Execution Pending Appeal

RULE 39

Execution, Satisfaction and Effect of Judgments

Section 2. Discretionary execution. —

(a) Execution of a judgment or final order pending appeal. — On motion of the
prevailing party with notice to the adverse party filed in the trial court while it has
jurisdiction over the case and is in possession of either the original record or the
record on appeal, as the case may be, at the time of the filing of such motion, said
court may, in its discretion, order execution of a judgment or final order even before
the expiration of the period to appeal.

After the trial court has lost jurisdiction the motion for execution pending appeal may
be filed in the appellate court.

Discretionary execution may only issue upon good reasons to be stated in a special
order after due hearing.

Requirements: In   Manacop v. Equitable Banking Corporation (G.R. No.

162814-17, August 25, 2005, 468 SCRA 256.)

(a) there must be a motion by the prevailing party with notice to the adverse party;

(b) there must be a good reason for execution pending appeal; and

(c) the good reason must be stated in a special order.  

Good Reasons; Defined.-

As such exception, the court’s discretion in allowing it must be strictly
construed and firmly grounded on the existence of good reasons.  “Good reasons,” it
has been held, consist of compelling circumstances that justify immediate execution
lest the judgment becomes illusory.   The circumstances must be superior,
outweighing the injury or damages that might result should the losing party secure a
reversal of the judgment. Lesser reasons would make of execution pending appeal,
instead of an instrument of solicitude and justice, a tool of oppression and inequity.
(Florendo vs Paramount Corp. G.R. No. 167976, January 20, 2010)

EXAMPLES OF GOOD REASONS

1.  “Imminent danger of insolvency.” (Archinet International vs Becco Philippines,
Inc., G.R. No. 183753, June 19, 2009)

2. Judgment debtor is actually insolvent (Padilla et.al. vs CA, et.al., L-31569, Sept.
28, 1973)

3. The Prevailing party was a natural person who, at 76 years of age, may no longer
enjoy the fruit of the judgment before he finally passes away. (Borja vs Court of
Appeals. 274 Phil. 258 [1991])

4. When the appeal is dilatory and the losing party intends to encumber and/or
dispose of the property  subject of the case during the pendency of the appeal  in
order to defraud or deprive the plaintiff of proprietary rights and defeat the ends of
justice (Home Insurance Company vs. Court of  Appeals, 184 SCRA 318 [1990]

However, BF Corporation v. Edsa Shangri-la Hotel, the Supreme Court held

that an allegation that the appeal is merely dilatory is not a good reason for granting
execution pending appeal.

Note: “Good reason” as required by Section 2, Rule 39 of the Rules of

Court does not necessarily mean unassailable and flawless basis but at the very least,
it must be on solid footing. Dire financial conditions of the plaintiffs supported by
mere self-serving statements as “good reason” for the issuance of a writ of execution
pending appeal does not stand on solid footing. It does not even stand on its own.
(National Power Corporation vs Judge Adiong, A.M. No. RTJ-07-2060)

5. That the goods subject matter of the judgment will deteriorate during the pendency
of the appeal; and that a slight deterioration of said goods will be sufficient to impair
their market value as first-hand goods. (Federation of United Namarco Distributors,
Inc. v. National Marketing Corp. G.R. L-17819 March 31, 1962)
DIESEL CONSTRUCTION vs. JOLLIBEE FOODS CORP
GR 136805
January 28, 2000

The Court must stress that the execution of a judgment before its finality must be founded
upon  good reasons. The yardstick remains the presence or the absence of  good
reasons consisting of exceptional circumstances of such urgency as to outweigh the injury
or damage that the losing party may suffer, should the appealed judgment be reversed
later. Good reason imports a superior circumstance that will outweigh injury or damage to
the adverse party. In the case at bar, petitioner failed to show "paramount and compelling
reasons of urgency and justice." Petitioner cites as good reason merely the fact that "it is a
small-time building contractor that could ill-afford the protracted delay in the
reimbursement of the advances it made for the aforesaid increased-costs of . . .
construction of the [respondent's] buildings."

GR 145817

Execution pending appeal is an extraordinary remedy allowed only when there are
reasons to believe that the judgment debtor will not be able to satisfy the judgment debt if
the appeals process will still have to be awaited. It requires proof of circumstances such as
insolvency or attempts to escape, abscond or evade a just debt.

In Florendo v. Paramount Insurance, Corp., the Court explained that the execution pending
appeal is an exception to the general rule that execution issues as a matter of right, when
a judgment has become final and executory:

As such exception, the court’s discretion in allowing it must bestrictly

construed and firmly grounded on the existence of good reasons.“Good reasons,”
it has been held, consist of compelling circumstances that justify immediate
execution lest the judgment becomes illusory. The circumstances must be
superior, outweighing the injury or damages that might result should the losing
party secure a reversal of the judgment. Lesser reasons would make of execution
pending appeal, instead of an instrument of solicitude and justice, a tool of
oppression and inequity. (Emphasis supplied)

Indeed, the presence or the absence of good reasons remains the yardstick in allowing the
remedy of execution pending appeal, which should consist of exceptional circumstances of
such urgency as to outweigh the injury or damage that the losing party may suffer, should
the appealed judgment be reversed later. Thus, the Court held that even the financial
distress of the prevailing company is not sufficient reason to call for execution pending
appeal:

In addressing this issue, the Court must stress that the execution of a judgment before its
finality must be founded upon good reasons. The yardstick remains the presence or the
absence of good reasons consisting of exceptional circumstances of such urgency as to
outweigh the injury or damage that the losing party may suffer, should the appealed
judgment be reversed later. Good reason imports a superior circumstance that will
outweigh injury or damage to the adverse party. In the case at bar, petitioner failed to show
“paramount and compelling reasons of urgency and justice.” Petitioner cites as good
reason merely the fact that “it is a small-time building contractor that could ill-afford the
protracted delay in the reimbursement of the advances it made for the aforesaid increased
costs of . . . construction of the [respondent's] buildings.”
G.R. No. 189358               October 8, 2014

CENTENNIAL GUARANTEE ASSURANCE CORPORATION,

vs.
UNIVERSAL MOTORS CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE,
NISSAN CAGAYAN DE ORO DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and
PETER YAP, 

"x x x.
The execution of a judgment pending appeal is an exception to the general rule
that only a final judgment may be executed; hence, under Section 2, Rule 39 of
the Rules of Court (Rules), the existence of "good reasons" for the immediate
execution of a judgment is an indispensable requirement as this is what confers
discretionary power on a court to issue a writ of execution pending appeal. Good
reasons consist of compelling circumstances justifying immediate execution, lest
judgment becomes illusory, that is, the prevailing party’s chances for recovery on
execution from the judgment debtor are altogether nullified. The "good reason"
yardstick imports a superior circumstance demanding urgency that will outweigh
injury or damage to the adverse party and one such "good reason" that has been
held to justify discretionary execution is the imminent danger of insolvency of the
defeated party.”

The factual findings that NSSC is under a state of rehabilitation and had ceased business
operations, taken together with the information that NSSC President and General Manager
Orimaco had permanently left the country with his family, constitute such superior
circumstances that demand urgency in the execution of the October 31, 2007 Decision
because respondents now run the risk of its non-satisfaction by the time the appeal is
decided with finality. Notably, as early as April 22, 2008, the rehabilitation receiver had
manifested before the rehabilitation court the futility of rehabilitating NSSC because of the
latter’s insincerity in the implementation of the rehabilitation process. Clearly, respondents’
diminishing chances of recovery from the favorable Decision is a good reason to justify
immediate execution; hence, it would be improper to set aside the order granting execution
pending appeal.