454 Phil. 409
CALLEJO, SR., J.:
(a) A downpayment of ONE MILLION (P1,000,000.00) PESOS in personal check shall be paid upon the execution of this Contract;The parties further agreed that in case of default by the vendors:
(b) The balance of ELEVEN MILLION (P11,000,000.00) to be paid by eleven (11) postdated checks at the rate of ONE MILLION (P1,000,000.00) a month all of which shall likewise be delivered to the VENDORS upon the execution of this Contract; provided, however, that the date of the first postdated check shall be thirty days from the full and actual delivery of the units as provided in paragraph 3 hereof and the subsequent dates of the other postdated checks shall be reckoned from the date of the first postdated check;[3]
The respondents, as vendors, guaranteed that the franchise and routes to Buendia-Ayala-UP and vice versa and Monumento-Ayala via EDSA were valid, fully and completely utilizable, and merely required registration with the Land Transportation Office (LTO) for the vendees to be able to operate the same.[5] The vendees delivered the downpayment and postdated checks drawn upon the account of Goldfinger with the Philbanking Corporation for the balance of the purchase price.
- CONSEQUENCES OF DEFAULT. It is agreed and understood that the representations and warranties made by the VENDORS in this Contract are the primary motivations/reasons that induced, convinced and moved the VENDEE to enter into this contract and the Deed of Sale. In the event of default by the VENDORS, the VENDEE shall at its option either consider the obligations of the VENDORS under the Contract immediately due and demandable and the VENDORS shall immediately execute the Deed of Sale of the buses and their corresponding lines/franchises without need of any further payments or reimburse all the amounts paid by the VENDEE to the VENDORS. In either case, the VENDORS shall, likewise, be liable to the VENDEE for liquidated damages in the amount of Twelve Million (P12,000,000.00) pesos.
In the event of default by the VENDEE, the VENDORS shall at their option, declare the entire obligation due and demandable, and demand for the payment of the entire balance of the purchase price or declare the contract as without any further force and effect and that all payments previously paid are forfeited. In either case, the VENDEE shall, likewise, be liable for liquidated damages in the amount of Twelve Million (P12,000,000.00) Pesos in favor of the VENDORS.[4]
The plaintiffs therein prayed for the issuance of a temporary restraining order, and after due notice and hearing, to issue a writ of preliminary injunction, enjoining the therein defendants DDTC and DMTC, their agents, representatives and all persons acting in their behalf from encashing, depositing, discounting or transacting the postdated checks issued by plaintiff Goldfinger as listed in Annex "B" of the complaint, and enjoining the defendant Philbanking Corporation (Del Monte branch), its agents, representatives and all persons acting in its behalf from encashing, accepting, clearing, or transacting in any other manner, the postdated checks listed in Annex "A" of the complaint.
- Declaring the Deed of Conditional Sale entered into between the plaintiffs Willy Choa Coyukiat and Goldfinger Transport Corporation and the defendants De Dios Transportation Co., Inc. and the De Dios Marikina Transit Corporation as RESCINDED.
- Ordering the defendants De Dios Transportation Co. Inc and the De Dios Marikina Transit Corporation to return the One Million Pesos (P1,000,000.00) down payment and all other amounts given by the plaintiffs to them under the Deed of Conditional Sale.
- Requiring the defendants De Dios Transportation Co. Inc. and the De Dios Marikina Transit Corporation to accept the return from the plaintiffs of the fifty-eight (58) passenger buses;
- Ordering the defendant De Dios Transportation Co. Inc. and the De Dios Marikina Transit Corporation to pay jointly and severally to the plaintiffs the amount of Twelve Million Pesos (P12,000,000.00) as liquidated damages.
ON THE SECOND CAUSE OF ACTION - On the second cause of action, ordering the defendant De Dios Transportation Co. Inc. and the De Dios Marikina Transit Corporation to pay jointly and severally to the plaintiffs the amount of One Million Pesos (P1,000,000.00) as moral damages.
ON THE THIRD CAUSE OF ACTION - On the third cause of action, ordering the defendants De Dios Transportation Co. Inc. and the De Dios Marikina Transit Corporation to pay jointly and severally the amount of One Million Pesos (P1,000,000.00) as exemplary damages.
ON THE FOURTH CAUSE OF ACTION - On the fourth cause of action, ordering the defendants De Dios Transportation Co. Inc. and the De Dios Marikina Transit Corporation to pay jointly and severally to the plaintiffs the amounts of Five Hundred Thousand Pesos (P500,000.00) as attorney's fees and at least One Hundred Thousand Pesos (P100,000.00) as litigation expenses.[7]
WHEREFORE, as prayed for, defendants' counterclaim is hereby GRANTED, and judgment is hereby rendered ordering plaintiff to pay the defendants the following:Aggrieved, the plaintiffs Coyukiat and Goldfinger interposed an appeal to the Court of Appeals (CA) which was docketed as CA-G.R. CV No. 61310.
(1) ELEVEN MILLION (P11,000,000.00) PESOS representing the plaintiff's unpaid balance on the consideration of the Deed of Conditional Sale;(2) TWELVE MILLION (P12,000,000.00) PESOS as liquidated damages; (3) FIVE HUNDRED THOUSAND PESOS (P500,000.00) as moral damages and FIVE HUNDRED THOUSAND PESOS (P500,000.00) as exemplary damages; and(4) TWO HUNDRED THOUSAND PESOS as attorney's fees and P113,783.50 as litigation expenses; (5) Costs of suit.[11]
There is no basis for defendants-appellees to execute against the injunction bond.[17]In accordance with the directive of the Court of Appeals, the respondents filed on December 9, 1999 with the RTC Quezon City, Br. 223, a Motion to Resolve their Motion to Execute Against the Injunction Bond. The respondents alleged inter alia that (a) the trial court had ruled that the plaintiffs Coyukiat and Goldfinger were not entitled to a writ of preliminary injunction; (b) were it not for the writ, the respondents would have been able to negotiate and collect on the remaining postdated checks of the plaintiffs which had become stale in the meantime; (c) the plaintiffs were able to hide and dispose of their assets because of a temporary restraining order and writ of preliminary injunction issued by the court; (d) by reason of the failure of the plaintiffs to pay the amount due and demandable under the decision of the court, the respondents sustained damages; (e) in accordance with the provisions of the Revised Rules of Court, before the decision of the court a quo became final and executory, the respondents filed their motion to execute against the injunction bond on September 15, 1999 before the CA; (f) the CA directed the respondents to address their motion to the trial court for consideration and resolution thereof.[20]II
The Decision of the lower court has become final and, therefore, defendants-appellees' Motion can no longer be entertained.[18]III
Even assuming, for the sake of argument that an application for damages can still be made, defendants-appellees suffered no damage by reason of the issuance of the injunction.[19]
WHEREFORE, the assailed Orders dated February 2, 2000 and March 13, 2000 are REVERSED and SET ASIDE and, in lieu thereof, another is rendered granting the petitioners' Motion to Execute Against the Injunction Bond. No costs.[23]The Court of Appeals cited the ruling of this Court in International Container Terminal Services, Inc. v. Court of Appeals,[24] which declared that Section 20, Rule 57 of the Rules of Court regarding the application against the surety bond in support of the writ of preliminary attachment shall apply by analogy to a preliminary injunction. The CA likewise cited the ruling of this Court in Rivera v. Talavera,[25] and Ponce Enrile v. Capulong,[26] that the application or claim for damages against the injunction bond must be filed before the trial court either during the trial with due notice to the surety or sureties, or even after trial when judgment is rendered, but before entry thereof.
The petition is bereft of merit.
- With all due respect, the Honorable Court of Appeals decided the case in a way not in accord with law and the applicable decisions of the Honorable Supreme Court. The Honorable Court of Appeals erred when it ruled that it still had jurisdiction over the case even after Coyukiat and Goldfinger had filed their Notice of Withdrawal of Appeal as a matter of right.
- Respondents are not entitled to execute on the injunction bond for failing to file an application for damages against the injunction bond at the trial of the main case, Civil Case No. Q-95-24462, and for filing the same only after the decision in said case had become final and executory.
- The judgment of the Quezon City RTC-Branch 223 in the main case, Civil Case No. Q-95-24462, did not include any award for damages in favor of respondents by reason of the issuance of the writ of preliminary injunction, and the fact that the decision therein was in favor of respondents did not automatically entitle them to such award for damages.
- The damages allegedly sustained by respondents were not by reason of the issuance of the writ of preliminary injunction.[27]
The Court of AppealsIn its reply to the comment of the respondents, the petitioner avers that the compliance to the CA Resolution of September 16, 1999, to submit the appellants' conformity to the substitution of new counsel and the withdrawal of the appeal was a ratification of the withdrawal of the appeal by the new counsel which should be deemed effective as of the date of the filing of the notice of withdrawal of appeal, or on September 14, 1999.
still had jurisdiction over
the case when the
Motion to Execute
Against the Injunction
Bond was filed.
Petitioner argues in its Petition that Coyukiat filed a Withdrawal of Appeal on September 14, 1999 or one day before respondents filed their Motion to Execute Against Injunction Bond on September 15, 1999. Since no appellee's brief had been filed at that time, petitioner argues that the withdrawal of the appeal was a matter of right. Thus, Pioneer triumphantly concludes, on September 14, 1999 the appeal was already effectively withdrawn and the Decision of the trial court had already become final and executory.
What Pioneer conveniently does not disclose is that the Withdrawal of Appeal was not filed by counsel of record for Coyukiat but a different counsel purporting to be the newly substituted counsel for Coyukiat. This different counsel from the counsel of record had entered her appearance as such only for the purpose of withdrawing the appeal.
More importantly, Pioneer also conveniently fails to disclose that neither the Entry of Appearance of new counsel for Coyukiat nor the Withdrawal of the Appeal bore the conformity of Willy Choa Coyukiat and Goldfinger Transport Corporation--the appellants.
It is well-established that substitution of counsel is not effective without the conformity of client. Moreover, well-entrenched is the rule that pleadings which have the effect of withdrawing the appeal should bear the conformity of the appellant.
Clearly therefore, the Withdrawal of Appeal filed on September 14, 1999 was not effectual because it did not bear the conformity of Coyukiat. The new counsel of Coyukiat (who entered her appearance without Coyukiat's conformity in substitution of the counsel of record) cannot reasonably expect that she will be allowed by the Court of Appeals to withdraw the appeal on her own. This is especially so when even her substitution of the counsel of record does not bear the conformity of the appellants.
In a long line of cases, the court has ruled that the attorney of record is regarded as the counsel who should be held responsible for the conduct of the case (Fojas vs. Navarro, 32 SCRA 476, 485 [1970]).
For a substitution of attorneys to be effectual, the procedure to be followed strictly is as follows:"In order that there may be substitution of attorneys in a given case, there must be (1) a written application for substitution; (2) the written consent of the client; (3) the written consent of the attorney substituted; and (4) in case such written consent cannot be secured, there must be filed with the application proof of service of notice of such motion upon the attorney to be substituted, in the manner prescribed by the rules. Unless the foregoing formalities are complied with, substitution will not be permitted, and the attorney who properly appeared last in the case, before such application for substitution, will be regarded as the attorney of record and will be held responsible for the proper conduct of the case." (Adarne vs. Aldaba, A.C. No. 801, June 27, 1978; Cortez, et al. vs. CA, et al., L-32547, May 9, 1978; Ramos vs. Potenciano, 118 Phil. 1435; and U.S. vs. Borromeo, 20 Phil. 189).In this case, therefore, the Withdrawal of Appeal filed by a new counsel who substituted the counsel of record--Atty. Ronaldo Reyes, without bearing the conformity of Coyukiat was a mere scrap of paper.
This is precisely the reason why the Court of Appeals issued a resolution requiring the appellant to submit his conformity to the withdrawal.
As mentioned above, the appellants only manifested their desire to withdraw the appeal, by way of the signature of Coyukiat in his behalf and in behalf of Goldfinger Transport Corporation, on September 29, 1999.
This conformity was taken note of by the Court of Appeals on October 8, 1999 when it dismissed the appeal.
Clearly, therefore, even if we were to follow petitioner's argument that a withdrawal of appeal is a matter of right and needs no further action from the court, in this case the intention of withdrawing the appeal was only properly made known to the court by Coyukiat and Goldfinger Transport Corp. on September 29, 1999.
By that time, respondents had already filed their Motion to Execute Against the Injunction Bond.
It is, therefore, not factually and legally accurate for petitioner Pioneer to claim that the Court of Appeals had already lost jurisdiction over the case when the Motion to Execute Against the Injunction Bond was filed.[28]
The record shows that the withdrawal of their appeal by appellants Willy Choa Coyukiat and Goldfinger Transport Corporation from the decision rendered in Civil Case No. Q-95-24462 was approved by the Thirteenth Division of this Court only on October 8, 1999. Having preceded the resolution to the effect issued in CA-G.R. CV No. 61310 (p. 92, Rollo) by twenty-three (23) days, there is no gainsaying the fact that the petitioners' filing of their application for damages against the injunction bond on September 15, 1999 (pp. 72-75, ibid.) was still well within the time frame the law prescribes therefor. That this Court still had jurisdiction over the case when the petitioners' Motion for Execution Against the Injunction Bond was filed is evident from the referral thereof to the court a quo in the same order which granted the appellants' withdrawal of their appeal (p. 92, ibid.). The supervening finality of the decision in Civil Case No. Q-95-24462 notwithstanding, the respondent court clearly committed grave abuse of discretion in denying the petitioners' motion to resolve their application for damages solely on the ground that the withdrawal of the appeal rendered its Decision dated December 4, 1998 final and executory (p. 28, ibid.).[29]The contention of the petitioner does not persuade.
... No substitution of counsel of record is allowed unless the following essential requisites of a valid substitution of counsel concur: (1) there must be a written request for substitution; (2) it must be filed with the written consent of the client; (3) it must be with the written consent of the attorney to be substituted; and (4) in case the consent of the attorney to be substituted cannot be obtained, there must be at least a proof of notice that the motion for substitution was served on him in the manner prescribed by the Rules of Court. ...[31]There was clearly no compliance to these essential requisites. It was only on September 16, 1999 when the CA granted the motion of the Padilla Reyes & De la Torre Law Office to withdraw as counsel for the appellants that the withdrawal of the said counsel and its substitution by the Luis Q.U. Uranza, Jr. & Associates became effective.
Section 3. Withdrawal of appeal. - An appeal may be withdrawn as a matter of right at any time before the filing of the appellee's brief. Thereafter, the withdrawal may be allowed in the discretion of the court.We agree with the respondents that the notice of withdrawal of appeal of the appellants in CA-G.R. CV No. 61310 filed on September 14, 1999 was not self-executory, and did not render the trial court's December 4, 1998 Decision final and executory. While we agree with the petitioner that under Section 3, Rule 50 of the Rules of Court, an appeal may be withdrawn by the appellants as a matter of right at any time before the filing of the appellees' brief; however, the rule does not apply in this case because the notice of withdrawal of appeal filed in CA-G.R. CV No. 61310 by the Luis Q.U. Uranza, Jr. & Associates did not bear the appellants' conformity thereto. It bears stressing that the counsel of the appellants was a mere agent holding a special power of attorney to act for and in behalf of the principal respecting the ordinary course of the appealed case. There was a need for the appellants, as the principals, to execute a special power of attorney specifically authorizing the withdrawal of a perfected appeal.[32] Absent a special power of attorney expressly authorizing their counsel to withdraw their appeal, or in lieu thereof, the written conformity of the appellants to the withdrawal of their appeal, the notice of withdrawal of appeal by the new counsel of the appellants was a mere scrap of paper.
... Having successfully enjoined the encashment of the checks they issued through the surety bond issued by the private respondent (pp. 55-58, ibid.), Willy Choa Coyukiat and Goldfinger Transport Corporation were able to use and dispose of the petitioners' buses (p. 134, ibid.) and to evade the satisfaction of the decision rendered in Civil Case No. Q-95-24462 pending appeal (pp. 76-77, ibid.). Far from acknowledging the judgment debt, therefore, it appears that the withdrawal of the appeal was merely calculated to further frustrate the satisfaction of the same.[33]The notice of withdrawal of appeal was deemed filed only on September 28, 1999 upon compliance with the September 16, 1999 Resolution of the CA. The appeal of the appellants was effectively withdrawn and dismissed before October 8, 1999 when the CA issued its resolution therein. The petitioner should not be benefited by the deleterious manipulation of the rules of procedure.
In International Container Terminal Services, Inc. v. Court of Appeals,[35] this Court ruled that due notice to the adverse party and its surety setting forth the facts supporting the applicant's right to damages and the amount thereof under the bond is indispensable. The surety should be given an opportunity to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the writ.[36] In the absence of due notice to the surety, therefore, no judgment for damages may be entered and executed against it.
- The application for damages must be filed in the same case where the bond was issued;
- Such application for damages must be filed before the entry of judgment; and
- After hearing with notice to the surety.[34]