[ G.R. Nos. L-5717 and L-5751 to L-5756. August 30, 1952 ] 91 Phil. 891
[ G.R. Nos. L-5717 and L-5751 to L-5756. August 30, 1952 ]
SCOTTISH UNION & NATIONAL INSURANCE COMPANY; LONDON AND SCOTTISH ASSURANCE CORPORATION, LTD.; AND ST. PAUL FIRE & MARINE INSURANCE COMPANY, PETITIONERS, VS. HIGINIO B. MACADAEG, JUDGE OF THE COURT OF FIRST INSTANCE OF MANILA AND YU HUN & COMPANY, RESPONDENTS. D E C I S I O N
BENGZON, J.:
The petitioners are three of seven defendants in as many civil cases of the Manila court of first instance, now on appeal, and the respondent Yu Him & Co., is the plaintiff therein. As a result of the fire that destroyed its warehouse and goods in May 1949, Yu Hun & Co. filed in 1949 and 1950 the above suits seeking to recover the total sum of P240,000 from the defendants, foreign insurance corporations who had issued insurance policies covering the said properties. After a protracted trial characterized by several delaying incidents, on December 28, 1951 the respondent Judge rendered judgment the dispositive part of which reads partly as follows:
“IN VIEW OF THE FOREGOING, the Court hereby renders judgment in favor of the plaintiff and against each and everyone of the defendants as follows: In Civil Case No. 9251, defendant Scottish Union National Insurance Co., shall pay the plaintiff, Yu Hun & Co., the sum of P50,000 plus 8 per cent interest thereon in accordance with section 91-B of the Insurance Act from the date of the filing of the complaint up to full payment thereof. Defendant shall also pay the costs. In Civil Case No. 11136 defendant, London & Scottish Insurance Corp. Ltd., shall pay the plaintiff, Yu Hun & Co., the sum of P5,000, plus 8 per cent interests thereon in accordance with section 91-B of the complaint up to full payment thereof. Defendant shall also pay the costs. In Civil Case No. 11137, defendant, St. Paul’s Fire & Marine Insurance Co., shall pay to the plaintiff, Yu Hun & Co., the amount of P5,000 plus 8 per cent interests thereon in accordance with section 91-B of the Insurance Act from the date of the filing of the complaint up to full payment thereof. Defendant shall pay the costs.”
On January 30, 1952, all defendants filed a motion for reconsideration and/or new trial, which was denied on February 18, 1952. But on January 28, 1952, Yu Hun & Co. submitted an urgent petition for execution pending appeal, under the provisions of section 2, Rule 39 of the Rules of Court. And notwithstanding vigorous opposition, the respondent judge directed the issuance of writs of execution against the petitioners, the London & Scottish Assurance Corporation, the Scottish Union and Insurance Co. and the St. Paul’s Fire and Marine Insurance Co. Wherefore, charging grave abuse of discretion, the last-mentioned corporations promptly interposed this petition for prohibition and certiorari with prayer for preliminary injunction. As requested, we issued the restraining writ upon presentation of a suitable bond. The disputed order reads as follows:
“Petition for advanced execution of judgment is before this Court for consideration. Section 2, Rule 39, of the Rules of Court, allows the issuance of an advanced writ of execution for “good cause.” This so-called “good cause” does not have a definite meaning. It must be interpreted in accordance with the circumstances of a particular case. It is the opinion of this Court that when there is danger for the judgment to be ineffective if and when it becomes final, there is good cause to issue an advanced writ of execution. The defendants in these cases are all foreign corporations; they may cease business operation and, as a matter of fact, defendants Scottish Union and National Insurance Co., London and Scottish Assurance Corporation, Ltd., and St. Paul’s Fire and Marine Insurance Co. did cease business operation. It may be stated in this connection, that these defendants ceased operation in the Philippines in accordance with law and that other companies assumed their obligations. This, of course, is perfectly legal in so far as business transaction is concerned. The question involved, however, is the right of the plaintiff to be secure. Immediate relief must be given to, the prevailing party as soon as the judgment of the Court becomes executory. Any delay to the granting of that relief should be discouraged. Under the circumstances of the instant cases, justice and equity demand that the right of the plaintiff be protected and secured. The only way to secure and protect such right is the issuance of a writ of execution or for the defendants to file their respective bonds to stay execution. This holds true, however, in so far as defendants Scottish Union and National Insurance Co., London and Scottish Assurance Corporation, Ltd., and St. Paul’s Fire and Marine Insurance Co. are concerned. They have ceased business without giving” notice to the Court, and the assuming companies also failed to do the same. In so far as the latter are concerned, the Court has no jurisdiction over them. And the Court feels that it would have been a demonstration of good faith on the part of defendants Scottish Union and National Insurance Co., London and Scottish Assurance Corporation, Ltd., and St. Paul’s Fire and Marine Insurance Co. and the assuming companies had they given notice to the Court of their transaction."
There is no question that, with the approval of the Insurance Commissioner, on June 30, 1951, the London and Scottish Assurance Corporation and the St. Paul’s Fire and Marine Insurance Co.—each sued for P5,000 in their respective cases—withdrew from business in the Philippines and all their outstanding risks were assumed by Northern Assurance Co. Ltd. and Firemen’s Fund Insurance Co. under Rep. Act No. 447. There is also no question that on November 25, 1950 the Scottish Union and National Insurance Co. with P50,000 involved in its case, withdrew from business in the Philippines and all its liabilities were assumed by the Commercial Union Assurance Co. under the provisions of Rep. Act No. 447 with the approval of the Insurance Commissioner. It is admitted by the parties that, pending appeal, the trial court has discretion to direct execution of its own judgment, provided there are good reasons therefore expressed in its order of execution (Sec. 2 Rule 39). Therefore the issue in this litigation is narrowed down to whether the petitioners’ withdrawal from business in this country during the pendency of the case constitutes a sufficiently good reason for decreeing execution notwithstanding the appeal. Inasmuch as appellate courts will not interfere with the lower court’s discretion unless abuse thereof is shown,[1] the question should perhaps be framed negatively: Is that withdrawal not a good reason for execution? The respondent judge in the contested directive explains that “when there is danger for the judgment to be ineffective if and when it becomes final, there is good cause to issue an advanced writ of execution.” That appears to be good law. In fact, petitioners, making no effort to dispute the legal proposition, merely deny that the circumstances show the existence of the danger apprehended by His Honor. Under the Insurance Law, when a foreign insurance corporation applies for permission to engage in business in the Philippines it must deposit with the Insurance Commissioner “for the benefit and security” of its policyholders and creditors in the Philippines securities and bonds for the total amount of P250,000 (Sec. 178 as amended), valuables which said officer is required to retain until the day when such corporation ceases to do business in this jurisdiction and applies, and is permitted by said Commissioner, to get them back. (Sec. 179) Republic Act No. 447 prescribes the procedure to be followed upon cessation of business: The foreign insurer must apply. Its application must be published in two newspapers. It must discharge its liabilities to policy-holders and creditors in this country, and cause its policies insuring Philippine residents to be taken up by other qualified insurers. Then “the Insurance Commissioner shall make an examination of the books and records of the withdrawing company and if upon such examination he finds that the insurer has no outstanding liabilities to residents of the Philippines, he shall permit the insurer to withdraw.” We are told that petitioners obtained the permit to withdraw under Rep. Act No. 447. We must assume that they have secured from the Commissioner or will secure from him the return of the bonds and securities they had deposited at the beginning of their business operations. And the probable result will be that when Yu Hun & Co. finally wins his P60,000 suit on appeal, there will be no leviable assets of the foreign insurers (petitioners) in this country. Because it is generally known that these securities on deposit are the only properties here of these foreign insurance companies. Therefore it may not be held that his honor was clearly mistaken in requiring execution in advance on the ground that upon petitioner’s withdrawal there is danger for Yu Hun’s judgment to be ineffective. The situation would be no different from the case where the debtor who is defendant-appellant in a litigation is found to be liquidating his properties preparatory to transferring his permanent residence to foreign countries. Anyway these foreign insurers have a remedy: file a bond.[2] But it might be argued, that having withdrawn under Rep. Act No. 447 with the permission of the Insurance Commissioner, the petitioners should not be prejudiced by such withdrawal. In reply they must be reminded that one of the conditions precedent for such withdrawal is that they shall “discharge their liabilities to policyholders and creditors in this country.” (Sec. 202-C) They have tailed to discharge their liabilities to Yu Hun & Co. Granting that upon issuing tne permit, the Insurance Commissioner must have been convinced that the petitioners “had no outstanding liabilities to residents of the Philippines,” yet there is nothing in the law to make his findings conclusive upon the courts. They could not be, because they are based only upon the “examination of the books and records of the withdrawing company.” The procedure outlined in Rep. Act 447 is intended to govern the conduct of the insurance Commissioner where petitions are made for return of the deposit upon withdrawal of foreign insurers. It does not attempt to regulate the liquidation of liabilities of such foreign insurers, nor the rights of claimants against them. Of course there is no doubt that if the Insurance Commissioner is advised that there are unpaid claimants against the foreign insurers he will refuse to allow withdrawal or the return of the securities deposited with him or such portion thereof as may be necessary to satisfy the local claimants. Yet it would be incorrect to assert that whenever he allows the return of such securities, there are factually and legally no unpaid claimants. The petitioners contend that when the Insurance Commissioner, pursuant to law, approves the withdrawal of a foreign insurance company from business in the Philippines the courts may not contest the discretion exercised by him and substitute their own judgment therefore “declaring that the outstanding risks of the withdrawing company are not sufficiently protected by the measures taken” by said officer. The contention must be overruled, because the matter now at issue does not concern “outstanding risks” but accrued “liabilities”, which the law requires to be discharged before withdrawal. (Sec. 202-C Insurance Law as amended by Rep. Act No. 447) The statute does not authorize a foreign insurer to assign to another insurer its accrued liabilities to a policy-holder, foisting a new debtor upon the latter. And even supposing it does permit such assignment, there is no denying that once the substitution is accomplished, the judgment which Yu Hun & Co. would get in the above cases would practically become useless, since it would be unenforceable by execution against the new debtor, who is not a party to the case. Thus the frustration or circumvention of the action would entirely be owing to the voluntary act of the petitioners, who neither advised the court nor secured the consent of Yu Hun & Co. to the substitution. Consequently it was meet and proper to adopt measures calculated to forestall such frustration, especially after the Court had found the petitioners unreasonably delayed settlement of Yu Hun’s claim for losses. Premises considered, the petition is denied, and the preliminary injunction heretofore issued is hereby dissolved. Costs in favor of respondents. So ordered. Paras, C. J., Pablo, Padilla, Tuason, Montemayor, Bautista Angelo, and Labrador, JJ., concur.