FACTS:

This case involves a complaint for breach of contract filed by Nissan Specialist Sales Corporation (NSSC) against Universal Motors Corporation (UMC) and other individuals. The Regional Trial Court (RTC) issued a temporary restraining order (TRO) and later converted it into a writ of preliminary injunction. The Court of Appeals (CA), in a separate case, dissolved the writ of preliminary injunction, stating that NSSC had no clear legal right for its issuance. Respondents then filed an application for damages against the injunction bond issued by Centennial Guarantee Assurance Corporation (CGAC). The RTC dismissed the complaint for lack of merit but ordered NSSC, Orimaco, and CGAC to jointly and severally pay damages against the injunction bond. The RTC also granted the execution pending appeal of its decision due to good reasons. CGAC questioned the grant of execution before the CA, which affirmed the order but limited CGAC's liability to the amount of the bond. CGAC filed a motion for reconsideration which was denied. Thus, CGAC filed this petition for review on certiorari before the Supreme Court. The central issues in this case are: (a) whether good reasons exist for execution pending appeal against CGAC; and (b) whether CGAC's liability on the bond should be limited to a certain amount.

ISSUES:

1. Whether or not good reasons exist to justify execution pending appeal against CGAC which is a mere surety.

2. Whether or not CGAC's liability on the bond should be limited to P500,000.00.

RULING:

1. Yes, there are good reasons to justify execution pending appeal against CGAC. The Regional Trial Court (RTC) found that there exists imminent danger of insolvency on the part of NSSC, the principal debtor, and that NSSC has ceased its business operations. Furthermore, the President and General Manager of NSSC has migrated abroad with his family. Additionally, NSSC failed to file the necessary supersedeas bond to forestall the immediate execution of the decision pending appeal. Therefore, these circumstances constitute good reasons to justify the execution pending appeal against CGAC, the surety.

2. No, CGAC's liability on the bond should not be limited to P500,000.00. The Court of Appeals (CA) ruled that CGAC's liability should be limited to only the amount of the bond it issued, which is P1,000,000.00. The CA determined that limited liability to P500,000.00 is not proper. Consequently, CGAC's liability on the bond should remain at P1,000,000.00.

PRINCIPLES:

• Execution pending appeal may be justified if there are good reasons, such as the imminent danger of insolvency, cessation of business operations, migration of the principal debtor, and failure to file a supersedeas bond.

• The liability of a surety on a bond is limited to the amount of the bond it issued.