Philippine National Bank v. DKS International, Inc.
REITERATIONFacts
The Antecedents: The Philippine National Bank (PNB) leased a large parcel of land from the Philippine Government. PNB subsequently sought to sublease a portion of this land to DKS International, Inc. (DKS). While PNB and DKS proceeded with arrangements, the government agency responsible, the Land Management Bureau (LMB), initially denied and later approved the sublease with conditions. However, the approval was subsequently recalled for re-evaluation. Despite these developments, PNB alleged that DKS forcibly took possession of the 9,500-square meter portion of the leased property on October 9, 2002, and prevented PNB's car park operations. This led PNB to file a forcible entry case against DKS and its representative, Michael Dy. Procedural History: The Metropolitan Trial Court (MeTC) ruled in favor of PNB, ordering DKS and Dy to vacate the premises and pay damages. A Writ of Execution was issued, but its implementation was stalled by DKS's appeal to the Regional Trial Court (RTC). The RTC affirmed the MeTC's decision and ordered the issuance of a writ of execution with a break-open order. DKS appealed this to the Court of Appeals (CA). Meanwhile, DKS filed a motion to recall the writ of execution, arguing that they had already surrendered possession to the government, which had repossessed the property due to the expiration of PNB's lease and the withdrawal of the sublease approval. The government, through the LMB, also sought to intervene, objecting to the execution of the writ. The RTC initially denied these motions but later recalled the writ of execution, citing the Sheriff's Partial Return indicating that DKS had surrendered possession to the LMB, which was now in physical possession of the property. PNB then filed a Petition for Certiorari with the CA, assailing the RTC's recall of the writ. The CA denied PNB's petition, finding no grave abuse of discretion by the RTC, and ruled that the government's repossession constituted a supervening event. PNB's motion for reconsideration was also denied, leading to the present petition. The Petition: This case is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, filed by Philippine National Bank (PNB) against DKS International, Inc. and Michael Dy. PNB assails the Decision of the Court of Appeals (CA) dated March 16, 2007, which denied PNB's Petition for Certiorari, and the subsequent Resolution dated August 6, 2007, which denied PNB's Motion for Reconsideration. PNB argues that the CA erred in passing upon issues not submitted for resolution, in declaring that PNB had no right of possession, in disregarding the lower courts' findings in the forcible entry case, and in allowing the recall of the writ of execution without a supersedeas bond. PNB contends that the CA should have focused solely on the issue of physical possession in the forcible entry case and should not have delved into ownership or the expiration of the lease contract, which were matters subject to separate litigation.
Issue(s)
Whether the Court of Appeals committed grave abuse of discretion amounting to lack of or in excess of jurisdiction in affirming the RTC's recall of the writ of execution with break open order. Whether the Court of Appeals erred in passing upon an issue not submitted to it for resolution. Whether the Court of Appeals erred in declaring that petitioner PNB has no right of possession over the subject property. Whether the Court of Appeals erred in disregarding the uncontroverted findings of facts and the unassailed Decision of the MeTC and RTC in the forcible entry case. Whether the Court of Appeals erred in allowing the stay of the execution and recall of the break open order even in the absence of the required supersedeas bond, and the enforceability of monetary awards.
Ruling
The Supreme Court denied the petition for review on certiorari. It held that the Court of Appeals did not commit grave abuse of discretion in affirming the RTC's recall of the writ of execution with break open order. The Court found that supervening events, namely the surrender of the premises by DKS to the government (the admitted owner) and the government's repossession, rendered the execution of the judgment for physical possession impossible. The Court also clarified that while the execution of the possession aspect of the judgment was rendered impossible, the monetary awards for compensation and attorney's fees remained enforceable.
Ratio Decidendi
On the propriety of recalling the writ of execution with break open order: The Court reiterated that grave abuse of discretion implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. In this case, the RTC, in recalling the writ, considered the Sheriff's Partial Return and the government's intervention, which indicated that DKS had already surrendered possession of the premises to the Land Management Bureau (LMB), the admitted owner. The Court found that it would be a misstep to order the transfer of possession from the government, which was not a party to the ejectment case, to PNB. Therefore, the recall of the writ was warranted because the portion of the judgment ordering DKS to vacate and surrender possession had become impossible to implement due to these supervening events. The Court emphasized that the primary issue before the CA was the alleged grave abuse of discretion by the RTC, and to resolve this, the CA had to consider the facts that led to the recall, including the government's take-over. On passing upon issues not submitted for resolution: The Court clarified that the CA correctly took notice of the government's take-over and repossession of the property because these were the very facts the RTC considered in recalling the writ. Without discussing these issues, the CA could not have determined whether the RTC's recall was proper, which was essential to resolving the grave abuse of discretion claim. However, the Court deemed it proper to state that the CA's pronouncement regarding the non-renewal of the lease contract was without binding effect, as that issue was beyond the CA's competence in this specific certiorari proceeding and was already the subject of separate litigation. On PNB's right of possession: The Court noted that while the MeTC and RTC ruled in favor of PNB in the forcible entry case, entitling it to a writ of execution, the subsequent events rendered the physical possession aspect of the judgment impossible to implement. The Court agreed with the RTC that ordering the government, the admitted owner, to vacate the premises in favor of PNB would be erroneous, especially since the government was not a party to the ejectment case. Thus, the recall of the writ was justified based on these supervening circumstances. On disregarding lower court findings and the supersedeas bond: The Court held that the RTC did not commit grave abuse of discretion in recalling the writ. The Sheriff's Partial Return, which indicated that DKS had surrendered possession to the LMB, was a factual finding that the RTC considered. The Court reiterated that factual issues are generally for the lower courts to resolve and are binding on the Supreme Court, especially when affirmed by the CA. Furthermore, the Court clarified that Section 19, Rule 70 of the Rules of Court, concerning the stay of execution pending appeal with a supersedeas bond, was not applicable because the appeal to the RTC had already been decided, and the issue was about the execution of the RTC's judgment, not the MeTC's judgment pending appeal to the RTC. On the enforceability of monetary awards and the recall of the break open order: The Court clarified that while the writ of execution for physical possession was recalled, the portions of the MeTC's decision awarding reasonable compensation and attorney's fees in favor of PNB remained enforceable. The Court noted that the parties themselves acknowledged this and agreed that the issue on the monetary award should be left for resolution by the Court of Appeals. Therefore, PNB could still seek the execution of these monetary awards.
Main Doctrine
The recall of a writ of execution with a break open order is proper when supervening events render the execution of the judgment impossible, such as when the premises have already been surrendered to a third party who is the admitted owner thereof, and who was not a party to the ejectment case.