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HEIRS OF LATE JUSTICE JOSE B. L. REYES v. CA

FACTS:

The case involves a dispute between the petitioners, brothers Justice Jose Benedicto Luna Reyes and Dr. Edmundo A. Reyes, and the respondent, Metro Manila Builders, Inc. (MMB, Inc.), over a 25-year lease contract for a property in Pasay City. The lease contract had a low rental rate, considering that MMB, Inc. was responsible for maintaining the premises.

The petitioners discovered that MMB, Inc. had failed to properly maintain the property and had sub-leased it to third parties without their consent. As a result, the petitioners served a notice terminating the lease and demanding that MMB, Inc. vacate the premises.

MMB, Inc. did not comply with the notice, prompting the petitioners to file a complaint for unlawful detainer. The Metropolitan Trial Court (MTC) ruled in favor of the petitioners, ordering MMB, Inc. to vacate the property and pay rental arrears and other expenses.

Both parties filed various appeals and petitions with different courts. MMB, Inc. appealed to the Regional Trial Court (RTC), but their appeal was dismissed for failure to file the appeal memorandum on time. MMB, Inc. then withdrew their appeal and simultaneously filed a petition for annulment of the ejectment decision before the RTC. They also sought injunctive relief against the enforcement of the writ of execution from the Court of Appeals (CA).

The CA issued a resolution allowing the withdrawal of the first appeal and restraining the petitioners from enforcing the writ of execution. However, the resolution was signed by only two members of the CA, rendering it void.

MMB, Inc. continued to file motions and petitions with the CA, seeking injunctive relief and temporary restraining orders. The CA consolidated the cases filed by MMB, Inc. and set a hearing for the application of a preliminary injunction.

At the same time, the petitioners filed a comment/opposition to the resolution issued by the CA. The case involves a series of motions and petitions filed by MMB, Inc. with the CA, seeking relief from the dismissal of their appeal and the enforcement of the writ of execution.

Meanwhile, another case involves a dispute between the petitioners, Santos and Rivera, and the respondent, Gozon, over the termination of a lease contract. The petitioners terminated the lease due to alleged violations by Gozon. Gozon filed a petition for annulment of the termination before the RTC, which was dismissed. Gozon then appealed to the CA and simultaneously filed a separate petition for certiorari against the dismissal of the annulment petition.

The CA granted Gozon's certiorari petition and ordered the RTC to reinstate the annulment case. The petitioners, dissatisfied with the CA's decision, filed a petition for certiorari before the Supreme Court, arguing that the CA committed grave abuse of discretion.

ISSUES:

  1. Whether the Court of Appeals committed grave abuse of discretion in granting the petition for execution pending appeal and issuing the writ of execution.

  2. Whether the Court of Appeals erred in finding petitioners guilty of indirect contempt of court and ordering them to pay a fine and make a complete restoration of the subject property.

  3. Whether the nature of the complaint is for rescission of contract, not ejectment, over which the Metropolitan Trial Court, Pasay City did not have jurisdiction.

  4. Whether the Court of Appeals erred in directing that respondent MMB, Inc. be restored in possession of the leased premises.

  5. Whether the Court of Appeals erred in immediately executing its resolution transferring possession of the property from petitioners to respondent MMB, Inc. by a "special sheriff".

  6. Whether the Court of Appeals erred in declaring petitioners guilty of indirect contempt of court, and sentencing them to pay a fine of P30,000.00.

  7. Whether the Court of Appeals had good reasons to justify the premature execution of its decision.

  8. Whether bad faith and malice can be imputed to the petitioners for insisting on their rights and exhausting judicial remedies.

  9. Whether the Court of Appeals had the authority to appoint a special sheriff.

RULING:

  1. The Supreme Court granted the petition and nullified the resolution of the Court of Appeals allowing execution pending appeal and the writ of execution issued pursuant thereto. The Court held that the Court of Appeals committed grave abuse of discretion in granting the petition for execution pending appeal since the private respondents failed to establish the existence of special, exceptional, or compelling reasons to justify such execution. The Court also ruled that the Court of Appeals erred in issuing the writ of execution and restoring possession to the private respondent without conducting a hearing as required under Section 2(a), Rule 39 of the 1997 Rules of Civil Procedure.

  2. The Supreme Court nullified the finding of indirect contempt and the order for petitioners to pay a fine and make a complete restoration of the subject property. The Court held that the Court of Appeals acted with undue haste in finding the petitioners guilty of indirect contempt without giving them an opportunity to explain or present their side, and without conducting a proper hearing. The Court emphasized that the power to punish for contempt should be exercised judiciously and with great caution, and that the constitutional right to due process requires that the accused be given the opportunity to be heard and to defend himself before any penalty is imposed upon him.

  3. The Court finds the petitions meritorious. It rules that there is no need for a judicial rescission of the lease contract between the lessors and the lessee. The Court upholds the provision of the contract in which the lessors may, in their absolute discretion, declare the contract cancelled and terminated and require the tenant to vacate the leased premises in the event of default or breach of any condition of the contract. The Court holds that the parties are bound by the terms of their lease contract, as long as it is not contrary to law, morals, good customs, public policy, or public order.

  4. As for the issue of contempt, the Court finds that the petitioners acted in good faith in implementing the writ of execution and demolishing the improvements on the property. The temporary restraining order had already lapsed, and no further restraining order was in effect. The Court emphasizes that the power to punish for contempt must be exercised judiciously and sparingly, with utmost self-restraint.

  5. No. The reasons given by the Court of Appeals, such as the deprivation of the respondent's income, the clogged dockets of the appellate courts, and the alleged bad faith and malice of the petitioners, were not "good" enough to warrant the premature execution of the decision. The financial condition of the respondent is not a compelling circumstance for immediate execution, public knowledge of court congestion mocks the integrity and competence of the Supreme Court, and good faith is always presumed.

  6. No. Bad faith and malice cannot be imputed to the petitioners for insisting on their rights and exhausting judicial remedies. Good faith is always presumed, and the mere filing of a petition for review with the Supreme Court stays the finality of the Court of Appeals' decision.

  7. No. The Court of Appeals had no authority to appoint a special sheriff. The appointment of an employee from the mailing section, who was not even bonded as required by law, was an encroachment on the authority of the Supreme Court. The concerned members of the Court of Appeals may be held liable for disciplinary action.

PRINCIPLES:

  • Execution pending appeal may only be allowed if there exist special, exceptional, or compelling reasons that warrant such execution. The party seeking execution pending appeal has the burden of proving the existence of such reasons.

  • A hearing is required before a court can grant a petition for execution pending appeal, in accordance with Section 2(a), Rule 39 of the 1997 Rules of Civil Procedure.

  • The power to punish for contempt should be exercised judiciously, with great caution, and in accordance with due process. The accused should be given the opportunity to be heard and to defend himself before any penalty is imposed upon him.

  • Contracts are respected as the law between the contracting parties, and they may establish stipulations, clauses, terms, and conditions, as long as they are not contrary to law, morals, good customs, public policy, or public order.

  • Parties may enter into agreements providing for the cancellation or rescission of a contract without judicial intervention if such violation of the contract's terms is agreed upon.

  • The power to punish for contempt must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment.

  • Discretionary execution is allowed pending appeal of a judgment or final order of the trial court upon good reasons to be stated in a special order after due hearing. However, a judgment of the Court of Appeals cannot be executed pending appeal. Execution can only be sought after the judgment has become final and executory.

  • Premature execution of a judgment requires "good reasons" that justify the urgency, such as the deterioration of commodities subject to litigation or the deteriorating condition of properties left unattended.

  • The financial condition of a party is not a compelling circumstance for immediate execution.

  • Public knowledge of court congestion should not be used as a justification for premature execution as it undermines the integrity and competence of the judiciary.

  • Lower courts have a duty to obey decisions of the Supreme Court and render obeisance to its position as the apex of the hierarchy of courts.

  • Urgency resulting from years of delay in the disposal of a case is not a good reason for premature execution.

  • Bad faith and malice cannot be imputed to parties simply for insisting on their rights and exhausting judicial remedies.

  • Filing a petition for review with the Supreme Court stays the finality of the Court of Appeals' decision.

  • The Court of Appeals does not have the authority to appoint a special sheriff.

  • Excessive exercise of authority by illegally appointing a special sheriff may result in disciplinary action.