Rule 57-61 Cases

Preliminary attachment
PCL Industries v. CA. G.R. No. 147970, 486 SCRA 214, 31 March 2006
G.R. No. 147970
March 31, 2006
PCL Industries Manufacturing Corporation, Petitioner,
vs.
The COURT OF APPEALS and ASA Color & Chemical Industries, Inc.,
Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for certiorari seeking the reversal of the Decision1 of the Court
of Appeals (CA) promulgated on February 21, 2001, which affirmed the Decision of the
Regional Trial Court (RTC) of Quezon City, Branch 226; and the CA Resolution dated
May 9, 2001 denying petitioners motion for reconsideration.
The antecedent facts are as follows:
On October 10, 1995, private respondent filed a complaint with the RTC for Sum of
Money with Preliminary Attachment against herein petitioner. Private respondent claims
that during the period from January 18, 1994 to April 14, 1994, petitioner purchased and
received from it various printing ink materials with a total value of P504,906.00, payable
within 30 days from the respective dates of invoices; and that petitioner, in bad faith,
failed to comply with the terms of the sale and failed to pay its obligations despite
repeated verbal and written demands.
Petitioner was served with summons together with the Writ of Preliminary Attachment on
October 20, 1995. On October 23, 1995, petitioner filed a Motion to Dissolve and/or
Discharge Writ of Preliminary Attachment. On November 20, 1995, the trial court issued
an Order denying petitioners motion to dissolve the writ of preliminary attachment.
Petitioners motion for reconsideration of said order was also denied per Order dated
January 2, 1996. Petitioner no longer elevated to the higher courts the matter of the
propriety of the issuance of the writ of preliminary attachment.
In the meantime, on October 30, 1995, petitioner filed its Answer with Counterclaim.
Petitioner claims that the various printing ink materials delivered to it by private
respondent were defective and sometime in August, October, and November of 1993,
they have returned ink materials to private respondent as shown by several Transmittal
Slips. Nevertheless, petitioner admits that it continued to buy ink materials from private
respondent in 1994 despite having rejected ink materials delivered by private respondent
in 1993. Petitioner, however, insists that the ink materials delivered by private
respondent in 1994 were also defective and they made known their complaints to
Frankie, the authorized representative of private respondent. In a letter dated June 30,
1995, petitioner informed private respondent that it had been complaining to its (private
respondents) representative about the quality of the ink materials but nothing was done
to solve the matter. Private respondent replied through a letter dated July 16, 1995, that
it was giving petitioner the option to return the products delivered, "sealed and unused"
within one week from receipt of said letter or pay the full amount of its obligation.
Petitioner answered in a letter dated September 26, 1995, that private respondent
should pick up at its plant the remaining unused defective ink materials, and requested
to meet with private respondent to thresh out the matter. No meeting was ever held.
Petitioner further claims that it suffered damages in the amount of P1,592,794.50
because its customers rejected the finished plastic products it delivered, complaining of
the bad smell, which, according to petitioner, was caused by the defective ink materials
supplied by private respondent.
After trial on the merits, the trial court rendered its Decision dated January 8, 1999, the
dispositive portion of which reads thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff.
Defendant PCL Industries Manufacturing Corporation is hereby ordered to pay plaintiff:
1) P504,906.00 plus 20% interest per annum from April 1994 until fully paid;
2) 25% of the above amount as and for attorneys fees; and
3) cost of suit.
The counterclaim of defendant is hereby dismissed for insufficiency of evidence.
SO ORDERED.2
The RTC Decision was appealed by herein petitioner to the CA. On February 21, 2001,
the CA promulgated its Decision affirming the RTC judgment. The CA held that there
was sufficient evidence to prove that herein petitioner had the intention of defrauding
private respondent when it contracted the obligation because it agreed to pay within 30
days from the date of purchase but once the merchandise was in its possession, it
refused to pay. Furthermore, the CA ruled that the issue on the propriety of the issuance
of the writ of preliminary attachment should be laid to rest since petitioner no longer
questioned the trial courts orders before the higher courts.
As to the alleged defect of the ink delivered by private respondent, both the trial court
and the CA found that the evidence presented by petitioner was insufficient to prove that
it was indeed the ink from private respondent which caused the unwanted smell in
petitioners finished plastic products. The trial courts analysis of the evidence led it to
the following conclusions, to wit:
[D]efendant presented transmittal receipts, which allegedly represent the items returned
by defendant [herein petitioner] to plaintiff [herein respondent].
xxxx
A closer look at these three transmittal receipts would readily show that they are all for
deliveries made in 1993, whereas the items admittedly received by defendant and listed
in paragraph 2 of the Complaint are all delivered and dated from January 18, 1994 to
April 14, 1994.
The items, therefore, returned for being defective and communicated by defendant to
plaintiff are for those printing ink materials delivered in 1993 and these are not the items
left unpaid and in issue in this present Complaint.
There is no other proof of demand made by defendant to plaintiff corporation as to
communicate to plaintiff any defect in the printing ink materials delivered in 1994 except
the demand letter (Exhibit "42") which is dated September 26, 1995.
As admitted by defendants witness, Eleno Cayabyab, the demands made by Mr.
Jovencio Lim to plaintiff had been oral or verbal only and made only on two occasions. In
fact said witness cannot remember exactly when these oral demands were made by Mr.
Jovencio Lim, x x x
xxxx
As regards the testimony of defendants witness Jovencio Lim that defendants endusers returned the plastic packaging materials to defendant and defendant had to
reimburse its clients of the amount paid by them and defendant allegedly suffered
damages, defendant failed to present sufficient evidence of this allegation. x x x3
Affirming the foregoing findings of the trial court, the CA further noted that:
As may be observed, as early as January 31, 1994, the appellant [herein petitioner] had
received complaints from its customers about the alleged unwanted smell of their plastic
products. However, no steps were taken to investigate which of its several suppliers
delivered the defective ink and, if indeed, the appellees ink materials were the cause of
the smell, no immediate communications were sent to the latter. On the contrary, it
(appellant) continued to place orders and receive deliveries from the appellee. Worse,
the appellant failed to convincingly show that the appellant stopped using the
subject ink materials upon notice of its customers of the alleged unwanted smell
of the products. Conversely, the appellant continued using the same in their
production of plastic materials which would only show that the cause of the
alleged stinking smell cannot be attributed to the subject ink materials used. The
appellant tried to convince us that the subject ink materials were the same ink delivered
by the appellee and used in the products that were returned because of the unwanted
smell. However, its evidence fails to impress us.
There is no indication that the plasticized pouches printed by the defendantappellant and returned by its customers were printed with the use of the paint
delivered by the plaintiff-appellee. The formers evidence on this point are either
self-serving or unreliable, or totally unworthy of credence, as shown by the
following:
1) The "work process" forms contain the names of two (2) or three (3) suppliers,
as shown by the following:
Exh. "12" STOCK/ASA
"13" SIMCOR/ASA
"14" - SIMCOR/ASA
"15" - SIMCOR/ASA
"16" - SYNPAC/ASA
"17" - SYNPAC/ASA
"18" - SYNPAC/ASA
"19" - SYNPAC/ASA
"20" - SYNPAC/ASA/CDI
"21" - SYNPAC/ASA
This is an indication that the supplier of the obnoxious paint materials has not been
properly identified or pinpointed.
2) The "Memorandum" to the appellants Production Department from its
Records/Receiving Section is an internal memo that does not indicate which of
their several suppliers delivered the "inferior quality of ink". No witness from the
appellants Production Department was presented to attest that the ink supplied
by the appellee was found defective. Not even the person who prepared the said
"Work Process" sheets was presented to explain the entries thereon.
3) Exhibits "30", "31" and "32" are supposedly memos from Frank F. Tanos of the
Omega Manufacturing (one of the appellants customers), alleging that they have
rejected certain printed materials due to "unwanted smell". Again, these memos do not
indicate the source of such unwanted smell. In any case, the memos were respectively
dated June 15, 1994, July 15, 1994 and March 30, 1995 - - which dates are too far away
from the deliveries made by the appellee.
4) The defendant-appellant made returns of ink products to the appellee much earlier on
August 3, 1993, August 6, 1993, October 13, 1993 and November 3, 1993 as shown by
the delivery receipts/return slips of such dates. According to the appellee, these were
samples that were really returnable if not acceptable. This explanation appears to be
plausible, since the quantity involved appears to be unusually low, compared to the
questioned and unpaid deliveries. At any rate, no similar delivery receipts or return slips
were presented to show that the subject ink materials were indeed rejected and returned
by the appellant to the appellee. On the contrary, the appellant admits that they still have
them in their possession for the reason that they were not picked up by the appellees
representative. Such reasoning appears to be shallow and unworthy of credence. For if
the materials were indeed not picked up within a reasonable time by the appellees
representative, the appellant should have taken steps to return them; otherwise they will
be held liable for the value thereof.

5) The defendant-appellant never made any written or formal complaint about the
alleged inferior quality ink and no steps were taken to demand restitution or rectification.
Its letter dated June 30, 1995 was the first time it made a communication to the
appellee about the alleged inferior quality of the ink delivered by the latter. This
letter was its answer to the appellees letter of demand for payment. Obviously,
the appellants letter was written to serve as an excuse for its failure to pay for its
contractual obligations. In any case, as a reaction to such letter, the appellee dared
the appellant to return the materials within one week, through its letter of July 16, 1995.
Obviously, no such return was made.4 (Emphasis supplied)
Petitioner then filed the present petition for review on certiorari on the following grounds:
I.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION IN ISSUING A WRIT OF PRELIMINARY ATTACHMENT EX PARTE
WITHOUT ANY LEGAL BASIS AND ON GROUNDS NOT AUTHORIZED UNDER RULE
57 OF THE RULES OF COURT
II.
THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AS ITS JUDGMENT WAS BASED ON A MISAPPREHENSION OF
FACTS AND ITS FINDINGS ARE NOT SUPPORTED BY THE EVIDENCE EXTANT IN
THE RECORDS OF THIS CASE
III.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT REVERSING THE RULING OF THE TRIAL COURT 5
First of all, although the petition states that it is one for certiorari under Rule 65 of the
Rules of Court as it imputes grave abuse of discretion committed by the CA, the Court
shall treat the petition as one for review on certiorari under Rule 45, considering that it
was filed within the reglementary period for filing a petition for review on certiorari and
the issues and arguments raised basically seek the review of the CA judgment.
Secondly, it should be pointed out that petitioner mistakenly stated that it was the CA
that issued the writ of preliminary attachment. Said writ was issued by the trial court. On
appeal, the CA merely upheld the trial courts order, ruling that the applicants (herein
private respondents) affidavit was sufficient basis for the issuance of the writ because it
stated that petitioner had the intention of defrauding private respondent by agreeing to
pay its purchases within 30 days but then refused to pay the same once in possession of
the merchandise.
The Court, however, finds the issuance of the Writ of Preliminary Attachment to be
improper. In Philippine Bank of Communications v. Court
of Appeals,6 the Court held thus:
Petitioner cannot insist that its allegation that private respondents failed to remit
the proceeds of the sale of the entrusted goods nor to return the same is
sufficient for attachment to issue. We note that petitioner anchors its application upon
Section 1(d), Rule 57. This particular provision was adequately explained in Liberty
Insurance Corporation v. Court of Appeals, as follows
To sustain an attachment on this ground, it must be shown that the debtor in contracting
the debt or incurring the obligation intended to defraud the creditor. The fraud must
relate to the execution of the agreement and must have been the reason which induced
the other party into giving consent which he would not have otherwise given. To
constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud
should be committed upon contracting the obligation sued upon. A debt is fraudulently
contracted if at the time of contracting it the debtor has a preconceived plan or
intention not to pay, as it is in this case. Fraud is a state of mind and need not be
proved by direct evidence but may be inferred from the circumstances attendant in each
case (Republic v. Gonzales, 13 SCRA 633). (Emphasis ours)
We find an absence of factual allegations as to how the fraud alleged by petitioner was
committed. As correctly held by respondent Court of Appeals, such fraudulent intent
not to honor the admitted obligation cannot be inferred from the debtors inability
to pay or to comply with the obligations.7 (Emphasis supplied)
More recently, in Philippine National Construction Corporation v. Dy,8 the Court ruled
that the following allegations in an affidavit to support the application for a Writ of
Preliminary Attachment is insufficient, to wit:
Radstock grounded its application for a Writ of Preliminary Attachment on Section 1 (d)
and (e) of Rule 57 of the Rules of Court which provides:
SECTION 1. Grounds upon which attachment may issue. A plaintiff or any proper party
may, at the commencement of the action or at any time thereafter, have the property of
the adverse party attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
...
(d) In an action against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about
to do so, with intent to defraud his creditors;
...
In support of these grounds, the affidavit of merit alleged the following:
3. Despite repeated demands and periodic statements of accounts sent to PNCC for the
settlement of the credit obligation Yen 5.46 Billion, its interests and penalties within three
(3) days from demand in writing, and in the case of credit obligation for P20,000,000
which PNCC had agreed to punctually liquidate the said advances to its subsidiary,
PNCC failed to pay and honor its obligations herein stated.
xxxx
5. That PNCC knowing that it is bankrupt and that it does not have enough assets to
meet its existing obligations is now offering for sale its assets as shown in the reports
published in newspapers of general circulation.
6. That the above series of acts as enumerated in paragraphs 3, 4 and 5[,] Marubeni
believes, constitute fraud on the part of PNCC in contracting the obligations mentioned
herein and will surely prejudice its creditors.
xxxx
We do not see how the above allegations, even on the assumption they are all true, can
be considered as falling within sub-paragraphs (d) and (e). The first three assert, in
essence, that PNCC has failed to pay its debt and is offering for sale its assets knowing
that it does not have enough to pay its obligations. As previously held, fraudulent
intent cannot be inferred from a debtors inability to pay or comply with
obligations. Also, the fact that PNCC has insufficient assets to cover its
obligations is no indication of fraud even if PNCC attempts to sell them because it
is quite possible that PNCC was entering into a bona fide good faith sale where at
least fair market value for the assets will be received. In such a situation,
Marubeni would not be in a worse position than before as the assets will still be
there but just liquidated. Also, that the Financial Statements do not reflect the loan
obligation cannot be construed as a scheme to defraud creditors.
As to the last two paragraphs, these merely stated that while PNCC continued to
receive revenues from toll charges and other loan obligations the debt to
Marubeni remained unpaid. Again, no fraud can be deduced from these acts. While
these may be sufficient averments to be awarded damages once substantiated by

competent evidence and for which a writ of execution will issue, they are not sufficient
to obtain the harsh provisional remedy of preliminary attachment which requires
more than mere deliberate failure to pay a debt. (Emphasis supplied)
Similarly, in this case, the bare allegations in the applicants affidavit, to wit:
6. PCL Industries Manufacturing Corporation, after receiving the above printing ink
materials acted in bad faith when it failed to comply with the terms and conditions of the
sale thereby prejudicing the interest of Asa Color & Chemical Industries, Inc.
xxxx
10. Defendant [herein petitioner] was guilty of fraud in contracting the obligation when he
[sic] agreed to pay the purchases within 30 days from date of purchases but once in
possession of the merchandise, refused to pay his just and valid obligation thereby using
the capital of plaintiff [herein private respondent] to the latters prejudices [sic]. 9
are insufficient to prove that petitioner was guilty of fraud in contracting the debt or
incurring the obligation. The affidavit does not contain statements of other factual
circumstances to show that petitioner, at the time of contracting the obligation, had a
preconceived plan or intention not to pay. Verily, in this case, the mere fact that
petitioner failed to pay its purchases upon falling due and despite several demands
made by private respondent, is not enough to warrant the issuance of the harsh
provisional remedy of preliminary attachment.
However, with regard to the other issues raised in this petition, the Court finds the same
unmeritorious.
This Court reiterated in Child Learning Center, Inc. v. Tagario,10 the well-settled rule that:
Generally, factual findings of the trial court, affirmed by the Court of Appeals, are
final and conclusive and may not be reviewed on appeal. The established
exceptions are: (1) when the inference made is manifestly mistaken, absurd or
impossible; (2) when there is grave abuse of discretion; (3) when the findings are
grounded entirely on speculations, surmises or conjectures; (4) when the judgment of
the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact
are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant and
appellee; (7) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (8) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (9) when the findings of fact of the Court of
Appeals are premised on the absence of evidence and are contradicted by the evidence
on record. (Emphasis supplied)
Petitioner insists that the CA should have given weight to its evidence, i.e., the work
processes (Exhibits "12" to "21"), which supposedly proved that respondent ASA
supplied the ink that caused the unpleasant smell of petitioners finished products.
Petitioner argues that the CA erred in concluding that the work processes failed to prove
that the defective ink definitely came from respondent because said documents showed
not only the name of respondent ASA Color as supplier, but also the names of several
other suppliers. Petitioner now tries to explain that the other names of suppliers
appearing on the work processes were suppliers of plastic materials, so the only supplier
of ink appearing on said documents is respondent ASA. It is further pointed out that, as
testified by Jovencio Lim (Lim), petitioners President, during the period covered by the
Work Processes, they had only two suppliers of ink, CDI Sakada and respondent ASA
Color.
The Court subjected the records of this case to close scrutiny, but found that petitioners
allegation that the CA judgment is based on misapprehension of facts, is absolutely
unfounded.
There is no testimonial evidence whatsoever to support petitioners belated
explanation that the other names of suppliers appearing on the work processes
are suppliers of plastic materials and not ink. Moreover, petitioners witnesses
contradict each other. Lim claims that during the period covered by the work processes,
they had only 2 suppliers of ink, namely, CDI Sakada and ASA Color.11 On the other
hand, contrary to Lims claim, Victor Montaez, petitioners Head of the Accounting
Department, testified that at that time, they had three or four suppliers of ink materials.12
The work process form dated April 29, 1994 marked as Exhibit "20" also listed the
suppliers as "SYNPAC/ASA/ CDI," and the colors used as "Brown-ASA" and "YellowCDI." Hence, petitioners own evidence reveals that there were at least two suppliers of
ink for that batch of production, as Lim has stated that both ASA and CDI are suppliers
of ink materials.13 Hence, the CA was correct in ruling that petitioners evidence failed to
prove that it was indeed respondent ASA Color who supplied the defective ink.
Having failed to prove that the ink materials delivered by respondent were defective,
petitioner does not have any basis for claiming the right to return and not pay for the
materials it purchased from respondent. It is, therefore, no longer necessary to discuss
whether it was the obligation of respondent to pick-up the ink from petitioners
warehouse.
Petitioner is likewise wrong in assuming that the CA totally disregarded the testimony of
Frank Tanos (Tanos) who withdrew his testimony on February 24, 1998, or almost a
year after testifying that petitioners plastic products were rejected by customers due to
the bad smell of paint. The CA made no ruling on the admissibility of Tanos testimony.
The appellate court merely stated that the memos (Exhibits "30"-"32") from said witness
also do not prove the source of the unwanted smell. Thus, the CA obviously considered
Tanos testimony and the documents he identified for whatever they were worth, but still
found them unconvincing to prove petitioners claim that it was respondent who delivered
defective ink materials.
Clearly, the findings of fact of both the trial court and the CA, as quoted above, are
strongly rooted on testimonial and documentary evidence submitted by both parties. This
case evidently does not fall under any of the enumerated exceptions to the general rule
that factual findings of the trial court, affirmed by the CA, are final and conclusive and
may not be reviewed on appeal.
IN VIEW OF THE FOREGOING, the petition is partly GRANTED. Insofar as the
issuance of the Writ of Attachment is concerned, the Court finds the same improper,
hence, the attachment over any property of petitioner by the writ of preliminary
attachment is ordered LIFTED effective upon the finality of this Decision. In all other
respects, the Decision of the Court of Appeals dated February 21, 2001 and its
Resolution dated May 9, 2001 are AFFIRMED.
SO ORDERED.
Metro Inc. et al v. Laras Gifts, G.R. No. 171741, 606 SCRA 175, 27 November 2009
METRO, INC. and
SPOUSES FREDERICK JUAN
and LIZA JUAN,
Petitioners,
- versus -
G.R. No. 171741

Present:
CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,*
BRION,
DEL CASTILLO, and
ABAD, JJ.
LARAS GIFTS AND

DECORS, INC.,
LUIS VILLAFUERTE, JR.
and LARA MARIA R.
Promulgated:
VILLAFUERTE,
Respondents.
November 27, 2009
x---------------------------------- ----------------x
DECISION
CARPIO, J.:
The Case
This is a petition for review[if !supportFootnotes][1][endif] of the 29 September 2004 Decision[if
and 2 March 2006 Resolution[if !supportFootnotes][3][endif] of the Court of
Appeals in CA-G.R. SP No. 79475. In its 29 September 2004 Decision, the Court of
Appeals granted the petition for certiorari of respondents Laras Gifts and Decors, Inc.,
Luis Villafuerte, Jr., and Lara Maria R. Villafuerte (respondents). In its 2 March 2006
Resolution, the Court of Appeals denied the motion for reconsideration of petitioners
Metro, Inc., Frederick Juan and Liza Juan (petitioners).
!supportFootnotes][2][endif]
The Facts
Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations engaged in the
business of manufacturing, producing, selling and exporting handicrafts. Luis Villafuerte,
Jr. and Lara Maria R. Villafuerte are the president and vice-president of LGD
respectively. Frederick Juan and Liza Juan are the principal officers of Metro, Inc.
Sometime in 2001, petitioners and respondents agreed that respondents would
endorse to petitioners purchase orders received by respondents from their buyers in the
United States of America in exchange for a 15% commission, to be shared equally by
respondents and James R. Paddon (JRP), LGDs agent. The terms of the agreement
were later embodied in an e-mail labeled as the 2001 Agreement.[if !supportFootnotes][4][endif]
In May 2003, respondents filed with the Regional Trial Court, Branch 197, Las
Pias City (trial court) a complaint against petitioners for sum of money and damages
with a prayer for the issuance of a writ of preliminary attachment. Subsequently,
respondents filed an amended complaint[if !supportFootnotes][5][endif] and alleged that, as of July
2002, petitioners defrauded them in the amount of $521,841.62. Respondents also
prayed for P1,000,000 as moral damages, P1,000,000 as exemplary damages and 10%
of the judgment award as attorneys fees. Respondents also prayed for the issuance of
a writ of preliminary attachment.
In its 23 June 2003 Order,[if !supportFootnotes][6][endif] the trial court granted respondents
prayer and issued the writ of attachment against the properties and assets of
petitioners. The 23 June 2003 Order provides:
WHEREFORE, let a Writ of Preliminary Attachment issue against the properties
and assets of Defendant METRO, INC. and against the properties and assets of
Defendant SPOUSES FREDERICK AND LIZA JUAN not exempt from execution, as
may be sufficient to satisfy the applicants demand of US$521,841.62 US Dollars or its
equivalent in Pesos upon actual attachment, which is about P27 Million, unless such
Defendants make a deposit or give a bond in an amount equal to P27 Million to satisfy
the applicants demand exclusive of costs, upon posting by the Plaintiffs of a Bond for
Preliminary Attachment in the amount of twenty five million pesos (P25,000,000.00),
subject to the approval of this Court.
SO ORDERED.[if !supportFootnotes][7][endif]
On 26 June 2003, petitioners filed a motion to discharge the writ of
attachment. Petitioners argued that the writ of attachment should be discharged on the
following grounds: (1) that the 2001 agreement was not a valid contract because it did
not show that there was a meeting of the minds between the parties; (2) assuming that
the 2001 agreement was a valid contract, the same was inadmissible because
respondents failed to authenticate it in accordance with the Rules on Electronic
Evidence; (3) that respondents failed to substantiate their allegations of fraud with
specific acts or deeds showing how petitioners defrauded them; and (4) that
respondents failed to establish that the unpaid commissions were already due and
demandable.
After considering the arguments of the parties, the trial court granted petitioners
motion and lifted the writ of attachment. The 12 August 2003 Order[if !supportFootnotes][8][endif]
of the trial court provides:
Premises considered, after having taken a second hard look at the Order dated
June 23, 2003 granting plaintiffs application for the issuance of a writ of preliminary
attachment, the Court holds that the issuance of a writ of preliminary attachment in this
case is not justified.
WHEREFORE, the writ of preliminary attachment issued in the instant

case is hereby ordered immediately discharged and/or lifted.
Respondents filed a motion for reconsideration. In its 10 September 2003 Order,

the trial court denied the motion.
Respondents filed a petition for certiorari before the Court of
Appeals. Respondents alleged that the trial court gravely abused its discretion when it
ordered the discharge of the writ of attachment without requiring petitioners to post a
counter-bond.
In its 29 September 2004 Decision, the Court of Appeals granted respondents
petition. The 29 September 2004 Decision provides:
WHEREFORE, finding merit in the petition, We GRANT the same. The assailed
Orders are hereby ANNULLED and SET ASIDE. However, the issued Writ of
Preliminary Attachment may be ordered discharged upon the filing by the private
respondents of the proper counter-bond pursuant to Section 12, Rule 57 of the Rules of
Civil Procedure.
Petitioners filed a motion for reconsideration. In its 2 March 2006 Resolution, the
Court of Appeals denied the motion.
Hence, this petition.
The 12 August 2003 Order of the Trial Court
According to the trial court, respondents failed to sufficiently show that petitioners
were guilty of fraud either in incurring the obligation upon which the action was brought,
or in the performance thereof. The trial court found no proof that petitioners were
motivated by malice in entering into the 2001 agreement. The trial court also declared
that petitioners failure to fully comply with their obligation, absent other facts or
circumstances to indicate evil intent, does not automatically amount to
fraud. Consequently, the trial court ordered the discharge of the writ of attachment for
lack of evidence of fraud.
The 29 September 2004 Decision of the Court of Appeals
According to the Court Appeals, the trial court gravely abused its discretion when it
ordered the discharge of the writ of attachment without requiring petitioners to post a
counter-bond. The Court of Appeals said that when the writ of attachment is issued
upon a ground which is at the same time also the applicants cause of action, courts are
precluded from hearing the motion for dissolution of the writ when such hearing would
necessarily force a trial on the merits of a case on a mere motion.[if
The Court of Appeals pointed out that, in this case, fraud was not
only alleged as the ground for the issuance of the writ of attachment, but was actually
the core of respondents complaint. The Court of Appeals declared that the only way
that the writ of attachment can be discharged is by posting a counter-bond in
accordance with Section 12,[if !supportFootnotes][12][endif] Rule 57 of the Rules of Court.
The Issue
Petitioners raise the question of whether the writ of attachment issued by the trial
court was improperly issued such that it may be discharged without the filing of a
counter-bond.
The Ruling of the Court
The petition has no merit.
Petitioners contend that the writ of attachment was improperly issued because
respondents amended complaint failed to allege specific acts or circumstances
constitutive of fraud. Petitioners insist that the improperly issued writ of attachment may
be discharged without the necessity of filing a counter-bond. Petitioners also argue that
respondents failed to show that the writ of attachment was issued upon a ground which
is at the same time also respondents cause of action. Petitioners maintain that
respondents amended complaint was not an action based on fraud but was a simple
case for collection of sum of money plus damages.
On the other hand, respondents argue that the Court of Appeals did not err in
ruling that the writ of attachment can only be discharged by filing a counterbond. According to respondents, petitioners cannot avail of Section 13,[if
Rule 57 of the Rules of Court to have the attachment set aside
because the ground for the issuance of the writ of attachment is also the basis of
respondents amended complaint. Respondents assert that the amended complaint is a
complaint for damages for the breach of obligation and acts of fraud committed by
petitioners.
In this case, the basis of respondents application for the issuance of a writ of
preliminary attachment is Section 1(d), Rule 57 of the Rules of Court which provides:
SEC. 1. Grounds upon which attachment may issue. At the commencement of
the action or at any time before entry of judgment, a plaintiff or any proper party may
have the property of the adverse party attached as security for the satisfaction of any
judgment that maybe recovered in the following cases: x x x
(d) In an action against a party who has been guilty of fraud in contracting the
debt or incurring the obligation upon which the action is brought, or in the performance
thereof; x x x
In Liberty Insurance Corporation v. Court of Appeals,[if
explained:
we
To sustain an attachment on this ground, it must be shown that the debtor in

contracting the debt or incurring the obligation intended to defraud the creditor. The
fraud must relate to the execution of the agreement and must have been the reason
which induced the other party into giving consent which he would not have otherwise
given. To constitute a ground for attachment in Section 1(d), Rule 57 of the Rules of
Court, fraud should be committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor has a preconceived plan
or intention not to pay, as it is in this case.[if !supportFootnotes][15][endif]
The applicant for a writ of preliminary attachment must sufficiently show the factual
circumstances of the alleged fraud because fraudulent intent cannot be inferred from the
debtors mere non-payment of the debt or failure to comply with his obligation.[if
In their amended complaint, respondents alleged the following in support of their

prayer for a writ of preliminary attachment:
5. Sometime in early 2001, defendant Frederick Juan approached plaintiff spouses
and asked them to help defendants export business. Defendants enticed plaintiffs to
enter into a business deal. He proposed to plaintiff spouses the following:
a. That plaintiffs transfer and endorse to defendant Metro some

of
the Purchase Orders (POs) they will receive from their US
buyers;
b. That defendants will sell exclusively and only thru plaintiffs for their US
buyer;
xxx
6. After several discussions on the matter and further inducement on the part of
defendant spouses, plaintiff spouses agreed. Thus, on April 21, 2001, defendant
spouses confirmed and finalized the agreement in a letter-document entitled 2001
Agreement they emailed to plaintiff spouses, a copy of which is hereto attached as
Annex A.
xxx
20. Defendants are guilty of fraud committed both at the inception of
the agreement and in the performance of the obligation. Through
machinations and schemes, defendants successfully enticed
plaintiffs to enter into the 2001 Agreement. In order to secure
plaintiffs full trust in them and lure plaintiffs to endorse more
POs and increase the volume of the orders, defendants during the
early part, remitted to plaintiffs shares under the Agreement.
21. However, soon thereafter, just when the orders increased and the
amount involved likewise increased, defendants suddenly, without
any justifiable reasons and in pure bad faith and fraud, abandoned
their contractual obligations to remit to plaintiffs their
shares. And worse, defendants transacted directly with
plaintiffs foreign buyer to the latters exclusion and
damage. Clearly, defendants planned everything from the
beginning, employed ploy and machinations to defraud plaintiffs,
and consequently take from them a valuable client.
22. Defendants are likewise guilty of fraud by violating the trust

and confidence reposed upon them by plaintiffs. Defendants
received the proceeds of plaintiffs LCs with the clear
obligation of remitting 15% thereof to the plaintiffs. Their
refusal and failure to remit the said amount despite demand
constitutes a breach of trust amounting to malice and fraud.[if
(Emphasis and underscoring in the original)
(Boldfacing and italicization supplied)
We rule that respondents allegation that petitioners undertook to sell exclusively

and only through JRP/LGD for Target Stores Corporation but that petitioners transacted
directly with respondents foreign buyer is sufficient allegation of fraud to support their
application for a writ of preliminary attachment. Since the writ of preliminary attachment
was properly issued, the only way it can be dissolved is by filing a counter-bond in
accordance with Section 12, Rule 57 of the Rules of Court.
Moreover, the reliance of the Court of Appeals in the cases of Chuidian v.
Sandiganbayan,[if !supportFootnotes][18][endif] FCY Construction Group, Inc. v. Court of Appeals,[if
and Liberty Insurance Corporation v. Court of Appeals[if
is proper. The rule that when the writ of attachment is issued upon a
ground which is at the same time the applicants cause of action, the only other way the
writ can be lifted or dissolved is by a counter-bond[if !supportFootnotes][21][endif] is applicable in
this case. It is clear that in respondents amended complaint of fraud is not only alleged
as a ground for the issuance of the writ of preliminary attachment, but it is also the core
of respondents complaint. The fear of the Court of Appeals that petitioners could force
a trial on the merits of the case on the strength of a mere motion to dissolve the
attachment has a basis.
WHEREFORE, we DENY the petition. We AFFIRM the
29 September
2004 Decision and 2 March 2006 Resolution of the Court of Appeals in CA-G.R. SP No.
79475.
SO ORDERED.
Davao Light and Power Co., Inc. vs. CA, G.R. No. 93262, 204 SCRA 343, 29
November 1991
G.R. No. 93262 December 29, 1991
DAVAO LIGHT & POWER CO., INC., petitioner,
vs.
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND
TOURIST INN, and TEODORICO ADARNA, respondents.
Breva & Breva Law Offices for petitioner.
Goc-Ong & Associates for private respondents.
NARVASA, J.:p
Subject of the appellate proceedings at bar is the decision of the Court of Appeals in CAG.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light &
Power Co., Inc.," promulgated on May 4, 1990. 1 That decision nullified and set aside
the writ of preliminary attachment issued by the Regional Trial Court of Davao City 2 in
Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.), before
the service of summons on the defendants (herein respondents Queensland Co., Inc.
and Adarna).
Following is the chronology of the undisputed material facts culled from the Appellate
Tribunal's judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed a
verified complaint for recovery of a sum of money and damages against Queensland
Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The complaint
contained an ex parte application for a writ of preliminary attachment.
2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle,
issued an Order granting the ex parte application and fixing the attachment bond at
P4,600,513.37.
3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the writ
of attachment issued.
4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of
attachment and a copy of the attachment bond, were served on defendants Queensland
and Adarna; and pursuant to the writ, the sheriff seized properties belonging to the latter.
5. On September 6, 1989, defendants Queensland and Adarna filed a motion to
discharge the attachment for lack of jurisdiction to issue the same because at the time
the order of attachment was promulgated (May 3, 1989) and the attachment writ issued
(May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and over
the persons of the defendants.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
attachment.
7. On September 19, 1989, the Trial Court issued an Order denying the motion to
discharge.
This Order of September 19, 1989 was successfully challenged by Queensland and
Adarna in a special civil action of certiorari instituted by them in the Court of Appeals.
The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May
4, 1990. The Appellate Court's decision closed with the following disposition:
. . . the Orders dated May 3, 1989 granting the issuance of a writ of preliminary
attachment, dated September 19, 1989 denying the motion to discharge attachment;
dated November 7, 1989 denying petitioner's motion for reconsideration; as well as all
other orders emanating therefrom, specially the Writ of Attachment dated May 11, 1989
and Notice of Levy on Preliminary Attachment dated May 11, 1989, are hereby declared
null and void and the attachment hereby ordered DISCHARGED.
The Appellate Tribunal declared that
. . . While it is true that a prayer for the issuance of a writ of preliminary attachment may
be included m the complaint, as is usually done, it is likewise true that the Court does not
acquire jurisdiction over the person of the defendant until he is duly summoned or
voluntarily appears, and adding the phrase that it be issued "ex parte" does not confer
said jurisdiction before actual summons had been made, nor retroact jurisdiction upon
summons being made. . . .
It went on to say, citing Sievert v. Court of Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court
acquires authority under law to act coercively against the defendant or his property . . .;"
and that "the critical time is the of the vesting of jurisdiction in the court over the person
of the defendant in the main case."
Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light
seeks in the present appellate proceedings.
The question is whether or not a writ of preliminary attachment may issue ex parte
against a defendant before acquisition of jurisdiction of the latter's person by service of
summons or his voluntary submission to the Court's authority.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted.
It is incorrect to theorize that after an action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has been vested in the court, but before the
acquisition of jurisdiction over the person of the defendant (either by service of summons
or his voluntary submission to the court's authority), nothing can be validly done by the
plaintiff or the court. It is wrong to assume that the validity of acts done during this period
should be defendant on, or held in suspension until, the actual obtention of jurisdiction
over the defendant's person. The obtention by the court of jurisdiction over the person of
the defendant is one thing; quite another is the acquisition of jurisdiction over the person
of the plaintiff or over the subject-matter or nature of the action, or the res or object
hereof.
An action or proceeding is commenced by the filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the court over the subject matter or nature of
the action or proceeding is invoked or called into activity; 5 and it is thus that the court
acquires jurisdiction over said subject matter or nature of the action. 6 And it is by that
self-same act of the plaintiff (or petitioner) of filing the complaint (or other appropriate
pleading) by which he signifies his submission to the court's power and authority
that jurisdiction is acquired by the court over his person. 7 On the other hand, jurisdiction
over the person of the defendant is obtained, as above stated, by the service of
summons or other coercive process upon him or by his voluntary submission to the
authority of the court. 8
The events that follow the filing of the complaint as a matter of routine are well known.
After the complaint is filed, summons issues to the defendant, the summons is then
transmitted to the sheriff, and finally, service of the summons is effected on the
defendant in any of the ways authorized by the Rules of Court. There is thus ordinarily
some appreciable interval of time between the day of the filing of the complaint and the
day of service of summons of the defendant. During this period, different acts may be
done by the plaintiff or by the Court, which are unquestionable validity and propriety.
Among these, for example, are the appointment of a guardian ad litem, 9 the grant of
authority to the plaintiff to prosecute the suit as a pauper litigant, 10 the amendment of
the complaint by the plaintiff as a matter of right without leave of court, 11 authorization
by the Court of service of summons by publication, 12 the dismissal of the action by the
plaintiff on mere notice. 13
This, too, is true with regard to the provisional remedies of preliminary attachment,
preliminary injunction, receivership or replevin. 14 They may be validly and properly
applied for and granted even before the defendant is summoned or is heard from.
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the
provisional remedy in virtue of which a plaintiff or other party may, at the commencement
of the action or at any time thereafter, have the property of the adverse party taken into
the custody of the court as security for the satisfaction of any judgment that may be
recovered. 15 It is a remedy which is purely statutory in respect of which the law requires
a strict construction of the provisions granting it. 16 Withal no principle, statutory or
jurisprudential, prohibits its issuance by any court before acquisition of jurisdiction over
the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or
at any time thereafter." 17 The phase, "at the commencement of the action," obviously
refers to the date of the filing of the complaint which, as above pointed out, is the date
that marks "the commencement of the action;" 18 and the reference plainly is to a time
before summons is served on the defendant, or even before summons issues. What the
rule is saying quite clearly is that after an action is properly commenced by the filing
of the complaint and the payment of all requisite docket and other fees the plaintiff
may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent
requisites laid down by law, and that he may do so at any time, either before or after
service of summons on the defendant. And this indeed, has been the immemorial
practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the
application for attachment in the complaint or other appropriate pleading (counter-claim,
cross-claim, third-party claim) and for the Trial Court to issue the writ ex-parte at the
commencement of the action if it finds the application otherwise sufficient in form and
substance.
In Toledo v. Burgos, 19 this Court ruled that a hearing on a motion or application for
preliminary attachment is not generally necessary unless otherwise directed by the Trial
Court in its discretion. 20 And in Filinvest Credit Corporation v. Relova, 21 the Court
declared that "(n)othing in the Rules of Court makes notice and hearing indispensable
and mandatory requisites for the issuance of a writ of attachment." The only pre-requisite
is that the Court be satisfied, upon consideration of "the affidavit of the applicant or of
some other person who personally knows the facts, that a sufficient cause of action
exists, that the case is one of those mentioned in Section 1 . . . (Rule 57), that there is
no other sufficient security for the claim sought to be enforced by the action, and that the
amount due to the applicant, or the value of the property the possession of which he is
entitled to recover, is as much as the sum for which the order (of attachment) is granted
above all legal counterclaims." 22 If the court be so satisfied, the "order of attachment
shall be granted," 23 and the writ shall issue upon the applicant's posting of "a bond
executed to the adverse party in an amount to be fixed by the judge, not exceeding the
plaintiffs claim, conditioned that the latter will pay all the costs which may be adjudged to
the adverse party and all damages which he may sustain by reason of the attachment, if
the court shall finally adjudge that the applicant was not entitled thereto." 24
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18,
1989, 25 this Court had occasion to emphasize the postulate that no hearing is required
on an application for preliminary attachment, with notice to the defendant, for the reason
that this "would defeat the objective of the remedy . . . (since the) time which such a
hearing would take, could be enough to enable the defendant to abscond or dispose of
his property before a writ of attachment issues." As observed by a former member of this
Court, 26 such a procedure would warn absconding debtors-defendants of the

commencement of the suit against them and the probable seizure of their properties,
and thus give them the advantage of time to hide their assets, leaving the creditorplaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger
of losing any security for a favorable judgment and thus give him only an illusory victory.
Withal, ample modes of recourse against a preliminary attachment are secured by law to
the defendant. The relative ease with which a preliminary attachment may be obtained is
matched and paralleled by the relative facility with which the attachment may legitimately
be prevented or frustrated. These modes of recourse against preliminary attachments
granted by Rule 57 were discussed at some length by the separate opinion in Mindanao
Savings & Loans Asso. Inc. v. CA., supra.
That separate opinion stressed that there are two (2) ways of discharging an attachment:
first, by the posting of a counterbond; and second, by a showing of its improper or
irregular issuance.
1.0. The submission of a counterbond is an efficacious mode of lifting an attachment
already enforced against property, or even of preventing its enforcement altogether.
1.1. When property has already been seized under attachment, the attachment may be
discharged upon counterbond in accordance with Section 12 of Rule 57.
Sec. 12. Discharge of attachment upon giving counterbond. At any time after an order
of attachment has been granted, the party whose property has been attached or the
person appearing in his behalf, may, upon reasonable notice to the applicant, apply to
the judge who granted the order, or to the judge of the court in which the action is
pending, for an order discharging the attachment wholly or in part on the security given .
. . in an amount equal to the value of the property attached as determined by the judge
to secure the payment of any judgment that the attaching creditor may recover in the
action. . . .
1.2. But even before actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not wait until his property is
seized before seeking the discharge of the attachment by a counterbond. This is made
possible by Section 5 of Rule 57.
Sec. 5. Manner of attaching property. The officer executing the order shall without
delay attach, to await judgment and execution in the action, all the properties of the party
against whom the order is issued in the province, not exempt from execution, or so much
thereof as may be sufficient to satisfy the applicant's demand, unless the former makes
a deposit with the clerk or judge of the court from which the order issued, or gives a
counter-bond executed to the applicant, in an amount sufficient to satisfy such demand
besides costs, or in an amount equal to the value of the property which is about to be
attached, to secure payment to the applicant of any judgment which he may recover in
the action. . . . (Emphasis supplied)
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted or
discharged on the ground that it has been irregularly or improperly issued, in accordance
with Section 13 of Rule 57. Like the first, this second mode of lifting an attachment may
be resorted to even before any property has been levied on. Indeed, it may be availed of
after property has been released from a levy on attachment, as is made clear by said
Section 13, viz.:
Sec. 13. Discharge of attachment for improper or irregular issuance. The party whose
property has been attached may also, at any time either BEFORE or AFTER the release
of the attached property, or before any attachment shall have been actually levied, upon
reasonable notice to the attaching creditor, apply to the judge who granted the order, or
to the judge of the court in which the action is pending, for an order to discharge the
attachment on the ground that the same was improperly or irregularly issued. If the
motion be made on affidavits on the part of the party whose property has been attached,
but not otherwise, the attaching creditor may oppose the same by counter-affidavits or
other evidence in addition to that on which the attachment was made. . . . (Emphasis
supplied)
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The
attachment debtor cannot be deemed to have waived any defect in the issuance of the
attachment writ by simply availing himself of one way of discharging the attachment writ,
instead of the other. Moreover, the filing of a counterbond is a speedier way of
discharging the attachment writ maliciously sought out by the attaching creditor instead
of the other way, which, in most instances . . . would require presentation of evidence in
a fullblown trial on the merits, and cannot easily be settled in a pending incident of the
case." 27
It may not be amiss to here reiterate other related principles dealt with in Mindanao
Savings & Loans Asso. Inc. v. C.A., supra., 28 to wit:
(a) When an attachment may not be dissolved by a showing of its irregular or improper
issuance:
. . . (W)hen the preliminary attachment is issued upon a ground which is at the same
time the applicant's cause of action; e.g., "an action for money or property embezzled or
fraudulently misapplied or converted to his own use by a public officer, or an officer of a
corporation, or an attorney, factor, broker, agent, or clerk, in the course of his
employment as such, or by any other person in a fiduciary capacity, or for a willful
violation of duty." (Sec. 1 [b], Rule 57), or "an action against a party who has been guilty
of fraud m contracting the debt or incurring the obligation upon which the action is
brought" (Sec. 1 [d], Rule 57), the defendant is not allowed to file a motion to dissolve
the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual
averments in the plaintiff's application and affidavits on which the writ was based and
consequently that the writ based thereon had been improperly or irregularly issued (SEE
Benitez v. I.A.C., 154 SCRA 41) the reason being that the hearing on such a motion
for dissolution of the writ would be tantamount to a trial of the merits of the action. In
other words, the merits of the action would be ventilated at a mere hearing of a motion,
instead of at the regular trial. Therefore, when the writ of attachment is of this nature, the
only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886).
(b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment bond:
. . . The dissolution of the preliminary attachment upon security given, or a showing of its
irregular or improper issuance, does not of course operate to discharge the sureties on
plaintiff's own attachment bond. The reason is simple. That bond is "executed to the
adverse party, . . . conditioned that the . . . (applicant) will pay all the costs which may be
adjudged to the adverse party and all damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the applicant was not entitled thereto"
(SEC. 4, Rule 57). Hence, until that determination is made, as to the applicant's
entitlement to the attachment, his bond must stand and cannot be with-drawn.
With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is the
same: they may also issue ex parte. 29
It goes without saying that whatever be the acts done by the Court prior to the
acquisition of jurisdiction over the person of defendant, as above indicated issuance
of summons, order of attachment and writ of attachment (and/or appointments of
guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper
litigant, or amendment of the complaint by the plaintiff as a matter of right without leave
of court 30 and however valid and proper they might otherwise be, these do not and
cannot bind and affect the defendant until and unless jurisdiction over his person is
eventually obtained by the court, either by service on him of summons or other coercive
process or his voluntary submission to the court's authority. Hence, when the sheriff or
other proper officer commences implementation of the writ of attachment, it is essential
that he serve on the defendant not only a copy of the applicant's affidavit and attachment
bond, and of the order of attachment, as explicity required by Section 5 of Rule 57, but
also the summons addressed to said defendant as well as a copy of the complaint and
order for appointment of guardian ad litem, if any, as also explicity directed by Section 3,
Rule 14 of the Rules of Court. Service of all such documents is indispensable not only
for the acquisition of jurisdiction over the person of the defendant, but also upon
considerations of fairness, to apprise the defendant of the complaint against him, of the
issuance of a writ of preliminary attachment and the grounds therefor and thus accord
him the opportunity to prevent attachment of his property by the posting of a
counterbond in an amount equal to the plaintiff's claim in the complaint pursuant to
Section 5 (or Section 12), Rule 57, or dissolving it by causing dismissal of the complaint
itself on any of the grounds set forth in Rule 16, or demonstrating the insufficiency of the
applicant's affidavit or bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with this fundamental requirement of service of
summons and the other documents above indicated that writs of attachment issued by
the Trial Court ex parte were struck down by this Court's Third Division in two (2) cases,
namely: Sievert v. Court of Appeals, 31 and BAC Manufacturing and Sales Corporation
v. Court of Appeals, et al. 32 In contrast to the case at bar where the summons and a
copy of the complaint, as well as the order and writ of attachment and the attachment
bond were served on the defendant in Sievert, levy on attachment was attempted
notwithstanding that only the petition for issuance of the writ of preliminary attachment
was served on the defendant, without any prior or accompanying summons and copy of
the complaint; and in BAC Manufacturing and Sales Corporation, neither the summons
nor the order granting the preliminary attachment or the writ of attachment itself was
served on the defendant "before or at the time the levy was made."
For the guidance of all concerned, the Court reiterates and reaffirms the proposition that
writs of attachment may properly issue ex parte provided that the Court is satisfied that
the relevant requisites therefor have been fulfilled by the applicant, although it may, in its
discretion, require prior hearing on the application with notice to the defendant; but that
levy on property pursuant to the writ thus issued may not be validly effected unless
preceded, or contemporaneously accompanied, by service on the defendant of
summons, a copy of the complaint (and of the appointment of guardian ad litem, if any),
the application for attachment (if not incorporated in but submitted separately from the
complaint), the order of attachment, and the plaintiff's attachment bond.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of
Appeals is hereby REVERSED, and the order and writ of attachment issued by Hon.
Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City in
Civil Case No. 19513-89 against Queensland Hotel or Motel or Queensland Tourist Inn
and Teodorico Adarna are hereby REINSTATED. Costs against private respondents.
SO ORDERED.
Onate v. Abrogar, G.R. No. 107303, 241 SCRA 659, 23 February 1995
G.R. No. 107303 February 21, 1994
EMMANUEL C. OATE and ECON HOLDINGS CORPORATION, petitioners,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial
Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, respondents.
G.R. No. 107491 February 21, 1994
BRUNNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial
Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, respondents.
Florante A. Bautista for petitioner in G.R. No. 107303.
Andin & Andin Law Offices for Brunner Development Corporation.
Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life Assurance Company of
Canada.
NOCON, J.:
These are separate petitions for certiorari with a prayer for temporary restraining order
filed by Emmanuel C. Oate and Econ Holdings Corporation (in G.R. No. 107303), and
Brunner Development Corporation (in G.R. No. 107491), both of which assail several
orders issued by respondent Judge Zues C. Abrogar in Civil Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life
Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a sum of
money with a prayer for the immediate issuance of a writ of attachment against
petitioners, and Noel L. Dio, which was docketed as Civil Case No. 91-3506 and raffled
to Branch 150 of the RTC Makati, presided over by respondent Judge. The following
day, December 24, 1991, respondent Judge issued an order granting the issuance of a
writ of attachment, and the writ was actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life's ex-parte motion, the trial court amended the writ of
attachment to reflect the alleged amount of the indebtedness. That same day, Deputy
Sheriff Arturo C. Flores, accompanied by a representative of Sun Life, attempted to
serve summons and a copy of the amended writ of attachment upon petitioners at their
known office address at 108 Aguirre St., Makati but was not able to do so since there
was no responsible officer to receive the same. 1 Nonetheless, Sheriff Flores proceeded,
over a period of several days, to serve notices of garnishment upon several commercial
banks and financial institutions, and levied on attachment a condominium unit and a real
property belonging to petitioner Oate.
Summons was eventually served upon petitioners on January 9, 1992, while defendant
Dio was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of
Attachment." That same day, Sun Life filed an ex-parte motion to examine the books of
accounts and ledgers of petitioner Brunner Development Corporation (Brunner, for
brevity) at the Urban Bank, Legaspi Village Branch, and to obtain copies thereof, which
motion was granted by respondent Judge. The examination of said account took place
on January 23, 1992. Petitioners filed a motion to nullify the proceedings taken thereat
since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a memorandum in
support of the motion to discharge attachment. Also on that same day, Sun Life filed
another motion for examination of bank accounts, this time seeking the examination of
Account No. 0041-0277-03 with the Bank of Philippine Islands (BPI) which,
incidentally, petitioners claim not to be owned by them and the records of Philippine
National Bank (PNB) with regard to checks payable to Brunner. Sun Life asked the court
to order both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying petitioners' and the
co-defendants' motion to discharge the amended writ of attachment, (2) approving Sun
Life's additional attachment, (3) granting Sun Life's motion to examine the BPI account,
and (4) denying petitioners' motion to nullify the proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the February 6, 1992
order. On September 6, 1992, respondent Judge denied the motion for reconsideration.
Hence, the instant petitions. Petitioners' basic argument is that respondent Judge had
acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in (1)
issuing ex parte the original and amended writs of preliminary attachment and the
corresponding notices of garnishment and levy on attachment since the trial court had
not yet acquired jurisdiction over them; and (2) allowing the examination of the bank
records though no notice was given to them.
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred in granting Sun Life's prayer for a
writ of preliminary attachment on the ground that the trial court had not acquired
jurisdiction over them. This argument is clearly unavailing since it is well-settled that a
writ of preliminary attachment may be validly applied for and granted even before the
defendant is summoned or is heard from. 2 The rationale behind this rule was stated by
the Court in this wise:
A preliminary attachment may be defined, paraphrasing the Rules of Court, as the
provisional remedy in virtue of which a plaintiff or other proper party may, at the
commencement of the action or any time thereafter, have the property of the adverse
party taken into the custody of the court as security for the satisfaction of any judgment
that may be recovered. It is a remedy which is purely statutory in respect of which the
law requires a strict construction of the provisions granting it. Withal no principle,
statutory or jurisprudential, prohibits its issuance by any court before acquisition of
jurisdiction over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or
at any time thereafter." The phrase "at the commencement of the action," obviously
refers to the date of the filing of the complaint which, as abovepointed out, its the date
that marks "the commencement of the action;" and the reference plainly is to a time
before summons is served on the defendant or even before summons issues. What the
rule is saying quite clearly is that after an action is properly
commenced by the filing of the complaint and the payment of all requisite docket and
other fees the plaintiff may apply for and obtain a writ of preliminary attachment upon
fulfillment of the pertinent requisites laid down by law, and that he may do so at any time,
either before or after service of summons on the defendant. And this indeed, has been
the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to
incorporate the application for attachment in the complaint or other appropriate pleading
(counterclaim, cross-claim, third-party claim) and for the Trial Court to issue the writ exparte at the commencement of the action if it finds the application otherwise sufficient in
form and substance. 3
Petitioners then contended that the writ should have been discharged since the ground
on which it was issued fraud in contracting the obligation was not present. This
cannot be considered a ground for lifting the writ since this delves into the very complaint
of the Sun Life. As this Court stated in Cuatro v. Court of Appeals: 4
Moreover, an attachment may not be dissolved by a showing of its irregular or improper
issuance if it is upon a ground which is at the same time the applicant's cause of action
in the main case since an anomalous situation would result if the issues of the main case
would be ventilated and resolved in a mere hearing of the motion (Davao Light and
Power Co., Inc. vs. Court of Appeals, supra, The Consolidated Bank and Trust Corp.
(Solidbank) vs. Court of Appeals, 197 SCRA 663 [1991]).
In the present case, one of the allegation in petitioner's complaint below is that the
defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to
cover the installment payments and a separate set of postdated checks for payment of
the stipulated interest (Annex "B"). The issue of fraud, then, is clearly within the
competence of the lower court in the main action. 5
The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was
dismissed by the Provincial Prosecutor of Rizal for Makati on April 21, 1992 and was
upheld by the Provincial Prosecutor on July 13, 1992 is of no moment since the same
can be indicative only of the absence of criminal liability, but not of civil liability. Besides,
Sun Life had elevated the case for review to the Department of Justice, where the case
is presently pending.
Finally, petitioners argue that the enforcement of the writ was invalid since it
undisputedly preceded the actual service of summons by six days at most. Petitioners
cite the decisions in Sievert vs. Court of Appeals, et al. 6 and BAC Manufacturing and
Sales Corp. vs. Court of Appeals, et al., 7 wherein this Court held that enforcement of the
writ of attachment can not bind the defendant in view of the failure of the trial court to
acquire jurisdiction over the defendant through either summons or his voluntary
appearance.
We do not agree entirely with petitioners. True, this Court had held in a recent decision
that the enforcement of writ of attachment may not validly be effected until and unless
proceeded or contemporaneously accompanied by service of summons. 8
But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases.
In those two cases, summons was never served upon the defendants. The plaintiffs
therein did not even attempt to cause service of summons upon the defendants, right up
to the time the cases went up to this Court. This is not true in the case at bar. The
records reveal that Sheriff Flores and Sun Life did attempt a contemporaneous service
of both summons and the writ of attachment on January 3, 1992, but we stymied by the
absence of a responsible officer in petitioners' offices. Note is taken of the fact that
petitioners Oate and Econ Holdings admitted in their answer 9 that the offices of both
Brunner Development Corporation and Econ Holdings were located at the same address
and that petitioner Oate is the President of Econ Holdings while petitioner Dio is the
President of Brunner Development Corporation as well as a stockholder and director of
Econ Holdings.
Thus, an exception to the established rule on the enforcement of the writ of attachment
can be made where a previous attempt to serve the summons and the writ of attachment
failed due to factors beyond the control of either the plaintiff or the process server,
provided that such service is effected within a reasonable period thereafter.
Several reasons can be given for the exception. First, there is a possibility that a
defendant, having been alerted of plaintiffs action by the attempted service of summons
and the writ of attachment, would put his properties beyond the reach of the plaintiff
while the latter is trying to serve the summons and the writ anew. By the time the plaintiff
may have caused the service of summons and the writ, there might not be any property
of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six days later. To
nullify the notices of garnishment issued prior thereto would again open the possibility
that petitioners would transfer the garnished monies while Sun Life applied for new
notices of garnishment.
Third, the ease by which a writ of attachment can be obtained is counter-balanced by the
ease by which the same can be discharged: the defendant can either make a cash
deposit or post a counter-bond equivalent to the value of the property attached. 10 The
petitioners herein tried to have the writ of attachment discharged by posting a counterbond, the same was denied by respondent Judge on the ground that the amount of the
counter-bond was less than that of Sun Life's bond.
II.
Petitioners' second ground assail the acts of respondent Judge in allowing the
examination of Urban Banks' records and in ordering that the examination of the bank
records of BPI and PNB as invalid since no notice of said examinations were ever given
them. Sun Life grounded its requests for the examination of the bank accounts on
Section 10, Rule 57 of the Rules of Court, which provided, to wit:
Sec. 10. Examination of party whose property is attached and persons indebted to him
or controlling his property; delivery of property to officer. Any person owing debts to
the party whose property is attached or having in his possession or under his control any
credit or other personal property belonging to such party, may be required to attend
before the court in which the action is pending, or before a commissioner appointed by
the court and be examined on oath respecting the same. The party whose property is
attached may also be required to attend for the purpose of giving information respecting
his property, and may be examined on oath. The court may, after such examination,
order personal property capable of manual delivery belonging to him, in the possession
of the person so required to attend before the court, to be delivered to the clerk or court,
sheriff, or other proper officer on such terms as may be just, having reference to any lien
thereon or claim against the same, to await the judgment in the action.
It is clear from the foregoing provision that notice need only be given to the garnishee,
but the person who is holding property or credits belonging to the defendant. The
provision does not require that notice be furnished the defendant himself, except when
there is a need to examine said defendant "for the purpose of giving information
respecting his property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as
amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits With Any Banking
Institution and Providing Penalty Therefore," for Section 2 therefore provides an
exception "in cases where the money deposited or invested is the subject matter of the
litigation."
The examination of the bank records is not a fishing expedition, but rather a method by
which Sun Life could trace the proceeds of the check it paid to petitioners.
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining
order issued on June 28, 1993 is hereby lifted.
SO ORDERED.
Security Pacific Assurance v. Hon. Judge Tria-Infante, G.R. No. 144740, 468 SCRA
526, 31 August 2005
G.R. No. 144740 August 31, 2005
SECURITY PACIFIC ASSURANCE CORPORATION, Petitioners,
vs.
THE HON. AMELIA TRIA-INFANTE, In her official capacity as Presiding Judge,
Regional Trial Court, Branch 9, Manila; THE PEOPLE OF THE PHILIPPINES,
represented by Spouses REYNALDO and ZENAIDA ANZURES; and REYNALDO R.
BUAZON, In his official capacity as Sheriff IV, Regional Trial Court, Branch 9,
Manila, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari, assailing the Decision1 and Resolution2 of
the Court of Appeals in CA-G.R. SP No. 58147, dated 16 June 2000 and 22 August
2000, respectively. The said Decision and Resolution declared that there was no grave
abuse of discretion on the part of respondent Judge in issuing the assailed order dated
31 March 2000, which was the subject in CA-G.R. SP No. 58147.
THE FACTS
The factual milieu of the instant case can be traced from this Courts decision in G.R.
No. 106214 promulgated on 05 September 1997.
On 26 August 1988, Reynaldo Anzures instituted a complaint against Teresita Villaluz
(Villaluz) for violation of Batas Pambansa Blg. 22. The criminal information was brought
before the Regional Trial Court, City of Manila, and raffled off to Branch 9, then presided
over by Judge Edilberto G. Sandoval, docketed as Criminal Case No. 89-69257.
An Ex-Parte Motion for Preliminary Attachment3 dated 06 March 1989 was filed by
Reynaldo Anzures praying that pending the hearing on the merits of the case, a Writ of
Preliminary Attachment be issued ordering the sheriff to attach the properties of Villaluz
in accordance with the Rules.
On 03 July 1989, the trial court issued an Order4 for the issuance of a writ of preliminary
attachment "upon complainants posting of a bond which is hereby fixed at
P2,123,400.00 and the Courts approval of the same under the condition prescribed by
Sec. 4 of Rule 57 of the Rules of Court!."
An attachment bond5 was thereafter posted by Reynaldo Anzures and approved by the
court. Thereafter, the sheriff attached certain properties of Villaluz, which were duly
annotated on the corresponding certificates of title.
On 25 May 1990, the trial court rendered a Decision6 on the case acquitting Villaluz of
the crime charged, but held her civilly liable. The dispositive portion of the said decision
is reproduced hereunder:
WHEREFORE, premises considered, judgment is hereby rendered ACQUITTING the
accused TERESITA E. VILLALUZ with cost de oficio. As to the civil aspect of the case
however, accused is ordered to pay complainant Reynaldo Anzures the sum of TWO
MILLION ONE HUNDRED TWENTY THREE THOUSAND FOUR HUNDRED
(P2,123,400.00) PESOS with legal rate of interest from December 18, 1987 until fully
paid, the sum of P50,000.00 as attorneys fees and the cost of suit.7
Villaluz interposed an appeal with the Court of Appeals, and on 30 April 1992, the latter
rendered its Decision,8 the dispositive portion of which partly reads:
WHEREFORE, in CA-G.R. CV No. 28780, the Decision of the Regional Trial Court of
Manila, Branch 9, dated May 25, 1990, as to the civil aspect of Criminal Case No. 8969257, is hereby AFFIRMED, in all respects!.
The case was elevated to the Supreme Court (G.R. No. 106214), and during its
pendency, Villaluz posted a counter-bond in the amount of P2,500,000.00 issued by
petitioner Security Pacific Assurance Corporation.9 Villaluz, on the same date10 of the
counter-bond, filed an Urgent Motion to Discharge Attachment.11
On 05 September 1997, we promulgated our decision in G.R. No. 106214, affirming in
toto the decision of the Court of Appeals.
In view of the finality of this Courts decision in G.R. No. 106214, the private complainant
moved for execution of judgment before the trial court.12
On 07 May 1999, the trial court, now presided over by respondent Judge, issued a Writ
of Execution.13
Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, but the
latter no longer resided in her given address. This being the case, the sheriff sent a
Notice of Garnishment upon petitioner at its office in Makati City, by virtue of the counterbond posted by Villaluz with said insurance corporation in the amount of P2,500,000.00.
As reported by the sheriff, petitioner refused to assume its obligation on the counterbond it posted for the discharge of the attachment made by Villaluz.14
Reynaldo Anzures, through the private prosecutor, filed a Motion to Proceed with
Garnishment,15 which was opposed by petitioner16 contending that it should not be held
liable on the counter-attachment bond.
The trial court, in its Order dated 31 March 2000,17 granted the Motion to Proceed with
Garnishment. The sheriff issued a Follow-Up of Garnishment18 addressed to the
President/General Manager of petitioner dated 03 April 2000.
On 07 April 2000, petitioner filed a Petition for Certiorari with Preliminary Injunction
and/or Temporary Restraining Order19 with the Court of Appeals, seeking the nullification
of the trial courts order dated 31 March 2000 granting the motion to proceed with
garnishment. Villaluz was also named as petitioner. The petitioners contended that the
respondent Judge, in issuing the order dated 31 March 2000, and the sheriff committed
grave abuse of discretion and grave errors of law in proceeding against the petitioner
corporation on its counter-attachment bond, despite the fact that said bond was not
approved by the Supreme Court, and that the condition by which said bond was issued
did not happen.20
On 16 June 2000, the Court of Appeals rendered a Decision,21 the dispositive portion of
which reads:
WHEREFORE, premises considered, the Court finds no grave abuse of discretion on the
part of respondent judge in issuing the assailed order. Hence, the petition is dismissed.
A Motion for Reconsideration22 was filed by petitioner, but was denied for lack of merit by
the Court of Appeals in its Resolution23 dated 22 August 2000.
Undeterred, petitioner filed the instant petition under Rule 45 of the 1997 Rules of Civil
Procedure, with Urgent Application for a Writ of Preliminary Injunction and/or Temporary
Restraining Order.24
On 13 December 2000, this Court issued a Resolution25 requiring the private
respondents to file their Comment to the Petition, which they did. Petitioner was required
to file its Reply26 thereafter.
Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo and Zenaida
Anzures executed a Memorandum of Understanding (MOU).27 In it, it was stipulated that
as of said date, the total amount garnished from petitioner had amounted to
P1,541,063.85, and so the remaining amount still sought to be executed was
P958,936.15.28 Petitioner tendered and paid the amount of P300,000.00 upon signing of
the MOU, and the balance of P658,936.15 was to be paid in installment at P100,000.00
at the end of each month from February 2001 up to July 2001. At the end of August
2001, the amount of P58,936.00 would have to be paid. This would make the aggregate
amount paid to the private respondents P2,500,000.00.29 There was, however, a proviso
in the MOU which states that "this contract shall not be construed as a waiver or
abandonment of the appellate review pending before the Supreme Court and that it will
be subject to all such interim orders and final outcome of said case."
On 13 August 2001, the instant petition was given due course, and the parties were
obliged to submit their respective Memoranda.30
ISSUES
The petitioner raises the following issues for the resolution of this Court:
Main Issue - WHETHER OR NOT THE COURT OF Appeals committed reversible error
in affirming the 31 march 2000 order of public respondent judge which allowed execution
on the counter-bond issued by the petitioner.
Corollary Issues (1) WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
RULED THAT THE ATTACHMENT ON THE PROPERTY OF VILLALUZ WAS
DISCHARGED WITHOUT NEED OF COURT APPROVAL OF THE COUNTER-BOND
POSTED; and (2) WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
RULED THAT THE ATTACHMENT ON THE PROPERTY OF VILLALUZ WAS
DISCHARGED BY THE MERE ACT OF POSTING THE COUNTER-BOND.
THE COURTS RULING
Petitioner seeks to escape liability by contending, in the main, that the writ of attachment
which was earlier issued against the real properties of Villaluz was not discharged. Since
the writ was not discharged, then its liability did not accrue. The alleged failure of this
Court in G.R. No. 106214 to approve the counter-bond and to cause the discharge of the
attachment against Villaluz prevented the happening of a condition upon which the
counter-bonds issuance was premised, such that petitioner should not be held liable
thereon.31
Petitioner further asserts that the agreement between it and Villaluz is not a suretyship
agreement in the sense that petitioner has become an additional debtor in relation to
private respondents. It is merely waiving its right of excussion32 that would ordinarily
apply to counter-bond guarantors as originally contemplated in Section 12, Rule 57 of
the 1997 Rules.
In their Comment,33 the private respondents assert that the filing of the counter-bond by
Villaluz had already ipso facto discharged the attachment on the properties and made
the petitioner liable on the bond. Upon acceptance of the premium, there was already an
express contract for surety between Villaluz and petitioner in the amount of
P2,500,000.00 to answer for any adverse judgment/decision against Villaluz.
Petitioner filed a Reply34 dated 09 May 2001 to private respondents Comment, admitting
the binding effect of the bond as between the parties thereto. What it did not subscribe to
was the theory that the attachment was ipso facto or automatically discharged by the
mere filing of the bond in court. Such theory, according to petitioner, has no foundation.
Without an order of discharge of attachment and approval of the bond, petitioner submits
that its stipulated liability on said bond, premised on their occurrence, could not possibly
arise, for to hold otherwise would be to trample upon the statutorily guaranteed right of
the parties to contractual autonomy.
Based on the circumstances present in this case, we find no compelling reason to
reverse the ruling of the Court of Appeals.
Over the years, in a number of cases, we have made certain pronouncements about
counter-bonds.
In Tijam v. Sibonghanoy,35 as reiterated in Vanguard Assurance Corp. v. Court of
Appeals,36 we held:
. . . [A]fter the judgment for the plaintiff has become executory and the execution is
returned unsatisfied, as in this case, the liability of the bond automatically attaches and,
in failure of the surety to satisfy the judgment against the defendant despite demand
therefore, writ of execution may issue against the surety to enforce the obligation of the
bond.
In Luzon Steel Coporation v. Sia, et al.: 37
. . . [C]ounterbonds posted to obtain the lifting of a writ of attachment is due to these
bonds being security for the payment of any judgment that the attaching party may
obtain; they are thus mere replacements of the property formerly attached, and just as
the latter may be levied upon after final judgment in the case in order to realize the
amount adjudged, so is the liability of the countersureties ascertainable after the
judgment has become final. . . .
In Imperial Insurance, Inc. v. De Los Angeles,38 we ruled:
. . . Section 17, Rule 57 of the Rules of Court cannot be construed that an "execution
against the debtor be first returned unsatisfied even if the bond were a solidary one, for a
procedural may not amend the substantive law expressed in the Civil Code, and further
would nullify the express stipulation of the parties that the suretys obligation should be
solidary with that of the defendant.
In Philippine British Assurance Co., Inc. v. Intermediate Appellate Court,39 we further
held that "the counterbond is intended to secure the payment of any judgment that the
attaching creditor may recover in the action."
Petitioner does not deny that the contract between it and Villaluz is one of surety.
However, it points out that the kind of surety agreement between them is one that merely
waives its right of excussion. This cannot be so. The counter-bond itself states that the
parties jointly and severally bind themselves to secure the payment of any judgment that
the plaintiff may recover against the defendant in the action. A surety is considered in
law as being the same party as the debtor in relation to whatever is adjudged touching
the obligation of the latter, and their liabilities are interwoven as to be inseparable.40
Suretyship is a contractual relation resulting from an agreement whereby one person,
the surety, engages to be answerable for the debt, default or miscarriage of another,
known as the principal. The suretys obligation is not an original and direct one for the
performance of his own act, but merely accessory or collateral to the obligation
contracted by the principal. Nevertheless, although the contract of a surety is in essence
secondary only to a valid principal obligation, his liability to the creditor or promise of the
principal is said to be direct, primary and absolute; in other words, he is directly and
equally bound with the principal. The surety therefore becomes liable for the debt or duty
of another although he possesses no direct or personal interest over the obligations nor
does he receive any benefit therefrom.41
In view of the nature and purpose of a surety agreement, petitioner, thus, is barred from
disclaiming liability.
Petitioners argument that the mere filing of a counter-bond in this case cannot
automatically discharge the attachment without first an order of discharge and approval
of the bond, is lame.
Under the Rules, there are two (2) ways to secure the discharge of an attachment. First,
the party whose property has been attached or a person appearing on his behalf may
post a security. Second, said party may show that the order of attachment was
improperly or irregularly issued.42 The first applies in the instant case. Section 12, Rule
57,43 provides:
SEC. 12. Discharge of attachment upon giving counter-bond. After a writ of attachment
has been enforced, the party whose property has been attached, or the person
appearing on his behalf, may move for the discharge of the attachment wholly or in part
on the security given. The court shall, after due notice and hearing, order the discharge
of the attachment if the movant makes a cash deposit, or files a counter-bond executed
to the attaching party with the clerk of the court where the application is made, in an
amount equal to that fixed by the court in the order of attachment, exclusive of costs. But
if the attachment is sought to be discharged with respect to a particular property, the
counter-bond shall be equal to the value of that property as determined by the court. In
either case, the cash deposit or the counter-bond shall secure the payment of any
judgment that the attaching party may recover in the action. A notice of the deposit shall
forthwith be served on the attaching party. Upon the discharge of an attachment in
accordance with the provisions of this section, the property attached, or the proceeds of
any sale thereof, shall be delivered to the party making the deposit or giving the counterbond, or to the person appearing on his behalf, the deposit or counter-bond aforesaid
standing in place of the property so released. Should such counter-bond for any reason
be found to be or become insufficient, and the party furnishing the same fail to file an
additional counter-bond, the attaching party may apply for a new order of attachment.
It should be noted that in G.R. No. 106214, per our Resolution dated 15 January 1997,44
we permitted Villaluz to file a counter-attachment bond. On 17 February 1997,45 we
required the private respondents to comment on the sufficiency of the counter-bond
posted by Villaluz.
It is quite palpable that the necessary steps in the discharge of an attachment upon
giving counter-bond have been taken. To require a specific order for the discharge of the
attachment when this Court, in our decision in G.R. No. 106214, had already declared
that the petitioner is solidarily bound with Villaluz would be mere surplusage. Thus:
During the pendency of this petition, a counter-attachment bond was filed by petitioner
Villaluz before this Court to discharge the attachment earlier issued by the trial court.
Said bond amounting to P2.5 million was furnished by Security Pacific Assurance, Corp.
which agreed to bind itself "jointly and severally" with petitioner for "any judgment" that
may be recovered by private respondent against the former.46
We are not unmindful of our ruling in the case of Belisle Investment and Finance Co.,
Inc. v. State Investment House, Inc.,47 where we held:
. . . [T]he Court of Appeals correctly ruled that the mere posting of a counterbond does
not automatically discharge the writ of attachment. It is only after hearing and after the
judge has ordered the discharge of the attachment if a cash deposit is made or a
counterbond is executed to the attaching creditor is filed, that the writ of attachment is
properly discharged under Section 12, Rule 57 of the Rules of Court.
The ruling in Belisle, at first glance, would suggest an error in the assailed ruling of the
Court of Appeals because there was no specific resolution discharging the attachment
and approving the counter-bond. As above-explained, however, consideration of our
decision in G.R. No. 106214 in its entirety will readily show that this Court has virtually
discharged the attachment after all the parties therein have been heard on the matter.
On this score, we hew to the pertinent ratiocination of the Court of Appeals as regards
the heretofore cited provision of Section 12, Rule 57 of the 1997 Rules of Civil
Procedure, on the discharge of attachment upon giving counter-bond:
. . . The filing of the counter-attachment bond by petitioner Villaluz has discharged the
attachment on the properties and made the petitioner corporation liable on the counterattachment bond. This can be gleaned from the "DEFENDANTS BOND FOR THE
DISSOLUTION OF ATTACHMENT", which states that Security Pacific Assurance
Corporation, as surety, in consideration of the dissolution of the said attachment jointly
and severally, binds itself with petitioner Villaluz for any judgment that may be
recovered by private respondent Anzures against petitioner Villaluz.
The contract of surety is only between petitioner Villaluz and petitioner corporation. The
petitioner corporation cannot escape liability by stating that a court approval is needed
before it can be made liable. This defense can only be availed by petitioner corporation
against petitioner Villaluz but not against third persons who are not parties to the
contract of surety. The petitioners hold themselves out as jointly and severally liable
without any conditions in the counter-attachment bond. The petitioner corporation
cannot impose requisites before it can be made liable when the law clearly does
not require such requisites to be fulfilled.48 (Emphases supplied.)
Verily, a judgment must be read in its entirety, and it must be construed as a whole so as
to bring all of its parts into harmony as far as this can be done by fair and reasonable
interpretation and so as to give effect to every word and part, if possible, and to
effectuate the intention and purpose of the Court, consistent with the provisions of the
organic law.49
Insurance companies are prone to invent excuses to avoid their just obligation.50 It
seems that this statement very well fits the instant case.
WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of
Appeals dated 16 June 2000 and 22 August 2000, respectively, are both AFFIRMED.
Costs against petitioner.
SO ORDERED.
Insular Savings v. CA, G.R. No. 123638, 460 SCRA 122, 15 June 2005
G.R. NO. 123638
June 15, 2005
INSULAR SAVINGS BANK, Petitioner,
vs.
COURT OF APPEALS, JUDGE OMAR U. AMIN, in his capacity as Presiding Judge
of Branch 135 of the Regional Trial Court of Makati, and FAR EAST BANK AND
TRUST COMPANY, Respondents.
DECISION
GARCIA, J.:
Thru this appeal via a petition for review on certiorari under Rule 45 of the Rules of
Court, petitioner Insular Savings Bank seeks to set aside the D E C I S I O N1 dated
October 9, 1995 of the Court of Appeals in CA-G.R. SP No. 34876 and its resolution
dated January 24, 1996,2 denying petitioners motion for reconsideration.
The assailed decision of October 9, 1995 cleared the Regional Trial Court (RTC) at
Makati, Branch 135, of committing, as petitioner alleged, grave abuse of discretion in
denying petitioners motion to discharge attachment by counter-bond in Civil Case No.
92-145, while the equally assailed resolution of January 24, 1996 denied petitioners
motion for reconsideration.
The undisputed facts are summarized in the appellate courts decision3 under review, as
follows:
"On December 11, 1991, respondent Bank [Far East Bank and Trust Company]
instituted Arbitration Case No. 91-069 against petitioner [Insular Savings Bank] before
the Arbitration Committee of the Philippine Clearing House Corporation [PCHC]. The
dispute between the parties involved three [unfunded] checks with a total value of
P25,200,000.00. The checks were drawn against respondent Bank and were presented
by petitioner for clearing. As respondent Bank returned the checks beyond the
reglementary period, [but after petitioners account with PCHC was credited with the
amount of P25,200,000.00] petitioner refused to refund the money to respondent Bank.
While the dispute was pending arbitration, on January 17, 1992, respondent Bank
instituted Civil Case No. 92-145 in the Regional Trial Court of Makati and prayed for the
issuance of a writ of preliminary attachment. On January 22, 1992, Branch 133 of the
Regional Trial Court of Makati issued an Order granting the application for preliminary
attachment upon posting by respondent Bank of an attachment bond in the amount of
P6,000,000.00. On January 27, 1992, Branch 133 of the Regional Trial Court of Makati
issued a writ of preliminary attachment for the amount of P25,200,000.00. During the
hearing on February 11, 1992 before the Arbitration Committee of the Philippine
Clearing House Corporation, petitioner and respondent Bank agreed to temporarily
divide between them the disputed amount of P25,200,000.00 while the dispute has not
yet been resolved. As a result, the sum of P12,600,000.00 is in the possession of
respondent Bank. On March 9, 1994, petitioner filed a motion to discharge attachment
by counter-bond in the amount of P12,600,000.00. On June 13, 1994, respondent
Judge issued the first assailed order denying the motion. On June 27, 1994,
petitioner filed a motion for reconsideration which was denied in the second
assailed order dated July 20, 1994" (Emphasis and words in bracket added).
From the order denying its motion to discharge attachment by counter-bond, petitioner
went to the Court of Appeals on a petition for certiorari thereat docketed as CA-G.R. SP
No. 34876, ascribing on the trial court the commission of grave abuse of discretion
amounting to lack of jurisdiction.
While acknowledging that "[R]espondent Judge may have erred in his Order of June 13,
1994 that the counter-bond should be in the amount of P27,237,700.00", in that he
erroneously factored in, in arriving at such amount, unliquidated claim items, such as
actual and exemplary damages, legal interest, attorneys fees and expenses of litigation,
the CA, in the herein assailed decision dated October 9, 1995, nonetheless denied due
course to and dismissed the petition. For, according to the appellate court, the RTCs
order may be defended by, among others, the provision of Section 12 of Rule 57 of the
Rules of Court, infra. The CA added that, assuming that the RTC erred on the matter of
computing the amount of the discharging counter-bond, its error does not amount to
grave abuse of discretion.
With its motion for reconsideration having been similarly denied, petitioner is now with
us, faulting the appellate court, as follows:
"I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE PRINCIPAL
AMOUNT CLAIMED BY RESPONDENT BANK SHOULD BE THE BASIS FOR
COMPUTING THE AMOUNT OF THE COUNTER-BOND, FOR THE PRELIMINARY
ATTACHMENT WAS ISSUED FOR THE SAID AMOUNT ONLY.
"II. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE ARGUMENT
THAT THE AMOUNT OF THE COUNTER-BOND SHOULD BE BASED ON THE VALUE
OF THE PROPERTY ATTACHED CANNOT BE RAISED FOR THE FIRST TIME IN
THE COURT OF APPEALS.
"III. THE COURT OF APPEALS ERRED IN RULING THAT THE AMOUNT OF THE
COUNTER-BOND SHOULD BE BASED ON THE VALUE OF THE PROPERTY
ATTACHED EVEN IF IT WILL RESULT IN MAKING THE AMOUNT OF THE
COUNTER-BOND EXCEED THE AMOUNT FOR WHICH PRELIMINARY
ATTACHMENT WAS ISSUED."
Simply put, the issue is whether or not the CA erred in not ruling that the trial court
committed grave abuse of discretion in denying petitioners motion to discharge
attachment by counter-bond in the amount of P12,600,000.00.
Says the trial court in its Order of June 13, 1994:
"xxx (T)he counter-bond posted by [petitioner] Insular Savings Bank should include the
unsecured portion of [respondents] claim of P12,600,000.00 as agreed by means of
arbitration between [respondent] and [petitioner]; Actual damages at 25% percent per
annum of unsecured amount of claim from October 21, 1991 in the amount of
P7,827,500.00; Legal interest of 12% percent per annum from October 21, 1991 in the
amount of P3,805,200.00; Exemplary damages in the amount of P2,000,000.00; and
attorneys fees and expenses of litigation in the amount of P1,000,000.00 with a total
amount of P27,237,700.00 (Adlawan vs. Tomol, 184 SCRA 31 (1990)".
Petitioner, on the other hand, argues that the starting point in computing the amount of
counter-bond is the amount of the respondents demand or claim only, in this case
P25,200,000.00, excluding contingent expenses and unliquidated amount of damages.
And since there was a mutual agreement between the parties to temporarily, but equally,
divide between themselves the said amount pending and subject to the final outcome of
the arbitration, the amount of P12,600,000.00 should, so petitioner argues, be the basis
for computing the amount of the counter-bond.
The Court rules for the petitioner.
The then pertinent provision of Rule 57 (Preliminary Attachment) of the Rules of Court
under which the appellate court issued its assailed decision and resolution, provides as
follows:
"SEC. 12. Discharge of attachment upon giving counter-bond. At any time after an
order of attachment has been granted, the party whose property has been attached, . . .
may upon reasonable notice to the applicant, apply to the judge who granted the order
or to the judge of the court which the action is pending, for an order discharging the
attachment wholly or in part on the security given. The judge shall, after hearing, order
the discharge of the attachment if a cash deposit is made, or a counter-bond executed to

the attaching creditor is filed, on behalf of the adverse party, with the clerk or judge of
the court where the application is made in an amount equal to the value of the
property attached as determined by the judge, to secure the payment of any
judgment that the attaching creditor may recover in the action. x x x . Should such
counter-bond for any reason be found to be, or become insufficient, and the party
furnishing the same fail to file an additional counter-bond, the attaching party may apply
for a new order of attachment"4 (Emphasis supplied).4
As may be noted, the amount of the counter-attachment bond is, under the terms of the
aforequoted Section 12, to be measured against the value of the attached property, as
determined by the judge to secure the payment of any judgment that the attaching
creditor may recover in the action. Albeit not explicitly stated in the same section and
without necessarily diminishing the sound discretion of the issuing judge on matters of
bond approval, there can be no serious objection, in turn, to the proposition that the
attached property - and logically the counter-bond necessary to discharge the lien on
such property - should as much as possible correspond in value to, or approximately
match the attaching creditors principal claim. Else, excessive attachment, which ought
to be avoided at all times, shall ensue. As we held in Asuncion vs. Court of Appeals:5
"We, however, find the counter-attachment bond in the amount of P301,935.41 required
of the private respondent by the trial court as rather excessive under the circumstances.
Considering that the principal amounts claimed by the petitioner . . . total only
P185,685.00, and that he had posted a bond of only P80,000.00 for the issuance of the
writ of preliminary attachment, we deem it reasonable to lower the amount of the
counter-attachment bond to be posted by the private respondent . . . to the sum of
P185,685.00."
The following excerpts from Herrera, REMEDIAL LAW, Vol. VII, 1997 ed., p. 61, citing
retired Justice Jose Y. Feria, drive home the same point articulated in Asuncion:
"The sheriff is required to attach only so much of the property of the party against whom
the order is issued as may be sufficient to satisfy the applicants demand, the amount
of which is stated in the order, unless a deposit is made or a counter-bond is given
equal to said amount. However, if the value of the property to be attached is less than
the amount of the demand, the amount of the applicants bond may be equal to the value
of said property, and the amount of the adverse partys deposit or counter-bond
may be equal to the applicants bond. The writ of preliminary attachment is issued
upon approval of the requisite bond". (Emphasis supplied).1avvphi1.net
Turning to the case at bar, the records show that the principal claim of respondent, as
plaintiff a quo, is in the amount of P25,200,000.00,6 representing the three (3) unfunded
checks drawn against, and presented for clearing to, respondent bank. Jurisprudence
teaches that a writ of attachment cannot be issued for moral and exemplary damages,
and other unliquidated or contingent claim.7
The order of attachment dated January 22, 1992 fixed the bond to be posted by
respondent, as applicant, at P6,000,000.00. The writ of attachment issued on January
27, 1992, in turn, expressly indicated that petitioner is justly indebted to respondent in
the amount of P25,200,000.00.8 On February 11, 1992, before the Arbitration Committee
of the Philippine Clearing House Corporation, petitioner and respondent, however,
agreed to equally divide between themselves, albeit on a temporary basis, the disputed
amount of P25,200,000.00, subject to the outcome of the arbitration proceedings. Thus,
the release by petitioner of the amount of P12,600,000.00 to respondent. On March 7,
1994, petitioner filed a motion to discharge attachment by counter-bond in the amount of
P12,600,000.009 which, to petitioner, is the extent that respondent may actually be
prejudiced in the event its basic complaint for recovery of money against petitioner
prospers.
As things stood, therefore, respondents principal claim against petitioner immediately
prior to the filing of the motion to discharge attachment has effectively been pruned
down to P12,600,000.00. The trial court was fully aware of this reality. Accordingly, it
should have allowed a total discharge of the attachment on a counter-bond based on the
reduced claim of respondent. If a portion of the claim is already secured, we see no
justifiable reason why such portion should still be subject of counter-bond. It may be that
a counter-bond is intended to secure the payment of any judgment that the attaching
party may recover in the main action. Simple common sense, if not consideration of fair
play, however, dictates that a part of a possible judgment that has veritably been
preemptively satisfied or secured need not be covered by the counter-bond.
With the view we take of this case, the trial court, in requiring petitioner to post a
counter-bond in the amount of P27,237,700.00,
obviously glossed over one certain fundamental. We refer to the fact that the attachment
respondent applied for and the corresponding writ issued was only for the amount of
P25.2 Million. Respondent, it bears to stress, did not pray for attachment on its other
claims, contingent and unliquidated as they were. Then, too, the attaching writ rightly
excluded such claims. While the records do not indicate, let alone provide a clear
answer as to the actual value of the property levied upon, it may reasonably be assumed
that it is equal to respondents principal claim. Be that as it may, it was simply unjust for
the trial court to base the amount of the counter-bond on a figure beyond the
P25,200,000.00 threshold, as later reduced to P12,600,200.00.
The trial court, therefore, committed grave abuse of discretion when it denied petitioners
motion to discharge attachment by counter-bond in the amount of P12,600,000.00, an
amount more than double the attachment bond required of, and given by, respondent.
As a necessary consequence, the Court of Appeals committed reversible error when it
dismissed petitioners recourse thereto in CA-G.R. SP No. 34876.
It bears to stress, as a final consideration, that the certiorari proceedings before the
appellate court and the denial of the motion to discharge attachment subject of such
proceedings, transpired under the old rules on preliminary attachment which has since
been revised.10 And unlike the former Section 12 of Rule 57 of the Rules of Court where
the value of the property attached shall be the defining measure in the computation of
the discharging counter-attachment bond, the present less stringent Section 12 of Rule
57 provides that the court shall order the discharge of attachment if the movant "makes a
cash deposit, or files a counter-bond . . . in an amount equal to that fixed by the court in
the order of attachment, exclusive of costs." Not being in the nature of a penal statute,
the Rules of Court cannot be given retroactive effect.11
This disposition should be taken in the light of then Section 12, Rule 57 of the Rules of
Court.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and
resolution of the Courts of Appeals are hereby REVERSED and SET ASIDE, along with
the orders dated June 13, 1994 and July 20, 1994 of the Regional Trial Court at Makati,
Branch 135, in Civil Case No. 92-145 insofar they denied petitioners motion to
discharge attachment by counter-bond in the amount of P12,600,000.00, and a new one
entered GRANTING such motion upon the reposting of the same counter-bond.
SO ORDERED.
Injunction
Rualo v. Pitargue, G.R. No. 140284, 449 SCRA 121, 21 January 2005
G.R. No. 140284
January 21, 2005
BEETHOVEN L. RUALO, in substitution of former COMMISSIONER LIWAYWAY
VINZONS-CHATO OF THE BUREAU OF INTERNAL REVENUE, petitioner,
vs.
ELISEO P. PITARGUE, NOBLE BAMBINA B. PEREZ and EDMUND VASQUEZ,
respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to set aside the Decision2 dated 29 September
1999 of the Court of Appeals ("appellate court") in CA-G.R. SP No. 47354. The appellate
court affirmed the Order3 dated 6 April 1998 and the corresponding writ of preliminary
mandatory injunction dated 7 April 1998 issued by Branch 77 of the Regional Trial Court
of Quezon City ("trial court") in Civil Case No. Q-97-32928. The trial court directed the
Bureau of Internal Revenue ("BIR") (1) to recall Revenue Travel Assignment Order
("RTAO") Nos. 28-97 and 1-98 to 35-98; (2) to cease from further implementing the
reorganization of the BIR; and (3) to maintain the status quo. The present petition also
seeks the immediate issuance of a temporary restraining order and writ of preliminary
injunction to restrain the court from enforcing the order and writ.
The Facts
On 26 October 1993, President Fidel V. Ramos ("President Ramos") issued Executive
Order No. 132, entitled "Approving the Streamlining of the Bureau of Internal Revenue."
On 28 July 1997, President Ramos issued Executive Order No. 430 ("EO 430") entitled
"Further Streamlining the Bureau of Internal Revenue in line with its Computerized
Integrated Tax System." The Whereas clauses of EO 430 stated the reasons for its
enactment, thus:
WHEREAS, the BIR is undertaking a major transformation to fulfill its vision and mission
and achieve its strategic goals;
WHEREAS, the BIR has to provide and prepare for the full implementation of the
Computerized Integrated Tax System (CITS) within the years 1997 and 1998 and
therefore has to institute simultaneously the changes in its processes, values, skills and
structure;
WHEREAS, under Section 20, Chapter 7, Title I, Book III of Executive Order No. 292
(Administrative Code of 1987), the President of the Philippines is empowered to exercise
such powers and functions vested in him, which are provided for under the laws;
WHEREAS, under Section 76 of the General Provisions of Republic Act No. 8250 (FY
1997 General Appropriations Act), the President may direct changes in the organization
and key positions in any department, bureau or agency;
WHEREAS, under Section 78 of the General Provisions of RA 8250, heads of
departments, bureaus and agencies are directed to scale down, phase out or abolish
activities no longer essential in the delivery of public services.4
On 17 September 1997, then BIR Commissioner Liwayway Vinzons-Chato
("Commissioner Vinzons-Chato") issued Revenue Memorandum Order No. 57-97
("RMO 57-97") prescribing the "Policies and Guidelines on Streamlining the Bureau of
Internal Revenue under Executive Order No. 430" which included redeployment of
personnel.5 RMO 57-97 provides:
B. On Deployment of Personnel
1. The implementation of the BIR [Table of Organization] under E.O. No. 430 shall not
result to involuntary separation or diminution in rank and compensation of personnel.
2. Staffing under the modified structure shall come from existing personnel. External
hiring shall only be considered for highly technical position where the expertise required
is not internally available and the need is immediate (i.e. cannot wait for
retooling/retraining interventions).
3. Staffing under the modified T.O. shall be done in two stages, i.e., interim assignment
and final placement.
3.1. Interim assignments shall be made pending the finalization and approval of a
Revised Staffing Pattern pursuant to E.O. No. 430 in order to avoid disruption in normal
operations, mobilize newly-created units and effect a smooth transition to the modified
structure.
3.1.1. Interim assignments shall be effected through the issuance of Revenue Travel
Assignment Orders (RTAOs) for positions specified in E.O. No. 430 and Revenue
Special Orders (RSOs) for all others.
3.1.2. Interim assignments shall consider the Qualification Standards (QS) and the
special requirements (man specifications) of the positions. Thus, only employees who
meet the QS of the positions shall be designated thereto.
3.1.3. Interim assignments shall be approved by the Commissioner upon
recommendation of the following:
3.1.3.1 MANCOM for managerial positions (down to Division Chief level)
3.1.3.2 Assistant Commissioners/ Regional Directors concerned for non-managerial
positions.
On 24 November 1997, Commissioner Vinzons-Chato issued RTAO 28-97 reassigning
certain revenue personnel citing the exigencies of the revenue service as well as EO
430 and RMO 57-97 as basis.
On 5 December 1997, respondent Eliseo P. Pitargue ("Pitargue") filed a petition for
prohibition and injunction with special prayer for temporary restraining order before the
trial court against Commissioner Vinzons-Chato, together with then Secretary of Finance
Roberto de Ocampo ("Secretary de Ocampo"), then Executive Secretary Ruben Torres
("Executive Secretary Torres") and then Secretary of Budget and Management Salvador
M. Enriquez ("Secretary Enriquez") (collectively, "government officials"). Pitargue raised
the issue of whether funds appropriated for a specific purpose may be transferred as a
result of the reorganization of the BIR as provided in EO 430 and its implementing
policies and guidelines under RMO 57-97. The petition prayed that:
1. A temporary restraining order be issued enjoining the [government officials] from
further implementing the questioned reorganization of the BIR;
2. After hearing, the [government officials] be permanently enjoined from acting on any
reorganization pursuant to EO 430, RMO 57-97 and RTAO 28-97; and
3. EO 430, as well as RMO 57-97, and all other similar administrative issuances be
declared unconstitutional.6
During the period 7-9 January 1998, the BIR issued RTAO 1-98 to 7-98, relieving certain
BIR personnel of their duties and directing them to report to their new assignments as
indicated in the order.7
In an order dated 15 December 1997, Judge Marciano I. Bacalla ("Judge Bacalla")
denied Pitargues application for the issuance of a temporary restraining order. Judge
Bacalla directed the government officials to file their answer.
Meanwhile, in a letter dated 2 January 1998, Commissioner Vinzons-Chato requested
for an exemption from the prohibition on the transfer of detail and rotation of BIR
personnel during the election period from 11 January 1998 up to 10 June 1998 from the
Commission on Elections ("Comelec"). Comelec Director Teresita Suarez ("Director
Suarez") granted this request on 6 January 1998.8

Noble Bambina B. Perez ("Perez"), Chief Revenue Officer I of the BIR, filed an amended
petition dated 7 January 1998 before the trial court. On the same date, Pitargue filed an
urgent motion to admit the amended petition. Pitargue alleged that he has no objection
to Perezs inclusion as party plaintiff to afford her an opportunity to air her grievance.
On 8 January 1998, Judge Bacalla inhibited himself from further proceeding with the
petition to avoid any suspicion of a partial judgment. He forwarded the case to the Clerk
of Court for re-raffle. The case was re-raffled to Branch 77, presided by Judge Vivencio
S. Baclig ("Judge Baclig").
Comelec promulgated Resolution No. 2973 on 12 January 1998 prohibiting the transfer
of any officer or employee in the civil service without the prior written approval of the
Comelec during the election period from 11 January 1998 to 10 June 1998.9
The BIR issued RTAO 8-98 to 17-98 on 16 January 199810 relieving more BIR personnel
of their present duties and directing them to report to their new assignments as indicated
in the transfer orders. Apart from exigencies of the revenue service, the BIR also cited
EO 430 and Republic Act No. 8424 ("RA 8424")11 as reasons for the transfers.
On 19 January 1998, Judge Baclig issued an order admitting the amended petition. The
order stated that since the government officials have not yet filed a responsive pleading,
the amendment of the petition was still a matter of right on the part of Pitargue and
Perez. However, Judge Baclig ruled that the motion seeking to set the case for hearing
for the issuance of a temporary restraining order could no longer be granted. In his 15
December 1997 order, Judge Bacalla had already denied the application for a temporary
restraining order to enjoin the government officials from further implementing the
questioned reorganization of the BIR pursuant to EO 430, RMO 57-97 and RTAO 28-97.
In the meantime, the BIR issued RTAO 19-98 to 29-9812 on 20 January 1998, and RTAO
30-9813 on 21 January 1998.
On 23 January 1998, Pitargue filed a motion to reconsider the 19 January 1998 order
and reiterated his prayer for the issuance of a temporary restraining order. On the same
date, Secretary de Ocampo approved the proposed reorganization of the Office of the
Commissioner and the Information Systems Group of the BIR. Approval of the
reorganization of the other offices was deferred pending the report and recommendation
of the International Monetary Funds Technical Mission.14
Judge Baclig issued an order on 28 January 1998 admitting Perez as one of the
petitioners.
The BIR issued more transfer orders. The BIR issued RTAO 31-98 to 33-9815 on 27
January 1998, and RTAO 34-98 to 35-9816 on 3 February 1998.
On 4 February 1998, Judge Baclig issued yet another Order:
When this case was called for hearing on the petitioners prayer for the issuance of a
temporary restraining order, the counsel for public respondents moved for the
reconsideration of the Order of this Court, dated January 28, 1998, which set said
petitioners prayer for the issuance of a temporary restraining order for hearing today,
contending that the procedure pursued by petitioners is irregular because the Court had
already denied their prayer for a temporary restraining order and the order of denial has
attained finality. The Court resolves to require public respondents [government officials]
to put their motion for reconsideration in writing. And in view of this pending incident, the
Court is constrained to cancel todays scheduled hearing.
WHEREFORE, public respondents [government officials] are hereby given fifteen (15)
days from yesterday, February 3, 1998, within which to file their motion for
reconsideration of the Order of January 28, 1998. Meanwhile, the hearing is hereby held
in abeyance.
SO ORDERED.17
On the same day, Pitargue filed an urgent motion for reconsideration.18 Pitargue stated
that "the cancellation of the 4 February 1998 hearing on the temporary restraining order,
coupled with the grant of a 15-day period for the government officials to file a motion for
reconsideration effectively deprives [him] of the urgent right to seek immediate relief."
Pitargue added that "the issuance of more than 30 Revenue Travel Assignment Orders
affecting not less than 581 revenue officers all over the country in a span of less than
two weeks would render nugatory the relief" for the issuance of temporary restraining
order.
On 6 February 1998, Judge Baclig ordered that Pitargues urgent motion for
reconsideration be considered submitted for resolution.
On 10 February 1998, Pitargue and Perez filed a motion to set their application for the
issuance of a writ of preliminary injunction for hearing. Pitargue and Perez prayed that
should the trial court deny their unresolved motion for reconsideration, the trial court
should give them the opportunity on or before 13 February 1998 to show the necessity
for the issuance of a writ of preliminary injunction.19
On 11 February 1998, Judge Baclig granted Pitargue and Perezs motion, setting the
hearing on 13 February 1998.
Commissioner Vinzons-Chato received another memorandum dated 12 February 1998
from Secretary Enriquez, who replaced Secretary de Ocampo as Secretary of the
Department of Finance. The memorandum reads in part:
A review of the fiscal program and the measures to ensure stability in revenue
generation is currently being undertaken by the undersigned. Considering the
implications of the reorganization of the BIR and the redeployment of its personnel on
tax administration, a deferment of the implementation of such measures is hereby
requested. This is consistent with the January 23, 1998 memorandum of the former
Secretary of Finance. The inputs of the new Secretary on major reforms on tax
administration including redeployment of personnel can enhance their implementation.
xxx
In the exigencies of the service, this is a request which can be considered a directive.20
In the hearing held on 13 February 1998, Pitargue and Perez appeared as witnesses.
Pitargue, testifying in his capacity as a taxpayer, declared that he has a right to seek
protection against the misappropriation of public funds resulting from the reorganization
in the BIR which he claims is violative of the provisions of the Constitution and the
General Appropriations Act of 1997. Perez, a Chief Revenue Officer of the BIR, testified
that the issuance of several RTAOs threatens her right to security of tenure.21
On 17 February 1998, the trial court gave the OSG a non-extendible period of 15 days
from date to file their memorandum. The OSG asserted that there could be no hearing
on an application for a writ of preliminary injunction unless the petitioner pleads the
application in the main petition. The OSG also insisted that the motion for the issuance
of the writ does not contain sufficient allegations to support the application for a writ of
preliminary injunction. The trial court allowed Pitargue and Perez to file a memorandum
in support of their application for a writ of preliminary injunction also within 15 days from
17 February 1998. Meanwhile, the trial court held in abeyance the hearing on the urgent
motion for the issuance of a writ of preliminary injunction pending the submission of the
parties memoranda.1awphi1.nt
On the same day, Judge Baclig denied Pitargue and Perezs oral motion requesting for
the issuance of a temporary restraining order pending the submission of the memoranda
of the parties. Judge Baclig based the denial on the same ground adverted to in the 15
December 1997 order that there was no urgency for the issuance of a temporary
restraining order.
On 24 February 1998, Pitargue and Perez filed a motion to admit a second amended
petition for prohibition and injunction with preliminary mandatory/prohibitory injunction

with a special prayer for temporary restraining order. Aside from impleading two
additional party petitioners (Nieto A. Racho and Edmund Vasquez) who were alleged to
be directly affected by the questioned BIR reorganization, the second amended petition
made other substantial changes, to wit:
1. Including a different issue: whether the reorganization being undertaken by the BIR in
accordance with law;
2. Seeking a new relief: nullification of the RTAOs;
3. Raising additional grounds for the allowance of the petition: violation of the
constitutional right to security of tenure and due process, the provisions of RA 6656 (An
Act to Protect the Security of Tenure of Civil Service Officers and Employees in the
Implementation of Government Reorganization), RA 8250 (General Appropriations Act of
1997) and the Omnibus Election Code in relation to Comelec Resolution No. 2973, the
purposes of Administrative Order No. 372, and the directive of the Department of
Finance; and
4. Praying for the issuance of a writ of a preliminary mandatory injunction ordering the
CIR to recall RTAO 28-97, 1-98 to 35-98 and of a preliminary prohibitory injunction
ordering the government officials to cease and desist from reorganizing the BIR.
The second amended petition also prayed that:
1. An order be issued permanently enjoining the government officials from acting on any
reorganization pursuant to EO 430, RMO 57-97 and RTAO 28-97, 1-98 to 35-98;
2. EO 430 be declared unconstitutional; and
3. The implementing policies and guidelines contained in RMO 57-97 and RTAO 28-97,
1-98 to 35-98, and all other similar administrative issuances, be declared void or
unconstitutional.22
In an affidavit dated 24 March 1998, Nieto Racho denied any participation in the second
amended petition. Nieto Racho asserted that he never questioned the legality of the
various directives issued by the BIR management concerning the bureaus
reorganization. He has already transferred from Revenue District Office ("RDO") 83 in
Talisay, Cebu to RDO 86 in Borongan, Samar.23
On 27 February 1998, the trial court directed the government officials to file their
opposition to the motion to admit second amended petition within seven days from date.
The government officials correspondingly filed their opposition on 6 March 1998.
Pitargue filed a reply to the opposition on 9 March 1998.
Judge Baclig granted the motion to admit the second amended petition on 16 March
1998. Judge Baclig set on 19 and 20 March 1998 the hearing on the application for a
writ of preliminary mandatory and prohibitory injunction.
On 19 March 1998, Judge Baclig gave the government officials ten days from said date
within which to file their written opposition to Pitargues application for a writ of
preliminary injunction as well as their memorandum. The government officials filed a
consolidated opposition and memorandum on 30 March 1998.
The Ruling of the Trial Court
On 6 April 1998, the trial court ordered the issuance of a writ of preliminary injunction
directing the BIR to cease from implementing RTAO 28-97 and 1-98 to 35-98. The trial
court held that there is a possibility that revenue collection and monitoring activities will
be temporarily suspended pending approval of the reassigned revenue officers. The trial
court stated that even if the RTAOs do not violate respondents right to security of
tenure, the RTAOs are contrary to the Secretary of Finances directive to defer the
reorganization. The trial court held that there was an illegal reorganization, done without
the concurrence of the Secretary of Finance and without the approval of the Secretary of
Budget and Management. The dispositive portion of the trial courts order reads:
WHEREFORE, the Court hereby orders the issuance of a writ of preliminary mandatory
injunction ordering the respondent Commissioner of Internal Revenue to immediately
recall, upon receipt of the writ, Revenue Travel Assignment Order Nos. 28-97 and 1-98
to 35-98, and to cease and desist from further implementing the reorganization of the
Bureau of Internal revenue until further Orders from this Court; and to maintain the
status quo. The petitioners are exempted from filing an injunction bond considering that
respondent Secretary of Finance himself has ordered the deferment of the
reorganization in his twin directives.
SO ORDERED.24 (Emphasis in the original)
The trial court issued the corresponding writ of preliminary mandatory injunction on 7
April 1998.
The following day, the BIR filed a petition for certiorari and prohibition with urgent prayer
for temporary restraining order and preliminary injunction with the appellate court. The
petition was docketed as CA-G.R. SP No. 47354. The appellate court issued a resolution
granting the prayer for a temporary restraining order.
The Ruling of the Court of Appeals
On 19 June 1998, the appellate court issued a resolution directing the trial court to cease
and desist from enforcing the order dated 6 April 1998 and the writ of preliminary
mandatory injunction dated 7 April 1998.
On 29 September 1999, the appellate court rendered its decision. In upholding the trial
courts writ of preliminary injunction, the appellate court ruled that the RTAOs issued by
the BIR to effect the transfer or promotion in rank of BIR personnel under EO 430 were
issued without authority from the Secretary of Finance and approval by the Secretary of
Budget and Management. The appellate court also ruled that the RTAOs violated
Section 2 of the Omnibus Election Code and Comelec Resolution No. 2973 dated 12
January 1998. The dispositive portion of the appellate courts decision reads:
WHEREFORE, the instant petition is DENIED due course and is hereby DISMISSED for
lack of merit.
Accordingly, the Writ of Preliminary Injunction issued by the Former Fourteenth Division
of this Court on June 19, 1998 is hereby reconsidered and set aside.
The respondent Court is hereby DIRECTED to immediately conduct further proceedings
with dispatch until the final disposition of the instant case.
No pronouncement as to costs.
Let the entire original record of this Case be REMANDED to the court of origin.
SO ORDERED.25
Issues
In its petition, the BIR states that the appellate court committed errors when it:
1. UPHELD THE ASSAILED ORDER AND WRIT OF PRELIMINARY MANDATORY
INJUNCTION ON THE GRATUITOUS ASSUMPTION THAT A REORGANIZATION IN
THE BIR WAS BEING IMPLEMENTED BY THEN COMMISSIONER CHATO
THROUGH THE ISSUANCE OF THE RTAOs;
2. FAILED TO CONSIDER THAT THE SUBJECT RTAOs WERE MERE TRANSFER
AND REASSIGNMENTS OF PERSONNEL ISSUED PENDING THE ACTUAL
IMPLEMENTATION OF THE REORGANIZATION ENVISIONED UNDER EO 430,
WHICH, IN THE EXIGENCIES OF THE SERVICE, CAN BE ISSUED BY THEN
COMMISSIONER CHATO IN THE EXERCISE OF HER PREROGATIVE AS HEAD OF
THE BIR;
3. HELD THAT THE ISSUANCES OF THE RTAOs WERE IN VIOLATION OF SECTION
1 OF RESOLUTION NO. 2973 DATED 12 JANUARY 1998 OF THE COMELEC,
NOTWITHSTANDING THE EXEMPTION OR APPROVAL GRANTED BY THE
COMELEC FOR SUCH ISSUANCES;
4. FAILED TO NULLIFY THE QUESTIONED ORDER AND WRIT OF PRELIMINARY

MANDATORY INJUNCTION DESPITE BEING TAINTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
CONSIDERING:
a. THE PATENT INSUFFICIENCY OF RESPONDENTS SECOND AMENDED
PETITION, SPECIFICALLY THE ABSENCE IN THE PETITION OF AN APPLICATION
FOR PRELIMINARY INJUNCTION;
b. THE FAILURE OF RESPONDENTS TO SHOW THE EXISTENCE OF A CLEAR AND
POSITIVE RIGHT WHICH COULD BE PROTECTED BY INJUNCTIVE RELIEF;
c. THE ABSENCE OF ANY SHOWING OF IRREPARABLE INJURY SUSTAINED OR
WILL BE SUSTAINED BY RESPONDENTS BY REASON OF THE ISSUANCE OF THE
RTAOs;
d. THE LACK OF A VALID GROUND TO WARRANT EXEMPTION FROM THE
REQUISITE POSTING OF AN INJUNCTION BOND; and
e. THE PATENT LACK OF MERIT OF RESPONDENTS SECOND AMENDED
PETITION.
The central question for resolution is whether Pitargue, Perez and Vasquez are entitled
to the writ of preliminary injunction granted by the trial court. For this reason, we shall
deal only with the questioned writ and not with the merits of the case pending before the
trial court.
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides:
SECTION 3. Grounds for issuance of a writ of preliminary injunction.A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the rights
of the applicant respecting the subject of the action or proceeding, and tending to render
the judgment ineffectual.
For respondents to be entitled to an injunctive writ, they must show that there exists a
right to be protected and that the acts against which the injunction is directed are
violative of the right.26 We note that respondents employed the shotgun approach in their
petition before the trial court to show their entitlement to the writ of preliminary injunction.
Pitargue sued as a taxpayer fearing possible misappropriation of public funds. Vasquez,
who received an RTAO reassigning him, raised violation of his constitutional rights to
security of tenure and to due process. Perez sued as a BIR employee fearing a violation
of her constitutional rights to security of tenure and to due process by a probable
inclusion in the RTAOs. Let us examine whether their allegations are sufficient for the
issuance of an injunctive writ.1awphi1.nt
As to Pitargue, it is premature for him to raise violation of the appropriation laws as an
issue. Section 25(5), Article VI of the 1987 Constitution states:
No law shall be passed authorizing any transfer of appropriations; however, the
President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions
may, by law, be authorized to augment any item in the general appropriations law for
their respective offices from savings in other items of their respective appropriations.
On the other hand, Section 3 of EO 430 provides:

SECTION 3. Funding. The financial resources needed to carry out the provisions of
this Executive Order shall be taken from funds available in the BIR: Provided, That the
total cost of the approved staffing pattern at full implementation shall not exceed
available funds for Personal Services.
Section 3 of EO 430 prevents any transfer of appropriation or any augmentation of the
funds available for Personal Services. It is speculative on the part of respondents to
assert that funds intended for another purpose have been transferred to meet the
funding requirements of an impending reorganization under EO 430 and the present
reassignments under RMO 57-97 and RTAO 28-97 and 1-98 to 35-98. Furthermore,
RMO 57-97 states that:
3. Staffing under the modified T.O. shall be done in two stages, i.e., interim assignment
and final placement.
3.1. Interim assignments shall be made pending the finalization and approval of a
Revised Staffing Pattern pursuant to E.O. 430 in order to avoid disruption in normal
operations, mobilize newly-created units and effect a smooth transition to the modified
structure.
3.1.1 Interim assignment shall be effected through the issuance of Revenue Travel
Assignment Orders (RTAOs) for positions specified in E.O. 430 and Revenue Special
Orders (RSOs) for all others.
xxx
3.2 Final Placement actions shall take place upon approval of the Revised Staffing
Pattern of the Bureau by the Department of Finance (DOF) and the Department of
Budget and Management (DBM).
3.2.1 An RTAO shall be issued to confirm/finalize an employees continued discharge of
the functions which constituted his interim assignment.27
It was premature for respondents to raise violation of appropriation laws as an issue as
final placement shall take place only upon approval of the Revised Staffing Pattern of the
BIR by the Department of Finance and Department of Budget and Management.
Being BIR employees, Perez and Vasquez focused their objections on security of
tenure. In the case of Perez, respondents object to the specter of a transfer. In the case
of Vasquez, respondents object to the place of transfer. Under the law, any employee
who questions the validity of his transfer should appeal to the Civil Service
Commission.28 The trial court should have dismissed the case as to Perez and Vasquez,
who both failed to exhaust administrative remedies. As we held in National Power
Corporation v. Court of Appeals :29
xxx The settled rule is before a party may seek the intervention of the courts, he should
first avail of all the means afforded by administrative processes. Hence, if a remedy
within the administrative machinery is still available, with a procedure prescribed
pursuant to law for an administrative officer to decide the controversy, a party should first
exhaust such remedy before resorting to the courts.
To subordinate essential government services, along with the great resources and
efforts they entail, to the individual preferences and opinions of civil service employees,
would negate the principle that a public office is a public trust and that it is not the private
preserve of any person.30
Section 2(3), Article IX-B of the Constitution provides that "[n]o officer or employee of the
civil service shall be removed or suspended except for cause provided by law."
Respondents also invoke RA No. 6656 as construed in Floreza v. Ongpin,31 which
declared:
We apply the ruling in Dario v. Mison and Section 2 of Republic Act 6656 to this petition.
We hold that Floreza was deprived of his right to security of tenure by his non-
reappointment to the position of Revenue Service Chief or its new title under the
reorganized Bureau of Internal Revenue. It should be remembered that after February 2,
1987, any reorganization undertaken by the government is circumscribed by the
provisions and safeguards of the new Constitution. Hence, when Floreza was not
reappointed as Revenue Service Chief or as Assistant Commissioner either in the Legal
Service or in the Planning and Research Service, and other persons were appointed to
the positions, he was, in effect, dismissed from the service in violation not only of his
right to security of tenure but to due process as well.
On the other hand, paragraph 1, section 2 of EO 430 states:
SECTION 2. Redeployment of Personnel. The redeployment of officials and other
personnel on the basis of the streamlining embodied in this Executive Order shall not
result in the diminution in rank and compensation of existing personnel and shall take
into account pertinent Civil Service laws and rules.
RMO 57-97 echoes the same sentiment, and provides:
B. On Deployment of Personnel
1. The implementation of the BIR T.O. under EO 430 shall not result to involuntary
separation or diminution in rank and compensation of personnel.
xxx
5. Placement of personnel shall be in accordance with the Civil Service rules and
regulations.32
Respondents did not cite any BIR employee who suffered a diminution of rank and
salary as a result of the issued RTAOs. Neither did they cite any BIR employee who was
removed from office as a result of the transfers. Failing these, we assert the presumption
of regularity of the issuance of the RTAOs - that Commissioner Vinzons-Chato issued
the RTAOs as part of a bona-fide reassignment of selected BIR employees to streamline
the Bureaus services. The certification dated 19 May 1998 from Lucita G. Rodriguez,
Assistant Commissioner of the BIRs Human Resource Development Service, reads:
THIS IS TO CERTIFY that, to date, no appointments have been issued to BIR
employees as a consequence of their reassignments pursuant to Revenue Travel
Assignment Order (RTAO) Nos. 28-97 and 1-98 to 35-98. Accordingly, no salary
increase or adjustment was made or given to any of the said employees by virtue of the
issuance of the said RTAOs.33
Osias B. Baldivino, Chief of the BIRs Litigation and Prosecution Division, notarized the
certification.
A preliminary injunction is merely a provisional remedy, an adjunct to the main case
subject to the latters outcome. Its sole objective is to preserve the status quo until the
trial court hears fully the merits of the case. The status quo is the last actual, peaceable
and uncontested situation which precedes a controversy.l^vvphi1.net The status quo
should be that existing at the time of the filing of the case. A preliminary injunction
should not establish new relations between the parties, but merely maintain or reestablish the pre-existing relationship between them.34 We remind respondents of our
ruling in Manila International Airport Authority v. Court of Appeals :35
Considering the far-reaching effects of a writ of preliminary injunction, the trial court
should have exercised more prudence and judiciousness in its issuance of the injunction
order. We remind trial courts that while generally the grant of a writ of preliminary
injunction rests on the sound discretion of the court taking cognizance of the case,
extreme caution must be observed in the exercise of such discretion. The discretion of
the court a quo to grant an injunctive writ must be exercised based on the grounds and
in the manner provided by law. Thus, the Court declared in Garcia v. Burgos:
"It has been consistently held that there is no power the exercise of which is more
delicate, which requires greater caution, deliberation and sound discretion, or more
dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of
equity that should never be extended unless to cases of great injury, where courts of law
cannot afford an adequate or commensurate remedy in damages.1a\^/phi1.net
Every court should remember that an injunction is a limitation upon the freedom of action
of the defendant and should not be granted lightly or precipitately. It should be granted
only when the court is fully satisfied that the law permits it and the emergency demands
it." (Emphasis in the original)
Courts should avoid issuing a writ of preliminary injunction which would in effect dispose
of the main case without trial.36 In issuing the writ of preliminary injunction, the trial court
did not maintain the status quo but restored the situation before the status quo, that is,
the situation before the issuance of the RTAOs. In effect, the trial court accepted
respondents premise about an unlawful reorganization and prejudged the
constitutionality of the questioned issuances (EO 430, RMO 57-97 and RTAO 28-97 and
1-98 to 35-98).
The trial courts ruling was a reversal of the rule on the burden of proof since it assumed
the proposition which the respondents here were bound to prove. Moreover, the trial
courts grant of the writ of preliminary injunction in favor of respondents despite the lack
of a clear and unmistakable right on their part constitutes grave abuse of discretion
amounting to lack of jurisdiction.
WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals dated 29
September 1999 in CA-G.R. SP No. 47354 is SET ASIDE. The Order dated 6 April 1998
and the corresponding writ of preliminary mandatory injunction dated 7 April 1998, both
issued by Branch 77 of the Regional Trial Court of Quezon City in Civil Case No. Q-9732928, are declared VOID.
SO ORDERED.
G.G. Sportswear v. BDO, G.R. No. 184434, 612 SCRA 47, 8 February 2010
G.G. SPORTSWEAR
MANUFACTURING CORP.
and NARESH K. GIDWANI,
Petitioners,
G.R. No. 184434

Present:
Carpio, J., Chairperson,

- versus Brion,
Del Castillo,
Abad, and
Perez, JJ.
BANCO DE ORO UNIBANK, INC.,
PHILIPPINE INVESTMENT ONE
(SPV-AMC), INC. and THE OFFICE
OF THE CLERK OF COURT AND
EX OFFICIO SHERIFF OF THE
REGIONAL TRIAL COURT OF
MAKATI CITY, BRANCH 133, as
represented by ATTY. ENGRACIO
Promulgated:
M. ESCASINAS, JR.,
Respondents.
February 8, 2010
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
This case is concerned with the need to issue a temporary restraining order
(TRO) or writ of preliminary injunction, enjoining a banks foreclosure of the mortgages
that secure the plaintiffs loans upon a claim that the bank had already sold the loan
receivables to a Special Purpose Vehicle entity.
The Facts and the Case
On April 22, 1994 petitioners G.G. Sportswear Manufacturing Corp. (G.G.
Sportswear) and Naresh Gidwani mortgaged a lot in Aranda, Makati, and a house and
lot in Bel-Air Village, also in Makati, to Equitable-PCI Bank, now the respondent Banco
de Oro Unibank, Inc. (BDO), to secure a P20,357,000.00 loan to G.G. Sportswear. On
April 25, 1996, to secure an additional P11,643,000.00 loan that BDO gave G.G.
Sportswear, the parties amended the real estate mortgages to include such
loan. Petitioner G.G. Sportswear was unable to pay its loans.
On March 15, 2005 respondent BDO told G.G. Sportswear in a letter[if
that the bank transferred on that date its past due loan obligation with
the bank, totaling US$12,257,581.31 as of December 31, 2004, to Philippine Investment
One (SPV-AMC), Inc. (PIO), including all interest, fees, charges, penalties, and
securities/collaterals, if any. This was followed by BDO Certification[if !supportFootnotes][2][endif]
dated April 21, 2005 that it has assigned, conveyed, transferred and sold to PIO, on a
without recourse basis, all its rights, title, benefits and interest to the Loan Receivables
of G.G. Sportswear.
Subsequently, however, respondent BDO applied with the Ex Officio Sheriff of
Makati for the foreclosure of the properties that petitioners G.G. Sportswear and Gidwani
mortgaged with the bank. The notice of sheriffs sale scheduled the auction of the
properties on May 31, 2007 but this was subsequently rescheduled to July 18, 2007. At
any rate, the sheriff auctioned off the Aranda property to BDO on June 21, 2007.[if
On July 16, 2007, two days before the rescheduled auction of the Bel-Air
property, petitioners G.G. Sportswear and Gidwani filed an action with the Regional Trial
Court (RTC) of Makati, in Civil Case 07-631,[if !supportFootnotes][4][endif] to annul the foreclosure,
hold respondent BDO in indirect contempt, award damages, and enjoin further
foreclosure by TRO and preliminary injunction. They alleged that, as a result of BDOs
transfer of G.G. Sportswears loan receivables to PIO in 2005, BDO lost the right to
foreclose.
In its answer,[if !supportFootnotes][5][endif] respondent BDO denied transferring
petitioner G.G. Sportswears loan receivables to PIO, stating that the April 21, 2005
Certification it issued was a mere general certification that did not specify which of
several loan receivables were sold to PIO. BDO in fact transferred to Philippine Asset
Investment, which entity was subsequently taken over by respondent PIO, only
P290,820.00 out of G.G. Sportswears total loan.[if !supportFootnotes][6][endif] BDO attached
Certifications[if !supportFootnotes][7][endif] from itself and from PIO to the effect that the credits
secured by the Aranda and Bel-Air properties had not been transferred to PIO. The
latter filed an answer of the same tenor.[if !supportFootnotes][8][endif]
On August 7, 2007 the RTC issued an order,[if !supportFootnotes][9][endif] denying
petitioners G.G. Sportswear and Gidwanis applications for TRO and preliminary
injunction. They filed a motion for reconsideration and a motion to inhibit the presiding
judge,[if !supportFootnotes][10][endif] but on October 11, 2007 the RTC denied both motions.[if
This prompted G.G. Sportswear and Gidwani to file a special civil
action of certiorari with the Court of Appeals (CA) in CA-G.R. SP 101799, assailing the
RTC orders mainly based on the proposition that respondent BDO had lost its right to
foreclose the mortgages when it assigned its rights to PIO.
On June 26, 2008 the CA rendered judgment,[if !supportFootnotes][12][endif] dismissing
the petition for lack of merit. It denied on August 29, 2008 petitioners G.G. Sportswear
and Gidwanis subsequent motion for reconsideration,[if !supportFootnotes][13][endif] prompting
them to file the present petition for review.
Issue Presented
The only issue presented in this case is whether or not the CA erred in finding
that the RTC did not gravely abuse its discretion when it denied petitioners G.G.
Sportswear and Gidwanis application for TRO and preliminary injunction despite the
banks apparent assignment of its credit to another entity.
The Courts Ruling
Petitioners G.G. Sportswear and Gidwani point out that BDOs March 15, 2005
letter and its April 21, 2005 certification show that the bank already transferred to PIO all
its rights to the loan receivables of G.G. Sportswear. Thus, BDO lost its right to
foreclose the mortgages on the properties that secured the unpaid loans, thus, entitling
petitioners to an order enjoining the foreclosures. Further, petitioners claim that BDO
bloated G.G. Sportswears outstanding obligation such that it was being made to pay
more through the foreclosure than was actually due.
The test for issuing a TRO or an injunction is whether the facts show a need
equity to intervene in order to protect perceived rights in equity.[if
In general, a higher court will not set aside the trial courts grant or
denial of an application for preliminary injunction unless it gravely abused its discretion
as when it lacks jurisdiction over the action, ignores relevant considerations that stick out
of the parties pleadings, sees the facts with a blurred lens, ignores what is relevant,
draws illogical conclusions, or simply acts in random fashion.
for
Injunction may be issued only when the plaintiff appears to be entitled to the
main relief he asks in his complaint.[if !supportFootnotes][15][endif] This means that the plaintiffs
allegations should show clearly that he has a cause of action. This means that he
enjoys some right and that the defendant has violated it.[if !supportFootnotes][16][endif] And, where
the defendant is heard on the application for injunction, the trial court must consider, too,
the weight of his opposition.
If one were to go by respondent BDOs March 15, 2005 letter to petitioner G.G.
Sportswear and its April 21, 2005 certification, the bank appears to have already
assigned all the loan receivables of G.G. Sportswear to respondent PIO. Logically, BDO
no longer had the right to foreclose on the mortgages that secured the loans. But,
judging by its answer to the complaint, BDO wanted that corrected. For it claimed that it
actually assigned just a measly portion of its loan receivables to respondent PIO.
Did the allegations of the parties and the documents they attached to their
pleadings give ample justification for the issuance of a TRO or preliminary injunction
order to stop the foreclosure sale of the Bel-Air property? Two considerations militate
against it:
First. The mortgaged properties were due for foreclosure. Admittedly, petitioner G.G.
Sportswear had defaulted on the loans secured by the subject mortgages. Petitioners
had, therefore, no right to complain about losing their properties to foreclosure.
Second. The issue of which party owns the loan receivables and, consequently, had the
right to foreclose the mortgages is essentially an issue between BDO and PIO. This
issue is the concern of petitioners G.G. Sportswear and Gidwani but only to the extent
that they are entitled to ensure that the proceeds of the foreclosure sale were paid to the
right party.
As it happens, however, this is not even a genuine issue. Respondent PIO,
which had been impleaded in the case, did not contest BDOs ownership of the loan
receivables and its right to foreclose the mortgages. It would, therefore, make no sense
to insist that PIO be the one to foreclose when it denounces such right. Besides, the
real estate mortgages presented for foreclosure remained in BDOs name. No
document has been presented superseding it.

For the above reasons, it cannot be said that petitioners G.G. Sportswear and
Gidwani have established a right to the main relief they want, namely, the arrest of the
foreclosure sale of their mortgaged properties after they had admitted not paying their
loans. As for their claim that BDO had bloated G.G. Sportswears outstanding
obligation, the remedy if this turns out to be true is to direct BDO to return the excess
proceeds with damages as the circumstances may warrant.
What is more, the provisional remedy of preliminary injunction may only be
resorted to when there is a pressing necessity to avoid injurious consequences which
cannot be remedied under any standard of compensation.[if !supportFootnotes][17][endif] Here,
since there is a valid cause to foreclose on the mortgages, petitioners G.G. Sportswear
and Gidwani cannot claim that the irreparable damage they wanted to prevent by their
application for preliminary injunction is the loss of their properties to auction sale. Their
real injury, if it turns out that the right to foreclose belongs to PIO rather than to BDO, is
payment of the proceeds of the auction sale to the wrong party rather than to their
creditor. But this kind of injury is purely monetary and is compensable by an appropriate
judgment against BDO. It is not in any sense an irreparable injury.
Under the circumstances, the Court must concur with the CAs finding that the
RTC did not act with grave abuse of discretion in denying petitioners application for
TRO and preliminary injunction order.
ACCORDINGLY, the Court DENIES the petition and entirely AFFIRMS the June 26,
2008 decision and August 29, 2008 resolution of the Court of Appeals in CA-G.R. SP
101799.
SO ORDERED.
Borja v. Salcedo, Adm. Matter No. RTJ-03-1746 (formerly OCA IPI No. 10-1225RTJ), 412 SCRA 110, 26 September 2003
[A.M. No. RTJ-03-1746. September 26, 2003]
ROGER F. BORJA, complainant, vs. JUDGE ZORAYDA H. SALCEDO, respondent.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
In a Complaint dated January 11, 2001, Roger F. Borja accuses Presiding Judge
Zorayda H. Salcedo of the Regional Trial Court (Branch 32) of San Pablo City of gross
ignorance of the law and grave abuse of discretion in issuing a temporary restraining
order (TRO) in Civil Case No. SP-5775 (01), entitled, Damaso T. Ambray vs. San Pablo
City Water District, represented by General Manager Roger Borja, et al., without
complying with the 1997 Rules of Civil Procedure.
Complainant alleges that the civil case was filed with the RTC of San Pablo City on
January 2, 2001 and on the same day, assigned by raffle to Branch 32, presided over by
respondent Judge. The following day, respondent Judge issued an Order granting the
TRO, to wit:
Before this Court is a verified complaint praying for the issuance of a Temporary
Restraining Order (TRO) which the Court finds to be sufficient in form and substance.
Conformably with Rule 8 of the Interim Rules and Guidelines and Section 1 of BP Blg.
224, the issuance of the Writ of Preliminary Injunction is hereby set on January 4, 2001
at 8:30 oclock in the morning and at which date and time, the respondents/defendants
are hereby directed to appear and show cause why the writ prayed for should not be
granted.
In the meantime, in order to maintain the status quo between the parties and to obviate
irreparable damage the petitioner may suffer by reason of and as a consequence of the
acts sought to be enjoined pending hearing on the issuance of the writ of preliminary
injunction, the respondents/defendants are hereby enjoined from enforcing Board
Resolution No. 082, Series 2000 restraining Atty. Marciano Brion, Jr. to sit, act and
exercise the powers of a Director of San Pablo City Water District representing the civic
sector.
Let this Order together with the copy of the Complaint be served forthwith upon the
respondents/defendants who are hereby given a period of ten (10) days from receipt
within which to file their Answer.
The Deputy Sheriff of this Branch is hereby ordered to implement the processes of this
Court immediately.
SO ORDERED
City of San Pablo, January 3, 2001.
and a copy thereof was received by the complainant that afternoon.[if !supportFootnotes][1][endif]
Complainant claims that the procedure followed by respondent Judge violated Rule 58
Section 4 [b-c-d], 1997 Rules of Civil Procedure on the following grounds:
(a) Being a multi-sala court, it is the Executive Judge that may issue an ex-parte TRO
good for 72 hours.
(b) The notice of raffle was not preceded or contemporaneously accompanied, by
service of summons, with the complaint or initiatory pleading and the applicants affidavit
and bond.
(c) Respondent Judge who was assigned to the case did not conduct the required
summary hearing with notice and in the presence of the parties within 24 hours after the
Sheriffs return of service and/or the records are received by the branch selected by
raffle.
(d) The TRO was issued ex-parte without the required bond and without alleging that the
matter is of extreme urgency and applicant would suffer grave or irreparable injury.
(e) Complainant did not ask for the issuance of a preliminary injunction on January 4,
2001 in the morning.[if !supportFootnotes][2][endif]
Then Court Administrator Alfredo Benipayo, through a letter dated February 7, 2001,
informed complainant that the subject matter of his complaint is judicial in nature hence it
shall be denied due course as there are judicial remedies available under the Rules of
Court yet to be exhausted.[if !supportFootnotes][3][endif]
On March 30, 2001, however, the Office of the Court Administrator (OCA) received a
Motion from complainant dated March 29, 2001, praying for the reconsideration of the
notice of denial of his complaint on the strength of an Order dated January 19, 2001
issued by Judge Marivic Balisi-Umali of the RTC (Branch 30), San Pablo City, dissolving
the questioned TRO for failure to comply with the requisites of Supreme Court
Administrative Circular No. 20-95.
Complainant argues that when the law transgressed is elementary, as in the instant
case, the failure to know or observe it constitutes gross ignorance of the law.[if
Upon the report and recommendation of the OCA, this Court, in a Resolution dated
August 29, 2001 resolved to require:
(a) respondent Judge Zorayda Salcedo to COMMENT on the complaint and motion for
reconsideration within ten (10) days from notice hereof; and (b) Judge Marivic T. BalisiUmali, then Regional Trial Court Judge, San Pablo City, Branch 30, to EXPLAIN within
ten (10 ) days from notice hereof why no disciplinary action should be taken against her
for issuing an order dissolving a temporary restraining order issued by a court of coequal jurisdiction.[if !supportFootnotes][5][endif]
On October 16, 2001, respondent judge submitted her comment and apologized for the
delay in its submission explaining that she, as well as her husband, underwent cataract
operation.[if !supportFootnotes][6][endif] She informed the Court that she is adopting as her
comment the Indorsement dated November 16, 2000 which she had submitted to this
Court in connection with OCA IPI No. 00-1058-RTJ, an earlier administrative case also
filed by herein complainant against her but which was dismissed by this Court for lack of
merit.[if !supportFootnotes][7][endif] She likewise emphasized her denial of partiality, ignorance of
the law, bias and so forth being attributed to her by complainant for the reverse is true as
it has been (her) desire ! to always observe impartiality, fairness, and dedication in the
administration of justice.[if !supportFootnotes][8][endif]
Judge Marivic T. Balisi-Umali in her Compliance dated October 17, 2001, explained her
actions relative to the case as follows:
May the Honorable First Division be informed that Civil Case No. SP-5757(01) xxx for
Declaration of Nullity of Board Resolution No. 082, Series 2000 and for Issuance of
Temporary Restraining Order was originally raffled to Branch 32 of the San Pablo City,
RTC presided over by the Honorable Zoraida Herradura Salcedo on January 2,
2001. The following day Judge Salcedo issued a Temporary Restraining Order
(TRO). On even date, defendant Borja filed a Motion to Inhibit Judge Herradura
[Salcedo] from the case and which the latter granted. On January 5, 2001, defendant
Brion filed a Motion to Dissolve Temporary Restraining Order anchored on the ground
that the TRO was issued in violation of Rule 58, Section 4(d) of the 1997 Rules of Civil
Procedure and is therefore a patent nullity. On even date, the case was raffled to the
undersigned.
The undersigned resolved the Motion to Dissolve Temporary Restraining Order on
January 19, 2001. A copy of her Order is hereto attached. The undersigned dissolved
the TRO because it was issued in violation of Supreme Court Circular No. 20-95.
The record of the case forwarded to the undersigned from Branch 32 did not show
that any Order setting a summary hearing on the application for TRO was caused
to be issued by Branch 32 for service to all the parties.
Administrative Circular No. 20-95 mandates that the application for TRO shall be acted
upon only after all the parties are heard in a summary hearing.
The undersigned humbly submits that as aforestated, Judge Salcedo inhibited
herself from the case which was thereafter re-raffled to the sala of the
undersigned. The motion to Dissolve TRO had to be resolved.
The undersigned in dissolving the TRO did not ignore or overlook the fact that it was
issued by a co-equal court, the orders or processes of which the undersigned cannot
interfere with, pass upon much less reverse. However, under the circumstances
obtaining where it was clearly shown and the undersigned was convinced that the TRO
was irregularly issued, somehow she had to correct the error. It was her conviction then
and now that by sustaining the TRO because it was issued by a co-equal court would
tantamount to correcting a mistake with another mistake.[if !supportFootnotes][9][endif] (Emphasis
supplied)
In a Resolution dated July 17, 2002, this Court referred the case to the Office of the
Court Administrator for evaluation, report and recommendation.[if !supportFootnotes][10][endif]
Deputy Court Administrator Jose P. Perez submitted his Report, dated November 4,
2002, pertinent portions of which read as follows:
In the study of the entire record of the case, the undersigned observed that respondent
judge did not controvert the material allegations in the complaint. Her comment dated
November 16, 2000, specifically relates to the incidents involved in Civil Case No. SP5454(99) which is the subject matter of OCA IPI No. 00-1058-RTJ. We therefore find
unavailing the explanation of Judge Salcedo.
We find that respondent judge failed to comply with Administrative Circular No. 2095. No order setting a summary hearing on the application for temporary restraining
order was furnished the defendants. A summary hearing can not be dispensed with in
view of the mandatory requirement that the application for a TRO shall be acted upon
only after all parties are heard in a summary hearing after the record of the case are
transmitted to the branch selected by raffle.
A TRO may however be issued ex-parte if the matter is of such extreme urgency that
grave injustice and irreparable injury will arise unless it is issued immediately. Under
such circumstances, the executive judge shall issue the TRO effective only for seventytwo (72) hours from its issuance. But such a procedure is not applicable to
respondent judge because she is not the executive judge of RTC, San Pablo City.
(Emphasis supplied).
In Golangco vs. Villanueva, 278 SCRA 414, it was held that respondent judges
disregard of the Supreme Courts pronouncement on temporary restraining orders was
not just ignorance of the prevailing rule; to a large extent, it was misconduct, conduct
prejudicial to the proper administration of justice and grave abuse of authority.
Likewise, in Adao vs. Lorenzo, A.M. No. RTJ-99-1496, 316 SCRA 570, respondent
judge was fined in the amount of P5,000.00 for his failure to abide by Administrative
Circular No. 20-95.
Concerning the dissolution of the questioned TRO by Judge Marivic T. Balisi-Umali,
RTC, Branch 30, San Pablo City, we find the same to be proper. Judge Umali has
satisfactorily explained that she granted the defendants motion to dissolve TRO on 19
January 2000 or only after Judge Salcedo inhibited herself from trying the case and the
case re-raffled to the formers sala on 5 January 2000.
IN VIEW OF THE FOREGOING, it is respectfully recommended that:
(1) OCA IPI No. 01-1225-RTJ be RE-DOCKETED as a regular administrative matter;
(2) Respondent Judge Zorayda H. Salcedo, RTC, Branch 32, San Pablo City be fined
in the amount of FIVE THOUSAND (P5,000.00) PESOS for her failure to comply with
Administrative Circular No. 20-95, with a warning that a repetition of similar acts in the
future shall be dealt with more severely; and
(3)
The explanation of Judge Marivic T. Balisi-Umali, then RTC Judge, Branch 30,
San Pablo City be ACCEPTED for being meritorious.[if !supportFootnotes][11][endif]
On March 27, 2003, complainant submitted a Memorandum emphasizing that:
respondent judge is not an Executive Judge; the complaint in Civil Case No. SP-5775
(01) did not allege extreme urgency for the issuance of a TRO neither did it state that its
non-issuance would cause grave injustice and irreparable injury to the plaintiff; the TRO
issued by respondent judge on January 3, 2001 failed to declare that it was effective for
72 hours only; and on January 19, 2001, Judge Marivic T. Balisi-Umali dissolved the
TRO issued by respondent judge for violation of SC Circular No. 20-95.[if
Respondent judge, on the other hand, manifested, through a letter dated February 13,
2003, her willingness to submit the matter for resolution on the basis of the pleadings on
record.[if !supportFootnotes][13][endif]
After a review of the records of the case, we find the recommendations of the OCA to be
well taken.
Administrative Circular No. 20-95 provides:
1.
Where an application for temporary restraining order (TRO) or writ of preliminary
injunction is included in a complaint or any initiatory pleading filed with the trial court,
such complaint or initiatory pleading shall be raffled only after notice to the adverse party
and in the presence of such party or counsel.
2.
The application for a TRO shall be acted upon only after all parties are heard in a
summary hearing conducted within twenty-four (24) hours after the records are
transmitted to the branch selected by raffle. The records shall be transmitted
immediately after raffle.
3.
If the matter is of extreme urgency, such that unless a TRO is issued, grave
injustice and irreparable injury will arise, the Executive Judge shall issue the TRO
effective only for seventy-two (72) hours from issuance but shall immediately summon
the parties for conference and immediately raffle the case in their presence. Thereafter,
before the expiry of the seventy-two (72) hours, the Presiding Judge to whom the case is
assigned shall conduct a summary hearing to determine whether the TRO can be
extended for another period until a hearing in the pending application for preliminary
injunction can be conducted. In no case shall the total period of the TRO exceed twenty
(20) days, including the original seventy-two (72) hours, for the TRO issued by the
Executive Judge.
4.
With the exception of the provisions which necessarily involve multiple-sala
stations, these rules shall apply to single-sala stations especially with regard to
immediate notice to all parties of all applications for TRO.
In this case, it is not disputed that respondent judge issued a TRO without conducting
the required summary hearing. There is no showing that it falls under the exceptional
circumstances enumerated by the afore-quoted administrative circular where a TRO
may be issued by the Executive Judge before assignment by raffle to a judge without
first conducting a summary hearing.
In defense, respondent judge adopts as her comment in this case, the 2nd indorsement
dated November 16, 2002 which she submitted in OCA IPI No. 00-1058-RTJ, which is
an earlier administrative case filed against her by herein complainant. In said
indorsement, respondent talked about the urgency of the issuance of the restraining
order in that particular case and also mentions that:
!A judge may not be held administratively accountable for every erroneous order or
decision he renders. To unjustifiably hold otherwise, assuming that he has erred would
make his position doubly unbearable, for no one called upon to try the facts or interpret
the laws in the process of administering justice can be infallible in his judgment. The
error must be gross or patent, malicious, deliberate or evident bad faith.
As a matter of public policy then, the acts of a judge in his official capacity are not
subject to disciplinary action, even though such acts are erroneous. Good faith and
absence of malice, corrupt motives or improper consideration are sufficient defenses in
which a judge charged with ignorance of the law can find refuge. (Quisumbing, J.,
Annabelle R. Gutierrez V. Hon. Rodolfo Palattao, A.M. RTJ-95-1326, July 8, 1998).[if
We find the explanation of respondent in the present case to be insufficient to excuse

her from observing strict compliance with Supreme Court Administrative Circular No. 2095.
As previously explained by this Court, there are differences in the requisites for the
issuance of a temporary restraining order and in the life of a TRO when it is issued by an
Executive Judge and when it is issued by a Presiding Judge of a court. In Adao vs.
Lorenzo,[if !supportFootnotes][15][endif] we clarified:
If the temporary restraining order was issued by respondent in his capacity as Executive
Judge, the TRO was good for 72 hours only. Within that period he was required to
summon the parties to a conference before issuing the TRO and then assign the case by
raffle. Thus, par. 3 of Administrative Circular No. 20-95 provides:
If the matter is of extreme urgency, such that unless a TRO is issued, grave injustice and
irreparable injury will arise, the Executive Judge shall issue the TRO effective only for
seventy-two (72) hours from issuance but shall immediately summon the parties for
conference and immediately raffle the case in their presence. Thereafter, before the
expiry of the seventy-two (72) hours, the Presiding Judge to whom the case is assigned
shall conduct a summary hearing to determine whether the TRO can be extended for
another period until a hearing in the pending application for preliminary injunction can be
conducted. In no case shall the total period of the TRO exceed (20) days, including the
original seventy-two (72) hours, for the TRO issued by the Executive Judge. (Emphasis
added)
On the other hand, if the TRO was issued after Civil Case No. 3391 had been raffled to
Branch 2 and respondent judge issued it in his capacity as Acting Judge, then he should
have complied with the following provision of Administrative Circular No. 20-95, par. 2:
The application for a TRO shall be acted upon only after all parties are heard in a
summary hearing conducted within twenty-four (24) hours after the records are
transmitted to the branch selected by raffle. The records shall be transmitted
immediately after raffle.[if !supportFootnotes][16][endif] (Emphasis supplied).
In this case, respondent judge issued the questioned TRO in her capacity as Presiding
Judge. She should have known that a summary hearing was indispensable.
As we explained in Abundo vs. Judge Manio, Jr.[if !supportFootnotes][17][endif]
!The holding of a summary hearing prior to the issuance of a temporary restraining
order is mandatory, in view of the requirement that the application for a temporary
restraining order shall be acted upon only after all parties are heard in a summary
hearing after the records are transmitted to the branch selected by raffle. In other words,
a summary hearing may not be dispensed with.
A TRO can be issued ex parte if the matter is of such extreme urgency that grave
injustice and irreparable injury will arise unless it is issued immediately. Under such
circumstance, the executive judge shall issue the TRO effective only for seventy-two
(72) hours from its issuance. The executive judge is then required to summon the parties
to a conference, during which the case should be raffled in their presence. Before the
expiry of the seventy-two hours, the presiding judge to whom the case was raffled shall
conduct a summary hearing to determine whether the TRO can be extended for another
period until a hearing on the pending application for preliminary injunction can be held.[if
(Emphasis supplied)
The reason for this is that Administrative Circular No. 20-95 aims to restrict the ex parte
issuance of a TRO to cases of extreme urgency in order to avoid grave injustice and
irreparable injury.[if !supportFootnotes][19][endif]
The rule holds that before a temporary restraining order may be issued, all parties must
be heard in a summary hearing first, after the records are transmitted to the branch
selected by raffle. The only instance when a TRO may be issued ex parte is when the
matter is of such extreme urgency that grave injustice and irreparable injury will arise
unless it is issued immediately. Under such circumstance, the Executive Judge shall
issue the TRO effective for 72 hours only. The Executive Judge shall then summon the
parties to a conference during which the case should be raffled in their presence. Before
the lapse of the 72 hours, the Presiding Judge to whom the case was raffled shall then
conduct a summary hearing to determine whether the TRO can be extended for another
period until the application for preliminary injunction can be heard, which period shall in
no case exceed 20 days including the original 72 hours.
Clearly, respondent Judge Salcedo as presiding judge of Branch 32 to which Civil Case
No. SP-5775 (01) was raffled, erred in issuing the questioned TRO without conducting
the necessary hearing first. Only the executive judge may issue a TRO ex parte, under
exceptional circumstances and following a specified procedure herein-abovementioned.
In meting out the correct penalty, we considered the following cases:
Adao vs. Judge Lorenzo[if !supportFootnotes][20][endif] where this Court pronounced that the
failure of respondent therein, as an Executive Judge, to abide by Administrative Circular
No. 20-95 in issuing the TRO constituted grave abuse of authority, misconduct, and
conduct prejudicial to the proper administration of justice for which reason, a fine of
P5,000.00 was imposed on respondent judge.[if !supportFootnotes][21][endif]
Abundo vs. Judge Manio, Jr.[if !supportFootnotes][22][endif] where the Court reprimanded
respondent judge and warned him for failing to comply with Administrative Circular No.
20-95.[if !supportFootnotes][23][endif] The Court explained that while a judges disregard of the
Supreme Courts pronouncement on temporary restraining orders is not just ignorance of
the prevailing rule, but to a large extent, constitutes misconduct, conduct prejudicial to
the proper administration of justice, and grave abuse of authority; however, to be
punishable, an act constituting ignorance of the law must not only be contradictory to
existing law and jurisprudence, but must also be motivated by bad faith, fraud,
dishonesty or corruption.[if !supportFootnotes][24][endif]
In the present case, there is neither allegation nor proof that respondent judge was
motivated by bad faith, fraud, dishonesty, corruption or any other ill-motive.
However, it cannot be ignored that on September 7, 2000, barely a year before the
filing of the present administrative complaint, another administrative case had been
lodged against respondent judge by the same complainant concerning the issuance of a
TRO in another civil case[if !supportFootnotes][25][endif] without complying with the same
requirements of Administrative Circular No. 20-95, docketed as Adm. Matter No. OCA
IPI 00-1058-RTJ. In compliance with the directive of this Court, respondent filed her
comment therein which she now reiterates in the present administrative case.
Unfortunately, the issue on the issuance of the TRO was sidetracked when the
administrative matter was dismissed by this Court for lack of merit per its Resolution
dated March 12, 2001, based on the recommendation of then Court Administrator
Alfredo Benipayo that what complainant assailed was the wisdom of the decision
rendered by respondent judge; that there was already a pronouncement made by this
Court that there is no reversible error committed by respondent in the assailed decision;
and that complainants themselves admitted in their complaint that the decision was
rendered by the court after the case was tried on the merits.
In other words, respondent judge had earlier been apprised of the provisions of
Administrative Circular No. 20-95 and therefore, it cannot be said that she is ignorant of
the law. For her conscious disregard of a a basic rule on the issuance of a TRO, Judge
Salcedo must be held administratively liable not for gross ignorance of the law but for
grave abuse of authority and conduct prejudicial to the proper administration of justice.
For this reason, we find the recommendation of the Office of the Court
Administrator to fine respondent in the amount of P5,000.00 to be just and appropriate.
On the other hand, we accept the explanation of Judge Marivic T. Balisi-Umali,
RTC Judge, Branch 30, San Pablo City regarding her dissolution of the TRO issued by
Judge Salcedo of Branch 32 since it was issued in violation of SC Circular No. 2095. While the rule is that no court has the authority to nullify the judgments or processes
of another court they having co-equal power to grant the same reliefs, said rule does not
apply to this case for the simple reason that Judge Balisi-Umali did not nullify the
process of another court but she merely acted as the presiding judge over a case that
has been duly assigned to her Branch by raffle after herein respondent had inhibited
herself upon motion of the complainant.
WHEREFORE, we find Judge Zorayda H. Salcedo of the Regional Trial Court,
Branch 32, San Pablo City guilty of grave abuse of authority and conduct prejudicial to
the proper administration of justice. She is imposed a fine of FIVE THOUSAND PESOS
(P5,000.00) with a stern warning that repetition of the same or similar acts in the future
will be dealt with more severely.
SO ORDERED.
Overseas Workers v. Chavez, G.R. No. 169802, 524 SCRA 451, 8 June 2007
OVERSEAS WORKERS WELFARE ADMINISTRATION,
represented by Administrator Marianito D. Roque,
Petitioner,
G.R. No. 169802
- versus -
Present:
ATTY. CESAR L. CHAVEZ, OPHELIA N. ALMENARIO,

ELVIRA ADOR, REYNALDO TAYAG, TORIBIO
ROBLES, JR., ROSSANE BAHIA, RACQUEL LLAGASKUNTING, MA. STELLA A. DULCE, ROSSANA SIRAY,
EDUARDO MENDOZA, JR., PRISCILLA BARTOLO,
ROSE VILLANUEVA, CHERRY MOLINA, MARY ROSE
RAMOS, MA. MINERVA PAISO, RODERIC DELOS
REYES, RENATO DELA CRUZ, MARIVIC DIGMA,
JESSIE BALLESTEROS, DONATO DAGDAG, MARK
TUMIBAY, CYNTHIA FRUEL, DEMETRIO SORIANO,
MILAGROS GUEVARRA, ANGELITA LACSON, BERT
BUQUID, JUN SAMORANAS, TEODORO TUTAY,
LEAH YOGYOG, MARIE CRUZ and CONCEPCION
BRAGAS REGALADO,
Respondents.
YNARES-SANTIAGO, J.
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.*
Promulgated:
June 8, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
The Case
Petitioner Overseas Workers Welfare Administration (OWWA), comes to this
Court via the instant Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the 22 September 2005 Decision[if !supportFootnotes][1][endif] of the Court of
Appeals in CA-G.R. SP No. 87702, which affirmed the Order[if !supportFootnotes][2][endif] dated
30 September 2004, of the Regional Trial Court (RTC), Pasay City, Branch 117, in Civil
Case No. 04-0415-CFM. The RTC granted the issuance of a writ of preliminary
injunction restraining OWWA from implementing its new organizational structure.
Factual Antecedents
OWWA is a government agency tasked primarily to protect the interest and
promote the welfare of overseas Filipino workers (OFWs).[if !supportFootnotes][3][endif] OWWA
traces its beginnings to 1 May 1977, when the Welfare and Training Fund for Overseas
Workers in the Department of Labor and Employment (DOLE) was created by virtue of
Letter of Instructions No. 537, with the main objective, inter alia, of providing social and
welfare services to OFW, including insurance coverage, social work, legal and
placement assistance, cultural and remittances services, and the like. On 1 May 1980,
Presidential Decree No. 1694 was signed into law, formalizing the operations of a
comprehensive Welfare Fund (Welfund), as authorized and created under Letter of
Instructions No. 537. Presidential Decree No. 1694 further authorized that contributions
to the Welfare and Training Fund collected pursuant to Letter of Instructions No. 537 be
transferred to the Welfund. On 16 January 1981, Presidential Decree No. 1809 was
promulgated, amending certain provisions of Presidential Decree No. 1694.[if
Subsequently, Executive Order No. 126 was passed which
reorganized the Ministry of Labor and Employment. Executive Order No. 126 also
renamed the Welfare Fund as the OWWA.
From the records, it is undisputed that on 9 January 2004, as there was yet no
formal OWWA structure duly approved by the Department of Budget and Management
(DBM) and the Civil Service Commission (CSC), the OWWA Board of Trustees passed
Resolution No. 001,[if !supportFootnotes][5][endif] Series of 2004, bearing the title Approving the
Structure of the Overseas Workers Welfare Administration, and depicting the
organizational structure and staffing pattern of the OWWA, as approved by Patricia A.
Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of Trustees and then
Secretary of the DOLE. According to Resolution No. 001, the structuring of the OWWA
will stabilize the internal organization and promote careerism among the employees. It
will also ensure a more efficient and effective delivery of programs and services to
member-OFWs. Resolution No. 001 resolved, thus:
RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure
which is hereto attached and made an integral part of this Resolution, comprising mainly
of the approved organizational chart, functional descriptions and staffing pattern, subject
to the following:
a. There will be no displacement of existing regular employees;
b. There will be no temporary appointments; and
c. There will be no hiring of casuals, contractuals or consultants in the new structure.
RESOLVED further, that the OWWA Structure be immediately
submitted for the appropriate actions of competent authorities,
particularly the DBM and CSC.[if !supportFootnotes][6][endif]
On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved

the organizational structure and staffing pattern of the OWWA.[if !supportFootnotes][7][endif] In her
approval thereof, she stated that the total funding requirements for the revised
organizational structure shall be P107,546,379 for four hundred (400)
positions. Moreover, DBM Secretary Boncodin underscored that the funding shall come
solely from the OWWA funds and that no government funds shall be released for the
implementation of the changes made.
On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued
Advisory No. 01,[if !supportFootnotes][8][endif] advising the officials and employees of the OWWA
that the DBM had recently approved OWWAs organizational chart, functional
statements, and the staffing pattern. Advisory No. 01 also announced that a Placement
Committee will be created to evaluate and recommend placement of all
regular/permanent incumbents of OWWA in the new organizational chart and staffing
pattern. All employees were asked to indicate in writing their interest or preference in
any of the approved plantilla item, especially for promotion to the Human Resources
Management Division, not later than 11 June 2004. Further, Advisory No. 01
emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of
2004, had declared the policy that there will be no displacement of existing
regular/permanent employees. Qualified casual and contractual personnel may apply
for any vacant item only after all regular/permanent employees of OWWA had been
placed.
Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued
Administrative Order No. 171, Series of 2004, creating a Placement Committee to
evaluate qualifications of employees; and to recommend their appropriate placement in
the new organizational chart, functional statements and staffing pattern of the
OWWA. Administrative Order No. 171 was partially amended by Administrative Order
No. 171-A, issued by DOLE Acting Secretary Manuel G. Imson (Imson), authorizing the
Placement Committee to recommend to the OWWA Administrator their evaluations,
which shall thereafter be endorsed to the DOLE Secretary for consideration.[if
The Placement Committee was directed to comply with the pertinent

CESB/CSC/DBM rules and regulations on its recommended placement of all personnel
of OWWA based on the following parameters, to wit[if !supportFootnotes][10][endif]:
1.
There would be no diminution nor displacement of permanent/regular employees
of OWWA.
2.
Qualified casuals and contractual personnel may likewise be

considered in the staffing pattern only after ensuring that
the regular(s)/permanent employees of OWWA have
already been placed.
3.
Decentralization of functions to bring OWWA services closer to the

public shall be adopted. Thus, priority in some promotions
shall be given to those who opt to be assigned in the
regional offices, aside from performance.
4.
Deployment in the overseas posts shall be made on rotation basis from

both the frontline and the administrative staff, based on
performance.
5.
Regular/permanent incumbents interested for promotion should

indicate their interest in writing to the Placement
Committee: Attn: The Chairperson.
6.
Those who may opt to retire should submit to the HRMD, their
application for retirement, copy furnished the Budget
Division for budget allocation purposes.
The Placement Committee should complete its task not later than June
30, 2004.
On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting
OWWA officials and employees to an orientation on the new structure, functions and
staffing pattern of the OWWA. Moreover, Advisory No. 02 required the holding of
elections for the First and Second Level Representatives who will elect from among
themselves the regular official representatives and alternates in the Placement
Committee deliberations. On 11 June 2004, Advisory No. 03 was issued, announcing
the conduct of an election for representatives and alternates representing the employees
in the first [Salary Grades (SG) 1-9] and second level (SG 10-24), pursuant to
Administrative Order No. 171, dated 3 June 2004, as amended by Administrative Order
No. 171-A.
On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order
No. 186, Series of 2004,[if !supportFootnotes][11][endif] prescribing the guidelines on the placement
of personnel in the new staffing pattern of the OWWA.
On 29 June 2004, herein respondents filed with the RTC, a Complaint for
Annulment of the Organizational Structure of the OWWA, as approved by OWWA Board
Resolution No. 001, Series of 2004, with Prayer for the Issuance of a Writ of Preliminary
Injunction[if !supportFootnotes][12][endif] against herein petitioner OWWA and its Board of
Trustees.[if !supportFootnotes][13][endif] The case was docketed as Civil Case No. 04-0415-CFM.
In their Complaint, respondents alleged that the OWWA has around 24
consultants, 29 casual employees, 76 contractual workers, and 356 officers and
employees, which number does not include the 85 contractual employees in the Office of
the Secretariat of the OWWA Medicare.[if !supportFootnotes][14][endif] Respondents posited that
the approved Organizational Structure and Staffing Pattern of the OWWA increases the
number of regular plantilla positions from 356 to 400; however, the increase of 42
positions will not absorb the aforementioned consultants and casual and contractual
workers. They further averred that the plantilla positions in the Central Office will be
reduced from 250 to 140, while the regional offices will have an increase of 164
positions. According to the respondents, the resulting decrease in the number of

employees in the Central Office will result in the constructive dismissal of at least 110
employees. Meanwhile, the deployment of the regular central office personnel to the
regional offices will displace the said employees, as well as their families.
Respondents challenged the validity of the new organizational structure of the
OWWA. In fine, they contended that the same is null and void; hence, its
implementation should be prohibited.
Respondents prayed for the issuance of a writ of preliminary injunction to
restrain petitioners from: 1) implementing its organizational structure as approved by the
OWWA Board of Trustees in its Resolution dated 9 January 2004; and 2) advertising
and proceeding with the recruitment and placement of new employees under the new
organizational structure.[if !supportFootnotes][15][endif]
Further, respondents prayed that after trial on the merits, OWWAs
organizational structure be declared as unconstitutional and contrary to law; and the
OWWA Board of Trustees be declared as having acted contrary to the Constitution and
existing laws, and with grave abuse of discretion in approving Resolution No. 001, dated
9 January 2004.[if !supportFootnotes][16][endif]
The Ruling of the RTC
On 30 September 2004, the RTC rendered an Order[if !supportFootnotes][17][endif]
granting respondents prayer for a writ of preliminary injunction upon the filing of a bond
in the sum of P100,000.00. In the grant thereof, the RTC reasoned that any move to
reorganize the structure of the OWWA requires an amendatory law. It deemed
Resolution No. 001 was not merely a formalization of the organizational structure and
staffing pattern of the OWWA, but a disruption of the existing organization which
disturbs and displaces a number of regular employees, including consultants and casual
and contractual employees.
The RTC ratiocinated in this wise:
x x x All told, what is being done now at OWWA is a reorganization of its structure as
originally conceived under P.D. No. 1694 [Organization and Administration of the
Welfare for Overseas Workers] and P.D. No. 1809 [Amending Certain Provisions of
Presidential Decree 1694, Creating the Welfare Fund for Overseas Workers]. In the
(sic) light of Section 11 of R.A. No. 6656 which provides that the executive branch of the
government shall implement reorganization schemes within a specified period of time
authorized by law, this court doubts whether a reorganization of OWWA can be effected
without an enabling law.
Further, defendants do not dispute the fact that while the mechanics of the
reorganization is still being forged, the DOLE already processed applications and
eventually hired employees not from among the existing employees of the OWWA. This
appears to be in contravention of Section 4 of R.A. No. 6656 which provides:
Sec. 4. Officers and employees holding permanent

appointments shall be given preference for appointment to the new
positions in the approved staffing pattern comparable to their former
position or in case there are not enough comparable positions, to
positions next lower in rank.
No new employees shall be taken in until all permanent

officers and employees have been appointed, including temporary
and casual employees who possess the necessary qualification
requirements, among which is the appropriate civil service eligibility
for permanent appointment to positions in the approved staffing
pattern, in case there are still positions to be filled, unless such
positions are policy-determining, primarily confidential or highly
technical in nature.
Furthermore, defendants (sic) do not dispute the fact that the Placement Committee
was hastily constituted, that its members were not educated of their task of job
placement, that there was no real to goodness (sic) personnel evaluation and, finally, the
Chairman of the Committee was simply hand-picked by the DOLE Secretary contrary to
the explicit injunction of Section 8 of the Implementing Rules of R.A .No. 6656 that the
members shall elect their Chairman.[if !supportFootnotes][18][endif]
The RTC also cited the protection afforded by the Constitution to workers, specifically,
officers or employees of the Civil Service in ruling that the existing organization of the
OWWA need not be disturbed in any way and no single worker will be removed or
displaced. Thus:
This court entertains no doubt that as workers, plaintiffs enjoy a right that is protected
both by the Constitution and statutes. Thus, (n)o officer or employee of the civil service
shall be removed or suspended except for cause provided by law. (Sec. 2, par. 3, Art.
IX, Constitution). No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws. (Sec.
1, Art. III; ibid.). A persons job is his property. In many cases, as in the Philippine
setting, ones job also means ones life and the lives of those who depended on
him. Hence, it is a policy of the State to free the people from poverty through policies
that provide adequate social services, promote full employment, a rising standard of
living, and an improved quality of life for all. (Sec. 8, Art. II, ibid.) Any act that, contrary
to law, tends to deprive a worker of his work, violates his rights.[if !supportFootnotes][19][endif]
Finally, the RTC defended its jurisdiction over the controversy despite
petitioners protestations that jurisdiction over respondents complaint is lodged in the
administrative agencies tasked to implement the new OWWA structure. It ruled that the
doctrine of primary jurisdiction is applicable only where the administrative agency
exercises its quasi-judicial or administrative function; but, where what is challenged is
the constitutionality of a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative functions, regular courts have jurisdiction over the
matter.[if !supportFootnotes][20][endif]
Therefore, the RTC, in its Order, dated 30 September 2004, granted
respondents prayer for a writ of preliminary injunction, to wit:
WHEREFORE, upon plaintiffs (sic) filing of a bond in the sum of P100,000.00, let a writ
of preliminary injunction issue in: 1) restraining the defendants from implementing the
new organizational structure of OWWA approved by the Board of Trustees on January 9,
2004 and 2) restraining the defendants from advertising and proceeding with the
recruitment and placement of new employees under the new organizational structure.[if
Without filing a Motion for Reconsideration, petitioner, thru the Office of the
Solicitor General (OSG),[if !supportFootnotes][22][endif] filed with the Court of Appeals, a Petition
for Certiorari and Prohibition with Prayer for Issuance of a Temporary Restraining Order
and Writ of Preliminary Injunction under Rule 65 of the Rules of Court, assailing the RTC
Order of 30 September 2004.[if !supportFootnotes][23][endif]
The Ruling of the Appellate Court
On 22 September 2005, the Court of Appeals rendered the assailed Decision,
which dismissed the petition. It affirmed the court a quos findings that respondents
possess a clear and legal right to the immediate issuance of the writ. It resolved that it
was proper for the RTC to restrain, for the meantime, the implementation of OWWAs
reorganization to prevent injury until after the main case is heard and decided.[if
It found respondents allegations sufficient to prove the existence of
a right that should be protected by a writ of preliminary injunction. Thus:
Petitioner averred, too, that majority of the casuals, contractuals and consultants have
been employed for more than ten (10) years, if not twenty (20) years, and were not
regularized simply due to lack of regular positions in the plantilla or the freezing of
recruitment thereto.
To be sure, private respondents have convincingly

adduced evidence of specific acts to substantiate their claim of
impending injury and not merely allegations of facts and conclusions
of law, but factual evidence of a clear and unmistakable right of
being displaced or dismissed by the planned reorganization. These
allegations are substantial enough to prove the right in esse. At
best, the anxiety of being dismissed or displaced is not premature,
speculative and purely anticipatory, but based on real fear which
shows a threatened or direct injury[,] it appearing that the
reorganization of the OWWA is already slowly being put into motion.
Apropos, having successfully established a direct and personal injury

as a consequence of the new reorganization[al] structure, it was only
proper for the court a quo to grant the writ of preliminary injunction to
restrain, for the meantime, the implementation of the reorganization
to prevent injury on respondents until after the main case is heard
and decided. Truly, as correctly observed by the trial court, private
respondents enjoy a right that is protected both by the Constitution
and statutes. A persons job is not only his property but his very
life. The constitutional protection of the right to life is not just a
protection of the right to be alive or to the security of ones limb
against physical harm. The right to life is also a right to a good life
(Bernas, The Constitution of the Republic of the Philippines, A
Commentary, Volume I, First Edition, 1997) which includes the right
to earn a living or the right to a livelihood. A fortiori, the requisites for
preliminary injunction to issue have adequately been established: the
existence of a clear and unmistakable right, and the acts violative of
said right.
While the evidence to be submitted at the hearing on the

motion for preliminary injunction need not be conclusive and
complete, We find that private respondents have adequately shown
that they are in clear danger of being irreparably injured unless the
status quo is observed, in the meantime x x x.[if !supportFootnotes][25][endif]
The appellate court was likewise of the opinion that the substantial issues
raised before the court a quo anent the validity of the organizational structure of the
OWWA; the alleged lack of authority of the DBM to approve the same including the
alleged violation by the OWWA of relevant statutes; the lack of consultation prior to the
reorganization; and the supposed illegal constitution of the Placement Committee, are
matters which the RTC is behooved to resolve. In finding no error on the part of the
RTC, the Court of Appeals said that without an injunctive relief, any decision that may be
rendered in the suit would already be ineffective, moot and academic.[if
Aggrieved, petitioner through the OSG,[if
filed the instant
petition.
In the instant petition, petitioner prays that the appealed Decision of the Court
of Appeals be reversed and set aside, and that Civil Case No. 04-0415-CFM before the
RTC be dismissed for lack of merit.[if !supportFootnotes][28][endif]
The Issue
The issue to be resolved is, whether the court a quo gravely abused its
discretion in issuing the writ of preliminary injunction. Stated otherwise, the issue is
whether the Court of Appeals erred in affirming the RTC in its grant of the assailed writ
of preliminary injunction. Clearly, we are thus confined to the matter of the propriety of
the issuance of the writ of preliminary injunction by the trial court, and not to the merits of
the case which is still pending before the latter.
The Case for the Petitioner
First, in support of their petition, petitioner posits that the OWWA has already
implemented the new organizational structure as the advertisement, recruitment, and
placement of OWWA employees have been accomplished; and in the process, none of
the respondents have been dismissed. Moreover, the act sought to be prevented has
long been consummated; hence, the remedy of injunction should no longer be
entertained.
Second, petitioner adduces the proposition that the reorganization of the
OWWA does not require an amendatory law contrary to the holding of the court a
quo. The OSG maintains that there was no previous OWWA structure in the first place;
and neither did Presidential Decree No. 1694[if !supportFootnotes][29][endif] nor Presidential
Decree No. 1809,[if !supportFootnotes][30][endif] provide for an organizational structure for the
OWWA.
Third, petitioner disputes the existence of the rights of respondents to be
protected by the preliminary injunctive writ sought on the ground that the latter did not
shown any legal right which needs the protection thereof, nor did they show that any
such right was violated to warrant the issuance of a preliminary injunction. Petitioner
asserts that respondents did not claim that they are the consultants or casual or
contractual workers who would allegedly be displaced; and neither did respondents
show that there is only one right or cause of action pertaining to all of them. Neither was
there a violation of their rights because respondents have all been given appointments in
the new OWWA organizational structure.[if !supportFootnotes][31][endif]
Finally, on respondents allegation that the reorganization of the OWWA will
reassign permanent employees to its regional offices, and consequently, displace them
and their families, petitioner counters that an employee may be reassigned from one
organizational unit to another in the same agency, provided that such reassignment shall
not involve a reduction in rank, status or salary.[if !supportFootnotes][32][endif]

The Case for the Respondents
Respondents argue that the petitioner railroaded and raced against time to
implement the new OWWA organizational structure. They claim that in the process,
petitioner exhibited manifest bad faith and injustice. What existed was a hasty
reorganization and restructuring of the OWWA without adequate study and consultation,
which was thereafter submitted and immediately approved by the Board of
Trustees. They insist that the creation of an organizational structure of the OWWA
would require a presidential fiat or a legislative enactment pursuant to Republic Act No.
6656.[if !supportFootnotes][33][endif]
Further, respondents maintain that their right in esse was established during
the proceedings for the issuance of the writ of preliminary injunction, as their complaint
sufficiently showed the rights and interests of the parties. They alleged that at no stage
in the proceedings did petitioner question such rights. In fact, petitioner made a waiver
in open court to the effect that it was not presenting testimonial evidence. According to
the respondents, such an act was constitutive of an admission by petitioner of the
existence of a right in esse in their favor.
Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an
order granted at any stage of an action prior to the judgment or final order requiring a
party or a court, an agency or a person to refrain from a particular act or acts.[if
Section 3, Rule 58 of the Rules of Court, enumerates the grounds for
the issuance of a writ of preliminary injunction as follows:
Sec. 3. Grounds for issuance of preliminary injunction. A

preliminary injunction may be granted when it is established:
(a)
That the applicant is entitled to the relief
demanded, and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period
or perpetually;
(b)
That the commission, continuance or nonperformance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or
(c)
That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
A preliminary injunction is granted at any stage of an action or proceeding prior to the

judgment or final order.[if !supportFootnotes][35][endif] It persists until it is dissolved or until the
termination of the action without the court issuing a final injunction.[if
To be entitled to an injunctive writ, petitioner must show, inter alia,
the existence of a clear and unmistakable right and an urgent and paramount necessity
for the writ to prevent serious damage.[if !supportFootnotes][37][endif] A writ of preliminary
injunction is generally based solely on initial and incomplete evidence.[if
The evidence submitted during the hearing on an application for a
writ of preliminary injunction is not conclusive or complete for only a sampling is
needed to give the trial court an idea of the justification for the preliminary injunction
pending the decision of the case on the merits.[if !supportFootnotes][39][endif] In fact, the evidence
required to justify the issuance of a writ of preliminary injunction in the hearing thereon
need not be conclusive or complete.[if !supportFootnotes][40][endif] It must also be stressed that it
does not necessarily proceed that when a writ of preliminary injunction is issued, a final
injunction will follow.[if !supportFootnotes][41][endif]
Moreover, the grant or denial of a preliminary injunction is discretionary on the

part of the trial court.[if !supportFootnotes][42][endif] Thus, the rule is, the matter of the issuance of
a writ of preliminary injunction is addressed to the sound discretion of the trial court,
unless the court commits grave abuse of discretion.[if !supportFootnotes][43][endif] In Toyota Motor
Phils. Corporation Workers Association (TMPCWA) v. Court of Appeals,[if
this Court pronounced that grave abuse of discretion in the issuance
of writs of preliminary injunction implies a capricious and whimsical exercise of judgment
that is equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or
despotic manner by reason of passion, prejudice or personal aversion amounting to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all
in contemplation of law. It is clear that the assessment and evaluation of evidence in
the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to
the trial court for its conclusive determination.[if !supportFootnotes][45][endif] The duty of the court
taking cognizance of a prayer for a writ of preliminary injunction is to determine whether
the requisites necessary for the grant of an injunction are present in the case before it.[if
However, as earlier stated, if the court commits grave abuse of its
discretion in the issuance of the writ of preliminary injunction, such that the act amounts
to excess or lack of jurisdiction, the same may be nullified through a writ of certiorari or
prohibition.
More significantly, a preliminary injunction is merely a provisional remedy, an
adjunct to the main case subject to the latters outcome, the sole objective of which is to
preserve the status quo until the trial court hears fully the merits of the case.[if
The status quo should be that existing at the time of the filing of the
case.[if !supportFootnotes][48][endif] The status quo usually preserved by a preliminary injunction
is the last actual, peaceable and uncontested status which preceded the actual
controversy.[if !supportFootnotes][49][endif] The status quo ante litem is, ineluctably, the state of
affairs which is existing at the time of the filing of the case. Indubitably, the trial court
must not make use of its injunctive power to alter such status.[if !supportFootnotes][50][endif]
We hold that the RTC, in granting the assailed writ of preliminary injunction,
committed grave abuse of discretion amounting to lack of jurisdiction.
In the case at bar, the RTC did not maintain the status quo when it issued the
writ of preliminary injunction. Rather, it effectively restored the situation prior to the
status quo, in effect, disposing the issue of the main case without trial on the
merits. What was preserved by the RTC was the state of affairs before the issuance of
Resolution No. 001, which approved the structure of the OWWA, and the subsequent
administrative orders pursuant to its passing. The RTC forgot that what is imperative in
preliminary injunction cases is that the writ can not be effectuated to establish new
relations between the parties. Hence, we find herein an application of the lessons that
can be learned from Rualo v. Pitargue.[if !supportFootnotes][51][endif] In Rualo, this Court
determined, among others, the propriety of the writ of preliminary injunction which was
issued restraining the Bureau of Internal Revenue from further implementing its
reorganization, and enforcing the orders[if !supportFootnotes][52][endif] pursuant thereto. This
Court, in lifting the therein assailed writ, underscored the legal proscription which states
that courts should avoid issuing a writ of preliminary injunction which would in effect
dispose of the main case without trial.[if !supportFootnotes][53][endif] According to the Court in
Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the
status quo but restored the situation before the status quo, that is, the situation before
the issuance of the Revenue Travel Assignment Orders.[if !supportFootnotes][54][endif] The Court
further declared that what existed was an acceptance of therein respondents premise of
the illegality of the reorganization, and a prejudgment on the constitutionality of the
assailed issuances.[if !supportFootnotes][55][endif] As in Rualo, we find herein a similar case
where the RTC admitted hook, line and sinker the mere allegations of respondents that
the reorganization as instituted was unlawful without the benefit of a full trial on the
merits. It also did not maintain the status quo but restored the landscape before the
implementation of OWWAs reorganization. In thus issuing the writ of preliminary
injunction, the substantive issues of the main case were resolved by the trial
court. What was done by the RTC was quite simply a disposition of the case without
trial. This is an error in law and an exercise of grave abuse of discretion. Furthermore,
we find that the RTC similarly prejudged the validity of the issuances released by the
OWWA Board of Trustees, as well as the other governmental bodies (i.e., DBM, DOLE),
which approved the organizational structure and staffing pattern of the OWWA. In
Rualo, this Court asserted the presumption of regularity of the therein assailed
government issuances. In this case, we accentuate the same presumption.
Ineluctably, this Court is compelled to rule against the propriety of the grant of
the assailed ancillary writ of preliminary injunction on the material ground that the
records do not support respondents entitlement thereto.
We do not find attendant the requisites for the issuance of a preliminary
injunctive writ. This Court is not convinced that respondents were able to show a clear
and unmistakable legal right to warrant their entitlement to the writ. A mere blanket
allegation that they are all officers and employees of the OWWA without a showing of
how they stand to be directly injured by the implementation of its questioned
organizational structure does not suffice to prove a right in esse. As was aptly raised by
the petitioner, respondents did not show that they were dismissed due to the challenged
reorganization. There was no showing that they are the employees who are in grave
danger of being displaced. Respondents were similarly wanting in proving that they are
the consultants and contractual and casual employees, who will allegedly suffer by
reason of the re-organization. This Court is consistently adamant in demanding that a
clear and positive right especially calling for judicial protection must be established.[if
As has been reiterated, injunction is not a remedy to protect or
enforce contingent, abstract, or future rights; it will not issue to protect a right not in
esse and which may never arise, or to restrain an action which did not give rise to a
cause of action.[if !supportFootnotes][57][endif] In contrast, the rights of OWWA are accorded to it
by law. The importance of the reorganization within the body and the benefits that will
accrue thereto were accentuated by the Board of Trustees in its Resolution No.
001. The aforesaid resolution declared, inter alia, that the structuring of the OWWA will
stabilize the internal organization and promote careerism among the employees, as well
as ensure a more efficient and effective delivery of programs and services to memberOFWs.[if !supportFootnotes][58][endif] However, we go further to opine that even the question of
whether the OWWA requires an amendatory law for its reorganization is one that should
be best threshed out in the disposition of the merits of the case. Indeed, the question as
to the validity of the OWWA reorganization remains the subject in the main case pending
before the trial court. Its annulment is outside the realm of the instant Petition.
Assuming arguendo that respondents stand to be in danger of being
transferred due to the reorganization, under the law, any employee who questions the
validity of his transfer should appeal to the CSC.[if !supportFootnotes][59][endif] Even then,
administrative remedies must be exhausted before resort to the regular courts can be
had.
Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had
been accomplished. Injunction will not lie where the acts sought to be enjoined have
already been accomplished or consummated.[if !supportFootnotes][60][endif] The wheels of
OWWAs reorganization started to run upon the approval by the Board of Trustees of its
Resolution No. 001 entitled, Approving the Structure of the Overseas Workers Welfare
Administration. Subsequently, a series of issuances which approved the organizational
structure and staffing pattern of the agency was issued by the DBM, the OWWA
Administrator, and by the DOLE. Resolution No. 001 has already been
implemented. Case law has it that a writ of preliminary injunction will not issue if the act
sought to be enjoined is a fait accompli.
of preliminary injunction being an extraordinary event,[if
one deemed as a strong arm of equity or a transcendent remedy,[if
it must be granted only in the face of actual and existing substantial
rights. In the absence of the same, and where facts are shown to be wanting in bringing
the matter within the conditions for its issuance, the ancillary writ must be struck down
for having been rendered in grave abuse of discretion.
A
writ
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated
22 September 2005 in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The
Writ of Preliminary Injunction issued by the Regional Trial Court pursuant to its Order,
dated 30 September 2004, in Civil Case No. 04-0415-CFM is LIFTED and SET ASIDE.
SO ORDERED.
Power Sites v. United Neon, G.R. No. 163406, 605 SCRA 196, 24 November 2009
POWER SITES AND SIGNS, INC.,
Petitioner,
G.R. No. 163406

Present:
- versus -
CARPIO,* J., Chairperson,

LEONARDO-DE CASTRO,**
BRION,
DEL CASTILLO, and
ABAD, JJ.
UNITED NEON (a Division of Ever

Corporation),
Promulgated:
Respondent.
November 24, 2009
x--------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
Before a court grants injunctive relief, the following must be demonstrated: that
complainant is entitled to the relief sought, the actual or threatened violation of
complainants rights, the probability of irreparable injury, and the inadequacy of
pecuniary compensation as relief.[if !supportFootnotes][1][endif] Otherwise, there is no basis for
the issuance of a writ of injunction.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court of
the Decision[if !supportFootnotes][2][endif] dated January 29, 2004 and the Resolution[if
dated April 28, 2004 of the Court of Appeals in CA-G.R. SP No.
72689.
Petitioner's Factual Allegations
Power Sites and Signs, Inc. (Power Sites) is a corporation engaged in the
business of installing outdoor advertising signs or billboards. It applied for, and was
granted, the necessary permits to construct a billboard on a site located at Km. 23, East
Service Road, Alabang, Muntinlupa (the site).[if !supportFootnotes][4][endif] After securing all the
necessary permits, Power Sites began to construct its billboard on the site.
Subsequently, in March 2002, petitioner discovered that respondent United
Neon, a Division of Ever Corporation (United Neon), had also began installation and
erection of a billboard only one meter away from its site and which completely blocked
petitioners sign. Thus, on March 5, 2002, petitioner requested United Neon to make
adjustments to its billboard to ensure that petitioners sign would not be obstructed.[if
However, petitioners repeated requests that respondent refrain from
constructing its billboard were ignored,[if !supportFootnotes][6][endif] and attempts to amicably
resolve the situation failed.[if !supportFootnotes][7][endif]
Respondent's Factual Allegations

In January 2002, United Neon and Power Sites separately negotiated with Gen.
Pedro R. Balbanero to lease a portion of a property located at East Service Road, South
Superhighway, Alabang, Muntinlupa City, in order to build a billboard on the premises.[if
Gen. Balbanero rejected Power Sites proposal and decided to lease
the premises to United Neon. Thus, on January 26, 2002, United Neon and Gen.
Balbanero entered into a Contract of Lease (the lease contract).[if !supportFootnotes][9][endif]
On January 28, 2002, United Neon registered the lease contract with the
Outdoor Advertising Association of the Philippines (OAAP), in accordance with Article
11, Sec. 3.6 of the OAAP Code of Ethics/Guidelines.[if !supportFootnotes][10][endif] By virtue of its
registration of the Contract of Lease with the OAAP, United Neon alleged that it obtained
the exclusive right to the line of sight over the leased property, in accordance with Article
11, Section 3.7 of the OAAP Code of Ethics/Guidelines.[if !supportFootnotes][11][endif]
Sometime in February 2002, United Neon started construction of its
billboard. Power Sites, after failing to lease the premises from Gen. Balbanero,
negotiated with the owner of the adjacent property and secured its own lease in order to
erect a billboard that would disrupt United Neons exclusive line of sight.[if
To protect its rights, on March 6, 2002, United Neon urged Power
Sites to relocate the latters sign to another location, or to construct it in such a way that
the sign would not obstruct the view of United Neons billboard.[if !supportFootnotes][13][endif]
Legal Proceedings
In a letter-complaint dated June 29, 2002, petitioner requested the Muntinlupa
City Engineer and Building Official to revoke United Neons building permit and to issue
a Cease and Desist Order against it.[if !supportFootnotes][14][endif] On July 4, 2002, the City
Building Official, Engineer Robert M. Bunyi, referred the complaint to United Neon for
comment:
This refers to your ongoing construction of signboard located at East Service
Road, Alabang, City of Muntinlupa, which was granted Building Permit No. 12-02-05-357
dated May 22, 2002 and which is the object of an attached formal complaint x x x
Relative to the foregoing and per inspection conducted by this office, we have
noted that your sign is 4 meters away from an existing and on going sign construction
with building permit no. 12-02-02-111 which was granted earlier than your permit.
We therefore direct you to submit your position and all your related supporting
evidence whether or not you violated the Code of Ethics of Advertisement which is
expressly supported by the National Building Code (PD 1096) Rule V, Section 2.1 of the
General Provision and to maintain status quo by desisting from all construction activities
in the meantime that this matter is being studied for resolution by this office.[if
However, before
Power Sites filed on July
Injunction and Prayer
against
a resolution could be made by the City Building Official,

1, 2002, a Petition for Injunction with Writ of Preliminary
for Temporary Restraining Order and Damages[if
United Neon before the Regional Trial Court (RTC) of
Muntinlupa City, which was raffled to Branch 256 and docketed as Civil Case No. 02143.
After the filing of the parties respective memoranda,[if !supportFootnotes][17][endif] which
took the place of testimonial evidence, the RTC granted petitioners prayer for the
issuance of a preliminary injunction in an Order dated August 1, 2002.[if
The Writ of Injunction was issued on the same day.[if
The RTC ruled:
After considering the arguments raised by both parties in their respective
Memoranda, this Court finds that the plaintiff is entitled to the relief sought considering
that the commission and/or continuance of the act of installing the signage by the
respondent during the litigation would work grave injustice and irreparable damage to
petitioner since it would surely cause immense loss in profit and possible damage claims
from its clients because it would certainly cover the sign of the petitioner's clients.
xxxx
WHEREFORE, this Court finds the plaintiffs application for the issuance of a
Writ of Preliminary Injunction to be meritorious and well taken.
Let therefore a Writ of Preliminary Injunction be issued against the respondent
UNITED NEON to cease and desist from constructing/installing the signage and to
dismantle any existing sign, girds [sic] or post that support said sign.
x x x x[if !supportFootnotes][20][endif]
United Neon then filed a Petition for Prohibition and Certiorari with Application
Temporary Restraining Order and/or Writ of Preliminary Injunction[if
before the Court of Appeals, which was docketed as CA-G.R. SP No.
72689. In brief, United Neon claimed that the grant of preliminary injunction was
unwarranted, particularly because Power Sites only prayed for a prohibitory injunction in
its original petition, but the Order went as far as to grant a mandatory injunction in favor
of Power Sites. United Neon prayed that the Court of Appeals invalidate the RTCs
Order and Writ dated August 1, 2002, issue a temporary restraining order enjoining the
RTC from further proceeding with Civil Case No. 02-143, and, after hearing, enjoin the
RTC from enforcing the August 1, 2002 Order.
for
After the parties exchange of pleadings, the Court of Appeals invalidated the
Order of the RTC dated August 1, 2002 and the Writ of Preliminary Injunction, but
denied the prayer for prohibition, to wit:
To warrant the issuance of an injunction, whether prohibitory or mandatory,
private respondent's right to the line of sight must be clear. In this case, there is a cloud
of doubt as to private respondent's right to the claimed line of sight as petitioner had
manifested prior registration of its billboard with the Outdoor Advertising Association of
the Philippines (OAAP) which allegedly gave petitioner a protection of its exclusive right
to the line of sight.
Injunction should be issued when there is a substantial challenge to the

claimed right. The conflicting claims by the parties to the right to the line of sight present
an impression that the right claimed by private respondent as its basis for the prayer for
the injunctive relief is far from clear. While it is not required that private respondent's
right be conclusively established at this stage, it is nevertheless necessary to show, at
least tentatively, that it exists and is not vitiated by any substantial challenge or
contradiction, such as has been made by petitioner.
Even the issue of the status quo ante cannot be determined clearly in this
case. The status quo ante referred to by private respondent was seriously challenged by
petitioner by claiming it was the first to build its structure. Hence, public respondent had
no clear basis for the status quo ordered in the injunctive order.
xxxx
On the matter of the prayer for prohibition, it is incorrect and improper to
declare public respondent incapable of rendering a fair trial due to the erroneous
injunctive order issued. Petitioner may avail of other legal remedies if it truly believes
that public respondent can no longer deliver fair judgment in this case.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED,
as follows:
1.
The assailed Order dated August 1, 2002 and the Writ of Preliminary
Injunction issued by public respondent in Civil Case
No. 02-143 are hereby declared NULL AND VOID for
having issued with grave abuse of discretion
amounting to lack or excess of jurisdiction; and
2.
The prayer for prohibition is hereby DENIED for lack of merit.
Petitioners Motion for Partial Reconsideration was denied by the Court of

Appeals in a Resolution dated April 28, 2004.[if !supportFootnotes][23][endif] Hence, this petition.
Arguments
In essence, Power Sites claims that the Court of Appeals gravely erred in
invalidating the Writ of Preliminary Injunction for the following reasons:
1)
Power Sites has a better right over the line of sight because it constructed its
billboard ahead of the respondent and is therefore entitled to protection under
the National Building Code. United Neon could not have begun construction
ahead of Power Sites (allegedly in February 2002), since it only obtained its
Building Permit in May of 2002. Further, the alleged registration of the lease
contract with the OAAP does not bind Power Sites, since the latter is not a
member of the OAAP. In any event, proof of the alleged registration of the
lease contract was not presented before the trial court; all that was submitted
in evidence was an application letter to the OAAP.
2)
Even if its original petition did not contain a prayer for the issuance of a
mandatory injunction, its Memorandum before the trial court requested the
grant of a mandatory injunction.[if !supportFootnotes][24][endif] United Neon was still in
the initial stages of construction at the time the original petition was filed;
hence, Power Sites only prayed for the issuance of a preliminary prohibitory
injunction to preserve the status quo. However, at the time the parties were
required to file their respective memoranda, United Neons structure was
already fully completed. Thus, a preliminary mandatory injunction was
required.
3)
The Court of Appeals should have dismissed outright the Petition for Certiorari,
since United Neon failed to attach all the relevant pleadings, in disregard of the
Rules of Court.
On the other hand, United Neon claims that the Court of Appeals Decision
and Resolution were correct, and the trial courts Order dated August 1, 2002 and the
writ of injunction were patently illegal, for the following reasons:
1)
Power Sites has no clear and unmistakable right to be protected, since it failed to
register its lease contract with the OAAP. In contrast, it is United Neon that has
the exclusive right to the line of sight because United Neon began construction
ahead of Power Sites, and registered its lease with the OAAP.
2)
The issuance of the preliminary mandatory injunction by the RTC, which went
beyond the allegations and prayer in the initiatory petition, constituted grave
abuse of discretion amounting to lack or excess of jurisdiction.
3)
Power Sites did not even have the required permits to construct a billboard, since
all the permits issued by the Muntinlupa City government were issued to HCLC
Resources and Development Corporation, and not to Power Sites.
4)
Power Sites willfully violated the rules against forum shopping, since it sought the
same relief from the Muntinlupa City Building Official and before the RTC.
Our Ruling
We find the grant of a preliminary mandatory injunction by the trial court not
warranted. Consequently, we affirm the Decision of the Court of Appeals dated January
29, 2004 and its Resolution dated April 28, 2004 in CA-G.R. SP No. 72689.
Procedural Issue
The Court of Appeals properly exercised its discretion in giving due course to the petition
Power Sites claims that the Court of Appeals should not have entertained the
petition for certiorari because United Neon failed to attach the requisite documentary
evidence to its petition.
We are not persuaded. Section 1 of Rule 65 of the Rules of Court provides:
Section 1. Petition for certiorari. x x x
The petition shall be accompanied by a certified true copy

of the judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third
paragraph of Section 3, Rule 46.
A plain reading of the provision indicates that there is no specific enumeration

of the documents that must be appended to the petition, other than a certified true copy
of the assailed judgment, order, or resolution. In Condes v. Court of Appeals,[if
we held that the acceptance or rejection by the Court of Appeals of a
petition for certiorari rests in its sound discretion. Thus:
x x x The initial determination of what pleadings, documents or orders are
relevant and pertinent to the petition rests on the petitioner. Thereafter, the CA will
review the petition and determine whether additional pleadings, documents or orders
should have been attached thereto.
The appellate court found the present petition sufficient in form when it
proceeded to decide the case on the merits, without raising any question as to the
sufficiency of the petition. Acceptance of a petition for certiorari, as well as granting
due course thereto is addressed to the sound discretion of the court. Where it
does not appear, as in this case, that in giving due course to the petition for
certiorari, the CA committed any error that prejudiced the substantial rights of the
parties, there is no reason to disturb its determination that the copies of the
pleadings and documents attached to the petition were sufficient to make out a
prima facie case. (Emphasis supplied)
In the same manner, we find no reversible error when the Court of Appeals
gave due course to the petition, since it evidently found that the documents attached to
the petition were sufficient.
Substantive Issues
The applicant must show that it is entitled to the relief sought, and that acts are being
undertaken in violation of the applicants rights
We emphasize that at this stage of the proceedings, we are not concerned
with the merits of the case, but only with the propriety of the issuance of the preliminary
injunction by the trial court. After a painstaking review of the arguments and evidence
presented by the parties, we find that petitioner was not entitled to the grant of a
preliminary injunction for two reasons: first, the alleged right sought to be protected by
the petitioner was not clearly demonstrated; second, the requirement of grave and
irreparable injury is absent.
A preliminary injunction may be granted only where the plaintiff appears to be
clearly entitled to the relief sought[if !supportFootnotes][26][endif] and has substantial interest in the
right sought to be defended.[if !supportFootnotes][27][endif] While the existence of the right need
not be conclusively established, it must be clear.[if !supportFootnotes][28][endif] The standard is
even higher in the case of a preliminary mandatory injunction, which should only be
granted
x x x in cases of extreme urgency; where the right is very clear; where
considerations of relative inconvenience bear strongly in
complainant's favor; where there is a willful and unlawful invasion of
plaintiff's right against his protest and remonstrance, the injury being
a continuing one; and where the effect of the mandatory injunction is
rather to reestablish and maintain a preexisting continuing relation
between the parties, recently and arbitrarily interrupted by the
defendant, than to establish a new relation x x x.[if !supportFootnotes][29][endif]
The evidence presented before us in support of a preliminary injunction is

weak and inconclusive, and the alleged right sought to be protected by petitioner is
vehemently disputed. We note that both parties allege that: (1) they began construction
of their respective billboards first; (2) the billboard of the other party blocks the others
exclusive line of sight; (3) they are entitled to protection under the provisions of the
National
Building
Code
and
OAAP
Code
of
Ethics/Guidelines.[if
However, we are not in a position to resolve these factual matters,
which should be resolved by the trial court. The question of which party began
construction first and which party is entitled to the exclusive line of sight is inextricably
linked to whether or not petitioner has the right that deserves protection through a
preliminary injunction. Indeed, the trial court would be in the best position to determine
which billboard was constructed first, their actual location, and whether or not an existing
billboard was obstructed by another.
At this juncture, it is not even clear to us what relationship Power Sites has to
the billboard that would entitle it to seek an injunction, since the documents before us
indicate that the barangay clearance and the Billboard/Signboard permit were issued to
HCLC Resource and Development Corporation, while the Building Permit and Electrical
Permit were issued to Mr. Renato Reyes So.[if !supportFootnotes][31][endif] As regards the identity
of these parties, the explanation thus far presented was
HCLC Resource and Development Corp. (HCLC) is a corporation whose
majority shares of stock are owned by Mr. Renato So, the same majority owner and
President of Power Sites. HCLC and Power Sites are closely connected. HCLC was the
entity which constructs the billboards of Power Sites, while the latter remains the owner
of the billboards.
Needless to say, this flies in the face of the basic principle in corporation law
that a corporation has a personality separate and distinct from those of its stockholders
and other corporations to which it may be connected. Nonetheless, these are matters
that are better resolved in the course of trial.
The damages alleged by petitioner can be quantified; it cannot be considered as Grave
and Irreparable Injury as understood in law
It is settled that a writ of preliminary injunction should be issued only to prevent
grave and irreparable injury, that is, injury that is actual, substantial, and demonstrable.
Here, there is no irreparable injury as understood in law. Rather, the damages alleged
by the petitioner, namely, immense loss in profit and possible damage claims from
clients and the cost of the billboard which is a considerable amount of money[if
is easily quantifiable, and certainly does not fall within the concept of
irreparable damage or injury as described in Social Security Commission v. Bayona:[if
Damages are irreparable within the meaning of the rule relative to the issuance
of injunction where there is no standard by which their amount can be measured
with reasonable accuracy. An irreparable injury which a court of equity will enjoin
includes that degree of wrong of a repeated and continuing kind which produce hurt,
inconvenience, or damage that can be estimated only by conjecture, and not by
any accurate standard of measurement. An irreparable injury to authorize an
injunction consists of a serious charge of, or is destructive to, the property it affects,
either physically or in the character in which it has been held and enjoined, or when the
property has some peculiar quality or use, so that its pecuniary value will not fairly
recompense the owner of the loss thereof. (Emphasis supplied)
Here, any damage petitioner may suffer is easily subject to mathematical
computation and, if proven, is fully compensable by damages.[if !supportFootnotes][34][endif] Thus,
a preliminary injunction is not warranted. As previously held in Golding v. Balatbat,[if
the writ of injunction
should never issue when an action for damages would adequately
compensate the injuries caused. The very foundation of the

jurisdiction to issue the writ rests in the probability of irreparable
injury, the inadequacy of pecuniary compensation, and the
prevention of the multiplicity of suits, and where facts are not shown
to bring the case within these conditions, the relief of injunction
should be refused.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals

dated January 29, 2004 in CA-G.R. SP No. 72689 declaring as null the August 1, 2002
Order of the Regional Trial Court of Muntinlupa City, Branch 256 and the Writ of
Injunction in Civil Case No. 02-143, and denying the prayer for prohibition, and its
Resolution dated April 28, 2004 denying the Motion for Reconsideration, are
AFFIRMED.
SO ORDERED.
DFA v. Falcon, G.R. No. 176657, 629 SCRA 644, 1 September 2010
DEPARTMENT OF FOREIGN AFFAIRS and BANGKO
SENTRAL NG PILIPINAS,
Petitioners,
G.R. No. 176657

Present:
- versus HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE

PRESIDING JUDGE OF BRANCH 71 OF THE REGIONAL
TRIAL COURT IN PASIG CITY and BCA INTERNATIONAL
CORPORATION,
Respondents.
CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
Promulgated:
September 1, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the
Rules of Court with a prayer for the issuance of a temporary restraining order and/or a
writ of preliminary injunction filed by petitioners Department of Foreign Affairs (DFA) and
Bangko Sentral ng Pilipinas (BSP). Petitioners pray that the Court declare as null and
void the Order[if !supportFootnotes][1][endif] dated February 14, 2007 of respondent Judge Franco
T. Falcon (Judge Falcon) in Civil Case No. 71079, which granted the application for
preliminary injunction filed by respondent BCA International Corporation
(BCA). Likewise, petitioners seek to prevent respondent Judge Falcon from
implementing the corresponding Writ of Preliminary Injunction dated February 23, 2007[if
issued pursuant to the aforesaid Order.
The facts of this case, as culled from the records, are as follows:
Being a member state of the International Civil Aviation Organization (ICAO),[if
the Philippines has to comply with the commitments and standards set
forth in ICAO Document No. 9303[if !supportFootnotes][4][endif] which requires the ICAO member
states to issue machine readable travel documents (MRTDs)[if !supportFootnotes][5][endif] by April
2010.
Thus, in line with the DFAs mandate to improve the passport and visa issuance
system, as well as the storage and retrieval of its related application records, and
pursuant to our governments ICAO commitments, the DFA secured the approval of the
President of the Philippines, as Chairman of the Board of the National Economic and
Development Authority (NEDA), for the implementation of the Machine Readable

Passport and Visa Project (the MRP/V Project) under the Build-Operate-and-Transfer
(BOT) scheme, provided for by Republic Act No. 6957, as amended by Republic Act No.
7718 (the BOT Law), and its Implementing Rules and Regulations (IRR). Thus, a Prequalification, Bids and Awards Committee (PBAC) published an invitation to pre-qualify
and bid for the supply of the needed machine readable passports and visas, and
conducted the public bidding for the MRP/V Project on January 10, 2000. Several
bidders responded and BCA was among those that pre-qualified and submitted its
technical and financial proposals. On June 29, 2000, the PBAC found BCAs bid to be
the sole complying bid; hence, it permitted the DFA to engage in direct negotiations with
BCA. On even date, the PBAC recommended to the DFA Secretary the award of the
MRP/V Project to BCA on a BOT arrangement.
In compliance with the Notice of Award dated September 29, 2000 and Section
11.3, Rule 11 of the IRR of the BOT Law,[if !supportFootnotes][6][endif] BCA incorporated a project
company, the Philippine Passport Corporation (PPC) to undertake and implement the
MRP/V Project.
On February 8, 2001, a Build-Operate-Transfer Agreement[if !supportFootnotes][7][endif]
(BOT Agreement) between the DFA and PPC was signed by DFA Acting Secretary
Lauro L. Baja, Jr. and PPC President Bonifacio Sumbilla. Under the BOT Agreement,
the MRP/V Project was defined as follows:
Section 1.02 MRP/V Project refers to all the activities
and services undertaken in the fulfillment of the Machine Readable
Passport and Visa Project as defined in the Request for Proposals
(RFP), a copy of which is hereto attached as Annex A, including but
not limited to project financing, systems development, installation
and maintenance in the Philippines and Foreign Service Posts
(FSPs), training of DFA personnel, provision of all project
consumables (related to the production of passports and visas, such
as printer supplies, etc.), scanning of application and citizenship
documents, creation of data bases, issuance of machine readable
passports and visas, and site preparation in the Central Facility and
Regional Consular Offices (RCOs) nationwide.[if !supportFootnotes][8][endif]
On April 5, 2002, former DFA Secretary Teofisto T. Guingona and Bonifacio

Sumbilla, this time as BCA President, signed an Amended BOT Agreement[if
in order to reflect the change in the designation of the parties and to
harmonize Section 11.3 with Section 11.8[if !supportFootnotes][10][endif] of the IRR of the BOT
Law. The Amended BOT Agreement was entered into by the DFA and BCA with the
conformity of PPC.
The two BOT Agreements (the original version signed on February 8, 2001
and the amended version signed April 5, 2002) contain substantially the same provisions
except for seven additional paragraphs in the whereas clauses and two new provisions
Section 9.05 on Performance and Warranty Securities and Section 20.15 on

Miscellaneous Provisions. The two additional provisions are quoted below:
Section 9.05. The PPC has posted in favor of the DFA the
performance security required for Phase 1 of the MRP/V Project and
shall be deemed, for all intents and purposes, to be full compliance
by BCA with the provisions of this Article 9.
xxxx
Section 20.15 It is clearly and expressly understood that

BCA may assign, cede and transfer all of its rights and obligations
under this Amended BOT Agreement to PPC, as fully as if PPC is
the original signatory to this Amended BOT Agreement, provided
however that BCA shall nonetheless be jointly and severally liable
with PPC for the performance of all the obligations and liabilities
under this Amended BOT Agreement.[if !supportFootnotes][11][endif]
Also modified in the Amended BOT Agreement was the Project Completion
date of the MRP/V Project which set the completion of the implementation phase of the
project within 18 to 23 months from the date of effectivity of the Amended BOT
Agreement as opposed to the previous period found in the original BOT Agreement
which set the completion within 18 to 23 months from receipt of the NTP (Notice to
Proceed) in accordance with the Project Master Plan.
On April 12, 2002, an Assignment Agreement[if !supportFootnotes][12][endif] was
executed by BCA and PPC, whereby BCA assigned and ceded its rights, title, interest
and benefits arising from the Amended BOT Agreement to PPC.
As set out in Article 8 of the original and the Amended BOT Agreement, the
MRP/V Project was divided into six phases:
Phase 1. Project Planning Phase The Project Proponent [BCA] shall prepare
detailed plans and specifications in accordance with Annex A of this [Amended] BOT
Agreement within three (3) months from issuance of the NTP (Notice to Proceed) [from
the date of effectivity of this Amended BOT Agreement]. This phase shall be considered
complete upon the review, acceptance and approval by the DFA of these plans and the
resulting Master Plan, including the Master Schedule, the business process
specifications, the acceptance criteria, among other plans.

xxxx
The DFA must approve all detailed plans as a condition precedent to the
issuance of the CA [Certificate of Acceptance] for Phase 1.
Phase 2. Implementation of the MRP/V Project at the Central Facility Within six
(6) months from issuance of the CA for Phase 1, the PROJECT PROPONENT [BCA]
shall complete the implementation of the MRP/V Project in the DFA Central Facility, and
establish the network design between the DFA Central Facility, the ten (10) RCOs
[Regional Consular Offices] and the eighty (80) FSPs [Foreign Service Posts].
xxxx
Phase 3. Implementation of the MRP/V Project at the Regional Consular Offices
This phase represents the replication of the systems as approved from the Central
Facility to the RCOs throughout the country, as identified in the RFP [Request for
Proposal]. The approved systems are those implemented, evaluated, and finally
approved by DFA as described in Phase 1. The Project Proponent [BCA] will be
permitted to begin site preparation and the scanning and database building operations in
all offices as soon as the plans are agreed upon and accepted. This includes site
preparation and database building operations in these Phase-3 offices.
Within six (6) months from issuance of CA for Phase 2, the Project Proponent
[BCA] shall complete site preparation and implementation of the approved systems in
the ten (10) RCOs, including a fully functional network connection between all equipment
at the Central Facility and the RCOs.
Phase 4. Full Implementation, including all Foreign Service Posts Within three (3)
to eight (8) months from issuance of the CA for Phase-3, the Project Proponent [BCA]
shall complete all preparations and fully implement the approved systems in the eighty
(80) FSPs, including a fully functional network connection between all equipment at the
Central Facility and the FSPs. Upon satisfactory completion of Phase 4, a CA shall be
issued by the DFA.
Phase 5. In Service Phase Operation and maintenance of the complete MRP/V
Facility to provide machine readable passports and visas in all designated locations
around the world.
Phase 6. Transition/Turnover Transition/Turnover to the DFA of all operations and
equipment, to include an orderly transfer of ownership of all hardware, application
system software and its source code and/or licenses (subject to Section 5.02 [H]),
peripherals, leasehold improvements, physical and computer security improvements,
Automated Fingerprint Identification Systems, and all other MRP/V facilities shall
commence at least six (6) months prior to the end of the [Amended] BOT
Agreement. The transition will include the training of DFA personnel who will be taking
over the responsibilities of system operation and maintenance from the Project
Proponent [BCA]. The Project Proponent [BCA] shall bear all costs related to this
transfer.[if !supportFootnotes][13][endif] (Words in brackets appear in the Amended BOT
Agreement)
To place matters in the proper perspective, it should be pointed out that both
the DFA and BCA impute breach of the Amended BOT Agreement against each other.
According to the DFA, delays in the completion of the phases permeated the
MRP/V Project due to the submission of deficient documents as well as intervening
issues regarding BCA/PPCs supposed financial incapacity to fully implement the
project.
On the other hand, BCA contends that the DFA failed to perform its reciprocal
obligation to issue to BCA a Certificate of Acceptance of Phase 1 within 14 working days
of operation purportedly required by Section 14.04 of the Amended BOT Agreement.
BCA bewailed that it took almost three years for the DFA to issue the said Certificate
allegedly because every appointee to the position of DFA Secretary wanted to review
the award of the project to BCA. BCA further alleged that it was the DFAs refusal to
approve the location of the DFA Central Facility which prevented BCA from proceeding
with Phase 2 of the MRP/V Project.
Later, the DFA sought the opinion of the Department of Finance (DOF) and the
Department of Justice (DOJ) regarding the appropriate legal actions in connection with
BCAs alleged delays in the completion of the MRP/V Project. In a Letter dated
February 21, 2005,[if !supportFootnotes][14][endif] the DOJ opined that the DFA should issue a final
demand upon BCA to make good on its obligations, specifically on the warranties and
responsibilities regarding the necessary capitalization and the required financing to carry
out the MRP/V Project. The DOJ used as basis for said recommendation, the Letter
dated April 19, 2004[if !supportFootnotes][15][endif] of DOF Secretary Juanita Amatong to then DFA
Secretary Delia Albert stating, among others, that BCA may not be able to infuse more
capital into PPC to use for the completion of the MRP/V Project.
Thus, on February 22, 2005, DFA sent a letter[if !supportFootnotes][16][endif] to BCA,
through its project company PPC, invoking BCAs financial warranty under Section
5.02(A) of the Amended BOT Agreement.[if !supportFootnotes][17][endif] The DFA required BCA to
submit (a) proof of adequate capitalization (i.e., full or substantial payment of stock
subscriptions); (b) a bank guarantee indicating the availability of a credit facility of P700
million; and (c) audited financial statements for the years 2001 to 2004.
In reply to DFAs letter, BCA, through PPC, informed the former of its position that
its financial capacity was already passed upon during the prequalification process and
that the Amended BOT Agreement did not call for any additional financial requirements
for the implementation of the MRP/V Project. Nonetheless, BCA submitted its financial
statements for the years 2001 and 2002 and requested for additional time within which
to comply with the other financial requirements which the DFA insisted on.[if
According to the DFA, BCAs financial warranty is a continuing warranty which

requires that it shall have the necessary capitalization to finance the MRP/V Project in its
entirety and not on a per phase basis as BCA contends. Only upon sufficient proof of
its financial capability to complete and implement the whole project will the DFAs
obligation to choose and approve the location of its Central Facility arise. The DFA
asserted that its approval of a Central Facility site was not ministerial and upon its
review, BCAs proposed site for the Central Facility was purportedly unacceptable in
terms of security and facilities. Moreover, the DFA allegedly received conflicting official
letters and notices[if !supportFootnotes][19][endif] from BCA and PPC regarding the true ownership
and control of PPC. The DFA implied that the disputes among the shareholders of PPC
and between PPC and BCA appeared to be part of the reason for the hampered
implementation of the MRP/V Project.
BCA, in turn, submitted various letters and documents to prove its financial
capability to complete the MRP/V Project.[if !supportFootnotes][20][endif] However, the DFA
claimed these documents were unsatisfactory or of dubious authenticity. Then on August
1, 2005, BCA terminated its Assignment Agreement with PPC and notified the DFA that
it would directly implement the MRP/V Project.[if !supportFootnotes][21][endif] BCA further claims
that the termination of the Assignment Agreement was upon the instance, or with the
conformity, of the DFA, a claim which the DFA disputed.
December 9, 2005, the DFA sent a Notice of Termination[if
to BCA and PPC due to their alleged failure to submit proof of
financial capability to complete the entire MRP/V Project in accordance with the financial
warranty under Section 5.02(A) of the Amended BOT Agreement. The Notice states:
On
After a careful evaluation and consideration of the matter,

including the reasons cited in your letters dated March 3, May 3, and
June 20, 2005, and upon the recommendation of the Office of the
Solicitor General (OSG), the Department is of the view that your
continuing default in complying with the requisite bank guarantee
and/or credit facility, despite repeated notice and demand, is legally
unjustified.
In light of the foregoing considerations and upon the

instruction of the Secretary of Foreign Affairs, the Department
hereby formally TERMINATE (sic) the Subject Amended BOT
Agreement dated 5 April 2005 (sic)[if !supportFootnotes][23][endif] effective 09
December 2005. Further, and as a consequence of this termination,
the Department formally DEMAND (sic) that you pay within ten (10)
days from receipt hereof, liquidated damages equivalent to the
corresponding performance security bond that you had posted for
the MRP/V Project.
Please be guided accordingly.
On December 14, 2005, BCA sent a letter[if !supportFootnotes][24][endif] to the DFA

demanding that it immediately reconsider and revoke its previous notice of termination,
otherwise, BCA would be compelled to declare the DFA in default pursuant to the
Amended BOT Agreement. When the DFA failed to respond to said letter, BCA issued
its own Notice of Default dated December 22, 2005[if !supportFootnotes][25][endif] against the DFA,
stating that if the default is not remedied within 90 days, BCA will be constrained to
terminate the MRP/V Project and hold the DFA liable for damages.
BCAs request for mutual discussion under Section 19.01 of the Amended BOT
Agreement[if !supportFootnotes][26][endif] was purportedly ignored by the DFA and left the dispute
unresolved through amicable means within 90 days. Consequently, BCA filed its
Request for Arbitration dated April 7, 2006[if !supportFootnotes][27][endif] with the Philippine
Dispute Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the Amended
BOT Agreement which provides:
Section 19.02 Failure to Settle Amicably If the Dispute
cannot be settled amicably within ninety (90) days by mutual
discussion as contemplated under Section 19.01 herein, the Dispute
shall be settled with finality by an arbitrage tribunal operating under
International Law, hereinafter referred to as the Tribunal, under the
UNCITRAL Arbitration Rules contained in Resolution 31/98 adopted
by the United Nations General Assembly on December 15, 1976,
and entitled Arbitration Rules on the United Nations Commission on
the International Trade Law. The DFA and the BCA undertake to
abide by and implement the arbitration award. The place of
arbitration shall be Pasay City, Philippines, or such other place as
may mutually be agreed upon by both parties. The arbitration
proceeding shall be conducted in the English language.[if
As alleged in BCAs Request for Arbitration, PDRCI is a non-stock, non-profit

organization composed of independent arbitrators who operate under its own
Administrative Guidelines and Rules of Arbitration as well as under the United Nations
Commission on the International Trade Law (UNCITRAL) Model Law on International
Commercial Arbitration and other applicable laws and rules. According to BCA, PDRCI
can act as an arbitration center from whose pool of accredited arbitrators both the DFA
and BCA may select their own nominee to become a member of the arbitral tribunal
which will render the arbitration award.
BCAs Request for Arbitration filed with the PDRCI sought the following reliefs:
1.
A judgment nullifying and setting aside the Notice
of Termination dated December 9, 2005 of Respondent [DFA],
including its demand to Claimant [BCA] to pay liquidated damages
equivalent to the corresponding performance security bond posted

by Claimant [BCA];
2.
A judgment (a) confirming the Notice of Default
dated December 22, 2005 issued by Claimant [BCA] to Respondent
[DFA]; and (b) ordering Respondent [DFA] to perform its obligation
under the Amended BOT Agreement dated April 5, 2002 by
approving the site of the Central Facility at the Star Mall Complex on
Shaw Boulevard, Mandaluyong City, within five days from receipt of
the Arbitral Award; and
3.
A judgment ordering respondent [DFA] to pay
damages to Claimant [BCA], reasonably estimated at
P50,000,000.00 as of this date, representing lost business
opportunities; financing fees, costs and commissions; travel
expenses; legal fees and expenses; and costs of arbitration,
including the fees of the arbitrator/s.[if !supportFootnotes][29][endif]
PDRCI, through a letter dated April 26, 2006,[if !supportFootnotes][30][endif] invited the
DFA to submit its Answer to the Request for Arbitration within 30 days from receipt of
said letter and also requested both the DFA and BCA to nominate their chosen arbitrator
within the same period of time.
Initially, the DFA, through a letter dated May 22, 2006,[if !supportFootnotes][31][endif]
requested for an extension of time to file its answer, without prejudice to jurisdictional
and other defenses and objections available to it under the law. Subsequently,
however, in a letter dated May 29, 2006,[if !supportFootnotes][32][endif] the DFA declined the
request for arbitration before the PDRCI. While it expressed its willingness to resort to
arbitration, the DFA pointed out that under Section 19.02 of the Amended BOT
Agreement, there is no mention of a specific body or institution that was previously
authorized by the parties to settle their dispute. The DFA further claimed that the
arbitration of the dispute should be had before an ad hoc arbitration body, and not before
the PDRCI which has as its accredited arbitrators, two of BCAs counsels of
record. Likewise, the DFA insisted that PPC, allegedly an indispensable party in the
instant case, should also participate in the arbitration.
The DFA then sought the opinion of the DOJ on the Notice of Termination dated
December 9, 2005 that it sent to BCA with regard to the MRP/V Project.
In DOJ Opinion No. 35 (2006) dated May 31, 2006,[if !supportFootnotes][33][endif] the DOJ
concurred with the steps taken by the DFA, stating that there was basis in law and in fact
for the termination of the MRP/V Project. Moreover, the DOJ recommended the
immediate implementation of the project (presumably by a different contractor) at the
soonest possible time.
Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for
the latter to provide the former passports compliant with international standards. The
BSP then solicited bids for the supply, delivery, installation and commissioning of a
system for the production of Electronic Passport Booklets or e-Passports.[if
For BCA, the BSPs invitation to bid for the supply and purchase of e-Passports
(the e-Passport Project) would only further delay the arbitration it requested from the
DFA. Moreover, this new e-Passport Project by the BSP and the DFA would render
BCAs remedies moot inasmuch as the e-Passport Project would then be replacing the
MRP/V Project which BCA was carrying out for the DFA.
Thus, BCA filed a Petition for Interim Relief[if !supportFootnotes][35][endif] under Section 28
of the Alternative Dispute Resolution Act of 2004 (R.A. No. 9285),[if !supportFootnotes][36][endif]
with the Regional Trial Court (RTC) of Pasig City, Branch 71, presided over by
respondent Judge Falcon. In that RTC petition, BCA prayed for the following:
WHEREFORE, BCA respectfully prays that this Honorable Court, before the
constitution of the arbitral tribunal in PDRCI Case No. 30-2006/BGF, grant petitioner
interim relief in the following manner:
(a)
upon filing of this Petition, immediately issue an order temporarily
restraining Respondents [DFA and BSP], their agents, representatives, awardees,
suppliers and assigns (i) from awarding a new contract to implement the Project, or any
similar electronic passport or visa project; or (ii) if such contract has been awarded, from
implementing such Project or similar projects until further orders from this Honorable
Court;
(b)
after notice and hearing, issue a writ of preliminary injunction ordering
Respondents [DFA and BSP], their agents, representatives, awardees, suppliers and
assigns to desist (i) from awarding a new contract to implement the Project or any similar
electronic passport or visa project; or (ii) if such contract has been awarded, from
implementing such Project or similar projects, and to maintain the status quo ante
pending the resolution on the merits of BCAs Request for Arbitration; and
(c)
render judgment affirming the interim relief granted to BCA until the
dispute between the parties shall have been resolved with finality.
BCA also prays for such other relief, just and equitable under the premises.[if
BCA alleged, in support for its application for a Temporary Restraining Order
(TRO), that unless the DFA and the BSP were immediately restrained, they would
proceed to undertake the project together with a third party to defeat the reliefs BCA
sought in its Request for Arbitration, thus causing BCA to suffer grave and irreparable
injury from the loss of substantial investments in connection with the implementation of
the MRP/V Project.
Thereafter, the DFA filed an Opposition (to the Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction) dated January 18, 2007,[if
alleging that BCA has no cause of action against it as the contract
between them is for machine readable passports and visas which is not the same as the
contract it has with the BSP for the supply of electronic passports. The DFA also
pointed out that the Filipino people and the governments international standing would
suffer great damage if a TRO would be issued to stop the e-Passport Project. The DFA
mainly anchored its opposition on Republic Act No. 8975, which prohibits trial courts
from issuing a TRO, preliminary injunction or mandatory injunction against the bidding or
awarding of a contract or project of the national government.
On January 23, 2007, after summarily hearing the parties oral arguments on
BCAs application for the issuance of a TRO, the trial court ordered the issuance of a
TRO restraining the DFA and the BSP, their agents, representatives, awardees,
suppliers and assigns from awarding a new contract to implement the Project or any
similar electronic passport or visa project, or if such contract has been awarded, from
implementing such or similar projects.[if !supportFootnotes][39][endif] The trial court also set for
hearing BCAs application for preliminary injunction.
Consequently, the DFA filed a Motion for Reconsideration[if !supportFootnotes][40][endif] of
the January 23, 2007 Order. The BSP, in turn, also sought to lift the TRO and to dismiss
the petition. In its Urgent Omnibus Motion dated February 1, 2007,[if !supportFootnotes][41][endif]
the BSP asserted that BCA is not entitled to an injunction, as it does not have a clear
right which ought to be protected, and that the trial court has no jurisdiction to enjoin the
implementation of the e-Passport Project which, the BSP alleged, is a national
government project under Republic Act No. 8975.
In the hearings set for BCAs application for preliminary injunction, BCA presented
as witnesses, Mr. Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr. from the
Independent Verification and Validation Contractor commissioned by the DFA under the
Amended BOT Agreement, and DFA Assistant Secretary Domingo Lucenario, Jr. as
adverse party witness.
The DFA and the BSP did not present any witness during the hearings for BCAs
application for preliminary injunction. According to the DFA and the BSP, the trial court
did not have any jurisdiction over the case considering that BCA did not pay the correct
docket fees and that only the Supreme Court could issue a TRO on the bidding for a
national government project like the e-Passport Project pursuant to the provisions of
Republic Act No. 8975. Under Section 3 of Republic Act No. 8975, the RTC could only
issue a TRO against a national government project if it involves a matter of extreme
urgency involving a constitutional issue, such that unless a TRO is issued, grave
injustice and irreparable injury will arise.
Thereafter, BCA filed an Omnibus Comment [on Opposition and Supplemental
Opposition (To the Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction)] and Opposition [to Motion for Reconsideration (To the
Temporary Restraining Order dated January 23, 2007)] and Urgent Omnibus Motion [(i)
To Lift Temporary Restraining Order; and (ii) To Dismiss the Petition] dated January 31,
2007.[if !supportFootnotes][42][endif] The DFA and the BSP filed their separate Replies (to BCAs
Omnibus Comment) dated February 9, 2007[if !supportFootnotes][43][endif] and February 13,
2007,[if !supportFootnotes][44][endif] respectively.
On February 14, 2007, the trial court issued an Order granting BCAs application
for preliminary injunction, to wit:
WHEREFORE, in view of the above, the court resolves
that it has jurisdiction over the instant petition and to issue the
provisional remedy prayed for, and therefore, hereby GRANTS
petitioners
[BCAs]
application
for
preliminary
injunction. Accordingly, upon posting a bond in the amount of Ten
Million Pesos (P10,000,000.00), let a writ of preliminary injunction
issue ordering respondents [DFA and BSP], their agents,
representatives, awardees, suppliers and assigns to desist (i) from
awarding a new contract to implement the project or any similar
electronic passport or visa project or (ii) if such contract has been
awarded from implementing such project or similar projects.
The motion to dismiss is denied for lack of merit. The

motions for reconsideration and to lift temporary restraining Order
are now moot and academic by reason of the expiration of the
TRO.[if !supportFootnotes][45][endif]
On February 16, 2007, BCA filed an Amended Petition,[if !supportFootnotes][46][endif]

wherein paragraphs 3.3(b) and 4.3 were modified to add language to the effect that
unless petitioners were enjoined from awarding the e-Passport Project, BCA would be
deprived of its constitutionally-protected right to perform its contractual obligations under
the original and amended BOT Agreements without due process of law. Subsequently,
on February 26, 2007, the DFA and the BSP received the Writ of Preliminary Injunction
dated February 23, 2007.
Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition for
Certiorari[if !supportFootnotes][47][endif] and prohibition under Rule 65 of the Rules of Court with a
prayer for the issuance of a temporary restraining order and/or a writ of preliminary
injunction, imputing grave abuse of discretion on the trial court when it granted interim
relief to BCA and issued the assailed Order dated February 14, 2007 and the writ of
preliminary injunction dated February 23, 2007.
The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction dated March 5, 2007.[if

On March 12, 2007, the Court required BCA to file its comment on the said
petition within ten days from notice and granted the Office of the Solicitor Generals
urgent motion for issuance of a TRO and/or writ of preliminary injunction,[if
thus:
After deliberating on the petition for certiorari and
prohibition with temporary restraining order and/or writ of preliminary
injunction assailing the Order dated 14 February 2007 of the
Regional Trial Court, Branch 71, Pasig City, in Civil Case No. 71079,
the Court, without necessarily giving due course thereto, resolves to
require respondents to COMMENT thereon (not to file a motion to
dismiss) within ten (10) days from notice.
The Court further resolves to GRANT the Office of the

Solicitor Generals urgent motion for issuance of a temporary
restraining order and/or writ of preliminary injunction dated 05 March
2007 and ISSUE a TEMPORARY RESTRAINING ORDER, as
prayed for, enjoining respondents from implementing the assailed
Order dated 14 February 2007 and the Writ of Preliminary Injunction
dated 23 February 2007, issued by respondent Judge Franco T.
Falcon in Civil Case No. 71079 entitled BCA International
Corporation vs. Department of Foreign Affairs and Bangko Sentral
ng Pilipinas, and from conducting further proceedings in said case
until further orders from this Court.
BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO,[if
to which the DFA and the BSP filed their Reply dated August 14,
2007.[if !supportFootnotes][51][endif]
In a Resolution dated June 4, 2007,[if !supportFootnotes][52][endif] the Court denied BCAs

motion to lift TRO. BCA filed another Urgent Omnibus Motion dated August 17, 2007,
for the reconsideration of the Resolution dated June 4, 2007, praying that the TRO
issued on March 12, 2007 be lifted and that the petition be denied.
In a Resolution dated September 10, 2007,[if !supportFootnotes][53][endif] the Court denied
BCAs Urgent Omnibus Motion and gave due course to the instant petition. The parties
were directed to file their respective memoranda within 30 days from notice of the
Courts September 10, 2007 Resolution.
Petitioners DFA and BSP submit the following issues for our consideration:
ISSUES
I
WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY ABUSED HIS

DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN HE ISSUED THE ASSAILED ORDER,
WHICH EFFECTIVELY ENJOINED THE IMPLEMENTATION OF
THE E-PASSPORT PROJECT -- A NATIONAL GOVERNMENT
PROJECT UNDER REPUBLIC ACT NO. 8975.
II
WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN GRANTING RESPONDENT BCAS INTERIM
RELIEF INASMUCH AS:
[if !supportLists](I)
[endif]RESPONDENT BCA HAS NOT ESTABLISHED A
CLEAR RIGHT THAT CAN BE PROTECTED BY AN INJUNCTION; AND
[if !supportLists](II)
[endif]RESPONDENT BCA HAS NOT SHOWN THAT IT
WILL SUSTAIN GRAVE AND IRREPARABLE INJURY THAT MUST BE PROTECTED
BY AN INJUNCTION. ON THE CONTRARY, IT IS THE FILIPINO PEOPLE, WHO
PETITIONERS PROTECT, THAT WILL SUSTAIN SERIOUS AND SEVERE INJURY BY
THE INJUNCTION.[IF !SUPPORTFOOTNOTES][54][ENDIF]
At the outset, we dispose of the procedural objections of BCA to the petition, to
wit: (a) petitioners did not follow the hierarchy of courts by filing their petition directly with
this Court, without filing a motion for reconsideration with the RTC and without filing a
petition first with the Court of Appeals; (b) the person who verified the petition for the
DFA did not have personal knowledge of the facts of the case and whose appointment to
his position was highly irregular; and (c) the verification by the Assistant Governor and
General Counsel of the BSP of only selected paragraphs of the petition was with the
purported intent to mislead this Court.
Although the direct filing of petitions for certiorari with the Supreme Court is
discouraged when litigants may still resort to remedies with the lower courts, we have in
the past overlooked the failure of a party to strictly adhere to the hierarchy of courts on
highly meritorious grounds. Most recently, we relaxed the rule on court hierarchy in the
case of Roque, Jr. v. Commission on Elections,[if !supportFootnotes][55][endif] wherein we held:
The policy on the hierarchy of courts, which petitioners indeed failed to observe, is
not an iron-clad rule. For indeed the Court has full discretionary power to take
cognizance and assume jurisdiction of special civil actions for certiorari and mandamus
filed directly with it for exceptionally compelling reasons or if warranted by the
nature of the issues clearly and specifically raised in the petition.[if !supportFootnotes][56][endif]
(Emphases ours.)
The Court deems it proper to adopt a similarly liberal attitude in the present case in
consideration of the transcendental importance of an issue raised herein. This is the first
time that the Court is confronted with the question of whether an information and
communication technology project, which does not conform to our traditional notion of
the term infrastructure, is covered by the prohibition on the issuance of court
injunctions found in Republic Act No. 8975, which is entitled An Act to Ensure the
Expeditious Implementation and Completion of Government Infrastructure Projects by
Prohibiting Lower Courts from Issuing Temporary Restraining Orders, Preliminary
Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for Violations
Thereof, and for Other Purposes. Taking into account the current trend of
computerization and modernization of administrative and service systems of government
offices, departments and agencies, the resolution of this issue for the guidance of the
bench and bar, as well as the general public, is both timely and imperative.
Anent BCAs claim that Mr. Edsel T. Custodio (who verified the Petition on
behalf of the DFA) did not have personal knowledge of the facts of the case and was
appointed to his position as Acting Secretary under purportedly irregular circumstances,
we find that BCA failed to sufficiently prove such allegations. In any event, we have
previously held that [d]epending on the nature of the allegations in the petition, the
verification may be based either purely on personal knowledge, or entirely on authentic
records, or on both sources.[if !supportFootnotes][57][endif] The alleged lack of personal
knowledge of Mr. Custodio (which, as we already stated, BCA failed to prove) would not
necessarily render the verification defective for he could have verified the petition purely
on the basis of authentic records.
As for the assertion that the partial verification of Assistant Governor and
General Counsel Juan de Zuniga, Jr. was for the purpose of misleading this Court, BCA
likewise failed to adduce evidence on this point. Good faith is always presumed.
Paragraph 3 of Mr. Zunigas verification indicates that his partial verification is due to the
fact that he is verifying only the allegations in the petition peculiar to the BSP. We see
no reason to doubt that this is the true reason for his partial or selective verification.
In sum, BCA failed to successfully rebut the presumption that the official acts
(of Mr. Custodio and Mr. Zuniga) were done in good faith and in the regular performance
of official duty.[if !supportFootnotes][58][endif] Even assuming the verifications of the petition

suffered from some defect, we have time and again ruled that [t]he ends of justice are
better served when cases are determined on the merits after all parties are given full
opportunity to ventilate their causes and defenses rather than on technicality or some
procedural imperfections.[if !supportFootnotes][59][endif] In other words, the Court may suspend
or even disregard rules when the demands of justice so require.[if !supportFootnotes][60][endif]
We now come to the substantive issues involved in this case.
On whether the trial court had
jurisdiction to issue a writ of
preliminary injunction in the present
case
In their petition, the DFA and the BSP argue that respondent Judge Falcon
gravely abused his discretion amounting to lack or excess of jurisdiction when he issued
the assailed orders, which effectively enjoined the bidding and/or implementation of the
e-Passport Project. According to petitioners, this violated the clear prohibition under
Republic Act No. 8975 regarding the issuance of TROs and preliminary injunctions
against national government projects, such as the e-Passport Project.
The prohibition invoked by petitioners is found in Section 3 of Republic Act No.
8975, which reads:
Section 3. Prohibition on the Issuance of Temporary
Restraining Orders, Preliminary Injunctions and Preliminary
Mandatory Injunctions. No court, except the Supreme Court, shall
issue any temporary restraining order, preliminary injunction or
preliminary mandatory injunction against the government, or any of
its subdivisions, officials or any person or entity, whether public or
private, acting under the governments direction, to restrain, prohibit
or compel the following acts:
[if !supportLists](a)
[endif]Acquisition, clearance and
development of the right-of-way and/or site or location of any
national government project;
[if !supportLists](b) [endif]Bidding or awarding of contract/project of the national

government as defined under Section 2 hereof;
[if !supportLists](c) [endif]Commencement, prosecution, execution, implementation,
operation of any such contract or project;
[if !supportLists](d) [endif]Termination or rescission of any such contract/project; and
[if !supportLists](e) [endif]The undertaking or authorization of any other lawful activity
necessary for such contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those claiming to have
rights through such bidders involving such contract/project. This prohibition shall not
apply when the matter is of extreme urgency involving a constitutional issue, such that
unless a temporary restraining order is issued, grave injustice and irreparable injury will
arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond
shall accrue in favor of the government if the court should finally decide that the
applicant was not entitled to the relief sought.
If after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the qualified
and winning bidder or order a rebidding of the same, without prejudice to any liability that
the guilty party may incur under existing laws.
From the foregoing, it is indubitable that no court, aside from the Supreme
Court, may enjoin a national government project unless the matter is one of extreme
urgency involving a constitutional issue such that unless the act complained of is
enjoined, grave injustice or irreparable injury would arise.
What then are the national government projects over which the lower courts
are without jurisdiction to issue the injunctive relief as mandated by Republic Act No.
8975?
Section 2(a) of Republic Act No. 8975 provides:
Section 2. Definition of Terms.
(a) National government projects shall refer to all current

and future national government infrastructure, engineering works
and service contracts, including projects undertaken by governmentowned and -controlled corporations, all projects covered by Republic
Act No. 6975, as amended by Republic Act No. 7718, otherwise
known as the Build-Operate-and-Transfer Law, and other related
and necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation,
construction, completion, operation, maintenance, improvement,
repair and rehabilitation, regardless of the source of funding.
As petitioners themselves pointed out, there are three types of national

government projects enumerated in Section 2(a), to wit:
[endif]current and future national government
infrastructure projects, engineering works and service contracts, including projects
undertaken by government-owned and controlled corporations;
[if !supportLists](b)
[endif]all projects covered by R.A. No. 6975, as amended
by R.A. No. 7718, or the Build-Operate-and-Transfer ( BOT) Law; and
[if !supportLists](c)
[endif]other related and necessary activities, such as site
acquisition, supply and/or installation of equipment and materials, implementation,
construction, completion, operation, maintenance, improvement repair and rehabilitation,
regardless of the source of funding.
Under Section 2(a) of the BOT Law as amended by Republic Act No. 7718,[if
private sector infrastructure or development projects are those
normally financed and operated by the public sector but which will now be wholly
or partly implemented by the private sector, including but not limited to, power
plants, highways, ports, airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroads and railways, transport systems, land
reclamation projects, industrial estates or townships, housing, government buildings,
tourism projects, markets, slaughterhouses, warehouses, solid waste management,
information technology networks and database infrastructure, education and health
facilities, sewerage, drainage, dredging, and other infrastructure and development
projects as may be authorized by the appropriate agency.
In contrast, Republic Act No. 9184,[if !supportFootnotes][62][endif] also known as the

Government Procurement Reform Act, defines infrastructure projects in Section 5(k)
thereof in this manner:
(k) Infrastructure Projects - include the construction,
improvement, rehabilitation, demolition, repair, restoration or
maintenance of roads and bridges, railways, airports, seaports,
communication facilities, civil works components of information
technology projects, irrigation, flood control and drainage, water
supply, sanitation, sewerage and solid waste management systems,
shore protection, energy/power and electrification facilities, national
buildings, school buildings, hospital buildings and other related
construction projects of the government. (Emphasis supplied.)
In the present petition, the DFA and the BSP contend that the bidding for the
supply, delivery, installation and commissioning of a system for the production of
Electronic Passport Booklets, is a national government project within the definition of
Section 2 of Republic Act No. 8975. Petitioners also point to the Senate deliberations on
Senate Bill No. 2038[if !supportFootnotes][63][endif] (later Republic Act No. 8975) which allegedly
show the legislatives intent to expand the scope and definition of national government
projects to cover not only the infrastructure projects enumerated in Presidential Decree
No. 1818, but also future projects that may likewise be considered national government
infrastructure projects, like the e-Passport Project, to wit:
Senator Cayetano. x x x Mr. President, the present bill, the Senate Bill No.
2038, is actually an improvement of P.D. No. 1818 and definitely not
a repudiation of what I have earlier said, as my good friend clearly
stated. But this is really an effort to improve both the scope and
definition of the term government projects and to ensure that lower
court judges obey and observe this prohibition on the issuance of
TROs on infrastructure projects of the government.
xxxx
Senator Cayetano. That is why, Mr. President, I did try to explain why I would
accept the proposed amendment, meaning the totality of the repeal
of P.D. 1818 which is not found in the original version of the bill,
because of my earlier explanation that the definition of the term
government infrastructure project covers all of those enumerated in
Section 1 of P.D. No. 1818. And the reason for that, as we know, is
we do not know what else could be considered government
infrastructure project in the next 10 or 20 years.
x x x So, using the Latin maxim of expression unius est exclusion alterius,
which means what is expressly mentioned is tantamount to an
express exclusion of the others, that is the reason we did not include
particularly an enumeration of certain activities of the government
found in Section 1 of P.D. No. 1818. Because to do that, it may be a
good excuse for a brilliant lawyer to say Well, you know, since it
does not cover this particular activity, ergo, the Regional Trial Court
may issue TRO.
Using the foregoing discussions to establish that the intent of the framers of the
law was to broaden the scope and definition of national government projects and
national infrastructure projects, the DFA and the BSP submit that the said scope and
definition had since evolved to include the e-Passport Project. They assert that the
concept of infrastructure must now refer to any and all elements that provide support,
framework, or structure for a given system or organization, including information
technology, such as the e-Passport Project.
Interestingly, petitioners represented to the trial court that the e-Passport Project is
a BOT project but in their petition with this Court, petitioners simply claim that the ePassport Project is a national government project under Section 2 of Republic Act No.
8975. This circumstance is significant, since relying on the claim that the e-Passport
Project is a BOT project, the trial court ruled in this wise:
The prohibition against issuance of TRO and/or writ of preliminary injunction under
RA 8975 applies only to national government infrastructure project covered by the
BOT Law, (RA 8975, Sec 3[b] in relation to Sec. 2).
The national government projects covered under the BOT are

enumerated under Sec. 2 of RA6957, as amended, otherwise known
as the BOT Law. Notably, it includes information technology
networks and database infrastructure.
In relation to information technology projects, infrastructure

projects refer to the civil works components thereof. (R.A. No.
9184 [2003], Sec. 5[c]{sic}).[if !supportFootnotes][64][endif]
Respondent BSPs request for bid, for the supply, delivery, installation
and commissioning of a system for the production of Electronic
Passport Booklets appears to be beyond the scope of the term civil
works. Respondents did not present evidence to prove otherwise.[if
(Emphases ours.)
From the foregoing, it can be gleaned that the trial court accepted BCAs
reasoning that, assuming the e-Passport Project is a project under the BOT Law,
Section 2 of the BOT Law must be read in conjunction with Section 5(c) of Republic Act
No. 9184 or the Government Procurement Reform Act to the effect that only the civil
works component of information technology projects are to be considered
infrastructure. Thus, only said civil works component of an information technology
project cannot be the subject of a TRO or writ of injunction issued by a lower court.
Although the Court finds that the trial court had jurisdiction to issue the writ of
preliminary injunction, we cannot uphold the theory of BCA and the trial court that the
definition of the term infrastructure project in Republic Act No. 9184 should be applied
to the BOT Law.
Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein,
including the term infrastructure project, with the following phrase: For purposes of
this Act, the following terms or words and phrases shall mean or be understood as
follows x x x.
This Court has stated that the definition of a term in a statute is not conclusive as
to the meaning of the same term as used elsewhere.[if !supportFootnotes][66][endif] This is evident
when the legislative definition is expressly made for the purposes of the statute
containing such definition.[if !supportFootnotes][67][endif]
There is no legal or rational basis to apply the definition of the term infrastructure
project in one statute to another statute enacted years before and which already defined
the types of projects it covers. Rather, a reading of the two statutes involved will readily
show that there is a legislative intent to treat information technology projects differently
under the BOT Law and the Government Procurement Reform Act.
In the BOT Law as amended by Republic Act No. 7718, the national infrastructure
and development projects covered by said law are enumerated in Section 2(a) as
follows:
SEC. 2. Definition of Terms. - The following terms used in
this Act shall have the meanings stated below:
[endif]Private sector infrastructure or development projects The general description of infrastructure or development projects normally financed and
operated by the public sector but which will now be wholly or partly implemented by the
private sector, including but not limited to, power plants, highways, ports, airports,
canals, dams, hydropower projects, water supply, irrigation, telecommunications,
railroads and railways, transport systems, land reclamation projects, industrial estates of
townships, housing, government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology networks and
database infrastructure, education and health facilities, sewerage, drainage, dredging,
and other infrastructure and development projects as may be authorized by the
appropriate agency pursuant to this Act. Such projects shall be undertaken through
contractual arrangements as defined hereunder and such other variations as may be

approved by the President of the Philippines.
For the construction stage of these
infrastructure projects, the project proponent may
obtain financing from foreign and/or domestic
sources and/or engage the services of a foreign
and/or Filipino contractor: Provided, That, in case
an infrastructure or a development facility's
operation requires a public utility franchise, the
facility operator must be a Filipino or if a
corporation, it must be duly registered with the
Securities and Exchange Commission and
owned up to at least sixty percent (60%) by
Filipinos: Provided, further, That in the case of
foreign contractors, Filipino labor shall be
employed or hired in the different phases of
construction where Filipino skills are available:
Provided, finally, That projects which would have
difficulty in sourcing funds may be financed partly
from direct government appropriations and/or
from Official Development Assistance (ODA) of
foreign governments or institutions not exceeding
fifty percent (50%) of the project cost, and the
balance to be provided by the project proponent.
(Emphasis supplied.)
A similar provision appears in the Revised IRR of the BOT Law as amended, to
wit:
SECTION 1.3 - DEFINITION OF TERMS
For purposes of these Implementing Rules and Regulations, the terms and
phrases hereunder shall be understood as follows:
xxxx
v. Private Sector Infrastructure or
Development
Projects
The
general
description of infrastructure or Development
Projects normally financed, and operated by the
public sector but which will now be wholly or
partly financed, constructed and operated by the
private sector, including but not limited to, power
plants, highways, ports, airports, canals, dams,
hydropower projects, water supply, irrigation,
telecommunications, railroad and railways,
transport systems, land reclamation projects,
industrial estates or townships, housing,
government buildings, tourism projects, public
markets, slaughterhouses, warehouses, solid
waste management, information technology
networks and database infrastructure, education
and health facilities, sewerage, drainage,
dredging,
and
other
infrastructure
and
development projects as may otherwise be
authorized by the appropriate Agency/LGU
pursuant to the Act or these Revised IRR. Such
projects shall be undertaken through Contractual
Arrangements as defined herein, including such
other variations as may be approved by the
President of the Philippines.
xxxx
SECTION 2.2 - ELIGIBLE TYPES OF PROJECTS
The
Construction, rehabilitation, improvement, betterment, expansion,

modernization, operation, financing and maintenance of the following
types of projects which are normally financed and operated by the
public sector which will now be wholly or partly financed, constructed
and operated by the private sector, including other infrastructure and

development projects as may be authorized by the appropriate
agencies, may be proposed under the provisions of the Act and
these Revised IRR, provided however that such projects have a cost
recovery component which covers at least 50% of the Project Cost,
or as determined by the Approving Body:
xxxx
h. Information technology (IT) and data

base infrastructure, including modernization of
IT, geo-spatial resource mapping and cadastral
survey for resource accounting and planning.
(Underscoring supplied.)
Undeniably, under the BOT Law, wherein the projects are to be privately funded,
the entire information technology project, including the civil works component and the
technological aspect thereof, is considered an infrastructure or development project and
treated similarly as traditional infrastructure projects. All the rules applicable to
traditional infrastructure projects are also applicable to information technology
projects. In fact, the MRP/V Project awarded to BCA under the BOT Law appears to
include both civil works (i.e., site preparation of the Central Facility, regional DFA offices
and foreign service posts) and non-civil works aspects (i.e., development, installation
and maintenance in the Philippines and foreign service posts of a computerized passport
and visa issuance system, including creation of databases, storage and retrieval
systems, training of personnel and provision of consumables).
In contrast, under Republic Act No. 9184 or the Government Procurement Reform
Act, which contemplates projects to be funded by public funds, the term infrastructure
project was limited to only the civil works component of information technology
projects. The non-civil works component of information technology projects would be
treated as an acquisition of goods or consulting services as the case may be.
This limited definition of infrastructure project in relation to information
technology projects under Republic Act No. 9184 is significant since the IRR of Republic
Act No. 9184 has some provisions that are particular to infrastructure projects and other
provisions that are applicable only to procurement of goods or consulting services.[if
Implicitly, the civil works component of information technology projects are subject
to the provisions on infrastructure projects while the technological and other components
would be covered by the provisions on procurement of goods or consulting services as
the circumstances may warrant.
When Congress adopted a limited definition of what is to be considered
infrastructure in relation to information technology projects under the Government
Procurement Reform Act, legislators are presumed to have taken into account previous
laws concerning infrastructure projects (the BOT Law and Republic Act No. 8975) and
deliberately adopted the limited definition. We can further presume that Congress had
written into law a different treatment for information technology projects financed by
public funds vis-a-vis privately funded projects for a valid legislative purpose.
The idea that the definitions of terms found in the Government Procurement
Reform Act were not meant to be applied to projects under the BOT Law is further
reinforced by the following provision in the IRR of the Government Procurement Reform
Act:
Section 1. Purpose and General Coverage
This Implementing Rules and Regulations (IRR) Part A, hereinafter called
IRR-A, is promulgated pursuant to Section 75 of Republic Act No.
9184 (R.A. 9184), otherwise known as the Government
Procurement Reform Act (GPRA), for the purpose of prescribing the
necessary rules and regulations for the modernization,
standardization, and regulation of the procurement activities of the
government. This IRR-A shall cover all fully domestically-funded
procurement activities from procurement planning up to contract
implementation and termination, except for the following:
a) Acquisition of real property which shall be governed by Republic Act No.

8974 (R.A. 8974), entitled An Act to Facilitate the Acquisition of
Right-of-Way Site or Location for National Government Infrastructure
Projects and for Other Purposes, and other applicable laws; and
b) Private sector infrastructure or development projects and other procurement

covered by Republic Act No. 7718 (R.A. 7718), entitled An Act Authorizing the
Financing, Construction, Operation and Maintenance of Infrastructure Projects by
the Private Sector, and for Other Purposes, as amended: Provided, however, That
for the portions financed by the Government, the provisions of this IRR-A shall
apply.
The IRR-B for foreign-funded procurement activities shall be the subject of a
subsequent issuance. (Emphases supplied.)
The foregoing provision in the IRR can be taken as an administrative interpretation

that the provisions of Republic Act No. 9184 are inapplicable to a BOT project except
only insofar as such portions of the BOT project that are financed by the government.
Taking into account the different treatment of information technology projects
under the BOT Law and the Government Procurement Reform Act, petitioners
contention the trial court had no jurisdiction to issue a writ of preliminary injunction in the
instant case would have been correct if the e-Passport Project was a project under the
BOT Law as they represented to the trial court.
However, petitioners presented no proof that the e-Passport Project was a BOT
project. On the contrary, evidence adduced by both sides tended to show that the ePassport Project was a procurement contract under Republic Act No. 9184.
The BSPs on-line request for expression of interest and to bid for the e-Passport
Project[if !supportFootnotes][69][endif] from the BSP website and the newspaper clipping[if
of the same request expressly stated that [t]he two stage bidding
procedure under Section 30.4 of the Implementing Rules and Regulation (sic) Part-A of
Republic Act No. 9184 relative to the bidding and award of the contract shall
apply. During the testimony of DFA Assistant Secretary Domingo Lucenario, Jr. before
the trial court, he admitted that the e-Passport Project is a BSP procurement project and
that it is the BSP that will pay the suppliers.[if !supportFootnotes][71][endif] In petitioners
Manifestation dated July 29, 2008[if !supportFootnotes][72][endif] and the Erratum[if
thereto, petitioners informed the Court that a contract for the supply
of a complete package of systems design, technology, hardware, software, and
peripherals, maintenance and technical support, ecovers and datapage security
laminates for the centralized production and personalization of Machine Readable
Electronic Passport was awarded to Francois Charles Oberthur Fiduciaire. In the
Notice of Award dated July 2, 2008[if !supportFootnotes][74][endif] attached to petitioners pleading,
it was stated that the failure of the contractor/supplier to submit the required
performance bond would be sufficient ground for the imposition of administrative penalty
under Section 69 of the IRR-A of Republic Act No. 9184.
Being a government procurement contract under Republic Act No. 9184, only the
civil works component of the e-Passport Project would be considered an infrastructure
project that may not be the subject of a lower court-issued writ of injunction under
Republic Act No. 8975.
Could the e-Passport Project be considered as engineering works or a service
contract or as related and necessary activities under Republic Act No. 8975 which
may not be enjoined?

We hold in the negative. Under Republic Act No. 8975, a service contract refers
to infrastructure contracts entered into by any department, office or agency of the
national government with private entities and nongovernment organizations for services
related or incidental to the functions and operations of the department, office or agency
concerned. On the other hand, the phrase other related and necessary activities
obviously refers to activities related to a government infrastructure, engineering works,
service contract or project under the BOT Law. In other words, to be considered a
service contract or related activity, petitioners must show that the e-Passport Project is
an infrastructure project or necessarily related to an infrastructure project. This,
petitioners failed to do for they saw fit not to present any evidence on the details of the ePassport Project before the trial court and this Court. There is nothing on record to
indicate that the e-Passport Project has a civil works component or is necessarily related
to an infrastructure project.
Indeed, the reference to Section 30.4[if !supportFootnotes][75][endif] of the IRR of Republic
Act No. 9184 (a provision specific to the procurement of goods) in the BSPs request for
interest and to bid confirms that the e-Passport Project is a procurement of goods and
not an infrastructure project. Thus, within the context of Republic Act No. 9184 which
is the governing law for the e-Passport Project the said Project is not an infrastructure
project that is protected from lower court issued injunctions under Republic Act No.
8975, which, to reiterate, has for its purpose the expeditious and efficient implementation
and completion of government infrastructure projects.
We note that under Section 28, Republic Act No. 9285 or the Alternative
Dispute Resolution Act of 2004,[if !supportFootnotes][76][endif] the grant of an interim measure of
protection by the proper court before the constitution of an arbitral tribunal is allowed:
Sec. 28. Grant of Interim Measure of Protection. (a) It is
not incompatible with an arbitration agreement for a party to request,
before constitution of the tribunal, from a Court an interim measure
of protection and for the Court to grant such measure. After
constitution of the arbitral tribunal and during arbitral proceedings, a
request for an interim measure of protection, or modification thereof,
may be made with the arbitral tribunal or to the extent that the
arbitral tribunal has no power to act or is unable to act effectively, the
request may be made with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third arbitrator, who has
been nominated, has accepted the nomination and written
communication of said nomination and acceptance has been
received by the party making the request.
shall be observed:
[endif]The following rules on interim or provisional relief
[if !supportLists](1)
[endif]Any party may request that provisional relief be
granted against the adverse party.

[endif]Such relief may be granted:
[if !supportLists](i)
[endif] to prevent irreparable loss or injury;
[if !supportLists](ii)
obligation;
[if !supportLists](iii)
[if !supportLists](iv)
[endif] to provide security for the performance of any

[endif]to produce or preserve any evidence; or
[endif]to compel any other appropriate act or omission.
[endif]The order granting provisional relief may be
conditioned upon the provision of security or any act or omission specified in the order.
[endif]Interim or provisional relief is requested by written
application transmitted by reasonable means to the Court or arbitral tribunal as the case
may be and the party against whom the relief is sought, describing in appropriate detail
the precise relief, the party against whom the relief is requested, the grounds for the
relief, and the evidence supporting the request.
[endif]The order shall be binding upon the parties.
[endif]Either party may apply with the Court for assistance in
implementing or enforcing an interim measure ordered by an arbitral tribunal.
[endif]A party who does not comply with the order shall be
liable for all damages resulting from noncompliance, including all expenses and
reasonable attorneys fees, paid in obtaining the orders judicial enforcement.
Section 3(h) of the same statute provides that the "Court" as referred to in
Article 6 of the Model Law shall mean a Regional Trial Court.
Republic Act No. 9285 is a general law applicable to all matters and
controversies to be resolved through alternative dispute resolution methods. This law
allows a Regional Trial Court to grant interim or provisional relief, including preliminary
injunction, to parties in an arbitration case prior to the constitution of the arbitral
tribunal. This general statute, however, must give way to a special law governing
national government projects, Republic Act No. 8975 which prohibits courts, except the
Supreme Court, from issuing TROs and writs of preliminary injunction in cases involving
national government projects.
However, as discussed above, the prohibition in Republic Act No. 8975 is
inoperative in this case, since petitioners failed to prove that the e-Passport Project is
national government project as defined therein. Thus, the trial court had jurisdiction to
issue a writ of preliminary injunction against the e-Passport Project.
On whether the trial courts
issuance of a writ of injunction was
proper
Given the above ruling that the trial court had jurisdiction to issue a writ of
injunction and going to the second issue raised by petitioners, we answer the
question: Was the trial courts issuance of a writ of injunction warranted under the
circumstances of this case?
Petitioners attack on the propriety of the trial courts issuance of a writ of
injunction is two-pronged: (a) BCA purportedly has no clear right to the injunctive relief
sought; and (b) BCA will suffer no grave and irreparable injury even if the injunctive relief
were not granted.
To support their claim that BCA has no clear right to injunctive relief,
petitioners mainly allege that the MRP/V Project and the e-Passport Project are not the
same project. Moreover, the MRP/V Project purportedly involves a technology (the 2D
optical bar code) that has been rendered obsolete by the latest ICAO developments
while the e-Passport Project will comply with the latest ICAO standards (the contactless
integrated circuit). Parenthetically, and not as a main argument, petitioners imply that
BCA has no clear contractual right under the Amended BOT Agreement since BCA had
previously assigned all its rights and obligations under the said Agreement to PPC.
BCA, on the other hand, claims that the Amended BOT Agreement also
contemplated the supply and/or delivery of e-Passports with the integrated circuit
technology in the future and not only the machine readable passport with the 2D optical
bar code technology. Also, it is BCAs assertion that the integrated circuit technology is
only optional under the ICAO issuances. On the matter of its assignment of its rights to
PPC, BCA counters that it had already terminated (purportedly at DFAs request) the
assignment agreement in favor of PPC and that even assuming the termination was not
valid, the Amended BOT Agreement expressly stated that BCA shall remain solidarily
liable with its assignee, PPC.
Most of these factual allegations and counter-allegations already touch upon
the merits of the main controversy between the DFA and BCA, i.e., the validity and
propriety of the termination of the Amended BOT Agreement (the MRP/V Project)
between the DFA and BCA. The Court deems it best to refrain from ruling on these
matters since they should be litigated in the appropriate arbitration or court proceedings
between or among the concerned parties.
One preliminary point, however, that must be settled here is whether BCA
retains a right to seek relief against the DFA under the Amended BOT Agreement in
view of BCAs previous assignment of its rights to PPC. Without preempting any factual
finding that the appropriate court or arbitral tribunal on the matter of the validity of the
assignment agreement with PPC or its termination, we agree with BCA that it remained
a party to the Amended BOT Agreement, notwithstanding the execution of the
assignment agreement in favor of PPC, for it was stipulated in the Amended BOT
Agreement that BCA would be solidarily liable with its assignee. For convenient
reference, we reproduce the relevant provision of the Amended BOT Agreement here:
Section 20.15. It is clearly and expressly understood that
BCA may assign, cede and transfer all of its rights and obligations
under this Amended BOT Agreement to PPC [Philippine Passport
Corporation], as fully as if PPC is the original signatory to this

Amended BOT Agreement, provided however that BCA shall
nonetheless be jointly and severally liable with PPC for the
performance of all the obligations and liabilities under this
Amended BOT Agreement. (Emphasis supplied.)
Furthermore, a review of the records shows that the DFA continued to address
its correspondence regarding the MRP/V Project to both BCA and PPC, even after the
execution of the assignment agreement. Indeed, the DFAs Notice of Termination dated
December 9, 2005 was addressed to Mr. Bonifacio Sumbilla as President of both BCA
and PPC and referred to the Amended BOT Agreement executed between the
Department of Foreign Affairs (DFA), on one hand, and the BCA International
Corporation and/or the Philippine Passport Corporation (BCA/PPC). At the very least,
the DFA is estopped from questioning the personality of BCA to bring suit in relation to
the Amended BOT Agreement since the DFA continued to deal with both BCA and PPC
even after the signing of the assignment agreement. In any event, if the DFA truly
believes that PPC is an indispensable party to the action, the DFA may take necessary
steps to implead PPC but this should not prejudice the right of BCA to file suit or to seek
relief for causes of action it may have against the DFA or the BSP, for undertaking the ePassport Project on behalf of the DFA.
With respect to petitioners contention that BCA will suffer no grave and
irreparable injury so as to justify the grant of injunctive relief, the Court finds that this
particular argument merits consideration.
The BOT Law as amended by Republic Act No. 7718, provides:
SEC. 7. Contract Termination. - In the event that a project is revoked,
cancelled or terminated by the Government through no fault of the project
proponent or by mutual agreement, the Government shall compensate the said
project proponent for its actual expenses incurred in the project plus a reasonable
rate of return thereon not exceeding that stated in the contract as of the date of such
revocation, cancellation or termination: Provided, That the interest of the Government in
this instances shall be duly insured with the Government Service Insurance System
[GSIS] or any other insurance entity duly accredited by the Office of the Insurance
Commissioner: Provided, finally, That the cost of the insurance coverage shall be
included in the terms and conditions of the bidding referred to above.
In the event that the government defaults on certain major obligations in the
contract and such failure is not remediable or if remediable shall remain unremedied for
an unreasonable length of time, the project proponent/contractor may, by prior notice
to the concerned national government agency or local government unit specifying the
turn-over date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or proportionate
contract cost as defined in the contract. (Emphases supplied.)
In addition, the Amended BOT Agreement, which is the law between and
among the parties to it, pertinently provides:
Section 17.01 Default In case a party commits an act
constituting an event of default, the non-defaulting party may
terminate this Amended BOT Agreement by serving a written
notice to the defaulting party specifying the grounds for termination
and giving the defaulting party a period of ninety (90) days within
which to rectify the default. If the default is not remedied within this
period to the satisfaction of the non-defaulting party, then the latter
will serve upon the former a written notice of termination indicating
the effective date of termination.
Section 17.02 Proponents Default If this Amended

BOT Agreement is terminated by reason of the BCAs default, the
DFA shall have the following options:
[if !supportLists]A.
[endif]Allow the BCAs unpaid creditors who hold a lien
on the MRP/V Facility to foreclose on the MRP/V Facility. The right of the BCAs unpaid
creditors to foreclose on the MRP/V Facility shall be valid for the duration of the
effectivity of this Amended BOT Agreement; or,
[if !supportLists]B.
[endif]Allow the BCAs unpaid creditors who hold a lien
on the MRP/V Facility to designate a substitute BCA for the MRP/V Project, provided
the designated substitute BCA is qualified under existing laws and acceptable to the
DFA. This substitute BCA shall hereinafter be referred to as the Substitute BCA. The
Substitute BCA shall assume all the BCAs rights and privileges, as well as the
obligations, duties and responsibilities hereunder; provided, however, that the DFA shall
at all times and its sole option, have the right to invoke and exercise any other remedy
which may be available to the DFA under any applicable laws, rules and/or regulations
which may be in effect at any time and from time to time. The DFA shall cooperate with
the creditors with a view to facilitating the choice of a Substitute BCA, who shall takeover the operation, maintenance and management of the MRP/V Project, within three (3)
months from the BCAs receipt of the notice of termination from the DFA. The
Substituted BCA shall have all the rights and obligations of the previous BCA as
contained in this Amended BOT Agreement; or
[if !supportLists]C.
[endif]Take-over the MRP/V Facility and assume all
attendant liabilities thereof.
[if !supportLists]D.
[endif]In all cases of termination due to the default of the
BCA, it shall pay DFA liquidated damages equivalent to the applicable the (sic)
Performance Security.
Section 17.03 DFAs Default If this Amended BOT
Agreement is terminated by the BCA by reason of the DFAs Default,
the DFA shall:
[if !supportLists]A.
[endif]Be obligated to take over the MRP/V Facility on an
as is, where is basis, and shall forthwith assume attendant liabilities thereof; and
[if !supportLists]B.
[endif]Pay liquidated damages to the BCA equivalent to
the following amounts, which may be charged to the insurance proceeds referred to in
Article 12:
[endif]In the event of termination prior to completion of
the implementation of the MRP/V Project, damages shall be paid equivalent to the
value of completed implementation, minus the aggregate amount of the attendant
liabilities assumed by the DFA, plus ten percent (10%) thereof. The amount of such
compensation shall be determined as of the date of the notice of termination and shall
become due and demandable ninety (90) days after the date of this notice of
termination. Under this Amended BOT Agreement, the term Value of the Completed
Implementation shall mean the aggregate of all reasonable costs and expenses
incurred by the BCA in connection with, in relation to and/or by reason of the MRP/V
Project, excluding all interest and capitalized interest, as certified by a reputable and
independent accounting firm to be appointed by the BCA and subject to the approval by
the DFA, such approval shall not be unreasonably withheld.
[endif]In the event of termination after completion of
design, development, and installation of the MRP/V Project, just compensation
shall be paid equivalent to the present value of the net income which the BCA
expects to earn or realize during the unexpired or remaining term of this Amended
BOT Agreement using the internal rate of return on equity (IRRe) defined in the
financial projections of the BCA and agreed upon by the parties, which is attached
hereto and made as an integral part of this Amended BOT Agreement as Schedule 1.
(Emphases supplied.)
The validity of the DFAs termination of the Amended BOT Agreement and the
determination of the party or parties in default are issues properly threshed out in
arbitration proceedings as provided for by the agreement itself. However, even if we
hypothetically accept BCAs contention that the DFA terminated the Amended BOT
Agreement without any default or wrongdoing on BCAs part, it is not indubitable that
BCA is entitled to injunctive relief.
The BOT Law expressly allows the government to terminate a BOT
agreement, even without fault on the part of the project proponent, subject to the
payment of the actual expenses incurred by the proponent plus a reasonable rate of
return.
Under the BOT Law and the Amended BOT Agreement, in the event of default
on the part of the government (in this case, the DFA) or on the part of the proponent, the
non-defaulting party is allowed to terminate the agreement, again subject to proper
compensation in the manner set forth in the agreement.
Time and again, this Court has held that to be entitled to injunctive relief the party
seeking such relief must be able to show grave, irreparable injury that is not capable of
compensation.
In Lopez v. Court of Appeals, [if !supportFootnotes][77][endif] we held:
Generally, injunction is a preservative remedy for the
protection of one's substantive right or interest. It is not a cause of
action in itself but merely a provisional remedy, an adjunct to a
main suit. It is resorted to only when there is a pressing
necessity to avoid injurious consequences which cannot be
remedied under any standard compensation. The application of
the injunctive writ rests upon the existence of an emergency or of a
special reason before the main case can be regularly heard. The
essential conditions for granting such temporary injunctive relief are
that the complaint alleges facts which appear to be sufficient to
constitute a proper basis for injunction and that on the entire showing
from the contending parties, the injunction is reasonably necessary
to protect the legal rights of the plaintiff pending the litigation. Two
requisites are necessary if a preliminary injunction is to issue,
namely, the existence of a right to be protected and the facts against
which the injunction is to be directed are violative of said right. In
particular, for a writ of preliminary injunction to issue, the existence
of the right and the violation must appear in the allegation of the
complaint and a preliminary injunction is proper only when the
plaintiff (private respondent herein) appears to be entitled to the
relief demanded in his complaint. (Emphases supplied.)
We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro

Corporation,[if !supportFootnotes][78][endif] where we likewise opined:
Before a writ of preliminary injunction may be issued, there must be a clear
showing by the complaint that there exists a right to be protected and that the acts
against which the writ is to be directed are violative of the said right. It must be shown
that the invasion of the right sought to be protected is material and substantial, that the
right of complainant is clear and unmistakable and that there is an urgent and paramount
necessity for the writ to prevent serious damage. Moreover, an injunctive remedy
may only be resorted to when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard compensation.
(Emphasis supplied.)
As the Court explained previously in Philippine Airlines, Inc. v. National Labor

Relations Commission[if !supportFootnotes][79][endif]:
An injury is considered irreparable if it is of such constant and frequent recurrence
that no fair and reasonable redress can be had therefor in a court of law, or where there
is no standard by which their amount can be measured with reasonable accuracy,
that is, it is not susceptible of mathematical computation. It is considered
irreparable injury when it cannot be adequately compensated in damages due to the
nature of the injury itself or the nature of the right or property injured or when
there exists no certain pecuniary standard for the measurement of
damages. (Emphases supplied.)
It is still contentious whether this is a case of termination by the DFA alone or both
the DFA and BCA. The DFA contends that BCA, by sending its own Notice of Default,
likewise terminated or abandoned the Amended BOT Agreement. Still, whether this is
a termination by the DFA alone without fault on the part of BCA or a termination due to
default on the part of either party, the BOT Law and the Amended BOT Agreement lay
down the measure of compensation to be paid under the appropriate circumstances.
Significantly, in BCAs Request for Arbitration with the PDRCI, it prayed for,
among others, a judgment ordering respondent [DFA] to pay damages to Claimant
[BCA], reasonably estimated at P50,000,000.00 as of [the date of the Request for
Arbitration], representing lost business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses; and costs of arbitration,
including the fees of the arbitrator/s.[if !supportFootnotes][80][endif] All the purported damages that
BCA claims to have suffered by virtue of the DFAs termination of the Amended BOT
Agreement are plainly determinable in pecuniary terms and can be reasonably
estimated according to BCAs own words.
Indeed, the right of BCA, a party which may or may not have been in default on its
BOT contract, to have the termination of its BOT contract reversed is not guaranteed by
the BOT Law. Even assuming BCAs innocence of any breach of contract, all the law
provides is that BCA should be adequately compensated for its losses in case of
contract termination by the government.
There is one point that none of the parties has highlighted but is worthy of
discussion. In seeking to enjoin the government from awarding or implementing a
machine readable passport project or any similar electronic passport or visa project and
praying for the maintenance of the status quo ante pending the resolution on the merits
of BCAs Request for Arbitration, BCA effectively seeks to enjoin the termination of the
Amended BOT Agreement for the MRP/V Project.
There is no doubt that the MRP/V Project is a project covered by the BOT Law
and, in turn, considered a national government project under Republic Act No.
8795. Under Section 3(d) of that statute, trial courts are prohibited from issuing a TRO
or writ of preliminary injunction against the government to restrain or prohibit the
termination or rescission of any such national government project/contract.
The rationale for this provision is easy to understand. For if a project proponent
that the government believes to be in default is allowed to enjoin the termination of its
contract on the ground that it is contesting the validity of said termination, then the
government will be unable to enter into a new contract with any other party while the
controversy is pending litigation. Obviously, a courts grant of injunctive relief in such an
instance is prejudicial to public interest since government would be indefinitely
hampered in its duty to provide vital public goods and services in order to preserve the
private proprietary rights of the project proponent. On the other hand, should it turn out
that the project proponent was not at fault, the BOT Law itself presupposes that the
project proponent can be adequately compensated for the termination of the
contract. Although BCA did not specifically pray for the trial court to enjoin the
termination of the Amended BOT Agreement and thus, there is no direct violation of
Republic Act No. 8795, a grant of injunctive relief as prayed for by BCA will indirectly
contravene the same statute.
Verily, there is valid reason for the law to deny preliminary injunctive relief to those
who seek to contest the governments termination of a national government
contract. The only circumstance under which a court may grant injunctive relief is the
existence of a matter of extreme urgency involving a constitutional issue, such that
unless a TRO or injunctive writ is issued, grave injustice and irreparable injury will result.
Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer
grave and irreparable injury since the bidding out and award of the e-Passport Project
would be tantamount to a violation of its right against deprivation of property without due
process of law under Article III, Section 1 of the Constitution. We are unconvinced.
Article III, Section 1 of the Constitution provides [n]o person shall be deprived of
life, liberty, or property without due process of law, nor shall any person be denied the
equal protection of the laws. Ordinarily, this constitutional provision has been applied to
the exercise by the State of its sovereign powers such as, its legislative power,[if
police power,[if !supportFootnotes][82][endif] or its power of eminent domain.[if
In the instant case, the State action being assailed is the DFAs termination of the
Amended BOT Agreement with BCA. Although the said agreement involves a public
service that the DFA is mandated to provide and, therefore, is imbued with public
interest, the relationship of DFA to BCA is primarily contractual and their dispute involves
the adjudication of contractual rights. The propriety of the DFAs acts, in relation to the
termination of the Amended BOT Agreement, should be gauged against the provisions
of the contract itself and the applicable statutes to such contract. These contractual and
statutory provisions outline what constitutes due process in the present case. In all,
BCA failed to demonstrate that there is a constitutional issue involved in this case, much
less a constitutional issue of extreme urgency.
As for the DFAs purported failure to appropriate sufficient amounts in its budget to
pay for liquidated damages to BCA, this argument does not support BCAs position that
it will suffer grave and irreparable injury if it is denied injunctive relief. The DFAs liability
to BCA for damages is contingent on BCA proving that it is entitled to such damages in
the proper proceedings. The DFA has no obligation to set aside funds to pay for
liquidated damages, or any other kind of damages, to BCA until there is a final and
executory judgment in favor of BCA. It is illogical and impractical for the DFA to set
aside a significant portion of its budget for an event that may never happen when such
idle funds should be spent on providing necessary services to the populace. For if it
turns out at the end of the arbitration proceedings that it is BCA alone that is in default, it
would be the one liable for liquidated damages to the DFA under the terms of the
Amended BOT Agreement.
With respect to BCAs allegation that the e-Passport Project is grossly
disadvantageous to the Filipino people since it is the government that will be spending
for the project unlike the MRP/V Project which would have been privately funded, the
same is immaterial to the issue at hand. If it is true that the award of the e-Passport
Project is inimical to the public good or tainted with some anomaly, it is indeed a cause
for grave concern but it is a matter that must be investigated and litigated in the proper
forum. It has no bearing on the issue of whether BCA would suffer grave and irreparable
injury such that it is entitled to injunctive relief from the courts.
In all, we agree with petitioners DFA and BSP that the trial courts issuance of a
writ of preliminary injunction, despite the lack of sufficient legal justification for the same,
is tantamount to grave abuse of discretion.
To be very clear, the present decision touches only on the twin issues of (a) the
jurisdiction of the trial court to issue a writ of preliminary injunction as an interim relief
under the factual milieu of this case; and (b) the entitlement of BCA to injunctive
relief. The merits of the DFA and BCAs dispute regarding the termination of the
Amended BOT Agreement must be threshed out in the proper arbitration
proceedings. The civil case pending before the trial court is purely for the grant of
interim relief since the main case is to be the subject of arbitration proceedings.
BCAs petition for interim relief before the trial court is essentially a petition for a
provisional remedy (i.e., preliminary injunction) ancillary to its Request for Arbitration in
PDRCI Case No. 30-2006/BGF. BCA specifically prayed that the trial court grant it
interim relief pending the constitution of the arbitral tribunal in the said PDRCI
case. Unfortunately, during the pendency of this case, PDRCI Case No. 30-2006/BGF
was dismissed by the PDRCI for lack of jurisdiction, in view of the lack of agreement
between the parties to arbitrate before the PDRCI.[if !supportFootnotes][84][endif] In Philippine
National Bank v. Ritratto Group, Inc.,[if !supportFootnotes][85][endif] we held:
A writ of preliminary injunction is an ancillary or preventive remedy that may
only be resorted to by a litigant to protect or preserve his rights or
interests and for no other purpose during the pendency of the
principal action. The dismissal of the principal action thus
results in the denial of the prayer for the issuance of the writ. x
x x. (Emphasis supplied.)
In view of intervening circumstances, BCA can no longer be granted injunctive relief and
the civil case before the trial court should be accordingly dismissed. However, this is
without prejudice to the parties litigating the main controversy in arbitration proceedings,
in accordance with the provisions of the Amended BOT Agreement, which should
proceed with dispatch.
It does not escape the attention of the Court that the delay in the submission of
this controversy to arbitration was caused by the ambiguity in Section 19.02 of the
Amended BOT Agreement regarding the proper body to which a dispute between the
parties may be submitted and the failure of the parties to agree on such an arbitral
tribunal. However, this Court cannot allow this impasse to continue indefinitely. The
parties involved must sit down together in good faith and finally come to an
understanding regarding the constitution of an arbitral tribunal mutually acceptable to
them.
WHEREFORE, the instant petition is hereby GRANTED. The assailed Order
dated February 14, 2007 of the Regional Trial Court of Pasig in Civil Case No. 71079
and the Writ of Preliminary Injunction dated February 23, 2007 are REVERSED and SET
ASIDE. Furthermore, Civil Case No. 71079 is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.
Receivership
Vivares v. Jose Reyes, G.R 155408, 545 SCRA 80, 13 February 2008
JULIO A. VIVARES and
MILA G. IGNALING,
Petitioners,
G.R. No. 155408

Present:
- versus -
ENGR. JOSE J. REYES,

Respondent.
QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:
February 13, 2008

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case
The kernel dispute in this petition under Rule 45 is the legality of the May 22,
2001 Resolution[if !supportFootnotes][1][endif] of the Camiguin Regional Trial Court (RTC), Branch
28 in Civil Case No. 517, which placed the estate of Severino Reyes under
receivership. The Court of Appeals (CA) saw it differently in CA-G.R. SP No. 67492its
June 18, 2002 Decision[if !supportFootnotes][2][endif] recalled the RTC directive on the
appointment of the receiver, prompting Julio Vivares and Mila Ignaling to file the petition
at bar to convince the Court to reinstate the receivership.
The Facts
Severino Reyes was the father of respondent Jose Reyes and Torcuato
Reyes. Upon the death of Severino, respondent and Torcuato came upon their
inheritance consisting of several properties. They had an oral partition of the properties
and separately appropriated to themselves said properties.
On May 12, 1992, Torcuato died with a last will and testament executed on
January 3, 1992. In Reyes v. Court of Appeals,[if !supportFootnotes][3][endif] we affirmed the
November 29, 1995 CA Decision, admitting the will for probate.
Petitioner Vivares was the designated executor of Torcuatos last will and
testament, while petitioner Ignaling was declared a lawful heir of Torcuato.
Believing that Torcuato did not receive his full share in the estate of Severino,
petitioners instituted an action for Partition and Recovery of Real Estate before the
Camiguin RTC, Branch 28 entitled Julio A. Vivares, as executor of the estate of Torcuato
J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J. Reyes and docketed as Civil Case
No. 517. With the approval of the trial court, the parties agreed that properties from the
estate of Severino, which were already transferred in the names of respondent and
Torcuato prior to the latters death on May 12, 1992, shall be excluded from litigation. In
short, what was being contested were the properties that were still in the name of
Severino.
On November 24, 1997, for the purpose of collating the common properties
that were disputed, the trial court directed the formation of a three-man commission with
due representation from both parties, and the third member, appointed by the trial court,
shall act as chairperson. The disputed properties were then annotated with notices of lis
pendens upon the instance of petitioners.
On March 15, 2000, petitioners filed a Motion to Place Properties in Litigation
under Receivership[if !supportFootnotes][4][endif] before the trial court alleging that to their
prejudice respondent had, without prior court approval and without petitioners
knowledge, sold to third parties and transferred in his own name several common
properties. Petitioners also averred that respondent fraudulently antedated, prior to May
12, 1992, some conveyances and transfers to make it appear that these were no longer
part of the estate of Severino under litigation. They further claimed that respondent was
and is in possession of the common properties in the estate of Severino, and exclusively
enjoying the fruits and income of said properties and without rendering an accounting on
them and turning over the share pertaining to Torcuato. Thus, petitioners prayed to
place the entire disputed estate of Severino under receivership. They nominated a
certain Lope Salantin to be appointed as receiver.
On March 23, 2000, respondent filed his Opposition to Place the Estate of
Severino Reyes under Receivership,[if !supportFootnotes][5][endif] denying that he had fraudulently
transferred any property of the estate of Severino and asserting that any transfer in his
name of said properties was a result of the oral partition between him and Torcuato that
enabled the latter as well to transfer several common properties in his own name.
On May 24, 2000, petitioners filed their Offer of Exhibits in support of their
motion for receivership. On the same date, the trial court issued an Order[if
granting petitioners motion and appointed Salantin as receiver
conditioned on the filing of a PhP 50,000 bond. Respondent filed a motion for
reconsideration, contending that the appointment of a receiver was unduly precipitate
considering that he was not represented by counsel and thus was deprived of due
process.
On August 4, 2000, the trial court allowed respondent to present his evidence
to contest petitioners grounds for the appointment of a receiver, and the trial court set
the reception of respondents evidence for September 4, 2000. However, on August 24,
2000, respondent filed a motion for postponement of the September 4, 2000 scheduled
hearing on the ground that he was in the United States as early as July 23, 2000 for
medical examination. On September 5, 2000, the trial court denied respondents motion
for postponement and reinstated its May 24, 2000 Order.
On September 19, 2000, respondent filed a Manifestation with Motion to
Discharge Receiver, reiterating the circumstances which prevented him from attending
the September 4, 2000 hearing and praying for the discharge of the receiver upon the
filing of a counterbond in an amount to be fixed by the court in accordance with Section
3, Rule 59 of the 1997 Revised Rules on Civil Procedure. On October 10, 2000,
petitioners filed their undated Opposition to Motion to Discharge Receiver.
Subsequently, respondent filed a Motion to Cancel Notice of Lis Pendens
which was annotated on Tax Declaration (TD) No. 112 covering Lot No. 33 allegedly
belonging exclusively to him. Respondent asserted in the motion that an adjacent
property to Lot No. 33, particularly a portion of Lot No. 35, which is owned by a certain
Elena Unchuan, was erroneously included in Lot No. 33 and, consequently, was
subjected to the notice of lis pendens. Petitioners filed their Opposition to the Motion to
Cancel Lis Pendens.
Consequently, on May 22, 2001, the trial court issued a Resolution, denying
respondents motions to discharge receiver and cancel the notice of lis pendens in TD
No. 112. Respondent seasonably filed a partial motion for reconsideration of the May
22, 2001 Resolution, attaching copies of deeds of sale executed by Torcuato covering
several common properties of the estate of Severino to prove that he and Torcuato had
indeed made an oral partition of the estate of their father, Severino, and thus allowing
him and Torcuato to convey their respective shares in the estate of Severino to third
persons.
On October 19, 2001, the trial court heard respondents motion for partial
reconsideration, and on the same date issued an Order denying the motion for partial
reconsideration on the ground that respondent failed to raise new matters in the motion
but merely reiterated the arguments raised in previous pleadings.
Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing
the May 22, 2001 Resolution and October 19, 2001 Order of the RTC.
The Ruling of the Court of Appeals
On June 18, 2002, the CA rendered the assailed Decision, sustaining
respondents position and granted relief, thus:
WHEREFORE, premises considered, the Petition is hereby GRANTED. The Resolution
dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No.
517 is hereby reversed and set aside. The court-appointed receiver, Lope Salantin, is
discharged upon the posting by petitioner of a counterbond in the amount of
P100,000.00. The notice of lis pendens in Tax Declaration 112, in so far as it covers the
property of Elena Unchuan, is cancelled. Let this case be remanded to the court a quo
for further proceedings.[if !supportFootnotes][7][endif]
In reversing the trial court, the CA reasoned that the court a quo failed to
observe the well-settled rule that allows the grant of the harsh judicial remedy of
receivership only in extreme cases when there is an imperative necessity for it. The CA
thus held that it is proper that the appointed receiver be discharged on the filing of a
counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.
Moreover, the CA ratiocinated that respondent has adequately demonstrated
that the appointment of the receiver has no sufficient basis, and further held that the
rights of petitioners over the properties in litigation are doubly protected through the
notices of lis pendens annotated on the titles of the subject properties. In fine, the
appellate court pointed out that the appointment of a receiver is a delicate one, requiring
the exercise of discretion, and not an absolute right of a party but subject to the
attendant facts of each case. The CA found that the trial court abused its discretion in
appointing the receiver and in denying the cancellation of the notice of lis pendens on
TD No. 112, insofar as it pertains to the portion owned by Unchuan.
Aggrieved, petitioners in turn interposed a Motion for Reconsideration that was
denied through the assailed September 24, 2002 CA Resolution.
Thus, this petition for review on certiorari is before us, presenting the following
issues for consideration:
I
WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS

PRECLUDES THE APPOINTMENT OF A RECEIVER WHEN
THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN
LITIGATION.
II
WHETHER OR NOT A DULY APPOINTED RECEIVER OF PROPERTIES IN

LITIGATION SHOULD BE DISCHARGED SIMPLY BECAUSE THE
ADVERSE PARTY OFFERS TO POST A COUNTERBOND.
III
WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS PENDENS

ANNOTATED ON TAX DECLARATION NO. 112 IS CONTRARY TO
LAW.[if !supportFootnotes][8][endif]
The Courts Ruling

The petition must be denied. Being closely related, we discuss the first and
second issues together.
Receivership not justified
We sustain the CA ruling that the trial court acted arbitrarily in granting the petition
for appointment of a receiver as there was no sufficient cause or reason to justify
placing the disputed properties under receivership.
First, petitioners asseverate that respondent alienated several common properties
of Severino without court approval and without their knowledge and consent. The
fraudulent transfers, they claim, were antedated prior to May 12, 1992, the date of
Torcuatos death, to make it appear that these properties no longer form part of the
assets of the estate under litigation in Civil Case No. 517.
Petitioners position is bereft of any factual mooring.
Petitioners miserably failed to adduce clear, convincing, and hard evidence to
show the alleged fraud in the transfers and the antedating of said transfers. The fact
that the transfers were dated prior to the demise of Torcuato on May 12, 1992 does not
necessarily mean the transfers were attended by fraud. He who alleges fraud has the
burden to prove it.
Moreover, respondent has adduced documentary proof that Torcuato himself
similarly conveyed several lots in the estate of Severino based on the oral partition
between the siblings. To lend credence to the transfers executed by Torcuato but
distrust to those made by respondent would be highly inequitable as correctly opined by
the court a quo.
Indeed, receivership is a harsh remedy to be granted only in extreme
situations. As early as 1914, the Court already enunciated the doctrinal pronouncement
in Velasco & Co. v. Gochuico & Co. that courts must use utmost circumspection in
allowing receivership, thus:
The power to appoint a receiver is a delicate one and should be exercised with extreme
caution and only under circumstances requiring summary relief or where the court is
satisfied that there is imminent danger of loss, lest the injury thereby caused be far
greater than the injury sought to be averted. The court should consider the
consequences to all of the parties and the power should not be exercised when it is
likely to produce irreparable injustice or injury to private rights or the facts demonstrate
that the appointment will injure the interests of others whose rights are entitled to as
much consideration from the court as those of the complainant.[if !supportFootnotes][9][endif]
Petitioners cannot now impugn the oral partition entered into by Torcuato and
respondent and hence cannot also assail the transfers made by respondent of the lots
which were subject of said agreement, considering that Torcuato also sold properties
based on said verbal arrangement. Indeed, the parties agreed that the civil action does
not encompass the properties covered by the oral partition. In this factual setting,
petitioners cannot convince the Court that the alleged fraudulent transfers of the lots
made by respondent, which purportedly form part of his share in Severinos estate based
on the partition, can provide a strong basis to grant the receivership.
Second, petitioner is willing to post a counterbond in the amount to be fixed by the
court based on Sec. 3, Rule 59 of the 1997 Rules of Civil Procedure, which reads:
Sec. 3. Denial of application or discharge of receiver.The application may be denied,
or the receiver discharged, when the adverse party files a bond executed to the
applicant, in an amount to be fixed by the court, to the effect that such party will pay the
applicant all damages he may suffer by reason of the acts, omissions, or other matter
specified in the application as ground for such appointment. The receiver may also be
discharged if it is shown that his appointment was obtained without sufficient cause.
Anchored on this rule, the trial court should have dispensed with the services
of the receiver, more so considering that the alleged fraud put forward to justify the
receivership was not at all established.
Petitioners advance the issue that the receivership should not be recalled
simply because the adverse party offers to post a counterbond. At the outset, we find
that this issue was not raised before the CA and therefore proscribed by the doctrine that
an issue raised for the first time on appeal and not timely raised in the proceedings in the
lower court is barred by estoppel.[if !supportFootnotes][10][endif] Even if we entertain the issue, the
contention is nevertheless devoid of merit. The assailed CA decision supported the
discharge of the receiver with several reasons including the posting of the
counterbond. While the CA made a statement that the trial court should have
discharged the appointed receiver on the basis of the proposed counterbond, such
opinion does not jibe with the import of Sec. 3, Rule 59. The rule states that the
application may be denied or the receiver discharged. In statutory construction, the
word may has always been construed as permissive. If the intent is to make it
mandatory or ministerial for the trial court to order the recall of the receiver upon the
offer to post a counterbond, then the court should have used the word shall. Thus, the
trial court has to consider the posting of the counterbond in addition to other reasons
presented by the offeror why the receivership has to be set aside.
Third, since a notice of lis pendens has been annotated on the titles of the
disputed properties, the rights of petitioners are amply safeguarded and preserved since
there can be no risk of losing the property or any part of it as a result of any conveyance
of the land or any encumbrance that may be made thereon posterior to the filing of the
notice of lis pendens.[if !supportFootnotes][11][endif] Once the annotation is made, any
subsequent conveyance of the lot by the respondent would be subject to the outcome of
the litigation since the fact that the properties are under custodia legis is made known to
all and sundry by operation of law. Hence, there is no need for a receiver to look after
the disputed properties.
On the issue of lis pendens, petitioners argue that the mere fact that a notice of lis
pendens was annotated on the titles of the disputed properties does not preclude the
appointment of a receiver. It is true that the notice alone will not preclude the transfer of
the property pendente lite, for the title to be issued to the transferee will merely carry the
annotation that the lot is under litigation. Hence, the notice of lis pendens, by itself, may
not be the most convenient and feasible means of preserving or administering the
property in litigation. However, the situation is different in the case at bar. A
counterbond will also be posted by the respondent to answer for all damages petitioners
may suffer by reason of any transfer of the disputed properties in the future. As a matter
of fact, petitioners can also ask for the issuance of an injunctive writ to foreclose any
transfer, mortgage, or encumbrance on the disputed properties. These considerations,
plus the finding that the appointment of the receiver was without sufficient cause, have
demonstrated the vulnerability of petitioners postulation.
Fourth, it is undisputed that respondent has actual possession over some of the disputed
properties which are entitled to protection. Between the possessor of a subject property
and the party asserting contrary rights to the properties, the former is accorded better
rights. In litigation, except for exceptional and extreme cases, the possessor ought not
to be deprived of possession over subject property. Article 539 of the New Civil Code
provides that every possessor has a right to be respected in his possession; and should
he be disturbed therein he shall be protected in or restored to said possession by the
means established by the laws and the Rules of Court. In Descallar v. Court of
Appeals, we ruled that the appointment of a receiver is not proper where the rights of the
parties, one of whom is in possession of the property, are still to be determined by the
trial court.[if !supportFootnotes][12][endif]
In view of the foregoing reasons, we uphold the CA ruling that the grant of the
receivership was without sufficient justification nor strong basis.
Anent the third issue that the cancellation of the notice of lis pendens on TD No.
112 is irregular as Lot No. 33 is one of the disputed properties in the partition case,
petitioners position is correct.
The CA made a factual finding that the property of Unchuan was erroneously
included in Lot No. 33, one of the disputed properties in Civil Case No. 517. It then ruled
that the annotation of lis pendens should be lifted.
This ruling is bereft of factual basis.

The determination whether the property of Unchuan is a part of Lot No. 33 and
whether that portion really belongs to Unchuan are matters to be determined by the trial
court. Consequently, the notice of lis pendens on TD No. 112 stays until the final ruling
on said issues is made.
WHEREFORE, the petition is PARTLY GRANTED. The June 18, 2002 CA Decision in
CA-G.R. SP No. 67492 is AFFIRMED with MODIFICATION insofar as it ordered the
cancellation of the notice of lis pendens in TD No. 112. As thus modified, the appealed
CA Decision should read as follows:
WHEREFORE, premises considered, the Petition is hereby

PARTLY GRANTED. The Resolution dated 22 May 2001 of the
Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is
hereby reversed and set aside. The court-appointed receiver, Lope
Salantin, is discharged upon the posting by petitioner of a
counterbond in the amount of PhP 100,000. The notice of lis
pendens in TD No. 112, including the portion allegedly
belonging to Elena Unchuan, remains valid and effective. Let
this case be remanded to the court a quo for further proceedings in
Civil Case No. 517.
No costs.
SO ORDERED.
Replevin
Smart v. Astorga, G.R. No. 148132, 542 SCRA 434, 28 January 2008
G.R. No. 148132
January 28, 2008
SMART COMMUNICATIONS, INC., petitioner,
vs.
REGINA M. ASTORGA, respondent.
x---------------------------------------------------x
G.R. No. 151079
January 28, 2008
SMART COMMUNICATIONS, INC., petitioner,
vs.
REGINA M. ASTORGA, respondent.
x---------------------------------------------------x
G.R. No. 151372
January 28, 2008
REGINA M. ASTORGA, petitioner,
vs.
SMART COMMUNICATIONS, INC. and ANN MARGARET V. SANTIAGO,
respondents.
DECISION
NACHURA, J.:
For the resolution of the Court are three consolidated petitions for review on certiorari
under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February 28, 2000
Decision1 and the May 7, 2001 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP.
No. 53831. G.R. Nos. 151079 and 151372 question the June 11, 2001 Decision3 and the
December 18, 2001 Resolution4 in CA-G.R. SP. No. 57065.
Regina M. Astorga (Astorga) was employed by respondent Smart Communications,
Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales
Marketing Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly
salary of P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits,
namely, annual performance incentive equivalent to 30% of her annual gross salary, a
group life and hospitalization insurance coverage, and a car plan in the amount of
P455,000.00.5
In February 1998, SMART launched an organizational realignment to achieve more
efficient operations. This was made known to the employees on February 27, 1998.6
Part of the reorganization was the outsourcing of the marketing and sales force. Thus,
SMART entered into a joint venture agreement with NTT of Japan, and formed SMARTNTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG/FSD, Astorgas division.
To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who
would be recommended by SMART. SMART then conducted a performance evaluation
of CSMG personnel and those who garnered the highest ratings were favorably
recommended to SNMI. Astorga landed last in the performance evaluation, thus, she
was not recommended by SMART. SMART, nonetheless, offered her a supervisory
position in the Customer Care Department, but she refused the offer because the
position carried lower salary rank and rate.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on
March 3, 1998, SMART issued a memorandum advising Astorga of the termination of
her employment on ground of redundancy, effective April 3, 1998. Astorga received it on
March 16, 1998.7
The termination of her employment prompted Astorga to file a Complaint8 for illegal
dismissal, non-payment of salaries and other benefits with prayer for moral and
exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She
claimed that abolishing CSMG and, consequently, terminating her employment was
illegal for it violated her right to security of tenure. She also posited that it was illegal for
an employer, like SMART, to contract out services which will displace the employees,
especially if the contractor is an in-house agency.9
SMART responded that there was valid termination. It argued that Astorga was
dismissed by reason of redundancy, which is an authorized cause for termination of
employment, and the dismissal was effected in accordance with the requirements of the
Labor Code. The redundancy of Astorgas position was the result of the abolition of
CSMG and the creation of a specialized and more technically equipped SNMI, which is a
valid and legitimate exercise of management prerogative.10
In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she
pay the current market value of the Honda Civic Sedan which was given to her under the
companys car plan program, or to surrender the same to the company for proper
disposition.11 Astorga, however, failed and refused to do either, thus prompting SMART
to file a suit for replevin with the Regional Trial Court of Makati (RTC) on August 10,
1998. The case was docketed as Civil Case No. 98-1936 and was raffled to Branch 57.12
Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to
state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that
the regular courts have no jurisdiction over the complaint because the subject thereof
pertains to a benefit arising from an employment contract; hence, jurisdiction over the
same is vested in the labor tribunal and not in regular courts.13
Pending resolution of Astorgas motion to dismiss the replevin case, the Labor Arbiter
rendered a Decision14 dated August 20, 1998, declaring Astorgas dismissal from
employment illegal. While recognizing SMARTs right to abolish any of its departments,
the Labor Arbiter held that such right should be exercised in good faith and for causes
beyond its control. The Arbiter found the abolition of CSMG done neither in good faith
nor for causes beyond the control of SMART, but a ploy to terminate Astorgas
employment. The Arbiter also ruled that contracting out the functions performed by
Astorga to an in-house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of
the Rules Implementing the Labor Code.
Accordingly, the Labor Arbiter ordered:
WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga] to be
illegal and unjust. [SMART and Santiago] are hereby ordered to:
1. Reinstate [Astorga] to [her] former position or to a substantially equivalent position,
without loss of seniority rights and other privileges, with full backwages, inclusive of
allowances and other benefits from the time of [her] dismissal to the date of
reinstatement, which computed as of this date, are as follows:
(a)
Astorga
BACKWAGES; (P33,650.00 x 4 months)
= P134,600.00
UNPAID SALARIES (February 15, 1998-April 3, 1998
February 15-28, 1998
= P 16,823.00
March 1-31, [1998]
= P 33,650.00
April 1-3, 1998
= P 3,882.69
CAR MAINTENANCE ALLOWANCE
= P 8,000.00
(P2,000.00 x 4)
FUEL ALLOWANCE
= P 14,457.83
(300 liters/mo. x 4 mos. at P12.04/liter)
TOTAL
= P211,415.52
xxxx
3. Jointly and severally pay moral damages in the amount of P500,000.00 x x x and
exemplary damages in the amount of P300,000.00. x x x
4. Jointly and severally pay 10% of the amount due as attorneys fees.
SO ORDERED.15
Subsequently, on March 29, 1999, the RTC issued an Order16 denying Astorgas motion
to dismiss the replevin case. In so ruling, the RTC ratiocinated that:
Assessing the [submission] of the parties, the Court finds no merit in the motion to
dismiss.
As correctly pointed out, this case is to enforce a right of possession over a company car
assigned to the defendant under a car plan privilege arrangement. The car is registered
in the name of the plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of
the 1997 Rules of Civil Procedure, which is undoubtedly within the jurisdiction of the
Regional Trial Court.
In the Complaint, plaintiff claims to be the owner of the company car and despite
demand, defendant refused to return said car. This is clearly sufficient statement of
plaintiffs cause of action.
Neither is there forum shopping. The element of litis penden[t]ia does not appear to exist
because the judgment in the labor dispute will not constitute res judicata to bar the filing
of this case.
WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit.
SO ORDERED.17
Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.18
Astorga elevated the denial of her motion via certiorari to the CA, which, in its February
28, 2000 Decision,19 reversed the RTC ruling. Granting the petition and, consequently,
dismissing the replevin case, the CA held that the case is intertwined with Astorgas
complaint for illegal dismissal; thus, it is the labor tribunal that has rightful jurisdiction
over the complaint. SMARTs motion for reconsideration having been denied,20 it
elevated the case to this Court, now docketed as G.R. No. 148132.
Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the
illegal dismissal case to the National Labor Relations Commission (NLRC). In its
September 27, 1999 Decision,21 the NLRC sustained Astorgas dismissal. Reversing the
Labor Arbiter, the NLRC declared the abolition of CSMG and the creation of SNMI to do
the sales and marketing services for SMART a valid organizational action. It overruled
the Labor Arbiters ruling that SNMI is an in-house agency, holding that it lacked legal
basis. It also declared that contracting, subcontracting and streamlining of operations for
the purpose of increasing efficiency are allowed under the law. The NLRC further found
erroneous the Labor Arbiters disquisition that redundancy to be valid must be impelled
by economic reasons, and upheld the redundancy measures undertaken by SMART.
The NLRC disposed, thus:
WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set aside.
[Astorga] is further ordered to immediately return the company vehicle assigned to her.
[Smart and Santiago] are hereby ordered to pay the final wages of [Astorga] after [she]
had submitted the required supporting papers therefor.
SO ORDERED.22
Astorga filed a motion for reconsideration, but the NLRC denied it on December 21,
1999.23
Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a
Decision24 affirming with modification the resolutions of the NLRC. In gist, the CA agreed
with the NLRC that the reorganization undertaken by SMART resulting in the abolition of
CSMG was a legitimate exercise of management prerogative. It rejected Astorgas
posturing that her non-absorption into SNMI was tainted with bad faith. However, the CA
found that SMART failed to comply with the mandatory one-month notice prior to the
intended termination. Accordingly, the CA imposed a penalty equivalent to Astorgas
one-month salary for this non-compliance. The CA also set aside the NLRCs order for
the return of the company vehicle holding that this issue is not essentially a labor
concern, but is civil in nature, and thus, within the competence of the regular court to
decide. It added that the matter had not been fully ventilated before the NLRC, but in the
regular court.
Astorga filed a motion for reconsideration, while SMART sought partial reconsideration,
of the Decision. On December 18, 2001, the CA resolved the motions, viz.:
WHEREFORE, [Astorgas] motion for reconsideration is hereby PARTIALLY GRANTED.
[Smart] is hereby ordered to pay [Astorga] her backwages from 15 February 1998 to 06
November 1998. [Smarts] motion for reconsideration is outrightly DENIED.
SO ORDERED.25
Astorga and SMART came to us with their respective petitions for review assailing the
CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court
ordered the consolidation of these petitions with G.R. No. 148132.26
In her Memorandum, Astorga argues:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGAS
DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR
VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,
CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL.
II
SMARTS REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE
APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES
ASTORGA TO HER SALARIES DURING THE PENDENCY OF THE APPEAL.
III
THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL
TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY
OF A CAR WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic)
BENEFIT.27
On the other hand, Smart in its Memoranda raises the following issues:
I
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION OF THE HONORABLE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT SMART DID NOT COMPLY WITH THE
NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND
OF REDUNDANCY.
II
WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE
DEPARTMENT OF LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE
WITH THE NOTICE REQUIREMENTS BEFORE TERMINATION.
III
WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL LABOR
RELATIONS COMMISSION FINDS APPLICATION IN THE CASE AT BAR
CONSIDERING THAT IN THE SERRANO CASE THERE WAS ABSOLUTELY NO
NOTICE AT ALL.28
IV
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION

OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES NOT
HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY SMART
TO RECOVER ITS OWN COMPANY VEHICLE FROM A FORMER EMPLOYEE WHO
WAS LEGALLY DISMISSED.
V
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE
THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A
CAR PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR.
VI
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE
THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF
SMART UNDER THE LABOR CODE.29
The Court shall first deal with the propriety of dismissing the replevin case filed with the
RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in G.R. No.
148132.
Replevin is an action whereby the owner or person entitled to repossession of goods or
chattels may recover those goods or chattels from one who has wrongfully distrained or
taken, or who wrongfully detains such goods or chattels. It is designed to permit one
having right to possession to recover property in specie from one who has wrongfully
taken or detained the property.30 The term may refer either to the action itself, for the
recovery of personalty, or to the provisional remedy traditionally associated with it, by
which possession of the property may be obtained by the plaintiff and retained during the
pendency of the action.31
That the action commenced by SMART against Astorga in the RTC of Makati City was
one for replevin hardly admits of doubt.
In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction,
the CA made the following disquisition, viz.:
[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the
employment package. We doubt that [SMART] would extend [to Astorga] the same car
plan privilege were it not for her employment as district sales manager of the company.
Furthermore, there is no civil contract for a loan between [Astorga] and [Smart].
Consequently, We find that the car plan privilege is a benefit arising out of employeremployee relationship. Thus, the claim for such falls squarely within the original and
exclusive jurisdiction of the labor arbiters and the NLRC.32
We do not agree. Contrary to the CAs ratiocination, the RTC rightfully assumed
jurisdiction over the suit and acted well within its discretion in denying Astorgas motion
to dismiss. SMARTs demand for payment of the market value of the car or, in the
alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the
relationship of debtor and creditor rather than employee-employer relations.33 As such,
the dispute falls within the jurisdiction of the regular courts.
In Basaya, Jr. v. Militante,34 this Court, in upholding the jurisdiction of the RTC over the
replevin suit, explained:
Replevin is a possessory action, the gist of which is the right of possession in the
plaintiff. The primary relief sought therein is the return of the property in specie
wrongfully detained by another person. It is an ordinary statutory proceeding to
adjudicate rights to the title or possession of personal property. The question of whether
or not a party has the right of possession over the property involved and if so, whether or
not the adverse party has wrongfully taken and detained said property as to require its
return to plaintiff, is outside the pale of competence of a labor tribunal and beyond the
field of specialization of Labor Arbiters.
xxxx
The labor dispute involved is not intertwined with the issue in the Replevin Case. The
respective issues raised in each forum can be resolved independently on the other. In
fact in 18 November 1986, the NLRC in the case before it had issued an Injunctive Writ
enjoining the petitioners from blocking the free ingress and egress to the Vessel and
ordering the petitioners to disembark and vacate. That aspect of the controversy is
properly settled under the Labor Code. So also with petitioners right to picket. But the
determination of the question of who has the better right to take possession of the
Vessel and whether petitioners can deprive the Charterer, as the legal possessor of the
Vessel, of that right to possess in addressed to the competence of Civil Courts.
In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of
jurisdiction as laid down by pertinent laws.
The CA, therefore, committed reversible error when it overturned the RTC ruling and
ordered the dismissal of the replevin case for lack of jurisdiction.
Having resolved that issue, we proceed to rule on the validity of Astorgas dismissal.
Astorga was terminated due to redundancy, which is one of the authorized causes for
the dismissal of an employee. The nature of redundancy as an authorized cause for
dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor
Relations Commission,35 viz:
x x x redundancy in an employers personnel force necessarily or even ordinarily refers
to duplication of work. That no other person was holding the same position that private
respondent held prior to termination of his services does not show that his position had
not become redundant. Indeed, in any well organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing the work of one
person. We believe that redundancy, for purposes of the Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number
of factors, such as overhiring of workers, decreased volume of business, or dropping of
a particular product line or service activity previously manufactured or undertaken by the
enterprise.
The characterization of an employees services as superfluous or no longer necessary
and, therefore, properly terminable, is an exercise of business judgment on the part of
the employer. The wisdom and soundness of such characterization or decision is not
subject to discretionary review provided, of course, that a violation of law or arbitrary or
malicious action is not shown.36
Astorga claims that the termination of her employment was illegal and tainted with bad
faith. She asserts that the reorganization was done in order to get rid of her. But except
for her barefaced allegation, no convincing evidence was offered to prove it. This Court
finds it extremely difficult to believe that SMART would enter into a joint venture
agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of
easing out a particular employee, such as Astorga. Moreover, Astorga never denied that
SMART offered her a supervisory position in the Customer Care Department, but she
refused the offer because the position carried a lower salary rank and rate. If indeed
SMART simply wanted to get rid of her, it would not have offered her a position in any
department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because there
was no compelling economic reason for redundancy. But contrary to her claim, an
employer is not precluded from adopting a new policy conducive to a more economical
and effective management even if it is not experiencing economic reverses. Neither
does the law require that the employer should suffer financial losses before he can
terminate the services of the employee on the ground of redundancy. 37
We agree with the CA that the organizational realignment introduced by SMART, which
culminated in the abolition of CSMG/FSD and termination of Astorgas employment was
an honest effort to make SMARTs sales and marketing departments more efficient and
competitive. As the CA had taken pains to elucidate:
x x x a careful and assiduous review of the records will yield no other conclusion than
that the reorganization undertaken by SMART is for no purpose other than its declared
objective as a labor and cost savings device. Indeed, this Court finds no fault in
SMARTs decision to outsource the corporate sales market to SNMI in order to attain
greater productivity. [Astorga] belonged to the Sales Marketing Group under the Fixed
Services Division (CSMG/FSD), a distinct sales force of SMART in charge of selling
SMARTs telecommunications services to the corporate market. SMART, to ensure it
can respond quickly, efficiently and flexibly to its customers requirement, abolished
CSMG/FSD and shortly thereafter assigned its functions to newly-created SNMI
Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for the
reason that CSMG/FSD does not have the necessary technical expertise required for the
value added services. By transferring the duties of CSMG/FSD to SNMI, SMART has
created a more competent and specialized organization to perform the work required for
corporate accounts. It is also relieved SMART of all administrative costs management,
time and money-needed in maintaining the CSMG/FSD. The determination to outsource
the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment
based on relevant criteria and is therefore a legitimate exercise of management
prerogative.
Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined
towards the worker and upheld his cause in most of his conflicts with his employer. This
favored treatment is consonant with the social justice policy of the Constitution. But while
tilting the scales of justice in favor of workers, the fundamental law also guarantees the
right of the employer to reasonable returns for his investment.38 In this light, we must
acknowledge the prerogative of the employer to adopt such measures as will promote
greater efficiency, reduce overhead costs and enhance prospects of economic gains,
albeit always within the framework of existing laws. Accordingly, we sustain the
reorganization and redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated one (1)
month notice prior to termination. The record is clear that Astorga received the notice of
termination only on March 16, 199839 or less than a month prior to its effectivity on April
3, 1998. Likewise, the Department of Labor and Employment was notified of the
redundancy program only on March 6, 1998.40
Article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof x x x.
SMARTs assertion that Astorga cannot complain of lack of notice because the
organizational realignment was made known to all the employees as early as February
1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot replace
the formal and written notice required by the law. In the written notice, the employees
are informed of the specific date of the termination, at least a month prior to the
effectivity of such termination, to give them sufficient time to find other suitable
employment or to make whatever arrangements are needed to cushion the impact of
termination. In this case, notwithstanding Astorgas knowledge of the reorganization, she
remained uncertain about the status of her employment until SMART gave her formal
notice of termination. But such notice was received by Astorga barely two (2) weeks
before the effective date of termination, a period very much shorter than that required by
law.
Be that as it may, this procedural infirmity would not render the termination of Astorgas
employment illegal. The validity of termination can exist independently of the procedural
infirmity of the dismissal.41 In DAP Corporation v. CA,42 we found the dismissal of the
employees therein valid and for authorized cause even if the employer failed to comply
with the notice requirement under Article 283 of the Labor Code. This Court upheld the
dismissal, but held the employer liable for non-compliance with the procedural
requirements.
The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at
the same time, awarding indemnity for violation of Astorga's statutory rights.
However, we find the need to modify, by increasing, the indemnity awarded by the CA to
Astorga, as a sanction on SMART for non-compliance with the one-month mandatory
notice requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot,43
viz.:
[I]f the dismissal is based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him should be
tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee, and (2) if the dismissal is based on an authorized cause under Article 283
but the employer failed to comply with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated by the employers exercise of his
management prerogative.
We deem it proper to increase the amount of the penalty on SMART to P50,000.00.
As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation
pay equivalent to at least one (1) month salary or to at least one (1) months pay for
every year of service, whichever is higher. The records show that Astorgas length of
service is less than a year. She is, therefore, also entitled to separation pay equivalent to
one (1) month pay.
Finally, we note that Astorga claimed non-payment of wages from February 15, 1998.
This assertion was never rebutted by SMART in the proceedings a quo. No proof of
payment was presented by SMART to disprove the allegation. It is settled that in labor
cases, the burden of proving payment of monetary claims rests on the employer.44
SMART failed to discharge the onus probandi. Accordingly, it must be held liable for
Astorgas salary from February 15, 1998 until the effective date of her termination, on
April 3, 1998.
However, the award of backwages to Astorga by the CA should be deleted for lack of
basis. Backwages is a relief given to an illegally dismissed employee. Thus, before
backwages may be granted, there must be a finding of unjust or illegal dismissal from
work.45 The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the
NLRC reversed the Labor Arbiters ruling and categorically declared Astorgas dismissal
valid. This ruling was affirmed by the CA in its assailed Decision. Since Astorgas
dismissal is for an authorized cause, she is not entitled to backwages. The CAs award
of backwages is totally inconsistent with its finding of valid dismissal.
WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The
February 28, 2000 Decision and the May 7, 2001 Resolution of the Court of Appeals in
CA-G.R. SP. No. 53831 are SET ASIDE. The Regional Trial Court of Makati City,
Branch 57 is DIRECTED to proceed with the trial of Civil Case No. 98-1936 and render
its Decision with reasonable dispatch.
On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos. 151079
and 151372 are DENIED. The June 11, 2001 Decision and the December 18, 2001
Resolution in CA-G.R. SP. No. 57065, are AFFIRMED with MODIFICATION. Astorga is
declared validly dismissed. However, SMART is ordered to pay Astorga P50,000.00 as
indemnity for its non-compliance with procedural due process, her separation pay
equivalent to one (1) month pay, and her salary from February 15, 1998 until the
effective date of her termination on April 3, 1998. The award of backwages is DELETED
for lack of basis.
SO ORDERED.
Rivera v. Vargas, G.R. No. 165895, 588 SCRA 529, 5 June 2009
TERLYNGRACE RIVERA,
Petitioner,
G.R. No. 165895

Present:
- versus -
YNARES-SANTIAGO, J.,
Chairperson,
CARPIO,*
CORONA,**
NACHURA, and
PERALTA, JJ.
Promulgated:
FLORENCIO L. VARGAS,
Respondent.
June 5, 2009
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
What is the effect of a writ of replevin that has been improperly served?
This is the sole issue to be resolved in this petition for review on certiorari
seeking to set aside the Decision[if !supportFootnotes][1][endif] of the Court of Appeals (CA) dated
November 18, 2003 in CA-G.R. SP No. 78529, as well as its October 20, 2004
Resolution,[if !supportFootnotes][2][endif] denying the petition for certiorari filed by petitioner
Terlyngrace Rivera (Rivera).
The facts follow.
On February 24, 2003, respondent Florencio Vargas (Vargas) filed a
complaint[if !supportFootnotes][3][endif] against petitioner and several John Does before Branch 02
of the Regional Trial Court (RTC) in Tuguegarao City, Cagayan, for the recovery of a
150 T/H rock crushing plant located in Sariaya, Quezon. In his complaint and affidavit,[if
Vargas claims ownership of the said equipment, having purchased
and imported the same directly from Hyun Dae Trading Co., in Seoul, South Korea, in
December 1993.[if !supportFootnotes][5][endif] The equipment was allegedly entrusted to
petitioners husband, Jan T. Rivera, who died sometime in late 2002, as caretaker of
respondents construction aggregates business in Batangas. According to Vargas,
petitioner failed to return the said equipment after her husbands death despite his
repeated demands, thus forcing him to resort to court action.[if !supportFootnotes][6][endif] The
complaint was accompanied by a prayer for the issuance of a writ of replevin and the
necessary bond amounting to P2,400,000.00.
Summons[if !supportFootnotes][7][endif] dated February 24, 2003 was served upon

petitioner through her personal secretary on April 28, 2003 at her residence in
Paraaque City. Interestingly, however, the writ of replevin[if !supportFootnotes][8][endif] was
served upon and signed by a certain Joseph Rejumo, the security guard on duty in
petitioners crushing plant in Sariaya, Quezon on April 29, 2003,[if !supportFootnotes][9][endif]
contrary to the sheriffs return[if !supportFootnotes][10][endif] stating that the writ was served upon
Rivera.
On May 8, 2003, Rivera filed her answer, manifestation, and motion for the
acceptance of petitioners redelivery bond.[if !supportFootnotes][11][endif] In her answer, petitioner
countered that the rock-crushing plant was ceded in favor of her husband as his share
following the dissolution of the partnership formed between Jan Rivera and respondents
wife, Iluminada Vargas (Iluminada), on May 28, 1998, while the partnerships second
rock-crushing plant in Cagayan was ceded in favor of Iluminada.[if !supportFootnotes][12][endif] She
further averred that from the time that the partnership was dissolved sometime in 2000
until Jan Riveras death in late 2002, it was petitioners husband who exercised
ownership over the said equipment without any disturbance from respondent.[if
On May 12, 2003, the RTC issued an Order[if !supportFootnotes][14][endif] disapproving

petitioners redelivery bond application for failure to comply with the requirements under
Sections 5 and 6 of Rule 60 of the Rules of Court.[if !supportFootnotes][15][endif] Without directly
saying so, the RTC faulted petitioner for her failure to file the application for redelivery
bond within five (5) days from the date of seizure as provided in the Rules of Court.
Petitioner moved for reconsideration,[if !supportFootnotes][16][endif] but the same was also
denied.[if !supportFootnotes][17][endif]
Aggrieved, petitioner elevated the matter to the CA through a petition for certiorari
under Rule 65. This, too, was denied for lack of merit.[if !supportFootnotes][18][endif] Petitioner
moved for reconsideration,[if !supportFootnotes][19][endif] but it was also denied.[if
Undaunted, petitioner now comes to us via this Rule 45 petition.

Petitioner argues that the RTC committed grave abuse of discretion in denying
her counterbond on the ground that it was filed out of time. She contends that the
mandatory five-day period did not even begin to run in this case due to the improper
service of the writ of replevin, contrary to Section 4 of Rule 60.[if !supportFootnotes][21][endif]
We find the petition meritorious.
Replevin is one of the most ancient actions known to law, taking its name from
the object of its process.[if !supportFootnotes][22][endif] It originated in common law as a remedy
against the wrongful exercise of the right of distress for rent[if !supportFootnotes][23][endif] and,
according to some authorities, could only be maintained in such a case.[if
But by the weight of authority, the remedy is not and never was
restricted to cases of wrongful distress in the absence of any statutes relating to the
subject, but is a proper remedy for any unlawful taking.[if !supportFootnotes][25][endif] Replevied,
used in its technical sense, means delivered to the owner,[if !supportFootnotes][26][endif] while the
words to replevy means to recover possession by an action of replevin.[if
Broadly understood in this jurisdiction, replevin is both a form of principal

remedy and of provisional relief. It may refer either to the action itself, i.e., to regain the
possession of personal chattels being wrongfully detained from the plaintiff by another,
or to the provisional remedy that would allow the plaintiff to retain the thing during the
pendency of the action and to hold it pendente lite.[if !supportFootnotes][28][endif] The action is
primarily possessory in nature and generally determines nothing more than the right of
possession.[if !supportFootnotes][29][endif]
The law presumes that every possessor is a possessor in good faith.[if
He is entitled to be respected and protected in his possession[if
as if he were the true owner thereof until a competent court rules
otherwise.[if !supportFootnotes][32][endif] Before a final judgment, property cannot be seized unless
by virtue of some provision of law.[if !supportFootnotes][33][endif] The Rules of Court, under Rule
60, authorizes such seizure in cases of replevin. However, a person seeking a remedy in
an action for replevin must follow the course laid down in the statute, since the remedy is
penal in nature.[if !supportFootnotes][34][endif] When no attempt is made to comply with the
provisions of the law relating to seizure in this kind of action, the writ or order allowing
the seizure is erroneous and may be set aside on motion[if !supportFootnotes][35][endif] by the
adverse party. Be it noted, however, that a motion to quash the writ of replevin goes to
the technical regularity of procedure, and not to the merits of the case[if
in the principal action.
The process regarding the execution of the writ of replevin in Section 4 of Rule
60 is unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking
of the property, must serve a copy thereof to the adverse party (petitioner, in this case)
together with the application, the affidavit of merit, and the replevin bond.[if
The reasons are simple, i.e., to provide proper notice to the adverse
party that his property is being seized in accordance with the courts order upon
application by the other party, and ultimately to allow the adverse party to take the
proper remedy consequent thereto.
Service of the writ upon the adverse party is mandatory in line with the
constitutional guaranty on procedural due process and as safeguard against
unreasonable searches and seizures.[if !supportFootnotes][38][endif] If the writ was not served upon
the adverse party but was instead merely handed to a person who is neither an agent of
the adverse party nor a person authorized to receive court processes on his behalf, the
service thereof is erroneous and is, therefore, invalid, running afoul of the statutory and
constitutional requirements. The service is likewise invalid if the writ of replevin was
served without the required documents. Under these circumstances, no right to seize
and to detain the property shall pass, the act of the sheriff being both unlawful and
unconstitutional.
In the case at bar, petitioner avers that the writ of replevin was served upon the
security guard where the rock-crushing plant to be seized was located.[if
The signature of the receiving party indicates that the writ was
received on April 29, 2003 by a certain Joseph Rejumo, the guard on duty in a plant in
Sariaya, Quezon, where the property to be seized was located, and witnessed by
Claudio Palatino, respondents caretaker.[if !supportFootnotes][40][endif] The sheriffs return,[if
however, peremptorily states that both the writ of replevin and the
summons were served upon Rivera. On May 8, 2003, or nine (9) days after the writ was
served on the security guard, petitioner filed an answer to the complaint accompanied by
a prayer for the approval of her redelivery bond. The RTC, however, denied the
redelivery bond for having been filed beyond the five-day mandatory period prescribed in
Sections 5 and 6 of Rule 60.[if !supportFootnotes][42][endif] But since the writ was invalidly served,
petitioner is correct in contending that there is no reckoning point from which the
mandatory five-day period shall commence to run.
The trial court is reminded that not only should the writ or order of replevin
comply with all the requirements as to matters of form or contents prescribed by the
Rules of Court.[if !supportFootnotes][43][endif] The writ must also satisfy proper service in order to
be valid and effective: i.e. it should be directed to the officer who is authorized to serve it;
and it should be served upon the person who not only has the possession or custody of
the property involved but who is also a party or agent of a party to the action.
Consequently, a trial court is deemed to have acted without or in excess of its jurisdiction
with respect to the ancillary action of replevin if it seizes and detains a personalty on the
basis of a writ that was improperly served, such as what happened in this case.
At the outset, petitioners proper remedy should have been to file a motion to
quash the writ of replevin or a motion to vacate the order of seizure. Nevertheless,
petitioners filing of an application for a redelivery bond, while not necessary, did not
thereby waive her right to question the improper service. It now becomes imperative for
the trial court to restore the parties to their former positions by returning the seized
property to petitioner and by discharging the replevin bond filed by respondent. The trial,
with respect to the main action, shall continue. Respondent may, however, file a new
application for replevin should he choose to do so.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals,
as well as its Resolution, in CA-G.R. SP No. 78529 is hereby SET ASIDE. The Regional
Trial Court is hereby ordered to restore the parties to their former positions, discharge
respondents replevin bond, and proceed with the trial of the main action with dispatch.
SO ORDERED.
Support pendente lite

De Asis vs. CA, G.R. No. 127578, 303 SCRA 176, 15 February 1999
G.R. No. 127578 February 15, 1999
MANUEL DE ASIS, petitioner,
vs.
COURT OF APPEALS, HON. JAIME T. HAMOY, Branch 130, RTC, Kalookan City
and GLEN CAMIL ANDRES DE ASIS represented by her mother/guardian VIRCEL
D. ANDRES, respondents.
PURISIMA, J.:
Petition for certiorari under Rule 65 oft he Revised Rules of Court seeking to nullify the
decision of the Court of Appeals which affirmed the trial court's Orders, dated November
25, 1993 and February 4, 1994, respectively, denying petitioner's Motion to Dismiss the
Complaint in Civil Case No. C-16107, entitled "Glen Camil Andres de Asis, etc. vs.
Manuel de Asis", and the motion for reconsideration.
The pertinent facts leading to the filing of the petition at bar are as follows:
On October 14, 1988, Vircel D. Andres, (the herein private respondent) in her capacity
as the legal guardian of the minor, Glen Camil Andres de Asis, brought an action for
maintenance and support against Manuel de Asis, docketed as Civil Case No. Q-88-935
before the Regional Trial Court of Quezon City, Branch 94, alleging that the defendant
Manuel de Asis (the petitioner here) is the father of subject minor Glen Camil Andres de
Asis, and the former refused and/or failed to provide for the maintenance of the latter,
despite repeated demands.
In his Answer, petitioner denied his paternity of the said minor and theorized that he
cannot therefore be required to provide support for him.
On July 4, 1989, private respondent Vircel D. Andres, through counsel, sent in a
manifestation the pertinent portion of which, reads;
1. That this proposed Amended Answer, defendant (herein petitioner) has made a
judicial admission/declaration that "1). defendant denies that the said minor child (Glen
Camil) is his child 2) he (petitioner) has no obligation to the plaintiff Glen Camil . . .
2. That with the aforesaid judicial admission/declarations by the defendant, it seems
futile and a useless exercise to claim support from said defendant.
3. That under the foregoing circumstances it would be more practical that plaintiff
withdraws the complains against the defendant subject to the condition that the
defendant should not pursue his counterclaim in the above-entitled case, . . . 1
By virtue of the said manifestation, both the plaintiff and the defendant agreed to move
for the dismissal of the case. Acting thereupon, the Regional Trial Court a quo issued the
following Order of August 8, 1989, dismissing Civil Case No. Q-88-935 with prejudice, to
wit:
Acting on the manifestation of Atty. Romualdo C. delos Santos, counsel for the
defendant, that counsel for the plaintiff Atty. Ismael J. Andres has no objection that this
case be withdrawn provided that the defendant will withdraw the counterclaim, as prayed
for, let the case be dismissed with prejudice.
SO ORDERED. 2
On September 7, 1995, another Complaint for maintenance and support was brought
against Manuel A. de Asis, this time in the name of Glen Camil Andres de Asis,
represented by her legal guardian/mother, Vircel D. Andres. Docketed as Civil Case No.
C-16107 before Branch 130 of the Regional Trial Court of Kalookan, the said Complaint
prayed, thus:
WHEREFORE, premises considered, it is respectfully prayed that judgment be rendered

ordering defendant:
1. To pay plaintiff the sum of not less than P2,000.00 per month for every month since
June 1, 1987 as support in arrears which defendant failed to provide plaintiff shortly after
her birth in June 1987 up to present;
2. To give plaintiff a monthly allowance of P5,000.00 to be paid in advance on or before
the 5th of each and every month.
3. To give plaintiff by way of support pendente lite a monthly allowance of P5,000.00 per
month, the first monthly allowance to start retroactively from the first day of this month
and the subsequent ones to be paid in advance on or before the 5th of each succeeding
month.
4. To pay the costs of suit.
Plaintiff prays for such other relief just and equitable under the premises. 3
On October 8, 1993, petitioner moved to dismiss the Complaint on the ground of res
judicata, alleging that Civil Case C-16107 is barred by the prior judgment which
dismissed with prejudice Civil Case Q -88-935.
In the Order dated November 25, 1993 denying subject motion to dismiss, the trial court
ruled that res judicata is inapplicable in an action for support for the reason that
renunciation or waiver of future support is prohibited by law. Petitioner's motion for
reconsideration of the said Order met the same fate. It was likewise denied.
Petitioner filed with the Court of Appeals a Petition for Certiorari. But on June 7, 1996,
the Court of Appeals found that the said Petition devoid of merit and dismissed the
same.
Undaunted, petitioner found his way to this court via the present petition, posing the
question whether or not the public respondent acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in upholding the denial of the motion to
dismiss by the trial court, and holding that an action for support cannot be barred by res
judicata.
To buttress his submission, petitioner invokes the previous dismissal of the Complaint
for maintenance and support, Civil Case Q-88-935, filed by the mother and guardian of
the minor, Glen Camil Andres de Asis, (the herein private respondent). In said case, the
complainant manifested that because of the defendant's judicial declaration denying that
he is the father of subject minor child, it was "futile and a useless exercise to claim
support from defendant". Because of such manifestation, and defendant's assurance
that he would not pursue his counterclaim anymore, the parties mutually agreed to move
for the dismissal of the complaint. The motion was granted by the Quezon City Regional
Trial Court, which then dismissed the case with prejudice.
Petitioner contends that the aforecited manifestation, in effect admitted the lack of
filiation between him and the minor child, which admission binds the complainant, and
since the obligation to give support is based on the existence of paternity and filiation
between the child and the putative parent, the lack thereof negates the right to claim for
support. Thus, petitioner maintains that the dismissal of the Complaint by the lower court
on the basis of the said manifestation bars the present action for support, especially so
because the order of the trial court explicitly stated that the dismissal of the case was
with prejudice.
The petition is not impressed with merit.
The right to receive support can neither be renounced nor transmitted to a third person.
Article 301 of the Civil Code, the law in point, reads:
Art. 301. The right to receive support cannot be renounced, nor can it be transmitted to a
third person. Neither can it be compensated with what the recipient owes the obligor. . . .
Furthermore, future support cannot be the subject of a compromise.
Art. 2035, ibid, provides, that:

No compromise upon the following questions shall be valid:
(1) The civil status of persons;
(2) The validity of a marriage or legal separation;
(3) Any ground for legal separation
(4) Future support;
(5) The jurisdiction of courts;
(6) Future legitime.
The raison d' etre behind the proscription against renunciation, transmission and/or
compromise of the right to support is stated, thus:
The right to support being founded upon the need of the recipient to maintain his
existence, he is not entitled to renounce or transfer the right for this would mean
sanctioning the voluntary giving up of life itself. The right to life cannot be renounce;
hence, support which is the means to attain the former, cannot be renounced.
xxx xxx xxx
To allow renunciation or transmission or compensation of the family right of a person to
support is virtually to allow either suicide or the conversion of the recipient to a public
burden. This is contrary to public policy. 4
In the case at bar, respondent minor's mother, who was the plaintiff in the first case,
manifested that she was withdrawing the case as it seemed futile to claim support from
petitioner who denied his paternity over the child. Since the right to claim for support is
predicated on the existence of filiation between the minor child and the putative parent,
petitioner would like us to believe that such manifestation admitting the futility of claiming
support from him puts the issue to rest and bars any and all future complaint for support.
The manifestation sent in by respondent's mother in the first case, which acknowledged
that it would be useless to pursue its complaint for support, amounted to renunciation as
it severed the vinculum that gives the minor, Glen Camil, the right to claim support from
his putative parent, the petitioner. Furthermore, the agreement entered into between the
petitioner and respondent's mother for the dismissal of the complaint for maintenance
and support conditioned upon the dismissal of the counterclaim is in the nature of a
compromise which cannot be countenanced. It violates the prohibition against any
compromise of the right to support.
Thus, the admission made by counsel for the wife of the facts alleged in a motion of the
husband, in which the latter prayed that his obligation to support be extinguished cannot
be considered as an assent to the prayer, and much less, as a waiver of the right to
claim for support. 5
It is true that in order to claim support, filiation and/or paternity must first be shown
between the claimant and the parent. However, paternity and filiation or the lack of the
same is a relationship that must be judicially established and it is for the court to declare
its existence or absence. It cannot be left to the will or agreement of the parties.
The civil status of a son having been denied, and this civil status, from which the right to
support is derived being in issue, it is apparent that no effect can be .given to such a
claim until an authoritative declaration has been made as to the existence of the cause. 6
Although in the case under scrutiny, the admission may be binding upon the respondent,
such an admission is at most evidentiary and does not conclusively establish the lack of
filiation.
Neither are we persuaded by petitioner's theory that the dismissal with prejudice of Civil
Case Q-88-935 has the effect of res judicata on the subsequent case for support. The
case of Advincula vs. Advincula 7 comes to the fore. In Advincula, the minor, Manuela
Advincula, instituted a case for acknowledgment and support against her putative father,
Manuel Advincula. On motion of both parties and for the reason that the "plaintiff has lost
interest and is no longer interested in continuing the case against the defendant and has
no further evidence to introduce in support of the complaint", the case was dismissed.
Thereafter, a similar case was instituted by Manuela, which the defendant moved to
dismiss, theorizing that the dismissal of the first case precluded the filing of the second
case.
In disposing such case, this Court ruled, thus:
The new Civil Code provides that the allowance for support is provisional because the
amount may be increased or decreased depending upon the means of the giver and the
needs of the recipient (Art. 297); and that the right to receive support cannot be
renounced nor can it be transmitted to a third person neither can it be compensated with
what the recipient owes the obligator (Art .301). Furthermore, the right to support can not
be waived or transferred to third parties and future support cannot be the subject of
compromise (Art. 2035; Coral v. Gallego, 38 O.G. 3135, cited in IV Civil Code by Padilla,
p. 648; 1956 Ed.). This being true, it is indisputable that the present action for support
can be brought, notwithstanding the fact the previous case filed against the same
defendant was dismissed. And it also appearing that the dismissal of Civil Case No.
3553, was not an adjudication upon the merits, as heretofore shown, the right of herein
plaintiff-appellant to reiterate her suit for support and acknowledgment is available, as
her needs arise. Once the needs of plaintiff arise, she has the right to bring an action for
support, for it is only then that her cause for action is accrues.. . .
xxx xxx xxx
It appears that the former dismissal was predicated upon compromise.
Acknowledgment, affecting as it does the civil status of a persons and future support,
cannot be the subject of compromise (pars. 1 & 4, Art. 2035, Civil Code). Hence, the first
dismissal cannot have force and effect and can not bar the filing of another action,
asking for the same relief against the same defendant. (emphasis supplied).
Conformably, notwithstanding the dismissal of Civil Case Q-88-935 and the lower court's
pronouncement that such dismissal was with prejudice, the second action for support
may still prosper.
WHEREFORE, the petition under consideration is hereby DISMISSED and the decision
of the Court of Appeals AFFIRMED. No pronouncement as to costs.
SO ORDERED.

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Preliminary attachment

be held liable for the value thereof.

these may be sufficient averments to be awarded damages once substantiated by

G.R. No. 171741

LARAS GIFTS AND

WHEREFORE, the writ of preliminary attachment issued in the instant

Respondents filed a motion for reconsideration. In its 10 September 2003 Order,

To sustain an attachment on this ground, it must be shown that the debtor in

In their amended complaint, respondents alleged the following in support of their

a. That plaintiffs transfer and endorse to defendant Metro some

22. Defendants are likewise guilty of fraud by violating the trust

We rule that respondents allegation that petitioners undertook to sell exclusively

Court, 26 such a procedure would warn absconding debtors-defendants of the

the discharge of the attachment if a cash deposit is made, or a counter-bond executed to

Suarez") granted this request on 6 January 1998.8

petition for prohibition and injunction with preliminary mandatory/prohibitory injunction

4. FAILED TO NULLIFY THE QUESTIONED ORDER AND WRIT OF PRELIMINARY

On the other hand, Section 3 of EO 430 provides:

G.R. No. 184434

Carpio, J., Chairperson,

document has been presented superseding it.

We find the explanation of respondent in the present case to be insufficient to excuse

G.R. No. 169802

ATTY. CESAR L. CHAVEZ, OPHELIA N. ALMENARIO,

On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved

The Placement Committee was directed to comply with the pertinent

Qualified casuals and contractual personnel may likewise be

Decentralization of functions to bring OWWA services closer to the

Deployment in the overseas posts shall be made on rotation basis from

Regular/permanent incumbents interested for promotion should

Division for budget allocation purposes.

positions. According to the respondents, the resulting decrease in the number of

Sec. 4. Officers and employees holding permanent

No new employees shall be taken in until all permanent

To be sure, private respondents have convincingly

reorganization of the OWWA is already slowly being put into motion.

Apropos, having successfully established a direct and personal injury

While the evidence to be submitted at the hearing on the

Aggrieved, petitioner through the OSG,[if

filed the instant

not involve a reduction in rank, status or salary.[if !supportFootnotes][32][endif]

Sec. 3. Grounds for issuance of preliminary injunction. A

A preliminary injunction is granted at any stage of an action or proceeding prior to the

Moreover, the grant or denial of a preliminary injunction is discretionary on the

G.R. No. 163406

CARPIO,* J., Chairperson,

UNITED NEON (a Division of Ever

Respondent's Factual Allegations

a resolution could be made by the City Building Official,

Injunction should be issued when there is a substantial challenge to the

The prayer for prohibition is hereby DENIED for lack of merit.

Petitioners Motion for Partial Reconsideration was denied by the Court of

The petition shall be accompanied by a certified true copy

A plain reading of the provision indicates that there is no specific enumeration

The evidence presented before us in support of a preliminary injunction is

compensate the injuries caused. The very foundation of the

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals

G.R. No. 176657

- versus HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE

Development Authority (NEDA), for the implementation of the Machine Readable

On April 5, 2002, former DFA Secretary Teofisto T. Guingona and Bonifacio

Section 9.05 on Performance and Warranty Securities and Section 20.15 on

Section 20.15 It is clearly and expressly understood that

specifications, the acceptance criteria, among other plans.