Estares vs. Court of Appeals or Republic Act No. 3765.
or Republic Act No. 3765. It opposed the prayer for restraining order on the ground
G.R. No. 144755, June 8, 2005
Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of
Court which assails the Decision1 and Resolution of the Court of Appeals dated April
17, 2000 and July 7, 2000, respectively, in CA-G.R. SP No. 56123.
The factual background of the case is as follows:
On May 21, 1999, petitioner Spouses Eliseo F. Estares and Rosenda P. Estares
(Estares spouses for brevity) filed a complaint for "Damages and Preliminary
Prohibitory Injunction" against private respondent Prominent Lending & Credit
Corporation (PLCC) before the Regional Trial Court, Branch 24, Biñan, Laguna,
docketed as Civil Case No. B-5476.2
They alleged that: on January 12, 1998, they obtained a loan from PLCC for
₱800,000.00 secured by a real estate mortgage over a 363-square meter parcel of land
with improvements situated in the Municipality of Santa Rosa, Laguna, covered by
Transfer Certificate of Title (TCT) No. 99261; the promissory note and the real estate
mortgage were falsified because they affixed their signatures on two blank documents;
the monthly interest of 3.5% and 3% penalty on each delayed monthly interest are
different from the 18% interest per annum to which they agreed to; for failure to pay
their obligation despite repeated demands, PLCC filed a petition for extrajudicial
foreclosure with the Office of the Provincial Sheriff of Laguna; and on June 8, 1999,
the Sheriff sent a Notice of Extrajudicial Sale to the Estares spouses.
Accordingly, the Estares spouses sought to declare as null and void the promissory
note and the real estate mortgage for not reflecting their true agreement. In the
interim, they prayed for a temporary restraining order (TRO) and/or writ of
preliminary injunction to enjoin PLCC from taking possession of the mortgaged
property and proceeding with the extrajudicial sale scheduled on July 13, 1999 at
10:00 a.m.
On June 30, 1999, the Estares spouses amended their complaint to include the
Register of Deeds of Laguna-Calamba Branch, the Provincial Sheriff of Laguna and
Sheriff IV Arnel G. Magat as party-defendants.3
On July 12, 1999, the trial court issued a TRO in favor of the Estares spouses.4 The
parties subsequently agreed to maintain the status quo until August 20, 1999.5
On August 6, 1999, PLCC filed its Answer with Counterclaim alleging that the Estares
spouses were duly apprised of the terms and conditions of the loan, including the rate
of interest, penalties and other charges, in accordance with the Truth in Lending Act
that there is no factual and legal basis for its issuance since the Estares spouses’ fear
of eviction is false.6
At the hearing on the Estares spouses’ application for a writ of preliminary injunction,
Rosenda P. Estares (Rosenda for brevity) testified that: the loan proceeds of
₱637,000.00, received on January 12, 1998, was used in the improvement and
renovation of their boarding house; they did not question PLCC in writing why they
only received ₱637,000.00; when they received the Statement of Account, they did not
question the figures appearing therein; when they received PLCC’s demand letter, they
went to the former’s office not to question the loan’s terms and conditions but merely
to request for extension of three months to pay their obligation. They adduced in
evidence the promissory note, real estate mortgage, statement of account, petition for
extrajudicial foreclosure and the notice of extrajudicial sale. The Estares spouses then
rested their case.
In opposition to the application for a writ of preliminary injunction, PLCC presented
its manager, Rey Arambulo, who testified that the Estares spouses were duly apprised
of the terms and conditions of the loan, including the rate of interest, penalties and
other charges, in accordance with the Truth in Lending Act or Republic Act No. 3765.
It submitted the same evidence offered by the Estares spouses, along with the latter’s
credit application, the credit investigation report, the receipts PLCC issued, and the
disclosure statement on the loan.
On August 18, 1999, the trial court denied the Estares spouses’ application for a writ
of preliminary injunction, holding that the latter failed to establish the facts necessary
for an injunction to issue.7
On August 31, 1999, the Estares spouses filed a motion for reconsideration.8 During
the hearing on the motion for reconsideration on September 17, 1999, Eliseo P.
Estares (Eliseo for brevity) moved that he be allowed to testify on the circumstances
of the loan but the trial court denied it. The trial court deemed it best that he be
presented during the trial on the merits.9 On October 1, 1999, the trial court denied
the motion for reconsideration.10
On December 7, 1999, the Estares spouses filed a petition for certiorari and
prohibition in the Court of Appeals ascribing grave abuse of discretion upon the trial
court in issuing the Orders dated August 18, 1999 and October 1, 1999 which denied
their prayer for a writ of preliminary injunction and motion for reconsideration,
respectively.11
On December 14, 1999, without giving due course to the petition, the Court of Appeals
issued a Resolution requiring the PLCC to file its comment to the petition. The action
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on the Estares spouses’ application for a TRO and writ of preliminary injunction was
deferred and held in abeyance until after receipt of the comment.12
With no restraining order enjoining him, Sheriff Magat conducted an auction sale on
January 5, 2000, with PLCC as highest bidder for ₱1,500,000.00.13
In its Comment dated January 15, 2000, PLCC claimed that the trial court did not
commit grave abuse of discretion in denying the Estares spouses’ application for a
writ of preliminary injunction since the latter failed to prove their right to injunctive
relief and the action sought to be enjoined has been rendered moot by the auction
sale conducted on January 5, 2000.14
On April 17, 2000, the Court of Appeals dismissed the petition for lack of merit,
holding that the trial court did not abuse its discretion in denying the Estares spouses’
application for a writ of preliminary injunction since the latter failed to prove the
requisites for the issuance thereof. 15
The Estares spouses then moved for reconsideration of the April 17, 2000 decision.
In addition, they prayed that the auction sale on January 5, 2000, as well as the
minutes of auction sale and certificate of sale, be declared null and void not only
because there was no publication of the notice of auction sale but the auction sale
preempted the Court of Appeals in the disposition of the case and was conducted in
defiance of the Resolution dated December 14, 1999.16
On July 7, 2000, the Court of Appeals denied the Estares spouses’ motion for
reconsideration.17
On September 16, 2000, the Estares spouses filed the present petition for certiorari
and prohibition anchored on the following grounds:
I court refused to allow him to testify during the hearing on the motion for
THE COURT OF APPEALS ERRED IN NOT GRANTING A WRIT OF PRELIMINARY
INJUNCTION TO PREVENT RESPONDENTS PLCC AND PROVINCIAL SHERIFF OF
LAGUNA/ SHERIFF ARNEL MAGAT FROM FORECLOSING THE MORTGAGE AND
CONDUCTING THE AUCTION SALE OF PETITIONERS’ PROPERTY AND/OR IN
UPHOLDING THE ORDER DATED AUGUST 18, 1999 OF JUDGE DAMASO A.
HERRERA, RTC-BRANCH 24, LAGUNA.
II
THE COURT OF APPEALS ERRED IN NOT DECLARING AS NULL AND VOID
AND/OR SETTING ASIDE THE AUCTION SALE OF THE PETITIONERS’ HOUSE AND
LOT CONDUCTED BY SHERIFF ARNEL MAGAT ON JANUARY 5, 2000 FOR LACK OF
RE-PUBLICATION OF NOTICE OF EXTRA-JUDICIAL SALE, FOR PRE-EMPTING THE
COURT OF APPEALS IN DECIDING THE CASE, AND FOR RENDERING THE
PETITION IN CA-G.R. SP NO. 56123 MOOT AND ACADEMIC.
III
THE COURT OF APPEALS ERRED IN NOT DECLARING DENIAL OF DUE PROCESS
TO OVERSEAS CONTRACT WORKER ELISEO ESTARES WHEN JUDGE DAMASO A.
HERRERA REFUSED TO ALLOW HIM TO TESTIFY ON THE CIRCUMSTANCES OF
THEIR LOAN WITH PLCC.18
Anent the first ground, the Estares spouses insist that they firmly established their
right to injunctive relief. They claim that the promissory note, credit application,
disbursement voucher, disclosure statement and real estate mortgage are falsified;
the promissory note is not reflective of the true amount of the loan, as well as the
term, interest and charges thereon; the ₱126,362.28 represent additional charges,
not as part of the loan, that were not agreed upon prior to or before the consummation
of the loan; and the amount of the loan and rate of interest stated in the falsified
promissory note are fictitious or simulated.
With respect to the second ground, they maintain that the auction sale conducted on
January 5, 2000 should be nullified because it lacked republication of the notice of
auction sale and it was conducted in violation of the Court of Appeals’ Resolution
dated December 14, 1999 which enjoined the parties to maintain the status quo
pending the filing by the respondents of their Comment to the petition. They argue
that PLCC and Sheriff Magat preempted the Court of Appeals from resolving their
petition by conducting the auction sale on January 5, 2000.
As to the third ground, they aver that Eliseo was denied due process when the trial
reconsideration. They contend that Eliseo, an overseas contract worker, purposely
took leave from work in the Middle East to testify on the circumstances of the loan
and his testimony was material to clarify the matter of notarization of the real estate
mortgage and show that said document was falsified.
On October 2, 2000, the Court granted the TRO prayed for in the petition and required
the respondents to comment thereon.19
In its Comment dated October 25, 2000, PLCC asserts that the petition should be
dismissed for being deficient on both procedural and substantive aspects.
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As to the procedural aspect, PLCC posits that the petition is filed beyond the sixty-
day period required by the rules and therefore filed out of time. PLCC further claims
that the verification and certification of non-forum shopping are both insufficient. The
verification speaks of a "Pre-Trial Brief" while the certification of non-forum shopping
was executed only by Rosenda.
As to the substance of the petition, PLCC argues that the Estares spouses failed to
establish their right to injunctive relief; the validity of the January 5, 2000 auction
sale was brought only in the motion for reconsideration which is improper because it
is a factual issue best addressed to the trial court; Sheriff Magat did not preempt the
Court of Appeals in deciding CA-G.R. SP No. 56123 when he conducted the auction
sale on January 5, 2000 because the Resolution dated December 14, 1999 of the said
court did not suspend or restrain the sheriff from conducting the foreclosure sale;
Eliseo was not denied due process because he sought to testify on factual matters in
the hearing on their motion for reconsideration which is improper as factual matters
are best brought and proved during the trial on the merits of the case.
The Court gave due course to the petition and required the parties to submit their
respective memoranda20 which they complied with.21
Before ruling on the issues raised in the petition, it is necessary to dwell on the
procedural aspects of the case.
From a reading of the grounds on which the instant petition for certiorari and
prohibition are based, it is readily apparent that the Estares spouses are appealing a
decision of the Court of Appeals by resorting to Rule 65, when their remedy should
be based on Rule 45 of the Rules of Court. A petition for review under Rule 45 is not
similar to a petition for certiorari under Rule 65.
Under Rule 45, decisions, final orders or resolutions of the Court of Appeals in any
case, i.e., regardless of the nature of the action or proceedings involved, may be
appealed to us by filing a petition for review on certiorari, which would be but a
continuation of the appellate process over the original case.22 In contrast, a special
civil action under Rule 65 is an independent action based on the specific grounds
therein provided and proper only if there is no appeal or any plain, speedy and
adequate remedy in the ordinary course of law.23 Thus, certiorari cannot be availed
of as a substitute for the lost remedy of an ordinary appeal.24
By their own account, the Estares spouses received the Order dated July 7, 2000
denying their motion for reconsideration from the Court of Appeals on July 18, 2000.
Instead of filing a petition for review with this Court within 15 days thereof or until
August 2, 2000, they filed this special civil action by registered mail on September
16, 2000 or 60 days from receipt of the Order dated July 7, 2000. By then, they had
already lost the remedy of appeal. By availing of a wrong remedy, the instant petition
should have merited outright dismissal.
Concerning the verification, we note that Rosenda stated therein that she caused the
preparation of the "foregoing Pre-Trial Brief" but we consider the same as a slight error
and honest mistake in the preparation of the petition. In any event, the purpose of
requiring a verification is simply to secure an assurance that the allegations of the
petition have been made in good faith; or are true and correct, not merely
speculative.25 This requirement is simply a condition affecting the form of pleadings,
and noncompliance therewith does not necessarily render it fatally defective.26
Indeed, verification is only a formal, not a jurisdictional, requirement.27
With regard to the certification of non-forum shopping signed only by Rosenda, the
rule is that the certificate of non-forum shopping must be signed by all the petitioners
or plaintiffs in a case and the signing by only one of them is insufficient because a
lone signatory cannot be presumed to have personal knowledge of the matters
required to be stated in the attestation.28
However, the Court has also stressed that the rules on forum shopping, which were
designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective which is simply to prohibit and penalize the evils of
forumshopping.29 The fact that the rules on forumshopping require strict compliance
merely underscores its mandatory nature that it cannot be dispensed with or its
requirements altogether disregarded, but it does not thereby interdict substantial
compliance with its provisions under justifiable circumstances.30
We find that the execution by Rosenda of the certificate of non-forum shopping in
behalf of her co-petitioner and husband, Eliseo, constitutes substantial compliance
with the Rules. After all they share a common interest in the property involved since
it is conjugal property, and the petition questioning the propriety of the decision of
the Court of Appeals originated from an action brought by the spouses, and is clearly
intended for the benefit of the conjugal partnership. Considering that the husband
was at that time an overseas contract worker working in Algeria, whereas the petition
was prepared in Sta. Rosa, Laguna, a rigid application of the rules on forumshopping
that would disauthorize the wife’s signing the certification in her behalf and that of
her husband is too harsh and clearly uncalled for.31
In any event, we find that this petition must still be dismissed as the Court of Appeals
did not commit any grave abuse of discretion amounting to want or excess of
jurisdiction in dismissing the petition.
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Generally, injunction is a preservative remedy for the protection of substantive rights
or interests. It is not a cause of action in itself but merely a provisional remedy, an
adjunct to a main suit. The controlling reason for the existence of the judicial power
to issue the writ is that the court may thereby prevent a threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly
investigated and advisedly adjudicated. It is to be resorted to only when there is a
pressing necessity to avoid injurious consequences which cannot be remedied under
any standard of compensation. The application of the writ rests upon an alleged
existence of an emergency or of a special reason for such an order before the case can
be regularly heard, and the essential conditions for granting such temporary
injunctive relief are that the complaint alleges facts which appear to be sufficient to
constitute a cause of action for injunction and that on the entire showing from both
sides, it appears, in view of all the circumstances, that the injunction is reasonably
necessary to protect the legal rights of plaintiff pending the litigation.32
The Estares spouses had the burden in the trial court to establish the following
requirements for them to be entitled to injunctive relief: (a) the existence of their right
to be protected; and (b) that the acts against which the injunction is to be directed
are violative of such right.33] To be entitled to an injunctive writ, the 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.34 Thus, 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.35
In the present case, the Estares spouses failed to establish their right to injunctive
relief. They do not deny that they are indebted to PLCC but only question the amount
thereof. Their property is by their own choice encumbered by a real estate mortgage.
Upon the nonpayment of the loan, which was secured by the mortgage, the mortgaged
property is properly subject to a foreclosure sale.
Rosenda’s testimony sealed the fate of the necessity of the writ of preliminary
injunction. She admitted that: they did not question PLCC in writing why they only
received ₱637,000.00; they did not question the figures appearing in the Statement
of Account when they received it; and, when they received PLCC’s demand letter, they
went to the former’s office not to question the loan’s terms and conditions but merely
to request for extension of three months to pay their obligation.36 She acknowledged
that they only raised the alleged discrepancy of the amount loaned and the amount
received, as well as the blank documents which they allegedly signed, after PLCC
initiated the foreclosure proceedings.37
It must be stressed 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.38 As such, a trial court’s decision to grant or
to deny injunctive relief will not be set aside on appeal unless the court abused its
discretion. In granting or denying injunctive relief, a court abuses its discretion when
it lacks jurisdiction, fails to consider and make a record of the factors relevant to its
determination, relies on clearly erroneous factual findings, considers clearly irrelevant
or improper factors, clearly gives too much weight to one factor, relies on erroneous
conclusions of law or equity, or misapplies its factual or legal conclusions.39
In the present case, the Estares spouses clearly failed to prove that they have a right
protected and that the acts against which the writ is to be directed are violative of
said right. Hence, the Court of Appeals did not commit a grave abuse of its discretion
amounting to excess or lack of jurisdiction in dismissing petitioners’ petition for
certiorari.
There is likewise no merit to the claim that the Court of Appeals gravely abused its
discretion when it denied the prayer to nullify the auction sale held on January 5,
2000 for lack of republication of the notice of auction sale and for preempting the
Court of Appeals in deciding the case and rendering the petition in CA-G.R. SP No.
56123 moot and academic.
The absence of republication of the notice of auction sale is a factual matter which by
the weight of judicial precedents cannot be inquired into by this Court in a petition
for certiorari. It is best addressed to the attention of the trial court and taken up in
the trial of the case, necessitating presentation of evidence by both parties. The
propriety of the auction sale is a matter which the trial court is in the best position to
determine. For it is basic that certiorari under Rule 65 is a remedy narrow in scope
and inflexible in character. It is not a general utility tool in the legal workshop.40 It
offers only a limited form of review. Its principal function is to keep an inferior tribunal
within its jurisdiction.41 It can be invoked only for an error of jurisdiction, that is,
one where the act complained of was issued by the court, officer or a quasi-judicial
body without or in excess of jurisdiction, or with grave abuse of discretion which is
tantamount to lack or in excess of jurisdiction,42 not to be used for any other
purpose,43 such as to cure errors in proceedings or to correct erroneous conclusions
of law or fact.44 Again suffice it to say that the only issue settled here is the propriety
of the non-issuance of a writ of preliminary injunction pending the final outcome of
the case.
As to petitioners’ assertion that the Court of Appeals in its Resolution dated December
14, 1999 impliedly directed the parties to maintain the status quo, we deemed it
worthy to quote in full the said Resolution, thus:
Without necessarily giving due course to the petition, the Court requires the
respondents to file their comment (not motion to dismiss) within ten (10) days from
notice, which may be treated as their Answer should the petition be given due course.
4|Page

Respondents are likewise ordered to show cause in the same Comment why a
temporary restraining order and writ of preliminary injunction should not be issued.
The action of the petitioners’ application for a temporary restraining order and writ of
preliminary injunction is deferred and held in abeyance until after receipt of
respondents’ Comment.45
Clearly, the Court of Appeals did not give due course to the petition but merely
required PLCC to comment thereon. The Court of Appeals did not enjoin the conduct
of the auction sale. In any case, the necessity for the issuance of the writ of injunction
has been found wanting.
Lastly, the Estares spouses’ claim that Eliseo was denied due process when the trial
court refused to allow him to testify during hearing on the motion for reconsideration
deserves scant consideration.
It must be remembered that a writ of preliminary injunction is generally based solely
on initial and incomplete evidence. 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.46
We note that it was the Estares spouses’ choice to present only Rosenda to testify on
the circumstances of the loan at the hearing on their application for a writ of
preliminary injunction and they cannot assert that Eliseo should have been accorded
that opportunity during the hearing on the motion for reconsideration. The essence
of due process is found in the reasonable opportunity to be heard and submit any
evidence one may have in support of one's defense. What the law proscribes is the
lack of opportunity to be heard.47 As long as a party is given the opportunity to defend
his interests in due course, he would have no reason to complain, for it is this
opportunity to be heard that makes up the essence of due process.48 Eliseo cannot
complain that he was deprived of due process since he is given the full opportunity to
testify on the circumstances of the loan during the trial of the main case.49
All told, no grave abuse of discretion could therefore be imputed to the Court of
Appeals in dismissing petitioners’ petition for certiorari with prohibition, for lack of
merit.
WHEREFORE, the instant petition for certiorari and prohibition is DISMISSED. The
assailed Decision and Resolution of the Court of Appeals dated April 17, 2000 and
July 7, 2000, respectively, in CA-G.R. SP No. 56123 are AFFIRMED in all respects.
The temporary restraining order issued by this Court is lifted. Costs against
petitioners.
SO ORDERED.
Mabuyo Farms Inc. vs. Court of Appeals
G.R. No. 140058, August 1, 2002
This petition for review seeks to reverse the decision1 promulgated on August 27,
1999, of the Court of Appeals in CA-G.R. SP No. 51375. The appellate court enjoined
the enforcement of the writ of preliminary injunction dated April 14, 1998, issued by
the Regional Trial Court of Balanga, Bataan, Branch 1, in Civil Case No. 6695 against
private respondent, Antonio Santos.
The factual antecedents of this case are as follows:
On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo
Florida, Cornelio Pilipino and Severino Vistan, lawful possessors of Lot 1379 of the
Morong, Bataan Cadastre. Lot 1379 consists of 144 hectares. Domingo, Florida,
Pilipino and Vistan through their forebears and by themselves had been in open,
notorious, and exclusive possession of portions of Lot 1379 since 1933 in the concept
of owners. The Bureau then directed them to confirm their titles over the property by
filing the appropriate applications for the portions of the property respectively
occupied by them.
In October 1970, petitioner bought the respective portions of Domingo, Florida,
Pilipino and Vistan, totaling 69,932 square meters and entered into a compromise
settlement with six other persons occupying the property, whose applications had
been rejected by the Bureau. Petitioner then filed an application for land registration
docketed as LRC Cad. Rec. No. N-209 with the then Court of First Instance of Bataan,
Branch 1. The application was contested by several oppositors, among them the heirs
of one Toribio Alejandro.
On December 20, 1991, the trial court decided the land registration case in
petitioner’s favor. The losing parties appealed to the Court of Appeals, where the case
was docketed as CA-G.R. CV No. 40452. On March 14, 2000, the appellate court
affirmed the lower court’s decision.2
In June 1997, a group of occupants entered the land, destroyed the fences and drove
away livestock owned by petitioner.
On October 9, 1997, petitioner filed a complaint for injunction with damages,
with a prayer for a temporary restraining order, docketed as Civil Case No. 6695, with
5|Page
the RTC of Balanga, Bataan. Named as defendants were Juanito Infante, Domingo
Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe, and Richard Doe.
The trial court issued the temporary restraining order (TRO) and on January 16, 1998,
the sheriff served copies on the defendants. The sheriff accompanied petitioner’s
president to the property where they found five (5) persons cultivating the land. The
latter refused to give their names or receive copies of the TRO. They claimed that they
were only farm workers of a certain Antonio Santos who allegedly owned the
land.3
On April 14, 1998, the trial court issued a writ of preliminary injunction restraining
the defendants or persons acting on their behalf from entering and cultivating the
disputed property. The aforementioned writ was also served upon respondent who
was occupying a portion of Lot No. 1379.4
On February 24, 1999, private respondent filed a special civil action for certiorari
docketed as CA-G.R. SP No. 51375 with the Court of Appeals. Private respondent
averred that he only learned about the writ of preliminary injunction on February 16,
1999, when he secured a copy of the order. He claimed that he was an innocent
purchaser for value of the property from Francisco, Armando, and Conchita, all
surnamed Alejandro and the injunction prevented him from using his property. He
alleged that he was not a party to Civil Case No. 6695 and that it was grave abuse of
discretion for the trial court to enforce the injunctive writ against him since it did not
have jurisdiction over him.
On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in private
respondent’s favor, thus:
WHEREFORE, premises considered the instant Petition is hereby GRANTED. Public
respondent is enjoined from imposing the questioned writ of preliminary injunction
dated April 14, 199[8] against petitioner [Santos].
SO ORDERED.5
Hence, the instant petition, submitting the following issues for our consideration:
A. WHETHER [PRIVATE] RESPONDENT WAS DEPRIVED OF HIS CONSTITUTIONAL
RIGHT TO BE HEARD.
B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL PROCEDURE6 IS
APPLICABLE IN THE ABOVE-ENTITLED CASE.
We find the lone issue to be: Is private respondent bound by the writ of
preliminary injunction issued by the trial court?
First, petitioner contends that the injunctive writ of April 14, 1998 was issued not
only against all named defendants in Civil Case No. 6695, but also against three
unnamed "Does." It now argues that the "Does" in the complaint are all those who
violated its rights, including private respondent. Petitioner asks us to note that the
writ of injunction was served not only against the defendants in Civil Case No. 6695,
but also against other persons who were seen entering and cultivating petitioner’s
property, including private respondent. Since the latter personally received the
injunctive order on June 5, 1998, he was already forewarned to intervene in Civil Case
No. 6695 if he had any right or interest to protect in the disputed property. This he
failed to do. Since private respondent did not then take the opportunity to present his
side, he cannot now claim that he was denied due process when the writ was enforced
against him.
In his comment, private respondent counters that he was not legally bound nor
required by law to file his pleadings in Civil Case No. 6695 as he was not a party in
said case. Likewise, he was not required to act on or protest the injunctive writ in the
aforementioned civil case. Private respondent avers that what petitioner wants is to
have a continuing writ in its favor, to include not only the defendants in Civil Case
No. 6695 but also all those who may subsequently intrude into the land dispute.
Private respondent submits that the court a quo committed no error in describing
petitioner’s posture as a violation of the fundamental rights to notice and hearing.
We have minutely scrutinized the order granting the writ of preliminary injunction
and are unable to say that the writ applied to private respondent. The order merely
stated "[L]et a writ of preliminary injunction be issued enjoining and restraining the
defendants or any person or persons acting in their place or stead from further entering
and cultivating the said land of the plaintiff subject matter of this case until further
order from the Court."7 The persons specifically enjoined in the order were the
defendants in Civil Case No. 6695 or persons acting in their stead. Petitioner itself
admitted that private respondent was not a defendant in Civil Case No. 6695 since
"at the institution of the case in 1997, he (private respondent) did not have a right
over any portion of petitioner’s lot."8 Neither was he a trespasser then.9 Also, nothing
in the records indicate that private respondent was acting on behalf of any of the
defendants. Taking all these into consideration, we must hold that the writ of
preliminary injunction thus cannot be made to apply to private respondent.
A preliminary injunction is an order granted at any stage of an action prior to final
judgment, requiring a person to refrain from a particular act.10 As an ancillary or
preventive remedy, a writ of preliminary injunction may therefore be resorted to by a
party to protect or preserve his rights and for no other purpose during the pendency
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of the principal action.11 Its object is to preserve the status quo until the merits of
the case can be heard.12 It is not a cause of action in itself but merely a provisional
remedy, an adjunct to a main suit.13 Thus, a person who is not a party in the main
suit, like private respondent in the instant case, cannot be bound by an ancillary writ,
such as the writ of preliminary injunction issued against the defendants in Civil Case
No. 6695. He cannot be affected by any proceeding to which he is a stranger.14
Second, petitioner contends that the Court of Appeals erred when it observed that
petitioner should have impleaded private respondent as defendant in Civil Case No.
6695 pursuant to Section 11, Rule 3 of the 1997 Rules of Civil Procedure.15 Instead,
private respondent should have intervened in Civil Case No. 6695 to protect his rights.
Petitioner avers that at the time the injunctive writ was issued, it had already rested
its case and to require it to amend its complaint to include private respondent was
too late.
Private respondent counters that there was no reason why Section 11, Rule 3 of the
1997 Rules of Civil Procedure should not be made to apply to Civil Case No. 6695. He
argues that contrary to petitioner’s posture, his inclusion as a defendant in Civil Case
No. 6695 is procedurally correct since no final judgment had yet been rendered in
said case. Moreover, he avers that petitioner cannot insist that private respondent be
vigilant in protecting his rights by intervening in Civil Case No. 6695.1âwphi1.nêt
We agree with private respondent. First, private respondent had no duty to intervene
in the proceedings in Civil Case No. 6695. Intervention in an action is neither
compulsory nor mandatory but only optional and permissive.16 Second, to warrant
intervention, two requisites must concur: (a) the movant has a legal interest in the
matter in litigation,17 and (b) intervention must not unduly delay or prejudice the
adjudication of the rights of the parties18 nor should the claim of the intervenor be
capable of being properly decided in a separate proceeding.19 The interest, which
entitles a person to intervene in a suit, must involve the matter in litigation and of
such direct and immediate character that the intervenor will either gain or lose by the
direct legal operation and effect of the judgment. Civil Case No. 6695 was an action
for permanent injunction and damages. As a stranger to the case, private respondent
had neither legal interest in a permanent injunction nor an interest on the damages
to be imposed, if any, in Civil Case No. 6695. To allow him to intervene would have
unnecessarily complicated and prolonged the case.
We agree with the Court of Appeals that to make the injunctive writ applicable against
private respondent, petitioner should have impleaded the latter as an additional
defendant in Civil Case No. 6695. Petitioner’s insistence that it had rested its case
and hence was too late to include defendant finds no support in Section 11. The rule
categorically provides that "Parties may be dropped or added by order of the court on
motion of any party or on its own initiative at any stage of the action (stress supplied)
and on such terms as are just."21 We find it inexplicable why petitioner pointedly
resisted the advice of the appellate court to implead private respondent as an
additional defendant in Civil Case No. 6695.
WHEREFORE, the instant petition is DENIED and the assailed decision of the Court
of Appeals in CA-G.R. SP No. 51375 AFFIRMED. No pronouncement as to costs.
SO ORDERED
China Banking Corporation vs. Co
G.R. No. 174569, September 17, 2008
Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision,
Sindalan, San Fernando, Pampanga, which was covered by Transfer Certificate of
Title (TCT) No. 450216-R to petitioner-spouses Joey and Mary Jeannie Castro (the
Castro spouses). It sold two other lots also located in the same place covered by TCT
Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha Nogoy (the
Nogoy spouses).
The lots of the Castro spouses and the Nogoy spouses are commonly bound on their
southeastern side by Lot No. 3783-E, which is covered by TCT No. 269758-R in the
name of respondent Benjamin Co (Co) and his siblings.
Co and his siblings entered into a joint venture with respondent Three Kings
Construction and Realty Corporation for the development of the Northwoods Estates,
a subdivision project covering Lot No. 3783-E and adjacent lots. For this purpose,
they contracted the services of respondent, Engineer Dale Olea.
In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote respondents asking them
to stop constructing the wall, and remove all installed construction materials and
restore the former condition of Lot No. [3]783-E which they (petitioners) claimed to be
a road lot.1 They also claimed that the construction obstructed and closed the only
means of ingress and egress of the Nogoy spouses and their family, and at the same
time, caved in and impeded the ventilation and clearance due the Castro spouses’
residential house.2
Petitioners’ demand remained unheeded, prompting them to file before the Regional
Trial Court (RTC) of San Fernando, Pampanga a complaint,3 docketed as Civil Case
No. 12834, for injunction, restoration of road lot/right of way and damages with
prayer for temporary restraining order and/or writ of preliminary injunction.
7|Page
Before respondents filed their Answer,4 petitioners filed an Amended Complaint,5
alleging that the construction of the perimeter wall was almost finished and thus
modifying their prayer for a writ of preliminary injunction to a writ of preliminary
mandatory injunction, viz:
WHEREFORE, it is respectfully prayed of this Honorable Court that:
A. Before trial on the merits, a temporary restraining order be issued immediately
restraining the defendants from doing further construction of the perimeter wall on
the premises, and thereafter, a writ of preliminary mandatory injunction be issued
enjoining the defendants from perpetrating and continuing with the said act and
directing them jointly and severally, to restore the road lot, Lot 3783-E to its previous
condition.
x x x x 6 (Underscoring in the original; emphasis supplied)
After hearing petitioners’ application for a writ of preliminary mandatory injunction,
Branch 44 of the San Fernando, Pampanga RTC denied the same, without prejudice
to its resolution after the trial of the case on the merits, in light of the following
considerations:
After a judicious evaluation of the evidence, the Commissioner’s Report on the
Conduct of the Ocular Inspection held on February 14, 2004, as well as the pleadings,
the Court is of the opinion and so holds that a writ of preliminary injunction should
not be issued at this time. Plaintiffs have not clearly shown that their rights have been
violated and that they are entitled to the relief prayed for and that irreparable damage
would be suffered by them if an injunction is not issued. Whether lot 3783-E is a road
lot or not is a factual issue which should be resolved after the presentation of
evidence. This Court is not inclined to rely only on the subdivision plans presented
by plaintiffs since, as correctly argued by defendants, the subdivision plans do not
refer to lot 3783-E hence are not conclusive as to the status or classification of lot
3783-E. This court notes further that Subdivision Plan Psd-03-000577 of Lot 3783
from which the other subdivision plans originates [sic] does not indicate lot 3783-E
as a road lot.
Even the physical evidence reveals that lot 3783-E is not a road lot. The Court noticed
during the ocular inspection on February 14, 2004, that there is a PLDT box almost
in front of lot 3783-E. There is no visible pathway either in the form of a beaten path
or paved path on lot 3783-E. Visible to everyone including this court are wild plants,
grasses, and bushes of various kinds. Lot 3783-E could not have been a road lot
because Sps. Nogoy, one of the plaintiffs, even built a structure on lot 3783-E which
they used as a coffin factory.
Plaintiffs failed to prove that they will be prejudiced by the construction of the wall.
The ocular inspection showed that they will not lose access to their residences. As a
matter of fact, lot 3783-E is not being used as an access road to their residences and
there is an existing secondary road within St. Benedict Subdivision that serves as the
main access road to the highway. With respect to the blocking of ventilation and light
of the residence of the Sps. Castro, suffice it to state that they are not deprived of light
and ventilation. The perimeter wall of the defendants is situated on the left side of the
garage and its front entrance is still open and freely accessible.
This is indeed an issue of fact which should be ventilated in a full blown trial,
determinable through further presentation of evidence by the parties. x x x
xxxx
WHEREFORE, premises considered, plaintiffs’ application for the issuance of a writ
of preliminary mandatory injunction is denied without prejudice to its resolution after
the trial of the case on the merits.7 (Underscoring supplied)
Their Motion for Reconsideration8 having been denied, petitioners filed a petition for
certiorari9 before the Court of Appeals which dismissed the same10 and denied their
subsequent Motion for Reconsideration.11
Hence, the petitioners filed the present petition,12 faulting the Court of Appeals in
I.
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF SUBSTANCE NOT IN ACCORD
WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II.
. . . PROMOTING THE LOWER COURT’S RATIOCINATION THAT PETITIONERS ARE
SEEKING THE ESTABLISHMENT OF AN EASEMENT OF RIGHT OF WAY, WHEN
THEY ARE CLAIMING THE ENFORCEMENT OF THE STATUTORY PROHIBITION
AGAINST CLOSURE OR DISPOSITION OF AN ESTABLISHED ROAD LOT.
III.
. . . SANCTION[ING] THE LOWER COURT’S PATENT GRAVE ABUSE OF DISCRETION
IN PERFUNCTORILY DENYING PETITIONERS’ APPLICATION FOR WRIT OF
PRELIMINARY INJUNCTION.13
8|Page
It is settled that the grant of a preliminary mandatory injunction rests on the sound
discretion of the court, and the exercise of sound judicial discretion by the lower court
should not be interfered with except in cases of manifest abuse.14
It is likewise settled that a court should avoid issuing a writ of preliminary mandatory
injunction which would effectively dispose of the main case without trial.15
In the case at bar, petitioners base their prayer for preliminary mandatory injunction
on Section 44 of Act No. 496 (as amended by Republic Act No. 440), Section 50 of
Presidential Decree 1529, and their claim that Lot No. 3783-E is a road lot.
To be entitled to a writ of preliminary injunction, however, the petitioners must
establish the following requisites: (a) the invasion of the right sought to be protected
is material and substantial; (b) the right of the complainant is clear and unmistakable;
and (c) there is an urgent and permanent necessity for the writ to prevent serious
damage.16
Since a preliminary mandatory injunction commands the performance of an act, it
does not preserve the status quo and is thus more cautiously regarded than a mere
prohibitive injunction.17 Accordingly, the issuance of a writ of preliminary mandatory
injunction is justified only in a clear case, free from doubt or dispute.18 When the
complainant’s right is thus doubtful or disputed, he does not have a clear legal right
and, therefore, the issuance of injunctive relief is improper.
Section 44 of Act 496,19 which petitioners invoke, provides:
xxxx
Any owner subdividing a tract of registered land into lots shall file with the Chief of
the General Land Registration Office a subdivision plan of such land on which all
boundaries, streets and passageways, if any, shall be distinctly and accurately
delineated. If no streets or passageways are indicated or no alteration of the perimeter
of the land is made, and it appears that the land as subdivided does not need of them
and that the plan has been approved by the Chief of the General Land Registration
Office, or by the Director of Lands as provided in section fifty-eight of this Act, the
Register of Deeds may issue new certificates of title for any lot in accordance with said
subdivision plan. If there are streets and/or passageways, no new certificates shall
be issued until said plan has been approved by the Court of First Instance of the
province or city in which the land is situated. A petition for that purpose shall be filed
by the registered owner, and the court after notice and hearing, and after considering
the report of the Chief of the General Land Registration Office, may grant the petition,
subject to the condition, which shall be noted on the proper certificate, that no portion
of any street or passageway so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without approval of the court first had, or may
render such judgment as justice and equity may require.20 (Underscoring supplied
by the petitioners)
Section 50 of Presidential Decree No. 1529,21 which petitioners likewise invoke,
provides:
SECTION 50. Subdivision and consolidation plans. – Any owner subdividing a tract
of registered land into lots which do not constitute a subdivision project as defined
and provided for under P.D. No. 957, shall file with the Commissioner of Land
Registration or with the Bureau of Lands a subdivision plan of such land on which
all boundaries, streets, passageways and waterways, if any, shall be distinctly and
accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the Commissioner of
Land Registration or the Bureau of Lands together with the approved technical
descriptions and the corresponding owner's duplicate certificate of title is presented
for registration, the Register of Deeds shall, without requiring further court approval
of said plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of Deeds shall
annotate on the new certificate of title covering the street, passageway or open space,
a memorandum to the effect that except by way of donation in favor of the national
government, province, city or municipality, no portion of any street, passageway,
waterway or open space so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without the approval of the Court of First Instance
of the province or city in which the land is situated. x x x22 (Underscoring supplied
by petitioner)
The best evidence thus that Lot No. 3783-E is a road lot would be a memorandum to
that effect annotated on the certificate of title covering it. Petitioners presented TCT
No. 185702-R covering Lot No. 3783-E in the name of Sunny Acres Realty
Management Corporation which states that the registration is subject to "the
restrictions imposed by Section 44 of Act 496, as amended by Rep. Act No. 440."23
The annotation does not explicitly state, however, that Lot No. 3783-E is a road
lot.1awphi1.net
In any event, TCT No. 185702-R had been cancelled and in its stead was issued TCT
No. 247778-R24 which, in turn, was cancelled by TCT No. 269758-R25 in the name
of respondent Co and his siblings.
TCT No. 247778-R and respondent Co’s TCT No. 269758-R do not now contain the
aforementioned memorandum annotated on TCT No. 185702-R re the registration
being "subject to restrictions imposed by Section 44 of Act 496, as amended by
9|Page
Republic Act No. 440." Given the immediately foregoing circumstances, there is doubt
on whether Lot No. 3783-E is covered by a road lot.
While petitioners correctly argue that certain requirements must be observed before
encumbrances, in this case the condition of the lot’s registration as being subject to
the law, may be discharged and before road lots may be appropriated26 gratuity
assuming that the lot in question was indeed one, TCT Nos. 247778-R and 269758-
R enjoy the presumption of regularity27 and the legal requirements for the removal
of the memorandum annotated on TCT No. 185702-R are presumed to have been
followed.28
At all events, given the following factual observations of the trial court after
conducting an ocular inspection of Lot 3783-E, viz:
x x x The ocular inspection showed that [petitioners] will not lose access to their
residences. As a matter of fact, lot 3783-E is not being used as an access road to their
residences and there is an existing secondary road within St. Benedict Subdivision
that serves as the main access road to the highway.29 With respect to the blocking of
ventilation and light of the residence of the Sps. Castro, suffice it to state that they
are not deprived of light and ventilation. The perimeter wall of the defendants is
situated on the left side of the garage and its front entrance is still open and freely
accessible,30
and the absence of a showing that petitioners have an urgent and paramount need
for a writ of preliminary mandatory injunction to prevent irreparable damage, they
are not entitled to such writ.
WHEREFORE, the petition is DENIED.
SO ORDERED
Light Rail Transit Authority v. Court of Appeals
November 25, 2004
Both filed by petitioner Light Rail Transit Authority (LRTA), G.R. Nos. 139275-76
assail the Decision dated February 26, 1999, rendered by the Court of Appeals (CA)
in the consolidated petitions docketed as CA-G.R. SP Nos. 44220 and 44227;[1] G.R.
No. 140949, on the other hand, questions the Decision dated November 12, 1999,
issued by the CA in CA-G.R. SP No. 52382.[2] These cases originated from the orders
issued by the Regional Trial Court of Pasay City (Branch 111) in Civil Case No. 97-
0423.
The antecedent facts of these consolidated petitions were summed up by the CA in
CA-G.R. SP Nos. 44220 and 44227, as follows:
On October 1, 1986, T.N. LAL & CO., LTD. (private respondent herein and hereafter
to be referred to as LAL for short) donated a stereo system to the LRTA, to provide
music for relaxation and amusement in the 18 stations and all the rail vehicles of
LRTA along its Line 1. On March 19, 1990, LAL and the LRTA entered into an
agreement whereby LAL was authorized to air commercial advertisements through
the aforesaid stereo system for a period of five (5) years and three (3) months from
March 19, 1990, in consideration of a fee equivalent to thirty percent (30%) of the
gross sales of advertisements (less any agency commission) annually, with minimum
annual guaranteed fees. Subsequently, the period of the contract was amended to five
(5) years from April 1, 1992, or until March 31, 1997.
On March 31, 1997, LAL filed an action for reformation of contract and damages (with
application for preliminary mandatory & prohibitory injunction and Temporary
Restraining Order) against LRTA with the Regional Trial Court at Pasay City, and the
same was docketed as Civil Case No. 97-0423 and raffled to Branch 111, presided
over by the respondent judge.
The complaint alleged that vibrations and noises coming from the light rail vehicles
caused disruptions in the sound system, resulting in a sharp decline of
advertisements aired over the said system. LAL requested for a moratorium of the
agreement until the said problem can be solved, but LRTA refused to grant such
request. Hence, the complaint prays that the contract be reformed by including
therein a provision allowing a moratorium in case of disruption affecting the system
attributable to mechanical/technical problems in the LRT line or light rail vehicles,
including a pro rata extension of the agreement. The complaint also prays for a
temporary restraining order and preliminary injunction ordering the defendant to
maintain the status quo and prohibiting it or any of its agents from disrupting,
cutting, severing or disconnecting the electric power supplied to the plaintiffs sound
system.
Upon receipt of the complaint, the respondent Judge issued a Temporary Restraining
Order enjoining the parties to maintain the status quo, and restraining the LRTA from
disrupting, cutting, severing or disconnecting the electric power supplied to LALs
sound system installed in all the LRT stations and vehicles. The TRO was to expire on
April 20, 1997.
On April 16, 1997, after notice and hearing, the respondent judge issued an Order,
the dispositive portion of which is as follows:
10 | P a g e
WHEREFORE, with all the foregoing considerations, and subject to the condition of
plaintiff posting a bond in the amount of Five Hundred Thousand Pesos
(P500,000.00), Philippine Currency, conditioned to answer for any damage which the
defendant may suffer by reason of the injunction herein granted, let therefore, a Writ
of Preliminary Injunction be issued in favor of the plaintiff against the defendant who
is enjoined from:
(a) Terminating or declaring as terminated the Agreement dated March 19, 1990 as
amended on August 6, 1993 and to observe the status quo before March 31, 1997;
and,
(b) As a consequence thereof, to desist from removing, disrupting, interfering,
disconnecting or tampering the power supply leading to plaintiffs sound system, in
all places, sites and locations within the defendants area of responsibility for the
duration of this proceedings, UNLESS THIS ORDER IS EARLIER RECALLED by this
Court.
SO ORDERED. (p. 57, Rollo)
On April 22, 1997, LRTA filed a Manifestation alleging that the failure of LAL to post
a bond has rendered the Order dated April 16, 1997 ineffective. On the same day,
LRTA unplugged the electrical connection of the sound system.
However, on April 25, 1997, LAL filed an injunction bond in the amount of
P500,000.00, and the writ of preliminary injunction was issued by the respondent
judge. The same was served on LRTA on the same day.
On April 25, 1997, LAL filed a Motion to Cite the Defendant in Contempt, alleging that
on April 22, 1997, in defiance of the courts Order of March 31, 1997 (sic), the
defendant disconnected and cut off the power supply to its sound system thereby
disrupting and disturbing the regular programs and advertisements aired therein.
The motion was set for hearing on April 29, 1997.
On April 28, 1997, LRTA filed a motion for postponement which was granted and the
hearing was reset to May 15, 1997. However, the respondent judge issued an order
dated April 29, 1997, the dispositive portion of which is as follows:
WHEREFORE, pending resolution of plaintiffs Motion To Cite Defendant In Contempt
which is calendared anew on May 15, 1997 at 8:30 A.M., defendant Light Rail Transit
Authority as well as its counsel are hereby ORDERED to comply with the Order of
this Court dated April 16, 1997 to cause the complete restoration of the sound system
to its original status/condition immediately upon receipt hereof. Let this Order be
served for prompt implementation by the Sheriff of this Court who is directed to
submit his report/return on the action taken in this regard.
so ordered. (p. 32, Rollo)
On April 30, 1997, the LRTA filed a motion for reconsideration of the said order.
On May 5, 1997, LAL filed another motion to cite Evangeline M. Razon, Geronima P.
Anastacio and Atty. Moises S. Tolentino, [Jr.] for civil contempt, for refusing to comply
with the order of the court dated April 29, 1997. The motion was requested to be
submitted for[to] the court for proper decision immediately upon receipt hereof.
On May 7, 1997, LRTA filed an opposition to the two motions to cite in contempt.
On May 13, 1997, the respondent judge issued the herein assailed order the
dispositive portion of which is as follows:
WHEREFORE, this Court finds the defendants guilty of indirect contempt for defying
the Orders of April 16 and 29, 1997 and the Writ of Preliminary Injunction issued in
this case. Since the act committed can still be corrected or capable of being undone
by the officers of the defendant corporation and/or its agents/operators themselves,
let therefore a Warrant of Arrest be issued against the following persons, namely:
1) Evangeline M. Razon, Officer-in-charge, LRTA;
2) Geronima P. Anastacio, Head of LRTA, Legal Department; and,
3) Moises S. Tolentino, [Jr.], General Manager, Metro Transit Organization, Operators
of the LRT system.
for their apprehension and incarceration/imprisonment until such time when they
have performed or cause to be performed the act complained of in this case, by
reconnecting, replugging or reactivating plaintiffs sound system at all LRT facilities
and restoring them in the same state and condition as it was on April 16, 1997.
SO ORDERED. (p. 25, Rollo)
Accordingly, warrants of arrest were issued against the persons named in the order.
Motions to quash warrants of arrest were filed by LRTA, Evangeline M. Razon, [and]
Geronima P. Anastacio. At the same time, the LRTA filed a motion for the respondent
judge to inhibit himself from further hearing the case. [3]
11 | P a g e
Atty. Moises S. Tolentino, Jr., General Manager of Metro Transit Organization
(operators of the LRT system), then filed a special civil action for certiorari and
prohibition (CA-G.R. SP No. 44227) on May 21, 1997, assailing the trial courts order
dated May 13, 1997, finding him, Evangeline M. Razon, and Geronima P. Anastacio,
guilty of indirect contempt and ordering the issuance of warrants of arrest against
them. Atty. Tolentino contended that the trial court issued the orders in disregard of
substantive and procedural due process.[4]
Petitioner LRTA, meanwhile, filed a special civil action for certiorari (CA-G.R. SP No.
44220) on May 28, 1997, seeking the annulment of the following orders issued by the
trial court: (1) Order dated April 29, 1997, ordering petitioner to comply with the trial
courts Order dated April 16, 1997; and (2) Order dated May 13, 1997, denying
petitioners motion for reconsideration and finding Atty. Tolentino, Razon, and
Anastacio, guilty of indirect contempt and ordering the issuance of warrants of arrest
against them.
CA-G.R. SP Nos. 44220 and 44227 were thereafter consolidated as both involved
related issues.[5]
On February 26, 1999, the CA rendered its decision in the above-mentioned cases,
the decretal portion of which reads:
WHEREFORE, the petitions filed in these cases are hereby GIVEN DUE COURSE, and
judgment is hereby rendered ANNULLING AND SETTING ASIDE the Order dated May
13, 1997 and the warrants of arrest in connection therewith, issued by the respondent
judge in Civil Case No. 97-0423.
SO ORDERED.[6]
While the CA annulled the Order dated May 13, 1997 and the warrants of arrest
issued by the trial court in Civil Case No. 97-0423, it nevertheless ruled that the writ
of preliminary injunction issued by the trial court per Order dated April 16, 1997, as
well as the Order dated April 29, 1997, is valid and binding.[7]
Respondent then filed with the trial court a Motion to Enforce the Order dated April
16, 1997. Petitioner, on the other hand, filed a Manifestation asking that the
resolution of respondents motion be suspended on the ground that there appears to
be an inconsistency with the body and the dispositive portion of the CAs decision.[8]
Notwithstanding petitioners manifestation, the trial court issued an order dated April
7, 1999, granting respondents motion and ordering petitioner to immediately restore
the power supply to respondents sound system within 24 hours.[9] Petitioner filed a
motion for reconsideration but the trial court denied it in another (second) order dated
April 7, 1999.
On April 22, 1999, the trial court issued an order amending the second order dated
April 7, 1999, to be dated April 20, 1999.[10]
Thus, petitioner filed on April 22, 1999, another special civil action for certiorari (CA-
G.R. SP No. 52382) with the CA, contesting the trial courts orders dated April 7, 1999
and April 20, 1999 (previously dated April 7, 1999).
Petitioner alleged that the assailed orders were issued with grave abuse of discretion,
as these are not in accordance with the CAs decision dated February 26, 1999.[11]
In the meantime, petitioner, on April 14, 1999, filed in CA-G.R. SP Nos. 44220 and
44227 a Motion for Clarification of Decision,[12] but it was denied by the CA per
Resolution dated May 21, 1999.[13] Petitioner sought reconsideration but it was also
denied per Resolution dated July 9, 1999,[14] prompting petitioner to institute on
July 29, 1999, a petition for certiorari with this Court, docketed as G.R. Nos. 139275-
76.
The CA then promulgated its decision in CA-G.R. SP No. 52382 on November 12,
1999, dismissing the petition and affirming the assailed orders dated April 7, 1999
and April 20, 1999. Petitioner elevated the dismissal to this Court via petition for
review filed on December 20, 1999, docketed as G.R. No. 140949.
On February 21, 2000, the Court ordered the consolidation of G.R. Nos. 139275-76
and G.R. No. 140949.[15]
In G.R. Nos. 139275-76, petitioner raises the following issues:
I
IF THE BODY OF THE DECISION IN THE SAID CONSOLIDATED CASES IS IN
CONFLICT WHICH HAS BECOME FINAL CONFLICTS WITH THE DISPOSITIVE
PORTION THEREOF, WHICH OF THEM SHALL PREVAIL?
II
CAN THE LIFETIME OF AN EXPIRED CONTRACT BE EXTENDED BY A PRELIMINARY
INJUNCTION?[16]
In G.R. No. 140949, the following:
12 | P a g e
1. CAN A BODY OF THE DECISION [WHICH DOES NOT HAVE ANY SUPPORT IN OR
CONTRARY TO THE DISPOSITIVE PORTION THEREOF] BE ENFORCED OR
EXECUTED?
2. WHETHER OR NOT THE ORDER OF THE TRIAL COURT A QUO DATED APRIL 7,
1999 AND THE OTHER ONE ALSO DATED APRIL 7, 1999 [WHICH WAS LATER
AMENDED BY THE TRIAL COURT A QUO TO BE DATED APRIL 20, 1999 IN AN
ORDER DATED APRIL 22, 1999] ENFORCING THE BODY OF THE DECISION OF THE
HONORABLE COURT OF APPEALS DATED FEBRUARY 26, 1999 IN CA-G.R. SP NO.
44220 AND CA-G.R. SP NO. 44227 ARE NULL AND VOID.[17]
Petitioners argument rests mainly on its adamant belief that the discussion of the CA
in the body of its Decision dated February 26, 1999, rendered in CA-G.R. SP Nos.
44220 and 44227, is inconsistent with its fallo, which nullified and set aside the trial
courts order dated May 13, 1997. According to petitioner, since the May 13, 1997
order is premised on the April 16, 1997 (granting the issuance of the writ of
preliminary injunction) and April 29, 1997 (enforcing compliance with the injunctive
writ) orders, therefore, these orders are likewise invalid, and respondent cannot seek
its enforcement.
The Court, however, has carefully read the assailed decision and cannot find anything
inconsistent with the body and fallo. Even a student of law can understand its import.
It has been said that, to understand the dispositive portion of a decision, one has only
to ascertain the issues of the action.[18]
CA-G.R. SP Nos. 44220 and 44227 involved three issues. First is whether or not an
injunction order, as embodied in the April 16, 1997 order, is effective prior to the
posting of an injunction bond and the issuance of the injunctive writ;[19] second,
whether or not the Order of April 29, 1997 is valid and binding;[20] and the third is
whether or not the petitioners were validly held guilty of contempt of court per Order
dated May 13, 1997.[21]
On the first issue, the CA categorically ruled that the April 16, 1997 order is binding
even without the filing of the injunction bond.[22] On the second issue, the CA
likewise ruled that the April 29, 1997 Order is valid and binding.[23] It was on the
third issue that the CA found grave abuse of discretion committed by the trial court,
and the Order dated May 13, 1997 was consequently rendered null and void. The CA
is clear on this score. It held, viz.:
The Motion to Cite Defendant in Contempt, dated April 23, 1997 (Annex G, Petition,
SP No. 44227) does not name them as respondents. It prays only that the defendant
(LRTA) and its officers and employees who are responsible for the act complained of
be held in contempt. It is only in the Motion to Cite Defendants for Civil Contempt
Under Rule 71, Section 7 of the Revised Rules of Court dated May 5, 1997 (sic) that
Evangeline M. Razon, Geronima P. Atanacio, and Moises S. Tolentino, [Jr.] are
mentioned as responsible on the continuing defiance of the Orders of the Honorable
Court. But the said motion was fatally defective in that it did not contain a proper
notice of hearing, as required by Sec. 4, Rule 15 of the Revised Rules of Court. It only
contains the request to the Branch Clerk of Court that the said motion be submitted
to the court immediately upon receipt hereof.
Worst of all, the respondent judge issued his disputed order , two (2) days before the
date that he himself fixed for the hearing of the motion to cite the defendant in
contempt. Clearly, the said persons were denied their day in court.
Moreover, we have reviewed the transcript of the ex parte hearing conducted by the
respondent judge on April 29, 1997 (on the motion to cite defendant in contempt
dated April 23, 1997), and we find that the evidence presented against the
abovenamed persons (who are now facing warrants of arrest) were basically hearsay
testimony. The respondent judge acted with grave abuse of discretion in issuing his
disputed order, and its corresponding warrants of arrest, without a hearing, and on
the basis of flimsy evidence.[24] (Emphasis Ours)
It is plain to see that only the May 13, 1997 order was nullified by the CA. The April
16 and 29, 1997 orders remain valid and binding. Petitioners argument that these
two orders should likewise have been nullified because the May 13, 1997 order is
based thereon, is misplaced. The nullity of the May 13, 1997 order was not based on
these 2 orders, but on grounds of lack of due process and evidence. These grounds
inevitably led to the dispositive portion of the CAs decision. It must be stressed that
it is the dispositive part of the judgment that actually settles and declares the rights
and obligations of the parties, finally, definitively, and authoritatively,
notwithstanding the existence of inconsistent statements in the body that may tend
to confuse.[25]
If there was any error committed by the CA, it was in failing to state in the dispositive
portion of the decision that the petition was only partially granted. But this does not
affect the decision, as its import can be grasped notwithstanding the lapse.
Consequently, the Decision dated February 26, 1999 in CA-G.R. SP Nos. 44220 and
44227 nullifying the Order dated May 13, 1997 is a valid decision.
Nevertheless, the Court agrees with petitioner that the trial court committed grave
abuse of discretion in issuing the injunctive writ.
Section 3 of Rule 58 of the Rules of Court provides for the grounds justifying the
issuance of a preliminary injunction, to wit:
13 | P a g e
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 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.
The purpose of a preliminary injunction is to prevent threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly
studied and adjudicated. To be entitled to an injunctive writ, the petitioner has the
burden to establish the following requisites:[26]
(1) a right in esse or a clear and unmistakable right to be protected;
(2) a violation of that right;
(3) that there is an urgent and permanent act and urgent necessity for the writ to
prevent serious damage.
In the present case, respondents entitlement to the injunctive writ is found on its
prima facie legal right to remain in the premises and continue broadcasting
commercial advertisements within the LRT stations. The only way to determine this
is to look into the terms of the contract between petitioner and respondent, as it
provides for their respective rights and obligations. It is fundamental that if the terms
of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. No amount of extrinsic
aids are required and no further extraneous sources are necessary in order to
ascertain the parties intent [27]
The Agreement contains the following stipulations, inter alia:
Whereas, for purposes of adjusting the five-year period corresponding to the annual
minimum guaranteed amount disrupted by the start-up ninety-day period and the
six-month moratorium period effective September 1, 1990, to end March 1, 1991, the
parties have agreed to formally amend the Agreement to reflect the changes thereon;
1. Article I (a) of the Agreement is hereby amended to read as follows:
(a.) This Agreement shall be effective for five (5) years to commence on April 1, 1992
until March 31, 1997, unless sooner terminated as provided hereunder.[28]
The contract explicitly states that it was due to expire on March 31, 1997, the same
day respondent filed its action for reformation of contract. When the trial court issued
its Order dated April 16, 1997, ordering petitioner to refrain from terminating the
contract and to retain respondents services until further orders from the court, the
contract had already expired. Respondent, therefore, has no clear and unmistakable
right to be protected by the issuance of the writ. This is but a consequence of their
stipulation of a determinate period for its expiration.[29] The injunction, in effect,
virtually extended the original period agreed upon.
It was the trial courts belief that to allow the contract to expire would render
respondents action for reformation of contract moot and academic.[30] Needless to
say, a contract can be renewed, revived or extended only by mutual consent of the
parties. No court can compel a party to agree to a contract through the
instrumentality of a writ of preliminary injunction.[31] Also, the possibility of
irreparable damage without proof of actual existing right is not a ground for an
injunction.[32]
WHEREFORE, the petitions in G.R. Nos. 139275-76 and 140949, are hereby
GRANTED. The Decision dated February 26, 1999, in CA-G.R. SP Nos. 44220 and
44227, and the Decision dated November 12, 1999, in CA-G.R. SP No. 52382,
rendered by the Court of Appeals are hereby SET ASIDE. Consequently, the Orders
dated April 16 and 29, 1997, issued by the Regional Trial Court of Pasay City (Branch
111) in Civil Case No. 97-0423, and all other orders appurtenant thereto, are
NULLIFIED.
The trial court is ORDERED to proceed with Civil Case No. 97-0423 with immediate
dispatch.
SO ORDERED
14 | P a g e
Bacolod City Water District vs. Labayen
446 SCRA 110, December 10, 2004
First, the chronology of facts. Petitioner Bacolod City Water District (BACIWA) is a
water district established pursuant to Presidential Decree No. 198 as a government-
owned and controlled corporation with original charter. It is in the business of
providing safe and potable water to Bacolod City.
Public respondent City of Bacolod is a municipal corporation created by
Commonwealth Act No. 326, otherwise known as the Charter of Bacolod.
On March 26, 1999, respondent City filed a case for Injunction With a Prayer for
Temporary Restraining Order And/Or Preliminary Mandatory Injunction against
petitioner in the sala of public respondent judge. The petition stated that on January
15, 1999, BACIWA published in the Visayan Daily Star,[1] a local paper of general
circulation, a Schedule of Automatic Water Rates Adjustments for the years 1999,
2000 and 2001. The rates were supposed to take effect seven (7) days after its posting
in the local papers or on January 22, 1999. The increase was aborted after petitioner
unilaterally suspended the January 22, 1999 scheduled implementation. On March
15, 1999, however, petitioner announced that the rate hike will be implemented on
April 1, 1999. [2]
Respondent City opposed. It alleged that the proposed water rates would violate due
process as they were to be imposed without the public hearing required under Letter
of Instructions No. 700[3] and Presidential Decree No. 1479.[4] Hence, it prayed that
before the hearing of the main case, a temporary restraining order or a preliminary
injunction be issued.[5]
On March 30, 1999, the court a quo issued an Order[6] summoning the parties with
their counsels to attend the preliminary hearing for the issuance of a temporary
restraining order or preliminary mandatory injunction. On April 8, 1999, it required
the parties to simultaneously submit their respective memoranda on whether it had
jurisdiction over the case and whether a public hearing was conducted re the
proposed increase in water rates.[7]
Petitioner filed its Position Paper dated April 15, 1999. It attached documents
evidencing the conduct of extensive and lengthy public hearings in fifty-eight (58) of
the sixty-one (61) barangays of Bacolod City. It opined that original jurisdiction over
cases on rate review is vested in the Local Water Utilities Administration (LWUA);
appellate jurisdiction is vested in the National Water Resources [Board] (NWRB) whose
decisions shall be appealable to the Office of the President.[8]
On May 5, 1999, petitioner also filed a Motion to Dismiss. In an Order[9] dated May
7, 1999, the court directed respondent City to file its Opposition to petitioners Motion
to Dismiss within fifteen (15) days.
On June 17, 1999, respondent City filed a Motion to Set [for] Hearing[10] its
application for a temporary restraining order or preliminary mandatory injunction. It
alleged that the parties had already submitted their respective memoranda and it has
already submitted its Opposition to petitioners Motion to Dismiss. It also alleged that
petitioner had already effected the water rates increase and collection, hence, causing
irreparable injury to the public.
Petitioner opposed the Motion. On July 20, 1999, respondent City filed its Reply to
Opposition and reiterated that the application for the issuance of a temporary
restraining order or preliminary mandatory injunction be heard since petitioner
continued to violate the right of the public to due process and it might take time before
the case would be finally resolved.[11] On the same date, petitioner filed a
Manifestation and Motion[12] stating that the hearing may no longer be necessary as
the respective positions of both parties have already been presented and amplified in
their pleadings and memoranda.
On July 22, 1999, respondent trial court issued an Order[13] stating that there was
no more need to hear the case on the merits[14] as both parties have already
submitted their position papers and documents to prove their respective allegations.
On July 23, 1999, petitioner filed its Reply[15] to respondent Citys Opposition to the
Motion to Dismiss reiterating that petitioner failed to exhaust administrative remedies
provided by law hence the petition be dismissed for utter lack of merit.
After a hiatus of nearly seven (7) months, or on February 18, 2000, respondent City
filed an Urgent Motion for the Issuance of Temporary Restraining Order And[/]Or Writ
of Preliminary Injunction[16] praying that the case be set for hearing on February 24,
2000. On the same date requested, respondent court heard respondents application
for temporary restraining order and issued an Order[17] commanding petitioner to
stop, desist and refrain from implementing the proposed water rates for the year 2000
which were then supposed to take effect on March 1, 2000.
On March 7, 2000, petitioner filed an Urgent Motion for Reconsideration and
Dissolution of the Temporary Restraining Order.[18] Respondent court a quo issued
on March 10, 2000 an Order[19] directing respondent City to file an Opposition to the
Urgent Motion. In its Opposition, respondent City[20] contended that the temporary
restraining order issued was not infirmed with procedural and substantive defects. It
also averred that respondent court has jurisdiction over the case since the sole
question of the lack of public hearing does not require the special knowledge or
15 | P a g e
expertise of an administrative agency and may be resolved by respondent court, hence
the doctrine of primary jurisdiction does not apply.
Respondent court continued with the proceedings by receiving the evidence of
petitioner in support of its Motion for Reconsideration and Dissolution of Temporary
Restraining Order. It further issued Orders dated March 17, 2000[21] and March 20,
2000.[22]
On April 6, 2000, respondent court issued an Order[23] finding petitioners Urgent
Motion for Reconsideration and Dissolution of Temporary Restraining Order moot and
academic considering petitioners compliance of said temporary restraining order.
Four (4) days after, in an Order[24] dated April 10, 2000, it denied petitioners Motion
to Dismiss for lack of merit.
On April 19, 2000, respondent City filed a Manifestation praying that respondent trial
court issue a writ of preliminary injunction against petitioner, stating thus:
A Temporary Restraining Order was issued against the respondents which, however,
expired before the parties were able to finish the presentation of their respective
witnesses and evidences;
The instant case was submitted for resolution and decision of this Honorable Court
during the last week of March but while awaiting the decision of this Honorable Court,
several complaints had reached the petitioner that the respondents had already
reflected in the water billings for the month of April the new water rates for the year
2000;
x x x [25]
Petitioner, for its part, filed a Motion for Reconsideration[26] of respondent trial courts
Order denying its Motion to Dismiss. Respondent City filed an Opposition to [the]
Motion for Reconsideration[27] on June 1, 2000.
Respondent court did not act upon petitioners Motion for Reconsideration until
respondent City filed an [Ex Parte] Motion for Speedy Resolution[28] of the case on
October 6, 2000 praying that the case be resolved before the year 2000 ends in order
to prevent the implementation of the water rates increase for the year 2001 which was
to be imposed allegedly without the benefit of a public hearing.
On December 21, 2000, respondent court issued the assailed Decision[29] granting
the final injunction which allegedly confirmed the previous preliminary injunction.
Petitioner filed its Motion for Reconsideration[30] of the assailed Decision on January
11, 2001 asserting, among others, that the case was not yet ripe for decision when
the court granted the final injunction, the petitioner having had no opportunity to file
its answer, avail of the mandatory pre-trial conference and have the case tried on the
merits.
Respondent court denied the Motion for Reconsideration for lack of merit in an
Order[31] dated January 24, 2001. Petitioner then filed a special civil action for
certiorari under Rule 65 in the Court of Appeals. It alleged that public respondent
judge acted without or in excess of jurisdiction and/or with grave and patent abuse
of discretion amounting to lack or excess of jurisdiction when she issued the final
injunction in disregard of petitioners basic right to due process.[32]
The Court of Appeals dismissed the petition for review on certiorari, ratiocinating
thus:
In the case at bar, the [O]rder of public respondent dated 24 February 2000, though
termed by BACIWA as a temporary restraining order, is in fact a preliminary
injunction. The period of the restraint was not limited. By its wordings, it can be safely
inferred that the increased water rates must not be effected until final disposition of
the main case. This note of semi-permanence simply cannot issue from a mere
temporary restraining order. It must be further noted that the temporary restraining
order has been elevated to the same level as the preliminary injunction in the
procedure, grounds and requirements of its obtention by S[ection] 4, Rule 58. Thus,
to set [a] distinction, the present practice is to categorically refer to it as a temporary
restraining order. In which case, the omission by the public respondent in referring
to the 24 February 2000 order as a temporary restraining order could not have been
a mere oversight but deliberate.[33]
Resorting to this Court, petitioner raises the following issues:
I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED AND REFUSED TO
RULE THAT RESPONDENT COURT HAD ACTED WITHOUT OR IN EXCESS OF
JURISDICTION AND/OR WITH GRAVE ABUSE OF DISCRETION FOR ARBITRARILY
AND CAPRICIOUSLY RENDERING A DECISION PURPORTING TO ISSUE A FINAL
INJUNCTION AND CONFIRMING ITS ALLEGED PRELIMINARY INJUNCTION,
DESPITE THE FACT THAT:
A. NO PRELIMINARY INJUNCTION HAD BEEN ISSUED;
16 | P a g e
B. THE RESPONDENT LOWER COURT DID NOT RESOLVE HEREIN PETITIONERS
MOTION FOR RECONSIDERATION OF THE ORDER DENYING PETITIONERS
MOTION TO DISMISS;
C. THE HEREIN PETITIONER HAD NOT YET FILED ITS ANSWER TO THE PETITION;
D. THERE WAS STILL NO JOINDER OF THE ISSUES SINCE NO ANSWER HAD YET
BEEN FILED;
E. THE MANDATORY PRE-TRIAL CONFERENCE WAS NOT YET CONDUCTED;
F. THERE WAS NO TRIAL ON THE MERITS FOR THE MAIN CASE.
II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT INSISTED THAT THE 24
FEBRUARY 2000 ORDER (ANNEX R) ISSUED BY THE TRIAL COURT WAS A
PRELIMINARY INJUNCTION WHEN THE RECORDS CLEARLY AND INDUBITABLY
SHOW THAT IT WAS A TEMPORARY RESTRAINING ORDER (TRO).
III
BY DISMISSING THE PETITION FOR CERTIORARI, THE COURT OF APPEALS
GRAVELY ERRED WHEN IT EFFECTIVELY PREVENTED PETITIONER FROM FULLY
VENTILATING ITS CASE IN THE MAIN ACTION DUE TO THE IRREGULAR AND
CONFUSED PROCEEDINGS CONDUCTED BY THE RESPONDENT COURT.[34]
We rule in favor of petitioner.
The initial issue is the proper characterization of the Order dated February 24, 2000.
The sequence of events and the proceedings that transpired in the trial court make a
clear conclusion that the Order issued was a temporary restraining order and not a
preliminary injunction.
First. We quote the pertinent parts of the questioned Order:
xxx
When this motion was called for hearing wherein both parties have argued
exhaustedly their respective sides, this court denied the ten (10) days extension for
further amplification of the arguments of the respondent to oppose the said motion
for issuance of a temporary restraining order.
It appearing therefore, that the acts of the defendant will actually affect the plaintiff
before the decision of this court can be rendered and in order to afford the court to
pass on the issues without the same becoming moot and academic and considering
the urgency of the matter that immediate action should be taken, and pursuant to
Administrative Circular No. 6, Paragraph 4 and sub-paragraph 15 and The Interim
Rules and Guidelines [set forth] by the Rules of Court, this court hereby orders the
respondent[,] its agents, representatives or any person acting in his behalf to stop,
desist and refrain from implementing in their billings the new water rate increase
which will start on March 1, 2000. The Deputy Provincial Sheriff of this court is hereby
ordered to furnish copy of this order to the respondent Bacolod City Water District as
well as to its agents or representatives acting [o]n his behalf.
x x x [35] (emphases supplied)
It can be gleaned from the afore-quoted Order that what the trial court issued was a
temporary restraining order and not a preliminary injunction. The trial court has
always referred to it as a temporary restraining order in the succeeding Orders it
issued on March 10, 2000[36] and April 6, 2000.[37]
The parties, in their succeeding pleadings,[38] also referred to the assailed Order as
a temporary restraining order. The petitioner filed an Urgent Motion for
Reconsideration and Dissolution of Temporary Restraining Order (TRO)[39] on March
1, 2000. This was opposed by respondent City itself in its Opposition to Motion for
Reconsideration and Dissolution of Temporary Restraining Order (TRO)[40] dated
March 14, 2000. Further, respondent City, in its Manifestation dated April 19, 2000
stated, viz:
xxx
A Temporary Restraining Order was issued against the respondents which, however,
expired before the parties were able to finish the presentation of their respective
witnesses and evidences;
xxx
WHEREFORE, it is most respectfully prayed that while waiting for the decision and
order of the Honorable Court, a preliminary injunction as prayed for in the petition
be issued against the respondents.
x x x[41] (emphases supplied)
17 | P a g e
It can be gleaned from the foregoing that both parties and respondent trial court have
consistently referred to the directive as a temporary restraining order. It was only in
the respondent courts assailed Decision that the Order was referred to as a
preliminary injunction, viz:
xxx
This Court therefore grants the final injunction prayed for restraining the respondent
from the commission of the act complained of for the year 2001 and hereby confirming
the preliminary injunction previously ordered.
x x x [42] (emphasis supplied)
Again, it was only when petitioner expressed its vehement objection on the ruling that
the final injunction confirmed the preliminary injunction previously issued, when the
respondent City and the respondent trial court started to insist that the questioned
Order was a preliminary injunction. Given the previous undeviating references to it
as a temporary restraining order, respondents cannot now consider it as a preliminary
injunction to justify the validity of the assailed Decision. The attendant facts and
circumstances clearly show that the respondent trial court issued a temporary
restraining order.
Second. Injunction is a judicial writ, process or proceeding whereby a party is ordered
to do or refrain from doing a certain act. It may be the main action or merely a
provisional remedy for and as an incident in the main action.[43]
The main action for injunction is distinct from the provisional or ancillary remedy of
preliminary injunction which cannot exist except only as part or an incident of an
independent action or proceeding. As a matter of course, in an action for injunction,
the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory,
may issue. Under the law, the main action for injunction seeks a judgment embodying
a final injunction which is distinct from, and should not be confused with, the
provisional remedy of preliminary injunction, the sole object of which is to preserve
the status quo until the merits can be heard.[44] A preliminary injunction is granted
at any stage of an action or proceeding prior to the judgment or final order. It persists
until it is dissolved or until the termination of the action without the court issuing a
final injunction.[45]
A restraining order, on the other hand, is issued to preserve the status quo until the
hearing of the application for preliminary injunction which cannot be issued ex parte.
Under Rule 58[46] of the Rules of Court, a judge may issue a temporary restraining
order with a limited life of twenty (20) days from date of issue. If before the expiration
of the twenty (20)-day period the application for preliminary injunction is denied, the
temporary restraining order would be deemed automatically vacated. If no action is
taken by the judge on the application for preliminary injunction within the said twenty
(20) days, the temporary restraining order would automatically expire on the 20th day
by the sheer force of law, no judicial declaration to that effect being necessary.[47]
Hence, in the case at bar, since no preliminary injunction was issued, the temporary
restraining order granted automatically expired after twenty (20) days under the
Rules. The fact that respondent court merely ordered the respondent[,] its agents,
representatives or any person acting in his behalf to stop, desist and refrain from
implementing in their billings the new water rate increase which will start on March
1, 2000[48] without stating the period for the restraint does not convert the temporary
restraining order to a preliminary injunction.
The rule against the non-extendibility of the twenty (20)-day limited period of
effectivity of a temporary restraining order is absolute if issued by a regional trial
court. The failure of respondent court to fix a period for the ordered restraint did not
lend the temporary restraining order a breath of semi-permanence which can only be
characteristic of a preliminary injunction. The twenty (20)-day period provided by the
Rules of Court should be deemed incorporated in the Order where there is an omission
to do so. It is because of this rule on non-extendibility that respondent City was
prompted to move that hearings be set for its application of a preliminary injunction.
Respondent City cannot take advantage of this omission by respondent trial court.
Third. Even if we assume that the issued Order was a preliminary injunction,
petitioner is correct in contending that the assailed Decision is premature.
The records reveal that respondent court did not resolve petitioners Motion for
Reconsideration of the Order denying its Motion to Dismiss before it issued the
assailed Decision. Consequently, there was no answer filed by petitioner, no joinder
of issues, no mandatory pre-trial conference, and no trial on the merits, yet, a
Decision was handed down by the respondent trial court.
The short circuiting of the procedural process denied the petitioner due process of
law. It was not able to allege its defenses in an answer and prove them in a hearing.
The convoluted procedure allowed by the respondent trial court and the pleadings
filed by the parties which are not models of clarity certainly created confusion. But
this confusion should not be seized as a reason to deny a party the constitutional
right to due process. Over and above every desideratum in litigation is fairness. All
doubts should be resolved in favor of fairness.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the
Court of Appeals dated November 27, 2002 and February 28, 2003, respectively, are
18 | P a g e
REVERSED and SET ASIDE. The case is remanded to the court a quo for further
proceedings.
SO ORDERED.
Roman Catholic Archbishop of San Fernando Pampanga vs. Soriano, et al.
G.R. No.153829 and G.R. No. 160909, August 17, 2011
Before this Court are two petitions for resolution: the first, a Petition for Review on
Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, filed by
the Roman Catholic Archbishop (RCA) of San Fernando, Pampanga, assailing the
March 18, 2002 Decision[2] and the May 30, 2002 Resolution[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 66974; and the second, a Petition for Injunction under
Rule 58, filed by Benjamin Guinto, Jr. (Guinto), seeking to enjoin the implementation
of the Writ of Execution[4] dated October 14, 2003, issued by the Municipal Circuit
Trial Court (MCTC) of Macabebe-Masantol, Pampanga in Civil Case No. 2000(23).
The facts follow:
The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B. Aniceto,
D.D., claimed that it is the owner of a vast tract of land located near the Catholic
Church at Poblacion, Macabebe, Pampanga and covered by Original Certificate of Title
(OCT) No. 17629 issued by the Registry of Deeds of San Fernando on February 21,
1929.[5] The RCA alleged that several individuals unlawfully occupied the subject
land and refused to vacate despite repeated demands. Having no other recourse, the
RCA filed an ejectment case, docketed as Civil Case No. 2000(23), before the MCTC of
Macabebe-Masantol, Pampanga against the alleged intruders, namely, Leocadio and
Rufina Reyes, Jose Balagtas, Marcial and Victoria Balagtas, Levita Naluz, Dionisio
Barcoma, Felicidad Urbina, Justiniano Reyes, Lawrence Muniz, Eduardo Soriano,
Cosmer Vergara, Perlita Bustos, Brigida Navarro, Leonoda Cruz, Leonida Manansala,
Angelito Juliano, Eduardo Ibay, Edna Yalung, Reynaldo Mallari, Lily Masangcay,
Evangelina Ablaza, Crisanto Manansala, Feliza Esguerra, Gloria Manansala,
Bienvenido and Felicisima Panganiban, Ofroneo Caparas, Tino Enriquez, Elizabeth
and Benjamin Guinto, Felix Salenga, Eleno and Rosala Salenga, Luisa and Domingo
Sison, Francia Flores, Eduardo and Rosita Gutierrez, Zosima and Ener Basilio, Andy
and Loreto Bonifacio, Peter and Felicisima Villajuan.[6]
On the other hand, defendants countered that the RCA has no cause of action against
them because its title is spurious. They contended that the subject land belonged to
the State, but they have already acquired the same by acquisitive prescription as they
and their predecessors-in-interest have been in continuous possession of the land for
more than thirty (30) years.
After considering the pleadings submitted by the parties, the MCTC rendered decision
on September 28, 2001 in favor of the RCA. The trial court held that OCT No. 17629
in the name of the RCA remains valid and binding against the whole world until it is
declared void by a court of competent jurisdiction. Thus, defendants were ordered to
vacate the premises and to pay reasonable monthly rentals from August 15, 2000
until they shall have finally vacated the premises.[7]
Defendants appealed to the Regional Trial Court (RTC). However, the appeal was
dismissed because of their failure to file the appeal memorandum. When defendants
elevated the case to the CA, their petition for certiorari was not given due course for
failure to file the same within the extended period. Hence, the decision ejecting the
defendants from the premises became final.
Pursuant to Section 21,[8] Rule 70 of the 1997 Rules of Civil Procedure, as amended,
the RCA filed an Urgent Motion for Immediate Issuance of a Writ of Execution, which
the MCTC granted in an Order[9] dated February 10, 2003, as follows:
WHEREFORE, on the basis of the rules and jurisprudence aforecited, the Motion for
Execution filed by plaintiff is hereby granted. Let a writ of execution be issued in
connection with this case which is a ministerial duty of the Court.
Defendants Motion for Inhibition is denied for lack of merit.
SO ORDERED.[10]
Thereafter, the MCTC issued another Order dated October 6, 2003, the pertinent
portion of which states:
Let a writ of execution be issued to implement the Decision dated September 28, 2001.
No further defendants motion to stay execution shall be entertained.
SO ORDERED.[11]
Accordingly, a writ of execution[12] was issued commanding the sheriff or his deputies
to implement the MCTC Decision. Thus, Sheriff Edgar Joseph C. David sent the
defendants a Notice to Vacate[13] dated December 8, 2003.
Seeking to enjoin the implementation of the writ of execution and the notice to vacate,
Guinto filed the instant Petition for Injunction with Prayer for Issuance of a Temporary
Restraining Order (TRO),[14] docketed as G.R. No. 160909.
19 | P a g e
Meanwhile, during the pendency of the ejectment case at the MCTC, some of the
defendants therein, namely, Eduardo Soriano, Jr., Edna Yalun, Evangelina Ablaza,
Felicidad Y. Urbina, Felix Salenga, Reynaldo I. Mallari, Marciana B. Barcoma,
Bienvenido Panganiban, Brigida Navarro, Eufrancia T. Flores, Victoria B. Sodsod,
Eufronio Caparas, Crisanto Manansala, Lily Masangcay, Benjamin Guinto, Jr.,
Martha G. Castro and Lino Tolentino filed Civil Case No. 01-1046(M) against the RCA
for Quieting of Title and Declaration of Nullity of Title before the RTC of Macabebe,
Pampanga.[15] They claimed that they are in actual possession of the land in the
concept of owners and alleged that OCT No. 17629 in the name of RCA is spurious
and fake.
Before filing its Answer, the RCA moved to dismiss the case on grounds of
noncompliance with a condition precedent, laches, and for being a collateral attack
on its title. The RCA likewise later filed a supplement to its motion to dismiss.
In an Order[16] dated June 4, 2001, the RTC denied the motion to dismiss reasoning
that when the rules speak of noncompliance with a condition precedent, it could refer
only to the failure of a party to secure the appropriate certificate to file action under
the Local Government Code, or the failure to exert earnest efforts towards an amicable
settlement when the suit involves members of the same family. The RTC also found
that plaintiffs have a cause of action. Furthermore, the trial court held that RCAs
argument that the property cannot be acquired by prescription because it has title
over it is a matter of evidence which may be established during the trial on the merits.
Aggrieved, the RCA filed a motion for reconsideration, which the trial court denied in
an Order[17] dated July 24, 2001. Thereafter, the RCA filed with the CA a petition for
certiorari with prayer for preliminary injunction.[18]
On March 18, 2002, the CA promulgated the assailed Decision,[19] the dispositive
portion of which reads:
WHEREFORE, for lack of merit, the petition is hereby DISMISSED.
SO ORDERED.[20]
A motion for reconsideration[21] of the Decision was filed by the RCA. However, in the
Resolution[22] dated May 30, 2002, the CA denied the motion for lack of merit. Hence,
the RCA filed the present petition for review on certiorari,[23] docketed as G.R. No.
153829, assailing the Decision of the CA, as well as its Resolution denying the motion
for reconsideration.
On January 14, 2004, we resolved to consolidate G.R. Nos. 160909 and 153829.[24]
Subsequently, the Court resolved to treat the petition for injunction with prayer for
the issuance of a TRO in G.R. No. 160909 as a motion for the issuance of a TRO
and/or writ of preliminary injunction in G.R. No. 153829.[25]
The RCA raises the following issues:
(A) WHETHER OR NOT CIVIL CASE NO. 01-1046(M) FOR QUIETING OF TITLE
AND DECLARATION OF NULLITY OF TITLE IS LEGALLY DISMISSIBLE FOR
VIOLATION OF THE VARIOUS PROVISIONS OF THE RULES OF COURT;
and
(B) WHETHER OR NOT THE CIVIL ACTION (THE ABOVE MENTIONED CIVIL CASE
NO. 01-1046[M]) FILED BY PRIVATE RESPONDENTS CONSTITUTES A COLLATERAL
ATTACK ON PETITIONER'S TITLE.[26]
Essentially, the issue before us is whether the CA erred in not holding that the RTC
committed grave abuse of discretion in denying the motion to dismiss filed by the
RCA.
We affirm the ruling of the CA.
Well-entrenched in our jurisdiction is the rule that the trial courts denial of a motion
to dismiss cannot be questioned in a certiorari proceeding under Rule 65 of the 1997
Rules of Civil Procedure, as amended. This is because a certiorari writ is a remedy
designed to correct errors of jurisdiction and not errors of judgment. The appropriate
course of action of the movant in such event is to file an answer and interpose as
affirmative defenses the objections raised in the motion to dismiss. If, later, the
decision of the trial judge is adverse, the movant may then elevate on appeal the same
issues raised in the motion.[27]
The only exception to this rule is when the trial court gravely abused its discretion in
denying the motion.[28] This exception is, nevertheless, applied sparingly, and only
in instances when there is a clear showing that the trial court exercised its judicial
power in an arbitrary or despotic manner by reason of passion or personal
hostility.[29] Further, the abuse of the court's discretion must be so patent and gross
as to amount to an evasion of a positive duty or a virtual refusal to perform the duty
enjoined by, or to act at all in contemplation of, law.[30]
Here, in dismissing the petition for certiorari, the CA did not find grave abuse of
discretion on the part of the RTC. The appellate court was not convinced with the
RCAs argument that plaintiffs failed to comply with the condition precedent provided
in Article 477[31] of the Civil Code because they allegedly did not have legal or
equitable title to, or interest in the real property. The CA explained that the
20 | P a g e
requirement stated in Article 477 is not a condition precedent before one can file an
action for quieting of title. Rather, it is a requisite for an action to quiet title to prosper
and the existence or nonexistence of the requisite should be determined only after
trial on the merits. The CA also agreed with the trial court in ruling that the RCA
cannot raise in a motion to dismiss the ground that the complaint is already barred
by laches for it still remains to be established during trial how long the plaintiffs have
slept on their rights, if such be the case. Evidently, the CA is correct in finding that
the denial by the RTC of the RCAs motion to dismiss is not tainted with grave abuse
of discretion.
Next, the RCA submits that an action for quieting of title is a special civil action
covered by Rule 63, while an action for declaration of nullity of title is governed by
ordinary rules. Thus, it contends that these cases should have been dismissed for
violation of the rule on joinder of actions under Section 5, Rule 2 of the 1997 Rules of
Civil Procedure, as amended, which requires that the joinder shall not include special
civil actions governed by special rules. Such contention, however, is utterly bereft of
merit and insufficient to show that the CA erred in upholding the trial courts decision.
Section 6 of Rule 2 explicitly provides that misjoinder of causes of action is not a
ground for dismissal of an action.
The RCA likewise asserts that the case for quieting of title is a collateral attack on its
title which is prohibited by law. However, we agree with the CA in holding that the
complaint against the RCA does not amount to a collateral attack because the action
for the declaration of nullity of OCT No. 17629 is a clear and direct attack on its title.
An action is deemed an attack on a title when its objective is to nullify the title, thereby
challenging the judgment pursuant to which the title was decreed. The attack is direct
when the objective is to annul or set aside such judgment, or enjoin its enforcement.
On the other hand, the attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is nevertheless made as an incident
thereof.[32]
The complaint filed with the RTC pertinently alleged that the claim of ownership by
the RCA is spurious as its title, denominated as OCT No. 17629, is fake for the
following reasons: (1) that the erasures are very apparent and the title itself is fake;
(2) it was made to appear under Memorandum of Encumbrance Entry No. 1007 that
the title is a reconstituted title when in truth, it is not; and (3) the verification reveals
that there was no petition filed before any court where an order was issued for the
reconstitution and re-issuance of an owners duplicate copy.[33] It is thus clear from
the foregoing that the case filed questioning the genuineness of OCT No. 17629 is a
direct attack on the title of the RCA.
As regards the petition docketed as G.R. No. 160909 which this Court treated as
motion for the issuance of a TRO and/or writ of preliminary injunction, Guinto insists
that there is a need to enjoin the sheriff from enforcing the writ of execution as it
would cause grave and irreparable damage to Guinto, while the RCA would not suffer
any damage if it would later be proved that indeed its title is genuine.
We disagree.
Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, enumerates the
grounds for the issuance of preliminary injunction, viz:
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.
And as clearly explained in Ocampo v. Sison Vda. de Fernandez:[34]
To be entitled to the injunctive writ, the applicant must show that there exists a right
to be protected which is directly threatened by an act sought to be enjoined.
Furthermore, there must be a showing that the invasion of the right is material and
substantial and that there is an urgent and paramount necessity for the writ to
prevent serious damage. The applicants right must be clear and unmistakable. In the
absence of a clear legal right, the issuance of the writ constitutes grave abuse of
discretion. Where the applicants right or title is doubtful or disputed, injunction is
not proper. The possibility of irreparable damage without proof of an actual existing
right is not a ground for injunction.
A clear and positive right especially calling for judicial protection must be shown.
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 act which does not give rise to a cause of action. There must exist an actual right.
21 | P a g e
There must be a patent showing by the applicant that there exists a right to be
protected and that the acts against which the writ is to be directed are violative of
said right.
In this case, the defendants in the ejectment case possess no such legal rights that
merit the protection of the courts through the writ of preliminary injunction. The
MCTC has already rendered a decision in favor of the RCA and ordered the defendants
therein to vacate the premises. Their appeal to the RTC was dismissed and the
decision has become final. Evidently, their right to possess the property in question
has already been declared inferior or inexistent in relation to the right of the RCA in
the MCTC decision which has already become final and executory.[35]
WHEREFORE, the petition in G.R. No. 153829 is DENIED. The Decision dated March
18, 2002 and the Resolution dated May 30, 2002 of the Court of Appeals in CA-G.R.
SP No. 66974 are AFFIRMED. The motion for the issuance of a TRO and/or writ of
preliminary injunction to enjoin the sheriff from enforcing the writ of execution in
Civil Case No. 2000(23) is likewise DENIED for lack of merit.
No costs.
SO ORDERED.
Medina vs. Judge Canon
A.M. RTJ-11-298, February 22, 2012
The Case
This is an administrative complaint filed by Atty. Rene O. Medina and Atty. Clarito
Servillas (complainants) against Judge Victor A. Canoy (respondent judge), Presiding
Judge of the Regional Trial Court (RTC) of Surigao City, Branch 29, for Gross
Ignorance of the Law and Procedure, Undue Interference and Gross Inefficiency,
relative to Civil Case No. 7077 entitled "Zenia A. Pagels v. Spouses Reynaldo dela
Cruz"; Spec. Proc. No. 7101 entitled "Noel P.E.M. Schellekens v. P/S, Supt. David Y.
Ombao, et al."; and Civil Case No. 7065 entitled "Heirs of Matilde Chato Alcaraz v.
Philex-Lascogon Mining Corporation, et al."
The Facts
The undisputed facts, as culled from the records, are as follows:
In Civil Case No. 7077
On 30 June 2009, petitioner Zenia Pagels (Pagels) filed a Petition for Injunction with
prayer for issuance of Preliminary Injunction, Temporary Restraining Order (TRO),
Accounting, Damages and Attorney’s Fees against respondents Spouses Reynaldo
and Racquel dela Cruz (respondent spouses). The case was raffled to Branch 30,
where respondent judge was the acting presiding judge. After serving respondent
spouses with the Summons, copy of the Petition and Notice of hearing, respondent
judge conducted the hearing and granted the TRO on 2 July 2009. On 3 July 2009,
the TRO was implemented resulting in the transfer of possession of the duly-licensed
primary and elementary school and church from respondent spouses to Pagels. On
13 July 2009, respondent spouses filed their Answer with Affirmative Defenses and
Counterclaim. During the 14 July 2009 hearing for preliminary injunction, the parties
agreed to submit position papers. Pagels filed her position paper but respondent
spouses filed a Motion to Hear their Affirmative Defenses instead.
On 11 August 2009, respondent judge granted the preliminary injunction without
need of a bond pending the hearing of respondent spouses’ Motion to Hear Affirmative
Defenses. On 1 September 2009, respondent spouses filed a Motion for
Reconsideration, which respondent judge set for hearing on 5 October 2009.
Subsequently, respondent judge reset the hearing to 16 November 2009 and then to
12 March 2010. Upon assumption as the new presiding judge of Branch 30 sometime
in February 2010, Judge Evangeline Yuipco-Bayana issued an Order revoking the
preliminary injunction earlier issued by respondent judge.
In their Complaint dated 13 September 2010, complainants contend that respondent
judge should be charged with gross ignorance of the law and procedure: (1) for
disregarding the basic and elementary principle that TRO and preliminary injunction
are improper remedies to transfer possession of one property to another whose title
has not been clearly established; and (2) for failure to decide the Motion for
Reconsideration within a period of 30 days as required by the rules and
jurisprudence.
In Spec. Proc. No. 7101
Petitioner Noel P.E.M. Schellekens (petitioner Noel) filed a Petition for Writ of Habeas
Corpus on 19 August 2009. The next day, respondents Aris Caesar B. Servillas, P/S,
Supt. David Y. Ombao, Denelito G. Glico, Alexis E. Espojona, and Rosemarie Catelo
testified during the hearing. On 21 August 2009, which was a holiday, respondent
judge issued an Order for the release of petitioner Noel upon finding that the latter
was unlawfully arrested. The Order was implemented on the same day.
Relative to this case, complainants charge respondent judge of: (1) gross ignorance of
procedure and undue interference in the administrative functions of the Bureau of
Immigration by ordering the release of the expired passport of petitioner Noel, and by
preparing the said Order outside of the court’s premises because it was not single-
spaced and did not have a stamp by the Clerk of Court as received; and (2) violating
22 | P a g e
Canon 1 of the Code of Judicial Conduct due to his friendly greeting to petitioner Noel
and for acting as counsel for the latter by propounding questions on the respondents
during their testimonies.
In Civil Case No. 7065
On 3 August 2009, defendant Philex-Lascogon Mining Corporation filed a Motion to
Dismiss the Amended Complaint filed by plaintiffs Heirs of Alcaraz on the ground of
lack of jurisdiction. The plaintiffs Heirs of Alcaraz submitted their Opposition dated
17 August 2009 and their 2nd Amended Complaint dated 26 August 2009. However,
it was only on 20 September 2010 that respondent Judge issued an Order denying
the Motion to Dismiss. Accordingly, complainants claim that respondent judge should
be held guilty of gross inefficiency and of violating the Code of Judicial Conduct for
his undue delay in resolving a simple Motion to Dismiss.
As their final charge, complainants aver that respondent judge is guilty of tardiness
and inefficiency in trying cases before his branch. Complainants state that
respondent judge usually starts the hearing between 9:45 a.m. and 10:00 a.m. in
violation of the Supreme Court Circular.
In his Comment with Counter-Charge dated 5 November 2010, respondent judge
preliminarily states that complainant Atty. Medina is neither a counsel nor a party
litigant in Spec. Proc. No. 7101 and Civil Case No. 7065; thus, he has no interest to
question perceived irregularities relative to these cases. With respect to Atty. Servillas,
he is neither a counsel nor a party-in-interest in any of the cases mentioned in the
complaint.
Relative to Civil Case No. 7077, respondent judge claims that he issued the TRO and
preliminary injunction judiciously and without bad faith or irregularity. He argues
that he resolved cases based on the merits of the case and if there was indeed error,
it merely constitutes an error of judgment. Respondent judge further states that the
alleged error was already aptly corrected by Judge Bayana’s reversal. Regarding the
alleged delay in the resolution of the Motion for Reconsideration, respondent judge
defends himself by explaining that the Motion was not submitted for resolution.
Respondent judge argues that respondent spouses’ lawyer (complainant Atty. Medina)
failed to file a responsive pleading to the Opposition to Motion for Reconsideration
and that the hearing of the Motion was further reset to 12 March 2010.
As for Spec. Proc. No. 7101, respondent judge argues that it is already subject of an
earlier complaint filed by Cristita C. Vda. de Tolibas against him. With respect to Civil
Case No. 7065, respondent judge states that the Motion to Dismiss was already
resolved.
On the charge of tardiness and inefficiency, respondent judge attached the: (1) 21
October 2010 Joint Affidavit of Prosecutor Maureen Chua and Atty. Jose Begil, Jr.;
and (2) 21 October 2010 affidavit of Court Legal Researcher Peter John Tremedal
explaining the reasons for the delay of the hearing. In Tremedal’s Affidavit, he states
that respondent judge instructed him to convene the counsels first, and to ensure
their attendance before respondent judge starts the hearing. In conclusion,
respondent judge asserts that the malicious filing of the baseless complaint was
conduct unbecoming officers of the court for which complainants must be held
accountable.
In their Rejoinder and Answer to Counter-Charge dated 1 December 2010,
complainants reiterate their arguments in the Complaint. In the first case, they
emphasize that respondent judge deliberately failed to resolve the Motion for
Reconsideration. On the second, complainants argue that the pendency of the Tolibas
administrative complaint cannot divest the Supreme Court of its jurisdiction to review
the actions of respondent judge, more so in the light of new allegations supported by
judicial records. As for respondent Judge’s alleged tardiness and inefficiency,
complainants point out that the joint affidavit of Prosecutor Chua and Atty. Bejil, Jr.
merely pertained to one particular day. As answer to respondent judge’s Counter-
Charge, complainants denied the allegation for lack of factual and legal basis.
The OCA’s Report and Recommendation
In its Report dated 18 July 2011, the Office of the Court Administrator (OCA) found
respondent judge guilty of undue delay in rendering an order but dismissed the
charges of gross ignorance of the law and gross misconduct for being judicial in nature
and for lack of merit.
In its evaluation, the OCA preliminarily states that in administrative proceedings it is
immaterial whether or not the complainant himself or herself has a cause of action
against the respondent.
On the charge of gross ignorance of the law, the OCA held that respondent judge
committed an error of judgment for which he may not be administratively held liable
in the absence of bad faith, malice or corrupt purpose. As to the issue of undue delay
in resolving the Motion for Reconsideration, the OCA likewise held it unmeritorious
because the motion was not submitted for resolution in view of the resetting of its
hearing.
As for the charges relating to Spec. Proc. No. 7101, the OCA found that the issues
raised by complainant may be best resolved in another pending case against
respondent judge (OCA IPI No. 09-3254-TRJ) except the alleged violation of the Code
of Judicial Conduct for acting as counsel for the petitioner. The OCA also found the
23 | P a g e
charges of tardiness and inefficiency bereft of merit because Tremedal’s Affidavit
explained the reason for the late hearing.
On the other hand, the OCA held that respondent judge is guilty of undue delay in
resolving the Motion to Dismiss in violation of the 1987 Constitution. Since it was
respondent judge’s first administrative offense, the OCA considered it as a mitigating
circumstance. The OCA recommended a fine of ₱5,000 with a stern warning that a
repetition of the same or similar act shall be dealt with more severely.
This Court, in a Resolution dated 5 October 2011, re-docketed administrative
complaint OCA-IPI No. 10-3514-RTJ as regular administrative matter A.M. No. RTJ-
11-2298.
The Court’s Ruling
We are partially in accord with the OCA’s findings and recommendation.
To settle the issue on complainant’s cause of action, the OCA correctly observed that
complainants may file the present administrative complaint against respondent
judge. As the Court held in LBC Bank Vigan Branch v. Guzman,1 the objective in
administrative cases is the preservation of the integrity and competence of the
Judiciary by policing its ranks and enforcing discipline among its erring employees.
However, on the charge of gross ignorance of the law, we find respondent judge guilty
of the charge.
Well-settled is the rule that an injunction cannot be issued to transfer possession or
control of a property to another when the legal title is in dispute between the parties
and the legal title has not been clearly established.2 In this case, respondent judge
evidently disregarded this established doctrine applied in numerous cases when it
granted the preliminary injunction in favor of Pagels whose legal title is disputed.
When the law involved is simple and elementary, lack of conversance with it
constitutes gross ignorance of the law.3 Gross ignorance of the law is the disregard
of basic rules and settled jurisprudence.4
Respondent judge should have been more cautious in issuing writs of preliminary
injunctions because as consistently held these writs are strong arms of equity which
must be issued with great deliberation."5 In Fortune Life Insurance Co., Inc. v.
Luczon,6 the Court held the judge guilty of gross ignorance of the law when he failed
to conduct a hearing prior to issuance of an injunction in violation of the Rules of
Court. It was further emphasized in Zuño v. Cabredo,7 where it was held that the act
of respondent in issuing the TRO to enjoin the Bureau of Customs and its officials
from detaining the subject shipment amounted to gross ignorance of the law.
A judge may also be administratively liable if shown to have been motivated by bad
faith, fraud, dishonesty or corruption in ignoring, contradicting or failing to apply
settled law and jurisprudence.8 In the present case, the following compounded
circumstances manifest bad faith on the part of respondent judge: (1) in his Comment
with Counter-Charge, respondent judge states that he decided after the parties
submitted their position papers, but his Order dated 11 August 2009 indicates that
respondent spouses did not file their position paper and the hearing of the Affirmative
Defense was still set on 18 August 2009; (2) respondent judge’s Order patently shows
facts not entitling Pagels to the preliminary injunction but respondent judge still
issued it; and (3) respondent judge did not require petitioner Pagels to put up a bond
without sufficient justification or showing of exemption.
The error is magnified by respondent judge’s delay in resolving the Motion for
Reconsideration through the following subsequent acts: (1) he set the hearing of the
Motion for Reconsideration dated 1 September 2009 on 5 October 2009 contrary to
the rule providing that the "hearing x x x must not be later than 10 days after the
filing of the motion";9 (2) on 18 November 2009, respondent judge reset the hearing
from 16 November 2009 to 12 March 2010; and (3) he failed to resolve the said Motion
despite the non-filing of a responsive pleading to the Opposition on the Motion for
Reconsideration considering that it is not an indispensable pleading for resolution
and the rules provide that "a motion for reconsideration shall be resolved within thirty
days from the time it is submitted for resolution."10
Indeed, when the inefficiency springs from a failure to consider so basic and elemental
a rule, a law or a principle in the discharge of his functions, a judge is either too
incompetent and undeserving of the position and title he holds or he is too vicious
that the oversight or omission was deliberately done in bad faith and in grave abuse
of judicial authority.11
Relative to Spec. Proc. No 7101, respondent judge filed a Manifestation dated 2
September 2011 annexing this Court’s Resolution dated 13 June 2011 dismissing the
case against respondent judge filed by Cristita Conjurado Vda. De Tolibas. In the
Resolution, we adopted the OCA’s evaluation, to wit: (1) respondent judge validly
issued the writ of habeas corpus on a holiday, in accord with the Section 2, Rule 102
of the Rules of Court; and (2) the assailed Order was not issued to assist petitioner
Noel in evading the crime of parricide. It is because the said Resolution did not
address the issues in this Complaint that we modify the findings of the OCA and rule
upon the allegations of complainants.
On the charge of violation of Canon 1 of the Code of Judicial Conduct, we find the
same bereft of merit. A judge may properly intervene in the presentation of evidence
to expedite and prevent unnecessary waste of time and clarify obscure and incomplete
24 | P a g e
details in the course of the testimony of the witness.12 In City of Cebu v. Gako,13 the
Court finds nothing irregular when respondent judge unduly arrogated unto himself
the duty of a counsel by calling a witness to the stand and conducting the latter’s
direct testimony even if the respective counsels were not interested or did not intend
to present said person as their witness. Here, the records show that respondent judge
merely propounded questions to elicit relevant facts from the witness respondents.
The Transcript of Stenographic Notes, by itself, was not sufficient to show bias or
partiality. It has been held that the Court has to be shown acts or conduct of the
judge clearly indicative of arbitrariness or prejudice before the latter can be branded
the stigma of being biased and partial.14
On the charge of gross ignorance of procedure and undue interference in the
administrative functions of the Bureau of Immigration, complainants failed to prove
the charge with substantial evidence. In administrative proceedings, complainants
have the burden of proving by substantial evidence the allegations in their
complaints.15 Mere accusations or surmises will not suffice.In the absence of
contrary evidence, what will prevail is the presumption that the respondent judge has
regularly performed his duties.16
On the charge of tardiness and inefficiency, we find the same likewise without merit.
Without evidence as to their truthfulness or veracity, the allegations in the Complaint
filed by complainants remain mere allegations and do not rise to the dignity of proof.
On the charge of undue delay in resolving the Motion to Dismiss, we adopt the
recommendation of the OCA that respondent judge is guilty of the charge and should
be fined ₱5,000. Respondent judge resolved the said Motion after more than a year
and only after the filing of the instant complaint. Failure to decide cases and other
matters within the reglementary period of ninety (90) days constitutes gross
inefficiency and warrants the imposition of administrative sanction against the erring
magistrate.17 This is not only a blatant transgression of the Constitution but also of
the Code of Judicial Conduct, which enshrines the significant duty of magistrates to
decide cases promptly. Canon 6, Section 5 of the Code provides that "judges shall
perform all judicial duties including the delivery of reserved decisions efficiently, fairly
and with reasonable promptness. "
Under Rule 140 of the Revised Rules of Court, as amended, gross ignorance of the
law is a serious charge punishable by either: (1) dismissal from the service, forfeiture
of all or part of the benefits as the Court may determine, and disqualification from
reinstatement or appointment to any public office, including government-owned and
controlled corporation; or (2) suspension from office without salary and other benefits
for more than three but not exceeding six months; or (3) a fine of more than ₱20,000
but not exceeding ₱40,000 while undue delay in rendering a decision or order is a less
serious charge punishable by either (1) suspension from office without salary and
other benefits for not less than one nor more than three months; or (2) a fine of more
than ₱10,000 but not exceeding ₱20,000.1âwphi1
Accordingly, we impose a fine of ₱25,000 for the charge of gross ignorance of the law,
taking into account that in a previous case respondent judge had been sanctioned.18
WHEREFORE, we find respondent Judge Victor A. Canoy GUILTY of GROSS
IGNORANCE OF THE LAW and UNDUE DELAY in rendering a decision and
accordingly fine him Thirty Thousand Pesos (₱30,000). He is STERNLY WARNED that
a repetition of similar or analogous infractions in the future shall be dealt with more
severely. The other charges are hereby dismissed.
SO ORDERED.
Ortigas vs. CA
G.R. No. 79128, June 16, 1988
Challenged in this petition is the writ of preliminary mandatory injunction issued by
the respondent it Court of Appeals directing the petitioner herein to reconnect and
restore the electrical service to Gondola Unit No. 8 of private respondent at the
Greenhills Shopping Center upon the filing by the latter of an injunction bond in the
amount of P15,000. The respondent court annulled and set aside the order of the
Regional Trial Court of Pasig, Metro Manila, Branch 152, dated March 19, 1987
entitled "Dalton B. King, et al. vs. Ortigas and Company, Limited Partnership" dated
March 19, 1987, which denied plaintiffs application for preliminary mandatory
injunction.
We deal in this case only with the matter of the issuance of the writ of preliminary
mandatory injunction to compel petitioners to reconnect the electrical service to
private respondents. We are not called upon to review the merits of the case, for this
has still to be tried and decided by the court a quo.
The antecedent facts are as follows:
In a letter agreement dated October 28, 1983, Ortigas and Company, Limited
Partnership (Ortigas for brevity) through its Greenhills Shopping Center (GSC)
Manager, Manuel Lozano, Jr., leased to Wellington Syquiatco a unit in Gondola alley
(Unit No. 8) at Greenhills Shopping Center, San Juan, Metro Manila for a period of
ten (10) years at a monthly rental of P1,500.00 starting December 1, 1983 and
increasing gradually every year thereafter. The subject unit was used for the operation
of a snack counter, known as "Pied Piper."
On May 10, 1984, Wellington Syquiatco, with the approval of Ortigas, subleased the
subject unit to herein respondent spouses (King spouses for brevity) who occupied
25 | P a g e
the premises effective May 15, 1984. Later, Wellington Syquiatco, for valuable
consideration (P97,000.00) sold to King spouses his leasehold rights and obligations
over the subject Gondola/unit. This transfer of rights was approved by Ortigas on
September 18, 1984.
In August, 1985, Ortigas dismissed its GSC Manager and undertook an audit of his
performance. Ortigas dissevered that the letter-lease agreements signed by the GSC
Manager, allegedly without appropriate authority, uniformly included a clause
providing that "6. Electric and water bins shall be for our (i.e. Ortigas)
account."Ortigas also discovered later that the GSC Manager owned one Gondola unit
(Unit No. 1).
Ortigas' new manager, Jose Lim III, met with the Gondola lessees in March 1986 and
proposed to correct the inequities in the lease agreements. Individual electric meters
were to be installed in the respective units. A new contract for the Gondola units was
submitted to the lessees, which provided among others that "electric and other utility
costs' were for the lessees" account. The Kings did not sign the new lease agreement.
The electricity bin for May and June, 1986, amounted to P3,480.02 (including cost of
meter installation) and P2,456.53, respectively, which Ortigas tried to collect from the
King spouses. In a letter dated July 28, 1986, the latter protested the bill, citing
paragraph No. 6 of the letter contract of October 28, 1983 which provided that electric
and water bills were for the account of Ortigas.
The subsequent electricity bins for the months of July, August, September and
October amounted to P2,069.06, P2,097.74, P2,018.10 and P2,051.58, respectively,
which including the unpaid bills for May and June, totalled P14,174.03. When the
Kings refused to pay the big, Ortigas disconnected the electricity supply to them. As
a consequence, the Kings filed on January 16, 1987, a complaint against Ortigas with
the Regional Trial Court of Pasig, Metro Manila, Branch 152, docketed as Civil Case
No. 54202, for specific performance and damages, with prayer for the issuance of a
writ of preliminary mandatory injunction to compel restoration and reconnection of
the electric power supply to plaintiffs Gondola unit. Ortigas filed an opposition, dated
February 9, 1987, to plaintiffs' application for a writ of preliminary mandatory
injunction, alleging among others that there was a typographical error in Paragraph
No. 6 of the letter agreement, consisting of the omission of the letter "y" from the word
"our;" that taking advantage of such typographical error, the plaintiffs consumed
electricity amounting to a monthly average of P2,362.17, while paying a monthly
rental initially at Pl,500.00, thereby making Ortigas subsidize their occupancy of the
leased premises to the tune of more than P800 per month. Ortigas further alleged that
to grant the writ of preliminary mandatory injunction would allow plaintiffs to enrich
themselves unjustly at the expense of defendant.
After hearing the oral arguments of the parties and considering their pleadings the
trial court on March 19, 1987 denied plaintiff application for a writ of preliminary
mandatory injunction.
The plaintiffs filed a petition with the respondent Court of Appeals for the annulment
of the order of the court a quo dated March 19, 1987, denying their application for a
writ of preliminary mandatory injunction. As stated above, the respondent appellate
court issued its questioned decision dated June 30, 1987, annulling the order of the
court a quo and issuing itself the writ of preliminary mandatory injunction prayed for
by the Kings upon the filing of a bond of P15,000.00.
The basic issue which we have to determine is whether the court a quo committed a
grave abuse of discretion in denying plaintiffs' application for a preliminary
mandatory injunction.
We find no such grave abuse of discretion committed by the trial court which would
justify the setting aside of its order by the respondent appellate court and the issuance
by the latter of the writ of preliminary mandatory injunction.
The writ of preliminary injunction, in general, cannot be sought as a matter of right,
but its grant or refusal rests in the sound discretion of the court under the
circumstances and the facts of the particular case. The writ is the "strong arm of
equity" and therefore should not be used to sanction inequity.
The defendant in the case, the petitioner herein, was able to show that the electricity
consumed per month by the King spouses was way above the amount of the monthly
rentals which they were paying to the petitioner, thereby in effect making the latter
subsidize the business of the former in the leased premises. Such an obviously
inequitable situation by which private respondents enriched themselves at the
expense of petitioner cannot be ignored, as private respondents wanted the trial court
to do, by insisting on a strict adherence to the letter of the contract, which petitioner
questioned, alleging inter alia obvious mistake and collusion, and non-approval of the
contract by the principal of the signatory for the lessor defenses which must
eventually be considered by the court a quo in deciding the merits of the case. It is
thus not a simple case of a contracting party having made a bad bargain and who
must be made to abide by it. The trial court, considering the equities of the case,
refused to issue the preliminary mandatory injunction. We hold that in refusing to do
so the trial court did not commit a grave abuse of discretion.
In general, courts should avoid issuing a writ of preliminary injunction which in effect
disposes of the main case without trial. This is precisely the effect of the writ of
preliminary mandatory injunction issued by the respondent appellate court. Having
granted through a writ of preliminary mandatory injunction the main prayer of the
26 | P a g e
complaint, there is practically nothing left for the trial court to try except the plaintiffs'
claim for damages.
WHEREFORE, the appealed decision of the respondent Court of Appeals dated June
30, 1987 is reversed and set aside.
SO ORDERED.
Merville Park Homeowners vs. Velez
G.R. No. 82985, April 22, 1991
Petitioner Merville Park Homeowners Association, Inc. ("MPHAI"), a non-stock, non-
profit corporation, became the owner of the pipelines and waterworks system
("waterworks system") of Merville Park Subdivision in Paranaque, Metro Manila, by
virtue of a deed of donation dated 24 February 1977 executed in its favor by Merville
Development Corporation.
On 19 December 1978, MPHAI, through its then President Ernesto N. Gonzales,
entered into a contract of lease with private respondent Edgardo Salandanan covering
its waterworks system to insure efficient water service within the Merville Park
Subdivision ("Subdivision"). That lease contract required respondent Salandanan to
construct additional wells, to put into full operational condition Wells Nos. 4 and 5 as
well as to rehabilitate Wells Nos. 1, 2 and 3. The contract also allowed respondent
Salandanan to increase annually the water rates but only to the extent of ten percent
(10%) of the preceding year's rates. The water rates set out in the contract could be
charged only upon completion of Well No. 5. The lease contract was later on amended
to provide for, inter alia, a period of ten (10) years commencing from its signing on 20
July 1981. In that amended contract, the parties agreed to increase the water rates
which increase was in turn approved by the National Water Resources Council. It was
also there provided that each homeowner shall pay a deposit in the amount of P300.00
which was to be used to pay for respondent Salandanan's overdue electric bill with
Meralco, and thereafter, to be credited against the homeowner's future water bills.
Subsequently, respondent Salandanan again asked for an increase in water rates.
MPHAI was at first adamant to the point of filing a case in court against respondent
Salandanan. But sometime in 1982, MPHAI and respondent Salandanan arrived at a
compromise. In that compromise agreement, MPHAI consented to an increase in the
water rates as urged by respondent Salandanan but conditioned upon his completion
of Well No. 2 (New Madrid Well). The compromise agreement was later amended and
provided for a new water rate schedule effective 1 July 1984, but similarly conditioned
upon Salandanan's completion of Well No. 2.
On 16 July 1985, MPHAI commenced an action, Civil Case No. 11124, before Branch
136 of the Regional Trial Court (RTC) of Makati, presided over by Judge Ricardo
Francisco, against respondent Salandanan. In this suit, MPHAI sought to rescind the
amended lease contract and the amended compromise agreement, and prayed for
issuance of a writ of preliminary mandatory injunction. MPHAI alleged in its
complaint that sometime in 1984 for failure of respondent Salandanan to pay his
electric bills amounting to P1,035,000.00, Meralco had cut off the electric power
supply of his rented water pumps resulting in a severe water shortage within the
Subdivision and thereby endangering the lives and health of the residents thereof;
that aside from respondent Salandanan's failure to pay his electric bills, he had
violated his contract with petitioner by neglecting to drill and complete new wells and
undertake immediate repairs of broken water pumps; that there was an immediate
need to issue a writ of preliminary mandatory injunction in its favor to enable it to
take possession and control of the water works system.
Judge Francisco, in an order dated 23 July 1985, granted MPHAI's prayer for a writ
of preliminary mandatory injunction and directed respondent Salandanan to turn
over to MPHAI the operation and control of the waterworks system. This prompted
respondent Salandanan to file an urgent motion for reconsideration stating, among
other things, that the regular courts had no jurisdiction over the subject matter of the
case, the same being under the jurisdiction of the National Water Resources Council;
and that the case was filed prematurely considering that MPHAI had not as yet
exhausted the available administrative remedies.
After private respondent had filed an answer with counterclaim and third-party
complaint, the case was re-raffled to Branch 180 presided over by Judge Benigno M.
Puno, who in an order dated 12 August 1985, lifted the writ of preliminary mandatory
injunction. The case, however, was once more reraffled and this time it went to Branch
149 with Judge Manuel Yuzon, presiding. Judge Yuzon, upon MPHAI's motion for
reconsideration and upon its filing of a surety bond in the amount of P26,000.00,
issued an order dated 11 August 1986 reinstating the writ of preliminary mandatory
injunction. Respondent Salandanan, however, in turn moved for reconsideration on
the ground that such a writ was not a proper remedy to deliver property in the
possession of one party to another. But, before Salandanan's motion could be
resolved, the case was, for the third time, re-raffled and transferred this time to the
sala of respondent Judge Francisco X. Velez. Judge Velez, on 6 August 1987, issued
an order lifting and setting aside the writ, and on 30 March 1988, an order directing
the Deputy Sheriff to return and restore to respondent Salandanan the possession of
the waterworks system.
And so the present Petition for Certiorari was filed.
The Court issued a Temporary Restraining Order on 6 May 1988 enjoining respondent
Judge Velez from enforcing his two (2) orders, ordering petitioner MPHAI to file a bond
in the amount of P50,000.00, and requiring private respondent Salandanan to file a
27 | P a g e
Comment on the Petition. After additional pleadings and counter- pleadings, the
Court granted due course to the Petition and required the parties to file simultaneous
Memoranda. The parties complied; private respondent Salandanan also submitted a
Supplemental Memorandum.
Deliberating on the instant Petition for Certiorari and after careful examination of the
record of this case, the Court considers that petitioner has failed to show any grave
abuse of discretion, or any act without or in excess of jurisdiction, on the part of
respondent Judge in issuing the orders dated 6 August 1987 and 30 March 1988,
lifting and setting aside the writ of preliminary mandatory injunction earlier issued in
Civil Case No. 11124, and ordering private respondent restored to the possession of
the waterworks system involved.
A preliminary mandatory injunction is not a proper remedy to take property,
possession of which is being disputed, out of the possession and control of one party
and to deliver the same to the other party. It may issue pendente lite only in cases of
extreme urgency, where the right to the possession, during the pendency of the main
case, of the property involved is very clear; where considerations of relative
inconvenience bear strongly in favor of the complainant seeking the possession
pendente lite; where there was wilful and unlawful invasion of plaintiffs rights, over
his protest and remonstrance, the injury being a continuing one; where the effect of
the preliminary mandatory injunction is to re-establish and maintain a pre-existing
and continuing relationship between the parties, recently and arbitrarily interrupted
by the defendant, rather than to establish a new relationship during the pendency of
the principal case.1 Obviously, it is for the party requesting the writ to demonstrate
clearly the presence of one or more of the above grounds.
Under the terms and conditions of the amended contract of lease, private respondent
Salandanan is entitled to possess and manage the waterworks system for a period of
ten (10) years beginning 20 March 1981, unless, of course, the contract is judicially
rescinded. Petitioner's action for the rescission of the amended lease contract was
pending before the trial court at the time petitioner had recourse to the Supreme
Court, and that action, so far as the records before us show, remains pending to this
date. Petitioner has failed to show the existence of some extraordinary situation
imposing upon it irreparable injury and clearly calling for the issuance and
maintenance of the writ of preliminary mandatory injunction. Petitioner alleged that
sometime in 1984, the power supply of the water pumps had been cut off by Meralco
for failure of private respondent Salandanan to pay his electric bills, resulting in a
severe water shortage within the Subdivision. There was, however, no showing that
this condition remained subsisting three (3) years later, at the time respondent
Judge's orders here assailed were rendered (August 1987 and March 1988) and at the
time the Petition for Certiorari was filed (May 1988) before the Supreme Court. There
was, in other words, no showing that the severe water shortage had not been remedied
at or before the said material times and that a clear and present danger of the same
or similar default on Salandanan's part, threatening the same severe consequences
for the subdivision residents, persisted. On the contrary, it appears from the record
that the Metropolitan Waterworks and Sewerage System ("MWSS") had commenced
servicing the Subdivision before issuance of the respondent Judge's orders here
sought to be annulled, which circumstance surely reduced the probabilities of
recurrence of such breakdown of water supply. Succinctly put, petitioner has not
shown that the continued possession of the leased waterworks system by respondent
Salandanan created a continuing, clear and imminent danger that the Subdivision
would suffer from lack of adequate supply of potable water.
Accordingly, the Court believes that respondent Judge was not merely acting
arbitrarily and capriciously in holding that private respondent Salandanan was
entitled to be maintained in the possession of the leased waterworks system pending
resolution of the on-going action for rescission of the amended contract of lease and
amended compromise agreement. At the same time, it appears to the Court that the
relations between the petitioner MPHAI and private respondent Salandanan have
been strained and frayed by the controversies and litigation between them. In order
to protect the Subdivision residents from the hardships that would ensue from any
recurrence of the problems encountered in 1984 after delivery of the possession of the
waterworks system to private respondent Salandanan, private respondent should be
required to post either a cash deposit or a surety bond from a surety company of
indubitable solvency, in the amount of P100,000.00, conditioned upon the continued
and adequate supply of potable water to Subdivision residents by private respondent
and faithful compliance with his other obligations under existing agreements with
petitioner. This deposit or bond shall be in addition to any performance bond
required from private respondent under existing contractual arrangements. Moreover,
it goes without saying that the trial court has full authority to issue such further order
or orders may become necessary to protect adequately the Subdivision residents from
disruption of water service within the Subdivision, attributable to the failure of either
petitioner MPHAI or private respondent Salandanan to comply with any of their
respective contractual obligations during the pendency of the action for rescission of
contract.
WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of
merit.1âwphi1 Private respondent Salandanan is hereby REQUIRED to put up either
a cash deposit or a surety bond issued by a surety company of indubitable solvency
acceptable to this Court in the amount of P100,000.00, within a non-extendible period
of ten (10) days from notice hereof, to indemnify the members of petitioner MPHAI for
any damages or inconvenience they may suffer by reason of failure of private
respondent Salandanan to provide a continuous and adequate supply of potable water
and otherwise to comply faithfully with all of his obligations under the amended
28 | P a g e
contract of lease and amended compromise agreement. No pronouncement as to
costs. This Resolution is immediately executory.
Buyco vs. Baraquia
G.R. No. 177486, December 21, 2009
Nelson Baraquia (respondent) filed before the Regional Trial Court (RTC) of Iloilo City
a complaint[1] against Dominico Buyco and Clemente Buyco (Buycos), for the
establishment of a permanent right of way, injunction and damages with preliminary
injunction and temporary restraining order, to enjoin the Buycos from closing off a
private road within their property which he has been using to go to and from the
public highway to access his poultry farm.
The Buycos died during the pendency of the case, and were substituted by Purisimo
Buyco (petitioner) and his brother Gonzalo.
Branch 39 of the Iloilo RTC granted respondents application for preliminary
injunction.
By Decision[2] of February 14, 2007, the trial court dismissed respondents complaint
for failure to establish the concurrence of the essential requisites for the
establishment of an easement of right of way under Articles 649 and 650 of the Civil
Code.[3] It accordingly lifted the writ of preliminary injunction.
Respondent filed a notice of appeal of the trial courts decision. Petitioner filed too a
notice of partial appeal bearing on to the non-award of prayer for damages.
Respondent later filed with the trial court a motion to cite petitioner and his brother
Gonzalo in contempt, alleging that they had closed off the subject road, thus violating
the writ of preliminary injunction. The trial court, by Resolution of March 13, 2007,[4]
noting that respondent received on March 5, 2007 his copy of its decision while
petitioner received his on February 21, 2007, held that the February 14, 2007
decision had not yet become final and executory, hence, the writ of preliminary
injunction remained to be valid, efficacious and obligatory, rendering petitioners act
of closing the road on March 1, 2007 an indirect contempt of court. It thus declared
petitioner and his brother in contempt of court.
Petitioner moved for reconsideration of the trial courts March 13, 2007 Resolution,
contending that a preliminary injunction, once quashed, ceases to exist, and that he
and his brother cannot be held guilty of indirect contempt by mere motion.
By Resolution[5] of April 18, 2007, the trial court set aside the March 13, 2007
Resolution and granted petitioners motion for reconsideration, ruling that petitioner
and his brother cannot be held in contempt of court by mere motion and not by
verified petition.
On the lifetime of the writ of preliminary injunction, the trial court held that it is its
illumined opinion that the matter of whether a writ of preliminary injunction remains
valid until the decision annulling the same attains finality is not firmly entrenched in
jurisprudence, contrary to the position of the defendants. It thereupon quoted a
portion of the ruling in the 2006 case of Lee v. Court of Appeals,[6] to wit:
Furthermore, notwithstanding the stand of both parties, the fact remains that the
Decision of the Court of Appeals annulling the grant of preliminary injunction in favor
of petitioners has not yet become final on 14 December 2000. In fact, such Decision
has not yet become final and executory even on the very date of this Decision, in view
of petitioners appeal with us under Rule 45 of the 1997 Rules of Civil Procedure. The
preliminary injunction, therefore, issued by the trial court remains valid until the
Decision of the Court of Appeals annulling the same attains finality, and violation
thereof constitutes indirect contempt which, however, requires either a formal charge
or a verified petition.[7] (underscoring in the original decision)
Hence, this petition for review, raising a question of law whether the lifting of a writ
of preliminary injunction due to the dismissal of the complaint is immediately
executory, even if the dismissal of the complaint is pending appeal.
The petition is meritorious.
A writ of preliminary injunction is an order granted at any stage of an action or
proceeding prior to the judgment or final order, requiring a party or a court, agency
or a person to refrain from a particular act or acts.[8] It is merely a provisional remedy,
adjunct to the main case subject to the latters outcome.[9] It is not a cause of action
in itself.[10] Being an ancillary or auxiliary remedy, it is available during the pendency
of the action which may be resorted to by a litigant to preserve and protect certain
rights and interests therein pending rendition, and for purposes of the ultimate
effects, of a final judgment in the case.
The writ is provisional because it constitutes a temporary measure availed of during
the pendency of the action and it is ancillary because it is a mere incident in and is
dependent upon the result of the main action.
It is well-settled that the sole object of a preliminary injunction, whether prohibitory
or mandatory, is to preserve the status quo until the merits of the case can be heard.
29 | P a g e
It is usually granted when it is made to appear that there is a substantial controversy
between the parties and one of them is committing an act or threatening the
immediate commission of an act that will cause irreparable injury or destroy the
status quo of the controversy before a full hearing can be had on the merits of the
case.[12]
Indubitably, in the case at bar, the writ of preliminary injunction was granted by the
lower court upon respondents showing that he and his poultry business would be
injured by the closure of the subject road. After trial, however, the lower court found
that respondent was not entitled to the easement of right of way prayed for, having
failed to prove the essential requisites for such entitlement, hence, the writ was lifted.
The present case having been heard and found dismissible as it was in fact dismissed,
the writ of preliminary injunction is deemed lifted, its purpose as a provisional remedy
having been served, the appeal therefrom notwithstanding.
Unionbank v. Court of Appeals[13] enlightens:
x x x a dismissal, discontinuance or non-suit of an action in which a restraining order
or temporary injunction has been granted operates as a dissolution of the restraining
order or temporary injunction, regardless of whether the period for filing a motion for
reconsideration of the order dismissing the case or appeal therefrom has expired. The
rationale therefor is that even in cases where an appeal is taken from a judgment
dismissing an action on the merits, the appeal does not suspend the judgment, hence
the general rule applies that a temporary injunction terminates automatically on the
dismissal of the action. (italics, emphasis and underscoring supplied)
The lower courts citation of Lee v. Court of Appeals[14] is misplaced. In Lee, unlike in
the present case, the original complaint for specific performance and cancellation of
real estate mortgage was not yet decided on the merits by the lower court. Thus, the
preliminary injunction therein issued subsisted pending appeal of an incident.
There being no indication that the appellate court issued an injunction in respondents
favor, the writ of preliminary injunction issued on December 1, 1999 by the trial court
was automatically dissolved upon the dismissal of Civil Case No. 26015.
WHEREFORE, the petition is GRANTED. The Resolution dated April 18, 2007 of the
trial court is REVERSED. The writ of preliminary injunction which Branch 39 of the
Iloilo Regional Trial Court issued on December 1, 1999 was automatically dissolved
upon its dismissal by Decision of February 14, 2007 of Civil Case No. 26015.
SO ORDERED.
Heirs of the late J.B.L. Reyes vs. CA
338 SCRA 282
The cases before the Court are consolidated petitions for review on certiorari to nullify:
(1) the decision of the Court of Appeals[1] setting aside that of the Metropolitan Trial
Court, Pasay City, Branch 45[2] and the orders of the Regional Trial Court, Pasay City
branch 231[3], and ordering petitioners to restore the subject property to the
possession of respondent MMB, Inc. until the expiration of the lease contract, and (2)
the resolution of the Court of Appeals[4] allowing execution pending appeal[5] of its
aforesaid decision and issuing a writ of execution[6] depriving petitioners of
possession of the leased property and giving its possession to respondent MMB, Inc.[7]
which was a deforciant and worse, declaring petitioners guilty of indirect contempt of
court and sentencing them to pay a fine of P30,000.00.
The factual background of the case dates back to November 30, 1976. Brothers
Justice Jose Benedicto Luna Reyes (also known as Justice J. B. L. Reyes) and Dr.
Edmundo A. Reyes were co-owners of a parcel of land located at Taft Avenue, Pasay
City, near Buendia, with a land area of more than one hectare, covered by two
Transfer Certificates of Title[8]. On November 30, 1976, the brothers entered into a
25-year lease contract[9]with Metro Manila Builders, Inc. (MMB, Inc.) at a very low
rate of rental (P15,000.00 to P30,000.00 a month) in consideration of the fact that the
lessee would cover all present and future improvements in the property with
insurance against certain risks and maintain the premises in good, sanitary and
tenantable condition at all times.
However, in the course of the lease, petitioners found out that respondent MMB, Inc.
had not properly maintained the premises or covered the same with an adequate
insurance policy. Worse, respondent MMB, Inc. had sub-leased the property to third
parties and was earning therefrom about P500,000.00 a month. On December 2,
1996, petitioners served on respondent MMB, Inc. a notice terminating the lease
contract and demanding that they vacate and surrender the premises subject of the
lease to petitioners.
Failing to do so, on February 3, 1997, petitioners filed with the Metropolitan Trial
Court, Pasay City, Branch 45 a complaint for unlawful detainer[10] based on breach
of the contract of lease.
On March 5, 1997, respondent MMB, Inc. filed its answer to the complaint. MMB,
Inc. did not deny the violations imputed to it but questioned the absence of a judicial
rescission of the contract of lease.[11]
30 | P a g e
On May 9, 1997, the trial court rendered a decision in favor of petitioners, thus:
"WHEREFORE, and considering the foregoing, judgment is hereby rendered in favor
of the plaintiff heirs of J.B.L. Reyes, thru Adoracion D. Reyes, and heirs of Edmundo
Reyes namely Ma. Teresa P. Reyes, and Carlos P. Reyes and against the defendant
Metro Manila Builders, Inc. ordering the latter:
1. And all persons claiming right under it to vacate, surrender and cede possession
of the leased premises to plaintiffs;
2. To pay plaintiffs, P300,000.00 for every month from notice to vacate until
possession is finally turned over to plaintiffs, with legal interest;
3. To pay plaintiff the amount of P20,000.00 as for attorneys fees; and,
4. To pay the cost of suit"[12]
On May 16, 1997, petitioners filed with the Metropolitan Trial Court, Pasay City,
Branch 45 a motion for execution of the judgment of eviction.[13] On the other hand,
respondent appealed the decision to the Regional Trial Court, Pasay City, Branch
113.[14] However, respondents failed to file their appeal memorandum on time and
so the court dismissed their appeal. In its appeal to the RTC, respondent MMB, Inc.
never raised the issue of jurisdiction. Hence, on November 5, 1997, respondent MMB,
Inc. filed an appeal to the Court of Appeals.[15]
On November 26, 1997, MTC Branch 45, Pasay City,[16] granted the motion for
execution that petitioners filed. Consequently, on December 1, 1997, the trial court
issued the corresponding writ of execution.[17] However, on December 8, 1997, the
Court of Appeals issued a temporary restraining order[18] against the execution of
the ejectment judgment.
Even before the appellate court could rule on the injunctive relief, respondent MMB,
Inc. withdrew its appeal.[19] In a resolution dated February 17, 1998, the Court of
Appeals allowed the withdrawal.[20]
Simultaneously with the withdrawal of the first CA case,[21] on February 17, 1998,
private respondent also filed a petition for annulment of the ejectment decision before
the Regional Trial Court, Pasay City, Branch 231 (RTC 231)[22] on the ground that
the MTC had no jurisdiction over the ejectment case. MMB, Inc. prayed for a
temporary restraining order and/or preliminary injunction against the execution of
the ejectment decision. The court, however, did not issue a temporary restraining
order (TRO) against MTC Branch 45, Pasay City.
On March 5, 1998, petitioners filed with the Regional Trial Court their memorandum
in support of their opposition against the injunctive relief sought by MMB, Inc.[23]
On March 20, 1998, petitioners filed with the same court a motion to dismiss.[24]
In an attempt to dramatize its plea, on March 23, 1998, respondent MMB, Inc. filed
another petition with the Court of Appeals[25], for certiorari and mandamus
complaining about what it termed as the sub-silencio denial by the lower court of
their application for injunctive relief.[26]
On March 23, 1998, the Court of Appeals issued a resolution giving petitioners, as
respondents therein, ten ((10) days from notice within which to file their comment on
the petition, not a motion to dismiss, and in the meantime, restrained them from
enforcing the writ of execution in Civil Case No. 113-97, MTC-Pasay City, Branch
45.[27]
Incidentally, the resolution was signed by only two members of the Court of Appeals,
Special Fourth Division, namely, Justice Demetrio G. Demetria, ponente, and Justice
Ramon A. Barcelona, member, concurring. Justice Omar U. Amin, member, did not
sign. Hence, the resolution is void, which the division clerk of court should not have
received for filing, much less served on the parties. By law, the attendance of three
members of the Court of Appeals shall constitute a quorum for the sessions of a
division. The unanimous vote of three members of a division shall be necessary for
the pronouncement of a decision, or final resolution which shall be reached in
consultation before the writing of the opinion by any member of the division.[28] This
rule applies to interlocutory resolutions.[29] True, any member of the Court of Appeals
may issue preliminary injunction or temporary restraining order.[30] However, this
power is exercised only in case of extreme urgency, and in the tradition of the Supreme
Court, the Court en banc or division ratifies or confirms the act of the single justice
at the very next session of the Court.
On April 14, 1998, upon motion of petitioners, RTC-Pasay 231 issued an order
dismissing the petition on the ground that respondent's remedy is appeal in due time
which, when withdrawn, was effectively abandoned. The Regional Trial Court, Pasay
City, Branch 231, thus ruled:
"If jurisdiction was indeed a valid concern of the petitioner, it should have been raised
at the first opportunity i.e. At the inception of the ejectment case before the
Metropolitan Trial Court. Although, the question of jurisdiction may be raised at any
stage of the proceedings, it should not be used as a scheme to delay the proceedings
and petitioner cannot feign ignorance or inadvertence in a manner aptly illustrated
by the respondents, to wit:
31 | P a g e
6.1 What gave petitioner away is its silence on why it failed, nay refused to raise the
issue of jurisdiction in its petition before the appellate court. Jurisdiction it is
elementary may be raised anytime even before the first time on appeal. (Govt. vs.
American Surety Company 11 PHIL 203; Vda De Roxas vs. Rafferty, 37 PHIL 957;
People vs. Que Po Lay, 94 PHIL 6400).
Furthermore, this Court reiterates that the remedy under Rule 47 is unavailable to
the petitioner." It can be availed of only "as the last remedy and cannot be resorted to
if the ordinary remedies of a new trial, appeal, petition for relief or other appropriate
remedies are available." In this case, appeal is the ordinary remedy which was
available to and had in fact been availed of by the petitioner. Lamentably, it caused
the withdrawal of its appeal expressing preference and venturing to obtain instead
relief under Rule 47 which appears inappropriate under the circumstances."[31]
With the imminent expiration of the temporary restraining order,[32] respondent
MMB, Inc. filed with the Court of Appeals a series of petitions and motions urging the
Court of Appeals to issue injunctive relief.[33] Thus, on May 14, 1998, respondent
MMB, Inc. filed with the Court of Appeals a motion for leave of court to admit a
supplemental petition.[34]
On May 18, 1998, respondent MMB, Inc. filed with the Court of Appeals an urgent
motion for the issuance of another temporary restraining order in the second CA
case.[35] Respondent sought a TRO to enjoin the MTC-Branch 45, Pasay City from
enforcing the writ of execution of the decision in Civil Case No. 113-97 and the
Regional Trial Court from proceeding with Civil Case No. 98-0366 pending the
resolution of the supplemental petition.
Also on the same date, respondent filed with the Court of Appeals a manifestation
alleging that it filed with the Regional Trial Court, Quezon City, Branch 88 an action
for annulment of the unilateral termination of lease contract and damages.[36] On
the ground that such case was still pending, respondents prayed for a temporary
restraining order and a writ of preliminary inj
unction to prevent the execution of the judgment in Civil Case No. 113-97.[37]
On May 20, 1998, respondent MMB, Inc. filed with the Court of Appeals[38] another
case seeking to set aside the order of the RTC Pasay, Branch 231, dismissing the
action and praying that a temporary restraining order be issued against the MTC-45
Pasay City enjoining the writ of execution issued in Civil Case No. 113-97, to desist
from proceeding with CA-G. R. SP No. 47158, to declare the order of respondent judge
in Civil Case No. 98-0366 as null and void for being issued in grave abuse of
discretion, without or in excess of its jurisdiction, and to declare the TRO/injunction
permanent.
On May 22, 1998, the Court of Appeals consolidated the second[39] and third[40] CA
cases.
In the meantime, on June 29, 1998, the Court of Appeals issued a resolution in the
third CA case,[41] as follows:
"We hereby resolve:
a. to require the respondent in CA GR SP. No. 47720 to file the petition, not a motion
to dismiss, which may be considered as their answer should we decide to give it due
course;
b. Considering that respondent's comment and petitioner's reply in C.A. G.R. SP. No.
47158, to set for hearing the application for preliminary injunction on July 15, 1998,
at 2:00 A.M. at Paras Hall, Court of Appeals, Ma. Orosa St., Ermita Manila; and
c. For a comprehensive appreciation of the consolidated cases before us, to require
the RTC Branch 231 of Pasay City to Elevate the Original Records of Civil Case No.
98-0366 and other pertinent pleadings and papers related thereto within five (5) days
from notice.[42]
On July 2, 1998, respondents filed with the Regional Trial Court, Branch 110, Pasay
City a petition seeking a temporary restraining order to enjoin MTC Branch 45, Pasay
City,[43] and the sheriff [44] from enforcing the writ of execution issued on December
1, 1997.
In compliance with the said resolution, on July 15, 1998, petitioners filed their
comment/opposition, alleging that:
a. The petition of private respondent is moot and academic as the entire premises has
already been turned over by the sheriff of MTC-45 Albert Zaragoza except 14 lessees
which were allowed by the petitioners to remove their improvements within fifteen
days;
b. Assuming the dismissal of the petition for annulment was erroneous, the remedy
is appeal not certiorari;
c. Private respondent is guilty of forum shopping as the issue pending in the Second
CA Case, which in RTC-Q.C. is docketed as Civil Case No. Q-98-34382 (for annulment
of unilateral termination of lease contract) and the third CA Case are one and the
same;
32 | P a g e
d. Judge Ylagan committed no abuse of discretion. Petitioners are not guilty of
contempt since there is no order violated;
e. The dismissal order (April 14, 1998) did not pre-empt the Second CA case;
f. Private respondent failed to allege, much less prove, irreparable injury to it.
On August 21, 1998, the Court of Appeals promulgated its decision, the dispositive
portion of which reads as follows:
"WHEREFORE, the decision of the Metropolitan Trial Court, Branch 45, Pasay City in
Civil Case No. 113-97 dated May 9, 1997 is SET ASIDE and the orders dated March
23, 1998 and April 14, 1998, issued in Civil Case No. 98-0366 are likewise SET
ASIDE. Private respondent is hereby ordered to restore the subject property in the
possession of petitioner and are hereby permanently enjoined from further
committing acts disturbing physical possession of the subject property by petitioner
until after the expiration of the Contract of Lease.[45]
On the same date the decision of the Court of Appeals was promulgated, respondent
MMB, Inc. filed with that court a very urgent ex-parte motion for execution pending
appea1.[46] On August 26, 1998, the Court of Appeals required petitioners to
comment on such motion for execution pending appeal within ten (10) days from
notice.[47]
On August 25, 1998, respondent filed with the Court of Appeals another motion ex-
parte for execution pending appeal, motion to cite in contempt and motion to stop
demolition.[48]
On August 27, 1998, the Court of Appeals issued a resolution stating thus:
"a. Considering that discretionary execution may only issue after due hearing
pursuant to Section (2)a, Rule 39 of the 1997 Rules on Civil Procedure, to set for
hearing the very urgent motion for execution pending appeal on September 1, 1998,
at 10:00 AM at Moran Hall, Court of Appeals x x x;
"b. To require private respondents and counsel to explain within five (5) days from
receipt hereof why they should not be cited for contempt; and
"c. To restrain private respondents and all persons acting in their behalf from further
demolishing the buildings and improvements on the subject premises.[49]
On August 31, 1998, petitioners filed with the Court of Appeals a motion requesting
for an extension of time to file explanation on the motion to declare petitioners and
counsel in contempt.[50] In a resolution dated September 3, 1998, the Court of
Appeals granted the motion, giving petitioners and counsel ten (10) days from
September 1, 1998, or up to September 11, 1998, within which to file the
explanation.[51] The case was set for oral argument, parties were directed to submit
simultaneously their respective memoranda to the very urgent motion for the
issuance of a writ of execution pending appeal/motion to stop demolition within ten
(10) days from date, or until September 11, 1998.[52]
On September 11, 1998, petitioners filed with the Court of Appeals a motion for
extension of time to file comment/memorandum for at least five (5) days from
September 11, 1998, or up September 16, 1998 .[53]
On September 14, 1998, petitioners filed with the Supreme Court a petition for review
of the decision of the Court of Appeals.[54] On September 17, 1998, petitioners filed
with the Court of Appeals their consolidated comment to the very urgent motion for
execution pending appeal, manifestation/motion to cite in contempt/motion to stop
demolition, with motion to defer consideration.[55]
The Court of Appeals, however, despite the pending petition with this Court,
promulgated on September 18, 1998, its resolution, the dispositive portion of which
reads:
"Accordingly, this Court hereby RESOLVES to grant the instant petition.
"1. A writ of Execution Pending Appeal of the Decision of this Court dated August 21,
1998 is hereby issued.
"The Division Clerk of this Court is hereby ordered to furnish a certified true copy of
this resolution and the decision of this Court dated August 21, 1998 to the
Metropolitan Trial Court, Branch 45, and Regional Trial Court, Branch 231 both of
Pasay City.
"2. Private respondents and their counsel are hereby adjudged guilty of indirect
contempt of this Honorable Court and are hereby sentenced to pay a fine of
P30,000.00. Private respondents and counsel are also directed to make a complete
restoration to petitioner of the subject property.
"SO ORDERED."[56]
On September 21, 1998, the Court of Appeals designated a special sheriff[57] to
enforce the writ, and on the same day, he evicted petitioners from the premises and
restored possession in favor of private respondent.[58]
33 | P a g e
On September 29, 1998, petitioners filed with the Supreme Court a petition for
certiorari to nullify the resolution of the Court of Appeals allowing execution pending
appeal and the writ of execution issued pursuant thereto and more, finding petitioners
guilty of indirect contempt of court and sentencing them to pay a fine of
P30,000.00.[59]
The issues raised in the petitions may be summed up as to whether or not the Court
of Appeals erred:
1. In ruling that the nature of the complaint is for rescission of contract, not
ejectment, over which the Metropolitan Trial Court, Pasay City did not have
jurisdiction;
2. In directing that respondent MMB, Inc. be restored in possession of the leased
premises;
3. In immediately executing its resolution dated September 18, 1998, transferring
possession of the property from petitioners to respondent MMB, Inc. by a "special
sheriff".
4. In declaring petitioners guilty of indirect contempt of court, and sentencing them
to pay a fine of P30,000.00.
The crux of the case is whether there was a need for judicial rescission of the contract
of lease before respondent MMB, Inc. may be compelled to move out of the leased
premises.
We find the petitions impressed with merit.
We rule that there is no need for a judicial rescission of the lease contract between
lessors heirs of Justice J. B. L. Reyes, et al. and lessee MMB, Inc. The contract
provides:
"Section 18, paragraph 4 (a) In the event of default or breach of any of the condition
of this contract x x x.
(b) x x x the LESSOR may, in his absolute discretion declare the contract cancelled
and terminated and require the TENANT to vacate the leased premises x x x
MMB, Inc. violated the following conditions of the contract:
1. Par. 8 requiring MMB, Inc. to cover all buildings and improvements on the leased
premises with insurance against fire, earthquake and extended coverage risks;
2. Par. 9 and 10 of the contract requiring MMB, Inc. to maintain the leased premises
and all the buildings and improvements thereon in a state of security and first class
repair, in a clean and sanitary condition, to repair and restore or reconstruct such
damaged on destroyed improvements;
3. Par. 11 of the contract requiring defendant to secure LESSOR's prior written
consent before it may assign or transfer any of its rights under the contacts.
We have ruled that "there is nothing wrong if the parties to a lease contract agreed on
certain mandatory provisions concerning their respective rights and obligations, such
as the procurement of the insurance and the rescission clause. For it is well to recall
that contracts are respected as the law between the contracting parties, and they may
establish such stipulations, clauses, terms and conditions as they may want to
include. As long as such agreements are not contrary to law, morals, good customs,
public policy or public order they shall have the force of law between them."[60]
The law on obligations and contracts does not prohibit parties from entering into
agreement providing that a violation of the terms of the contract would cause its
cancellation even without judicial intervention.[61] This is what petitioners and
respondent entered into, a lease contract with stipulation that the contract is
rescinded upon violation of its substantial provisions, which MMB, Inc. does not deny
they violated.
The basic issue having been disposed of, we need not resolve the other issues
petitioners raised.
On hindsight, the Court of Appeals declared petitioners guilty of indirect contempt of
court because they implemented the writ of execution of the trial court despite the
order of the court to elevate the entire original records. And petitioners proceeded to
demolish the improvements on the property without authority of the Court of Appeals.
However, this was because the temporary restraining order issued by the Court of
Appeals had lapsed after sixty (60) days.[62] No more restraining order was in effect
until the court decided the case on its merits. Hence, petitioners acted in good faith
in the exercise of their proprietary rights. There was no willful disobedience to a lawful
order. Petitioners were not guilty of contempt. The salutary rule is that the power to
punish for contempt must be exercised on the preservative, not vindictive principle,
and on the corrective and not retaliatory idea of punishment.[63] The courts must
exercise the power to punish for contempt for purposes that are impersonal because
that power is intended as a safeguard not for the judges as persons but for the
functions that they exercise.[64] The court must exercise the power of contempt
judiciously and sparingly, with utmost self-restraint.[65]
34 | P a g e
One final word. It was bad enough that the Court of Appeals erred in ruling that the
lease contract must be judicially rescinded before respondent MMB, Inc. may be
evicted from the premises. It was worse that the Court of Appeals immediately
enforced its decision pending appeal restoring respondent in possession of the leased
premises and worst, appointed a special sheriff to carry out the writ of execution. In
the first place, we emphatically rule that the Court of Appeals has no authority to
issue immediate execution pending appeal of its own decision. Discretionary
execution under Rule 39, Section 2 (a), 1997 Rules of Civil Procedure, as amended, is
allowed pending appeal of a judgment or final order of the trial court, upon good
reasons to be stated in a special order after due hearing. A judgment of the Court of
Appeals cannot be executed pending appeal. Once final and executory, the judgment
must be remanded to the lower court, where a motion for its execution may be filed
only after its entry.[66] In other words, before its finality, the judgment cannot be
executed. There can be no discretionary execution of a decision of the Court of
Appeals. In the second place, even in discretionary executions, the same must be
firmly founded upon good reasons. The court must state in a special order the "good
reasons" justifying the issuance of the writ.[67] The good reasons allowing execution
pending appeal must constitute superior circumstances demanding urgency that will
outweigh the injuries or damages to the adverse party if the decision is reversed.[68]
Jurisprudence teaches us what are "good reasons" that justify a premature execution
of judgment, such as "deterioration of commodities subject of litigation"[69] and "the
deteriorating condition of the vessel, M/V 'Valiant' . . . left to rot at the pier and
without a crew to guard it".[70]In this case, the good reasons given by the Court of
Appeals to support the discretionary execution of its decision are (1) that respondent
would be deprived of income from its business endeavors; (2) that "it is of public
knowledge" that the Court of Appeals and the Supreme Court are clogged with cases
and it may take some time before the decision in the case may attain its finality; and
(3) that petitioners acted with bad faith and malice.[71] None of the cited reasons is
"good" enough. According to jurisprudence, respondent's precarious financial
condition is not a compelling circumstance warranting immediate execution.[72] The
assertion that "it is of public knowledge" that the Supreme Court is clogged with cases
that may take time to decide mocks the integrity and derides the competence of this
Court. The remark erodes and undermines the people's trust and confidence in the
judiciary, ironically coming from one of its subordinate courts. This is an assault on
the Supreme Court that borders on contempt; we cannot permit such attack to pass
without sanction. This we cannot countenance. Litigants, lawyers and judges share
the responsibility of unclogging the dockets of the judiciary.[73] No lower court justice
or judge may deride, chastise or chide the Supreme Court even speaking "with due
respect" in his ponencia. In fact, it is the duty of lower courts to obey the decisions of
the Supreme Court and render obeisance to its status as the apex of the hierarchy of
courts. "A becoming modesty of inferior courts demands conscious realization of the
position that they occupy in the interrelation and operation of the integrated judicial
system of the nation."[74] "There is only one Supreme Court from whose decision all
other courts should take their bearings" so spoke Justice J. B. L. Reyes.[75] We echo
this golden nugget of advice. If a judge of a lower court cannot do so in conscience,
he has no alternative but to yield his judicial robe and resign.[76] More, it has been
held that urgency resulting from years of delay in the disposal of a case is not a good
reason for premature execution of the decision.[77] Bad faith and malice are not
indicated simply because petitioners insisted on their rights and exhausted judicial
remedies. On the contrary, good faith is always presumed.[78] In the third place, on
September 14, 1998, petitioners elevated the decision of the Court of Appeals to the
Supreme Court by petition for review.[79] By the mere fact of the filing of the petition,
the finality of the Court of Appeals' decision was stayed, and there could be no entry
of judgment therein,[80] and, hence, no premature execution could be had. The Court
of Appeals adopted its resolution granting execution pending appeal on September
18, 1998, after the petition for review was already filed in the Supreme Court.[81] It
thereby encroached on the hallowed grounds of the Supreme Court. Worst of all, the
Court of Appeals has no authority to appoint a special sheriff.[82] It appointed an
employee of the mailing section, who was not even bonded as required by law.[83]
Such display of keen interest in the immediate execution of its decision coupled with
the exercise of excessive authority by illegally appointing a "special sheriff' makes the
concerned members of the Court of Appeals liable to disciplinary action and the
imposition of appropriate penalty.[84]
WHEREFORE, the Court declares VOID the resolution of the Court of Appeals, dated
September 18, 1998 in CA-G. R. SP No. 47158 and SP No. 47720, and the writ of
execution dated September 21, 1998, issued pursuant thereto. Petitioners are
acquitted of the charge of contempt of court.
The Court REVERSES the decision of the Court of Appeals promulgated on August
21, 1998, in CA-G. R. SP No. 47158 and SP No. 47720, and REINSTATES the decision
of the Regional Trial Court, Pasay City, Branch 231, dated March 23, 1998, and order
dated April 14, 1998, in Civil Case 98-0366.
Costs against respondent MMB, Inc.
Let a copy of this decision be furnished to the Presiding Justice, Court of Appeals,
Manila, for dissemination to the Associate Justices, Court of Appeals, for their
information and guidance.
SO ORDERED.
35 | P a g e
G.R. No. 142616 July 31, 2001
PHILIPPINE NATIONAL BANK, petitioner,
vs.
RITRATTO GROUP INC., RIATTO INTERNATIONAL, INC., and DADASAN
GENERAL MERCHANDISE,respondents.
KAPUNAN, J.:
In a petition for review on certiorari under Rule 45 of the Revised Rules of Court,
petitioner seeks to annul and set aside the Court of Appeals' decision in C.A. CV G.R.
S.P. No. 55374 dated March 27, 2000, affirming the Order issuing a writ of
preliminary injunction of the Regional Trial Court of Makati, Branch 147 dated June
30, 1999, and its Order dated October 4, 1999, which denied petitioner's motion to
dismiss.
The antecedents of this case are as follows:
Petitioner Philippine National Bank is a domestic corporation organized and existing
under Philippine law. Meanwhile, respondents Ritratto Group, Inc., Riatto
International, Inc. and Dadasan General Merchandise are domestic corporations,
likewise, organized and existing under Philippine law.
On May 29, 1996, PNB International Finance Ltd. (PNB-IFL) a subsidiary company of
PNB, organized and doing business in Hong Kong, extended a letter of credit in favor
of the respondents in the amount of US$300,000.00 secured by real estate mortgages
constituted over four (4) parcels of land in Makati City. This credit facility was later
increased successively to US$1,140,000.00 in September 1996; to US$1,290,000.00
in November 1996; to US$1,425,000.00 in February 1997; and decreased to
US$1,421,316.18 in April 1998. Respondents made repayments of the loan incurred
by remitting those amounts to their loan account with PNB-IFL in Hong Kong.
However, as of April 30, 1998, their outstanding obligations stood at
US$1,497,274.70. Pursuant to the terms of the real estate mortgages, PNB-IFL,
through its attorney-in-fact PNB, notified the respondents of the foreclosure of all the
real estate mortgages and that the properties subject thereof were to be sold at a
public auction on May 27, 1999 at the Makati City Hall.
On May 25, 1999, respondents filed a complaint for injunction with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order before
the Regional Trial Court of Makati. The Executive Judge of the Regional Trial Court
of Makati issued a 72-hour temporary restraining order. On May 28, 1999, the case
was raffled to Branch 147 of the Regional Trial Court of Makati. The trial judge then
set a hearing on June 8, 1999. At the hearing of the application for preliminary
injunction, petitioner was given a period of seven days to file its written opposition to
the application. On June 15, 1999, petitioner filed an opposition to the application
for a writ of preliminary injunction to which the respondents filed a reply. On June
25, 1999, petitioner filed a motion to dismiss on the grounds of failure to state a cause
of action and the absence of any privity between the petitioner and respondents. On
June 30, 1999, the trial court judge issued an Order for the issuance of a writ of
preliminary injunction, which writ was correspondingly issued on July 14, 1999. On
October 4, 1999, the motion to dismiss was denied by the trial court judge for lack of
merit.
Petitioner, thereafter, in a petition for certiorari and prohibition assailed the issuance
of the writ of preliminary injunction before the Court of Appeals. In the impugned
decision,1 the appellate court dismissed the petition. Petitioner thus seeks recourse
to this Court and raises the following errors:
1.
THE COURT OF APPEALS PALPABLY ERRED IN NOT DISMISSING THE
COMPLAINT A QUO, CONSIDERING THAT BY THE ALLEGATIONS OF THE
COMPLAINT, NO CAUSE OF ACTION EXISTS AGAINST PETITIONER, WHICH
IS NOT A REAL PARTY IN INTEREST BEING A MERE ATTORNEY-IN-FACT
AUTHORIZED TO ENFORCE AN ANCILLARY CONTRACT.
2.
THE COURT OF APPEALS PALPABLY ERRED IN ALLOWING THE TRIAL
COURT TO ISSUE IN EXCESS OR LACK OF JURISDICTION A WRIT OF
PRELIMINARY INJUNCTION OVER AND BEYOND WHAT WAS PRAYED FOR
IN THE COMPLAINT A QUO CONTRARY TO CHIEF OF STAFF, AFP VS. GUADIZ
JR., 101 SCRA 827.2
Petitioner prays, inter alia, that the Court of Appeals' Decision dated March 27, 2000
and the trial court's Orders dated June 30, 1999 and October 4, 1999 be set aside
and the dismissal of the complaint in the instant case. 3
In their Comment, respondents argue that even assuming arguendo that petitioner
and PNB-IFL are two separate entities, petitioner is still the party-in-interest in the
application for preliminary injunction because it is tasked to commit acts of
foreclosing respondents' properties.4 Respondents maintain that the entire credit
facility is void as it contains stipulations in violation of the principle of mutuality of
36 | P a g e
contracts.5 In addition, respondents justified the act of the court a quo in applying
the doctrine of "Piercing the Veil of Corporate Identity" by stating that petitioner is
merely an alter ego or a business conduit of PNB-IFL.6
The petition is impressed with merit.
Respondents, in their complaint, anchor their prayer for injunction on alleged invalid
provisions of the contract:
GROUNDS
I against the defendant PNB is a suit against PNB-IFL.10 In justifying its ruling, the trial
THE DETERMINATION OF THE INTEREST RATES BEING LEFT TO THE SOLE
DISCRETION OF THE DEFENDANT PNB CONTRAVENES THE PRINCIPAL OF
MUTUALITY OF CONTRACTS.
II
THERE BEING A STIPULATION IN THE LOAN AGREEMENT THAT THE RATE
OF INTEREST AGREED UPON MAY BE UNILATERALLY MODIFIED BY
DEFENDANT, THERE WAS NO STIPULATION THAT THE RATE OF INTEREST
SHALL BE REDUCED IN THE EVENT THAT THE APPLICABLE MAXIMUM
RATE OF INTEREST IS REDUCED BY LAW OR BY THE MONETARY BOARD.7
Based on the aforementioned grounds, respondents sought to enjoin and restrain
PNB from the foreclosure and eventual sale of the property in order to protect their
rights to said property by reason of void credit facilities as bases for the real estate
mortgage over the said property.8
The contract questioned is one entered into between respondent and PNB-IFL, not
PNB. In their complaint, respondents admit that petitioner is a mere attorney-in-fact
for the PNB-IFL with full power and authority to, inter alia, foreclose on the properties
mortgaged to secure their loan obligations with PNB-IFL. In other words, herein
petitioner is an agent with limited authority and specific duties under a special power
of attorney incorporated in the real estate mortgage. It is not privy to the loan
contracts entered into by respondents and PNB-IFL.
The issue of the validity of the loan contracts is a matter between PNB-IFL, the
petitioner's principal and the party to the loan contracts, and the respondents. Yet,
despite the recognition that petitioner is a mere agent, the respondents in their
complaint prayed that the petitioner PNB be ordered to re-compute the rescheduling
of the interest to be paid by them in accordance with the terms and conditions in the
documents evidencing the credit facilities, and crediting the amount previously paid
to PNB by herein respondents.9
Clearly, petitioner not being a part to the contract has no power to re-compute the
interest rates set forth in the contract. Respondents, therefore, do not have any cause
of action against petitioner.
The trial court, however, in its Order dated October 4, 1994, ruled that since PNB-
IFL, is a wholly owned subsidiary of defendant Philippine National Bank, the suit
court, citing the case of Koppel Phil. Inc. vs. Yatco,11 reasoned that the corporate entity
may be disregarded where a corporation is the mere alter ego, or business conduit of
a person or where the corporation is so organized and controlled and its affairs are so
conducted, as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation.12
We disagree.
The general rule is that as a legal entity, a corporation has a personality distinct and
separate from its individual stockholders or members, and is not affected by the
personal rights, obligations and transactions of the latter. 13 The mere fact that a
corporation owns all of the stocks of another corporation, taken alone is not sufficient
to justify their being treated as one entity. If used to perform legitimate functions, a
subsidiary's separate existence may be respected, and the liability of the parent
corporation as well as the subsidiary will be confined to those arising in their
respective business. The courts may in the exercise of judicial discretion step in to
prevent the abuses of separate entity privilege and pierce the veil of corporate entity.
We find, however, that the ruling in Koppel finds no application in the case at bar. In
said case, this Court disregarded the separate existence of the parent and the
subsidiary on the ground that the latter was formed merely for the purpose of evading
the payment of higher taxes. In the case at bar, respondents fail to show any cogent
reason why the separate entities of the PNB and PNB-IFL should be disregarded.
While there exists no definite test of general application in determining when a
subsidiary may be treated as a mere instrumentality of the parent corporation, some
factors have been identified that will justify the application of the treatment of the
doctrine of the piercing of the corporate veil. The case of Garrett vs. Southern Railway
Co.14 is enlightening. The case involved a suit against the Southern Railway Company.
Plaintiff was employed by Lenoir Car Works and alleged that he sustained injuries
37 | P a g e
while working for Lenoir. He, however, filed a suit against Southern Railway Company
on the ground that Southern had acquired the entire capital stock of Lenoir Car
Works, hence, the latter corporation was but a mere instrumentality of the former.
The Tennessee Supreme Court stated that as a general rule the stock ownership alone
by one corporation of the stock of another does not thereby render the dominant
corporation liable for the torts of the subsidiary unless the separate corporate
existence of the subsidiary is a mere sham, or unless the control of the subsidiary is
such that it is but an instrumentality or adjunct of the dominant corporation. Said
Court then outlined the circumstances which may be useful in the determination of
whether the subsidiary is but a mere instrumentality of the parent-corporation:
The Circumstance rendering the subsidiary an instrumentality. It is manifestly
impossible to catalogue the infinite variations of fact that can arise but there
are certain common circumstances which are important and which, if present
in the proper combination, are controlling.
These are as follows:
(a) The parent corporation owns all or most of the capital stock of the
subsidiary.
(b) The parent and subsidiary corporations have common directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of the subsidiary
or otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses or losses of
the subsidiary.
(g) The subsidiary has substantially no business except with the parent
corporation or no assets except those conveyed to or by the parent corporation.
(h) In the papers of the parent corporation or in the statements of its officers,
the subsidiary is described as a department or division of the parent
corporation, or its business or financial responsibility is referred to as the
parent corporation's own.
(i) The parent corporation uses the property of the subsidiary as its own.
(j) The directors or executives of the subsidiary do not act independently in the
interest of the subsidiary but take their orders from the parent corporation.
(k) The formal legal requirements of the subsidiary are not observed.
The Tennessee Supreme Court thus ruled:
In the case at bar only two of the eleven listed indicia occur, namely, the
ownership of most of the capital stock of Lenoir by Southern, and possibly
subscription to the capital stock of Lenoir. . . The complaint must be
dismissed.
Similarly, in this jurisdiction, we have held that the doctrine of piercing the corporate
veil is an equitable doctrine developed to address situations where the separate
corporate personality of a corporation is abused or used for wrongful purposes. The
doctrine applies when the corporate fiction is used to defeat public convenience,
justify wrong, protect fraud or defend crime, or when it is made as a shield to confuse
the legitimate issues, or where a corporation is the mere alter ego or business conduit
of a person, or where the corporation is so organized and controlled and its affairs are
so conducted as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation.15
In Concept Builders, Inc. v. NLRC,16 we have laid the test in determining the
applicability of the doctrine of piercing the veil of corporate fiction, to wit:
1. Control, not mere majority or complete control, but complete domination,
not only of finances but of policy and business practice in respect to the
transaction attacked so that the corporate entity as to this transaction had at
the time no separate mind, will or existence of its own.
2. Such control must have been used by the defendant to commit fraud or
wrong, to perpetuate the violation of a statutory or other positive legal duty,
or dishonest and, unjust act in contravention of plaintiffs legal rights; and,
3. The aforesaid control and breach of duty must proximately cause the injury
or unjust loss complained of.
The absence of any one of these elements prevents "piercing the corporate
veil." In applying the "instrumentality" or "alter ego" doctrine, the courts are
38 | P a g e
 concerned with reality and not form, with how the corporation operated and
the individual defendant's relationship to the operation. 17
Aside from the fact that PNB-IFL is a wholly owned subsidiary of petitioner PNB, there
is no showing of the indicative factors that the former corporation is a mere
instrumentality of the latter are present. Neither is there a demonstration that any of
the evils sought to be prevented by the doctrine of piercing the corporate veil exists.
Inescapably, therefore, the doctrine of piercing the corporate veil based on the alter
ego or instrumentality doctrine finds no application in the case at bar.
In any case, the parent-subsidiary relationship between PNB and PNB-IFL is not the
significant legal relationship involved in this case since the petitioner was not sued
because it is the parent company of PNB-IFL. Rather, the petitioner was sued because
it acted as an attorney-in-fact of PNB-IFL in initiating the foreclosure proceedings. A
suit against an agent cannot without compelling reasons be considered a suit against
the principal. Under the Rules of Court, every action must be prosecuted or defended
in the name of the real party-in-interest, unless otherwise authorized by law or these
Rules.18 In mandatory terms, the Rules require that "parties-in-interest without
whom no final determination can be had, an action shall be joined either as plaintiffs
or defendants."19 In the case at bar, the injunction suit is directed only against the
agent, not the principal.
Anent the issuance of the preliminary injunction, the same must be lifted as it is a
mere provisional remedy but adjunct to the main suit. 20 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. Further, there is no showing
that respondents are entitled to the issuance of the writ. Section 3, Rule 58, of the
1997 Rules of Civil Procedure provides:
SECTION 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 non-performance of the acts 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.
Thus, 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.21 Respondents do not deny their indebtedness. Their properties are by
their own choice encumbered by real estate mortgages. Upon the non-payment of the
loans, which were secured by the mortgages sought to be foreclosed, the mortgaged
properties are properly subject to a foreclosure sale. Moreover, respondents
questioned the alleged void stipulations in the contract only when petitioner initiated
the foreclosure proceedings. Clearly, respondents have failed to prove that they have
a right protected and that the acts against which the writ is to be directed are violative
of said right.22 The Court is not unmindful of the findings of both the trial court and
the appellate court that there may be serious grounds to nullify the provisions of the
loan agreement. However, as earlier discussed, respondents committed the mistake
of filing the case against the wrong party, thus, they must suffer the consequences of
their error.
All told, respondents do not have a cause of action against the petitioner as the latter
is not privy to the contract the provisions of which respondents seek to declare void.
Accordingly, the case before the Regional Trial Court must be dismissed and the
preliminary injunction issued in connection therewith, must be lifted.
IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The assailed
decision of the Court of Appeals is hereby REVERSED. The Orders dated June 30,
1999 and October 4, 1999 of the Regional Trial Court of Makati, Branch 147 in Civil
Case No. 99-1037 are hereby ANNULLED and SET ASIDE and the complaint in said
case DISMISSED.
SO ORDERED.
39 | P a g e
[G.R. No. 69863-65 : December 10, 1990.]
192 SCRA 183
LINO BROCKA, BENJAMIN CERVANTES, COSME GARCIA, RODOLFO SANTOS,
VALENTINO SALIPSIP, RICARDO VEGA, ERIC MARIANO, JOSE EMMANUEL
OYALES, RONNIE MATTA, ALFREDO VIAJE, RUBEN EUGENIO, REYNALDO
ORTIZ, ORLANDO ORTIZ, NOEL REYES, EDUARDO IMPERIAL, NESTOR
SARMIENTO, FRANCO PALISOC, VIRGILIO DE GUZMAN, ALBERTO REYES,
JESSIE PINILI, ROMULO AUGUIS, DOMINADOR RESURRECION III, RONNIE
LAYGO, ROSAURO ROQUE, CLARENCE SORIANO, OCTAVO DEPAWA, CARLITO
LA TORRE, SEVERNO ILANO, JR., DOMINGO CAJIPE, ALAN ALEGRE, RAMON
MARTINEZ, MA. GILDA HERNANDEZ, EDNA P. VILLANUEVA, DOLLY S. CANU,
MELQUIADES C. ATIENZA, ELIGIO P. VERA CRUZ, ROGER C. BAGAN, ABUNDIO
M. CALISTE, Petitioners, vs. JUAN PONCE ENRILE, MAJ. GENERAL FIDEL V.
RAMOS, BRIG. GENERAL PEDRO BALBANERO, COL. ABAD, COL. DAWIS,
SERGIO APOSTOL, P/LT, RODOLFO M. GARCIA and JUDGE RICARDO TENSUAN,
Respondents.
DECISION
MEDIALDEA, J.:
This petition was originally filed on February 13, 1985 to secure the release of
petitioners on habeas corpus and to permanently enjoin the City Fiscal of Quezon
City from investigating charges of "Inciting to Sedition" against petitioners Lino
Brocka, Benjamin Cervantes, Cosme Garcia and Rodolfo Santos, (hereafter Brocka,
et al.). On learning that the corresponding informations for this offense has been filed
by the City Fiscal against them on February 11, 1985, a supplemental petition was
filed on February 19, 1985 (p. 51, Rollo) to implead the Presiding Judge, 1 and to
enjoin the prosecution of Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 (p.
349, Rollo) and the issuance of warrants for their arrests, including their arraignment.
Since then President Ferdinand E. Marcos had ordered the provisional release of
Brocka, et al., the issue on habeas corpus has become moot and academic (p. 396,
Rollo). We shall thus focus on the question of whether or not the prosecution of the
criminal cases for Inciting to Sedition may lawfully be enjoined.:-cralaw
Petitioners were arrested on January 28, 1985 by elements of the Northern Police
District following the forcible and violent dispersal of a demonstration held in
sympathy with the jeepney strike called by the Alliance of Concerned Transport
Organization (ACTO). Thereafter, they were charged with Illegal Assembly in Criminal
Cases Nos. 37783, 37787 and 37788 with Branch 108, Regional Trial Court, NCJR,
Quezon City. 2
Except for Brocka, et al. who were charged as leaders of the offense of Illegal Assembly
and for whom no bail was recommended, the other petitioners were released on bail
of P3,000.00 each. Brocka, et al.'s provisional release was ordered only upon an
urgent petition for bail for which daily hearings from February 1-7, 1985 were held.
However, despite service of the order of release on February 9, 1985, Brocka, et al.
remained in detention, respondents having invoked a Preventive Detention Action
(PDA) allegedly issued against them on January 28, 1985 (p. 6, Rollo). Neither the
original, duplicate original nor certified true copy of the PDA was ever shown to them
(p. 367, Rollo).
Brocka, et al. were subsequently charged on February 11, 1985 with Inciting to
Sedition, docketed as Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 (p. 349,
Rollo), without prior notice to their counsel (p. 7, Rollo). The original informations filed
recommended no bail (p. 349, Rollo). The circumstances surrounding the hasty filing
of this second offense are cited by Brocka, et al. (quoting from a separate petition filed
on their behalf in G.R. Nos. 69848-50 entitled "Sedfrey A. Ordoñez vs. Col. Julian
Arzaga, et al."), as follows:
"x x x
"6. The sham' character of the inquest examination concocted by all respondents is
starkly bizarre when we consider that as early as 10:30 A.M. today, February 11,
1985, Benjamin Cervantes was able to contact undersigned petitioner by phone
informing counsel that said Benjamin Cervantes and the 4 other persons who are the
subjects of this petition will be brought before the Quezon City Fiscal at 2:30 for
undisclosed reasons: subsequently, another phone call was received by petitioning
counsel informing him that the appearance of Benjamin Cervantes et al. was to be at
2:00 P.M. When petitioning counsel arrived in the office of Assistant City Fiscal Arturo
Tugonon, the complainants' affidavits had not yet been received by any of the panel
of three assistant city fiscals, although the five persons under detention were already
in the office of said assistant fiscal as early as 2:00 P.M. It was only at 3:00 when a
representative of the military arrived bringing with him alleged statements of
complainants against Lino Broka (sic) et al. for alleged inciting to sedition, whereupon
undersigned counsel asked respondent Colonel Agapito Abad 'who ordered the
detained persons to be brought to the office of Assistant Fiscal Arturo Tugonon since
there were no charges on file;' and said Colonel Agapito Abad said aloud: 'I only
received a telephone call from Colonel Arzaga about 11:00 A.M. to bring the detained
persons today — I am only the custodian.' At 3:15, petitioning counsel inquired from
the Records Custodian when the charges against Lino Broka (sic) had been officially
received and he was informed that the said charges were never coursed through the
Records Office.
40 | P a g e
"7. Under the facts narrated above, respondents have conspired to use the strong arm
of the law and hatched the nefarious scheme to deprive Lino Broka (sic) et al. the right
to bail because the utterances allegedly constituting inciting to sedition under Article
142 of the Revised Penal Code are, except for varying nuances, almost verbatim the
same utterances which are the subject of Criminal Cases No. 37783, 37787 and
37788 and for which said detained persons are entitled to be released on bail as a
matter of constitutional right. Among the utterances allegedly made by the accused
and which the respondents claimed to be violative of Article 142 of the Revised Penal
Code are: 'Makiisa sa mga drivers, "Makiisa sa aming layunin, "Digmaang bayan ang
sagot sa kahirapan,' Itigil ang pakikialam ng imperyalismo sa Pilipinas,' 'Rollback ng
presyo ng langis sa 95 Centavos.' (See Annex B)
"8. That when petitioning counsel and other members of the defense panel requested
that they be given 7 days within which said counsel may confer with their clients —
the detained persons named above, the panel of assistant fiscals demanded that said
detained persons should sign a 'waiver' of their rights under Article 125 of the Revised
Penal Code as a condition for the grant of said request, which is a harassing
requirement considering that Lino Broka (sic) et al. were already under the detention,
albeit illegally, and they could not have waived the right under Rule 125 which they
did not enjoy at the time the ruling was made by the panel of assistant city fiscals."
(pp. 4-6, Rollo in G.R. 69848-50).
They were released provisionally on February 14, 1985, on orders of then President
F. E. Marcos. The circumstances of their release are narrated in Our resolution dated
January 26, 1985, as quoted in the Solicitor General's Manifestation as follows:
"G.R. Nos. 69848-50 (Sedfrey A. Ordoñez, Petitioner, vs. Col. Julian Arzaga, et al.,
Respondents). — Petitioner Sedfrey A. Ordoñez filed this petition for habeas corpus in
behalf of Lino Brocka, Benjamin Cervantes, Cosme Garcia, Alexander Luzano, and
Rodolfo Santos, who were all detained under a Preventive Detention Action (PDA)
issued by then President Ferdinand E. Marcos on January 28, 1985. They were
charged in three separate informations of the crime of illegal assembly under Art. 146,
paragraph 3 of the Revised Penal Code, as amended by PD 1834. On February 7,
1985, the Honorable Miriam Defensor Santiago, Regional Trial Judge of Quezon City,
issued a resolution in the above criminal cases, directing the release of the five
accused on bail of P6,000.00 for each of them, and from which resolution the
respondent fiscals took no appeal. Immediately thereafter, the accused filed their
respective bail bonds. This notwithstanding, they continued to be held in detention
by order of the respondent colonels; and on February 11, 1985, these same accused
were 'reinvestigated,' this time on charges of 'inciting to sedition' ** under Art. 142 of
the Revised Penal Code, following which corresponding cases were filed. The
respondents complied with Our resolution requiring them, inter alia, to make a
RETURN of the writ of habeas corpus. In their RETURN, it appeared that all the
accused had already been released, four of them on February 15, 1985 and one
February 8, 1985. The petitioner, nevertheless, argued that the petition has not
become moot and academic because the accused continue to be in the custody of the
law under an invalid charge of inciting to sedition." (p. 395, Rollo).
Hence, this petition.
Brocka, et al. contend that respondents' manifest bad faith and/or harassment are
sufficient bases for enjoining their criminal prosecution, aside from the fact that the
second offense of inciting to sedition is illegal, since it is premised on one and the
same act of attending and participating in the ACTO jeepney strike. They maintain
that while there may be a complex crime from a single act (Art. 48, RTC), the law does
not allow the splitting of a single act into two offenses and filing two informations
therefor, further, that they will be placed in double jeopardy.
The primary issue here is the legality of enjoining the criminal prosecution of a case,
since the two other issues raised by Brocka, et al. are matters of defense against the
sedition charge.
We rule in favor of Brocka, et al. and enjoin their criminal prosecution for the second
offense of inciting to sedition.
Indeed, the general rule is that criminal prosecution may not be restrained or stayed
by injunction, preliminary or final. There are however exceptions, among which are:
"a. To afford adequate protection to the constitutional rights of the accused
(Hernandez vs. Albano, et al., L-19272, January 25, 1967, 19 SCRA 95);
"b. When necessary for the orderly administration of justice or to avoid oppression or
multiplicity of actions (Dimayuga, et al. vs. Fernandez, 43 Phil. 304; Hernandez
vs. Albano, supra; Fortun vs. Labang, et al., L-38383, May 27, 1981, 104 SCRA 607);
"c. When there is a pre-judicial question which is sub judice (De Leon vs. Mabanag,
70 Phil. 202);
"d. When the acts of the officer are without or in excess of authority (Planas vs. Gil,
67 Phil. 62);
"e. Where the prosecution is under an invalid law, ordinance or regulation (Young
vs. Rafferty, 33 Phil. 556; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 389);
"f. When double jeopardy is clearly apparent (Sangalang vs. People and Avendia, 109
Phil. 1140);
"g. Where the court has no jurisdiction over the offense (Lopez vs. City Judge, L-
25795, October 29, 1966, 18 SCRA 616);
"h. Where it is a case of persecution rather than prosecution (Rustia vs. Ocampo, CA-
G.R. No. 4760, March 25, 1960);
"i. Where the charges are manifestly false and motivated by the lust for vengeance
(Recto vs. Castelo, 18 L.J. [1953], cited in Rañoa vs. Alvendia, CA-G.R. No. 30720-
41 | P a g e
R, October 8, 1962; Cf, Guingona, et al vs. City Fiscal, L-60033, April 4, 1984, 128
SCRA 577); and
"j. When there is clearly no prima facie case against the accused and a motion to
quash on that ground has been denied (Salonga vs. Paño, et al., L-59524, February
18, 1985, 134 SCRA 438).
"7. Preliminary injunction has been issued by the Supreme Court to prevent the
threatened unlawful arrest of petitioners (Rodriguez vs. Castelo, L-6374, August 1,
1958)." (cited in Regalado, Remedial Law Compendium, p. 188, 1988 Ed.)
In the petition before Us, Brocka, et al. have cited the circumstances to show that the
criminal proceedings had become a case of persecution, having been undertaken by
state officials in bad faith.: nad
Respondents, on the other hand, had invoked a PDA in refusing Brocka, et al.'s
release from detention (before their release on orders of then Pres. Marcos). This PDA
was, however, issued on January 28, 1985, but was invoked only on February 9, 1985
(upon receipt of the trial court's order of release). Under the guidelines issued, PDAs
shall be invoked within 24 hours (in Metro Manila) or 48 hours (outside Metro Manila).
(Ilagan v. Enrile, G.R. No. 70748, October 28, 1985, 139 SCRA 349). Noteworthy also
is Brocka, et al.'s claim that, despite subpoenas for its production, the prosecution
merely presented a purported xerox copy of the invoked PDA (par. 4, Counter-
Rejoinder, p. 367, Rollo).
The foregoing circumstances were not disputed by the Solicitor General's office. In
fact they found petitioner's plight "deplorable" (par. 51, Manifestation, p. 396, Rollo).
The hasty filing of the second offense, premised on a spurious and inoperational PDA,
certainly betrays respondent's bad faith and malicious intent to pursue criminal
charges against Brocka, et al.
We have expressed Our view in the Ilagan case that "individuals against whom PDAs
have been issued should be furnished with the original, and the duplicate original,
and a certified true copy issued by the official having official custody of the PDA, at
the time of the apprehension" (supra, p. 369).
We do not begrudge the zeal that may characterize a public official's prosecution of
criminal offenders. We, however, believe that this should not be a license to run
roughshod over a citizen's basic constitutional lights, such as due process, or
manipulate the law to suit dictatorial tendencies.
We are impelled to point out a citizen's helplessness against the awesome powers of
a dictatorship. Thus, while We agree with the Solicitor General's observation and/or
manifestation that Brocka, et al. should have filed a motion to quash the information,
We, however, believe that such a course of action would have been a futile move,
considering the circumstances then prevailing. Thus, the tenacious invocation of a
spurious and inoperational PDA and the sham and hasty preliminary investigation
were clear signals that the prosecutors intended to keep Brocka, et al. in detention
until the second offense of "Inciting to Sedition" could be facilitated and justified
without need of issuing a warrant of arrest anew. As a matter of fact the corresponding
informations for this second offense were hastily filed on February 11, 1985, or two
days after Brocka, et al.'s release from detention was ordered by the trial judge on
February 9, 1985.
Constitutional rights must be upheld at all costs, for this gesture is the true sign of
democracy. These may not be set aside to satisfy perceived illusory visions of national
grandeur.: nad
In the case of J. Salonga v. Cruz Paño, We point out:
"Infinitely more important than conventional adherence to general rules of criminal
procedure is respect for the citizen's right to be free not only from arbitrary arrest and
punishment but also from unwarranted and vexatious prosecution . . ." (G.R. No. L-
59524, February 18, 1985, 134 SCRA 438-at p. 448).
We, therefore, rule that where there is manifest bad faith that accompanies the filing
of criminal charges, as in the instant case where Brocka, et al. were barred from
enjoying provisional release until such time that charges were filed, and where a sham
preliminary investigation was hastily conducted, charges that are filed as a result
should lawfully be enjoined.
ACCORDINGLY, the petition is hereby GRANTED. The trial court is PERMANENTLY
ENJOINED from proceeding in any manner with the cases subject of the petition. No
costs.
SO ORDERED.
[G.R. No. 140228. November 19, 2004]
FRANCISCO MEDINA, MARIA MEDINA, RAYMUNDO MEDINA, ENRIQUE MEDINA,
EDGARDO MEDINA, EVELYN MEDINA, ERNIE MEDINA, ELPIDIO MEDINA,
EDWIN MEDINA, ELEONOR MEDINA, TEOFILO MEDINA, JR., EUGENE
MEDINA, ELVIRA MEDINA, ANATALIO MEDINA, MARIO MEDINA,
CORNELIO MEDINA, ERNESTO MEDINA, IGNACIO CONSTANTINO,
SANTOS CONSTANTINO, HERMOGENES CONSTANTINO, FLORENCIO
CONSTANTINO, VIRGINIA CONSTANTINO, MARCELO GEREMILLO,
ROSILA GEREMILLO, ERNESTO GEREMILLO, MERCEDES GEREMILLO,
MELENCIO GEREMILLO, BALBINO MEDINA, CRISANTA MEDINA,
YOLANDA MEDINA, LYDIA MEDINA, RENATO MEDINA, EUFEMIA
42 | P a g e
 MEDINA, VIRGILIO MEDINA, SONIA MEDINA, LUZVIMINDA MEDINA,
CRISPIN MEDINA, REMIGIO M. RODOLFO, MILAGROS M. RODOLFO,
NIDA M. RODOLFO, BELEN M. RODOLFO, MANUEL M. RODOLFO,
ALFREDO M. RODOLFO, SALLY AREVALO, ELMER AREVALO, CELSO
AREVALO, JR., VINCENT AREVALO, NENE AREVALO, THE HEIRS OF
NAZARIA CRUZ and SANTOS AREVALO, petitioners, vs. GREENFIELD
DEVELOPMENT CORPORATION, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The propriety of the writ of preliminary injunction issued by the Regional Trial
Court of Muntinlupa City (Branch 276) in Civil Case No. 98-233 is the sole issue in
this petition for review on certiorari, assailing the decision of the Court of Appeals
nullifying said writ.
Petitioners are the grandchildren of Pedro Medina from two marriages. In his first
marriage to Isadora San Jose, Pedro sired three children: Rafael, Rita and Remegia;
in his second marriage, this time to Natalia Mullet, Pedro had five: Cornelio, Brigida,
Balbino, Crisanta and Rosila. Except for Balbino and Crisanta, all of Pedros children
likewise bore children, the petitioners in this case.[1]
On June 5, 1962, Pedro, his brother Alberto Medina and his niece Nazaria Cruz
(Albertos daughter) executed a notarized Contract to Sell in favor of respondent
Greenfield Development Corporation over a parcel of land located in Muntinlupa City,
then in the Province of Rizal, covered by Transfer Certificate of Title (TCT) No. 100177
(Lot 90-A) and measuring 17,121 square meters.[2] A notarized Deed of Sale covering
said property was subsequently entered into on June 27, 1962, in favor of respondent,
and this time signed by Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta, Rosila,
and Alberto, all surnamed Medina, and Nazaria Cruz, as vendors. [3]
Thereafter, a notarized Deed of Absolute Sale with Mortgage was executed on
September 4, 1964 in favor of respondent over Lot 90-B covered by TCT No. 100178,
measuring 16,291 square meters. Signing as vendors were Pedro, Cornelio, Brigida,
Balbino, Gregoria, Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria
Cruz.[4]
By virtue of these sales, respondent was able to register in its name the title to
the two parcels of land with TCT No. 100578 covering Lot 90-A and TCT No. 133444
covering Lot 90-B. These properties were consolidated with other lots and were
eventually registered on July 19, 1995, in the name of respondent under TCT Nos.
202295, 202296 and 202297.[5]
On November 6, 1998, petitioners instituted Civil Case No. 98-233, an action for
annulment of titles and deeds, reconveyance, damages with preliminary injunction
and restraining order, against respondent and the Register of Deeds of
Makati.[6] Included in the complaint are the heirs of Nazaria Cruz, as unwilling co-
plaintiffs.[7] Petitioners allege in their complaint that they are co-owners of these two
parcels of land. While the titles were registered in the names of Pedro, Alberto,
Cornelio, Brigida and Gregoria, all surnamed Medina, they alleged that they were
recognized as co-owners thereof. In support of their case, petitioners maintain that
the deeds of sale on these properties were simulated and fictitious, and the signatures
of the vendors therein were fake. Despite the transfer of the title to respondents name,
they remained in possession thereof and in fact, their caretaker, a certain Santos
Arevalo and his family still reside on a portion of the property. On July 13, 1998,
petitioners caused an adverse claim to be annotated on the titles. After discovering
the annotation, respondent constructed a fence on the property and posted security
personnel, barring their ingress and egress. Thus, petitioners sought, among others,
the issuance of a temporary restraining order and a writ of preliminary injunction
enjoining respondent and its agents and representatives from preventing petitioners
to exercise their rights over the properties.[8]
Respondent denied the allegations, stating that petitioners have no valid claim
on the properties as it is already titled in its name by virtue of the public documents
executed by their predecessors. As counterclaim, respondent alleged that Santos
Arevalo is not petitioners caretaker and it was them who employed him as caretaker. [9]
On January 18, 1999, the trial court issued its resolution granting petitioners
prayer for injunctive relief. The dispositive portion of the resolution reads:
Let therefore an injunction issue, enjoining and directing defendant GREENFIELD
DEVELOPMENT CORPORATION, its security guards, agents, representatives, and all
those claiming rights under it, from preventing plaintiffs and their caretaker Santos
Arevalo, from entering and going out of the subject premises, and from preventing
them to exercise their property rights, upon payment of a bond in the amount
of P100,000.00.
It is SO ORDERED.[10]
Respondent filed a special civil action for certiorari and prohibition with the Court
of Appeals, docketed as CA-G.R. SP No. 52015. On July 16, 1999, the Court of
Appeals[11] rendered its decision nullifying the trial courts resolution, the dispositive
portion of which provides:
43 | P a g e
IN THE (sic) LIGHT OF ALL THE FOREGOING, the petition is hereby GRANTED. The
assailed Resolution of the Public Respondent Judge, dated January 18, 1999, in Civil
Case No. 98-233 is hereby NULLIFIED.
SO ORDERED.[12]
Petitioners now seek recourse with this Court, alleging the following grounds:
I
THE COURT OF APPEALS ERRED IN RELYING HEAVILY ON THE ANTECEDENT
FACTS NARRATED IN THE PETITION OF THE RESPONDENT IN CA-G.R. SP NO.
52015 AND ADOPTED THE SAME AS ITS OWN WITHOUT EVIDENTIARY SUPPORT
II
THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN UPHOLDING THE
VALIDITY OF THE DEEDS OF SALE IN FAVOR OF THE RESPONDENT AND IN
HOLDING THAT RESPONDENTS TRANSFER CERTIFICATES OF TITLE ARE VALID
DESPITE THE FACT THAT THE SAID ISSUES ARE YET TO BE TRIED
III
THE COURT OF APPEALS ERRED IN PRESUMING THAT NOTARIZED DOCUMENTS
ARE VALID AND THAT RESPONDENTS TORRENS TITLES ARE INDEFEASIBLE ON
THE WRONG NOTION THAT THE RESPONDENT WAS PRESUMED INNOCENT
PERSON
IV
THE COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT
RESPONDENT WAS IN CONSTRUCTIVE POSSESSION OF THE SUBJECT PREMISES
NOTWITHSTANDING THAT PETITIONERS ARE IN ACTUAL POSSESSION THEREOF
V Court of Appeals also found that respondent is in constructive possession of the
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONERS RIGHT TO
IMPUGN RESPONDENTS TITLES HAVE (SIC) PRESCRIBED SINCE AN ACTION OR
DEFENSE BASED ON THE INEXISTENCE OF A CONTRACT DOES NOT
PRESCRIBE[13]
As stated at the outset, the sole issue in this case is whether or not the trial court
erred in granting petitioners prayer for injunctive relief. This Courts resolution will
revolve only on the propriety of the injunction. Any reference to the validity or
invalidity of the transfers and the titles is merely preliminary, as the matter should
be resolved after trial on the merits.
It was the trial courts opinion that petitioners are entitled to the injunction for
the following reasons:
The Court however holds suspect the acquisition by Greenfield Development
Corporation of the two parcels. Lot 90-A covered by Transfer Certificate of Title No.
100177, was promised to be sold to defendant under a contract to sell but the other
co-owners did not sign this Contract to Sell, who all denied knowledge of the same.
No contract of Sale followed this Contract to Sell which cannot be the bases of the
issuance of a new title. A Contract to Sell is only a promise to sell, and is not a deed
of sale, specially as this Contact to Sell is not signed by all of the registered owners.
This Court cannot also understand how the document, denominated as DEED OF
ABSOLUTE SALE WITH MORTGAGE can be the bases (sic) of a new title. The
absoluteness of the sale, is contradicted by the mortgage it also provides. There is
absoluteness of sale only when the buyer upon execution of the contract, pay (sic) in
full the consideration and ownership passes to the Vendee. The registered owners of
Lot 90-B covered by Transfer Certificate of Title No. 100178 even deny having
executed this document of Deed of Absolute Sale with Mortgage.
Until these matters are threshed out at the trial on the merits, and after this is fully
explained and determined, whether the properties were actually sold to Defendant
Greenfield Development Corporation, irreparable injury will visit the landowner if the
claim of ownership by Greenfield Development Corporation is allowed and not
enjoined.[14]
The Court of Appeals, however, disagreed with the trial court. It noted that the
trial court relied mainly on petitioners allegations in the complaint, which were not
supported by substantial evidence, and ignored the presumption of validity ascribed
to the duly notarized deeds of conveyances and the titles issued to respondent. The
properties in dispute considering that it is already the registered owner thereof since
1962. Lastly, the Court of Appeals held that petitioners right to impugn respondents
title to the property has already prescribed.[15]
Section 3, Rule 58 of the Rules of Court provides for the grounds justifying the
issuance of a preliminary injunction, to wit:
44 | P a g e
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 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.
The purpose of a preliminary injunction is to prevent threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly
studied and adjudicated. Its sole aim is to preserve the status quo until the merits of
the case can be heard fully.[16] Thus, to be entitled to an injunctive writ, the petitioner
has the burden to establish the following requisites: [17]
1) a right in esse or a clear and unmistakable right to be protected;
(2) a violation of that right;
(3) that there is an urgent and permanent act and urgent necessity for the
writ to prevent serious damage.
Hence, petitioners entitlement to the injunctive writ hinges on their prima
facie legal right to the properties subject of the present dispute. The Court notes that
the present dispute is based solely on the parties allegations in their respective
pleadings and the documents attached thereto. We have on one hand, petitioners bare
assertion or claim that they are co-owners of the properties sold by their predecessors
to respondent, and on the other, respondents claim of ownership supported by deeds
of conveyances and torrens titles in their favor. From these alone, it is clear that
petitioners failed to discharge the burden of clearly showing a clear and unmistakable
right to be protected. Where the complainants right or title is doubtful or disputed,
injunction is not proper. The possibility of irreparable damage without proof of actual
existing right is not a ground for an injunction.[18]
Petitioners contend that the Court of Appeals should not have relied on
respondents allegations regarding the circumstances surrounding the sales and the
transfer of the titles. Petitioners point out that trial on the merits of the case is still
ongoing and respondent is yet to adduce evidence in support of its contention. The
same, however, applies to petitioners cause of action. They only have their own
allegations and are yet to prove their claim. And as stated earlier, the only bases from
which the propriety of the injunction can be determined are their respective pleadings
and documents. What tilt the balance in respondents favor are the notarized
documents and the titles to the properties. The well-settled rule is that a document
acknowledged before a notary public enjoys the presumption of regularity. It is
a prima facie evidence of the facts therein stated. To overcome this presumption, there
must be presented evidence that is clear and convincing. Absent such evidence, the
presumption must be upheld.[19] In addition, the titles in the name of respondent,
having been registered under the Torrens system, are generally a conclusive evidence
of the ownership of the land referred to therein,[20] and a strong presumption exists
that the titles are regularly issued and valid.[21] Therefore, until and unless petitioners
show that the documents are indeed spurious and the titles invalid, then the
presumptions must prevail at this juncture.
Petitioners, however, argue that the presumption of validity of the notarized
documents and titles cannot be applied in respondents case as it is not an innocent
purchaser.[22] According to petitioners, respondent is fully aware that at the time that
the Contract to Sell was entered into in 1962, Leon Medina who is a co-owner of the
property then covered by TCT No. 21314, was already dead. Suffice it to say that these
arguments already involve the merits of the main case pending before the trial court,
which should not even be preliminarily dealt with, as it would be premature.
Equally pertinent is the rule that courts should avoid issuing a writ of preliminary
injunction, which in effect, would dispose of the main case without trial.[23] The
ground relied upon by the trial court in issuing the writ of preliminary injunction in
this case is its doubt over the acquisition of the properties by respondent.[24] Such
basis would be virtually recognizing petitioners claim that the deeds of conveyances
and the titles are a nullity without further proof, to the detriment of the doctrine of
presumption of validity in favor of these documents. There would, in effect, be a
prejudgment of the main case and a reversal of the rule on the burden of proof since
it would assume the proposition which the petitioners are inceptively duty bound to
prove.[25]
Petitioners also claim that they are in actual possession of the property. As
alleged in their complaint, they instituted Santos Arevalo, a co-petitioner, as
caretaker.[26] They also alleged in their petition filed before this Court that Balbino
and Yolanda Medina and their respective families are still residing on a portion of the
property.[27] Respondent belies their claim, declaring that it employed Arevalo as
caretaker. Respondent presented a notarized Receipt and Quitclaim dated April 26,
45 | P a g e
1994, signed by Arevalo, who attested that he was employed by respondent as
caretaker and that his stay on the property was a mere privilege granted by
respondent.
Possession and ownership are two different legal concepts. Just as possession is
not a definite proof of ownership, neither is non-possession inconsistent with
ownership. Even assuming that petitioners allegations are true, it bears no legal
consequence in the case at hand because the execution of the deeds of conveyances
is already deemed equivalent to delivery of the property to respondent, and prior
physical delivery or possession is not legally required.[28] Under Article 1498 of the
Civil Code, when the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the object of the contract, if from the deed the
contrary does not appear or cannot be inferred. Possession is also transferred, along
with ownership thereof, to respondent by virtue of the notarized deeds of
conveyances.[29]
In sum, the trial court committed grave abuse of discretion in issuing the writ of
preliminary injunction, and the Court of Appeals was correct in nullifying the same.
The Court, however, finds that it was precipitate for the Court of Appeals to rule
that petitioners action is barred by prescription. As previously stressed, the parties
are yet to prove their respective allegations and the trial court is yet to receive the
evidence. There is nothing on record that can conclusively support the conclusion
that the action is barred by prescription. Hence, the Court of Appeals should not have
made such ruling.
WHEREFORE, the petition is hereby DENIED for lack of merit. The Decision
dated July 16, 1999 rendered by the Court of Appeals in CA-G.R. SP No. 52015 is
AFFIRMED, except as to its view on prescription, as discussed in the body of the text.
Let the original records of this case be remanded to the Regional Trial Court of
Muntinlupa City (Branch 276) with dispatch for further proceedings.
SO ORDERED.
[G.R. No. 121158. December 5, 1996]
CHINA BANKING CORPORATION, ATTYS. REYNALDO M. CABUSORA and
RENATO C. TAGUIAM, petitioners, vs. COURT OF APPEALS, HON. PEDRO
T. SANTIAGO, SPS. SO CHING and CRISTINA SO, and NATIVE WEST
INTERNATIONAL TRADING CORP., respondents.
DECISION
FRANCISCO, J.:
China Banking Corporation (China Bank) extended several loans to Native West
International Trading Corporation (Native West) and to So Ching, Native Wests
president. Native West in turn executed promissory notes[1] in favor of China Bank. So
Ching, with the marital consent of his wife, Cristina So, additionally executed two
mortgages over their properties, viz., a real estate mortgage executed on July 27, 1989
covering a parcel of land situated in Cubao, Quezon City, under TCT No.
277797,[2] and another executed on August 10, 1989 covering a parcel of land located
in Mandaluyong, under TCT No. 5363.[3] The promissory notes matured and despite
due demands by China Bank neither private respondents Native West nor So Ching
paid. Pursuant to a provision embodied in the two mortgage contracts, China Bank
filed petitions for the extra-judicial foreclosure of the mortgaged properties before
Notary Public Atty. Renato E. Taguiam for TCT No. 277797,[4] and Notary Public Atty.
Reynaldo M. Cabusora for TCT No. 5363,[5] copies of which were given to the spouses
So Ching and Cristina So. After due notice and publication, the notaries public
scheduled the foreclosure sale of the spouses real estate properties on April 13,
1993. Eight days before the foreclosure sale, however, private respondents filed a
complaint [6]with the Regional Trial Court[7]for accounting with damages and with
temporary restraining order against petitioners alleging the following causes of action:
A. Defendants failed to comply with the mandates of Administrative Order No. 3
of the Supreme Court dated October 19, 1984.
B. Defendants failed to comply with the mandates of Section 2 Presidential
Decree No. 1079 dated January 28, 1977.
C. MORTGAGORS liability limited to P6,500,000.00 and P3,500,000.00
respectively in the Mortgages Annexes A and B respectively, but the same
are not included in the notice of foreclosure.
46 | P a g e
 D. Violation of Truth in Lending Act (RP Act No. 3765).
E. In all the loans granted by DEFENDANT-BANK to plaintiffs and Borrowers, the
Bank charged interests in excess of the rate allowed by the Central Bank.
F. Violation of Article 1308 of the Civil Code.[8]
On April 7, 1993, the trial court issued a temporary restraining order to enjoin the
foreclosure sale. Thereafter counsels for the respective parties agreed to file their
pleadings and to submit the case, without further hearing, for resolution. On April
28, 1993, the trial court, without passing upon the material averments of the
complaint, issued an Order granting the private respondents prayer for the issuance
of preliminary injunction with the following proffered justification:
From the foregoing, it is quite apparent that a question of accounting poses a thorny
issue as between the litigants. Variance in the amounts involved relating to the loan
agreements must be judiciously passed upon by the Court and this is only possible if
a trial on the merits could be had as the matters appurtenant thereto are evidentiary
in nature.
Under the premises, the accounting issue being evidentiary in character calls for an
issuance of a writ of preliminary injunction pending the adjudication of the case. The
issuance thereof at this particular stage of the case is merely a preventive remedy
designed to protect from irreparable injury to property or other rights plaintiff may
suffer, which a court of equity may take cognizance of by commanding acts to be done
or prohibiting their commission, as in the instant suit, to restrain notaries public
Cabusora and Taguiam as well as defendant China Banking Corporation from
continuing with the auction sale of the subject properties, until further orders from
this Court.
Wherefore, premises considered, finding that the circumstances warrant the issuance
of a preliminary injunction, plaintiffs prayer is hereby GRANTED. Consequent
thereto, plaintiffs are hereby ordered to post a bond amounting to P1 (ONE) Million to
answer for whatever damages defendant may suffer as a consequence of the writ. [9]
Petitioners moved for reconsideration, but it was denied in an Order
dated September 23, 1993. To annul the trial courts Orders of April 28,
1993 and September 23, 1993, petitioners elevated the case through certiorari and
prohibition[10] before public respondent Court of Appeals.[11] In a decision dated
January 17, 1995, respondent Court of Appeals held that Administrative Circular No.
3 is the governing rule in extra-judicial foreclosure of mortgage, which circular
petitioners however failed to follow, and with respect to the publication of the notice
of the auction sale, the provisions of P.D. No. 1079 is the applicable statute,[12] which
decree petitioners similarly failed to obey. Respondent Court of Appeals did not pass
upon the other issues and confined its additional lengthy discussion on the validity
of the trial courts issuance of the preliminary injunction, finding the same neither
capricious nor whimsical exercise of judgment that could amount to grave abuse of
discretion.[13] The Court of Appeals accordingly dismissed the petition, as well as
petitioners subsequent motion for reconsideration.[14] Hence, the instant petition
under Rule 45 of the Rules of Court reiterating the grounds raised before respondent
court, to wit:
I. PETITIONER CBCS PETITIONS TO EXTRA-JUDICIALLY FORECLOSE THE
REAL ESTATE MORTGAGES OF JULY 27, 1989 AND AUGUST 10,
1989 THRU PETITIONERS-NOTARIES PUBLIC, AND THE
SCHEDULED FORECLOSURE SALE ARE VALID AND LAWFUL;
II. PRIVATE RESPONDENTS AND PETITIONER CBC HAD EXPRESSLY AGREED
TO CONSIDER THE SAME MORTGAGES AS VALID SECURITIES FOR
PROMPT AND FULL PAYMENT OF ALL AND ANY OBLIGATIONS OF
THE FORMER FROM THE LATTER;
III. THE SUPPOSED VARIANCE IN THE TOTAL AMOUNT OF UNPAID LOANS IS
NOT A VALID BASIS TO ENJOIN THE FORECLOSURE OF THE
QUESTIONED MORTGAGES. THE MERE FAILURE TO PAY THE LOAN
SECURED BY SAID MORTGAGES IS THE ONLY, SINGLE REASON
FOR THEIR LAWFUL FORECLOSURE;
IV. PETITIONER BANK HAD FURNISHED PRIVATE RESPONDENTS WITH
COPIES OF DISCLOSURE STATEMENTS IN COMPLIANCE WITH THE
TRUTH IN LENDING ACT, AND CHARGED THEM INTERESTS IN
ACCORDANCE WITH LAW AND PURSUANT TO ITS EXPRESS
AGREEMENT WITH THE LATTER;
V. THE P1.0 MILLION INJUNCTION BOND REQUIRED BY THE HONORABLE
COURT A QUO ON PRIVATE RESPONDENTS IS GROSSLY AND
PATENTLY INADEQUATE.[15]
At the outset, the Courts attention is drawn to the fact that since the filing of this
suit before the trial court, none of the substantial issues have been resolved. To avoid
and gloss over the issues raised by the parties, as what the trial court and respondent
Court of Appeals did, would unduly prolong this litigation involving a rather simple
case of foreclosure of mortgage. Undoubtedly, this will run counter to the avowed
purpose of the rules, i.e., to assist the parties in obtaining just, speedy and
47 | P a g e
inexpensive determination of every action or proceeding.[16] The Court, therefore, feels
that the central issues of the case, albeit unresolved by the courts below, should now
be settled specially as they involved pure questions of law. Furthermore, the pleadings
of the respective parties on file have amply ventilated their various positions and
arguments on the matter necessitating prompt adjudication.
Now to the core issues.
As the Court sees it, the crucial issues are: (1) whether or not the loans in excess
of the amounts expressly stated in the mortgage contracts can be included as part of
the loans secured by the real estate mortgages, (2) whether or not petitioners can
extrajudicially foreclose the properties subject of the mortgages, (3) whether or not
Administrative Order No. 3 should govern the extrajudicial foreclosure of the
properties, and (4) whether or not the writ of preliminary injunction issued by the trial
court is valid.
Petitioners aver that the additional loans extended in favor of private respondents
in excess of P6,500,000.00 and P3,500,000.00 amounts respectively stipulated in the
July 27, 1989 and August 10, 1989 mortgage contracts are also secured by the same
collaterals or real estate properties, citing as bases the introductory paragraph
(whereas clause) of the mortgage contracts, as well as the stipulations stated therein
under the first and second paragraphs. Private respondents for their part argue that
the additional loans are clean loans, relying on some isolated parts of the same
introductory paragraph and first paragraph of the contracts, and also of the third
paragraph.
As both parties offered a conflicting interpretation of the contract, then judicial
determination of the parties intention is thus, inevitable. [17] Hereunder are the
pertinent identical introductory paragraphs and paragraphs 1 to 3 of the July 27,
1989 and August 10, 1989mortgage contracts:
WHEREAS, the MORTGAGEE has granted, and may from time to time hereafter grant
to the MORTGAGOR(S)/either of them/and/or NATIVE WEST INTERNATIONAL
TRADING CORP. hereinafter called the DEBTOR(S) credit facilities not exceeding SIX
MILLION FIVE HUNDRED THOUSAND PESOS ONLY (P6,500,000.00)* Philippine
currency, and the MORTGAGEE had required the MORTGAGOR(S) to give collateral
security for the payment of any and all obligations heretofore contracted/incurred
and which may thereafter be contracted/incurred by the MORTGAGOR(S) and/or
DEBTOR(S), or any one of them, in favor of the MORTGAGEE;
NOW, THEREFORE, as collateral security for the payment of the principal and
interest of the indebtedness/obligations herein referred to and the faithful
performance by the MORTGAGOR(S) of his (her, its) obligations hereunder, the
MORTGAGOR(S) hereby execute(s) a FIRST MORTGAGE, in favor of the
MORTGAGEE, free from all liens and encumbrances of any kind, that (those) certain
parcel(s) of land, together with all the buildings/machineries/equipment/
improvements now existing thereon, and which may hereafter be placed thereon,
described in the Schedule of mortgaged properties described hereunder and/or which
is hereto attached, marked Exhibit A and made a part thereof.
1. It is agreed that this mortgage shall respond for all the obligations
contracted/incurred by the MORTGAGOR(S) and/or DEBTOR(S) or any one of them,
in favor of the MORTGAGEE up to the said sum of SIX MILLION FIVE HUNDRED
THOUSAND PESOS ONLY (P6,500,000.00)*regardless of the manner in which the said
obligations may have been contracted/incurred by the MORTGAGOR(S) and/or
DEBTOR(S) whether by advances or loans made to him (her, it) by the MORTGAGEE,
by the negotiation of mercantile documents, including trust receipts, by the execution
by the MORTGAGOR(S) and/or DEBTOR(S) of money market
instruments/commercial papers, undertakings of guaranty of suretyship, or by
endorsement of negotiable instruments, or otherwise, the idea being to make this deed
a comprehensive and all embracing security that it is.
2. Payments on account of the principal and interest of the credit granted by the
MORTGAGEE to the MORTGAGOR(S) and/or DEBTOR(S) may be made from time to
time, and as often as the MORTGAGOR(S) may elect; provided, however, that in the
event of such payments being so made that the indebtedness to the MORTGAGEE
may from time to time be reduced the MORTGAGEE may make further advances and
all sums whatsoever advanced by the MORTGAGEE shall be secured by this
mortgage, and partial payments of said indebtedness from time to time shall not
thereby be taken to reduce by the amount of such payments the credit hereby
secured. The said credit shall extend to and account which shall, within the said limit
of P6,500,000.00* exclusive of interest, be fluctuating and subject to increase or
decrease from time to time as the MORTGAGEE may approve, and this mortgage shall
stand as security for all indebtedness of the MORTGAGOR(S) and/or DEBTOR(S), or
any one of them, at any and all times outstanding, regardless of partial or full
payments at any time or times made by the MORTGAGOR(S) and/or DEBTOR(S).
3. It is hereby agreed that the MORTGAGEE may from time to time grant the
MORTGAGOR(S)/DEBTOR(S) credit facilities exceeding the amount secured by this
mortgage, without affecting the liability of the MORTGAGOR(S) under this mortgage
up to the amount stipulated.[18]
An important task in contract interpretation is the ascertainment of the intention
of the contracting parties which is accomplished by looking at the words they used to
project that intention in their contract, i.e., all the words, not just a particular word
or two, and words in context, not words standing alone.[19] Indeed, Article 1374 of the
48 | P a g e
Civil Code, states that the various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may result from all of them
taken jointly. Applying the rule, we find that the parties intent is to constitute the real
estate properties as continuing securities liable for future obligations beyond the
amounts of P6.5 million and P3.5 million respectively stipulated in the July 27,
1989 and August 10, 1989 mortgage contracts. Thus, while the whereas clause
initially provides that the mortgagee has granted, and may from time to time hereafter
grant to the mortgagors x x x credit facilities not exceeding six million five hundred
thousand pesos only (P6,500,000.00)** yet in the same clause it provides that the
mortgagee had required the mortgagor(s) to give collateral security for the payment of
any and all obligations heretofore contracted/incurred and which may thereafter be
contracted/incurred by the mortgagor(s) and/or debtor(s), or any one of them, in favor
of the mortgagee which qualifies the initial part and shows that the collaterals or real
estate properties serve as securities for future obligations. The first which ends with
the clause, the idea being to make this deed a comprehensive and all embracing
security that it is supports this qualification.
Similarly, the second provides that the mortgagee may take further advances and
all sums whatsoever advanced by the mortgagee shall be secured by this mortgagee
x x x. And although it was stated that [t]he said credit shall extend to any account
which shall, within the said limit of P6,500,000.00 exclusive of interest, this part of
the second sentence is again qualified by its succeeding portion which provides that
this mortgage shall stand as security for all indebtedness of the mortgagor(s) and/or
debtor(s), or any one of them, at any and all times outstanding ... Again, under the
third paragraph, it is provided that the mortgagee may from time to time grant the
mortgagor(s)/debtor(s) credit facilities exceeding the amount secured by this
mortgage x x x. The fourth paragraph,[20] in addition, states that x x x all such
withdrawals, and payments, whether evidenced by promissory notes or otherwise,
shall be secured by this mortgage which manifestly shows that the parties principally
intended to constitute the real estate properties as continuing securities for additional
advancements which the mortgagee may, upon application, extend. It is well settled
that mortgages given to secure future advancements or loans are valid and legal
contracts, and that the amounts named as consideration in said contracts do not
limit the amount for which the mortgage may stand as security if from the four corners
of the instrument the intent to secure future and other indebtedness can be
gathered.[21]
Anent the second issue, we find that petitioners are entitled to foreclose the
mortgages. In their complaint for accounting with damages pending with the trial
court, private respondents averred that:
8. Up to and until February, 1993, PLAINTIFF-CORPORATION had paid to the
DEFENDANT-BANK, the amount of THREE HUNDRED FIFTY THOUSAND
(P350,000.00) Pesos, Philippine Currency, and was willing to pay the balance in
installments of FOUR HUNDRED THOUSAND (P400,000.00) Pesos, Philippine
Currency, every month, in the meantime, but the DEFENDANT-BANK refused to
accept, demanding instead SEVEN HUNDRED MILLION (P700,000,000.00) Pesos,
Philippine Currency, a month.
9. Inspite of the expressed willingness and commitment of plaintiffs to pay their
obligation in a manner which they could afford, on March 11, 1993, MORTGAGORS
and DEFENDANT-CORPORATION, each received a Letter of Demand from
DEFENDANT-BANK, for the payment of P28,775,615.14 exclusive of interest and
penalty evidenced by 11 promissory notes enclosed therein x x x.
10. Upon receipt of the letter, PLAINTIFF-CORPORATION through its President
pleaded with the Chairman of the Board of the DEFENDANT-BANK, through whom
Defendant-Corporation was transacting business with, to accept its offer of payment
of FOUR HUNDRED THOUSAND (P400,000.00) Pesos, Philippine Currency, a month,
in the meantime, which was again refused by the said Chairman. [22]
which allegations are a clear admission that they were unable to settle to the fullest
their obligation. Foreclosure is valid where the debtors, as in this case, are in default
in the payment of their obligation.[23] The essence of a contract of mortgage
indebtedness is that a property has been identified or set apart from the mass of the
property of the debtor-mortgagor as security for the payment of money or the
fulfillment of an obligation to answer the amount of indebtedness, in case of default
of payment.[24] It is a settled rule that in a real estate mortgage when the obligation is
not paid when due, the mortgagee has the right to foreclose the mortgage and to have
the property seized and sold in view of applying the proceeds to the payment of the
obligation.[25] In fact, aside from the mortgage contracts, the promissory notes
executed to evidence the loans also authorize the mortgagee to foreclose on the
mortgages. Thus:
x x x CHINA BANKING CORPORATION is hereby authorized to sell at public or private
sales such securities or things of value for the purpose of applying their proceeds to
such payments.[26]
And while private respondents aver that they have already paid ten million pesos, an
allegation which has still to be settled before the trial court, the same cannot be
utilized as a shield to enjoin the foreclosure sale. A mortgage given to secure
advancements, we repeat, is a continuing security and is not discharged by repayment
of the amount named in the mortgage, until the full amount of the advancements are
paid.[27]
With respect to the third issue, we find private respondents contention that
Administrative Order No. 3 is the governing rule in foreclosure of mortgages
49 | P a g e
misplaced. The parties, we note, have stipulated that the provisions of Act No. 3135
is the controlling law in case of foreclosure. Thus:
17. The MORTGAGOR(S) hereby grant(s) unto the MORTGAGEE full and irrevocable
power of attorney coupled with interest, in the event of breach of any of the conditions
of this mortgage, to sell, in its discretion, the mortgaged properties at public auction,
for cash and to the highest bidder, in the Province or City where the mortgaged
properties are located, before the Sheriff, or a Notary Public, without court
proceedings, after posting notices of sale for a period of twenty days in three public
places in said place; and after publication of such notice in a newspaper of general
circulation in the said place once a week, for three consecutive weeks, and the
MORTGAGEE is hereby authorized to execute the deed of sale and all such other
documents as may be necessary in the premises all in accordance with the provisions
of Act No. 3135 of the Philippine Legislature,as amended, and Section 78 of Republic
Act No. 337; x x x.[28] (Underscoring supplied. )
By invoking the said Act, there is no doubt that it must govern the manner in which
the sale and redemption shall be effected.[29] Clearly, the fundamental principle that
contracts are respected as the law between the contracting parties finds application
in the present case,[30] specially where they are not contrary to law, morals, good
customs and public policy.
Moreover, Administrative Order No. 3 is a directive for executive judges and clerks
of courts which, under its preliminary paragraph is [i]n line with the responsibility of
an Executive Judge, under Administrative Order No. 6, dated June 30, 1975, for the
management of courts within his administrative area, included in which is the task
of supervising directly the work of the Clerk of Court, who is also the Ex-Oficio Sheriff,
and his staff, x x x Surely, a petition for foreclosure with the notary public is not
within the contemplation of the aforesaid directive as the same is not filed with the
court. At any rate, Administrative Order No. 3 cannot prevail over Act No. 3135, as
amended. It is an elementary principle in statutory construction that a statute is
superior to an administrative directive and the former cannot be repealed or amended
by the latter.
On the last issue, we find that the issuance of the writ of injunction by the trial
court unjustified. A writ of preliminary injunction, as an ancillary or preventive
remedy, 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. [31] But
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. [32] In the case at bench,
we fail to see any reason why the foreclosure of the mortgages should be enjoined. On
the face of the clear admission by private respondents that they were unable to settle
their obligations which were secured by the mortgages, petitioners have a clear right
to foreclose the mortgages which is a remedy provided by law. Thus, in Caltex
Philippines, Inc. v. Intermediate Appellate Court, [33] we reiterated the rule that:
x x x where a debt is secured by a mortgage and there is a default in payment on the
part of the mortgagor, the mortgagee has a choice of one (1) or two (2) remedies, but
he cannot have both. The mortgagee may:
1) foreclosure the mortgage; or
2) file an ordinary action to collect the debt.
When the mortgagee chooses the foreclosure of the mortgage as a remedy, he enforces
his lien by the sale on foreclosure of the mortgaged property. The proceeds of the sale
will be applied to the satisfaction of the debt. With this remedy, he has a prior lien on
the property. In case of a deficiency, the mortgagee has the right to claim for the
deficiency resulting from the price obtained in the sale of the real property at public
auction and the outstanding obligation at the time of the foreclosure proceedings
(Soriano v. Enriquez, 24 Phil. 584; Banco de Islas Filipinas v. Concepcion Hijos, 53
Phil. 86; Banco Nacional v. Barreto, 53 Phil. 101).
On the other hand, if the mortgagee resorts to an action to collect the debt, he thereby
waives his mortgage lien. He will have no more priority over the mortgaged property. If
the judgment in the action to collect is favorable to him, and it becomes final and
executory, he can enforce said judgment by execution. He can even levy execution on
the same mortgaged property, but he will not have priority over the latter and there
may be other creditors who have better lien on the properties of the mortgagor.[34]
WHEREFORE, the instant petition is hereby GRANTED. The assailed Decision,
as well as the Resolution, of the Court of Appeals dated January 17, 1995 and July
7, 1995, respectively, are hereby REVERSED and SET ASIDE. The preliminary writ of
injunction issued by the trial court is hereby NULLIFIED. This case is REMANDED to
the court of origin for further proceedings in conformity with this decision.
SO ORDERED.
50 | P a g e
[G.R. No. 131367. August 31, 2000]
HUTCHISON PORTS PHILIPPINES LIMITED, petitioner, vs. SUBIC BAY
METROPOLITAN AUTHORITY, INTERNATIONAL CONTAINER TERMINAL
SERVICES INC., ROYAL PORT SERVICES INC. and the EXECUTIVE
SECRETARY, respondents.
DECISION
YNARES-SANTIAGO, J.:
On February 12, 1996, the Subic Bay Metropolitan Authority (or SBMA)
advertised in leading national daily newspapers and in one international
publication,[1] an invitation offering to the private sector the opportunity to develop
and operate a modern marine container terminal within the Subic Bay Freeport
Zone. Out of seven bidders who responded to the published invitation, three were
declared by the SBMA as qualified bidders after passing the pre-qualification
evaluation conducted by the SBMAs Technical Evaluation Committee (or SBMA-
TEC). These are: (1) International Container Terminal Services, Inc. (or ICTSI);
(2) a consortium consisting of Royal Port Services, Inc. and HPC Hamburg Port
Consulting GMBH (or RPSI); and (3) Hutchison Ports Philippines Limited (or
HPPL), representing a consortium composed of HPPL, Guoco Holdings (Phils.), Inc.
and Unicol Management Services, Inc. All three qualified bidders were required to
submit their respective formal bid package on or before July 1, 1996 by the SBMAs
Pre-qualification, Bids and Awards Committee (or SBMA-PBAC).
Thereafter, the services of three (3) international consultants[2] recommended by
the World Bank for their expertise were hired by SBMA to evaluate the business plans
submitted by each of the bidders, and to ensure that there would be a transparent
and comprehensive review of the submitted bids. The SBMA also hired the firm of
Davis, Langdon and Seah Philippines, Inc. to assist in the evaluation of the bids and
in the negotiation process after the winning bidder is chosen. All the consultants,
after such review and evaluation unanimously concluded that HPPLs Business Plan
was far superior to that of the two other bidders. [3]
However, even before the sealed envelopes containing the bidders proposed
royalty fees could be opened at the appointed time and place, RPSI formally
protested that ICTSI is legally barred from operating a second port in the
Philippines based on Executive Order No. 212 and Department of
Transportation and Communication (DOTC) Order 95-863. RPSI thus requested
that the financial bid of ICTSI should be set aside. [4]
Nevertheless, the opening of the sealed financial bids proceeded under
advisement relative to the protest signified by RPSI. The financial bids, more
particularly the proposed royalty fee of each bidder, was as follows:
ICTSI ------------US$57.80 TEU
HPPL ------------US$20.50 TEU
RPSI -------------US$15.08 TEU
The SBMA-PBAC decided to suspend the announcement of the winning bid, however,
and instead gave ICTSI seven (7) days within which to respond to the letter-protest
lodged by RPSI. The HPPL joined in RPSIs protest, stating that ICTSI should be
disqualified because it was already operating the Manila International Container Port
(or MICP), which would give rise to inevitable conflict of interest between the MICP
and the Subic Bay Container Terminal facility.[5]
On August 15, 1996, the SBMA-PBAC issued a resolution rejecting the bid of
ICTSI because said bid does not comply with the requirements of the tender
documents and the laws of the Philippines. The said resolution also declared that:
RESOLVED FURTHER, that the winning bid be awarded to HUTCHISON PORTS
PHILIPPINES LIMITED (HPPL) and that negotiations commence immediately with
HPPL (HUTCHISON) with a view to concluding an acceptable agreement within 45
days of this date failing which negotiations with RPSI (ROYAL) will commence with a
view to concluding an acceptable agreement within 45 days thereafter failing which
there will be declared a failure of bids.[6] (Underscoring supplied)
The following day, ICTSI filed a letter-appeal with SBMAs Board of Directors
requesting the nullification and reversal of the above-quoted resolution rejecting
ICTSIs bid while awarding the same to HPPL. But even before the SBMA Board could
act on the appeal, ICTSI filed a similar appeal before the Office of the President.[7] On
August 30, 1996, then Chief Presidential Legal Counsel (CPLC) Renato L. Cayetano
submitted a memorandum to then President Fidel V. Ramos, containing the following
recommendations:
We therefore suggest that the President direct SBMA Chairman Gordon to consider
option number 4 that is to re-evaluate the financial bids submitted by the parties,
taking into consideration all the following factors:
1. Reinstate ICTSIs bid;
51 | P a g e
2. Disregard all arguments relating to monopoly;
3. The re-evaluation must be limited to the parties financial bids.
3.1 Considering that the parties business have been accepted (passed),
strictly follow the criteria for bid evaluation provided for in pars. (c) and
(d), Part B (1) of the Tender Document.
4. In the re-evaluation, the COA should actively participate to determine which of the
financial bids is more advantageous.
5. In addition, all the parties should be given ample opportunity to elucidate or clarify
the components/justification for their respective financial bids in order to ensure fair
play and transparency in the proceedings.
6. The Presidents authority to review the final award shall remain. [8] (Underscoring
supplied)
The recommendation of CPLC Cayetano was approved by President Ramos, and
a copy of President Ramos handwritten approval was sent to the SBMA Board of
Directors. Accordingly, the SBMA Board, with the concurrence of representatives of
the Commission on Audit, agreed to focus the reevaluation of the bids in accordance
with the evaluation criteria and the detailed components contained in the Tender
Document, including all relevant information gleaned from the bidding documents,
as well as the reports of the three international experts and the consultancy firm hired
by the SBMA.
On September 19, 1996, the SBMA Board issued a Resolution, declaring:
NOW, THEREFORE, IT IS HEREBY RESOLVED that the bid that conforms to the
Invitation to Tender, that has a realistic Business Plan offering the greatest financial
return to SBMA, the best possible offer and the most advantageous to the government
is that of HPPL and HPPL is accordingly selected as the winning bidder and is hereby
awarded the concession for the operation and development of the Subic Bay
Container Terminal.[9] (Underscoring supplied)
In a letter dated September 24, 1996, the SBMA Board of Directors submitted to
the Office of the President the results of the re-evaluation of the bid proposals, to wit:
SBMA, through the unanimous vote of all the Board Members, excluding the
Chairman of the Board who voluntarily inhibited himself from participating in the re-
evaluation, selected the HPPL bid as the winning bid, being: the conforming bid with
a realistic Business Plan offering the greatest financial return to the SBMA; the best
possible offer in the market, and the most advantageous to the government in
accordance with the Tender Document.[10]
Notwithstanding the SBMA Boards recommendations and action awarding the
project to HPPL, then Executive Secretary Ruben Torres submitted a memorandum
to the Office of the President recommending that another rebidding be
conducted.[11] Consequently, the Office of the President issued a Memorandum
directing the SBMA Board of Directors to refrain from signing the Concession Contract
with HPPL and to conduct a rebidding of the project.[12]
In the meantime, the Resident Ombudsman for the DOTC filed a complaint
against members of the SBMA-PBAC before the Office of the Ombudsman for alleged
violation of Section 3(e) of Republic Act No. 3019 for awarding the contract to
HPPL. On April 16, 1997, the Evaluation and Preliminary Investigation Bureau of the
Office of the Ombudsman issued a Resolution absolving the members of the SBMA-
PBAC of any liability and dismissing the complaint against them, ruling thus:
After an assiduous study of the respective contentions of both parties, we are inclined
to hold, as it is hereby held, that there is no proof on record pinpointing respondents
to have acted in excess of their discretion when they awarded the bid to HPPL. Records
revealed that respondents, in the exercise of their discretion in determining the
financial packages offered by the applicants, were guided by the expert report of
Davis, Langdon and Seah (DLS) that fairly evaluated which of the bidders tender the
greatest financial return to the government. There is no showing that respondents
had abused their prerogatives. As succinctly set forth in the DLS report it stated,
among others, that, in assessing the full financial return to SBMA offered by the
bidders, it is necessary to consider the following critical matters:
1. Royalty fees
2. Volume of TEUs as affected by:
a. Tariff rates;
b. Marketing strategy;
c. Port facilities; and
d. Efficient reliable services.
52 | P a g e
With the preceding parameters for the evaluation of bidders business plan, the
respondents were fairly guided by, as they aligned their judgment in congruence with,
the opinion of the panel of experts and the SBMAs Technical Evaluation Committee
to the effect that HPPLs business is superior while that of ICTSIs appeared to be
unrealistically high which may eventually hinder the competitiveness of the SBMA
port with the rest of the world. Respondents averred that the panel of World Bank
experts noted that ICTSIs high tariff rates at U.S. $119.00 per TEU is already higher
by 37% through HPPL, which could further increase by 20% in the first two (2) years
and by 5% hike thereafter. In short, high tariffs would discourage potential customers
which may be translated into low cargo volume that will eventually reduce financial
return to SBMA. Respondents asserted that HPPLs business plan offers the greatest
financial return which could be equated that over the five years, HPPL offers 1.25
billion pesos while ICTSI offers P0.859 billion, and RPSI offers P.420 billion. Over the
first ten years HPPL gives P2.430 billion, ICTSI tenders P2.197 billion and RPSI has
P1.632 billion.
Viewed from this perspective alongside with the evidence on record, the undersigned
panel does not find respondents to have exceeded their discretion in awarding the bid
to HPPL. Consequently, it could not be said that respondents act had placed the
government at a grossly disadvantageous plight that could have jeopardized the
interest of the Republic of the Philippines.[13]
On July 7, 1997, the HPPL, feeling aggrieved by the SBMAs failure and refusal
to commence negotiations and to execute the Concession Agreement despite its earlier
pronouncements that HPPL was the winning bidder, filed a complaint [14] against
SBMA before the Regional Trial Court (RTC) of Olongapo City, Branch 75, for specific
performance, mandatory injunction and damages. In due time, ICTSI, RPSI and
the Office of the President filed separate Answers-in-Intervention[15] to the complaint
opposing the reliefs sought by complainant HPPL.
Complainant HPPL alleged and argued therein that a binding and legally
enforceable contract had been established between HPPL and defendant SBMA under
Article 1305 of the Civil Code, considering that SBMA had repeatedly declared and
confirmed that HPPL was the winning bidder. Having accepted HPPLs offer to operate
and develop the proposed container terminal, defendant SBMA is duty-bound to
comply with its obligation by commencing negotiations and drawing up a Concession
Agreement with plaintiff HPPL. HPPL also pointed out that the bidding procedure
followed by the SBMA faithfully complied with existing laws and rules established by
SBMA itself; thus, when HPPL was declared the winning bidder it acquired the
exclusive right to negotiate with the SBMA. Consequently, plaintiff HPPL posited that
SBMA should be: (1) barred from conducting a re-bidding of the proposed project
and/or performing any such acts relating thereto; and (2) prohibited from negotiating
with any party other than plaintiff HPPL until negotiations between HPPL and SBMA
have been concluded or in the event that no acceptable agreement could be arrived
at. Plaintiff HPPL also alleged that SBMAs continued refusal to negotiate the
Concession Contract is a substantial infringement of its proprietary rights, and
caused damage and prejudice to plaintiff HPPL.
Hence, HPPL prayed that:
(1) Upon the filing of this complaint, hearings be scheduled to determine the propriety
of plaintiffs mandatory injunction application which seeks to order defendant or any
of its appropriate officers or committees to forthwith specify the date as well as to
perform any and all such acts (e.g. laying the ground rules for discussion) for the
commencement of negotiations with plaintiff with the view to signing at the earliest
possible time a Concession Agreement for the development and operation of the Subic
Bay Container Terminal.
(2) Thereafter, judgment be rendered in favor of plaintiff and against defendant:
2.1. Making permanent the preliminary mandatory injunction it had issued;
2.2. Ordering defendant to implement the Concession Agreement it had executed with
plaintiff in respect of the development and operation of the proposed Subic Bay
Container Terminal;
2.3. Ordering defendant to pay for the cost of plaintiffs attorneys fees in the amount
of P500,000.00, or as otherwise proven during the trial.
Plaintiff prays for other equitable reliefs.[16]
During the pre-trial hearing, one of the issues raised and submitted for resolution
was whether or not the Office of the President can set aside the award made by SBMA
in favor of plaintiff HPPL and if so, can the Office of the President direct the SBMA to
conduct a re-bidding of the proposed project.
While the case before the trial court was pending litigation, on August 4, 1997,
the SBMA sent notices to plaintiff HPPL, ICTSI and RPSI requesting them to declare
their interest in participating in a rebidding of the proposed project. [17] On October
20, 1997, plaintiff HPPL received a copy of the minutes of the pre-bid conference
which stated that the winning bidder would be announced on December 5,
1997.[18] Then on November 4, 1997, plaintiff HPPL learned that the SBMA had
accepted the bids of ICTSI and RPSI who were the only bidders who qualified.
53 | P a g e
 In order to enjoin the rebidding while the case was still pending, plaintiff HPPL
filed a motion for maintenance of the status quo[19] on October 28, 1997. The said
motion was denied by the court a quo in an Order dated November 3, 1997, to wit:
Plaintiff maintains that by voluntarily participating in this proceedings, the defendant
and the intervenors have unqualifiedly agreed to submit the issue of the propriety,
legality and validity of the Office of the Presidents directive that the SBMA effect a
rebidding of its concession contract or the operation of the Subic Bay Container
Terminal. As such, the status quo must be maintained in order not to thwart the
courts ability to resolve the issues presented. Further, the ethics of the profession
require that counsel should discontinue any act which tends to render the issues
academic.
The Opposition is anchored on lack of jurisdiction since the issuance of a cease-and-
desist order would be tantamount to the issuance of a Temporary Restraining Order
or a Writ of Injunction which this Court cannot do in light of the provision of Section
21 of R.A. 7227 which states:
Section 21. Injunction and Restraining Order. The implementation of the projects for
the conversion into alternative productive uses of the military reservations are urgent
and necessary and shall not be restrained or enjoined except by an order issued by
the Supreme Court of the Philippines.
During the hearing on October 30, 1997, SBMAs counsel revealed that there is no law
or administrative rule or regulation which requires that a bidding be accomplished
within a definite time frame.
Truly, the matter of the deferment of the re-bidding on November 4, 1997 rests on the
sound discretion of the SBMA. For this Court to issue a cease-and-desist order would
be tantamount to an issuance of a Temporary Restraining Order or a Writ of
Preliminary Injunction. (Prado v. Veridiano II, G.R. No. 98118, December 6, 1991).
The Court notes that the Office of the President has not been heard fully on the
issues. Moreover, one of the intervenors is of the view that the issue of jurisdiction
must be resolved first, ahead of all the other issues.
WHEREFORE, and viewed from the foregoing considerations, plaintiffs motion is
DENIED.
SO ORDERED.[20] (Underscoring supplied)
Hence, this petition filed by petitioner (plaintiff below) HPPL against respondents
SBMA, ICTSI, RPSI and the Executive Secretary seeking to obtain a prohibitory
injunction. The grounds relied upon by petitioner HPPL to justify the filing of the
instant petition are summed up as follows:
29. It is respectfully submitted that to allow or for this Honorable Court to otherwise
refrain from restraining SBMA, during the pendency of this suit, from committing the
aforementioned act(s) which will certainly occur on 5 December 1997 such action (or
inaction) will work an injustice upon petitioner which has validly been announced as
the winning bidder for the operation of the Subic Bay Container Terminal.
30. To allow or for this Honorable Court to otherwise refrain from restraining SBMA,
during the pendency of this suit, from committing the aforementioned threatened acts
would be in violation of petitioners rights in respect of the action it had filed before
the RTC of Olongapo City in Civil Case No. 243-O-97, and could render any judgment
which may be reached by said Court moot and ineffectual. As stated, the legal issues
raised by the parties in that proceedings are of far reaching importance to the national
pride and prestige, and they impact on the integrity of government agencies engaged
in international bidding of privatization projects. Its resolution on the merits by the
trial court below and, thereafter, any further action to be taken by the parties before
the appellate courts will certainly benefit respondents and the entire Filipino
people.[21]
WHEREFORE, petitioner HPPL sought relief praying that:
a) Upon the filing of this petition, the same be given due course and a temporary
restraining order and/or writ of preliminary injunction be issued ex parte, restraining
SBMA or any of its committees, or other persons acting under its control or direction
or upon its instruction, from declaring any winner on 5 December 1997 or at any
other date thereafter, in connection with the rebidding for the privatization of the
Subic Bay Container Terminal and/or for any, some or all of the respondents to
perform any such act(s) in pursuance thereof, until further orders from this Honorable
Court;
b) After appropriate proceedings, judgment be rendered in favor of petitioner and
against respondents --
(1) Ordering SBMA to desist from conducting any rebidding or in declaring the winner
of any such rebidding in respect of the development and operation of the Subic Bay
Container Terminal until the judgment which the RTC of Olongapo City may render
in Civil Case No. 243-O-97 is resolved with finality;
54 | P a g e
(2) Declaring null and void any award which SBMA may announce or issue on 5
December 1997; and
(3) Ordering respondents to pay for the cost of suit.
Petitioner prays for other equitable reliefs.[22]
The instant petition seeks the issuance of an injunctive writ for the sole purpose
of holding in abeyance the conduct by respondent SBMA of a rebidding of the
proposed SBICT project until the case for specific performance is resolved by the trial
court. In other words, petitioner HPPL prays that the status quo be preserved until
the issues raised in the main case are litigated and finally determined. Petitioner was
constrained to invoke this Courts exclusive jurisdiction and authority by virtue of the
above-quoted Republic Act 7227, Section 21.
On December 3, 1997, this Court granted petitioner HPPLs application for a
temporary restraining order enjoining the respondent SBMA or any of its committees,
or other persons acting under its control or direction or upon its instruction, from
declaring any winner on December 5, 1997 or at any other date thereafter, in
connection with the rebidding for the privatization of the Subic Bay Container
Terminal and/or for any, some or all of the respondents to perform any such act or
acts in pursuance thereof.[23]
There is no doubt that since this controversy arose, precious time has been lost
and a vital infrastructure project has in essense been mothballed to the detriment of
all parties involved, not the least of which is the Philippine Government, through its
officials and agencies, who serve the interest of the nation. It is, therefore, imperative
that the issues raised herein and in the court a quo be resolved without further delay
so as not to exacerbate an already untenable situation.
At the outset, the application for the injunctive writ is only a provisional remedy,
a mere adjunct to the main suit.[24] Thus, it is not uncommon that the issues in the
main action are closely intertwined, if not identical, to the allegations and counter
allegations propounded by the opposing parties in support of their contrary positions
concerning the propriety or impropriety of the injunctive writ. While it is not our
intention to preempt the trial courts determination of the issues in the main action
for specific performance, this Court has a bounden duty to perform; that is, to resolve
the matters before this Court in a manner that gives essence to justice, equity and
good conscience.
While our pronouncements are for the purpose only of determining whether or
not the circumstances warrant the issuance of the writ of injunction, it is inevitable
that it may have some impact on the main action pending before the trial
court. Nevertheless, without delving into the merits of the main case, our findings
herein shall be confined to the necessary issues attendant to the application for an
injunctive writ.
For an injunctive writ to be issued, the following requisites must be proven:
First. That the petitioner/applicant must have a clear and unmistakable right.
Second. That there is a material and substantial invasion of such right.
Third. That there is an urgent and permanent necessity for the writ to prevent
serious damage.[25]
To our mind, petitioner HPPL has not sufficiently shown that it has a clear and
unmistakable right to be declared the winning bidder with finality, such that the
SBMA can be compelled to negotiate a Concession Contract. Though the SBMA Board
of Directors, by resolution, may have declared HPPL as the winning bidder, said award
cannot be said to be final and unassailable. The SBMA Board of Directors and other
officers are subject to the control and supervision of the Office of the President. All
projects undertaken by SBMA require the approval of the President of the Philippines
under Letter of Instruction No. 620, which places the SBMA under its ambit as an
instrumentality, defined in Section 10 thereof as an agency of the national
government, not integrated within the department framework, vested with special
functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered institutions and
government owned and controlled corporations.[26] (Underscoring supplied)
As a chartered institution, the SBMA is always under the direct control of the
Office of the President, particularly when contracts and/or projects undertaken by
the SBMA entail substantial amounts of money. Specifically, Letter of Instruction No.
620 dated October 27, 1997 mandates that the approval of the President is required
in all contracts of the national government offices, agencies and instrumentalities,
including government-owned or controlled corporations involving two million pesos
(P2,000,000.00) and above, awarded through public bidding or negotiation. The
President may, within his authority, overturn or reverse any award made by the SBMA
Board of Directors for justifiable reasons. It is well-established that the discretion to
accept or reject any bid, or even recall the award thereof, is of such wide latitude that
the courts will not generally interfere with the exercise thereof by the executive
department, unless it is apparent that such exercise of discretion is used to shield
unfairness or injustice. When the President issued the memorandum setting aside
the award previously declared by the SBMA in favor of HPPL and directing that a
rebidding be conducted, the same was, within the authority of the President and was
a valid exercise of his prerogative. Consequently, petitioner HPPL acquired no clear
55 | P a g e
and unmistakable right as the award announced by the SBMA prior to the Presidents
revocation thereof was not final and binding.
There being no clear and unmistakable right on the part of petitioner HPPL, the
rebidding of the proposed project can no longer be enjoined as there is no material
and substantial invasion to speak of. Thus, there is no longer any urgent or
permanent necessity for the writ to prevent any perceived serious damage. In fine,
since the requisites for the issuance of the writ of injunction are not present in the
instant case, petitioners application must be denied for lack of merit.[27]
Finally, we focus on the matter of whether or not petitioner HPPL has the legal
capacity to even seek redress from this Court. Admittedly, petitioner HPPL is a foreign
corporation, organized and existing under the laws of the British Virgin Islands. While
the actual bidder was a consortium composed of petitioner, and two other
corporations, namely, Guoco Holdings (Phils.) Inc. and Unicol Management Servises,
Inc., it is only petitioner HPPL that has brought the controversy before the Court,
arguing that it is suing only on an isolated transaction to evade the legal requirement
that foreign corporations must be licensed to do business in the Philippines to be able
to file and prosecute an action before Philippines courts.
The maelstrom of this issue is whether participating in the bidding is a mere
isolated transaction, or did it constitute engaging in or transacting business in the
Philippines such that petitioner HPPL needed a license to do business in the
Philippines before it could come to court.
There is no general rule or governing principle laid down as to what constitutes
doing or engaging in or transacting business in the Philippines. Each case must be
judged in the light of its peculiar circumstances.[28] Thus, it has often been held that
a single act or transaction may be considered as doing business when a corporation
performs acts for which it was created or exercises some of the functions for which it
was organized. The amount or volume of the business is of no moment, for even a
singular act cannot be merely incidental or casual if it indicates the foreign
corporations intention to do business.[29]
Participating in the bidding process constitutes doing business because it shows
the foreign corporations intention to engage in business here. The bidding for the
concession contract is but an exercise of the corporations reason for creation or
existence. Thus, it has been held that a foreign company invited to bid for IBRD and
ADB international projects in the Philippines will be considered as doing business in
the Philippines for which a license is required. In this regard, it is the performance by
a foreign corporation of the acts for which it was created, regardless of volume of
business, that determines whether a foreign corporation needs a license or not. [30]
The primary purpose of the license requirement is to compel a foreign corporation
desiring to do business within the Philippines to submit itself to the jurisdiction of
the courts of the state and to enable the government to exercise jurisdiction over them
for the regulation of their activities in this country.[31] If a foreign corporation operates
a business in the Philippines without a license, and thus does not submit itself to
Philippine laws, it is only just that said foreign corporation be not allowed to invoke
them in our courts when the need arises. While foreign investors are always welcome
in this land to collaborate with us for our mutual benefit, they must be prepared as
an indispensable condition to respect and be bound by Philippine law in proper cases,
as in the one at bar.[32] The requirement of a license is not intended to put foreign
corporations at a disadvantage, for the doctrine of lack of capacity to sue is based on
considerations of sound public policy.[33] Accordingly, petitioner HPPL must be held
to be incapacitated to bring this petition for injunction before this Court for it is a
foreign corporation doing business in the Philippines without the requisite license.
WHEREFORE, in view of all the foregoing, the instant petition is hereby
DISMISSED for lack of merit. Further, the temporary restraining order issued on
December 3, 1997 is LIFTED and SET ASIDE. No costs.
SO ORDERED.
G.R. No. 167434 February 19, 2007
SPOUSES RAMON M. NISCE and A. NATIVIDAD PARAS-NISCE, Petitioners,
vs.
EQUITABLE PCI BANK, INC., Respondent.
CALLEJO, SR., J.:
On November 26, 2002, Equitable PCI Bank1 (Bank) as creditor-mortgagee filed a
petition for extrajudicial foreclosure before the Office of the Clerk of Court as Ex-
Officio Sheriff of the Regional Trial Court (RTC) of Makati City. It sought to foreclose
the following real estate mortgage contracts executed by the spouses Ramon and
Natividad Nisce over two parcels of land covered by Transfer Certificate of Title (TCT)
Nos. S-83466 and S-83467 of the Registry of Deeds of Rizal: one dated February 26,
1974; two (2) sets of "Additional Real Estate Mortgage" dated September 27, 1978 and
June 3, 1996; and an "Amendment to Real Estate Mortgage" dated February 28, 2000.
The mortgage contracts were executed by the spouses Nisce to secure their obligation
under Promissory Note Nos. 1042793 and BD-150369, including a Suretyship
Agreement executed by Natividad. The obligation of the Nisce spouses totaled
₱34,087,725.76 broken down as follows:
Spouses Ramon & Natividad Nisce - - - - - ₱17,422,285.99
Natividad P. Nisce (surety) - - - - - - - - - - US$57,306.59
56 | P a g e
and - - - - - - - - - - - - ₱16,665,439.772
On December 2, 2002, the Ex-Officio Sheriff set the sale at public auction at 10:00
a.m. on January 14, 2003, 3 or on January 30, 2003 in the event the public auction
would not take place on the earlier setting.
On January 28, 2003, the Nisce spouses filed before the RTC of Makati City a
complaint for "nullity of the Suretyship Agreement, damages and legal compensation"
with prayer for injunctive relief against the Bank and the Ex-Officio Sheriff. They
alleged the following: in a letter4 dated December 7, 2000 they had requested the bank
(through their lawyer-son Atty. Rosanno P. Nisce) to setoff the peso equivalent of their
obligation against their US dollar account with PCI Capital Asia Limited (Hong Kong),
a subsidiary of the Bank, under Certificate Deposit No. 016125 and Account No. 090-
0104 (Passbook No. 83-3041);6 the Bank accepted their offer and requested for an
estimate of the balance of their account; they complied with the Bank’s request and
in a letter dated February 11, 2002, informed it that the estimated balance of their
account as of December 1991 (including the 11.875% per annum interest) was
US$51,000.42,7 and that as of December 2002, Natividad’s US dollar deposit with it
amounted to at least ₱9,000,000.00; they were surprised when they received a letter
from the Bank demanding payment of their loan account, and later a petition for
extrajudicial foreclosure.
The spouses Nisce also pointed out that the petition for foreclosure filed by the Bank
included the alleged obligation of Natividad as surety for the loan of Vista Norte
Trading Corporation, a company owned and managed by their son Dino Giovanni P.
Nisce (₱16,665,439.77 and US$57,306.59). They insisted, however, that the
suretyship agreement was null and void for the following reasons:
(a) x x x [I]t was executed without the knowledge and consent of plaintiff
Ramon M. Nisce, who is by law the administrator of the conjugal partnership;
(b) The suretyship agreement did not redound to the benefit of the conjugal
partnership and therefore did not bind the same;
(c) Assuming, arguendo, that the suretyship contract was valid and binding,
any obligation arising therefrom is not covered by plaintiffs’ real estate
mortgages which were constituted to secure the payment of certain specific
obligations only.8
The spouses Nisce likewise alleged that since they and the Bank were creditors and
debtors with respect to each other, their obligations should have been offset by legal
compensation to the extent of their account with the Bank.
To support their plea for a writ of preliminary and prohibitory injunction, the spouses
Nisce alleged that the amount for which their property was being sold at public
auction (₱34,087,725.76) was grossly excessive; the US dollar deposit of Natividad
with PCI Capital Asia Ltd. (Hong Kong), and the obligation covered by the suretyship
agreement had not been deducted. They insisted that their property rights would be
violated if the sale at public auction would push through. Thus, the spouses Nisce
prayed that they be granted the following reliefs:
(1) that upon the filing of this Complaint and/or after due notice and summary
hearing, the Honorable Court immediately issue a temporary restraining order
(TRO) restraining defendants, their representatives and/or deputies, and other
persons acting for and on their behalf from proceeding with the extrajudicial
foreclosure sale of plaintiffs’ mortgaged properties on 30 January 2003 or on
any other dates subsequent thereto;
(2) that after due notice and hearing and posting of the appropriate bond, the
Honorable Court convert the TRO to a writ of preliminary prohibitory
injunction;
(3) that after trial on the merits, the Honorable Court render judgment –
(a) making the preliminary injunction final and permanent;
(b) ordering defendant Bank to set off the present peso value of Mrs.
Nisce’s US dollar time deposit, inclusive of stipulated interest, against
plaintiffs’ loan obligations with defendant Bank;
(c) declaring the Deed of Suretyship dated 25 May 1998 null and valid
and without any binding effect as to plaintiff spouses, and ordering
defendant Bank to exclude the amounts covered by said suretyship
contract from plaintiffs’ obligations with defendant Bank;
(d) ordering defendant Bank to pay plaintiffs the following sums:
(i) at least ₱3,000,000.00 as moral damages;
(ii) at least ₱1,500,000.00 as exemplary damages; and
(iii) at least ₱500,000.00 as attorney’s fees and for other
expenses of litigation.
57 | P a g e
Plaintiffs further pray for costs of suit and such other reliefs as may be deemed just
and equitable.9
On same day, the Bank filed an "Amended Petition" with the Office of the Executive
Judge for extrajudicial foreclosure of the Real Estate Mortgage to satisfy the spouses’
loan account of ₱30,533,552.24, exclusive of interests, penalties and other charges;
and the amounts of ₱16,665,439.77 and US$57,306.59 covered by the suretyship
agreement executed by Natividad Nisce. 10
In the meantime, the parties agreed to have the sale at public auction reset to January
30, 2003.
In its Answer to the complaint, the Bank alleged that the spouses had no cause of
action for legal compensation since PCI Capital was a different corporation with a
separate and distinct personality; if at all, offsetting may occur only with respect to
the spouses’ US$500.00 deposit account in its Paseo de Roxas branch.
In the meantime, the Ex-Officio Sheriff set the sale at public auction at 10:00 a.m. on
March 5 and 27, 2003.11 The spouses Nisce then filed a Supplemental Complaint with
plea for a temporary restraining order to enjoin the sale at public
auction.12 Thereafter, the RTC conducted hearings on the plaintiffs’ plea for a
temporary restraining order, and the parties adduced testimonial and documentary
evidence on their respective arguments.
The Case for the Spouses Nisce
Natividad frequently traveled abroad and needed a facility with easy access to foreign
exchange. She inquired from E.P. Nery, the Bank Manager for PCI Bank Paseo de
Roxas Branch, about opening an account. He assured her that she would be able to
access it from anywhere in the world. She and Nery also agreed that any balance of
account remaining at maturity date would be rolled over until further instructions, or
until she terminated the facility.13Convinced, Natividad deposited US$20,500.00 on
July 19, 1984, and was issued Passbook No. 83-3041.14 Upon her request, the bank
transferred the US$20,000.00 to PCI Capital Asia Ltd. in Hong Kong via cable order. 15
On July 11, 1996, the spouses Nisce secured a ₱20,000,000.00 loan from the Bank
under Promissory Note No. BD-150369.16 The maturity date of the loan was July 11,
2001, payable in monthly installments at 16.731% interest per annum. To secure the
payment of the loan account, they executed an Amendment to the Real Estate
Mortgage over the properties17 located in Makati City covered by TCT Nos. S-83466
and S-83467.18 They later secured another loan of ₱13,089,936.90 on March 1, 2000
(to mature on March 1, 2005) payable quarterly at 13.9869% interest per annum; this
loan agreement is evidenced by Promissory Note (PN) No. 1042793 19 and covered by
a Real Estate Mortgage20 executed on February 28, 2000. They made a partial
payment of ₱13,866,666.50 on the principal of their loan account covered by PN No.
BD-150369, and ₱5,348,239.82 on the interests. 21 These payments are evidenced by
receipts and checks.22 However, there were payments totaling ₱4,600,000.00 received
by the Bank but were not covered by checks or receipts. 23 As of September 2000, the
balance of their loan account under PN No. BD-150369 was only
₱4,333,333.46.24 They also made partial payment on their loan account under PN No.
1042793 which, as of May 30, 2001, amounted to ₱2,218,793.61.25
On July 20, 1984, PCI Capital issued Certificate of Deposit No. CD-01612;26 proof of
receipt of the US$20,000.00 transferred to it by PCI Bank Paseo de Roxas Branch as
requested by Natividad. The deposit account was to earn interest at the rate of
11.875% per annum, and would mature on October 22, 1984, thereafter to be payable
at the office of the depositary in Hong Kong upon presentation of the Certificate of
Deposit.
In June 1991, two sons of the Nisce spouses were stranded in Hong Kong. Natividad
called the Bank and requested for a partial release of her dollar deposit to her sons.
However, she was informed that according to its computer records, no such dollar
account existed. Sometime in November 1991, she submitted her US dollar passbook
with a xerox copy of the Certificate of Deposit for the PCIB to determine the
whereabouts of the account.27 She reiterated her request to the Bank on January 27,
199228 and September 11, 2000.29
In the meantime, in 1994, the Equitable Banking Corporation and the PCIB were
merged under the corporate name Equitable PCI Bank.
In a letter dated December 7, 2000, Natividad confirmed to the Bank, through Ms.
Shellane R. Casaysayan, her offer to settle their loan account by offsetting the peso
equivalent of her dollar account with PCI Capital under Account No. 090-
0104.30 Their son, Atty. Rosanno Nisce, later wrote the Bank, declaring that the
estimated balance of the US dollar account with PCI Capital as of December 1991 was
US$51,000.42.31 Atty. Nisce corroborated this in his testimony, and stated that Ms.
Casaysayan had declared that she would refer the matter to her superiors. 32 A certain
Rene Esteven also told him that another offer to setoff his parents’ account had been
accepted, and he was assured that its implementation was being processed. 33 On
cross examination, Atty. Nisce declared that there was no response to his request for
setoff,34 and that Esteven assured him that the Bank would look for the records of his
mother’s US dollar savings deposit.35 He was later told that the Bank had accepted
the offer to setoff the account.36
58 | P a g e
The Case for the Bank
The Bank adduced evidence that, as of January 31, 2003, the balance of the spouses’
account under the two promissory notes, including interest and penalties, was
₱30,533,552.24.37 It had agreed to restructure their loans on March 31, 1998, but
they nevertheless failed to pay despite repeated demands. 38 The spouses had also
been furnished with a statement of their account as of June 2001. Thus, under the
terms of the Real Estate Mortgage and Promissory Notes, it had the right to the remedy
of foreclosure. It insisted that there is no showing in its records that the spouses had
delivered checks amounting to ₱4,600,000.00.39
According to the Bank, Natividad’s US$20,000.00 deposit with the PCIB Paseo de
Roxas branch was transferred to PCI Capital via cable order,40 and that it later issued
Certificate of Deposit No. 01612 (Non-transferrable).41 In a letter dated May 9, 2001,
it informed Natividad that it had acted merely as a conduit in facilitating the transfer
of the funds, and that her deposit was made with PCI Capital and not with PCIB. PCI
Capital had a separate and distinct personality from the PCIB, and a claim against
the former cannot be made against the latter. It was later advised that PCI Capital
had already ceased operations.42
The spouses Nisce presented rebuttal documentary evidence to show that PCI Capital
was registered in Hong Kong as a corporation under Registration No. 84555 on
February 27, 198943 with an authorized capital stock of 50,000,000 (with par value
of HKD1.00); the PCIB subscribed to 29,039,993 issued shares at the par value of
HKD1.00 per share;44 on October 25, 2004, the corporate name of PCI Capital was
changed to PCI Express Padala (HK) Ltd.; 45 and the stockholdings of PCIB remained
at 29,039,999 shares.46
On March 24, 2003, the RTC issued an Order47 granting the spouses Nisce’s plea for
a writ of preliminary injunction on a bond of ₱10,000,000.00. The dispositive portion
of the Order reads:
WHEREFORE, in order not to render the judgment ineffectual, upon filing by the
plaintiffs and the approval thereof by the court of a bond in the amount of
Php10,000,000.00, which shall answer for any damage should the court finally decide
that plaintiffs are not entitled thereto, let a writ of preliminary injunction issue
enjoining defendants Equitable-PCI Bank, Atty. Engracio M. Escasinas, Jr., and any
person or entity acting for and in their behalf from proceeding with the extrajudicial
foreclosure sale of TCT Nos. 437678 and 437679 registered in the names of the
plaintiffs.48
After weighing the parties’ arguments along with their documentary evidence, the RTC
declared that justice would be best served if a writ of preliminary injunction would be
issued to preserve the status quo. It had yet to resolve the issue of setoff since only
Natividad dealt with the Bank regarding her dollar account. It also had to resolve the
issue of whether the Bank had failed to credit the amount of ₱4,600,000.00 to the
spouses Nisce’s account under PN No. BD-150369, and their claim that the Bank had
effectively accelerated the respective maturity dates of their loan. 49The spouses Nisce
posted the requisite bond which was approved by the RTC.1awphi1.net
The Bank opted not to file a motion for reconsideration of the order, and instead
assailed the trial court’s order before the CA via petition for certiorari under Rule 65
of the Rules of Court. The Bank alleged that the RTC had acted without or in excess
of its jurisdiction, or with grave abuse of its discretion amounting to lack or excess of
jurisdiction when it issued the assailed order;50 the spouses Nisce had failed to prove
the requisites for the issuance of a writ of preliminary injunction; respondents’ claim
that their account with petitioner had been extinguished by legal compensation has
no factual and legal basis. It further asserted that according to the evidence, Natividad
made the US$20,000.00 deposit with PCI Capital before it merged with Equitable
Bank – hence, the Bank was not the debtor of Natividad relative to the dollar account.
The Bank cited the ruling of this Court in Escaño v. Heirs of Escaño and Navarro51 to
support its arguments. It insisted that the spouses Nisce had failed to establish
"irreparable injury" in case of denial of their plea for injunctive relief.
The spouses, for their part, pointed out that the Bank failed to file a motion for
reconsideration of the trial court’s order, a condition sine qua non to the filing of a
petition for certiorari under Rule 65 of the Rules of Court. Moreover, the error
committed by the trial court is a mere error of judgment not correctible by certiorari;
hence, the petition should have been dismissed outright by the CA. They reiterated
their claim that they had made a partial payment of ₱4,600,000.00 on their loan
account which petitioner failed to credit in their favor. The Bank had agreed to debit
their US dollar savings deposit in the PCI Capital as payment of their loan account.
They insisted that they had never deposited their US dollar account with PCI Capital
but with the Bank, and that they had never defaulted on their loan account. Contrary
to the Bank’s claim, they would have suffered irreparable injury had the trial court
not enjoined the extrajudicial foreclosure of the real estate mortgage.
On December 22, 2004, the CA rendered judgment granting the petition and nullifying
the assailed Order of the RTC.52 The appellate court declared that a petition for
certiorari under Rule 65 of the Rules of Court may be filed despite the failure to file a
motion for reconsideration, particularly in instances where the issue raised is one of
law; where the error is patent; the assailed order is void, or the questions raised are
the same as those already ruled upon by the lower court. According to the appellate
court, the issue raised before it was purely one of law: whether the loan account of
59 | P a g e
the spouses was extinguished by legal compensation. Thus, a motion for the
reconsideration of the assailed order was not a prerequisite to a petition for certiorari
under Rule 65.
The appellate court further declared that the trial court committed grave abuse of its
discretion in issuing the assailed order, since no plausible reason was given by the
spouses Nisce to justify the injunction of the extrajudicial foreclosure of the real estate
mortgage. Given their admission that they had not settled the obligations secured by
the mortgage, the Bank had a clear right to seek the remedy of foreclosure.
The CA further declared as devoid of factual basis the spouses Nisce’s argument that
the Bank should have applied, by way of legal compensation, the peso equivalent of
their time deposit with PCI Capital as partial settlement of their obligations. It held
that for compensation to take place, the requirements set forth in Articles 1278 and
1279 of the Civil Code of the Philippines must be present; in this case, the parties are
not mutually creditors and debtors of each other. It pointed out that the time deposit
which the spouses Nisce sought to offset against their obligations to the Bank is
maintained with PCI Capital. Even if PCI Capital is a subsidiary of the Bank,
compensation cannot validly take place because the Bank and PCI Capital are two
separate and distinct corporations. It pointed out the settled principle "that a
corporation has a personality separate and distinct from its stockholders and from
other corporations to which it may be connected."
The CA further declared that the alleged ₱4,600,000.00 payment on PN No. BD-
150369 was not pleaded in the spouses’ complaint and supplemental complaint
before the court a quo. What they alleged, aside from legal compensation, was that
the mortgage is not liable for the obligation of Natividad Nisce as surety for the loans
obtained by a trading firm owned and managed by their son. The CA further pointed
out that the Bank precisely amended the petition for foreclosure sale by deleting the
claim for Natividad’s obligation as surety. The appellate court concluded that the
injunctive writ was issued by the RTC without factual and legal basis. 53
The spouses Nisce moved to have the decision reconsidered, but the appellate court
denied the motion. They thus filed the instant petition for review on the following
grounds:
5.1. THE HONORABLE COURT OF APPEALS ERRED IN TAKING
COGNIZANCE OF THE PETITION FOR CERTIORARI DESPITE THE BANK’S
FAILURE TO FILE A MOTION FOR RECONSIDERATION WITH THE TRIAL
COURT.
5.2. THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT PREMATURELY RULED ON THE MERITS OF THE MAIN
CASE.
5.3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT JUDGE HAD COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING A
TEMPORARY RESTRAINING ORDER AND A WRIT OF PRELIMINARY
INJUNCTION IN FAVOR OF THE SPOUSES NISCE. 54
Petitioners aver that the CA erred in not dismissing respondent Bank’s petition for
certiorari outright because of the absence of a condition precedent: the filing of a
motion for reconsideration of the assailed Order of the RTC before filing the petition
for certiorari in the CA. They insist that respondent bank’s failure to file a motion for
reconsideration of the assailed Order deprived the RTC of its option to resolve the
issue of whether it erred in issuing the writ of preliminary injunction in their favor.
Petitioners insist that in resolving whether a petition for a writ of preliminary
injunction should be granted, the trial court and the appellate court are not to resolve
the merits of the main case. In this case, however, the CA resolved the bone of
contention of the parties in the trial court: whether the loan account of petitioners
with respondent bank had been extinguished by legal compensation against petitioner
Natividad Nisce’s US dollar savings account with PCI Capital in Hong Kong. The CA
reversed the assailed order of the trial court by resolving the main issue in the trial
court on its merits, and declaring that the US dollar savings deposit of the petitioner
Natividad Nisce with the PCI Capital cannot be used to offset the loan account of
petitioners with respondent bank. In fine, according to petitioners, the CA preempted
the ruling of the RTC on the main issue even before the parties could be given an
opportunity to complete the presentation of their respective evidences. Petitioners
point out that in the assailed Order, the RTC declared that to determine whether
respondent had credited petitioners for the amount of ₱4,600,000.00 under PN No.
BD-150369 and whether respondent as mortgagee-creditor accelerated the maturities
of the two (2) promissory notes executed by petitioner, there was a need for a full-
blown trial and an exhaustive consideration of the evidence of the parties.
Petitioners further insist that a petition for a writ of certiorari is designed solely to
correct errors of jurisdiction and not errors of judgment, such as errors in the findings
and conclusions of the trial court. Petitioners maintain that the trial court’s erroneous
findings and conclusions (according to respondent bank) are not the proper subjects
for a petition for certiorari. Contrary to the findings of the CA, they did not admit in
the trial court that they were in default in the payment of their loan obligations. They
had always maintained that they had no outstanding obligation to respondent bank
60 | P a g e
precisely because their loan account had been offset by the US dollar deposit of
petitioner Natividad Nisce, and that they had made check payments of ₱4,600,000.00
which respondent bank had not credited in their favor. Likewise erroneous is the CA
ruling that they would not suffer irreparable damage or injury if their properties would
be sold at public auction following the extrajudicial foreclosure of the mortgage.
Petitioners point out that their conjugal home stands on the subject properties and
would be lost if sold at public auction. Besides, petitioners aver, the injury to
respondent bank resulting from the issuance of a writ of preliminary injunction is
amply secured by the ₱10,000,000.00 injunction bond which they had posted.
For its part, respondent avers that, as held by the CA, the requirement of the filing of
a motion for reconsideration of the assailed Order admits of exceptions, such as where
the issue presented in the appellate court is the same issue presented and resolved
by the trial court. It insists that petitioners failed to prove a clear legal right to
injunctive relief; hence, the trial court committed grave abuse of discretion in issuing
a writ of preliminary injunction.
Respondent maintains that the sole issue involved in the petition for certiorari of
respondent in the CA was whether or not the trial court committed grave abuse of its
discretion in issuing the writ of preliminary injunction. Necessarily, the CA would
have to delve into the circumstances behind such issuance. In so doing, the CA had
to consider and calibrate the testimonial and documentary evidence adduced by the
parties. However, the RTC and the CA did not resolve with finality the threshold
factual and legal issue of whether the loan account of petitioners had been paid in
full before it filed its petition for extrajudicial foreclosure of the real estate mortgage.
The Ruling of the Court
The Petition in the
Court of Appeals
Not Premature
The general rule is that before filing a petition for certiorari under Rule 65 of the Rules
of Court, the petitioner is mandated to comply with a condition precedent: the filing
of a motion for reconsideration of the assailed order, and the subsequent denial of the
court a quo. It must be stressed that a petition for certiorari is an extraordinary
remedy and should be filed only as a last resort. The filing of a motion for
reconsideration is intended to afford the public respondent an opportunity to correct
any actual error attributed to it by way of re-examination of the legal and factual
issues.55 However, the rule is subject to the following recognized exceptions:
(a) where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) where the questions raised in the certiorari proceeding have been duly raised and
passed upon by the lower court, or are the same as those raised and passed upon in
the lower court; (c) where there is an urgent necessity for the resolution of the question
and any further delay would prejudice the interests of the Government or of the
petitioner or the subject matter of the action is perishable; (d) where, under the
circumstances, a motion for reconsideration would be useless; (e) where petitioner
was deprived of due process and there is extreme urgency for relief; (f) where, in a
criminal case, relief from an order of arrest is urgent and the granting of such relief
by the trial court is improbable; (g) where the proceedings in the lower court are a
nullity for lack of due process; (h) where the proceedings was ex parte or in which the
petitioner had no opportunity to object; and (i) where the issue raised is one purely of
law or public interest is involved.56
As will be shown later, the March 24, 2003 Order of the trial court granting petitioner’s
plea for a writ of preliminary injunction was issued with grave abuse of discretion
amounting to excess or lack of jurisdiction and thus a nullity. If the trial court issues
a writ of preliminary injunction despite the absence of proof of a legal right and the
injury sustained by the plaintiff, the writ is a nullity.57
Petitioners Are Not
Entitled to a Writ of
Preliminary Prohibitory
Injunction
Section 3, Rule 58 of the Rules of Court provides that a preliminary injunction may
be granted when the following have been 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 tendering to render the judgment ineffectual.
61 | P a g e
The grant of a preliminary injunction in a case rests on the sound discretion of the
court with the caveat that it should be made with great caution. The exercise of sound
judicial discretion by the lower court should not be interfered with except in cases of
manifest abuse. Injunction is a preservative remedy for the protection of the parties’
substantive rights and interests. The sole aim of a preliminary injunction is to
preserve the status quo within the last actual status that preceded the pending
controversy until the merits of the case can be heard fully. Moreover, a petition for a
preliminary injunction is an equitable remedy, and one who comes to claim for equity
must do so with clean hands. It is to be resorted to by a litigant to prevent or preserve
a right or interest where there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard of compensation. A petition for a writ
of preliminary injunction rests upon an alleged existence of an emergency or of a
special reason for such a writ before the case can be regularly tried. By issuing a writ
of preliminary injunction, the court can thereby prevent a threatened or continued
irreparable injury to the plaintiff before a judgment can be rendered on the claim.58
The plaintiff praying for a writ of preliminary injunction must further establish that
he or she has a present and unmistakable right to be protected; that the facts against
which injunction is directed violate such right;59 and there is a special and paramount
necessity for the writ to prevent serious damages. In the absence of proof of a legal
right and the injury sustained by the plaintiff, an order for the issuance of a writ of
preliminary injunction will be nullified. Thus, where the plaintiff’s right is doubtful or
disputed, a preliminary injunction is not proper. The possibility of irreparable damage
without proof of an actual existing right is not a ground for a preliminary injunction. 60
However, to establish the essential requisites for a preliminary injunction, the
evidence to be submitted by the plaintiff need not be conclusive and complete. 61 The
plaintiffs are only required to show that they have an ostensible right to the final relief
prayed for in their complaint.62 A writ of preliminary injunction is generally based
solely on initial or incomplete evidence.63 Such evidence need only be a sampling
intended merely to give the court an evidence of justification for a preliminary
injunction pending the decision on the merits of the case, and is not conclusive of the
principal action which has yet to be decided.64
It bears stressing that findings of the trial court granting or denying a petition for a
writ of preliminary injunction based on the evidence on record are merely provisional
until after the trial on the merits of the case shall have been concluded.65
The trial court, in granting or dismissing an application for a writ of preliminary
injunction based on the pleadings of the parties and their respective evidence must
state in its order the findings and conclusions based on the evidence and the law.
This is to enable the appellate court to determine whether the trial court committed
grave abuse of its discretion amounting to excess or lack of jurisdiction in resolving,
one way or the other, the plea for injunctive relief. The trial court’s exercise of its
judicial discretion whether to grant or deny an application for a writ of preliminary
injunction involves the assessment and evaluation of the evidence, and its findings of
facts are ordinarily binding and conclusive on the appellate court and this Court. 66
We agree with respondent’s contention that as creditor-mortgagee, it has the right
under the real estate mortgage contract and the amendment thereto to foreclose
extrajudicially, the real estate mortgage and sell the property at public auction,
considering that petitioners had failed to pay their loans, plus interests and other
incremental amounts as provided for in the deeds. Petitioners contend, however, that
if respondent bank extrajudicially forecloses the real estate mortgage and has
petitioners’ property sold at public auction for an amount in excess of the balance of
their loan account, petitioner’s contractual and substantive rights under the real
estate mortgage would be violated; in such a case, the extrajudicial foreclosure sale
may be enjoined by a writ of preliminary injunction.
Respondent bank sought the extrajudicial foreclosure of the real estate mortgage and
was to sell the property at public auction for ₱30,533,552.24. The amount is based
on Promissory Notes No. 1042793 and BD-150369, interests, penalty charges, and
attorney’s fees, as of January 31, 2003, exclusive of all interests, penalties, other
charges, and foreclosure costs accruing thereafter.67 Petitioners asserted before the
trial court that respondents sought the extrajudicial foreclosure of the mortgaged
deed for an amount far in excess of what they owed, because the latter failed to credit
₱4,600,000.00 paid in checks but without any receipts having been issued therefor;
and the ₱9,000,000.00 peso equivalent of the US$20,000.00 deposit of petitioner
Natividad Nisce with PCIB under Passbook No. 83-3041 and Certificate of Deposit No.
CD-01612 issued by PCI Capital on July 23, 1984. Petitioners maintain that the
US$20,000.00 dollar deposit should be setoff against their account with respondent
against their loan account, on their claim that respondent is their debtor insofar as
said deposit is concerned.
It was the burden of petitioners, as plaintiffs below, to adduce preponderant evidence
to prove their claim that respondent bank was the debtor of petitioner Natividad Nisce
relative to her dollar deposit with PCIB, and later transferred to PCI Capital in Hong
Kong, a subsidiary of respondent Bank. Petitioners, however, failed to discharge their
burden.
Under Article 1278 of the New Civil Code, compensation shall take place when two
persons, in their own right, are creditors and debtors of each other. In order that
compensation may be proper, petitioners were burdened to establish the following:
62 | P a g e
 (1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the latter
has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor. 68
Compensation takes effect by operation of law when all the requisites mentioned in
Article 1279 of the New Civil Code are present and extinguishes both debts to the
concurrent amount even though the creditors and debtors are not aware of the
compensation. Legal compensation operates even against the will of the interested
parties and even without their consent.69 Such compensation takes place ipso jure;
its effects arise on the very day on which all requisites concur. 70
As its minimum, compensation presupposes two persons who, in their own right and
as principals, are mutually indebted to each other respecting equally demandable and
liquidated obligations over any of which no retention or controversy commenced and
communicated in due time to the debtor exists. Compensation, be it legal or
conventional, requires confluence in the parties of the characters of mutual debtors
and creditors, although their rights as such creditors or their obligations as such
debtors need not spring from one and the same contract or transaction. 71
Article 1980 of the New Civil Code provides that fixed, savings and current deposits
of money in banks and similar institutions shall be governed by the provisions
concerning simple loans. Under Article 1953, of the same Code, a person who secures
a loan of money or any other fungible thing acquires the ownership thereof, and is
bound to pay the creditor an equal amount of the same kind and quality. The
relationship of the depositors and the Bank or similar institution is that of creditor-
debtor. Such deposit may be setoff against the obligation of the depositor with the
bank or similar institution.
When petitioner Natividad Nisce deposited her US$20,500.00 with the PCIB on July
19, 1984, PCIB became the debtor of petitioner. However, when upon petitioner’s
request, the amount of US$20,000.00 was transferred to PCI Capital (which forthwith
issued Certificate of Deposit No. 01612), PCI Capital, in turn, became the debtor of
Natividad Nisce. Indeed, a certificate of deposit is a written acknowledgment by a bank
or borrower of the receipt of a sum of money or deposit which the Bank or borrower
promises to pay to the depositor, to the order of the depositor; or to some other person;
or to his order whereby the relation of debtor and creditor between the bank and the
depositor is created.72 The issuance of a certificate of deposit in exchange for currency
creates a debtor-creditor relationship.73
Admittedly, PCI Capital is a subsidiary of respondent Bank. Even then, PCI Capital
[PCI Express Padala (HK) Ltd.] has an independent and separate juridical personality
from that of the respondent Bank, its parent company; hence, any claim against the
subsidiary is not a claim against the parent company and vice versa. 74 The evidence
on record shows that PCIB, which had been merged with Equitable Bank, owns
almost all of the stocks of PCI Capital. However, the fact that a corporation owns all
of the stocks of another corporation, taken alone, is not sufficient to justify their being
treated as one entity. If used to perform legitimate functions, a subsidiary’s separate
existence shall be respected, and the liability of the parent corporation, as well as the
subsidiary shall be confined to those arising in their respective business.75 A
corporation has a separate personality distinct from its stockholders and from other
corporations to which it may be conducted. This separate and distinct personality of
a corporation is a fiction created by law for convenience and to prevent injustice.
This Court, in Martinez v. Court of Appeals 76 held that, being a mere fiction of law,
peculiar situations or valid grounds can exist to warrant, albeit sparingly, the
disregard of its independent being and the piercing of the corporate veil. The veil of
separate corporate personality may be lifted when, inter alia, the corporation is merely
an adjunct, a business conduit or an alter ego of another corporation or where the
corporation is so organized and controlled and its affairs are so conducted as to make
it merely an instrumentality, agency, conduit or adjunct of another corporation; or
when the corporation is used as a cloak or cover for fraud or illegality; or to work
injustice; or where necessary to achieve equity or for the protection of the creditors.
In those cases where valid grounds exist for piercing the veil of corporate entity, the
corporation will be considered as a mere association of persons. The liability will
directly attach to them.77
The Court likewise declared in the same case that the test in determining the
application of the instrumentality or alter ego doctrine is as follows:
1. Control, not mere majority or complete stock control, but complete
dominion, not only of finances but of policy and business practice in respect
to the transaction attacked so that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its own;
63 | P a g e
 2. Such control must have been used by the defendant to commit fraud or SO ORDERED.
wrong, to perpetuate the violation of a statutory or other positive legal duty,
or dishonest and unjust act in contravention of plaintiff’s legal rights; and [G.R. No. L-31135. May 29, 1970.]

3. The aforesaid control and breach of duty must proximately cause the injury THE DIRECTOR OR OFFICER-IN-CHARGE OF THE BUREAU OF
or unjust loss complaint of. TELECOMMUNICATIONS, LEON CERVANTES, in his capacity as Regional
Superintendent of Region IV, Bureau of Telecommunications, Iloilo City, and
The Court emphasized that the absence of any one of these elements prevents VIVENCIO ALAGBAY, in his capacity as Chief Operator, Bureau of
"piercing the corporate veil." In applying the "instrumentality" or "alter ego" doctrine, Telecommunications, Roxas City, Petitioners, v. HON. JOSE A. ALIGAEN, in his
the courts are concerned with reality and not form, with how the corporation operated capacity as Judge of the Court of First Instance of Capiz, Branch II, and JOSE
and the individual defendant’s relationship to that operation. 78 M. F. BELO, Respondents.

Petitioners failed to adduce sufficient evidence to justify the piercing of the veil of Solicitor General Felix V. Makasiar, Assistant Solicitor General Conrado T.
corporate entity and render respondent Bank liable for the US$20,000.00 deposit of Limcaoco and Solicitor Pedro A. Ramirez, for Petitioners.
petitioner Natividad Nisce as debtor.
Siguion Reyna, Montecillo, Belo & Ongsiako for respondent Jose M. F. Belo.
On hindsight, petitioners could have spared themselves the expenses and tribulation
of a litigation had they just withdrawn their deposit from the PCI Capital and remitted
the same to respondent. However, petitioner insisted on their contention of setoff. SYLLABUS

On the ₱4,600,000.00 paid in checks allegedly remitted by petitioners to respondent

1. ADMINISTRATIVE LAW; BUREAU OF TELECOMMUNICATIONS; ESTABLISHMENT
in partial payment of their loan account, petitioners failed to adduce in evidence the
OF TELECOMMUNICATION SERVICE, LIMITATION. — As provided in Section 79 of
checks to show that, indeed, the checks were drawn by petitioners and delivered to
Executive Order No. 94 of July 1, 1947, the Bureau of Telecommunications is
respondent, and that respondent was able to cash the checks. The only evidence
empowered to establish telecommunication service in places where such service does
adduced by petitioners is a piece of paper listing the serial numbers of the checks and
not exist, but in places where such service already exists it may only negotiate for,
the amount of each check:
operate and maintain a telecommunication system by utilizing such existing facilities
in cities, towns and provinces under such terms, conditions or arrangements as may
PAYMENTS MADE & RECEIVED BY EBC BUT W/O RECEIPTS be agreed upon with their owners or operators.

1. Dec. 29, 1997 - EBC-0000039462 - ₱2,000,000.00 2. ID.; ID.; ID.; INTENTION OF THE LAW. — The intention of Executive Order No. 94
is to avoid competition between the government and the private operator that would
2. Jan. 22, 1998 - EBC-213016118C - 1,000,000.00 prove ruinous or disadvantageous to both. When a private person or entity is granted
a legislative franchise to operate a telephone system, or any public utility for that
3. Feb. 24, 1998 - UB -0000074619 - 800,000.00 matter, the government has the correlative obligation to afford the grantee of the
franchise all the chances or opportunity to operate profitably, as long as public
4. Mar. 23, 1998 - EBC-213016121C - 800,000.00 convenience is properly served, rather than promote a competition with the grantee.

79 3. ID.; ID.; ACTION TO ENJOIN UNAUTHORIZED ACTS OF PUBLIC OFFICERS, NOT

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The
Decision of the Court of Appeals is AFFIRMED. Costs against petitioners.
A SUIT AGAINST THE STATE. — An action to enjoin the officers of the Bureau of
Telecommunications from establishing, maintaining and operating a local telephone
system in Roxas City, in violation of law and the rights of the petitioner, is not a suit
against the State within the rule of immunity of the State from suit, the State
64 | P a g e
authorizing only legal acts by its officers.
4. REMEDIAL LAW; ACTIONS; CAUSE OF ACTION; GENERALLY. — A cause of action
is an act or omission of one party in violation of the legal right or rights of the other;
and its essential elements are legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation of said legal right.
5. ID.; ID.; INJUNCTIONS; JURISDICTION AND POWER TO ISSUE; RESTRAINING
ACTS WITHIN TERRITORIAL JURISDICTION. — The Court of First Instance of Capiz
has jurisdiction to restrain the officers of the Bureau of Telecommunications from
establishing a local telephone system within its territorial jurisdiction,
notwithstanding that the office of respondent Director of the Bureau of
Telecommunications is in Manila, and that of respondent Regional Superintendent is
in Iloilo City.
6. ID.; ID.; PRELIMINARY INJUNCTIONS; SUFFICIENCY PETITION. — A petition
under oath alleging: (1) the legal right of petitioner Belo (now respondent) to establish
and operate a telephone system in Roxas City as authorized by a legislative franchise
and the certificate of public convenience issued by the Public Service Commission,
and his having actually established the telephone system and operating the same; (2)
the violation of petitioner Belo’s (now respondent) right by the unauthorized or illegal
acts of the respondents (now petitioners) in taking steps to install another telephone
system in Roxas City without previously having negotiated or entered into any
arrangement with petitioner as required by law; and (3) the injury that would be
caused to petitioner Belo (now respondent) by the acts of respondents (now
petitioners) is considered sufficient as basis for the respondent court in issuing the
writ of preliminary injunction prayed for.
7. ID.; ID.; DISSOLUTION; UPON GIVING COUNTERBOND; GENERALLY. — An
injunction issued to stop an unauthorized act should not be dissolved by the mere
filing of a counterbond, otherwise, the counterbond would become the vehicle of the
commission or continuance of an unauthorized or illegal act which the injunction
precisely is intended to prevent.
8. ID.; ID.; ID.; DISCRETION OF COURT. — Under Section 6 of Rule 58 of the Rules
of Court, the court is called upon to exercise its discretion in determining or weighing
the relative damages which the parties may suffer by the dissolution of the injunction.
If the damages that may be suffered by the defendant by the continuance of the
injunction outweigh the damages that may be suffered by the plaintiff by the
dissolution of the injunction, then the injunction should be dissolved.
DECISION
ZALDIVAR, J.:
On August 1, 1969, herein respondent Jose M. F. Belo filed with the Court of First
Instance of Capiz, presided over by respondent Judge Jose A. Aligaen, a verified
petition captioned "Injunction with Preliminary Injunction" (Civil Case No. V-3192),
naming as respondents therein the Director of the Bureau of Telecommunications,
Leo Cervantes, the Regional Superintendent of Region IV of the Bureau of
Telecommunications with station in Iloilo City, and their agents and/or
representatives acting in their behalf, and Vivencio Alagbay, Chief Operator of the
Bureau of Telecommunications in Roxas City. The petitioner alleged that he, Belo,
was the grantee of a Congressional franchise, Republic Act No. 2957, as amended, to
establish, maintain and operate a telephone system in Roxas City and in the province
of Capiz, which franchise was confirmed and given effect by the order, dated June 26,
1961, of the Public Service Commission; that pursuant to said franchise be had put
up in Roxas City, since July, 1961, at a cost of P417,041.27, an automatic telephone
system which had been operating and rendering good service with 410 telephones
and sufficient reserves for additional lines when needed; that the Bureau of
Telecommunications, through therein respondents, was starting to establish,
maintain and operate in the same geographical area of Roxas City another local
telephone system which would directly compete with, and seriously prejudice, the
telephone system that he was already operating and would render ineffective his
franchise; that the Bureau of Telecommunications was not authorized to establish an
additional local telephone system in places where there was no demand for it, as in
Roxas City, that no prior inquiry was ever made by the authorities concerned if there
was any need for another telephone system in Roxas City; that therein respondents
had never attempted to negotiate with him for the use of his facilities in conjunction
with the national hook-up of a telephone system; that the telephone system that he
was operating was already connected with the Philippine Long Distance Telephone
Company which is a national system; and that he would suffer serious and irreparable
loss and injury if therein respondents would go ahead with the establishment of a
new telephone system. Belo then prayed the Court of First Instance of Capiz that due
to the urgency of the matter a writ of preliminary injunction be issued ex parte,
enjoining therein respondents from establishing another local telephone system in
Roxas City; that after hearing, the writ be made permanent; and that damages be
assessed against therein respondents in their personal and individual capacities.
On the same day, August 1, 1969, Judge Jose A. Aligaen of the Court of First Instance
of Capiz, entered an order authorizing the issuance of the writ of preliminary
injunction prayed for upon Belo’s posting a bond of P5,000, and, accordingly, a writ
of preliminary injunction was issued, restraining therein respondents, their agents,
65 | P a g e
and representatives, from further committing and continuing the acts complained of,
and from constructing another telephone system in Roxas City. 1
On August 5, 1969, Belo filed with the Court of First Instance of Capiz, an urgent
motion to declare Vivencio Alagbay and his agents in contempt of court because in
spite of the injunction they continued the work of installing the new telephone system
in Roxas City. This motion was amended on August 9, 1969, to include the Director
of the Bureau of Telecommunications and Leon Cervantes, the Regional Director of
the Bureau, to be cited for contempt. On August 9, 1969 Vivencio Alagbay filed his
opposition to the motion, alleging that as a mere employee of the Bureau of
Telecommunications he had nothing to do with the construction of the telephone
exchange, and that it was the International Telegraph and Telephone Philippines, Inc.
(ITT for short) over which he had no supervision and control, that was working on the
project. On the same date, the respondents in the court below filed a joint motion for
dissolution of the writ of injunction, offering at the same time to put up a counter-
bond in the sum of P20,000, to which motion Belo filed his opposition, then
respondents below filed their reply to the opposition and Belo filed his rejoinder to the
reply.
The Solicitor General, upon request of the Director of the Bureau of
Telecommunications, filed, on August 27, 1969, an answer to the petition for
injunction of Belo, denying the material allegations thereof and setting up special and
affirmative defenses, to wit: (1) that the trial court did not have jurisdiction over the
case, it being a suit against the Government which had not given its consent to be
sued; (2) that the court had no jurisdiction to issue the writ of injunction against the
Director of the Bureau of Telecommunications whose official residence was beyond
the territorial jurisdiction of the court: (3) that the Bureau of Telecommunications had
authority to operate its own telecommunications network in the whole country
pursuant to Section 1930 of the Revised Administrative Code, without need of a
legislative franchise; (4) that the Bureau of Telecommunications was not prohibited
from expanding its telephone system and that its operations were not limited to non-
commercial activities; (5) that the Bureau of Telecommunications had entered into an
agreement with ITT for the supply and installation of expanded telecommunications
network project, which, when completed, would cover not only telephone services but
also data processing computer, telegraphic transfers, etc. which services have not
been made available by Belo; (6) that it was the ITT, and not the Bureau of
Telecommunications, that was actually constructing the telecommunications system
in Roxas City; (7) that Belo’s franchise, as per section 12 of Republic Act No. 2957, is
not exclusive; (8) that there being 67,800 residents in Roxas City out of which only a
total of 410 are being served, the facilities of Belo are inadequate or inefficient.
Respondents below alleged as counterclaim that the writ of preliminary injunction
was improvidently issued and was causing a damage of P10,000 for every day of delay
in the completion of the project.
On September 1, 1969, the City Fiscal of Roxas City, not knowing that an answer had
already been filed by the Solicitor General, filed a motion to dismiss upon the grounds
of: (1) lack of jurisdiction over the persons of therein respondents, the subject matter
of the action, and the nature of the action; and (2) failure to state a cause of action.
After hearing on the motion to declare Vivencio Alagbay in contempt, the lower court,
in its order of September 3, 1969, held Vivencio Alagbay and the men working under
him, even if they be working under the guise of being workers of the ITT, liable for
contempt of court, but the court did not impose any penalty on them because they
had stopped working and only declared that they would be arrested and confined in
jail should they resume the work of erecting telephone poles and connecting telephone
cables and wires. At the same time the lower court denied the motion for the
dissolution of the injunction. 2
Belo moved, on September 11, 1969, to reconsider the order of September 3, 1969,
praying that appropriate penalty be imposed on Alagbay and the men working under
him. Petitioner Alagbay also filed a motion for the reconsideration of said order.
In the meantime, on September 10, 1969, the respondents in the court below filed a
motion for preliminary hearing on the affirmative defenses alleged in their answer, as
well as the motion to dismiss. On September 15, 1969, Belo filed his reply to the
answer, and his answer to the counterclaim.
In an order, dated October 1, 1969, the Court of First Instance of Capiz denied the
motions filed by Alagbay and Belo for the reconsideration of the order of September
3, 1969. In a separate order also of the same date, the court denied the motion to
dismiss the petition and set the pre-trial of the case for October 23, 1969. 3
Seeking to annul and set aside the various orders issued by the Court of First Instance
of Capiz, namely, those dated August 1, 1961, granting the motion for the issuance
of a writ of preliminary injunction, and the writ of preliminary injunction issued
pursuant thereto; the order dated September 3, 1969 holding Alagbay and the men
working under him in contempt of court; and the orders issued on October 1, 1969
denying Alagbay’s motion for reconsideration and the motion to dismiss filed by the
respondents below and setting the pre-trial of the case for October 23, 1969, the
instant petition for a writ of certiorari and prohibition with preliminary injunction was
filed with this Court by herein petitioners, the Director or Officer-in-charge of the
Bureau of Telecommunications, Leon Cervantes and Vivencio Alagbay, on October 27,
1969, praying that pending the determination of the case on the merits, a writ of
preliminary injunction be issued, ex parte and without bond, restraining herein
respondent Judge Jose Aligaen, who presides the Court of First Instance of Capiz,
from enforcing the abovecited orders, and from taking cognizance of Civil Case No. V-
66 | P a g e
3192 of said court until further orders from this Court. respondent against herein petitioners cannot be considered as a suit against the
State.
By resolution, dated October 30, 1969, this Court issued the writ of preliminary
injunction prayed for, and required herein respondents to file their answer. Decisive in the resolution of the issues raised by petitioners in the present case are
the provisions of the franchise granted to respondent Belo, and the powers and
Herein respondent Jose M. F. Belo filed his answer, making certain admissions and functions of the Bureau of Telecommunications. The franchise, Republic Act No.
denials of the allegations in the petition for certiorari and prohibition, and rebutted 2957, granted to Belo "the right and privilege to construct, maintain, and operate in
the grounds alleged in support of the petition. the Province of Capiz and Roxas City, a telephone system to carry on the business of
electrical transmission of conversations and signals in said province and city," 6 but
Before this Court herein petitioners now contend that:chanrob1es virtual 1aw library the rights granted therein" shall not be exclusive;" 7 that the "Philippine Government
shall have the privilege, without compensation, of using the poles of the grantee to
(a) Respondent court has no jurisdiction to hear and determine the case because it attach one ten-pin crossarm, and to install, maintain and operate wires of its
involves a suit against the Government which has not given its consent to be sued; telegraph system thereon; Provided, however, that the Bureau of Telecommunications
shall have the right to place additional crossarms and wires on the poles of the grantee
(b) Respondent court has no jurisdiction, power and authority to issue writs by paying a compensation, the rate of which is to be agreed upon by the Director of
of certiorari, prohibition, mandamus and injunction requiring the execution of acts Telecommunications and the grantee;" 8 and that "it is expressly provided that in the
by, or controlling the acts of, national officials with residences and offices beyond its event the Philippine Government should desire to maintain and operate for itself the
territorial jurisdiction; system and enterprise herein authorized, the grantee shall surrender his franchise
and will turn over to the Government said system and all serviceable equipment
(c) Respondent court acted with grave abuse of discretion amounting to lack of therein, at cost, less reasonable depreciation." 9
jurisdiction in issuing ex parte the orders and writ of injunction complained of despite
the fact that respondent Belo’s complaint states no cause of action and, therefore, he The powers and duties of the Bureau of Telecommunications, on the other hand, as
is not entitled to the main relief; and it follows that he is not entitled to the writ of provided in Executive Order No. 94 of July 1, 1947, insofar as relevant to the instant
preliminary injunction; case are as follows:jgc:chanrobles.com.ph

(d) Respondent court acted with grave abuse of discretion amounting to lack of "Sec. 79. The Bureau of Telecommunications shall exercise the following powers and
jurisdiction in refusing to dissolve the ex parte writ of preliminary injunction despite duties:chanrob1es virtual 1aw library
petitioners’ offer to put up a counterbond.
‘(a) To operate and maintain existing wire-telegraph and radio-telegraph offices,
1. Petitioners argue that the Bureau of Telecommunications is an entity of the stations, and facilities, and those to be established to restore the pre-war
Government of the Republic of the Philippines, created pursuant to Executive Order telecommunication service under the Bureau of Posts, as well as such additional
No. 94, series of 1947, and charged with the governmental function of operating and offices or stations as may hereafter be established to provide telecommunications
maintaining a telecommunications network in the entire length and breadth of the service in places requiring such service;
country, and the action against the Director of the Bureau of Telecommunications
and his subordinates was tantamount to a suit against the Government which cannot ‘(b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or
be done without the consent of the Government. 4 radio telecommunications service throughout the Philippines by utilizing such
existing facilities in cities, towns, and provinces as may be found feasible and under
On the other hand, respondent Belo argues that even if petitioners are officers of the such terms and conditions or arrangements with the present owners or operators
Government their act of establishing a local telephone system in Roxas City is without thereof as may be agreed upon to the satisfaction of all concerned.’"
authority of law, and violates his rights, hence the action for the redress of injuries
that he suffered or would suffer is not a suit against the State. 5 From above-quoted provisions, it is clear that the Bureau of Telecommunications is
empowered to establish telecommunications service in places where such service does
We sustain the stand of respondent Belo. We hold that the suit commenced by said not exist, but in places where such service already exists it may only negotiate for,

67 | P a g e
operate and maintain a telecommunication system by utilizing such existing facilities
in cities, towns and provinces under such terms, conditions or arrangements as may
be agreed upon with their owners or operators.
It is not denied that respondent Belo had already established, since July 1961, an
automatic telephone system in Roxas City. Respondent Belo was operating the
telephone system when the Bureau of Telecommunications. through petitioners, took
steps to establish another local telephone system without having made any
negotiation with respondent Belo for the utilization of the existing facilities being used
by said respondent under terms, conditions and arrangements that would be
satisfactory to all concerned — which acts gave rise to the filing by respondent Belo
of Civil Case No. V-3192 for injunction in the Court of First Instance of Capiz on
August 1, 1969. The officers of the Bureau of Telecommunications, therefore,
attempted to establish a local telephone system in Roxas City in violation of law and
the rights of respondent Belo. Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or officers are not acts of the State,
and an action against the officials or officers by one whose rights have been invaded
or violated by such acts, for the protection of his rights, is not a suit against the State
within the rule of immunity of the State from suit. 10 In the same tenor, it has been
said that an action at law or suit in equity against a State officer or the director of a
State department on the ground that, while claiming to act for the State, he violates
or invades the personal and property rights of the plaintiff, under an unconstitutional
act or under an assumption of authority which he does not have, is not a suit against
the State within the constitutional provision that the State may not be sued without
its consent. 11
2. In support of their contention that respondent court did not have jurisdiction to
issue the writ of injunction in question, herein petitioners argue that the office of
petitioner Director of the Bureau of Telecommunications is in Manila, and that of
petitioner Regional Superintendent of Region IV is in Iloilo City, both of which places
are outside the territorial jurisdiction of respondent court, hence their actions could
not be controlled or enjoined by respondent Court. 12
Respondent Belo, on the contrary, contends that the Court of First Instance has power
to issue the writ of injunction under Sec. 44, of the Judiciary Act of 1948; that the
respondents in the lower court (now petitioners in this Court) were joined as such
respondents because they were necessary to a complete determination of the
questions involved and were the ones responsible for the project of establishing a new
telephone system in Roxas City; that their acts, violative of herein respondent Belo’s
rights, were committed or being pursued in Roxas City which is within the territorial
jurisdiction of the court. 13
We find merit in the contention of respondent Belo. The ruling in the cases relied upon
by petitioners, namely: Acosta v. Alvendia, supra; Samar Mining Co. v. Arnado, supra;
Alhambra Cigar and Cigarette Co. The National Administrator of Regional Office No.
2, supra, is to the effect that the court of first instance has no jurisdiction to restrain
by injunction acts committed outside the territorial boundaries of their respective
provinces or districts. In Acosta v. Alvendia, this Court held that, pursuant to Sec.
44(h) of the Judiciary Act and Sec. 2, Rule 60 of the Rules of Court, 14 courts of first
instance have jurisdiction to control or restrain acts committed or about to be
committed within the territorial boundaries of their respective provinces and districts
by means of the writ of injunction. In the instant case, the acts relative to the
establishment of a local telephone system by petitioners were being done within the
territorial boundaries of the province or district of respondent court, and so said court
had jurisdiction to restrain them by injunction. It does not matter that some of the
respondents in the trial court, against whom the injunctive order was issued, had
their official residences outside the territorial jurisdiction of the trial court. In the case
of Gonzales v. Secretary of Public Works, Et Al., 15 wherein the only question raised
was whether the Court of First Instance of Davao had jurisdiction to entertain a case
the main purpose of which was to prevent the enforcement of a decision of the
Secretary of Public Works who was in Manila, this Court held that, inasmuch as the
acts sought to be restrained were to be performed within the territorial boundaries of
the province of Davao, the Court of First Instance of Davao had jurisdiction to hear
and decide the case, and to issue the necessary injunctive order. This Gonzales case
was an action for certiorari and prohibition with preliminary injunction and/or
preliminary mandatory injunction to prevent the demolition of Gonzales’ dam in
Davao in compliance with the order of the Secretary of Public Works.
It follows, therefore, that since the acts to be restrained were being done in Roxas
City, or within the territorial jurisdiction of respondent court, the latter had
jurisdiction to restrain said acts even if the office of respondent Director of the Bureau
of Telecommunications is in Manila, and that of respondent Regional Superintendent
of Region IV is in Iloilo City.
3. Petitioners also maintain that respondent Belo’s petition for injunction before
respondent court states no cause of action, and respondent court committed a grave
abuse of discretion in issuing the orders and the writ of preliminary injunction now
in question. 16
The contention of petitioners has no merit. A cause of action is "an act or omission of
one party in violation of the legal right or rights of the other; and its essential elements
are legal right of the plaintiff, correlative obligation of the defendant, and act or
omission of the defendant in violation of said legal right." 17 The petition filed with
the respondent lower court clearly alleges: (1) the legal right of respondent Belo to
establish and operate a telephone system in Roxas City as authorized by a legislative
franchise and the certificate of public convenience issued by the Public Service
68 | P a g e
Commission, and his having actually established the telephone system and operating
the same; (2) the violation of respondent Belo’s right by the unauthorized or illegal
acts of the petitioners in taking steps to install another telephone system in Roxas
City without previously having negotiated or entered into any arrangement with
respondent Belo as required by law; and (3) the injury that would be caused of
respondent Belo by the acts of petitioners. Certainly the petitioners herein — more so
because they are officials or officers of the government — have a correlative obligation
to respect the right of respondent Belo, or to act in accordance with law. The
allegations in the petition, which was under oath, served as a basis for respondent
court to exercise its sound discretion whether or not to issue the writ of preliminary
injunction. We do not see in the actuation of respondent court any whimsical or
capricious exercise of judgment when it issued the writ of preliminary injunction in
question. In its order authorizing the issuance of the writ respondent court
said:jgc:chanrobles.com.ph
"That it has not been shown that petitioner (Belo) is remiss in his operation under his
franchise, and that the establishment, maintenance and operation of another local
telephone system in the same geographical area of Roxas City will result in direct
competition with petitioner which is contrary to the franchise granted to him; and
that the continuance of the acts complained of would work serious and irreparable
loss and injury to the petitioner (Belo) unless restrained."cralaw virtua1aw library
We believe that respondent court had acted in accordance with the provisions of
Section 3, Rule 58 of the Rules of Court. By its order it can be gathered that
respondent court had found respondent Belo (petitioner below) entitled to the relief
demanded, when it said "that the continuance of the acts complained of would work
serious and irreparable loss and injury to the petitioner unless restrained." The
respondent court considered it necessary to issue the writ because the continuance
of the acts of installing the new telephone system by the respondents below
(petitioners herein) would render the judgment in the petition for injunction
ineffectual.
Petitioners herein anchor their contention that respondent court committed a grave
abuse of discretion when it issued the writ of preliminary injunction because the
Bureau of Telecommunications has the power to establish a telephone system in
Roxas City, so that respondent court should not have restrained the Director of the
Bureau and the men under him from pursuing the work of installing the telephone
system. The power of the Bureau of Telecommunications to establish, operate and
maintain a nationwide telephone system is conceded. But that power is subject to a
limitation, and that limitation is, that in cities, towns or provinces where telephone
systems are already in operation it should utilize such existing facilities under such
terms and conditions or arrangements with the owners or operators of those systems
as may be agreed upon to the satisfaction of all concerned. The Bureau of
Telecommunications can even expropriate the local facilities if it becomes necessary
to resort to this recourse. Thus, this Court, in the case of Republic v. Philippine Long
Distance Telephone Co., 18 said:jgc:chanrobles.com.ph
"The Bureau of Telecommunications, under Section 79(b) of Executive Order No. 94,
may operate and maintain wire telephone or radio telephone communications
throughout the Philippines by utilizing existing facilities in cities, towns and provinces
under such terms and conditions or arrangement with present owners or operators
as may be agreed upon to the satisfaction of all concerned; but there is nothing in
this section that would exclude resort to condemnation proceedings where
unreasonable or unjust terms and conditions are exacted, to the extent of crippling
or seriously hampering the operation of said Bureau."cralaw virtua1aw library
It is claimed by petitioners that the project of the Bureau of Telecommunications in
Roxas City is a part of a nationwide telecommunications expansion project, as
contemplated in Republic Act 2612, and that Roxas City had been chosen as the site
of one of the telephone exchanges and of one of the base points in the turnkey
installation projects. It will be noted that the respondent court did not enjoin the
Bureau of Telecommunications from working on its telephone exchange and turnkey
installation project in Roxas City in relation to its alleged nationwide
telecommunications expansion project. The respondent court only enjoined the
petitioners herein "to desist and refrain from establishing, maintaining and operating
another local telephone system in the geographical area of Roxas City . . ." 19 In other
words, the petitioners could go on with the work on the installation of the national
hook-up, but not to establish another local telephone system. The idea of respondent
court, as gathered from its order authorizing the issuance of the writ, was to prevent
the competition between the new telephone system and the system already operated
by respondent Belo. Respondent Belo alleged in his petition before respondent lower
court — and the allegation is not denied — that the officials or authorities of the
Bureau of Telecommunications had never attempted to negotiate with him for the use
of the facilities of his local telephone system in conjunction with the Bureau’s national
hook-up project. It is plain, therefore, that petitioners herein did not act in accordance
with law.
It is Our considered view that the powers and duties of the Bureau of
Telecommunications in connection with the operation and maintenance of a
nationwide telecommunications system are as provided, and delimited, in Section 79
of Executive Order No. 94, series of 1947. We believe that the provision of paragraph
(b) of Section 73 of the Executive Order, which authorizes the Bureau of
Telecommunications "to investigate, consolidate, negotiate for, operate and maintain
wire telephone or radio telecommunication service throughout the Philippines by
utilizing such existing facilities . . . under such terms and conditions or arrangements
with the present owners or operators as may be agreed upon . . .", was intended to
69 | P a g e
protect the operators of telephone systems already existing and duly authorized by
law to operate. The Bureau of Telecommunications may take steps to improve the
telephone service in any locality in the Philippines, but in so doing it must first enter
into negotiation or arrangement with the operator or owner of the existing telephone
system. We believe that the intention of the executive order, precisely, is to avoid a
competition which would prove ruinous or disadvantageous to both the government
and the private operator. When a private person or entity is granted a legislative
franchise to operate a telephone system, or any public utility for that matter, the
government has the correlative obligation to afford the grantee of the franchise all the
chances or opportunity to operate profitably, as long as public convenience is proper]y
served, rather than promote a competition with the grantee. We can not accept the
view, as urged by herein petitioners, that the Bureau of Telecommunications can
install and operate a telephone system in any place in the Philippines regardless of
the rights and interests of existing private Operators, especially if the existing operator
is a grantee of a legislative franchise. That view is not in consonance with the
provisions of paragraph (b) of Section 79 of Executive Order No. 94, series of 1947.
Indeed, it should be the concern of the Bureau of Telecommunications and the Public
Service Commission that telephone services in the country are efficient and
satisfactory. But in promoting satisfactory service the rights and interests of prior
operators should not be wantonly disregarded. If the Bureau of Telecommunications
believes that it has to embark on a project of improving the telephone service in a
particular place, it should negotiate or arrange with the existing operator as provided
in paragraph (b) of Section 79 of Executive Order No. 94. If no satisfactory
arrangement can be arrived at between the Bureau of Telecommunications and the
existing operator, the Bureau of Telecommunications may resort to expropriation as
suggested in the decision of this Court in the case of Republic v. Philippine Long
Distance Telephone Co., supra. Or, if the government would decide to operate the
telephone system to the exclusion of the grantee of the legislative franchise, the
grantee may be required to surrender his franchise and turn over to the government
the telephone system he is operating We have noted that all legislative franchises for
the operation of a telephone system contain a proviso similar to that of Section 18 of
the franchise of respondent Belo (Rep. Act 2957), as follows:jgc:chanrobles.com.ph
"Sec. 18. It is expressly provided that in the event the Philippine Government should
desire to maintain and operate for itself the system and enterprise herein authorized,
the grantee shall surrender his franchise and will turn over to the Government said
system and all serviceable equipment therein at cost, less reasonable
depreciation."cralaw virtua1aw library
It is urged by herein petitioners that the franchise granted to respondent Belo is not
exclusive. This is true, but it does not follow that any person or entity — not even the
Bureau of Telecommunications — can put up another telephone system in Roxas City
in a manner not in accordance with law.
"Notwithstanding a franchise is not exclusive so as to prevent the grant of a similar
franchise to another or to prevent competition on the part of a person or entity duly
authorized in that regard, such a franchise has been regarded or characterized as
exclusive against one who carries a competing operation without due authorization
or in violation of the law governing the matter." 20
"There is authority for the view. however, that the owner of a franchise which is not
exclusive, in that . . . does not prevent the grantor from granting a similar franchise
to another or does not prevent lawful competition on the part of public authorities, is
entitled to relief by injunction against competition which is illegal or is carried on by
one not authorized in that regard, in the case either of actual or of threatened injury
from such competition." 21
And so in the case at bar, because the Director of the Bureau of Telecommunications,
or any of the herein petitioners, had not negotiated or made arrangement with
respondent Belo before taking steps to install a new local telephone system in Roxas
City, as required in paragraph (b) of Section 79 of Executive Order No. 94, the
respondent court had properly issued the writ of preliminary injunction enjoining said
petitioners to "desist and refrain from establishing, maintaining and operating
another local telephone system in . . . Roxas City."cralaw virtua1aw library
4. It is also the contention of the petitioners that respondent court committed a grave
abuse of discretion when it refused to dissolve the writ of preliminary injunction in
spite of petitioners’ offer to put up a counterbond of P20,000, although the
Government is exempt from filing a bond. Under the circumstances obtaining in this
case, this contention has no merit.
The mere filing of a counterbond does not necessarily warrant the dissolution of the
writ of preliminary injunction. Under Section 6 of Rule 58 of the Rules of Court, a
preliminary injunction, if granted, may be dissolved "if it appears after hearing that
although the plaintiff is entitled to the injunction, the continuance thereof, as the
case may be, would cause great damage to the defendant while the plaintiff can be
fully compensated for such damages as he may suffer, and the defendant files a bond
in an amount fixed by the judge conditioned that he will pay all damages which the
plaintiff may suffer by the . . . dissolution of the injunction." 22 Under this quoted
provision of the rules of court, the court is called upon to exercise its discretion in
determining or weighing the relative damages that may be suffered by the parties. If
the damages that may be suffered by the defendant by the continuance of the
injunction outweigh the damages that may be suffered by the plaintiff by the
dissolution of the injunction, then the injunction should be dissolved. In the case at
bar the respondent court, in refusing to dissolve the writ of preliminary injunction,
took into consideration that "the petitioner (Belo) will suffer great and irreparable
70 | P a g e
injury considering the tremendous investment of the petitioner, his time and gigantic measuring the extent of the assumed liability.
efforts made to put up telephone service in Roxas City." An injunction issued to stop
an unauthorized act should not be dissolved by the mere filing of a counterbond, 3. ID.; ID.; ID.; MALICE OR LACK OF GOOD FAITH, NOT A DEFENSE FOR
otherwise, the counterbond would become the vehicle of the commission or RECOVERY OF DAMAGES AGAINST THE INJUNCTION BOND. — The statutory
continuance of an unauthorized or illegal act which the injunction precisely is undertaking of the bond is that it shall answer for all damages which the party to be
intended to prevent. restrained may sustain by reason of the injunction if the court should finally decide
that the plaintiff was not entitled thereto. Malice or lack of good faith is not an element
We hold, therefore, that respondent court did not commit a grave abuse of discretion of recovery on the bond; otherwise, the filing of the bond is a useless formality.
when it refused to dissolve the writ of preliminary injunction it had issued.
4. ID.; ACTION FOR DAMAGES CAUSED BY INJUNCTION; PRINCIPLE GOVERNING
Having thus declared that respondent court had jurisdiction to issue the writ of THE ACTION. — The same principles govern an action for damages for the improper
preliminary in junction in question, and that it did not abuse its discretion in refusing suing out of an injunction that govern an action brought to recover damages for the
to dissolve the said writ, it follows that it also acted with jurisdiction when it issued wrongful filing of an action. The party claiming damages must prove that the party
the orders of August 1, 1969, of September 3, 1969, and of October 1, 1969, which applicant obtained the writ of injunction maliciously and without probable cause.
are questioned in these proceedings. 23 This rule, however, applies only where the party restrained pursues his claim for
damages not upon the injunction bond.
IN VIEW IF THE FOREGOING, the writ of preliminary injunction issued by this Court
on October 30, 1969 is dissolved, and the instant petition for certiorari and BARREDO, J., concurring:chanrob1es virtual 1aw library
prohibition is dismissed. The questioned writ of preliminary injunction and the orders
issued by respondent court (Annexes B, C, M, Q and Q-1 of the Petition) are held 1. REMEDIAL LAW; PLEADING AND PRACTICE; PRELIMINARY INJUNCTION BOND,
valid. No pronouncement as to costs. It is so ordered. NATURE AND SCOPE. — The injunction bond is the security which the law requires
[G.R. No. L-23868. October 22, 1970.] the complainant in a bill of an injunction to execute, to indemnify the defendant, in
case the injunction shall be dissolved. The bond becomes, when forfeited, the cause
ZACARIAS C. AQUINO, Petitioner, v. FRANCISCO SOCORRO and COURT OF of action, and is intended by the law, to measure the damages of every kind which the
APPEALS, Respondents. party may sustain by wrongfully suing out the injunction in case it is dissolved. It is
not at all like the official bonds of sheriffs which are made payable to the People of
Tranquilino O. Calo, Jr. for Petitioner. the State. The injunction bond is made payable to the defendant.

Alfaro & Associates for respondent Francisco Socorro. 2. ID.; ID.; BOND DESIGNED TO COVER ALL DAMAGES. — There is no remedy other
than upon the bond, whether the injunction is maliciously or otherwise obtained.
Good faith is never a defense in a claim for damages caused by the unwarranted or
SYLLABUS unjustified issuance of the injunction. It is designed by the statute, to cover all
damages the party enjoined can possibly sustain, and it is in the power of the judge
or officer granting the writ to require a bond in a penalty sufficient to cover all
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; conceivable damages.
DAMAGES CAUSED BY INJUNCTION, RECOVERABLE. — This Court has ruled that
damages sustained on account of the improvident issuance of a writ of injunction
may be recovered upon the bond filed with the Court. DECISION

2. ID.; ID.; ID.; RECOVERABLE DAMAGES, LIMITED TO AMOUNT OF BOND. —

There is nothing in the Rules of Court which allows recovery of damages other than CASTRO, J.:
upon the bond pledged by the party suing for an injunction. Section 9, Rule 58 of the
Rules of Court, limits the amount of recovery only upon the bond, the amount
71 | P a g e
On February 14, 1964 the Court of Appeals, upon petition of Francisco Socorro in
CA-G.R. 33560-R, 1 issued a writ of preliminary injunction in his favor upon his
posting a P1,000 bond. The writ of preliminary injunction, among others, restrained
Zacarias Aquino "from entering, cutting, hauling, selling and/or exporting logs or
other forest products from the forest area" subject of litigation. Aquino, however, filed
a counterbond in the amount of P2,000, effecting the immediate dissolution of the
writ.
The Court of Appeals, on June 29, 1964, dismissed Socorro’s petition re the main
action, for lack of jurisdiction to entertain the same. Socorro subsequently appealed
the decision of the appellate court to this Court. We affirmed the appellate court’s
decision in a resolution dated December 24, 1964 in case G.R. L-23608.
On July 15, 1964, before the appellate court’s decision dismissing Socorro’s petition
became final, Aquino filed with the appellate court his claim for damages in the
amount of P199,000 on account of the wrongful issuance of the writ of preliminary
injunction. The appellate court denied Aquino’s claim, for want of bad faith and malice
on the part of Socorro in filing his petition and securing the issuance of the writ of
preliminary injunction. Aquino’s subsequent motion for reconsideration was denied.
Hence, the present petition for certiorari to review the resolution of the Court of
Appeals denying his claim for damages.
Aquino contends that the respondent appellate court erred in denying his claim for
damages on the ground of want of bad faith and malice on the part of the respondent
Socorro in filing the petition for certiorari re the main case and securing the issuance
of the writ of preliminary injunction. He invokes the provisions of Section 9, Rule 58
in relation to Section 20, Rule 57, of the Rules of Court. Section 9, Rule 58
recites:jgc:chanrobles.com.ph
"Judgment to include damages against party and sureties.—Upon the trial the
amount of damages to be awarded to the plaintiff, or to the defendant, as the case
may be, upon the bond of the other party, shall be claimed, ascertained, and awarded
under the same procedure as prescribed in Section 20 of Rule 57."cralaw virtua1aw
library
Section 20, Rule 57 reads:jgc:chanrobles.com.ph
"Claim for damages on account of illegal attachment.—If the judgment on the action
be in favor of the party against whom attachment was issued, he may recover, upon
the bond given or deposit made by the attaching creditor, any damages resulting from
the attachment. Such damages may be awarded only upon application and after
proper hearing, and shall be included in the final judgment. The application must be
filed before the trial or before appeal is perfected or before the judgment becomes
executory, with due notice to the attaching creditor and his surety or sureties, setting
forth the facts showing his right to damages and the amount thereof.
"If the judgment of the appellate court be favorable to the party against whom the
attachment was issued, he must claim damages sustained during the pendency of
the appeal by filing an application with notice to the party in whose favor the
attachment was issued or his surety or sureties, before the judgment of the appellate
court becomes executory. The appellate court may allow the application to be heard
and decided by the trial court."cralaw virtua1aw library
Aquino points out that the said provisions do not require a claimant who seeks to
recover damages on account of the wrongful issuance of a writ of preliminary
injunction, to prove bad faith and malice on the part of the party who obtained the
issuance of the writ. To reinforce his contention, he invokes the provisions of Section
4(b) of Rule 58 of the Rules of Court. This rule, Aquino avers, makes the party applying
for an injunction liable for all damages sustained by the other party if the court finally
decides the party applicant as not entitled thereto. He maintains that, in the case at
bar, the dissolution of the writ of preliminary injunction by the respondent appellate
court clearly demonstrates that the respondent Socorro was not entitled thereto.
Socorro, on the other hand, prays for the dismissal of the present petition on the
following grounds: (1) The petitioner "refused to prosecute his claim for damages . . .
in the main action then already on appeal to this Court;" (2) The petitioner "failed to
state in his motion claiming for damages the facts upon which his rights thereto are
based;" (3) The petitioner, if "suing on the bond . . . has no more cause of action as
the said bond had already been dissolved 2 upon motion by the petitioner Aquino;"
and (4) The petitioner, if "suing beyond the bond . . . failed to show, or there is no
showing that the respondent Socorro," in filing his petition for certiorari and securing
the issuance of the writ of preliminary injunction, "was motivated by malice or bad
faith."cralaw virtua1aw library
The present case raises the question of whether Aquino’s claim for damages on
account of the improvident issuance by the respondent appellate court of the writ of
preliminary injunction should be dismissed on the ground that he has failed to show
or prove bad faith and malice on the part of the respondent Socorro in obtaining the
issuance of the writ of preliminary injunction.
In Pacis v. The Commission on Elections, 3 this Court made an extensive discussion
of the principles applicable to the recovery of damages caused through the
improvident issuance of a writ of preliminary injunction. This Court said that
"damages sustained as a result of a wrongfully obtained injunction may be recovered
upon the injunction bond required to be filed with the court." The same provisions
72 | P a g e
permitting the issuance of the writ of preliminary injunction require the filing of a
bond before the grant of the writ. "The statutory undertaking of the bond is that it
shall answer for all damages which the party to be restrained may sustain by reason
of the injunction if the court should finally decide that the plaintiff was not entitled
thereto. Malice or lack of good faith is not an element of recovery on the bond. This
must be so, because to require malice as a prerequisite would make the filing of the
bond a useless formality."cralaw virtua1aw library
Continuing, this Court said that "the dissolution of the injunction, even if the
injunction was obtained in good faith, amounts to a determination that the injunction
was wrongfully obtained and a right of action on the injunction bond immediately
accrues." Thus, for the purpose of recovery upon the injunction bond, "the dissolution
of the injunction because of the failure of petitioner’s main cause of action" provides
the "actionable wrong" for the purpose of recovery upon the bond.
This Court also stressed, in the same case, that "there is nothing in the Rules of Court
which allows recovery of damages other than upon the bond pledged by the party
suing for an injunction. Section 9, Rule 58, limits recovery only upon the bond, and
it specifically states that xxx ‘the amount of damages to be awarded to the plaintiff,
or to the defendant, as the case may be, upon the bond of the other party, shall be
claimed, ascertained, and awarded under the same procedure as prescribed in
Section 20 of Rule 57.’" Under this provision, the party restrained, if he can recover
anything, can recover only by reason of and upon the bond — the only security and
protection conceded to him by the rules. Consequently, the rule limits the amount of
recovery in a suit on an injunction bond to the sum thus fixed, the amount measuring
the extent of the assumed liability.
This Court also finds it necessary to restate the rule in Molina v. Somes 4 that "an
action for damages for the improper suing out of an injunction must be maintained
upon the same principles which govern an action for the wrongful bringing of an
action." This rule, however, applies only when the party restrained pursues his claim
for damages not upon the injunction bond. In such a case where the party restrained
sues not on the injunction bond, the rules accord him no relief by way of a claim for
damages unless he can establish that the party applicant secured the issuance of the
writ maliciously and without probable cause. This Court stated that." . . when the
process has been sued out maliciously there may be a right of action in favor of the
defendant. But this right depends upon the law governing malicious prosecutions,
and has no relation to the claim for damages urged by the defendant in this case. . .
." 5 Before the Court are administrative complaints filed against Judge Arnulfo G.
Additionally, this Court, citing Palmer v. Foley (71 N.Y. 106, 108),
said:jgc:chanrobles.com.ph
"It seems that, without some security given before the granting of an injunction order,
or without some order of the court or a judge, requiring some act on the part of the
plaintiff, which is equivalent to the giving of security — such as a deposit of money in
court — the defendant has no remedy for any damages which he may sustain from
the issuing of the injunction, unless the conduct of the plaintiff has been such as to
give ground for an action for malicious prosecution.
In the case at bar, the record reveals that the petitioner Aquino, in the proceedings
before the respondent appellate court, filed a counterbond in the amount of P2,000
and opposed the injunction bond filed by the respondent Socorro on the ground of its
insufficiency. In effect, these brought about the immediate dissolution of the writ of
preliminary injunction. Thus Aquino pursues his claim for damages in the amount of
P199,000 no longer upon the injunction bond in the amount of P1,000 filed by Socorro
with the respondent appellate court. This being the case, applicable here is the
holding in Molina v. Somes, supra, that an application for damages on account of the
improvident issuance of a preliminary injunction writ must be governed by the same
principles applicable to an action for the wrongful bringing of an action. Before the
respondent’s liability can attach, it must appear that he filed his petition
for certiorari re the main action and obtained the issuance of the writ of preliminary
injunction maliciously and without probable cause. These two essential requisites,
malicious prosecution and lack of probable cause, are neither alleged nor proved in
this case before us. Nothing in the record tends to establish the liability of the
respondent Socorro.
ACCORDINGLY, the present petition for certiorari is hereby denied. No cost.
Chief State Prosecutor JOVENCITO R. ZUO, ATTY. CLEMENTE P. HERALDO,
Chief of the Internal Inquiry and Prosecution Division-Customs
Intelligence and Investigation Service (IIPD-CIIS), and LEONITO A.
SANTIAGO, Special Investigator of the IIPD-CIIS, petitioners, vs. JUDGE
ARNULFO G. CABREDO, Regional Trial Court, Branch 15, Tabaco City,
Albay, respondent.
DECISION
PER CURIAM:
Cabredo of Branch 15 of the Regional Trial Court (RTC) of Tabaco City, Albay, for
grave misconduct, knowingly rendering an unjust interlocutory order, manifest
partiality, evident bad faith, and gross inexcusable negligence.
73 | P a g e
The Antecedents
The facts are simple. Atty. Winston Florin, the Deputy Collector of Customs of
the Sub-port of Tabaco, Albay, issued on September 3, 2001 Warrant of Seizure and
Detention (WSD) No. 06-2001 against a shipment of 35,000 bags of rice aboard the
vessel M/V Criston, for violation of Section 2530 of the Tariff and Customs Code of
the Philippines (TCCP).[1]
A few days after the issuance of the warrant of seizure and detention, or on
September 25, 2001, Antonio Chua, Jr. and Carlos Carillo, claiming to be consignees
of the subject goods, filed before the Regional Trial Court of Tabaco City, Albay, a
Petition for Prohibition with Prayer for the Issuance of Preliminary Injunction and
Temporary Restraining Order (TRO) which was docketed as Civil Case No. T-2170.
The said petition sought to enjoin the Bureau of Customs and its officials from
detaining the subject shipment.
On September 28, 2001, Judge Cabredo issued an order ex parte, the relevant
portion of which reads as follows:
xxx
Acting on the petition for Prohibition with Prayers for the Issuance of Preliminary
Injunction and Temporary Restraining Order and finding the same to be sufficient in
form and substance and that after a thorough evaluation of the entire records, it
appears that the subject matter involved is of extreme urgency and the applicants will
suffer grave injustice and irreparable injury pursuant to paragraph 2, Section
5, [R]ule 58 of the 1997 Rules of Civil Procedure, let a temporary restraining order be
issued good for seventy two (72) hours from service thereof restraining the herein
respondents or any person or entity so acting in their behalf from detaining the
subject a) 14,920 bags of imported well[-]milled rice (WMR), b) 5,000 bags of local
well[-]milled rice (WMR) and c) 15,000 bags of imported special variety rice, upon the
filing of a bond in the amount of PhP31,450,000.00. [2]
xxx
By virtue of said TRO, the 35,000 bags of rice were released from customs to Antonio
Chua, Jr. and Carlos Carillo.
In his complaint, Chief State Prosecutor Zuo alleged that respondent Judge
violated Administrative Circular No. 7-99,[3] which cautions trial court judges in their
issuance of temporary restraining orders and writs of preliminary injunctions. Said
circular reminds judges of the principle, enunciated in Mison v. Natividad,[4] that the
Collector of Customs has exclusive jurisdiction over seizure and forfeiture
proceedings, and regular courts cannot interfere with his exercise thereof or stifle or
put it to naught.
Chief State Prosecutor Zuo further alleged that respondent Judge knew very well
that at the time he issued the questioned order, he did not have any jurisdiction to
pass upon the validity or regularity of the seizure and forfeiture proceedings
conducted by the Bureau of Customs. Hence, he asserts, respondent Judge wantonly
disregarded rules and settled jurisprudence, to the damage and prejudice of the
government, depriving it of its legal custody over the seized articles and consequently,
the opportunity to collect taxes and duties thereon.
Atty. Clemente P. Heraldo, Chief of the Internal Inquiry and Prosecution Division-
Customs Intelligence and Investigation Service (IIPD-CIIS), and Leonito A. Santiago,
Special Investigator of the IIPD-CIIS also filed a joint Supplemental Complaint-
Affidavit reiterating the allegations in the complaint filed by Chief State Prosecutor
Zuo.[5]
In his 1st Indorsement dated September 23, 2002, Court Administrator
Presbitero J. Velasco, Jr. referred to respondent Judge the complaint against him for
his comment. On November 11, 2002, respondent Judge filed his Comment With
Motion to Suspend Proceedings. He alleged therein that when he issued the
questioned TRO, he honestly believed that the Bureau of Customs had been divested
of its jurisdiction over the case. He specifically cited the statement of Deputy Collector
of Customs Florin in the warrant of seizure and detention that, as the investigating
officer, he cannot find any violation of Section 2530 of the Tariff and Customs
Code.[6] According to respondent Judge, because of this statement, the Bureau of
Customs no longer had any jurisdiction over the case.
Respondent Judge likewise explained in his Comment that he saw to it that the
interests of both parties in the case were duly protected. By requiring petitioners
therein to put up a bond equivalent to the full value of the goods to answer for
whatever liability may be adjudged against them, he safeguarded the interest of the
government relative to collecting taxes and duties due on the shipment. On the other
hand, he allowed petitioners therein to have possession of the goods, which were
perishable in nature, upon filing of the bond.
Finally, respondent Judge, in his Comment, also moved that the proceedings
herein be suspended. He alleged that the matter of whether or not the issuance of the
questioned TRO was illegal, whimsical, and attended with manifest partiality and bad
faith is now pending before the Court of Appeals in a case docketed as CA G.R. SP No.
72047. Hence, the proceedings herein should be suspended to await the final decision
in the case before the Court of Appeals.
The Court Administrators Evaluation
74 | P a g e
 The Court Administrator, in his Evaluation dated February 7, 2003, stated that
the questioned TRO was clearly illegal and issued in excess of jurisdiction. He
cited Rallos v. Gako, Jr.,[7] which held that Regional Trial Courts are devoid of any
competence to pass upon the validity or regularity of seizure and forfeiture
proceedings conducted by the Bureau of Customs or to enjoin or otherwise interfere
with these proceedings. The rule enunciated in Mison v. Trinidad[8] is clear: the
Collector of Customs has exclusive jurisdiction over seizure and forfeiture
proceedings. The RTCs are precluded from assuming cognizance over such matters
even through petitions for certiorari, prohibition or mandamus. Moreover, even if the
seizure by the Collector of Customs were illegal, which has yet to be proven, such act
does not deprive the Bureau of Customs of jurisdiction thereon.
The Court Administrator concluded that the act of respondent Judge in issuing
the questioned TRO amounted to gross ignorance of the law.
The Courts Ruling
We agree with the findings of the Court Administrator.
First, respondent Judge is not exculpated by his contention that his act did not
cause any damage upon the government by preventing it from collecting duties and
taxes due on the shipment since he required petitioners therein to file a bond in the
amount equivalent to the value of the shipment.
The collection of duties and taxes due on the seized goods is not the only reason
why trial courts are enjoined from issuing orders releasing imported articles under
seizure and forfeiture proceedings by the Bureau of Customs. Administrative Circular
No. 7-99 takes into account the fact that the issuance of TROs and the granting of
writs of preliminary injunction in seizure and forfeiture proceedings before the Bureau
of Customs may arouse suspicion that the issuance or grant was for considerations
other than the strict merits of the case. Furthermore, respondent Judges actuation
goes against settled jurisprudence that the Collector of customs has exclusive
jurisdiction over seizure and forfeiture proceedings, and regular courts cannot
interfere with his exercise thereof or stifle and put it to naught. [9]
Second, respondent Judge cannot claim that he issued the questioned TRO
because he honestly believed that the Bureau of Customs was effectively divested of
its jurisdiction over the seized shipment due to the statement of Deputy Collector of
Customs Florin who stated that, as the investigating officer, he cannot find any
violation of Section 2530 of the Tariff and Customs Code.
Even if it be assumed that in the exercise of the Collector of Customs of its
exclusive jurisdiction over seizure and forfeiture cases, a taint of illegality is correctly
imputed, the most that can be said is that under these circumstances, grave abuse
of discretion may oust it of its jurisdiction. This does not mean, however, that the trial
court is vested with competence to acquire jurisdiction over these seizure and
forfeiture cases. The proceedings before the Collector of Customs are not final. An
appeal lies to the Commissioner of Customs and thereafter to the Court of Tax
Appeals. It may even reach this Court through an appropriate petition for review. The
proper ventilation of the legal issues is thus indicated. Certainly, the Regional Trial
Court is not included therein. Hence, it is devoid of jurisdiction. [10]
Clearly, therefore, respondent Judge had no jurisdiction to take cognizance of the
petition and issue the questioned TRO. He proceeded against settled doctrine, an act
constituting gross ignorance of the law.[11] This is a serious violation under Section 8,
Rule 140 of the Rules of Court.[12]
What is involved here is a fundamental and well-known judicial norm. If the law
is so elementary, not to know it or to act if one does not know it, constitutes gross
ignorance of the law.[13] Gross ignorance of the law is the disregard of basic rules and
settled jurisprudence.[14] Failure to know the basic principles is an inexcusable
offense. Respondents actuation in this case is tantamount to grave misconduct.
It is a basic principle that the Collector of Customs has exclusive jurisdiction over
seizure and forfeiture proceedings of dutiable goods. A studious and conscientious
judge can easily be conversant with such an elementary rule.
Finally, in issuing orders and rendering decisions, judges must make sure that
the same are not only just, correct, and impartial, but also done in a manner free
from any suspicion of unfairness and partiality. As aforestated, Administrative
Circular No. 7-99 reminds judges that their issuance of TROs and grants of writs of
preliminary injunction in seizure and forfeiture proceedings before the Bureau of
Customs may arouse suspicion that said issuance or grant was for considerations
other than the strict merits of the case. The said administrative circular seeks to
reiterate that they should embody the image of equity and justice in the eyes of the
public.
Respondent Judges order is of the kind that erodes the publics confidence and
faith in the courts. Judges are to avoid not just impropriety, but even the appearance
of impropriety. They must give no ground for reproach in order to promote public
confidence in the integrity and impartiality of the judiciary. [15] No position exacts a
greater demand for moral righteousness and uprightness than a seat in the
judiciary.[16]
WHEREFORE, Judge Arnulfo G. Cabredo is found GUILTY of GRAVE
MISCONDUCT. The Court imposes on him the penalty of DISMISSAL from the service
with forfeiture of all benefits, excluding accrued leave credits, with prejudice to re-
75 | P a g e
employment in any branch or agency of the government, including government-owned
or controlled corporations. February 28, 2003, in CA-G.R. SP No. 67397, which set aside the Order[2] dated
Let a copy of this decision be attached to the personnel records of Judge Arnulfo
September 4, 2001 of the Regional Trial Court of Valenzuela City, Branch 172, in Civil
G. Cabredo.
SO ORDERED. Case No. 82-V-01.

FILIPINO METALS CORPORATION, MAXIMA STEEL G.R. No. 157498 The antecedent facts are as follows:
MILLS CORPORATION, BUILDERS STEEL
CORPORATION, UNICORN METAL
CORPORATION, VENUS STEEL CORPORATION, Present: Petitioners are manufacturers of various steel products such as reinforcing bars, steel
LEGACY STEEL CORPORATION, PAG-ASA
STEEL CORPORATION, MARTIAN* STEEL Davide, Jr., C.J., sections, and profiles. The principal raw materials for these products are steel billets,
CORPORATION, LUNAR** STEEL (Chairman),
CORPORATION, CEBU STEEL CORPORATION, Quisumbing, which come in various chemical and physical compositions, sourced partly from
CAPITOL STEEL CORPORATION, STEEL Ynares-Santiago,
ASIA MANUFACTURING CORPORATION, and GRAND Carpio, and domestic producers and partly from overseas suppliers.
ASIA CORPORATION, Azcuna, JJ.
Petitioners,
The domestic suppliers supply only about 15% of the countrys total requirements.
- versus -
These are made from various scraps containing impurities. They are of inferior quality
SECRETARY OF THE DEPARTMENT OF TRADE AND
INDUSTRY, SECRETARY OF THE DEPARTMENT OF
compared to the imported ones made from virgin-ore materials. Thus, petitioners are
AGRICULTURE, SECRETARY OF THE
DEPARTMENT OF FINANCE, THE
compelled to import a bulk of their raw materials from foreign suppliers.
COMMISSIONER OF THE BUREAU OF
CUSTOMS, and THE CHAIRMAN OF THE TARIFF
COMMISSION, Promulgated:
Respondents. On July 17, 2000, Republic Act No. 8800[3] was enacted codifying the provisions of

July 15, 2005 Article XIX of the General Agreement on Tariffs and Trade (GATT) and the World Trade
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Organization (WTO) Agreement on Safeguards. These agreements authorize the
DECISION
application of a safeguard measure if a product is being imported into the country in
QUISUMBING, J.:
such quantities as would cause or threaten to cause serious injury to domestic

producers of like or directly competitive products.

For review on certiorari is the Court of Appeals Decision,[1] dated

76 | P a g e

On April 6, 2001, petitioners filed with the Regional Trial Court of Valenzuela City,
Branch 172, a petition for declaratory relief and/or certiorari and prohibition seeking
to declare Rep. Act No. 8800 as unconstitutional.
...
The private respondents projected loss in business is not the clear
legible (sic) right contemplated by the rules which shall be entitled to
the protection of an injunctive relief.[5]

The RTC judge, while holding in abeyance a ruling on the validity of Rep. Act No. Aggrieved, petitioners now come to this Court on a petition for review raising the

8800, found a strong case against the constitutionality of the said law sufficient to following issues:

justify a preliminary injunctive relief. The dispositive portion of his questioned order A.

reads: WHETHER OR NOT THE COURT OF APPEALS COMMITTED A

REVERSIBLE [ERROR] WHEN IT REVERSED AND SET ASIDE THE 4
WHEREFORE, upon the filing by the petitioners and petitioners in SEPTEMBER 2001 ORDER OF THE REGIONAL TRIAL COURT OF
intervention of a bond in the amount of P10,000,000.00 to answer for VALENZUELA, THUS DISSOLVING THE WRIT OF PRELIMINARY
whatever damages which the respondents and respondents in INJUNCTION ENJOINING PUBLIC RESPONDENTS FROM
intervention may sustain by reason of the injunction if the Court IMPLEMENTING R.A. 8800, CONSIDERING THAT PETITIONERS
should finally decide that the petitioners and petitioners in HAVE MADE OUT A CASE OF UNCONSTITUTIONALITY STRONG
intervention were not entitled thereto, let a writ of preliminary ENOUGH TO OVERCOME THE PRESUMPTION OF
injunction be issued restraining the respondents from enforcing CONSTITUTIONALITY OF R.A. 8800 FOR THE PURPOSE OF ISSUING
Republic Act 8800 and/or its Implementing Rules and Regulations. A WRIT OF PRELIMINARY INJUNCTION.

SO ORDERED.[4] B.

WHETHER OR NOT THE VIOLATION OF WTO AGREEMENTS WAS

PROPERLY RAISED AS AN ISSUE IN THE TRIAL COURT LEVEL AS A
Not satisfied, respondents filed a petition for certiorari with the Court of Appeals. In GROUND FOR THE UNCONSTITUTIONALITY OF R.A. 8800.

its assailed decision dated February 28, 2003, the appellate court concluded that the C.

RTC judge committed grave abuse of discretion in issuing the writ of injunction. In
reversing the trial court order, the Court of Appeals reasoned thus:
Questions on the constitutionality of the law [do not]
necessarily entitle a movant to have the assailed law enjoined. It would
seem that respondent Judge acted with undue haste in issuing the writ
of preliminary injunction a quo, disregarding the well-settled
presumption of validity that laws enjoy.
WHETHER OR NOT PETITIONERS HAVE ADEQUATELY SHOWN A
CLEAR RIGHT TO INJUNCTIVE RELIEF.
D.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT FAILED TO DISMISS THE THIRD
PETITION (C.A.-G.R. S.P. No. 67397) FILED BY PUBLIC
RESPONDENTS WITH THE COURT OF APPEALS.[6]

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 Petitioners maintain that Rep. Act No. 8800 violates Article VI, Section 28 (2) court.[8] Neither is the issue of forum-shopping allegedly committed by respondents,

of the Constitution.[7] They contend that the said provision does not authorize determinative of the case at hand.

Congress to delegate the power to impose tariff rates, import and export quotas,
The sole issue in this petition is whether or not the Court of Appeals erred in
tonnage and wharfage dues and other duties or imposts to persons other than the
reversing the trial court order enjoining respondents from enforcing Rep. Act No.
President. They further argue that Rep. Act No. 8800 impairs Philippine treaty
8800. Simply put, should the preliminary injunction issued by the trial court be
obligations under the WTO Agreement on Safeguards. In fine, they contend that they
upheld?
have made out a case of unconstitutionality sufficient to entitle them to a writ of
We rule in the affirmative.
preliminary injunction. Lastly, petitioners allege that respondents engaged in forum-

shopping.
In the recent case of Southern Cross Cement Corporation v. Philippine Cement

Respondents, however, insist that the Court of Appeals correctly ruled that Manufacturers Corporation,[9] this Court intimated, but only by way of obiter dictum,

Rep. Act No. 8800 enjoys the presumption of constitutionality. They argue that the that the imposition of safeguard measures should not be enjoined as that would be

enactment of Rep. Act No. 8800 constitutes a valid delegation of legislative power. tantamount to enjoining the collection of taxes.

Respondents claim it is improper for petitioners to raise the issue of the alleged
Verily, as early as Churchill and Tait v. Rafferty,[10] the Court rejected judicial control
violation of the WTO Agreement on Safeguards since it was not raised before the Court
over collection of taxes. That taxes must be collected promptly is a policy deeply
of Appeals. They also allege that the supposed injury to be sustained by petitioners is
entrenched in our tax system. Thus, no court is allowed to grant injunction to restrain
neither grave nor irreparable. Finally, respondents deny that they engaged in forum-
the collection of any internal revenue tax.[11]
shopping.

Rep. Act No. 8800, also known as the Safeguard Measures Act, authorize the
At the outset, we note that the issue of constitutionality of Rep. Act No. 8800
application of a safeguard measure upon a finding that a product is being imported
is not raised in the instant petition. It is in fact pending litigation at the regional trial
into the country in increased quantities as to be a substantial cause of serious injury

or threat to the domestic industry.[12] Hence, the primary purpose of safeguard

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measures is not at all to generate revenue for the government, but to provide In the instant case, the act complained of is the enforcement of Rep. Act No.

protection to domestic industry threatened by import surges. Thus, while suspending 8800. Petitioners pointed out that Rep. Act No. 8800 delegated the power to fix tariffs

the collection of internal revenue taxes will definitely cripple the government, and imposts directly to the Secretary of the Department of Trade and Industry.

enjoining the enforcement of safeguard measures would not necessarily drain the Moreover, they showed that Rep. Act No. 8800 impairs Philippine treaty obligations

national coffer. Note that safeguard measures are not always in the form of a tariff under the WTO Agreement on Safeguards.[14]

increase. Safeguard measures may, and in fact, usually take the form of a simple
We have ruled that when the petitioner assailing a statute has made out a case
quantitative restriction on imports.[13]
of unconstitutionality strong enough to overcome, in the mind of the judge, the

presumption of validity, in addition to a showing of a clear legal right to the remedy

Clearly, safeguard measures are not in the nature of taxes, in the sense of
sought, the court should issue a writ of preliminary injunction.[15]
being the lifeblood of the national economy, such that their enforcement cannot per

se be enjoined. Having settled this preliminary matter, we now look at the merits of After a careful consideration of the submission by the parties, we are

the instant petition. convinced that petitioners herein have established a strong case for the

unconstitutionality of Rep. Act No. 8800 sufficient for the grant of a preliminary
Under Rule 58, Section 3 of the Revised Rules of Court, any of the following
injunction. Note, however, that a writ of preliminary injunction is issued merely to
grounds justifies the issuance of a preliminary injunction:
preserve the status quo ante.[16] Its sole objective is to preserve the status quo until
(a) That the plaintiff is entitled to the relief demanded, and the whole
or part of such relief consists in restraining the commission or the merits of the case can be heard fully. It is generally availed of to prevent actual or
continuance of the acts complained of, or in the performance of an
act or acts, either for a limited period or perpetually; threatened acts, until the merits of the case can be disposed of. [17]

(b) That the commission or continuance of some act complained of Respondents tenaciously argue that Rep. Act No. 8800 enjoys the presumption
during the litigation or the non-performance thereof would
probably work injustice to the plaintiff; or of validity and constitutionality until proven otherwise. True, but for the purpose of

(c) That the defendant is doing, threatens, or is about to do, or is issuing a provisional remedy, strictly speaking, this contention lacks relevance.
procuring or suffering to be done, some act probably in violation of Obviously, a law need not be declared unconstitutional first before a preliminary
the plaintiffs rights respecting the subject of the action, and
tending to render the judgment ineffectual. injunction against its enforcement may be granted.[18] Needless to stress, the moment

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a law is nullified for being unconstitutional, it ceases to exist. Thus, a writ of This, to us, is sufficient to entitle petitioners to a preliminary injunction. We
injunction would then become superfluous.
thus hold that the Court of Appeals erred in reversing the trial court order granting

the writ of preliminary injunction.

Only two requisites are necessary for a preliminary injunction to issue: (1) the

existence of a right to be protected and (2) the facts, against which the injunction is WHEREFORE, the petition is GRANTED. The Court of Appeals Decision, dated

to be directed violate said right.[19] While a clear showing of the right is necessary, its February 28, 2003, in CA-G.R. SP No. 67397, is REVERSED and SET ASIDE. The

existence need not be conclusively established. In fact, the evidence required to justify Order, dated September 4, 2001, of the Regional Trial Court of Valenzuela City,

the issuance of a writ of preliminary injunction need not be conclusive or complete. Branch 172, in Civil Case No. 82-V-01 is hereby REINSTATED. No pronouncement

The evidence need only give the court an idea of the justification for the preliminary as to costs.

injunction, pending the decision of the case on the merits. Thus, to be entitled to the SO ORDERED.

writ, petitioners are only required to show that they have an ostensible right to the

final relief prayed for in their complaint.[20]

In this case, petitioners have demonstrated a clear right threatened by the

questioned safeguard measures. Being in a business heavily dependent on

importation of steel, they would be severely damaged once safeguard measures are

applied against steel imports. Petitioners have shown, to the satisfaction of the trial

court and this Court that any increase in tariffs or quantitative restriction on imports

will force them to close down their respective businesses and lay off their employees.

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