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FIRST DIVISION SO ORDERED.

G.R. No. 185595 January 9, 2013 The aforesaid order and subsequent orders for support pendente lite were the subject
of G.R. No. 139337 entitled "Ma. Carminia C. Roxas v. Court of Appeals and Jose
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MA. CARMINIA C. CALDERON represented by her Attorney-In-Fact, Marycris V. Antonio F. Roxas" decided by this Court on August 15, 2001. The Decision in said
Baldevia, Petitioner, case declared that "the proceedings and orders issued by the trial court in the
vs. application for support pendente lite (and the main complaint for annulment of
JOSE ANTONIO F. ROXAS and COURT OF APPEALS, Respondents. marriage) in the re-filed case, that is, in Civil Case No. 97-0608 were not rendered null
and void by the omission of a statement in the certificate of non-forum shopping
regarding the prior filing and dismissal without prejudice of Civil Case No. 97-0523
DECISION which involves the same parties." The assailed orders for support pendente lite were
thus reinstated and the trial court resumed hearing the main case.
VILLARAMA, JR., J.:
On motion of petitioner’s counsel, the trial court issued an Order dated October 11,
Before us is a petition for review on certiorari under Rule 45 assailing the 2002 directing private respondent to give support in the amount of P42,292.50 per
1 2 7
Decision dated September 9, 2008 and Resolution dated December 15, 2008 of the month starting April 1, 1999 pursuant to the May 19, 1998 Order.
Court of Appeals (CA) in CA-G.R. CV No. 85384. The CA affirmed the Orders dated
March 7, 2005 and May 4, 2005 of the Regional Trial Court (RTC) of Parañaque City, On February 11, 2003, private respondent filed a Motion to Reduce Support citing,
Branch 260 in Civil Case No. 97-0608. among other grounds, that the P42,292.50 monthly support for the children as fixed by
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the court was even higher than his then P20,800.00 monthly salary as city councilor.
Petitioner Ma. Carminia C. Calderon and private respondent Jose Antonio F. Roxas,
were married on December 4, 1985 and their union produced four children. On January 9
After hearing, the trial court issued an Order dated March 7, 2005 granting the motion
3
16, 1998, petitioner filed an Amended Complaint for the declaration of nullity of their to reduce support and denying petitioner’s motion for spousal support, increase of the
marriage on the ground of psychological incapacity under Art. 36 of the Family Code of children’s monthly support pendente lite and support-in-arrears. The trial court
the Philippines. considered the following circumstances well-supported by documentary and testimonial
evidence: (1) the spouses’ eldest child, Jose Antonio, Jr. is a Sangguniang Kabataan
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On May 19, 1998, the trial court issued an Order granting petitioner’s application for Chairman and is already earning a monthly salary; (2) all the children stay with private
support pendente lite. Said order states in part: respondent on weekends in their house in Pasay City; (3) private respondent has no
source of income except his salary and benefits as City Councilor; (4) the voluminous
…Accordingly, the defendant is hereby ordered to contribute to the support of the documents consisting of official receipts in payment of various billings including school
above-named minors, (aside from 50% of their school tuition fees which the defendant tuition fees, private tutorials and purchases of children’s school supplies, personal
has agreed to defray, plus expenses for books and other school supplies), the sum of checks issued by private respondent, as well as his own testimony in court, all of which
P42,292.50 per month, effective May 1, 1998, as his share in the monthly support of substantiated his claim that he is fulfilling his obligation of supporting his minor children
the children, until further orders from this Court. The first monthly contribution, i.e., for during the pendency of the action; (5) there is no proof presented by petitioner that she
the month of May 1998, shall be given by the defendant to the plaintiff within five (5) is not gainfully employed, the spouses being both medical doctors; (6) the unrebutted
days from receipt of a copy of this Order. The succeeding monthly contributions of allegation of private respondent that petitioner is already in the United States; and (7)
P42,292.50 shall be directly given by the defendant to the plaintiff without need of any the alleged arrearages of private respondent was not substantiated by petitioner with
demand, within the first five (5) days of each month beginning June 1998. All expenses any evidence while private respondent had duly complied with his obligation as ordered
for books and other school supplies shall be shouldered by the plaintiff and the by the court through his overpayments in other aspects such as the children’s school
defendant, share and share alike. Finally, it is understood that any claim for support-in- tuition fees, real estate taxes and other necessities.
arrears prior to May 1, 1998, may be taken up later in the course of the proceedings
proper. Petitioner’s motion for partial reconsideration of the March 7, 2005 Order was denied
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on May 4, 2005.
xxxx
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On May 16, 2005, the trial court rendered its Decision in Civil Case No. 97-0608
decreeing thus:
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WHEREFORE, judgment is hereby rendered declaring (sic): become final and executory. The CA further noted that petitioner failed to avail of the
proper remedy to question an interlocutory order.
1. Declaring null and void the marriage between plaintiff Ma.Carmina C. Roxas and
defendant Jose Antonio Roxas solemnized on December 4, 1985 at San Agustin Petitioner’s motion for reconsideration was likewise denied by the CA.
Convent, in Manila. The Local Civil Registrar of Manila is hereby ordered to cancel the
marriage contract of the parties as appearing in the Registry of Marriage as the same is Hence, this petition raising the following issues:
void;
A. DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or
2. Awarding the custody of the parties’ minor children Maria Antoinette Roxas, Julian REVERSIBLE ERROR WHEN IT RULED THAT THE RTC ORDERS DATED
Roxas and Richard Roxas to their mother herein petitioner, with the respondent hereby MARCH 7, 2005 AND MAY 4, 2005 ARE MERELY INTERLOCUTORY?
given his visitorial and or custodial rights at [sic] the express conformity of petitioner.
B. DID THE CA COMMIT A GRAVE ABUSE OF DISCRETION and/or
3. Ordering the respondent Jose Antonio Roxas to provide support to the children in REVERSIBLE ERROR WHEN IT DISMISSED OUTRIGHT THE APPEAL
the amount of P30,000.00 a month, which support shall be given directly to petitioner FROM SAID RTC ORDERS, WHEN IT SHOULD HAVE DECIDED THE
whenever the children are in her custody, otherwise, if the children are in the APPEAL ON THE MERITS?
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provisional custody of respondent, said amount of support shall be recorded properly
as the amounts are being spent. For that purpose the respondent shall then render a
periodic report to petitioner and to the Court to show compliance and for monitoring. In The core issue presented is whether the March 7, 2005 and May 4, 2005 Orders on the
addition, the respondent is ordered to support the proper schooling of the children matter of support pendente lite are interlocutory or final.
providing for the payment of the tuition fees and other school fees and charges
including transportation expenses and allowances needed by the children for their This Court has laid down the distinction between interlocutory and final orders, as
studies. follows:

4. Dissolving the community property or conjugal partnership property of the parties as x x x A "final" judgment or order is one that finally disposes of a case, leaving nothing
the case may be, in accordance with law. more to be done by the Court in respect thereto, e.g., an adjudication on the merits
which, on the basis of the evidence presented at the trial, declares categorically what
Let copies of this decision be furnished the Office of the Solicitor General, the Office of the rights and obligations of the parties are and which party is in the right; or a
the City Prosecutor, Paranaque City, and the City Civil Registrar of Paranaque City and judgment or order that dismisses an action on the ground, for instance, of res judicata
Manila. or prescription. Once rendered, the task of the Court is ended, as far as deciding the
controversy or determining the rights and liabilities of the litigants is concerned. Nothing
12 more remains to be done by the Court except to await the parties’ next move (which
SO ORDERED. among others, may consist of the filing of a motion for new trial or reconsideration, or
the taking of an appeal) and ultimately, of course, to cause the execution of the
On June 14, 2005, petitioner through counsel filed a Notice of Appeal from the Orders judgment once it becomes "final" or, to use the established and more distinctive term,
dated March 7, 2005 and May 4, 2005. "final and executory."

In her appeal brief, petitioner emphasized that she is not appealing the Decision dated xxxx
May 16, 2005 which had become final as no appeal therefrom had been brought by the
parties or the City Prosecutor or the Solicitor General. Petitioner pointed out that her Conversely, an order that does not finally dispose of the case, and does not end the
appeal is "from the RTC Order dated March 7, 2005, issued prior to the rendition of the Court’s task of adjudicating the parties’ contentions and determining their rights and
decision in the main case", as well as the May 4, 2005 Order denying her motion for liabilities as regards each other, but obviously indicates that other things remain to be
13
partial reconsideration. done by the Court, is "interlocutory" e.g., an order denying a motion to dismiss under
Rule 16 of the Rules, or granting a motion for extension of time to file a pleading, or
By Decision dated September 9, 2008, the CA dismissed the appeal on the ground that authorizing amendment thereof, or granting or denying applications for postponement,
granting the appeal would disturb the RTC Decision of May 16, 2005 which had long or production or inspection of documents or things, etc. Unlike a "final" judgment or
order, which is appealable, as above pointed out, an "interlocutory" order may not be
2
questioned on appeal except only as part of an appeal that may eventually be taken measures availed of during the pendency of the action, and they are ancillary because
15 20
from the final judgment rendered in the case. [Emphasis supplied] they are mere incidents in and are dependent upon the result of the main action. The
subject orders on the matter of support pendente lite are but an incident to the main
The assailed orders relative to the incident of support pendente lite and support in action for declaration of nullity of marriage.
arrears, as the term suggests, were issued pending the rendition of the decision on the
main action for declaration of nullity of marriage, and are therefore interlocutory. They Moreover, private respondent’s obligation to give monthly support in the amount fixed
did not finally dispose of the case nor did they consist of a final adjudication of the by the RTC in the assailed orders may be enforced by the court itself, as what
merits of petitioner’s claims as to the ground of psychological incapacity and other transpired in the early stage of the proceedings when the court cited the private
incidents as child custody, support and conjugal assets. respondent in contempt of court and ordered him arrested for his refusal/failure to
21
comply with the order granting support pendente lite. A few years later, private
The Rules of Court provide for the provisional remedy of support pendente lite which respondent filed a motion to reduce support while petitioner filed her own motion to
may be availed of at the commencement of the proper action or proceeding, or at any increase the same, and in addition sought spousal support and support in arrears. This
16
time prior to the judgment or final order. On March 4, 2003, this Court promulgated fact underscores the provisional character of the order granting support pendente lite.
17
the Rule on Provisional Orders which shall govern the issuance of provisional orders Petitioner’s theory that the assailed orders have ceased to be provisional due to the
during the pendency of cases for the declaration of nullity of marriage, annulment of arrearages incurred by private respondent is therefore untenable.1âwphi1
voidable marriage and legal separation. These include orders for spousal support, child
support, child custody, visitation rights, hold departure, protection and administration of Under Section 1, Rule 41 of the 1997 Revised Rules of Civil Procedure, as amended,
common property. appeal from interlocutory orders is not allowed. Said provision reads:

Petitioner contends that the CA failed to recognize that the interlocutory aspect of the SECTION 1. Subject of appeal. - An appeal may be taken from a judgment or final
assailed orders pertains only to private respondent’s motion to reduce support which order that completely disposes of the case, or of a particular matter therein when
was granted, and to her own motion to increase support, which was denied. Petitioner declared by these Rules to be appealable.
points out that the ruling on support in arrears which have remained unpaid, as well as
her prayer for reimbursement/payment under the May 19, 1998 Order and related No appeal may be taken from:
orders were in the nature of final orders assailable by ordinary appeal considering that
the orders referred to under Sections 1 and 4 of Rule 61 of the Rules of Court can
apply only prospectively. Thus, from the moment the accrued amounts became due (a) An order denying a motion for new trial or reconsideration;
and demandable, the orders under which the amounts were made payable by private
respondent have ceased to be provisional and have become final. (b) An order denying a petition for relief or any similar motion seeking relief
from judgment;
We disagree.
(c) An interlocutory order;
The word interlocutory refers to something intervening between the commencement
and the end of the suit which decides some point or matter but is not a final decision of (d) An order disallowing or dismissing an appeal;
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the whole controversy. An interlocutory order merely resolves incidental matters and
leaves something more to be done to resolve the merits of the case. In contrast, a (e) An order denying a motion to set aside a judgment by consent, confession
judgment or order is considered final if the order disposes of the action or proceeding or compromise on the ground of fraud, mistake or duress, or any other ground
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completely, or terminates a particular stage of the same action. Clearly, whether an vitiating consent;
order or resolution is final or interlocutory is not dependent on compliance or non-
compliance by a party to its directive, as what petitioner suggests. It is also important to
emphasize the temporary or provisional nature of the assailed orders. (f) An order of execution;

Provisional remedies are writs and processes available during the pendency of the (g) A judgment or final order for or against one or more of several parties or in
action which may be resorted to by a litigant to preserve and protect certain rights and separate claims, counterclaims, cross-claims and third-party complaints, while
interests therein pending rendition, and for purposes of the ultimate effects, of a final the main case is pending, unless the court allows an appeal therefrom; and
judgment in the case. They are provisional because they constitute temporary
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(h) An order dismissing an action without prejudice; 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
In all the above instances where the judgment or final order is not appealable, the Injunction against private respondent Prominent Lending & Credit Corporation (PLCC)
aggrieved party may file an appropriate special civil action under Rule 65. (Emphasis before the Regional Trial Court, Branch 24, Bian, Laguna, docketed as Civil Case No. B-
[2]
supplied.) 5476.
They alleged that: on January 12, 1998, they obtained a loan from PLCC
The remedy against an interlocutory order not subject of an appeal is an appropriate for P800,000.00 secured by a real estate mortgage over a 363-square meter parcel of
special civil action under Rule 65 provided that the interlocutory order is rendered land with improvements situated in the Municipality of Santa Rosa, Laguna, covered by
without or in excess of jurisdiction or with grave abuse of discretion. Having chosen the Transfer Certificate of Title (TCT) No. 99261; the promissory note and the real estate
wrong remedy in questioning the subject interlocutory orders of the RTC, petitioner's mortgage were falsified because they affixed their signatures on two blank documents;
appeal was correctly dismissed by the CA. 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
WHEREFORE, the petition for review on certiorari is DENIED, for lack of merit. The obligation despite repeated demands, PLCC filed a petition for extrajudicial foreclosure
Decision dated September 9, 2008 and Resolution dated December 15, 2008 of the with the Office of the Provincial Sheriff of Laguna; and on June 8, 1999, the Sheriff sent
Court of Appeals in CA-G.R. CV No. 85384 are AFFIRMED. a Notice of Extrajudicial Sale to the Estares spouses.
Accordingly, the Estares spouses sought to declare as null and void the promissory
With costs against the petitioner. 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
SO ORDERED. 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.

SECOND DIVISION 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
[3]
Sheriff IV Arnel G. Magat as party-defendants.
[4]
On July 12, 1999, the trial court issued a TRO in favor of the Estares spouses. The
[G.R. No. 144755. June 8, 2005] [5]
parties subsequently agreed to maintain the status quo until August 20, 1999.
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
SPOUSES ELISEO F. ESTARES and ROSENDA P. ESTARES, petitioners, Act or Republic Act No. 3765. It opposed the prayer for restraining order on the ground
vs. COURT OF APPEALS, HON. DAMASO HERRERA as Presiding Judge that there is no factual and legal basis for its issuance since the Estares spouses fear of
of the RTC, Branch 24, Bian, Laguna PROMINENT LENDING & CREDIT eviction is false.
[6]
CORPORATION, PROVINCIAL SHERIFF OF LAGUNA and Sheriff IV
ARNEL G. MAGAT, respondents. 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
DECISION of P637,000.00, 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
AUSTRIA-MARTINEZ, J.: received P637,000.00; when they received the Statement of Account, they did not
question the figures appearing therein; when they received PLCCs demand letter, they
Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of went to the formers office not to question the loans terms and conditions but merely to
[1]
Court which assails the Decision and Resolution of the Court of Appeals dated April request for extension of three months to pay their obligation. They adduced in evidence
17, 2000 and July 7, 2000, respectively, in CA-G.R. SP No. 56123. 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
The factual background of the case is as follows: case.

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In opposition to the application for a writ of preliminary injunction, PLCC presented On July 7, 2000, the Court of Appeals denied the Estares spouses motion for
[17]
its manager, Rey Arambulo, who testified that the Estares spouses were duly apprised reconsideration.
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 On September 16, 2000, the Estares spouses filed the present petition
submitted the same evidence offered by the Estares spouses, along with the latters credit for certiorari and prohibition anchored on the following grounds:
application, the credit investigation report, the receipts PLCC issued, and the disclosure I
statement on the loan.
On August 18, 1999, the trial court denied the Estares spouses application for a THE COURT OF APPEALS ERRED IN NOT GRANTING A WRIT OF PRELIMINARY
writ of preliminary injunction, holding that the latter failed to establish the facts necessary INJUNCTION TO PREVENT RESPONDENTS PLCC AND PROVINCIAL SHERIFF OF
[7]
for an injunction to issue. LAGUNA/ SHERIFF ARNEL MAGAT FROM FORECLOSING THE MORTGAGE AND
CONDUCTING THE AUCTION SALE OF PETITIONERS PROPERTY AND/OR IN
On August 31, 1999, the Estares spouses filed a motion for UPHOLDING THE ORDER DATED AUGUST 18, 1999 OF JUDGE DAMASO A.
[8]
reconsideration. During the hearing on the motion for reconsideration on September HERRERA, RTC-BRANCH 24, LAGUNA.
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
[9]
he be presented during the trial on the merits. On October 1, 1999, the trial court denied II
[10]
the motion for reconsideration.
THE COURT OF APPEALS ERRED IN NOT DECLARING AS NULL AND VOID
On December 7, 1999, the Estares spouses filed a petition for certiorari and AND/OR SETTING ASIDE THE AUCTION SALE OF THE PETITIONERS HOUSE
prohibition in the Court of Appeals ascribing grave abuse of discretion upon the trial court AND LOT CONDUCTED BY SHERIFF ARNEL MAGAT ON JANUARY 5, 2000 FOR
in issuing the Orders dated August 18, 1999 and October 1, 1999 which denied their LACK OF RE-PUBLICATION OF NOTICE OF EXTRA-JUDICIAL SALE, FOR PRE-
[11]
prayer for a writ of preliminary injunction and motion for reconsideration, respectively. EMPTING THE COURT OF APPEALS IN DECIDING THE CASE, AND FOR
On December 14, 1999, without giving due course to the petition, the Court of RENDERING THE PETITION IN CA-G.R. SP NO. 56123 MOOT AND ACADEMIC.
Appeals issued a Resolution requiring the PLCC to file its comment to the petition. The
action on the Estares spouses application for a TRO and writ of preliminary injunction III
[12]
was deferred and held in abeyance until after receipt of the comment.
With no restraining order enjoining him, Sheriff Magat conducted an auction sale THE COURT OF APPEALS ERRED IN NOT DECLARING DENIAL OF DUE
on January 5, 2000, with PLCC as highest bidder for P1,500,000.00.
[13] PROCESS TO OVERSEAS CONTRACT WORKER ELISEO ESTARES WHEN
JUDGE DAMASO A. HERRERA REFUSED TO ALLOW HIM TO TESTIFY ON THE
[18]
In its Comment dated January 15, 2000, PLCC claimed that the trial court did not CIRCUMSTANCES OF THEIR LOAN WITH PLCC.
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 Anent the first ground, the Estares spouses insist that they firmly established their
the action sought to be enjoined has been rendered moot by the auction sale conducted right to injunctive relief. They claim that the promissory note, credit application,
[14]
on January 5, 2000. disbursement voucher, disclosure statement and real estate mortgage are falsified; the
On April 17, 2000, the Court of Appeals dismissed the petition for lack of merit, promissory note is not reflective of the true amount of the loan, as well as the term,
holding that the trial court did not abuse its discretion in denying the Estares spouses interest and charges thereon; the P126,362.28 represent additional charges, not as part
application for a writ of preliminary injunction since the latter failed to prove the requisites of the loan, that were not agreed upon prior to or before the consummation of the loan;
for the issuance thereof.
[15] and the amount of the loan and rate of interest stated in the falsified promissory note are
fictitious or simulated.
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 With respect to the second ground, they maintain that the auction sale conducted
of auction sale and certificate of sale, be declared null and void not only because there on January 5, 2000 should be nullified because it lacked republication of the notice of
was no publication of the notice of auction sale but the auction sale preempted the Court auction sale and it was conducted in violation of the Court of Appeals Resolution dated
of Appeals in the disposition of the case and was conducted in defiance of the Resolution December 14, 1999 which enjoined the parties to maintain the status quo pending the
dated December 14, 1999.
[16] filing by the respondents of their Comment to the petition. They argue that PLCC and

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Sheriff Magat preempted the Court of Appeals from resolving their petition by conducting provided and proper only if there is no appeal or any plain, speedy and adequate remedy
[23]
the auction sale on January 5, 2000. in the ordinary course of law. Thus, certiorari cannot be availed of as a substitute for
[24]
the lost remedy of an ordinary appeal.
As to the third ground, they aver that Eliseo was denied due process when the trial
court refused to allow him to testify during the hearing on the motion for reconsideration. By their own account, the Estares spouses received the Order dated July 7, 2000
They contend that Eliseo, an overseas contract worker, purposely took leave from work denying their motion for reconsideration from the Court of Appeals on July 18, 2000.
in the Middle East to testify on the circumstances of the loan and his testimony was Instead of filing a petition for review with this Court within 15 days thereof or until August
material to clarify the matter of notarization of the real estate mortgage and show that 2, 2000, they filed this special civil action by registered mail on September 16, 2000 or
said document was falsified. 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
On October 2, 2000, the Court granted the TRO prayed for in the petition and outright dismissal.
[19]
required the respondents to comment thereon.
Concerning the verification, we note that Rosenda stated therein that she caused
In its Comment dated October 25, 2000, PLCC asserts that the petition should be the preparation of the foregoing Pre-Trial Brief but we consider the same as a slight error
dismissed for being deficient on both procedural and substantive aspects. and honest mistake in the preparation of the petition. In any event, the purpose of
As to the procedural aspect, PLCC posits that the petition is filed beyond the sixty- requiring a verification is simply to secure an assurance that the allegations of the petition
[25]
day period required by the rules and therefore filed out of time. PLCC further claims that have been made in good faith; or are true and correct, not merely speculative. This
the verification and certification of non-forum shopping are both insufficient. The requirement is simply a condition affecting the form of pleadings, and noncompliance
[26]
verification speaks of a Pre-Trial Brief while the certification of non-forum shopping was therewith does not necessarily render it fatally defective. Indeed, verification is only a
[27]
executed only by Rosenda. formal, not a jurisdictional, requirement.

As to the substance of the petition, PLCC argues that the Estares spouses failed With regard to the certification of non-forum shopping signed only by Rosenda, the
to establish their right to injunctive relief; the validity of the January 5, 2000 auction sale rule is that the certificate of non-forum shopping must be signed by all the petitioners or
was brought only in the motion for reconsideration which is improper because it is a plaintiffs in a case and the signing by only one of them is insufficient because a lone
factual issue best addressed to the trial court; Sheriff Magat did not preempt the Court signatory cannot be presumed to have personal knowledge of the matters required to be
[28]
of Appeals in deciding CA-G.R. SP No. 56123 when he conducted the auction sale on stated in the attestation.
January 5, 2000 because the Resolution dated December 14, 1999 of the said court did However, the Court has also stressed that the rules on forum shopping, which were
not suspend or restrain the sheriff from conducting the foreclosure sale; Eliseo was not designed to promote and facilitate the orderly administration of justice, should not be
denied due process because he sought to testify on factual matters in the hearing on interpreted with such absolute literalness as to subvert its own ultimate and legitimate
their motion for reconsideration which is improper as factual matters are best brought [29]
objective which is simply to prohibit and penalize the evils of forumshopping. The fact
and proved during the trial on the merits of the case. that the rules on forumshopping require strict compliance merely underscores its
The Court gave due course to the petition and required the parties to submit their mandatory nature that it cannot be dispensed with or its requirements altogether
[20]
respective memoranda which they complied with.
[21] disregarded, but it does not thereby interdict substantial compliance with its provisions
[30]
under justifiable circumstances.
Before ruling on the issues raised in the petition, it is necessary to dwell on the
procedural aspects of the case. 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
From a reading of the grounds on which the instant petition for certiorari and the Rules. After all they share a common interest in the property involved since it is
prohibition are based, it is readily apparent that the Estares spouses are appealing a conjugal property, and the petition questioning the propriety of the decision of the Court
decision of the Court of Appeals by resorting to Rule 65, when their remedy should be of Appeals originated from an action brought by the spouses, and is clearly intended for
based on Rule 45 of the Rules of Court. A petition for review under Rule 45 is not similar the benefit of the conjugal partnership. Considering that the husband was at that time an
to a petition for certiorari under Rule 65. 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
Under Rule 45, decisions, final orders or resolutions of the Court of Appeals in any the wifes signing the certification in her behalf and that of her husband is too harsh and
case, i.e., regardless of the nature of the action or proceedings involved, may be clearly uncalled for.
[31]

appealed to us by filing a petition for review on certiorari, which would be but a


[22]
continuation of the appellate process over the original case. In contrast, a special civil In any event, we find that this petition must still be dismissed as the Court of
action under Rule 65 is an independent action based on the specific grounds therein Appeals did not commit any grave abuse of discretion amounting to want or excess of
jurisdiction in dismissing the petition.
6
Generally, injunction is a preservative remedy for the protection of substantive In the present case, the Estares spouses clearly failed to prove that they have a
rights or interests. It is not a cause of action in itself but merely a provisional remedy, an right protected and that the acts against which the writ is to be directed are violative of
adjunct to a main suit. The controlling reason for the existence of the judicial power to said right. Hence, the Court of Appeals did not commit a grave abuse of its discretion
issue the writ is that the court may thereby prevent a threatened or continuous amounting to excess or lack of jurisdiction in dismissing petitioners petition for certiorari.
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 There is likewise no merit to the claim that the Court of Appeals gravely abused its
pressing necessity to avoid injurious consequences which cannot be remedied under discretion when it denied the prayer to nullify the auction sale held on January 5, 2000
any standard of compensation. The application of the writ rests upon an alleged for lack of republication of the notice of auction sale and for preempting the Court of
existence of an emergency or of a special reason for such an order before the case can Appeals in deciding the case and rendering the petition in CA-G.R. SP No. 56123 moot
be regularly heard, and the essential conditions for granting such temporary injunctive and academic.
relief are that the complaint alleges facts which appear to be sufficient to constitute a The absence of republication of the notice of auction sale is a factual matter which
cause of action for injunction and that on the entire showing from both sides, it appears, by the weight of judicial precedents cannot be inquired into by this Court in a petition
in view of all the circumstances, that the injunction is reasonably necessary to protect for certiorari. It is best addressed to the attention of the trial court and taken up in the trial
[32]
the legal rights of plaintiff pending the litigation. of the case, necessitating presentation of evidence by both parties. The propriety of the
The Estares spouses had the burden in the trial court to establish the following auction sale is a matter which the trial court is in the best position to determine. For it is
requirements for them to be entitled to injunctive relief: (a) the existence of their right to basic that certiorari under Rule 65 is a remedy narrow in scope and inflexible in character.
[40]
be protected; and (b) that the acts against which the injunction is to be directed are It is not a general utility tool in the legal workshop. It offers only a limited form of review.
[41]
violative of such right.
[33]
To be entitled to an injunctive writ, the petitioner must Its principal function is to keep an inferior tribunal within its jurisdiction. It can be
show, inter alia, the existence of a clear and unmistakable right and an urgent and invoked only for an error of jurisdiction, that is, one where the act complained of was
paramount necessity for the writ to prevent serious damage.
[34]
Thus, an injunctive issued by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or
remedy may only be resorted to when there is a pressing necessity to avoid injurious with grave abuse of discretion which is tantamount to lack or in excess of
[42] [43]
consequences which cannot be remedied under any standard compensation.
[35] jurisdiction, not to be used for any other purpose, such as to cure errors in
[44]
proceedings or to correct erroneous conclusions of law or fact. Again suffice it to say
In the present case, the Estares spouses failed to establish their right to injunctive that the only issue settled here is the propriety of the non-issuance of a writ of preliminary
relief. They do not deny that they are indebted to PLCC but only question the amount injunction pending the final outcome of the case.
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 As to petitioners assertion that the Court of Appeals in its Resolution dated
property is properly subject to a foreclosure sale. December 14, 1999 impliedly directed the parties to maintain the status quo, we deemed
it worthy to quote in full the said Resolution, thus:
Rosendas 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 Without necessarily giving due course to the petition, the Court requires the
received P637,000.00; they did not question the figures appearing in the Statement of respondents to file their comment (not motion to dismiss) within ten (10) days from
Account when they received it; and, when they received PLCCs demand letter, they went notice, which may be treated as their Answer should the petition be given due course.
to the formers office not to question the loans terms and conditions but merely to request
[36]
for extension of three months to pay their obligation. She acknowledged that they only
raised the alleged discrepancy of the amount loaned and the amount received, as well Respondents are likewise ordered to show cause in the same Comment why a
as the blank documents which they allegedly signed, after PLCC initiated the foreclosure temporary restraining order and writ of preliminary injunction should not be issued.
[37]
proceedings.
The action of the petitioners application for a temporary restraining order and writ of
It must be stressed that the assessment and evaluation of evidence in the issuance preliminary injunction is deferred and held in abeyance until after receipt of
of the writ of preliminary injunction involve findings of facts ordinarily left to the trial court respondents Comment.
[45]
[38]
for its conclusive determination. As such, a trial courts 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 Clearly, the Court of Appeals did not give due course to the petition but merely required
jurisdiction, fails to consider and make a record of the factors relevant to its PLCC to comment thereon. The Court of Appeals did not enjoin the conduct of the
determination, relies on clearly erroneous factual findings, considers clearly irrelevant or auction sale. In any case, the necessity for the issuance of the writ of injunction has been
improper factors, clearly gives too much weight to one factor, relies on erroneous found wanting.
[39]
conclusions of law or equity, or misapplies its factual or legal conclusions.
7
Lastly, the Estares spouses claim that Eliseo was denied due process when the NARVASA, J.:
trial court refused to allow him to testify during hearing on the motion for reconsideration
deserves scant consideration. Subject of the appellate proceedings at bar is the decision of the Court of Appeals in
It must be remembered that a writ of preliminary injunction is generally based solely CA-G.R. Sp. No. 1967 entitled "Queensland Hotel, Inc., etc. and Adarna v. Davao Light
1
on initial and incomplete evidence. The evidence submitted during the hearing on an & Power Co., Inc.," promulgated on May 4, 1990. That decision nullified and set aside
2
application for a writ of preliminary injunction is not conclusive or complete for only a the writ of preliminary attachment issued by the Regional Trial Court of Davao City in
sampling is needed to give the trial court an idea of the justification for the preliminary Civil Case No. 19513-89 on application of the plaintiff (Davao Light & Power Co.),
injunction pending the decision of the case on the merits.
[46] before the service of summons on the defendants (herein respondents Queensland
Co., Inc. and Adarna).
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 Following is the chronology of the undisputed material facts culled from the Appellate
preliminary injunction and they cannot assert that Eliseo should have been accorded that Tribunal's judgment of May 4, 1990.
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 1. On May 2, 1989 Davao Light & Power Co., Inc. (hereafter, simply Davao Light) filed
[47]
of opportunity to be heard. As long as a party is given the opportunity to defend his a verified complaint for recovery of a sum of money and damages against Queensland
interests in due course, he would have no reason to complain, for it is this opportunity to Hotel, etc. and Teodorico Adarna (docketed as Civil Case No. 19513-89). The
[48]
be heard that makes up the essence of due process. Eliseo cannot complain that he complaint contained an ex parte application for a writ of preliminary attachment.
was deprived of due process since he is given the full opportunity to testify on the
[49]
circumstances of the loan during the trial of the main case. 2. On May 3, 1989 Judge Nartatez, to whose branch the case was assigned by raffle,
issued an Order granting the ex parte application and fixing the attachment bond at
All told, no grave abuse of discretion could therefore be imputed to the Court of P4,600,513.37.
Appeals in dismissing petitioners petition for certiorari with prohibition, for lack of merit.

WHEREFORE, the instant petition for certiorari and prohibition is DISMISSED. The 3. On May 11, 1989 the attachment bond having been submitted by Davao Light, the
assailed Decision and Resolution of the Court of Appeals dated April 17, 2000 and July writ of attachment issued.
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. 4. On May 12, 1989, the summons and a copy of the complaint, as well as the writ of
SO ORDERED. attachment and a copy of the attachment bond, were served on defendants
Queensland and Adarna; and pursuant to the writ, the sheriff seized properties
belonging to the latter.

G.R. No. 93262 December 29, 1991 5. On September 6, 1989, defendants Queensland and Adarna filed a motion to
discharge the attachment for lack of jurisdiction to issue the same because at the time
DAVAO LIGHT & POWER CO., INC., petitioner, the order of attachment was promulgated (May 3, 1989) and the attachment writ issued
vs. (May 11, 1989), the Trial Court had not yet acquired jurisdiction over the cause and
THE COURT OF APPEALS, QUEENSLAND HOTEL or MOTEL or QUEENSLAND over the persons of the defendants.
TOURIST INN, and TEODORICO ADARNA, respondents.
6. On September 14, 1989, Davao Light filed an opposition to the motion to discharge
Breva & Breva Law Offices for petitioner. attachment.

Goc-Ong & Associates for private respondents. 7. On September 19, 1989, the Trial Court issued an Order denying the motion to
discharge.

This Order of September 19, 1989 was successfully challenged by Queensland and
Adarna in a special civil action of certiorari instituted by them in the Court of Appeals.
8
The Order was, as aforestated, annulled by the Court of Appeals in its Decision of May acquisition of jurisdiction over the person of the plaintiff or over the subject-matter or
4, 1990. The Appellate Court's decision closed with the following disposition: nature of the action, or the res or object hereof.

. . . the Orders dated May 3, 1989 granting the issuance of a writ of An action or proceeding is commenced by the filing of the complaint or other initiatory
4 By that act, the jurisdiction of the court over the subject matter or nature of the action or proceeding is invoked or
preliminary attachment, dated September 19, 1989 denying the motion to pleading.
called into activity; 5
discharge attachment; dated November 7, 1989 denying petitioner's motion and it is thus that the court acquires jurisdiction over said subject matter
6
for reconsideration; as well as all other orders emanating therefrom, specially or nature of the action. And it is by that self-same act of the plaintiff (or petitioner) of
the Writ of Attachment dated May 11, 1989 and Notice of Levy on Preliminary filing the complaint (or other appropriate pleading) — by which he signifies his
Attachment dated May 11, 1989, are hereby declared null and void and the submission to the court's power and authority — that jurisdiction is acquired by the
7
attachment hereby ordered DISCHARGED. court over his person. On the other hand, jurisdiction over the person of the defendant
is obtained, as above stated, by the service of summons or other coercive process
8
The Appellate Tribunal declared that — upon him or by his voluntary submission to the authority of the court.

The events that follow the filing of the complaint as a matter of routine are well known. After the complaint is filed, summons issues
. . . While it is true that a prayer for the issuance of a writ of preliminary to the defendant, the summons is then transmitted to the sheriff, and finally, service of the summons is effected on the defendant in
attachment may be included m the complaint, as is usually done, it is likewise any of the ways authorized by the Rules of Court. There is thus ordinarily some appreciable interval of time between the day of the
true that the Court does not acquire jurisdiction over the person of the filing of the complaint and the day of service of summons of the defendant. During this period, different acts may be done by the
defendant until he is duly summoned or voluntarily appears, and adding the plaintiff or by the Court, which are unquestionable validity and propriety. Among these, for example, are the appointment of a
phrase that it be issued "ex parte" does not confer said jurisdiction before guardian ad litem, 9
actual summons had been made, nor retroact jurisdiction upon summons the grant of authority to the plaintiff to prosecute the suit as a pauper
10
being made. . . . litigant, the amendment of the complaint by the plaintiff as a matter of right without
11
leave of court, authorization by the Court of service of summons by
12 13
3 publication, the dismissal of the action by the plaintiff on mere notice.
It went on to say, citing Sievert v. Court of Appeals, that "in a proceedings in
attachment," the "critical time which must be identified is . . . when the trial court This, too, is true with regard to the provisional remedies of preliminary attachment, preliminary injunction, receivership or
acquires authority under law to act coercively against the defendant or his replevin. 14
property . . .;" and that "the critical time is the of the vesting of jurisdiction in the court They may be validly and properly applied for and granted even before the
over the person of the defendant in the main case." defendant is summoned or is heard from.

Reversal of this Decision of the Court of Appeals of May 4, 1990 is what Davao Light A preliminary attachment may be defined, paraphrasing the Rules of Court, as the
seeks in the present appellate proceedings. provisional remedy in virtue of which a plaintiff or other party may, at the
commencement of the action or at any time thereafter, have the property of the
adverse party taken into the custody of the court as security for the satisfaction of any
The question is whether or not a writ of preliminary attachment may issue ex 15
judgment that may be recovered. It is a remedy which is purely statutory in respect of
parte against a defendant before acquisition of jurisdiction of the latter's person by 16
which the law requires a strict construction of the provisions granting it. Withal no
service of summons or his voluntary submission to the Court's authority. principle, statutory or jurisprudential, prohibits its issuance by any court before
acquisition of jurisdiction over the person of the defendant.
The Court rules that the question must be answered in the affirmative and that
consequently, the petition for review will have to be granted. Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action
17
or at any time thereafter." The phase, "at the commencement of the action," obviously
It is incorrect to theorize that after an action or proceeding has been commenced and refers to the date of the filing of the complaint — which, as above pointed out, is the
18
jurisdiction over the person of the plaintiff has been vested in the court, but before the date that marks "the commencement of the action;" and the reference plainly is to a
acquisition of jurisdiction over the person of the defendant (either by service of time before summons is served on the defendant, or even before summons issues.
summons or his voluntary submission to the court's authority), nothing can be validly What the rule is saying quite clearly is that after an action is properly commenced — by
done by the plaintiff or the court. It is wrong to assume that the validity of acts done the filing of the complaint and the payment of all requisite docket and other fees — the
during this period should be defendant on, or held in suspension until, the actual plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the
obtention of jurisdiction over the defendant's person. The obtention by the court of pertinent requisites laid down by law, and that he may do so at any time, either before
jurisdiction over the person of the defendant is one thing; quite another is the or after service of summons on the defendant. And this indeed, has been the
9
immemorial practice sanctioned by the courts: for the plaintiff or other proper party to That separate opinion stressed that there are two (2) ways of discharging an
incorporate the application for attachment in the complaint or other appropriate attachment: first, by the posting of a counterbond; and second, by a showing of its
pleading (counter-claim, cross-claim, third-party claim) and for the Trial Court to issue improper or irregular issuance.
the writ ex-parte at the commencement of the action if it finds the application otherwise
sufficient in form and substance. 1.0. The submission of a counterbond is an efficacious mode of lifting an attachment
already enforced against property, or even of preventing its enforcement altogether.
19
In Toledo v. Burgos, this Court ruled that a hearing on a motion or application for
preliminary attachment is not generally necessary unless otherwise directed by the 1.1. When property has already been seized under attachment, the attachment may be
20 21
Trial Court in its discretion. And in Filinvest Credit Corporation v. Relova, the Court discharged upon counterbond in accordance with Section 12 of Rule 57.
declared that "(n)othing in the Rules of Court makes notice and hearing indispensable
and mandatory requisites for the issuance of a writ of attachment." The only pre-
requisite is that the Court be satisfied, upon consideration of "the affidavit of the Sec. 12. Discharge of attachment upon giving counterbond. — At any time
applicant or of some other person who personally knows the facts, that a sufficient after an order of attachment has been granted, the party whose property has
cause of action exists, that the case is one of those mentioned in Section 1 . . . (Rule been attached or the person appearing in his behalf, may, upon reasonable
57), that there is no other sufficient security for the claim sought to be enforced by the notice to the applicant, apply to the judge who granted the order, or to the
action, and that the amount due to the applicant, or the value of the property the judge of the court in which the action is pending, for an order discharging the
possession of which he is entitled to recover, is as much as the sum for which the order attachment wholly or in part on the security given . . . in an amount equal to
22
(of attachment) is granted above all legal counterclaims." If the court be so satisfied, the value of the property attached as determined by the judge to secure the
23
the "order of attachment shall be granted," and the writ shall issue upon the payment of any judgment that the attaching creditor may recover in the
applicant's posting of "a bond executed to the adverse party in an amount to be fixed action. . . .
by the judge, not exceeding the plaintiffs claim, conditioned that the latter will pay all
the costs which may be adjudged to the adverse party and all damages which he may 1.2. But even before actual levy on property, seizure under attachment may be
sustain by reason of the attachment, if the court shall finally adjudge that the applicant prevented also upon counterbond. The defendant need not wait until his property is
24
was not entitled thereto." seized before seeking the discharge of the attachment by a counterbond. This is made
possible by Section 5 of Rule 57.
In Mindanao Savings & Loan Association, Inc. v. Court of Appeals, decided on April 18, 1989, 25
this Court had
occasion to emphasize the postulate that no hearing is required on an application for Sec. 5. Manner of attaching property. — The officer executing the order shall
preliminary attachment, with notice to the defendant, for the reason that this "would without delay attach, to await judgment and execution in the action, all the
defeat the objective of the remedy . . . (since the) time which such a hearing would properties of the party against whom the order is issued in the province, not
take, could be enough to enable the defendant to abscond or dispose of his property exempt from execution, or so much thereof as may be sufficient to satisfy the
before a writ of attachment issues." As observed by a former member of this applicant's demand, unless the former makes a deposit with the clerk or judge
26
Court, such a procedure would warn absconding debtors-defendants of the of the court from which the order issued, or gives a counter-bond executed to
commencement of the suit against them and the probable seizure of their properties, the applicant, in an amount sufficient to satisfy such demand besides costs, or
and thus give them the advantage of time to hide their assets, leaving the creditor- in an amount equal to the value of the property which is about to be attached,
plaintiff holding the proverbial empty bag; it would place the creditor-applicant in danger to secure payment to the applicant of any judgment which he may recover in
of losing any security for a favorable judgment and thus give him only an illusory the action. . . . (Emphasis supplied)
victory.
2.0. Aside from the filing of a counterbond, a preliminary attachment may also be lifted
Withal, ample modes of recourse against a preliminary attachment are secured by law or discharged on the ground that it has been irregularly or improperly issued, in
to the defendant. The relative ease with which a preliminary attachment may be accordance with Section 13 of Rule 57. Like the first, this second mode of lifting an
obtained is matched and paralleled by the relative facility with which the attachment attachment may be resorted to even before any property has been levied on. Indeed, it
may legitimately be prevented or frustrated. These modes of recourse against may be availed of after property has been released from a levy on attachment, as is
preliminary attachments granted by Rule 57 were discussed at some length by the made clear by said Section 13, viz.:
separate opinion in Mindanao Savings & Loans Asso. Inc. v. CA., supra.
Sec. 13. Discharge of attachment for improper or irregular issuance. — The
party whose property has been attached may also, at any time
10
either BEFORE or AFTER the release of the attached property, or before any (b) Effect of the dissolution of a preliminary attachment on the plaintiffs attachment
attachment shall have been actually levied, upon reasonable notice to the bond:
attaching creditor, apply to the judge who granted the order, or to the judge of
the court in which the action is pending, for an order to discharge the . . . The dissolution of the preliminary attachment upon security given, or a
attachment on the ground that the same was improperly or irregularly issued. showing of its irregular or improper issuance, does not of course operate to
If the motion be made on affidavits on the part of the party whose property has discharge the sureties on plaintiff's own attachment bond. The reason is
been attached, but not otherwise, the attaching creditor may oppose the same simple. That bond is "executed to the adverse party, . . . conditioned that
by counter-affidavits or other evidence in addition to that on which the the . . . (applicant) will pay all the costs which may be adjudged to the adverse
attachment was made. . . . (Emphasis supplied) party and all damages which he may sustain by reason of the attachment, if
the court shall finally adjudge that the applicant was not entitled thereto"
This is so because "(a)s pointed out in Calderon v. I.A.C., 155 SCRA 531 (1987), The (SEC. 4, Rule 57). Hence, until that determination is made, as to the
attachment debtor cannot be deemed to have waived any defect in the issuance of the applicant's entitlement to the attachment, his bond must stand and cannot be
attachment writ by simply availing himself of one way of discharging the attachment with-drawn.
writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of
discharging the attachment writ maliciously sought out by the attaching creditor instead With respect to the other provisional remedies, i.e., preliminary injunction (Rule 58),
of the other way, which, in most instances . . . would require presentation of evidence receivership (Rule 59), replevin or delivery of personal property (Rule 60), the rule is
in a fullblown trial on the merits, and cannot easily be settled in a pending incident of the same: they may also issue ex parte.
29
27
the case."

It may not be amiss to here reiterate other related principles dealt with in Mindanao Savings & Loans Asso. Inc. v. C.A., It goes without saying that whatever be the acts done by the Court prior to the
supra., 28 acquisition of jurisdiction over the person of defendant, as above indicated — issuance
to wit: of summons, order of attachment and writ of attachment (and/or appointments of
guardian ad litem, or grant of authority to the plaintiff to prosecute the suit as a pauper
(a) When an attachment may not be dissolved by a showing of its irregular or litigant, or amendment of the complaint by the plaintiff as a matter of right without leave
30
improper issuance: of court — and however valid and proper they might otherwise be, these do not and
cannot bind and affect the defendant until and unless jurisdiction over his person is
. . . (W)hen the preliminary attachment is issued upon a ground which is at the eventually obtained by the court, either by service on him of summons or other
same time the applicant's cause of action; e.g., "an action for money or coercive process or his voluntary submission to the court's authority. Hence, when the
property embezzled or fraudulently misapplied or converted to his own use by sheriff or other proper officer commences implementation of the writ of attachment, it is
a public officer, or an officer of a corporation, or an attorney, factor, broker, essential that he serve on the defendant not only a copy of the applicant's affidavit and
agent, or clerk, in the course of his employment as such, or by any other attachment bond, and of the order of attachment, as explicity required by Section 5 of
person in a fiduciary capacity, or for a willful violation of duty." (Sec. 1 [b], Rule Rule 57, but also the summons addressed to said defendant as well as a copy of the
57), or "an action against a party who has been guilty of fraud m contracting complaint and order for appointment of guardian ad litem, if any, as also explicity
the debt or incurring the obligation upon which the action is brought" (Sec. 1 directed by Section 3, Rule 14 of the Rules of Court. Service of all such documents is
[d], Rule 57), the defendant is not allowed to file a motion to dissolve the indispensable not only for the acquisition of jurisdiction over the person of the
attachment under Section 13 of Rule 57 by offering to show the falsity of the defendant, but also upon considerations of fairness, to apprise the defendant of the
factual averments in the plaintiff's application and affidavits on which the writ complaint against him, of the issuance of a writ of preliminary attachment and the
was based — and consequently that the writ based thereon had been grounds therefor and thus accord him the opportunity to prevent attachment of his
improperly or irregularly issued (SEE Benitez v. I.A.C., 154 SCRA 41) — the property by the posting of a counterbond in an amount equal to the plaintiff's claim in
reason being that the hearing on such a motion for dissolution of the writ the complaint pursuant to Section 5 (or Section 12), Rule 57, or dissolving it by causing
would be tantamount to a trial of the merits of the action. In other words, the dismissal of the complaint itself on any of the grounds set forth in Rule 16, or
merits of the action would be ventilated at a mere hearing of a motion, instead demonstrating the insufficiency of the applicant's affidavit or bond in accordance with
of at the regular trial. Therefore, when the writ of attachment is of this nature, Section 13, Rule 57.
the only way it can be dissolved is by a counterbond (G.B. Inc. v. Sanchez, 98
Phil. 886). It was on account of the failure to comply with this fundamental requirement of service
of summons and the other documents above indicated that writs of attachment issued
by the Trial Court ex parte were struck down by this Court's Third Division in two (2)
11
31
cases, namely: Sievert v. Court of Appeals, and BAC Manufacturing and Sales SPECIAL STEEL PRODUCTS,
32
Corporation v. Court of Appeals, et al. In contrast to the case at bar — where the
INC. and AUGUSTO L. PARDO, Promulgated:
summons and a copy of the complaint, as well as the order and writ of attachment and
the attachment bond were served on the defendant — in Sievert, levy on attachment Respondents. June 13, 2012
was attempted notwithstanding that only the petition for issuance of the writ of
preliminary attachment was served on the defendant, without any prior or x-------------------------------------------------------------------x
accompanying summons and copy of the complaint; and in BAC Manufacturing and
Sales Corporation, neither the summons nor the order granting the preliminary DECISION
attachment or the writ of attachment itself was served on the defendant "before or at
the time the levy was made." DEL CASTILLO, J.:

A crossed check with the notation account payee only can only be deposited in the named payees
For the guidance of all concerned, the Court reiterates and reaffirms the proposition account. It is gross negligence for a bank to ignore this rule solely on the basis of a third partys oral
that writs of attachment may properly issue ex parte provided that the Court is satisfied representations of having a good title thereto.
that the relevant requisites therefor have been fulfilled by the applicant, although it
may, in its discretion, require prior hearing on the application with notice to the Before the Court is a Petition for Review on Certiorari of the October 13, 2006 Decision of the Court
defendant; but that levy on property pursuant to the writ thus issued may not be validly of Appeals (CA) in CA-G.R. CV No. 62425. The dispositive portion of the assailed Decision reads:
effected unless preceded, or contemporaneously accompanied, by service on the
defendant of summons, a copy of the complaint (and of the appointment of guardian ad WHEREFORE, premises considered, the May 4, 1998 Decision of
litem, if any), the application for attachment (if not incorporated in but submitted the Regional Trial Court of Pasig City, Branch 168, in Civil Case No. 63561, is
separately from the complaint), the order of attachment, and the plaintiff's attachment hereby AFFIRMED.
bond.
[1]
SO ORDERED.
WHEREFORE, the petition is GRANTED; the challenged decision of the Court of
Appeals is hereby REVERSED, and the order and writ of attachment issued by Hon. Factual Antecedents
Milagros C. Nartatez, Presiding Judge of Branch 8, Regional Trial Court of Davao City
in Civil Case No. 19513-89 against Queensland Hotel or Motel or Queensland Tourist Respondent Special Steel Products, Inc. (SSPI) is a private domestic corporation selling steel
Inn and Teodorico Adarna are hereby REINSTATED. Costs against private products. Its co-respondent Augusto L. Pardo (Pardo) is SSPIs President and majority
[2]
respondents. stockholder.
[3]
SO ORDERED. International Copra Export Corporation (Interco) is its regular customer.
[4]
Jose Isidoro Uy, alias Jolly Uy (Uy), is an Interco employee, in charge of the purchasing
EQUITABLE BANKING G.R. No. 175350 department, and the son-in-law of its majority stockholder.
[5]

CORPORATION,
Petitioner, Present: Petitioner Equitable Banking Corporation (Equitable or bank) is a private domestic corporation
[6]
engaged in banking and is the depository bank of Interco and of Uy.
*
LEONARDO-DE CASTRO, In 1991, SSPI sold welding electrodes to Interco, as evidenced by the following sales invoices:
Acting Chairperson, [7]
Sales Invoice No. 65042 dated February 14, 1991 for P325,976.34
[8]
- versus - BERSAMIN, Sales Invoice No. 65842 dated April 11, 1991 for P345,412.80
[9]
Sales Invoice No. 65843 dated April 11, 1991 for P313,845.84
DEL CASTILLO,
VILLARAMA, JR., and
** The due dates for these invoices were March 16, 1991 (for the first sales invoice) and May 11,
PERLAS-BERNABE, JJ. 1991 (for the others). The invoices provided that Interco would pay interest at the rate of 36% per
annum in case of delay.
12
the scheme. As for his fear of tax evasion, Pardo explained that the Bureau of Internal Revenue
In payment for the above welding electrodes, Interco issued three checks payable to the order of might notice a discrepancy between the financial reports of Interco (which might have reported the
[10] [11] [12]
SSPI on July 10, 1991, July 16, 1991, and July 29, 1991. Each check was crossed with the checks as SSPIs income in 1991) and those of SSPI (which reported the income only in
notation account payee only and was drawn against Equitable. The records do not identify the 1993). Since Uy and Equitable were responsible for Pardos worries, they should compensate him
[24]
signatory for these three checks, or explain how Uy, Intercos purchasing officer, came into jointly and severally therefor.
possession of these checks.
[25]
SSPI and Pardo also prayed for exemplary damages and attorneys fees.
The records only disclose that Uy presented each crossed check to Equitable on the day of its In support of their application for preliminary attachment, the plaintiffs alleged that the defendants
[13]
issuance and claimed that he had good title thereto. He demanded the deposit of the checks in are guilty of fraud in incurring the obligation upon which the action was brought and that there is
[14] [26]
his personal accounts in Equitable, Account No. 18841-2 and Account No. 03474-0. no sufficient security for the claim sought to be enforced in this action.
[27]
Equitable acceded to Uys demands on the assumption that Uy, as the son-in-law of Intercos The trial court granted plaintiffs application. It issued the writ of preliminary attachment on
[15] [28]
majority stockholder, was acting pursuant to Intercos orders. The bank also relied on Uys status September 20, 1993, upon the filing of plaintiffs bond for P500,000.00. The sheriff served and
[16] [29]
as a valued client. Thus, Equitable accepted the checks for deposit in Uys personal implemented the writ against the personal properties of both defendants.
[17]
accounts and stamped ALL PRIOR ENDORSEMENT AND/OR LACK OF ENDORSEMENT
[18]
GUARANTEED on their dorsal portion. Uy promptly withdrew the proceeds of the checks. Upon Equitables motion and filing of a counter-bond, however, the trial court eventually discharged
[30] [31]
the attachment against it.
In October 1991, SSPI reminded Interco of the unpaid welding electrodes, amounting
[19] [20]
to P985,234.98. It reiterated its demand on January 14, 1992. SSPI explained its immediate Equitable then argued for the dismissal of the complaint for lack of cause of action. It maintained
need for payment as it was experiencing some financial crisis of its own. Interco replied that it had that interest income is due only when it is expressly stipulated in writing. Since Equitable and
already issued three checks payable to SSPI and drawn against Equitable. SSPI denied receipt SSPI did not enter into any contract, Equitable is not liable for damages, in the form of
[32]
of these checks. unobtained interest income, to SSPI. Moreover, SSPIs acceptance of Intercos payment on the
[33]
On August 6, 1992, SSPI requested information from Equitable regarding the three checks. The sales invoices is a waiver or extinction of SSPIs cause of action based on the three checks.
[21]
bank refused to give any information invoking the confidentiality of deposits.
Equitable further argued that it is not liable to SSPI because it accepted the three crossed checks
[34]
The records do not disclose the circumstances surrounding Intercos and SSPIs eventual discovery in good faith. Equitable averred that, due to Uys close relations with the drawer of the checks,
of Uys scheme. Nevertheless, it was determined that Uy, not SSPI, received the proceeds of the the bank had basis to assume that the drawer authorized Uy to countermand the original order
three checks that were payable to SSPI. Thus, on June 30, 1993 (twenty-three months after the stated in the check (that it can only be deposited in the named payees account). Since only Uy is
issuance of the three checks), Interco finally paid the value of the three checks to SSPI, plus a responsible for the fraudulent conversion of the checks, he should reimburse Equitable for any
[35]
portion of the accrued interests. Interco refused to pay the entire accrued interest of P767,345.64 amounts that it may be made liable to plaintiffs.
on the ground that it was not responsible for the delay. Thus, SSPI was unable to
[22]
collect P437,040.35 (at the contracted rate of 36% per annum) in interest income. The bank counter-claimed that SSPI is liable to it in damages for the wrongful and malicious
attachment of Equitables personal properties. The bank maintained that SSPI knew that the
SSPI and its president, Pardo, filed a complaint for damages with application for a writ of allegation of fraud against the bank is a falsehood. Further, the bank is financially capable to meet
preliminary attachment against Uy and Equitable Bank. The complaint alleged that the three the plaintiffs claim should the latter receive a favorable judgment. SSPI was aware that the
crossed checks, all payable to the order of SSPI and with the notation account payee only, could preliminary attachment against the bank was unnecessary, and intended only to humiliate or
[36]
be deposited and encashed by SSPI only. However, due to Uys fraudulent representations, and destroy the banks reputation.
Equitables indispensable connivance or gross negligence, the restrictive nature of the checks was
ignored and the checks were deposited in Uys account. Had the defendants not diverted the three Meanwhile, Uy answered that the checks were negotiated to him; that he is a holder for value of
[37]
checks in July 1991, the plaintiffs could have used them in their business and earned money from the checks and that he has a good title thereto. He did not, however, explain how he obtained
them. Thus, the plaintiffs prayed for an award of actual damages consisting of the unrealized the checks, from whom he obtained his title, and the value for which he received them. During trial,
interest income from the proceeds of the checks for the two-year period that the defendants Uy did not present any evidence but adopted Equitables evidence as his own.
[23]
withheld the proceeds from them (from July 1991 up to June 1993).
[38]
In his personal capacity, Pardo claimed an award of P3 million as moral damages from the Ruling of the Regional Trial Court
defendants. He allegedly suffered hypertension, anxiety, and sleepless nights for fear that the
government would charge him for tax evasion or money laundering. He maintained that
defendants actions amounted to money laundering and that it unfairly implicated his company in
13
The RTC clarified that SSPIs cause of action against Uy and Equitable is for quasi-delict. SSPI is
not seeking to enforce payment on the undelivered checks from the defendants, but to recover the The trial court denied Equitables motion for reconsideration in its Order dated November 19,
[39] [46]
damage that it sustained from the wrongful non-delivery of the checks. 1998.
[47]
The crossed checks belonged solely to the payee named therein, SSPI. Since SSPI did not Only Equitable appealed to the CA, reiterating its defenses below.
authorize anyone to receive payment in its behalf, Uy clearly had no title to the checks and
[48]
Equitable had no right to accept the said checks from Uy. Equitable was negligent in permitting Uy Appealed Ruling of the Court of Appeals
to deposit the checks in his account without verifying Uys right to endorse the crossed checks. The
court reiterated that banks have the duty to scrutinize the checks deposited with it, for a The appellate court found no merit in Equitables appeal.
determination of their genuineness and regularity. The law holds banks to a high standard because It affirmed the trial courts ruling that SSPI had a cause of action for quasi-delict against
[49]
banks hold themselves out to the public as experts in the field. Thus, the trial court found Equitables Equitable. The CA noted that the three checks presented by Uy to Equitable were crossed
[40]
explanation regarding Uys close relations with the drawer unacceptable. checks, and strictly made payable to SSPI only. This means that the checks could only be
[50]
deposited in the account of the named payee. Thus, the CA found that Equitable had the
Uys conversion of the checks and Equitables negligence make them liable to compensate SSPI responsibility of ensuring that the crossed checks are deposited in SSPIs account only. Equitable
[51]
for the actual damage it sustained. This damage consists of the income that SSPI failed to realize violated this duty when it allowed the deposit of the crossed checks in Uys account.
[41]
during the delay. The trial court then equated this unrealized income with the interest income The CA found factual and legal basis to affirm the trial courts award of moral damages in favor of
[52]
that SSPI failed to collect from Interco. Thus, it ordered Uy and Equitable to pay, jointly and Pardo.
[42]
severally, the amount of P437,040.35 to SSPI as actual damages.
[53]
It likewise affirmed the award of exemplary damages and attorneys fees in favor of SSPI.
It also ordered the defendants to pay exemplary damages of P500,000.00, attorneys fees
[43]
amounting to P200,000.00, as well as costs of suit. Issues
The trial court likewise found merit in Pardos claim for moral damages. It found that Pardo suffered
anxiety, sleepless nights, and hypertension in fear that he would face criminal prosecution. The 1. Whether SSPI has a cause of action against Equitable for quasi-delict;
[44]
trial court awarded Pardo the amount of P3 million in moral damages.
2. Whether SSPI can recover, as actual damages, the stipulated 36% per annum interest from
The dispositive portion of the trial courts Decision reads: Equitable;

WHEREFORE, judgment is hereby rendered in favor of plaintiffs Special Steel 3. Whether speculative fears and imagined scenarios, which cause sleepless nights, may be the
Products, Inc., and Augusto L. Pardo and against defendants Equitable basis for the award of moral damages; and
Banking Corporation [and] Jose Isidoro Uy, alias Jolly Uy, ordering defendants
to jointly and severally pay plaintiffs the following: 4. Whether the attachment of Equitables personal properties was wrongful.

1. P437,040.35 as actual damages; Our Ruling


2. P3,000,000.00 as moral damages to Augusto L. Pardo;
3. P500,000.00 as exemplary damages; SSPIs cause of action
4. P200,000.00 as attorneys fees; and This case involves a complaint for damages based on quasi-delict. SSPI asserts that it did not
5. Costs of suit. receive prompt payment from Interco in July 1991 because of Uys wilful and illegal conversion of
the checks payable to SSPI, and of Equitables gross negligence, which facilitated Uys actions. The
Defendant EBCs counterclaim is hereby DISMISSED for lack of factual and combined actions of the defendants deprived SSPI of interest income on the said moneys from
legal basis. July 1991 until June 1993. Thus, SSPI claims damages in the form of interest income for the said
period from the parties who wilfully or negligently withheld its money from it.
Likewise, the crossclaim filed by defendant EBC against defendant Jose
Isidoro Uy and the crossclaim filed by defendant Jose Isidoro Uy against Equitable argues that SSPI cannot assert a right against the bank based on the undelivered
[54]
defendant EBC are hereby DISMISSED for lack of factual and legal basis. checks. It cites provisions from the Negotiable Instruments Law and the case of Development
[55]
Bank of Rizal v. Sima Wei to argue that a payee, who did not receive the check, cannot require
SO ORDERED. the drawee bank to pay it the sum stated on the checks.
[45]
Pasig City, May 4, 1998.
14
Equitables argument is misplaced and beside the point. SSPIs cause of action is not based on the proof of the assertions and without making the appropriate inquiries. Had it only exercised due
three checks. SSPI does not ask Equitable or Uy to deliver to it the proceeds of the checks as the diligence, Equitable could have saved both Interco and the named payee, SSPI, from the trouble
rightful payee. SSPI does not assert a right based on the undelivered checks or for breach of that the banks mislaid trust wrought for them.
contract. Instead, it asserts a cause of action based on quasi-delict. A quasi-delict is an act or
omission, there being fault or negligence, which causes damage to another. Quasi-delicts exist Equitables pretension that there is nothing under the circumstances that rendered Uys title to the
even without a contractual relation between the parties. The courts below correctly ruled that SSPI checks questionable is outrageous. These are crossed checks, whose manner of discharge, in
has a cause of action for quasi-delict against Equitable. banking practice, is restrictive and specific. Uys name does not appear anywhere on the crossed
checks. Equitable, not knowing the named payee on the check, had no way of verifying for itself
The checks that Interco issued in favor of SSPI were all crossed, made payable to SSPIs order, the alleged genuineness of the indorsement to Uy. The checks bear nothing on their face that
and contained the notation account payee only. This creates a reasonable expectation that the supports the belief that the drawer gave the checks to Uy. Uys relationship to Intercos majority
payee alone would receive the proceeds of the checks and that diversion of the checks would be stockholder will not justify disregarding what is clearly ordered on the checks.
averted. This expectation arises from the accepted banking practice that crossed checks are
[56]
intended for deposit in the named payees account only and no other. At the very least, the nature
of crossed checks should place a bank on notice that it should exercise more caution or expend Actual damages
more than a cursory inquiry, to ascertain whether the payee on the check has authorized the holder
to deposit the same in a different account. It is well to remember that [t]he banking system has For its role in the conversion of the checks, which deprived SSPI of the use thereof,
become an indispensable institution in the modern world and plays a vital role in the economic life Equitable is solidarily liable with Uy to compensate SSPI for the damages it suffered.
of every civilized society. Whether as mere passive entities for the safe-keeping and saving of
money or as active instruments of business and commerce, banks have attained an [sic] Among the compensable damages are actual damages, which encompass the value of the loss
[60]
ubiquitous presence among the people, who have come to regard them with respect and even sustained by the plaintiff, and the profits that the plaintiff failed to obtain. Interest payments, which
gratitude and, above all, trust and confidence. In this connection, it is important that banks should SSPI claims, fall under the second category of actual damages.
guard against injury attributable to negligence or bad faith on its part. As repeatedly emphasized,
since the banking business is impressed with public interest, the trust and confidence of the public SSPI computed its claim for interest payments based on the interest rate stipulated in its contract
in it is of paramount importance. Consequently, the highest degree of diligence is expected, and with Interco. It explained that the stipulated interest rate is the actual interest income it had failed to
[57]
high standards of integrity and performance are required of it. obtain from Interco due to the defendants tortious conduct.
The Court finds the application of the stipulated interest rate erroneous.
Equitable did not observe the required degree of diligence expected of a banking institution under
the existing factual circumstances. SSPI did not recover interest payments at the stipulated rate from Interco because it agreed that
the delay was not Intercos fault, but that of the defendants. If that is the case, then Interco is not in
The fact that a person, other than the named payee of the crossed check, was presenting it for delay (at least not after issuance of the checks) and the stipulated interest payments in their
deposit should have put the bank on guard. It should have verified if the payee (SSPI) authorized contract did not become operational. If Interco is not liable to pay for the 36% per annum interest
the holder (Uy) to present the same in its behalf, or indorsed it to him. Considering however, that rate, then SSPI did not lose that income. SSPI cannot lose something that it was not entitled to in
the named payee does not have an account with Equitable (hence, the latter has no specimen the first place. Thus, SSPIs claim that it was entitled to interest income at the rate stipulated in its
signature of SSPI by which to judge the genuineness of its indorsement to Uy), the bank knowingly contract with Interco, as a measure of its actual damage, is fallacious.
assumed the risk of relying solely on Uys word that he had a good title to the three checks. Such
misplaced reliance on empty words is tantamount to gross negligence, which is the absence of or More importantly, the provisions of a contract generally take effect only among the parties, their
[61]
failure to exercise even slight care or diligence, or the entire absence of care, evincing a assigns and heirs. SSPI cannot invoke the contractual stipulation on interest payments against
[58]
thoughtless disregard of consequences without exerting any effort to avoid them. Equitable because it is neither a party to the contract, nor an assignee or an heir to the contracting
parties.
Equitable contends that its knowledge that Uy is the son-in-law of the majority stockholder of the
drawer, Interco, made it safe to assume that the drawer authorized Uy to countermand the order Nevertheless, it is clear that defendants actions deprived SSPI of the present use of its money for
appearing on the check. In other words, Equitable theorizes that Interco reconsidered its original a period of two years. SSPI is therefore entitled to obtain from the tortfeasors the profits that it failed
[59]
order and decided to give the proceeds of the checks to Uy. That the bank arrived at this to obtain from July 1991 to June 1993. SSPI should recover interest at the legal rate of 6% per
[62]
conclusion without anything on the face of the checks to support it is demonstrative of its lack of annum, this being an award for damages based on quasi-delict and not for a loan or forbearance
caution. It is troubling that Equitable proceeded with the transaction based only on its knowledge of money.
that Uy had close relations with Interco. The bank did not even make inquiries with the drawer,
Interco (whom the bank considered a valued client), to verify Uys representation. The banking Moral damages
system is placed in peril when bankers act out of blind faith and empty promises, without requiring
15
Both the trial and appellate courts awarded Pardo P3 million in moral damages. Pardo claimed SSPI submitted the following affidavit in support of its application for a writ of preliminary
that he was frightened, anguished, and seriously anxious that the government would prosecute attachment:
[63]
him for money laundering and tax evasion because of defendants actions. In other words, he
was worried about the repercussions that defendants actions would have on him. I, Augusto L. Pardo, of legal age, under oath hereby depose and declare:

Equitable argues that Pardos fears are all imagined and should not be compensated. The bank 1. I am one of the plaintiffs in the above-entitled case; the other
[64]
points out that none of Pardos fears panned out. plaintiff is our family corporation, Special Steel Products, Inc., of which I am
Moral damages are recoverable only when they are the proximate result of the defendants the president and majority stockholder; I caused the preparation of the
[65]
wrongful act or omission. Both the trial and appellate courts found that Pardo indeed suffered as foregoing Complaint, the allegations of which I have read, and which I hereby
a result of the diversion of the three checks. It does not matter that the things he was worried and affirm to be true and correct out of my own personal knowledge;
anxious about did not eventually materialize. It is rare for a person, who is beset with mounting
problems, to sift through his emotions and distinguish which fears or anxieties he should or should 2. The corporation and I have a sufficient cause of action against
not bother with. So long as the injured partys moral sufferings are the result of the defendants defendants Isidoro Uy alias Jolly Uy and Equitable Banking Corporation, who
actions, he may recover moral damages. are guilty of fraud in incurring the obligation upon which this action is
brought, as particularly alleged in the Complaint, which allegations I hereby
The Court, however, finds the award of P3 million excessive. Moral damages are given not to adopt and reproduce herein;
punish the defendant but only to give the plaintiff the means to assuage his sufferings with
[66] [67]
diversions and recreation. We find that the award of P50,000.00 as moral damages is 3. There is no sufficient security for our claim in this action and that
reasonable under the circumstances. the amount due us is as much as the sum for which the order is granted above
all legal counterclaims;
Equitable to recover amounts from Uy
4. We are ready and able to put up a bond executed to the
Equitable then insists on the allowance of their cross-claim against Uy. The bank argues that it was defendants in an amount to be fixed by the Court[,] conditioned on the
Uy who was enriched by the entire scheme and should reimburse Equitable for whatever amounts payment of all costs[,] which may be adjudged to defendants[,] and all
[68]
the Court might order it to pay in damages to SSPI. damages[,] which they may sustain by reason of the attachment of the court,
[71]
should [the court] finally adjudge that we are not entitled thereto.
Equitable is correct. There is unjust enrichment when (1) a person is unjustly benefited, and (2)
[69]
such benefit is derived at the expense of or with damages to another. In the instant case, the
fraudulent scheme concocted by Uy allowed him to improperly receive the proceeds of the three The complaint (to which the supporting affidavit refers) cites the following factual circumstances to
crossed checks and enjoy the profits from these proceeds during the entire time that it was withheld justify SSPIs application:
from SSPI. Equitable, through its gross negligence and mislaid trust on Uy, became an unwitting
instrument in Uys scheme. Equitables fault renders it solidarily liable with Uy, insofar as 6. x x x Yet, notwithstanding the fact that SPECIAL STEEL did not
respondents are concerned. Nevertheless, as between Equitable and Uy, Equitable should be open an account with EQUITABLE BANK as already alleged, thru its
allowed to recover from Uy whatever amounts Equitable may be made to pay under the connivance with defendant UY in his fraudulent scheme to defraud SPECIAL
judgment. It is clear that Equitable did not profit in Uys scheme. Disallowing Equitables cross-claim STEEL, or at least thru its gross negligence EQUITABLE BANK
against Uy is tantamount to allowing Uy to unjustly enrich himself at the expense of Equitable. For consented to or allowed the opening of Account No. 18841-2 at its head office
this reason, the Court allows Equitables cross-claim against Uy. and Account No. 03474-0 at its Ermita Branch in the name of SPECIAL
STEEL without the latters knowledge, let alone authority or consent, but
Preliminary attachment obviously on the bases of spurious or falsified documents submitted by UY
or under his authority, which documents EQUITABLE BANK did not
[72]
Equitable next assails as error the trial courts dismissal of its counter-claim for wrongful preliminary bother to verify or check their authenticity with SPECIAL STEEL.
attachment. It maintains that, contrary to SSPIs allegation in its application for the writ, there is no
showing whatsoever that Equitable was guilty of fraud in allowing Uy to deposit the checks. Thus, xxxx
the trial court should not have issued the writ of preliminary attachment in favor of SSPI. The
wrongful attachment compelled Equitable to incur expenses for a counter-bond, amounting 9. On August 6, 1992, plaintiffs, thru counsel, wrote EQUITABLE
to P30,204.26, and caused it to sustain damage, amounting to P5 million, to its goodwill and BANK about the fraudulent transactions involving the aforesaid checks, which
[70]
business credit. could not have been perpetrated without its indispensable participation and
cooperation, or gross negligence, and therein solicited its cooperation in
16
securing information as to the anomalous and irregular opening of the false 2. REDUCING the award of moral damages in favor of Augusto L. Pardo
accounts maintained in SPECIAL STEELs name, but EQUITABLE BANK from P3,000,000.00 to P 50,000.00; and
malevolently shirking from its responsibility to prevent the further perpetration
of fraud, conveniently, albeit unjustifiably, invoked the confidentiality of the 3. REVERSING the dismissal of Equitable Banking Corporations cross-claim against
deposits and refused to give any information, and accordingly denied Jose Isidoro Uy, alias Jolly Uy. Jolly Uy is hereby ORDERED to REIMBURSEEquitable Banking
SPECIAL STEELs valid request, thereby knowingly shielding the identity of Corporation the amounts that the latter will pay to respondents.
[73]
the ma[le]factors involved [in] the unlawful and fraudulent transactions.
Additionally, the Court hereby REVERSES the dismissal of Equitable Banking Corporations
counterclaim for damages against Special Steel Products, Inc. This Court ORDERSSpecial Steel
The above affidavit and the allegations of the complaint are bereft of specific and definite Products, Inc. to PAY Equitable Banking Corporation actual damages in the total amount
allegations of fraud against Equitable that would justify the attachment of its properties. In fact, of P30,204.36, for the wrongful preliminary attachment of its properties.
SSPI admits its uncertainty whether Equitables participation in the transactions involved fraud or
was a result of its negligence. Despite such uncertainty with respect to Equitables participation, The rest of the assailed Decision is AFFIRMED.
SSPI applied for and obtained a preliminary attachment of Equitables properties on the ground of
fraud. We believe that such preliminary attachment was wrongful. [A] writ of preliminary attachment SO ORDERED.
is too harsh a provisional remedy to be issued based on mere abstractions of fraud. Rather, the
rules require that for the writ to issue, there must be a recitation of clear and concrete factual
circumstances manifesting that the debtor practiced fraud upon the creditor at the time of the G.R. No. 92813 July 31, 1991
execution of their agreement in that said debtor had a preconceived plan or intention not to pay
[74]
the creditor. No proof was adduced tending to show that Equitable had a preconceived plan not
to pay SSPI or had knowingly participated in Uys scheme. PEROXIDE PHILIPPINES CORPORATION, EASTMAN CHEMICAL INDUSTRIES,
INC., EDMUNDO O. MAPUA and ROSE U. MAPUA, petitioners,
That the plaintiffs eventually obtained a judgment in their favor does not detract from the vs.
wrongfulness of the preliminary attachment. While the evidence warrants [a] judgment in favor of HON. COURT OF APPEALS and BANK OF THE PHILIPPINE,
[the] applicant, the proofs may nevertheless also establish that said applicants proffered ground ISLANDS, respondents.
for attachment was inexistent or specious, and hence, the writ should not have issued at all x x
[75]
x. Antonio P. Barredo for petitioners.
Padilla Law Office for private respondent.
For such wrongful preliminary attachment, plaintiffs may be held liable for
[76]
damages. However, Equitable is entitled only to such damages as its evidence would allow, for
the wrongfulness of an attachment does not automatically warrant the award of damages. The
debtor still has the burden of proving the nature and extent of the injury that it suffered by reason
[77]
of the wrongful attachment.
REGALADO, J.:
The Court has gone over the records and found that Equitable has duly proved its claim for, and
1
is entitled to recover, actual damages. In order to lift the wrongful attachment of Equitables Assailed in this petition for review on certiorari are the decision of respondent Court of
properties, the bank was compelled to pay the total amount of P30,204.26 in premiums for a Appeals, promulgated on September 4, 1989 in CA-G. R. SP No. 15672, granting the
[78] 2
counter-bond. However, Equitable failed to prove that it sustained damage to its goodwill and petition for certiorari filed by private respondent, and its resolution of March 29, 1990
business credit in consequence of the alleged wrongful attachment. There was no proof of denying petitioners' motion for reconsideration. On December 6, 1982, herein private
Equitables contention that respondents actions caused it public embarrassment and a bank run. respondent Bank of the Philippine Islands (BPI) sued herein petitioners Peroxide
Philippines Corporation (Peroxide), Eastman Chemical Industries, Inc. (Eastman), and
WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The assailed the spouses Edmund O. Mapua and Rose U. Mapua (Mapuas) in Civil Case No. 48849
October 13, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 62425 is MODIFIED by: of the then Court of First Instance of Pasig, Metro Manila for the collection of an
indebtedness of Peroxide wherein Eastman and the Mapuas bound themselves to be
1. REDUCING the award of actual damages to respondents to the rate of 6% per solidarily liable.
annum of the value of the three checks from July 1991 to June 1993 or a period of twenty-three
months;

17
Upon the filing of said action, the trial court, then presided over by Judge Gregorio G. Petitioners then sought the review of said decision by this Court in G.R. No. 74558, but
Pineda, ordered the issuance of a writ of preliminary attachment which was actually no temporary restraining order was granted therein. In the meantime, on May 29, 1986,
6
done on January 7, 1983 after BPI filed an attachment bond in the amount of Judge Acosta issued an order suspending the writ of preliminary attachment in the
P32,700,000.00. Petitioners' properties were accordingly attached by the sheriff. aforesaid Civil Case No. 48849 pursuant to an ex parte motion filed by herein
petitioners.
On January 11, 1983, Eastman and the Mapuas moved to lift the attachment, which
motion was set for hearing on January 14, 1983. On said date and on motion of BPI, it Thereafter, in its resolution dated October 27, 1986, this Court denied the aforesaid
was granted up to January 17, 1983 to file a written opposition to the motion to lift the petition for review on certiorari "considering that the writ of preliminary attachment
7
writ of attachment. BPI also filed a motion to set for hearing the said motion to lift issued was in accordance with law and applicable jurisprudence." Petitioners' motion
8
attachment and its opposition thereto. for reconsideration was denied with finality in our resolution of October 6, 1987.

However, on January 17, 1983, Judge Pineda issued two (2) orders, the first, denying Dissatisfied, petitioners again filed an urgent motion for clarification submitting that the
BPI's motion for a hearing, and, the second, lifting the writ of attachment as prayed for Court failed to pass upon two issues, namely: (1) whether Eastman and the Mapuas
by Eastman and the Mapuas. BPI filed a motion for reconsideration but, consequent to were sureties or mere guarantors of Peroxide, and (2) whether Rose U. Mapua was
the then judiciary reorganization, the case was re-raffled and assigned to the sala of bound by the "Continuing Guarantee" executed by her husband, Edmund O. Mapua.
Judge Pastor Reyes. Acting upon said motion, on November 10, 1987 the Court resolved to deny the same
for the reason, among others, that the clarification sought regarding the propriety of the
9
On November 28, 1983, Judge Reyes issued an order with an explicit finding that the attachment of the properties of Eastman and the Mapuas involves questions of fact.
attachment against the properties of Eastman and the Mapuas was proper on the
ground that they had disposed of their properties in fraud of BPI. It also directed the On July 30, 1987, BPI filed a motion to order Bataan Pulp and Paper Mills, Inc.
sheriff to implement the writ of attachment upon the finality of said order. (Bataan), jointly and severally with petitioners, to deliver to the sheriff the cash
dividends declared on the garnished shares of stock of said petitioners with said paper
After a motion for partial reconsideration by BPI and some exchanges between the company, and to cite for contempt the officers of Bataan for releasing and/or paying the
parties, on December 17, 1984 the trial court, this time with Judge Eficio B. Acosta dividends to petitioners in disregard of the notice of garnishment.
presiding, issued an order granting BPI's motion for partial reconsideration by
10
finding, inter alia, that "(c)onsidering the lapse of more than a year since the Order of In an exhaustive order dated December 16, 1987, the trial court, now presided over
November 28, 1983 and the nature and purpose of attachment, the writ of attachment by Judge Fernando L. Gerona, Jr. and wherein Civil Case No. 48849 was then
revived in the Order of November 28, 1983 and hereby re-affirmed may be executed pending, addressing all the issues raised by the parties, granted BPI's motion for
and implemented immediately," and directing the sheriff to execute said writ which "is delivery of the dividends. Judge Gerona sustained the position of BPI that dividends
3
hereby declared immediately executory." are but incidents or mere fruits of the shares of stock and as such the attachment of the
stock necessarily included the dividends declared thereon if they were declared
Contending that said order of December 17, 1984 was rendered with grave abuse of subsequent to the notice of garnishment.
discretion amounting to lack of jurisdiction, petitioners sought the annulment thereof in
a petition for certiorari and prohibition in AC-G.R. SP No. 05043 of the Intermediate He further held that the preliminary attachment, being a provisional remedy, must
Appellate Court, wherein a temporary restraining order was issued. This restraining necessarily become effective immediately upon the issuance thereof and must
order was lifted when said court rendered its decision in said case on March 14, continue to be effective even during the pendency of an appeal from a judgment of the
4
1986 dismissing the petition and holding, among others, that: court which issued the said provisional remedy and will only cease to have effect when
the judgment is satisfied or the attachment is discharged or vacated in some manner
We find nothing wrong with the attachment of the properties of PEROXIDE. provided by law. The motion to cite the officers of Bataan was, however, denied.
Even were We to assume that the original petition for attachment was
defective for failure to specify the particular transactions involved in the Petitioners moved for reconsideration but the same was denied for the reason that the
alleged "alienation" of PEROXIDE's properties, the fact is that the defect, if order of May 29, 1986 of Judge Acosta was based on an ex parte motion without
any, was cured by the other pleadings (like the opposition or virtual reasonable notice, hence a patent nullity for lack of due process. Accordingly, the
amendment) filed by BANK With such amendment, the specific properties aforesaid order of December 16, 1987 held that the writ of attachment continued to be
5 11
concerned were distinctly enumerated. effective.

18
Petitioners thereafter filed a second motion for reconsideration which, however, 1. The trial court acted with grave abuse of discretion in denying BPI's
remained pending and unresolved when Judge Gerona inhibited himself from further urgent ex parte motion to suspend the order of August 23, 1988;
sitting in the case. Said case was then re-raffled to the sala of Judge Jainal D. Rasul
who required the parties to re-summarize their respective positions upon the issue of 2. The order of September 19, 1988 renders moot and academic BPI's
the attachment. pending motion for reconsideration;

Then, resolving the pending incidents before it, the court a quo issued the disputed 3. The lower court erroneously held that the writ of attachment secured by BPI
order of August 23, 1988, which states, inter alia that: had ceased to be valid and effective or had been suspended by virtue of its
orders of January 17, 1983 and May 29, 1986;
THIS Court thru Judge Gerona had arrived at the correct conclusion that the
contempt charge against the Officers of the Garnishee Corporation cannot be 4. The trial court committed grave abuse of discretion when it nullified the writ
sustained, for the reason that they relied on the Order of the Court thru Judge of attachment as against Eastman and the Mapuas;
Acosta under date of May 29, 1986 suspending the Writ of Attachment and
since said order was not then set aside, there was no order or writ violated by
said officers. It follows a fortiori that the release of the cash dividends was 5. There is no inconsistency between the resolution of the Supreme Court
valid, legal and not contemptuous. Consequently, there is no reason to justify dated October 27, 1986 and its subsequent resolution of November 10, 1987;
or deserve the return of cash dividends prayed for by the plaintiff.
6. The attachment can validly issue against the conjugal properties of the
Besides, the propriety of the attachment of the properties of the defendant Mapuas; and
Eastman Chemical Industries, Inc., and defendant Mapua Spouses should still
be determined by this Court as a question of fact, pursuant to the Supreme 7. The trial court disregarded the clear and unequivocal records of the case
14
Court resolution dated November 23, 1987. Meanwhile, it is only fair that the when it issued its order of August 23, 1988.
properties of the Eastman Chemical Industries, Inc. and the defendants
Mapua spouses should not, pending such proper determination, be attached Ruling on these issues, respondent Court of Appeals declared:
as to give life and meaning to the Supreme Court resolution of November 23,
1987.
WHEREFORE, the petition for certiorari is hereby GRANTED. Judgment is
12 hereby rendered as follows:
SO ORDERED.

(a) Declaring the writ of preliminary attachment against the defendants


BPI moved for the reconsideration of said order. Thereafter, it learned that Bataan had Eastman Chemical Industries, Inc. and the spouses, Edmund and Rose
again declared a cash dividend on its shares payable on or before September 30, Mapua valid and enforceable from the beginning, without prejudice to
1988. Furthermore, Bataan informed BPI that it would be releasing to Eastman and determining the solidary liability of said defendants with defendant Peroxide
Edmund O. Mapua the cash dividends on their shares on September 23, 1988 on the Philippines Corporation;
strength of the order of the trial court of August 23, 1988.

(b) Setting aside the Order of August 23, 1988 insofar as it decreed that the
Consequently, BPI filed an urgent ex parte motion on September 19, 1988 for the cash dividends declared or the garnished shares of stocks (sic) of the
suspension of the effects of the trial court's order of August 23, 1988 in view of the defendants with Bataan Pulp and Paper Mills, Inc. are not subject to
pending motion for reconsideration it had filed against said order. In an order likewise attachment;
dated September 19, 1988, the trial court denied BPI's motion for suspension of the
13
order of August 23, 1988.
(c) Ordering the defendants and the Bataan Pulp and Paper Mills, Inc., jointly
and severally, to deliver to the sheriff the cash dividends as may hereafter be
BPI then filed a petition for certiorari in respondent court, docketed therein as CA-G.R. declared and paid on the garnished shares of stock;
SP No. 15672, invoking the following grounds:

(d) Setting aside the Order of September 19, 1988.

19
With costs against private respondents. issuance since the judgment had not been satisfied, nor has the writ been validly
discharged either by the filing of a counterbond or for improper or irregular issuance.
15
SO ORDERED.
We likewise affirm the findings and conclusion of respondent court that the order of
Their motion for reconsideration having been denied, petitioners are once again before Judge Acosta, dated May 29, 1986, suspending the writ of attachment was in essence
us on this spin-off facet of the same case, contending that respondent court has a lifting of said writ which order, having likewise been issued ex parte and without
departed from the accepted and usual course of judicial proceedings. notice and hearing in disregard of Section 13 of Rule 57, could not have resulted in the
discharge of the attachment. Said attachment continued unaffected by the so-called
order or suspension and could not have been deemed inefficacious until and only by
1. As correctly formulated by respondent court, the threshold issue is the validity of the reason of its supposed restoration in the order of December 16, 1987 of Judge Gerona.
attachment of the properties of Eastman and the Mapuas, from which arises the Under the facts of this case, the ex parte discharge or suspension of the attachment is
correlative question of whether or not the disputed cash dividends on the garnished a disservice to the orderly administration of justice and nullifies the underlying role and
shares of stock are likewise subject thereto. Necessarily involved is the matter of the purpose of preliminary attachment in preserving the rights of the parties pendente
continuing validity of the writ or whether or not the same was validly lifted and lite as an ancillary remedy.
suspended by the lower court's orders dated January 17, 1983 and May 29, 1986,
respectively.
We, therefore, sustain the position of BPI that the Court of Appeals, in its judgment
presently under challenge, did not err in upholding the continuing and uninterrupted
BPI asserts that the discharge is illegal and void because the order lifting the same is validity and enforceability of the writ of preliminary attachment issued in Civil Case No.
violative of Section 13, Rule 57 of the Rules of Court which requires, among others, a 48849 since the order of discharge and, later, the order of suspension of the trial court
prior hearing before the judge may order the discharge of the attachment upon proof were void and could not have created the operational lacuna in its effectivity as claimed
adduced therein of the impropriety or irregularity in the issuance of the writ and the by petitioners. Further, the cancellation of the annotations regarding the levy on
defect is not cured forthwith. We may mention in this regard that if the petition for the attachment of petitioners' properties, procured by the sheriff pursuant to the aforesaid
discharge of the writ violates the requirements of the law, the trial judge does not invalid orders, is likewise a nullity and another levy thereon is not required. We
16
acquire jurisdiction to act thereon. observe, however, that the records do not disclose the lifting of the levy on the Bataan
shares of Eastman and the Mapuas and on their real properties in Caloocan City.
It is true that petitioner's motion to discharge was set for hearing with notice to BPI but
it is likewise true that counsel for the latter asked for an opportunity to file a written 2. Petitioners next call attention to the fact that when the order of Judge Acosta of
opposition and for a hearing to which he asked that petitioner Edmund O. Mapua be December 17, 1984, which directed the immediate execution and implementation of the
subpoenaed. Said counsel was allowed to file a written opposition which he seasonably writ of attachment, was brought on a petition for certiorari and prohibition to the
did, but Judge Pineda denied both the requested subpoena and hearing and, instead, Intermediate Appellate Court in AC-G.R. SP No. 05043, said court issued a temporary
granted the discharge of the attachment. These are the bases for BPI's complaint that it restraining order.
17
was denied due process.
They allege that although the restraining order was lifted by said appellate court in its
Now, it is undeniable that when the attachment is challenged for having been illegally decision in the case on March 14, 1986, the same was reinstated by the court "until
or improperly issued, there must be a hearing with the burden of proof to sustain the further orders" in its order of April 24, 1986 in connection with petitioners' motion for
18
writ being on the attaching creditor. That hearing embraces not only the right to reconsideration therein. On May 14, 1986, respondent court denied the motion for
present evidence but also a reasonable opportunity to know the claims of the opposing reconsideration but, so petitioners insist, "without, however, stating that it was lifting its
parties and meet them. The right to submit arguments implies that opportunity, restraining order." When the case went on review to this Court in G.R. No. 74558, no
19
otherwise the right would be a barren one. It means a fair and open hearing. And, as mention was made regarding said restraining order. Hence, petitioners assert, the said
provided by the aforecited Section 13 of Rule 57, the attaching creditor should be restraining order had not been lifted, in effect arguing that the writ of attachment cannot
allowed to oppose the application for the discharge of the attachment by counter- be implemented as a consequence.
affidavit or other evidence, in addition to that on which the attachment was made.
This misleading argument is confuted by the records in AC-G.R. SP No. 05043. In its
Respondent court was, therefore, correct in holding that, on the above-stated premises, aforesaid resolution of April 24, 1986, the appellate court stated that "(a)s of this date,
the attachment of the properties of Eastman and the Mapuas remained valid from its April 23, 1986, the motion for reconsideration could not be considered in view of the
absence of the comment of the private respondents." Hence, the court directed that
20
"(i)n order to maintain the status quo of the parties, . . . the restraining order issued by As can be seen the paragraph begins with the holding that there is nothing
20
us on December 28, 1984 is hereby revived and made effective until further orders." wrong with the attachment of properties of Peroxide. This holding on its face is
limited only to the upholding of attachment against the properties of petitioner
Thereafter, finding no merit in the motion for reconsideration, the court denied the Peroxide. And yet the alienations mentioned in the subsequent sentences do
same, declaring that "(w)ith this resolution, we find no need in resolving the Urgent not refer to dispositions of properties of Peroxide and by Peroxide. A cursory
Motion to Reconsider and set aside Resolution of April 24, 1985 (sic, 1986) filed by the glance of records will show that they refer to dispositions alleged to have been
private respondent BPI and the other incidents still pending resolution."
21 fraudulently made by Eastman Chemical Industries, Inc. and Edmund Mapua.
Relating this point to the dispositive portion which in effect sustains the
attachment issued by the trial court not only against Peroxide, but also against
All incidents in AC-G.R. SP No. 05043 having been disposed of, it follows that the Eastman and Mapua spouses.
26
temporary restraining order which had been expressly lifted in the decision therein, and
which was merely temporarily reinstated for purposes of the motion for reconsideration
that was ultimately denied, was also necessarily lifted. Parenthetically, said temporary 4. As earlier narrated, this Court denied the petition for review on certiorari in G.R. No.
restraining order, not having been supplanted by a writ of preliminary injunction, could 74558, and when petitioners persisted in seeking a clarification as to the nature of the
22
not have had an effectivity of more than twenty (20) days, and this limitation applies liability of Eastman and the Mapuas, the Court denied the same on the ground that the
to temporary restraining orders issued by the Court of Appeals.
23 clarification sought involves questions of fact. As observed by respondent Court of
Appeals, the aforesaid ruling was erroneously construed by the lower court when it
declared that the properties of Eastman and the Mapuas should not, pending proper
3. We reject petitioners' theory that the preliminary attachment is not applicable to determination, be attached. In doing so, the court below virtually lifted or discharged
Eastman and the Mapuas. The writ was issued in Civil Case No. 48849 against the the attachment even before its propriety had been determined.
properties of all the petitioners herein. Eastman and the Mapuas moved for the
discharge of the attachment on the ground that they were not disposing of their
properties in fraud of creditors, but they did not raise the issue of their liabilities as We sustain respondent court's ratiocination in its decision under review that when
being allegedly those of mere guarantors. They did so only when this Court resolved on petitioners sought clarification from us regarding the propriety of the attachment on the
October 27, 1986 that the writ of preliminary attachment was issued in accordance with properties of Eastman and the Mapuas, and we said that this involves a question of
law and applicable jurisprudence.
24 fact, what this means is that the court a quo should determine the propriety or regularity
thereof, and such determination can only be had in appropriate proceedings conducted
for that purpose. However, until such attachment has been found to be improper and
Also, what was considered in AC-G.R. SP No. 05043 and thereafter in G.R. No. 74558 irregular, the attachment is valid and subsisting.
was the matter of the validity of the attachment against Eastman and the Mapuas,
considering that, even before the proceedings had reached the Intermediate Appellate
Court in AC-G.R. SP No. 05043, BPI no longer had any attachment against Peroxide Thus, as correctly posited by BPI, before the determination of the liability of Eastman
whose only remaining asset in Bulacan had been levied upon and acquired by its other and the Mapuas after trial on the merits, the writ of preliminary attachment may
creditors when Judge Pineda lifted the attachment obtained by BPI. properly issue. Even assuming that when Eastman and the Mapuas asked for the lifting
of the attachment they presented evidence that they were guarantors and not sureties
of Peroxide, the trial court could not have admitted such evidence or ruled upon that
Petitioners seek to capitalize on a passage in the decision in AC-G.R. SP No. 05043, issue since the same could be entertained only after a full-blown trial and not before
hereinbefore quoted, where the appellate court stated that "(w)e find nothing wrong 27
then. Otherwise, we would have the procedural absurdity wherein the trial court would
with the attachment of the properties of PEROXIDE," without mentioning Eastman and be forced to decide in advance and preempt in an auxiliary proceeding an issue which
the Mapuas. This was clearly in the nature of peccata minuta, a plain case of harmless can and should be determined only in a trial on the merits.
oversight, since the properties referred to in the decision as having been alienated in
fraud of BPI were properties of Eastman and the Mapuas, not of Peroxide.
The proceeding in the issuance of a writ of preliminary attachment, as a mere
provisional remedy, is ancillary to an action commenced at or before the time when the
In fact, as pointed out by private respondent, petitioners' own motion for attachment is sued out. Accordingly the attachment does not affect the decision of the
reconsideration of March 24, 1986 filed in said case specifically adverted to that case on the merits, the right to recover judgment on the alleged indebtedness and the
prefatory statement as being equivocal, with the following observation: "Actually no right to attach the property of the debtor being entirely separate and distinct. As a rule,
properties of Peroxide had been attached. What were attached were properties of the judgment in the main action neither changes the nature nor determines the validity
25
Eastman and Rose Mapua." Private respondent further invites attention to the petition 28
of the attachment. At any rate, whether said petitioners are guarantors or sureties,
for certiorari in G.R. No. 74558, against the decision in AC-G.R. SP No. 05043,
wherein, assailing the aforequoted statement therein, petitioners aver:
21
there exists a valid cause of action against them and their properties were properly as Sheriff IV, Regional Trial Court,
attached on the basis of that indubitable circumstance.1âwphi1 Branch 9, Manila,
Respondents.
5. Petitioners bewail the fact that respondent court allegedly handled August 31, 2005
the certiorari case, CA-G.R. SP No. 15672 now on appeal before us, as if it were a x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
petition for review on certiorari by passing upon what they submit should be considered
as errors of judgment and not errors of jurisdiction. From the foregoing disquisition, DECISION
however, it is readily apparent that the petition in said case faults the orders of the trial
court as tainted with grave abuse of discretion equivalent to a jurisdictional flaw. The CHICO-NAZARIO, J.:
errors assigned necessarily involved a discussion of erroneous conclusions and/or lack [1]
of factual bases much beyond the pale of mere errors of judgment or misperception of Before Us is a petition for review on certiorari, assailing the Decision and
[2]
evidence, and dwelt on the improvident issuance of orders clearly arbitrary and Resolution of the Court of Appeals in CA-G.R. SP No. 58147, dated 16 June
oppressive for being in defiance of the rules and devoid of justifying factual moorings. 2000 and 22 August 2000, respectively. The said Decision and Resolution declared that
We cannot, therefore, share the sentiments and stance of petitioners on this score. there was no grave abuse of discretion on the part of respondent Judge in issuing the
assailed order dated 31 March 2000, which was the subject in CA-G.R. SP No. 58147.
Neither do we subscribe to petitioners' charge that respondent court injudiciously gave THE FACTS
due course to the aforesaid petition for certiorari without requiring the prior filing and
resolution of a motion for the reconsideration of the questioned orders of the trial court. The factual milieu of the instant case can be traced from this Courts decision in G.R. No.
There are, admittedly, settled exceptions to that requisite and which obtain in the 106214 promulgated on 05 September 1997.
present case. A motion for reconsideration was correctly dispensed with by respondent
court since the questions raised in the certiorari proceeding had been duly raised and On 26 August 1988, Reynaldo Anzures instituted a complaint against Teresita Villaluz
29
passed upon by the lower court. Also, under the circumstances therein, a motion for (Villaluz) for violation of Batas Pambansa Blg. 22. The criminal information was brought
reconsideration would serve no practical purpose since the trial judge had already had before the Regional Trial Court, City of Manila, and raffled off to Branch 9, then presided
the opportunity to consider and pass upon the questions elevated on certiorari to over by Judge Edilberto G. Sandoval, docketed as Criminal Case No. 89-69257.
30
respondent court.
[3]
An Ex-Parte Motion for Preliminary Attachment dated 06 March 1989 was filed by
FOR ALL THE FOREGOING CONSIDERATIONS, the petition at bar is DENIED and Reynaldo Anzures praying that pending the hearing on the merits of the case, a Writ of
the judgment of respondent Court of Appeals is hereby AFFIRMED. Preliminary Attachment be issued ordering the sheriff to attach the properties of Villaluz
in accordance with the Rules.
SO ORDERED. [4]
On 03 July 1989, the trial court issued an Order for the issuance of a writ of preliminary
attachment upon complainants posting of a bond which is hereby fixed at P2,123,400.00
SECURITY PACIFIC G.R. No. 144740 and the Courts approval of the same under the condition prescribed by Sec. 4 of Rule
ASSURANCE CORPORATION, 57 of the Rules of Court.
Petitioner,
Present: [5]
An attachment bond was thereafter posted by Reynaldo Anzures and approved by the
- versus - court. Thereafter, the sheriff attached certain properties of Villaluz, which were duly
annotated on the corresponding certificates of title.
THE HON. AMELIA TRIA- PUNO,
INFANTE, In her official capacity Chairman, [6]
On 25 May 1990, the trial court rendered a Decision on the case acquitting Villaluz of
as Presiding Judge, Regional Trial AUSTRIA-MARTINEZ, the crime charged, but held her civilly liable. The dispositive portion of the said decision
Court, Branch 9, Manila; THE CALLEJO, SR., is reproduced hereunder:
PEOPLE OF THE PHILIPPINES, TINGA, and
represented by Spouses CHICO-NAZARIO, JJ. WHEREFORE, premises considered, judgment is hereby
REYNALDO and ZENAIDA rendered ACQUITTING the accused TERESITA E. VILLALUZ
ANZURES; and REYNALDO R. with cost de oficio. As to the civil aspect of the case however, accused
BUAZON, In his official capacity Promulgated: is ordered to pay complainant Reynaldo Anzures the sum of TWO
22
MILLION ONE HUNDRED TWENTY THREE THOUSAND FOUR nullification of the trial courts order dated 31 March 2000 granting the motion to proceed
HUNDRED (P2,123,400.00) PESOS with legal rate of interest from with garnishment. Villaluz was also named as petitioner. The petitioners contended that
December 18, 1987 until fully paid, the sum of P50,000.00 as the respondent Judge, in issuing the order dated 31 March 2000, and the sheriff
[7]
attorneys fees and the cost of suit. committed grave abuse of discretion and grave errors of law in proceeding against the
petitioner corporation on its counter-attachment bond, despite the fact that said bond
was not approved by the Supreme Court, and that the condition by which said bond was
[20]
issued did not happen.
Villaluz interposed an appeal with the Court of Appeals, and on 30 April 1992, the latter
[8] [21]
rendered its Decision, the dispositive portion of which partly reads: On 16 June 2000, the Court of Appeals rendered a Decision, the dispositive portion of
which reads:
WHEREFORE, in CA-G.R. CV No. 28780, the Decision of
the Regional Trial Court of Manila, Branch 9, dated May 25, 1990, as WHEREFORE, premises considered, the Court finds no
to the civil aspect of Criminal Case No. 89-69257, is hereby grave abuse of discretion on the part of respondent judge in issuing
AFFIRMED, in all respects. the assailed order. Hence, the petition is dismissed.

[22]
The case was elevated to the Supreme Court (G.R. No. 106214), and during its A Motion for Reconsideration was filed by petitioner, but was denied for lack of merit
[23]
pendency, Villaluz posted a counter-bond in the amount of P2,500,000.00 issued by by the Court of Appeals in its Resolution dated 22 August 2000.
[9] [10]
petitioner Security Pacific Assurance Corporation. Villaluz, on the same date of the
[11]
counter-bond, filed an Urgent Motion to Discharge Attachment. Undeterred, petitioner filed the instant petition under Rule 45 of the 1997 Rules of Civil
Procedure, with Urgent Application for a Writ of Preliminary Injunction and/or Temporary
[24]
On 05 September 1997, we promulgated our decision in G.R. No. 106214, Restraining Order.
affirming in toto the decision of the Court of Appeals.
[25]
On 13 December 2000, this Court issued a Resolution requiring the private
In view of the finality of this Courts decision in G.R. No. 106214, the private complainant respondents to file their Comment to the Petition, which they did. Petitioner was required
[12] [26]
moved for execution of judgment before the trial court. to file its Reply thereafter.

On 07 May 1999, the trial court, now presided over by respondent Judge, issued Meanwhile, on 17 January 2001, petitioner and the spouses Reynaldo and Zenaida
[13] [27]
a Writ of Execution. Anzures executed a Memorandum of Understanding (MOU). In it, it was stipulated that
as of said date, the total amount garnished from petitioner had amounted
Sheriff Reynaldo R. Buazon tried to serve the writ of execution upon Villaluz, but the to P1,541,063.85, and so the remaining amount still sought to be executed
[28]
latter no longer resided in her given address. This being the case, the sheriff sent a was P958,936.15. Petitioner tendered and paid the amount of P300,000.00 upon
Notice of Garnishment upon petitioner at its office in Makati City, by virtue of the counter- signing of the MOU, and the balance of P658,936.15 was to be paid in installment
bond posted by Villaluz with said insurance corporation in the amount of P2,500,000.00. atP100,000.00 at the end of each month from February 2001 up to July 2001. At the end
As reported by the sheriff, petitioner refused to assume its obligation on the counter- of August 2001, the amount of P58,936.00 would have to be paid. This would make the
[14] [29]
bond it posted for the discharge of the attachment made by Villaluz. aggregate amount paid to the private respondents P2,500,000.00. There was,
however, a proviso in the MOU which states that this contract shall not be construed as
Reynaldo Anzures, through the private prosecutor, filed a Motion to Proceed with a waiver or abandonment of the appellate review pending before the Supreme Court and
[15] [16]
Garnishment, which was opposed by petitioner contending that it should not be held that it will be subject to all such interim orders and final outcome of said case.
liable on the counter-attachment bond.
On 13 August 2001, the instant petition was given due course, and the parties were
[17] [30]
The trial court, in its Order dated 31 March 2000, granted the Motion to Proceed with obliged to submit their respective Memoranda.
[18]
Garnishment. The sheriff issued a Follow-Up of Garnishment addressed to the
President/General Manager of petitioner dated 03 April 2000. ISSUES

On 07 April 2000, petitioner filed a Petition for Certiorari with Preliminary Injunction The petitioner raises the following issues for the resolution of this Court:
[19]
and/or Temporary Restraining Order with the Court of Appeals, seeking the
23
Main Issue - WHETHER OR NOT THE COURT OF APPEALS Based on the circumstances present in this case, we find no compelling reason
COMMITTED REVERSIBLE ERROR IN AFFIRMING THE 31 to reverse the ruling of the Court of Appeals.
MARCH 2000 ORDER OF PUBLIC RESPONDENT JUDGE WHICH
ALLOWED EXECUTION ON THE COUNTER-BOND ISSUED BY Over the years, in a number of cases, we have made certain pronouncements about
THE PETITIONER. counter-bonds.
[35]
Corollary Issues (1) WHETHER OR NOT THE COURT OF In Tijam v. Sibonghanoy, as reiterated in Vanguard Assurance Corp. v. Court of
[36]
APPEALS CORRECTLY RULED THAT THE ATTACHMENT ON THE Appeals, we held:
PROPERTY OF VILLALUZ WAS DISCHARGED WITHOUT NEED
OF COURT APPROVAL OF THE COUNTER-BOND POSTED; and . . . [A]fter the judgment for the plaintiff has become executory and the
(2) WHETHER OR NOT THE COURT OF APPEALS CORRECTLY execution is returned unsatisfied, as in this case, the liability of the
RULED THAT THE ATTACHMENT ON THE PROPERTY OF bond automatically attaches and, in failure of the surety to satisfy the
VILLALUZ WAS DISCHARGED BY THE MERE ACT OF POSTING judgment against the defendant despite demand therefore, writ of
THE COUNTER-BOND. execution may issue against the surety to enforce the obligation of the
bond.

THE COURTS RULING


[37]
In Luzon Steel Coporation v. Sia, et al.:
Petitioner seeks to escape liability by contending, in the main, that the writ of attachment
which was earlier issued against the real properties of Villaluz was not discharged. Since . . . [C]ounterbonds posted to obtain the lifting of a writ of attachment
the writ was not discharged, then its liability did not accrue. The alleged failure of this is due to these bonds being security for the payment of any judgment
Court in G.R. No. 106214 to approve the counter-bond and to cause the discharge of the that the attaching party may obtain; they are thus mere replacements
attachment against Villaluz prevented the happening of a condition upon which the of the property formerly attached, and just as the latter may be levied
counter-bonds issuance was premised, such that petitioner should not be held liable upon after final judgment in the case in order to realize the amount
[31]
thereon. adjudged, so is the liability of the countersureties ascertainable after
the judgment has become final. . . .
Petitioner further asserts that the agreement between it and Villaluz is not a suretyship
agreement in the sense that petitioner has become an additional debtor in relation to
[32]
private respondents. It is merely waiving its right of excussion that would ordinarily
[38]
apply to counter-bond guarantors as originally contemplated in Section 12, Rule 57 of In Imperial Insurance, Inc. v. De Los Angeles, we ruled:
the 1997 Rules.
. . . Section 17, Rule 57 of the Rules of Court cannot be construed that
[33]
In their Comment, the private respondents assert that the filing of the counter-bond by an execution against the debtor be first returned unsatisfied even if the
Villaluz had already ipso facto discharged the attachment on the properties and made bond were a solidary one, for a procedural may not amend the
the petitioner liable on the bond. Upon acceptance of the premium, there was already an substantive law expressed in the Civil Code, and further would nullify
express contract for surety between Villaluz and petitioner in the amount the express stipulation of the parties that the suretys obligation should
of P2,500,000.00 to answer for any adverse judgment/decision against Villaluz. be solidary with that of the defendant.
[34]
Petitioner filed a Reply dated 09 May 2001 to private respondents Comment,
admitting the binding effect of the bond as between the parties thereto. What it did not
[39]
subscribe to was the theory that the attachment was ipso facto or automatically In Philippine British Assurance Co., Inc. v. Intermediate Appellate Court, we further
discharged by the mere filing of the bond in court. Such theory, according to petitioner, held that the counterbond is intended to secure the payment of any judgmentthat the
has no foundation. Without an order of discharge of attachment and approval of the bond, attaching creditor may recover in the action.
petitioner submits that its stipulated liability on said bond, premised on their occurrence, Petitioner does not deny that the contract between it and Villaluz is one of surety.
could not possibly arise, for to hold otherwise would be to trample upon the statutorily However, it points out that the kind of surety agreement between them is one that merely
guaranteed right of the parties to contractual autonomy. waives its right of excussion. This cannot be so. The counter-bond itself states that the
parties jointly and severally bind themselves to secure the payment of any judgment that
24
the plaintiff may recover against the defendant in the action. A surety is considered in bond for any reason be found to be or become insufficient, and the
law as being the same party as the debtor in relation to whatever is adjudged touching party furnishing the same fail to file an additional counter-bond, the
[40]
the obligation of the latter, and their liabilities are interwoven as to be inseparable. attaching party may apply for a new order of attachment.

Suretyship is a contractual relation resulting from an agreement whereby one person,


the surety, engages to be answerable for the debt, default or miscarriage of another,
known as the principal. The suretys obligation is not an original and direct one for the It should be noted that in G.R. No. 106214, per our Resolution dated 15 January
[44]
performance of his own act, but merely accessory or collateral to the obligation 1997, we permitted Villaluz to file a counter-attachment bond. On 17 February
[45]
contracted by the principal. Nevertheless, although the contract of a surety is in essence 1997, we required the private respondents to comment on the sufficiency of the
secondary only to a valid principal obligation, his liability to the creditor or promise of the counter-bond posted by Villaluz.
principal is said to be direct, primary and absolute; in other words, he is directly and
equally bound with the principal. The surety therefore becomes liable for the debt or duty It is quite palpable that the necessary steps in the discharge of an attachment upon giving
of another although he possesses no direct or personal interest over the obligations nor counter-bond have been taken. To require a specific order for the discharge of the
[41]
does he receive any benefit therefrom. attachment when this Court, in our decision in G.R. No. 106214, had already declared
that the petitioner is solidarily bound with Villaluz would be mere surplusage. Thus:
In view of the nature and purpose of a surety agreement, petitioner, thus, is barred from
disclaiming liability. During the pendency of this petition, a counter-attachment
bond was filed by petitioner Villaluz before this Court to discharge the
Petitioners argument that the mere filing of a counter-bond in this case cannot attachment earlier issued by the trial court. Said bond amounting to
automatically discharge the attachment without first an order of discharge and approval P2.5 million was furnished by Security Pacific Assurance, Corp. which
of the bond, is lame. agreed to bind itself jointly and severally with petitioner for any
judgment that may be recovered by private respondent against the
[46]
Under the Rules, there are two (2) ways to secure the discharge of an former.
attachment. First, the party whose property has been attached or a person appearing on
his behalf may post a security. Second, said party may show that the order of attachment
[42]
was improperly or irregularly issued. The first applies in the instant case. Section 12,
[43]
Rule 57, provides: We are not unmindful of our ruling in the case of Belisle Investment and Finance Co.,
[47]
Inc. v. State Investment House, Inc., where we held:
SEC. 12. Discharge of attachment upon giving counter-bond. After a
writ of attachment has been enforced, the party whose property has . . . [T]he Court of Appeals correctly ruled that the mere posting of a
been attached, or the person appearing on his behalf, may move for counterbond does not automatically discharge the writ of attachment.
the discharge of the attachment wholly or in part on the security given. It is only after hearing and after the judge has ordered the discharge
The court shall, after due notice and hearing, order the discharge of of the attachment if a cash deposit is made or a counterbond is
the attachment if the movant makes a cash deposit, or files a counter- executed to the attaching creditor is filed, that the writ of attachment is
bond executed to the attaching party with the clerk of the court where properly discharged under Section 12, Rule 57 of the Rules of Court.
the application is made, in an amount equal to that fixed by the court
in the order of attachment, exclusive of costs. But if the attachment is
sought to be discharged with respect to a particular property, the
counter-bond shall be equal to the value of that property as determined The ruling in Belisle, at first glance, would suggest an error in the assailed ruling
by the court. In either case, the cash deposit or the counter-bond shall of the Court of Appeals because there was no specific resolution discharging the
secure the payment of any judgment that the attaching party may attachment and approving the counter-bond. As above-explained, however,
recover in the action. A notice of the deposit shall forthwith be served consideration of our decision in G.R. No. 106214 in its entirety will readily show that this
on the attaching party. Upon the discharge of an attachment in Court has virtually discharged the attachment after all the parties therein have been
accordance with the provisions of this section, the property attached, heard on the matter.
or the proceeds of any sale thereof, shall be delivered to the party
making the deposit or giving the counter-bond, or to the person On this score, we hew to the pertinent ratiocination of the Court of Appeals as
appearing on his behalf, the deposit or counter-bond aforesaid regards the heretofore cited provision of Section 12, Rule 57 of the 1997 Rules of Civil
standing in place of the property so released. Should such counter- Procedure, on the discharge of attachment upon giving counter-bond:
25
LEONARDO-DE CASTRO, J.:
. . . The filing of the counter-attachment bond by petitioner Villaluz has
discharged the attachment on the properties and made the petitioner 1 2 3
This is a Petition for Review on Certiorari of the Decision and Resolution dated March
corporation liable on the counter-attachment bond. This can be 21, 2003 and August 4, 2003, respectively, of the Court of Appeals in CA-G.R. SP No.
gleaned from the DEFENDANTS BOND FOR THE DISSOLUTION OF 67547, which granted the Petition for Certiorari filed by respondent Philippine National
ATTACHMENT, which states that Security Pacific Assurance Bank (PNB) and reversed and set aside the Orders dated May 17, 2001 and
Corporation, as surety, in consideration of the dissolution of the said September 3, 2001 of the Regional Trial Court (RTC) of Lapu-Lapu City, Branch 27, in
attachment jointly and severally, binds itself with petitioner Villaluz 4
Civil Case No. 5513-L. The Order dated May 17, 2001 of the trial court granted the
for any judgment that may be recovered by private respondent application for issuance of writ of preliminary injunction of petitioners Palm Tree
Anzures against petitioner Villaluz. Estates, Inc. (PTEI) and Belle Air Golf and Country Club, Inc. (BAGCCI), while the
5
Order dated September 3, 2001 denied PNB’s motion for reconsideration.
The contract of surety is only between petitioner Villaluz and petitioner
corporation. The petitioner corporation cannot escape liability by 6
stating that a court approval is needed before it can be made liable. On January 29, 1997, PTEI entered into a seven-year term loan agreement with PNB
This defense can only be availed by petitioner corporation against for the amount of P320 million, or its US dollar equivalent, in view of urgent need for
7
petitioner Villaluz but not against third persons who are not parties to additional funding for the completion of its ongoing projects in Lapu-Lapu City. As
8
the contract of surety. The petitioners hold themselves out as jointly security for the payment of the loan, a Real Estate Mortgage over 48 parcels of land
and severally liable without any conditions in the counter-attachment covering an aggregate area of 353,916 sq.m. together with the buildings and
bond. The petitioner corporation cannot impose requisites before improvements thereon, was executed by PTEI in favor of PNB on February 21, 1997.
it can be made liable when the law clearly does not require such
[48] 9
requisites to be fulfilled. (Emphases supplied.) On June 15, 1998, upon the request of PTEI, an Amendment to Loan Agreement was
signed by PNB and PTEI -

To (i) extend the grace period for the principal repayment of the Loan, (ii) amend the
Verily, a judgment must be read in its entirety, and it must be construed as a interest payment date of the Loan, and (iii) grant in favor of the Borrower an additional
whole so as to bring all of its parts into harmony as far as this can be done by fair and Loan (the "Additional Loan") in the amount not exceeding P80,000,000.00, x x x.
10
reasonable interpretation and so as to give effect to every word and part, if possible, and
to effectuate the intention and purpose of the Court, consistent with the provisions of the
organic law.
[49] On the same day, June 15, 1998, as a result of PTEI’s transfer to BAGCCI of the
ownership, title and interest over 199,134 sq.m. of the real properties mortgaged to
11
Insurance companies are prone to invent excuses to avoid their just PNB, PTEI executed an Amendment to Real Estate Mortgage in favor of PNB with
[50]
obligation. It seems that this statement very well fits the instant case. BAGCCI as accommodation mortgagor with respect to the real properties transferred to
it by PTEI. The relevant portion of the agreement provides:
WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of
Appeals dated 16 June 2000 and 22 August 2000, respectively, are both AFFIRMED. SECTION 1. AMENDMENTS
Costs against petitioner.
1.01 The Mortgaged Properties including that portion transferred to BAGCCI shall
SO ORDERED.
continue to secure PTEI’s obligations to the Mortgagee of whatever kind and nature,
and whether such obligations have been contracted, before, during or after the date of
this instrument.
G.R. No. 159370 October 3, 2012
1.02 The existing mortgage lien in favor of the Mortgagee annotated on the titles
PALM TREE ESTATES, INC. and BELLE AIR GOLF AND COUNTRY CLUB, covering the portion of the Mortgaged Properties which is transferred in favor of
12
INC., Petitioners, BAGCCI shall be carried over to the new titles to be issued as a result of the transfer.
vs.
PHILIPPINE NATIONAL BANK, Respondent.
On August 10, 1999, PTEI and PNB executed four documents. First, on account of
PTEI’s failure to avail of the P80 million additional loan granted under the amendment
26
to Loan Agreement and upon its request, PTEI and PNB entered into a Loan On April 23, 2001, to enjoin PNB from foreclosing on the mortgage, PTEI and BAGCCI
13 25
Agreement revalidating the said additional loan. Under this agreement, full payment filed a Complaint in the RTC of Lapu-Lapu City for breach of contracts, nullity of
of the additional loan shall be secured by a pledge on 204,000 shares of PTEI stock in promissory notes, annulment of mortgages, fixing of principal, accounting, nullity of
14
the names of the accommodation pledgors, Matthew O. Tan and Rodolfo M. Bausa. interests and penalties, annulment of petition for extrajudicial foreclosure, injunction,
damages, with prayer for temporary restraining order, and writ of preliminary
26
15
Second, a Contract of Pledge was executed by Matthew O. Tan and Rodolfo M. injunction. This was docketed as Civil Case No. 5513-L and raffled to Branch 27.
Bausa as accommodation pledgors in favor of PNB to secure the loan agreement
covering the P80 million additional loan. Under this contract, Tan and Bausa pledged In their complaint, PTEI and BAGCCI claimed that, out of the P320 million term loan
their 204,000 shares of PTEI stock in favor of PNB as security for the full payment of committed by PNB under the loan agreement, PNB released only a total amount of
27
the P80 million additional loan. P248,045,679.36, or a deficiency of P71,954,320.64 which PNB failed to release
28
despite demands. PTEI and BAGCCI also averred that PNB took advantage of their
16
Third, upon the request of PTEI, a Restructuring Agreement was executed by PTEI financial difficulty by unilaterally (1) converting the US dollar denominated loan to a
and PNB. Under this agreement, the full payment of the restructured loan shall be peso loan at an unreasonable conversion rate of P38.50:US$1, when the prevailing
secured not only by the 48 parcels of land previously mortgaged to PNB but also by an conversion rate at the time of the release of the loan was only P26.25:US$1, and (2)
29
additional mortgage on three parcels of land registered in the name of the re-pricing the interests to exorbitant and unconscionable rates.
17
accommodation mortgagor, Aprodicio D. Intong.
PTEI and BAGCCI further alleged that, under threat of foreclosure, they were forced to
18
Fourth, a Supplement to Real Estate Mortgage was executed by Aprodicio D. Intong execute an amendment to the loan agreement acknowledging the principal obligation
as accommodation mortgagor in favor of the PNB. Under this instrument, in addition to as of April 20, 1998 to be P345,035,719.07 even if they received only
the 48 parcels of land previously mortgaged to PNB, three parcels of land and their P248,045,679.36.30 Moreover, PTEI and BAGCCI signed the amendment to the loan
improvements have been included in the existing mortgage as additional security for agreement because of PNB’s offer to extend an additional P80 million loan which the
the loans or credit facilities granted by PNB to PTEI. latter failed to release despite the fact that all conditions for its release had been
31
complied with in April 1999. PTEI and BAGCCI further claimed that the amendment to
19 the loan agreement, amendment to the real estate mortgage, certain promissory notes
In a letter dated September 20, 2000, PNB demanded payment of PTEI’s outstanding and their respective disclosure statements and the restructuring agreement should be
obligations which amounted to P599,251,583.18 as of August 31, 2010. Thereafter, in declared void as they were executed pursuant to a void amendment to the loan
20
a letter dated February 19, 2001, PNB denied PTEI’s request for another restructuring agreement, and with vitiated consent and without full consideration.
32
of its past due indebtedness which amounted to P621,977,483.61 as of December 6,
2000. In the said letter, the stated reason for the denial of PTEI’s request was its failure
to perform its contractual obligations: Finally, PTEI and BAGCCI stated that the extrajudicial foreclosure initiated by
respondent on their properties was patently null and void since it included promissory
notes which were supposed to have already been paid, as well as properties which
It would be difficult for us to justify to our Board of Directors your request because of have already been transferred to BAGCCI and were being made to answer under the
your failure to fulfill the basic terms and conditions agreed upon in our previous 33
restructuring agreement of which BAGCCI was not a party. Furthermore, PTEI
meetings. If you will recall, we mentioned that in order for us to evaluate PTEI’s averred that the amendment to the real estate mortgage had been novated by a
restructuring request, you should settle in full the company’s unpaid insurance premium subsequent loan agreement covering the new P80 million loan which was secured by a
of P350,374.13, and your past due credit card advances of P1,848,292.78, and update pledge on 204,000 shares of stock of PTEI. PTEI also alleged that the machinery and
the company’s realty tax arrearages on the mortgaged properties. However, to this equipments being chattels should not be included in the foreclosure of the real estate
21
date, you have not remitted any payments nor submitted any payment plans therefor. mortgage.
34

As PTEI defaulted in its payment of past due loan with PNB, the bank filed a On the other hand, PNB refuted PTEI and BAGCCI’s allegations and claimed that it
22
Petition for extrajudicial foreclosure of the mortgaged properties on March 27, had already issued to PTEI the total amount of P356,722,152.46 which exceeded the
23
2001. The following day, March 28, 2001, PTEI’s President, Kenichi Akimoto, wrote a 35
P320 million covered by the loan agreement by P36 million. Whatever delay in the
24
letter to PNB’s President, Feliciano L. Miranda, Jr., requesting for "another 30 days to release of the loan proceeds, if any, was attributable only to PTEI.
36
settle" PTEI’s "accrued obligations."
According to PNB, the conversion of dollar loans to peso loans was not unilateral but
made upon the request of PTEI and that the use of dollar to peso rate of US$1:P39.975
27
was only proper as it was the prevailing exchange rate at the time of the Noted by this Court is the issue of, among others, the propriety of the foreclosure
37
conversion. There was also no unilateral increase of the interest rate as PTEI never proceedings in line with plaintiffs’ contention "x x x that properties of the plaintiffs are
raised any objection to such an increase although it was duly notified of the loan being made to answer by the defendants for obligations which are not secured by
38
repricing through various letter-advices. these properties, or that properties of plaintiffs which are already free from the
mortgage are included in the Petition (Annex "W" of the Complaint) for extra-judicial
PNB likewise denied that the loan agreement and the amendment to it, the amendment foreclosure. Continuing, the plaintiffs elaborated that "While plaintiffs are not disputing
to real estate mortgage, certain promissory notes and their disclosure statements, as the right of a creditor-mortgagee to proceed against the properties of a debtor-
39
well as the restructuring agreement, were all executed without PTEI’s consent. Under mortgagor to pay for any unpaid secured obligations, it must be clearly understood,
the law, Kenichi Akimoto, PTEI’s president, and other executive officers could be however, that any foreclosure proceedings that may be effected relative thereto must
presumed to be responsible and intelligent enough to carefully read, understand and only affect the properties subject of the mortgage contract and should only be made to
evaluate each loan document for Akimoto’s signature.
40 answer for the correct and undisputed obligations which are secured by the properties
sought to be foreclosed. Any foreclosure proceedings which will include properties
which are not subject of the mortgage contract or which will make the said properties
PNB further claimed that PTEI was granted an additional P80 million loan which was answer for obligations which are not secured by the said properties will be tantamount
secured by a pledge of PTEI’s shares of stock. There was no novation because neither to taking of properties without due process of law in violation of the Constitution x x x."
was the object and principal conditions changed, nor PTEI substituted as debtor, nor
41
any third person subrogated in PNB’s rights.
In other words, there are serious controversies whose resolution must not be rendered
moot and academic by the performance of the assailed acts. In this regard, the Court is
After hearing the PTEI and BAGCCI’s application for issuance of writ of preliminary adopting the ruling of the Supreme Court in the case of Rava Development Corporation
injunction, the RTC of Lapu-Lapu City required the parties to submit their respective vs. Court of Appeals, 211 SCRA 144, that says:
memoranda.
" x x x it is a well settled rule that the sole object of a preliminary injunction whether
Subsequently, the RTC of Lapu-Lapu City issued the Order dated May 17, 2001 prohibitory or mandatory is to preserve the status quo until the merits of the case can
ordering the issuance of a writ of preliminary injunction: be heard (Avila vs. Tapucan, 200 SCRA 148 1991). It is usually granted when it is
made to appear that there is a substantial controversy between the parties and one of
ORDER 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
For resolution is plaintiffs’ application for issuance of writ of preliminary injunction to hearing can be had on the merits of the case."
prevent the acts complained of.
The Court is convinced that, at the very least, plaintiffs have the right to be fully heard
It is to be noted that the resolution of the application is only preliminary in character and before it is finally deprived of its rights over the mortgaged properties in question in the
may change depending upon the nature, character and weight of evidence that will be same manner that defendant bank has the right to be fully heard on its claims. Plaintiffs
presented during trial on the merits. have the right to be heard on their claim that the principal amount and the total
obligation alleged by the defendant is not correct, that the escalation of the interest is
not legal or that their property can only be foreclosed after final determination of the
After carefully going through with the parties’ arguments contained in their respective exact and correct amount of the total obligation. On the other hand, the defendant bank
memoranda together with their respective documentary evidences appended thereto, it is fully protected because its claims on the mortgaged properties are properly recorded,
is very clear that the positions of the parties are completely opposed to each other if not registered. Besides, plaintiffs admitted their said indebtedness to the defendant
which indicates (sic) that real controversies exist. The Court believes that all these bank and signified to meet their said obligations only after the determination of the
legal controversies can only be resolved in a trial on the merits where the parties are exact amount of the same.
given complete opportunity to present their case and adduce evidence.
On the matter of the questioned and disputed principal obligation, interests
The Court further believes that while all the legal controversies are being heard and and/penalties, the Court is of the opinion that it would be in the interest of justice and
tried, the status quo ante litem must be maintained which means that the acts being equity that the matter be also threshed out during the trial on the merits of this case
complained of must be enjoined pendente lite. before any foreclosure proceeding can proceed consonant to the following ruling of the
Supreme Court in Almeda vs. Court of Appeals, 256 SCRA 292, 307, to wit:
28
"In the first place, because of the dispute regarding the interest rate increases, an issue agreements, and promissory notes. PTEI and BAGCCI question the reversal and
which was never settled on the merit in the courts below, the exact amount of setting aside by the Court of Appeals of the orders of the trial court although there was
petitioner’s obligation could not be determined. Thus, the foreclosure provisions of P.D. no finding that the trial court acted without or in excess of its jurisdiction in issuing the
385 could be validly invoked by respondent bank only after the settlement of the said orders. PTEI and BAGCCI further assert that the Court of Appeals was wrong in
question invoking the interest rate of the loan, and only after the spouses refused to ruling that no clear and unmistakable right in favor of PTEI and BAGCCI was shown to
44
meet their obligations following such determination." exist.

In essence, therefore, the Court is swayed to order the maintenance of the status quo On the other hand, PNB insists that PTEI and BAGCCI failed to establish an
and direct the issuance of the writ of preliminary injunction by the fact that if plaintiffs indubitable right which was violated by PNB and which ought to be protected by an
are immediately deprived of their said properties altogether disregarding the demands injunctive writ. They also failed to show that the absence of an injunctive writ would
45
of due process, plaintiffs will surely be damaged and injured gravely and even cause them irreparable injury.
irreparably. The Court does not want that to happen until it has fully disposed of the
case. For PNB, the Court of Appeals therefore correctly ruled that there was no basis for the
trial court’s issuance of a writ of preliminary injunction.
WHEREFORE, premises considered, let a writ of preliminary injunction issue enjoining
the defendants, or any person or agents acting for and in their behalf, from foreclosing The petition has no merit.
the subject properties of the plaintiffs, and/or from further proceeding with foreclosure
under the Petition (Annex "W" of the Complaint), upon filing by the plaintiffs, and
approval by this Court, of an injunction bond in the amount of ONE MILLION AND FIVE The second paragraph of Section 1, Rule 65 of the Rules of Court provides:
42
HUNDRED THOUSAND (P1,500,000.00) PESOS.
The petition shall be accompanied by a certified true copy of the judgment, order or
Reconsideration of the above order was denied in an Order dated September 3, 2001. resolution subject thereof, copies of all pleadings and documents relevant and pertinent
Thereafter, PNB filed a Petition for Certiorari with the Court of Appeals alleging that the thereto, and a sworn certification of non-forum shopping as provided in the third
RTC of Lapu-Lapu City acted with grave abuse of discretion in issuing the Orders paragraph of section 3, Rule 46.
dated May 17, 2001 and September 3, 2001.
In this case, PNB attached the following documents to the Petition for Certiorari which it
The Court of Appeals, in the assailed Decision dated March 21, 2003, found merit in filed in the Court of Appeals:
PNB’s petition. According to the Court of Appeals, PTEI and BAGCCI failed to show a
clear and unmistakable right which would have necessitated the issuance of a writ of (a) Order dated May 17, 2001 granting PTEI and BAGCCI’s application for the
preliminary injunction, while PNB had the right to extrajudicial foreclosure under the issuance of preliminary injunction;
43
loan agreement when its debtors defaulted in their obligation. Thus, the Court of
Appeals granted PNB’s petition. (b) Order dated September 3, 2001 denying PNB’s motion for reconsideration;

Reconsideration was denied in a Resolution dated August 4, 2003. (c) PNB’s memorandum in support of its opposition to the issuance of
preliminary injunction;
Hence, this petition.
(d) PNB’s motion for reconsideration of the order dated May 17, 2001;
This Court is asked to resolve the issue of whether the writ of injunction was issued by
the trial court with grave abuse of discretion, in which case the appellate court correctly (e) PNB’s motion for early resolution dated July 4, 2011;
set it aside.

(f) PNB’s supplemental motion for early resolution dated July 26, 2001;
PTEI and BAGCCI claim that the Court of Appeals should not have given due course to
PNB’s Petition for Certiorari as such petition violated Section 1, Rule 65 of the Rules of
Court when it deliberately omitted all the supporting material documents attached to the (g) PNB’s answer with counterclaim dated June 5, 2001, together with its
complaint such as the petition for foreclosure, the real estate mortgage, the loan annexes "A" to "L"; and
29
(h) PTEI and BAGCCI’s complaint dated April 16, 2001, without the annexes. Nevertheless, an examination of PNB’s petition and the documents attached to it would
show that the Court of Appeals’ determination as to the formal sufficiency of the petition
PTEI and BAGCCI fault PNB for not including the annexes to their complaint which is correct. The documents attached to the petition were adequate to support the
consisted of PNB’s petition for foreclosure, the real estate mortgage, the loan arguments of PNB and to give the Court of Appeals a satisfactory, or at least
agreements, and promissory notes. They argue that such failure on PNB’s part substantial, picture of the case.
constituted a violation of the second paragraph of Section 1, Rule 65 of the Rules of
Court. The Court is not persuaded. A complainant’s wrongful conduct respecting the matter for which injunctive relief is
49
sought precludes the complainant from obtaining such relief. A petition for a
The determination of the completeness or sufficiency of the form of the petition, preliminary injunction is an equitable remedy, and one who comes to claim for equity
50
including the relevant and pertinent documents which have to be attached to it, is must do so with clean hands
largely left to the discretion of the court taking cognizance of the petition, in this case
the Court of Appeals. If the petition is insufficient in form and substance, the same may Since injunction is the strong arm of equity, he who must apply for it must come with
46
be forthwith dismissed without further proceedings. That is the import of Section 6, equity or with clean hands. This is so because among the maxims of equity are (1) he
Rule 65 of the Rules of Court: who seeks equity must do equity, and (2) he who comes into equity must come with
51
clean hands. x x x. (Citation omitted.)
Sec. 6. Order to comment. – If the petition is sufficient in form and substance to justify
such process, the court shall issue an order requiring the respondent or respondents to In this case, the hands of PTEI were not unsullied when it sought preliminary injunction.
comment on the petition within ten (10) days from receipt of a copy thereof. Such order It was already in breach of its contractual obligations when it defaulted in the payment
shall be served on the respondents in such manner as the court may direct, together of its indebtedness to PNB.1âwphi1 PTEI’s President, Akimoto, admitted that PTEI has
with a copy of the petition and any annexes thereto. unsettled accrued obligations in the letter dated March 28, 2001. Moreover, PTEI had
sought the rescheduling or deferral of its payment as well as the restructuring of its
In petitions for certiorari before the Supreme Court and the Court of Appeals, the loan. This Court has held that a debtor’s various and constant requests for deferment
provisions of section 2, Rule 56, shall be observed. Before giving due course thereto, of payment and restructuring of loan, without actually paying the amount due, are clear
52
the court may require the respondents to file their comment to, and not a motion to indications that said debtor was unable to settle his obligation.
dismiss, the petition. Thereafter, the court may require the filing of a reply and such
other responsive or other pleadings as it may deem necessary and proper. As PTEI is not entitled to the issuance of a writ of preliminary injunction, so is BAGCCI.
The accessory follows the principal. The accessory obligation of BAGCCI as
The Court of Appeals already determined that PNB’s petition complied with the second accommodation mortgagor is tied to PTEI’s principal obligation to PNB and arises only
paragraph of Section 1, Rule 65 of the Rules of Court and, consequently, that the said in the event of PTEI’s default. Thus, BAGCCI’s interest in the issuance of the writ of
petition is sufficient in form and substance when it ordered PTEI and BAGCCI to preliminary injunction is necessarily prejudiced by PTEI’s wrongful conduct and breach
comment on PNB’s petition. This Court sees no compelling reason to set aside the of contract.
determination of the Court of Appeals on that matter. Moreover, PTEI and BAGCCI
53
wasted their opportunity to question the formal sufficiency of PNB’s petition when they In Barbieto v. Court of Appeals, the Court stated the general principles in issuing a
failed to file their comment on time, leading the Court of Appeals to rule in its Decision writ of preliminary injunction:
dated March 21, 2003 as follows:
A preliminary injunction is an order granted at any stage of an action prior to judgment
Parenthetically, the "Manifestation and Motion for Leave To Admit Respondents’ of final order, requiring a party, court, agency, or person to refrain from a particular act
Comment [on] the Petition", as well as respondents’ Comment are hereby DENIED, or acts. It is a preservative remedy to ensure the protection of a party’s substantive
considering that they were filed more than one (1) year from the lapse of the rights or interests pending the final judgment in the principal action. A plea for an
reglementary period of filing the same. Accordingly, respondents’ Comment is ordered injunctive writ lies upon the existence of a claimed emergency or extraordinary situation
47
EXPUNGED from the record of this case. which should be avoided for otherwise, the outcome of a litigation would be useless as
far as the party applying for the writ is concerned.1âwphi1
PTEI and BAGCCI compounded their error when they subsequently failed to raise the
issue in their motion for reconsideration of the decision of the Court of Appeals. Such At times referred to as the "Strong Arm of Equity," we have consistently ruled that there
48
omission constituted a waiver of the said issue pursuant to the omnibus motion rule. is no power the exercise of which is more delicate and which calls for greater
30
circumspection than the issuance of an injunction. It should only be extended in cases The Court of Appeals did not err when it ruled that PTEI and BAGCCI failed to show a
of great injury where courts of law cannot afford an adequate or commensurate remedy clear and unmistakable right which would have necessitated the issuance of a writ of
in damages; "in cases of extreme urgency; where the right is very clear; where preliminary injunction. The Order dated May 17, 2001 of the trial court failed to state a
considerations of relative inconvenience bear strongly in complainant’s favor; where finding of facts that would justify the issuance of the writ of preliminary injunction. It
there is a willful and unlawful invasion of plaintiff's right against his protest and merely stated the conclusion that "real controversies exist" based on the observation
61
remonstrance, the injury being a continuing one, and where the effect of the mandatory that "the positions of the parties are completely opposed to each other." It simply
injunction is rather to reestablish and maintain a preexisting continuing relation declared:
between the parties, recently and arbitrarily interrupted by the defendant, than to
establish a new relation." Noted by this Court is the issue of, among others, the propriety of the foreclosure
proceedings in line with plaintiffs’ contention "x x x that properties of the plaintiffs are
For the writ to issue, two requisites must be present, namely, the existence of the right being made to answer by the defendants for obligations which are not secured by
to be protected, and that the facts against which the injunction is to be directed are these properties, or that properties of plaintiffs which are already free from the
54
violative of said right. x x x. mortgage are included in the Petition (Annex "W" of the Complaint) for extra-judicial
foreclosure. Continuing, the plaintiffs elaborated that "While plaintiffs are not disputing
A writ of preliminary injunction is an extraordinary event which must be granted only in the right of a creditor-mortgagee to proceed against the properties of a debtor-
55
the face of actual and existing substantial rights. The duty of the court taking mortgagor to pay for any unpaid secured obligations, it must be clearly understood,
cognizance of a prayer for a writ of preliminary injunction is to determine whether the however, that any foreclosure proceedings that may be effected relative thereto must
56
requisites necessary for the grant of an injunction are present in the case before it. In only affect the properties subject of the mortgage contract and should only be made to
the absence of the same, and where facts are shown to be wanting in bringing the answer for the correct and undisputed obligations which are secured by the properties
matter within the conditions for its issuance, the ancillary writ must be struck down for sought to be foreclosed. Any foreclosure proceedings which will include properties
having been rendered in grave abuse of discretion.
57 which are not subject of the mortgage contract or which will make the said properties
answer for obligations which are not secured by the said properties will be tantamount
to taking of properties without due process of law in violation of the Constitution x x
The right of PNB to extrajudicially foreclose on the real estate mortgage in the event of x."
62
PTEI’s default is provided under various contracts of the parties. Foreclosure is but a
58
necessary consequence of nonpayment of mortgage indebtedness. In view of PTEI’s
failure to settle its outstanding obligations upon demand, it was proper for PNB to This clearly shows that the trial court relied only on the bare allegations of PTEI and
exercise its right to foreclose on the mortgaged properties. It then became incumbent BAGCCI that the mortgaged properties were being made to answer for obligations that
on PTEI and BAGCCI, when they filed the complaint and sought the issuance of a writ are not covered by the mortgage and that properties which are not mortgaged are
of preliminary injunction, to establish that they have a clear and unmistakable right included in PNB’s petition for extrajudicial foreclosure. Beyond bare allegations,
which requires immediate protection during the pendency of the action. The Order however, no specific evidence was cited. Thus, the trial court’s order granting the
dated May 17, 2001 of the trial court granting the application for issuance of writ of issuance of a writ of preliminary injunction had no factual basis. It is elementary that
63
preliminary injunction failed to show that PTEI and BAGCCI discharged that burden. allegations are not proof. Contentions and averments in pleadings do not constitute
facts unless they are in the nature of admissions or proven by competent evidence.
This becomes more significant in connection with the issuance of the writ of preliminary
In this connection, this Court has denied the application for a writ of preliminary injunction in light of the Court’s pronouncement in University of the Philippines v. Hon.
injunction that would enjoin an extrajudicial foreclosure of a mortgage, and declared Catungal, Jr.
64
that foreclosure is proper when the debtors are in default of the payment of their
obligation. In particular, this Court ruled in Equitable PCI Bank, Inc. v. OJ-Mark
Trading, Inc.
59 The trial court must state its own findings of fact and cite the particular law to justify the
65
grant of preliminary injunction. Utmost care in this regard is demanded. x x x.

Where the parties stipulated in their credit agreements, mortgage contracts and
promissory notes that the mortgagee is authorized to foreclose the mortgaged Moreover, an application for injunctive relief is construed strictly against the
66
properties in case of default by the mortgagors, the mortgagee has a clear right to pleader. Also, the possibility of irreparable damage without proof of an actual existing
67
foreclosure in case of default, making the issuance of a Writ of Preliminary Injunction right is not a ground for a preliminary injunction to issue.
60
improper. x x x. (Citation omitted.)
At most, the trial court’s finding of the existence of a real controversy because the
respective claims of the parties are opposing simply amounted to a finding that the
31
rights of PTEI and BAGCCI are disputed, debatable or dubious. This Court has held, MIRIAM COLLEGE FOUNDATION, INC., petitioner,
however, that: vs.
HON. COURT OF APPEALS, JASPER BRIONES, JEROME GOMEZ, RELLY
In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave CARPIO, ELIZABETH VALDEZCO, JOSE MARI RAMOS, CAMILLE PORTUGAL,
abuse of discretion. Injunction is not designed to protect contingent or future rights. It is JOEL TAN and GERALD GARY RENACIDO, respondents.
68
not proper when the complainant’s right is doubtful or disputed. (Emphasis supplied,
citation omitted.)1âwphi1 KAPUNAN, J.:

In view of the doubtful nature of the alleged right of PTEI and BAGCCI, the trial court’s "Obscene," "vulgar," "indecent," "gross," "sexually explicit," "injurious to young
1
pronouncement regarding the necessity to issue a writ of injunction to protect the right readers," and devoid of all moral values." This was now some members of the Miriam
of PTEI and BAGCCI to be heard before they are deprived of such alleged right College community allegedly described the contents of the September-October 1994
crumbles: issue (Vol. 41, No. 14) of Miriam College's school paper (Chi-Rho), and magazine (Ang
Magasing Pampanitikan ng Chi-Rho). The articles in the Chi-Rho included:
A writ of preliminary injunction is issued to prevent an extrajudicial foreclosure, only
upon a clear showing of a violation of the mortgagor’s unmistakable right. . . . a story, clearly fiction, entitled 'Kaskas' written by one Gerald Garry
Unsubstantiated allegations of denial of due process and prematurity of a loan are not Renacido . . . Kaskas, written in Tagalog, treats of the experience of a group
sufficient to defeat the mortgagee’s unmistakable right to an extrajudicial of young, male, combo players who, one evening, after their performance
69
foreclosure. (Emphasis supplied.) went to see a bold show in a place called "Flirtation". This was the way the
author described the group's exposure during that stage show:
Furthermore, without pre-empting the trial court’s ruling on the allegation of PTEI and
BAGCCI regarding PNB’s alleged unilateral increase of interest rates, the trial court "Sige, sa Flirtation tayo. Happy hour na halos . . . he! he! he! sambit
70
misapplied Almeda v. Court of Appeals when it opined that "it would be in the interest ng kanilang bokalistang kanina pa di maitago ang pagkahayok sa
of justice and equity" that "the matter of the questioned and disputed principal karneng babae na kanyang pinananabikan nuong makalawa pa,
obligation, interests and/penalties" "be also threshed out during the trial on the merits" susog naman ang tropa.
"before any foreclosure proceeding can proceed." In Almeda, the petitioner spouses
questioned from the very start the unilateral increases in interest rates made by the ". . . Pumasok ang unang mananayaw. Si 'Red Raven' ayon sa
creditor bank. They also tendered payment and, when refused by the creditor bank, emcee. Nakasuot lamang ng bikining pula na may palamuting dilaw
consigned the amount equivalent to the principal loan and accrued interest calculated sa gilid-gilid at sa bandang utong. Nagsimula siya sa kanyang pag-
at the originally stipulated rate. In this case, it appears that, despite having.previously giling nang tumugtog na ang unang tono ng "Goodbye" ng Air
71
received letter-advices in October and November 1997 regarding changes in the loan Supply. Dahan-dahan ang kanyang mga malalantik at mapang-akit
interest rate, PTEI and BAGCCI assailed the alleged unilateral increases in interest na galaw sa una. Mistulang sawa na nililingkis ang hangin, paru-
rates only when they filed the complaint on April 23, 2001 and after PNB had already parong padapo-dapo sa mga bulaklak na lamesa, di-upang umamoy
exercised its right to extrajudicial foreclosure. Moreover, despite admitting PTEI's o kumuha ng nektar, ngunit para ipaglantaran ang sariling bulaklak at
indebtedness to PNB, no tender of payment or consignation was made. These ang angkin nitong malansang nektar.
substantial differences work against the applicability of Almeda in this case.
"Kaskas mo babe, sige . . . kaskas."
WHEREFORE, the petition is hereby DENIED.
Napahaling ang tingin ng balerinang huwad kay Mike. Mistulang
Costs against petitioners PTEI and BAGCCI. natipuhan, dahil sa harap niya'y nagtagal. Nag-akmang mag-aalis ng
pangitaas na kapirasong tela. Hindi nakahinga si Mike, nanigas sa
SO ORDERED. kanyang kinauupuan, nanigas pati ang nasa gitna ng kanyang hita.
Ang mga mata niya'y namagnet sa kayamanang ngayo'y halos isang
pulgada lamang mula sa kanyang naglalaway na bunganga.
Naputol-putol ang kanyang hininga nang kandungan ni 'Red Raven'
G.R. No. 127930 December 15, 2000
32
ang kanyang kanang hita. Lalo naghingalo siya nang kabayuhin ito mga putang biyak na sa gitna,
ng dahan dahan . . . Pabilis ng pabilis.'
'di na puwedeng paglabhan,
The author further described Mike's responses to the dancer as
follows (quoted in part): 'di na maaaring pagbabaran . . ."

. . . Nagsimulang lumaban na ng sabayan si Mike sa dancer. Hindi Gomez stated that the poems in the magazine are not "garapal" and "sa mga
nagpatalo ang ibong walang pakpak, inipit ng husto ang hita ni Mike tulang ito namin maipagtatanggol ang katapangan (o pagka-sensasyonal) ng
at pinag-udyukan ang kanyang dibdib sa mukha nito. pamagat na "Libog at iba pang Tula." He finished "Foreplay" with these words:
"Dahil para saan pa ang libog kung hindi ilalabas?"
"Kaskas mo pa, kaskas mo pa!"
The cover title in question appears to have been taken from a poem written by
Palpakan at halagpakan na tawanan ang tumambad sa kanya ng Relly Carpio of the same title. The poem dealt on a woman and a man who
biglang halikan siya nito sa labi at iniwang bigla, upang kanyang met each other, gazed at each other, went up close and "Naghalikan,
muniin ang naudlot niyang pagtikim ng karnal na nektar. Hindi niya Shockproof." The poem contained a background drawing of a woman with her
maanto kung siya ay nanalo o natalo sa nangyaring sagupaan ng two mammary and nipples exposed and with a man behind embracing her
libog. Ang alam lang niya ay nanlata na siya." with the woman in a pose of passion-filled mien.

After the show the group went home in a car with the bokalista driving. A Another poem entitled 'Virgin Writes Erotic' was about a man having fantasies
pedestrian happened to cross the street and the driver deliberately hit him in his sleep. The last verse said: "At zenith I pull it out and find myself alone in
with these words: this fantasy." Opposite the page where this poem appeared was a drawing of
a man asleep and dreaming of a naked woman (apparently of his dreams)
"Pare tingnan natin kung immortal itong baboy na ito. He! He! He! lying in bed on her buttocks with her head up (as in a hospital bed with one
He! Sabad ng sabog nilang drayber/bokalista." end rolled up). The woman's right nipple can be seen clearly. Her thighs were
stretched up with her knees akimbo on the bed.
The story ends (with their car about to hit a truck) in these words: . . .
"Pare . . . trak!!! Put . . .!!!! In the next page (page 29) one finds a poem entitled "Naisip ko Lang" by Belle
Campanario. It was about a young student who has a love-selection problem:
". . . Kung sinong pipiliin: ang teacher kong praning, o ang boyfriend kong
Ang Magasing Pampanitikan, October, 1994 issue, was in turn, given bading." The word "praning" as the court understands it, refers to a paranoid
the cover title of "Libog at iba pang tula." person; while the word "bading" refers to a sward or "bakla" or "badidang".
This poem also had an illustration behind it: of a young girl with large eyes
In his foreword which Jerome Gomez entitled "Foreplay", Jerome wrote: and sloping hair cascading down her curves and holding a peeled banana
"Alam ko, nakakagulat ang aming pamagat." Jerome then proceeded to write whose top the illustrator shaded up with downward-slanting strokes. In the
about previous reactions of readers to women-writers writing about matters poem, the girl wanted to eat banana topped by peanut butter. In line with
erotic and to gay literature. He justified the Magazine's erotic theme on the Jerome's "Foreplay" and by the way it was drawn that banana with peanut
ground that many of the poems passed on to the editors were about butter top was meant more likely than not, to evoke a spiritedly mundane,
"sekswalidad at iba't ibang karanasan nito." Nakakagulat ang tapang ng mga mental reaction from a young audience.
manunulat . . . tungkol sa maselang usaping ito . . . at sa isang institusyon
pang katulad ng Miriam!" Another poem entitled "Malas ang Tatlo" by an unknown author went like this:

Mr. Gomez quoted from a poem entitled "Linggo" written by himself: 'Na picture mo na ba

may mga palangganang nakatiwangwang - no'ng magkatabi tayong dalawa

33
sa pantatluhang sofa - In a Letter dated 21 November 1994, Dr. Sevilla again required the students to file their
written answers.
ikaw, the legitimate asawa
6
In response, Atty. Ricardo Valmonte, lawyer for the students, submitted a letter to the
at ako, biro mo, ang kerida? Discipline Committee reiterating his clients' position that said Committee had no
jurisdiction over them. According to Atty. Valmonte, the Committee was "trying to
impose discipline on his clients on account of their having written articles and poems in
tapos, tumabi siya, shit! their capacity as campus journalists." Hence, he argued that "what applies is Republic
Act No. 7079 The Campus Journalism Act and its implementing rules and regulations."
kumpleto na: He also questioned the partiality of the members of said Committee who allegedly "had
already articulated their position" against his clients.
ikaw, ako at siya
The Discipline Committee proceeded with its investigation ex parte. Thereafter, the
kulang na lang, kamera." Discipline Board, after a review of the Discipline Committee's report, imposed
disciplinary sanctions upon the students, thus:

A poem "Sa Gilid ng Itim" by Gerald Renacido in the Chi-Rho broadsheet


spoke of a fox (lobo) yearning for "karneng sariwa, karneng bata,Briones
1. Jasper karneng Expulsion. Briones is the Editor-in-Chief of Chi-Rho and a 4th year student;
may kalambutan . . . isang bahid ng dugong dalaga, maamo't malasa, ipahid
sa mga labing sakim sa romansa' and ended with 'hinog na para himukin
2. Daphne Cowper suspension up to (summer) March, 1995;
2
bungang bibiyakin."
3. Imelda Hilario suspension for two (2) weeks to expire on February 2, 1995;
Following the publication of the paper and the magazine, the members of the editorial
board, and Relly Carpio, author of Libog, all students of Miriam4.College,
Deborah Ligon a suspension up to May, 1995. Miss Ligon is a 4th year student and could graduate
3
received
letter signed by Dr. Aleli Sevilla, Chair of the Miriam College Discipline Committee. The laude;
Letter dated 4 November 1994 stated:
5. Elizabeth Valdezco suspension up to (summer) March, 1995;

This is to inform you that the letters of complain filed against you Portugal
6. Camille by members graduation privileges withheld, including diploma. She is an Octoberian;
of the Miriam Community and a concerned Ateneo grade five student have
been forwarded to the Discipline Committee for inquiry7.and investigation.
Joel Tan suspension for two (2) weeks to expire on February 2, 1995;
Please find enclosed complaints.
8. Gerald Gary Renacido Expelled and given transfer credentials. He is a 2nd year student. He wrote the fic
As expressed in their complaints you have violated regulations in the student
handbook specifically Section 2 letters B and R, pages9.30 Relly
and Carpio
32, Section 4 Dismissed and given transfer credentials. He is in 3rd year and wrote the poem "L
(Major offenses) letter j, page 36 letters m, n, and p, page 37 and no. 2 (minor
offenses) letter a, page 37. 10. Jerome Gomez Dismissed and given transfer credentials. He is in 3rd year. He wrote the foreword
questioned Anthology of Poems; and
You are required to submit a written statement in answer
11. to the Mari
Jose charge/s on or
Ramos Expelled and given transfer papers. He is a 2nd year student and art editor of Chi-
before the initial date of hearing to be held on November 15, 1994, Tuesday,
4
1:00 in the afternoon at the DSA Conference Room.
The above students thus filed a petition for prohibition and certiorari with preliminary
None of the students submitted their respective answers. They instead requested Dr. injunction/restraining order before the Regional Trial Court of Quezon City questioning
Sevilla to transfer the case to the Regional Office of the Department of Education, the jurisdiction of the Discipline Board of Miriam College over them.
Culture and Sports (DECS) which under Rule XII of DECS Order No. 94, Series of
5
1992, supposedly had jurisdiction over the case.

34
On 17 January 1995, the Regional Trial Court, Branch CIII, presided by Judge Jaime The sanctions imposed on the other plaintiffs, namely, Deborah Ligon, Imelda
N. Salazar, Jr., issued an order denying the plaintiffs' prayer for a Temporary Hilario, Elizabeth Valdezco, Camille Portugal and Daphne Cowper, shall
Restraining Order. It held: remain in force and shall not be covered by this Injunction: Provided, that
Camille Portugal now a graduate, shall have the right to receive her diploma,
There is nothing in the DECS Order No. 94, S. 1992 dated August 19, 1992 but defendants are not hereby prevented from refusing her the privilege of
that excludes school Administrators from exercising jurisdiction over cases of walking on the graduation stage so as to prevent any likely public tumults.
the nature involved in the instant petition. R.A. 7079 also does not state
anything on the matter of jurisdiction. The DECS undoubtedly cannot The plaintiffs are required to post an injunction bond in the sum of Four
determine the extent of the nature of jurisdiction of schools over disciplinary Thousand Pesos (P4,000.00) each.
cases. Moreover, as this Court reads that DECS Order No. 94, S. of 1992, it
merely prescribes for purposes of internal administration which DECS officer SO ORDERED.
9
or body shall hear cases arising from R A. 7079 if and when brought to it for
resolution. The said order never mentioned that it has exclusive jurisdiction
over cases falling under R.A. 707.
8 Both parties moved for a reconsideration of the above order. In an Order dated 22
February 1995, the RTC dismissed the petition, thus:
The students thereafter filed a "Supplemental Petition and Motion for
Reconsideration." The College followed with its Answer. 4. On the matter raised by both parties that it is the DECS which has
jurisdiction, inasmuch as both parties do not want this court to assume
jurisdiction here then this court will not be more popish than the Pope and in
Subsequently, the RTC issued an Order dated 10 February 1995 granting the fact is glad that it will have one more case out of its docket.
writ of preliminary injunction.
ACCORDINGLY, the instant case is hereby DISMISSED without prejudice to
ACCORDINGLY, so as not to render the issues raised moot and academic, let the parties going to another forum.
a writ of preliminary injunction issue enjoining the defendants, including the
officers and members of the Disciplinary Committee, the Disciplinary Board, or
any similar body and their agents, and the officers and members of the All orders heretofore issued here are hereby recalled and set aside.
Security Department, Division, or Security Agency securing the premises and
10
campus of Miriam College Foundation, Inc. from: SO ORDERED.

1. Enforcing and/or implementing the expulsion or dismissal The students, excluding Deborah Ligon, Imelda Hilario and Daphne Cowper, sought
resolutions or orders complained of against herein plaintiffs (a) relief in this Court through a petition for certiorari and prohibition of preliminary
11
Jasper Briones; (b) Gerald Gary Renacido; (c) Relly Carpio; (d) injunction/restraining order questioning the Orders of the RTC dated 10 and 24
Jerome Gomez; and (e) Jose Mari Ramos, but otherwise allowing February 1995.
the defendants to impose lesser sanctions on aforementioned
plaintiffs; and On 15 March 1995, the Court resolved to refer the case to the Court of Appeals (CA)
12
for disposition. On 19 May 1995, the CA issued a resolution stating:
2. Disallowing, refusing, barring or in any way preventing the herein
plaintiffs (all eleven of them) from taking tests or exams and entering The respondents are hereby required to file comment on the instant petition
the Miriam campus for such purpose as extended to all students of and to show cause why no writ of preliminary injunction should be issued,
Miriam College Foundation, Inc.; neither should their respective within ten (10) days from notice hereof, and the petitioners may file reply
course or subject teachers or professors withhold their grades, thereto within five (5) days from receipt of former's comment.
including final grades, if and when they meet the requirements
similarly prescribed for all other students, this current 2nd Semester
of 1994-95. In order not to render ineffectual the instant petition, let a Temporary
Restraining Order be issued enjoining the public respondents from enforcing
letters of dismissal/suspension dated January 19, 1995.

35
13
SO ORDERED. 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
15
In its Decision dated 26 September 1996, respondent court granted the students' perform to refrain from performing a particular act or acts. As an extraordinary
petition. The CA declared the RTC Order dated 22 February 1995, as well as the remedy, injunction is calculated to preserve or maintain the status quo of things and is
students' suspension and dismissal, void. generally availed of to prevent actual or threatened acts, until the merits of the case
16
can be heard. A preliminary injunction persists until it is dissolved or until the
termination of the action without the court issuing a final injunction.
Hence, this petition by Miriam College.
The basic purpose of restraining order, on the other hand, is to preserve the status
We limit our decision to the resolution of the following issues: 17
quo until the hearing of the application for preliminary injunction. Under the former 5,
Rule 58 of the Rules of Court, as amended by 5, Batas Pambansa Blg. 224, a judge (or
(1) The alleged moot character of the case. justice) may issue a temporary restraining order with a limited life of twenty days from
18
date of issue. If before the expiration of the 20-day period the application for
(2) The jurisdiction of the trial court to entertain the petition for certiorari filed preliminary injunction is denied, the temporary order would thereby be deemed
by the students. automatically vacated. If no action is taken by the judge on the application for
preliminary injunction within the said 20 days, the temporary restraining order would
automatically expire on the 20th day by the sheer force of law, no judicial declaration to
(3) The power of petitioner to suspend or dismiss respondent students. 19
that effect being necessary. In the instant case, no such preliminary injunction was
issued; hence, the TRO earlier issued automatically expired under the aforesaid
20
(4) The jurisdiction of petitioner over the complaints against the students. provision of the Rules of Court.

We do not tackle the alleged obscenity of the publication, the propriety of the penalty This limitation as to the duration of the temporary restraining order was the rule
21
imposed or the manner of the imposition thereof. These issues, though touched upon prevailing when the CA issued its TRO dated 19 May 1995. By that time respondents
by the parties in the proceedings below, were not fully ventilated therein. Elizabeth Valdezco and Joel Tan had already served their respective suspensions. The
TRO was applicable only to respondents Jasper Briones, Jerome Gomez, Relly Carpio,
Jose Mari Ramos and Gerald Gary Renacido all of whom were dismissed, and
I
respondent Camille Portugal whose graduation privileges were withheld. The TRO,
however, lost its effectivity upon the lapse of the twenty days. It can hardly be said that
Petitioner asserts the Court of Appeals found the case moot thus: in that short span of time, these students had already graduated as to render the case
moot.
While this petition may be considered moot and academic since more than
one year have passed since May 19, 1995 when this court issued a temporary Either the CA was of the notion that its TRO was effective throughout the pendency of
restraining order enjoining respondents from enforcing the dismissal and the case or that what is issued was a preliminary injunction. In either case, it was error
14
suspension on petitioners . . . on the part of the CA to assume that its order supposedly enjoining Miriam from
enforcing the dismissal and suspension was complied with. A case becomes moot and
Since courts do not adjudicate moot cases, petitioner argues that the CA should not academic when there is no more actual controversy between the parties or no useful
22
have proceeded with the adjudication of the merits of the case. purpose can be served in passing upon the merits. To determine the moot character
of a question before it, the appellate court may receive proof or take notice of facts
23
appearing outside the record. In the absence of such proof or notice of facts, the
We find that the case is not moot.
Court of Appeals should not have assumed that its TRO was enforced, and that the
case was rendered moot by the mere lapse of time.
It may be noted that what the court issued in 19 May 1995 was a temporary restraining
order, not a preliminary injunction. The records do not show that the CA ever issued a 24
Indeed, private respondents in their Comment herein deny that the case has become
preliminary injunction.
moot since Miriam refused them readmission in violation of the TRO. This fact is
unwittingly conceded by Miriam itself when, to counter this allegation by the students, it
says that private respondents never sought readmission after the restraining order was
36
25
issued. In truth, Miriam relied on legal technicalities to subvert the clear intent of said II
order, which states:
"To uphold and protect the freedom of the press even at the campus level and to
In order not to render ineffectual the instant petition, let a Temporary promote the development and growth of campus journalism as a means of
Restraining Order be issued enjoining the public respondents from enforcing strengthening ethical values, encouraging critical and creative thinking, and developing
28
letters of dismissal/suspension dated January 19, 1995. moral character and personal discipline of the Filipino youth," Congress enacted in
1991 Republic Act No. 7079. Entitled "AN ACT PROVIDING FOR THE
Petitioner says that the above order is "absurd" since the order "incorrectly DEVELOPMENT AND PROMOTION OF CAMPUS JOURNALISM AND FOR OTHER
29 30
directs public respondent, the Hon. Jaime Salazar, presiding judge of the Regional Trial PURPOSES," the law contains provisions for the selection of the editorial board and
31 32
Court of Quezon City not to dismiss or suspend the students."
26 publication adviser, the funding of the school publication, and the grant of exemption
to donations used actually, directly and exclusively for the promotion of campus
33
27 journalism from donor's or gift tax.
We do not agree. Padua vs. Robles lays down the rules in construing judgments. We
find these rules to be applicable to court orders as well:
Noteworthy are provisions clearly intended to provide autonomy to the editorial board
and its members. Thus, the second paragraph of Section 4 states that "(o)nce the
The sufficiency and efficacy of a judgment must be tested by its substance publication is established, its editorial board shall freely determine its editorial policies
rather than its form. In construing a judgment, its legal effects including such and-manage the publication's funds."
effects that necessarily follow because of legal implications, rather than the
language used, govern. Also, its meaning, operation, and consequences must
be ascertained like any other written instrument. Thus, a judgment rests on Section 7, in particular, provides:
the intent of the court as gathered from every part thereof, including the
situation to which it applies and attendant circumstances. (Emphasis A member of the publication staff must maintain his or her status as student in
supplied.) order to retain membership in the publication staff. A student shall not be
expelled or suspended solely on the basis of articles he or she has written, or
Tested by such standards, we find that the order was indeed intended on the basis of the performance of his or her duties in the student publication.
for private respondents (in the appellate court) Miriam College, et al., and not public
respondent Judge. In dismissing the case, the trial judge recalled and set aside all Section 9 of the law mandates the DECS to "promulgate the rules and regulations
34
orders it had previously issued, including the writ of preliminary injunction. In doing so, necessary for the effective implementation of this Act." Pursuant to said authority,
the trial court allowed the dismissal and suspension of the students to remain in force. then DECS Secretary Armand Fabella, issued DECS Order No. 94, Series of 1992,
Thus, it would indeed be absurd to construe the order as being directed to the RTC. providing under Rule XII that:
Obviously, the TRO was intended for Miriam College.
GENERAL PROVISIONS
True, respondent-students should have asked for a clarification of the above order.
They did not. Nevertheless, if Miriam College found the order "absurd," then it should SECTION 1. The Department of Education, Culture and Sports (DECS) shall help
have sought a clarification itself so the Court of Appeals could have cleared up any ensure and facilitate the proper carrying out of the Implementing Rules and
confusion. It chose not to. Instead, it took advantage of the supposed vagueness of the Regulations of Republic Act No. 7079. It shall also act on cases on appeal brought
order and used the same to justify its refusal to readmit the students. before it.

As Miriam never readmitted the students, the CA's ruling that the case is moot has no The DECS regional office shall have the original jurisdiction over cases as a result of
basis. How then can Miriam argue in good faith that the case had become moot when it the decisions, actions and policies of the editorial board of a school within its area of
knew all along that the facts on which the purported moot character of the case were administrative responsibility. It shall conduct investigations and hearings on the these
based did not exist? Obviously, Miriam is clutching to the CA's wrongful assumption cases within fifteen (15) days after the completion of the resolution of each case.
that the TRO it issued was enforced to justify the reversal of the CA's decision. (Emphasis supplied.)

Accordingly, we hold that the case is not moot, Miriam's pretensions to the contrary The latter two provisions of law appear to be decisive of the present case.
notwithstanding.
37
It may be recalled that after the Miriam Disciplinary Board imposed disciplinary the power or authority, but also the duty, to exercise that jurisdiction and to render a
38
sanctions upon the students, the latter filed a petition for certiorari and prohibition in the decision in a case properly submitted to it. Accordingly, the trial court should not have
Regional Trial Court raising, as grounds therefor, that: dismissed the petition without settling the issues presented before it.

I III

DEFENDANT'S DISCIPLINARY COMMITTEE AND DISCIPLINARY BOARD Before we address the question of which between the DECS Regional Office and
35
OF DEFENDANT SCHOOL HAVE NO JURISDICTION OVER THE CASE. Miriam College has jurisdiction over the complaints against the students, we first delve
into the power of either to impose disciplinary sanctions upon the students. Indeed, the
II resolution of the issue of jurisdiction would be reduced to an academic exercise if
neither the DECS Regional Office nor Miriam College had the power to impose
sanctions upon the students.
DEFENDANT SCHOOL'S DISCIPLINARY COMMITTEE AND THE
DISCIPLINARY BOARD DO NOT HAVE THE QUALIFICATION OF AN
IMPARTIAL AND NEUTRAL ARBITER AND, THEREFORE THEIR TAKING Recall, for purposes of this discussion, that Section 7 of the Campus Journalism Act
COGNIZANCE OF THE CASE AGAINST PLAINTIFFS WILL DENY THE prohibits the expulsion or suspension of a student solely on the basis of articles he or
LATTER OF THEIR RIGHT TO DUE PROCESS.
36 she has written.

Anent the first ground, the students theorized that under Rule XII of the Rules and A.
Regulations for the Implementation of R.A. No. 7079, the DECS Regional Office, and
not the school, had jurisdiction over them. The second ground, on the other hand, Section 5 (2), Article XIV of the Constitution guarantees all institutions of higher
alleged lack of impartiality of the Miriam Disciplinary Board, which would thereby learning academic freedom. This institutional academic freedom includes the right of
deprive them of due process. This contention, if true, would constitute grave abuse of the school or college to decide for itself, its aims and objectives, and how best to attain
discretion amounting to lack or excess of jurisdiction on the part of the trial court. These them free from outside coercion or interference save possibly when the overriding
39
were the same grounds invoked by the students in their refusal to answer the charges public welfare calls for some restraint. The essential freedoms subsumed in the term
against them. The issues were thus limited to the question of jurisdiction - a question "academic freedom" encompasses the freedom to determine for itself on academic
purely legal in nature and well within the competence and the jurisdiction of the trial grounds:
court, not the DECS Regional Office. This is an exception to the doctrine of primary
37
jurisdiction. As the Court held in Phil. Global Communications, Inc. vs. Relova. (1) Who may teach,

Absent such clarity as to the scope and coverage of its franchise, a legal (2) What may be taught,
question arises which is more appropriate for the judiciary than for an
administrative agency to resolve. The doctrine of primary jurisdiction calls for
application when there is such competence to act on the part of an (3) How it shall be taught, and
administrative body. Petitioner assumes that such is the case. That is to beg
40
the question. There is merit, therefore, to the approach taken by private (4) Who may be admitted to study.
respondents to seek judicial remedy as to whether or not the legislative
franchise could be so interpreted as to enable the National The right of the school to discipline its students is at once apparent in the third
Telecommunications Commission to act on the matter. A jurisdictional freedom, i.e., "how it shall be taught." A school certainly cannot function in an
question thus arises and calls for an answer. atmosphere of anarchy.

However, when Miriam College in its motion for reconsideration contended that the Thus, there can be no doubt that the establishment of an educational
DECS Regional Office, not the RTC, had jurisdiction, the trial court, refusing to "be institution requires rules and regulations necessary for the maintenance of an
more popish than the Pope," dismissed the case. Indeed, the trial court could hardly orderly educational program and the creation of an educational environment
contain its glee over the fact that "it will have one more case out of its docket." We conducive to learning. Such rules and regulations are equally necessary for
remind the trial court that a court having jurisdiction of a case has not only the right and the protection of the students, faculty, and property.
41

38
Moreover, the school has an interest in teaching the student discipline, a necessary, if and to continue their course therein up to graduation," such right is subject, as
not indispensable, value in any field of learning. By instilling discipline, the school all rights are, to the established academic and disciplinary standards laid
teaches discipline. Accordingly, the right to discipline the student likewise finds basis in down by the academic institution.
the freedom "what to teach."
"For private schools have the right to establish reasonable rules and
Incidentally, the school not only has the right but the duty to develop discipline in its regulations for the admission, discipline and promotion of students. This
students. The Constitution no less imposes such duty. right . . . extends as well to parents . . . as parents under a social and moral (if
not legal) obligation, individually and collectively, to assist and cooperate with
All educational institutions shall inculcate patriotism and nationalism, foster the schools."
love of humanity, respect for human rights, appreciation of the role of national
heroes in the historical development of the country, teach the rights and duties Such rules are "incident to the very object of incorporation and indispensable
of citizenship, strengthen ethical and spiritual values, develop moral character to the successful management of the college. The rules may include those
and personal discipline, encourage critical and creative thinking, broaden governing student discipline." Going a step further, the establishment of the
42
scientific and technological knowledge, and promote vocational efficiency. rules governing university-student relations, particularly those pertaining to
student discipline, may be regarded as vital, not merely to the smooth and
In Angeles vs. Sison, we also said that discipline was a means for the school to carry efficient operation of the institution, but to its very survival.
out its responsibility to help its students "grow and develop into mature, responsible,
43
effective and worthy citizens of the community." Within memory of the current generation is the eruption of militancy in the
academic groves as collectively, the students demanded and plucked for
Finally, nowhere in the above formulation is the right to discipline more evident than in themselves from the panoply of academic freedom their own rights
"who may be admitted to study." If a school has the freedom to determine whom to encapsulized under the rubric of "right to education" forgetting that, In
admit, logic dictates that it also has the right to determine whom to exclude or expel, as Hohfeldian terms, they have the concomitant duty, and that is, their duty to
well as upon whom to impose lesser sanctions such as suspension and the withholding learn under the rules laid down by the school.
of graduation privileges.
. . . It must be borne in mind that universities are established, not merely to
44
Thus, in Ateneo de Manila vs. Capulong, the Court upheld the expulsion of students develop the intellect and skills of the studentry, but to inculcate lofty values,
found guilty of hazing by petitioner therein, holding that: ideals and attitudes; may, the development, or flowering if you will, of the total
man.
No one can be so myopic as to doubt that the immediate reinstatement of
respondent students who have been investigated and found guilty by the In essence, education must ultimately be religious - not in the sense that the
Disciplinary Board to have violated petitioner university's disciplinary rules and founders or charter members of the institution are sectarian or profess a
standards will certainly undermine the authority of the administration of the religious ideology. Rather, a religious education, as the renowned philosopher
school. This we would be most loathe to do. Alfred North Whitehead said, is 'an education which inculcates duty and
reverence.' It appears that the particular brand of religious education offered
by the Ateneo de Manila University has been lost on the respondent students.
More importantly, it will seriously impair petitioner university's academic
freedom which has been enshrined in the 1935, 1973 and the present 1987
Constitution.
45 Certainly, they do not deserve to claim such a venerable institution as the
Ateneo de Manila University as their own a minute longer, for they may
foreseeably cast a malevolent influence on the students currently enrolled, as
Tracing the development of academic freedom, the Court continued: well as those who come after them.1avvphi1

Since Garcia vs. Loyola School of Theology, we have consistently upheld the Quite applicable to this case is our pronouncement in Yap Chin Fah v. Court
salutary proposition that admission to an institution of higher learning is of Appeals that: "The maintenance of a morally conducive and orderly
discretionary upon a school, the same being a privilege on the part of the educational environment will be seriously imperilled, if, under the
student rather than a right. While under the Education Act of 1982, students circumstances of this case, Grace Christian is forced to admit petitioner's
have a right "to freely choose their field of study, subject to existing curricula
39
children and to reintegrate them to the student body." Thus, the decision of personal intercommunication among the students. This is not only inevitable
petitioner university to expel them is but congruent with the gravity of their part of the educational process. A student's rights, therefore, do not embrace
46
misdeeds. merely the classroom hours. When he is in the cafeteria, or on the playing
field, or on the campus during the authorized hours, he may express his
B. opinions, even on controversial subjects like the conflict in Vietnam, if he does
so without 'materially and substantially interfering with the requirements of
appropriate discipline in the operation of the school' and without colliding with
Section 4 (1), Article XIV of the Constitution recognizes the State's power to regulate the rights of others. . . . But conduct by the student, in class or out of it, which
educational institution: for any reason - whether it stems from time, place, or type of behavior -
materially disrupts classwork or involves substantial disorder or invasion of the
The State recognizes the complementary roles of public and private rights of others is, of course, not immunized by the constitutional guarantee of
49
institutions in the educational system and shall exercise reasonable freedom of speech.
supervision and regulation of all educational institutions.
The Malabanan ruling was followed in Villar vs. Technological Institute of the
50 51
As may be gleaned from the above provision, such power to regulate is subject to the Philippines, Arreza vs. Gregorio Araneta University Foundation, and Non vs. Dames
52
requirement of reasonableness. Moreover, the Constitution allows merely II.
the regulation and supervision of educational institutions, not the deprivation of their
rights. The right of the students to free speech in school premises, however, is not absolute.
The right to free speech must always be applied in light of the special characteristics of
53
C. the school environment. Thus, while we upheld the right of the students to free
expression in these cases, we did not rule out disciplinary action by the school for
In several cases, this Court has upheld the right of the students to free speech in "conduct by the student, in class or out of it, which for any reason - whether it stems
47
school premises. In the landmark case of Malabanan vs. Ramento, students of the from time, place, or type of behavior - which materially disrupts classwork or involves
54
Gregorio Araneta University Foundation, believing that the merger of the Institute of substantial disorder or invasion of the rights of others." Thus, in Malabanan, we held:
Animal Science with the Institute of Agriculture would result in the increase in their
tuition, held a demonstration to protest the proposed merger. The rally however was 6. Objection is made by private respondents to the tenor of the speeches by
held at a place other than that specified in the school permit and continued longer than the student leaders. That there would be a vigorous presentation of view
the time allowed. The protest, moreover, disturbed the classes and caused the opposed to the proposed merger of the Institute of Animal Science with the
stoppage of the work of non-academic personnel. For the illegal assembly, the Institute of Agriculture was to be expected. There was no concealment of the
university suspended the students for one year. In affirming the students' rights to fact that they were against such a move as it confronted them with a serious
peaceable assembly and free speech, the Court through Mr. Chief Justice Enrique problem ("isang malaking suliranin.") They believed that such a merger would
Fernando, echoed the ruling of the US Supreme Court in Tinker v. Des Moines School result in the increase in tuition fees, an additional headache for their parents
48
District. ("isa na naman sakit sa ulo ng ating mga magulang.") If in the course of such
demonstration, with an enthusiastic audience goading them on, utterances
Petitioners invoke their rights to peaceable assembly and free speech. They extremely critical at times, even vitriolic, were let loose, that is quite
are entitled to do so. They enjoy like the rest of the citizens the freedom to understandable. Student leaders are hardly the timid, different types. They are
express their views and communicate their thoughts to those disposed to likely to be assertive and dogmatic. They would be ineffective if during a rally
listen in gatherings such as was held in this case. They do not, to borrow from they speak in the guarded and judicious language of the academe. At any
the opinion of Justice Fortas in Tinker v. Des Moines Community School rate, even a sympathetic audience is not disposed to accord full credence to
District, 'shed their constitutional rights to freedom of speech or expression at their fiery exhortations. They take into account the excitement of the occasion,
the schoolhouse gate.' While, therefore, the authority of educational the propensity of speakers to exaggerate, the exuberance of youth. They may
institutions over the conduct of students must be recognized, it cannot go so give the speakers the benefit of their applause, but with the activity taking
far as to be violative of constitutional safeguards. On a more specific level place in the school premises and during the daytime, no clear and present
there is persuasive force to this Fortas opinion. "The principal use to which the danger of public disorder is discernible. This is without prejudice to the taking
schools are dedicated is to accommodate students during prescribed hours of disciplinary action for conduct, which, to borrow from Tinker, "materially
for the purpose of certain types of activities. Among those activities is disrupts classwork or involves substantial disorder or invasion of the rights of
55
others."
40
It is in the light of this standard that we read Section 7 of the Campus Journalism Act. The Case
Provisions of law should be construed in harmony with those of the Constitution; acts of
the legislature should be construed, wherever possible, in a manner that would avoid 1 2
We review a ruling of the Court of Appeals enjoining the government from enforcing,
56
their conflicting with the fundamental law. A statute should not be given a broad litis pendentia, a ban on the importation of used motor vehicles.
57
construction if its validity can be saved by a narrower one. Thus, Section 7 should be
read in a manner as not to infringe upon the school's right to discipline its students. At
the same time, however, we should not construe said provision as to unduly restrict the The Facts
right of the students to free speech. Consistent with jurisprudence, we read Section 7
3
of the Campus Journalism Act to mean that the school cannot suspend or expel a Executive Order No. 156 (EO 156) , issued by President Gloria Macapagal-Arroyo
student solely on the basis of the articles he or she has written, except when such (President Arroyo) on 12 December 2002, imposes a partial ban on the importation of
4
article materially disrupt class work or involve substantial disorder or invasion of the used motor vehicles. The ban is part of several measures EO 156 adopts to
5
rights of others. "accelerate the sound development of the motor vehicle industry in the Philippines." In
Executive Secretary v. Southwing Heavy Industries, Inc. and two related
6
IV. petitions (collectively, Southwing), we found EO 156 a valid executive issuance
enforceable throughout the Philippine customs territory, except in the Subic Special
Economic and Freeport Zone in Zambales (Subic Freeport) by virtue of its status as a
From the foregoing, the answer to the question of who has jurisdiction over the cases "separate customs territory" under Republic Act No. 7227.
7
filed against respondent students becomes self-evident. The power of the school to
investigate is an adjunct of its power to suspend or expel. It is a necessary corollary to
the enforcement of rules and regulations and the maintenance of a safe and orderly Respondent Forerunner Multi Resources, Inc. (respondent), a corporation engaged in
58
educational environment conducive to learning. That power, like the power to the importation of used motor vehicles via the ports of Aparri, Cagayan and San
suspend or expel, is an inherent part of the academic freedom of institutions of higher Fernando, La Union, sued the government in the Regional Trial Court of Aparri,
learning guaranteed by the Constitution. We therefore rule that Miriam College has the Cagayan (trial court) to declare invalid EO 156, impleading petitioner public officials as
8
authority to hear and decide the cases filed against respondent students.1âwphi1.nêt respondents. Respondent attacked EO 156 for (1) having been issued by President
Arroyo ultra vires; (2) trenching the Due Process and Equal Protection Clauses of the
Constitution; and (3) having been superseded by Executive Order No. 418 (EO
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE. 9
418), issued by President Arroyo on 4 April 2005, modifying the tariff rates of imported
Petitioner Miriam College is ordered to READMIT private respondent Joel Tan whose used motor vehicles. Respondent sought a preliminary injunctive writ to enjoin, litis
suspension has long lapsed. pendentia, the enforcement of EO 156.

SO ORDERED. The Ruling of the Trial Court

Acting on respondent’s application for preliminary injunctive remedy, the trial court
granted relief, initially by issuing a temporary restraining order followed by a writ of
10
G.R. No. 199324 January 7, 2013 preliminary injunction granted in its Order of 27 November 2008. On petitioners’
motion, however, the trial court reconsidered its Order and lifted the injunctive writ on 7
EXECUTIVE SECRETARY, SECRETARY OF FINANCE, COMMISSIONER OF July 2010. The trial court grounded its ruling on Southwing which it considered as
CUSTOMS, DISTRICT COLLECTOR OF CUSTOMS, Port of Aparri, Cagayan, negating any "clear and unmistakable legal right" on the part of respondent to receive
11
DISTRICT COLLECTOR OF CUSTOMS, Port of San Fernando, La Union, and the "protection of a writ of preliminary injunction."
HEAD OF THE LAND TRANSFORTATION OFFICE, Petitioners,
vs. Respondent elevated the case to the Court of Appeals in a certiorari petition.
FORERUNNER MULTI RESOURCES, INC., Respondent.
The Ruling of the Court of Appeals
DECISION
The Court of Appeals granted certiorari, set aside the trial court’s Order of 7 July 2010
CARPIO, J.: and reinstated its Order of 27 November 2008. In the appellate court’s estimation, the
trial court committed grave abuse of discretion in lifting the preliminary injunctive writ it
41
earlier issued. The appellate court held that the implementation of EO 156 "would put Respondent sought preliminary injunctive relief as ancillary to its principal cause of
12
petitioner in a financial crisis." As authority, the appellate court invoked by analogy action to invalidate EO 156. Respondent’s attack on EO 156, however, comes on the
this Court’s ruling in Filipino Metals Corporation v. Secretary of the Department of heels of Southwing where we passed upon and found EO 156 legally sound, albeit
13
Trade and Industry. overextended in application. We found EO 156 a valid police power measure
addressing an "urgent national concern":
Petitioners are now before this Court charging the Court of Appeals with having
committed an error of law in reinstating the preliminary injunctive writ for respondent. There is no doubt that the issuance of the ban to protect the domestic industry is a
They argue that Southwing controls the case, precluding the Court of Appeals from reasonable exercise of police power. The deterioration of the local motor manufacturing
recognizing a clear legal right of respondent to import used motor vehicles. firms due to the influx of imported used motor vehicles is an urgent national concern
that needs to be swiftly addressed by the President. In the exercise of delegated police
Respondent counters that the doctrinal import of Southwing was weakened by the power, the executive can therefore validly proscribe the importation of these vehicles. x
20
subsequent issuance of EO 418, allegedly repealing EO 156. Respondent invokes our xx
minute Resolution of 15 November 2010 denying the petition in G.R. No. 187475
(Executive Secretary v. Feniz [CEZA] International, Inc.) as judicial confirmation of the The narrow ambit of this review precludes us from passing upon the merits of the
supposed repeal. constitutional and administrative issues respondent raised to attack EO 156.
Nevertheless, we have no hesitation in holding that whatever legal right respondent
As prayed for by petitioners, we issued a temporary restraining order on 16 January may possess vis à vis the operation of EO 156, we find such legal right to be doubtful
2012 against the Court of Appeals’ ruling. by force of the Southwing precedent. Until reversed or modified by this Court,
Southwing makes conclusive the presumption of EO 156’s validity. Our holding is
bolstered by respondent’s failure to remove its case from the confines of such ruling.
The Issue
In arriving at a contrary conclusion, the Court of Appeals dwelt on the "grave and
The question is whether the Court of Appeals erred in granting preliminary injunctive irremediable" financial losses respondent was poised to sustain as a result of EO 156’s
relief to respondent to enjoin enforcement of EO 156. 21
enforcement, finding such prejudice "inequitable." No doubt, by importing used motor
vehicles in contravention of the ban under EO 156, respondent risked sustaining
The Court’s Ruling losses. Such risk, however, was self-imposed. Having miscalculated its chances,
respondent cannot look to courts for injunctive relief against self-inflicted losses which
We hold that it was error for the Court of Appeals to grant preliminary injunctive relief to are in the nature of damnum absque injuria. Injunction will not issue on the mere
respondent. We set aside the Court of Appeals’ ruling and reinstate the trial court’s possibility that a litigant will sustain damage, without proof of a clear legal right entitling
22
Order of 7 July 2010. the litigant to protection.

Respondent Without Clear Legal Right to Nor does our ruling in Filipino Metals furnish doctrinal support for
Import Used Motor Vehicles respondent.1âwphi1 We sustained the trial court’s issuance of a preliminary injunctive
writ in that case to enjoin the enforcement of Republic Act No. 8800 (RA 8800)
delegating to a cabinet member the power to adopt measures to address prejudicial
It is a deeply ingrained doctrine in Philippine remedial law that a preliminary injunctive importations in contravention of relevant international agreements. We grounded our
14
writ under Rule 58 issues only upon a showing of the applicant’s "clear legal ruling on the fact that the petitioners, which principally argued that RA 8800 violates
15 16
right" being violated or under threat of violation by the defendant. "Clear legal right," Article VI, Section 28(2) of the Constitution (limiting Congress’ delegation of the power
within the meaning of Rule 58, contemplates a right "clearly founded in or granted by to fix trade quotas to the President), "have established a strong case for the
17
law." Any hint of doubt or dispute on the asserted legal right precludes the grant of 23
unconstitutionality of RA 8800." In short, the petitioners in Filipino Metals discharged
18
preliminary injunctive relief. For suits attacking the validity of laws or issuances with the burden of overcoming the presumption of validity accorded to RA 8800, warranting
the force and effect of law, as here, the applicant for preliminary injunctive relief bears the issuance of a preliminary injunctive writ in their favor. Southwing forecloses a
the added burden of overcoming the presumption of validity inhering in such laws or similar finding for respondent.
19
issuances. These procedural barriers to the issuance of a preliminary injunctive writ
are rooted on the equitable nature of such relief, preserving the status quo while, at the
same time, restricting the course of action of the defendants even before adverse Lastly, we find no merit in respondent’s submission that EO 418 repealed EO 156,
judgment is rendered against them. removing the legal bar to its importation of used motor vehicles. The question of
42
whether EO 418 repealed EO 156 was already settled in our Resolution dated 22 We are urged in this petition for review on certiorari to reverse and set aside the
1
August 2006 denying reconsideration of our ruling in Southwing. The respondents in Decision of the Court of Appeals in CA-G.R. SP No. 81932 which, in turn, reversed the
2
those cases, importers of used motor vehicles via the Subic Freeport, had espoused Orders, respectively dated 22 August 2003 and 27 November 2003, of the Regional
the theory presently advanced by respondent. We rejected the proffered construction of Trial Court (RTC), Branch 104, Parañaque City in Civil Case No. 02-0504. The assailed
the two issuances: Orders issued a writ of preliminary injunction in favor of petitioner TML Gasket
Industries, Inc. (TML), enjoining respondent BPI Family Savings Bank, Inc.'s (BPI's)
The subsequent issuance of E.O. No. 418 increasing the import duties on used motor extra-judicial foreclosure of TML’s mortgaged properties, and denied TML’s motion for
vehicles did not alter the policy of the executive department to prohibit the importation reconsideration thereof.
of said vehicle. x x x There is nothing in the text of E.O. No. 418 which expressly
repeals E.O. No. 156. The Congress, or the Office of the President in this case, is The facts are not in dispute.
presumed to know the existing laws, such that whenever it intends to repeal a
particular or specific provision of law, it does so expressly. The failure to add a specific Sometime in September 1996, TML obtained a loan from the Bank of Southeast Asia,
repealing clause indicates that the intent was not to repeal previous administrative Inc. (BSA), which TML can avail via a credit facility of P85,000,000.00. As security for
issuances. x x x the loan, TML executed a real estate mortgage over commercial and industrial lots
located at Dr. A. Santos Avenue, Parañaque City covered by Transfer Certificate of
E.O. No. 156 is very explicit in its prohibition on the importation of used motor vehicles. Title (TCT) Nos. 81278 and 81303 of the Registry of Deeds of Parañaque City. For
On the other hand, E.O. No. 418 merely modifies the tariff and nomenclature rates of additional security, BSA required TML to execute a promissory note for each availment
import duty on used motor vehicles. Nothing therein expressly revokes the importation from the credit facility.
ban. (Italicization supplied)
On different dates from September 1996 to 31 July 1997, TML executed several
Contrary to respondent's claim, our minute Resolution dated 15 November 2010 promissory notes (PN), which provided in pertinent part:
denying the petition in Feniz did not have the effect of modifying much less reversing
our holding in Southwing. The petition in Feniz sought a review of the ruling of the trial Since time is of the essence hereof, TML is in default under this Note, without need for
court striking down Section 2 of EO 418. The trial court found such provision, which notice, demand, presentment or any other act or deed in any of the following events: a)
imposed additional specific duty of ₱500,000 on each imported used motor vehicle, TML fails to pay when due, totally or partially, the principal, interest and other charges
void for having been issued by President Arroyo ultra vires. Neither the validity of EO under this Note x x x.
3
156 nor the alleged repeal by EO 418 of EO 156 was the lis mota in Feniz.
During the period of the loan, BSA changed its corporate name to DBS Bank Phils.
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 27 June (DBS), which eventually merged with BPI under the latter’s corporate name.
2011 and the Resolution dated 14 November 2011 of the Court of Appeals. The Order
dated 7 July 201 0 of the Regional Trial Court of Aparri, Cagayan, Branch 10, is
REINSTATED. The temporary restraining order issued on 16 January 2012 is made TML defaulted in the payment of its loan leading BPI to extra-judicially foreclose the
PERMANENT. mortgaged properties. As of 25 June 2002, TML’s indebtedness to BPI amounted to
P71,877,930.56, excluding penalties, charges, attorney’s fees and other expenses of
foreclosure.
SO ORDERED.
On 24 October 2002, the Ex-Officio Sheriff of RTC, Parañaque City issued a Notice of
G.R. No. 188768 January 7, 2013 Extra-judicial Foreclosure Sale of the mortgaged properties.

TML GASKET INDUSTRIES, INC., Petitioner, Because of the imminent foreclosure sale of its mortgaged properties, TML, on 21
vs. November 2002, filed a "Complaint for Declaratory Relief, Accounting, Declaration of
BPI FAMILY SAVINGS BANK, INC., Respondent. Nullity of Notice of Extra-Judicial Sale, Increased (sic) in Interest Rates, Penalty
Charges Plus, (sic) Damages, with Prayer for the Issuance of Temporary Restraining
RESOLUTION Order (TRO) and/or Writ of Preliminary Injunction" against BPI and DBS before the
RTC, Branch 194, Parañaque City.
PEREZ, J.:
43
The complaint highlighted the following clause in the PNs signed by TML, to wit: In an Order dated 20 June 2003, the trial court denied TML’s application for the
issuance of a preliminary injunction, ratiocinating thus:
If changes in the conditions and/or circumstances occur which, directly or indirectly,
increase the overall costs of money to the Lender, such as but not limited to the In resolving whether or not to grant the injunctive writ, this Court is guided by the
following: (i) any change in the laws or regulations, including any amendments, requisites thereof, as repeatedly (sic) enunciated by the Supreme Court, to wit: (1) the
modifications, interpretations, administrative implementation or repeal thereof affecting invasion of a right is material and substantial; (2) the right of complainant is clear and
the Lender or its business such as reserve or similar requirement, tax on income, gross unmistakable; and (3) there is an urgent and paramount necessity for the writ to
receipts, or the imposition of any levy, fees or other taxes; or (ii) changes in the interest prevent serious damage. x x x.
rate of forbearance of money whether in the prevailing market rates or such other
guiding or reference rates as may be adopted, determined and/or authorized by the From the testimony of TML’s witness, Lyman Lozada, it was established that TML is
CB; (iii) extraordinary inflation or there is an increase of fifteen percent (15%) in the indeed indebted to BPI and has become delinquent in the payment of the loan
consumer price index as announced by the CB or the National Economic Development obligation; that TML is willing to let go off (sic) the collaterals, the properties subject
Authority reckoned from the date of the granting of the loan or the credit line; or (iv) matter hereof, by way of dacion en pago. Apparently, the only concern of TML is the
devaluation, revaluation, or depreciation in real value or purchasing power of the fact that it will be ousted from the properties after the period of redemption shall have
Philippine Peso, that is, when there has been an adverse change of at least fifteen lapsed.
percent (15%), in the CB Reference Exchange Rate for the Philippine Peso to the US
Dollar and/or such other foreign currencies adopted by the Philippine Government or its
instrumentalities or agencies, as forming part of its international reserves, reckoned The foregoing testimony of TML casts doubt on its right over the property. The
from the date of granting of the loan or credit line; (v) any change in the reserve or aforementioned requisites are not obtaining in favor of TML. Moreover, as held by the
similar requirements as a necessary consequence of obtaining a unibanking license on Supreme Court, "where the complainant’s right or title is doubtful or disputed, injunction
the part of the Lender, then the Lender may, at its sole option, correspondingly adjust is not proper. x x x.
the interest rate in all outstanding loans(s) and other obligations under this Note/s and
5
such other documents that may be thereafter be executed. The adjustment in interest Furthermore, TML has in its favor the right of redemption.
4
rate shall take effect three (3) days after receipt by TML of the notice of adjustment.
On motion for reconsideration, the trial court made a complete turn-around. It ordered
TML asseverated that BSA made it understand that the stipulation meant that TML’s the issuance of the writ in favor of TML, subject to the posting of a bond in the amount
loan would be subject to only a 16% interest rate per annum. TML alleged that "despite of P300,000.00, to wit:
the odds and difficulties it encountered, aggravated by the global economic crisis, it
tried hard to religiously pay its x x x obligation to BPI x x x." However, contrary to their While it is admitted that TML has defaulted in the payment of its loan obligation, which
actual understanding, BSA "unreasonably, unconscionably and unilaterally" imposed a thus conferred upon BPI the right of foreclosure, the Court, after a contemplation of the
33% interest rate per annum, and ultimately, a penalty of 36% interest on past due logical consequence of the denial of the injunctive writ, is convinced that great and
principal and corresponding interest thereon. irreparable damages may be caused TML. As pointed out by TML, it might lead to an
absurd scenario of TML winning the case but losing its property in BPI’s favor or in an
TML likewise pointed out that it had demanded an independent accounting and even worse scenario, in favor of third parties. This is because of the short period within
6
liquidation of its loan account, which went unheeded. Ultimately, for TML, it cannot be which TML could exercise its redemption right under the General Banking Act.
considered in default of an obligation with an undetermined and unascertained amount.
In that regard, TML argued that the intended foreclosure of TML’s mortgaged BPI moved for reconsideration of the order. However, the trial court maintained its
properties is unwarranted for being illegal; thus, the foreclosure ought to be enjoined to ruling:
prevent TML from suffering grave and irreparable damage, especially since TML’s
office and factory are located at the mortgaged properties.
Admittedly, TML has incurred in default in the payment of its obligation but the amount
has yet to be determined, the determination thereof being one of the provinces of the
Refuting TML’s allegations, BPI maintained that the interest rates on TML’s loan instant complaint, and considering the brief redemption period under the General
obligation were mutually and voluntarily agreed upon. On TML’s application for the Banking Act,the redemption is next to impossible. Thus, the injury to TML would be
issuance of a writ of preliminary injunction, BPI countered that it has the absolute right very grave if not irreparable.
7
to foreclose the mortgage constituted over TML’s properties given that TML defaulted
on its loan obligation, which had already become due and demandable.
44
Posthaste, BPI filed a petition for certiorari under Rule 65 of the Rules of Court before BPI, which, in turn, rendered BPI’s original petition for extra-judicial foreclosure of
the Court of Appeals, seeking to annul and set aside the twin Orders of the trial court mortgage moot and academic.
respectively dated 22 August 2003 and 27 November 2003 which granted the writ of
preliminary injunction in favor of The appellate court denied the motions and affirmed its original decision:

TML and enjoined the foreclosure sale of the mortgaged properties. WHEREFORE, the instant motion for reconsideration and supplemental motion for
reconsideration are hereby DENIED. Accordingly, Our Decision, dated August 19,
9
The appellate court found grave abuse of discretion in the trial court’s issuance of the 2008, STANDS.
orders as demonstrated by the following:
Hence, this petition for review on certiorari positing that the appellate court erred when
1. TML signed the PNs which stipulated that TML, as the Borrower, is it reversed and set aside the twin Orders of the trial court and lifted the injunctive writ.
considered in default when it "fails to pay, when due, totally or partially, the
principal, interest and other charges thereunder." We subscribe to the appellate court’s ruling.

2. Consistent therewith, the Real Estate Mortgage signed by TML provides Section 3, Rule 58 of the Rules of Court lists the grounds for the issuance of a writ of
that one of the effects of default of the mortgagor (TML) includes the right of preliminary injunction:
the mortgagee (BPI) to immediately foreclose the mortgage, which foreclosure
may be undertaken judicially or extra-judicially, at the discretion of the
mortgagee (BPI). SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may
be granted when it is established:
3. TML itself admitted in its complaint that it has failed to pay its outstanding
loan to BPI. (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
4. From all three points, BPI has the right to extra-judicially foreclose the for a limited period or perpetually;
mortgaged properties.
(b) That the commission, continuance or non-performance of the act or acts
5. TML did not demonstrate an actual existing right to be protected. complained of during the litigation would probably work injustice to the
applicant; or
6. Corollary thereto, there is no threatened or actual violation of TML’s
doubtful right to the mortgaged properties. (c) That a party, court, agency or a person doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in
The dispositive portion of the appellate court’s decision reads, thus: violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
WHEREFORE, the Petition is GRANTED. The twin Order(s), dated August 22, 2003
and November 27, 2003, of the Regional Trial Court of Parañaque City, Branch 164 As such, a writ of preliminary injunction may be issued only upon clear showing of an
(sic) in Civil Case No. 02-0504, are hereby REVERSED and SET ASIDE. Accordingly, actual existing right to be protected during the pendency of the principal action. The
8
the writ of preliminary injunction granted in favor of TML is hereby LIFTED. requisites of a valid injunction are the existence of a right and its actual or threatened
violations. Thus, to be entitled to an injunctive writ, the right to be protected and the
10
TML filed a motion for reconsideration. While the resolution thereof was pending, TML violation against that right must be shown.
filed a Supplemental Motion for Reconsideration arguing that BPI’s petition for certiorari
has become moot and academic because BPI had supposedly filed an Amended In this case, TML anchors its right to the mortgaged properties on its claim that it
Petition for Extra-judicial Foreclosure of Real Estate Mortgage under Act No. 3135 cannot be considered in default of its loan obligation to BPI. Consequently, the
before the trial court. For TML, that effectively changed the amount of its obligation to mortgaged properties cannot be foreclosed. TML claims it had been religiously paying
its loan; however, BPI’s unilateral increase of the rate of interest to 33% prevented TML
45
from further paying the loan. Thus, for TML, while an accounting and liquidation of the The issuance of a preliminary injunction rests entirely within the discretion of the court
actual amount of its obligation to BPI remains undetermined, it cannot be considered in taking cognizance of the case and is generally not interfered with except in cases of
default. Ultimately, TML avers that the threatened foreclosure and auction sale of its manifest abuse. For the issuance of the writ of preliminary injunction to be proper, it
mortgaged properties while its loan with BPI subsists is a violation of its right. must be shown that the invasion of the right sought to be protected is material and
substantial, that the right of complainant is clear and unmistakable and that there is an
12
We note that TML categorically admitted that it has an existing loan with BPI, secured urgent and paramount necessity for the writ to prevent serious damage. In the
by a real estate mortgage and several promissory notes, and that it stopped paying for absence of a clear legal right, the issuance of a writ of injunction constitutes grave
one reason or another. On that point, we affirm the appellate court’s findings: abuse of discretion.

It is settled rule of law that foreclosure is proper when the debtors are in default of the From the foregoing, it is apparent that the trial court committed grave abuse of
payment of their obligation. On this note, it must be recalled that the promissory notes discretion when it revoked its previous order and subsequently issued a writ of
executed by TML in favor of BPI states that the Borrower - in this case, TML – is preliminary injunction simply on the following grounds: "(a) that TML’s mortgage debt is
considered in default when it fails to pay when due, totally or partially, the principal, unliquidated; (b) that TML stands to suffer great and irreparable damages if it wins the
interest and other charges under the promissory note(s). In conjunction therewith, the case but, in the process, loses its mortgaged properties to BPI, or even worse, to third
real estate mortgage executed by the parties stipulates, among others, that: parties; and, (c) that, considering, the brief redemption period under the General
Banking Act, TML’s chance to redeem its properties would be next to impossible."

Sec. 6. Effects of Default by the Mortgagor. xxx


In Selegna Management and Development Corporation v. United Coconut Planters
13
Bank, we ruled that the debt is considered liquidated despite the alleged lack of
a) The MORTGAGEE shall have the right to immediately foreclose on this Mortgage in accounting:
accordance with Sec. 7, hereof;
A debt is liquidated when the amount is known or is determinable by inspection of the
xxx terms and conditions of the relevant promissory notes and related documentation.
Failure to furnish a debtor a detailed statement of account does not ipso facto result in
Sec. 7. Foreclosure. Foreclosure shall, at the sole discretion of the MORTGAGEE, be an unliquidated obligation.
either judicial or extrajudicial, xxx xxx.
Petitioners executed a Promissory Note, in which they stated that their principal
In its Complaint, TML admitted that it has not paid its obligation with BPI by reason of obligation was in the amount of P103,909,710.82, subject to an interest rate of 21.75
the exorbitant rates of interest unilaterally imposed by the latter. However, regardless percent per annum.
of TML’s defenses, the fact that it has an outstanding obligation with BPI which it failed
to pay despite demand remains undisputed. Verily, TML’s failure to comply with the Pursuant to the parties' Credit Agreement, petitioners likewise know that any delay in
terms and conditions of its credit agreement with BPI, as embodied in the real estate the payment of the principal obligation will subject them to a penalty charge of one
mortgage and the promissory notes it issued in favor of the latter, entitles BPI to percent per month, computed from the due date until the obligation is paid in full.
extrajudicially foreclose the mortgaged properties.
It is in fact clear from the agreement of the parties that when the payment is
xxxx accelerated due to an event of default, the penalty charge shall be based on the total
principal amount outstanding, to be computed from the date of acceleration until the
To our mind, the grounds relied upon by the trial court, do not justify the issuance of a obligation is paid in full. Their Credit
writ of preliminary injunction in favor of TML. Under the factual setting of this case, TML
has no right to be protected from the impending foreclosure of its properties. Certainly, Agreement even provides for the application of payments. It appears from the
the said foreclosure is authorized under the real estate mortgage and the promissory agreements that the amount of total obligation is known or, at the very least,
notes voluntarily executed by TML in favor of BPI. Needless to say, BPI’s exercise of determinable.
its right to foreclose the subject properties does not, in any way, constitute a violation of
TML’s property rights. On the contrary, the foreclosure of the mortgage is to enforce
the contractual obligation of BPI.
11 Moreover, when they made their partial payment, petitioners did not question the
principal, interest or penalties demanded from them. They only sought additional time
46
to update their interest payments or to negotiate a possible restructuring of their MANILA INTERNATIONAL G.R. No. 143870
account. Hence, there is no basis for their allegation that a statement of account was AIRPORT AUTHORITY,
necessary for them to know their obligation. We cannot impair respondent's right to Petitioner, Present:
foreclose the properties on the basis of their unsubstantiated allegation of a violation of
14
due process. PUNO,
- versus - Chairman,
Clearly, the possibility of irreparable damage without proof of actual existing right is no AUSTRIA-MARTINEZ,
ground for an injunction. Once again, our holding in Selegna is relevant and sound: CALLEJO, SR.,
TINGA, and
NAZARIO, JJ.
x x x Injunction is not designed to protect contingent or future rights. It is not proper RIVERA VILLAGE LESSEE
when the complainant's right is doubtful or disputed. HOMEOWNERS ASSOCIATION, Promulgated:
INCORPORATED, September 30, 2005
xxxx Respondent.
x------------------------------------------------------------x
Petitioners do not have any clear right to be protected. As shown in our earlier findings,
they failed to substantiate their allegations that their right to due process had been
violated and the maturity of their obligation forestalled. Since they indisputably failed to
meet their obligations in spite of repeated demands, we hold that there is no legal DECISION
justification to enjoin respondent from enforcing its undeniable right to foreclose the
mortgaged properties. TINGA, J.:
[1]
We resolve the Petition for Review on Certiorari dated August 23, 2000 filed
In any case, petitioners will not be deprived outrightly of their property. Pursuant to [2]
by the Manila International Airport Authority (MIAA), assailing the Decision of the Court
Section 47 of the General Banking Law of 2000, mortgagors who have judicially or of Appeals dated June 30, 2000 which directed the issuance of a writ of preliminary
extrajudicially sold their real property for the full or partial payment of their obligation injunction restraining petitioner from evicting the homeowners of Rivera Village from their
have the right to redeem the property within one year after the sale. They can redeem dwellings.
their real estate by paying the amount due, with interest rate specified, under the
15
mortgage deed; as well as all the costs and expenses incurred by the bank. The antecedents, culled from the petition and the assailed Decision, are as follows:

Lastly, as the Court of Appeals had done, we clarify that our disposition in this case The then Civil Aeronautics Administration (CAA) was entrusted with the administration,
pertains only to the propriety of the trial court’s Orders issuing a writ of preliminary operation, management, control, maintenance and development of the Manila
injunction in favor of TML to enjoin the foreclosure of TML’s mortgaged properties. We International Airport (MIA), now the Ninoy Aquino International Airport. Among its powers
do not dispose herein of the main case pending before the RTC, Branch 194, was the power to enter into, make and execute concessions and concession rights for
Parañaque City docketed as Civil Case No. 02-0504. purposes essential to the operation of the airport.

On May 25, 1965, the CAA, through its Director, Capt. Vicente C. Rivera,
All told, there is no reversible error in the appellate court’s decision, reversing and
entered into individual lease contracts with its employees (lessees) for the lease of
setting aside the Orders dated 22 August 2003 and 27 November 2003 of the trial court
portions of a four (4)-hectare lot situated in what is now known as Rivera Village located
and lifting the writ of preliminary injunction issued in favor of TML.
in Barangay 199 and 200 in Pasay City. The leases were for a twenty-five (25)-year
[3]
period to commence on May 25, 1965 up to May 24, 1990 at P20.00 per annum as
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA- rental.
G.R. SP No. 81932 is AFFIRMED. Costs against petitioner.

SO ORDERED.
On May 4, 1982, Executive Order No. (EO) 778 was issued (later amended
by EO 903 on July 21, 1983), creating petitioner MIAA, transferring existing assets of

47
the MIA to MIAA, and vesting the latter with the power to administer and operate the inasmuch as petitioner therein (respondent homeowners association) is not the real
MIA. party-in-interest, the individual members of the association being the ones who have
possessory rights over their respective premises. Moreover, the lease contracts have
Sometime in January 1995, MIAA stopped issuing accrued rental bills and already expired.
refused to accept rental payments from the lessees. As a result, respondent Rivera
Village Lessee Homeowners Association, Inc. (homeowners association), purportedly As regards the contention that the lessees are entitled to possess the subject
representing the lessees, requested MIAA to sell the subject property to its members, property by virtue of PD 1517, Proclamation No. 1967 and PD 2016, which respectively
invoking the provisions of Presidential Decree No. (PD) 1517 or the Urban Land Reform identify parcels of urban land as part of the Urban Land Reform Zone, specify certain
Act and PD 2016. areas in Metro Manila, including Rivera Village, as areas for priority development or
urban land reform zones, and prohibit the eviction of occupant families from such lands,
The MIAA, on February 14, 1996, denied the request, claiming that the subject the trial court declared that the subject property has been reserved by MIAA for airport-
property is included in its Conceptual Development Plan intended for airport-related related activities and, as such, is exempt from the coverage of the Comprehensive and
activities. Continuing Urban Development and Housing Program under Republic Act No. (RA)
7279.
Respondent then filed a petition for mandamus and prohibition with prayer for
[4]
the issuance of a preliminary injunction against MIAA and the National Housing Respondent filed an appeal with the Court of Appeals, interposing essentially
Authority (NHA). The petition, docketed as Civil Case No. 97-1598 in the Regional Trial the same arguments raised before the trial court. The appellate court annulled and set
Court of Pasay City, Branch 109, sought to restrain the MIAA from implementing its aside the order of the trial court and remanded the case for further proceedings. The
Conceptual Development Plan insofar as Rivera Village is concerned. It also sought to dispositive portion of the assailed Decision states:
compel MIAA to segregate Rivera Village from the scope of the Conceptual Development
Plan and the NHA to take the necessary steps for the disposition of the property in favor WHEREFORE, the assailed October 12, 1998 Order is annulled, set
of the members of the homeowners association. aside and reversed. The case is remanded to the court a quo for
further proceedings.
[5]
MIAA filed an answer alleging that the petition fails to state a cause of action
in view of the expiration of the lease contracts and the lack of personality to sue of the A writ of preliminary injunction is issued restraining and preventing
homeowners association. MIAA also claimed that the homeowners association is not respondent MIAA from evicting the members of petitioner Rivera
entitled to a writ of mandamus because it does not have a clear legal right to possess Village Association from their respective lots in the Rivera Village.
the subject property and MIAA does not have a corresponding duty to segregate Rivera Petitioner is ordered to post a bond in the amount of P500,000.00
Village from its Conceptual Development Plan. with the condition that petitioner will pay to respondent MIAA all
damages it may sustain by reason of the injunction if the court should
A preliminary hearing on MIAAs affirmative defenses was conducted, after finally decided that petitioner is not entitled thereto. Upon approval of
[6]
which the trial court issued an Order dated October 12, 1998, denying the prayer for the bond, the writ of preliminary injunction shall forthwith issue.
the issuance of a temporary restraining order and/or writ of preliminary injunction and
[8]
dismissing the petition for lack of merit. The dispositive portion of the Order reads: SO ORDERED.

In view of all the foregoing, the prayer for the issuance of a temporary The appellate court foremost ruled that the case can be construed as a class
restraining order and/or writ of preliminary injunction is hereby denied suit instituted by the Rivera Village lessees. The homeowners association, considered
for lack of merit and the above-entitled petition is hereby ordered as the representative of the lessees, merely instituted the suit for the benefit of its
dismissed for lack of merit. members. It does not claim to have any right or interest in the lots occupied by the
lessees, nor seek the registration of the titles to the land in its name.
[7]
SO ORDERED.
On the issue of the expiration of the lease contracts and the application of PD
1517, Proclamation No. 1967 and PD 2016, the Court of Appeals held that the expiration
The trial court held that PD 1818 bars the issuance of a restraining order, of the lease contracts cannot adversely affect the rights acquired by the lessees under
preliminary injunction or preliminary mandatory injunction in any case, dispute or the foregoing laws. Besides, the lease contracts were impliedly renewed by virtue of
controversy involving infrastructure projects of the government or any public utility MIAAs acceptance of rental payments from May 25, 1990 up to December 1994. This
operated by the government. It also ruled that the petition failed to state a cause of action resulted in an implied new lease under Article 1670 of the Civil Code.
48
Moreover, the appellate court construed Sec. 5(c) of RA 7279 to mean that if Respondent further argues that PD 1818 is inapplicable to this case because it
the government lot has not been utilized during the ten (10)-year period for the purpose has established a clear and unmistakable right to an injunction. Besides, PD 2016 which
for which it has been reserved prior to 1983, then said lot is encompassed by the law protects from eviction tenants of lands identified for priority development, is a later
and is subject to distribution to the legitimate and qualified residents of the area after enactment which should be deemed to prevail over PD 1818.
appropriate proceedings have been undertaken.
[10]
In the Resolution dated January 24, 2001, the petition was given due course
As to whether PD 1818 bars the issuance of an injunctive writ in this case, the and the parties were required to submit their respective memoranda.
appellate court ruled that PD 1818 is a general law on the issuance of restraining orders
[11]
and writs of preliminary injunction. On the other hand, PD 2016 is a special law Accordingly, MIAA submitted its Memorandum dated March 20, 2001, while
[12]
specifically prohibiting the eviction of tenants from lands identified as areas for priority respondent filed its Memorandum dated April 20, 2001. For its part, NHA manifested
development. Thus, the trial court can issue an injunctive writ if the act sought to be that it is adopting the memorandum of MIAA as its own insofar as the same is germane
[13]
restrained will enforce the eviction of tenants from urban land reform zones. and material to NHAs stand.

The court, however, declared that it cannot make a definitive ruling on the rights As presented and discussed by the parties, the issues are the following:
of the members of the homeowners association vis--vis the MIAA Conceptual
Development Plan, considering the need for a full-blown trial to ferret out whether the 1. Has PD 2016 modified PD 1818?
claimed rights under the pertinent laws have ripened to actual legal and vested rights in
their favor. 2. Did the petition filed by respondent with the trial court state a cause
of action against petitioner?
MIAA now seeks a review of the Decision of the Court of Appeals. In the instant
petition, MIAA contends that the appellate court erred in ruling that PD 2016, which 3. Is petitioner obliged to dispose of the subject properties in favor of
prohibits the eviction of occupant families from real property identified as areas for priority the members of respondent association after appropriate
development or urban land reform zones, has modified PD 1818, which bars the proceedings?
issuance of injunctive writ in cases involving infrastructure projects of the government,
including public utilities for the transport of goods and commodities. 4. Is respondent entitled to the issuance of a writ of preliminary
[14]
injunction?
It argues that the petition filed by the homeowners association with the trial court
fails to state a cause of action because the homeowners association is not the real party-
in-interest in the suit. Allegedly, the Board Resolution presented by respondent shows We first resolve the threshold question of whether respondent has personality
that it was only the board of directors of the association, as distinguished from the to sue.
members thereof, which authorized respondent to act as its representative in the suit.
MIAA contends that the real parties-in-interest in the petition filed with the trial
MIAA also stresses that the subject property has recently been reserved by court are the individual members of the homeowners association. Not having been
MIAA for airport-related activities and, as such, Sec. 5(c) of RA 7279 applies. Under the brought in the name of the real parties-in-interest, the suit was correctly dismissed by the
said law, lands which are used, reserved or otherwise set aside for government offices, trial court for failure to state a cause of action.
facilities and other installations are exempt from the coverage of the law.
The 1997 Rules of Civil Procedure (Rules of Court) requires that every action
Moreover, MIAA avers that the Court of Appeals should not have granted must be prosecuted or defended in the name of the real party-in-interest, i.e., the party
injunctive relief to respondent, considering that the grant of an injunction would inflict who stands to be benefited or injured by the judgment in the suit, or the party entitled to
[15]
greater damage to petitioner and to the public. the avails of the suit. A case is dismissible for lack of personality to sue upon proof
that the plaintiff is not the real party-in-interest, hence grounded on failure to state a
[9] [16]
Respondent filed a Comment dated November 20, 2000, arguing that MIAA cause of action.
is mandated by law to dispose of Rivera Village to the homeowners thereof. Under
existing laws, the homeowners have the right to possess and enjoy the property. To The petition before the trial court was filed by the homeowners association,
accept MIAAs pretense that the property has been recently reserved for airport-related represented by its President, Panfilo R. Chiutena, Sr., upon authority of a Board
activities and therefor exempt from the coverage of RA 7279 will allegedly violate the Resolution empowering the latter to file [A]ll necessary action to the Court of Justice and
right of the homeowners as bona fide tenants to socialized housing.
49
other related acts necessary to have our Housing Project number 4 land be titled to the is not deemed filed and the court does not acquire jurisdiction over the complaint. It must
[20]
members of the Association. be stressed that an unauthorized complaint does not produce any legal effect.

Obviously, the petition cannot be considered a class suit under Sec. 12, Rule In this case, the petition filed with the trial court sufficiently avers that the
[17]
3 of the Rules of Court, the requisites therefor not being present in the case, notably homeowners association, through its President, is suing in a representative capacity as
because the petition does not allege the existence and prove the requisites of a class authorized under the Board Resolution attached to the petition. Although the names of
suit, i.e., that the subject matter of the controversy is one of common or general interest the individual members of the homeowners association who are the beneficiaries and
to many persons and the parties are so numerous that it is impracticable to bring them real parties-in-interest in the suit were not indicated in the title of the petition, this defect
all before the court, and because it was brought only by one party. can be cured by the simple expedient of requiring the association to disclose the names
of the principals and to amend the title and averments of the petition accordingly.
[18]
In Board of Optometry v. Colet, we held that courts must exercise utmost
caution before allowing a class suit, which is the exception to the requirement of joinder Essentially, the purpose of the rule that actions should be brought or defended
of all indispensable parties. For while no difficulty may arise if the decision secured is in the name of the real party-in-interest is to protect against undue and unnecessary
favorable to the plaintiffs, a quandary would result if the decision were otherwise as those litigation and to ensure that the court will have the benefit of having before it the real
who were deemed impleaded by their self-appointed representatives would certainly adverse parties in the consideration of a case. This rule, however, is not to be narrowly
claim denial of due process. and restrictively construed, and its application should be neither dogmatic nor rigid at all
[21]
times but viewed in consonance with extant realities and practicalities. As correctly
There is, however, merit in the appellate courts pronouncement that the petition noted by the Court of Appeals, the dismissal of this case based on the lack of personality
should be construed as a suit brought by the homeowners association as the to sue of petitioner-association will only result in the filing of multiple suits by the
representative of the members thereof under Sec. 3, Rule 3 of the Rules of Court, which individual members of the association.
provides:
What is more decisive to the resolution of the present controversy, however,
Sec. 3. Representatives as parties.Where the action is is a matter not addressed by the parties in the case before this Court, that is, the fact
allowed to be prosecuted or defended by a representative or someone that the petition filed before the trial court is for mandamus to compel MIAA to
acting in a fiduciary capacity, the beneficiary shall be included in segregate Rivera Village from the scope of its Conceptual Development Plan and the
the title of the case and shall be deemed to be the real party in NHA to take the necessary steps for the disposition of the subject property in favor
interest. A representative may be a trustee of an express trust, a of the members of the homeowners association.
guardian, an executor or administrator, or a party authorized by law or
these Rules. An agent acting in his own name and for the benefit of an Parenthetically, while the procedural rule is that a party is required to indicate
undisclosed principal may sue or be sued without joining the principal in his brief an assignment of errors and only those assigned shall be considered by the
except when the contract involves things belonging to the principal. appellate court in deciding the case, it is equally settled that appellate courts have ample
[Emphasis supplied.] authority to rule on matters not assigned as errors in an appeal, if these are indispensable
[22]
or necessary to the just resolution of the pleaded issues.
It is a settled rule that every action must be prosecuted or defended in the name
of the real party-in-interest. Where the action is allowed to be prosecuted or defended by For instance, the Court has allowed the consideration of other grounds not
a representative acting in a fiduciary capacity, the beneficiary must be included in the raised or assigned as errors specifically in the following instances: (1) grounds not
title of the case and shall be deemed to be the real party-in-interest. The name of such assigned as errors but affecting jurisdiction over the subject matter; (2) matters not
[19]
beneficiaries shall, likewise, be included in the complaint. assigned as errors on appeal but are evidently plain or clerical errors within the
contemplation of the law; (3) matters not assigned as errors on appeal but consideration
Moreover, Sec. 4, Rule 8 of the Rules of Court provides that facts showing the of which is necessary in arriving at a just decision and complete resolution of the case
capacity of a party to sue or be sued, or the authority of a party to sue or be sued in a or to serve the interest of justice or to avoid dispensing piecemeal justice; (4) matters not
representative capacity must be averred in the complaint. In order to maintain an action specifically assigned as errors on appeal but raised in the trial court and are matters of
in a court of justice, the plaintiff must have an actual legal existence, that is, he or she or record having some bearing on the issue submitted which the parties failed to raise or
it must be a person in law and possessed of a legal entity as either a natural or an artificial which the lower court ignored; (5) matters not assigned as errors on appeal but closely
person. The party bringing suit has the burden of proving the sufficiency of the related to an error assigned; and (6) matters not assigned as errors on appeal but upon
[23]
representative character that he claims. If a complaint is filed by one who claims to which the determination of a question properly assigned is dependent.
represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint

50
In this case, although the propriety of the filing of a petition for mandamus was The question of whether mandamus is the proper remedy was clearly raised in
[24]
no longer raised as an issue before this Court, MIAA asserted in its answer to the the trial court and the Court of Appeals although it was largely ignored by both courts.
original petition that the homeowners association is not entitled to a writ of mandamus This issue being indispensable to the resolution of this case, we shall rule on the matter.
because it has not shown any legal right to possess the subject property and a correlative
obligation on the part of MIAA to segregate the property from its Conceptual A writ of mandamus can be issued only when petitioners legal right to the
Development Plan. MIAA averred: performance of a particular act which is sought to be compelled is clear and complete. A
clear legal right is a right which is indubitably granted by law or is inferable as a matter
[28]
28. Petitioner is not entitled to the issuance of a writ of of law.
mandamus. For a writ of mandamus to issue, it is essential that
petitioner has a legal right to the thing demanded and that it is the In order that a writ of mandamus may aptly issue, it is essential that, on the one
imperative duty of respondent to perform the act required. The legal hand, petitioner has a clear legal right to the claim that is sought and that, on the other
right of petitioner to the thing demanded must be well-defined, clear hand, respondent has an imperative duty to perform that which is demanded of him.
and certain. The corresponding duty of respondent to perform the Mandamus will not issue to enforce a right, or to compel compliance with
required act must also be clear and specific (Cf. Lemi v. Valencia, 26
SCRA 203, 210 [1968]).

29. Petitioner, in view of the expiration of the lease contracts a duty, which is questionable or over which a substantial doubt exists. The principal
of its individual members, has failed to show that it has the legal right function of the writ of mandamus is to command and to expedite, not to inquire and to
to possess the subject property. adjudicate. Thus, it is neither the office nor the aim of the writ to secure a legal right but
to implement that which is already established. Unless the right to relief sought is
30. There is therefore no corresponding duty on the part of unclouded, mandamus will not issue.
respondent MIAA to segregate the property from the scope of its
[25]
Conceptual Development Plan. In this case, the Court of Appeals itself conceded that no definitive ruling as
regards the rights of the individual members of the homeowners association could yet
The question of whether the homeowners association is entitled to the issuance of a writ be made considering the need for a full determination of whether their claimed rights
[26]
of mandamus was again raised in the memorandum filed by MIAA with the Court of under the pertinent laws have ripened into actual legal and vested rights. The appellate
Appeals. MIAA alleged: court even outlined the requisites under PD 1517 which have yet to be complied with,
namely: (1) the submission to the NHA of a proposal to acquire the subject property as
[29]
Appellant is not entitled to the issuance of a writ of required under Sec. 9 of PD 1517;
mandamus. For a writ of mandamus to issue, it is essential that the
appellant has a legal right to the thing demanded and that it is the
imperative duty of respondent to perform the act required. The legal
right of appellant to the thing demanded must be well-defined, clear and (2) proof that the members of the homeowners association are qualified to avail of
[30]
and certain. The corresponding duty of respondent to perform the the benefits under PD 1517 as mandated by Sec. 6 of the same law.
required act must also be clear and specific (cf. Lemi v. Valencia, 26
SCRA 203, 210 [1968]). Resort to mandamus is evidently premature because there is no showing that
the members of the homeowners association have already filed an application or
proposal with the NHA to acquire their respective lots. There is still an administrative
remedy open to the members of the homeowners association which they should have
[31]
first pursued, failing which they cannot invoke judicial action.
In view of the expiration of the lease contracts of its individual
members, appellant has failed to show that it has the legal right to We note that while respondent alleges that its members enlisted themselves
[32]
possess the subject property. There is therefore no corresponding with the NHA in order to avail of the benefits of the law, the NHA, in its answer to the
duty on the part of the MIAA to segregate the property from the scope petition, denied this allegation for being self-serving. Whatever rights the members of the
[27]
of its conceptual development plan. homeowners association may have under the relevant laws are still in substantial doubt
or dispute. Hence, the petition for mandamus was appropriately dismissed for failure to
state a cause of action.

51
So, too, should the prayer for the issuance of a writ of prohibition contained in
the same petition be denied. Writs of certiorari, prohibition and mandamus are The Executive Secretary as representative of the President of the Philippines
prerogative writs of equity and their granting is ordinarily within the sound discretion of is, therefore, an indispensable party in actions seeking to compel the sale or disposition
the courts to be exercised on equitable principles. Said writs should only be issued when of properties of the MIAA. Section 7, Rule 3 of the Rules of Court provides that parties-
[33]
the right to the relief is clear. As our findings in this case confirm, the homeowners in-interest without whom no final determination can be had of an action shall be joined
association failed to establish a clear legal right to the issuance of the writs of mandamus either as plaintiffs or defendants.
and prohibition prayed for. Thus, the presence of all indispensable parties is a condition sine qua non for
the exercise of judicial power. It is precisely when an indispensable party is not before
There is, moreover, another ground for the dismissal of the petition filed before the court that the action should be dismissed. The plaintiff is mandated to implead all
the trial court which appears to have been overlooked by the parties in this case. indispensable parties, and the absence of one renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties, but even as to
In the original petition filed before the trial court, the homeowners association those present. One who is a party to a case is not bound by any decision of the court;
[36]
averred that although EO 903 transferred to MIAA the properties and assets of MIA, such otherwise, he will be deprived of his right to due process.
transfer was made subject to what the homeowners association claims to be the existing
[34]
rights of its members. MIAA dismissed this allegation as an erroneous conclusion of For the foregoing reasons, the prayer for the issuance of the writ of preliminary
[35]
law. injunction must perforce be denied. Preliminary injunction is a mere ancillary remedy
which cannot stand separately or proceed independently of the main case. Having
We cite the complete text of the relevant provision of EO 903 to fully understand declared that the petition filed before the trial court was correctly dismissed, the
the import thereof and its effect on the present controversy. Section 3 thereof states: determination of the homeowners associations entitlement to a writ of preliminary
[37]
injunction is already moot and academic.
Sec. 3. Creation of the Manila International Airport
Authority.There is hereby established a body corporate to be known Besides, as earlier noted, the right of the members of the homeowners
as the Manila International Airport Authority which shall be attached to association to possess and purchase the subject property is still uncertain considering
the Ministry of Transportation and Communications. The principal that they have not completed the process for the acquisition of their lots as outlined in
office of the Authority shall be located at the New Manila International PD 1517.
Airport. The Authority may establish such offices, branches, agencies
or subsidiaries as it may deem proper and necessary; Provided, That Injunction is a preservative remedy aimed at protecting substantive rights and
any subsidiary that may be organized shall have the prior approval of interests. The writ of preliminary injunction is issued by the court to prevent threatened
the President. or continuous irreparable injury to parties before their claims can be thoroughly studied
and adjudicated. Its sole objective is to preserve the status quo until the merits of the
The land where the Airport is presently located as well case can be heard fully. The writ is issued upon the satisfaction of two requisites, namely:
as the surrounding land area of approximately six hundred (1) the existence of a right to be protected; and (2) acts which are violative of said right.
hectares, are hereby transferred, conveyed and assigned to the In the absence of a clear legal right, the issuance of the injunctive relief constitutes grave
ownership and administration of the Authority, abuse of discretion. Injunction is not designed to protect contingent or future rights.
subject to existing rights, if any. The Bureau of Lands and other Where the complainants right is doubtful or disputed, injunction is not proper. The
appropriate government agencies shall undertake an actual survey of possibility of irreparable damage without proof of actual existing right is not a ground for
[38]
the area transferred within one year from the promulgation of this an injunction.
Executive Order and the corresponding title to be issued in the name
of the authority. Any portion thereof shall not be disposed through With this conclusion, we deem it unnecessary to discuss the other issues raised
sale or through any other mode unless specifically approved by in this petition.
the President of the Philippines. [Emphasis supplied.]
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of
As can clearly be seen from the foregoing provision, while it is true that the Appeals dated June 30, 2000 is REVERSED and SET ASIDE. Civil Case No. 97-1598
ownership and administration of the airport and its surrounding land was assigned to of the Regional Trial Court of Pasay City is ordered DISMISSED.
MIAA subject to existing rights, which we may here understand to be the rights granted
under PD 1517, EO 903 specifically requires the approval of the President of the SO ORDERED.
Philippines before any disposition by sale or any other mode may be made concerning
the property transferred to MIAA.
52
12
G.R. No. 184045 January 22, 2014 Civil Case No. TG-1966 (annulment case). In their complaint, Sps. Alindog alleged
13
that they purchased the subject property from Gutierrez way back in September
SPOUSES NICASIO C. MARQUEZ AND ANITA J. MARQUEZ, Petitioners, 1989, but were unable to secure a certificate of title in their names because Gonzales –
vs. to whom they have entrusted said task – had deceived them in that they were assured
SPOUSES CARLITO ALINDOG AND CARMEN ALINDOG, Respondents. that the said certificate was already being processed when such was not the
14
case. Eventually, they found out that the property had already been mortgaged to Sps.
Marquez, and that when they tried to contact Gonzales for an explanation, she could
DECISION no longer be found. Separately, Sps. Alindog averred that when the mortgage was
15
executed in favor of Sps. Marquez, Gutierrez was already dead.
PERLAS-BERNABE, J.:
16
In their defense, Sps. Marquez disputed Sps. Alindog’s ownership over the subject
1 2
Assailed in this petition for review on certiorari are the Decision dated February 29, property, arguing that the purported sale in the latter’s favor was never registered and
3
2008 and Resolution dated August 6, 2008 of the Court of Appeals (CA) in CA-G.R. therefore, not binding upon them. Further, they insisted that their certificate of title, TCT
SP No. 97744 finding no grave abuse of discretion on the part of the Regional Trial No. T-41939, was already indefeasible, and cannot be attacked collaterally.
Court of Tagaytay City, Branch 18 (RTC) in issuing the Orders dated November 14,
4
2005 and January 17, 2007[[5 ]] in SCA No. TG-05-2521. Based on these orders, a Meanwhile, on March 16, 2005, Anita filed an ex-parte petition for the issuance of a writ
writ of preliminary injunction was issued against petitioners-spouses Nicasio C. 17
of possession (ex-parte petition) before the RTC, docketed as LRC Case No. TG-05-
Marquez and Anita J. Marquez (Sps. Marquez), enjoining them from taking possession 1068, claiming that the same is ministerial on the court’s part following the
of the property subject of this case despite the consolidation of their title over the same. consolidation of her and her husband’s title over the subject property. Impleaded in
said petition are Sps. Gutierrez, including all persons claiming rights under them.
The Facts
The RTC Rulings and Subsequent Proceedings
Records show that sometime in June 1998, petitioner Anita J. Marquez (Anita)
extended a loan in the amount of ₱500,000.00 to a certain Benjamin Gutierrez 18
In an Order dated August 1, 2005, the RTC granted Anita’s ex-parte petition and
(Gutierrez). As security therefor, Gutierrez executed a Deed of Real Estate thereby directed the issuance of a writ of possession in her favor. Consequently, a
6
Mortgage dated June 16, 1998 over a parcel of land located in Tagaytay City with an 19
notice to vacate dated September 23, 2005 was issued by Acting Sheriff Teodorico V.
area of 660 square meters, more or less, covered by Transfer Certificate of Title (TCT) Cosare (Sheriff Cosare) against Sps. Gutierrez and all persons claiming rights under
7
No. T-13443 (subject property), registered under the name of Benjamin A. Gutierrez, them. Sps. Alindog were served with a copy of the said notice to vacate on September
married to Liwanag Camerin (Sps. Gutiererez). The mortgage was duly annotated on 27, 2005.
20
the dorsal portion of TCT No. T-13443, which Sps. Marquez had verified as clean prior
8
to the mortgage.
Claiming that they would suffer irreparable injury if the implementation of the writ of
possession in favor of Sps. Marquez would be left unrestrained, Sps. Alindog sought
Since Gutierrez defaulted in the payment of his loan obligation, Anita sought the extra- the issuance of a temporary restraining order (TRO) and/or writ of preliminary
judicial foreclosure of the subject property. At the public auction sale held on January 21
injunction with prayer for damages, in a separate case docketed as SCA No. TG-05-
9
19, 2000, Anita emerged as the highest bidder for the amount of ₱1,171,000.00. Upon 22
2521 (injunction case) which was raffled to the same court.
Gutierrez’s failure to redeem the same property within the prescribed period therefor,
10
title was consolidated under TCT No. T-41939 on November 5, 2001 (in the name of
Anita J. Marquez, married to Nicasio C. Marquez) which, however, bore an annotation While it appears that the RTC issued a 72-hour TRO on September 29, 2005 in Sps.
11
of adverse claim dated March 2, 2000 in the names of respondents-spouses Carlito Alindog’s favor, records nonetheless show that said order was not extended to a full
23 24
and Carmen Alindog (Sps. Alindog). Said annotation was copied from an earlier 20-day TRO. To this end, the Sheriff’s Return dated November 14, 2005 shows that
annotation on TCT No. T-13443 made only after the subject property’s mortgage to Sheriff Cosare was able to implement the writ of possession on November 11, 2005,
Sps. Marquez. turning over the possession of the subject property to Sps. Marquez.

25
Subsequently, or on March 21, 2000, Sps. Alindog filed a civil case for annulment of After further proceedings on the injunction case, the RTC, through an Order dated
real estate mortgage and certificate of sale with prayer for damages against Sps. November 14, 2005, issued a writ of preliminary injunction enjoining Sps. Marquez
Marquez and a certain Agripina Gonzales (Gonzales) before the RTC, docketed as from taking possession of the subject property until after the controversy has been fully
53
resolved on the merits. The said issuance was based on the RTC’s appreciation of the The Court’s Ruling
initial evidence adduced by Sps. Alindog, concluding that they appear to have a right to
be protected. Thus, notwithstanding the consolidation of Sps. Marquez’s title over the The petition is meritorious.
subject property, the RTC granted Sps. Alindog’s prayer for injunctive relief, holding
26
that any further dispossession on their part would cause them irreparable injury.
It is an established rule that the purchaser in an extra-judicial foreclosure sale is
27 entitled to the possession of the property and can demand that he be placed in
Aggrieved, Sps. Marquez moved for reconsideration, essentially pointing out that, as possession of the same either during (with bond) or after the expiration (without bond)
the confirmed and registered owners of the subject property, they are entitled to its of the redemption period therefor. To this end, the Court, in China Banking Corp. v.
28 29
possession as a matter of right. They argued that pursuant to Sections 7 and 8 of 41
Sps. Lozada (China Banking Corp.), citing several cases on the matter, explained
30 31
Act No. 3135, as amended by Act No. 4118, the RTC was legally bound to place that a writ of possession duly applied for by said purchaser should issue as a matter of
them in possession of the subject property pending resolution of the annulment case. course, and thus, merely constitutes a ministerial duty on the part of the court, viz.:
42
Further, it is their position that the purpose for the issuance of the injunctive writ – i.e.,
to restrain the implementation of the writ of possession – had already been rendered
moot and academic by its actual enforcement in the interim. The procedure for extrajudicial foreclosure of real estate mortgage is governed by Act
No. 3135, as amended. The purchaser at the public auction sale of an extrajudicially
foreclosed real property may seek possession thereof in accordance with Section 7 of
For their part, Sps. Alindog filed a Motion for Approval of Cash Bond and to Regain Act No. 3135, as amended, which provides:
32
Possession of the subject property.

33 SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition
In an Order dated January 17, 2007, the RTC denied the motion of Sps. Marquez, the Court of First Instance of the province or place where the property or any part
while granted that of Sps. Alindog. Unperturbed, Sps. Marquez elevated the case to the thereof is situated, to give him possession thereof during the redemption period,
34
CA on certiorari. furnishing bond in an amount equivalent to the use of the property for a period of
twelve months, to indemnify the debtor in case it be shown that the sale was made
The CA Ruling without violating the mortgage or without complying with the requirements of this Act.
Such petition shall be made under oath and filed in form or an ex parte motion in the
35
In a Decision dated February 29, 2008, the CA denied Sps. Marquez’s petition as it registration or cadastral proceedings if the property is registered, or in special
found no grave abuse of discretion on the RTC’s part when it issued the injunctive writ proceedings in the case of property registered under the Mortgage Law or under
that enjoined Sps. Marquez from taking possession of the subject property. It observed section one hundred and ninety-four of the Administrative Code, or of any other real
that Sps. Alindog had indeed "adduced prima facie proof of their right to possess the property encumbered with a mortgage duly registered in the office of any register of
36
subject property" while the annulment case was pending, adding that the latter’s "right deeds in accordance with any existing law, and in each case the clerk of court shall,
37
to remain in possession" proceeds from the fact of the subject property’s earlier sale upon the filing of such petition, collect the fees specified in paragraph eleven of section
to them. Thus, while Sps. Marquez concededly had a right to possess the subject one hundred and fourteen of Act Numbered Four hundred and ninety six as amended
property on account of the consolidation of the title in their names, the CA nonetheless by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon
38
found no fault on the part of the RTC for "proceeding with caution" in weighing the approval of the bond, order that a writ of possession issue addressed to the sheriff of
conflicting claims of the parties and subsequently issuing the writ of preliminary the province in which the property is situated, who shall execute said order
injunction in Sps. Alindog’s favor. immediately.

39
Dissatisfied, Sps. Marquez moved for reconsideration which was, however, denied in The Court expounded on the application of the foregoing provision in De Gracia v. San
40
a Resolution dated August 6, 2008, hence, this petition. Jose, thus:

The Issue Before the Court As may be seen, the law expressly authorizes the purchaser to petition for a writ of
possession during the redemption period by filing an ex parte motion under oath for
that purpose in the corresponding registration or cadastral proceeding in the case of
The essential issue in this case is whether or not the CA erred in finding no grave property with Torrens title; and upon the filing of such motion and the approval of the
abuse of discretion on the part of the RTC when it issued the injunctive writ which corresponding bond, the law also in express terms directs the court to issue the order
enjoined Sps. Marquez from taking possession of the subject property. for a writ of possession. Under the legal provisions above copied, the order for a writ of
possession issues as a matter of course upon the filing of the proper motion and the
54
approval of the corresponding bond. No discretion is left to the court. And any question A clear line demarcates a discretionary act from a ministerial one. Thus:
regarding the regularity and validity of the sale (and the consequent cancellation of the
writ) is left to be determined in a subsequent proceeding as outlined in section 8. Such The distinction between a ministerial and discretionary act is well delineated. A purely
question is not to be raised as a justification for opposing the issuance of the writ of ministerial act or duty is one which an officer or tribunal performs in a given state of
possession, since, under the Act, the proceeding for this is ex parte. facts, in a prescribed manner, in obedience to the mandate of a legal authority, without
regard to or the exercise of his own judgment upon the propriety or impropriety of the
Strictly, Section 7 of Act No. 3135, as amended, refers to a situation wherein the act done. If the law imposes a duty upon a public officer and gives him the right to
purchaser seeks possession of the foreclosed property during the 12-month period for decide how or when the duty shall be performed, such duty is discretionary and not
redemption. Upon the purchaser’s filing of the ex parte petition and posting of the ministerial. The duty is ministerial only when the discharge of the same requires neither
appropriate bond, the RTC shall, as a matter of course, order the issuance of the writ of the exercise of official discretion or judgment.
possession in the purchaser’s favor.
Clearly, the use of discretion and the performance of a ministerial act are mutually
In IFC Service Leasing and Acceptance Corporation v. Nera, the Court reasoned that if exclusive. (Emphases and underscoring supplied; citations omitted)
under Section 7 of Act No. 3135, as amended, the RTC has the power during the
period of redemption to issue a writ of possession on the ex parte application of the The ministerial issuance of a writ of possession in favor of the purchaser in an extra-
purchaser, there is no reason why it should not also have the same power after the 45
judicial foreclosure sale, however, admits of an exception. Section 33, Rule 39 of the
expiration of the redemption period, especially where a new title has already been Rules of Court (Rules) pertinently provides that the possession of the mortgaged
issued in the name of the purchaser. Hence, the procedure under Section 7 of Act No. property may be awarded to a purchaser in an extra-judicial foreclosure unless a third
3135, as amended, may be availed of by a purchaser seeking possession of the party is actually holding the property by adverse title or right. In the recent case of
foreclosed property he bought at the public auction sale after the redemption period 46
Rural Bank of Sta. Barbara (Iloilo), Inc. v. Centeno, citing the case of China Banking
has expired without redemption having been made. Corp., the Court illumined that "the phrase ‘a third party who is actually holding the
property adversely to the judgment obligor’ contemplates a situation in which a third
xxxx party holds the property by adverse title or right, such as that of a co-owner, tenant or
usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property
It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the in their own right, and they are not merely the successor or transferee of the right of
property purchased if it is not redeemed during the period of one year after the possession of another co-owner or the owner of the property. Notably, the property
registration of the sale. As such, he is entitled to the possession of the said property should not only be possessed by a third party, but also held by the third party adversely
47
and can demand it at any time following the consolidation of ownership in his name and to the judgment obligor." In other words, as mentioned in Villanueva v. Cherdan
48
the issuance to him of a new transfer certificate of title. The buyer can in fact demand Lending Investors Corporation, the third person must therefore claim a right superior
possession of the land even during the redemption period except that he has to post a to that of the original mortgagor.
bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is
required after the redemption period if the property is not redeemed. Possession of the In this case, it is clear that the issuance of a writ of possession in favor of Sps.
land then becomes an absolute right of the purchaser as confirmed owner. Upon Marquez, who had already consolidated their title over the extra-judicially foreclosed
proper application and proof of title, the issuance of the writ of possession becomes a property, is merely ministerial in nature. The general rule as herein stated – and not the
ministerial duty of the court. (Emphases and underscoring supplied; citations and exception found under Section 33, Rule 39 of the Rules – should apply since Sps.
emphases in the original omitted) Alindog hinged their claim over the subject property on their purported purchase of the
same from its previous owner, i.e., Sps. Gutierrez (with Gutierrez being the original
43
In the case of Spouses Espiridion v. CA, the Court expounded on the ministerial mortgagor). Accordingly, it cannot be seriously doubted that Sps. Alindog are only the
nature of the foregoing issuance as follows:
44 latter’s (Sps. Gutierrez) successors-in-interest who do not have a right superior to
them.
The issuance of a writ of possession to a purchaser in a public auction is a ministerial
act.1âwphi1 After the consolidation of title in the buyer’s name for failure of the That said, the RTC therefore gravely abused its discretion when it issued the injunctive
mortgagor to redeem the property, the writ of possession becomes a matter of right. Its writ which enjoined Sps. Marquez from taking possession of the subject property. To
issuance to a purchaser in an extrajudicial foreclosure sale is merely a ministerial be sure, grave abuse of discretion arises when a lower court or tribunal patently
49
function. The trial court has no discretion on this matter. Hence, any talk of discretion in violates the Constitution, the law or existing jurisprudence. Here, while the RTC had
connection with such issuance is misplaced. initially issued a writ of possession in favor of Sps. Marquez, it defied existing
55
jurisprudence when it effectively rescinded the said writ by subsequently granting Sps.
Alindog's prayer for injunctive relief. The RTC's finding anent the initial evidence
adduced by Sps. Alindog constitutes improper basis to justify the issuance of the writ of
preliminary injunction in their favor since, in the first place, it had no authority to DECISION
exercise any discretion in this respect. Jurisprudence is clear on the matter: without the
exception under Section 33, Rule 39 of the Rules availing, the issuance of a writ of
possession in favor of the purchaser of an extra-judicially foreclosed property - such as
Sps.

Marquez in this case - should come as a matter of course, and, in such regard, PUNO, J.:
constitutes only a ministerial duty on the part of the court. Besides, it was improper for
the RTC to have issued a writ of preliminary injunction since the act sought to be First, the chronology of facts. Petitioner Bacolod City Water District (BACIWA) is a
enjoined, i.e., the implementation of the writ of possession, had already been water district established pursuant to Presidential Decree No. 198 as a government-
accomplished in the interim and thus, rendered the matter moot. Case law instructs owned and controlled corporation with original charter. It is in the business of providing
that injunction would not lie where the acts sought to be enjoined had already become safe and potable water to Bacolod City.
50
fait accompli (meaning, an accomplished or consummated act). Hence, since the
consummation of the act sought to be restrained had rendered Sps. Alindog's Public respondent City of Bacolod is a municipal corporation created by
injunction petition moot, the issuance of the said injunctive writ was altogether Commonwealth Act No. 326, otherwise known as the Charter of Bacolod.
improper.

On March 26, 1999, respondent City filed a case for Injunction With a Prayer for
All told, by acting averse to well-settled jurisprudential rules and resultantly depriving Temporary Restraining Order And/Or Preliminary Mandatory Injunction against
Sps. Marquez of their right of possession over the subject property, the Court therefore petitioner in the sala of public respondent judge. The petition stated that on January 15,
concludes that the RTC gravely abused its discretion in this case. In effect, the CA's 1
1999, BACIWA published in the Visayan Daily Star, a local paper of general
contrary ruling thereto is hereby reversed and set aside, which consequentially leads to circulation, a Schedule of Automatic Water Rates Adjustments for the years 1999, 2000
the nullification of the writ of preliminary injunction issued by the RTC in favor of Sps. and 2001. The rates were supposed to take effect seven (7) days after its posting in the
Alindog, and the reinstatement of the writ of possession issued by the same court in local papers or on January 22, 1999. The increase was aborted after petitioner
favor of Sps. Marquez. It must, however, be noted that these pronouncements are unilaterally suspended the January 22, 1999 scheduled implementation. On March 15,
without prejudice to any separate action which Sps. Alindog may file in order to recover 1999, however, petitioner announced that the rate hike will be implemented on April 1,
ownership of the subject property. 1999.
2

WHEREFORE, the petition is GRANTED. The Decision dated February 29, 2008 and Respondent City opposed. It alleged that the proposed water rates would violate due
Resolution dated August 6, 2008 of the Court of Appeals in CA-G.R. SP No. 97744, as process as they were to be imposed without the public hearing required under Letter of
well as the Orders dated November 14, 2005 and January 17, 2007 of the Regional 3 4
Instructions No. 700 and Presidential Decree No. 1479. Hence, it prayed that before
Trial Court of Tagaytay City, Branch 18 in SCA No. TG-05-2521 are hereby the hearing of the main case, a temporary restraining order or a preliminary injunction
REVERSED and SET ASIDE. Accordingly, the writ of preliminary injunction in SCA No. be issued.
5
TG-05-2521 is NULLIFIED, while the Writ of Possession in LRC Case No. TG-05-1068
is REINSTATED. 6
On March 30, 1999, the court a quo issued an Order summoning the parties with their
counsels to attend the preliminary hearing for the issuance of a temporary restraining
SO ORDERED. 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
G.R. No. 157494 December 10, 2004 the case and whether a public hearing was conducted re the proposed increase in
7
water rates.
BACOLOD CITY WATER DISTRICT, petitioner,
vs. Petitioner filed its Position Paper dated April 15, 1999. It attached documents
THE HON. EMMA C. LABAYEN, Presiding Judge, RTC of Bacolod City, Br. 46 and evidencing the conduct of extensive and lengthy public hearings in fifty-eight (58) of the
the City of Bacolod,respondents. sixty-one (61) barangays of Bacolod City. It opined that original jurisdiction over cases
56
on rate review is vested in the Local Water Utilities Administration (LWUA); appellate that respondent court has jurisdiction over the case since the sole question of the lack
jurisdiction is vested in the National Water Resources [Board] (NWRB) whose of public hearing does not require the special knowledge or expertise of an
8
decisions shall be appealable to the Office of the President. administrative agency and may be resolved by respondent court, hence the doctrine of
primary jurisdiction does not apply.
9
On May 5, 1999, petitioner also filed a Motion to Dismiss. In an Order dated May 7,
1999, the court directed respondent City to file its Opposition to petitioner’s Motion to Respondent court continued with the proceedings by receiving the evidence of
Dismiss within fifteen (15) days. petitioner in support of its Motion for Reconsideration and Dissolution of Temporary
21
Restraining Order. It further issued Orders dated March 17, 2000 and March 20,
22
10
On June 17, 1999, respondent City filed a Motion to Set [for] Hearing its application 2000.
for a temporary restraining order or preliminary mandatory injunction. It alleged that the
23
parties had already submitted their respective memoranda and it has already submitted On April 6, 2000, respondent court issued an Order finding petitioner’s Urgent Motion
its Opposition to petitioner’s Motion to Dismiss. It also alleged that petitioner had for Reconsideration and Dissolution of Temporary Restraining Order moot and
already effected the water rates increase and collection, hence, causing irreparable academic considering petitioner’s compliance of said temporary restraining order.
injury to the public.
24
Four (4) days after, in an Order dated April 10, 2000, it denied petitioner’s Motion to
Petitioner opposed the Motion. On July 20, 1999, respondent City filed its Reply to Dismiss for lack of merit.
Opposition and reiterated that the application for the issuance of a temporary
restraining order or preliminary mandatory injunction be heard since petitioner On April 19, 2000, respondent City filed a Manifestation praying that respondent trial
continued to violate the right of the public to due process and it might take time before court issue a writ of preliminary injunction against petitioner, stating thus:
11
the case would be finally resolved. On the same date, petitioner filed a Manifestation
12
and Motion 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 A Temporary Restraining Order was issued against the respondents which,
and memoranda. however, expired before the parties were able to finish the presentation of
their respective witnesses and evidences;
13
On July 22, 1999, respondent trial court issued an Order stating that there was no
14
more need to hear the case on the merits as both parties have already submitted The instant case was submitted for resolution and decision of this Honorable
their position papers and documents to prove their respective allegations. Court during the last week of March but while awaiting the decision of this
Honorable Court, several complaints had reached the petitioner that the
15 respondents had already reflected in the water billings for the month of April
On July 23, 1999, petitioner filed its Reply to respondent City’s Opposition to the the new water rates for the year 2000;
Motion to Dismiss reiterating that petitioner failed to exhaust administrative remedies
provided by law hence the petition be dismissed for utter lack of merit. 25
xxx
After a hiatus of nearly seven (7) months, or on February 18, 2000, respondent City 26
filed an Urgent Motion for the Issuance of Temporary Restraining Order And[/]Or Writ Petitioner, for its part, filed a Motion for Reconsideration of respondent trial court’s
16
of Preliminary Injunction praying that the case be set for hearing on February 24, Order denying its Motion to Dismiss. Respondent City filed an Opposition to [the]
27
2000. On the same date requested, respondent court heard respondent’s application Motion for Reconsideration on June 1, 2000.
17
for temporary restraining order and issued an Order commanding petitioner to stop,
desist and refrain from implementing the proposed water rates for the year 2000 which Respondent court did not act upon petitioner’s Motion for Reconsideration until
28
were then supposed to take effect on March 1, 2000. respondent City filed an [Ex Parte] Motion for Speedy Resolution of the case on
October 6, 2000 praying that the case be resolved before the year 2000 ends in order
On March 7, 2000, petitioner filed an Urgent Motion for Reconsideration and to prevent the implementation of the water rates increase for the year 2001 which was
18
Dissolution of the Temporary Restraining Order. Respondent court a quo issued on to be imposed allegedly without the benefit of a public hearing.
19
March 10, 2000 an Order directing respondent City to file an Opposition to the Urgent
20 29
Motion. In its Opposition, respondent City contended that the temporary restraining On December 21, 2000, respondent court issued the assailed Decision granting the
order issued was not infirmed with procedural and substantive defects. It also averred final injunction which allegedly confirmed the previous preliminary injunction.
57
30
Petitioner filed its Motion for Reconsideration of the assailed Decision on January 11, B. THE RESPONDENT LOWER COURT DID NOT RESOLVE
2001 asserting, among others, that the case was not yet ripe for decision when the HEREIN PETITIONER’S MOTION FOR RECONSIDERATION OF
court granted the final injunction, the petitioner having had no opportunity to file its THE ORDER DENYING PETITIONER’S MOTION TO DISMISS;
answer, avail of the mandatory pre-trial conference and have the case tried on the
merits. C. THE HEREIN PETITIONER HAD NOT YET FILED ITS ANSWER
TO THE PETITION;
Respondent court denied the Motion for Reconsideration for lack of merit in an
31
Order dated January 24, 2001. Petitioner then filed a special civil action for certiorari D. THERE WAS STILL NO JOINDER OF THE ISSUES SINCE NO
under Rule 65 in the Court of Appeals. It alleged that public respondent judge acted ANSWER HAD YET BEEN FILED;
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 petitioner’s basic right to due process.
32 E. THE MANDATORY PRE-TRIAL CONFERENCE WAS NOT YET
CONDUCTED;
The Court of Appeals dismissed the petition for review on certiorari, ratiocinating thus:
F. THERE WAS NO TRIAL ON THE MERITS FOR THE MAIN
CASE.
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 II
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 THE COURT OF APPEALS GRAVELY ERRED WHEN IT INSISTED THAT
simply cannot issue from a mere temporary restraining order. It must be THE 24 FEBRUARY 2000 ORDER (ANNEX R) ISSUED BY THE TRIAL
further noted that the temporary restraining order has been elevated to the COURT WAS A PRELIMINARY INJUNCTION WHEN THE RECORDS
same level as the preliminary injunction in the procedure, grounds and CLEARLY AND INDUBITABLY SHOW THAT IT WAS A TEMPORARY
requirements of its obtention by S[ection] 4, Rule 58. Thus, to set [a] RESTRAINING ORDER (TRO).
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 III
referring to the 24 February 2000 order as a temporary restraining order could
33
not have been a mere oversight but deliberate.
BY DISMISSING THE PETITION FOR CERTIORARI, THE COURT OF
APPEALS GRAVELY ERRED WHEN IT EFFECTIVELY PREVENTED
Resorting to this Court, petitioner raises the following issues: PETITIONER FROM FULLY VENTILATING ITS CASE IN THE MAIN
ACTION DUE TO THE IRREGULAR AND CONFUSED PROCEEDINGS
34
I CONDUCTED BY THE RESPONDENT COURT.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED AND We rule in favor of petitioner.
REFUSED TO RULE THAT RESPONDENT COURT HAD ACTED WITHOUT
OR IN EXCESS OF JURISDICTION AND/OR WITH GRAVE ABUSE OF The initial issue is the proper characterization of the Order dated February 24, 2000.
DISCRETION FOR ARBITRARILY AND CAPRICIOUSLY RENDERING A
DECISION PURPORTING TO ISSUE A FINAL INJUNCTION AND
CONFIRMING ITS ALLEGED PRELIMINARY INJUNCTION, DESPITE THE The sequence of events and the proceedings that transpired in the trial court make a
FACT THAT: clear conclusion that the Order issued was a temporary restraining order and not a
preliminary injunction.
A. NO PRELIMINARY INJUNCTION HAD BEEN ISSUED;
First. We quote the pertinent parts of the questioned Order:

xxx
58
When this motion was called for hearing wherein both parties have argued It can be gleaned from the foregoing that both parties and respondent trial court have
exhaustedly their respective sides, this court denied the ten (10) days consistently referred to the directive as a temporary restraining order. It was only in the
extension for further amplification of the arguments of the respondent to respondent court’s assailed Decision that the Order was referred to as a preliminary
oppose the said motion for issuance of a temporary restraining order. injunction, viz:

It appearing therefore, that the acts of the defendant will actually affect the xxx
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 This Court therefore grants the final injunction prayed for restraining the
academic and considering the urgency of the matter that immediate action respondent from the commission of the act complained of for the year 2001
should be taken, and pursuant to Administrative Circular No. 6, Paragraph 4 and hereby confirming the preliminary injunction previously ordered.
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, 42
representatives or any person acting in his behalf to stop, desist and xxx (emphasis supplied)
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 Again, it was only when petitioner expressed its vehement objection on the ruling that
is hereby ordered to furnish copy of this order to the respondent Bacolod City the final injunction confirmed the preliminary injunction previously issued, when the
Water District as well as to its agents or representatives acting [o]n his behalf. 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
xxx
35
(emphases supplied) 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
It can be gleaned from the afore-quoted Order that what the trial court issued was a restraining order.
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
36
March 10, 2000 and April 6, 2000.
37 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
43
38 provisional remedy for and as an incident in the main action.
The parties, in their succeeding pleadings, also referred to the assailed Order as a
temporary restraining order. The petitioner filed an Urgent Motion for Reconsideration
39
and Dissolution of Temporary Restraining Order (TRO) on March 1, 2000. This was The main action for injunction is distinct from the provisional or ancillary remedy of
opposed by respondent City itself in its Opposition to Motion for Reconsideration and preliminary injunction which cannot exist except only as part or an incident of an
40
Dissolution of Temporary Restraining Order (TRO) dated March 14, 2000. Further, independent action or proceeding. As a matter of course, in an action for injunction, the
respondent City, in its Manifestation dated April 19, 2000 stated, viz: 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
xxx remedy of preliminary injunction, the sole object of which is to preserve the status
44
quo until the merits can be heard. A preliminary injunction is granted at any stage of
A Temporary Restraining Order was issued against the respondents which, an action or proceeding prior to the judgment or final order. It persists until it is
however, expired before the parties were able to finish the presentation of dissolved or until the termination of the action without the court issuing a final
45
their respective witnesses and evidences; injunction.

xxx 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
46
WHEREFORE, it is most respectfully prayed that while waiting for the parte. Under Rule 58 of the Rules of Court, a judge may issue a temporary restraining
decision and order of the Honorable Court, a preliminary injunction as order with a limited life of twenty (20) days from date of issue. If before the expiration of
prayed for in the petition be issued against the respondents. 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
41 taken by the judge on the application for preliminary injunction within the said twenty
x x x (emphases supplied)
59
(20) days, the temporary restraining order would automatically expire on the 20th day
47
by the sheer force of law, no judicial declaration to that effect being necessary. FIRST DIVISION

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. STRATEGIC ALLIANCE DEVELOPMENT G.R. No. 187872
The fact that respondent court merely ordered "the respondent[,] its agents, CORPORATION,
representatives or any person acting in his behalf to stop, desist and refrain from Petitioner,
implementing in their billings the new water rate increase which will start on March 1, Present:
48
2000" without stating the period for the restraint does not convert the temporary
restraining order to a preliminary injunction. CORONA, C. J.,
- versus - Chairperson,
VELASCO, JR.,
The rule against the non-extendibility of the twenty (20)-day limited period of effectivity LEONARDO-DE CASTRO,
of a temporary restraining order is absolute if issued by a regional trial court. The PERALTA* and
failure of respondent court to fix a period for the ordered restraint did not lend the STAR INFRASTRUCTURE DEVELOPMENT PEREZ, JJ.
temporary restraining order a breath of semi-permanence which can only be CORPORATION ET AL.,
characteristic of a preliminary injunction. The twenty (20)-day period provided by the Respondents.
Rules of Court should be deemed incorporated in the Order where there is an omission Promulgated:
to do so. It is because of this rule on non-extendibility that respondent City was November 17, 2010
prompted to move that hearings be set for its application of a preliminary injunction. x--------------------------------------------------x
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 DECISION
is correct in contending that the assailed Decision is premature.

The records reveal that respondent court did not resolve petitioner’s Motion for PEREZ, J.:
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 The classification of causes of action as intra-corporate disputes is at the heart of this
was handed down by the respondent trial court. petition for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil
Procedure, assailing the 22 December 2008 Decision rendered by the Ninth Division of
[1]
The short circuiting of the procedural process denied the petitioner due process of law. the Court of Appeals (CA) in CA-G.R. No. 96945 as well as the 30 April 2009 resolution
[2]
It was not able to allege its defenses in an answer and prove them in a hearing. The which denied the motion for reconsideration of the same decision.
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 The Facts
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
REVERSED and SET ASIDE. The case is remanded to the court a quo for further Petitioner Strategic Alliance Development Corporation (STRADEC) is a domestic
proceedings. corporation primarily engaged in the business of a development company in all the
elements and details thereof, with principal place of business at Poblacion Sur,
[3] [4]
Bayambang, Pangasinan. Along with five individuals and three other
SO ORDERED. [5]
corporations, STRADEC incorporated respondent Star Infrastructure Development
Corporation (SIDC) on 28 October 1997, for the purpose of engaging in the general
60
construction business. As such incorporator, STRADEC fully paid and owned 2,449,998 further transfer of the corporations principal place of business to Lipa, Batangas was
shares or 49% of the 5,000,000 shares of stock into which SIDCs authorized capital stock approved; and, that despite being left out in the notice sent by respondent Cynthia
[6]
of P5,000,000.00 were divided. Pursuant to an amendment of its Articles of Laureta, SIDCs new Corporate Secretary, it fielded a proxy to the 20 July 2006 SIDC
Incorporation on 5 June 1998, SIDC transferred its principal place of business stockholders special meeting where the increase of the corporations authorized capital
[7]
from Pasig City to Poblacion Sur, Bayambang, Pangasinan and, later, to Lipa, stock to P850,000,000.00 was discussed together with the decrease of the number of its
[8]
Batangas. directors from nine to five. In addition to a temporary restraining order and/or writ of
preliminary injunction to enjoin, among other matters, CTCIIs exercise of proprietary
rights over the subject shares, SIDCs implementation of the resolutions passed during
the 20 July 2006 stockholders meeting and any action thereon by respondent Securities
and Exchange Commission (SEC), STRADEC prayed for the grant of the following
On 8 October 2004, respondents Aderito Z. Yujuico and Bonifacio C. Sumbilla, reliefs: (a) the nullification of the loan and pledge respondents Yujuico and Sumbilla
in their respective capacities as then President and Treasurer of STRADEC, executed a contracted with respondent Wong; (b) the avoidance of the notarial sale conducted by
Promissory Note for and in consideration of a loan in the sum of P10,000,000.00 respondent Caraos; (c) the cancellation of the transfer of its shares in SIDCs books; (d)
ostensibly extended in favor of said corporation by respondent Robert L. Wong, one of the invalidation of the 30 July 2005 and 20 July 2006 SIDC stockholders meetings; and,
[9]
the incorporators of SIDC. As security for the payment of the principal as well as the (e) the grant of its claims for attorneys fees and the costs.
[16]
stipulated interests thereon, a pledge constituted over STRADECs entire shareholdings
[10]
in SIDC was executed by respondent Yujuico on 1 April 2005. In view of STRADECs
[11]
repeated default on its obligations, however, the shares thus pledged were sold by
way of the 26 April 2005 notarial sale conducted in Makati City by respondent Raymond
[12]
M. Caraos. Having tendered the sole bid of P11,800,000.00, respondent Wong was On 30 August 2006, the RTC issued a resolution denying STRADECs
issued the corresponding certificates of stocks by respondent Bede S. Tabalingcos, application for writ of preliminary injunction on the ground that the grant thereof would
SIDCs Corporate Secretary for the years 2004 and 2005, after the transfer was recorded effectively dispose of the main action without trial; and, that the right to the relief sought
[13]
in the corporations stock and transfer book. was, as yet, uncertain in view of the pendency of cases before the courts of Pasig and
Urdaneta City involving, among other issues, the ownership of STRADECs shares and
[17]
the legitimacy of its two opposing sets of directors. Anent STRADECs amended
petition as aforesaid, the RTC issued the following order on the same date:
On 17 July 2006, Cezar T. Quiambao, in his capacity as President and
Chairman of the Board of Directors of STRADEC, commenced the instant suit with the
filing of the petition which was docketed as Civil Case No. 7956 before Branch 2 of the The Amended Petition dated July 31, 2006 presents four (4)
Regional Trial Court (RTC) of Batangas City, sitting as a Special Commercial Court main causes of action.
[14]
(SCC). In its 31 July 2006 amended petition, STRADEC alleged, among other matters,
that respondents Yujuico and Sumbilla were not authorized to enter into any loan The Court holds that as for the first and second causes of
agreement with respondent Wong, much less pledge its SIDC shareholdings as security action, to wit: First declaration of nullity of the supposed loan extended
therefor; that it did not receive the proceeds of the supposed loan and immediately by respondent Wong to STRADEC and the Deed of Pledge covering
apprised SIDC of the irregularity of the transaction upon discovering the same; that it STRADECs entire shareholding in SIDC; Second declaration of nullity
was only able to ascertain the details of the transaction and transfer of the subject shares of the 26 April 2005 auction sale of STRADECs entire shareholdings
from a narration thereof in a Certification dated 3 September 2005 issued by respondent in SIDC in Makati City, this Court is the wrong venue; The Rules of
Tabalingcos; and, that respondent Wong subsequently sold the shares to respondent Court provides that all other actions (other than real) may be
Cypress Tree Capital Investment, Inc. (CTCII), a corporation he formed with members commenced and tried where the plaintiff or any of the principal
of his own family on 5 July 2005.
[15] plaintiffs resides; or where the defendant or any of the principal
defendants resides, at the election of the plaintiff. By the foregoing,
STRADEC should file the case, under the first cause of action, either
in Bayambang, Pangasinan, its principal place of business as stated
in the Articles of Incorporation or in any of the residences of Yujuico,
STRADEC further averred that it already caused the National Bureau of Sumbilla or Wong.The same holds true with respect to the second
Investigation (NBI) to conduct an investigation of the unlawful transfer of its shares; that cause of action. The matter is between STRADEC and its alleged
it was altogether eased out during the 30 July 2005 SIDC annual stockholders meeting erring officers over the alleged irregular auction sale of STRADECs
where respondent Wong was acknowledged as the holder of the subject shares and the
61
[24]
shareholdings in SIDC, hence, venue should be at the residences of CA rendered the herein assailed 22 December 2008 decision, discounting the grave
the parties, as plaintiff may elect, as discussed above. abuse of discretion STRADEC imputed against the RTC upon the following findings and
conclusions, to wit:
Although this Court is not the correct venue, the Court will not
dismiss the case but however will not act thereon.

As for the third and fourth causes of action which are the
cancellation of registration of fraudulent transfers involving 1. STRADECs first and second causes of action for nullification of the
STRADECs shareholding in SIDC and the declaration of invalidity of pledge constituted over its shares and the subsequent
the 30 July 2005 annual stockholders meeting and 20 July 2006 notarial sale thereof are purely civil in nature and were,
special stockholders meeting of SIDC, the Court resolves to hold in therefore, erroneously joined with its third and fourth causes
abeyance any action thereon until after the Supreme Court shall have of action for invalidation of the registration of the transfer in
rendered a ruling as to who between the conflicting two (2) sets of SIDCs books as well as its annual and special stockholders
Board of Directors of STRADEC should be recognized as legitimate, meetings;
because it is only then that this Court could make a determination on
the issue raised by the respondents on the authority of Mr. Quiambao 2. Aside from correctly applying the rule on venue in personal actions
to represent STRADEC in this suit. for STRADECs first and second causes of action, the RTC
cannot be faulted for not ordering the dismissal of the same
SO ORDERED.
[18] since misjoinder of causes of action does not involve a
question of jurisdiction and the discretionary authority to
order separation of the misjoined causes of action
necessarily includes the authority to stay proceedings with
respect thereto;
Dissatisfied with the foregoing order, STRADEC, through its counsel of record,
interposed an oral motion for reconsideration on the ground that the solidary liability the 3. Further proceedings with respect to the third and fourth causes of
individual respondents and SIDC incurred for the tortious transfer of the subject shares action were also correctly held in abeyance by the RTC in
justified the laying of venue at the latters principal place of business in Batangas; that view of the pendency of cases in other courts involving,
the pledge executed by respondent Yujuico violated the 18 October 2004 temporary among other issues, the ownership of STRADECs shares, its
restraining order issued by Branch 48 of the RTC of Urdaneta City in Civil Case No. U- legitimate Directors and Corporate Officers and the authority
14 (SCC-2874), the intra-corporate dispute earlier filed to determine STRADECs of Cezar T. Quiambao to act for and its behalf; and
legitimate Directors and Officers; and, that pursuant to the 25 November 2004 order
issued in the same case, a writ of preliminary injunction had been issued enjoining 4. The pendency of said cases discounts the existence of a clear and
respondent Yujuico and his cohorts from acting as STRADECs Officers and committing unmistakable right on the part of STRADEC as would justify
[19]
acts inimical to its interests. The motion was, however, denied for lack of merit in the the grant of its application to an injunctive writ which would,
second 30 August 2006 order issued by the RTC upon the finding that the theory of at any rate, effectively dispose of the main case without
[25]
solidary liability foisted by STRADEC had no basis in its pleadings and that the injunctive trial.
writ issued in Civil Case No. U-14 (SCC-2874) was not determinative of the issue of
[20]
ownership of its shares.

[26]
STRADECs motion for reconsideration of the foregoing decision was denied
[27]
in the 30 April 2009 resolution issued in the case, hence, this petition.
Aggrieved, STRADEC filed the petition for certiorari docketed before the CA as
CA-G.R. SP No. 96945, on the ground that the RTC acted without or in excess of
jurisdiction or with grave abuse of discretion in finding that venue was improperly laid, in
holding in abeyance further proceedings in the case and in denying its application for a
[21] [22]
writ of preliminary injunction. In receipt of respondents separate comments to the The Issues
[23]
petition and the memoranda subsequently filed by the parties, the Ninth Division of the
62
STRADEC urges the reversal and setting aside of the assailed CA decision and We find merit in the petition.
resolution on the following grounds:

An intra-corporate dispute is understood as a suit arising from intra-corporate


[29]
THE COURT OF APPEALS HAS NOT ONLY DECIDED relations or between or among stockholders or between any or all of them and the
[30]
QUESTIONS OF SUBSTANCE IN A WAY NOT IN ACCORD WITH corporation. Applying what has come to be known as the relationship test, it has been
LAW OR WITH APPLICABLE DECISIONS OF THIS HONORABLE held that the types of actions embraced by the foregoing definition include the following
COURT, BUT HAS ALSO SO FAR SANCTIONED THE LOWER suits: (a) between the corporation, partnership or association and the public; (b) between
COURTS DEPARTURE FROM THE ACCEPTED AND USUAL the corporation, partnership or association and its stockholders, partners, members, or
COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN officers; (c) between the corporation, partnership or association and the State insofar as
EXERCISE OF THIS HONORABLE COURTS POWER OF its franchise, permit or license to operate is concerned; and, (d) among the stockholders,
[31]
SUPERVISION, IN THAT partners or associates themselves. As the definition is broad enough to cover all kinds
of controversies between stockholders and corporations, the traditional interpretation
A. THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT was to the effect that the relationship test brooked no distinction, qualification or any
[32]
CHARACTERIZING THE FIRST AND SECOND CAUSES exemption whatsoever.
OF ACTION IN CIVIL CASE NO. 7956 AS INTRA-
CORPORATE AND PLACE ITS VENUE AND
JURISDICTION IN RTC BATANGAS CITY.

B. THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT However, the unqualified application of the relationship test has been modified on the
ASCRIBING GRAVE ABUSE OF DISCRETION ground that the same effectively divests regular courts of jurisdiction over cases for the
TO RTC BATANGAS CITYS REFUSAL TO APPLY THE sole reason that the suit is between the corporation and/or its corporators. It was held
RULES OF COURT AFTER RULING THAT IT WAS NOT that the better policy in determining which body has jurisdiction over a case would be to
THE PROPER VENUE FOR THE FIRST AND SECOND consider not only the status or relationship of the parties but also the nature of the
[33]
CAUSES OF ACTION IN CIVIL CASE NO. 7956. question that is the subject of their controversy. Under the nature of the controversy
test, the dispute must not only be rooted in the existence of an intra-corporate
C. THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT relationship, but must also refer to the enforcement of the parties' correlative rights and
ASCRIBING GRAVE ABUSE OF DISCRETION obligations under the Corporation Code as well as the internal and intra-corporate
[34]
TO RTC BATANGAS CITYS RULING TO HOLD IN regulatory rules of the corporation. The combined application of the relationship test
ABEYANCE FURTHER PROCEEDINGS WITH RESPECT and the nature of the controversy test has, consequently, become the norm in
TO THE THIRD AND FOURTH CAUSES OF ACTION IN determining whether a case is an intra-corporate controversy or is purely civil in
CIVIL CASE NO. 7956 BY REASON OF AN UNRELATED character.
PENDING ACTION.

D. THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT


ASCRIBING GRAVE ABUSE TO RTC BATANGAS CITYS In the case at bench, STRADECs first and second causes of action seek the nullification
DENIAL OF PETITIONERS APPLICATION FOR A WRIT of the loan and pledge over its SIDC shareholding contracted by respondents Yujuico,
OF PRELIMINARY INJUNCTION DESPITE A SHOWING Sumbilla and Wong as well the avoidance of the notarial sale of said shares conducted
OF A CLEAR AND POSITIVE RIGHT AND A CONTINUING by respondent Caraos. STRADECs 31 July 2006 amended petition significantly set forth
[28]
VIOLATION BY THE RESPONDENTS THEREOF. the following allegations common to its main causes of action, to wit:

xxx
The Courts Ruling
63
xxxx

4. Sometime in June 2005, STRADECs President and 12. The Deed of Pledge made it appear, among others, that
Chairman of the Board of Directors, Cezar T. Quiambao, received for and in partial consideration of a loan from respondent Wong in the
information that STRADEC had been divested of its shareholdings in principal amount of only TEN MILLION PESOS (P10,000,000.00),
SIDC. STRADEC pledged its 2,449,998 shares of stocks in SIDC worth TWO
HUNDRED FORTY-FOUR MILLION, NINE HUNDRED NINETY-NINE
Apparently, all of STRADECs 49% shareholdings in SIDC were THOUSAND EIGHT HUNDRED PESOS (P244,999,800.00).
transferred and placed in the name of respondent Wong, another
incorporator of SIDC, upon the instance of respondents Yujuico and 13. STRADEC, however, had never authorized respondents
Sumbilla, former officers of STRADEC. Yuhuico and Sumbilla to enter into any loan agreement with
respondent Wong, much less pledge its shareholdings in SIDC.
5. However, respondents Yujuico and Sumbilla, despite being former
officers of STRADEC, never possessed authority to transact any 14. Neither has STRADEC at any time received any amount
business in behalf of STRADEC involving any of its corporate assets of loan personally from Mr. Wong.
and investments, including STRADECs shareholdings in SIDC.
xxxx
6. Upon learning of this highly irregular development, STRADEC
immediately called the attention of SIDCs Board of Directors and 15. Moreover, a subsequent examination of the Notarial
officers and requested official confirmation of the recording of any such Records of respondent Caraos for the year 2004 with the Office of the
sale in the books of SIDC cautioning that STRADEC had not Clerk of Court and Ex-Officio Sheriff of
authorized the sale or transfer of its shares in SIDC. the Regional Trial Court of Makati City revealed that the Deed of
Pledge is not one of the documents notarized by Atty. Caraos during
xxxx the period of September 2003 to December 2004.

7. To date, however, STRADEC has not received any response from 16. STRADEC was also able to get hold of a Certificate of
SIDCs Board of Directors and officers. Sale issued by respondent Caraos on 26 April 2005 stating that an
auction sale was held on 26 April 2005 wherein all of STRADECs
8. Instead, STRADEC was able to secure from a secondary 2,449,998 shares of stock in SIDC, among others, were sold to
source a copy of the Certification dated 23 September 2005 issued by respondent Wong to satisfy STRADECs alleged outstanding
respondent Tabalingcos, SIDCs Corporate Secretary, narrating how obligation in the amount of ELEVEN MILLION EIGHT HUNDRED
all of STRADECs shareholdings in SIDC, among others, were THOUSAND PESOS (P11,800,000.00);
acquired by respondent Wong by reason of respondents Yujuico and
Sumbillas unauthorized acts. From the Certificate of Sale, it appears that respondent
Caraos proceeded with the auction sale without any notice to
The same Certification states that the shareholdings were in turn STRADEC as the supposed pledgor, and despite the fact that that
transferred by respondent Wong to respondent CTCII, which as respondent Wong, the supposed pledgee, was the only bidder.
STRADEC would later learn was a newly-formed corporation of
respondent Wongs family; xxxx

xxxx 17. Incidentally, respondent CARAOS and SIDCs Corporate


Secretary, Atty. Tabalingcos, are partners of the same law firm;
11. STRADEC was able to get hold of a document entitled
Deed of Pledge dated 08 October 2004 purportedly signed by 18. STRADEC has good reasons to believe that while it
respondents Yujuico and Sumbilla in behalf of STRADEC as pledgor, immediately informed the officers of SIDC of the irregularities
and by respondent Wong as pledgee. attending the divestment of its shareholdings in said respondent
corporation, its Corporate Secretary, respondent Tabalingcos,
apparently went on to register the transfers in the corporations stock
64
[37]
and transfer book, as evidenced by SIDCs General Information In addition to being conferred by law, it bears emphasizing that the
Sheet for 2005, wherein it was annotated that the shares of STRADEC jurisdiction of a court or tribunal over the case is determined by the allegations in the
[38] [39]
or Strategic Alliance Development Corp. has been acquired by Mr. complaint and the character of the relief sought, irrespective of whether or not the
[40]
Wong in view of the Notarial Sale conducted on April 26, 2005. plaintiff is entitled to recover all or some of the claims asserted therein. Moreover,
[41]
pursuant to Section 5.2 of Republic Act No. 8799, otherwise known as the Securities
xxxx Regulation Code, the jurisdiction of the SEC over all cases enumerated under Section 5
of Presidential Decree No. 902-A has been transferred to RTCs designated by this Court
[42]
19. Worse, it would appear now that respondent Wong had as SCCs pursuant to A.M. No. 00-11-03-SC promulgated on 21 November
likewise unlawfully transferred STRADECs 49% shareholdings in 2000. Thus, Section 1(a), Rule 1 of the Interim Rules of Procedure Governing Intra-
SIDC to his newly formed Corporation, respondent CTCII. Corporate Controversies (Interim Rules) provides as follows:
[35]
xxxx
SECTION 1. (a) Cases covered. These Rules shall govern
the procedure to be observed in civil cases involving the following:

Applying the relationship test, we find that STRADECs first and second causes of action (1) Devices or schemes employed by, or any act of, the board
qualify as intra-corporate disputes since said corporation and respondent Wong are of directors, business associates, officers or partners, amounting to
incorporators and/or stockholders of SIDC. Having acquired STRADECs shares thru the fraud or misrepresentation which may be detrimental to the interest of
impugned notarial sale conducted by respondent Caraos, respondent Wong appears to the public and/or of the stockholders, partners, or members of any
have further transferred said shares in favor of CTCII, a corporation he allegedly formed corporation, partnership, or association;
with members of his own family. By reason of said transfer, CTCII became a stockholder
of SIDC and was, in fact, alleged to have been recognized as such by the latter and its (2) Controversies arising out of intra-corporate, partnership,
corporate officers. To our mind, these relationships were erroneously disregarded by the or association relations, between and among stockholders, members,
RTC when it ruled that venue was improperly laid for STRADECs first and second causes or associates; and between, any or all of them and the corporation,
[36]
of action which, applying Section 2, Rule 4 of the 1997 Rules of Civil Procedure, should partnership, or association of which they are stockholders, members,
have been filed either at the place where it maintained its principal place of business or or associates, respectively;
where respondents Yujuico, Sumbilla and Wong resided. (3) Controversies in the election or appointment of directors,
trustees, officers, or managers of corporations, partnerships, or
associations;

(4) Derivative suits; and


Considering that they fundamentally relate to STRADECs status as a
stockholder and the alleged fraudulent divestment of its stockholding in SIDC, the same (5) Inspection of corporate books. (Italics supplied)
causes of action also qualify as intra-corporate disputes under the nature of the
controversy test. As part of the fraud which attended the transfer of its shares, STRADEC
distinctly averred, among other matters, that respondents Yujuico and Sumbilla had no
authority to contract a loan with respondent Wong; that the pledge executed by
respondent Yujuico was simulated since it did not receive the proceeds of the loan for
which its shares in SIDC were set up as security; that irregularities attended the notarial In upholding the RTCs pronouncement that venue was improperly laid, the CA
sale conducted by respondent Caraos who sold said shares to respondent Wong; that ruled that STRADECs first and second causes of action were not intra-corporate disputes
the latter unlawfully transferred the same shares in favor of CTCII; and, that SIDC and because the issues pertaining thereto were civil in nature. In support of the foregoing
[43]
its officers recognized and validated said transfers despite being alerted about their conclusion, the CA cited Speed Distributing Corporation vs. Court of Appeals where
defects. Ultimately, the foregoing circumstances were alleged to have combined to rid this Court essentially ruled out the existence of an intra-corporate dispute from an action
STRADEC of its shares in SIDC and its right as a stockholder to participate in the latters instituted by the wife for the nullification of the transfer of a property between corporations
corporate affairs. of which her deceased husband was a stockholder. The CA also relied on this Courts
[44]
pronouncement in Nautica Canning Corporation vs. Yumul to the effect, among others,
that an action to determine the validity of the transfer of shares from one stockholder to
another is civil in nature and is, therefore, cognizable by regular courts and not the
65
[45]
SEC. In addition to the fact that the first case involved a civil action instituted against STRADEC, as pointed out by respondents, also questions the validity of the 30 July 2005
corporations by one who was not a stockholder thereof, however, STRADEC correctly SIDC stockholders annual meeting where the aforesaid change in the address of its
points out that, unlike the second case, the limited jurisdiction of the SEC is not in issue principal place of business was allegedly approved. Said matter should be properly
in the case at bench. threshed out in the proceedings before the RTC alongside such issues as the validity of
the transfers of STRADECs shares to respondents Wong and CTCII, the propriety of the
Even prescinding from the different factual and legal milieus of said cases, the recording of said transfers in SIDCs books, STRADECs status as a stockholder of SIDC,
CA also failed to take into consideration the fact that, unlike the SEC which is a tribunal the legality of the 20 July 2006 SIDC stockholders special meeting or, for that matter,
[46]
of limited jurisdiction, SCCs like the RTC are still competent to tackle civil law issues Cezar T. Quiambaos authority to represent STRADEC in the case at bench.
incidental to intra-corporate disputes filed before them. In G.D. Express Worldwide N.V.
[47]
vs. Court of Appeals, this Court ruled as follows: The rule is settled that rules of procedure ought not to be applied in a very rigid,
[52]
technical sense, for they have been adopted to help secure not override substantial
[53] [54]
justice. Considering that litigation is not a game of technicalities courts have been
exhorted, time and again, to afford every litigant the amplest opportunity for the proper
and just determination of his case free from the constraints of technicalities. Since rules
It should be noted that the SCCs are still considered courts of procedure are mere tools designed to facilitate the attainment of justice, it is well
of general jurisdiction. Section 5.2 of R.A. No. 8799 directs merely the recognized that courts are empowered to suspend its rules, when the rigid application
Supreme Court's designation of RTC branches that shall exercise [55]
thereof tends to frustrate rather than promote the ends of justice. No less than Section
jurisdiction over intra-corporate disputes. Nothing in the language of 3, Rule 1 of the Interim Rules provides that the provisions thereof are to be liberally
the law suggests the diminution of jurisdiction of those RTCs to be construed in order to promote their objective of securing a just, summary, speedy and
designated as SCCs. The assignment of intra-corporate disputes to inexpensive determination of every action or proceeding.
SCCs is only for the purpose of streamlining the workload of the RTCs
so that certain branches thereof like the SCCs can focus only on a
particular subject matter.

The designation of certain RTC branches to handle specific The CA also erred in upholding the RTCs suspension of proceedings for
cases is nothing new. For instance, pursuant to the provisions of R.A. STRADECs third and fourth causes of action assailing the registration of the transfers of
No. 6657 or the Comprehensive Agrarian Reform Law, the Supreme its shares as well as the 30 July 2005 annual meeting and 20 July 2006 special meeting
Court has assigned certain RTC branches to hear and decide cases of SIDCs stockholders, in view of the pendency of actions in other courts involving
under Sections 56 and 57 of R.A. No. 6657. ownership of the shares into which STRADECs own capital stock has been divided and
its legitimate directors and officers. On the principle that a corporation is a legal entity
The RTC exercising jurisdiction over an intra-corporate with a personality separate and distinct from its individual stockholders or members and
[56]
dispute can be likened to an RTC exercising its probate jurisdiction or from that of its officers who manage and run its affairs, we find that said other actions
sitting as a special agrarian court. The designation of the SCCs as have little or no bearing to the issues set forth in STRADECs amended petition which, at
such has not in any way limited their jurisdiction to hear and decide bottom, involve the transfer of its own shareholding in SIDC and its status and rights as
cases of all nature, whether civil, criminal or special proceedings. such stockholder. The record also shows that the impugned loan transaction was
contracted by respondents Yujuico and Sumbilla on 8 October 2004 or before the 10
December 2004 election of STRADECs Board of Directors conducted pursuant to the 25
Viewed in the foregoing light and the intra-corporate nature of STRADECs first and November 2004 order issued in Civil Case No. U-14 (SCC-2874). Thus, even the
second causes of action, the CA clearly erred in upholding the RTCs finding that venue restoration of status quo ante in said case pursuant to this Courts 29 January 2007
therefor was improperly laid. Given that the question of venue is decidedly not decision in G.R. No. 168639, entitled Alderito Yujuico, et al. vs. Cezar T. Quiambao, et
[57]
[48]
jurisdictional and may, in fact, be waived, said error was further compounded when al. is no hindrance to the determination of the issues of want of authority and
the RTC handed down its first 30 August 2006 order even before respondents were able consideration for the transfer of STRADECs shares.
to file pleadings squarely raising objections to the venue for said causes of
[49] [50]
action. Pursuant to Section 5, Rule 1 of the Interim Rules, at any rate, it cannot be
gainsaid that STRADEC correctly commenced its petition before the RTC exercising
jurisdiction over SIDCs principal place of business which was alleged to have been Considering that the determination of the factual and legal issues presented in
[51]
transferred from Bayambang, Pangasinan to Lipa, Batangas. It matters little that the case can proceed independent of those being litigated in the other cases filed against
66
each other by the members of STRADEC's Board of Directors, we find that the CA finally AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS G. R. No. 183367
erred in denying STRADEC's application of a writ of preliminary injunction to restrain (a) GARCIA, and LYDIA MARCIANO,
CTCII from further exercising proprietary rights over the subject shares; (b) SIDC and its Petitioners,
officers from recognizing the transfer or further transfers of the same; (c) the Present:
implementation of the resolutions passed during the 20 July 2006 SIDC stockholders
special meeting; and (d) the SEC from acting on any report submitted in respect CARPIO, J., Chairperson,
thereto. A provisional remedy which has, for its object, the preservation of the status - versus - BRION,
[58]
quo, preliminary injunction may be resorted to by a party in order to preserve and PEREZ,
[59]
protect certain rights and interests during the pendency of an action. By both law and SERENO, and
jurisprudence, said provisional writ may be issued upon the concurrence of the following REYES, JJ.
essential requisites, to wit: (1) that the invasion of the right is material and substantial; MUNICIPALITY OF PADRE GARCIA BATANGAS
(2) that the right of complainant is clear and unmistakable; and, (3) that there is an urgent PROVINCE,
[60]
and paramount necessity for the writ to prevent serious damage. Respondent. Promulgated:

March 14, 2012


As the owner, STRADEC is undoubtedly possessed of clear and unmistakable
rights over the subject SIDC shares which respondent Yujuico pledged in favor of
respondent Wong. Unless collectively restrained, the aforesaid acts will completely
divest STRADEC of its shares and unfairly deprive it of participation in SIDC's corporate
affairs pending the determination of the validity of the impugned transfers. Given that the
parties have already submitted their arguments for and against the writ of preliminary
injunction sought, STRADEC is, however, required to put up an injunction bond pursuant
[61]
to Section 1, Rule 10 of the Interim Rules. Conditioned to answer for damages
[62]
respondents may sustain as a consequence of the issuance of the writ, the amount of
the bond is fixed at P10,000,000.00 which is equivalent to the supposed loan for which
STRADEC's shares were pledged by respondent Yujuico.
DECISION

WHEREFORE, premises considered, the petition is GRANTED and the SERENO, J.:
assailed decision and resolution are, accordingly, REVERSED and SET ASIDE. In lieu
thereof, another is entered ORDERING the resumption of proceedings in Civil Case No.
7956 without further delay. Subject to the posting of the requisite bond in the sum This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking
of P10,000,000.00, STRADEC's application for a writ of preliminary injunction is to annul the Court of Appeals (CA) Resolutions in CA-G.R. SP No. 102540 dated 26
[1]
likewise GRANTED. March 2008 and 16 June 2008, which denied petitioners Motion for the issuance of a
status quo order and Motion for issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction.

Statement of the Facts and the Case

In 1993, fire razed to the ground the old public market of respondent Municipality of Padre
Garcia, Batangas. The municipal government, through its then Municipal Mayor Eugenio
67
Gutierrez, invited petitioner Australian Professional Realty, Inc. (APRI) to rebuild the There is no opposition in the instant petition.
public market and construct a shopping center.
WHEREFORE, in view thereof, and finding the petition to be
sufficient in form and substance, it being supported by sufficient
[2]
evidence, judgement (sic) is hereby rendered in favor of the plaintiff as
On 19 January 1995, a Memorandum of Agreement (MOA) was executed against the respondents as follows:
between petitioner APRI and respondent, represented by Mayor Gutierrez and the
members of the Sangguniang Bayan. Under the MOA, APRI undertook to construct a (a) The Memorandum of Agreement is hereby declared null
shopping complex in the 5,000-square-meter area. In return, APRI acquired the and void for being contrary to law and public policy,
exclusive right to operate, manage, and lease stall spaces for a period of 25 years. particularly R.A. 6957 and R.A. 7718;
(b) The respondents are hereby ordered to pay the amount
of FIVE MILLION PESOS (₱5,000,000.00) in favor of the
In May 1995, Victor Reyes was elected as municipal mayor of respondent. On plaintiff for damages caused to the latter;
6 February 2003, respondent, through Mayor Reyes, initiated a Complaint for Declaration
of Nullity of Memorandum of Agreement with Damages before the Regional Trial Court (c) The structures found within the unfinished PADRE GARCIA
(RTC) of Rosario, Batangas, Fourth Judicial Region, Branch 87. The Complaint was SHOPPING CENTER are hereby declared forfeited in favor
docketed as Civil Case No. 03-004. of the Municipality of Padre Garcia.
[3]
SO ORDERED.

On 12 February 2003, the RTC issued summons to petitioners, requiring them


to file their Answer to the Complaint. However, the summons was returned unserved, as
petitioners were no longer holding office in the given address. There having been no timely appeal made, respondent filed a Motion for
Execution of Judgment, which was granted by the RTC. A Writ of Execution was thus
issued on 15 July 2005.
On 2 April 2003, a Motion for Leave of Court to Effect Service by Publication
was filed by respondent before the RTC and subsequently granted by the trial court.
After learning of the adverse judgment, petitioners filed a Petition for Relief from
Judgment dated 18 July 2005. This Petition was denied by the RTC in an Order dated
15 June 2006. In another Order dated 14 February 2008, the trial court denied the Motion
On 24 November 2003, the RTC issued an Order declaring petitioners in default for Reconsideration.
and allowing respondent to present evidence ex parte.

Petitioners later filed before the CA a Petition for Certiorari and Prohibition
On 6 October 2004, a Decision was rendered by the RTC, which, after narrating dated 28 February 2008, docketed as CA-G.R. SP No. 102540. On 7 March 2008,
the testimonial evidence for respondent, stated: petitioners filed before the CA a Motion for the Issuance of Status Quo Order and Motion
[4]
for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction. The
After the completion of the testimony of Victor M. Reyes, motion prayed for an order to restrain the RTC from further proceeding and issuing any
[5]
counsel for the petitioner manifested that he will file the formal offer of further Order, Resolution, Writ of Execution, and any other court processes in the case
evidence in writing. before it.

On July 19, 2004, counsel for the petitioner filed before this
Court his Formal Offer of Documentary Exhibits consisting of Exhibits On 26 March 2008, the CA issued a Resolution denying the said motion, stating
A to H, inclusive of submarkings. thus:
On August 18, 2004 an order was issued by the Court
admitting all the exhibits formally offered by the petitioner thru counsel
After a careful evaluation of petitioners Motion for Issuance
and this case was ordered submitted for resolution of the Court.
of Status Quo Order and Motion for Issuance of Temporary
68
Restraining Order and/or Writ of Preliminary Injunction, We find that administrative comity and fair play. Even if the writ were implemented, petitioners failed
the matter is not of extreme urgency and that there is no clear and to state in categorical terms the serious injury they would sustain.
irreparable injury that would be suffered by the petitioners if the prayer
for the issuance of a Status Quo Order, Temporary Restraining Order
(TRO) and/or Writ of Preliminary Injunction is not granted. In Ong Respondent further argues that it is now in possession of the contracts that the lessees
Ching Kian Chuan v. Court of Appeals, it was held that, to be entitled of the Padre Garcia Shopping Center executed with APRI. Thus, there are actions [that
to injunctive relief, the petitioner must show, inter alia, the existence of [7]
militate] against the preservation of the present state of things, as sought to be
a clear and unmistakable right and an urgent and paramount necessity achieved with the issuance of a status quo order.
for the writ to prevent serious damage.

WHEREFORE, petitioners prayer for the issuance of a Status


On 2 June 2009, petitioners filed their Reply to respondents Comment.
Quo Order, Temporary Restraining Order and/or Writ of Preliminary
[6]
Injunction is hereby DENIED for lack of merit.

On 3 March 2010, this Court issued a Resolution requiring the parties to inform the Court
of the present status of CA-G.R. SP No. 102540. On 15 April 2010, respondent
On 17 June 2008, the CA denied the Motion for Reconsideration of the 26 manifested that after the parties filed their respective Memoranda, the CA considered
March 2008 Resolution, stating that the mere preservation of the status quo is not the case submitted for decision. On 12 May 2010, petitioners filed their Compliance,
sufficient to justify the issuance of an injunction. stating that the appellate court, per its Resolution dated 7 August 2008, held in abeyance
the resolution of CA-G.R. SP No. 102540, pending resolution of the instant Petition.

On 8 July 2008, petitioners filed the instant Petition for Review on Certiorari
dated 6 July 2008. The Courts Ruling

The Petition is denied for failure to show any grave abuse of discretion on the part of the
Petitioners claim that the amount of APRIs investment in the Padre Garcia Shopping CA.
Center is estimated at ₱30,000,000, the entirety of which the RTC declared forfeited to
respondent without just compensation. At the time of the filing of the Petition, APRI had
47 existing tenants and lessees and was deriving an average monthly rental income of Procedural Issue:
₱100,000. The Decision of the RTC was allegedly arrived at without first obtaining Propriety of a Petition
jurisdiction over the persons of petitioners. The execution of the allegedly void judgment for Review under Rule
of the RTC during the pendency of the Petition before the CA would probably work 45
injustice to the applicant, as the execution would result in an arbitrary declaration of nullity
of the MOA without due process of law.
Before proceeding to the substantive issues raised, we note that petitioners resorted to
an improper remedy before this Court. They filed a Petition for Review on Certiorari under
Petitioners further allege that respondent did not exercise reasonable diligence in Rule 45 of the Rules of Court to question the denial of their Motion for the issuance of an
inquiring into the formers address in the case before the RTC. The Process Server injunctive relief.
Return, with respect to the unserved summons, did not indicate the impossibility of a
service of summons within a reasonable time, the efforts exerted to locate APRI, or any
inquiry as to the whereabouts of the said petitioner. Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be taken from an
interlocutory order. An interlocutory order is one that does not dispose of the case
[8]
completely but leaves something to be decided upon. An order granting or denying an
On 6 August 2008, this Court required respondent to file its Comment. On 13 February application for preliminary injunction is interlocutory in nature and, hence, not
[9]
2009, the Comment was filed, alleging among others that despite the RTCs issuance of appealable. Instead, the proper remedy is to file a Petition for Certiorari and/or
[10]
a Writ of Execution, respondent did not move to implement the said writ out of Prohibition under Rule 65.
69
While the Court may dismiss a petition outright for being an improper remedy, it may in Grave abuse of discretion in the issuance of writs of preliminary injunction
[11]
certain instances proceed to review the substance of the petition. Thus, this Court will implies a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction;
treat this Petition as if it were filed under Rule 65. or the exercise of power in an arbitrary or despotic manner by reason of passion,
prejudice or personal aversion amounting to an evasion of positive duty or to a virtual
[18]
refusal to perform the duty enjoined or to act at all in contemplation of law. The burden
Substantive Issue: is thus on petitioner to show in his application that there is meritorious ground for the
[19]
Grave abuse of issuance of a TRO in his favor.
discretion on the part
of the CA
In this case, no grave abuse of discretion can be imputed to the CA. It did not
exercise judgment in a capricious and whimsical manner or exercise power in an
The issue that must be resolved by this Court is whether the CA committed grave abuse arbitrary or despotic manner.
of discretion in denying petitioners Motion for the Issuance of Status Quo Order and
Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction
(Motion for Injunction). No clear legal right - A clear legal right means one clearly founded in or granted by law
[20]
or is enforceable as a matter of law. In the absence of a clear legal right, the issuance
[21]
of the writ constitutes grave abuse of discretion. The possibility of irreparable damage
[22]
A writ of preliminary injunction and a TRO are injunctive reliefs and preservative without proof of an actual existing right is not a ground for injunction.
[12]
remedies for the protection of substantive rights and interests. An application for the
issuance of a writ of preliminary injunction and/or TRO may be granted upon the filing of
a verified application showing facts entitling the applicant to the relief demanded. A perusal of the Motion for Injunction and its accompanying Affidavit filed before
the CA shows that petitioners rely on their alleged right to the full and faithful execution
of the MOA. However, while the enforcement of the Writ of Execution, which would nullify
Essential to granting the injunctive relief is the existence of an urgent necessity the implementation of the MOA, is manifestly prejudicial to petitioners interests, they
for the writ in order to prevent serious damage. A TRO issues only if the matter is of such have failed to establish in their Petition that they possess a clear legal right that merits
extreme urgency that grave injustice and irreparable injury would arise unless it is issued the issuance of a writ of preliminary injunction. Their rights under the MOA have already
[13] [14]
immediately. Under Section 5, Rule 58 of the Rule of Court, a TRO may be issued been declared inferior or inexistent in relation to respondent in the RTC case, under a
[23]
only if it appears from the facts shown by affidavits or by the verified application that judgment that has become final and executory. At the very least, their rights under the
great or irreparable injury would be inflicted on the applicant before the writ of preliminary MOA are precisely disputed by respondent. Hence, there can be no clear and
injunction could be heard. unmistakable right in favor of petitioners to warrant the issuance of a writ of injunction.
[24]
Where the complainants right or title is doubtful or disputed, injunction is not proper.

Thus, to be entitled to the injunctive writ, petitioners must show that (1) there
exists a clear and unmistakable right to be protected; (2) this right is directly threatened The general rule is that after a judgment has gained finality, it becomes the
by an act sought to be enjoined; (3) the invasion of the right is material and substantial; ministerial duty of the court to order its execution. No court should interfere, by injunction
[25]
and (4) there is an urgent and paramount necessity for the writ to prevent serious and or otherwise, to restrain such execution. The rule, however, admits of exceptions, such
irreparable damage.
[15] as the following: (1) when facts and circumstances later transpire that would render
execution inequitable or unjust; or (2) when there is a change in the situation of the
[26]
parties that may warrant an injunctive relief. In this case, after the finality of the RTC
Decision, there were no supervening events or changes in the situation of the parties
The grant or denial of a writ of preliminary injunction in a pending case rests on that would entail the injunction of the Writ of Execution.
the sound discretion of the court taking cognizance of the case, since the assessment
and evaluation of evidence towards that end involves findings of fact left to the said court
[16]
for its conclusive determination. Hence, the exercise of judicial discretion by a court in
injunctive matters must not be interfered with, except when there is grave abuse of No irreparable injury- Damages are irreparable where there is no standard by which
[17]
discretion. [27]
their amount can be measured with reasonable accuracy. In this case, petitioners have
alleged that the loss of the public market entails costs of about ₱30,000,000 in
70
investments, ₱100,000 monthly revenue in rentals, and amounts as yet unquantified but
not unquantifiable in terms of the alleged loss of jobs of APRIs employees and potential
suits that may be filed by the leaseholders of the public market for breach of contract.
Clearly, the injuries alleged by petitioners are capable of pecuniary estimation. Any loss
petitioners may suffer is easily subject to mathematical computation and, if proven, is
[28]
fully compensable by damages. Thus, a preliminary injunction is not warranted. With
respect to the allegations of loss of employment and potential suits, these are speculative
at best, with no proof adduced to substantiate them.

The foregoing considered, the CA did not commit grave abuse of discretion in
denying the Motion for Injunction. In any case, petitioners may still seek recourse in their
pending Petition before the Court of Appeals.

WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions dated 26


March 2008 and 16 June 2008 in CA-G.R. SP No. 102540 are AFFIRMED. The Court of
Appeals is directed to proceed with dispatch to dispose of the case before it.

SO ORDERED.

71

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