G.R. No. 144755 June 8, 2005 the Truth in Lending Act or Republic Act No. 3765.
the Truth in Lending Act or Republic Act No. 3765. It opposed the prayer for In its Comment dated January 15, 2000, PLCC claimed that the trial court did not
SPOUSES ELISEO F. ESTARES and ROSENDA P.
ESTARES, petitioners,
vs.
COURT OF APPEALS, HON. DAMASO HERRERA as Presiding
Judge of the RTC, Branch 24, Biñan, Laguna PROMINENT LENDING
& CREDIT CORPORATION, PROVINCIAL SHERIFF OF LAGUNA
and Sheriff IV ARNEL G. MAGAT, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari and prohibition under Rule 65 of the Rules
of Court which assails the Decision1and Resolution of the Court of Appeals
dated April 17, 2000 and July 7, 2000, respectively, in CA-G.R. SP No. 56123.
The factual background of the case is as follows:
On May 21, 1999, petitioner Spouses Eliseo F. Estares and Rosenda P. Estares
(Estares spouses for brevity) filed a complaint for "Damages and Preliminary
Prohibitory Injunction" against private respondent Prominent Lending &
Credit Corporation (PLCC) before the Regional Trial Court, Branch 24, Biñan,
Laguna, docketed as Civil Case No. B-5476.2
They alleged that: on January 12, 1998, they obtained a loan from PLCC for
₱800,000.00 secured by a real estate mortgage over a 363-square meter parcel
of land with improvements situated in the Municipality of Santa Rosa, Laguna,
covered by Transfer Certificate of Title (TCT) No. 99261; the promissory note
and the real estate mortgage were falsified because they affixed their
signatures on two blank documents; the monthly interest of 3.5% and 3%
penalty on each delayed monthly interest are different from the 18% interest
per annum to which they agreed to; for failure to pay their obligation despite
repeated demands, PLCC filed a petition for extrajudicial foreclosure with the
Office of the Provincial Sheriff of Laguna; and on June 8, 1999, the Sheriff
sent a Notice of Extrajudicial Sale to the Estares spouses.
Accordingly, the Estares spouses sought to declare as null and void the
promissory note and the real estate mortgage for not reflecting their true
agreement. In the interim, they prayed for a temporary restraining order (TRO)
and/or writ of preliminary injunction to enjoin PLCC from taking possession
of the mortgaged property and proceeding with the extrajudicial sale scheduled
on July 13, 1999 at 10:00 a.m.
On June 30, 1999, the Estares spouses amended their complaint to include the
Register of Deeds of Laguna-Calamba Branch, the Provincial Sheriff of
Laguna and Sheriff IV Arnel G. Magat as party-defendants.3
On July 12, 1999, the trial court issued a TRO in favor of the Estares
spouses.4 The parties subsequently agreed to maintain the status quo until
August 20, 1999.5
On August 6, 1999, PLCC filed its Answer with Counterclaim alleging that
the Estares spouses were duly apprised of the terms and conditions of the loan,
including the rate of interest, penalties and other charges, in accordance with
1
restraining order on the ground that there is no factual and legal basis for its commit grave abuse of discretion in denying the Estares spouses’ application for a
issuance since the Estares spouses’ fear of eviction is false.6 writ of preliminary injunction since the latter failed to prove their right to injunctive
At the hearing on the Estares spouses’ application for a writ of preliminary relief and the action sought to be enjoined has been rendered moot by the auction sale
injunction, Rosenda P. Estares (Rosenda for brevity) testified that: the loan conducted on January 5, 2000.14
proceeds of ₱637,000.00, received on January 12, 1998, was used in the On April 17, 2000, the Court of Appeals dismissed the petition for lack of merit,
improvement and renovation of their boarding house; they did not question holding that the trial court did not abuse its discretion in denying the Estares spouses’
PLCC in writing why they only received ₱637,000.00; when they received the application for a writ of preliminary injunction since the latter failed to prove the
Statement of Account, they did not question the figures appearing therein; when requisites for the issuance thereof. 15
they received PLCC’s demand letter, they went to the former’s office not to The Estares spouses then moved for reconsideration of the April 17, 2000 decision.
question the loan’s terms and conditions but merely to request for extension of In addition, they prayed that the auction sale on January 5, 2000, as well as the
three months to pay their obligation. They adduced in evidence the promissory minutes of auction sale and certificate of sale, be declared null and void not only
note, real estate mortgage, statement of account, petition for extrajudicial because there was no publication of the notice of auction sale but the auction sale
foreclosure and the notice of extrajudicial sale. The Estares spouses then rested preempted the Court of Appeals in the disposition of the case and was conducted in
their case. defiance of the Resolution dated December 14, 1999.16
In opposition to the application for a writ of preliminary injunction, PLCC On July 7, 2000, the Court of Appeals denied the Estares spouses’ motion for
presented its manager, Rey Arambulo, who testified that the Estares spouses reconsideration.17
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 On September 16, 2000, the Estares spouses filed the present petition
for certiorari and prohibition anchored on the following grounds:
Act or Republic Act No. 3765. It submitted the same evidence offered by the
Estares spouses, along with the latter’s credit application, the credit I
investigation report, the receipts PLCC issued, and the disclosure statement on
THE COURT OF APPEALS ERRED IN NOT GRANTING A WRIT OF
the loan. PRELIMINARY INJUNCTION TO PREVENT RESPONDENTS PLCC AND
On August 18, 1999, the trial court denied the Estares spouses’ application for PROVINCIAL SHERIFF OF LAGUNA/ SHERIFF ARNEL MAGAT FROM
a writ of preliminary injunction, holding that the latter failed to establish the FORECLOSING THE MORTGAGE AND CONDUCTING THE AUCTION SALE
facts necessary for an injunction to issue.7 OF PETITIONERS’ PROPERTY AND/OR IN UPHOLDING THE ORDER
On August 31, 1999, the Estares spouses filed a motion for DATED AUGUST 18, 1999 OF JUDGE DAMASO A. HERRERA, RTC-BRANCH
reconsideration.8 During the hearing on the motion for reconsideration on 24, LAGUNA.
September 17, 1999, Eliseo P. Estares (Eliseo for brevity) moved that he be II
allowed to testify on the circumstances of the loan but the trial court denied it.
THE COURT OF APPEALS ERRED IN NOT DECLARING AS NULL AND VOID
The trial court deemed it best that he be presented during the trial on the AND/OR SETTING ASIDE THE AUCTION SALE OF THE PETITIONERS’
merits.9 On October 1, 1999, the trial court denied the motion for HOUSE AND LOT CONDUCTED BY SHERIFF ARNEL MAGAT ON JANUARY
reconsideration.10 5, 2000 FOR LACK OF RE-PUBLICATION OF NOTICE OF EXTRA-JUDICIAL
On December 7, 1999, the Estares spouses filed a petition for certiorari and SALE, FOR PRE-EMPTING THE COURT OF APPEALS IN DECIDING THE
prohibition in the Court of Appeals ascribing grave abuse of discretion upon the CASE, AND FOR RENDERING THE PETITION IN CA-G.R. SP NO. 56123
trial court in issuing the Orders dated August 18, 1999 and October 1, 1999 MOOT AND ACADEMIC.
which denied their prayer for a writ of preliminary injunction and motion for III
reconsideration, respectively.11
THE COURT OF APPEALS ERRED IN NOT DECLARING DENIAL OF DUE
On December 14, 1999, without giving due course to the petition, the Court of PROCESS TO OVERSEAS CONTRACT WORKER ELISEO ESTARES WHEN
Appeals issued a Resolution requiring the PLCC to file its comment to the JUDGE DAMASO A. HERRERA REFUSED TO ALLOW HIM TO TESTIFY ON
petition. The action on the Estares spouses’ application for a TRO and writ of THE CIRCUMSTANCES OF THEIR LOAN WITH PLCC.18
preliminary injunction was deferred and held in abeyance until after receipt of
the comment.12 Anent the first ground, the Estares spouses insist that they firmly established their
right to injunctive relief. They claim that the promissory note, credit application,
With no restraining order enjoining him, Sheriff Magat conducted an auction disbursement voucher, disclosure statement and real estate mortgage are falsified; the
sale on January 5, 2000, with PLCC as highest bidder for ₱1,500,000.00.13 promissory note is not reflective of the true amount of the loan, as well as the term,
interest and charges thereon; the ₱126,362.28 represent additional charges, not as part
of the loan, that were not agreed upon prior to or before the consummation of
the loan; and the amount of the loan and rate of interest stated in the falsified
promissory note are fictitious or simulated.
With respect to the second ground, they maintain that the auction sale
conducted on January 5, 2000 should be nullified because it lacked
republication of the notice of auction sale and it was conducted in violation of
the Court of Appeals’ Resolution dated December 14, 1999 which enjoined
the parties to maintain the status quo pending the filing by the respondents of
their Comment to the petition. They argue that PLCC and Sheriff Magat
preempted the Court of Appeals from resolving their petition by conducting
the auction sale on January 5, 2000.
As to the third ground, they aver that Eliseo was denied due process when the
trial court refused to allow him to testify during the hearing on the motion for
reconsideration. They contend that Eliseo, an overseas contract worker,
purposely took leave from work in the Middle East to testify on the
circumstances of the loan and his testimony was material to clarify the matter
of notarization of the real estate mortgage and show that said document was
falsified.
On October 2, 2000, the Court granted the TRO prayed for in the petition and
required the respondents to comment thereon.19
In its Comment dated October 25, 2000, PLCC asserts that the petition should
be dismissed for being deficient on both procedural and substantive aspects.
As to the procedural aspect, PLCC posits that the petition is filed beyond the
sixty-day period required by the rules and therefore filed out of time. PLCC
further claims that the verification and certification of non-forum shopping are
both insufficient. The verification speaks of a "Pre-Trial Brief" while the
certification of non-forum shopping was executed only by Rosenda.
As to the substance of the petition, PLCC argues that the Estares spouses failed
to establish their right to injunctive relief; the validity of the January 5, 2000
auction sale was brought only in the motion for reconsideration which is
improper because it is a factual issue best addressed to the trial court; Sheriff
Magat did not preempt the Court of Appeals in deciding CA-G.R. SP No.
56123 when he conducted the auction sale on January 5, 2000 because the
Resolution dated December 14, 1999 of the said court did not suspend or
restrain the sheriff from conducting the foreclosure sale; Eliseo was not denied
due process because he sought to testify on factual matters in the hearing on
their motion for reconsideration which is improper as factual matters are best
brought and proved during the trial on the merits of the case.
The Court gave due course to the petition and required the parties to submit
their respective memoranda20 which they complied with.21
Before ruling on the issues raised in the petition, it is necessary to dwell on the
procedural aspects of the case.
From a reading of the grounds on which the instant petition for certiorari and
prohibition are based, it is readily apparent that the Estares spouses are
appealing a decision of the Court of Appeals by resorting to Rule 65, when
2
their remedy should be based on Rule 45 of the Rules of Court. A petition for partnership. Considering that the husband was at that time an overseas contract
review under Rule 45 is not similar to a petition for certiorari under Rule 65. worker working in Algeria, whereas the petition was prepared in Sta. Rosa, Laguna,
Under Rule 45, decisions, final orders or resolutions of the Court of Appeals in a rigid application of the rules on forumshopping that would disauthorize the wife’s
any case, i.e., regardless of the nature of the action or proceedings involved, signing the certification in her behalf and that of her husband is too harsh and clearly
may be appealed to us by filing a petition for review on certiorari, which would uncalled for.31
be but a continuation of the appellate process over the original case.22 In In any event, we find that this petition must still be dismissed as the Court of Appeals
contrast, a special civil action under Rule 65 is an independent action based on did not commit any grave abuse of discretion amounting to want or excess of
the specific grounds therein provided and proper only if there is no appeal or jurisdiction in dismissing the petition.
any plain, speedy and adequate remedy in the ordinary course of Generally, injunction is a preservative remedy for the protection of substantive rights
law.23 Thus, certiorari cannot be availed of as a substitute for the lost remedy or interests. It is not a cause of action in itself but merely a provisional remedy, an
of an ordinary appeal.24 adjunct to a main suit. The controlling reason for the existence of the judicial power
By their own account, the Estares spouses received the Order dated July 7, 2000 to issue the writ is that the court may thereby prevent a threatened or continuous
denying their motion for reconsideration from the Court of Appeals on July 18, irremediable injury to some of the parties before their claims can be thoroughly
2000. Instead of filing a petition for review with this Court within 15 days investigated and advisedly adjudicated. It is to be resorted to only when there is a
thereof or until August 2, 2000, they filed this special civil action by registered pressing necessity to avoid injurious consequences which cannot be remedied under
mail on September 16, 2000 or 60 days from receipt of the Order dated July 7, any standard of compensation. The application of the writ rests upon an alleged
2000. By then, they had already lost the remedy of appeal. By availing of a existence of an emergency or of a special reason for such an order before the case can
wrong remedy, the instant petition should have merited outright dismissal. be regularly heard, and the essential conditions for granting such temporary injunctive
Concerning the verification, we note that Rosenda stated therein that she caused relief are that the complaint alleges facts which appear to be sufficient to constitute a
the preparation of the "foregoing Pre-Trial Brief" but we consider the same as cause of action for injunction and that on the entire showing from both sides, it
a slight error and honest mistake in the preparation of the petition. In any event, appears, in view of all the circumstances, that the injunction is reasonably necessary
to protect the legal rights of plaintiff pending the litigation.32
the purpose of requiring a verification is simply to secure an assurance that the
allegations of the petition have been made in good faith; or are true and correct,
The Estares spouses had the burden in the trial court to establish the following
not merely speculative.25 This requirement is simply a condition affecting the requirements for them to be entitled to injunctive relief: (a) the existence of their right
form of pleadings, and noncompliance therewith does not necessarily render it to be protected; and (b) that the acts against which the injunction is to be directed are
fatally defective.26 Indeed, verification is only a formal, not a jurisdictional,violative of such right.33] To be entitled to an injunctive writ, the petitioner must
requirement.27 show, inter alia, the existence of a clear and unmistakable right and an urgent and
With regard to the certification of non-forum shopping signed only by Rosenda, paramount necessity for the writ to prevent serious damage.34 Thus, an injunctive
the rule is that the certificate of non-forum shopping must be signed by all the remedy may only be resorted to when there is a pressing necessity to avoid injurious
petitioners or plaintiffs in a case and the signing by only one of them is consequences which cannot be remedied under any standard compensation.35
insufficient because a lone signatory cannot be presumed to have personal In the present case, the Estares spouses failed to establish their right to injunctive
knowledge of the matters required to be stated in the attestation.28 relief. They do not deny that they are indebted to PLCC but only question the amount
However, the Court has also stressed that the rules on forum shopping, which thereof. Their property is by their own choice encumbered by a real estate mortgage.
were designed to promote and facilitate the orderly administration of justice, Upon the nonpayment of the loan, which was secured by the mortgage, the mortgaged
should not be interpreted with such absolute literalness as to subvert its own property is properly subject to a foreclosure sale.
ultimate and legitimate objective which is simply to prohibit and penalize the Rosenda’s testimony sealed the fate of the necessity of the writ of preliminary
evils of forumshopping.29 The fact that the rules on forumshopping require injunction. She admitted that: they did not question PLCC in writing why they only
strict compliance merely underscores its mandatory nature that it cannot be received ₱637,000.00; they did not question the figures appearing in the Statement of
dispensed with or its requirements altogether disregarded, but it does not Account when they received it; and, when they received PLCC’s demand letter, they
thereby interdict substantial compliance with its provisions under justifiable went to the former’s office not to question the loan’s terms and conditions but merely
circumstances.30 to request for extension of three months to pay their obligation.36 She acknowledged
We find that the execution by Rosenda of the certificate of non-forum shopping that they only raised the alleged discrepancy of the amount loaned and the amount
in behalf of her co-petitioner and husband, Eliseo, constitutes substantial received, as well as the blank documents which they allegedly signed, after PLCC
compliance with the Rules. After all they share a common interest in the initiated the foreclosure proceedings.37
property involved since it is conjugal property, and the petition questioning the It must be stressed that the assessment and evaluation of evidence in the issuance of
propriety of the decision of the Court of Appeals originated from an action the writ of preliminary injunction involve findings of facts ordinarily left to the trial
brought by the spouses, and is clearly intended for the benefit of the conjugal court for its conclusive determination.38 As such, a trial court’s decision to grant or
to deny injunctive relief will not be set aside on appeal unless the court abused
its discretion. In granting or denying injunctive relief, a court abuses its
discretion when it lacks jurisdiction, fails to consider and make a record of the
factors relevant to its determination, relies on clearly erroneous factual
findings, considers clearly irrelevant or improper factors, clearly gives too
much weight to one factor, relies on erroneous conclusions of law or equity,
or misapplies its factual or legal conclusions.39
In the present case, the Estares spouses clearly failed to prove that they have a
right protected and that the acts against which the writ is to be directed are
violative of said right. Hence, the Court of Appeals did not commit a grave
abuse of its discretion amounting to excess or lack of jurisdiction in dismissing
petitioners’ petition for certiorari.
There is likewise no merit to the claim that the Court of Appeals gravely
abused its discretion when it denied the prayer to nullify the auction sale held
on January 5, 2000 for lack of republication of the notice of auction sale and
for preempting the Court of Appeals in deciding the case and rendering the
petition in CA-G.R. SP No. 56123 moot and academic.
The absence of republication of the notice of auction sale is a factual matter
which by the weight of judicial precedents cannot be inquired into by this
Court in a petition for certiorari. It is best addressed to the attention of the trial
court and taken up in the trial of the case, necessitating presentation of
evidence by both parties. The propriety of the auction sale is a matter which
the trial court is in the best position to determine. For it is basic
that certiorariunder Rule 65 is a remedy narrow in scope and inflexible in
character. It is not a general utility tool in the legal workshop.40 It offers only
a limited form of review. Its principal function is to keep an inferior tribunal
within its jurisdiction.41 It can be invoked only for an error of jurisdiction, that
is, one where the act complained of was issued by the court, officer or a quasi-
judicial body without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of jurisdiction,42 not to be
used for any other purpose,43 such as to cure errors in proceedings or to correct
erroneous conclusions of law or fact.44 Again suffice it to say that the only
issue settled here is the propriety of the non-issuance of a writ of preliminary
injunction pending the final outcome of the case.
As to petitioners’ assertion that the Court of Appeals in its Resolution dated
December 14, 1999 impliedly directed the parties to maintain the status quo,
we deemed it worthy to quote in full the said Resolution, thus:
Without necessarily giving due course to the petition, the Court requires the
respondents to file their comment (not motion to dismiss) within ten (10) days
from notice, which may be treated as their Answer should the petition be given
due course.
Respondents are likewise ordered to show cause in the same Comment why a
temporary restraining order and writ of preliminary injunction should not be
issued.
The action of the petitioners’ application for a temporary restraining order and
writ of preliminary injunction is deferred and held in abeyance until after
receipt of respondents’ Comment.45
3
Clearly, the Court of Appeals did not give due course to the petition but merely 14, 1998, issued by the Regional Trial Court of Balanga, Bataan, Branch 1, in Civil
required PLCC to comment thereon. The Court of Appeals did not enjoin the Case No. 6695 against private respondent, Antonio Santos.
conduct of the auction sale. In any case, the necessity for the issuance of the The factual antecedents of this case are as follows:
writ of injunction has been found wanting.
On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo
Lastly, the Estares spouses’ claim that Eliseo was denied due process when the Florida, Cornelio Pilipino and Severino Vistan, lawful possessors of Lot 1379 of the
trial court refused to allow him to testify during hearing on the motion for Morong, Bataan Cadastre. Lot 1379 consists of 144 hectares. Domingo, Florida,
reconsideration deserves scant consideration. Pilipino and Vistan through their forebears and by themselves had been in open,
It must be remembered that a writ of preliminary injunction is generally based notorious, and exclusive possession of portions of Lot 1379 since 1933 in the concept
solely on initial and incomplete evidence. The evidence submitted during the of owners. The Bureau then directed them to confirm their titles over the property by
hearing on an application for a writ of preliminary injunction is not conclusive filing the appropriate applications for the portions of the property respectively
or complete for only a "sampling" is needed to give the trial court an idea of the occupied by them.1âwphi1.nêt
justification for the preliminary injunction pending the decision of the case on In October 1970, petitioner bought the respective portions of Domingo, Florida,
the merits.46 Pilipino and Vistan, totaling 69,932 square meters and entered into a compromise
We note that it was the Estares spouses’ choice to present only Rosenda to settlement with six other persons occupying the property, whose applications had
testify on the circumstances of the loan at the hearing on their application for a been rejected by the Bureau. Petitioner then filed an application for land registration
writ of preliminary injunction and they cannot assert that Eliseo should have docketed as LRC Cad. Rec. No. N-209 with the then Court of First Instance of Bataan,
been accorded that opportunity during the hearing on the motion for Branch 1. The application was contested by several oppositors, among them the heirs
reconsideration. The essence of due process is found in the reasonable of one Toribio Alejandro.
opportunity to be heard and submit any evidence one may have in support of On December 20, 1991, the trial court decided the land registration case in petitioner’s
one's defense. What the law proscribes is the lack of opportunity to be favor. The losing parties appealed to the Court of Appeals, where the case was
heard.47 As long as a party is given the opportunity to defend his interests in docketed as CA-G.R. CV No. 40452. On March 14, 2000, the appellate court affirmed
due course, he would have no reason to complain, for it is this opportunity to the lower court’s decision.2
be heard that makes up the essence of due process.48 Eliseo cannot complain
that he was deprived of due process since he is given the full opportunity to In June 1997, a group of occupants entered the land, destroyed the fences and drove
testify on the circumstances of the loan during the trial of the main case.49 away livestock owned by petitioner.
All told, no grave abuse of discretion could therefore be imputed to the Court On October 9, 1997, petitioner filed a complaint for injunction with damages, with a
of Appeals in dismissing petitioners’ petition for certiorari with prohibition, for prayer for a temporary restraining order, docketed as Civil Case No. 6695, with the
lack of merit. RTC of Balanga, Bataan. Named as defendants were Juanito Infante, Domingo
Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe, and Richard Doe.
WHEREFORE, the instant petition for certiorari and prohibition is
DISMISSED. The assailed Decision and Resolution of the Court of Appeals The trial court issued the temporary restraining order (TRO) and on January 16, 1998,
dated April 17, 2000 and July 7, 2000, respectively, in CA-G.R. SP No. 56123 the sheriff served copies on the defendants. The sheriff accompanied petitioner’s
are AFFIRMED in all respects. The temporary restraining order issued by this president to the property where they found five (5) persons cultivating the land. The
Court is lifted. Costs against petitioners. latter refused to give their names or receive copies of the TRO. They claimed that
they were only farm workers of a certain Antonio Santos who allegedly owned the
SO ORDERED. land.3
G.R. No. 140058 August 1, 2002 On April 14, 1998, the trial court issued a writ of preliminary injunction restraining
MABAYO FARMS, INC., herein represented by its President MRS. the defendants or persons acting on their behalf from entering and cultivating the
RORAIMA SILVA, petitioner, disputed property. The aforementioned writ was also served upon respondent who
vs. was occupying a portion of Lot No. 1379.4
HON. COURT OF APPEALS and ANTONIO SANTOS, respondents. On February 24, 1999, private respondent filed a special civil action for certiorari
RESOLUTION docketed as CA-G.R. SP No. 51375 with the Court of Appeals. Private respondent
QUISUMBING, J.: averred that he only learned about the writ of preliminary injunction on February 16,
1999, when he secured a copy of the order. He claimed that he was an innocent
This petition for review seeks to reverse the decision1 promulgated on August purchaser for value of the property from Francisco, Armando, and Conchita, all
27, 1999, of the Court of Appeals in CA-G.R. SP No. 51375. The appellate surnamed Alejandro and the injunction prevented him from using his property. He
court enjoined the enforcement of the writ of preliminary injunction dated April alleged that he was not a party to Civil Case No. 6695 and that it was grave abuse of
discretion for the trial court to enforce the injunctive writ against him since it
did not have jurisdiction over him.
On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in
private respondent’s favor, thus:
WHEREFORE, premises considered the instant Petition is hereby
GRANTED. Public respondent is enjoined from imposing the
questioned writ of preliminary injunction dated April 14, 199[8]
against petitioner [Santos].
SO ORDERED.5
Hence, the instant petition, submitting the following issues for our
consideration:
A. WHETHER [PRIVATE] RESPONDENT WAS DEPRIVED OF
HIS CONSTITUTIONAL RIGHT TO BE HEARD.
B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL
PROCEDURE6 IS APPLICABLE IN THE ABOVE-ENTITLED
CASE.
We find the lone issue to be: Is private respondent bound by the writ of
preliminary injunction issued by the trial court?
First, petitioner contends that the injunctive writ of April 14, 1998 was issued
not only against all named defendants in Civil Case No. 6695, but also against
three unnamed "Does." It now argues that the "Does" in the complaint are all
those who violated its rights, including private respondent. Petitioner asks us
to note that the writ of injunction was served not only against the defendants
in Civil Case No. 6695, but also against other persons who were seen entering
and cultivating petitioner’s property, including private respondent. Since the
latter personally received the injunctive order on June 5, 1998, he was already
forewarned to intervene in Civil Case No. 6695 if he had any right or interest
to protect in the disputed property. This he failed to do. Since private
respondent did not then take the opportunity to present his side, he cannot now
claim that he was denied due process when the writ was enforced against him.
In his comment, private respondent counters that he was not legally bound nor
required by law to file his pleadings in Civil Case No. 6695 as he was not a
party in said case. Likewise, he was not required to act on or protest the
injunctive writ in the aforementioned civil case. Private respondent avers that
what petitioner wants is to have a continuing writ in its favor, to include not
only the defendants in Civil Case No. 6695 but also all those who may
subsequently intrude into the land dispute. Private respondent submits that the
court a quo committed no error in describing petitioner’s posture as a violation
of the fundamental rights to notice and hearing.
We have minutely scrutinized the order granting the writ of preliminary
injunction and are unable to say that the writ applied to private respondent.
The order merely stated "[L]et a writ of preliminary injunction be issued
enjoining and restraining the defendants or any person or persons acting in
their place or stead from further entering and cultivating the said land of the
plaintiff subject matter of this case until further order from the Court."7 The
persons specifically enjoined in the order were the defendants in Civil Case
4
No. 6695 or persons acting in their stead. Petitioner itself admitted that private We agree with the Court of Appeals that to make the injunctive writ applicable against
respondent was not a defendant in Civil Case No. 6695 since "at the institution private respondent, petitioner should have impleaded the latter as an additional
of the case in 1997, he (private respondent) did not have a right over any portion defendant in Civil Case No. 6695. Petitioner’s insistence that it had rested its case and
of petitioner’s lot."8 Neither was he a trespasser then.9 Also, nothing in the hence was too late to include defendant finds no support in Section 11. The rule
records indicate that private respondent was acting on behalf of any of the categorically provides that "Parties may be dropped or added by order of the court on
defendants. Taking all these into consideration, we must hold that the writ of motion of any party or on its own initiative at any stage of the action (stress supplied)
preliminary injunction thus cannot be made to apply to private respondent. and on such terms as are just."21 We find it inexplicable why petitioner pointedly
A preliminary injunction is an order granted at any stage of an action prior to resisted the advice of the appellate court to implead private respondent as an
final judgment, requiring a person to refrain from a particular act.10 As an additional defendant in Civil Case No. 6695.
ancillary or preventive remedy, a writ of preliminary injunction may therefore WHEREFORE, the instant petition is DENIED and the assailed decision of the
be resorted to by a party to protect or preserve his rights and for no other purpose Court of Appeals in CA-G.R. SP No. 51375 AFFIRMED. No pronouncement as to
during the pendency of the principal action.11 Its object is to preserve the costs.
status quo until the merits of the case can be heard.12 It is not a cause of action SO ORDERED.
in itself but merely a provisional remedy, an adjunct to a main suit.13 Thus, a
person who is not a party in the main suit, like private respondent in the instant
case, cannot be bound by an ancillary writ, such as the writ of preliminary CHINA BANKING G.R. No. 174569
injunction issued against the defendants in Civil Case No. 6695. He cannot be CORPORATION, SPOUSES Present:
affected by any proceeding to which he is a stranger.14 JOEY & MARY JEANNIE
CASTRO and SPOUSES QUISUMBING, J., Chairperson,
Second, petitioner contends that the Court of Appeals erred when it observed
that petitioner should have impleaded private respondent as defendant in Civil RICHARD & EDITHA CARPIO MORALES,
Case No. 6695 pursuant to Section 11, Rule 3 of the 1997 Rules of Civil NOGOY, TINGA,
Procedure.15 Instead, private respondent should have intervened in Civil Case Petitioners, VELASCO, JR., and
No. 6695 to protect his rights. Petitioner avers that at the time the injunctive - versus - BRION, JJ.
writ was issued, it had already rested its case and to require it to amend its
BENJAMIN CO, ENGR. Promulgated:
complaint to include private respondent was too late.
DALE OLEA and THREE September 17, 2008
Private respondent counters that there was no reason why Section 11, Rule 3 of KINGS CONSTRUCTION &
the 1997 Rules of Civil Procedure should not be made to apply to Civil Case REALTY CORPORATION,
No. 6695. He argues that contrary to petitioner’s posture, his inclusion as a Respondents.
defendant in Civil Case No. 6695 is procedurally correct since no final
judgment had yet been rendered in said case. Moreover, he avers that petitioner x --------------------------------------------------x
cannot insist that private respondent be vigilant in protecting his rights by DECISION
intervening in Civil Case No. 6695.1âwphi1.nêt CARPIO MORALES, J.:
We agree with private respondent. First, private respondent had no duty to
Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision,
intervene in the proceedings in Civil Case No. 6695. Intervention in an action Sindalan, San Fernando, Pampanga, which was covered by Transfer Certificate of
is neither compulsory nor mandatory but only optional and
Title (TCT) No. 450216-R to petitioner-spouses Joey and Mary Jeannie Castro (the
permissive.16Second, to warrant intervention, two requisites must concur: (a) Castro spouses). It sold two other lots also located in the same place covered by TCT
the movant has a legal interest in the matter in litigation,17 and (b) intervention
Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha Nogoy (the
must not unduly delay or prejudice the adjudication of the rights of the Nogoy spouses).
parties18 nor should the claim of the intervenor be capable of being properly
decided in a separate proceeding.19 The interest, which entitles a person to The lots of the Castro spouses and the Nogoy spouses are commonly bound on their
intervene in a suit, must involve the matter in litigation and of such direct and southeastern side by Lot No. 3783-E, which is covered by TCT No. 269758-R in the
immediate character that the intervenor will either gain or lose by the direct name of respondent Benjamin Co (Co) and his siblings.
legal operation and effect of the judgment.20 Civil Case No. 6695 was an action Co and his siblings entered into a joint venture with respondent Three Kings
for permanent injunction and damages. As a stranger to the case, private Construction and Realty Corporation for the development of the Northwoods Estates,
respondent had neither legal interest in a permanent injunction nor an interest a subdivision project covering Lot No. 3783-E and adjacent lots. For this purpose,
on the damages to be imposed, if any, in Civil Case No. 6695. To allow him to they contracted the services of respondent, Engineer Dale Olea.
intervene would have unnecessarily complicated and prolonged the case. In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote respondents
asking them to stop constructing the wall, and remove all installed construction
materials and restore the former condition of Lot No. [3]783-E which they
(petitioners) claimed to be a road lot.1 They also claimed that the construction
obstructed and closed the only means of ingress and egress of the Nogoy
spouses and their family, and at the same time, caved in and impeded the
ventilation and clearance due the Castro spouses’ residential house.2
Petitioners’ demand remained unheeded, prompting them to file before the
Regional Trial Court (RTC) of San Fernando, Pampanga a
complaint,3 docketed as Civil Case No. 12834, for injunction, restoration of
road lot/right of way and damages with prayer for temporary restraining order
and/or writ of preliminary injunction.
Before respondents filed their Answer,4 petitioners filed an Amended
Complaint,5 alleging that the construction of the perimeter wall was almost
finished and thus modifying their prayer for a writ of preliminary injunction to
a writ of preliminary mandatory injunction, viz:
WHEREFORE, it is respectfully prayed of this Honorable Court that:
A. Before trial on the merits, a temporary restraining order be issued
immediately restraining the defendants from doing further construction of the
perimeter wall on the premises, and thereafter, a writ
of preliminary mandatory injunction be issued enjoining the defendants from
perpetrating and continuing with the said act and directing them jointly and
severally, to restore the road lot, Lot 3783-E to its previous condition.
x x x x 6 (Underscoring in the original; emphasis supplied)
After hearing petitioners’ application for a writ of preliminary mandatory
injunction, Branch 44 of the San Fernando, Pampanga RTC denied the same,
without prejudice to its resolution after the trial of the case on the merits, in
light of the following considerations:
After a judicious evaluation of the evidence, the Commissioner’s Report on
the Conduct of the Ocular Inspection held on February 14, 2004, as well as the
pleadings, the Court is of the opinion and so holds that a writ of preliminary
injunction should not be issued at this time. Plaintiffs have not clearly shown
that their rights have been violated and that they are entitled to the relief prayed
for and that irreparable damage would be suffered by them if an injunction is
not issued. Whether lot 3783-E is a road lot or not is a factual issue which
should be resolved after the presentation of evidence. This Court is not inclined
to rely only on the subdivision plans presented by plaintiffs since, as correctly
argued by defendants, the subdivision plans do not refer to lot 3783-E hence
are not conclusive as to the status or classification of lot 3783-E. This court
notes further that Subdivision Plan Psd-03-000577 of Lot 3783 from which the
other subdivision plans originates [sic] does not indicate lot 3783-E as a road
lot.
Even the physical evidence reveals that lot 3783-E is not a road lot. The Court
noticed during the ocular inspection on February 14, 2004, that there is a PLDT
box almost in front of lot 3783-E. There is no visible pathway either in the
5
form of a beaten path or paved path on lot 3783-E. Visible to everyone including the lower court should not be interfered with except in cases of manifest abuse. 14
this court are wild plants, grasses, and bushes of various kinds. Lot 3783-E
could not have been a road lot because Sps. Nogoy, one of the plaintiffs, even It is likewise settled that a court should avoid issuing a writ of preliminary mandatory
built a structure on lot 3783-E which they used as a coffin factory. injunction which would effectively dispose of the main case without trial. 15
Plaintiffs failed to prove that they will be prejudiced by the construction of the In the case at bar, petitioners base their prayer for preliminary mandatory injunction
wall. The ocular inspection showed that they will not lose access to their on Section 44 of Act No. 496 (as amended by Republic Act No. 440), Section 50 of
residences. As a matter of fact, lot 3783-E is not being used as an access road Presidential Decree 1529, and their claim that Lot No. 3783-E is a road lot.
to their residences and there is an existing secondary road within St. Benedict To be entitled to a writ of preliminary injunction, however, the petitioners must
Subdivision that serves as the main access road to the highway. With respect to establish the following requisites: (a) the invasion of the right sought to be protected
the blocking of ventilation and light of the residence of the Sps. Castro, suffice is material and substantial; (b) the right of the complainant is clear and unmistakable;
it to state that they are not deprived of light and ventilation. The perimeter wall and (c) there is an urgent and permanent necessity for the writ to prevent serious
of the defendants is situated on the left side of the garage and its front entrance
damage.16
is still open and freely accessible.
This is indeed an issue of fact which should be ventilated in a full blown trial, Since a preliminary mandatory injunction commands the performance of an act, it
determinable through further presentation of evidence by the parties. x x x does not preserve the status quo and is thus more cautiously regarded than a mere
prohibitive injunction.17 Accordingly, the issuance of a writ of preliminary
xxxx
mandatory injunction is justified only in a clear case, free from doubt or
WHEREFORE, premises considered, plaintiffs’ application for the issuance of
dispute.18 When the complainant’s right is thus doubtful or disputed, he does not
a writ of preliminary mandatory injunction is denied without prejudice to its
have a clear legal right and, therefore, the issuance of injunctive relief is improper.
resolution after the trial of the case on the merits.7 (Underscoring supplied)
Section 44 of Act 496,19 which petitioners invoke, provides:
Their Motion for Reconsideration8 having been denied, petitioners filed a
xxxx
petition for certiorari9 before the Court of Appeals which dismissed the
Any owner subdividing a tract of registered land into lots shall file with the Chief of
same10 and denied their subsequent Motion for Reconsideration.11 the General Land Registration Office a subdivision plan of such land on which all
Hence, the petitioners filed the present petition, faulting the Court of Appeals boundaries, streets and passageways, if any, shall be distinctly and accurately
12
in delineated. If no streets or passageways are indicated or no alteration of the perimeter
of the land is made, and it appears that the land as subdivided does not need of them
I. and that the plan has been approved by the Chief of the General Land Registration
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF Office, or by the Director of Lands as provided in section fifty-eight of this Act, the
SUBSTANCE NOT IN ACCORD WITH THE BASIC Register of Deeds may issue new certificates of title for any lot in accordance with
GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND said subdivision plan. If there are streets and/or passageways, no new certificates shall
APPLICABLE DECISIONS OF THIS HONORABLE COURT. be issued until said plan has been approved by the Court of First Instance of the
II. province or city in which the land is situated. A petition for that purpose shall be filed
by the registered owner, and the court after notice and hearing, and after considering
. . . PROMOTING THE LOWER COURT’S RATIOCINATION the report of the Chief of the General Land Registration Office, may grant the
THAT PETITIONERS ARE SEEKING THE ESTABLISHMENT petition, subject to the condition, which shall be noted on the proper certificate, that
OF AN EASEMENT OF RIGHT OF WAY, WHEN THEY ARE no portion of any street or passageway so delineated on the plan shall be closed or
CLAIMING THE ENFORCEMENT OF THE STATUTORY otherwise disposed of by the registered owner without approval of the court first had,
PROHIBITION AGAINST CLOSURE OR DISPOSITION OF AN
or may render such judgment as justice and equity may require.20 (Underscoring
ESTABLISHED ROAD LOT.
supplied by the petitioners)
III.
Section 50 of Presidential Decree No. 1529,21 which petitioners likewise invoke,
. . . SANCTION[ING] THE LOWER COURT’S PATENT GRAVE
provides:
ABUSE OF DISCRETION IN PERFUNCTORILY DENYING
PETITIONERS’ APPLICATION FOR WRIT OF PRELIMINARY SECTION 50. Subdivision and consolidation plans. – Any owner subdividing a tract
of registered land into lots which do not constitute a subdivision project as defined
INJUNCTION.13
and provided for under P.D. No. 957, shall file with the Commissioner of Land
It is settled that the grant of a preliminary mandatory injunction rests on the Registration or with the Bureau of Lands a subdivision plan of such land on which all
sound discretion of the court, and the exercise of sound judicial discretion by
boundaries, streets, passageways and waterways, if any, shall be distinctly and
accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the
Commissioner of Land Registration or the Bureau of Lands together with the
approved technical descriptions and the corresponding owner's duplicate
certificate of title is presented for registration, the Register of Deeds shall,
without requiring further court approval of said plan, register the same in
accordance with the provisions of the Land Registration Act, as amended:
Provided, however, that the Register of Deeds shall annotate on the new
certificate of title covering the street, passageway or open space, a
memorandum to the effect that except by way of donation in favor of the
national government, province, city or municipality, no portion of any street,
passageway, waterway or open space so delineated on the plan shall be closed
or otherwise disposed of by the registered owner without the approval of the
Court of First Instance of the province or city in which the land is situated. x x
x22(Underscoring supplied by petitioner)
The best evidence thus that Lot No. 3783-E is a road lot would be a
memorandum to that effect annotated on the certificate of title covering it.
Petitioners presented TCT No. 185702-R covering Lot No. 3783-E in the name
of Sunny Acres Realty Management Corporation which states that the
registration is subject to "the restrictions imposed by Section 44 of Act 496, as
amended by Rep. Act No. 440."23 The annotation does not explicitly state,
however, that Lot No. 3783-E is a road lot.1awphi1.net
In any event, TCT No. 185702-R had been cancelled and in its stead was issued
TCT No. 247778-R24 which, in turn, was cancelled by TCT No. 269758-
R25 in the name of respondent Co and his siblings.
TCT No. 247778-R and respondent Co’s TCT No. 269758-R do not now
contain the aforementioned memorandum annotated on TCT No. 185702-R re
the registration being "subject to restrictions imposed by Section 44 of Act
496, as amended by Republic Act No. 440." Given the immediately foregoing
circumstances, there is doubt on whether Lot No. 3783-E is covered by a road
lot.
While petitioners correctly argue that certain requirements must be observed
before encumbrances, in this case the condition of the lot’s registration as
being subject to the law, may be discharged and before road lots may be
appropriated26 gratuity assuming that the lot in question was indeed one, TCT
Nos. 247778-R and 269758-R enjoy the presumption of regularity27and the
legal requirements for the removal of the memorandum annotated on TCT No.
185702-R are presumed to have been followed.28
At all events, given the following factual observations of the trial court after
conducting an ocular inspection of Lot 3783-E, viz:
x x x The ocular inspection showed that [petitioners] will not lose access to
their residences. As a matter of fact, lot 3783-E is not being used as an access
road to their residences and there is an existing secondary road within St.
Benedict Subdivision that serves as the main access road to the
6
highway.29 With respect to the blocking of ventilation and light of the docketed as Civil Case No. 97-0423 and raffled to Branch 111, presided
residence of the Sps. Castro, suffice it to state that they are not deprived of light over by the respondent judge.
and ventilation. The perimeter wall of the defendants is situated on the left side The complaint alleged that vibrations and noises coming from the light rail
of the garage and its front entrance is still open and freely accessible, 30 vehicles caused disruptions in the sound system, resulting in a sharp decline
of advertisements aired over the said system. LAL requested for a
and the absence of a showing that petitioners have an urgent and paramount moratorium of the agreement until the said problem can be solved, but
need for a writ of preliminary mandatory injunction to prevent irreparable LRTA refused to grant such request. Hence, the complaint prays that the
damage, they are not entitled to such writ. contract be reformed by including therein a provision allowing a
WHEREFORE, the petition is DENIED. moratorium in case of disruption affecting the system attributable to
SO ORDERED. mechanical/technical problems in the LRT line or light rail vehicles,
including a pro rata extension of the agreement. The complaint also prays
G.R. Nos. 139275-76 and 140949 November 25, 2004 for a temporary restraining order and preliminary injunction ordering the
LIGHT RAIL TRANSIT AUTHORITY, petitioner, defendant to maintain the status quo and prohibiting it or any of its agents
vs. from disrupting, cutting, severing or disconnecting the electric power
COURT OF APPEALS and T.N. LAL & CO., LTD., respondents. supplied to the plaintiff’s sound system.
Upon receipt of the complaint, the respondent Judge issued a Temporary
DECISION Restraining Order enjoining the parties to maintain the status quo, and
restraining the LRTA from disrupting, cutting, severing or disconnecting
the electric power supplied to LAL’s sound system installed in all the LRT
AUSTRIA-MARTINEZ, J.: stations and vehicles. The TRO was to expire on April 20, 1997.
Both filed by petitioner Light Rail Transit Authority (LRTA), G.R. Nos. On April 16, 1997, after notice and hearing, the respondent judge issued an Order, the
139275-76 assail the Decision dated February 26, 1999, rendered by the Court dispositive portion of which is as follows:
of Appeals (CA) in the consolidated petitions docketed as CA-G.R. SP Nos. WHEREFORE, with all the foregoing considerations, and subject to the
44220 and 44227;1 G.R. No. 140949, on the other hand, questions the Decision condition of plaintiff posting a bond in the amount of Five Hundred
dated November 12, 1999, issued by the CA in CA-G.R. SP No. 52382.2 These Thousand Pesos (P500,000.00), Philippine Currency, conditioned to answer
cases originated from the orders issued by the Regional Trial Court of Pasay for any damage which the defendant may suffer by reason of the injunction
City (Branch 111) in Civil Case No. 97-0423. herein granted, let therefore, a Writ of Preliminary Injunction be issued in
The antecedent facts of these consolidated petitions were summed up by the CA favor of the plaintiff against the defendant who is enjoined from:
in CA-G.R. SP Nos. 44220 and 44227, as follows: (a) Terminating or declaring as terminated the Agreement dated
On October 1, 1986, T.N. LAL & CO., LTD. (private respondent March 19, 1990 as amended on August 6, 1993 and to observe the
herein and hereafter to be referred to as LAL for short) donated a status quo before March 31, 1997; and,
stereo system to the LRTA, to provide music for relaxation and (b) As a consequence thereof, to desist from removing, disrupting,
amusement in the 18 stations and all the rail vehicles of LRTA along interfering, disconnecting or tampering the power supply leading
its Line 1. On March 19, 1990, LAL and the LRTA entered into an to plaintiff’s sound system, in all places, sites and locations within
agreement whereby LAL was authorized to air commercial the defendant’s area of responsibility for the duration of this
advertisements through the aforesaid stereo system for a period of five proceedings, UNLESS THIS ORDER IS EARLIER RECALLED
(5) years and three (3) months from March 19, 1990, in consideration by this Court.
of a fee equivalent to thirty percent (30%) of the gross sales of
advertisements (less any agency commission) annually, with SO ORDERED. (p. 57, Rollo)
minimum annual guaranteed fees. Subsequently, the period of the On April 22, 1997, LRTA filed a Manifestation alleging that the failure of LAL to
contract was amended to five (5) years from April 1, 1992, or until post a bond has rendered the Order dated April 16, 1997 ineffective. On the same day,
March 31, 1997. LRTA unplugged the electrical connection of the sound system.
On March 31, 1997, LAL filed an action for reformation of contract However, on April 25, 1997, LAL filed an injunction bond in the amount of
and damages (with application for preliminary mandatory & P500,000.00, and the writ of preliminary injunction was issued by the respondent
prohibitory injunction and Temporary Restraining Order) against judge. The same was served on LRTA on the same day.
LRTA with the Regional Trial Court at Pasay City, and the same was On April 25, 1997, LAL filed a "Motion to Cite the Defendant in Contempt", alleging
that on April 22, 1997, in defiance of the court’s Order of March 31, 1997 (sic), the
defendant disconnected and cut off the power supply to its sound system
thereby disrupting and disturbing the regular programs and advertisements
aired therein. The motion was set for hearing on April 29, 1997.
On April 28, 1997, LRTA filed a motion for postponement which was granted
and the hearing was reset to May 15, 1997. However, the respondent judge
issued an order dated April 29, 1997, the dispositive portion of which is as
follows:
WHEREFORE, pending resolution of plaintiff’s ‘Motion To Cite
Defendant In Contempt’ which is calendared anew on May 15, 1997
at 8:30 A.M., defendant Light Rail Transit Authority as well as its
counsel are hereby ORDERED to comply with the Order of this
Court dated April 16, 1997 to cause the complete restoration of the
sound system to its original status/condition immediately upon
receipt hereof. Let this Order be served for prompt implementation
by the Sheriff of this Court who is directed to submit his report/return
on the action taken in this regard.
so ordered. (p. 32, Rollo)
On April 30, 1997, the LRTA filed a motion for reconsideration of
the said order.
On May 5, 1997, LAL filed another motion to cite Evangeline M.
Razon, Geronima P. Anastacio and Atty. Moises S. Tolentino, [Jr.]
for civil contempt, for refusing to comply with the order of the court
dated April 29, 1997. The motion was requested to be submitted
for[to] the court for proper decision "immediately upon receipt
hereof".
On May 7, 1997, LRTA filed an opposition to the two motions to
cite in contempt.
On May 13, 1997, the respondent judge issued the herein assailed
order the dispositive portion of which is as follows:
WHEREFORE, this Court finds the defendants guilty of indirect
contempt for defying the Orders of April 16 and 29, 1997 and the
Writ of Preliminary Injunction issued in this case. Since the act
committed can still be corrected or capable of being undone by the
officers of the defendant corporation and/or its agents/operators
themselves, let therefore a Warrant of Arrest be issued against the
following persons, namely:
1) Evangeline M. Razon, Officer-in-charge, LRTA;
2) Geronima P. Anastacio, Head of LRTA, Legal Department; and,
3) Moises S. Tolentino, [Jr.], General Manager, Metro Transit
Organization, Operators of the LRT system.
for their apprehension and incarceration/imprisonment until such
time when they have performed or cause to be performed the act
complained of in this case, by reconnecting, replugging or
reactivating plaintiff’s sound system at all LRT facilities and
7
restoring them in the same state and condition as it was on April 16, hours.9 Petitioner filed a motion for reconsideration but the trial court denied it in
1997. another (second) order dated April 7, 1999.
SO ORDERED. (p. 25, Rollo)
Accordingly, warrants of arrest were issued against the persons
named in the order. Motions to quash warrants of arrest were filed by
LRTA, Evangeline M. Razon, [and] Geronima P. Anastacio. At the
same time, the LRTA filed a motion for the respondent judge to
inhibit himself from further hearing the case. …3
Atty. Moises S. Tolentino, Jr., General Manager of Metro Transit Organization
(operators of the LRT system), then filed a special civil action for certiorari and
prohibition (CA-G.R. SP No. 44227) on May 21, 1997, assailing the trial court’s
order dated May 13, 1997, finding him, Evangeline M. Razon, and Geronima
P. Anastacio, guilty of indirect contempt and ordering the issuance of warrants
of arrest against them. Atty. Tolentino contended that the trial court issued the
orders in disregard of substantive and procedural due process.4
Petitioner LRTA, meanwhile, filed a special civil action for certiorari (CA-G.R.
SP No. 44220) on May 28, 1997, seeking the annulment of the following orders
issued by the trial court: (1) Order dated April 29, 1997, ordering petitioner to
comply with the trial court’s Order dated April 16, 1997; and (2) Order dated
May 13, 1997, denying petitioner’s motion for reconsideration and finding Atty.
Tolentino, Razon, and Anastacio, guilty of indirect contempt and ordering the
issuance of warrants of arrest against them.
CA-G.R. SP Nos. 44220 and 44227 were thereafter consolidated as both
involved related issues.5
On February 26, 1999, the CA rendered its decision in the above-mentioned
cases, the decretal portion of which reads:
WHEREFORE, the petitions filed in these cases are hereby GIVEN
DUE COURSE, and judgment is hereby rendered ANNULLING
AND SETTING ASIDE the Order dated May 13, 1997 and the
warrants of arrest in connection therewith, issued by the respondent
judge in Civil Case No. 97-0423.
SO ORDERED.6
While the CA annulled the Order dated May 13, 1997 and the warrants of arrest
issued by the trial court in Civil Case No. 97-0423, it nevertheless ruled that the
writ of preliminary injunction issued by the trial court per Order dated April 16,
1997, as well as the Order dated April 29, 1997, is valid and binding.7
Respondent then filed with the trial court a Motion to Enforce the Order dated
April 16, 1997. Petitioner, on the other hand, filed a Manifestation asking that
the resolution of respondent’s motion be suspended on the ground that there
appears to be an inconsistency with the body and the dispositive portion of the
CA’s decision.8
Notwithstanding petitioner’s manifestation, the trial court issued an order dated
April 7, 1999, granting respondent’s motion and ordering petitioner to Petitioner’s argument rests mainly on its adamant belief that the discussion of the CA
immediately restore the power supply to respondent’s sound system within 24 in the body of its Decision dated February 26, 1999, rendered in CA-G.R. SP Nos.
44220 and 44227, is inconsistent with its fallo, which nullified and set aside the trial
On April 22, 1999, the trial court issued an order amending the second order dated
April 7, 1999, to be dated April 20, 1999.10
Thus, petitioner filed on April 22, 1999, another special civil action for certiorari (CA-
G.R. SP No. 52382) with the CA, contesting the trial court’s orders dated April 7,
1999 and April 20, 1999 (previously dated April 7, 1999).
Petitioner alleged that the assailed orders were issued with grave abuse of discretion,
as these are not in accordance with the CA’s decision dated February 26, 1999.11
In the meantime, petitioner, on April 14, 1999, filed in CA-G.R. SP Nos. 44220 and
44227 a Motion for Clarification of Decision,12 but it was denied by the CA per
Resolution dated May 21, 1999.13 Petitioner sought reconsideration but it was also
denied per Resolution dated July 9, 1999,14 prompting petitioner to institute on July
29, 1999, a petition for certiorari with this Court, docketed as G.R. Nos. 139275-76.
The CA then promulgated its decision in CA-G.R. SP No. 52382 on November 12,
1999, dismissing the petition and affirming the assailed orders dated April 7, 1999
and April 20, 1999. Petitioner elevated the dismissal to this Court via petition for
review filed on December 20, 1999, docketed as G.R. No. 140949.
On February 21, 2000, the Court ordered the consolidation of G.R. Nos. 139275-76
and G.R. No. 140949.15
In G.R. Nos. 139275-76, petitioner raises the following issues:
I
IF THE BODY OF THE DECISION IN THE SAID CONSOLIDATED
CASES IS IN CONFLICT WHICH HAS BECOME FINAL CONFLICTS
WITH THE DISPOSITIVE PORTION THEREOF, WHICH OF THEM
SHALL PREVAIL?
II
CAN THE LIFETIME OF AN EXPIRED CONTRACT BE EXTENDED
BY A PRELIMINARY INJUNCTION?16
In G.R. No. 140949, the following:
1. CAN A BODY OF THE DECISION [WHICH DOES NOT HAVE ANY
SUPPORT IN OR CONTRARY TO THE DISPOSITIVE PORTION
THEREOF] BE ENFORCED OR EXECUTED?
2. WHETHER OR NOT THE ORDER OF THE TRIAL COURT A QUO
DATED APRIL 7, 1999 AND THE OTHER ONE ALSO DATED APRIL
7, 1999 [WHICH WAS LATER AMENDED BY THE TRIAL COURT A
QUO TO BE DATED APRIL 20, 1999 IN AN ORDER DATED APRIL
22, 1999] ENFORCING THE BODY OF THE DECISION OF THE
HONORABLE COURT OF APPEALS DATED FEBRUARY 26, 1999 IN
CA-G.R. SP NO. 44220 AND CA-G.R. SP NO. 44227 ARE NULL AND
VOID.17
court’s order dated May 13, 1997. According to petitioner, since the May 13,
1997 order is premised on the April 16, 1997 (granting the issuance of the writ
of preliminary injunction) and April 29, 1997 (enforcing compliance with the
injunctive writ) orders, therefore, these orders are likewise invalid, and
respondent cannot seek its enforcement.
The Court, however, has carefully read the assailed decision and cannot find
anything inconsistent with the body and fallo. Even a student of law can
understand its import. It has been said that, to understand the dispositive
portion of a decision, one has only to ascertain the issues of the action.18
CA-G.R. SP Nos. 44220 and 44227 involved three issues. First is whether or
not an injunction order, as embodied in the April 16, 1997 order, is effective
prior to the posting of an injunction bond and the issuance of the injunctive
writ;19 second, whether or not the Order of April 29, 1997 is valid and
binding;20 and the third is whether or not the petitioners were validly held
guilty of contempt of court per Order dated May 13, 1997.21
On the first issue, the CA categorically ruled that the April 16, 1997 order is
binding even without the filing of the injunction bond.22 On the second issue,
the CA likewise ruled that the April 29, 1997 Order is valid and binding.23 It
was on the third issue that the CA found grave abuse of discretion committed
by the trial court, and the Order dated May 13, 1997 was consequently
rendered null and void. The CA is clear on this score. It held, viz.:
The Motion to Cite Defendant in Contempt, dated April 23, 1997
(Annex "G", Petition, SP No. 44227) does not name them as
respondents. It prays only that the defendant (LRTA) "and its
officers and employees who are responsible for the act complained
of" be held in contempt. It is only in the Motion to Cite Defendants
for Civil Contempt Under Rule 71, Section 7 of the Revised Rules
of Court dated May 5, 1997 (sic) that Evangeline M. Razon,
Geronima P. Atanacio, and Moises S. Tolentino, [Jr.] are mentioned
as "responsible on the continuing defiance of the Orders of the
Honorable Court." But the said motion was fatally defective in that
it did not contain a proper notice of hearing, as required by Sec. 4,
Rule 15 of the Revised Rules of Court. It only contains the request
to the Branch Clerk of Court that the said motion be submitted to the
court "immediately upon receipt hereof."
Worst of all, the respondent judge issued his disputed order …, two
(2) days before the date that he himself fixed for the hearing of the
motion to cite the defendant in contempt. Clearly, the said persons
were denied their day in court.
Moreover, we have reviewed the transcript of the ex parte hearing
conducted by the respondent judge on April 29, 1997 (on the motion
to cite defendant in contempt dated April 23, 1997), and we find that
the evidence presented against the abovenamed persons (who are
now facing warrants of arrest) were basically hearsay testimony. …
The respondent judge acted with grave abuse of discretion in issuing
his disputed order, and its corresponding warrants of arrest, without
a hearing, and on the basis of flimsy evidence.24(Emphasis Ours)
8
It is plain to see that only the May 13, 1997 order was nullified by the CA. The commercial advertisements within the LRT stations. The only way to determine this
April 16 and 29, 1997 orders remain valid and binding. Petitioner’s argument is to look into the terms of the contract between petitioner and respondent, as it
that these two orders should likewise have been nullified because the May 13, provides for their respective rights and obligations. It is fundamental that if the terms
1997 order is based thereon, is misplaced. The nullity of the May 13, 1997 order of a contract are clear and leave no doubt upon the intention of the contracting parties,
was not based on these 2 orders, but on grounds of lack of due process and the literal meaning of its stipulations shall control. No amount of extrinsic aids are
evidence. These grounds inevitably led to the dispositive portion of the CA’s required and no further extraneous sources are necessary in order to ascertain the
decision. It must be stressed that it is the dispositive part of the judgment that parties’ intent 27
actually settles and declares the rights and obligations of the parties, finally, The "Agreement" contains the following stipulations, inter alia:
definitively, and authoritatively, notwithstanding the existence of inconsistent
statements in the body that may tend to confuse.25 Whereas, for purposes of adjusting the five-year period corresponding to
the annual minimum guaranteed amount disrupted by the start-up ninety-
If there was any error committed by the CA, it was in failing to state in the day period and the six-month moratorium period effective September 1,
dispositive portion of the decision that the petition was only partially granted. 1990, to end March 1, 1991, the parties have agreed to formally amend the
But this does not affect the decision, as its import can be grasped "Agreement" to reflect the changes thereon;
notwithstanding the lapse. Consequently, the Decision dated February 26, 1999
in CA-G.R. SP Nos. 44220 and 44227 nullifying the Order dated May 13, 1997 …
is a valid decision. 1. Article I (a) of the "Agreement" is hereby amended to read as follows:
Nevertheless, the Court agrees with petitioner that the trial court committed (a.) This Agreement shall be effective for five (5) years to commence on
grave abuse of discretion in issuing the injunctive writ. April 1, 1992 until March 31, 1997, unless sooner terminated as provided
Section 3 of Rule 58 of the Rules of Court provides for the grounds hereunder."28
justifying the issuance of a preliminary injunction, to wit: The contract explicitly states that it was due to expire on March 31, 1997, the same
SEC. 3. Grounds for issuance of preliminary injunction. - A day respondent filed its action for reformation of contract. When the trial court issued
preliminary injunction may be granted when it is established: its Order dated April 16, 1997, ordering petitioner to refrain from terminating the
contract and to retain respondent’s services until further orders from the court, the
(a) That the applicant is entitled to the relief demanded, and the whole contract had already expired. Respondent, therefore, has no clear and unmistakable
or part of such relief consists in restraining the commission or right to be protected by the issuance of the writ. This is but a consequence of their
continuance of the act or acts complained of, or in requiring the stipulation of a determinate period for its expiration.29 The injunction, in effect,
performance of an act or acts, either for a limited period or virtually extended the original period agreed upon.
perpetually;
It was the trial court’s belief that to allow the contract to expire would render
(b) That the commission, continuance or non-performance of the act respondent’s action for reformation of contract moot and academic.30 Needless to
or acts complained of during the litigation would probably work say, a contract can be renewed, revived or extended only by mutual consent of the
injustice to the applicant; or parties. No court can compel a party to agree to a contract through the instrumentality
(c) That a party, court, agency or a person is doing, threatening or is of a writ of preliminary injunction.31 Also, the possibility of irreparable damage
attempting to do, or is procuring or suffering to be done, some act or without proof of actual existing right is not a ground for an injunction.32
acts probably in violation of the rights of the applicant respecting the WHEREFORE, the petitions in G.R. Nos. 139275-76 and 140949, are hereby
subject of the action or proceeding, and tending to render the GRANTED. The Decision dated February 26, 1999, in CA-G.R. SP Nos. 44220 and
judgment ineffectual. 44227, and the Decision dated November 12, 1999, in CA-G.R. SP No. 52382,
The purpose of a preliminary injunction is to prevent threatened or continuous rendered by the Court of Appeals are hereby SET ASIDE. Consequently, the Orders
irremediable injury to some of the parties before their claims can be thoroughly dated April 16 and 29, 1997, issued by the Regional Trial Court of Pasay City (Branch
studied and adjudicated. To be entitled to an injunctive writ, the petitioner has 111) in Civil Case No. 97-0423, and all other orders appurtenant thereto, are
the burden to establish the following requisites:26 NULLIFIED.
(1) a right in esse or a clear and unmistakable right to be protected; The trial court is ORDERED to proceed with Civil Case No. 97-0423 with immediate
(2) a violation of that right; dispatch.
(3) that there is an urgent and permanent act and urgent necessity for SO ORDERED.
the writ to prevent serious damage. G.R. No. 157494 December 10, 2004
In the present case, respondent’s entitlement to the injunctive writ is found on BACOLOD CITY WATER DISTRICT, petitioner,
its prima facie legal right to remain in the premises and continue broadcasting vs.
THE HON. EMMA C. LABAYEN, Presiding Judge, RTC of Bacolod
City, Br. 46 and the City of Bacolod,respondents.
DECISION
PUNO, J.:
First, the chronology of facts. Petitioner Bacolod City Water District
(BACIWA) is a water district established pursuant to Presidential Decree No.
198 as a government-owned and controlled corporation with original charter.
It is in the business of providing safe and potable water to Bacolod City.
Public respondent City of Bacolod is a municipal corporation created by
Commonwealth Act No. 326, otherwise known as the Charter of Bacolod.
On March 26, 1999, respondent City filed a case for Injunction With a Prayer
for Temporary Restraining Order And/Or Preliminary Mandatory Injunction
against petitioner in the sala of public respondent judge. The petition stated
that on January 15, 1999, BACIWA published in the Visayan Daily Star,1 a
local paper of general circulation, a Schedule of Automatic Water Rates
Adjustments for the years 1999, 2000 and 2001. The rates were supposed to
take effect seven (7) days after its posting in the local papers or on January 22,
1999. The increase was aborted after petitioner unilaterally suspended the
January 22, 1999 scheduled implementation. On March 15, 1999, however,
petitioner announced that the rate hike will be implemented on April 1, 1999. 2
Respondent City opposed. It alleged that the proposed water rates would
violate due process as they were to be imposed without the public hearing
required under Letter of Instructions No. 7003 and Presidential Decree No.
1479.4 Hence, it prayed that before the hearing of the main case, a temporary
restraining order or a preliminary injunction be issued.5
On March 30, 1999, the court a quo issued an Order6 summoning the parties
with their counsels to attend the preliminary hearing for the issuance of a
temporary restraining order or preliminary mandatory injunction. On April 8,
1999, it required the parties to simultaneously submit their respective
memoranda on whether it had jurisdiction over the case and whether a public
hearing was conducted re the proposed increase in water rates.7
Petitioner filed its Position Paper dated April 15, 1999. It attached documents
evidencing the conduct of extensive and lengthy public hearings in fifty-eight
(58) of the sixty-one (61) barangays of Bacolod City. It opined that original
jurisdiction over cases on rate review is vested in the Local Water Utilities
Administration (LWUA); appellate jurisdiction is vested in the National Water
Resources [Board] (NWRB) whose decisions shall be appealable to the Office
of the President.8
On May 5, 1999, petitioner also filed a Motion to Dismiss. In an Order9 dated
May 7, 1999, the court directed respondent City to file its Opposition to
petitioner’s Motion to Dismiss within fifteen (15) days.
On June 17, 1999, respondent City filed a Motion to Set [for] Hearing10 its
application for a temporary restraining order or preliminary mandatory
9
injunction. It alleged that the parties had already submitted their respective Four (4) days after, in an Order24 dated April 10, 2000, it denied petitioner’s Motion
memoranda and it has already submitted its Opposition to petitioner’s Motion to Dismiss for lack of merit.
to Dismiss. It also alleged that petitioner had already effected the water rates On April 19, 2000, respondent City filed a Manifestation praying that respondent trial
increase and collection, hence, causing irreparable injury to the public. court issue a writ of preliminary injunction against petitioner, stating thus:
Petitioner opposed the Motion. On July 20, 1999, respondent City filed its A Temporary Restraining Order was issued against the respondents which,
Reply to Opposition and reiterated that the application for the issuance of a however, expired before the parties were able to finish the presentation of
temporary restraining order or preliminary mandatory injunction be heard since their respective witnesses and evidences;
petitioner continued to violate the right of the public to due process and it might
take time before the case would be finally resolved.11 On the same date, The instant case was submitted for resolution and decision of this Honorable
Court during the last week of March but while awaiting the decision of this
petitioner filed a Manifestation and Motion12 stating that the hearing may no
longer be necessary as the respective positions of both parties have already been Honorable Court, several complaints had reached the petitioner that the
respondents had already reflected in the water billings for the month of
presented and amplified in their pleadings and memoranda.
April the new water rates for the year 2000;
On July 22, 1999, respondent trial court issued an Order13 stating that there
was no more need to hear the case on the merits14 as both parties have already x x x 25
submitted their position papers and documents to prove their respective Petitioner, for its part, filed a Motion for Reconsideration26 of respondent trial court’s
allegations. Order denying its Motion to Dismiss. Respondent City filed an Opposition to [the]
On July 23, 1999, petitioner filed its Reply15 to respondent City’s Opposition Motion for Reconsideration27 on June 1, 2000.
to the Motion to Dismiss reiterating that petitioner failed to exhaust Respondent court did not act upon petitioner’s Motion for Reconsideration until
administrative remedies provided by law hence the petition be dismissed for respondent City filed an [Ex Parte] Motion for Speedy Resolution28 of the case on
utter lack of merit. October 6, 2000 praying that the case be resolved before the year 2000 ends in order
After a hiatus of nearly seven (7) months, or on February 18, 2000, respondent to prevent the implementation of the water rates increase for the year 2001 which was
City filed an Urgent Motion for the Issuance of Temporary Restraining Order to be imposed allegedly without the benefit of a public hearing.
And[/]Or Writ of Preliminary Injunction16 praying that the case be set for On December 21, 2000, respondent court issued the assailed Decision29 granting the
hearing on February 24, 2000. On the same date requested, respondent court final injunction which allegedly confirmed the previous preliminary injunction.
heard respondent’s application for temporary restraining order and issued an Petitioner filed its Motion for Reconsideration30 of the assailed Decision on January
Order17 commanding petitioner to stop, desist and refrain from implementing 11, 2001 asserting, among others, that the case was not yet ripe for decision when the
the proposed water rates for the year 2000 which were then supposed to take court granted the final injunction, the petitioner having had no opportunity to file its
effect on March 1, 2000. answer, avail of the mandatory pre-trial conference and have the case tried on the
On March 7, 2000, petitioner filed an Urgent Motion for Reconsideration and merits.
Dissolution of the Temporary Restraining Order.18 Respondent court a Respondent court denied the Motion for Reconsideration for lack of merit in an
quo issued on March 10, 2000 an Order19 directing respondent City to file an Order31 dated January 24, 2001. Petitioner then filed a special civil action for
Opposition to the Urgent Motion. In its Opposition, respondent certiorari under Rule 65 in the Court of Appeals. It alleged that public respondent
City20 contended that the temporary restraining order issued was not infirmed judge acted without or in excess of jurisdiction and/or with grave and patent abuse of
with procedural and substantive defects. It also averred that respondent court discretion amounting to lack or excess of jurisdiction when she issued the final
has jurisdiction over the case since the sole question of the lack of public injunction in disregard of petitioner’s basic right to due process.32
hearing does not require the special knowledge or expertise of an administrative
agency and may be resolved by respondent court, hence the doctrine of primary The Court of Appeals dismissed the petition for review on certiorari, ratiocinating
jurisdiction does not apply. thus:
In the case at bar, the [O]rder of public respondent dated 24 February 2000,
Respondent court continued with the proceedings by receiving the evidence of
petitioner in support of its Motion for Reconsideration and Dissolution of 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
Temporary Restraining Order. It further issued Orders dated March 17,
200021and March 20, 2000.22 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-
On April 6, 2000, respondent court issued an Order23 finding petitioner’s permanence simply cannot issue from a mere temporary restraining order.
Urgent Motion for Reconsideration and Dissolution of Temporary Restraining It must be further noted that the temporary restraining order has been
Order moot and academic considering petitioner’s compliance of said elevated to the same level as the preliminary injunction in the procedure,
temporary restraining order.
grounds and requirements of its obtention by S[ection] 4, Rule 58. Thus, to
 set [a] distinction, the present practice is to categorically refer to it
as a temporary restraining order. In which case, the omission by the
public respondent in referring to the 24 February 2000 order as a
temporary restraining order could not have been a mere oversight
but deliberate.33
Resorting to this Court, petitioner raises the following issues:
I xxx
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED AND REFUSED TO RULE THAT RESPONDENT
COURT HAD ACTED WITHOUT OR IN EXCESS OF
JURISDICTION AND/OR WITH GRAVE ABUSE OF
DISCRETION FOR ARBITRARILY AND CAPRICIOUSLY
RENDERING A DECISION PURPORTING TO ISSUE A FINAL
INJUNCTION AND CONFIRMING ITS ALLEGED
PRELIMINARY INJUNCTION, DESPITE THE FACT THAT:
A. NO PRELIMINARY INJUNCTION HAD BEEN
ISSUED;
B. THE RESPONDENT LOWER COURT DID NOT
RESOLVE HEREIN PETITIONER’S MOTION FOR
RECONSIDERATION OF THE ORDER DENYING
PETITIONER’S MOTION TO DISMISS;
C. THE HEREIN PETITIONER HAD NOT YET FILED
ITS ANSWER TO THE PETITION;
D. THERE WAS STILL NO JOINDER OF THE ISSUES
SINCE NO ANSWER HAD YET BEEN FILED;
E. THE MANDATORY PRE-TRIAL CONFERENCE
WAS NOT YET CONDUCTED;
F. THERE WAS NO TRIAL ON THE MERITS FOR
THE MAIN CASE.
II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
INSISTED THAT THE 24 FEBRUARY 2000 ORDER (ANNEX R)
ISSUED BY THE TRIAL COURT WAS A PRELIMINARY
INJUNCTION WHEN THE RECORDS CLEARLY AND
INDUBITABLY SHOW THAT IT WAS A TEMPORARY
RESTRAINING ORDER (TRO).
III
BY DISMISSING THE PETITION FOR CERTIORARI, THE
COURT OF APPEALS GRAVELY ERRED WHEN IT
EFFECTIVELY PREVENTED PETITIONER FROM FULLY
VENTILATING ITS CASE IN THE MAIN ACTION DUE TO
THE IRREGULAR AND CONFUSED PROCEEDINGS
CONDUCTED BY THE RESPONDENT COURT.34
We rule in favor of petitioner.
10
The initial issue is the proper characterization of the Order dated February 24, injunction as prayed for in the petition be issued against the
2000. respondents.
The sequence of events and the proceedings that transpired in the trial court x x x41 (emphases supplied)
make a clear conclusion that the Order issued was a temporary restraining order It can be gleaned from the foregoing that both parties and respondent trial court have
and not a preliminary injunction. consistently referred to the directive as a temporary restraining order. It was only in
First. We quote the pertinent parts of the questioned Order: the respondent court’s assailed Decision that the Order was referred to as a
preliminary injunction, viz:
When this motion was called for hearing wherein both parties have xxx
argued exhaustedly their respective sides, this court denied the ten This Court therefore grants the final injunction prayed for restraining the
(10) days extension for further amplification of the arguments of the respondent from the commission of the act complained of for the year 2001
respondent to oppose the said motion for issuance of a temporary and hereby confirming the preliminary injunction previously ordered.
restraining order.
x x x 42 (emphasis supplied)
It appearing therefore, that the acts of the defendant will actually Again, it was only when petitioner expressed its vehement objection on the ruling that
affect the plaintiff before the decision of this court can be rendered the final injunction confirmed the preliminary injunction previously issued, when the
and in order to afford the court to pass on the issues without the same respondent City and the respondent trial court started to insist that the questioned
becoming moot and academic and considering the urgency of the
Order was a preliminary injunction. Given the previous undeviating references to it
matter that immediate action should be taken, and pursuant to as a temporary restraining order, respondents cannot now consider it as a preliminary
Administrative Circular No. 6, Paragraph 4 and sub-paragraph 15 and injunction to justify the validity of the assailed Decision. The attendant facts and
The Interim Rules and Guidelines [set forth] by the Rules of circumstances clearly show that the respondent trial court issued a temporary
Court, this court hereby orders the respondent[,] its agents, restraining order.
representatives or any person acting in his behalf to stop, desist
and refrain from implementing in their billings the new water 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
rate increase which will start on March 1, 2000. The Deputy
Provincial Sheriff of this court is hereby ordered to furnish copy of a provisional remedy for and as an incident in the main action.43
this order to the respondent Bacolod City Water District as well as to The main action for injunction is distinct from the provisional or ancillary remedy of
its agents or representatives acting [o]n his behalf. preliminary injunction which cannot exist except only as part or an incident of an
x x x 35 (emphases supplied) independent action or proceeding. As a matter of course, in an action for injunction,
the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory,
It can be gleaned from the afore-quoted Order that what the trial court issued may issue. Under the law, the main action for injunction seeks a judgment embodying
was a temporary restraining order and not a preliminary injunction. The trial
a final injunction which is distinct from, and should not be confused with, the
court has always referred to it as a temporary restraining order in the succeeding provisional remedy of preliminary injunction, the sole object of which is to preserve
Orders it issued on March 10, 200036 and April 6, 2000.37 the status quo until the merits can be heard.44 A preliminary injunction is granted at
The parties, in their succeeding pleadings,38 also referred to the assailed Order any stage of an action or proceeding prior to the judgment or final order. It persists
as a temporary restraining order. The petitioner filed an Urgent Motion for until it is dissolved or until the termination of the action without the court issuing a
Reconsideration and Dissolution of Temporary Restraining Order final injunction.45
(TRO)39on March 1, 2000. This was opposed by respondent City itself in its A restraining order, on the other hand, is issued to preserve the status quo until the
Opposition to Motion for Reconsideration and Dissolution of Temporary hearing of the application for preliminary injunction which cannot be issued ex
Restraining Order (TRO)40 dated March 14, 2000. Further, respondent City, parte. Under Rule 5846 of the Rules of Court, a judge may issue a temporary
in its Manifestation dated April 19, 2000 stated, viz: restraining order with a limited life of twenty (20) days from date of issue. If before
xxx the expiration of the twenty (20)-day period the application for preliminary injunction
A Temporary Restraining Order was issued against the is denied, the temporary restraining order would be deemed automatically vacated.
respondents which, however, expired before the parties were able to If no action is taken by the judge on the application for preliminary injunction within
finish the presentation of their respective witnesses and evidences; the said twenty (20) days, the temporary restraining order would automatically
expire on the 20th day by the sheer force of law, no judicial declaration to that effect
xxx being necessary.47
WHEREFORE, it is most respectfully prayed that while waiting Hence, in the case at bar, since no preliminary injunction was issued, the temporary
for the decision and order of the Honorable Court, a preliminary restraining order granted automatically expired after twenty (20) days under the
Rules. The fact that respondent court merely ordered "the respondent[,] its
agents, representatives or any person acting in his behalf to stop, desist and
refrain from implementing in their billings the new water rate increase which
will start on March 1, 2000"48 without stating the period for the restraint does
not convert the temporary restraining order to a preliminary injunction.
The rule against the non-extendibility of the twenty (20)-day limited period of
effectivity of a temporary restraining order is absolute if issued by a regional
trial court. The failure of respondent court to fix a period for the ordered
restraint did not lend the temporary restraining order a breath of semi-
permanence which can only be characteristic of a preliminary injunction. The
twenty (20)-day period provided by the Rules of Court should be deemed
incorporated in the Order where there is an omission to do so. It is because of
this rule on non-extendibility that respondent City was prompted to move that
hearings be set for its application of a preliminary injunction. Respondent City
cannot take advantage of this omission by respondent trial court.
Third. Even if we assume that the issued Order was a preliminary injunction,
petitioner is correct in contending that the assailed Decision is premature.
The records reveal that respondent court did not resolve petitioner’s Motion
for Reconsideration of the Order denying its Motion to Dismiss before it issued
the assailed Decision. Consequently, there was no answer filed by petitioner,
no joinder of issues, no mandatory pre-trial conference, and no trial on the
merits, yet, a Decision was handed down by the respondent trial court.
The short circuiting of the procedural process denied the petitioner due process
of law. It was not able to allege its defenses in an answer and prove them in a
hearing. The convoluted procedure allowed by the respondent trial court and
the pleadings filed by the parties which are not models of clarity certainly
created confusion. But this confusion should not be seized as a reason to deny
a party the constitutional right to due process. Over and above every
desideratum in litigation is fairness. All doubts should be resolved in favor of
fairness.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals dated November 27, 2002 and February
28, 2003, respectively, are REVERSED and SET ASIDE. The case is
remanded to the court a quo for further proceedings.
SO ORDERED.
G.R. No. 153829 August 17, 2011
ROMAN CATHOLIC ARCHBISHOP OF SAN FERNANDO,
PAMPANGA represented herein by the incumbent
Archbishop, Petitioner,
vs.
EDUARDO SORIANO, JR., EDNA YALUN, EVANGELINA ABLAZA,
FELICIDAD Y. URBINA, FELIX SALENGA, REYNALDO I.
MALLARI, MARCIANA B. BARCOMA, BIENVENIDO
PANGANIBAN, BRIGIDA NAVARRO, EUFRANCIA T. FLORES,
VICTORIA B. SUDSOD, EUFRONIO CAPARAS, CRISANTO
11
MANANSALA, LILY MASANGCAY, BENJAMIN GUINTO, JR., After considering the pleadings submitted by the parties, the MCTC rendered decision
MARTHA G. CASTRO and LINO TOLENTINO, Respondents. on September 28, 2001 in favor of the RCA. The trial court held that OCT No. 17629
x - - - - - - - - - - - - - - - - - - - - - - -x in the name of the RCA remains valid and binding against the whole world until it is
declared void by a court of competent jurisdiction. Thus, defendants were ordered to
G.R. No. 160909 vacate the premises and to pay reasonable monthly rentals from August 15, 2000 until
BENJAMIN GUINTO, JR.,1 Petitioner, they shall have finally vacated the premises.7
vs. Defendants appealed to the Regional Trial Court (RTC). However, the appeal was
ROMAN CATHOLIC ARCHBISHOP OF SAN FERNANDO, dismissed because of their failure to file the appeal memorandum. When defendants
PAMPANGA represented herein by the incumbent elevated the case to the CA, their petition for certiorari was not given due course for
Archbishop, Respondent. failure to file the same within the extended period. Hence, the decision ejecting the
DECISION defendants from the premises became final.
VILLARAMA, JR., J.: Pursuant to Section 21,8 Rule 70 of the 1997 Rules of Civil Procedure, as amended,
the RCA filed an Urgent Motion for Immediate Issuance of a Writ of Execution,
Before this Court are two petitions for resolution: the first, a Petition for Review
on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, which the MCTC granted in an Order9 dated February 10, 2003, as follows:
filed by the Roman Catholic Archbishop (RCA) of San Fernando, Pampanga, WHEREFORE, on the basis of the rules and jurisprudence aforecited, the Motion for
assailing the March 18, 2002 Decision2 and the May 30, 2002 Resolution3 of Execution filed by plaintiff is hereby granted. Let a writ of execution be issued in
the Court of Appeals (CA) in CA-G.R. SP No. 66974; and the second, a Petition connection with this case which is a ministerial duty of the Court.
for Injunction under Rule 58, filed by Benjamin Guinto, Jr. (Guinto), seeking Defendants’ Motion for Inhibition is denied for lack of merit.
to enjoin the implementation of the Writ of Execution4 dated October 14, 2003,
issued by the Municipal Circuit Trial Court (MCTC) of Macabebe-Masantol, SO ORDERED.10
Pampanga in Civil Case No. 2000(23). Thereafter, the MCTC issued another Order dated October 6, 2003, the pertinent
The facts follow: portion of which states:
The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B. Let a writ of execution be issued to implement the Decision dated September 28,
Aniceto, D.D., claimed that it is the owner of a vast tract of land located near 2001.
the Catholic Church at Poblacion, Macabebe, Pampanga and covered by No further defendants’ motion to stay execution shall be entertained.
Original Certificate of Title (OCT) No. 17629 issued by the Registry of Deeds
SO ORDERED.11
of San Fernando on February 21, 1929.5 The RCA alleged that several
individuals unlawfully occupied the subject land and refused to vacate despite Accordingly, a writ of execution12 was issued commanding the sheriff or his deputies
repeated demands. Having no other recourse, the RCA filed an ejectment case, to implement the MCTC Decision. Thus, Sheriff Edgar Joseph C. David sent the
docketed as Civil Case No. 2000(23), before the MCTC of Macabebe-Masantol, defendants a Notice to Vacate13 dated December 8, 2003.
Pampanga against the alleged intruders, namely, Leocadio and Rufina Reyes, Seeking to enjoin the implementation of the writ of execution and the notice to vacate,
Jose Balagtas, Marcial and Victoria Balagtas, Levita Naluz, Dionisio Barcoma, Guinto filed the instant Petition for Injunction with Prayer for Issuance of a
Felicidad Urbina, Justiniano Reyes, Lawrence Muniz, Eduardo Soriano, Temporary Restraining Order (TRO),14 docketed as G.R. No. 160909.
Cosmer Vergara, Perlita Bustos, Brigida Navarro, Leonoda Cruz, Leonida Meanwhile, during the pendency of the ejectment case at the MCTC, some of the
Manansala, Angelito Juliano, Eduardo Ibay, Edna Yalung, Reynaldo Mallari, defendants therein, namely, Eduardo Soriano, Jr., Edna Yalun, Evangelina Ablaza,
Lily Masangcay, Evangelina Ablaza, Crisanto Manansala, Feliza Esguerra, Felicidad Y. Urbina, Felix Salenga, Reynaldo I. Mallari, Marciana B. Barcoma,
Gloria Manansala, Bienvenido and Felicisima Panganiban, Ofroneo Caparas, Bienvenido Panganiban, Brigida Navarro, Eufrancia T. Flores, Victoria B. Sodsod,
Tino Enriquez, Elizabeth and Benjamin Guinto, Felix Salenga, Eleno and Eufronio Caparas, Crisanto Manansala, Lily Masangcay, Benjamin Guinto, Jr.,
Rosala Salenga, Luisa and Domingo Sison, Francia Flores, Eduardo and Rosita Martha G. Castro and Lino Tolentino filed Civil Case No. 01-1046(M) against the
Gutierrez, Zosima and Ener Basilio, Andy and Loreto Bonifacio, Peter and RCA for Quieting of Title and Declaration of Nullity of Title before the RTC of
Felicisima Villajuan.6 Macabebe, Pampanga.15 They claimed that they are in actual possession of the land
On the other hand, defendants countered that the RCA has no cause of action in the concept of owners and alleged that OCT No. 17629 in the name of RCA is
against them because its title is spurious. They contended that the subject land spurious and fake.
belonged to the State, but they have already acquired the same by acquisitive Before filing its Answer, the RCA moved to dismiss the case on grounds of
prescription as they and their predecessors-in-interest have been in continuous noncompliance with a condition precedent, laches, and for being a collateral attack
possession of the land for more than thirty (30) years. on its title. The RCA likewise later filed a supplement to its motion to dismiss.
In an Order16 dated June 4, 2001, the RTC denied the motion to dismiss
reasoning that when the rules speak of noncompliance with a condition
precedent, it could refer only to the failure of a party to secure the appropriate
certificate to file action under the Local Government Code, or the failure to
exert earnest efforts towards an amicable settlement when the suit involves
members of the same family. The RTC also found that plaintiffs have a cause
of action. Furthermore, the trial court held that RCA’s argument – that the
property cannot be acquired by prescription because it has title over it – is a
matter of evidence which may be established during the trial on the merits.
Aggrieved, the RCA filed a motion for reconsideration, which the trial court
denied in an Order17 dated July 24, 2001. Thereafter, the RCA filed with the
CA a petition for certiorari with prayer for preliminary injunction.18
On March 18, 2002, the CA promulgated the assailed Decision,19 the
dispositive portion of which reads:
WHEREFORE, for lack of merit, the petition is hereby DISMISSED.
SO ORDERED.20
A motion for reconsideration21 of the Decision was filed by the RCA.
However, in the Resolution22 dated May 30, 2002, the CA denied the motion
for lack of merit. Hence, the RCA filed the present petition for review on
certiorari,23docketed as G.R. No. 153829, assailing the Decision of the CA,
as well as its Resolution denying the motion for reconsideration.
On January 14, 2004, we resolved to consolidate G.R. Nos. 160909 and
153829.24 Subsequently, the Court resolved to treat the petition for injunction
with prayer for the issuance of a TRO in G.R. No. 160909 as a motion for the
issuance of a TRO and/or writ of preliminary injunction in G.R. No. 153829.25
The RCA raises the following issues:
(A) WHETHER OR NOT CIVIL CASE NO. 01-1046(M) FOR QUIETING
OF TITLE AND DECLARATION OF NULLITY OF TITLE IS LEGALLY
DISMISSIBLE FOR VIOLATION OF THE VARIOUS PROVISIONS OF
THE RULES OF COURT;
and
(B) WHETHER OR NOT THE CIVIL ACTION (THE ABOVE
MENTIONED CIVIL CASE NO. 01-1046[M]) FILED BY PRIVATE
RESPONDENTS CONSTITUTES A COLLATERAL ATTACK ON
PETITIONER'S TITLE.26
Essentially, the issue before us is whether the CA erred in not holding that the
RTC committed grave abuse of discretion in denying the motion to dismiss
filed by the RCA.
We affirm the ruling of the CA.
Well-entrenched in our jurisdiction is the rule that the trial court’s denial of a
motion to dismiss cannot be questioned in a certiorari proceeding under Rule
65 of the 1997 Rules of Civil Procedure, as amended. This is because a
certiorari writ is a remedy designed to correct errors of jurisdiction and not
errors of judgment. The appropriate course of action of the movant in such
event is to file an answer and interpose as affirmative defenses the objections
12
raised in the motion to dismiss. If, later, the decision of the trial judge is adverse, title itself is fake; (2) it was made to appear under Memorandum of Encumbrance
the movant may then elevate on appeal the same issues raised in the motion.27 Entry No. 1007 that the title is a reconstituted title when in truth, it is not; and (3) the
The only exception to this rule is when the trial court gravely abused its verification reveals that there was no petition filed before any court where an order
discretion in denying the motion.28 This exception is, nevertheless, applied was issued for the reconstitution and re-issuance of an owner’s duplicate copy.33 It
sparingly, and only in instances when there is a clear showing that the trial court is thus clear from the foregoing that the case filed questioning the genuineness of
exercised its judicial power in an arbitrary or despotic manner by reason of OCT No. 17629 is a direct attack on the title of the RCA.
passion or personal hostility.29 Further, the abuse of the court's discretion must As regards the petition docketed as G.R. No. 160909 which this Court treated as
be so patent and gross as to amount to an evasion of a positive duty or a virtual motion for the issuance of a TRO and/or writ of preliminary injunction, Guinto insists
refusal to perform the duty enjoined by, or to act at all in contemplation of, that there is a need to enjoin the sheriff from enforcing the writ of execution as it
law.30 would cause grave and irreparable damage to Guinto, while the RCA would not suffer
Here, in dismissing the petition for certiorari, the CA did not find grave abuse any damage if it would later be proved that indeed its title is genuine.
of discretion on the part of the RTC. The appellate court was not convinced We disagree.
with the RCA’s argument that plaintiffs failed to comply with the condition Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, enumerates the
precedent provided in Article 47731 of the Civil Code because they allegedly grounds for the issuance of preliminary injunction, viz:
did not have legal or equitable title to, or interest in the real property. The CA
explained that the requirement stated in Article 477 is not a condition precedent SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction
before one can file an action for quieting of title. Rather, it is a requisite for an may be granted when it is established:
action to quiet title to prosper and the existence or nonexistence of the requisite (a) That the applicant is entitled to the relief demanded, and the whole or
should be determined only after trial on the merits. The CA also agreed with the part of such relief consists in restraining the commission or continuance of
trial court in ruling that the RCA cannot raise in a motion to dismiss the ground the act or acts complained of, or in requiring the performance of an act or
that the complaint is already barred by laches for it still remains to be acts, either for a limited period or perpetually;
established during trial how long the plaintiffs have slept on their rights, if such (b) That the commission, continuance or nonperformance of the act or acts
be the case. Evidently, the CA is correct in finding that the denial by the RTC complained of during the litigation would probably work injustice to the
of the RCA’s motion to dismiss is not tainted with grave abuse of discretion. applicant; or
Next, the RCA submits that an action for quieting of title is a special civil action (c) That a party, court, agency or a person is doing, threatening, or is
covered by Rule 63, while an action for declaration of nullity of title is governed attempting to do, or is procuring or suffering to be done, some act or acts
by ordinary rules. Thus, it contends that these cases should have been dismissed probably in violation of the rights of the applicant respecting the subject of
for violation of the rule on joinder of actions under Section 5, Rule 2 of the 1997 the action or proceeding, and tending to render the judgment ineffectual.
Rules of Civil Procedure, as amended, which requires that the joinder shall not
include special civil actions governed by special rules. Such contention, And as clearly explained in Ocampo v. Sison Vda. de Fernandez:34
however, is utterly bereft of merit and insufficient to show that the CA erred in To be entitled to the injunctive writ, the applicant must show that there exists a right
upholding the trial court’s decision. Section 6 of Rule 2 explicitly provides that to be protected which is directly threatened by an act sought to be enjoined.
misjoinder of causes of action is not a ground for dismissal of an action. Furthermore, there must be a showing that the invasion of the right is material and
The RCA likewise asserts that the case for quieting of title is a collateral attack substantial and that there is an urgent and paramount necessity for the writ to prevent
on its title which is prohibited by law. However, we agree with the CA in serious damage. The applicant’s right must be clear and unmistakable. In the absence
holding that the complaint against the RCA does not amount to a collateral of a clear legal right, the issuance of the writ constitutes grave abuse of discretion.
attack because the action for the declaration of nullity of OCT No. 17629 is a Where the applicant’s right or title is doubtful or disputed, injunction is not proper.
clear and direct attack on its title. The possibility of irreparable damage without proof of an actual existing right is not
a ground for injunction.
An action is deemed an attack on a title when its objective is to nullify the title,
thereby challenging the judgment pursuant to which the title was decreed. The A clear and positive right especially calling for judicial protection must be
attack is direct when the objective is to annul or set aside such judgment, or shown.1avvphi1 Injunction is not a remedy to protect or enforce contingent, abstract,
or future rights; it will not issue to protect a right not in esse and which may never
enjoin its enforcement. On the other hand, the attack is indirect or collateral
when, in an action to obtain a different relief, an attack on the judgment is arise, or to restrain an act which does not give rise to a cause of action. There must
nevertheless made as an incident thereof.32 exist an actual right. There must be a patent showing by the applicant that there exists
a right to be protected and that the acts against which the writ is to be directed are
The complaint filed with the RTC pertinently alleged that the claim of violative of said right.
ownership by the RCA is spurious as its title, denominated as OCT No. 17629,
is fake for the following reasons: (1) that the erasures are very apparent and the
In this case, the defendants in the ejectment case possess no such legal rights
that merit the protection of the courts through the writ of preliminary
injunction. The MCTC has already rendered a decision in favor of the RCA
and ordered the defendants therein to vacate the premises. Their appeal to the
RTC was dismissed and the decision has become final. Evidently, their right
to possess the property in question has already been declared inferior or
inexistent in relation to the right of the RCA in the MCTC decision which has
already become final and executory.35
WHEREFORE, the petition in G.R. No. 153829 is DENIED. The Decision
dated March 18, 2002 and the Resolution dated May 30, 2002 of the Court of
Appeals in CA-G.R. SP No. 66974 are AFFIRMED. The motion for the
issuance of a TRO and/or writ of preliminary injunction to enjoin the sheriff
from enforcing the writ of execution in Civil Case No. 2000(23) is
likewise DENIED for lack of merit.
No costs.
SO ORDERED.
A.M. No. RTJ-11-2298 February 22, 2012
ATTY. RENE O. MEDINA and ATTY. CLARITO
SERVILLAS, Complainants,
vs.
JUDGE VICTOR A. CANOY, Regional Trial Court, Branch 29, Surigao
City, Respondent.
DECISION
CARPIO, J.:
The Case
This is an administrative complaint filed by Atty. Rene O. Medina and Atty.
Clarito Servillas (complainants) against Judge Victor A. Canoy (respondent
judge), Presiding Judge of the Regional Trial Court (RTC) of Surigao City,
Branch 29, for Gross Ignorance of the Law and Procedure, Undue Interference
and Gross Inefficiency, relative to Civil Case No. 7077 entitled "Zenia A.
Pagels v. Spouses Reynaldo dela Cruz"; Spec. Proc. No. 7101 entitled "Noel
P.E.M. Schellekens v. P/S, Supt. David Y. Ombao, et al."; and Civil Case No.
7065 entitled "Heirs of Matilde Chato Alcaraz v. Philex-Lascogon Mining
Corporation, et al."
The Facts
The undisputed facts, as culled from the records, are as follows:
In Civil Case No. 7077
On 30 June 2009, petitioner Zenia Pagels (Pagels) filed a Petition for
Injunction with prayer for issuance of Preliminary Injunction, Temporary
Restraining Order (TRO), Accounting, Damages and Attorney’s Fees against
respondents Spouses Reynaldo and Racquel dela Cruz (respondent
spouses). The case was raffled to Branch 30, where respondent judge was the
acting presiding judge. After serving respondent spouses with the Summons,
copy of the Petition and Notice of hearing, respondent judge conducted the
hearing and granted the TRO on 2 July 2009. On 3 July 2009, the TRO was
13
implemented resulting in the transfer of possession of the duly-licensed primary inefficiency and of violating the Code of Judicial Conduct for his undue delay in
and elementary school and church from respondent spouses to Pagels. On 13 resolving a simple Motion to Dismiss.
July 2009, respondent spouses filed their Answer with Affirmative Defenses As their final charge, complainants aver that respondent judge is guilty of tardiness
and Counterclaim. During the 14 July 2009 hearing for preliminary injunction, and inefficiency in trying cases before his branch. Complainants state that respondent
the parties agreed to submit position papers. Pagels filed her position paper but judge usually starts the hearing between 9:45 a.m. and 10:00 a.m. in violation of the
respondent spouses filed a Motion to Hear their Affirmative Defenses instead. Supreme Court Circular.
On 11 August 2009, respondent judge granted the preliminary injunction
In his Comment with Counter-Charge dated 5 November 2010, respondent judge
without need of a bond pending the hearing of respondent spouses’ Motion to preliminarily states that complainant Atty. Medina is neither a counsel nor a party
Hear Affirmative Defenses. On 1 September 2009, respondent spouses filed a litigant in Spec. Proc. No. 7101 and Civil Case No. 7065; thus, he has no interest to
Motion for Reconsideration, which respondent judge set for hearing on 5 question perceived irregularities relative to these cases. With respect to Atty.
October 2009. Subsequently, respondent judge reset the hearing to 16 Servillas, he is neither a counsel nor a party-in-interest in any of the cases mentioned
November 2009 and then to 12 March 2010. Upon assumption as the new in the complaint.
presiding judge of Branch 30 sometime in February 2010, Judge Evangeline
Yuipco-Bayana issued an Order revoking the preliminary injunction earlier Relative to Civil Case No. 7077, respondent judge claims that he issued the TRO and
issued by respondent judge. preliminary injunction judiciously and without bad faith or irregularity. He argues
that he resolved cases based on the merits of the case and if there was indeed error, it
In their Complaint dated 13 September 2010, complainants contend that merely constitutes an error of judgment. Respondent judge further states that the
respondent judge should be charged with gross ignorance of the law and alleged error was already aptly corrected by Judge Bayana’s reversal. Regarding the
procedure: (1) for disregarding the basic and elementary principle that TRO and alleged delay in the resolution of the Motion for Reconsideration, respondent judge
preliminary injunction are improper remedies to transfer possession of one defends himself by explaining that the Motion was not submitted for resolution.
property to another whose title has not been clearly established; and (2) for Respondent judge argues that respondent spouses’ lawyer (complainant Atty.
failure to decide the Motion for Reconsideration within a period of 30 days as Medina) failed to file a responsive pleading to the Opposition to Motion for
required by the rules and jurisprudence. Reconsideration and that the hearing of the Motion was further reset to 12 March
In Spec. Proc. No. 7101 2010.
Petitioner Noel P.E.M. Schellekens (petitioner Noel) filed a Petition for Writ of As for Spec. Proc. No. 7101, respondent judge argues that it is already subject of an
Habeas Corpus on 19 August 2009. The next day, respondents Aris Caesar B. earlier complaint filed by Cristita C. Vda. de Tolibas against him. With respect to
Servillas, P/S, Supt. David Y. Ombao, Denelito G. Glico, Alexis E. Espojona, Civil Case No. 7065, respondent judge states that the Motion to Dismiss was already
and Rosemarie Catelo testified during the hearing. On 21 August 2009, which resolved.
was a holiday, respondent judge issued an Order for the release of petitioner
On the charge of tardiness and inefficiency, respondent judge attached the: (1) 21
Noel upon finding that the latter was unlawfully arrested. The Order was October 2010 Joint Affidavit of Prosecutor Maureen Chua and Atty. Jose Begil, Jr.;
implemented on the same day.
and (2) 21 October 2010 affidavit of Court Legal Researcher Peter John Tremedal
Relative to this case, complainants charge respondent judge of: (1) gross explaining the reasons for the delay of the hearing. In Tremedal’s Affidavit, he states
ignorance of procedure and undue interference in the administrative functions that respondent judge instructed him to convene the counsels first, and to ensure their
of the Bureau of Immigration by ordering the release of the expired passport of attendance before respondent judge starts the hearing. In conclusion, respondent
petitioner Noel, and by preparing the said Order outside of the court’s premises judge asserts that the malicious filing of the baseless complaint was conduct
because it was not single-spaced and did not have a stamp by the Clerk of Court unbecoming officers of the court for which complainants must be held accountable.
as received; and (2) violating Canon 1 of the Code of Judicial Conduct due to In their Rejoinder and Answer to Counter-Charge dated 1 December 2010,
his friendly greeting to petitioner Noel and for acting as counsel for the latter complainants reiterate their arguments in the Complaint. In the first case, they
by propounding questions on the respondents during their testimonies. emphasize that respondent judge deliberately failed to resolve the Motion for
In Civil Case No. 7065 Reconsideration. On the second, complainants argue that the pendency of the Tolibas
On 3 August 2009, defendant Philex-Lascogon Mining Corporation filed a administrative complaint cannot divest the Supreme Court of its jurisdiction to review
Motion to Dismiss the Amended Complaint filed by plaintiffs Heirs of Alcaraz the actions of respondent judge, more so in the light of new allegations supported by
on the ground of lack of jurisdiction. The plaintiffs Heirs of Alcaraz submitted judicial records. As for respondent Judge’s alleged tardiness and inefficiency,
their Opposition dated 17 August 2009 and their 2nd Amended Complaint dated complainants point out that the joint affidavit of Prosecutor Chua and Atty. Bejil, Jr.
26 August 2009. However, it was only on 20 September 2010 that respondent merely pertained to one particular day. As answer to respondent judge’s Counter-
Judge issued an Order denying the Motion to Dismiss. Accordingly, Charge, complainants denied the allegation for lack of factual and legal basis.
complainants claim that respondent judge should be held guilty of gross The OCA’s Report and Recommendation
In its Report dated 18 July 2011, the Office of the Court Administrator (OCA)
found respondent judge guilty of undue delay in rendering an order but
dismissed the charges of gross ignorance of the law and gross misconduct for
being judicial in nature and for lack of merit.
In its evaluation, the OCA preliminarily states that in administrative
proceedings it is immaterial whether or not the complainant himself or herself
has a cause of action against the respondent.
On the charge of gross ignorance of the law, the OCA held that respondent
judge committed an error of judgment for which he may not be
administratively held liable in the absence of bad faith, malice or corrupt
purpose. As to the issue of undue delay in resolving the Motion for
Reconsideration, the OCA likewise held it unmeritorious because the motion
was not submitted for resolution in view of the resetting of its hearing.
As for the charges relating to Spec. Proc. No. 7101, the OCA found that the
issues raised by complainant may be best resolved in another pending case
against respondent judge (OCA IPI No. 09-3254-TRJ) except the alleged
violation of the Code of Judicial Conduct for acting as counsel for the
petitioner. The OCA also found the charges of tardiness and inefficiency bereft
of merit because Tremedal’s Affidavit explained the reason for the late
hearing.
On the other hand, the OCA held that respondent judge is guilty of undue delay
in resolving the Motion to Dismiss in violation of the 1987 Constitution. Since
it was respondent judge’s first administrative offense, the OCA considered it
as a mitigating circumstance. The OCA recommended a fine of ₱5,000 with a
stern warning that a repetition of the same or similar act shall be dealt with
more severely.
This Court, in a Resolution dated 5 October 2011, re-docketed administrative
complaint OCA-IPI No. 10-3514-RTJ as regular administrative matter A.M.
No. RTJ-11-2298.
The Court’s Ruling
We are partially in accord with the OCA’s findings and recommendation.
To settle the issue on complainant’s cause of action, the OCA correctly
observed that complainants may file the present administrative complaint
against respondent judge. As the Court held in LBC Bank Vigan Branch v.
Guzman,1 the objective in administrative cases is the preservation of the
integrity and competence of the Judiciary by policing its ranks and enforcing
discipline among its erring employees.
However, on the charge of gross ignorance of the law, we find respondent
judge guilty of the charge.
Well-settled is the rule that an injunction cannot be issued to transfer
possession or control of a property to another when the legal title is in dispute
between the parties and the legal title has not been clearly established.2 In this
case, respondent judge evidently disregarded this established doctrine applied
in numerous cases when it granted the preliminary injunction in favor of Pagels
whose legal title is disputed. When the law involved is simple and elementary,
14
lack of conversance with it constitutes gross ignorance of the law.3 Gross because the said Resolution did not address the issues in this Complaint that we
ignorance of the law is the disregard of basic rules and settled jurisprudence.4 modify the findings of the OCA and rule upon the allegations of complainants.
Respondent judge should have been more cautious in issuing writs of On the charge of violation of Canon 1 of the Code of Judicial Conduct, we find the
preliminary injunctions because as consistently held these writs are strong arms same bereft of merit. A judge may properly intervene in the presentation of evidence
of equity which must be issued with great deliberation."5 In Fortune Life to expedite and prevent unnecessary waste of time and clarify obscure and incomplete
Insurance Co., Inc. v. Luczon,6 the Court held the judge guilty of gross details in the course of the testimony of the witness.12 In City of Cebu v. Gako,13 the
ignorance of the law when he failed to conduct a hearing prior to issuance of an Court finds nothing irregular when respondent judge unduly arrogated unto himself
injunction in violation of the Rules of Court. It was further emphasized in Zuño the duty of a counsel by calling a witness to the stand and conducting the latter’s
v. Cabredo,7 where it was held that the act of respondent in issuing the TRO to direct testimony even if the respective counsels were not interested or did not intend
enjoin the Bureau of Customs and its officials from detaining the subject to present said person as their witness. Here, the records show that respondent judge
shipment amounted to gross ignorance of the law. merely propounded questions to elicit relevant facts from the witness respondents.
A judge may also be administratively liable if shown to have been motivated The Transcript of Stenographic Notes, by itself, was not sufficient to show bias or
by bad faith, fraud, dishonesty or corruption in ignoring, contradicting or failing partiality. It has been held that the Court has to be shown acts or conduct of the judge
to apply settled law and jurisprudence.8 In the present case, the following clearly indicative of arbitrariness or prejudice before the latter can be branded the
stigma of being biased and partial.14
compounded circumstances manifest bad faith on the part of respondent judge:
(1) in his Comment with Counter-Charge, respondent judge states that he On the charge of gross ignorance of procedure and undue interference in the
decided after the parties submitted their position papers, but his Order dated 11 administrative functions of the Bureau of Immigration, complainants failed to prove
August 2009 indicates that respondent spouses did not file their position paper the charge with substantial evidence. In administrative proceedings, complainants
and the hearing of the Affirmative Defense was still set on 18 August 2009; (2) have the burden of proving by substantial evidence the allegations in their
respondent judge’s Order patently shows facts not entitling Pagels to the complaints.15 Mere accusations or surmises will not suffice.In the absence of
preliminary injunction but respondent judge still issued it; and (3) respondent contrary evidence, what will prevail is the presumption that the respondent judge has
judge did not require petitioner Pagels to put up a bond without sufficient regularly performed his duties.16
justification or showing of exemption.
On the charge of tardiness and inefficiency, we find the same likewise without merit.
The error is magnified by respondent judge’s delay in resolving the Motion for Without evidence as to their truthfulness or veracity, the allegations in the Complaint
Reconsideration through the following subsequent acts: (1) he set the hearing filed by complainants remain mere allegations and do not rise to the dignity of proof.
of the Motion for Reconsideration dated 1 September 2009 on 5 October 2009 On the charge of undue delay in resolving the Motion to Dismiss, we adopt the
contrary to the rule providing that the "hearing x x x must not be later than 10 recommendation of the OCA that respondent judge is guilty of the charge and should
days after the filing of the motion";9 (2) on 18 November 2009, respondent
be fined ₱5,000. Respondent judge resolved the said Motion after more than a year
judge reset the hearing from 16 November 2009 to 12 March 2010; and (3) he and only after the filing of the instant complaint. Failure to decide cases and other
failed to resolve the said Motion despite the non-filing of a responsive pleading matters within the reglementary period of ninety (90) days constitutes gross
to the Opposition on the Motion for Reconsideration considering that it is not inefficiency and warrants the imposition of administrative sanction against the erring
an indispensable pleading for resolution and the rules provide that "a motion for magistrate.17 This is not only a blatant transgression of the Constitution but also of
reconsideration shall be resolved within thirty days from the time it is submittedthe Code of Judicial Conduct, which enshrines the significant duty of magistrates to
for resolution."10
decide cases promptly. Canon 6, Section 5 of the Code provides that "judges shall
Indeed, when the inefficiency springs from a failure to consider so basic and perform all judicial duties including the delivery of reserved decisions efficiently,
elemental a rule, a law or a principle in the discharge of his functions, a judge fairly and with reasonable promptness. "
is either too incompetent and undeserving of the position and title he holds or Under Rule 140 of the Revised Rules of Court, as amended, gross ignorance of the
he is too vicious that the oversight or omission was deliberately done in bad law is a serious charge punishable by either: (1) dismissal from the service, forfeiture
faith and in grave abuse of judicial authority.11 of all or part of the benefits as the Court may determine, and disqualification from
Relative to Spec. Proc. No 7101, respondent judge filed a Manifestation dated reinstatement or appointment to any public office, including government-owned and
2 September 2011 annexing this Court’s Resolution dated 13 June 2011 controlled corporation; or (2) suspension from office without salary and other benefits
dismissing the case against respondent judge filed by Cristita Conjurado Vda. for more than three but not exceeding six months; or (3) a fine of more than ₱20,000
De Tolibas. In the Resolution, we adopted the OCA’s evaluation, to wit: (1) but not exceeding ₱40,000 while undue delay in rendering a decision or order is a less
respondent judge validly issued the writ of habeas corpus on a holiday, in accord serious charge punishable by either (1) suspension from office without salary and
with the Section 2, Rule 102 of the Rules of Court; and (2) the assailed Order other benefits for not less than one nor more than three months; or (2) a fine of more
was not issued to assist petitioner Noel in evading the crime of parricide. It is than ₱10,000 but not exceeding ₱20,000.1âwphi1
Accordingly, we impose a fine of ₱25,000 for the charge of gross ignorance of
the law, taking into account that in a previous case respondent judge had been
sanctioned.18
WHEREFORE, we find respondent Judge Victor A.
Canoy GUILTY of GROSS IGNORANCE OF THE LAW and UNDUE
DELAY in rendering a decision and accordingly fine him Thirty Thousand
Pesos (₱30,000). He is STERNLY WARNED that a repetition of similar or
analogous infractions in the future shall be dealt with more severely. The other
charges are hereby dismissed.
SO ORDERED.
G.R. No. 79128 June 16, 1988
ORTIGAS & COMPANY Limited Partnership, petitioner,
vs.
COURT OF APPEALS and SPS DALTON B. KING and CECILIA F.
KING, respondents.
YAP, C.J.:
Challenged in this petition is the writ of preliminary mandatory injunction
issued by the respondent it Court of Appeals directing the petitioner herein to
reconnect and restore the electrical service to Gondola Unit No. 8 of private
respondent at the Greenhills Shopping Center upon the filing by the latter of
an injunction bond in the amount of P15,000. The respondent court annulled
and set aside the order of the Regional Trial Court of Pasig, Metro Manila,
Branch 152, dated March 19, 1987 entitled "Dalton B. King, et al. vs. Ortigas
and Company, Limited Partnership" dated March 19, 1987, which denied
plaintiffs application for preliminary mandatory injunction.
We deal in this case only with the matter of the issuance of the writ of
preliminary mandatory injunction to compel petitioners to reconnect the
electrical service to private respondents. We are not called upon to review the
merits of the case, for this has still to be tried and decided by the court a quo.
The antecedent facts are as follows:
In a letter agreement dated October 28, 1983, Ortigas and Company, Limited
Partnership (Ortigas for brevity) through its Greenhills Shopping Center
(GSC) Manager, Manuel Lozano, Jr., leased to Wellington Syquiatco a unit in
Gondola alley (Unit No. 8) at Greenhills Shopping Center, San Juan, Metro
Manila for a period of ten (10) years at a monthly rental of P1,500.00 starting
December 1, 1983 and increasing gradually every year thereafter. The subject
unit was used for the operation of a snack counter, known as "Pied Piper."
On May 10, 1984, Wellington Syquiatco, with the approval of Ortigas,
subleased the subject unit to herein respondent spouses (King spouses for
brevity) who occupied the premises effective May 15, 1984. Later, Wellington
Syquiatco, for valuable consideration (P97,000.00) sold to King spouses his
leasehold rights and obligations over the subject Gondola/unit. This transfer of
rights was approved by Ortigas on September 18, 1984.
15
In August, 1985, Ortigas dismissed its GSC Manager and undertook an audit of The basic issue which we have to determine is whether the court a quo committed a
his performance. Ortigas dissevered that the letter-lease agreements signed by grave abuse of discretion in denying plaintiffs' application for a preliminary
the GSC Manager, allegedly without appropriate authority, uniformly included mandatory injunction.
a clause providing that "6. Electric and water bins shall be for our (i.e. Ortigas) We find no such grave abuse of discretion committed by the trial court which would
account."Ortigas also discovered later that the GSC Manager owned one justify the setting aside of its order by the respondent appellate court and the issuance
Gondola unit (Unit No. 1). by the latter of the writ of preliminary mandatory injunction.
Ortigas' new manager, Jose Lim III, met with the Gondola lessees in March The writ of preliminary injunction, in general, cannot be sought as a matter of right,
1986 and proposed to correct the inequities in the lease agreements. Individual but its grant or refusal rests in the sound discretion of the court under the
electric meters were to be installed in the respective units. A new contract for circumstances and the facts of the particular case. The writ is the "strong arm of
the Gondola units was submitted to the lessees, which provided among others equity" and therefore should not be used to sanction inequity.
that "electric and other utility costs' were for the lessees" account. The Kings
did not sign the new lease agreement. The defendant in the case, the petitioner herein, was able to show that the electricity
consumed per month by the King spouses was way above the amount of the monthly
The electricity bin for May and June, 1986, amounted to P3,480.02 (including rentals which they were paying to the petitioner, thereby in effect making the latter
cost of meter installation) and P2,456.53, respectively, which Ortigas tried to
subsidize the business of the former in the leased premises. Such an obviously
collect from the King spouses. In a letter dated July 28, 1986, the latter protested inequitable situation by which private respondents enriched themselves at the expense
the bill, citing paragraph No. 6 of the letter contract of October 28, 1983 which of petitioner cannot be ignored, as private respondents wanted the trial court to do, by
provided that electric and water bills were for the account of Ortigas. insisting on a strict adherence to the letter of the contract, which petitioner questioned,
The subsequent electricity bins for the months of July, August, September and alleging inter alia obvious mistake and collusion, and non-approval of the contract
October amounted to P2,069.06, P2,097.74, P2,018.10 and P2,051.58, by the principal of the signatory for the lessor defenses which must eventually be
respectively, which including the unpaid bills for May and June, totalled considered by the court a quo in deciding the merits of the case. It is thus not a simple
P14,174.03. When the Kings refused to pay the big, Ortigas disconnected the case of a contracting party having made a bad bargain and who must be made to abide
electricity supply to them. As a consequence, the Kings filed on January 16, by it. The trial court, considering the equities of the case, refused to issue the
1987, a complaint against Ortigas with the Regional Trial Court of Pasig, Metro preliminary mandatory injunction. We hold that in refusing to do so the trial court did
Manila, Branch 152, docketed as Civil Case No. 54202, for specific not commit a grave abuse of discretion.
performance and damages, with prayer for the issuance of a writ of preliminary In general, courts should avoid issuing a writ of preliminary injunction which in effect
mandatory injunction to compel restoration and reconnection of the electric disposes of the main case without trial. This is precisely the effect of the writ of
power supply to plaintiffs Gondola unit. Ortigas filed an opposition, dated preliminary mandatory injunction issued by the respondent appellate court. Having
February 9, 1987, to plaintiffs' application for a writ of preliminary mandatory granted through a writ of preliminary mandatory injunction the main prayer of the
injunction, alleging among others that there was a typographical error in
complaint, there is practically nothing left for the trial court to try except the plaintiffs'
Paragraph No. 6 of the letter agreement, consisting of the omission of the letter claim for damages.
"y" from the word "our;" that taking advantage of such typographical error, the
plaintiffs consumed electricity amounting to a monthly average of P2,362.17, WHEREFORE, the appealed decision of the respondent Court of Appeals dated June
while paying a monthly rental initially at Pl,500.00, thereby making Ortigas 30, 1987 is reversed and set aside.
subsidize their occupancy of the leased premises to the tune of more than P800 SO ORDERED.
per month. Ortigas further alleged that to grant the writ of preliminary G.R. No. 82985 April 22, 1991
mandatory injunction would allow plaintiffs to enrich themselves unjustly at
MERVILLE PARK HOMEOWNERS ASSOCIATION, INC., petitioner,
the expense of defendant.
vs.
After hearing the oral arguments of the parties and considering their pleadings HON. FRANCISCO X. VELEZ and EDGARDO M.
the trial court on March 19, 1987 denied plaintiff application for a writ of SALANDANAN, respondents.
preliminary mandatory injunction.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioner.
The plaintiffs filed a petition with the respondent Court of Appeals for the E.M. Salandanan, Linato and Associates for respondents.
annulment of the order of the court a quo dated March 19, 1987, denying their Nicanor T. Santos, Bernadette G. Santos and Associates for Intervenor.
application for a writ of preliminary mandatory injunction. As stated above, the
respondent appellate court issued its questioned decision dated June 30, 1987,
annulling the order of the court a quo and issuing itself the writ of preliminary RESOLUTION
mandatory injunction prayed for by the Kings upon the filing of a bond of
FELICIANO, J.:
P15,000.00.
Petitioner Merville Park Homeowners Association, Inc. ("MPHAI"), a non-
stock, non-profit corporation, became the owner of the pipelines and
waterworks system ("waterworks system") of Merville Park Subdivision in
Paranaque, Metro Manila, by virtue of a deed of donation dated 24 February
1977 executed in its favor by Merville Development Corporation.
On 19 December 1978, MPHAI, through its then President Ernesto N.
Gonzales, entered into a contract of lease with private respondent Edgardo
Salandanan covering its waterworks system to insure efficient water service
within the Merville Park Subdivision ("Subdivision"). That lease contract
required respondent Salandanan to construct additional wells, to put into full
operational condition Wells Nos. 4 and 5 as well as to rehabilitate Wells Nos.
1, 2 and 3. The contract also allowed respondent Salandanan to increase
annually the water rates but only to the extent of ten percent (10%) of the
preceding year's rates. The water rates set out in the contract could be charged
only upon completion of Well No. 5. The lease contract was later on amended
to provide for, inter alia, a period of ten (10) years commencing from its
signing on 20 July 1981. In that amended contract, the parties agreed to
increase the water rates which increase was in turn approved by the National
Water Resources Council. It was also there provided that each homeowner
shall pay a deposit in the amount of P300.00 which was to be used to pay for
respondent Salandanan's overdue electric bill with Meralco, and thereafter, to
be credited against the homeowner's future water bills.
Subsequently, respondent Salandanan again asked for an increase in water
rates. MPHAI was at first adamant to the point of filing a case in court against
respondent Salandanan. But sometime in 1982, MPHAI and respondent
Salandanan arrived at a compromise. In that compromise agreement, MPHAI
consented to an increase in the water rates as urged by respondent Salandanan
but conditioned upon his completion of Well No. 2 (New Madrid Well). The
compromise agreement was later amended and provided for a new water rate
schedule effective 1 July 1984, but similarly conditioned upon Salandanan's
completion of Well No. 2.
On 16 July 1985, MPHAI commenced an action, Civil Case No. 11124, before
Branch 136 of the Regional Trial Court (RTC) of Makati, presided over by
Judge Ricardo Francisco, against respondent Salandanan. In this suit, MPHAI
sought to rescind the amended lease contract and the amended compromise
agreement, and prayed for issuance of a writ of preliminary mandatory
injunction. MPHAI alleged in its complaint that sometime in 1984 for failure
of respondent Salandanan to pay his electric bills amounting to P1,035,000.00,
Meralco had cut off the electric power supply of his rented water pumps
resulting in a severe water shortage within the Subdivision and thereby
endangering the lives and health of the residents thereof; that aside from
respondent Salandanan's failure to pay his electric bills, he had violated his
contract with petitioner by neglecting to drill and complete new wells and
undertake immediate repairs of broken water pumps; that there was an
immediate need to issue a writ of preliminary mandatory injunction in its favor
to enable it to take possession and control of the water works system.
Judge Francisco, in an order dated 23 July 1985, granted MPHAI's prayer for
a writ of preliminary mandatory injunction and directed respondent
16
Salandanan to turn over to MPHAI the operation and control of the waterworks
system. This prompted respondent Salandanan to file an urgent motion for
reconsideration stating, among other things, that the regular courts had no
jurisdiction over the subject matter of the case, the same being under the
jurisdiction of the National Water Resources Council; and that the case was
filed prematurely considering that MPHAI had not as yet exhausted the
available administrative remedies.
After private respondent had filed an answer with counterclaim and third-party
complaint, the case was re-raffled to Branch 180 presided over by Judge
Benigno M. Puno, who in an order dated 12 August 1985, lifted the writ of
preliminary mandatory injunction. The case, however, was once more reraffled
and this time it went to Branch 149 with Judge Manuel Yuzon, presiding. Judge
Yuzon, upon MPHAI's motion for reconsideration and upon its filing of a surety
bond in the amount of P26,000.00, issued an order dated 11 August 1986
reinstating the writ of preliminary mandatory injunction. Respondent
Salandanan, however, in turn moved for reconsideration on the ground that such
a writ was not a proper remedy to deliver property in the possession of one party
to another. But, before Salandanan's motion could be resolved, the case was, for
the third time, re-raffled and transferred this time to the sala of respondent Judge
Francisco X. Velez. Judge Velez, on 6 August 1987, issued an order lifting and
setting aside the writ, and on 30 March 1988, an order directing the Deputy
Sheriff to return and restore to respondent Salandanan the possession of the
waterworks system.
And so the present Petition for Certiorari was filed.
The Court issued a Temporary Restraining Order on 6 May 1988 enjoining
respondent Judge Velez from enforcing his two (2) orders, ordering petitioner
MPHAI to file a bond in the amount of P50,000.00, and requiring private
respondent Salandanan to file a Comment on the Petition. After additional
pleadings and counter- pleadings, the Court granted due course to the Petition
and required the parties to file simultaneous Memoranda. The parties complied;
private respondent Salandanan also submitted a Supplemental Memorandum.
Deliberating on the instant Petition for Certiorari and after careful examination
of the record of this case, the Court considers that petitioner has failed to show
any grave abuse of discretion, or any act without or in excess of jurisdiction, on
the part of respondent Judge in issuing the orders dated 6 August 1987 and 30
March 1988, lifting and setting aside the writ of preliminary mandatory
injunction earlier issued in Civil Case No. 11124, and ordering private
respondent restored to the possession of the waterworks system involved.
A preliminary mandatory injunction is not a proper remedy to take property,
possession of which is being disputed, out of the possession and control of one
party and to deliver the same to the other party. It may issue pendente liteonly
in cases of extreme urgency, where the right to the possession, during the
pendency of the main case, of the property involved is very clear; where
considerations of relative inconvenience bear strongly in favor of the
complainant seeking the possession pendente lite; where there was wilful and
unlawful invasion of plaintiffs rights, over his protest and remonstrance, the
injury being a continuing one; where the effect of the preliminary mandatory
injunction is to re-establish and maintain a pre-existing and continuing relationship
between the parties, recently and arbitrarily interrupted by the defendant, rather than
to establish a new relationship during the pendency of the principal case.1 Obviously,
it is for the party requesting the writ to demonstrate clearly the presence of one or
more of the above grounds.
Under the terms and conditions of the amended contract of lease, private respondent
Salandanan is entitled to possess and manage the waterworks system for a period of
ten (10) years beginning 20 March 1981, unless, of course, the contract is judicially
rescinded. Petitioner's action for the rescission of the amended lease contract was
pending before the trial court at the time petitioner had recourse to the Supreme Court,
and that action, so far as the records before us show, remains pending to this date.
Petitioner has failed to show the existence of some extraordinary situation imposing
upon it irreparable injury and clearly calling for the issuance and maintenance of the
writ of preliminary mandatory injunction. Petitioner alleged that sometime in 1984,
the power supply of the water pumps had been cut off by Meralco for failure of private
respondent Salandanan to pay his electric bills, resulting in a severe water shortage
within the Subdivision. There was, however, no showing that this condition remained
subsisting three (3) years later, at the time respondent Judge's orders here assailed
were rendered (August 1987 and March 1988) and at the time the Petition
for Certiorari was filed (May 1988) before the Supreme Court. There was, in other
words, no showing that the severe water shortage had not been remedied at or before
the said material times and that a clear and present danger of the same or similar
default on Salandanan's part, threatening the same severe consequences for the
subdivision residents, persisted. On the contrary, it appears from the record that the
Metropolitan Waterworks and Sewerage System ("MWSS") had commenced
servicing the Subdivision before issuance of the respondent Judge's orders here
sought to be annulled, which circumstance surely reduced the probabilities of
recurrence of such breakdown of water supply. Succinctly put, petitioner has not
shown that the continued possession of the leased waterworks system by respondent
Salandanan created a continuing, clear and imminent danger that the Subdivision
would suffer from lack of adequate supply of potable water.
Accordingly, the Court believes that respondent Judge was not merely acting
arbitrarily and capriciously in holding that private respondent Salandanan was entitled
to be maintained in the possession of the leased waterworks system pending
resolution of the on-going action for rescission of the amended contract of lease and
amended compromise agreement. At the same time, it appears to the Court that the
relations between the petitioner MPHAI and private respondent Salandanan have
been strained and frayed by the controversies and litigation between them. In order to
protect the Subdivision residents from the hardships that would ensue from any
recurrence of the problems encountered in 1984 after delivery of the possession of
the waterworks system to private respondent Salandanan, private respondent should
be required to post either a cash deposit or a surety bond from a surety company of
indubitable solvency, in the amount of P100,000.00, conditioned upon the continued
and adequate supply of potable water to Subdivision residents by private respondent
and faithful compliance with his other obligations under existing agreements with
petitioner. This deposit or bond shall be in addition to any performance bond required
from private respondent under existing contractual arrangements. Moreover, it goes
without saying that the trial court has full authority to issue such further order or
orders may become necessary to protect adequately the Subdivision residents
from disruption of water service within the Subdivision, attributable to the
failure of either petitioner MPHAI or private respondent Salandanan to comply
with any of their respective contractual obligations during the pendency of the
action for rescission of contract.
WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of
merit.1âwphi1 Private respondent Salandanan is hereby REQUIRED to put up
either a cash deposit or a surety bond issued by a surety company of
indubitable solvency acceptable to this Court in the amount of P100,000.00,
within a non-extendible period of ten (10) days from notice hereof, to
indemnify the members of petitioner MPHAI for any damages or
inconvenience they may suffer by reason of failure of private respondent
Salandanan to provide a continuous and adequate supply of potable water and
otherwise to comply faithfully with all of his obligations under the amended
contract of lease and amended compromise agreement. No pronouncement as
to costs. This Resolution is immediately executory.
G.R. No. 177486 December 21, 2009
PURISIMO BUYCO, Petitioner,
vs.
NELSON BARAQUIA, Respondent.
DECISION
CARPIO MORALES, J.:
Nelson Baraquia (respondent) filed before the Regional Trial Court (RTC) of
Iloilo City a complaint1 against Dominico Buyco and Clemente Buyco
(Buycos), for the establishment of a permanent right of way, injunction and
damages with preliminary injunction and temporary restraining order, to
enjoin the Buycos from closing off a private road within their property which
he has been using to go to and from the public highway to access his poultry
farm.
The Buycos died during the pendency of the case, and were substituted by
Purisimo Buyco (petitioner) and his brother Gonzalo.
Branch 39 of the Iloilo RTC granted respondent’s application for preliminary
injunction.
By Decision2 of February 14, 2007, the trial court dismissed respondent’s
complaint for failure to establish the concurrence of the essential requisites for
the establishment of an easement of right of way under Articles 649 and 650
of the Civil Code.3 It accordingly lifted the writ of preliminary injunction.
Respondent filed a notice of appeal of the trial court’s decision. Petitioner filed
too a notice of partial appeal bearing on to the non-award of prayer for
damages.
Respondent later filed with the trial court a motion to cite petitioner and his
brother Gonzalo in contempt, alleging that they had closed off the subject road,
thus violating the writ of preliminary injunction. The trial court, by Resolution
of March 13, 2007,4 noting that respondent received on March 5, 2007 his
copy of its decision while petitioner received his on February 21, 2007, held
17
that the February 14, 2007 decision had not yet become final and executory, It is well-settled that the sole object of a preliminary injunction, whether prohibitory
hence, the writ of preliminary injunction remained to be valid, efficacious and or mandatory, is to preserve the status quo until the merits of the case can be heard.
obligatory, rendering petitioner’s act of closing the road on March 1, 2007 an It is usually granted when it is made to appear that there is a substantial controversy
indirect contempt of court. It thus declared petitioner and his brother in between the parties and one of them is committing an act or threatening the immediate
contempt of court. commission of an act that will cause irreparable injury or destroy the status quo of
Petitioner moved for reconsideration of the trial court’s March 13, 2007 the controversy before a full hearing can be had on the merits of the case.12
Resolution, contending that a preliminary injunction, once quashed, ceases to Indubitably, in the case at bar, the writ of preliminary injunction was granted by the
exist, and that he and his brother cannot be held guilty of indirect contempt by lower court upon respondent’s showing that he and his poultry business would be
mere motion. injured by the closure of the subject road. After trial, however, the lower court found
By Resolution5 of April 18, 2007, the trial court set aside the March 13, 2007 that respondent was not entitled to the easement of right of way prayed for, having
Resolution and granted petitioner’s motion for reconsideration, ruling that failed to prove the essential requisites for such entitlement, hence, the writ was
petitioner and his brother cannot be held in contempt of court by mere motion lifted.1avvphi1
and not by verified petition. The present case having been heard and found dismissible as it was in fact dismissed,
On the lifetime of the writ of preliminary injunction, the trial court held that it the writ of preliminary injunction is deemed lifted, its purpose as a provisional remedy
is its "illumined opinion that the matter of whether a writ of preliminary having been served, the appeal therefrom notwithstanding.
injunction remains valid until the decision annulling the same attains finality Unionbank v. Court of Appeals13 enlightens:
is not firmly entrenched in jurisprudence, contrary to the position of the "x x x a dismissal, discontinuance or non-suit of an action in which a restraining order
defendants." It thereupon quoted a portion of the ruling in the 2006 case of Lee or temporary injunction has been granted operates as a dissolution of the restraining
v. Court of Appeals,6 to wit: order or temporary injunction," regardless of whether the period for filing a motion
Furthermore, notwithstanding the stand of both parties, the fact remains that the for reconsideration of the order dismissing the case or appeal therefrom has expired.
Decision of the Court of Appeals annulling the grant of preliminary injunction The rationale therefor is that even in cases where an appeal is taken from a judgment
in favor of petitioners has not yet become final on 14 December 2000. In fact, dismissing an action on the merits, the appeal does not suspend the judgment, hence
such Decision has not yet become final and executory even on the very date of the general rule applies that a temporary injunction terminates automatically on the
this Decision, in view of petitioners’ appeal with us under Rule 45 of the 1997 dismissal of the action." (italics, emphasis and underscoring supplied)
Rules of Civil Procedure. The preliminary injunction, therefore, issued by the
The lower court’s citation of Lee v. Court of Appeals14 is misplaced. In Lee, unlike
trial court remains valid until the Decision of the Court of Appeals annulling in the present case, the original complaint for specific performance and cancellation
the same attains finality, and violation thereof constitutes indirect contempt
of real estate mortgage was not yet decided on the merits by the lower court. Thus,
which, however, requires either a formal charge or a verified the preliminary injunction therein issued subsisted pending appeal of an incident.
petition.7 (underscoring in the original decision)
There being no indication that the appellate court issued an injunction in respondent’s
Hence, this petition for review, raising a question of law – whether the lifting favor, the writ of preliminary injunction issued on December 1, 1999 by the trial court
of a writ of preliminary injunction due to the dismissal of the complaint is was automatically dissolved upon the dismissal of Civil Case No. 26015.
immediately executory, even if the dismissal of the complaint is pending appeal.
WHEREFORE, the petition is GRANTED. The Resolution dated April 18, 2007 of
The petition is meritorious. the trial court is REVERSED. The writ of preliminary injunction which Branch 39
A writ of preliminary injunction is an order granted at any stage of an action or of the Iloilo Regional Trial Court issued on December 1, 1999 was automatically
proceeding prior to the judgment or final order, requiring a party or a court, dissolved upon its dismissal by Decision of February 14, 2007 of Civil Case No.
agency or a person to refrain from a particular act or acts.8 It is merely a 26015.
provisional remedy, adjunct to the main case subject to the latter’s outcome.9 It SO ORDERED.
is not a cause of action in itself.10Being an ancillary or auxiliary remedy, it is
available during the pendency of the action which may be resorted to by a [G.R. Nos. 135180-81; 135425-26. August 16, 2000]
litigant to preserve and protect certain rights and interests therein pending Heirs of the Late Justice JOSE B. L. REYES represented by ADORACION D.
rendition, and for purposes of the ultimate effects, of a final judgment in the REYES and Heirs of EDMUNDO A. REYES, namely, MA. TERESA
case. P. REYES and CARLOS P. REYES, petitioners, vs. COURT OF
The writ is provisional because it constitutes a temporary measure availed of APPEALS AND METRO MANILA BUILDERS, INC., respondents.
during the pendency of the action and it is ancillary because it is a mere incident DECISION
in and is dependent upon the result of the main action.11 PARDO, J.:
 The cases before the Court are consolidated petitions for review on
certiorari to nullify: (1) the decision of the Court of Appeals[1] setting aside
that of the Metropolitan Trial Court, Pasay City, Branch 45[2] and the orders
of the Regional Trial Court, Pasay City branch 231[3], and ordering petitioners
to restore the subject property to the possession of respondent MMB, Inc. until
the expiration of the lease contract, and (2) the resolution of the Court of
Appeals[4] allowing execution pending appeal[5] of its aforesaid decision and
issuing a writ of execution[6] depriving petitioners of possession of the leased
property and giving its possession to respondent MMB, Inc.[7] which was a
deforciant and worse, declaring petitioners guilty of indirect contempt of court
and sentencing them to pay a fine of P30,000.00.
The factual background of the case dates back to November 30, 1976.
Brothers Justice Jose Benedicto Luna Reyes (also known as Justice J. B. L.
Reyes) and Dr. Edmundo A. Reyes were co-owners of a parcel of land located
at Taft Avenue, Pasay City, near Buendia, with a land area of more than one
hectare, covered by two Transfer Certificates of Title[8]. On November 30,
1976, the brothers entered into a 25-year lease contract[9]with Metro Manila
Builders, Inc. (MMB, Inc.) at a very low rate of rental (P15,000.00 to
P30,000.00 a month) in consideration of the fact that the lessee would cover
all present and future improvements in the property with insurance against
certain risks and maintain the premises in good, sanitary and tenantable
condition at all times.
However, in the course of the lease, petitioners found out that respondent
MMB, Inc. had not properly maintained the premises or covered the same with
an adequate insurance policy. Worse, respondent MMB, Inc. had sub-leased
the property to third parties and was earning therefrom about P500,000.00 a
month. On December 2, 1996, petitioners served on respondent MMB, Inc. a
notice terminating the lease contract and demanding that they vacate and
surrender the premises subject of the lease to petitioners.
Failing to do so, on February 3, 1997, petitioners filed with the
Metropolitan Trial Court, Pasay City, Branch 45 a complaint for unlawful
detainer[10] based on breach of the contract of lease.
On March 5, 1997, respondent MMB, Inc. filed its answer to the
complaint. MMB, Inc. did not deny the violations imputed to it but questioned
the absence of a judicial rescission of the contract of lease.[11]
On May 9, 1997, the trial court rendered a decision in favor of
petitioners, thus:
"WHEREFORE, and considering the foregoing, judgment is hereby rendered
in favor of the plaintiff heirs of J.B.L. Reyes, thru Adoracion D. Reyes, and
heirs of Edmundo Reyes namely Ma. Teresa P. Reyes, and Carlos P. Reyes
and against the defendant Metro Manila Builders, Inc. ordering the latter:
1. And all persons claiming right under it to vacate, surrender and
cede possession of the leased premises to plaintiffs;
2. To pay plaintiffs, P300,000.00 for every month from notice to
vacate until possession is finally turned over to plaintiffs, with
legal interest;
18
3. To pay plaintiff the amount of P20,000.00 as for attorneys fees; Court of Appeals shall constitute a quorum for the sessions of a division. The
and, unanimous vote of three members of a division shall be necessary for the
4. To pay the cost of suit"[12] pronouncement of a decision, or final resolution which shall be reached in
consultation before the writing of the opinion by any member of the division.[28] This
On May 16, 1997, petitioners filed with the Metropolitan Trial Court, rule applies to interlocutory resolutions.[29] True, any member of the Court of
Pasay City, Branch 45 a motion for execution of the judgment of Appeals may issue preliminary injunction or temporary restraining
eviction.[13] On the other hand, respondent appealed the decision to the order.[30] However, this power is exercised only in case of extreme urgency, and in
Regional Trial Court, Pasay City, Branch 113.[14] However, respondents failed the tradition of the Supreme Court, the Court en banc or division ratifies or confirms
to file their appeal memorandum on time and so the court dismissed their the act of the single justice at the very next session of the Court.
appeal. In its appeal to the RTC, respondent MMB, Inc. never raised the issue
of jurisdiction. Hence, on November 5, 1997, respondent MMB, Inc. filed an On April 14, 1998, upon motion of petitioners, RTC-Pasay 231 issued an order
dismissing the petition on the ground that respondent's remedy is appeal in due time
appeal to the Court of Appeals.[15]
which, when withdrawn, was effectively abandoned. The Regional Trial Court, Pasay
On November 26, 1997, MTC Branch 45, Pasay City,[16] granted the City, Branch 231, thus ruled:
motion for execution that petitioners filed. Consequently, on December 1, 1997,
the trial court issued the corresponding writ of execution.[17] However, on "If jurisdiction was indeed a valid concern of the petitioner, it should have been
December 8, 1997, the Court of Appeals issued a temporary restraining raised at the first opportunity i.e. At the inception of the ejectment case before the
order[18] against the execution of the ejectment judgment. Metropolitan Trial Court. Although, the question of jurisdiction may be raised at
any stage of the proceedings, it should not be used as a scheme to delay the
Even before the appellate court could rule on the injunctive relief, proceedings and petitioner cannot feign ignorance or inadvertence in a manner aptly
respondent MMB, Inc. withdrew its appeal.[19] In a resolution dated February illustrated by the respondents, to wit:
17, 1998, the Court of Appeals allowed the withdrawal.[20]
6.1 What gave petitioner away is its silence on why it failed, nay refused to raise the
Simultaneously with the withdrawal of the first CA case,[21] on February issue of jurisdiction in its petition before the appellate court. Jurisdiction it is
17, 1998, private respondent also filed a petition for annulment of the ejectment elementary may be raised anytime even before the first time on appeal. (Govt. vs.
decision before the Regional Trial Court, Pasay City, Branch 231 (RTC American Surety Company 11 PHIL 203; Vda De Roxas vs. Rafferty, 37 PHIL 957;
231)[22] on the ground that the MTC had no jurisdiction over the ejectment People vs. Que Po Lay, 94 PHIL 6400).
case. MMB, Inc. prayed for a temporary restraining order and/or preliminary
injunction against the execution of the ejectment decision. The court, however, Furthermore, this Court reiterates that the remedy under Rule 47 is unavailable to
did not issue a temporary restraining order (TRO) against MTC Branch 45, the petitioner." It can be availed of only "as the last remedy and cannot be resorted
Pasay City. to if the ordinary remedies of a new trial, appeal, petition for relief or other
appropriate remedies are available." In this case, appeal is the ordinary remedy
On March 5, 1998, petitioners filed with the Regional Trial Court their which was available to and had in fact been availed of by the
memorandum in support of their opposition against the injunctive relief sought petitioner. Lamentably, it caused the withdrawal of its appeal expressing preference
by MMB, Inc.[23] On March 20, 1998, petitioners filed with the same court a and venturing to obtain instead relief under Rule 47 which appears inappropriate
motion to dismiss.[24] under the circumstances."[31]
In an attempt to dramatize its plea, on March 23, 1998, respondent MMB, With the imminent expiration of the temporary restraining
Inc. filed another petition with the Court of Appeals[25], for certiorari and order,[32] respondent MMB, Inc. filed with the Court of Appeals a series of petitions
mandamus complaining about what it termed as the sub-silencio denial by the and motions urging the Court of Appeals to issue injunctive relief.[33] Thus, on May
lower court of their application for injunctive relief.[26] 14, 1998, respondent MMB, Inc. filed with the Court of Appeals a motion for leave
On March 23, 1998, the Court of Appeals issued a resolution giving of court to admit a supplemental petition.[34]
petitioners, as respondents therein, ten ((10) days from notice within which to On May 18, 1998, respondent MMB, Inc. filed with the Court of Appeals an
file their comment on the petition, not a motion to dismiss, and in the meantime, urgent motion for the issuance of another temporary restraining order in the second
restrained them from enforcing the writ of execution in Civil Case No. 113-97, CA case.[35] Respondent sought a TRO to enjoin the MTC-Branch 45, Pasay City
MTC-Pasay City, Branch 45.[27] from enforcing the writ of execution of the decision in Civil Case No. 113-97 and the
Incidentally, the resolution was signed by only two members of the Court Regional Trial Court from proceeding with Civil Case No. 98-0366 pending the
of Appeals, Special Fourth Division, namely, Justice Demetrio G. resolution of the supplemental petition.
Demetria, ponente, and Justice Ramon A. Barcelona, member, concurring. Also on the same date, respondent filed with the Court of Appeals a
Justice Omar U. Amin, member, did not sign. Hence, the resolution manifestation alleging that it filed with the Regional Trial Court, Quezon City, Branch
is void, which the division clerk of court should not have received for filing, 88 an action for annulment of the unilateral termination of lease contract and
much less served on the parties. By law, the attendance of three members of the
damages.[36] On the ground that such case was still pending, respondents
prayed for a temporary restraining order and a writ of preliminary inj
unction to prevent the execution of the judgment in Civil Case No. 113-
97.[37]
On May 20, 1998, respondent MMB, Inc. filed with the Court of
Appeals[38] another case seeking to set aside the order of the RTC Pasay,
Branch 231, dismissing the action and praying that a temporary restraining
order be issued against the MTC-45 Pasay City enjoining the writ of execution
issued in Civil Case No. 113-97, to desist from proceeding with CA-G. R. SP
No. 47158, to declare the order of respondent judge in Civil Case No. 98-0366
as null and void for being issued in grave abuse of discretion, without or in
excess of its jurisdiction, and to declare the TRO/injunction permanent.
On May 22, 1998, the Court of Appeals consolidated the second[39] and
third[40] CA cases.
In the meantime, on June 29, 1998, the Court of Appeals issued a
resolution in the third CA case,[41] as follows:
"We hereby resolve:
a. to require the respondent in CA GR SP. No. 47720 to file the
petition, not a motion to dismiss, which may be considered as
their answer should we decide to give it due course;
b. Considering that respondent's comment and petitioner's reply in
C.A. G.R. SP. No. 47158, to set for hearing the application for
preliminary injunction on July 15, 1998, at 2:00 A.M. at Paras
Hall, Court of Appeals, Ma. Orosa St., Ermita Manila; and
c. For a comprehensive appreciation of the consolidated cases
before us, to require the RTC Branch 231 of Pasay City to
Elevate the Original Records of Civil Case No. 98-0366 and
other pertinent pleadings and papers related thereto within five
(5) days from notice.[42]
On July 2, 1998, respondents filed with the Regional Trial Court, Branch
110, Pasay City a petition seeking a temporary restraining order to enjoin MTC
Branch 45, Pasay City,[43] and the sheriff [44] from enforcing the writ of
execution issued on December 1, 1997.
In compliance with the said resolution, on July 15, 1998, petitioners filed
their comment/opposition, alleging that:
a. The petition of private respondent is moot and academic as the
entire premises has already been turned over by the sheriff of
MTC-45 Albert Zaragoza except 14 lessees which were
allowed by the petitioners to remove their improvements
within fifteen days;
b. Assuming the dismissal of the petition for annulment was
erroneous, the remedy is appeal not certiorari;
c. Private respondent is guilty of forum shopping as the issue
pending in the Second CA Case, which in RTC-Q.C. is
docketed as Civil Case No. Q-98-34382 (for annulment of
19
unilateral termination of lease contract) and the third CA Case On September 11, 1998, petitioners filed with the Court of Appeals a motion
are one and the same; for extension of time to file comment/memorandum for at least five (5) days from
d. Judge Ylagan committed no abuse of discretion. Petitioners are September 11, 1998, or up September 16, 1998 .[53]
not guilty of contempt since there is no order violated; On September 14, 1998, petitioners filed with the Supreme Court a petition for
e. The dismissal order (April 14, 1998) did not pre-empt the Second review of the decision of the Court of Appeals.[54] On September 17, 1998,
CA case; petitioners filed with the Court of Appeals their consolidated comment to the very
urgent motion for execution pending appeal, manifestation/motion to cite in
f. Private respondent failed to allege, much less prove, irreparable contempt/motion to stop demolition, with motion to defer consideration.[55]
injury to it.
The Court of Appeals, however, despite the pending petition with this Court,
On August 21, 1998, the Court of Appeals promulgated its decision, the promulgated on September 18, 1998, its resolution, the dispositive portion of which
dispositive portion of which reads as follows: reads:
"WHEREFORE, the decision of the Metropolitan Trial Court, Branch 45, "Accordingly, this Court hereby RESOLVES to grant the instant petition.
Pasay City in Civil Case No. 113-97 dated May 9, 1997 is SET ASIDE and
the orders dated March 23, 1998 and April 14, 1998, issued in Civil Case No. "1. A writ of Execution Pending Appeal of the Decision of this Court dated August
98-0366 are likewise SET ASIDE. Private respondent is hereby ordered to 21, 1998 is hereby issued.
restore the subject property in the possession of petitioner and are hereby "The Division Clerk of this Court is hereby ordered to furnish a certified true copy
permanently enjoined from further committing acts disturbing physical of this resolution and the decision of this Court dated August 21, 1998 to the
possession of the subject property by petitioner until after the expiration of the Metropolitan Trial Court, Branch 45, and Regional Trial Court, Branch 231 both of
Contract of Lease.[45] Pasay City.
On the same date the decision of the Court of Appeals was promulgated, "2. Private respondents and their counsel are hereby adjudged guilty of indirect
respondent MMB, Inc. filed with that court a very urgent ex-parte motion for contempt of this Honorable Court and are hereby sentenced to pay a fine of
execution pending appea1.[46] On August 26, 1998, the Court of Appeals P30,000.00. Private respondents and counsel are also directed to make a complete
required petitioners to comment on such motion for execution pending appeal restoration to petitioner of the subject property.
within ten (10) days from notice.[47] "SO ORDERED."[56]
On August 25, 1998, respondent filed with the Court of Appeals another On September 21, 1998, the Court of Appeals designated a special sheriff[57] to
motion ex-parte for execution pending appeal, motion to cite in contempt and enforce the writ, and on the same day, he evicted petitioners from the premises and
motion to stop demolition.[48] restored possession in favor of private respondent.[58]
On August 27, 1998, the Court of Appeals issued a resolution stating thus: On September 29, 1998, petitioners filed with the Supreme Court a petition for
"a. Considering that discretionary execution may only issue after due hearing certiorari to nullify the resolution of the Court of Appeals allowing execution pending
pursuant to Section (2)a, Rule 39 of the 1997 Rules on Civil Procedure, to set appeal and the writ of execution issued pursuant thereto and more, finding
for hearing the very urgent motion for execution pending appeal on September petitioners guilty of indirect contempt of court and sentencing them to pay a
1, 1998, at 10:00 AM at Moran Hall, Court of Appeals x x x; fine of P30,000.00.[59]
"b. To require private respondents and counsel to explain within five (5) days The issues raised in the petitions may be summed up as to whether or not the
from receipt hereof why they should not be cited for contempt; and Court of Appeals erred:
"c. To restrain private respondents and all persons acting in their behalf from 1. In ruling that the nature of the complaint is for rescission of contract,
further demolishing the buildings and improvements on the subject not ejectment, over which the Metropolitan Trial Court, Pasay City
premises.[49] did not have jurisdiction;
On August 31, 1998, petitioners filed with the Court of Appeals a motion 2. In directing that respondent MMB, Inc. be restored in possession of the
requesting for an extension of time to file explanation on the motion to declare leased premises;
petitioners and counsel in contempt.[50] In a resolution dated September 3,
3. In immediately executing its resolution dated September 18, 1998,
1998, the Court of Appeals granted the motion, giving petitioners and counsel transferring possession of the property from petitioners to respondent
ten (10) days from September 1, 1998, or up to September 11, 1998, within MMB, Inc. by a "special sheriff".
which to file the explanation.[51] The case was set for oral argument, parties
were directed to submit simultaneously their respective memoranda to the very 4. In declaring petitioners guilty of indirect contempt of court, and
sentencing them to pay a fine of P30,000.00.
urgent motion for the issuance of a writ of execution pending appeal/motion to
stop demolition within ten (10) days from date, or until September 11, 1998.[52]
 The crux of the case is whether there was a need for judicial rescission
of the contract of lease before respondent MMB, Inc. may be compelled to
move out of the leased premises.
We find the petitions impressed with merit.
We rule that there is no need for a judicial rescission of the lease contract
between lessors heirs of Justice J. B. L. Reyes, et al. and lessee MMB, Inc. The
contract provides:
"Section 18, paragraph 4 (a) In the event of default or breach of any of the
condition of this contract x x x.
(b) x x x the LESSOR may, in his absolute discretion declare the
contract cancelled and terminated and require the TENANT to vacate the
leased premises x x x
MMB, Inc. violated the following conditions of the contract:
1. Par. 8 requiring MMB, Inc. to cover all buildings and improvements on the
leased premises with insurance against fire, earthquake and extended
coverage risks;
2. Par. 9 and 10 of the contract requiring MMB, Inc. to maintain the leased
premises and all the buildings and improvements thereon in a state of
security and first class repair, in a clean and sanitary condition, to repair and
restore or reconstruct such damaged on destroyed improvements;
3. Par. 11 of the contract requiring defendant to secure LESSOR's prior
written consent before it may assign or transfer any of its rights under the
contacts.
We have ruled that "there is nothing wrong if the parties to a lease
contract agreed on certain mandatory provisions concerning their respective
rights and obligations, such as the procurement of the insurance and the
rescission clause. For it is well to recall that contracts are respected as the law
between the contracting parties, and they may establish such stipulations,
clauses, terms and conditions as they may want to include. As long as such
agreements are not contrary to law, morals, good customs, public policy or
public order they shall have the force of law between them."[60]
The law on obligations and contracts does not prohibit parties from
entering into agreement providing that a violation of the terms of the contract
would cause its cancellation even without judicial intervention.[61] This is
what petitioners and respondent entered into, a lease contract with stipulation
that the contract is rescinded upon violation of its substantial provisions, which
MMB, Inc. does not deny they violated.
The basic issue having been disposed of, we need not resolve the other
issues petitioners raised.
On hindsight, the Court of Appeals declared petitioners guilty of indirect
contempt of court because they implemented the writ of execution of the trial
court despite the order of the court to elevate the entire original records. And
petitioners proceeded to demolish the improvements on the property without
authority of the Court of Appeals. However, this was because the temporary
restraining order issued by the Court of Appeals had lapsed after sixty (60)
20
days.[62] No more restraining order was in effect until the court decided the
case on its merits. Hence, petitioners acted in good faith in the exercise of their
proprietary rights. There was no willful disobedience to a lawful
order. Petitioners were not guilty of contempt. The salutary rule is that the
power to punish for contempt must be exercised on the preservative, not
vindictive principle, and on the corrective and not retaliatory idea of
punishment.[63] The courts must exercise the power to punish for contempt for
purposes that are impersonal because that power is intended as a safeguard not
for the judges as persons but for the functions that they exercise.[64] The court
must exercise the power of contempt judiciously and sparingly, with utmost
self-restraint.[65]
One final word. It was bad enough that the Court of Appeals erred in
ruling that the lease contract must be judicially rescinded before respondent
MMB, Inc. may be evicted from the premises. It was worse that the Court of
Appeals immediately enforced its decision pending appeal restoring respondent
in possession of the leased premises and worst, appointed a special sheriff to
carry out the writ of execution. In the first place, we emphatically rule that the
Court of Appeals has no authority to issue immediate execution pending
appeal of its own decision. Discretionary execution under Rule 39, Section 2
(a), 1997 Rules of Civil Procedure, as amended, is allowed pending
appeal of a judgment or final order of the trial court, upon good reasons to
be stated in a special order after due hearing. A judgment of the Court of
Appeals cannot be executed pending appeal. Once final and executory, the
judgment must be remanded to the lower court, where a motion for its execution
may be filed only after its entry.[66] In other words, before its finality, the
judgment cannot be executed. There can be no discretionary execution of a
decision of the Court of Appeals. In the second place, even in discretionary
executions, the same must be firmly founded upon good reasons. The court
must state in a special order the "good reasons" justifying the issuance of the
writ.[67] The good reasons allowing execution pending appeal must constitute
superior circumstances demanding urgency that will outweigh the injuries or
damages to the adverse party if the decision is reversed.[68] Jurisprudence
teaches us what are "good reasons" that justify a premature execution of
judgment, such as "deterioration of commodities subject of litigation"[69] and
"the deteriorating condition of the vessel, M/V 'Valiant' . . . left to rot at the pier
and without a crew to guard it".[70]In this case, the good reasons given by the
Court of Appeals to support the discretionary execution of its decision are (1)
that respondent would be deprived of income from its business endeavors; (2)
that "it is of public knowledge" that the Court of Appeals and the Supreme Court
are clogged with cases and it may take some time before the decision in the case
may attain its finality; and (3) that petitioners acted with bad faith and
malice.[71] None of the cited reasons is "good" enough. According to
jurisprudence, respondent's precarious financial condition is not a compelling
circumstance warranting immediate execution.[72] The assertion that "it is of
public knowledge" that the Supreme Court is clogged with cases that may take
time to decide mocks the integrity and derides the competence of this
Court. The remark erodes and undermines the people's trust and confidence in
the judiciary, ironically coming from one of its subordinate courts. This is an
assault on the Supreme Court that borders on contempt; we cannot permit such
attack to pass without sanction. This we cannot countenance. Litigants, lawyers and
judges share the responsibility of unclogging the dockets of the judiciary.[73] No
lower court justice or judge may deride, chastise or chide the Supreme Court even
speaking "with due respect" in his ponencia. In fact, it is the duty of lower courts to
obey the decisions of the Supreme Court and render obeisance to its status as the apex
of the hierarchy of courts. "A becoming modesty of inferior courts demands conscious
realization of the position that they occupy in the interrelation and operation of the
integrated judicial system of the nation."[74] "There is only one Supreme Court from
whose decision all other courts should take their bearings" so spoke Justice J. B. L.
Reyes.[75] We echo this golden nugget of advice. If a judge of a lower court cannot
do so in conscience, he has no alternative but to yield his judicial robe and
resign.[76] More, it has been held that urgency resulting from years of delay in the
disposal of a case is not a good reason for premature execution of the
decision.[77] Bad faith and malice are not indicated simply because petitioners
insisted on their rights and exhausted judicial remedies. On the contrary, good faith
is always presumed.[78]In the third place, on September 14, 1998, petitioners
elevated the decision of the Court of Appeals to the Supreme Court by petition for
review.[79] By the mere fact of the filing of the petition, the finality of the Court of
Appeals' decision was stayed, and there could be no entry of judgment
therein,[80] and, hence, no premature execution could be had. The Court of Appeals
adopted its resolution granting execution pending appeal on September 18, 1998, after
the petition for review was already filed in the Supreme Court.[81] It thereby
encroached on the hallowed grounds of the Supreme Court. Worst of all, the Court
of Appeals hasno authority to appoint a special sheriff.[82] It appointed an
employee of the mailing section, who was not even bonded as required by
law.[83] Such display of keen interest in the immediate execution of its decision
coupled with the exercise of excessive authority by illegally appointing a "special
sheriff' makes the concerned members of the Court of Appeals liable to disciplinary
action and the imposition of appropriate penalty.[84]
WHEREFORE, the Court declares VOID the resolution of the Court of
Appeals, dated September 18, 1998 in CA-G. R. SP No. 47158 and SP No. 47720,
and the writ of execution dated September 21, 1998, issued pursuant
thereto. Petitioners are acquitted of the charge of contempt of court.
The Court REVERSES the decision of the Court of Appeals promulgated on
August 21, 1998, in CA-G. R. SP No. 47158 and SP No. 47720, and REINSTATES
the decision of the Regional Trial Court, Pasay City, Branch 231, dated March 23,
1998, and order dated April 14, 1998, in Civil Case 98-0366.
Costs against respondent MMB, Inc.
Let a copy of this decision be furnished to the Presiding Justice, Court of
Appeals, Manila, for dissemination to the Associate Justices, Court of Appeals, for
their information and guidance.
SO ORDERED.
G.R. No. 142616 July 31, 2001
PHILIPPINE NATIONAL BANK, petitioner,
vs.
RITRATTO GROUP INC., RIATTO INTERNATIONAL, INC., and
DADASAN GENERAL MERCHANDISE,respondents.
KAPUNAN, J.:
In a petition for review on certiorari under Rule 45 of the Revised Rules of
Court, petitioner seeks to annul and set aside the Court of Appeals' decision in
C.A. CV G.R. S.P. No. 55374 dated March 27, 2000, affirming the Order
issuing a writ of preliminary injunction of the Regional Trial Court of Makati,
Branch 147 dated June 30, 1999, and its Order dated October 4, 1999, which
denied petitioner's motion to dismiss.
The antecedents of this case are as follows:
Petitioner Philippine National Bank is a domestic corporation organized and
existing under Philippine law. Meanwhile, respondents Ritratto Group, Inc.,
Riatto International, Inc. and Dadasan General Merchandise are domestic
corporations, likewise, organized and existing under Philippine law.
On May 29, 1996, PNB International Finance Ltd. (PNB-IFL) a subsidiary
company of PNB, organized and doing business in Hong Kong, extended a
letter of credit in favor of the respondents in the amount of US$300,000.00
secured by real estate mortgages constituted over four (4) parcels of land in
Makati City. This credit facility was later increased successively to
US$1,140,000.00 in September 1996; to US$1,290,000.00 in November 1996;
to US$1,425,000.00 in February 1997; and decreased to US$1,421,316.18 in
April 1998. Respondents made repayments of the loan incurred by remitting
those amounts to their loan account with PNB-IFL in Hong Kong.
However, as of April 30, 1998, their outstanding obligations stood at
US$1,497,274.70. Pursuant to the terms of the real estate mortgages, PNB-
IFL, through its attorney-in-fact PNB, notified the respondents of the
foreclosure of all the real estate mortgages and that the properties subject
thereof were to be sold at a public auction on May 27, 1999 at the Makati City
Hall.
On May 25, 1999, respondents filed a complaint for injunction with prayer for
the issuance of a writ of preliminary injunction and/or temporary restraining
order before the Regional Trial Court of Makati. The Executive Judge of the
Regional Trial Court of Makati issued a 72-hour temporary restraining order.
On May 28, 1999, the case was raffled to Branch 147 of the Regional Trial
Court of Makati. The trial judge then set a hearing on June 8, 1999. At the
hearing of the application for preliminary injunction, petitioner was given a
period of seven days to file its written opposition to the application. On June
15, 1999, petitioner filed an opposition to the application for a writ of
preliminary injunction to which the respondents filed a reply. On June 25,
1999, petitioner filed a motion to dismiss on the grounds of failure to state a
cause of action and the absence of any privity between the petitioner and
respondents. On June 30, 1999, the trial court judge issued an Order for the
issuance of a writ of preliminary injunction, which writ was correspondingly
issued on July 14, 1999. On October 4, 1999, the motion to dismiss was denied
by the trial court judge for lack of merit.
Petitioner, thereafter, in a petition for certiorari and prohibition assailed the
issuance of the writ of preliminary injunction before the Court of Appeals. In
the impugned decision,1 the appellate court dismissed the petition. Petitioner
thus seeks recourse to this Court and raises the following errors:
21
1. Based on the aforementioned grounds, respondents sought to enjoin and restrain PNB
THE COURT OF APPEALS PALPABLY ERRED IN NOT from the foreclosure and eventual sale of the property in order to protect their rights
DISMISSING THE COMPLAINT A QUO, CONSIDERING THAT to said property by reason of void credit facilities as bases for the real estate mortgage
BY THE ALLEGATIONS OF THE COMPLAINT, NO CAUSE OF over the said property.8
ACTION EXISTS AGAINST PETITIONER, WHICH IS NOT A The contract questioned is one entered into between respondent and PNB-IFL, not
REAL PARTY IN INTEREST BEING A MERE ATTORNEY-IN- PNB. In their complaint, respondents admit that petitioner is a mere attorney-in-fact
FACT AUTHORIZED TO ENFORCE AN ANCILLARY for the PNB-IFL with full power and authority to, inter alia, foreclose on the
CONTRACT. properties mortgaged to secure their loan obligations with PNB-IFL. In other words,
2. herein petitioner is an agent with limited authority and specific duties under a special
power of attorney incorporated in the real estate mortgage. It is not privy to the loan
THE COURT OF APPEALS PALPABLY ERRED IN ALLOWING contracts entered into by respondents and PNB-IFL.
THE TRIAL COURT TO ISSUE IN EXCESS OR LACK OF
JURISDICTION A WRIT OF PRELIMINARY INJUNCTION The issue of the validity of the loan contracts is a matter between PNB-IFL, the
OVER AND BEYOND WHAT WAS PRAYED FOR IN THE petitioner's principal and the party to the loan contracts, and the respondents. Yet,
COMPLAINT A QUO CONTRARY TO CHIEF OF STAFF, AFP despite the recognition that petitioner is a mere agent, the respondents in their
VS. GUADIZ JR., 101 SCRA 827.2 complaint prayed that the petitioner PNB be ordered to re-compute the rescheduling
of the interest to be paid by them in accordance with the terms and conditions in the
Petitioner prays, inter alia, that the Court of Appeals' Decision dated March 27, documents evidencing the credit facilities, and crediting the amount previously paid
2000 and the trial court's Orders dated June 30, 1999 and October 4, 1999 be to PNB by herein respondents.9
set aside and the dismissal of the complaint in the instant case.3
Clearly, petitioner not being a part to the contract has no power to re-compute the
In their Comment, respondents argue that even assuming arguendo that interest rates set forth in the contract. Respondents, therefore, do not have any cause
petitioner and PNB-IFL are two separate entities, petitioner is still the party-in- of action against petitioner.
interest in the application for preliminary injunction because it is tasked to
commit acts of foreclosing respondents' properties.4 Respondents maintain that The trial court, however, in its Order dated October 4, 1994, ruled that since PNB-
the entire credit facility is void as it contains stipulations in violation of the IFL, is a wholly owned subsidiary of defendant Philippine National Bank, the suit
principle of mutuality of contracts.5 In addition, respondents justified the act of against the defendant PNB is a suit against PNB-IFL.10 In justifying its ruling, the
the court a quo in applying the doctrine of "Piercing the Veil of Corporate trial court, citing the case of Koppel Phil. Inc. vs. Yatco,11 reasoned that the corporate
Identity" by stating that petitioner is merely an alter ego or a business conduit entity may be disregarded where a corporation is the mere alter ego, or business
of PNB-IFL.6 conduit of a person or where the corporation is so organized and controlled and its
affairs are so conducted, as to make it merely an instrumentality, agency, conduit or
The petition is impressed with merit. adjunct of another corporation.12
Respondents, in their complaint, anchor their prayer for injunction on alleged We disagree.
invalid provisions of the contract:
The general rule is that as a legal entity, a corporation has a personality distinct and
GROUNDS separate from its individual stockholders or members, and is not affected by the
I personal rights, obligations and transactions of the latter.13 The mere fact that a
THE DETERMINATION OF THE INTEREST RATES BEING corporation owns all of the stocks of another corporation, taken alone is not sufficient
LEFT TO THE SOLE DISCRETION OF THE DEFENDANT PNB to justify their being treated as one entity. If used to perform legitimate functions, a
CONTRAVENES THE PRINCIPAL OF MUTUALITY OF subsidiary's separate existence may be respected, and the liability of the parent
CONTRACTS. corporation as well as the subsidiary will be confined to those arising in their
respective business. The courts may in the exercise of judicial discretion step in to
II prevent the abuses of separate entity privilege and pierce the veil of corporate entity.
THERE BEING A STIPULATION IN THE LOAN AGREEMENT We find, however, that the ruling in Koppel finds no application in the case at bar. In
THAT THE RATE OF INTEREST AGREED UPON MAY BE said case, this Court disregarded the separate existence of the parent and the
UNILATERALLY MODIFIED BY DEFENDANT, THERE WAS subsidiary on the ground that the latter was formed merely for the purpose of evading
NO STIPULATION THAT THE RATE OF INTEREST SHALL BE the payment of higher taxes. In the case at bar, respondents fail to show any cogent
REDUCED IN THE EVENT THAT THE APPLICABLE reason why the separate entities of the PNB and PNB-IFL should be disregarded.
MAXIMUM RATE OF INTEREST IS REDUCED BY LAW OR BY
THE MONETARY BOARD.7 While there exists no definite test of general application in determining when a
subsidiary may be treated as a mere instrumentality of the parent corporation, some
factors have been identified that will justify the application of the treatment of
the doctrine of the piercing of the corporate veil. The case of Garrett vs.
Southern Railway Co.14 is enlightening. The case involved a suit against the
Southern Railway Company. Plaintiff was employed by Lenoir Car Works and
alleged that he sustained injuries while working for Lenoir. He, however, filed
a suit against Southern Railway Company on the ground that Southern had
acquired the entire capital stock of Lenoir Car Works, hence, the latter
corporation was but a mere instrumentality of the former. The Tennessee
Supreme Court stated that as a general rule the stock ownership alone by one
corporation of the stock of another does not thereby render the dominant
corporation liable for the torts of the subsidiary unless the separate corporate
existence of the subsidiary is a mere sham, or unless the control of the
subsidiary is such that it is but an instrumentality or adjunct of the dominant
corporation. Said Court then outlined the circumstances which may be useful
in the determination of whether the subsidiary is but a mere instrumentality of
the parent-corporation:
The Circumstance rendering the subsidiary an instrumentality. It is
manifestly impossible to catalogue the infinite variations of fact that
can arise but there are certain common circumstances which are
important and which, if present in the proper combination, are
controlling.
These are as follows:
(a) The parent corporation owns all or most of the capital stock of
the subsidiary.
(b) The parent and subsidiary corporations have common directors
or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of the
subsidiary or otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses or
losses of the subsidiary.
(g) The subsidiary has substantially no business except with the
parent corporation or no assets except those conveyed to or by the
parent corporation.
(h) In the papers of the parent corporation or in the statements of its
officers, the subsidiary is described as a department or division of
the parent corporation, or its business or financial responsibility is
referred to as the parent corporation's own.
(i) The parent corporation uses the property of the subsidiary as its
own.
(j) The directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their orders
from the parent corporation.
(k) The formal legal requirements of the subsidiary are not observed.
22
The Tennessee Supreme Court thus ruled: party-in-interest, unless otherwise authorized by law or these Rules.18 In mandatory
In the case at bar only two of the eleven listed indicia occur, namely, terms, the Rules require that "parties-in-interest without whom no final determination
the ownership of most of the capital stock of Lenoir by Southern, and can be had, an action shall be joined either as plaintiffs or defendants."19 In the case
possibly subscription to the capital stock of Lenoir. . . The complaint at bar, the injunction suit is directed only against the agent, not the principal.
must be dismissed. Anent the issuance of the preliminary injunction, the same must be lifted as it is a
mere provisional remedy but adjunct to the main suit.20 A writ of preliminary
Similarly, in this jurisdiction, we have held that the doctrine of piercing the
corporate veil is an equitable doctrine developed to address situations where the injunction is an ancillary or preventive remedy that may only be resorted to by a
litigant to protect or preserve his rights or interests and for no other purpose during
separate corporate personality of a corporation is abused or used for wrongful
purposes. The doctrine applies when the corporate fiction is used to defeat the pendency of the principal action. The dismissal of the principal action thus results
in the denial of the prayer for the issuance of the writ. Further, there is no showing
public convenience, justify wrong, protect fraud or defend crime, or when it is
made as a shield to confuse the legitimate issues, or where a corporation is the that respondents are entitled to the issuance of the writ. Section 3, Rule 58, of the
1997 Rules of Civil Procedure provides:
mere alter ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make it merely SECTION 3. Grounds for issuance of preliminary injunction. — A
an instrumentality, agency, conduit or adjunct of another corporation.15 preliminary injunction may be granted when it is established:
In Concept Builders, Inc. v. NLRC,16 we have laid the test in determining the (a) That the applicant is entitled to the relief demanded, and the whole or
applicability of the doctrine of piercing the veil of corporate fiction, to wit: part of such relief consists in restraining the commission or continuance of
1. Control, not mere majority or complete control, but complete the act or acts complained of, or in requiring the performance of an act or
domination, not only of finances but of policy and business practice acts, either for a limited period or perpetually,
in respect to the transaction attacked so that the corporate entity as to (b) That the commission, continuance or non-performance of the acts or
this transaction had at the time no separate mind, will or existence of acts complained of during the litigation would probably work injustice to
its own. the applicant; or
2. Such control must have been used by the defendant to commit fraud (c) That a party, court, agency or a person is doing, threatening, or is
or wrong, to perpetuate the violation of a statutory or other positive attempting to do, or is procuring or suffering to be done, some act or acts
legal duty, or dishonest and, unjust act in contravention of plaintiffs probably in violation of the rights of the applicant respecting the subject of
legal rights; and, the action or proceeding, and tending to render the judgment ineffectual.
3. The aforesaid control and breach of duty must proximately cause Thus, an injunctive remedy may only be resorted to when there is a pressing necessity
the injury or unjust loss complained of. to avoid injurious consequences which cannot be remedied under any standard
The absence of any one of these elements prevents "piercing the compensation.21 Respondents do not deny their indebtedness. Their properties are by
corporate veil." In applying the "instrumentality" or "alter ego" their own choice encumbered by real estate mortgages. Upon the non-payment of the
doctrine, the courts are concerned with reality and not form, with how loans, which were secured by the mortgages sought to be foreclosed, the mortgaged
the corporation operated and the individual defendant's relationship properties are properly subject to a foreclosure sale. Moreover, respondents
to the operation.17 questioned the alleged void stipulations in the contract only when petitioner initiated
the foreclosure proceedings. Clearly, respondents have failed to prove that they have
Aside from the fact that PNB-IFL is a wholly owned subsidiary of petitioner a right protected and that the acts against which the writ is to be directed are violative
PNB, there is no showing of the indicative factors that the former corporation of said right.22 The Court is not unmindful of the findings of both the trial court and
is a mere instrumentality of the latter are present. Neither is there a the appellate court that there may be serious grounds to nullify the provisions of the
demonstration that any of the evils sought to be prevented by the doctrine of loan agreement. However, as earlier discussed, respondents committed the mistake of
piercing the corporate veil exists. Inescapably, therefore, the doctrine of filing the case against the wrong party, thus, they must suffer the consequences of
piercing the corporate veil based on the alter ego or instrumentality doctrine their error.
finds no application in the case at bar.
All told, respondents do not have a cause of action against the petitioner as the latter
In any case, the parent-subsidiary relationship between PNB and PNB-IFL is is not privy to the contract the provisions of which respondents seek to declare void.
not the significant legal relationship involved in this case since the petitioner Accordingly, the case before the Regional Trial Court must be dismissed and the
was not sued because it is the parent company of PNB-IFL. Rather, the preliminary injunction issued in connection therewith, must be lifted.
petitioner was sued because it acted as an attorney-in-fact of PNB-IFL in
initiating the foreclosure proceedings. A suit against an agent cannot without IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The assailed
compelling reasons be considered a suit against the principal. Under the Rules decision of the Court of Appeals is hereby REVERSED. The Orders dated June 30,
of Court, every action must be prosecuted or defended in the name of the real 1999 and October 4, 1999 of the Regional Trial Court of Makati, Branch 147 in Civil
Case No. 99-1037 are hereby ANNULLED and SET ASIDE and the complaint
in said case DISMISSED.
SO ORDERED.
270 Phil. 271
MEDIALDEA, J.:
This petition was originally filed on February 13, 1985 to secure the release of
petitioners on habeas corpus and to permanently enjoin the City Fiscal
of Quezon City from investigating charges of "Inciting to Sedition" against
petitioners Lino Brocka, Benjamin Cervantes, CosmeGarcia and Rodolfo
Santos, (hereafter Brocka, et al.). On learning that the
corresponding informations for this offense had been filed by the City Fiscal
against them on February 11, 1985, a supplemental petition was filed on
February 19, 1985 (p. 51, Rollo) to implead the Presiding Judge,[1] and to
enjoin the prosecution of Criminal Cases Nos. Q-38023, Q-38024 and Q-
38025 (p. 349, Rollo) and the issuance of warrants for their arrests, including
their arraignment. Since then President Ferdinand E. Marcos had ordered the
provisional release of Brocka, et al., the issue on habeas corpus has become
moot and academic (p. 396, Rollo). We shall thus focus on the question of
whether or not the prosecution of the criminal cases for Inciting to Sedition
may lawfully be enjoined.
Petitioners were arrested on January 28, 1985 by elements of the Northern
Police District following the forcible and violent dispersal of a demonstration
held in sympathy with the jeepney strike called by the Alliance of Concerned
Transport Organization (ACTO). Thereafter, they were charged with Illegal
Assembly in Criminal Cases Nos. 37783, 37787 and 37788 with Branch 108,
Regional Trial Court, NCJR, Quezon City.[2]
Except for Brocka, et al. who were charged as leaders of the offense of Illegal
Assembly and for whom no bail was recommended, the other petitioners were
released on bail of P3,000.00 each. Brocka, et al.'s provisional release was
ordered only upon an urgent petition for bail for which daily hearings from
February 1-7, 1985 were held.
However, despite service of the order of release on February 9, 1985, Brocka,
et al. remained in detention, respondents having invoked a Preventive
Detention Action (PDA) allegedly issued against them on January 28, 1985 (p.
6, Rollo). Neither the original, duplicate original nor certified true copy of the
PDA was ever shown to them (p. 367, Rollo).
Brocka, et al. were subsequently charged on February 11, 1985 with Inciting
to Sedition, docketed as Criminal Cases Nos. Q-38023, Q-38024 and Q-38025
(p. 349, Rollo), without prior notice to their counsel (p. 7, Rollo). The
original informations filed recommended no bail (p. 349, Rollo). The
circumstances surrounding the hasty filing of this second offense are cited
by Brocka, et al. (quoting from a separate petition filed on their behalf in G.R.
Nos. 69848-50 entitled "Sedfrey A. Ordonez vs. Col. Julian Arzaga, et al."),
as follows:
"x x x.
23
"6. The 'sham' character of the inquest examination concocted by all
respondents is starkly bizarre when we consider that as early as 10:30 A.M.
today, February 11, 1985, Benjamin Cervantes was able to contact undersigned
petitioner by phone informing counsel that said Benjamin Cervantes and the 4
other persons who are the subjects of this petition will be brought before
the Quezon City Fiscal at 2:30 for undisclosed reasons: subsequently, another
phone call was received by petitioning counsel informing him that the
appearance of Benjamin Cervantes et al was to be at 2:00 P.M. When
petitioning counsel arrived in the office of Assistant City Fiscal
Arturo Tugonon, the complainants' affidavits had not yet been received by any
of the panel of three assistant city fiscals, although the five persons under
detention were already in the office of said assistant fiscal as early as 2:00
P.M. It was only at 3:00 when a representative of the military arrived bringing
with him alleged statements of complainants against Lino Broka (sic) et al for
alleged inciting to sedition, whereupon undersigned counsel asked respondent
Colonel Agapito Abad 'who ordered the detained persons to be brought to the
office of Assistant Fiscal Arturo Tugonon since there were no charges on file;'
and said Colonel Agapito Abad said aloud: 'I only received a telephone call
from Colonel Arzaga about 11:00 A.M. to bring the detained persons today - I
am only the custodian.' At 3:15, petitioning counsel inquired from the Records
Custodian when the charges against Lino Broka (sic) had been officially
received and he was informed that the said charges were never coursed through
the Records Office.
"7. Under the facts narrated above, respondents have conspired to use the
strong arm of the law and hatched the nefarious scheme to
deprive Lino Broka (sic) et al the right to bail because the utterances allegedly
constituting inciting to sedition under Article 142 of the Revised Penal Code
are, except for varying nuances, almost verbatim the same utterances which are
the subject of Criminal Cases No. 37783, 37787 and 37788 and for which said
detained persons are entitled to be released on bail as a matter of constitutional
right. Among the utterances allegedly made by the accused and which the
respondents claimed to be violative of Article 142 of the Revised Penal Code
are: 'Makiisa sa mgadrivers,' 'Makiisa sa aming layunin,'
'Digmaang bayan ang sagot sakahirapan,' Itigil ang pakikialam ng imperyalis
mo sa Pilipinas,' 'Rollback ng presyo ng langis sa 95 Centavos.' (See Annex B)
"8. That when petitioning counsel and other members of the defense panel
requested that they be given 7 days within which said counsel may confer with
their clients - the detained persons named above, the panel of assistant fiscals
demanded that said detained persons should sign a 'waiver' of their rights under
Article 125 of the Revised Penal Code as a condition for the grant of said
request, which is a harrassing requirement considering that Lino Broka (sic) et
al were already under the detention, albeit illegally, and they could not have
waived the right under Rule 125 which they did not enjoy at the time the ruling
was made by the panel of assistant city fiscaIs." (p. 4-6, Rollo in G.R. 69848-"b. When necessary for the orderly administration of justice or to avoid oppression
50)) or multiplicity of actions (Dimayuga, et al. vs. Fernandez, 43 Phil. 304; Hernandez
They were released provisionally on February 14, 1985, on orders of then vs. Albano, supra; Fortun vs. Labang, et al., L-38383, May 27, 1981, 104 SCRA
President F. E. Marcos. The circumstances of their release are narrated in Our 607);
resolution dated January 26, 1985, as quoted in the Solicitor General's Manifestation
as follows:
"G.R. Nos. 69848-50 (Sedfrey A. Ordonez, Petitioner, vs. Col. Julian Arzaga, et al.,
Respondents). - Petitioner Sedfrey A. Ordonez filed this petition for habeas corpus
in behalf of LinoBrocka, Benjamin Cervantes, Cosme Garcia, Alexander Luzano,
and Rodolfo Santos, who were all detained under a Preventive Detention Action
(PDA) issued by then President Ferdinand E. Marcos on January 28, 1985. They were
charged in three separate informations of the crime of illegal assembly under Art.
146, paragraph 3 of the Revised Penal Code, as amended by PD 1834. On February
7, 1985, the Honorable Miriam Defensor Santiago, Regional Trial Judge
of Quezon City, issued a resolution in the above criminal cases, directing the release
of the five accused on bail of P6,000.00 for each of them, and from which resolution
the respondent fiscals took no appeal. Immediately thereafter, the accused filed their
respective bail bonds. This notwithstanding, they continued to be held in detention
by order of the respondent colonels; and on February 11, 1985, these same accused
were 'reinvestigated,' this time on charges of 'inciting to sedition'*under Art. 142 of
the Revised Penal Code, following which corresponding cases were filed. The
respondents complied with Our resolution requiring them, inter alia, to make a
RETURN of the writ of habeas corpus. In their RETURN, it appeared that all the
accused had already been released, four of them on February 15, 1985 and one
February 8, 1985. The petitioner, nevertheless, argued that the petition has not
become moot and academic because the accused continue to be in the custody of the
law under an invalid charge of inciting to sedition." (p. 395, Rollo)
Hence, this petition.
Brocka, et al. contend that respondents' manifest bad faith and/or harassment are
sufficient bases for enjoining their criminal prosecution, aside from the fact that the
second offense of inciting to sedition is illegal, since it is premised on one and the
same act of attending and participating in the ACTO jeepney strike. They maintain
that while there may be a complex crime from a single act (Art. 48, RTC), the law
does not allow the splitting of a single act into two offenses and filing
two informations therefor, further, that they will be placed in double jeopardy.
The primary issue here is the legality of enjoining the criminal prosecution of a case,
since the two other issues raised by Brocka, et al. are matters of defense against the
sedition charge.
We rule in favor of Brocka, et al. and enjoin their criminal prosecution for the second
offense of inciting to sedition.
Indeed, the general rule is that criminal prosecution may not be restrained or stayed
by injunction, preliminary or final. There are however so exceptions, among which
are:
"a. To afford adequate protection to the constitutional rights of the accused
(Hernandez vs. Albano, et al., L-19272, January 25, 1967, 19 SCRA 95);
"c. When there is a pre-judicial question which is sub judice (De Leon
vs. Mabanag, 70 Phil. 202);
"d. When the acts of the officer are without or in excess of authority
(Planas vs. Gil, 67 Phil. 62);
"e. Where the prosecution is under an invalid law, ordinance or regulation
(Young vs. Rafferty, 33 Phil. 556; Yu Cong Eng vs. Trinidad, 47 Phil. 385,
389);
"f. When double jeopardy is clearly apparent (Sangalang vs. People
and Avendia, 109 Phil. 1140);
"g. Where the court has no jurisdiction over the offense (Lopez vs. City
Judge, L-25795, October 29, 1966, 18 SCRA 616);
"h. Where it is a case of persecution rather than prosecution
(Rustia vs. Ocampo, CA-G.R. No. 4760, March 25, 1960);
"i. Where the charges are manifestly false and motivated by the lust for
vengeance (Recto vs. Castelo, 18 L.J. [1953], cited in Rãnoa vs. Alvendia,
CA-G.R. No. 30720-R, October 8, 1962; Cf. Guingona, et al, vs. City Fiscal,
L-60033, April 4, 1984, 128 SCRA 577); and
"j. When there is clearly no prima facie case against the accused and a
motion to quash on that ground has been denied (Salonga vs. Pano, et al., L-
59524, February 18, 1985, 134 SCRA 438).
"7. Preliminary injunction has been issued by the Supreme Court to prevent
the threatened unlawful arrest of petitioners (Rodriguez vs. Castelo, L-6374,
August 1, 1953)." (cited in Regalado, Remedial Law Compendium, p. 188,
1988 Ed.)
In the petition before Us, Brocka, et al. have cited the circumstances to show
that the criminal proceedings had become a case of persecution, having been
undertaken by state officials in bad faith.
Respondents, on the other hand, had invoked a PDA in refusing Brocka, et al.'s
release from detention (before their release on orders of then Pres.
Marcos). This PDA was, however, issued on January 28, 1985, but was
invoked only on February 9, 1985 (upon receipt of the trial court's order of
release). Under the guidelines issued, PDAs shall be invoked within 24 hours
(in Metro Manila) or 48 hours (outside Metro Manila) (Ilagan v. Enrile, G.R.
No. 70748, October 28, 1985, 139 SCRA 349). Noteworthy also is Brocka, et
al.'s claim that, despite subpoenas for its production, the prosecution merely
presented a purported xerox copy of the invoked PDA (par. 4, Counter-
Rejoinder, p. 367, Rollo).
The foregoing circumstances were not disputed by the Solicitor General's
office. In fact they found petitioner's plight "deplorable" (par. 51,
Manifestation, p. 396, Rollo).
The hasty filing of the second offense, premised on a spurious
and inoperational PDA, certainly betrays respondent's bad faith and malicious
intent to pursue criminal charges against Brocka, et al.
We have expressed Our view in the Ilagan case that "individuals against
whom PDAs have been issued should be furnished with the original, and the
24
duplicate original, and a certified true copy issued by the official having official CONSTANTINO, HERMOGENES CONSTANTINO, FLORENCIO
custody of the PDA, at the time of the apprehension" (supra, p. 369). CONSTANTINO, VIRGINIA CONSTANTINO, MARCELO GEREMILLO,
We do not begrudge the zeal that may characterize a public official's ROSILA GEREMILLO, ERNESTO GEREMILLO, MERCEDES
prosecution of criminal offenders. We, however, believe that this should not be GEREMILLO, MELENCIO GEREMILLO, BALBINO MEDINA,
a license to run roughshod over a citizen's basic constitutional rights, such as CRISANTA MEDINA, YOLANDA MEDINA, LYDIA MEDINA, RENATO
due process, or manipulate the law to suit dictatorial tendencies. MEDINA, EUFEMIA MEDINA, VIRGILIO MEDINA, SONIA MEDINA,
LUZVIMINDA MEDINA, CRISPIN MEDINA, REMIGIO M. RODOLFO,
We are impelled to point out a citizen's helplessness against the awesome MILAGROS M. RODOLFO, NIDA M. RODOLFO, BELEN M. RODOLFO,
powers of a dictatorship. Thus, while We agree with the Solicitor General's MANUEL M. RODOLFO, ALFREDO M. RODOLFO, SALLY AREVALO,
observation and/or manifestation that Brocka, et al. should have filed a motion ELMER AREVALO, CELSO AREVALO, JR., VINCENT AREVALO, NENE
to quash the information, We however, believe that such a course of action AREVALO, THE HEIRS OF NAZARIA CRUZ and SANTOS
would have been a futile move, considering the circumstances then AREVALO, petitioners,
prevailing. Thus, the tenacious invocation of a spurious and inoperational PDA vs.
and the sham and hasty preliminary investigation were clear signals that the GREENFIELD DEVELOPMENT CORPORATION, respondent.
prosecutors intended to keep Brocka, et al. in detention until the second offense
of "Inciting to Sedition'' could be facilitated and justified without need of
issuing a warrant of arrest anew. As a matter of fact the DECISION
corresponding informations for this second offense were hastily filed on
February 11, 1985, or two days after Brocka, et al.'s release from detention was
ordered by the trial judge on February 9, 1985. AUSTRIA-MARTINEZ, J.:
Constitutional rights must be upheld at all costs, for this gesture is the true sign The propriety of the writ of preliminary injunction issued by the Regional Trial Court
of democracy. These may not be set aside to satisfy perceived illusory visions of Muntinlupa City (Branch 276) in Civil Case No. 98-233 is the sole issue in this
of national grandeur. petition for review on certiorari, assailing the decision of the Court of Appeals
nullifying said writ.
In the case of J. Salonga v. Cruz Paño, We pointed out:
Petitioners are the grandchildren of Pedro Medina from two marriages. In his first
"Infinitely more important than conventional adherence to general rules of marriage to Isadora San Jose, Pedro sired three children: Rafael, Rita and Remegia;
criminal procedure is respect for the citizen's right to be free not only from in his second marriage, this time to Natalia Mullet, Pedro had five: Cornelio, Brigida,
arbitrary arrest and punishment but also from unwarranted and vexatious Balbino, Crisanta and Rosila. Except for Balbino and Crisanta, all of Pedro's children
prosecution. x x x." (G.R. No. L-59524, February 18, 1985, 134 SCRA 438-at likewise bore children, the petitioners in this case.1
p. 448)
On June 5, 1962, Pedro, his brother Alberto Medina and his niece Nazaria Cruz
We, therefore, rule that where there is manifest bad faith that accompanies the (Alberto's daughter) executed a notarized Contract to Sell in favor of respondent
filing of criminal charges, as in the instant case where Brocka, et al. were barred Greenfield Development Corporation over a parcel of land located in Muntinlupa
from enjoying provisional release until such time that charges were filed, and City, then in the Province of Rizal, covered by Transfer Certificate of Title (TCT) No.
where a sham preliminary investigation was hastily conducted, charges that are 100177 (Lot 90-A) and measuring 17,121 square meters.2 A notarized Deed of Sale
filed as a result should lawfully be enjoined. covering said property was subsequently entered into on June 27, 1962, in favor of
ACCORDINGLY, the petition is hereby GRANTED. The trial court is respondent, and this time signed by Pedro, Cornelio, Brigida, Balbino, Gregoria,
PERMANENTLY ENJOINED from proceeding in any manner with the cases Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria Cruz, as vendors.3
subject of the petition. No costs. Thereafter, a notarized Deed of Absolute Sale with Mortgage was executed on
SO ORDERED. September 4, 1964 in favor of respondent over Lot 90-B covered by TCT No. 100178,
measuring 16,291 square meters. Signing as vendors were Pedro, Cornelio, Brigida,
Balbino, Gregoria, Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria
G.R. No. 140228 November 19, 2004 Cruz.4
FRANCISCO MEDINA, MARIA MEDINA, RAYMUNDO MEDINA, By virtue of these sales, respondent was able to register in its name the title to the two
ENRIQUE MEDINA, EDGARDO MEDINA, EVELYN MEDINA, parcels of land with TCT No. 100578 covering Lot 90-A and TCT No. 133444
ERNIE MEDINA, ELPIDIO MEDINA, EDWIN MEDINA, ELEONOR covering Lot 90-B. These properties were consolidated with other lots and were
MEDINA, TEOFILO MEDINA, JR., EUGENE MEDINA, ELVIRA eventually registered on July 19, 1995, in the name of respondent under TCT Nos.
MEDINA, ANATALIO MEDINA, MARIO MEDINA, CORNELIO 202295, 202296 and 202297.5
MEDINA, ERNESTO MEDINA, IGNACIO CONSTANTINO, SANTOS
On November 6, 1998, petitioners instituted Civil Case No. 98-233, an action
for annulment of titles and deeds, reconveyance, damages with preliminary
injunction and restraining order, against respondent and the Register of Deeds
of Makati.6 Included in the complaint are the heirs of Nazaria Cruz, as
unwilling co-plaintiffs.7 Petitioners allege in their complaint that they are co-
owners of these two parcels of land. While the titles were registered in the
names of Pedro, Alberto, Cornelio, Brigida and Gregoria, all surnamed
Medina, they alleged that they were recognized as co-owners thereof. In
support of their case, petitioners maintain that the deeds of sale on these
properties were simulated and fictitious, and the signatures of the vendors
therein were fake. Despite the transfer of the title to respondent's name, they
remained in possession thereof and in fact, their caretaker, a certain Santos
Arevalo and his family still reside on a portion of the property. On July 13,
1998, petitioners caused an adverse claim to be annotated on the titles. After
discovering the annotation, respondent constructed a fence on the property and
posted security personnel, barring their ingress and egress. Thus, petitioners
sought, among others, the issuance of a temporary restraining order and a writ
of preliminary injunction enjoining respondent and its agents and
representatives from preventing petitioners to exercise their rights over the
properties.8
Respondent denied the allegations, stating that petitioners have no valid claim
on the properties as it is already titled in its name by virtue of the public
documents executed by their predecessors. As counterclaim, respondent
alleged that Santos Arevalo is not petitioners' caretaker and it was them who
employed him as caretaker.9
On January 18, 1999, the trial court issued its resolution granting petitioners'
prayer for injunctive relief. The dispositive portion of the resolution reads:
Let therefore an injunction issue, enjoining and directing defendant
GREENFIELD DEVELOPMENT CORPORATION, its security
guards, agents, representatives, and all those claiming rights under
it, from preventing plaintiffs and their caretaker Santos Arevalo,
from entering and going out of the subject premises, and from
preventing them to exercise their property rights, upon payment of a
bond in the amount of P100,000.00.
It is SO ORDERED.10
Respondent filed a special civil action for certiorari and prohibition with the
Court of Appeals, docketed as CA-G.R. SP No. 52015. On July 16, 1999, the
Court of Appeals11 rendered its decision nullifying the trial court's resolution,
the dispositive portion of which provides:
IN THE (sic) LIGHT OF ALL THE FOREGOING, the petition is
hereby GRANTED. The assailed Resolution of the Public
Respondent Judge, dated January 18, 1999, in Civil Case No. 98-233
is hereby NULLIFIED.
SO ORDERED.12
Petitioners now seek recourse with this Court, alleging the following grounds:
I Sell is not signed by all of the registered owners.
25
THE COURT OF APPEALS ERRED IN RELYING HEAVILY ON This Court cannot also understand how the document, denominated as
THE ANTECEDENT FACTS NARRATED IN THE PETITION OF DEED OF ABSOLUTE SALE WITH MORTGAGE can be the bases (sic)
THE RESPONDENT IN CA-G.R. SP NO. 52015 AND ADOPTED of a new title. The absoluteness of the sale, is contradicted by the mortgage
THE SAME AS ITS OWN WITHOUT EVIDENTIARY SUPPORT it also provides. There is absoluteness of sale only when the buyer upon
II execution of the contract, pay (sic) in full the consideration and ownership
passes to the Vendee. The registered owners of Lot 90-B covered by
THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN Transfer Certificate of Title No. 100178 even deny having executed this
UPHOLDING THE VALIDITY OF THE DEEDS OF SALE IN document of Deed of Absolute Sale with Mortgage.
FAVOR OF THE RESPONDENT AND IN HOLDING THAT
RESPONDENT'S TRANSFER CERTIFICATES OF TITLE ARE Until these matters are threshed out at the trial on the merits, and after this
is fully explained and determined, whether the properties were actually sold
VALID DESPITE THE FACT THAT THE SAID ISSUES ARE YET
TO BE TRIED to Defendant Greenfield Development Corporation, irreparable injury will
visit the landowner if the claim of ownership by Greenfield Development
III Corporation is allowed and not enjoined.14
THE COURT OF APPEALS ERRED IN PRESUMING THAT
The Court of Appeals, however, disagreed with the trial court. It noted that the trial
NOTARIZED DOCUMENTS ARE VALID AND THAT court relied mainly on petitioners' allegations in the complaint, which were not
RESPONDENT'S TORRENS TITLES ARE INDEFEASIBLE ON
supported by substantial evidence, and ignored the presumption of validity ascribed
THE WRONG NOTION THAT THE RESPONDENT WAS to the duly notarized deeds of conveyances and the titles issued to respondent. The
PRESUMED INNOCENT PERSON
Court of Appeals also found that respondent is in constructive possession of the
IV properties in dispute considering that it is already the registered owner thereof since
THE COURT OF APPEALS COMMITTED A MISTAKE IN 1962. Lastly, the Court of Appeals held that petitioners' right to impugn respondent's
HOLDING THAT RESPONDENT WAS IN CONSTRUCTIVE title to the property has already prescribed.15
POSSESSION OF THE SUBJECT PREMISES Section 3, Rule 58 of the Rules of Court provides for the grounds justifying the
NOTWITHSTANDING THAT PETITIONERS ARE IN ACTUAL issuance of a preliminary injunction, to wit:
POSSESSION THEREOF SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary
V injunction may be granted when it is established:
THE COURT OF APPEALS ERRED IN FINDING THAT (a) That the applicant is entitled to the relief demanded, and the whole or
PETITIONERS' RIGHT TO IMPUGN RESPONDENT'S TITLES part of such relief consists in restraining the commission or continuance of
HAVE (SIC) PRESCRIBED SINCE AN ACTION OR DEFENSE the act or acts complained of, or in requiring the performance of an act or
BASED ON THE INEXISTENCE OF A CONTRACT DOES NOT acts, either for a limited period or perpetually;
PRESCRIBE13 (b) That the commission, continuance or non-performance of the act or acts
As stated at the outset, the sole issue in this case is whether or not the trial court complained of during the litigation would probably work injustice to the
erred in granting petitioners' prayer for injunctive relief. This Court's resolution applicant; or
will revolve only on the propriety of the injunction. Any reference to the validity (c) That a party, court, agency or a person is doing, threatening or is
or invalidity of the transfers and the titles is merely preliminary, as the matter attempting to do, or is procuring or suffering to be done, some act or acts
should be resolved after trial on the merits. probably in violation of the rights of the applicant respecting the subject of
It was the trial court's opinion that petitioners are entitled to the injunction for the action or proceeding, and tending to render the judgment ineffectual.
the following reasons: The purpose of a preliminary injunction is to prevent threatened or continuous
The Court however holds suspect the acquisition by Greenfield irremediable injury to some of the parties before their claims can be thoroughly
Development Corporation of the two parcels. Lot 90-A covered by studied and adjudicated. Its sole aim is to preserve the status quo until the merits of
Transfer Certificate of Title No. 100177, was promised to be sold to the case can be heard fully.16 Thus, to be entitled to an injunctive writ, the petitioner
defendant under a contract to sell but the other co-owners did not sign has the burden to establish the following requisites:17
this Contract to Sell, who all denied knowledge of the same. No 1) a right in esse or a clear and unmistakable right to be protected;
contract of Sale followed this Contract to Sell which cannot be the
bases of the issuance of a new title. A Contract to Sell is only a (2) a violation of that right;
promise to sell, and is not a deed of sale, specially as this Contact to (3) that there is an urgent and permanent act and urgent necessity for the
writ to prevent serious damage.
Hence, petitioners' entitlement to the injunctive writ hinges on their prima facie
legal right to the properties subject of the present dispute. The Court notes that
the present dispute is based solely on the parties' allegations in their respective
pleadings and the documents attached thereto. We have on one hand,
petitioners' bare assertion or claim that they are co-owners of the properties
sold by their predecessors to respondent, and on the other, respondent's claim
of ownership supported by deeds of conveyances and torrens titles in their
favor. From these alone, it is clear that petitioners failed to discharge the
burden of clearly showing a clear and unmistakable right to be protected.
Where the complainant's right or title is doubtful or disputed, injunction is not
proper. The possibility of irreparable damage without proof of actual existing
right is not a ground for an injunction.18
Petitioners contend that the Court of Appeals should not have relied on
respondent's allegations regarding the circumstances surrounding the sales and
the transfer of the titles. Petitioners point out that trial on the merits of the case
is still ongoing and respondent is yet to adduce evidence in support of its
contention. The same, however, applies to petitioners' cause of action. They
only have their own allegations and are yet to prove their claim. And as stated
earlier, the only bases from which the propriety of the injunction can be
determined are their respective pleadings and documents. What tilt the balance
in respondent's favor are the notarized documents and the titles to the
properties. The well-settled rule is that a document acknowledged before a
notary public enjoys the presumption of regularity. It is a prima facie evidence
of the facts therein stated. To overcome this presumption, there must be
presented evidence that is clear and convincing. Absent such evidence, the
presumption must be upheld.19 In addition, the titles in the name of
respondent, having been registered under the Torrens system, are generally a
conclusive evidence of the ownership of the land referred to therein,20 and a
strong presumption exists that the titles are regularly issued and
valid.21 Therefore, until and unless petitioners show that the documents are
indeed spurious and the titles invalid, then the presumptions must prevail at
this juncture.
Petitioners, however, argue that the presumption of validity of the notarized
documents and titles cannot be applied in respondent's case as it is not an
innocent purchaser.22 According to petitioners, respondent is fully aware that
at the time that the Contract to Sell was entered into in 1962, Leon Medina
who is a co-owner of the property then covered by TCT No. 21314, was
already dead. Suffice it to say that these arguments already involve the merits
of the main case pending before the trial court, which should not even be
preliminarily dealt with, as it would be premature.
Equally pertinent is the rule that courts should avoid issuing a writ of
preliminary injunction, which in effect, would dispose of the main case
without trial.23 The ground relied upon by the trial court in issuing the writ of
preliminary injunction in this case is its doubt over the acquisition of the
properties by respondent.24 Such basis would be virtually recognizing
petitioners' claim that the deeds of conveyances and the titles are a nullity
without further proof, to the detriment of the doctrine of presumption of
validity in favor of these documents. There would, in effect, be a prejudgment
26
of the main case and a reversal of the rule on the burden of proof since it would and CRISTINA SO, and NATIVE WEST INTERNATIONAL TRADING
assume the proposition which the petitioners are inceptively duty bound to CORP., respondents.
prove.25
Petitioners also claim that they are in actual possession of the property. As
alleged in their complaint, they instituted Santos Arevalo, a co-petitioner, as
caretaker.26 They also alleged in their petition filed before this Court that
Balbino and Yolanda Medina and their respective families are still residing on
a portion of the property.27 Respondent belies their claim, declaring that it
employed Arevalo as caretaker. Respondent presented a notarized Receipt and
Quitclaim dated April 26, 1994, signed by Arevalo, who attested that he was
employed by respondent as caretaker and that his stay on the property was a
mere privilege granted by respondent.
Possession and ownership are two different legal concepts. Just as possession
is not a definite proof of ownership, neither is non-possession inconsistent with
ownership. Even assuming that petitioners' allegations are true, it bears no legal
consequence in the case at hand because the execution of the deeds of
conveyances is already deemed equivalent to delivery of the property to
respondent, and prior physical delivery or possession is not legally
required.28 Under Article 1498 of the Civil Code, "when the sale is made
through a public instrument, the execution thereof shall be equivalent to the
delivery of the object of the contract, if from the deed the contrary does not
appear or cannot be inferred." Possession is also transferred, along with
ownership thereof, to respondent by virtue of the notarized deeds of
conveyances.29
In sum, the trial court committed grave abuse of discretion in issuing the writ
of preliminary injunction, and the Court of Appeals was correct in nullifying
the same.
The Court, however, finds that it was precipitate for the Court of Appeals to
rule that petitioners' action is barred by prescription. As previously stressed, the
parties are yet to prove their respective allegations and the trial court is yet to
receive the evidence. There is nothing on record that can conclusively support
the conclusion that the action is barred by prescription. Hence, the Court of
Appeals should not have made such ruling.
WHEREFORE, the petition is hereby DENIED for lack of merit. The Decision
dated July 16, 1999 rendered by the Court of Appeals in CA-G.R. SP No. 52015
is AFFIRMED, except as to its view on prescription, as discussed in the body
of the text.
Let the original records of this case be remanded to the Regional Trial Court of
Muntinlupa City (Branch 276) with dispatch for further proceedings.
SO ORDERED.
G.R. No. 121158 December 5, 1996
CHINA BANKING CORPORATION, ATTYS. REYNALDO M.
CABUSORA and RENATO C. TAGUIAM, petitioners,
vs.
COURT OF APPEALS, HON. PEDRO T. SANTIAGO, SPS. SO CHING
FRANCISCO, J.:p
China Banking Corporation (China Bank) extended several loans to Native West
International Trading Corporation (Native West) and to So Ching, Native West's
president. Native West in turn executed promissory notes 1 in favor of China Bank.
So Ching, with the marital consent of his wife, Cristina So, additionally executed two
mortgages over their properties, viz., a real estate mortgage executed on July 27, 1989
covering a parcel of land situated in Cubao, Quezon City, under TCT No. 277797 2,
and another executed on August 10, 1989 covering a parcel of land located in
Mandaluyong, under TCT No. 5363. 3 The promissory notes matured and despite due
demands by China Bank neither private respondents Native West nor So Ching paid.
Pursuant to a provision embodied in the two mortgage contracts, China Bank filed
petitions for the extra-judicial foreclosure of the mortgaged properties before Notary
Public Atty. Renato E. Taguiam for TCT No. 277797, 4 and Notary Public Atty.
Reynaldo M. Cabusora for TCT No. 5363, 5 copies of which were given to the
spouses So Ching and Cristina So. After due notice and publication, the notaries
public scheduled the foreclosure sale of the spouses' real estate properties on April
13, 1993. Eight days before the foreclosure sale, however, private respondents filed a
complaint 6 with the Regional Trial Court 7 for accounting with damages and with
temporary restraining order against petitioners alleging the following causes of
action:
A. Defendants failed to comply with the mandates of
Administrative Order No. 3 of the Supreme Court dated October
19, 1984.
B. Defendants failed to comply with the mandates of Section 2
Presidential Decree No. 1079 dated January 28, 1977.
C. MORTGAGORS liability limited to P6,500,000.00 and
P3,500,000.00 respectively in the Mortgages Annexes A and B
respectively, but the same are not included in the notice of
foreclosure.
D. Violation of Truth in Lending Act (RP Act No. 3765).
E. In all the loans granted by DEFENDANT-BANK to plaintiffs
and Borrowers, the Bank charged interests in excess of the rate
allowed by the Central Bank.
F. Violation of Article 1308 of the Civil Code. 8
On April 7, 1993, the trial court issued a temporary restraining order to
enjoin the foreclosure sale. Thereafter counsels for the respective parties
agreed to file their pleadings and to submit the case, without further hearing,
for resolution. On April 28, 1993, the trial court, without passing upon the
material averments of the complaint, issued an Order granting the private
respondents' prayer for the issuance of preliminary injunction with the
following proffered justification:
 From the foregoing, it is quite apparent that a question of
accounting poses a thorny issue as between the litigants.
Variance in the amounts involved relating to the loan
agreements must be judiciously passed upon by the Court
and this is only possible if a trial on the merits could be
had as the matters appurtenant thereto are evidentiary in
nature.
Under the premises, the accounting issue being evidentiary
in character calls for an issuance of a writ of preliminary
injunction pending the adjudication of the case. The
issuance thereof at this particular stage of the case is
merely a preventive remedy designed to protect from
irreparable injury to property or other rights plaintiff may
suffer, which a court of equity may take cognizance of by
commanding acts to be done or prohibiting their
commission, as in the instant suit, to restrain notaries
public Cabusora and Taguiam as well as defendant China
Banking Corporation from continuing with the auction
sale of the subject properties, until further orders from this
Court.
Wherefore, premises considered, finding that the
circumstances warrant the issuance of a preliminary
injunction, plaintiff's prayer is hereby GRANTED.
Consequent thereto, plaintiffs are hereby ordered to post a
bond amounting to P1 (ONE) Million to answer for
whatever damages defendant may suffer as a consequence
of the writ. 9
Petitioners moved for reconsideration, but it was denied in an Order dated
September 23, 1993. To annul the trial court's Orders of April 28, 1993 and
September 23, 1993, petitioners elevated the case through certiorari and
prohibition 10 before public respondent Court of Appeals. 11 In a decision
dated January 17, 1995, respondent Court of Appeals held that Administrative
Circular No. 3 is the governing rule in extra-judicial foreclosure of mortgage,
which circular petitioners however failed to follow, and with respect to the
publication of the notice of the auction sale, the provisions of P.D. No. 1079
is the applicable statute, 12 which decree petitioners similarly failed to obey.
Respondent Court of Appeals did not pass upon the other issues and confined
its additional lengthy discussion on the validity of the trial court's issuance of
the preliminary injunction, finding the same neither capricious nor whimsical
exercise of judgment that could amount to grave abuse of discretion. 13 The
Court of Appeals accordingly dismissed the petition, as well as petitioners'
subsequent motion for reconsideration. 14 Hence, the instant petition under
Rule 45 of the Rules of Court reiterating the grounds raised before respondent
court, to wit:
I. PETITIONER CBC'S PETITIONS TO
EXTRAJUDICIALLY FORECLOSE THE REAL
ESTATE MORTGAGES OF JULY 27, 1989 AND
AUGUST 10, 1989 THRU PETITIONERS-NOTARIES
27
PUBLIC, AND THE SCHEDULED FORECLOSURE Petitioners aver that the additional loans extended in favor of private respondents in
SALE ARE VALID AND LAWFUL; excess of P6,500,000.00 and P3,500,000.00 — amounts respectively stipulated in the
II. PRIVATE RESPONDENTS AND PETITIONER CBC July 27, 1989 and August 10, 1989 mortgage contracts — are also secured by the
HAD EXPRESSLY AGREED TO CONSIDER THE same collaterals or real estate properties, citing as bases the introductory paragraph
SAME MORTGAGES AS VALID SECURITIES FOR ("whereas clause") of the mortgage contracts, as well as the stipulations stated therein
PROMPT AND FULL PAYMENT OF ALL AND ANY under the first and second paragraphs. Private respondents for their part argue that the
OBLIGATIONS OF THE FORMER FROM THE additional loans are clean loans, relying on some isolated parts of the same
LATTER; introductory paragraph and first paragraph of the contracts, and also of the third
paragraph.
III. THE SUPPOSED VARIANCE IN THE TOTAL
AMOUNT OF UNPAID LOANS IS NOT A VALID As both parties offered a conflicting interpretation of the contract, then judicial
BASIS TO ENJOIN THE FORECLOSURE OF THE determination of the parties' intention is thus, inevitable. 17 Hereunder are the
QUESTIONED MORTGAGES. THE MERE FAILURE pertinent identical introductory paragraphs and paragraphs 1 to 3 of the July 27, 1989
TO PAY THE LOAN SECURED BY SAID and August 10, 1989 mortgage contracts:
MORTGAGES IS THE ONLY, SINGLE REASON FOR WHEREAS, the MORTGAGEE has granted, and may from time
THEIR LAWFUL FORECLOSURE;. to time hereafter grant to the MORTGAGOR(S)/either of
them/and/or NATIVE WEST INTERNATIONAL TRADING
IV. PETITIONER BANK HAD FURNISHED PRIVATE
RESPONDENTS WITH COPIES OF DISCLOSURE CORP. — hereinafter called the DEBTOR(S) credit facilities not
exceeding SIX MILLION FIVE HUNDRED THOUSAND
STATEMENTS IN COMPLIANCE WITH THE TRUTH
IN LENDING ACT, AND CHARGED THEM PESOS ONLY (P6,500,000.00)* Philippine currency, and the
MORTGAGEE had required the MORTGAGOR(S) to give
INTERESTS IN ACCORDANCE WITH LAW AND
PURSUANT TO ITS EXPRESS AGREEMENT WITH collateral security for the payment of any and all obligations
THE LATTER; heretofore contracted/incurred and which may thereafter be
contracted/incurred by the MORTGAGOR(S) and/or
V. THE P1.0 MILLION INJUNCTION BOND DEBTOR(S), or any one of them, in favor of the MORTGAGEE;
REQUIRED BY THE HONORABLE COURT A QUO ON
PRIVATE RESPONDENTS IS GROSSLY AND NOW, THEREFORE, as collateral security for the payment of the
principal and interest of the indebtedness/obligations herein
PATENTLY INADEQUATE. 15
referred to and the faithful performance by the MORTGAGOR(S)
At the outset, the Court's attention is drawn to the fact that since the filing of of his (her, its) obligations hereunder, the MORTGAGOR(S)
this suit before the trial court, none of the substantial issues have been resolved. hereby execute(s) a FIRST MORTGAGE, in favor of the
To avoid and gloss over the issues raised by the parties, as what the trial court MORTGAGEE, free from all liens and encumbrances of any
and respondent Court of Appeals did, would unduly prolong this litigation kind, that (those) certain parcel(s) of land, together with all the
involving a rather simple case of foreclosure of mortgage. Undoubtedly, this buildings/machineries/equipment improvements now existing
will run counter to the avowed purpose of the rules, i.e., to assist the parties in thereon, and which may hereafter be placed thereon, described in
obtaining just, speedy and inexpensive determination of every action or the Schedule of mortgaged properties described hereunder and/or
proceeding. 16 The Court, therefore, feels that the central issues of the case, which is hereto attached, marked Exhibit "A" and made a part
albeit unresolved by the courts below, should now be settled specially as they thereof.
involved pure questions of law. Furthermore, the pleadings of the respective
parties on file have amply ventilated their various positions and arguments on 1. It is agreed that this mortgage shall respond for all the
obligations contracted/incurred by the MORTGAGOR(S) and/or
the matter necessitating prompt adjudication.
DEBTOR(S) or any one of them, in favor of the MORTGAGEE
Now to the core issues. up to the said sum of SIX MILLION FIVE HUNDRED
As the Court sees it, the crucial issues are: (1) whether or not the loans in excess THOUSAND PESOS ONLY (P6,500,000.00)* regardless of the
of the amounts expressly stated in the mortgage contracts can be included as manner in which the said obligations may have been
part of the loans secured by the real estate mortgages, (2) whether or not contracted/incurred by the MORTGAGOR(S) and/or
petitioners can extra-judicially foreclose the properties subject of the DEBTOR(S) — whether by advances or loans made to him (her,
mortgages, (3) whether or not Administrative Order No. 3 should govern the it) by the MORTGAGEE, by the negotiation of mercantile
extra-judicial foreclosure of the properties, and (4) whether or not the writ of documents, including trust receipts, by the execution by the
preliminary injunction issued by the trial court is valid. MORTGAGOR(S) and/or DEBTOR(S) of money market
instruments/commercial papers, undertakings of guaranty of
 suretyship, or by endorsement of negotiable instruments,
or otherwise, the idea being to make this deed a
comprehensive and all embracing security that it is.
2. Payments on account of the principal and interest of the
credit granted by the MORTGAGEE to the
MORTGAGOR(S) and/or DEBTOR(S) may be made
from time to time, and as often as the MORTGAGOR(S)
may elect; provided, however, that in the event of such
payments being so made that the indebtedness to the
MORTGAGEE may from time to time be reduced the
MORTGAGEE may make further advances and all sums
whatsoever advanced by the MORTGAGEE shall be
secured by this mortgage, and partial payments of said
indebtedness from time to time shall not thereby be taken
to reduce by the amount of such payments the credit
hereby secured. The said credit shall extend to any account
which shall, within the said limit of
P6,500,000.00* exclusive of interest, be fluctuating and
subject to increase or decrease from time to time as the
MORTGAGEE may approve, and this mortgage shall
stand as security for all indebtedness of the
MORTGAGOR(S) and/or DEBTOR(S), or any one of
them, at any and all times outstanding, regardless of partial
or full payments at any time or times made by the
MORTGAGOR(S) and/or DEBTOR(S).
3. It is hereby agreed that the MORTGAGEE may from
time to time grant the MORTGAGOR(S)/DEBTOR(S)
credit facilities exceeding the amount secured by this
mortgage, without affecting the liability of the
MORTGAGOR(S) under this mortgage up to the amount
stipulated. 18
An important task in contract interpretation is the ascertainment of the
intention of the contracting parties which is accomplished by looking at the
words they used to project that intention in their contract, i.e., all the words,
not just a particular word or two, and words in context, not words standing
alone. 19 Indeed, Article 1374 of the Civil Code, states that "the various
stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly."
Applying the rule, we find that the parties intent is to constitute the real estate
properties as continuing securities liable for future obligations beyond the
amounts of P6.5 million and P3.5 million respectively stipulated in the July
27, 1989 and August 10, 1989 mortgage contracts. Thus, while the "whereas"
clause initially provides that "the mortgagee has granted, and may from time
to time hereafter grant to the mortgagors . . . credit facilities not exceeding six
million five hundred thousand pesos only (P6,500,000.00)**" yet in the same
clause it provides that "the mortgagee had required the mortgagor(s) to give
collateral security for the payment of any and all obligations heretofore
contracted/incurred and which may thereafter be contracted/incurred by the
28
mortgagor(s) and/or debtor(s), or any one of them, in favor of the mortgagee"
which qualifies the initial part and shows that the collaterals or real estate
properties serve as securities for future obligations. The first paragraph which
ends with the clause, "the idea being to make this deed a comprehensive and all
embracing security that it is" supports this qualification.
Similarly, the second paragraph provides that "the mortgagee may take further
advances and all sums whatsoever advanced by the mortgagee shall be secured
by this mortgagee . . ." And although it was stated that "[t]he said credit shall
extend to any account which shall, within the said limit of P6,500,000.00
exclusive of interest", this part of the second sentence is again qualified by its
succeeding portion which provides that "this mortgage shall stand as security
for all indebtedness of the mortgagor(s) and/or debtor(s), or any one of them, at
any and all times outstanding . . ." Again, under the third paragraph, it is
provided that "the mortgagee may from time to time grant the
mortgagor(s)/debtor(s) credit facilities exceeding the amount secured by this
mortgage . . ." The fourth paragraph, 20in addition, states that ". . . all such
withdrawals, and payments, whether evidenced by promissory notes or
otherwise, shall be secured by this mortgage" which manifestly shows that the
parties principally intended to constitute the real estate properties as continuing
securities for additional advancements which the mortgagee may, upon
application, extend. It is well settled that mortgages given to secure future
advancements or loans are valid and legal contracts, and that the amounts
named as consideration in said contracts do not limit the amount for which the
mortgage may stand as security if from the four corners of the instrument the
intent to secure future and other indebtedness can be gathered. 21
Anent the second issue, we find that petitioners are entitled to foreclose the
mortgages. In their complaint for accounting with damages pending with the
trial court, private respondents averred that:
With respect to the third issue, we find private respondents' contention that
8. Up to and until February, 1993, PLAINTIFF- Administrative Order No. 3 is the governing rule in foreclosure of mortgages
CORPORATION had paid to the DEFENDANT-BANK, misplaced. The parties, we note, have stipulated that the provisions of Act No. 3135
the amount of THREE HUNDRED FIFTY THOUSAND is the controlling law in case of foreclosure. Thus:
(P350,000.00) Pesos, Philippine Currency, and was willing
to pay the balance in installments of FOUR HUNDRED
THOUSAND (P400,000.00) Pesos, Philippine Currency,
every month, in the meantime, but the DEFENDANT-
BANK refused to accept, demanding instead SEVEN
HUNDRED MILLION (P700,000,000.00) Pesos,
Philippine Currency, a month.
9. Inspite of the expressed willingness and commitment of
plaintiffs to pay their obligation in a manner which they
could afford, on March 11, 1993, MORTGAGORS and
DEFENDANT-CORPORATION, each received a Letter of
Demand from DEFENDANT-BANK, for the payment of
P28,775,615.14 exclusive of interest and penalty evidenced
by 11 promissory notes enclosed therein . . . .
10. Upon receipt of the letter, PLAINTIFF-
CORPORATION through its President pleaded with the
Chairman of the Board of the DEFENDANT-BANK, through
whom Defendant-Corporation was transacting business with, to
accept its offer of payment of FOUR HUNDRED THOUSAND
(P400,000.00) Pesos, Philippine Currency, a month, in the
meantime, which was again refused by the said Chairman. 22
which allegations are a clear admission that they were unable to settle to the
fullest their obligation. Foreclosure is valid where the debtors, as in this
case, are in default in the payment of their obligation. 23 The essence of a
contract of mortgage indebtedness is that a property has been identified or
set apart from the mass of the property of the debtor-mortgagor as security
for the payment of money or the fulfillment of an obligation to answer the
amount of indebtedness, in case of default of payment. 24 It is a settled rule
that in a real estate mortgage when the obligation is not paid when due, the
mortgagee has the right to foreclose the mortgage and to have the property
seized and sold in view of applying the proceeds to the payment of the
obligation. 25 In fact, aside from the mortgage contracts, the promissory
notes executed to evidence the loans also authorize the mortgagee to
foreclose on the mortgages. Thus:
. . . CHINA BANKING CORPORATION is hereby authorized to
sell at public or private sales such securities or things of value for
the purpose of applying their proceeds to such payments. 26
And while private respondents aver that they have already paid ten million
pesos, an allegation which has still to be settled before the trial court, the
same cannot be utilized as a shield to enjoin the foreclosure sale. A
mortgage given to secure advancements, we repeat, is a continuing security
and is not discharged by repayment of the amount named in the mortgage,
until the full amount of the advancements are paid. 27
17. The MORTGAGOR(S) hereby grant(s) unto the
MORTGAGEE full and irrevocable power of attorney coupled
with interest, in the event of breach of any of the conditions of
this mortgage, to sell, in its discretion, the mortgaged properties
at public auction, for cash and to the highest bidder, in the
Province or City where the mortgaged properties are located,
before the Sheriff, or a Notary Public, without court proceedings,
after posting notices of sale for a period of twenty days in three
public places in said place; and after publication of such notice in
a newspaper of general circulation in the said place once a week,
for three consecutive weeks, and the MORTGAGEE is hereby
authorized to execute the deed of sale and all such other
documents as may be necessary in the premises all in accordance
with the provisions of Act No. 3135 of the Philippine Legislature,
as amended, and Section 78 of Republic Act
No. 337: . . . 28 (Emphasis supplied.)
 By invoking the said Act, there is no doubt that it must "govern the
manner in which the sale and redemption shall be
effected." 29 Clearly, the fundamental principle that contracts are
respected as the law between the contracting parties finds application
in the present case, 30 specially where they are not contrary to law,
morals, good customs and public policy.
Moreover, Administrative Order No. 3 is a directive for executive judges and
clerks of courts which, under its preliminary paragraph, is "[i]n line with the
responsibility of an Executive Judge, under Administrative Order No. 6, dated
June 30, 1975, for the management of courts within his administrative area,
included in which is the task of supervising directly the work of the Clerk of
Court, who is also the Ex-Oficio Sheriff, and his staff, . . . ." Surely, a petition
for foreclosure with the notary public is not within the contemplation of the
aforesaid directive as the same is not filed with the court. At any rate,
Administrative Order No. 3 cannot prevail over Act No. 3135, as amended. It
is an elementary principle in statutory construction that a statute is superior to
an administrative directive and the former cannot be repealed or amended by
the latter.
On the last issue, we find that the issuance of the writ of injunction by the trial
court unjustified. A writ of preliminary injunction, as an ancillary or
preventive remedy, may only be resorted to by a litigant to protect or preserve
his rights or interests and for no other purpose during the pendency of the
principal action. 31 But before a writ of preliminary injunction may be issued,
there must be a clear showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be directed are violative
of the said right. 32 In the case at bench, we fail to see any reason why the
foreclosure of the mortgages should be enjoined. On the face of the clear
admission by private respondents that they were unable to settle their
obligations which were secured by the mortgages, petitioners have a clear right
to foreclose the mortgages which is a remedy provided by law. Thus, in Caltex
Philippines, Inc. v. Intermediate Appellate Court, 33 we reiterated the rule
that:
. . . where a debt is secured by a mortgage and there is a
default in payment on the part of the mortgagor, the
mortgagee has a choice of one (1) or two (2) remedies, but
he cannot have both. The mortgagee may:
1) foreclosure the mortgage; or
2) file an ordinary action to collect the debt.
When the mortgagee chooses the foreclosure of the
mortgage as a remedy, he enforces his lien by the sale on
foreclosure of the mortgaged property. The proceeds of the
sale will be applied to the satisfaction of the debt. With this
remedy, he has a prior lien on the property. In case of a
deficiency, the mortgagee has the right to claim for the
deficiency resulting from the price obtained in the sale of
the real property at public auction and the outstanding
obligation at the time of the foreclosure proceedings
29
(Soriano v. Enriquez, 24 Phil 584; Banco de Islas Filipinas submitted bids. The SBMA also hired the firm of Davis, Langdon and Seah
v. Concepcion Hijos, 53 Phil 86; Banco Nacional v. Philippines, Inc. to assist in the evaluation of the bids and in the negotiation process
Barreto, 53 Phil 101). after the winning bidder is chosen. All the consultants, after such review and
On the other hand, if the mortgagee resorts to an action to evaluation unanimously concluded that HPPLs Business Plan was far superior to that
collect the debt, he thereby waives his mortgage lien. He of the two other bidders.[3]
will have no more priority over the mortgaged property. If However, even before the sealed envelopes containing the bidders proposed
the judgment in the action to collect is favorable to him, and royalty fees could be opened at the appointed time and place, RPSI formally protested
it becomes final and executory, he can enforce said that ICTSI is legally barred from operating a second port in the Philippines based on
judgment by execution. He can even levy execution on the Executive Order No. 212 and Department of Transportation and Communication
same mortgaged property, but he will not have priority over (DOTC) Order 95-863. RPSI thus requested that the financial bid of ICTSI should be
the latter and there may be other creditors who have better set aside.[4]
lien on the properties of the mortgagor. 34 Nevertheless, the opening of the sealed financial bids proceeded under
WHEREFORE, the instant petition is hereby GRANTED. The assailed advisement relative to the protest signified by RPSI.The financial bids, more
Decision, as well as the Resolution, of the Court of Appeals dated January 17, particularly the proposed royalty fee of each bidder, was as follows:
1995 and July 7, 1995, respectively, are hereby REVERSED and SET ASIDE.
ICTSI ------------US$57.80 TEU
The preliminary writ of injunction issued by the trial court is hereby
NULLIFIED. This case is REMANDED to the court of origin for further HPPL ------------US$20.50 TEU
proceedings in conformity with this decision. RPSI -------------US$15.08 TEU
SO ORDERED. The SBMA-PBAC decided to suspend the announcement of the winning bid,
however, and instead gave ICTSI seven (7) days within which to respond to the letter-
[G.R. No. 131367. August 31, 2000]
protest lodged by RPSI. The HPPL joined in RPSIs protest, stating that ICTSI should
HUTCHISON PORTS PHILIPPINES LIMITED, petitioner, vs. SUBIC be disqualified because it was already operating the Manila International Container
BAY METROPOLITAN AUTHORITY, INTERNATIONAL Port (or MICP), which would give rise to inevitable conflict of interest between the
CONTAINER TERMINAL SERVICES INC., ROYAL PORT MICP and the Subic Bay Container Terminal facility.[5]
SERVICES INC. and the EXECUTIVE
SECRETARY, respondents. On August 15, 1996, the SBMA-PBAC issued a resolution rejecting the bid of
ICTSI because said bid does not comply with the requirements of the tender
DECISION documents and the laws of the Philippines. The said resolution also declared that:
YNARES-SANTIAGO, J.: RESOLVED FURTHER, that the winning bid be awarded to HUTCHISON PORTS
On February 12, 1996, the Subic Bay Metropolitan Authority (or SBMA) PHILIPPINES LIMITED (HPPL) and that negotiations commence immediately
advertised in leading national daily newspapers and in one international with HPPL (HUTCHISON) with a view to concluding an acceptable agreement
publication,[1] an invitation offering to the private sector the opportunity to within 45 days of this date failing which negotiations with RPSI (ROYAL) will
develop and operate a modern marine container terminal within the Subic Bay commence with a view to concluding an acceptable agreement within 45 days
Freeport Zone. Out of seven bidders who responded to the published invitation, thereafter failing which there will be declared a failure of bids.[6] (Underscoring
three were declared by the SBMA as qualified bidders after passing the pre- supplied)
qualification evaluation conducted by the SBMAs Technical Evaluation The following day, ICTSI filed a letter-appeal with SBMAs Board of Directors
Committee (or SBMA-TEC). These are: (1) International Container Terminal requesting the nullification and reversal of the above-quoted resolution rejecting
Services, Inc. (or ICTSI); (2) a consortium consisting of Royal Port Services, ICTSIs bid while awarding the same to HPPL. But even before the SBMA Board
Inc. and HPC Hamburg Port Consulting GMBH (or RPSI); and (3) Hutchison could act on the appeal, ICTSI filed a similar appeal before the Office of the
Ports Philippines Limited (or HPPL), representing a consortium composed of President.[7] On August 30, 1996, then Chief Presidential Legal Counsel (CPLC)
HPPL, Guoco Holdings (Phils.), Inc. and Unicol Management Services, Inc. All Renato L. Cayetano submitted a memorandum to then President Fidel V. Ramos,
three qualified bidders were required to submit their respective formal bid containing the following recommendations:
package on or before July 1, 1996 by the SBMAs Pre-qualification, Bids and
Awards Committee (or SBMA-PBAC). We therefore suggest that the President direct SBMA Chairman Gordon to consider
option number 4 that is to re-evaluate the financial bids submitted by the parties,
Thereafter, the services of three (3) international taking into consideration all the following factors:
consultants[2] recommended by the World Bank for their expertise were hired
by SBMA to evaluate the business plans submitted by each of the bidders, and 1. Reinstate ICTSIs bid;
to ensure that there would be a transparent and comprehensive review of the 2. Disregard all arguments relating to monopoly;
3. The re-evaluation must be limited to the parties financial bids.
3.1 Considering that the parties business have been accepted (passed), strictly
follow the criteria for bid evaluation provided for in pars. (c) and (d), Part B
(1) of the Tender Document.
4. In the re-evaluation, the COA should actively participate to determine
which of the financial bids is more advantageous.
5. In addition, all the parties should be given ample opportunity to elucidate
or clarify the components/justification for their respective financial bids in
order to ensure fair play and transparency in the proceedings.
6. The Presidents authority to review the final award shall
remain.[8] (Underscoring supplied)
The recommendation of CPLC Cayetano was approved by President
Ramos, and a copy of President Ramos handwritten approval was sent to the
SBMA Board of Directors. Accordingly, the SBMA Board, with the
concurrence of representatives of the Commission on Audit, agreed to focus
the reevaluation of the bids in accordance with the evaluation criteria and the
detailed components contained in the Tender Document, including all relevant
information gleaned from the bidding documents, as well as the reports of the
three international experts and the consultancy firm hired by the SBMA.
On September 19, 1996, the SBMA Board issued a Resolution,
declaring:
NOW, THEREFORE, IT IS HEREBY RESOLVED that the bid that
conforms to the Invitation to Tender, that has a realistic Business Plan
offering the greatest financial return to SBMA, the best possible offer and the
most advantageous to the government is that of HPPL and HPPL is
accordingly selected as the winning bidder and is hereby awarded the
concession for the operation and development of the Subic Bay Container
Terminal.[9] (Underscoring supplied)
In a letter dated September 24, 1996, the SBMA Board of Directors
submitted to the Office of the President the results of the re-evaluation of the
bid proposals, to wit:
SBMA, through the unanimous vote of all the Board Members, excluding the
Chairman of the Board who voluntarily inhibited himself from participating
in the re-evaluation, selected the HPPL bid as the winning bid, being: the
conforming bid with a realistic Business Plan offering the greatest financial
return to the SBMA; the best possible offer in the market, and the most
advantageous to the government in accordance with the Tender
Document.[10]
Notwithstanding the SBMA Boards recommendations and action
awarding the project to HPPL, then Executive Secretary Ruben Torres
submitted a memorandum to the Office of the President recommending that
another rebidding be conducted.[11]Consequently, the Office of the President
issued a Memorandum directing the SBMA Board of Directors to refrain from
signing the Concession Contract with HPPL and to conduct a rebidding of the
project.[12]
30
In the meantime, the Resident Ombudsman for the DOTC filed a
complaint against members of the SBMA-PBAC before the Office of the
Ombudsman for alleged violation of Section 3(e) of Republic Act No. 3019 for
awarding the contract to HPPL. On April 16, 1997, the Evaluation and
Preliminary Investigation Bureau of the Office of the Ombudsman issued a
Resolution absolving the members of the SBMA-PBAC of any liability and
dismissing the complaint against them, ruling thus:
After an assiduous study of the respective contentions of both parties, we are
inclined to hold, as it is hereby held, that there is no proof on record
pinpointing respondents to have acted in excess of their discretion when they
awarded the bid to HPPL. Records revealed that respondents, in the exercise
of their discretion in determining the financial packages offered by the
applicants, were guided by the expert report of Davis, Langdon and Seah
(DLS) that fairly evaluated which of the bidders tender the greatest financial
return to the government. There is no showing that respondents had abused
their prerogatives. As succinctly set forth in the DLS report it stated, among
others, that, in assessing the full financial return to SBMA offered by the
bidders, it is necessary to consider the following critical matters:
1. Royalty fees
2. Volume of TEUs as affected by:
a. Tariff rates;
b. Marketing strategy;
c. Port facilities; and
d. Efficient reliable services.
With the preceding parameters for the evaluation of bidders business plan, the
respondents were fairly guided by, as they aligned their judgment in
congruence with, the opinion of the panel of experts and the SBMAs
Technical Evaluation Committee to the effect that HPPLs business is superior
while that of ICTSIs appeared to be unrealistically high which may eventually
hinder the competitiveness of the SBMA port with the rest of the
world. Respondents averred that the panel of World Bank experts noted that
ICTSIs high tariff rates at U.S. $119.00 per TEU is already higher by 37%
through HPPL, which could further increase by 20% in the first two (2) years
and by 5% hike thereafter. In short, high tariffs would discourage potential
customers which may be translated into low cargo volume that will eventually
reduce financial return to SBMA. Respondents asserted that HPPLs business
plan offers the greatest financial return which could be equated that over the
five years, HPPL offers 1.25 billion pesos while ICTSI offers P0.859 billion,
and RPSI offers P.420 billion. Over the first ten years HPPL gives P2.430
billion, ICTSI tenders P2.197 billion and RPSI has P1.632 billion.
Viewed from this perspective alongside with the evidence on record, the
undersigned panel does not find respondents to have exceeded their discretion resolution was whether or not the Office of the President can set aside the award made
in awarding the bid to HPPL. Consequently, it could not be said that
respondents act had placed the government at a grossly disadvantageous plight the SBMA to conduct a re-bidding of the proposed project.
that could have jeopardized the interest of the Republic of the Philippines.[13]
On July 7, 1997, the HPPL, feeling aggrieved by the SBMAs failure and refusal
to commence negotiations and to execute the Concession Agreement despite its
earlier pronouncements that HPPL was the winning bidder, filed a
complaint[14] against SBMA before the Regional Trial Court (RTC) of Olongapo
City, Branch 75, for specific performance, mandatory injunction and damages.In due
time, ICTSI, RPSI and the Office of the President filed separate Answers-in-
Intervention[15] to the complaint opposing the reliefs sought by complainant HPPL.
Complainant HPPL alleged and argued therein that a binding and legally
enforceable contract had been established between HPPL and defendant SBMA under
Article 1305 of the Civil Code, considering that SBMA had repeatedly declared and
confirmed that HPPL was the winning bidder. Having accepted HPPLs offer to
operate and develop the proposed container terminal, defendant SBMA is duty-bound
to comply with its obligation by commencing negotiations and drawing up a
Concession Agreement with plaintiff HPPL. HPPL also pointed out that the bidding
procedure followed by the SBMA faithfully complied with existing laws and rules
established by SBMA itself; thus, when HPPL was declared the winning bidder it
acquired the exclusive right to negotiate with the SBMA. Consequently, plaintiff
HPPL posited that SBMA should be: (1) barred from conducting a re-bidding of the
proposed project and/or performing any such acts relating thereto; and (2) prohibited
from negotiating with any party other than plaintiff HPPL until negotiations between
HPPL and SBMA have been concluded or in the event that no acceptable agreement
could be arrived at. Plaintiff HPPL also alleged that SBMAs continued refusal to
negotiate the Concession Contract is a substantial infringement of its proprietary
rights, and caused damage and prejudice to plaintiff HPPL.
Hence, HPPL prayed that:
(1) Upon the filing of this complaint, hearings be scheduled to determine the
propriety of plaintiffs mandatory injunction application which seeks to order
defendant or any of its appropriate officers or committees to forthwith specify the
date as well as to perform any and all such acts (e.g. laying the ground rules for
discussion) for the commencement of negotiations with plaintiff with the view to
signing at the earliest possible time a Concession Agreement for the development
and operation of the Subic Bay Container Terminal.
(2) Thereafter, judgment be rendered in favor of plaintiff and against defendant:
2.1. Making permanent the preliminary mandatory injunction it had issued;
2.2. Ordering defendant to implement the Concession Agreement it had executed
with plaintiff in respect of the development and operation of the proposed Subic
Bay Container Terminal;
2.3. Ordering defendant to pay for the cost of plaintiffs attorneys fees in the amount
of P500,000.00, or as otherwise proven during the trial.
Plaintiff prays for other equitable reliefs.[16]
During the pre-trial hearing, one of the issues raised and submitted for
by SBMA in favor of plaintiff HPPL and if so, can the Office of the President direct
While the case before the trial court was pending litigation, on August 4, 1997,
the SBMA sent notices to plaintiff HPPL, ICTSI and RPSI requesting them to declare
their interest in participating in a rebidding of the proposed project.[17] On
October 20, 1997, plaintiff HPPL received a copy of the minutes of the pre-
bid conference which stated that the winning bidder would be announced on
December 5, 1997.[18] Then on November 4, 1997, plaintiff HPPL learned
that the SBMA had accepted the bids of ICTSI and RPSI who were the only
bidders who qualified.
In order to enjoin the rebidding while the case was still pending, plaintiff
HPPL filed a motion for maintenance of the status quo[19] on October 28,
1997. The said motion was denied by the court a quo in an Order dated
November 3, 1997, to wit:
Plaintiff maintains that by voluntarily participating in this proceedings, the
defendant and the intervenors have unqualifiedly agreed to submit the issue
of the propriety, legality and validity of the Office of the Presidents directive
that the SBMA effect a rebidding of its concession contract or the operation
of the Subic Bay Container Terminal. As such, the status quo must be
maintained in order not to thwart the courts ability to resolve the issues
presented. Further, the ethics of the profession require that counsel should
discontinue any act which tends to render the issues academic.
The Opposition is anchored on lack of jurisdiction since the issuance of a
cease-and-desist order would be tantamount to the issuance of a Temporary
Restraining Order or a Writ of Injunction which this Court cannot do in light
of the provision of Section 21 of R.A. 7227 which states:
Section 21. Injunction and Restraining Order. The implementation of the
projects for the conversion into alternative productive uses of the military
reservations are urgent and necessary and shall not be restrained or enjoined
except by an order issued by the Supreme Court of the Philippines.
During the hearing on October 30, 1997, SBMAs counsel revealed that there
is no law or administrative rule or regulation which requires that a bidding be
accomplished within a definite time frame.
Truly, the matter of the deferment of the re-bidding on November 4, 1997
rests on the sound discretion of the SBMA. For this Court to issue a cease-
and-desist order would be tantamount to an issuance of a Temporary
Restraining Order or a Writ of Preliminary Injunction. (Prado v. Veridiano
II, G.R. No. 98118, December 6, 1991).
The Court notes that the Office of the President has not been heard fully on
the issues. Moreover, one of the intervenors is of the view that the issue of
jurisdiction must be resolved first, ahead of all the other issues.
WHEREFORE, and viewed from the foregoing considerations, plaintiffs
motion is DENIED.
SO ORDERED.[20] (Underscoring supplied)
Hence, this petition filed by petitioner (plaintiff below) HPPL against
respondents SBMA, ICTSI, RPSI and the Executive Secretary seeking to
obtain a prohibitory injunction. The grounds relied upon by petitioner HPPL
to justify the filing of the instant petition are summed up as follows:
31
29. It is respectfully submitted that to allow or for this Honorable Court to
otherwise refrain from restraining SBMA, during the pendency of this suit,
from committing the aforementioned act(s) which will certainly occur on 5
December 1997 such action (or inaction) will work an injustice upon
petitioner which has validly been announced as the winning bidder for the
operation of the Subic Bay Container Terminal.
30. To allow or for this Honorable Court to otherwise refrain from restraining
SBMA, during the pendency of this suit, from committing the aforementioned
threatened acts would be in violation of petitioners rights in respect of the
action it had filed before the RTC of Olongapo City in Civil Case No. 243-O-
97, and could render any judgment which may be reached by said Court moot
and ineffectual. As stated, the legal issues raised by the parties in that
proceedings are of far reaching importance to the national pride and prestige,
and they impact on the integrity of government agencies engaged in
international bidding of privatization projects. Its resolution on the merits by
the trial court below and, thereafter, any further action to be taken by the
parties before the appellate courts will certainly benefit respondents and the
entire Filipino people.[21]
WHEREFORE, petitioner HPPL sought relief praying that:
a) Upon the filing of this petition, the same be given due course and a
temporary restraining order and/or writ of preliminary injunction be issued ex
parte, restraining SBMA or any of its committees, or other persons acting
under its control or direction or upon its instruction, from declaring any
winner on 5 December 1997 or at any other date thereafter, in connection with
the rebidding for the privatization of the Subic Bay Container Terminal and/or
for any, some or all of the respondents to perform any such act(s) in pursuance
thereof, until further orders from this Honorable Court;
b) After appropriate proceedings, judgment be rendered in favor of petitioner
and against respondents --
(1) Ordering SBMA to desist from conducting any rebidding or in declaring
the winner of any such rebidding in respect of the development and operation
of the Subic Bay Container Terminal until the judgment which the RTC of
Olongapo City may render in Civil Case No. 243-O-97 is resolved with
finality;
(2) Declaring null and void any award which SBMA may announce or issue
on 5 December 1997; and
(3) Ordering respondents to pay for the cost of suit.
Petitioner prays for other equitable reliefs.[22]
The instant petition seeks the issuance of an injunctive writ for the sole
purpose of holding in abeyance the conduct by respondent SBMA of a rebidding
of the proposed SBICT project until the case for specific performance is
resolved by the trial court. In other words, petitioner HPPL prays that the status
quo be preserved until the issues raised in the main case are litigated and finally
determined. Petitioner was constrained to invoke this Courts exclusive
jurisdiction and authority by virtue of the above-quoted Republic Act 7227,
Section 21.
On December 3, 1997, this Court granted petitioner HPPLs application for a
temporary restraining order enjoining the respondent SBMA or any of its committees,
or other persons acting under its control or direction or upon its instruction, from
declaring any winner on December 5, 1997 or at any other date thereafter, in
connection with the rebidding for the privatization of the Subic Bay Container
Terminal and/or for any, some or all of the respondents to perform any such act or
acts in pursuance thereof.[23]
There is no doubt that since this controversy arose, precious time has been lost
and a vital infrastructure project has in essense been mothballed to the detriment of
all parties involved, not the least of which is the Philippine Government, through its
officials and agencies, who serve the interest of the nation. It is, therefore, imperative
that the issues raised herein and in the court a quo be resolved without further delay
so as not to exacerbate an already untenable situation.
At the outset, the application for the injunctive writ is only a provisional
remedy, a mere adjunct to the main suit.[24] Thus, it is not uncommon that the issues
in the main action are closely intertwined, if not identical, to the allegations and
counter allegations propounded by the opposing parties in support of their contrary
positions concerning the propriety or impropriety of the injunctive writ. While it is
not our intention to preempt the trial courts determination of the issues in the main
action for specific performance, this Court has a bounden duty to perform; that is, to
resolve the matters before this Court in a manner that gives essence to justice, equity
and good conscience.
While our pronouncements are for the purpose only of determining whether or
not the circumstances warrant the issuance of the writ of injunction, it is inevitable
that it may have some impact on the main action pending before the trial
court. Nevertheless, without delving into the merits of the main case, our findings
herein shall be confined to the necessary issues attendant to the application for an
injunctive writ.
For an injunctive writ to be issued, the following requisites must be proven:
First. That the petitioner/applicant must have a clear and unmistakable right.
Second. That there is a material and substantial invasion of such right.
Third. That there is an urgent and permanent necessity for the writ to prevent
serious damage.[25]
To our mind, petitioner HPPL has not sufficiently shown that it has a clear and
unmistakable right to be declared the winning bidder with finality, such that the
SBMA can be compelled to negotiate a Concession Contract. Though the SBMA
Board of Directors, by resolution, may have declared HPPL as the winning bidder,
said award cannot be said to be final and unassailable. The SBMA Board of Directors
and other officers are subject to the control and supervision of the Office of the
President. All projects undertaken by SBMA require the approval of the President of
the Philippines under Letter of Instruction No. 620, which places the SBMA under its
ambit as an instrumentality, defined in Section 10 thereof as an agency of the national
government, not integrated within the department framework, vested with special
functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered
institutions and government owned and controlled
corporations.[26](Underscoring supplied)
As a chartered institution, the SBMA is always under the direct control
of the Office of the President, particularly when contracts and/or projects
undertaken by the SBMA entail substantial amounts of money. Specifically,
Letter of Instruction No. 620 dated October 27, 1997 mandates that the
approval of the President is required in all contracts of the national government
offices, agencies and instrumentalities, including government-owned or
controlled corporations involving two million pesos (P2,000,000.00) and
above, awarded through public bidding or negotiation. The President may,
within his authority, overturn or reverse any award made by the SBMA Board
of Directors for justifiable reasons. It is well-established that the discretion to
accept or reject any bid, or even recall the award thereof, is of such wide
latitude that the courts will not generally interfere with the exercise thereof by
the executive department, unless it is apparent that such exercise of discretion
is used to shield unfairness or injustice. When the President issued the
memorandum setting aside the award previously declared by the SBMA in
favor of HPPL and directing that a rebidding be conducted, the same was,
within the authority of the President and was a valid exercise of his
prerogative. Consequently, petitioner HPPL acquired no clear and
unmistakable right as the award announced by the SBMA prior to the
Presidents revocation thereof was not final and binding.
There being no clear and unmistakable right on the part of petitioner
HPPL, the rebidding of the proposed project can no longer be enjoined as there
is no material and substantial invasion to speak of. Thus, there is no longer any
urgent or permanent necessity for the writ to prevent any perceived serious
damage. In fine, since the requisites for the issuance of the writ of injunction
are not present in the instant case, petitioners application must be denied for
lack of merit.[27]
Finally, we focus on the matter of whether or not petitioner HPPL has
the legal capacity to even seek redress from this Court.Admittedly, petitioner
HPPL is a foreign corporation, organized and existing under the laws of the
British Virgin Islands. While the actual bidder was a consortium composed of
petitioner, and two other corporations, namely, Guoco Holdings (Phils.) Inc.
and Unicol Management Servises, Inc., it is only petitioner HPPL that has
brought the controversy before the Court, arguing that it is suing only on an
isolated transaction to evade the legal requirement that foreign corporations
must be licensed to do business in the Philippines to be able to file and
prosecute an action before Philippines courts.
The maelstrom of this issue is whether participating in the bidding is a
mere isolated transaction, or did it constitute engaging in or transacting
business in the Philippines such that petitioner HPPL needed a license to do
business in the Philippines before it could come to court.
There is no general rule or governing principle laid down as to what
constitutes doing or engaging in or transacting business in the
Philippines. Each case must be judged in the light of its peculiar
32
circumstances.[28] Thus, it has often been held that a single act or transaction It sought to foreclose the following real estate mortgage contracts executed by the
may be considered as doing business when a corporation performs acts for spouses Ramon and Natividad Nisce over two parcels of land covered by Transfer
which it was created or exercises some of the functions for which it was Certificate of Title (TCT) Nos. S-83466 and S-83467 of the Registry of Deeds of
organized. The amount or volume of the business is of no moment, for even a Rizal: one dated February 26, 1974; two (2) sets of "Additional Real Estate Mortgage"
singular act cannot be merely incidental or casual if it indicates the foreign dated September 27, 1978 and June 3, 1996; and an "Amendment to Real Estate
corporations intention to do business.[29] Mortgage" dated February 28, 2000. The mortgage contracts were executed by the
Participating in the bidding process constitutes doing business because it spouses Nisce to secure their obligation under Promissory Note Nos. 1042793 and
shows the foreign corporations intention to engage in business here. The BD-150369, including a Suretyship Agreement executed by Natividad. The
bidding for the concession contract is but an exercise of the corporations reason obligation of the Nisce spouses totaled ₱34,087,725.76 broken down as follows:
for creation or existence.Thus, it has been held that a foreign company invited Spouses Ramon & Natividad Nisce - - - - - ₱17,422,285.99
to bid for IBRD and ADB international projects in the Philippines will be Natividad P. Nisce (surety) - - - - - - - - - - US$57,306.59
considered as doing business in the Philippines for which a license is
required. In this regard, it is the performance by a foreign corporation of the and - - - - - - - - - - - - ₱16,665,439.772
acts for which it was created, regardless of volume of business, that determines On December 2, 2002, the Ex-Officio Sheriff set the sale at public auction at 10:00
whether a foreign corporation needs a license or not.[30] a.m. on January 14, 2003,3 or on January 30, 2003 in the event the public auction
The primary purpose of the license requirement is to compel a foreign would not take place on the earlier setting.
corporation desiring to do business within the Philippines to submit itself to the On January 28, 2003, the Nisce spouses filed before the RTC of Makati City a
jurisdiction of the courts of the state and to enable the government to exercise complaint for "nullity of the Suretyship Agreement, damages and legal
jurisdiction over them for the regulation of their activities in this country.[31] If compensation" with prayer for injunctive relief against the Bank and the Ex-Officio
a foreign corporation operates a business in the Philippines without a license, Sheriff. They alleged the following: in a letter4 dated December 7, 2000 they had
and thus does not submit itself to Philippine laws, it is only just that said foreign requested the bank (through their lawyer-son Atty. Rosanno P. Nisce) to setoff the
corporation be not allowed to invoke them in our courts when the need peso equivalent of their obligation against their US dollar account with PCI Capital
arises. While foreign investors are always welcome in this land to collaborate Asia Limited (Hong Kong), a subsidiary of the Bank, under Certificate Deposit No.
with us for our mutual benefit, they must be prepared as an indispensable 016125 and Account No. 090-0104 (Passbook No. 83-3041);6 the Bank accepted
condition to respect and be bound by Philippine law in proper cases, as in the their offer and requested for an estimate of the balance of their account; they complied
one at bar.[32] The requirement of a license is not intended to put foreign with the Bank’s request and in a letter dated February 11, 2002, informed it that the
corporations at a disadvantage, for the doctrine of lack of capacity to sue is estimated balance of their account as of December 1991 (including the 11.875% per
based on considerations of sound public policy.[33] Accordingly, petitioner annum interest) was US$51,000.42,7 and that as of December 2002, Natividad’s US
HPPL must be held to be incapacitated to bring this petition for injunction dollar deposit with it amounted to at least ₱9,000,000.00; they were surprised when
before this Court for it is a foreign corporation doing business in the Philippines they received a letter from the Bank demanding payment of their loan account, and
without the requisite license. later a petition for extrajudicial foreclosure.
WHEREFORE, in view of all the foregoing, the instant petition is The spouses Nisce also pointed out that the petition for foreclosure filed by the Bank
hereby DISMISSED for lack of merit. Further, the temporary restraining order included the alleged obligation of Natividad as surety for the loan of Vista Norte
issued on December 3, 1997 is LIFTED and SET ASIDE. No costs. Trading Corporation, a company owned and managed by their son Dino Giovanni P.
SO ORDERED. Nisce (₱16,665,439.77 and US$57,306.59). They insisted, however, that the
suretyship agreement was null and void for the following reasons:
G.R. No. 167434 February 19, 2007
(a) x x x [I]t was executed without the knowledge and consent of plaintiff
SPOUSES RAMON M. NISCE and A. NATIVIDAD PARAS- Ramon M. Nisce, who is by law the administrator of the conjugal
NISCE, Petitioners, partnership;
vs.
EQUITABLE PCI BANK, INC., Respondent. (b) The suretyship agreement did not redound to the benefit of the conjugal
partnership and therefore did not bind the same;
(c) Assuming, arguendo, that the suretyship contract was valid and binding,
DECISION any obligation arising therefrom is not covered by plaintiffs’ real estate
CALLEJO, SR., J.: mortgages which were constituted to secure the payment of certain specific
obligations only.8
On November 26, 2002, Equitable PCI Bank1 (Bank) as creditor-mortgagee
filed a petition for extrajudicial foreclosure before the Office of the Clerk of
Court as Ex-Officio Sheriff of the Regional Trial Court (RTC) of Makati City.
The spouses Nisce likewise alleged that since they and the Bank were creditors
and debtors with respect to each other, their obligations should have been
offset by legal compensation to the extent of their account with the Bank.
To support their plea for a writ of preliminary and prohibitory injunction, the
spouses Nisce alleged that the amount for which their property was being sold
at public auction (₱34,087,725.76) was grossly excessive; the US dollar
deposit of Natividad with PCI Capital Asia Ltd. (Hong Kong), and the
obligation covered by the suretyship agreement had not been deducted. They
insisted that their property rights would be violated if the sale at public auction
would push through. Thus, the spouses Nisce prayed that they be granted the
following reliefs:
(1) that upon the filing of this Complaint and/or after due notice and
summary hearing, the Honorable Court immediately issue a
temporary restraining order (TRO) restraining defendants, their
representatives and/or deputies, and other persons acting for and on
their behalf from proceeding with the extrajudicial foreclosure sale
of plaintiffs’ mortgaged properties on 30 January 2003 or on any
other dates subsequent thereto;
(2) that after due notice and hearing and posting of the appropriate
bond, the Honorable Court convert the TRO to a writ of preliminary
prohibitory injunction;
(3) that after trial on the merits, the Honorable Court render
judgment –
(a) making the preliminary injunction final and permanent;
(b) ordering defendant Bank to set off the present peso
value of Mrs. Nisce’s US dollar time deposit, inclusive of
stipulated interest, against plaintiffs’ loan obligations with
defendant Bank;
(c) declaring the Deed of Suretyship dated 25 May 1998
null and valid and without any binding effect as to plaintiff
spouses, and ordering defendant Bank to exclude the
amounts covered by said suretyship contract from
plaintiffs’ obligations with defendant Bank;
(d) ordering defendant Bank to pay plaintiffs the following
sums:
(i) at least ₱3,000,000.00 as moral damages;
(ii) at least ₱1,500,000.00 as exemplary
damages; and
(iii) at least ₱500,000.00 as attorney’s fees and
for other expenses of litigation.
Plaintiffs further pray for costs of suit and such other reliefs as may be deemed
just and equitable.9
On same day, the Bank filed an "Amended Petition" with the Office of the
Executive Judge for extrajudicial foreclosure of the Real Estate Mortgage to
satisfy the spouses’ loan account of ₱30,533,552.24, exclusive of interests,
33
penalties and other charges; and the amounts of ₱16,665,439.77 and 22, 1984, thereafter to be payable at the office of the depositary in Hong Kong upon
US$57,306.59 covered by the suretyship agreement executed by Natividad presentation of the Certificate of Deposit.
Nisce.10 In June 1991, two sons of the Nisce spouses were stranded in Hong Kong. Natividad
In the meantime, the parties agreed to have the sale at public auction reset to called the Bank and requested for a partial release of her dollar deposit to her sons.
January 30, 2003. However, she was informed that according to its computer records, no such dollar
In its Answer to the complaint, the Bank alleged that the spouses had no cause account existed. Sometime in November 1991, she submitted her US dollar passbook
of action for legal compensation since PCI Capital was a different corporation with a xerox copy of the Certificate of Deposit for the PCIB to determine the
with a separate and distinct personality; if at all, offsetting may occur only with whereabouts of the account.27 She reiterated her request to the Bank on January 27,
respect to the spouses’ US$500.00 deposit account in its Paseo de Roxas branch. 199228 and September 11, 2000.29
In the meantime, in 1994, the Equitable Banking Corporation and the PCIB were
In the meantime, the Ex-Officio Sheriff set the sale at public auction at 10:00
a.m. on March 5 and 27, 2003.11 The spouses Nisce then filed a Supplemental merged under the corporate name Equitable PCI Bank.
Complaint with plea for a temporary restraining order to enjoin the sale at public In a letter dated December 7, 2000, Natividad confirmed to the Bank, through Ms.
auction.12 Thereafter, the RTC conducted hearings on the plaintiffs’ plea for a Shellane R. Casaysayan, her offer to settle their loan account by offsetting the peso
temporary restraining order, and the parties adduced testimonial and equivalent of her dollar account with PCI Capital under Account No. 090-
documentary evidence on their respective arguments. 0104.30 Their son, Atty. Rosanno Nisce, later wrote the Bank, declaring that the
estimated balance of the US dollar account with PCI Capital as of December 1991
The Case for the Spouses Nisce
was US$51,000.42.31 Atty. Nisce corroborated this in his testimony, and stated that
Natividad frequently traveled abroad and needed a facility with easy access to Ms. Casaysayan had declared that she would refer the matter to her superiors.32 A
foreign exchange. She inquired from E.P. Nery, the Bank Manager for PCI certain Rene Esteven also told him that another offer to setoff his parents’ account
Bank Paseo de Roxas Branch, about opening an account. He assured her that had been accepted, and he was assured that its implementation was being
she would be able to access it from anywhere in the world. She and Nery also processed.33 On cross examination, Atty. Nisce declared that there was no response
agreed that any balance of account remaining at maturity date would be rolled to his request for setoff,34 and that Esteven assured him that the Bank would look for
over until further instructions, or until she terminated the facility.13Convinced,
the records of his mother’s US dollar savings deposit.35 He was later told that the
Natividad deposited US$20,500.00 on July 19, 1984, and was issued Passbook Bank had accepted the offer to setoff the account.36
No. 83-3041.14 Upon her request, the bank transferred the US$20,000.00 to
PCI Capital Asia Ltd. in Hong Kong via cable order.15 The Case for the Bank
On July 11, 1996, the spouses Nisce secured a ₱20,000,000.00 loan from the The Bank adduced evidence that, as of January 31, 2003, the balance of the spouses’
Bank under Promissory Note No. BD-150369.16 The maturity date of the loan account under the two promissory notes, including interest and penalties, was
was July 11, 2001, payable in monthly installments at 16.731% interest per ₱30,533,552.24.37 It had agreed to restructure their loans on March 31, 1998, but
annum. To secure the payment of the loan account, they executed an they nevertheless failed to pay despite repeated demands.38 The spouses had also
been furnished with a statement of their account as of June 2001. Thus, under the
Amendment to the Real Estate Mortgage over the properties17 located in
Makati City covered by TCT Nos. S-83466 and S-83467.18 They later secured terms of the Real Estate Mortgage and Promissory Notes, it had the right to the
remedy of foreclosure. It insisted that there is no showing in its records that the
another loan of ₱13,089,936.90 on March 1, 2000 (to mature on March 1, 2005)
payable quarterly at 13.9869% interest per annum; this loan agreement is spouses had delivered checks amounting to ₱4,600,000.00.39
evidenced by Promissory Note (PN) No. 104279319 and covered by a Real According to the Bank, Natividad’s US$20,000.00 deposit with the PCIB Paseo de
Estate Mortgage20 executed on February 28, 2000. They made a partial Roxas branch was transferred to PCI Capital via cable order,40 and that it later issued
payment of ₱13,866,666.50 on the principal of their loan account covered by Certificate of Deposit No. 01612 (Non-transferrable).41 In a letter dated May 9, 2001,
PN No. BD-150369, and ₱5,348,239.82 on the interests.21 These payments are it informed Natividad that it had acted merely as a conduit in facilitating the transfer
evidenced by receipts and checks.22 However, there were payments totaling of the funds, and that her deposit was made with PCI Capital and not with PCIB. PCI
₱4,600,000.00 received by the Bank but were not covered by checks or Capital had a separate and distinct personality from the PCIB, and a claim against the
receipts.23 As of September 2000, the balance of their loan account under PN former cannot be made against the latter. It was later advised that PCI Capital had
No. BD-150369 was only ₱4,333,333.46.24 They also made partial payment on already ceased operations.42
their loan account under PN No. 1042793 which, as of May 30, 2001, amounted The spouses Nisce presented rebuttal documentary evidence to show that PCI Capital
to ₱2,218,793.61.25 was registered in Hong Kong as a corporation under Registration No. 84555 on
On July 20, 1984, PCI Capital issued Certificate of Deposit No. CD- February 27, 198943 with an authorized capital stock of 50,000,000 (with par value
01612;26 proof of receipt of the US$20,000.00 transferred to it by PCI Bank of HKD1.00); the PCIB subscribed to 29,039,993 issued shares at the par value of
Paseo de Roxas Branch as requested by Natividad. The deposit account was to HKD1.00 per share;44 on October 25, 2004, the corporate name of PCI Capital was
earn interest at the rate of 11.875% per annum, and would mature on October
changed to PCI Express Padala (HK) Ltd.;45 and the stockholdings of PCIB
remained at 29,039,999 shares.46
On March 24, 2003, the RTC issued an Order47 granting the spouses Nisce’s
plea for a writ of preliminary injunction on a bond of ₱10,000,000.00. The
dispositive portion of the Order reads:
WHEREFORE, in order not to render the judgment ineffectual, upon filing by
the plaintiffs and the approval thereof by the court of a bond in the amount of
Php10,000,000.00, which shall answer for any damage should the court finally
decide that plaintiffs are not entitled thereto, let a writ of preliminary
injunction issue enjoining defendants Equitable-PCI Bank, Atty. Engracio M.
Escasinas, Jr., and any person or entity acting for and in their behalf from
proceeding with the extrajudicial foreclosure sale of TCT Nos. 437678 and
437679 registered in the names of the plaintiffs.48
After weighing the parties’ arguments along with their documentary evidence,
the RTC declared that justice would be best served if a writ of preliminary
injunction would be issued to preserve the status quo. It had yet to resolve the
issue of setoff since only Natividad dealt with the Bank regarding her dollar
account. It also had to resolve the issue of whether the Bank had failed to credit
the amount of ₱4,600,000.00 to the spouses Nisce’s account under PN No.
BD-150369, and their claim that the Bank had effectively accelerated the
respective maturity dates of their loan.49The spouses Nisce posted the
requisite bond which was approved by the RTC.1awphi1.net
The Bank opted not to file a motion for reconsideration of the order, and
instead assailed the trial court’s order before the CA via petition for certiorari
under Rule 65 of the Rules of Court. The Bank alleged that the RTC had acted
without or in excess of its jurisdiction, or with grave abuse of its discretion
amounting to lack or excess of jurisdiction when it issued the assailed
order;50 the spouses Nisce had failed to prove the requisites for the issuance
of a writ of preliminary injunction; respondents’ claim that their account with
petitioner had been extinguished by legal compensation has no factual and
legal basis. It further asserted that according to the evidence, Natividad made
the US$20,000.00 deposit with PCI Capital before it merged with Equitable
Bank – hence, the Bank was not the debtor of Natividad relative to the dollar
account. The Bank cited the ruling of this Court in Escaño v. Heirs of Escaño
and Navarro51 to support its arguments. It insisted that the spouses Nisce had
failed to establish "irreparable injury" in case of denial of their plea for
injunctive relief.
The spouses, for their part, pointed out that the Bank failed to file a motion for
reconsideration of the trial court’s order, a condition sine qua non to the filing
of a petition for certiorari under Rule 65 of the Rules of Court. Moreover, the
error committed by the trial court is a mere error of judgment not correctible
by certiorari; hence, the petition should have been dismissed outright by the
CA. They reiterated their claim that they had made a partial payment of
₱4,600,000.00 on their loan account which petitioner failed to credit in their
favor. The Bank had agreed to debit their US dollar savings deposit in the PCI
Capital as payment of their loan account. They insisted that they had never
deposited their US dollar account with PCI Capital but with the Bank, and that
34
they had never defaulted on their loan account. Contrary to the Bank’s claim, DESPITE THE BANK’S FAILURE TO FILE A MOTION FOR
they would have suffered irreparable injury had the trial court not enjoined the RECONSIDERATION WITH THE TRIAL COURT.
extrajudicial foreclosure of the real estate mortgage. 5.2. THE HONORABLE COURT OF APPEALS COMMITTED
On December 22, 2004, the CA rendered judgment granting the petition and REVERSIBLE ERROR WHEN IT PREMATURELY RULED ON THE
nullifying the assailed Order of the RTC.52 The appellate court declared that a MERITS OF THE MAIN CASE.
petition for certiorari under Rule 65 of the Rules of Court may be filed despite 5.3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
the failure to file a motion for reconsideration, particularly in instances where THAT RESPONDENT JUDGE HAD COMMITTED GRAVE ABUSE OF
the issue raised is one of law; where the error is patent; the assailed order is DISCRETION AMOUNTING TO LACK OR EXCESS OF
void, or the questions raised are the same as those already ruled upon by the JURISDICTION IN ISSUING A TEMPORARY RESTRAINING ORDER
lower court. According to the appellate court, the issue raised before it was AND A WRIT OF PRELIMINARY INJUNCTION IN FAVOR OF THE
purely one of law: whether the loan account of the spouses was extinguished by SPOUSES NISCE.54
legal compensation. Thus, a motion for the reconsideration of the assailed order
was not a prerequisite to a petition for certiorari under Rule 65. Petitioners aver that the CA erred in not dismissing respondent Bank’s petition for
certiorari outright because of the absence of a condition precedent: the filing of a
The appellate court further declared that the trial court committed grave abuse motion for reconsideration of the assailed Order of the RTC before filing the petition
of its discretion in issuing the assailed order, since no plausible reason was for certiorari in the CA. They insist that respondent bank’s failure to file a motion for
given by the spouses Nisce to justify the injunction of the extrajudicial reconsideration of the assailed Order deprived the RTC of its option to resolve the
foreclosure of the real estate mortgage. Given their admission that they had not issue of whether it erred in issuing the writ of preliminary injunction in their favor.
settled the obligations secured by the mortgage, the Bank had a clear right to
seek the remedy of foreclosure. Petitioners insist that in resolving whether a petition for a writ of preliminary
injunction should be granted, the trial court and the appellate court are not to resolve
The CA further declared as devoid of factual basis the spouses Nisce’s argument the merits of the main case. In this case, however, the CA resolved the bone of
that the Bank should have applied, by way of legal compensation, the peso contention of the parties in the trial court: whether the loan account of petitioners with
equivalent of their time deposit with PCI Capital as partial settlement of their respondent bank had been extinguished by legal compensation against petitioner
obligations. It held that for compensation to take place, the requirements set Natividad Nisce’s US dollar savings account with PCI Capital in Hong Kong. The
forth in Articles 1278 and 1279 of the Civil Code of the Philippines must be CA reversed the assailed order of the trial court by resolving the main issue in the
present; in this case, the parties are not mutually creditors and debtors of each trial court on its merits, and declaring that the US dollar savings deposit of the
other. It pointed out that the time deposit which the spouses Nisce sought to petitioner Natividad Nisce with the PCI Capital cannot be used to offset the loan
offset against their obligations to the Bank is maintained with PCI Capital. Even account of petitioners with respondent bank. In fine, according to petitioners, the CA
if PCI Capital is a subsidiary of the Bank, compensation cannot validly take preempted the ruling of the RTC on the main issue even before the parties could be
place because the Bank and PCI Capital are two separate and distinct given an opportunity to complete the presentation of their respective evidences.
corporations. It pointed out the settled principle "that a corporation has a Petitioners point out that in the assailed Order, the RTC declared that to determine
personality separate and distinct from its stockholders and from other whether respondent had credited petitioners for the amount of ₱4,600,000.00 under
corporations to which it may be connected." PN No. BD-150369 and whether respondent as mortgagee-creditor accelerated the
The CA further declared that the alleged ₱4,600,000.00 payment on PN No. maturities of the two (2) promissory notes executed by petitioner, there was a need
BD-150369 was not pleaded in the spouses’ complaint and supplemental for a full-blown trial and an exhaustive consideration of the evidence of the parties.
complaint before the court a quo. What they alleged, aside from legal Petitioners further insist that a petition for a writ of certiorari is designed solely to
compensation, was that the mortgage is not liable for the obligation of Natividad correct errors of jurisdiction and not errors of judgment, such as errors in the findings
Nisce as surety for the loans obtained by a trading firm owned and managed by and conclusions of the trial court. Petitioners maintain that the trial court’s erroneous
their son. The CA further pointed out that the Bank precisely amended the findings and conclusions (according to respondent bank) are not the proper subjects
petition for foreclosure sale by deleting the claim for Natividad’s obligation as for a petition for certiorari. Contrary to the findings of the CA, they did not admit in
surety. The appellate court concluded that the injunctive writ was issued by the the trial court that they were in default in the payment of their loan obligations. They
RTC without factual and legal basis.53 had always maintained that they had no outstanding obligation to respondent bank
The spouses Nisce moved to have the decision reconsidered, but the appellate precisely because their loan account had been offset by the US dollar deposit of
court denied the motion. They thus filed the instant petition for review on the petitioner Natividad Nisce, and that they had made check payments of ₱4,600,000.00
following grounds: which respondent bank had not credited in their favor. Likewise erroneous is the CA
5.1. THE HONORABLE COURT OF APPEALS ERRED IN ruling that they would not suffer irreparable damage or injury if their properties would
TAKING COGNIZANCE OF THE PETITION FOR CERTIORARI be sold at public auction following the extrajudicial foreclosure of the mortgage.
Petitioners point out that their conjugal home stands on the subject properties and
would be lost if sold at public auction. Besides, petitioners aver, the injury to
respondent bank resulting from the issuance of a writ of preliminary injunction
is amply secured by the ₱10,000,000.00 injunction bond which they had
posted.
For its part, respondent avers that, as held by the CA, the requirement of the
filing of a motion for reconsideration of the assailed Order admits of
exceptions, such as where the issue presented in the appellate court is the same
issue presented and resolved by the trial court. It insists that petitioners failed
to prove a clear legal right to injunctive relief; hence, the trial court committed
grave abuse of discretion in issuing a writ of preliminary injunction.
Respondent maintains that the sole issue involved in the petition for certiorari
of respondent in the CA was whether or not the trial court committed grave
abuse of its discretion in issuing the writ of preliminary injunction.
Necessarily, the CA would have to delve into the circumstances behind such
issuance. In so doing, the CA had to consider and calibrate the testimonial and
documentary evidence adduced by the parties. However, the RTC and the CA
did not resolve with finality the threshold factual and legal issue of whether
the loan account of petitioners had been paid in full before it filed its petition
for extrajudicial foreclosure of the real estate mortgage.
The Ruling of the Court
The Petition in the
Court of Appeals
Not Premature
The general rule is that before filing a petition for certiorari under Rule 65 of
the Rules of Court, the petitioner is mandated to comply with a condition
precedent: the filing of a motion for reconsideration of the assailed order, and
the subsequent denial of the court a quo. It must be stressed that a petition for
certiorari is an extraordinary remedy and should be filed only as a last resort.
The filing of a motion for reconsideration is intended to afford the public
respondent an opportunity to correct any actual error attributed to it by way of
re-examination of the legal and factual issues.55 However, the rule is subject
to the following recognized exceptions:
(a) where the order is a patent nullity, as where the court a quo has no
jurisdiction; (b) where the questions raised in the certiorari proceeding have
been duly raised and passed upon by the lower court, or are the same as those
raised and passed upon in the lower court; (c) where there is an urgent
necessity for the resolution of the question and any further delay would
prejudice the interests of the Government or of the petitioner or the subject
matter of the action is perishable; (d) where, under the circumstances, a motion
for reconsideration would be useless; (e) where petitioner was deprived of due
process and there is extreme urgency for relief; (f) where, in a criminal case,
relief from an order of arrest is urgent and the granting of such relief by the
trial court is improbable; (g) where the proceedings in the lower court are a
nullity for lack of due process; (h) where the proceedings was ex parte or in
which the petitioner had no opportunity to object; and (i) where the issue raised
is one purely of law or public interest is involved.56
35
As will be shown later, the March 24, 2003 Order of the trial court granting issuance of a writ of preliminary injunction will be nullified. Thus, where the
petitioner’s plea for a writ of preliminary injunction was issued with grave plaintiff’s right is doubtful or disputed, a preliminary injunction is not proper. The
abuse of discretion amounting to excess or lack of jurisdiction and thus a nullity. possibility of irreparable damage without proof of an actual existing right is not a
If the trial court issues a writ of preliminary injunction despite the absence of ground for a preliminary injunction.60
proof of a legal right and the injury sustained by the plaintiff, the writ is a However, to establish the essential requisites for a preliminary injunction, the
nullity.57 evidence to be submitted by the plaintiff need not be conclusive and complete.61 The
Petitioners Are Not plaintiffs are only required to show that they have an ostensible right to the final relief
Entitled to a Writ of prayed for in their complaint.62 A writ of preliminary injunction is generally based
Preliminary Prohibitory solely on initial or incomplete evidence.63 Such evidence need only be a sampling
Injunction intended merely to give the court an evidence of justification for a preliminary
Section 3, Rule 58 of the Rules of Court provides that a preliminary injunction injunction pending the decision on the merits of the case, and is not conclusive of the
may be granted when the following have been established: principal action which has yet to be decided.64
(a) That the applicant is entitled to the relief demanded, and the whole It bears stressing that findings of the trial court granting or denying a petition for a
or part of such relief consists in restraining the commission or writ of preliminary injunction based on the evidence on record are merely provisional
continuance of the act or acts complained of, or in requiring the until after the trial on the merits of the case shall have been concluded.65
performance of an act or acts, either for a limited period or The trial court, in granting or dismissing an application for a writ of preliminary
perpetually; injunction based on the pleadings of the parties and their respective evidence must
state in its order the findings and conclusions based on the evidence and the law. This
(b) That the commission, continuance or nonperformance of the act
or acts complained of during the litigation would probably work is to enable the appellate court to determine whether the trial court committed grave
injustice to the applicant; or abuse of its discretion amounting to excess or lack of jurisdiction in resolving, one
way or the other, the plea for injunctive relief. The trial court’s exercise of its judicial
(c) That a party, court, agency or a person is doing, threatening, or is discretion whether to grant or deny an application for a writ of preliminary injunction
attempting to do, or is procuring or suffering to be done, some act or
involves the assessment and evaluation of the evidence, and its findings of facts are
acts probably in violation of the rights of the applicant respecting the ordinarily binding and conclusive on the appellate court and this Court.66
subject of the action or proceeding, and tendering to render the
judgment ineffectual. We agree with respondent’s contention that as creditor-mortgagee, it has the right
under the real estate mortgage contract and the amendment thereto to foreclose
The grant of a preliminary injunction in a case rests on the sound discretion of extrajudicially, the real estate mortgage and sell the property at public auction,
the court with the caveat that it should be made with great caution. The exercise considering that petitioners had failed to pay their loans, plus interests and other
of sound judicial discretion by the lower court should not be interfered with incremental amounts as provided for in the deeds. Petitioners contend, however, that
except in cases of manifest abuse. Injunction is a preservative remedy for the if respondent bank extrajudicially forecloses the real estate mortgage and has
protection of the parties’ substantive rights and interests. The sole aim of a petitioners’ property sold at public auction for an amount in excess of the balance of
preliminary injunction is to preserve the status quo within the last actual status their loan account, petitioner’s contractual and substantive rights under the real estate
that preceded the pending controversy until the merits of the case can be heard mortgage would be violated; in such a case, the extrajudicial foreclosure sale may be
fully. Moreover, a petition for a preliminary injunction is an equitable remedy, enjoined by a writ of preliminary injunction.
and one who comes to claim for equity must do so with clean hands. It is to be
resorted to by a litigant to prevent or preserve a right or interest where there is Respondent bank sought the extrajudicial foreclosure of the real estate mortgage and
a pressing necessity to avoid injurious consequences which cannot be remedied was to sell the property at public auction for ₱30,533,552.24. The amount is based on
under any standard of compensation. A petition for a writ of preliminary Promissory Notes No. 1042793 and BD-150369, interests, penalty charges, and
injunction rests upon an alleged existence of an emergency or of a special attorney’s fees, as of January 31, 2003, exclusive of all interests, penalties, other
reason for such a writ before the case can be regularly tried. By issuing a writ charges, and foreclosure costs accruing thereafter.67 Petitioners asserted before the
of preliminary injunction, the court can thereby prevent a threatened or trial court that respondents sought the extrajudicial foreclosure of the mortgaged deed
continued irreparable injury to the plaintiff before a judgment can be rendered for an amount far in excess of what they owed, because the latter failed to credit
on the claim.58 ₱4,600,000.00 paid in checks but without any receipts having been issued therefor;
and the ₱9,000,000.00 peso equivalent of the US$20,000.00 deposit of petitioner
The plaintiff praying for a writ of preliminary injunction must further establish Natividad Nisce with PCIB under Passbook No. 83-3041 and Certificate of Deposit
that he or she has a present and unmistakable right to be protected; that the facts No. CD-01612 issued by PCI Capital on July 23, 1984. Petitioners maintain that the
against which injunction is directed violate such right;59 and there is a special US$20,000.00 dollar deposit should be setoff against their account with respondent
and paramount necessity for the writ to prevent serious damages. In the absence
of proof of a legal right and the injury sustained by the plaintiff, an order for the
against their loan account, on their claim that respondent is their debtor insofar
as said deposit is concerned.
It was the burden of petitioners, as plaintiffs below, to adduce preponderant
evidence to prove their claim that respondent bank was the debtor of petitioner
Natividad Nisce relative to her dollar deposit with PCIB, and later transferred
to PCI Capital in Hong Kong, a subsidiary of respondent Bank. Petitioners,
however, failed to discharge their burden.
Under Article 1278 of the New Civil Code, compensation shall take place
when two persons, in their own right, are creditors and debtors of each other.
In order that compensation may be proper, petitioners were burdened to
establish the following:
(1) That each one of the obligors be bound principally, and that he
be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due
are consumable, they be of the same kind, and also of the same
quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the
debtor.68
Compensation takes effect by operation of law when all the requisites
mentioned in Article 1279 of the New Civil Code are present and extinguishes
both debts to the concurrent amount even though the creditors and debtors are
not aware of the compensation. Legal compensation operates even against the
will of the interested parties and even without their consent.69 Such
compensation takes place ipso jure; its effects arise on the very day on which
all requisites concur.70
As its minimum, compensation presupposes two persons who, in their own
right and as principals, are mutually indebted to each other respecting equally
demandable and liquidated obligations over any of which no retention or
controversy commenced and communicated in due time to the debtor exists.
Compensation, be it legal or conventional, requires confluence in the parties
of the characters of mutual debtors and creditors, although their rights as such
creditors or their obligations as such debtors need not spring from one and the
same contract or transaction.71
Article 1980 of the New Civil Code provides that fixed, savings and current
deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loans. Under Article 1953, of the same Code, a
person who secures a loan of money or any other fungible thing acquires the
ownership thereof, and is bound to pay the creditor an equal amount of the
same kind and quality. The relationship of the depositors and the Bank or
similar institution is that of creditor-debtor. Such deposit may be setoff against
the obligation of the depositor with the bank or similar institution.
36
When petitioner Natividad Nisce deposited her US$20,500.00 with the PCIB legal duty, or dishonest and unjust act in contravention of plaintiff’s legal
on July 19, 1984, PCIB became the debtor of petitioner. However, when upon rights; and
petitioner’s request, the amount of US$20,000.00 was transferred to PCI Capital 3. The aforesaid control and breach of duty must proximately cause the
(which forthwith issued Certificate of Deposit No. 01612), PCI Capital, in turn, injury or unjust loss complaint of.
became the debtor of Natividad Nisce. Indeed, a certificate of deposit is a
written acknowledgment by a bank or borrower of the receipt of a sum of money The Court emphasized that the absence of any one of these elements prevents
"piercing the corporate veil." In applying the "instrumentality" or "alter ego" doctrine,
or deposit which the Bank or borrower promises to pay to the depositor, to the
order of the depositor; or to some other person; or to his order whereby the the courts are concerned with reality and not form, with how the corporation operated
relation of debtor and creditor between the bank and the depositor is and the individual defendant’s relationship to that operation.78
created.72 The issuance of a certificate of deposit in exchange for currency Petitioners failed to adduce sufficient evidence to justify the piercing of the veil of
creates a debtor-creditor relationship.73 corporate entity and render respondent Bank liable for the US$20,000.00 deposit of
Admittedly, PCI Capital is a subsidiary of respondent Bank. Even then, PCI petitioner Natividad Nisce as debtor.
Capital [PCI Express Padala (HK) Ltd.] has an independent and separate On hindsight, petitioners could have spared themselves the expenses and tribulation
juridical personality from that of the respondent Bank, its parent company; of a litigation had they just withdrawn their deposit from the PCI Capital and remitted
hence, any claim against the subsidiary is not a claim against the parent the same to respondent. However, petitioner insisted on their contention of setoff.
company and vice versa.74 The evidence on record shows that PCIB, which On the ₱4,600,000.00 paid in checks allegedly remitted by petitioners to respondent
had been merged with Equitable Bank, owns almost all of the stocks of PCI in partial payment of their loan account, petitioners failed to adduce in evidence the
Capital. However, the fact that a corporation owns all of the stocks of another checks to show that, indeed, the checks were drawn by petitioners and delivered to
corporation, taken alone, is not sufficient to justify their being treated as one respondent, and that respondent was able to cash the checks. The only evidence
entity. If used to perform legitimate functions, a subsidiary’s separate existence adduced by petitioners is a piece of paper listing the serial numbers of the checks and
shall be respected, and the liability of the parent corporation, as well as the the amount of each check:
subsidiary shall be confined to those arising in their respective business.75 A
corporation has a separate personality distinct from its stockholders and from PAYMENTS MADE & RECEIVED BY EBC BUT W/O RECEIPTS
other corporations to which it may be conducted. This separate and distinct
1. Dec. 29, 1997 - EBC-0000039462 - ₱2,000,000.00
personality of a corporation is a fiction created by law for convenience and to
prevent injustice.
2. Jan. 22, 1998 - EBC-213016118C - 1,000,000.00
This Court, in Martinez v. Court of Appeals76 held that, being a mere fiction
of law, peculiar situations or valid grounds can exist to warrant, albeit sparingly, 3. Feb. 24, 1998 - UB -0000074619 - 800,000.00
the disregard of its independent being and the piercing of the corporate veil. The
veil of separate corporate personality may be lifted when, inter alia, the 4. Mar. 23, 1998 - EBC-213016121C - 800,000.00
corporation is merely an adjunct, a business conduit or an alter ego of another
corporation or where the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an instrumentality, agency, conduit 79
or adjunct of another corporation; or when the corporation is used as a cloak or
cover for fraud or illegality; or to work injustice; or where necessary to achieve IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
equity or for the protection of the creditors. In those cases where valid grounds The Decision of the Court of Appeals is AFFIRMED. Costs against petitioners.
exist for piercing the veil of corporate entity, the corporation will be considered
SO ORDERED.
as a mere association of persons. The liability will directly attach to them.77
G.R. No. L-31135 May 29, 1970
The Court likewise declared in the same case that the test in determining the
THE DIRECTOR OR OFFICER-IN-CHARGE OF THE BUREAU OF
application of the instrumentality or alter ego doctrine is as follows:
TELECOMMUNICATIONS, LEON CERVANTES, in his capacity as Regional
1. Control, not mere majority or complete stock control, but complete
Superintendent of Region IV, Bureau of Telecommunications, Iloilo City, and
dominion, not only of finances but of policy and business practice in
VIVENCIO ALAGBAY, in his capacity as Chief Operator, Bureau of
respect to the transaction attacked so that the corporate entity as to
Telecommunications, Roxas City, petitioners,
this transaction had at the time no separate mind, will or existence of
vs.
its own;
HON. JOSE A. ALIGAEN, in his capacity as Judge of the Court of First Instance
2. Such control must have been used by the defendant to commit fraud of Capiz, Branch II, and JOSE, M. F. BELO, respondents.
or wrong, to perpetuate the violation of a statutory or other positive
Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor General
Conrado T. Limcaoco and Solicitor Pedro A. Ramirez for petitioners.
Siguion Reyna, Montecillo, Belo & Ongsiako for respondent Jose M. F. Belo.
ZALDIVAR, J.:
On August 1, 1969, herein respondent Jose M. F. Belo filed with the Court of
First Instance of Capiz, presided over by respondent Judge Jose A. Aligaen, a
verified petition captioned "Injunction with Preliminary Injunction" (Civil
Case No. V-3192), naming as respondents therein the Director of the Bureau
of Telecommunications, Leo Cervantes, the Regional Superintendent of
Region IV of the Bureau of Telecommunications with station in Iloilo City,
and their agents and/or representatives acting in their behalf, and Vivencio
Alagbay, Chief Operator of the Bureau of Telecommunications in Roxas City.
The petitioner alleged that he, Belo, was the grantee of a Congressional
franchise, Republic Act No. 2957, as amended, to establish, maintain and
operate a telephone system in Roxas City and in the province of Capiz, which
franchise was confirmed and given effect by the order, dated June 26, 1961, of
the Public Service Commission; that pursuant to said franchise he had put up
in Roxas City, since July, 1961, at a cost of P417,041.27, an automatic
telephone system which had been operating and rendering good service with
410 telephones and sufficient reserves for additional lines when needed; that
the Bureau of Telecommunications, through therein respondents, was starting
to establish, maintain and operate in the same geographical area of Roxas City
another local telephone system which would directly compete with, and
seriously prejudice, the telephone system that he was already operating and
would render ineffective his franchise; that the Bureau of Telecommunications
was not authorized to establish an additional local telephone system in places
where there was no demand for it, as in Roxas City, that no prior inquiry was
ever made by the authorities concerned if there was any need for another
telephone system in Roxas City; that therein respondents had never attempted
to negotiate with him for the use of his facilities in conjunction with the
national hook-up of a telephone system; that the telephone system that he was
operating was already connected with the Philippine Long Distance Telephone
Company, which is a national system; and that he would suffer serious and
irreparable loss and injury if therein respondents would go ahead with the
establishment of a new telephone system. Belo then prayed the Court of First
Instance of Capiz that due to the urgency of the matter a writ of preliminary
injunction be issued ex parte, enjoining therein respondents from establishing
another local telephone system in Roxas City; that after hearing, the writ be
made permanent; and that damages be assessed against therein respondents in
their personal and individual capacities.
On the same day, August 1, 1969, Judge Jose A. Aligaen of the Court of First
Instance of Capiz, entered an order authorizing the issuance of the writ of
preliminary injunction prayed for upon Belo's posting a bond of P5,000, and,
accordingly, a writ of preliminary injunction was issued, restraining therein
respondents, their agents, and representatives, from further committing and
37
continuing the acts complained of, and from constructing another telephone respondents, the subject matter of the action, and the nature of the action; and (2)
system in Roxas City.1 failure to state a cause of action.
On August 5, 1969, Belo filed with the Court of First Instance of Capiz, an
urgent motion to declare Vivencio Alagbay and his agents in contempt of
court because in spite of the injunction they continued the work of installing
the new telephone system in Roxas City. This motion was amended on August
9, 1969, to include the Director of the Bureau of Telecommunications and
Leon Cervantes, the Regional Director of the Bureau, to be cited for contempt.
On August 9, 1969 Vivencio Alagbay filed his opposition to the motion,
alleging that as a mere employee of the Bureau of Telecommunications he had
nothing to do with the construction of the telephone exchange, and that it was
the International Telegraph and Telephone Philippines, Inc. (ITT for short)
over which he had no supervision and control, that was working on the
project. On the same date, the respondents in the court below filed a joint
motion for dissolution of the writ of injunction, offering at the same time to
put up a counterbond in the sum of P20,000, to which motion Belo filed his
opposition, then respondents below filed their reply to the opposition and Belo
filed his rejoinder to the reply.
The Solicitor General, upon request of the Director of the Bureau of
Telecommunications, filed, on August 27, 1969, an answer to the petition for
injunction of Belo, denying the material allegations thereof and setting up
special and affirmative defenses, to wit: (1) that the trial court did not have
jurisdiction over the case, it being a suit against the Government which had not
given its consent to be sued; (2) that the court had no jurisdiction to issue the
writ of injunction against the Director of the Bureau of Telecommunications
whose official residence was beyond the territorial jurisdiction of the court; (3)
that the Bureau of Telecommunications had authority to operate its own
telecommunications network in the whole country pursuant to Section 1930 of
the Revised Administrative Code, without need of a legislative franchise; (4)
that the Bureau of Telecommunications was not prohibited from expanding its
telephone system and that its operations were not limited to non-commercial
activities; (5) that the Bureau of Telecommunications had entered into an
agreement with ITT for the supply and installation of expanded
telecommunications network project, which, when completed, would cover not
only telephone services but also data processing computer, telegraphic
transfers, etc. which services have not been made available by Belo; (6) that it
was the ITT, and not the Bureau of Telecommunications, that was actually
constructing the telecommunications system in Roxas City; (7) that Belo's
franchise, as per section 12 of Republic Act No. 2957, is not exclusive; (8) that
there being 67,800 residents in Roxas City out of which only a total of 410 are
being served, the facilities of Belo are inadequate or inefficient. Respondents
below alleged as counterclaim that the writ of preliminary injunction was
improvidently issued and was causing a damage of P10,000 for every day of
delay in the completion of the project.
On September 1, 1969, the City Fiscal of Roxas City, not knowing that an Before this Court herein petitioners now contend that:
answer had already been filed by the Solicitor General, filed a motion to dismiss
upon the grounds of: (1) lack of jurisdiction over the persons of therein
After hearing on the motion to declare Vivencio Alagbay in contempt, the lower court,
its order of September 3, 1969, held Vivencio Alagbay and the men working under
him, even if they be working under the guise of being workers of the ITT, liable for
contempt of court, but the court did not impose any penalty on them because they had
stopped working and only declared that they would be arrested and confined in jail
should they resume the work of erecting telephone poles and connecting telephone
cables and wires. At the same time the lower court denied the motion for the
dissolution of the injunction.2
Belo moved, on September 11, 1969, to reconsider the order of September 3, 1969,
praying that appropriate penalty be imposed on Alagbay and the men working under
him. Petitioner Alagbay also filed a motion for the reconsideration of said order.
In the meantime, on September 10, 1969, the respondents in the court below filed a
motion for preliminary hearing on the affirmative defenses alleged in their answer, as
well as the motion to dismiss. On September 15, 1969, Belo filed his reply to the
answer, and his answer to the counterclaim.
In an order, dated October 1, 1969, the Court of First Instance of Capiz denied the
motions filed by Alagbay and Belo for the reconsideration of the order of September
3, 1969. In a separate order also of the same date, the court denied the motion to
dismiss the petition and set the pre-trial of the case for October 23, 1969.3
Seeking to annul and set-aside the various orders issued by the Court of First
Instance of Capiz, namely, those dated August 1, 1961, granting the motion for the
issuance of a writ of preliminary injunction, and the writ of preliminary injunction
issued pursuant thereto; the order dated September 3, 1969 holding Alagbay and the
men working under him in contempt of court; and the orders issued on October 1,
1969 denying Alagbay's motion for reconsideration and the motion to dismiss filed
by the respondents below and setting the pre-trial of the case for October 23, 1969,
the instant petition for a writ of certiorari and prohibition with preliminary
injunction was filed with this Court by herein petitioners, the Director or Officer-in-
charge of the Bureau of Telecommunications, Leon Cervantes and Vivencio
Alagbay, on October 27, 1969, praying that pending the determination of the case
on the merits, a writ of preliminary injunction be issued, ex parte and without bond,
restraining herein respondent Judge Jose Aligaen, who presides the Court of First
Instance of Capiz, from enforcing the abovecited orders, and from taking
cognizance of Civil Case No. V-3192 of said court until further orders from this
Court.
By resolution, dated October 30, 1969, this Court issued the writ of preliminary
injunction prayed for, and required herein respondents to file their answer.
Herein respondent Jose M. F. Belo filed his answer, making certain admissions and
denials of the allegations in the petition for certiorari and prohibition, and rebutted
the grounds alleged in support of the petition.
(a) Respondent court has no jurisdiction to hear and determine the
case because it involves a suit against the Government which has
not given its consent to be sued;
 (b) Respondent court has no jurisdiction, power and
authority to issue writs of certiorari, prohibition,
mandamus and injunction requiring the execution of acts
by, or controlling the acts of, national officials with
residences and offices beyond its territorial jurisdiction;
(c) Respondent court acted with grave abuse of discretion
amounting to lack of jurisdiction in issuing ex parte the
orders and writ of injunction complained of despite the fact
that respondent Belo's complaint states no cause of action
and, therefore, he is not entitled to the main relief; and it
follows that he is not entitled to the writ of preliminary
injunction;
(d) Respondent court acted with grave abuse of discretion
amounting to lack of jurisdiction in refusing to dissolve
the ex parte writ of preliminary injunction despite
petitioners' offer to put up a counterbond.
1. Petitioners argue that the Bureau of Telecommunications is an entity of the
Government of the Republic of the Philippines, created pursuant to Executive
Order No. 94, series of 1947, and charged with the governmental function of
operating and maintaining a telecommunications network in the entire length
and breadth of the country, and the action against the Director of the Bureau
of Telecommunications and his subordinates was tantamount to a suit against
the Government which cannot be done without the consent of the
Government.4
On the other hand, respondent Belo argues that even if petitioners are officers
of the Government their act of establishing a local telephone system in Roxas
City is without authority of law, and violates his rights, hence the action for
the redress of injuries that he suffered or would suffer is not a suit against the
State.5
We sustain the stand of respondent Belo. We hold that the suit commenced
by said respondent against herein petitioners cannot be considered as a suit
against the State.
Decisive in the resolution of the issues raised by petitioners in the present case
are the provisions of the franchise granted to respondent Belo, and the powers
and functions of the Bureau of Telecommunications. The franchise, Republic
Act No. 2957, granted to Belo "the right and privilege to construct, maintain,
and operate in the Province of Capiz and Roxas City, a telephone system to
carry on the business of electrical transmission of conversations and signals in
"said province and city,"6 but the rights granted therein" shall not be
exclusive;"7 that the "Philippine Government shall have the privilege, without
compensation, of using the poles of the grantee to attach one ten-pin crossarm,
and to install, maintain and operate wires of its telegraph
system thereon; Provided, however, that the Bureau of Telecommunications
shall have the right to place additional crossarms and wires on the poles of the
grantee by paying a compensation, the rate of which is to be agreed upon by
the Director of Telecommunications and the grantee;"8 and that "it is
expressly provided that in the event the Philippine Government should desire
38
to maintain and operate for itself the system and enterprise herein authorized, Bureau of Telecommunications, therefore, attempted to establish a local telephone
the grantee shall surrender his franchise and will turn over to the Government system in Roxas City in violation of law and the rights of respondent Belo. Inasmuch
said system and all serviceable equipment therein, at cost, less reasonable as the State authorizes only legal acts by its officers, unauthorized acts of government
depreciation."9 officials or officers are not acts of the State, and an action against the officials or
The powers and duties of the Bureau of Telecommunications, on the other officers by one whose rights have been invaded or violated by such acts, for the
hand, as provided in Executive Order No. 94 of July 1, 1947, insofar as protection of his rights, is not a suit against the State within the rule of immunity of
relevant to the instant case are as follows: the State from suit. 10 In the same tenor, it has been said that an action at law or suit
in equity against a State officer or the director of a State department on the ground
Sec. 79. The Bureau of Telecommunications shall exercise that, while claiming to act for the State, he violates or invades the personal and
the following powers and duties:
property rights of the plaintiff, under an unconstitutional act or under an assumption
'(a) To operate and maintain existing of authority which he does not have, is not a suit against the State within the
wire-telegraph and radio telegraph constitutional provision that the State may not be sued without its consent. 11
offices, stations, and facilities, and 2. In support of their contention that respondent court did not have jurisdiction to
those to be established to restore the issue the writ of injunction in question, herein petitioners argue that the office of
pre-war telecommunication service petitioner Director of the Bureau of Telecommunications is in Manila, and that of
under the Bureau of Posts, as well as petitioner Regional Superintendent of Region IV is in Iloilo City, both of which
such additional offices or stations as places are outside the territorial jurisdiction of respondent court, hence their actions
may hereafter be established to provide could not be controlled or enjoined by respondent Court. 12
telecommunications service in places
requiring such service; Respondent Belo, on the contrary, contends that the Court of First Instance has
power to issue the writ of injunction under Sec. 44, of the Judiciary Act of 1948;
'(b) To investigate, consolidate, that the respondents in the lower court (now petitioners in this Court) were joined as
negotiate for, operate and maintain such respondents because they were necessary to a complete determination of the
wire-telephone or radio questions involved and were the ones responsible for the project of establishing a
telecommunications service throughout new telephone system in Roxas City; that their acts, violative of herein respondent
the Philippines by utilizing such Belo's rights, were committed or being pursued in Roxas City which is within the
existing facilities in cities, towns, and territorial jurisdiction of the court. 13
provinces as may be found feasible and
under such terms and conditions or We find merit in the contention of respondent Belo. The ruling in the cases relied
arrangements with the present owners upon by petitioners, namely: Acosta v. Alvendia, supra; Samar Mining Co. v.
or operators thereof as may be agreed Arnado, supra; Alhambra Cigar and Cigarette Co. v. The National Administrator of
upon to the satisfaction of all Regional Office No. 2, supra, is to the effect that the court of first instance has no
concerned.' jurisdiction to restrain by injunction acts committed outside the territorial
boundaries of their respective provinces or districts. In Acosta v. Alvendia, this
From the above-quoted provisions, it is clear that the Bureau of Court held that, pursuant to Sec. 44(h) of the Judiciary Act and Sec. 2, Rule 60 of
Telecommunications is empowered to establish telecommunications service in the Rules of Court, 14 courts of first instance have jurisdiction to control or restrain
places where such service does not exist, but in places where such service acts committed or about to be committed within the territorial boundaries of their
already exists it may only negotiate for, operate and maintain a respective provinces and districts by means of the writ of injunction. In the instant
telecommunication system by utilizing such existing facilities in cities, towns case, the acts relative to the establishment of a local telephone system by petitioners
and provinces under such terms, conditions or arrangements as may be agreed were being done within the territorial boundaries of the province or district of
upon with their owners or operators. respondent court, and so said court had jurisdiction to restrain them by injunction. It
It is not denied that respondent Belo had already established, since July 1961, does not matter that some of the respondents in the trial court, against whom the
an automatic telephone system in Roxas City. Respondent Belo was operating injunctive order was issued, had their official residences outside the territorial
the telephone system when the Bureau of Telecommunications, through jurisdiction of the trial court. In the case of Gonzales v. Secretary of Public Works,
petitioners, took steps to establish another local telephone system without et al., 15 wherein the only question raised was whether the Court of First Instance of
having made any negotiation with respondent Belo for the utilization of the Davao had jurisdiction to entertain a case the main purpose of which was to prevent
existing facilities being used by said respondent under terms, conditions and the enforcement of a decision of the Secretary of Public Works who was in Manila,
arrangements that would be satisfactory to all concerned — which acts gave this Court held that inasmuch as the acts sought to be restrained were to be
rise to the filing by respondent Belo of Civil Case No. V-3192 for injunction in performed within the territorial boundaries of the province of Davao, the Court of
the Court of First Instance of Capiz on August 1, 1969. The officers of the First Instance of Davao had jurisdiction to hear and decide the case, and to issue the
necessary injunctive order. This Gonzales case was an action for certiorari
and prohibition with preliminary injunction and/or preliminary mandatory
injunction to prevent the demolition of Gonzales' dam in Davao in
compliance with the order of the Secretary of Public Works.
It follows, therefore, that since the acts to be restrained were being done in
Roxas City, or within the territorial jurisdiction of respondent court, the latter
had jurisdiction to restrain said acts even if the office of respondent Director
of the Bureau of Telecommunications is in Manila, and that of respondent
Regional Superintendent of Region IV is in Iloilo City.
3. Petitioners also maintain that respondent Belo's petition for injunction
before respondent court states no cause of action, and respondent court
committed a grave abuse of discretion in issuing the orders and the writ of
preliminary injunction now in question. 16
The contention of petitioners has no merit. A cause of action is "an act or
omission of one party in violation of the legal right or rights of the other; and
its essential elements are legal right of the plaintiff, correlative obligation of
the defendant, and act or omission of the defendant in violation of said legal
right." 17 The petition filed with the respondent lower court clearly alleges:
(1) the legal right of respondent Belo to establish and operate a telephone
system in Roxas City as authorized by a legislative franchise and the
certificate of public convenience issued by the Public Service Commission,
and his having actually established the telephone system and operating the
same; (2) the violation of respondent Belo's right by the unauthorized or
illegal acts of the petitioners in taking steps to install another telephone
system in Roxas City without previously having negotiated or entered into
any arrangement with respondent Belo as required by law; and (3) the injury
that would be caused to respondent Belo by the acts of petitioners. Certainly
the petitioners herein — more so because they are officials or officers of the
government — have a correlative obligation to respect the right of
respondent Belo, or to act in accordance with law. The allegations in the
petition, which was under oath, served as a basis for respondent court to
exercise its sound discretion whether or not to issue the writ of preliminary
injunction. We do not see in the actuation of respondent court any whimsical
or capricious exercise of judgment when it issued the writ of preliminary
injunction in question. In its order authorizing the issuance of the writ
respondent court said:
That it has not been shown that petitioner (Belo) is remiss
in his operation under his franchise, and that the
establishment, maintenance and operation of another local
telephone system in the same geographical area of Roxas
City will result in direct competition with petitioner which
is contrary to the franchise granted to him; and that the
continuance of the acts complained of would work serious
and irreparable loss and injury to the petitioner (Belo)
unless restrained.
We believe that respondent court had acted in accordance with the provisions
of Section 3, Rule 58 of the Rules of Court. By its order it can be gathered
39
that respondent court had found respondent Belo (petitioner below) entitled to
the relief demanded, when it said "that the continuance of the acts complained
of would work serious and irreparable loss and injury to the petitioner unless
restrained." The respondent court considered it necessary to issue the writ
because the continuance of the acts of installing the new telephone system by
the respondents below (petitioners herein) would render the judgment in the
petition for injunction ineffectual.
Petitioners herein anchor their contention that respondent court committed a
grave abuse of discretion when it issued the writ of preliminary injunction
because the Bureau of Telecommunications has the power to establish a
telephone system in Roxas City, so that respondent court should not have
restrained the Director of the Bureau and the men under him from pursuing the
work of installing the telephone system. The power of the Bureau of
Telecommunications to establish, operate and maintain a nationwide telephone
system is conceded. But that power is subject to a limitation, and that limitation
is, that in cities, towns or provinces where telephone systems are already in
operation it should utilize such existing facilities under such terms and
conditions or arrangements with the owners or operators of those systems as
may be agreed upon to the satisfaction of all concerned. The Bureau of
Telecommunications can even expropriate the local facilities if it becomes
necessary to resort to this recourse. Thus, this Court, in the case of Republic v.
Philippine Long Distance Telephone Co., 18 said:
The Bureau of Telecommunications, under Section 79(b) of
Executive Order No. 94, may operate and maintain wire
telephone or radio telephone communications throughout
the Philippines by utilizing existing facilities in cities, towns
and provinces under such terms and conditions or
arrangement with present owners or operators as may be
agreed upon to the satisfaction of all concerned; but there is
nothing in this section that would exclude resort to
condemnation proceedings where unreasonable or
unthinking terms and conditions are exacted, to the extent
of crippling or seriously hampering the operation of said
Bureau.
It is claimed by petitioners that the project of the Bureau of
Telecommunications in Roxas City is a part of a nationwide
telecommunications expansion project, as contemplated in Republic Act 2612,
and that Roxas City had been chosen as the site of one of the telephone
exchanges and of one of the base points in the turnkey installation projects. It
will be noted that the respondent court did not enjoin the Bureau of
Telecommunications from working on its telephone exchange and turnkey
installation project in Roxas City in relation to its alleged nationwide
telecommunications expansion project. The respondent court only enjoined
the petitioners herein "to desist and refrain from establishing, maintaining
and operating another local telephone system in the geographical area of
Roxas City ..." 19 In other words, the petitioners could go on with the work on
the installation of the national hook-up, but not to establish another local
telephone system. The idea of respondent court, as gathered from its order
authorizing the issuance of the writ, was to prevent the competition between the new
telephone system and the system already operated by respondent Belo. Respondent
Belo alleged in his petition before respondent lower court — and the allegation is
not denied — that the officials or authorities of the Bureau of Telecommunications
had never attempted to negotiate with him for the use of the facilities of his local
telephone system in conjunction with the Bureau's national hook-up project. It is
plain, therefore, that petitioners herein did not act in accordance with law.
It is Our considered view that the powers and duties of the Bureau of
Telecommunications in connection with the operation and maintenance of a
nationwide telecommunications system are as provided, and delimited, in Section 79
of Executive Order No. 94, series of 1947. We believe that the provision of paragraph
(b) of Section 79 of the Executive Order, which authorizes the Bureau of
Telecommunications "to investigate, consolidate, negotiate for, operate and maintain
wire telephone or radio telecommunication service throughout the Philippines by
utilizing such existing facilities ... under such terms and conditions or arrangements
with the present owners or operators as may be agreed upon ...", was intended to
protect the operators of telephone systems already existing and duly authorized by
law to operate. The Bureau of Telecommunications may take steps to improve the
telephone service in any locality in the Philippines, but in so doing it must first enter
into negotiation or arrangement with the operator or owner of the existing telephone
system. We believe that the intention of the executive order, precisely, is to avoid a
competition which would prove ruinous or disadvantageous to both the government
and the private operator. When a private person or entity is granted a legislative
franchise to operate a telephone system, or any public utility for that matter, the
government has the correlative obligation to afford the grantee of the franchise all the
chances or opportunity to operate profitably, as long as public convenience is properly
served, rather than promote a competition with the grantee. We can not accept the
view, as urged by herein petitioners, that the Bureau of Telecommunications can
install and operate a telephone system in any place in the Philippines regardless of the
rights and interests of existing private operators, especially if the existing operator is
a grantee of a legislative franchise. That view is not in consonance with the provisions
of paragraph (b) of Section 79 of Executive Order No. 94, series of 1947. Indeed, it
should be the concern of the Bureau of Telecommunications and the Public Service
Commission that telephone services in the country are efficient and satisfactory. But
in promoting satisfactory service the rights and interests of prior operators should not
be wantonly disregarded. If the Bureau of Telecommunications believes that it has to
embark on a project of improving the telephone service in a particular place, it should
negotiate or arrange with the existing operator as provided in paragraph (b) of Section
79 of Executive Order No. 94. If no satisfactory arrangement can be arrived at
between the Bureau of Telecommunications and the existing operator, the Bureau of
Telecommunications may resort to expropriation as suggested in the decision of this
Court in the case of Republic v. Philippine Long Distance Telephone Co., supra. Or,
if the government would decide to operate the telephone system to the exclusion of
the grantee of the legislative franchise, the grantee may be required to surrender his
franchise and turn over to the government the telephone system he is operating. We
have noted that all legislative franchises for the operation of a telephone system
contain a proviso similar to that of Section 18 of the franchise of respondent Belo
(Rep. Act 2957), as follows:
 Sec. 18. It is expressly provided that in the event the
Philippine Government should desire to maintain and
operate for itself the system and enterprise herein
authorized, the guarantee shall surrender his franchise and
will turn over to the Government said system and all
serviceable equipment therein, at cost, less reasonable
depreciation.
It is urged by herein petitioners that the franchise granted to respondent Belo
is not exclusive. This is true, but it does not follow that any person or entity
— not even the Bureau of Telecommunications — can put up another
telephone system in Roxas City in a manner not in accordance with law.
Notwithstanding a franchise is not exclusive so as to
prevent the grant of a similar franchise to another or to
prevent competition on the part of a person or entity duly
authorized in that regard, such a franchise has been
regarded or characterized as exclusive against one who
carries a competing operation without due authorization or
in violation of the law governing the matter. 20
There is authority for the view, however, that the owner of
a franchise which is not exclusive, in that ... does not
prevent the grantor from granting a similar franchise to
another or does not prevent lawful competition on the part
of public authorities, is entitled to relief by injunction
against competition which is illegal or is carried on by one
not authorized in that regard, in the case either of actual or
of threatened injury from such competition. 21
And so in the case at bar, because the Director of the Bureau of
Telecommunications, or any of the herein petitioners, had not negotiated or
made arrangement with respondent Belo before taking steps to install a new
local telephone system in Roxas City, as required in paragraph (b) of Section
79 of Executive Order No. 94, the respondent court had properly issued the
writ of preliminary injunction enjoining said petitioners to "desist and refrain
from establishing, maintaining and operating another local telephone system
in ... Roxas City."
4. It is also the contention of the petitioners that respondent court committed a
grave abuse of discretion when it refused to dissolve the writ of preliminary
injunction in spite of petitioners' offer to put up a counterbond of P20,000,
although the Government is exempt from filing a bond. Under the
circumstances obtaining in this case, this contention has no merit.
The mere filing of a counterbond does not necessarily warrant the dissolution
of the writ of preliminary injunction. Under Section 6 of Rule 58 of the Rules
of Court, a preliminary injunction, if granted, may be dissolved "if it appears
after hearing that although the plaintiff is entitled to the injunction, the
continuance thereof, as the case may be, would cause great damage to the
defendant while the plaintiff can be fully compensated for such damages as he
may suffer, and the defendant files a bond in an amount fixed by the judge
conditioned that he will pay all damages which the plaintiff may suffer by
40
the ... dissolution of the injunction." Under this quoted provision of the rules of appealed the decision of the appellate court to this Court. We affirmed the appellate
court, the court is called upon to exercise its discretion in determining or court's decision in a resolution dated December 24, 1964 in case G.R. L-23608.
weighing the relative damages that may be suffered by the parties. If the On July 15, 1964, before the appellate court's decision dismissing Socorro's petition
damages that may be suffered by the defendant by the continuance of the became final, Aquino filed with the appellate court his claim for damages in the
injunction outweigh the damages that may be suffered by the plaintiff by the amount of P199,000 on account of the wrongful issuance of the writ of preliminary
dissolution of the injunction, then the injunction should be dissolved. In the case injunction. The appellate court denied Aquino's claim, for want of bad faith and
at bar the respondent court, in refusing to dissolve the writ of preliminary malice on the part of Socorro in filing his petition and securing the issuance of the
injunction, took into consideration that "the petitioner (Belo) will suffer great writ of preliminary injunction. Aquino's subsequent motion for reconsideration was
and irreparable injury considering the tremendous investment of the petitioner, denied.
his time and gigantic efforts made to put up telephone service in Roxas City."
An injunction issued to stop an unauthorized act should not be dissolved by the Hence, the present petition for certiorari to review the resolution of the Court of
Appeals denying his claim for damages.
mere filing of a counterbond, otherwise, the counterbond would come the
vehicle of the commission or continuance of an unauthorized or illegal act Aquino contends that the respondent appellate court erred in denying his claim for
which the injunction precisely is intended to prevent. 22 damages on the ground of want of bad faith and malice on the part of the respondent
Socorro in filing the petition for certiorari re the main case and securing the issuance
We hold, therefore, that respondent court did not commit a grave abuse of
discretion when it refused to dissolve the writ of preliminary injunction it had of the writ of preliminary injunction. He invokes the provisions of Section 9, Rule 58
in relation to Section 20, Rule 57, of the Rules of Court. Section 9, Rule 58 recites:.
issued.
Having thus declared that respondent court had jurisdiction to issue the writ of Judgement to include damages against party and surities. —
preliminary injunction in question, and that it did not abuse its discretion in Upon the trial the amount of damages to be awarded to the
plaintiff, or to the defendant, as the case may be, upon the bond
refusing to dissolve the said writ, it follows that it also acted with jurisdiction
when it issued the orders of August 1, 1969, of September 3, 1969, and of of the other party, shall be claimed, ascertained, and awarded
under the same procedure as prescribed in Section 20 of Rule 57.
October 1, 1969, which are questioned in these proceedings. 23
IN VIEW OF THE FOREGOING, the writ of preliminary injunction issued Section 20, Rule 57 reads:.
by this Court on October 30, 1969 is dissolved, and the instant petition Claim for damages on account of illegal attachment. — If the
for certiorari and prohibition is dismissed. The questioned writ of preliminary judgment on the action be in favor of the party against whom
injunction and the orders issued by respondent court (Annexes B, C, M, Q and attachment was issued, be may recover, upon the bond given or
Q-1 of the Petition) are held valid. No pronouncement as to costs. It is so deposit made by the attaching creditor, any damages resulting
ordered. from the attachment. Such damages may be awarded only upon
G.R. No. L-23868 October 22, 1970 application and after proper hearing, and shall be included in the
final judgment. The application must be filed before the trial or
ZACARIAS C. AQUINO, petitioner, before appeal is perfected or before the judgment becomes
vs.
executory, with due notice to the attaching creditor and his surety
FRANCISCO SOCORRO and COURT OF APPEALS, respondents. or sureties, setting forth the facts showing his right to damages
Tranquilino O. Calo, Jr. for petitioner. and the amount thereof.
Alfaro and Associates for respondent Francisco Socorro. If the judgment of the appellate court be favorable to the party
against whom the attachment was issued, he must claim damages
sustained during the pendency of the appeal by filing an
CASTRO, J.:. application with notice to the party in whose favor the attachment
On February 14, 1964 the Court of Appeals, upon petition of Francisco Socorro was issued or his surety or sureties, before the judgment of the
in CA-G.R. 33560-R,1 issued a writ of preliminary injunction in his favor upon appellate court becomes executory. The appellate court may allow
his posting a P1,000 bond. The writ of preliminary injunction, among others, the application to be heard and decided by the trial court.
restrained Zacarias Aquino "from entering, cutting, hauling, selling and/or
Aquino points out that the said provisions do not require a claimant who seeks to
exporting logs or other forest products from the forest area" subject of litigation.
recover damages on account of the wrongful issuance of a writ of preliminary
Aquino, however, filed a counterbond in the amount of P2,000, effecting the
injunction, to prove bad faith and malice on the part of the party who obtained the
immediate dissolution of the writ. issuance of the writ. To reinforce his contention, he invokes the provisions of
The Court of Appeals, on June 29, 1964, dismissed Socorro's petition re the Section 4 (b) of Rule 58 of the Rules of Court. This rule, Aquino avers, makes the
main action, for lack of jurisdiction to entertain the same. Socorro subsequently party applying for an injunction liable for all damages sustained by the other party if
the court finally decides the party applicant as not entitled thereto. He
maintains that, in the case at bar, the dissolution of the writ of preliminary
injunction by the respondent appellate court clearly demonstrates that the
respondent Socorro was not entitled thereto.
Socorro, on the other hand, plays for the dismissal of the present petition on
the following grounds: (1) The petitioner "refused to prosecute his claim for
damages ... in the main action then already on appeal to this Court;" (2) The
petitioner "failed to state in his motion claiming for damages the facts upon
which his rights thereto are based;" (3) The petitioner, if "suing on the bond ...
has no more cause of action as the said bond had already been dissolved2 upon
motion by the petitioner Aquino;" and (4) The petitioner, if "suing beyond the
bond ... failed to show, or there is no showing that the respondent Socorro," in
filing his petition for certiorari and securing the issuance of the writ of
preliminary injunction, "was motivated by malice or bad faith."
The present case raises the question of whether Aquino's claim for damages
on account of the improvident issuance by the respondent appellate court of
the writ of preliminary injunction should be dismissed on the ground that he
has failed to show or prove bad faith and malice on the part of the respondent
Socorro in obtaining the issuance of the writ of preliminary injunction.
In Pacis vs. The Commission on Elections,3 this Court made an extensive
discussion of the principles applicable to the recovery of damages caused
through the improvident issuance of a writ of preliminary injunction. This
Court said that "damages sustained as a result of a wrongfully obtained
injunction may be recovered upon the injunction bond required to be filed with
the court." The same provisions permitting the issuance of the writ of
preliminary injunction require the filing of a bond before the grant of the writ.
"The statutory undertaking of the bond is that it shall answer for all damages
which the party to be restrained may sustain by reason of the injunction if the
court should finally decide that the plaintiff was not entitled thereto. Malice or
lack of good faith is not an element of recovery on the bond. This must be so,
because to require malice as a prerequisite would make the filing of the bond
a useless formality."
Continuing, this Court said that "the dissolution of the injunction, even if the
injunction was obtained in good faith, amounts to a determination that the
injunction was wrongfully obtained and a right of action on the injunction bond
immediately accrues." Thus, for the purpose of recovery upon the injunction
bond, "the dissolution of the injunction because of the failure of petitioner's
main cause of action" provides the "actionable wrong" for the purpose of
recovery upon the bond.
This Court also stressed, in the same case, that "there is nothing in the Rules
of Court which allows recovery of damages other than upon the bond pledged
by the party suing for an injunction. Section 9, Rule 58, limits recovery only
upon the bond, and it specifically states that ... 'the amount of damages to be
awarded to the plaintiff, or to the defendant, as the case may be, upon the bond
of the other party, shall be claimed, ascertained, and awarded under the same
procedure as prescribed in Section 20 of Rule 57.' " Under this provision, the
party restrained, if he can recover anything, can recover only by reason of and
41
upon the bond — the only security and protection conceded to him by the rules. Chief State Prosecutor JOVENCITO R. ZUÑO, ATTY. CLEMENTE P.
Consequently, the rule limits the amount of recovery in a suit on an injunction HERALDO, Chief of the Internal Inquiry and Prosecution Division —
bond to the sum thus fixed, the amount measuring the extent of the assumed Customs Intelligence and Investigation Service (IIPD-CIIS), and LEONITO A.
liability. SANTIAGO, Special Investigator of the IIPD-CIIS, petitioners,
This Court also finds it necessary to restate the rule in Molina vs. Somes4 that vs.
"an action for damages for the improper suing out of an injunction must be JUDGE ARNULFO G. CABREDO, Regional Trial Court, Branch 15, Tabaco
maintained upon the same principles which govern an action for the wrongful City, Albay, respondent.
bringing of an action." This rule, however, applies only when the party PER CURIAM:
restrained pursues his claim for damages not upon the injunction bond. In such Before the Court are administrative complaints filed against Judge Arnulfo G.
a case where the party restrained sues not on the injunction bond, the rules Cabredo of Branch 15 of the Regional Trial Court (RTC) of Tabaco City, Albay, for
accord him no relief by way of a claim for damages unless he can establish that grave misconduct, knowingly rendering an unjust interlocutory order, manifest
the party applicant secured the issuance of the writ maliciously and without partiality, evident bad faith, and gross inexcusable negligence.
probable cause. This Court stated that "... when the process has been sued out
maliciously there may be a right of action in favor of the defendant. But this The Antecedents
right depends upon the law governing malicious prosecutions, and has no The facts are simple. Atty. Winston Florin, the Deputy Collector of Customs of the
relation to the claim for damages urged by the defendant in this case. ..."5 Sub-port of Tabaco, Albay, issued on September 3, 2001 Warrant of Seizure and
Additionally, this Court, citing Palmer vs. Foley (71 N.Y. 106, 108), said:. Detention (WSD) No. 06-2001 against a shipment of 35,000 bags of rice aboard the
vessel M/V Criston, for violation of Section 2530 of the Tariff and Customs Code of
It seems that, without some security given before the the Philippines (TCCP).1
granting of an injunction order, or without some order of the
court or a judge, requiring some act on the part of the A few days after the issuance of the warrant of seizure and detention, or on September
plaintiff, which is equivalent to the giving of security — 25, 2001, Antonio Chua, Jr. and Carlos Carillo, claiming to be consignees of the
such as a deposit of money in court — the defendant has no subject goods, filed before the Regional Trial Court of Tabaco City, Albay, a Petition
remedy for any damages which he may sustain from the for Prohibition with Prayer for the Issuance of Preliminary Injunction and Temporary
issuing of the injunction, unless the conduct of the plaintiff Restraining Order (TRO) which was docketed as Civil Case No. T-2170. The said
has been such as to give ground for an action for malicious petition sought to enjoin the Bureau of Customs and its officials from detaining the
prosecution. subject shipment.
In the case at bar, the record reveals that the petitioner Aquino, in the On September 28, 2001, Judge Cabredo issued an order ex parte, the relevant portion
proceedings before the respondent appellate court filed a counterbond in the of which reads as follows:
amount of P2,000 and opposed the injunction bond filed by the respondent xxx xxx xxx
Socorro on the ground of its insufficiency. In effect, those brought about the
Acting on the petition for Prohibition with Prayers for the Issuance of
immediate dissolution of the writ of preliminary injunction. Thus Aquino Preliminary Injunction and Temporary Restraining Order and finding the
pursues his claim for damages in the amount of P199,000 no longer upon the same to be sufficient in form and substance and that after a thorough
injunction bond in the amount of P1,000 filed by Socorro with the respondent evaluation of the entire records, it appears that the subject matter involved
appellate court. This being the case, applicable here is the holding in Molina is of extreme urgency and the applicants will suffer grave injustice and
vs. Somes, supra, that an application for damages on account of the irreparable injury pursuant to paragraph 2, Section 5, [R]ule 58 of the 1997
improvident issuance of a preliminary injunction writ must be governed by the Rules of Civil Procedure, let a temporary restraining order be issued good
same principles applicable to an action for the wrongful bringing of action. for seventy two (72) hours from service thereof restraining the herein
Before the respondent's liability can attach, it must appear that he filed his respondents or any person or entity so acting in their behalf from detaining
petition for certiorari re the main action and obtained the issuance of the writ the subject a) 14,920 bags of imported well[-]milled rice (WMR), b) 5,000
of preliminary injunction maliciously and without probable cause. These two bags of local well[-]milled rice (WMR) and c) 15,000 bags of imported
essential requisites, malicious prosecution and lack of probable cause, are special variety rice, upon the filing of a bond in the amount of
neither alleged nor proved in this case before us. Nothing in the record tends PhP31,450,000.00.2
to establish the liability of the respondent Socorro.
xxx xxx xxx
ACCORDINGLY, the present petition for certiorari is hereby denied. No cost.
By virtue of said TRO, the 35,000 bags of rice were released from customs to Antonio
A.M. No. RTJ-03-1779 April 30, 2003 Chua, Jr. and Carlos Carillo.
(Formerly A.M. OCA IPI No. 02-1577-RTJ)
In his complaint, Chief State Prosecutor Zuño alleged that respondent Judge
violated Administrative Circular No. 7-99,3 which cautions trial court judges
in their issuance of temporary restraining orders and writs of preliminary
injunctions. Said circular reminds judges of the principle, enunciated in Mison
v. Natividad,4 that the Collector of Customs has exclusive jurisdiction over
seizure and forfeiture proceedings, and regular courts cannot interfere with his
exercise thereof or stifle or put it to naught.
Chief State Prosecutor Zuño further alleged that respondent Judge knew very
well that at the time he issued the questioned order, he did not have any
jurisdiction to pass upon the validity or regularity of the seizure and forfeiture
proceedings conducted by the Bureau of Customs. Hence, he asserts,
respondent Judge wantonly disregarded rules and settled jurisprudence, to the
damage and prejudice of the government, depriving it of its legal custody over
the seized articles and consequently, the opportunity to collect taxes and duties
thereon.
Atty. Clemente P. Heraldo, Chief of the Internal Inquiry and Prosecution
Division-Customs Intelligence and Investigation Service (IIPD-CIIS), and
Leonito A. Santiago, Special Investigator of the IIPD-CIIS also filed a joint
Supplemental Complaint-Affidavit reiterating the allegations in the complaint
filed by Chief State Prosecutor Zuño.5
In his 1st Indorsement dated September 23, 2002, Court Administrator
Presbitero J. Velasco, Jr. referred to respondent Judge the complaint against
him for his comment. On November 11, 2002, respondent Judge filed his
Comment With Motion to Suspend Proceedings. He alleged therein that when
he issued the questioned TRO, he honestly believed that the Bureau of
Customs had been divested of its jurisdiction over the case. He specifically
cited the statement of Deputy Collector of Customs Florin in the warrant of
seizure and detention that, as the investigating officer, he "cannot find any
violation of Section 2530 of the Tariff and Customs Code."6 According to
respondent Judge, because of this statement, the Bureau of Customs no longer
had any jurisdiction over the case.
Respondent Judge likewise explained in his Comment that he saw to it that the
interests of both parties in the case were duly protected. By requiring
petitioners therein to put up a bond equivalent to the full value of the goods to
answer for whatever liability may be adjudged against them, he safeguarded
the interest of the government relative to collecting taxes and duties due on the
shipment. On the other hand, he allowed petitioners therein to have possession
of the goods, which were perishable in nature, upon filing of the bond.
Finally, respondent judge, in his Comment, also moved that the proceedings
herein be suspended. He alleged that the matter of whether or not the issuance
of the questioned TRO was illegal, whimsical, and attended with manifest
partiality and bad faith is now pending before the Court of Appeals in a case
docketed as CA G.R. SP No. 72047. Hence, the proceedings herein should be
suspended to await the final decision in the case before the Court of Appeals.
The Court Administrator's Evaluation
The Court Administrator, in his Evaluation dated February 7, 2003, stated that
the questioned TRO was clearly illegal and issued in excess of jurisdiction. He
42
cited Rallos v. Gako, Jr.,7 which held that Regional Trial Courts are devoid of Clearly, therefore, respondent judge had no jurisdiction to take cognizance of the
any competence to pass upon the validity or regularity of seizure and forfeiture petition and issue the questioned TRO. He proceeded against settled doctrine, an act
proceedings conducted by the Bureau of Customs or to enjoin or otherwise constituting gross ignorance of the law.11 This is a serious violation under Section 8,
interfere with these proceedings. The rule enunciated in Mison v. Trinidad8 is Rule 140 of the Rules of Court.12
clear: the Collector of Customs has exclusive jurisdiction over seizure and What is involved here is a fundamental and well-known judicial norm. If the law is
forfeiture proceedings. The RTCs are precluded from assuming cognizance so elementary, not to know it or to act if one does not know it, constitutes gross
over such matters even through petitions for certiorari, prohibition ignorance of the law.13 Gross ignorance of the law is the disregard of basic rules and
or mandamus. Moreover, even if the seizure by the Collector of Customs were settled jurisprudence.14 Failure to know the basic principles is an inexcusable
illegal, which has yet to be proven, such act does not deprive the Bureau of offense. Respondent's actuation in this case is tantamount to grave misconduct.
Customs of jurisdiction thereon.
It is a basic principle that the Collector of Customs has exclusive jurisdiction over
The Court Administrator concluded that the act of respondent judge in issuing seizure and forfeiture proceedings of dutiable goods. A studious and conscientious
the questioned TRO amounted to gross ignorance of the law. judge can easily be conversant with such an elementary rule.
The Court's Ruling
Finally, in issuing orders and rendering decisions, judges must make sure that the
We agree with the findings of the Court Administrator. same are not only just, correct, and impartial, but also done in a manner free from any
First, respondent Judge is not exculpated by his contention that his act did not suspicion of unfairness and partiality. As aforestated, Administrative Circular No. 7-
99 reminds judges that their issuance of TROs and grants of writs of preliminary
cause any damage upon the government by preventing it from collecting duties
and taxes due on the shipment since he required petitioners therein to file a bondinjunction in seizure and forfeiture proceedings before the Bureau of Customs may
arouse suspicion that said issuance or grant was for considerations other than the strict
in the amount equivalent to the value of the shipment.
merits of the case. The said administrative circular seeks to reiterate that they should
The collection of duties and taxes due on the seized goods is not the only reason embody the image of equity and justice in the eyes of the public.
why trial courts are enjoined from issuing orders releasing imported articles
under seizure and forfeiture proceedings by the Bureau of Customs. Respondent Judge's order is of the kind that erodes the public's confidence and faith
Administrative Circular No. 7-99 takes into account the fact that the issuance in the courts. Judges are to avoid not just impropriety, but even the appearance of
of TROs and the granting of writs of preliminary injunction in seizure and impropriety. They must give no ground for reproach in order to promote public
forfeiture proceedings before the Bureau of Customs may arouse suspicion that confidence in the integrity and impartiality of the judiciary.15 No position exacts a
the issuance or grant was for considerations other than the strict merits of the greater demand for moral righteousness and uprightness than a seat in the judiciary.16
case. Furthermore, respondent Judge's actuation goes against settled WHEREFORE, Judge Arnulfo G. Cabredo is found GUILTY of GRAVE
jurisprudence that the Collector of Customs has exclusive jurisdiction over MISCONDUCT. The Court imposes on him the penalty of DISMISSAL from the
seizure and forfeiture proceedings, and regular courts cannot interfere with his service with forfeiture of all benefits, excluding accrued leave credits, with prejudice
exercise thereof or stifle and put it to naught.9 to re-employment in any branch or agency of the government, including government-
Second, respondent Judge cannot claim that he issued the questioned TRO owned or controlled corporations.
because he honestly believed that the Bureau of Customs was effectively Let a copy of this decision be attached to the personnel records of Judge Arnulfo G.
divested of its jurisdiction over the seized shipment due to the statement of Cabredo.
Deputy Collector of Customs Florin who stated that, as the investigating officer, SO ORDERED.
he "cannot find any violation of Section 2530 of the Tariff and Customs Code."
G.R. No. 157498 July 15, 2005
Even if it be assumed that in the exercise of the Collector of Customs of its
exclusive jurisdiction over seizure and forfeiture cases, a taint of illegality is FILIPINO METALS CORPORATION, MAXIMA STEEL MILLS
correctly imputed, the most that can be said is that under these circumstances, CORPORATION, BUILDERS STEEL CORPORATION, UNICORN METAL
grave abuse of discretion may oust it of its jurisdiction. This does not mean, CORPORATION, VENUS STEEL CORPORATION, LEGACY STEEL
however, that the trial court is vested with competence to acquire jurisdiction CORPORATION, PAG-ASA STEEL CORPORATION, MARTIAN* STEEL
over these seizure and forfeiture cases. The proceedings before the Collector of CORPORATION, LUNAR** STEEL CORPORATION, CEBU STEEL
Customs are not final. An appeal lies to the Commissioner of Customs and CORPORATION, CAPITOL STEEL CORPORATION, STEEL ASIA
thereafter to the Court of Tax Appeals. It may even reach this Court through an MANUFACTURING CORPORATION, and GRAND ASIA
appropriate petition for review. The proper ventilation of the legal issues is thus CORPORATION, Petitioners,
indicated. Certainly, the Regional Trial Court is not included therein. Hence, it vs.
is devoid of jurisdiction.10 SECRETARY OF THE DEPARTMENT OF TRADE AND INDUSTRY,
SECRETARY OF THE DEPARTMENT OF AGRICULTURE, SECRETARY
OF THE DEPARTMENT OF FINANCE, THE COMMISSIONER OF THE
BUREAU OF CUSTOMS, and THE CHAIRMAN OF THE TARIFF
COMMISSION, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the Court of Appeals’ Decision,1 dated
February 28, 2003, in CA-G.R. SP No. 67397, which set aside
the Order2 dated September 4, 2001 of the Regional Trial Court of
Valenzuela City, Branch 172, in Civil Case No. 82-V-01.
The antecedent facts are as follows:
Petitioners are manufacturers of various steel products such as reinforcing
bars, steel sections, and profiles. The principal raw materials for these products
are steel billets, which come in various chemical and physical compositions,
sourced partly from domestic producers and partly from overseas suppliers.
The domestic suppliers supply only about 15% of the country’s total
requirements. These are made from various scraps containing impurities. They
are of inferior quality compared to the imported ones made from virgin-ore
materials. Thus, petitioners are compelled to import a bulk of their raw
materials from foreign suppliers.
On July 17, 2000, Republic Act No. 88003 was enacted codifying the
provisions of Article XIX of the General Agreement on Tariffs and Trade
(GATT) and the World Trade Organization (WTO) Agreement on Safeguards.
These agreements authorize the application of a safeguard measure if a product
is being imported into the country in such quantities as would cause or threaten
to cause serious injury to domestic producers of like or directly competitive
products.
On April 6, 2001, petitioners filed with the Regional Trial Court of Valenzuela
City, Branch 172, a petition for declaratory relief and/or certiorari and
prohibition seeking to declare Rep. Act No. 8800 as unconstitutional.
The RTC judge, while holding in abeyance a ruling on the validity of Rep. Act
No. 8800, found a strong case against the constitutionality of the said law
sufficient to justify a preliminary injunctive relief. The dispositive portion of
his questioned order reads:
WHEREFORE, upon the filing by the petitioners and petitioners in
intervention of a bond in the amount of P10,000,000.00 to answer for whatever
damages which the respondents and respondents in intervention may sustain
by reason of the injunction if the Court should finally decide that the
petitioners and petitioners in intervention were not entitled thereto, let a writ
of preliminary injunction be issued restraining the respondents from enforcing
Republic Act 8800 and/or its Implementing Rules and Regulations.
SO ORDERED.4
Not satisfied, respondents filed a petition for certiorari with the Court of
Appeals. In its assailed decision dated February 28, 2003, the appellate court
concluded that the RTC judge committed grave abuse of discretion in issuing
the writ of injunction. In reversing the trial court order, the Court of Appeals
reasoned thus:
43
Questions on the constitutionality of the law [do not] necessarily entitle a power. Respondents claim it is improper for petitioners to raise the issue of the alleged
movant to have the assailed law enjoined. It would seem that respondent Judge violation of the WTO Agreement on Safeguards since it was not raised before the
acted with undue haste in issuing the writ of preliminary injunction a quo, Court of Appeals. They also allege that the supposed injury to be sustained by
disregarding the well-settled presumption of validity that laws enjoy.… petitioners is neither grave nor irreparable. Finally, respondents deny that they
engaged in forum-shopping.
...
…The private respondents’ projected loss in business is not the clear legible At the outset, we note that the issue of constitutionality of Rep. Act No. 8800 is not
(sic) right contemplated by the rules which shall be entitled to the protection of raised in the instant petition. It is in fact pending litigation at the regional trial
an injunctive relief.5 court.8 Neither is the issue of forum-shopping allegedly committed by respondents,
determinative of the case at hand.
Aggrieved, petitioners now come to this Court on a petition for review raising
the following issues: The sole issue in this petition is whether or not the Court of Appeals erred in reversing
the trial court order enjoining respondents from enforcing Rep. Act No. 8800. Simply
A. put, should the preliminary injunction issued by the trial court be upheld?
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A We rule in the affirmative.
REVERSIBLE [ERROR] WHEN IT REVERSED AND SET ASIDE THE 4
SEPTEMBER 2001 ORDER OF THE REGIONAL TRIAL COURT OF In the recent case of Southern Cross Cement Corporation v. Philippine Cement
VALENZUELA, THUS DISSOLVING THE WRIT OF PRELIMINARY Manufacturers Corporation,9 this Court intimated, but only by way of obiter dictum,
INJUNCTION ENJOINING PUBLIC RESPONDENTS FROM that the imposition of safeguard measures should not be enjoined as that would be
IMPLEMENTING R.A. 8800, CONSIDERING THAT PETITIONERS HAVE tantamount to enjoining the collection of taxes.
MADE OUT A CASE OF UNCONSTITUTIONALITY STRONG ENOUGH Verily, as early as Churchill and Tait v. Rafferty,10 the Court rejected judicial control
TO OVERCOME THE PRESUMPTION OF CONSTITUTIONALITY OF over collection of taxes. That taxes must be collected promptly is a policy deeply
R.A. 8800 FOR THE PURPOSE OF ISSUING A WRIT OF PRELIMINARY entrenched in our tax system. Thus, no court is allowed to grant injunction to restrain
INJUNCTION. the collection of any internal revenue tax.11
B. Rep. Act No. 8800, also known as the Safeguard Measures Act, authorize the
application of a safeguard measure upon a finding that a product is being imported
WHETHER OR NOT THE VIOLATION OF WTO AGREEMENTS WAS
PROPERLY RAISED AS AN ISSUE IN THE TRIAL COURT LEVEL AS A into the country in increased quantities as to be a substantial cause of serious injury
or threat to the domestic industry.12 Hence, the primary purpose of safeguard
GROUND FOR THE UNCONSTITUTIONALITY OF R.A. 8800.
measures is not at all to generate revenue for the government, but to provide
C. protection to domestic industry threatened by import surges. Thus, while suspending
WHETHER OR NOT PETITIONERS HAVE ADEQUATELY SHOWN A the collection of internal revenue taxes will definitely cripple the government,
CLEAR RIGHT TO INJUNCTIVE RELIEF. enjoining the enforcement of safeguard measures would not necessarily drain the
D. national coffer. Note that safeguard measures are not always in the form of a tariff
increase. Safeguard measures may, and in fact, usually take the form of a simple
WHETHER OR NOT THE COURT OF APPEALS COMMITTED quantitative restriction on imports.13
REVERSIBLE ERROR WHEN IT FAILED TO DISMISS THE THIRD
PETITION (C.A.-G.R. S.P. No. 67397) FILED BY PUBLIC RESPONDENTS Clearly, safeguard measures are not in the nature of taxes, in the sense of being the
WITH THE COURT OF APPEALS.6 lifeblood of the national economy, such that their enforcement cannot per se be
enjoined. Having settled this preliminary matter, we now look at the merits of the
Petitioners maintain that Rep. Act No. 8800 violates Article VI, Section 28 (2) instant petition.
of the Constitution.7 They contend that the said provision does not authorize
Congress to delegate the power to impose tariff rates, import and export quotas, Under Rule 58, Section 3 of the Revised Rules of Court, any of the following grounds
tonnage and wharfage dues and other duties or imposts to persons other than justifies the issuance of a preliminary injunction:
the President. They further argue that Rep. Act No. 8800 impairs Philippine (a) That the plaintiff is entitled to the relief demanded, and the whole or part of such
treaty obligations under the WTO Agreement on Safeguards. In fine, they relief consists in restraining the commission or continuance of the acts complained
contend that they have made out a case of unconstitutionality sufficient to entitle of, or in the performance of an act or acts, either for a limited period or perpetually;
them to a writ of preliminary injunction. Lastly, petitioners allege that (b) That the commission or continuance of some act complained of during the
respondents engaged in forum-shopping. litigation or the non-performance thereof would probably work injustice to the
Respondents, however, insist that the Court of Appeals correctly ruled that Rep. plaintiff; or
Act No. 8800 enjoys the presumption of constitutionality. They argue that the
enactment of Rep. Act No. 8800 constitutes a valid delegation of legislative
(c) That the defendant is doing, threatens, or is about to do, or is procuring or This, to us, is sufficient to entitle petitioners to a preliminary injunction. We
suffering to be done, some act probably in violation of the plaintiff’s rights thus hold that the Court of Appeals erred in reversing the trial court order
respecting the subject of the action, and tending to render the judgment granting the writ of preliminary injunction.
ineffectual. WHEREFORE, the petition is GRANTED. The Court of Appeals’ Decision,
In the instant case, the act complained of is the enforcement of Rep. Act No. dated February 28, 2003, in CA-G.R. SP No. 67397, is REVERSED and SET
8800. Petitioners pointed out that Rep. Act No. 8800 delegated the power to ASIDE. The Order, dated September 4, 2001, of the Regional Trial Court of
fix tariffs and imposts directly to the Secretary of the Department of Trade and Valenzuela City, Branch 172, in Civil Case No. 82-V-01 is
Industry. Moreover, they showed that Rep. Act No. 8800 impairs Philippine hereby REINSTATED. No pronouncement as to costs.
treaty obligations under the WTO Agreement on Safeguards.14
We have ruled that when the petitioner assailing a statute has made out a case
of unconstitutionality strong enough to overcome, in the mind of the judge, the
presumption of validity, in addition to a showing of a clear legal right to the
remedy sought, the court should issue a writ of preliminary injunction.15
After a careful consideration of the submission by the parties, we are
convinced that petitioners herein have established a strong case for the
unconstitutionality of Rep. Act No. 8800 sufficient for the grant of a
preliminary injunction. Note, however, that a writ of preliminary injunction is
issued merely to preserve the status quo ante.16 Its sole objective is to
preserve the status quo until the merits of the case can be heard fully. It is
generally availed of to prevent actual or threatened acts, until the merits of the
case can be disposed of.17
Respondents tenaciously argue that Rep. Act No. 8800 enjoys the presumption
of validity and constitutionality until proven otherwise. True, but for the
purpose of issuing a provisional remedy, strictly speaking, this contention
lacks relevance. Obviously, a law need not be declared unconstitutional first
before a preliminary injunction against its enforcement may be
granted.18 Needless to stress, the moment a law is nullified for being
unconstitutional, it ceases to exist. Thus, a writ of injunction would then
become superfluous.
Only two requisites are necessary for a preliminary injunction to issue: (1) the
existence of a right to be protected and (2) the facts, against which the
injunction is to be directed violate said right.19 While a clear showing of the
right is necessary, its existence need not be conclusively established. In fact,
the evidence required to justify the issuance of a writ of preliminary injunction
need not be conclusive or complete. The evidence need only give the court an
idea of the justification for the preliminary injunction, pending the decision of
the case on the merits. Thus, to be entitled to the writ, petitioners are only
required to show that they have an ostensible right to the final relief prayed for
in their complaint.20
In this case, petitioners have demonstrated a clear right threatened by the
questioned safeguard measures. Being in a business heavily dependent on
importation of steel, they would be severely damaged once safeguard measures
are applied against steel imports. Petitioners have shown, to the satisfaction of
the trial court and this Court that any increase in tariffs or quantitative
restriction on imports will force them to close down their respective businesses
and lay off their employees.

44