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PRELIMINARY INJUNCTION FULL TEXT CASES

Contents
Limitless Potentials v CA CLAROS........................................................................2
Semirara Coal Corporation v. HGL Development, G.R. No. 166854, December 6,
2006................................................................................................................... 11
China Banking Corporation v. Co, G.R. No. 174569, September 17, 2008..........22
Devesa v. Arbes, 13 Phil. 273............................................................................. 27
Preysler v. CA, G.R. No. 158141, July 11, 2006...................................................31
Limitless Potentials (supra) CLAROS..................................................................35
Mantile v. Cajucom, 19 Phil. 563 MARCELO........................................................35
Feliciano v. Alipio, G.R. No. L-5656, March 24, 1954 GIME..................................41
Semirara Coal, supra. TORREJOS........................................................................42
Barayuga v. Adventist University, G.R. No. 168008, 17 August 2011
ESPARAGOZA...................................................................................................... 42
Australian Professional Realty, Inc. v. Municipality of Padre Garcia Batangas, G.R.
No. 183367, March 14 2012 DUYONGCO............................................................52
Philippine National Bank v. RJ Ventures, G.R. No. 164548, September 27, 2006
BITANGJOL.......................................................................................................... 59
Australian Professional Realty, Inc. (id) DUYUNGCO...........................................77
Ermita v. Aldecoa-Delorino, G.R. No. 177130, 7 June 2011 FERNANDEZ............77
Overseas Workers Welfare Administration v. Chavez, G.R. No. 169802, June 8,
2007 SITOY......................................................................................................... 88
Dungog v. CA, G.R. No. 139767. August 5, 2003 DACUA..................................102
Executive Secretary v. CA, G.R. No. 131719, 25 May 1994 FAITH....................107
Mabayo Farm v. CA, G.R. No. 140058, August 1, 2002 HIYAS...........................122
Senate Blue Ribbon Committee v. Majuducon, G.R. No. 13378, July 29, 2003
BELLEZA........................................................................................................... 125
Southern Cross Cement v. Philippine Cement Manufacturers, G.R. No. 158540,
July 8, 2004 LIM................................................................................................ 131
Delta Ventures v. Cabato, G.R. No. 118216, March 9, 2000 REALINO...............153
Bangko Sentral ng Pilipinas Monetary Board and Chuci Fonancier Vs. Hon. Nina
G. Antonio-Valenzuela, etc., et al., G.R. No. 184778, October 2, 2009 BRAGAT157
Traders Royal Bank v. IAC, G.R. No. L-66321, October 31, 1984 PAGAPONG....168
RCBC Capital Corporation v. Banco de Oro Unibank, Inc., G.R. No. 196171, 10
December 2012 TIU......................................................................................... 172

Supreme Court Administrative Circular No. 11 2000 MISSING!.....................175


Republic v. Nolasco, G.R. No. 155108, April 27, 2005......................................176
Hernandez v. National Power Corp., G.R. No. 145328, March 23, 2006............190
Department of Foreign Affairs v. Falcon, G.R. No. 176657, 1 September 2010 198
Nerwin Industries Corp. v. PNOC-Energy Development Corporation, G.R. No.
167057, April 11, 2012..................................................................................... 233
Baguio Regreening Movement, Inc. v. Masweng, G.R. No. 180882, 27 February
2013................................................................................................................. 246
Republic v. Evangelista, G.R. No. 156015, August 11, 2005.............................252
Landbank of the Philippines v. Continental Watchman, G.R. No. 136114, January
22, 2004........................................................................................................... 257
Limitless Potentials (supra) CLAROS................................................................261
Spouses Yap v. International Exchange Bank, G.R. No. 175145, March 28, 2008
......................................................................................................................... 261
Interim Rules on Intra-Corporate Controversies, section on provisional remedies
8/13.................................................................................................................. 273
A.M. No. 07-11-08-SC, Special Rules of Court on Alternative Dispute Resolution
......................................................................................................................... 273
(Read and understand Rule 5, Interim Measures of Protection).......................273
R.A. 8975.......................................................................................................... 277
SC Cir. 68-94 (November 3, 1994)....................................................................279
SC Resolution of February 17, 1998 (supra, Part VI, F, 10)...............................280
SC Cir. 13-93.................................................................................................... 281
SC Admin. Cir. 20-95 (February 12 ,1995)........................................................282

Limitless Potentials v CA CLAROS


G.R. No. 164459
LIMITLESS
vs.

April 24, 2007


POTENTIALS,

INC., Petitioner,

HON. COURT OF APPEALS,


VILLASOR, Respondents.

CRISOSTOMO

YALUNG,

and

ATTY.

ROY

MANUEL

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure seeking to annul and set aside: (1) The Decision, 1 dated 16 September 2003, of the
Court of Appeals in CA-G.R. SP No. 73463 entitled, Limitless Potentials, Inc. vs. Hon. Manuel D.
Victorio, in his capacity as the Presiding Judge of the Regional Trial Court of Makati City, Branch
141, Crisostomo Yalung, and Atty. Roy Manuel Villasor, which dismissed herein petitioners Petition
for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure for lack of merit, and (2)
The Resolution,2 dated 8 July 2004, of the appellate court in the same case which denied petitioners
Motion for Reconsideration because the issues and arguments raised therein had already been
passed upon and judiciously resolved in the Decision dated 16 September 2003.
The controversy of this case stemmed from the following facts:
On 12 October 1995, Digital Networks Communications and Computers, Inc. (Digital) and herein
petitioner Limitless Potentials, Inc. (LPI), a domestic corporation duly organized and existing under
Philippine laws, entered into a Billboard Advertisement Contract whereby petitioner was to construct
one billboard advertisement for Digitals product for a period of one year, with an agreed rental
of P60,000.00 per month plus Value Added Tax (VAT). It was agreed, among other things, that Digital
will make a three-month deposit in the following manner, to wit: (a) P60,000.00 plus VAT upon the
signing of the contract, and (b) P120,000.00 plus VAT upon completion of the billboard. Digital
complied with the aforesaid agreement.
The billboard, however, was destroyed by unknown persons. In view thereof, the contract between
Digital and the petitioner was considered terminated. Digital demanded for the return of their rental
deposit for two months, but the petitioner refused to do so claiming that the loss of the billboard was
due to force majeure and that any cause of action should be directed against the responsible
persons. Thus, on 18 April 1997, Digital commenced a suit against herein petitioner before the
Metropolitan Trial Court (MeTC) of Makati City, Branch 66, presided over by then Judge Estela
Perlas-Bernabe (Judge Perlas-Bernabe)3 , for the return of Digitals deposit, which was equivalent to
two months rental inclusive of VAT and attorneys fees. The case was docketed as Civil Case No.
55170.
On 18 June 1997, consistent with its defense against Digitals Complaint, petitioner filed a Third
Party Complaint4against Macgraphics Carranz International Corporation (Macgraphics) and herein
private respondents Bishop Crisostomo Yalung (Bishop Yalung) and Atty. Roy Manuel Villasor (Atty.
Villasor) alleging that it had entered into a contract of lease with Roman Catholic Archbishop of
Manila (RCAM), as represented by the private respondents, over a space inside San Carlos Manor
Seminary in Guadalupe Viejo, Makati City, where petitioner erected the subject billboard. Petitioner
further averred that despite its full compliance with the terms and conditions of the lease contract,
herein private respondents, together with their cohorts, maliciously dismantled and destroyed the
subject billboard and prevented its men from reconstructing it. Thereafter, petitioner learned that
Macgraphics had "cajoled and induced" RCAM, through the private respondents, to destroy the
subject billboard to enable Macgraphics to erect its own billboard and advertising signs. Thus, by

way of affirmative defenses, petitioner claimed that: (a) the destruction of the subject billboard was
not of its own making and beyond its control, and (b) Digitals cause of action, if any, should be
directed against the private respondents and Macgraphics. Hence, petitioner prayed that judgment
be rendered in its favor and to hold private respondents liable for the following: (a) moral damages in
the amount of P1,000,000.00; (b) exemplary, temperate and nominal damages amounting
to P300,000.00; (c) P300,000.00 as attorneys fees; (d) P50,000.00 as litigation expenses; and (e)
costs of suit, allegedly suffered or incurred by it because of the willful destruction of the billboard by
the private respondents.
In response, private respondents filed a Motion to Dismiss the aforesaid Third-Party Complaint
based on the following grounds: (1) litis pendentia; (2) lack of cause of action; (3) forum shopping;
and (4) lack of privity of contract. The MeTC, in an Order dated 25 August 1997, 5 denied the said
Motion to Dismiss. Petitioner filed an Amended Third-Party Complaint. Again, private respondents
filed a Motion to Dismiss Amended Third-Party Complaint. However, the MeTC also denied the
Motion to Dismiss Amended Third-Party Complaint in an Order dated 10 October 1997. 6
On 9 December 1997, private respondents filed a Petition for Certiorari with Prayer for Preliminary
Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of
Makati City, assailing the Orders dated 25 August 1997 and 10 October 1997 of the MeTC of Makati
City denying their Motion to Dismiss Third-Party Complaint and Motion to Dismiss Amended ThirdParty Complaint, respectively, in Civil Case No. 55170.
The RTC issued an Order on 6 February 1998, 7 granting private respondents prayer for a writ of
preliminary injunction, conditioned upon the posting of an injunction bond in the amount
of P10,000.00. Thus, the MeTC was enjoined from hearing the Third-Party Complaint in Civil Case
No. 55170. The pertinent portion of the aforesaid Order reads, as follows:
When the application for temporary restraining order and/or preliminary injunction was heard this
afternoon, [herein petitioner] who did not file comment on the petition appeared thru counsel
Emmanuel Magnaye. It was brought out to the attention of this Court that respondent judge is poised
on pursuing the hearing of the case before her despite the pendency of this petition. It appeared that
the case was set by respondent judge for hearing ex-parte for the reception of [herein petitioners]
evidence on 23 February 1998. It also appeared that [herein private respondents] were declared in
default despite the fact that they have filed their answer and the motion to lift such order of default
and for admission of the answer was denied by respondent judge.
Upon consideration of the allegations in the petition and the oral manifestations and admissions of
both parties, this Court hereby resolves to issue the writ of preliminary injunction in order to preserve
the status quo as well as not to render the issue herein raised moot and academic.
WHEREFORE, the motion for preliminary injunction is granted. Accordingly, upon the filing by [herein
private respondents] of a bond in the amount of P10,000.00, let a writ of preliminary injunction be
issued, enjoining respondent judge, or her successor, from hearing the [T]hird [P]arty [C]omplaint
against [herein private respondents] in Civil Case No. 55170 until further orders from this Court. 8
Subsequently, however, the RTC rendered a Decision 9 on 28 April 2000, dismissing the Petition for
Certiorari filed by private respondents, the dispositive portion of which reads:

WHEREFORE, the petition is hereby dismissed for lack of merit. The preliminary injunction issued by
this Court on 6 February 200010 (sic) is hereby dissolved.
Costs against [herein private respondents].11
Disgruntled, private respondents filed an Urgent Motion for Reconsideration, which was denied by
the RTC in its Order12 dated 26 June 2000.
Petitioner filed its Motion for Judgment Against the Bond, and in compliance with the directive of the
RTC, the petitioner filed a pleading 13 specifying its claims, thus: (a) attorneys fees in the sum of P74,
375.00; and (b) moral damages for the tarnished good will in the sum of P1,000,000.00.
The RTC, in its Order dated 3 April 2002, 14 denied petitioners Motion for Judgment Against the Bond
declaring that the preliminary injunction was not wrongfully obtained; therefore, the claim for
damages on the bond is untenable.
Aggrieved, the petitioner moved for the reconsideration of the aforesaid Order, which was also
denied by the RTC in its Order dated 6 August 2002. 15
Dissatisfied, the petitioner filed a Petition for Certiorari under Rule 65 of the Revised Rules of Civil
Procedure before the Court of Appeals assailing the Orders of the RTC dated 3 April 2002 and 6
August 2002 for having been issued with grave abuse of discretion amounting to lack and/or excess
of jurisdiction.
On 6 November 2002, the Court of Appeals issued a Resolution 16 dismissing the Petition for failure to
show proof that a certain Quirino B. Baterna has been duly authorized by the petitioner to file the
Petition for and in its behalf. Petitioner moved for the reconsideration of the aforesaid Resolution,
which was granted by the appellate court in its Resolution dated 24 January 2003 17 thereby
reinstating the Petition for Certiorari filed by the petitioner.
On 16 September 2003, the Court of Appeals rendered a Decision dismissing the Petition filed by
the petitioner for utter lack of merit. The petitioner filed a Motion for Reconsideration based on the
following grounds:
I. The dismissal of the petition and dissolution of the injunction amount to a determination
that the injunction was wrongfully or improvidently obtained.
II. The petitioner suffered damages by reason of the issuance of the injunction.
III. The damages claimed by the petitioner are covered by the injunction bond.
The Court of Appeals through a Resolution dated 8 July 2004, denied the petitioners Motion for
Reconsideration.
Hence, this Petition.
Petitioner pointed out two basic legal issues wherein the appellate court committed serious and
reversible errors, to wit:

I. Is malice or bad faith a condition sine qua non for liability to attach on the injunction bond?
II. Are attorneys fees, litigation costs, and cost of delay by reason of the injunction covered
by the injunction bond?
Petitioner argues that malice or lack of good faith is not an element of recovery on the bond. 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
immediately accrues to the defendant. The petitioner maintains that the attorneys fees, litigation
costs, and cost of delay by reason of the injunction are proper and valid items of damages which can
be claimed against the injunction bond. Hence, having proven through testimonial and documentary
evidence that it suffered damages because of the issuance of the writ of injunction, and since malice
or lack of good faith is not an element of recovery on the injunction bond, petitioner asserts that it
can properly collect such damages on the said bond.
Private respondent Bishop Yalung on the other hand, prays for the outright dismissal of the present
Petition due to the alleged failure of the petitioner to comply with the mandatory rule on proper
certification on non-forum shopping under Section 5, Rule 7 of the 1997 Revised Rules of Civil
Procedure. According to him, it is not sufficient for Mr. Baterna to make the undertaking that "I have
not commenced any other action or proceeding involving the same issue in the Supreme Court, etc."
inasmuch as such undertaking should have been made by the principal party, namely, the petitioner.
He underscores that the verification/disclaimer of forum shopping executed by Mr. Baterna on behalf
of the petitioner is legally defective for failure to enumerate with particularity the multiple civil and
criminal actions, which were filed by him and the petitioner against the private respondents.
Private respondent Bishop Yalung also avers that the petitioner is not entitled to collect damages on
the injunction bond filed before the court a quo. Primarily, as the appellate court mentioned in its
Decision, the preliminary injunction was directed not against the petitioner but against the MeTC.
The petitioner was not restrained from doing any act. What was restrained was the hearing of the
Third-Party Complaint while the Petition for Certiorari was pending, "in order to preserve the status
quo and not to render the issue therein moot and academic." 18Also, the fact that the decision is
favorable to the party against whom the injunction was issued does not automatically entitle the
latter to recover damages on the bond. Therefore, the petitioner cannot claim that it suffered
damages because of the issuance of the writ of injunction.
Private respondent Atty. Villasor shares the same argument as that of his co-respondent Bishop
Yalung that it was the MeTC which was enjoined and not herein petitioner. Private respondent Atty.
Villasor further alleged that in the Special Civil Action for Certiorari, the action is principally against
any tribunal, board, or officer exercising judicial or quasi-judicial functions who has acted without or
in excess of jurisdiction or with grave abuse of discretion. Thus, private respondents Petition for
Certiorari before the RTC principally pertains to the MeTC and not to herein petitioner. Additionally,
private respondent Atty. Villasor argues that it was petitioner who was benefited by such writ of
preliminary injunction, because the injunction left Digital unable to prosecute Civil Case No. 55170
against herein petitioner. Lastly, private respondent Atty. Villasor claims that petitioner did not oppose
their application for a writ of preliminary injunction at the hearing wherein petitioner was duly
represented by counsel.
Simply stated, the threshold issues are:

I. Can petitioner recover damages from the injunction bond?


II. Was petitioner able to substantiate the damages?
Quite apart from the above, there appears to be another question concerning the alleged violation by
the petitioner of the mandatory rule on proper certification on non-forum shopping.
In the case at bar, petitioner repeatedly argues that malice or lack of good faith is not an element of
recovery on the injunction bond. In answering this issue raised by petitioner, this Court must initially
establish the nature of the preliminary injunction, the purpose of the injunction bond, as well as the
manner of recovering damages on the said bond.
A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and
protect certain rights and interests during the pendency of an action. 19 It is an order granted at any
stage of an action, prior to the judgment or final order, requiring a party, court, agency or person to
perform or to refrain from performing a particular act or acts. A preliminary injunction, as the term
itself suggests, is merely temporary, subject to the final disposition of the principal action. 20 It is
issued to preserve the status quo ante, which is the last actual, peaceful, and uncontested status
that preceded the actual controversy,21 in order to protect the rights of the plaintiff during the
pendency of the suit. Otherwise, if no preliminary injunction is issued, the defendant may, before
final judgment, do the act which the plaintiff is seeking the court to restrain. This will make ineffectual
the final judgment that the court may afterwards render in granting relief to the plaintiff. 22 The status
quo should be existing ante litem motam, or at the time of the filing of the case. For this reason, a
preliminary injunction should not establish new relations between the parties, but merely maintain or
re-establish the pre-existing relationship between them. 23
The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to
some of the parties before their claims can be thoroughly studied and adjudicated. Thus, to be
entitled to an injunctive writ, the petitioner has the burden to establish the following requisites:
(1) a right in esse or a clear and unmistakable right to be protected;
(2) a violation of that right;
(3) that there is an urgent and permanent act and urgent necessity for the writ to
prevent serious damage.24
A preliminary injunction or temporary restraining order may be granted only when, among other
things, the applicant, not explicitly exempted, files with the court, where the action or proceeding is
pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to
the effect that the applicant will pay such party or person all damages which he may sustain by
reason of the injunction or temporary restraining order if the court should finally decide that the
applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary
injunction shall be issued.25 Thus, the posting of a bond is a condition sine qua non for a writ of
preliminary injunction to be issued.
The injunction bond is intended as a security for damages in case it is finally decided that the
injunction ought not to have been granted. Its principal purpose is to protect the enjoined party

against loss or damage by reason of the injunction, 26 and the bond is usually conditioned
accordingly.
The damages sustained as a result of a wrongfully obtained injunction may be recovered upon the
injunction bond which is required to be deposited with court. 27 Rule 57, Section 20, of the 1997
Revised Rules of Civil Procedure, which is similarly applicable to preliminary injunction, 28 has
outlined the procedure for the filing of a claim for damages against an injunction bond. The aforesaid
provision of law pertinently provides:
SEC. 20. Claim for damages on account of improper, irregular or excessive attachment. - An
application for damages on account of improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the judgment becomes executory, with due
notice to the attaching party and his surety or sureties, setting forth the facts showing his right to
damages and the amount thereof. Such damages may be awarded only after proper hearing and
shall be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party against whom the attachment was
issued, he must claim damages sustained during the pendency of the appeal by filing an application
in the appellate court, with notice to the party in whose favor the attachment was issued or his surety
or sureties, before the judgment of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the attachment was issued from
recovering in the same action the damages awarded to him from any property of the attaching party
not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully
satisfy the award.29
Now, it can be clearly gleaned that there is nothing from the aforequoted provision of law which
requires an enjoined party, who suffered damages by reason of the issuance of a writ of injunction,
to prove malice or lack of good faith in the issuance thereof before he can recover damages against
the injunction bond. This Court was very succinct in the case of Aquino v. Socorro, 30 citing the case
of Pacis v. Commission on Elections,31 thus:
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 a bond a useless formality. 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 petitioners main cause of action provides the actionable wrong for the purpose of
recovery upon the bond.
We, therefore, agree with the petitioner that indeed, malice or lack of good faith is not a condition
sine qua non for liability to attach on the injunction bond.
With respect to the issue raised by the petitioner regarding the coverage of the injunction bond, this
Court finds it necessary to quote once again the provision of Section 4(b), Rule 58 of the 1997
Revised Rules of Civil Procedure, to wit:

Unless exempted by the court, the applicant files with the court where the action or proceeding is
pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to
the effect that the applicant will pay to such party or person all damages which he may sustain by
reason of the injunction or temporary restraining order if the court should finally decide that the
applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary
injunction shall be issued.
The aforesaid provision of law clearly provides that the injunction bond is answerable for all
damages. The bond insures with all practicable certainty that the defendant may sustain no ultimate
loss in the event that the injunction could finally be dissolved. 32 Consequently, the bond may obligate
the bondsmen to account to the defendant in the injunction suit for all damages, or costs and
reasonable counsels fees, incurred or sustained by the latter in case it is determined that the
injunction was wrongfully issued.33 Likewise, the posting of a bond in connection with a preliminary
injunction does not operate to relieve the party obtaining an injunction from any and all responsibility
for damages that the writ may thereby cause. It merely gives additional protection to the party
against whom the injunction is directed. It gives the latter a right of recourse against either the
applicant or his surety or against both.34
The contention of the petitioner, thus, is tenable. Attorneys fees, litigation costs, and costs of delay
can be recovered from the injunction bond as long as it can be shown that said expenses were
sustained by the party seeking recovery by reason of the writ of preliminary injunction, which was
later on determined as not to have been validly issued and that the party who applied for the said
writ was not entitled thereto. The case of Aquino v. Socorro, 35 citing the case of Pacis v. Commission
on Elections,36 holds 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. It is also erroneous for the appellate court to rule that
petitioner is not entitled to claim damages from the injunction bond simply because the preliminary
injunction was directed against the MeTC and not against the petitioner. The MeTC does not stand
to suffer damages from the injunction because it has no interest or stake in the Petition pending
before it. Damage or loss is suffered by the party whose right to pursue its case is suspended or
delayed, which in this case, is the petitioner. Upon issuance of the writ of injunction, it is the
petitioner who will stand to suffer damages for the delay in the principal case because, had it not
been for the injunction, the petitioner would not have incurred additional expenses for attending the
separate hearings on the injunction, and the RTC can already decide the main case and make a
prompt determination of the respective rights of the parties therein. Hence, even if the preliminary
injunction was directed against the MeTC and not against the petitioner, it is the latter which has the
right to recover from the injunction bond the damages which it might have suffered by reason of the
said injunction.
As to the second main issue in the present case, although we do recognize that the petitioner had a
right to recover damages from the injunction bond, however, we agree in the findings of the Court of
Appeals, which affirmed the findings of the RTC, that the petitioner did not sustain any damage by
reason of the issuance of the writ of injunction. In the petitioners Motion for Judgment Against the
Bond,37 petitioner stated therein, thus:
5. There can be no serious debate that the issuance of the Writ of Preliminary injunction, all at the
instance of [herein private respondents], resulted in actual and pecuniary damages on the part of
[herein petitioner] in the amount more than the value of the bond posted by [private respondents].

The attorneys fees for expenses in litigation alone expended by [petitioner] to defend itself in this
proceedings, not to mention other pecuniary damages, amounts to P10,000.00. 38
In the case at bar, petitioner is claiming attorneys fees in the sum of P74,375.00 it allegedly paid to
defend itself in the main case for certiorari, which it would not have spent had the private
respondents not filed their nuisance Petition and secured a writ of preliminary injunction. Likewise,
by reason of the unfounded suit, the good will of the petitioner was brought to bad light, hence,
damaged.39 It is noteworthy to mention that the undertaking of the injunction 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. Apparently, as the appellate
court pointed out in its Decision dated 16 September 2003, the damages being claimed by the
petitioner were not by reason of the injunction but the litigation expenses it incurred in defending
itself in the main case for certiorari, which is definitely not within the coverage of the injunction bond.
Thus, this Court is not convinced that the attorneys fees in the amount of P74,375.00 as well as the
moral damages for the tarnished good will in the sum of P1,000,000.00 were suffered by the
petitioner because of the issuance of the writ of injunction.
Furthermore, this Court will not delve into the sufficiency of evidence as to the existence and amount
of damages suffered by petitioner for it is already a question of fact. It is settled that the factual
findings of the trial court, particularly when affirmed by the Court of Appeals, are binding on the
Supreme Court.40 Although this rule is subject to exceptions, 41 the present case does not fall into any
of those exceptions which would have allowed this Court to make its own determination of facts. This
Court upholds the factual findings of both the RTC and the Court of Appeals that there is insufficient
evidence to establish that petitioner actually suffered damages because of the preliminary injunction
issued by the RTC.
Now, on the matter of proper certification on non-forum shopping.
The requirement of a Certification on Non-Forum Shopping is contained in Rule 7, Section 5, of the
1997 Revised Rules of Civil Procedure, which states that:
The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or similar
action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to
the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
of court without prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause
for administrative sanctions.

Private respondent Bishop Yalung might have overlooked the Secretarys Certificate 42 attached to the
petitioners Petition for Review, which authorized Mr. Baterna, President of herein petitioner LPI, to
represent the latter in this case. According to the Secretarys Certificate, the Board of Directors of
petitioner LPI, at a special meeting held on 12 August 2004 at its office at No. 812 J.P. Rizal St.,
Makati City, during which there was a quorum, the following resolutions were approved, to wit:
RESOLVED, AS IT IS HEREBY RESOLVED, that the corporation reiterates the authority of its
President, Mr. Quirino B. Baterna, to represent the corporation in all cases by and/or against the
corporation vis--vis the Roman Catholic Archbishop of Manila/Crisostomo Yalung, Roy
Villasor/Digital Netwrok (sic) Communications and Computers, Inc., and/or MacGraphics Carranz
International Corporation, to file a Petition for Review on Certiorari with the Supreme Court docketed
as G.R. No. 164459 to assert/protect LPIs rights and interests in connection with C.A.-G.R. No.
73463, entitled "Limitless Potentials, Inc., vs. Hon. Manuel Victorio, et al.," Honorable Court of
Appeals, Manila.
RESOLVED FURTHERMORE, that any and all acts of our President, concerning the abovereferenced subject matter are hereby affirmed, confirmed and ratified by the corporation for all legal
intents and purposes.43
Private respondent Bishop Yalung further argued that Mr. Baterna failed to enumerate in the
Certification against Forum Shopping the multiple cases filed by him and the petitioner against
private respondents. This is also erroneous.
Forum shopping consists of filing multiple suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. 44 It
exists where the elements of litis pendentia 45 are present or where a final judgment in one case will
amount to res judicata in another.46 It may be resorted to by a party against whom an adverse
judgment or order has been issued in one forum, in an attempt to seek a favorable opinion in
another, other than by an appeal or a special civil action for certiorari.47
As the RTC correctly found, there was no violation of the rule against forum shopping. The cause of
action in petitioners case for consignation and damages docketed as Civil Case No. 95-1559, 48 is
different from the cause of action in its Third-Party Complaint in Civil Case No. 55170. The damages
sought in the first case were those suffered by petitioner by reason of the alleged breach of the
contract of lease by the RCAM; whereas the damages sought in the Third-Party Complaint were
those allegedly suffered by petitioner owing to the destruction of its billboard by the private
respondents, thereby terminating the Billboard Advertisement Contract between petitioner and
Digital. Digital also sued petitioner for recovery of the rental deposits it had already paid under the
same contract. Consequently, petitioner had to engage the services of counsel and incurred litigation
expenses in order to defend itself in the case filed against it by Digital. Thus, the two actions are
completely different and distinct from each other so much so that a decision in either case could not
be pleaded as res judicata in the other. Hence, there is no forum shopping that would necessitate
the outright dismissal of this case.
WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and
Resolution of the Court of Appeals dated 16 September 2003 and 8 July 2004, respectively, affirming
the Decision of the RTC dated 28 April 2000, denying herein petitioners motion to recover damages
against the injunction bond, are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

Semirara Coal Corporation v. HGL Development, G.R. No. 166854, December


6, 2006

SEMIRARA COAL CORPORATION(now


SEMIRARA MINING CORPORATION),

G.R. No. 166854

Petitioner,
Present:

- versus -

QUISUMBING, J., Chairperson,


CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

HGL DEVELOPMENT CORPORATIONand Promulgated:


HON. ANTONIO BANTOLO, Presiding
Judge, Branch 13, Regional Trial December 6, 2006
Court, 6th Judicial
Region,
Culasi,
Antique,
Respondents.
x--------------------------------------------------x
DECISION
QUISUMBING, J.:

Before us is a petition for review on certiorari assailing the Decision [1] dated
January 31, 2005, of the Court of Appeals in CA G.R. CEB SP No. 00035 which
affirmed the Resolution[2] dated September 16, 2004 of the Regional Trial Court of
Culasi, Antique, Branch 13.
The facts are as follows:
Petitioner Semirara Mining Corporation is a grantee by the Department of
Energy (DOE) of a Coal Operating Contract under Presidential Decree No. 972[3] over

the entire Island of Semirara, Antique, which contains an area of 5,500 hectares
more or less.

[4]

Private respondent HGL Development Corporation is a grantee of Forest Land


Grazing Lease Agreement (FLGLA) No. 184 by the then Ministry of Environment and
Natural Resources,[5] over 367 hectares of land located at the barrios of Bobog and
Pontod,

Semirara,

Caluya,

on September 28,1984[6] for

Antique. The
a

FLGLA

term

No. 184 was

of 25 years,

issued

to

end

on December 31, 2009. Since its grant, HGL has been grazing cattle on the subject
property.
Sometime

in 1999,

petitioners

representatives

approached

HGL

and

requested for permission to allow petitioners trucks and other equipment to pass
through the property covered by the FLGLA. HGL granted the request on condition
that petitioners use would not violate the FLGLA in any way. Subsequently, however,
petitioner erected several buildings for petitioners administrative offices and
employees residences without HGLs permission. Petitioner also conducted blasting
and

excavation;

constructed

an

access

road

to

petitioners

minesite

in

the Panaan Coal Reserve, Semirara; and maintained a stockyard for the coal it
extracted from its mines. Thus, the land which had been used for cattle grazing was
greatly damaged, causing the decimation of HGLs cattle.
On September 22, 1999, HGL wrote petitioner demanding full disclosure of
petitioners activities on the subject land as well as prohibiting petitioner from
constructing any improvements without HGLs permission. Petitioner ignored the
demand and continued with its activities.
On December 6, 2000,

the

Department

of

Environment

and

Natural

Resources (DENR) unilaterally cancelled FLGLA No. 184 and ordered HGL to vacate
the premises.The DENR found that HGL failed to pay the annual rental and
surcharges

from 1986 to 1999 and

to

submit

the

required

Grazing

Reports

from 1985 to 1999 or pay the corresponding penalty for non-submission thereof. [7]
HGL

contested

the

findings

and

filed

letter

of

reconsideration

on January 12, 2001, which was denied by DENR Secretary Heherson Alvarez in a
letter-order datedDecember 9, 2002. The DENR stated that it had coordinated with

the DOE, which had jurisdiction over coal or coal deposits and coal-bearing lands,
and was informed that coal deposits were very likely to exist in Sitios Bobog and
Pontod. Hence, unless it could be proved that coal deposits were not present, HGLs
request had to be denied.[8]
HGL sent a letter dated March 6, 2003 to DENR Secretary Alvarez seeking
reconsideration. The DENR did not act on the letter and HGL later withdrew this
second letter of reconsideration in its letter of August 4, 2003.
On November 17, 2003, HGL filed a complaint against the DENR for specific
performance and damages with prayer for a temporary restraining order and/or writ
of

preliminary

injunction,

docketed

as

Civil

Case

No. 20675 (2003)

with

the Regional Trial Court of Caloocan City. A writ of preliminary injunction was issued
by the Caloocan City RTC on December 22, 2003, enjoining the DENR from enforcing
its December 6, 2000 Order of Cancellation.
Meanwhile, HGL had also filed on November 17, 2003, a complaint against
petitioner for Recovery of Possession and Damages with Prayer for TRO and/or Writ
of Preliminary Mandatory Injunction, docketed as Civil Case No. C-146 with the
Regional Trial Court of Culasi, Antique, Branch 13.[9]
On December 1, 2003, the Antique trial court heard the application for Writ of
Preliminary Mandatory Injunction in Civil Case No. C-146. Only HGL presented its
evidence. Reception

for

petitioners

evidence

was

set

to March 23-

24, 2004. Petitioner was notified. But, on March 19, 2004, petitioners President
wrote the court asking for postponement since its counsel had suddenly
resigned. The trial court refused to take cognizance of the letter and treated it as a
mere scrap of paper since it failed to comply with the requisites for the filing of
motions and since it was not shown that petitioners President was authorized to
represent petitioner. Because of petitioners failure to attend the two scheduled
hearings, the trial court, in an Order dated March 24, 2004, deemed the application
for issuance of a Writ of Preliminary Mandatory Injunction submitted for
decision.Meanwhile, petitioner had filed its Answer dated February 26, 2004, raising
among others the affirmative defense that HGL no longer had any right to possess
the subject property since its FLGLA has already been cancelled and said
cancellation had already become final.

On April 14, 2004, petitioner filed a verified Omnibus Motion praying that the
trial court reconsider its Order of March 24, 2004, since petitioners failure to attend
the hearing was due to an accident. Petitioner also prayed that the trial court admit
as part of petitioners evidence in opposition to the application for injunction,
certified copies of the DENR Order of Cancellation dated December 6, 2000; HGLs
letter of reconsideration dated January 12, 2001; letter of DENR Secretary Alvarez
dated December 9, 2002denying reconsideration of the order; and registry return
receipt showing HGLs receipt of the denial of reconsideration. In the alternative,
petitioner prayed that the case be set for preliminary hearing on its affirmative
defense of lack of cause of action and forum-shopping. [10] Public respondent denied
the Omnibus Motion in a Resolution dated June 21,2004.
Petitioner filed a motion for reconsideration of the said resolution. Upon HGLs
opposition, the motion was declared submitted for resolution in accordance with the
trial courts Order of August 5, 2004.[11]
On September 16, 2004, the trial court granted the prayer for issuance of a
Writ

of

Preliminary

Mandatory

Injunction. [12] Petitioner

did

not

move

for

reconsideration of the order. The Writ of Preliminary Mandatory Injunction was


accordingly issued by the trial court on October 6, 2004.[13] The writ restrained
petitioner or its agents from encroaching on the subject land or conducting any
activities in it, and commanded petitioner to restore possession of the subject land
to HGL or its agents.
Petitioner questioned the Resolution dated September 16, 2004, and the Writ
of Preliminary Mandatory Injunction dated October 6, 2004 before the Court of
Appeals in a petition for certiorari, raising eight issues. On January 31, 2005,
however, the appellate court dismissed the petition. The Court of Appeals in its
decision by Justice Magpale ruled on the issues posed before the appellate court:
1.

PRIVATE RESPONDENT HAS NO LEGAL RIGHT OR CAUSE OF


ACTION UNDER THE PRINCIPAL ACTION OR COMPLAINT, MUCH LESS,
TO THE ANCILLARY REMEDY OF INJUNCTION;

2.

PRIVATE RESPONDENT DID NOT COME TO COURT WITH CLEAN


HANDS;

3.

RESPONDENT JUDGE UNJUSTIFIABLY AND ARBITRARILY DEPRIVED


PETITIONER OF ITS FUNDAMENTAL RIGHT TO DUE PROCESS BY NOT
GIVING IT ANOPPORTUNITY TO PRESENT EVIDENCE IN OPPOSITION
TO THE MANDATORY INJUNCTION;

4.

RESPONDENT JUDGE IMMEDIATELY GRANTED THE APPLICATION


FOR THE ISSUANCE OF A WRIT OF MANDATORY INJUNCTION
WITHOUT FIRST RESOLVING THE PENDING MOTION FOR
RECONSIDERATION DATED JULY 12, 2004 OF PETITIONER;

5.

RESPONDENT JUDGE DID NOT CONSIDER OR ADMIT THE


CERTIFIED TRUE COPIES OF THE OFFICIAL RECORDS OF THE DENR
CANCELLING PRIVATE RESPONDENTS FLGLA AS EVIDENCE AGAINST
THE MANDATORY INJUNCTION PRAYED FOR;

6.

RESPONDENT JUDGE SHOULD HAVE GRANTED PETITIONERS


MOTION FOR PRELIMINARY HEARING ON ITS AFFIRMATIVE DEFENSE
THAT PRIVATE RESPONDENT UNDER ITS COMPLAINT HAS NO CAUSE
OF ACTION AGAINST PETITIONER;

7.

RESPONDENT JUDGE SHOULD HAVE DISMISSED THE COMPLAINT


OUTRIGHT FOR VIOLATION OF THE RULES ON FORUM SHOPPING BY
PRIVATE RESPONDENT;

8.

THE MANDATORY INJUNCTION ISSUED IN THE INSTANT CASE IS


VIOLATIVE OF THE PROVISIONS OF PRESIDENTIAL DECREE 605. [14]

The Court of Appeals in the assailed Decision dated January 31, 2005, opined
and ruled as follows (which we quote verbatim):
Anent the first issue, WE rule against the petitioner.
Perusal of the allegations in the Complaint filed by the private
respondent with the court a quo show that its cause of action is mainly
anchored on the Forest Land Grazing Lease Agreement (FLGLA)
executed by and between said private respondent and the Department
of Environment and Natural Resources (DENR) which became effective
on August 28, 1984 and to expire on December 31, 2009.
Under the said lease agreement, the private respondent was
granted permission to use and possess the subject land comprising
of 367-hectares
located
at
the
barrios
of Bobog andPontod, Semirara Island,
Antique
for
cattle-grazing
purposes.
However, petitioner avers that the FLGLA on which private
respondents cause of action is based was already cancelled by the
DENR by virtue of its Orders dated December 6, 2000 andDecember
9, 2002.

While it is true
Orders cancelling the FLGLA,
presently the subject of Civil
Trial Court (RTC) of Caloocan
the FLGLA is still subsisting.

that the DENR issued the said


the same is not yet FINAL since it is
Case No. 20675 pending in the Regional
City. Thus, for all intents and purposes,

The construction of numerous buildings and the blasting


activities thereon by the petitioner undertaken without the consent of
the private respondent blatantly violates the rights of the latter
because it reduced the area being used for cattle-grazing pursuant to
the FLGLA.
From the foregoing it is clear that the three (3) indispensable
requisites of a cause of action, to wit: (a) the right in favor of the
plaintiff by whatever means and under whatever law it arises or is
created; (b) an obligation on the part of the named defendant to
respect or not to violate such right; (c) an act or omission on the part
of such defendant is violative of the right of plaintiff or constituting a
breach of the obligation of defendant to the plaintiff for which the latter
may maintain an action for recovery of damages, are PRESENT.
Hence, having established that private respondent herein has a
cause of action under the principal action in Civil Case No. C-146,
necessarily it also has a cause of action under the ancillary remedy of
injunction.
Anent the third issue, WE rule against the petitioner.
This Court finds that the petitioner was not deprived of due
process.
It appears from the records of the instant case that the
petitioner was given two (2) settings for the reception of its evidence in
support of its opposition to the prayer of herein private respondent for
the
issuance
of
a
writ
of
preliminary
mandatory
injunction. Unfortunately, on both occasions, petitioner did not present
its evidence.
Petitioner claims that its failure to attend the hearings for the
reception of its evidence was excusable due to the sudden resignation
of its lawyer and as such, nobody can attend the hearings of the case.
WE are not persuaded.
Scrutiny of the pleadings submitted by both parties shows that
petitioners lawyer, Atty. Mary Catherine P. Hilario, affiliates herself with
the law firm of BERNAS SAN JUAN & ASSOCIATE LAW OFFICES with
address
at 2nd Floor, DMCI Plaza 2281 Pasong Tamo Extension, Makati City,
by
signing on and in behalf of the said law office. This Court takes judicial
notice of the fact that law offices employ more than one (1) associate

attorney aside from the name partners. As such, it can easily assign
the instant case to its other lawyers who are more than capable to
prepare the necessary motion for postponement or personally appear
to the court a quo to explain the situation.
Even assuming arguendo that Atty. Hilario is the only one who is
knowledgeable of the facts of the case, still, petitioners cannot claim
that there was violation of due process because the ESSENCE of due
process is reasonable opportunity to be heard x x x. What the law
proscribed is lack of opportunity to be heard. In the case at bar,
petitioner was given two (2) settings to present its evidence but it
opted not to.
Lastly, a prayer for the issuance of a writ of preliminary
mandatory injunction demands urgent attention from the court and as
such, delay/s is/are frowned upon due to the irreparable damage/s that
can be sustained by the movant.
Anent the fourth issue, WE rule against the petitioner.
Petitioner claims that the court a quo gravely erred when it
issued the writ of preliminary injunction without first resolving its
Motion for Reconsideration dated July 12, 2004.
WE rule that the public respondent cannot be faulted for not
resolving the Motion for Reconsideration dated July 12, 2004 because
the same partakes of the nature of a second motion for reconsideration
of the Order dated March 24, 2004.
Records readily disclose that a prior motion for reconsideration
was
filed
by
the
petitioner
herein
assailing
the
Order
dated March 24, 2004. Although captioned as Omnibus Motion the
same was really a motion for reconsideration. Said Omnibus Motion
was resolved by the court a quo in its Order dated June 21, 2004.
Hence, the public respondent is no longer duty bound to resolve
the subsequent, reiterative and second motion for reconsideration.
Anent the fifth issue, WE rule against the petitioner.
The court a quo was correct in disregarding the documentary
evidence submitted by the petitioner in support of its opposition to the
prayer for the issuance of a writ of preliminary mandatory injunction.
The documentary evidence submitted by the petitioner herein
with the court a quo were merely attached to an Omnibus Motion and
was not properly identified, marked and formally offered as evidence
which is a blatant disregard and violation of the Rules on Evidence.

Considering the above discussions, this Court finds that the


public respondent did not abuse his discretion in issuing the assailed
resolution.
Anent the eighth issue, WE likewise rule against the petitioner.
Presidential Decree (PD) 605 is the law Banning the Issuance by
Courts of Preliminary Injunctions in Cases Involving Concessions,
Licenses, and Other Permits Issued by Public Administrative Officials or
Bodies for the Exploitation of Natural Resources.
Section 1 thereof provides that No court of the Philippines shall
have jurisdiction to issue any restraining order, preliminary injunction
or preliminary mandatory injunction in any case involving or growing
out of the issuance, suspension, revocation, approval or disapproval of
any concession, license, permit, patent or public grant of any kind for
the disposition, exploitation, utilization, exploration and development
of the natural resources of the country.
The instant case is not within the purview of the above-cited law
because the issue/s raised herein does not involve or arise out of
petitioners coal operation contract.
The case filed with the court a quo is principally based on the
alleged encroachment by the petitioner of the subject land over which
private respondent claims it has authority to occupy or possess
until December 31, 2009 pursuant to FLGLA No. 184.
As such, the preliminary mandatory injunction issued by the
court a quo did not in any way affect the efficacy of the petitioners coal
concession or license.
WHEREFORE, the instant petition for certiorari is DENIED and
consequently, the assailed Resolution is hereby AFFIRMED.
SO ORDERED.[15]
Hence, this instant petition. On February 23, 2005, this Court issued a TRO
enjoining the implementation and enforcement of the Court of Appeals Decision
dated January31, 2005.[16]
Petitioner submits in the petition now the following grounds:
I
THE RESOLUTION DATED 16 SEPTEMBER 2004 AND THE WRIT OF
PRELIMINARY MANDATORY INJUNCTION DATED 6 OCTOBER 2004
ISSUED BY PUBLIC RESPONDENT ARE A PATENT NULLITY AS PRIVATE
RESPONDENT CLEARLY HAS NO LEGAL RIGHT OR CAUSE OF ACTION

UNDER ITS PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO THE


ANCILLARY REMEDY OF PRELIMINARY MANDATORY INJUNCTION;
II
A WRIT OF PRELIMINARY MANDATORY INJUNCTION CANNOT BE USED
TO TAKE PROPERTY OUT OF THE POSSESSION OF ONE PARTY AND
PLACE IT INTO THAT OF ANOTHER WHO HAS NO CLEAR LEGAL RIGHT
THERETO;
III
PRIVATE RESPONDENTS COMPLAINT IN CIVIL CASE NO. C-146 IS IN THE
NATURE OF AN ACCION PUBLICIANA, NOT FORCIBLE ENTRY; HENCE, A
WRIT OF PRELIMINARY MANDATORY INJUNCTION IS NOT A PROPER
REMEDY;
IV
PETITIONER WAS UNJUSTIFIABLY AND ARBITRARILY DEPRIVED OF ITS
FUNDAMENTAL RIGHT TO DUE PROCESS WHEN IT WAS DENIED THE
RIGHT TO PRESENT EVIDENCE IN OPPOSITION TO THE APPLICATION
FOR PRELIMINARY MANDATORY INJUNCTION;

V
THE PUBLIC RESPONDENT DELIBERATELY WITHHELD THE RESOLUTION
OF PETITIONERS MOTION FOR RECONSIDERATION DATED 12 JULY 2004
AND PROCEEDED TO PREMATURELY ISSUE THE PRELIMINARY
MANDATORY INJUNCTION IN VIOLATION OF PETITIONERS RIGHT TO FAIR
PLAY AND JUSTICE;
VI
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
WHEN:
1)

HE REFUSED OR FAILED TO ADMIT AND/OR CONSIDER THE


CERTIFIED DENR RECORDS OF THE DENR ORDER CANCELLING
PRIVATE RESPONDENTS FLGLA;

2)

HE REFUSED OR FAILED TO CONDUCT A HEARING ON THESE


CERTIFIED PUBLIC DOCUMENTS WHICH CONCLUSIVELY PROVE
PRIVATE RESPONDENTS LACK OF CAUSE OF ACTION UNDER THE
PRINCIPAL ACTION; AND

3)

HE REFUSED OR FAILED TO DISMISS THE COMPLAINT


OUTRIGHT FOR VIOLATING THE RULES ON FORUM SHOPPING BY
PRIVATE RESPONDENT.[17]

Before this Court decides the substantive issues raised herein, certain procedural
issues that were raised by the parties must first be addressed.
Petitioner contends that it was improper for the Regional Trial Court of Antique to
issue the writ of preliminary mandatory injunction (and for the Court of Appeals to
affirm the same) without giving it an opportunity to present evidence and without
first resolving the Motion for Reconsideration dated July 12, 2004. But as borne by
the records of the case, it is evident that petitioner had the opportunity to present
evidence in its favor during the hearing for the application of the writ of preliminary
mandatory injunction before the lower court. However, petitioners failure to present
its evidence was brought by its own failure to appear on the hearing dates scheduled
by the trial court. Thus, petitioner cannot complain of denial of due process when it
was its own doing that prevented it from presenting its evidence in opposition to the
application for a writ of preliminary mandatory injunction. It must be pointed out that
the trial court correctly refused to take cognizance of the letter of petitioners
President which prayed for the postponement of the scheduled hearings. Said letter
was not a proper motion that must be filed before the lower court for the stated
purpose by its counsel of record. Moreover, there was absolutely no proof given that
the sender of the letter was the duly authorized representative of petitioner.
Second, the filing of the motion for reconsideration dated July 12, 2004, which
essentially reproduced the arguments contained in the previously filed and denied
Omnibus Motion dated April 14, 2004, renders the said motion for reconsideration
dated

July 12, 2004,

mere pro

forma motion. Moreover,

the

motion

for

reconsideration dated June 12,2004, being a second motion for reconsideration, the
trial court correctly denied it for being a prohibited motion. [18]
Third, it must be stated that the petition for certiorari before the Court of Appeals
should not have prospered because petitioner failed to file a motion for
reconsideration from the assailed resolution of the Regional Trial Court of Antique,
granting the writ of preliminary mandatory injunction. Well settled is the rule that
before a party may resort to the extraordinary writ of certiorari, it must be shown
that there is no other plain, speedy and adequate remedy in the ordinary course of
law. Thus, it has been held by this Court that a motion for reconsideration is a
condition sine qua non for the grant of the extraordinary writ of certiorari. [19] Here, a
motion for reconsideration was an available plain, speedy and adequate remedy in

the ordinary course of law, designed to give the trial court the opportunity to correct
itself.
Now on the merits of the instant petition.
The pivotal issue confronting this Court is whether the Court of Appeals seriously
erred or committed grave abuse of discretion in affirming the September 16, 2004
Resolution of the Regional Trial Court of Antique granting the writ of preliminary
mandatory injunction.
Under Article 539 of the New Civil Code, a lawful possessor is entitled to be
respected in his possession and any disturbance of possession is a ground for the
issuance of a writ of preliminary mandatory injunction to restore the possession.
[20]

Thus, petitioners claim that the issuance of a writ of preliminary mandatory

injunction

is

improper

because

the

instant

case

is

allegedly

one

for accion publiciana deserves no consideration. This Court has already ruled
in Torre, et al. v. Hon. J. Querubin, et al.[21] that prior to the promulgation of the New
Civil Code, it was deemed improper to issue a writ of preliminary injunction where
the party to be enjoined had already taken complete material possession of the
property involved. However, with the enactment of Article 539, the plaintiff is now
allowed to avail of a writ of preliminary mandatory injunction to restore him in his
possession during the pendency of his action to recover possession. [22]
It is likewise established that a writ of mandatory injunction is granted upon a
showing that (a) the invasion of the right is material and substantial; (b) the right of
complainant is clear and unmistakable; and (c) there is an urgent and permanent
necessity for the writ to prevent serious damage. [23]
In the instant case, it is clear that as holder of a pasture lease agreement under
FLGLA No. 184, HGL has a clear and unmistakable right to the possession of the
subject property.Recall that under the FLGLA, HGL has the right to the lawful
possession of the subject property for a period of 25 years or until 2009. As lawful
possessor, HGL is therefore entitled to protection of its possession of the subject
property and any disturbance of its possession is a valid ground for the issuance of
a writ of preliminary mandatory injunction in its favor. The right of HGL to the
possession of the property is confirmed by petitioner itself when it sought

permission from HGL to use the subject property in 1999. In contrast to HGLs clear
legal right to use and possess the subject property, petitioners possession was
merely by tolerance of HGL and only because HGL permitted petitioner to use a
portion of the subject property so that the latter could gain easier access to its
mining area in the Panaan Coal Reserve.
The urgency and necessity for the issuance of a writ of mandatory injunction also
cannot be denied, considering that HGL stands to suffer material and substantial
injury

as

result

of

petitioners

continuous

intrusion

into

the

subject

property. Petitioners continued occupation of the property not only results in the
deprivation of HGL of the use and possession of the subject property but likewise
affects HGLs business operations. It must be noted that petitioner occupied the
property and prevented HGL from conducting its business way back in 1999 when
HGL still had the right to the use and possession of the property for
another 10 years or until 2009. At the very least, the failure of HGL to operate its
cattle-grazing business is perceived as an inability by HGL to comply with the
demands of its customers and sows doubts in HGLs capacity to continue doing
business.This damage to HGLs business standing is irreparable injury because no
fair and reasonable redress can be had by HGL insofar as the damage to its goodwill
and business reputation is concerned.
Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its
order dated December 6, 2000. But as rightly held by the Court of Appeals, the
alleged cancellation of FLGLA No. 184 through a unilateral act of the DENR does not
automatically render the FLGLA invalid since the unilateral cancellation is subject of
a

separate

case

which

is

still

pending

before

the Regional Trial Court of Caloocan City. Notably, said court has issued a writ of
preliminary injunction enjoining the DENR from enforcing its order of cancellation of
FLGLA No. 184.
The Court of Appeals found that the construction of numerous buildings and blasting
activities by petitioner were done without the consent of HGL, but in blatant
violation of its rights as the lessee of the subject property. It was likewise found that
these unauthorized activities effectively deprived HGL of its right to use the subject
property for cattle-grazing pursuant to the FLGLA. It cannot be denied that the
continuance of petitioners possession during the pendency of the case for recovery

of possession will not only be unfair but will undeniably work injustice to HGL. It
would also cause continuing damage and material injury to HGL. Thus, the Court of
Appeals correctly upheld the issuance of the writ of preliminary mandatory
injunction in favor of HGL.
WHEREFORE, the

instant

petition

is DENIED. The

Decision

dated January 31, 2005, of the Court of Appeals in CA G.R. CEB SP No. 00035, which
affirmed the Resolution dated September 16, 2004 of the Regional Trial Court
of Culasi, Antique, Branch 13, as well as the Writ of Preliminary Mandatory
Injunction

dated

October 6, 2004 issued

pursuant

to

said

Resolution,

is AFFIRMED. The temporary restraining order issued by this Court is hereby


lifted. No pronouncement as to costs.
SO ORDERED.

LEONARDO A. QUISUMBING
Associate Justice

China Banking Corporation v. Co, G.R. No. 174569, September 17, 2008
SECOND DIVISION
CHINA BANKING CORPORATION,
G.R. No. 174569
SPOUSES JOEY & MARY JEANNIE
CASTRO and SPOUSES RICHARD &
Present:
EDITHA NOGOY,
Petitioners,
QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
- versus VELASCO, JR., and
BRION, JJ.
BENJAMIN CO, ENGR. DALE OLEA
and THREE KINGS CONSTRUCTION
& REALTY CORPORATION,

Promulgated:
September 17, 2008

Respondents.
x--------------------------------------------------x
DECISION
CARPIO MORALES, J.:
Petitioner China Banking Corporation sold a lot located at St. Benedict
Subdivision, Sindalan, San Fernando, Pampanga, which was covered by Transfer
Certificate of Title (TCT) No. 450216-R to petitioner-spouses Joey and Mary Jeannie
Castro (the Castro spouses). It sold two other lots also located in the same place
covered by TCT Nos. 450212-R and 450213-R to petitioner-spouses Richard
and Editha Nogoy (the Nogoy spouses).
The lots of the Castro spouses and the Nogoy spouses are commonly bound
on their southeastern side by Lot No. 3783-E, which is covered by TCT No. 269758-R
in the name of respondent Benjamin Co (Co) and his siblings.
Co and his siblings entered into a joint venture with respondent Three Kings
Construction and Realty Corporation for the development of the Northwoods Estates,
a subdivision project covering Lot No. 3783-E and adjacent lots. For this purpose,
they contracted the services of respondent, Engineer Dale Olea.
In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote respondents
asking them to stop constructing the wall, and remove all installed construction
materials and restore the former condition of Lot No. [3]783-E which they
(petitioners) claimed to be a road lot.[1] They also claimed that the construction
obstructed and closed the only means of ingress and egress of the Nogoy spouses
and their family, and at the same time, caved in and impeded the ventilation and
clearance due the Castro spouses residential house. [2]
Petitioners demand remained unheeded, prompting them to file before the
Regional Trial Court (RTC) of San Fernando, Pampanga a complaint,[3] docketed as
Civil Case No. 12834, for injunction, restoration of road lot/right of way and damages
with prayer for temporary restraining order and/or writ of preliminary injunction.
Before respondents filed their Answer, [4] petitioners filed an Amended
Complaint,[5] alleging that the construction of the perimeter wall was almost
finished and thusmodifying 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.
xxxx

[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
Commissioners 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 3783E. 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 3783E. There is no visible pathway either in the form of a beaten path or
paved path on lot 3783-E. Visible to everyone including this court
are wild plants, grasses, and bushes of various kinds. Lot 3783-E
could not have been a road lot because Sps. Nogoy, one of the
plaintiffs, even built a structure on lot 3783-E which they used as a
coffin factory.
Plaintiffs failed to prove that they will be prejudiced by the
construction of the wall. The ocular inspection showed that they will
not lose access to their residences. As a matter of fact, lot 3783-E is
not being used as an access road to their residences and there is an
existing secondary road within St. Benedict Subdivision that serves
as the main access road to the highway. With respect to the blocking
of ventilation and light of the residence of the Sps. Castro, suffice it
to state that they are not deprived of light and ventilation. The
perimeter wall of the defendants is situated on the left side of the
garage and its front entrance is still open and freely accessible.

This is indeed an issue of fact which should be ventilated in a


full blown trial, determinable through further presentation of
evidence by the parties. x x x
xxxx
WHEREFORE, premises considered, plaintiffs application for
the issuance of a writ of preliminary mandatory injunction is denied
without prejudice to its resolution after the trial of the case on the
merits.[7] (Underscoring supplied)
Their Motion for Reconsideration[8] having been denied, petitioners filed a
petition for certiorari[9] before the Court of Appeals which dismissed the same [10] and
denied their subsequent Motion for Reconsideration. [11]
Hence, the petitioners filed the present petition, [12] faulting the Court of
Appeals in
I.
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF SUBSTANCE NOT IN
ACCORD WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE
NO. 1529) AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II.
. . . PROMOTING THE LOWER COURTS RATIOCINATION THAT
PETITIONERS ARE SEEKING THE ESTABLISHMENT OF AN EASEMENT OF
RIGHT OF WAY, WHEN THEY ARE CLAIMING THE ENFORCEMENT OF THE
STATUTORY PROHIBITION AGAINST CLOSURE OR DISPOSITION OF AN
ESTABLISHED ROAD LOT.
III.
. . . SANCTION[ING] THE LOWER COURTS PATENT GRAVE ABUSE OF
DISCRETION IN PERFUNCTORILY DENYING PETITIONERS APPLICATION
FOR WRIT OF PRELIMINARY INJUNCTION.[13]
It is settled that the grant of a preliminary mandatory injunction rests on the
sound discretion of the court, and the exercise of sound judicial discretion by the
lower court should not be interfered with except in cases of manifest abuse. [14]
It is likewise settled that a court should avoid issuing a writ of preliminary
mandatory injunction which would effectively dispose of the main case without trial.
[15]

In the case at bar, petitioners base their prayer for preliminary mandatory
injunction on Section 44 of Act No. 496 (as amended by Republic Act No. 440),

Section 50 of Presidential Decree 1529, and their claim that Lot No. 3783-E is a road
lot.
To be entitled to a writ of preliminary injunction, however, the petitioners must
establish the following requisites: (a) the invasion of the right sought to be protected
is material and substantial; (b) the right of the complainant is clear and
unmistakable; and (c) there is an urgent and permanent necessity for the writ to
prevent serious damage.[16]
Since a preliminary mandatory injunction commands the performance of an
act, it does not preserve the status quo and is thus more cautiously regarded than a
mere prohibitive injunction.[17] Accordingly, the issuance of a writ of preliminary
mandatory injunction is justified only in a clear case, free from doubt or dispute.
[18]
When the complainants right is thus doubtful or disputed, he does not have a
clear legal right and, therefore, the issuance of injunctive relief is improper.
Section 44 of Act 496,[19] which petitioners invoke, provides:
xxxx
Any owner subdividing a tract of registered land into lots shall file with
the Chief of the General Land Registration Office a subdivision plan of
such land on which all boundaries, streets and passageways, if any,
shall be distinctly and accurately delineated. If no streets or
passageways are indicated or no alteration of the perimeter of the land
is made, and it appears that the land as subdivided does not need of
them and that the plan has been approved by the Chief of the General
Land Registration Office, or by the Director of Lands as provided in
section fifty-eight of this Act, the Register of Deeds may issue new
certificates of title for any lot in accordance with said subdivision plan.
If there are streets and/or passageways, no new certificates shall be
issued until said plan has been approved by the Court of First Instance
of the province or city in which the land is situated. A petition for that
purpose shall be filed by the registered owner, and the court after
notice and hearing, and after considering the report of the Chief of the
General Land Registration Office, may grant the petition, subject to the
condition, which shall be noted on the proper certificate, that no
portion of any street or passageway so delineated on the plan shall be
closed or otherwise disposed of by the registered owner without
approval of the court first had, or may render such judgment as justice
and equity may require.[20] (Underscoring supplied by the petitioners)
Section 50 of Presidential Decree No. 1529, [21] which petitioners likewise
invoke, provides:
SECTION 50. Subdivision and consolidation plans. Any owner
subdividing a tract of registered land into lots which do not constitute a
subdivision project as defined and provided for under P.D. No. 957,
shall file with the Commissioner of Land Registration or with the

Bureau of Lands a subdivision plan of such land on which all


boundaries, streets, passageways and waterways, if any, shall be
distinctly and accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the
Commissioner of Land Registration or the Bureau of Lands together
with the approved technical descriptions and the corresponding
owner's duplicate certificate of title is presented for registration, the
Register of Deeds shall, without requiring further court approval of said
plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of
Deeds shall annotate on the new certificate of title covering the street,
passageway or open space, a memorandum to the effect that except
by way of donation in favor of the national government, province, city
or municipality, no portion of any street, passageway, waterway or
open space so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without the approval of the Court
of First Instance of the province or city in which the land is situated.
x x x[22] (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.
In any event, TCT No. 185702-R had been cancelled and in its stead was
issued TCT No. 247778-R[24] which, in turn, was cancelled by TCT No. 269758-R [25] in
the name of respondent Co and his siblings.
TCT No. 247778-R and respondent Cos 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 lots registration as being
subject to the law, may be discharged and before road lots may be
appropriated[26] gratuity assuming that the lot in question was indeed one, TCT Nos.
247778-R and 269758-R enjoy the presumption of regularity [27] and the legal
requirements for the removal of the memorandum annotated on TCT No. 185702-R
are presumed to have been followed.[28]
At all events, given the following factual observations of the trial court after
conducting an ocular inspection of Lot 3783-E, viz:

x x x The ocular inspection showed that [petitioners] will not


lose access to their residences. As a matter of fact, lot 3783-E is not
being used as an access road to their residences and there is an
existing secondary road within St. Benedict Subdivision that serves as
the main access road to the highway. [29] With respect to the blocking of
ventilation and light of the residence of the Sps. Castro, suffice it to
state that they are not deprived of light and ventilation. The perimeter
wall of the defendants is situated on the left side of the garage and its
front entrance is still open and freely accessible, [30]
and the absence of a showing that petitioners have an urgent and paramount need
for a writ of preliminary mandatory injunction to prevent irreparable damage, they
are not entitled to such writ.
WHEREFORE, the petition is DENIED.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice

Devesa v. Arbes, 13 Phil. 273


G.R. No. L-4891

March 23, 1909

SOFIA
vs.
CRISPIN ARBES, defendant-appellant.
Leocadio
Joaquin
Sofia Devesa on her own behalf.

DEVESA, plaintiff-appellee,

for

appellant.

CARSON, J.:
Plaintiff alleging that the defendant, acting as administrator of the estate of
Gregoria Arbes, deceased, had unlawfully taken possession of certain rice lands and
cocoanut groves, the property of the plaintiff, prayed for an injunction restraining
defendant from continuing in possession and enjoying the fruits of the land in
question until and unless he obtained a final judgment in a proper action declaring
these lands to be the property of the estate of which he is administrator, and
prayed further that a preliminary injunction be issued restraining defendant from
continuing in possession or enjoying the fruits of the land in question pending the
trial of the cause.
The complaint alleges that the property in question was assigned to plaintiff's
deceased husband under the terms of an extra judicial partition contract executed
in the year 1887 by the heirs of Gregoria Arbes, plaintiff's husband's first wife, and
that ever since that date until the defendant took possession of this land, plaintiff

and her husband had continued in the quiet, peaceable, and exclusive possession
thereof. The trial court, apparently without giving the defendant an opportunity to
be heard, granted the preliminary injunction prayed for, conditioned upon the
execution of a bond for costs and damages, whereupon the defendant presented a
motion which though irregular in form may fairly be regarded as a demurrer to the
complaint on the ground that the facts alleged do not constitute a cause of action,
and prayed that the preliminary injunction be dissolved.
The trial court overruled the demurrer and declined to dissolve the preliminary
injunction, and defendant without excepting to the ruling of the court withdrew his
motion and filed his answer. In this answer defendant admitted having taken
possession of the land in question, as alleged by the plaintiff, but denied plaintiff's
allegation that she and her husband had been in the exclusive possession thereof,
and alleged that the land in question was the property of Gregoria Arbes, deceased,
of whose estate he is the administrator, and that after the death of Gregoria Arbes,
it passed pro indiviso to her heirs, who from the time of her death continued in joint
possession thereof, until he took possession upon his appointment as administrator;
he also alleged that one of the heirs, Vicente Sola, widower of Gregoria Arbes,
deceased, married the plaintiff; that plaintiff's claim to an interest in the property in
question is or should be strictly limited to the interest which she is entitled to take
from her husband, since deceased; and that while it is true that she and her
husband exercised certain rights of possession of the land in question, they never
had exclusive possession, and such rights of possession as they did exercise were
exercised not only on their behalf but on behalf of all the heirs of Gregoria Arbes.
Upon these pleadings the parties went to trial, and plaintiff introduced evidence
tending to prove that the land in question was originally the property of her
husband, Vicente Sola, acquired by him, not from his wife, Gregoria Arbes, but by
purchase, in part prior to, and in part after his marriage with his first wife; she also
introduced in evidence a document, dated January 31, 1887, purporting to be a
partition agreement between her husband Sola, and the other heirs of Gregoria
Arbes who died a short time prior to the execution of the instrument, whereby the
land in question was assigned to Sola as his property. Plaintiff further introduced
testimony which clearly established her allegation that from the date of that
instrument until the time when defendant took possession of the land, she and her
husband had had the exclusive possession thereof.
Defendant did not deny the execution of the partition agreement, and wholly failed
to proved that the land in question was or is a part of the estate of Gregoria Arbes,
deceased, or to establish his allegation that plaintiff and her husband were not in
the exclusive possession of the land in question from the date of its execution to the
time when he took possession as administrator, or that they held possession thereof
jointly with the other heirs of Gregoria Arbes. He insisted, however, that the
agreement was not binding upon the heirs of Gregoria Arbes, because at the date of
its execution two of them, a niece and a nephew, were minors and incapable of
executing such a document, although it appears that they were represented upon
that occasion by their respective fathers who married sisters of Gregoria Arbes, and
signed the instrument as the legal representatives of these minor heirs.

The trial court on the pleadings and proof submitted at the trial found that the
plaintiff was entitled to the possession of the land in question, and rendered final
judgment in accordance with the prayer of the complaint, granting a final injunction
perpetually restraining the defendant administrator from continuing in possession of
the land in question or enjoying the fruits thereof.
We are in entire accord with the trial judge as to his findings of fact, and agree with
him that the evidence of record establishes plaintiff's right of possession in and to
the lands in question: for without deciding whether the extrajudicial partition
agreement between the heirs of Gregoria Arbes, deceased, executed in 1887,
conveyed to plaintiff's deceased husband the absolute right of ownership in the land
assigned to him thereby; or whether that agreement, which was executed before
the present Code of Civil Procedure went into effect, can be successfully attacked at
this time by the minor heirs, because of the apparent lack of judicial approbation of
the action of their legal representatives; it is sufficient, for the purposes of this
decision, to point out that plaintiff, and her husband having been in exclusive
possession of this land, under a claim based on the partition agreement, for more
than fifteen years, the defendant, in his capacity of administrator, had no lawful
authority to take possession thereof without plaintiff's consent, in the absence of a
final judgment of a competent court securing to him his alleged right of possession;
and that defendant having failed to prove that the estate of which he is
administrator is the true owner of all any part of the land in question, the plaintiff is
entitled to be replaced in possession.
We are of opinion, however, that the remedy by injunction sought by the plaintiff
and allowed the trial court was not the proper remedy for the cause of action set
out in the pleadings and established by the evidence, and that, in accordance with
the provisions of section 126 of the Code of Civil Procedure, the court should have
granted "relief consistent with the case made by the complaint and supported by
the evidence and embraced within the issue," and to that end should have required
an amendment of the complaint by striking out the prayer for an injunction and
substituting therefor a prayer for a judgment for possession of the land described in
the complaint, and upon the complaint thus amended, judgment should have been
rendered in favor of the plaintiff.
Both the parties to this action appear to have labored under a misapprehension as
to the purpose, scope, and limitations of the special remedy, known as an
injunction, and defined in section 162 of the Code of Civil Procedure. The records in
many cases in this court disclose a considerable degree of doubt and uncertainty in
the minds of counsel as to the function of this remedy, and in some cases a wholly
erroneous concept of the purpose and object for which it is provided. This erroneous
concept may, perhaps, be due to the fact that in the Spanish version of the new
Code of Civil Procedure, the term injunction is translated interdicto prohibitorio,
which may thus have given rise to the impression that the remedy by injunction is
similar in character to the summaryinterdictal actions of the Spanish procedural
law; but while the injunction resembles in many respects theinterdicto of the Roman
law, especially the decretal (decretale, quod praetor re nata implorantibus decrevit),
and while it also resembles to a certain degree in its operation and effect,

the interdictos de adquirir, de retener, andde recobrar or de despojo of the Spanish


procedural law; nevertheless, it is wholly distinct therefrom, and, as a rule, the
circumstances under which, in accordance with the former procedural law,
these interdictos properly issued, would not justify nor sustain the issuance of an
injunction, as defined and provided in the new Code of Civil Procedure. An injunction
is a "special remedy" adopted in that code from American practice, and originally
borrowed from English legal procedure, which was there issued by the authority and
under the seal of a court of equity, and limited, as in other cases where equitable
relief is sought, to cases where there is no "plain, adequate, and complete remedy
at law" (30 Barb., 549; 5 R. I., 472; 121 N. Y., 46; 31 Pa., 387; 32 Ala., N. S., 723; 37
N. H., 254; 61 Hun., 140; 145 U. S., 459; 141 Ill., 572; 49 Fed. Rep., 517; 37 id., 357;
129 Md., 464; 109 N. C., 21; 83 Wis., 426; 115 Mo., 613), which "will not be granted
while the rights between the parties are undetermined, except in extraordinary
cases where material and irreparable injury will done," which can not be
compensated in damages, and where there will be no adequate remedy (3 Bosw.,
607; 1 Beasl., 247, 542; 15 Md., 22; 13 Cal., 156, 190; 6 Wis., 680; 16 Tex., 410; 28
Mo., 210; 24 Fla., 542; 39 N. H., 182; 12 Cush., 410; 27 Ga., 499; 1 McAll., 271; 54
Fed. Rep., 1005; 64 Vt., 643), and which will not, as a rule, be granted, to take
property out of the possession of one party and put it into that of another whose
title has not been established by law. (144 U. S., 119; 40 W. N. C. Pa., 121.)
This court has frequently held, when treating of the special remedies by injunction,
mandamus and prohibition, which are provided in the new Code of Procedure in Civil
Cases, that the accepted American doctrine limiting the use of these remedies to
cases where there is no other adequate remedy, and otherwise controlling the
issuance of these writs, and must be deemed to limit their use in like manner in this
jurisdiction, when not otherwise provided by law: to hold otherwise would be to
render practically of no effect the various provisions of the code touching many if
not most of the ordinary actions, and the enforcement of judgment in such actions;
for it may well be supposed that if a complainant could secure relief by injunction in
every case where "the defendant is doing or threatens or is about to do, or is
procuring or suffering to be done, some act probably in violation of the plaintiff's
rights" and could enforce the judgment granting the injunction by the summary
contempt proceedings authorized in section 172 of the code to punish violations of
injunctions, he would seldom elect to enforce his rights in such cases by the
ordinary remedies, involving as they do the difficult and ofttimes fruitless labor of
enforcing judgments obtained therein by execution. But so many cases have come
before us where preliminary injunctions have been issued apparently without regard
to this rule, that we are satisfied that the erroneous impression still prevails, in
some quarters, that a preliminary injunction must issue where a prima
facie showing is made of the existence of the circumstances under which such
injunctions may be granted as set out in section 164 of the Code of Civil Procedure,
without keeping in mind the fact that applications for injunctions are made to the
sound discretion of the court, and the exercise of that discretion is controlled by the
accepted doctrines touching the granting of injunctions in such cases; and we may
add that the records also disclose a dangerous tendency to grant permanent

injunctions on insufficient grounds, as a result of a similar erroneous construction of


the provisions of the code in that regard.
No brief was filed by plaintiff on appeal, and the contentions of the parties in the
court below are not very clearly set out in the very short brief of the defendant and
appellant. It appears, however, that defendant challenged the jurisdiction of the trial
court, on the ground that the summary interdictal actions of the Spanish procedural
law have been done away with by the provisions of the new Code of Procedure in
Civil Cases, the interdicto de recobrar or de despojo having been expressly
displaced by the summary remedies prescribed in section 80 of the new code, for
the recovery of lands or buildings of which one is deprived by force, intimidation,
fraud, or strategy within a year prior to the institution of the action; and defendant
insists that the action instituted by plaintiff, while in form a proceeding praying for
an injunction under the new code, assimilated to the former proceeding praying for
an interdicto de recobrar or de despojo, is in fact an action which could only be
maintained under the provisions of section 80 of the new code, of which original
jurisdiction is conferred upon the courts of the justice of the peace, exclusive of the
Court of First Instance. Plaintiff and appellee on the other hand seems to have
insisted that the injunction proceedings instituted by her were assimilated rather to
the summary action known as the interdicto de retener and that the facts alleged
and proven establishing her right to an interdicto de retener, under the old law, she
is entitled to an injunction under the new code, that remedy being the equivalent
provided by the new code for the interdicto of the old law.
But while we agree with defendant and appellant that the summary remedies
provided in section 80 may be said to replace and perhaps abrogate the
old interdicto de recobrar or de despojo, and that if the facts alleged and proven
made out a cause of action under that section and, therefore, within the exclusive
jurisdiction of the court of the justice of the peace, it would be necessary to hold
that the trial court was wholly without original jurisdiction; and while we can not
agree with the plaintiff and appellee that the facts set out in the pleadings and
evidence would support the issuance of an interdicto de retener, even under the
former procedure, because possession of the land and buildings had been actually
lost to plaintiff when the action was instituted, nor can we agree with her that even
if a proper case for the granting of an interdicto de retener under the old procedure
had been established, it necessarily follows that an injunction should issue under
the new procedure; and without deciding whether all the summary interdictal
remedies of the Spanish law have been wholly and in all cases abolished under the
provisions of the new code, it is sufficient for the purpose of this decision to hold
that since there is nothing in the allegations or proof to show that defendant
obtained possession of the land in question by force, intimidation, fraud, or
strategy, the action is not in the nature of the summary remedy known to the old
law as aninterdicto de recobrar or de despojo, nor is it the summary remedy of
forcible entry and wrongful detainer provided in section 80 of the new code, and
therefore it does not fall within the exclusive jurisdiction of the court of the justice of
the peace, to the exclusion of the Court of First Instance, which tried the case.

What has been said disposes of all the errors assigned by appellant, except his
assignment of error based on his contention that the administrator having taken
possession as an officer of the court wherein the estate was being administered, his
conduct in that regard should not be questioned, except in the course of the
administration proceedings.
We have frequently held that a contested claim of an administrator that certain
rights of possession and ownership are the property of the estate which he
represents must be determined in a separate action, and not in the course of the
administration proceedings; and it should be necessary to add that the mere fact
that an administrator holds letters of appointment from some court, in nowise
authorizes him to take possession of property held by another under a claim of a
right to possession until and unless he successfully establishes his right to
possession of such property in a proper proceeding in a competent court.
Ten days from the date of this decision let judgment be entered, reversing the
judgment of the trial court and dissolving the preliminary and permanent injunctions
issued therein, without costs either party in this instance, and ten days thereafter
let the record be returned to the court below where, upon the amendment of the
complaint along the lines therein indicated, judgment will be rendered in favor of
the plaintiff for the possession of the lands described in the complaint, together with
the costs in the Court of First Instance, but without damages, which were not
satisfactorily established by the evidence of record. So ordered.
Arellano, C. J., Torres and Johnson, JJ., concur.
Willard, J., concurs in the result.

Preysler v. CA, G.R. No. 158141, July 11, 2006


G.R. No. 158141

July 11, 2006

FAUSTO
R.
PREYSLER,
vs.
COURT OF APPEALS and FAR EAST ENTERPRISES, INC., respondents.

JR., petitioner,

DECISION
QUISUMBING, J.:
This petition for review assails the Decision 1 dated January 20, 2003 and
Resolution2 dated May 20, 2003 of the Court of Appeals in CA-G.R. SP No. 52946.
The Court of Appeals lifted the amended writ of preliminary injunction dated
December 29, 1998 issued by the Regional Trial Court, Branch 14 of Nasugbu,
Batangas in Civil Case No. 345 and reinstated the original writ dated December 12,
1996.
The antecedent facts are as follows:

Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner
Fausto Preysler, Jr. and his wife owned lots therein and also two parcels of land
adjacent to the subdivision. These two parcels were bounded on the North and West
by the China Sea and on the East and South by the subdivision. To gain access to
the two parcels petitioner has to pass through private respondent's subdivision.
Petitioner offered P10,000 for the easement of right of way but private respondent
refused it for being grossly inadequate. Private respondent then barricaded the front
gate of petitioner's property to prevent petitioner and his family from using the
subdivision roads to access said parcels.
The petitioner filed, with the Regional Trial Court of Nasugbu, Batangas, a Complaint
for Right of Way with prayer for preliminary prohibitive injunction against private
respondent. After due hearing, the trial court, in an Order dated November 5, 1996,
held that barricading the property to prevent the petitioner from entering it
deprived him of his ownership rights and caused irreparable damage and injuries. It
ordered herein private respondent:
1) To remove or cause or allow the removal of the barricade (six concrete posts)
installed by it on the front gate of the plaintiffs' properties fronting Sea Cliff Drive;
2) To cease, desist and refrain from obstructing or hindering plaintiffs' entry into and
exit from their subject properties and/or their free passage over Sea Cliff Drive from
and to the public highway near the gate of the Tali Beach Subdivision pending
termination of this litigation on the merits and/or unless a contrary order is issued
henceforth.3
Accordingly, the writ of preliminary injunction was issued on December 12, 1996.
On July 8, 1998, petitioner used the subdivision road to transport heavy equipment
and construction materials to develop his property. Consequently, private
respondent moved to dissolve the writ claiming that the petitioner violated its right
to peaceful possession and occupation of Tali Beach Subdivision when petitioner
brought in heavy equipment and construction materials. Private respondent
maintained that the damages that may be caused to it far outweigh the alleged
damages sought to be prevented by the petitioner. It alleged that there is an
alternate route available to petitioner, particularly the barangay road leading to
Balaytigue and the Calabarzon Road.
For his part, the petitioner moved to clarify the December 12, 1996 writ and asked
the court to clearly define the action required of private respondent to avert further
damage and inconvenience to petitioner. Petitioner prayed that his contractors,
visitors, and other representatives be allowed access and persons he has authorized
be allowed to install power lines over private respondent's property.
On December 29, 1998, the trial court issued a Joint Resolution amending the order
in the original writ to read as follows:
1. To remove or cause or allow the removal of the barricade (six concrete posts)
installed by it on the front gate of the plaintiffs' properties fronting Sea Cliff Drive.

2. To cease, desist and refrain from obstructing or hindering plaintiffs' (including


plaintiffs' visitors, guests, contractors, and other persons authorized by or acting for
and/or under said plaintiffs) entry into and exit from their subject properties and/or
their free passage over Sea Cliff Drive and other connecting subdivision roads, from
and to the public highway near the gate of the Tali Beach Subdivision, pending the
termination of this litigation on the merits and/or unless a contrary order is issued
henceforth.
3. To cease, desist and refrain from hindering or obstructing plaintiffs' contractors,
guests, visitors and other authorized persons to bring along with them their motor
vehicles, equipments, materials, supplies, machineries and other items necessary
for the needs of the plaintiffs' properties.
4. To cease, desist and refrain from hindering or obstructing the plaintiffs and/or
persons authorized by them, to install electric power lines over the Tali Beach
Subdivision for plaintiffs' electric power requirements. 4
Private respondent filed a petition for certiorari with the Court of Appeals, which set
aside the amended writ dated December 29, 1998 and reinstated the original writ
dated December 12, 1996 with modification as to the amount of the bond. The
petitioner moved for reconsideration, but the same was denied.
Petitioner now comes before us claiming that the Court of Appeals:
I
[GRAVELY] ERRED IN FINDING AND CONCLUDING THAT THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN ISSUING: (1) THE JOINT RESOLUTION
DATED 29 DECEMBER 1998, (2) THE AMENDED WRIT OF PRELIMINARY
INJUNCTION (MANDATORY AND PROHIBITORY) OF EVEN DATE AND (3) THE ORDER
DATED 8 MARCH 1999 DENYING THE MOTION FOR RECONSIDERATION TO
RECONSIDER AND SET ASIDE THE JOINT RESOLUTION.
II
OVERSTEPPED THE BOUNDARY OF ITS AUTHORITY AND JURISDICTION IN
RESOLVING FACTUAL MATTERS, HOWEVER, ERRONEOUS, COULD NOT BE REVIEWED
UNDER THE EXTRAORDINARY WRIT OF CERTIORARI BUT BY ORDINARY APPEAL,
INSTEAD OF CONFINING ITSELF TO DETERMINE WHETHER OR NOT THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN ISSUING THE JOINT RESOLUTION,
THE AMENDED WRIT OF PRELIMINARY INJUNCTION (MANDATORY AND PROHIBITORY),
AND THE ORDER DATED 6 MARCH 1996 DENYING THE MOTION TO RECONSIDER
THE JOINT RESOLUTION.
III
EXCEEDED ITS JURISDICTION AND AUTHORITY IN SETTING ASIDE THE JOINT
RESOLUTION, LIFTING THE AMENDED WRIT OF PRELIMINARY INJUNCTION DATED
29 DECEMBER 1998, AND RESTRICTING OR LIMITING PASSAGE OVER THE TALI
BEACH SUBDIVISION ROADS TO INGRESS AND EGRESS OF PETITIONER AND

MEMBERS OF THE LATTER'S HOUSEHOLD IN UTTER VIOLATION OF THE LAW ON


EASEMENT, IN GENERAL, AND LEGAL EASEMENT OF RIGHT OF WAY IN PARTICULAR. 5
Simply, the issue is whether there was a legal basis for the issuance of the amended
writ of injunction. Likewise, we need to resolve whether the right of passage allowed
in the uncontested original writ applies not only to the petitioner and his household,
but also to his visitors, contractors, construction workers, authorized persons, heavy
equipment machinery, and construction materials as well as the installation of
power lines.
Petitioner contends that inherent in the right of way under Article 649 6 of the New
Civil Code is the right to cultivate and develop the property, which is an attribute of
ownership provided under Article 428. 7 According to petitioner, the passage of
heavy equipment and construction materials through the subdivision is granted by
Article 656.8 Petitioner adds that he was not seeking the right of way only for
occasional visits to his property but also to develop, use and enjoy it.
Private respondent claims that what was granted in the original writ was not the
easement of right of way but only the maintenance of the status quo. It maintains
that from the very beginning, petitioner and his household were allowed into the
subdivision only because petitioner owned several lots in the subdivision. Hence,
according to private respondent, the Court of Appeals properly dissolved the
amended writ as the status quo protected by the original writ did not include the
passage of construction workers in petitioner's property outside the subdivision.
Private respondent stresses that at the time the original writ was applied for there
was no construction work yet.
Private respondent argues that its recognition of the original writ should not be
construed as admitting that petitioner had a right of way; and with no easement of
right of way, petitioner cannot claim other rights under the law on easement. It
further contends that acts prohibited and allowed under the amended writ
amounted to a premature adjudication on the merits of the main case on whether or
not petitioner has a right of way, which is still pending before the trial court.
Prefatorily, we note that what was granted by the trial court was the preliminary
injunction, and that the main case for right of way has not yet been settled. We
have in previous cases9 said that the objective of a writ of preliminary injunction is
to preserve the status quo until the merits of the case can be fully heard. Status
quo is the last actual, peaceable and uncontested situation which precedes a
controversy.10 The Court of Appeals was correct in its findings that the last actual,
peaceful and uncontested situation that preceded the controversy was solely the
access of petitioner and his household to his property outside the subdivision for
visits and inspections. At the time the writ was applied for in 1995, there was still no
construction going on in the property. It was merely raw land. The use of the
subdivision roads for ingress and egress of construction workers, heavy equipment,
delivery of construction materials, and installation of power lines, are clearly not
part of the status quo in the original writ. Along this line, the Court of Appeals
properly set aside the amended writ and reinstated the original writ.

However, under Article 656 of the New Civil Code, if the right of way is
indispensable for the construction, repair, improvement, alteration or beautification
of a building, a temporary easement is granted after payment of indemnity for the
damage caused to the servient estate. In our view, however, "indispensable" in this
instance is not to be construed literally. Great inconvenience is sufficient. 11 In the
present case, the trial court found that irrespective of which route petitioner used in
gaining access to his property, he has to pass private respondent's subdivision.
Thus we agree that petitioner may be granted a temporary easement. This
temporary easement in the original writ differs from the permanent easement of
right of way now being tried in the main case.
The law provides that temporary easement is allowed only after the payment of the
proper indemnity. As there are neither sufficient allegations nor established facts in
the record to help this Court determine the proper amount of indemnity, it is best to
remand the case to the trial court for such determination.
Additionally, we find that the installation of electric power lines is a permanent
easement not covered by Article 656. Article 656 deals only with the temporary
easement of passage. Neither can installation of electric power lines be subject to a
preliminary injunction for it is not part of the status quo. Besides, more damage
would be done to both parties if the power lines are installed only to be removed
later upon a contrary judgment of the court in the main case.
WHEREFORE, the petition is PARTIALLY GRANTED.
We hereby order (a) private respondent to allow the right of passage thru the
subdivision by the petitioner's visitors and guests, contractors, construction
workers, heavy equipment vehicles, and delivery construction materials; and (b)
petitioner to pay private respondent the indemnity therefor to be determined by the
trial court. The case is hereby REMANDED to the trial court for the determination of
the proper amount of indemnity for the temporary easement under Article 649.
No pronouncement as to costs.
SO ORDERED.
Carpio, Carpio-Morales, Tinga, Velasco, Jr., J.J., concur.

Limitless Potentials (supra) CLAROS


Mantile v. Cajucom, 19 Phil. 563 MARCELO
G.R. No. L-5734

August 17, 1911

MARCELO
MANTILE,
ET
vs.
ALEJANDRO CAJUCOM, ET AL., defendants-appellants.
Ramon
Diokno
Allen A. Garner for appellees.

for

AL., plaintiffs-appellees,

appellants.

TORRES, J.:
This is an appeal by the defendants from the judgment rendered in the matter of
the principal issue, and in the incidental one of contempt of court.
THE INCIDENTAL ISSUE OF CONTEMPT
On June 22, 1908, the attorneys for the plaintiffs Marcelo Mantile, Sebastian Bancod,
Adriano Espaol, Gregorio Corpus, Claudio Angeles, Doroteo Dacuno, Fernando
Polintan, Maximino Fajardo, Catalino Rubio, Alejandro Caisip, Diego Santiago,
Eugenio Ronquillo, Raymundo Santiago, Simon de la Cruz, Anacleto de los Reyes,
Rafael Mendoza, Marcelino Fajardo, Tomas Marcelo, Inocencio Santiago, Eugenio
Angeles, Segundo Ramos, and Geronimo Rojas, filed a written complaint against
Alejandro Cajucom and Timoteo Cajucom wherein they prayed for the issuance of
writ of preliminary injunction to restrain the defendants from continuing to close the
canal orestero called Paligui ng Buquid Puntang Piniping, in the barrio of Biga of the
pueblo of Bongabon, and through which the water ran that irrigated the
sementeras, or rice fields of which the plaintiffs were the owners, and from
obstructing the course of such water, and furthermore that, after the hearing of the
case, a writ of perpetual injunction be issued against the said defendants, and that
the latter be sentenced to pay to each of the twenty-two plaintiffs the amount of the
losses and damages caused him, and the costs.
The plaintiffs having furnished bond, the court, by order of July 26, 1908, directed
that preliminary injunction issue against the said defendants, their agents and
representatives, restraining them from performing any act whatever that might tend
to close or obstruct the canal or estero called Paligui ng Buquid Puntang Piniping, in
the barrio and pueblo before-mentioned, of the Province of Nueva Ecija, and to
refrain from hindering the passage of the water that flowed through the said canal.
The defendants were notified of this writ and it was served upon them on the 29th
of the same month.
By a petition of July 6, 1908, counsel for the plaintiffs set forth under oath that,
according to information he had received, the defendants were continuing to
obstruct and hinder the passage of the water, in disobedience to the judicial order,
and prayed that the said defendants be notified to appear and state their reasons, if
any they had, why they should not be punished for contempt of court for
disobedience to the writ of preliminary injunction issued. This petition was granted
and the defendants having been notified, they alleged in writing, on the 14th of the
same month, that they had been notified on the 3rd of July of the said writ by the
sheriff of Nueva Ecija and since then had complied with the order of the court, but
called attention to the fact that the stream had been closed by two tenants of the
defendant, Alejandro Cajucom, on the 1st of the preceding month of July, since
which date neither they, the defendants, nor any other person in their
representation, had done anything whatever to the stream or ditch in question;
wherefore they prayed that the two men who closed the said stream be examined,
and that, in view of such facts, the charge of contempt of court be dismissed, and
the plaintiffs be sentenced to pay the costs, and the damages occasioned.

The court, after the witnesses summoned had been examined, decided, on August
20, 1908, that the defendants had committed contempt of court and imposed upon
each of them a fine of P200, and imprisonment until they should duly comply with
the writ of injunction, and sentenced each of them to pay one-half of the costs.
Defendants excepted to this judgment and, the required bill of exceptions having
been submitted, the Supreme Court, in its decision of January 11, [31]
1910,1 dismissed the appeal on the ground that the said bill of exceptions had been
improperly admitted, inasmuch as the order issued in connection with the incidental
question of contempt of court, could be reviewed only after the rendition of
judgment on the main issue, and not until then could the said incident of contempt
be, by means of a bill of exceptions, submitted to this court; therefore the records in
the case were remanded to the court below, later to be transmitted to the clerk of
this court upon the filing of the main record with the bill of exceptions.
By the writ of preliminary injunction issued on June 26, 1908, the original of which is
on file, page 7 of the main record, the defendants Alejandro and Timoteo Cajucom,
their attorneys, representatives and agents, were enjoined from performing any act
whatever that might tend to close and obstruct the canal, a branch, called Paligui
ng Buquid Puntang Piniping, of an estero situated in the barrio of Biga of the pueblo
of Bongabon, Nueva Ecija, and to cease to obstruct or hinder the course of the
water that should flow through the said branch.
In the written complaint presented on June 22, 1908, it is averred that the said canal
or estero was closed by the representatives of the defendants, on the 1st of June of
the year therein stated, and that since then the water which it ordinarily carried had
ceased to flow through it, the plaintiff's lands thereby being deprived of irrigation.
So that when the writ of injunction was issued on the 26th of the said month, it was
taken for granted that the esteroor canal in question was closed and that the water
did not run through it, as occurred prior to the said 1st of June; and counsel for the
plaintiffs, in charging, by a writing of July 6, 1908, that contempt of court was
committed, stated that the defendants, according to the information he had, were
still obstructing and hindering the passage of the water, in disobedience of the writ
of injunction.
The defendants having been notified to show cause why they should not be
punished for contempt of court and disobedience of the preliminary injunction
issued by the court, answered that since the 3rd of July, the date when they were
notified by the deputy sheriff, they had complied with the prohibitory order and had
not done anything whatever, by themselves or through others in their
representation, to the stream or ditch in question, which was closed by two tenants
of one of the defendants, Alejandro Cajucom, on June 1, 1908; as acknowledged by
said tenants.
The writ issued by the court contained no order instructing the defendants to raise
or remove the obstructions that prevented the water from flowing through the said
canal or ditch.
The canal was obstructed and closed on June 1st, and when the persons who closed
it were notified on July 3 that they should abstain from performing any act whatever

tending to obstruct and prevent the flow of water, the canal or ditch still remained
closed, and the record shows no proof that it was afterwards opened to the passage
of water, nor that, after the defendants had been notified of the injunction, they
again closed it. The fact that the latter failed to remove the obstruction they had
placed in the said canal or estero for the purpose of preventing the passage of the
water, since they were not ordered so to do by the judicial writ, is not sufficient to
make them liable for contempt of court.
The act of the closing of the canal occurred prior to the issuance of the writ, and,
since a thing that has already been done can not be prohibited, by the mere fact of
there not having been done what was not ordered in the writ it can not be held that
a judicial order was disobeyed and willfully disregarded.
Section 162 of the Code of Civil Procedure prescribes:
An injunction is a writ or order requiring a person to refrain from particular act.
The said writ prohibited the performance of any act that would obstruct, close, or
hinder the course of the water through the Piniping canal or creek, when it was
already obstructed and closed; and as the removal of the impediment or obstruction
was not ordered, the defendants were not obliged to perform any particular act, and
their inaction in leaving the canal closed does not constitute contempt of court, as
they did not violate any judicial prohibition.
The record shows that the prohibition was issued after the closing of the canal;
hence, if the defendants did not remove the obstruction, they disobeyed no order. In
the syllabus of decision No. 1697, Municipal council of Santa Rosa vs. Provincial
Board of La Laguna (3 Phil. Rep., 206), the rule was laid down that the commission
of an act already done can not be enjoined. To say that it could, would be nonsense.
THE MAIN ISSUE
On January 28, 1909, the plaintiffs filed an amended complaint, with the permission
of the court, wherein they alleged that certain of them named Maria Marcelo,
Crisanto Rubio, Alipio Espaol or Estaol, Marcelo Mantile, Adriano Espaol or
Estaol, Sebastian Bancod, Claudio Angeles, Diego Santiago, Raymundo Santiago,
Anacleto de los Reyes, Rafael Mendoza, Clemente Alivia, Marcelino Fajardo, and
Segundo Ramos had been, on or about June 1, 1908, and were at the time, the
proprietors and owners of rice lands situated in the barrio of Biga of the pueblo of
Bongabon, and that the other plaintiffs were planters and cultivators of some
portions of the said islands; that (following the statement in the complaint as to the
boundaries or adjacent lands of each of their respective properties) the said Paligui
ng Buquid Puntang Piniping estero or creek existed and had always existed in the
afore-mentioned barrio; that water flowed through it on or about June 1, 1908, and
the plaintiffs used that water in the cultivation of their above-mentioned lands; that,
on or about the date aforesaid, the defendants, by themselves and through their
agents and representatives, obstructed and closed the mouth of the estero in such
manner that the lands described were deprived of the water that had flowed and
should flow through the saidestero; that, on or about the 4th of October of the same
year before mentioned, the continual heavy rains and high floods carried away the

obstruction in the said Paligui ng Buquid Puntang Piniping estero; that, in view of the
statements made by the defendants, they believed that the latter would again close
the estero in order to obstruct the passage of the water to their (the plaintiffs')
properties; and that the plaintiffs, through the closing of the saidestero or creek,
suffered losses and damages in the following amounts: Maria Marcelo, P1,500;
Crisanto Rubio, P250; Alipio Espaol, P75; Marcelo Mantile, P2,500; Adriano Espaol,
P75; Sebastian Bancod, P400; Gregorio Corpus, P150; Claudio Angeles, P250;
Doroteo Dacuno, P250; Fernando Polintan, P250; Maximino Fajardo, P200; Catalino
Rubio, P300; Alejandro Caisip, P270; Diego Santiago, P800; Eugenio Ronquillo, P486;
Raymundo Santiago, P650; Simeon [Simon] de la Cruz, P480; Anacleto de los Reyes,
P180; Rafael Mendoza, P300; Marcelino Fajardo, P340; Tomas Marcelo, P270;
Inocencio Santiago, P375; Eugenio Angeles, P375; Geronimo Rojas, P135; Segundo
Ramos, P390, and Clemente Alivia, P219; and the complaint concluded by asking
the court to render judgment against the defendants, and, at the termination of the
trial, to issue a perpetual injunction enjoining them from closing the said estero or
creek, or in any manner obstructing the course of the water therein, and
furthermore, to sentence them to pay to the plaintiffs the losses and damages
suffered by them, and the costs of the suit.
On February 11, 1909, the defendants' counsel, answering the amended complaint,
made a general denial of each and all the allegations of the said complaint and
alleged, as a special defense, that the irrigation canal in question belonged to the
defendants; that the mouth of the said Paligui ng Buquid Puntang Piniping canal did
not previously exist and was opened only at the request of Marcelo Mantile; and
that the plaintiff's lands were provided with another irrigation ditch independent of
the one herein concerned. Said counsel therefore prayed that his clients be
absolved from the complaint, that the irrigation canal in question be declared to
belong to the defendants, and that the plaintiffs be sentenced to pay the costs.
On April 26, 1909, the case came up for hearing, testimony was adduced by both
parties and the court, after consideration of the evidence, rendered judgment on
July 26,1909, enjoining the defendant Alejandro Cajucom from closing the Paligui ng
Buquid Puntang Piniping estero or creek, or in any manner obstructing the course of
the water running therein. the preliminary injunction issued against the defendant,
his agents and representatives, by the Hon. Judge Estanislao Yusay, was thus
rendered perpetual, and the said defendant was sentenced to pay the following
sums, for losses and damages; To Maria Marcelo, P196.50; Crisanto Rubio, P139.50;
Alipio Espaol, P75; Marcelo Mantile P800.25; Adriano Espaol, P75; Sebastian
Bancod, P142.50; Gregorio Corpus, P90.12; Claudio Angeles, P97.87; Doroteo
Dacumo, P90.37; Fernando Polintan, P80.87; Maximino Fajardo, P75.37; Alejandro
Caisip, P75; Catalino Rubio, P84; Diego Santiago, P131.25; Eugenio Ronquillo,
P131.25; Raymundo Santiago, P540; Simon de la Cruz, P135; Anacleto de los Reyes,
P90; Rafael Mendoza, P195; Marcelino Fajardo, P180; Geronimo Rojas, P90; Segundo
Ramos, P210; Clemente Alivia, P109.50, and to Tomas Marcelo, Inocencio Santiago,
and Angeles, tenants-on- shares of Maria Marcelo, the sum of P196.50. Counsel for
the defendant, Alejandro Cajucom, excepted to this judgment and prayed for a new
trial on the grounds that the said judgment was not sufficiently supported by the
weight of the evidence and was contrary to law. This motion was overruled by an

order of September 2, and exception thereto was taken by the appellant who duly
filed the proper bill of exceptions, which was certified to and forwarded to the clerk
of this court.
Counsel for the appellants having been authorized, by an order of February 12,
1910, to present the facts relative to the charge of contempt of court, as an incident
of the main issue, and upon his petition, the Supreme Court ruled that the bill of
exceptions relative to the matter of the contempt of court, together with the
evidence therewith submitted should be held to be an integral part of the said main
issue with the bill of exceptions thereto pertaining.
With regard to main issues of this suit, the object of the plaintiffs is to obtain from
the court an order decreeing the former preliminary injunction to be perpetual. This
claim, which is opposed by the defendants, presupposes a right on the part of the
plaintiffs to use and profit by the water that runs through the Piniping estero or
creek, to the benefit of their respective agricultural lands.
The law applicable to the present contention is found in articles 407 to 425 of the
Civil Code, in the last of which it is provided:
In all that is not expressly determined by the provisions of this chapter, the special
law of waters shall be observed.
This law is that of August 3, 1866, which was extended to the Philippine Islands by
the royal decree of the 8th of the same month and year and published with
the Decreto de cumplase of the Gobierno General of September 21, 1871, in the
Official Gazette of the 24th of the same month and year, on account of the
subsequent law of June 13, 1879, in force in Spain, not having been promulgated in
these Islands. It contains, among others, the provisions found in articles 30 to 65
applicable to the case at bar.
The scant data and the insufficiency of the evidence offered by the record, preclude
this court's deciding, in accordance with the law, upon the pleadings and the proofs
submitted by the parties, the several issues raised in the course of this litigation,
and for this reason we esteem it proper that the case be reopened for the conduct
of the following proceedings:
1. An ocular inspection shall be made by the justice or auxiliary justice of the peace,
attended by expert surveyors one of which latter to be appointed by each of the
parties to the suit for the purpose of determining whether the water from
the estero named Sapang Cabasan issues from a spring called Sibul; whether this
spring and the said estero are upon the land owned by the defendants, and, if not,
who is the owner of the land on which they are located, and whether he is a third
person who is not a party to this suit.
2. Whether the creek, estero, or ditch, named Paligui Puntang Piniping, is connected
or united with the Sapang Cabasan estero, and whether the said Puntang Piniping
creek or canal crosses the lands of defendants or those of the plaintiffs.
3. To ascertain at what point or place either of the said Cabasan or Piniping canals
was closed; whether the closure was made on the lands of defendants or on that of

the plaintiffs, and whether, on account of such closure, the course of the water was
completely obstructed and prevented from entering the lands of the plaintiffs.
4. Whether the Paligui Puntang Piniping creek, canal, or estero passes through
the sitio called Pinagtubuhan, or receives water from some other spring, creek, or
canal, stating the name of the same and whether it is distinct and separate from the
Sapang Cabasan estero.
A rough sketch must be drawn that shall show the location of the lands of the
defendants and those of the plaintiffs; the points where the said two esteros and the
Sibul Spring are situated; the exact point where the closure of the canal was
effected; which of the lands are situated in high places and which in low places; and
in what direction the water flows after arising from the Sibul Spring and entering
into the Sapang Cabasan estero.
5. An investigation and report shall be made as to whether the Puntang Piniping
canal or estero is of recent formation and was excavated but a short time ago, or
whether, by the signs observed on its banks, it appears that it was opened many
years ago, stating since when it has been opened.
6. Investigation and report shall be made as to whether the plaintiffs' lands receive
irrigation water from any spring, estero, or creek, other than those before
mentioned, and, if so, their names and the distances between them, and the latter
shall be noted on the rough sketch drawn by the surveyors.
From the result obtained from the proceedings, and the rough sketch drawn by the
experts, we shall easily be able to arrive at a conclusion as to whether the
defendants had or had not a right to close the Cabasan or Puntang Piniping creek,
thus depriving the plaintiffs' sementeras of the water flowing through it, or whether,
on the other hand, the plaintiff had a right to the enjoyment and use of such water
for the irrigation of their lands, and whether, through the want of the same, they
suffered losses and damages by fault of the said defendants.
For the foregoing reasons, justice demands, in our opinion, that we find that the
defendants Alejandro and Timoteo Cajucom did not commit any act whatever
constituting contempt of a judicial order. The order of August 20, 1908 is reversed.
No special findings is made as to the costs of the incidental proceedings.
The judgment appealed from, of July 26, 1909, is set aside, and the record of the
case shall be remanded, with a certified copy of this decision, to the court below in
order that the judge may proceed with a rehearing and conduct the proceedings
hereinbefore specified, and in due season render judgment wherein he shall take
into account the evidence already contained in the record, together with such new
evidence as may be admitted, in accordance with this decision and in harmony with
the law. So ordered.
Mapa, Johnson, Carson, and Moreland, JJ., concur.

Feliciano v. Alipio, G.R. No. L-5656, March 24, 1954 GIME


G.R. No. L-5656

March 24, 1954

JUAN
G.
FELICIANO,
ET
vs.
MARIANO ALIPIO, ET AL., respondents-appellee.

AL., petitioners-appellants,

K.V.
Faylona
for
appellants.
Office of the Solicitor General Juan R. Liwag and Solicitor Felix V. Makasiar for
appellees.
JUGO, J.:
On September 21, 1951, the Director of Public Schools issued Circular No. 20, series
of 1951, which reads as follows:
PUBLIC SCHOOL PUPILS AND STUDENTS MAY BE REQUIRED TO SALUTE THE
FLAG
To Division Superintendents:
1. Quoted in the inclosure to this Circular for the information and guidance of
school officials and teachers, is Opinion No. 370, series of 1951, of the
Honorable, the Secretary of Justice, "regarding the power of the Director of
Public Schools to require all pupils and students in public schools to salute the
flag, on pain of being barred from admission to, or expelled from, such
schools."
This Circular revokes Circular No. 33, series of 1948.

(Sgd.)
BENITO
PANGILINAN
Director of Public Schools

The petitioners filed before the Court of First Instance of Tarlac a petition for
declaratory relief and mandatory injunction, praying that the above circular be
declared null and void, that preliminary injunction be issued prohibiting the
respondents Mariano Alipio and other teachers of the Malacampa Elementary
School, and the Director of Public Schools, from carrying out the provisions of said
circular, and that, after trial, the preliminary injunction be made permanent.
The Provincial Fiscal of Tarlac filed a motion to dismiss the petition on the ground
that under section 2, Rule 66, it was not a case in which a declaratory judgment
could be rendered. The court dismissed the case. Hence, the petitioners have
appealed to this Court.

It is not necessary to decide whether the petition for declaratory judgment be


granted in this case, because in the petition presented in the court below, in
addition to the declaratory judgment, the petitioners prayed for the issuance of a
permanent injunction, which is equivalent to an action for prohibition against public
officers, and as such we consider it, without passing at this stage of the proceedings
on the merits of said action.
In the present case, we cannot consider the question as to the constitutionality of
the circular as this will be decided after the regular hearing.
In view of the foregoing, the order of the court dismissing the petition is reversed,
and the case returned to the Court of First Instance of Tarlac for further proceedings
as in an action for prohibition, without costs. So ordered.
Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Reyes, Bautista Angelo, Labrador,
Concepcion and Diokno, JJ., concur.

Semirara Coal, supra. TORREJOS


Barayuga v. Adventist University, G.R. No. 168008, 17 August 2011
ESPARAGOZA
Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
PETRONILO J. BARAYUGA,
Petitioner,
-versusADVENTIST UNIVERSITY OF THE
PHILIPPINES,
THROUGH
ITS
BOARD
OF
TRUSTEES,
REPRESENTED
BY
ITS
CHAIRMAN, NESTOR D. DAYSON,
Respondents.

G.R. No. 168008


Present:
CORONA, C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:

August 17, 2011


x-----------------------------------------------------------------------------------------x
DECISION
BERSAMIN, J:

The injunctive relief protects only a right in esse. Where the plaintiff does not
demonstrate that he has an existing right to be protected by injunction, his suit for
injunction must be dismissed for lack of a cause of action.
The dispute centers on whether the removal of the petitioner as President of
respondent Adventist University of the Philippines (AUP) was valid, and whether his
term in that office was five years, as he insists, or only two years, as AUP insists.
We hereby review the decision promulgated on August 5, 2004, [1] by which
the Court of Appeals (CA) nullified and set aside the writ of preliminary injunction
issued by the Regional Trial Court (RTC), Branch 21, in Imus, Cavite to prevent AUP
from removing the petitioner.
Antecedents
AUP, a non-stock and non-profit domestic educational institution incorporated under
Philippine laws on March 3, 1932, was directly under the North Philippine Union
Mission (NPUM) of the Southern Asia Pacific Division of the Seventh Day Adventists.
During the 3rd Quinquennial Session of the General Conference of Seventh Day
Adventists held from November 27, 2000 to December 1, 2000, the NPUM Executive
Committee elected the members of the Board of Trustees of AUP, including the
Chairman and the Secretary. Respondent Nestor D. Dayson was elected Chairman
while the petitioner was chosen Secretary.
On January 23, 2001, almost two months following the conclusion of the
3rd Quinquennial Session, the Board of Trustees appointed the petitioner President of
AUP.[2] During his tenure, or from November 11 to November 13, 2002, a group from
the NPUM conducted an external performance audit. The audit revealed the
petitioners autocratic management style, like making major decisions without the
approval or recommendation of the proper committees, including the Finance
Committee; and that he had himself done the canvassing and purchasing of
materials and made withdrawals and reimbursements for expenses without valid
supporting receipts and without the approval of theFinance Committee. The audit
concluded that he had
committed serious violations
disbursement and use of funds.

of

fundamental

rules

and

procedure

in

the

The NPUM Executive Committee and the Board of Trustees decided to


immediately request the services of the General Conference Auditing Service
(GCAS) to determine the veracity of the audit findings. Accordingly, GCAS auditors
worked in the campus from December 4 to December 20, 2002 to review the
petitioners transactions during the period from April 2002 to October 2002. On
December 20, 2002, CGAS auditors reported the results of their review, and
submitted their observations and recommendations to the Board of Trustees.
Upon receipt of the CGAS report that confirmed the initial findings of the auditors on
January 8, 2003, the NPUM informed the petitioner of the findings and required him
to explain.
On January 15, 2003, Chairman Dayson and the NPUM Treasurer likewise informed
the petitioner inside the NPUM office on the findings of the auditors in the presence

of the AUP Vice-President for Financial Affairs, and reminded him of the possible
consequences should he fail to satisfactorily explain the irregularities cited in the
report. He replied that he had already prepared his written explanation.
The Board of Trustees set a special meeting at 2 p.m. on January 22,
2003. Being the Secretary, the petitioner himself prepared the agenda and included
an item on his case.In that meeting, he provided copies of the auditors report and
his answers to the members of the Board of Trustees. After hearing his explanations
and oral answers to the questions raised on issues arising from the report, the
members of the Board of Trustees requested him to leave to allow them to analyze
and evaluate the report and his answers.Despite a long and careful deliberation,
however, the members of the Board of Trustees decided to adjourn that night and to
set another meeting in the following week considering that the meeting had not
been specifically called for the purpose of deciding his case. The adjournment would
also allow the Board of Trustees more time to ponder on the commensurate
disciplinary measure to be meted on him.
On January 23, 2003, Chairman Dayson notified the petitioner in writing that the
Board of Trustees would hold in abeyance its deliberation on his answer to the
auditors report and would meet again at 10:00 a.m. on January 27, 2003. Chairman
Dayson indicated that some sectors in the campus had not been properly
represented in the January 22, 2003 special meeting, and requested the petitioner
as Secretary to ensure that all sectors are duly represented in the next meeting of
the Board of Trustees.[3]
In the January 27, 2003 special meeting, the petitioner sent a letter to the Board of
Trustees. The members, by secret ballot, voted to remove him as President because
of his serious violations of fundamental rules and procedures in the disbursement
and use of funds as revealed by the special audit; to appoint an interim committee
consisting of three members to assume the powers and functions of the President;
and to recommend him to the NPUM for consideration as Associate Director for
Secondary Education.[4]
On January 28, 2003, the petitioner was handed inside the NPUM office a letter,
together with a copy of the minutes of the special meeting held the previous day. In
turn, he handed to Chairman Dayson a letter requesting two weeks within which to
seek a reconsideration, stating that he needed time to obtain supporting documents
because he was then attending to his dying mother. [5]
In the evening of January 28, 2003, the Board of Trustees, most of whose
members had not yet left Cavite, reconvened to consider and decide the petitioners
request for reconsideration. During the meeting, he made an emotional appeal to
allow him to continue as President, promising to immediately vacate his office
should he again commit any of the irregularities cited in the auditors report. He
added that should the Board of Trustees not favor his appeal, he would settle for a
retirement package for him and his wife and would leave the church.
The Board of Trustees denied the petitioners request for reconsideration
because his reasons were not meritorious. Board Member Elizabeth Role served the

notice of the denial on him the next day, but he refused to receive the notice,
simply saying Alam ko na yan.[6]
The petitioner later obtained a copy of the inter-school memorandum dated
January 31, 2003 informing AUP students, staff, and faculty members about his
relief as President and the appointment of an interim committee to assume the
powers and duties of the President.
On February 4, 2003, the petitioner brought his suit for injunction and damages in
the RTC, with prayer for the issuance of a temporary restraining order (TRO),
impleading AUP and its Board of Trustees, represented by Chairman Dayson, and
the interim committee. His complaint alleged that the Board of Trustees had
relieved him as President without valid grounds despite his five-year term; that the
Board of Trustees had thereby acted in bad faith; and that his being denied ample
and reasonable time to present his evidence deprived him of his right to due
process.[7]
The suit being intra-corporate and summary in nature, the application for TRO was
heard by means of affidavits. In the hearing of February 7, 2003, the parties agreed
not to harass each other. The RTC used the mutual agreement as its basis to issue
a status quo order on February 11, 2003.[8]
In their answer with counterclaim, the respondents denied the allegations of the
petitioner, and averred that he had been validly removed for cause; and that he had
been granted ample opportunity to be heard in his defense. [9]
Order of the RTC
On March 21, 2003, after summary hearing, the RTC issued the TRO enjoining
the respondents and persons acting for and in their behalf from implementing the
resolution removing him as President issued by the Board of Trustees during the
January 27, 2003 special meeting, and enjoining the interim committee from
performing the functions of President of AUP. The RTC did not require a bond.[10]
After further hearing, the RTC issued on April 25, 2003 its controversial order,
granting the petitioners application for a writ of preliminary injunction. It thereby
resolved three issues, namely: (a) whether the special board meetings were valid;
(b) whether the conflict-of-interest provision in the By-Laws and Working Policy was
violated; and (c) whether the petitioner was denied due process. It found for the
petitioner upon all the issues. On the first issue, it held that there was neither a
written request made by any two members of the Board of Trustees nor proper
notices sent
[11]

to the members as required by AUPs By-Laws, which omissions, being patent


defects, tainted the special board meetings with nullity. Anent the second issue, it
ruled that the purchase of coco lumber from his balae (i.e., mother-in-law of his son)
was not covered by the conflict-of-interest provision, for AUPs Model Statement of
Acceptance form mentioned only the members of the immediate family and did not
extend to the relationship between him and his balae. On the third issue, it
concluded that he was deprived of due process when the Board of Trustees refused
to grant his motion for reconsideration and his request for additional time to

produce his evidence, and instead immediately implemented its decision by


relieving him from his position without according him the treatment befitting a
university President.
Proceedings in the CA
With the Interim Rules for Intra-Corporate Controversies prohibiting a motion for
reconsideration, the respondents forthwith filed a petition for certiorari in the CA,
[12]
contending that the petitioners complaint did not meet the requirement that an
injunctive writ should be anchored on a legal right; and that he had been merely
appointed, not elected, as President for a term of office of only two years, not five
years, based on AUPs amended By-Laws.
In the meanwhile, on September 17, 2003, the petitioner filed a supplemental
petition in the CA,[13] alleging that after the commencement of his action, he filed in
the RTC an urgent motion for the issuance of a second TRO to enjoin the holding of
an AUP membership meeting and the election of a new Board of Trustees,
capitalizing on the admission in the respondents answer that he had been elected in
2001 to a five-year term of office. He argued that the admission estopped the
respondents from insisting to the contrary.
The respondents filed in the CA a verified urgent motion for a TRO and to set a
hearing on the application for preliminary injunction to enjoin the RTC from
implementing the assailed order granting a writ of preliminary injunction and from
further proceeding in the case. The petitioner opposed the motion for TRO, but did
not object to the scheduling of preliminary injunctive hearings.
On February 24, 2004, the CA issued a TRO to enjoin the RTC from proceeding for a
period of 60 days, and declared that the prayer for injunctive relief would be
resolved along with the merits of the main case.
The petitioner sought a clarification of the TRO issued by the CA, considering
that his cause of action in his petitions to cite the respondents in indirect contempt
dated March 5, 2004 and March 16, 2004 filed in the RTC involved the election of a
certain Robin Saban as the new President of AUP in blatant and malicious violation
of the writ of preliminary injunction issued by the RTC. In clarifying the TRO, the CA
explained that it did not go beyond the reliefs prayed for in the respondents motion
for TRO and preliminary injunctive hearings.
On August 5, 2004, the CA rendered its decision nullifying the RTCs writ of
preliminary injunction. It rejected the petitioners argument that Article IV, Section 3
of AUPs Constitution and By-Laws and Working Policy of the Conference provided a
five-year term for him, because the provision was inexistent. It ruled that the
petitioners term of office had expired on January 22, 2003, or two years from his
appointment, based on AUPs amended By-Laws; that, consequently, he had been a
mere de facto officer appointed by the members of the Board of Trustees; and that
he held no legal right warranting the issuance of the writ of preliminary injunction.

The CA declared that the rule on judicial admissions admitted of exceptions,


as held in National Power Corporation v. Court of Appeals, [14] where the Court held
that admissions were not evidence that prevailed over documentary proof; that the
petitioners being able to answer the results of the special audit point-by-point belied
his allegation of denial of due process; that AUP was the party that stood to be
injured by the issuance of the injunctive writ in the form of a demoralized
administration, studentry, faculty and staff, sullied reputation, and dishonest
leadership; and that the assailed RTC order sowed confusion and chaos because the
RTC thereby chose to subordinate the interest of the entire AUP community to that
of the petitioner who had been deemed not to have satisfied the highest ideals
required of his office.
Issues
Undeterred, the petitioner has appealed, contending that:
I.
THE COURT OF APPPEALS HAS DECIDED CONTRARY TO LAW AND
JURISPRUDENCE WHEN IT RULED THAT THE EXTRAORDINARY WRIT OF
CERTIORARI APPLIED IN THE CASE AT BAR.
II.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH THE ESTABLISHED LAW AND
JURISPRUDENCE THAT ADMISSIONS, VERBAL OR WRITTEN, MADE BY A
PARTY IN THE COURSE OF THE PROCEEDINGS IN THE SAME CASE,
DOES NOT REQUIRE PROOF, BY REQUIRING PETITIONER BARAYUGA TO
PRESENT EVIDENCE THAT HIS TERM AS PRESIDENT OF AUP IS FOR FIVE
(5) YEARS.
III.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT
RULED THAT PETITIONER BARAYUGA HAS ONLY A TERM OF TWO (2)
YEARS INSTEAD OF FIVE (5) YEARS AS CLEARLY ADMITTED BY PRIVATE
RESPONDENT AUP IN ITS ANSWER.
IV.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND JURISPRUDENCE BY SOLELY
RELYING ON THE CASE OF NATIONAL POWER CORPORATION v. COURT
OF APPEALS, WHICH INVOLVE FACTS DIFFERENT FROM THE PRESENT
CASE.
V.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT
UNJUSTIFIABLY ALLOWED THE WAIVER OF NOTICE FOR THE SPECIAL
MEETING OF THE BOARD OF TRUSTEES.

VI.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT
ERRONEOUSLY CONCLUDED THAT PETITIONER BARAYUGA WAS MERELY
OCCUPYING THE POSITION OF AUP PRESIDENT IN A HOLD-OVER
CAPACITY.
The petitioner argues that the assailed RTC order, being supported by substantial
evidence, accorded with law and jurisprudence; that his tenure as President under
the Constitution, By-Laws and the Working Policy of the Conference was for five
years, contrary to the CAs findings that he held the position in a hold-over capacity;
that instead, the CA should have applied the rule on judicial admission, because the
holding in National Power Corporation v. Court of Appeals, cited by the CA, did not
apply, due to AUP not having presented competent evidence to prove that he had
not been elected by the Board of Trustees as President of AUP; and that his removal
during the special board meeting that was invalidly held for lack of notice denied
him due process.

AUP counters that:


I
PETITIONER IS NOT AN ELECTED TRUSTEE OF THE AUP BOARD, NOR
WAS (HE) ELECTED AS PRESIDENT, AND AS SUCH, HE CAN CLAIM NO
RIGHT TO THE AUP PRESIDENCY, BEING TWICE DISQUALIFIED BY LAW,
WHICH RENDERS MOOT AND ACAMEDIC ALL OF THE ARGUMENTS IN
THIS PETITION.
II
EVEN IF WE FALSELY ASSUME EX GRATIA THAT PETITIONER IS AN
ELECTED TRUSTEE AND ELECTED PRESIDENT, THE TWO (2) YEAR TERM
PROVIDED IN AUPS BY-LAWS REQUIRED BY THE CORPORATION CODE
AND APPROVED BY THE SEC IS WHAT GOVERNS THE INTRA-CORPORATE
CONTROVERSY, THE AUPS ADMISSION IN ITS ANSWER THAT HE HAS A
FIVE (5) YEAR TERM BASED ON HIS INVOKED SAMPLE CONSTITUTION,
BY-LAWS AND POLICY OF THE SEVENTH DAY ADVENTIST
NOTWITHSTANDING.
III
PURSUANT TO THE RULES AND SETTLED JURISPRUDENCE, THE
ADMISSION IN THE ANSWER IS NOT EVEN PREJUDICIAL AT ALL.
IV
EVEN IF WE FALSELY ASSUME, JUST FOR THE SAKE OF ARGUMENT,
THAT THE PETITIONER HAD A FIVE (5) YEAR TERM AS UNIVERSITY
PRESIDENT, HE WAS NONETHELESS VALIDLY TERMINATED FOR LOSS OF
CONFIDENCE, GIVEN THE NUMEROUS ADMITTED ANOMALIES HE
COMMITTED.

V
PETITIONER CANNOT COMPLAIN THAT NOTICES OF THE BOARD
MEETING WERE NOT SENT TO ALL THE TWENTY FIVE (25) TRUSTEES OF
THE AUP BOARD, SINCE: [1] AS THE AUP SECRETARY, IT WAS HE WHO
HAD THE DUTY TO SEND THE NOTICES; [2] WORSE, HE ATTENDED AND
EXHAUSTIVELY DEFENDED HIS WRITTEN ANSWER IN THE AUP BOARD
OF TRUSTEES MEETING, THUS, WAIVING ANY NOTICE OBJECTION; [3]
WORST OF ALL, HIS AFTERTHOUGHT OBJECTION IS DECEPTIVELY FALSE
IN FACT.
The decisive question is whether the CA correctly ruled that the petitioner
had no legal right to the position of President of AUP that could be protected by the
injunctive writ issued by the RTC.
Ruling
We deny the petition for review for lack of merit.
1.
Petition is already moot
The injunctive writ issued by the RTC was meant to protect the petitioners
right to stay in office as President. Given that the lifetime of the writ of preliminary
injunction was co-extensive with the duration of the act sought to be prohibited,
[15]
this injunctive relief already became moot in the face of the admission by the
petitioner himself, through his affidavit, [16] that his term of office premised on his
alleged five-year tenure as President had lasted only until December 2005. In short,
the injunctive writ granted by the RTC had expired upon the end of the term of
office (as posited by him).
The mootness of the petition warranted its denial. When the resolution of the
issue submitted in a case has become moot and academic, and the prayer of the
complaint or petition, even if granted, has become impossible of enforcement for
there is nothing more to enjoin the case should be dismissed. [17] No useful purpose
would then be served by passing on the merits of the petition, because any ruling
could hardly be of any practical or useful purpose in the premises. It is a settled rule
that a court will not determine a moot question or an abstract proposition, nor
express an opinion in a case in which no practical relief can be granted. [18] Indeed,
moot and academic cases cease to present any justiciable controversies by virtue of
supervening events,[19] and the courts of law will not determine moot questions,
[20]
for the courts should not engage in academic declarations and determine a moot
question.[21]
2.
RTC acted in patently grave abuse of discretion
in issuing the TRO and writ of injunction

Nonetheless, the aspect of the case concerning the petitioners claim for
damages has still to be decided. It is for this reason that we have to resolve whether
or not the petitioner had a right to the TRO and the injunctive writ issued by the
RTC.
A valid writ of preliminary injunction rests on the weight of evidence
submitted by the plaintiff establishing: (a) a present and unmistakable right to be
protected; (b) the acts against which the injunction is directed violate such right;
and (c) a special and paramount necessity for the writ to prevent serious damages.
[22]
In the absence of a clear legal right, the issuance of the injunctive writ
constitutes grave abuse of discretion[23] and will result to nullification thereof. Where
the complainants right is doubtful or disputed, injunction is not proper. The
possibility of irreparable damage sans proof of an actual existing right is not a
ground for a preliminary injunction.[24]
It is clear to us, based on the foregoing principles guiding the issuance of the
TRO and the writ of injunction, that the issuance of the assailed order constituted
patently grave abuse of discretion on the part of the RTC, and that the CA rightly set
aside the order of the RTC.
To begin with, the petitioner rested his claim for injunction mainly upon his
representation that he was entitled to serve for five years as President of AUP under
the Constitution, By-Laws and Working Policy of the General Conference of the
Seventh Day Adventists (otherwise called the Bluebook). All that he presented in
that regard, however, were mere photocopies of pages 225-226 of the Bluebook,
which read:
Article IV-Board of Directors
Sec. 1. This school operated by the _____________ Union
Conference/Mission of Seventh-Day Adventists shall be under the direct
control of a board of directors, elected by the constituency in its
quinquennial sessions. The board of directors shall consist of 15 to 21
members, depending on the size of the institution. Ex officio members
shall be the union president as chairperson, the head of the school as
secretary, the union secretary, the union treasurer, the union director
of education, the presidents of the conferences/missions within the
union. xxx.
Sec. 2. The term of office of members of the board of directors shall be
five years to coincide with the ______________ Union Conference/Mission
quinquennial period.
Sec. 3. The duties of the board of directors shall be to elect
quinquenially the president, xxx.
Yet, the document had no evidentiary value. It had not been officially adopted
for submission to and approval of the Securities and Exchange Commission. It was
nothing but an unfilled model form. As such, it was, at best, only a private
document that could not be admitted as evidence in judicial proceedings until it was
first properly authenticated in court.

Section 20, Rule 132 of the Rules of Court requires authentication as a


condition for the admissibility of a private document, to wit:
Section 20. Proof of private document. Before any private
document offered as authentic is received in evidence, its due
execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of
handwriting of the maker.

the

genuineness

of

the

signature

or

Any other private document need only be identified as that which


it is claimed to be. (21 a)
For the RTC to base its issuance of the writ of preliminary injunction on the
mere photocopies of the document, especially that such document was designed to
play a crucial part in the resolution of the decisive issue on the length of the term of
office of the petitioner, was gross error.
Secondly, even assuming that the petitioner had properly authenticated the
photocopies of the Bluebook, the provisions contained therein did not vest the right
to an office in him. An unfilled model form creates or establishes no rights in favor
of anyone.
Thirdly, the petitioners assertion of a five-year duration for his term of office
lacked legal basis.
Section 108 of the Corporation Code determines the membership and
number of trustees in an educational corporation, viz:
Section 108. Board of trustees. Trustees of educational institutions
organized as educational corporations shall not be less than five (5)
nor more than fifteen (15): Provided, however, That the number of
trustees shall be in multiples of five (5).
Unless otherwise provided in the articles of incorporation or the
by-laws, the board of trustees of incorporated schools, colleges, or
other institutions of learning shall, as soon as organized, so classify
themselves that the term of office of one-fifth (1/5) of their number
shall expire every year. Trustees thereafter elected to fill
vacancies, occurring before the expiration of a particular term,
shall hold office only for the unexpired period. Trustees elected
thereafter to fill vacancies caused by expiration of term shall
hold office for five (5) years. A majority of the trustees shall
constitute a quorum for the transaction of business. The powers and
authority of trustees shall be defined in the by-laws.

For institutions organized as stock corporations, the number and


term of directors shall be governed by the provisions on stock
corporations.
The second paragraph of the provision, although setting the term of the
members of the Board of Trustees at five years, contains a proviso expressly
subjecting the duration to what is otherwise provided in the articles of incorporation
or by-laws of the educational corporation. That contrary provision controls on the
term of office.[25]
In AUPs case, its amended By-Laws provided the term of the members of the
Board of Trustees, and the period within which to elect the officers, thusly:
Article I
Board of Trustees
Section 1. At the first meeting of the members of the corporation,
and thereafter every two years, a Board of Trustees shall be elected. It
shall be composed of fifteen members in good and regular standing in
the Seventh-day Adventist denomination, each of whom shall hold
his office for a term of two years, or until his successor has
been elected and qualified. If a trustee ceases at any time to be a
member in good and regular standing in the Seventh-day Adventist
denomination, he shall thereby cease to be a trustee.
xxxx
Article IV
Officers
Section 1. Election of officers. At their organization meeting,
the members of the Board of Trustees shall elect from among
themselves a Chairman, a Vice-Chairman, a President, a Secretary, a
Business Manager, and a Treasurer. The same persons may hold and
perform the duties of more than one office, provided they are not
incompatible with each other.[26]
In light of foregoing, the members of the Board of Trustees were to serve a
term of office of only two years; and the officers, who included the President, were
to be elected from among the members of the Board of Trustees during their
organizational meeting, which was held during the election of the Board of
Trustees every two years. Naturally, the officers, including the President, were to
exercise the powers vested by Section 2 of the amended By-Laws for a term of only
two years, not five years.
Ineluctably, the petitioner, having assumed as President of AUP on January
23, 2001, could serve for only two years, or until January 22, 2003. By the time of
his removal for cause as President on January 27, 2003, he was already occupying

the office in a hold-over capacity, and could be removed at any time, without cause,
upon the election or appointment of his successor. His insistence on holding on to
the office was untenable, therefore, and with more reason when one considers that
his removal was due to the loss of confidence on the part of the Board of Trustees.
4.
Petitioner was not denied due process
The petitioner complains that he was denied due process because he was deprived
of the right to be heard and to seek reconsideration; and that the proceedings of the
Board of Trustees were illegal due to its members not being properly notified of the
meeting.
Still, the petitioner fails to convince us.
The requirements of due process in an administrative context are satisfied
when the parties are afforded fair and reasonable opportunity to explain their
respective sides of the controversy,[27] for the essence of due process is an
opportunity to be heard.[28] Here, the petitioner was accorded the full opportunity to
be
heard,
as
borne
by
the
fact
that
he
was
granted
the
opportunity to refute the adverse findings contained in the GCAS audit report and
that the Board of Trustees first heard his side during the board meetings before his
removal. After having voluntarily offered his refutations in the proceedings before
the Board of Trustees, he should not now be permitted to denounce the proceedings
and to plead the denial of due process after the decision of the Board of Trustees
was adverse to him.
Nor can his urging that the proceedings were illegal for lack of prior
notification be plausible in light of the fact that he willingly participated therein
without raising the objection of lack of notification. Thereby, he effectively waived
his right to object to the validity of the proceedings based on lack of due notice. [29]
5.
Conclusion
The removal of the petitioner as President of AUP, being made in accordance
with the AUP Amended By-Laws, was valid. With that, our going into the other issues
becomes unnecessary. We conclude that the order of the RTC granting his
application for the writ of preliminary injunction was tainted with manifestly grave
abuse of discretion; that the CA correctly nullified and set aside the order; and that
his claim for damages, being bereft of factual and legal warrant, should be
dismissed.
WHEREFORE, we DENY the petition for review on certiorari for lack of merit,
and hereby DISMISS SEC Case No. 028-03 entitled Dr. Petronilo Barayuga v. Nelson
D. Dayson, et al.
The petitioner shall pay the cost of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

Australian Professional Realty, Inc. v. Municipality of Padre Garcia Batangas,


G.R. No. 183367, March 14 2012 DUYONGCO
Republic
Supreme
Manila

of

the Philippines
Court

SECOND DIVISION
AUSTRALIAN PROFESSIONAL REALTY,
INC., JESUS GARCIA, and LYDIA
MARCIANO,
Petitioners,

Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

- versus -

MUNICIPALITY OF PADRE
BATANGAS PROVINCE,
Respondent.

G. R. No. 183367

GARCIA
Promulgated:
March 14, 2012

x--------------------------------------------------x
DECISION
SERENO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to annul the Court of Appeals (CA) Resolutions in CA-G.R. SP No. 102540
dated 26 March 2008[1] and 16 June 2008, which denied petitioners Motion for the
issuance of a status quo order and Motion for issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction.

Statement of the Facts and the Case

In 1993, fire razed to the ground the old public market of respondent Municipality of
Padre Garcia, Batangas. The municipal government, through its then Municipal
Mayor Eugenio Gutierrez, invited petitioner Australian Professional Realty, Inc.
(APRI) to rebuild the public market and construct a shopping center.
On 19 January 1995, a Memorandum of Agreement (MOA) [2] was executed
between petitioner APRI and respondent, represented by Mayor Gutierrez and the
members of the Sangguniang Bayan. Under the MOA, APRI undertook to construct a
shopping complex in the 5,000-square-meter area. In return, APRI acquired the
exclusive right to operate, manage, and lease stall spaces for a period of 25 years.
In May 1995, Victor Reyes was elected as municipal mayor of respondent. On
6 February 2003, respondent, through Mayor Reyes, initiated a Complaint for
Declaration of Nullity of Memorandum of Agreement with Damages before the
Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial Region, Branch 87.
The Complaint was docketed as Civil Case No. 03-004.
On 12 February 2003, the RTC issued summons to petitioners, requiring them
to file their Answer to the Complaint. However, the summons was returned
unserved, as petitioners were no longer holding office in the given address.
On 2 April 2003, a Motion for Leave of Court to Effect Service by Publication
was filed by respondent before the RTC and subsequently granted by the trial court.
On 24 November 2003, the RTC issued an Order declaring petitioners in
default and allowing respondent to present evidence ex parte.
On 6 October 2004, a Decision was rendered by the RTC, which, after
narrating the testimonial evidence for respondent, stated:

After the completion of the testimony of Victor M. Reyes, counsel


for the petitioner manifested that he will file the formal offer of
evidence in writing.
On July 19, 2004, counsel for the petitioner filed before this
Court his Formal Offer of Documentary Exhibits consisting of Exhibits A
to H, inclusive of submarkings.
On August 18, 2004 an order was issued by the Court admitting
all the exhibits formally offered by the petitioner thru counsel and this
case was ordered submitted for resolution of the Court.
There is no opposition in the instant petition.
WHEREFORE, in view thereof, and finding the petition to be
sufficient in form and substance, it being supported by sufficient
evidence, judgement (sic) is hereby rendered in favor of the plaintiff as
against the respondents as follows:
(a)

The Memorandum of Agreement is hereby declared null


and void for being contrary to law and public policy, particularly
R.A. 6957 and R.A. 7718;

(b)

The respondents are hereby ordered to pay the amount of


FIVE MILLION PESOS (5,000,000.00) in favor of the plaintiff for
damages caused to the latter;

(c)

The structures found within the unfinished PADRE GARCIA


SHOPPING CENTER are hereby declared forfeited in favor of the
Municipality of Padre Garcia.
SO ORDERED.[3]

There having been no timely appeal made, respondent filed a Motion for
Execution of Judgment, which was granted by the RTC. A Writ of Execution was thus
issued on 15 July 2005.
After learning of the adverse judgment, petitioners filed a Petition for Relief
from Judgment dated 18 July 2005. This Petition was denied by the RTC in an Order
dated 15 June 2006. In another Order dated 14 February 2008, the trial court denied
the Motion for Reconsideration.
Petitioners later filed before the CA a Petition for Certiorari and Prohibition
dated 28 February 2008, docketed as CA-G.R. SP No. 102540. On 7 March 2008,
petitioners filed before the CA a Motion for the Issuance of Status Quo Order and
Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction.[4] The motion prayed for an order to restrain the RTC from further
proceeding and issuing any further Order, Resolution, Writ of Execution, and any
other court processes[5] in the case before it.

On 26 March 2008, the CA issued a Resolution denying the said motion,


stating thus:
After a careful evaluation of petitioners Motion for Issuance of
Status Quo Order and Motion for Issuance of Temporary Restraining
Order and/or Writ of Preliminary Injunction, We find that the matter is
not of extreme urgency and that there is no clear and irreparable injury
that would be suffered by the petitioners if the prayer for the issuance
of a Status Quo Order, Temporary Restraining Order (TRO) and/or Writ
of Preliminary Injunction is not granted. In Ong Ching Kian Chuan v.
Court of Appeals, it was held that, to be entitled to injunctive relief, the
petitioner must show, inter alia, the existence of a clear and
unmistakable right and an urgent and paramount necessity for the writ
to prevent serious damage.
WHEREFORE, petitioners prayer for the issuance of a Status Quo
Order, Temporary Restraining Order and/or Writ of Preliminary
Injunction is hereby DENIED for lack of merit. [6]

On 17 June 2008, the CA denied the Motion for Reconsideration of the 26


March 2008 Resolution, stating that the mere preservation of the status quo is not
sufficient to justify the issuance of an injunction.
On 8 July 2008, petitioners filed the instant Petition for Review on Certiorari
dated 6 July 2008.
Petitioners claim that the amount of APRIs investment in the Padre Garcia Shopping
Center is estimated at 30,000,000, the entirety of which the RTC declared forfeited
to respondent without just compensation. At the time of the filing of the Petition,
APRI had 47 existing tenants and lessees and was deriving an average monthly
rental income of 100,000. The Decision of the RTC was allegedly arrived at without
first obtaining jurisdiction over the persons of petitioners. The execution of the
allegedly void judgment of the RTC during the pendency of the Petition before the
CA would probably work injustice to the applicant, as the execution would result in
an arbitrary declaration of nullity of the MOA without due process of law.
Petitioners further allege that respondent did not exercise reasonable diligence in
inquiring into the formers address in the case before the RTC. The Process Server
Return, with respect to the unserved summons, did not indicate the impossibility of
a service of summons within a reasonable time, the efforts exerted to locate APRI,
or any inquiry as to the whereabouts of the said petitioner.
On 6 August 2008, this Court required respondent to file its Comment. On 13
February 2009, the Comment was filed, alleging among others that despite the RTCs
issuance of a Writ of Execution, respondent did not move to implement the said writ

out of administrative comity and fair play. Even if the writ were implemented,
petitioners failed to state in categorical terms the serious injury they would sustain.
Respondent further argues that it is now in possession of the contracts that the
lessees of the Padre Garcia Shopping Center executed with APRI. Thus, there are
actions [that militate] against the preservation of the present state of things, [7] as
sought to be achieved with the issuance of a status quo order.
On 2 June 2009, petitioners filed their Reply to respondents Comment.
On 3 March 2010, this Court issued a Resolution requiring the parties to inform the
Court of the present status of CA-G.R. SP No. 102540. On 15 April 2010, respondent
manifested that after the parties filed their respective Memoranda, the CA
considered the case submitted for decision. On 12 May 2010, petitioners filed their
Compliance, stating that the appellate court, per its Resolution dated 7 August
2008, held in abeyance the resolution of CA-G.R. SP No. 102540, pending resolution
of the instant Petition.
The Courts Ruling
The Petition is denied for failure to show any grave abuse of discretion on the part
of the CA.
Procedural Issue: Propriety of a
Petition for Review under Rule 45
Before proceeding to the substantive issues raised, we note that petitioners
resorted to an improper remedy before this Court. They filed a Petition for Review
on Certiorari under Rule 45 of the Rules of Court to question the denial of their
Motion for the issuance of an injunctive relief.
Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be taken from
an interlocutory order. An interlocutory order is one that does not dispose of the
case completely but leaves something to be decided upon. [8] An order granting or
denying an application for preliminary injunction is interlocutory in nature and,
hence, not appealable.[9] Instead, the proper remedy is to file a Petition for Certiorari
and/or Prohibition under Rule 65.[10]
While the Court may dismiss a petition outright for being an improper remedy, it
may in certain instances proceed to review the substance of the petition. [11] Thus,
this Court will treat this Petition as if it were filed under Rule 65.

Substantive Issue: Grave abuse of


discretion on the part of the CA
The issue that must be resolved by this Court is whether the CA committed grave
abuse of discretion in denying petitioners Motion for the Issuance of Status Quo
Order and Motion for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction (Motion for Injunction).
A writ of preliminary injunction and a TRO are injunctive reliefs and
preservative remedies for the protection of substantive rights and interests. [12] An
application for the issuance of a writ of preliminary injunction and/or TRO may be
granted upon the filing of a verified application showing facts entitling the applicant
to the relief demanded.
Essential to granting the injunctive relief is the existence of an urgent
necessity for the writ in order to prevent serious damage. A TRO issues only if the
matter is of such extreme urgency that grave injustice and irreparable injury would
arise unless it is issued immediately. [13] Under Section 5, Rule 58 of the Rule of
Court,[14] a TRO may be issued only if it appears from the facts shown by affidavits
or by the verified application that great or irreparable injury would be inflicted on
the applicant before the writ of preliminary injunction could be heard.
Thus, to be entitled to the injunctive writ, petitioners must show that (1)
there exists a clear and unmistakable right to be protected; (2) this right is directly
threatened by an act sought to be enjoined; (3) the invasion of the right is material
and substantial; and (4) there is an urgent and paramount necessity for the writ to
prevent serious and irreparable damage.[15]
The grant or denial of a writ of preliminary injunction in a pending case rests
on the sound discretion of the court taking cognizance of the case, since the
assessment and evaluation of evidence towards that end involves findings of fact
left to the said court for its conclusive determination. [16] Hence, the exercise of
judicial discretion by a court in injunctive matters must not be interfered with,
except when there is grave abuse of discretion. [17]
Grave abuse of discretion in the issuance of writs of preliminary injunction
implies a capricious and whimsical exercise of judgment equivalent to lack of
jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of
passion, prejudice or personal aversion amounting to an evasion of positive duty or
to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.[18] The burden is thus on petitioner to show in his application that there is
meritorious ground for the issuance of a TRO in his favor. [19]

In this case, no grave abuse of discretion can be imputed to the CA. It did not
exercise judgment in a capricious and whimsical manner or exercise power in an
arbitrary or despotic manner.

No clear legal right


A clear legal right means one clearly founded in or granted by law or is
enforceable as a matter of law. [20] In the absence of a clear legal right, the issuance
of the writ constitutes grave abuse of discretion. [21] The possibility of irreparable
damage without proof of an actual existing right is not a ground for injunction. [22]
A perusal of the Motion for Injunction and its accompanying Affidavit filed
before the CA shows that petitioners rely on their alleged right to the full and
faithful execution of the MOA. However, while the enforcement of the Writ of
Execution, which would nullify the implementation of the MOA, is manifestly
prejudicial to petitioners interests, they have failed to establish in their Petition that
they possess a clear legal right that merits the issuance of a writ of preliminary
injunction. Their rights under the MOA have already been declared inferior or
inexistent in relation to respondent in the RTC case, under a judgment that has
become final and executory.[23] At the very least, their rights under the MOA are
precisely disputed by respondent. Hence, there can be no clear and unmistakable
right in favor of petitioners to warrant the issuance of a writ of injunction. Where the
complainants right or title is doubtful or disputed, injunction is not proper. [24]
The general rule is that after a judgment has gained finality, it becomes the
ministerial duty of the court to order its execution. No court should interfere, by
injunction or otherwise, to restrain such execution. [25] The rule, however, admits of
exceptions, such as the following: (1) when facts and circumstances later transpire
that would render execution inequitable or unjust; or (2) when there is a change in
the situation of the parties that may warrant an injunctive relief. [26] In this case, after
the finality of the RTC Decision, there were no supervening events or changes in the
situation of the parties that would entail the injunction of the Writ of Execution.

No irreparable injury
Damages are irreparable where there is no standard by which their amount
can be measured with reasonable accuracy. [27] In this case, petitioners have alleged
that the loss of the public market entails costs of about 30,000,000 in investments,
100,000 monthly revenue in rentals, and amounts as yet unquantified but not
unquantifiable in terms of the alleged loss of jobs of APRIs employees and potential

suits that may be filed by the leaseholders of the public market for breach of
contract. Clearly, the injuries alleged by petitioners are capable of pecuniary
estimation. Any loss petitioners may suffer is easily subject to mathematical
computation and, if proven, is fully compensable by damages. Thus, a preliminary
injunction is not warranted.[28] With respect to the allegations of loss of employment
and potential suits, these are speculative at best, with no proof adduced to
substantiate them.
The foregoing considered, the CA did not commit grave abuse of discretion in
denying the Motion for Injunction. In any case, petitioners may still seek recourse in
their pending Petition before the Court of Appeals.
WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions dated 26
March 2008 and 16 June 2008 in CA-G.R. SP No. 102540 are AFFIRMED. The Court
of Appeals is directed to proceed with dispatch to dispose of the case before it.

SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice

Philippine National Bank v. RJ Ventures, G.R. No. 164548, September 27,


2006 BITANGJOL

FIRST DIVISION

PHILIPPINE NATIONAL BANK,

G.R. No. 164548

Petitioner,
Present:

PANGANIBAN, C.J.

- versus Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
RJ
VENTURES
REALTY
&
DEVELOPMENT
CORPORATION
and
RAJAH
BROADCASTING
NETWORK, INC.,

CALLEJO, SR., and


CHICO-NAZARIO, JJ.

Respondents.
Promulgated:

September 27, 2006


x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

Before this Court is a Petition for Review filed under Rule 45 of the Rules of Court
assailing the 31 March 2004 Decision[1] and the 8 July 2004 Resolution[2] of the Court
of Appeals in CA-G.R. SP No. 56119. The challenged Decision disposed, thus:

IN VIEW OF ALL THE FOREGOING, the instant petition is


hereby GRANTED, the assailed Orders dated July 28, 1999 and October
26, 1999, respectively, [are] REVERSED AND SET ASIDE, and the
preliminary injunction earlier issued is reinstated. No cost.[3]

The assailed Resolution denied petitioner Philippine National Banks (PNBs) Motion
for Reconsideration dated 3 May 2004.

The Antecedents

As culled from the records, the facts show that on 26 February 1999, respondents RJ
Ventures Realty & Development Corporation (RJVRD) and Rajah Broadcasting
Network, Inc. (RBN) filed a Complaint for Injunction with Prayer for Issuance of
Temporary Restraining Order and Writ of Preliminary Injunction [4] against petitioner
PNB and Juan S. Baun, Jr.[5] with the Regional Trial Court (RTC), Branch 66 of Makati
City, and docketed as Civil Case No. 99-452.

In its Complaint, respondents contended that on 13 June 1996, First Womens Credit
Corporation (FWCC) received an invitation to bid from PNB anent the sale of an
8,000 square meter property, located at Paseo de Roxas corner Sen. Gil. Puyat
Avenue, Makati City, and covered by Transfer Certificate of Title No. S-15223
(Buendia Property).[6]On 10 July 1996, FWCC bid the amount of P455,000.00 per
square meter or a total of P3,640,000,000.00; and pursuant to PNB Rules and
Regulations on the Acceptance and Evaluation of Proposals, it deposited ten percent
(10%) of the offered price or P364,000,000.00 with the PNB by way of two checks,
No.
418796
and
No.
418797,
in
the
amounts
of P312,000,000.00
[7]
and P52,000,000.00, respectively. On 11 July 1996, FWCC submitted a revised
offer increasing its bid by P5,000.00 per square meter or a total additional amount
of P40,000,000.00. In view of the increase, FWCC deposited with PNB an additional
amount of P4,000,000.00.[8] On 17 July 1996, FWCC was awarded the Buendia
Property.[9] PNBs Notice of Award to FWCC set a condition that within thirty (30)
calendar days from receipt of the same, the successful offeror shall tender payment
of the balance of the purchase price in the form of a managers or cashiers check.
[10]
On 24 July 1996, FWCC, invoking Section 7.2[11] of the PNB Rules requested PNB
to finance the entire balance of the purchase price. [12] On 17 September 1996 and
pending action on its loan application, FWCC assigned all its rights, claims, interest,
and title over the Buendia Property to RJVRD. [13] The latter assumed the right to
purchase the Buendia Property and the obligations of FWCC to PNB on the balance
of the bid price.

Respondents further posited that PNB initially refused to finance the entire balance
of the purchase price except to the extent of seventy-five percent (75%) thereof.
[14]
However, PNB finally agreed to grant a loan to RJVRD equivalent to eighty
percent (80%) of the purchase price or for the amount of P2,944,000,000.00. The
grant was conditioned on the deposit by RJVRD with PNB of an additional ten
percent (10%) of the purchase price to the first ten percent (10%) downpayment
which the former had paid. Otherwise stated, RJVRD was required to raise an
additional amount of P368,000,000.00.[15] Moreover, to allow RJVRD to raise the
additional amount, PNB proposed to lend RBN the required amount, the latter being
an affiliate company of RJVRD, which amount will be available for relending to
RJVRD.[16]

Respondents described the said arrangement in this wise:

15.0 PNB shall extend a loan to RBN in the amount of P350,000,000.00


which in turn would be loaned to RJVRD.

15.1 The proceeds of the loan shall be used by RJVRD to partially pay
the additional 10% or P368,000,000.00 deposit on the Property. PNB
documents would however show that the loan was for the expansion of
RBN.

15.2 Mr. Ramon P. Jacinto, the majority stockholder of RJVRD will pledge
to PNB 70% of his shares of stock in RBN and 40% of his shares of
stock in FWCC.[17]

Moreover, in their Complaint a quo, respondents avowed that on 30 September


1996, following the payment by RJVRD to PNB of the additional deposit
of P368,000,000.00, the parties entered into a loan agreement wherein PNB will
finance the balance of the purchase price in the amount of P2,944,000,000.00
subject to conditions, inter alia, that after the transfer of the Buendia Property in the
name of RJVRD, the same shall be mortgaged in favor of PNB. On even date, RJVRD
and PNB executed a Loan Agreement.[18] A Deed of Sale[19] and a Real Estate
Mortgage,[20] both dated 30 September 1996 were similarly executed between
RJVRD and PNB over the Buendia Property. The Loan Agreement included a two-way
peso/dollar convertibility feature at the option of RJVRD; hence, to avail of a lower
interest rate, RJVRD converted its peso loan to US dollar based on a rate of
exchange of P26.23 to US$1.00, or for a total amount of US$112,237,895.54.

Respondents claimed that RJVRD undertook to engage foreign investors for the
project. It entered into negotiations with Hyundai Construction of South Korea which
were eventually suspended. Its talks with Siemens of Austria, and Property
Investment and Development Management Corporation of Singapore failed.
[21]
Respondents interposed further that the Asian currency crisis on 11 July
1997 caused a depreciation of the Philippine peso which correspondingly increased
the obligation of RJVRD to PNB fromP2,944,000,000.00 to P5,405,301,470.82
inclusive of interest.[22] On 30 September 1997, in an effort to continue the project,
RJVRD entered into a joint venture agreement with Fil-Estate Management
Incorporated for the development of the Buendia Property. RBN secured another
loan from PNB in the amount of P100,000,000.00, part of which was used in paying
the interest for the loan it had secured in favor of RJVRD. In addition, as and by way
of security, RBN assigned in favor of PNB, all its rights and interest over radio and
television frequencies issued by the National Telecommunications Commission,
located in Tuguegarao, Baguio, Manila, Cebu, Bacolod, Iloilo, including those in
Cagayan de Oro (FM Stations), and Manila (AM Station and TV-UHF Station). [23] On
September 1997, RJVRD paid PNB the accrued interest on the loan amounting

toP353,478,628.88. RBN also updated its first account with PNB by paying
about P41,000,00.00. In March 1998, RJVRD, RBN and PNB entered into discussions
on the restructuring of the loans. Respondents alleged that while discussions were
ongoing, the accounts of RJVRD and RBN became delinquent. [24] PNB sent RJVRD, a
notice,[25]dated 2 June 1998, declaring their accounts delinquent and demanding the
settlement of the same.[26]

Respondents asserted that prior to 11 June 1998, in line with the continuing
discussions between PNB and RBN for the restructuring of the loan, PNB required
the redenomination of RBNs loan as a condition for its restructuring. [27] On 11 June
1998, RBN sent a letter to PNB in agreement to the redenomination of the loan,
stating therein the agreed terms for the restructuring of the loan. RJVRD sent a
letter to PNB agreeing to redenominate its own loan based on PNBs initial proposal,
which letter was returned to RJVRD for the reason that, at that time, the proposals
for the restructuring of the RJVRD loan component did not call for the
redenomination of the loan of RJVRD. [28] On 24 June 1998, RBN sent a letter to PNB,
confirming to redenominate the loan under the terms stated in its letter of 11 June
1998.[29] On 9 September 1998, respondents asseverated that PNB made a call to
RJVRD, asking the latter to redenominate its loans. On the same date, RJVRD sent
PNB, a letter in agreement to the redenomination. [30] On 23 October 1998, the RJ
Groups of Companies sent Mr. Benjamin Palma Gil, president of PNB, a proposal for
the settlement of respondents accounts, including a request for the restructuring of
the loans.[31]

On 25 January 1999, PNB, through its counsel, sent RBN a demand letter,
requiring the latter to settle their outstanding account of P841,460,891.91.[32] In a
letter similarly dated 25 January 1999, PNB by counsel, demanded from RJVRD the
settlement of its total obligation of P5,405,301,470.82.[33] On 28 January 1999, RBN
sent a letter to PNBs counsel, expressing its surprise to receive the demand letter
despite their continuing negotiations with PNB for the restructuring of its accounts.
[34]
In its letter, RBN said that it was, in fact, required by PNB to redenominate its
dollar loans into pesos as an initial step for the restructuring of the account, and
which it has complied.[35] On even date, RJVRD sent a letter to PNBs counsel
emphasizing that it had not been advised of any adverse development in their
negotiation with PNB nor had it been informed of the discontinuance of the
negotiation. RJVRD sought for additional time to justify its proposal to PNB with the
aim of arriving at a friendly settlement.[36]

On 18 February 1999, PNB made a demand to RBN to turnover the possession


and/or control of Broadcasting Equipment Inventory located at No. 33, Dominican
Hills,Baguio City.[37] On 18 February 1999, RJVRD received a Notice of Extrajudicial
Sale, dated 1 February 1999 for the sale of the Buendia Property [38] to be held on 2
March 1999 at the City Hall, Makati City.

Respondents manifested in their Complaint that when RJVRD, as assignee of


FWCC purchased the Buendia Property from PNB, the Philippine economy was
progressive; that it was under this favorable economic scenario that RJVRD agreed
to the terms and conditions of the loan agreements; however, following the Asian
economic crisis of July 1997, and with the depreciation of the Philippine peso, the
loan of RJVRD which was denominated in US dollars rose from P2,944,000,000.00
(US$112,237,895.54) toP5,405,301,470.82.[39] According to respondents, from the
original contract price of P3,680,000,000.00, RJVRD already made a payment
of P736,000,000.00, representing twenty-percent (20%) of the value of the Buendia
Property and P353,478,628.88, representing interest on the loan or a total
of P1,089,478,628.88; and that PNB never effectively lost control over the Buendia
Property, considering that simultaneous with the execution of the Loan Agreement
between RJVRD and PNB, RJVRD executed a Real Estate Mortgage over the Buendia
Property in favor of PNB. Furthermore, respondents sought to find recourse under
Article 19[40] of the Civil Code. They contended that the action on the part of PNB to
foreclose the collaterals pledged or mortgaged by RJVRD and RBN, including the
extrajudicial sale of the Buendia Property on 2 March 1999 at the City Hall of Makati
City, and the planned take over of RBNs radio facilities in Baguio City would be,
among others, premature.[41]

Finally, in support of its Application for the Issuance of a Temporary


Restraining Order and a Writ of Preliminary Injunction, respondents alleged that
RJVRD and RNB would suffer great and irreparable injury by the extrajudicial
foreclosure of the property and the take over of RBNs radio facilities in Baguio,
unless a Temporary Restraining Order and/or Writ of Preliminary Injunction is issued
enjoining defendants from implementing the Notice of Extrajudicial Sale dated 1
February 1999, and enjoining PNB from taking possession and control of RBNs radio
facilities in Baguio City. Respondents maintained that the commission or
continuance of the acts complained of during the litigation or the non-performance
thereof would work injustice to RJVRD and RBN. They manifested their willingness to
post a bond as the court a quo may fix in its discretion, to answer for whatever
damages PNB may sustain for the reason of the restraining order or injunction, if
finally determined that respondents are not entitled thereto.

Acting on respondents prayer for the issuance of a Temporary Restraining


Order, the RTC, issued an Order [42] dated 2 March 1999, denying the same. The RTC
held that the evidence showed that respondents are in default of payment of its
loan from PNB, amounting to P5,405,301,470.82, including interests and
penalties. According to the RTC, the respondents failed to prove that they have a
clear right to restrain the foreclosure of the Buendia Property; whereas, it is PNB
which has a clear right to the Buendia Property.The RTC opined that the evidence
failed to prove that respondents will suffer irreparable injury if the foreclosure of the
Buendia Property is not enjoined, for under the law, respondents have one (1) year
from the date of the registration of the sale with the Register of Deeds within which
to redeem the Buendia Property; thus, respondents will have a chance to recover
the ownership thereof by way of redemption. Finally, the RTC ruled that the rule of
equity is on the side of PNB considering that the Buendia Property was formerly
owned by PNB. The RTC denied the application for Temporary Restraining Order for

lack of merit, and held that the exposure of PNB in the transaction amounted
toP5,405,301,470.82, while the exposure of respondents is P1,089,478,628.00.[43]

On 2 March 1999, the Buendia Property was sold in a public


auction conducted by Atty. Juan S. Buan, Notary Public of Makati City. [44] There being
no other bidder, the Buendia Property was sold to PNB for the amount
of P2,800,000,000.00. On 3 May 1999, RBN received a Notice of Extrajudical Sale
from PNB, specifying therein that the property covered by Broadcating Equipment
Inventory located at No. 33 Dominical Hills, Baguio City will be sold for cash at
public auction to the highest bidder on 10 May 1999, at the City Hall, Baguio City,
pursuant to the terms of the Deed of Chattel Mortage dated 19 June 1994 to satisfy
the mortgage indebtedness of P841,460,491.91.[45]

Following this development, on 4 May 1999, respondents filed an Urgent


Application for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.[46] Respondents prayed that a Temporary Restraining Order
be issued enjoining PNB or any persons acting under its instructions from
foreclosing on any other collaterals pledged or mortgaged by respondents to PNB,
particularly that which is subject of the Notice of Extrajudicial Sale to be conducted
by Notary Public Perlita Chan-Rondez in Baguio City on 10 May 1999. It was likewise
prayed that after due proceedings, a Writ of Preliminary Injunction be similarly
issued. [47]

On 7 May 1999, the RTC issued an Order [48] granting the Writ of Preliminary
Injunction respondents application for the issuance of a Temporary Restraining
Order (TRO), upon posting of a bond in the amount of P1,000,000.00.

On 27 May 1999, the RTC issued an Order, [49] granting the Writ of Preliminary
Injunction, enjoining PNB from foreclosing all collaterals pledged or mortgaged by
respondents to PNB, in particular those described in Exhibits A to L thereof, after the
posting of a bond in the amount of P5,000,000.00.[50] According to the court, the
right of PNB to foreclose the chattel mortgages is still challenged by the
respondents and therefore, is not yet clearly established. Hence, if PNB is allowed to
foreclose the subject chattel mortgages, the determination of the right of PNB to
foreclose the subject properties will become moot and academic. Subsequently,
on 28 May 1999, a Writ of Preliminary Injunction was issued.

On 9 June 1999, PNB filed a Motion for Reconsideration [51] of the Order of 27
May 1999. PNB averred, inter alia, that RBN failed to produce any evidence to
substantiate and support its claim that it is entitled to the Writ of Preliminary
Injunction in order to enjoin PNB from foreclosing on the subject chattels. According
to PNB, it was able to show that RBN failed without justifiable cause or reason to

service the credit facilities extended to it. PNB advanced the argument that RBN has
no clear right in esse; therefore, it cannot seek relief from the court. PNB claimed
that they were able to prove irreparable damage to the bank if PNB will be enjoined
from foreclosing on the chattel mortgages. PNB maintained that proceeding with the
auction sale of the subject properties would lower the banks past due ratio
approximately by 2%; hence, with the decrease in the banks past due ratio
percentage, there would be no legal impediment to PNBs resumption to full lending
operations since the Bangko Sentral ng Pilipinas recommendation for stoppage of
grants of new loans is anchored on PNBs current high past due ratio. In support of
its Motion for Reconsideration, PNB further theorized that decreasing its past due
ratio would improve investors confidence; hence, substantially enhancing the
viability of PNB in its move to attain full privatization by the year 2000.

In its Opposition,[52] respondents submitted that during the hearing of the


application for a Writ of Preliminary Injunction, the court expressed its position that
it will not receive evidence relative to the merits of the case as the same would preempt the resolution of the merits or dispose of the main case without trial;
therefore, by agreement of the parties, the principal issue was limited to whether
RBN will suffer irreparable injury if the writ of preliminary injunction is not
issued. According to respondents, the damage to RBNs image, loss of listenership,
advertisers, staff and employees is unquantifiable in monetary terms. Irreparable
damage would be caused to RBN if PNB is allowed to foreclose its equipments. It
would also disrupt, if not, paralyze, the operations of RBNs stations. They further
asserted that there is no reason to disturb the injunction issued by the court absent
a showing of manifest abuse.

On 28 July 1999, the RTC issued an Order[53] granting PNBs Motion for
Reconsideration. This was subsequently rectified in the Order of 29 July 1999 as to
the date of the Writ of Preliminary Injunction from May 28, 1998 to May 28, 1999.
[54]
In lifting the Writ of Preliminary Injunction of 28 May 1999, the RTC rationalized
that the failure of RBN to pay the three (3) credit facilities it obtained from
defendant PNB was established; thus, RBN was considered to have effectively
defaulted on its loan obligation. In the same Order, the RTC concluded that RBN
made express admission of its delinquency in its Complaint. Moreover, the RTC held
that the cross-default provision[55] embodied in the Loan Agreement between the
parties establishes against the grant of the injunction.

Respondents moved for a reconsideration of the 28 July 1999 Order, submitting that
there was no reason to disturb the preliminary injunction order as there was no
showing of a manifest abuse by then Presiding Judge Hon. Eriberto U. Rosario, in the
issuance thereof. Respondents explicated, inter alia, that the sufficiency of their
application was already passed upon by the RTC through the Order dated 27 May
1999.

On 26 October 1999, the RTC issued an Order, [56] denying respondents Motion for
Reconsideration for the lifting of the Writ of Preliminary Injunction dated 28 May
1999.
Aggrieved, on 7 December 1999, respondents filed with the Court of Appeals a
Petition for Certiorari under Rule 65 of the Rules of Court assailing the Orders
dated 28 July 1999and 26 October 1999, imputing grave abuse of discretion on the
part of the RTC in dissolving the Writ of Preliminary Injunction earlier issued.
Before the appellate court, respondents argued that the sufficiency of their
application for preliminary injunction was already raised and passed upon by the
RTC in the Injunction Order dated 27 May 1999; however, PNB was not able to allege
other grounds for the lifting thereof as mandated by Section 6 of Rule 58 of the
Rules of Court.[57] Moreover, respondents asserted that on the issue of the purported
delinquency, the RTC failed to consider PNBs judicial admissions, whereby the rights
of PNB should be those of a seller covered by the law on Sales (Title VI, Book IV,
Civil Code), and not those of a money-lender covered by the law on Loans (TitleXI,
Book IV, Civil Code); hence, PNBs rights as a seller are either to rescind the sale,
retrieve the title to the property transferred to the buyer, and exact payment of
damages or to leave the property with the buyer, to exact payment of the entire
price with interest, and recover damages thereby suffered. According to the
respondents, the PNB as seller had recovered through foreclosure the Buendia
Property. They alleged that: PNB had forfeited in its favor as mortgagor, the
payments already made by RJVRD and the interest thereon; PNB is in the process of
recovering as mortgagor and seller additional damages in the form of interests,
penalties, charges, attorneys fees, etc; and PNB is in the process of recovering as
mortgagor, by way of the foreclosure of mortgage, other realty and chattels of
significant value. Respondents contended that there was no grave abuse of
discretion in the issuance of the Writ of Preliminary Injunction because the
contemplated foreclosure of the other properties will work injustice to RBN and
would render ineffectual any judgment on the merits of the case ineffectual.

Anent the issue of whether respondents will suffer irreparable injury, respondents
pleaded that although the immediate effect of a Writ of Preliminary Injunction may
be quantifiable in pesos, the effect on the respondents is its viability that stands to
be affected in the long-term. Respondents rationalized that the foreclosure of the
radio equipment will result in the stoppage of operations, and eventually, the loss of
the image of the station. These factors will cause the loss of its listenership and
client confidence, which cannot be quantifiable in monetary terms. Moreover,
respondents set forth the contention that even as PNB suggested that after
foreclosure, the radio equipment would either be sold to improve PNBs liquidity or
disposed by way of lease-purchase agreement, there exists no assurance that RBN
can repurchase the foreclosed collaterals.

The Ruling of the Court of Appeals

On 9 December 1999, the Court of Appeals issued a Resolution [58] temporarily


enjoining PNB from foreclosing any collateral pledged or mortgaged by RJVRD and
RBN, and from taking possession and control of the latters radio facilities
in Baguio City, until further orders from the appellate court. In granting the same,
the Court of Appeals underscored that the purpose of the temporary injunctive relief
is to preserve the status quo ante between the parties, and so as not to render
moot and academic the relief prayed for in the Petition. Accordingly, the Court of
Appeals set the hearing on the application for the issuance of a preliminary
injunction on 11 January 2000.

On 10 January 2000, the PNB filed a Comment with the Court of Appeals, disputing
the imputation of grave abuse of discretion on the part of the RTC when it lifted the
preliminary injunction. The PNB opposed respondents claim that there exists in their
favor a right to be protected. According to PNB, the foreclosure of the collaterals
shall be effective upon the default of RBN, which default had been established as
RBN was unable to properly service the loan agreements without justifiable cause
and despite due demand. Anent the issue on the existence of irreparable injury, PNB
challenged respondents contention by arguing that there is, in fact, a pecuniary
standard by which RBNs damage can be measured per the testimony of RBNs
witness that it will suffer a loss of P1.2 Billion for the next ten (10) years. PNB
further posited that there were no judicial admissions on their part to the effect that
RJVRD and RBN are not delinquent. In furtherance of its opposition, PNB averred
that it acted in two separate capacities as seller and lender. As a seller, PNB owned
the Buendia Property and offered it for sale to interested parties. PNB accepted the
bid of RJVRD and the property was sold to the latter. As a lender, PNB supplied the
credit facility to RJVRD as the latter needed to borrow money to finance the
payment of the remaining balance. PNB insisted that these two transactions cannot
be treated as one and the same; hence, there is nothing that prevents it from acting
as a seller and lender at the same time. In fine, PNB maintained that RJVRD did not
default on the payment of the purchase price for such was completely paid; rather,
it defaulted on the payment of the loan, on its principal, and interest.
On 4 February 2000, the Court of Appeals issued a Resolution, [59] granting the Writ
of Preliminary Injunction, enjoining PNB and its agents from foreclosing the
collaterals pledged and mortgaged by RJVRD and RBN and from taking over
possession and control of RBN radio facilities in Baguio City. The appellate court,
held, viz:

The principal action in the petition at bar dwells on the controversy on


whether or not the respondent court committed grave abuse of
discretion in issuing the order lifting and setting aside the injunctive
relief earlier issued in Civil Case No. 4592 (sic). If no preliminary
injunction is issued in this case, pending resolution of such main
petition, respondent will proceed to foreclose the pledged or
mortgaged collaterals. In that eventuality, petitioners stand to sustain
injury and irreparable damage, the loss of its properties, income[,] and
clientele listeners in the subject radio broadcasting station
in Baguio City, even before the instant certiorari proceeding could be

resolved. To allow the impending foreclosure to proceed, at this point in


time, will surely be violative of petitioners right to be heard and to due
process. It is for this reason, for the preservation of the status
quo between the parties, pending decision of the main petition and in
order not to render the same moot and academic, We feel justified to
grant the preliminary injunction prayed for.

IN VIEW OF ALL THE FOREGOING, pending final resolution of the


petition at bar, let a Writ of Preliminary Injunction be issued in this case
enjoining the respondent PNB, its officers or agents from foreclosing
the collateral pledged and mortgaged by petitioners, RJ Ventures
Realty & Development Corporation and Rajah Broadcasting Network,
Inc., from taking over possession and control of RBN radio facilities in
Baguio City, upon the posting of a P1,000,000.00 injunction bond.

Undeterred, PNB filed a Motion for Reconsideration praying that the Order of 4
February 2000 be set aside and the Writ of Preliminary Injunction issued by the
Court of Appeals be immediately lifted and dissolved.

Acting on the Motion, the Court of Appeals, rendered the assailed Decision dated 31
March 2004, denying the same. In the same order, the appellate court, reversed and
set aside the Orders dated 28 July 1999 and 26 October 1999 of the RTC; hence,
effectively reinstating the Writ of Preliminary Injunction earlier issued on 28 May
1999. The Court of Appeals held that the RTC was not asked to make a definitive
conclusion on the issue of whether RBN was indeed guilty of default in paying its
loan nor was it asked to resolve whether RBN committed a breach against PNB
which necessitated foreclosure. A determination of whether there was default or
breach can be only be reached after the principal action is set for trial on the merits
after the parties are given opportunity to present evidence in support of their
respective claims.

The appellate court decreed, to wit:

It must be emphasized that a preliminary injunction may be granted at


any stage of an action prior to final judgment, requiring a person to
refrain from a particular act. As the term itself suggests, it is merely
temporary, subject to the final disposition of the principal action. The
justification for the preliminary injunction is urgency. It is based on
evidence tending to show that the action complained of must be
stayed lest the movant suffer irreparable injury or the final judgment
granting the relief sought become ineffectual. Necessarily, that
evidence need only be a sampling, as it were, and intended merely to

give the court an idea of the justification for the preliminary injunction
pending the decision of the case on the merits. The evidence
submitted at the hearing on the motion for preliminary injunction is not
conclusive of the principal action, which has yet to be decided. (Olalia
vs. Hizon, 196 SCRA 665 [1991]).

Anent the issue of whether RBN would sustain irreparable injury should
the chattel mortgage be foreclosed, it bears repeating that the
evidence to be submitted at the hearing on the motion for preliminary
injunction need not be conclusive and complete. On this score, We find
petitioners to have sufficiently established the existence of irreparable
injury to justify, albeit provisionally, the restraint of the act complained
against them.

We find that the potential injury demonstrated by the various


testimonies presented by petitioners more than satisfies the legal and
jurisprudential requirements of irreparable injury. There is no
gainsaying in that the foreclosure of the subject radio equipment[s]
would inevitably result in stoppage of operations. This, in turn, shall
result to (sic) the stations tarnished image and consequent loss of
public listenership. Loss of listenership then leads to loss of confidence
of the stations patrons and advertising clients that would cause serious
repercussions on its ability to sustain its operations. Undoubtedly, the
loss of image and reputation by a radio station are matters that are not
quantifiable in terms of monetary value.

All told, We find the court a quos lifting of the injunction earlier issued
tainted with grave abuse of discretion properly correctable by the
special writ of certiorari.[60]

On 4 May 2004, PNB moved for the reconsideration thereon. On 8 July 2004,
the Court of Appeals rendered a Resolution, finding no justification to compel a
modification or reversal of the 31 March 2004 Decision.

Hence, the instant Petition.

The Issues

PNB recites the following statement of the issues, viz:

WHETHER OR NOT THE PETITION FILED BY PNB INVOLVES QUESTIONS


OF FACTS WHICH SHOULD BE A CAUSE FOR ITS DISMISSAL;

II

WHETHER OR NOT THE DEFAULT BY RJVRD AND RBN IN THE PAYMENT


OF THEIR RESPECTIVE LOAN OBLIGATIONS TO PNB JUSTIFIES THE
DENIAL OF THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION
FOR THE FORECLOSURE OF THE MORTGAGED PROPERTIES;

III

WHETHER OR NOT RBNS ADMISSION OF ITS FAILURE TO SETTLE ITS


LOAN OBLIGATION IN FULL GIVES PNB A CLEAR RIGHT TO FORECLOSE
THE MORTGAGE;

IV

WHETHER OR NOT [THE] RIGHT OF RJVRD AND RBN TO A WRIT OF


INJUNCTION IS CLEAR, EXISTING[,] AND UNMISTAKABLE; and

WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAD LEGAL


BASIS IN REVERSING AND SETTING ASIDE THE ORDER DATED JULY 28,
1999 AND OCTOBER 26, 1999 OF THE REGIONAL TRIAL COURT OF
MAKATI, BRANCH 66, AND THEREBY ISSUING A WRIT OF CERTIOARI IN
FAVOR OF RJVRD AND RBN.[61]

The Ruling of the Court

The pivotal issue in the instant Petition is whether the Court of Appeals
correctly reinstated the Writ of Preliminary Injunction dated 28 May 1999. Hence,
the question is whether respondents RJVRD and RBN are entitled to the Writ of
Preliminary Injunction. It is for this reason that we shall address and concern
ourselves only with the assailed writ, but not with the merits of the case
pending before the trial court. A preliminary injunction is merely a provisional
remedy, adjunct to the main case subject to the latters outcome. [62] It is not a cause
of action in itself.[63]
This Petition has no merit.

Foremost, we reiterate that the sole object of a preliminary injunction is to maintain


the status quo until the merits can be heard. [64] A preliminary injunction[65] is an
order granted at any stage of an action prior to judgment of final order, requiring a
party, court, agency, or person to refrain from a particular act or acts. It is a
preservative remedy to ensure the protection of a partys substantive rights or
interests pending the final judgment in the principal action. A plea for an injunctive
writ lies upon the existence of a claimed emergency or extraordinary situation
which should be avoided for otherwise, the outcome of a litigation would be useless
as far as the party applying for the writ is concerned. [66]

The grounds for the issuance of a Writ of Preliminary Injunction are prescribed in
Section 3 of Rule 58 of the Rules of Court. Thus:

SEC.

3. Grounds for issuance of preliminary injunction. A


injunction may be granted when it is established:

preliminary

(a) That the applicant is entitled to the relief demanded, and


the whole or part of such relief consists in restraining the commission
or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;

(b) That the commission, continuance or nonperformance of the


act or acts complained of during the litigation would probably work
injustice to the applicant; or

(c) That a party, court, agency or a person is doing,


threatening, or is attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.

Otherwise stated, for a Writ of Preliminary Injunction to issue, the following


requisites must be present, to wit: (1) the existence of a clear and unmistakable
right that must be protected, and (2) an urgent and paramount necessity for the
writ to prevent serious damage. [67] Indubitably, this Court has likewise stressed
that the very foundation of the jurisdiction to issue a writ of injunction rests in the
existence of a cause of action and in the probability of irreparable injury,
inadequacy of pecuniary compensation and the prevention of multiplicity of suits.
[68]
Sine dubio, the grant or denial of a writ of preliminary injunction in a pending
case rests in the sound discretion of the court taking cognizance of the case since
the assessment and evaluation of evidence towards that end involve findings of
facts left to the said court for its conclusive determination. [69] Hence, the exercise of
judicial discretion by a court in injunctive matters must not be interfered with
except when there is grave abuse of discretion. [70] Grave abuse of discretion in the
issuance of writs of preliminary injunction implies a capricious and whimsical
exercise of judgment that is equivalent to lack of jurisdiction, or where the power is
exercised in an arbitrary or despotic manner by reason of passion, prejudice or
personal aversion amounting to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined, or to act at all in contemplation of law. [71]

We find the conclusions reached by the Court of Appeals to be in accord with law.

The Supreme Court is not a trier of facts. [72] While this is perhaps one of our more
emphatic doctrines, it admits of certain exceptions, inter alia, when the findings of
the Court of Appeals are contrary to those of the trial court. [73] In the case at bar, we
apply the exception and proceed to make a determination of whether there is a
factual and legal bases for a Writ of Preliminary Injunction to issue.

First, respondents were able to establish a clear and unmistakable right to


the possession of the subject collaterals. Evidently, as owner of the subject
collaterals that stand to be extrajudicially foreclosed, respondents are entitled to
the possession and protection thereof. RBN as the owner and operator of the subject
radio equipment and radio stations have a clear right over them. The instant case
does not involve abstract rights, or a future and contingent rights, but a right that is

already in existence. To our minds, petitioners claim that respondents have lost
their rights to the subject collaterals in the face of their admission of default is best
threshed out in a full-blown trial a quo where the merits of the case can be tried and
determined. Significantly, to give the trial court a fair idea of whether a justification
for the issuance of the writ exists, only a sampling of the evidence is needed,
pending a decision on the merits of the case. [74] Hence, the determination of
respondents default and the legality of the defenses they adduced are matters
appropriately subject of the trial on the merits.

Second, there is an urgent and paramount necessity to prevent serious


damage. Indeed, an injunctive remedy may only be resorted to when there is a
pressing necessity to avoid injurious consequences which cannot be remedied
under any standard compensation. [75] PNB assails the existence of this ground by
raising the argument that there is, in actuality, a pecuniary standard by which RBNs
damage can be measured, as evidenced by the testimony of RBNs witness that it
will suffer a loss of P1.2 Billion for the next ten (10) years.

To be sure, this court has declared that the term irreparable injury has a
definite meaning in law. It does not have reference to the amount of damages that
may be caused but rather to the difficulty of measuring the damages inflicted. If full
compensation can be obtained by way of damages, equity will not apply the remedy
of injunction.[76] The Court of Appeals declared that the evidence adduced by
respondents more than satisfies the legal and jurisprudential requirements of
irreparable injury. It behooves this court to appreciate the unique character of the
collaterals that stand to be affected should the Writ of Preliminary Injunction be
dissolved as PNB would have it. The direct and inevitable result would be the
stoppage of the operations of respondents radio stations, consequently, losing its
listenership, and tarnishing the image that it has built over time. It does not stretch
ones imagination to see that the cost of a destroyed image is significantly the loss
of its good name and reputation. As aptly appreciated by the appellate court, the
value of a radio stations image and reputation are not quantifiable in terms of
monetary value. This conclusion can be gleaned from the testimony of respondents
witness, Jose E. Escaner, Jr., General Manager of RBN, thus:

Atty. Mendoza:
Q: Now, in your forty (40) years in the broadcast (sic) industry, have
you had any personal experience in (sic) any actual interruption
in the operations of a radio station programming?

Witness:
A: Yes, when I was handling the network of the then Ambassador
Nanding Cojuanco within which the radio stations were
sequestered and sometime or the other it (sic) went off the air

and immediately, we do not have any revenues, so much so that


we actually suffered two (2) to three (3) years.

Atty. Mendoza:

Q: And how long did it take for that station in Cebu that you mentioned
to retain its listenership day? (sic)

Witness:

A: Well, honestly, until now its airtime, because of its image, status
image (sic) which is the reputation of an AM Station while they
are still recouping other stations, the other reports came over
(sic) and practically brought their ratings down, so, until now
they still have to recoup.

Atty. Mendoza:

Q: What radio station are you referring to?

Witness:

A: DYRB.

Atty. Mendoza:

Q: What would be the consequence if the radio stations of RBN stops


(sic) operation (sic)?

Witness:

A: It will lose whatever image it has generated to this point and (sic)
time, it will cost irreparable damage not only to its operation but
most of all (sic) its image as being built by RNB. Rajah
Broadcasting Network and I doubt very much if it will still be

able to recoup to a very good result, what we are now


generating.

Atty. Mendoza:

That is all for the witness, Your Honor.

COURT:

Alright (sic), cross.

Atty. dela Vega:

With the permission of the Honorable Court.

xxxx

Atty. dela Vega:

Q: Based from (sic) your experienced (sic) as the person engaged in


media practice Mr. Witness, with respect to the possession, let
us go to the heart of the matter as of this point and time.

COURT:

You shoot the question straight.


Atty. dela Vega:

Yes, Your Honor.

(continuing to (sic) the witness

Q Will it made a difference to the operations of a radio station and


relation with the listeners and their clients if technical
equipments, in (sic) the technical equipments, the ownership
over the sale are transferred to another person?

Witness:

A: If you take the equipment immediately that would mean stopping


our operations. That would mean stopping our day to day
communication with our listenership. That they will be
wondering, that will cost damage and (sic) our image
immediately. That will cost damage to our contracts right now
without keeping with our clients.

Atty. dela Vega:

Q: Usually that person who owns that particular equipment will get the
particular equipment. When you say get, what do you mean by
get Mr. Witness?

Witness:

A: If for instance was what we are talking about right now, you are
going to foreclose, ok, (sic), what will we use?

Atty. dela Vega:

Q: Assuming Mr. Witness, that the creditor of Rajah Broadcasting


Network will not get, will not get the equipment, will not get
their account, will it adversely affect the operations of Rajah
Broadcating?

Witness:

A: Still it will.

Atty. dela vega:

Q: In what way?

Witness:

A: Because that will have an effect now on our relation with our
clientele. The image will be doubt (sic). The will be doubt, there
be vacillation in the planning of the media plans, vacillation in
the buying of airtime.

Atty. dela Vega:

Q It will affect?

Witness:

A: It will affect. The confidence is there.

Atty. dela Vega:

Q: It will affect?

Witness:

A: We do not want our clientele to lose confidence. [77]

Evidently, there exists in the case at bar a pressing necessity to avoid


injurious consequences to respondents which cannot be remedied under any
standard compensation.After a careful scrutiny of the attendant circumstances, we
do not find herein a reason for reversing the reinstatement by the Court of Appeals
of the Writ of Preliminary Injunction earlier issued.

The Fallo

WHEREFORE, the Petition is DENIED. The Decision dated 31 March


2004 and the Resolution dated 8 July 2004 of the Court of Appeals in CA-G.R. SP No.
56119, reversing and setting aside the 28 July 1999 and 26 October 1999 Orders of
the RTC, Branch 66 of Makati City in Civil Case No. 99-452, and reinstating the Writ
of Preliminary Injunction issued on 28 May 1999 are AFFIRMED. Costs against
petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

Australian Professional Realty, Inc. (id) DUYUNGCO


Ermita v. Aldecoa-Delorino, G.R. No. 177130, 7 June 2011 FERNANDEZ
EN BANC
HON. EDUARDO ERMITA in his
official capacity as THE EXECUTIVE
SECRETARY,

G.R. No. 177130


Present:

Petitioner,
CORONA, C.J.,
- versus -

CARPIO,
CARPIO MORALES,
VELASCO, JR.,

HON. JENNY LIND R. ALDECOADELORINO, Presiding Judge, Branch


137, Regional Trial Court, Makati
City, ASSOCIATION OF

NACHURA,
LEONARDO-DE CASTRO,

PETROCHEMICAL MANUFACTURERS
OF THE PHILIPPINES, representing
JGSummit Petrochemical
Corporation, et al.,

BRION,

Respondents.

DEL CASTILLO,

PERALTA,
BERSAMIN,

ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO,* JJ.
Promulgated:

June 7, 2011
x--------------------------------------------------x
DECISION
CARPIO MORALES, J.:
Then Executive Secretary petitioner Eduardo Ermita assailed via certiorari the writ
of preliminary injunction granted by public respondent Judge Jenny Lind R. Aldecoa
Delorino, then Presiding Judge of the Regional Trial Court of Makati City, Branch 137,
by Omnibus Order[1] dated February 6, 2007 in favor of private respondent
Association of Petrochemical Manufacturers of the Philippines (APMP or private
respondent) denying petitioners Motion to Dismiss and enjoining the government
from implementing Executive Order No. 486.
Executive Order No. 486 (E.O. 486) issued on January 12, 2006 by then President
Gloria Macapagal-Arroyo reads:
LIFTING THE SUSPENSION OF THE APPLICATION OF THE
TARIFF REDUCTION SCHEDULE ON PETROCHEMICALS AND
CERTAIN PLASTIC PRODUCTS UNDER THE COMMON EFFECTIVE
PREFERENTIAL TARIFF (CEPT) SCHEME FOR THE ASEAN FREE
TRADE AREA (AFTA)
WHEREAS, Executive Order 234 dated 27 April
2000, which implemented the 2000-2003 Philippine
schedule of tariff reduction of products transferred from
the Temporary Exclusion List and the Sensitive List to the

Inclusion List of the accelerated CEPT Scheme for the


AFTA, provided that the CEPT rates on petrochemicals
and certain plastic products will be reduced to 5%
on 01 January 2003;
WHEREAS, Executive Order 161 issued on 9 January
2003 provides for the suspension of the application of the
tariff reduction schedule on petrochemicals and certain
products in 2003 and 2004 only;
WHEREAS, the government recognizes the need to
provide an enabling environment for the naphtha cracker
plant to attain international competitiveness;
WHEREAS, the NEDA Board approved the lifting of
the suspension of the aforesaid tariff reduction
schedule on petrochemicals and certain plastic
products and the reversion of the CEPT rates on
these products to EO 161 (s.2003) levels once the
naphtha cracker plant is in commercial operation;
NOW, THEREFORE, I, GLORIA MACAPAGALARROYO, President of the Republic of the Philippines,
pursuant to the powers vested in me under Section 402 of
the Tariff and Customs Code of 1978 (Presidential Decree
No. 1464), as amended, do hereby order:
SECTION 1.
The articles specifically listed
in Annex "A" (Articles Granted Concession under the CEPT
Scheme for the AFTA) hereof, as classified under Section
104 of the Tariff and Customs Code of 1978, as amended,
shall be subject to the ASEAN CEPT rates in accordance
with the schedule indicated in Column 4 of Annex "A".
The ASEAN CEPT rates so indicated shall be accorded to
imports coming from ASEAN Member States applying
CEPT concession to the same product pursuant to Article
4 of the CEPT Agreement and Its Interpretative Notes.
SECTION 2.
In the event that any subsequent
change is made in the basic (MFN) Philippine rate of duty
on any of the article listed in Annex "A" to a rate lower
than the rate prescribed in Column 4 of Annex ""A, such
article shall automatically be accorded the corresponding
reduced duty.

SECTION 3. From the date of effectivity of this


Executive Order, all articles listed in Annex
"A" entered into or withdrawn from warehouses in
the Philippines for consumption shall be imposed
the rates of duty therein prescribed subject to
qualification under the Rules of Origin as provided for in
the Agreement on the CEPT Scheme for the AFTA signed
on 28 January 1992.
SECTION 4.
The Department of Trade and
Industry, in coordination with National Economic and
Development Authority, the Department of Finance, the
Tariff Commission and the Bureau of Customs, shall
promulgate the implementing rules and regulations that
will govern the reversion of the CEPT rates on
petrochemicals and plastic products to EO 161 (s.2003)
levels once the naphtha cracker plant is in commercial
operation.
SECTION
5.
All
presidential
issuances,
administrative rules and regulations, or parts thereof,
which are contrary to or inconsistent with this Executive
Order are hereby revoked or modified accordingly.
SECTION 6. This Executive Order shall take effect
immediately following its complete publication in two (2)
newspapers of general circulation in the Philippines.
Done in the City of Manila, this 12th day of January in
the year of Our Lord Two Thousand and Six. (emphasis
supplied)

The above issuance in effect reduces protective tariff rates from 10% to 5%
on the entry of inexpensive products, particularly plastic food packaging, from
ASEAN Free Trade (AFTA) member countries into the Philippines.
APMP, an organization composed of manufacturers of petrochemical and resin
products, opposed the implementation of E.O. 486. Contending that the E.O. would
affect local manufacturers, it filed a petition before the RTC of Makati, docketed as
Civil Case No. 06-2004, seeking the declaration of its unconstitutionality for being
violative of Sec. 4 of Republic Act No. 6647 which prohibits the President from
increasing or reducing taxes while Congress is in session [2] and Sec. 402(e)[3] of the

Tariff and Customs Code. It thereupon prayed for the issuance of a writ of
preliminary injunction to enjoin its implementation.
Petitioner contends that public respondent gravely abused her discretion in
assuming jurisdiction over the petition for prohibition and granting the writ of
preliminary injunction as the exercise of the quasi-legislative functions of the
President cannot be enjoined. He avers that writs of prohibition lie only against
those persons exercising judicial, quasi-judicial or ministerial functions.
By granting injunctive relief, petitioner contends that public respondent
effectively preempted the trial of and pre-judged the case, given that what private
respondent seeks is to stop the implementation of E.O. 486. Further, petitioner
contends that the grant of injunctive relief was not supported by fact and law, for
what APMP sought to be protected was future economic benefits which may be
affected by the implementation of the E.O. benefits which its members have no
right to since protective tariff rates are government privileges wherein no one can
claim any vested right to.
On the merits, petitioner maintains that E.O. 486 is not constitutionally infirm,
it having been issued under the authority of Secs. 401 and 402 of the Tariff and
Customs Code which set no limitations on the Presidents power to adjust tariff rate
and serve as the governments response to its AFTA commitment on Common
Effective Preferential Tariff (CEPT).
Since it is only the Omnibus Order denying the Motion to Dismiss and
granting a writ of preliminary injunction that is being assailed, the Court will not
pass on the constitutionality of E.O. 486 which is still pending before the trial court.
Private respondent prays in its Comment for the denial of the present
petition, alleging that, among other things, the petition is premature as petitioner
failed to file a Motion for Reconsideration of the assailed Omnibus Order of public
respondent, and maintaining the propriety of the remedy of prohibition which it filed
to assail the E.O.
The issues then are:

1.

Whether public respondent erred in assuming jurisdiction over the petition


for prohibition and not granting petitioners motion to dismiss the petition;

2.

Whether a motion for reconsideration should have been filed by petitioner;


and

3.

Whether public respondent erred in granting the writ of preliminary


injunction in favor of APMP.

On the issue of jurisdiction


Rule 65, Sec. 2 of the Rules of Court provides:
Sec. 2. Petition for Prohibition. - When the proceedings of any
tribunal, corporation, board, officer or person, whether
exercising judicial, quasi-judicial or ministerial functions, are
without or in excess of its jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal or
any other plain, speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that
judgment be rendered commanding the respondent to desist
from further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs as law and
justice may require. (emphasis supplied)

Holy Spirit Homeowners Association v. Defensor[4] expounds on prohibition as a


remedy to assail executive issuances:
A petition for prohibition is also not the proper remedy to
assail an IRR issued in the exercise of a quasi-legislative
function. Prohibition is an extraordinary writ directed against any
tribunal, corporation, board, officer or person, whether exercising
judicial, quasi-judicial or ministerial functions, ordering said entity or
person to desist from further proceedings when said proceedings are
without or in excess of said entitys or persons jurisdiction, or are
accompanied with grave abuse of discretion, and there is no appeal or
any other plain, speedy and adequate remedy in the ordinary course of
law. Prohibition lies against judicial or ministerial functions,
but not
against
legislative
or
quasi-legislative
functions. Generally, the purpose of a writ of prohibition is to keep a
lower court within the limits of its jurisdiction in order to maintain the
administration of justice in orderly channels. Prohibition is the proper
remedy to afford relief against usurpation of jurisdiction or power by an
inferior court, or when, in the exercise of jurisdiction in handling
matters clearly within its cognizance the inferior court transgresses the
bounds prescribed to it by the law, or where there is no adequate

remedy available in the ordinary course of law by which such relief can
be obtained. Where the principal relief sought is to invalidate an IRR,
petitioners remedy is an ordinary action for its nullification, an action
which properly falls under the jurisdiction of the Regional Trial Court. In
any case, petitioners allegation that respondents are performing or
threatening to perform functions without or in excess of their
jurisdiction may appropriately be enjoined by the trial court through a
writ of injunction or a temporary restraining order. (emphasis supplied)

Be that as it may, it is settled that what determines the nature of the action
and which court has jurisdiction over it are the allegations in the
complaint and the character of the relief sought.[5] A perusal of the petition of
APMP before the trial court readily shows that it is not a mere petition for prohibition
with application for the issuance of a writ of preliminary injunction. For it is also one
for certiorari as it specifically alleges that E.O. 486 is invalid for being
unconstitutional, it having been issued in contravention ofSec. 4 of R.A. 6647 and
Sec. 402(e) of the Tariff and Customs Code, hence, its enforcement should be
enjoined and petitioner prohibited from implementing the same.
Petitions for certiorari and prohibition are appropriate remedies to raise
constitutional issues and to review and/or prohibit or nullify, when proper, acts of
legislative and executive officials.[6] Thus, even if the petition was denominated as
one for prohibition, public respondent did not err in treating it also as one for
certiorari and taking cognizance of the controversy.
On the propriety of filing a motion
for reconsideration

Ordinarily, certiorari as a special civil action will not lie unless a motion for
reconsideration is first filed before the respondent tribunal, to allow it an
opportunity to correct its assigned errors.[7] This rule, however, is not without
exceptions.
The rule is, however, circumscribed by well-defined exceptions, such as
(a) where the order is a patent nullity, as where the court a quo had no
jurisdiction; (b) where the questions raised in thecertiorari 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 were ex parte, or in which the petitioner had no
opportunity to object; and (i) where the issue raised is one purely
of law or where public interest is involved.[8] (emphasis supplied)

The present case involves the constitutionality and implementation of an executive


issuance
involving
tariff
rates
and,
as
alleged
by
petitioner, the
Governments commitments under the AFTA. Clearly, the filing of a motion for
reconsideration may be dispensed with following exceptions (c ) and (i) in the above
enumeration in Siok Ping Tang.
On the grant of the writ of
preliminary injunction

APMP alleges that it is composed of manufacturers of petrochemical products


and that the implementation of the assailed E.O. reducing tariff rates on certain
petroleum-based products will result in the local market being flooded with lowerpriced imported goods which will, consequently, adversely affect their sales
profits. In granting the assailed writ, public respondent held that, based on the
initial evidence presented, the APMP stands to lose substantial revenues and some
of its members may eventually have to close up or stop ongoing works on their
Naphtha Cracker plants if E.O. 486 is implemented. Public respondent thus ruled
that the APMP was entitled to the writ as it has a valuable stake in the
petrochemical industry and the enforcement of E.O. 486 will adversely affect its
members; and that petitioner violated APMPs right on the strength of an invalid
executive issuance.
Public respondent noted that the Southern Cross case cited by petitioner
which ruled that no court is allowed to grant injunction to restrain the collection of
taxes is inapplicable in the present case, since restraining the implementation of
E.O. 486 will not deprive the Government of revenues; instead, it will result in more
revenues as the proposed reduction of rates will be enjoined.
Public respondent thus concluded that there is sufficient basis for the
issuance of a writ of preliminary injunction in favor of APMP.

It is well to emphasize that the grant or denial of a writ of preliminary


injunction in a pending case rests on the sound discretion of the court taking
cognizance thereof.[9] In the present case, however, where it is the Government
which is being enjoined from implementing an issuance which enjoys the
presumption of validity, such discretion must be exercised with utmost
caution. Executive Secretary v. Court of Appeals,[10] enlightens:

In Social Security Commission v. Judge Bayona, we ruled that a law is


presumed constitutional until otherwise declared by judicial
interpretation. The suspension of the operation of the law is a
matter of extreme delicacy because it is an interference with
the official acts not only of the duly elected representatives of
the people but also of the highest magistrate of the land.

In Younger v. Harris, Jr.,


States emphasized, thus:

the

Supreme

Court

of

the United

Federal injunctions against state criminal statutes,


either in their entirety or with respect to their
separate and distinct prohibitions, are not to be
granted as a matter of course, even if such statutes
are unconstitutional. No citizen or member of the
community is immune from prosecution, in good faith, for
his alleged criminal acts. The imminence of such a
prosecution even though alleged to be unauthorized and,
hence, unlawful is not alone ground for relief in equity
which exerts its extraordinary powers only to prevent
irreparable injury to the plaintiff who seeks its aid. 752
Beal v. Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61
S.Ct. 418, 420, 85 L.Ed. 577.

And similarly, in Douglas, supra, we made clear, after


reaffirming this rule, that:
"It does not appear from the record that petitioners have
been threatened with any injury other than that incidental
to every criminal proceeding brought lawfully and in good
faith . . ." 319 U.S., at 164, 63 S.Ct., at 881.

The possible unconstitutionality of a statute, on its


face, does not of itself justify an injunction against
good faith attempts to enforce it, unless there is a
showing of bad faith, harassment, or any other
unusual circumstance that would call for equitable
relief. The "on its face" invalidation of statutes has been
described as "manifestly strong medicine," to be
employed "sparingly and only as a last resort," and is
generally disfavored.

To be entitled to a preliminary injunction to enjoin


the enforcement of a law assailed to be
unconstitutional, the party must establish that it
will suffer irreparable harm in the absence of
injunctive relief and must demonstrate that it is
likely to succeed on the merits, or that there are
sufficiently serious questions going to the merits
and the balance of hardships tips decidedly in its
favor. The higher standard reflects judicial deference
toward "legislation or regulations developed through
presumptively
reasoned
democratic
processes."
Moreover, an injunction will alter, rather than maintain,
the status quo, or will provide the movant with
substantially all the relief sought and that relief cannot be
undone even if the defendant prevails at a trial on the
merits.
Considering that injunction is an exercise of equitable
relief and authority, in assessing whether to issue a
preliminary injunction, the courts must sensitively assess
all the equities of the situation, including the public
interest. In litigations between governmental and
private parties, courts go much further both to give
and withhold relief in furtherance of public interest
than they are accustomed to go when only private
interests are involved. Before the plaintiff may be
entitled to injunction against future enforcement,
he is burdened to show some substantial
hardship. (emphasis supplied)

Indeed, a writ of preliminary injunction is issued precisely to prevent


threatened or continuous irremediable injury to some of the parties before their
claims can be thoroughly studied or adjudicated to preserve the status quo until the
merits of the case can be heard fully. Still, even if it is a temporary and ancillary
remedy, its issuance should not be trifled with, and an applicant must convincingly
show its entitlement to the relief. St. James College of Paranaque v. Equitable PCI
Bank,[11] explains:

Under Section 3, Rule 58 of the Rules of Court, an application for a writ


of preliminary injunction may be granted if the following grounds are
established, thus: virtual law library

(a) That the applicant is entitled to the relief demanded, and


the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period
or perpetually;

(b) That the commission, continuance or non-performance of the act or


acts complained of during the litigation would probably work injustice
to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is


attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the
judgment ineffectual.

And following jurisprudence, these requisites must be proved before a


writ of preliminary injunction, be it mandatory or prohibitory, will issue:

(1) The
applicant
must
have
a
clear
and
unmistakable right to be protected, that is a right
in esse;

(2) There is a material and substantial invasion of


such right;

(3) There is an urgent need for the writ to prevent


irreparable injury to the applicant; and

(4) No other ordinary, speedy, and adequate


remedy exists to prevent the infliction of irreparable
injury. (emphasis supplied)a1a

It is thus ineluctable that for it to be entitled to the writ, the APMP must show that it
has a clear and unmistakable right that is violated and that there is an
urgent necessity for its issuance. [12] That APMP had cause of action and the
standing to interpose the action for prohibition did not ipso facto call for the grant of
injunctive relief in its favor without it proving its entitlement thereto.
Transfield Philippines, Inc. v. Luzon Hydro Corporation, [13] illuminates on the right of
a party to injunctive relief:
Before a writ of preliminary injunction may be issued, there must be a
clear showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be
directed are violative of the said right. It must be shown that
the invasion of the right sought to be protected is material and
substantial, that the right of complainant is clear and
unmistakable and that there is an urgent and paramount
necessity for the writ to prevent serious damage. Moreover, an
injunctive remedy may only be resorted to when there is a
pressing necessity to avoid injurious consequences which
cannot be remedied under any standard compensation.
(emphasis supplied)

Contrary to public respondents ruling, APMP failed to adduce any evidence to


prove that it had a clear and unmistakable right which was or would be violated by
the enforcement of E.O. 486. The filing of the petition at the court a quo was
anchored on APMP and its members fear of loss or reduction of their
income once E.O. 486 is implemented and imported plastic and similar products
flood the domestic market due to reduced tariff rates. As correctly posited by
petitioner, APMP was seeking protection over future economic benefits which, at
best, it had an inchoate right to.
More importantly, tariff protection is not a right, but a privilege granted by
the government and, therefore, APMP cannot claim redress for alleged violation
thereof. In a similar case wherein the validity of R.A. 9337 with respect to provisions
authorizing the President to increase the value-added tax (VAT) rates, the Court
held:
The input tax is not a property or a property right within the
constitutional purview of the due process clause. A VAT-registered
persons entitlement to the creditable input tax is a mere
statutory privilege.
The distinction between statutory privileges and vested rights
must be borne in mind for persons have no vested rights in
statutory privileges. The state may change or take away rights,
which were created by the law of the state, although it may not
take away property, which was vested by virtue of such rights.
[14]
(emphasis supplied)
Assuming arguendo that it was upon the governments assurances that the
members of APMP allegedly invested hundred of millions of dollars in putting up the
necessary infrastructure, that does not vest upon APMP a right which must be
protected.
Respecting the element of irreparable injury, the landmark case of Social Security
Commission v. Bayona[15] teaches:
Damages are irreparable within the meaning of the rule
relative to the issuance of injunction where there is no
standard by which their amount can be measured with
reasonable accuracy (Crouc v. Central Labor Council, 83 ALR, 193).
"An irreparable injury which a court of equity will enjoin
includes that degree of wrong of a repeated and continuing
kind which produce hurt, inconvenience, or damage that can
be estimated only by conjecture, and not by any accurate

standard of measurement" (Phipps v. Rogue River Valley Canal Co.,


7 ALR, 741). An irreparable injury to authorize an injunction consists of
"a serious charge of, or is destructive to, the property it affects, either
physically or in the character in which it has been held and enjoined, or
when the property has some peculiar quality or use, so that its
pecuniary value will not fairly recompense the owner of the loss
thereof" (Dunker v. Field and Tub Club, 92 P., 502). (emphasis supplied)
As does the more recent case of Philippine Air Lines v. National Labor Relations
Commission:[16]
An injury is considered irreparable if it is of such
constant and frequent recurrence that no fair and reasonable
redress can be had therefor in a court of law, or where there is
no standard by which their amount can be measured with
reasonable accuracy, that is, it is not susceptible of mathematical
computation. It is considered irreparable injury when it cannot be
adequately compensated in damages due to the nature of the injury
itself or the nature of the right or property injured or when there exists
no
certain
pecuniary
standard
for
the
measurement
of
damages. (emphasis supplied)
In the present case, aside from APMPs allegations that the reduced tariff rates
will adversely affect its members business and may lead to closure, there is no
showing what irreparable injury it stood to suffer with the implementation of E.O.
486.
IN FINE, not only is there no showing of a clear right on the part of APMP
which was violated; the injury sought to be protected is prospective in nature,
hence, the injunctive relief should not have been granted.
WHEREFORE, the petition is PARTLY GRANTED. The Omnibus Order
dated February 6, 2007 issued by public respondent Hon. Judge Jenny Lind R.
Aldecoa-Delorino is REVERSED insofar as it granted a Writ of Preliminary
Injunction in favor of private respondent, Association of Petrochemical
Manufacturers of the Philippines (APMP). Accordingly, the Writ is DISSOLVED,
and the case REMANDED to the court of origin for further appropriate
proceedings.
SO ORDERED.

CONCHITA CARPIO MORALES


Associate Justice

Overseas Workers Welfare Administration v. Chavez, G.R. No. 169802, June 8,


2007 SITOY

THIRD DIVISION

OVERSEAS WORKERS WELFARE


ADMINISTRATION,represented by
Administrator
Marianito
D.
Roque,
Petitioner,

- versus -

ATTY. CESAR L. CHAVEZ, OPHELIA


N. ALMENARIO, ELVIRA ADOR,
REYNALDO
TAYAG,
TORIBIO
ROBLES, JR., ROSSANE BAHIA,
RACQUEL LLAGAS-KUNTING, MA.
STELLA A. DULCE, ROSSANA
SIRAY, EDUARDO MENDOZA, JR.,
PRISCILLA
BARTOLO,
ROSE
VILLANUEVA, CHERRY MOLINA,
MARY
ROSE
RAMOS,
MA.
MINERVA PAISO, RODERIC DELOS
REYES, RENATO DELA CRUZ,
MARIVIC
DIGMA,
JESSIE
BALLESTEROS, DONATO DAGDAG,
MARK TUMIBAY, CYNTHIA FRUEL,
DEMETRIO SORIANO, MILAGROS
GUEVARRA, ANGELITA LACSON,
BERT BUQUID, JUN SAMORANAS,
TEODORO TUTAY, LEAH YOGYOG,
MARIE CRUZ and CONCEPCION

G.R. No. 169802

Present:

YNARES-SANTIAGO, J.
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.*

BRAGAS REGALADO,
Respondents.

Promulgated:

June 8, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

The Case

Petitioner Overseas Workers Welfare Administration (OWWA), comes to this


Court via the instant Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the 22 September 2005 Decision [1] of the Court of Appeals in CAG.R. SP No. 87702, which affirmed the Order [2] dated 30 September 2004, of the
Regional Trial Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415CFM. The RTC granted the issuance of a writ of preliminary injunction restraining
OWWA from implementing its new organizational structure.

Factual Antecedents

OWWA is a government agency tasked primarily to protect the interest and promote
the welfare of overseas Filipino workers (OFWs). [3] OWWA traces its beginnings to 1
May 1977, when the Welfare and Training Fund for Overseas Workers in the
Department of Labor and Employment (DOLE) was created by virtue of Letter of
Instructions No. 537, with the main objective, inter alia, of providing social and
welfare services to OFW, including insurance coverage, social work, legal and
placement assistance, cultural and remittances services, and the like. On 1 May
1980, Presidential Decree No. 1694 was signed into law, formalizing the operations
of a comprehensive Welfare Fund (Welfund), as authorized and created under Letter
of Instructions No. 537. Presidential Decree No. 1694 further authorized that
contributions to the Welfare and Training Fund collected pursuant to Letter of
Instructions No. 537 be transferred to the Welfund. On 16 January 1981, Presidential
Decree No. 1809 was promulgated, amending certain provisions of Presidential
Decree No. 1694.[4] Subsequently, Executive Order No. 126 was passed which
reorganized the Ministry of Labor and Employment. Executive Order No. 126 also
renamed the Welfare Fund as the OWWA.
From the records, it is undisputed that on 9 January 2004, as there was yet no
formal OWWA structure duly approved by the Department of Budget and
Management (DBM) and the Civil Service Commission (CSC), the OWWA Board of
Trustees passed Resolution No. 001, [5] Series of 2004, bearing the title Approving the
Structure of the Overseas Workers Welfare Administration, and depicting the
organizational structure and staffing pattern of the OWWA, as approved by Patricia
A. Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of Trustees and then
Secretary of the DOLE. According to Resolution No. 001, the structuring of the
OWWA will stabilize the internal organization and promote careerism among the
employees. It will also ensure a more efficient and effective delivery of programs
and services to member-OFWs. Resolution No. 001 resolved, thus:

RESOLVED therefore, to approve as it is hereby approved, the OWWA


Structure which is hereto attached and made an integral part of this
Resolution, comprising mainly of the approved organizational chart,
functional descriptions and staffing pattern, subject to the following:
a. There will be no displacement of existing regular employees;

b. There will be no temporary appointments; and

c. There will be no hiring of casuals, contractuals or


consultants in the new structure.

RESOLVED further, that the OWWA Structure be immediately submitted


for the appropriate actions of competent authorities, particularly the
DBM and CSC.[6]

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


the organizational structure and staffing pattern of the OWWA. [7] In her approval
thereof, she stated that the total funding requirements for the revised
organizational structure shall be P107,546,379 for four hundred (400)
positions. Moreover, DBM Secretary Boncodin underscored that the funding shall
come solely from the OWWA funds and that no government funds shall be released
for the implementation of the changes made.

On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued


Advisory No. 01,[8] advising the officials and employees of the OWWA that the DBM
had recently approved OWWAs organizational chart, functional statements, and the
staffing pattern. Advisory No. 01 also announced that a Placement Committee will
be created to evaluate and recommend placement of all regular/permanent
incumbents of OWWA in the new organizational chart and staffing pattern. All
employees were asked to indicate in writing their interest or preference in any of
the approved plantilla item, especially for promotion to the Human Resources
Management Division, not later than 11 June 2004.Further, Advisory No. 01
emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of
2004, had declared the policy that there will be no displacement of existing
regular/permanent employees. Qualified casual and contractual personnel may
apply for any vacant item only after all regular/permanent employees of OWWA had
been placed.

Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued


Administrative Order No. 171, Series of 2004, creating a Placement Committee to
evaluate qualifications of employees; and to recommend their appropriate
placement in the new organizational chart, functional statements and staffing
pattern of the OWWA.Administrative Order No. 171 was partially amended by
Administrative Order No. 171-A, issued by DOLE Acting Secretary Manuel G. Imson
(Imson), authorizing the Placement Committee to recommend to the OWWA
Administrator their evaluations, which shall thereafter be endorsed to the DOLE
Secretary for consideration.[9]

The Placement Committee was directed to comply with the pertinent


CESB/CSC/DBM rules and regulations on its recommended placement of all
personnel of OWWA based on the following parameters, to wit [10]:

1. There
would
be
no
diminution
nor
permanent/regular employees of OWWA.

displacement

of

2. Qualified casuals and contractual personnel may likewise be


considered in the staffing pattern only after ensuring that the
regular(s)/permanent employees of OWWA have already been
placed.

3. Decentralization of functions to bring OWWA services closer to the


public shall be adopted. Thus, priority in some promotions shall
be given to those who opt to be assigned in the regional offices,
aside from performance.

4. Deployment in the overseas posts shall be made on rotation basis


from both the frontline and the administrative staff, based on
performance.

5. Regular/permanent incumbents interested for promotion should


indicate their interest in writing to the Placement Committee:
Attn: The Chairperson.

6. Those who may opt to retire should submit to the HRMD, their
application for retirement, copy furnished the Budget Division for
budget allocation purposes.

The Placement Committee should complete its task not later than June
30, 2004.

On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting
OWWA officials and employees to an orientation on the new structure, functions and
staffing pattern of the OWWA. Moreover, Advisory No. 02 required the holding of
elections for the First and Second Level Representatives who will elect from among
themselves the regular official representatives and alternates in the Placement
Committee deliberations. On 11 June 2004, Advisory No. 03 was issued, announcing
the conduct of an election for representatives and alternates representing the
employees in the first [Salary Grades (SG) 1-9] and second level (SG 10-24),
pursuant to Administrative Order No. 171, dated 3 June 2004, as amended by
Administrative Order No. 171-A.

On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order


No. 186, Series of 2004, [11] prescribing the guidelines on the placement of personnel
in the new staffing pattern of the OWWA.

On 29 June 2004, herein respondents filed with the RTC, a Complaint for
Annulment of the Organizational Structure of the OWWA, as approved by OWWA
Board Resolution No. 001, Series of 2004, with Prayer for the Issuance of a Writ of
Preliminary Injunction[12] against herein petitioner OWWA and its Board of Trustees.
[13]
The case was docketed as Civil Case No. 04-0415-CFM.

In their Complaint, respondents alleged that the OWWA has around 24


consultants, 29 casual employees, 76 contractual workers, and 356 officers and
employees, which number does not include the 85 contractual employees in the
Office of the Secretariat of the OWWA Medicare. [14] Respondents posited that the
approved Organizational Structure and Staffing Pattern of the OWWA increases the
number of regular plantilla positions from 356 to 400; however, the increase of 42
positions will not absorb the aforementioned consultants and casual and contractual
workers. They further averred that the plantilla positions in the Central Office will be
reduced from 250 to 140, while the regional offices will have an increase of 164
positions. According to the respondents, the resulting decrease in the number of
employees in the Central Office will result in the constructive dismissal of at least
110 employees. Meanwhile, the deployment of the regular central office personnel
to the regional offices will displace the said employees, as well as their families.

Respondents challenged the validity of the new organizational structure of


the OWWA. In fine, they contended that the same is null and void; hence, its
implementation should be prohibited.

Respondents prayed for the issuance of a writ of preliminary injunction to


restrain petitioners from: 1) implementing its organizational structure as approved
by the OWWA Board of Trustees in its Resolution dated 9 January 2004; and 2)
advertising and proceeding with the recruitment and placement of new employees
under the new organizational structure.[15]

Further, respondents prayed that after trial on the merits, OWWAs


organizational structure be declared as unconstitutional and contrary to law; and
the OWWA Board of Trustees be declared as having acted contrary to the
Constitution and existing laws, and with grave abuse of discretion in approving
Resolution No. 001, dated 9 January 2004.[16]

The Ruling of the RTC

On 30 September 2004, the RTC rendered an Order [17] granting respondents


prayer for a writ of preliminary injunction upon the filing of a bond in the sum
ofP100,000.00. In the grant thereof, the RTC reasoned that any move to reorganize
the structure of the OWWA requires an amendatory law. It deemed Resolution No.
001 was not merely a formalization of the organizational structure and staffing
pattern of the OWWA, but a disruption of the existing organization which disturbs
and displaces a number of regular employees, including consultants and casual and
contractual employees.

The RTC ratiocinated in this wise:

x x x All told, what is being done now at OWWA is a reorganization of


its structure as originally conceived under P.D. No. 1694 [Organization
and Administration of the Welfare for Overseas Workers] and P.D. No.
1809 [Amending Certain Provisions of Presidential Decree 1694,
Creating the Welfare Fund for Overseas Workers]. In the (sic) light of
Section 11 of R.A. No. 6656 which provides that the executive branch
of the government shall implement reorganization schemes within a
specified period of time authorized by law, this court doubts whether a
reorganization of OWWA can be effected without an enabling law.

Further, defendants do not dispute the fact that while the


mechanics of the reorganization is still being forged, the DOLE already
processed applications and eventually hired employees not from
among the existing employees of the OWWA. This appears to be in
contravention of Section 4 of R.A. No. 6656 which provides:

Sec.
4. Officers
and
employees
holding
permanent
appointments shall be given preference for appointment to the new
positions in the approved staffing pattern comparable to their former
position or in case there are not enough comparable positions, to
positions next lower in rank.

No new employees shall be taken in until all permanent officers


and employees have been appointed, including temporary and casual
employees who possess the necessary qualification requirements,
among which is the appropriate civil service eligibility for permanent
appointment to positions in the approved staffing pattern, in case
there are still positions to be filled, unless such positions are policydetermining, primarily confidential or highly technical in nature.

Furthermore, defendants (sic) do not dispute the fact that the


Placement Committee was hastily constituted, that its members were

not educated of their task of job placement, that there was no real to
goodness (sic) personnel evaluation and, finally, the Chairman of the
Committee was simply hand-picked by the DOLE Secretary contrary to
the explicit injunction of Section 8 of the Implementing Rules of R.A
.No. 6656 that the members shall elect their Chairman. [18]

The RTC also cited the protection afforded by the Constitution to workers,
specifically, officers or employees of the Civil Service in ruling that the existing
organization of the OWWA need not be disturbed in any way and no single worker
will be removed or displaced. Thus:

This court entertains no doubt that as workers, plaintiffs enjoy a


right that is protected both by the Constitution and statutes. Thus, (n)o
officer or employee of the civil service shall be removed or suspended
except for cause provided by law. (Sec. 2, par. 3, Art. IX,
Constitution). No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal
protection of the laws. (Sec. 1, Art. III; ibid.). A persons job is his
property. In many cases, as in the Philippine setting, ones job also
means ones life and the lives of those who depended on him. Hence, it
is a policy of the State to free the people from poverty through policies
that provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all. (Sec. 8,
Art. II, ibid.) Any act that, contrary to law, tends to deprive a worker of
his work, violates his rights.[19]

Finally, the RTC defended its jurisdiction over the controversy despite
petitioners protestations that jurisdiction over respondents complaint is lodged in
the administrative agencies tasked to implement the new OWWA structure. It ruled
that the doctrine of primary jurisdiction is applicable only where the administrative
agency exercises its quasi-judicial or administrative function; but, where what is
challenged is the constitutionality of a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative functions, regular
courts have jurisdiction over the matter.[20]

Therefore, the RTC, in its Order, dated 30 September 2004, granted


respondents prayer for a writ of preliminary injunction, to wit:

WHEREFORE, upon plaintiffs (sic) filing of a bond in the sum


of P100,000.00, let a writ of preliminary injunction issue in: 1)
restraining the defendants from implementing the new organizational
structure of OWWA approved by the Board of Trustees on January 9,

2004 and 2) restraining the defendants from advertising and


proceeding with the recruitment and placement of new employees
under the new organizational structure.[21]

Without filing a Motion for Reconsideration, petitioner, thru the Office of the
Solicitor General (OSG),[22] filed with the Court of Appeals, a Petition
for Certiorari and Prohibition with Prayer for Issuance of a Temporary Restraining
Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court,
assailing the RTC Order of 30 September 2004.[23]

The Ruling of the Appellate Court

On 22 September 2005, the Court of Appeals rendered the assailed Decision,


which dismissed the petition. It affirmed the court a quos findings that respondents
possess a clear and legal right to the immediate issuance of the writ. It resolved
that it was proper for the RTC to restrain, for the meantime, the implementation of
OWWAs reorganization to prevent injury until after the main case is heard and
decided.[24] It found respondents allegations sufficient to prove the existence of a
right that should be protected by a writ of preliminary injunction. Thus:

Petitioner averred, too, that majority of the casuals, contractuals


and consultants have been employed for more than ten (10) years, if
not twenty (20) years, and were not regularized simply due to lack of
regular positions in the plantilla or the freezing of recruitment thereto.

To be sure, private respondents have convincingly adduced


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

Apropos, having successfully established a direct and personal injury


as a consequence of the new reorganization[al] structure, it was only
proper for the court a quo to grant the writ of preliminary injunction to
restrain, for the meantime, the implementation of the reorganization to
prevent injury on respondents until after the main case is heard and
decided. Truly, as correctly observed by the trial court, private
respondents enjoy a right that is protected both by the Constitution

and statutes. A persons job is not only his property but his very
life. The constitutional protection of the right to life is not just a
protection of the right to be alive or to the security of ones limb
against physical harm. The right to life is also a right to a good
life (Bernas, The Constitution of the Republic of the Philippines, A
Commentary, Volume I, First Edition, 1997) which includes the right to
earn a living or the right to a livelihood. A fortiori, the requisites for
preliminary injunction to issue have adequately been established: the
existence of a clear and unmistakable right, and the acts violative of
said right.

While the evidence to be submitted at the hearing on the motion


for preliminary injunction need not be conclusive and complete, We
find that private respondents have adequately shown that they are in
clear danger of being irreparably injured unless the status quo is
observed, in the meantime x x x.[25]

The appellate court was likewise of the opinion that the substantial issues
raised before the court a quo anent the validity of the organizational structure of the
OWWA; the alleged lack of authority of the DBM to approve the same including the
alleged violation by the OWWA of relevant statutes; the lack of consultation prior to
the reorganization; and the supposed illegal constitution of the Placement
Committee, are matters which the RTC is behooved to resolve. In finding no error on
the part of the RTC, the Court of Appeals said that without an injunctive relief, any
decision that may be rendered in the suit would already be ineffective, moot and
academic.[26]

Aggrieved, petitioner through the OSG,[27] filed the instant petition.

In the instant petition, petitioner prays that the appealed Decision of the
Court of Appeals be reversed and set aside, and that Civil Case No. 04-0415-CFM
before the RTC be dismissed for lack of merit. [28]

The Issue

The issue to be resolved is, whether the court a quo gravely abused its
discretion in issuing the writ of preliminary injunction. Stated otherwise, the issue is
whether the Court of Appeals erred in affirming the RTC in its grant of the assailed
writ of preliminary injunction. Clearly, we are thus confined to the matter of the
propriety of the issuance of the writ of preliminary injunction by the trial court, and
not to the merits of the case which is still pending before the latter.

The Case for the Petitioner

First, in support of their petition, petitioner posits that the OWWA has already
implemented the new organizational structure as the advertisement, recruitment,
and placement of OWWA employees have been accomplished; and in the process,
none of the respondents have been dismissed. Moreover, the act sought to be
prevented has long been consummated; hence, the remedy of injunction should no
longer be entertained.

Second, petitioner adduces the proposition that the reorganization of the


OWWA does not require an amendatory law contrary to the holding of the court a
quo. The OSG maintains that there was no previous OWWA structure in the first
place; and neither did Presidential Decree No. 1694 [29] nor Presidential Decree No.
1809,[30] provide for an organizational structure for the OWWA.

Third, petitioner disputes the existence of the rights of respondents to be


protected by the preliminary injunctive writ sought on the ground that the latter did
not shown any legal right which needs the protection thereof, nor did they show
that any such right was violated to warrant the issuance of a preliminary
injunction. Petitioner asserts that respondents did not claim that they are the
consultants or casual or contractual workers who would allegedly be displaced; and
neither did respondents show that there is only one right or cause of action
pertaining to all of them. Neither was there a violation of their rights because
respondents have all been given appointments in the new OWWA organizational
structure.[31]

Finally, on respondents allegation that the reorganization of the OWWA will


reassign permanent employees to its regional offices, and consequently, displace
them and their families, petitioner counters that an employee may be reassigned
from one organizational unit to another in the same agency, provided that such
reassignment shall not involve a reduction in rank, status or salary. [32]

The Case for the Respondents

Respondents argue that the petitioner railroaded and raced against time to
implement the new OWWA organizational structure. They claim that in the process,
petitioner exhibited manifest bad faith and injustice. What existed was a hasty
reorganization and restructuring of the OWWA without adequate study and
consultation, which was thereafter submitted and immediately approved by the
Board of Trustees. They insist that the creation of an organizational structure of the

OWWA would require a presidential fiat or a legislative enactment pursuant to


Republic Act No. 6656.[33]

Further, respondents maintain that their right in esse was established during
the proceedings for the issuance of the writ of preliminary injunction, as their
complaint sufficiently showed the rights and interests of the parties. They alleged
that at no stage in the proceedings did petitioner question such rights. In fact,
petitioner made a waiver in open court to the effect that it was not presenting
testimonial evidence. According to the respondents, such an act was constitutive of
an admission by petitioner of the existence of a right in esse in their favor.

The Ruling of the Court

Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an


order granted at any stage of an action prior to the judgment or final order requiring
a party or a court, an agency or a person to refrain from a particular act or acts.
[34]
Section 3, Rule 58 of the Rules of Court, enumerates the grounds for the issuance
of a writ ofpreliminary injunction as follows:

Sec. 3. Grounds for issuance of preliminary injunction.


A preliminary injunction may be granted when it is established:

(a)
That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the commission
or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;

(b)
That the commission, continuance or non-performance
of the act or acts complained of during the litigation would probably
work injustice to the applicant; or

(c)
That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.

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


the judgment or final order. [35] It persists until it is dissolved or until the termination
of the action without the court issuing a final injunction.[36] To be entitled to an
injunctive writ, petitioner must show, inter alia, the existence of a clear and
unmistakable right and an urgent and paramount necessity for the writ to prevent
serious damage.[37] A writ of preliminary injunction is generally based solely on
initial and incomplete evidence.[38] The evidence submitted during the hearing on an
application for a writ of preliminary injunction is not conclusive or complete for only
a sampling is needed to give the trial court an idea of the justification for
the preliminary injunction pending the decision of the case on the merits. [39] In fact,
the evidence required to justify the issuance of a writ of preliminary injunction in the
hearing thereon need not be conclusive or complete.[40] It must also be stressed that
it does not necessarily proceed that when a writ of preliminary injunction is issued,
a final injunction will follow.[41]

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


the part of the trial court.[42] Thus, the rule is, the matter of the issuance of a writ of
preliminary injunction is addressed to the sound discretion of the trial court, unless
the court commits grave abuse of discretion. [43] In Toyota Motor Phils. Corporation
Workers Association (TMPCWA) v. Court of Appeals, [44] this Court pronounced that
grave abuse of discretion in the issuance of writs of preliminary injunction implies a
capricious and whimsical exercise of judgment that is equivalent to lack of
jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of
passion, prejudice or personal aversion amounting to an evasion of positive duty or
to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of
law. It is clear that the assessment and evaluation of evidence in the issuance of the
writ of preliminary injunction involve findings of facts ordinarily left to the trial court
for its conclusive determination. [45] The duty of the court taking cognizance of a
prayer for a writ of preliminary injunction is to determine whether the requisites
necessary for the grant of an injunction are present in the case before it.
[46]
However, as earlier stated, if the court commits grave abuse of its discretion in
the issuance of the writ of preliminary injunction, such that the act amounts to
excess or lack of jurisdiction, the same may be nullified through a writ
of certiorari or prohibition.

More significantly, a preliminary injunction is merely a provisional remedy, an


adjunct to the main case subject to the latters outcome, the sole objective of which
is to preserve the status quo until the trial court hears fully the merits of the case.
[47]
The status quo should be that existing at the time of the filing of the case.
[48]
The status quousually preserved by a preliminary injunction is the last actual,
peaceable and uncontested status which preceded the actual controversy.
[49]
The status quo ante litem is, ineluctably, the state of affairs which is existing at
the time of the filing of the case. Indubitably, the trial court must not make use of
its injunctive power to alter such status.[50]

We hold that the RTC, in granting the assailed writ of preliminary injunction,
committed grave abuse of discretion amounting to lack of jurisdiction.

In the case at bar, the RTC did not maintain the status quo when it issued the
writ of preliminary injunction. Rather, it effectively restored the situation prior to
the status quo, in effect, disposing the issue of the main case without trial on the
merits. What was preserved by the RTC was the state of affairs before the issuance
of Resolution No. 001, which approved the structure of the OWWA, and the
subsequent administrative orders pursuant to its passing. The RTC forgot that what
is imperative in preliminary injunction cases is that the writ can not be effectuated
to establish new relations between the parties. Hence, we find herein an application
of the lessons that can be learned from Rualo v. Pitargue.[51] In Rualo, this Court
determined, among others, the propriety of the writ of preliminary injunction which
was issued restraining the Bureau of Internal Revenue from further implementing its
reorganization, and enforcing the orders [52] pursuant thereto. This Court, in lifting
the therein assailed writ, underscored the legal proscription which states that courts
should avoid issuing a writ of preliminary injunction which would in effect dispose of
the main case without trial. [53] According to the Court in Rualo, the trial court, in
issuing the writ of preliminary injunction, did not maintain the status quo but
restored the situation before the status quo, that is, the situation before the
issuance of the Revenue Travel Assignment Orders. [54] The Court further declared
that what existed was an acceptance of therein respondents premise of the illegality
of the reorganization, and a prejudgment on the constitutionality of the assailed
issuances.[55] As in Rualo, we find herein a similar case where the RTC admitted
hook, line and sinker the mere allegations of respondents that the reorganization as
instituted was unlawful without the benefit of a full trial on the merits. It also did not
maintain the status quo but restored the landscape before the implementation of
OWWAs reorganization. In thus issuing the writ of preliminary injunction, the
substantive issues of the main case were resolved by the trial court.What was done
by the RTC was quite simply a disposition of the case without trial. This is an error in
law and an exercise of grave abuse of discretion. Furthermore, we find that the RTC
similarly prejudged the validity of the issuances released by the OWWA Board of
Trustees, as well as the other governmental bodies (i.e., DBM, DOLE), which
approved
the
organizational
structure
and
staffing
pattern
of
the
OWWA. In Rualo, this Court asserted the presumption of regularity of the therein
assailed government issuances.In this case, we accentuate the same presumption.

Ineluctably, this Court is compelled to rule against the propriety of the grant
of the assailed ancillary writ of preliminary injunction on the material ground that
the records do not support respondents entitlement thereto.

We do not find attendant the requisites for the issuance of a preliminary


injunctive writ. This Court is not convinced that respondents were able to show a
clear and unmistakable legal right to warrant their entitlement to the writ. A mere
blanket allegation that they are all officers and employees of the OWWA without a
showing of how they stand to be directly injured by the implementation of its

questioned organizational structure does not suffice to prove a right in esse. As was
aptly raised by the petitioner, respondents did not show that they were dismissed
due to the challenged reorganization. There was no showing that they are the
employees who are in grave danger of being displaced. Respondents were similarly
wanting in proving that they are the consultants and contractual and casual
employees, who will allegedly suffer by reason of the re-organization. This Court is
consistently adamant in demanding that a clear and positive right especially calling
for judicial protection must be established. [56] As has been reiterated, injunction is
not a remedy to protect or enforce contingent, abstract, or future rights; it will not
issue to protect a right not in esse and which may never arise, or to restrain an
action which did not give rise to a cause of action. [57] In contrast, the rights of
OWWA are accorded to it by law. The importance of the reorganization within the
body and the benefits that will accrue thereto were accentuated by the Board of
Trustees in its Resolution No. 001. The aforesaid resolution declared, inter alia, that
the structuring of the OWWA will stabilize the internal organization and promote
careerism among the employees, as well as ensure a more efficient and effective
delivery of programs and services to member-OFWs. [58] However, we go further to
opine that even the question of whether the OWWA requires an amendatory law for
its reorganization is one that should be best threshed out in the disposition of the
merits of the case. Indeed, the question as to the validity of the OWWA
reorganization remains the subject in the main case pending before the trial
court. Its annulment is outside the realm of the instant Petition.

Assuming arguendo that respondents stand to be in danger of being


transferred due to the reorganization, under the law, any employee who questions
the validity of his transfer should appeal to the CSC. [59] Even then, administrative
remedies must be exhausted before resort to the regular courts can be had.

Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had
been accomplished. Injunction will not lie where the acts sought to be enjoined have
already been accomplished or consummated.[60] The wheels of OWWAs
reorganization started to run upon the approval by the Board of Trustees of its
Resolution No. 001 entitled, Approving the Structure of the Overseas Workers
Welfare Administration. Subsequently, a series of issuances which approved the
organizational structure and staffing pattern of the agency was issued by the DBM,
the OWWA Administrator, and by the DOLE. Resolution No. 001 has already been
implemented. Case law has it that a writ of preliminary injunction will not issue if
the act sought to be enjoined is a fait accompli.

A writ of preliminary injunction being an extraordinary event, [61] one deemed


as a strong arm of equity or a transcendent remedy, [62] it must be granted only in
the face of actual and existing substantial rights. In the absence of the same, and
where facts are shown to be wanting in bringing the matter within the conditions for
its issuance, the ancillary writ must be struck down for having been rendered in
grave abuse of discretion.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of


Appeals, dated 22 September 2005 in CA-G.R. SP No. 87702, is REVERSED and SET
ASIDE. The Writ of Preliminary Injunction issued by the Regional Trial Court
pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415-CFM
is LIFTED andSET ASIDE.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

Dungog v. CA, G.R. No. 139767. August 5, 2003 DACUA


FIRST DIVISION

[G.R. No. 139767. August 5, 2003]


FELIPE SY DUNGOG, petitioner, vs. COURT OF APPEALS, JUAN A. GATO, in
his official capacity as RTC Sheriff, Lapu-Lapu City and CARLOS
GOTHONG LINES, INC., respondents.
DECISION
CARPIO, J.:

The Case
This petition for review on certiorari[1] assails the Decision[2] dated 14 May 1999
of the Court of Appeals in CA-G.R. SP No. 48788, as well as the Resolution dated 24
August 1999 denying the motion for reconsideration. The Court of
Appeals dismissed outright the petition for certiorari, prohibition and mandamus
filed by petitioner Felipe Sy Dungog (Felipe) against respondents. The petition
questioned the propriety of the Order [3] dated 14 August 1998 (Order) and the writ
of preliminary injunction (Writ) dated 18 August 1998 issued by the RegionalTrial
Court of Cebu, Lapu-Lapu City, Branch 53 (trial court) in Civil Case No. 5020-L.

The Antecedents
Tracing the roots of this controversy, Felipe alleges [4] that he and his sister,
Fortune, agreed to sell their lots in Canjulao, Cebu, through their parents, Juan L.
Dungog and Emma S. Dungog (Spouses Dungog). The Spouses Dungog convinced
other lot owners in Canjulao to sell their lots either directly to them or to Felipe and
his sister. On 31 December 1996, the Spouses Dungog entered into a Contract to
Sell (Contract) with private respondent Carlos A. Gothong Lines, Inc. (Gothong
Lines) covering several lots in Canjulao. The lots which the Spouses Dungog
contracted to sell to Gothong Lines belonged to various individuals as listed in the
Contracts Annex A[5] which specified the corresponding approximate land areas of
each lot. Among these was Lot 1031-F registered in the name of Felipe and covered
by Transfer Certificate of Title No. 10359 of the Register of Deeds of Lapu-Lapu
City. Under the Contract, Gothong Lines was to pay on installment basis the
purchase price of P65,520,475.00 computed at P500 per square meter. Thus,
Gothong Lines paid a down payment of P12,000,000.00.For the balance
of P53,520,475.00,[6] Gothong Lines issued 15 postdated checks of P3,568,031.00
each beginning on 31 January 1997 as payment for 15 equal monthly
installments.Gothong Lines made good all the checks, except the last 4 checks
dated 30 December 1997, 31 January 1998, 28 February 1998 and 30 March 1998,
which bounced due to Gothong Lines stop payment order.
Felipe alleges further that as of 31 December 1997, his parents had delivered 66
parcels of land to Gothong Lines with a total area of 101,104.20 square meters
valued atP50,552,100.00. Felipe also states that as of the same date, Gothong Lines
had paid P51,248,345.00 in encashed checks plus the initial down payment
of P12,000,000.00. This left an overpayment of P696,245.00 in the hands of the
Spouses Dungog. Felipe claims, however, that despite Gothong Lines stop payment
order of its last four checks, the Spouses Dungog still delivered in February 1998, 8
parcels of land with a total land area of 11,590 square meters valued
at P5,795,000.00. Among those delivered was Lot 1031-F. The Spouses Dungog
demanded payment for these 8 parcels of land, but Gothong Lines refused to
pay. The Spouses Dungog became frustrated with Gothong Lines complete silence
on their demands for payment, as well as the earlier stop payment order on the last
4 checks. Thus, the Spouses Dungog informed Gothong Lines in a letter dated 18
June 1998 that they would no longer push through with their offer to sell the
remaining lots.
On 6 July 1998, Gothong Lines filed a complaint for Specific Performance,
Damages with Writ of Preliminary Mandatory Injunction against the Spouses Dungog
to enforce the Contract.Gothong Lines faulted the Spouses Dungog for non-delivery
of some of the parcels of land in breach of the Contract. Gothong Lines alleged that
while the total amount of P51,248,348.26 paid to the Spouses Dungog corresponds
to 102,496.69 square meters, the Spouses Dungog actually delivered to Gothong
Lines only 100,613.69 square meters. Gothong Lines claimed that it paid an excess
of P941,848.00[7] corresponding to 1,883 square meters. To protect its interest,
Gothong Lines ordered the bank to stop payment on the remaining postdated
checks.Gothong Lines asked the trial court to issue a writ of preliminary injunction
to restrain the Spouses Dungog from canceling the Contract and from preventing its
representatives and vehicles from passing through the properties subject of the

Contract. Gothong Lines offered to post a bond of P500,000.00 and consigned


the P4,048,950.00 representing the balance of the purchase price.
Traversing Gothong Lines allegations, the Spouses Dungog contended that it
was Gothong Lines which breached the Contract by stopping payment on the last 4
checks. The Spouses Dungog also charged Gothong Lines with competing with them
in acquiring one of the lots subject of the Contract. They further countered that
Gothong Lines violated a verbal agreement between them not to develop the roads
until after 30 June 1998, the last day for the Spouses Dungog to deliver and turn
over the lots. The Spouses Dungog opposed Gothong Lines application for a writ of
preliminary injunction on the ground that Gothong Lines violated the terms of the
Contract and the other contemporaneous agreements between them.
Based on the pleadings and affidavits presented by the parties, the trial court
granted on 14 August 1998 Gothong Lines prayer for injunction. The dispositive
portion of the Order reads:
WHEREFORE, in the light of the foregoing considerations, plaintiffs application for
the issuance of a writ of preliminary injunction is GRANTED. Consequently, after the
filing and approval of a bond in the amount of Three Hundred Thousand Pesos
(P300,000.00), let a writ of preliminary injunction issue, enjoining defendants, their
representatives, or anyone acting in their behalf; (a) from canceling the contract to
sell dated December 31, 1996; and (b) from disallowing or preventing the entry and
exit of plaintiffs vehicles and those of its representatives through Lot 1031-F and
other undelivered lots concerned.[8]
Based on this Order, the trial court issued the Writ on 18 August 1998 which the
sheriff served on the same date.
Felipe assailed the Order and the Writ in a special civil action for certiorari
before the Court of Appeals. The appellate court, however, dismissed outright
Felipes petition. The appellate court also denied on 24 August 1999 Felipes motion
for reconsideration. Thus, Felipe filed the instant petition questioning the propriety
of the writ of preliminary injunction issued by the trial court.

The Rulings of the Trial Court and the Court of Appeals


In granting the Writ, the trial court stated There is no dispute that plaintiff has already paid defendants the amount
of P51,248,348.26 out of the total consideration of P65,520,475.00. Plaintiff has also
deposited with the Office of the Clerk of Court the amount of P4,048,950.00, leaving
a balance of P10,223,176.74.
Plaintiff had already started the road development in the properties delivered to
it. In other words, it has already spent much to develop the properties which form
the bulk of the parcels of land subject of the contract.
Ingress to and egress from plaintiffs development activities lie on an undelivered
parcel of land. Through it pass the vehicles, equipment, supplies and materials, as

well as the workers, required by the project.The closure of this passage has
apparently stymied the development in the area.
About 78% of the properties are in the hands of plaintiff. Access to these properties
is under the control of defendants, the entrance being located in Lot 1031-F, one of
the remaining undelivered lots. Since the entrance gate has been closed by
defendants, it strikes the mind of the court that Lot 1031-F and the other
undelivered lots have now, in a manner of speaking, imprisoned the delivered
properties.
It is not therefore hard to see that the closure of the entrance gate has worked to
the prejudice of plaintiff and will certainly jeopardize the development work in the
delivered properties. Elementary justice and the spirit of fair play thus dictate that
the status quo ante, which is the situation before the closure when plaintiffs
representatives were able to pass through Lot 1031-F, be restored.
Insofar as defendants threatened cancellation of the contract to sell, the Court has
seen that out of the total area of 131,040.95 square meters covered by the
contract, plaintiff had already paid for 102,496.69 square meters, and that it had
deposited P4,048,950.00 to pay for some of the undelivered parcels. It is but fair
that such a move be, in the meantime, disallowed. [9]
In dismissing outright Felipes petition for certiorari, prohibition and mandamus
assailing the trial courts Order and the Writ, the Court of Appeals stated The petition should be dismissed outright, the petitioner has no standing here. He
may be the owner of the lot in question but he is not a party litigant in the
case a quo. His being a son of defendant spouse in the lower court does not give
him the capacity to sue. Of course, he is not without legal remedy to protect his
interest.[10]

The Issue
In his Memorandum, Felipe narrows the inquiry to MAY PETITIONER BE DEPRIVED OF HIS PROPERTY WITHOUT DUE PROCESS OF LAW
AND PAYMENT OF JUST COMPENSATION FOR THE BENEFIT OF PRIVATE
RESPONDENT?[11]
Felipe laments that the dismissal of his petition resulted in the outright
confiscation of his property for the private use of Gothong Lines, without due
process of law and just compensation. Felipe claims that in dismissing his petition,
the Court of Appeals effectively sustained the trial courts Order divesting him of his
rights over Lot 1031-F.
The question of whether Gothong Lines may demand the turn over of the
parcels of land listed in Annex A of the Contract is not our concern here. The issue in
this petition is whether the Court of Appeals erred in dismissing Felipes petition.

The Courts Ruling


The petition is bereft of merit.

Dismissal by the Court of Appeals of


Felipes petition was proper.
Felipe committed a procedural blunder in filing a special civil action for certiorari
to assail the Order and the Writ. Felipe was not a party in Civil Case No. 5020-L. He
could not, therefore, assail the writ of preliminary injunction through a petition for
certiorari before the Court of Appeals. As correctly pointed out by the Court of
Appeals, Felipe does not possess the requisite standing to file such suit.
In Ciudad Real v. Court of Appeals,[12] this Court ruled that there is grave
abuse of discretion if the appellate court recognizes the standing of a party, not a
litigant in the trial court proceedings, to join a petition for certiorari. The Court
explained:
Worse was the ruling of the respondent appellate court sanctioning the standing of
Magdiwang Realty Corporation to join said petition for certiorari. As the records
show, Magdiwang filed a Motion for Intervention on July 18, 1989 invoking its
alleged Memorandum of Agreement with Doa Juana Development Corporation dated
July 15, 1982. The trial court, however, denied this motion and Magdiwang did not
question the ruling in the appellate court. The ruling thus, became final. After about
two (2) years or on August 27, 1991, Magdiwang again filed a Motion to Substitute
and/or Join as Party/Plaintiff relying on the same Memorandum of Agreement. The
trial court similarly denied the motion, and the denial also attained finality as
Magdiwang did not further challenge its correctness. Despite the finality of the order
denying Magdiwangs intervention way back in 1989, the respondent court in its
Decision of August 20, 1992 recognized the standing of Magdiwang to assail in the
appellate court the Compromise Agreement. Again, this ruling constitutes grave
abuse of discretion for Magdiwang was not a party in interest in Civil Case No. Q35393.
The wisdom of this ruling is all too apparent. If a person not a party to an action
is allowed to file a certiorari petition assailing an interlocutory order of the trial
court, such as an injunctive order and writ, proceedings will become unnecessarily
complicated, expensive and interminable. Eventually, this will defeat the policy of
our remedial laws to secure party-litigants a speedy and inexpensive disposition of
every action.
Felipe could have simply intervened[13] in the trial court proceedings to enable
him to protect or preserve a right or interest which may be affected by such
proceedings. A motion to intervene may be filed at any time before rendition of
judgment by the trial court. [14] The purpose of intervention is not to obstruct or
unnecessarily delay the placid operation of the machinery of trial. The purpose is
merely to afford one, not an original party but possessing a certain right or interest
in the pending case, the opportunity to appear and be joined so he could assert or
protect such right or interest.[15] Indeed, Felipe could have easily joined his parents
as defendants in resisting the claim of Gothong Lines.

A resolution affirming the Court of Appeals outright dismissal of Felipes petition


for these reasons would have been sufficient. Nevertheless, we deem it best to
address the propriety of the issuance by the trial court of the writ of preliminary
injunction before writing finis to this petition.

Issuance of writ of preliminary injunction


was also proper.
Preliminary injunction is an order granted at any stage of an action, prior to the
judgment or final order, requiring a party, court, agency or person to perform or to
refrain from performing a particular act or acts. [16] A preliminary injunction, as the
term itself suggests, is merely temporary, subject to the final disposition of the
principal action. Its purpose is to preserve the statusquo of the matter subject of the
action to protect the rights of the plaintiff during the pendency of the
suit. Otherwise, if no preliminary injunction is issued, the defendant may, before
final judgment, do the act which the plaintiff is seeking the court to restrain. This
will make ineffectual the final judgment that the court may afterwards render in
granting relief to the plaintiff.[17]
The issuance of a writ of preliminary injunction rests entirely within the
discretion of the court and is generally not interfered with except in cases of
manifest abuse.[18] The assessment and evaluation of evidence in the issuance of
the writ of preliminary injunction involve findings of facts ordinarily left to the trial
court for its conclusive determination.[19]
We find that there was adequate justification for the issuance of the assailed
writ of preliminary injunction. There is no dispute that the Spouses Dungog entered
into the Contract with Gothong Lines which included Lot 1031-F owned by
Felipe. Felipe admitted that he authorized his parents to sell this lot. He also
admitted that his parents had delivered to Gothong Lines Lot 1031-F along with
other parcels of land. However, the Spouses Dungog threatened to cancel the
Contract and to deny Gothong Lines passage through Lot 1031-F allegedly due to
non-payment of the subsequent installments.
In applying for the Writ, Gothong Lines sought to restrain in the meantime the
Spouses Dungog from canceling the Contract in order not to render the judgment
ineffectual. Gothong Lines also sought to preserve its right of way through Lot 1031F to maintain access to the other parcels of land previously delivered by the
Spouses Dungog to Gothong Lines.
A careful reading of the trial courts assailed Order discloses that the Writ
enjoined the cancelation of the Contract on the basis of Gothong Lines substantial
performance of the Contract.The trial court also enjoined the closure of the entrance
gate in Lot 1031-F to preserve the status quo ante.
Under Section 3, Rule 58[20] of the 1997 Rules on Civil Procedure, a preliminary
injunction is proper when the plaintiff appears entitled to the relief demanded in the
complaint. The
trial
court
found
that
Gothong
Lines
had
already
paid P51,248,348.26 out of the total consideration of P65,520,475.00. Gothong
Lines also consigned with the court an additional P4,048,950.00 leaving a balance
of P10,223,176.74. The trial court likewise found that 78% of the properties were
already in the possession of Gothong Lines. Moreover, the status quo, which is the

last actual peaceable uncontested status that preceded the controversy, [21] was that
Gothong Lines had access to the lots subject of the Contract through the entrance
gate in Lot 1031-F. That is why Gothong Lines commenced construction of its pier
and the development of the roads within the parcels of land covered by the
Contract. The issuance of the Writ would no doubt preserve the status quo between
the Spouses Dungog and Gothong Lines that existed prior to the filing of the
case. We agree with the trial court that the status quo should be maintained until
the issue on the parties respective rights and obligations under the Contract is
determined after the trial.
Clearly, in issuing the Writ, the trial court did not forthwith deprive Felipe of his
ownership of Lot 1031-F. Neither did the Writ have the effect of ousting Felipe from
possession of the lot.The trial court did not rule on the merits of the case so as to
amount to a deprivation or confiscation of property without due process of law or
just compensation. There was no adjudication on the rightful possession or
ownership of the contested parcels of land subject of the Contract. The trial court
issued the injunction only as a preventive remedy to protect during the pendency of
the action Gothong Lines right to a final and effective relief.
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ., concur.

Executive Secretary v. CA, G.R. No. 131719, 25 May 1994 FAITH


G.R. No. 131719

May 25, 2004

THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY


OF LABOR AND EMPLOYMENT, AND THE SECRETARY OF FOREIGN AFFAIRS,
OWWA PUNO, ADMINISTRATOR, and POEA ADMINISTRATOR, petitioners,
vs.
THE HON. COURT OF APPEALS and ASIAN RECRUITMENT COUNCIL
PHILIPPINE CHAPTER (ARCO-PHIL.), INC., representing its members:
Worldcare
Services
Internationale,
Inc.,
Steadfast
International Recruitment Corporation, Dragon International Manpower
Services Corporation, Verdant Manpower Mobilization Corporation, Brent
Overseas Personnel, Inc., ARL Manpower Services, Inc., Dahlzhen
International Services, Inc., Interworld Placement Center, Inc., Lakas Tao
Contract Services, Ltd. Co., and SSC Multiservices, respondents.
DECISION
CALLEJO, SR., J.:
In this petition for review on certiorari, the Executive Secretary of the President of
the Philippines, the Secretary of Justice, the Secretary of Foreign Affairs, the

Secretary of Labor and Employment, the POEA Administrator and the OWWA
Administrator, through the Office of the Solicitor General, assail the Decision 1 of the
Court of Appeals in CA-G.R. SP No. 38815 affirming the Order 2 of the Regional Trial
Court of Quezon City dated August 21, 1995 in Civil Case No. Q-95-24401, granting
the plea of the petitioners therein for a writ of preliminary injunction and of the writ
of preliminary injunction issued by the trial court on August 24, 1995.
The Antecedents
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, took effect on July 15, 1995. The Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipino Act of 1995
was, thereafter, published in the April 7, 1996 issue of the Manila Bulletin. However,
even before the law took effect, the Asian Recruitment Council Philippine Chapter,
Inc. (ARCO-Phil.) filed, on July 17, 1995, a petition for declaratory relief under Rule
63 of the Rules of Court with the Regional Trial Court of Quezon City to declare as
unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j), (l) and
(m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of the law, with a plea
for the issuance of a temporary restraining order and/or writ of preliminary
injunction enjoining the respondents therein from enforcing the assailed provisions
of the law.
In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was
self-executory and that no implementing rules were needed. It prayed that the court
issue a temporary restraining order to enjoin the enforcement of Section 6,
paragraphs (a) to (m) on illegal recruitment, Section 7 on penalties for illegal
recruitment, and Section 9 on venue of criminal actions for illegal recruitments, viz:
Viewed in the light of the foregoing discussions, there appears to be urgent
an imperative need for this Honorable Court to maintain the status quo by
enjoining the implementation or effectivity of the questioned provisions of RA
8042, by way of a restraining order otherwise, the member recruitment
agencies of the petitioner will suffer grave or irreparable damage or injury.
With the effectivity of RA 8042, a great majority of the duly licensed
recruitment agencies have stopped or suspended their operations for fear of
being prosecuted under the provisions of a law that are unjust and
unconstitutional. This Honorable Court may take judicial notice of the fact
that processing of deployment papers of overseas workers for the past weeks
have come to a standstill at the POEA and this has affected thousands of
workers everyday just because of the enactment of RA 8042. Indeed, this has
far reaching effects not only to survival of the overseas manpower supply
industry and the active participating recruitment agencies, the countrys
economy which has survived mainly due to the dollar remittances of the
overseas workers but more importantly, to the poor and the needy who are in
dire need of income-generating jobs which can only be obtained from abroad.
The loss or injury that the recruitment agencies will suffer will then be
immeasurable and irreparable. As of now, even foreign employers have

already reduced their manpower requirements from the Philippines due to


their knowledge that RA 8042 prejudiced and adversely affected the local
recruitment agencies.3
On August 1, 1995, the trial court issued a temporary restraining order effective for
a period of only twenty (20) days therefrom.
After the petitioners filed their comment on the petition, the ARCO-Phil. filed an
amended petition, the amendments consisting in the inclusion in the caption thereof
eleven (11) other corporations which it alleged were its members and which it
represented in the suit, and a plea for a temporary restraining order enjoining the
respondents from enforcing Section 6 subsection (i), Section 6 subsection (k) and
paragraphs 15 and 16 thereof, Section 8, Section 10, paragraphs 1 and 2, and
Sections 11 and 40 of Rep. Act No. 8042.
The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to
(m), Section 7(a) to (b), and Section 10 paragraphs (1) and (2), quoted as follows:
(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL
MIGRANT WORKERS IS THE POSSESSION OF SKILLS. PURSUANT TO THIS AND
AS SOON AS PRACTICABLE, THE GOVERNMENT SHALL DEPLOY AND/OR
ALLOW THE DEPLOYMENT ONLY OF SKILLED FILIPINO WORKERS.4
Sec. 2 subsection (i, 2nd par.)
Nonetheless, the deployment of Filipino overseas workers, whether landbased or sea-based, by local service contractors and manning agents
employing them shall be encourages (sic). Appropriate incentives may be
extended to them.

II. ILLEGAL RECRUITMENT


SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That any such non-licensee or
non-holder who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It shall, likewise,
include the following acts, whether committed by any person, whether a nonlicensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than


that specified in the schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to make a worker pay any
amount greater than that actually received by him as a loan or
advance;
(b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit
his employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and conditions of
employment;
(e) To influence or attempt to influence any person or entity not to
employ any worker who has not applied for employment through his
agency;
(f) To engage in the recruitment or placement of workers in jobs
harmful to public health or morality or to the dignity of the Republic of
the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of
Labor and Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from
jobs, departures and such other matters or information as may be
required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up
to and including the period of the expiration of the same without the
approval of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation engaged
in travel agency or to be engaged directly or indirectly in the
management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations other than those

authorized under the Labor Code and its implementing rules and
regulations;
(l) Failure to actually deploy without valid reason as determined by the
Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection
with his documentation and processing for purposes of deployment, in
cases where the deployment does not actually take place without the
workers fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic
sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three (3)
or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.

SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than
twelve (12) years and a fine of not less than two hundred thousand pesos
(P200,000.00) nor more than five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred
thousand pesos (P500,000.00) nor more than one million pesos
(P1,000,000.00) shall be imposed if illegal recruitment constitutes economic
sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18) years of age or committed by a
non-licensee or non-holder of authority.
Sec. 8.
Prohibition on Officials and Employees. It shall be unlawful for any official or
employee of the Department of Labor and Employment, the Philippine
Overseas Employment Administration (POEA), or the Overseas Workers
Welfare Administration (OWWA), or the Department of Foreign Affairs, or
other government agencies involved in the implementation of this Act, or

their relatives within the fourth civil degree of consanguinity or affinity, to


engage, directly or indirectly, in the business of recruiting migrant workers as
defined in this Act. The penalties provided in the immediate preceding
paragraph shall be imposed upon them. (underscoring supplied)

Sec. 10, pars. 1 & 2.


Money Claims. Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide,within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. The
preliminary investigations of cases under this Act shall be terminated within a
period of thirty (30) calendar days from the date of their filing. Where the
preliminary investigation is conducted by a prosecution officer and a prima
facie case is established, the corresponding information shall be filed in court
within twenty-four (24) hours from the termination of the investigation. If the
preliminary investigation is conducted by a judge and a prima facie case is
found to exist, the corresponding information shall be filed by the proper
prosecution officer within forty-eight (48) hours from the date of receipt of
the records of the case.
The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate
Section 1, Article III of the Constitution. 5 According to the respondent, Section 6(g)
and (i) discriminated against unskilled workers and their families and, as such,
violated the equal protection clause, as well as Article II, Section 12 6 and Article XV,
Sections 17 and 3(3) of the Constitution.8 As the law encouraged the deployment of
skilled Filipino workers, only overseas skilled workers are granted rights. The

respondent stressed that unskilled workers also have the right to seek employment
abroad. According to the respondent, the right of unskilled workers to due process is
violated because they are prevented from finding employment and earning a living
abroad. It cannot be argued that skilled workers are immune from abuses by
employers, while unskilled workers are merely prone to such abuses. It was pointed
out that both skilled and unskilled workers are subjected to abuses by foreign
employers. Furthermore, the prohibition of the deployment of unskilled workers
abroad would only encourage fly-by-night illegal recruiters.
According to the respondent, the grant of incentives to service contractors and
manning agencies to the exclusion of all other licensed and authorized recruiters is
an invalid classification. Licensed and authorized recruiters are thus deprived of
their right to property and due process and to the "equality of the person." It is
understandable for the law to prohibit illegal recruiters, but to discriminate against
licensed and registered recruiters is unconstitutional.
The respondent, likewise, alleged that Section 6, subsections (a) to (m) is
unconstitutional because licensed and authorized recruitment agencies are placed
on equal footing with illegal recruiters. It contended that while the Labor Code
distinguished between recruiters who are holders of licenses and non-holders
thereof in the imposition of penalties, Rep. Act No. 8042 does not make any
distinction. The penalties in Section 7(a) and (b) being based on an invalid
classification are, therefore, repugnant to the equal protection clause, besides being
excessive; hence, such penalties are violative of Section 19(1), Article III of the
Constitution.9 It was also pointed out that the penalty for officers/officials/employees
of recruitment agencies who are found guilty of economic sabotage or large-scale
illegal recruitment under Rep. Act No. 8042 is life imprisonment. Since recruitment
agencies usually operate with a manpower of more than three persons, such
agencies are forced to shut down, lest their officers and/or employees be charged
with large scale illegal recruitment or economic sabotage and sentenced to life
imprisonment. Thus, the penalty imposed by law, being disproportionate to the
prohibited acts, discourages the business of licensed and registered recruitment
agencies.
The respondent also posited that Section 6(m) and paragraphs (15) and (16),
Sections 8, 9 and 10, paragraph 2 of the law violate Section 22, Article III of the
Constitution10 prohibiting ex-post facto laws and bills of attainder. This is because
the provisions presume that a licensed and registered recruitment agency is guilty
of illegal recruitment involving economic sabotage, upon a finding that it committed
any of the prohibited acts under the law. Furthermore, officials, employees and their
relatives are presumed guilty of illegal recruitment involving economic sabotage
upon such finding that they committed any of the said prohibited acts.
The respondent further argued that the 90-day period in Section 10, paragraph (1)
within which a labor arbiter should decide a money claim is relatively short, and
could deprive licensed and registered recruiters of their right to due process. The
period within which the summons and the complaint would be served on foreign

employees and, thereafter, the filing of the answer to the complaint would take
more than 90 days. This would thereby shift on local licensed and authorized
recruiters the burden of proving the defense of foreign employers. Furthermore, the
respondent asserted, Section 10, paragraph 2 of the law, which provides for the
joint and several liability of the officers and employees, is a bill of attainder and a
violation of the right of the said corporate officers and employees to due process.
Considering that such corporate officers and employees act with prior approval of
the board of directors of such corporation, they should not be liable, jointly and
severally, for such corporate acts.
The respondent
unconstitutional:

asserted

that

the

following

provisions

of

the

law

are

SEC. 9. Venue. A criminal action arising from illegal recruitment as defined


herein shall be filed with the Regional Trial Court of the province or city where
the offense was committed or where the offended party actually resides at
the time of the commission of the offense: Provided, That the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of other
courts: Provided, however, That the aforestated provisions shall also apply to
those criminal actions that have already been filed in court at the time of the
effectivity of this Act.

SEC. 10. Money Claims. Notwithstanding any provision of law to the


contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.
Sec. 40.
The departments and agencies charged with carrying out the provisions of
this Act shall, within ninety (90) days after the effectiviy of this Act, formulate
the necessary rules and regulations for its effective implementation.
According to the respondent, the said provisions violate Section 5(5), Article VIII of
the Constitution11 because they impair the power of the Supreme Court to
promulgate rules of procedure.
In their answer to the petition, the petitioners alleged, inter alia, that (a) the
respondent has no cause of action for a declaratory relief; (b) the petition was
premature as the rules implementing Rep. Act No. 8042 not having been released as
yet; (c) the assailed provisions do not violate any provisions of the Constitution;
and, (d) the law was approved by Congress in the exercise of the police power of the

State. In opposition to the respondents plea for injunctive relief, the petitioners
averred that:
As earlier shown, the amended petition for declaratory relief is devoid of merit for
failure of petitioner to demonstrate convincingly that the assailed law is
unconstitutional, apart from the defect and impropriety of the petition. One who
attacks a statute, alleging unconstitutionality must prove its invalidity beyond
reasonable doubt (Caleon v. Agus Development Corporation, 207 SCRA 748). All
reasonable doubts should be resolved in favor of the constitutionality of a statute
(People v. Vera, 65 Phil. 56). This presumption of constitutionality is based on the
doctrine of separation of powers which enjoin upon each department a becoming
respect for the acts of the other departments (Garcia vs. Executive Secretary, 204
SCRA 516 [1991]). Necessarily, the ancillary remedy of a temporary restraining
order and/or a writ of preliminary injunction prayed for must fall. Besides, an act of
legislature approved by the executive is presumed to be within constitutional
bounds (National Press Club v. Commission on Elections, 207 SCRA 1).12
After the respective counsels of the parties were heard on oral arguments, the trial
court issued on August 21, 1995, an order granting the petitioners plea for a writ of
preliminary injunction upon a bond of P50,000. The petitioner posted the requisite
bond and on August 24, 1995, the trial court issued a writ of preliminary injunction
enjoining the enforcement of the following provisions of Rep. Act No. 8042 pending
the termination of the proceedings:
Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to
(m), and pars. 15 & 16; Section 7, subsections (a) & (b); Section 8; Section 9;
Section 10; pars. 1 & 2; Section 11; and Section 40 of Republic Act No. 8042,
otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.
13
The petitioners filed a petition for certiorari with the Court of Appeals assailing the
order and the writ of preliminary injunction issued by the trial court on the following
grounds:
1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of
its member-agencies to be protected by the injunctive relief and/or violation
of said rights by the enforcement of the assailed sections of R.A. 8042;
2. Respondent Judge fixed a P50,000 injunction bond which is grossly
inadequate to answer for the damage which petitioner-officials may sustain,
should respondent ARCO-PHIL. be finally adjudged as not being entitled
thereto.14
The petitioners asserted that the respondent is not
petitioner in the trial court. It is inconceivable how the
non-profit corporation, could sustain direct injury as a
the law. They argued that if, at all, any damage would

the real party-in-interest as


respondent, a non-stock and
result of the enforcement of
result in the implementation

of the law, it is the licensed and registered recruitment agencies and/or the
unskilled Filipino migrant workers discriminated against who would sustain the said
injury or damage, not the respondent. The respondent, as petitioner in the trial
court, was burdened to adduce preponderant evidence of such irreparable injury,
but failed to do so. The petitioners further insisted that the petition a quo was
premature since the rules and regulations implementing the law had yet to be
promulgated when such petition was filed. Finally, the petitioners averred that the
respondent failed to establish the requisites for the issuance of a writ of preliminary
injunction against the enforcement of the law and the rules and regulations issued
implementing the same.
On December 5, 1997, the appellate court came out with a four-page decision
dismissing the petition and affirming the assailed order and writ of preliminary
injunction issued by the trial court. The appellate court, likewise, denied the
petitioners motion for reconsideration of the said decision.
The petitioners now come to this Court in a petition for review on certiorari on the
following grounds:
1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or
that of its member-agencies to be protected by the injunctive relief and/or
violation of said rights by the enforcement of the assailed sections of R.A.
8042;
2. The P50,000 injunction bond fixed by the court a quo and sustained by the
Court of Appeals is grossly inadequate to answer for the damage which
petitioners-officials may sustain, should private respondent ARCO-PHIL. be
finally adjudged as not being entitled thereto. 15
On February 16, 1998, this Court issued a temporary restraining order enjoining the
respondents from enforcing the assailed order and writ of preliminary injunction.
The Issues
The core issue in this case is whether or not the trial court committed grave abuse
of its discretion amounting to excess or lack of jurisdiction in issuing the assailed
order and the writ of preliminary injunction on a bond of onlyP50,000 and whether
or not the appellate court erred in affirming the trial courts order and the writ of
preliminary injunction issued by it.
The petitioners contend that the respondent has no locus standi. It is a non-stock,
non-profit organization; hence, not the real party-in-interest as petitioner in the
action. Although the respondent filed the petition in the Regional Trial Court in
behalf of licensed and registered recruitment agencies, it failed to adduce in
evidence a certified copy of its Articles of Incorporation and the resolutions of the
said members authorizing it to represent the said agencies in the proceedings.
Neither is the suit of the respondent a class suit so as to vest in it a personality to

assail Rep. Act No. 8042; the respondent is service-oriented while the recruitment
agencies it purports to represent are profit-oriented. The petitioners assert that the
law is presumed constitutional and, as such, the respondent was burdened to make
a case strong enough to overcome such presumption and establish a clear right to
injunctive relief.
The petitioners bewail the P50,000 bond fixed by the trial court for the issuance of a
writ of preliminary injunction and affirmed by the appellate court. They assert that
the amount is grossly inadequate to answer for any damages that the general
public may suffer by reason of the non-enforcement of the assailed provisions of the
law. The trial court committed a grave abuse of its discretion in granting the
respondents plea for injunctive relief, and the appellate court erred in affirming the
order and the writ of preliminary injunction issued by the trial court.
The respondent, for its part, asserts that it has duly established its locus standi and
its right to injunctive relief as gleaned from its pleadings and the appendages
thereto. Under Section 5, Rule 58 of the Rules of Court, it was incumbent on the
petitioners, as respondents in the RTC, to show cause why no injunction should
issue. It avers that the injunction bond posted by the respondent was more than
adequate to answer for any injury or damage the petitioners may suffer, if any, by
reason of the writ of preliminary injunction issued by the RTC. In any event, the
assailed provisions of Rep. Act No. 8042 exposed its members to the immediate and
irreparable damage of being deprived of their right to a livelihood without due
process, a property right protected under the Constitution.
The respondent contends that the commendable purpose of the law to eradicate
illegal recruiters should not be done at the expense and to the prejudice of licensed
and authorized recruitment agencies. The writ of preliminary injunction was
necessitated by the great number of duly licensed recruitment agencies that had
stopped or suspended their business operations for fear that their officers and
employees would be indicted and prosecuted under the assailed oppressive penal
provisions of the law, and meted excessive penalties. The respondent, likewise,
urges that the Court should take judicial notice that the processing of deployment
papers of overseas workers have come to a virtual standstill at the POEA.
The Courts Ruling
The petition is meritorious.
The Respondent Has Locus Standi
To File the Petition in the RTC in Representation of the Eleven Licensed and
Registered Recruitment Agencies Impleaded in the Amended Petition
The modern view is that an association has standing to complain of injuries to its
members. This view fuses the legal identity of an association with that of its
members.16 An association has standing to file suit for its workers despite its lack of

direct interest if its members are affected by the action. An organization has
standing to assert the concerns of its constituents. 17
In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on
Elections,18 we held that standing jus tertii would be recognized only if it can be
shown that the party suing has some substantial relation to the third party, or that
the right of the third party would be diluted unless the party in court is allowed to
espouse the third partys constitutional claims.
In this case, the respondent filed the petition for declaratory relief under Rule 64 of
the Rules of Court for and in behalf of its eleven (11) licensed and registered
recruitment agencies which are its members, and which approved separate
resolutions expressly authorizing the respondent to file the said suit for and in their
behalf. We note that, under its Articles of Incorporation, the respondent was
organized for the purposes inter alia of promoting and supporting the growth and
development of the manpower recruitment industry, both in the local and
international levels; providing, creating and exploring employment opportunities for
the exclusive benefit of its general membership; enhancing and promoting the
general welfare and protection of Filipino workers; and, to act as the representative
of any individual, company, entity or association on matters related to the
manpower recruitment industry, and to perform other acts and activities necessary
to accomplish the purposes embodied therein. The respondent is, thus, the
appropriate party to assert the rights of its members, because it and its members
are in every practical sense identical. The respondent asserts that the assailed
provisions violate the constitutional rights of its members and the officers and
employees thereof. The respondent is but the medium through which its individual
members seek to make more effective the expression of their voices and the
redress of their grievances.19
However, the respondent has no locus standi to file the petition for and in behalf of
unskilled workers. We note that it even failed to implead any unskilled workers in its
petition. Furthermore, in failing to implead, as parties-petitioners, the eleven
licensed and registered recruitment agencies it claimed to represent, the
respondent failed to comply with Section 2 of Rule 63 20 of the Rules of Court.
Nevertheless, since the eleven licensed and registered recruitment agencies for
which the respondent filed the suit are specifically named in the petition, the
amended petition is deemed amended to avoid multiplicity of suits. 21
The Assailed Order and Writ of
Preliminary Injunction Is Mooted
By Case Law
The respondent justified its plea for injunctive relief on the allegation in its amended
petition that its members are exposed to the immediate and irreparable danger of
being deprived of their right to a livelihood and other constitutional rights without

due process, on its claim that a great number of duly licensed recruitment agencies
have stopped or suspended their operations for fear that (a) their officers and
employees would be prosecuted under the unjust and unconstitutional penal
provisions of Rep. Act No. 8042 and meted equally unjust and excessive penalties,
including life imprisonment, for illegal recruitment and large scale illegal
recruitment without regard to whether the recruitment agencies involved are
licensed and/or authorized; and, (b) if the members of the respondent, which are
licensed and authorized, decide to continue with their businesses, they face the
stigma and the curse of being labeled "illegal recruiters." In granting the
respondents plea for a writ of preliminary injunction, the trial court held, without
stating the factual and legal basis therefor, that the enforcement of Rep. Act No.
8042, pendente lite, would cause grave and irreparable injury to the respondent
until the case is decided on its merits.
We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the
Court had, in a catena of cases, applied the penal provisions in Section 6, including
paragraph (m) thereof, and the last two paragraphs therein defining large scale
illegal recruitment committed by officers and/or employees of recruitment agencies
by themselves and in connivance with private individuals, and imposed the
penalties provided in Section 7 thereof, including the penalty of life
imprisonment.22 The Informations therein were filed after preliminary investigations
as provided for in Section 11 of Rep. Act No. 8042 and in venues as provided for in
Section 9 of the said act. InPeople v. Chowdury,23 we held that illegal recruitment is
a crime of economic sabotage and must be enforced.
In People v. Diaz,24 we held that Rep. Act No. 8042 is but an amendment of the
Labor Code of the Philippines and is not an ex-post facto law because it is not
applied retroactively. In JMM Promotion and Management, Inc. v. Court of
Appeals,25 the issue of the extent of the police power of the State to regulate a
business, profession or calling vis--vis the equal protection clause and the nonimpairment clause of the Constitution were raised and we held, thus:
A profession, trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work and
the right to make a living because these rights are property rights, the
arbitrary and unwarranted deprivation of which normally constitutes an
actionable wrong.
Nevertheless, no right is absolute, and the proper regulation of a profession,
calling, business or trade has always been upheld as a legitimate subject of a
valid exercise of the police power by the state particularly when their conduct
affects either the execution of legitimate governmental functions, the
preservation of the State, the public health and welfare and public morals.
According to the maxim, sic utere tuo ut alienum non laedas, it must of
course be within the legitimate range of legislative action to define the mode
and manner in which every one may so use his own property so as not to
pose injury to himself or others.

In any case, where the liberty curtailed affects at most the rights of property,
the permissible scope of regulatory measures is certainly much wider. To
pretend that licensing or accreditation requirements violates the due process
clause is to ignore the settled practice, under the mantle of the police power,
of regulating entry to the practice of various trades or professions.
Professionals leaving for abroad are required to pass rigid written and
practical exams before they are deemed fit to practice their trade. Seamen
are required to take tests determining their seamanship. Locally, the
Professional Regulation Commission has begun to require previously licensed
doctors and other professionals to furnish documentary proof that they had
either re-trained or had undertaken continuing education courses as a
requirement for renewal of their licenses. It is not claimed that these
requirements pose an unwarranted deprivation of a property right under the
due process clause. So long as professionals and other workers meet
reasonable regulatory standards no such deprivation exists.
Finally, it is a futile gesture on the part of petitioners to invoke the nonimpairment clause of the Constitution to support their argument that the
government cannot enact the assailed regulatory measures because they
abridge the freedom to contract. In Philippine Association of Service
Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the
Constitution must yield to the loftier purposes targeted by the
government." Equally important, into every contract is read provisions of
existing law, and always, a reservation of the police power for so long as the
agreement deals with a subject impressed with the public welfare.
A last point. Petitioners suggest that the singling out of entertainers and
performing artists under the assailed department orders constitutes class
legislation which violates the equal protection clause of the Constitution. We
do not agree.
The equal protection clause is directed principally against undue favor and
individual or class privilege. It is not intended to prohibit legislation which is
limited to the object to which it is directed or by the territory in which it is to
operate. It does not require absolute equality, but merely that all persons be
treated alike under like conditions both as to privileges conferred and
liabilities imposed. We have held, time and again, that the equal protection
clause of the Constitution does not forbid classification for so long as such
classification is based on real and substantial differences having a reasonable
relation to the subject of the particular legislation. If classification is germane
to the purpose of the law, concerns all members of the class, and applies
equally to present and future conditions, the classification does not violate
the equal protection guarantee.26
The validity of Section 6 of R.A. No. 8042 which provides that employees of
recruitment agencies may be criminally liable for illegal recruitment has been
upheld in People v. Chowdury:27

As stated in the first sentence of Section 6 of RA 8042, the persons who may
be held liable for illegal recruitment are the principals, accomplices and
accessories. An employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with his employer, if it is
shown that he actively and consciously participated in illegal recruitment. It
has been held that the existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally causes the
corporation to commit a crime. The corporation obviously acts, and can act,
only by and through its human agents, and it is their conduct which the law
must deter. The employee or agent of a corporation engaged in unlawful
business naturally aids and abets in the carrying on of such business and will
be prosecuted as principal if, with knowledge of the business, its purpose and
effect, he consciously contributes his efforts to its conduct and promotion,
however slight his contribution may be. 28
By its rulings, the Court thereby affirmed the validity of the assailed penal and
procedural provisions of Rep. Act No. 8042, including the imposable penalties
therefor. Until the Court, by final judgment, declares that the said provisions are
unconstitutional, the enforcement of the said provisions cannot be enjoined.
The RTC Committed Grave Abuse of Its Discretion Amounting to Excess or Lack of
Jurisdiction in Issuing the Assailed Order and the Writ of Preliminary Injunction
The matter of whether to issue a writ of preliminary injunction or not is addressed to
the sound discretion of the trial court. However, if the court commits grave abuse of
its discretion in issuing the said writ amounting to excess or lack of jurisdiction, the
same may be nullified via a writ of certiorari and prohibition.
In Social Security Commission v. Judge Bayona, 29 we ruled that a law is presumed
constitutional until otherwise declared by judicial interpretation. The suspension of
the operation of the law is a matter of extreme delicacy because it is an
interference with the official acts not only of the duly elected representatives of the
people but also of the highest magistrate of the land.
In Younger v. Harris, Jr.,30 the Supreme Court of the United States emphasized, thus:
Federal injunctions against state criminal statutes, either in their entirety or
with respect to their separate and distinct prohibitions, are not to be granted
as a matter of course, even if such statutes are unconstitutional. No citizen or
member of the community is immune from prosecution, in good faith, for his
alleged criminal acts. The imminence of such a prosecution even though
alleged to be unauthorized and, hence, unlawful is not alone ground for relief
in equity which exerts its extraordinary powers only to prevent irreparable
injury to the plaintiff who seeks its aid. 752 Beal v. Missouri Pacific Railroad
Corp., 312 U.S. 45, 49, 61 S.Ct. 418, 420, 85 L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:

"It does not appear from the record that petitioners have been threatened
with any injury other than that incidental to every criminal proceeding
brought lawfully and in good faith " 319 U.S., at 164, 63 S.Ct., at 881. 31
The possible unconstitutionality of a statute, on its face, does not of itself justify an
injunction against good faith attempts to enforce it, unless there is a showing of bad
faith, harassment, or any other unusual circumstance that would call for equitable
relief.32 The "on its face" invalidation of statutes has been described as "manifestly
strong medicine," to be employed "sparingly and only as a last resort," and is
generally disfavored.33
To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed
to be unconstitutional, the party must establish that it will suffer irreparable harm in
the absence of injunctive relief and must demonstrate that it is likely to succeed on
the merits, or that there are sufficiently serious questions going to the merits and
the balance of hardships tips decidedly in its favor. 34 The higher standard reflects
judicial deference toward "legislation or regulations developed through
presumptively reasoned democratic processes." Moreover, an injunction will alter,
rather than maintain, the status quo, or will provide the movant with substantially
all the relief sought and that relief cannot be undone even if the defendant prevails
at a trial on the merits. 35 Considering that injunction is an exercise of equitable relief
and authority, in assessing whether to issue a preliminary injunction, the courts
must sensitively assess all the equities of the situation, including the public
interest.36 In litigations between governmental and private parties, courts go much
further both to give and withhold relief in furtherance of public interest than they
are accustomed to go when only private interests are involved. 37 Before the plaintiff
may be entitled to injunction against future enforcement, he is burdened to show
some substantial hardship.38
The fear or chilling-effect of the assailed penal provisions of the law on the
members of the respondent does not by itself justify prohibiting the State from
enforcing them against those whom the State believes in good faith to be
punishable under the laws:
Just as the incidental "chilling effect" of such statutes does not
automatically render them unconstitutional, so the chilling effect that
admittedly can result from the very existence of certain laws on the statute
books does not in itself justify prohibiting the State from carrying out the
important and necessary task of enforcing these laws against socially harmful
conduct that the State believes in good faith to be punishable under its laws
and the Constitution.39
It must be borne in mind that subject to constitutional limitations, Congress is
empowered to define what acts or omissions shall constitute a crime and to
prescribe punishments therefor.40 The power is inherent in Congress and is part of
the sovereign power of the State to maintain peace and order. Whatever views may
be entertained regarding the severity of punishment, whether one believes in its

efficiency or its futility, these are peculiarly questions of legislative policy. 41 The
comparative gravity of crimes and whether their consequences are more or less
injurious are matters for the State and Congress itself to determine. 42 Specification
of penalties involves questions of legislative policy. 43
Due process prohibits criminal stability from shifting the burden of proof to the
accused, punishing wholly passive conduct, defining crimes in vague or overbroad
language and failing to grant fair warning of illegal conduct. 44Class legislation is
such legislation which denies rights to one which are accorded to others, or inflicts
upon one individual a more severe penalty than is imposed upon another in like
case offending.45 Bills of attainder are legislative acts which inflict punishment on
individuals or members of a particular group without a judicial trial. Essential to a
bill of attainder are a specification of certain individuals or a group of individuals,
the imposition of a punishment, penal or otherwise, and the lack of judicial trial. 46
Penalizing unlicensed and licensed recruitment agencies and their officers and
employees and their relatives employed in government agencies charged with the
enforcement of the law for illegal recruitment and imposing life imprisonment for
those who commit large scale illegal recruitment is not offensive to the Constitution.
The accused may be convicted of illegal recruitment and large scale illegal
recruitment only if, after trial, the prosecution is able to prove all the elements of
the crime charged.47
The possibility that the officers and employees of the recruitment agencies, which
are members of the respondent, and their relatives who are employed in the
government agencies charged in the enforcement of the law, would be indicted for
illegal recruitment and, if convicted sentenced to life imprisonment for large scale
illegal recruitment, absent proof of irreparable injury, is not sufficient on which to
base the issuance of a writ of preliminary injunction to suspend the enforcement of
the penal provisions of Rep. Act No. 8042 and avert any indictments under the
law.48 The normal course of criminal prosecutions cannot be blocked on the basis of
allegations which amount to speculations about the future. 49
There is no allegation in the amended petition or evidence adduced by the
respondent that the officers and/or employees of its members had been threatened
with any indictments for violations of the penal provisions of Rep. Act No. 8042.
Neither is there any allegation therein that any of its members and/or their officers
and employees committed any of the acts enumerated in Section 6(a) to (m) of the
law for which they could be indicted. Neither did the respondent adduce any
evidence in the RTC that any or all of its members or a great number of other duly
licensed and registered recruitment agencies had to stop their business operations
because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042. The
respondent merely speculated and surmised that licensed and registered
recruitment agencies would close shop and stop business operations because of the
assailed penal provisions of the law. A writ of preliminary injunction to enjoin the
enforcement of penal laws cannot be based on such conjectures or speculations.
The Court cannot take judicial notice that the processing of deployment papers of

overseas workers have come to a virtual standstill at the POEA because of the
assailed provisions of Rep. Act No. 8042. The respondent must adduce evidence to
prove its allegation, and the petitioners accorded a chance to adduce controverting
evidence.
The respondent even failed to adduce any evidence to prove irreparable injury
because of the enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or
apprehension that, because of time constraints, its members would have to defend
foreign employees in cases before the Labor Arbiter is based on speculations. Even
if true, such inconvenience or difficulty is hardly irreparable injury.
The trial court even ignored the public interest involved in suspending the
enforcement of Rep. Act No. 8042 vis--vis the eleven licensed and registered
recruitment agencies represented by the respondent. In People v. Gamboa, 50 we
emphasized the primary aim of Rep. Act No. 8042:
Preliminarily, the proliferation of illegal job recruiters and syndicates preying
on innocent people anxious to obtain employment abroad is one of the
primary considerations that led to the enactment of The Migrant Workers and
Overseas Filipinos Act of 1995. Aimed at affording greater protection to
overseas Filipino workers, it is a significant improvement on existing laws in
the recruitment and placement of workers for overseas employment.
Otherwise known as the Magna Carta of OFWs, it broadened the concept of
illegal recruitment under the Labor Code and provided stiffer penalties
thereto, especially those that constitute economic sabotage, i.e., Illegal
Recruitment in Large Scale and Illegal Recruitment Committed by a
Syndicate.51
By issuing the writ of preliminary injunction against the petitioners sans any
evidence, the trial court frustrated, albeit temporarily, the prosecution of illegal
recruiters and allowed them to continue victimizing hapless and innocent people
desiring to obtain employment abroad as overseas workers, and blocked the
attainment of the salutary policies52 embedded in Rep. Act No. 8042. It bears
stressing that overseas workers, land-based and sea-based, had been remitting to
the Philippines billions of dollars which over the years had propped the economy.
In issuing the writ of preliminary injunction, the trial court considered paramount
the interests of the eleven licensed and registered recruitment agencies
represented by the respondent, and capriciously overturned the presumption of the
constitutionality of the assailed provisions on the barefaced claim of the respondent
that the assailed provisions of Rep. Act No. 8042 are unconstitutional. The trial court
committed a grave abuse of its discretion amounting to excess or lack of jurisdiction
in issuing the assailed order and writ of preliminary injunction. It is for this reason
that the Court issued a temporary restraining order enjoining the enforcement of
the writ of preliminary injunction issued by the trial court.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed


decision of the appellate court isREVERSED AND SET ASIDE. The Order of the
Regional Trial Court dated August 21, 1995 in Civil Case No. Q-95-24401 and the
Writ of Preliminary Injunction issued by it in the said case on August 24, 1995
are NULLIFIED. No costs.
SO ORDERED.
Puno*, Quisumbing**, Austria-Martinez, and Tinga, JJ., concur.

Mabayo Farm v. CA, G.R. No. 140058, August 1, 2002 HIYAS


G.R. No. 140058

August 1, 2002

MABAYO FARMS, INC., herein represented by its President MRS. RORAIMA


SILVA, petitioner,
vs.
HON. COURT OF APPEALS and ANTONIO SANTOS, respondents.
RESOLUTION
QUISUMBING, J.:
This petition for review seeks to reverse the decision 1 promulgated on August 27,
1999, of the Court of Appeals in CA-G.R. SP No. 51375. The appellate court enjoined
the enforcement of the writ of preliminary injunction dated April 14, 1998, issued by
the Regional Trial Court of Balanga, Bataan, Branch 1, in Civil Case No. 6695 against
private respondent, Antonio Santos.
The factual antecedents of this case are as follows:
On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo
Florida, Cornelio Pilipino and Severino Vistan, lawful possessors of Lot 1379 of the
Morong, Bataan Cadastre. Lot 1379 consists of 144 hectares. Domingo, Florida,
Pilipino and Vistan through their forebears and by themselves had been in open,
notorious, and exclusive possession of portions of Lot 1379 since 1933 in the
concept of owners. The Bureau then directed them to confirm their titles over the
property by filing the appropriate applications for the portions of the property
respectively occupied by them.1wphi1.nt
In October 1970, petitioner bought the respective portions of Domingo, Florida,
Pilipino and Vistan, totaling 69,932 square meters and entered into a compromise
settlement with six other persons occupying the property, whose applications had
been rejected by the Bureau. Petitioner then filed an application for land registration
docketed as LRC Cad. Rec. No. N-209 with the then Court of First Instance of Bataan,

Branch 1. The application was contested by several oppositors, among them the
heirs of one Toribio Alejandro.
On December 20, 1991, the trial court decided the land registration case in
petitioners favor. The losing parties appealed to the Court of Appeals, where the
case was docketed as CA-G.R. CV No. 40452. On March 14, 2000, the appellate
court affirmed the lower courts decision.2
In June 1997, a group of occupants entered the land, destroyed the fences and
drove away livestock owned by petitioner.
On October 9, 1997, petitioner filed a complaint for injunction with damages, with a
prayer for a temporary restraining order, docketed as Civil Case No. 6695, with the
RTC of Balanga, Bataan. Named as defendants were Juanito Infante, Domingo
Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe, and Richard Doe.
The trial court issued the temporary restraining order (TRO) and on January 16,
1998, the sheriff served copies on the defendants. The sheriff accompanied
petitioners president to the property where they found five (5) persons cultivating
the land. The latter refused to give their names or receive copies of the TRO. They
claimed that they were only farm workers of a certain Antonio Santos who allegedly
owned the land.3
On April 14, 1998, the trial court issued a writ of preliminary injunction restraining
the defendants or persons acting on their behalf from entering and cultivating the
disputed property. The aforementioned writ was also served upon respondent who
was occupying a portion of Lot No. 1379.4
On February 24, 1999, private respondent filed a special civil action for certiorari
docketed as CA-G.R. SP No. 51375 with the Court of Appeals. Private respondent
averred that he only learned about the writ of preliminary injunction on February 16,
1999, when he secured a copy of the order. He claimed that he was an innocent
purchaser for value of the property from Francisco, Armando, and Conchita, all
surnamed Alejandro and the injunction prevented him from using his property. He
alleged that he was not a party to Civil Case No. 6695 and that it was grave abuse
of discretion for the trial court to enforce the injunctive writ against him since it did
not have jurisdiction over him.
On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in private
respondents 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
CONSTITUTIONAL RIGHT TO BE HEARD.

WAS

DEPRIVED

OF

HIS

B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL PROCEDURE 6 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 petitioners
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 petitioners 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."7The persons specifically enjoined in the order were
the defendants in Civil Case No. 6695 or persons acting in their stead. Petitioner
itself admitted that private respondent was not a defendant in Civil Case No. 6695
since "at the institution of the case in 1997, he (private respondent) did not have a
right over any portion of petitioners lot." 8 Neither was he a trespasser then.9 Also,
nothing in the records indicate that private respondent was acting on behalf of any
of the defendants. Taking all these into consideration, we must hold that the writ of
preliminary injunction thus cannot be made to apply to private respondent.

A preliminary injunction is an order granted at any stage of an action prior to final


judgment, requiring a person to refrain from a particular act. 10 As an ancillary or
preventive remedy, a writ of preliminary injunction may therefore be resorted to by
a party to protect or preserve his rights and for no other purpose during the
pendency of the principal action. 11 Its object is to preserve the status quo until the
merits of the case can be heard. 12 It is not a cause of action in itself but merely a
provisional remedy, an adjunct to a main suit. 13 Thus, a person who is not a party in
the main suit, like private respondent in the instant case, cannot be bound by an
ancillary writ, such as the writ of preliminary injunction issued against the
defendants in Civil Case No. 6695. He cannot be affected by any proceeding to
which he is a stranger.14
Second, petitioner contends that the Court of Appeals erred when it observed that
petitioner should have impleaded private respondent as defendant in Civil Case No.
6695 pursuant to Section 11, Rule 3 of the 1997 Rules of Civil Procedure. 15 Instead,
private respondent should have intervened in Civil Case No. 6695 to protect his
rights. Petitioner avers that at the time the injunctive writ was issued, it had already
rested its case and to require it to amend its complaint to include private
respondent was too late.
Private respondent counters that there was no reason why Section 11, Rule 3 of the
1997 Rules of Civil Procedure should not be made to apply to Civil Case No. 6695.
He argues that contrary to petitioners posture, his inclusion as a defendant in Civil
Case No. 6695 is procedurally correct since no final judgment had yet been
rendered in said case. Moreover, he avers that petitioner cannot insist that private
respondent be vigilant in protecting his rights by intervening in Civil Case No.
6695.1wphi1.nt
We agree with private respondent. First, private respondent had no duty to
intervene in the proceedings in Civil Case No. 6695. Intervention in an action is
neither compulsory nor mandatory but only optional and permissive. 16Second, to
warrant intervention, two requisites must concur: (a) the movant has a legal interest
in the matter in litigation,17 and (b) intervention must not unduly delay or prejudice
the adjudication of the rights of the parties 18nor should the claim of the intervenor
be capable of being properly decided in a separate proceeding. 19 The interest, which
entitles a person to intervene in a suit, must involve the matter in litigation and of
such direct and immediate character that the intervenor will either gain or lose by
the direct legal operation and effect of the judgment. 20 Civil Case No. 6695 was an
action for permanent injunction and damages. As a stranger to the case, private
respondent had neither legal interest in a permanent injunction nor an interest on
the damages to be imposed, if any, in Civil Case No. 6695. To allow him to intervene
would have unnecessarily complicated and prolonged the case.
We agree with the Court of Appeals that to make the injunctive writ applicable
against private respondent, petitioner should have impleaded the latter as an
additional defendant in Civil Case No. 6695. Petitioners insistence that it had rested
its case and hence was too late to include defendant finds no support in Section 11.

The rule categorically provides that "Parties may be dropped or added by order of
the court on motion of any party or on its own initiative at any stage of the
action (stress supplied) and on such terms as are just." 21 We find it inexplicable why
petitioner pointedly resisted the advice of the appellate court to implead private
respondent as an additional defendant in Civil Case No. 6695.
WHEREFORE, the instant petition is DENIED and the assailed decision of the Court
of Appeals in CA-G.R. SP No. 51375 AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Bellosillo Mendoza, and Corona, JJ., concur.

Senate Blue Ribbon Committee v. Majuducon, G.R. No. 13378, July 29, 2003
BELLEZA
EN BANC

[G.R. No. 136760. July 29, 2003]


THE SENATE BLUE RIBBON COMMITTEE, represented by its Chairman,
SENATOR AQUILINO Q. PIMENTEL, JR., petitioner, vs. HON. JOSE B.
MAJADUCON, Presiding Judge of Branch 23, Regional Trial Court of
General Santos City, and ATTY. NILO J. FLAVIANO, respondents.

[G.R. No. 138378. July 29, 2003]


AQUILINO Q. PIMENTEL, JR., petitioner, vs. THE HONORABLE JOSE S.
MAJADUCON, in his capacity as Presiding Judge of Branch 23,
Regional Trial Court, General Santos City, respondent.
DECISION
YNARES-SANTIAGO, J.:
For resolution are two consolidated petitions: (a) G.R. No. 136760, for certiorari,
prohibition, mandamus and preliminary injunction, assailing the resolution dated
November 11, 1998 of Judge Jose S. Majaducon of the Regional Trial Court of
General Santos City, Branch 23, which denied the Senate Blue Ribbon Committees
motion to dismiss the petition for prohibition, injunction with writ of preliminary
injunction filed by private respondent Atty. Nilo J. Flaviano; and (b) G.R. No.
138378, for review of the resolution dated April 15, 1999 of respondent Judge
Majaducon declaring petitioner Senator Aquilino Q. Pimentel, Jr. guilty of indirect
contempt of court.

The antecedent facts are as follows:


G.R. No. 136760:
On August 28, 1998, Senator Blas F. Ople filed Senate Resolution No. 157
directing the Committee on National Defense and Security to conduct an inquiry, in
aid of legislation, into the charges of then Defense Secretary Orlando Mercado that
a group of active and retired military officers were organizing a coup detat to
prevent the administration of then President Joseph Estrada from probing alleged
fund irregularities in the Armed Forces of the Philippines. [1]
On the same date, Senator Vicente C. Sotto III also filed Resolution No. 160,
directing the appropriate senate committee to conduct an inquiry, in aid of
legislation, into the alleged mismanagement of the funds and investment portfolio
of the Armed Forces Retirement and Separation Benefits System (AFP-RSBS) xxx. [2]
The Senate President referred the two resolutions to the Committee on
Accountability of Public Officers and Investigations (Blue Ribbon Committee) and the
Committee on National Defense and Security.
During the public hearings conducted by the Senate Blue Ribbon Committee
(hereafter called the Committee), it appeared that the AFP-RSBS purchased a lot in
General Santos City, designated as Lot X, MR-1160, for P10,500.00 per square
meter from private respondent Atty. Nilo J. Flaviano. However, the deed of sale filed
with the Register of Deeds indicated that the purchase price of the lot was only
P3,000.00 per square meter.
The Committee thereafter caused the service of a subpoena to respondent Atty.
Flaviano, directing him to appear and testify before it. Respondent refused to
appear at the hearing.Instead, he filed a petition for prohibition and preliminary
injunction with prayer for temporary restraining order with the Regional Trial Court
of General Santos City, Branch 23, which was docketed as SP Civil Case No. 496.
On October 21, 1998, the trial court issued a Temporary Restraining Order
directing the Committee to CEASE and DESIST from proceeding with the inquiry in
P.S. 160 particularly in General Santos City and/or anywhere in Region XI or Manila
on matters affecting the patenting/titling and sale of Lot X, MR-1160-D to AFP-RSBS,
and from issuing subpoenas to witnesses from Region XI, particularly from General
Santos City, pending the hearing of the petition for prohibition and injunction. [3]
On November 5, 1998, the Committee filed a motion to dismiss the petition on
the grounds of (a) lack of jurisdiction, and (b) failure to state a valid cause of
action. It further argued that the issuance of the Temporary Restraining Order was
invalid for violating the rule against ex-parte issuance thereof; and that the same
was not enforceable beyond the territorial jurisdiction of the trial court.
On November 11, 1998, the trial court denied petitioners motion to dismiss and
granted the writ of preliminary injunction, thus:
WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is DENIED, and the
WRIT OF PRELIMINARY INJUNCTION is hereby issued against respondent. It is
enjoined from enforcing its subpoenas to petitioner in Region XI to appear and
testify before it in any of its inquiry or investigation anywhere in the Philippines
regarding the acquisition by the AFP-RSBS of Lot X, MR-1160-D, located in General

Santos City. The bond of petitioner filed on October 21, 1998, for P500,000.00 for
the TRO also serves as his bond in this injunction.
SO ORDERED.[4]
Hence, the instant petition for certiorari which was docketed as G.R. No.
136760, alleging that respondent Judge Majaducon committed grave abuse of
discretion and/or acted without or in excess of jurisdiction when he:
I. DENIED PETITIONERS MOTION TO DISMISS THE PETITION FOR
PROHIBITION AND PRELIMINARY INJUNCTION FILED BY PRIVATE
RESPONDENT, ATTY. NILO J. FLAVIANO, AGAINST THE PETITIONER IN SP.
CIVIL CASE NO. 496.
II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE FOR A PERIOD
OF TWENTY (20) DAYS AGAINST THE PETITIONER ON OCTOBER 21,
1998, AND (2) A WRIT OF PRELIMINARY INJUNCTION ON NOVEMBER
11, 1998 ENJOINING THE PETITIONER FROM ENFORCING ITS
SUBPOENAS TO PRIVATE RESPONENT IN REGION XI.
III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE RIBBON IN
GRANTING INJUNCTIVE RELIEF TO PRIVATE RESPONDENT.[5]
G.R. No. 138378:
On January 13, 1999, the newspaper, The Philippine Star published a news
report on the filing by the Committee with this Court of the petition
for certiorari which was docketed as G.R. No. 136760. The news report quoted
portions of the petition filed by the Committee, alleging that Regional Trial Court
Judge Majaducon was guilty of gross ignorance of the rules and procedures when he
issued the temporary restraining order and the writ of preliminary injunction
because, under the principle of separation of powers, courts cannot interfere with
the exercise by the legislature of its authority to conduct investigations in aid of
legislation.[6]
Reacting to the aforesaid news report, respondent Judge Majaducon motu
proprio initiated a charge for indirect contempt of court against Senator Aquilino Q.
Pimentel, Jr., news reporter Perseus Echeminada, Philippine Star publisher Maximo
Soliven, editor-in-chief Ramon J. Farolan, and executive editor Bobby G. dela Cruz,
which was docketed as Special Civil Case No. 496. Judge Majaducon averred that
the news report created in the minds of the reader the impression that he violated
the separation of powers clause of the Constitution and that he was guilty of gross
ignorance of the rules and procedures.
After the respondents submitted their respective answers, a decision was
rendered on April 15, 1999 finding petitioner Pimentel guilty of indirect contempt.
Hence, the instant petition based on the following grounds:
I. THE EXPRESSION GROSS IGNORANCE OF THE RULES OF PROCEDURE OR
GROSS IGNORANCE OF THE LAW IN REFERENCE TO THE
RESPONDENTS EX-PARTE ISSUANCE OF INJUNCTIVE RELIEF IS NOT
PEJORATIVE AS TO CONSTITUTE A GROUND FOR INDIRECT CONTEMPT.

II. THIS HONORABLE COURT ITSELF USES GROSS IGNORANCE OF THE LAW
AND OTHER EXPRESSIONS OF SIMILAR FORCEFUL IMPORT IN
DESCRIBING GROSS AND PALPABLE ERRORS OF JUDGES.
III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE PETITIONER, THE
RESPONDENT JUDGE HAS, IN EFFECT, PREEMPTED THIS HONORABLE
COURT IN RESOLVING THE ISSUES RAISED AGAINST HIM IN G.R. NO.
136760.
IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE RIBBON PETITION IN
G.R. NO. 136760, OR EXCERPTS THEREOF WAS A LEGITIMATE
EXERCISE OF FREEDOM OF EXPRESSION AND OF THE PRESS.
The two petitions, namely, G.R. No. 136760 and G.R. No. 138378, were ordered
consolidated on December 11, 2000.
The issues for resolution in these joint petitions are: (a) whether or not
respondent Judge Jose Majaducon committed grave abuse of discretion when he
dismissed petitioners motion to dismiss the petition for prohibition and issued the
writ of preliminary injunction; and (b) whether or not respondent Judge erred in
convicting petitioner Pimentel of indirect contempt of court.
On the first issue, petitioner Committee contends that courts have no
jurisdiction to restrain Congress from performing its constitutionally vested function
to conduct investigations in aid of legislation, following the principle of separation of
powers. Moreover, the petition filed by respondent Flaviano before the trial court
failed to state a cause of action considering that the legislative inquiry did not deal
with the issuance of the patent and title to Lot X, MR-1160-D in the name of AFPRSBS, which is well within the courts jurisdiction, but with the anomaly in the
purchase thereof, which falls squarely within the ambit of Senate Resolutions Nos.
157[7] and 160.[8]
On the other hand, respondent Flaviano contends that the trial court may
properly intervene into investigations by Congress pursuant to the power of judicial
review vested in it by the Constitution. He avers that he has a valid cause of action
to file the petition for prohibition considering that the Committees investigation will
delve into the validity of the patenting and titling of Lot X, MR-1160-D which, as
admitted by petitioner, falls within the competence of judicial courts. In fact, the
validity of the purchase by AFP-RSBS of the subject lot is already the subject of a
pending action before the Regional Trial Court of General Santos City and the
Ombudsman of Mindanao. Finally, he cites the case of Bengzon v. Senate Blue
Ribbon Committee,[9] and argues that preliminary injunction may issue in cases
pending before administrative bodies such as the Ombudsman or the Office of the
Prosecutor as long as the right to self-incrimination guaranteed by the Bill of Rights
is in danger. Furthermore, an information against him has been filed with the
Sandiganbayan.
We find for petitioner. There is grave abuse of discretion when the respondent
acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of his
judgment, as when the assailed order is bereft of any factual and legal justification.
[10]
In this case, the assailed resolution of respondent Judge Majaducon was issued
without legal basis.

The principle of separation of powers essentially means that legislation belongs


to Congress, execution to the Executive, and settlement of legal controversies to
the Judiciary. Each is prevented from invading the domain of the others. [11] When the
Senate Blue Ribbon Committee served subpoena on respondent Flaviano to appear
and testify before it in connection with its investigation of the alleged misuse and
mismanagement of the AFP-RSBS funds, it did so pursuant to its authority to
conduct inquiries in aid of legislation. This is clearly provided in Article VI, Section
21 of the Constitution, thus:
The Senate or the House of Representatives or any of its respective committees
may conduct inquiries in aid of legislation in accordance with its duly published
rules of procedure. The rights of persons appearing in or affected by such inquiries
shall be respected.
Hence, the Regional Trial Court of General Santos City, or any court for that
matter, had no authority to prohibit the Committee from requiring respondent to
appear and testify before it.
The ruling in Bengzon, cited by respondent, does not apply in this case. We
agree with petitioner Committee that the factual circumstances therein are different
from those in the case at bar. In Bengzon, no intended legislation was involved and
the subject matter of the inquiry was more within the province of the courts rather
than of the legislature. More specifically, the investigation in the said case was an
offshoot of the privilege speech of then Senator Enrile, who urged the Senate to
look into a possible violation of the Anti-Graft and Corrupt Practices Act by the
relatives of then President Corazon Aquino, particularly Mr. Ricardo Lopa, in
connection with the alleged sale of 36 to 39 corporations belonging to Benjamin
Romualdez. On the other hand, there was in this case a clear legislative purpose, as
stated in Senate Resolution No. 160, and the appropriate Senate Committee was
directed to look into the reported misuse and mismanagement of the AFP-RSBS
funds, with the intention of enacting appropriate legislation to protect the rights and
interests of the officers and members of the Armed Forces of the
Philippines. Further, in Bengzon, the validity of the sale of Romualdezs corporations
was pending with the Sandiganbayan when the Senate Blue Ribbon Committee
decided to conduct its investigation. In short, the issue had already been preempted by the court.
In the instant case, the complaint against respondent Flaviano regarding the
anomaly in the sale of Lot X, MR-1160 was still pending before the Office of the
Ombudsman when the Committee served subpoena on him. In other words, no
court had acquired jurisdiction over the matter. Thus, there was as yet no
encroachment by the legislature into the exclusive jurisdiction of another branch of
the government. Clearly, there was no basis for the respondent Judge to apply the
ruling in Bengzon. Hence, the denial of petitioners motion to dismiss the petition for
prohibition amounted to grave abuse of discretion.
In G.R. No. 138378, petitioner, Senator Aquilino Pimentel, Jr., contends that
respondent judge erred in finding him, as representative of the Committee, guilty of
indirect contempt of court under Rule 71, Section 3(d) of the 1997 Rules of Civil
Procedure. According to Pimentel, the phrase gross ignorance of the rules of law and
procedure, which the Committee used in the petition, is not depreciatory, but
merely a description of normal usage in petitions where the acts of lower courts are

challenged before higher judicial bodies. In fact, this Court often uses the phrase in
its decisions to describe judges who commit gross and palpable mistakes in their
interpretation and application of the law. Petitioner further maintains that when the
Committee used the phrase, it did so without malice. Rather, it was only to stress
the unfamiliarity of or disregard by the respondent Judge of a basic rule of
procedure, and to buttress its arguments in support of its petition for certiorari.
Petitioner Pimentel also contends that he had no participation in the publication
in the Philippine Star of excerpts from the Committees petition for certiorari. Even
assuming arguendothat it was within his control, he pointed out that he could not
have prevented the editors and writers of the newspaper from publishing the same,
lest he violate their constitutional right of free expression. Indeed, the report by the
Philippine Star of the filing of the petition and the reproduction of its contents was a
legitimate exercise of press freedom.
Respondent Judge counters that Pimentel was guilty of indirect contempt of
court, first, for causing the publication of the Committees petition in the Philippine
Star notwithstanding that the same was sub judice; second, for making derogatory
remarks in the petition itself which affected the honor and integrity of the
respondent judge and degraded the administration of justice; and third, for making
it appear that an administrative complaint was filed against respondent Judge for
gross ignorance of the law. These, he said, constituted malicious and false report
which obstructed the administration of justice.
Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:
Section 3. Indirect contempt to be punished after charge and hearing. After a
charge in writing has been filed, and an opportunity given to the respondent to
comment thereon within such period as may be fixed by the court and to be heard
by himself or counsel, a person guilty of any of the following acts may be punished
for indirect contempt:
xxxxxxxxx
d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice; x x x.
After deliberating on the parties arguments, we find that petitioner Pimentel is
not guilty of improper conduct which obstructs or degrades the administration of
justice.
Verily, it does not appear that Pimentel caused the publication in the Philippine
Star of the fact of filing of the petition for certiorari by the Committee and the
reproduction of excerpts thereof. He had no right to choose which news articles will
see print in the newspaper. Rather, it is the publisher thereof which decides which
news events will be reported in the broadsheet.In doing so, it is allowed the widest
latitude of choice as to what items should see the light of day so long as they are
relevant to a matter of public interest, pursuant to its right of press freedom. [12]
Respondent Judges allegation that petitioner made it appear that an
administrative complaint was filed against him is without basis. From a careful
perusal of the records, it appears that while the Committee prayed for the
imposition of administrative sanctions against respondent Judge Majaducon for

gross ignorance of the law, no formal administrative complaint was instituted


separately from the petition for certiorari.
Finally, the statement that respondent Judge was grossly ignorant of the rules of
law and procedure does not constitute improper conduct that tends to impede,
obstruct or degrade the administration of justice. As correctly argued by petitioner,
the phrase gross ignorance of the rules of law and procedure is ordinarily found in
administrative complaints and is a necessary description to support a petition which
seeks the annulment of an order of a judge wherein basic legal principles are
disregarded.
In Spouses Bacar v. Judge De Guzman, Jr.,[13] it was held that when the law is so
elementary, not to know it or to act as if a judge does not know it, constitutes gross
ignorance of the law. In this case, there was no showing that petitioner Pimentel, as
representative of the Committee, used the phrase to malign the trial court. Rather,
it was used to express what he believed as a violation of the basic principle of
separation of powers.
In this connection, it bears stressing that the power to declare a person in
contempt of court must be exercised on the preservative, not vindictive principle,
and on the corrective and not retaliatory idea of punishment. [14] This was aptly
expressed in the case of Nazareno v. Barnes:[15]
A judge, as a public servant, should not be so thin-skinned or sensitive as to feel
hurt or offended if a citizen expresses an honest opinion about him which may not
altogether be flattering to him. After all, what matters is that a judge performs his
duties in accordance with the dictates of his conscience and the light that God has
given him. A judge should never allow himself to be moved by pride, prejudice,
passion, or pettiness in the performance of his duties. He should always bear in
mind that the power of the court to punish for contempt should be exercised 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.
WHEREFORE, in view of the foregoing, the petitions docketed as G.R. Nos.
136760 and 138378 are GRANTED. The resolution of the Regional Trial Court of
General Santos City, Branch 23, in Special Civil Case No. 496 dated November 11,
1998, which denied the Senate Blue Ribbon Committees motion to dismiss,
is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the trial
court on November 11, 1998 is DISSOLVED. The resolution dated April 15, 1999,
which declared Senator Aquilino Q. Pimentel, Jr. guilty of indirect contempt of court,
is REVERSED and SET ASIDE. The petition for indirect contempt is ordered
DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Quisumbing, Carpio, AustriaMartinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Sandoval-Gutierrez, J., on official leave.

Southern Cross Cement v. Philippine Cement Manufacturers, G.R. No.


158540, July 8, 2004 LIM
G.R. No. 158540

July 8, 2004

SOUTHERN
CROSS
CEMENT
CORPORATION, petitioner,
vs.
THE PHILIPPINE CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE
DEPARTMENT OF TRADE & INDUSTRY, THE SECRETARY OF THE
DEPARTMENT OF FINANCE, and THE COMMISSIONER OF THE BUREAU OF
CUSTOMS, respondents.

DECISION

TINGA, J.:
"Good fences make good neighbors," so observed Robert Frost, the archetype of
traditional New England detachment. The Frost ethos has been heeded by nations
adjusting to the effects of the liberalized global market. 1 The Philippines, for one,
enacted Republic Act (Rep. Act) No. 8751 (on the imposition of countervailing
duties), Rep. Act No. 8752 (on the imposition of anti-dumping duties) and, finally,
Rep. Act No. 8800, also known as the Safeguard Measures Act ("SMA") 2 soon after it
joined the General Agreement on Tariff and Trade (GATT) and the World Trade
Organization (WTO) Agreement.3
The SMA provides the structure and mechanics for the imposition of emergency
measures, including tariffs, to protect domestic industries and producers from
increased imports which inflict or could inflict serious injury on them. 4 The wisdom
of the policies behind the SMA, however, is not put into question by the petition at
bar. The questions submitted to the Court relate to the means and the procedures
ordained in the law to ensure that the determination of the imposition or nonimposition of a safeguard measure is proper.
Antecedent Facts
Petitioner Southern Cross Cement Corporation ("Southern Cross") is a domestic
corporation engaged in the business of cement manufacturing, production,
importation and exportation. Its principal stockholders are Taiheiyo Cement
Corporation and Tokuyama Corporation, purportedly the largest cement
manufacturers in Japan.5
Private respondent Philippine Cement Manufacturers Corporation 6 ("Philcemcor") is
an association of domestic cement manufacturers. It has eighteen (18)

members,7 per Record. While Philcemcor heralds itself to be an association of


domestic cement manufacturers, it appears that considerable equity holdings, if not
controlling interests in at least twelve (12) of its member-corporations, were
acquired by the three largest cement manufacturers in the world, namely Financiere
Lafarge S.A. of France, Cemex S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland
(formerly Holderbank Financiere Glaris, Ltd., then Holderfin B.V.). 8
On 22 May 2001, respondent Department of Trade and Industry ("DTI") accepted an
application from Philcemcor, alleging that the importation of gray Portland
cement9 in increased quantities has caused declines in domestic production,
capacity utilization, market share, sales and employment; as well as caused
depressed local prices. Accordingly, Philcemcor sought the imposition at first of
provisional, then later, definitive safeguard measures on the import of cement
pursuant to the SMA. Philcemcor filed the application in behalf of twelve (12) of its
member-companies.10
After preliminary investigation, the Bureau of Import Services of the DTI, determined
that critical circumstances existed justifying the imposition of provisional
measures.11 On 7 November 2001, the DTI issued an Order,imposing a provisional
measure equivalent to Twenty Pesos and Sixty Centavos (P20.60) per forty (40)
kilogram bag on all importations of gray Portland cement for a period not exceeding
two hundred (200) days from the date of issuance by the Bureau of Customs (BOC)
of the implementing Customs Memorandum Order.12 The corresponding Customs
Memorandum Order was issued on 10 December 2001, to take effect that same day
and to remain in force for two hundred (200) days. 13
In the meantime, the Tariff Commission, on 19 November 2001, received a request
from the DTI for a formal investigation to determine whether or not to impose a
definitive safeguard measure on imports of gray Portland cement, pursuant to
Section 9 of the SMA and its Implementing Rules and Regulations. A notice of
commencement of formal investigation was published in the newspapers on 21
November 2001. Individual notices were likewise sent to concerned parties, such as
Philcemcor, various importers and exporters, the Embassies of Indonesia, Japan and
Taiwan, contractors/builders associations, industry associations, cement workers'
groups, consumer groups, non-government organizations and concerned
government agencies.14 A preliminary conference was held on 27 November 2001,
attended by several concerned parties, including Southern Cross. 15 Subsequently,
the Tariff Commission received several position papers both in support and against
Philcemcor's application.16 The Tariff Commission also visited the corporate offices
and manufacturing facilities of each of the applicant companies, as well as that of
Southern Cross and two other cement importers. 17
On 13 March 2002, the Tariff Commission issued its Formal Investigation Report
("Report"). Among the factors studied by the Tariff Commission in its Report were
the market share of the domestic industry, 18 production and sales,19 capacity
utilization,20 financial performance and profitability, 21 and return on sales.22 The Tariff
Commission arrived at the following conclusions:
1. The circumstances provided in Article XIX of GATT 1994 need not be
demonstrated since the product under consideration (gray Portland cement)

is not the subject of any Philippine obligation or tariff concession under the
WTO Agreement. Nonetheless, such inquiry is governed by the national
legislation (R.A. 8800) and the terms and conditions of the Agreement on
Safeguards.
2. The collective output of the twelve (12) applicant companies constitutes a
major proportion of the total domestic production of gray Portland cement
and blended Portland cement.
3. Locally produced gray Portland cement and blended Portland cement
(Pozzolan) are "like" to imported gray Portland cement.
4. Gray Portland cement is being imported into the Philippines in increased
quantities, both in absolute terms and relative to domestic production,
starting in 2000. The increase in volume of imports is recent, sudden, sharp
and significant.
5. The industry has not suffered and is not suffering significant overall
impairment in its condition, i.e., serious injury.
6. There is no threat of serious injury that is imminent from imports of gray
Portland cement.
7. Causation has become moot and academic in view of the negative
determination of the elements of serious injury and imminent threat of
serious injury.23
Accordingly, the Tariff Commission made the following recommendation, to wit:
The elements of serious injury and imminent threat of serious injury not
having been established, it is hereby recommended that no definitive general
safeguard measure be imposed on the importation of gray Portland cement. 24
The DTI received the Report on 14 March 2002. After reviewing the report, then DTI
Secretary Manuel Roxas II ("DTI Secretary") disagreed with the conclusion of the
Tariff Commission that there was no serious injury to the local cement industry
caused by the surge of imports. 25 In view of this disagreement, the DTI requested an
opinion from the Department of Justice ("DOJ") on the DTI Secretary's scope of
options in acting on the Commission's recommendations. Subsequently, then DOJ
Secretary Hernando Perez rendered an opinion stating that Section 13 of the SMA
precluded a review by the DTI Secretary of the Tariff Commission's negative finding,
or finding that a definitive safeguard measure should not be imposed. 26
On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the
conclusions of the Tariff Commission, the DTI Secretary noted the DTI's
disagreement with the conclusions. However, he also cited the DOJ Opinion advising
the DTI that it was bound by the negative finding of the Tariff Commission. Thus, he
ruled as follows:

The DTI has no alternative but to abide by the [Tariff] Commission's


recommendations.
IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA
8800 which states:
"In the event of a negative final determination; or if the cash
bond is in excess of the definitive safeguard duty assessed,
the Secretary shall immediately issue, through the Secretary
of Finance, a written instruction to the Commissioner of
Customs, authorizing the return of the cash bond or the
remainder thereof, as the case may be, previously collected as
provisional general safeguard measure within ten (10) days
from the date a final decision has been made; Provided, that
the government shall not be liable for any interest on the
amount to be returned. The Secretary shall not accept for
consideration another petition from the same industry, with
respect to the same imports of the product under
consideration within one (1) year after the date of rendering
such a decision."
The DTI hereby issues the following:
The application for safeguard measures against the importation of gray
Portland cement filed by PHILCEMCOR (Case No. 02-2001) is hereby
denied.27 (Emphasis in the original)
Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days later, it
filed with the Court of Appeals a Petition for Certiorari, Prohibition and
Mandamus28 seeking to set aside the DTI Decision, as well as the Tariff
Commission's Report. Philcemcor likewise applied for a Temporary Restraining
Order/Injunction to enjoin the DTI and the BOC from implementing the
questioned Decision and Report. It prayed that the Court of Appeals direct the DTI
Secretary to disregard the Report and to render judgment independently of the
Report. Philcemcor argued that the DTI Secretary, vested as he is under the law
with the power of review, is not bound to adopt the recommendations of the Tariff
Commission; and, that the Report is void, as it is predicated on a flawed framework,
inconsistent inferences and erroneous methodology. 29
On 10 June 2002, Southern Cross filed its Comment.30 It argued that the Court of
Appeals had no jurisdiction over Philcemcor's Petition, for it is on the Court of Tax
Appeals ("CTA") that the SMA conferred jurisdiction to review rulings of the
Secretary in connection with the imposition of a safeguard measure. It likewise
argued that Philcemcor's resort to the special civil action of certiorari is improper,
considering that what Philcemcor sought to rectify is an error of judgment and not
an error of jurisdiction or grave abuse of discretion, and that a petition for review
with the CTA was available as a plain, speedy and adequate remedy. Finally,
Southern Cross echoed the DOJ Opinion that Section 13 of the SMA precludes a
review by the DTI Secretary of a negative finding of the Tariff Commission.

After conducting a hearing on 19 June 2002 on Philcemcor's application for


preliminary injunction, the Court of Appeals' Twelfth Division 31 granted the writ
sought in its Resolution dated 21 June 2002.32 Seven days later, on 28 June 2002,
the two-hundred (200)-day period for the imposition of the provisional measure
expired. Despite the lapse of the period, the BOC continued to impose the
provisional measure on all importations of Portland cement made by Southern
Cross. The uninterrupted assessment of the tariff, according to Southern Cross,
worked to its detriment to the point that the continued imposition would eventually
lead to its closure.33
Southern Cross timely filed a Motion for Reconsideration of the Resolution on 9
September 2002. Alleging that Philcemcor was not entitled to provisional relief,
Southern Cross likewise sought a clarificatory order as to whether the grant of the
writ of preliminary injunction could extend the earlier imposition of the provisional
measure beyond the two hundred (200)-day limit imposed by law. The appeals'
court failed to take immediate action on Southern Cross's motion despite the four
(4) motions for early resolution the latter filed between September of 2002 and
February of 2003. After six (6) months, on 19 February 2003, the Court of Appeals
directed
Philcemcor
to
comment
on
Southern
Cross's Motion
for
Reconsideration.34 After Philcemcor filed its Opposition35 on 13 March 2003,
Southern Cross filed another set of four (4) motions for early resolution.
Despite the efforts of Southern Cross, the Court of Appeals failed to directly resolve
the Motion for Reconsideration. Instead, on 5 June 2003, it rendered
a Decision,36 granting in part Philcemcor's petition. The appellate court ruled that it
had jurisdiction over the petition for certiorari since it alleged grave abuse of
discretion. It refused to annul the findings of the Tariff Commission, citing the rule
that factual findings of administrative agencies are binding upon the courts and its
corollary, that courts should not interfere in matters addressed to the sound
discretion and coming under the special technical knowledge and training of such
agencies.37 Nevertheless, it held that the DTI Secretary is not bound by the factual
findings of the Tariff Commission since such findings are merely recommendatory
and they fall within the ambit of the Secretary's discretionary review. It determined
that the legislative intent is to grant the DTI Secretary the power to make a final
decision on the Tariff Commission's recommendation. 38 The dispositive portion of
the Decision reads:
WHEREFORE, based on the foregoing premises, petitioner's prayer to set
aside the findings of the Tariff Commission in its assailed Report dated March
13, 2002 is DENIED. On the other hand, the assailed April 5, 2002 Decision
of the Secretary of the Department of Trade and Industry is hereby SET
ASIDE. Consequently, the case is REMANDED to the public respondent
Secretary of Department of Trade and Industry for a final decision in
accordance with RA 8800 and its Implementing Rules and Regulations.
SO ORDERED.39
On 23 June 2003, Southern Cross filed the present petition, assailing the appellate
court's Decision for departing from the accepted and usual course of judicial
proceedings, and not deciding the substantial questions in accordance with law and

jurisprudence. The petition argues in the main that the Court of Appeals has no
jurisdiction over Philcemcor's petition, the proper remedy being a petition for review
with the CTA conformably with the SMA, and; that the factual findings of the Tariff
Commission on the existence or non-existence conditions warranting the imposition
of general safeguard measures are binding upon the DTI Secretary.
The timely filing of Southern Cross's petition before this Court necessarily prevented
the Court of AppealsDecision from becoming final.40 Yet on 25 June 2003, the DTI
Secretary issued a new Decision, ruling this time that that in light of the appellate
court's Decision there was no longer any legal impediment to his deciding
Philcemcor's application for definitive safeguard measures. 41 He made a
determination that, contrary to the findings of the Tariff Commission, the local
cement industry had suffered serious injury as a result of the import
surges.42 Accordingly, he imposed a definitive safeguard measure on the
importation of gray Portland cement, in the form of a definitive safeguard duty in
the amount of P20.60/40 kg. bag for three years on imported gray Portland
Cement.43
On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a
Temporary Restraining Order and/or A Writ of Preliminary Injunction"
("TRO Application"), seeking to enjoin the DTI Secretary from enforcing
hisDecision of 25 June 2003 in view of the pending petition before this Court.
Philcemcor filed an opposition, claiming, among others, that it is not this Court but
the CTA that has jurisdiction over the application under the law.
On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing
the DTI Secretary's 25 June 2003 Decision which imposed the definite safeguard
measure. Prescinding from this action, Philcemcor filed with this Court
a Manifestation and Motion to Dismiss in regard to Southern Cross's petition,
alleging that it deliberately and willfully resorted to forum-shopping. It points out
that Southern Cross's TRO Application seeks to enjoin the DTI Secretary's second
decision, while its Petition before the CTA prays for the annulment of the same
decision.44
Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor also
argues that the CTA, being a special court of limited jurisdiction, could only review
the ruling of the DTI Secretary when a safeguard measure is imposed, and that the
factual findings of the Tariff Commission are not binding on the DTI Secretary. 45
After giving due course to Southern Cross's Petition, the Court called the case for
oral argument on 18 February 2004.46 At the oral argument, attended by the
counsel for Philcemcor and Southern Cross and the Office of the Solicitor General,
the Court simplified the issues in this wise: (i) whether the Decision of the DTI
Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the
Court of Appeals has jurisdiction, whether itsDecision is in accordance with law; and,
(iii) whether a Temporary Restraining Order is warranted.47
During the oral arguments, counsel for Southern Cross manifested that due to the
imposition of the general safeguard measures, Southern Cross was forced to cease
operations in the Philippines in November of 2003. 48

Propriety of the Temporary Restraining Order


Before the merits of the Petition, a brief comment on Southern Cross's application
for provisional relief. It sought to enjoin the DTI Secretary from enforcing the
definitive safeguard measure he imposed in his 25 June 2003Decision. The Court did
not grant the provisional relief for it would be tantamount to enjoining the collection
of taxes, a peremptory judicial act which is traditionally frowned upon, 49 unless
there is a clear statutory basis for it. 50 In that regard, Section 218 of the Tax Reform
Act of 1997 prohibits any court from granting an injunction to restrain the collection
of any national internal revenue tax, fee or charge imposed by the internal revenue
code.51A similar philosophy is expressed by Section 29 of the SMA, which states that
the filing of a petition for review before the CTA does not stop, suspend, or
otherwise toll the imposition or collection of the appropriate tariff duties or the
adoption of other appropriate safeguard measures. 52 This evinces a clear legislative
intent that the imposition of safeguard measures, despite the availability of judicial
review, should not be enjoined notwithstanding any timely appeal of the imposition.
The Forum-Shopping Issue
In the same breath, we are not convinced that the allegation of forum-shopping has
been duly proven, or that sanction should befall upon Southern Cross and its
counsel. The standard by Section 5, Rule 7 of the 1997 Rules of Civil Procedure in
order that sanction may be had is that "the acts of the party or his counsel clearly
constitute willful and deliberate forum shopping." 53 The standard implies a malicious
intent to subvert procedural rules, and such state of mind is not evident in this case.
The Jurisdictional Issue
On to the merits of the present petition.
In its assailed Decision, the Court of Appeals, after asserting only in brief that it had
jurisdiction over Philcemcor'sPetition, discussed the issue of whether or not the DTI
Secretary is bound to adopt the negative recommendation of the Tariff Commission
on the application for safeguard measure. The Court of Appeals maintained that it
had jurisdiction over the petition, as it alleged grave abuse of discretion on the part
of the DTI Secretary, thus:
A perusal of the instant petition reveals allegations of grave abuse of
discretion on the part of the DTI Secretary in rendering the assailed April 5,
2002 Decision wherein it was ruled that he had no alternative but to abide by
the findings of the Commission on the matter of safeguard measures for the
local cement industry. Abuse of discretion is admittedly within the ambit of
certiorari.
Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. It is alleged that, in the
assailed Decision, the DTI Secretary gravely abused his discretion in wantonly
evading to discharge his duty to render an independent determination or
decision in imposing a definitive safeguard measure. 54

We do not doubt that the Court of Appeals' certiorari powers extend to correcting
grave abuse of discretion on the part of an officer exercising judicial or quasi-judicial
functions.55 However, the special civil action of certiorari is available only when
there is no plain, speedy and adequate remedy in the ordinary course of
law.56 Southern Cross relies on this limitation, stressing that Section 29 of the SMA is
a plain, speedy and adequate remedy in the ordinary course of law which
Philcemcor did not avail of. The Section reads:
Section 29. Judicial Review. Any interested party who is adversely affected
by the ruling of the Secretary in connection with the imposition of a
safeguard measure may file with the CTA, a petition for review of such
ruling within thirty (30) days from receipt thereof. Provided, however, that the
filing of such petition for review shall not in any way stop, suspend or
otherwise toll the imposition or collection of the appropriate tariff duties or
the adoption of other appropriate safeguard measures, as the case may be.
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same
disposition as in appeals in connection with adverse rulings on tax matters to
the Court of Appeals.57 (Emphasis supplied)
It is not difficult to divine why the legislature singled out the CTA as the court with
jurisdiction to review the ruling of the DTI Secretary in connection with the
imposition of a safeguard measure. The Court has long recognized the legislative
determination to vest sole and exclusive jurisdiction on matters involving internal
revenue and customs duties to such a specialized court. 58 By the very nature of its
function, the CTA is dedicated exclusively to the study and consideration of tax
problems and has necessarily developed an expertise on the subject. 59
At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to
take cognizance of a case should be clearly conferred and should not be deemed to
exist on mere implication.60 Concededly, Rep. Act No. 1125, the statute creating the
CTA, does not extend to it the power to review decisions of the DTI Secretary in
connection with the imposition of safeguard measures. 61 Of course, at that time
which was before the advent of trade liberalization the notion of safeguard
measures or safety nets was not yet in vogue.
Undeniably, however, the SMA expanded the jurisdiction of the CTA by including
review of the rulings of the DTI Secretary in connection with the imposition of
safeguard measures. However, Philcemcor and the public respondents agree that
the CTA has appellate jurisdiction over a decision of the DTI Secretary imposing a
safeguard measure, but not when his ruling is not to impose such measure.
In a related development, Rep. Act No. 9282, enacted on 30 March 2004, expressly
vests unto the CTA jurisdiction over "[d]ecisions of the Secretary of Trade and
Industry, in case of nonagricultural product, commodity or article xxx involving
xxx safeguard measures under Republic Act No. 8800, where either party
may appeal the decision to impose or not to impose said duties."62 Had Rep.
Act No. 9282 already been in force at the beginning of the incidents subject of this
case, there would have been no need to make any deeper inquiry as to the extent

of the CTA's jurisdiction. But as Rep. Act No. 9282 cannot be applied retroactively to
the present case, the question of whether such jurisdiction extends to a decision not
to impose a safeguard measure will have to be settled principally on the basis of the
SMA.
Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire
jurisdiction over the petition for review contemplated therein: (i) there must be a
ruling by the DTI Secretary; (ii) the petition must be filed by an interested party
adversely affected by the ruling; and (iii) such ruling must be in connection with the
imposition of a safeguard measure. The first two requisites are clearly present. The
third requisite deserves closer scrutiny.
Contrary to the stance of the public respondents and Philcemcor, in this case where
the DTI Secretary decides not to impose a safeguard measure, it is the CTA which
has jurisdiction to review his decision. The reasons are as follows:
First. Split jurisdiction is abhorred.
Essentially, respondents' position is that judicial review of the DTI Secretary's ruling
is exercised by two different courts, depending on whether or not it imposes a
safeguard measure, and in either case the court exercising jurisdiction does so to
the exclusion of the other. Thus, if the DTI decision involves the imposition of a
safeguard measure it is the CTA which has appellate jurisdiction; otherwise, it is the
Court of Appeals. Such setup is as novel and unusual as it is cumbersome and
unwise. Essentially, respondents advocate that Section 29 of the SMA has
established split appellate jurisdiction over rulings of the DTI Secretary on the
imposition of safeguard measure.
This interpretation cannot be favored, as the Court has consistently refused to
sanction split jurisdiction.63 The power of the DTI Secretary to adopt or withhold a
safeguard measure emanates from the same statutory source, and it boggles the
mind why the appeal modality would be such that one appellate court is qualified if
what is to be reviewed is a positive determination, and it is not if what is appealed is
a negative determination. In deciding whether or not to impose a safeguard
measure, provisional or general, the DTI Secretary would be evaluating only one
body of facts and applying them to one set of laws. The reviewing tribunal will be
called upon to examine the same facts and the same laws, whether or not the
determination is positive or negative.
In short, if we were to rule for respondents we would be confirming the exercise by
two judicial bodies of jurisdiction over basically the same subject matterprecisely
the split-jurisdiction situation which is anathema to the orderly administration of
justice.64 The Court cannot accept that such was the legislative motive especially
considering that the law expressly confers on the CTA, the tribunal with the
specialized competence over tax and tariff matters, the role of judicial review
without mention of any other court that may exercise corollary or ancillary
jurisdiction in relation to the SMA. The provision refers to the Court of Appeals but
only in regard to procedural rules and dispositions of appeals from the CTA to the
Court of Appeals.65

The principle enunciated in Tejada v. Homestead Property Corporation66 is applicable


to the case at bar:
The Court agrees with the observation of the [that] when an administrative
agency or body is conferred quasi-judicial functions, all controversies
relating to the subject matter pertaining to its specialization are
deemed to be included within the jurisdiction of said administrative
agency or body. Split jurisdiction is not favored.67
Second. The interpretation of the provisions of the SMA favors vesting untrammeled
appellate jurisdiction on the CTA.
A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar
the CTA from reviewing a negative determination by the DTI Secretary nor conferred
on the Court of Appeals such review authority. Respondents note, on the other hand,
that neither did the law expressly grant to the CTA the power to review a negative
determination. However, under the clear text of the law, the CTA is vested with
jurisdiction to review the ruling of the DTI Secretary " in connection with the
imposition of a safeguard measure." Had the law been couched instead to
incorporate the phrase "the ruling imposing a safeguard measure," then
respondent's claim would have indisputable merit. Undoubtedly, the phrase "in
connection with" not only qualifies but clarifies the succeeding phrase "imposition of
a safeguard measure." As expounded later, the phrase also encompasses the
opposite or converse ruling which is the non-imposition of a safeguard measure.
In the American case of Shaw v. Delta Air Lines, Inc.,68 the United States Supreme
Court, in interpreting a key provision of the Employee Retirement Security Act of
1974, construed the phrase "relates to" in its normal sense which is the same as "if
it has connection with or reference to." 69 There is no serious dispute that the phrase
"in connection with" is synonymous to "relates to" or "reference to," and that all
three phrases are broadly expansive. This is affirmed not just by jurisprudential fiat,
but also the acquired connotative meaning of "in connection with" in common
parlance. Consequently, with the use of the phrase "in connection with," Section 29
allows the CTA to review not only the ruling imposing a safeguard measure, but all
other rulings related or have reference to the application for such measure.
Now, let us determine the maximum scope and reach of the phrase "in connection
with" as used in Section 29 of the SMA. A literalist reading or linguistic survey may
not satisfy. Even the US Supreme Court in New York State Blue Cross Plans v.
Travelers Ins.70 conceded that the phrases "relate to" or "in connection with" may be
extended to the farthest stretch of indeterminacy for, universally, relations or
connections are infinite and stop nowhere. 71 Thus, in the case the US High Court,
examining the same phrase of the same provision of law involved in Shaw, resorted
to looking at the statute and its objectives as the alternative to an "uncritical
literalism."72 A similar inquiry into the other provisions of the SMA is in order to
determine the scope of review accorded therein to the CTA. 73
The authority to decide on the safeguard measure is vested in the DTI Secretary in
the case of non-agricultural products, and in the Secretary of the Department of
Agriculture in the case of agricultural products. 74 Section 29 is likewise explicit that

only the rulings of the DTI Secretary or the Agriculture Secretary may be reviewed
by the CTA.75 Thus, the acts of other bodies that were granted some powers by the
SMA, such as the Tariff Commission, are not subject to direct review by the CTA.
Under the SMA, the Department Secretary concerned is authorized to decide on
several matters. Within thirty (30) days from receipt of a petition seeking the
imposition of a safeguard measure, or from the date he mademotu
proprio initiation, the Secretary shall make a preliminary determination on whether
the increased imports of the product under consideration substantially cause or
threaten to cause serious injury to the domestic industry. 76Such ruling is crucial
since only upon the Secretary's positive preliminary determination that a threat to
the domestic industry exists shall the matter be referred to the Tariff Commission for
formal investigation, this time, to determine whether the general safeguard
measure should be imposed or not.77 Pursuant to a positive preliminary
determination, the Secretary may also decide that the imposition of a provisional
safeguard measure would be warranted under Section 8 of the SMA. 78 The Secretary
is also authorized to decide, after receipt of the report of the Tariff Commission,
whether or not to impose the general safeguard measure, and if in the affirmative,
what general safeguard measures should be applied. 79 Even after the general
safeguard measure is imposed, the Secretary is empowered to extend the
safeguard measure,80 or terminate, reduce or modify his previous rulings on the
general safeguard measure.81
With the explicit grant of certain powers involving safeguard measures by the SMA
on the DTI Secretary, it follows that he is empowered to rule on several issues.
These are the issues which arise in connection with, or in relation to, the imposition
of a safeguard measure. They may arise at different stages the preliminary
investigation stage, the post-formal investigation stage, or the post-safeguard
measure stage yet all these issues do become ripe for resolution because an
initiatory action has been taken seeking the imposition of a safeguard measure. It is
the initiatory action for the imposition of a safeguard measure that sets the wheels
in motion, allowing the Secretary to make successive rulings, beginning with the
preliminary determination.
Clearly, therefore, the scope and reach of the phrase "in connection with," as
intended by Congress, pertain to all rulings of the DTI Secretary or Agriculture
Secretary which arise from the time an application or motu proprioinitiation for the
imposition of a safeguard measure is taken. Indeed, the incidents which require
resolution come to the fore only because there is an initial application or action
seeking the imposition of a safeguard measure. From the legislative standpoint, it
was a matter of sense and practicality to lump up the questions related to the
initiatory application or action for safeguard measure and to assign only one court
and; that is the CTA to initially review all the rulings related to such initiatory
application or action. Both directions Congress put in place by employing the phrase
"in connection with" in the law.
Given the relative expanse of decisions subject to judicial review by the CTA under
Section 29, we do not doubt that a negative ruling refusing to impose a safeguard
measure falls within the scope of its jurisdiction. On a literal level, such negative
ruling is "a ruling of the Secretary in connection with the imposition of a safeguard

measure," as it is one of the possible outcomes that may result from the initial
application or action for a safeguard measure. On a more critical level, the rulings of
the DTI Secretary in connection with a safeguard measure, however diverse the
outcome may be, arise from the same grant of jurisdiction on the DTI Secretary by
the SMA.82 The refusal by the DTI Secretary to grant a safeguard measure involves
the same grant of authority, the same statutory prescriptions, and the same degree
of discretion as the imposition by the DTI Secretary of a safeguard measure.
The position of the respondents is one of "uncritical literalism" 83 incongruent with
the animus of the law. Moreover, a fundamentalist approach to Section 29 is not
warranted, considering the absurdity of the consequences.
Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et
Absurdum.84
Even assuming arguendo that Section 29 has not expressly granted the CTA
jurisdiction to review a negative ruling of the DTI Secretary, the Court is precluded
from favoring an interpretation that would cause inconvenience and
absurdity.85 Adopting the respondents' position favoring the CTA's minimal
jurisdiction would unnecessarily lead to illogical and onerous results.
Indeed, it is illiberal to assume that Congress had intended to provide appellate
relief to rulings imposing a safeguard measure but not to those declining to impose
the measure. Respondents might argue that the right to relief from a negative ruling
is not lost since the applicant could, as Philcemcor did, question such ruling through
a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure,
in lieu of an appeal to the CTA. Yet these two reliefs are of differing natures and
gravamen. While an appeal may be predicated on errors of fact or errors of law, a
special civil action for certiorari is grounded on grave abuse of discretion or lack of
or excess of jurisdiction on the part of the decider. For a special civil action for
certiorari to succeed, it is not enough that the questioned act of the respondent is
wrong. As the Court clarified in Sempio v. Court of Appeals:
A tribunal, board or officer acts without jurisdiction if it/he does not have the
legal power to determine the case. There is excess of jurisdiction where,
being clothed with the power to determine the case, the tribunal, board or
officer oversteps its/his authority as determined by law. And there is grave
abuse of discretion where the tribunal, board or officer acts in a capricious,
whimsical, arbitrary or despotic manner in the exercise of his judgment as to
be said to be equivalent to lack of jurisdiction. Certiorari is often resorted to
in order to correct errors of jurisdiction. Where the error is one of law or of
fact, which is a mistake of judgment, appeal is the remedy. 86
It is very conceivable that the DTI Secretary, after deliberate thought and careful
evaluation of the evidence, may either make a negative preliminary determination
as he is so empowered under Section 7 of the SMA, or refuse to adopt the definitive
safeguard measure under Section 13 of the same law. Adopting the respondents'
theory, this negative ruling is susceptible to reversal only through a special civil
action for certiorari, thus depriving the affected party the chance to elevate the
ruling on appeal on the rudimentary grounds of errors in fact or in law. Instead, and

despite whatever indications that the DTI Secretary acted with measure and within
the bounds of his jurisdiction are, the aggrieved party will be forced to resort to a
gymnastic exercise, contorting the straight and narrow in an effort to
discombobulate the courts into believing that what was within was actually beyond
and what was studied and deliberate actually whimsical and capricious. What then
would be the remedy of the party aggrieved by a negative ruling that simply erred
in interpreting the facts or the law? It certainly cannot be the special civil action for
certiorari, for as the Court held in Silverio v. Court of Appeals: "Certiorari is a
remedy narrow in its scope and inflexible in its character. It is not a general utility
tool in the legal workshop."87
Fortunately, this theoretical quandary need not come to pass. Section 29 of the SMA
is worded in such a way that it places under the CTA's judicial review all rulings of
the DTI Secretary, which are connected with the imposition of a safeguard measure.
This is sound and proper in light of the specialized jurisdiction of the CTA over tax
matters. In the same way that a question of whether to tax or not to tax is properly
a tax matter, so is the question of whether to impose or not to impose a definitive
safeguard measure.
On another note, the second paragraph of Section 29 similarly reveals the
legislative intent that rulings of the DTI Secretary over safeguard measures should
first be reviewed by the CTA and not the Court of Appeals. It reads:
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same
disposition as in appeals in connection with adverse rulings on tax matters to
the Court of Appeals.
This is the only passage in the SMA in which the Court of Appeals is mentioned. The
express wish of Congress is that the petition conform to the requirements and
procedure under Rule 43 of the Rules of Civil Procedure. Since Congress mandated
that the form and procedure adopted be analogous to a review of a CTA ruling by
the Court of Appeals, the legislative contemplation could not have been that the
appeal be directly taken to the Court of Appeals.
Issue
of
Commission's
on DTI Secretary.

Binding

Effect
Factual

of

Tariff
Determination

The next issue for resolution is whether the factual determination made by the Tariff
Commission under the SMA is binding on the DTI Secretary. Otherwise stated, the
question is whether the DTI Secretary may impose general safeguard measures in
the absence of a positive final determination by the Tariff Commission.
The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of
the Tariff Commission do not necessarily constitute a final decision. Section 13
details the procedure for the adoption of a safeguard measure, as well as the steps
to be taken in case there is a negative final determination. The implication of the

Court of Appeals' holding is that the DTI Secretary may adopt a definitive safeguard
measure, notwithstanding a negative determination made by the Tariff Commission.
Undoubtedly, Section 13 prescribes certain limitations and restrictions before
general safeguard measures may be imposed. However, the most fundamental
restriction on the DTI Secretary's power in that respect is contained in
Section 5 of the SMAthat there should first be a positive final
determination of the Tariff Commissionwhich the Court of Appeals curiously
all but ignored. Section 5 reads:
Sec. 5. Conditions for the Application of General Safeguard Measures. The
Secretary shall apply a general safeguard measure upon a positive
final determination of the [Tariff] Commission that a product is being
imported into the country in increased quantities, whether absolute or
relative to the domestic production, as to be a substantial cause of serious
injury or threat thereof to the domestic industry; however, in the case of nonagricultural products, the Secretary shall first establish that the application of
such safeguard measures will be in the public interest. (emphasis supplied)
The plain meaning of Section 5 shows that it is the Tariff Commission that has the
power to make a "positive final determination." This power lodged in the Tariff
Commission, must be distinguished from the power to impose the general safeguard
measure which is properly vested on the DTI Secretary. 88
All in all, there are two condition precedents that must be satisfied before the DTI
Secretary may impose a general safeguard measure on grey Portland cement. First,
there must be a positive final determination by the Tariff Commission that a product
is being imported into the country in increased quantities (whether absolute or
relative to domestic production), as to be a substantial cause of serious injury or
threat to the domestic industry. Second, in the case of non-agricultural products the
Secretary must establish that the application of such safeguard measures is in the
public interest.89 As Southern Cross argues, Section 5 is quite clear-cut, and it is
impossible to finagle a different conclusion even through overarching methods of
statutory construction. There is no safer nor better settled canon of interpretation
that when language is clear and unambiguous it must be held to mean what it
plainly expresses:90 In the quotable words of an illustrious member of this Court,
thus:
[I]f a statute is clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. The verba legis or
plain meaning rule rests on the valid presumption that the words employed
by the legislature in a statute correctly express its intent or will and preclude
the court from construing it differently. The legislature is presumed to know
the meaning of the words, to have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute. 91
Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA, 92 which
interprets Section 5 of the law, likewise requires a positive final determination on
the part of the Tariff Commission before the application of the general safeguard
measure.

The SMA establishes a distinct allocation of functions between the Tariff Commission
and the DTI Secretary. The plain meaning of Section 5 shows that it is the Tariff
Commission that has the power to make a "positive final determination." This
power, which belongs to the Tariff Commission, must be distinguished from the
power to impose general safeguard measure properly vested on the DTI Secretary.
The distinction is vital, as a "positive final determination" clearly antecedes, as a
condition precedent, the imposition of a general safeguard measure. At the same
time, a positive final determination does not necessarily result in the imposition of a
general safeguard measure. Under Section 5, notwithstanding the positive final
determination of the Tariff Commission, the DTI Secretary is tasked to decide
whether or not that the application of the safeguard measures is in the public
interest.
It is also clear from Section 5 of the SMA that the positive final determination to be
undertaken by the Tariff Commission does not entail a mere gathering of statistical
data. In order to arrive at such determination, it has to establish causal linkages
from the statistics that it compiles and evaluates: after finding there is an
importation in increased quantities of the product in question, that such importation
is a substantial cause of serious threat or injury to the domestic industry.
The Court of Appeals relies heavily on the legislative record of a congressional
debate during deliberations on the SMA to assert a purported legislative intent that
the findings of the Tariff Commission do not bind the DTI Secretary. 93 Yet as
explained earlier, the plain meaning of Section 5 emphasizes that only if the Tariff
Commission renders a positive determination could the DTI Secretary impose a
safeguard measure. Resort to the congressional records to ascertain legislative
intent is not warranted if a statute is clear, plain and free from ambiguity. The
legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by the use of such words as are found in
the statute.94
Indeed, the legislative record, if at all to be availed of, should be approached with
extreme caution, as legislative debates and proceedings are powerless to vary the
terms of the statute when the meaning is clear. 95 Our holding in Civil Liberties Union
v. Executive Secretary96 on the resort to deliberations of the constitutional
convention to interpret the Constitution is likewise appropriate in ascertaining
statutory intent:
While it is permissible in this jurisdiction to consult the debates and
proceedings of the constitutional convention in order to arrive at the reason
and purpose of the resulting Constitution, resort thereto may be had only
when other guides fail as said proceedings are powerless to vary the terms of
the Constitution when the meaning is clear. Debates in the constitutional
convention "are of value as showing the views of the individual members,
and as indicating the reasons for their votes, but they give us no light as to
the views of the large majority who did not talk xxx. We think it safer to
construe the constitution from what appears upon its face." 97
Moreover, it is easy to selectively cite passages, sometimes out of their proper
context, in order to assert a misleading interpretation. The effect can be dangerous.

Minority or solitary views, anecdotal ruminations, or even the occasional crude


witticisms, may improperly acquire the mantle of legislative intent by the sole virtue
of their publication in the authoritative congressional record. Hence, resort to
legislative deliberations is allowable when the statute is crafted in such a manner as
to leave room for doubt on the real intent of the legislature.
Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to
impose a general safeguard measure by preconditioning such imposition on a
positive determination by the Tariff Commission. Such legislative intent should be
given full force and effect, as the executive power to impose definitive safeguard
measures is but a delegated powerthe power of taxation, by nature and by
command of the fundamental law, being a preserve of the legislature. 98 Section
28(2), Article VI of the 1987 Constitution confirms the delegation of legislative
power, yet ensures that the prerogative of Congress to impose limitations and
restrictions on the executive exercise of this power:
The Congress may, by law, authorize the President to fix within specified
limits, and subject to such limitations and restrictions as it may impose, tariff
rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program
of the Government.99
The safeguard measures which the DTI Secretary may impose under the SMA may
take the following variations, to wit: (a) an increase in, or imposition of any duty on
the imported product; (b) a decrease in or the imposition of a tariff-rate quota on
the product; (c) a modification or imposition of any quantitative restriction on the
importation of the product into the Philippines; (d) one or more appropriate
adjustment measures, including the provision of trade adjustment assistance; and
(e) any combination of the above-described actions. Except for the provision of
trade adjustment assistance, the measures enumerated by the SMA are essentially
imposts, which precisely are the subject of delegation under Section 28(2), Article VI
of the 1987 Constitution.100
This delegation of the taxation power by the legislative to the executive is
authorized by the Constitution itself.101At the same time, the Constitution also grants
the delegating authority (Congress) the right to impose restrictions and limitations
on the taxation power delegated to the President. 102 The restrictions and limitations
imposed by Congress take on the mantle of a constitutional command, which the
executive branch is obliged to observe.
The SMA empowered the DTI Secretary, as alter ego of the President,103 to impose
definitive general safeguard measures, which basically are tariff imposts of the type
spoken of in the Constitution. However, the law did not grant him full, uninhibited
discretion to impose such measures. The DTI Secretary authority is derived from the
SMA; it does not flow from any inherent executive power. Thus, the limitations
imposed by Section 5 are absolute, warranted as they are by a constitutional fiat. 104
Philcemcor cites our 1912 ruling in Lamb v. Phipps105 to assert that the DTI
Secretary, having the final decision on the safeguard measure, has the power to
evaluate the findings of the Tariff Commission and make an independent judgment

thereon. Given the constitutional and statutory limitations governing the present
case, the citation is misplaced. Lamb pertained to the discretion of the Insular
Auditor of the Philippine Islands, whom, as the Court recognized, "[t]he statutes of
the United States require[d] xxx to exercise his judgment upon the legality xxx [of]
provisions of law and resolutions of Congress providing for the payment of money,
the means of procuring testimony upon which he may act." 106
Thus in Lamb, while the Court recognized the wide latitude of discretion that may
have been vested on the Insular Auditor, it also recognized that such latitude flowed
from, and is consequently limited by, statutory grant. However, in this case, the
provision of the Constitution in point expressly recognizes the authority of Congress
to prescribe limitations in the case of tariffs, export/import quotas and other such
safeguard measures. Thus, the broad discretion granted to the Insular Auditor of the
Philippine Islands cannot be analogous to the discretion of the DTI Secretary which
is circumscribed by Section 5 of the SMA.
For that matter, Cario v. Commissioner on Human Rights, 107 likewise cited by
Philcemcor, is also inapplicable owing to the different statutory regimes prevailing
over that case and the present petition. In Cario, the Court ruled that the
constitutional power of the Commission on Human Rights (CHR) to investigate
human rights' violations did not extend to adjudicating claims on the
merits.108 Philcemcor claims that the functions of the Tariff Commission being "only
investigatory," it could neither decide nor adjudicate. 109
The applicable law governing the issue in Cario is Section 18, Article XIII of the
Constitution, which delineates the powers and functions of the CHR. The provision
does not vest on the CHR the power to adjudicate cases, but only to investigate all
forms of human rights violations.110 Yet, without modifying the thorough disquisition
of the Court in Cario on the general limitations on the investigatory power, the
precedent is inapplicable because of the difference in the involved statutory
frameworks. The Constitution does not repose binding effect on the results of the
CHR's investigation.111 On the other hand, through Section 5 of the SMA and under
the authority of Section 28(2), Article VI of the Constitution, Congress did intend to
bind the DTI Secretary to the determination made by the Tariff Commission. 112 It is
of no consequence that such determination results from the exercise of
investigatory powers by the Tariff Commission since Congress is well within its
constitutional mandate to limit the authority of the DTI Secretary to impose
safeguard measures in the manner that it sees fit.
The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13
of the SMA's Implementing Rules in support of the view that the DTI Secretary may
decide independently of the determination made by the Tariff Commission.
Admittedly, there are certain infelicities in the language of Section 13 and Rule 13.
But reliance should not be placed on the textual imprecisions. Rather, Section 13
and Rule 13 must be viewed in light of the fundamental prescription imposed by
Section 5. 113
Section 13 of the SMA lays down the procedure to be followed after the Tariff
Commission renders its report. The provision reads in full:

SEC. 13. Adoption of Definitive Measures. Upon its positive determination,


the Commission shall recommend to the Secretary an appropriate definitive
measure, in the form of:
(a) An increase in, or imposition of, any duty on the imported product;
(b) A decrease in or the imposition of a tariff-rate quota (MAV) on the product;
(c) A modification or imposition of any quantitative restriction on the
importation of the product into the Philippines;
(d) One or more appropriate adjustment measures, including the provision of
trade adjustment assistance;
(e) Any combination of actions described in subparagraphs (a) to (d).
The Commission may also recommend other actions, including the initiation
of international negotiations to address the underlying cause of the increase
of imports of the product, to alleviate the injury or threat thereof to the
domestic industry, and to facilitate positive adjustment to import
competition.
The general safeguard measure shall be limited to the extent of redressing or
preventing the injury and to facilitate adjustment by the domestic industry
from the adverse effects directly attributed to the increased
imports: Provided, however, That when quantitative import restrictions are
used, such measures shall not reduce the quantity of imports below the
average imports for the three (3) preceding representative years, unless clear
justification is given that a different level is necessary to prevent or remedy a
serious injury.
A general safeguard measure shall not be applied to a product originating
from a developing country if its share of total imports of the product is less
than three percent (3%): Provided, however, That developing countries with
less than three percent (3%) share collectively account for not more than
nine percent (9%) of the total imports.
The decision imposing a general safeguard measure, the duration of which is
more than one (1) year, shall be reviewed at regular intervals for purposes of
liberalizing or reducing its intensity. The industry benefiting from the
application of a general safeguard measure shall be required to show positive
adjustment within the allowable period. A general safeguard measure shall be
terminated where the benefiting industry fails to show any improvement, as
may be determined by the Secretary.
The Secretary shall issue a written instruction to the heads of the concerned
government agencies to implement the appropriate general safeguard
measure as determined by the Secretary within fifteen (15) days from receipt
of the report.

In the event of a negative final determination, or if the cash bond is in excess


of the definitive safeguard duty assessed, the Secretary shall immediately
issue, through the Secretary of Finance, a written instruction to the
Commissioner of Customs, authorizing the return of the cash bond or the
remainder thereof, as the case may be, previously collected as provisional
general safeguard measure within ten (10) days from the date a final decision
has been made: Provided, That the government shall not be liable for any
interest on the amount to be returned. The Secretary shall not accept for
consideration another petition from the same industry, with respect to the
same imports of the product under consideration within one (1) year after the
date of rendering such a decision.
When the definitive safeguard measure is in the form of a tariff increase, such
increase shall not be subject or limited to the maximum levels of tariff as set
forth in Section 401(a) of the Tariff and Customs Code of the Philippines.
To better comprehend Section 13, note must be taken of the distinction between the
investigatory and recommendatory functions of the Tariff Commission under the
SMA.
The word "determination," as used in the SMA, pertains to the factual findings on
whether there are increased imports into the country of the product under
consideration, and on whether such increased imports are a substantial cause of
serious injury or threaten to substantially cause serious injury to the domestic
industry.114The SMA explicitly authorizes the DTI Secretary to make a preliminary
determination,115 and the Tariff Commission to make the final determination. 116 The
distinction is fundamental, as these functions are not interchangeable. The Tariff
Commission makes its determination only after a formal investigation process, with
such investigation initiated only if there is a positive preliminary determination by
the DTI Secretary under Section 7 of the SMA. 117 On the other hand, the DTI
Secretary may impose definitive safeguard measure only if there is a positive final
determination made by the Tariff Commission. 118
In contrast, a "recommendation" is a suggested remedial measure submitted by the
Tariff Commission under Section 13 after making a positive final determination in
accordance with Section 5. The Tariff Commission is not empowered to make a
recommendation absent a positive final determination on its part. 119 Under Section
13, the Tariff Commission is required to recommend to the [DTI] Secretary an
"appropriate definitive measure." 120 The Tariff Commission "may also recommend
other actions, including the initiation of international negotiations to address the
underlying cause of the increase of imports of the products, to alleviate the injury or
threat thereof to the domestic industry and to facilitate positive adjustment to
import competition."121
The recommendations of the Tariff Commission, as rendered under Section 13, are
not obligatory on the DTI Secretary. Nothing in the SMA mandates the DTI Secretary
to adopt the recommendations made by the Tariff Commission. In fact, the SMA
requires that the DTI Secretary establish that the application of such safeguard
measures is in the public interest, notwithstanding the Tariff Commission's
recommendation on the appropriate safeguard measure based on its positive final

determination.122 The non-binding force of the Tariff Commission's recommendations


is congruent with the command of Section 28(2), Article VI of the 1987 Constitution
that only the President may be empowered by the Congress to impose appropriate
tariff rates, import/export quotas and other similar measures. 123 It is the DTI
Secretary, as alter ego of the President, who under the SMA may impose such
safeguard measures subject to the limitations imposed therein. A contrary
conclusion would in essence unduly arrogate to the Tariff Commission the executive
power to impose the appropriate tariff measures. That is why the SMA empowers
the DTI Secretary to adopt safeguard measures other than those recommended by
the Tariff Commission.
Unlike the recommendations of the Tariff Commission, its determination has a
different effect on the DTI Secretary. Only on the basis of a positive final
determination made by the Tariff Commission under Section 5 can the DTI Secretary
impose a general safeguard measure. Clearly, then the DTI Secretary is bound by
thedetermination made by the Tariff Commission.
Some confusion may arise because the sixth paragraph of Section 13 124 uses the
variant word "determined" in a different context, as it contemplates "the
appropriate general safeguard measure as determined by the Secretary within
fifteen (15) days from receipt of the report." Quite plainly, the word "determined" in
this context pertains to the DTI Secretary's power of choice of the appropriate
safeguard measure, as opposed to the Tariff Commission's power to determine the
existence of conditions necessary for the imposition of any safeguard measure. In
relation to Section 5, such choice also relates to the mandate of the DTI Secretary to
establish that the application of safeguard measures is in the public interest, also
within the fifteen (15) day period. Nothing in Section 13 contradicts the instruction
in Section 5 that the DTI Secretary is allowed to impose the general safeguard
measures only if there is a positive determination made by the Tariff Commission.
Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned "Final
Determination by the Secretary." The assailed Decision and Philcemcor latch on this
phraseology to imply that the factual determination rendered by the Tariff
Commission under Section 5 may be amended or reversed by the DTI Secretary. Of
course, implementing rules should conform, not clash, with the law that they seek
to implement, for a regulation which operates to create a rule out of harmony with
the statute is a nullity. 125 Yet imperfect draftsmanship aside, nothing in Rule 13.2
implies that the DTI Secretary can set aside the determination made by the Tariff
Commission under the aegis of Section 5. This can be seen by examining the
specific provisions of Rule 13.2, thus:
RULE 13.2. Final Determination by the Secretary
RULE 13.2.a. Within fifteen (15) calendar days from receipt of the
Report of the Commission, the Secretary shall make a decision, taking
into consideration the measures recommended by the Commission.
RULE 13.2.b. If the determination is affirmative, the Secretary shall
issue, within two (2) calendar days after making his decision, a written
instruction to the heads of the concerned government agencies to

immediately implement the appropriate general safeguard measure as


determined by him. Provided, however, that in the case of nonagricultural products, the Secretary shall first establish that the
imposition of the safeguard measure will be in the public interest.
RULE 13.2.c. Within two (2) calendar days after making his decision,
the Secretary shall also order its publication in two (2) newspapers of
general circulation. He shall also furnish a copy of his Order to the
petitioner and other interested parties, whether affirmative or
negative. (Emphasis supplied.)
Moreover, the DTI Secretary does not have the power to review the findings of the
Tariff Commission for it is not subordinate to the Department of Trade and Industry
("DTI"). It falls under the supervision, not of the DTI nor of the Department of
Finance (as mistakenly asserted by Southern Cross), 126 but of the National
Economic Development Authority, an independent planning agency of the
government of co-equal rank as the DTI. 127 As the supervision and control of a
Department Secretary is limited to the bureaus, offices, and agencies under
him,128 the DTI Secretary generally cannot exercise review authority over actions of
the Tariff Commission. Neither does the SMA specifically authorize the DTI Secretary
to alter, amend or modify in any way the determination made by the Tariff
Commission. The most that the DTI Secretary could do to express displeasure over
the Tariff Commission's actions is to ignore its recommendation, but not its
determination.
The word "determination" as used in Rule 13.2 of the Implementing Rules is
dissonant with the same word as employed in the SMA, which in the latter case is
undeviatingly in reference to the determination made by the Tariff Commission.
Beyond the resulting confusion, however, the divergent use in Rule 13.2 is
explicable as the Rule textually pertains to the power of the DTI Secretary to review
the recommendations of the Tariff Commission, not the latter's determination.
Indeed, an examination of the specific provisions show that there is no real conflict
to reconcile. Rule 13.2 respects the logical order imposed by the SMA. The Rule does
not remove the essential requirement under Section 5 that a positive final
determination be made by the Tariff Commission before a definitive safeguard
measure may be imposed by the DTI Secretary.
The assailed Decision characterizes the findings of the Tariff Commission as merely
recommendatory and points to the DTI Secretary as the authority who renders the
final decision.129 At the same time, Philcemcor asserts that the Tariff Commission's
functions are merely investigatory, and as such do not include the power to decide
or adjudicate. These contentions, viewed in the context of the fundamental requisite
set forth by Section 5, are untenable. They run counter to the statutory prescription
that a positive final determination made by the Tariff Commission should first be
obtained before the definitive safeguard measures may be laid down.
Was it anomalous for Congress to have provided for a system whereby the Tariff
Commission may preclude the DTI, an office of higher rank, from imposing a
safeguard measure? Of course, this Court does not inquire into the wisdom of the
legislature but only charts the boundaries of powers and functions set in its

enactments. But then, it is not difficult to see the internal logic of this statutory
framework.
For one, as earlier stated, the DTI cannot exercise review powers over the Tariff
Commission which is not its subordinate office.
Moreover, the mechanism established by Congress establishes a measure of check
and balance involving two different governmental agencies with disparate
specializations. The matter of safeguard measures is of such national importance
that a decision either to impose or not to impose then could have ruinous effects on
companies doing business in the Philippines. Thus, it is ideal to put in place a
system which affords all due deliberation and calls to fore various governmental
agencies exercising their particular specializations.
Finally, if this arrangement drawn up by Congress makes it difficult to obtain a
general safeguard measure, it is because such safeguard measure is the exception,
rather than the rule. The Philippines is obliged to observe its obligations under the
GATT, under whose framework trade liberalization, not protectionism, is laid down.
Verily, the GATT actually prescribes conditions before a member-country may
impose a safeguard measure. The pertinent portion of the GATT Agreement on
Safeguards reads:
2. A Member may only apply a safeguard measure to a product only if that
member has determined, pursuant to the provisions set out below, that such
product is being imported into its territory in such increased quantities,
absolute or relative to domestic production, and under such conditions as to
cause or threaten to cause serious injury to the domestic industry that
produces like or directly competitive products. 130
3. (a) A Member may apply a safeguard measure only following an
investigation by the competent authorities of that Member pursuant to
procedures previously established and made public in consonance with
Article X of the GATT 1994. This investigation shall include reasonable public
notice to all interested parties and public hearings or other appropriate
means in which importers, exporters and other interested parties could
present evidence and their views, including the opportunity to respond to the
presentations of other parties and to submit their views, inter alia, as to
whether or not the application of a safeguard measure would be in the public
interest. The competent authorities shall publish a report setting forth their
findings and reasoned conclusions reached on all pertinent issues of fact and
law.131
The SMA was designed not to contradict the GATT, but to complement it. The two
requisites laid down in Section 5 for a positive final determination are the same
conditions provided under the GATT Agreement on Safeguards for the application of
safeguard measures by a member country. Moreover, the investigatory procedure
laid down by the SMA conforms to the procedure required by the GATT Agreement
on Safeguards. Congress has chosen the Tariff Commission as the competent
authority to conduct such investigation. Southern Cross stresses that applying the
provision of the GATT Agreement on Safeguards, the Tariff Commission is clearly

empowered to arrive at binding conclusions. 132 We agree: binding on the DTI


Secretary is the Tariff Commission's determinations on whether a product is
imported in increased quantities, absolute or relative to domestic production and
whether any such increase is a substantial cause of serious injury or threat thereof
to the domestic industry.133
Satisfied as we are with the proper statutory paradigm within which the SMA should
be analyzed, the flaws in the reasoning of the Court of Appeals and in the
arguments of the respondents become apparent. To better understand the dynamics
of the procedure set up by the law leading to the imposition of definitive safeguard
measures, a brief step-by-step recount thereof is in order.
1. After the initiation of an action involving a general safeguard measure, 134 the DTI
Secretary makes a preliminary determination whether the increased imports of the
product under consideration substantially cause or threaten to substantially cause
serious injury to the domestic industry, 135 and whether the imposition of a
provisional measure is warranted under Section 8 of the SMA. 136 If the preliminary
determination is negative, it is implied that no further action will be taken on the
application.
2. When his preliminary determination is positive, the Secretary immediately
transmits the records covering the application to the Tariff Commission for
immediate formal investigation.137
3. The Tariff Commission conducts its formal investigation, keyed towards making a
final determination. In the process, it holds public hearings, providing interested
parties the opportunity to present evidence or otherwise be heard. 138 To repeat,
Section 5 enumerates what the Tariff Commission is tasked to determine: (a)
whether a product is being imported into the country in increased quantities,
irrespective of whether the product is absolute or relative to the domestic
production; and (b) whether the importation in increased quantities is such that it
causes serious injury or threat to the domestic industry. 139 The findings of the Tariff
Commission as to these matters constitute the final determination, which may be
either positive or negative.
4. Under Section 13 of the SMA, if the Tariff Commission makes a positive
determination, the Tariff Commission "recommends to the [DTI] Secretary an
appropriate definitive measure." The Tariff Commission "may also recommend other
actions, including the initiation of international negotiations to address the
underlying cause of the increase of imports of the products, to alleviate the injury or
threat thereof to the domestic industry, and to facilitate positive adjustment to
import competition."140
5. If the Tariff Commission makes a positive final determination, the DTI Secretary is
then to decide, within fifteen (15) days from receipt of the report, as to what
appropriate safeguard measures should he impose.
6. However, if the Tariff Commission makes a negative final determination, the DTI
Secretary cannot impose any definitive safeguard measure. Under Section 13, he is

instructed instead to return whatever cash bond was paid by the applicant upon the
initiation of the action for safeguard measure.
The Effect of the Court's Decision
The Court of Appeals erred in remanding the case back to the DTI Secretary, with
the instruction that the DTI Secretary may impose a general safeguard measure
even if there is no positive final determination from the Tariff Commission. More
crucially, the Court of Appeals could not have acquired jurisdiction over Philcemcor's
petition for certiorari in the first place, as Section 29 of the SMA properly vests
jurisdiction on the CTA. Consequently, the assailed Decision is an absolute nullity,
and we declare it as such.
What is the effect of the nullity of the assailed Decision on the 5 June
2003 Decision of the DTI Secretary imposing the general safeguard measure? We
have recognized that any initial judicial review of a DTI ruling in connection with the
imposition of a safeguard measure belongs to the CTA. At the same time, the Court
also recognizes the fundamental principle that a null and void judgment cannot
produce any legal effect. There is sufficient cause to establish that the 5 June
2003 Decision of the DTI Secretary resulted from the assailed Court of
Appeals Decision, even if the latter had not yet become final. Conversely, it can be
concluded that it was because of the putative imprimatur of the Court of
Appeals' Decision that the DTI Secretary issued his ruling imposing the safeguard
measure. Since the 5 June 2003 Decision derives its legal effect from the
void Decision of the Court of Appeals, this ruling of the DTI Secretary is
consequently void. The spring cannot rise higher than the source.
The DTI Secretary himself acknowledged that he drew stimulating force from the
appellate court's Decision for in his own 5 June 2003 Decision, he declared:
From the aforementioned ruling, the CA has remanded the case to the DTI
Secretary for a final decision. Thus, there is no legal impediment for the
Secretary to decide on the application.141
The inescapable conclusion is that the DTI Secretary needed the
assailed Decision of the Court of Appeals to justify his rendering a
second Decision. He explicitly invoked the Court of Appeals' Decision as basis for
rendering his 5 June 2003 ruling, and implicitly recognized that without
such Decision he would not have the authority to revoke his previous ruling and
render a new, obverse ruling.
It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of
the void Decision, it being an attempt to carry out such null judgment. There is
therefore no choice but to declare it void as well, lest we sanction the perverse
existence of a fruit from a non-existent tree. It does not even matter what the
disposition of the 25 June 2003 Decision was, its nullity would be warranted even if
the DTI Secretary chose to uphold his earlier ruling denying the application for
safeguard measures.

It is also an unfortunate spectacle to behold the DTI Secretary, seeking to enforce a


judicial decision which is not yet final and actually pending review on appeal. Had it
been a judge who attempted to enforce a decision that is not yet final and
executory, he or she would have readily been subjected to sanction by this Court.
The DTI Secretary may be beyond the ambit of administrative review by this Court,
but we are capacitated to allocate the boundaries set by the law of the land and to
exact fealty to the legal order, especially from the instrumentalities and officials of
government.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of
Appeals is DECLARED NULL AND VOID and SET ASIDE. The Decision of the DTI
Secretary dated 25 June 2003 is also DECLARED NULL AND VOID and SET ASIDE. No
Costs.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.

Delta Ventures v. Cabato, G.R. No. 118216, March 9, 2000 REALINO


G.R. No. 118216

March 9, 2000

DELTAVENTURES
RESOURCES,
INC., petitioner,
vs.
HON. FERNANDO P. CABATO, Presiding Judge Regional Trial Court, La
Trinidad, Benguet, Branch 62; HON. GELACIO L. RIVERA, JR., Executive
Labor Arbiter, NLRC-CAR, Baguio City, ADAM P. VENTURA, Deputy-Sheriff,
NLRC-CAR, Baguio City; ALEJANDRO BERNARDINO, AUGUSTO GRANADOS,
PILANDO TANGAY, NESTOR RABANG, RAY DAYAP, MYRA BAYAONA, VIOLY
LIBAO, AIDA LIBAO, JESUS GATCHO and GREGORIO DULAY, respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annual the Order dated November 7,
1994,1 of respondent Judge Fernando P. Cabato of the Regional Trial Court of La
Trinidad, Benguet, Branch 62, in Civil Case No. 94-CV-0948, dismissing petitioner's
amended third-party complaint, as well as the Order dated December 14,
1994,2denying motion for reconsideration.
On July 15, 1992, a Decision 3 was rendered by Executive Labor Arbiter Norma
Olegario, National Labor Relations Commission Regional Arbitration Board,
Cordillera Autonomous Region (Commission), in NLRC Case No. 01-08-0165-89
entitled "Alejandro Bernardino, et al, vs. Green Mountain Farm, Roberto Ongpin and
Almus Alabe", the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered declaring the respondents guilty


of Illegal Dismissal and Unfair Labor Practice and ordering them to pay the
complainants, in solidum, in the amount herein below listed:
1. Violy Libao P131,368.07
2. Myra Bayaona 121,470.23
3. Gregorio Dulay 128,362.17
4. Jesus Gatcho 126,475.17
5. Alejandro Bernardino 110,158.20
6. Pilando Tangay 107,802.66
7. Aida Libao 129,967.34
8. Rey Dayap 123,289.21
9. Nestor Rabang 90,611.69
10. Augusto Granados 108,106.03
plus attorney's fees in the amount of P10.000.00.
Respondent Almus Alabe is also ordered to answer in exemplary damages in
the amount of P5,00.00 each to all the complainants.
xxx

xxx

SO ORDERED.

xxx

On May 19, 1994, complainants in the abovementioned labor case filed before the
Commission a motion for the issuance of a writ of execution as respondent's appeal
to the Commission and this Court5 were respectively denied.
On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case
was reassigned in view of Labor Arbiter Olegario's transfer, issued a writ of
execution6 directing NLRC Deputy Sheriff Adam Ventura to execute the judgment
against respondents, Green Mountain Farm, Roberto Ongpin and Almus Alabe Sheriff
Ventura then proceeded to enforce the writ by garnishing certain personal
properties of respondents. Findings that said judgment debtors do not have
sufficient personal properties to satisfy the monetary award, Sheriff Ventura
proceeded to levy upon a real property covered by Tax Declaration No. 9697,
registered in the name of Roberto Ongpin, one of the respondents in the labor case.

Thereafter, Sheriff Ventura caused the publication on the July 17, 1994 edition of the
Baguio Midland Courier the date of the public auction of said real property.
On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed
before the Commission a third-party claim 7 asserting ownership over the property
levied upon and subject of the Sheriff notice of sale. Labor Arbiter Rivera thus
issued an order directing the suspension of the auction sale until the merits of
petitioner's claim has been resolved.8
However, on August 16, 1994, petitioner filed with the Regional Trial Court of La
Trinidad, Benguet a complaint for injunction and damages, with a prayer for the
issuance of a temporary retraining order against Sheriff Ventura, reiterating the
same allegations it raised in the third party claim it field with the Commission. The
petition was docketed as Civil Case No. 94-CV-0948, entitled "Deltaventures
Resources, Inc., petitioner vs. Adam P. Ventura,et al., defendants." The next day,
August 17, 1994, respondent Judge Cabato issued a temporary restraining order,
enjoining respondents in the civil case before him to hold in abeyance any action
relative to the enforcement of the decision in the labor case. 9
Petitioner likewise filed on August 30, 1994, an amended complaint 10 to implead
Labor arbiter Rivera and herein private respondent-laborers.
Further, on September 20, 1994, petitioner, filed with the Commission a
manifestation11 questioning the latter's authority to hear the case, the matter being
within the jurisdiction of the regular courts. The manifestation however, was
dismissed by Labor arbiter Rivera on October 3, 1994. 12
Meanwhile, on September 20, 1994, private respondent-laborers, moved for the
dismissal of the civil case on the ground of the court's lack of
jurisdiction.13 Petitioner filed its opposition to said motion on October 4, 1994. 14
On November 7, 1994, after both parties had submitted their respective briefs,
respondent court rendered its assailed decision premised on the following grounds:
First, this Court is equal rank with the NLRC, hence, has no jurisdiction to
issue an injunction against the execution of the NLRC decision. . . .
Second, the NLRC retains authority over all proceedings anent the execution
of its decision. This power carries with it the right to determine every
question which may be involved in the execution of its decision. . . .
Third, Deltaventures Resources, Inc. should rely on and comply with the Rules
of the NLRC because it is the principal procedure to be followed, the Rules of
Court being merely suppletory in application, . . .

Fourth, the invocation of estoppel by the plaintiffs is misplaced. . . . . [B]efore


the defendants have filed their formal answer to the amended complaint,
they moved to dismiss it for lack of jurisdiction.
Lastly, the plaintiff, having in the first place addressed to the jurisdiction of
the NLRC by filing with it a Third Party Claim may not at the same time
pursue the present amended Complaint under the forum shopping rule. 15
Their motion for reconsideration having been denied
Judge, 16 petitioner promptly filed this petition now before us.

by

respondent

In spite of the many errors assigned by petitioner, 17 we find that here the core issue
is whether or not the trial court may take cognizance of the complaint filed by
petitioner and consequently provide the injunction relief sought. Such cognizance in
turn, would depend on whether the acts complained of are related to, connected or
interwoven with the cases falling under the exclusive jurisdiction of the Labor
arbiter or the NLRC.
Petitioner avers that court a quo erred in dismissing the third-party claim on the
ground of lack of jurisdiction. Further, it contends that the NLRC-CAR did not acquire
jurisdiction over the claim for it did not impugn the decision of the NLRC-CAR but
merely questioned the propriety of the levy made by Sheriff Ventura. In support of
its claim, petitioner asserts that the instant case does not involve a labor dispute, as
no-employer-employee relationship exists between the parties. Nor is the
petitioner's case related in any way to either parties' case before the NLRC-CAR
hence, not within the jurisdiction of the Commission.
Basic as a hornbook principle, jurisdiction over the subject matter of a case is
conferred by law and determined by the allegations in the complainant 18 which
comprise a concise statement of the ultimate facts constituting the petitioner's
cause of action.19 Thus we have held that:
Jurisdiction over the subject-matter is determined upon the allegations made
in the complainant, irrespective of whether the plaintiff is entitled or not
entitled to recover upon the claim asserted therein - a matter resolved only
after and as a result of the trial. 20
Petitioner filed the third-party claim before the court a quo by reason of a writ of
execution issued by the NLRC-CAR Sheriff against a property to which it claims
ownership. The writ was issued to enforce and execute the commission's decision in
NLRC Case No. 01-08-0165-89 (Illegal Dismissal and Unfair Labor Practice) against
Green Mountain Farm, Roberto Ongpin and Almus Alabe.
Ostensibly the complaint before the trial court was for the recovery of possession
and injunction, but in essence it was an action challenging the legality or propriety
of the levy vis-a-vis the alias writ of execution, including the acts performed by the
Labor Arbiter and the Deputy Sheriff implementing the writ. The complainant was in

effect a motion to quash the writ of execution of a decision rendered on a case


properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and
Unfair Labor Practice. Considering the factual setting, it is then logical to conclude
that the subject matter of the third party claim is but an incident of the labor case, a
matter beyond the jurisdiction of regional trial courts.
Precedents abound confirming the rule that said courts have no labor jurisdiction to
act on labor cases or various incidents arising therefrom, including the execution of
decisions, awards or orders.21 Jurisdiction to try and adjudicate such cases pertains
exclusively to the proper labor official concerned under the Department of Labor
and Employment. To hold otherwise is to sanction split jurisdiction which is
obnoxious to the orderly administration of justice. 22
Petitioner failed to realize that by filing its third-party claim with the deputy sheriff,
it submitted itself to the jurisdiction of the Commission acting through the Labor
Arbiter.1wphi1 It failed to perceive the fact that what it is really controverting is
the decision of the Labor arbiter and not the act of the deputy sheriff in executing
said order issued as a consequence of said decision rendered.
Jurisdiction once acquired is not lost upon the instance of the parties but continues
until the case is terminated.23Whatever irregularities attended the issuance and
execution of the alias writ of execution should be referred to the same
administrative tribunal which rendered the decision. 24 This is because any court
which issued a writ of execution has the inherent power, for the advancement of
justice, to correct errors of its ministerial officers and to control its own processes. 25
The broad powers granted to the Labor Arbiter and to the National Labor Relations
Commission by Articles 217, 218 and 224 of the Labor Code can only be interpreted
as vesting in them jurisdiction over incidents arising from, in connection with or
relating to labor disputes, as the controversy under consideration, to the exclusion
of the regular courts.
Having established that jurisdiction over the case rests with the Commission, we
find no grave abuse of discretion on the part of respondent Judge Cabato in denying
petitioner's motion for the issuance of an injunction against the execution of the
decision of the National Labor Relations Commission.
Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits
issuance of a temporary or permanent injunction or restraining order in any case
involving or growing out of labor disputes by any court or other entity (except as
otherwise provided in Arts. 218 and 264). As correctly observed by court a quo, the
main issue and the subject of the amended complaint for injunction are questions
interwoven with the execution of the Commission's decision. No doubt the
aforecited prohibition in Article 254 is applicable.1wphi1
Petitioner should have filed its third-party claim before the Labor Arbiter, from
whom the writ of execution originated, before instituting said civil case. The NLRC's

Manual on Execution of Judgment,26 issued pursuant to Article 218 of the Labor


Code, provides the mechanism for a third-party claimant to assert his claim over a
property levied upon by the sheriff pursuant to an order or decision of the
Commission or of the Labor Arbiter. The power of the Labor Arbiter to issue a writ of
execution carries with it the power to inquire into the correctness of the execution of
his decision and to consider whatever supervening events might transpire during
such execution.
Moreover, in denying petitioner's petition for injunction, the court a quo is merely
upholding the time-honored principle that a Regional Trial Court, being a co-equal
body of the National Labor Relations Commission, has no jurisdiction to issue any
restraining order or injunction to enjoin the execution of any decision of the latter. 27
WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed
Orders of respondent Judge Fernando P. Cabato dated November 7, 1994 and
December 14, 1994, respectively are AFFIRMED. The records of this case are hereby
REMANDED to the National Labor Relations Commission for further
proceedings.1wphi1.nt
Costs against petitioner.
SO ORDERED.
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Bangko Sentral ng Pilipinas Monetary Board and Chuci Fonancier Vs. Hon.
Nina G. Antonio-Valenzuela, etc., et al., G.R. No. 184778, October 2, 2009
BRAGAT

THIRD DIVISION

BANGKO SENTRAL NG PILIPINAS


MONETARY BOARD and CHUCHI
FONACIER,

G.R. No. 184778

Petitioners,

Present:

- versus -

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

HON.
NINA
G.
ANTONIOVALENZUELA, in her capacity as
Regional Trial Court Judge of
Manila, Branch 28; RURAL BANK
OF PARAAQUE, INC.; RURAL BANK
OF SAN JOSE (BATANGAS), INC.;
RURAL BANK OF CARMEN (CEBU),
INC.; PILIPINO RURAL BANK, INC.;
PHILIPPINE COUNTRYSIDE RURAL
BANK, INC.; RURAL BANK OF
CALATAGAN
(BATANGAS),
INC.
(now DYNAMIC RURAL BANK);
RURAL BANK OF DARBCI, INC.;
RURAL
BANK
OF
KANANGA
(LEYTE),
INC.
(now
FIRST
INTERSTATE RURAL BANK); RURAL
BANK OF BISAYAS MINGLANILLA
(now BANK OF EAST ASIA); and
SAN PABLO CITY DEVELOPMENT
Promulgated:
BANK, INC.,
October 2, 2009
Respondents.
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case

This is a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a
Temporary Restraining Order (TRO)/Writ of Preliminary Injunction, questioning the
Decision dated September 30, 2008[1] of the Court of Appeals (CA) in CA-G.R. SP No.
103935. The CA Decision upheld the Order [2] dated June 4, 2008 of the Regional Trial
Court (RTC), Branch 28 in Manila, issuing writs of preliminary injunction in Civil Case
Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08119249, 08-119250, 08-119251, and 08-119273, and the Order dated May 21, 2008
that consolidated the civil cases.
The Facts
In September of 2007, the Supervision and Examination Department (SED) of
the Bangko Sentral ng Pilipinas (BSP) conducted examinations of the books of the

following banks: Rural Bank of Paraaque, Inc. (RBPI), Rural Bank of San Jose
(Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc.,
Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc.
(now Dynamic Rural Bank), Rural Bank of Darbci, Inc., Rural Bank of Kananga
(Leyte), Inc. (now First Interstate Rural Bank), Rural Bank de Bisayas Minglanilla
(now Bank of East Asia), and San Pablo City Development Bank, Inc.
After the examinations, exit conferences were held with the officers or
representatives of the banks wherein the SED examiners provided them with copies
of Lists of Findings/Exceptions containing the deficiencies discovered during the
examinations. These banks were then required to comment and to undertake the
remedial measures stated in these lists within 30 days from their receipt of the lists,
which remedial measures included the infusion of additional capital. Though the
banks claimed that they made the additional capital infusions, petitioner Chuchi
Fonacier, officer-in-charge of the SED, sent separate letters to the Board of Directors
of each bank, informing them that the SED found that the banks failed to carry out
the required remedial measures. In response, the banks requested that they be
given time to obtain BSP approval to amend their Articles of Incorporation, that they
have an opportunity to seek investors. They requested as well that the basis for the
capital infusion figures be disclosed, and noted that none of them had received the
Report of Examination (ROE) which finalizes the audit findings. They also requested
meetings with the BSP audit teams to reconcile audit figures. In response, Fonacier
reiterated the banks failure to comply with the directive for additional capital
infusions.
On May 12, 2008, the RBPI filed a complaint for nullification of the BSP ROE with
application for a TRO and writ of preliminary injunction before the RTC docketed as
Civil Case No. 08-119243 against Fonacier, the BSP, Amado M. Tetangco, Jr., Romulo
L. Neri, Vicente B. Valdepenas, Jr., Raul A. Boncan, Juanita D. Amatong, Alfredo C.
Antonio, and Nelly F. Villafuerte. RBPI prayed that Fonacier, her subordinates,
agents, or any other person acting in her behalf be enjoined from submitting the
ROE or any similar report to the Monetary Board (MB), or if the ROE had already
been submitted, the MB be enjoined from acting on the basis of said ROE, on the
allegation that the failure to furnish the bank with a copy of the ROE violated its
right to due process.
The Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc.,
Pilipino Rural Bank, Inc., Philippine Countryside Rural Bank, Inc., Rural Bank of
Calatagan (Batangas), Inc., Rural Bank of Darbci, Inc., Rural Bank
of Kananga (Leyte), Inc., and Rural Bank de Bisayas Minglanilla followed suit, filing
complaints with the RTC substantially similar to that of RBPI, including the reliefs
prayed for, which were raffled to different branches and docketed as Civil Cases
Nos. 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08119250, and 08-119251, respectively.
On May 13, 2008, the RTC denied the prayer for a TRO of Pilipino Rural Bank,
Inc. The bank filed a motion for reconsideration the next day.
On May 14, 2008, Fonacier and the BSP filed their opposition to the application for a
TRO and writ of preliminary injunction in Civil Case No. 08-119243 with the

RTC.Respondent Judge Nina Antonio-Valenzuela of Branch 28 granted RBPIs prayer


for the issuance of a TRO.
The other banks separately filed motions for consolidation of their cases in Branch
28, which motions were granted. Judge Valenzuela set the complaint of Rural Bank
of San Jose(Batangas), Inc. for hearing on May 15, 2008. Petitioners assailed the
validity of the consolidation of the nine cases before the RTC, alleging that the court
had already prejudged the case by the earlier issuance of a TRO in Civil Case No.
08-119243, and moved for the inhibition of respondent judge. Petitioners filed a
motion for reconsideration regarding the consolidation of the subject cases.
On May 16, 2008, San Pablo City Development Bank, Inc. filed a similar complaint
against the same defendants with the RTC, and this was docketed as Civil Case No.
08-119273 that was later on consolidated with Civil Case No. 08-119243. Petitioners
filed an Urgent Motion to Lift/Dissolve the TRO and an Opposition to the earlier
motion for reconsideration of Pilipino Rural Bank, Inc.
On May 19, 2008, Judge Valenzuela issued an Order granting the prayer for the
issuance of TROs for the other seven cases consolidated with Civil Case No. 08119243. On May 21, 2008, Judge Valenzuela issued an Order denying petitioners
motion for reconsideration regarding the consolidation of cases in Branch 28. On
May 22, 2008, Judge Valenzuela granted the urgent motion for reconsideration of
Pilipino Rural Bank, Inc. and issued a TRO similar to the ones earlier issued.
On May 26, 2008, petitioners filed a Motion to Dismiss against all the complaints
(except that of the San Pablo City Development Bank, Inc.), on the grounds that the
complaints stated no cause of action and that a condition precedent for filing the
cases had not been complied with. On May 29, 2008, a hearing was conducted on
the application for a TRO and for a writ of preliminary injunction of San Pablo City
Development Bank, Inc.
The Ruling of the RTC
After the parties filed their respective memoranda, the RTC, on June 4, 2008, ruled
that the banks were entitled to the writs of preliminary injunction prayed for. It held
that it had been the practice of the SED to provide the ROEs to the banks before
submission to the MB. It further held that as the banks are the subjects of
examinations, they are entitled to copies of the ROEs. The denial by petitioners of
the banks requests for copies of the ROEs was held to be a denial of the banks right
to due process.
The dispositive portion of the RTCs order reads:
WHEREFORE, the Court rules as follows:
1)

Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Rural Bank of Paranaque Inc.
is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let

a writ of preliminary injunction be issued to enjoin and restrain the


defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.
2)

Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Rural Bank of San Jose
(Batangas), Inc. is directed to post a bond executed to the
defendants, in the amount of P500,000.00 to the effect that the
plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide
that the plaintiff was not entitled thereto. After posting of the bond
and approval thereof, let a writ of preliminary injunction be issued
to enjoin and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection with
the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other
similar report prepared in connection with the examination
conducted on the plaintiff has been submitted to the Monetary
Board, the latter and its members (i.e. defendants Tetangco, Neri,
Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

3)

Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Rural Bank of Carmen
(Cebu), Inc. is directed to post a bond executed to the defendants,
in the amount of P500,000.00 to the effect that the plaintiff will pay
to the defendants all damages which they may sustain by reason of
the injunction if the Court should finally decide that the plaintiff was
not entitled thereto. After posting of the bond and approval thereof,
let a writ of preliminary injunction be issued to enjoin and restrain
the defendants from submitting the Report of Examination or any
other similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.

4)

Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Pilipino Rural Bank Inc. is
directed to post a bond executed to the defendants, in the amount

of P500,000.00 to the effect that the plaintiff will pay to the


defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.
5)

Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Philippine Countryside Rural
Bank Inc. is directed to post a bond executed to the defendants, in
the amount of P500,000.00 to the effect that the plaintiff will pay to
the defendants all damages which they may sustain by reason of
the injunction if the Court should finally decide that the plaintiff was
not entitled thereto. After posting of the bond and approval thereof,
let a writ of preliminary injunction be issued to enjoin and restrain
the defendants from submitting the Report of Examination or any
other similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.

6)

Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Dynamic Bank Inc. (Rural
Bank of Calatagan) is directed to post a bond executed to the
defendants, in the amount of P500,000.00 to the effect that the
plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide
that the plaintiff was not entitled thereto. After posting of the bond
and approval thereof, let a writ of preliminary injunction be issued
to enjoin and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection with
the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other
similar report prepared in connection with the examination
conducted on the plaintiff has been submitted to the Monetary
Board, the latter and its members (i.e. defendants Tetangco, Neri,
Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

7)

Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Rural Bank of DARBCI, Inc. is
directed to post a bond executed to the defendants, in the amount
of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.

8)

Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Rural Bank of Kananga Inc.
(First Intestate Bank), is directed to post a bond executed to the
defendants, in the amount of P500,000.00 to the effect that the
plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide
that the plaintiff was not entitled thereto. After posting of the bond
and approval thereof, let a writ of preliminary injunction be issued
to enjoin and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection with
the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other
similar report prepared in connection with the examination
conducted on the plaintiff has been submitted to the Monetary
Board, the latter and its members (i.e. defendants Tetangco, Neri,
Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

9)

Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section 4(b)
of the Revised Rules of Court, plaintiff Banco Rural De Bisayas
Minglanilla (Cebu) Inc. (Bank of East Asia) is directed to post a bond
executed to the defendants, in the amount of P500,000.00 to the
effect that the plaintiff will pay to the defendants all damages which
they may sustain by reason of the injunction if the Court should
finally decide that the plaintiff was not entitled thereto. After
posting of the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from
submitting the Report of Examination or any other similar report
prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on
Examination [sic] or any other similar report prepared in connection

with the examination conducted on the plaintiff has been submitted


to the Monetary Board, the latter and its members (i.e. defendants
Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of
said report.
10) Re: Civil Case No. 08-119273. Pursuant to Rule 58, Section 4(b) of
the Revised Rules of Court, plaintiff San Pablo City Development
Bank, Inc. is directed to post a bond executed to the defendants, in
the amount of P500,000.00 to the effect that the plaintiff will pay to
the defendants all damages which they may sustain by reason of
the injunction if the Court should finally decide that the plaintiff was
not entitled thereto. After posting of the bond and approval thereof,
let a writ of preliminary injunction be issued to enjoin and restrain
the defendants from submitting the Report of Examination or any
other similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has
been submitted to the Monetary Board, the latter and its members
(i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong,
Antonio, and Villafuerte) are enjoined and restrained from acting on
the basis of said report.[3]
The Ruling of the CA
Petitioners then brought the matter to the CA via a petition for certiorari under Rule
65 claiming grave abuse of discretion on the part of Judge Valenzuela when she
issued the orders dated May 21, 2008 and June 4, 2008.
The CA ruled that the RTC committed no grave abuse of discretion when it ordered
the issuance of a writ of preliminary injunction and when it ordered the
consolidation of the 10 cases.
It held that petitioners should have first filed a motion for reconsideration of the
assailed orders, and failed to justify why they resorted to a special civil action of
certiorari instead.
The CA also found that aside from the technical aspect, there was no grave abuse of
discretion on the part of the RTC, and if there was a mistake in the assessment of
evidence by the trial court, that should be characterized as an error of judgment,
and should be correctable via appeal.
The CA held that the principles of fairness and transparency dictate that the
respondent banks are entitled to copies of the ROE.
Regarding the consolidation of the 10 cases, the CA found that there was a
similarity of facts, reliefs sought, issues raised, defendants, and that plaintiffs and
defendants were represented by the same sets of counsels. It found that the joint
trial of these cases would prejudice any substantial right of petitioners.

Finding that no grave abuse of discretion attended the issuance of the orders by the
RTC, the CA denied the petition.
On November 24, 2008, a TRO was issued by this Court, restraining the CA, RTC,
and respondents from implementing and enforcing the CA Decision dated
September 30, 2008 in CA-G.R. SP No. 103935. [4]
By reason of the TRO issued by this Court, the SED was able to submit their
ROEs to the MB. The MB then prohibited the respondent banks from transacting
business
and
placed
them
under
receivership
under
Section 53 of Republic Act No. (RA) 8791[5] and Sec. 30 of RA
7653[6] through MB Resolution No. 1616 dated December 9, 2008; Resolution Nos.
1637 and 1638 dated December 11, 2008; Resolution Nos. 1647, 1648, and 1649
dated December 12, 2008; Resolution Nos. 1652 and 1653 dated December 16,
2008; and Resolution Nos. 1692 and 1695 dated December 19, 2008, with the
Philippine Deposit Insurance Corporation as the appointed receiver.
Now we resolve the main petition.
Grounds in Support of Petition
I.

II.

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN


NOT FINDING THAT THE INJUNCTION ISSUED BY THE REGIONAL
TRIAL COURT VIOLATED SECTION 25 OF THE NEW CENTRAL
BANK ACT AND EFFECTIVELY HANDCUFFED THE BANGKO
SENTRAL FROM DISCHARGING ITS FUNCTIONS TO THE GREAT
AND IRREPARABLE DAMAGE OF THE COUNTRYS BANKING
SYSTEM;
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT RESPONDENTS ARE ENTITLED TO BE FURNISHED
COPIES OF THEIR RESPECTIVE ROEs BEFORE THE SAME IS
SUBMITTED TO THE MONETARY BOARD IN VIEW OF THE
PRINCIPLES OF FAIRNESS AND TRANSPARENCY DESPITE LACK OF
EXPRESS PROVISION IN THE NEW CENTRAL BANK ACT
REQUIRING BSP TO DO THE SAME
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
DEPARTING FROM WELL-ESTABLISHED PRECEPTS OF LAW AND
JURISPRUDENCE
A.

B.

C.

THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED


RESORT TO PETITION FOR CERTIORARI UNDER RULE 65
INSTEAD
OF
FIRST
FILING
A
MOTION
FOR
RECONSIDERATION
RESPONDENT
BANKS
ACT
OF
RESORTING
IMMEDIATELY TO THE COURT WAS PREMATURE SINCE IT
WAS MADE IN UTTER DISREGARD OF THE PRINCIPLE OF
PRIMARY
JURISDICTION
AND
EXHAUSTION
OF
ADMINISTRATIVE REMEDY
THE ISSUANCE OF A WRIT OF PRELIMINARY
INJUNCTION BY THE REGIONAL TRIAL COURT WAS NOT

ONLY IMPROPER BUT AMOUNTED TO GRAVE ABUSE OF


DISCRETION[7]

Our Ruling
The petition is meritorious.
In Lim v. Court of Appeals it was stated:
The requisites for preliminary injunctive relief are: (a) the
invasion of right sought to be protected is material and substantial; (b)
the right of the complainant is clear and unmistakable; and (c) there is
an urgent and paramount necessity for the writ to prevent serious
damage.
As such, a writ of preliminary injunction may be issued only upon
clear showing of an actual existing right to be protected during the
pendency of the principal action. The twin requirements of a valid
injunction are the existence of a right and its actual or threatened
violations. Thus, to be entitled to an injunctive writ, the right to be
protected and the violation against that right must be shown. [8]
These requirements are absent in the present case.
In granting the writs of preliminary injunction, the trial court held that the
submission of the ROEs to the MB before the respondent banks would violate the
right to due process of said banks.
This is erroneous.
The respondent banks have failed to show that they are entitled to copies of
the ROEs. They can point to no provision of law, no section in the procedures of the
BSP that shows that the BSP is required to give them copies of the ROEs. Sec. 28 of
RA 7653, or the New Central Bank Act, which governs examinations of banking
institutions, provides that the ROE shall be submitted to the MB; the bank examined
is not mentioned as a recipient of the ROE.
The respondent banks cannot claim a violation of their right to due process if
they are not provided with copies of the ROEs. The same ROEs are based on the
lists of findings/exceptions containing the deficiencies found by the SED examiners
when they examined the books of the respondent banks. As found by the RTC, these
lists of findings/exceptions were furnished to the officers or representatives of the
respondent banks, and the respondent banks were required to comment and to
undertake remedial measures stated in said lists. Despite these instructions,
respondent banks failed to comply with the SEDs directive.
Respondent banks are already aware of what is required of them by the BSP,
and cannot claim violation of their right to due process simply because they are not
furnished with copies of the ROEs. Respondent banks were held by the CA to be

entitled to copies of the ROEs prior to or simultaneously with their submission to the
MB, on the principles of fairness and transparency. Further, the CA held that if the
contents of the ROEs are essentially the same as those of the lists of
findings/exceptions provided to said banks, there is no reason not to give copies of
the ROEs to the banks. This is a flawed conclusion, since if the banks are already
aware of the contents of the ROEs, they cannot say that fairness and transparency
are not present. If sanctions are to be imposed upon the respondent banks, they are
already well aware of the reasons for the sanctions, having been informed via the
lists of findings/exceptions, demolishing that particular argument. The ROEs would
then be superfluities to the respondent banks, and should not be the basis for a writ
of preliminary injunction. Also, the reliance of the RTC on Banco Filipino v. Monetary
Board[9] is misplaced. The petitioner in that case was held to be entitled to annexes
of the Supervision and Examination Sectors reports, as it already had a copy of the
reports themselves. It was not the subject of the case whether or not the petitioner
was entitled to a copy of the reports. And the ruling was made after the petitioner
bank was ordered closed, and it was allowed to be supplied with annexes of the
reports in order to better prepare its defense. In this instance, at the time the
respondent banks requested copies of the ROEs, no action had yet been taken by
the MB with regard to imposing sanctions upon said banks.
The issuance by the RTC of writs of preliminary injunction is an unwarranted
interference with the powers of the MB. Secs. 29 and 30 of RA 7653 [10] refer to the
appointment of a conservator or a receiver for a bank, which is a power of the MB
for which they need the ROEs done by the supervising or examining
department. The writs of preliminary injunction issued by the trial court hinder the
MB from fulfilling its function under the law. The actions of the MB under Secs. 29
and 30 of RA 7653 may not be restrained or set aside by the court except on
petition for certiorari on the ground that the action taken was in excess of
jurisdiction or with such grave abuse of discretion as to amount to lack or excess of
jurisdiction. The writs of preliminary injunction order are precisely what cannot be
done under the law by preventing the MB from taking action under either Sec. 29 or
Sec. 30 of RA 7653.
As to the third requirement, the respondent banks have shown no necessity
for the writ of preliminary injunction to prevent serious damage. The serious
damage contemplated by the trial court was the possibility of the imposition of
sanctions upon respondent banks, even the sanction of closure. Under the law, the
sanction of closure could be imposed upon a bank by the BSP even without notice
and hearing. The apparent lack of procedural due process would not result in the
invalidity of action by the MB. This was the ruling in Central Bank of
the Philippines v. Court of Appeals. [11] This close now, hear later scheme is grounded
on practical and legal considerations to prevent unwarranted dissipation of the
banks assets and as a valid exercise of police power to protect the depositors,
creditors, stockholders, and the general public. The writ of preliminary injunction
cannot, thus, prevent the MB from taking action, by preventing the submission of
the ROEs and worse, by preventing the MB from acting on such ROEs.
The trial court required the MB to respect the respondent banks right to due
process by allowing the respondent banks to view the ROEs and act upon them to
forestall any sanctions the MB might impose. Such procedure has no basis in law

and does in fact violate the close now, hear later doctrine. We held in Rural Bank of
San Miguel, Inc. v. Monetary Board, Bangko Sentral ng Pilipinas:
It is well-settled that the closure of a bank may be considered as
an exercise of police power. The action of the MB on this matter is final
and executory. Such exercise may nonetheless be subject to judicial
inquiry and can be set aside if found to be in excess of jurisdiction or
with such grave abuse of discretion as to amount to lack or excess of
jurisdiction.[12]
The respondent banks cannotthrough seeking a writ of preliminary injunction
by appealing to lack of due process, in a roundabout manner prevent their closure
by the MB.Their remedy, as stated, is a subsequent one, which will determine
whether the closure of the bank was attended by grave abuse of discretion. Judicial
review enters the picture only after the MB has taken action; it cannot prevent such
action by the MB. The threat of the imposition of sanctions, even that of closure,
does not violate their right to due process, and cannot be the basis for a writ of
preliminary injunction.
The close now, hear later doctrine has already been justified as a measure for
the protection of the public interest. Swift action is called for on the part of the BSP
when it finds that a bank is in dire straits. Unless adequate and determined efforts
are taken by the government against distressed and mismanaged banks, public
faith in the banking system is certain to deteriorate to the prejudice of the national
economy itself, not to mention the losses suffered by the bank depositors, creditors,
and stockholders, who all deserve the protection of the government. [13]
The respondent banks have failed to show their entitlement to the writ of
preliminary injunction. It must be emphasized that an application for injunctive relief
is construed strictly against the pleader. [14] The respondent banks cannot rely on a
simple appeal to procedural due process to prove entitlement. The requirements for
the issuance of the writ have not been proved. No invasion of the rights of
respondent banks has been shown, nor is their right to copies of the ROEs clear and
unmistakable. There is also no necessity for the writ to prevent serious
damage. Indeed the issuance of the writ of preliminary injunction tramples upon the
powers of the MB and prevents it from fulfilling its functions.There is no right that
the writ of preliminary injunction would protect in this particular case. In the
absence of a clear legal right, the issuance of the injunctive writ constitutes grave
abuse of discretion.[15] In the absence of proof of a legal right and the injury
sustained by the plaintiff, an order for the issuance of a writ of preliminary
injunction will be nullified.[16]

Courts are hereby reminded to take greater care in issuing injunctive relief to
litigants, that it would not violate any law. The grant of a preliminary injunction in a

case rests on the sound discretion of the court with the caveat that it should be
made with great caution.[17] Thus, the issuance of the writ of preliminary injunction
must have basis in and be in accordance with law. All told, while the grant or denial
of an injunction generally rests on the sound discretion of the lower court, this Court
may and should intervene in a clear case of abuse. [18]
WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision dated
September 30, 2008 in CA-G.R. SP No. 103935 is hereby REVERSED. The assailed
order and writ of preliminary injunction of respondent Judge Valenzuela in Civil Case
Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08119249,
08-119250,
08-119251,
and
08-119273
are
hereby
declared NULL and VOID.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice

Traders Royal Bank v. IAC, G.R. No. L-66321, October 31, 1984 PAGAPONG
G.R. No. L-66321 October 31 1984
TRADERS
ROYAL
BANK, petitioner,
vs.
THE HON INTERMEDIATE APPELATE COURT, HON., JESUS R. DE VEGA, AS
PRESIDING JUDGE OF THE RETIONAL TRIA COURT, THIRD JUDICIAL REGION,
BRANCH IX, MALOLOS, Bulacan, LA TONDEA, INC., VICTORINO P.
EVANGELISTA IN HIS CAPACITY AS Ex-Officio Provincial Sheriff of Bulacan,
and/or any and all his deputies, respondents.

ESCOLIN, J.:+.wph!1
The issue posed for resolution in this petition involves the authority of a Regional
Trial Court to issue, at the instance of a third-party claimant, an injunction enjoining
the sale of property previously levied upon by the sheriff pursuant to a writ of
attachment issued by another Regional Trial Court.
The antecedent facts, undisputed by the parties, are set forth in the decision of the
respondent Intermediate Appellate Court thus: t.hqw
Sometime on March 18, 1983 herein petitioner Traders Royal Bank
instituted a suit against the Remco Alcohol Distillery, Inc. REMCO
before the Regional Trial Court, Branch CX, Pasay City, in Civil Case No.
9894-P, for the recovery of the sum of Two Million Three Hundred
Eighty Two Thousand Two Hundred Fifty Eight & 71/100 Pesos

(P2,382,258.71) obtaining therein a writ of pre attachment directed


against the assets and properties of Remco Alcohol Distillery, Inc.
Pursuant to said writ of attachment issued in Civil Case No. 9894-P,
Deputy Sheriff Edilberto Santiago levied among others about 4,600
barrels of aged or rectified alcohol found within the premises of said
Remco Distillery Inc. A third party claim was filed with the Deputy
Sheriff by herein respondent La Tondea, Inc. on April 1, 1982 claiming
ownership over said attached property (Complaint, p. 17, Rollo).
On May 12, 1982, private respondent La Tondea, Inc. filed a
complaint-in- intervention in said Civil Case No. 9894, alleging among
others, that 'it had made advances to Remco Distillery Inc. which
totalled P3M and which remains outstanding as of date' and that the
'attached properties are owned by La Tondea, Inc.' (Annex '3' to
petitioner's Motion to Dismiss dated July 27, 1983 Annex "C" to the
petition).
Subsequently, private respondent La Tondea, Inc., without the
foregoing complaint-in- intervention having been passed upon by the
Regional Trial Court, Branch CX, (Pasay City), filed in Civil Case No.
9894-P a "Motion to Withdraw" dated October 8, 1983, praying that it
be allowed to withdraw alcohol and molasses from the Remco Distillery
Plant (Annex 4 to Petitioner's Motion to Dismiss-Annex C, Petition) and
which motion was granted per order of the Pasay Court dated January
27, 1983, authorizing respondent La Tondea, Inc. to withdraw alcohol
and molasses from the Remco Distillery Plant at Calumpit, Bulacan
(Annex "I" to Reply to Plaintiff's Opposition dated August 2, 1983
Annex E to the Petition).
The foregoing order dated January 27, 1983 was however reconsidered
by the Pasay Court by virtue of its order dated February 18, 1983
(Annex A Petition, p. 15) declaring that the alcohol "which has not
been withdrawn remains in the ownership of defendant Remco Alcohol
Distillery Corporation" and which order likewise denied La Tondea's
motion to intervene.
A motion for reconsideration of the foregoing order of February 18,
1983 was filed by respondent La Tondea, Inc., on March 8, 1983
reiterating its request for leave to withdraw alcohol from the Remco
Distillery Plant, and praying further that the "portion of the order dated
February 18, 1983" declaring Remco to be the owner of subject
alcohol, "be reconsidered and striken off said order". This motion has
not been resolved (p. 4, Petition) up to July 18, 1983 when a
manifestation that it was withdrawing its motion for reconsideration
was filed by respondent La Tondea Inc.

On July 19, 1983, private respondent La Tondea Inc. instituted before


the Regional Trial Court, Branch IX, Malolos, Bulacan presided over by
Respondent Judge, Civil Case No. 7003-M, in which it asserted its claim
of ownership over the properties attached in Civil Case No. 9894-P, and
likewise prayed for the issuance of a writ of Preliminary Mandatory and
Prohibitory Injunction (Annex B,id ).
A Motion to Dismiss and/or Opposition to the application for a writ of
Preliminary Injunction by herein respondent La Tondea Inc. was filed
by petitioner on July 27, 1983 (Annex C, p. 42, Id.)
This was followed by respondent La Tondea's opposition to petitioner's
Motion to Dismiss on August 1, 1983 (Annex D, p. 67, Id.).
A reply on the part of petitioner was made on the foregoing opposition
on August 3, 1983 (p. 92, Id.).
Hearings were held on respondent La Tondea's application for
injunctive relief and on petitioner's motion to dismiss on August 8, 19
& 23, 1983 (p. 5, Id.).
Thereafter, the parties filed their respective memoranda (Annex F, p.
104; Annex G, p. 113, Rollo).
Subsequently, the questioned order dated September 28, 1983 was
issued by the respondent Judge declaring respondent La Tondea Inc.
to be the owner of the disputed alcohol, and granting the latter's
application for injunctive relief (Annex H-1, Id.).
On October 6, 1983, respondent Sheriff Victorino Evangelista issued on
Edilberto A. Santiago Deputy Sheriff of Pasay City the corresponding
writ of preliminary injunction (Annex N, p. 127, Id.).
This was followed by an order issued by the Pasay Court dated October
11, 1983 in Civil Case No. 9894-P requiring Deputy Sheriff Edilberto A.
Santiago to enforce the writ of preliminary attachment previously
issued by said court, by preventing respondent sheriff and respondent
La Tondea, Inc. from withdrawing or removing the disputed alcohol
from the Remco ageing warehouse at Calumpit, Bulacan, and requiring
the aforenamed respondents to explain and show cause why they
should not be cited for contempt for withdrawing or removing said
attached alcohol belonging to Remco, from the latter's ageing
warehouse at Calumpit, Bulacan (Annex F, p. 141, Petition).
Thereafter, petitioner Traders Royal Bank filed with the Intermediate Appellate Court
a petition for certiorari and prohibition, with application for a writ of preliminary
injunction, to annul and set aside the Order dated September 28, 1983 of the

respondent Regional Trial Court of Malolos, Bulacan, Branch IX, issued in Civil Case
No. 7003-M; to dissolve the writ of preliminary injunction dated October 6, 1983
issued pursuant to said order; to prohibit respondent Judge from taking cognizance
of and assuming jurisdiction over Civil Case No. 7003-M, and to compel private
respondent La Tondea, Inc., and Ex- Oficio Provincial Sheriff of Bulacan to return
the disputed alcohol to their original location at Remco's ageing warehouse at
Calumpit, Bulacan.
In its decision, the Intermediate Appellate Court dismissed the petition for lack of
legal and factual basis, holding that the respondent Judge did not abuse his
discretion in issuing the Order of September 28, 1983 and the writ of preliminary
injunction dated October 3, 1983. citing the decision in Detective and Protective
Bureau vs. Cloribel(26 SCRA 255). Petitioner moved for reconsideration, but the
respondent court denied the same in its resolution dated February 2, 1984.
Hence, this petition.
Petitioner contends that respondent Judge of the Regional T- trial Court of Bulacan
acted without jurisdiction in entertaining Civil Case No. 7003-M, in authorizing the
issuance of a writ of preliminary mandatory and prohibitory injunction, which
enjoined the sheriff of Pasay City from interferring with La Tondea's right to enter
and withdraw the barrels of alcohol and molasses from Remco's ageing warehouse
and from conducting the sale thereof, said merchandise having been previously
levied upon pursuant to the attachment writ issued by the Regional Trial Court of
Pasay City in Civil Case No. 9894-P. It is submitted that such order of the Bulacan
Court constitutes undue and illegal interference with the exercise by the Pasay
Court of its coordinate and co-equal authority on matters properly brought before it.
We find the petition devoid of merit.
There is no question that the action filed by private respondent La Tondea, Inc., as
third-party claimant, before the Regional Trial Court of Bulacan in Civil Case No.
7003-M wherein it claimed ownership over the property levied upon by Pasay City
Deputy Sheriff Edilberto Santiago is sanctioned by Section 14, Rule 57 of the Rules
of Court. Thus t.hqw
If property taken be claimed by any person other than the party
against whom attachment had been issued or his agent, and such
person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves such
affidavit upon the officer while the latter has possession of the
property, and a copy thereof upon the attaching creditor, the officer
shall not be bound to keep the property under the attachment, unless
the attaching creditor or his agent, on demand of said officer, secures
aim against such claim by a bond in a sum not greater than the value
of the property attached. In case of disagreement as to such value, the
same shall be decided by the court issuing the writ of attachment. The

officer shall not be liable for damages, for the taking or keeping of such
property, to any such third-party claimant, unless such a claim is so
made and the action upon the bond brought within one hundred and
twenty (120) days from the date of the filing of said bond. But nothing
herein contained shall prevent such third person from vindicating his
claim to the property by proper action ...
The foregoing rule explicitly sets forth the remedy that may be availed of by a
person who claims to be the owner of property levied upon by attachment, viz: to
lodge a third- party claim with the sheriff, and if the attaching creditor posts an
indemnity bond in favor of the sheriff, to file a separate and independent action to
vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314). And this precisely
was the remedy resorted to by private respondent La Tondea when it filed the
vindicatory action before the Bulacan Court.
The case before us does not really present an issue of first impression. In Manila
Herald Publishing Co., Inc. vs. Ramos, 1 this Court resolved a similar question in this
wise: t.hqw
The objection that at once suggests itself to entertaining in Case No.
12263 the motion to discharge the preliminary attachment levied in
Case No. 11531 is that by so doing one judge would interfere with
another judge's actuations. The objection is superficial and will not
bear analysis.
It has been seen that a separate action by the third party who claims
to be the owner of the property attached is appropriate. If this is so, it
must be admitted that the judge trying such action may render
judgment ordering the sheriff of whoever has in possession the
attached property to deliver it to the plaintiff-claimant or desist from
seizing it. It follows further that the court may make an interlocutory
order, upon the filing of such bond as may be necessary, to release the
property pending final adjudication of the title. Jurisdiction over an
action includes jurisdiction over an interlocutory matter incidental to
the cause and deemed necessary to preserve the subject matter of the
suit or protect the parties' interests. This is self-evident.
xxx xxx xxx
It is true of course that property in custody of the law can not be
interfered without the permission of the proper court, and property
legally attached is property in custodia legis. But for the reason just
stated, this rule is confined to cases where the property belongs to the
defendant or one in which the defendant has proprietary interest.
When the sheriff acting beyond the bounds of his office seizes a
stranger's property, the rule does not apply and interference with his
custody is not interference with another court's order of attachment.

It may be argued that the third-party claim may be unfounded; but so


may it be meritorious, for that matter. Speculations are however beside
the point. The title is the very issue in the case for the recovery of
property or the dissolution of the attachment, and pending final
decision, the court may enter any interlocutory order calculated to
preserve the property in litigation and protect the parties' rights and
interests.
Generally, the rule that no court has the power to interfere by injunction with the
judgments or decrees of a concurrent or coordinate jurisdiction having equal power
to grant the injunctive relief sought by injunction, is applied in cases where no thirdparty claimant is involved, in order to prevent one court from nullifying the
judgment or process of another court of the same rank or category, a power which
devolves upon the proper appellate court . 2 The purpose of the rule is to avoid
conflict of power between different courts of coordinate jurisdiction and to bring
about a harmonious and smooth functioning of their proceedings.
It is further argued that since private respondent La Tondea, Inc., had voluntarily
submitted itself to the jurisdiction of the Pasay Court by filing a motion to intervene
in Civil Case No. 9894-P, the denial or dismissal thereof constitutes a bar to the
present action filed before the Bulacan Court.
We cannot sustain the petitioner's view. Suffice it to state that intervention as a
means of protecting the third-party claimant's right in an attachment proceeding is
not exclusive but cumulative and suppletory to the right to bring an independent
suit. 3 The denial or dismissal of a third-party claim to property levied upon cannot
operate to bar a subsequent independent action by the claimant to establish his
right to the property even if he failed to appeal from the order denying his original
third-party claim. 4
WHEREFORE, the instant petition is hereby dismissed and the decision of the
Intermediate Appellate Court in AC-G.R. No. SP-01860 is affirmed, with costs against
petitioner Traders Royal Bank.
SO ORDERED.1wph1.t
Aquino, Concepcion, Jr., Guerrero and Cuevas, JJ., concur.
Makasiar and Abad Santos, JJ., reserves their vote

RCBC Capital Corporation v. Banco de Oro Unibank, Inc., G.R. No. 196171, 10
December 2012 TIU
G.R. No. 196171

January 15, 2014

RCBC
CAPITAL
CORPORATION, Petitioner,
vs.
BANCO DE ORO UNIBANK, INC. (now BDO UNIBANK, INC.), Respondent.
x-----------------------x
G.R. No. 199238
BANCO
DE
ORO
UNIBANK,
INC., Petitioner,
vs.
COURT OF APPEALS and RCBC CAPITAL CORPORATION, Respondents.
x-----------------------x
G.R. No. 200213
BANCO
DE
ORO
UNIBANK,
INC., Petitioner,
vs.
RCBC CAPITAL CORPORATION and THE ARBITRAL TRIBUNAL IN ICC
ARBITRATION REF. NO. 13290/MS/JEM AND/OR RICHARD IAN BARKER, NEIL
KAPLAN AND SANTIAGO KAPUNAN, in their official capacity as Members of
THE ARBITRATION TRIBUNAL, Respondents.
RESOLUTION
VILLARAMA, JR., J.:
Before the Court are: (1) the Joint Motion and Manifestation dated October 1, 2013
filed in G.R. Nos. 196171 & 199238 by RCBC Capital Corporation ("RCBC Capital"),
BDO Unibank, Inc. ("BDO"), and George L. Go, in his personal capacity and as
attorney-in-fact of the individual stockholders as listed in the Share Purchase
Agreement dated May 27, 2000 ("Go/Shareholders"), thru their respective counsels;
and (2) the Joint Motion and Manifestation dated October 1, 2013 filed in G.R. No.
200213 by BDO and RCBC Capital thru their respective counsel.
All three petitions emanated from arbitration proceedings commenced by RCBC
Capital pursuant to the arbitration clause under its Share Purchase Agreement (SPA)
with EPCIB involving the latters shares in Bankard, Inc. In the course of arbitration
conducted by the Tribunal constituted and administered by the International
Chamber of Commerce-International Commercial Arbitration (ICC-ICA), EPCIB was
merged with BDO which assumed all its liabilities and obligations.
G.R. No. 196171 is a petition for review under Rule 45 seeking to reverse the Court
of Appeals (CA) Decision dated December 23, 2010 in CA-G.R. SP No. 113525 which
reversed and set aside the June 24, 2009 Order of the Regional Trial Court (RTC) of
Makati City, Branch 148 in SP Proc. Case No. M-6046. The RTC confirmed the Second

Partial Award issued by the Arbitration Tribunal ordering BDO to pay RCBC Capital
proportionate share in the advance costs and dismissing BDOs counterclaims.
G.R. No. 199238 is a petition for certiorari under Rule 65 assailing the September
13, 2011 Resolution in CA-G.R. SP No. 120888 which denied BDOs application for
the issuance of a stay order and/or temporary restraining order (TRO)/preliminary
injunction against the RTC of Makati City, Branch 148 in Sp. Proc. Case No. M-6046.
Acting upon RCBC Capitals urgent motion, the RTC issued on August 22, 2011 a writ
of execution for the implementation of the courts order confirming the Final Award
rendered by the Arbitration Tribunal on June 16, 2010.
On the other hand, G.R. No. 200213, filed on February 6, 2012, is a petition for
review under Rule 45 praying for the reversal of the CAs Decision dated February
24, 2011 and Resolution dated January 13, 2012 in CA-G.R. SP No. 113402. The CA
denied BDOs petition for certiorari and prohibition with application for issuance of a
TRO and/or writ of preliminary injunction against the RTC of Makati City, Branch 148
in Sp. Proc. Case No. M-6046. By Order dated June 24, 2009, the RTC denied BDOs
motion for access of the computerized accounting system of Bankard, Inc. after
Chairman Richard Ian Barker had denied BDOs request that it be given access to
the said source of facts or data used in preparing the accounting summaries
submitted in evidence before the Arbitration Tribunal.
G.R. Nos. 196171 & 199238 were consolidated and a Decision was rendered by this
Court on December 10, 2012, the dispositive portion of which states:
WHEREFORE, premises considered, the petition in G.R. No. 199238 is DENIED. The
Resolution dated September 13, 2011 of the Court of Appeals in CA-G.R. SP No.
120888 is AFFIRMED.
The petition in G.R. No. 196171 is DENIED. The Decision dated December 23, 2010
of the Court of Appeals in CA-G.R. SP No. 113525 is hereby AFFIRMED.
SO ORDERED.1
Both RCBC Capital and BDO filed motions for partial reconsideration of the above
decision.
Meanwhile, in G.R. No. 200213, RCBC Capital filed its Comment, to which a Reply
was filed by BDO. By Resolution dated July 22, 2013, both parties were directed to
submit their respective memoranda within 30 days from notice.
In their Joint Motion and Manifestation filed in G.R. Nos. 196171 & 199238, the
parties submit and pray that
5. After negotiations, the Parties have mutually agreed that it is in their best
interest and general benefit to settle their differences with respect to their
respective causes of action, claims or counterclaims in the RCBC Capital

Petition and the BDO Petition, with a view to a renewal of their business
relations.
6. Thus, the parties have reached a complete, absolute and final settlement
of their claims, demands, counterclaims and causes of action arising, directly
or indirectly, from the facts and circumstances giving rise to, surrounding or
arising from both Petitions, and have agreed to jointly terminate and dismiss
the same in accordance with their agreement.
7. In view of the foregoing compromise between the Parties, BDO, RCBC
Capital and Go/Shareholders, with the assistance of their respective counsels,
have decided to jointly move for the termination and dismissal of the abovecaptioned cases with prejudice.
PRAYER
WHEREFORE, RCBC CAPITAL CORPORATION, BDO UNIBANK, INC. and GEORGE L. GO,
IN HIS PERSONAL CAPACITY AND AS ATTORNEY-IN-FACT OF THE INDIVIDUAL
STOCKHOLDERS AS LISTED IN THE SHARE PURCHASE AGREEMENT DATED 27 MAY
2000 respectfully pray that this Honorable Court order the termination and dismissal
of the above-captioned cases, with prejudice. RCBC Capital BDO and
Go/Shareholders respectfully pray for such other relief as may be deemed just or
equitable under the premises.2
BDO and RCBC Capital likewise submit and pray in their Joint Motion and
Manifestation in G.R. No. 200213 that
3. After negotiations, the Parties have mutually agreed that it is in their best
interest and general benefit to settle their differences with respect to their
respective causes of action, claims or counterclaims in the above-captioned
case, with a view to a renewal of their business relations.
4. Thus, the Parties have reached a complete, absolute and final settlement
of their claims, demands, counterclaims and causes of action arising, directly
or indirectly, from the facts and circumstances giving rise to, surrounding or
arising from the present Petition, and have agreed to jointly terminate and
dismiss the present Petition in accordance with their agreement.
5. In view of the foregoing compromise between the Parties, BDO and RCBC
Capital, with the assistance of their respective counsels, have decided to
jointly move for the termination and dismissal of the above-captioned case
with prejudice.1wphi1
PRAYER

WHEREFORE, BDO UNIBANK, INC. and RCBC CAPITAL CORPORATION respectfully


pray that this Honorable Court order the termination and dismissal of the abovecaptioned case, with prejudice.
BDO and RCBC Capital respectfully pray for such other relief as may be deemed just
or equitable under the premises. 3
Under this Court s Resolution dated November 27, 2013, G.R. No. 200213 is ordered
consolidated with G.R. Nos. 196171 199238.
IN VIEW OF THE FOREGOING and as prayed for, G.R. Nos. 196171, 199238 and
200213 are hereby ordered DISMISSED with prejudice and are deemed CLOSED and
TERMINATED.
SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice

Supreme Court Administrative Circular No. 11 2000 MISSING!


RE: BAN ON THE ISSUANCE OF TEMPORARY RESTRAINING ORDERS OR WRITS OF
PRELIMINARY PROHIBITORY OR MANDATORY INJUNCTIONS IN CASES INVOLVING
GOVERNMENT INFRASTRUCTURE PROJECTS.

Republic v. Nolasco, G.R. No. 155108, April 27, 2005


SECOND DIVISION
[G.R. No. 155108. April 27, 2005]
REPUBLIC OF THE PHILIPPINES, Represented by Department of Public
Works and Highways (DPWH) under Secretary Simeon Datumanong and
Undersecretary Edmundo V. Mir, then Chairman Of Bid and Awards
Committee (BAC), Assistant Secretary Bashir D. Rasuman, BAC ViceChairman, Director Oscar D. Abundo, BAC Member Director OIC-Director
Antonio V. Malano, Jr., BAC Member and Project Director Philip F.
Menez, petitioner, vs. EMILIANO R. NOLASCO, respondent.
DECISION
TINGA, J.:
An obiter dictum is a nonessential, welcome and sublime like a poem of love in a
last will or unwanted and asinine as in brickbats in a funeral oration. It is neither

enforceable as a relief nor the source of a judicially actionable claim. However, by


reason of its non-binding nature, the pronouncement does not generally constitute
error of law or grave abuse of discretion, even if it proves revelatory of the
erroneous thinking on the part of the judge. It is chiefly for that reason that this
petition is being denied, albeit with all clarifications necessary to leave no doubt as
to the status and legal effect of the controvertible Order dated 6 September 2002
issued by Judge Juan C. Nabong, Jr. (Petitioner) of the Regional Trial Court (RTC) of
Manila, Branch 32.
The root of the dispute is a public works project, the Agno River Flood Control
Project (Project), the undertaking of which has been unfortunately delayed due to
the present petition. Funding for the project was to be derived primarily through a
loan from the Japan Bank for International Cooperation (JBIC). A Bid and Awards
Committee (BAC) was constituted by the Department of Public Works and Highways
(DPWH) for the purpose of conducting international competitive bidding for the
procurement of the contract for Package IIthe Guide Channel to Bayambang under
Phase II of the Project.[1] Six (6) pre-qualified contractors submitted their bids for the
project, among them the present intervenors Daewoo Engineering and Construction
Co., Ltd. (Daewoo), and China International Water and Electric Corp. (China
International).
However, even before the BAC could come out with its recommendations, a legal
challenge had already been posed to preempt the awarding of the contract to
Daewoo. On 19 February 2002, Emiliano R. Nolasco, a self-identified taxpayer and
newspaper publisher/editor-in-chief,[2] filed a Petition, seeking a temporary
restraining order and/or preliminary injunction, with the RTC of Manila, naming the
DPWH and the members of the BAC as respondents. He alleged having obtained
copies of Confidential Reports from an Unnamed DPWH Consultant, which he
attached to his petition. Nolasco argued that based on the confidential reports it
was apparent that Daewoos bid was unacceptable and the putative award to
Daewoo, illegal, immoral, and prejudicial to the government and the Filipino
taxpayers. Invoking his right as a taxpayer, Nolasco prayed that the DPWH and BAC
be restrained from awarding the contract to Daewoo and Daewoo disqualified as a
bidder.[3]
The petition was raffled to the sala of Judge Nabong and docketed as Civil Case No.
02-102923. An ex-parte hearing was conducted on the prayer for a temporary
restraining order (TRO), with Nolasco alone in attendance. Petitioner issued
an Order dated 4 March 2002 directing the issuance of a TRO, enjoining the DPWH
and the BAC from awarding the contract to Daewoo and that [Daewoo] be
disqualified as bidder and its bidders be rejected from carrying out the Project. [4] The
term of the TRO was for a period of twenty (20) days.
Upon learning of the TRO, the DPWH and the BAC, through the Office of the Solicitor
General (OSG), filed a Motion to Dismiss Petition with Motion for Dissolution of
Temporary Restraining Order Dated March 4, 2002. [5] While noting the impropriety
of a twenty (20)-day TRO without prior notice or hearing, they pointed out that
Republic Act No. 8975 precisely prohibited the issuance by any court, save the
Supreme Court, of a TRO or preliminary injunction which restrains or prohibits the

bidding for or awarding of a contract/project of the national government.


Accordingly, they prayed that the petition be dismissed and the TRO dissolved.
This new motion was set for hearing on 21 March 2002, and thereupon the parties
were afforded the opportunity to argue their case. Then, on 27 March 2002, the RTC
issued an order dismissing Nolascos petition. The dismissal of the petition was
warranted, according to the RTC, as it was a suit against the State, which had been
sued without its consent.[6] The RTC also noted that Nolasco had not established that
he would sustain a direct injury should the contract be awarded to Daewoo, and that
the general interest which may have been possessed by Nolasco along with all
members of the public would not suffice. [7]
Interestingly, on 2 April 2002, the OSG claims to have received a copy of an alleged
order dated 22 March 2002 purportedly signed by Judge Nabong which denied the
motion to dismiss, gave the petition due course, and granted the preliminary
injunction subject to the posting of an injunction bond in the amount of Five
Hundred Thousand Pesos (P500,000.00).[8]However, in a Certification signed by
Loida P. Moralejo, Officer-in-Charge of RTC Branch 32, it was attested that the
signature in this order was spurious, and affirmed instead the Orderdated 22 March
2002 dismissing the petition.[9]
In the meantime, the BAC issued Resolution No. MFCDP-RA-02 dated 1 April 2002.
The BAC noted therein that among the three lowest bidders were Daewoo and China
International, and that based on the bid amounts as corrected, the bid of Daewoo
was the lowest of the three, followed by China Internationals. [10] As a result, the BAC
resolved to recommend the award of the contract for the Project to Daewoo. Then
DPWH Secretary Simeon Datumanong approved the recommendation by affixing his
signature on the Resolution on the same day.[11] A copy of the Resolution and the Bid
Evaluation Report was furnished to JBIC for review and concurrence. [12]
For his part, Nolasco filed a motion for reconsideration dated 3 April 2002, seeking
the reversal of the Order dated 27 March 2002 dismissing his petition. Nolasco set
this motion for reconsideration for hearing on 18 April 2002, but none apparently
ensued.[13] The OSG filed its Opposition/Comment/Manifestation dated 24 April 2002
wherein it prayed that it be allowed to adopt its earlier motion to dismiss as its
opposition to the motion for reconsideration. The RTC granted OSGs prayer in
an Order dated 13 May 2002.[14] In the same Order, the RTC likewise stated that in
the spirit of comprehensive fairness, this Court must, and hereby, [set] the hearing
on the reception of petitioners evidence on this Motion [for Reconsideration] on 17
May 2002.[15]
During the hearing of 17 May 2002, the OSG asked Judge Nabong to clarify his
directive that a hearing be had for the reception of Nolascos evidence. Judge
Nabong clarified that his bent was for petitioner to present his evidence but no
longer on the question of whether a TRO or injunction should be issued. The RTC
granted the OSGs prayer to submit a motion for reconsideration of this order, which
the OSG did on 31 May 2002.[16] In the motion for reconsideration, the OSG argued
that it was unnecessary to receive Nolascos evidence, considering that the
dismissal of the petition was grounded on pure questions of law. It also sought

clarification of Judge Nabongs remarks during the 17 May 2002 hearing, which
seemed to imply that this new hearing would actually be on the merits of the
petition.
This new OSG motion was submitted to the RTC during the hearing of 28 June 2002,
wherein Petitioner announced that the motion was to be resolved in due time. At the
same time, the RTC allowed Nolasco to adduce his evidence over the objections of
the OSG. Nolasco presented a witness, Engineer Shohei Ezaki, a DPWH consultant
hired by JBIC who testified pursuant to a subpoena earlier issued by the court. Ezaki
testified as to the Evaluation Report and Result prepared by his consultant firm and
which had been earlier attached to Nolascos petition. Nolasco also intimated its
intention to present DPWH Director Philip F. Meez as a witness on his behalf. In the
hearing of 2 August 2002, the OSG manifested that it would file motions opposing
the presentation of witnesses by Nolasco and the issuance of subpoenas requiring
their testimony. In its order issued in open court on 2 August 2002, the RTC deferred
the further presentation of Nolascos witnesses pending the filing of OSGs motions.
At that point, the proceedings thus far undertaken had been unorthodox. Then the
course veered sharply to the bizarre. Nolasco filed a motion dated 12 August 2002,
seeking the rendition of a partial judgment and dismissal of his own petition, based
on the proceedings that had transpired during the hearings held on 28 June and 2
August 2002.[17] In the motion, Nolasco reiterated his submission that based on the
evidence presented thus far, Daewoo should have been disqualified from bidding on
the project. While the prayer for the dismissal of the motion for reconsideration was
anchored on the need to abbreviate the proceedings so as to implement the
projects, the motion nonetheless urged the court, to issue a partial judgment and
award the bid for the Project to China International. Nolasco likewise filed a Formal
Offer of Evidence dated 29 August 2002. The offered evidence included various
documents and the testimony of Nolasco and his witnesses previously heard by the
court. Both submissions of Nolasco were vigorously objected to by the OSG in
pleadings filed to that effect.[18]
Then, on 6 September 2002, the RTC issued the Order now assailed before this
Court. It included a brief discussion of the factual antecedents, as well as the 27
March 2002 Orderdismissing the petition and the various pleadings filed by the
parties prior and subsequent to the dismissal of the petition. The last two pages of
the four (4)-page Order proceeded to dissect the testimonies and ultimate
dispositions therein. The last three paragraphs of the Order and its fallo are
replicated below in full:
In the hearing, however, on August 21, 2002, Atty. Abelardo M. Santos for petitioner
in open court, formally offered the testimony of Mr. Ezaki, although, before the start
of his testimony Atty. Santos Manifested: Your Honor, the purpose of the testimony
of this witness is to show that they had made a technical study of all the prequalified bidders referring to the Agno River Flood Control Project, Phase II.
Engr Shohel Ezaki, hired by the Japan Bank for International Cooperation (JBIC)
through which the funding, granted by the Overseas Development Assistance
(ODA), is covered and flows through, and the DPWH and President, Philippines

Office, Nippon Koie Company, Ltd., (testifying under an issued subpoena duces
tecum ad testificandum) testified that the Evaluation Report and Result of their
consultant firm in association with the PKII and the Basic Team Inc., (doing
evaluation works for the DPWH) disqualified DAEWOO and ITALIAN THAI on Packages
1 and 2, Phase II. Insofar, moreover, as regards Package 1, Phase II, the bids
submitted by TOA Corporation is the lowest evaluated responsive bid. The second
lowest evaluated responsive bid is that of China State Construction Engineering. In
open court, on August 2, 2002, Director Engr. Philip F. Menez, Major Floor Control &
Drainage Project-Project Management Office, Cluster II, DPWH, confirmed the award
to TOA Corporation, the evaluated responsive bid, Package 1.
All told, and presently, and urgently, there is the need to implement the PROJECTS
in this petition so as not to affect the ODA funding, harnessed through JBIC. More so,
in addition, and a thoughtful consideration of pleadings and argument, from the
Formal Offer of Evidence ADMITTED, facts, hearing, respondent BAC has strayed
from fairly applying the Bidding Laws, Guidelines, Rules, and Regulations, and Bid
Tender Documents and, as a matter of fairness, and in the interest of justice,
considering other bidders whose bids have been evaluated by the Technical Working
Group including the consultant, Nippon Koie Company, Ltd., in association with the
PKII and the Basic Team, Inc., to be substantially responsive, the Honorable
Simeon P. Datumanong must now seriously consider and effect the award
of Package 2, PHASE II, of the Agno River Floor Control Project, as duly
recommended by the Consultants and the Technical Working Group, DPWH, to China
International Water & Electric Corporation being the lowest evaluated responsive
bid.
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the
Petition is hereby DISMISSED.
SO ORDERED. (Emphasis supplied)[19]
The OSG received a copy of the Order dated 6 September 2002 on 17 September
2002. It opted to file a Petition for Review on Certiorari under Rule 45 with this
Court, instead of resorting to a motion for reconsideration, to avert unnecessary
delay of the implementation of the Project which would result in millions of pesos in
damages. The OSG thus alleges that the petition raises pure questions of law,
thereby dispensing with recourse to the Court of Appeals. [20]
The OSG also notes that in a letter to the DPWH dated 21 June 2002, JBIC, through
Chief Representative Mitsuru Taruki, let it be known that it had decided to hold in
abeyance its concurrence to the project, as the issue [was] now under the
jurisdiction of the appropriate Philippine courts and other relevant organizations of
the Philippine government, and that it would be prudent to wait for the decisions of
the proper authorities before taking any action on the matter. [21] It is likewise worth
noting at this juncture that Nolasco had also filed a verified complaint against the
Chairman and members of the BAC with the Presidential Anti-Graft Commission, as
well as another complaint with the National Economic Development Authority and a
complaint-letter with JBIC itself requesting that the bank reject the award to
Daewoo.[22]

Since the filing of the present petition, both Daewoo and China International have
since participated in the case. Daewoo filed a Comment-in-Intervention dated 10
January 2003, which this Court treated as a petition-In-intervention. [23] Upon order of
this Court, China International filed a Comment-in-Intervention dated 5 February
2003.
Petitioner imputes error to the RTC in taking notice of and resolving Nolascos Motion
to Issue Partial Judgment and Motion to Dismiss Petition, which they characterize as
a trifle. Substantively, it asserts that the RTC erred in directing the DPWH to perform
an affirmative act even though the court had no more jurisdiction over the petition,
considering that the RTC never resolved the motion for reconsideration filed by
Nolasco. It also avers that Nolascos original petition had been substantially
amended, without leave of court and without notice to the Petitioner, and that they
had not been afforded the opportunity to file an answer to the petition. Moreover,
the RTC is alleged to have erred in directing the award of the subject package to
China International, a stranger to the case, without ordering the inclusion of Daewoo
as an indispensable party.
We can recast the legal question within the framework of whether the RTC
committed a reversible error in assailed Order dated 6 September 2002. It is a mark
of the strangeness of this case that Petitioner seeks the nullification of a dispositive
order that affirms the very dismissal of the case they likewise seek. However, given
the circumstances, the dilemma of Petitioner is understandable. While the fallo of
the assailed Order is indeed favorable to them, the body thereof is a palpable
source of mischief.
The Petitioner assails only the Order of 6 September 2002. However, it behooves
this Court to be more comprehensive in approach, in part to elucidate on the proper
steps that should be undertaken by lower court judges when confronted with
complaints or petitions affecting national government infrastructure projects. Our
review will necessarily entail an examination of the propriety of the procedure
adopted by the RTC in disposing of Nolascos petition. It would be best for the Court
to diagram the procedures undertaken below like a grammar school teacher to
illustrate the multiple errors attendant in this case. From a chronological standpoint,
the first matter for discussion would be Nolascos Petition before the RTC.
The caption of the Petition states that it is for Issuance of a Temporary Restraining
Order and/or Preliminary Injunction.[24] In the Petition, Nolasco averred that he
received a letter from a resident of Bayambang, Pangasinan, regarding the latters
observations on the Public Bidding made on the Project; that Nolasco contacted his
sources at the DPWH and learned that the Project would be awarded to Daewoo;
that he obtained a Confidential Report from an Unnamed DPWH Consultant which
allegedly concluded that Daewoos bid was unacceptable. From these premises,
Nolasco argued that he was entitled to the issuance of a temporary restraining
order or preliminary injunction, as the award to the contracts to Daewoo would
probably cause injustice to him as a taxpayer. As prayer, Nolasco asked that the
respondents therein (herein Petitioner) be restrained from awarding the contracts to
Daewoo and that Daewoo be disqualified as a bidder and its bid rejected.

It would be difficult to ascertain the nature of Nolascos action if the Court were
obliged to rely alone on the caption of his pleading. The caption describes
the Petition as one for issuance of a temporary restraining order and/or preliminary
injunction; hence, implying that the action seeks only provisional reliefs without the
necessary anchor of a final relief. Moreover, the use of Petition in lieu of Complaint
seemingly implies that the action brought forth is the special civil action of
prohibition under Rule 65, yet this is not supported by the body of the pleading itself
as it is bereft of the necessary allegations of grave abuse of discretion or
absence/excess of jurisdiction and the absence of any other plain speedy and
adequate remedy.[25]
Nonetheless, the principle consistently adhered to in this jurisdiction is that it is not
the caption but the allegations in the complaint or other initiatory pleading which
give meaning to the pleading and on the basis of which such pleading may be
legally characterized.[26] An examination of the petition reveals that it should be
considered as a complaint for injunction, with a prayer for the provisional relief of
temporary restraining order/preliminary injunction. After all, the Petition prayed that
respondents therein (Petitioner herein) be restrained from awarding the contracts to
Daewoo, citing as basis thereof its unacceptability, as purportedly established by
the evaluation report.
Nonetheless, the prayer for the issuance of a temporary restraining order or
preliminary injunction affecting the bidding or awarding of a national government
contract or project, would have called for the application of Republic Act No. 8975
and the corresponding denial of the prayer for provisional relief. Still, the RTC
instead issued a TRO in its Order dated 4 March 2002.
Republic Act No. 8975 definitively enjoins all courts, except the Supreme Court, from
issuing any temporary restraining order, preliminary injunction, or preliminary
mandatory injunction against the government, or any of its subdivisions, officials or
any person or entity to restrain, prohibit or compel the bidding or awarding of a
contract or project of the national government, [27] precisely the situation that
obtains in this case with respect to the Agno River Project. The only exception would
be if the matter is of extreme urgency involving a constitutional issue, such that
unless the temporary restraining order is issued, grave injustice and irreparable
injury will arise.[28] The TRO issued by the RTC failed to take into consideration said
law. Neither did it advert to any extreme urgency involving a constitutional issue, as
required by the statute. The law ordains that such TRO is void, [29] and the judge who
issues such order should suffer the penalty of suspension of at least sixty (60) days
without pay.[30]
Nevertheless, there is no need to belabor this point since the TRO no longer
subsists. It appears that the RTC subsequently realized the import of Republic Act
No. 8975 as it cited the same in its 27 March 2002 Order dismissing the Petition:
Applying Republic Act No. 8975, most particularly Section 3 thereof, and
Administrative Circular No. 11-2000 issued on November 13, 2000 by the Honorable
Hilario G. Davide, Jr., Chief Justice, Supreme Court, all parties having copies, the
Petition at bench ought to be dismissed outrightly (sic). [31]

However, it must be clarified that Republic Act No. 8975 does not ordinarily warrant
the outright dismissal of any complaint or petition before the lower courts seeking
permanent injunctive relief from the implementation of national government
infrastructure projects. What is expressly prohibited by the statute is the issuance of
the provisional reliefs of temporary restraining orders, preliminary injunctions, and
preliminary mandatory injunctions. It does not preclude the lower courts from
assuming jurisdiction over complaints or petitions that seek as ultimate relief the
nullification or implementation of a national government infrastructure project. A
statute such as Republic Act No. 8975 cannot diminish the constitutionally
mandated judicial power to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government.[32] Section 3 of the law in fact mandates, thus:
If after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the
qualified and winning bidder or order a rebidding of the same, without prejudice to
any liability that the guilty party may incur under existing laws.
Thus, when a court is called upon to rule on an initiatory pleading assailing any
material aspect pertinent to a national government infrastructure project, the court
ordinarily may not dismiss the action based solely on Republic Act No. 8975 but is
merely enjoined from granting provisional reliefs. If no other ground obtains to
dismiss the action, the court should decide the case on the merits. As we recently
held in Opia v. NHA:[33]
Unquestionably, the power to issue injunctive writs against the implementation of
any government infrastructure project is exclusively lodged with this Court,
pursuant to Section 3 of Rep. Act No. 8975. But while lower courts are proscribed
thereunder from issuing restraining orders and/or writs of preliminary injunction to
stop such projects, the proscription does not mean that such courts are likewise
bereft of authority to take cognizance of the issue/issues raised in the principal
action, as long as such action and the relief sought are within their jurisdiction.
Accordingly, it was not proper for the RTC to cite Republic Act No. 8975 as basis for
the dismissal of Nolascos petition since the statute does not bar the institution of an
action that seeks to enjoin the implementation of a national government project,
but merely the issuance of provisional orders enjoining the same. However, the RTC
cited two other grounds for the dismissal of the casethat Nolascos general interest
as a taxpayer was not sufficient to establish any direct injury to him should the
Project be awarded to Daewoo; and that the petition was a suit against the State,
which may not be sued without its consent.
We shall defer for now a review of these two grounds cited by the RTC for the
dismissal of Nolascos petition, and instead focus on the proper steps that should
have been undertaken owing to the dismissal of the case. Nolasco filed a motion for
reconsideration or the dismissal of the case, a remedy available to him since the 27
March 2002 Order is a final order that disposed of the case. [34] Petitioner responded
with an all-encompassing Opposition/Comment/Mani-festation (Re: Petitioners
Motion for Reconsideration). Both of these submissions were set for hearing before

the RTC. The RTC could have very well resolved the motion for reconsideration
based on the pleadings submitted. Yet, in its Order dated 13 May 2002, it declared:
However, be that as it may, in the spirit of comprehensive fairness, this Court must,
and hereby, sets the hearing on the Reception of Petitioners evidence on this Motion
on May 17, 2002 at 9:00 A.M.[35]
As far as determinable, there is no legal or jurisprudential standard of
comprehensive fairness, a phrase that reeks of pomposity without admitting to any
concrete meaning. Neither is there any mandatory rule directing a court to conduct
a hearing to receive evidence on a motion for reconsideration. Nonetheless, a
motion for reconsideration, as with all other motions which may not be acted upon
without prejudicing the rights of the adverse party, is required to be set for hearing
by the applicant,[36] and to be heard with due notice to all parties concerned. [37]
It is certainly within acceptable bounds of discretion for the trial judge to require or
allow the movant for reconsideration to present evidence in support of the
arguments in the motion, and in fact desirable if such evidence should be
necessarily appreciated for a fair and correct disposition of the motion for
reconsideration. Yet caution should be had. At this stage, the issues and evidence
submitted for appreciation and resolution of the trial court should be limited to the
matters pertinent to the motion for reconsideration. In this case, the RTC in hearing
the motion for reconsideration, should have focused on the issues of lack of
standing on the part of Nolasco and non-suability of the State, as these were the
grounds on which dismissal of the petition was predicated. It would entail a
fundamental reconsideration of these two key concerns for Nolascos motion to have
been granted and the petition readmitted.
Instead, the RTC, upon Nolascos insistence, proceeded instead to hear the case on
the merits. The RTC allowed Nolascos witness, Engineer Ezaki to testify as to the
authenticity and veracity of the bid evaluation report attached to Nolascos petition,
and to affirm the conclusion that Daewoo was not a qualified bidder. [38] This unusual
turn of events arouses suspicion. The RTC had earlier dismissed the petition on legal
grounds, yet it was now considering factual matters as basis for review on
reconsideration. The petitioner, through counsel, appears to have strenuously
objected to this furtive and dubious recourse by Nolasco, but to no avail.
Then, despite the fact that other witnesses of Nolasco were still scheduled to be
heard, Nolasco filed the Motion to Issue Partial Judgment and to Dismiss Petition. He
expressly prayed that his very own motion for reconsideration of the petition be
dismissed. From this motion, it is difficult to ascertain why exactly Nolasco wanted
the RTC to deny his own motion for reconsideration and to affirm the dismissal of his
own petition, though there is the expressed concern in order to abbreviate the
proceedings in view of the need to implement the subject projects of this petition
the soonest possible time.[39] At the same time, and in the same pleading, Nolasco
still asserted that Daewoo was not qualified to be awarded the project, and
emphasizes that such contention was borne out by the evidence he had presented
thus far. Accordingly, he likewise prayed that partial judgment be rendered on the

petition, calling on the RTC to conclude that China International won the Project, it
being the lowest evaluated responsive bid. [40]
It bears noting that at this stage, there were two pending motions before the RTC,
both filed by Nolasco, which had at issue whether or not his petition should be
dismissed. The first was Nolascos motion for reconsideration praying for the
reinstatement of his petition. The second was Nolascos Motion for Partial Judgment
and to Dismiss Petition, praying for the dismissal of his petition. Palpably, Nolasco
had opted to hedge his chips on both red and black, which is not normally done for
obvious reasons. Neither did Nolasco, in his latter pleading, expressly withdraw his
earlier motion for reconsideration, although his subsequent prayer for the dismissal
of his own earlier motion sufficiently evinced such intent.
This Motion for Partial Judgment and to Dismiss Petition is truly an odd duckling of a
pleading, which unfortunately did not blossom into a swan but from it instead
emerged an even uglier duckthe 6 September 2002 Order, which dismissed the
petition yet intoned that DPWH Secretary Datumanong must now seriously consider
and effect the award of the project to China International.
There is no doubt that the assailed Order dated 6 September 2002 sought to resolve
the Motion for Partial Judgment and to Dismiss Petition. This is evident from the first
sentence of the Order, which states: Before the Court is petitioners Motion to Issue
Partial Judgment and to Dismiss Petition filed on August 16, 2002. No other pending
motion, such as the motion for reconsideration, was adverted to as being subject for
resolution by the said Order.
Now, the Motion for Partial Judgment and to Dismiss Petition seeks reliefs A and B
that China International be awarded the project; and that the motion for
reconsideration be dismissed. There is no doubt that relief B was unequivocally
granted by the trial court, with the following disposal:
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the
Petition is hereby DISMISSED.
SO ORDERED.[41]
But did the trial court grant relief A that China International be awarded the project?
All told, and presently, and urgently, there is the need to implement the PROJECTS
in this petition so as not to affect the ODA funding, harnessed through JBIC. More so,
in addition, and a thoughtful consideration of pleadings and argument, from the
Formal Offer of Evidence ADMITTED, facts, hearing, respondent BAC has strayed
from fairly applying the Bidding Laws, Guidelines, Rules, and Regulations, and Bid
Tender Documents and, as a matter of fairness, and in the interest of justice,
considering other bidders whose bids have been evaluated by the Technical Working
Group including the consultant, Nippon Koie Company, Ltd., In association with the
PKII and the Basic Team, Inc., to be substantially responsive, the Honorable
Simeon P. Datumanong must now seriously consider and effect the award
of Package 2, PHASE II, of the Agno River Floor Control Project, as duly
recommended by the Consultants and the Technical Working Group,

DPWH, to China International Water & Electric Corporation being the


lowest evaluated responsive bid.[42] (emphasis supplied)
Contrast this with Nolascos prayer on the same relief in his Motion for Partial
Judgment and to Dismiss Petition, thus:
WHEREFORE, in view of the foregoing premises, and in consideration of equity and
petitioners moral obligation and in order to abbreviate the proceedings in view of
the need to implement the subject projects of this petition the soonest possible time
so an not to jeopardize the funding granted by the Overseas Development
Assistance (ODA) fund through the Japan Bank For International Cooperation (JBIC),
it is respectfully prayed unto this Honorable Court to issue its partial judgment on
the petition. An [sic] in view of the foregoing findings that clear violation of bidding
laws, rules and regulations, the respondents Bid Tender Documents, has been
committed by the respondents members of the BAC, and in fairness to the other
bidder whose bids have been evaluated by the Technical Working Group including
the consultant, Nippon Koie Company, Ltd., in association with the PKIII and the
Basic Team, Inc. to be substantially responsive, the Bid of China International Water
& Electric Corporation being the lowest evaluated responsive bid must be
awarded the project, package 2, Phase II, of the Agno River Flood Control
Projects as recommended by the Consultants and the Technical Working
Group of the respondents. The respondent, Honorable Secretary Simeon
Datumanong is hereby directed to take steps to attain this end.
[43]
(Emphasis supplied)
Unmistakably though, the controverted portion of the Order, urging the DPWH
Secretary to consider awarding the Project to China International does not form part
of the dispositive portion or fallo. What should be deemed as the dispositive portion
in this case is the final paragraph of the Resolution, which reads: WHEREFORE, in
view of all the foregoing, the Motion for Reconsideration of the Petition is hereby
DISMISSED.
The Court recently explicated the contents of a proper dispositive portion in Velarde
v. Social Justice Society:[44]
In a civil case as well as in a special civil action, the disposition should state
whether the complaint or petition is granted or denied, the specific relief granted,
and the costs. The following test of completeness may be applied. First, the parties
should know their rights and obligations. Second, they should know how to execute
the decision under alternative contingencies. Third, there should be no need for
further proceedings to dispose of the issues. Fourth, the case should be terminated
by according the proper relief. The "proper relief" usually depends upon what the
parties seek in their pleadings. It may declare their rights and duties, command the
performance of positive prestations, or order them to abstain from specific acts. The
disposition must also adjudicate costs.[45]
We have ruled before against recognizing statements in the body of a decision as
part of the dispositive portion. In Velarde, the respondents insisted that a statement
by the trial court found on page ten (10) of the fourteen (14)-page decision should

be considered as part of the dispositive portion. The Court disagreed, [46] and cited
the precedent in Magdalena Estate, Inc.v. Hon. Caluag:[47]
. . . The quoted finding of the lower court cannot supply deficiencies in the
dispositive portion. It is a mere opinion of the court and the rule is settled that
where there is a conflict between the dispositive part and the opinion, the former
must prevail over the latter on the theory that the dispositive portion is the final
order while the opinion is merely a statement ordering nothing. [48]
In Contreras v. Felix,[49] the Court reasoned:
More to the point is another well-recognized doctrine, that the final judgment as
rendered is the judgment of the court irrespective of all seemingly contrary
statements in the decision. "A judgment must be distinguished from an opinion. The
latter is the informal expression of the views of the court and cannot prevail against
its final order or decision. While the two may be combined in one instrument, the
opinion forms no part of the judgment. So, . . . there is a distinction between the
findings and conclusions of a court and its Judgment. While they may constitute its
decision and amount to the rendition of a judgment, they are not the judgment
itself. They amount to nothing more than an order for judgment, which must, of
course, be distinguished from the judgment." (1 Freeman on Judgments, p. 6.) At
the root of the doctrine that the premises must yield to the conclusion is perhaps,
side by side with the needs of writing finis to litigations, the recognition of the truth
that "the trained intuition of the judge continually leads him to right results for
which he is puzzled to give unimpeachable legal reasons." "It is an everyday
experience of those who study judicial decisions that the results are usually sound,
whether the reasoning from which the results purport to flow is sound or not." (The
Theory of Judicial Decision, Pound, 36 Harv. Law Review, pp. 9, 51.) It is not
infrequent that the grounds of a decision fail to reflect the exact views of the court,
especially those of concurring justices in a collegiate court. We often encounter in
judicial decisions, lapses, findings, loose statements and generalities which do not
bear on the issues or are apparently opposed to the otherwise sound and
considered result reached by the court as expressed in the dispositive part, so
called, of the decision.[50]
Moreover, we are guided by the evident fact that the respondent-judge did not
intend to make his conclusions on who should be awarded the Project as part of the
dispositive portion of his order. The language deliberately employed in the order,
must now seriously consider and effect the award, indicates that the judge was
hesitant to definitively grant the relief sought by Nolasco, which was that the trial
court award the bid to China International and direct Sec. Datumanong to take steps
towards this end. Instead, it stated that Sec. Datumanong must now seriously
consider and effect the award to China International. Undoubtedly, the word must is
mandatory in character, but it is used in conjunction with consider. In short, the trial
court noted that the DPWH Secretary must think about effecting an award to China
International.
Imagine if Nolasco had tried to judicially enforce this portion of the decision. Agents
of the court would be sent over to the DPWH offices to confront the DPWH

Secretary. What else could they say but, Sir, have you seriously considered effecting
the award to China International? Of course, the DPWH Secretary can reply, Yes, but
I decided to award the bid anyway to Daewoo, and such averment would evince
satisfactory compliance with the assailed Order. After all, the Order did not require
that the DPWH award the bid to China International, only that the DPWH consider
such a measure.
These premises considered, we cannot agree with Petitioner characterization of this
portion of the Order as granting affirmative relief in favor of China International.
[51]
No such affirmative relief was rendered in favor of China International, as such
was not included as part of the fallo. Nor was there an evident intent on the part of
the judge to grant such affirmative relief, on account of the language he employed,
recommendatory in character as it ultimately was.
Still, if the Court were to construe this assailed portion of the Order as belonging to
the dispository part, such disposition, effectively concluding that China International
and not DAEWOO should be awarded the bid, would run contrary to law.
It must be remembered that Nolascos prayer that the trial court award the bid to
China International utilized as legal basis the power of the trial courts to issue
partial or separate judgments. Yet by any objective standard, there is no merit in
allowing for such a relief in this case. Section 5, Rule 36 of the Rules of Civil
Procedure, which governs separate judgments, states:
Sec. 5. Separate judgments. When more than one claim for relief is presented in an
action, the court, at any stage, upon a determination of the issues material to a
particular claim and all counterclaims arising out of the transaction or occurrence
which is the subject matter of the claim, may render a separate judgment disposing
of such claim. The judgment shall terminate the action with respect to the claim so
disposed of and the action shall proceed as to the remaining claims. . . .
On paper, Nolascos petition prays for two reliefs, that the petitioner be restrained
from awarding the Project to Daewoo, and that Daewoo be disqualified as a bidder
and its bid be rejected. Yet these reliefs are obviously intertwined for the allowance
of one would necessarily lead to the grant of the other. The multiple reliefs referred
to in the provision refer to those sufficiently segregate from each other that the
allowance of one at a preliminary stage will not preclude litigation on the merits of
the others.
More importantly, the rule is explicit that partial judgment with regards one of the
reliefs is warranted only after a determination of the issues material to a particular
claim and all counterclaims arising out of the transaction or occurrence which is the
subject matter of the claim. Herein, the partial judgment was sought even before
the respondents had the chance to file their answer to the petition. Moreover, it was
prayed for at a point when, at even such a preliminary stage, the claimant was
actually somehow able to already present evidence in support of his claim, but
before the respondents had the chance to rebut this claim or support countervailing
evidence.

At bare minimum, the allowance of a partial judgment at this stage would constitute
a denial of constitutional due process. It would condemn before hearing, and render
judgment before trial.[52] Had indeed partial judgment been granted in the
assailed Order, it would have been rendered before the Petitioner were afforded the
opportunity to rebut the evidence of Nolasco, or to present their own countervailing
evidence. While the allowance of partial judgments may expedite the litigation of
claims, it cannot be sanctioned at a stage when the trial judge has not had the
opportunity to hear all sides to the claim. In fact, it was highly imprudent for the
respondent judge to have concluded, as he did in his Order, that it was an admitted
fact that the BAC had strayed from fairly applying the Bidding Laws, Guidelines,
Rules, and Regulations, and Bid Tender Documents, considering that the Petitioner
had not even filed an answer or been allowed the opportunity to present any
evidence on its behalf.
And there is the fact that as of the moment the assailed Order was rendered,
Nolascos petition had already been dismissed by the earlier Order dated 27 March
2002. In order that the prayer for partial judgment could have been granted by the
RTC, it would have been first necessary to reinstate Nolascos dismissed petition,
such as by granting Nolascos motion for reconsideration. The respondent judge
never reinstated the petition, which has stood dismissed since 27 March 2002. Thus,
none of the reliefs prayed for by Nolasco in his Petition, much less the prayer for
partial judgment, could have ever been granted by the respondent-judge.
Thus, the dispositive portion of the assailed Order correctly limited itself to the
denial of Nolascos motion for reconsideration without allowing any other relief that
Nolasco prayed for in his Motion for Partial Judgment and to Dismiss Petition. Had
the respondent judge instead opted to grant partial judgment and direct the award
of the Project to China International, the Court would not hesitate to strike down
such award. Yet the respondent judge did not act so unequivocally, and merely
advised that the DPWH Secretary should consider such an option. Perhaps the
propriety of such advice can be appropriately questioned, in light of our view that
such conclusion was derived without allowing the DPWH or an injured party such as
Daewoo opportunity to be heard and to present their own evidence. Nonetheless,
such advisory opinion has no binding effect, especially if construed as directing the
award of the Project to China International. Accordingly, for that reason alone and
with the necessary clarifications made, there is no reason to set aside the
assailed Order dated 6 September 2002, especially considering that its final
disposition dismissing Nolascos motion for reconsideration is ultimately correct.
Nolascos petition had been correctly dismissed by the RTC on two grounds: that
Nolascos general interest as a taxpayer was not sufficient to establish any direct
injury to him should the Project be awarded to Daewoo; and that the petition was a
suit against the State, which may not prosper without its consent. Given that none
of the parties are actually praying that Nolascos motion for reconsideration be
granted or that Nolascos petition be reinstated, we need not review in depth the
rationale of the RTC in dismissing Nolascos petition. The mere invocation of standing
as a tax payer does not mean that in each and every instance where such a ground
is invoked courts are left with no alternative except to hear the parties, for the

courts are vested with discretion whether or not a taxpayers suit should be
entertained.[53] We likewise find no error on the part of the RTC when it cited as basis
for the dismissal of Nolascos petition, our ruling in Bugnay Construction &
Development Corp. v. Laron[54] that the taxpayer-plaintiff must specifically prove
that he has sufficient interest in preventing the illegal expenditure of money raised
by taxation, and that he will sustain a direct injury as a result of the enforcement of
the questioned statute or contract.[55]
We also find no error on the part of the RTC in regarding Nolascos petition as a suit
against the State without the latters consent. An unincorporated government
agency such as the DPWH is without any separate juridical personality of its own
and hence enjoys immunity from suit. [56] Even in the exercise of proprietary
functions incidental to its primarily governmental functions, an unincorporated
agency still cannot be sued without its consent. [57] Moreover, it cannot be said that
the DPWH was deemed to have given its consent to be sued by entering into a
contract, for at the time the petition was filed by Nolasco, the DPWH had not yet
entered into a contract with respect to the Project.
Surprisingly, and with no apparent benefit on its behalf, Petitioner imputes error on
the part of the RTC when the court, in the fallo of the assailed Order, directed the
dismissal of the Motion for Reconsideration of the Petition, pointing out that such
pleading was never filed by Nolasco,[58] and accordingly prays that the order
dismissing the alleged Motion for Reconsideration of Petition be declared null and
void.[59] However, Nolasco did file a Motion for Reconsideration to the order
dismissing the petition, and in his Motion for Partial Judgment and to Dismiss
Petition, Nolasco similarly prays that the Motion for Reconsideration of the Petition
be dismissed. We have no doubt, infelicitous wording aside, that the Motion for
Reconsideration of the Petition adverted to in the fallo refers to Nolascos own
motion for reconsideration, the denial of which Nolasco also prayed for in
the Motion for Partial Judgment and to Dismiss Petition that was the subject of the
assailed Order. And as just discussed, the denial of the Nolascos motion for
reconsideration was in order.
Notably, this Court has not engaged in a review of the award of the Project to
Daewoo. Notwithstanding the fact that the parties have prayed that the Court either
effect the award of the Project to Daewoo or direct the award to China International,
the Court deems it improper to conduct a de novo factual finding on which entity
should be awarded the project. The Court is not a trier of facts, and it would be
offensive to established order and the hierarchy of courts for this Court to initiate
such factual review. Had the RTC conducted a valid trial on the merits, perhaps this
Court could eventually review the lower courts findings on the matter, but the RTC
properly dismissed the case, and it would be unbecoming on the part of this Court
to suddenly engage in an initial trial on the merits on appellate review.
This is a stance not borne out of hesitance to tackle the issue, or avoid the sort of
ruling that may satisfy one party or the other as definitive, but arrived at out of
necessity to preserve the integrity of our civil procedure, including the hierarchy of
our courts and the limits of this Courts power of judicial review. Precisely, the messy
milieu presented before us occurred because the RTC and Nolasco compromised our

court processes to destructive ends, and it is this Courts function to reassert the
rules, to restore order, and not compound to the sloppiness by itself violating
procedural order.
The executive department is acknowledged to have wide latitude to accept or reject
a bid, or even after an award has been made, to revoke such award. From these
actions taken, the court will not generally interfere with the exercise of discretion by
the executive department, unless it is apparent that the exercise of discretion is
used to shield unfairness or injustice.[60]This policy of non-interference can hardly be
countermanded by reason of a claim anchored on an unofficial document such as
the Confidential Reports from an Unnamed DPWH Consultant presented by Nolasco,
especially when the probative value thereof has hardly been passed upon by a
proper trier of facts.
More importantly, the Court, the parties, and the public at large are bound to
respect the fact that official acts of the Government, including those performed by
governmental agencies such as the DPWH, are clothed with the presumption of
regularity in the performance of official duty. and cannot be summarily, prematurely
and capriciously set aside.[61] Such presumption is operative not only upon the
courts, but on all persons, especially on those who deal with the government on a
frequent basis. There is perhaps a more cynical attitude fostered within the popular
culture, or even through anecdotal traditions. Yet, such default pessimism is not
embodied in our system of laws, which presumes that the State and its elements
act correctly unless otherwise proven. To infuse within our legal philosophy a
contrary, gloomy pessimism would assure that the State would bog down, wither
and die.
Instead, our legal framework allows the pursuit of remedies against errors of the
State or its components available to those entitled by reason of damage or injury
sustained. Such litigation involves demonstration of legal capacity to sue or be
sued, an exhaustive trial on the merits, and adjudication that has basis in duly
proven facts and law. No proper and viable legal challenge has emerged impugning
the award of the Project by DPWH to Daewoo, Nolascos Petition being woefully
insufficient to that purpose. It is tragic perhaps that the irresponsible actions of
Judge Nabong, and their ultimate embodiment in his obiter dicta in the
assailed Order, somehow fostered the illusion that there was a serious legal cloud
hovering over the award by DPWH to Daewoo. We rule that there is none, that the
RTC acted correctly in granting the Petitioners motion to dismiss
Nolascos Petition and in denying the subsequent motion for reconsideration to the
dismissal. These are the only relevant matters properly brought for judicial review
and everything else is unnecessary verbiage.
For the same reason, we cannot allow the Petitioners prayer for damages against
Nolasco. The matter of damages is one that has to be properly litigated before the
triers of fact, and certainly has not been passed upon by the RTC. Yet it does not
necessarily follow that no liability arises from the filing of the initiatory petition, or
the facts succeeding thereto. It does not escape our attention that on 2 April 2002,
the OSG was served a spurious order purportedly giving due course to Nolascos
petition and granting the sought-for preliminary injunction. This incident cannot

pass without comment by this Court, which cannot sanction the circulation of fake
judicial orders, and should be duly investigated by the National Bureau of
Investigation for appropriate action.
Finally, it likewise appears that Judge Nabong, by issuing the temporary restraining
order dated 4 March 2002, violated Section 6 of Republic Act No. 8975, which
penalizes the judge who issues a temporary restraining order enjoining the bidding
or awarding of a contract or project of the national government. [62] Yet to his credit,
Judge Nabong recalled the TRO upon realizing his error, thus a REPRIMAND should
suffice under the circumstances.
WHEREFORE, premises considered, the Petition is DENIED. The
assailed Order dated 6 September 2004 is AFFIRMED, with the QUALIFICATION that
last paragraph of the body of the Order, which states that the DPWH Secretary must
now seriously consider and effect the award of Package 2, Phase II of the Agno River
Flood Control Project is OBITER DICTA and hence of no binding force.
The National Bureau of Investigation is hereby DIRECTED to investigate the
circumstances surrounding the alleged spurious order dated 22 March 2002 served
on the Office of the Solicitor General and determine possible criminal liabilities for
the creation of such forged document.
Judge Juan Nabong is hereby REPRIMANDED for failure to observe Section 6 of
Republic Act No. 8975, and WARNED that a subsequent repetition of the same shall
be dealt with more severely.
No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Hernandez v. National Power Corp., G.R. No. 145328, March 23, 2006
G.R. No. 145328 March 23, 2006
EDUARDO F. HERNANDEZ, MA. ENCARBACION R. LEGASPI, JAIME BLANCO,
JR., ENRIQUE BELO, CARLOS VIAPLANA, CARL FURER, VIVENCIO TINIO,
MICHAEL BRIGGS, ROSA CARAM, FAUSTO PREYSLER, ROBERT KUA, GEORGE
LEE, GUILLERMO LUCHANGCO, PETER DEE, LUISA MARQUEZ, ANGELITA
LILLES, JUAN CARLOS, HOMER GO, AMADEO VALENZUELA, EMILIO CHING,
ANTONIO CHAN, MURLI SABNANI, MARCOS ROCES, RAYMUNDO FELICIANO,
NORMA GAFFUD, ALF HOLST, LOURDES P. ROQUE, MANUEL DY, RAUL
FERNANDEZ, VICTORIA TENGCO, CHI MO CHENG, BARANGAY DASMARIAS,
and
HON.
FRANCISCO
B.
IBAY, petitioners

vs.
NATIONAL POWER CORPORATION, respondent
DECISION
CHICO-NAZARIO, J.:
Although Presidential Decree No. 1818 prohibits any court from issuing injunctions
in cases involving infrastructure projects, the prohibition extends only to the
issuance of injunctions or restraining orders against administrative acts in
controversies involving facts or the exercise of discretion in technical cases. On
issues clearly outside this dimension and involving questions of law, this Court
declared that courts could not be prevented from exercising their power to restrain
or prohibit administrative acts.1 In such cases, let the hammer fall and let it fall
hard.
With health risks linked to exposure to electromagnetic radiation as their battle cry,
petitioners, all residents of Dasmarias Village, are clamoring for the reversal of the
decision2 dated 3 May 2000 of the Court of Appeals in CA-G.R. SP No. 57849 as well
as the resolution dated 27 September 2000, denying their motion for
reconsideration.
The assailed decision3 of the Court of Appeals reversed the order of the Regional
Trial Court of Makati, issuing a writ of preliminary injunction against respondent
National Power Corporation (NAPOCOR) to stay the latter from energizing and
transmitting high voltage electric current through its cables erected from Sucat,
Paraaque to Araneta Ave., Quezon City.
But, first, the facts:
Sometime in 1996, NAPOCOR began the construction of 29 decagon-shaped steel
poles or towers with a height of 53.4 meters to support overhead high tension
cables in connection with its 230 Kilovolt Sucat-Araneta-Balintawak Power
Transmission Project. Said transmission line passes through the Sergio Osmea, Sr.
Highway (South Superhighway), the perimeter of Fort Bonifacio, and Dasmarias
Village proximate to Tamarind Road, where petitioners homes are.
Said project later proved to be petitioners bane of existence.
Alarmed by the sight of the towering steel towers, petitioners scoured the internet
on the possible adverse effects that such a structure could cause to their health and
well-being. Petitioners got hold of published articles and studies linking the
incidence of a fecund of illnesses to exposure to electromagnetic fields. These
illnesses range from cancer to leukemia.
Petitioners left no stones unturned to address their malady. They aired this growing
concern to the NAPOCOR, which conducted a series of meetings with them.

NAPOCOR received flak from Representative Francis Joseph G. Escudero, who in his
Privilege Speech dated 10 May 1999, denounced the cavalier manner with which
Napocor ignored safety and consultation requirements in the questioned project.
Petitioners brought their woes to the attention of Rep. Arnulfo Fuentebella,
Chairman of the House Committee on Energy, wherein NAPOCOR was asked to shed
light on the petitioners problem. In a letter dated 8 November 1999, Napocor
President Federico Puno stated that NAPOCOR was still in the process of coming up
with a "win-win" solution to the concerns of the Dasmarias Village and Forbes Park
residents.4
In a letter dated 10 August 1999 addressed to Congressman Arnulfo P. Fuentebella,
NAPOCORs President wrote:
We have discussed the matter with the Dasmarias and Forbes residents and we
have come up with four (4) options on how to address the problem, to wit:
Option Cost
Option 1: Transfer the line
(proposal of Dasmarias/Forbes)

to

Lawton

Avenue P 111.84

million

Option 2: Maintain 12 meters distance along P 77.60 million the village


Option 3: Construct an underground line P 482.00 million
Option 4: Reroute along C-5 and South Luzon P 1,018.83 million
Expressway (combination of overhead and underground) 5
Negotiations between petitioners and the NAPOCOR reached an impass, with
petitioners vying for the relocation of the transmission lines to Fort Bonifacio on one
hand, and the NAPOCOR insisting on a 12-meter easement widening, on the other. 6
Thus, petitioners, on 9 March 2000 filed a Complaint 7 for Damages with Prayer for
the Issuance of a Temporary Restraining Order and/or a Writ of Preliminary
Injunction against NAPOCOR. Harping on the hazardous effects of exposure to
electromagnetic radiation to the health and safety to themselves and their families,
petitioners, through the instant case, sought what they had failed to achieve
through amicable means with NAPOCOR and prayed, inter alia, for damages and the
relocation of the transmission lines to Lawton Avenue, Fort Bonifacio.
On 13 March 2000, Judge Francisco B. Ibay issued an order 8 in Civil Case No. 00-352,
which temporarily restrained the respondent from energizing and transmitting high
voltage electric current through the said project. The pertinent portion of the said
order reads:

Acting on the plaintiffs "Urgent Omnibus Motion," it appearing that the subject area
will be energized by midnight tonight based on a report taken from Representative
Joker P. Arroyo by plaintiffs counsel, so as not to render moot and academic the
instant case, as prayed for, defendant National Power Corporation is ordered to
maintain the status quo and/or be enjoined from energizing and transmitting high
voltage electric current through its cables for forty eight (48) hours starting 4
oclock in the afternoon today and ending 4 oclock in the afternoon of 15 March
2000.9
By order10 of 15 March 2000, the trial court extended the restraining order for 18
more days.
NAPOCOR filed a Petition for Certiorari with Prayer for Temporary Restraining Order
and Preliminary Injunction with the Court of Appeals assailing the above order by
the trial court. Alluding to Presidential Decree No. 1818 (1981), "Prohibiting Courts
from Issuing Restraining Orders or Preliminary Injunctions in Cases Involving
Infrastructure and Natural Resource Development Projects of, and Public Utilities
Operated by, the Government," particularly Sec. 1, NAPOCOR stalwartly sought the
dismissal of the case on the ground of lack jurisdiction. Presidential Decree No. 1818
provides:
Section 1. No Court in the Philippines shall have jurisdiction to issue any restraining
order, preliminary injunction or preliminary mandatory injunction in any case,
dispute, or controversy involving an infrastructure project, or a mining, fishery,
forest or other natural resource development project of the government, or any
public utility operated by the government, including among other public utilities for
transport of the goods or commodities, stevedoring and arrastre contracts, to
prohibit any person or persons, entity or government official from proceeding with
or continuing the execution or implementation of any such project, or the operation
of such public utility or pursuing any lawful activity necessary for such execution,
implementation or operation.
In the interregnum, by order dated 3 April 2000, the trial court ordered the issuance
of a writ of preliminary injunction against NAPOCOR. 11 The trial court articulated that
an injunction was necessary to stay respondent NAPOCORs activation of its power
lines due to the possible health risks posed to the petitioners. Asserting its
jurisdiction over the case, the trial court was of the view that Presidential Decree
No. 1818 and jurisprudence proscribing injunctions against infrastructure projects
do not find application in the case at bar because of the health risks involved.
The trial court, thus, enjoined the NAPOCOR from further preparing and installing
high voltage cables to the steel pylons erected near petitioners homes and from
energizing and transmitting high voltage electric current through said cables while
the case is pending final adjudication, upon posting of the bond amounting
to P5,000,000.00 executed to the effect that petitioners will pay all the damages the
NAPOCOR may sustain by reason of the injunction if the Court should finally decide
that the petitioners are not entitled thereto. 12

In light of the foregoing order of the trial court, the petition which NAPOCOR filed
with the Court of Appeals was later amended to include the prayer for the
nullification and injunction of the Order dated 3 April 2000 of the trial court.
In the challenged decision of 3 May 2000, the Court of Appeals reversed the trial
courts order, with the following fallo:
WHEREFORE, premises considered, the instant petition for certiorari is hereby
GRANTED. The assailed orders of the respondent court, dated March 13, 2000 and
April 3, 2000, are hereby REVERSED and SET ASIDE. 13
In the Court of Appeals rationale, the proscription on injunctions against
infrastructure projects of the government is clearly mandated by the above-quoted
Section 1 of Presidential Decree No. 1818, as reiterated by the Supreme Court in its
Circulars No. 2-91 and No. 13-93, dated 15 March 1991 and 5 March 1993,
respectively.
As their motion for reconsideration was met with similar lack of success, petitioners,
in a last attempt at vindication, filed the present petition for review on the following
arguments:
I.
Temporary restraining orders and preliminary injunctions were purposely designed
to address matters of extreme urgency where there is probability of grave injustice
and irreparable injury.14
II.
The rule on preliminary injunction merely requires that unless restrained, the act
complained of will probably work injustice to the applicant or probably violate his
rights and tends to render the judgment ineffectual.15 (Emphasis in the original.)
Fundamental to the resolution of the instant petition is the issue of whether or not
the trial court may issue a temporary restraining order and preliminary injunction to
enjoin the construction and operation of the 29 decagon-shaped steel poles or
towers by the NAPOCOR, notwithstanding Presidential Decree No. 1818.
Petitioners clutch on their stand that Presidential Decree No. 1818 could not be
construed to apply to cases of extreme urgency as in the present case when no less
than the rights of the petitioners to health and safety hangs on the balance.
We find the petition to be imbued with merit.
Presidential Decree No. 1818 was issued on 16 January 1981, prohibiting judges
from issuing restraining orders against government infrastructure projects. In part,
the decree says, "No court in the Philippines shall have jurisdiction to issue any

restraining order, preliminary injunction or preliminary order, preliminary mandatory


injunction in any case, dispute or controversy involving an infrastructure project."
Realizing the importance of this decree, this Tribunal had issued different circulars to
implement this particular law.
Presidential Decree No. 181816 prohibits courts from issuing injunctions against
government infrastructure projects. In Garcia v. Burgos,17 Presidential Decree No.
1818 was held to prohibit courts from issuing an injunction against any
infrastructure project in order not to disrupt or hamper the pursuit of essential
government projects or frustrate the economic development effort of the nation.
While its sole provision would appear to encompass all cases involving the
implementation of projects and contracts on infrastructure, natural resource
development and public utilities, this rule, however, is not absolute as there are
actually instances when Presidential Decree No. 1818 should not find application. In
a spate of cases, this Court declared that although Presidential Decree No. 1818
prohibits any court from issuing injunctions in cases involving infrastructure
projects, the prohibition extends only to the issuance of injunctions or restraining
orders against administrative acts in controversies involving facts or the exercise of
discretion in technical cases. On issues clearly outside this dimension and involving
questions of law, this Court declared that courts could not be prevented from
exercising their power to restrain or prohibit administrative acts. 18
In the case at bar, petitioners sought the issuance of a preliminary injunction on the
ground that the NAPOCOR Project impinged on their right to health as enshrined in
Article II, Section 15 of the 1987 Constitution, which provides:
Sec. 15. The State shall protect and promote the right to health of the people and
instill consciousness among them.
To boot, petitioners, moreover, harp on respondents failure to conduct prior
consultation with them, as the community affected by the project, in stark violation
of Section 27 of the Local Government Code which provides: "no project or program
shall be implemented by government authorities unless the consultations
mentioned are complied with, and prior approval of the Sanggunian concerned is
observed."
From the foregoing, whether there is a violation of petitioners constitutionally
protected right to health and whether respondent NAPOCOR had indeed violated the
Local Government Code provision on prior consultation with the affected
communities are veritable questions of law that invested the trial court with
jurisdiction to issue a TRO and subsequently, a preliminary injunction. As such,
these questions of law divest the case from the protective mantle of Presidential
Decree No. 1818.
Moreover, the issuance by the trial court of a preliminary injunction finds legal
support in Section 3 of Rule 58 of the Rules of Court which provides:

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


may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of
the act or acts complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment ineffectual. (3a)
(Emphasis supplied.)
The rule on preliminary injunction merely requires that unless restrained, the act
complained of will probably violate his rights and tend to render the judgment
ineffectual.
Here, there is adequate evidence on record to justify the conclusion that the project
of NAPOCOR probably imperils the health and safety of the petitioners so as to
justify the issuance by the trial court of a writ of preliminary injunction.
Petitioners adduced in evidence copies of studies linking the incidence of illnesses
such as cancer and leukemia to exposure to electromagnetic fields. The records
bear out, to boot, a copy of a brochure of NAPOCOR regarding its Quezon Power
Project from which will be supplying NAPOCOR with the power which will pass
through the towers subject of the controversy. The NAPOCOR brochure provides that
because of the danger concomitant with high voltage power, Philippine laws
mandate that the power lines should be located within safe distances from
residences. And the Quezon Power Project mandates an easement of 20 meters to
the right and 20 meters to the left which falls short of the 12-meter easement that
NAPOCOR was proposing to petitioners.
Likewise on record, are copies of letters of Napocor President Federico Puno to Rep.
Arnulfo Fuentebella, Chairman of the House Committee on Energy, stating updates
on the negotiations being undertaken by the NAPOCOR and the Dasmarias Village
and Forbes Park residents. Also on file is the Privilege Speech dated 10 May 1999 of
Representative Francis Joseph G. Escudero, who denounced the cavalier manner
with which Napocor ignored safety and consultation requirements in the questioned
project.
With a member of Congress denouncing the subject project of NAPOCOR because of
the very same health and safety ills that petitioners now hew to in this petition, and

with documents on record to show that NAPOCOR made representations to


petitioners that they are looking into the possibility of relocating the project, added
to the fact that there had been series of negotiations and meetings between
petitioners and NAPOCOR as well as related agencies, there is ample indicia to
suggest to the mind of the court that the health concerns of the petitioners are, at
the very least, far from imaginary.
Indeed, if there is no cause for concern, NAPOCOR would not have been stirred to
come up with options to address the woes of petitioners, nor would Congressman
Escudero have fired away those strong words of censure, assailing what to
Congressman Escudero smacks of a "cavalier manner by which the NAPOCOR has
responded to earnest pleas for a review of its practice of installing massive pylons
supporting high tension cables in densely populated areas." 19
True, the issue of whether or not the transmission lines are safe is essentially
evidentiary in nature, and pertains to the very merits of the action below. In fact,
petitioners recognize that the conclusiveness of their life, health and safety
concerns still needs to be proved in the main case below and they are prepared to
do so especially in the light of some studies cited by respondent that yield contrary
results in a disputed subject. Despite the parties conflicting results of studies made
on the issue, the possibility that the exposure to electromagnetic radiation causes
cancer and other disorders is still, indeed, within the realm of scientific scale of
probability.
Equally important, we take judicial notice that the area alluded to as location of the
NAPOCOR project is a fragile zone being proximate to local earthquake faults,
particularly the Marikina fault, among other zones. This is not to mention the risks of
falling structures caused by killer tornadoes and super typhoons, the Philippines,
especially Central Luzon, being situated along the typhoon belt.
Moreover, the Local Government Code, requires conference with the affected
communities of a government project. NAPOCOR, palpably, made a shortcut to this
requirement. In fact, there appears a lack of exhaustive feasibility studies on
NAPOCORs part before making a go with the project on hand; otherwise, it should
have anticipated the legal labyrinth it is now caught in.
These are facts, which the trial court could not ignore, and form as sufficient basis
to engender the cloud of doubt that the NAPOCOR project could, indeed, endanger
the lives of the petitioners. A preliminary injunction is likewise justified prior to a
final determination of the issues of whether or not NAPOCOR ignored safety and
consultation requirements in the questioned project. Indeed, the court could,
nay should, grant the writ of preliminary injunction if the purpose of the other party
is to shield a wrongdoing. A ruling to the contrary would amount to an erosion of
judicial discretion.
After all, for a writ of preliminary injunction to be issued, the Rules do not require
that the act complained of be in violation of the rights of the applicant. Indeed, what

the Rules require is that the act complained of be probably in violation of the rights
of the applicant. Under the Rules of Court, probability is enough basis for injunction
to issue as a provisional remedy, which is different from injunction as a main action
where one needs to establish absolute certainty as basis for a final and permanent
injunction.
Pending the final determination of the trial court on the main case for damages, of
whether or not the NAPOCOR Project infringes on petitioners substantive right to
health and pending determination of the question of whether there was nonobservance of the prior-consultation proviso under the Local Government Code, it is
prudent to preserve the status quo. In Phil. Ports Authority v. Cipres Stevedoring &
Arrastre, Inc.,20 we held:
A preliminary injunction is an order granted at any stage of an action prior to
judgment of final order, requiring a party, court, agency, or person to refrain from a
particular act or acts. It is a preservative remedy to ensure the protection of a
partys substantive rights or interests pending the final judgment in the principal
action. A plea for an injunctive writ lies upon the existence of a claimed emergency
or extraordinary situation which should be avoided for otherwise, the outcome of a
litigation would be useless as far as the party applying for the writ is concerned.
At times referred to as the "Strong Arm of Equity," we have consistently ruled that
there is no power the exercise of which is more delicate and which calls for greater
circumspection than the issuance of an injunction. It should only be extended in
cases of great injury where courts of law cannot afford an adequate or
commensurate remedy in damages; "in cases of extreme urgency; where the right
is very clear; where considerations of relative inconvenience bear strongly in
complainants favor; where there is a willful and unlawful invasion of plaintiffs right
against his protest and remonstrance, the injury being a continuing one, and where
the effect of the mandatory injunction is rather to reestablish and maintain a
preexisting continuing relation between the parties, recently and arbitrarily
interrupted by the defendant, than to establish a new relation." (Emphasis
supplied.)
What is more, contrary to respondents assertion, there is not a single syllable in the
circulars issued by this Court enjoining the observance of Presidential Decree No.
1818, which altogether and absolutely, ties the hands of the courts from issuing a
writ of preliminary injunction. What Circular 2-91 21 dated 15 March 1991 seeks to
enjoin is the indiscriminate issuance of court injunctions. The same holds for
Circular 13-9322 dated 5 March 1993 and Circular 68-94. 23 And, in Circular No. 7-99,
judges are enjoined to observe utmost caution, prudence and judiciousness in the
issuance of temporary restraining order and in the grant of writs of preliminary
injunction to avoid any suspicion that its issuance or grant was for consideration
other than the strict merits of the case.24
There is not a hint from the foregoing circulars suggesting an unbridled prohibition
against the issuance of temporary restraining orders or preliminary injunctions.

In sum, what Presidential Decree No. 1818 aims to avert is the untimely frustration
of government infrastructure projects, particularly by provisional remedies, to the
detriment of the greater good by disrupting the pursuit of essential government
projects or frustrate the economic development effort of the nation. Presidential
Decree No. 1818, however, was not meant to be a blanket prohibition so as to
disregard the fundamental right to health, safety and well-being of a community
guaranteed by the fundamental law of the land. 25
Lest we be misconstrued, this decision does not undermine the purpose of the
NAPOCOR project which is aimed towards the common good of the people. But, is
the promotion of the general welfare at loggerheads with the preservation of the
rule of law? We submit that it is not.26
In the present case, the far-reaching irreversible effects to human safety should be
the primordial concerns over presumed economic benefits per se as alleged by the
NAPOCOR.
Not too long ago, the Court, in Metropolitan Manila Development Authority (MMDA)
v. Bel-Air Village Association, Inc., 27 upheld the validity of the writ of preliminary
injunction issued by the Court of Appeals enjoining the implementation of the
Metropolitan Manila Development Authoritys proposed action of opening of the
Neptune Street to public vehicular traffic. We were categorical Not infrequently, the government is tempted to take legal shortcuts to solve urgent
problems of the people. But even when government is armed with the best of
intention, we cannot allow it to run roughshod over the rule of law. Again, we let the
hammer fall and fall hard on the illegal attempt of the MMDA to open for public use
a private road in a private subdivision. While we hold that the general welfare
should be promoted, we stress that it should not be achieved at the expense of the
rule of law.28
In hindsight, if, after trial, it turns out that the health-related fears that petitioners
cleave on to have adequate confirmation in fact and in law, the questioned project
of NAPOCOR then suffers from a paucity of purpose, no matter how noble the
purpose may be. For what use will modernization serve if it proves to be a scourge
on an individuals fundamental right, not just to health and safety, but, ostensibly,
to life preservation itself, in all of its desired quality?
WHEREFORE, the petition is granted. The decision dated 3 May 2000 of the Court
of Appeals in CA-G.R. SP No. 57849 is REVERSED as well as the resolution dated 27
September 2000. The Order dated 3 April 2000 of the Regional Trial Court of Makati
in Civil Case No. 00-352 is hereby REINSTATED. No pronouncement as to costs
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

Department of Foreign Affairs v. Falcon, G.R. No. 176657, 1 September 2010

Republic of the Philippines


Supreme Court
Manila

FIRST DIVISION

DEPARTMENT OF FOREIGN AFFAIRS


and BANGKO SENTRAL NG
PILIPINAS,

G.R. No. 176657

Petitioners,
Present:

- versus -

CORONA, C.J.,
Chairperson,
VELASCO, JR.,

HON. FRANCO T. FALCON, IN HIS


CAPACITY AS THE PRESIDING
JUDGE OF BRANCH 71 OF THE
REGIONAL TRIAL COURT IN PASIG
CITY and BCA INTERNATIONAL
CORPORATION,
Respondents.

LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

Promulgated:

September 1, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the
Rules of Court with a prayer for the issuance of a temporary restraining order and/or
a writ of preliminary injunction filed by petitioners Department of Foreign Affairs
(DFA) and Bangko Sentral ng Pilipinas (BSP). Petitioners pray that the Court declare
as null and void the Order[1] dated February 14, 2007 of respondent Judge Franco T.
Falcon (Judge Falcon) in Civil Case No. 71079, which granted the application for
preliminary injunction filed by respondent BCA International Corporation
(BCA). Likewise, petitioners seek to prevent respondent Judge Falcon from
implementing the corresponding Writ of Preliminary Injunction dated February 23,
2007[2] issued pursuant to the aforesaid Order.

The facts of this case, as culled from the records, are as follows:

Being a member state of the International Civil Aviation Organization (ICAO), [3] the
Philippines has to comply with the commitments and standards set forth in ICAO
Document No. 9303[4] which requires the ICAO member states to issue machine
readable travel documents (MRTDs)[5] by April 2010.

Thus, in line with the DFAs mandate to improve the passport and visa issuance
system, as well as the storage and retrieval of its related application records, and
pursuant to our governments ICAO commitments, the DFA secured the approval of
the President of the Philippines, as Chairman of the Board of the National Economic
and Development Authority (NEDA), for the implementation of the Machine
Readable Passport and Visa Project (the MRP/V Project) under the Build-Operateand-Transfer (BOT) scheme, provided for by Republic Act No. 6957, as amended by
Republic Act No. 7718 (the BOT Law), and its Implementing Rules and Regulations
(IRR). Thus, a Pre-qualification, Bids and Awards Committee (PBAC) published an
invitation to pre-qualify and bid for the supply of the needed machine readable
passports and visas, and conducted the public bidding for the MRP/V Project on
January 10, 2000. Several bidders responded and BCA was among those that pre-

qualified and submitted its technical and financial proposals.On June 29, 2000, the
PBAC found BCAs bid to be the sole complying bid; hence, it permitted the DFA to
engage in direct negotiations with BCA. On even date, the PBAC recommended to
the DFA Secretary the award of the MRP/V Project to BCA on a BOT arrangement.

In compliance with the Notice of Award dated September 29, 2000 and Section 11.3,
Rule 11 of the IRR of the BOT Law, [6] BCA incorporated a project company, the
Philippine Passport Corporation (PPC) to undertake and implement the MRP/V
Project.

On February 8, 2001, a Build-Operate-Transfer Agreement [7] (BOT Agreement)


between the DFA and PPC was signed by DFA Acting Secretary Lauro L. Baja, Jr. and
PPC President Bonifacio Sumbilla. Under the BOT Agreement, the MRP/V Project was
defined as follows:

Section 1.02 MRP/V Project refers to all the activities and


services undertaken in the fulfillment of the Machine Readable
Passport and Visa Project as defined in the Request for Proposals (RFP),
a copy of which is hereto attached as Annex A, including but not
limited to project financing, systems development, installation and
maintenance in the Philippines and Foreign Service Posts (FSPs),
training of DFA personnel, provision of all project consumables (related
to the production of passports and visas, such as printer supplies, etc.),
scanning of application and citizenship documents, creation of data
bases, issuance of machine readable passports and visas, and site
preparation in the Central Facility and Regional Consular Offices (RCOs)
nationwide.[8]

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


Sumbilla, this time as BCA President, signed an Amended BOT Agreement [9] in order
to reflect the change in the designation of the parties and to harmonize Section
11.3 with Section 11.8[10] of the IRR of the BOT Law. The Amended BOT Agreement
was entered into by the DFA and BCA with the conformity of PPC.

The two BOT Agreements (the original version signed on February 8, 2001
and the amended version signed April 5, 2002) contain substantially the same
provisions except for seven additional paragraphs in the whereas clauses and two
new provisions Section 9.05 on Performance and Warranty Securities and Section
20.15 on Miscellaneous Provisions. The two additional provisions are quoted below:

Section 9.05. The PPC has posted in favor of the DFA the
performance security required for Phase 1 of the MRP/V Project and
shall be deemed, for all intents and purposes, to be full compliance by
BCA with the provisions of this Article 9.

xxxx

Section 20.15 It is clearly and expressly understood that BCA


may assign, cede and transfer all of its rights and obligations under
this Amended BOT Agreement to PPC, as fully as if PPC is the original
signatory to this Amended BOT Agreement, provided however that BCA
shall nonetheless be jointly and severally liable with PPC for the
performance of all the obligations and liabilities under this Amended
BOT Agreement.[11]

Also modified in the Amended BOT Agreement was the Project Completion
date of the MRP/V Project which set the completion of the implementation phase of
the project within 18 to 23 months from the date of effectivity of the Amended BOT
Agreement as opposed to the previous period found in the original BOT Agreement
which set the completion within 18 to 23 months from receipt of the NTP (Notice to
Proceed) in accordance with the Project Master Plan.

On April 12, 2002, an Assignment Agreement [12] was executed by BCA and
PPC, whereby BCA assigned and ceded its rights, title, interest and benefits arising
from the Amended BOT Agreement to PPC.

As set out in Article 8 of the original and the Amended BOT Agreement, the
MRP/V Project was divided into six phases:

Phase 1. Project Planning Phase The Project Proponent [BCA]


shall prepare detailed plans and specifications in accordance with
Annex A of this [Amended] BOT Agreement within three (3) months
from issuance of the NTP (Notice to Proceed) [from the date of
effectivity of this Amended BOT Agreement]. This phase shall be
considered complete upon the review, acceptance and approval by the
DFA of these plans and the resulting Master Plan, including the Master
Schedule, the business process specifications, the acceptance criteria,
among other plans.

xxxx

The DFA must approve all detailed plans as a condition precedent to


the issuance of the CA [Certificate of Acceptance] for Phase 1.

Phase 2. Implementation of the MRP/V Project at the


Central Facility Within six (6) months from issuance of the CA for
Phase 1, the PROJECT PROPONENT [BCA] shall complete the
implementation of the MRP/V Project in the DFA Central Facility, and
establish the network design between the DFA Central Facility, the ten
(10) RCOs [Regional Consular Offices] and the eighty (80) FSPs [Foreign
Service Posts].

xxxx

Phase 3. Implementation of the MRP/V Project at the


Regional Consular Offices This phase represents the replication of
the systems as approved from the Central Facility to the RCOs
throughout the country, as identified in the RFP [Request for Proposal].
The approved systems are those implemented, evaluated, and finally
approved by DFA as described in Phase 1.The Project Proponent [BCA]
will be permitted to begin site preparation and the scanning and
database building operations in all offices as soon as the plans are
agreed upon and accepted. This includes site preparation and
database building operations in these Phase-3 offices.

Within six (6) months from issuance of CA for Phase 2, the Project
Proponent [BCA] shall complete site preparation and implementation of
the approved systems in the ten (10) RCOs, including a fully functional
network connection between all equipment at the Central Facility and
the RCOs.

Phase 4. Full Implementation, including all Foreign


Service Posts Within three (3) to eight (8) months from issuance of
the CA for Phase-3, the Project Proponent [BCA] shall complete all
preparations and fully implement the approved systems in the eighty
(80) FSPs, including a fully functional network connection between all
equipment at the Central Facility and the FSPs. Upon satisfactory
completion of Phase 4, a CA shall be issued by the DFA.

Phase 5. In Service Phase Operation and maintenance of the


complete MRP/V Facility to provide machine readable passports and
visas in all designated locations around the world.

Phase 6. Transition/Turnover Transition/Turnover to the DFA


of all operations and equipment, to include an orderly transfer of
ownership of all hardware, application system software and its source
code and/or licenses (subject to Section 5.02 [H]), peripherals,
leasehold
improvements,
physical
and
computer
security
improvements, Automated Fingerprint Identification Systems, and all
other MRP/V facilities shall commence at least six (6) months prior to
the end of the [Amended] BOT Agreement. The transition will include
the training of DFA personnel who will be taking over the
responsibilities of system operation and maintenance from the Project
Proponent [BCA]. The Project Proponent [BCA] shall bear all costs
related to this transfer. [13] (Words in brackets appear in the Amended
BOT Agreement)

To place matters in the proper perspective, it should be pointed out that both
the DFA and BCA impute breach of the Amended BOT Agreement against each
other.

According to the DFA, delays in the completion of the phases permeated the
MRP/V Project due to the submission of deficient documents as well as intervening
issues regarding BCA/PPCs supposed financial incapacity to fully implement the
project.

On the other hand, BCA contends that the DFA failed to perform its reciprocal
obligation to issue to BCA a Certificate of Acceptance of Phase 1 within 14 working
days of operation purportedly required by Section 14.04 of the Amended BOT
Agreement. BCA bewailed that it took almost three years for the DFA to issue the
said Certificate allegedly because every appointee to the position of DFA Secretary
wanted to review the award of the project to BCA. BCA further alleged that it was
the DFAs refusal to approve the location of the DFA Central Facility which prevented
BCA from proceeding with Phase 2 of the MRP/V Project.

Later, the DFA sought the opinion of the Department of Finance (DOF) and the
Department of Justice (DOJ) regarding the appropriate legal actions in connection
with BCAs alleged delays in the completion of the MRP/V Project. In a Letter dated
February 21, 2005,[14] the DOJ opined that the DFA should issue a final demand upon
BCA to make good on its obligations, specifically on the warranties and
responsibilities regarding the necessary capitalization and the required financing to
carry out the MRP/V Project.The DOJ used as basis for said recommendation, the
Letter dated April 19, 2004[15] of DOF Secretary Juanita Amatong to then DFA
Secretary Delia Albert stating, among others, that BCA may not be able to infuse
more capital into PPC to use for the completion of the MRP/V Project.

Thus, on February 22, 2005, DFA sent a letter [16] to BCA, through its project
company PPC, invoking BCAs financial warranty under Section 5.02(A) of the
Amended BOT Agreement.[17] The DFA required BCA to submit (a) proof of adequate
capitalization (i.e., full or substantial payment of stock subscriptions); (b) a bank
guarantee indicating the availability of a credit facility of P700 million; and (c)
audited financial statements for the years 2001 to 2004.

In reply to DFAs letter, BCA, through PPC, informed the former of its position that its
financial capacity was already passed upon during the prequalification process and
that the Amended BOT Agreement did not call for any additional financial
requirements for the implementation of the MRP/V Project. Nonetheless, BCA
submitted its financial statements for the years 2001 and 2002 and requested for
additional time within which to comply with the other financial requirements which
the DFA insisted on.[18]

According to the DFA, BCAs financial warranty is a continuing warranty which


requires that it shall have the necessary capitalization to finance the MRP/V Project
in its entirety and not on a per phase basis as BCA contends. Only upon sufficient
proof of its financial capability to complete and implement the whole project will the
DFAs obligation to choose and approve the location of its Central Facility arise. The
DFA asserted that its approval of a Central Facility site was not ministerial and upon
its review, BCAs proposed site for the Central Facility was purportedly unacceptable
in terms of security and facilities. Moreover, the DFA allegedly received conflicting
official letters and notices[19] from BCA and PPC regarding the true ownership and
control of PPC. The DFA implied that the disputes among the shareholders of PPC
and between PPC and BCA appeared to be part of the reason for the hampered
implementation of the MRP/V Project.

BCA, in turn, submitted various letters and documents to prove its financial
capability to complete the MRP/V Project. [20] However, the DFA claimed these
documents were unsatisfactory or of dubious authenticity. Then on August 1, 2005,
BCA terminated its Assignment Agreement with PPC and notified the DFA that it
would directly implement the MRP/V Project. [21] BCA further claims that the
termination of the Assignment Agreement was upon the instance, or with the
conformity, of the DFA, a claim which the DFA disputed.

On December 9, 2005, the DFA sent a Notice of Termination [22] to BCA and
PPC due to their alleged failure to submit proof of financial capability to complete
the entire MRP/V Project in accordance with the financial warranty under Section
5.02(A) of the Amended BOT Agreement. The Notice states:

After a careful evaluation and consideration of the matter,


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

In light of the foregoing considerations and upon the instruction


of the Secretary of Foreign Affairs, the Department hereby formally
TERMINATE (sic) the Subject Amended BOT Agreement dated 5 April
2005 (sic)[23] effective 09 December 2005. Further, and as a
consequence of this termination, the Department formally DEMAND
(sic) that you pay within ten (10) days from receipt hereof, liquidated
damages equivalent to the corresponding performance security bond
that you had posted for the MRP/V Project.

Please be guided accordingly.

On December 14, 2005, BCA sent a letter [24] to the DFA demanding that it
immediately reconsider and revoke its previous notice of termination, otherwise,
BCA would be compelled to declare the DFA in default pursuant to the Amended
BOT Agreement. When the DFA failed to respond to said letter, BCA issued its own
Notice of Default dated December 22, 2005 [25] against the DFA, stating that if the
default is not remedied within 90 days, BCA will be constrained to terminate the
MRP/V Project and hold the DFA liable for damages.

BCAs request for mutual discussion under Section 19.01 of the Amended BOT
Agreement[26] was purportedly ignored by the DFA and left the dispute unresolved
through amicable means within 90 days. Consequently, BCA filed its Request for
Arbitration dated April 7, 2006[27] with the Philippine Dispute Resolution Center, Inc.
(PDRCI), pursuant to Section 19.02 of the Amended BOT Agreement which provides:

Section 19.02 Failure to Settle Amicably If the Dispute


cannot be settled amicably within ninety (90) days by mutual
discussion as contemplated under Section 19.01 herein, the Dispute
shall be settled with finality by an arbitrage tribunal operating under
International Law, hereinafter referred to as the Tribunal, under the
UNCITRAL Arbitration Rules contained in Resolution 31/98 adopted by
the United Nations General Assembly on December 15, 1976, and
entitled Arbitration Rules on the United Nations Commission on the
International Trade Law. The DFA and the BCA undertake to abide by

and implement the arbitration award. The place of arbitration shall be


Pasay City, Philippines, or such other place as may mutually be agreed
upon by both parties. The arbitration proceeding shall be conducted in
the English language.[28]

As alleged in BCAs Request for Arbitration, PDRCI is a non-stock, non-profit


organization composed of independent arbitrators who operate under its own
Administrative Guidelines and Rules of Arbitration as well as under the United
Nations Commission on the International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration and other applicable laws and rules. According
to BCA, PDRCI can act as an arbitration center from whose pool of accredited
arbitrators both the DFA and BCA may select their own nominee to become a
member of the arbitral tribunal which will render the arbitration award.

BCAs Request for Arbitration filed with the PDRCI sought the following reliefs:

1. A judgment nullifying and setting aside the Notice of


Termination dated December 9, 2005 of Respondent [DFA], including its
demand to Claimant [BCA] to pay liquidated damages equivalent to the
corresponding performance security bond posted by Claimant [BCA];

2. A judgment (a) confirming the Notice of Default dated


December 22, 2005 issued by Claimant [BCA] to Respondent [DFA];
and (b) ordering Respondent [DFA] to perform its obligation under the
Amended BOT Agreement dated April 5, 2002 by approving the site of
the Central Facility at the Star Mall Complex on Shaw Boulevard,
Mandaluyong City, within five days from receipt of the Arbitral Award;
and

3. A judgment ordering respondent [DFA] to pay damages to


Claimant [BCA], reasonably estimated at P50,000,000.00 as of this
date, representing lost business opportunities; financing fees, costs
and commissions; travel expenses; legal fees and expenses; and costs
of arbitration, including the fees of the arbitrator/s. [29]

PDRCI, through a letter dated April 26, 2006, [30] invited the DFA to submit its
Answer to the Request for Arbitration within 30 days from receipt of said letter and
also requested both the DFA and BCA to nominate their chosen arbitrator within the
same period of time.

Initially, the DFA, through a letter dated May 22, 2006, [31] requested for an extension
of time to file its answer, without prejudice to jurisdictional and other defenses and
objections available to it under the law. Subsequently, however, in a letter dated
May 29, 2006,[32] the DFA declined the request for arbitration before the
PDRCI. While it expressed its willingness to resort to arbitration, the DFA pointed out
that under Section 19.02 of the Amended BOT Agreement, there is no mention of a
specific body or institution that was previously authorized by the parties to settle
their dispute. The DFA further claimed that the arbitration of the dispute should be
had before an ad hocarbitration body, and not before the PDRCI which has as its
accredited arbitrators, two of BCAs counsels of record. Likewise, the DFA insisted
that PPC, allegedly an indispensable party in the instant case, should also
participate in the arbitration.

The DFA then sought the opinion of the DOJ on the Notice of Termination dated
December 9, 2005 that it sent to BCA with regard to the MRP/V Project.

In DOJ Opinion No. 35 (2006) dated May 31, 2006, [33] the DOJ concurred with the
steps taken by the DFA, stating that there was basis in law and in fact for the
termination of the MRP/V Project. Moreover, the DOJ recommended the immediate
implementation of the project (presumably by a different contractor) at the soonest
possible time.

Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for the
latter to provide the former passports compliant with international standards. The
BSP then solicited bids for the supply, delivery, installation and commissioning of a
system for the production of Electronic Passport Booklets or e-Passports. [34]

For BCA, the BSPs invitation to bid for the supply and purchase of e-Passports (the ePassport Project) would only further delay the arbitration it requested from the
DFA.Moreover, this new e-Passport Project by the BSP and the DFA would render
BCAs remedies moot inasmuch as the e-Passport Project would then be replacing
the MRP/V Project which BCA was carrying out for the DFA.

Thus, BCA filed a Petition for Interim Relief [35] under Section 28 of the Alternative
Dispute Resolution Act of 2004 (R.A. No. 9285), [36] with the Regional Trial Court (RTC)
of Pasig City, Branch 71, presided over by respondent Judge Falcon. In that RTC
petition, BCA prayed for the following:

WHEREFORE, BCA respectfully prays that this Honorable Court, before


the constitution of the arbitral tribunal in PDRCI Case No. 30-2006/BGF,
grant petitioner interim relief in the following manner:

(a) upon filing of this Petition, immediately issue an order temporarily


restraining Respondents [DFA and BSP], their agents, representatives,
awardees, suppliers and assigns (i) from awarding a new contract to
implement the Project, or any similar electronic passport or visa
project; or (ii) if such contract has been awarded, from implementing
such Project or similar projects until further orders from this Honorable
Court;

(b) after notice and hearing, issue a writ of preliminary injunction


ordering Respondents [DFA and BSP], their agents, representatives,
awardees, suppliers and assigns to desist (i) from awarding a new
contract to implement the Project or any similar electronic passport or
visa project; or (ii) if such contract has been awarded, from
implementing such Project or similar projects, and to maintain
the status quo ante pending the resolution on the merits of BCAs
Request for Arbitration; and

(c) render judgment affirming the interim relief granted to BCA until
the dispute between the parties shall have been resolved with finality.

BCA also prays for such other relief, just and equitable under the
premises.[37]

BCA alleged, in support for its application for a Temporary Restraining Order (TRO),
that unless the DFA and the BSP were immediately restrained, they would proceed
to undertake the project together with a third party to defeat the reliefs BCA sought
in its Request for Arbitration, thus causing BCA to suffer grave and irreparable injury
from the loss of substantial investments in connection with the implementation of
the MRP/V Project.

Thereafter, the DFA filed an Opposition (to the Application for Temporary Restraining
Order and/or Writ of Preliminary Injunction) dated January 18, 2007, [38] alleging that
BCA has no cause of action against it as the contract between them is for machine
readable passports and visas which is not the same as the contract it has with the
BSP for the supply of electronic passports. The DFA also pointed out that the Filipino
people and the governments international standing would suffer great damage if a
TRO would be issued to stop the e-Passport Project. The DFA mainly anchored its
opposition on Republic Act No. 8975, which prohibits trial courts from issuing a TRO,
preliminary injunction or mandatory injunction against the bidding or awarding of a
contract or project of the national government.

On January 23, 2007, after summarily hearing the parties oral arguments on BCAs
application for the issuance of a TRO, the trial court ordered the issuance of a TRO
restraining the DFA and the BSP, their agents, representatives, awardees, suppliers
and assigns from awarding a new contract to implement the Project or any similar
electronic passport or visa project, or if such contract has been awarded, from
implementing such or similar projects. [39] The trial court also set for hearing BCAs
application for preliminary injunction.

Consequently, the DFA filed a Motion for Reconsideration [40] of the January 23, 2007
Order. The BSP, in turn, also sought to lift the TRO and to dismiss the petition. In its
Urgent Omnibus Motion dated February 1, 2007, [41] the BSP asserted that BCA is not
entitled to an injunction, as it does not have a clear right which ought to be
protected, and that the trial court has no jurisdiction to enjoin the implementation of
the e-Passport Project which, the BSP alleged, is a national government project
under Republic Act No. 8975.

In the hearings set for BCAs application for preliminary injunction, BCA presented as
witnesses, Mr. Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr. from the
Independent Verification and Validation Contractor commissioned by the DFA under
the Amended BOT Agreement, and DFA Assistant Secretary Domingo Lucenario, Jr.
as adverse party witness.

The DFA and the BSP did not present any witness during the hearings for BCAs
application for preliminary injunction. According to the DFA and the BSP, the trial
court did not have any jurisdiction over the case considering that BCA did not pay
the correct docket fees and that only the Supreme Court could issue a TRO on the
bidding for a national government project like the e-Passport Project pursuant to the
provisions of Republic Act No. 8975. Under Section 3 of Republic Act No. 8975, the
RTC could only issue a TRO against a national government project if it involves a
matter of extreme urgency involving a constitutional issue, such that unless a TRO
is issued, grave injustice and irreparable injury will arise.

Thereafter, BCA filed an Omnibus Comment [on Opposition and Supplemental


Opposition (To the Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction)] and Opposition [to Motion for Reconsideration (To the
Temporary Restraining Order dated January 23, 2007)] and Urgent Omnibus Motion
[(i) To Lift Temporary Restraining Order; and (ii) To Dismiss the Petition] dated
January 31, 2007.[42] The DFA and the BSP filed their separate Replies (to BCAs
Omnibus Comment) dated February 9, 2007 [43] and February 13, 2007,
[44]
respectively.

On February 14, 2007, the trial court issued an Order granting BCAs application for
preliminary injunction, to wit:

WHEREFORE, in view of the above, the court resolves that it has


jurisdiction over the instant petition and to issue the provisional
remedy prayed for, and therefore, hereby GRANTS petitioners [BCAs]
application for preliminary injunction. Accordingly, upon posting a bond
in the amount of Ten Million Pesos (P10,000,000.00), let a writ of
preliminary injunction issue ordering respondents [DFA and BSP], their
agents, representatives, awardees, suppliers and assigns to desist (i)
from awarding a new contract to implement the project or any similar
electronic passport or visa project or (ii) if such contract has been
awarded from implementing such project or similar projects.

The motion to dismiss is denied for lack of merit. The motions


for reconsideration and to lift temporary restraining Order are now
moot and academic by reason of the expiration of the TRO. [45]

On February 16, 2007, BCA filed an Amended Petition, [46] wherein paragraphs 3.3(b)
and 4.3 were modified to add language to the effect that unless petitioners were
enjoined from awarding the e-Passport Project, BCA would be deprived of its
constitutionally-protected right to perform its contractual obligations under the
original and amended BOT Agreements without due process of law. Subsequently,
on February 26, 2007, the DFA and the BSP received the Writ of Preliminary
Injunction dated February 23, 2007.

Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition
for Certiorari[47] and prohibition under Rule 65 of the Rules of Court with a prayer for
the issuance of a temporary restraining order and/or a writ of preliminary injunction,
imputing grave abuse of discretion on the trial court when it granted interim relief
to BCA and issued the assailed Order dated February 14, 2007 and the writ of
preliminary injunction dated February 23, 2007.

The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction dated March 5, 2007. [48]

On March 12, 2007, the Court required BCA to file its comment on the said petition
within ten days from notice and granted the Office of the Solicitor Generals urgent
motion for issuance of a TRO and/or writ of preliminary injunction, [49] thus:

After deliberating on the petition for certiorari and prohibition


with temporary restraining order and/or writ of preliminary injunction
assailing the Order dated 14 February 2007 of the Regional Trial Court,
Branch 71, Pasig City, in Civil Case No. 71079, the Court, without
necessarily giving due course thereto, resolves to require respondents
to COMMENT thereon (not to file a motion to dismiss) within ten (10)
days from notice.

The Court further resolves to GRANT the Office of the Solicitor


Generals urgent motion for issuance of a temporary restraining order
and/or writ of preliminary injunction dated 05 March 2007
and ISSUE a TEMPORARY RESTRAINING ORDER, as prayed for,
enjoining respondents from implementing the assailed Order dated 14
February 2007 and the Writ of Preliminary Injunction dated 23 February
2007, issued by respondent Judge Franco T. Falcon in Civil Case No.
71079 entitled BCA International Corporation vs. Department of
Foreign Affairs and Bangko Sentral ng Pilipinas, and from conducting
further proceedings in said case until further orders from this Court.

BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO, [50] to which
the DFA and the BSP filed their Reply dated August 14, 2007. [51]

In a Resolution dated June 4, 2007, [52] the Court denied BCAs motion to lift TRO. BCA
filed another Urgent Omnibus Motion dated August 17, 2007, for the reconsideration
of the Resolution dated June 4, 2007, praying that the TRO issued on March 12,
2007 be lifted and that the petition be denied.

In a Resolution dated September 10, 2007, [53] the Court denied BCAs Urgent
Omnibus Motion and gave due course to the instant petition. The parties were
directed to file their respective memoranda within 30 days from notice of the Courts
September 10, 2007 Resolution.

Petitioners DFA and BSP submit the following issues for our consideration:
ISSUES

WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY ABUSED HIS


DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN
HE ISSUED THE ASSAILED ORDER, WHICH EFFECTIVELY ENJOINED THE
IMPLEMENTATION OF THE E-PASSPORT PROJECT -- A NATIONAL
GOVERNMENT PROJECT UNDER REPUBLIC ACT NO. 8975.

II

WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH GRAVE


ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION
IN
GRANTING
RESPONDENT
BCAS INTERIM
RELIEF INASMUCH AS:

(I)

RESPONDENT BCA HAS NOT ESTABLISHED A


CLEAR RIGHT THAT CAN BE PROTECTED BY AN
INJUNCTION; AND

(II)

RESPONDENT BCA HAS NOT SHOWN THAT IT


WILL SUSTAIN GRAVE AND IRREPARABLE INJURY
THAT MUST BE PROTECTED BY AN INJUNCTION. ON
THE CONTRARY, IT IS THE FILIPINO PEOPLE, WHO
PETITIONERS PROTECT, THAT WILL SUSTAIN
SERIOUS AND SEVERE INJURY BY THE INJUNCTION.
[54]

At the outset, we dispose of the procedural objections of BCA to the


petition, to wit: (a) petitioners did not follow the hierarchy of courts by filing their
petition directly with this Court, without filing a motion for reconsideration with
the RTC and without filing a petition first with the Court of Appeals; (b) the
person who verified the petition for the DFA did not have personal knowledge of
the facts of the case and whose appointment to his position was highly irregular;
and (c) the verification by the Assistant Governor and General Counsel of the
BSP of only selected paragraphs of the petition was with the purported intent to
mislead this Court.
Although the direct filing of petitions for certiorari with the Supreme Court
is discouraged when litigants may still resort to remedies with the lower courts,
we have in the past overlooked the failure of a party to strictly adhere to the
hierarchy of courts on highly meritorious grounds. Most recently, we relaxed the
rule on court hierarchy in the case of Roque, Jr. v. Commission on Elections,
[55]
wherein we held:

The policy on the hierarchy of courts, which petitioners indeed


failed to observe, is not an iron-clad rule. For indeed the Court has
full discretionary power to take cognizance and assume jurisdiction of
special civil actions for certiorari and mandamus filed directly with
it for exceptionally compelling reasons or if warranted by the
nature of the issues clearly and specifically raised in the petition.
[56]
(Emphases ours.)

The Court deems it proper to adopt a similarly liberal attitude in the present case in
consideration of the transcendental importance of an issue raised herein. This is the
first time that the Court is confronted with the question of whether an information
and communication technology project, which does not conform to our traditional
notion of the term infrastructure, is covered by the prohibition on the issuance of
court injunctions found in Republic Act No. 8975, which is entitled An Act to Ensure
the Expeditious Implementation and Completion of Government Infrastructure
Projects by Prohibiting Lower Courts from Issuing Temporary Restraining Orders,
Preliminary Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for
Violations Thereof, and for Other Purposes. Taking into account the current trend of
computerization and modernization of administrative and service systems of
government offices, departments and agencies, the resolution of this issue for the
guidance of the bench and bar, as well as the general public, is both timely and
imperative.

Anent BCAs claim that Mr. Edsel T. Custodio (who verified the Petition on
behalf of the DFA) did not have personal knowledge of the facts of the case and
was appointed to his position as Acting Secretary under purportedly irregular
circumstances, we find that BCA failed to sufficiently prove such allegations. In
any event, we have previously held that [d]epending on the nature of the
allegations in the petition, the verification may be based either purely on
personal knowledge, or entirely on authentic records, or on both sources. [57] The
alleged lack of personal knowledge of Mr. Custodio (which, as we already stated,
BCA failed to prove) would not necessarily render the verification defective for
he could have verified the petition purely on the basis of authentic records.
As for the assertion that the partial verification of Assistant Governor and
General Counsel Juan de Zuniga, Jr. was for the purpose of misleading this Court,
BCA likewise failed to adduce evidence on this point. Good faith is always
presumed. Paragraph 3 of Mr. Zunigas verification indicates that his partial
verification is due to the fact that he is verifying only the allegations in the
petition peculiar to the BSP. We see no reason to doubt that this is the true
reason for his partial or selective verification.
In sum, BCA failed to successfully rebut the presumption that the official
acts (of Mr. Custodio and Mr. Zuniga) were done in good faith and in the regular
performance of official duty.[58] Even assuming the verifications of the petition

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

Acquisition, clearance and development of the right-ofway and/or site or location of any national government
project;

(b) Bidding or awarding of contract/project of the national


government as defined under Section 2 hereof;

(c)

Commencement,
prosecution,
execution,
implementation, operation of any such contract or project;

(d) Termination or rescission of any such contract/project;


and

(e)

The undertaking or authorization of any other lawful


activity necessary for such contract/project.

This prohibition shall apply in all cases, disputes or controversies


instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter
is of extreme urgency involving a constitutional issue, such that unless
a temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be
fixed by the court, which bond shall accrue in favor of the government
if the court should finally decide that the applicant was not entitled to
the relief sought.

If after due hearing the court finds that the award of the contract is null
and void, the court may, if appropriate under the circumstances, award
the contract to the qualified and winning bidder or order a rebidding of
the same, without prejudice to any liability that the guilty party may
incur under existing laws.

From the foregoing, it is indubitable that no court, aside from the Supreme
Court, may enjoin a national government project unless the matter is one of
extreme urgency involving a constitutional issue such that unless the act
complained of is enjoined, grave injustice or irreparable injury would arise.
What then are the national government projects over which the lower
courts are without jurisdiction to issue the injunctive relief as mandated by
Republic Act No. 8975?
Section 2(a) of Republic Act No. 8975 provides:
Section 2. Definition of Terms.
(a) National government projects shall refer to all current and
future national government infrastructure, engineering works and
service contracts, including projects undertaken by government-owned
and -controlled corporations, all projects covered by Republic Act No.
6975, as amended by Republic Act No. 7718, otherwise known as the
Build-Operate-and-Transfer Law, and other related and necessary
activities, such as site acquisition, supply and/or installation of
equipment and materials, implementation, construction, completion,
operation, maintenance, improvement, repair and rehabilitation,
regardless of the source of funding.

As petitioners themselves pointed out, there are three types of national


government projects enumerated in Section 2(a), to wit:
(a)

current
and
future
national
government
infrastructure projects, engineering works and service
contracts, including projects undertaken by government-owned
and controlled corporations;

(b)

all projects covered by R.A. No. 6975, as amended by


R.A. No. 7718, or the Build-Operate-and-Transfer ( BOT)
Law; and

(c)

other related and necessary activities, such as site


acquisition, supply and/or installation of equipment and
materials, implementation, construction, completion, operation,
maintenance, improvement repair and rehabilitation, regardless
of the source of funding.

Under Section 2(a) of the BOT Law as amended by Republic Act No. 7718,
private sector infrastructure or development projects are those
normally financed and operated by the public sector but which will now
be wholly or partly implemented by the private sector, including but not
limited to, power plants, highways, ports, airports, canals, dams, hydropower
projects, water supply, irrigation, telecommunications, railroads and railways,
transport systems, land reclamation projects, industrial estates or townships,
housing, government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology networks
and database infrastructure, education and health facilities, sewerage,
drainage, dredging, and other infrastructure and development projects as may
be authorized by the appropriate agency.
[61]

In contrast, Republic Act No. 9184, [62] also known as the Government Procurement
Reform Act, defines infrastructure projects in Section 5(k) thereof in this manner:

(k) Infrastructure
Projects include
the
construction,
improvement, rehabilitation, demolition, repair, restoration or
maintenance of roads and bridges, railways, airports, seaports,
communication facilities, civil works components of information
technology projects, irrigation, flood control and drainage, water
supply, sanitation, sewerage and solid waste management systems,
shore protection, energy/power and electrification facilities, national
buildings, school buildings, hospital buildings and other related
construction projects of the government. (Emphasis supplied.)

In the present petition, the DFA and the BSP contend that the bidding for
the supply, delivery, installation and commissioning of a system for the
production of Electronic Passport Booklets, is a national government project
within the definition of Section 2 of Republic Act No. 8975. Petitioners also point
to the Senate deliberations on Senate Bill No. 2038 [63] (later Republic Act No.
8975) which allegedly show the legislatives intent to expand the scope and
definition of national government projects to cover not only the infrastructure
projects enumerated in Presidential Decree No. 1818, but also future projects
that may likewise be considered national government infrastructure projects, like
the e-Passport Project, to wit:
Senator Cayetano. x x x Mr. President, the present bill, the Senate
Bill No. 2038, is actually an improvement of P.D. No. 1818 and
definitely not a repudiation of what I have earlier said, as my good
friend clearly stated. But this is really an effort to improve both the
scope and definition of the term government projects and to ensure
that lower court judges obey and observe this prohibition on the
issuance of TROs on infrastructure projects of the government.
xxxx
Senator Cayetano. That is why, Mr. President, I did try to explain why
I would accept the proposed amendment, meaning the totality of the
repeal of P.D. 1818 which is not found in the original version of the bill,
because of my earlier explanation that the definition of the term
government infrastructure project covers all of those enumerated in
Section 1 of P.D. No. 1818. And the reason for that, as we know, is we
do not know what else could be considered government infrastructure
project in the next 10 or 20 years.
x x x So, using the Latin maxim of expression unius est exclusion
alterius, which means what is expressly mentioned is tantamount to an
express exclusion of the others, that is the reason we did not include
particularly an enumeration of certain activities of the government
found in Section 1 of P.D. No. 1818. Because to do that, it may be a
good excuse for a brilliant lawyer to say Well, you know, since it does
not cover this particular activity, ergo, the Regional Trial Court may
issue TRO.
Using the foregoing discussions to establish that the intent of the framers of the
law was to broaden the scope and definition of national government projects and
national infrastructure projects, the DFA and the BSP submit that the said scope
and definition had since evolved to include the e-Passport Project. They assert
that the concept of infrastructure must now refer to any and all elements that
provide support, framework, or structure for a given system or organization,
including information technology, such as the e-Passport Project.
Interestingly, petitioners represented to the trial court that the e-Passport Project
is a BOT project but in their petition with this Court, petitioners simply claim that

the e-Passport Project is a national government project under Section 2 of


Republic Act No. 8975. This circumstance is significant, since relying on the claim
that the e-Passport Project is a BOT project, the trial court ruled in this wise:
The prohibition against issuance of TRO and/or writ of preliminary
injunction under RA 8975 applies only to national government
infrastructure project covered by the BOT Law, (RA 8975, Sec
3[b] in relation to Sec. 2).
The national government projects covered under the BOT are
enumerated under Sec. 2 of RA6957, as amended, otherwise known as
the BOT Law. Notably, it includes information technology
networks and database infrastructure.
In relation to information technology projects, infrastructure
projects refer to the civil works components thereof. (R.A. No.
9184 [2003], Sec. 5[c]{sic}).[64]
Respondent BSPs request for bid, for the supply, delivery, installation
and commissioning of a system for the production of Electronic
Passport Booklets appears to be beyond the scope of the term civil
works. Respondents did not present evidence to prove otherwise.
[65]
(Emphases ours.)
From the foregoing, it can be gleaned that the trial court accepted BCAs
reasoning that, assuming the e-Passport Project is a project under the BOT Law,
Section 2 of the BOT Law must be read in conjunction with Section 5(c) of
Republic Act No. 9184 or the Government Procurement Reform Act to the effect
that only the civil works component of information technology projects are to be
considered infrastructure. Thus, only said civil works component of an
information technology project cannot be the subject of a TRO or writ of
injunction issued by a lower court.
Although the Court finds that the trial court had jurisdiction to issue the writ of
preliminary injunction, we cannot uphold the theory of BCA and the trial court
that the definition of the term infrastructure project in Republic Act No. 9184
should be applied to the BOT Law.
Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein,
including the term infrastructure project, with the following phrase: For
purposes of this Act, the following terms or words and phrases shall mean or
be understood as follows x x x.
This Court has stated that the definition of a term in a statute is not conclusive
as to the meaning of the same term as used elsewhere. [66] This is evident when
the legislative definition is expressly made for the purposes of the statute
containing such definition.[67]

There is no legal or rational basis to apply the definition of the term


infrastructure project in one statute to another statute enacted years before and
which already defined the types of projects it covers. Rather, a reading of the
two statutes involved will readily show that there is a legislative intent to treat
information technology projects differently under the BOT Law and the
Government Procurement Reform Act.
In the BOT Law as amended by Republic Act No. 7718, the national infrastructure
and development projects covered by said law are enumerated in Section 2(a) as
follows:
SEC. 2. Definition of Terms. - The following terms used in this Act
shall have the meanings stated below:

(a)
Private
sector
infrastructure
or
development projects - The general description of
infrastructure or development projects normally financed
and operated by the public sector but which will now be
wholly or partly implemented by the private sector,
including but not limited to, power plants, highways,
ports, airports, canals, dams, hydropower projects, water
supply, irrigation, telecommunications, railroads and
railways, transport systems, land reclamation projects,
industrial estates of townships, housing, government
buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information
technology networks and database infrastructure,
education and health facilities, sewerage, drainage,
dredging, and other infrastructure and development
projects as may be authorized by the appropriate agency
pursuant to this Act. Such projects shall be undertaken
through contractual arrangements as defined hereunder
and such other variations as may be approved by the
President of the Philippines.

For the construction stage of these infrastructure


projects, the project proponent may obtain financing from
foreign and/or domestic sources and/or engage the
services of a foreign and/or Filipino contractor: Provided,
That, in case an infrastructure or a development facility's
operation requires a public utility franchise, the facility
operator must be a Filipino or if a corporation, it must be
duly registered with the Securities and Exchange
Commission and owned up to at least sixty percent (60%)
by Filipinos: Provided, further, That in the case of foreign
contractors, Filipino labor shall be employed or hired in
the different phases of construction where Filipino skills
are available: Provided, finally, That projects which would

have difficulty in sourcing funds may be financed partly


from direct government appropriations and/or from
Official Development Assistance (ODA) of foreign
governments or institutions not exceeding fifty percent
(50%) of the project cost, and the balance to be provided
by the project proponent. (Emphasis supplied.)

A similar provision appears in the Revised IRR of the BOT Law as amended, to
wit:
SECTION 1.3 - DEFINITION OF TERMS

For purposes of these Implementing Rules and Regulations, the terms


and phrases hereunder shall be understood as follows:

xxxx

v. Private
Sector
Infrastructure
or
Development Projects - The general description of
infrastructure or Development Projects normally financed,
and operated by the public sector but which will now be
wholly or partly financed, constructed and operated by
the private sector, including but not limited to, power
plants, highways, ports, airports, canals, dams,
hydropower
projects,
water
supply,
irrigation,
telecommunications, railroad and railways, transport
systems, land reclamation projects, industrial estates or
townships, housing, government buildings, tourism
projects, public markets, slaughterhouses, warehouses,
solid
waste
management, information
technology
networks and database infrastructure, education and
health facilities, sewerage, drainage, dredging, and other
infrastructure and development projects as may otherwise
be authorized by the appropriate Agency/LGU pursuant to
the Act or these Revised IRR. Such projects shall be
undertaken through Contractual Arrangements as defined
herein, including such other variations as may be
approved by the President of the Philippines.

xxxx

SECTION 2.2 - ELIGIBLE TYPES OF PROJECTS

The Construction, rehabilitation, improvement, betterment, expansion,


modernization, operation, financing and maintenance of the following
types of projects which are normally financed and operated by the
public sector which will now be wholly or partly financed, constructed
and operated by the private sector, including other infrastructure and
development projects as may be authorized by the appropriate
agencies, may be proposed under the provisions of the Act and these
Revised IRR, provided however that such projects have a cost recovery
component which covers at least 50% of the Project Cost, or as
determined by the Approving Body:

xxxx

h. Information technology (IT) and data base


infrastructure, including modernization of IT, geo-spatial
resource mapping and cadastral survey for resource
accounting and planning. (Underscoring supplied.)

Undeniably, under the BOT Law, wherein the projects are to be privately funded,
the entire information technology project, including the civil works component
and the technological aspect thereof, is considered an infrastructure or
development project and treated similarly as traditional infrastructure
projects. All the rules applicable to traditional infrastructure projects are also
applicable to information technology projects. In fact, the MRP/V Project awarded
to BCA under the BOT Law appears to include both civil works (i.e., site
preparation of the Central Facility, regional DFA offices and foreign service posts)
and non-civil works aspects (i.e., development, installation and maintenance in
the Philippines and foreign service posts of a computerized passport and visa
issuance system, including creation of databases, storage and retrieval systems,
training of personnel and provision of consumables).
In contrast, under Republic Act No. 9184 or the Government Procurement Reform
Act, which contemplates projects to be funded by public funds, the term
infrastructure project was limited to only the civil works component of
information technology projects. The non-civil works component of information
technology projects would be treated as an acquisition of goods or consulting
services as the case may be.
This limited definition of infrastructure project in relation to information
technology projects under Republic Act No. 9184 is significant since the IRR of
Republic Act No. 9184 has some provisions that are particular to infrastructure

projects and other provisions that are applicable only to procurement of goods or
consulting services.[68]
Implicitly, the civil works component of information technology projects are
subject to the provisions on infrastructure projects while the technological and
other components would be covered by the provisions on procurement of goods
or consulting services as the circumstances may warrant.
When Congress adopted a limited definition of what is to be considered
infrastructure in relation to information technology projects under the
Government Procurement Reform Act, legislators are presumed to have taken
into account previous laws concerning infrastructure projects (the BOT Law and
Republic Act No. 8975) and deliberately adopted the limited definition. We can
further presume that Congress had written into law a different treatment for
information technology projects financed by public funds vis-a-visprivately
funded projects for a valid legislative purpose.
The idea that the definitions of terms found in the Government Procurement
Reform Act were not meant to be applied to projects under the BOT Law is
further reinforced by the following provision in the IRR of the Government
Procurement Reform Act:
Section 1. Purpose and General Coverage

This Implementing Rules and Regulations (IRR) Part A, hereinafter


called IRR-A, is promulgated pursuant to Section 75 of Republic Act No.
9184 (R.A. 9184), otherwise known as the Government Procurement
Reform Act (GPRA), for the purpose of prescribing the necessary rules
and regulations for the modernization, standardization, and regulation
of the procurement activities of the government. This IRR-A shall
cover all fully domestically-funded procurement activities from
procurement planning up to contract implementation and
termination, exceptfor the following:

a) Acquisition of real property which shall be governed by Republic Act


No. 8974 (R.A. 8974), entitled An Act to Facilitate the Acquisition of
Right-of-Way Site or Location for National Government Infrastructure
Projects and for Other Purposes, and other applicable laws; and

b) Private sector infrastructure or development projects and


other procurement covered by Republic Act No. 7718 (R.A.
7718), entitled An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure Projects by the
Private Sector, and for Other Purposes, as amended: Provided,
however, That for the portions financed by the Government,
the provisions of this IRR-A shall apply.

The IRR-B for foreign-funded procurement activities shall be the subject


of a subsequent issuance. (Emphases supplied.)

The foregoing provision in the IRR can be taken as an administrative


interpretation that the provisions of Republic Act No. 9184 are inapplicable to a
BOT project except only insofar as such portions of the BOT project that are
financed by the government.
Taking into account the different treatment of information technology projects
under the BOT Law and the Government Procurement Reform Act, petitioners
contention the trial court had no jurisdiction to issue a writ of preliminary
injunction in the instant case would have been correct if the e-Passport Project
was a project under the BOT Law as they represented to the trial court.
However, petitioners presented no proof that the e-Passport Project was a BOT
project. On the contrary, evidence adduced by both sides tended to show that
the e-Passport Project was a procurement contract under Republic Act No. 9184.
The BSPs on-line request for expression of interest and to bid for the e-Passport
Project[69] from the BSP website and the newspaper clipping [70] of the same
request expressly stated that [t]he two stage bidding procedure under Section
30.4 of the Implementing Rules and Regulation (sic) Part-A of Republic Act No.
9184 relative to the bidding and award of the contract shall apply. During the
testimony of DFA Assistant Secretary Domingo Lucenario, Jr. before the trial
court, he admitted that the e-Passport Project is a BSP procurement project and
that it is the BSP that will pay the suppliers. [71] In petitioners Manifestation dated
July 29, 2008[72] and the Erratum[73] thereto, petitioners informed the Court that a
contract for the supply of a complete package of systems design, technology,
hardware, software, and peripherals, maintenance and technical support,
ecovers and datapage security laminates for the centralized production and
personalization of Machine Readable Electronic Passport was awarded to
Francois Charles Oberthur Fiduciaire. In the Notice of Award dated July 2,
2008[74] attached to petitioners pleading, it was stated that the failure of the
contractor/supplier to submit the required performance bond would be sufficient
ground for the imposition of administrative penalty under Section 69 of the IRR-A
of Republic Act No. 9184.
Being a government procurement contract under Republic Act No. 9184, only the
civil works component of the e-Passport Project would be considered an
infrastructure project that may not be the subject of a lower court-issued writ of
injunction under Republic Act No. 8975.
Could the e-Passport Project be considered as engineering works or a service
contract or as related and necessary activities under Republic Act No. 8975
which may not be enjoined?

We hold in the negative. Under Republic Act No. 8975, a service contract refers
to infrastructure contracts entered into by any department, office or agency of
the national government with private entities and nongovernment organizations for
services related or incidental to the functions and operations of the department,
office or agency concerned.On the other hand, the phrase other related and
necessary activities obviously refers to activities related to a government
infrastructure, engineering works, service contract or project under the BOT Law. In
other words, to be considered a service contract or related activity, petitioners must
show that the e-Passport Project is an infrastructure project or necessarily related to
an infrastructure project. This, petitioners failed to do for they saw fit not to present
any evidence on the details of the e-Passport Project before the trial court and this
Court. There is nothing on record to indicate that the e-Passport Project has a civil
works component or is necessarily related to an infrastructure project.

Indeed, the reference to Section 30.4[75] of the IRR of Republic Act No. 9184 (a
provision specific to the procurement of goods) in the BSPs request for interest and
to bid confirms that the e-Passport Project is a procurement of goods and not an
infrastructure project. Thus, within the context of Republic Act No. 9184 which is the
governing law for the e-Passport Project the said Project is not an infrastructure
project that is protected from lower court issued injunctions under Republic Act No.
8975, which, to reiterate, has for its purpose the expeditious and efficient
implementation and completion of government infrastructure projects.

We note that under Section 28, Republic Act No. 9285 or the Alternative
Dispute Resolution Act of 2004,[76] the grant of an interim measure of protection by
the proper court before the constitution of an arbitral tribunal is allowed:

Sec. 28. Grant of Interim Measure of Protection. (a) It is not


incompatible with an arbitration agreement for a party to request,
before constitution of the tribunal, from a Court an interim measure of
protection and for the Court to grant such measure. After constitution
of the arbitral tribunal and during arbitral proceedings, a request for an
interim measure of protection, or modification thereof, may be made
with the arbitral tribunal or to the extent that the arbitral tribunal has
no power to act or is unable to act effectively, the request may be
made with the Court.The arbitral tribunal is deemed constituted when
the sole arbitrator or the third arbitrator, who has been nominated, has
accepted the nomination and written communication of said
nomination and acceptance has been received by the party making the
request.

(a)

The following rules on interim or provisional relief


shall be observed:

(1)
Any party may request that provisional
relief be granted against the adverse party.

(2)

Such relief may be granted:

(i)

to prevent irreparable loss or


injury;

(ii)

to provide security for


performance of any obligation;

the

(iii)

to produce
evidence; or

any

(iv)

to compel any other appropriate


act or omission.

or

preserve

(3)
The order granting provisional relief
may be conditioned upon the provision of security or any
act or omission specified in the order.

(4)
Interim
or
provisional
relief
is
requested by written application transmitted by
reasonable means to the Court or arbitral tribunal as the
case may be and the party against whom the relief is
sought, describing in appropriate detail the precise relief,
the party against whom the relief is requested, the
grounds for the relief, and the evidence supporting the
request.

(5)
parties.

The order shall be binding upon the

(6)
Either party may apply with the Court
for assistance in implementing or enforcing an interim
measure ordered by an arbitral tribunal.

(7)
A party who does not comply with the
order shall be liable for all damages resulting from

noncompliance, including all expenses and reasonable


attorneys fees, paid in obtaining the orders judicial
enforcement.

Section 3(h) of the same statute provides that the "Court" as referred to in
Article 6 of the Model Law shall mean a Regional Trial Court.

Republic Act No. 9285 is a general law applicable to all matters and
controversies to be resolved through alternative dispute resolution methods. This
law allows a Regional Trial Court to grant interim or provisional relief, including
preliminary injunction, to parties in an arbitration case prior to the constitution of
the arbitral tribunal. This general statute, however, must give way to a special law
governing national government projects, Republic Act No. 8975 which prohibits
courts, except the Supreme Court, from issuing TROs and writs of preliminary
injunction in cases involving national government projects.

However, as discussed above, the prohibition in Republic Act No. 8975 is


inoperative in this case, since petitioners failed to prove that the e-Passport Project
is national government project as defined therein. Thus, the trial court had
jurisdiction to issue a writ of preliminary injunction against the e-Passport Project.

On whether the trial courts issuance of a writ


of injunction was proper

Given the above ruling that the trial court had jurisdiction to issue a writ of
injunction and going to the second issue raised by petitioners, we answer the
question: Was the trial courts issuance of a writ of injunction warranted under the
circumstances of this case?

Petitioners attack on the propriety of the trial courts issuance of a writ of


injunction is two-pronged: (a) BCA purportedly has no clear right to the injunctive
relief sought; and (b) BCA will suffer no grave and irreparable injury even if the
injunctive relief were not granted.

To support their claim that BCA has no clear right to injunctive relief,
petitioners mainly allege that the MRP/V Project and the e-Passport Project are not
the same project.Moreover, the MRP/V Project purportedly involves a technology
(the 2D optical bar code) that has been rendered obsolete by the latest ICAO

developments while the e-Passport Project will comply with the latest ICAO
standards (the contactless integrated circuit). Parenthetically, and not as a main
argument, petitioners imply that BCA has no clear contractual right under the
Amended BOT Agreement since BCA had previously assigned all its rights and
obligations under the said Agreement to PPC.

BCA, on the other hand, claims that the Amended BOT Agreement also
contemplated the supply and/or delivery of e-Passports with the integrated circuit
technology in the future and not only the machine readable passport with the 2D
optical bar code technology. Also, it is BCAs assertion that the integrated circuit
technology is only optional under the ICAO issuances. On the matter of its
assignment of its rights to PPC, BCA counters that it had already terminated
(purportedly at DFAs request) the assignment agreement in favor of PPC and that
even assuming the termination was not valid, the Amended BOT Agreement
expressly stated that BCA shall remain solidarily liable with its assignee, PPC.

Most of these factual allegations and counter-allegations already touch upon


the merits of the main controversy between the DFA and BCA, i.e., the validity and
propriety of the termination of the Amended BOT Agreement (the MRP/V Project)
between the DFA and BCA. The Court deems it best to refrain from ruling on these
matters since they should be litigated in the appropriate arbitration or court
proceedings between or among the concerned parties.

One preliminary point, however, that must be settled here is whether BCA
retains a right to seek relief against the DFA under the Amended BOT Agreement in
view of BCAs previous assignment of its rights to PPC. Without preempting any
factual finding that the appropriate court or arbitral tribunal on the matter of the
validity of the assignment agreement with PPC or its termination, we agree with
BCA that it remained a party to the Amended BOT Agreement, notwithstanding the
execution of the assignment agreement in favor of PPC, for it was stipulated in the
Amended BOT Agreement that BCA would be solidarily liable with its assignee. For
convenient reference, we reproduce the relevant provision of the Amended BOT
Agreement here:

Section 20.15. It is clearly and expressly understood that BCA


may assign, cede and transfer all of its rights and obligations under
this Amended BOT Agreement to PPC [Philippine Passport Corporation],
as fully as if PPC is the original signatory to this Amended BOT
Agreement, provided however that BCA shall nonetheless be
jointly and severally liable with PPC for the performance of all
the obligations and liabilities under this Amended BOT
Agreement. (Emphasis supplied.)

Furthermore, a review of the records shows that the DFA continued to address
its correspondence regarding the MRP/V Project to both BCA and PPC, even after the
execution of the assignment agreement. Indeed, the DFAs Notice of Termination
dated December 9, 2005 was addressed to Mr. Bonifacio Sumbilla as President of
both BCA and PPC and referred to the Amended BOT Agreement executed between
the Department of Foreign Affairs (DFA), on one hand, and the BCA International
Corporation and/or the Philippine Passport Corporation (BCA/PPC). At the very least,
the DFA is estopped from questioning the personality of BCA to bring suit in relation
to the Amended BOT Agreement since the DFA continued to deal with both BCA and
PPC even after the signing of the assignment agreement. In any event, if the DFA
truly believes that PPC is an indispensable party to the action, the DFA may take
necessary steps to implead PPC but this should not prejudice the right of BCA to file
suit or to seek relief for causes of action it may have against the DFA or the BSP, for
undertaking the e-Passport Project on behalf of the DFA.

With respect to petitioners contention that BCA will suffer no grave and
irreparable injury so as to justify the grant of injunctive relief, the Court finds that
this particular argument merits consideration.

The BOT Law as amended by Republic Act No. 7718, provides:

SEC. 7. Contract Termination. - In the event that a project is


revoked, cancelled or terminated by the Government through
no fault of the project proponent or by mutual agreement,
theGovernment shall compensate the said project proponent
for its actual expenses incurred in the project plus a reasonable
rate of return thereon not exceeding that stated in the contract as of
the date of such revocation, cancellation or termination: Provided, That
the interest of the Government in this instances shall be duly insured
with the Government Service Insurance System [GSIS] or any other
insurance entity duly accredited by the Office of the Insurance
Commissioner: Provided, finally, That the cost of the insurance
coverage shall be included in the terms and conditions of the bidding
referred to above.

In the event that the government defaults on certain major


obligations in the contract and such failure is not remediable or if
remediable shall remain unremedied for an unreasonable length of
time, the project proponent/contractor may, by prior notice to the
concerned national government agency or local government unit
specifying the turn-over date, terminate the contract. The project
proponent/contractor shall be reasonably compensated by the
Government for equivalent or proportionate contract cost as
defined in the contract. (Emphases supplied.)

In addition, the Amended BOT Agreement, which is the law between and
among the parties to it, pertinently provides:
Section 17.01 Default In case a party commits an act
constituting an event of default, the non-defaulting party may
terminate this Amended BOT Agreement by serving a written
notice to the defaulting party specifying the grounds for termination
and giving the defaulting party a period of ninety (90) days within
which to rectify the default. If the default is not remedied within this
period to the satisfaction of the non-defaulting party, then the latter
will serve upon the former a written notice of termination indicating
the effective date of termination.

Section 17.02 Proponents Default If this Amended BOT


Agreement is terminated by reason of the BCAs default, the DFA
shall have the following options:

A.

Allow the BCAs unpaid creditors who


hold a lien on the MRP/V Facility to foreclose on
the MRP/V Facility. The right of the BCAs unpaid
creditors to foreclose on the MRP/V Facility shall be
valid for the duration of the effectivity of this
Amended BOT Agreement; or,

B.

Allow the BCAs unpaid creditors who


hold a lien on the MRP/V Facility to designate
a substitute BCA for the MRP/V Project, provided
the designated substitute BCA is qualified under
existing laws and acceptable to the DFA. This
substitute BCA shall hereinafter be referred to as
the Substitute BCA. The Substitute BCA shall
assume all the BCAs rights and privileges, as well
as the obligations, duties and responsibilities
hereunder; provided, however, that the DFA shall at
all times and its sole option, have the right to
invoke and exercise any other remedy which may
be available to the DFA under any applicable laws,
rules and/or regulations which may be in effect at
any time and from time to time. The DFA shall
cooperate with the creditors with a view to
facilitating the choice of a Substitute BCA, who
shall take-over the operation, maintenance and
management of the MRP/V Project, within three (3)
months from the BCAs receipt of the notice of
termination from the DFA. The Substituted BCA

shall have all the rights and obligations of the


previous BCA as contained in this Amended BOT
Agreement; or

C.

Take-over the MRP/V Facility


assume all attendant liabilities thereof.

and

D.

In all cases of termination due to the


default of the BCA, it shall pay DFA liquidated
damages equivalent to the applicable the (sic)
Performance Security.

Section 17.03 DFAs Default If this Amended BOT Agreement


is terminated by the BCA by reason of the DFAs Default, the DFA
shall:

A.

Be obligated to take over the MRP/V


Facility on an as is, where is basis, and shall
forthwith assume attendant liabilities thereof; and

B.

Pay liquidated damages to the BCA


equivalent to the following amounts, which may be
charged to the insurance proceeds referred to in
Article 12:

(1)

In the event of termination prior to


completion of the implementation of the
MRP/V Project, damages shall be paid
equivalent to the value of completed
implementation, minus the aggregate
amount of the attendant liabilities
assumed by the DFA, plus ten percent
(10%) thereof. The amount of such
compensation shall be determined as of the
date of the notice of termination and shall
become due and demandable ninety (90)
days after the date of this notice of
termination. Under this Amended BOT
Agreement, the term Value of the Completed
Implementation shall mean the aggregate of
all reasonable costs and expenses incurred
by the BCA in connection with, in relation to
and/or by reason of the MRP/V Project,

excluding all interest and capitalized interest,


as certified by a reputable and independent
accounting firm to be appointed by the BCA
and subject to the approval by the DFA, such
approval shall not be unreasonably withheld.

(2)

In the event of termination after


completion of design, development, and
installation of the MRP/V Project, just
compensation shall be paid equivalent
to the present value of the net income
which the BCA expects to earn or
realize
during
the
unexpired
or
remaining term of this Amended BOT
Agreementusing the internal rate of return
on equity (IRRe) defined in the financial
projections of the BCA and agreed upon by
the parties, which is attached hereto and
made as an integral part of this Amended
BOT Agreement as Schedule 1. (Emphases
supplied.)

The validity of the DFAs termination of the Amended BOT Agreement and the
determination of the party or parties in default are issues properly threshed out in
arbitration proceedings as provided for by the agreement itself. However, even if we
hypothetically accept BCAs contention that the DFA terminated the Amended BOT
Agreement without any default or wrongdoing on BCAs part, it is not indubitable
that BCA is entitled to injunctive relief.
The BOT Law expressly allows the government to terminate a BOT
agreement, even without fault on the part of the project proponent, subject to the
payment of the actual expenses incurred by the proponent plus a reasonable rate of
return.

Under the BOT Law and the Amended BOT Agreement, in the event of default
on the part of the government (in this case, the DFA) or on the part of the
proponent, the non-defaulting party is allowed to terminate the agreement, again
subject to proper compensation in the manner set forth in the agreement.
Time and again, this Court has held that to be entitled to injunctive relief the party
seeking such relief must be able to show grave, irreparable injury that is not
capable of compensation.

In Lopez v. Court of Appeals, [77] we held:

Generally, injunction is a preservative remedy for the protection


of one's substantive right or interest. It is not a cause of action in itself
but merely a provisional remedy, an adjunct to a main suit. It is
resorted to only when there is a pressing necessity to avoid
injurious consequences which cannot be remedied under any
standard compensation. The application of the injunctive writ rests
upon the existence of an emergency or of a special reason before the
main case can be regularly heard. The essential conditions for granting
such temporary injunctive relief are that the complaint alleges facts
which appear to be sufficient to constitute a proper basis for injunction
and that on the entire showing from the contending parties, the
injunction is reasonably necessary to protect the legal rights of the
plaintiff pending the litigation. Two requisites are necessary if a
preliminary injunction is to issue, namely, the existence of a right to be
protected and the facts against which the injunction is to be directed
are violative of said right. In particular, for a writ of preliminary
injunction to issue, the existence of the right and the violation must
appear in the allegation of the complaint and a preliminary
injunction is proper only when the plaintiff (private respondent
herein) appears to be entitled to the relief demanded in his
complaint. (Emphases supplied.)

We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro Corporation,


[78]
where we likewise opined:

Before a writ of preliminary injunction may be issued, there must be a


clear showing by the complaint that there exists a right to be protected
and that the acts against which the writ is to be directed are violative
of the said right. It must be shown that the invasion of the right sought
to be protected is material and substantial, that the right of
complainant is clear and unmistakable and that there is an urgent and
paramount
necessity
for
the
writ
to
prevent
serious
damage. Moreover, an injunctive remedy may only be resorted
to when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard
compensation. (Emphasis supplied.)

As the Court explained previously in Philippine Airlines, Inc. v. National Labor


Relations Commission[79]:

An injury is considered irreparable if it is of such constant and


frequent recurrence that no fair and reasonable redress can be had
therefor in a court of law, or where there is no standard by which
their amount can be measured with reasonable accuracy, that
is, it is not susceptible of mathematical computation. It is
considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself
or the nature of the right or property injured or when there
exists no certain pecuniary standard for the measurement of
damages. (Emphases supplied.)

It is still contentious whether this is a case of termination by the DFA alone or both
the DFA and BCA. The DFA contends that BCA, by sending its own Notice of Default,
likewise terminated or abandoned the Amended BOT Agreement. Still, whether this
is a termination by the DFA alone without fault on the part of BCA or a termination
due to default on the part of either party, the BOT Law and the Amended BOT
Agreement lay down the measure of compensation to be paid under the appropriate
circumstances.

Significantly, in BCAs Request for Arbitration with the PDRCI, it prayed for, among
others, a judgment ordering respondent [DFA] to pay damages to Claimant [BCA],
reasonably estimated at P50,000,000.00 as of [the date of the Request for
Arbitration], representing lost business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses; and costs of arbitration,
including the fees of the arbitrator/s. [80] All the purported damages that BCA claims
to have suffered by virtue of the DFAs termination of the Amended BOT Agreement
are plainly determinable in pecuniary terms and can be reasonably estimated
according to BCAs own words.

Indeed, the right of BCA, a party which may or may not have been in default on its
BOT contract, to have the termination of its BOT contract reversed is not
guaranteed by the BOT Law. Even assuming BCAs innocence of any breach of
contract, all the law provides is that BCA should be adequately compensated for its
losses in case of contract termination by the government.
There is one point that none of the parties has highlighted but is worthy of
discussion. In seeking to enjoin the government from awarding or implementing a
machine readable passport project or any similar electronic passport or visa project
and praying for the maintenance of the status quo ante pending the resolution on
the merits of BCAs Request for Arbitration, BCA effectively seeks to enjoin the
termination of the Amended BOT Agreement for the MRP/V Project.

There is no doubt that the MRP/V Project is a project covered by the BOT Law and, in
turn, considered a national government project under Republic Act No. 8795. Under

Section 3(d) of that statute, trial courts are prohibited from issuing a TRO or writ of
preliminary injunction against the government to restrain or prohibit the termination
or rescission of any such national government project/contract.

The rationale for this provision is easy to understand. For if a project proponent that
the government believes to be in default is allowed to enjoin the termination of its
contract on the ground that it is contesting the validity of said termination, then the
government will be unable to enter into a new contract with any other party while
the controversy is pending litigation. Obviously, a courts grant of injunctive relief in
such an instance is prejudicial to public interest since government would be
indefinitely hampered in its duty to provide vital public goods and services in order
to preserve the private proprietary rights of the project proponent. On the other
hand, should it turn out that the project proponent was not at fault, the BOT Law
itself presupposes that the project proponent can be adequately compensated for
the termination of the contract. Although BCA did not specifically pray for the trial
court to enjoin the termination of the Amended BOT Agreement and thus, there is
no direct violation of Republic Act No. 8795, a grant of injunctive relief as prayed for
by BCA will indirectly contravene the same statute.

Verily, there is valid reason for the law to deny preliminary injunctive relief to those
who seek to contest the governments termination of a national government
contract. The only circumstance under which a court may grant injunctive relief is
the existence of a matter of extreme urgency involving a constitutional issue, such
that unless a TRO or injunctive writ is issued, grave injustice and irreparable injury
will result.
Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer
grave and irreparable injury since the bidding out and award of the e-Passport
Project would be tantamount to a violation of its right against deprivation of
property without due process of law under Article III, Section 1 of the
Constitution. We are unconvinced.

Article III, Section 1 of the Constitution provides [n]o person shall be deprived of life,
liberty, or property without due process of law, nor shall any person be denied the
equal protection of the laws. Ordinarily, this constitutional provision has been
applied to the exercise by the State of its sovereign powers such as, its legislative
power,[81] police power,[82] or its power of eminent domain.[83]

In the instant case, the State action being assailed is the DFAs termination of the
Amended BOT Agreement with BCA. Although the said agreement involves a public
service that the DFA is mandated to provide and, therefore, is imbued with public
interest, the relationship of DFA to BCA is primarily contractual and their dispute
involves the adjudication of contractual rights. The propriety of the DFAs acts, in
relation to the termination of the Amended BOT Agreement, should be gauged
against the provisions of the contract itself and the applicable statutes to such
contract. These contractual and statutory provisions outline what constitutes due

process in the present case. In all, BCA failed to demonstrate that there is a
constitutional issue involved in this case, much less a constitutional issue of
extreme urgency.

As for the DFAs purported failure to appropriate sufficient amounts in its budget to
pay for liquidated damages to BCA, this argument does not support BCAs position
that it will suffer grave and irreparable injury if it is denied injunctive relief. The DFAs
liability to BCA for damages is contingent on BCA proving that it is entitled to such
damages in the proper proceedings. The DFA has no obligation to set aside funds to
pay for liquidated damages, or any other kind of damages, to BCA until there is a
final and executory judgment in favor of BCA. It is illogical and impractical for the
DFA to set aside a significant portion of its budget for an event that may never
happen when such idle funds should be spent on providing necessary services to
the populace. For if it turns out at the end of the arbitration proceedings that it is
BCA alone that is in default, it would be the one liable for liquidated damages to the
DFA under the terms of the Amended BOT Agreement.
With respect to BCAs allegation that the e-Passport Project is grossly
disadvantageous to the Filipino people since it is the government that will be
spending for the project unlike the MRP/V Project which would have been privately
funded, the same is immaterial to the issue at hand. If it is true that the award of
the e-Passport Project is inimical to the public good or tainted with some anomaly, it
is indeed a cause for grave concern but it is a matter that must be investigated and
litigated in the proper forum. It has no bearing on the issue of whether BCA would
suffer grave and irreparable injury such that it is entitled to injunctive relief from the
courts.

In all, we agree with petitioners DFA and BSP that the trial courts issuance of a writ
of preliminary injunction, despite the lack of sufficient legal justification for the
same, is tantamount to grave abuse of discretion.

To be very clear, the present decision touches only on the twin issues of (a) the
jurisdiction of the trial court to issue a writ of preliminary injunction as an interim
relief under the factual milieu of this case; and (b) the entitlement of BCA to
injunctive relief. The merits of the DFA and BCAs dispute regarding the termination
of the Amended BOT Agreement must be threshed out in the proper arbitration
proceedings. The civil case pending before the trial court is purely for the grant of
interim relief since the main case is to be the subject of arbitration proceedings.

BCAs petition for interim relief before the trial court is essentially a petition for a
provisional remedy (i.e., preliminary injunction) ancillary to its Request for
Arbitration in PDRCI Case No. 30-2006/BGF. BCA specifically prayed that the trial
court grant it interim relief pending the constitution of the arbitral tribunal in the
said PDRCI case.Unfortunately, during the pendency of this case, PDRCI Case No.
30-2006/BGF was dismissed by the PDRCI for lack of jurisdiction, in view of the lack

of agreement between the parties to arbitrate before the PDRCI. [84] In Philippine
National Bank v. Ritratto Group, Inc.,[85] we held:

A writ of preliminary injunction is an ancillary or preventive remedy


that may only be resorted to by a litigant to protect or preserve his
rights or interests and for no other purpose during the pendency of the
principal action. The dismissal of the principal action thus
results in the denial of the prayer for the issuance of the writ. x
x x. (Emphasis supplied.)

In view of intervening circumstances, BCA can no longer be granted injunctive relief


and the civil case before the trial court should be accordingly dismissed. However,
this is without prejudice to the parties litigating the main controversy in arbitration
proceedings, in accordance with the provisions of the Amended BOT Agreement,
which should proceed with dispatch.

It does not escape the attention of the Court that the delay in the submission of this
controversy to arbitration was caused by the ambiguity in Section 19.02 of the
Amended BOT Agreement regarding the proper body to which a dispute between
the parties may be submitted and the failure of the parties to agree on such an
arbitral tribunal. However, this Court cannot allow this impasse to continue
indefinitely. The parties involved must sit down together in good faith and finally
come to an understanding regarding the constitution of an arbitral tribunal mutually
acceptable to them.

WHEREFORE, the instant petition is hereby GRANTED. The assailed Order dated
February 14, 2007 of the Regional Trial Court of Pasig in Civil Case No. 71079 and
the Writ of Preliminary Injunction dated February 23, 2007 are REVERSED and SET
ASIDE. Furthermore, Civil Case No. 71079 is hereby DISMISSED.

No pronouncement as to costs.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

Nerwin Industries Corp. v. PNOC-Energy Development Corporation, G.R. No.


167057, April 11, 2012
Republic of the Philippines
Supreme Court
Baguio City
FIRST DIVISION

NERWIN INDUSTRIES
CORPORATION,
Petitioner,

G.R. No. 167057

Present:

CORONA,C.J., Chairperson,
- versus -

LEONARDO-DE CASTRO,
*

BRION,

BERSAMIN, and
PNOC-ENERGY DEVELOPMENT
CORPORATION, and
ESTER R. GUERZON, Chairman,
Bids and Awards Committee,

VILLARAMA, JR., JJ.

Promulgated:

Respondents.

April 11, 2012


x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

Republic Act No. 8975[1] expressly prohibits any court, except the Supreme Court,
from issuing any temporary restraining order (TRO), preliminary injunction, or
preliminary mandatory injunction to restrain, prohibit or compel the Government, or
any of its subdivisions or officials, or any person or entity, whether public or private,
acting under the Governments direction, from: (a) acquiring, clearing, and
developing the right-of-way, site or location of any National Government project; (b)
bidding or awarding of a contract or project of the National Government; (c)
commencing, prosecuting, executing, implementing, or operating any such contract
or project; (d) terminating or rescinding any such contract or project; and (e)
undertaking or authorizing any other lawful activity necessary for such contract or
project.

Accordingly, a Regional Trial Court (RTC) that ignores the statutory prohibition and
issues a TRO or a writ of preliminary injunction or preliminary mandatory injunction
against a government contract or project acts contrary to law.

Antecedents

The following antecedents are culled from the assailed decision of the Court of
Appeals (CA) promulgated on October 22, 2004,[2] viz:

In 1999, the National Electrification Administration (NEA) published an invitation to


pre-qualify and to bid for a contract, otherwise known as IPB No. 80, for the supply
and delivery of about sixty thousand (60,000) pieces of woodpoles and twenty
thousand (20,000) pieces of crossarms needed in the countrys Rural Electrification
Project. The said contract consisted of four (4) components, namely: PIA, PIB and PIC
or woodpoles and P3 or crossarms, necessary for NEAs projected allocation
for Luzon, Visayas and Mindanao. In response to the said invitation, bidders, such as
private respondent [Nerwin], were required to submit their application for eligibility
together with their technical proposals. At the same time, they were informed that
only those who would pass the standard pre-qualification would be invited to submit
their financial bids.

Following a thorough review of the bidders qualifications and eligibility, only four (4)
bidders, including private respondent [Nerwin], qualified to participate in the
bidding for the IPB-80 contract. Thereafter, the qualified bidders submitted their
financial bids where private respondent [Nerwin] emerged as the lowest bidder for
all schedules/components of the contract. NEA then conducted a pre-award
inspection of private respondents [Nerwins] manufacturing plants and facilities,
including its identified supplier in Malaysia, to determine its capability to supply and
deliver NEAs requirements.

In the Recommendation of Award for Schedules PIA, PIB, PIC and P3 - IBP No. 80 [for
the] Supply and Delivery of Woodpoles and Crossarms dated October 4, 2000, NEA
administrator Conrado M. Estrella III recommended to NEAs Board of Directors the
approval of award to private respondent [Nerwin] of all schedules for IBP No. 80 on
account of the following:

a. Nerwin is the lowest complying and responsive bidder;

b. The price difference for the four (4) schedules between the bid of Nerwin
Industries (lowest responsive and complying bidder) and the second lowest bidder
in the amount of $1.47 million for the poles and $0.475 million for the crossarms, is
deemed substantial and extremely advantageous to the government. The price
difference is equivalent to 7,948 pcs. of poles and 20.967 pcs. of crossarms;

c. The price difference for the three (3) schedules between the bids of Nerwin and
the Tri-State Pole and Piling, Inc. approximately in the amount of $2.36 million for
the poles and $0.475 million for the crossarms are equivalent to additional 12.872
pcs. of poles and 20.967 pcs. of crossarms; and

d. The bidder and manufacturer are capable of supplying the woodpoles and
specified in the bid documents and as based on the pre-award inspection
conducted.

However, on December 19, 2000, NEAs Board of Directors passed Resolution No.
32 reducing by 50% the material requirements for IBP No. 80 given the time
limitations for the delivery of the materials, xxx, and with the loan closing date of
October 2001 fast approaching. In turn, it resolved to award the four (4) schedules
of IBP No. 80 at a reduced number to private respondent [Nerwin]. Private
respondent [Nerwin] protested the said 50% reduction, alleging that the same was a
ploy to accommodate a losing bidder.

On the other hand, the losing bidders Tri State and Pacific Synnergy appeared to
have filed a complaint, citing alleged false or falsified documents submitted during
the pre-qualification stage which led to the award of the IBP-80 project to private
respondent [Nerwin].

Thus, finding a way to nullify the result of the previous bidding, NEA officials sought
the opinion of the Government Corporate Counsel who, among others, upheld the
eligibility and qualification of private respondent [Nerwin]. Dissatisfied, the said
officials attempted to seek a revision of the earlier opinion but the Government
Corporate Counsel declared anew that there was no legal impediment to prevent
the award of IPB-80 contract to private respondent [Nerwin]. Notwithstanding, NEA
allegedly held negotiations with other bidders relative to the IPB-80 contract,
prompting private respondent [Nerwin] to file a complaint for specific performance
with prayer for the issuance of an injunction, which injunctive application was
granted by Branch 36 of RTC-Manila in Civil Case No. 01102000.

In the interim, PNOC-Energy Development Corporation purporting to be under the


Department of Energy, issued Requisition No. FGJ 30904R1 or an invitation to prequalify and to bid for wooden poles needed for its Samar Rural Electrification Project
(O-ILAW project).

Upon learning of the issuance of Requisition No. FGJ 30904R1 for the O-ILAW Project,
Nerwin filed a civil action in the RTC in Manila, docketed as Civil Case No. 03106921
entitled Nerwin Industries Corporation v. PNOC-Energy Development Corporation
and Ester R. Guerzon, as Chairman, Bids and Awards Committee, alleging that
Requisition No. FGJ 30904R1 was an attempt to subject a portion of the items
covered by IPB No. 80 to another bidding; and praying that a TRO issue to enjoin
respondents proposed bidding for the wooden poles.

Respondents sought the dismissal of Civil Case No. 03106921, stating that the
complaint averred no cause of action, violated the rule that government
infrastructure projects were not to be subjected to TROs, contravened the
mandatory prohibition against non-forum shopping, and the corporate president had
no authority to sign and file the complaint. [3]

On June 27, 2003, after Nerwin had filed its rejoinder to respondents reply, the RTC
granted a TRO in Civil Case No. 03106921.[4]

On July 30, 2003, the RTC issued an order,[5] as follows:

WHEREFORE, for the foregoing considerations, an order is hereby issued by this


Court:

1.

DENYING the motion to consolidate;

2.

DENYING the urgent motion for reconsideration;

3.
DISQUALIFYING Attys. Michael A. Medado, Datu Omar S. Sinsuat and Mariano
H. Paps from appearing as counsel for the defendants;

4.

DECLARING defendants in default;

5.

GRANTING the motion for issuance of writ of preliminary injunction.

Accordingly, let a writ of preliminary injunction issue enjoining the defendant PNOCEDC and its Chairman of Bids and Awards Committee Esther R. Guerzon from
continuing the holding of the subject bidding upon the plaintiffs filing of a bond in
the amount of P200,000.00 to answer for any damage or damages which the
defendants may suffer should it be finally adjudged that petitioner is not entitled
thereto, until final determination of the issue in this case by this Court.

This order shall become effective only upon the posting of a bond by the plaintiffs in
the amount of P200,000.00.

Let a copy of this order be immediately served on the defendants and strict
compliance herein is enjoined. Furnish the Office of the Government Corporate
Counsel copy of this order.

SO ORDERED.

Respondents moved for the reconsideration of the order of July 30, 2003, and also
to set aside the order of default and to admit their answer to the complaint.

On January 13, 2004, the RTC denied respondents motions for reconsideration, to
set aside order of default, and to admit answer. [6]

Thence, respondents commenced in the Court of Appeals (CA) a special civil action
for certiorari (CA-GR SP No. 83144), alleging that the RTC had thereby committed
grave abuse of discretion amounting to lack or excess of jurisdiction in holding that
Nerwin had been entitled to the issuance of the writ of preliminary injunction
despite the express prohibition from the law and from the Supreme Court; in issuing
the TRO in blatant violation of the Rules of Court and established jurisprudence; in
declaring respondents in default; and in disqualifying respondents counsel from
representing them.[7]

On October 22, 2004, the CA promulgated its decision, [8] to wit:

WHEREFORE, the petition is GRANTED. The assailed Orders dated July 30


and December 29, 2003 are hereby ANNULED and SET ASIDE. Accordingly, Civil
Case No. 03106921, private respondents complaint for issuance of temporary
restraining order/writ of preliminary injunction before Branch 37 of the Regional Trial
Court of Manila, is DISMISSED for lack of merit.

SO ORDERED.

Nerwin filed a motion for reconsideration, but the CA denied the motion on February
9, 2005.[9]

Issues

Hence, Nerwin appeals, raising the following issues:

I.
Whether or not the CA erred in dismissing the case on the basis of Rep. Act
8975 prohibiting the issuance of temporary restraining orders and preliminary
injunctions, except if issued by the Supreme Court, on government projects.

II. Whether or not the CA erred in ordering the dismissal of the entire case on the
basis of Rep. Act 8975 which prohibits the issuance only of a preliminary injunction
but not injunction as a final remedy.

III. Whether or not the CA erred in dismissing the case considering that it is also one
for damages.

Ruling

The petition fails.

In its decision of October 22, 2004, the CA explained why it annulled and set aside
the assailed orders of the RTC issued on July 20, 2003 and December 29, 2003, and
why it altogether dismissed Civil Case No. 03106921, as follows:
It is beyond dispute that the crux of the instant case is the propriety of respondent
Judges issuance of a preliminary injunction, or the earlier TRO, for that matter.

Respondent Judge gravely abused his discretion in entertaining an application for


TRO/preliminary injunction, and worse, in issuing a preliminary injunction through
the assailed order enjoining petitioners sought bidding for its O-ILAW Project. The
same is a palpable violation of RA 8975 which was approved on November 7, 2000,
thus, already existing at the time respondent Judge issued the assailed Orders
dated July 20 and December 29, 2003.

Section 3 of RA 8975 states in no uncertain terms, thus:

Prohibition on the Issuance of temporary Restraining Order, Preliminary Injunctions


and Preliminary Mandatory Injunctions. No court, except the Supreme Court, shall
issue any temporary restraining order, preliminary injunction or preliminary
mandatory injunction against the government, or any of its subdivisions, officials, or
any person or entity, whether public or private, acting under the governments
direction, to restrain, prohibit or compel the following acts:

xxx
(b) Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof;
xxx
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such contract/project. This prohibition
shall not apply when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. xxx

The said proscription is not entirely new. RA 8975 merely supersedes PD 1818 which
earlier underscored the prohibition to courts from issuing restraining orders or
preliminary injunctions in cases involving infrastructure or National Resources
Development projects of, and public utilities operated by, the government. This law
was, in fact, earlier upheld to have such a mandatory nature by the Supreme Court
in an administrative case against a Judge.

Moreover, to bolster the significance of the said prohibition, the Supreme Court had
the same embodied in its Administrative Circular No. 11-2000 which reiterates the
ban on issuance of TRO or writs of Preliminary Prohibitory or Mandatory Injunction in
cases involving Government Infrastructure Projects. Pertinent is the ruling
in National Housing Authority vs. Allarde As regards the definition of infrastructure
projects, the Court stressed in Republic of the Phil. vs. Salvador Silverio and Big
Bertha Construction: The term infrastructure projects means construction,
improvement and rehabilitation of roads, and bridges, railways, airports, seaports,
communication facilities, irrigation, flood control and drainage, water supply and
sewerage systems, shore protection, power facilities, national buildings, school
buildings, hospital buildings and other related construction projects that form part of
the government capital investment.

Thus, there is nothing from the law or jurisprudence, or even from the facts of the
case, that would justify respondent Judges blatant disregard of a simple,
comprehensible and unequivocal mandate (of PD 1818) prohibiting the issuance of
injunctive writs relative to government infrastructure projects. Respondent Judge did
not even endeavor, although expectedly, to show that the instant case falls under
the single exception where the said proscription may not apply, i.e., when the
matter is of extreme urgency involving a constitutional issue, such that unless a
temporary restraining order is issued, grave injustice and irreparable injury will
arise.

Respondent Judge could not have legally declared petitioner in default because, in
the first place, he should not have given due course to private respondents
complaint for injunction.Indubitably, the assailed orders were issued with grave
abuse of discretion amounting to lack or excess of jurisdiction.

Perforce, this Court no longer sees the need to resolve the other grounds proffered
by petitioners.[10]

The CAs decision was absolutely correct. The RTC gravely abused its discretion,
firstly, when it entertained the complaint of Nerwin against respondents
notwithstanding that Nerwin was thereby contravening the express provisions of
Section 3 and Section 4 of Republic Act No. 8975 for its seeking to enjoin the
bidding out by respondents of the O-ILAW Project; and, secondly, when it issued the
TRO and the writ of preliminary prohibitory injunction.

Section 3 and Section 4 of Republic Act No. 8975 provide:

Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary


Injunctions and Preliminary Mandatory Injunctions. No court, except the Supreme
Court, shall issue any temporary restraining order, preliminary injunction or
preliminary mandatory injunction against the government, or any of its subdivisions,
officials or any person or entity, whether public or private, acting under the
governments direction, to restrain, prohibit or compel the following acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or


location of any national government project;

(b) Bidding or awarding of contract/project of the national government as


defined under Section 2 hereof;

(c) Commencement, prosecution, execution, implementation, operation of any such


contract or project;

(d) Termination or rescission of any such contract/project; and

(e) The undertaking or authorization of any other lawful activity necessary for such
contract/project.

This prohibition shall apply in all cases, disputes or controversies instituted by a


private party, including but not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such contract/project. This prohibition
shall not apply when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the court should
finally decide that the applicant was not entitled to the relief sought.

If after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the
qualified and winning bidder or order a rebidding of the same, without prejudice to
any liability that the guilty party may incur under existing laws.

Section 4. Nullity of Writs and Orders. - Any temporary restraining order,


preliminary injunction or preliminary mandatory injunction issued in
violation of Section 3 hereof is void and of no force and effect.

The text and tenor of the provisions being clear and unambiguous, nothing was left
for the RTC to do except to enforce them and to exact upon Nerwin obedience to
them. The RTC could not have been unaware of the prohibition under Republic Act
No. 8975 considering that the Court had itself instructed all judges and justices of
the lower courts, through Administrative Circular No. 11-2000, to comply with and
respect the prohibition against the issuance of TROs or writs of preliminary
prohibitory or mandatory injunction involving contracts and projects of the
Government.

It is of great relevance to mention at this juncture that Judge Vicente A. Hidalgo, the
Presiding Judge of Branch 37 of the RTC, the branch to which Civil Case
No. 03106921 had been raffled, was in fact already found administratively liable for
gross misconduct and gross ignorance of the law as the result of his issuance of the
assailed TRO and writ of preliminary prohibitory injunction. The Court could only fine
him in the amount of P40,000.00 last August 6, 2008 in view of his intervening
retirement from the service. That sanction was meted on him in A.M. No. RTJ-082133 entitled Sinsuat v. Hidalgo,[11] where this Court stated:

The Court finds that, indeed, respondent is liable for gross misconduct. As the CA
explained in its above-stated Decision in the petition for certiorari, respondent failed
to heed the mandatory ban imposed by P.D. No. 1818 and R.A. No. 8975 against a
government infrastructure project, which the rural electrification project certainly
was. He thereby likewise obstinately disregarded this Courts various circulars
enjoining courts from issuing TROs and injunctions against government
infrastructure projects in line with the proscription under R.A. No.
8975.Apropos are Gov. Garcia v. Hon. Burgos and National Housing Authority v. Hon.
Allarde wherein this Court stressed that P.D. No. 1818 expressly deprives courts of
jurisdiction to issue injunctive writs against the implementation or execution of a
government infrastructure project.

Reiterating the prohibitory mandate of P.D. No. 1818, the Court in Atty. Caguioa v.
Judge Lavia faulted a judge for grave misconduct for issuing a TRO against a
government infrastructure project thus:

xxx It appears that respondent is either feigning a misunderstanding of the law or


openly manifesting a contumacious indifference thereto. In any case, his disregard
of the clear mandate of PD 1818, as well as of the Supreme Court Circulars
enjoining strict compliance therewith, constitutes grave misconduct and conduct
prejudicial to the proper administration of justice. His claim that the said statute is
inapplicable to his January 21, 1997 Order extending the dubious TRO is but a
contrived subterfuge to evade administrative liability.

In resolving matters in litigation, judges should endeavor assiduously to


ascertain the facts and the applicable laws. Moreover, they should exhibit
more than just a cursory acquaintance with statutes and procedural rules.
Also, they are expected to keep abreast of and be conversant with the
rules and the circulars which the Supreme Court has adopted and which
affect the disposition of cases before them.

Although judges have in their favor the presumption of regularity and good faith in
the performance of their judicial functions, a blatant disregard of the clear and
unmistakable terms of the law obviates this presumption and renders
them susceptible to administrative sanctions. (Emphasis and underscoring
supplied)

The pronouncements in Caguioa apply as well to respondent.

The questioned acts of respondent also constitute gross ignorance of the law for
being patently in disregard of simple, elementary and well-known rules which
judges are expected to know and apply properly.

IN FINE, respondent is guilty of gross misconduct and gross ignorance of the


law, which are serious charges under Section 8 of Rule 140 of the Rules of Court. He
having retired from the service, a fine in the amount of P40,000 is imposed upon
him, the maximum amount fixed under Section 11 of Rule 140 as an alternative
sanction to dismissal or suspension.[12]

Even as the foregoing outcome has rendered any further treatment and discussion
of Nerwins other submissions superfluous and unnecessary, the Court notes that the
RTC did not properly appreciate the real nature and true purpose of the injunctive
remedy. This failing of the RTC presses the Court to use this decision to reiterate the
norms and parameters long standing jurisprudence has set to control the issuance
of TROs and writs of injunction, and to now insist on conformity to them by all
litigants and lower courts. Only thereby may the grave misconduct committed in
Civil Case No. 03106921 be avoided.

A preliminary injunction is an order granted at any stage of an action or proceeding


prior to the judgment or final order, requiring a party or a court, agency or person,
to refrain from a particular act or acts.[13] It is an ancillary or preventive remedy
resorted to by a litigant to protect or preserve his rights or interests during the
pendency of the case. As such, it is issued only when it is established that:

(a) The applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually; or

(b) The commission, continuance or non-performance of the act or acts complained


of during the litigation would probably work injustice to the applicant; or

(c) A party, court, agency or a person is doing, threatening, or is attempting to do,


or is procuring or suffering to be done, some act or acts probably in violation of the
rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual. [14]

The existence of a right to be protected by the injunctive relief is indispensable.


In City Government of Butuan v. Consolidated Broadcasting System (CBS), Inc.,
[15]
the Court elaborated on this requirement, viz:

As with all equitable remedies, injunction must be issued only at the instance of a
party who possesses sufficient interest in or title to the right or the property sought
to be protected. It is proper only when the applicant appears to be entitled to the
relief demanded in the complaint, which must aver the existence of the right and
the violation of the right, or whose averments must in the minimum constitute
a prima facie showing of a right to the final relief sought. Accordingly, the conditions
for the issuance of the injunctive writ are: (a) that the right to be protected
exists prima facie; (b) that the act sought to be enjoined is violative of that right;
and (c) that there is an urgent and paramount necessity for the writ to prevent
serious damage. An injunction will not issue to protect a right not in esse, or
a right which is merely contingent and may never arise; or to restrain an
act which does not give rise to a cause of action; or to prevent the
perpetration of an act prohibited by statute. Indeed, a right, to be
protected by injunction, means a right clearly founded on or granted by
law or is enforceable as a matter of law.[16]

Conclusive proof of the existence of the right to be protected is not demanded,


however, for, as the Court has held in Saulog v. Court of Appeals,[17] it is enough
that:

xxx for the court to act, there must be an existing basis of facts affording a
present right which is directly threatened by an act sought to be enjoined.
And while a clear showing of the right claimed is necessary, its existence
need not be conclusively established. In fact, the evidence to be submitted to
justify preliminary injunction at the hearing thereon need not be conclusive or
complete but need only be a sampling intended merely to give the court an idea of
the justification for the preliminary injunction pending the decision of the case on
the merits. This should really be so since our concern here involves only the
propriety of the preliminary injunction and not the merits of the case still
pending with the trial court.

Thus, to be entitled to the writ of preliminary injunction, the private respondent


needs only to show that it has the ostensible right to the final relief prayed for
in its complaint xxx.[18]

In this regard, the Rules of Court grants a broad latitude to the trial courts
considering that conflicting claims in an application for a provisional writ more often
than not involve and require a factual determination that is not the function of the
appellate courts.[19] Nonetheless, the exercise of such discretion must be sound, that
is, the issuance of the writ, though discretionary, should be upon the grounds and in
the manner provided by law.[20] When that is done, the exercise of sound discretion
by the issuing court in injunctive matters must not be interfered with except when
there is manifest abuse.[21]

Moreover, judges dealing with applications for the injunctive relief ought to be wary
of improvidently or unwarrantedly issuing TROs or writs of injunction that tend to
dispose of the merits without or before trial. Granting an application for the relief in
disregard of that tendency is judicially impermissible, [22] for it is never the function
of a TRO or preliminary injunction to determine the merits of a case, [23] or to decide
controverted facts.[24] It is but a preventive remedy whose only mission is to prevent
threatened wrong,[25] further injury,[26] and irreparable harm[27] or injustice[28] until
the rights of the parties can be settled. Judges should thus look at such relief only as
a means to protect the ability of their courts to render a meaningful decision.
[29]
Foremost in their minds should be to guard against a change of circumstances
that will hamper or prevent the granting of proper reliefs after a trial on the merits.
[30]
It is well worth remembering that the writ of preliminary injunction should issue
only to prevent the threatened continuous and irremediable injury to the applicant
before the claim can be justly and thoroughly studied and adjudicated. [31]

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals;


and ORDERS petitioner to pay the costs of suit.

The Court Administrator shall disseminate this decision to the lower courts for their
guidance.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

Baguio Regreening Movement, Inc. v. Masweng, G.R. No. 180882, 27


February 2013
G.R. No. 180882

February 27, 2013

THE BAGUIO REGREENING MOVEMENT, INC., represented by ATTY.


ERDOLFO V. BALAJADIA; ENVIRONMENT MANAGEMENT CITY AND PARKS
OFFICE, represented by its Officer-in Charge, Cordelia C. Lacsamana; and
THE BUSOL FOREST RESERVATION TASK FORCE, represented by its Team
Leader,
Victor
Dictag, Petitioners,
vs.
ATTY. BRAIN MASWENG, in his capacity as Regional Hearing Officer, NCIPCAR; ELIZABETH MAT-AN, for herself and as representative of the heirs of
Rafael; JUDITH MARANES, for herself and as representative of the heirs of
Molintas; HELEN LUBOS, for herself and as representative of the heirs of
Kalomis; MAGDALENA GUMANGAN QUE, for herself and as representative
of the heirs of Gumangan; Spouses ALEXANDER AMPAGUEY and LUCIA
AMPAGUEY;
and
Spouses
CARMEN
PANA
YO
and
MELANIO
PANAYO, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rule on Civil
Procedure assailing the Decision1 of the Court of Appeals dated April 30, 2007 in CAG.R. SP No. 78570 insofar as it affirmed the issuances of National Commission on
Indigenous Peoples (NCIP) Hearing Officer Brain Masweng, and the Resolution of the
same court dated December 11, 2007 denying petitioners Motion for Partial
Reconsideration.
Herein private respondents Elizabeth Mat-an, Judith Maranes, Helen Lubos,
Magdalena Gumangan Que, spouses Alexander and Lucia Ampaguey, and spouses
Melanio and Carmen Panayo, claiming that their parents inherited from their
ancestors several parcels of land in what is now known as the Busol Watershed
Reservation, filed before the NCIP a Petition for Injunction, with an application for a
Temporary Restraining Order (TRO), and thereafter a Writ of Preliminary Injunction
seeking to enjoin the Baguio District Engineers Office, the Office of the City
Architect and Parks Superintendent, and petitioners The Baguio Regreening
Movement, Inc. and the Busol Task Force from fencing the Busol Watershed
Reservation.
In their Petition before the NCIP, private respondents claim that they are members
of the Ibaloi and Kankanaey tribes of Baguio City. Their ancestors ownership of the
properties now known as the Busol Watershed Reservation was allegedly expressly

recognized in Proclamation No. 15 issued by Governor General Leonard Wood. As


owners of said properties, their ancestors paid the realty taxes thereon. The fencing
project of petitioners would allegedly impede their access to and from their
residences, farmlands and water sources, and dispossess them of their yard where
tribal rituals and ceremonies are usually held.
On October 21, 2002, NCIP Regional Hearing Officer Brain S. Masweng issued a TRO,
the dispositive portion of which reads:
WHEREFORE, finding the petition in order and that grave injustice may result
should the acts complained of be not immediately restrained, a Temporary
Restraining Order is hereby issued pursuant to Section 69 (d) of R.A. 8371, ordering
the respondents namely, the Baguio District Engineers Office, represented by
Engineer Nestor M. Nicolas, the Project Contractor, Mr. Pel-ey, the Baguio
Regreening Movement Inc., represented by Atty. Erdolfo V. Balajadia, the Busol Task
Force, represented by its Team Leader, Moises G. Anipew, the Baguio City Architect
and Parks Superintendent Office, represented by Arch. Ignacio Estipona, and all
persons acting for and their behalf (sic) of the respondents, their agents and/or
persons whomever acting for and their behalf (sic), to refrain, stop, cease and desist
from fencing and/or constructing fences around and between the areas and
premises of petitioners, ancestral land claims, specifically identified in Proclamation
No. 15 as Lot "A" with an area of 143,190 square meters, included within the
boundary lines, Lot "B" 77,855 square meters, included within the boundary lines,
Lot "C" 121,115 square meters, included within the boundary lines, Lot "D" 33,839
square meters, included within the boundary lines, Lot "E" 87,903 square meters,
included within the boundary lines, Lot "F" 39,487 square meters, included within
the boundary lines, Lot "G" 11,620 square meters, included within the boundary
lines, Lot "H" 17,453 square meters, included within the boundary lines, Lot "J"
40,000 square meters, included within the boundary lines, all described and
embraced under Proclamation No. 15, the land embraced and described under the
approved plan No. 12064 of the then Director of Lands, containing an area of 186,
square meters surveyed for Gumangan, the land covered by LRC PSD 52910,
containing an area of 77,849 square meters as surveyed for Emily Kalomis, that
land covered by survey plan 11935 Amd, containing an area of 263153 square
meters as surveyed for Molintas, and that land covered by AP-7489, containing an
area of 155084 as surveyed for the heirs of Rafael.
This Restraining Order shall be effective for a period of twenty (20) days from
receipt hereof.
Meantime, the respondents are further ordered to show cause on November 5, 2002
(Tuesday) at 2:00 oclock in the afternoon, why petitioners prayer for the issuance
of a writ of preliminary injunction should not be granted. 2
On November 6, 2002, Atty. Masweng denied petitioners motion to dissolve the
TRO, explaining that a TRO may be issued motu proprio where the matter is of
extreme urgency and the applicant will suffer grave injustice and irreparable injury.

He further stated that petitioners failed to comply with the procedure laid down in
Section 6, Rule 58 of the Rules of Court.
On November 12, 2002, Atty. Masweng issued an Order, the dispositive portion of
which states:
WHEREFORE, a writ of preliminary injunction is hereby issued against the
respondents, their agents, or persons acting for and in their behalves (sic), ordering
them to refrain, cease and desist from implementing their fencing project during the
pendancy (sic) of the aboveentitled case in any portion of petitioners ancestral land
claims within the Busol Watershed Reservation. The lands being identified under
Proclamation No. 15 as lot[s] A, B, C, D, E, F, G, H, and J, including the
lands covered by Petitioners approved survey plans as follows: that land identified
and plotted under Survey Plan No. B.L. FILE No. II-11836, September, 1916 surveyed
for Gumangan; that land covered by PSD-52910, May, 1921, surveyed for Emily
Kalomis; that land covered by survey plan II-11935 Amd, 1916, surveyed for
Molintas; and that land covered by Survey Plan No. AP 7489, March 1916, surveyed
for the heirs of Rafael.
The writ of preliminary injunction shall be effective and shall be enforced only upon
petitioners compliance with the required injunctive bond of Twenty Thousand Pesos
(P20,000.00) each in compliance with Section 3, R.A. 8975. 3
Atty. Masweng ruled that the NCIP has jurisdiction over all claims and disputes
involving rights of Indigenous Cultural Communities (ICCs) and Indigenous Peoples
(IPs) and, in the exercise of its jurisdiction, may issue injunctive writs. According to
Atty. Masweng, the allegations in the verified petition show that private respondents
invoked the provisions of Republic Act No. 8371, otherwise known as the Indigenous
Peoples Rights Act of 1997 (IPRA), when they sought to enjoin petitioners from
fencing their ancestral lands within the Busol Watershed Reservation. Petitioners
fencing project violated Section 58 of the IPRA, which requires the prior written
consent of the affected ICCs/IPs. The NCIP therefore has authority to hear the
petition filed by private respondents and to issue the injunctive writ. As regards
petitioners contention that the issuance of the TRO violated Presidential Decree No.
1818, Atty. Masweng applied the Decision of this Court in Malaga v. Penachos,
Jr.,4 and held that:
Respondents project of fencing the Busol Watershed is not in the exercise of
administrative discretion involving a very technical matter. This is so since the
implementation of the fencing project would traverse along lands occupied by
people who claim that they have a legal right over their lands. The fence would
actually cut across, divide, or segregate lands occupied by people. The effect of it
would fence in and fence out property claims. In this case, petitioners invoke their
constitutional rights to be protected against deprivation of property without due
process of law and of taking private property without just compensation. Such
situations involve pure question of law.5

As regards the invocation of res judicata by petitioners, Atty. Masweng held that
they failed to present copies of the Decisions supposedly rendered by the Regional
Trial Court and the Supreme Court.
On November 29, 2002, petitioners filed a Motion for Reconsideration of the above
Order. On June 20, 2003, Atty. Masweng denied said Motion on the ground that the
same was filed out of time.
Petitioners filed before the Court of Appeals a Petition for Certiorari, alleging grave
abuse of discretion on the part of Atty. Masweng in issuing the TRO and the writ of
preliminary injunction.
On April 30, 2007, the Court of Appeals rendered its Decision dismissing petitioners
Petition for Certiorari. The dispositive portion of the Decision is as follows:
WHEREFORE, premises considered, the instant petition is DISMISSED and the
assailed orders of public respondent AFFIRMED. Nevertheless, private respondents
are hereby enjoined from (i) introducing constructions at the Busol Watershed and
Forest Reservation and (ii) engaging in activities that degrade the resources therein
until viable measures or programs for the maintenance, preservation and
development of said reservation are adopted pursuant to Sec. 58 of Rep. Act No.
8371.6
The Court of Appeals ruled that since the petition before the NCIP involves the
protection of private respondents rights to their ancestral domains in accordance
with Section 7(b), (c) and (g) 7 of the IPRA, the NCIP clearly has jurisdiction over the
dispute pursuant to Section 66. The Court of Appeals also upheld the conclusion of
Atty. Masweng that the NCIP can issue injunctive writs as a principal relief against
acts adversely affecting or infringing on the rights of ICCs or IPs, because "(t)o rule
otherwise would render NCIP inutile in preventing acts committed in violation of the
IPRA."8
As regards petitioners allegations that government reservations such as the subject
Busol Watershed cannot be the subject of ancestral domain claims, the Court of
Appeals pointed out that Section 58 9 of the IPRA in fact mandates the full
participation of ICCs/IPs in the maintenance, management, and development of
ancestral domains or portions thereof that are necessary for critical watersheds. The
IPRA, thus, gives the ICCs/IPs responsibility to maintain, develop, protect, and
conserve such areas with the full and effective assistance of government agencies. 10
Despite ruling in favor of private respondents, the Court of Appeals nevertheless
found merit in petitioners own application for injunction and observed that certain
activities by private respondents without regard for environmental considerations
could result in irreparable damage to the watershed and the ecosystem. Thus, the
Court of Appeals enjoined private respondents from introducing constructions at the
Busol Watershed and from engaging in activities that degrade its resources, until

viable measures or programs for the maintenance, preservation and development of


said reservation are adopted pursuant to the aforementioned Section 58 of the IPRA.
Hence, the present Petition for Review wherein petitioners assert the following
grounds:
1. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING
THE NCIPS ISSUANCE OF A TEMPORARY RESTRAINING ORDER AND WRIT OF
PRELIMINARY INJUNCTION DESPITE CLEAR AND PATENT VIOLATION OF P.D.
1818, SUPREME COURT CIRCULAR NO. 68-94 AND SUPREME COURT
ADMINISTRATIVE CIRCULAR NO. 11-2000;
2. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN AFFIRMING THE
ACT OF THE NCIP IN ISSUING A 20-DAYS TEMPORARY RESTRAINING ORDER EX
PARTE SANS THE MANDATORY NOTICE AND HEARING FOR THE ISSUANCE
THEREOF;
3. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING
THE NCIPS ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION DESPITE
ABSOLUTE ABSENCE OF CLEAR, UNMISTAKABLE AND POSITIVE LEGAL RIGHTS
ON THE PART OF THE APPLICANTS;
4. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN HOLDING THAT
THE NCIP HEARING OFFICER HAS JURISDICTION OVER A CASE OF INJUNCTION
INVOLVING A GOVERNMENT INFRASTRUCTURE PROJECT;
5. THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN BRUSHING
ASIDE SECTION 78, A SPECIAL PROVISION OF REPUBLIC ACT 8371 WHICH
EXCLUDES THE CITY OF BAGUIO FROM THE COVERAGE OF ANCESTRAL LAND
CLAIMS APPLICATIONS;
6. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN UPHOLDING
RULE XIII OF THE IMPLEMENTING RULES OF REPUBLIC ACT 8371, EVEN IF THE
PROVISIONS OF SAID RULE XIII CLEARLY OVERSTEPPED AND EXCEEDED
SECTION 78 OF R.A. 8371.11
TRO and
Projects

Preliminary

Injunction

against

Government

Infrastructure

The governing law as regards the prohibition to issue restraining orders and
injunctions against government infrastructure projects is Republic Act No.
8975,12 which modified Presidential Decree No. 1818, the law cited by the parties,
upon its effectivity on November 26, 2000. 13 Section 9 of Republic Act No. 8975
provides:

Section 9. Repealing Clause. All laws, decrees, including Presidential Decree Nos.
605, 1818 and Republic Act No. 7160, as amended, orders, rules and regulations or
parts thereof inconsistent with this Act are hereby repealed or amended accordingly.
Thus, in GV Diversified International, Incorporated v. Court of Appeals,14 we ruled
that Presidential Decree No. 1818 have been effectively superseded by Republic Act
No. 8975. The prohibition is thus now delineated in Section 3 of said latter law,
which provides:
Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary
Injunctions and Preliminary Mandatory Injunctions. No court, except the
Supreme Court, shall issue any temporary restraining order, preliminary injunction
or preliminary mandatory injunction against the government, or any of its
subdivisions, officials or any person or entity, whether public or private, acting
under the governments direction, to restrain, prohibit or compel the following acts:
(a) Acquisition, clearance and development of the right-of-way and/or site or
location of any national government project;
(b) Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof;
(c) Commencement, prosecution, execution, implementation, operation of
any such contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for
such contract/project.
This prohibition shall apply to all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such contract/project. This prohibition
shall not apply when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the court should
finally decide that the applicant was not entitled to the relief sought.
If after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the
qualified and winning bidder or order a rebidding of the same, without prejudice to
any liability that the guilty party may incur under the existing laws. (Emphasis
supplied.)
Should a judge violate the preceding section, Republic Act No. 8975 provides the
following penalty:

Section 6. Penal Sanction. In addition to any civil and criminal liabilities he or she
may incur under existing laws, any judge who shall issue a temporary restraining
order, preliminary injunction or preliminary mandatory injunction in violation of
Section 3 hereof, shall suffer the penalty of suspension of at least sixty (60) days
without pay. (Emphasis added.)
It is clear from the foregoing provisions that the prohibition covers only judges, and
does not apply to the NCIP or its hearing officers. In this respect, Republic Act No.
8975 conforms to the coverage of Presidential Decree No. 605 15 and Presidential
Decree No. 1818,16 both of which enjoin only the courts. Accordingly, we cannot
nullify the assailed Orders on the ground of violation of said laws.
The Courts Previous Decision in G.R. No. 180206
On February 4, 2009, this Court promulgated its Decision in G.R. No. 180206, a suit
which involved several of the parties in the case at bar. In G.R. No. 180206, the City
Mayor of Baguio City issued three Demolition Orders with respect to allegedly illegal
structures constructed by private respondents therein on a portion of the Busol
Forest Reservation. Private respondents filed a Petition for Injunction with the NCIP.
Atty. Masweng issued two temporary restraining orders directing the City
Government of Baguio to refrain from enforcing said Demolition Orders and
subsequently granted private respondents application for a preliminary injunction.
The Court of Appeals, acting on petitioners Petition for Certiorari, affirmed the
temporary restraining orders and the writ of preliminary injunction.
This Court then upheld the jurisdiction of the NCIP on the basis of the allegations in
private respondents Petition for Injunction. It was similarly claimed in said Petition
for Injunction that private respondents were descendants of Molintas and
Gumangan whose claims over the portions of the Busol Watershed Reservation had
been recognized by Proclamation No. 15. This Court thus ruled in G.R. No. 180206
that the nature of the action clearly qualify it as a dispute or controversy over
ancestral lands/domains of the ICCs/IPs.17 On the basis of Section 69(d)18 of the IPRA
and Section 82, Rule XV19 of NCIP Administrative Circular No. 1-03, the NCIP may
issue temporary restraining orders and writs of injunction without any prohibition
against the issuance of the writ when the main action is for injunction. 20
On petitioners argument that the City of Baguio is exempt from the provisions of
the IPRA and, consequently, the jurisdiction of the NCIP, this Court ruled in G.R. No.
180206 that said exemption cannot ipso facto be deduced from Section 7821 of the
IPRA because the law concedes the validity of prior land rights recognized or
acquired through any process before its effectivity. 22
Lastly, however, this Court ruled that although the NCIP has the authority to issue
temporary restraining orders and writs of injunction, it was not convinced that
private
respondents
were
entitled
to
the
relief
granted
by
the
Commission.23 Proclamation No. 15 does not appear to be a definitive recognition of
private respondents ancestral land claim, as it merely identifies the Molintas and

Gumangan families as claimants of a portion of the Busol Forest Reservation, but


does not acknowledge vested rights over the same. 24 Since it is required before the
issuance of a writ of preliminary injunction that claimants show the existence of a
right to be protected, this Court, in G.R. No. 180206, ultimately granted the petition
of the City Government of Baguio and set aside the writ of preliminary injunction
issued therein.1wphi1
In the case at bar, petitioners and private respondents present the very same
arguments and counter-arguments with respect to the writ of injunction against the
fencing of the Busol Watershed Reservation. The same legal issues are thus being
litigated in G.R. No. 180206 and in the case at bar, except that different writs of
injunction are being assailed. In both cases, petitioners claim (1) that Atty. Masweng
is prohibited from issuing temporary restraining orders and writs of preliminary
injunction against government infrastructure projects; (2) that Baguio City is beyond
the ambit of the IPRA; and (3) that private respondents have not shown a clear right
to be protected. Private respondents, on the other hand, presented the same
allegations in their Petition for Injunction, particularly the alleged recognition made
under Proclamation No. 15 in favor of their ancestors. While res judicatadoes not
apply on account of the different subject matters of the case at bar and G.R. No.
180206 (they assail different writs of injunction, albeit issued by the same hearing
officer), we are constrained by the principle of stare decisis to grant the instant
petitiOn. The Court explained the principle of stare decisis25in Ting v. Velez-Ting26:
The principle of stare decisis enjoins adherence by lower courts to doctrinal rules
established by this Court in its final decisions. It is based on the principle that once
a question of law has been examined and decided, it should be deemed settled and
closed to further argument. Basically, it is a bar to any attempt to relitigate the
same issues, necessary for two simple reasons: economy and stability. In our
jurisdiction, the principle is entrenched in Article 8 of the Civil Code. (Citations
omitted.)
We have also previously held that "under the doctrine of stare decisis, once a court
has laid down a principle of law as applicable to a certain state of facts, it will
adhere to that principle and apply it to all future cases where the facts are
substantially the same."27
However, even though the principal action in the case at bar is denominated as a
petition for injunction, the relief prayed for and granted by the NCIP partakes of the
nature of a preliminary injunction in the sense that its effectivity would cease the
moment the NCIP issues its decision in an appropriate action. The conclusions of
this Court in both the case at bar and that in G.R. No. 180206 as regards private
respondents' ancestral land claim should therefore be considered provisional, as
they are based merely on the allegations in the complaint or petition and not on
evidence adduced in a full-blown proceeding on the merits by the proper tribunal.
Private respondents are therefore not barred from proving their alleged ancestral
domain claim in the appropriate proceeding, despite the denial of the temporary
injunctive relief prayed for.

WHEREFORE, the present Petition for Review on Certiorari is hereby GRANTED. The
Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 78570 dated April
30, 2007 and December 11, 2007, respectively, are REVERSED and SET ASIDE.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

Republic v. Evangelista, G.R. No. 156015, August 11, 2005


SECOND DIVISION
[G.R. No. 156015. August 11, 2005]
REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM,
in his capacity as former Chief of the Intelligence Service, Armed Forces of
the Philippines (ISAFP), and former Commanding General, Presidential
Security Group (PSG), and MAJ. DAVID B. DICIANO, in his capacity as an
Officer of ISAFP and former member of the PSG, petitioners, vs. HON.
VICTORINO EVANGELISTA, in his capacity as Presiding Judge, Regional Trial
Court, Branch 223, Quezon City, and DANTE LEGASPI, represented by his
attorney-in-fact, Paul Gutierrez, respondents.
DECISION
PUNO, J.:
The case at bar stems from a complaint for damages, with prayer for the issuance
of a writ of preliminary injunction, filed by private respondent Dante Legaspi,
through his attorney-in-fact Paul Gutierrez, against petitioners Gen. Jose M.
Calimlim, Ciriaco Reyes and Maj. David Diciano before the Regional Trial Court (RTC)
of Quezon City.[1]
The Complaint alleged that private respondent Legaspi is the owner of a land
located in Bigte, Norzagaray, Bulacan. In November 1999, petitioner Calimlim,
representing the Republic of the Philippines, and as then head of the Intelligence
Service of the Armed Forces of the Philippines and the Presidential Security Group,
entered into a Memorandum of Agreement (MOA) with one Ciriaco Reyes. The MOA
granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan.
Petitioner Diciano signed the MOA as a witness. [2] It was further alleged that
thereafter, Reyes, together with petitioners, started, digging, tunneling and blasting
works on the said land of Legaspi. The complaint also alleged that petitioner
Calimlim assigned about 80 military personnel to guard the area and encamp
thereon to intimidate Legaspi and other occupants of the area from going near the
subject land.

On February 15, 2000, Legaspi executed a special power of attorney (SPA)


appointing his nephew, private respondent Gutierrez, as his attorney-in-fact.
Gutierrez was given the power to deal with the treasure hunting activities on
Legaspis land and to file charges against those who may enter it without the latters
authority.[3] Legaspi agreed to give Gutierrez 40% of the treasure that may be found
in the land.
On February 29, 2000, Gutierrez filed a case for damages and injunction against
petitioners for illegally entering Legaspis land. He hired the legal services of Atty.
Homobono Adaza. Their contract provided that as legal fees, Atty. Adaza shall be
entitled to 30% of Legaspis share in whatever treasure may be found in the land. In
addition, Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee per court
hearing and defray all expenses for the cost of the litigation. [4] Upon the filing of the
complaint, then Executive Judge Perlita J. Tria Tirona issued a 72-hour temporary
restraining order (TRO) against petitioners.
The case[5] was subsequently raffled to the RTC of Quezon City, Branch 223, then
presided by public respondent Judge Victorino P. Evangelista. On March 2, 2000,
respondent judge issued another 72-hour TRO and a summary hearing for its
extension was set on March 7, 2000.
On March 14, 2000, petitioners filed a Motion to Dismiss [6] contending: first, there is
no real party-in-interest as the SPA of Gutierrez to bring the suit was already
revoked by Legaspi on March 7, 2000, as evidenced by a Deed of Revocation, [7] and,
second, Gutierrez failed to establish that the alleged armed men guarding the area
were acting on orders of petitioners. On March 17, 2000, petitioners also filed a
Motion for Inhibition[8] of the respondent judge on the ground of alleged partiality in
favor of private respondent.
On March 23, 2000, the trial court granted private respondents application for a writ
of preliminary injunction on the following grounds: (1) the diggings and blastings
appear to have been made on the land of Legaspi, hence, there is an urgent need to
maintain the status quo to prevent serious damage to Legaspis land; and, (2) the
SPA granted to Gutierrez continues to be valid. [9] The trial court ordered thus:
WHEREFORE, in view of all the foregoing, the Court hereby resolves to GRANT
plaintiffs application for a writ of preliminary injunction. Upon plaintiffs filing of an
injunction bond in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00),
let a Writ of Preliminary Injunction issue enjoining the defendants as well as their
associates, agents or representatives from continuing to occupy and encamp on the
land of the plaintiff LEGASPI as well as the vicinity thereof; from digging, tunneling
and blasting the said land of plaintiff LEGASPI; from removing whatever treasure
may be found on the said land; from preventing and threatening the plaintiffs and
their representatives from entering the said land and performing acts of ownership;
from threatening the plaintiffs and their representatives as well as plaintiffs lawyer.
On even date, the trial court issued another Order [10] denying petitioners motion to
dismiss and requiring petitioners to answer the complaint. On April 4, 2000, it
likewise denied petitioners motion for inhibition. [11]

On appeal, the Court of Appeals affirmed the decision of the trial court. [12]
Hence this petition, with the following assigned errors:
I
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE
RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.
II
WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.
III
WHETHER RESPONDENT JUDGE OUGHT TO HAVE INHIBITED HIMSELF FROM
FURTHER PROCEEDING WITH THE CASE.
We find no merit in the petition.
On the first issue, petitioners claim that the special power of attorney of Gutierrez to
represent Legaspi has already been revoked by the latter. Private respondent
Gutierrez, however, contends that the unilateral revocation is invalid as his agency
is coupled with interest.
We agree with private respondent.
Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds
himself to render some service or do something in representation or on behalf of
another, known as the principal, with the consent or authority of the latter. [13]
A contract of agency is generally revocable as it is a personal contract of
representation based on trust and confidence reposed by the principal on his agent.
As the power of the agent to act depends on the will and license of the principal he
represents, the power of the agent ceases when the will or permission is withdrawn
by the principal. Thus, generally, the agency may be revoked by the principal at will.
[14]

However, an exception to the revocability of a contract of agency is when it is


coupled with interest, i.e., if a bilateral contract depends upon the agency. [15] The
reason for its irrevocability is because the agency becomes part of another
obligation or agreement. It is not solely the rights of the principal but also that of
the agent and third persons which are affected. Hence, the law provides that in such
cases, the agency cannot be revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate courts that
the agency granted by Legaspi to Gutierrez is coupled with interest as a bilateral
contract depends on it. It is clear from the records that Gutierrez was given by
Legaspi, inter alia, the power to manage the treasure hunting activities in
the subject land; to file any case against anyone who enters the land
without authority from Legaspi; to engage the services of lawyers to carry
out the agency; and, to dig for any treasure within the land and enter into
agreements relative thereto. It was likewise agreed upon that Gutierrez shall

be entitled to 40% of whatever treasure may be found in the land. Pursuant


to this authority and to protect Legaspis land from the alleged illegal entry of
petitioners, agent Gutierrez hired the services of Atty. Adaza to prosecute the case
for damages and injunction against petitioners. As payment for legal services,
Gutierrez agreed to assign to Atty. Adaza 30% of Legaspis share in
whatever treasure may be recovered in the subject land. It is clear that the
treasure that may be found in the land is the subject matter of the agency; that
under the SPA, Gutierrez can enter into contract for the legal services of Atty. Adaza;
and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of the
agency, i.e., in the treasures that may be found in the land. This bilateral contract
depends on the agency and thus renders it as one coupled with interest, irrevocable
at the sole will of the principal Legaspi. [16] When an agency is constituted as a clause
in a bilateral contract, that is, when the agency is inserted in another agreement,
the agency ceases to be revocable at the pleasure of the principal as the agency
shall now follow the condition of the bilateral agreement. [17] Consequently, the Deed
of Revocation executed by Legaspi has no effect. The authority of Gutierrez to file
and continue with the prosecution of the case at bar is unaffected.
On the second issue, we hold that the issuance of the writ of preliminary injunction
is justified. A writ of preliminary injunction is an ancilliary or preventive remedy that
is 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. [18] It is issued by the
court to prevent threatened or continuous irremediable injury to the applicant
before his claim can be thoroughly studied and adjudicated. [19] Its aim is to preserve
the status quo ante until the merits of the case can be heard fully, upon the
applicants showing of two important conditions, viz.: (1) the right to be
protected prima facie exists; and, (2) the acts sought to be enjoined are violative of
that right.[20]
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a writ of
preliminary injunction may be issued when it is established:
(a) that the applicant is entitled to the relief demanded, the whole or part of such
relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;
(b) that the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant;
or
(c) that a party, court, agency or a person is doing, threatening, or is attempting to
do, or is procuring or suffering to be done, some act or acts probably in violation of
the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
It is crystal clear that at the hearing for the issuance of a writ of preliminary
injunction, mere prima facie evidence is needed to establish the applicants rights or
interests in the subject matter of the main action. [21] It is not required that the
applicant should conclusively show that there was a violation of his rights as this

issue will still be fully litigated in the main case. [22]Thus, an applicant for a writ
is required only to show that he has an ostensible right to the final relief
prayed for in his complaint. [23]
In the case at bar, we find that respondent judge had sufficient basis to issue the
writ of preliminary injunction. It was established, prima facie, that Legaspi has a
right to peaceful possession of his land, pendente lite. Legaspi had title to
the subject land. It was likewise established that the diggings were conducted by
petitioners in the enclosed area of Legaspis land. Whether the land fenced by
Gutierrez and claimed to be included in the land of Legaspi covered an
area beyond that which is included in the title of Legaspi is a factual issue
still subject to litigation and proof by the parties in the main case for
damages. It was necessary for the trial court to issue the writ of preliminary
injunction during the pendency of the main case in order to preserve the rights and
interests of private respondents Legaspi and Gutierrez.
On the third issue, petitioners charge that the respondent judge lacked the
neutrality of an impartial judge. They fault the respondent judge for not giving
credence to the testimony of their surveyor that the diggings were conducted
outside the land of Legaspi. They also claim that respondent judges rulings on
objections raised by the parties were biased against them.
We have carefully examined the records and we find no sufficient basis to hold that
respondent judge should have recused himself from hearing the case. There is no
discernible pattern of bias on the rulings of the respondent judge. Bias and partiality
can never be presumed. Bare allegations of partiality will not suffice in an absence
of a clear showing that will overcome the presumption that the judge dispensed
justice without fear or favor.[24] It bears to stress again that a judges appreciation or
misappreciation of the sufficiency of evidence adduced by the parties, or the
correctness of a judges orders or rulings on the objections of counsels during the
hearing, without proof of malice on the part of respondent judge, is not sufficient to
show bias or partiality. As we held in the case of Webb vs. People,[25] the adverse
and erroneous rulings of a judge on the various motions of a party do not
sufficiently prove bias and prejudice to disqualify him. To be disqualifying, it must be
shown that the bias and prejudice stemmed from an extrajudicial source and result
in an opinion on the merits on some basis other than what the judge learned from
his participation in the case. Opinions formed in the course of judicial proceedings,
although erroneous, as long as based on the evidence adduced, do not prove bias or
prejudice. We also emphasized that repeated rulings against a litigant, no matter
how erroneously, vigorously and consistently expressed, do not amount to bias and
prejudice which can be a bases for the disqualification of a judge.
Finally, the inhibition of respondent judge in hearing the case for damages has
become moot and academic in view of the latters death during the pendency of the
case. The main case for damages shall now be heard and tried before another
judge.
IN VIEW WHEREOF, the impugned Orders of the trial court in Civil Case No. Q-0040115, dated March 23 and April 4, 2000, are AFFIRMED. The presiding judge of the

Regional Trial Court of Quezon City to whom Civil Case No. Q-00-40115 was
assigned is directed to proceed with dispatch in hearing the main case for damages.
No pronouncement as to costs.
SO ORDERED.
Austria-Martinez, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

Landbank of the Philippines v. Continental Watchman, G.R. No. 136114,


January 22, 2004
THIRD DIVISION

[G.R. No. 136114. January 22, 2004]

LANDBANK OF THE PHILIPPINES, petitioner, vs. CONTINENTAL WATCHMAN


AGENCY INCORPORATED AND THE COURT OF APPEALS,respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
We have consistently held that there is no grave abuse of discretion in the
issuance of a writ of preliminary injunction where a party was not deprived of its day
in court, as it was heard and had exhaustively presented all its arguments and
defenses.1 Hence, when contending parties were both given ample time and
opportunity to present their respective evidence and arguments in support of their
opposing contentions, no grave abuse of discretion can be attributed to the trial
court which issued the writ of preliminary injunction, as it is given a generous
latitude in this regard, pursuant to Section 4, Rule 58 of the 1997 Rules of Civil
Procedure, as amended.
Assailed in this petition for certiorari under Rule 65 of the same Rules is the
Decision2 dated July 31, 1998 of the Court of Appeals in CA-G.R. SP No. 46890,
entitled "Land Bank of the Philippines versus Judge Vivencio S. Baclig and
Continental Watchman Agency Incorporated," the dispositive portion of which reads:
"WHEREFORE, premises considered, the petition is hereby denied due course and
the same DISMISSED. Let the original record of the case be remanded to the court a
quo immediately upon the finality hereof.
"SO ORDERED."3

On September 28, 1996, Land Bank of the Philippines (LBP), herein petitioner,
caused to be published in the Philippine Daily Inquirer, a newspaper of general
circulation, an "Invitation to Pre-Qualify," inviting reputable security agencies to prequalify for security guard services in the different LBP offices, properties and
installations nationwide. Continental Watchmen Agency Incorporated (CWAI), herein
private respondent, and other security agencies responded to the invitation and
participated in the public bidding.
In the bidding proper held on June 10, 1997, all the pre-qualified security
agencies, private respondent included, submitted their individual sealed bid
proposals to petitioner's Special Committee for the Selection of Security Agencies
(Bid Committee). Private respondent submitted a bid for three (3) areas, namely,
Area I, Area III, and Area V, all in Luzon.
After all the bids were opened and evaluated, it turned out that private
respondent was the lowest bidder for those three areas.
However, on June 18, 1997, the Bid Committee declared private respondent
disqualified because (1) its bid price was below the monthly salary of a guard
prescribed by the Philippine Association of Detective and Protective Agency
Operators, Inc.; and (2) it violated petitioner's Bid Bulletin No. 1 requiring that the
bid price should include night differential pay for all the guards.
Private respondent asked for reconsideration but was denied by the Bid
Committee.
Hence, on July 22, 1997, private respondent filed with the Regional Trial Court,
Branch 17, Manila, a petition for injunction and damages with a prayer for a
preliminary mandatory injunction against petitioner LBP, docketed as Civil Case No.
97-84264.
On August 1, 1997, after the hearing wherein both parties presented their
respective evidence, the trial court issued a temporary restraining order (TRO)
effective for twenty (20) days. At the same time, the trial court set for hearing
private respondent's application for preliminary injunction. This incident was heard
on August 22, 1997. Thereafter, the trial court issued an Order directing the
issuance of a writ of preliminary injunction, thus:
"WHEREFORE, the petition for the issuance of a writ of preliminary injunction is
hereby granted. Upon the filing of a bond in the sum of Fifty Thousand Pesos
(P50,000.00), Philippine currency, and the approval thereof by the Court, let a writ
issue directing the defendant, its attorneys, representatives and other persons
assisting it, to cease and desist from awarding the contract for security agencies
for Area I, Area III and Area V in Luzon to any security agency, until further orders
from the Court.
"SO ORDERED."4
Meanwhile, on August 27, 1997, petitioner filed its "Answer with Special and/or
Affirmative Defenses and Compulsory Counterclaim." 5
On September 2, 1997, a writ of preliminary injunction 6 was accordingly issued.

On January 12, 1998, the trial court issued an Order denying petitioner's motion
for reconsideration of its Order directing the issuance of a writ of preliminary
injunction.
Consequently, on February 23, 1998, petitioner filed with respondent Court of
Appeals a "Petition for Certiorari and Prohibition with Preliminary Injunction and
Temporary Restraining Order" under Rules 58 and 65 of the 1997 Rules of Civil
Procedure, as amended, alleging that the two Orders of the trial court dated August
22, 1997 and January 12, 1998 were issued without jurisdiction or with grave abuse
of discretion.7
On July 31, 1999, the Court of Appeals issued its assailed Decision dismissing
the petition, thus:
"WHEREFORE, premises considered, the petition is hereby denied due course and
the same DISMISSED. Let the original record of the case be remanded to the court a
quo immediately upon the finality hereof.
"SO ORDERED."8
The Court of Appeals ratiocinated as follows:
"After a fine filtration of the record ('expediente') and a close look at the two
assailed orders, We agree with the private respondent that the respondent court did
not commit any grave abuse of discretion in issuing them. At this juncture, it is well
to state that the special civil action for certiorari is a remedy designed for the
correction of errors of jurisdiction and not errors of judgment (Ramnani vs. Court of
Appeals, 221 SCRA 582). It will not even issue for simple abuse of discretion
(University of the Philippines vs. Civil Service Commission, 228 SCRA 207).
Parenthetically, grave abuse of discretion implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction (Planters Products, Inc.
vs. Court of Appeals, 193 SCRA 563), or in other words, where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal
hostilityand it must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law (Bustamante vs. Commission on Audit, 216 SCRA 134;
Philippine Airlines, Inc. vs. Confesor, 231 SCRA 41). In the case at bench, the record
does not show such kind of actuation on the part of the respondent judge. As long
as a court or quasi-judicial body acts within its jurisdiction, any alleged errors
committed in the exercise of its jurisdiction will amount to nothing more than errors
of judgment which are reviewable by timely appeal and not by a special civil action
of certiorari (New York Marine Managers, Inc. vs. Court of Appeal, 249 SCRA
416; Commissioner on Internal Revenue vs. Court of Appeals, 257 SCRA 200).
"Furthermore, this being a petition for certiorari, factual matters are not proper for
consideration (Insular Bank of Asia and America vs. Court of Appeals, 228 SCRA
420; Navarro vs. Commission on Elections, 228 SCRA 596), for this Court has to
confine itself to the issue of whether of not the respondent court lacked or exceeded
its jurisdiction or committed grave abuse of discretion (San Pedro vs. Court of
Appeals, 253 SCRA 145)it cannot review conclusion of fact (Holy Cross
of Davao College, Inc. vs. Joaquin, 263 SCRA 358). Anyway, it should be stated that

the grant or denial of an injunction rests on the sound discretion of the trial court
(Technology Developers, Inc. vs. Court of Appeals, 193 SCRA 147; Avila vs. Tapucar,
201 SCRA 148)and the same will not be interfered with by appellate courts except
on a clear abuse of discretion (S & A Gaisano Incorporated vs. Hidalgo, 19 SCRA
224), which situation appeared wanting in the case at bench. We took note that the
respondent court conducted hearings before issuing a writ of preliminary injunction.
More. The private respondent was even required to put a bond to answer for
possible damages which may arise from the issuance of said writ of preliminary
injunction. On this score, We wish to advert to Supreme Court rulings that erroneous
conclusions or errors of judgment or of procedure, not relating to the court's
jurisdiction or involving grave abuse of discretion, are not reviewable by certiorari
under Rule 65 of the Rules of Court (Rodriguez vs. Court of Appeals, 245 SCRA 150;
Commissioner on Internal Revenue vs. Court of Appeals, supra; Santiago Land
Development Company vs. Court of Appeals, 258 SCRA 535). For, as already stated,
such errors are reviewable by timely appeal.
"Similarly, the special civil action of prohibition must be based on jurisdictional
grounds against the trial court's judgment (Vda. De Suan vs. Unson, 185 SCRA 437).
It is designed to prevent the use of the strong arm of the law in an oppressive or
vindictive manner (Planas vs. Gil, 67 SCRA 62; Lopez vs. City Judge, 18 SCRA 616).
To justify its issuance, there are certain requisites which must be complied with
(Guingona vs. City Fiscal of Manila, 137 SCRA 597), which requisites the petitioner
failed to comply. Also, said recourse is available only when there is no appeal or any
plain, speedy or adequate remedy in the ordinary course of law (Pilar Development
Corporation vs. Court of Appeal, 225 SCRA 549). Undeniably, appeal will be
available in the case at bench."9
Petitioner filed a motion for reconsideration but was denied by the Appellate
Court in its Resolution dated September 22, 1998.
Hence, the present petition for certiorari alleging:
"IT IS MOST RESPECTFULLY SUBMITTED THAT THE HONORABLE COURT OF APPEALS
GRAVELY ABUSED ITS DISCRETION WHEN IT PROMULGATED AND ISSUED THE
DECISION DATED JULY 31, 1998 AND RESOLUTION DATED SEPTEMBER 22,
1998 UPHOLDING THE QUESTIONED ORDERS OF THE RESPONDENT COURT IN CIVIL
CASE NO. 97-84264 DATEDAUGUST 22, 1997 AND JANUARY 12, 1998."10
Petitioner submits inter alia that the Court of Appeals, by dismissing its petition,
in effect compelled it to enter into a contract for security guard services with private
respondent and as a result, Civil Case No. 97-84264 has been prematurely resolved.
Private respondent, on the other hand, counters that respondent Court of
Appeals did not act with grave abuse of discretion in affirming the Order of the trial
court directing the issuance of the writ of preliminary injunction. In the first place,
the Order was issued after a hearing wherein the parties were given the opportunity
to present their respective evidence. Secondly, private respondent, being the lowest
bidder, has a clear right to an injunction. Lastly, whatever error the trial court may
have committed is only an error of judgment, not correctible by certiorari.
The petition must fail.

First, petitioner's remedy is an appeal to this Court from the Court of Appeals'
Decision dated July 31, 1998 by way of a petition for review on certiorari under Rule
45. Instead, it filed this petition for certiorari under Rule 65 only on November 18,
1998 or forty three (43) days after it received the Appellate Court's Decision
denying its motion for reconsideration. Apparently, petitioner resorted to certiorari
because it failed to interpose an appeal seasonably. This, of course, is a procedural
flaw. Time and again we have reminded members of the bench and bar that the
special civil action of certiorari cannot be used as a substitute for a lost appeal. 11
Admittedly, this Court, in accordance with the liberal spirit pervading the Rules
of Court and in the interest of justice, has the discretion to treat a petition for
certiorari as a petition for review on certiorari under Rule 45, especially if filed
within the reglementary period for filing a petition for review. 12 In this case,
however, we find no reason to justify a liberal application of the Rules.
Even assuming that the present petition is a proper remedy, still it is
dismissible. Based on the evidence presented by private respondent, the trial court
found that all the requisites for the issuance of an injunctive writ were
present.13 Although petitioner presented evidence to rebut private respondent's
assertions, those will be better assessed and considered in the trial proper. The
assailed injunctive writ is not a judgment on the merits of the case, contrary to the
submission of petitioner, for a writ of preliminary injunction is generally based solely
on initial and incomplete evidence. The evidence submitted during the hearing of
the incident is not conclusive or complete for only a "sampling" is needed to give
the trial court an idea of the justification for the preliminary injunction pending the
decision of the case on the merits. 14 As such, the findings of fact and opinion of a
court when issuing the writ of preliminary injunction are interlocutory in nature and
made before the trial on the merits is commenced or terminated. Furthermore, it
does not necessarily proceed that when a writ of preliminary injunction is issued, a
final injunction will follow, as erroneously argued by petitioner. There are vital facts
that have yet to be presented during the trial which may not be obtained or
presented during the hearing on the application for the injunctive writ. 15 Clearly,
petitioner's contention that the trial court and the Court of Appeals had already
disposed of the main case lacks merit.
Also, the sole object of a preliminary injunction is to preserve the status quo
until the merits of the case can be heard. 16 Here, after evaluating the evidence
presented by both contending parties, the trial court held that justice would be
better served if the status quo is preserved until the final determination of the
merits of the case. We find nothing whimsical, arbitrary, or capricious in such ruling.
Significantly, the rule is well-entrenched that the issuance of the writ of
preliminary injunction rests upon the sound discretion of the trial court. It bears
reiterating that Section 4 of Rule 58 gives generous latitude to the trial courts in this
regard for the reason that conflicting claims in an application for a provisional writ
more often than not involve a factual determination which is not the function of the
appellate courts. Hence, the exercise of sound judicial discretion by the trial court in
injunctive matters must not be interfered with except when there is manifest
abuse,17 which is wanting in the present case.
In sum, we find the petition bereft of merit. It is not the proper remedy and even
if it is, no grave abuse of discretion was committed by respondent Court of Appeals.

WHEREFORE, the petition is DISMISSED.


SO ORDERED.
Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.

Limitless Potentials (supra) CLAROS


Spouses Yap v. International Exchange Bank, G.R. No. 175145, March 28,
2008

THIRD DIVISION

SPOUSES ALFREDO and


SHIRLEY YAP,
Petitioners,

G.R. No. 175145

Present:
AUSTRIA-MARTINEZ, J.,
Acting Chairperson,

- versus -

TINGA,*
CHICO-NAZARIO,
NACHURA, and

INTERNATIONAL EXCHANGE
BANK,[1] SHERIFF RENATO C.
FLORA and/or OFFICE OF THE
CLERK OF COURT, REGIONAL
TRIAL COURT,MAKATI CITY,
Respondents.

REYES, JJ.

Promulgated:

March 28, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure which seeks to set aside the Resolution [2] of the Court of Appeals in
CA-G.R. SP No. 95074 dated 11 July 2006 which dismissed petitioner-spouses
Alfredo and Shirley Yaps petition for certiorari which questioned the Order[3] of
Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088
recalling and dissolving the Writ of Preliminary Injunction dated 13 August 2001,
and its Resolution[4]dated 9 October 2006 denying petitioners Motion for
Reconsideration.

The factual antecedents are as follows:

Respondent International Exchange Bank (iBank, for brevity) filed a collection suit
with application for the issuance of a writ of preliminary attachment against Alberto
Looyuko and Jimmy T. Go in the RTC of Makati. The case was raffled to Branch 150
and was docketed as Civil Case No. 98-791. On 7 October 1999, the trial court
rendered a Decision in favor of respondent iBank and found Alberto Looyuko and
Jimmy T. Go liable, ordering them to pay the amount of ninety-six million pesos
(P96,000,000.00), plus penalty.

A Writ of Execution on the judgment against Mr. Looyuko was


implemented. Thereafter, a Writ of Execution was issued against Mr. Go for his part
of the liability.Thereupon, respondent Renato C. Flora, Sheriff of Branch 150 of the
RTC of Makati City, issued a Notice of Sheriffs Sale on 12 May 2000 notifying all the
parties concerned, as well as the public in general, that the following real
properties, among other properties, covered by Transfer Certificates of Title (TCTs)
No. PT-66751, No. PT-66749, No. 55469 and No. 45229 of the Registry of Deeds of
Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs No. 4621 and No.
52987 of the Registry of Deeds of Mandaluyong City, allegedly owned by Mr. Go will

be sold at public auction on 15 June 2000.[5] Said public auction did not push
through.

On 13 June 2000, petitioner-spouses Alfredo and Shirley Yap filed a Complaint for
Injunction with Prayer for Temporary Restraining Order and/or Preliminary Injunction
with the RTC of Pasig City. The case was docketed as Civil Case No. 67945 and was
raffled to Branch 158 thereof. Petitioners sought to stop the auction sale alleging
that the properties covered by TCTs No. PT-66751, No. PT-66749, No. 55469 and No.
45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of
Quezon City, and TCTs No. 4621 and No. 52987 of the Registry of Deeds of
Mandaluyong City, are already owned by them by virtue of Deeds of Absolute
Sale[6] executed by Jimmy Go in their favor. They further alleged that respondent
sheriff disregarded their right over the properties despite their execution of an
Affidavit of Adverse Claim to prove their claim over the properties and the
publication of a Notice to the Public warning that various deeds had already been
issued in their favor evidencing their right over the same.

A second Notice of Sheriffs Sale dated 30 June 2000 was issued by Sheriff Flora
scheduling a public auction on 24 July 2000 for the afore-mentioned properties. The
public auction did not happen anew. Thereafter, a third Notice of
Sheriffs Sale dated 21 July 2000 scheduling a public auction on 22 August 2000 was
issued.
On 21 August 2000, the RTC of Pasig City, Branch 158, issued an Order in Civil Case
No. 67945 denying petitioners application for a writ of preliminary injunction. [7]
As scheduled, the public auction took place on 22 August 2000 for which
respondent sheriff issued a Certificate of Sale stating that the subject properties had
been sold at public auction in favor of respondent iBank, subject to the third-party
claims of petitioners.[8]

Petitioners filed with the RTC of Pasig City the instant case for Annulment of Sheriffs
Auction Sale Proceedings and Certificate of Sale against iBank, the Clerk of Court
and Ex-Officio Sheriff of RTC Makati City, and Sheriff Flora. The case was docketed
as Civil Case No. 68088 and was raffled to Branch 264. The Complaint was amended
to include a prayer for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.[9]

Engracio M. Escarias, Jr., Clerk of Court VII and Ex-Officio Sheriff of RTC Makati City,
filed his Answer while respondents iBank and Sheriff Flora filed an Omnibus Motion
(Motion to Refer the Complaint to the Office of the Clerk of Court for Raffle in the
Presence of Adverse Party and Motion to Dismiss) dated 17 October 2000.[10]

In an Order dated 20 February 2001, Hon. Leoncio M. Janolo, Jr. denied the Omnibus
Motion for lack of merit.[11] Respondents iBank and Sheriff Flora filed a Motion for
Reconsideration dated 26 February 2001.[12]

A hearing was held on the application for preliminary injunction. On 18 July 2001, an
Order was issued by Judge Janolo granting petitioners application for issuance of a
writ of preliminary injunction. The Order reads:
WHEREFORE, premises considered, plaintiffs application for issuance of a Writ of
Preliminary Injunction is GRANTED, and defendants and their representatives are
enjoined from proceeding further with the execution, including consolidating title
and taking possession thereof, against plaintiffs real properties covered by Transfer
Certificates of Title Nos. PT-66751, PT-66749, 55469, 45229, 4621, 52987 and
36489.

The Writ of Preliminary Injunction shall be issued upon plaintiffs posting of a bond
executed to defendant in the amount of Three Million Pesos (P3,000,000.00) to the
effect that plaintiffs will pay defendants all damages which the latter may sustain by
reason of the injunction if it be ultimately decided that the injunction is
unwarranted.[13]

On 13 August 2001, upon posting a bond in the amount of three million pesos
(P3,000,000.00), Judge Janolo issued the Writ of Preliminary Injunction. [14]

Respondents iBank and Sheriff Flora filed on 29 August 2001 a Motion for
Reconsideration[15] of the order granting the Writ of Preliminary Injunction which the
trial court denied in an Order dated 21 November 2001.[16]

With the denial of their Motion for Reconsideration, respondents iBank and Sheriff
Flora filed with the Court of Appeals a Petition for Certiorari, Prohibition
and Mandamuswith prayer for issuance of Temporary Restraining Order and/or
Preliminary Injunction[17] praying that it: (a) issue immediately a temporary
restraining order enjoining Judge Janolo from taking any action or conducting any
further proceeding on the case; (b) annul the Orders dated 18 July 2001 and 21
November 2001; and (c) order the immediate dismissal of Civil Case No. 68088.

In its decision dated 18 July 2003, the Court of Appeals dismissed the Petition. [18] It
explained that no grave abuse of discretion was committed by Judge Janolo in
promulgating the two Orders. It emphasized that its ruling only pertains to the

propriety or impropriety of the issuance of the preliminary injunction and has no


bearing on the main issues of the case which are still to be resolved on the
merits. The Very Urgent Motion for Reconsideration filed by respondents iBank and
Sheriff Flora was denied for lack of merit. [19]

Respondents iBank and Sheriff Flora thereafter filed with this Court a Petition
for Certiorari which we dismissed. The Courts Resolution dated 7 March 2005 reads:

Considering the allegations, issues and arguments adduced in the petition for
certiorari, the Court Resolves to DISMISS the petition for being a wrong remedy
under the Rules and evidently used as a substitute for the lost remedy of appeal
under Rule 45 of the 1997 Rules of Civil Procedure, as amended. Besides, even if
treated as a petition under Rule 65 of the said Rules, the same would be dismissed
for failure to sufficiently show that the questioned judgment is tainted with grave
abuse of discretion.[20]

Accordingly, an Entry of Judgment was issued by the Supreme Court certifying that
the resolution dismissing the case had become final and executory on 30 July 2005.
[21]

Subsequently, respondents iBank and Sheriff Flora filed with the RTC of Pasig City,
Branch 264, an Omnibus Motion (To Resolve Motion to Dismiss Complaint and/or
Dissolve Injunction) dated 31 January 2006 praying that their pending Motion for
Reconsideration dated 26 February 2001 which seeks for the dismissal of the case
be resolved and/or the Writ of Preliminary Injunction previously issued be dissolved.
[22]

On 9 February 2006, petitioners filed their Comment thereon with Motion to Cite in
Contempt the counsel[23] of respondents. They pray that the pending Motion for
Reconsideration be denied for being devoid of merit, and that the Motion to Dissolve
Writ of Preliminary Injunction be also denied, it being a clear defiance of the
directive of the Supreme Court which ruled with finality that the injunction issued by
the trial court was providently issued and was not tainted with grave abuse of
discretion. They further ask that respondents counsel be cited in contempt of court
and be meted out the appropriate penalty. [24] Respondents filed a Reply dated 20
February 2006.

In a Manifestation dated 24 March 2006, respondents iBank and Sheriff Flora


submitted an Affidavit of Merit to emphasize their resolve and willingness, among
other things, to file a counter-bond to cover whatever damages petitioners may
suffer should the trial court decide to dissolve the writ of preliminary injunction.
[25]
Petitioners filed a Counter-Manifestation with Second Motion to Cite Respondents
Counsel in Direct Contempt of Court [26] to which respondents filed an Opposition.
[27]
Petitioners filed a Reply thereto. [28]

In an Order[29] dated 29 April 2006, the trial court recalled and dissolved the Writ of
Preliminary Injunction dated 13 August 2001, and ordered respondents to post a
counter-bond amounting to ten million pesos. It directed the Branch Clerk of Court
to issue a Writ Dissolving Preliminary Injunction upon the filing and approval of the
required counter-bond. The dispositive portion of the Order reads:

WHEREFORE, this Courts writ of preliminary injunction dated August 13, 2001 is
recalled and dissolved. Defendants are hereby ordered to post a counter-bond
amounting to ten million pesos (P10,000,000.00) to cover the damages plaintiffs
would incur should a favorable judgment be rendered them after trial on the merits.

The Branch Clerk of Court is directed to issue a Writ Dissolving Preliminary


Injunction upon the filing and approval of defendants counter-bond. [30]
The trial court explained its ruling in this wise:

In our jurisdiction, the provisions of Rule 58 of the Revised Rules of Court allow the
issuance of preliminary injunction. This court granted plaintiffs prayer preliminary
injunction in the Order dated July 18, 2001 and the corresponding writ issued
on August 13, 2001.

Defendants in this case, however, are not without remedy to pray for dissolution of
preliminary injunction already granted because it is only interlocutory and not
permanent in nature.

The provisions of Section 6, Rule 58 of the Revised Rules of Court allow dissolution
of the injunction granted provided there is affidavit of party or persons enjoined; an
opportunity to oppose by the other party; hearing on the issue, and filing of a bond
to be fixed by the court sufficient to compensate damages applicant may suffer by
dissolution thereby.

A preliminary injunction is merely a provisional remedy, an adjunct to the main case


subject to the latters outcome. Its sole objective is to preserve the status quo until
the trial court hears fully the merits of the case. The status quo is the last actual,
peaceable and uncontested situation which precedes a controversy. The status
quo should be that existing at the time of the filing of the case. A preliminary
injunction should not establish new relations between the parties, but merely
maintain or re-establish the pre-existing relationship between them. x x x.

When the complainants right or title is doubtful or disputed, he does not have a
clear legal right and, therefore, the issuance of injunctive relief is not proper and
constitutes grave abuse of discretion. x x x. In the case at bar, plaintiffs deed of sale
was purported to be not duly notarized. As such, the legal right of what the plaintiffs
claim is still doubtful and such legal right can only be threshed out in a full blown
trial where they can clearly establish the right over the disputed properties.

Moreover, defendants are willing to post a counter bond which could cover up to the
damages in favor of plaintiffs in case the judgment turns out to be adverse to
them. Under the Rules of Civil Procedure, this is perfectly allowed and the
dissolution of the writ of injunction can accordingly be issued. In the case of Lasala
vs. Fernandez, the highest court has enunciated that a court has the power to recall
or modify a writ of preliminary injunction previously issued by it. The issuance or
recall of a preliminary writ of injunction is an interlocutory matter that remains at all
times within the control of the court. (G.R. No. L-16628, May 23, 1962). The
defendants had shown that dissolution of the writ of injunction is just and proper. It
was duly shown that great and irreparable injury would severely cause the
defendants if the writ of injunction shall continue to exist. [31]

On 5 May 2006, petitioners filed a Petition for Certiorari before the Court of Appeals
asking that the trial courts Order dated 29 April 2006 be set aside.[32]

During the pendency of the Petition for Certiorari, petitioners filed before the trial
court a Very Urgent Motion to Suspend Proceedings [33] to which respondents filed a
Comment.[34]

On 11 July 2006, the Court of Appeals resolved to dismiss outright the Petition
for Certiorari for failure of petitioners to file a motion for reconsideration of the
Order dated 29 April 2006.[35] The Motion for Reconsideration[36] filed by petitioners
was denied.[37]

After being granted an extension of thirty days within which to file a petition
for certiorari, petitioners filed the instant Petition on 14 December 2006. They made
the following assignment of errors:

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY


ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN
DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION DATED 13 AUGUST 2001.

1.
DESPITE THE FACT THAT THE COURT OF APPEALS RESOLVED WITH
FINALITY THAT YOUR PERITIONERS WILL SUFFER IRREPARABLE INJURY (C.A.s
emphasis) IF NO INJUNCTION IS ISSUED.

2.
DESPITE THE FACT THAT THE HON. SUPREME COURT RULED WITH
FINALITY THAT THE COURT A QUO DID NOT ABUSE ITS JURISDICTION WHEN IT
ISSUED THE INJUNCTION DATED 13 AUGUST 2001, THUS, SUSTAINING THE
REGULARITY OF THE WRIT OF PRELIMINARY INJUNCTION.

II

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY


ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION BY
FIXING THE PHP10,000,000.00 COUNTER-BOND DESPITE THE FACT THAT THE
IRREPARABLE DAMAGE TO PETITIONERS AS A RESULT OF DISSOLVING THE WRIT OF
PRELIMINARY INJUNCTION IS INCAPABLE OF PECUNIARY ESTIMATION OR COULD NOT
BE QUANTIFIED.

III

THE HONORABLE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION
IN OUTRIGHTLY DISMISSING YOUR PETITIONERS PETITION FOR CERTIORARI IN CA-GR
SP NO. 95074, AS IT FAILED TO APPLY EXISTING JURISPRUDENCE TO THE EFFECT
THAT A MOTION FOR RECONSIDERATION MAY BE DISPENSED WITH WHERE THE
CONTROVERTED ACT IS PATENTLY ILLEGAL OR WAS PERFORMED WITHOUT
JURISDICTION OR IN EXCESS OF JURISDICTION AS HELD IN HAMILTON VS. LEVY, (344
SCRA 821)

IV

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND GRAVELY ABUSED ITS
DISCRETION WHEN IT DENIED PETITIONERS MOTION FOR RECONSIDERATION
CLEARLY POINTING OUT TO THE COURT THAT AS AN EXCEPTION TO THE RULE, THE
REQUIRED MOTION FOR RECONSIDERATION MAY BE DISPENSED WITH.

At the outset, it must be said that the Writ of Preliminary Injunction dated 13 August
2001 issued by the trial court has not yet been actually dissolved because
respondents have not posted the required counter-bond in the amount
of P10,000,000.00. The dissolution thereof is primed on the filing of the counterbond.

Petitioners argue that the trial court abused its discretion when it ordered the
dissolution of the Writ of Preliminary Injunction, the propriety of its issuance having
been affirmed by both the Court of Appeals and the Supreme Court. There being an
Order by this Court that the injunction issued by the trial court was not tainted with
grave abuse of discretion, the dissolution of said writ is a clear defiance of this
Courts directive.

Respondents, on the other hand, contend that the trial court has the authority and
prerogative to set aside the Writ of Preliminary Injunction. They add that since
petitioners Deed of Sale was not duly notarized, the latters application for
preliminary injunction is devoid of factual and legal bases. They assert that, not
being public documents, the subject deeds of sale are nothing but spurious, if not
falsified, documents. They add that the continuance of the Writ of Preliminary
Injunction would cause them irreparable damage because it continues to incur
damage not only for the nonpayment of the judgment award (in Civil Case No. 98791 before the RTC of Makati City, Br. 150), but also for opportunity losses resulting
from the continued denial of its right to consolidate title over the levied properties.

There is no dispute that both the Court of Appeals and this Court have ruled that the
issuance of the Writ of Preliminary Injunction by the trial court was not tainted with
grave abuse of discretion. Respondents tried to undo the issuance of said writ but to

no avail. The Resolution on the matter attained finality on 30 July 2005 and an entry
of judgment was made.

This, notwithstanding, respondents filed with the RTC of Pasig City, Branch 264, an
Omnibus Motion (To Resolve Motion to Dismiss Complaint and/or Dissolve Injunction)
dated 31 January 2006 praying that their Motion for Reconsideration dated 26
February 2001 of the trial courts denial of their Motion to Dismiss which the trial
court failed to resolve, be resolved and/or the Writ of Preliminary Injunction
previously issued be dissolved. With this Omnibus Motion, the trial court issued the
Order dated 13 August 2001 recalling and dissolving the Writ of Preliminary
Injunction conditioned on the filing of a P10,000,000.00 counter-bond.

The question is: Under the circumstances obtaining in this case, may the trial court
recall and dissolve the preliminary injunction it issued despite the rulings of the
Court of Appeals and by this Court that its issuance was not tainted with grave
abuse of discretion?

We hold that the trial court may still order the dissolution of the preliminary
injunction it previously issued. We do not agree with petitioners argument that the
trial court may no longer dissolve the preliminary injunction because this Court
previously ruled that its issuance was not tainted with grave abuse of discretion.

The issuance of a preliminary injunction is different from its dissolution. Its issuance
is governed by Section 3,[38] Rule 58 of the 1997 Rules of Civil Procedure while the
grounds for its dissolution are contained in Section 6, Rule 58 of the 1997 Rules of
Civil Procedure. As long as the party seeking the dissolution of the preliminary
injunction can prove the presence of any of the grounds for its dissolution, same
may be dissolved notwithstanding that this Court previously ruled that its issuance
was not tainted with grave abuse of discretion.
Section 6 of Rule 58 reads:

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or
restraining order. The application for injunction or restraining order may be denied,
upon a showing of its insufficiency. The injunction or restraining order may also be
denied, or, if granted, may be dissolved, on other grounds upon affidavits of the
party or person enjoined, which may be opposed by the applicant also by
affidavits. It may further be denied, or, if granted, may be dissolved, if it appears
after hearing that although the applicant is entitled to the injunction or restraining
order, the issuance or continuance thereof, as the case may be, would cause
irreparable damage to the party or person enjoined while the applicant can be fully
compensated for such damages as he may suffer, and the former files a bond in an

amount fixed by the court conditioned that he will pay all damages which the
applicant may suffer by the denial or the dissolution of the injunction or restraining
order. If it appears that the extent of the preliminary injunction or restraining order
granted is too great, it may be modified.

Under the afore-quoted section, a preliminary injunction may be dissolved if it


appears after hearing that although the applicant is entitled to the injunction or
restraining order, the issuance or continuance thereof, as the case may be, would
cause irreparable damage to the party or person enjoined while the applicant can
be fully compensated for such damages as he may suffer, and the former files a
bond in an amount fixed by the court on condition that he will pay all damages
which the applicant may suffer by the denial or the dissolution of the injunction or
restraining order. Two conditions must concur: first, the court in the exercise of its
discretion, finds that the continuance of the injunction would cause great damage to
the defendant, while the plaintiff can be fully compensated for such damages as he
may suffer; second, the defendant files a counter-bond. [39] The Order of the trial
court dated 29 April 2006 is based on this ground.

In the case at bar, the trial court, after hearing, found that respondents duly showed
that they would suffer great and irreparable injury if the injunction shall continue to
exist. As to the second condition, the trial court likewise found that respondents
were willing to post a counter-bond which could cover the damages that petitioners
may suffer in case the judgment turns out to be adverse to them. The Order of the
trial court to recall and dissolve the preliminary injunction is subject to the filing and
approval of the counter-bond that it ordered. Failure to post the required counterbond will necessarily lead to the non-dissolution of the preliminary injunction. The
Order of Dissolution cannot be implemented until and unless the required counterbond has been posted.

The well-known rule is that the matter of issuance of a writ of preliminary injunction
is addressed to the sound judicial discretion of the trial court, and its action shall not
be disturbed on appeal unless it is demonstrated that it acted without jurisdiction or
in excess of jurisdiction or, otherwise, in grave abuse of discretion. By the same
token, the court that issued such a preliminary relief may recall or dissolve the writ
as the circumstances may warrant.[40] In the case on hand, the trial court issued the
order of dissolution on a ground provided for by the Rules of Court. The same being
in accordance with the rules, we find no reason to disturb the same.

Petitioners contend that the Court of Appeals erred and gravely abused its
discretion when it dismissed outright their Petition for Certiorari by failing to apply
existing jurisprudence that a motion for reconsideration may be dispensed with
where the controverted act is patently illegal or was performed without jurisdiction

or in excess of jurisdiction. On the other hand, respondents urge the Court to deny
the Petition for Review, arguing that the Court of Appeals properly applied the
general rule that the filing of a motion for reconsideration is a condition sine qua
non in order that certiorari will lie.

We find petitioners contention to be untenable.

The rule is well settled that the filing of a motion for reconsideration is an
indispensable condition to the filing of a special civil action for certiorari.[41] 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 trial court an opportunity to correct any actual error attributed to it by
way of re-examination of the legal and factual issues. [42] By their failure to file a
motion for reconsideration, they deprived the trial court of the opportunity to rectify
any error it committed, if there was any.
Moreover, a perusal of petitioners petition for certiorari filed with the Court of
Appeals shows that they filed the same because there was no appeal, or any plain,
speedy and adequate remedy in the course of law except via a petition
for certiorari. When same was dismissed by the Court of Appeals for failure to file a
motion for reconsideration of the trial courts Order, they argue that while the filing
of a motion for reconsideration is a sine qua non before a petition for certiorari is
instituted, the same is not entirely without exception like where the controverted
act is patently illegal or was performed without jurisdiction or in excess of
jurisdiction. It was only when the Court of Appeals dismissed their Petition did they
argue that exceptions to the general rule should apply. Their invocation of the
application of the exceptions was belatedly made. The application of the exceptions
should be raised in their Petition for Certiorari and not when their Petition has
already been dismissed. They must give their reasons and explain fully why their
case falls under any of the exceptions. This, petitioners failed to do.
Petitioners argument that they filed the Petition for Certiorari without filing a motion
for reconsideration because there is no appeal, or any plain, speedy and adequate
remedy in the course of law except via a Petition for Certiorari does not
convince. We have held that the plain and adequate remedy referred to in Section
1, Rule 65 of the Rules of Court is a motion for reconsideration of the assailed Order
or Resolution.[43] The mere allegation that there is no appeal, or any plain, speedy
and adequate remedy is not one of the exceptions to the rule that a motion for
reconsideration is a sine qua non before a petition for certiorari may be filed.
All told, we hold that the act of the trial court of issuing the Order dated 29 April
2006 was not patently illegal or performed without or in excess of jurisdiction. The
Court of Appeals was correct in dismissing outright petitioners Petition
for Certiorari for failing to file a motion for reconsideration of the trial courts Order.

Our pronouncements in this case are confined only to the issue of the dissolution of
the preliminary injunction and will not apply to the merits of the case.

WHEREFORE, all considered, the Petition is hereby DENIED. The Resolutions of the
Court of Appeals in CA-GR SP No. 95074 dated 11 July 2006 and 9 October
2006are AFFIRMED. The Order dated 29 April 2006 of Branch 264 of the Regional
Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and dissolving the
Writ of Preliminary Injunction dated 13 August 2001 is AFFIRMED. Upon the posting
by respondents of the counter-bond required, the trial court is directed to issue the
Writ Dissolving Preliminary Injunction. No costs.
SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

Interim Rules on Intra-Corporate Controversies, section on provisional


remedies 8/13
Rule 10
PROVISIONAL REMEDIES
Section 1. Provisional remedies. - A party may apply for any of the provisional
remedies provided in the Rules of Court as may be available for the purposes.
However, no temporary restraining order or status quo order shall be issued save in
exceptional cases and only after hearing the parties and the posting of bond.

A.M. No. 07-11-08-SC, Special Rules of Court on Alternative Dispute


Resolution
(Read and understand Rule 5, Interim Measures of Protection)
RULE 5: INTERIM MEASURES OF PROTECTION
Rule 5.1. Who may ask for interim measures of protection. - A party to an
arbitration agreement may petition the court for interim measures of protection.
Rule 5.2. When to petition. - A petition for an interim measure of protection may be
made (a) before arbitration is commenced, (b) after arbitration is commenced, but

before the constitution of the arbitral tribunal, or (c) after the constitution of the
arbitral tribunal and at any time during arbitral proceedings but, at this stage, only
to the extent that the arbitral tribunal has no power to act or is unable to act
effectively.
Rule 5.3. Venue. - A petition for an interim measure of protection may be filed with
the Regional Trial Court, which has jurisdiction over any of the following places:
a. Where the principal place of business of any of the parties to arbitration is
located;
b. Where any of the parties who are individuals resides;
c. Where any of the acts sought to be enjoined are being performed, threatened to
be performed or not being performed; or
d. Where the real property subject of arbitration, or a portion thereof is situated.
Rule 5.4. Grounds. - The following grounds, while not limiting the reasons for the
court to grant an interim measure of protection, indicate the nature of the reasons
that the court shall consider in granting the relief:
a. The need to prevent irreparable loss or injury;
b. The need to provide security for the performance of any obligation;
c. The need to produce or preserve evidence; or
d. The need to compel any other appropriate act or omission.
Rule 5.5. Contents of the petition. - The verified petition must state the following:
a. The fact that there is an arbitration agreement;
b. The fact that the arbitral tribunal has not been constituted, or if constituted, is
unable to act or would be unable to act effectively;
c. A detailed description of the appropriate relief sought;
d. The grounds relied on for the allowance of the petition
Apart from other submissions, the petitioner must attach to his petition an authentic
copy of the arbitration agreement.
Rule 5.6. Type of interim measure of protection that a court may grant.- The
following, among others, are the interim measures of protection that a court may
grant:
a. Preliminary injunction directed against a party to arbitration;
b. Preliminary attachment against property or garnishment of funds in the custody
of a bank or a third person;
c. Appointment of a receiver;
d. Detention, preservation, delivery or inspection of property; or,

e. Assistance in the enforcement of an interim measure of protection granted by the


arbitral tribunal, which the latter cannot enforce effectively.
Rule 5.7. Dispensing with prior notice in certain cases. - Prior notice to the other
party may be dispensed with when the petitioner alleges in the petition that there is
an urgent need to either (a) preserve property, (b) prevent the respondent from
disposing of, or concealing, the property, or (c) prevent the relief prayed for from
becoming illusory because of prior notice, and the court finds that the reason/s
given by the petitioner are meritorious.
Rule 5.8. Comment/Opposition. - The comment/opposition must be filed within
fifteen (15) days from service of the petition. The opposition or comment should
state the reasons why the interim measure of protection should not be granted.
Rule 5.9. Court action. - After hearing the petition, the court shall balance the
relative interests of the parties and inconveniences that may be caused, and on that
basis resolve the matter within thirty (30) days from (a) submission of the
opposition, or (b) upon lapse of the period to file the same, or (c) from termination
of the hearing that the court may set only if there is a need for clarification or
further argument.
If the other parties fail to file their opposition on or before the day of the hearing,
the court shall motu propriorender judgment only on the basis of the allegations in
the petition that are substantiated by supporting documents and limited to what is
prayed for therein.
In cases where, based solely on the petition, the court finds that there is an urgent
need to either (a) preserve property, (b) prevent the respondent from disposing of,
or concealing, the property, or (c) prevent the relief prayed for from becoming
illusory because of prior notice, it shall issue an immediately executory temporary
order of protection and require the petitioner, within five (5) days from receipt of
that order, to post a bond to answer for any damage that respondent may suffer as
a result of its order. The ex-parte temporary order of protection shall be valid only
for a period of twenty (20) days from the service on the party required to comply
with the order. Within that period, the court shall:
a. Furnish the respondent a copy of the petition and a notice requiring him to
comment thereon on or before the day the petition will be heard; and
b. Notify the parties that the petition shall be heard on a day specified in the notice,
which must not be beyond the twenty (20) day period of the effectivity of the exparte order.
The respondent has the option of having the temporary order of protection lifted by
posting an appropriate counter-bond as determined by the court.
If the respondent requests the court for an extension of the period to file his
opposition or comment or to reset the hearing to a later date, and such request is
granted, the court shall extend the period of validity of the ex-partetemporary order
of protection for no more than twenty days from expiration of the original period.

After notice and hearing, the court may either grant or deny the petition for an
interim measure of protection. The order granting or denying any application for
interim measure of protection in aid of arbitration must indicate that it is issued
without prejudice to subsequent grant, modification, amendment, revision or
revocation by an arbitral tribunal.
Rule 5.10. Relief against court action. - If respondent was given an opportunity to
be heard on a petition for an interim measure of protection, any order by the court
shall be immediately executory, but may be the subject of a motion for
reconsideration and/or appeal or, if warranted, a petition for certiorari.
Rule 5.11. Duty of the court to refer back. - The court shall not deny an application
for assistance in implementing or enforcing an interim measure of protection
ordered by an arbitral tribunal on any or all of the following grounds:
a. The arbitral tribunal granted the interim relief ex parte; or
b. The party opposing the application found new material evidence, which the
arbitral tribunal had not considered in granting in the application, and which, if
considered, may produce a different result; or
c. The measure of protection ordered by the arbitral tribunal amends, revokes,
modifies or is inconsistent with an earlier measure of protection issued by the court.
If it finds that there is sufficient merit in the opposition to the application based on
letter (b) above, the court shall refer the matter back to the arbitral tribunal for
appropriate determination.
Rule 5.12. Security. - The order granting an interim measure of protection may be
conditioned upon the provision of security, performance of an act, or omission
thereof, specified in the order.
The Court may not change or increase or decrease the security ordered by the
arbitral tribunal.
Rule 5.13. Modification, amendment, revision or revocation of courts previously
issued interim measure of protection. - Any court order granting or denying interim
measure/s of protection is issued without prejudice to subsequent grant,
modification, amendment, revision or revocation by the arbitral tribunal as may be
warranted.
An interim measure of protection issued by the arbitral tribunal shall, upon its
issuance be deemed to have ipso jure modified, amended, revised or revoked an
interim measure of protection previously issued by the court to the extent that it is
inconsistent with the subsequent interim measure of protection issued by the
arbitral tribunal.
Rule 5.14. Conflict or inconsistency between interim measure of protection issued
by the court and by the arbitral tribunal. - Any question involving a conflict or
inconsistency between an interim measure of protection issued by the court and by
the arbitral tribunal shall be immediately referred by the court to the arbitral
tribunal which shall have the authority to decide such question.

Rule 5.15. Court to defer action on petition for an interim measure of protection
when informed of constitution of the arbitral tribunal. - The court shall defer action
on any pending petition for an interim measure of protection filed by a party to an
arbitration agreement arising from or in connection with a dispute thereunder upon
being informed that an arbitral tribunal has been constituted pursuant to such
agreement. The court may act upon such petition only if it is established by the
petitioner that the arbitral tribunal has no power to act on any such interim measure
of protection or is unable to act thereon effectively.
Rule 5.16. Court assistance should arbitral tribunal be unable to effectively enforce
interim measure of protection. - The court shall assist in the enforcement of an
interim measure of protection issued by the arbitral tribunal which it is unable to
effectively enforce.

R.A. 8975
REPUBLIC ACT NO. 8975

November 7, 2000

AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION


OF GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER
COURTS FROM ISSUING TEMPORARY RESTRANING ORDERS. PRELIMINARY
INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING
PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines
Congress assembled:
Section 1. Declaration of Policy. - Article XII, Section 6 of the Constitution states
that the use of property bears a social function, and all economic agents shall
contribute to the common good. Towards this end, the State shall ensure the
expeditious and efficient implementation and completion of government
infrastructure projects to avoid unnecessary increase in construction, maintenance
and/or repair costs and to immediately enjoy the social and economic benefits
therefrom.
Section 2. Definition of Terms.
(a) National government projects" shall refer to all current and future national
government infrastructure, engineering works and service contracts, including
projects undertaken by government-owned and controlled corporations, all projects
covered by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise
known as the Build-Operate-and-Transfer Law, and other related and necessary
activities such as site acquisition, supply and/or installation of equipment and
materials, implementation, construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of the source of funding.

(b) "Service contracts" shall refer to infrastructure contracts entered into by any
department, office or agency of the national government with private entities and
non-government organizations for services related or incidental to the functions and
operations of the department, office or agency concerned.
Section 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Mandatory Injunctions. No court, except the Supreme Court, shall
issue any temporary restraining order, preliminary injunction or preliminary
mandatory injunction against the government, or any of its subdivisions, officials or
any person or entity, whether public or private acting under the government
direction, to restrain, prohibit or compel the following acts:
(a) Acquisition, clearance and development of the right-of-way and/or site or
location of any national government project;
(b) Bidding or awarding of contract/ project of the national government as defined
under Section 2 hereof;
(c) Commencement prosecution, execution, implementation, operation of any such
contract or project;1awphil.net
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for such
contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such contract/project. This prohibition
shall not apply when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the court should
finally decide that the applicant was not entitled to the relief sought.
In after due hearing the court finds that the award of the contract is null and void,
the court may, if appropriate under the circumstances, award the contract to the
qualified and winning bidder or order a rebidding of the same, without prejudice to
any liability that the guilty party may incur under existing laws.
Section 4. Nullity of Writs and Orders. Any temporary restraining order,
preliminary injunction or preliminary mandatory injunction issued in violation of
Section 3 hereof is void and of no force and effect.
Section 5. Designation of Regional Trial Courts. - The Supreme Court may
designate regional trial courts to act as commissioners with the sole function of
receiving facts of the case involving acquisition clearance and development of rightof-way for government infrastructure projects. The designated regional trial court
shall within thirty (30) days from the date of receipt of the referral, forwards its
findings of facts to the Supreme Court for appropriate action.

Section 6. Penal Sanction. In addition to any civil and criminal liabilities he or she
may incur under existing laws, any judge who shall issue a temporary restraining
order, preliminary injunction or preliminary mandatory injunction in violation of
Section 3 hereof, shall suffer the penalty of suspension of at least sixty (60) days
without pay.
Section 7. Issuance of Permits. Upon payment in cash of the necessary fees
levied under Republic Act No. 7160, as amended, otherwise known as the Local
Government Code of 1991, the governor of the province or mayor of a highlyurbanized city shall immediately issue the necessary permit to extract sand, gravel
and other quarry resources needed in government projects. The issuance of said
permit shall consider environmental laws, land use ordinances and the pertinent
provisions of the Local Government Code relating to environment.
Section 8. Separability Clause. - If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions hereof not affected thereby
shall continue to be of full force and effect.
Section 9. Repealing Clause. - All laws, decrees, including Presidential Decree No.
605, 1818 and Republic Act No. 7160, as amended, orders, rules and regulations or
parts thereof inconsistent with this Act are hereby repealed or amended accordingly.
Section 10. Effectivity Clause. This Act shall take effect fifteen (15) days following
its publication in at least two (2) newspapers of general circulation.
Approved: November 7, 2000

SC Cir. 68-94 (November 3, 1994)


CIRCULAR NO. 68-94

TO: JUDGES OF THE REGIONAL TRIAL COURTS, SHARIA DISTRICT COURTS,


METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES,
MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS AND
SHARIA CIRCUIT COURTS
SUBJECT: STRICT OBSERVANCE OF SECTION 1 OF P.D. 1818 ENVISIONED BY
CIRCULAR NO. 13093 DATED MARCH 5, 1993 AND CIRCULAR NO. 20-92
DATED MARCH 24, 1992.
There have been reports that despite Circular 13-93 dated March 5, 1993, some
courts are still issuing temporary restraining orders and/or preliminary injunctions
even in cases, disputes, or controversies involving government infrastructure
projects in violation of Section 1 of P.D. 1818, which
provides:chanroblesvirtuallawlibrary

"Section 1. No court in the Philippines shall have jurisdiction to issue any restraining
order, preliminary injunction, or preliminary mandatory injunction in any case,
dispute, or controversy involving an infrastructure project, or a mining, fishery,
forest, or other natural resource development project of the government, or any
public utility operated by the government, including among others public utilities for
the transport of the goods or commodities, stevedoring and arrastre contracts, to
prohibit any person or persons, entity or government officials from proceeding with,
or continuing the execution or implementation of any such project, or the operation
of such public utility, or pursuing any lawful activity necessary for such execution,
implementation or operation."
In order to obviate complaints against the indiscriminate issuance if restraining
orders and court injunctions against government public utilities and infrastructure
projects in gross violation of the aforesaid Presidential Decree, the provision of
Circular No. 13-93 issued on March 5, 1993 is hereby reiterated for your strict
compliance.
All Clerks of Courts are hereby directed to immediately furnish this Office copies of
any restraining order(s) and/or writ(s) of injunction against government corporations
and public utility firms.
For strict compliance.
November 3, 1994.

[Sgd.] REYNALDO L. SUAREZ


Officer-in-Charge
Deputy Court Administrator

SC Resolution of February 17, 1998 (supra, Part VI, F, 10)


BAR MATTER NO. 803 February 17, 1998
Gentlemen:
Quoted hereunder, for your information, is a resolution of the Court En Banc dated
February 17, 1998
Bar Matter No. 803. Re: Correction of clerical errors in the 1997 Rules of Civil
Procedure which were approved on April 8, 1997, effective July 1, 1997. The Court
Resolved to CORRECT the following provisions in the 1997 Rules of Civil Procedure:
(a) Section 7 of Rule 13; (b) Section 1 (c) of Rule 50; (c) Section 5 of Rule 58; and
Section 1 of Rule 63; and (e) Section 2 of Rule 64, to read as follows:
RULE 13

Section 7. Service by mail. Service by registered mail shall be made by


depositing the copy in the post office, in a sealed envelope, plainly addressed to the
party or his counsel at his office, if known otherwise at his residence, if known, with
postage fully pre-paid, and with instructions to the postmaster to return the mail to
the sender after ten (10) days if undelivered. If no registry service is available in the
locality of either the sender or the addressee, service may be done by ordinary mail.
(5a)
RULE 50
SECTION 1. Grounds for dismissal of appeal. An appeal may be dismissed by the
Court of Appeals on its own motion or on that of the appellee on the following
grounds.
xxx xxx xxx
(c) Failure of the appellant to pay the docket and other lawful fees as provided in
section 5 of Rule 40 and section 4 of Rule 41;
RULE 58
Section 5. Preliminary injunction not granted without notice; exception. No
preliminary injunction shall be granted without hearing and prior notice to the party
or person sought to be enjoined. If it shall appear from facts shown by affidavits or
by the verified application that great or irreparable injury would result to the
applicant before the matter can be heard on notice the court to which the
application for preliminary injunction was made, may issue a temporary restraining
order to be effective only for a period of twenty (20) days from service on the party
or person sought to be enjoined except as herein provided. Within the said twentyday period, the court must order said party or person to show cause, at a specified
time and place, why the injunction should not be granted, determine within the
same period whether or not the preliminary injunction shall be granted and
accordingly issue the corresponding order.
RULE 63
SECTION 1. Who may file petition. Any person interested under a deed, will,
contract or other written instrument, or whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation may,
before breach or violation thereof, bring an action in the appropriate Regional Trial
Court to determine any question of construction or validity arising, and for a
declaration of his rights or duties thereunder.
RULE 64
Section 2. Mode of review. A judgment or final order or resolution of the
Commission on Elections and the Commission on Audit may be brought by the
aggrieved party to the Supreme Court on certiorariunder Rule 65, except as
hereinafter provided. (n)
Very truly yours,

(Sgd.) LUZVIMINDA D. PUNO


Clerk of Court

SC Cir. 13-93
TO: JUDGES OF THE REGIONAL TRIAL COURTS, SHARIA DISTRICT COURTS,
METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES,
MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS AND
SHARIA COURTS
SUBJECT : PRESIDENTIAL DECREE NO. 1818.
The Office of the Court Administrator has been continuously receiving reports and/or
complaints against indiscriminate issuance of restraining orders and court
injunctions against the National Power Corporation and other government public
utility firms in gross violation of Sec 1 of P. D. 1818.cralaw
For the information and guidance of all concerned, the Supreme Court in the case
of "National Power Corporation vs. Hon. Abraham Vera", G. R. No. 83558, February
27, 1989, 170 SCRA 721, categorically ruled that the National Power Corporation is
entitled to the protective mantle of the aforecited decree for the higher interest of
public service. Section 1 of P. D. 1818 provides:chanroblesvirtuallawlibrary
"Section 1. No court in the Philippines shall have jurisdiction to issue any restraining
order, preliminary mandatory injunction in any case, dispute, or controversy
involving an infrastructure project, or a mining, fishery, forest, or other natural
resource development project of the government, or any public utility operated by
the government, including among others public utilities for the transport of the
goods or commodities, stevedoring and arrastre contracts, to prohibit any person or
persons, entity or government officials from proceeding with, or continuing the
execution or implementation of, any such project, or the operation of such public
utility, or pursuing any lawful activity necessary for such execution, implementation
or operation."
All Clerks of Court are directed to immediately furnish this Office copies of any
restraining orders and/or writs of injunction against the National Power Corporation
or other government public utility firms.
Strict compliance hereof is enjoined.cralaw
March 5, 1993.

[Sgd.] ERNANI CRUZ PAO

Court Administrator

SC Admin. Cir. 20-95 (February 12 ,1995)


ADMINISTRATIVE CIRCULAR NO. 20-95 September 12, 1995
TO: COURT OF APPEALS, SANDIGANBAYAN, COURT OF TAX APPEALS, REGIONAL
TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS,
MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL CIRCUIT TRIAL COURTS, SHARI'A
DISTRICT COURTS, SHARI'A CIRCUIT COURTS AND ALL MEMBERS OF THE
INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: RE: SPECIAL RULES FOR TEMPORARY RESTRAINING ORDERS AND
PRELIMINARY INJUNCTIONS.
1. Where an application for temporary restraining order (TRO) or writ of preliminary
injunction is included in a complaint or any initiatory pleading filed with the trial
court, such compliant or initiatory pleading shall be raffled only after notice to the
adverse party and in the presence of such party or counsel.
2. The application for a TRO shall be acted upon only after all parties are heard in a
summary hearing conducted within twenty-four (24) hours after the records are
transmitted to the branch selected by raffle. The records shall be transmitted
immediately after raffle.
3. If the matter is of extreme urgency, such that unless a TRO is issued, grave
injustice and irreparable injury will arise, the Executive Judge shall issue the TRO
effective only for seventy-two (72) hours from issuance but shall immediately
summon the parties fro conference and immediately raffle the case in their
presence. Thereafter, before the expiry of the seventy-two (72) hours, the Presiding
Judge to whom the case is assigned shall conduct a summary hearing to determine
whether the TRO can be extended for another period until a hearing in the pending
application for preliminary injunction can be conducted. In no case shall the total
period of the TRO exceed twenty (20) days, including the original seventy-two (72)
hours, for the TRO issued by the Executive Judge.
4. With the exception of the provisions which necessarily involve multiple-sala
stations, these rules shall apply to single-sala stations especially with regard to
immediate notice to all parties of all applications for TRO.
For immediate compliance.
This Circular shall be published in two (2) newspaper of general circulation and shall
take effect on October 1, 1995."
September 12, 1995.
(Sgd.)ANDRES R. NARVASA
Chief Justice