Rule 58-PRELIMINARY INJUNCTION
its Pre-qualification, Bids and Awards
FIRST DIVISION
March 22, 2017
G.R. No. 214864
PHILIPPINE PORTS AUTHORITY (PPA),
represented by Oscar M. Sevilla, General
Manager, Benjamin B. Cecilio, Assistant
Manager for Operations, and Sisali B.
Arap, Port Manager, Petitioner
vs
NASIPIT INTEGRATED ARRASTRE AND
STEVEDORING SERVICES, INC. (NIASSI),
represented by Ramon Calo, Respondent
DECISION
CAGUIOA, J.:
This is a Petition for Review
on Certiorari  (Petition) filed under Rule 45 of
1 December 21, 2000.  The Notice of Award
the Rules of Court against the Amended
Decision  dated September 15, 2014
2 thereto by signing the conforme portion and
(Amended Decision) in CA-G.R. SP No.
04828-MIN rendered by the Court of Appeals,
Cagayan de Oro City, Special Former Twenty-
Second Division (CA). The Amended Decision
stems from an Amended Petition for
Mandamus with Prayer for the Writ of
Preliminary Mandatory Injunction and/or
Temporary Restraining Order  filed before the
3 issue a Hold-Over Authority (HOA) in its favor,
Regional Trial Court of Butuan City (RTC) by
respondent Nasipit Integrated Arrastre and
Stevedoring Services, Inc. (NIASSI) against
petitioner Philippine Ports Authority (PP
A),  which sought to compel the latter to
4 cargo[-]handling contract shall have been
formally execute the 10-year cargo-handling
contract awarded in NIASSI's favor.
The Facts
PP A is a government agency created by
virtue of Presidential Decree No. 505 (PD
505). Under PD 505, PPA is charged with the
management and control of all ports in the
Philippines.  On the other hand, NIASSI is a
5 subsequently extended several times upon
duly organized Philippine corporation
engaged in the business of cargo handling. 6 extensions and their particulars cannot be
Sometime in November 2000, PP A, through
Committee (PBAC) accepted bids for a 10-
year contract to operate as the sole cargo
handler at the port of Nasipit, Agusan del
Norte (Nasipit Port).  Subsequently, PBAC
7
issued Resolution No. 005-
2000  recommending that the 10-year cargo-
8
handling contract be awarded to NIASSI as
the winning bidder. 9
On November 20, 2000, the second highest
bidder, Concord Arrastre and Stevedoring
Corporation (CASCOR) filed a protest with
PPA's General Manager, Oscar M.
Sevilla  (Sevilla), alleging that two of NIASSI's
10
stockholders on record are legislators who are
constitutionally prohibited from having any
direct or indirect financial interest in any
contract with the government or any of its
agencies during the term of their office. 11
Notwithstanding the protest, PPA issued a
Notice of Award in favor of NIASSI on
12
directed NIASSI to signify its concurrence
returning the same to PP A within 10 days
from receipt.  PP A received notice of
13
NIASSI's conformity to the Notice of Award on
January 3, 2001. 14
However, instead of formally executing a
written contract, NIASSI requested PP A to
in view of CASCOR's pending protest. PPA
granted NIASSI's request and issued a HOA
dated August 1, 2001, effective until October
31, 2001, "or until [such time] a
awarded, whichever comes first." 15
Meanwhile, the Office of the Government
Corporate Counsel (OGCC) issued Opinion
No. 028, series of2002 on February 7, 2002
(OGCC Opinion) which confirmed the
authority of PP A to bid out the cargo-handling
contract and affirmed the validity of the award
in NIASSI's favor.  Despite this, the HOA was
16
NIASSI' s request. While the exact number of
ascertained from the records, the last
extension of the HOA appears to have been
issued on October 13, 2004, for a term of six
months. 17
However, barely two months after the last
extension of the HOA, PPA, through its
Assistant General Manager for Operations,
Benjamin B. Cecilio (Cecilio), issued a letter
dated December 6, 2004 revoking the
extension.  In said letter, Cecilio advised
18
NIASSI that PPA received numerous
complaints regarding the poor quality of its
services due to the use of inadequately
maintained equipment. Cecilio further relayed
that PPA would take over the cargo-handling
services at the Nasipit Port beginning
December 10, 2004. 19
Proceedings before the RTC
On the scheduled date of the take-over,
NIASSI filed with the RTC a Petition for
Injunction with Prayer for the Writ of
Preliminary Injunction and/or Temporary
Restraining Order. The petition was later
amended to a Petition for Mandamus with
Prayer for the Writ of Preliminary Mandatory
Injunction and/or Temporary Restraining
Order on December 22, 2004. (Amended
Petition).
20
The Amended Petition prayed for the
issuance of a writ of mandamus directing PPA
to formally execute a written contract, and a
writ of preliminary mandatory injunction
directing PP A to turn over the management
and operations of Nasipit Port's cargo-
handling services back to NIASSI. 21
On March 18, 2005, the RTC issued a
resolution granting NIASSI's prayer for a writ
of preliminary mandatory injunction,
conditioned upon the posting of a
₱1,000,000.00 surety bond.  The pertinent
22
portion of the said resolution reads:
It is undeniable that petitioner spent a
considerable capital outlay, in the form of
equipment, machineries and appliances in the
establishment of its port operation. Moreover,
it has also supplied the necessary manpower
to wheel its operation.
When the PPA took an active part in the
management, control and supervision of the
port operations, it practically utilized all the
available resources supplied by the petitioner.
What actually happened was that PP A made
only adjustment/correction in the port
operation to improve the delivery of basic
services. No additional capital outlay was
spent.
In summation, this Court recognizes and
declares that petitioner's right to continue the
cargo handling operations should be
protected. It cannot be denied that the
continued operation by respondents will
probably work injustice to the petitioner,
causing irreparable damage to the latter. The
better ends of justice [will] be served if the
state of affairs [will] be maintained prior to
respondent's actual takeover, until finally the
main action is disposed. 23
After NIASSI posted the required surety bond,
the RTC issued the writ of preliminary
mandatory injunction on March 28, 2005.  PP24
A filed a Motion for Reconsideration on even
date, followed by a Supplemental Motion on
March 30, 2005. The Supplemental Motion
alleged that the writ of preliminary mandatory
injunction should be quashed since its
corresponding surety bond designated
NIASSI's President Ramon Calo as principal,
instead ofNIASSI itself.25
Subsequently, PP A filed a Manifestation
expressing its willingness to file a counter-
bond in the event that its Motion for
Reconsideration is granted.  Thereafter,
26
NIASSI filed an Opposition/Reply to PPA's
Motion for Reconsideration. 27
On April 11, 2005, the RTC issued an order
(April 2005 RTC Order) granting PPA's Motion
for Reconsideration. The April 2005 RTC
Order immediately dissolved the writ of
preliminary mandatory injunction and directed
NIASSI to surrender the management and
control of Nasipit Port's cargo-handling
operations to PPA. 28
Prompted by the April 2005 RTC Order,
NIASSI filed a Petition for Certiorari before the
CA (CA petition), docketed as CA-G.R. SP
No. 00214.  The CA petition assailed the
29
immediately executory nature of the April
2005 RTC Order and questioned the
dissolution of the writ of preliminary injunction
without prior hearing. In addition, the CA
petition alleged that the April 2005 RTC Order
reversed the RTC's previous order despite the
absence of new matters or issues
raised.  The CA petition thus prayed for the
30
reversal of the April 2005 RTC Order, and
ultimately, the reinstatement of the writ of
preliminary injunction. 31
For its part, PPA argued, among others, that
NIASSI was not entitled to the issuance of the
injunctive writ because it had no legal right to
continue providing cargo-handling services at
Nasipit Port, considering that PP A has no
existing cargo-handling contract with NIASSI. 32
In a Decision  dated August 8, 2006, the CA
33
granted the petition observing that Presiding
Judge Godofredo B. Abul, Jr. (Judge Abul) of
the RTC committed several procedural errors
when he issued the April 2005 RTC Order.
According to the CA, Judge Abul did not
conduct a hearing on PPA's Motion for
Reconsideration nor did he direct PP A to file
a counter-bond before quashing the writ of
preliminary mandatory injunction, in violation
of Section 6, Rule 58 of the Rules of
Court.  The CA concluded that these lapses,
34
taken together with Judge Abul's sudden and
inexplicable change of mind, gave rise to
suspicions that the issuance of the April 2005
RTC Order was tainted with irregularity and
grave abuse of discretion.  Thus, the CA
35
directed the reinstatement of the writ of
preliminary mandatory injunction.  This36
decision was later affirmed by this Court in the
case of Philippine Ports Authority v. Nasipit
Integrated Arrastre and Stevedoring Services,
Inc.
37
Notably, in the process of resolving NIASSI's
CA petition, it became necessary for the CA to
determine whether NIASSI had any legal right
to continue its operations at Nasipit Port. In
this connection, the CA found that a perfected
contract between NIASSI and PP A in respect
of the cargohandling operations in fact
existed, albeit unwritten.  The CA held:
38
Under Article 1318 of the Civil Code, there
can be no contract unless the following
requisites concur: (a) consent of the
contracting parties; (b) object certain which is
the subject matter of the contract; and (c)
cause of the obligation which is established.
Under Article 1315 of the same Code,
contracts are perfected by mere consent,
upon the acceptance by the offeree of the
offer made by the offeror. From that moment,
the parties are bound not only to the fulfillment
of what has been expressly stipulated but also
to all the consequences which, according to
their nature, may be in keeping with good
faith, usage and law.
In the case at bar, there is no dispute as to
the subject matter of the contract and the
cause of the obligation. The controversy lies in
the consent - whether the Notice of Award
constitutes as a counter-offer and, as a
consequence, did not give rise to a perfected
contract.
A perusal of the records shows that PPA
conducted a public bidding for a ten-year
contract to operate as sole cargo handler at
Nasipit Port, and among the bidders, only two
(2) pre-qualified, one of which is the petitioner.
In its Resolution No. 005-2000, the Pre-
qualification, Bids and Awards Committee
(PBAC) declared the petitioner as the winning
bidder, and, consequently, a Notice of Award
was given to the latter. x x x
xxxx
Since respondent PP A started the process of
entering into the contract by conducting a
bidding, Article 1326 of the Civil Code shall
apply, to wit:
Advertisements to bidders are simply
invitations to make proposals, and the
advertiser is not bound to accept the highest
or lowest bidder, unless the contrary appears.
Accordingly, the rules and regulations issued
by the PPA for the public bidding constituted
the advertisement to bid on the contract, while
the bid proposals submitted by the bidders
constituted the offer. The reply of respondent
PPA shows its acceptance or rejection of the
respective offers.
x x x PPA categorically awarded the contract
to the petitioner in accordance with the terms
and conditions of the latter's bid proposal.
This is the acceptance of petitioner's offer as
contemplated by the law. A thorough reading
of the required documents clearly shows that
they had no material or significant bearing to
the perfection of the contract. These were
mere formal requirements that will not affect
the award of the contract to the petitioner. If at
all, the need to submit the documents in
question pertains to the issuance of the
written evidence of the contract.
xxxx
Verily, the Holdover Authority (HOA) granted
by the private respondent and the series of
extensions allowing the petitioner to operate
provisionally the arrastre service confirm the
perfection of their contract despite the delay in
its consummation due to acts attributable to
the private respondents. But it cannot be
gainsaid that the series of extensions
constitute partial fulfillment and execution of
the contract of cargo handling services.
xxxx
It is therefore Our submission that a perfected
contract of cargo handling services existed
when the petitioner won the bidding, given the
Notice of Award and conformed (sic) to the
conditions set forth in the Notice of Award
because the requirements prescribed in the
Notice of Award have no bearing on the
perfection of the contract. On the contrary, it
amounted to a qualified acceptance of
petitioner's offer, a clear legal right to continue
its operations in the port. Since the
respondent is bound by the contract, the act
of taking over the cargo handling service from
the petitioner is violative of its
right.  (Emphasis supplied)
39
In view of the foregoing CA decision, and this
Court's decision in G.R. No. 174136 affirming
the same, the RTC directed the parties to
submit their simultaneous memoranda on the
issue of whether the Amended Petition had
been rendered moot and academic.  On the40
basis of such memoranda, Judge Abul issued
a Resolution  dated June 1, 2011 (June 2011
41
RTC Resolution) dismissing the Amended
Petition for being moot and academic. The
June 2011 RTC Resolution observed that
since the CA had already made a definitive
ruling that a contract had been perfected
between the parties, the RTC had "nothing left
to do" in respect of the Amended Petition. 42
However, on NIASSI's Motion for
Reconsideration, the RTC issued a
Resolution  dated September 20, 2011
43
(September 2011 RTC Resolution) reversing
the June 2011 RTC Resolution. The
dispositive portion of the September 2011
RTC Resolution reads:
WHEREFORE, premises considered, the
Motion for Reconsideration is granted.
The defendant is hereby ordered to execute a
formal ten (10) years contract in favor of the
plaintiff, upon the finality of this order. The writ
of preliminary injunction issued by the Court
dated August 8, 2006, will be considered
dissolved upon perfection of the formal
arrastre service contract.
SO ORDERED. 44
PPA moved for the reconsideration of the
September 2011 RTC Resolution. However,
the RTC denied PPA's motion in an Order
dated December 20, 2011(December2011
RTC Order). 45
Proceedings before the CA
Aggrieved, PP A filed an appeal before the
CA, docketed as CA-G.R. SP No. 04828. In
said appeal, PPA faulted the RTC for
reversing the June 2011 RTC Order, insisting
that the Amended Petition had already
become moot and academic. The PP A also
alleged that the CA erred in directing it to
execute a written 10-year contract with
NIASSI reckoned from the finality of the
September 2011 RTC Resolution, as this was
tantamount to extending the original term of
the contract between the parties that was
perfected on January 3, 2001, the date when
PPA received notice of NIASSI's conformity to
the Notice of Award. 46
PPA thus prayed that the September 2011
RTC Resolution and December 2011 R TC
Order be set aside, and a new order be
issued dismissing the Amended Petition for
being moot and academic. 47
On December 11, 2013, the CA rendered a
Decision  granting PPA's appeal in part (CA
48
Decision) by annulling the September 2011
RTC Resolution and December 2011 RTC
Order in so far as they failed to consider that
the 10-year cargo-handling contract had been
partially fulfilled. The CA ruled:
There is already a perfected contract of ten
years, albeit it is not written. In fact, NIASSI is
already exercising the subject matter of that
unwritten contract. To compel PP A to execute
a new written ten-year contract without
deducting the periods mentioned above is to
create another contract for the parties and to
unjustly enrich NIASSI. Consequently, the
written contract should only cover the
remaining period of the original ten-year
contract. In the event that the total period is
already more than ten (10) years, then the
petition should be dismissed for being moot
and academic.
WHEREFORE, the instant appeal is partly
GRANTED. The case is remanded to the
Regional Trial Court to determine the total
period of time during which NIASSI was in
operation of the cargo handling services of
Nasipit port, which period covers the following:
(1) The several hold-over permits granted to
NIASSI since 2001, the year the contract was
perfected;
(2) The operation of NIASSI as a
consequence of Our decision in 2006; and
(3) The operation of NIASSI as a
consequence of the granting of its motion for
reconsideration in 2011 until the finality of this
case.
The total period shall then be deducted, as
partial fulfillment, to the ten-year contract in
favor of NIASSI. The written contract should
only cover the balance of the ten-year period
awarded to NIASSI in the Notice of Award.
Otherwise, the petition should be dismissed
for being moot and academic.
SO ORDERED.  (Emphasis and underscoring
49
supplied)
On NIASSI's Motion for Reconsideration,
however, the CA issued its Amended Decision
dated September 15, 2014.  As stated earlier,
50
the Amended Decision affirmed the
September 2011 R TC Resolution and
December 2011 RTC Order directing PPA to
execute the cargo-handling contract in favor
of NIASSI for a full 10-year term from the
finality of the September 2011 RTC
Resolution,  on the ground that NIASSI's
51
operations for the period covered by the HOA
and its extensions should not be deducted
therefrom:
Having a Notice of Award in its favor and
having complied with the requirements,
NIASSI has established that it has a right for
(sic) the ten-year cargohandling contract; yet
no written contract embodying the terms of the
agreement was signed between the
parties. "A contract is perfected by mere
consent and from that moment the parties are
bound not only to the fulfillment of what has
been expressly stipulated but also to all the
consequences which, according to their
nature, may be in keeping with good faith,
usage and law." What remains then is just the
execution of the written contract embodying
the terms of the agreement so that both
parties can comply. And "there is no unjust
enrichment where the one receiving the
benefit has a legal right or entitlement
thereto." Thus, pursuant to the Notice of
Award, the PPA is now directed to execute the
10-year written contract in favor of NIASSI.
Based on the language of the last hold-over
authority, the PPA does not consider the hold-
over permits as partial fulfillment of the
unwritten cargo handling contract. The HOA is
a separate agreement between the parties
pending the issuance of the cargo-handling
services contract.  (Italics in the original;
52
emphasis supplied)
PP A received a copy of the Amended
Decision on October 20, 2014. 53
On November 4, 2014, PPA filed a motion
with the Court asking for an additional period
of 30 days within which to file a Petition for
Review on Certiorari.  PPA's motion was
54
granted by the Court in its Resolution dated
November 17, 2014. 55
Finally, on December 3, 2014, PPA filed the
instant Petition.
Issue
The sole issue for resolution of this Court is
whether the CA erred when it issued the
Amended Decision affirming the September
2011 RTC Resolution and December 2011
RTC Order, and directing PPA to execute a
cargo-handling contract in favor of NIASSI for
a full 10-year term without deducting the
period covered by the HOA.
The Court's Ruling
In the instant Petition, PPA contends that the
Amended Petition before the RTC had been
rendered moot and academic by virtue of the
CA's decision in CA-G.R. SP No. 00214.  On
56
this basis, PPA concludes that it can no longer
be compelled to formally execute a contract
with NIASSI upon finality of the Amended
Decision, since the term of the perfected
contract already expired on January 3, 2011,
10 years after PPA received notice of
NIASSI's conformity to the Notice of Award. 57
The Petition is impressed with merit.
The CA 's findings in CA-G.R. SP No.
00214 constitute the law of the case
between the parties, and are thus
binding herein.
In its decision in CA-G.R. SP No. 00214, the
CA held that (i) the 10- year cargo-handling
contract had already been perfected, and (ii)
the HOA and its subsequent extensions
constituted partial fulfillment thereof. For
emphasis, the relevant portions are
reproduced:
Verily, the Holdover Authority (HOA) granted
by the private respondent and the series of
extensions allowing the petitioner to operate
provisionally the arrastre service confirm the
perfection of their contract despite the delay in
its consummation due to acts attributable to
the private respondents. But it cannot be
gainsaid that the series of extensions
constitute partial fulfillment and execution of
the contract of cargo handling services.
xxxx
It is therefore Our submission that a perfected
contract of cargo handling services existed
when the petitioner won the bidding, given the
Notice of Award and conformed to the
conditions set forth in the Notice of Award
because the requirements prescribed in the
Notice of Award have no bearing on the
perfection of the contract. On the contrary, it
amounted to a qualified acceptance of
petitioner's offer, a clear legal right to continue
its operations in the port. Since the
respondent is bound by the contract, the act
of taking over the cargo handling service from
the petitioner is violative of its right.
58
This decision was affirmed by the Court in
toto in G.R. No. 174136, thus:
WHEREFORE, the petition is DENIED and
the appealed Decision of the Court of
Appeals isAFFIRMED. 59
In tum, the Court's decision became final and
executory after the lapse of 15 days from
notice thereof to the parties. From such time,
the Court's decision became immutable and
unalterable.60
The Court notes that CA-G.R. SP No. 00214
and the instant Petition both stem from the
Amended Petition, and seek the same relief -
the execution of a written contract in
accordance with the Notice of Award.
Moreover, both cases involve the same facts,
parties and arguments. For these reasons, the
Court believes that the doctrine of the law of
the case is applicable.
The doctrine of the law of the case precludes
departure from a rule previously made by an
appellate court in a subsequent proceeding
essentially involving the same
case.  Pursuant to this doctrine, the Court,
61
in De La Salle University v. De La Salle
University Employees Association
(DLSUEANAFTEU),  (DLSU) denied therein
62
petitioner's prayer for review, since the
petition involved a single issue which had
been resolved with finality by the CA in a
previous case involving the same facts,
arguments and relief.
We note that both G.R. No. 168477 and this
petition are offshoots of petitioner's purported
temporary measures to preserve its neutrality
with regard to the perceived void in the union
leadership. While these two cases arose out
of different notices to strike filed on April 3,
2003 and August 27, 2003, it is undeniable
that the facts cited and the arguments raised
by petitioner are almost identical. Inevitably,
G.R. No. 168477 and this petition seek only
one relief, that is, to absolve petitioner from
respondent's charge of committing an unfair
labor practice, or specifically, a violation of
Article 248(g) in relation to Article 252 of the
Labor Code.
For this reason, we are constrained to apply
the law of the case doctrine in light of the
finality of our July 20, 2005 and September
21, 2005 resolutions in G.R. No. 168477. In
other words, our previous affirmance of the
Court of Appeals' finding - that petitioner erred
in suspending collective bargaining
negotiations with the union and in placing the
union funds in escrow considering that the
intra-union dispute between the Aliazas and
Bafiez factions was not a justification therefor
- is binding herein. Moreover, we note that
entry of judgment in G.R. No. 168477 was
made on November 3, 2005, and that put to
an end to the litigation of said issues once and
for all.
The law of the case has been defined as the
opinion delivered on a former appeal. It
means that whatever is once irrevocably
established as the controlling legal rule or
decision between the same parties in the
same case continues to be the law of the
case, whether correct on general principles or
not, so long as the facts on which such
decision was predicated continue to be the
facts of the case before the court.  (Italics in
63
the original; emphasis supplied; citations
omitted)
In Heirs of Felino M Timbol, Jr. v. Philippine
National Bank  (Heirs of Timbol), the Court
64
was confronted with procedural antecedents
similar to those attendant in this case.
Therein, the Court affirmed the CA's decision
declaring as valid the extrajudicial foreclosure
assailed by petitioners on the basis of factual
findings which were affirmed by the Court in a
previous decision that dealt with the
dissolution of a writ of preliminary injunction
issued in the same case. Thus, in Heirs of
Timbol, the Court ruled that the CA correctly
applied the doctrine of the law of the case.
The Court of Appeals correctly applied the law
of the case doctrine.
In PNB v. Timbol, PNB brought a petition
for certiorari to set aside the order of Judge
Zeus L. Abrogar that issued a writ of
preliminary injunction in Civil Case No. 00-
946. The Court struck down this order, holding
that the order "was attended with grave abuse
of discretion."
The Court found that the Spouses Timbol
"never denied that they defaulted in the
payment of the obligation." In fact, they even
acknowledged that they had an outstanding
obligation with PNB, and simply requested for
more time to pay.
The Court also held that the extrajudicial
foreclosure of the mortgage was proper, since
it was done in accordance with the terms of
the Real Estate Mortgage, which was also the
Court's basis in finding that Supreme Court
Administrative Order No. 3 does not apply in
that case.
The Court also found that the Spouses
Timbol's claim that PNB bloated the amount of
their obligation was "grossly misleading and a
gross misinterpretation" by the Spouses
Timbol. The Court noted the Spouses
Timbol's letter to PNB that acknowledged they
had an outstanding obligation to PNB, as well
as affirmed that they received the demand
letter directing them to pay, contrary to their
claim. Thus, the Court in PNB v.
Timbol concluded that the R TC committed
grave abuse of discretion when it issued a writ
of preliminary injunction.
No doubt, this Court is bound by its earlier
pronouncements in PNB v. Timbol.
The term law of the case has been held to
mean that "whatever is once irrevocably
established as the controlling legal rule or
decision between the same parties in the
same case continues to be the law of the
case, whether correct on general principles or
not, so long as the facts on which such
decision was predicated continue to be the
facts of the case before the court. As a
general rule, a decision on a prior appeal of
the same case is held to be the law of the
case whether that question is right or
wrong, the remedy of the party deeming
himself aggrieved being to seek a rehearing."
xxxx
The Court is bound by its earlier ruling in PNB
v. Timbol finding the extrajudicial foreclosure
to be proper. The Court therein thoroughly
and thoughtfully examined the validity of the
extrajudicial foreclosure in order to determine
whether the writ of preliminary injunction was
proper. To allow a reexamination of this
conclusion will disturb what has already been
settled and only create confusion if the Court
now makes a contrary finding.
Thus, "[q]uestions necessarily involved in the
decision on a former appeal will be regarded
as the law of the case on a subsequent
appeal, although the questions are not
expressly treated in the opinion of the court,
as the presumption is that all the facts in the
case bearing on the point decided have
received due consideration whether all or
none of them are mentioned in the
opinion."  (Italics in the original; emphasis
65
supplied; citations omitted)
The Court's discussions in DLSU and Heirs of
Timbol are in point here where the allegations
and reliefs prayed for in NIASSI' s Amended
Petition show that their disposition required
the RTC to resolve a single issue - whether
PP A is bound to formally execute the 10-year
cargo-handling contract pursuant to the Notice
of Award. The relevant portions of the
Amended Petition state:
14. Petitioner won the bidding to operate
cargo-handling services in the port of Nasipit,
Agusan del Norte, for ten (10) years.
Notwithstanding due compliance by petitioner
of (sic) all the requirements as indicated in the
Notice of Award x x x petitioner was surprised
to receive a communication from respondent
CECILIO for public respondent to takeover
instead the management and operations of
cargo-handling services in the port of Nasipit,
Agusan del Norte.
xxxx
19. The act of public respondent in taking-
over the management and operations of
cargo-handling services of petitioner utilizing
the existing facilities and manpower
constitutes not only a blatant disregard to the
existing permit to operate, it likewise
demonstrates a notorious abuse of power
reminiscent of the dark days of martial rule.
The same act is oppressive, capricious,
whimsical, arbitrary and despotic as it denied
petitioner of (sic) its right to be heard and
dispute the malicious allegations against it.
Essentially, the act is a calculated move to
snatch away the award of the ten-year
contract of petitioner to operate the Cargo
Handling Services. x x x
24. WHEREFORE, FOR ALL THE
FOREGOING, it is most respectfully prayed of
(sic) this Honorable Court that upon filing of
this Petition, a Temporary Restraining Order
(TRO) and/or the Writ of Preliminary
Mandatory Injunction be issued commanding
or enjoining the respondents and all persons
acting in their behalf or direction, to refrain,
cease and desist from further implementing
the take-over of the management and
operations of the cargo-handling services in
Nasipit Port, Agusan del Norte, as contained
in the letter dated 6 December 2004 x x x, and
to refrain from issuing similar orders pending
resolution of the instant case and to restore to
the herein petitioner the management and
operation of the cargo handling services at the
Port of Nasipit and until after the Honorable
Court shall have heard and resolved the
application for the issuance of the Writ of
Preliminary Mandatory Injunction.
25. Petitioner further prays that after due
notice and hearing, the Writ of Mandamus be
issued commanding the respondents to
execute or cause the final execution of a
Cargo-Handling contract between petitioner
and the Philippine Ports Authority as
represented by herein
respondents.  (Underscoring omitted;
66
emphasis supplied)
In CA-G.R. SP No. 00214, the CA determined
the existence of a perfected contract between
PP A and NIASSI in order to ascertain
whether the issuance of a writ of preliminary
injunction in favor of NIASSI was proper.
Thus, the sole issue for the RTC's
determination had been resolved in CAG. R.
SP No. 00214, when the CA made the
following findings:
1. The 10-year cargo-handling contract had
been perfected on January 3, 2001, the date
when PP A received notice of NIASSI's
conformity to the Notice of Award;
2. The parties are bound to formally execute
the perfected cargo-handling contract in
accordance with the Notice of Award; and
3. NIASSI's operations during the period
covered by the HOA constitute partial
fulfillment of the perfected cargo-handling
contract.
A preliminary injunction is in the nature of an
ancillary remedy to preserve the status
quo during the pendency of the main case. As
a necessary consequence, matters resolved
in injunction proceedings do not, as a general
rule, conclusively determine the merits of the
main case or decide controverted facts
therein.  Generally, findings made in
67
injunction proceedings are subject to the
outcome of the main case which is usually
tried subsequent to the injunction
proceedings.
In this case, however, no further proceedings
were conducted after the Decision of the
Supreme Court relative to the injunction
proceedings had become final. To be sure,
the RTC directed the parties to submit their
respective memoranda on the issue of
whether or not the main case had become
moot and academic because of the finality of
said Decision and, on the basis of the
memoranda, the R TC resolved to dismiss the
Amended Petition, as it had nothing left to
determine.  As such, no evidence to
68
controvert the findings of the CA in CA-G.R.
SP No. 00214 were presented in the main
case. This being the case, the factual findings
of the CA in respect of the perfected cargo-
handling contract in the injunction
proceedings became conclusive upon finality
of this Court's decision affirming the same.
These circumstances thus render the
application of the law of the case doctrine
proper.
In any case, it is worth noting that NIASSI
recognized the perfection of the cargo-
handling contract in its Comment to the instant
Petition, thus:
x x x When NIASSI received and signed the
"conforme" portion [of the Notice of Award],
there [was] already [a] meeting of minds
between the parties as to the object and
cause of the cargo handling contract,
including the terms and duration thereof.69
To NIASSI, the cargo-handling contract was a er 9, and 6
valid and binding agreement, and it was thus 2004 days
bound by the concomitant rights and
obligations arising therefrom. Decemb 3 PPA Letter dated
er 10, months December 6,
The term of the perfected contract has 2004 and 17 2004
already expired. to March days
27, 2005
PP A avers that its 10-year cargo-handling March 14 NIASSI Issuance of
contract with NIASSI already expired on 28, 2005 days Preliminary
January 3, 2011, after the lapse of 10 years to Mandatory
from the date when said contract was April 11, Injunction
perfected.  In turn, PP A concludes that it can
70
2005
no longer be directed to formally execute
another contract with NIASSI, since such a April 12, 1 year, PPA Dissolution
directive would unduly lengthen the term of 2005 to 3 of
the cargo-handling contract contrary to the August 7, months Preliminary
intention of the parties.71 2006 and 26 Injunction
days
While the Court agrees with PPA's submission August 8, 8 NIASSI Reinstateme
that the perfected contract has already 2006 to years, nt of
expired, the Court clarifies that such expiration Decemb 3 Preliminary
is not because of the mere lapse of 10 years er 3, months Injunction
reckoned from the date when the same was 2014 and 26
perfected. To hold as such would be to feign days
ignorance of the events that transpired
thereafter, which led to the institution of this Decemb - NIASSI Institution of
very Petition. er 3, the Petition
2014
It bears emphasizing that PPA assumed the  
management and operations of the cargo-
handling services at Nasipit Port on two Based on the table above, NIASSI conducted
separate instances- first, by virtue of its letter the cargo-handling operations at Nasipit Port
dated December 6, 2004 revoking the last for a total period of 3 years, 11 months and 20
extension of the HOA, and second, by virtue days. Notably, NIASSI does not dispute that it
of the April 2005 RTC Order lifting the has been conducting such operations since
preliminary mandatory injunction granted in the reinstatement of the preliminary
NIASSI's favor. The IO-year term of the mandatory injunction.
perfected contract must be deemed
interrupted during the periods when PPA Thus, even if the Court assumes a
assumed management and control over conservative stance for purposes of illustration
NIASSI's cargo-handling operations. and sets the cut-off date for NIASSI's current
operations on the date when this Petition was
The relevant periods are summarized, thus: filed, NIASSI's total period of operation would
be pegged at 12 years, 3 months and 15
Period Duratio Operato Basis days, computed as follows:
n r
January 3 NIASSI Notice of Period Duratio Basis
3, 2001 years, Award n
to 11 January 3 years, Notice of
Decemb months 3, 2001 to 11 Award
 Decembe months SPOUSES VICTOR P. DULNUAN and
r 9, 2004 and 6 JACQUELINE P. DULNUAN, Petitioners,
days vs.
METROPOLITAN BANK & TRUST
March 28, 14 days Issuance of COMPANY, Respondent.
2005 to Preliminary
April 11, Mandatory DECISION
2005 Injunction
August 8, 8 years, Reinstatemen PEREZ, J.:
2006 to 3 t of
Decembe months Preliminary This is a Petition for Review on Certiorari  filed
1

r 3, 2014 and 26 Injunction by petitioners Spouses Victor Dulnuan and

days Jacqueline Dulnuan (Spouses Dulnuan)
seeking to reverse and set aside the 14
Total 12 years, 3 months and January 2011 Decision  of the Court of
2

15 days Appeals. and its 29 April 2011 Resolution  in

3

CA-G.R. SP No. 108628. The assailed

Clearly, the 10-year term of the perfected
contract had already expired, leaving the R
TC with nothing to enforce. 72
Finally, it bears stressing that PPA issued the
Notice of Award on December 21, 2000. To
compel PPA to formally execute a 10-year
cargo-handling contract at this time on the
basis of conditions prevailing nearly two
decades ago would certainly be unreasonable
and iniquitous.
For the foregoing reasons, the Court resolves
to grant the instant Petition.
WHEREFORE, premises considered, the
Petition for Review on Certiorari is
GRANTED. The Amended Decision dated
September 15, 2014 of the Court of Appeals
decision and resolution reversed the 3
December 2008 Order of the Regional Trial
Court (RTC) of La Trinidad, Benguet, which, in
turn, enjoined the extrajudicial foreclosure
sale or' a parcel of land covered by Transfer
Certificate of Title (TCT) No. T-46390
registered under the name of the Spouses
Dulnuan. The dispositive portion of the Court
of Appeals Decision reads:
WHEREFORE, the petition is GRANTED. The
Order dated December 3, 2008 of the
Regional Trial Court, Branch 63 of La
Trinidad, Benguet in Civil Case No. 08-CV-
2470 which granted [the Spouses Dulnuan’s]
application for writ of preliminary injunction
and the RTC’s Order dated March 24, 2009,
which denied [Metropolitan Bank and Trust
Company’s] motion for reconsideration, are
hereby REVERSED and SET ASIDE. 4

in CA-G.R. SP No. 04828-MIN is SET ASIDE.

Consequently, SP. Civil Case No. 1242
pending before the Regional Trial Court of
Butuan City, Branch 4, is hereby DISMISSED.
SO ORDERED.
The Facts
On several occasions, the Spouses Dulnuan
obtained loans from Metropolitan Bank and
Trust Company (Metrobank), the total of which
reached the sum ₱3,200,000.00, as
evidenced by promissory notes executed by
them. 5

As a security for the loan obligations, the

FIRST DIVISION Spouses Dulnuan executed a Real Estate
Mortgage (REM) over a parcel of land covered
G.R. No. 196864               July 8, 2015 by TCT No. 46390 registered under their
names and located at La Trinidad, Benguet
with an area of 392 square meters (subject
property).  Subsequently, however, the
6
Spouses Dulnuan incurred default and
therefore the loan obligations became due
and demandable.
On 22 April 2008, Metrobank filed an
application for extra-judicial foreclosure
proceedings over the subject property before
the RTC of La Trinidad, Benguet. After due
notice and publication, the mortgaged
property was sold at a public auction where
Metrobank was declared as the highest bidder
after tendering the bid of ₱6,189,000.00, as
shown in the Certificate of Sale.  In order to
7
validly effect the foreclosure, a copy of the
said Notice of Public Auction Sale was posted
on the bulletin boards of Barangay Betag,
Municipal Hall of La Trinidad, Benguet,
Provincial Capitol Benguet.  Before the
8
expiration of the one-year redemption period
allowed by law, Metrobank filed a Petition for
the Issuance of Writ of Possession docketed
as LRC Case No. 08-60 which was raffled
before Branch 63 of the RTC. 9
On 30 September 2008, the Spouses Dulnuan
instituted a Complaint seeking the issuance of
a temporary restraining order and preliminary
and final injunction and, for the annulment of
extra-judicial foreclosure and real estate
mortgage before the RTC of LaTrinidad,
Benguet, Branch 10, which case was
docketed as Civil Case No. 08-CV-2470. The
complaint alleged that the mortgage
constituted over the property is null and void
because at the time the agreement was
entered on 18October 2000, no contract of
loan was yet executed by the parties. It was
only on 19 December 2003 that they received
the proceeds of the loan, as evidenced by the
Promissory Note. In other words, there is no
principal obligation upon which the ancillary
contract of mortgage was attached to.
Upon motion of the Spouses Dulnuan, Civil
Case No. 08-CV-2470 was consolidated
before Branch 63 of the RTC wherein the LRC
Case No. 08-60 was pending. After summary
hearing, the court a quoin an Order dated 5
November 2008, issued a Temporary
Restraining Order and set the hearing for the
issuance of Writ of Preliminary Injunction.
Both parties proceeded to adduce evidence
for and against the issuance of the writ of
preliminary injunction.
Finding an imperative need to protect and
preserve the rights of the Spouses Dulnuan
during the pendency of the principal action,
the RTC issued an Order dated 3 December
2008, enjoining Metrobank from taking
possession of the subject property until the
final disposition of the annulment of mortgage
case. The decretal portion of the Order reads:
WHEREFORE, premises considered, and
finding compelling reason at this point in time
to grant for the application for preliminary
injunction, the same is hereby granted upon
posting of preliminary injunction bond in the
amount of ₱200,000.00 duly approved by the
court, let the writ of preliminary injunction be
issued to take effect pendente lite,
commanding the [Metrobank] including its
agents and representatives, as well as
persons acting under its control, supervision,
instruction, order or authorization, to desist
from entering, occupying, possessing, using,
or from performing any act of possession and
occupation of the aforedescribed property, as
well as from causing the cancellation of the
existing transfer certificate of title of the
[Spouses Dulnuan] and from securing in lieu
thereof a transfer certificate of title over the
aforedescribed property in its favor.10
In an Order dated 24 March 2009, the RTC
refused to reconsider its earlier Order.
Arguing that the RTC gravely abused its
discretion in enjoining its taking of possession
over the subject realties, Metrobank filed a
Petition for Certiorari before the Court of
Appeals.
On 14 January 2011, the Court of Appeals
rendered a Decision reversing the questioned
Orders and declared that the issuance of the
writ of preliminary injunction is unjustified
under the circumstances. The appellate court
made a pronouncement that as the highest
bidder at the auction sale, Metrobank is
entitled to occupy the subject property, and,
any question regarding the validity of the
mortgage or the foreclosure thereof shall not
preclude the purchaser from taking
possession. The disquisition the Court of
Appeals reads:
WHEREFORE, the petition is GRANTED. The
Order dated December 3, 2008 of the
Regional Trial Court, Branch 63 of La
Trininidad, Benguet in Civil Case 08-CV-2470
which granted respondents’ application for
writ of preliminary injunction and the RTC’s
Order dated March 24, 2009 which denied
[Metrobank’s] motion for reconsideration are
hereby RESERVED and SET ASIDE. 11
For lack of merit, the Spouses Dulnuan’s
Motion for Reconsideration was denied by the
Court of Appeals in a Resolution dated 29
April 2011.
The Spouses Dulnuan is now before this
Court via this instant Petition for Review on
Certiorari seeking the reversal of the Court of
Appeals Decision and Resolution on the
following grounds:
I.
THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE AND SERIOUS
ERROR IN OVERLOOKING THE
UNDISPUTED FACT THAT THE PETITION
FOR WRIT OF POSSESSION WAS FILED
DURING THE REDEMPTION PERIOD AND
NO BOND HAD BEEN POSTED BY
RESPONDENT TO WARRANT ITS
ISSUANCE; AND
II.
THE HONORABLE COURT OF APPEALS
COMMITTED A GRAVE AND SERIOUS
ERROR IN OVERLOOKING THE FACT
THAT CIVIL CASE NO. 08-CV-2470 AND
LRC CASE NO. 08-60 WERE
CONSOLIDATED. 12
The Court's Ruling
The Court is urged to resolve the issue of
whether or not the Court of Appeals erred in
dissolving the writ of preliminary injunction
issued against Metrobank. The writ of
preliminary injunction enjoined Metrobank
from entering, occupying, possessing, using,
or performing any act of possession and
occupation over the subject property. Without
going into the merits of this case, the Court
will confine itself in the determination of the
propriety of the preliminary injunction, such
being a preservative remedy for the protection
of substantive rights or interests, is not a
cause of action in itself but merely a
provisional remedy, an adjunct to a main suit. 13
A writ of preliminary injunction and a TRO are
injunctive reliefs and preservative remedies
for the protection of substantive rights and
interests.  An application for the issuance of a
1âwphi1
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.  The
14
purpose of injunction is to prevent threatened
or continuous irremediable injury to some of
the parties before their claims can be
thoroughly studied and educated. Its sole aim
is to preserve the status quo until the merits of
the case is heard fully.15
The status quo is the last actual, peaceable
and uncontested situation which precedes a
controversy.  The status quo should be that
16
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.
Pertinent are the provisions of Section 3, Rule
58 of the Rules of Court, enumerates the
grounds for the issuance of a writ of
preliminary injunction, to wit:
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.
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. 17
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
requisites of a valid injunction are the
existence of the right and its actual or
threatened violations. Thus, to be entitled to
an injunctive writ, the right to be protected and
the violation against the right must be shown. 18
Extant from the pleadings of the parties is the
failure of the Spouses Dulnuan to establish
the essential requisites for the issuance of the
writ of preliminary injunction.
First. The court a quo cannot enjoin
Metrobank, at the instance of the Spouses
Dulnuan, from taking possession of the
subject property simply because the period of
redemption has not yet expired. As the
highest bidder in the foreclosure sale upon
whom a certificate sale was issued by the
sheriff, Metrobank has the right to be placed
in possession of the subject property even
during the redemption period provided that the
necessary amount of bond is posted. As
elucidated by the Court in Spouses Tolosa v.
United Coconut Planters Bank: 19
A writ of possession is simply an order by
which the sheriff is commanded by the court
to place a person in possession of a real or
personal property. Under Section 7 of Act No.
3135, as amended, a writ of possession may
be issued in favor of a purchaser in a
foreclosure sale either (1) within the one-year
redemption period, upon the filing of a bond;
or (2) after the lapse of the redemption period,
without need of a bond. Within the one-year
redemption period, the purchaser may apply
for a writ of possession by filing a petition in
the form of an ex parte motion under oath, in
the registration or cadastral proceedings of
the registered property. The law requires only
that the proper motion be filed, the bond
approved and no third person is involved.
After the consolidation of title in the buyer’s
name for failure of the mortgagor to redeem
the property, entitlement to the writ of
possession becomes a matter of right. In the
latter case, the right of possession becomes
absolute because the basis thereof is the
purchaser’s ownership of the property.
It is an established rule that the purchaser in
an extra-judicial foreclosure sale is entitled to
the possession of the property and can
demand that he be placed in possession of
the same either during (with bond) or after the
expiration (without bond) of the redemption
period therefor.  The non-expiration of the
20
period of redemption shall not preclude the
purchaser from taking possession of the
property provided that the necessary is
posted. The buyer can in fact demand
possession of the land even during the
redemption period except that he has to post
a bond in accordance with Section 7  of Act 21
No. 3135, as amended. In the case at bar,
Metrobank manifested its willingness to post a
bond but its application for the issuance of the
writ of possession was unjustly denied by the
RTC.
Second. The pendency of the action assailing
the validity of the mortgage should not bar the
issuance of the writ of possession.  A pending
1âwphi1
action for annulment of mortgage or
foreclosure does not stay the issuance of a
writ of possession.  Regardless of the
22
pendency of such suit, the purchaser remains
entitled to a writ of possession, without
prejudice, of course, to the eventual outcome
of the pending annulment case. Emphatic to
the point is the ruling of the Court in Spouses
Fortaleza v. Spouses Lapitan: 23
Lastly, we agree with the CA that any question
regarding the regularity and validity of the
mortgage or its foreclosure cannot be raised
as a justification for opposing the petition for
the issuance of the writ of possession. The
said issues may be raised and determined
only after the issuance of the writ of
possession. Indeed, "[t]he judge with whom
an application for writ of possession is filed
need not look into the validity of the mortgage
or the manner of its foreclosure." The writ
issues as a matter of course. "The rationale
for the rule is to allow the purchaser to have
possession of the foreclosed property without
delay, such possession being founded on the
right of ownership."
Without prejudice to the final disposition of the
annulment case, Metrobank is entitled to the
writ of possession and cannot be barred from
enjoying the property, possession being one
of the essential attributes of ownership.
Third. While the grant or denial of the
preliminary injunction rests on the sound
discretion of the court taking cognizance of
the case, and judicial discretion of the court in
injunctive matters should not be interfered
with,  in the absence of clear and legal right,
24
however, the issuance of a writ of injunction
constitutes a grave abuse of discretion. 25
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 despotic
manner by reason of passion, prejudice or
personal aversion amounting to an evasion of
a positive duty or to a virtual refusal to perform
a duty enjoined or to act at all in
contemplation of law.  The burden is thus on
26
petitioner to show in his application that there
is meritorious ground for the issuance of TRO
in his favor.  When the complainant’s right is
27
doubtful or disputed, he does not have a clear
legal right and, therefore, the issuance of
injunctive writ is improper.  Herein, the
28
Spouses Dulnuan failed to show that they
have clear and unmistakable right to the
issuance of writ in question.
In fine, we find that the Court of Appeals
committed no reversible error in reversing the
injunction issued by the RTC. The record
shows that Metrobank caused the extrajudicial
foreclosure of the mortgage on the subject
realties as a consequence of the Spouses
Dulnuan's default on their mortgage
obligation. As the highest bidder at the
foreclosure sale, Metrobank can exercise its
right of possession over the subject realty,
and the issuance of writ of preliminary
injunction, enjoining the bank from occupying
the property in question, is erroneous.
WHEREFORE, premises considered, the
instant petition is hereby . DENIED. The
assailed Decision dated 14 January 2011 and
Resolution dated 29 April 2011 of the Court of
Appeals in CA-G.R. SP No. 108628 are
hereby AFFIRMED.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 170038 - July 11, 2012]
CHINA BANKING
CORPORATION, Petitioner, v. SPS.
HARRY CIRIACO and ESTHER
CIRIACO, Respondents.
DECISION
BRION, J.:
We resolve the Petition for Review
on Certiorari 1 filed by China Banking
Corporation (petitioner) to challenge the
April 15, 2005 decision2 and the October
10, 2005 resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 64349.
The CA decision denied the petitioner s
Petition for Certiorari for lack of merit.
The CA resolution denied the petitioner
s subsequent motion for
reconsideration.
FACTUAL BACKGROUND
On March 11, 1996, Spouses Harry and
Esther Ciriaco (respondents) obtained a
P1,500,000.00 loan4 from the petitioner,
secured by a real estate mortgage5 over
their 526-square meter land in La
Trinidad, Benguet, covered by Transfer
Certificate of Title (TCT) No. T-21710.6 ςrνll
When the respondents defaulted in the
payment of their loan, the petitioner
extrajudicially foreclosed7 the
mortgaged property and sold it at public
auction where the petitioner emerged as
the highest bidder. The Sheriff executed
a Certificate of Sale8 in the petitioner s
favor on March 11, 1998. The Register
of Deeds annotated the Certificate of
Sale on TCT No. T-21710 on March 24,
1998.9ςrνll
On March 23, 1999, a day before the
expiration of the redemption period, the
respondents filed a complaint with the
Regional Trial Court (RTC) of La
Trinidad, Benguet, Branch 8, for
Injunction to enjoin the consolidation of
title in the petitioner s favor, assailing
the redemption price of the foreclosed
property.10 ςrνll
On July 26, 1999, the RTC dismissed the
complaint for being moot due to the
consolidation of title in the petitioner s
favor on March 31, 1999, "without
prejudice to the filing of an appropriate
action."11 ςrνll
On August 17, 1999, the respondents
filed a complaint with the RTC of La
Trinidad, Benguet, Branch 63, for
Cancellation of Consolidation of
Ownership over a Real Property, Specific
Performance, and Damages.12 They
again questioned the redemption price
of the foreclosed property.
On September 23, 1999, the petitioner
filed its Answer with Compulsory
Counterclaim, denying the allegations of
the respondents complaint.13 ςrνll
On March 16, 2000, the respondents
filed an Omnibus Motion for Leave to
Amend Complaint and to Admit
Attached Amended Complaint as well as
Motion for Hearing on the Issuance of a
Writ of Preliminary Injunction and/or
Temporary Restraining Order (TRO),
with a notice of hearing on the omnibus
motion scheduled on March 22,
2000.14 The respondents sought to
amend the complaint to allege further
that fraud attended the consolidation of
title in the petitioner s favor and to
include a prayer for the issuance of a
writ of preliminary injunction and/or
TRO to enjoin the petitioner from
disposing of the foreclosed property or
taking possession thereof.
At the March 22, 2000 hearing, the RTC
gave the petitioner ten (10) days within
which to file its comment to the
respondents omnibus motion, and set
the hearing on the omnibus motion on
April 24, 2000.15
ςrνll
The petitioner subsequently filed its
Opposition to the omnibus
motion,16 arguing that the respondents
further allegation of fraud changes the
theory of the case which is not allowed,
and that the respondents failed to show
that they have a clear right in esse that
should be protected by an injunctive
relief.
At the April 24, 2000 hearing on the
omnibus motion, the RTC gave the
respondents ten (10) days to file their
comment to the petitioner s opposition,
and gave the petitioner ten (10) days to
file its reply to the respondents
comment.17 The respondents did not file
a reply to the petitioner s opposition.
THE RTC s RULING
In its August 1, 2000 order, the RTC
admitted the amended complaint and
directed the petitioner to file an answer.
It noted that the 1997 Rules of Civil
Procedure relaxed the rule on
amendments to pleadings, subject only
to the limitation that they are not
dilatory. It also granted the respondents
application for the issuance of a writ of
preliminary injunction and/or TRO, since
the respondents were entitled to prove
their claim of fraud, and their claim that
the interests and penalty charges
imposed by the bank had no factual
basis.18
ςrνll
The RTC denied19 the petitioner s
subsequent motion for
reconsideration.20 On August 24, 2000,
the RTC issued a writ of preliminary
injunction, restraining the petitioner
from disposing of the foreclosed
property or taking possession thereof.21 ςrνll
The petitioner then filed a Rule 65
petition for certiorari with the CA,
arguing that the RTC gravely abused its
discretion in precipitately granting the
respondents application for the issuance
of a writ of preliminary injunction
without any hearing.22 ςrνll
THE CA s RULING
In its April 15, 2005 decision, the CA
denied the petition. It found that the
RTC did not commit any grave abuse of
discretion since it gave the parties
ample opportunity to present their
respective positions on the propriety of
an injunctive writ during the hearings on
March 22, 2000 and
April 24, 2000, and that the petitioner
was also heard on its motion for
reconsideration of the August 1, 2000
order.23
ςrνll
When the CA denied24 the petitioner s
motion for reconsideration,25 the latter
filed the present petition.26 ςrνll
THE PETITION
The petitioner argues that the RTC
granted the respondents application for
the issuance of a writ of preliminary
injunction and/or TRO, despite the lack
of a hearing thereon; the RTC
conducted hearings on the respondents
omnibus motion only, not on the
respondents application for the issuance
of a writ of preliminary injunction and/or
TRO, which has not yet been set for
hearing.
THE CASE FOR THE RESPONDENTS
The respondents submit that the RTC
gave the petitioner ample opportunity to
be heard on his opposition to the
respondents application for the issuance
of a writ of preliminary injunction and/or
TRO at the March 22, 2000 and April 24,
2000 hearings, and on the petitioner s
motion for reconsideration of the August
1, 2000 order.
THE ISSUE
The core issue boils down to whether
the CA erred in finding that the RTC did
not commit any grave abuse of
discretion in granting the respondents
application for the issuance of a writ of
preliminary injunction and/or TRO.
OUR RULING
We find merit in the petition.
A preliminary injunction is an order without hearing and prior notice to the
granted at any stage of an action prior party or persons sought to be enjoined.
to the judgment or final order requiring If it shall appear from facts shown by
a party or a court, agency or a person affidavits or by the verified application
to refrain from a particular act or that great or irreparable injury would
acts.27 It is the "strong arm of result to the applicant before the matter
equity,"28 an extraordinary peremptory can be heard on notice, the court to
remedy that must be used with extreme which the application for preliminary
caution,29 affecting as it does the injunction was made, may issue ex
respective rights of the parties.30 Ï‚rνll parte a temporary restraining order to
be effective only for a period of twenty
Sections 3 and 5, Rule 58 of the 1997 (20) days from service on the party or
Rules of Civil Procedure on preliminary person sought to be enjoined, except as
injunction, pertinent to this case, herein provided. Within the twenty-day
provide the requirements for the period, the court must order said party
issuance of a writ of preliminary or person to show cause at a specified
injunction or a TRO: ςrαlαω
time and place, why the injunction
should not be granted. The court shall
SEC. 3. Grounds for issuance of also determine, within the same period,
preliminary injunction. - A preliminary whether or not the preliminary
injunction may be granted when it is injunction shall be granted, and
established: ςηαñrοblεš  Î½Î¹r† Ï…αl  lαω  lιbrαrà ¿
accordingly issue the corresponding
order.
(a) That the applicant is entitled to the
relief demanded, and the whole or part However, subject to the provisions of
of such relief consists in restraining the the preceding sections, if the matter is
commission or continuance of the act or of extreme urgency and the applicant
acts complained of, or in requiring the will suffer grave injustice and
performance of an act or acts, either for irreparable injury, the executive judge
a limited period or perpetually; of a multiple-sala court or the presiding
judge of a single-sala court may issue
(b) That the commission, continuance or ex parte a temporary restraining order
non-performance of the act or acts effective for only seventy-two (72)
complained of during the litigation hours from issuance but shall
would probably work injustice to the immediately comply with the provisions
applicant; or of the next preceding section as to
service of summons and the documents
(c) That a party, court, agency or a to be served therewith. Thereafter,
person is doing, threatening, or is within the aforesaid seventy-two (72)
attempting to do, or is procuring or hours, the judge before whom the case
suffering to be done, some act or acts is pending shall conduct a summary
probably in violation of the rights of the hearing to determine whether the
applicant respecting the subject of the temporary restraining order shall be
action or proceeding, and tending to extended until the application for
render the judgment ineffectual. preliminary injunction can be heard. In
no case shall the total period of
chanrobles virtual law library

effectivity of the temporary restraining

order exceed twenty (20) days,
SEC. 5. Preliminary injunction not including the original seventy-two hours
granted without notice; exception. - No provided herein.31
preliminary injunction shall be granted
ςrνll
From the provisions, it appears clearly
that before a writ of preliminary
injunction may be issued, a clear
showing must be made that there exists
a right to be protected and that the acts
against which the writ is to be directed
are violative of an established
right.32 The holding of a hearing, where
both parties can introduce evidence and
present their side, is also required
before the courts may issue a TRO or an
injunctive writ.33
ςrνll
Generally, an RTC's decision to grant or
to deny injunctive relief will not be set
aside on appeal, unless the trial court
abused its discretion. In granting or
denying injunctive relief, a court abuses
its discretion when it lacks jurisdiction;
fails to consider and make a record of
the factors relevant to its
determination; relies on clearly
erroneous factual findings; considers
clearly irrelevant or improper factors;
clearly gives too much weight to one
factor; relies on erroneous conclusions
of law or equity; or misapplies its
factual or legal conclusions.34
ςrνll
In this case, we find that the RTC
abbreviated the proceedings and
precipitately granted the respondents
application for injunctive relief. The RTC
did not conduct a hearing for reception
of a "sampling" of the parties respective
evidence to give it an idea of the
justification for its issuance pending the
decision of the case on the merits.35 It
failed to make any factual finding to
support the issuance of the writ of
preliminary injunction since it did not
conduct any hearing on the application
for the issuance of the writ of
preliminary injunction or TRO. The RTC
conducted the March 22, 2000 and April
24, 2000 hearings on the respondents
omnibus motion only whether to admit
the amended complaint and whether to
hold a hearing on the respondents
application for a writ of preliminary
injunction.
In fact, a perusal of the August 1, 2000
order shows that the RTC granted the
respondents application for a writ of
preliminary injunction based only on the
respondents unsubstantiated
allegations, thus:ςrαlαω
Going now to the application for a writ
of preliminary injunction and/or
temporary restraining order, the
plaintiffs aver that a writ should issue
forbidding the defendant bank from
taking possession of the subject
property and disposing of the same
beyond recovery by them tending to
make any favorable judgment in their
favor ineffective.
The Complaint alleges that had
defendant bank not committed fraud,
plaintiffs could have redeemed the
property subject matter hereof.
Furthermore, considering that the
redemption price of the property
foreclosed appears to have been
bloated, thereby making it difficult for
plaintiffs to redeem their property, to
deny the application would in effect be
condoning the act of the defendant bank
in imposing interests and penalty
charges which plaintiffs claim as not
having been agreed upon by them.
In view of the foregoing, plaintiffs are
entitled to prove their claim of fraud and
their claim that the interests and
penalty charges imposed by the bank
have no factual basis.36 ςrνll
Clearly, the respondents right to
injunctive relief has not been clearly and
unmistakably demonstrated. The
respondents have not presented
evidence, testimonial or documentary,
other than the bare allegations
contained in their pleadings, to support
their claim of fraud that brings about
the irreparable injury sought to be
avoided by their application for
injunctive relief. Thus, the RTC s grant
of the writ of preliminary injunction in
favor of the respondents, despite the
lack of any evidence of a clear and
unmistakable right on their part,
constitutes grave abuse of discretion
amounting to lack of jurisdiction.
Every court should remember that an
injunction is a limitation upon the
freedom of the defendant s action and
should not be granted lightly or
precipitately. It should be granted only
when the court is fully satisfied that the
law permits it and the emergency
demands it;37 no power exists whose
exercise is more delicate, which requires
greater caution and deliberation, or is
more dangerous in a doubtful case, that
the issuance of an injunction.38
ςrνll
WHEREFORE, the petition is GRANTED.
The April 15, 2005 decision and the
October 10, 2005 resolution of the Court
of Appeals in CA-G.R. SP No. 64349 are
REVERSED and SER ASIDE. The August
1, 2000 and March 7, 2001 orders of the
Regional Trial Court of La Trinidad,
Benguet, Branch 63 are MODIFIED. The
Writ of Preliminary Injunction issued in
Civil Case No. 99-CV-1395 is declared
VOID and is therefore SET ASIDE.
Costs against the respondents.
SO ORDERED.
FIRST DIVISION
G.R. No. 157163               June 25, 2014
BANK OF THE PHILIPPINE
ISLANDS, Petitioner,
vs.
HON. JUDGE AGAPITO L. HONTANOSAS,
JR., REGIONAL TRIAL COURT, BRANCH
16, CEBU CITY, SILVERIO BORBON,
SPOUSES XERXES AND ERLINDA
FACULTAD, AND XM FACULTAD &
DEVELOPMENT
CORPORATION, Respondents.
DECISION
BERSAMIN, J.:
Injunction should not issue except upon a
clear showing that the applicant has a right in
esse to be protected, and that the acts sought
to be enjoined are violative of such right. A
preliminary injunction should not determine
the merits of a case, or decide controverted
facts, for, being a preventive remedy, it only
seeks to prevent threatened wrong, further
injury, and irreparable harm or injustice until
the rights of the parties can be settled.
The Case
Under review at the instance of the defendant,
now the petitioner herein, is the decision
promulgated on July 9, 2002,  whereby the
1
Court of Appeals (CA) upheld the order
issuedon July 5, 2001 in Civil Case No. CEB-
26468 entitled Spouses Silverio & Zosima
Borbon, et al. v. Bank of the Philippine
Islandsby the Regional Trial Court (RTC),
Branch 16, in Cebu City, presided by Hon.
Judge Agapito L. Hontanosas, Jr.
Antecedents
On May 22, 2001, respondents Spouses
Silverio and Zosima Borbon, Spouses Xerxes
and Erlinda Facultad,and XM Facultad and
Development Corporation commenced Civil
Case No. CEB-26468 to seek the declaration
of the nullity of the promissory notes,real
estate and chattel mortgages and continuing
surety agreement they had executed in favor
of the petitioner. They further sought damages
and attorney’s fees, and applied for a
temporary restraining order (TRO) orwrit of
preliminary injunction to prevent the petitioner
from foreclosing on the mortgages against
their properties.
The complaintalleged that the respondents
had obtained a loan from the petitioner, and
had executed promissory notes binding
themselves, jointly and severally, to pay the
sum borrowed; that as security for the
payment of the loan, they had constituted real
estate mortgages on several parcels of land in
favor of the petitioner; and that they had been
made to sign a continuing surety agreement
and a chattel mortgage on their Mitsubishi
Pajero.
It appears that the respondents’obligation to
the petitioner had reached ₱17,983,191.49,
but they had only been able to pay ₱13 Million
because they had been adversely affected by
the economic turmoil in Asia in 1997. The
petitioner required them to issue postdated
checks to cover the loan under threat of
foreclosing on the mortgages. Thus, the
complaint sought a TRO or a writ of
preliminary injunction to stay the threatened
foreclosure.
On June 6, 2001, the petitioner filed its
answer with affirmative defenses and
counterclaim, as well as its oppositionto the
issuance of the writ of preliminary injunction,
contending that the foreclosure of the
mortgages was within itslegal right to do. 2
Also on June 6, 2001 the petitioner filed a
motion to dismiss reiterating its affirmative
defenses, to wit:
I) THAT THE COMPLAINT SHOULD
BE DISMISSED BECAUSE VENUE IS
IMPROPERLYLAID. (RULE 16,
SECITON 1, PARAGRAPH (C);
II) THAT THE COURT HAS
NOTACQUIRED JURISDICTION
OVER THE SUBJECT MATTER
OFTHE CLAIM BECAUSE THE
PROPER LEGAL FEES HAS NOT
BEEN PAID IN ACCORDANCE WITH
RULE 14, OF THE RULES OF
COURT AND CIRCULAR NO. 7 OF
THE SUPREME COURT, SERIES OF
1988;
III) THAT ZOSIMA BORBON’S
COMPLAINT SHOULD BE
DISMISSED BECAUSE PLAINTIFF
ZOSIMA BORBON HAS NO LEGAL
PERSONALITY TO SUE BEING
DECEASED, SPOUSE OF
PLAINTIFF SILVERIO BORBON.
(RULE 16, SECTION 1(d);
IV) THAT THE ESTATE OF ZOSIMA
BORBON BEING AN
INDISPENSABLE PARTY, THE
COMPLAINT SHOULD BE
AMENDED TO INCLUDE THE
ESTATE OF ZOSIMA BORBON.
(RULE 16, SECTION 1(j);
V) THAT THE COMPLAINT
OFPLAINTIFF XM FACULTAD AND
DEVELOPMENT CORPORATION,
SHOULD BE DISMISSED BECAUSE
THERE IS NO BOARD RESOLUTION
AUTHORIZING THE FILING OF THIS
CASE. [RULE 16, SECTION 1 (d)];
VI) THAT THE PLEADING
ASSERTING THE CLAIM STATES
NO CAUSE OF ACTION. 3
On July 5, 2001, the RTC denied the
petitioner’s motion to dismissfor being
unmeritorious,  but granted the respondents’
4
application for preliminary injunction,  to wit:
5
WHEREFORE, premises considered, the
application for preliminary injunction is
GRANTED. Upon filing by the
plaintiffapplicants of a bond in the amount of
₱2,000,000 in favor of defendant to the effect
that applicants will pay to adverse party all
damages which it may sustain by reason of
the injunction, let a writ of preliminary
injunction be issued directing the defendant
and its agents or representatives, to cease
and desist from commencing foreclosure and
sale proceedings of the mortgaged properties;
from taking possession of the Mitsubishi
Pajero subject of the chattel mortgage; and
from using the questioned post-dated checks
as evidence for the filing of complaint against
plaintiffs Facultad for violation of Batas
Pambansa Blg. 22, while the present case is
pending litigation.
This writ of preliminary injunction shall
continue until further orders from the Court.
Notify the parties of this Order.
SO ORDERED. 6 preliminary injunction because it thereby only
The RTC later denied the petitioner’s motion
for reconsideration through its order  of August
7 The CA denied the petitioner’s motion for
22, 2001.
Ruling of the CA
Dissatisfied, the petitioner assailed the orders
of the RTC by petition for certiorariin the CA,
submitting the lone issue of:
WHETHER OR NOT THE PUBLIC
RESPONDENT COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT ISSUED
AN ORDER DENYING THE MOTION TO
DISMISS AND GRANTING THE WRIT OF
PRELIMINARY MANDATORY INJUNCTION.
On July 9, 2002, however, the CArendered
the adverse decision under review, to wit:
WHEREFORE, premises considered, the
assailed order of the Regional Trial Court
(RTC) of Cebu City, Branch 16 dated July 5,
2001 and August 22, 2001 are hereby
AFFIRMED. Let the original records of this
case be remanded immediately to the court a
quo for further proceedings. SO ORDERED.
The CA held that the petitioner’s averment of
non-payment of the proper docket fee by the
respondents asthe plaintiffs in Civil Case No.
CEB-26468 was not substantiated; that even if
the correct docket fee was not in fact paid, the
strict application of the rule thereon could be
mitigated in the interest of justice;  and that
9
Civil Case No. CEB-26468, being a personal
action, was properly filed in Cebu City where
respondent XM Facultad and Development
Corporation’s principal office was located. 10
The CA further held that ZosimaBorbon’s
death rendered respondent Silverio Borbon,
her surviving spouse, the successor to her
estate; that although there was a valid transfer
of interest pending the litigation, the dismissal
of the complaintwould not be in order because
it was permissible under the rules to continue
the action in the name of the original
party;  and that the RTC did not commit grave
11
abuse of discretion in issuing the writ of
applied the pertinent law and jurisprudence. 12
reconsiderationthrough its resolution of
February 12, 2003. 13
Issues
Hence, this appeal, with the petitioner positing
as follows:
1. Whether or not Civil Case No. CEB-
26468 should be dismissed for (a)
non-payment of the correct amount of
docket fee; and (b) improper venue; 14
2. Whether or not the issuance of the
writ of preliminary injunction against
the petitioner, its agents and
representatives, was in order.
Ruling of the Court
The appeal is partly meritorious.
1. Civil Case No. CEB-26468 was a personal
action; hence, venue was properly laid
8
The CA and the RTC held that Civil Case No.
CEB-26468, being for the declaration of the
nullity of a contract of loan and its
accompanying continuing surety agreement,
and the real estate and chattel mortgages,
was a personal action; hence, its filing in Cebu
City, the place of business of one of the
plaintiffs, was correct under Section 2, Rule 4
of the Rules of Court.
The petitioner contends, however, that Civil
Case No. CEB-26468 was a real action that
should be commenced and tried in the proper
court having jurisdiction over the area wherein
the real property involved, or a portion thereof,
was situated; and thatconsequently the filing
and docket fees for the complaintshould be
based on the value of the property as stated
in the certificate of sale attached thereto.
We sustain the lower courts’ holdings.
The determinants of whether an action is of a
real or a personal nature have been fixed by
the Rules of Courtand relevant jurisprudence.
According to Section 1, Rule 4 of the Rules of
Court, a real action is one that affects title to
or possession of real property, or an interest
therein. Such action is to be commenced and
tried in the proper court having jurisdiction
over the area wherein the real property
involved, ora portion thereof, is situated, which
explains why the action is also referred to as a
localaction. In contrast, the Rules of
Courtdeclares all other actionsas personal
actions.  Such actions may include those
15
brought for the recovery of personal property,
or for the enforcement of some contract or
recovery of damages for its breach, or for the
recovery of damages for the commission of an
injury to the person or property.  The venue of
16
a personal action isthe place where the
plaintiff or any of the principal plaintiffs
resides,or where the defendant or any of the
principal defendants resides, or in the case of
a non-resident defendant where he may be
found, at the election of the plaintiff,  for which
17
reason the action is considered a transitory
one.
The complaintin Civil Case No. CEB-26468
pertinently alleged as follows: 18
xxxx
3.1 Plaintiffs signed blank pre-printed
forms of promissory note no. 501253-
000, continuing surety agreement, real
estate mortgages, chattel mortgage
which violates the principle of
mutuality of contracts. These contracts
are in the nature of contracts of
adhesion with provisions favouring
defendant bank and plaintiffs had
nothing to do except to sign the unjust
stipulations which should be declared
as NULL AND VOID. These contracts
do not reflect the real agreement of
the parties and the stipulations are
tilted infavor of defendant bank.
3.2 Moreover, these real estate
mortgages, chattel mortgages and
continuing surety agreement are
securing specific amounts of
obligation and upon the payment of
₱13,000,000 to defendant bank,
automatically, these became functus
de oficioand should be released
immediately without the encumbrance.
3.3 As the chattel mortgage involving
the Mitsubishi Pajero secured only
₱600,000.00, upon liquidation of more
than ₱800,000.00 principal payment,
the same became null and void, and
defendant bank should be ordered to
cancel the mortgage and to be
directed not to take any appropriate
action to take possession.
3.4 In addition, Penbank Checks Nos.
11237 to 11242 with amounts of
₱200,000.00 each and BPI Check
Nos. 019098 & 019099 with amounts
of ₱400,000.00 each, issued against
the will of plaintiffs Facultad and
without any consideration, should be
declared null and void. Defendant
bank should be directed not to deposit
the samefor collection with the drawee
bank.
xxxx
3.6 Furthermore, the total obligation of
plaintiffs is void and baseless because
it is based on illegal impositions of
exorbitant interest and excessive
charges. Interest was converted into
principal which in turn earns interest.
These illegal impositions are
considered by law and jurisprudence
as null and void. These excessive
interest and charges should be
applied to the principal unless there
isapplication, defendant bank is
enriching itself at the expense of
plaintiffs. x x x x
Based on the aforequoted allegations of the
complaintin Civil Case No. CEB-26468, the
respondents seek the nullification of the
promissory notes, continuing surety
agreement, checks and mortgage agreements
for being executed against their will and
vitiated by irregularities, not the recovery of
the possession or title to the properties
burdened by the mortgages. There was no
allegation that the possession of the
properties under the mortgages had already
been transferred to the petitioner in the
meantime. Applying the determinants, Civil
Case No. CEB-26468 was unquestionably a
personal action, for, as ruled in Chua v. Total
Office Products and Services (Topros),Inc.: 19
Well-settled is the rule that an action to annul
a contract of loan and its accessory real
estate mortgageis a personal action. In a
personal action, the plaintiff seeks the
recovery of personal property, the
enforcement of a contractor the recovery of
damages. In contrast, in a real action, the
plaintiff seeks the recovery of real property, or,
as indicated in Section 2 (a), Rule 4 of the
then Rules of Court, a real action is an action
affecting title to real property or for the
recovery of possession, or for partition or
condemnation of, or foreclosure of mortgage
on, real property.
In the Pascual case, relied upon by petitioner,
the contract of sale of the fishpond was
assailed as fictitious for lack of consideration.
We held that there being no contract to begin
with, there is nothing to annul. Hence, we
deemed the action for annulment of the said
fictitious contract therein as one constituting a
real action for the recovery of the fishpond
subject thereof.
We cannot, however, apply the foregoing
doctrine to the instant case. Note that in
Pascual, title to and possession of the subject
fishpond had already passed to the vendee.
There was, therefore, a need to recover the
said fishpond. But in the instant case,
ownership of the parcels of land subject of the
questioned real estatemortgage was never
transferred to petitioner, but remained with
TOPROS. Thus, no real action for the
recovery of real property is involved. This
being the case, TOPROS’ action for
annulment of the contracts of loan and real
estate mortgage remains a personal action.
xxxx
The Court of Appeals finds that Hernandez v.
Rural Bank of Lucena, Inc.provides the proper
precedent in this case. In Hernandez,
appellants contended that the action of the
Hernandez spouses for the cancellation of the
mortgage on their lots was a real action
affecting title to real property, which should
have been filed in the place where the
mortgaged lots were situated. Rule 4, Section
2 (a), of the then Rules of Court, was applied,
to wit:
SEC. 2. Venue in Courts of First Instance. –
(a) Real actions. – Actions affecting title to, or
for recovery of possession, or for partition or
condemnation of, or foreclosure of mortgage
on, real property, shall be commenced and
tried in the province where the property or any
part thereof lies.
The Court pointed out in the Hernandezcase
that with respect to mortgage, the rule on real
actions only mentions an action for
foreclosure of a real estate mortgage. It does
not include an action for the cancellation of a
real estate mortgage. Exclusio unios est
inclusio alterius. The latter thus falls under the
catch-all provision on personal actions under
paragraph (b) of the above-cited section, to
wit:
SEC. 2 (b) Personal actions. – All other
actions may be commenced and tried where
the defendant or any of the defendants
resides or may be found, or where the plaintiff
or any of the plaintiffs resides, at the election
of the plaintiff.
In the same vein, the action for annulment of
a real estate mortgage in the present case
must fall under Section 2 of Rule 4, to wit:
SEC. 2. Venue of personal actions. – All other
actions may be commenced and tried where
the plaintiff or any of the principal plaintiffs
resides, orwhere the defendant or any of the
principal defendants resides, or in the case of
a nonresident defendant where he may be
found, at the election of the plaintiff.
Thus, Pasig City, where the parties reside, is
the proper venue of the action to nullify the
subject loan and real estate mortgage
contracts. The Court of Appeals committed no
reversible error in upholding the orders of the
Regional Trial Court denying petitioner’s
motion to dismiss the case on the ground of
improper venue.
Being a personal action, therefore, Civil Case
No. CEB-26468 was properly brought in the
RTC in Cebu City, where respondent XM
Facultad and Development Corporation, a
principal plaintiff, had its address.
Upon the same consideration, the petitioner’s
contention that the filing and docket fees for
the complaintshould be based on the
assessed values of the mortgaged real
properties due to Civil Case No. CEB-26468
being a real action cannot be upheld for lack
of factual and legal bases.
2. Respondents were not entitled to the writ of
preliminary injunction
In their application for the issuance of the writ
of preliminary injunction, the respondents
averred that the nullity of the loan and
mortgage agreements entitled them to the
relief of enjoining the petitioner from: (a)
foreclosing the real estateand chattel
mortgages; (b)taking possession, by replevin,
of the Mitsubishi Pajero; and (c) depositing the
postdated checks; that respondents Spouses
Facultad would suffer injustice and irreparable
injury should the petitioner foreclose the
mortgages and file criminal complaints for
violation of Batas Pambansa Blg.22 against
them; and that such threatened acts, if done,
would render ineffectual the judgment of the
trial court.  They prayed that the petitioner be
20
enjoined from doing acts that would disturb
their material possession of the mortgaged
properties, manifesting their willingness to
post a bond for the issuance of the writ of
preliminary injunction.21
As mentioned, the RTC issued the writ of
preliminary injunction on July 16, 2001 based
on the foregoing allegations of the
respondents’ application,  and the CA upheld
22
the issuance in its assailed July 9, 2002
decision.23
The petitioner submits that the issuance of the
writ of preliminary injunction constituted a
violation of Administrative Circular (AC) No.
07-99 dated June 25, 1999, and thus
subjected respondent Judge to administrative
sanction;  that injunction could not issue to
24
enjoin the prosecution of the criminal offenses
because such prosecution was imbued with
public interest;  and that the petitioner, as the
25
mortgagee, could not be prohibited from
exercising its legal right to foreclose the
mortgages because foreclosure of the
mortgages was its proper remedy under the
law.26
AC No. 07-99 was issued as a guideline for
lower court judges in the issuance of TROs
and writs of preliminary injunctions to prevent
the implementation of infrastructure projects,
or the seizure and forfeiture proceedings by
the Bureau of Customs, viz:
ADMINISTRATIVE CIRCULAR NO. 07-99
June 25, 1999
TO: ALL JUDGES OF LOWER COURTS RE:
EXERCISE OF UTMOST CAUTION,
PRUDENCE, AND JUDICIOUSNESS IN
ISSUANCE OF TEMPORARY RESTRAINING
ORDERS AND WRITS OF PRELIMINARY
INJUNCTIONS
Despite well-entrenched jurisprudence and
circulars regarding exercise of judiciousness
and care in the issuance of temporary
restraining orders (TRO) or grant of writs
ofpreliminary injunction, reports or complaints
on abuses committed by trial judges in
connection therewith persist. Some even
intimated thatirregularities, including
corruption, might have influenced the
issuance ofthe TRO or the writ of preliminary
injunction.
No less than the President of the Philippines
has requested this Court to issue a circular
reminding judges to respect P.D. No. 1818,
which prohibits the issuance of TROs in cases
involving implementation of government
infrastructure projects. The Office of the
President has likewise brought to the attention
of this Court orders of judges releasing
imported articles under seizure and forfeiture
proceedings by the Bureau of Customs.
Judges are thus enjoined to observe utmost
caution, prudence and judiciousness in the
issuance of TRO and in the grant of writs of
preliminary injunction to avoid any suspicion
that its issuance or grant was for
considerations other than the strict merits of
the case.
Judges should bear in mind that in Garcia v.
Burgos(291 SCRA 546, 571-572 [1998]), this
Court explicitly stated:
Sec. 1 of PD 1818 distinctly provides that "[n]o
court in the Philippines shall have jurisdiction
to issue any restraining order, preliminary
injunction, or preliminary mandatory injunction
in any case, dispute, orcontroversy
involvingan infrastructure project . . . of the
government, . . . to prohibit any person or
persons, entity or government official from
proceeding with, or continuing the execution
or implementation of any such project . . . or
pursuing any lawful activity necessary for such
execution, implementation or operation." At
the risk of being repetitious, we stress that the
foregoing statutory provision expressly
deprives courts of jurisdiction to issue
injunctive writs against the implementation or
execution of an infrastructure project.
Their attention is further invited to Circular No.
68-94, issued on 3 November 1994 by the
OCA OIC Deputy Court Administrator
Reynaldo L. Suarez, on the subject "Strict
Observance of Section 1 of P.D. 1818
Envisioned by Circular No. 13-93 dated March
5, 1993, and Circular No. 20-92 dated March
24, 1992.
Finally, judges should never forget what the
Court categorically declared in Mison v.
Natividad(213 SCRA 734, 742 [1992] that
"[b]y express provision of law, amply
supported by well-settled jurisprudence, the
Collector of Customs has exclusive jurisdiction
over seizure and forfeiture proceedings, and
regular courts cannot interfere with his
exercise thereof or stifleor put it to naught."
The Office of the Court Administrator shall see
to it that this circular is immediately
disseminated and shall monitor
implementation thereof.
STRICT OBSERVANCE AND COMPLIANCE
of this Circular is hereby enjoined.
AC No. 07-99 was irrelevant herein, however,
because Civil Case No. CEB-26468 did not
involve the implementation of infrastructure
projects, or the seizure and forfeiture
proceedings by the Bureau of Customs.
Consequently, the petitioner’s urging that
respondent Judge be held administratively
liable for violating AC No. 07-99 was
misplaced.
However, the RTC’s issuance of the writ of
preliminary injunction to enjoin the petitioner
from proceeding withthe foreclosure of the
mortgages was plainly erroneous and
unwarranted.
A preliminary injunction is an order granted at
any stage of an action prior to the judgment or
final order requiring a party or a court, agency
or a person to refrain from a particular act or
acts.  It is the "strong arm of equity," an
27
extraordinary peremptory remedy that must be
used with extreme caution, affecting as it does
the respective rights of the parties.  The
28
requirements for the issuance of a writ of
preliminary injunction or TRO are enumerated
in Section 3, Rule 58 of the Rules of Court, to
wit:
Section 3. Grounds for issuance of preliminary
injunction. - A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the
relief demanded, and the whole or part
of such relief consists in restraining
the commission or continuance of the
act or acts complained of, or in
requiring the performance of an act or
acts, eitherfor 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.
In City Government of Butuan v. Consolidated
Broadcasting System (CBS), Inc.,  the Court
29
restated the nature and concept of a writ of
preliminary injunction, as follows:
A preliminary injunction is an order granted at
any stage of an action or proceeding prior to
the judgment orfinal order requiring a party or
a court, an agency, or a person to refrain from
a particular act or acts. It may also require the
performance of a particular act or acts, in
which case it is known as a preliminary
mandatory injunction. Thus, a prohibitory
injunction is one that commands a party to
refrain from doing a particular act, while a
mandatory injunction commands the
performance of some positive act to correct a
wrong in the past.
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 facieshowing 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
bystatute. 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. (Bold emphasis supplied)
Under the circumstances averred in the
complaintin Civil Case No. CEB-26468, the
issuance ofthe writ of preliminary injunction
upon the application of the respondents was
improper. They had admittedly constituted the
real estate and chattel mortgages to secure
the performance of their loan obligation to the
petitioner, and, as such, they were fully aware
of the consequences on their rights in the
properties given as collaterals should the loan
secured be unpaid. The foreclosure of the
mortgages would be the remedy provided by
law for the mortgagee to exact payment.  In 30
fact, they did not dispute the
petitioner’sallegations that they had not fully
paid their obligation, and that Civil Case No.
CEB-26468 was precisely brought by them in
order to stave off the impending foreclosure of
the mortgages based on their claim that they
had been compelled to sign pre-printed
standard bank loan forms and mortgage
agreements.
It is true that the trial courts are given
generous latitude to act on applications for the
injunctive writ for the reason that conflicting
claims in an application for the writ more often
than not involve a factual determination that is
not the function of the appellate courts;  and
31
that the exercise of sound discretion by the
issuing courts in injunctive matters ought not
to be interfered with exceptwhen there is
manifest abuse.  Nonetheless, the exercise of
32
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.  Judges should
33
always bear in mind that the writ of preliminary
injunction is issued uponthe satisfaction of two
requisite conditions, namely: (1) the right to be
protected exists prima facie; and (2) the acts
sought to be enjoined are violative of that
right. According toSaulog v. Court of
Appeals,  the applicant must have a sufficient
34
interest or right to be protected, but it is
enough that:-
x x x 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
ofthe 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 ofpreliminary
injunction, the private respondent needs only
to show that it has the ostensible right to the
final relief prayed for in its complaint x x x.
It is also basic that the power to issue a writ of
injunction is to be exercised only where the
reason and necessity therefor are clearly
established, and only in cases reasonably free
from doubt.  For, truly, a preliminary injunction
35
should not determine the merits of a case,  or
decide controverted facts.  As a preventive
37
remedy, injunction only seeks to prevent
threatened wrong,  further injury,  and
38 39
irreparable harm  or injustice  until the rights
40 41
of the parties can be settled.  As an ancillary
1âwphi1
and preventive remedy, it may be resorted to
by a party to protect or preserve his rights
during the pendency of the principal action,
and for no other purpose.  Such relief will
42
accordingly protect the ability of the court to
render a meaningful decision;  it will further
43
serve to guard against a change of
circumstances that will hamper orprevent the
granting of proper relief after a trial on the
merits.  Verily, its essential function is to
44
preserve the status quo between the parties
until the merits of the case can be heard.
Moreover, the applicant must prove that the
violation sought to be prevented would cause
an irreparable injustice.  But the respondents
46
failed to establish the irreparable injury they
would suffer should the writ of preliminary
injunction not be issued. Theyprincipally
feared the loss of their possession and
ownership of the mortgaged properties, and
faced the possibility of a criminal prosecution
for the post-dated checks they issued. But
such fear of potential loss ofpossession and
ownership, or facing a criminal prosecution did
not constitute the requisite irreparable injury
that could have warranted the issuance of the
writ of injunction. "An injury is considered
irreparable," according to Philippine National
Bank v. Castalloy Technology Corporation, 47
x x x if it is of such constant and frequent
recurrence that no fair or reasonable redress
can be had therefor ina court of law, or where
there is no standard by which their amount
canbe measured with reasonable accuracy,
that is, it is not susceptible of mathematical
computation. The provisional remedy of
preliminary injunction may only be resorted to
when there is a pressing necessity to avoid
injurious consequences which cannot be
remedied under any standard of
compensation.
The injury being fearedby the herein
respondents is not of such nature. Ultimately,
36 the amount to which the mortgagee-bank shall
be entitled will be determined by the
disposition of the trial court in the main issue
of the case. We have explained in Equitable
PCI Bank, Inc. v. OJMark Trading, Inc.that all
is not lost for defaulting mortgagors whose
properties were foreclosed by creditors-
mortgagees. The respondents will not be
deprived outrightly of their property, given the
right of redemption granted to them under the
law. Moreover, in extrajudicial foreclosures,
mortgagors have the right toreceive any
surplus in the selling price. Thus, if the
mortgagee is retaining more of the proceeds
of the sale than he is entitled to, this fact
alone will not affect the validity of the sale but
will give the mortgagor a cause of action to
45 recover such surplus.
As a general rule, the courts will not issue
writs of prohibition or injunction – whether
preliminary or final – in order to enjoin or
restrain any criminal prosecution.  But there
48
are extreme cases in which exceptions to the
general rule have been recognized, including:
(1) when the injunction is necessary to afford
adequate protection to the constitutional rights
of the accused; (2) when it is necessary for
the orderly administration of justice or to avoid
oppression or multiplicity of actions; (3) when
there is a prejudicial question that is sub
judice; (4) when the acts of the officer are
without or in excess of authority; (5) when the
prosecution is under an invalid law, ordinance
or regulation; (6) when double jeopardy is
clearly apparent; (7) when the court has no
jurisdiction over the offense; (8) when it is a
case of persecution rather than prosecution;
(9) when the charges are manifestly false and
motivated by the lust for vengeance; and (10)
when there is clearly no prima faciecase
against the accused and a motion to quash on
that ground has been denied.  However, the
49
respondents did not sufficiently show that Civil
Case No. CEB-26468 came under any of the
foregoing exceptions. Hence, the issuance by
the RTC of the writ of preliminary injunction to
enjoin the petitioner from instituting criminal
complaints for violation of BP No. 22 against
the respondents was unwarranted.
Every court should remember that an
injunction should not be granted lightly or
precipitately because it isa limitation upon the
freedom of the defendant's action. It should be
granted only when the court is fully satisfied
that the law permits it and the emergency
demands it,  for no power exists whose
50
exercise is more delicate, which requires
greater caution and deliberation, or is more
dangerous in a doubtful case, than the
issuance of an injunction.51
In view of the foregoing, the CA grossly erred
in not declaring that the RTC committed grave
abuse of discretion in granting the application
of the respondents as the plaintiffs in Civil
Case No. CEB-26468. The RTC apparently
disregarded the aforecited well-known norms
and guidelines governing the issuance of the
writ of injunction. Thereby, the RTC acted
capriciously and arbitrarily. Grave abuse of
discretion means either that the judicial or
quasi-judicial power was exercised in an
arbitrary or despotic manner by reason of
passion or personal hostility, or that the
respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform
the duty enjoined or to act in contemplation of
law, such as when such judge, tribunal or
board exercising judicial or quasi-judicial
powers acted in a capricious or whimsical
manner as to be equivalent to lack of
jurisdiction. 52
WHEREFORE, the Court PARTIALLY
GRANTS the petition for review on certiorari;
MODIFIES the decision promulgated on July
9, 2002 by annulling and setting aside the writ
of preliminary injunction in Civil Case No.
CEB-26468 issued by the Regional Trial
Court, Branch 16, in Cebu City for being
devoid of factual and legal bases; ORDERS
the Regional Trial Court, Branch 16, in Cebu
City to proceed with dispatch in Civil Case No.
CEB-26468; and DIRECTS the respondents
to pay the costs of suit.
SO ORDERED.
SECOND DIVISION
January 25, 2017
G.R. No. 215807
ROSARIO E. CAHAMBING, Petitioner
vs.
VICTOR ESPINOSA and JUANA ANG,
Respondent
DECISION
PERALTA, J.:
Before this Court is the Petition for Keview
on Certiorari under Rule 45 of the Rules of
Court dated November 28, 2014 of petitioner
Rosario E. Cahambing that seeks to reverse
and set aside the Decision  dated November
1
29, 2013 and Resolution dated October 28,
2014 of the Court of Appeals (CA), affirming
the Order  dated September 22, 2009 and
2
Resolution dated February 25, 2010 of the
Regional Trial Court (RTC), Branch 25,
Maasin City, Southern Leyte regarding the
issuance of a writ of preliminary injunction in
Civil Case No. R-2912 for Annulment of Deed
of Extra-Judicial Partition.
The facts follow.
Petitioner and respondent Victor Espinosa are
siblings and the children of deceased spouses
Librado and Brigida Espinosa, the latter
bequeathing their properties, among which is
Lot B or Lot 3 54 with an area of 1,341 square
meters, more or less, situated in Maasin City,
Southern Leyte, to the said siblings in the
same deceased spouses' respective Last
Wills and Testaments which were duly
probated.
Deceased Librado and Brigida bequeathed
their respective shares over Lot 354 to
respondent Victor Espinosa, however, Brigida
subsequently revoked and cancelled her will,
giving her one-half (1/2) share over Lot 354 to
petitioner.
Brigida Espinosa and respondent Victor
Espinosa, after the death of Librado Espinosa,
entered into an Extrajudicial Partition of Real
Estate subdividing Lot 354 into Lot 354-A,
with an area of 503.5 square meters
adjudicated to Brigida Espinosa, and Lot 354-
B, with an area of 837.5 square meters,
adjudicated to respondent Victor Espinosa,
who eventually obtained a certificate of title in
his name.
Not being included in the partition of Lot 354,
petitioner filed a complaint against respondent
Victor Espinosa and his representative,
respondent Juana Ang, for, among others, the
annulment of the Extrajudicial Partition of Real
Property which was docketed as Civil Case
No. R-2912.
Incidentally, a commercial building named as
Espinosa Building stands on Lot No. 354. At
the time of the filing of the complaint, the
same building had twelve (12) lessees, four
(4) of whom pay rentals to petitioner, namely:
Pacifica Agrivet Supplies, Family Circle,
Ariane's Gift Items, and Julie's Bakeshop.
Petitioner alleged that respondent Juana Ang
prevailed upon Pacifica Agrivet Supplies not
to renew its lease contract with petitioner but
to enter into a contract of lease with
respondent Victor Espinosa instead.
According to petitioner, respondent Juana
Ang also threatened to do the same thing with
Julie's Bakeshop.
In one of the pre-trial conferences, the Clerk
of Court, acting as Commissioner, issued an
Order dated April 16, 1998 directing the
parties to maintain the status quo.
Thereafter, respondent Victor Espinosa filed
an Application for the Issuance of a Writ of
Preliminary Injunction with Prayer for the
Issuance of a Temporary Restraining Order
dated March 3, 2009 against petitioner
alleging that the latter violated the status quo
ante order by allowing her sons to occupy the
space rented by Jhanel' s Pharmacy which is
one of respondent Victor Espinosa's tenants.
Respondent Victor Espinosa, through his
attorney-in-fact, private respondent Juana
Ang, alleged that petitioner's sons constructed
a connecting door through the partition
separating their cellular phone shop from
Jhanel' s Pharmacy and that the contract of
lease between the latter and respondent
Victor Espinosa is still subsisting, hence, the
entry by petitioner's sons into the pharmacy's
commercial space disturbed the status quo
ante.
The RTC, finding merit to the application for
temporary restraining order filed by
respondent Victor Espinosa, granted the
same on March 6, 2009. Thereafter, the RTC,
on September 22, 2009, issued an Order for
the issuance of a writ of preliminary injunction,
the dispositive portion of which reads as
follows:
IN VIEW OF THE FOREGOING, the
defendant's prayer for the issuance of a writ of
preliminary injunction is GRANTED.
Accordingly, upon defendant's filing, within ten
(10) days from receipt hereof, of the injunction
bond in the sum of fifty thousand pesos
(PhP50,000.00) conditioned on defendant's
paying all damages, the plaintiff may sustain
by reason of this injunction in case the Court
should finally decide that the defendant is not
entitled thereto, let a writ of preliminary
injunction issue enjoining or restraining the
plaintiff and all those claiming rights under her
from disturbing the possession of the
defendant to the leased premises or the
"status quo ante" until after this case shall
have been decided on the merits and/or until
further orders from this Court.
SO ORDERED.
After the denial of petitioner's motion for
reconsideration in a Resolution dated
February 25, 2010, petitioner filed a petition
on certiorari under Rule 65 of the Rules of
Court, with the CA imputing grave abuse of
discretion on the part. of the RTC when it
granted the application for the issuance of a
writ of preliminary injunction filed by
respondent Victor Espinosa. According to
petitioner, respondents themselves violated
the status quo ante order when they wrested
the space rented by Pacifica Agrivet Supplies
from petitioner's control and that there was no
compliance with the requisites for the
issuance of the writ of preliminary injunction.
The CA, on November 29, 2013, dismissed
petitioner's petition on certiorari, thus:
WHEREFORE, the petition is DENIED. The
Order and the Resolution, dated September
22, 2009 and February 25, 2010, respectively,
both issued by respondent court in Civil Case
No. R-2912 STAND.
SO ORDERED.
In a Resolutior1 dated October 28, 2014, the
CA denied petitioner's motion for
reconsideration. Hence, the present petition.
Petitioner comes before this Court with the
following issues for
resolution:
I.
ISSUES FOR RESOLUTION
A.
HE WHO SEEKS EQUITY MUST DO
EQUITY. PRIVATE RESPONDENTS TOOK
THE LAW INTO THEIR OWN HANDS BY
WRESTING CONTROL OF THE SPACE
BEING RENTED OUT TO PACIFICA
AGRIVET SUPPLIES AND UNDER THE
CONTROL OF MRS. ROSARIO
CAHAMBING. THE HONORABLE COURT
OF APPEALS COMMITTED LEGAL ERROR
IN VALIDATING THE WRIT OF
PRELIMINARY INJUNCTION GRANTED BY
THE HONORABLE RTC IN FAVOR OF
PRIVATE RESPONDENTS DESPITE THE
LATTER'S CONDUCT WHICH DIRTIED AND
SULLIED THEIR HANDS.
B.
THE WRIT OF PRELIMINARY INJUNCTION
IS GRANTED ONLY IN EXTRAORDINARY
CASES WHERE THE REQUISITES ARE
COMPLIED WITH. THE HONORABLE
COURT OF APPEALS COMMITTED LEGAL
ERRORS IN VALIDATING THE WRIT OF
PRELIMINARY INJUNCTION GRANTED BY
THE HONORABLE RTC OF MAASIN CITY
DESPITE THE LACK OF URGENCY AND
DESPITE THE FACT THAT RESPONDENTS'
CLAIM FOR DAMAGES ARE
QUANTIFIABLE.
According to petitioner, the CA turned a blind
eye and failed to consider respondents'
violation of the status quo when it wrested
possession and control of the space leased to
Pacifica Agrivet Supplies and tried to do the
same with Lhuillier Pawnshop; thus,
committing a grave error and amounts to
discrimination since the CA recognized the
status quo as the situation where petitioner
was the lessor of Pacifica Agrivet Supplies.
Petitioner further claims that respondents
failed to prove the elements before an
injunction could be issued and that the CA
committed an error in validating the writ of
preliminary injunction without those requisites.
In particular, petitioner avers the following
contentions: (1) the damage claimed by
respondents is quantifiable at ₱12,000.00 per
month, hence, not irreparable; (2) respondent,
Victor Espinosa is at best a co-owner of the
subject property, while respondent Juana Ang
is a stranger, and a co-owner cannot exclude
another co-owner, hence, respondent Victor
Espinosa's right is not clear and unmistakable;
(3) there is no urgency involved because the
application for injunction was filed more than
one year after the incident in question; (4)
contrary to the conclusion of the CA, the
space occupied by Jhanel' s Pharmacy was
voluntarily surrendered to petitioner by the
lessee; and (5) the CA committed grave legal
errors when it failed to correct the RTC's
issuance of the writ of preliminary injunction.
In their Comment  dated June 4, 2015,
3 of a litigation
respondents argue that they did not have
sullied hands when they applied for the writ of
preliminary injunction. They also point out that
the issuance of the writ of preliminary
injunction was strictly in accordance with the
Revised Rules on Civil Procedure.
Petitioner, in her Reply  dated August 14,
4
2015, reiterated her arguments contained in
the petition for review.
1âwphi1
The present petition is void of any merit.
A close reading of the arguments raised by
petitioner would show that they are factual in
nature. A petition for review filed under Rule
45 may raise only questions of law.  The
5
factual findings of the Court of Appeals, when
supported by substantial evidence, are
generally conclusive and binding on the
parties and are no longer reviewable unless
the case falls under the recognized
exceptions.   This court is not a trier of facts
6
and we are not dutybound to re-examine
evidence. 7
Nevertheless, the CA did not err in ruling that
the RTC did not commit any grave abuse of
discretion in issuing the questioned writ of
preliminary injunction.
In Philippine National Bank v. RJ Ventures
Realty and Development Corporation, et
al.,   this Court exhaustively discussed the
8
nature of a writ of preliminary injunction, thus:
Foremost, we reiterate that the sole object of
a preliminary injunction is to maintain the
status quo until the merits can be heard.  A9
preliminary injunction   is an order granted at
10
any stage of an action prior to judgment or
final order, requiring a party, court, agency, or
person to refrain from a parti.cular act or acts.
It is a preservative remedy to ensure the
protection of a party's 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
would be useless as far as the party applying
for the writ is concerned.  11
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 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.
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.  Indubitably, this Court has likewise
12
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.   Sine dubio, the grant
13
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.   Hence, the exercise of
14
judicial discretion by a court in injunctive
matters must not be interfered with except
when there is grave abuse of
discretion.   Grave abuse of discretion in the
15
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.16
This Court agrees with the CA and the RTC
that the elements for the issuance of a writ of
preliminary injunction are present in this case.
As aptly ruled by the CA:
In this case, respondent court correctly found
that private respondent Victor Espinosa had
established a clear and unmistakable right to
a commercial space heretofore occupied by
Jhanel's Pharmacy. He had an existing
Contract of Lease with the pharmacy up to
December 2009. Without prejudging the main
case, it was established that, at the time of the
issuance of the status quo order dated April
16, 1998, Jhanel' s Pharmacy was recognized
as one of private respondent Victor Espinosa'
s tenants. In fact, petitioner identified only
Pacifica Agrivet Supplies, Family Circle,
Ariane's Gift Items and Julie's Bakeshop. As
such, pursuant to the status quo order, it is
private respondent Victor Espinosa who must
continue to deal with Jhanel's Pharmacy.
Correspondingly, the commercial space
occupied by Jhanel' s Pharmacy must be
deemed to be under the possession and
control of private respondent Victor Espinosa
as of the time of the issuance of the status
quo order. The right of possession and control
is a clear right already established by the
circumstances obtaining at that time. Hence,
petitioner's act of entering the premises of
Jhanel's Pharmacy, through her sons, is a
material and substantial violation of private
respondent Victor Espinosa's right, which act
must be enjoined.
The RTC was also able to make the following
factual findings that shows the urgency and
the necessity of the issuance of the writ of
preliminary injunction in order to prevent
serious damage:
By allowing the plaintiff to disturb the status
quo ante which, for purposes of this instant
application, is limited to the admission by the
plaintiff regarding the lease by twelve lessees,
including Jhanel's Pharmacy, of the subject
commercial building, the rentals of which only
four pertains to her, excluding Jhanel's
Pharmacy, great and irreparable injury would
result to defendant not just because he would
be deprived of his right to collect rent from
Jhanel's Pharmacy but more importantly,
because it would make doing business with
him risky, unstable and unsound, especially
with respect to his other tenants having
existing contracts with the defendant.
All of the above findings and considerations
expounded in the CA' s assailed decision and
resolution contain no reversible error, thus,
they should not be disturbed. It must always
be remembered that the issuance of a writ of
preliminary injunction rests entirely on the
discretion of the court and is generally not
interfered with except in cases of manifest
abuse.   In this case, no manifest abuse can
17
be attributed to the RTC that issued the
questioned writ. This Court has also held that
no grave abuse of discretion can be attributed
to a judge or body issuing a writ of preliminary
injunction where a party has not been
deprived of its day in court as it was heard
and it exhaustively presented all its arguments
and defenses.   Verily, petitioner was given
18
her day in court to present her side but as in
all litigations, only one party prevails.
WHEREFORE, the Petition for Review
on Certiorari under Rule 45 of the Rules of
Court dated November 28, 2014 of petitioner
Rosario E. Cahambing is DENIED.
Consequently, the Decision dated November
29, 2013 and Resolution dated October 28,
2014 of the Court of Appeals, affirming the
Order dated September 22, 2009 and
Resolution dated February 25, 2010 of the
Regional Trial Court, Branch 25, Maasin City,
Southern Leyte, are AFFIRMED.
SO ORDERED.
THIRD DIVISION
G.R. No. 197802, November 11,
2015
ZUNECA PHARMACEUTICAL, AKRAM
ARAIN AND/OR VENUS ARAIN, M.D.
DBA ZUNECA
PHARMACEUTICAL, Petitioners, v. NA
TRAPHARM, INC., Respondent.
RESOLUTION
VILLARAMA, JR., J.:
This is a petition for review1 under Rule
45 of the 1997 Rules of Civil Procedure,
as amended, assailing the April 18,
2011 Decision2 and July 21, 2011
Resolution3 of the Court of Appeals (CA)
in the petition for certiorari docketed as
CA-G.R. SP No. 103333 granting a
permanent injunction in favor of
respondent Natrapharm, Inc. and
against petitioner Zuneca
Pharmaceutical.
The facts follow:
Respondent is an all-Filipino
pharmaceutical company which
manufactures and sells a medicine
bearing the generic name "CITICOLINE,"
which is indicated for heart and stroke
patients. The said medicine is marketed
by respondent under its registered
trademark "ZYNAPSE," which
respondent obtained from the
Intellectual Property Office (IPO) on
September 24, 2007 under Certificate of
Trademark Registration No. 4-2007-
005596. With its registration, the
trademark "ZYNAPSE" enjoys protection
for a term of 10 years from September
24, 2007.4
In addition, respondent obtained from
the Bureau of Food and Drugs (BFAD)
all necessary permits and licenses to
register, list and sell its "ZYNAPSE"
medicine in its various forms and
dosages.5
Allegedly unknown to respondent, since
2003 or even as early as 2001,
petitioners have been selling a medicine
imported from Lahore, Pakistan bearing
the generic name "CARBAMAZEPINE,"
an anti-convulsant indicated for
epilepsy, under the brand name
"ZYNAPS," which trademark is however
not registered with the IPO. "ZYNAPS" is
pronounced exactly like "ZYNAPSE."6
Respondent further alleged that
petitioners are selling their product
"ZYNAPS" CARBAMAZEPINE in
numerous drugstores in the country
where its own product "ZYNAPSE"
CITICOLINE is also being sold.7
Moreover, respondent claimed that the
drug CARBAMAZEPINE has one
documented serious and disfiguring
side-effect called "Stevens-Johnson
Syndrome," and that the sale of the
medicines "ZYNAPSE" and "ZYNAPS" in
the same drugstores will give rise to
medicine switching.8

On October 30, 2007, respondent sent
petitioners a cease-and-desist demand
letter, pointing out that:
a. "ZYNAPSE" is the
registered trademark of
[respondent], and that as
such owner, it has
exclusive trademark right
under the law to the use
thereof and prevent others
from using identical or
confusingly similar marks,
and that [petitioners] must
stop the use of "ZYNAPS"
for being nearly identical
to "ZYNAPSE"; and
b. Because there is confusing
similarity between
"ZYNAPSE" and "ZYNAPS,"
there is a danger of
medicine switching, with
the patient on "ZYNAPSE"
medication placed in a
more injurious situation
given the Steven-Johnson
Syndrome side effect of
the "ZYNAPS"
CARBAMAZEPINE.9
Petitioners refused to heed the above
demand, claiming that they had prior
use of the name "ZYNAPS" since year
2003, having been issued by the BFAD a
Certificate of Product Registration (CPR)
on April 15, 2003, which allowed them
to sell CARBAMAZEPINE under the brand
name "ZYNAPS."10
On November 29, 2007, respondent
filed a complaint against petitioners for
trademark infringement for violation of
Republic Act (R.A.) No. 8293, or
the Intellectual Property Code of the
Philippines (IPC), with prayer for a
temporary restraining order (TRO)
and/or writ of preliminary injunction. To
justify the TRO/writ of preliminary
injunction, respondent cited Section
12211 of R.A. No. 8293, under which the
registration of "ZYNAPSE" gives it the
exclusive right to use the said name as
well as to exclude others from using the
same.12 In addition, respondent argued
that under Sections 13813 and 147.114 of
the IPC, certificates of registration are
prima facie evidence of the registrant's
ownership of the mark and of the
registrant's exclusive right to use the
same.15 Respondent also invoked the
case of Conrad and Company, Inc. v.
Court of Appeals16 where it was ruled
that an invasion of a registered mark
entitles the holder of a certificate of
registration thereof to injunctive relief.17
In their answer, petitioners argued that
they enjoyed prior use in good faith of
the brand name "ZYNAPS," having
submitted their application for CPR with
the BFAD on October 2, 2001, with the
name "ZYNAPS" expressly indicated
thereon. The CPR was issued to them on
April 15, 2003.18 Moreover, petitioners
averred that under Section 15919 of the
IPC their right to use the said mark is
protected.20
In its December 21, 2007 Order,21 the
Regional Trial Court (RTC) denied
respondent's application for a TRO,
ruling that even if respondent was able
to first register its mark "ZYNAPSE" with
the IPO in 2007, it is nevertheless
defeated by the prior actual use by
petitioners of "ZYNAPS" in 2003.
In its March 12, 2008 Order,22 the RTC
denied the application for a writ of
preliminary injunction, reiterating the
reasons stated in the order denying the
application for a TRO:
In this Court's objective evaluation,
neither party is, at this point, entitled to
any injunctive solace. Plaintiff, while
admittedly the holder of a registered
trademark under the IPC, may not
invoke ascendancy or superiority of its
CTR [certificate of trademark
registration] over the CPR [certificate of
product registration of the BFAD] of the
defendants, as the latter certificate is, in
the Court's opinion, evidence of its
"prior use". Parenthetically, the plaintiff
would have been entitled to an
injunction as against any or all third
persons in respect of its registered mark
under normal conditions, that is, in the
event wherein Section 159.1 would not
be invoked by such third person. Such is
the case however in this litigation.
Section 159 of the IPC explicitly curtails
the registrant's rights by providing for
limitations on those rights as against a
"prior user" under Section 159.1 xxx.23
Via a petition for certiorari with an
application for a TRO and/or a writ of
preliminary injunction, respondent
questioned before the CA the RTC's
denial of the application for a writ of
preliminary injunction.
On June 17, 2008, the CA issued a
Resolution24 denying respondent's
application for TRO and/or preliminary
injunction for lack of merit. The CA
found no compelling reason to grant the
application for TRO and/or preliminary
injunction because there was no
showing that respondent had a clear
and existing right that will be violated
by petitioners. Respondent moved for
reconsideration but was denied by the
CA in its July 31, 2008 Resolution.25 cralawred
However, contrary to its earlier
resolutions denying the application for a
TRO/preliminary injunction, the CA, in
its April 18, 2011 Decision, upheld the
allegations of respondent that it is
entitled to injunctive relief on the basis
of its IPO registration and permanently
enjoined petitioners from the
commercial use of "ZYNAPS."
The fallo of the CA Decision reads:
WHEREFORE, premises considered, the
Petition for Certiorari is GRANTED. The
assailed Omnibus Order dated 12 March
2008 of the Regional Trial Court, Branch
93 of Quezon City in Civil Case No. Q-
07-61561 is REVERSED and SET
ASIDE, and a new one is
entered permanently ENJOINING def
endants-respondents, their employees,
agents, representatives, dealers,
retailers, and/or assigns, and any and
all persons acting in their behalf, from
manufacturing, importing, distributing,
selling and/or advertising for sale, or
otherwise using in commerce, the anti-
convulsant
drug CARBAMAZEPINE under the
brand name and mark "ZYNAPS," or
using any other name which is similar or
confusingly similar to petitioner's
registered trademark "ZYNAPSE,"
including filing of application for
permits, license, or certificate of product
registration with the Food and Drug
Administration and other government
agencies.
SO ORDERED.26 (Underscoring and
additional emphasis supplied)
Petitioners' motion for reconsideration
was denied by the CA in its Resolution
dated July 21, 2011.
Hence, this petition for review.
On December 2, 2011, the RTC
rendered a Decision27 on the merits of
the case. It found petitioners liable to
respondent for damages. Moreover, it
enjoined the petitioners from using
"ZYNAPS" and ordered all materials
related to it be disposed outside the
channel of commerce or destroyed
without compensation.28
Respondent moved to dismiss the
present petition in view of the December
2, 2011 RTC Decision which functions as
a full adjudication on the merits of the
main issue of trademark infringement.
Respondent contended that the present
petition is moot and academic, it only
involving an ancillary writ.29
Petitioners, on the other hand, opposed
the motion to dismiss arguing that the
December 2, 2011 RTC Decision had not
yet attained finality, thus, the present
petition had not yet been rendered
moot.
The two issues which need to be
addressed are:
1) Whether the decision on the merits
rendered the issues in this case moot
and academic? and
2) Whether the CA may order
a permanent injunction in deciding a
petition for certiorari against the denial
of an application for a preliminary
injunction issued by the RTC?
We hold that the issues raised in the
instant petition have been rendered
moot and academic given the RTC's
December 2, 2011 Decision on the
merits of the case.
Rule 58 of the Rules of Court provides
for both preliminary and permanent
injunction. Section 1, Rule 58 provides
for the definition of preliminary
injunction:
SECTION 1. Preliminary injunction
defined; classes. — 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 a person to refrain from a
particular act or acts. It may also
require the performance of a particular
act or acts, in which case it shall be
known as a preliminary mandatory
injunction. (Emphasis supplied)
On the other hand, Section 9 of the
same Rule defines a permanent
injunction in this wise:
SEC. 9. When final injunction
granted. — If after the trial of the
action it appears that the applicant is
entitled to have the act or acts
complained of permanently enjoined,
the court shall grant a final injunction
perpetually restraining the party or
person enjoined from the commission or
continuance of the act or acts or
confirming the preliminary mandatory
injunction. (Emphasis supplied)
A writ of preliminary injunction is
generally based solely on initial and
incomplete evidence.30 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.31 As such, the findings of fact
and opinion of a court when issuing the
writ of preliminary injunction
are interlocutory in nature and made
even before the trial on the merits is
commenced or terminated.32
By contrast a permanent injunction,
based on Section 9, Rule 58 of the Rules
of Court, forms part of the judgment on
the merits and it can only be properly
ordered only on final judgment. A
permanent injunction may thus be
granted after a trial or hearing on the
merits of the case and a decree granting
or refusing an injunction should not be
entered until after a hearing on the
merits where a verified answer
containing denials is filed or where no
answer is required, or a rule to show
cause is equivalent to an answer.33
As such a preliminary injunction, like
any preliminary writ and any
interlocutory order, cannot survive the
main case of which it is an incident;
because an ancillary writ of preliminary
injunction loses its force and effect after
the decision in the main petition.34
In Casilan v. Ybañez,35 this Court stated:
As things stand now, this Court can no
longer interfere with the preliminary
injunctions issued by the Leyte court in
its cases Nos. 2985 and 2990, because
such preliminary writs have already
been vacated, being superseded and
replaced by the permanent injunction
ordered in the decision on the merits
rendered on 21 March 1962. And as to
the permanent injunction, no action
can be taken thereon without
reviewing the judgment on the
merits, such injunction being but a
consequence of the pronouncement that
the credits of Tiongson and Montilla are
entitled to priority over that of
Casilan. Since the court below had
the power and right to determine
such question of preference, its
judgment is not without, nor in
excess of, jurisdiction; and even
assuming that its findings are not
correct, they would, at most,
constitute errors of law, and not
abuses of discretion, correctible
by  certiorari . The obvious remedy
for petitioner Casilan was a timely
appeal from the judgment on the
merits to the Court of Appeals, the
amount involved being less than
P200,000. But the judgment has
become final and unappealable and can
not be set aside
through certiorari proceedings.
(Emphasis supplied)
Here, this Court is being asked to
determine whether the CA erred by
issuing a permanent injunction in a case
which questioned the propriety of the
denial of an ancillary writ. But with the
RTC's December 2, 2011 Decision on
the case for "Injunction, Trademark
Infringement, Damages and
Destruction," the issues raised in the
instant petition have been rendered
moot and academic. We note that the
case brought to the CA on a petition
for certiorari merely involved the RTC's
denial of respondent's application for a
writ of preliminary injunction, a mere
ancillary writ. Since a decision on the
merits has already been rendered and
which includes in its disposition a
permanent injunction, the proper
remedy is an appeal36 from the decision
in the main case.
WHEREFORE, in light of all the
foregoing, the petition is hereby DENIED
for being moot and academic.
SO ORDERED.
SPECIAL THIRD DIVISION
April 5, 2017
G.R. No. 217617
CARMELITA T. BORLONGAN, Petitioner,
vs.
BANCO DE ORO (formerly EQUITABLE PCI
BANK), Respondent.
RESOLUTION
VELASCO, JR, J.:
Nature of the Case
Before the Court are two consolidated
petitions invariably assailing the foreclosure
sale of a property without properly serving the
summons upon its owners.
Factual Antecedents
Sometime in 1976, Eliseo Borlongan, Jr.
(Eliseo) and his wife Carmelita, acquired a
real property located at No. 111, Sampaguita
St., Valle Verde II, Pasig City covered by
Transfer Certificate of Title (TCT) No. 0421
(the subject property). In 2012, they went to
the Registry of Deeds of Pasig City to obtain a
copy of the TCT in preparation for a
prospective sale of the subject property. To
their surprise, the title contained an annotation
that the property covered thereby was the
subject of an execution sale in Civil Case (CC)
No. 03-0713 pending before Branch 134 of
the Regional Trial Court of Makati City (Makati
RTC).
Petitioner immediately procured a copy of the
records of CC No. 03- 0713 and found out
that respondent Banco de Oro (BDO),
formerly Equitable PCI Bank, filed a complaint
for sum of money against Tancho
Corporation, the principal debtor of loan
obligations obtained from the bank. Likewise
impleaded were several persons, including
Carmelita, who supposedly signed four (4)
security agreements totaling ₱l3,500,000 to
guarantee the obligations of Tancho
Corporation.
It appears from the records of CC No. 03-
0713 that on July 2, 2003, the Makati R TC
issued an Order directing the service of
summons to all the defendants at the
business address of Tancho Corporation
provided by BDO: Fumakilla Compound,
Amang Rodriguez Avenue, Brgy. Dela Paz,
Pasig City (Fumakilla Compound).
Parenthetically, the records of CC No. 03-
0713 show that respondent BDO already
foreclosed the Fumakilla Compound as early
as August 21, 2000, following Tancho
Corporation's failure to pay its obligation, and
BDO already consolidated its ownership of the
property on November 16, 2001.
Understandably, on July 31, 2003, the
process server filed an Officer's Return stating
that summons remained unserved as the
"defendants are no longer holding office at
[Fumakilla Compound]."
On October 27, 2003, after the single attempt
at personal service on Carmelita and her co-
defendants, BDO moved for leave to serve the
summons by publication. On October 28,
2003, the RTC granted the motion.
On August 10, 2004, BDO filed an ex-parte
Motion for the Issuance of a Writ of
Attachment against the defendants, including
Carmelita. During the hearing on the motion,
BDO submitted a copy of the title of the
subject property. The Makati RTC thereafter
granted BDO's motion and a Writ of
Attachment was issued against the
defendants in CC No. 03-0713, effectively
attaching the subject property on behalf of
BDO.
On December 20, 2005, BDO filed an ex-parte
motion praying, among others, that the
summons and the complaint be served
against Carmelita at the subject property. The
Makati RTC granted the motion. On February
9, 2006, the Sheriff filed a return stating that
no actual personal service was made as
Carmelita "is no longer residing at the given
address and the said address is for 'rent,' as
per information gathered from the security
guard on duty."
On May 30, 2006, however, BDO filed a
manifestation stating that it had complied with
the October 28, 2003 Order of the Makati RTC
having caused the publication of the alias
summons and the complaint in People's
Taliba on May 15, 2006.
Thereafter, upon BDO's motion, the Makati
RTC declared the defendants in CC No. 03-
0713, including Carmelita, in default. BDO
soon after proceeded to present its evidence
ex-parte.
On November 29, 2007, the Makati RTC
rendered a Decision holding the defendants in
CC No. 03-0713 liable to pay BDO
₱32,543,856.33 plus 12% interest per
annum from the time of the filing of the
complaint until fully paid and attorney's fees.
The Makati RTC decision was published on
June 9, 2008.
On August 20, 2008, the Makati RTC issued a
Writ of Execution upon BDO's motion. The
Order states that in the event that the
judgment obligors cannot pay all or part of the
obligation, the sheriff shall levy upon the
properties of the defendants to satisfy the
award.
On October 28, 2008, the Makati R TC' s
sheriff filed a Report stating that he tried to
serve the Writ of Execution upon the
defendants at Fumakilla Compound but he
was not able to do so since the defendants
were no longer holding office thereat. The
Sheriff also reported that, on the same day,
he went to the subject property to serve the
execution but likewise failed in his attempt
since Carmelita was no longer residing at the
said address.
On November 11, 2008, BDO filed a Motion to
Conduct Auction of the subject property. The
motion was granted by the Makati RTC on
May 5, 2009 so that the subject property was
sold to BDO, as the highest bidder, on
October 6, 2009.
Following the discovery of the sale of their
property, Eliseo executed an affidavit of
adverse claim and, on January 21, 2013, filed
a Complaint for Annulment of Surety
Agreements, Notice of Levy on Attachment,
Auction Sale and Other Documents, docketed
as CC No. 73761, with the Regional Trial
Court of Pasig City (Pasig RTC).  1
He alleged in his Complaint that the subject
property is a family home that belongs to the
conjugal partnership of gains he established
with his wife. He further averred that the
alleged surety agreements upon which the
attachment of the property was anchored
were signed by his wife without his consent
and did not redound to benefit their family.
Thus, he prayed that the surety agreements
and all other documents and processes,
including the ensuing attachment, levy and
execution sale, based thereon be nullified.
BDO filed a Motion to Dismiss the Complaint,
asserting that the Pasig RTC has no
jurisdiction to hear Eliseo's Complaint, the
case was barred by res judicata given the
Decision and orders of the Makati RTC, and,
finally, the Complaint failed to state a cause of
action.
In an Order dated May 31, 2013, the Pasig R
TC dismissed the case citing lack of
jurisdiction. The RTC held that it could not
pass upon matters already brought before the
R TC Makati and, citing Spouses Ching
v.Court of Appeals,  the husband of a
2
judgment debtor is not a stranger to a case
who can file a separate and independent
action to determine the validity of the levy and
sale of a property.
On a motion for reconsideration filed by
Eliseo, the Pasig RTC reinstated the case with
qualification. Relying on Buado v. Court of
Appeals,  the Pasig RTC held that since
3
majority of Eliseo's causes of action were
premised on a claim that the obligation
contracted by his wife has not redounded to
their family, and, thus, the levy on their
property was illegal, his filing of a separate
action is not an encroachment on the
jurisdiction of the Makati R TC, which ordered
the attachment and execution in the first
place.
The Pasig RTC clarified, however, that it
cannot annul the surety agreements
supposedly signed by Carmelita since Eliseo
was not a party to those agreements and the
validity and efficacy of these contracts had
already been decided by the Makati RTC.
Both Eliseo and BDO referred the Pasig
RTC's Decision to the Court of Appeals (CA).
In its petition, docketed as CA-G.R. SP No.
133994, BDO contended that it was an error
for the Pasig RTC to apply Buado as it does
not apply squarely to the circumstances of the
case and has not superseded Ching. BDO
maintained that by reinstating the complaint,
Pasig R TC has violated the rule prohibiting
non-interference by one court with the orders
of a coequal court.
In its January 20, 2015 Decision,  the
4
appellate court granted BDO's petition and
ordered the Pasig RTC to cease from hearing
CC No. 73761 commenced by Eliseo. In so
ruling, the CA held that Eliseo is not a
stranger who can initiate an action
independent from the case where the
attachment and execution sale were ordered.
Thus, the CA concluded that in opting to
review the validity of the levy and execution
sale of the subject property pursuant to the
judgment of the Makati RTC, the Pasig RTC
acted without jurisdiction.
Eliseo moved for, but was denied,
reconsideration by the appellate court. Hence,
he came to this Court via a Petition for Review
on Certiorari under Rule 45 of the Rules of
Court, docketed as G.R. No. 218540.
On August 19, 2015, the Court issued a
Resolution denying Eliseo's petition. Eliseo
begs to differ and takes exception from the
said holding in his motion for reconsideration
dated October 5, 2015, which is presently for
Resolution by this Court.
Meanwhile, on an ex-parte omnibus motion
filed by BDO, the Makati RTC ordered the
issuance of a Writ of Possession and the
issuance of a new TCT covering the subject
property in favor of the respondent bank.
Arguing that the Makati R TC had not
acquired jurisdiction over her person as the
service of the summons and the other
processes of the court was defective,
Carmelita filed a Petition for Annulment of
Judgment (With Urgent Prayer for Issuance of
Temporary Restraining Order and/or Writ of
Preliminary Injunction) with the CA, docketed
as CA-G.R. SP No. 134664.
Before the CA can act on the Petition for
Annulment, the Borlongans found posted on
the subject property a Writ of Possession
dated August 1, 2014 and a Notice to Vacate
dated August 29, 2014.
In its Resolution dated November 12,
2014,  the appellate court denied Carmelita's
5
prayer for the issuance of a Temporary
Restraining Order (TRO) and/or Writ of
Preliminary Injunction (WPI).
Aggrieved, Carmelita interposed a motion for
the reconsideration of the CA's November 12,
2014 Resolution. On March 23, 2015,
however, the appellate court denied her
motion for reconsideration, holding that "upon
the expiration of the redemption period, the
right of the purchaser to the possession of the
foreclosed property becomes absolute."
Thus, on April 27, 2015, Carmelita filed a
Petition for Review, docketed as G.R. No.
217617, before this Court, ascribing to the
appellate court the commission of serious
reversible errors. The Court denied the
petition on June 22, 2015. Hence, on
September 1, 2015, Carmelita interposed a
Motion for Reconsideration urging the Court to
take a second hard look at the facts of the
case and reconsider its stance.
Considering that both cases originated from
the same facts and involved interrelated
issues, on January 25, 2016, the Court
resolved to consolidate G.R. No. 218540 with
G.R. No. 217617.
Issues
The question posed in G.R. No. 217617 is
whether or not the CA erred in refusing to
issue a TRO and/or WPI stopping the
consolidation of BDO's ownership over the
subject property. On the other hand, the issue
in G.R. No. 218540 revolves around whether
the Pasig RTC has jurisdiction to hear and
decide a case filed by the non-debtor husband
to annul the levy and execution sale of the
subject property ordered by the Makati RTC
against his wife.
Our Ruling
A reexamination of the antecedents and
arguments in G.R. Nos. 217617 and 218540
compels the reversal of the appellate court's
resolutions in both cases.
G.R. No. 217617
The Issuance of a TRO/WPI is not a
prejudgment of the main case
On the propriety of CA' s refusal to issue a
TRO/WPI, it is worthy to note that Section 3,
Rule 58 of the Rules of Court provides the
grounds for the issuance of a preliminary
injunction, viz:
Section 3. Grounds for issuance of preliminary
injunction. - A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the
relief demanded, and the whole or part
of such relief consists in restraining
the commission or continuance of the
act or acts complained of, or in
requiring the performance of an act or
acts either for a limited period or
perpetually;
(b) That the commission, continuance
or non-performance of the 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.
From the foregoing provision, it is clear that a
writ of preliminary injunction is warranted
where there is a showing that there exists a
right to be protected and that the acts against
which the writ is to be directed violate an
established right. Otherwise stated, for a court
to decide on the propriety of issuing a TRO
and/or a WPI, it must only inquire into the
existence of two things: (1) a clear and
unmistakable right that must be protected;
and (2) an urgent and paramount necessity
for the writ to prevent serious damage.
In Levi Strauss (Phils.) Inc. v. Vogue
Traders Clothing Company,  the Court
6
already explained that the issuance of a TRO
is not conclusive of the outcome of the case
as it requires but a sampling of the evidence,
viz:
Indeed, a writ of preliminary injunction is
generally based solely on initial and
incomplete evidence adduced by the applicant
(herein petitioner). The evidence submitted
during the hearing of the incident is not
conclusive, for only a "sampling" is
needed to give the trial court an idea of the
justification for its issuance pending the
decision of the case on the merits. As such,
the findings of fact and opinion of a court
when issuing the writ of preliminary injunction
are interlocutory in nature. Moreover, the sole
object of a preliminary injunction is to
preserve the status quo until the merits of
the case can be heard. Since Section 4 of
Rule 58 of the Rules of Civil Procedure gives
the trial courts sufficient discretion to evaluate
the conflicting claims in an application for a
provisional writ which often involves a factual
determination, the appellate courts generally
will not interfere in the absence of manifest
abuse of such discretion. A writ of
preliminary injunction would become a
prejudgment of a case only when it grants
the main prayer in the complaint or
responsive pleading, so much so that there
is nothing left for the trial court to try except
merely incidental matters. (emphasis
supplied)
Notably, the primary prayer of the Petition for
Annulment before the appellate court is the
declaration of the nullity of the proceedings in
the R TC and its Decision dated November
29, 2007; it is not merely confined to the
prevention of the issuance of the writ of
possession and the consolidation of the
ownership of the subject property in BDO's
name-the concerns of the prayer for the TRO
and/or WPI.
Indeed, the petitioner's prayer for the issuance
of a TRO and/or WPI was intended to
preserve the status quo ante,   and not to pre-
7
empt the appellate court's decision on the
merits of her petition for annulment. Thus, it
was a grievous error on the part of the CA to
deny her of this provisional remedy.
The appellate court's error is readily apparent
given the stark existence of the grounds for
the issuance of a writ of preliminary injunction.
On the first ground, petitioner has a clear and
unmistakable right that must be protected.
This right is not just her proprietary rights over
the subject property but her constitutionally
protected right to due process before she
can be deprived of her property. No less than
Section 1 of the Bill of Rights of the 1987
Constitution mandates that:
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. (emphasis supplied)
In its classic formulation, due process means
that any person with interest to the thing in
litigation must be notified and given an
opportunity to def end that interest.   Thus,
8
as the essence of due process lies in the
reasonable opportunity to be heard and to
submit any evidence the defendant may have
in support of her defense, she must be
properly served the summons of the court.
In other words, the service of summons is a
vital and indispensable ingredient of due
process   and compliance with the rules
9
regarding the service of the summons is as
much an issue of due process as it is of
jurisdiction.   Unfortunately, as will be
10
discussed, it would seem that the
Constitutional right of the petitioner to be
properly served the summons and be notified
has been disregarded by the officers of the
trial court.
At this very juncture, the existence of the
second ground for the issuance of a TRO
and/or WPI is self-evident. Without a TRO
and/or WPI enjoining the respondent bank
from continuing in the possession and
consolidating the ownership of the subject
property, petitioner's right to be afforded due
process will unceasingly be violated.
It need not be stressed that a continuous
violation of constitutional rights is by itself a
grave and irreparable injury that this or any
court cannot plausibly tolerate.
Without a doubt, the appellate court should
have acted intrepidly and issued the TRO
and/or WPI posthaste to protect the
constitutional rights of petitioner, as it is duty-
bound to do.
The performance of official duty was
not regular
Regrettably, the appellate court fell short in
the fulfillment of its mandate and instead
relied on the disputable presumption that
"official duty has been regularly performed."
The Court cannot subscribe to the position
taken by the appellate court.
As a rule, summons should be personally
served on a defendant. When summons
cannot be served personally within a
reasonable period of time, substituted service
may be resorted to. Service of summons by
publication can be resorted to only if the
defendant's "whereabouts are unknown and
cannot be ascertained by diligent inquiry." The
relevant sections of Rule 14 of the Rules of
Court provide, thus:
SEC. 6. Service in person on defendant. -
Whenever practicable, the summons shall be
served by handing a copy thereof to the
defendant in person, or, if he refuses to
receive and sign for it, by tendering it to him.
SEC. 7. Substituted service. - If, for justifiable
causes, the defendant cannot be served
within a reasonable time as provided in the
preceding section, service may be effected (a)
by leaving copies of the summons at the
defendant's residence with some person of
suitable age and discretion then residing
therein, or (b) by leaving the copies at
defendant's office or regular place of business
with some competent person in charge
thereof.
xxxx
SEC. 14. Service upon defendant whose
identity or whereabouts are unknown. - In any
action where the defendant is designated as
an unknown owner, or the like, or whenever
his whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may,
by leave of court, be effected upon him by
publication in a newspaper of general
circulation and in such places and for such
time as the court may order.
It is, therefore, proper to state that the
hierarchy and rules in the service of summons
are as follows:
(1) Personal service;
(2) Substituted service, if for justifiable
causes the defendant cannot be
served within a reasonable time; and
(3) Service by publication, whenever
the defendant's whereabouts are
unknown and cannot be ascertained
by diligent inquiry.
Simply put, personal service of summons is
the preferred mode. And, the rules on the
service of summons other than by personal
service may be used only as prescribed
and only in the circumstances authorized
by statute. Thus, the impossibility of
prompt personal service must be shown by
stating that efforts have been made to find the
defendant personally and that such efforts
have failed before substituted service may be
availed.   Furthermore, their rules must be
11
followed strictly, faithfully and fully as they are
extraordinary in character and considered in
derogation of the usual method of service.
In Manotoc v. Court of Appeals,   the Court
12
enumerated and explained the requirements
to effect a valid service of summons other
than by personal service, viz:
(1) Impossibility of Prompt Personal
Service
xxxx
Sheriffs are asked to discharge their duties on
the service of summons with due care, utmost
diligence, and reasonable promptness and
speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are
enjoined to try their best efforts to accomplish
personal service on defendant. On the other
hand, since the defendant is expected to try to
avoid and evade service of summons, the
sheriff must be resourceful, persevering,
canny, and diligent in serving the process on
the defendant. For substituted service of
summons to be available, there must be
several attempts by the sheriff to
personally serve the summons within a
reasonable period [of one month) which
eventually resulted in failure to prove
impossibility of prompt service. "Several
attempts" means at least three (3) tries,
preferably on at least two different
dates. In addition, the sheriff must cite why
such efforts were unsuccessful. It is only
then that impossibility of service can be
confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of
Summons the facts and circumstances
surrounding the attempted personal
service. The efforts made to find the
defendant and the reasons behind the
failure must be clearly narrated in detail in
the Return. The date and time of the attempts
on personal service, the inquiries made to
locate the defendant, the name/s of the
occupants of the alleged residence or house
of defendant and all other acts done, though
futile, to serve the summons on defendant
must be specified in the Return to justify
substituted service. The form on Sheriffs
Return of Summons on Substituted Service
prescribed in the Handbook for Sheriffs
published by the Philippine Judicial Academy
requires a narration of the efforts made to find
the defendant personally and the fact of
failure. Supreme Court Administrative Circular
No. 5 dated November 9, 1989 requires
that "impossibility of prompt service
should be shown by stating the efforts
made to find the defendant personally and
the failure of such efforts," which should
be made in the proof of service.
In the case now before Us, the summons was
served on the petitioner by publication. Yet,
the circumstances surrounding the case do
not justify the resort.
Consider: in July 2003, the sheriff attempted
to serve the summons on the defendants,
including petitioner Carmelita, at Fumakilla
Compound, i.e., at the property already
foreclosed, acquired, and possessed by the
respondent bank as early as August 2001.
Immediately after this single attempt at
personal service in July 2003, the respondent
bank moved in October 2003 for leave to
serve the summons by publication (and not
even substituted service), which motion the
RTC granted.
Clearly, there was no diligent effort made to
find the petitioner and properly serve her the
summons before the service by publication
was allowed. Neither was it impossible to
locate the residence of petitioner and her
whereabouts.
It should be noted that the principal obligor in
CC No. 03-0713 was Tancho Corporation and
petitioner Carmelita was impleaded only
because she supposedly signed a surety
agreement as a director. As a juridical person,
Tancho Corporation is required to file
mandatory corporate papers with the
Securities and Exchange Commission (SEC),
such as its General Information Sheet (GIS).
In 1997 and 2000, the GIS filed by Tancho
Corporation with the SEC provided the names
of its directors and their addresses. One of
these directors included petitioner Carmelita
with her address listed at 41 Chicago St.,
Quezon City. The GIS of Tancho Corporation
was readily available to the public including
the RTC's process server and respondent
bank.
Patently, it cannot be plausibly argued that it
was impossible to find the petitioner and
personally serve her with summons. In like
manner, it can hardly be stated that the
process server regularly performed his duty.
The subject property was not
foreclosed by the respondent bank;
right of BDO to the possession of the
subject property is questionable
Still unwilling to issue the TRO and/or WPI
fervently prayed for by petitioner, the
appellate court held that "upon the expiration
of the redemption period, the right of the
purchaser to the possession of the foreclosed
property becomes absolute." This Court
cannot affirm the appellate court's ruling.
At the outset, it must be pointed out that the
subject property was never mortgaged to,
much less foreclosed by, the respondent
bank. Thus, it was error for the CA to refer to
the subject property as "foreclosed property."
Rather, as disclosed by the records, the
possession of the subject property was
acquired by BDO through attachment and
later by execution sale. However, it is
presumptive to state that the right of BDO
over the possession of the subject property is
now absolute considering that there is an
action that questions the validity of the bank's
acquisition over the same property.
In Cometa v. Intermediate Appellate
Court,   we explained that the expiration of
13
the redemption period does not automatically
vest in the auction purchaser an absolutely
possessory right over the property, viz:
From the foregoing discussion, it can be seen
that the writ of possession may issue in favor
of a purchaser in an execution sale when the
deed of conveyance has been executed and
delivered to him after the period of redemption
has expired and no redemption has been
made by the judgment debtor.
A writ of possession is complementary to a
writ of execution (see Vda. de Bogacki v.
Inserto, 111 SCRA 356, 363), and in an
execution sale, it is a consequence of a writ of
execution, a public auction sale, and the
fulfillment of several other conditions for
conveyance set by law. The issuance of a writ
of possession is dependent on the valid
execution of the procedural stages preceding
it. Any flaw afflicting any of its stages,
therefore, could affect the validity of its
issuance.
In the case at bar, the validity of the levy
and sale of the properties is directly put in
issue in another case by the petitioners.
This Court finds it an issue which requires pre-
emptive resolution. For if the respondent
acquired no interest in the property by
virtue of the levy and sale, then, he is not
entitled to its possession.
The respondent appellate court's emphasis on
the failure of The petitioner to redeem the
properties within the period required by law is
misplaced because redemption, in this
case, is inconsistent with the petitioner's
claim of invalidity of levy and sale.
Redemption is an implied admission of the
regularity of the sale and would estop the
petitioner from later impugning its validity
on that ground. (emphasis supplied)
Thus, even given the expiration of the
redemption period, a TRO and/or WPI is still
obtainable and warranted where the validity of
the acquisition of the possession is afflicted by
Constitutional and procedural infirmities.
G.R. No. 218540
Eliseo can file an independent action
for the annulment of the attachment
of their conjugal property
As to the question of the Pasig RTC' s
jurisdiction to hear Eliseo's complaint, we
cannot subscribe to BDO' s contention that
Eliseo cannot file a separate and independent
action for the annulment of the levy on their
conjugal property.
Section 16, Rule 39 of the Rules of Court
allows third-party claimants of properties
under execution to vindicate their claims to the
property in a separate action with another
court. It states, thus:
SECTION 16. Proceedings Where Property
Claimed by Third Person. - If the property
levied on is claimed by any person other than
the judgment obligor 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 the
same upon the officer making the levy and a
copy thereof upon the judgment obligee, the
officer shall not be bound to keep the
property, unless such judgment obligee, on
demand of the officer, files a bond approved
by the court to indemnify the third-party
claimant in a sum not less than the value of
the property levied on. In case of
disagreement as to such value, the same shall
be determined by the court issuing the writ of
execution. No claim for damages for the
taking or keeping of the property may be
enforced against the bond unless the action
therefor is filed within one hundred twenty
(120) days from the date of the filing of the
bond.
The officer shall not be liable for damages for
the taking or keeping of the property, to any
third-party claimant if such bond is
filed. Nothing herein contained shall
prevent such claimant or any third person
from vindicating his claim to the property
in a separate action, or prevent the judgment
obligee from claiming damages in the same or
a separate action against a third-party
claimant who filed a frivolous or plainly
spurious claim. (emphasis supplied)
Clearly, the availability of the remedy provided
under the foregoing provision requires only
that that the claim is a third-party or a
"stranger" to the case. The poser then is this:
is the husband, who was not a party to the suit
but whose conjugal property was executed on
account of the other spouse's debt, a
"stranger" to the suit? In Buado v. Court of
Appeals,  this Court had the opportunity to
14
clarify that, to resolve the issue, it must first be
determined whether the debt had redounded
to the benefit of the conjugal partnership or
not. In the negative, the spouse is a stranger
to the suit who can file an independent
separate action, distinct from the action in
which the writ was issued. We held, thus:
A third-party claim must be filed [by] a person
other than the judgment debtor or his agent.
In other words, only a stranger to the case
may file a third-party claim.
This leads us to the question: Is the husband,
who was not a party to the suit but whose
conjugal property is being executed on
account of the other spouse being the
judgment obligor, considered a "stranger?"
 xxxx
Pursuant to Mariano however, it must further
be settled whether the obligation of the
judgment debtor redounded to the benefit
of the conjugal partnership or not.
Petitioners argue that the obligation of the
wife arising from her criminal liability is
chargeable to the conjugal partnership.  We
1âwphi1
do not agree.
There is no dispute that contested property is
conjugal in nature. Article 122 of the Family
Code explicitly provides that payment of
personal debts contracted by the husband or
the wife before or during the marriage shall
not be charged to the conjugal partnership
except insofar as they redounded to the
benefit of the family.
xxxx
Parenthetically, by no stretch of imagination
can it be concluded that the civil obligation
arising from the crime of slander committed by
Erlinda redounded to the benefit of the
conjugal partnership.
To reiterate, conjugal property cannot be
held liable for the personal obligation
contracted by one spouse, unless some
advantage or benefit is shown to have
accrued to the conjugal partnership.
xxxx
Hence, the filing of a separate action by
respondent is proper and jurisdiction is thus
vested on Branch 21. (emphasis supplied)
In the present case, it is not disputed that the
conjugal property was attached on the basis
of a surety agreement allegedly signed by
Carmelita for and in behalf of Tancho
Corporation. In our 2004 Decision in Spouses
Ching v. Court of Appeals,   we
15
elucidated that there is no presumption that
the conjugal partnership is benefited when
a spouse enters into a contract of surety,
holding thusly:
In this case, the private respondent failed to
prove that the conjugal partnership of the
petitioners was benefited by the petitioner-
husband's act of executing a continuing
guaranty and suretyship agreement with the
private respondent for and in behalf of PBMCI.
The contract of loan was between the private
respondent and the PBMCI, solely for the
benefit of the latter. No presumption can be
inferred from the fact that when the
petitioner-husband entered into an
accommodation agreement or a contract of
surety, the conjugal partnership would
thereby be benefited. The private
respondent was burdened to establish that
such benefit redounded to the conjugal
partnership.
It could be argued that the petitioner-husband
was a member of the Board of Directors of
PBMCI and was one of its top twenty
stockholders, and that the shares of stocks of
the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated
through the loans obtained; that the petitioner-
husband's career would be enhanced should
PBMCI survive because of the infusion of
fresh capital. However, these are not the
benefits contemplated by Article 161 of the
New Civil Code. The benefits must be those
directly resulting from the loan. They
cannot merely be a by-product or a spin-
off of the loan itself.
This is different from the situation where the
husband borrows money or receives services
to be used for his own business or profession.
In the Ayala case, we ruled that it is such a
contract that is one within the term "obligation
for the benefit of the conjugal partnership."
Thus:
xxxx
The Court held in the same case that the
rulings of the Court in Cobb-Perez and G-
Tractors, Inc. are not controlling because the
husband, in those cases, contracted the
obligation for his own business. In this case,
the petitioner-husband acted merely as a
surety for the loan contracted by the PBMCI
from the private respondent. (emphasis
supplied)
Furthermore, it is not apparent from the
records of this case that BDO had established
the benefit to the conjugal partnership flowing
from the surety agreement allegedly signed by
Carmelita. Thus, Eliseo's claim over the
subject property lodged with the RTC Pasig is
proper, with the latter correctly exercising
jurisdiction thereon.
Besides, BDO's reliance on Spouses Ching v.
Court of Appeals  (2003) is improper. In the
16
present case, Eliseo and his wife discovered
the attachment of their conjugal property only
after the finality of the decision by the R TC
Makati. There was, therefore, no opportunity
for Eliseo to intervene in the case before the R
TC Makati which attached the conjugal
property, as a motion to intervene can only be
filed "at any time before rendition of judgment
by the trial court."  This spells the whale of
17
difference between the case at bar and the
earlier Spouses Ching. Unlike in the present
case, the debtor in the case cited by BDO was
properly informed of the collection suit and his
spouse had the opportunity to question the
attachment of their conjugal property before
the court that issued the levy on attachment,
but simply refused to do so. Thus, to now
deny Eliseo the opportunity to question the
attachment made by the R TC Makati in a
separate and independent action will be to,
again, refuse him the due process of law
before their property is taken. As this Court is
duty-bound to protect and enforce
Constitutional rights, this we cannot allow.
WHEREFORE, the petitions are GRANTED.
(1) The January 20, 2015 Decision
and May 26, 2015 Resolution of the
Court of Appeals in CA-G.R. SP No.
133994 are
hereby REVERSED and SETASIDE.
The Regional Trial Court of Pasig,
Branch 155 is ordered to continue with
the proceedings and decide Civil Case
No. 73761 with reasonable dispatch.
(2) The November 12, 2014 and
March 23, 2015 Resolutions of the
appellate court in CA-G.R. SP No.
134664
are REVERSED and SETASIDE.
Accordingly, let a Temporary Restraining
Order (TRO) be issued enjoining, prohibiting,
and preventing respondent Banco De Oro, its
assigns, transferees, successors, or any and
all other persons acting on its behalf from
possessing, selling, transferring, encumbering
or otherwise exercising acts of ownership over
the property subject of the controversy. Said
TRO shall remain valid and effective until such
time as the rights and interests of the parties
in CA-G.R. SP No. 134664 shall have been
determined and finally resolved.
SO ORDERED.
SECOND DIVISION
G.R. No. 172909               March 5, 2014
SPOUSES SILVESTRE O. PLAZA AND
ELENA Y. PLAZA, Petitioners,
vs.
GUILLERMO LUSTIVA, ELEODORA VDA.
DE MARTINEZ AND VICKY SAYSON
GOLOSENO, Respondents.
DECISION
BRION, J.:
Through a petition for review on
certiorari,  filed under Rule 45 of the Rules of
1
Court, the petitioners, spouses Silvestre O.
Plaza and Elena Y. Plaza, seek the reversal of
the decision  dated October 24, 2005 and the
2
Resolution  dated April 6, 2006 of the Court of
3
Appeals (CA) in CA-G.R. SP No. 59859.
THE FACTS
On August 28, 1997, the CA  ruled that among
4
the Plaza siblings, namely: Aureliano,
Emiliana, Vidal, Marciano, and Barbara,
Barbara was the owner of the subject
agricultural land. The decision became final
and executory and Barbara's successors,
respondents Guillermo Lustiva, Eleodora Vda.
de Martinez and Vicky Sayson Goloseno,
have continued occupying the property.
On September 14, 1999, Vidal’s son and
daughter-in-law, the petitioners, filed a
Complaint for Injunction, Damages, Attorney’s
Fees with Prayer for the Issuance of the Writ
of Preliminary Injunction and/or Temporary
Restraining Order against the respondents
and the City Government of Butuan. They
prayed that the respondents be enjoined from
unlawfully and illegally threatening to take
possession of the subject property. According
to the petitioners, they acquired the land from
Virginia Tuazon in 1997; Tuazon was the sole
bidder and winner in a tax delinquency sale
conducted by the City of Butuan on December
27, 1996.
In their answer, the respondents pointed out
that they were never delinquent in paying the
land taxes and were in fact not aware that
their property had been offered for public
auction. Moreover, Tuazon, being a
government employee, was disqualified to bid
in the public auction, as stated in Section 89
of the Local Government Code of 1991.  As
5
Tuazon’s participation in the sale was void,
she could have not transferred ownership to
the petitioners. Equally important, the
petitioners merely falsified the property tax
declaration by inserting the name of the
petitioners’ father, making him appear as a co-
owner of the auctioned land. Armed with the
falsified tax declaration, the petitioners, as
heirs of their father, fraudulently redeemed the
land from Tuazon. Nonetheless, there was
nothing to redeem as the land was not sold.
For these irregularities, the petitioners had no
right to the Writ of Preliminary Injunction
and/or Temporary Restraining Order prayed
for against them.
THE RTC’S RULING
In its December 14, 1999 order,  the Regional
6
Trial Court (RTC) of Butuan City, Branch 5,
reconsidered its earlier order,  denied the
7
prayer for a Writ of Preliminary Injunction, and
ordered that the possession and occupation of
the land be returned to the respondents. The
RTC found that the auction sale was tainted
with irregularity as the bidder was a
government employee disqualified in
accordance with Section 89 of the Local
Government Code of 1991. The petitioners
are not buyers in good faith either. On the
contrary, they were in bad faith for having
falsified the tax declaration they redeemed the
property with.
THE CA’S RULING
Through a petition for review on certiorari
under Rule 65, the petitioners challenged the
RTC’s order before the CA.
While the petition for review on certiorari was
pending before the CA, the petitioners filed an
action for specific performance  against the
8
City Government of Butuan. According to the
petitioners, they acquired possession and
ownership over the auctioned property when
they redeemed it from Tuazon. The City
Government of Butuan must therefore issue
them a certificate of sale. 9
In its October 24, 2005 decision,  the CA
10
affirmed the RTC’s ruling, found the
petitioners guilty of forum shopping, dismissed
the case, and referred the case to the Court
and to the Integrated Bar of the Philippines for
investigation and institution of the appropriate
administrative action.  The CA, after legal
11
analysis, similarly concluded that for being
disqualified to bid under Section 89 of the
Local Government Code of 1991, Tuazon
never obtained ownership over the property;
much less transmit any proprietary rights to
the petitioners. Clearly, the petitioners failed to
establish any clear and unmistakable right
enforceable by the injunctive relief.
On April 6, 2006, the CA rejected the
petitioners’ motion for reconsideration.
THE PARTIES’ ARGUMENTS
The petitioners filed the present petition for
review on certiorari with this Court to
challenge the CA rulings. The petitioners
maintain that they did not falsify the tax
declaration in acquiring the auctioned
property. Moreover, assuming that Tuazon,
the sole bidder, was indeed disqualified from
participating in the public auction, Section
181  of the Local Government Code of 1991
12
finds application. Applying the law, it is as if
there was no bidder, for which the City
Government of Butuan was to be considered
the purchaser of the land in auction.
Therefore, when the petitioners bought the
land, they bought it directly from the purchaser
- City Government of Butuan - and not from
Tuazon, as redeemers.
Also, the respondents may not question the
validity of the public auction for failing to
deposit with the court the amount required by
Section 267  of the Local Government Code
13
of 1991.
Finally, the petitioners argue that they did not
commit forum shopping, as the reliefs prayed
for in the present case and in the specific
performance case are not the same. In the
present case, they merely impleaded the City
Government of Butuan as a nominal party to
pay for the value of the land only if possession
of the land was awarded to the respondents.
On the other hand, the complaint for specific
performance prayed that the City Government
of Butuan execute the necessary certificate of
sale and other relevant documents pertaining
to the auction.
The respondents, for their part, reiterate the
lower courts’ findings that there could have
been no legal redemption in favor of the
petitioners as the highest bidder was
disqualified from bidding. Moreover, the CA
correctly applied the law in finding the
petitioners guilty of forum shopping. Most
importantly, the grant of preliminary injunction
lies in the sound discretion of the court and
the petitioners failed to show proof that they
are entitled to it.
Meanwhile, on August 8, 2013, the RTC
dismissed the main action and ordered the
petitioners to pay the respondents attorney’s
fees and litigation expenses. 14
THE COURT’S RULING
We resolve to deny the petition for lack of
merit.
The petitioners may not
raise factual issues
The petitioners maintain that they did not
falsify the tax declaration they reimbursed the
property with. According to them, the
document already existed in 1987, way before
they acquired the land in 1997. Contrary
likewise to the lower courts’ finding, they did
not purchase the land from Tuazon as
redemptioners; they directly bought the
property from the City Government of Butuan.
These factual contests are not appropriate for
a petition for review on certiorari under Rule
45. The Court is not a trier of facts.  The Court
15
will not revisit, re-examine, and re-evaluate
the evidence and the factual conclusions
arrived at by the lower courts.  In the absence
16
of compelling reasons, the Court will not
disturb the rule that factual findings of the
lower tribunals are final and binding on this
Court. 17
Sections 181 and 267 of the Local
Government Code of 1991 are inapplicable;
these provisions do not apply to the present
case
The petitioners may not invoke Section
181  of the Local Government Code of 1991
18
to validate their alleged title. The law
authorizes the local government unit to
purchase the auctioned property only in
instances where "there is no bidder" or "the
highest bid is xxx insufficient." A disqualified
bidder is not among the authorized grounds.
The local government also never undertook
steps to purchase the property under Section
181 of the Local Government Code of 1991,
presumably because it knew the invoked
provision does not apply.
Neither can the Court agree with the
petitioners’ stance that the respondents’
defense — the petitioners’ defective title —
must fail for want of deposit to the court the
amount required by Section 267 of the Local
Government Code. The provision states:
Section 267. Action Assailing Validity of Tax
Sale. - No court shall entertain any action
assailing the validity or any sale at public
auction of real property or rights therein under
this Title until the taxpayer shall have
deposited with the court the amount for which
the real property was sold, together with
interest of two percent (2%) per month from
the date of sale to the time of the institution of
the action. The amount so deposited shall be
paid to the purchaser at the auction sale if the
deed is declared invalid but it shall be
returned to the depositor if the action fails.
Neither shall any court declare a sale at public
auction invalid by reason or irregularities or
informalities in the proceedings unless the
substantive rights of the delinquent owner of
the real property or the person having legal
interest therein have been impaired.
[underscores ours; italics supplied]
A simple reading of the title readily reveals
that the provision relates to actions for
annulment of tax sales. The section likewise
makes use of terms "entertain" and
"institution" to mean that the deposit
requirement applies only to initiatory actions
assailing the validity of tax sales. The intent of
the provision to limit the deposit requirement
to actions for annulment of tax sales led to the
Court’s ruling in National Housing Authority v.
Iloilo City, et al.  that the deposit requirement
19
is jurisdictional — a condition necessary for
the court to entertain the action:
As is apparent from a reading of the foregoing
provision, a deposit equivalent to the amount
of the sale at public auction plus two percent
(2%) interest per month from the date of the
sale to the time the court action is instituted is
a condition — a "prerequisite," to borrow the
term used by the acknowledged father of the
Local Government Code — which must be
satisfied before the court can entertain any
action assailing the validity of the public
auction sale. The law, in plain and
unequivocal language, prevents the court
from entertaining a suit unless a deposit is
made. xxx. Otherwise stated, the deposit is a
jurisdictional requirement the nonpayment of
which warrants the failure of the action.
xxxx
Clearly, the deposit precondition is an
ingenious legal device to guarantee the
satisfaction of the tax delinquency, with the
local government unit keeping the payment on
the bid price no matter the final outcome of
the suit to nullify the tax sale.
20
The Court would later reiterate the
jurisdictional nature of the deposit in Wong v.
City of Iloilo,  and pronounce:
21
In this regard, National Housing Authority v.
Iloilo City holds that the deposit required
under Section 267 of the Local Government
Code is a jurisdictional requirement, the
nonpayment of which warrants the dismissal
of the action. Because petitioners in this case
did not make such deposit, the RTC never
acquired jurisdiction over the complaints. 22
These rulings clearly render inapplicable the
petitioners’ insistence that the respondents
should have made a deposit to the court. The
suit filed by the petitioners was an action for
injunction and damages; the issue of nullity of
the auction was raised by the respondents
themselves merely as a defense and in no
way converted the action to an action for
annulment of a tax sale.
The petitioners failed to show clear
and unmistakable rights to be protected
by the writ; the present action has been
rendered moot and academic by the
dismissal of the main action
As the lower courts correctly found, Tuazon
had no ownership to confer to the petitioners
despite the latter’s reimbursement of Tuazon’s
purchase expenses. Because they were never
owners of the property, the petitioners failed
to establish entitlement to the writ of
preliminary injunction. "[T]o be entitled to an
injunctive writ, the right to be protected and
the violation against that right must be shown.
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. When the complainant’s
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." 23
Likewise, upon the dismissal of the main case
by the RTC on August 8, 2013, the question
of issuance of the writ of preliminary injunction
has become moot and academic. In Arevalo v.
Planters Development Bank,  the Court ruled
24
that a case becomes moot and academic
when there is no more issue between the
parties or object that can be served in
deciding the merits of the case. Upon the
dismissal of the main action, the question of
the non-issuance of a writ of preliminary
injunction automatically died with it. A writ of
preliminary injunction is a provisional remedy;
it is auxiliary, an adjunct of, and subject to the
determination of the main action. It is deemed
lifted upon the dismissal of the main case, any
appeal therefrom notwithstanding. 25
The petitioners are guilty
of forum shopping
We agree with the CA that the petitioners
committed forum shopping when they filed the
specific performance case despite the
pendency of the present case before the CA.
In the recent case of Heirs of Marcelo Sotto,
etc., et al. v. Matilde S. Palicte,  the Court laid
26
down the three ways forum shopping may be
committed: 1) through litis pendentia — filing
multiple cases based on the same cause of
action and with the same prayer, the previous
case not having been resolved yet; 2) through
res judicata — filing multiple cases based on
the same cause of action and the same
prayer, the previous case having been finally
resolved; and 3) splitting of causes of action
— filing multiple cases based on the same
cause of action but with different prayers —
the ground to dismiss being either litis
pendentia or res judicata. "The requisites of
litis pendentia are: (a) the identity of parties, or
at least such as representing the same
interests in both actions; (b) the identity of
rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the
identity of the two cases such that judgment in
one, regardless of which party is successful,
would amount to res judicata in the other." 27
Noticeable among these three types of forum
shopping is the identity of the cause of action
in the different cases filed. Cause of action is
"the act or omission by which a party violates
the right of another."
28
The cause of action in the present case (and
the main case) is the petitioners’ claim of
ownership of the land when they bought it,
either from the City Government of Butuan or
from Tuazon. This ownership is the
petitioners’ basis in enjoining the respondents
from dispossessing them of the property. On
the other hand, the specific performance case
prayed that the City Government of Butuan be
ordered to issue the petitioners the certificate
of sale grounded on the petitioners’ ownership
of the land when they had bought it, either
from the City Government of Butuan or from
Tuazon. While it may appear that the main
relief prayed for in the present injunction case
is different from what was prayed for in the
specific performance case, the cause of action
which serves as the basis for the reliefs
remains the same — the petitioners’ alleged
ownership of the property after its purchase in
a public auction.
Thus, the petitioners' subsequent filing of the
specific performance action is forum shopping
of the third kind-splitting causes of action or
filing multiple cases based on the same cause
of action, but with different prayers. As the
Court has held in the past, "there is still forum
shopping even if the reliefs prayed for in the
two cases are different, so long as both cases
raise substantially the same issues." 29
Similarly, the CA correctly found that the
petitioners and their counsel were guilty of
forum shopping based on litis pendentia. Not
only were the parties in both cases the same
insofar as the City Government of Butuan is
concerned, there was also identity of rights
asserted and identity of facts alleged. The
cause of action in the specific performance
case had already been ruled upon in the
present case, although it was still pending
appeal before the CA. Likewise, the prayer
sought in the specific performance case-for
the City Government ofButuan to execute a
deed of sale in favor of the petitioners - had
been indirectly ruled upon in the present case
when the R TC declared that no certificate of
sale could be issued because there had been
no valid sale.
WHEREFORE, premises considered, the
Court DENIES the petition for review on
certiorari.  The decision dated October 24,
1âwphi1
2005 and the resolution dated April 6, 2006 of
the Court of Appeals in CA-G.R. SP No.
59859 are hereby AFFIRMED.
SO ORDERED.
ARTURO D. BRION
Associate Justice
THIRD DIVISION
G.R. No. 206808-09, September 07,
2016
LOCAL WATER UTILITIES
ADMINISTRATION EMPLOYEES
ASSOCIATION FOR PROGRESS
(LEAP), MELANIO B. CUCHAPIN II,
GREARDO* G. PERU, ROLAND S.
CABAHUG, GLORIA P. VELASQUEZ,
ERLINDA G. VILLANUEVA, TEODORO
M. REYNOSO, FERNANDO L.
NICANDRO, JOSEPHINE P. SIMENE,
LAMBERTO R. RIVERA, REYNALDO
M. VIDA, and RUCTICO** B.
TUTOL, Petitioners, v. LOCAL WATER
UTILITIES ADMINISTRATION
(LWUA) and DEPARTMENT OF
BUDGET AND
MANAGEMENT, Respondents.
DECISION
PERALTA, J.:
Challenged in the present petition
for certiorari under Rule 65 of the Rules
of Court are the Decision1 and
Resolution2 of the Court of Appeals
(CA), dated August 28, 2012 and
January 15, 2013, respectively, in two
(2) consolidated cases docketed as CA-
G.R. SP Nos. 100482 and 100662. The
assailed CA Decision reversed and set
aside the: (1) December 7, 2006
Order3 of the Regional Trial Court (RTC)
of Quezon City, Branch 92 in SP. Proc.
No. Q-06-59047, which granted
petitioners' prayer for the issuance of a
writ of preliminary injunction; and (2)
the June 6, 2007 Resolution4 of the RTC
which denied respondents' Motion for
Reconsideration. The questioned CA
Resolution denied herein petitioners'
Motion for Reconsideration.
The facts of the case are as follows:
On February 2, 2004, former President
Gloria Macapagal-Arroyo enacted
Executive Order (E.O.) No. 2795 for the
purpose of reviewing and rationalizing
the then existing financing policies for
the Philippine water supply and
sewerage sector to allow for the efficient
flow of resources thereto. Under the
said E.O., all concerned government
agencies and instrumentalities of the
water supply and sewerage sector,
which includes, among others, the Local
Water Utilities Administration (LWUA),
were directed to pursue and implement
reform objectives and policies. The said
E.O. particularly provided for the
rationalization of LWUA's organizational
structure and operations.
On October 4, 2004, President Arroyo
issued E.O. No. 366 directing all
departments of the executive branch
and their component units/bureaus
including government-owned and
controlled corporations, boards, task
forces, councils, commissions and all
other agencies attached thereto or
under the administrative supervision of
a Department, to conduct a strategic
review of the operations and
organization of the Executive Branch
and to prepare a rationalization plan
which includes the phasing of activities
and availment of incentives by affected
employees.
On April 13, 2005, President Arroyo
issued E.O. No. 421,6 specifying LWUA's
core functions and providing for shifts in
its policy direction, functions, programs,
activities and strategies. Cognizant of
the effect of the rationalization of the
functions of LWUA, the E.O. gave
affected LWUA personnel the option to
either remain or retire, or be separated
from government service.
Pursuant to the provisions of E.O. No.
421, then LWUA Administrator Lorenzo
Zamora came up with Office Order No.
077-05 creating Task Force 421 and its
Action Team. The said Task Force was
charged, among others, with the duty of
preparing the LWUA's staffing pattern
and the corresponding plantilla positions
therein as directed by E.O. No. 421. The
Action Team, on the other hand, was
given the responsibility of reporting to
the Task Force and assisting it in the
execution of its duties and
responsibilities. Among the appointed
members of the Action Team was herein
petitioner Melanio Cuchapin II, who was
then the Chairperson of petitioner LWUA
Employees' Association for Progress
(LEAP). Subsequently, Task Force 421
was able to come up with a staffing
pattern, consisting of 467 plantilla
positions which it submitted to the
LWUA Board of Trustees for approval.
On April 18, 2006, the LWUA Board of
Trustees issued Board Resolution No. 69
which approved the staffing pattern
proposed by Task Force 421. Thereafter,
the approved staffing pattern was
submitted to the Department of Budget
and Management (DBM) for review and
approval.
In its letter dated September 27, 2006,
the DBM approved 447 plantilla
positions out of the 467 proposed
positions. Twenty (20) positions were
excluded from the plantilla because they
were classified as coterminous with the
members of the LWUA Board of Trustees
and are not considered critical in the
agency's operations.
On October 18, 2006, LWUA issued
Office Order No. 168-06 requiring the
immediate implementation of the
following: (a) posting of the DBM-
approved staffing pattern; (b)
finalization by the Staffing Committee of
the staffing guidelines to be submitted
to the Management and the Board of
Trustees for approval; and (c)
finalization by the Task Analysis
Committee of the job descriptions under
the rationalized LWUA structure. The
said Office Order also provided that the
guidelines for the implementation of the
approved staffing pattern shall include a
general provision declaring that all
employees may apply for a maximum of
five positions in the rationalized
structure where they may qualify.
On October 19, 2006, petitioners filed a
petition for certiorari, prohibition
and mandamus with prayer for
temporary restraining order (TRO) and
preliminary injunction with the RTC of
Quezon City. Alleging that LWUA and
DBM acted with grave abuse of
discretion in adopting and implementing
the reorganization plan of LWUA,
petitioners prayed that LWUA and DBM
be restrained from implementing the
following: (1) DBM-approved staffing
pattern; (2) Resolution No. 69 of the
LWUA Board of Trustees, and (3) E.O.
Nos. 279, 366 and 421, on the ground
that petitioners will suffer injustice and
sustain irreparable injury as 233 LWUA
employees face immediate and outright
dismissal from service.
Respondents filed their respective
Oppositions to the petitioners' prayer for
TRO and/or preliminary injunction.
After hearing, the RTC issued its
assailed Order7 granting petitioners'
prayer for the issuance of a writ of
preliminary injunction, disposing as
follows:
WHEREFORE, let a writ of preliminary
injunction be issued, restraining the
respondents from enforcing and
effecting the assailed questioned DBM-
Approved Staffing Pattern dated 27
September 2006, LWUA Board
Resolution No. 69, series of 2006, and
Executive Order Nos. 279, 366 and 421,
including the issuance of any orders,
resolutions and/or decisions relating to
the same, upon the filing of a bond in
the amount of one hundred thousand
(P100,000.00) pesos for any damage
that may be sustained by the
respondents by reason of the injunction
if the Court will finally decide that the
petitioners are not entitled thereto.
SO ORDERED.8
LWUA and DBM filed separate Motions
for Reconsideration, but these were
denied in the RTC's questioned
Resolution9 dated June 6, 2007.
LWUA and DBM then filed separate
special civil actions for certiorari with
the CA questioning the subject RTC
Order and Resolution. These petitions
were subsequently consolidated.
On August 28, 2012, the CA
promulgated its presently disputed
Decision, with the following dispositive
portion:
WHEREFORE, the instant petitions
are GRANTED. Accordingly, the Order
dated 07 December 2006 and the
Resolution dated 06 June 2007 issued
by Branch 92 of the Regional Trial Court
in Quezon City in SP Proc. No. Q-06-
59047 are REVERSED and SET ASIDE.
The Writ of Preliminary Injunction
issued by the said court pursuant to its
Order dated 07 December 2006
is LIFTED and SET ASIDE.
SO ORDERED.10
Petitioners filed a Motion for
Reconsideration, but the CA denied it in
its Resolution dated January 15, 2013.
Hence, the instant petition based on the
following grounds:
6.1 THE HONORABLE FOURTEENTH
DIVISION OF THE COURT OF APPEALS
ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION IN
ISSUING THE RESOLUTION DATED 15
JANUARY 2013, DENYING THE INSTANT
MOTION FOR RECONSIDERATION FILED
BY THE PETITIONERS AND AFFIRMING
THE DECISION PROMULGATED ON 28
AUGUST 2012, AND REVERSING THE
DECISION OF THE TRIAL COURT.
6.2 THE RESPONDENT COURT ACTED
WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK AND/OR EXCESS
OF JURISDICTION IN HOLDING THAT
THE PETITIONERS ARE NOT ENTITLED
TO THE [INJUNCTIVE] WRIT.
6.3 THERE IS NO APPEAL, OR ANY
PLAIN AND SPEEDY REMEDY IN THE
ORDINARY COURSE OF LAW OTHER
THA[N] THE INSTANT PETITION.11
At the outset, the Court notes that in its
Decision12 dated December 27, 2012,
the RTC dismissed the petition
for certiorari, mandamus and prohibition
which was filed by petitioners on the
ground of lack of justiciable controversy
and resort to a wrong remedy.
On this basis, the Court deems it proper
to address the procedural matters raised
by respondents as it finds the instant
petition dismissible for reasons to be
discussed hereunder.
First, is the propriety of the remedy
availed of by petitioners. Petitioners
come to this Court questioning the
Decision and Resolution of the CA via a
special civil action
for certiorari contending that there is "a
very urgent need to resolve the issues
presented herein and considering that
public respondents are hell-bent on
proceeding with [the] removal and
deprivation of economic benefits,
causing great injury to petitioners and
LWUA employees, and having no other
plain, speedy and adequate remedy in
the ordinary course of the law x x x."13
It is settled that a petition
for certiorari under Rule 65 of the Rules
of Court is a pleading limited to
correction of errors of jurisdiction or
grave abuse of discretion amounting to
lack or excess of jurisdiction. Its
principal office is to keep the inferior
court within the parameters of its
jurisdiction or to prevent it from
committing such a grave abuse of
discretion amounting to lack or excess
of jurisdiction. It may issue only when
the following requirements are alleged
in and established by the petition: (1)
that the writ is directed against a
tribunal, a board or any officer
exercising judicial or quasi-judicial
functions; (2) that such tribunal, board
or officer has acted without or in excess
of jurisdiction, or with grave abuse of
discretion amounting to lack or excess
of jurisdiction; and (3) that there is no
appeal or any plain, speedy and
adequate remedy in the ordinary course
of law.14
This Court has repeatedly held that a
special civil action for certiorari under
Rule 65 of the Rules of Court is proper
only when there is neither appeal nor
plain, speedy and adequate remedy in
the ordinary course of law. The
extraordinary remedy of certiorari is not
a substitute for a lost appeal; it is not
allowed when a party to a case fails to
appeal a judgment to the proper forum,
especially if one's own negligence or
error in one's choice of remedy
occasioned such loss or lapse.15
On the other hand, Section 1, Rule 45 of
the Rules of Court provides that the
proper remedy to question a judgment,
final order or resolution of the CA, as in
the present case, is a petition for review
on certiorari regardless of the nature of
the action or proceeding involved.16 The
petition must be filed within fifteen (15)
days from notice of the judgment, final
order or resolution appealed from; or of
the denial of petitioner's motion for
reconsideration filed in due time after
notice of the judgment.17
This Court has ruled that because an
appeal was available to the aggrieved
party, the action for certiorari would not
be entertained. We emphasized in that
case that the remedies of appeal
and certiorari are mutually exclusive,
not alternative or successive.18 Where
an appeal is available, certiorari will not
prosper, even if the ground is grave
abuse of discretion.19
By filing the present special civil action
for certiorari under Rule 65, petitioners,
therefore, clearly availed themselves of
the wrong remedy. Under Supreme
Court Circular 2-90, an appeal taken to
this Court or to the CA by a wrong or an
inappropriate mode merits outright
dismissal. On this score alone, the
instant petition is dismissible.
The second issue raised by respondents
that the dismissal of petitioners'
principal action for certiorari, prohibition
and mandamus filed with the RTC
results in the automatic dissolution of
the ancillary writ of preliminary
injunction issued by the same court.
The Court agrees with respondents.
A writ of preliminary injunction is an
order granted at any stage of an action
or proceeding prior to the judgment or
final order, requiring a party or a court,
agency or a person to refrain from a
particular act or acts.20 It is merely a
provisional remedy, adjunct to the main
case subject to the latter's outcome. It
is not a cause of action in itself. The writ
is provisional because it constitutes a
temporary measure availed of during
the pendency of the action and it is
ancillary because it is a mere incident in
and is dependent upon the result of the
main action.21 Being an ancillary or
auxiliary remedy, it is available during
the pendency of the action which may
be resorted to by a litigant to preserve
and protect certain rights and interests
therein pending rendition, and for
purposes of the ultimate effects, of a
final judgment in the case.22
It is well settled that the sole object of a
preliminary injunction, whether
prohibitory or mandatory, is to preserve
the status quo until the merits of the
case can be heard.23 It is usually
granted when it is made to appear that
there is a substantial controversy
between the parties and one of them is
committing an act or threatening the
immediate commission of an act that
will cause irreparable injury or destroy
the status quo of the controversy before
a full hearing can be had on the merits
of the case.24 It persists until it is
dissolved or until the termination of the
action without the court issuing a final
injunction.25cralawred
Indubitably, in the present case, the
writ of preliminary injunction was
granted by the RTC based on its finding
that there was a need to protect
petitioners' rights to security of tenure
during the pendency of the principal
action. After trial, however, the lower
court found, among others, that, in
questioning the constitutionality of E.O.
Nos. 279, 366 and 421 as well as
Resolution No. 69 of the LWUA Board of
Trustees, petitioners failed to establish
the existence of an actual case or
controversy which is ripe for judicial
determination. Thus, the RTC dismissed
the principal action for certiorari,
prohibition and mandamus.
The principal action having been heard
and found dismissible as it was in fact
dismissed, the writ of preliminary
injunction issued by the RTC is deemed
lifted, its purpose as a provisional
remedy having been served, the appeal
from the main case
notwithstanding.26 In this regard, this
Court's ruling in the case of Unionbank
of the Philippines v. Court of Appeals27 is
instructive, to wit:
x x x "a dismissal, discontinuance or
non-suit of an action in which a
restraining order or temporary
injunction has been granted operates as
a dissolution of the restraining order or
temporary injunction," regardless of
whether the period for filing a motion
for reconsideration of the order
dismissing the case or appeal therefrom
has expired. The rationale therefor is
that even in cases where an appeal is
taken from a judgment dismissing an
action on the merits, the appeal does
not suspend the judgment, hence the
general rule applies that a temporary
injunction terminates automatically on
the dismissal of the action.28
Finally, the Court agrees with the RTC
and the CA that even assuming that
petitioners have a valid cause of action,
in that their security of tenure may be
violated as a result of their transfer or
termination from service, the law,
particularly Republic Act No. 665629 (RA
6656), provides them with ample
remedies to address their alleged
predicament, prior to filing an action in
court. Sections 7 and 8 of RA 6656
provide, thus:
Section 7. A list of the personnel
appointed to the authorized positions in
the approved staffing pattern shall be
made known to all the officers and
employees of the department or
agency. Any of such officers and
employees aggrieved by the
appointments made may file an
appeal with the appointing
authority who shall make a decision
within thirty (30) days from the
filling thereof.
Section 8. An officer or employee
who is still not satisfied with the
decision of the appointing authority
may further appeal within ten (10)
days from the receipt thereof to the
Civil Service Commission which
shall render a decision thereon
within thirty (30) days and whose
decision shall be final and
executory.30
Under the doctrine of exhaustion of
administrative remedies, before a party
is allowed to seek the intervention of
the court, he or she should have availed
himself or herself of all the means of
administrative processes afforded him
or her.31 Hence, if resort to a remedy
within the administrative machinery can
still be made by giving the
administrative officer concerned every
opportunity to decide on a matter that
comes within his or her jurisdiction,
then such remedy should be exhausted
first before the court's judicial power
can be sought.32 The premature
invocation of the intervention of the
court is fatal to one's cause of
action.33 The doctrine of exhaustion of
administrative remedies is based on
practical and legal reasons. The
availment of administrative remedy
entails lesser expenses and provides for
a speedier disposition of
controversies.34 Furthermore, the courts
of justice, for reasons of comity and
convenience, will shy away from a
dispute until the system of
administrative redress has been
completed and complied with, so as to
give the administrative agency
concerned every opportunity to correct
its error and dispose of the case.35
Corollary to the doctrine of exhaustion
of administrative remedies is the
doctrine of primary jurisdiction; that is,
courts cannot or will not determine a
controversy involving a question which
is within the jurisdiction of the
administrative tribunal prior to the
resolution of that question by the
administrative tribunal, where the
question demands the exercise of sound
administrative discretion requiring the
special knowledge, experience and
services of the administrative tribunal to
determine technical and intricate
matters of fact.36
Thus, petitioners should have first
brought their case to the appointing
authority, which in this case, is the
LWUA Board of Trustees, and,
thereafter, to the Civil Service
Commission, which has primary
jurisdiction over the case. On the basis
of the abovequoted provisions, it is clear
that petitioners failed to exhaust the
administrative remedies given them by
law before resorting to the filing of a
petition for certiorari, prohibition
and mandamus.
WHEREFORE, the instant petition
is DISMISSED. The Decision and
Resolution of the Court of Appeals,
dated August 28, 2012 and January 15,
2013, respectively, in CA-G.R. SP Nos.
100482 and 100662 are AFFIRMED.
SO ORDERED. Payment for the P 2,000,000.00 TL was
due on October 29, 1996, and payments
SECOND DIVISION for the STLLs, of P 12,000,000.00
and P 3,000,000.00, were due on April
G.R. No. 173036 : September 26, 28, 1996 and April 8, 1997,
2012 respectively.8 ςrνll

AGOO RICE MILL CORPORATION ARMC made several partial payments to

(represented by its President, Kam cover the loans interests,9  but found it Ï‚rνll

Biak Y. Chan, Jr.), Petitioner, v. LAND difficult to fully settle its loan obligations

BANK OF THE on time due to the companys financial
PHILIPPINES, Respondent. liquidity problems; the negative effect of
the governments rice importation in
DECISION 1996 on its sales of rice;10  and Ï‚rνll

problems brought by the El Ni

BRION, J.: phenomenon in the regions rice
production.11 ςrνll

Before us is a petition for review

on certiorari1   of the March 28, 2006 In a letter12  dated January 6, 1997, the
ςrνll

ARMC, through its President Mr. Kam

ςrνll

Decision2  and the June 6, 2006

Biak Y. Chan, Jr., requested the LBP for
ςrνll

resolution3  of the Court of

an extension of time to pay its
ςrνll

Appeals (CA) in CA-Ci.R. CV No. 84458.

The CA affirmed the decision4  of the obligations; he asked for a period
ending on February 28, 1997.
ςrνll

Regional Trial Court (RTC),  Branch 30,

San Fernando City, La Union, in Civil
Case No. 6255 which denied the The LBP, through a letter13  dated Ï‚rνll

complaint for injunction tiled by Agoo February 25, 1997, reminded ARMC of
Rice Mill Corporation (ARMC) against its commitment to pay on February 28,
the Land Bank of the 1997.
Philippines (LBP).  The CA denied the
petitioner's subsequent motion for On February 27, 1997, still foreseeing
reconsideration. its inability to pay its obligations on the
requested date, the ARMC wrote the LBP
Background Facts for the renewal of its loans, particularly
the P 15,000,000.00 STLLs.14  The LBP Ï‚rνll

The facts, as gathered from the records, allegedly replied with the advice to have
are as follows: the loans restructured instead of
renewed.15
chanroblesvirtuallawlibrary

ςrνll

From October 1993 to October

1996,5  the ARMC obtained from the LBP Accordingly, in a letter16  dated March Ï‚rνll

12, 1997, ARMC requested the LBP to

ςrνll

a Term Loan (TL) for P 2,000,000.00

and two (2) Short-Term Loan Lines restructure its STLLs. It suggested a
(STLLs) amounting to a total payment arrangement
of P 15,000,000.00,6  evidenced by of P 5,000,000.00 every six (6) months,
until the whole loan of P 15,000,000.00
ςrνll

promissory notes. These loans were

secured by a Real and Chattel Mortgage was paid in full.17 ςrνll

over the ARMCs four (4) commercial

lots, including their improvements, and The LBP deferred the ARMCs proposal
its rice mill machineries and generator.7 ςrνll
and advised it to first secure a waiver of
its penalty charges prior to the loans
restructuring.18 ςrνll
In a letter19  dated November 3, 1997,
ςrνll
the LBP informed the ARMC that the
banks Domestic Banking Loan
Committee has agreed to require an
additional collateral from the ARMC,
which must be offered on or before
November 7, 1997; otherwise, the LBP
would be forced to pursue legal action.
In another letter20  dated November 10,
ςrνll
1997, the LBP informed ARMC that its
existing collateral was short
of P 3,400,000.00, based on its
outstanding P 15,000,000.00 loan, and
reiterated that ARMC needed to offer
additional collateral and to submit the
necessary documents; ARMC was given
up to November 14, 1997 to comply,
but this was extended to November 25,
1997.21  ARMC responded by asking for
ςrνll
a reappraisal of its properties, but the
LBP denied the request, insisting that
the valuation made by its Property
Assessors was fair and reasonable.22
On April 15, 1998, the LBP wrote to the
ARMC regarding the latters failure to
comply with the LBPs required offer of
an additional collateral or to pay its due
obligations. The LBP informed the ARMC
that noncompliance on or before April
30, 1998 would result in the referral of
the matter to the banks Legal Office for
appropriate action.23
In a letter24  dated May 22, 1998, the
ςrνll
LBP informed the ARMC that its
requested loan restructuring was under
evaluation with the banks Loan
Approving Authorities; in the meantime,
the bank reminded ARMC of its payment
for the month, which must be paid on or
before May 29, 1998.
Application for Extrajudicial Foreclosure
On July 8, 1998, the LBP sent the ARMC
a Final Notice of Payment,25  informing Ï‚rνll
the ARMC that it had filed, on the same
date, an application for the extrajudicial
foreclosure of ARMCs mortgaged
properties with the Office of the Ex-
Officio Sheriff of San Fernando City, La
Union.26ςrνll
In its application for extrajudicial
foreclosure,27  the LBP alleged, among
ςrνll
others, that: (1) despite repeated
demands, the ARMC failed to pay its
overdue obligations, in violation of the
terms and conditions of the Real and
Chattel Mortgage; (2) as of July 8,
1998, the ARMCs total unpaid obligation
amounted to P 23,473,320.83, broken
down as follows principal amount
of P 15,000,000.00, interests amounting
to P 7,363,320.83, and penalties
amounting to P 1,110,000.00; and (3)
the ARMC had been duly notified,
through a letter-notice dated July 8,
1998, of the foreclosure proceedings
and of the time, date and place of public
ςrνll
auction.
The extrajudicial foreclosure was set for
August 26, 1998 at nine oclock in the
morning.28 ςrνll
Complaint for Injunction
On August 24, 1998, ARMC, through its
President, filed with the RTC, Branch 30,
ςrνll
San Fernando City, La Union, a
complaint for injunction with application
for a writ of preliminary injunction and
temporary restraining order, and for
recovery of damages.29 ςrνll
ARMC mainly alleged that LBPs
proposed extrajudicial foreclosure
should be enjoined for being premature,
improper and in violation of ARMCs
contractual and property rights since
negotiations for the restructuring of its
loans were still ongoing. ARMC
contended that, unless enjoined, the
foreclosure would cause its company
grave injustice and irreparable injury.
ARMC also alleged that the LBPs petition
for extrajudicial foreclosure contained
inconsistent statements on the total
amount of its principal obligation, and
omitted the following relevant facts:
that the P 15,000,000.00 STLLs and
the P 2,000,000.00 TL were separately
secured by a real estate mortgage and a
chattel mortgage, respectively; that
the P 2,000,000.00 TL had been fully
paid, evidenced by a voucher dated
February 27, 1997; and that despite full
payment of the P 2,000,000.00 TL, the
LBP did not release the chattel
mortgage and still included it in the
petition for extrajudicial foreclosure.
Further, ARMC contended that the Real
and Chattel Mortgage attached to the
LBPs petition for extrajudicial
foreclosure referred to a loan previously
obtained by ARMC in 1995, which does
not reflect the recent loan transactions
between the parties, and that the
mortgage contract was altered without
ARMCs consent by including in the
mortgaged chattel the ARMCs "stocks
(rice/palay) inventories."30
ςrνll
ARMC denied receipt of the LBPs July 8,
1998 Final Notice of Payment.
Temporary Restraining Order and Writ
of Preliminary Injunction
On August 24, 1998, Executive Judge
Vicente A. Pacquing, RTC, La Union,
issued a 72hour Temporary Restraining
Order (TRO) directing the Ex-Officio
Provincial Sheriff of La Union to cease
and desist from proceeding with the
August 26, 1998 foreclosure sale.31  The
ςrνll
following day, the RTC ordered the
extension of the TRO for seventeen (17)
days.32ςrνll
On September 8, 1998, the RTC ordered
the proceedings suspended in view of
the parties manifestation to have the
case amicably settled.33  The
ςrνll
contemplated settlement, however,
failed. Thus, the RTC proceeded with the
hearing on the issuance of the writ of
preliminary injunction on January 12,
1999.34ςrνll
In an order35  dated March 18, 1999,
ςrνll
Judge Adolfo Alagar, RTC, Branch 30,
San Fernando City, La Union, issued a
writ of preliminary injunction upon the
ARMCs filing of a bond
of P 4,000,000.00.
The RTCs Ruling
In a decision dated August 5, 2004, the
RTC found no merit in the ARMCs
complaint for injunction.
Contrary to the allegation that the LBP
reneged on its commitment to
restructure the ARMCs loans, the RTC
found that the LBP never agreed to the
ARMCs proposed restructuring and,
thus, was not in bad faith when it
exercised its right to foreclose the
ARMCs mortgaged properties; that no
agreement was forged between the
parties because the ARMC failed to offer
an additional collateral, as the LBP
required for the approval of the
proposed restructuring.
Further, the RTC found no inconsistency
or vagueness in the petition for
extrajudicial foreclosure as to the
amount of the ARMCs principal
obligation, i.e.,  P 15,000,000.00, and
that the settlement of
the P 2,000,000.00 TL could not operate
to discharge the mortgaged chattel
because the Real and Chattel Mortgage
was found to be indivisible, i.e., the
mortgaged real estate and chattel could
not be discharged until the ARMCs total
indebtedness under the Real and Chattel
Mortgage is fully settled.
The RTC denied the ARMCs complaint on
the ground that injunction cannot issue
against the exercise of a valid right, the
right of the creditormortgagee to
foreclose on the mortgage where the
debtor-mortgagor has defaulted in the
payment of its obligations.
The RTC likewise ruled that the LBPs
foreclosure was not merely an exercise
of its right, but also the performance of
its legal obligation under Presidential
Decree No. (P.D.) 385;36  the decree
ςrνll
requires government financial
institutions, such as the LBP, to
foreclose mandatorily all loans with
arrearages, including interest and
charges, amounting to at least twenty
percent (20%) of the total outstanding
obligation. The same decree also
provides that no restraining order,
temporary or permanent injunction shall
be issued by the court against the
foreclosing government financial
institution unless 20% of the
outstanding arrearages have been paid
after the filing of the foreclosure
proceedings.
The ARMC moved to reconsider the
RTCs decision, but the trial court denied
the motion in an order dated February
2, 2005.37  The ARMC filed a notice of
ςrνll
appeal to the CA on February 8, 2005.38 ςrνll
In its appeal to the CA, the ARMC
insisted that the restructuring of
its P 15,000,000.00 STLLs was still
under negotiation when the LBP filed its
application for extrajudicial foreclosure
on July 8, 1998, and contended that the
LBP was in bad faith and guilty of
promissory estoppel when it led the
ARMC to believe that it would
restructure its loans, yet refused to
have the mortgaged properties
reappraised by an independent
appraiser.
The ARMC further contended that the
charges imposed by the LBP were
unwarranted and that the stipulated
interest on the promissory notes was
excessive and unconscionable and
should be voided.
Foreclosure Sale
On May 12, 2005, the Sheriff of the RTC
of San Fernando City, La Union issued a
Notice of Extrajudicial Sale that set the
auction sale of the mortgaged properties
on June 3, 2005.39 ςrνll
The ARMC sought to enjoin the
foreclosure sale by filing with the CA an
application for the issuance of a writ of
preliminary injunction and temporary
restraining order, which the CA denied
in a resolution dated June 14, 2005.40 ςrνll
The LBP emerged as the winning bidder
in the auction sale.41
ςrνll
The CAs Ruling
In a decision42  dated March 28, 2006,
ςrνll
the CA found no merit in the ARMCs
appeal. The CA affirmed the RTC in
ruling that, under P.D. 385, an
injunction, whether permanent or
temporary, could not be issued to enjoin
the foreclosure proceedings instituted
by the LBP.
The CA likewise found that the LBP did
not approve, or even promised to
approve, the ARMCs proposed loan
restructuring; that, in LBPs letter dated
May 22, 1998 to ARMCs president, the
LBP merely informed the ARMC that its
proposal was "under evaluation by [its]
Loan Approving Authorities";43  that
ςrνll
nothing in the letter suggested that the
LBP made any commitment or
assurance to ARMC that it would
approve the latters proposal, thus, the
LBP could not be held liable for
promissory estoppel; and that, in fact,
the LBP repeatedly sent notices
demanding payment from ARMC but the
latter failed to comply, prompting LBP to
file for extrajudicial foreclosure.
The CA did not also find the LBP in bad
faith for refusing to have the ARMCs
mortgaged properties reappraised by an
independent appraiser; the LBPs low
valuation on the reappraised properties
would even be more beneficial to ARMC
in case of redemption.
Neither did the CA find the stipulated
interest rates on the promissory notes
and the imposed penalty charges
excessive, unconscionable and
unwarranted, as the interest on the
promissory notes ranged from 15.50%
to 18.25% per annum and was last
fixed at the "prevailing bank rate," while
the penalty charge was imposed at 12%
per annum. The CA found these rates
reasonable and cannot be compared
with the 5.5% per month, or 66% per
annum, interest that this Court found to
be excessive, illegal, iniquitous and
unconscionable in Medel v. Court of
Appeals.44ςrνll
The CA denied the motion for
reconsideration that the ARMC
subsequently filed, paving the way for
the present petition for review
on certiorari filed with this Court on
August 2, 2006.
The Courts Ruling
The basic issue posed for our resolution
is the ARMCs entitlement to an
injunctive remedy.
"Injunction is a judicial writ, process or
proceeding whereby a party is ordered
to do or refrain from doing a certain act.
It may be the main action or merely a
provisional remedy for and as an
incident in the main action."45  For an
ςrνll
injunction to issue, the following
essential requisites must be present: (1)
there must be a right in esse or the
existence of a right to be protected; and
(2) the act against which the injunction
is directed to constitute a violation of
such right.46
ςrνll
The ARMC filed a complaint for
injunction against the LBP on the
ground that the latters then impending
foreclosure of its mortgaged properties
was in violation of its contractual and
property rights, particularly the right of
the ARMC to have its outstanding loan
restructured by the LBP. The ARMC
alleged that the LBP acted in bad faith
and in wanton disregard of its
commitment to restructure the formers
loans when it hastily filed for
extrajudicial foreclosure while
negotiations for the loan restructuring
were still ongoing.
The existence of the ARMCs claimed
right to the loan restructuring, however,
was not clearly established by the
ARMC. A party seeking to avail of an
injunctive relief must prove that he or
she possesses a right in esse or one
that is actual or existing.47  Such right
ςrνll
must be clear and unmistakable,48  and Ï‚rνll
not contingent, abstract or future rights,
or one that may never arise.49 ςrνll
In the present case, both the RTC and
the CA found that no agreement was
forged between the ARMC and the LBP
on the restructuring of the ARMCs loans
at the time the LBP filed an application
to extra-judicially foreclose the ARMCs
mortgaged properties; the proposed
loan restructuring was not approved by
the LBP because the ARMC failed to
offer an additional collateral sufficient
enough to cover its outstanding loan
with the bank. Thus, the ARMC, then,
had no actual right to protect or to
enforce against the LBP. It failed to
satisfy the first requisite, i.e.,  the
existence of a clear and unmistakable
right for the issuance of an injunction.
On the other hand, the LBP had every
right to foreclose on the Real and
Chattel Mortgage since the ARMC had
defaulted in the payment of its overdue
loan obligation with the bank. The
foreclosure is supported by the express
mandate of P.D. 385, which provides:
Section 1. It shall be mandatory for
government financial institutions, after
the lapse of sixty (60) days from the
issuance of this Decree, to foreclose the
collaterals and/or securities for any
loan, credit, accommodation, and/or
guarantees granted by them whenever
the arrearages on such account,
including accrued interest and other
charges, amount to at least twenty
percent (20%) of the total outstanding
obligations, including interest and other
charges, as appearing in the books of
account and/or related records of the
financial institution concerned. This shall
be without prejudice to the exercise by
the government financial institutions of
such rights and/or remedies available to
them under their respective contracts
with their debtors, including the right to
foreclose on loans, credits,
accommodations and/or guarantees on
which the arrearages are less than
twenty percent (20%).
Section 2 of the same decree further
provides that:chanroblesvirtuallawlibrary
Section 2. No restraining order.
temporary or permanent injunction shall
be issued by the court against any
government financial institution in any
action taken by such institution in
compliance with the mandatory
foreclosure provided in Section
1 hereof whether such restraining
order. temporary or permanent
injunction is sought by the
borrower(s) or any third party or
parties, except after due hearing in
which it is established by the
borrower and admitted by the
government financial institution
concerned that twenty percent
(20%) of the outstanding
arrearages has been paid after the
filing of foreclosure proceedings.
chanroblesvirtuallawlibrary
Under these terms, the ARMC cannot
secure an injunction against the LBP, a
government financial institution.
Injunction Became Moot and Academic
The present petition must also be
denied because the act sought to be
enjoined by the ARMC is already a
consummated act. The records show
that the foreclosure sale on the ARMC's
JTIOligaged properties was held
sometime in June 2005 and
the LBP emerged as the winning bidder.
An injunction suit becomes moot and
academic after the act sought to be
enjoined had already been
consummated.50
ςrνll
WHEREFORE, we DENY the present
petition for review on certiorari for lack
of merit and for being moot and
academic. Costs against petitioner Agoo
Rice Mill Corporation.
SO ORDERED.
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, Respondent.
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 of Quezon City, Branch 223, then presided by
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. It was further alleged that
2  guarding the area were acting on orders of
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 Legaspi’s land and to file charges
against those who may enter it without the
latter’s authority. Legaspi agreed to give
3 
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 Legaspi’s 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
Legaspi’s share in whatever treasure may be
found in the land. In addition, Gutierrez
agreed to pay Atty. Adaza ₱5,000.00 as
appearance fee per court hearing and defray
all expenses for the cost of the litigation. Upon
4 
the filing of the complaint, then Executive
Judge Perlita J. Tria Tirona issued a 72-hour
temporary restraining order (TRO) against
petitioners.
The case was subsequently raffled to the RTC
5 
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 contending: first, there is no real
6 
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, and, second, Gutierrez failed to
7 
establish that the alleged armed men
petitioners. On March 17, 2000, petitioners
also filed a Motion for Inhibition of the
8 
respondent judge on the ground of alleged
partiality in favor of private respondent.
On March 23, 2000, the trial court granted
private respondent’s 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 Legaspi’s land; and, (2) the SPA
granted to Gutierrez continues to be
valid. The trial court ordered thus:
9 
WHEREFORE, in view of all the foregoing, the
Court hereby resolves to GRANT plaintiff’s
application for a writ of preliminary injunction.
Upon plaintiff’s filing of an injunction bond in
the amount of ONE HUNDRED THOUSAND
PESOS (₱100,000.00), 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 denying petitioners’ motion to dismiss
10 
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 irrevocability is because the agency becomes
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. The reason for its
15 
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
Legaspi’s 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 Legaspi’s 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. When an
16 
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. Consequently, the
17  establish the applicant’s rights or interests in
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. It is
18  preliminary injunction. It was
issued by the court to prevent threatened or
continuous irremediable injury to the applicant
before his claim can be thoroughly studied
and adjudicated. Its aim is to preserve
19  subject land. It was likewise established that
the status quo ante until the merits of the case
can be heard fully, upon the applicant’s
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
the subject matter of the main action. It is not
21 
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. Thus, an
22 
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
established, prima facie, that Legaspi has a
right to peaceful possession of his
land, pendente lite. Legaspi had title to the
the diggings were conducted by petitioners in
the enclosed area of Legaspi’s 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 judge’s 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. It bears to stress again
24  G.R. No. 207938
that a judge’s appreciation or misappreciation
of the sufficiency of evidence adduced by the
parties, or the correctness of a judge’s 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, the adverse and
25  DECISION
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 latter’s
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-00-40115,
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.
THIRD DIVISION
October 11, 2017
EVY CONSTRUCTION AND
DEVELOPMENT CORPORATION, Petitioner
vs.
VALIANT ROLL FORMING SALES
CORPORATION, Respondent
LEONEN, J.:
 
In every application for provisional injunctive
relief, the applicant must establish the actual
and existing right sought to be protected. The
applicant must also establish the urgency of a
writ's issuance to prevent grave and
irreparable injury. Failure to do so will warrant
the court's denial of the application. Moreover,
the application for the issuance of a writ of
preliminary injunction may be denied in the
same summary hearing as the application for
the issuance of the temporary restraining
order if the applicant fails to establish
requisites for the entitlement of the writ.
This is a Petition for Review
on Certiorari  assailing the October 22, 2012
1 a Notice of Levy were issued against the
Decision  and June 25, 2013 Resolution  of
2 3
the Court of Appeals in CA-G.R. SP No.
112737. The assailed judgments found that
the Regional Trial Court did not gravely abuse
its discretion when it denied Evy Construction
and Development Corporation's (Evy
Construction) application for the issuance of a
temporary restraining order. This application
sought to restrain the Register of Deeds from
compelling Evy Construction to surrender its
owner's copy of Transfer Certificate of Title
(TCT) No. 168590 and from further annotating
encumbrances relative to a civil case between
its predecessor-in-interest and a third party.
On September 4, 2007, Evy Construction
purchased a parcel of land covered by TCT
No. 134890 in Lipa, Batangas from Linda N.
Ang (Ang) and Senen T. Uyan (Uyan).  They 1âwphi1
executed a Deed of Absolute Sale, which was
notarized on September 11, 2007. At the time
of the sale, no lien or encumbrance was
annotated on the title, except for a notice of
adverse claim filed by Ang. 4
On September 18, 2007, the Register of
Deeds annotated a Notice of Levy on
Attachment on TCT No. 134890.  This5
annotation was by virtue of the Writ of
Preliminary Attachment issued by Branch 46,
Regional Trial Court, San Fernando,
Parnpanga in Civil Case No. 13442
entitled Valiant Roll Forming Sales
Corporation v. Angeli Lumber and Hardware,
Inc., and Linda Ngo Ang.  Two (2) other
6
encumbrances were also annotated on the
title.
7
Evy Construction registered the Deed of
Absolute Sale with the Register of Deeds on
November 20, 2007. TCT No. 168590 was
issued in its name; however, it contained the
annotation of the prior Notice of Levy on
Attachment, as well as a Notice of
Attachment/Levy upon Realty dated October
2, 2007 and a Notice of Levy on Preliminary
Attachment dated November 8, 2007. 8
Subsequently, the Regional Trial Court
rendered a Decision in Civil Case No. 13442
in favor of Valiant Roll Forming Sales
Corporation (Valiant). A Writ of Execution and
property covered by TCT No. 134890. 9
Evy Construction filed a Notice of Third-Party
Claim in Civil Case No. 13442, informing the
court that it had already filed with the sheriff
an Affidavit of Title/Ownership on May 20,
2008, in accordance with Rule 57 of the Rules
of Court.  Valiant posted an Indemnity Bond
10
of ₱745,700.00 to answer for any damages
that Evy Construction may suffer should
execution of the Regional Trial Court Decision
proceed. 11
By virtue of the July 18, 2008 Writ of
Execution issued in Civil Case No. 13442, the
Sheriff issued a Notice of Sale on Execution of
Real Property of Ang's properties, including
the property covered by TCT No. 134890.  A 12
Certificate of Sale was eventually issued to
Valiant as the winning bidder of the property
covered by TCT No. 134890. 13
On October 29, 2009, Evy Construction filed
with the Regional Trial Court of Lipa City,
Batangas its Complaint for Quieting of
Title/Removal of Cloud, Annulment of
Execution Sale and Certificate of Sale, and
Damages, with application for temporary
restraining order and/or preliminary
injunction. 14
It prayed for the issuance of a temporary
restraining order and/or writ of preliminary
injunction to enjoin the Register of Deeds from
compelling it to surrender its copy of TCT No.
168590 and from annotating any further
transactions relating to Civil Case No. 13442. 15
In the hearing for its application for the
issuance of a temporary restraining order, Evy
Construction claimed that it would suffer great
and irreparable injury if the Register of Deeds
were restrained from compelling it to
surrender the owner's duplicate copy ofTCT
No. 168590. It claimed that potential investors
interested in developing the property "[would]
back out of their investment plans if there [was
a] cloud of doubt hovering over the title on the
property."16
On November 9, 2009, the Regional Trial
Court issued an Order denying the application
for the issuance of a temporary restraining
order for having no legal basis. Evy
Construction's Motion for Reconsideration
was likewise denied in an Order dated
December 11, 2009.  Hence, it filed a Petition
17
for Certiorari  with the Court of Appeals.
18
On October 22, 2012, the Court of Appeals
rendered its Decision.  It held that Evy
19
Construction failed to sufficiently establish its
right to the issuance of a temporary
restraining order.
According to the Court of Appeals, Evy
Construction failed to sufficiently establish that
it would suffer grave and irreparable injury if
additional recording and annotation of further
transactions, orders, or processes relating to
the sale of the property to Valiant were made
on the title. It observed that the grounds
raised already touched on the merits of its
Complaint, resolution of which would amount
to prejudgment of the case. 20
The Court of Appeals likewise pointed out that
Evy Construction could still sue for damages if
the trial court eventually finds that the sale of
the property to Valiant was invalid. It also
reminded Evy Construction that it had the
remedy of proceeding against the indemnity
bond posted by Valiant for any damages it
might suffer as a result of the sale.
Evy Construction filed a Motion for
Reconsideration, which was denied by the
Court of Appeals in its Resolution  dated June
22
25, 2013. Hence, this Petition  was filed.
23
Petitioner argues that it was denied due
process when its application for preliminary
injunction was denied in the same summary
proceeding as the denial of its application for
a temporary restraining order.  Petitioner
24
likewise submits that it was entitled to the
injunctive writ applied for since "real estate
development is an industry built on trust and
public perception.''  It explains that the doubt
25
cast by the auction sale and its annotation to
the title caused investors to withdraw their
investments from petitioner's housing
development project, despite the expenses it
already incurred.26
Petitioner avers that the issuance of an
injunctive writ is necessary to prevent further
damage since its "business reputation and
goodwill as a real estate developer, once
tarnished and sullied, cannot be restored."  It
27
insists that respondent's indemnity bond in the
amount of ₱745,700.00 was not only
inadequate compared to petitioner's
investment in the property; it was immaterial
since it would be insufficient to restore buyer
and investor confidence in the project or in
petitioner's competence and reputation as a
property developer. 28
On the other hand, respondent counters that
the application for preliminary injunction was
never actually set for hearing or resolved by
the trial court; thus, it was misleading for
petitioner to argue that it was denied due
process by the trial court.  It maintains that
29
the Court of Appeals did not err in finding that
petitioner failed to establish the requisites for
the issuance of a temporary restraining order
and that petitioner still had adequate remedies
in the indemnity bond.  Respondent likewise
30
reiterates the Court of Appeals' finding that
petitioner already touches on the merits of its
Complaint before the trial court, which
effectively prejudges the case. 31
21 This Court is asked to resolve the following
issues:
First, whether or not petitioner Evy
Construction and Development Corporation
was denied due process when its application
for a writ of preliminary injunction was denied
in the same proceeding as its application for a
temporary restraining order; and
Second, whether or not the trial court
committed grave abuse of discretion in
denying petitioner Evy Construction and
Development Corporation's application for
injunctive relief.
 I temporary restraining order should be
Injunction is defined as "a judicial writ,
process or proceeding whereby a party is
ordered to do or refrain from doing a certain
act."  It may be filed as a main action before
32
the trial court  or as a provisional remedy in
33
the main action.  Bacolod City Water District
34
v. Hon. Labayen  expounded:
35
The main action for injunction is distinct from
the provisional or ancillary remedy of
preliminary injunction which cannot exist
except only as part or an incident of an
independent action or proceeding. As a matter
of course, in an action for injunction, the
auxiliary remedy of preliminary injunction,
whether prohibitory or mandatory, may issue.
Under the law, the main action for injunction
seeks a judgment embodying a final injunction
which is distinct from, and should not be
confused with, the provisional remedy of
preliminary injunction, the sole object of which
is to preserve the status quo until the merits
can be heard. A preliminary injunction is
granted at any stage of an action or
proceeding prior to the judgment or final
order. It persists until it is dissolved or until the
termination of the action without the court
issuing a final injunction. 36
Petitioner claims that it was denied due
process when "no valid hearing for the
application for preliminary injunction was ever
set" by the trial court and it "was NOT even
allowed to present its summary arguments
and its witness in support of its application for
a [temporary restraining order]." 37
A temporary restraining order may be
issued ex parte "to preserve the status quo
until the hearing of the application for
preliminary injunction [,] which cannot be
issued ex parte."  Otherwise stated, a trial
38
court may issue a temporary restraining order
even without a prior hearing for a limited
period of 72 hours "if the matter is of extreme
urgency and the applicant will suffer grave
injustice and in-eparable injury."  In this
39
instance, a summary hearing, separate from
the application of the preliminary injunction, is
required only to determine if a 72-hour
extended. 40
A trial court may also issue ex parte a
temporary restraining order for 20 days H[i]f 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 trial court has 20 days from its
41
issuance to resolve the application for
preliminary injunction. If no action is taken on
the application for preliminary injunction
during this period, the temporary restraining
order is deemed to have expired.  Notably,
42
the Rules do not require that a hearing on the
application for preliminary injunction be
conducted during this period.
While Rule 58, Section 4(d)  requires that the
43
trial court conduct a summary hearing in every
application for temporary restraining order
regardless of a grant or denial, Rule 58,
Section 5 requires a hearing only if an
application for preliminary injunction
is granted. Thus, Section 5 states that "[n]o
preliminary injunction shall be granted without
hearing and prior notice to the party or person
sought to be enjoined." Inversely stated, an
application for preliminary injunction may
be denied even without the conduct of a
hearing separate from that of the summary
hearing of an application for the issuance of a
temporary restraining order.
In this case, the November 9, 2009 hearing
was denominated as a "hearing on the
application for temporary restraining order and
preliminary injunction."  Petitioner's counsel
44
was allowed to present its arguments  and its
45
witness  but conceded that the issues before
46
the trial court were legal in nature.  Thus, the
47
trial court resolved that there was no need to
present the witness, which petitioner's counsel
accepted without objection:
COURT
[T]he only issue now is purely legal, so there
is no need to present your witness.
ATTY. LIMBO
Yes[,] Your Honor.
COURT
We are submitting the Motion for Issuance of
Temporary Restraining Order for resolution.
ATTY. LIMBO
Yes, Your Honor.
COURT
Alright, submitted. 48
Petitioner cannot insist on a separate hearing
for the application for preliminary injunction,
considering that it accepted that its application
would be submitted for decision without the
presentation of its witness. The trial court did
not find any need to conduct a further hearing
on the application for preliminary injunction
since petitioner was unable to substantiate its
entitlement to a temporary restraining order. In
any case, even if a separate hearing was
granted, petitioner would have presented the
same arguments and evidence in the
November 9, 2009 hearing. Thus, there can
be no denial of due process if the party
alleging it has already been granted an
opportunity to be heard.
II.A
Under Rule 58 of the Rules of Court, 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 a person to refrain from
a particular act or acts" or an order "requir[ing]
the performance of a particular act or acts."  It
49
is an ancillary relief granted by the court
where the main action or proceeding is
pending. 50
In order to be granted the writ, it must be
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 perforn1ance 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. 51
The issuance of a writ of preliminary injunction
is considered an "extraordinary event," being
a ''strong arm of equity or a transcendent
remedy."  Thus, the power to issue the writ
52
"should be exercised sparingly, with utmost
care, and with great caution and
deliberation."53
An injunctive writ is granted only to applicants
with "actual and existing substantial rights"  or54
rights in esse. Further, the applicant must
show "that the invasion of the right is material
and substantial and that there is an urgent
and paramount necessity for the writ to
prevent serious damage."  Thus, the writ will
55
not issue to applicants whose rights are
merely contingent or to compel or restrain acts
that do not give rise to a cause of action. 56
In this case, petitioner alleges that as the
registered owner of the property covered by
TCT No. 168590, "[i]t has the undeniable right
to the full use and possession [of it]."
57
At the time of the sale between petitioner Evy
Construction, Uyan, and Ang, TCT No.
134890 in Uyan's and Ang's names did not
contain any liens or encumbrances, except for
a notice of adverse claim by Ang dated
January 21, 1999. However, petitioner
admitted that while the Deed of Absolute Sale
was executed on September 4, 2007, the
property was only registered in its name on
November 20, 2007.  The encumbrances in
58
respondent's favor were annotated on
September 18, 2007, October 2, 2007, and
November 8, 2007,  or when the property was
59
still registered under Uyan's and Ang's names.
Under the Torrens system of registration, a
person who deals with the registered owner of
the property is not bound to look beyond the
title for any liens or encumbrances that have
not been annotated.  TCT No. 134890 did not
60
contain a notice of lis pendens that could have
warned petitioner that the property was under
litigation.
The sale between petitioner Evy
Construction? Uyan, and Ang was not
annotated on TCT No. 134890 at the time of
its sale.  A sale of property that is not
1âwphi1
registered under the Torrens system is
binding only between the buyer and the seller
and does not affect innocent third
persons.  The Regional Trial Court could not
61
have been faulted for ordering the annotation
of the notice of levy on attachment on TCT
No. 134890 considering that when the
September 18, 2007 Order was issued1 the
property was still in Uyan's and Ang's names.
Thus, in determining whether or not petitioner
is entitled to injunctive relief, the courts would
have to pass upon the inevitable issue of
which between petitioner and respondent has
the better right over the property, the very
issue to be resolved in the main case.
The facts of this case mirror that of Spouses
Chua v. Hon. Gutierrez,  where this Court was
62
confronted with the issue of whether or not a
registered lien of attachment is superior to that
of an unregistered deed of sale. In Spouses
Chua, the property was already registered in
the Spouses Chua's names when the property
was levied. Thus, they argued that, not being
the judgment debtors, the property should not
have been subjected to an execution sale.
This Court found the argument unmeritorious
and held:
[A] levy on attachment, duly registered, has
preference over a prior unregistered sale and,
even if the prior unregistered sale is
subsequently registered before the sale on
execution but after the levy is made, the
validity of the execution sale should be upheld
because it retroacts to the date of levy. 63
The prior levy on attachment carries over to
the new certificate of title, effectively placing
the buyers in the position of their vendor
under litigation.
However, Spouses Chua stated an exception
in that "[k]nowledge of an unregistered sale is
equivalent to registration."  If a party presents
64
evidentiary proof that the judgment creditor
had knowledge of a valid sale between the
judgment debtor and an innocent third party,
that knowledge would have the effect of
registration on the judgment creditor.
As in Spouses Chua, respondent's attachment
liens dated September 18, 2007, October 2,
2007, and November 8, 2007, if valid, may
have been superior to whatever right
petitioner may have acquired by virtue of the
Deed of Absolute Sale, which was only
registered on November 20, 2009. However,
the validity of the liens and the validity of the
Deed of Absolute Sale are factual matters that
have yet to be resolved by the trial court. The
trial court must also determine whether or not
respondent had prior knowledge of the sale.
Thus, no injunctive writ could be issued
pending a final determination of petitioner's
actual and existing right over the
property.  The grant of an injunctive writ could
1âwphi1
operate as a prejudgment of the main case.
II.B
Even assuming that there is already a final
determination of petitioner's right over the
property, petitioner still failed to prove the
urgent and paramount necessity to enjoin the
Register of Deeds from
making further annotations on TCT No.
168590.
Petitioner prays for the issuance of an
injunctive writ to prevent grave and irreparable
damage to its reputation as a real estate
developer.  Indeed, injunctive relief could be
65
granted to prevent grave and irreparable
damage to a business entity's goodwill and
business reputation. 66
Injury is considered irreparable if "there is no
standard by which [its] amount can be
measured with reasonable accuracy."  The 67
injury must be such that its pecuniary value
cannot be estimated, and thus, cannot fairly
compensate for the loss.  For this reason, the
68
loss of goodwill and business reputation,
being unquantifiable, would be considered as
grave and irreparable damage.
In Yu v. Court of Appeals,  this Court granted
69
an exclusive distributor's prayer for an
injunctive writ to prevent a competitor from
selling the same product on the ground that
the continued sale would "[render] illusory . . .
the very purpose for which the exclusive
distributorship was conceptualized, at the
expense of the sole authorized distributor." 70
In Semirara Coal Corporation v. HGL
Development Corporation,  this Court upheld
71
the issuance of a writ of mandatory injunction
to prevent Semirara Coal Corporation's
(Semirara) continued intrusion on HGL
Development Corporation's (HGL) property. It
also found that Semirara damaged HGL's
business standing when it prevented HGL
from operating its cattle-grazing business on
its property, which ''[was] perceived as an
inability by HGL to comply with the demands
of its customers and sow[ed] doubts in HGL's
capacity to continue doing business." 72
In Philippine National Bank v. RJ Ventures
Realty & Development Corporation,   this
73
Court affirmed the issuance of a writ of
preliminary injunction to enjoin the
extrajudicial foreclosure of Rajah
Broadcasting Network's radio equipment
pending the resolution of the main case
questioning the mortgage. This Court found
that the foreclosure would stop the operations
of Rajah Broadcasting Network's radio
stations. The loss of its listenership and the
damage to its image and reputation would not
be quantifiable, and thus, would be
irreparable.
However, in applications for provisional
injunctive writs the applicant must also prove
the urgency of the application.  The possibility
1âwphi1
of a grave and irreparable injury must be
established, at least tentatively, to justify the
restraint of the act complained of.  It is "[a]s
74
the term itself suggests ... temporary, subject
to the final disposition of the principal
action."  Its sole objective is "to preserve the
75
status quo until the merits can be heard." 76
Petitioner alleges that the execution sale and
the prior annotations on its title caused
"crucial investors and buyers"  to withdraw,
77
"notwithstanding the considerable costs and
expenses [it] already incurred." This is the
78
grave and irreparable damage it sought to be
protected from. However, the feared
"damage" was caused by the execution sale
and the annotations already made on the title.
It even admits that the annotations were
"impairing the progress of [its] housing
development."  In other words, petitioner
79
failed to establish the urgent and paramount
necessity of preventing further annotations on
the title.
Thus, what petitioner actually seeks is the
removal of the annotations on its title, which is
precisely what it asked for in its Complaint for
Quieting of Title/Removal of Cloud, Annulment
of Execution Sale and Certificate of Sale, and
Damages before the trial court. Injunctive
relief would have no practical effect
considering that the purported damage it
seeks to be protected from has already been
done. Therefore, its proper remedy is not the
issuance of an injunctive writ but to thresh out
the merits of its Complaint before the trial
court.
In Cortez-Estrada v. Heirs of Samut,  this 80
Court held:
[T]he 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. 81
The court's discretion is not interfered with
unless there is a showing that the grant or
denial was tainted with grave abuse of
discretion.82
The trial court, in the exercise of its discretion,
denied petitioner's application for the issuance
of a temporary restraining order and writ of
preliminary injunction on the ground that
petitioner would still have sufficient relief in its
prayer for damages in its Complaint.  In the
83
event that the annotations on petitioner's title
are found by the trial court to be invalid,
petitioner would have adequate relief in the
removal of the annotations and in the award
of damages. Therefore, the trial court acted
within the bounds of its discretion.
WHEREFORE, the Petition is DENIED,
SO ORDERED.
SECOND DIVISION
G.R. No. 182758               May 30, 2011
LAND BANK OF THE
PHILIPPINES, Petitioner,
vs.
HEIRS OF SEVERINO
LISTANA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under
Rule 45 of the Rules of Court. The petition
challenges the 30 January 2008 Decision2 and
6 May 2008 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 92701. The Court
of Appeals affirmed in toto the 4 August4 and
18 October5 2005 Orders of the Regional Trial
Court, Judicial Region 5, Branch 51, Sorsogon
City (RTC), in Civil Case No. 2001-6803.
The Facts
Severino Listana (Listana) owned a 246.0561-
hectare parcel of land in Inlagadian,
Casiguran, Sorsogon, covered by Transfer
Certificate of Title No. T-20193. Listana
voluntarily sold the property to the
government, through the Department of
Agrarian Reform, under Republic Act (RA) No.
6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988.
The Department of Agrarian Reform
Adjudication Board (DARAB) of Sorsogon
commenced summary administrative
proceedings to determine the amount of just
compensation for the property. In its 14
October 1998 Decision, the DARAB set the
amount at P10,956,963.25 and ordered
petitioner Land Bank of the Philippines (LBP)
to pay Listana the same.
On 18 June 1999, the Provincial Agrarian
Reform Adjudicator (PARAD) issued a writ of
execution ordering Land Bank Manager and
Agrarian Operations Center Head Alex A.
Lorayes (Lorayes) to pay Listana
₱10,956,963.25. Lorayes refused. Thus, on 2
September 1999, Listana filed with the
PARAD a motion for contempt against
Lorayes.
On 6 September 1999, LBP filed with the
Regional Trial Court, Judicial Region 5,
Branch 52, Sorsogon City, acting as special
agrarian court (SAC), a petition for judicial
determination of the amount of just
compensation for the property. LBP
challenged the amount set by the DARAB and
prayed that the amount be fixed at
₱5,871,689.03.
The PARAD granted Listana’s motion for
contempt. In its 20 August 2000 Order, the
PARAD cited Lorayes for indirect contempt
and ordered his imprisonment until he
complied with the DARAB’s 14 October 1998
Decision.
In its 25 October 2000 Order, the SAC
dismissed LBP’s petition for judicial
determination of the amount of just
compensation for the property. LBP appealed
the 25 October 2000 Order.
In its 27 November 2000 Resolution, the
PARAD ordered the issuance of an alias writ
of execution, ordering LBP to pay Listana
₱10,956,963.25. On 3 January 2001, the
PARAD issued a warrant of arrest against
Lorayes.
LBP filed with the RTC a petition for injunction
with application for the issuance of a writ of
preliminary injunction enjoining PARAD from
implementing the warrant of arrest against
Lorayes. In its 29 January 2001 Order, the
RTC enjoined the PARAD from implementing
the warrant of arrest pending final
determination of the amount of just
compensation for the property. LBP posted a
₱5,644,773.02 cash bond. The dispositive
portion of the 29 January 2001 Order stated:
WHEREFORE, premises considered, the
respondent Provincial Adjudicator of the
DARAB or anyone acting in its stead is
enjoined as it is hereby enjoined from
enforcing its order of arrest against Mr. Alex
A. Lorayes pending the final termination of the
case before RTC Branch 52, Sorsogon upon
the posting of a cash bond by the Land Bank.
SO ORDERED.6
Listana filed with the RTC a motion for
reconsideration. In its 2 April 2001 Order, the
RTC denied the motion. Listana filed with the
Court of Appeals a petition for certiorari under
Rule 65 of the Rules of Court. In its 11
December 2001 Decision, the Court of
Appeals set aside the 29 January and 2 April
2001 Orders of the RTC.
LBP filed with the Court a petition for review
on certiorari under Rule 45 of the Rules of
Court. In Land Bank of the Philippines v.
Listana, Sr.,7 the Court set aside the 11
December 2001 Decision of the Court of
Appeals and reinstated the 29 January and 2
April 2001 Orders of the RTC enjoining the
PARAD from implementing the warrant of
arrest pending final determination of the
amount of just compensation for the property.
The Court declared void all proceedings that
stemmed from Listana’s motion for contempt.
The Court held that:
Hence, the contempt proceedings initiated
through an unverified "Motion for Contempt"
filed by the respondent with the PARAD were
invalid for the following reasons: First, the
Rules of Court clearly require the filing of a
verified petition with the Regional Trial Court,
which was not complied with in this case. The
charge was not initiated by the PARAD motu
proprio, rather, it was by a motion filed by
respondent. Second, neither the PARAD nor
the DARAB have jurisdiction to decide the
contempt charge filed by the respondent. The
issuance of a warrant of arrest was beyond
the power of the PARAD and the DARAB.
Consequently, all the proceedings that
stemmed from respondent’s "Motion for
Contempt," specifically the Orders of the
PARAD dated August 20, 2000 and January
3, 2001 for the arrest of Alex A. Lorayes, are
null and void.
WHEREFORE, in view of the foregoing, the
petition for review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. SP No.
65276, dated December 11, 2001,
is REVERSED and SET ASIDE. The Order of
the Regional Trial Court of Sorsogon,
Sorsogon, Branch 51, dated January 29,
2001, which enjoined the Provincial
Adjudicator of the DARAB or anyone acting in
its stead from enforcing its order of arrest
against Mr. Alex A. Lorayes pending the final
termination of the case before Regional Trial
Court of Sorsogon, Sorsogon, Branch 52,
is REINSTATED.
SO ORDERED.8
On 26 May 2004, LBP filed with the RTC a
motion9 to withdraw the ₱5,644,773.02 cash
bond. LBP stated that:
LAND BANK OF THE PHILIPPINES, through
counsel unto this Honorable Court,
respectfully avers:
1. That last February 1, 2001,
LANDBANK posted cash bond
 covered by Official Receipt No.
7135588 dated January 31, 2001 in
the amount of ₱5,644,773.02. [C]opy
of the Order, Official Receipt and
deposit slip are hereto attached as
Annexes "A", "B", and "C";
2. That on August 5, 2003, the
Supreme Court issued a Decision in
G.R[.] No. 152611 entitled "Land Bank
of the Philippines versus Severino
Listana", the dispositive portion is
quoted as follows:
"WHEREFORE, in view of the foregoing, the
petition for review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. SP No.
65276, dated December 11, 2001, is
REVISED [sic] and SET ASIDE. The Order of
the Regional Trial Court of Sorsogon,
Sorsogon, Branch 51, dated January 29,
2001, which enjoined the Provincial
Adjudicator of the DARAB or anyone acting in
its stead from enforcing its order or [sic] arrest
against Mr. Alex A. Lorayes pending the final
termination of the case before Regional Trial
Court of Sorsogon, Sorsogon, Branch 52, is
REINSTATED.
SO ORDERED."
1. That on February 26, 200 [sic], an Entry of
Judgment was issued by the Supreme Court
making the Decision in G.R. No. 152611 final
and executory. Copy of the Entry of Judgment
is hereto attached as Annex "D".
WHEREFORE, premises considered it is most
respectfully prayed that the cash bond put up
by Land Bank of the Philippines be
released[.]10
The RTC’s Ruling
In its 4 August 2005 Order, the RTC denied
LBP’s motion to withdraw the P5,644,773.02
cash bond. The RTC held that:
The Court finds the Land Bank’s Motion
without merit inasmuch as the arguments
raised therein are specious. Contrary to Land
Bank’s conclusion, this Court holds otherwise
that the cash bond did not become moot and
academic upon the finality of the Supreme
Court’s decision dated August 5, 2003. This is
so because the underlying reason for the
posting of the cash bond still remains despite
the decision of the Supreme Court upholding
the unconstitutionality of the order of arrest
issued by PARAD. And that reason is the
distinctive fact that the cash bond was put up
in order to secure any damages that the
private respondent Listana may incur by
reason of the issuance of the injunction order.
The damages being referred to, that is — the
legal right of Mr. Listana to be justly and
promptly paid of his expropriated property —
was not effectively extinguished by the mere
decision of the Supreme Court declaring the
illegality of the order of arrest issued by the
PARAD against Mr. Alex Lorayes. In fact, the
Court’s ruling did not in any way, expressly or
impliedly, ordered [sic] the release of the cash
bond in Land Bank’s favor despite that the
latter’s petition was upheld with finality by the
Supreme Court.
Indeed, the cash bond did not become moot
and academic as clearly intentioned in the
Supreme Court’s decision dated August 5,
2003. A simple reading of its dispositive
portion would crystallize to anyone’s mind that
the final resolution of the case, including all
the issues interwoven therein, is conditioned
on the final determination of the just
compenstaion case filed before Branch 52,
RTC-Sorsogon and now pending before the
Supreme Court. It clearly means therefore that
the release of the cash bond to either party
being one of the issues necessarily included
in this case, would depend on the final
termination of the main action — the just
compensation case. To this date, the
Supreme Court has not rendered a resolution
pertaining thereto.
In adopting this line of reasoning, this Court is
merely upholding with consistency the tenor
and intent of its Order dated January 29,
2001. In issuing the injunction order against
the PARAD, the Court did not only recognize
the right of Mr. Alex Lorayes against illegal
arrest but at the same time protected the
inherent right of Mr. Severino Listana to be
justly and promptly paid of his expropriated
property, hence it ordered the petitioner to
post a cash bond in the amount of
P5,644,773.02, the almost exact amount Mr.
Listana could have collected as payment from
Land Bank had it not for the injunction order.
At this juncture also, the Court would not be
persuaded with Land Bank’s contention that
the cash bond be released it [sic] its favor for
the reason that the same was drawn not from
the agrarian fund but advanced from its
capital fund as part of litigation expenses. The
internal operations of Land Bank is of no
moment under the instant case. When the
injunctive order was issued; it was clear to
Land Bank that the cash bond posted was
precisely meant to secure the unpaid balance
due to Mr. Listana. To adhere to Land Bank’s
contention would effectively defeat the
purpose of the injunction bond and to subject
again the landowner to another circuitous
mode of collecting compensation for his
property in case the just compensation case
be resolved in his favor. Therefore, in the
interest of social justice, the Court deems it
wise to preserve the status quo with regards
[sic] to the cash bond. It shall not be dissolved
at the moment and shall stay pending the final
termination of the just compensation case.11
LBP filed a motion for reconsideration. In its
18 October 2005 Order, the RTC denied the
motion. LBP filed with the Court of Appeals a
petition12 for certiorari under Rule 65 of the
Rules of Court.
The Court of Appeals’ Ruling
In its 30 January 2008 Decision, the Court of
Appeals dismissed LBP’s petition and
affirmed in toto the RTC’s 4 August and 18
October 2005 Orders. The Court of Appeals
held that:
It is plain to see from the Supreme Court’s
decision that only the Orders of the PARAD
dated 20 August 2000 and 3 January 2001 for
the arrest of Lorayes were nullified.
A reading of the Supreme Court’s decision will
show that the nullification of the orders of the
PARAD stemmed not from the correctness of
Lorayes’ refusal to execute the DARAB’s
decision nor from the entitlement of Land
Bank to enjoin such execution. Rather, it is
grounded on the adoption of the improper
mode of initiating the contempt proceedings,
and on PARAD’s lack of jurisdiction to decide
the contempt charge. Hence, the absence of
any pronouncement in the Supreme Court’s
decision finally deciding the issue of whether
or not Land Bank is permanently entitled to
enjoin the payment of P10,956,963.25 to the
Heirs of Listana. In fact, the dispositive portion
unequivocally upholds and reinstates only the
court a quo’s grant of the writ
of preliminary injunction.
It must be stressed that it is the dispositive
part of the judgment that actually settles and
declares the rights and obligations of the
parties, finally, definitively, and authoritatively,
notwithstanding the existence of statements in
the body that may tend to confuse.
Thus, notwithstanding its pronouncement that
neither the PARAD nor the DARAB had any
authority to cite Lorayes in contempt and
order his arrest, the Supreme Court’s decision
cannot be used as basis to release the
injunction bond posted by Land Bank,
inasmuch as the decision upheld and
reinstated the court a quo’s issuance of the
writ of preliminary injunction. Without the
injunction bond, the writ of preliminary
injunction would be invalid.
A preliminary injunction or temporary
restraining order may be granted only when,
among others, the applicant, unless exempted
by the court, 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.
xxxx
In the case at bar, the writ of preliminary
injunction is directed at the PARAD’s orders to
arrest Lorayes for refusing to comply with the
DARAB’s decision ordering Land Bank to pay
the amount of P10,956,963.25 as just
compensation for the subject property.
As subsequently explained by the court a quo
in its assailed Order, the underlying reason
behind its grant of the writ of preliminary
injunction is the pendency of Land Bank’s
action for judicial determination of just
compensation. As long as the issue of just
compensation is not settled, it would be
precipitate to rule one way or the other on the
propriety of executing the DARAB’s decision.
Indeed, if the courts eventually uphold the
DARAB’s valuation of the subject property, the
injunction against the execution of the
DARAB’s Decision would give rise to the
Heirs’ right to collect damages, which the
injunction bond would answer for. It is only
when the courts finally strike down the
DARAB’s computation of just compensation
that the injunction bond may finally be
released.
Clearly, the court a quo soundly exercised its
discretion in refusing to release the injunction
bond posted by Land Bank.13
LBP filed a motion for reconsideration. In its 6
May 2008 Resolution, the Court of Appeals
denied the motion. Hence, the present
petition.
Issue
LBP raises as issue that the Court of Appeals
erred in not allowing the withdrawal of the
P5,644,773.02 cash bond.
The Court’s Ruling
The petition is unmeritorious.
In Land Bank of the Philippines v. Listana, Sr.,
the Court reinstated the 29 January 2001
Order of the RTC. The dispositive portion of
the case states:
WHEREFORE, in view of the foregoing, the
petition for review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. SP No.
65276, dated December 11, 2001,
is REVERSED and SET ASIDE. The Order of
the Regional Trial Court of Sorsogon,
Sorsogon, Branch 51, dated January 29,
2001, which enjoined the Provincial
Adjudicator of the DARAB or anyone
acting in its stead from enforcing its order
of arrest against Mr. Alex A. Lorayes
pending the final termination of the case
before Regional Trial Court of Sorsogon,
Sorsogon, Branch 52, is REINSTATED.
SO ORDERED.14 (Emphasis supplied)
The dispositive portion of the 29 January 2001
Order of the RTC states:
WHEREFORE, premises considered, the
respondent Provincial Adjudicator of the
DARAB or anyone acting in its stead is
enjoined as it is hereby enjoined from
enforcing its order of arrest against Mr. Alex
A. Lorayes pending the final termination of the
case before RTC Branch 52, Sorsogon upon
the posting of a cash bond by the Land Bank.
SO ORDERED.15
The dispositive portion of the 29 January 2001
Order of the RTC clearly states that "the
respondent Provincial Adjudicator of the
DARAB x x x is enjoined x x x from enforcing
its order of arrest against Mr. Alex A.
Lorayes pending the final termination of the
case before RTC Branch 52, Sorsogon
upon the posting of a cash bond by Land
Bank." Thus, LBP cannot withdraw the bond
pending final determination of the amount of
just compensation for the property.
In its 14 October 1998 Decision, the DARAB
set the amount of just compensation for the
property at ₱10,956,963.25 and ordered LBP
to pay Listana the amount. On 18 June 1999,
the PARAD issued a writ of execution ordering
Lorayes to pay Listana the amount. Lorayes
refused and, later, LBP filed with the RTC a
petition for injunction with application for the
issuance of a writ of preliminary injunction.
An applicant for preliminary injunction is
required to file a bond executed to the party or
person enjoined, to the effect that the
applicant will pay to such party or person all
damages which he may sustain by reason of
the injunction. Section 4(b), Rule 58 of the
Rules of Court states:
SEC. 4. Verified application and bond for
preliminary injunction or temporary restraining
order. — A preliminary injunction or temporary
restraining order may be granted only when:
xxxx
(b) 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.
As correctly ruled by the lower courts, the
₱5,644,773.02 bond shall answer for the
damages Listana may sustain if the courts
finally uphold the ₱10,956,963.25 just
compensation set by the DARAB. In Republic
v. Caguioa,16 the Court held that, "The
purpose of the injunction bond is to protect the
defendant against loss or damage by reason
of the injunction in case the court finally
decides that the plaintiff was not entitled to it,
and the bond is usually conditioned
accordingly."17
The SAC has original and exclusive
jurisdiction over petitions for determination of
the amount of just compensation of properties
acquired under RA No. 6657. Administrative
agencies have no jurisdiction over just
compensation cases. Section 57 of RA No.
6657 states that, "The Special Agrarian
Courts shall have original and exclusive
jurisdiction over all petitions for the
determination of just compensation to
landowners." In Land Bank of the Philippines
v. Wycoco,18 citing Republic v. Court of
Appeals,19 the Court held that:
In Republic v. Court of Appeals, it was held
that Special Agrarian Courts are given
original and exclusive jurisdiction over two
categories of cases, to wit: (1) all petitions
for the determination of just
compensation; and (2) the prosecution of all
criminal offenses under R.A. No. 6657. x x
x The DAR, as an administrative agency,
cannot be granted jurisdiction over cases
of eminent domain and over criminal
cases. The valuation of property in
eminent domain is essentially a judicial
function which is vested with the Special
Agrarian Courts and cannot be lodged with
administrative agencies.20 (Emphasis
supplied)
Thus, as a rule, the DARAB’s decision setting
the amount of just compensation is merely
preliminary and not executory if challenged
before the SAC. Execution pending "appeal"
of the DARAB decision is allowed only on
meritorious grounds.21 Even then, it is the
SAC, not the DARAB, that can grant
execution pending "appeal" because the SAC
has original and exclusive jurisdiction over just
compensation cases. The determination of the
amount of just compensation is a judicial
function that cannot be usurped by
administrative agencies. In Apo Fruits
Corporation v. Court of Appeals,22 the Court
held that:
It is now settled that the valuation of property
in eminent domain is essentially a judicial
function which is vested with the RTC acting
as Special Agrarian Court. The same cannot
be lodged with administrative agencies and
may not be usurped by any other branch or
official of the government.231avvphi1
In the present case, LBP filed with the SAC a
petition for determination of the amount of just
compensation on 6 September 1999. The
PARAD issued the alias writ of execution and
warrant of arrest on 27 November 2000 and 3
January 2001, respectively. The writ of
execution and warrant of arrest were invalid
because the 14 October 1998 Decision of the
DARAB setting the amount at ₱10,956,963.25
was merely preliminary and not executory.
In any event, the Court has reinstated the 29
January 2001 Order of the RTC enjoining the
PARAD from implementing the warrant of
arrest pending final determination of the
DEPUTIES, Regional Trial Court, Branch
33, Hall of Justice, Libertad, Butuan City;
and FIRST CONSOLIDATED
BANK, Respondents.
DECISION
PERALTA, J.:
Before us is a Petition for Certiorari,
Prohibition and Mandamus with Prayer for a
Temporary Restraining Oder and/or Writ of
Preliminary Injunction under Rule 65 of the
Rules of Court which seeks to annul and set
aside the Resolutions dated July 2, 2009  and
1

amount of just compensation for the September 30, 2009  of the Court of Appeals
2

property. Land Bank of the Philippines v. (CA) in CA-G.R. CV No. 01822-MIN.

Listana, Sr. has long become final and
executory and can no longer be disturbed.
The facts follow:
Consequently, LBP cannot withdraw the
₱5,644,773.02 cash bond which is a condition
for the issuance of the writ of preliminary Between the periods March 25, 1996 to July
injunction. 13, 2000, petitioners executed several real
estate mortgages and chattel mortgage in
favor of respondent First Consolidated Bank
WHEREFORE, the Court DENIES the
(hereafter private respondent bank), through
petition. The Court AFFIRMS the 30 January
its branch in Butuan City.
2008 Decision and 6 May 2008 Resolution of
the Court of Appeals in CA-G.R. SP No.
92701. The loans obtained by petitioners were
released on different dates and are
summarized as follows:
SO ORDERED.

ANTONIO T. CARPIO Date the   Principal

Associate Justice Loan was Amount
Granted
WE CONCUR: March 19, Agusan Institute 8,000.000.00
1996 of Technology
THIRD DIVISION (owned by
petitioners) was
G.R. No. 190134               July 8, 2015 granted an
Interim
SPOUSES ROGELIO and SHIRLEY T. LIM, Financing Loan.
Agusan Institute of Technology, March 25, Agusan Institute 2,000,000.00
represented by DR. SHIRLEY T. LIM, 1996 of Technology
President and as Attorney-in-Fact of FELIX was granted a
A. CUENCA, MARY ANN M. MALOLOT, and second Interim
REY ADONIS M. MEJORADA Petitioners, Financing Loan.
vs.
HONORABLE COURT OF APPEALS, March 27, Agusan Institute 1,500,000.00
TWENTY-SECOND DIVISION, CAGAYAN 1996 of Technology
DE ORO CITY, MINDANAO STATION; was granted a
SHERIFF ARCHIBALD C. VERGA, and his
 third Interim religiously pay said loans as they became due
Financing Loan. and demandable, hence, private respondent
bank was forced to file for an application for
July 17, Rogelio Lim 300,000.00 Extra-judicial Foreclosure of Real Estate
1996 was granted a Mortgage and Chattel Mortgage on December
commercial 28, 2000.
loan.
October Rogelio Lim 1,300,000.00 In response, petitioners filed an action for
20, 1996 was granted a revocation and annulment of real estate
second mortgage and chattel mortgage with plea for
commercial the issuance of a temporary restraining order
loan. and preliminary injunction with the Regional
Trial Court (RTC) of Butuan City. In its
October Rogelio Lim 60,000.00 complaint, petitioners alleged that the
31, 1996 was granted a contracts of mortgage cannot be foreclosed
fourth because Agusan Institute of Technology had
commercial already full paid its obligation with private
loan. respondent Bank if the latter did not charge
exorbitant and excessive interests and
February 5, Agusan Institute 9,512,400.00 penalties in the computation of all payments
1997 of Technology made by the former. Petitioners assert that the
was granted a total payments they tendered to private
loan the entire respondent bank constituted overpayments to
proceeds of the loan, they allege that there is no legal and
which was used factual basis or necessity for private
to pay off the respondent bank to effect the foreclosure of
three Interim the real and personal properties mortgaged to
Financing secure the loan.
Loans.
February 5, Agusan Institute 1,987,600.00 To prove their cause of action, petitioners
1997 of Technology presented one witness, petitioner Shirley Lim,
was granted a who testified that due to private respondent
loan. bank’s illegal application for the extrajudicial
foreclosure of its mortgages, she suffered
July 20, Agusan Institute 3,400,000.00 social humiliation, wounded feelings,
1997 of Technology sleepless nights and mental anxieties.
was granted Interesting to note, however, that despite
another loan. petitioners’ claims regarding overpayments of
April 19, Agusan Institute 45,000.00 their loan obligations, no documentary
1999 of Technology evidence was ever attached to the complaint
was granted proving that indeed there were overpayments
loan. made and when it were actually made.

June 30, Agusan Institute 10,100,000.00 After proper hearing on petitioners’ application
1999 of Technology for issuance of a writ of preliminary injunction,
was granted the RTC issued the writ ordering private
loan. respondent Bank to desist from foreclosing
the said contracts of mortgage.
Private respondent bank admitted that the
aforementioned loans were paid by Agusan Trial on the merits then ensued.
Institute of Technology except for the 7th,
8th and 11th loans. Petitioners failed to
On December 28, 2007, the RTC rendered a
Decision  lifting the writ of preliminary
3
injunction and ruling in favor of private
respondent Bank.
WHEREFORE, premises, considered,
judgment is hereby rendered in favor of the
defendant Bank and against the plaintiff
Agusan Institute of Technology, declaring,
directing and ordering the following:
a) The dismissal of the instant
complaint.
b) The plaintiff Agusan Institute of
Technology (AIT) as represented by
Dr. Shirley T. Lim to pay defendant
Bank the following:
1. The outstanding balance of
the 7th loan (₱9,512,400.00)
which as of May 23, 2005
amounts to ₱20,213,240.55
until fully paid.
2. The outstanding balance of
the 8th loan (₱1,987,600.00)
which amounts to
₱3,742,841.63 as of May 23,
2005 until fully paid.
3. The outstanding balance of
the 11th loan (10,100,000.00)
which amounts to
₱46,569,275.26 as of May 23,
2005 until fully paid.
c) Attorney’s fees in the amount of
10% of the outstanding obligations.
d) Litigation expenses in the amount
of ₱30,000.00.
e) Exemplary damages in the amount
of ₱50,000.00.
f) The writ of preliminary injunction is
hereby ordered lifted and of no forced
and effect.
SO ORDERED 4 COMMITTED A GRAVE ABOUSE OF
Dissatisfied, petitioners appealed to the CA.
In a Resolution dated July 2, 2009, the CA
denied petitioners’ appeal with prayer for the
issuance of a Temporary Restraining Order
(TRO) and/or Writ of Preliminary Injunction.
The CA held that injunction is an extraordinary
remedy to be resorted to when there is a
pressing necessity to avoid injurious
consequences that cannot be remedied under
any standard compensation. To be entitled to
an injunctive writ, the applicants must show,
inter alia, the existence of a clear and
unmistakable right and an urgent and
paramount necessity for the writ to prevent
serious damages. The CA held that is neither
appears from the facts shown by the TRO
application that great or irreparable injury
would result to petitioners before the matter
can be hear, nor did petitioners show any
clear and positive right to be entitled to the
protection of the ancillary relief of TRO.
5
Petitioners filed a motion for reconsideration,
however, the same was denied in a
Resolution dated September 30, 2009.
Hence, the present petition.
Petitioners raise the following grounds to
support their petition:
I
THE HONORABLE COURT OF APPEAL
COMMITTED A GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN ISSUING
THE JULY 2, 2009 RESOLUTION WHICH
DENIED PETITIONERS’ APPLICATION FOR
THE ISSUANCE OF TEMPORARY
RESTRAINING ORDER, DESPITE THE
FACT THAT PETITIONERS HAVE SHOWN
THEIR CLEAR ENTITLEMENT TO THE
ISSUANCE OF INJUNCTIVE RELIEF.
II
THE HONORABLE COURT OF APPEALS
DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN ISSUING
THE SEPTEMBER 30, 2009 RESOLUTION
WHICH DENIED PETITIONERS’ MOTION
FOR RECONSIDERATION OF THE
RESOLUTION DATED JULY 2, 2009
DENYING PETITIONERS’ APPLICATION
FOR THE ISSUANCE OF INJUNCTIVE
RELIEF, AND IN NOT ACTING ON THE
MERITS ON PETITIONERS’
SUPPLEMENTAL TO THE MOTION FOR
RECONSIDERATION, DESPITE THE FACT
THAT PETITIONERS HAVE CLEARLY
SHOWN THAT GREAT AND IRREPARABLE
INJURY WOULD BE COMMITTED AGAINST
THEM IF THEIR PLEA FOR INJUNCTIVE
RELIEF WOULD NOT BE ISSUED IN THEIR
FAVOR AND THAT PETITIONER RAISED
COGENT GROUNDS IN THEIR
SUPPLEMENTAL MOTION. 6
In essence, at issue is whether or not the CA,
in denying petitioners’ application for a writ of
preliminary injunction, committed grave abuse
of discretion amounting to lack of jurisdiction.
We rule in the negative.
Section 5, Rule 58 of the Rules of Court
provides that a temporary restraining order my
e issued only if it appears from the facts
shown by affidavits or by verified application
that great or irreparable injury would be
inflicted on the applicant before the writ of
preliminary injunction could be hear. Thus:
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 verified application
that great or irreparable injury would result to
the applicant before the matter can be heard
on notice, the court 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 twenty-day 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.
However, and subject to the provisions of the
preceding sections, if the matter is of extreme
urgency and the applicant will suffer grave
injustice and irreparable injury, the executive
judge of a multiple-sala court or the presiding
judge of a single sala court may issue ex parte
a temporary restraining order effective for only
seventy-two (72) hours from issuance but he
shall immediately comply with the provisions
of the next preceding section as to service of
summons and the documents to be served
therewith. Thereafter, within the aforesaid
seventy-two (72) hours, the judge before
whom the case is pending shall conduct a
summary hearing to determine whether the
temporary restraining order shall be extended
until the application for preliminary injunction
can be hear. In no case shall the total period
of effectivity of the temporary restraining order
exceed twenty (20)days, including the original
seventy-two hours provide herein,
In the event that the application for preliminary
injunction is denied or not resolved within the
said period, the temporary restraining order is
deemed, automatically vacated. The effectivity
of a temporary restraining order is not
extendible without need of any judicial
declaration to that effect and no court shall
have authority to extend or renew the same
on the same ground for which it was issued.
However, if issued by the Court of Appeals or
a member thereof, the temporary restraining
order shall be effective for sixty (60) days from
service on the party or person sought to be
enjoined. A restraining order issued by the
Supreme Court or a member thereof shall be
effective until further orders.
From the foregoing, it is clear that to be
entitled to an injunctive writ, the applicant
must show that there exists a right to be
protected which is directly threatened by an
act sought to be enjoined. Furthermore, there
must be a showing that the invasion of the
right is material and substantial, and that there
is an urgent and paramount necessity for the
writ to prevent serious damage. 7
In Australian Professional Realty, Inc. v.
Municipality of Padre Garcia, Batangas
Province,  this Court held that a writ of
8 grave abuse of discretion. 12
preliminary injunction and a TRO are
injunctive reliefs and preservative remedies
for the protection of substantive rights and
interest.  Essential to granting the injunctive
1âwphi1
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. 9
Also, the Court, in the case of Pahila-Garrido
v. Tortogo, 10
Emphasized that-
[I]injunctive relief is resorted to only when
there is a pressing necessity to avoid injurious
consequences that cannot be redressed
under any standard of compensation. The
controlling reason for the existenece of the
judicial power to issue the writ of injuction is
that the court may thereby prevent a
threatened or continuous injury to some of the
parties before their claims can be thoroughly
investigated and advisedly adjudicated. A writ
of preliminary injunction is an extraordinary
event and is the strong arm of equity or a
transcendent remedy. It is granted only to
protect actual and existing substantial rights.
Without actual and existing rights on the part
of the applicant, and in the absence of facts
bringing the matter within the conditions for its
issuance, the ancillary writ must be struck
down for being issued in grave abuse of
discretion. Thus, injunction will not issue to
protect a right not in esse, which is merely
contingent, and which may never arise , or to
restrain an act which does not give rise to a
cause of action. 11
Worth nothing also is the fact 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 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. Hence, the exercise of judicial
discretion by a court injunctive matters must
not be interfered with, except when there is
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. 13
In the present case, we find that the CA did
not commit grave abuse of discretion in
denying petitioners’ application for preliminary
injunction and TRO. As aptly held by the CA, it
neither appears from the facts shown by the
TRO application that great or irreparable injury
would result to petitioners before the matter
can be heard, nor did they show any clear and
positive right to be entitled to the protection of
the ancillary relief of TRO as they only claim
that debts would have been paid had
respondent bank not impose astronomical
interests on its loans.
Nevertheless, it appears that the acts sought
to be enjoined by petitioners, that is, for
respondents to cease and desist from
conducting the extrajudicial foreclosure of its
properties, are already fait accompli.  As early
1a\^/phi1
as July 31, 2009, Sheriff Archibald Varga
executed in favor of respondent bank the
Sherrif’s Certificate of Sale on said properties
after petitioners failed to exercise the right of
redemption within the period required of them
under the law. Since the very evil that
petitioners want to avoid no longer exists,
there is nothing more to be restrained.
WHEREFORE, premises considered, the
instant petition is DENIED. The Court of
Appeals Resolutions dated July 2, 2009 and
September 30, 2009 are AFFIRMED.
SO ORDERED.
 EN BANC
G.R. No. 162716             September 27, 2006
Honorable Secretary EMILIA T. BONCODIN
of the Department of Budget and
Management (DBM), petitioner,
vs.
NATIONAL POWER CORPORATION
EMPLOYEES CONSOLIDATED UNION
(NECU), respondent.
DECISION
PANGANIBAN, C.J.:
Injunction is an extraordinary peremptory
remedy available only when the claimant can
show a clear and positive right that must be
protected. When the alleged right is unclear or
dubious, the injunctive writ cannot be granted.
As the present respondent has not proved a
clear legal right to the salary step increments
in question, the lower court is deemed to have
gravely abused its discretion when it issued
the Writ of Preliminary Injunction.
The Case
Before us is a Petition for Review1 under Rule
45 of the Rules of Court, assailing the
November 25, 2003 Decision2 and the March
4, 2004 Resolution,3 both rendered by the
Court of Appeals (CA) in CA-GR SP No.
74694.
The assailed Decision upheld the Writ of
Preliminary Injunction issued by the Regional
Trial Court of Quezon City, Branch 78, in its
Resolutions4 dated September 25, 2002, and
October 29, 2002, in Civil Case No. Q-02-
47615. The questioned writ enjoined the
implementation of National Power
Corporation's Board Resolution No. 2002-81
passed on July 24, 2002, and confirmed on
August 14, 2002; Secretary Emilia T.
Boncodin's Letter Memorandum dated May 8,
2002; and Corporate Auditor Norberto
Cabibihan's Memorandum Circular dated
June 5, 2002.
The assailed Resolution denied
reconsideration.
The Facts
The CA summarized the undisputed facts as
follows:
"On [October 8, 2001], the Board of
Directors of NAPOCOR issued Board
Resolution No. 2001-113 amending
Board Resolution No. 99-35 which
granted the Seniority in Position Pay.
Board Resolution No. 99-35 granted a
step increment to all qualified
NAPOCOR officials and employees
who have been in their position for ten
(10) years effective calendar year
1999. On the other hand, Board
Resolution No. 2001-113 reduced the
ten (10) year requirement to three (3)
years.
"On [November 12, 2001], then
President of NAPOCOR, Jesus
Alcordo, issued Circular No. 2001-51
providing for the implementing rules
and regulations of Board Resolution
No. 2001-113. On May 6, 2002, the
NAPOCOR Officer-in-Charge,
President and Chief Executive Officer,
Roland Quilala, issued Circular No.
2002-22 providing for additional
guidelines relative to the
implementation of the step increment
based on length of service in the
position to qualified NAPOCOR
officials and employees.
"On [November 26, 2001], petitioner
furnished a letter addressed to Mr.
Alcordo informing the latter that
NAPOCOR's request for clearance to
implement Joint CSC-DBM Circular
No. 1, s. 1990 which is the basis of
Board Resolution No. 2001-113
cannot be given due course for lack of
legal basis. In essence, petitioner
holds that the grant of step increment
based on length of service is an
additional benefit under a different
name since NAPOCOR has already
been granting seniority pay based on
the length of service as embodied in
the Collective Negotiation Agreement
(CNA). In addition, petitioner said that
the grant of step increment is not
applicable to the salary plan of
NAPOCOR considering its higher
salary rates [compared with that of the
existing government pay plan]. Lastly,
petitioner told Mr. Alcordo of the
budget implication of the grant of said
proposal which she estimated to cost
as high as Eighty Four Million Pesos
(P84,000,000.00).
"Based on the petitioner's foregoing
letter, the Corporate Auditor of
NAPOCOR, Norberto Cabibihan,
issued a Memorandum [dated June 5,
2002] to Roland Quilala, NAPOCOR
Officer-in-Charge, enjoining him to
suspend/stop payment of the step
increment as embodied in NPC
Circular No. 2001-51 dated
[November 12, 2001], [effective July
2002]. He also requested the
suspension of the implementation of
NPC Circular No. 2002-22 dated [May
6, 2002]. He warned that succeeding
payments of the step increment shall
be automatically disallowed.
"On [June 21, 2002], Mr. Quilala
issued a Memorandum enjoining
concerned officials to suspend the
processing of the succeeding step
increment based on length of service
resulting from the application of
Sections 2.2 (c) and 2.2 (d) of Circular
No. 2002-22.
"On [July 24, 2002], the NAPOCOR
Board of Directors issued Board
Resolution No. 2002-81 revising the
implementation of the Step Increment,
the pertinent portion of which reads:
'NOW, THEREFORE, BE IT
RESOLVED, AS IT IS
HEREBY RESOLVED, That
the recommendations of the
Department of Budget and
Management (DBM), as
explained by the Honorable
Secretary and Director of NP
Board, Emilia T. Boncodin,
relative to the
submitted Revised
Implementation of the Step
Increment due to Length of
Service in the position of the
NPC employees, to cover the
following:
'1) Pure seniority benefits
counted as one (1) step
increment for every three (3)
years of service in the present
position, covering from years
1994 up to 2001 or two (2)
steps increment only;
'2) Rollback of basic monthly
salary for NPC personnel who
have been recipients of the
step increase due to length of
service in their present
position in excess of the two
steps increment granted in the
above paragraph to qualified
employees and officials, and
Corrective Salary Adjustment
(CSA) effective September 1,
2002; and
'3) No payback by the NPC
officials and employees who
were granted salary
differentials covering the
period October 2001 up to
August 2002. Approval of all
this and the above benefits will
be sought from the Office of
the President, Malacañang,
upon assurance by the
Secretary of the Department of
Budget and Management
(DBM) that a favorable
endorsement in support
thereof will be made, x x x and
are hereby approved; x x x'
"Believing that NPC Circular Nos.
2001-51 and 2002-22 are within the
bounds of law and that they have
already acquired a vested right in it,
[respondent National Power
Corporation Employees Consolidated
Union (NECU) filed a Petition for
Prohibition with Application for
TRO/Preliminary Injunction before the
Regional Trial Court in Quezon City on
[August 27, 2002].
"On [August 30, 2002], public
respondent [Judge Percival Mandap
Lopez, of Branch 78, Regional Trial
Court of Quezon City] issued an Order
granting private respondent's prayer
for the issuance of a Temporary
Restraining Order and setting the
hearing of the application for the
issuance of a writ of preliminary
injunction on [September 9, 2002].
However, it appears that in lieu of oral
arguments, the parties opted to file
their respective position papers and
memoranda on the matter.
"Hence, on [September 25, 2002],
public respondent issued the first
assailed Resolution granting private
respondent's prayer for the issuance
of the writ of preliminary injunction.
Public respondent held that at that
stage of the proceedings, respondents
therein have not shown that Circular
No. 2001-51 and Board Resolution
No. 2001-113, which were
implemented effective [July 1, 2001],
are in contravention of [any] law. He
further held that a 'roll back' of the
salaries of all the NAPOCOR
employees, while the merits of the
case is yet to be heard, would result to
a grave and irreparable damage to
them. Thus, public respondent granted
[NECU's] prayer for the issuance of
the writ of preliminary injunction
subject to its filing of the Injunction
Bond in the amount of Eighty Four
Million Pesos (P84,000,000.00) which
is the budget implication of the step
increment as manifested by petitioner.
"Both parties moved for the
reconsideration of the Resolution.
Petitioner prayed for the reversal
thereof while [respondent NECU]
prayed for the deletion of the
Injunction Bond. Public respondent
denied both motions in the second
assailed Resolution dated [October
29, 2002]."5
Through a Petition for Certiorari under Rule
65 of the Rules of Court, petitioner sought
relief from the CA. She argued that the RTC
had "failed to consider the principle of non-
exhaustion of administrative remedies and
allowed the grant of seniority pay to
NAPOCOR employees [without any legal
basis]."6
Ruling of the Court of Appeals
The CA found no cogent reason to disturb the
conclusions reached by the lower court. The
appellate court ruled that the doctrine of
exhaustion of administrative remedies was not
a hard and fast rule. It held that the
determination of whether the arguments
raised by respondent fell within the exceptions
to the rule was within the sound discretion of
the trial court.
Adopting the RTC's ratiocinations that grave
and irreparable damage would be inflicted on
the employees if the writ was not granted, the
Court of Appeals said:
"It is the humble view of this Court that
matters of compensation, being
sacrosanct and held dearly as life
itself, cannot easily be trifled with,
trampled upon and recalled at whim.
The grim prospect of uncertainty
facing the [respondents] owing to their
inevitable separation from the service
further compels this Court to act
decisively and with dispatch while the
main case is being heard."7
The CA, however, refused to rule on the issue
of whether there was legal basis for the step
increments. It believed that to do so would
mean prejudging the main case pending
before the trial court.
Hence, this Petition.8
Issues
In her Memorandum, petitioner raises the
following issues for our consideration:
"I. Whether Rule 16 of the 1997 Rules
of Civil Procedure authorized the
Regional Trial Court to acquire
jurisdiction over matters pending with
the COA by issuing a writ of
preliminary injunction, which amounts
to an encroachment on the
independence of the same
constitutional body.
"II. Whether Section 16 of Republic
Act No. (RA) 6758 (The Salary
Standardization Law enacted on
August 21, 1989) amended RA No.
6375 (NAPOCOR Charter), which
authorized the Board of Directors to fix
the compensation, allowance and
benefits of its employees.
"III. Whether Sections 14 and 15 of
RA 6758 mandated the DBM to review
and approve NAPOCOR Board
Resolution No. 2001-113 and its
implementing Circular No. 2001-51
before it may be legally implemented.
"IV. Whether NAPOCOR has the
power to issue Board Resolution No.
2002-81 amending its Resolution No.
2001-113 and Circular No. 2001-51 in
order to correct its previous erroneous
act of implementing the latter
Resolution /Circular without the
requisite review and approval by the
DBM.
"V. Whether Rule 58 of the 1997
Rules of Civil Procedure authorized
the issuance of a writ of preliminary
injunction even if the relief/protection
applied for is the subject of
controversy in the main action.
"VI. Whether Section 1, Rule 36 of the
1997 Rules of Civil Procedure
required that an Order for the
issuance of a writ of preliminary
injunction should state clearly and
distinctly the facts and the law on
which it is based."9
Briefly, the issues brought for resolution by
this Court are (1) the propriety of the Writ of
Preliminary Injunction; and (2) the legality of
the step increments that were issued without
the DBM's prior approval.
Considering that the second issue concerns
the merits of the case pending before the trial
court, the Court will limit its discussion only to
the first question.
The Court's Ruling
The Petition is partly meritorious.
Sole Issue:
Propriety of the Preliminary Injunction
Exhaustion of Administrative Remedies
Initially, petitioner assails the trial court's
jurisdiction to issue the Writ of Preliminary
Injunction. She contends that the Petition for
Prohibition filed by respondent is premature,
because COA has yet to rule on whether or
not to lift the suspension of the step
increments granted in Napocor Board
Resolution No. 2001-113 and Circular No.
2001-51. She adds that there is a need to
follow the procedural requirements and
processes mandated in COA's 1997 Revised
Rules (COA Rules) as a condition precedent
for a resort to the courts by respondent. She
says further that it is not exempt from the
doctrine of exhaustion of administrative
remedies on the basis merely of its general
assertions of irreparable injury.
We disagree.
It should be noted that shortly after Corporate
Auditor Cabibihan issued the suspension
Order dated June 5, 2002, the Napocor board
passed Resolution No. 2002-81 on July 24,
2002, to rectify its Resolution No. 2001-113
and Circular No. 2001-51, which were issued
earlier without authority from the DBM. This
time, Resolution No. 2002-81, which was
confirmed on August 14, 2002, bore the
DBM's approval.
Under the new resolution, the step increments
mentioned in the previous Resolution No.
2001-113 were limited to a maximum of two
steps, and the "roll back" of salaries of all the
Napocor employees who received more than
the two-step increments was set to be
implemented on September 1, 2002. With the
circumstances then obtaining, it would have
been impractical, if not illogical, for respondent
to "exhaust" administrative remedies before
taking court action.
Besides, the COA Rules do not clearly and
explicitly prescribe the procedure for
addressing respondent's Complaint against
the implementation. Indeed, while Corporate
Auditor Cabibihan has yet to rule on whether
or not to lift the suspension order, as
petitioner contends, the fact remains that
Board Resolution No. 2002-81 has already
modified the previous resolution, precisely to
conform to COA Rules.
Even assuming arguendo that the provision
exists, the appeal mechanics under the COA
Rules would not constitute a speedy and
adequate remedy. A remedy is considered
plain, speedy and adequate if it will promptly
relieve the petitioner from the injurious effects
of the judgment or rule, order or resolution of
the lower court or agency.10
A petition for prohibition is a preventive
remedy and, as a rule, does not lie to restrain
an act that is already fait accompli.11 The
Petition for Prohibition instituted by
respondent before the trial court assailed the
validity not only of petitioner's May 8, 2002
Letter Memorandum and Corporate Auditor
Cabibihan's Memorandum Circular
(suspension order) but, more important, it
assailed Napocor Board Resolution No. 2002-
81, which was to be implemented in
September 2002. Given the impending "roll
back" of the salaries of the affected
employees, there was an urgent need for
judicial intervention.12
Moreover, respondent's immediate resort to
judicial action is justified because only legal
issues are to be resolved, which are the
validity of the step increments and the
authority of the DBM vis-à-vis the questioned
Napocor Circular and Resolution.13
All in all, the principle of non-exhaustion of
administrative remedies is not an inflexible
rule.14 It may be dispensed with in the present
case, because its application would not
constitute a plain, speedy and adequate
remedy. The issues here are purely legal, and
judicial intervention has been shown to be
urgent.
Injunctive Order
Not Properly Issued
Section 3, Rule 58 of the Revised Rules of
Court, provides thus:
"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.'"
To be entitled to a writ of injunction, a party
must establish the following requisites: (a) the
right of the complainant is clear and
unmistakable; (b) the invasion of the right
sought to be protected is material and
substantial; and (c) there is an urgent and
paramount necessity for the writ to prevent
serious damage.15
The question of whether a writ of preliminary
injunction should be issued is addressed to
the sound discretion of the issuing court.16 The
grant of the writ is conditioned on the
existence of the movant's clear and positive
right, which should be protected.17 It is an
extraordinary peremptory remedy available
only on the grounds expressly provided by
law, specifically Section 3 of Rule 58.
A clear legal right means one clearly founded
in or granted by law or is "enforceable as a
matter of law."18
Absent any clear and unquestioned legal
right, the issuance of an injunctive writ would
constitute grave abuse of
discretion.19 Injunction is not designed to
protect contingent, abstract or future rights
whose existence is doubtful or disputed.20 It
cannot be grounded on the possibility of
irreparable damage without proof of an actual
existing right.21 Sans that proof, equity will not
take cognizance of suits to establish title or
lend its preventive aid by injunction.22
Relevantly, Olalia v. Hizon23 held as follows:
"It has been consistently held that
there is no power the exercise of
which is more delicate, which requires
greater caution, deliberation and
sound discretion, or more dangerous
in a doubtful case, than the issuance
of an injunction. It is the strong arm of
equity that should never be extended
unless to cases of great injury, where
courts of law cannot afford an
adequate or commensurate remedy in
damages.
"Every court should remember that an
injunction is a limitation upon the
freedom of action of the defendant
and should not be granted lightly or
precipitately. It should be granted only
when the court is fully satisfied that
the law permits it and the emergency
demands it."24
In the present case, respondent anchors its
entitlement to the injunctive writ on its alleged
legal right to the step increments. It contends
that under Republic Act No. 6395 (Revised
Charter of the National Power
Corporation),25 the Napocor board was
empowered to fix the compensation and
benefits of its employees; and to grant step
increments, based on Memorandum Order
No. 198 issued by then President Fidel
Ramos and on Republic Act (RA) No. 7648
(otherwise known as the "Electric Power
Crisis Act of 1993").26
On the other hand, petitioner contends that
the pertinent provision of the Napocor
Charter,27 upon which respondent bases its
claimed authority from the board, has already
been superseded or modified by Section
1628 of Republic Act No. 6758.29 This provision
mandates the DBM's review and approval of
Napocor Board Resolution No. 2001-113 and
Circular No. 2001-51 prior to their
implementation. Hence, because these
issuances were implemented without the
DBM's mandatory review and approval, they
cannot be made the source of any right
whatsoever.
In its Resolution dated September 25, 2002,
the trial court noted that at that stage of the
proceedings, petitioner had not shown that
Circular No. 2001-51 and Resolution No.
2001-113, which were already being
implemented by Napocor, were in
contravention of any law. What the RTC
perceived to be clear was that a rollback of
the salaries of all the Napocor employees,
while the merits of the case were yet to be
heard, would result in grave and irreparable
damage to them. Hence, the trial court
concluded, its issuance of the injunctive writ
was justified.30
We disagree.
From the foregoing conflicting claims of the
parties, it is obvious that the right claimed by
respondent as its basis for asking for
injunctive relief is far from clear. The validity of
the circulars and board resolution has been
put into serious question; more so, in the light
of Napocor Board Resolution No. 2002-81,
which was issued precisely to rectify the
previously issued resolution and circular.
While respondent's claimed right is not
required to be conclusively established at this
stage, it is nevertheless necessary to show --
at least tentatively -- that it exists and is not
vitiated by any substantial challenge or
contradiction as that raised by petitioner.31 In
our view, respondent has failed to comply with
this requirement.
The enforcement of the suspension order and
Resolution No. 2002-81 would effect the
rollback of the salaries of Napocor employees
receiving more than the two-step increments.
True, their enforcement would be prejudicial
to respondent members' interest, but merely
showing this fact is not sufficient. It must also
be established that the party applying for the
writ has a clear legal right that must be
protected. Thus, a finding that the applicant
for preliminary injunction may suffer damage
not capable of pecuniary estimation does not
suffice to support an injunction, when it
appears that the right to be protected is
unclear or is seriously disputed.32
No Vested Right to the
Suspended Step Increments
Respondent contends that its members have
already acquired a vested right to the
suspended step increments, which they have
been enjoying after the issuance of Circular
No. 2001-51 in October 2001. It alleges that
the suspension or revision of the circular (by
virtue of Board Resolution No. 2002-81 issued
on July 24, 2002, and confirmed on August
14, 2002) constitutes a salary diminution,
which is clearly prejudicial to them.
A vested right is one that is absolute,
complete and unconditional; to its exercise, no
obstacle exists; and it is immediate and
perfect in itself and not dependent upon any
contingency.33 To be vested, a right must have
become a title -- legal or equitable -- to the
present or future enjoyment of property.34
As has been held, there is no vested right to
salary increases.35 There must be a lawful
decree or order supporting an employee's
claim.
In the present case, because the validity of
their implementation was fundamentally
assailed, the step increments enjoyed by the
Napocor employees could not have ripened
into vested rights. In brief, it is seriously
contended that, because they were granted
without the required DBM approval, no vested
rights to the step increments could have been
acquired.
The terms and conditions of employment of
government employees are governed by
law.36 It is the legislature and -- when properly
given delegated power -- the administrative
heads of government that fix the terms and
conditions of employment through statutes or
administrative circulars, rules, and
regulations.37
While government instrumentalities and
agencies are trying their best to alleviate the
financial difficulties of their employees, they
can do so only within the limits of budgetary
appropriations. The exercise of management
prerogative by government corporations are
limited by the provisions of the laws applicable
to them.38 Subject to state regulation in
particular is a public utility like Napocor, its
income, and the amount of money available
for its operating expenses including labor
costs.
Moreover, Article 100 of the Labor Code on
"non-diminution of benefits" does not
contemplate the continuous grant of
unauthorized or irregular compensation. The
application of the principle presupposes that a
company practice, policy and tradition
favorable to the employees has been clearly
established; and that the payments made by
the company pursuant to it have ripened into
benefits enjoyed by them.39
In Baybay Water District v. COA,40 a
substantially similar contention was resolved
in this wise:
"x x x. The erroneous application and
enforcement of the law by public
officers does not estop the
Government from making a
subsequent correction of such errors.
More specifically, where there is an
express provision of law prohibiting
the grant of certain benefits, the law
must be enforced even if it prejudices
certain parties due to an error
committed by public officials in
granting the benefit. x x x Practice,
without more, no matter how long
continued, cannot give rise to any
vested right if it is contrary to law."41
An Injunctive Writ, a Virtual
Disposition of the Main Case
While the grant of a writ of preliminary
injunction generally rests on the sound
discretion of the court taking cognizance of
the case, extreme caution must be observed
in the exercise of that discretion.42 A court
should, as much as possible, avoid issuing the
writ, which would effectively dispose of the
main case without trial and/or due process.43
In the present case, it is evident that the only
ground relied upon for injunctive relief is the
alleged nullity of petitioner's May 8, 2002
Memorandum and Auditor Cabibihan's June
5, 2002 suspension order. Respondent
contends that petitioner and Cabibihan
exceeded the limitations of their authority.
By issuing a writ premised on that sole
justification, the trial court in effect sustained
respondent's claim that petitioner and Auditor
Cabibihan had exceeded their authority in
ordering the suspension of the implementation
of the step increments; and that the
suspension was patently invalid or, at the very
least, that the memorandum and circular were
of doubtful validity. Thus, the lower court
prejudged the main case and reversed the
rule on the burden of proof, because it
assumed to be true the very proposition that
respondent-complainant in the RTC was duty-
bound to prove in the first place.
Furthermore, the RTC's action ran counter to
the well-settled rule that acts of public officers
are presumed to be regular and valid, unless
sufficiently shown to be otherwise.44 A court
may issue a writ or preliminary injunction only
when the respondent has made out a case of
invalidity or irregularity. That case must be
strong enough to overcome, in the mind of the
judge, the presumption of validity; and it must
show a clear legal right to the remedy
sought.45
Petitioner has gone to great lengths in arguing
her position on the merits of the prohibition
case, but this is neither the time nor the
opportunity for that kind of debate. The validity
of respondent's Complaint is a matter that
must be addressed initially by the trial court;
that issue cannot be resolved at this time by
this Court.
In fine, we hold that respondent has not
justified the issuance of the Writ of Preliminary
Injunction by proving its clear and positive
legal right to the step increments. The Court of
Appeals thus erred in affirming the
Resolutions of the trial court dated September
25, 2002 and October 29, 2002.
WHEREFORE, the Petition is GRANTED, and
the assailed Decision and
Resolution REVERSED AND SET
ASIDE. The Regional Trial Court of Quezon
City is directed to proceed speedily with the
trial on the merits of Civil Case No. Q-02-
47615 and to decide it with all deliberate
dispatch. No costs.
SO ORDERED.
 EN BANC
G.R. No. L-11130        October 8, 1917
BENITO GOLDING, plaintiff-appellee,
vs.
HIPOLITO BALATBAT, SERAPIA
BALATBAR and ESTEFANIA
BALATBAT, defendants.
HIPOLITO BALATBAT, appellant.
Marcelino Lontok for appellant.
No appearance for appellee.
JOHNSON, J.:
This action was commenced in the Court of
First Instance of the Province of Pampanga on
the 10th day of October, 1910. The petitioner
alleged that he was the owner of a piece or
parcel of land which is particularly described
in paragraph 2 of the complaint; that the
defendants, without right of jurisdiction, were
illegally and maliciously interfering with the
petitioner's possession of said land and would
undoubtedly continue to molest him and
interfere with his peaceful enjoyment of said
property unless they were enjoined from so
doing. The petitioner prayed for both a
preliminary and perpetual injunction. A bond
was given by the plaintiff in the sum of P1,500
and a preliminary injunction was issued. Each
of the defendants were served with a copy of
the complaint on the 27th day of October,
1910, together with a copy of the preliminary
injunction issued.
On the 10th day of November, 1910, the
defendant Hipolito Balatbat entered an
appearance in said case. For the reason that
none of the said defendants answered the
petition within the time fixed by law, the
petitioner presented a motion for a judgment
by default, which was granted by the Hon.
Julio Llorente upon the 26th day of November,
1910. The case was finally set down for
hearing and was heard upon the 4th day of
January, 1911. After hearing the proof
adduced by the plaintiff, a judgment was
rendered on the same day ordering and
enjoining the defendants, their agents and
representatives, and all other persons acting
in their behalf, to desist in their acts of
whatever character which molested or tended
to molest the plaintiff in the peaceful
enjoyment of the possession of his property. A
copy of said final injunction was served upon
the defendants.
Later, on the 15th day of June, 1914, the
plaintiff presented an affidavit in the court
below, alleging that the defendant Hipolito
Balatbat, his agents and representatives had
maliciously and illegally and by means of
violence committed acts in violation of the
terms of said injunction, and prayed that said
defendant and his representatives should be
cited to appear to show why they should not
be punished for a violation of the injunction
theretofore granted. In accordance with said
citation or order the defendant Hipolito
Balatbat and others appeared. Hipolito
Balatbat confessed that he was guilty of a
violation of said injunction, but attempted to
excuse his acts upon the theory that he was
the owner of the parcel of land in question.
The same confession and the same defense
were presented by the other persons who had
been cited to appear and explain why they
had violated said injunction. After hearing the
confession of the defendant Hipolito Balatbat,
the Hon. Julio Llorente found that he was
guilty of a violation of said final injunction and
imposed a fine upon him in the sum of P50,
with subsidiary imprisonment in case of
insolvency. From that sentence he appealed
to this Court. The other persons cited to show
why they should not be punished for contempt
were not punished.
In his first assignment of error, the appellant
alleges that the lower court committed an
error in sentencing him to a fine without
having first presented a complaint in due form
in accordance with the provisions of General
Orders No. 58, and in declaring that he had
not been duly notified of the injunction therefor
rendered. The appellant, in his argument in
support of said error, makes no reference to
the provisions of General Orders No. 58, but
alleges that the procedure followed in the
lower court was not in accordance with the
provisions of articles Nos. 231 and 232 of Act
No. 190. The record shows that the appellant
had been ordered not to do certain particular
acts described in the injunction, and that he
had notice of said injunction; that after the
lapse of more than three years, after being
cited to show cause why he had violated said
injunction, and after due hearing was given
him, he confessed that he had violated said
order but attempted to justify his acts. The
record shows that a complaint had been
presented in writing and filed with the clerk,
and that he had been given an opportunity to
be heard in accordance with the provisions of
article 233 of Act No. 190. The procedure in
the court below was entirely regular and in
accordance with the provisions of the law.
In his second assignment of error he alleges
that the lower court committed an error in
hearing the case and condemning the
appellant. The only argument in support of
said error is that, inasmuch as the lower court
had issued the injunction, it is not just for it to
consider the questions presented for a
violation of the same. In reply to that argument
it may be noted first that no objection was
presented of challenge made to the hearing of
the question relating to the violation of said
injunction by the lower court; and second the
record does not show any reason why the
Hon. Julio Llorente was not fully competent to
inquire into the question whether or not his
order of injunction had been violated. The
judge who grants an injunction may punish
those who violate its mandates.
In his third assignment of error the appellant
alleges that the lower court committed an
error in condemning the defendant or
"desacato;" and in support of that assignment
alleges that there was no proof showing that
the defendant had violated the terms of said
injunction. In reply to that argument it is
sufficient to say that the defendant and
appellant himself admitted that he had
violated the terms of said injunction; and the
only excuse offered therefor was the fact that
he claimed to be the owner of the lands in
question.
While we find nothing in the record which
would justify a reversal of the penalty imposed
by the lower court for the violation of the terms
of the injunction, yet, considering the apparent
ignorance of the defendant and appellant, we
are of the opinion that every purpose of the
plaintiff in justice and equity may be
conserved by a modification of said fine.
Therefore, the judgment of the lower court is
hereby modified; and it is hereby ordered and
decreed that a fine of P5 only be imposed
upon the defendant, and the costs. So
ordered.
Moreover, in view of the constant practice
which we have observed in certain of the
judicial districts of the Courts of First Instance
in granting injunctions for the purpose of
obtaining possession of land, we deem it
proper to make the following observations:
1. That injunction should not be
granted to take property out of the
possession and control of one party
and to place it in the hands of another
whose title has not been clearly
established by law. Another adequate,
summary and speedy remedy exists
for almost every case.
(Devesa vs. Arbes. 13 Phil. Rep., 273;
Palafox vs. Madamba, 19 Phil. Rep.,
444; Evangelista vs. Pedrenos, 27
Phil. Rep., 648; Gilchrist vs. Cuddy, 29
Phil. Rep., 542.)
2. The writ of injunction is one of the
special remedies provided by the
Code of Civil Procedure (Act No. 190).
It should not be issued except upon
condition that no other ordinary,
speedy and adequate remedy is
available to avoid or repair the
damage done, or which may be done
by a new violation of the plaintiff's
rights. (Palafox vs. Madamba, 19 Phil.
Rep., 444; Gilchrist vs. Cuddy, 29 Phil.
Rep., 542.)
3. That an injunction for the issuance
of which provisions is made in the
Code of Civil Procedure, while it
resemble the interdictal actions of the
Spanish procedural law in some
respect, is wholly distinct therefrom
and, as a rule, the circumstances
under which, in accordance with the
Spanish law, "interdictos de adquirir,
de retener, de recobrar, o de despojo"
were property issued would not justify
nor sustain the issuance of an
injunction as defined in said Code.
(Devesa vs. Arbes, 13 Phil. Rep.,
273.)
4. While the writ of injunction may be
issued to restrain acts of trespass and
the illegal interference with the
possession of land, the cases are very
few when said writ should issue ex
parte and before the defendant is
given a hearing; and it
should never issue when an action for
damages would adequately
compensate the injuries caused. The
very foundation of the jurisdiction to
issue the writ rests in the probability of
irreparable injury, the inadequacy of
pecuniary compensation, and the
prevention of the multiplicity of suits,
and where facts are not shown to
bring the case within these conditions,
the relief of injunction should be
refused. (Western Union Telegraph
Co., vs. Judkins, 75 Ala., 428; HIgh on
Injunctions, section 697;
Clark vs. Jeffersonville R. R. Co., 44
Ind., 248; Poughkeepsie Gas
Co. vs. Citizens' Gas Co., 89 N. Y.
493.) 1awphil.net
5. Injunctions to prevent trespass and
the illegal interference with the
possession of land should not be
granted, when the plaintiff's title is in
dispute and has not been established
at law, until the question of title is
settled in a proper proceeding brought
for that purpose. (Maloon vs. White,
57 N. H., 152; Greasap vs. Kemble,
26 W. Va., 603.)
6. There are cases, however, where
an injunction may be granted in order
to preserve the statu quo of property
until the title can be determined in a
proper action. (Clayton vs. Shoemaker
and Newcomenr, 67 Mid., 216.) But
even then it should not be granted ex
parte. The defendant should be given
an opportunity to be heard.
7. The remedy by injunction is never
the proper remedy to deprive a person
of the possession of property. If the
person in possession is in possession
illegally there exist other adequate,
speedy and summary remedies —
forcible entry and detainer and
ejectment. These remedies are
adequate. (Devesa vs. Arbes. 13 Phil.
Rep., 273; Palafox vs. Madamba, 19
Phil. Rep., 444.)
In the present action had the defendants
appeared when they were cited so to do and
alleged and showed that they were in
possession of the land in question as owners
thereof, the action would have resolved itself
into one of desahucio or ejectment, and a
motion properly presented and properly
supported to dissolve the temporary injunction
would have been denied. Of course, upon the
theory of the plaintiff, as presented in the
record, that he was the owner of the land in
question and in possession thereof — and
that fact not having been denied — and that
the defendants were mere trespassers
thereon and were illegally and maliciously
interfering and molesting the plaintiff in his
quiet and peaceable enjoyment of the
possession of his property, then injunction
was the proper remedy for the purpose of
preventing a repetition of said illegal acts.
(Maloon vs. White, 57 N. H., 152.)
The remedy by injunction is the proper
remedy to prevent repeated trespass upon
real property. (Merced Mining
Co., vs. Fremont, 7 Cal., 130;
Anderson vs. Harvey's Heirs, 10 Grattan [Va.],
386; Jerome vs. Ross, 7 Johnson's Ch. Rep.,
315.) But the trespass which will be enjoined
must be of such a nature that an action for
damages will not adequately compensate the
loss occasioned thereby. (Smith vs. Pettingill,
15 Vt. 82; Norton vs. Snyder, 4 Thomp. & C.,
330.) So ordered.
Arellano, C.J., Araullo, Street and Malcolm,
JJ., concur.
EN BANC
G.R. No. L-10572 December 21, 1915
FRANCIS A. CHURCHILL and STEWART
TAIT, plaintiffs-appellees,
vs.
JAMES J. RAFFERTY, Collector of Internal
Revenue, defendant-appellant.
Attorney-General Avanceña for appellant.
Aitken and DeSelms for appellees.
TRENT, J.:
The judgment appealed from in this case
perpetually restrains and prohibits the
defendant and his deputies from collecting
and enforcing against the plaintiffs and their
property the annual tax mentioned and
described in subsection (b) of section 100 of
Act No. 2339, effective July 1, 1914, and from
destroying or removing any sign, signboard,
or billboard, the property of the plaintiffs, for
the sole reason that such sign, signboard, or
billboard is, or may be, offensive to the sight;
and decrees the cancellation of the bond
given by the plaintiffs to secure the issuance
of the preliminary injunction granted soon
after the commencement of this action.
This case divides itself into two parts and
gives rise to two main questions; (1) that
relating to the power of the court to restrain by
injunction the collection of the tax complained
of, and (2) that relating to the validity of those
provisions of subsection (b) of section 100 of
Act No. 2339, conferring power upon the
Collector of Internal Revenue to remove any
sign, signboard, or billboard upon the ground
that the same is offensive to the sight or is
otherwise a nuisance.
The first question is one of the jurisdiction and
is of vital importance to the Government. The
sections of Act No. 2339, which bear directly
upon the subject, are 139 and 140. The first
expressly forbids the use of an injunction to
stay the collection of any internal revenue tax;
the second provides a remedy for any wrong
in connection with such taxes, and this
remedy was intended to be exclusive, thereby
precluding the remedy by injunction, which
remedy is claimed to be constitutional. The
two sections, then, involve the right of a
dissatisfied taxpayers to use an exceptional
remedy to test the validity of any tax or to
determine any other question connected
therewith, and the question whether the
remedy by injunction is exceptional.
Preventive remedies of the courts are
extraordinary and are not the usual remedies.
The origin and history of the writ of injunction
show that it has always been regarded as an
extraordinary, preventive remedy, as
distinguished from the common course of the
law to redress evils after they have been
consummated. No injunction issues as of
course, but is granted only upon the oath of a
party and when there is no adequate remedy
at law. The Government does, by section 139
and 140, take away the preventive remedy of
injunction, if it ever existed, and leaves the
taxpayer, in a contest with it, the same
ordinary remedial actions which prevail
between citizen and citizen. The Attorney-
General, on behalf of the defendant, contends
that there is no provisions of the paramount
law which prohibits such a course. While, on
the other hand, counsel for plaintiffs urge that
the two sections are unconstitutional because
(a) they attempt to deprive aggrieved
taxpayers of all substantial remedy for the
protection of their property, thereby, in effect,
depriving them of their property without due
process of law, and (b) they attempt to
diminish the jurisdiction of the courts, as
conferred upon them by Acts Nos. 136 and
190, which jurisdiction was ratified and
confirmed by the Act of Congress of July 1,
1902.
In the first place, it has been suggested that
section 139 does not apply to the tax in
question because the section, in speaking of a
"tax," means only legal taxes; and that an
illegal tax (the one complained of) is not a tax,
and, therefore, does not fall within the
inhibition of the section, and may be
restrained by injunction. There is no force in
this suggestion. The inhibition applies to all
internal revenue taxes imposes, or authorized
to be imposed, by Act No. 2339.
(Snyder vs. Marks, 109 U.S., 189.) And,
furthermore, the mere fact that a tax is illegal,
or that the law, by virtue of which it is
imposed, is unconstitutional, does not
authorize a court of equity to restrain its
collection by injunction. There must be a
further showing that there are special
circumstances which bring the case under
some well recognized head of equity
jurisprudence, such as that irreparable injury,
multiplicity of suits, or a cloud upon title to real
estate will result, and also that there is, as we
have indicated, no adequate remedy at law.
This is the settled law in the United States,
even in the absence of statutory enactments
such as sections 139 and 140.
(Hannewinkle vs. Mayor, etc., of Georgetown,
82 U.S., 547; Indiana Mfg. Co. vs. Koehne,
188 U.S., 681; Ohio Tax cases, 232 U. S.,
576, 587; Pittsburgh C. C. & St. L. R.
Co. vs. Board of Public Works, 172 U. S., 32;
Shelton vs. Plat, 139 U.S., 591; State Railroad
Tax Cases, 92 U. S., 575.) Therefore, this
branch of the case must be controlled by
sections 139 and 140, unless the same be
held unconstitutional, and consequently, null
and void.
The right and power of judicial
tribunals to declare whether
enactments of the legislature exceed
the constitutional limitations and are
invalid has always been considered a
grave responsibility, as well as a
solemn duty. The courts invariably
give the most careful consideration to
questions involving the interpretation
and application of the Constitution,
and approach constitutional questions
with great deliberation, exercising their
power in this respect with the greatest
possible caution and even reluctance;
and they should never declare a
statute void, unless its invalidity is, in
their judgment, beyond reasonable
doubt. To justify a court in
pronouncing a legislative act
unconstitutional, or a provision of a
state constitution to be in
contravention of the Constitution of the
United States, the case must be so
clear to be free from doubt, and the
conflict of the statute with the
constitution must be irreconcilable,
because it is but a decent respect to
the wisdom, the integrity, and the
patriotism of the legislative body by
which any law is passed to presume in
favor of its validity until the contrary is
shown beyond reasonable doubt.
Therefore, in no doubtful case will the
judiciary pronounce a legislative act to
be contrary to the constitution. To
doubt the constitutionality of a law is to
resolve the doubt in favor of its
validity. (6 Ruling Case Law, secs. 71,
72, and 73, and cases cited therein.)
It is also the settled law in the United States
that "due process of law" does not always
require, in respect to the Government, the
same process that is required between
citizens, though it generally implies and
includes regular allegations, opportunity to
answer, and a trial according to some well
settled course of judicial proceedings. The
case with which we are dealing is in point. A
citizen's property, both real and personal, may
be taken, and usually is taken, by the
government in payment of its taxes without
any judicial proceedings whatever. In this
country, as well as in the United States, the
officer charged with the collection of taxes is
authorized to seize and sell the property of
delinquent taxpayers without applying to the
courts for assistance, and the constitutionality
of the law authorizing this procedure never
has been seriously questioned. (City of
Philadelphia vs. [Diehl] The Collector, 5 Wall.,
720; Nicholl vs. U.S., 7 Wall., 122, and cases
cited.) This must necessarily be the course,
because it is upon taxation that the
Government chiefly relies to obtain the means
to carry on its operations, and it is of the
utmost importance that the modes adopted to
enforce the collection of the taxes levied
should be summary and interfered with as
little as possible. No government could exist if
every litigious man were permitted to delay
the collection of its taxes. This principle of
public policy must be constantly borne in mind
in determining cases such as the one under
consideration.
With these principles to guide us, we will
proceed to inquire whether there is any merit
in the two propositions insisted upon by
counsel for the plaintiffs. Section 5 of the
Philippine Bill provides: "That no law shall be
enacted in said Islands which shall deprive
any person of life, liberty, or property without
due process of law, or deny to any person
therein the equal protection of the law."
The origin and history of these provisions are
well-known. They are found in substance in
the Constitution of the United States and in
that of ever state in the Union.
Section 3224 of the Revised Statutes of the
United States, effective since 1867, provides
that: "No suit for the purpose of restraining the
assessment or collection of any tax shall be
maintained in any court."
Section 139, with which we have been
dealing, reads: "No court shall have authority
to grant an injunction to restrain the collection
of any internal-revenue tax."
A comparison of these two sections show that
they are essentially the same. Both expressly
prohibit the restraining of taxes by injunction.
If the Supreme Court of the United States has
clearly and definitely held that the provisions
of section 3224 do not violate the "due
process of law" and "equal protection of the
law" clauses in the Constitution, we would be
going too far to hold that section 139 violates
those same provisions in the Philippine Bill.
That the Supreme Court of the United States
has so held, cannot be doubted.
In Cheatham vs. United States (92 U.S.,
85,89) which involved the validity of an
income tax levied by an act of Congress prior
to the one in issue in the case of
Pollock vs. Farmers' Loan & Trust Co. (157
U.S., 429) the court, through Mr. Justice
Miller, said: "If there existed in the courts,
state or National, any general power of
impeding or controlling the collection of taxes,
or relieving the hardship incident to taxation,
the very existence of the government might be
placed in the power of a hostile judiciary.
(Dows vs. The City of Chicago, 11 Wall., 108.)
While a free course of remonstrance and
appeal is allowed within the departments
before the money is finally exacted, the
General Government has wisely made the
payment of the tax claimed, whether of
customs or of internal revenue, a condition
precedent to a resort to the courts by the party
against whom the tax is assessed. In the
internal revenue branch it has further
prescribed that no such suit shall be brought
until the remedy by appeal has been tried;
and, if brought after this, it must be within six
months after the decision on the appeal. We
regard this as a condition on which alone the
government consents to litigate the lawfulness
of the original tax. It is not a hard condition.
Few governments have conceded such a right
on any condition. If the compliance with this
condition requires the party aggrieved to pay
the money, he must do it."
Again, in State Railroad Tax Cases (92 U.S.,
575, 613), the court said: "That there might be
no misunderstanding of the universality of this
principle, it was expressly enacted, in 1867,
that "no suit for the purpose of restraining the
assessment or collection of any tax shall be
maintained in any court." (Rev, Stat., sec.
3224.) And though this was intended to apply
alone to taxes levied by the United States, it
shows the sense of Congress of the evils to
be feared if courts of justice could, in any
case, interfere with the process of collecting
taxes on which the government depends for
its continued existence. It is a wise policy. It is
founded in the simple philosophy derived from
the experience of ages, that the payment of
taxes has to be enforced by summary and
stringent means against a reluctant and often
adverse sentiment; and to do this
successfully, other instrumentalities and other
modes of procedure are necessary, than
those which belong to courts of justice."
And again, in Snyder vs. Marks (109 U.S.,
189), the court said: "The remedy of a suit to
recover back the tax after it is paid is provided
by statute, and a suit to restrain its collection
is forbidden. The remedy so given is
exclusive, and no other remedy can be
substituted for it. Such has been the current of
decisions in the Circuit Courts of the United
States, and we are satisfied it is a correct view
of the law."
itc-a1f
In the consideration of the plaintiffs' second
proposition, we will attempt to show (1) that
the Philippine courts never have had, since
the American occupation, the power to
restrain by injunction the collection of any tax
imposed by the Insular Government for its
own purpose and benefit, and (2) that
assuming that our courts had or have such
power, this power has not been diminished or
curtailed by sections 139 and 140.
We will first review briefly the former and
present systems of taxation. Upon the
American occupation of the Philippine, there
was found a fairly complete system of
taxation. This system was continued in force
by the military authorities, with but few
changes, until the Civil Government assumed
charge of the subject. The principal sources of
revenue under the Spanish regime were
derived from customs receipts, the so-called
industrial taxes, the urbana taxes, the stamp
tax, the personal cedula tax, and the sale of
the public domain. The industrial and urbana
taxes constituted practically an income tax of
some 5 per cent on the net income of persons
engaged in industrial and commercial pursuits
and on the income of owners of improved city
property. The sale of stamped paper and
adhesive stamp tax. The cedula tax was a
graduated tax, ranging from nothing up to
P37.50. The revenue derived from the sale of
the public domain was not considered a tax.
The American authorities at once abolished
the cedula tax, but later restored it in a
modified form, charging for each cedula
twenty centavos, an amount which was
supposed to be just sufficient to cover the cost
of issuance. The urbana tax was abolished by
Act No. 223, effective September 6, 1901.
The "Municipal Code" (Act No. 82) and the
Provincial Government Act (No. 83), both
enacted in 1901, authorize municipal councils
and provincial boards to impose an ad
valorem tax on real estate. The Municipal
Code did not apply to the city of Manila. This
city was given a special charter (Act No. 183),
effective August 30, 1901; Under this charter
the Municipal Board of Manila is authorized
and empowered to impose taxes upon real
estate and, like municipal councils, to license
and regulate certain occupations. Customs
matters were completely reorganized by Act
No. 355, effective at the port of Manila on
February 7, 1902, and at other ports in the
Philippine Islands the day after the receipt of a
certified copy of the Act. The Internal Revenue
Law of 1904 (Act No. 1189), repealed all
existing laws, ordinances, etc., imposing taxes
upon the persons, objects, or occupations
taxed under that act, and all industrial taxes
and stamp taxes imposed under the Spanish
regime were eliminated, but the industrial tax
was continued in force until January 1, 1905.
This Internal Revenue Law did not take away
from municipal councils, provincial boards,
and the Municipal Board of the city of Manila
the power to impose taxes upon real estate.
This Act (No. 1189), with its amendments,
was repealed by Act No. 2339, an act
"revising and consolidating the laws relative to
internal revenue."
Section 84 of Act No. 82 provides that "No
court shall entertain any suit assailing the
validity of a tax assessed under this act until
the taxpayer shall have paid, under protest,
the taxes assessed against him, . . . ."
This inhibition was inserted in section 17 of
Act No. 83 and applies to taxes imposed by
provincial boards. The inhibition was not
inserted in the Manila Charter until the
passage of Act No. 1793, effective October
12, 1907. Act No. 355 expressly makes the
payment of the exactions claimed a condition
precedent to a resort to the courts by
dissatisfied importers. Section 52 of Act No.
1189 provides "That no courts shall have
authority to grant an injunction restraining the
collection of any taxes imposed by virtue of
the provisions of this Act, but the remedy of
the taxpayer who claims that he is unjustly
assessed or taxed shall be by payment under
protest of the sum claimed from him by the
Collector of Internal Revenue and by action to
recover back the sum claimed to have been
illegally collected."
Sections 139 and 140 of Act No. 2339
contain, as we have indicated, the same
prohibition and remedy. The result is that the
courts have been expressly forbidden, in
every act creating or imposing taxes or
imposts enacted by the legislative body of the
Philippines since the American occupation, to
entertain any suit assailing the validity of any
tax or impost thus imposed until the tax shall
have been paid under protest. The only taxes
which have not been brought within the
express inhibition were those included in that
part of the old Spanish system which
completely disappeared on or before January
1, 1905, and possibly the old customs duties
which disappeared in February, 1902.
Section 56 of the Organic Act (No. 136),
effective June 16, 1901, provides that "Courts
of First Instance shall have original
jurisdiction:
x x x           x x x          x x x
2. In all civil actions which involve
the ... legality of any tax, impost, or
assessment, . . . .
x x x           x x x          x x x
7. Said courts and their judges, or any
of them, shall have power to issue
writs of
injunction, mandamus, certiorari,
prohibition, quo warranto, and habeas
corpus in their respective provinces
and districts, in the manner provided
in the Code of Civil Procedure.
The provisions of the Code of Civil Procedure
(Act No. 190), effective October 1, 1901,
which deals with the subject of injunctions, are
sections 162 to 172, inclusive. Injunctions, as
here defined, are of two kinds; preliminary and
final. The former may be granted at any time
after the commencement of the action and
before final judgment, and the latter at the
termination of the trial as the relief or part of
the relief prayed for (sec. 162). Any judge of
the Supreme Court may grant a preliminary
injunction in any action pending in that court
or in any Court of First Instance. A preliminary
injunction may also be granted by a judge of
the Court of First Instance in actions pending
in his district in which he has original
jurisdiction (sec. 163). But such injunctions
may be granted only when the complaint
shows facts entitling the plaintiff to the relief
demanded (sec. 166), and before a final or
permanent injunction can be granted, it must
appear upon the trial of the action that the
plaintiff is entitled to have commission or
continuance of the acts complained of
perpetually restrained (sec. 171). These
provisions authorize the institution in Courts of
First Instance of what are known as
"injunction suits," the sole object of which is to
obtain the issuance of a final injunction. They
also authorize the granting of injunctions as
aiders in ordinary civil actions. We have
defined in Davesa vs. Arbes (13 Phil. Rep.,
273), an injunction to be "A "special remedy"
adopted in that code (Act 190) 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 those cases
where there is no "plain, adequate, and
complete remedy at law,"which will not be
granted while the rights between the parties
are undetermined, except in extraordinary
cases where material and irreparable injury
will be done,"which cannot be compensated in
damages . . .
By paragraph 2 of section 56 of Act No.
136, supra, and the provisions of the various
subsequent Acts heretofore mentioned, the
Insular Government has consented to litigate
with aggrieved persons the validity of any
original tax or impost imposed by it on
condition that this be done in ordinary civil
actions after the taxes or exactions shall have
been paid. But it is said that paragraph 2
confers original jurisdiction upon Courts of
First Instance to hear and determine "all civil
actions" which involve the validity of any tax,
impost or assessment, and that if the all-
inclusive words "all" and "any" be given their
natural and unrestricted meaning, no action
wherein that question is involved can arise
over which such courts do not have
jurisdiction. (Barrameda vs. Moir, 25 Phil.
Rep., 44.) This is true. But the term "civil
actions" had its well defined meaning at the
time the paragraph was enacted. The same
legislative body which enacted paragraph 2
on June 16, 1901, had, just a few months
prior to that time, defined the only kind of
action in which the legality of any tax imposed
by it might be assailed. (Sec. 84, Act 82,
enacted January 31, 1901, and sec. 17, Act
No. 83, enacted February 6, 1901.) That kind
of action being payment of the tax under
protest and an ordinary suit to recover and no
other, there can be no doubt that Courts of
First Instance have jurisdiction over all such
actions. The subsequent legislation on the
same subject shows clearly that the
Commission, in enacting paragraph 2, supra,
did not intend to change or modify in any way
section 84 of Act No. 82 and section 17 of Act
No. 83, but, on the contrary, it was intended
that "civil actions," mentioned in said
paragraph, should be understood to mean, in
so far as testing the legality of taxes were
concerned, only those of the kind and
character provided for in the two sections
above mentioned. It is also urged that the
power to restrain by injunction the collection of
taxes or imposts is conferred upon Courts of
First Instance by paragraph 7 of section
56, supra. This paragraph does empower
those courts to grant injunctions, both
preliminary and final, in any civil action
pending in their districts, provided always, that
the complaint shows facts entitling the plaintiff
to the relief demanded. Injunction suits, such
as the one at bar, are "civil actions," but of a
special or extraordinary character. It cannot
be said that the Commission intended to give
a broader or different meaning to the word
"action," used in Chapter 9 of the Code of Civil
Procedure in connection with injunctions, than
it gave to the same word found in paragraph 2
of section 56 of the Organic Act. The Insular
Government, in exercising the power
conferred upon it by the Congress of the
United States, has declared that the citizens
and residents of this country shall pay certain
specified taxes and imposts. The power to tax
necessarily carries with it the power to collect
the taxes. This being true, the weight of
authority supports the proposition that the
Government may fix the conditions upon
which it will consent to litigate the validity of its
original taxes. (Tennessee vs. Sneed, 96
U.S., 69.)
We must, therefore, conclude that paragraph
2 and 7 of section 56 of Act No. 136,
construed in the light of the prior and
subsequent legislation to which we have
referred, and the legislative and judicial
history of the same subject in the United
States with which the Commission was
familiar, do not empower Courts of firs
Instance to interfere by injunction with the
collection of the taxes in question in this
case.1awphil.net
If we are in error as to the scope of paragraph
2 and 7, supra, and the Commission did
intend to confer the power upon the courts to
restrain the collection of taxes, it does not
necessarily follow that this power or
jurisdiction has been taken away by section
139 of Act No. 2339, for the reason that all
agree that an injunction will not issue in any
case if there is an adequate remedy at law.
The very nature of the writ itself prevents its
issuance under such circumstances.
Legislation forbidding the issuing of
injunctions in such cases is unnecessary. So
the only question to be here determined is
whether the remedy provided for in section
140 of Act No. 2339 is adequate. If it is, the
writs which form the basis of this appeal
should not have been issued. If this is the
correct view, the authority to issue injunctions
will not have been taken away by section 139,
but rendered inoperative only by reason of an
adequate remedy having been made
available.
The legislative body of the Philippine Islands
has declared from the beginning (Act No. 82)
that payment under protest and suit to recover
is an adequate remedy to test the legality of
any tax or impost, and that this remedy is
exclusive. Can we say that the remedy is not
adequate or that it is not exclusive, or both?
The plaintiffs in the case at bar are the first, in
so far as we are aware, to question either the
adequacy or exclusiveness of this remedy.
We will refer to a few cases in the United
States where statutes similar to sections 139
and 140 have been construed and applied.
In May, 1874, one Bloomstein presented a
petition to the circuit court sitting in Nashville,
Tennessee, stating that his real and personal
property had been assessed for state taxes in
the year 1872 to the amount of $132.60; that
he tendered to the collector this amount in
"funds receivable by law for such purposes;"
and that the collector refused to receive the
same. He prayed for an alternative writ
of mandamus to compel the collector to
receive the bills in payment for such taxes, or
to show cause to the contrary. To this petition
the collector, in his answer, set up the defense
that the petitioner's suit was expressly
prohibited by the Act of the General Assembly
of the State of Tennessee, passed in 1873.
The petition was dismissed and the relief
prayed for refused. An appeal to the supreme
court of the State resulted in the affirmance of
the judgment of the lower court. The case was
then carried to the Supreme Court of the
United States (Tennessee vs. Sneed, 96 U.
S., 69), where the judgment was again
affirmed.
The two sections of the Act of [March 21,]
1873, drawn in question in that cases, read as
follows:
1. That in all cases in which an officer,
charged by law with the collection of
revenue due the State, shall institute
any proceeding, or take any steps for
the collection of the same, alleged or
claimed to be due by said officer from
any citizen, the party against whom
the proceeding or step is taken shall, if
he conceives the same to be unjust or
illegal, or against any statute or clause
of the Constitution of the State, pay
the same under protest; and, upon his
making said payment, the officer or
collector shall pay such revenue into
the State Treasury, giving notice at the
time of payment to the Comptroller
that the same was paid under protest;
and the party paying said revenue
may, at any time within thirty days
after making said payment, and not
longer thereafter, sue the said officer
having collected said sum, for the
recovery thereof. And the same may
be tried in any court having the
jurisdiction of the amount and parties;
and, if it be determined that the same
was wrongfully collected, as not being
due from said party to the State, for
any reason going to the merits of the
same, then the court trying the case
may certify of record that the same
was wrongfully paid and ought to be
refunded; and thereupon the
Comptroller shall issue his warrant for
the same, which shall be paid in
preference to other claims on the
Treasury.
2. That there shall be no other
remedy, in any case of the collection
of revenue, or attempt to collect
revenue illegally, or attempt to collect
revenue in funds only receivable by
said officer under the law, the same
being other or different funds than
such as the tax payer may tender, or
claim the right to pay, than that above
provided; and no writ for the
prevention of the collection of any
revenue claimed, or to hinder or delay
the collection of the same, shall in
anywise issue, either injunction,
supersedeas, prohibition, or any other
writ or process whatever; but in all
cases in which, for any reason, any
person shall claim that the tax so
collected was wrongfully or illegally
collected, the remedy for said party
shall be as above provided, and in no
other manner."
In discussing the adequacy of the remedy
provided by the Tennessee Legislature, as
above set forth, the Supreme Court of the
United States, in the case just cited, said:
"This remedy is simple and effective. A suit at
law to recover money unlawfully exacted is as
speedy, as easily tried, and less complicated
than a proceeding by mandamus. ... In
revenue cases, whether arising upon its
(United States) Internal Revenue Laws or
those providing for the collection of duties
upon foreign imports, it (United States) adopts
the rule prescribed by the State of Tennessee.
It requires the contestant to pay the amount
as fixed by the Government, and gives him
power to sue the collector, and in such suit to
test the legality of the tax. There is nothing
illegal or even harsh in this. It is a wise and
reasonable precaution for the security of the
Government."
Thomas C. Platt commenced an action in the
Circuit Court of the United States for the
Eastern District of Tennessee to restrain the
collection of a license tax from the company
which he represented. The defense was that
sections 1 and 2 of the Act of 1873, supra,
prohibited the bringing of that suit. This case
also reached the Supreme Court of the United
States. (Shelton vs. Platt, 139 U. 591.) In
speaking of the inhibitory provisions of
sections 1 and 2 of the Act of 1873, the court
said: "This Act has been sanctioned and
applied by the Courts of Tennessee.
(Nashville vs. Smith, 86 Tenn., 213; Louisville
& N. R. Co. vs. State, 8 Heisk., 663, 804.) It is,
as counsel observe, similar to the Act of
Congress forbidding suit for the purpose of
restraining the assessment or collection of
taxes under the Internal Revenue Laws, in
respect to which this court held that the
remedy by suit to recover back the tax after
payment, provided for by the Statute, was
exclusive. (Snyder vs. Marks, of this character
has been called for by the embarrassments
resulting from the improvident employment of
the writ of injunction in arresting the collection
of the public revenue; and, even in its
absence, the strong arm of the court of
chancery ought not to be interposed in that
direction except where resort to that court is
grounded upon the settled principles which
govern its jurisdiction."
In Louisville & N.R. Co. vs. State (8 Heisk. [64
Tenn.], 663, 804), cited by the Supreme Court
of the United States in
Shelton vs. Platt, supra, the court said: "It was
urged that this statute (sections 1 and 2 of the
Act of 1873, supra) is unconstitutional and
void, as it deprives the citizen of the remedy
by certiorari, guaranteed by the organic law."
By the 10th section of the sixth article of the
Constitution, [Tennessee] it is provided that:
"The judges or justices of inferior courts of law
and equity shall have power in all civil cases
to issue writs of certiorari, to remove any
cause, or the transcript of the record thereof,
from any inferior jurisdiction into such court of
law, on sufficient cause, supported by oath or
affirmation."
The court held the act valid as not being in
conflict with these provisions of the State
constitution.
In Eddy vs. The Township of Lee (73 Mich.,
123), the complainants sought to enjoin the
collection of certain taxes for the year 1886.
The defendants, in support of their demurrer,
insisted that the remedy by injunction had
been taken away by section 107 of the Act of
1885, which section reads as follows: "No
injunction shall issue to stay proceedings for
the assessment or collection of taxes under
this Act."
It was claimed by the complainants that the
above quoted provisions of the Act of 1885
were unconstitutional and void as being in
conflict with article 6, sec. 8, of the
Constitution, which provides that: "The circuit
courts shall have original jurisdiction in all
matters, civil and criminal, not excepted in this
Constitution, and not prohibited by law. ...
They shall also have power to issue writs
of habeas corpus, mandamus, injunction, quo
warranto, certiorari, and other writs necessary
to carry into effect their orders, judgments,
and decrees."
Mr. Justice Champlin, speaking for the court,
said: "I have no doubt that the Legislature has
the constitutional authority, where it has
provided a plain, adequate, and complete
remedy at law to recover back taxes illegally
assessed and collected, to take away the
remedy by injunction to restrain their
collection."
Section 9 of the Philippine Bill reads in part as
follows: "That the Supreme Court and the
Courts of First Instance of the Philippine
Islands shall possess and exercise jurisdiction
as heretofore provided and such additional
jurisdiction as shall hereafter be prescribed by
the Government of said Islands, subject to the
power of said Government to change the
practice and method of procedure."
It will be seen that this section has not taken
away from the Philippine Government the
power to change the practice and method of
procedure. If sections 139 and 140,
considered together, and this must always be
done, are nothing more than a mode of
procedure, then it would seem that the
Legislature did not exceed its constitutional
authority in enacting them. Conceding for the
moment that the duly authorized procedure for
the determination of the validity of any tax,
impost, or assessment was by injunction suits
and that this method was available to
aggrieved taxpayers prior to the passage of
Act No. 2339, may the Legislature change this
method of procedure? That the Legislature
has the power to do this, there can be no
doubt, provided some other adequate remedy
is substituted in lieu thereof. In speaking of
the modes of enforcing rights created by
contracts, the Supreme Court of the United
States, in Tennessee vs. Sneed, supra, said:
"The rule seems to be that in modes of
proceedings and of forms to enforce the
contract the Legislature has the control, and
may enlarge, limit or alter them, provided that
it does not deny a remedy, or so embarrass it
with conditions and restrictions as seriously to
impair the value of the right."
In that case the petitioner urged that the Acts
of 1873 were laws impairing the obligation of
the contract contained in the charter of the
Bank of Tennessee, which contract was
entered into with the State in 1838. It was
claimed that this was done by placing such
impediments and obstructions in the way of its
enforcement, thereby so impairing the
remedies as practically to render the
obligation of no value. In disposing of this
contention, the court said: "If we assume that
prior to 1873 the relator had authority to
prosecute his claim against the State
by mandamus, and that by the statutes of that
year the further use of that form was
prohibited to him, the question remains.
whether an effectual remedy was left to him or
provided for him. We think the regulation of
the statute gave him an abundant means of
enforcing such right as he possessed. It
provided that he might pay his claim to the
collector under protest, giving notice thereof to
the Comptroller of the Treasury; that at any
time within thirty days thereafter he might sue
the officer making the collection; that the case
should be tried by any court having jurisdiction
and, if found in favor of the plaintiff on the
merits, the court should certify that the same
was wrongfully paid and ought to be refunded
and the Comptroller should thereupon issue
his warrant therefor, which should be paid in
preference to other claim on the Treasury."
But great stress is laid upon the fact that the
plaintiffs in the case under consideration are
unable to pay the taxes assessed against
them and that if the law is enforced, they will
be compelled to suspend business. This point
may be best answered by quoting from the
case of Youngblood vs. Sexton (32 Mich.,
406), wherein Judge Cooley, speaking for the
court, said: "But if this consideration is
sufficient to justify the transfer of a
controversy from a court of law to a court of
equity, then every controversy where money
is demanded may be made the subject of
equitable cognizance. To enforce against a
dealer a promissory note may in some cases
as effectually break up his business as to
collect from him a tax of equal amount. This is
not what is known to the law as irreparable
injury. The courts have never recognized the
consequences of the mere enforcement of a
money demand as falling within that
category."
Certain specified sections of Act No. 2339
were amended by Act No. 2432, enacted
December 23, 1914, effective January 1,
1915, by imposing increased and additional
taxes. Act No. 2432 was amended, were
ratified by the Congress of the United States
on March 4, 1915. The opposition manifested
against the taxes imposed by Acts Nos. 2339
and 2432 is a matter of local history. A great
many business men thought the taxes thus
imposed were too high. If the collection of the
new taxes on signs, signboards, and
billboards may be restrained, we see no well-
founded reason why injunctions cannot be
granted restraining the collection of all or at
least a number of the other increased taxes.
The fact that this may be done, shows the
wisdom of the Legislature in denying the use
of the writ of injunction to restrain the
collection of any tax imposed by the Acts.
When this was done, an equitable remedy
was made available to all dissatisfied
taxpayers.
The question now arises whether, the case
being one of which the court below had no
jurisdiction, this court, on appeal, shall
proceed to express an opinion upon the
validity of provisions of subsection (b) of
section 100 of Act No. 2339, imposing the
taxes complained of. As a general rule, an
opinion on the merits of a controversy ought
to be declined when the court is powerless to
give the relief demanded. But it is claimed that
this case is, in many particulars, exceptional.
It is true that it has been argued on the merits,
and there is no reason for any suggestion or
suspicion that it is not a bona fide controversy.
The legal points involved in the merits have
been presented with force, clearness, and
great ability by the learned counsel of both
sides. If the law assailed were still in force, we
would feel that an opinion on its validity would
be justifiable, but, as the amendment became
effective on January 1, 1915, we think it
advisable to proceed no further with this
branch of the case.
The next question arises in connection with
the supplementary complaint, the object of
which is to enjoin the Collector of Internal
Revenue from removing certain billboards, the
property of the plaintiffs located upon private
lands in the Province of Rizal. The plaintiffs
allege that the billboards here in question "in
no sense constitute a nuisance and are not
deleterious to the health, morals, or general
welfare of the community, or of any persons."
The defendant denies these allegations in his
answer and claims that after due investigation
made upon the complaints of the British and
German Consuls, he "decided that the
billboard complained of was and still is
offensive to the sight, and is otherwise a
nuisance." The plaintiffs proved by Mr.
Churchill that the "billboards were quite a
distance from the road and that they were
strongly built, not dangerous to the safety of
the people, and contained no advertising
matter which is filthy, indecent, or deleterious
to the morals of the community." The
defendant presented no testimony upon this
point. In the agreed statement of facts
submitted by the parties, the plaintiffs "admit
that the billboards mentioned were and still
are offensive to the sight."
The pertinent provisions of subsection (b) of
section 100 of Act No. 2339 read: "If after due
investigation the Collector of Internal Revenue
shall decide that any sign, signboard, or
billboard displayed or exposed to public view
is offensive to the sight or is otherwise a
nuisance, he may by summary order direct the
removal of such sign, signboard, or billboard,
and if same is not removed within ten days
after he has issued such order he my himself
cause its removal, and the sign, signboard, or
billboard shall thereupon be forfeited to the
Government, and the owner thereof charged
with the expenses of the removal so effected.
When the sign, signboard, or billboard
ordered to be removed as herein provided
shall not comply with the provisions of the
general regulations of the Collector of Internal
Revenue, no rebate or refund shall be allowed
for any portion of a year for which the tax may
have been paid. Otherwise, the Collector of
Internal Revenue may in his discretion make a
proportionate refund of the tax for the portion
of the year remaining for which the taxes were
paid. An appeal may be had from the order of
the Collector of Internal Revenue to the
Secretary of Finance and Justice whose
decision thereon shall be final."
The Attorney-General, on behalf of the
defendant, says: "The question which the
case presents under this head for
determination, resolves itself into this inquiry:
Is the suppression of advertising signs
displayed or exposed to public view, which are
admittedly offensive to the sight, conducive to
the public interest?"
And cunsel for the plaintiffs states the
question thus: "We contend that that portion of
section 100 of Act No. 2339, empowering the
Collector of Internal Revenue to remove
billboards as nuisances, if objectionable to the
sight, is unconstitutional, as constituting a
deprivation of property without due process of
law."
From the position taken by counsel for both
sides, it is clear that our inquiry is limited to
the question whether the enactment assailed
by the plaintiffs was a legitimate exercise of
the police power of the Government; for all
property is held subject to that power.
As a consequence of the foregoing, all
discussion and authorities cited, which go to
the power of the state to authorize
administrative officers to find, as a fact, that
legitimate trades, callings, and businesses
are, under certain circumstances, statutory
nuisances, and whether the procedure
prescribed for this purpose is due process of
law, are foreign to the issue here presented.
There can be no doubt that the exercise of the
police power of the Philippine Government
belongs to the Legislature and that this power
is limited only by the Acts of Congress and
those fundamentals principles which lie at the
foundation of all republican forms of
government. An Act of the Legislature which is
obviously and undoubtedly foreign to any of
the purposes of the police power and
interferes with the ordinary enjoyment of
property would, without doubt, be held to be
invalid. But where the Act is reasonably within
a proper consideration of and care for the
public health, safety, or comfort, it should not
be disturbed by the courts. The courts cannot
substitute their own views for what is proper in
the premises for those of the Legislature. In
Munn vs. Illinois (94 U.S., 113), the United
States Supreme Court states the rule thus: "If
no state of circumstances could exist to justify
such statute, then we may declare this one
void because in excess of the legislative
power of this state; but if it could, we must
presume it did. Of the propriety of legislative
interference, within the scope of the legislative
power, a legislature is the exclusive judge."
This rule very fully discussed and declared in
Powell vs. Pennsylvania (127 U.S., 678) —
"oleo-margarine" case. (See also
Crowley vs. Christensen, 137 U.S., 86, 87;
Camfield vs. U.S., 167 U.S., 518.) While the
state may interfere wherever the public
interests demand it, and in this particular a
large discretion is necessarily vested in the
legislature to determine, not only what the
interest of the public require, but what
measures are necessary for the protection of
such interests; yet, its determination in these
matters is not final or conclusive, but is
subject to the supervision of the courts.
(Lawton vs. Steele, 152 U.S., 133.) Can it be
said judicially that signs, signboards, and
billboards, which are admittedly offensive to
the sight, are not with the category of things
which interfere with the public safety, welfare,
and comfort, and therefore beyond the reach
of the police power of the Philippine
Government?
The numerous attempts which have been
made to limit by definition the scope of the
police power are only interesting as illustrating
its rapid extension within comparatively recent
years to points heretofore deemed entirely
within the field of private liberty and property
rights. Blackstone's definition of the police
power was as follows: "The due regulation
and domestic order of the kingdom, whereby
the individuals of the state, like members of a
well governed family, are bound to conform
their general behavior to the rules of propriety,
good neigborhood, and good manners, to be
decent, industrious, and inoffensive in their
respective stations." (Commentaries, vol. 4, p.
162.)
Chanceller Kent considered the police power
the authority of the state "to regulate
unwholesome trades, slaughter houses,
operations offensive to the senses." Chief
Justice Shaw of Massachusetts defined it as
follows: "The power vested in the legislature
by the constitution to make, ordain, and
establish all manner of wholesome and
reasonable laws, statutes, and ordinances,
either with penalties or without, not repugnant
to the constitution, as they shall judge to be
for the good and welfare of the
commonwealth, and of the subjects of the
same." (Com. vs. Alger, 7 Cush., 53.)
In the case of Butchers' Union Slaughter-
house, etc. Co. vs. Crescent City Live Stock
Landing, etc. Co. (111 U.S., 746), it was
suggested that the public health and public
morals are matters of legislative concern of
which the legislature cannot divest itself. (See
State vs. Mountain Timber Co. [1913], 75
Wash., 581, where these definitions are
collated.)
In Champer vs. Greencastle (138 Ind., 339), it
was said: "The police power of the State, so
far, has not received a full and complete
definition. It may be said, however, to be the
right of the State, or state functionary, to
prescribe regulations for the good order,
peace, health, protection, comfort,
convenience and morals of the community,
which do not ... violate any of the provisions of
the organic law." (Quoted with approval in
Hopkins vs. Richmond [Va., 1915], 86 S.E.,
139.)
In Com. vs. Plymouth Coal Co. ([1911] 232
Pa., 141), it was said: "The police power of
the state is difficult of definition, but it has
been held by the courts to be the right to
prescribe regulations for the good order,
peace, health, protection, comfort,
convenience and morals of the community,
which does not encroach on a like power
vested in congress or state legislatures by the
federal constitution, or does not violate the
provisions of the organic law; and it has been
expressly held that the fourteenth amendment
to the federal constitution was not designed to
interfere with the exercise of that power by the
state."
In People vs. Brazee ([Mich., 1914], 149 N.W.,
1053), it was said: "It [the police power] has
for its object the improvement of social and
economic conditioned affecting the community
at large and collectively with a view to bring
about "he greatest good of the greatest
number."Courts have consistently and wisely
declined to set any fixed limitations upon
subjects calling for the exercise of this power.
It is elastic and is exercised from time to time
as varying social conditions demand
correction."
In 8 Cyc., 863, it is said: "Police power is the
name given to that inherent sovereignty which
it is the right and duty of the government or its
agents to exercise whenever public policy, in
a broad sense, demands, for the benefit of
society at large, regulations to guard its
morals, safety, health, order or to insure in
any respect such economic conditions as an
advancing civilization of a high complex
character requires." (As quoted with approval
in Stettler vs. O'Hara [1914], 69 Ore, 519.)
Finally, the Supreme Court of the United
States has said in Noble State
Bank vs. Haskell (219 U.S. [1911], 575: "It
may be said in a general way that the police
power extends to all the great public needs. It
may be put forth in aid of what is sanctioned
by usage, or held by the prevailing morality or
strong and preponderant opinion to be greatly
and immediately necessary to the public
welfare."
This statement, recent as it is, has been
quoted with approval by several courts.
(Cunningham vs. Northwestern Imp. Co.
[1911], 44 Mont., 180; State vs. Mountain
Timber Co. [1913], 75 Wash., 581;
McDavid vs. Bank of Bay Minette [Ala., 1915],
69 Sou., 452; Hopkins vs. City of Richmond
[Va., 1915], 86 S.E., 139; State vs. Philipps
[Miss. 1915], 67 Sou., 651.)
It was said in Com. vs. Alger (7 Cush., 53,
85), per Shaw, C.J., that: "It is much easier to
perceive and realize the existence and
sources of this police power than to mark its
boundaries, or to prescribe limits to its
exercise." In Stone vs. Mississippi (101 U.S.,
814), it was said: "Many attempts have been
made in this court and elsewhere to define the
police power, but never with entire success. It
is always easier to determine whether a
particular case comes within the general
scope of the power, than to give an abstract
definition of the power itself, which will be in
all respects accurate."
Other courts have held the same vow of
efforts to evolve a satisfactory definition of the
police power. Manifestly, definitions which fail
to anticipate cases properly within the scope
of the police power are deficient. It is
necessary, therefore, to confine our
discussion to the principle involved and
determine whether the cases as they come up
are within that principle. The basic idea of civil
polity in the United States is that government
should interfere with individual effort only to
the extent necessary to preserve a healthy
social and economic condition of the country.
State interference with the use of private
property may be exercised in three ways.
First, through the power of taxation, second,
through the power of eminent domain, and
third, through the police power. Buy the first
method it is assumed that the individual
receives the equivalent of the tax in the form
of protection and benefit he receives from the
government as such. By the second method
he receives the market value of the property
taken from him. But under the third method
the benefits he derived are only such as may
arise from the maintenance of a healthy
economic standard of society and is often
referred to as damnum absque
injuria. (Com. vs. Plymouth Coal Co. 232 Pa.,
141; Bemis vs. Guirl Drainage Co., 182 Ind.,
36.) There was a time when state interference
with the use of private property under the
guise of the police power was practically
confined to the suppression of common
nuisances. At the present day, however,
industry is organized along lines which make it
possible for large combinations of capital to
profit at the expense of the socio-economic
progress of the nation by controlling prices
and dictating to industrial workers wages and
conditions of labor. Not only this but the
universal use of mechanical contrivances by
producers and common carriers has
enormously increased the toll of human life
and limb in the production and distribution of
consumption goods. To the extent that these
businesses affect not only the public health,
safety, and morals, but also the general social
and economic life of the nation, it has been
and will continue to be necessary for the state
to interfere by regulation. By so doing, it is
true that the enjoyment of private property is
interfered with in no small degree and in ways
that would have been considered entirely
unnecessary in years gone by. The regulation
of rates charged by common carriers, for
instance, or the limitation of hours of work in
industrial establishments have only a very
indirect bearing upon the public health, safety,
and morals, but do bear directly upon social
and economic conditions. To permit each
individual unit of society to feel that his
industry will bring a fair return; to see that his
work shall be done under conditions that will
not either immediately or eventually ruin his
health; to prevent the artificial inflation of
prices of the things which are necessary for
his physical well being are matters which the
individual is no longer capable of attending to
himself. It is within the province of the police
power to render assistance to the people to
the extent that may be necessary to
safeguard these rights. Hence, laws providing
for the regulation of wages and hours of labor
of coal miners (Rail & River Coal
Co. vs. Taylor, 234 U.S., 224); requiring
payment of employees of railroads and other
industrial concerns in legal tender and
requiring salaries to be paid semimonthly (Erie
R.R. Co. vs. Williams, 233 U.S., 685);
providing a maximum number of hours of
labor for women (Miller vs. Wilson, U.S. Sup.
Ct. [Feb. 23, 1915], Adv. Opns., p. 342);
prohibiting child labor (Sturges &
Burn vs. Beauchamp, 231 U.S., 320);
restricting the hours of labor in public
laundries (In re Wong Wing, 167 Cal., 109);
limiting hours of labor in industrial
establishment generally (State vs. Bunting, 71
Ore., 259); Sunday Closing Laws
(State vs. Nicholls [Ore., 1915], 151 Pac., 473;
People vs. C. Klinck Packing Co. [N.Y., 1915],
108 N. E., 278; Hiller vs. State [Md., 1914], 92
Atl., 842; State vs. Penny, 42 Mont., 118; City
of Springfield vs. Richter, 257 Ill., 578, 580;
State vs. Hondros [S.C., 1915], 84 S.E., 781);
have all been upheld as a valid exercise of the
police power. Again, workmen's compensation
laws have been quite generally upheld. These
statutes discard the common law theory that
employers are not liable for industrial
accidents and make them responsible for all
accidents resulting from trade risks, it being
considered that such accidents are a
legitimate charge against production and that
the employer by controlling the prices of his
product may shift the burden to the
community. Laws requiring state banks to join
in establishing a depositors' guarantee fund
have also been upheld by the Federal
Supreme Court in Noble State
Bank vs. Haskell (219 U. S., 104), and Assaria
State Bank vs. Dolley (219 U.S., 121).
Offensive noises and smells have been for a
long time considered susceptible of
suppression in thickly populated districts.
Barring livery stables from such locations was
approved of in Reinman vs. Little Rock (U.S.
Sup. Ct. [Apr. 5, 1915], U.S. Adv. Opns., p.
511). And a municipal ordinance was recently
upheld (People vs. Ericsson, 263 Ill., 368),
which prohibited the location of garages within
two hundred feet of any hospital, church, or
school, or in any block used exclusively for
residential purposes, unless the consent of
the majority of the property owners be
obtained. Such statutes as these are usually
upheld on the theory of safeguarding the
public health. But we apprehend that in point
of fact they have little bearing upon the health
of the normal person, but a great deal to do
with his physical comfort and convenience
and not a little to do with his peace of mind.
Without entering into the realm of psychology,
we think it quite demonstrable that sight is as
valuable to a human being as any of his other
senses, and that the proper ministration to this
sense conduces as much to his contentment
as the care bestowed upon the senses of
hearing or smell, and probably as much as
both together. Objects may be offensive to the
eye as well as to the nose or ear. Man's
esthetic feelings are constantly being
appealed to through his sense of sight. Large
investments have been made in theaters and
other forms of amusement, in paintings and
spectacular displays, the success of which
depends in great part upon the appeal made
through the sense of sight. Moving picture
shows could not possible without the sense of
sight. Governments have spent millions on
parks and boulevards and other forms of civic
beauty, the first aim of which is to appeal to
the sense of sight. Why, then, should the
Government not interpose to protect from
annoyance this most valuable of man's
senses as readily as to protect him from
offensive noises and smells?
The advertising industry is a legitimate one. It
is at the same time a cause and an effect of
the great industrial age through which the
world is now passing. Millions are spent each
year in this manner to guide the consumer to
the articles which he needs. The sense of
sight is the primary essential to advertising
success. Billboard advertising, as it is now
conducted, is a comparatively recent form of
advertising. It is conducted out of doors and
along the arteries of travel, and compels
attention by the strategic locations of the
boards, which obstruct the range of vision at
points where travelers are most likely to direct
their eyes. Beautiful landscapes are marred or
may not be seen at all by the traveler because
of the gaudy array of posters announcing a
particular kind of breakfast food, or
underwear, the coming of a circus, an
incomparable soap, nostrums or medicines for
the curing of all the ills to which the flesh is
heir, etc. It is quite natural for people to
protest against this indiscriminate and
wholesale use of the landscape by advertisers
and the intrusion of tradesmen upon their
hours of leisure and relaxation from work.
Outdoor life must lose much of its charm and
pleasure if this form of advertising is permitted
to continue unhampered until it converts the
streets and highways into veritable canyons
through which the world must travel in going
to work or in search of outdoor pleasure.
The success of billboard advertising depends
not so much upon the use of private property
as it does upon the use of the channels of
travel used by the general public. Suppose
that the owner of private property, who so
vigorously objects to the restriction of this form
of advertising, should require the advertiser to
paste his posters upon the billboards so that
they would face the interior of the property
instead of the exterior. Billboard advertising
would die a natural death if this were done,
and its real dependency not upon the
unrestricted use of private property but upon
the unrestricted use of the public highways is
at once apparent. Ostensibly located on
private property, the real and sole value of the
billboard is its proximity to the public
thoroughfares. Hence, we conceive that the
regulation of billboards and their restriction is
not so much a regulation of private property
as it is a regulation of the use of the streets
and other public thoroughfares.
We would not be understood as saying that
billboard advertising is not a legitimate
business any more than we would say that a
livery stable or an automobile garage is not.
Even a billboard is more sightly than piles of
rubbish or an open sewer. But all these
businesses are offensive to the senses under
certain conditions.
It has been urged against ministering to the
sense of sight that tastes are so diversified
that there is no safe standard of legislation in
this direction. We answer in the language of
the Supreme Court in Noble State
Bank vs. Haskell (219 U.S., 104), and which
has already been adopted by several state
courts (see supra), that "the prevailing
morality or strong and preponderating opinion"
demands such legislation. The agitation
against the unrestrained development of the
billboard business has produced results in
nearly all the countries of Europe. (Ency.
Britannica, vol. 1, pp. 237-240.) Many drastic
ordinances and state laws have been passed
in the United States seeking to make the
business amenable to regulation. But their
regulation in the United states is hampered by
what we conceive an unwarranted restriction
upon the scope of the police power by the
courts. If the police power may be exercised
to encourage a healthy social and economic
condition in the country, and if the comfort and
convenience of the people are included within
those subjects, everything which encroaches
upon such territory is amenable to the police
power. A source of annoyance and irritation to
the public does not minister to the comfort and
convenience of the public. And we are of the
opinion that the prevailing sentiment is
manifestly against the erection of billboards
which are offensive to the sight.
We do not consider that we are in conflict with
the decision in Eubank vs. Richmond (226
U.S., 137), where a municipal ordinance
establishing a building line to which property
owners must conform was held
unconstitutional. As we have pointed out,
billboard advertising is not so much a use of
private property as it is a use of the public
thoroughfares. It derives its value to the power
solely because the posters are exposed to the
public gaze. It may well be that the state may
not require private property owners to conform
to a building line, but may prescribe the
conditions under which they shall make use of
the adjoining streets and highways. Nor is the
law in question to be held invalid as denying
equal protection of the laws. In Keokee Coke
Co. vs. Taylor (234 U.S., 224), it was said: "It
is more pressed that the act discriminates
unconstitutionally against certain classes. But
while there are differences of opinion as to the
degree and kind of discrimination permitted by
the Fourteenth Amendment, it is established
by repeated decisions that a statute aimed at
what is deemed an evil, and hitting it
presumably where experience shows it to be
most felt, is not to be upset by thinking up and
enumerating other instances to which it might
have been applied equally well, so far as the
court can see. That is for the legislature to
judge unless the case is very clear."
But we have not overlooked the fact that we
are not in harmony with the highest courts of a
number of the states in the American Union
upon this point. Those courts being of the
opinion that statutes which are prompted and
inspired by esthetic considerations merely,
having for their sole purpose the promotion
and gratification of the esthetic sense, and not
the promotion or protection of the public
safety, the public peace and good order of
society, must be held invalid and contrary to
constitutional provisions holding inviolate the
rights of private property. Or, in other words,
the police power cannot interfere with private
property rights for purely esthetic purposes.
The courts, taking this view, rest their
decisions upon the proposition that the
esthetic sense is disassociated entirely from
any relation to the public health, morals,
comfort, or general welfare and is, therefore,
beyond the police power of the state. But we
are of the opinion, as above indicated, that
unsightly advertisements or signs, signboards,
or billboards which are offensive to the sight,
are not disassociated from the general welfare
of the public. This is not establishing a new
principle, but carrying a well recognized
principle to further application. (Fruend on
Police Power, p. 166.)
For the foregoing reasons the judgment
appealed from is hereby reversed and the
action dismissed upon the merits, with costs.
So ordered.
Arellano, C.J., Torres, Carson, and Araullo,
JJ., concur.
DECISION ON THE MOTION FOR A
REHEARING, JANUARY 24, 1916.
TRENT, J.:
Counsel for the plaintiffs call our attention to
the case of Ex parte Young (209 U.S., 123);
and say that they are of the opinion that this
case "is the absolutely determinative of the
question of jurisdiction in injunctions of this
kind." We did not refer to this case in our
former opinion because we were satisfied that
the reasoning of the case is not applicable to
section 100 (b), 139 and 140 of Act No. 2339.
The principles announced in the Young case
are stated as follows: "It may therefore be said
that when the penalties for disobedience are
by fines so enormous and imprisonment so
severe as to intimidate the company and its
officers from resorting to the courts to test the
validity of the legislation, the result is the
same as if the law in terms prohibited the
company from seeking judicial construction of
laws which deeply affect its rights.
It is urged that there is no principle
upon which to base the claim that a
person is entitled to disobey a statute
at least once, for the purpose of
testing its validity without subjecting
himself to the penalties for
disobedience provided by the statute
in case it is valid. This is not an
accurate statement of the case.
Ordinarily a law creating offenses in
the nature of misdemeanors or
felonies relates to a subject over
which the jurisdiction of the legislature
is complete in any event. In these
case, however, of the establishment of
certain rates without any hearing, the
validity of such rates necessarily
depends upon whether they are high
enough to permit at least some return
upon the investment (how much it is
not now necessary to state), and an
inquiry as to that fact is a proper
subject of judicial investigation. If it
turns out that the rates are too low for
that purpose, then they are illegal.
Now, to impose upon a party
interested the burden of obtaining a
judicial decision of such a question (no
prior hearing having ever been given)
only upon the condition that, if
unsuccessful, he must suffer
imprisonment and pay fines as
provided in these acts, is, in effect, to
close up all approaches to the courts,
and thus prevent any hearing upon the
question whether the rates as
provided by the acts are not too low,
and therefore invalid. The distinction is
obvious between a case where the
validity of the acts depends upon the
existence of a fact which can be
determined only after investigation of
a very complicated and technical
character, and the ordinary case of a
statute upon a subject requiring no
such investigation and over which the
jurisdiction of the legislature is
complete in any event.
An examination of the sections of our Internal
Revenue Law and of the circumstances under
which and the purposes for which they were
enacted, will show that, unlike the statutes
under consideration in the above cited case,
their enactment involved no attempt on the
part of the Legislature to prevent dissatisfied
taxpayers "from resorting to the courts to test
the validity of the legislation;" no effort to
prevent any inquiry as to their validity. While
section 139 does prevent the testing of the
validity of subsection (b) of section 100 in
injunction suits instituted for the purpose of
restraining the collection of internal revenue
taxes, section 140 provides a complete
remedy for that purpose. And furthermore, the
validity of subsection (b) does not depend
upon "the existence of a fact which can be
determined only after investigation of a very
complicated and technical character," but the
jurisdiction of the Legislature over the subject
with which the subsection deals "is complete
in any event." The judgment of the court in the
Young case rests upon the proposition that
the aggrieved parties had no adequate
remedy at law.
Neither did we overlook the case of
General Oil Co. vs. Crain (209 U.S.,
211), decided the same day and
citing Ex parte Young, supra. In that
case the plaintiff was a Tennessee
corporation, with its principal place of
business in Memphis, Tennessee. It
was engaged in the manufacture and
sale of coal oil, etc. Its wells and plant
were located in Pennsylvania and
Ohio. Memphis was not only its place
of business, at which place it sold oil
to the residents of Tennessee, but
also a distributing point to which oils
were shipped from Pennsylvania and
Ohio and unloaded into various tanks
for the purpose of being forwarded to
the Arkansas, Louisiana, and
Mississippi customers.
Notwithstanding the fact that the
company separated its oils, which
were designated to meet the
requirements of the orders from those
States, from the oils for sale in
Tennessee, the defendant insisted
that he had a right, under the Act of
the Tennessee Legislature, approved
April 21, 1899, to inspect all the oils
unlocated in Memphis, whether for
sale in that State or not, and charge
and collect for such inspection a
regular fee of twenty-five cents per
barrel. The company, being advised
that the defendant had no such right,
instituted this action in the inferior
States court for the purpose of
enjoining the defendant, upon the
grounds stated in the bill, from
inspecting or attempting to inspect its
oils. Upon trial, the preliminary
injunction which had been granted at
the commencement of the action, was
continued in force. Upon appeal, the
supreme court of the State of
Tennessee decided that the suit was
one against the State and reversed
the judgment of the Chancellor. In the
Supreme Court of the United States,
where the case was reviewed upon a
writ of error, the contentions of the
parties were stated by the court as
follows: "It is contended by defendant
in error that this court is without
jurisdiction because no matter sought
to be litigated by plaintiff in error was
determined by the Supreme Court of
Tennessee. The court simply held, it is
paid, that, under the laws of the State,
it had no jurisdiction to entertain the
suit for any purpose. And it is insisted
"hat this holding involved no Federal
question, but only the powers and
jurisdiction of the courts of the State of
Tennessee, in respect to which the
Supreme Court of Tennessee is the
final arbiter."
Opposing these contentions, plaintiff
in error urges that whether a suit is
one against a State cannot depend
upon the declaration of a statute, but
depends upon the essential nature
ofthe suit, and that the Supreme Court
recognized that the statute "aded
nothing to the axiomatic principle that
the State, as a sovereign, is not
subject to suit save by its own
consent."And it is hence insisted that
the court by dismissing the bill gave
effect to the law which was attacked. It
is further insisted that the bill
undoubtedly present rights under the
Constitution of the United States and
conditions which entitle plaintiff in
error to an injunction for the protection
of such rights, and that a statute of the
State which operates to deny such
rights, or such relief, `is itself in conflict
with the Constitution of the United
States."
That statute of Tennessee, which the supreme
court of that State construed and held to be
prohibitory of the suit, was an act passed
February 28, 1873, which provides: "That no
court in the State of Tennessee has, nor shall
hereafter have, any power, jurisdiction, or
authority to entertain any suit against the
State, or any officer acting by the authority of
the State, with a view to reach the State, its
treasury, funds or property; and all such suits
now pending, or hereafter brought, shall be
dismissed as to the State, or such officer, on
motion, plea or demurrer of the law officer of
the State, or counsel employed by the State."
The Supreme Court of the United States, after
reviewing many cases, said: "Necessarily, to
give adequate protection to constitutional
rights a distinction must be made between
valid and invalid state laws, as determining
the character of the suit against state officers.
And the suit at bar illustrates the necessity. If
a suit against state officer is precluded in the
national courts by the Eleventh Amendment to
the Constitution, and may be forbidden by a
State to its courts, as it is contended in the
case at bar that it may be, without power of
review by this court, it must be evident that an
easy way is open to prevent the enforcement
of many provisions of the Constitution; and the
Fourteenth Amendment, which is directed at
state action, could be nullified as to much of
its operation. ... It being then the right of a
party to be protected against a law which
violates a constitutional right, whether by its
terms or the manner of its enforcement, it is
manifest that a decision which denies such
protection gives effect to the law, and the
decision is reviewable by this court."
The court then proceeded to consider whether
the law of 1899 would, if administered against
the oils in question, violate any constitutional
right of the plaintiff and after finding and
adjudging that the oils were not in movement
through the States, that they had reached the
destination of their first shipment, and were
held there, not in necessary delay at means of
transportation but for the business purposes
and profit of the company, and resting its
judgment upon the taxing power of the State,
affirmed the decree of the supreme court of
the State of Tennessee.
From the foregoing it will be seen that the
Supreme Court of Tennessee dismissed the
case for want of jurisdiction because the suit
was one against the State, which was
prohibited by the Tennessee Legislature. The
Supreme Court of the United States took
jurisdiction of the controversy for the reasons
above quoted and sustained the Act of 1899
as a revenue law.
The case of Tennessee vs. Sneed (96 U.S.,
69), and Shelton vs. Platt (139 U.S., 591),
relied upon in our former opinion, were not
cited in General Oil Co. vs. Crain, supra,
because the questions presented and the
statutes under consideration were entirely
different. The Act approved March 31, 1873,
expressly prohibits the courts from restraining
the collection of any tax, leaving the
dissatisfied taxpayer to his exclusive remedy
— payment under protest and suit to recover
— while the Act approved February 28, 1873,
prohibits suits against the State.
In upholding the statute which authorizes the
removal of signboards or billboards upon the
sole ground that they are offensive to the
sight, we recognized the fact that we are not
in harmony with various state courts in the
American Union. We have just examined the
decision of the Supreme Court of the State of
Illinois in the recent case (October
[December], 1914) of Thomas Cusack
Co. vs. City of Chicago (267 Ill., 344), wherein
the court upheld the validity of a municipal
ordinances, which reads as follows:
"707. Frontage consents required. It shall be
unlawful for any person, firm or corporation to
erect or construct any bill-board or sign-board
in any block on any public street in which one-
half of the buildings on both sides of the street
are used exclusively for residence purposes,
without first obtaining the consent, in writing,
of the owners or duly authorized agents of
said owners owning a majority of the frontage
of the property, on both sides of the street, in
the block in which such bill-board or sign-
board is to be erected, constructed or located.
Such written consent shall be filed with the
commissioner of buildings before a permit
shall be issued for the erection, construction
or location of such bill-board or sign-board."
The evidence which the Illinois court relied
upon was the danger of fires, the fact that
billboards promote the commission of various
immoral and filthy acts by disorderly persons,
and the inadequate police protection furnished
to residential districts. The last objection has
no virtue unless one or the other of the other
objections are valid. If the billboard industry
does, in fact, promote such municipal evils to
noticeable extent, it seems a curious
inconsistency that a majority of the property
owners on a given block may legalize the
business. However, the decision is
undoubtedly a considerable advance over the
views taken by other high courts in the United
States and distinguishes several Illinois
decisions. It is an advance because it permits
the suppression of billboards where they are
undesirable. The ordinance which the court
approved will no doubt cause the virtual
suppression of the business in the residential
districts. Hence, it is recognized that under
certain circumstances billboards may be
suppressed as an unlawful use of private
property. Logically, it would seem that the
premise of fact relied upon is not very solid.
Objections to the billboard upon police,
sanitary, and moral grounds have been, as
pointed out by counsel for Churchill and Tait,
duly considered by numerous high courts in
the United States, and, with one exception,
have been rejected as without foundation. The
exception is the Supreme Court of Missouri,
which advances practically the same line of
reasoning as has the Illinois court in this
recent case. (St. Louis Gunning Advt.
Co. vs. City of St. Louis, 137 S. W., 929.) In
fact, the Illinois court, in Haller Sign
Works vs. Physical Culture Training School
(249 Ill., 436), "distinguished" in the recent
case, said: "There is nothing inherently
dangerous to the health or safety of the public
in structures that are properly erected for
advertising purposes."
If a billboard is so constructed as to offer no
room for objections on sanitary or moral
grounds, it would seem that the ordinance
above quoted would have to be sustained
upon the very grounds which we have
advanced in sustaining our own statute.
It might be well to note that billboard
legislation in the United States is attempting to
eradicate a business which has already been
firmly established. This business was allowed
to expand unchecked until its very extent
called attention to its objectionable features.
In the Philippine Islands such legislation has
almost anticipated the business, which is not
yet of such proportions that it can be said to
be fairly established. It may be that the courts
in the United States have committed
themselves to a course of decisions with
respect to billboard advertising, the full
consequences of which were not perceived
for the reason that the development of the
business has been so recent that the
objectionable features of it did not present
themselves clearly to the courts nor to the
people. We, in this country, have the benefit of
the experience of the people of the United
States and may make our legislation
preventive rather than corrective. There are in
this country, moreover, on every hand in those
districts where Spanish civilization has held
sway for so many centuries, examples of
architecture now belonging to a past age, and
which are attractive not only to the residents
of the country but to visitors. If the billboard
industry is permitted without constraint or
control to hide these historic sites from the
passerby, the country will be less attractive to
the tourist and the people will suffer a district
economic loss.
The motion for a rehearing is therefore
denied.
Arellano, C.J., Torres, and Carson, JJ.,
concur.
SECOND DIVISION
[G.R. NO. 147861 November 18,
2005]
PHILIPPINE PORTS
AUTHORITY, Petitioner, v. PIER 8
ARRASTRE & STEVE-DORING
SERVICES, INC., Respondents.
[G.R. NO. 155252]
PHILIPPINE PORTS
AUTHORITY, Petitioner, v. THE
COURT OF APPEALS (FORMER Ninth
Division) and PIER 8 ARRASTRE &
STEVEDORING SERVICES,
INC., Respondents.
DECISION
TINGA, J.:
These consolidated cases stem from the
purported exercise of police power by
the Philippine Ports Authority ("PPA") in
ousting operators of several arrastre
and stevedoring services from their
respective piers in the Manila North
Harbor. Matters were complicated on
account of procedural fiascos that
occurred at the Court of Appeals level in
both cases.
After distilling peripheral procedural
infirmities, two issues remain for
resolution. G.R. No. 147861, brought to
this Court via a Petition for Review
under Rule 45 of the Revised Rules on
Civil Procedure, necessitates a
determination of the legality of the
issuance of a writ of preliminary
injunction against PPA's takeover of port
services. On the other hand, at issue in
the Petition for Certiorari under Rule 65
of the Revised Rules on Civil Procedure
docketed as G.R. No 155252 is the
correctness of the Court of Appeals'
taking cognizance in contempt
proceedings of a matter pertaining to
the parties' possessory rights already
subject of the aforementioned appeal
under Rule 45.
The following facts are culled from the
records.
In the late 1990's, then President
Joseph E. Estrada issued a directive for
the modernization of the North Harbor
towards unification and rationalization of
all facility operators and service
providers.1 As the government agency
vested with the authority "to coordinate,
streamline, improve, and optimize the
planning, development, financing,
construction, maintenance and
operation of ports, port facilities, port
physical plants, all equipment used in
connection with the operation of a
port"2 and "[t]o supervise, control,
regulate, construct, maintain, operate,
and provide such facilities or services as
are necessary in the ports vested in, or
belonging to the Authority,"3 it fell upon
the PPA to implement the presidential
edict. However, the plan for
modernization, which required the North
Harbor to be run by a single entity,
encountered strong opposition including
resistance from North Harbor port
workers.
On 13 April 2000, PPA received
information from a press release by
the Asosasyon ng mga Mangagawa sa
Pantalan, comprising 95% of the North
Harbor work force, that it would stage a
strike starting 19 April 2000 which
would sufficiently paralyze the whole of
the North Harbor.4 PPA recounts that
several days prior to this
announcement, port workers carried out
a publicized strike plan by performing a
protest march towards Malacañan
Palace.5
According to PPA, these circumstances
prompted it to issue on 14 April 2000
Memorandum Order No. 07-2000
creating the PPA North Harbor Services
("PPA-NHPS") to take over cargo
handling operations and obviate an
interruption of port operations.
On the eve of the planned strike, PPA,
aided by a team of SWAT members of
the Western Police District, began
forcibly occupying several ports in the
North Harbor. By around 1:00 a.m. on
16 April 2000, PPA had taken over
operations at Piers 6, 8, 12, 14,
Terminal 16 and Marine Slipway, and
later that morning, Isla Puting Bato.
On 19 April 2000, respondent Pier 8
Arrastre and Stevedoring Services, Inc.,
("PASSI") the service provider
dispossessed of Pier 8 filed a complaint
for Injunction with Damages with prayer
for temporary restraining order (TRO)
and writ of preliminary injunction
docketed as Civil Case No. 00-97157
and raffled to the sala of Judge Zenaida
R. Daguna, Regional Trial Court ("RTC")
of Manila, Branch 19.
For its part, PASSI had been rendering
arrastre and stevedoring services at Pier
8 since 1974. Its latest contract expired
on 14 April 1997,6 three years before
PPA took over Pier 8. PASSI filed a
request for the renewal of its contract
which was never formally acted upon by
PPA. Thus, PASSI was operating at Pier
8 in a holdover capacity up until PPA's
takeover.
On 24 April 2000, the RTC granted
PASSI's application for a TRO. However,
in a subsequent order7 dated 3 May
2000, the lower court set aside the TRO
and denied the preliminary injunction
prayed for by PASSI. The RTC applied
Section 1, Presidential Decree (P.D.) No.
1818, which provides that "[n]o court
shall have jurisdiction to issue any
restraining order, preliminary injunction,
or preliminary mandatory injunction in
any case, dispute, or controversy
involving any public utility operated by
the government, including among others
public utilities for the transport of the
goods or commodities, stevedoring and
arrastre contracts. '"8 A Motion for
Reconsideration  was denied for lack of
merit in an Order9 dated 20 June 2000.
This prompted PASSI to file on 5 July
2000 with the Court of Appeals
a Petition for  Certiorariunder Rule 65 of
the Revised Rules of Civil Procedure
asking that a TRO/temporary
mandatory order be issued against PPA
and its representatives and that the
RTC's interlocutory orders dated 3 May
2000 and 20 June 2000 annulled and
set aside.10 The case was docketed as
CA-G.R. SP No. 59548.
On 6 September 2000, the Court of
Appeals issued the TRO prayed for by
PASSI. It directed PPA "to cease and
desist from continuing its takeover of
the operations of [PASSI] at Pier 8 and,
from molesting, disturbing and/or
interfering PASSI's operations
thereof."11
On 11 September 2000, PASSI filed
before the Court of Appeals a Petition to
Cite in Contempt certain PPA officials.
The petition, docketed as CA-G.R. SP
No. 60670,12 alleged that named PPA
officials had committed and were
continuing to commit acts to molest,
disturb and interfere with the operation
of PASSI at Pier 8 despite their receipt
of the TRO dated 6 September 2000.
Returning to the certiorari petition
assailing the RTC's interlocutory order,
on 7 November 2000, the Court of
Appeals granted PASSI's application for
the issuance of a writ of preliminary
injunction.13
On 9 January 2001, the Court of
Appeals rendered a Decision14 in CA-
G.R. SP No. 59548 which not only set
aside the orders of the RTC in Civil Case
No. 00-97157 but further made
permanent its own writ of preliminary
injunction issued on 7 November 2000.
PPA filed a Motion for
Reconsideration15 on 30 January 2001.
The Court of Appeals motu
proprio  consolidated CA G.R. SP No.
60670 with CA-G.R. SP No. 59548
through a Resolution  dated 16 January
2001.16 It denied PPA's Motion for
Reconsideration  via a Resolution on 6
April 2001.17
On 4 June 2001, PPA filed with this
Court a Petition for Review under Rule
45 of the Revised Rules on Civil
Procedure, assailing the Court of
Appeals' Decision  dated 9 January 2001
and its Resolution  dated 6 April 2001.
The petition contained an urgent plea
for the issuance of a TRO and/or
preliminary mandatory injunction to
restrain the Court of Appeals from
implementing the questioned decision.
The case was docketed as G.R. No.
147861.
Meanwhile, the proceedings in the
contempt case continued before the
Court of Appeals. PASSI filed therein
an Urgent Motion18 dated 22 August
2002 informing the appellate court that
Solid Shipping Lines Corporation, which
normally docked its vessels at Pier 8,
had written to PPA requesting
permission to berth four of its vessels at
Pier 6. Portraying the request as a
concoction of PPA and its officers in
cooperation with Solid Shipping Lines
Corporation to molest, interfere or
disturb PASSI's operations at Pier 8,
PASSI urged the Court of Appeals to
require PPA and its respondent officers
in the contempt case to strictly abide
with the TRO and writ of injunction and
to maintain the status quo by denying
the request of Solid Shipping Lines
Corporation to berth four of its vessels
at Pier 6. The Court of Appeals granted
PASSI's motion in a Resolution19 dated 4
September 2002.
On 2 October 2002, PPA filed with this
Court a Petition for Certiorari and
Prohibition with Urgent Plea for
Temporary Restraining Order and/or
Writ of Preliminary Injunction  assailing
the Court of Appeals' Resolution  in the
contempt case. The case was docketed
as G.R. No. 155252.
This Court did not act on the prayer for
TRO/preliminary injunction. On 31
August 2004, we motu
proprio consolidated G.R. No 155252
with G.R. No. 147861.
Before moving on to the main issues of
the consolidated cases, it is important
that we first tackle the procedural
mishap that occurred at the Court of
Appeals' level.
G.R. No. 147861 originated from
PASSI's petition for certiorari before the
Court of Appeals under Rule 65 of the
Revised Rules on Civil Procedure. Said
petition
assailed the validity of the
RTC's Order dated 3 May 2000 denying
petitioner's prayer for preliminary
injunction20 based on the court's
application of P.D. No. 1818. The
Petition for Certiorari before the Court of
Appeals sought the following reliefs:
A. This petition be given due course and
a Temporary Restraining
Order/Temporary Mandatory Order be
issued forthwith by this honorable Court
ordering respondent PPA, its
representatives and agents to cease and
desist from continuing its takeover of
the operations of petitioner PASSI at
Pier 8 and ordering PPA to immediately
surrender the operations of the same to
PASSI.
b. After proceedings, judgment be
rendered ANNULLING and SETTING
ASIDE the Orders of respondent
judge dated May 3, 2000 and June
20, 2000.
Petitioner likewise prays for such other
reliefs just and equitable under the
premises.21 (Emphasis supplied.)
In its Decision, the Court of Appeals
explained the parameters of the original
action before it in this wise, viz.:
Assailed before Us is the Order dated 3
May 2000 of the RTC of Manila in Civil
Case No. 00-97157, denying petitioner's
prayer for a writ of preliminary
injunction, as well as the order dated 20
June 2000 denying petitioner's motion
for reconsideration. Citing grave abuse
of discretion as the main ground of their
petition, Pier 8 Arrastre & Stevedoring
Services, Inc., comes and prays for the
setting aside and the annulment of the
said orders.22
However, after setting aside the RTC's
orders, the Court of Appeals proceeded
to rule on the issue of which party has
the better possessory right over Pier 8 a
matter which is beyond its jurisdiction to
resolve given the nature of the action
before it and the issues raised therein.
The Decision is void to that extent.
Moreover, we cannot sustain the grant
of preliminary injunction as ordered by
the Court of Appeals. As a rule, an
application for preliminary injunction
entails a determination of whether the
requisites provided in Rule 58 of the
Revised Rules on Civil Procedure for the
issuance of the provisional remedy are
extant. In the instant case, however,
the impact of P.D. No. 1818 the law
which proscribes court injunctions on
government projects'must also be taken
into account as said law specifically
excludes arrastre and stevedoring
contracts along with other activities
from the sphere of the injunctive power
of the courts.23 Consequently, both
issues are determinants of the
sustainability of the Court of Appeal's
decision and the parameters of its
jurisdiction in the original action
on certiorari .
The requisites to justify an injunctive
relief are: (a) the existence of a right
in esse  or the existence of a right to be
protected; and (b) the act against which
injunction is to be directed as a violation
of such right.24 A preliminary injunction
is proper only when the plaintiff appears
to be entitled to the relief demanded in
his complaint.25
PASSI admits that its contract has
expired and that it is merely occupying
and operating at Pier 8 in a holdover
capacity.26 Thus, PASSI's rights over
Pier 8 arise not from contractual
relations with the PPA, or a statutory
grant of authority, but merely by the
tolerance of the PPA. Tolerance is not
the surest footing on which a right
in esse can be established.
In fact, we have already held in Pernito
Arrastre Services v. Mendoza27 that PPA
may legally oust arrastre and
stevedoring operators even when the
latter had been
conferred with "holdover permits"
should the exigencies of public interest
so require. Taking off from the earlier
ruling in Anglo-Fil Trading Corporation
v. Lazaro,28 the Court elucidated, thus:
In the case of Anglo-Fil Trading
Corporation v. Lazaro (124 SCRA 494,
512, 513 and 519), we have already
underscored the fact that the arrastre
operations in the various ports in the
Philippines are affected with public
interest. We ruled:
....
"The Manila South Harbor is public
property owned by the State. The
operations of the premiere port of the
country, including stevedoring work, are
affected with public interest.
Stevedoring services are subject to
regulation and control for the public
good and in the interest of general
welfare."
Undoubtedly, therefore, the State in the
exercise of its police power through its
agency, the PPA, has the power to
revoke the temporary permits of
petitioners, assuming the existence of
valid temporary permits, and take over
the operations of the port of Tacloban
whenever the need to promote the
public interest and welfare both of the
stevedoring industry and the workers
therein justifies such take over. This
Court has already ruled that the statute
which gives PPA the authority to
implement the take over cannot be
assailed on the constitutional grounds
raised by the petitioners. Thus,
whatever right, if any, that the
petitioners may have acquired on the
basis of the temporary permits earlier
given them must yield to the State's
valid exercise of police power.
....
Furthermore, the records will bear out
the fact that only petitioner LIPSI has a
temporary permit issued by PPA. The
rest of the petitioners were either
merely allowed or tolerated to
operate in the port of Tacloban.
However, even on the assumption
that all of them were able to secure
temporary permits from PPA, still,
this does not vest any property
right on them and hence,
petitioners cannot allege a violation
of their right to non-deprivation of
property without due process of
law.
In the case of Anglo-Fil Trading
Corporation v. Lazaro, (supra, pp. 502-
521), we ruled:
....
In the first place, the petitioners were
operating merely on `hold-over' permits
...
Clearly, all hold-over permits were
by nature temporary and subject to
subsequent policy guidelines as
may be implemented by PPA. Such
should have served as sufficient
notice to petitioners that, at any
time, their authorities may be
terminated.
Whether or not the petitioner would be
issued a PTO depended on the sound
discretion of PPA and on the policies,
rules and regulations that the latter may
implement in accordance with the
statutory grant of power. Petitioners,
therefore, cannot be said to have been
deprived of property without due
process of law because, in this
respect, what was given them was
not a property right but a mere
privilege and they should have
taken cognizance of the fact that
since they have no vested right to
operate in the South Harbor, their
permits can be withdrawn anytime
the public welfare deems it best to
do so.29 (Emphases supplied.)
The diminished nature of any right of
possession PASSI may have by reason
of its "holdover capacity" is mandated
by precedent. The right of the PPA to
take over port facilities from operators
whose contracts have expired is
indubitable. Moreover, PASSI cannot
invoke any vested property rights that
may translate into a right in esse.
It is argued that PASSI's contract to
operate at Pier 8 is equivalent to a grant
of a license and that such license is
continuous in nature pursuant to
Section 18, Chapter 3, Book VII of the
Administrative Code, which provides
that "where the licensee has made
timely and sufficient application for the
renewal of a license with reference to
any activity of a continuing nature, the
existing license shall not expire until the
application shall have been finally
determined by the agency."30 However,
this argument is of some consequence
only in the adjudication of the main case
still pending before the lower court, if
not downright unconvincing for the
present nonce.
PASSI notes that the strike was directed
at PPA, not PASSI, and that PPA knew
that the strike had been called off but
still pushed through with the takeover
anyway. It observes further that since
its workforce were not members of
the Asosasyon ng mga Mangagawa sa
Pantalan it would not have been
affected and operations at Pier 8 would
have proceeded without interruption had
the strike pushed through. PASSI also
banks on the fact that other piers were
not taken over by PPA in a bid to cast
doubts on the underlying reason for the
takeover. Finally, it points out that PPA
had no workforce of its own and was
thus compelled to utilize the same
workforce that had threatened to stage
the strike. From the foregoing
ruminations, PASSI concludes that the
"supposed impending strike was merely
used by PPA as a convenient excuse for
its forcible takeover"31 and that "the
measures taken by PPA have no
reasonable nexus or connection with the
problem it allegedly sought to
solve."32 PASSI also employed the same
approach before the Court of Appeals
and the latter fell for it.33
The least that could be said of PASSI's
claims comprising its approach is that
they are purely speculative and cannot
be the basis for declaring the official
acts of PPA invalid. PASSI cannot be
allowed to
second guess PPA's strategy to obviate
disruptions in the port if the strike had
pushed through. The fact remains that
after the PPA takeover was effected, the
feared strike did not materialize.
As a basic matter, however, PPA does
not even need to stage a complicated
ruse merely to effect a valid takeover.
Pursuant to its charter, PPA has the
necessary police power to regulate the
country's ports which are vital to the
free-flow of goods in and out of the
country. This, coupled with the fact that
PASSI did not even have the benefit of a
"holdover permit" but was merely
operating Pier 8 in a "holdover capacity"
and thus may be ejected by PPA at any
time after notice.
In the light of the foregoing, it cannot
be said with a degree of conviction that
PASSI has presented a right in esse  that
can served as basis for the issuance of a
preliminary injunction in its favor.
More importantly, even if PASSI had
been able to establish a basis upon
which a preliminary injunction could be
issued under Rule 58 of the Revised
Rules on Civil Procedure, the application
of P.D. No. 1818 would override the
right to an injunctive remedy. P.D. No.
1818 deprives the courts of jurisdiction
to issue any preliminary injunction or
temporary retraining order on essential
government projects, including arrastre
and stevedoring operations.34
On the other hand, the Court of Appeals
was of the view that P.D. No. 1818 does
not apply in this instance because, as it
explained, PPA's takeover, "anchored on
a bogus strike is the very reason why
the operations in Pier 8 would be
disrupted and hampered. By and far,
even if [PASSI] were operating under a
holdover capacity, elementary notions of
due process and fair play would dictate
a contrary action from [PPA]." 35
Unfortunately, the Court of Appeals paid
no heed to established jurisprudence
that there are only two exceptional
circumstances which warrant the non-
observance of P.D. No. 1818, namely:
(1) where there is clear grave abuse of
discretion on the part of the government
authority or private person being
enjoined, and (2) where the effect of
the non-issuance of an injunction or a
restraining order would be to "stave off
implementation of a government
project."36
Obviously, the subject situation does
not present itself as an instance where
the non-issuance of an injunctive writ
would itself inhibit the implementation
of a government project. In fact, the
non-issuance of an injunctive writ would
allow PPA to run Pier 8 in the manner it
deems fit instead of having a court-
imposed extension of "holdover"
operations by PASSI.
Was there grave abuse of discretion by
the PPA which would have excluded the
application of P.D. No. 1818? As earlier
observed, the Court of Appeals has no
factual basis to conclude that the strike
was bogus. It engaged in speculation
when it concluded that the takeover
would be the reason for disruption in the
operations in Pier 8. The imputed due
process violation by the PPA, based on
the foregoing hollow allegations, cannot
be affirmed. There is, thus, no basis for
any pronouncement of grave abuse of
discretion by the PPA.
The appellate court's intimation of
disregard of due process on PPA's part,
if proven, may be the basis for an award
for damages but not for the issuance of
an injunctive writ. Factual and legal
determinations are essential for the
adjudication of the matter. As such, it
must be dealt with in the main case, if
not in a separate action. In the case at
bar, this unsubstantiated claim of
non-observance of due process cannot
be equated to a right in esse nor
warrant the non-observance of the
proscription injunction against
government contracts or projects under
P.D. No. 1818.
The prevailing rule is that the courts
should avoid issuing a writ of
preliminary injunction that would in
effect dispose of the main case without
trial.37 Otherwise, there would be a
prejudgment of the main case and a
reversal of the rule on the burden of
proof since it would assume the
proposition which petitioners are
inceptively bound to prove.38 Indeed, a
complaint for injunctive relief must be
construed strictly against the
pleader,39 especially when the factual
grounds relied upon are mere
suppositions which definitely cannot
militate against the exercise of police
power by the regulatory body charged
with the duty "to supervise, control,
regulate, construct, maintain, operate,
and provide such facilities or services as
are necessary in the ports...."40
Moreover, the grant or denial of a
preliminary injunction is discretionary on
the part of the trial court. In the
resolution of the Rule 65 petition
assailing the RTC's orders, the Court of
Appeals should have determined if the
assailed issuances were issued with
grave abuse of discretion amounting to
a lack or excess of jurisdiction.41 It did
not. All that it ascribed to the RTC is
"error."42
We have repeatedly held that there is
grave abuse of discretion justifying the
issuance of the writ of certiorari when
there is a capricious and whimsical
exercise of judgment as is equivalent to
lack of jurisdiction, as where the power
is exercised in an arbitrary or despotic
manner by reason of passion, prejudice,
or personal hostility 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.43 It
is clear from the foregoing discussions
that the Order issued by the Manila
RTC, Branch 12, was nothing of the
sort. On the contrary, its ruling on the
application of P.D. No. 1818 exhibited
the exercise of its sound discretion.
Injunction is the strong arm of equity
which must be issued with great caution
and deliberation, and only in cases of
great injury where there is no
commensurate remedy in damages.44
Note, however, that the foregoing only
pertains to the question of the propriety
of issuing a provisional remedy of
injunction against PPA's takeover. The
ultimate substantive possessory rights
between the parties is a matter still to
be determined in a full-blown trial where
relevant matters may be discovered by
a finder of facts and all issues raised by
parties fully threshed out.
Thus, in resolving G.R. No. 147861, we
hold the preliminary injunction against
PPA's takeover must be lifted. Moreover,
the Court of Appeals' Decision and its
affirmatory Resolution are held void ab
initio insofar as the appellate court
acted in excess of its jurisdiction in
ruling on the principal case on the
merits. The determination of which
party ultimately has the better right to
possession and operation of Pier 8 is still
pending adjudication before the Manila
RTC, Branch 12, in the main case Civil
Case No. 00-97157.
We turn now to G.R. No. 155252 in
which PPA assails the Court of
Appeals' Resolution directing PPA to
deny the request of Solid Shipping Lines
Corporation for permission to berth in
Pier 6.
Even here, procedural infirmities hound
the Court of Appeals' actions. It
confounds us why despite the Court of
Appeals' motu proprio consolidation of
CA-G.R. SP No. 5958 with CA G.R. SP
No. 60670, it did not resolve the
consolidated cases in one decision or
even elevate the consolidated cases in
their entirety to this Court when PPA
appealed the Decision dated 9 January
2001. The consolidation of the cases
was rendered ineffectual by this lapse.
Worse, an anomalous situation ensued
wherein the appealed part of the
consolidated cases went up to this Court
while the contempt part remained under
the cognizance of the Court of Appeals.
Which leads us back to the question was
the Resolution  of the Court of Appeals in
the contempt proceedings valid? cralawlibrary
As a contempt court, the Court of
Appeals had jurisdiction only over the
parties to the contempt case, i.e., the
petitioner - PASSI, and the respondents
- several PPA officials charged with
having received the Court of Appeals'
TRO dated 6 September 2000 and yet
continued to commit acts to molest,
disturb, and interfere with PASSI's
operation of Pier 8. PPA was never
impleaded. The Court of Appeals had no
jurisdiction over the person of PPA as
the latter was never impleaded as a
party to the case. It, thus, could not
effectively command PPA to deny the
request of Solid Shipping Lines
Corporation.
Moreover, the Court of
Appeals' Resolution was issued on 4
September 2002, a year after this Court
had given due course to PPA's appeal of
the Decision pertaining to the parties'
preliminary possessory rights. Acting as
a contempt court in a situation where
the contempt case was merely an
offshoot of a matter already pending
with this Court, the Court of Appeals'
jurisdiction was limited to its mandate
to determine whether respondents
therein committed acts in defiance of
the subject TRO. This is especially true
since the Petition for Review before this
Court includes a prayer for the issuance
of a TRO/preliminary injunction to
restrain the Court of Appeals from
implementing its Decision affirming
PASSI's right to possess and operate at
Pier 8. But the issues alleged on
possessory rights had been elevated to
this Court. By ruling on matters
pertaining to preliminary possessory
rights, the Court of Appeals exceeded its
own jurisdiction and encroached on this
Court's as well.
Thus, we hold that
the Resolution  issued by the Court of
Appeals dated 4 September 2002 was
rendered beyond its jurisdiction as a
contempt court.
12, is directed to hear and decide Civil
Case No. 00-97157 on the merits with
utmost dispatch.
No pronouncement as to costs.

PASSI submits that PPA has no SO ORDERED.

personality to question
the Resolution dated 4 September 2002.
This is obviously not the case since the
issuance not only restricted but also SECOND DIVISION
encroached on PPA's discretion in
regulating Philippine ports and port G.R. No. 207412, August 07, 2013
activities. An original action
for certiorari may be filed by a person
FLORD NICSON
aggrieved45 by the assailed issuance.
CALAWAG, Petitioner, v. UNIVERSITY
OF THE PHILIPPINES VISAYAS AND
PASSI's objection to PPA's resort to a DEAN CARLOS C.
petition for certiorari without the prior BAYLON, Respondents.
submission of a motion for
reconsideration of the Court of
G.R. No. 207542
Appeals' Resolution need not be
belabored. The present petition falls
MICAH P. ESPIA, JOSE MARIE F.
under several exceptions to the rule
NASALGA AND CHE CHE B.
requiring the prior filing of a motion for
SALCEPUEDES, Petitioners, v. DR.
the reconsideration of the assailed
CARLOS C. BA YLON, DR. MINDA J.
ruling. Where the Resolution  complained
FORMACI ON AND DR. EMERLINDA
of was issued in excess of or without
ROMAN (TO BE SUBSTITUTED BY
jurisdiction46 on a matter of public
ALFREDO E. PASCUAL, BEING THE
interest47 and in an apparent case of
NEW UP PRESIDENT), UNIVERSITY
urgency,48 a previous motion for
OF THE PHILIPPINES BOARD OF
reconsideration is unnecessary.
REGENTS, Respondents.

WHEREFORE, the Petition for Review in

G.R. No. 147861 is GRANTED. The
assailed Court of Appeals Decision  dated
9 January 2001 and its Resolution dated
6 April 2001 are ANNULLED and SET
ASIDE insofaras they purport to rule on
the parties' ultimate possessory rights.
The writ of preliminary injunction issued
by the Court of Appeals is DISSOLVED.
The Petition for Certiorari in G.R. No.
155252 is GRANTED. The Court of
Appeals' Resolution dated 4 September
2002 directing the Philippine Ports
Authority to deny the request of Solid
Shipping Lines to berth in Pier 6 is
ANNULLED and SET ASIDE. The
Regional Trial Court of Manila, Branch
RESOLUTION
BRION, J.:
 
This case involves the consolidated
petitions of petitioner Flord Nicson
Calawag in G.R. No. 207412 and
petitioners Micah P. Espia, Jose Marie F.
Nasalga and Che Che B. Salcepuedes in
G.R. No. 207542 (hereinafter
collectively known as petitioners), both
assailing the decision1 dated August 9,
2012 of the Court of Appeals (CA) in
CA-G.R. CEB-SP No. 05079. The CA
annulled the Order2 of the Regional Trial
Court (RTC) of Guimbal, Iloilo, Branch
67, granting a writ of preliminary
mandatory injunction against
respondent Dean Carlos Baylon of the
University of the Philippines Visayas (UP
Visayas).
The petitioners enrolled in the Master of
Science in Fisheries Biology at UP
Visayas under a scholarship from the
Department of Science and Technology-
Philippine Council for Aquatic and Marine
Research and Development. They
finished their first year of study with
good grades, and thus were eligible to
start their thesis in the first semester of
their second year. The petitioners then
enrolled in the thesis program, drafted
their tentative thesis titles, and obtained
the consent of Dr. Rex Baleña to be
their thesis adviser, as well as the other
faculty members’ consent to constitute
their respective thesis committees.
These details were enclosed in the
letters the petitioners sent to Dean
Baylon, asking him to approve the
composition of their thesis committees.
The letter contained the thesis
committee members and the thesis
adviser’s approval of their titles, as well
as the approval of Professor Roman
Sanares, the director of the Institute of
Marine Fisheries and Oceanology.
Upon receipt of the petitioners’ letters,
Dean Baylon wrote a series of memos
addressed to Professor Sanares,
questioning the propriety of the thesis
topics with the college’s graduate
degree program. He subsequently
disapproved the composition of the
petitioners’ thesis committees and their
tentative thesis topics. According to
Dean Baylon, the petitioners’ thesis
titles connote a historical and social
dimension study which is not
appropriate for the petitioners’ chosen
master’s degrees. Dean Baylon
thereafter ordered the petitioners to
submit a two-page proposal containing
an outline of their tentative thesis titles,
and informed them that he is forming an
ad hoc committee that would take over
the role of the adviser and of the thesis
committees.
The petitioners thus filed a petition
for certiorari and mandamus before the
RTC, asking it to order Dean Baylon to
approve and constitute the petitioners’
thesis committees and approve their
thesis titles. They also asked that the
RTC issue a writ of preliminary
mandatory injunction against Dean
Baylon, and order him to perform such
acts while the suit was pending.
The RTC granted a writ of preliminary
mandatory injunction, which Dean
Baylon allegedly refused to follow. UP
Visayas eventually assailed this order
before the CA through a Rule 65 petition
for certiorari, with prayer for a
temporary restraining order (TRO).
The CA’s Ruling
The CA issued a TRO against the
implementation of the RTC’s order,
holding that the petitioners had no clear
right to compel Dean Baylon to approve
the composition of their thesis
committees as a matter of course. As
the college dean, Dean Baylon exercises
supervisory authority in all academic
matters affecting the college. According
to the CA, the petitioners’ reliance on
Article 51 of the Graduate Program
Manual of UP Visayas is misplaced.
Article 51 provides:
Art. 51. The composition of the thesis
committee shall be approved by the
dean of the college/school upon the
recommendation of the chairperson of
the major department/division/institute.
The GPO shall be informed of the
composition of the thesis committee
and/or any change thereof.3 cralaw virtualaw library
Despite the mandatory language
provided for composing the thesis
committee under Article 51 of the
Graduate Program Manual of UP
Visayas, the CA construed it to mean
that the Dean’s approval is necessary
prior to the composition of a thesis
committee.
Lastly, the CA held that the case
presents issues that are purely
academic in character, which are
outside the court’s jurisdiction. It also
noted that Dean Baylon has been
accommodating of the petitioners, and
that the requirements he imposed were
meant to assist them to formulate a
proper thesis title and graduate on time.
The Petitions for Review on
Certiorari
In G.R. No. 207412, Calawag argues
that the CA’s decision should be set
aside for the following reasons:
cralawlibrary
First, Calawag was entitled to the
injunction prayed for, as he has clear
rights under the law which were violated
by Dean Baylon’s actions. These are the
right to education, the right to due
process, and the right to equal
protection under the law. According to
Calawag, Dean Baylon violated his right
to due process when he added to and
changed the requirements for the
constitution of his thesis committee,
without prior publication of the change
in rules. Calawag’s right to equal
protection of the law, on the other hand,
was allegedly violated because only
students like him, who chose Dr. Baleña
for their thesis adviser, were subjected
to the additional requirements imposed
by the dean, while the other students’
thesis committees were formed without
these impositions. Hence, Calawag and
the three other petitioners in G.R. No.
207542 were unduly discriminated
against.
Second, a reading of Executive Order
No. 628, s. 1980,4 and Republic Act No.
95005 shows that the college dean’s
functions are merely administrative,
and, hence, the CA erred in its
construction of Article 51 of the
Graduate Program Manual of UP
Visayas, as well as its proclamation that
the college dean has supervisory
authority over academic matters in the
college.
On the other hand, in G.R. No. 207542,
petitioners Espia, Nasalga and
Salcepuedes argue that the CA’s
decision should be set aside for the
following reasons:cralawlibrary
First, the Graduate Program Manual of
UP Visayas and the Guidelines for the
Master of Science in Fisheries Program
are clear in providing that Dean Baylon
has a formal duty to approve the
composition of the petitioners’ thesis
committees upon the latter’s compliance
with several requirements. Thus, when
the petitioners complied with these
requirements and Dean Baylon still
refused to approve the composition of
their thesis committees, the petitioners
had a right to have him compelled to
perform his duty.
Second, Dean Baylon cannot arbitrarily
change and alter the manual and the
guidelines, and cannot use academic
freedom as subterfuge for not
performing his duties.
Third, the thesis adviser and the thesis
committees, in consultations with the
students, have the right to choose the
thesis topics, and not the dean.
The Court’s Ruling
Having reviewed the arguments
presented by the petitioners and the
records they have attached to the
petitions, we find that the CA did not
commit an error in judgment in setting
aside the preliminary mandatory
injunction that the RTC issued against
Dean Baylon. Thus, there could be no
basis for the Court’s exercise of its
discretionary power to review the CA’s
decision.
“To be entitled to a writ of preliminary
injunction, x x x 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. 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. Accordingly,
the issuance of a writ of preliminary
mandatory injunction [presents a fourth
requirement: it] is justified only in a
clear case, free from doubt or dispute.
When the complainant’s right is thus
doubtful or disputed, he does not have a
clear legal right and, therefore, the
issuance of injunctive relief is
improper.”6cralaw virtualaw library
The CA did not err in ruling that the
petitioners failed to show a clear and
unmistakable right that needs the
protection of a preliminary mandatory
injunction. We support the CA’s
conclusion that the dean has the
discretion to approve or disapprove the
composition of a thesis committee, and,
hence, the petitioners had no right for
an automatic approval and composition
of their thesis committees.
Calawag’s citation of Executive Order
No. 628, s. 1980 and Republic Act No.
9500 to show that the dean of a college
exercises only administrative functions
and, hence, has no ascendancy over the
college’s academic matters, has no legal
ground to stand on. Neither law
provides or supports such conclusion, as
neither specifies the role and
responsibilities of a college dean. The
functions and duties of a college dean
are outlined in the university’s Faculty
Manual, which details the rules and
regulations governing the university’s
administration. Section 11.8.2,
paragraph b of the Faculty Manual
enumerates the powers and
responsibilities of a college dean, which
include the power to approve the
composition of a thesis committee, to
wit:
11.8.2 Administration
xxxx
b. Dean/Director of UP System or UP
Diliman-based Programs * The
Dean/Director shall be responsible for
the planning and
implementation of the graduate
programs. In particular,
the Dean/Director shall exercise the
following powers and responsibilities
based on the recommendations
forwarded to him/her, through
channels:cralawlibrary
xxxx
 Approve the
composition of the
Thesis, Dissertation or
Special Project**
Committees and Master’s
or doctoral
examination/oral defense
panel for each
student[.]7 (emphases and
italics ours)
By necessary implication,8 the dean’s
power to approve includes the power to
disapprove the composition of a thesis
committee. Thus, under the UP
System’s faculty manual, the dean has
complete discretion in approving or
disapproving the composition of a thesis
committee. Harmonizing this provision
with the Graduate Program Manual of
UP Visayas, and the Guidelines for the
Master of Science in Fisheries Program,
we agree with the CA’s interpretation
that the thesis committee’s composition
needs the approval of the dean after the
students have complied with the
requisites provided in Article 51 of the
Graduate Program Manual and Section
IX of the Guidelines for the Master of
Science in Fisheries Program.9 cralaw virtualaw library
Anent the petitioners’ argument that
Dean Baylon acted arbitrarily in
imposing additional requirements for the
composition of the thesis committee,
which according to Calawag violated
their right to due process, we hold that
the dean’s authority to approve or
disapprove the composition of a thesis
committee includes this discretion. We
also note the CA’s finding that these
additional requirements were meant to
assist the petitioners in formulating a
thesis title that is in line with the
college’s master of fisheries program.
Absent any finding of grave abuse of
discretion, we cannot interfere with the
exercise of the dean’s prerogative
without encroaching on the college’s
academic freedom.
Verily, the academic freedom accorded
to institutions of higher learning gives
them the right to decide for themselves
their aims and objectives and how best
to attain them.10 They are given the
exclusive discretion to determine who
can and cannot study in them, as well
as to whom they can confer the honor
and distinction of being their
graduates.11cralaw virtualaw library
This necessarily includes the prerogative
to establish requirements for
graduation, such as the completion of a
thesis, and the manner by which this
shall be accomplished by their students.
The courts may not interfere with their
exercise of discretion unless there is a
clear showing that they have arbitrarily
and capriciously exercised their
judgment.12 cralaw virtualaw library
Lastly, the right to education invoked by
Calawag cannot be made the basis for
issuing a writ of preliminary mandatory
injunction. In Department of Education,
Culture and Sports v. San Diego,13 we
held that the right to education is not
absolute. Section 5(e), Article XIV of the
Constitution provides that "[e]very
citizen has a right to select a profession
or course of study, subject to fair,
reasonable, and equitable admission
and academic requirements.” The thesis
requirement and the compliance with
the procedures leading to it, are part of
the reasonable academic requirements a
person desiring to complete a course of
study would have to comply with.
WHEREFORE, the Court resolves
to DENY giving due course to the
petitions in G.R. No. 207412 and G.R.
No. 207542.
SO ORDERED.
EN BANC
I.P.I. No. 16-241-CA-J, November
29, 2016
CLEMENTE F.
ATOC, Complainant, v. EDGARDO A.
CAMELLO, OSCAR V. BADELLES AND
PERPETUA T. ATAL-PAÑO,
ASSOCIATE JUSTICES, COURT OF
APPEALS, CAGAYAN DE ORO
CITY. Respondents.
DECISION
 PEREZ, J.:
This refers to the verified
complaint1 dated 12 January 2016 filed
by Clemente F. Atoc (complainant)
charging Edgardo A. Camello (Justice
Camello), Oscar V. Badelles (Justice
Badelles) and Perpetua T. Atal-Paño
(Justice Atal-Paño), all Associate
Justices of the Court of Appeals (CA),
Cagayan de Oro City, with gross
ignorance of the law, gross violation of
Attorney's oath, gross violation of Code
of Professional Responsibility (Canon 1,
Rules 7.03, 10.01, 10.03), gross
violation of Code of Judicial Conduct
(Canon 1, Rules 1.01 and 1.02; Canon
3, Rules 3.01 and 3.02), gross violation
of Professional Ethics (22), gross
violation of Code of Judicial Ethics (2, 5,
8, 22 and 31), grave abuse of authority,
gross misconduct, manifest partiality,
gross violation of Sections 4(a), 4(b)
and 4(c) of Republic Act (R.A.) No.
6713, and gross violation of Section
3(e) of R.A. No. 3019.
The complaint stemmed from the
resolutions2 the respondent justices
issued in CA-G.R. SP Nos. 07072-MIN
and 07073-MIN entitled "Oscar S.
Moreno and Glenn C. Bañez v. Han.
Conchita Carpio Morales in her capacity
as the Ombudsman; Department of the
Interior and Local Government
represented by Hon. Mel Senen
Sarmiento in his capacity as Secretary
and William G. Guilani."
Culled from the records are the
following antecedent facts: cralawlawlibrary
On 13 March 2015,3 William G. Guillani
filed a complaint for grave abuse of
authority, grave misconduct and
violation of Republic Act No. 6713
against Oscar S. Moreno (Moreno) and
Glenn C. Bañez (Bañez), in their
capacity as City Mayor and Officer-in-
charge Treasurer, respectively, of the
Local Government Unit of Cagayan de
Oro City, before the Office of the
Ombudsman-Mindanao (OMB).
In a Decision dated 14 August 2015; the
OMB found Moreno and Bañez
administratively guilty of grave
misconduct. The dispositive portion of
the decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, the Office finds
respondents Oscar S. Moreno and Glenn
C. Bañez GUILTY of Grave Misconduct
and are meted out the penalty of
Dismissal from service, including the
accessory penalties of cancellation of
eligibility, forfeiture of retirement
benefits, and the perpetual
disqualification for re-employment in the
government service. Further, the
charges of Grave Abuse of Authority and
violation of R.A. No. 6713 are
dismissed.4 (Underlining omitted)
On 3 November 2015, the OMB
furnished the Department of Interior
and Local Government (DILG) copy of
the decision for implementation of the
order of dismissal against Moreno and
Bañez.5
In order to stay the implementation of
the OMB decision, Moreno and Bañez
filed their respective Petitions
for Certiorari with Extremely Urgent
Prayer for Temporary Restraining Order
(TRO) and/or Writ of Preliminary
Injunction (WPI) on 11 November 2015.
On 12 November 2015, the DILG served
a copy of the decision on Moreno.6
On even date, incumbent Vice Mayor
Caesar Ian Acenas and Councilor Candy
Darimbang were sworn in office and
assumed the positions of City Mayor and
Vice Mayor of Cagayan de Oro City,
respectively.
On 13 November 2015, the CA issued a
resolution granting Moreno and Bañez's
prayer for issuance of a TRO. The TRO
which is effective for a period of 60
days, unless sooner revoked, enjoined
the DILG, its officers and agents and all
persons acting under them, from
enforcing, implementing and effecting
the OMB decision which dismissed
Moreno and Bañez from the service.7
On 17 November 2015, the DILG filed a
Manifestation informing the CA that as
of 6:12 in the evening of 12 November
2015, it has already implemented the
OMB decision dismissing Moreno and
Bañez from the service. The DILG
averred that it was only on 13
November 2015 at around 7:32 in the
evening that it received a copy of the
CA resolution granting the TRO.8
On the same date, the DILG filed a
second pleading denominated as
Manifestation with Urgent Motion for
Clarification. The motion seeks to clarify
as to who should be recognized as
Mayor of Cagayan de Oro City
considering that the department
received the' CA Resolution on the
granting of the TRO a day after the OMB
decision was served and implemented
against Moreno.9
On 18 November 2015, the CA issued a
resolution clarifying the validity and
enforceability of the TRO it earlier
issued. The CA ratiocinated that: chanRoblesvirtualLawlibrary
In the instant case, the last actual,
peaceable and uncontested condition
before the DILG the assailed
Ombudsman Decision is petitioner Oscar
Moreno sitting as the elected Cagayan
de Oro City Mayor and Glenn Bañez as
the Officer-in-Charge of the City
Treasurer's Office. Therefore, that is the
situation sought to be upheld by the
TRO pending the resolution of the
injunction. The status existing at the
time the present petition was filed
before this [c]ourt was that the mayor
and the officer-in-charge of the City
Treasurer's office were herein [Moreno
and Bañez]. That precisely is the status
referred to in a TRO taking into account
the litany of decisions defining how a
TRO operates. To construe otherwise
would counter settled jurisprudence. In
fact, the DILG has correctly understood
and captured the concept and essence
of a restraining order. x x x10
The dispositive portion of the resolution
thus reads:
chanRoblesvirtualLawlibrary
In view thereof, there is nothing further
to elucidate. The DILG appropriately
acknowledged [Moreno and Bañez']
powers and authority by virtue of the
TRO issued by this [c]ourt. That
declaration of the DILG, a party to this
case, is conclusive as to the status
quo sought to be preserved by [o]ur
TRO which binds all parties, agencies or
persons concerned to refrain from doing
any act or acts disruptive of the status
quo.11
The aforesaid resolution was penned by
Associate Justice Henri Jean Paul B.
Inting with Associate Justices Camello
and Pablito A. Perez concurring.
On 11 January 2016,12 the CA, through
Associate Justice Camello as ponente
with the concurrence of Associate
Justices Badelles and Atal-Paño, issued
a Writ of Preliminary Injunction to be
effective throughout the pendency of
the action unless elsewhere revoked or
modified, enjoining and preventing the
respondent DILG, its officers, agents,
and/or any person assisting it or acting
for and in its behalf, from enforcing and
implementing the 14 August 2015
decision of the OMB.
Claiming that he was aggrieved by the
resolutions issued by the CA in the
subject cases, complainant, a resident
of Cagayan de Oro City, filed a verified
complaint against the respondent
associate justices of the CA who issued
the latest resolution praying that they
be disbarred and their names be deleted
as members of the Integrated Bar of the
Philippines (IBP).
On 26 July 2016, this Court required the
respondent associate justices to
comment on the complaint.
In compliance with the Court's directive,
the respondent associate justices
submitted their Joint Comment13 on 11
October 2016.
They reported that not so long after the
CA issued the TRO dated 13 November
2015 on the subject case, complainant
charged the members of the Special
22nd Division of the CA, which was then
composed of Justices Camello, Henri
Jean Paul B. Inting (Justice-in-charge),
and Pablito A. Perez, with gross
ignorance of the law, gross violation of
attorney's oath, gross violation of the
Code of Professional Responsibility,
gross violation of the Code of Judicial
Conduct, gross violation of professional
ethics, gross violation of the Code of
Judicial Ethics, grave abuse of authority,
gross misconduct, manifest partiality,
and violation of R.A. No. 3019. The
complaint was docketed as I.P.I. No.
16-238-CA-J (Re: Verified Complaint of
Clemente F. Atoc).
They further reported that when the CA
upgraded the provisional remedy of TRO
to a Writ of Preliminary Injunction on 11
January 2016, complainant hastily
recycled his previous complaint against
Justices Camello, Henri Jean Paul B.
Inting and Pablito A. Perez and accused
this time the members of the Special
22nd Division, now composed of herein
respondent Justices Camello, Badelles
and Atal-Paño, of the exact violations,
based on the exact same circumstances,
and raising the exact same issues. They
noted that complainant even recycled in
the subsequent complaint his original
Verification and Certification of Non-
Forum Shopping. Complainant certified
that he' has not filed any complaint
involving the same issue/issues before
the Supreme Court, Court of Appeals,
any tribunal or agency, when he knows
for a fact that I.P.I. No. 16-238-CA-J is
still pending.
The respondent associate justices thus
iterate the same plea for the dismissal
of the utterly baseless complaint and
adopts in regard to the instant suit of
complainant, the very same comment
on complainant's complaint in I.P.I. No.
16-238-CA-J.
The respondent justices submit that
case law has been consistent in its
caveat that where judicial relief is still
available, whether it be ordinary or
extra-ordinary remedy, resort to
administrative complaint is not
allowed.14 They maintain that the
preclusive principle that bars parties to
a pending suit from by-passing judicial
remedies by resorting to administrative
suits against judges applies even more
to complainant who is not even a party
or privy, but a total stranger to the
pending petitions before the CA.15
We find the charges against respondent
Associate Justices bereft of merit.
At the outset, it is clear that the assailed
resolutions were issued by respondent
Associate Justices in the proper exercise
of their judicial functions. As such, these
are not subject to administrative
disciplinary action. Other than
complainant's bare allegations, there
were no evidence presented to show
any wrong-doings or bad faith on the
part of respondent associate justices.
We have settled the rule that a judge
may not be administratively sanctioned
from mere errors of judgment in the
absence of showing of any bad faith,
fraud, malice, gross ignorance, corrupt
purpose, or a deliberate intent to do an
injustice on his or her part.16 Judicial
officers cannot be subjected to
administrative disciplinary actions for
their performance of duty in good
faith.17
To be held liable for gross ignorance of
the law, it must be shown that in the
issuance of the assailed resolutions, the
justices have committed an error that
was gross or patent, deliberate or
malicious.18 In the instant case, it was
shown that the justices based their
findings on existing facts and
jurisprudence. There was no proof
presented to show that they were
moved by ill-will or malicious intention
to violate the law and extend favor to a
party. In fact, their findings were
thoroughly discussed in the ratio
decidendi of the resolution.
In assailing the resolutions issued by
the CA, complainant failed to realize
that unfavorable rulings are not
necessarily erroneous. If a party
disagrees with a ruling of the court,
assuming these were incorrect, there
are judicial remedies available to them
under the Rules of Court. As a matter of
public policy, a judge cannot be
subjected to liability for any of his
official acts, no matter how erroneous,
as long as he acts in good faith. To hold
otherwise would be to render judicial
office untenable, for no one called upon
to try the facts or interpret the law in
the process of administering justice can
be infallible in his judgment.19
Moreover, we have explained that
administrative complaints against
magistrates cannot be pursued
simultaneously with the judicial
remedies accorded to parties aggrieved
by the erroneous orders or judgments of
the former. Administrative remedies are
neither alternative to judicial review nor
do they cumulate thereto, where such
review is still available to the aggrieved
parties and the cases not yet been
resolved with finality.20 Here, it is
evident that the parties aggrieved by
the resolution can avail or may have
already availed of other judicial
remedies. Quite significant is the fact
that the instant administrative
complaint was filed by someone who is
not a party or privy to the case. As
correctly noted by the respondent
justices in their Joint-Comment, Atoc did
not even disclose the capacity in which
he brings the present administrative
complaint.
Anent the determination on whether the
respondent Associate Justices made an
error in enjoining the decision of the
OMB, the same would be squarely
addressed by this Court the moment the
issue is raised before it in a proper
judicial proceeding. We cannot make a
ruling in this administrative case on the
correctness of the issuance of the
injunction.21
We stated in the case of Morales I v. CA
Justices Real-Dimagiba, Lopez and
Garcia:22
chanroblesvirtuallawlibrary
To press the point, the present
Resolution should not be read as an
allowance carte blanche for the issuance
of TROs against the OMB's decision in
criminal and administrative complaints
against officials and employees of the
government. Foremost, we did not rule
on the validity of the issuance of the
TRO by the respondent associate
justices. What we said is that there is a
relevant ruling in the Binay, Jr. case
which removes the issuance by
respondent associate justices from the
ambit of gross ignorance of the law. Just
as important, the validity of the
issuance of a TRO, owing to the fact
that a TRO is merely a provisional
remedy which is an adjunct to a main
suit, which in this case is the main
petition of Mayor Gatchalian pending
before the CA, is a judicial issue that
cannot be categorically resolved in the
instant administrative matter.
xxxx
The remedy against the issuance of the
TRO is unarguably and by its very
nature, resolvable only thru judicial
procedures which are, a motion for
reconsideration and, if such motion is
denied, a special civil action
of certiorari under Rule 65. It is the
ruling granting the prayer for the writ
of certiorari that a basis for an
administrative action against the judge
issuing the TRO may arise. Such
happens when, from the decision on the
validity of the issuance, there is a
pronouncement that indicates gross
ignorance of the law of the issuing
judge. The instant administrative
complaint cannot be a substitute for the
aforesaid judicial remedies.
WHEREFORE, in view of the foregoing,
the instant administrative complaint
filed by Clemente F. Atoc against
Associate Justices Edgardo A. Camello,
Oscar V. Badelles and Perpetua T. Atal-
Paño, all of the Court of Appeals,
Cagayan de Oro City, is
hereby DISMISSED for lack of merit.
SO ORDERED.
ChanRoblesVirtualawlibrary
THIRD DIVISION
G.R. No. 189026, November 09,
2016
PHILIPPINE TELEGRAPH
TELEPHONE
CORP., Petitioner, v. SMART
COMMUNICATIONS,
INC., Respondent.
DECISION
JARDELEZA, J.:
Since 1979, the National
Telecommunications Commission (NTC)
has been the lead government agency
in charge of regulating the
telecommunications industry. The Public
Telecommunications Policy Act of the
Philippines1 (RA 7925) gave the NTC the
authority to approve or adopt access
charge arrangements between two
public telecommunication entities. The
issues here are whether the NTC has
primary jurisdiction over questions
involving access charge stipulations in a
bilateral interconnection agreement, and
whether regular courts can restrain the
NTC from reviewing the negotiated
access charges. chanroblesvirtuallawlibrary
I
Petitioner Philippine Telegraph &
Telephone Corporation (PT&T) and
respondent Smart Communications, Inc.
(Smart) entered into an
Agreement2 dated June 23, 1997 for the
interconnection of their
telecommunication facilities. The
Agreement provided for the
interconnection of Smart's Cellular
Mobile Telephone System (CMTS), Local
Exchange Carrier (LEC) and Paging
services with PT&T's LEC service.
Starting 1999, however, PT&T had
difficulty meeting its financial obligations
to Smart.3 Thus, on November 28,
2003, the parties amended the
Agreement, which extended the
payment period and allowed PT&T to
settle its obligations on installment
basis. The amended Agreement also
specified, among others, that Smart's
access charge to PT&T would increase
from P1.00 to P2.00 once PT&T's unpaid
balance reaches P4 Million and that
PT&T's access charge to Smart would be
reduced from P8.69 to P6.50. Upon full
payment, PT&T's access charge would
be further reduced to P4.50.4
On April 4, 2005, Smart sent a letter
informing PT&T that it increased the
access charge from P1.00 to P2.00
starting April 1, 2005 in accordance with
the amended Agreement. However, on
September 2, 2005, PT&T sent a letter
to Smart claiming that the latter
overcharged PT&T on outbound calls to
Smart's CMTS.5 PT&T cited the NTC
resolution in a separate dispute between
Smart and Digitel, where the NTC
ultimately disallowed the access charges
imposed by Smart for being
discriminatory and less favorable than
terms offered to other public
telecommunication entities (PTEs).
Accordingly, PT&T demanded a refund of
P12,681,795.13 from Smart.6
Thereafter, on September 15, 2005,
PT&T filed a letter-complaint with the
NTC raising the issue that the access
charges imposed by Smart were
allegedly "discriminatory and not in
conformity with those of other
carriers."7 On January 20, 2006, the
NTC ordered Smart and PT&T to attend
mediation conferences in order to thresh
out the issues.8 After the mediation
efforts failed, the NTC directed the
parties to file their respective pleadings,
after which it would consider the case
submitted for resolution. But before the
parties were able to submit the
pleadings, Smart filed a complaint with
the Regional Trial Court of Makati City
(RTC) against PT&T on April 7,
2006.9 Smart alleged that PT&T was in
breach of its contractual obligation when
it failed to pay its outstanding debt and
denied its liability to Smart. Accordingly,
Smart prayed that PT&T be ordered to
pay the sum of P1,387,742.33
representing its unpaid obligation and to
comply with the amended
Agreement.10 Smart also asked the RTC
to issue a temporary restraining order
against the NTC and PT&T, which the
RTC granted on April 25, 2006.11
In its answer to the complaint,12 PT&T
sought for the dismissal of the civil case
on the grounds of lack of jurisdiction,
non-observance of the doctrine of
primary jurisdiction, exhaustion of
administrative remedies, litis
pendentia and res judicata. It also
prayed that the restraining order be
immediately set aside. After several
hearings, the RTC issued a writ of
preliminary injunction in favor of
Smart.13 The RTC reasoned that allowing
the NTC to proceed and adjudicate
access charges would violate Smart's
contractual rights. The RTC also denied
PT&T's motion to dismiss, finding that
the nature of the civil case was
incapable of pecuniary estimation which
squarely falls within its jurisdiction.14 It
added that the NTC has no jurisdiction
to adjudicate breaches of contract and
award damages.
PT&T elevated the case to the Court of
Appeals through a petition for certiorari.
The Court of Appeals held that the RTC
did not commit grave abuse of
discretion and, consequently, denied the
petition.15 It found that the RTC had
jurisdiction over the case because it
involved an action for specific
performance, i.e., PT&T's compliance
with the Agreement, and is therefore
incapable of pecuniary estimation. And
insofar as the dispute involved an
alleged breach of contract, there was no
need to refer the matter to the NTC
because it had no jurisdiction over
breach of contract cases.16
After its motion for reconsideration was
denied by the Court of Appeals, PT&T
filed this petition for review17 seeking to
overturn the RTC's order of injunction
and non-dismissal of Smart's complaint.
PT&T principally argues that the NTC
has primary jurisdiction over the
determination of access charges. PT&T
characterizes the NTC case as one
involving the validity of interconnection
rates, as opposed to one involving
purely a breach of contract and claim for
damages cognizable by the RTC. PT&T
adds that the writ of preliminary
injunction issued by the RTC against
NTC constitutes interference with a co-
equal body. Smart counters by claiming
that the dispute was purely contractual;
hence, it properly falls within the
jurisdiction of the RTC. Although the
Agreement contained technical terms,
Smart's position is that the NTC has no
jurisdiction over bilateral
interconnection agreements voluntarily
negotiated and entered into by PTEs. chanroblesvirtuallawlibrary
II
Like the Court of Appeals below, Smart
relies on the argument that its
complaint before the RTC is one which is
incapable of pecuniary estimation and,
accordingly, falls within the RTC's
jurisdiction. Smart's theory is that,
because it is seeking to enforce the
Agreement, the action falls within the
ruling of Boiser v. Court of
Appeals18 that the regular courts, not
the NTC, have jurisdiction over cases
involving breach of contract and
damages. Invoking the freedom to
contract and non-impairment clause,
Smart posits that "[t]he specialized
knowledge and expertise of the NTC is
not indispensable or even necessary in
this case since x x x [Smart] simply
seeks to enforce and implement the
contractual agreement between the
parties and their rights and obligations
in relation thereto."19 Responding to
PT&T's claim that it is seeking the NTC
intervention only to resolve the issue on
validity of the rates of charges between
the two PTEs, Smart downplays this by
stating that there is no dispute on the
applicable rates since these were
already stated in the Agreement.20
We cannot agree with Smart's position.
While it is true that regional trial courts,
as courts of general jurisdiction, can
take cognizance of cases that are
incapable of pecuniary estimation-
including actions for breach of contract
and damages-the fact that the
interconnection agreement between
Smart and PT&T involved access
charges warrants a more nuanced
analysis.
RA 7925 recognizes and encourages
bilateral negotiations between PTEs, but
it does not strictly adopt a laissez-
faire policy. It imposes strictures that
restrain within reason how PTEs conduct
their business.21 The law aims to foster
a healthy competitive environment by
striking a balance between the freedom
of PTEs to make business decisions and
to interact with one another on the one
hand and the affordability of rates on
the other.22 However, one can speak of
healthy competition only between
equals. Thus, consistent with Section
19,23 Article XII of the Constitution, RA
7925 seeks to break up the monopoly in
the telecommunications industry by
gradually dismantling the barriers to
entry and granting new industry
entrants protection against dominant
carriers through equitable access
charges and equal access clauses in
interconnection agreements and through
the strict policing of predatory pricing by
dominant carriers.24
Specifically, Section 18 of RA 7925
regulates access charge arrangements
between two PTEs: chanRoblesvirtualLawlibrary
Access Charge/Revenue Sharing. - The
access charge/revenue sharing
arrangements between all
interconnecting carriers shall be
negotiated between the parties and the
agreement between the parties shall be
submitted to the Commission. In the
event the parties fail to agree thereon
within a reasonable period of time, the
dispute shall be submitted to the
Commission for resolution.
In adopting or approving an access
charge formula or revenue sharing
agreement between two or more
carriers, particularly, but not limited to a
local exchange, interconnecting with a
mobile radio, interexchange long
distance carrier, or international
carrier, the Commission shall ensure
equity, reciprocity and fairness
among the parties concerned. In so
approving the rates for
interconnection between the
telecommunications carriers, the
Commission shall take into
consideration the costs of the
facilities needed to complete the
interconnection, the need to provide
the cross-subsidy to local exchange
carriers to enable them to fulfill the
primary national objective of
increasing telephone density in the
country and assure a rate of return
on the local exchange network
investment that is at parity with
those earned by other segments of
the telecommunications
industry: Provided, That international
carriers and mobile radio operators
which are mandated to provide local
exchange services, shall not be exempt
from the requirement to provide the
cross-subsidy when they interconnect
with the local exchanges of other
carriers: Provided, further, That the
local exchanges which they will
additionally operate, shall equally be
entitled to the cross-subsidy from other
international carriers, mobile radio
operators, or inter-exchange carriers
interconnecting with them. (Emphasis
supplied.)
The first paragraph mandates that any
agreement pertaining to access charges
must be submitted to the NTC for
approval; in case the parties fail to
agree, the matter shall be resolved by
the NTC. Smart contends that the NTC's
authority under the second paragraph of
Section 18 is limited to instances where
the parties fail to agree on the rates.
This interpretation is incorrect. There is
no indication that-and Smart has not
pointed to any significant reason why-
the second paragraph of Section 18
should be construed as limited to the
latter instances. On the contrary, We
observe that Congress deliberately used
the word "approve," in conjunction with
"adopt," in describing the action that the
NTC may take. The plain dictionary
meaning of approve is "to express often
formally agreement with and support of
or commendation of as meeting a
standard."25 This presupposes that
something has been submitted to the
NTC, as the approving authority,
contrasted with the NTC adopting its
own formula. Under Section 18, it is
either the access charge formula or
revenue-sharing arrangement that is
submitted to the NTC for approval.
Smart and PT&T's Agreement, insofar as
it specifies the access charge rates for
the interconnection of their networks,
falls within the coverage of the
provision. Therefore, the Agreement
should have been submitted to the NTC
for its review and approval in
accordance with the second paragraph
of Section 18. Conspicuously, however,
neither Smart nor PT&T claims that the
access charges in the Agreement have
been submitted to, much less approved,
by the NTC. This further justifies the
intervention of the NTC.
It is clear that the law did not intend the
approval to simply be a ministerial
function. The second paragraph of
Section 18 enumerates the guidelines to
be considered by the NTC before it
approves the access charges. Thus, the
NTC must be satisfied that the access
charge formula is fair and reasonable
based on factors such as cost, public
necessity and industry returns;
otherwise, it has the discretion to
disapprove the rates in the event that it
finds that they fall short of the statutory
standards.26 Evidently, the proceeding
under Section 18 is quasi-judicial in
nature. Any action by the NTC would
particularly and immediately affect the
rights of the interconnecting PTEs-in this
case, Smart and PT&T-rather than being
applicable to all PTEs throughout the
Philippines.27 The NTC, therefore,
correctly treated the dispute as
adversarial and gave both Smart and
PT&T the opportunity to be heard.
The mere fact that Smart and PT&T
negotiated and executed a bilateral
interconnection agreement does not
take their stipulations on access charges
out of the NTC's regulatory reach. This
has to be so in order to further one of
the declared policies of RA 7925 of
expanding the telecommunications
network by improving and extending
basic services in unserved and
underserved areas at affordable
rates.28 A contrary ruling would severely
limit the NTC's ability to discharge its
twin mandates of protecting consumers
and promoting consumer welfare,29 and
would go against the trend towards
greater delegation of judicial authority
to administrative agencies in matters
requiring technical knowledge.30 Smart
cannot rely on the non-impairment
clause because it is a limit on the
exercise of legislative power and not of
judicial or quasi-judicial power.31 As
discussed in the preceding paragraph,
the approval of the access charge
formula under Section 18 is a quasi-
judicial function.
The foregoing interpretation is equally
supported by the structure of RA 7925.
Congress gave the NTC broad powers
over interconnection matters in order to
achieve the goal of universal
accessibility. Apart from the authority to
approve or adopt interconnection rates,
the NTC can even "[m]andate a fair and
reasonable interconnection of facilities
of authorized public network operators
and other providers of
telecommunications services through
appropriate modalities of
interconnection and at a reasonable and
fair level of charges, which make
provision for the cross subsidy to
unprofitable local exchange service
areas so as to promote telephone
density and provide the most extensive
access to basic telecommunications
services available at affordable rates to
the public."32 Such extensive powers
may generally be traced to the
Constitution, which recognizes the vital
role of communication and information
in nationbuilding.33 In Philippine Long
Distance Telephone Co. (PLDT) v.
National Telecommunications
Commission,34 we explained why the
NTC may regulate-in that case,
mandate-interconnection between
PTEs:chanRoblesvirtualLawlibrary
The interconnection which has been
required of PLDT is a form of
"intervention" with property rights
[recognized by Article XII, Section 6 of
the Constitution] dictated by "the
objective of government to promote the
rapid expansion of telecommunications
services in all areas of the Philippines, x
x x to maximize the use of
telecommunications facilities available, x
x x in recognition of the vital role of
communications in nation building x x x
and to ensure that all users of the public
telecommunications service have access
to all other users of the service
wherever they may be within the
Philippines at an acceptable standard of
service and at reasonable cost" (DOTC
Circular No. 90-248). Undoubtedly, the
encompassing objective is the common
good. The NTC, as the regulatory
agency of the State, merely exercised
its delegated authority to regulate the
use of telecommunications networks
when it decreed interconnection.
xxx
The decisive considerations are public
need, public interest, and the common
good. x x x Article II, Section 24 of the
1987 Constitution, recognizes the vital
role of communication and information
in nation building. It is likewise a State
policy to provide the environment for
the emergence of communications
structures suitable to the balanced flow
of information into, out of, and across
the country (Article XVI, Section 10, x x
x). A modem and dependable
communications network rendering
efficient and reasonably priced services
is also indispensable for accelerated
economic recovery and development. To
these public and national interests,
public utility companies must bow and
yield.35 (Emphasis omitted.)
The same reasoning obtains here.
Access charges directly affect the
State's goal of making basic
telecommunications services accessible
to everyone at affordable rates. If the
access charges are too high, the cost to
end-users may well be prohibitive.
Smart cannot simply invoke the freedom
of contract to shield it from the
intervention of the NTC, especially when
the law itself sanctions the agency's
intervention. As correctly pointed out by
PT&T, "[b]ecause petitioner and
respondent are public utility PTEs
subject to regulation by the NTC, their
freedom to enter into contracts is not
absolute but subject to the police power
of the State, especially when it comes to
matters affecting public interest and
convenience."36
The case relied upon by Smart, Boiser,
finds no application here for the simple
reason that the dispute in that case did
not involve access charges. Boiser arose
from PLDT's alleged failure to observe
the 30-day predisconnection notice
requirement stated in the parties'
Interconnecting Agreement. In holding
that regular courts had jurisdiction, we
said that "[t]here is nothing in the
Commission's powers which authorizes
it to adjudicate breach of contract cases,
much less to award moral and
exemplary damages."37 In stark
contrast, jurisdiction over negotiated
access charge formulas, such as Smart
and PT&T's Agreement, has been
allocated to the NTC by express
provision of law.
In fine, Section 18 of RA 7925
authorizes the NTC to determine the
equity, reciprocity and fairness of the
access charges stipulated in Smart and
PT&T's Agreement. This does not,
however, completely deprive the RTC of
its jurisdiction over the complaint filed
by Smart. The Agreement has other
stipulations which do not require the
NTC's expertise. But insofar as Smart's
complaint involved the enforcement of,
as well as the collection of sums based
on the rates subject of the NTC
proceedings, the RTC cannot proceed
with the civil case until the NTC has
finally determined if the access charges
are fair and reasonable. Hence, the
more prudent course of action for the
RTC would have been to hold the civil
action in abeyance until after a
determination of the NTC case. Indeed,
logic and the doctrine of primary
jurisdiction dictate such move. In San
Miguel Properties, Inc. v. Perez,38 we
held that:chanRoblesvirtualLawlibrary
The doctrine of primary jurisdiction has
been increasingly called into play on
matters demanding the special
competence of administrative agencies
even if such matters are at the same
time within the jurisdiction of the courts.
A case that requires for its
determination the expertise, specialized
skills, and knowledge of some
administrative board or commission
because it involves technical matters or
intricate questions of fact, relief must
first be obtained in an appropriate
administrative proceeding before a
remedy will be supplied by the courts
although the matter comes within the
jurisdiction of the courts. The
application of the doctrine does not call
for the dismissal of the case in the court
but only for its suspension until after
the matters within the competence
of the administrative body are
threshed out and determined.
To accord with the doctrine of primary
jurisdiction, the courts cannot and
will not determine a controversy
involving a question within the
competence of an administrative
tribunal, the controversy having
been so placed within the special
competence of the administrative
tribunal under a regulatory scheme.
In that instance, the judicial process
is suspended pending referral to the
administrative body for its view on
the matter in dispute. Consequently,
if the courts cannot resolve a question
that is within the legal competence of an
administrative body prior to the
resolution of that question by the latter,
especially where the question demands
the exercise of sound administrative
discretion requiring the special
knowledge, experience, and services of
the administrative agency to ascertain
technical and intricate matters of fact,
and a uniformity of ruling is essential to
comply with the purposes of the
regulatory statute administered,
suspension or dismissal of the action is
proper.39 (Emphasis supplied; citations
omitted.)
Here, it would be more proper for the
RTC to yield its jurisdiction in favor of
the NTC since the determination of a
central issue, i.e., the matter of access
charges, requires the special
competence and expertise of the latter.
"In this era of clogged court dockets,
administrative boards or commissions
with special knowledge, experience and
capability to promptly hear and
determine disputes on technical matters
or intricate questions of facts, subject to
judicial review in case of grave abuse of
discretion, are well-nigh indispensable.
Between the power lodged in an
administrative body and a court,
therefore, the unmistakable trend is to
refer it to the former."40
III
Under Rule 58, Section 2 of the 1997
Rules of Civil Procedure, the court where
the action is pending may grant the
provisional remedy of preliminary
injunction. Generally, trial courts have
the ancillary jurisdiction to issue writs of
preliminary injunction in cases falling
within its jurisdiction, including civil
actions that are incapable of pecuniary
estimation41 and claims for sum of
money exceeding P400,000.00,42 among
others. There are, however, exceptions
to this rule, such as when Congress, in
the exercise of its power to apportion
jurisdiction,43 restricts the authority of
regular courts to issue injunctive reliefs.
For example, the Labor Code prohibits
any court from issuing injunctions in
cases involving or arising from labor
disputes.44 Similarly, Republic Act No.
897545 (RA 8975) provides that no
court, other than the Supreme Court,
may issue provisional injunctive reliefs
which would adversely affect the
expeditious implementation and
completion of government infrastructure
projects.46 Another well-recognized
exception is that courts could not
interfere with the judgments, orders, or
decrees of a court of concurrent or
coordinate jurisdiction.47 This rule of
non-interference applies not only to
courts of law having equal rank but also
to quasi-judicial agencies statutorily at
par with such courts.48
The NTC was created pursuant to
Executive Order No. 54649 (EO 546),
promulgated on July 23, 1979. It
assumed the functions formerly
assigned to the Board of
Communications and the
Telecommunications Control Bureau and
was placed under the administrative
supervision of the Ministry of Public
Works. Meanwhile, the Board of
Communications previously exercised
the authority which originally pertained
to the Public Service Commission
(PSC).50 Under Executive Order No.
125,51 issued in January 1987, the NTC
became an attached agency of the
Department of Transportation and
Communications.
Section 16 of EO 546 provides that, with
respect to the NTC's quasi-judicial
functions, its decisions shall be
appealable in the same manner as the
decisions of the Board of
Communications had been appealed.
The rulings and decisions of the Board
were, in turn, appealable in the same
manner as the rulings and decisions of
the PSC.52 Under Section 35 of the
Public Service Act, the Supreme Court
had jurisdiction to review any order,
ruling, or decision of the PSC.53 In Iloilo
Commercial and Ice Company v. Public
Service Commission,54 we categorically
held that courts of first instance have no
power to issue a restraining order
directed to the PSC.55 In that case, the
PSC instructed the city fiscal to file a
criminal action against the owner and
manager of Iloilo Commercial and Ice
Company for allegedly operating a
public utility without the required
certificate of public convenience. The
company brought a complaint in the
Court of First Instance of Iloilo for an
injunction to restrain the PSC from
proceeding against the company and its
officers. The Court, speaking through
Justice Malcolm, said: chanRoblesvirtualLawlibrary
The Public Service Law, Act No. 3108,
as amended, creates a Public Service
Commission which is vested with the
powers and duties therein specified. The
Public Service Commissioners are given
the rank, prerogatives, and privileges of
Judges of First Instance. Any order
made by the commission may be
reviewed on the application of any
person or public service affected
thereby, by certiorari, in appropriate
cases or by petition, to the Supreme
Court, and the Supreme Court is given
jurisdiction to review any order of the
Commission and to modify or set it
aside (sec. 35).
x x x In the absence of a specific
delegation of jurisdiction to Courts
of First Instance to grant injunctive
relief against orders of the Public
Service Commission, it would
appear that no court, other than the
Supreme Court, possesses such
jurisdiction. To hold otherwise
would amount to a presumption of
power in favor of one branch of the
judiciary, as against another branch
of equal rank. If every Court of First
Instance had the right to interfere with
the Public Service Commission in the
due performance of its functions,
unutterable confusion would result. The
remedy at law is adequate, and consists
either in making the proper defense in
the criminal action or in the Ice
Company following the procedure
provided in the Public Service Law. An
injunction is not the proper remedy,
since other and exclusive remedies are
prescribed by law.56 (Emphasis
supplied.)
The above ruling is deemed to have
been modified by Batas Pambansa
Blg. 129, which granted the Court of
Appeals exclusive appellate jurisdiction
over "all final judgments, resolutions,
orders or awards of Regional Trial
Courts and quasi-judicial agencies,
instrumentalities, boards or
commission" except those falling within
the appellate jurisdiction of the
Supreme Court in accordance with the
Constitution and the Labor Code.57 In
this regard, Rule 43 of the Rules of
Court provides that an appeal from any
award, judgment or resolution of or
authorized by a quasi-judicial agency in
the exercise of its quasi-judicial
functions, including the NTC, shall be
through a petition for review with the
Court of Appeals.58
In view of the legislative history of the
NTC, it is clear that Congress intended
NTC, in respect of its quasi-judicial or
adjudicatory functions, to be co-equal
with regional trial courts. Hence, the
RTC cannot interfere with the NTC's
exercise of its quasi-judicial powers
without breaching the rule of non-
interference with tribunals of concurrent
or coordinate jurisdiction. In this case,
the NTC was already in the process of
resolving the issue of whether the
access charges stipulated in the
Agreement were fair and equitable
pursuant to its mandate under RA 7925
when the RTC issued the assailed writ of
preliminary injunction. Mediation
conferences had been conducted and,
failing to arrive at a settlement, the NTC
had ordered the parties to submit their
respective pleadings. Simply put, the
NTC had already assumed jurisdiction
over the issue involving access charges.
Undeniably, the RTC exceeded its
jurisdiction when it restrained the NTC
from exercising its statutory authority
over the dispute.
WHEREFORE, the petition
is PARTIALLY GRANTED. The Decision
dated February 18, 2009, as well as the
Resolution dated July 23, 2009, of the
Court of Appeals in CA-G.R. SP No.
97737 are SET ASIDE. The writ of
preliminary injunction issued by the
Regional Trial Court, Branch 146, Makati
City is DISSOLVED. The Regional Trial
Court, Branch 146, Makati City is further
directed to SUSPEND its proceedings
until the National Telecommunications
Commission makes a final determination
on the issue involving access charges.
SO ORDERED. ChanRoblesVirtualawlibrary
THIRD DIVISION
October 4, 2017
G.R. No. 214073
BICOL MEDICAL CENTER, represented by
Dr. Efren SJ. Nerva, and the DEPARTMENT
OF HEALTH, represented by HEALTH
SECRETARY ENRIQUE T. ONA, Petitioners
vs.
NOE B. BOTOR, CELJUN F. YAP, ISMAEL
A. ALBAO, AUGUSTO S. QUILON, EDGAR
F. ESPLANA II, and JOSEFINA F.
ESPLANA, Respondents
DECISION
LEONEN, J.:
Prima facie evidence is evidence that is not
rebutted or contradicted, making it good and
sufficient on its face to establish a fact
constituting a party's claim or defense. 1
This resolves the Petition for Review  filed by
2
Bicol Medical Center and the Department of
Health, assailing the February 28, 2014
Decision  and August 26, 2014 Resolution  of
3 4
the Court of Appeals in CA-G.R. SP No.
129806.
Camarines Sur Provincial Hospital (Provincial
Hospital) was established in 1933 as a 25-bed
provincial hospital located along Mabini
Street, now Peñafrancia Avenue, Naga City.
The Camarines Sur Provincial Government
eventually subsidized the operations of a
private hospital located at Concepcion
Pequefia, Naga City and transferred the
Provincial Hospital there.5
Road Lot No. 3, which stretched from
Panganiban Road to J. Miranda Avenue, is a
service road which leads to the Provincial
Hospital.6
The Provincial Hospital was eventually
converted to the Bicol
Regional Training and Teaching Hospital
(Training and Teaching Hospital). 7
Sometime in 1982, the Camarines Sur
Provincial Government donated about five (5)
hectares of land to the Ministry of Health, now
the Department of Health,  as evidenced by
8 docketed as Civil Case No. 2012-0073 and
Transfer Certificate of Title (TCT) No.
13693.  The Training and Teaching Hospital
9 Naga City. 19
and Road Lot No. 3 were included in this
donation. 10
The Training and Teaching Hospital became
the Bicol Medical Center (BMC) in
1995.  Sometime in 2009, BMC constructed a
11
steel gate along J. Miranda Avenue to control
the flow of vehicle and pedestrian traffic
entering the hospital premises. 12
On March 21, 2012, Dr. Efren SJ. Nerva (Dr.
Nerva), BMC Chief I, issued Hospital
Memorandum No. 0310,  which ordered the
13
rerouting of traffic inside the BMC Compound.
Salient portions of this Memorandum read:
To: All Officials and Employees This Center
Subject: Traffic Re-routing inside the BMC
Compound In line with the Traffic Re-routing
of the Center, the exit gate at the MCC
Quarters shall be closed and the OPD Exit
Gate shall be used for the exit of pedestrians
and motor vehicles effective April l, 2012.
For information and dissemination purposes. 14
This rerouting scheme closed the steel gate
for vehicles and pedestrians along J. Miranda
Avenue, relocating it from the eastern side of
the hospital to the western side effective April
1, 2012.  The relocation of this gate was
15
implemented for security reasons and to make
way for "[m]assive development within the
Complex." 16
The gate closure drew a lot of criticism from
the community, and on May 19, 2012, Atty.
Noe Botor (Atty. Botor) wrote to Naga City
Mayor John Bongat (Mayor Bongat), asking
for the reopening or dismantling of the gate for
being a public nuisance. 17
The Sangguniang Panlungsod of Naga City
passed a resolution authorizing Mayor Bongat
to dismantle the gate.  However, instead of
18
dismantling it, Mayor Bongat filed a Verified
Petition with Prayer for a Writ of Preliminary
Injunction against BMC. The case was
raffled to Branch 24, Regional Trial Court,
Atty. Botor, Celjun F. Yap, Ismael A. Albao,
Augusto S. Quilon, Edgar F. Esplana II, and
Josefina F. Esplana (Intervenors) were
allowed to intervene and submit their
complaint-in-intervention. 20
A few months later, ground-breaking
ceremonies for the construction of the Cancer
Center Building  were conducted, with
21
construction intended to begin in January
2013. When fully completed, the Cancer
Center Building would take over "about three-
fourths (3/4) of the width of Road Lot No. 3." 22
On December 21, 2012, the Regional Trial
Court denied Naga City's application for
injunctive relief, ruling that Naga City failed to
prove a clear and unmistakable right to the
writ prayed for.23
On February 22, 2013, the Regional Trial
Court denied the motion for reconsideration
filed by the Intervenors. 24
Only the Intervenors filed a petition
for certiorari before the Court of Appeals. 25
On February 28, 2014, the Court of Appeals
granted the petition and emphasized that only
a prima facie showing of an applicant's right to
the writ is required in an application for writ of
injunctive relief.
26
The Court of Appeals opined that the
Intervenors were able to prove the public
character of Road Lot No. 3, considering that
"the general public had been using [it] since
time immemorial," with even Dr. Nerva
admitting that he passed through it when he
was young. The Court of Appeals also gave
due weight to the 1970s Revised Assessor's
Tax Mapping Control Roll and its Identification
Map, which support the Intervenors' assertion
of the public nature of Road Lot No. 3. 27
The Court of Appeals concluded that Naga
City and the Intervenors were able to
present prima facie evidence of their right to
the writ. However, the Court of Appeals
pointed out that whether or not the Revised
Assessor's Tax Mapping Control Roll should
prevail over BMC's title over the property is a
factual matter that should be threshed out in
the trial court.  The dispositive portion of the
28
Court of Appeals Decision read:
WHEREFORE, premises considered, the
instant petition is hereby GRANTED. The
court a quo is hereby DIRECTED to issue a
writ of mandatory preliminary injunction in the
case a quo.
SO ORDERED.  (Emphasis in the original)
29
On August 26, 2014, the Court of
Appeals  denied the motions for
30
reconsideration filed by BMC and the
Department of Health. However, the Court of
Appeals emphasized that the injunction was
not directed against the construction of the
Cancer Center Building but against the
relocation of the service road and gate
closure.31
On September 29, 2014, petitioners BMC and
the Department of Health filed this Petition for
Review on Certiorari  before this Court.
32
Petitioners claim that although Road Lot No. 3
has been open to vehicles and pedestrians as
BMC's service road, it was never intended for
use by the general public and was not owned
by Naga City, as evidenced by the certification
issued by the Office of the City Engineer of
Naga City. 33
Petitioners assert that they have set up a gate
on Road Lot No. 3, which is closed' at night,
on weekends, and during holidays for security
reasons and.for the welfare of patients and
hospital staff. 34
Petitioners maintain that Dr. Nerva's closure
of the road and relocation of the gate was in
preparation for the construction of the Cancer
Center Building.  Thus, the preliminary
35
mandatory injunction issued by the Court of
Appeals had the effect of halting construction
of a government project, a violation of
Presidential Decree No. 1818  and this
36
Court's Administrative Circular No. 11-2000,
which reiterated the prohibition on the
issuance of injunctions in cases involving
government infrastructure projects. 37
Petitioners claim that the ₱5l,999,475.26
contract for the Cancer Center Building has
been awarded to OCM Steel Corporation, the
winning contractor, and the Notice to Proceed
dated February 3, 2014 has been issued,
signalling the mobilization stage of the
construction of the Cancer Center Building. 38
Petitioners emphasize that the Court of
Appeals erred in holding that the injunction
over the relocation of the service road and
closure of the gate did not violate Presidential
Decree No. 1818 because the Cancer Center
Building, a government project, will be
constructed right where the gate stands. 39
Petitioners point out that the Cancer Center
Building will be constructed along Road Lot
No. 3; hence, there is a need to close this
road due to the excavation and construction,
which will make it dangerous for pedestrians
and vehicles alike to pass through. 40
Petitioners likewise underscore that the
intervenors, now respondents, failed to
support their claim that Road Lot No. 3 was a
public road  or that they had a clear right to
41
the injunctive relief prayed for.  Furthermore,
42
respondents also allegedly "failed to prove
that the invasion of the [ir] right sought to be
protected [was] material and substantial" and
that there was an urgent necessity for the
issuance of the writ to prevent serious
damage. 43
Finally, petitioners applied for a temporary
restraining order and/or writ of preliminary
injunction to prevent the reopening of the gate
since doing so would affect the construction of
the Cancer Center Building. 44
On October 8, 2014, this Court issued two (2)
Resolutions. The first Resolution  granted
45
petitioners' motion for extension to file their
petition. The second Resolution  issued a
46
temporary restraining order enjoining the
implementation of the Court of Appeals
February 28, 2014 Decision and August 26,
2014 Resolution, which directed the Regional
Trial Court to issue a writ of mandatory
preliminary injunction on the closure of Road
Lot No. 3. The second Resolution also
required respondents to comment on the
petition.
47
On January 13, 2015, respondents filed their
Comment on the Petition,  where they
48
disputed petitioners' claim that Road Lot No. 3
was always a component or service road of
BMC. Respondents contend that Road Lot
No. 3 existed as a public road long before any
hospital was constructed on it and assert that
it remains to be a public road to this day.
Respondents also dispute petitioners' claim
that the road closure was for the construction
of the Cancer Center Building since Dr.
Nerva's memorandum was for no other
purpose than to reroute traffic within the
hospital complex. 50
Respondents likewise point out that when
they filed their intervention before the
Regional Trial Court and their petition before
the Court of Appeals, there were still no plans
to construct the Cancer Center Building.
Furthermore, BMC allegedly failed to support
its claim that there were indeed plans to build
the Cancer Center Building.  Nonetheless,
51
respondents explain that they are not against
its construction but are merely asking that it
not be illegally built on a public road. 52
Finally, respondents ask that this Court lift its
issued temporary restraining order against the
assailed Court of Appeals Decision and
Resolution. 53
In its Resolution  dated February 25, 2015,
54
this Court noted respondents' comment and
denied their prayer to lift the temporary
restraining order. It likewise directed
petitioners to file their reply to the comment.
In their Reply,  petitioners reiterate their stand
55
that Road Lot No. 3 is a private
property.  Petitioners also rebut respondents'
56
assertion that they only belatedly brought up
the construction of the Cancer Center Building
because this project was
nonexistent.  Petitioners attached photos  to
57 58
prove that the construction of the Cancer
Center Building was in progress. 59
The single issue to be resolved by this Court
is whether or not the Court of Appeals erred in
directing the Regional Trial Court to issue a
writ of preliminary injunction on the closure of
Road Lot No. 3.
The Petition is meritorious.
I
Department of Public Works and Highways v.
49
City Advertising Ventures Corp.  defined a
60
writ of preliminary injunction as follows:
[A] writ of preliminary injunction is an ancillary
and interlocutory order issued as a result of
an impartial determination of the context of
both parties. It entails a procedure for the
judge to assess whether the reliefs prayed for
by the complainant will be rendered moot
simply as a result of the parties' having to go
through the full requirements of a case being
fully heard on its merits. Although a trial court
judge is given a latitude of discretion, he or
she cannot grant a writ of injunction if there is
no clear legal right materially and substantially
breached from a prima facie evaluation of the
evidence of the complainant. Even if this is
present, the trial court must satisfy itself that
the injury to be suffered is irreparable. 61
A writ of preliminary injunction is issued to:
[P]reserve the status quo ante, upon the
applicant's showing of two important requisite
conditions, namely: (1) the right to be
protected exists prima facie, and (2) the acts
sought to be enjoined are violative of that
right. It must be proven that the violation
sought to be prevented would cause an
irreparable injustice. 62
Rule 58, Section 3 of the Rules of Court
provides the instances when a writ of
preliminary injunction may be issued:
Section 3. Grounds for issuance of preliminary
injunction. - A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the
relief demanded, and the whole or part
of such relief consists in restraining
the commission or continuance of the
act or acts complained of: or in
requiring the perfonnance 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.
Jurisprudence has likewise established that
the following requisites must be proven first
before a writ of preliminary injunction, whether
mandatory or prohibitory, may be issued:
(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.
63
In satisfying these requisites, the applicant for
the writ need not substantiate his or her claim
with complete and conclusive evidence since
only prima facie evidence  or a sampling is
64
required "to give the court an idea of the
justification for the preliminary injunction
pending the decision of the case on the
merits."65
Tan v. Hosana  defines prima facie evidence
66
as evidence that is "good and sufficient on its
face. Such evidence as, in the judgment of the
law, is sufficient to establish a given fact, or
the group or chain of facts constituting the·
party's claim or defense and which if not
rebutted or contradicted, will remain
sufficient." 67
Spouses Nisce v. Equitable PCI Bank  then
68
discussed the requisites and the proof
required for the issuance of a writ of
preliminary injunction:
The plaintiff praying for a writ of preliminary
injunction must further establish that he or she
has a present and unmistakable right to be
protected; that the facts against which
injunction is directed violate such right; and
there is a special and paramount necessity for
the writ to prevent serious damages. In the
absence of proof of a legal right and the injury
sustained by the plaintiff, an order for the
issuance of a writ of preliminary injunction will
be nullified. Thus, where the plaintiff's right is
doubtful or disputed, a preliminary injunction
is not proper. The possibility of irreparable
damage without proof of an actual existing
right is not a ground for a preliminary
injunction.
However, to establish the essential requisites
for a preliminary injunction, the evidence to be
submitted by the plaintiff need not be
conclusive and complete. The plaintiffs arc
only required to show that they have an
ostensible right to the final relief prayed for in
their complaint. A writ of preliminary
i11iunction is generally based solely on initial
or incomplete evidence. Such evidence need
only be a sampling intended merely to give
the court an evidence of justification for a
preliminary injunction pending the decision on
the merits of the case, and is not conclusive of
the principal action which has yet to be
decided. 69
(Emphasis supplied, citations omitted)
To prove its clear legal right over the remedy
being sought, Naga City presented before the
trial court the 1970s Revised Assessor's Tax
Mapping Control Roll and its Identification
Map which both identified Road Lot No. 3 as
being in the name of the Province of
Camarines Sur.  Witnesses' testimonies were
70
also presented to corroborate Naga City's
claims of the public nature of Road Lot No. 3. 71
Respondents claimed that as members of the
general public, they had every right to use
Road Lot No. 3, a public road. 72
On the other hand, BMC presented TCT No.
13693,  which covered a total land area of
73
53,890m2 within Barrio Concepcion, Naga City
with the Ministry of Health, now Department of
Health, as the registered owner. It is not
disputed that Road Lot No. 3 is part of the
property covered by TCT No. 13693.
BMC likewise presented a certification  from
74
the City Engineer of Naga City which read:
This is to certify that the road from
Panganiban Drive up to the entrance and exit
gate of Bicol Medical Center is not included in
the list of Inventory of City Road[s] of Naga
City.
Given this 14th day of December 2012 for
record and reference purposes. 75
A careful reading of the records convinces this
Court that respondents failed to
establish prima facie proof of their clear legal
right to utilize Road Lot No, 3. Whatever right
they sought to establish by proving the public
nature of Road Lot No. 3 was rebutted by the
Department of Health's certificate of title and
the City Engineer's categorical statement that
"the road from Panganiban Drive up to the
entrance and exit gate of [BJ\1C] was not
included in the list" of city roads under Naga
City's control. 76
Instead of merely relying on a tax map and
claims of customary use, Naga City or
respondents should have presented a clear
legal right to support their claim over Road Lot
No. 3.
Executive Secretary v. Forerunner Multi
Resources, Inc.   explained that a clear legal
77
right which would entitle the applicant to an
injunctive writ "contemplates a right 'clearly
founded in or granted by law.' Any hint of
doubt or dispute on the asserted legal right
precludes the grant of preliminary injunctive
relief."
78
Absent a particular law or statute establishing
Naga City's ownership or control over Road
Lot No. 3, the Department of Health's title over
the BMC compound must prevail over the
unsubstantiated claims of Naga City and
respondents. Department of Health's
ownership over Road Lot No. 3, with the
concomitant right to use and enjoy this
property, must be respected.
Respondents likewise cannot rely on the
supposed customary use of Road Lot No. 3 by
the public to support their claimed right of
unfettered access to the road because
customary use is not one (1) of the sources of
legal obligation;  hence, it does not ripen into
79
a right.
II
This Court finds that the Court of Appeals
erred in limiting prima facie evidence merely
to the evidence presented by Naga City and
respondents and in disregarding altogether
petitioners' evidence,  which had the effect of
80
squarely rebutting Naga City and respondents'
assertions. The Court of Appeals failed to
appreciate the nature of the ancillary remedy
of a writ of preliminary injunction as against
the ex parte nature of a temporary restraining
order.
During the hearing for the application for writ
of preliminary injunction, the trial court
correctly weighed the evidence presented by
both parties before dismissing Naga City's
application:
On 21 December 2012, the court a
quo handed down the first assailed Order
denying the application for injunctive relief.
According to said court, Naga City failed to
comply with the jurisprudential requirements
for the issuance of said injunction, to wit: 1)
the right of the complainant is clear and
unmistakable; 2) the invasion of the right is
material and substantial; and 3) urgent and
permanent necessity for the writ to prevent
serious damage.
Anent the first requirement, the court a
quo noted that even on the assumption that
the 1970's Revised Assessor's Tax Mapping
Control Roll and its Identification Map were
both authentic documents, the same would
not overcome BMC s ownership of the
property as evidenced by its title. BAMC’s title
covers all property within its bounds, which
naturally included Road Lot No. 3.
The court a quo thereafter proceeded to
conclude that since Naga City failed to clearly
establish its right over the said road, then
logically, it would not also be able to show
compliance with the second requisite, which
necessitates a material and substantial
invasion of such right.
On the third requirement, the court a quo took
into consideration the testimonies of two of the
herein petitioners, Eliza M. Quilon (hereinafter
Quilon) and Josefina F. Esplana (hereinafter
Esplana), who both have businesses in the
area and who said that their respective
enterprises started suffering from losses after
the closure of Road Lot No. 3. However,
according to the court a quo, the losses of
Quilon and Esplana hardly qualify as
irreparable injury required by jurisprudence in
granting the writ of preliminary injunction. This
is so, as the court declared, because the
alleged business losses that had been
purportedly caused by the closure of Road Lot
No. 3 were easily subject to mathematical
computation.  (Emphasis supplied)
81
Writs of preliminary injunction are granted only
upon prior notice to the party sought to be
enjoined and upon their due hearing.  Rule
1âwphi1
58, Section 5 of the Rules of Court provides:
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 ex parte 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 twenty-day
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.
However, and subject to the provisions of the
preceding sections, if the matter is of extreme
urgency and the applicant will suffer grave
injustice and irreparable injury, the executive
judge of a multiple-sala court or the presiding
judge of a single sala court may issue ex
parte a temporary restraining order effective
for only seventy-two (72) hours from issuance
but he shall immediately comply with the
provisions of the next preceding section as to
service of summons and the documents to be
served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge
before whom the case is pending shall
conduct a summary hearing to detem1ine
whether the temporary restraining order shall
be extended until the application for
preliminary injunction can be heard. In no
case shall the total period of effectivity of the
temporary restraining order extended twenty
(20) days, including the original seventy-two
hours (72) hours provided herein.
In the event that the application for preliminary
injunction is denied or not resolved within the
said period, the temporary restraining order is
deemed, automatically vacated. The effectivity
of a temporary restraining order is not
extendible without need of any judicial
declaration to that effect and no court shall
have authority to extend or renew the same
on the same ground for which it was issued.
However, if issued by the Court of Appeals or
a member thereof, the temporary restraining
order shall be effective for sixty (60) days from
service on the party or person sought to be
enjoined. A restraining order issued by the
Supreme Court or a member thereof shall be
effective until further orders.
Thus, Rule 58 requires "a full and
comprehensive hearing for the determination
of the propriety of the issuance of a writ of
preliminary injunction,"  giving the applicant
82
an opportunity to prove that great or
irreparable injury will result if no writ is issued
and allowing the opposing party to comment
on the application.
On the other hand, a temporary restraining
order that is heard only with the evidence
presented by its applicant is ex parte, but it is
issued to preserve the status quo until the
hearing for preliminary injunction can be
conducted, Miriam College Foundation,
Inc v. Court of Appeals  explained the
83
difference between preliminary injunction and
a restraining order as follows:
Preliminary injunction is an order granted at
any stage of an action or proceeding prior to
the judgment or final order, requiring a party
or a court, agency or a person to perform to
refrain from performing a particular act or acts.
As an extraordinary remedy, injunction is
calculated to preserve or maintain the status
quo of things and is generally availed of to
prevent actual or threatened acts, until the
merits of the case can be heard. A preliminary
injunction persists until it is dissolved or until
the termination of the action without the court
issuing a final injunction.
The basic purpose of restraining order, on the
other hand, is to preserve the status quo until
the hearing of the application for preliminary
injw1ction. ; Under the former A§5, Rule 58 of
the Rules of Court, as amended by A§S,
Batas Pambansa Blg. 224, a judge (or justice)
may issue a temporary restraining order with a
limited life of twenty days from date of issue. If
before the expiration of the 20-day period the
application for preliminary injunction is denied,
the temporary order would thereby be
deemed automatically vacated. If no action is
taken by the judge on the application for
preliminary injunction within the said 20 days,
the temporary restraining order would
automatically expire on the 20th day by the
sheer force of law, no judicial declaration to
that effect being necessary. In the instant
case, no such preliminary injunction was
issued; hence, the TRO earlier issued
automatically expired under the aforesaid
provision of the Rules of Court.  (Citations
84
omitted)
It is true that some issues are better threshed
out before the trial court, such as if the
donation to the Department of Health by the
Camarines Sur Provincial Government
contained an encumbrance for the public to
continue using Road Lot No. 3, or the validity
of this donation.  The Court of Appeals,
85
however, erred when it completely
disregarded the evidence presented by
petitioners, reasoning out that the question of
whether or not Naga City's evidence should
prevail over BMC's title over the property was
supposedly a factual matter that should be
threshed out in the trial court.
86
By focusing solely on Naga City and
respondents' evidence to determine if there
was prima facie evidence to issue the writ of
preliminary injunction while the case was
being heard in the lower court, the Court of
Appeals misappreciated the nature of a writ of
preliminary injunction. To reiterate, a
preliminary injunction is an ancillary remedy
issued after due hearing where both parties
are given the opportunity to present their
respective evidence. Thus, both their
evidence should be considered.
As it is, absent a finding of grave abuse of
discretion, there was no reason for the Court
of Appeals to reverse the trial court's denial of
respondents' application for the issuance of a
writ of preliminary injunction. Respondents
were unable to present prima facie evidence
of their clear and unmistakable right to use
Road Lot No. 3.
WHEREFORE, this Court resolves to GRANT
the Petition. The assailed February 28, 2014
Decision and August 26, 2014 Resolution of
the Court of Appeals in CA-G.R. SP No.
129806 are REVERSED and SET ASIDE.
The temporary restraining order issued by this
Court in its October 8, 2014 Resolution is
made PERMANENT.
SO ORDERED.
Laws:
1. RA8975 An Act to Ensure the
Expeditious Implementation and
Completion of Govt
Infrastructure Projects)
Case:
FIRST DIVISION
[G.R. No. 167057 : April 11, 2012]
NERWIN INDUSTRIES
CORPORATION, PETITIONER, VS.
PNOC-ENERGY DEVELOPMENT
CORPORATION, AND ESTER R.
GUERZON, CHAIRMAN, BIDS AND
AWARDS COMMITTEE,
RESPONDENTS.
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 Government’s
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.cralaw
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 country’s Rural Electrification
Project.  The said contract consisted of
four (4) components, namely: PIA, PIB
and PIC or woodpoles and P3 or
crossarms, necessary for NEA’s
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.  However, on December 19, 2000, NEA’s
NEA then conducted a pre-award
inspection of private respondent’s
[Nerwin’s] manufacturing plants and
facilities, including its identified supplier
in Malaysia, to determine its capability
to supply and deliver NEA’s
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
NEA’s 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.
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 pre-qualify 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
PNOC-EDC 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 petition fails.
The assailed Orders dated July 30 and
December 29, 2003 are hereby
ANNULED and SET ASIDE.  Accordingly,
Civil Case No. 03106921, private
respondent’s 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
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 Judge’s 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 government’s 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.  Thus, there is nothing from the law or
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.”
jurisprudence, or even from the facts of
the case, that would justify respondent
Judge’s 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
respondent’s 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 CA’s 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
government’s 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-08-2133
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 Court’s 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 Laviña 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 Nerwin’s 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 1. That prohibited or unlawful acts
their minds should be to guard against a have been threatened and will be
change of circumstances that will committed and will be continued
hamper or prevent the granting of unless restrained, but no
proper reliefs after a trial on the merits. injunction or temporary
[30]
 It is well worth remembering that the
restraining order shall be issued
writ of preliminary injunction should
issue only to prevent the threatened
on account of any threat,
continuous and irremediable injury to prohibited or unlawful act, except
the applicant before the claim can be against the person or persons,
justly and thoroughly studied and association or organization
adjudicated.[31]
cralaw
making the threat or committing
the prohibited or unlawful act or
WHEREFORE, the Court AFFIRMS the actually authorizing or ratifying
decision of the Court of Appeals; the same after actual knowledge
and ORDERS petitioner to pay the costs thereof;
of suit.  
2. That substantial and irreparable
The Court Administrator shall
injury to complainant’s property
disseminate this decision to the lower
courts for their guidance.
will follow;
 
SO  ORDERED. 3. That as to each item of relief to
be granted, greater injury will be
inflicted upon complainant by the
Article 218 of the Labor Code denial of relief than will be
inflicted upon defendants by the
granting of relief;
To enjoin or restrain any actual or
 
threatened commission of any or all
4. That complainant has no
prohibited or unlawful acts or to require
adequate remedy at law; and
the performance of a particular act in
 
any labor dispute which, if not restrained
5. That the public officers charged
or performed forthwith, may cause grave
with the duty to protect
or irreparable damage to any party or
complainant’s property are
render ineffectual any decision in favor
unable or unwilling to furnish
of such party: Provided, That no
adequate protection.
temporary or permanent injunction in
Section 1 of Rule X of the 2011
any case involving or growing out of a
labor dispute as defined in this Code NLRC Rules of Procedure
shall be issued except after hearing the
testimony of witnesses, with opportunity
SECTION 1. INJUNCTION IN ORDINARY
for cross-examination, in support of the
LABOR DISPUTES. – A preliminary
allegations of a complaint made under
injunction or restraining order may be
oath, and testimony in opposition
granted by the Commission through its
thereto, if offered, and only after a
Divisions pursuant to the provisions of
finding of fact by the Commission, to the
paragraph (e) of Article 218 (now 225)
effect: of the Labor Code, as amended, when it
  is established on the basis of the sworn
 allegations in the petition that the acts
complained of involving or arising from
any labor dispute before the
Commission, which, if not restrained or
performed forthwith, may cause grave
or irreparable damage to any party or
render ineffectual any decision in favor
of such party. A certification of non-
forum shopping shall accompany the
petition for injunction. The writ of
preliminary injunction or temporary
restraining order shall become effective
only upon posting of the required cash
bond in the amount to be determined
by the Commission to answer for any
damage that may be suffered by the
party enjoined, if it is finally determined
that the petitioner is not entitled
thereto.
Revised Corporation Code - Section
179.
Powers, Functions, and Jurisdiction of
the Commission.
Xxxxxx
In imposing penalties and additional
monitoring and supervision requirements, the
Commission shall take into consideration the
size, nature of the business, and capacity of
the corporation.
No court below the Court of Appeals shall
have jurisdiction to issue a restraining order,
preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or
controversy that directly or indirectly interferes
with the exercise of the powers, duties and
responsibilities of the Commission that falls
exclusively within its jurisdiction.
PRESIDENTIAL DECREE No. 1818
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
WHEREAS, Presidential Decree No. 605
prohibits the issuance by the courts of
restraining orders or injunctions in cases
involving concessions, licenses, and other
permits issued by administrative officials or
bodies for the exploitation, development and
utilization of natural resources of the country;
WHEREAS, it is in the public interest to adopt
a similar prohibition against the issuance of
such restraining orders or injunctions in other
areas of activity equally critical to the
economic development effort of the nation, in
order not to disrupt or hamper the pursuit of
essential government projects;
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by
virtue of the powers vested in me by the
Constitution, do hereby decree and order as
follows:
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 governmental 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.
Section 2. This decree shall take effect
immediately.
PRESIDENTIAL DECREE No. 385
January 31, 1974
 REQUIRING GOVERNMENT FINANCIAL the arrearages outstanding at the time of the
INSTITUTIONS TO FORECLOSE foreclosure is paid.
MANDATORILY ALL LOANS WITH
ARREARAGES, INCLUDING INTEREST All restraining orders and injunctions existing
AND CHARGES AMOUNTING TO AT as of the date of this Decree on foreclosure
LEAST TWENTY (20%) PERCENT OF THE proceedings filed by said government financial
TOTAL OUTSTANDING OBLIGATION institutions shall be considered lifted unless
finally resolved by the court within sixty (60)
Section 2. No restraining order, temporary or days from date hereof.
permanent injunction shall be issued by the
court against any government financial REPUBLIC ACT NO. 9136
institution in any action taken by such
institution in compliance with the mandatory
foreclosure provided in Section 1 hereof,
AN ACT ORDAINING REFORMS IN
whether such restraining order, temporary or THE ELECTRIC POWER INDUSTRY,
permanent injunction is sought by the AMENDING FOR THE PURPOSE
borrower(s) or any third party or parties, CERTAIN LAWS AND FOR OTHER
except after due hearing in which it is PURPOSES
established by the borrower and admitted by
the government financial institution concerned SEC. 78. Injunction and Restraining Order.
that twenty percent (20%) of the outstanding
arrearages has been paid after the filing of
foreclosure proceedings. – The implementation of the provisions of
the Act shall not be restrained or enjoined
In case a restraining order or injunction is except by an order issued by the Supreme
issued, the borrower shall nevertheless be Court of the Philippines.
legally obligated to liquidate the remaining
balance of the arrearages outstanding as of
the time of foreclosure, plus interest and other
charges, on every succeeding thirtieth (30th)
day after the issuance of such restraining
order or injunction until the entire arrearages
have been liquidated. These shall be in
addition to the payment of amortization
currently maturing. The restraining order or
injunction shall automatically be dissolved
should the borrower fail to make any of the
above-mentioned payments on due dates,
and no restraining order or injunction shall be PD 605- BANNING THE ISSUANCE BY
issued thereafter. This shall be without COURTS OF PRELIMINARY
prejudice to the exercise by the government
INJUNCTIONS IN CASES INVOLVING
financial institutions of such rights and/or
CONCESSIONS, LICENSES, AND OTHER
remedies available to them under their
respective charters and their respective
PERMITS ISSUED BY PUBLIC
contracts with their debtors, nor should this ADMINISTRATIVE OFFICIALS OR
provision be construed as restricting the BODIES FOR THE EXPLOITATION OF
government financial institutions concerned NATURAL RESOURCES
from approving, solely at its own discretion,
any restructuring, recapitalization, or any other Section 1. No court of the Philippines shall
arrangement that would place the entire have jurisdiction to issue any restraining
account on a current basis, provided, order, preliminary injunction or preliminary
however, that at least twenty percent (20%) of mandatory injunction in any case involving
or growing out of the issuance, approval or
disapproval, revocation or suspension of, or
any action whatsoever by the proper
administrative official or body on
concessions, licenses, permits, patents, or
public grants of any kind in connection with
the disposition, exploitation, utilization,
exploration, and/or development of the
natural resources of the Philippines.

A.M. No. 09-6-8-SC

RULES OF PROCEDURE FOR

ENVIRONMENTAL CASES

Section 10. Prohibition against temporary

restraining order (TRO) and preliminary
injunction. - Except the Supreme Court, no
court can issue a TRO or writ of preliminary
injunction against lawful actions of
government agencies that enforce
environmental laws or prevent violations
thereof.

Par-1 Sec.21 BP129

Section 21. Original jurisdiction in other

cases. – Regional Trial Courts shall exercise
original jurisdiction:

(1) In the issuance of writs of

certiorari, prohibition, mandamus, quo
warranto, habeas corpus and
injunction which may be enforced in
any part of their respective regions