THIRD DIVISION

[G.R. No. 164459. April 24, 2007.]

LIMITLESS POTENTIALS, INC., petitioner, vs. HON. COURT OF APPEALS,

CRISOSTOMO YALUNG, and ATTY. ROY MANUEL VILLASOR, respondents.

D E C I S I O N

CHICO-NAZARIO, J p:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil

Procedure seeking to annul and set aside: (1) The Decision, 1 dated 16 September 2003, of the Court of

Appeals in CA-G.R. SP No. 73463 entitled, Limitless Potentials, Inc. vs. Hon. Manuel D. Victorio,in his

capacity as the Presiding Judge of the Regional Trial Court of Makati City, Branch 141, Crisostomo Yalung,

and Atty. Roy Manuel Villasor, which dismissed herein petitioner's Petition for Certiorari under Rule 65 of

the 1997 Revised Rules of Civil Procedure for lack of merit, and (2) The Resolution, 2 dated 8 July 2004, of

the appellate court in the same case which denied petitioner's Motion for Reconsideration because the

issues and arguments raised therein had already been passed upon and judiciously resolved in the

Decision dated 16 September 2003.

The controversy of this case stemmed from the following facts:

On 12 October 1995, Digital Networks Communications and Computers, Inc. (Digital) and herein

petitioner Limitless Potentials, Inc. (LPI), a domestic corporation duly organized and existing under

Philippine laws, entered into a Billboard Advertisement Contract whereby petitioner was to construct

one billboard advertisement for Digital's product for a period of one year, with an agreed rental of

P60,000.00 per month plus Value Added Tax (VAT). It was agreed, among other things, that Digital will

make a three-month deposit in the following manner, to wit: (a) P60,000.00 plus VAT upon the signing of

the contract, and (b) P120,000.00 plus VAT upon completion of the billboard. Digital complied with the

aforesaid agreement.

The billboard, however, was destroyed by unknown persons. In view thereof, the contract between

Digital and the petitioner was considered terminated. Digital demanded for the return of their rental

deposit for two months, but the petitioner refused to do so claiming that the loss of the billboard was

due toforce majeure and that any cause of action should be directed against the responsible persons.

Thus, on 18 April 1997, Digital commenced a suit against herein petitioner before the Metropolitan Trial

Court (MeTC) of Makati City, Branch 66, presided over by then Judge Estela Perlas-Bernabe (Judge

Perlas-Bernabe), 3 for the return of Digital's deposit, which was equivalent to two months rental

inclusive of VAT and attorney's fees. The case was docketed as Civil Case No. 55170.

On 18 June 1997, consistent with its defense against Digital's Complaint, petitioner filed a Third-Party

Complaint 4 against Macgraphics Carranz International Corporation (Macgraphics) and herein private

respondents Bishop Crisostomo Yalung (Bishop Yalung) and Atty. Roy Manuel Villasor (Atty. Villasor)

alleging that it had entered into a contract of lease with Roman Catholic Archbishop of Manila (RCAM),

as represented by the private respondents, over a space inside San Carlos Manor Seminary in Guadalupe

Viejo, Makati City, where petitioner erected the subject billboard. Petitioner further averred that despite

its full compliance with the terms and conditions of the lease contract, herein private respondents,

together with their cohorts, maliciously dismantled and destroyed the subject billboard and prevented

its men from reconstructing it. Thereafter, petitioner learned that Macgraphics had "cajoled and

induced" RCAM, through the private respondents, to destroy the subject billboard to enable

Macgraphics to erect its own billboard and advertising signs. Thus, by way of affirmative defenses,

petitioner claimed that: (a) the destruction of the subject billboard was not of its own making and

beyond its control, and (b) Digital's cause of action, if any, should be directed against the private

respondents and Macgraphics. Hence, petitioner prayed that judgment be rendered in its favor and to

hold private respondents liable for the following: (a) moral damages in the amount of P1,000,000.00; (b)

exemplary, temperate and nominal damages amounting to P300,000.00; (c) P300,000.00 as attorney's

fees; (d) P50,000.00 as litigation expenses; and (e) costs of suit, allegedly suffered or incurred by it

because of the willful destruction of the billboard by the private respondents.

In response, private respondents filed a Motion to Dismiss the aforesaid Third-Party Complaint based on

the following grounds: (1) litis pendentia; (2) lack of cause of action; (3) forum shopping; and (4) lack of

privity of contract. The MeTC, in an Order dated 25 August 1997, 5 denied the said Motion to Dismiss.

Petitioner filed an Amended Third-Party Complaint. Again, private respondents filed a Motion to Dismiss

Amended Third-Party Complaint. However, the MeTC also denied the Motion to Dismiss Amended Third-

Party Complaint in an Order dated 10 October 1997. 6

On 9 December 1997, private respondents filed a Petition for Certiorari with Prayer for Preliminary

Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of Makati

City, assailing the Orders dated 25 August 1997 and 10 October 1997 of the MeTC of Makati City denying

their Motion to Dismiss Third-Party Complaint and Motion to Dismiss Amended Third-Party Complaint,

respectively, in Civil Case No. 55170.

The RTC issued an Order on 6 February 1998, 7 granting private respondents' prayer for a writ of

preliminary injunction, conditioned upon the posting of an injunction bond in the amount of P10,000.00.

Thus, the MeTC was enjoined from hearing the Third-Party Complaint in Civil Case No. 55170. The

pertinent portion of the aforesaid Order reads, as follows:

When the application for temporary restraining order and/or preliminary

injunction was heard this afternoon, [herein petitioner] who did not file

comment on the petition appeared thru counsel Emmanuel Magnaye. It was

brought out to the attention of this Court that respondent judge is poised on

pursuing the hearing of the case before her despite the pendency of this

petition. It appeared that the case was set by respondent judge for hearing ex-

parte for the reception of [herein petitioner's] evidence on 23 February 1998. It

also appeared that [herein private respondents] were declared in default

despite the fact that they have filed their answer and the motion to lift such

order of default and for admission of the answer was denied by respondent

judge.

Upon consideration of the allegations in the petition and the oral

manifestations and admissions of both parties, this Court hereby resolves to

issue the writ of preliminary injunction in order to preserve the status quo as

well as not to render the issue herein raised moot and academic.

WHEREFORE, the motion for preliminary injunction is granted. Accordingly,

upon the filing by [herein private respondents] of a bond in the amount of

P10,000.00, let a writ of preliminary injunction be issued, enjoining respondent

judge, or her successor, from hearing the [T]hird [P]arty [C]omplaint against

[herein private respondents] in Civil Case No. 55170 until further orders from

this Court. 8

Subsequently, however, the RTC rendered a Decision 9 on 28 April 2000, dismissing the Petition

for Certiorari filed by private respondents, the dispositive portion of which reads: IaEACT

WHEREFORE, the petition is hereby dismissed for lack of merit. The preliminary

injunction issued by this Court on 6 February 2000 10 (sic) is hereby dissolved.

Costs against [herein private respondents]. 11

Disgruntled, private respondents filed an Urgent Motion for Reconsideration, which was denied by the

RTC in its Order 12 dated 26 June 2000.

Petitioner filed its Motion for Judgment Against the Bond, and in compliance with the directive of the

RTC, the petitioner filed a pleading 13 specifying its claims, thus: (a) attorney's fees in the sum of

P74,375.00; and (b) moral damages for the tarnished good will in the sum of P1,000,000.00.

The RTC, in its Order dated 3 April 2002, 14 denied petitioner's Motion for Judgment Against the Bond

declaring that the preliminary injunction was not wrongfully obtained; therefore, the claim for damages

on the bond is untenable.

Aggrieved, the petitioner moved for the reconsideration of the aforesaid Order, which was also denied

by the RTC in its Order dated 6 August 2002. 15

Dissatisfied, the petitioner filed a Petition for Certiorari under Rule 65 of the Revised Rules of Civil

Procedure before the Court of Appeals assailing the Orders of the RTC dated 3 April 2002 and 6 August

2002 for having been issued with grave abuse of discretion amounting to lack and/or excess of

jurisdiction.

On 6 November 2002, the Court of Appeals issued a Resolution 16 dismissing the Petition for failure to

show proof that a certain Quirino B. Baterna has been duly authorized by the petitioner to file the

Petition for and in its behalf. Petitioner moved for the reconsideration of the aforesaid Resolution, which

was granted by the appellate court in its Resolution dated 24 January 2003 17 thereby reinstating the

Petition for Certiorari filed by the petitioner.

On 16 September 2003, the Court of Appeals rendered a Decision dismissing the Petition filed by the

petitioner for utter lack of merit. The petitioner filed a Motion for Reconsideration based on the

following grounds:

I. The dismissal of the petition and dissolution of the injunction amount to a

determination that the injunction was wrongfully or improvidently

obtained.

II. The petitioner suffered damages by reason of the issuance of the injunction.

III. The damages claimed by the petitioner are covered by the injunction bond.

The Court of Appeals through a Resolution dated 8 July 2004, denied the petitioner's Motion for

Reconsideration.

Hence, this Petition.

Petitioner pointed out two basic legal issues wherein the appellate court committed serious and

reversible errors, to wit:

I. Is malice or bad faith a condition sine qua non for liability to attach on the

injunction bond?

II. Are attorney's fees, litigation costs, and cost of delay by reason of the

injunction covered by the injunction bond?

Petitioner argues that malice or lack of good faith is not an element of recovery on the bond. The

dissolution of the injunction, even if the injunction was obtained in good faith, amounts to a

determination that the injunction was wrongfully obtained and a right of action on the injunction

immediately accrues to the defendant. The petitioner maintains that the attorney's fees, litigation costs,

and cost of delay by reason of the injunction are proper and valid items of damages which can be

claimed against the injunction bond. Hence, having proven through testimonial and documentary

evidence that it suffered damages because of the issuance of the writ of injunction, and since malice or

lack of good faith is not an element of recovery on the injunction bond, petitioner asserts that it can

properly collect such damages on the said bond. DAcaIE

Private respondent Bishop Yalung on the other hand, prays for the outright dismissal of the present

Petition due to the alleged failure of the petitioner to comply with the mandatory rule on proper

certification on non-forum shopping under Section 5, Rule 7 of the 1997 Revised Rules of Civil Procedure.

According to him, it is not sufficient for Mr. Baterna to make the undertaking that "I have not

commenced any other action or proceeding involving the same issue in the Supreme Court, etc."

inasmuch as such undertaking should have been made by the principal party, namely, the petitioner. He

underscores that the verification/disclaimer of forum shopping executed by Mr. Baterna on behalf of the

petitioner is legally defective for failure to enumerate with particularity the multiple civil and criminal

actions, which were filed by him and the petitioner against the private respondents.

Private respondent Bishop Yalung also avers that the petitioner is not entitled to collect damages on the

injunction bond filed before the court a quo. Primarily, as the appellate court mentioned in its Decision,

the preliminary injunction was directed not against the petitioner but against the MeTC. The petitioner

was not restrained from doing any act. What was restrained was the hearing of the Third-Party

Complaint while the Petition for Certiorari was pending, "in order to preserve the status quo and not to

render the issue therein moot and academic." 18 Also, the fact that the decision is favorable to the party

against whom the injunction was issued does not automatically entitle the latter to recover damages on

the bond. Therefore, the petitioner cannot claim that it suffered damages because of the issuance of the

writ of injunction.

Private respondent Atty. Villasor shares the same argument as that of his co-respondent Bishop Yalung

that it was the MeTC which was enjoined and not herein petitioner. Private respondent Atty. Villasor

further alleged that in the Special Civil Action for Certiorari, the action is principally against any tribunal,

board, or officer exercising judicial or quasi-judicial functions who has acted without or in excess of

jurisdiction or with grave abuse of discretion. Thus, private respondents' Petition for Certiorari before

the RTC principally pertains to the MeTC and not to herein petitioner. Additionally, private respondent

Atty. Villasor argues that it was petitioner who was benefited by such writ of preliminary injunction,

because the injunction left Digital unable to prosecute Civil Case No. 55170 against herein petitioner.

Lastly, private respondent Atty. Villasor claims that petitioner did not oppose their application for a writ

of preliminary injunction at the hearing wherein petitioner was duly represented by counsel.

Simply stated, the threshold issues are:

I. Can petitioner recover damages from the injunction bond?

II. Was petitioner able to substantiate the damages?

Quite apart from the above, there appears to be another question concerning the alleged violation by

the petitioner of the mandatory rule on proper certification on non-forum shopping.

In the case at bar, petitioner repeatedly argues that malice or lack of good faith is not an element of

recovery on the injunction bond. In answering this issue raised by petitioner, this Court must initially

establish the nature of the preliminary injunction, the purpose of the injunction bond, as well as the

manner of recovering damages on the said bond.

A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and

protect certain rights and interests during the pendency of an action. 19 It is an order granted at any

stage of an action, prior to the judgment or final order, requiring a party, court, agency or person to

perform or to refrain from performing a particular act or acts. A preliminary injunction, as the term itself

suggests, is merely temporary, subject to the final disposition of the principal action. 20 It is issued to

preserve the status quo ante, which is the last actual, peaceful, and uncontested status that preceded

the actual controversy, 21 in order to protect the rights of the plaintiff during the pendency of the suit.

Otherwise, if no preliminary injunction is issued, the defendant may, before final judgment, do the act

which the plaintiff is seeking the court to restrain. This will make ineffectual the final judgment that the

court may afterwards render in granting relief to the plaintiff. 22 The status quo should be existing ante

litem motam, or at the time of the filing of the case. For this reason, a preliminary injunction should not

establish new relations between the parties, but merely maintain or re-establish the pre-existing

relationship between them. 23

The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to

some of the parties before their claims can be thoroughly studied and adjudicated. Thus, to be entitled

to an injunctive writ, the petitioner has the burden to establish the following requisites: ETIDaH

(1) a right in esse or a clear and unmistakable right to be protected;

(2) a violation of that right;

(3) that there is an urgent and permanent act and urgent necessity for the writ

to prevent serious damage. 24

A preliminary injunction or temporary restraining order may be granted only when, among other things,

the applicant, not explicitly exempted, files with the court, where the action or proceeding is pending,

a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that

the applicant will pay such party or person all damages which he may sustain by reason of the injunction

or temporary restraining order if the court should finally decide that the applicant was not entitled

thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued. 25 Thus,

the posting of a bond is a condition sine qua non for a writ of preliminary injunction to be issued.

The injunction bond is intended as a security for damages in case it is finally decided that the injunction

ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or

damage by reason of the injunction, 26 and the bond is usually conditioned accordingly.

The damages sustained as a result of a wrongfully obtained injunction may be recovered upon the

injunction bond which is required to be deposited with court. 27 Rule 57, Section 20, of the 1997 Revised

Rules of Civil Procedure, which is similarly applicable to preliminary injunction, 28 has outlined the

procedure for the filing of a claim for damages against an injunction bond. The aforesaid provision of law

pertinently provides:

SEC. 20. Claim for damages on account of improper, irregular or excessive

attachment. — An application for damages on account of improper, irregular or

excessive attachment must be filed before the trial or before appeal is

perfected or before the judgment becomes executory, with due notice to the

attaching party and his surety or sureties, setting forth the facts showing his

right to damages and the amount thereof. Such damages may be awarded only

after proper hearing and shall be included in the judgment on the main case.

If the judgment of the appellate court be favorable to the party against whom

the attachment was issued, he must claim damages sustained during the

pendency of the appeal by filing an application in the appellate court, with

notice to the party in whose favor the attachment was issued or his surety or

sureties, before the judgment of the appellate court becomes executory. The

appellate court may allow the application to be heard and decided by the trial

court.

Nothing herein contained shall prevent the party against whom the attachment

was issued from recovering in the same action the damages awarded to him

from any property of the attaching party not exempt from execution should the

bond or deposit given by the latter be insufficient or fail to fully satisfy the

award. 29

Now, it can be clearly gleaned that there is nothing from the aforequoted provision of law which requires

an enjoined party, who suffered damages by reason of the issuance of a writ of injunction, to prove

malice or lack of good faith in the issuance thereof before he can recover damages against the injunction

bond. This Court was very succinct in the case of Aquino v. Socorro, 30 citing the case of Pacis v.

Commission on Elections, 31 thus:

Malice or lack of good faith is not an element of recovery on the bond. This

must be so, because to require malice as a prerequisite would make the filing of

a bond a useless formality. The dissolution of the injunction, even if the

injunction was obtained in good faith, amounts to a determination that the

injunction was wrongfully obtained and a right of action on the injunction bond

immediately accrues. Thus, for the purpose of recovery upon the injunction

bond, the dissolution of the injunction because of petitioner's main cause of

action provides the actionable wrong for the purpose of recovery upon the

bond.

We, therefore, agree with the petitioner that indeed, malice or lack of good faith is not a condition sine

qua non for liability to attach on the injunction bond.

With respect to the issue raised by the petitioner regarding the coverage of the injunction bond, this

Court finds it necessary to quote once again the provision of Section 4 (b), Rule 58 of the 1997 Revised

Rules of Civil Procedure, to wit:

Unless exempted by the court, the applicant files with the court where the

action or proceeding is pending, a bond executed to the party or person

enjoined, in an amount to be fixed by the court, to the effect that the applicant

will pay to such party or person all damages which he may sustain by reason of

the injunction or temporary restraining order if the court should finally decide

that the applicant was not entitled thereto. Upon approval of the requisite

bond, a writ of preliminary injunction shall be issued.

The aforesaid provision of law clearly provides that the injunction bond is answerable for all damages.

The bond insures with all practicable certainty that the defendant may sustain no ultimate loss in the

event that the injunction could finally be dissolved. 32 Consequently, the bond may obligate the

bondsmen to account to the defendant in the injunction suit for all damages, or costs and reasonable

counsel's fees, incurred or sustained by the latter in case it is determined that the injunction was

wrongfully issued. 33 Likewise, the posting of a bond in connection with a preliminary injunction does

not operate to relieve the party obtaining an injunction from any and all responsibility for damages that

the writ may thereby cause. It merely gives additional protection to the party against whom the

injunction is directed. It gives the latter a right of recourse against either the applicant or his surety or

against both. 34

The contention of the petitioner, thus, is tenable. Attorney's fees, litigation costs, and costs of delay can

be recovered from the injunction bond as long as it can be shown that said expenses were sustained by

the party seeking recovery by reason of the writ of preliminary injunction, which was later on

determined as not to have been validly issued and that the party who applied for the said writ was not

entitled thereto. The case of Aquino v. Socorro, 35citing the case of Pacis v. Commission on

Elections, 36 holds that the dissolution of the injunction, even if the injunction was obtained in good

faith, amounts to a determination that the injunction was wrongfully obtained and a right of action on

the injunction bond immediately accrues. It is also erroneous for the appellate court to rule that

petitioner is not entitled to claim damages from the injunction bond simply because the preliminary

injunction was directed against the MeTC and not against the petitioner. The MeTC does not stand to

suffer damages from the injunction because it has no interest or stake in the Petition pending before it.

Damage or loss is suffered by the party whose right to pursue its case is suspended or delayed, which in

this case, is the petitioner. Upon issuance of the writ of injunction, it is the petitioner who will stand to

suffer damages for the delay in the principal case because, had it not been for the injunction, the

petitioner would not have incurred additional expenses for attending the separate hearings on the

injunction, and the RTC can already decide the main case and make a prompt determination of the

respective rights of the parties therein. Hence, even if the preliminary injunction was directed against the

MeTC and not against the petitioner, it is the latter which has the right to recover from the injunction

bond the damages which it might have suffered by reason of the said injunction. aHICDc

As to the second main issue in the present case, although we do recognize that the petitioner had a right

to recover damages from the injunction bond, however, we agree in the findings of the Court of Appeals,

which affirmed the findings of the RTC, that the petitioner did not sustain any damage by reason of the

issuance of the writ of injunction. In the petitioner's Motion for Judgment Against the

Bond, 37 petitioner stated therein, thus:

5. There can be no serious debate that the issuance of the Writ of Preliminary

injunction, all at the instance of [herein private respondents], resulted in actual

and pecuniary damages on the part of [herein petitioner] in the amount more

than the value of the bond posted by [private respondents]. The attorney's fees

for expenses in litigation alone expended by [petitioner] to defend itself in this

proceedings, not to mention other pecuniary damages, amounts to

P10,000.00. 38

In the case at bar, petitioner is claiming attorney's fees in the sum of P74,375.00 it allegedly paid to

defend itself in the main case for certiorari, which it would not have spent had the private respondents

not filed their nuisance Petition and secured a writ of preliminary injunction. Likewise, by reason of the

unfounded suit, the good will of the petitioner was brought to bad light, hence, damaged. 39 It is

noteworthy to mention that the undertaking of the injunction bond is that it shall answer for all

damages which the party to be restrained may sustain by reason of the injunction if the court should

finally decide that the plaintiff was not entitled thereto. Apparently, as the appellate court pointed out in

its Decision dated 16 September 2003, the damages being claimed by the petitioner were not by reason

of the injunction but the litigation expenses it incurred in defending itself in the main case for certiorari,

which is definitely not within the coverage of the injunction bond. Thus, this Court is not convinced that

the attorney's fees in the amount of P74,375.00 as well as the moral damages for the tarnished good will

in the sum of P1,000,000.00 were suffered by the petitioner because of the issuance of the writ of

injunction.

Furthermore, this Court will not delve into the sufficiency of evidence as to the existence and amount of

damages suffered by petitioner for it is already a question of fact. It is settled that the factual findings of

the trial court, particularly when affirmed by the Court of Appeals, are binding on the Supreme

Court. 40 Although this rule is subject to exceptions, 41 the present case does not fall into any of those

exceptions which would have allowed this Court to make its own determination of facts. This Court

upholds the factual findings of both the RTC and the Court of Appeals that there is insufficient evidence

to establish that petitioner actually suffered damages because of the preliminary injunction issued by the

RTC.

Now, on the matter of proper certification on non-forum shopping.

The requirement of a Certification on Non-Forum Shopping is contained in Rule 7, Section 5, of the 1997

Revised Rules of Civil Procedure, which states that:

The plaintiff or principal party shall certify under oath in the complaint or other

initiatory pleading asserting a claim for relief, or in a sworn certification

annexed thereto and simultaneously filed therewith: (a) that he has not

theretofore commenced any action or filed any claim involving the same issues

in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,

no such other action or claim is pending therein; (b) if there is such other

pending action or claim, a complete statement of the present status thereof;

and (c) if he should thereafter learn that the same or similar action or claim has

been filed or is pending, he shall report that fact within five (5) days therefrom

to the court wherein his aforesaid complaint or initiatory pleading has been

filed.

Failure to comply with the foregoing requirements shall not be curable by mere

amendment of the complaint or other initiatory pleading but shall be cause for

the dismissal of the case without prejudice, unless otherwise provided, upon

motion and after hearing. The submission of a false certification or non-

compliance with any of the undertakings therein shall constitute indirect

contempt of court without prejudice to the corresponding administrative and

criminal actions. If the acts of the party or his counsel clearly constitute willful

and deliberate forum shopping, the same shall be ground for summary dismissal

with prejudice and shall constitute direct contempt, as well as a cause for

administrative sanctions.

Private respondent Bishop Yalung might have overlooked the Secretary's Certificate 42 attached to the

petitioner's Petition for Review, which authorized Mr. Baterna, President of herein petitioner LPI, to

represent the latter in this case. According to the Secretary's Certificate, the Board of Directors of

petitioner LPI, at a special meeting held on 12 August 2004 at its office at No. 812 J.P. Rizal St., Makati

City, during which there was a quorum, the following resolutions were approved, to wit:

RESOLVED, AS IT IS HEREBY RESOLVED, that the corporation reiterates the

authority of its President, Mr. Quirino B. Baterna, to represent the corporation

in all cases by and/or against the corporation vis-à-vis the Roman Catholic

Archbishop of Manila/Crisostomo Yalung, Roy Villasor/Digital Netwrok (sic)

Communications and Computers, Inc., and/or MacGraphics Carranz

International Corporation, to file a Petition for Review on Certiorari with the

Supreme Court docketed as G.R. No. 164459 to assert/protect LPI's rights and

interests in connection with C.A.-G.R. No. 73463, entitled "Limitless Potentials,

Inc. vs. Hon. Manuel Victorio, et al.," Honorable Court of Appeals,

Manila. DaAISH

RESOLVED FURTHERMORE, that any and all acts of our President, concerning

the above-referenced subject matter are hereby affirmed, confirmed and

ratified by the corporation for all legal intents and purposes. 43

Private respondent Bishop Yalung further argued that Mr. Baterna failed to enumerate in the

Certification against Forum Shopping the multiple cases filed by him and the petitioner against private

respondents. This is also erroneous.

Forum shopping consists of filing multiple suits involving the same parties for the same cause of action,

either simultaneously or successively, for the purpose of obtaining a favorable judgment. 44 It exists

where the elements of litis pendentia 45 are present or where a final judgment in one case will amount

to res judicata in another. 46 It may be resorted to by a party against whom an adverse judgment or

order has been issued in one forum, in an attempt to seek a favorable opinion in another, other than by

an appeal or a special civil action for certiorari. 47

As the RTC correctly found, there was no violation of the rule against forum shopping. The cause of

action in petitioner's case for consignation and damages docketed as Civil Case No. 95-1559, 48 is

different from the cause of action in its Third-Party Complaint in Civil Case No. 55170. The damages

sought in the first case were those suffered by petitioner by reason of the alleged breach of the contract

of lease by the RCAM; whereas the damages sought in the Third-Party Complaint were those allegedly

suffered by petitioner owing to the destruction of its billboard by the private respondents, thereby

terminating the Billboard Advertisement Contract between petitioner and Digital. Digital also sued

petitioner for recovery of the rental deposits it had already paid under the same contract. Consequently,

petitioner had to engage the services of counsel and incurred litigation expenses in order to defend itself

in the case filed against it by Digital. Thus, the two actions are completely different and distinct from

each other so much so that a decision in either case could not be pleaded as res judicata in the other.

Hence, there is no forum shopping that would necessitate the outright dismissal of this case.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of

the Court of Appeals dated 16 September 2003 and 8 July 2004, respectively, affirming the Decision of

the RTC dated 28 April 2000, denying herein petitioner's motion to recover damages against the

injunction bond, are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

THIRD DIVISION

[G.R. No. 166854. December 6, 2006.]

SEMIRARA COAL CORPORATION (now SEMIRARA MINING

CORPORATION), petitioner, vs. HGL DEVELOPMENT CORPORATION and HON.

ANTONIO BANTOLO, Presiding Judge, Branch 13, Regional Trial Court, 6th

Judicial Region, Culasi, Antique,respondents.

D E C I S I O N

QUISUMBING, J p:

Before us is a petition for review on certiorari assailing the Decision 1 dated January 31, 2005, of the

Court of Appeals in CA G.R. CEB SP No. 00035 which affirmed the Resolution 2 dated September 16, 2004

of the Regional Trial Court of Culasi, Antique, Branch 13.

The facts are as follows:

Petitioner Semirara Mining Corporation is a grantee by the Department of Energy (DOE) of a Coal

Operating Contract under Presidential Decree No. 9723 over the entire Island of Semirara, Antique,

which contains an area of 5,500 hectares more or less. 4

Private respondent HGL Development Corporation is a grantee of Forest Land Grazing Lease Agreement

(FLGLA) No. 184 by the then Ministry of Environment and Natural Resources, 5 over 367 hectares of land

located at the barrios of Bobog and Pontod, Semirara, Caluya, Antique. The FLGLA No. 184 was issued on

September 28, 1984 6 for a term of 25 years, to end on December 31, 2009. Since its grant, HGL has

been grazing cattle on the subject property.

Sometime in 1999, petitioner's representatives approached HGL and requested for permission to allow

petitioner's trucks and other equipment to pass through the property covered by the FLGLA. HGL

granted the request on condition that petitioner's use would not violate the FLGLA in any way.

Subsequently, however, petitioner erected several buildings for petitioner's administrative offices and

employees' residences without HGL's permission. Petitioner also conducted blasting and excavation;

constructed an access road to petitioner's minesite in the Panaan Coal Reserve, Semirara; and

maintained a stockyard for the coal it extracted from its mines. Thus, the land which had been used for

cattle grazing was greatly damaged, causing the decimation of HGL's cattle.

On September 22, 1999, HGL wrote petitioner demanding full disclosure of petitioner's activities on the

subject land as well as prohibiting petitioner from constructing any improvements without HGL's

permission. Petitioner ignored the demand and continued with its activities. SAEHaC

On December 6, 2000, the Department of Environment and Natural Resources (DENR) unilaterally

cancelled FLGLA No. 184 and ordered HGL to vacate the premises. The DENR found that HGL failed to

pay the annual rental and surcharges from 1986 to 1999 and to submit the required Grazing Reports

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

HGL contested the findings and filed a letter of reconsideration on January 12, 2001, which was denied

by DENR Secretary Heherson Alvarez in a letter-order dated December 9, 2002. The DENR stated that it

had coordinated with the DOE, which had jurisdiction over coal or coal deposits and coal-bearing lands,

and was informed that coal deposits were very likely to exist in Sitios Bobog and Pontod. Hence, unless it

could be proved that coal deposits were not present, HGL's request had to be denied. 8

HGL sent a letter dated March 6, 2003 to DENR Secretary Alvarez seeking reconsideration. The DENR did

not act on the letter and HGL later withdrew this second letter of reconsideration in its letter of August 4,

2003.

On November 17, 2003, HGL filed a complaint against the DENR for specific performance and damages

with prayer for a temporary restraining order and/or writ of preliminary injunction, docketed as Civil

Case No. 20675 (2003) with the Regional Trial Court of Caloocan City. A writ of preliminary injunction

was issued by the Caloocan City RTC on December 22, 2003, enjoining the DENR from enforcing its

December 6, 2000 Order of Cancellation.

Meanwhile, HGL had also filed on November 17, 2003, a complaint against petitioner for Recovery of

Possession and Damages with Prayer for TRO and/or Writ of Preliminary Mandatory Injunction, docketed

as Civil Case No. C-146 with the Regional Trial Court of Culasi, Antique, Branch 13. 9

On December 1, 2003, the Antique trial court heard the application for Writ of Preliminary Mandatory

Injunction in Civil Case No. C-146. Only HGL presented its evidence. Reception for petitioner's evidence

was set to March 23-24, 2004. Petitioner was notified. But, on March 19, 2004, petitioner's President

wrote the court asking for postponement since its counsel had suddenly resigned. The trial court refused

to take cognizance of the letter and treated it as a mere scrap of paper since it failed to comply with the

requisites for the filing of motions and since it was not shown that petitioner's President was authorized

to represent petitioner. Because of petitioner's failure to attend the two scheduled hearings, the trial

court, in an Order dated March 24, 2004, deemed the application for issuance of a Writ of Preliminary

Mandatory Injunction submitted for decision. Meanwhile, petitioner had filed its Answer dated February

26, 2004, raising among others the affirmative defense that HGL no longer had any right to possess the

subject property since its FLGLA has already been cancelled and said cancellation had already become

final.

On April 14, 2004, petitioner filed a verified Omnibus Motion praying that the trial court reconsider its

Order of March 24, 2004, since petitioner's failure to attend the hearing was due to an accident.

Petitioner also prayed that the trial court admit as part of petitioner's evidence in opposition to the

application for injunction, certified copies of the DENR Order of Cancellation dated December 6, 2000;

HGL's letter of reconsideration dated January 12, 2001; letter of DENR Secretary Alvarez dated December

9, 2002 denying reconsideration of the order; and registry return receipt showing HGL's receipt of the

denial of reconsideration. In the alternative, petitioner prayed that the case be set for preliminary

hearing on its affirmative defense of lack of cause of action and forum-shopping. 10 Public respondent

denied the Omnibus Motion in a Resolution dated June 21, 2004. IHcTDA

Petitioner filed a motion for reconsideration of the said resolution. Upon HGL's opposition, the motion

was declared submitted for resolution in accordance with the trial court's Order of August 5, 2004. 11

On September 16, 2004, the trial court granted the prayer for issuance of a Writ of Preliminary

Mandatory Injunction. 12 Petitioner did not move for reconsideration of the order. The Writ of

Preliminary Mandatory Injunction was accordingly issued by the trial court on October 6, 2004. 13 The

writ restrained petitioner or its agents from encroaching on the subject land or conducting any activities

in it, and commanded petitioner to restore possession of the subject land to HGL or its agents.

Petitioner questioned the Resolution dated September 16, 2004, and the Writ of Preliminary Mandatory

Injunction dated October 6, 2004 before the Court of Appeals in a petition for certiorari, raising eight

issues. On January 31, 2005, however, the appellate court dismissed the petition. The Court of Appeals in

its decision by Justice Magpale ruled on the issues posed before the appellate court:

1. PRIVATE RESPONDENT HAS NO LEGAL RIGHT OR CAUSE OF ACTION UNDER

THE PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO THE

ANCILLARY REMEDY OF INJUNCTION;

2. PRIVATE RESPONDENT DID NOT COME TO COURT WITH "CLEAN HANDS";

3. RESPONDENT JUDGE UNJUSTIFIABLY AND ARBITRARILY DEPRIVED

PETITIONER OF ITS FUNDAMENTAL RIGHT TO DUE PROCESS BY NOT

GIVING IT AN OPPORTUNITY TO PRESENT EVIDENCE IN OPPOSITION

TO THE MANDATORY INJUNCTION;

4. RESPONDENT JUDGE IMMEDIATELY GRANTED THE APPLICATION FOR THE

ISSUANCE OF A WRIT OF MANDATORY INJUNCTION WITHOUT FIRST

RESOLVING THE PENDING MOTION FOR RECONSIDERATION DATED

JULY 12, 2004 OF PETITIONER;

5. RESPONDENT JUDGE DID NOT CONSIDER OR ADMIT THE CERTIFIED TRUE

COPIES OF THE OFFICIAL RECORDS OF THE DENR CANCELLING

PRIVATE RESPONDENT'S FLGLA AS EVIDENCE AGAINST THE

MANDATORY INJUNCTION PRAYED FOR;

6. RESPONDENT JUDGE SHOULD HAVE GRANTED PETITIONER'S MOTION FOR

PRELIMINARY HEARING ON ITS AFFIRMATIVE DEFENSE THAT

PRIVATE RESPONDENT UNDER ITS COMPLAINT HAS NO CAUSE OF

ACTION AGAINST PETITIONER;

7. RESPONDENT JUDGE SHOULD HAVE DISMISSED THE COMPLAINT OUTRIGHT

FOR VIOLATION OF THE RULES ON FORUM SHOPPING BY PRIVATE

RESPONDENT;

8. THE MANDATORY INJUNCTION ISSUED IN THE INSTANT CASE IS VIOLATIVE OF

THE PROVISIONS OF PRESIDENTIAL DECREE 605. 14

The Court of Appeals in the assailed Decision dated January 31, 2005, opined and ruled as follows (which

we quote verbatim):

Anent the first issue, WE rule against the petitioner.

Perusal of the allegations in the Complaint filed by the private respondent with

the court a quo show that its cause of action is mainly anchored on the Forest

Land Grazing Lease Agreement ("FLGLA") executed by and between said private

respondent and the Department of Environment and Natural Resources (DENR)

which became effective on August 28, 1984 and to expire on December 31,

2009. CAaDTH

Under the said lease agreement, the private respondent was granted

permission to use and possess the subject land comprising of 367-hectares

located at the barrios of Bobog and Pontod, Semirara Island, Antique for cattle-

grazing purposes.

However, petitioner avers that the "FLGLA" on which private respondent's

cause of action is based was already cancelled by the DENR by virtue of its

Orders dated December 6, 2000 and December 9, 2002.

While it is true that the DENR issued the said Orders cancelling the "FLGLA", the

same is not yet FINAL since it is presently the subject of Civil Case No. 20675

pending in the Regional Trial Court (RTC) of Caloocan City. Thus, for all intents

and purposes, the "FLGLA" is still subsisting.

The construction of numerous buildings and the blasting activities thereon by

the petitioner undertaken without the consent of the private respondent

blatantly violates the rights of the latter because it reduced the area being used

for cattle-grazing pursuant to the "FLGLA".

From the foregoing it is clear that the three (3) indispensable requisites of a

cause of action, to wit: (a) the right in favor of the plaintiff by whatever means

and under whatever law it arises or is created; (b) an obligation on the part of

the named defendant to respect or not to violate such right; (c) an act or

omission on the part of such defendant is violative of the right of plaintiff or

constituting a breach of the obligation of defendant to the plaintiff for which

the latter may maintain an action for recovery of damages, are PRESENT.

Hence, having established that private respondent herein has a cause of action

under the principal action in Civil Case No. C-146, necessarily it also has a cause

of action under the ancillary remedy of injunction.

Anent the third issue, WE rule against the petitioner.

This Court finds that the petitioner was not deprived of due process.

It appears from the records of the instant case that the petitioner was given two

(2) settings for the reception of its evidence in support of its opposition to the

prayer of herein private respondent for the issuance of a writ of preliminary

mandatory injunction. Unfortunately, on both occasions, petitioner did not

present its evidence.

Petitioner claims that its failure to attend the hearings for the reception of its

evidence was excusable due to the sudden resignation of its lawyer and as such,

nobody can attend the hearings of the case.

WE are not persuaded.

Scrutiny of the pleadings submitted by both parties shows that petitioner's

lawyer, Atty. Mary Catherine P. Hilario, affiliates herself with the law firm of

BERNAS SAN JUAN & ASSOCIATE LAW OFFICES with address at 2nd Floor, DMCI

Plaza 2281 Pasong Tamo Extension, Makati City, by signing on and in behalf of

the said law office. This Court takes judicial notice of the fact that law offices

employ more than one (1) associate attorney aside from the name partners. As

such, it can easily assign the instant case to its other lawyers who are more than

capable to prepare the necessary "motion for postponement" or personally

appear to the court a quo to explain the situation.

Even assuming arguendo that Atty. Hilario is the only one who is knowledgeable

of the facts of the case, still, petitioners cannot claim that there was violation of

due process because the "ESSENCE of due process is reasonable opportunity to

be heard . . . . What the law proscribed is lack of opportunity to be heard." In

the case at bar, petitioner was given two (2) settings to present its evidence but

it opted not to. HEDCAS

Lastly, a prayer for the issuance of a writ of preliminary mandatory injunction

demands urgent attention from the court and as such, delay/s is/are frowned

upon due to the irreparable damage/s that can be sustained by the movant.

Anent the fourth issue, WE rule against the petitioner.

Petitioner claims that the court a quo gravely erred when it issued the writ of

preliminary injunction without first resolving its Motion for Reconsideration

dated July 12, 2004.

WE rule that the public respondent cannot be faulted for not resolving the

Motion for Reconsideration dated July 12, 2004 because the same partakes of

the nature of a second motion for reconsideration of the Order dated March 24,

2004.

Records readily disclose that a prior motion for reconsideration was filed by the

petitioner herein assailing the Order dated March 24, 2004. Although captioned

as "Omnibus Motion" the same was really a motion for reconsideration. Said

"Omnibus Motion" was resolved by the court a quo in its Order dated June 21,

2004.

Hence, the public respondent is no longer duty bound to resolve the

subsequent, reiterative and second motion for reconsideration.

Anent the fifth issue, WE rule against the petitioner.

The court a quo was correct in disregarding the documentary evidence

submitted by the petitioner in support of its opposition to the prayer for the

issuance of a writ of preliminary mandatory injunction.

The documentary evidence submitted by the petitioner herein with the court a

quo were merely attached to an "Omnibus Motion" and was not properly

identified, marked and formally offered as evidence which is a blatant disregard

and violation of the Rules on Evidence.

Considering the above discussions, this Court finds that the public respondent

did not abuse his discretion in issuing the assailed resolution.

Anent the eighth issue, WE likewise rule against the petitioner.

Presidential Decree (PD) 605 is the law "Banning the Issuance by Courts of

Preliminary Injunctions in Cases Involving Concessions, Licenses, and Other

Permits Issued by Public Administrative Officials or Bodies for the Exploitation of

Natural Resources."

Section 1 thereof provides that "No court of the Philippines shall have

jurisdiction to issue any restraining order, preliminary injunction or preliminary

mandatory injunction in any case involving or growing out of the issuance,

suspension, revocation, approval or disapproval of any concession, license,

permit, patent or public grant of any kind for the disposition, exploitation,

utilization, exploration and development of the natural resources of the

country."

The instant case is not within the purview of the above-cited law because the

issue/s raised herein does not involve or arise out of petitioner's coal operation

contract.

The case filed with the court a quo is principally based on the alleged

encroachment by the petitioner of the subject land over which private

respondent claims it has authority to occupy or possess until December 31,

2009 pursuant to FLGLA No. 184.

As such, the preliminary mandatory injunction issued by the court a quo did not

in any way affect the efficacy of the petitioner's coal concession or license.

WHEREFORE, the instant petition for certiorari is DENIED and consequently, the

assailed Resolution is hereby AFFIRMED. SCaEcD

SO ORDERED. 15

Hence, this instant petition. On February 23, 2005, this Court issued a TRO enjoining the implementation

and enforcement of the Court of Appeals Decision dated January 31, 2005. 16

Petitioner submits in the petition now the following grounds:

I

THE RESOLUTION DATED 16 SEPTEMBER 2004 AND THE WRIT OF PRELIMINARY

MANDATORY INJUNCTION DATED 6 OCTOBER 2004 ISSUED BY PUBLIC

RESPONDENT ARE A PATENT NULLITY AS PRIVATE RESPONDENT CLEARLY HAS

NO LEGAL RIGHT OR CAUSE OF ACTION UNDER ITS PRINCIPAL ACTION OR

COMPLAINT, MUCH LESS, TO THE ANCILLARY REMEDY OF PRELIMINARY

MANDATORY INJUNCTION;

II

A WRIT OF PRELIMINARY MANDATORY INJUNCTION CANNOT BE USED TO TAKE

PROPERTY OUT OF THE POSSESSION OF ONE PARTY AND PLACE IT INTO THAT

OF ANOTHER WHO HAS NO CLEAR LEGAL RIGHT THERETO;

III

PRIVATE RESPONDENT'S COMPLAINT IN CIVIL CASE NO. C-146 IS IN THE NATURE

OF AN ACCION PUBLICIANA, NOT FORCIBLE ENTRY; HENCE, A WRIT OF

PRELIMINARY MANDATORY INJUNCTION IS NOT A PROPER REMEDY;

IV

PETITIONER WAS UNJUSTIFIABLY AND ARBITRARILY DEPRIVED OF ITS

FUNDAMENTAL RIGHT TO DUE PROCESS WHEN IT WAS DENIED THE RIGHT TO

PRESENT EVIDENCE IN OPPOSITION TO THE APPLICATION FOR PRELIMINARY

MANDATORY INJUNCTION;

V

THE PUBLIC RESPONDENT DELIBERATELY WITHHELD THE RESOLUTION OF

PETITIONER'S MOTION FOR RECONSIDERATION DATED 12 JULY 2004 AND

PROCEEDED TO PREMATURELY ISSUE THE PRELIMINARY MANDATORY

INJUNCTION IN VIOLATION OF PETITIONER'S RIGHT TO FAIR PLAY AND JUSTICE;

VI

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN:

1) HE REFUSED OR FAILED TO ADMIT AND/OR CONSIDER THE

CERTIFIED DENR RECORDS OF THE DENR ORDER

CANCELLING PRIVATE RESPONDENT'S FLGLA;

2) HE REFUSED OR FAILED TO CONDUCT A HEARING ON THESE

CERTIFIED PUBLIC DOCUMENTS WHICH CONCLUSIVELY

PROVE PRIVATE RESPONDENT'S LACK OF CAUSE OF

ACTION UNDER THE PRINCIPAL ACTION; AND

3) HE REFUSED OR FAILED TO DISMISS THE COMPLAINT OUTRIGHT

FOR VIOLATING THE RULES ON FORUM SHOPPING BY

PRIVATE RESPONDENT. 17

Before this Court decides the substantive issues raised herein, certain procedural issues that were raised

by the parties must first be addressed. ADaECI

Petitioner contends that it was improper for the Regional Trial Court of Antique to issue the writ of

preliminary mandatory injunction (and for the Court of Appeals to affirm the same) without giving it an

opportunity to present evidence and without first resolving the Motion for Reconsideration dated July

12, 2004. But as borne by the records of the case, it is evident that petitioner had the opportunity to

present evidence in its favor during the hearing for the application of the writ of preliminary mandatory

injunction before the lower court. However, petitioner's failure to present its evidence was brought by

its own failure to appear on the hearing dates scheduled by the trial court. Thus, petitioner cannot

complain of denial of due process when it was its own doing that prevented it from presenting its

evidence in opposition to the application for a writ of preliminary mandatory injunction. It must be

pointed out that the trial court correctly refused to take cognizance of the letter of petitioner's President

which prayed for the postponement of the scheduled hearings. Said letter was not a proper motion that

must be filed before the lower court for the stated purpose by its counsel of record. Moreover, there

was absolutely no proof given that the sender of the letter was the duly authorized representative of

petitioner.

Second, the filing of the motion for reconsideration dated July 12, 2004, which essentially reproduced

the arguments contained in the previously filed and denied Omnibus Motion dated April 14, 2004,

renders the said motion for reconsideration dated July 12, 2004, a mere pro forma motion. Moreover,

the motion for reconsideration dated June 12, 2004, being a second motion for reconsideration, the trial

court correctly denied it for being a prohibited motion. 18

Third, it must be stated that the petition for certiorari before the Court of Appeals should not have

prospered because petitioner failed to file a motion for reconsideration from the assailed resolution of

the Regional Trial Court of Antique, granting the writ of preliminary mandatory injunction. Well settled is

the rule that before a party may resort to the extraordinary writ of certiorari, it must be shown that

there is no other plain, speedy and adequate remedy in the ordinary course of law. Thus, it has been

held by this Court that a motion for reconsideration is a condition sine qua non for the grant of the

extraordinary writ of certiorari. 19 Here, a motion for reconsideration was an available plain, speedy and

adequate remedy in the ordinary course of law, designed to give the trial court the opportunity to

correct itself.

Now on the merits of the instant petition.

The pivotal issue confronting this Court is whether the Court of Appeals seriously erred or committed

grave abuse of discretion in affirming the September 16, 2004 Resolution of the Regional Trial Court of

Antique granting the writ of preliminary mandatory injunction.

Under Article 539 of the New Civil Code, a lawful possessor is entitled to be respected in his possession

and any disturbance of possession is a ground for the issuance of a writ of preliminary mandatory

injunction to restore the possession. 20 Thus, petitioner's claim that the issuance of a writ of preliminary

mandatory injunction is improper because the instant case is allegedly one for accion

publiciana deserves no consideration. This Court has already ruled in Torre, et al. v. Hon. J. Querubin, et

al. 21 that prior to the promulgation of the New Civil Code, it was deemed improper to issue a writ of

preliminary injunction where the party to be enjoined had already taken complete material possession of

the property involved. However, with the enactment of Article 539, the plaintiff is now allowed to avail

of a writ of preliminary mandatory injunction to restore him in his possession during the pendency of his

action to recover possession. 22

It is likewise established that a writ of mandatory injunction is granted upon a showing that (a) the

invasion of the right is material and substantial; (b) the right of complainant is clear and unmistakable;

and (c) there is an urgent and permanent necessity for the writ to prevent serious damage. 23

In the instant case, it is clear that as holder of a pasture lease agreement under FLGLA No. 184, HGL has a

clear and unmistakable right to the possession of the subject property. Recall that under the FLGLA, HGL

has the right to the lawful possession of the subject property for a period of 25 years or until 2009. As

lawful possessor, HGL is therefore entitled to protection of its possession of the subject property and any

disturbance of its possession is a valid ground for the issuance of a writ of preliminary mandatory

injunction in its favor. The right of HGL to the possession of the property is confirmed by petitioner itself

when it sought permission from HGL to use the subject property in 1999. In contrast to HGL's clear legal

right to use and possess the subject property, petitioner's possession was merely by tolerance of HGL

and only because HGL permitted petitioner to use a portion of the subject property so that the latter

could gain easier access to its mining area in the Panaan Coal Reserve. aACEID

The urgency and necessity for the issuance of a writ of mandatory injunction also cannot be denied,

considering that HGL stands to suffer material and substantial injury as a result of petitioner's continuous

intrusion into the subject property. Petitioner's continued occupation of the property not only results in

the deprivation of HGL of the use and possession of the subject property but likewise affects HGL's

business operations. It must be noted that petitioner occupied the property and prevented HGL from

conducting its business way back in 1999 when HGL still had the right to the use and possession of the

property for another 10 years or until 2009. At the very least, the failure of HGL to operate its cattle-

grazing business is perceived as an inability by HGL to comply with the demands of its customers and

sows doubts in HGL's capacity to continue doing business. This damage to HGL's business standing is

irreparable injury because no fair and reasonable redress can be had by HGL insofar as the damage to its

goodwill and business reputation is concerned.

Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its order dated

December 6, 2000. But as rightly held by the Court of Appeals, the alleged cancellation of FLGLA No. 184

through a unilateral act of the DENR does not automatically render the FLGLA invalid since the unilateral

cancellation is subject of a separate case which is still pending before the Regional Trial Court of

Caloocan City. Notably, said court has issued a writ of preliminary injunction enjoining the DENR from

enforcing its order of cancellation of FLGLA No. 184.

The Court of Appeals found that the construction of numerous buildings and blasting activities by

petitioner were done without the consent of HGL, but in blatant violation of its rights as the lessee of the

subject property. It was likewise found that these unauthorized activities effectively deprived HGL of its

right to use the subject property for cattle-grazing pursuant to the FLGLA. It cannot be denied that the

continuance of petitioner's possession during the pendency of the case for recovery of possession will

not only be unfair but will undeniably work injustice to HGL. It would also cause continuing damage and

material injury to HGL. Thus, the Court of Appeals correctly upheld the issuance of the writ of

preliminary mandatory injunction in favor of HGL.

WHEREFORE, the instant petition is DENIED. The Decision dated January 31, 2005, of the Court of

Appeals in CA G.R. CEB SP No. 00035, which affirmed the Resolution dated September 16, 2004 of the

Regional Trial Court of Culasi, Antique, Branch 13, as well as the Writ of Preliminary Mandatory

Injunction dated October 6, 2004 issued pursuant to said Resolution, is AFFIRMED. The temporary

restraining order issued by this Court is hereby lifted. No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 174569. September 17, 2008.]

CHINA BANKING CORPORATION, SPOUSES JOEY & MARY JEANNIE CASTRO and

SPOUSES RICHARD & EDITHA NOGOY,petitioners, vs. BENJAMIN CO, ENGR.

DALE OLEA and THREE KINGS CONSTRUCTION & REALTY

CORPORATION, respondents.

D E C I S I O N

CARPIO-MORALES, J p:

Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision, Sindalan, San

Fernando, Pampanga, which was covered by Transfer Certificate of Title (TCT) No. 450216-R to

petitioner-spouses Joey and Mary Jeannie Castro (the Castro spouses). It sold two other lots also located

in the same place covered by TCT Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha

Nogoy (the Nogoy spouses). CSEHcT

The lots of the Castro spouses and the Nogoy spouses are commonly bound on their southeastern side

by Lot No. 3783-E, which is covered by TCT No. 269758-R in the name of respondent Benjamin Co (Co)

and his siblings.

Co and his siblings entered into a joint venture with respondent Three Kings Construction and Realty

Corporation for the development of the Northwoods Estates, a subdivision project covering Lot No.

3783-E and adjacent lots. For this purpose, they contracted the services of respondent, Engineer Dale

Olea.

In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.

On November 28, 2003, petitioners, through counsel, wrote respondents asking them to stop

constructing the wall, and remove all installed construction materials and restore the former condition of

Lot No. [3]783-E which they (petitioners) claimed to be a road lot. 1 They also claimed that the

construction obstructed and closed the only means of ingress and egress of the Nogoy spouses and their

family, and at the same time, caved in and impeded the ventilation and clearance due the Castro

spouses' residential house. 2

Petitioners' demand remained unheeded, prompting them to file before the Regional Trial Court (RTC) of

San Fernando, Pampanga a complaint, 3docketed as Civil Case No. 12834, for injunction, restoration of

road lot/right of way and damages with prayer for temporary restraining order and/or writ of

preliminary injunction.

Before respondents filed their Answer, 4 petitioners filed an Amended Complaint, 5 alleging that the

construction of the perimeter wall was almost finishedand thus modifying their prayer for a writ of

preliminary injunction to a writ of preliminary mandatory injunction, viz.: STECDc

WHEREFORE, it is respectfully prayed of this Honorable Court that:

A. Before trial on the merits, a temporary restraining order be issued

immediately restraining the defendants from doing

further construction of the perimeter wall on the

premises, and thereafter, a writ

of preliminary mandatory injunction be issued enjoining

the defendants from perpetrating and continuing with

the said act and directing them jointly and severally, to

restore the road lot, Lot 3783-E to its previous condition.

xxx xxx xxx 6 (Underscoring in the original; emphasis supplied)

After hearing petitioners' application for a writ of preliminary mandatory injunction, Branch 44 of the

San Fernando, Pampanga RTC denied the same, without prejudice to its resolution after the trial of the

case on the merits, in light of the following considerations:

After a judicious evaluation of the evidence, the Commissioner's Report on the

Conduct of the Ocular Inspection held on February 14, 2004, as well as the

pleadings, the Court is of the opinion and so holds that a writ of preliminary

injunction should not be issued at this time. Plaintiffs have not clearly shown

that their rights have been violated and that they are entitled to the relief

prayed for and that irreparable damage would be suffered by them if an

injunction is not issued. Whether lot 3783-E is a road lot or not is a factual issue

which should be resolved after the presentation of evidence. This Court is not

inclined to rely only on the subdivision plans presented by plaintiffs since, as

correctly argued by defendants, the subdivision plans do not refer to lot 3783-E

hence are not conclusive as to the status or classification of lot 3783-E. This

court notes further thatSubdivision Plan Psd-03-000577 of Lot 3783 from which

the other subdivision plans originates [sic] does not indicate lot 3783-E as a

road lot.

Even the physical evidence reveals that lot 3783-E is not a road lot. The Court

noticed during the ocular inspection on February 14, 2004, that there is a PLDT

box almost in front of lot 3783-E. There is no visible pathway either in the form

of a beaten path or paved path on lot 3783-E. Visible to everyone including this

court are wild plants, grasses, and bushes of various kinds. Lot 3783-E could not

have been a road lot because Sps. Nogoy, one of the plaintiffs, even built a

structure on lot 3783-E which they used as a coffin factory.

Plaintiffs failed to prove that they will be prejudiced by the construction of the

wall. The ocular inspection showed that they will not lose access to their

residences. As a matter of fact, lot 3783-E is not being used as an access road to

their residences and there is an existing secondary road within St. Benedict

Subdivision that serves as the main access road to the highway. With respect to

the blocking of ventilation and light of the residence of the Sps. Castro, suffice it

to state that they are not deprived of light and ventilation. The perimeter wall

of the defendants is situated on the left side of the garage and its front entrance

is still open and freely accessible.

This is indeed an issue of fact which should be ventilated in a full blown trial,

determinable through further presentation of evidence by the parties. . . .

xxx xxx xxx

WHEREFORE, premises considered, plaintiffs' application for the issuance of a

writ of preliminary mandatory injunction is denied without prejudice to its

resolution after the trial of the case on the merits. 7 (Underscoring

supplied) cSATEH

Their Motion for Reconsideration 8 having been denied, petitioners filed a petition for certiorari 9 before

the Court of Appeals which dismissed the same 10and denied their subsequent Motion for

Reconsideration. 11

Hence, the petitioners filed the present petition, 12 faulting the Court of Appeals in

I.

. . . DECID[ING] AND RESOLV[ING] A QUESTION OF SUBSTANCE NOT IN ACCORD

WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND

APPLICABLE DECISIONS OF THIS HONORABLE COURT.

II.

. . . PROMOTING THE LOWER COURT'S RATIOCINATION THAT PETITIONERS ARE

SEEKING THE ESTABLISHMENT OF AN EASEMENT OF RIGHT OF WAY, WHEN

THEY ARE CLAIMING THE ENFORCEMENT OF THE STATUTORY PROHIBITION

AGAINST CLOSURE OR DISPOSITION OF AN ESTABLISHED ROAD LOT.

III.

. . . SANCTION[ING] THE LOWER COURT'S PATENT GRAVE ABUSE OF DISCRETION

IN PERFUNCTORILY DENYING PETITIONERS' APPLICATION FOR WRIT OF

PRELIMINARY INJUNCTION. 13

It is settled that the grant of a preliminary mandatory injunction rests on the sound discretion of the

court, and the exercise of sound judicial discretion by the lower court should not be interfered with

except in cases of manifest abuse. 14

It is likewise settled that a court should avoid issuing a writ of preliminary mandatory injunction which

would effectively dispose of the main case without trial. 15

In the case at bar, petitioners base their prayer for preliminary mandatory injunction on Section 44 of Act

No. 496 (as amended by Republic Act No. 440), Section 50 of Presidential Decree 1529, and their claim

that Lot No. 3783-E is a road lot. DTaSIc

To be entitled to a writ of preliminary injunction, however, the petitioners must establish the following

requisites: (a) the invasion of the right sought to be protected is material and substantial; (b) the right of

the complainant is clear and unmistakable; and (c) there is an urgent and permanent necessity for the

writ to prevent serious damage. 16

Since a preliminary mandatory injunction commands the performance of an act, it does not preserve

the status quo and is thus more cautiously regarded than a mere prohibitive injunction. 17 Accordingly,

the issuance of a writ of preliminary mandatory injunction is justified only in a clear case, free from

doubt or dispute. 18 When the complainant's right is thus doubtful or disputed, he does not have a clear

legal right and, therefore, the issuance of injunctive relief is improper.

Section 44 of Act 496, 19 which petitioners invoke, provides:

xxx xxx xxx

Any owner subdividing a tract of registered land into lots shall file with the Chief

of the General Land Registration Office a subdivision plan of such land on which

all boundaries, streets and passageways, if any, shall be distinctly and accurately

delineated. If no streets or passageways are indicated or no alteration of the

perimeter of the land is made, and it appears that the land as subdivided does

not need of them and that the plan has been approved by the Chief of the

General Land Registration Office, or by the Director of Lands as provided in

section fifty-eight of this Act, the Register of Deeds may issue new certificates of

title for any lot in accordance with said subdivision plan. If there are streets

and/or passageways, no new certificates shall be issued until said plan has been

approved by the Court of First Instance of the province or city in which the land

is situated. A petition for that purpose shall be filed by the registered owner,

and the court after notice and hearing, and after considering the report of the

Chief of the General Land Registration Office, may grant the petition, subject to

the condition, which shall be noted on the proper certificate, that no portion of

any street or passageway so delineated on the plan shall be closed or otherwise

disposed of by the registered owner without approval of the court first had, or

may render such judgment as justice and equity may require. 20 (Underscoring

supplied by the petitioners)

Section 50 of Presidential Decree No. 1529, 21 which petitioners likewise invoke, provides:

SEC. 50. Subdivision and consolidation plans. — Any owner subdividing a tract

of registered land into lots which do not constitute a subdivision project as

defined and provided for under P.D. No. 957, shall file with the Commissioner of

Land Registration or with the Bureau of Lands a subdivision plan of such land on

which all boundaries, streets, passageways and waterways, if any, shall be

distinctly and accurately delineated.

If a subdivision plan, be it simple or complex, duly approved by the

Commissioner of Land Registration or the Bureau of Lands together with the

approved technical descriptions and the corresponding owner's duplicate

certificate of title is presented for registration, the Register of Deeds shall,

without requiring further court approval of said plan, register the same in

accordance with the provisions of the Land Registration Act, as amended:

Provided, however, that the Register of Deeds shall annotate on the new

certificate of title covering the street, passageway or open space, a

memorandum to the effect that except by way of donation in favor of the

national government, province, city or municipality, no portion of any street,

passageway, waterway or open space so delineated on the plan shall be closed

or otherwise disposed of by the registered owner without the approval of the

Court of First Instance of the province or city in which the land is

situated. . . . 22 (Underscoring supplied by petitioner) CDHcaS

The best evidence thus that Lot No. 3783-E is a road lot would be a memorandum to that effect

annotated on the certificate of title covering it. Petitioners presented TCT No. 185702-R covering Lot No.

3783-E in the name of Sunny Acres Realty Management Corporation which states that the registration is

subject to "the restrictions imposed by Section 44 of Act 496, as amended by Rep. Act No. 440." 23 The

annotation does not explicitly state, however, that Lot No. 3783-E is a road lot.

In any event, TCT No. 185702-R had been cancelled and in its stead was issued TCT No. 247778-

R 24 which, in turn, was cancelled by TCT No. 269758-R 25 in the name of respondent Co and his siblings.

TCT No. 247778-R and respondent Co's TCT No. 269758-R do not now contain the aforementioned

memorandum annotated on TCT No. 185702-R re the registration being "subject to restrictions imposed

by Section 44 of Act 496, as amended by Republic Act No. 440." Given the immediately foregoing

circumstances, there is doubt on whether Lot No. 3783-E is covered by a road lot.

While petitioners correctly argue that certain requirements must be observed before encumbrances, in

this case the condition of the lot's registration as being subject to the law, may be discharged and before

road lots may be appropriated 26 gratuity assuming that the lot in question was indeed one, TCT Nos.

247778-R and 269758-R enjoy the presumption of regularity 27 and the legal requirements for the

removal of the memorandum annotated on TCT No. 185702-R are presumed to have been followed. 28

At all events, given the following factual observations of the trial court after conducting an ocular

inspection of Lot 3783-E, viz.:

. . . The ocular inspection showed that [petitioners] will not lose access to their

residences. As a matter of fact, lot 3783-E is not being used as an access road to

their residences and there is an existing secondary road within St. Benedict

Subdivision that serves as the main access road to the highway. 29 With respect

to the blocking of ventilation and light of the residence of the Sps. Castro,

suffice it to state that they are not deprived of light and ventilation. The

perimeter wall of the defendants is situated on the left side of the garage and

its front entrance is still open and freely accessible, 30 EHCaDS

and the absence of a showing that petitioners have an urgent and paramount need for a writ of

preliminary mandatory injunction to prevent irreparable damage, they are not entitled to such

writ.

WHEREFORE, the petition is DENIED.

SO ORDERED.

EN BANC

[G.R. No. 4891. March 23, 1909.]

SOFIA DEVESA, plaintiff-appellee, vs. CRISPIN ARBES, defendant-appellant.

Leocadio Joaquin, for appellant.

Sofia Devesa, on her own behalf.

SYLLABUS

1. INJUNCTIONS; SPECIAL REMEDY OF THE CODE OF CIVIL PROCEDURE DISTINGUISHED

FROM THE OLD SPANISH WRITS. — Injunctions or interdictos prohibitorios, for the issuance of

which provision is made in the new Code of Civil Procedure, while they resemble the interdictal

actions of the Spanish procedural law in some respects, are wholly distinct therefrom and, as a rule,

the circumstances under which, in accordance with the Spanish law, interdictos de adquirir, de

retener, de recobrar or de despojo properly issued would not justify nor sustain the issuance of an

injunction, interdicto prohibitorio, as defined and provided in the new Code of Civil Procedure.

2. ID.; LIMITATION UPON USE OF WRITS OF INJUNCTION. — An injunction is a special

remedy contained in the new Code of Civil Procedure and adopted from American and English law

of procedure, and the accepted American doctrine limiting its use to cases where there is no other

adequate remedy, and otherwise controlling the issue thereof, must be deemed to limit its use in

like manner in this jurisdiction.

3. ID.; WRITS NOT AVAILABLE FOR RECOVERY OF PROPERTY WHEN TITLE IS NOT

ESTABLISHED. — Injunctions, as a rule, will not be granted to take property out of the possession or

control of one party and place it into that of another whose title has not clearly been established by

law.

4. ID.; SPANISH WRITS REPLACED BY SPECIAL REMEDIES. — The interdicto de recobrar or

de despojo may be said have been replaced and perhaps abrogated by the summary remedies

prescribed in section 80 of the new Code of Civil Procedure.

5. ID.; PROPERTY CLAIMS AGAINST ADMINISTRATOR REQUIRE SEPARATE ACTION. —

Contested claims of an administrator, that certain rights of possession and ownership are the

property of the estate which he represents, must be determined in a separate action, and not in

the course of the administration proceedings.

D E C I S I O N

CARSON, J p:

Plaintiff alleging that the defendant, acting as administrator of the estate of Gregoria

Arbes, deceased, had unlawfully taken possession of certain rice lands and coconut groves, the

property of the plaintiff, prayed for an injunction restraining defendant from continuing in

possession and enjoying the fruits of the land in question until and unless he obtained a final

judgment in a proper action declaring these lands to be the property of the estate of which he is

administrator, and prayed further that a preliminary injunction be issued restraining defendant

from continuing in possession or enjoying the fruits of the land in question pending the trial of the

cause.

The complaint alleges that the property in question was assigned to plaintiff's deceased

husband under the terms of an extrajudicial partition contract executed in the year 1887 by the

heirs of Gregoria Arbes, plaintiff's husband's first wife, and that ever since that date until the

defendant took possession of this land, plaintiff and her husband had continued in the quiet,

peaceable, and exclusive possession thereof. The trial court, apparently without giving the

defendant are opportunity to be heard, granted the preliminary injunction prayed for, conditioned

upon the execution of a bond for costs and damages, whereupon the defendant presented a

motion which though irregular in form may fairly be regarded as a demurrer to the complaint on

the ground that the facts alleged do not constitute a cause of action, and prayed that the

preliminary injunction be dissolved.

The trial court overruled the demurrer and declined to dissolve the preliminary

injunction, and defendant without excepting to the ruling of the court withdrew his motion and

filed answer. In this answer defendant admitted having taken possession of the land in question, as

alleged by the plaintiff, but denied plaintiff's allegation that she and her husband had been in the

exclusive possession thereof, and alleged that the land in question was the property of Gregoria

Arbes, deceased, of whose estate he is the administrator, and that after the death of Gregoria

Arbes, it passed pro indiviso to her heirs, who from the time of her death continued in joint

possession thereof, until he took possession upon his appointment as administrator; he also

alleged that one of the heirs, Vicente Sola, widower of Gregoria Arbes, deceased, married the

plaintiff; that plaintiff's claim to an interest in the property in question is or should be strictly

limited to the interest which she is entitled to take from her husband, since deceased; and that

while it is true that she and her husband exercised certain rights of possession of the land in

question, they never had exclusive possession, and such rights of possession as they did exercise

were exercised not only on their own behalf but on behalf of all the heirs of Gregoria Arbes.

Upon these pleadings the parties went to trial, and plaintiff introduced evidence tending

to prove that the land in question was originally the property of her husband, Vicente Sola,

acquired by him, not from his first wife, Gregoria Arbes, but by purchase, in part prior to, and in

part after his marriage with the first wife; she also introduced in evidence a document, dated

January 31, 1887, purporting to be a partition agreement between her husband Sola, and the other

heirs of Gregoria Arbes who died a short time prior to the execution of the instrument, whereby

the land in question was assigned to Sola as his property. Plaintiff further introduced testimony

which clearly established her allegation that from the date of that instrument until the time when

defendant took possession of the land, she and her husband had the exclusive possession thereof.

Defendant did not deny the execution of the partition agreement, and wholly failed to

prove that the land in question was or is a part of the estate of Gregoria Arbes, deceased, or to

established his allegation that plaintiff and her husband were not in the exclusive possession of the

land in question from the date of its execution to the time when he took possession as

administrator, or that they held possession thereof jointly with the other heirs of Gregoria Arbes.

He insisted, however, that the agreement was not binding upon the heirs of Gregoria Arbes,

because at the date of its execution two of them, a niece and a nephew, were minors and

incapable of executing such a document, although it appears that they were represented upon that

occasion by their respective fathers who married sisters of Gregoria Arbes, and signed the

instrument as the legal representatives of these minor heirs.

The trial court on the pleadings and proof submitted at the trial found that the plaintiff

was entitled to the possession of the land in question, and rendered final judgment in accordance

with the prayer of the complaint, granting a final injunction perpetually restraining the defendant

administrator from continuing in possession of the land in question or enjoying the fruits thereof.

We are in entire accord with the trial judge as to his findings of fact, and agree with him

that the evidence of record establishes plaintiff's right of possession in and to the lands in question:

for without deciding whether the extrajudicial partition agreement between the heirs of Gregoria

Arbes, deceased, executed in 1887, conveyed to plaintiff's deceased husband the absolute right of

ownership in the land assigned to him thereby; or whether that agreement, which was executed

before the present Code of Civil Procedure went into effect, can be successfully attacked at this

time by the minor heirs, because of the apparent lack of judicial approbation of the action of their

legal representatives; it is sufficient, for the purposes of this decision, to point out that plaintiff, and

her husband having been in exclusive possession of this land, under a claim based on the partition

agreement, for more than fifteen years, the defendant, in his capacity of administrator, had no

lawful authority to take possession thereof without plaintiff's consent, in the absence of a final

judgment of a competent court securing to him his alleged right of possession; and that defendant

having failed to prove that the estate of which he is administrator is the true owner of all or any

part of the land in question, the plaintiff is entitled to be replaced in possession.

We are of opinion, however, that the remedy by injunction sought by the plaintiff and

allowed by the trial court was not the proper remedy for the cause of action set out in the

pleadings and established by the evidence, and that, in accordance with the provisions of section

126 of the Code of Civil Procedure, the court should have granted "relief consistent with the case

made by the complaint and supported by the evidence and embraced within the issue," and to that

end should have required an amendment of the complaint by striking out the prayer for an

injunction and substituting therefor a prayer for judgment for possession of the land described in

the complaint, and upon the complaint thus amended, judgment should have been rendered in

favor of the plaintiff.

Both the parties to this action appear to have labored under a misapprehension as to

the purpose, scope, and limitations of the special remedy, known as an injunction, and defined in

section 162 of the Code of Civil Procedure. The records in many cases in this court disclose a

considerable degree of doubt and uncertainty in the minds of counsel as to the function of this

remedy, and in some cases a wholly erroneous concept of the purpose and object for which it is

provided. This erroneous concept may, perhaps, be due to the fact that in the Spanish version of

the new Code of Civil Procedure, the term injunction is translated interdicto prohibitorio, which

may thus have given rise to the impression that the remedy by injunction is similar in character to

the summary interdictal actions of the Spanish procedural law; but while the injunction resembles

in many respects theinterdicto of the Roman law, especially the decretal (decretale, quod praetor

re nata implorantibus decrevit), and while it also resembles to a certain degree in its operation and

effect, the interdictos de adquirir, de retener, and de recobrar or de despojo of the Spanish

procedural law; nevertheless, it is wholly distinct therefrom, and, as a rule, the circumstances

under which, in accordance with the former procedural law, these interdictos properly issued,

would not justify nor sustain the issuance of an injunction, as defined and provided in the new

Code of Civil Procedure. An injunction is a "special remedy" adopted in that code from American

practice, and originally borrowed from English legal procedure, which was there issued by the

authority and under the seal of a court of equity, and limited, as in other cases where equitable

relief is sought, to cases where there is no "plain, adequate, and complete remedy at law" (30

Barb., 549; 5 R. I., 472; 121 N. Y., 46; SI Pa., 387; 32 Ala., N.S. 723; 37 N. H., 254; 61 Hun., 140: 145

U. S., 459; 141 Ill., 572; 49 Fed. Rep., 517; 37 id., 67; 34 id., 357; 129 Md., 464; 109 N. C., 21; 83

Wis., 426: 115 Mo., 613), which "will not be granted while the rights between the parties are

undetermined, except in extraordinary cases where material and irreparable injury will be done,"

which can not be compensated in damages, and where there will be no adequate remedy 93

Bosw., 60; 1 Beasl., 247, 542; 15 Md., 22; 13 Cal., 156, 190; 6 Wis., 680: 16 Tex., 410; 28 Mo., 210;

24 Fla., 542; 39 N. H., 182: 12 Cush., 410; 27 Ga., 499; 1 McAll., 271; 54 Fed. Rep., 1005; 64 Vt.,

643), and which will not, as a rule, be granted, to take property out of the possession of one party

and put it into that of another whose title has not been established by law. (144 U. S., 119; 40 W. N.

C. Pa., 121.)

This court has frequently held, when treating of the special remedies by injunction,

mandamus and prohibition, which are provided in the new Code of Procedure in Civil Cases, that

the accepted American doctrine limiting the use of these remedies to cases where there is no other

adequate remedy, and otherwise controlling the issuance of these writs, and must be deemed to

limit their use in like manner in this jurisdiction, when not otherwise provided by law: to hold

otherwise would be to render practically of no effect the various provisions of the code touching

many if not most of the ordinary actions, and the enforcement of judgment in such actions; for it

may well be supposed that if a complainant could secure relief by injunction in every case where

"the defendant is doing or threatens or is about to do, or is procuring or suffering to be done, some

act probably in violation of the plaintiff's rights" and could enforce the judgment granting the

injunction by the summary contempt proceedings authorized in section 172 of the code to punish

violations of injunctions, he would seldom elect to enforce his rights in such cases by the ordinary

remedies, involving as they do the difficult and of times fruitless labor of enforcing judgments

obtained therein by execution. But so many cases have come before us where preliminary

injunctions have been issued apparently without regard to this rule, that we are satisfied that the

erroneous impression still prevails, in some quarters, that a preliminary injunction must issue

where a prima facie showing is made of the existence of the circumstances under which such

injunctions may be granted as set out in section 164 of the Code of Civil Procedure, without

keeping in mind the fact that applications for injunctions are made to the sound discretion of the

court, and that the exercise of that discretion is controlled by the accepted doctrines touching the

granting of injunctions in such cases; and we may add that the records also disclose in dangerous

tendency to grant permanent injunctions on insufficient grounds, as a result of a similar erroneous

construction of the provisions of the code in that regard.

No brief was filed by plaintiff on appeal, and the contentions of the parties in the court

below are not very clearly set out in the very short brief of the defendant and appellant. It appears,

however, that defendant challenged the jurisdiction of the trial court, on the ground that the

summary interdictal actions of the Spanish procedural law have been done away with by the

provisions of the new Code of Procedure in Civil Cases, the interdicto de recobrar or de

despojo having been expressly displaced by the summary remedies prescribed in section 80 of the

new code, for the recovery of lands or buildings of which one is deprived by force, intimidation,

fraud, or strategy within a year prior to the institution of the action; and defendant insists that the

action instituted by plaintiff, while in form a proceeding praying for an injunction under the new

code, assimilated to the former proceeding praying for an interdicto de recobrar or de despojo, is

in fact an action which could only be maintained under the provisions of section 80 of the new

code, of which original jurisdiction is conferred upon the courts of the justice of the peace,

exclusive of the Court of First Instance. Plaintiff and appellee on the other hand seems to have

insisted that the injunction proceedings instituted by her were assimilated rather to the summary

action known as the interdictor de retener and that the facts alleged and proven establishing her

right to an interdicto de retener, under the old law, she is entitled to an injunction under the new

code, that remedy being the equivalent provided by the new code for the interdicto of the old law.

But while we agree with defendant and appellant that the summary remedies provided

in section 80 may be said to replace and perhaps abrogate the old interdicto de recobrar or de

despojo, and that if the facts alleged and proven made out a cause of action under that section

and, therefore, within the exclusive jurisdiction of the court of the justice of the peace, it would be

necessary to hold that the trial court was wholly without original jurisdiction; and while we can not

agree with the plaintiff and appellee that the facts set out in the pleadings and evidence would

support the issuance of an interdicto de retener, even under the former procedure, because

possession of the land and buildings had been actually lost to plaintiff when the action was

instituted, nor can we agree with her that even if a proper case for the granting of an interdicto de

retener under the old procedure had been established, it necessarily follows that an injunction

should issue under the new procedure; and without deciding whether all the summary interdictal

remedies of the Spanish law have been wholly and in all cases abolished under the provisions of the

new code, it is sufficient for the purpose of this decision to hold that since there is nothing in the

allegations or proof to show that defendant obtained possession of the land in question by force,

intimidation, fraud, or strategy, the action is not in the nature of the summary remedy known to

the old law as an interdicto de recobrar or de despojo, nor is it the summary remedy of forcible

entry and wrongful detainer provided in section 80 of the new code, and therefor it does not fall

within the exclusive jurisdiction of the court of the justice of the peace, to the exclusion of the

Court of First Instance, which tried the case.

What has been said disposes of all the errors assigned by appellant, except his

assignment of error based on his contention that the administrator having taken possession as an

officer of the court wherein the estate was being administered, his conduct in that regard should

not be questioned, except in the course of the administration proceedings.

We have frequently held that a contested claim of an administrator that certain rights of

possession and ownership are the property of the estate which he represents must be determined

in a separate action, and not in the course of the administration proceedings; and it should not be

necessary to add that the mere fact that an administrator holds letters of appointment from some

court, in nowise authorizes him to take possession of property held by another under a claim of a

right to possession until and unless he successfully establishes his right to possession of such

property in a proper proceeding in a competent court.

Ten days from the date of this decision let judgment be entered, reversing the judgment

of the trial court and dissolving the preliminary and permanent injunctions issued therein, without

costs to either party in this instance, and ten days thereafter let the record be returned to the court

below where, upon the amendment of the complaint along the lines therein indicated, judgment

will be rendered in favor of the plaintiff for the possession of the lands described in the complaint,

together with the costs in the Court of First Instance, but without damages, which were not

satisfactorily established by the evidence of record. So ordered.

THIRD DIVISION

[G.R. No. 158141. July 11, 2006.]

FAUSTO R. PREYSLER, JR., petitioner, vs. COURT OF APPEALS and FAR EAST

ENTERPRISES, INC., respondents.

D E C I S I O N

QUISUMBING, J p:

This petition for review assails the Decision 1 dated January 20, 2003 and Resolution 2 dated May 20,

2003 of the Court of Appeals in CA-G.R. SP No. 52946. The Court of Appeals lifted the amended writ of

preliminary injunction dated December 29, 1998 issued by the Regional Trial Court, Branch 14 of

Nasugbu, Batangas in Civil Case No. 345 and reinstated the original writ dated December 12, 1996.

The antecedent facts are as follows:

Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner Fausto Preysler, Jr.

and his wife owned lots therein and also two parcels of land adjacent to the subdivision. These two

parcels were bounded on the North and West by the China Sea and on the East and South by the

subdivision. To gain access to the two parcels petitioner has to pass through private respondent's

subdivision. Petitioner offered P10,000 for the easement of right of way but private respondent refused

it for being grossly inadequate. Private respondent then barricaded the front gate of petitioner's

property to prevent petitioner and his family from using the subdivision roads to access said parcels.

The petitioner filed, with the Regional Trial Court of Nasugbu, Batangas, a Complaint for Right of Way

with prayer for preliminary prohibitive injunction against private respondent. After due hearing, the trial

court, in an Order dated November 5, 1996, held that barricading the property to prevent the petitioner

from entering it deprived him of his ownership rights and caused irreparable damage and injuries. It

ordered herein private respondent:

1) To remove or cause or allow the removal of the barricade (six

concrete posts) installed by it on the front gate of the

plaintiffs' properties fronting Sea Cliff Drive;

2) To cease, desist and refrain from obstructing or hindering

plaintiffs' entry into and exit from their subject properties

and/or their free passage over Sea Cliff Drive from and to

the public highway near the gate of the Tali Beach

Subdivision pending termination of this litigation on the

merits and/or unless a contrary order is issued

henceforth. 3

Accordingly, the writ of preliminary injunction was issued on December 12, 1996. TICaEc

On July 8, 1998, petitioner used the subdivision road to transport heavy equipment and construction

materials to develop his property. Consequently, private respondent moved to dissolve the writ claiming

that the petitioner violated its right to peaceful possession and occupation of Tali Beach Subdivision

when petitioner brought in heavy equipment and construction materials. Private respondent maintained

that the damages that may be caused to it far outweigh the alleged damages sought to be prevented by

the petitioner. It alleged that there is an alternate route available to petitioner, particularly the barangay

road leading to Balaytigue and the Calabarzon Road.

For his part, the petitioner moved to clarify the December 12, 1996 writ and asked the court to clearly

define the action required of private respondent to avert further damage and inconvenience to

petitioner. Petitioner prayed that his contractors, visitors, and other representatives be allowed access

and persons he has authorized be allowed to install power lines over private respondent's property.

On December 29, 1998, the trial court issued a Joint Resolution amending the order in the original writ to

read as follows:

1. To remove or cause or allow the removal of the barricade (six concrete posts)

installed by it on the front gate of the plaintiffs' properties fronting Sea Cliff

Drive.

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

plaintiffs' visitors, guests, contractors, and other persons authorized by or acting

for and/or under said plaintiffs) entry into and exit from their subject properties

and/or their free passage over Sea Cliff Drive and other connecting subdivision

roads, from and to the public highway near the gate of the Tali Beach

Subdivision, pending the termination of this litigation on the merits and/or

unless a contrary order is issued henceforth.

3. To cease, desist and refrain from hindering or obstructing plaintiffs'

contractors, guests, visitors and other authorized persons to bring along with

them their motor vehicles, equipments, materials, supplies, machineries and

other items necessary for the needs of the plaintiffs' properties.

4. To cease, desist and refrain from hindering or obstructing the plaintiffs

and/or persons authorized by them, to install electric power lines over the Tali

Beach Subdivision for plaintiffs' electric power requirements. 4

Private respondent filed a petition for certiorari with the Court of Appeals, which set aside the amended

writ dated December 29, 1998 and reinstated the original writ dated December 12, 1996 with

modification as to the amount of the bond. The petitioner moved for reconsideration, but the same was

denied.SIcEHC

Petitioner now comes before us claiming that the Court of Appeals:

I

. . . [GRAVELY] ERRED IN FINDING AND CONCLUDING THAT THE TRIAL COURT

COMMITTED GRAVE ABUSE OF DISCRETION IN ISSUING: (1) THE JOINT

RESOLUTION DATED 29 DECEMBER 1998, . . . (2) THE AMENDED WRIT OF

PRELIMINARY INJUNCTION (MANDATORY AND PROHIBITORY) OF EVEN

DATE . . . AND (3) THE ORDER DATED 8 MARCH 1999 DENYING THE MOTION

FOR RECONSIDERATION TO RECONSIDER AND SET ASIDE THE JOINT

RESOLUTION. . . .

II

. . . OVERSTEPPED THE BOUNDARY OF ITS AUTHORITY AND JURISDICTION IN

RESOLVING FACTUAL MATTERS, HOWEVER, ERRONEOUS, COULD NOT BE

REVIEWED UNDER THE EXTRAORDINARY WRIT OF CERTIORARI BUT BY

ORDINARY APPEAL, INSTEAD OF CONFINING ITSELF TO DETERMINE WHETHER

OR NOT THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN

ISSUING THE JOINT RESOLUTION, . . . THE AMENDED WRIT OF PRELIMINARY

INJUNCTION (MANDATORY AND PROHIBITORY), . . . AND THE ORDER DATED 6

MARCH 1996 DENYING THE MOTION TO RECONSIDER THE JOINT RESOLUTION. .

. .

III

. . . EXCEEDED ITS JURISDICTION AND AUTHORITY IN SETTING ASIDE THE JOINT

RESOLUTION, . . . LIFTING THE AMENDED WRIT OF PRELIMINARY INJUNCTION

DATED 29 DECEMBER 1998, . . . AND RESTRICTING OR LIMITING PASSAGE OVER

THE TALI BEACH SUBDIVISION ROADS TO INGRESS AND EGRESS OF PETITIONER

AND MEMBERS OF THE LATTER'S HOUSEHOLD IN UTTER VIOLATION OF THE

LAW ON EASEMENT, IN GENERAL, AND LEGAL EASEMENT OF RIGHT OF WAY IN

PARTICULAR. 5

Simply, the issue is whether there was a legal basis for the issuance of the amended writ of injunction.

Likewise, we need to resolve whether the right of passage allowed in the uncontested original writ

applies not only to the petitioner and his household, but also to his visitors, contractors, construction

workers, authorized persons, heavy equipment machinery, and construction materials as well as the

installation of power lines.

Petitioner contends that inherent in the right of way under Article 649 6 of the New Civil Code is the right

to cultivate and develop the property, which is an attribute of ownership provided under Article

428. 7 According to petitioner, the passage of heavy equipment and construction materials through the

subdivision is granted by Article 656. 8 Petitioner adds that he was not seeking the right of way only for

occasional visits to his property but also to develop, use and enjoy it.

Private respondent claims that what was granted in the original writ was not the easement of right of

way but only the maintenance of the status quo. It maintains that from the very beginning, petitioner

and his household were allowed into the subdivision only because petitioner owned several lots in the

subdivision. Hence, according to private respondent, the Court of Appeals properly dissolved the

amended writ as the status quo protected by the original writ did not include the passage of construction

workers in petitioner's property outside the subdivision. Private respondent stresses that at the time the

original writ was applied for there was no construction work yet. EcICSA

Private respondent argues that its recognition of the original writ should not be construed as admitting

that petitioner had a right of way; and with no easement of right of way, petitioner cannot claim other

rights under the law on easement. It further contends that acts prohibited and allowed under the

amended writ amounted to a premature adjudication on the merits of the main case on whether or not

petitioner has a right of way, which is still pending before the trial court.

Prefatorily, we note that what was granted by the trial court was the preliminary injunction, and that the

main case for right of way has not yet been settled. We have in previous cases 9 said that the objective

of a writ of preliminary injunction is to preserve the status quo until the merits of the case can be fully

heard. Status   quo is the last actual, peaceable and uncontested situation which precedes a

controversy. 10 The Court of Appeals was correct in its findings that the last actual, peaceful and

uncontested situation that preceded the controversy was solely the access of petitioner and his

household to his property outside the subdivision for visits and inspections. At the time the writ was

applied for in 1995, there was still no construction going on in the property. It was merely raw land. The

use of the subdivision roads for ingress and egress of construction workers, heavy equipment, delivery of

construction materials, and installation of power lines, are clearly not part of the status  quo in the

original writ. Along this line, the Court of Appeals properly set aside the amended writ and reinstated the

original writ.

However, under Article 656 of the New Civil Code, if the right of way is indispensable for the

construction, repair, improvement, alteration or beautification of a building, a temporary easement is

granted after payment of indemnity for the damage caused to the servient estate. In our view, however,

"indispensable" in this instance is not to be construed literally. Great inconvenience is sufficient. 11 In

the present case, the trial court found that irrespective of which route petitioner used in gaining access

to his property, he has to pass private respondent's subdivision. Thus we agree that petitioner may be

granted a temporary easement. This temporary easement in the original writ differs from the permanent

easement of right of way now being tried in the main case.

The law provides that temporary easement is allowed only after the payment of the proper indemnity.

As there are neither sufficient allegations nor established facts in the record to help this Court determine

the proper amount of indemnity, it is best to remand the case to the trial court for such

determination. aSCDcH

Additionally, we find that the installation of electric power lines is a permanent easement not covered by

Article 656. Article 656 deals only with the temporary easement of passage. Neither can installation of

electric power lines be subject to a preliminary injunction for it is not part of the status quo. Besides,

more damage would be done to both parties if the power lines are installed only to be removed later

upon a contrary judgment of the court in the main case.

WHEREFORE, the petition is PARTIALLY GRANTED.

We hereby order (a) private respondent to allow the right of passage thru the subdivision by the

petitioner's visitors and guests, contractors, construction workers, heavy equipment vehicles, and

delivery construction materials; and (b) petitioner to pay private respondent the indemnity therefor to

be determined by the trial court. The case is hereby REMANDED to the trial court for the determination

of the proper amount of indemnity for the temporary easement under Article 649.

No pronouncement as to costs.

SO ORDERED.

EN BANC

[G.R. No. 5734. August 17, 1911.]

MARCELO MANTILE, ET AL., plaintiffs-appellees, vs. ALEJANDRO CAJUCOM, ET

AL., defendants-appellants.

Ramon Diokno, for appellants.

Allen A. Garner, for appellees.

SYLLABUS

1. PRELIMINARY INJUNCTION; ACTS ALREADY PERFORMED CAN NOT BE PROHIBITED;

CONTEMPT. — Section 162 of the Code of Civil Procedure, in defining a preliminary injunction,

states: That it is the order or writ which prohibits a particular person from performing a particular

act, and therefore, if a writ of preliminary injunction has been issued against a particular person,

enjoining him, for example, from performing any act whatever that may tend to close and obstruct

an irrigation ditch by preventing the passage of the water, when the said ditch was already closed,

it can not be understood that the person, against whom the prohibitory order was issued, willfully

disregarded and disobeyed the said judicial writ by not removing the obstacle that prevented the

flow of the water, because this last operation is not covered by the writ of injunction.

2. ID.; ID.; ID. — If in a writ of preliminary injunction those who become the defendants

are not enjoined or required to remove the impediment or obstacle complained of as being

prejudicial to the rights and interests of the plaintiff, but merely to abstain or desist from

performing any act contrary and prejudicial to such rights and interests, the mere fact of their not

having taken out or removed the obstacle or impediment, which already existed at the time of the

issuance of the injunction, does not constitute disobedience to, or contempt of, a judicial order,

because what has already been done can not be prohibited. (Municipal Council of Sta. Rosa vs.

Provincial Board of La Laguna, 3 Phil. Rep., 206.)

3. IRRIGATION RIGHTS; LAW OF WATERS. — The legal provisions applicable to the use

and utilization of the waters of public or private domain are to be found in articles 407 to 425 of

the Civil Code, and the cases not therein provided for are governed by the Special Law of Waters of

August 3, 1866, published, with Cumplase decree of September 21, 1871, in the Official Gazette of

the 24th of the same month and year.

D E C I S I O N

TORRES, J p:

This is an appeal by the defendants from the judgment rendered in the matter of the

principal issue, and in the incidental one of contempt of court.

THE INCIDENTAL ISSUE OF CONTEMPT.

On June 22,1908, the attorneys for the plaintiffs Marcelo Mantile, Sebastian Bancod,

Adriano Español, Gregorio Corpus, Claudio Angeles, Doroteo Dacuno, Fernando Polintan, Maximino

Fajardo, Catalino Rubio, Alejandro Caisip, Diego Santiago, Eugenio Ronquillo, Raymundo Santiago,

Simon de la Cruz, Anacleto de los Reyes, Rafael Mendoza, Marcelino Fajardo, Tomas Marcelo,

Inocencio Santiago, Eugenio Angeles, Segundo Ramos, and Geronimo Rojas, filed a written

complaint against Alejandro Cajucom and Timoteo Cajucom wherein they prayed for the issuance

of a writ of preliminary injunction to restrain the defendants from continuing to close the canal

or estero called Paligui ng Buquid Puntang Piniping, in the barrio of Biga of the pueblo of Bongabon,

and through which the water ran that irrigated the sementeras, or rice fields of which the plaintiffs

were the owners, and from obstructing the course of such water, and furthermore that, after the

hearing of the case, a writ of perpetual injunction be issued against the said defendants, and that

the latter be sentenced to pay to each of the twenty-two plaintiffs the amount of the losses and

damages caused him, and the costs.

The plaintiffs having furnished bond, the court, by order of July 26, 1908, directed that

preliminary injunction issue against the said defendants, their agents and representatives,

restraining them from performing any act whatever that might tend to close or obstruct the canal

or estero called Paligui ng Buquid Puntang Piniping, in the barrio and pueblo before-mentioned, of

the Province of Nueva Ecija, and to refrain from hindering the passage of the water that flowed

through the said canal. The defendants were notified of this writ and it was served upon them on

the 29th of the same month.

By a petition of July 6, 1908, counsel for the plaintiffs set forth under oath that,

according to information he had received, the defendants were continuing to obstruct and hinder

the pasage of the water, in disobedience to the judicial order, and prayed that the' said defendants

be notified to appear and state their reasons, if any they had, why they should not be punished for

contempt of court for disobedience to the writ of preliminary injunction issued. This petition was

granted and the defendants having been notified, they alleged in writing, on the 14th of the same

month, that they had been notified on the 3d of July of the said writ by the sheriff of Nueva Ecija

and since then had complied with the order of the court, but called attention to the fact that the

stream had been closed by two tenants of the defendant, Alejandro Cajucom, on the 1st of the

preceding month of July, since which date neither they, the defendants, nor any other person in

their representation, had done anything' whatever to the stream or ditch in question; wherefore

they prayed that the two men who closed the said stream be examined, and that, in view of such

facts. the charge of contempt of court be dismissed, and the plaintiffs be sentenced to pay the

costs, and the damages occasioned.

The court, after the witnesses summoned had been examined, decided, on August 20,

1908, that the defendants had committed contempt of cost and imposed upon each of them a fine 

of   P200, and imprisonment until they should duly comply with the writ of injunction, and

sentenced each of them to pay one-half of the costs.

Defendants excepted to this judgment and, the required bill of exceptions having been

submitted, the Supreme Court, in its decision of January 11, [31] 1910, 1 dismissed the appeal on

the ground that the said bill of exceptions had been improperly admitted, inasmuch as the order

issued in connection with the incidental question of contempt of court, could be reviewed only

after the rendition of judgment on the main issue, and not until then could the said incident of

contempt be, by means of a bill of exceptions, submitted to this court; therefore the records in the

case were remanded to the court below, later to be transmitted to the clerk of this court upon the

filing of the main record with the bill of exceptions.

By the writ of preliminary injunction issued on June 26, 1908, the original of which is on

file, page 7 of the main record, the defendants Alejandro and Timoteo Cajucom, their attorneys,

representatives and agents, were enjoined from performing any act whatever that might tend to

close and obstruct the canal, a branch called Paligui ng Buquid Puntang Piniping, of

an estero situated in the barrio of Biga of the pueblo of Bongabon, Nueva Ecija, and to cease to

obstruct or hinder the course of the water that should flow through the said branch.

In the written complaint presented on June 22, 1908, it is averred that the said canal

or estero was closed by the representatives of the defendants on the 1st of June of the year therein

stated, and that since then the water which it ordinarily carried had ceased to flow through it the

plaintiffs' lands thereby being deprived of irrigation. So that when the writ of injunction was issued

on the 26th of the said month, it was taken for granted that the estero or canal in question was

closed and that the water did not run through it, as occurred prior to the said 1st of June; and

counsel for the plaintiffs, in charging, by a writing of July 6, 1908, that contempt of court was

committed, stated that the defendants, according to the information he had, were still obstructing

and hindering the passage of the water, in disobedience of the writ of injunction.

The defendants having been notified to show cause why they should not be punished

for contempt of court and disobedience of the preliminary injunction issued by the court, answered

that since the 3d of July, the date when they were notified by the deputy sheriff, they had complied

with the prohibitory order and had not done anything whatever, by themselves or through others

in their representation, to the stream or ditch in question, which was closed by two tenants of one

of the defendants, Alejandro Cajucom, on June 1, 1908, as acknowledged by said tenants.

The writ issued by the court contained no order instructing the defendants to raise or

remove the obstructions that prevented the water from flowing through the said canal or ditch.

The canal was obstructed and closed on June 1st, and when the persons who closed it

were notified on July 3 that they should abstain from performing any act whatever tending to

obstruct and prevent the flow of water, the canal or ditch still remained closed, and the record

shows no proof that it was afterwards opened to the passage of water, nor that, after the

defendants had been notified of the injunction, they again closed it. The fact that the latter failed

to remove the obstruction they had placed in the said canal or estero for the purpose of preventing

the passage of the water, since they were not ordered so to do by the judicial writ, is not sufficient

to make them liable for contempt of court.

The act of the closing of the canal occurred prior to the issuance of the writ, and, since a

thing that has already been done can not be prohibited, by the mere fact of there not having been

done what was not ordered in the writ it can not be held that a judicial order was disobeyed and

willfully disregarded.

Section 162 of the Code of Civil Procedure prescribes:

"An injunction is a writ or order requiring a person to refrain from a

particular act."

The said writ prohibited the performance of any act that would obstruct, close, or

hinder the course of the water through the Piniping canal or creek, when it was already obstructed-

and closed; and as the removal of the impediment or obstruction was not ordered, the defendants

were not obliged to perform any particular act, and their inaction in leaving the canal closed does

not constitute contempt of court, as they did not violate any judicial prohibition.

The record shows that the prohibition was issued after the closing of the canal; hence, if

the defendants did not remove the obstruction, they disobeyed no order. In the syllabus of

decision No. 1697, Municipal council of Santa Rosa vs. Provincial Board of La Laguna (3 Phil. Rep.,

206), the rule was laid down that the commission of an act already done can not be enjoined. To

say that it could, would be nonsense.

THE MAIN ISSUE.

On January 28, 1909, the plaintiffs filed an amended complaint, with the permission of

the court, wherein they alleged that certain of them named Maria Marcelo, Crisanto Rubio, Alipio

Español or Estañol, Marcelo Mantile, Adriano Español or Estañol, Sebastian Bancod, Claudio

Angeles, Diego Santiago, Raymundo Santiago, Anacleto de los Reyes, Rafael Mendoza, Clemente

Alivia, Marcelino Fajardo, and Segundo Ramos had been, on or about June 1, 1908, and were at the

time, the proprietors and owners of rice lands situated in the barrio of Biga of the pueblo of

Bongabon, and that the other plaintiffs were planters and cultivators of some portions of the said

lands; that (following the statement in the complaint as to the boundaries or adjacent lands of each

of their respective properties) the said Paligui ng Buquid Puntang Piniping estero or creek existed

and had always existed in the aforementioned barrio; that water flowed through it on or about

June 1, 1908, and the plaintiffs used that water in the cultivation of their above-mentioned lands;

that, on or about the date aforesaid, the defendants, by themselves and through their agents and

representatives, obstructed and closed the mouth of the estero in such manner that the lands

described were deprived of the water that had flowed and should flow through the said estero;

that, on or about the 4th of October of the same year before mentioned, the continual heavy rains

and high floods carried away the obstruction in the said Paligui ng Buquid Puntang Piniping estero;

that, in view of the statements made by the defendants, they believed that the latter would again

close the estero in order to obstruct the passage of the water to their (the plaintiffs') properties;

and that the plaintiffs, through the closing of the saidestero or creek, suffered losses and damages

in the following amounts: Maria Marcelo, P1,500; Crisanto Rubio, P250; Alipio Español, P75;

Marcelo Mantile, P2,500; Adriano Español, P75; Sebastian Bancod, P400; Gregorio Corpus, P150;

Claudio Angeles, P250; Doroteo Dacuno, P250; Fernando Polintan, P250; Maximino Fajardo, P200;

Catalino Rubio, P300; Alejandro Caisip, P270; Diego Santiago, P800; Eugenio Ronquillo, P486;

Raymundo Santiago, P650; Simeon [Simon] de la Cruz, P480; Anacleto de los Reyes, P180; Rafael

Mendoza, P300; Marcelino Fajardo, P340; Tomas Marcelo, P270; Inocencio Santiago, P375; Eugenio

Angeles, P375; Geronimo Rojas, P135; Segundo Ramos, P390, and Clemente Alivia, P219; and the

complaint concluded by asking the court to render judgment against the defendants, and, at the

termination of the trial, to issue a perpetual injunction enjoining them from closing the

said estero or creek, or in any manner obstructing the course of the water therein, and

furthermore, to sentence them to pay to the plaintiffs the losses and damages suffered by them,

and the costs of the suit.

On February 11, 1909, the defendants' counsel, answering the amended complaint,

made a general denial of each and all the allegations of the said complaint and alleged, as a special

defense, that the irrigation canal in question belonged to the defendants; that the mouth of the

said Paligui ng Buquid Puntang Piniping canal did not previously exist and was opened only at the

request of Marcelo Mantile; and that the plaintiffs' lands were provided with another irrigation

ditch independent of the one herein concerned. Said counsel therefore prayed that his clients be

absolved from the complaint, that the irrigation canal in question be declared to belong to the

defendants, and that the plaintiffs be sentenced to pay the costs.

On April 26, 1909, the case came up for hearing, testimony was adduced by both parties

and the court, after consideration of the evidence, rendered judgment on July 26, 1909, enjoining

the defendant Alejandro Cajucom from closing the Paligui ng Buquid Puntang Piniping estero or

creek, or in any manner obstructing the course of the water running therein. The preliminary

injunction issued against the defendant, his agents and representatives, by the Hon. Judge

Estanislao Yusay, was thus rendered perpetual, and the said defendant was sentenced to pay the

following sums, for losses and damages: To Maria Marcelo, P196.50; Crisanto Rubio, P139.50;

Alipio Español, P75; Marcelo Mantile, P800.25; Adriano Español, P75; Sebastian Bancod, P142.50;

Gregorio Corpus, P90.12; Claudio Angeles, P97.87; Doroteo Dacuno, P90.37; Fernando Polintan,

P80.87; Maximino Fajardo, P75.37; Alejandro Caisip, P75; Catalino Rubio, P84; Diego Santiago,

P131.25; Eugenio Ronquillo, P131.25; Raymundo Santiago, P540; Simon de la Cruz, P135; Anacleto

de los Reyes, P90; Rafael Mendoza, P195; Marcelino Fajardo, P180; Geronimo Rojas, P90; Segundo

Ramos, P210; Clemente Alivia, P109.50, and to Tomas Marcelo, Inocencio Santiago, and Eugenio

Angeles, tenants-on-shares of Maria Marcelo, the sum of P196.50. Counsel for the defendant,

Alejandro Cajucom, excepted to this judgment and prayed for a new trial on the grounds that the

said judgment was not sufficiently supported by the weight of the evidence and was contrary to

law. This motion was overruled by an order of September 2, and exception thereto was taken by

the appellant who duly filed the proper bill of exceptions, which was certified to and forwarded to

the clerk of this court.

Counsel for the appellants having been authorized, by an order of February 12, 1910, to

present the facts relative to the charge of contempt of court, as an incident of the main issue, and

upon his petition, the Supreme Court ruled that the bill of exceptions relative to the matter of the

contempt of court, together with the evidence therewith submitted, should be held to be an

integral part of the said main issue with the bill of exceptions thereto pertaining.

With regard to the main issue of this suit, the object of the plaintiffs is to obtain from

the court an order decreeing the former preliminary injunction to be perpetual. This claim, which is

opposed by the defendants, presupposes a right on the part of the plaintiffs to use and profit by

the water that runs through the Piniping estero or creek, to the benefit of their respective

agricultural lands.

The law applicable to the present contention is found in articles 407 to 425 of the Civil

Code, in the last of which it is provided:

"In all that is not expressly determined by the provisions of this

chapter, the special law of waters shall be observed."

This law is that of August 3, 1866, which was extended to the Philippine Islands by the

royal decree of the 8th of the same month and year and published with the Decreto de cumplase of

the Gobierno General of September 21, 1871, in the Official Gazette of the 24th of the same month

and year, on account of the subsequent law of June 13, 1879, in force in Spain, not having been

promulgated in these Islands. It contains, among others, the provisions found in articles 30 to 65

applicable to the case at bar.

The scant data and the insufficiency of the evidence offered by the record, preclude this

court's deciding, in accordance with the law, upon the pleadings and the proofs submitted by the

parties, the several issues raised in the course of this litigation, and for this reason we esteem it

proper that the case be reopened for the conduct of the following proceedings:

1. An ocular inspection shall be made by the justice or auxiliary justice of the peace,

attended by expert surveyors — one of which latter to be appointed by each of the parties to the

suit — for the purpose of determining whether the water from the estero named Sapang Cabasan

issues from a spring called Sibul; whether this spring and the said estero are upon the land owned

by the defendants, and, if not, who is the owner of the land on which they are located, and

whether he is a third person who is not a party to this suit.

2. Whether the creek, estero, or ditch, named Paligui Puntang Piniping, is connected or

united with the Sapang Cabasan estero, and whether the said Puntang Piniping creek or canal

crosses the lands of defendants or those of the plaintiffs.

3. To ascertain at what point or place either of the said Cabasan or Piniping canals was

closed; whether the closure was made on the land of defendants or on that of the plaintiffs, and

whether, on account of such closure, the course of the water was completely obstructed and

prevented from entering the lands of the plaintiffs.

4. Whether the Paligui Puntang Piniping creek, canal, or estero passes through

the sitio called Pinagtubuhan, or receives water from some other spring, creek, or canal, stating the

name of the same and whether it is distinct and separate from the Sapang Cabasan estero.

A rough sketch must be drawn that shall show the location of the lands of the

defendants and those of the plaintiffs; the points where the said twoesteros and the Sibul Spring

are situated; the exact point where the closure of the canal was effected; which of the lands are

situated in high places and which in low places; and in what direction the water flows after rising

from the Sibul Spring and entering into the Sapang Cabasan estero.

5. An investigation and report shall be made. as to whether the Puntang Piniping canal

or estero is of recent formation and was excavated but a short time ago, or whether, by the signs

observed on its banks, it appears that it was opened many years ago, stating since when it has been

opened.

6. Investigation and report shall be made as to whether the plaintiffs' lands receive

irrigation water from any spring, estero, or creek, other than those before mentioned, and, if so,

their names and the distances between them, and the latter shall be noted on the rough sketch

drawn by the surveyors.

From the result obtained from these proceedings, and the rough sketch drawn by the

experts, we shall easily be able to arrive at a conclusion as to whether the defendants had or had

not a right to close the Cabasan or Puntang Piniping creek, thus depriving the

plaintiffs' sementeras of the water flowing through it, or whether, on the other hand, the plaintiffs

had a right to the enjoyment and use of such water for the irrigation of their lands, and whether,

through the want of the same, they suffered losses and damages by fault of the said defendants.

For the foregoing reasons, justice demands, in our opinion, that we find that the

defendants Alejandro and Timoteo Cajucom did not commit any act whatever constituting

contempt of a judicial order. The order of August 20, 1908 is reversed. No special finding is made as

to the costs of the incidental proceedings.

The judgment appealed from, of July 26, 1909, is set aside, and the record of the case

shall be remanded, with a certified copy of this decision, to the court below in order that the judge

may proceed with a rehearing and conduct the proceedings hereinbefore specified, and in due

season render judgment wherein he shall take into account the evidence already contained in the

record, together with such new evidence as may be admitted, in accordance with this decision and

in harmony with the law. So ordered.

EN BANC

[G.R. No. L-5656. March 24, 1954.]

JUAN G. FELICIANO, ET AL., petitioners-appellants, vs. MARIANO ALIPIO, ET

AL., respondents-appellees.

K. V. Faylona for appellants.

Solicitor General Juan R. Liwag and Solicitor Felix V. Makasiar for appellees.

SYLLABUS

ACTION FOR DECLARATORY RELIEF CONSIDERED AS ONE FOR PROHIBITION. — Although

the petition filed against public Officers is for declaratory relief, yet if it prays also for the issuance

of a permanent injunction from carrying out the provisions of a Department Circular on grounds of

unconstitutionality, the same is equivalent to an action for prohibition and the court should not

dismiss the petition but should proceed with the case considering the action as one for prohibition.

D E C I S I O N

JUGO, J p:

On September 21, 1951, the Director of Public Schools issued Circular No. 20, series of

1951, which reads as follows:

"PUBLIC SCHOOL PUPILS AND STUDENTS MAY BE REQUIRED TO SALUTE THE

FLAG"

To Division Superintendents:

"1. Quoted in the inclosure to this Circular for the information and

guidance of school officials and teachers, is Opinion No. 370, series of 1951, of

the Honorable, the Secretary of Justice, 'regarding the power of the Director of

Public Schools to require all pupils and students in public schools to salute the

flag, on pain of being barred from admission to, or expelled from, such schools.'

"This Circular revokes Circular No. 33, series of 1948.

"(Sgd.) BENITO PANGILINAN

"Director of Public Schools"

The petitioners filed before the Court of First Instance of Tarlac a petition for

declaratory relief and mandatory injunction, praying that the above circular be declared null and

void, and that preliminary injunction be issued prohibiting the respondents Mariano Alipio and

other teachers of the Malacampa Elementary School, and the Director of Public Schools, from

carrying out the provisions of said circular, and that, after trial, the preliminary injunction be made

permanent.

The Provincial Fiscal of Tarlac filed a motion to dismiss the petition on the ground that

under section 2, Rule 66, it was not a case in which a declaratory judgment could be rendered. The

court dismissed the case. Hence, the petitioners have appealed to this Court.

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

granted in this case, because in the petition presented in the court below, in addition to the

declaratory judgment, the petitioners prayed for the issuance of a permanent injunction, which is

equivalent to an action for prohibition against public officers, and as such we consider it, without

passing at this stage of the proceedings on the merits of said action.

In the present case, we cannot consider the question as to the constitutionality of the

circular as this will be decided after the regular hearing.

In view of the foregoing, the order of the court dismissing the petition is reversed, and

the case returned to the Court of First Instance of Tarlac for further proceedings as in an action for

prohibition, without costs. So ordered.

FIRST DIVISION

[G.R. No. 168008. August 17, 2011.]

PETRONILO J. BARAYUGA, petitioner, vs. ADVENTIST UNIVERSITY OF THE

PHILIPPINES, THROUGH ITS BOARD OF TRUSTEES, REPRESENTED BY ITS

CHAIRMAN, NESTOR D. DAYSON, respondents.

DECISION

BERSAMIN, J p:

The injunctive relief protects only a right in esse. Where the plaintiff does not demonstrate that he has

an existing right to be protected by injunction, his suit for injunction must be dismissed for lack of a

cause of action.

The dispute centers on whether the removal of the petitioner as President of respondent Adventist

University of the Philippines (AUP) was valid, and whether his term in that office was five years, as he

insists, or only two years, as AUP insists.

We hereby review the decision promulgated on August 5, 2004, 1 by which the Court of Appeals (CA)

nullified and set aside the writ of preliminary injunction issued by the Regional Trial Court (RTC), Branch

21, in Imus, Cavite to prevent AUP from removing the petitioner.

Antecedents

AUP, a non-stock and non-profit domestic educational institution incorporated under Philippine laws on

March 3, 1932, was directly under the North Philippine Union Mission (NPUM) of the Southern Asia

Pacific Division of the Seventh Day Adventists. During the 3rd Quinquennial Session of the General

Conference of Seventh Day Adventists held from November 27, 2000 to December 1, 2000, the NPUM

Executive Committee elected the members of the Board of Trustees of AUP, including the Chairman and

the Secretary. Respondent Nestor D. Dayson was elected Chairman while the petitioner was chosen

Secretary.

On January 23, 2001, almost two months following the conclusion of the 3rd Quinquennial Session, the

Board of Trustees appointed the petitioner President of AUP. 2 During his tenure, or from November 11

to November 13, 2002, a group from the NPUM conducted an external performance audit. The audit

revealed the petitioner's autocratic management style, like making major decisions without the approval

or recommendation of the proper committees, including the Finance Committee; and that he had

himself done the canvassing and purchasing of materials and made withdrawals and reimbursements for

expenses without valid supporting receipts and without the approval of the Finance Committee. The

audit concluded that he had committed serious violations of fundamental rules and procedure in the

disbursement and use of funds. cTDaEH

The NPUM Executive Committee and the Board of Trustees decided to immediately request the services

of the General Conference Auditing Service (GCAS) to determine the veracity of the audit findings.

Accordingly, GCAS auditors worked in the campus from December 4 to December 20, 2002 to review the

petitioner's transactions during the period from April 2002 to October 2002. On December 20, 2002,

CGAS auditors reported the results of their review, and submitted their observations and

recommendations to the Board of Trustees.

Upon receipt of the CGAS report that confirmed the initial findings of the auditors on January 8, 2003,

the NPUM informed the petitioner of the findings and required him to explain.

On January 15, 2003, Chairman Dayson and the NPUM Treasurer likewise informed the petitioner inside

the NPUM office on the findings of the auditors in the presence of the AUP Vice-President for Financial

Affairs, and reminded him of the possible consequences should he fail to satisfactorily explain the

irregularities cited in the report. He replied that he had already prepared his written explanation.

The Board of Trustees set a special meeting at 2 p.m. on January 22, 2003. Being the Secretary, the

petitioner himself prepared the agenda and included an item on his case. In that meeting, he provided

copies of the auditors' report and his answers to the members of the Board of Trustees. After hearing his

explanations and oral answers to the questions raised on issues arising from the report, the members of

the Board of Trustees requested him to leave to allow them to analyze and evaluate the report and his

answers. Despite a long and careful deliberation, however, the members of the Board of Trustees

decided to adjourn that night and to set another meeting in the following week considering that the

meeting had not been specifically called for the purpose of deciding his case. The adjournment would

also allow the Board of Trustees more time to ponder on the commensurate disciplinary measure to be

meted on him.

On January 23, 2003, Chairman Dayson notified the petitioner in writing that the Board of Trustees

would hold in abeyance its deliberation on his answer to the auditors' report and would meet again at

10:00 a.m. on January 27, 2003. Chairman Dayson indicated that some sectors in the campus had not

been properly represented in the January 22, 2003 special meeting, and requested the petitioner as

Secretary to ensure that all sectors are duly represented in the next meeting of the Board of Trustees. 3

In the January 27, 2003 special meeting, the petitioner sent a letter to the Board of Trustees. The

members, by secret ballot, voted to remove him as President because of his serious violations of

fundamental rules and procedures in the disbursement and use of funds as revealed by the special audit;

to appoint an interim committee consisting of three members to assume the powers and functions of the

President; and to recommend him to the NPUM for consideration as Associate Director for Secondary

Education. 4

On January 28, 2003, the petitioner was handed inside the NPUM office a letter, together with a copy of

the minutes of the special meeting held the previous day. In turn, he handed to Chairman Dayson a letter

requesting two weeks within which to seek a reconsideration, stating that he needed time to obtain

supporting documents because he was then attending to his dying mother. 5

In the evening of January 28, 2003, the Board of Trustees, most of whose members had not yet left

Cavite, reconvened to consider and decide the petitioner's request for reconsideration. During the

meeting, he made an emotional appeal to allow him to continue as President, promising to immediately

vacate his office should he again commit any of the irregularities cited in the auditors' report. He added

that should the Board of Trustees not favor his appeal, he would settle for a retirement package for him

and his wife and would leave the church. AaEcDS

The Board of Trustees denied the petitioner's request for reconsideration because his reasons were not

meritorious. Board Member Elizabeth Role served the notice of the denial on him the next day, but he

refused to receive the notice, simply saying Alam ko na yan. 6

The petitioner later obtained a copy of the inter-school memorandum dated January 31, 2003 informing

AUP students, staff, and faculty members about his relief as President and the appointment of an interim

committee to assume the powers and duties of the President.

On February 4, 2003, the petitioner brought his suit for injunction and damages in the RTC, with prayer

for the issuance of a temporary restraining order (TRO), impleading AUP and its Board of Trustees,

represented by Chairman Dayson, and the interim committee. His complaint alleged that the Board of

Trustees had relieved him as President without valid grounds despite his five-year term; that the Board

of Trustees had thereby acted in bad faith; and that his being denied ample and reasonable time to

present his evidence deprived him of his right to due process. 7

The suit being intra-corporate and summary in nature, the application for TRO was heard by means of

affidavits. In the hearing of February 7, 2003, the parties agreed not to harass each other. The RTC used

the mutual agreement as its basis to issue a status quo order on February 11, 2003. 8

In their answer with counterclaim, the respondents denied the allegations of the petitioner, and averred

that he had been validly removed for cause; and that he had been granted ample opportunity to be

heard in his defense. 9

Order of the RTC

On March 21, 2003, after summary hearing, the RTC issued the TRO enjoining the respondents and

persons acting for and in their behalf from implementing the resolution removing him as President

issued by the Board of Trustees during the January 27, 2003 special meeting, and enjoining the interim

committee from performing the functions of President of AUP. The RTC did not require a bond. 10

After further hearing, the RTC issued on April 25, 2003 its controversial order, 11 granting the

petitioner's application for a writ of preliminary injunction. It thereby resolved three issues,

namely: (a) whether the special board meetings were valid; (b) whether the conflict-of-interest provision

in the By-Laws and Working Policy was violated; and (c) whether the petitioner was denied due process.

It found for the petitioner upon all the issues. On the first issue, it held that there was neither a written

request made by any two members of the Board of Trustees nor proper notices sent to the members as

required by AUP's By-Laws, which omissions, being patent defects, tainted the special board meetings

with nullity. Anent the second issue, it ruled that the purchase of coco lumber from his balae (i.e.,

mother-in-law of his son) was not covered by the conflict-of-interest provision, for AUP's Model

Statement of Acceptance form mentioned only the members of the immediate family and did not extend

to the relationship between him and his balae. On the third issue, it concluded that he was deprived of

due process when the Board of Trustees refused to grant his motion for reconsideration and his request

for additional time to produce his evidence, and instead immediately implemented its decision by

relieving him from his position without according him the treatment befitting a university President.

Proceedings in the CA

With the Interim Rules for Intra-Corporate Controversies prohibiting a motion for reconsideration, the

respondents forthwith filed a petition for certiorari in the CA, 12 contending that the petitioner's

complaint did not meet the requirement that an injunctive writ should be anchored on a legal right; and

that he had been merely appointed, not elected, as President for a term of office of only two years, not

five years, based on AUP's amended By-Laws. AHcaDC

In the meanwhile, on September 17, 2003, the petitioner filed a supplemental petition in the

CA, 13 alleging that after the commencement of his action, he filed in the RTC an urgent motion for the

issuance of a second TRO to enjoin the holding of an AUP membership meeting and the election of a new

Board of Trustees, capitalizing on the admission in the respondents' answer that he had been elected in

2001 to a five-year term of office. He argued that the admission estopped the respondents from insisting

to the contrary.

The respondents filed in the CA a verified urgent motion for a TRO and to set a hearing on the

application for preliminary injunction to enjoin the RTC from implementing the assailed order granting a

writ of preliminary injunction and from further proceeding in the case. The petitioner opposed the

motion for TRO, but did not object to the scheduling of preliminary injunctive hearings.

On February 24, 2004, the CA issued a TRO to enjoin the RTC from proceeding for a period of 60 days,

and declared that the prayer for injunctive relief would be resolved along with the merits of the main

case.

The petitioner sought a clarification of the TRO issued by the CA, considering that his cause of action in

his petitions to cite the respondents in indirect contempt dated March 5, 2004 and March 16, 2004 filed

in the RTC involved the election of a certain Robin Saban as the new President of AUP in blatant and

malicious violation of the writ of preliminary injunction issued by the RTC. In clarifying the TRO, the CA

explained that it did not go beyond the reliefs prayed for in the respondents' motion for TRO and

preliminary injunctive hearings.

On August 5, 2004, the CA rendered its decision nullifying the RTC's writ of preliminary injunction. It

rejected the petitioner's argument that Article IV, Section 3 of AUP's Constitution and By-Laws and

Working Policy of the Conference provided a five-year term for him, because the provision was

inexistent. It ruled that the petitioner's term of office had expired on January 22, 2003, or two years from

his appointment, based on AUP's amended By-Laws; that, consequently, he had been a mere de 

facto officer appointed by the members of the Board of Trustees; and that he held no legal right

warranting the issuance of the writ of preliminary injunction.

The CA declared that the rule on judicial admissions admitted of exceptions, as held in National Power 

Corporation   v.   Court   of   Appeals, 14 where the Court held that admissions were not evidence that

prevailed over documentary proof; that the petitioner's being able to answer the results of the special

audit point-by-point belied his allegation of denial of due process; that AUP was the party that stood to

be injured by the issuance of the injunctive writ in the form of a "demoralized administration, studentry,

faculty and staff, sullied reputation, and dishonest leadership;" and that the assailed RTC order sowed

confusion and chaos because the RTC thereby chose to subordinate the interest of the entire AUP

community to that of the petitioner who had been deemed not to have satisfied the highest ideals

required of his office.

Issues

Undeterred, the petitioner has appealed, contending that:

I.

THE COURT OF APPPEALS HAS DECIDED CONTRARY TO LAW AND

JURISPRUDENCE WHEN IT RULED THAT THE EXTRAORDINARY WRIT

OF CERTIORARI APPLIED IN THE CASE AT BAR.

II.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT

IN ACCORD WITH THE ESTABLISHED LAW AND JURISPRUDENCE THAT

"ADMISSIONS, VERBAL OR WRITTEN, MADE BY A PARTY IN THE COURSE OF THE

PROCEEDINGS IN THE SAME CASE, DOES NOT REQUIRE PROOF," BY REQUIRING

PETITIONER BARAYUGA TO PRESENT EVIDENCE THAT HIS TERM AS PRESIDENT

OF AUP IS FOR FIVE (5) YEARS. AIDSTE

III.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT

IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT RULED THAT

PETITIONER BARAYUGA HAS ONLY A TERM OF TWO (2) YEARS INSTEAD OF FIVE

(5) YEARS AS CLEARLY ADMITTED BY PRIVATE RESPONDENT AUP IN ITS

ANSWER.

IV.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT

IN ACCORD WITH LAW AND JURISPRUDENCE BY SOLELY RELYING ON THE CASE

OF NATIONAL POWER CORPORATION v. COURT OF APPEALS, WHICH INVOLVE

FACTS DIFFERENT FROM THE PRESENT CASE.

V.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT

IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT UNJUSTIFIABLY

ALLOWED THE WAIVER OF NOTICE FOR THE SPECIAL MEETING OF THE BOARD

OF TRUSTEES.

VI.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT

IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT ERRONEOUSLY

CONCLUDED THAT PETITIONER BARAYUGA WAS MERELY OCCUPYING THE

POSITION OF AUP PRESIDENT IN A HOLD-OVER CAPACITY. TDSICH

The petitioner argues that the assailed RTC order, being supported by substantial evidence, accorded

with law and jurisprudence; that his tenure as President under the Constitution, By-Laws and the

Working Policy of the Conference was for five years, contrary to the CA's findings that he held the

position in a hold-over capacity; that instead, the CA should have applied the rule on judicial admission,

because the holding in National Power Corporation v. Court of Appeals, cited by the CA, did not apply,

due to AUP not having presented competent evidence to prove that he had not been elected by the

Board of Trustees as President of AUP; and that his removal during the special board meeting that was

invalidly held for lack of notice denied him due process.

AUP counters that:

I

PETITIONER IS NOT AN ELECTED TRUSTEE OF THE AUP BOARD, NOR WAS (HE)

ELECTED AS PRESIDENT, AND AS SUCH, HE CAN CLAIM NO RIGHT TO THE AUP

PRESIDENCY, BEING TWICE DISQUALIFIED BY LAW, WHICH RENDERS MOOT AND

ACAMEDIC ALL OF THE ARGUMENTS IN THIS PETITION.

II

EVEN IF WE FALSELY ASSUME EX   GRATIA THAT PETITIONER IS AN ELECTED

TRUSTEE AND ELECTED PRESIDENT, THE TWO (2) YEAR TERM PROVIDED IN

AUP'S BY-LAWS — REQUIRED BY THE CORPORATION CODE AND APPROVED BY

THE SEC — IS WHAT GOVERNS THE INTRA-CORPORATE CONTROVERSY, THE

AUP'S ADMISSION IN ITS ANSWER THAT HE HAS A FIVE (5) YEAR TERM BASED

ON HIS INVOKED SAMPLE CONSTITUTION, BY-LAWS AND POLICY OF THE

SEVENTH DAY ADVENTIST NOTWITHSTANDING.

III

PURSUANT TO THE RULES AND SETTLED JURISPRUDENCE, THE ADMISSION IN

THE ANSWER IS NOT EVEN PREJUDICIAL AT ALL.

IV

EVEN IF WE FALSELY ASSUME, JUST FOR THE SAKE OF ARGUMENT, THAT THE

PETITIONER HAD A FIVE (5) YEAR TERM AS UNIVERSITY PRESIDENT, HE WAS

NONETHELESS VALIDLY TERMINATED FOR LOSS OF CONFIDENCE, GIVEN THE

NUMEROUS ADMITTED ANOMALIES HE COMMITTED.

V

PETITIONER CANNOT COMPLAIN THAT NOTICES OF THE BOARD MEETING WERE

NOT SENT TO ALL "THE TWENTY FIVE (25) TRUSTEES OF THE AUP BOARD",

SINCE: [1] AS THE AUP SECRETARY, IT WAS HE WHO HAD THE DUTY TO SEND

THE NOTICES; [2] WORSE, HE ATTENDED AND EXHAUSTIVELY DEFENDED HIS

WRITTEN ANSWER IN THE AUP BOARD OF TRUSTEES MEETING, THUS, WAIVING

ANY "NOTICE OBJECTION"; [3] WORST OF ALL, HIS AFTERTHOUGHT OBJECTION

IS DECEPTIVELY FALSE IN FACT.

The decisive question is whether the CA correctly ruled that the petitioner had no legal right to the

position of President of AUP that could be protected by the injunctive writ issued by the RTC.

Ruling

We deny the petition for review for lack of merit. cAHITS

1.

Petition is already moot

The injunctive writ issued by the RTC was meant to protect the petitioner's right to stay in office as

President. Given that the lifetime of the writ of preliminary injunction was co-extensive with the duration

of the act sought to be prohibited, 15 this injunctive relief already became moot in the face of the

admission by the petitioner himself, through his affidavit, 16 that his term of office premised on his

alleged five-year tenure as President had lasted only until December 2005. In short, the injunctive writ

granted by the RTC had expired upon the end of the term of office (as posited by him).

The mootness of the petition warranted its denial. When the resolution of the issue submitted in a case

has become moot and academic, and the prayer of the complaint or petition, even if granted, has

become impossible of enforcement — for there is nothing more to enjoin — the case should be

dismissed.17 No useful purpose would then be served by passing on the merits of the petition, because

any ruling could hardly be of any practical or useful purpose in the premises. It is a settled rule that a

court will not determine a moot question or an abstract proposition, nor express an opinion in a case in

which no practical relief can be granted. 18 Indeed, moot and academic cases cease to present any

justiciable controversies by virtue of supervening events, 19 and the courts of law will not determine

moot questions, 20 for the courts should not engage in academic declarations and determine a moot

question. 21

2.

RTC acted in patently grave abuse of discretion

in issuing the TRO and writ of injunction

Nonetheless, the aspect of the case concerning the petitioner's claim for damages has still to be decided.

It is for this reason that we have to resolve whether or not the petitioner had a right to the TRO and the

injunctive writ issued by the RTC.

A valid writ of preliminary injunction rests on the weight of evidence submitted by the plaintiff

establishing: (a) a present and unmistakable right to be protected; (b) the acts against which the

injunction is directed violate such right; and (c) a special and paramount necessity for the writ to prevent

serious damages. 22 In the absence of a clear legal right, the issuance of the injunctive writ constitutes

grave abuse of discretion 23 and will result to nullification thereof. Where the complainant's right is

doubtful or disputed, injunction is not proper. The possibility of irreparable damage sans proof of an

actual existing right is not a ground for a preliminary injunction. 24

It is clear to us, based on the foregoing principles guiding the issuance of the TRO and the writ of

injunction, that the issuance of the assailed order constituted patently grave abuse of discretion on the

part of the RTC, and that the CA rightly set aside the order of the RTC.

To begin with, the petitioner rested his claim for injunction mainly upon his representation that he was

entitled to serve for five years as President of AUP under the Constitution, By-Laws and Working Policy of

the General Conference of the Seventh Day Adventists (otherwise called the  Bluebook). All that he

presented in that regard, however, were mere photocopies of pages 225-226 of the Bluebook, which

read:

Article IV-Board of Directors

Sec. 1.This school operated by the _____________ Union Conference/Mission

of Seventh-Day Adventists shall be under the direct control of a board of

directors, elected by the constituency in its quinquennial sessions. The board of

directors shall consist of 15 to 21 members, depending on the size of the

institution. Ex officio members shall be the union president as chairperson, the

head of the school as secretary, the union secretary, the union treasurer, the

union director of education, the presidents of the conferences/missions within

the union. . . . . DICcTa

Sec. 2.The term of office of members of the board of directors shall be five

years to coincide with the _________________ Union Conference/Mission

quinquennial period.

Sec. 3.The duties of the board of directors shall be to elect quinquenially the

president, . . . .

Yet, the document had no evidentiary value. It had not been officially adopted for submission to and

approval of the Securities and Exchange Commission. It was nothing but an unfilled model form. As such,

it was, at best, only a private document that could not be admitted as evidence in judicial proceedings

until it was first properly authenticated in court.

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

private document, to wit:

Section 20.Proof of private document. — Before any private document offered

as authentic is received in evidence, its due execution and authenticity must be

proved either:

(a)By anyone who saw the document executed or written; or

(b)By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed

to be. (21 a)

For the RTC to base its issuance of the writ of preliminary injunction on the mere photocopies of the

document, especially that such document was designed to play a crucial part in the resolution of the

decisive issue on the length of the term of office of the petitioner, was gross error.

Secondly, even assuming that the petitioner had properly authenticated the photocopies of

the Bluebook, the provisions contained therein did not vest the right to an office in him. An unfilled

model form creates or establishes no rights in favor of anyone.

Thirdly, the petitioner's assertion of a five-year duration for his term of office lacked legal basis.

Section 108 of the Corporation   Code determines the membership and number of trustees in an

educational corporation, viz.:

Section 108.Board of trustees. — Trustees of educational institutions organized

as educational corporations shall not be less than five (5) nor more than fifteen

(15): Provided, however, That the number of trustees shall be in multiples of

five (5).

Unless otherwise provided in the articles of incorporation or the by-laws, the

board of trustees of incorporated schools, colleges, or other institutions of

learning shall, as soon as organized, so classify themselves that the term of

office of one-fifth (1/5) of their number shall expire every year.Trustees

thereafter elected to fill vacancies, occurring before the expiration of a

particular term, shall hold office only for the unexpired period. Trustees

elected thereafter to fill vacancies caused by expiration of term shall hold

office for five (5) years. A majority of the trustees shall constitute a quorum for

the transaction of business. The powers and authority of trustees shall be

defined in the by-laws.

For institutions organized as stock corporations, the number and term of

directors shall be governed by the provisions on stock corporations.

The second paragraph of the provision, although setting the term of the members of the Board of

Trustees at five years, contains a proviso expressly subjecting the duration to what is otherwise 

provided in the articles of incorporation or by-laws of the educational corporation. That contrary

provision controls on the term of office. 25

In AUP's case, its amended By-Laws provided the term of the members of the Board of Trustees, and the

period within which to elect the officers, thusly:

Article I

Board of Trustees

Section 1.At the first meeting of the members of the corporation, and

thereafter every two years, a Board of Trustees shall be elected. It shall be

composed of fifteen members in good and regular standing in the Seventh-day

Adventist denomination, each of whom shall hold his office for a term of two

years, or until his successor has been elected and qualified. If a trustee ceases

at any time to be a member in good and regular standing in the Seventh-day

Adventist denomination, he shall thereby cease to be a trustee.

xxx xxx xxx

Article IV

Officers

Section 1.Election of officers. — At their organization meeting, the members of

the Board of Trustees shall elect from among themselvesa Chairman, a Vice-

Chairman, a President, a Secretary, a Business Manager, and a Treasurer. The

same persons may hold and perform the duties of more than one office,

provided they are not incompatible with each other. 26 HICSaD

In light of foregoing, the members of the Board of Trustees were to serve a term of office of only two

years; and the officers, who included the President, were to be elected from among the members of the

Board of Trustees during their organizational meeting, which was held during the election of the Board of

Trustees every two years. Naturally, the officers, including the President, were to exercise the powers

vested by Section 2 of the amended By-Laws for a term of only two years, not five years.

Ineluctably, the petitioner, having assumed as President of AUP on January 23, 2001, could serve for only

two years, or until January 22, 2003. By the time of his removal for cause as President on January 27,

2003, he was already occupying the office in a hold-over capacity, and could be removed at any time, 

without cause, upon the election or appointment of his successor. His insistence on holding on to the

office was untenable, therefore, and with more reason when one considers that his removal was due to

the loss of confidence on the part of the Board of Trustees.

4.

Petitioner was not denied due process

The petitioner complains that he was denied due process because he was deprived of the right to be

heard and to seek reconsideration; and that the proceedings of the Board of Trustees were illegal due to

its members not being properly notified of the meeting.

Still, the petitioner fails to convince us.

The requirements of due process in an administrative context are satisfied when the parties are afforded

fair and reasonable opportunity to explain their respective sides of the controversy, 27 for the essence of

due process is an opportunity to be heard. 28 Here, the petitioner was accorded the full opportunity to

be heard, as borne by the fact that he was granted the opportunity to refute the adverse findings

contained in the GCAS audit report and that the Board of Trustees first heard his side during the board

meetings before his removal. After having voluntarily offered his refutations in the proceedings before

the Board of Trustees, he should not now be permitted to denounce the proceedings and to plead the

denial of due process after the decision of the Board of Trustees was adverse to him.

Nor can his urging that the proceedings were illegal for lack of prior notification be plausible in light of

the fact that he willingly participated therein without raising the objection of lack of notification.

Thereby, he effectively waived his right to object to the validity of the proceedings based on lack of due

notice.29

5.

Conclusion

The removal of the petitioner as President of AUP, being made in accordance with the AUP Amended By-

Laws, was valid. With that, our going into the other issues becomes unnecessary. We conclude that the

order of the RTC granting his application for the writ of preliminary injunction was tainted with

manifestly grave abuse of discretion; that the CA correctly nullified and set aside the order; and that his

claim for damages, being bereft of factual and legal warrant, should be dismissed.

WHEREFORE, we DENY the petition for review on certiorari for lack of merit, and hereby DISMISS SEC

Case No. 028-03 entitled Dr. Petronilo Barayuga v. Nelson D. Dayson, et al.

The petitioner shall pay the cost of suit.

SO ORDERED.

SECOND DIVISION

[G.R. No. 183367. March 14, 2012.]

AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS GARCIA, and LYDIA

MARCIANO, petitioners, vs. MUNICIPALITY OF PADRE GARCIA BATANGAS

PROVINCE, respondent.

DECISION

SERENO, J p:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the Court

of Appeals (CA) Resolutions in CA-G.R. SP No. 102540 dated 26 March 2008 1 and 16 June 2008, which

denied petitioners' Motion for the issuance of a status quo order and Motion for issuance of a temporary

restraining order (TRO) and/or writ of preliminary injunction.

Statement of the Facts and the Case

In 1993, fire razed to the ground the old public market of respondent Municipality of Padre Garcia,

Batangas. The municipal government, through its then Municipal Mayor Eugenio Gutierrez, invited

petitioner Australian Professional Realty, Inc. (APRI) to rebuild the public market and construct a

shopping center.

On 19 January 1995, a Memorandum of Agreement (MOA) 2 was executed between petitioner APRI and

respondent, represented by Mayor Gutierrez and the members of the Sangguniang Bayan. Under the

MOA, APRI undertook to construct a shopping complex in the 5,000-square-meter area. In return, APRI

acquired the exclusive right to operate, manage, and lease stall spaces for a period of 25 years.

In May 1995, Victor Reyes was elected as municipal mayor of respondent. On 6 February 2003,

respondent, through Mayor Reyes, initiated a Complaint for Declaration of Nullity of Memorandum of

Agreement with Damages before the Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial

Region, Branch 87. The Complaint was docketed as Civil Case No. 03-004.

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

Complaint. However, the summons was returned unserved, as petitioners were no longer holding office

in the given address.

On 2 April 2003, a Motion for Leave of Court to Effect Service by Publication was filed by respondent

before the RTC and subsequently granted by the trial court.

On 24 November 2003, the RTC issued an Order declaring petitioners in default and allowing respondent

to present evidence ex parte. SETaHC

On 6 October 2004, a Decision was rendered by the RTC, which, after narrating the testimonial evidence

for respondent, stated:

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

petitioner manifested that he will file the formal offer of evidence in writing.

On July 19, 2004, counsel for the petitioner filed before this Court his Formal

Offer of Documentary Exhibits consisting of Exhibits "A" to "H", inclusive of

submarkings.

On August 18, 2004 an order was issued by the Court admitting all the exhibits

formally offered by the petitioner thru counsel and this case was ordered

submitted for resolution of the Court.

There is no opposition in the instant petition.

WHEREFORE, in view thereof, and finding the petition to be sufficient in form

and substance, it being supported by sufficient evidence, judgement (sic) is

hereby rendered in favor of the plaintiff as against the respondents as follows:

(a)The Memorandum of Agreement is hereby declared null and void for being

contrary to law and public policy, particularly R.A. 6957 and R.A.

7718;

(b)The respondents are hereby ordered to pay the amount of FIVE MILLION

PESOS (P5,000,000.00) in favor of the plaintiff for damages caused to

the latter;

(c)The structures found within the unfinished PADRE GARCIA SHOPPING

CENTER are hereby declared forfeited in favor of the Municipality of

Padre Garcia.

SO ORDERED. 3

There having been no timely appeal made, respondent filed a Motion for Execution of Judgment, which

was granted by the RTC. A Writ of Execution was thus issued on 15 July 2005.

After learning of the adverse judgment, petitioners filed a Petition for Relief from Judgment dated 18 July

2005. This Petition was denied by the RTC in an Order dated 15 June 2006. In another Order dated 14

February 2008, the trial court denied the Motion for Reconsideration.

Petitioners later filed before the CA a Petition for Certiorari and Prohibition dated 28 February 2008,

docketed as CA-G.R. SP No. 102540. On 7 March 2008, petitioners filed before the CA a Motion for the

Issuance of Status Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ of

Preliminary Injunction. 4 The motion prayed for an order to restrain the RTC from "further proceeding

and issuing any further Order, Resolution, Writ of Execution, and any other court processes" 5 in the case

before it.

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

After a careful evaluation of petitioners' Motion for Issuance of Status 

Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ

of Preliminary Injunction, We find that the matter is not of extreme urgency and

that there is no clear and irreparable injury that would be suffered by the

petitioners if the prayer for the issuance of a Status  Quo Order, Temporary

Restraining Order (TRO) and/or Writ of Preliminary Injunction is not granted.

In Ong Ching Kian Chuan v. Court of Appeals, it was held that, to be entitled to

injunctive relief, the petitioner must show, inter alia, the existence of a clear

and unmistakable right and an urgent and paramount necessity for the writ to

prevent serious damage.

WHEREFORE, petitioners' prayer for the issuance of a Status   Quo Order,

Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby

DENIED for lack of merit. 6 caHIAS

On 16 June 2008, the CA denied the Motion for Reconsideration of the 26 March 2008 Resolution,

stating that the mere preservation of the status   quo is not sufficient to justify the issuance of an

injunction.

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

Petitioners claim that the amount of APRI's investment in the Padre Garcia Shopping Center is estimated

at P30,000,000, the entirety of which the RTC declared forfeited to respondent without just

compensation. At the time of the filing of the Petition, APRI had 47 existing tenants and lessees and was

deriving an average monthly rental income of P100,000. The Decision of the RTC was allegedly arrived at

without first obtaining jurisdiction over the persons of petitioners. The execution of the allegedly void

judgment of the RTC during the pendency of the Petition before the CA would probably work injustice to

the petitioners, as the execution would result in an arbitrary declaration of nullity of the MOA without

due process of law.

Petitioners further allege that respondent did not exercise reasonable diligence in inquiring into the

former's address in the case before the RTC. The Process Server Return, with respect to the unserved

summons, did not indicate the impossibility of a service of summons within a reasonable time, the

efforts exerted to locate APRI, or any inquiry as to the whereabouts of the said petitioner.

On 6 August 2008, this Court required respondent to file its Comment. On 13 February 2009, the

Comment was filed, alleging among others that despite the RTC's issuance of a Writ of Execution,

respondent did not move to implement the said writ out of administrative comity and fair play. Even if

the writ were implemented, petitioners failed to state in categorical terms the serious injury they would

sustain.

Respondent further argues that it is now in possession of the contracts that the lessees of the Padre

Garcia Shopping Center executed with APRI. Thus, there are "actions [that militate] against the

preservation of the present state of things," 7 as sought to be achieved with the issuance of a status 

quo order.

On 2 June 2009, petitioners filed their Reply to respondent's Comment.

On 3 March 2010, this Court issued a Resolution requiring the parties to inform the Court of the present

status of CA-G.R. SP No. 102540. On 15 April 2010, respondent manifested that after the parties filed

their respective Memoranda, the CA considered the case submitted for decision. On 12 May 2010,

petitioners filed their Compliance, stating that the appellate court, per its Resolution dated 7 August

2008, held in abeyance the resolution of CA-G.R. SP No. 102540, pending resolution of the instant

Petition.

The Court's Ruling

The Petition is denied for failure to show any grave abuse of discretion on the part of the CA.

Procedural Issue: Propriety of

a Petition for Review under

Rule 45

Before proceeding to the substantive issues raised, we note that petitioners resorted to an improper

remedy before this Court. They filed a Petition for Review on Certiorari under Rule 45 of the Rules of

Court to question the denial of their Motion for the issuance of an injunctive relief. aATEDS

Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be taken from an interlocutory order.

An interlocutory order is one that does not dispose of the case completely but leaves something to be

decided upon. 8 An order granting or denying an application for preliminary injunction is interlocutory in

nature and, hence, not appealable. 9 Instead, the proper remedy is to file a Petition for Certiorari and/or

Prohibition under Rule 65. 10

While the Court may dismiss a petition outright for being an improper remedy, it may in certain

instances proceed to review the substance of the petition.11 Thus, this Court will treat this Petition as if

it were filed under Rule 65.

Substantive Issue: Grave

abuse of discretion on the part

of the CA

The issue that must be resolved by this Court is whether the CA committed grave abuse of discretion in

denying petitioners' Motion for the Issuance ofStatus Quo Order and Motion for Issuance of Temporary

Restraining Order and/or Writ of Preliminary Injunction (Motion for Injunction).

A writ of preliminary injunction and a TRO are injunctive reliefs and preservative remedies for the

protection of substantive rights and interests. 12 An application for the issuance of a writ of preliminary

injunction and/or TRO may be granted upon the filing of a verified application showing facts entitling the

applicant to the relief demanded.

Essential to granting the injunctive relief is the existence of an urgent necessity for the writ in order to

prevent serious damage. A TRO issues only if the matter is of such extreme urgency that grave injustice

and irreparable injury would arise unless it is issued immediately. 13 Under Section 5, Rule 58 of the Rule

of Court, 14 a TRO may be issued only if it appears from the facts shown by affidavits or by the verified

application that great or irreparable injury would be inflicted on the applicant before the writ of

preliminary injunction could be heard.

Thus, to be entitled to the injunctive writ, petitioners must show that (1) there exists a clear and

unmistakable right to be protected; (2) this right is directly threatened by an act sought to be enjoined;

(3) the invasion of the right is material and substantial; and (4) there is an urgent and paramount

necessity for the writ to prevent serious and irreparable damage. 15

The grant or denial of a writ of preliminary injunction in a pending case rests on the sound discretion of

the court taking cognizance of the case, since the assessment and evaluation of evidence towards that

end involves findings of fact left to the said court for its conclusive determination. 16 Hence, the exercise

of judicial discretion by a court in injunctive matters must not be interfered with, except when there is

grave abuse of discretion. 17

Grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and

whimsical exercise of judgment equivalent to lack of jurisdiction; or the exercise of power in an arbitrary

or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of

positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of

law. 18 The burden is thus on petitioner to show in his application that there is meritorious ground for

the issuance of a TRO in his favor. 19

In this case, no grave abuse of discretion can be imputed to the CA. It did not exercise judgment in a

capricious and whimsical manner or exercise power in an arbitrary or despotic manner.

No clear legal right

A clear legal right means one clearly founded in or granted by law or is enforceable as a matter of

law. 20 In the absence of a clear legal right, the issuance of the writ constitutes grave abuse of

discretion. 21 The possibility of irreparable damage without proof of an actual existing right is not a

ground for injunction. 22 CHTAIc

A perusal of the Motion for Injunction and its accompanying Affidavit filed before the CA shows that

petitioners rely on their alleged right to the full and faithful execution of the MOA. However, while the

enforcement of the Writ of Execution, which would nullify the implementation of the MOA, is manifestly

prejudicial to petitioners' interests, they have failed to establish in their Petition that they possess a clear

legal right that merits the issuance of a writ of preliminary injunction. Their rights under the MOA have

already been declared inferior or inexistent in relation to respondent in the RTC case, under a judgment

that has become final and executory. 23 At the very least, their rights under the MOA are precisely

disputed by respondent. Hence, there can be no "clear and unmistakable" right in favor of petitioners to

warrant the issuance of a writ of injunction. Where the complainant's right or title is doubtful or

disputed, injunction is not proper. 24

The general rule is that after a judgment has gained finality, it becomes the ministerial duty of the court

to order its execution. No court should interfere, by injunction or otherwise, to restrain such

execution. 25 The rule, however, admits of exceptions, such as the following: (1) when facts and

circumstances later transpire that would render execution inequitable or unjust; or (2) when there is a

change in the situation of the parties that may warrant an injunctive relief. 26 In this case, after the

finality of the RTC Decision, there were no supervening events or changes in the situation of the parties

that would entail the injunction of the Writ of Execution.

No irreparable injury

Damages are irreparable where there is no standard by which their amount can be measured with

reasonable accuracy. 27 In this case, petitioners have alleged that the loss of the public market entails

costs of about P30 million in investments, P100,000 monthly revenue in rentals, and amounts as yet

unquantified — but not unquantifiable — in terms of the alleged loss of jobs of APRI's employees and

potential suits that may be filed by the leaseholders of the public market for breach of contract. Clearly,

the injuries alleged by petitioners are capable of pecuniary estimation. Any loss petitioners may suffer is

easily subject to mathematical computation and, if proven, is fully compensable by damages. Thus, a

preliminary injunction is not warranted. 28 With respect to the allegations of loss of employment and

potential suits, these are speculative at best, with no proof adduced to substantiate them.

The foregoing considered, the CA did not commit grave abuse of discretion in denying the Motion for

Injunction. In any case, petitioners may still seek recourse in their pending Petition before the Court of

Appeals.

WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions dated 26 March 2008 and 16 June

2008 in CA-G.R. SP No. 102540 areAFFIRMED. The Court of Appeals is directed to proceed with dispatch

to dispose of the case before it. SaICcT

SO ORDERED.

FIRST DIVISION

[G.R. No. 164548. September 27, 2006.]

PHILIPPINE NATIONAL BANK, petitioner, vs. RJ VENTURES REALTY &

DEVELOPMENT CORPORATION and RAJAH BROADCASTING NETWORK,

INC., respondents.

D E C I S I O N

CHICO-NAZARIO, J p:

Before this Court is a Petition for Review filed under Rule 45 of the Rules of Court assailing the 31 March

2004 Decision 1 and the 8 July 2004 Resolution2 of the Court of Appeals in CA-G.R. SP No. 56119. The

challenged Decision disposed, thus:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED, the

assailed Orders dated July 28, 1999 and October 26, 1999, respectively,

[are] REVERSED AND SET ASIDE, and the preliminary injunction earlier issued is

reinstated. No cost. 3

The assailed Resolution denied petitioner Philippine National Bank's (PNB's) Motion for Reconsideration

dated 3 May 2004.

The Antecedents

As culled from the records, the facts show that on 26 February 1999, respondents RJ Ventures Realty &

Development Corporation (RJVRD) and Rajah Broadcasting Network, Inc. (RBN) filed a Complaint for

Injunction with Prayer for Issuance of Temporary Restraining Order and Writ of Preliminary

Injunction 4 against petitioner PNB and Juan S. Baun, Jr. 5 with the Regional Trial Court (RTC), Branch 66

of Makati City, and docketed as Civil Case No. 99-452.

In its Complaint, respondents contended that on 13 June 1996, First Women's Credit Corporation (FWCC)

received an invitation to bid from PNB anent the sale of an 8,000 square meter property, located at

Paseo de Roxas corner Sen. Gil. Puyat Avenue, Makati City, and covered by Transfer Certificate of Title

No. S-15223 (Buendia Property). 6 On 10 July 1996, FWCC bid the amount of P455,000.00 per square

meter or a total of P3,640,000,000.00; and pursuant to PNB Rules and Regulations on the Acceptance

and Evaluation of Proposals, it deposited ten percent (10%) of the offered price or P364,000,000.00 with

the PNB by way of two checks, No. 418796 and No. 418797, in the amounts of P312,000,000.00 and

P52,000,000.00, respectively.7 On 11 July 1996, FWCC submitted a revised offer increasing its bid by

P5,000.00 per square meter or a total additional amount of P40,000,000.00. In view of the increase,

FWCC deposited with PNB an additional amount of P4,000,000.00. 8 On 17 July 1996, FWCC was

awarded the Buendia Property. 9PNB's Notice of Award to FWCC set a condition that within thirty (30)

calendar days from receipt of the same, the successful offeror shall tender payment of the balance of the

purchase price in the form of a manager's or cashier's check. 10 On 24 July 1996, FWCC, invoking Section

7.2 11 of the PNB Rules requested PNB to finance the entire balance of the purchase price. 12 On 17

September 1996 and pending action on its loan application, FWCC assigned all its rights, claims, interest,

and title over the Buendia Property to RJVRD. 13 The latter assumed the right to purchase the Buendia

Property and the obligations of FWCC to PNB on the balance of the bid price. TaEIAS

Respondents further posited that PNB initially refused to finance the entire balance of the purchase price

except to the extent of seventy-five percent (75%) thereof. 14 However, PNB finally agreed to grant a

loan to RJVRD equivalent to eighty percent (80%) of the purchase price or for the amount of

P2,944,000,000.00. The grant was conditioned on the deposit by RJVRD with PNB of an additional ten

percent (10%) of the purchase price to the first ten percent (10%) downpayment which the former had

paid. Otherwise stated, RJVRD was required to raise an additional amount of

P368,000,000.00. 15Moreover, to allow RJVRD to raise the additional amount, PNB proposed to lend

RBN the required amount, the latter being an affiliate company of RJVRD, which amount will be available

for relending to RJVRD. 16

Respondents described the said arrangement in this wise:

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

turn would be loaned to RJVRD.

15.1 The proceeds of the loan shall be used by RJVRD to partially pay the

additional 10% or P368,000,000.00 deposit on the Property. PNB documents

would however show that the loan was for the expansion of RBN.

15.2 Mr. Ramon P. Jacinto, the majority stockholder of RJVRD will pledge to PNB

70% of his shares of stock in RBN and 40% of his shares of stock in FWCC. 17

Moreover, in their Complaint a quo, respondents avowed that on 30 September 1996, following the

payment by RJVRD to PNB of the additional deposit of P368,000,000.00, the parties entered into a loan

agreement wherein PNB will finance the balance of the purchase price in the amount of

P2,944,000,000.00 subject to conditions, inter alia, that after the transfer of the Buendia Property in the

name of RJVRD, the same shall be mortgaged in favor of PNB. On even date, RJVRD and PNB executed a

Loan Agreement. 18 A Deed of Sale 19 and a Real Estate Mortgage, 20 both dated 30 September 1996

were similarly executed between RJVRD and PNB over the Buendia Property. The Loan Agreement

included a two-way peso/dollar convertibility feature at the option of RJVRD; hence, to avail of a lower

interest rate, RJVRD converted its peso loan to US dollar based on a rate of exchange of P26.23 to

US$1.00, or for a total amount of US$112,237,895.54.

Respondents claimed that RJVRD undertook to engage foreign investors for the project. It entered into

negotiations with Hyundai Construction of South Korea which were eventually suspended. Its talks with

Siemens of Austria, and Property Investment and Development Management Corporation of Singapore

failed. 21 Respondents interposed further that the Asian currency crisis on 11 July 1997 caused a

depreciation of the Philippine peso which correspondingly increased the obligation of RJVRD to PNB from

P2,944,000,000.00 to P5,405,301,470.82 inclusive of interest. 22 On 30 September 1997, in an effort to

continue the project, RJVRD entered into a joint venture agreement with Fil-Estate Management

Incorporated for the development of the Buendia Property. RBN secured another loan from PNB in the

amount of P100,000,000.00, part of which was used in paying the interest for the loan it had secured in

favor of RJVRD. In addition, as and by way of security, RBN assigned in favor of PNB, all its rights and

interest over radio and television frequencies issued by the National Telecommunications Commission,

located in Tuguegarao, Baguio, Manila, Cebu, Bacolod, Iloilo, including those in Cagayan de Oro (FM

Stations), and Manila (AM Station and TV-UHF Station). 23 On September 1997, RJVRD paid PNB the

accrued interest on the loan amounting to P353,478,628.88. RBN also updated its first account with PNB

by paying about P41,000,00.00. In March 1998, RJVRD, RBN and PNB entered into discussions on the

restructuring of the loans. Respondents alleged that while discussions were ongoing, the accounts of

RJVRD and RBN became delinquent. 24 PNB sent RJVRD, a notice, 25 dated 2 June 1998, declaring their

accounts delinquent and demanding the settlement of the same.26

Respondents asserted that prior to 11 June 1998, in line with the continuing discussions between PNB

and RBN for the restructuring of the loan, PNB required the redenomination of RBN's loan as a condition

for its restructuring. 27 On 11 June 1998, RBN sent a letter to PNB in agreement to the redenomination

of the loan, stating therein the agreed terms for the restructuring of the loan. RJVRD sent a letter to PNB

agreeing to redenominate its own loan based on PNB's initial proposal, which letter was returned to

RJVRD for the reason that, at that time, the proposals for the restructuring of the RJVRD loan component

did not call for the redenomination of the loan of RJVRD. 28 On 24 June 1998, RBN sent a letter to PNB,

confirming to redenominate the loan under the terms stated in its letter of 11 June 1998. 29 On 9

September 1998, respondents asseverated that PNB made a call to RJVRD, asking the latter to

redenominate its loans. On the same date, RJVRD sent PNB, a letter in agreement to the

redenomination. 30 On 23 October 1998, the RJ Groups of Companies sent Mr. Benjamin Palma Gil,

president of PNB, a proposal for the settlement of respondents' accounts, including a request for the

restructuring of the loans. 31

On 25 January 1999, PNB, through its counsel, sent RBN a demand letter, requiring the latter to settle

their outstanding account of P841,460,891.91. 32 In a letter similarly dated 25 January 1999, PNB by

counsel, demanded from RJVRD the settlement of its total obligation of P5,405,301,470.82. 33 On 28

January 1999, RBN sent a letter to PNB's counsel, expressing its surprise to receive the demand letter

despite their continuing negotiations with PNB for the restructuring of its accounts. 34 In its letter, RBN

said that it was, in fact, required by PNB to redenominate its dollar loans into pesos as an initial step for

the restructuring of the account, and which it has complied. 35 On even date, RJVRD sent a letter to

PNB's counsel emphasizing that it had not been advised of any adverse development in their negotiation

with PNB nor had it been informed of the discontinuance of the negotiation. RJVRD sought for additional

time to justify its proposal to PNB with the aim of arriving at a friendly settlement. 36

On 18 February 1999, PNB made a demand to RBN to turnover the possession and/or control of

Broadcasting Equipment Inventory located at No. 33, Dominican Hills, Baguio City. 37 On 18 February

1999, RJVRD received a Notice of Extrajudicial Sale, dated 1 February 1999 for the sale of the Buendia

Property 38 to be held on 2 March 1999 at the City Hall, Makati City. caIDSH

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

Buendia Property from PNB, the Philippine economy was progressive; that it was under this favorable

economic scenario that RJVRD agreed to the terms and conditions of the loan agreements; however,

following the Asian economic crisis of July 1997, and with the depreciation of the Philippine peso, the

loan of RJVRD which was denominated in US dollars rose from P2,944,000,000.00 (US$112,237,895.54)

to P5,405,301,470.82. 39 According to respondents, from the original contract price of

P3,680,000,000.00, RJVRD already made a payment of P736,000,000.00, representing twenty-percent

(20%) of the value of the Buendia Property and P353,478,628.88, representing interest on the loan or a

total of P1,089,478,628.88; and that PNB never effectively lost control over the Buendia Property,

considering that simultaneous with the execution of the Loan Agreement between RJVRD and PNB,

RJVRD executed a Real Estate Mortgage over the Buendia Property in favor of PNB. Furthermore,

respondents sought to find recourse under Article 19 40 of the Civil Code. They contended that the

action on the part of PNB to foreclose the collaterals pledged or mortgaged by RJVRD and RBN, including

the extrajudicial sale of the Buendia Property on 2 March 1999 at the City Hall of Makati City, and the

planned take over of RBN's radio facilities in Baguio City would be, among others, premature. 41

Finally, in support of its Application for the Issuance of a Temporary Restraining Order and a Writ of

Preliminary Injunction, respondents alleged that RJVRD and RNB would suffer great and irreparable

injury by the extrajudicial foreclosure of the property and the take over of RBN's radio facilities in Baguio,

unless a Temporary Restraining Order and/or Writ of Preliminary Injunction is issued enjoining

defendants from implementing the Notice of Extrajudicial Sale dated 1 February 1999, and enjoining PNB

from taking possession and control of RBN's radio facilities in Baguio City. Respondents maintained that

the commission or continuance of the acts complained of during the litigation or the non-performance

thereof would work injustice to RJVRD and RBN. They manifested their willingness to post a bond as the

court a quo may fix in its discretion, to answer for whatever damages PNB may sustain for the reason of

the restraining order or injunction, if finally determined that respondents are not entitled thereto.

Acting on respondent's prayer for the issuance of a Temporary Restraining Order, the RTC, issued an

Order 42 dated 2 March 1999, denying the same. The RTC held that the evidence showed that

respondents are in default of payment of its loan from PNB, amounting to P5,405,301,470.82, including

interests and penalties. According to the RTC, the respondents failed to prove that they have a clear right

to restrain the foreclosure of the Buendia Property; whereas, it is PNB which has a clear right to the

Buendia Property. The RTC opined that the evidence failed to prove that respondents will suffer

"irreparable injury" if the foreclosure of the Buendia Property is not enjoined, for under the law,

respondents have one (1) year from the date of the registration of the sale with the Register of Deeds

within which to redeem the Buendia Property; thus, respondents will have a chance to recover the

ownership thereof by way of redemption. Finally, the RTC ruled that the rule of equity is on the side of

PNB considering that the Buendia Property was formerly owned by PNB. The RTC denied the application

for Temporary Restraining Order for lack of merit, and held that the exposure of PNB in the transaction

amounted to P5,405,301,470.82, while the exposure of respondents is P1,089,478,628.00. 43

On 2 March 1999, the Buendia Property was sold in a public auction conducted by Atty. Juan S. Buan,

Notary Public of Makati City. 44 There being no other bidder, the Buendia Property was sold to PNB for

the amount of P2,800,000,000.00. On 3 May 1999, RBN received a Notice of Extrajudical Sale from PNB,

specifying therein that the property covered by Broadcating Equipment Inventory located at No. 33

Dominical Hills, Baguio City will be sold for cash at public auction to the highest bidder on 10 May 1999,

at the City Hall, Baguio City, pursuant to the terms of the Deed of Chattel Mortgage dated 19 June 1994

to satisfy the mortgage indebtedness of P841,460,491.91. 45

Following this development, on 4 May 1999, respondents filed an Urgent Application for the Issuance of

a Temporary Restraining Order and/or Writ of Preliminary Injunction. 46 Respondents prayed that a

Temporary Restraining Order be issued enjoining PNB or any persons acting under its instructions from

foreclosing on any other collaterals pledged or mortgaged by respondents to PNB, particularly that which

is subject of the Notice of Extrajudicial Sale to be conducted by Notary Public Perlita Chan-Rondez in

Baguio City on 10 May 1999. It was likewise prayed that after due proceedings, a Writ of Preliminary

Injunction be similarly issued. 47

On 7 May 1999, the RTC issued an Order 48 granting the Writ of Preliminary Injunction respondents'

application for the issuance of a Temporary Restraining Order (TRO), upon posting of a bond in the

amount of P1,000,000.00. aHSTID

On 27 May 1999, the RTC issued an Order, 49 granting the Writ of Preliminary Injunction, enjoining PNB

from foreclosing all collaterals pledged or mortgaged by respondents to PNB, in particular those

described in Exhibits A to L thereof, after the posting of a bond in the amount of

P5,000,000.00. 50According to the court, the right of PNB to foreclose the chattel mortgages is still

challenged by the respondents and therefore, is not yet clearly established. Hence, if PNB is allowed to

foreclose the subject chattel mortgages, the determination of the right of PNB to foreclose the subject

properties will become moot and academic. Subsequently, on 28 May 1999, a Writ of Preliminary

Injunction was issued.

On 9 June 1999, PNB filed a Motion for Reconsideration 51 of the Order of 27 May 1999. PNB

averred, inter alia, that RBN failed to produce any evidence to substantiate and support its claim that it is

entitled to the Writ of Preliminary Injunction in order to enjoin PNB from foreclosing on the subject

chattels. According to PNB, it was able to show that RBN failed without justifiable cause or reason to

service the credit facilities extended to it. PNB advanced the argument that RBN has no clear right

in esse; therefore, it cannot seek relief from the court. PNB claimed that they were able to prove

irreparable damage to the bank if PNB will be enjoined from foreclosing on the chattel mortgages. PNB

maintained that proceeding with the auction sale of the subject properties would lower the bank's "past

due ratio" approximately by 2%; hence, with the decrease in the bank's "past due ratio percentage,"

there would be no legal impediment to PNB's resumption to full lending operations since the Bangko

Sentral ng Pilipinas' recommendation for stoppage of grants of new loans is anchored on PNB's current

high "past due ratio." In support of its Motion for Reconsideration, PNB further theorized that decreasing

its "past due ratio" would improve investors' confidence; hence, substantially enhancing the viability of

PNB in its move to attain full privatization by the year 2000.

In its Opposition, 52 respondents submitted that during the hearing of the application for a Writ of

Preliminary Injunction, the court expressed its position that it will not receive evidence relative to the

merits of the case as the same would pre-empt the resolution of the merits or dispose of the main case

without trial; therefore, by agreement of the parties, the principal issue was limited to whether RBN will

suffer irreparable injury if the writ of preliminary injunction is not issued. According to respondents, the

damage to RBN's image, loss of listenership, advertisers, staff and employees is unquantifiable in

monetary terms. Irreparable damage would be caused to RBN if PNB is allowed to foreclose its

equipments. It would also disrupt, if not, paralyze, the operations of RBN's stations. They further

asserted that there is no reason to disturb the injunction issued by the court absent a showing of

manifest abuse.

On 28 July 1999, the RTC issued an Order 53 granting PNB's Motion for Reconsideration. This was

subsequently rectified in the Order of 29 July 1999 as to the date of the Writ of Preliminary Injunction

from May 28, 1998 to May 28, 1999. 54 In lifting the Writ of Preliminary Injunction of 28 May 1999, the

RTC rationalized that the failure of RBN to pay the three (3) credit facilities it obtained from defendant

PNB was established; thus, RBN was considered to have effectively "defaulted" on its loan obligation. In

the same Order, the RTC concluded that RBN made express admission of its delinquency in its Complaint.

Moreover, the RTC held that the "cross-default provision" 55 embodied in the Loan Agreement between

the parties establishes against the grant of the injunction.

Respondents moved for a reconsideration of the 28 July 1999 Order, submitting that there was no

reason to disturb the preliminary injunction order as there was no showing of a manifest abuse by then

Presiding Judge Hon. Eriberto U. Rosario, in the issuance thereof. Respondents explicated, inter alia, that

the sufficiency of their application was already passed upon by the RTC through the Order dated 27 May

1999. SaCIDT

On 26 October 1999, the RTC issued an Order, 56 denying respondents' Motion for Reconsideration for

the lifting of the Writ of Preliminary Injunction dated 28 May 1999.

Aggrieved, on 7 December 1999, respondents filed with the Court of Appeals a Petition

for Certiorari under Rule 65 of the Rules of Court assailing the Orders dated 28 July 1999 and 26 October

1999, imputing grave abuse of discretion on the part of the RTC in dissolving the Writ of Preliminary

Injunction earlier issued.

Before the appellate court, respondents argued that the sufficiency of their application for preliminary

injunction was already raised and passed upon by the RTC in the Injunction Order dated 27 May 1999;

however, PNB was not able to allege "other grounds" for the lifting thereof as mandated by Section 6 of

Rule 58 of the Rules of Court. 57 Moreover, respondents asserted that on the issue of the purported

delinquency, the RTC failed to consider PNB's judicial admissions, whereby the rights of PNB should be

those of a seller covered by the law on Sales (Title VI, Book IV, Civil Code), and not those of a money-

lender covered by the law on Loans (Title XI, Book IV, Civil Code); hence, PNB's rights as a seller are

either to rescind the sale, retrieve the title to the property transferred to the buyer, and exact payment

of damages or to leave the property with the buyer, to exact payment of the entire price with interest,

and recover damages thereby suffered. According to the respondents, the PNB as seller had recovered

through foreclosure the Buendia Property. They alleged that: PNB had forfeited in its favor as mortgagor,

the payments already made by RJVRD and the interest thereon; PNB is in the process of recovering as

mortgagor and seller additional damages in the form of interests, penalties, charges, attorney's fees, etc;

and PNB is in the process of recovering as mortgagor, by way of the foreclosure of mortgage, other realty

and chattels of significant value. Respondents contended that there was no grave abuse of discretion in

the issuance of the Writ of Preliminary Injunction because the contemplated foreclosure of the other

properties will work injustice to RBN and would render ineffectual any judgment on the merits of the

case ineffectual.

Anent the issue of whether respondents will suffer irreparable injury, respondents pleaded that although

the immediate effect of a Writ of Preliminary Injunction may be quantifiable in pesos, the effect on the

respondents is its viability that stands to be affected in the long-term. Respondents rationalized that the

foreclosure of the radio equipment will result in the stoppage of operations, and eventually, the loss of

the image of the station. These factors will cause the loss of its listenership and client confidence, which

cannot be quantifiable in monetary terms. Moreover, respondents set forth the contention that even as

PNB suggested that after foreclosure, the radio equipment would either be sold to improve PNB's

liquidity or disposed by way of lease-purchase agreement, there exists no assurance that RBN can

repurchase the foreclosed collaterals.

The Ruling of the Court of Appeals

On 9 December 1999, the Court of Appeals issued a Resolution 58 temporarily enjoining PNB from

foreclosing any collateral pledged or mortgaged by RJVRD and RBN, and from taking possession and

control of the latter's radio facilities in Baguio City, until further orders from the appellate court. In

granting the same, the Court of Appeals underscored that the purpose of the temporary injunctive relief

is to preserve the status quo ante between the parties, and so as not to render moot and academic the

relief prayed for in the Petition. Accordingly, the Court of Appeals set the hearing on the application for

the issuance of a preliminary injunction on 11 January 2000.

On 10 January 2000, the PNB filed a Comment with the Court of Appeals, disputing the imputation of

grave abuse of discretion on the part of the RTC when it lifted the preliminary injunction. The PNB

opposed respondents' claim that there exists in their favor a right to be protected. According to PNB, the

foreclosure of the collaterals shall be effective upon the default of RBN, which default had been

established as RBN was unable to properly service the loan agreements without justifiable cause and

despite due demand. Anent the issue on the existence of irreparable injury, PNB challenged respondents'

contention by arguing that there is, in fact, a pecuniary standard by which RBN's damage can be

measured per the testimony of RBN's witness that it will suffer a loss of P1.2 Billion for the next ten (10)

years. PNB further posited that there were no judicial admissions on their part to the effect that RJVRD

and RBN are not delinquent. In furtherance of its opposition, PNB averred that it acted in two separate

capacities as seller and lender. As a seller, PNB owned the Buendia Property and offered it for sale to

interested parties. PNB accepted the bid of RJVRD and the property was sold to the latter. As a lender,

PNB supplied the credit facility to RJVRD as the latter needed to borrow money to finance the payment

of the remaining balance. PNB insisted that these two transactions cannot be treated as one and the

same; hence, there is nothing that prevents it from acting as a seller and lender at the same time. In fine,

PNB maintained that RJVRD did not default on the payment of the purchase price for such was

completely paid; rather, it defaulted on the payment of the loan, on its principal, and interest. SEcAIC

On 4 February 2000, the Court of Appeals issued a Resolution, 59 granting the Writ of Preliminary

Injunction, enjoining PNB and its agents from foreclosing the collaterals pledged and mortgaged by

RJVRD and RBN and from taking over possession and control of RBN radio facilities in Baguio City. The

appellate court, held, viz:

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

or not the respondent court committed grave abuse of discretion in issuing the

order lifting and setting aside the injunctive relief earlier issued in Civil Case No.

4592 (sic). If no preliminary injunction is issued in this case, pending resolution

of such main petition, respondent will proceed to foreclose the pledged or

mortgaged collaterals. In that eventuality, petitioners stand to sustain injury

and irreparable damage, the loss of its properties, income[,] and clientele

listeners in the subject radio broadcasting station in Baguio City, even before

the instant certiorari proceeding could be resolved. To allow the impending

foreclosure to proceed, at this point in time, will surely be violative of

petitioners' right to be heard and to due process. It is for this reason, for the

preservation of the status quo between the parties, pending decision of the

main petition and in order not to render the same moot and academic, We feel

justified to grant the preliminary injunction prayed for.

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

let a Writ of Preliminary Injunction be issued in this case enjoining the

respondent PNB, its officers or agents from foreclosing the collateral pledged

and mortgaged by petitioners, RJ Ventures Realty & Development Corporation

and Rajah Broadcasting Network, Inc., from taking over possession and control

of RBN radio facilities in Baguio City, upon the posting of a P1,000,000.00

injunction bond.

Undeterred, PNB filed a Motion for Reconsideration praying that the Order of 4 February 2000 be set

aside and the Writ of Preliminary Injunction issued by the Court of Appeals be immediately lifted and

dissolved.

Acting on the Motion, the Court of Appeals, rendered the assailed Decision dated 31 March 2004,

denying the same. In the same order, the appellate court, reversed and set aside the Orders dated 28

July 1999 and 26 October 1999 of the RTC; hence, effectively reinstating the Writ of Preliminary

Injunction earlier issued on 28 May 1999. The Court of Appeals held that the RTC was not asked to make

a definitive conclusion on the issue of whether RBN was indeed guilty of default in paying its loan nor

was it asked to resolve whether RBN committed a breach against PNB which necessitated foreclosure. A

determination of whether there was default or breach can be only be reached after the principal action

is set for trial on the merits after the parties are given opportunity to present evidence in support of their

respective claims.

The appellate court decreed, to wit:

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

stage of an action prior to final judgment, requiring a person to refrain from a

particular act. As the term itself suggests, it is merely temporary, subject to the

final disposition of the principal action. The justification for the preliminary

injunction is urgency. It is based on evidence tending to show that the action

complained of must be stayed lest the movant suffer irreparable injury or the

final judgment granting the relief sought become ineffectual. Necessarily, that 

evidence need only be a "sampling," as it were, and intended merely to give the 

court   an   idea  of   the   justification   for   the  preliminary   injunction  pending   the 

decision of the case on the merits. The evidence submitted at the hearing on the

motion for preliminary injunction is not conclusive of the principal action, which

has yet to be decided. (Olalia vs. Hizon, 196 SCRA 665 [1991]).

Anent the issue of whether RBN would sustain "irreparable injury" should the

chattel mortgage be foreclosed, it bears repeating that the evidence to be

submitted at the hearing on the motion for preliminary injunction need not be

conclusive and complete. On this score, We find petitioners to have sufficiently

established the existence of irreparable injury to justify, albeit provisionally, the

restraint of the act complained against them. DASEac

We find that the potential injury demonstrated by the various testimonies

presented by petitioners more than satisfies the legal and jurisprudential

requirements of "irreparable injury." There is no gainsaying in that the

foreclosure of the subject radio equipment[s] would inevitably result in

stoppage of operations. This, in turn, shall result to (sic) the station's tarnished

image and consequent loss of public listenership. Loss of listenership then leads

to loss of confidence of the station's patrons and advertising clients that would

cause serious repercussions on its ability to sustain its operations. Undoubtedly,

the loss of image and reputation by a radio station are matters that are not

quantifiable in terms of monetary value.

All told, We find the court a quo's lifting of the injunction earlier issued tainted

with grave abuse of discretion properly correctable by the special writ

of certiorari. 60

On 4 May 2004, PNB moved for the reconsideration thereon. On 8 July 2004, the Court of Appeals

rendered a Resolution, finding no justification to compel a modification or reversal of the 31 March 2004

Decision.

Hence, the instant Petition.

The Issues

PNB recites the following statement of the issues, viz:

I

WHETHER OR NOT THE PETITION FILED BY PNB INVOLVES QUESTIONS OF FACTS

WHICH SHOULD BE A CAUSE FOR ITS DISMISSAL;

II

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

THEIR RESPECTIVE LOAN OBLIGATIONS TO PNB JUSTIFIES THE DENIAL OF THE

ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION FOR THE FORECLOSURE

OF THE MORTGAGED PROPERTIES;

III

WHETHER OR NOT RBN'S ADMISSION OF ITS FAILURE TO SETTLE ITS LOAN

OBLIGATION IN FULL GIVES PNB A CLEAR RIGHT TO FORECLOSE THE

MORTGAGE;

IV

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

IS CLEAR, EXISTING[,] AND UNMISTAKABLE; and

V

WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAD LEGAL BASIS IN

REVERSING AND SETTING ASIDE THE ORDER DATED JULY 28, 1999 AND

OCTOBER 26, 1999 OF THE REGIONAL TRIAL COURT OF MAKATI, BRANCH 66,

AND THEREBY ISSUING A WRIT OF CERTIOARI IN FAVOR OF RJVRD AND RBN. 61

The Ruling of the Court

The pivotal issue in the instant Petition is whether the Court of Appeals correctly reinstated the Writ of

Preliminary Injunction dated 28 May 1999. Hence, the question is whether respondents RJVRD and RBN

are entitled to the Writ of Preliminary Injunction. It is for this reason that we shall address and concern

ourselves only with the assailed writ, but not with the merits of the case pending before the trial court .

A preliminary injunction is merely a provisional remedy, adjunct to the main case subject to the latter's

outcome. 62 It is not a cause of action in itself. 63

This Petition has no merit. ACcISa

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

the merits can be heard. 64 A preliminary injunction65 is an order granted at any stage of an action prior

to judgment of final order, requiring a party, court, agency, or person to refrain from a particular act or

acts. It is a preservative remedy to ensure the protection of a 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 of a

litigation would be useless as far as the party applying for the writ is concerned. 66

The grounds for the issuance of a Writ of Preliminary Injunction are prescribed in Section 3 of Rule 58 of

the Rules of Court. Thus:

SEC. 3. Grounds   for   issuance   of   preliminary   injunction. — A preliminary

injunction may be granted when it is established:

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

of such relief consists in restraining the commission or continuance of the act or

acts complained of, or in requiring the performance of an act or acts, either for

a limited period or perpetually;

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

complained of during the litigation would probably work injustice to the

applicant; or

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

to do, or is procuring or suffering to be done, some act or acts probably in

violation of the rights of the applicant respecting the subject of the action or

proceeding, and tending to render the judgment ineffectual.

Otherwise stated, for a Writ of Preliminary Injunction to issue, the following requisites must be present,

to wit: (1) the existence of a clear and unmistakable right that must be protected, and (2) an urgent and

paramount necessity for the writ to prevent serious damage. 67 Indubitably, this Court has likewise

stressed that the very foundation of the jurisdiction to issue a writ of injunction rests in the existence of

a cause of action and in the probability of irreparable injury, inadequacy of pecuniary compensation and

the prevention of multiplicity of suits. 68 Sine   dubio, the grant or denial of a writ of preliminary

injunction in a pending case rests in the sound discretion of the court taking cognizance of the case since

the assessment and evaluation of evidence towards that end involve findings of facts left to the said

court for its conclusive determination. 69 Hence, the exercise of judicial discretion by a court in

injunctive matters must not be interfered with except when there is grave abuse of discretion. 70 Grave

abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and whimsical

exercise of judgment that is equivalent to lack of jurisdiction, or where the power is exercised in an

arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an

evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in

contemplation of law. 71

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

The Supreme Court is not a trier of facts. 72 While this is perhaps one of our more emphatic doctrines, it

admits of certain exceptions, inter alia, when the findings of the Court of Appeals are contrary to those

of the trial court. 73 In the case at bar, we apply the exception and proceed to make a determination of

whether there is a factual and legal bases for a Writ of Preliminary Injunction to issue. SHcDAI

First, respondents were able to establish a clear and unmistakable right to the possession of the subject

collaterals. Evidently, as owner of the subject collaterals that stand to be extrajudicially foreclosed,

respondents are entitled to the possession and protection thereof. RBN as the owner and operator of

the subject radio equipment and radio stations have a clear right over them. The instant case does not

involve abstract rights, or a future and contingent rights, but a right that is already in existence. To our

minds, petitioner's claim that respondents have lost their rights to the subject collaterals in the face of

their admission of default is best threshed out in a full-blown trial a quo where the merits of the case can

be tried and determined. Significantly, to give the trial court a fair idea of whether a justification for the

issuance of the writ exists, only a "sampling" of the evidence is needed, pending a decision on the merits

of the case. 74 Hence, the determination of respondents' default and the legality of the defenses they

adduced are matters appropriately subject of the trial on the merits.

Second, there is an urgent and paramount necessity to prevent serious damage. Indeed, an injunctive

remedy may only be resorted to when there is a pressing necessity to avoid injurious consequences

which cannot be remedied under any standard compensation. 75 PNB assails the existence of this

ground by raising the argument that there is, in actuality, a pecuniary standard by which RBN's damage

can be measured, as evidenced by the testimony of RBN's witness that it will suffer a loss of P1.2 Billion

for the next ten (10) years.

To be sure, this court has declared that the term irreparable injury has a definite meaning in law. It does

not have reference to the amount of damages that may be caused but rather to the difficulty of

measuring the damages inflicted. If full compensation can be obtained by way of damages, equity will

not apply the remedy of injunction. 76 The Court of Appeals declared that the evidence adduced by

respondents more than satisfies the legal and jurisprudential requirements of irreparable injury. It

behooves this court to appreciate the unique character of the collaterals that stand to be affected should

the Writ of Preliminary Injunction be dissolved as PNB would have it. The direct and inevitable result

would be the stoppage of the operations of respondents' radio stations, consequently, losing its

listenership, and tarnishing the image that it has built over time. It does not stretch one's imagination to

see that the cost of a destroyed image is significantly the loss of its good name and reputation. As aptly

appreciated by the appellate court, the value of a radio station's image and reputation are not

quantifiable in terms of monetary value. This conclusion can be gleaned from the testimony of

respondents' witness, Jose E. Escaner, Jr., General Manager of RBN, thus:

Atty. Mendoza:

Q: Now, in your forty (40) years in the broadcast (sic) industry, have you had

any personal experience in (sic) any actual interruption in the

operations of a radio station programming?

Witness:

A: Yes, when I was handling the network of the then Ambassador Nanding

Cojuanco within which the radio stations were sequestered and

sometime or the other it (sic) went off the air and immediately, we

do not have any revenues, so much so that we actually suffered two

(2) to three (3) years.

Atty. Mendoza:

Q: And how long did it take for that station in Cebu that you mentioned to

retain its listenership day? (sic)

Witness:

A: Well, honestly, until now its airtime, because of its image, status image (sic)

which is the reputation of an AM Station while they are still

recouping other stations, the other reports came over (sic) and

practically brought their ratings down, so, until now they still have to

recoup.

Atty. Mendoza:

Q: What radio station are you referring to?

Witness:

A: DYRB.

Atty. Mendoza:

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

operation (sic)? DSHTaC

Witness:

A: It will lose whatever image it has generated to this point and (sic) time, it will

cost irreparable damage not only to its operation but most of all (sic)

its image as being built by RNB. Rajah Broadcasting Network and I

doubt very much if it will still be able to recoup to a very good result,

what we are now generating.

Atty. Mendoza:

That is all for the witness, Your Honor.

COURT:

Alright (sic), cross.

Atty. dela Vega:

With the permission of the Honorable Court.

xxx xxx xxx

Atty. dela Vega:

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

practice Mr. Witness, with respect to the possession, let us go to the

heart of the matter as of this point and time.

COURT:

You shoot the question straight.

Atty. dela Vega:

Yes, Your Honor.

(continuing to (sic) the witness

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

the listeners and their clients if technical equipments, in (sic) the

technical equipments, the ownership over the sale are transferred to

another person?

Witness:

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

operations. That would mean stopping our day to day

communication with our listenership. That they will be wondering,

that will cost damage and (sic) our image immediately. That will cost

damage to our contracts right now without keeping with our clients.

Atty. dela Vega:

Q: Usually that person who owns that particular equipment will get the

particular equipment. When you say get, what do you mean by get

Mr. Witness?

Witness:

A: If for instance was what we are talking about right now, you are going to

foreclose, ok, (sic), what will we use?

Atty. dela Vega:

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

not get, will not get the equipment, will not get their account, will it

adversely affect the operations of Rajah Broadcating?

Witness:

A: Still it will. IESAac

Atty. dela vega:

Q: In what way?

Witness:

A: Because that will have an effect now on our relation with our clientele. The

image will be doubt (sic). The will be doubt, there be vacillation in

the planning of the media plans, vacillation in the buying of airtime.

Atty. dela Vega:

Q It will affect?

Witness:

A: It will affect. The confidence is there.

Atty. dela Vega:

Q: It will affect?

Witness:

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

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

respondents which cannot be remedied under any standard compensation. After a careful scrutiny of the

attendant circumstances, we do not find herein a reason for reversing the reinstatement by the Court of

Appeals of the Writ of Preliminary Injunction earlier issued.

The Fallo

WHEREFORE, the Petition is DENIED. The Decision dated 31 March 2004 and the Resolution dated 8 July

2004 of the Court of Appeals in CA-G.R. SP No. 56119, reversing and setting aside the 28 July 1999 and 26

October 1999 Orders of the RTC, Branch 66 of Makati City in Civil Case No. 99-452, and reinstating the

Writ of Preliminary Injunction issued on 28 May 1999 are AFFIRMED. Costs against petitioners. aTDcAH

SO ORDERED.

EN BANC

[G.R. No. 177130. June 7, 2011.]

HON. EDUARDO ERMITA in his official capacity as THE EXECUTIVE

SECRETARY, petitioner, vs. HON. JENNY LIND R. ALDECOA-DELORINO, Presiding

Judge, Branch 137, Regional Trial Court, Makati City, ASSOCIATION OF

PETROCHEMICAL MANUFACTURERS OF THE PHILIPPINES, representing JG

Summit Petrochemical Corporation, et al., respondents.

DECISION

CARPIO MORALES, J p:

Then Executive Secretary petitioner Eduardo Ermita assailed via certiorari the writ of preliminary

injunction granted by public respondent Judge Jenny Lind R. Aldecoa Delorino, then Presiding Judge of

the Regional Trial Court of Makati City, Branch 137, by Omnibus Order 1 dated February 6, 2007 in favor

of private respondent Association of Petrochemical Manufacturers of the Philippines (APMP or private

respondent) denying petitioner's Motion to Dismiss and enjoining the government from implementing

Executive Order No. 486. CAHTIS

Executive Order No. 486 (E.O. 486) issued on January 12, 2006 by then President Gloria Macapagal-

Arroyo reads:

LIFTING THE SUSPENSION OF THE APPLICATION OF THE TARIFF REDUCTION

SCHEDULE ON PETROCHEMICALS AND CERTAIN PLASTIC PRODUCTS UNDER

THE COMMON EFFECTIVE PREFERENTIAL TARIFF (CEPT) SCHEME FOR THE

ASEAN FREE TRADE AREA (AFTA)

WHEREAS, Executive Order 234 dated 27 April 2000, which implemented the

2000-2003 Philippine schedule of tariff reduction of products transferred from

the Temporary Exclusion List and the Sensitive List to the Inclusion List of the

accelerated CEPT Scheme for the AFTA, provided that the CEPT rates on

petrochemicals and certain plastic products will be reduced to 5% on 01

January 2003;

WHEREAS, Executive Order 161 issued on 9 January 2003 provides for the

suspension of the application of the tariff reduction schedule on petrochemicals

and certain products in 2003 and 2004 only;

WHEREAS, the government recognizes the need to provide an enabling

environment for the naphtha cracker plant to attain international

competitiveness;

WHEREAS, the NEDA Board approved the lifting of the suspension of the

aforesaid tariff reduction schedule on petrochemicals and certain plastic

products and the reversion of the CEPT rates on these products to EO 161 (s.

2003) levels once the naphtha cracker plant is in commercial operation;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic

of the Philippines, pursuant to the powers vested in me under Section 402 of

the Tariff and Customs Code of 1978 (Presidential Decree No. 1464), as

amended, do hereby order:

SECTION 1. The articles specifically listed in Annex   "A" (Articles Granted

Concession under the CEPT Scheme for the AFTA) hereof, as classified under

Section 104 of the Tariff and Customs Code of 1978, as amended, shall be

subject to the ASEAN CEPT rates in accordance with the schedule indicated in

Column 4 of Annex "A". The ASEAN CEPT rates so indicated shall be accorded to

imports coming from ASEAN Member States applying CEPT concession to the

same product pursuant to Article 4 of the CEPT Agreement and Its

Interpretative Notes.

SECTION 2. In the event that any subsequent change is made in the basic (MFN)

Philippine rate of duty on any of the article listed in Annex "A" to a rate lower

than the rate prescribed in Column 4 of Annex   "A", such article shall

automatically be accorded the corresponding reduced duty.

SECTION 3. From the date of effectivity of this Executive Order, all articles

listed in Annex "A" entered into or withdrawn from warehouses in the

Philippines for consumption shall be imposed the rates of duty therein

prescribed subject to qualification under the Rules of Origin as provided for in

the Agreement on the CEPT Scheme for the AFTA signed on 28 January 1992.

SECTION 4. The Department of Trade and Industry, in coordination with

National Economic and Development Authority, the Department of Finance, the

Tariff Commission and the Bureau of Customs, shall promulgate the

implementing rules and regulations that will govern the reversion of the CEPT

rates on petrochemicals and plastic products to EO 161 (s. 2003) levels once the

naphtha cracker plant is in commercial operation.

SECTION 5. All presidential issuances, administrative rules and regulations, or

parts thereof, which are contrary to or inconsistent with this Executive Order

are hereby revoked or modified accordingly.

SECTION 6. This Executive Order shall take effect immediately following its

complete publication in two (2) newspapers of general circulation in the

Philippines.

Done in the City of Manila, this 12th day of January in the year of Our Lord Two

Thousand and Six. (emphasis supplied)

The above issuance in effect reduces protective tariff rates from 10% to 5% on the entry of inexpensive

products, particularly plastic food packaging, from ASEAN Free Trade (AFTA) member countries into the

Philippines.

APMP, an organization composed of manufacturers of petrochemical and resin products, opposed the

implementation of E.O. 486. Contending that the E.O. would affect local manufacturers, it filed a petition

before the RTC of Makati, docketed as Civil Case No. 06-2004, seeking the declaration of its

unconstitutionality for being violative of Sec. 4 of Republic Act No. 6647 which prohibits the President

from increasing or reducing taxes while Congress is in session 2 and Sec. 402 (e) 3 of the Tariff and

Customs Code. It thereupon prayed for the issuance of a writ of preliminary injunction to enjoin its

implementation. STaIHc

Petitioner contends that public respondent gravely abused her discretion in assuming jurisdiction over

the petition for prohibition and granting the writ of preliminary injunction as the exercise of the quasi-

legislative functions of the President cannot be enjoined. He avers that writs of prohibition lie only

against those persons exercising judicial, quasi-judicial or ministerial functions.

By granting injunctive relief, petitioner contends that public respondent effectively preempted the trial

of and pre-judged the case, given that what private respondent seeks is to stop the implementation of

E.O. 486. Further, petitioner contends that the grant of injunctive relief was not supported by fact and

law, for what APMP sought to be protected was "future economic benefits" which may be affected by

the implementation of the E.O. — benefits which its members have no right to since protective tariff

rates are government privileges wherein no one can claim any vested right to.

On the merits, petitioner maintains that E.O. 486 is not constitutionally infirm, it having been issued

under the authority of Secs. 401 and 402 of the Tariff and Customs Code which set no limitations on the

President's power to adjust tariff rate and serve as the government's response to its AFTA commitment

on Common Effective Preferential Tariff (CEPT).

Since it is only the Omnibus Order denying the Motion to Dismiss and granting a writ of preliminary

injunction that is being assailed, the Court will not pass on the constitutionality of E.O. 486 which is still

pending before the trial court.

Private respondent prays in its Comment for the denial of the present petition, alleging that, among

other things, the petition is premature as petitioner failed to file a Motion for Reconsideration of the

assailed Omnibus Order of public respondent, and maintaining the propriety of the remedy of

prohibition which it filed to assail the E.O.

The issues then are:

1. Whether public respondent erred in assuming jurisdiction over the petition

for prohibition and not granting petitioner's motion to dismiss the

petition;

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

and

3. Whether public respondent erred in granting the writ of preliminary

injunction in favor of APMP.

On the issue of jurisdiction

Rule 65, Sec. 2 of the Rules of Court provides:

Sec. 2. Petition   for   Prohibition. — When the proceedings of any tribunal,

corporation, board, officer or person, whether exercising judicial, quasi-

judicial or ministerial functions, are without or in excess of its jurisdiction, or

with grave abuse of discretion amounting to lack or excess of jurisdiction, and

there is no appeal or any other plain, speedy, and adequate remedy in the

ordinary course of law, a person aggrieved thereby may file a verified petition in

the proper court, alleging the facts with certainty and praying that judgment be

rendered commanding the respondent to desist from further proceedings in

the action or matter specified therein, or otherwise granting such incidental

reliefs as law and justice may require. (emphasis supplied)

Holy Spirit Homeowners' Association v. Defensor 4 expounds on prohibition as a remedy to assail

executive issuances:

A petition for prohibition is also not the proper remedy to assail an IRR issued

in the exercise of a quasi-legislative function. Prohibition is an extraordinary

writ directed against any tribunal, corporation, board, officer or person,

whether exercising judicial, quasi-judicial or ministerial functions, ordering said

entity or person to desist from further proceedings when said proceedings are

without or in excess of said entity's or person's jurisdiction, or are accompanied

with grave abuse of discretion, and there is no appeal or any other plain, speedy

and adequate remedy in the ordinary course of law. Prohibition lies against

judicial or ministerial functions, but not against legislative or quasi-legislative

functions. Generally, the purpose of a writ of prohibition is to keep a lower

court within the limits of its jurisdiction in order to maintain the administration

of justice in orderly channels. Prohibition is the proper remedy to afford relief

against usurpation of jurisdiction or power by an inferior court, or when, in the

exercise of jurisdiction in handling matters clearly within its cognizance the

inferior court transgresses the bounds prescribed to it by the law, or where

there is no adequate remedy available in the ordinary course of law by which

such relief can be obtained. Where the principal relief sought is to invalidate an

IRR, petitioners' remedy is an ordinary action for its nullification, an action

which properly falls under the jurisdiction of the Regional Trial Court. In any

case, petitioners' allegation that "respondents are performing or threatening to

perform functions without or in excess of their jurisdiction" may appropriately

be enjoined by the trial court through a writ of injunction or a temporary

restraining order. (emphasis supplied)ESTDcC

Be that as it may, it is settled that what determines the nature of the action and which court has

jurisdiction over it are the allegations in the complaint and the character of the relief sought . 5 A

perusal of the petition of APMP before the trial court readily shows that it is not a mere petition for

prohibition with application for the issuance of a writ of preliminary injunction. For it is also one

for certiorari as it specifically alleges that E.O. 486 is invalid for being unconstitutional, it having been

issued in contravention of Sec. 4 of R.A. 6647 and Sec. 402 (e) of the Tariff and Customs Code, hence, its

enforcement should be enjoined and petitioner prohibited from implementing the same.

Petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to

review and/or prohibit or nullify, when proper, acts of legislative and executive officials. 6 Thus, even if

the petition was denominated as one for prohibition, public respondent did not err in treating it also as

one for certiorari and taking cognizance of the controversy.

On the propriety of filing a motion

for reconsideration

Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first filed

before the respondent tribunal, to allow it an opportunity to correct its assigned errors. 7 This rule,

however, is not without exceptions.

The rule is, however, circumscribed by well-defined exceptions, such as (a)

where the order is a patent nullity, as where the court a quo had no jurisdiction;

(b) where the questions raised in the certiorari proceeding have been duly

raised and passed upon by the lower court, or are the same as those raised and

passed upon in the lower court; (c) where there is an urgent necessity for the

resolution of the question and any further delay would prejudice the interests

of the Government or of the petitioner or the subject matter of the action is

perishable; (d) where, under the circumstances, a motion for reconsideration

would be useless; (e) where petitioner was deprived of due process and there is

extreme urgency for relief; (f) where, in a criminal case, relief from an order of

arrest is urgent and the granting of such relief by the trial court is improbable;

(g) where the proceedings in the lower court are a nullity for lack of due

process; (h) where the proceedings were ex parte, or in which the petitioner

had no opportunity to object; and (i) where the issue raised is one purely of

law or where public interest is involved. 8 (emphasis supplied)

The present case involves the constitutionality and implementation of an executive issuance involving

tariff rates and, as alleged by petitioner, the Government's commitments under the AFTA. Clearly, the

filing of a motion for reconsideration may be dispensed with following exceptions (c ) and (i) in the above

enumeration in Siok Ping Tang.

On the grant of the writ of

preliminary injunction

APMP alleges that it is composed of manufacturers of petrochemical products and that the

implementation of the assailed E.O. reducing tariff rates on certain petroleum-based products will result

in the local market being flooded with lower-priced imported goods which will, consequently, adversely

affect their sales profits. In granting the assailed writ, public respondent held that, based on the initial

evidence presented, the APMP stands to lose "substantial revenues" and some of its members "may

eventually have to close up or stop ongoing works on their Naphtha Cracker plants" if E.O. 486 is

implemented. Public respondent thus ruled that the APMP was entitled to the writ as it has a "valuable

stake in the petrochemical industry" and the enforcement of E.O. 486 will adversely affect its members;

and that petitioner violated APMP's right on the strength of an invalid executive issuance.

Public respondent noted that the Southern Cross case cited by petitioner which ruled that no court is

allowed to grant injunction to restrain the collection of taxes is inapplicable in the present case, since

restraining the implementation of E.O. 486 will not deprive the Government of revenues; instead, it will

result in more revenues as the proposed reduction of rates will be enjoined.

Public respondent thus concluded that there is sufficient basis for the issuance of a writ of preliminary

injunction in favor of APMP.

It is well to emphasize that the grant or denial of a writ of preliminary injunction in a pending case rests

on the sound discretion of the court taking cognizance thereof. 9 In the present case, however, where it

is the Government which is being enjoined from implementing an issuance which enjoys the

presumption of validity, such discretion must be exercised with utmost caution. Executive Secretary v. 

Court of Appeals, 10 enlightens: cDAITS

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

constitutional until otherwise declared by judicial interpretation.The suspension

of the operation of the law is a matter of extreme delicacy because it is an

interference with the official acts not only of the duly elected representatives

of the people but also of the highest magistrate of the land.

In Younger v. Harris, Jr., the Supreme Court of the United States emphasized,

thus:

Federal injunctions against state criminal statutes, either in their

entirety or with respect to their separate and distinct prohibitions,

are not to be granted as a matter of course, even if such statutes

are unconstitutional. No citizen or member of the community is

immune from prosecution, in good faith, for his alleged criminal acts.

The imminence of such a prosecution even though alleged to be

unauthorized and, hence, unlawful is not alone ground for relief in

equity which exerts its extraordinary powers only to prevent

irreparable injury to the plaintiff who seeks its aid. 752   Beal   v. 

Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61 S.Ct. 418, 420, 85

L.Ed. 577.

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

rule, that:

"It does not appear from the record that petitioners have been

threatened with any injury other than that incidental to every

criminal proceeding brought lawfully and in good faith . . ." 319 U.S.,

at 164, 63 S.Ct., at 881.

The possible unconstitutionality of a statute, on its face, does not

of itself justify an injunction against good faith attempts to enforce

it, unless there is a showing of bad faith, harassment, or any other

unusual circumstance that would call for equitable relief. The "on

its face" invalidation of statutes has been described as "manifestly

strong medicine," to be employed "sparingly and only as a last

resort," and is generally disfavored.

To be entitled to a preliminary injunction to enjoin the

enforcement of a law assailed to be unconstitutional, the party

must establish that it will suffer irreparable harm in the absence of

injunctive relief and must demonstrate that it is likely to succeed

on the merits, or that there are sufficiently serious questions going

to the merits and the balance of hardships tips decidedly in its

favor. The higher standard reflects judicial deference toward

"legislation or regulations developed through presumptively

reasoned democratic processes." Moreover, an injunction will alter,

rather than maintain, the status quo, or will provide the movant with

substantially all the relief sought and that relief cannot be undone

even if the defendant prevails at a trial on the merits. Considering

that injunction is an exercise of equitable relief and authority, in

assessing whether to issue a preliminary injunction, the courts must

sensitively assess all the equities of the situation, including the public

interest. In litigations between governmental and private parties,

courts go much further both to give and withhold relief in

furtherance of public interest than they are accustomed to go when

only private interests are involved. Before the plaintiff may be

entitled to injunction against future enforcement, he is burdened

to show some substantial hardship. (emphasis supplied)

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

irremediable injury to some of the parties before their claims can be thoroughly studied or adjudicated

— to preserve the status quo until the merits of the case can be heard fully. Still, even if it is a temporary

and ancillary remedy, its issuance should not be trifled with, and an applicant must convincingly show its

entitlement to the relief. St. James College of Parañaque v. Equitable PCI Bank, 11 explains:

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

preliminary injunction may be granted if the following grounds are established,

thus:

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

of such relief consists in restraining the commission or continuance of the act or

acts complained of, or in requiring the performance of an act or acts, either for

a limited period or perpetually;

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

complained of during the litigation would probably work injustice to the

applicant; or

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

to do, or is procuring or suffering to be done, some act or acts probably in

violation of the rights of the applicant respecting the subject of the action or

proceeding, and tending to render the judgment ineffectual.

And following jurisprudence, these requisites must be proved before a writ of

preliminary injunction, be it mandatory or prohibitory, will issue: HcDATC

(1) The applicant must have a clear and unmistakable

right to be protected, that is a right in esse;

(2) There is a material and substantial invasion of

such right;

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

irreparable injury to the applicant; and

(4) No other ordinary, speedy, and adequate remedy

exists to prevent the infliction of irreparable injury.

(emphasis supplied)

It is thus ineluctable that for it to be entitled to the writ, the APMP must show that it has a clear

and unmistakable right that is violated and that there is an urgent necessity for its

issuance. 12 That APMP had cause of action and the standing to interpose the action for

prohibition did not ipso facto call for the grant of injunctive relief in its favor without it proving its

entitlement thereto.

Transfield Philippines, Inc. v. Luzon Hydro Corporation, 13 illuminates on the right of a party to injunctive

relief:

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

showing by the complaint that there exists a right to be protected and that the

acts against which the writ is to be directed are violative of the said right. It

must be shown that the invasion of the right sought to be protected is

material and substantial, that the right of complainant is clear and

unmistakable and that there is an urgent and paramount necessity for the

writ to prevent serious damage. Moreover, an injunctive remedy may only be

resorted to when there is a pressing necessity to avoid injurious consequences

which cannot be remedied under any standard compensation. (emphasis

supplied)

Contrary to public respondent's ruling, APMP failed to adduce any evidence to prove that it had a clear

and unmistakable right which was or would be violated by the enforcement of E.O. 486. The filing of the

petition at the court a quo was anchored on APMP and its members' fear of loss or reduction of their

income once E.O. 486 is implemented and imported plastic and similar products flood the domestic

market due to reduced tariff rates. As correctly posited by petitioner, APMP was seeking protection

over "future economic benefits" which, at best, it had an inchoate right to.

More importantly, tariff protection is not a right, but a privilege granted by the government and,

therefore, APMP cannot claim redress for alleged violation thereof. In a similar case wherein the validity

of R.A. 9337 with respect to provisions authorizing the President to increase the value-added tax (VAT)

rates, the Court held:

The input tax is not a property or a property right within the constitutional

purview of the due process clause. A VAT-registered person's entitlement to

the creditable input tax is a mere statutory privilege.

The distinction between statutory privileges and vested rights must be borne

in mind for persons have no vested rights in statutory privileges. The state

may change or take away rights, which were created by the law of the state,

although it may not take away property, which was vested by virtue of such

rights. 14 (emphasis supplied)

Assuming arguendo that it was upon the government's assurances that the members of APMP allegedly

"invested hundred of millions of dollars in putting up the necessary infrastructure," that does not vest

upon APMP a right which must be protected.

Respecting the element of "irreparable injury," the landmark case of Social   Security  Commission   v. 

Bayona 15 teaches:

Damages are irreparable within the meaning of the rule relative to the

issuance of injunction where there is no standard by which their amount can

be measured with reasonable accuracy (Crouc v. Central Labor Council, 83 ALR,

193). "An irreparable injury which a court of equity will enjoin includes that

degree of wrong of a repeated and continuing kind which produce hurt,

inconvenience, or damage that can be estimated only by conjecture, and not

by any accurate standard of measurement" (Phipps v. Rogue River Valley Canal 

Co., 7 ALR, 741). An irreparable injury to authorize an injunction consists of "a

serious charge of, or is destructive to, the property it affects, either physically or

in the character in which it has been held and enjoined, or when the property

has some peculiar quality or use, so that its pecuniary value will not fairly

recompense the owner of the loss thereof" (Dunker v. Field and Tub Club, 92 P.,

502). (emphasis supplied) ACIESH

As does the more recent case of Philippine Air Lines v. National Labor Relations Commission: 16

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

recurrence that no fair and reasonable redress can be had therefor in a court

of law, or where there is no standard by which their amount can be measured

with reasonable accuracy, that is, it is not susceptible of mathematical

computation. It is considered irreparable injury when it cannot be adequately

compensated in damages due to the nature of the injury itself or the nature of

the right or property injured or when there exists no certain pecuniary standard

for the measurement of damages. (emphasis supplied)

In the present case, aside from APMP's allegations that the reduced tariff rates will adversely affect its

members' business and may lead to closure, there is no showing what "irreparable injury" it stood to

suffer with the implementation of E.O. 486.

IN FINE, not only is there no showing of a clear right on the part of APMP which was violated; the injury

sought to be protected is prospective in nature, hence, the injunctive relief should not have been

granted.

WHEREFORE, the petition is PARTLY GRANTED. The Omnibus Order dated February 6, 2007 issued by

public respondent Hon. Judge Jenny Lind R. Aldecoa-Delorino is REVERSED insofar as it granted a Writ of

Preliminary Injunction in favor of private respondent, Association of Petrochemical Manufacturers of the

Philippines (APMP). Accordingly, the Writ is DISSOLVED, and the case REMANDED to the court of origin

for further appropriate proceedings.

SO ORDERED.

THIRD DIVISION

[G.R. No. 169802. June 8, 2007.]

OVERSEAS WORKERS WELFARE ADMINISTRATION, represented by

Administrator Marianito D. Roque, petitioner, vs. ATTY. CESAR L. CHAVEZ,

OPHELIA N. ALMENARIO, ELVIRA ADOR, REYNALDO TAYAG, TORIBIO ROBLES,

JR., ROSSANE BAHIA, RACQUEL LLAGAS-KUNTING, MA. STELLA A. DULCE,

ROSSANA SIRAY, EDUARDO MENDOZA, JR., PRISCILLA BARTOLO, ROSE

VILLANUEVA, CHERRY MOLINA, MARY ROSE RAMOS, MA. MINERVA PAISO,

RODERIC DELOS REYES, RENATO DELA CRUZ, MARIVIC DIGMA, JESSIE

BALLESTEROS, DONATO DAGDAG, MARK TUMIBAY, CYNTHIA FRUEL,

DEMETRIO SORIANO, MILAGROS GUEVARRA, ANGELITA LACSON, BERT

BUQUID, JUN SAMORANAS, TEODORO TUTAY, LEAH YOGYOG, MARIE CRUZ

and CONCEPCION BRAGAS REGALADO, respondents.

D E C I S I O N

CHICO-NAZARIO, J p:

The Case

Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the instant

Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22 September 2005

Decision 1 of the Court of Appeals in CA-G.R. SP No. 87702, which affirmed the Order 2 dated 30

September 2004, of the Regional Trial Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415-

CFM. The RTC granted the issuance of a writ of preliminary injunction restraining OWWA from

implementing its new organizational structure.

Factual Antecedents

OWWA is a government agency tasked primarily to protect the interest and promote the welfare of

overseas Filipino workers (OFWs). 3 OWWA traces its beginnings to 1 May 1977, when the Welfare and

Training Fund for Overseas Workers in the Department of Labor and Employment (DOLE) was created by

virtue of Letter of Instructions No. 537, with the main objective, inter alia, of providing social and welfare

services to OFW, including insurance coverage, social work, legal and placement assistance, cultural and

remittances services, and the like. On 1 May 1980, Presidential Decree No. 1694 was signed into law,

formalizing the operations of a comprehensive Welfare Fund (Welfund), as authorized and created under

Letter of Instructions No. 537. Presidential Decree No. 1694 further authorized that contributions to the

Welfare and Training Fund collected pursuant to Letter of Instructions No. 537 be transferred to the

Welfund. On 16 January 1981, Presidential Decree No. 1809 was promulgated, amending certain

provisions of Presidential Decree No. 1694. 4 Subsequently, Executive Order No. 126 was passed which

reorganized the Ministry of Labor and Employment. Executive Order No. 126 also renamed the Welfare

Fund as the OWWA. ACDTcE

From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA structure

duly approved by the Department of Budget and Management (DBM) and the Civil Service Commission

(CSC), the OWWA Board of Trustees passed Resolution No. 001, 5 Series of 2004, bearing the title

"Approving the Structure of the Overseas Workers Welfare Administration," and depicting the

organizational structure and staffing pattern of the OWWA, as approved by Patricia A. Sto. Tomas (Sto.

Tomas), then Chair of the OWWA Board of Trustees and then Secretary of the DOLE. According to

Resolution No. 001, the structuring of the OWWA will stabilize the internal organization and promote

careerism among the employees. It will also ensure a more efficient and effective delivery of programs

and services to member-OFWs. Resolution No. 001 resolved, thus:

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

which is hereto attached and made an integral part of this Resolution,

comprising mainly of the approved organizational chart, functional descriptions

and staffing pattern, subject to the following:

a. There will be no displacement of existing regular employees;

b. There will be no temporary appointments; and

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

the new structure. DACTSa

RESOLVED further, that the OWWA Structure be immediately submitted for the

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

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

and staffing pattern of the OWWA. 7 In her approval thereof, she stated that the total funding

requirements for the revised organizational structure shall be P107,546,379 for four hundred (400)

positions. Moreover, DBM Secretary Boncodin underscored that the funding shall come solely from the

OWWA funds and that no government funds shall be released for the implementation of the changes

made.

On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01, 8 advising the

officials and employees of the OWWA that the DBM had recently approved OWWA's organizational

chart, functional statements, and the staffing pattern. Advisory No. 01 also announced that a Placement

Committee will be created to evaluate and recommend placement of all regular/permanent incumbents

of OWWA in the new organizational chart and staffing pattern. All employees were asked to indicate in

writing their interest or preference in any of the approved plantilla item, especially for promotion to the

Human Resources Management Division, not later than 11 June 2004. Further, Advisory No. 01

emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of 2004, had declared

the policy that there will be no displacement of existing regular/permanent employees. Qualified casual

and contractual personnel may apply for any vacant item only after all regular/permanent employees of

OWWA had been placed.

Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No. 171, Series of

2004, creating a Placement Committee to evaluate qualifications of employees; and to recommend their

appropriate placement in the new organizational chart, functional statements and staffing pattern of the

OWWA. Administrative Order No. 171 was partially amended by Administrative Order No. 171-A, issued

by DOLE Acting Secretary Manuel G. Imson (Imson), authorizing the Placement Committee to

recommend to the OWWA Administrator their evaluations, which shall thereafter be endorsed to the

DOLE Secretary for consideration. 9

The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and

regulations on its recommended placement of all personnel of OWWA based on the following

parameters, to wit: 10

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

employees of OWWA.

2. Qualified casuals and contractual personnel may likewise be considered in

the staffing pattern only after ensuring that the

regular(s)/permanent employees of OWWA have already been

placed.

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

shall be adopted. Thus, priority in some promotions shall be given to

those who opt to be assigned in the regional offices, aside from

performance.

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

the frontline and the administrative staff, based on

performance. DETACa

5. Regular/permanent incumbents interested for promotion should indicate

their interest in writing to the Placement Committee: Attn: The

Chairperson.

6. Those who may opt to retire should submit to the HRMD, their application for

retirement, copy furnished the Budget Division for budget allocation

purposes.

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

2004.

On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA officials and

employees to an orientation on the new structure, functions and staffing pattern of the OWWA.

Moreover, Advisory No. 02 required the holding of elections for the First and Second Level

Representatives who will elect from among themselves the regular official representatives and alternates

in the Placement Committee deliberations. On 11 June 2004, Advisory No. 03 was issued, announcing the

conduct of an election for representatives and alternates representing the employees in the first [Salary

Grades (SG) 1-9] and second level (SG 10-24), pursuant to Administrative Order No. 171, dated 3 June

2004, as amended by Administrative Order No. 171-A.

On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of

2004, 11 prescribing the guidelines on the placement of personnel in the new staffing pattern of the

OWWA.

On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the

Organizational Structure of the OWWA, as approved by OWWA Board Resolution No. 001, Series of

2004, with Prayer for the Issuance of a Writ of Preliminary Injunction 12 against herein petitioner OWWA

and its Board of Trustees. 13 The case was docketed as Civil Case No. 04-0415-CFM. DAETcC

In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual

employees, 76 contractual workers, and 356 officers and employees, which number does not include the

85 contractual employees in the Office of the Secretariat of the OWWA Medicare. 14 Respondents

posited that the approved Organizational Structure and Staffing Pattern of the OWWA increases the

number of regular plantilla positions from 356 to 400; however, the increase of 42 positions will not

absorb the aforementioned consultants and casual and contractual workers. They further averred that

the plantilla positions in the Central Office will be reduced from 250 to 140, while the regional offices will

have an increase of 164 positions. According to the respondents, the resulting decrease in the number of

employees in the Central Office will result in the constructive dismissal of at least 110 employees.

Meanwhile, the deployment of the regular central office personnel to the regional offices will displace

the said employees, as well as their families.

Respondents challenged the validity of the new organizational structure of the OWWA. In fine, they

contended that the same is null and void; hence, its implementation should be prohibited. EIASDT

Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners from: 1)

implementing its organizational structure as approved by the OWWA Board of Trustees in its Resolution

dated 9 January 2004; and 2) advertising and proceeding with the recruitment and placement of new

employees under the new organizational structure. 15

Further, respondents prayed that after trial on the merits, OWWA's organizational structure be declared

as unconstitutional and contrary to law; and the OWWA Board of Trustees be declared as having acted

contrary to the Constitution and existing laws, and with grave abuse of discretion in approving

Resolution No. 001, dated 9 January 2004. 16

The Ruling of the RTC

On 30 September 2004, the RTC rendered an Order 17 granting respondents' prayer for a writ of

preliminary injunction upon the filing of a bond in the sum of P100,000.00. In the grant thereof, the RTC

reasoned that any move to reorganize the structure of the OWWA requires an amendatory law. It

deemed Resolution No. 001 was not merely a "formalization of the organizational structure and staffing

pattern of the OWWA," but a disruption of the existing organization which disturbs and displaces a

number of regular employees, including consultants and casual and contractual employees.

The RTC ratiocinated in this wise:

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

structure as originally conceived under P.D. No. 1694 [Organization and

Administration of the Welfare for Overseas Workers] and P.D. No. 1809

[Amending Certain Provisions of Presidential Decree 1694, Creating the

"Welfare Fund for Overseas Workers"]. In the (sic) light of Section 11 of R.A. No.

6656 which provides that "the executive branch of the government shall

implement reorganization schemes within a specified period of time authorized

by law", this court doubts whether a reorganization of OWWA can be effected

without an enabling law.

Further, defendants do not dispute the fact that while the mechanics of the

reorganization is still being forged, the DOLE already processed applications and

eventually hired employees not from among the existing employees of the

OWWA. This appears to be in contravention of Section 4 of R.A. No. 6656 which

provides:

"Sec. 4. Officers and employees holding permanent appointments shall be given 

preference   for   appointment   to   the   new   positions   in   the   approved   staffing 

pattern comparable to their former position or  in case there are not enough 

comparable positions, to positions next lower in rank.

"No new employees shall be taken in until all permanent officers and employees 

have been appointed, including temporary and casual employees who possess 

the necessary qualification requirements, among which is the appropriate civil 

service   eligibility   for   permanent   appointment   to   positions   in   the   approved 

staffing pattern, in case there are still positions to be filled, unless such positions 

are policy-determining, primarily confidential or highly technical in nature."

Furthermore, defendant's (sic) do not dispute the fact that the Placement

Committee was hastily constituted, that its members were not educated of

their task of job placement, that there was no real to goodness (sic) personnel

evaluation and, finally, the Chairman of the Committee was simply hand-picked

by the DOLE Secretary contrary to the explicit injunction of Section 8 of the

Implementing Rules of R.A No. 6656 that "the members shall elect their

Chairman." 18

The RTC also cited the protection afforded by the Constitution to workers, specifically, officers or

employees of the Civil Service in ruling that the existing organization of the OWWA need not be

disturbed in any way and no single worker will be removed or displaced. Thus:

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

protected both by the Constitution and statutes. Thus, "(n)o officer or employee

of the civil service shall be removed or suspended except for cause provided by

law. "(Sec. 2, par. 3, Art. IX, Constitution). "No person shall be deprived of life,

liberty, or property without due process of law, nor shall any person be denied

the equal protection of the laws." (Sec. 1, Art. III; ibid.). A person's job is his

property. In many cases, as in the Philippine setting, one's job also means one's

life and the lives of those who depended on him. Hence, it is a policy of the

State to "free the people from poverty through policies that provide adequate

social services, promote full employment, a rising standard of living, and an

improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that, contrary to

law, tends to deprive a worker of his work, violates his rights. 19

Finally, the RTC defended its jurisdiction over the controversy despite petitioner's protestations that

jurisdiction over respondents' complaint is lodged in the administrative agencies tasked to implement

the new OWWA structure. It ruled that the doctrine of primary jurisdiction is applicable only where the

administrative agency exercises its quasi-judicial or administrative function; but, where what is

challenged is the constitutionality of a rule or regulation issued by the administrative agency in the

performance of its quasi-legislative functions, regular courts have jurisdiction over the matter. 20

Therefore, the RTC, in its Order, dated 30 September 2004, granted respondents' prayer for a writ of

preliminary injunction, to wit:

WHEREFORE, upon plaintiff's (sic) filing of a bond in the sum of P100,000.00, let

a writ of preliminary injunction issue in: 1) restraining the defendants from

implementing the new organizational structure of OWWA approved by the

Board of Trustees on January 9, 2004 and 2) restraining the defendants from

advertising and proceeding with the recruitment and placement of new

employees under the new organizational structure. 21

Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General

(OSG), 22 filed with the Court of Appeals, a Petition forCertiorari and Prohibition with Prayer for Issuance

of a Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court,

assailing the RTC Order of 30 September 2004. 23

The Ruling of the Appellate Court

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

petition. It affirmed the court a quo's findings that respondents possess a clear and legal right to the

immediate issuance of the writ. It resolved that it was proper for the RTC to restrain, for the meantime,

the implementation of OWWA's reorganization to prevent injury until after the main case is heard and

decided. 24 It found respondents' allegations sufficient to prove the existence of a right that should be

protected by a writ of preliminary injunction. Thus: CDAcIT

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

consultants have been employed for more than ten (10) years, if not twenty

(20) years, and were not regularized simply due to lack of regular positions in

the plantilla or the freezing of recruitment thereto.

To be sure, private respondents have convincingly adduced evidence of specific

acts to substantiate their claim of impending injury and not merely allegations

of facts and conclusions of law, but factual evidence of a clear and unmistakable

right of being displaced or dismissed by the planned reorganization. These

allegations are substantial enough to prove the right in esse. At best, the anxiety

of being dismissed or displaced is not premature, speculative and purely

anticipatory, but based on real fear which shows a threatened or direct injury[,]

it appearing that the reorganization of the OWWA is already slowly being put

into motion.

Apropos, having successfully established a direct and personal injury as a

consequence of the new reorganization[al] structure, it was only proper for the

court a   quo to grant the writ of preliminary injunction to restrain, for the

meantime, the implementation of the reorganization to prevent injury on

respondents until after the main case is heard and decided. Truly, as correctly

observed by the trial court, private respondents enjoy a right that is protected

both by the Constitution and statutes. A person's job is not only his property but

his very life. The constitutional protection of the right to life is not just a

protection of the right to be alive or to the security of one's limb against

physical harm. The right to life is also a right to a good life(Bernas,   The 

Constitution of the Republic of the Philippines, A Commentary, Volume I, First 

Edition,   1997) which includes the right to earn a living or the right to a

livelihood. A   fortiori, the requisites for preliminary injunction to issue have

adequately been established: the existence of a clear and unmistakable right,

and the acts violative of said right. caHCSD

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

preliminary injunction need not be conclusive and complete, We find that

private respondents have adequately shown that they are in clear danger of

being irreparably injured unless the status   quo is observed, in the

meantime . . . . 25

The appellate court was likewise of the opinion that the substantial issues raised before the court a 

quo anent the validity of the organizational structure of the OWWA; the alleged lack of authority of the

DBM to approve the same including the alleged violation by the OWWA of relevant statutes; the lack of

consultation prior to the reorganization; and the supposed illegal constitution of the Placement

Committee, are matters which the RTC is behooved to resolve. In finding no error on the part of the RTC,

the Court of Appeals said that without an injunctive relief, any decision that may be rendered in the suit

would already be ineffective, moot and academic. 26 cEaCAH

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

In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be reversed

and set aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for lack of merit. 28

The Issue

The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the writ of

preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred in affirming the

RTC in its grant of the assailed writ of preliminary injunction. Clearly, we are thus confined to the matter

of the propriety of the issuance of the writ of preliminary injunction by the trial court, and not to the

merits of the case which is still pending before the latter.

The Case for the Petitioner

First, in support of their petition, petitioner posits that the OWWA has already implemented the new

organizational structure as the advertisement, recruitment, and placement of OWWA employees have

been accomplished; and in the process, none of the respondents have been dismissed. Moreover, the

act sought to be prevented has long been consummated; hence, the remedy of injunction should no

longer be entertained.

Second, petitioner adduces the proposition that the reorganization of the OWWA does not require an

amendatory law contrary to the holding of the courta quo. The OSG maintains that there was no

previous OWWA structure in the first place; and neither did Presidential Decree No. 1694 29 nor

Presidential Decree No. 1809, 30 provide for an organizational structure for the OWWA.

Third, petitioner disputes the existence of the rights of respondents to be protected by the preliminary

injunctive writ sought on the ground that the latter did not shown any legal right which needs the

protection thereof, nor did they show that any such right was violated to warrant the issuance of a

preliminary injunction. Petitioner asserts that respondents did not claim that they are the consultants or

casual or contractual workers who would allegedly be displaced; and neither did respondents show that

there is only one right or cause of action pertaining to all of them. Neither was there a violation of their

rights because respondents have all been given appointments in the new OWWA organizational

structure. 31

Finally, on respondents' allegation that the reorganization of the OWWA will reassign permanent

employees to its regional offices, and consequently, displace them and their families, petitioner counters

that an employee may be reassigned from one organizational unit to another in the same agency,

provided that such reassignment shall not involve a reduction in rank, status or salary. 32

The Case for the Respondents

Respondents argue that the petitioner railroaded and raced against time to implement the new OWWA

organizational structure. They claim that in the process, petitioner exhibited manifest bad faith and

injustice. What existed was a hasty reorganization and restructuring of the OWWA without adequate

study and consultation, which was thereafter submitted and immediately approved by the Board of

Trustees. They insist that the creation of an organizational structure of the OWWA would require a

presidential fiat or a legislative enactment pursuant to Republic Act No. 6656. 33

Further, respondents maintain that their right in esse was established during the proceedings for the

issuance of the writ of preliminary injunction, as their complaint sufficiently showed the rights and

interests of the parties. They alleged that at no stage in the proceedings did petitioner question such

rights. In fact, petitioner made a waiver in open court to the effect that it was not presenting testimonial

evidence. According to the respondents, such an act was constitutive of an admission by petitioner of the

existence of a right in esse in their favor. CASTDI

The Ruling of the Court

Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at any stage

of an action prior to the judgment or final order requiring a party or a court, an agency or a person to

refrain from a particular act or acts. 34 Section 3, Rule 58 of the Rules of Court, enumerates the grounds

for the issuance of a writ of preliminary injunction as follows: cSEDTC

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

injunction may be granted when it is established:

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

of such relief consists in restraining the commission or continuance of the act or

acts complained of, or in requiring the performance of an act or acts, either for

a limited period or perpetually;

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

complained of during the litigation would probably work injustice to the

applicant; or

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

to do, or is procuring or suffering to be done, some act or acts probably in

violation of the rights of the applicant respecting the subject of the action or

proceeding, and tending to render the judgment ineffectual.

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

order. 35 It persists until it is dissolved or until the termination of the action without the court issuing a

final injunction. 36 To be entitled to an injunctive writ, petitioner must show, inter alia, the existence of a

clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious

damage. 37 A writ of preliminary injunction is generally based solely on initial and incomplete

evidence. 38 The evidence submitted during the hearing on an application for a writ of preliminary

injunction is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of

the justification for the preliminary injunction pending the decision of the case on the merits. 39 In fact,

the evidence required to justify the issuance of a writ of preliminary injunction in the hearing thereon

need not be conclusive or complete. 40 It must also be stressed that it does not necessarily proceed that

when a writ of preliminary injunction is issued, a final injunction will follow. 41

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

court. 42 Thus, the rule is, the matter of the issuance of a writ of preliminary injunction is addressed to

the sound discretion of the trial court, unless the court commits grave abuse of discretion. 43 In Toyota 

Motor Phils. Corporation Workers' Association (TMPCWA) v. Court of Appeals, 44 this Court pronounced

that grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and

whimsical exercise of judgment that is equivalent to lack of jurisdiction; or the exercise of power in an

arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an

evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in

contemplation of law. It is clear that the assessment and evaluation of evidence in the issuance of the

writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its conclusive

determination. 45 The duty of the court taking cognizance of a prayer for a writ of preliminary injunction

is to determine whether the requisites necessary for the grant of an injunction are present in the case

before it.46 However, as earlier stated, if the court commits grave abuse of its discretion in the issuance

of the writ of preliminary injunction, such that the act amounts to excess or lack of jurisdiction, the same

may be nullified through a writ of certiorari or prohibition.

More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the main case

subject to the latter's outcome, the sole objective of which is to preserve the status quo until the trial

court hears fully the merits of the case. 47 The status quo should be that existing at the time of the filing

of the case. 48 The status quo usually preserved by a preliminary injunction is the last actual, peaceable

and uncontested status which preceded the actual controversy. 49 The status   quo   ante   litem is,

ineluctably, the state of affairs which is existing at the time of the filing of the case. Indubitably, the trial

court must not make use of its injunctive power to alter such status. 50

We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave abuse of

discretion amounting to lack of jurisdiction.

In the case at bar, the RTC did not maintain the status  quo when it issued the writ of preliminary

injunction. Rather, it effectively restored the situation prior to the status quo, in effect, disposing the

issue of the main case without trial on the merits. What was preserved by the RTC was the state of

affairs before the issuance of Resolution No. 001, which approved the structure of the OWWA, and the

subsequent administrative orders pursuant to its passing. The RTC forgot that what is imperative in

preliminary injunction cases is that the writ can not be effectuated to establish new relations between

the parties. Hence, we find herein an application of the lessons that can be learned from Rualo  v. 

Pitargue. 51 In Rualo, this Court determined, among others, the propriety of the writ of preliminary

injunction which was issued restraining the Bureau of Internal Revenue from further implementing its

reorganization, and enforcing the orders 52 pursuant thereto. This Court, in lifting the therein assailed

writ, underscored the legal proscription which states that courts should avoid issuing a writ of

preliminary injunction which would in effect dispose of the main case without trial. 53 According to the

Court in Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the status 

quo but restored the situation before the status quo, that is, the situation before the issuance of the

Revenue Travel Assignment Orders. 54 The Court further declared that what existed was an acceptance

of therein respondents' premise of the illegality of the reorganization, and a prejudgment on the

constitutionality of the assailed issuances. 55 As in Rualo, we find herein a similar case where the RTC

admitted hook, line and sinker the mere allegations of respondents that the reorganization as instituted

was unlawful without the benefit of a full trial on the merits. It also did not maintain the status quo but

restored the landscape before the implementation of OWWA's reorganization. In thus issuing the writ of

preliminary injunction, the substantive issues of the main case were resolved by the trial court. What

was done by the RTC was quite simply a disposition of the case without trial. This is an error in law and

an exercise of grave abuse of discretion. Furthermore, we find that the RTC similarly prejudged the

validity of the issuances released by the OWWA Board of Trustees, as well as the other governmental

bodies (i.e., DBM, DOLE), which approved the organizational structure and staffing pattern of the

OWWA. In Rualo, this Court asserted the presumption of regularity of the therein assailed government

issuances. In this case, we accentuate the same presumption.

Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed ancillary writ

of preliminary injunction on the material ground that the records do not support respondents'

entitlement thereto.

We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This Court is not

convinced that respondents were able to show a clear and unmistakable legal right to warrant their

entitlement to the writ. A mere blanket allegation that they are all officers and employees of the OWWA

without a showing of how they stand to be directly injured by the implementation of its questioned

organizational structure does not suffice to prove a rightin esse. As was aptly raised by the petitioner,

respondents did not show that they were dismissed due to the challenged reorganization. There was no

showing that they are the employees who are in grave danger of being displaced. Respondents were

similarly wanting in proving that they are the consultants and contractual and casual employees, who

will allegedly suffer by reason of the re-organization. This Court is consistently adamant in demanding

that a clear and positive right especially calling for judicial protection must be established. 56 As has

been reiterated, injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it

will not issue to protect a right not in esse and which may never arise, or to restrain an action which did

not give rise to a cause of action. 57 In contrast, the rights of OWWA are accorded to it by law. The

importance of the reorganization within the body and the benefits that will accrue thereto were

accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution declared,inter 

alia, that the structuring of the OWWA will stabilize the internal organization and promote careerism

among the employees, as well as ensure a more efficient and effective delivery of programs and services

to member-OFWs. 58 However, we go further to opine that even the question of whether the OWWA

requires an amendatory law for its reorganization is one that should be best threshed out in the

disposition of the merits of the case. Indeed, the question as to the validity of the OWWA reorganization

remains the subject in the main case pending before the trial court. Its annulment is outside the realm of

the instant Petition. AaHTIE

Assuming arguendo that respondents stand to be in danger of being transferred due to the

reorganization, under the law, any employee who questions the validity of his transfer should appeal to

the CSC. 59 Even then, administrative remedies must be exhausted before resort to the regular courts

can be had.

Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been accomplished.

Injunction will not lie where the acts sought to be enjoined have already been accomplished or

consummated. 60 The wheels of OWWA's reorganization started to run upon the approval by the Board

of Trustees of its Resolution No. 001 entitled, "Approving the Structure of the Overseas Workers Welfare

Administration." Subsequently, a series of issuances which approved the organizational structure and

staffing pattern of the agency was issued by the DBM, the OWWA Administrator, and by the DOLE.

Resolution No. 001 has already been implemented. Case law has it that a writ of preliminary injunction

will not issue if the act sought to be enjoined is a fait accompli.

A writ of preliminary injunction being an extraordinary event, 61 one deemed as a strong arm of equity

or a transcendent remedy, 62 it must be granted only in the face of actual and existing substantial rights.

In the absence of the same, and where facts are shown to be wanting in bringing the matter within the

conditions for its issuance, the ancillary writ must be struck down for having been rendered in grave

abuse of discretion.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22 September 2005

in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the

Regional Trial Court pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415-CFM is

LIFTED and SET ASIDE.

SO ORDERED.

FIRST DIVISION

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

FELIPE SY DUNGOG, petitioner, vs. COURT OF APPEALS, JUAN A. GATO, in his

official capacity as RTC Sheriff, Lapu-Lapu City and CARLOS GOTHONG LINES,

INC., respondents.

Agapito P. Pagayanan, Jr. for petitioner.

Francisco V. Mijares, Jr. for respondent.

SYNOPSIS

Carlos Gothong Lines filed a complaint for specific performance against the spouses Dungog (parents of

herein petitioner) to enforce the contract of sale of the parcel of land owned by various individuals.

Gothong Lines faulted the spouses Dungog for non-delivery of some parcels of land, which resulted to an

overpayment in the amount paid. The spouses Dungog, however, contended that it was Gothong Lines

which breached the contract by stopping payment on the last four checks intended as the last

installments for the land. The spouses Dungog opposed Gothong Lines' application for a writ of

preliminary injunction on the ground that Gothong Lines violated the terms of the contract and the other

contemporaneous agreements between them. However, the trial court granted the prayer for

injunction, enjoining the spouses Dungog from cancelling the contract to sell. Thereafter, a writ of

preliminary injunction was issued. Petitioner assailed the order and the writ in a special civil action

for certiorari before the Court of Appeals. The appellate court dismissed outright the petition, as well as

denied the motion for reconsideration. Thus, he filed the instant petition questioning the propriety of

the writ of preliminary injunction issued by the trial court. ScaHDT

In denying the petition, the Supreme Court ruled that petitioner committed a procedural blunder in filing

a special civil action for certiorari to assail the order and the writ. The petition was not a party to the civil

case and, therefore, could not assail the writ of preliminary injunction through a petition

forcertiorari before the Court of Appeals. The appellate court was correct in saying that the petitioner

does not possess the requisite standing to file such suit.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; PLEADINGS; MOTION FOR INTERVENTION; PURPOSE THEREOF. —

A motion to intervene may be filed at any time before rendition of judgment by the trial court. The

purpose of intervention is not to obstruct or unnecessarily delay the placid operation of the machinery of

trial. The purpose is merely to afford one, not an original party but possessing a certain right or interest

in the pending case, the opportunity to appear and be joined so he could assert or protect such right or

interest.

2. ID.; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DEFINED; PURPOSE THEREOF TO PRESERVE

THE STATUS QUO OF THE MATTER SUBJECT OF THE ACTION; CONSTRUED. — Preliminary injunction is an

order granted at any stage of an action, prior to the judgment or final order, requiring a party, court,

agency or person to perform or to refrain from performing a particular act or acts. A preliminary

injunction, as the term itself suggests, is merely   temporary, subject to the final disposition of the

principal action. Its purpose is to preserve the statusquo of the matter subject of the action to protect

the rights of the plaintiff during the pendency of the suit. Otherwise, if no preliminary injunction is

issued, the defendant may, before final judgment, do the act which the plaintiff is seeking the court to

restrain. This will make ineffectual the final judgment that the court may afterwards render in granting

relief to the plaintiff. The issuance of a writ of preliminary injunction rests entirely within the discretion

of the court and is generally not interfered with except in cases of manifest abuse. The assessment and

evaluation of evidence in the issuance of the writ of preliminary injunction involve findings of facts

ordinarily left to the trial court for its conclusive determination.

3. ID.; ID.; ID.; WHEN PROPER; CASE AT BAR. — Under Section 3, Rule 58 of the 1997 Rules on Civil

Procedure, a preliminary injunction is proper when the plaintiff appears entitled to the relief demanded

in the complaint. The trial court found that Gothong Lines had already paid P51,248,348.26 out of the

total consideration of P65,520,475.00. Gothong Lines also consigned with the court an additional

P4,048,950.00 leaving a balance of P10,223,176.74. The trial court likewise found that 78% of the

properties were already in the possession of Gothong Lines. Moreover, the status  quo, which is the last

actual peaceable uncontested status that preceded the controversy, was that Gothong Lines had access

to the lots subject of the Contract through the entrance gate in Lot 1031-F. That is why Gothong Lines

commenced construction of its pier and the development of the roads within the parcels of land covered

by the Contract. The issuance of the Writ would no doubt preserve the status quo between the Spouses

Dungog and Gothong Lines that existed prior to the filing of the case. We agree with the trial court that

the status quo should be maintained until the issue on the parties' respective rights and obligations

under the Contract is determined after the trial.

D E C I S I O N

CARPIO, J p:

The Case

This petition for review on certiorari 1 assails the Decision 2 dated 14 May 1999 of the Court of Appeals

in CA-G.R. SP No. 48788, as well as the Resolution dated 24 August 1999 denying the motion for

reconsideration. The Court of Appeals dismissed  outright the petition for certiorari, prohibition and

mandamus filed by petitioner Felipe Sy Dungog ("Felipe") against respondents. The petition questioned

the propriety of the Order 3 dated 14 August 1998 ("Order") and the writ of preliminary injunction

("Writ") dated 18 August 1998 issued by the Regional Trial Court of Cebu, Lapu-Lapu City, Branch 53

("trial court") in Civil Case No. 5020-L.

The Antecedents

Tracing the roots of this controversy, Felipe alleges 4 that he and his sister, Fortune, agreed to sell their

lots in Canjulao, Cebu, through their parents, Juan L. Dungog and Emma S. Dungog ("Spouses Dungog").

The Spouses Dungog convinced other lot owners in Canjulao to sell their lots either directly to them or to

Felipe and his sister. On 31 December 1996, the Spouses Dungog entered into a Contract to Sell

("Contract") with private respondent Carlos A. Gothong Lines, Inc. ("Gothong Lines") covering several lots

in Canjulao. The lots which the Spouses Dungog contracted to sell to Gothong Lines belonged to various

individuals as listed in the Contract's Annex "A" 5 which specified the corresponding approximate land

areas of each lot. Among these was Lot 1031-F registered in the name of Felipe and covered by Transfer

Certificate of Title No. 10359 of the Register of Deeds of Lapu-Lapu City. Under the Contract, Gothong

Lines was to pay on installment basis the purchase price of P65,520,475.00 computed at P500 per square

meter. Thus, Gothong Lines paid a down payment of P12,000,000.00. For the balance of

P53,520,475.00, 6 Gothong Lines issued 15 postdated checks of P3,568,031.00 each beginning on 31

January 1997 as payment for 15 equal monthly installments. Gothong Lines made good all the checks,

except the last 4 checks dated 30 December 1997, 31 January 1998, 28 February 1998 and 30 March

1998, which bounced due to Gothong Lines' stop payment order.

Felipe alleges further that as of 31 December 1997, his parents had delivered 66 parcels of land to

Gothong Lines with a total area of 101,104.20 square meters valued at P50,552,100.00. Felipe also states

that as of the same date, Gothong Lines had paid P51,248,345.00 in encashed checks plus the initial

down payment of P12,000,000.00. This left an overpayment of P696,245.00 in the hands of the Spouses

Dungog. Felipe claims, however, that despite Gothong Lines' stop payment order of its last four checks,

the Spouses Dungog still delivered in February 1998, 8 parcels of land with a total land area of 11,590

square meters valued at P5,795,000.00. Among those delivered was Lot 1031-F. The Spouses Dungog

demanded payment for these 8 parcels of land, but Gothong Lines refused to pay. The Spouses Dungog

became frustrated with Gothong Lines' complete silence on their demands for payment, as well as the

earlier stop payment order on the last 4 checks. Thus, the Spouses Dungog informed Gothong Lines in a

letter dated 18 June 1998 that they would no longer push through with their offer to sell the remaining

lots. CHEIcS

On 6 July 1998, Gothong Lines filed a complaint for Specific   Performance,   Damages  with  Writ   of 

Preliminary Mandatory Injunction against the Spouses Dungog to enforce the Contract. Gothong Lines

faulted the Spouses Dungog for non-delivery of some of the parcels of land in breach of the Contract.

Gothong Lines alleged that while the total amount of P51,248,348.26 paid to the Spouses Dungog

corresponds to 102,496.69 square meters, the Spouses Dungog actually delivered to Gothong Lines only

100,613.69 square meters. Gothong Lines claimed that it paid an excess of P941,848.00 7 corresponding

to 1,883 square meters. To protect its interest, Gothong Lines ordered the bank to stop payment on the

remaining postdated checks. Gothong Lines asked the trial court to issue a writ of preliminary injunction

to restrain the Spouses Dungog from canceling the Contract and from preventing its representatives and

vehicles from passing through the properties subject of the Contract. Gothong Lines offered to post a

bond of P500,000.00 and consigned the P4,048,950.00 representing the balance of the purchase price.

Traversing Gothong Lines' allegations, the Spouses Dungog contended that it was Gothong Lines which

breached the Contract by stopping payment on the last 4 checks. The Spouses Dungog also charged

Gothong Lines with competing with them in acquiring one of the lots subject of the Contract. They

further countered that Gothong Lines violated a verbal agreement between them not to develop the

roads until after 30 June 1998, the last day for the Spouses Dungog to deliver and turn over the lots. The

Spouses Dungog opposed Gothong Lines' application for a writ of preliminary injunction on the ground

that Gothong Lines violated the terms of the Contract and the other contemporaneous agreements

between them.

Based on the pleadings and affidavits presented by the parties, the trial court granted on 14 August 1998

Gothong Lines' prayer for injunction. The dispositive portion of the Order reads:

WHEREFORE, in the light of the foregoing considerations, plaintiff's application

for the issuance of a writ of preliminary injunction is GRANTED. Consequently,

after the filing and approval of a bond in the amount of Three Hundred

Thousand Pesos (P300,000.00), let a writ of preliminary injunction issue,

enjoining defendants, their representatives, or anyone acting in their behalf; (a)

from canceling the contract to sell dated December 31, 1996; and (b) from

disallowing or preventing the entry and exit of plaintiff's vehicles and those of

its representatives through Lot 1031-F and other undelivered lots concerned. 8

Based on this Order, the trial court issued the Writ on 18 August 1998 which the sheriff served on the

same date.

Felipe assailed the Order and the Writ in a special civil action for certiorari before the Court of Appeals.

The appellate court, however, dismissed outright Felipe's petition. The appellate court also denied on 24

August 1999 Felipe's motion for reconsideration. Thus, Felipe filed the instant petition questioning the

propriety of the writ of preliminary injunction issued by the trial court.

The Rulings of the Trial Court and the Court of Appeals

In granting the Writ, the trial court stated —

There is no dispute that plaintiff has already paid defendants the amount of

P51,248,348.26 out of the total consideration of P65,520,475.00. Plaintiff has

also deposited with the Office of the Clerk of Court the amount of

P4,048,950.00, leaving a balance of P10,223,176.74.

Plaintiff had already started the road development in the properties delivered

to it. In other words, it has already spent much to develop the properties which

form the bulk of the parcels of land subject of the contract.

Ingress to and egress from plaintiff's development activities lie on an

undelivered parcel of land. Through it pass the vehicles, equipment, supplies

and materials, as well as the workers, required by the project. The closure of

this passage has apparently stymied the development in the area.

About 78% of the properties are in the hands of plaintiff. Access to these

properties is under the control of defendants, the entrance being located in Lot

1031-F, one of the remaining undelivered lots. Since the entrance gate has been

closed by defendants, it strikes the mind of the court that Lot 1031-F and the

other undelivered lots have now, in a manner of speaking, imprisoned the

delivered properties.

It is not therefore hard to see that the closure of the entrance gate has worked

to the prejudice of plaintiff and will certainly jeopardize the development work

in the delivered properties. Elementary justice and the spirit of fair play thus

dictate that the status quo ante, which is the situation before the closure when

plaintiff's representatives were able to pass through Lot 1031-F, be restored.

Insofar as defendants threatened cancellation of the contract to sell, the Court

has seen that out of the total area of 131,040.95 square meters covered by the

contract, plaintiff had already paid for 102,496.69 square meters, and that it

had deposited P4,048,950.00 to pay for some of the undelivered parcels. It is

but fair that such a move be, in the meantime, disallowed. 9

In dismissing outright Felipe's petition for certiorari, prohibition and mandamus assailing the trial court's

Order and the Writ, the Court of Appeals stated —

The petition should be dismissed outright, the petitioner has no standing here.

He may be the owner of the lot in question but he is not a party litigant in the

case a quo. His being a son of defendant spouse in the lower court does not give

him the capacity to sue. Of course, he is not without legal remedy to protect his

interest. 10

The Issue

In his Memorandum, Felipe narrows the inquiry to —

MAY PETITIONER BE DEPRIVED OF HIS PROPERTY WITHOUT DUE PROCESS OF

LAW AND PAYMENT OF JUST COMPENSATION FOR THE BENEFIT OF PRIVATE

RESPONDENT? 11

Felipe laments that the dismissal of his petition resulted in the outright confiscation of his property for

the private use of Gothong Lines, without due process of law and just compensation. Felipe claims that in

dismissing his petition, the Court of Appeals effectively sustained the trial court's Order divesting him of

his rights over Lot 1031-F. CTcSIA

The question of whether Gothong Lines may demand the turn over of the parcels of land listed in Annex

"A" of the Contract is not our concern here. The issue in this petition is whether the Court of Appeals

erred in dismissing Felipe's petition.

The Court's Ruling

The petition is bereft of merit.

Dismissal by the Court of Appeals of Felipe's petition was proper.

Felipe committed a procedural blunder in filing a special civil action for certiorari to assail the Order and

the Writ. Felipe was not a party in Civil Case No. 5020-L. He could not, therefore, assail the writ of

preliminary injunction through a petition for certiorari before the Court of Appeals. As correctly pointed

out by the Court of Appeals, Felipe does not possess the requisite standing to file such suit.

In Ciudad Real  v.  Court  of  Appeals, 12 this Court ruled that there is grave abuse of discretion if the

appellate court recognizes the standing of a party, not a litigant in the trial court proceedings, to join a

petition for certiorari. The Court explained:

Worse was the ruling of the respondent appellate court sanctioning the

standing of Magdiwang Realty Corporation to join said petition for certiorari. As

the records show, Magdiwang filed a Motion for Intervention on July 18, 1989

invoking its alleged Memorandum of Agreement with Doña Juana Development

Corporation dated July 15, 1982. The trial court, however, denied this motion

and Magdiwang did not question the ruling in the appellate court. The ruling

thus, became final. After about two (2) years or on August 27, 1991, Magdiwang

again filed a Motion to Substitute and/or Join as Party/Plaintiff relying on the

same Memorandum of Agreement. The trial court similarly denied the motion,

and the denial also attained finality as Magdiwang did not further challenge its

correctness. Despite the finality of the order denying Magdiwang's intervention

way back in 1989, the respondent court in its Decision of August 20, 1992

recognized the standing of Magdiwang to assail in the appellate court the

Compromise Agreement. Again, this ruling constitutes grave abuse of discretion

for Magdiwang was not a party in interest in Civil Case No. Q-35393.

The wisdom of this ruling is all too apparent. If a person not a party to an action is allowed to file a

certiorari petition assailing an interlocutory order of the trial court, such as an injunctive order and writ,

proceedings will become unnecessarily complicated, expensive and interminable. Eventually, this will

defeat the policy of our remedial laws to secure party-litigants a speedy and inexpensive disposition of

every action.

Felipe could have simply intervened 13 in the trial court proceedings to enable him to protect or

preserve a right or interest which may be affected by such proceedings. A motion to intervene may be

filed at any time before rendition of judgment by the trial court. 14 The purpose of intervention is not to

obstruct or unnecessarily delay the placid operation of the machinery of trial. The purpose is merely to

afford one, not an original party but possessing a certain right or interest in the pending case, the

opportunity to appear and be joined so he could assert or protect such right or interest. 15 Indeed,

Felipe could have easily joined his parents as defendants in resisting the claim of Gothong Lines.

A resolution affirming the Court of Appeals' outright dismissal of Felipe's petition for these reasons

would have been sufficient. Nevertheless, we deem it best to address the propriety of the issuance by

the trial court of the writ of preliminary injunction before writing finis to this petition.

Issuance of writ of preliminary injunction was also proper.

Preliminary injunction is an order granted at any stage of an action, prior to the judgment or final order,

requiring a party, court, agency or person to perform or to refrain from performing a particular act or

acts. 16 A preliminary injunction, as the term itself suggests, is merely temporary, subject to the final

disposition of the principal action. Its purpose is to preserve the status quo of the matter subject of the

action to protect the rights of the plaintiff during the pendency of the suit. Otherwise, if no preliminary

injunction is issued, the defendant may, before final judgment, do the act which the plaintiff is seeking

the court to restrain. This will make ineffectual the final judgment that the court may afterwards render

in granting relief to the plaintiff. 17

The issuance of a writ of preliminary injunction rests entirely within the discretion of the court and is

generally not interfered with except in cases of manifest abuse. 18 The assessment and evaluation of

evidence in the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to

the trial court for its conclusive determination. 19

We find that there was adequate justification for the issuance of the assailed writ of preliminary

injunction. There is no dispute that the Spouses Dungog entered into the Contract with Gothong Lines

which included Lot 1031-F owned by Felipe. Felipe admitted that he authorized his parents to sell this

lot. He also admitted that his parents had delivered to Gothong Lines Lot 1031-F along with other parcels

of land. However, the Spouses Dungog threatened to cancel the Contract and to deny Gothong Lines

passage through Lot 1031-F allegedly due to non-payment of the subsequent installments.

In applying for the Writ, Gothong Lines sought to restrain in the meantime the Spouses Dungog from

canceling the Contract in order not to render the judgment ineffectual. Gothong Lines also sought to

preserve its right of way through Lot 1031-F to maintain access to the other parcels of land previously

delivered by the Spouses Dungog to Gothong Lines. cCHITA

A careful reading of the trial court's assailed Order discloses that the Writ enjoined the cancellation of

the Contract on the basis of Gothong Lines' substantial performance of the Contract. The trial court also

enjoined the closure of the entrance gate in Lot 1031-F to preserve the status quo ante.

Under Section 3, Rule 58 20 of the 1997 Rules on Civil Procedure, a preliminary injunction is proper when

the plaintiff appears entitled to the relief demanded in the complaint. The trial court found that Gothong

Lines had already paid P51,248,348.26 out of the total consideration of P65,520,475.00. Gothong Lines

also consigned with the court an additional P4,048,950.00 leaving a balance of P10,223,176.74. The trial

court likewise found that 78% of the properties were already in the possession of Gothong Lines.

Moreover, the status quo, which is the last actual peaceable uncontested status that preceded the

controversy, 21 was that Gothong Lines had access to the lots subject of the Contract through the

entrance gate in Lot 1031-F. That is why Gothong Lines commenced construction of its pier and the

development of the roads within the parcels of land covered by the Contract. The issuance of the Writ

would no doubt preserve the status quo between the Spouses Dungog and Gothong Lines that existed

prior to the filing of the case. We agree with the trial court that the status quo should be maintained

until the issue on the parties' respective rights and obligations under the Contract is determined after the

trial.

Clearly, in issuing the Writ, the trial court did not forthwith deprive Felipe of his ownership of Lot 1031-F.

Neither did the Writ have the effect of ousting Felipe from possession of the lot. The trial court did not

rule on the merits of the case so as to amount to a deprivation or confiscation of property without due

process of law or just compensation. There was no adjudication on the rightful possession or ownership

of the contested parcels of land subject of the Contract. The trial court issued the injunction only as a

preventive remedy to protect during the pendency of the action Gothong Lines' right to a final and

effective relief.

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.

SECOND DIVISION

[G.R. No. 131719. May 25, 2004.]

THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF

LABOR AND EMPLOYMENT, AND THE SECRETARY OF FOREIGN AFFAIRS,

OWWA ADMINISTRATOR, and POEA ADMINISTRATOR, petitioners, vs. THE

HON. COURT OF APPEALS and ASIAN RECRUITMENT COUNCIL PHILIPPINE

CHAPTER (ARCO-PHIL.), INC., representing its members: Worldcare Services

Internationale, Inc., Steadfast International Recruitment Corporation, Dragon

International Manpower Services Corporation, Verdant Manpower

Mobilization Corporation, Brent Overseas Personnel, Inc., ARL Manpower

Services, Inc., Dahlzhen International Services, Inc., Interworld Placement

Center, Inc., Lakas Tao Contract Services, Ltd. Co., and SSC

Multiservices, respondents.

D E C I S I O N

CALLEJO, SR., J p:

In this petition for review on certiorari, the Executive Secretary of the President of the Philippines, the

Secretary of Justice, the Secretary of Foreign Affairs, the Secretary of Labor and Employment, the POEA

Administrator and the OWWA Administrator, through the Office of the Solicitor General, assail the

Decision 1 of the Court of Appeals in CA-G.R. SP No. 38815 affirming the Order 2 of the Regional Trial

Court of Quezon City dated August 21, 1995 in Civil Case No. Q-95-24401, granting the plea of the

petitioners therein for a writ of preliminary injunction and of the writ of preliminary injunction issued by

the trial court on August 24, 1995.

The Antecedents

Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995,

took effect on July 15, 1995. The Omnibus Rules and Regulations Implementing the Migrant Workers and

Overseas Filipino Act of 1995 was, thereafter, published in the April 7, 1996 issue of the Manila Bulletin.

However, even before the law took effect, the Asian Recruitment Council Philippine Chapter, Inc. (ARCO-

Phil.) filed, on July 17, 1995, a petition for declaratory relief under Rule 63 of the Rules of Court with the

Regional Trial Court of Quezon City to declare as unconstitutional Section 2, paragraph (g), Section 6,

paragraphs (a) to (j), (l) and (m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of the law, with

a plea for the issuance of a temporary restraining order and/or writ of preliminary injunction enjoining

the respondents therein from enforcing the assailed provisions of the law.

In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was self-executory and that

no implementing rules were needed. It prayed that the court issue a temporary restraining order to

enjoin the enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment, Section 7 on penalties

for illegal recruitment, and Section 9 on venue of criminal actions for illegal recruitments, viz:

Viewed in the light of the foregoing discussions, there appears to be urgent an

imperative need for this Honorable Court to maintain the status   quoby

enjoining the implementation or effectivity of the questioned provisions of RA

8042, by way of a restraining order otherwise, the member recruitment

agencies of the petitioner will suffer grave or irreparable damage or injury. With

the effectivity of RA 8042, a great majority of the duly licensed recruitment

agencies have stopped or suspended their operations for fear of being

prosecuted under the provisions of a law that are unjust and unconstitutional.

This Honorable Court may take judicial notice of the fact that processing of

deployment papers of overseas workers for the past weeks have come to a

standstill at the POEA and this has affected thousands of workers everyday just

because of the enactment of RA 8042. Indeed, this has far reaching effects not

only to survival of the overseas manpower supply industry and the active

participating recruitment agencies, the country's economy which has survived

mainly due to the dollar remittances of the overseas workers but more

importantly, to the poor and the needy who are in dire need of income-

generating jobs which can only be obtained from abroad. The loss or injury that

the recruitment agencies will suffer will then be immeasurable and irreparable.

As of now, even foreign employers have already reduced their manpower

requirements from the Philippines due to their knowledge that RA 8042

prejudiced and adversely affected the local recruitment agencies. 3

On August 1, 1995, the trial court issued a temporary restraining order effective for a period of only

twenty (20) days therefrom.

After the petitioners filed their comment on the petition, the ARCO-Phil. filed an amended petition, the

amendments consisting in the inclusion in the caption thereof eleven (11) other corporations which it

alleged were its members and which it represented in the suit, and a plea for a temporary restraining

order enjoining the respondents from enforcing Section 6 subsection (i), Section 6 subsection (k) and

paragraphs 15 and 16 thereof, Section 8, Section 10, paragraphs 1 and 2, and Sections 11 and 40 of Rep.

Act No. 8042.

The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to (m), Section 7(a) to

(b), and Section 10 paragraphs (1) and (2), quoted as follows:

(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL MIGRANT

WORKERS IS THE POSSESSION OF SKILLS. PURSUANT TO THIS AND AS SOON AS

PRACTICABLE, THE GOVERNMENT SHALL DEPLOY AND/OR ALLOW THE

DEPLOYMENT ONLY OF SKILLED FILIPINO WORKERS. 4

Sec. 2 subsection (i, 2nd par.)

Nonetheless, the deployment of Filipino overseas workers, whether land-based

or sea-based, by local service contractors and manning agents employing them

shall be encourages (sic). Appropriate incentives may be extended to them.

xxx xxx xxx

II. ILLEGAL RECRUITMENT

SEC. 6. Definition. — For purposes of this Act, illegal recruitment shall mean any

act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or

procuring workers and includes referring, contract services, promising or

advertising for employment abroad, whether for profit or not, when undertaken

by a non-licensee or non-holder of authority contemplated under Article 13(f)

of Presidential Decree No. 442, as amended, otherwise known as the Labor

Code of the Philippines: Provided, That any such non-licensee or non-holder

who, in any manner, offers or promises for a fee employment abroad to two or

more persons shall be deemed so engaged. It shall, likewise, include the

following acts, whether committed by any person, whether a non-licensee, non-

holder, licensee or holder of authority:

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

specified in the schedule of allowable fees prescribed by the Secretary of Labor

and Employment, or to make a worker pay any amount greater than that

actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation

to recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any

act of misrepresentation for the purpose of securing a license or authority

under the Labor Code;

(d) To induce or attempt to induce a worker already employed to quit his

employment in order to offer him another unless the transfer is designed to

liberate a worker from oppressive terms and conditions of employment;

(e) To influence or attempt to influence any person or entity not to employ any

worker who has not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to

public health or morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and

Employment or by his duly authorized representative;

(h) To fail to submit reports on the status of employment, placement vacancies,

remittance of foreign exchange earnings, separation from jobs, departures and

such other matters or information as may be required by the Secretary of Labor

and Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts

approved and verified by the Department of Labor and Employment from the

time of actual signing thereof by the parties up to and including the period of

the expiration of the same without the approval of the Department of Labor

and Employment;

(j) For an officer or agent of a recruitment or placement agency to become an

officer or member of the Board of any corporation engaged in travel agency or

to be engaged directly or indirectly in the management of a travel agency;

(k) To withhold or deny travel documents from applicant workers before

departure for monetary or financial considerations other than those authorized

under the Labor Code and its implementing rules and regulations;

(l) Failure to actually deploy without valid reason as determined by the

Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his

documentation and processing for purposes of deployment, in cases where the

deployment does not actually take place without the worker's fault. Illegal

recruitment when committed by a syndicate or in large scale shall be

considered an offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group

of three (3) or more persons conspiring or confederating with one another. It is

deemed committed in large scale if committed against three (3) or more

persons individually or as a group.

The persons criminally liable for the above offenses are the principals,

accomplices and accessories. In case of juridical persons, the officers having

control, management or direction of their business shall be liable.

xxx xxx xxx

SEC. 7. Penalties. —

(a) Any person found guilty of illegal recruitment shall suffer the penalty of

imprisonment of not less than six (6) years and one (1) day but not more than

twelve (12) years and a fine of not less than two hundred thousand pesos

(P200,000.00) nor more than five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than five hundred

thousand pesos (P500,000.00) nor more than one million pesos (P1,000,000.00)

shall be imposed if illegal recruitment constitutes economic sabotage as defined

herein.

Provided, however, That the maximum penalty shall be imposed if the person

illegally recruited is less than eighteen (18) years of age or committed by a non-

licensee or non-holder of authority.

Sec. 8.

Prohibition on Officials and Employees. — It shall be unlawful for any official or

employee of the Department of Labor and Employment, the Philippine

Overseas Employment Administration (POEA), or the Overseas Workers Welfare

Administration (OWWA), or the Department of Foreign Affairs, or other

government agencies involved in the implementation of this Act, or their

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

directly or indirectly, in the business of recruiting migrant workers as defined in

this Act. The penalties provided in the immediate preceding paragraph shall be 

imposed upon them. (emphasis supplied)

xxx xxx xxx

Sec. 10, pars. 1 & 2.

Money Claims. — Notwithstanding any provision of law to the contrary, the

Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the

original and exclusive jurisdiction to hear and decide, within   ninety   (90) 

calendar  days  after   the filing of   the complaint, the claims arising out of an

employer-employee relationship or by virtue of any law or contract involving

Filipino workers for overseas deployment including claims for actual, moral,

exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency

for any and all claims under this section shall be joint and several. This provision

shall be incorporated in the contract for overseas employment and shall be a

condition precedent for its approval. The performance bond to be filed by the

recruitment/placement agency, as provided by law, shall be answerable for all

money claims or damages that may be awarded to the workers. If the

recruitment/placement agency is a juridical being, the corporate officers and

directors and partners as the case may be, shall themselves be jointly and

solidarily liable with the corporation or partnership for the aforesaid claims and

damages.

xxx xxx xxx

SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. — The

preliminary investigations of cases under this Act shall be terminated within a

period of thirty (30) calendar days from the date of their filing. Where the

preliminary investigation is conducted by a prosecution officer and a prima 

facie case is established, the corresponding information shall be filed in court

within twenty-four (24) hours from the termination of the investigation. If the

preliminary investigation is conducted by a judge and a prima facie case is found

to exist, the corresponding information shall be filed by the proper prosecution

officer within forty-eight (48) hours from the date of receipt of the records of

the case.

The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate Section 1, Article III

of the Constitution. 5 According to the respondent, Section 6(g) and (i) discriminated against unskilled

workers and their families and, as such, violated the equal protection clause, as well asArticle II, Section

12 6 and Article XV, Sections 1 7 and 3(3) of the Constitution. 8 As the law encouraged the deployment of

skilled Filipino workers, only overseas skilled workers are granted rights. The respondent stressed that

unskilled workers also have the right to seek employment abroad. According to the respondent, the right

of unskilled workers to due process is violated because they are prevented from finding employment and

earning a living abroad. It cannot be argued that skilled workers are immune from abuses by employers,

while unskilled workers are merely prone to such abuses. It was pointed out that both skilled and

unskilled workers are subjected to abuses by foreign employers. Furthermore, the prohibition of the

deployment of unskilled workers abroad would only encourage fly-by-night illegal recruiters.

According to the respondent, the grant of incentives to service contractors and manning agencies to the

exclusion of all other licensed and authorized recruiters is an invalid classification. Licensed and

authorized recruiters are thus deprived of their right to property and due process and to the "equality of

the person." It is understandable for the law to prohibit illegal recruiters, but to discriminate against

licensed and registered recruiters is unconstitutional.

The respondent, likewise, alleged that Section 6, subsections (a) to (m) is unconstitutional because

licensed and authorized recruitment agencies are placed on equal footing with illegal recruiters. It

contended that while the Labor Code distinguished between recruiters who are holders of licenses and

non-holders thereof in the imposition of penalties, Rep. Act No. 8042 does not make any distinction. The

penalties in Section 7(a) and (b) being based on an invalid classification are, therefore, repugnant to the

equal protection clause, besides being excessive; hence, such penalties are violative of Section 19(1),

Article III of the Constitution. 9 It was also pointed out that the penalty for officers/officials/employees of

recruitment agencies who are found guilty of economic sabotage or large-scale illegal recruitment under

Rep. Act No. 8042 is life imprisonment. Since recruitment agencies usually operate with a manpower of

more than three persons, such agencies are forced to shut down, lest their officers and/or employees be

charged with large scale illegal recruitment or economic sabotage and sentenced to life imprisonment.

Thus, the penalty imposed by law, being disproportionate to the prohibited acts, discourages the

business of licensed and registered recruitment agencies.

The respondent also posited that Section 6(m) and paragraphs (15) and (16), Sections 8, 9 and 10,

paragraph 2 of the law violate Section 22, Article III of the Constitution 10 prohibiting ex-post facto laws

and bills of attainder. This is because the provisions presume that a licensed and registered recruitment

agency is guilty of illegal recruitment involving economic sabotage, upon a finding that it committed any

of the prohibited acts under the law. Furthermore, officials, employees and their relatives are presumed

guilty of illegal recruitment involving economic sabotage upon such finding that they committed any of

the said prohibited acts.

The respondent further argued that the 90-day period in Section 10, paragraph (1) within which a labor

arbiter should decide a money claim is relatively short, and could deprive licensed and registered

recruiters of their right to due process. The period within which the summons and the complaint would

be served on foreign employees and, thereafter, the filing of the answer to the complaint would take

more than 90 days. This would thereby shift on local licensed and authorized recruiters the burden of

proving the defense of foreign employers. Furthermore, the respondent asserted, Section 10, paragraph

2 of the law, which provides for the joint and several liability of the officers and employees, is a bill of

attainder and a violation of the right of the said corporate officers and employees to due process.

Considering that such corporate officers and employees act with prior approval of the board of directors

of such corporation, they should not be liable, jointly and severally, for such corporate acts.

The respondent asserted that the following provisions of the law are unconstitutional:

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

herein shall be filed with the Regional Trial Court of the province or city where

the offense was committed or where the offended party actually resides at the

time of the commission of the offense: Provided, That the court where the

criminal action is first filed shall acquire jurisdiction to the exclusion of other

courts: Provided, however, That the aforestated provisions shall also apply to

those criminal actions that have already been filed in court at the time of the

effectivity of this Act.

xxx xxx xxx

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

the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have

the original and exclusive jurisdiction to hear and decide, within ninety (90)

calendar days after the filing of the complaint, the claims arising out of an

employer-employee relationship or by virtue of any law or contract involving

Filipino workers for overseas deployment including claims for actual, moral,

exemplary and other forms of damages.

Sec. 40.

The departments and agencies charged with carrying out the provisions of this

Act shall, within ninety (90) days after the effectiviy of this Act, formulate the

necessary rules and regulations for its effective implementation.

According to the respondent, the said provisions violate Section 5(5). Article VIII of the

Constitution 11 because they impair the power of the Supreme Court to promulgate rules of procedure.

In their answer to the petition, the petitioners alleged, inter alia, that (a) the respondent has no cause of

action for a declaratory relief; (b) the petition was premature as the rules implementing Rep. Act No.

8042 not having been released as yet; (c) the assailed provisions do not violate any provisions of the

Constitution; and, (d) the law was approved by Congress in the exercise of the police power of the State.

In opposition to the respondent's plea for injunctive relief, the petitioners averred that:

As earlier shown, the amended petition for declaratory relief is devoid of merit

for failure of petitioner to demonstrate convincingly that the assailed law is

unconstitutional, apart from the defect and impropriety of the petition. One

who attacks a statute, alleging unconstitutionality must prove its invalidity

beyond reasonable doubt (Caleon v. Agus Development Corporation, 207 SCRA

748). All reasonable doubts should be resolved in favor of the constitutionality

of a statute (People v. Vera, 65 Phil. 56). This presumption of constitutionality is

based on the doctrine of separation of powers which enjoin upon each

department a becoming respect for the acts of the other departments (Garcia 

vs. Executive Secretary, 204 SCRA 516 [1991]). Necessarily, the ancillary remedy

of a temporary restraining order and/or a writ of preliminary injunction prayed

for must fall. Besides, an act of legislature approved by the executive is

presumed to be within constitutional bounds (National   Press   Club 

v. Commission on Elections, 207 SCRA 1). 12

After the respective counsels of the parties were heard on oral arguments, the trial court issued on

August 21, 1995, an order granting the petitioner's plea for a writ of preliminary injunction upon a bond

of P50,000. The petitioner posted the requisite bond and on August 24, 1995, the trial court issued a writ

of preliminary injunction enjoining the enforcement of the following provisions of Rep. Act No. 8042

pending the termination of the proceedings:

. . . Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m),

and pars. 15 & 16; Section 7, subsections (a) & (b); Section 8; Section 9; Section

10; pars. 1 & 2; Section 11; and Section 40 of Republic Act No. 8042, otherwise

known as the Migrant Workers and Overseas Filipinos Act of 1995. . . . 13

The petitioners filed a petition for certiorari with the Court of Appeals assailing the order and the writ of

preliminary injunction issued by the trial court on the following grounds:

1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of

its member-agencies to be protected by the injunctive relief and/or violation of

said rights by the enforcement of the assailed sections of R.A. 8042;

2. Respondent Judge fixed a P50,000 injunction bond which is grossly

inadequate to answer for the damage which petitioner-officials may sustain,

should respondent ARCO-PHIL. be finally adjudged as not being entitled

thereto. 14

The petitioners asserted that the respondent is not the real party-in-interest as petitioner in the trial

court. It is inconceivable how the respondent, a non-stock and non-profit corporation, could sustain

direct injury as a result of the enforcement of the law. They argued that if, at all, any damage would

result in the implementation of the law, it is the licensed and registered recruitment agencies and/or the

unskilled Filipino migrant workers discriminated against who would sustain the said injury or damage,

not the respondent. The respondent, as petitioner in the trial court, was burdened to adduce

preponderant evidence of such irreparable injury, but failed to do so. The petitioners further insisted

that the petition a quo was premature since the rules and regulations implementing the law had yet to

be promulgated when such petition was filed. Finally, the petitioners averred that the respondent failed

to establish the requisites for the issuance of a writ of preliminary injunction against the enforcement of

the law and the rules and regulations issued implementing the same.

On December 5, 1997, the appellate court came out with a four-page decision dismissing the petition

and affirming the assailed order and writ of preliminary injunction issued by the trial court. The appellate

court, likewise, denied the petitioners' motion for reconsideration of the said decision.

The petitioners now come to this Court in a petition for review on certiorari on the following grounds:

1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or

that of its member-agencies to be protected by the injunctive relief and/or

violation of said rights by the enforcement of the assailed sections of R.A. 8042;

2. The P50,000 injunction bond fixed by the court a quo and sustained by the

Court of Appeals is grossly inadequate to answer for the damage which

petitioners-officials may sustain, should private respondent ARCO-PHIL. be

finally adjudged as not being entitled thereto. 15

On February 16, 1998, this Court issued a temporary restraining order enjoining the respondents from

enforcing the assailed order and writ of preliminary injunction.

The Issues

The core issue in this case is whether or not the trial court committed grave abuse of its discretion

amounting to excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary

injunction on a bond of only P50,000 and whether or not the appellate court erred in affirming the trial

court's order and the writ of preliminary injunction issued by it.

The petitioners contend that the respondent has no locus   standi. It is a non-stock, non-profit

organization; hence, not the real party-in-interest as petitioner in the action. Although the respondent

filed the petition in the Regional Trial Court in behalf of licensed and registered recruitment agencies, it

failed to adduce in evidence a certified copy of its Articles of Incorporation and the resolutions of the

said members authorizing it to represent the said agencies in the proceedings. Neither is the suit of the

respondent a class suit so as to vest in it a personality to assail Rep. Act No. 8042; the respondent is

service-oriented while the recruitment agencies it purports to represent are profit-oriented. The

petitioners assert that the law is presumed constitutional and, as such, the respondent was burdened to

make a case strong enough to overcome such presumption and establish a clear right to injunctive relief.

The petitioners bewail the P50,000 bond fixed by the trial court for the issuance of a writ of preliminary

injunction and affirmed by the appellate court. They assert that the amount is grossly inadequate to

answer for any damages that the general public may suffer by reason of the non-enforcement of the

assailed provisions of the law. The trial court committed a grave abuse of its discretion in granting the

respondent's plea for injunctive relief, and the appellate court erred in affirming the order and the writ

of preliminary injunction issued by the trial court.

The respondent, for its part, asserts that it has duly established its locus standi and its right to injunctive

relief as gleaned from its pleadings and the appendages thereto. Under Section 5, Rule 58 of the Rules of

Court, it was incumbent on the petitioners, as respondents in the RTC, to show cause why no injunction

should issue. It avers that the injunction bond posted by the respondent was more than adequate to

answer for any injury or damage the petitioners may suffer, if any, by reason of the writ of preliminary

injunction issued by the RTC. In any event, the assailed provisions of Rep. Act No. 8042 exposed its

members to the immediate and irreparable damage of being deprived of their right to a livelihood

without due process, a property right protected under the Constitution.

The respondent contends that the commendable purpose of the law to eradicate illegal recruiters should

not be done at the expense and to the prejudice of licensed and authorized recruitment agencies. The

writ of preliminary injunction was necessitated by the great number of duly licensed recruitment

agencies that had stopped or suspended their business operations for fear that their officers and

employees would be indicted and prosecuted under the assailed oppressive penal provisions of the law,

and meted excessive penalties. The respondent, likewise, urges that the Court should take judicial notice

that the processing of deployment papers of overseas workers have come to a virtual standstill at the

POEA.

The Court's Ruling

The petition is meritorious.

The Respondent Has Locus Standi

To File the Petition in the RTC in

Representation of the Eleven

Licensed and Registered

Recruitment Agencies Impleaded

in the Amended Petition

The modern view is that an association has standing to complain of injuries to its members. This view

fuses the legal identity of an association with that of its members. 16 An association has standing to file

suit for its workers despite its lack of direct interest if its members are affected by the action. An

organization has standing to assert the concerns of its constituents. 17

In Telecommunications  and  Broadcast  Attorneys  of   the Philippines  v. Commission  on  Elections, 18 we

held that standing jus tertii would be recognized only if it can be shown that the party suing has some

substantial relation to the third party, or that the right of the third party would be diluted unless the

party in court is allowed to espouse the third party's constitutional claims.

In this case, the respondent filed the petition for declaratory relief under Rule 64 of the Rules of Court

for and in behalf of its eleven (11) licensed and registered recruitment agencies which are its members,

and which approved separate resolutions expressly authorizing the respondent to file the said suit for

and in their behalf. We note that, under its Articles of Incorporation, the respondent was organized for

the purposes inter  alia of promoting and supporting the growth and development of the manpower

recruitment industry, both in the local and international levels; providing, creating and exploring

employment opportunities for the exclusive benefit of its general membership; enhancing and

promoting the general welfare and protection of Filipino workers; and, to act as the representative of 

any individual, company, entity or association on matters related to the manpower recruitment industry, 

and to perform other acts and activities necessary to accomplish the purposes embodied therein. The

respondent is, thus, the appropriate party to assert the rights of its members, because it and its

members are in every practical sense identical. The respondent asserts that the assailed provisions

violate the constitutional rights of its members and the officers and employees thereof. The respondent

is but the medium through which its individual members seek to make more effective the expression of

their voices and the redress of their grievances. 19

However, the respondent has no locus standi to file the petition for and in behalf of unskilled workers.

We note that it even failed to implead any unskilled workers in its petition. Furthermore, in failing to

implead, as parties-petitioners, the eleven licensed and registered recruitment agencies it claimed to

represent, the respondent failed to comply with Section 2 of Rule 63 20 of the Rules of Court.

Nevertheless, since the eleven licensed and registered recruitment agencies for which the respondent

filed the suit are specifically named in the petition, the amended petition is deemed amended to avoid

multiplicity of suits. 21

The Assailed Order and Writ of 

Preliminary Injunction Is Mooted

By Case Law

The respondent justified its plea for injunctive relief on the allegation in its amended petition that its

members are exposed to the immediate and irreparable danger of being deprived of their right to a

livelihood and other constitutional rights without due process, on its claim that a great number of duly

licensed recruitment agencies have stopped or suspended their operations for fear that (a) their officers

and employees would be prosecuted under the unjust and unconstitutional penal provisions of Rep. Act

No. 8042 and meted equally unjust and excessive penalties, including life imprisonment, for illegal

recruitment and large scale illegal recruitment without regard to whether the recruitment agencies

involved are licensed and/or authorized; and, (b) if the members of the respondent, which are licensed

and authorized, decide to continue with their businesses, they face the stigma and the curse of being

labeled "illegal recruiters." In granting the respondent's plea for a writ of preliminary injunction, the trial

court held, without stating the factual and legal basis therefor, that the enforcement of Rep. Act No.

8042, pendente lite, would cause grave and irreparable injury to the respondent until the case is decided

on its merits.

We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the Court had, in a catena

of cases, applied the penal provisions in Section 6, including paragraph (m) thereof, and the last two

paragraphs therein defining large scale illegal recruitment committed by officers and/or employees of

recruitment agencies by themselves and in connivance with private individuals, and imposed the

penalties provided in Section 7 thereof, including the penalty of life imprisonment. 22 The Informations

therein were filed after preliminary investigations as provided for in Section 11 of Rep. Act No. 8042 and

in venues as provided for in Section 9 of the said act. In People v. Chowdury, 23 we held that illegal

recruitment is a crime of economic sabotage and must be enforced.

In People v. Diaz, 24 we held that Rep. Act No. 8042 is but an amendment of the Labor Code of the

Philippines and is not an ex-post facto law because it is not applied retroactively. In JMM Promotion and 

Management,   Inc. v. Court  of Appeals, 25 the issue of the extent of the police power of the State to

regulate a business, profession or calling vis-à-vis the equal protection clause and the non-impairment

clause of the Constitution were raised and we held, thus:

A profession, trade or calling is a property right within the meaning of our

constitutional guarantees. One cannot be deprived of the right to work and the

right to make a living because these rights are property rights, the arbitrary and

unwarranted deprivation of which normally constitutes an actionable wrong.

Nevertheless, no right is absolute, and the proper regulation of a profession,

calling, business or trade has always been upheld as a legitimate subject of a

valid exercise of the police power by the state particularly when their conduct

affects either the execution of legitimate governmental functions, the

preservation of the State, the public health and welfare and public morals.

According to the maxim, sic utere tuo ut alienum non laedas, it must of course

be within the legitimate range of legislative action to define the mode and

manner in which every one may so use his own property so as not to pose injury

to himself or others.

In any case, where the liberty curtailed affects at most the rights of property,

the permissible scope of regulatory measures is certainly much wider. To

pretend that licensing or accreditation requirements violates the due process

clause is to ignore the settled practice, under the mantle of the police power, of

regulating entry to the practice of various trades or professions. Professionals

leaving for abroad are required to pass rigid written and practical exams before

they are deemed fit to practice their trade. Seamen are required to take tests

determining their seamanship. Locally, the Professional Regulation Commission

has begun to require previously licensed doctors and other professionals to

furnish documentary proof that they had either re-trained or had undertaken

continuing education courses as a requirement for renewal of their licenses. It is

not claimed that these requirements pose an unwarranted deprivation of a

property right under the due process clause. So long as professionals and other

workers meet reasonable regulatory standards no such deprivation exists.

Finally, it is a futile gesture on the part of petitioners to invoke the non-

impairment clause of the Constitution to support their argument that the

government cannot enact the assailed regulatory measures because they

abridge the freedom to contract. In Philippine Association of Service Exporters, 

Inc. vs. Drilon, we held that "[t]he non-impairment clause of the Constitution . . .

must yield to the loftier purposes targeted by the government." Equally

important, into every contract is read provisions of existing law, and always, a

reservation of the police power for so long as the agreement deals with a

subject impressed with the public welfare.

A last point. Petitioners suggest that the singling out of entertainers and

performing artists under the assailed department orders constitutes class

legislation which violates the equal protection clause of the Constitution. We do

not agree.

The equal protection clause is directed principally against undue favor and

individual or class privilege. It is not intended to prohibit legislation which is

limited to the object to which it is directed or by the territory in which it is to

operate. It does not require absolute equality, but merely that all persons be

treated alike under like conditions both as to privileges conferred and liabilities

imposed. We have held, time and again, that the equal protection clause of the

Constitution does not forbid classification for so long as such classification is

based on real and substantial differences having a reasonable relation to the

subject of the particular legislation. If classification is germane to the purpose of

the law, concerns all members of the class, and applies equally to present and

future conditions, the classification does not violate the equal protection

guarantee. 26

The validity of Section 6 of R.A. No. 8042 which provides that employees of recruitment agencies may be

criminally liable for illegal recruitment has been upheld in People v. Chowdury: 27

As stated in the first sentence of Section 6 of RA 8042, the persons who may be

held liable for illegal recruitment are the principals, accomplices and

accessories. An employee of a company or corporation engaged in illegal

recruitment may be held liable as principal, together with his employer, if it is

shown that he actively and consciously participated in illegal recruitment. It has

been held that the existence of the corporate entity does not shield from

prosecution the corporate agent who knowingly and intentionally causes the

corporation to commit a crime. The corporation obviously acts, and can act,

only by and through its human agents, and it is their conduct which the law

must deter. The employee or agent of a corporation engaged in unlawful

business naturally aids and abets in the carrying on of such business and will be

prosecuted as principal if, with knowledge of the business, its purpose and

effect, he consciously contributes his efforts to its conduct and promotion,

however slight his contribution may be. . . . 28

By its rulings, the Court thereby affirmed the validity of the assailed penal and procedural provisions of

Rep. Act No. 8042, including the imposable penalties therefor. Until the Court, by final judgment,

declares that the said provisions are unconstitutional, the enforcement of the said provisions cannot be

enjoined.

The RTC Committed Grave Abuse

of Its Discretion Amounting to

Excess or Lack of Jurisdiction in

Issuing the Assailed Order and the

Writ of Preliminary Injunction

The matter of whether to issue a writ of preliminary injunction or not is addressed to the sound

discretion of the trial court. However, if the court commits grave abuse of its discretion in issuing the

said writ amounting to excess or lack of jurisdiction, the same may be nullified via a writ of certiorari and

prohibition.

In Social Security Commission v. Judge Bayona, 29 we ruled that a law is presumed constitutional until

otherwise declared by judicial interpretation. The suspension of the operation of the law is a matter of

extreme delicacy because it is an interference with the official acts not only of the duly elected

representatives of the people but also of the highest magistrate of the land.

In Younger v. Harris, Jr., 30 the Supreme Court of the United States emphasized, thus:

Federal injunctions against state criminal statutes, either in their entirety or

with respect to their separate and distinct prohibitions, are not to be granted as

a matter of course, even if such statutes are unconstitutional. No citizen or

member of the community is immune from prosecution, in good faith, for his

alleged criminal acts. The imminence of such a prosecution even though alleged

to be unauthorized and, hence, unlawful is not alone ground for relief in equity

which exerts its extraordinary powers only to prevent irreparable injury to the

plaintiff who seeks its aid. 752 Beal v.Missouri Pacific Railroad Corp., 312 U.S.

45, 49, 61 S.Ct. 418, 420, 85 L.Ed. 577.

And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:

"It does not appear from the record that petitioners have been threatened with

any injury other than that incidental to every criminal proceeding brought

lawfully and in good faith . . ." 319 U.S., at 164, 63 S.Ct., at 881. 31

The possible unconstitutionality of a statute, on its face, does not of itself justify an injunction against

good faith attempts to enforce it, unless there is a showing of bad faith, harassment, or any other

unusual circumstance that would call for equitable relief. 32 The "on its face" invalidation of statutes has

been described as "manifestly strong medicine," to be employed "sparingly and only as a last resort,"

and is generally disfavored. 33

To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed to be

unconstitutional, the party must establish that it will suffer irreparable harm in the absence of injunctive

relief and must demonstrate that it is likely to succeed on the merits, or that there are sufficiently serious 

questions going to the merits  and the balance of  hardships tips decidedly  in  its   favor. 34 The higher

standard reflects judicial deference toward "legislation or regulations developed through presumptively

reasoned democratic processes." Moreover, an injunction will alter, rather than maintain, thestatus quo,

or will provide the movant with substantially all the relief sought and that relief cannot be undone even

if the defendant prevails at a trial on the merits. 35 Considering that injunction is an exercise of equitable

relief and authority, in assessing whether to issue a preliminary injunction, the courts must sensitively 

assess   all   the   equities   of   the   situation,   including   the   public   interest. 36 In litigations between

governmental and private parties, courts go much further both to give and withhold relief in furtherance

of public interest than they are accustomed to go when only private interests are involved. 37Before the

plaintiff may be entitled to injunction against future enforcement, he is burdened to show some

substantial hardship. 38

The fear or chilling-effect of the assailed penal provisions of the law on the members of the respondent

does not by itself justify prohibiting the State from enforcing them against those whom the State

believes in good faith to be punishable under the laws:

. . . Just as the incidental "chilling effect" of such statutes does not automatically

render them unconstitutional, so the chilling effect that admittedly can result

from the very existence of certain laws on the statute books does not in itself

justify prohibiting the State from carrying out the important and necessary task

of enforcing these laws against socially harmful conduct that the State believes

in good faith to be punishable under its laws and the Constitution. 39

It must be borne in mind that subject to constitutional limitations, Congress is empowered to define

what acts or omissions shall constitute a crime and to prescribe punishments therefor. 40 The power is

inherent in Congress and is part of the sovereign power of the State to maintain peace and order.

Whatever views may be entertained regarding the severity of punishment, whether one believes in its

efficiency or its futility, these are peculiarly questions of legislative policy. 41 The comparative gravity of

crimes and whether their consequences are more or less injurious are matters for the State and Congress

itself to determine. 42 Specification of penalties involves questions of legislative policy. 43

Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing

wholly passive conduct, defining crimes in vague or overbroad language and failing to grant fair warning

of illegal conduct. 44 Class legislation is such legislation which denies rights to one which are accorded to

others, or inflicts upon one individual a more severe penalty than is imposed upon another in like case

offending. 45 Bills of attainder are legislative acts which inflict punishment on individuals or members of

a particular group without a judicial trial. Essential to a bill of attainder are a specification of certain

individuals or a group of individuals, the imposition of a punishment, penal or otherwise, and the lack of

judicial trial. 46

Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their

relatives employed in government agencies charged with the enforcement of the law for illegal

recruitment and imposing life imprisonment for those who commit large scale illegal recruitment is not

offensive to the Constitution. The accused may be convicted of illegal recruitment and large scale illegal

recruitment only if, after trial, the prosecution is able to prove all the elements of the crime charged. 47

The possibility that the officers and employees of the recruitment agencies, which are members of the

respondent, and their relatives who are employed in the government agencies charged in the

enforcement of the law, would be indicted for illegal recruitment and, if convicted sentenced to life

imprisonment for large scale illegal recruitment, absent proof of irreparable injury, is not sufficient on

which to base the issuance of a writ of preliminary injunction to suspend the enforcement of the penal

provisions of Rep. Act No. 8042 and avert any indictments under the law. 48 The normal course of

criminal prosecutions cannot be blocked on the basis of allegations which amount to speculations about

the future. 49

There is no allegation in the amended petition or evidence adduced by the respondent that the officers

and/or employees of its members had been threatened with any indictments for violations of the penal

provisions of Rep. Act No. 8042. Neither is there any allegation therein that any of its members and/or

their officers and employees committed any of the acts enumerated in Section 6(a) to (m) of the law for

which they could be indicted. Neither did the respondent adduce any evidence in the RTC that any or all

of its members or a great number of other duly licensed and registered recruitment agencies had to stop

their business operations because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042.

The respondent merely speculated and surmised that licensed and registered recruitment agencies

would close shop and stop business operations because of the assailed penal provisions of the law. A

writ of preliminary injunction to enjoin the enforcement of penal laws cannot be based on such

conjectures or speculations. The Court cannot take judicial notice that the processing of deployment

papers of overseas workers have come to a virtual standstill at the POEA because of the assailed

provisions of Rep. Act No. 8042. The respondent must adduce evidence to prove its allegation, and the

petitioners accorded a chance to adduce controverting evidence.

The respondent even failed to adduce any evidence to prove irreparable injury because of the

enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of time

constraints, its members would have to defend foreign employees in cases before the Labor Arbiter is

based on speculations. Even if true, such inconvenience or difficulty is hardly irreparable injury.

The trial court even ignored the public interest involved in suspending the enforcement of Rep. Act No.

8042 vis-à-vis the eleven licensed and registered recruitment agencies represented by the respondent.

In People v. Gamboa, 50 we emphasized the primary aim of Rep. Act No. 8042:

Preliminarily, the proliferation of illegal job recruiters and syndicates preying on

innocent people anxious to obtain employment abroad is one of the primary

considerations that led to the enactment of The Migrant Workers and Overseas 

Filipinos Act of 1995. Aimed at affording greater protection to overseas Filipino

workers, it is a significant improvement on existing laws in the recruitment and

placement of workers for overseas employment. Otherwise known as the

Magna Carta of OFWs, it broadened the concept of illegal recruitment under

the Labor Code and provided stiffer penalties thereto, especially those that

constitute economic sabotage, i.e., Illegal Recruitment in Large Scale and Illegal 

Recruitment Committed by a Syndicate. 51

By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial court

frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed them to continue

victimizing hapless and innocent people desiring to obtain employment abroad as overseas workers, and

blocked the attainment of the salutary policies 52 embedded in Rep. Act No. 8042. It bears stressing that

overseas workers, land-based and sea-based, had been remitting to the Philippines billions of dollars

which over the years had propped the economy.

In issuing the writ of preliminary injunction, the trial court considered paramount the interests of the

eleven licensed and registered recruitment agencies represented by the respondent, and capriciously

overturned the presumption of the constitutionality of the assailed provisions on the barefaced claim of

the respondent that the assailed provisions of Rep. Act No. 8042 are unconstitutional. The trial court

committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the

assailed order and writ of preliminary injunction. It is for this reason that the Court issued a temporary

restraining order enjoining the enforcement of the writ of preliminary injunction issued by the trial court.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the appellate court

is REVERSED AND SET ASIDE. The Order of the Regional Trial Court dated August 21, 1995 in Civil Case

No. Q-95-24401 and the Writ of Preliminary Injunction issued by it in the said case on August 24, 1995

are NULLIFIED. No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 140058. August 1, 2002.]

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

SILVA, petitioner, vs. HON. COURT OF APPEALS and ANTONIO

SANTOS, respondents.

Don P. Porciuncula for petitioner.

Oscar L. Karqan for private respondent.

SYNOPSIS

Petitioner bought the respective portions of the lawful possessors of the subject lot and entered into a

compromise settlement with six other persons occupying the property and then filed an application for

land registration which was decided by then Court of First Instance in petitioner's favor. Subsequently, a

group of occupants entered the land. Petitioner filed a complaint for injunction with damages, with a

prayer for a temporary restraining order (TRO), docketed as Civil Case No. 6695 with the RTC. The trial

court issued the TRO. Thereafter, the trial court issued a writ of preliminary injunction which was also

served upon respondent who was occupying a portion of the lot. Private respondent filed a special civil

action for certiorari with the Court of Appeals alleging among others that he was not a party to Civil Case

No. 6695 and that it was grave abuse of discretion for the trial court to enforce the injunctive writ

against him since it did not have jurisdiction over him. The appellate court decided in private

respondent's favor. Hence, the instant petition.

In affirming the decision of the Court of Appeals, the Supreme Court ruled that the persons specifically

enjoined in the order granting the writ of preliminary injunction were the defendants in Civil Case No.

6695 or persons acting in their stead. Petitioner admitted that private respondent was not a defendant in

the said civil case since at the institution thereof in 1997, he (private respondent) did not have a right

over any portion of petitioner's lot. Neither was he a trespasser then. Also, nothing in the records

indicate that private respondent was acting on behalf of any of the defendants. Taking all these into

consideration, the Court held that the writ of preliminary injunction thus cannot be made to apply to

private respondent. A preliminary injunction is not a cause of action in itself but merely a provisional

remedy, an adjunct to a main suit. Thus, a person who is not a party in the main suit, like private

respondent in the instant case, cannot be bound by an ancillary writ, such as the writ of preliminary

injunction issued against the defendants in Civil Case No. 6695. He cannot be affected by any proceeding

to which he is a stranger. cSIACD

SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; CANNOT BIND A PERSON WHO

IS NOT A PARTY IN THE MAIN SUIT; CASE AT BAR. — A preliminary injunction is an order granted at any

stage of an action prior to final judgment, requiring a person to refrain from a particular act. As an

ancillary or preventive remedy, a writ of preliminary injunction may therefore be resorted to by a party

to protect or preserve his rights and for no other purpose during the pendency of the principal action. Its

object is to preserve the status quo until the merits of the case can be heard. It is not a cause of action in

itself but merely a provisional remedy, an adjunct to a main suit. Thus, a person who is not a party in the

main suit, like private respondent in the instant case, cannot be bound by an ancillary writ, such as the

writ of preliminary injunction issued against the defendants in Civil Case No. 6695. He cannot be affected

by any proceeding to which he is a stranger.

2. ID.; ACTIONS; INTERVENTION; NOT COMPULSORY. — Intervention in an action is neither compulsory

nor mandatory but only optional and permissive.

3. ID.; ID.; ID.; REQUISITES. — [T]o warrant intervention, two requisites must concur: (a) the movant has

a legal interest in the matter in litigation, and (b) intervention must not unduly delay or prejudice the

adjudication of the rights of the parties nor should the claim of the intervenor be capable of being

properly decided in a separate proceeding. The interest, which entitles a person to intervene in a suit,

must involve the matter in litigation and of such direct and immediate character that the intervenor will

either gain or lose by the direct legal operation and effect of the judgment. AaHcIT

R E S O L U T I O N

QUISUMBING, J p:

This petition for review seeks to reverse the decision 1 promulgated on August 27, 1999, of the Court of

Appeals in CA-G.R. SP No. 51375. The appellate court enjoined the enforcement of the writ of

preliminary injunction dated April 14, 1998, issued by the Regional Trial Court of Balanga, Bataan, Branch

1, in Civil Case No. 6695 against private respondent, Antonio Santos. DCcSHE

The factual antecedents of this case are as follows: CADSHI

On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo Florida, Cornelio Pilipino

and Severino Vistan, lawful possessors of Lot 1379 of the Morong, Bataan Cadastre. Lot 1379 consists of

144 hectares. Domingo, Florida, Pilipino and Vistan through their forebears and by themselves had been

in open, notorious, and exclusive possession of portions of Lot 1379 since 1933 in the concept of owners.

The Bureau then directed them to confirm their titles over the property by filing the appropriate

applications for the portions of the property respectively occupied by them.

In October 1970, petitioner bought the respective portions of Domingo, Florida, Pilipino and Vistan,

totaling 69,932 square meters and entered into a compromise settlement with six other persons

occupying the property, whose applications had been rejected by the Bureau. Petitioner then filed an

application for land registration docketed as LRC Cad. Rec. No. N-209 with the then Court of First

Instance of Bataan, Branch 1. The application was contested by several oppositors, among them the

heirs of one Toribio Alejandro.

On December 20, 1991, the trial court decided the land registration case in petitioner's favor. The losing

parties appealed to the Court of Appeals, where the case was docketed as CA-G.R. CV No. 40452. On

March 14, 2000, the appellate court affirmed the lower court's decision. 2

In June 1997, a group of occupants entered the land, destroyed the fences and drove away livestock

owned by petitioner.

On October 9, 1997, petitioner filed a complaint for injunction with damages, with a prayer for a

temporary restraining order, docketed as Civil Case No. 6695, with the RTC of Balanga, Bataan. Named as

defendants were Juanito Infante, Domingo Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe,

and Richard Doe.

The trial court issued the temporary restraining order (TRO) and on January 16, 1998, the sheriff served

copies on the defendants. The sheriff accompanied petitioner's president to the property where they

found five (5) persons cultivating the land. The latter refused to give their names or receive copies of the

TRO. They claimed that they were only farm workers of a certain Antonio Santos who allegedly owned

the land. 3

On April 14, 1998, the trial court issued a writ of preliminary injunction restraining the defendants or

persons acting on their behalf from entering and cultivating the disputed property. The aforementioned

writ was also served upon respondent who was occupying a portion of Lot No. 1379. 4

On February 24, 1999, private respondent filed a special civil action for certiorari docketed as CA-G.R. SP

No. 51375 with the Court of Appeals. Private respondent averred that he only learned about the writ of

preliminary injunction on February 16, 1999, when he secured a copy of the order. He claimed that he

was an innocent purchaser for value of the property from Francisco, Armando, and Conchita, all

surnamed Alejandro and the injunction prevented him from using his property. He alleged that he was

not a party to Civil Case No. 6695 and that it was grave abuse of discretion for the trial court to enforce

the injunctive writ against him since it did not have jurisdiction over him.

On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in private respondent's favor,

thus:

WHEREFORE, premises considered the instant Petition is hereby GRANTED.

Public respondent is enjoined from imposing the questioned writ of preliminary

injunction dated April 14, 199[8] against petitioner [Santos].

SO ORDERED. 5

Hence, the instant petition, submitting the following issues for our consideration:

A. WHETHER [PRIVATE] RESPONDENT WAS DEPRIVED OF HIS CONSTITUTIONAL

RIGHT TO BE HEARD.

B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL PROCEDURE 6 IS

APPLICABLE IN THE ABOVE-ENTITLED CASE.

We find the lone issue to be: Is private respondent bound by the writ of preliminary injunction issued by

the trial court?

First, petitioner contends that the injunctive writ of April 14, 1998 was issued not only against all named

defendants in Civil Case No. 6695, but also against three unnamed "Does." It now argues that the "Does"

in the complaint are all those who violated its rights, including private respondent. Petitioner asks us to

note that the writ of injunction was served not only against the defendants in Civil Case No. 6695, but

also against other persons who were seen entering and cultivating petitioner's property, including

private respondent. Since the latter personally received the injunctive order on June 5, 1998, he was

already forewarned to intervene in Civil Case No. 6695 if he had any right or interest to protect in the

disputed property. This he failed to do. Since private respondent did not then take the opportunity to

present his side, he cannot now claim that he was denied due process when the writ was enforced

against him.

In his comment, private respondent counters that he was not legally bound nor required by law to file his

pleadings in Civil Case No. 6695 as he was not a party in said case. Likewise, he was not required to act

on or protest the injunctive writ in the aforementioned civil case. Private respondent avers that what

petitioner wants is to have a continuing writ in its favor, to include not only the defendants in Civil Case

No. 6695 but also all those who may subsequently intrude into the land dispute. Private respondent

submits that the court a quo committed no error in describing petitioner's posture as a violation of the

fundamental rights to notice and hearing.

We have minutely scrutinized the order granting the writ of preliminary injunction and are unable to say

that the writ applied to private respondent. The order merely stated "[L]et a writ of preliminary

injunction be issued enjoining and restraining the defendants or any person or persons acting in their

place or stead from further entering and cultivating the said land of the plaintiff subject matter of this

case until further order from the Court." 7 The persons specifically enjoined in the order were the

defendants in Civil Case No. 6695 or persons acting in their stead. Petitioner itself admitted that private

respondent was not a defendant in Civil Case No. 6695 since "at the institution of the case in 1997, he

(private respondent) did not have a right over any portion of petitioner's lot." 8 Neither was he a

trespasser then. 9 Also, nothing in the records indicate that private respondent was acting on behalf of

any of the defendants. Taking all these into consideration, we must hold that the writ of preliminary

injunction thus cannot be made to apply to private respondent.

A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring a

person to refrain from a particular act. 10 As an ancillary or preventive remedy, a writ of preliminary

injunction may therefore be resorted to by a party to protect or preserve his rights and for no other

purpose during the pendency of the principal action. 11 Its object is to preserve the status quo until the

merits of the case can be heard. 12 It is not a cause of action in itself but merely a provisional remedy, an

adjunct to a main suit. 13 Thus, a person who is not a party in the main suit, like private respondent in

the instant case, cannot be bound by an ancillary writ, such as the writ of preliminary injunction issued

against the defendants in Civil Case No. 6695. He cannot be affected by any proceeding to which he is a

stranger. 14

Second, petitioner contends that the Court of Appeals erred when it observed that petitioner should

have impleaded private respondent as defendant in Civil Case No. 6695 pursuant to Section 11, Rule 3 of

the 1997 Rules of Civil Procedure. 15 Instead, private respondent should have intervened in Civil Case

No. 6695 to protect his rights. Petitioner avers that at the time the injunctive writ was issued, it had

already rested its case and to require it to amend its complaint to include private respondent was too

late.

Private respondent counters that there was no reason why Section 11, Rule 3 of the 1997 Rules of Civil

Procedure should not be made to apply to Civil Case No. 6695. He argues that contrary to petitioner's

posture, his inclusion as a defendant in Civil Case No. 6695 is procedurally correct since no final

judgment had yet been rendered in said case. Moreover, he avers that petitioner cannot insist that

private respondent be vigilant in protecting his rights by intervening in Civil Case No. 6695.

We agree with private respondent. First, private respondent had no duty to intervene in the proceedings

in Civil Case No. 6695. Intervention in an action is neither compulsory nor mandatory but only optional

and permissive. 16 Second, to warrant intervention, two requisites must concur: (a) the movant has a

legal interest in the matter in litigation, 17 and (b) intervention must not unduly delay or prejudice the

adjudication of the rights of the parties 18 nor should the claim of the intervenor be capable of being

properly decided in a separate proceeding. 19 The interest, which entitles a person to intervene in a suit,

must involve the matter in litigation and of such direct and immediate character that the intervenor will

either gain or lose by the direct legal operation and effect of the judgment. 20 Civil Case No. 6695 was an

action for permanent injunction and damages. As a stranger to the case, private respondent had neither

legal interest in a permanent injunction nor an interest on the damages to be imposed, if any, in Civil

Case No. 6695. To allow him to intervene would have unnecessarily complicated and prolonged the case.

We agree with the Court of Appeals that to make the injunctive writ applicable against private

respondent, petitioner should have impleaded the latter as an additional defendant in Civil Case No.

6695. Petitioner's insistence that it had rested its case and hence was too late to include defendant finds

no support in Section 11. The rule categorically provides that "Parties may be dropped or added by order

of the court on motion of any party or on its own initiative at any stage of the action (stress supplied)

and on such terms as are just." 21 We find it inexplicable why petitioner pointedly resisted the advice of

the appellate court to implead private respondent as an additional defendant in Civil Case No. 6695.

WHEREFORE, the instant petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R.

SP No. 51375 AFFIRMED. No pronouncement as to costs. DACTSH

SO ORDERED.

EN BANC

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

THE SENATE BLUE RIBBON COMMITTEE, represented by its Chairman,

SENATOR AQUILINO Q. PIMENTEL, JR., petitioner, vs. HON. JOSE B.

MAJADUCON, Presiding Judge of Branch 23, Regional Trial Court of General

Santos City, and ATTY. NILO J. FLAVIANO, respondents.

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

AQUILINO Q. PIMENTEL, JR., petitioner, vs. THE HONORABLE JOSE S.

MAJADUCON, in his capacity as Presiding Judge of Branch 23, Regional Trial

Court, General Santos City, respondent.

Eddie U. Tamondong, Jose S. Songco, Abelardo de Jesus and Felipe R. Fragrante for petitioners.

Flaviano Canja Oclarit & Associates for Atty. N.J. Flaviano

SYNOPSIS

Before the Supreme Court are two consolidated petitions for certiorari docketed as G.R. No. 136760 and

G.R. No. 138378 assailing the resolutions of the respondent judge dismissing petitioner's motion to

dismiss the petition for prohibition, injunction with writ of preliminary injunction filed by private

respondent and convicting petitioner Senator Aquilino Q. Pimentel with indirect contempt.

In G.R. No. 136760, petitioners alleged that the respondent judge committed grave abuse of discretion

and/or acted without or in excess of jurisdiction when he enjoined the petitioners from proceeding with

the inquiry in P.S. 160 on the alleged anomaly in the purchase of Lot X, MR-1160-D, located in General

Santos City, by the AFP-RSBS, and enforcing its subpoenas to respondent Flaviano. According to

petitioner Committee, courts have no jurisdiction to restrain Congress from performing its

constitutionally vested function to conduct investigations in aid of legislation, following the principle of

separation of powers. On the other hand, respondent Flaviano contended that the trial court may

properly intervene into investigations by Congress pursuant to the power of judicial review vested in it

by the Constitution.

In G.R. No. 138378, petitioner Senator Aquilino Pimentel, Jr. contended that respondent judge erred in

finding him guilty of indirect contempt. According to Pimentel, when the petitioner Committee used the

phrase "gross ignorance of the rules of law and procedure," it did so without malice. Rather, it was only

to stress the unfamiliarity or disregard by the respondent judge of a basic rule of procedure, and to

buttress its arguments in support of its petition forcertiorari.

The Court held that the respondent judge's denial of petitioners' motion to dismiss the petition for

prohibition amounted to grave abuse of discretion. According to the Court, the principle of separation of

powers essentially means that legislation belongs to Congress, execution to the Executive, and

settlement of legal controversies to the Judiciary. When the Senate Blue Ribbon Committee served

subpoena on respondent Flaviano to appear and testify before it in connection with its investigation of

the alleged misuse and mismanagement of the AFP-RSBS, it did so pursuant to its authority to conduct

inquiries in aid of legislation. This is clearly provided in Article VI, Section 21 of the Constitution. Hence,

the Regional Trial Court of General Santos City, or any court for that matter, had no authority to prohibit

the Committee from requiring respondent to appear and testify before it. aDCIHE

The Court further held that petitioner Pimentel was not guilty of improper conduct which obstructs or

degrades the administration of justice. According to the Court, there was no showing that petitioner, as

representative of the Committee, used the phrase "gross ignorance of the rules of law and procedure" to

malign the trial court. Rather, it was used to express what he believed was a violation of the basic

principle of separation of powers.

Petitions granted.

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; GRAVE ABUSE OF DISCRETION;

WHEN PRESENT. — There is grave abuse of discretion when the respondent acts in a capricious,

whimsical, arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is

bereft of any factual and legal justification. In this case, the assailed resolution of respondent Judge

Majaducon was issued without legal basis.

2. ID.; ID.; CONTEMPT; INDIRECT CONTEMPT; PETITIONER IS NOT GUILTY THEREOF IN CASE AT BAR. —

After deliberating on the parties' arguments, we find that petitioner Pimentel is not guilty of improper

conduct which obstructs or degrades the administration of justice. Verily, it does not appear that

Pimentel caused the publication in the Philippine Star of the fact of filing of the petition for certiorari by

the Committee and the reproduction of excerpts thereof. He had no right to choose which news articles

will see print in the newspaper. Rather, it is the publisher thereof which decides which news events will

be reported in the broadsheet. In doing so, it is allowed "the widest latitude of choice as to what items

should see the light of day so long as they are relevant to a matter of public interest," pursuant to its

right of press freedom.

3. ID.; ID.; ID.; STATEMENT THAT RESPONDENT WAS GROSSLY IGNORANT OF THE RULES OF LAW AND

PROCEDURE DOES NOT CONSTITUTE IMPROPER CONDUCT WHICH OBSTRUCTS OR DEGRADE THE

ADMINISTRATION OF JUSTICE IN CASE AT BAR. — Finally, the statement that respondent Judge was

grossly ignorant of the rules of law and procedure does not constitute improper conduct that tends to

impede, obstruct or degrade the administration of justice. As correctly argued by petitioner, the phrase

"gross ignorance of the rules of law and procedure" is ordinarily found in administrative complaints and

is a necessary description to support a petition which seeks the annulment of an order of a judge

wherein basic legal principles are disregarded. In Spouses Bacar v. Judge De Guzman, Jr., it was held that

when the law is so elementary, not to know it or to act as if a judge does not know it, constitutes gross

ignorance of the law. In this case, there was no showing that petitioner Pimentel, as representative of

the Committee, used the phrase to malign the trial court. Rather, it was used to express what he

believed as a violation of the basic principle of separation of powers.

4. JUDICIAL ETHICS; JUDGES; CONTEMPT POWER; MUST BE EXERCISED ON THE PRESERVATIVE NOT

VINDICTIVE PRINCIPLE AND ON THE CORRECTIVE AND NOT RETALIATORY IDEA OF PUNISHMENT; CASE

AT BAR. — In this connection, it bears stressing that the power to declare a person in contempt of court

must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory

idea of punishment. This was aptly expressed in the case of Nazareno v. Barnes: A judge, as a public

servant, should not be so thin-skinned or sensitive as to feel hurt or offended if a citizen expresses an

honest opinion about him which may not altogether be flattering to him. After all, what matters is that a

judge performs his duties in accordance with the dictates of his conscience and the light that God has

given him. A judge should never allow himself to be moved by pride, prejudice, passion, or pettiness in

the performance of his duties. He should always bear in mind that the power of the court to punish for

contempt should be exercised for purposes that are impersonal, because that power is intended as a

safeguard not for the judges as persons but for the functions that they exercise.

5. POLITICAL LAW; SEPARATION OF POWERS; APPLICATION OF THE PRINCIPLE; COURTS HAVE NO

AUTHORITY TO PROHIBIT THE SENATE OR THE HOUSE OF REPRESENTATIVES FROM CONDUCTING

INQUIRIES IN AID OF LEGISLATION. — The principle of separation of powers essentially means that

legislation belongs to Congress, execution to the Executive, and settlement of legal controversies to the

Judiciary. Each is prevented from invading the domain of the others. When the Senate Blue Ribbon

Committee served subpoena on respondent Flaviano to appear and testify before it in connection with

its investigation of the alleged misuse and mismanagement of the AFP-RSBS funds, it did so pursuant to

its authority to conduct inquiries in aid of legislation. This is clearly provided in Article VI, Section 21 of

the Constitution, thus: The Senate or the House of Representatives or any of its respective committees

may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The

rights of persons appearing in or affected by such inquiries shall be respected. Hence, the Regional Trial

Court of General Santos City, or any court for that matter, had no authority to prohibit the Committee

from requiring respondent to appear and testify before it.

6. ID.; ID.; ID.; ID.; RULING IN BENGZON CASE (G.R. NO. 89914, 20 NOVEMBER 1991) NOT APPLICABLE TO

CASE AT BAR. — The ruling inBengzon, cited by respondent, does not apply in this case. We agree with

petitioner Committee that the factual circumstances therein are different from those in the case at bar.

In Bengzon, no intended legislation was involved and the subject matter of the inquiry was more within

the province of the courts rather than of the legislature. More specifically, the investigation in the said

case was an offshoot of the privilege speech of then Senator Enrile, who urged the Senate to look into a

possible violation of the Anti-Graft and Corrupt Practices Act by the relatives of then President Corazon

Aquino, particularly Mr. Ricardo Lopa, in connection with the alleged sale of 36 to 39 corporations

belonging to Benjamin Romualdez. On the other hand, there was in this case a clear legislative purpose,

as stated in Senate Resolution No. 160, and the appropriate Senate Committee was directed to look into

the reported misuse and mismanagement of the AFP-RSBS funds, with the intention of enacting

appropriate legislation to protect the rights and interests of the officers and members of the Armed

Forces of the Philippines. Further, in Bengzon, the validity of the sale of Romualdez's corporations was

pending with the Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct its

investigation. In short, the issue had already been pre-empted by the court. In the instant case, the

complaint against respondent Flaviano regarding the anomaly in the sale of Lot X, MR-1160 was still

pending before the Office of the Ombudsman when the Committee served subpoena on him. In other

words, no court had acquired jurisdiction over the matter. Thus, there was as yet no encroachment by

the legislature into the exclusive jurisdiction of another branch of the government. Clearly, there was no

basis for the respondent Judge to apply the ruling in Bengzon. Hence, the denial of petitioner's motion to

dismiss the petition for prohibition amounted to grave abuse of discretion.

D E C I S I O N

YNARES-SANTIAGO, J p:

For resolution are two consolidated petitions: (a) G.R. No. 136760, for certiorari, prohibition, mandamus

and preliminary injunction, assailing the resolution dated November 11, 1998 of Judge Jose S. Majaducon

of the Regional Trial Court of General Santos City, Branch 23, which denied the Senate Blue Ribbon

Committee's motion to dismiss the petition for prohibition, injunction with writ of preliminary injunction

filed by private respondent Atty. Nilo J. Flaviano; and (b) G.R. No. 138378, for review of the resolution

dated April 15, 1999 of respondent Judge Majaducon declaring petitioner Senator Aquilino Q. Pimentel,

Jr. guilty of indirect contempt of court.

The antecedent facts are as follows:

G.R. No. 136760:

On August 28, 1998, Senator Blas F. Ople filed Senate Resolution No. 157 directing the Committee on

National Defense and Security to conduct an inquiry, in aid of legislation, into the charges of then

Defense Secretary Orlando Mercado that a group of active and retired military officers were organizing

a coup d 'etat to prevent the administration of then President Joseph Estrada from probing alleged fund

irregularities in the Armed Forces of the Philippines. 1

On the same date, Senator Vicente C. Sotto III also filed Resolution No. 160, "directing the appropriate

senate committee to conduct an inquiry, in aid of legislation, into the alleged mismanagement of the

funds and investment portfolio of the Armed Forces Retirement and Separation Benefits System (AFP-

RSBS) . . .." 2

The Senate President referred the two resolutions to the Committee on Accountability of Public Officers

and Investigations (Blue Ribbon Committee) and the Committee on National Defense and Security.

During the public hearings conducted by the Senate Blue Ribbon Committee (hereafter called the

Committee), it appeared that the AFP-RSBS purchased a lot in General Santos City, designated as Lot X,

MR-1160, for P10,500.00 per square meter from private respondent Atty. Nilo J. Flaviano. However, the

deed of sale filed with the Register of Deeds indicated that the purchase price of the lot was only

P3,000.00 per square meter.

The Committee thereafter caused the service of a subpoena to respondent Atty. Flaviano, directing him

to appear and testify before it. Respondent refused to appear at the hearing. Instead, he filed a petition

for prohibition and preliminary injunction with prayer for temporary restraining order with the Regional

Trial Court of General Santos City, Branch 23, which was docketed as SP Civil Case No. 496.

On October 21, 1998, the trial court issued a Temporary Restraining Order directing the Committee "to

CEASE and DESIST from proceeding with the inquiry in P.S. 160 particularly in General Santos City and/or

anywhere in Region XI or Manila on matters affecting the patenting/titling and sale of Lot X, MR-1160-D

to AFP-RSBS," and "from issuing subpoenas to witnesses from Region XI, particularly from General Santos

City, pending the hearing of the petition for prohibition and injunction." 3

On November 5, 1998, the Committee filed a motion to dismiss the petition on the grounds of (a) lack of

jurisdiction, and (b) failure to state a valid cause of action. It further argued that the issuance of the

Temporary Restraining Order was invalid for violating the rule against ex-parte issuance thereof; and that

the same was not enforceable beyond the territorial jurisdiction of the trial court.

On November 11, 1998, the trial court denied petitioner's motion to dismiss and granted the writ of

preliminary injunction, thus:

WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is DENIED, and the

WRIT OF PRELIMINARY INJUNCTION is hereby issued against respondent. It is

enjoined from enforcing its subpoenas to petitioner in Region XI to appear and

testify before it in any of its inquiry or investigation anywhere in the Philippines

regarding the acquisition by the AFP-RSBS of Lot X, MR-1160-D, located in

General Santos City. The bond of petitioner filed on October 21, 1998, for

P500,000.00 for the TRO also serves as his bond in this injunction.

SO ORDERED. 4

Hence, the instant petition for certiorari which was docketed as G.R. No. 136760, alleging that

respondent Judge Majaducon committed grave abuse of discretion and/or acted without or in excess of

jurisdiction when he:

I. DENIED PETITIONER'S MOTION TO DISMISS THE PETITION FOR PROHIBITION

AND PRELIMINARY INJUNCTION FILED BY PRIVATE RESPONDENT,

ATTY. NILO J. FLAVIANO, AGAINST THE PETITIONER IN SP. CIVIL CASE

NO. 496.

II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE FOR A PERIOD OF

TWENTY (20) DAYS AGAINST THE PETITIONER ON OCTOBER 21, 1998,

AND (2) A WRIT OF PRELIMINARY INJUNCTION ON NOVEMBER 11,

1998 ENJOINING THE PETITIONER FROM ENFORCING ITS

SUBPOENAS TO PRIVATE RESPONDENT IN REGION XI.

III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE RIBBON IN GRANTING

INJUNCTIVE RELIEF TO PRIVATE RESPONDENT.5

G.R. No. 138378:

On January 13, 1999, the newspaper, The Philippine Star published a news report on the filing by the

Committee with this Court of the petition for certiorari which was docketed as G.R. No. 136760. The

news report quoted portions of the petition filed by the Committee, alleging that Regional Trial Court

Judge Majaducon was guilty of gross ignorance of the rules and procedures when he issued the

temporary restraining order and the writ of preliminary injunction because, under the principle of

separation of powers, courts cannot interfere with the exercise by the legislature of its authority to

conduct investigations in aid of legislation. 6

Reacting to the aforesaid news report, respondent Judge Majaducon motu proprio initiated a charge for

indirect contempt of court against Senator Aquilino Q. Pimentel, Jr., news reporter Perseus Echeminada,

Philippine Star publisher Maximo Soliven, editor-in-chief Ramon J. Farolan, and executive editor Bobby

G. dela Cruz, which was docketed as Special Civil Case No. 496. Judge Majaducon averred that the news

report created in the minds of the reader the impression that he violated the separation of powers

clause of the Constitution and that he was guilty of gross ignorance of the rules and procedures.

After the respondents submitted their respective answers, a decision was rendered on April 15, 1999

finding petitioner Pimentel guilty of indirect contempt.

Hence, the instant petition based on the following grounds:

I. THE EXPRESSION "GROSS IGNORANCE OF THE RULES OF PROCEDURE" OR

"GROSS IGNORANCE OF THE LAW" IN REFERENCE TO THE

RESPONDENT'S EX-PARTE ISSUANCE OF INJUNCTIVE RELIEF IS NOT

PEJORATIVE AS TO CONSTITUTE A GROUND FOR INDIRECT

CONTEMPT.

II. THIS HONORABLE COURT ITSELF USES "GROSS IGNORANCE OF THE LAW"

AND OTHER EXPRESSIONS OF SIMILAR FORCEFUL IMPORT IN

DESCRIBING GROSS AND PALPABLE ERRORS OF JUDGES.

III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE PETITIONER, THE

RESPONDENT JUDGE HAS, IN EFFECT, PREEMPTED THIS HONORABLE

COURT IN RESOLVING THE ISSUES RAISED AGAINST HIM IN G.R. NO.

136760.

IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE RIBBON PETITION IN

G.R. NO. 136760, OR EXCERPTS THEREOF WAS A LEGITIMATE

EXERCISE OF FREEDOM OF EXPRESSION AND OF THE PRESS.

The two petitions, namely, G.R. No. 136760 and G.R. No. 138378, were ordered consolidated on

December 11, 2000.

The issues for resolution in these joint petitions are: (a) whether or not respondent Judge Jose

Majaducon committed grave abuse of discretion when he dismissed petitioner's motion to dismiss the

petition for prohibition and issued the writ of preliminary injunction; and (b) whether or not respondent

Judge erred in convicting petitioner Pimentel of indirect contempt of court.

On the first issue, petitioner Committee contends that courts have no jurisdiction to restrain Congress

from performing its constitutionally vested function to conduct investigations in aid of legislation,

following the principle of separation of powers. Moreover, the petition filed by respondent Flaviano

before the trial court failed to state a cause of action considering that the legislative inquiry did not deal

with the issuance of the patent and title to Lot X, MR-1160-D in the name of AFP-RSBS, which is well

within the court's jurisdiction, but with the anomaly in the purchase thereof, which falls squarely within

the ambit of Senate Resolutions Nos. 157 7 and 160. 8

On the other hand, respondent Flaviano contends that the trial court may properly intervene into

investigations by Congress pursuant to the power of judicial review vested in it by the Constitution. He

avers that he has a valid cause of action to file the petition for prohibition considering that the

Committee's investigation will delve into the validity of the patenting and titling of Lot X, MR-1160-D

which, as admitted by petitioner, falls within the competence of judicial courts. In fact, the validity of the

purchase by AFP-RSBS of the subject lot is already the subject of a pending action before the Regional

Trial Court of General Santos City and the Ombudsman of Mindanao. Finally, he cites the case of Bengzon 

v. Senate Blue Ribbon Committee, 9and argues that preliminary injunction may issue in cases pending

before administrative bodies such as the Ombudsman or the Office of the Prosecutor as long as the right

to self-incrimination guaranteed by the Bill of Rights is in danger. Furthermore, an information against

him has been filed with the Sandiganbayan.

We find for petitioner. There is grave abuse of discretion when the respondent acts in a capricious,

whimsical, arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is

bereft of any factual and legal justification. 10 In this case, the assailed resolution of respondent Judge

Majaducon was issued without legal basis.

The principle of separation of powers essentially means that legislation belongs to Congress, execution

to the Executive, and settlement of legal controversies to the Judiciary. Each is prevented from invading

the domain of the others. 11 When the Senate Blue Ribbon Committee served subpoena on respondent

Flaviano to appear and testify before it in connection with its investigation of the alleged misuse and

mismanagement of the AFP-RSBS funds, it did so pursuant to its authority to conduct inquiries in aid of

legislation. This is clearly provided in Article VI, Section 21 of the Constitution, thus:

The Senate or the House of Representatives or any of its respective committees

may conduct inquiries in aid of legislation in accordance with its duly published

rules of procedure. The rights of persons appearing in or affected by such

inquiries shall be respected.

Hence, the Regional Trial Court of General Santos City, or any court for that matter, had no authority to

prohibit the Committee from requiring respondent to appear and testify before it.

The ruling in Bengzon, cited by respondent, does not apply in this case. We agree with petitioner

Committee that the factual circumstances therein are different from those in the case at bar. In Bengzon,

no intended legislation was involved and the subject matter of the inquiry was more within the province

of the courts rather than of the legislature. More specifically, the investigation in the said case was an

offshoot of the privilege speech of then Senator Enrile, who urged the Senate to look into a possible

violation of the Anti-Graft and Corrupt Practices Act by the relatives of then President Corazon Aquino,

particularly Mr. Ricardo Lopa, in connection with the alleged sale of 36 to 39 corporations belonging to

Benjamin Romualdez. On the other hand, there was in this case a clear legislative purpose, as stated in

Senate Resolution No. 160, and the appropriate Senate Committee was directed to look into the

reported misuse and mismanagement of the AFP-RSBS funds, with the intention of enacting appropriate

legislation to protect the rights and interests of the officers and members of the Armed Forces of the

Philippines. Further, in Bengzon, the validity of the sale of Romualdez's corporations was pending with

the Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct its investigation. In

short, the issue had already been pre-empted by the court.

In the instant case, the complaint against respondent Flaviano regarding the anomaly in the sale of Lot X,

MR-1160 was still pending before the Office of the Ombudsman when the Committee served subpoena

on him. In other words, no court had acquired jurisdiction over the matter. Thus, there was as yet no

encroachment by the legislature into the exclusive jurisdiction of another branch of the government.

Clearly, there was no basis for the respondent Judge to apply the ruling in Bengzon. Hence, the denial of

petitioner's motion to dismiss the petition for prohibition amounted to grave abuse of discretion.

In G.R. No. 138378, petitioner, Senator Aquilino Pimentel, Jr., contends that respondent judge erred in

finding him, as representative of the Committee, guilty of indirect contempt of court under Rule 71,

Section 3(d) of the 1997 Rules of Civil Procedure. According to Pimentel, the phrase "gross ignorance of

the rules of law and procedure," which the Committee used in the petition, is not depreciatory, but

merely a description of normal usage in petitions where the acts of lower courts are challenged before

higher judicial bodies. In fact, this Court often uses the phrase in its decisions to describe judges who

commit gross and palpable mistakes in their interpretation and application of the law. Petitioner further

maintains that when the Committee used the phrase, it did so without malice. Rather, it was only to

stress the unfamiliarity of or disregard by the respondent Judge of a basic rule of procedure, and to

buttress its arguments in support of its petition for certiorari.

Petitioner Pimentel also contends that he had no participation in the publication in the Philippine Star of

excerpts from the Committee's petition for certiorari. Even assuming arguendo that it was within his

control, he pointed out that he could not have prevented the editors and writers of the newspaper from

publishing the same, lest he violate their constitutional right of free expression. Indeed, the report by the

Philippine Star of the filing of the petition and the reproduction of its contents was a legitimate exercise

of press freedom.

Respondent Judge counters that Pimentel was guilty of indirect contempt of court,  first for causing the

publication of the Committee's petition in the Philippine Star notwithstanding that the same was sub 

judice, second,for making derogatory remarks in the petition itself which affected the honor and integrity

of the respondent judge and degraded the administration of justice; and third, for making it appear that

an administrative complaint was filed against respondent Judge for gross ignorance of the law. These, he

said, constituted malicious and false report which obstructed the administration of justice.

Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:

Section 3. Indirect contempt to be punished after charge and hearing. — After a

charge in writing has been filed, and an opportunity given to the respondent to

comment thereon within such period as may be fixed by the court and to be

heard by himself or counsel, a person guilty of any of the following acts may be

punished for indirect contempt;

xxx xxx xxx

d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or

degrade the administration of justice; . . ..

After deliberating on the parties' arguments, we find that petitioner Pimentel is not guilty of improper

conduct which obstructs or degrades the administration of justice.

Verily, it does not appear that Pimentel caused the publication in the Philippine Star of the fact of filing

of the petition for certiorari by the Committee and the reproduction of excerpts thereof. He had no right

to choose which news articles will see print in the newspaper. Rather, it is the publisher thereof which

decides which news events will be reported in the broadsheet. In doing so, it is allowed "the widest

latitude of choice as to what items should see the light of day so long as they are relevant to a matter of

public interest," pursuant to its right of press freedom. 12

Respondent Judge's allegation that petitioner made it appear that an administrative complaint was filed

against him is without basis. From a careful perusal of the records, it appears that while the Committee

prayed for the imposition of administrative sanctions against respondent Judge Majaducon for gross

ignorance of the law, no formal administrative complaint was instituted separately from the petition for

certiorari.

Finally, the statement that respondent Judge was grossly ignorant of the rules of law and procedure does

not constitute improper conduct that tends to impede, obstruct or degrade the administration of justice.

As correctly argued by petitioner, the phrase "gross ignorance of the rules of law and procedure" is

ordinarily found in administrative complaints and is a necessary description to support a petition which

seeks the annulment of an order of a judge wherein basic legal principles are disregarded.

In Spouses Bacar v. Judge De Guzman, Jr. 13 it was held that when the law is so elementary, not to know

it or to act as if a judge does not know it, constitutes gross ignorance of the law. In this case, there was

no showing that petitioner Pimentel, as representative of the Committee, used the phrase to malign the

trial court. Rather, it was used to express what he believed as a violation of the basic principle of

separation of powers.

In this connection, it bears stressing that the power to declare a person in contempt of court must be

exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of

punishment. 14 This was aptly expressed in the case of Nazareno v. Barnes: 15

A judge, as a public servant, should not be so thin-skinned or sensitive as to feel

hurt or offended if a citizen expresses an honest opinion about him which may

not altogether be flattering to him. After all, what matters is that a judge

performs his duties in accordance with the dictates of his conscience and the

light that God has given him. A judge should never allow himself to be moved by

pride, prejudice, passion, or pettiness in the performance of his duties. He

should always bear in mind that the power of the court to punish for contempt

should be exercised for purposes that are impersonal, because that power is

intended as a safeguard not for the judges as persons but for the functions that

they exercise.

WHEREFORE, in view of the foregoing, the petitions docketed as G.R. Nos. 136760 and 138378 are

GRANTED. The resolution of the Regional Trial Court of General Santos City, Branch 23, in Special Civil

Case No. 496 dated November 11, 1998, which denied the Senate Blue Ribbon Committee's motion to

dismiss, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the trial court on

November 11, 1998 is DISSOLVED. The resolution dated April 15, 1999, which declared Senator Aquilino

Q. Pimentel, Jr. guilty of indirect contempt of court, is REVERSED and SET ASIDE. The petition for indirect

contempt is ordered DISMISSED. SCEDAI

SO ORDERED.

SECOND DIVISION

[G.R. No. 158540. July 8, 2004.]

SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. THE PHILIPPINE

CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE DEPARTMENT OF

TRADE & INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE, and

THE COMMISSIONER OF THE BUREAU OF CUSTOMS, respondents.

D E C I S I O N

TINGA, J p:

"Good fences make good neighbors," so observed Robert Frost, the archetype of traditional New

England detachment. The Frost ethos has been heeded by nations adjusting to the effects of the

liberalized global market. 1 The Philippines, for one, enacted Republic Act (Rep. Act) No. 8751 (on the

imposition of countervailing duties), Rep. Act No. 8752 (on the imposition of anti-dumping duties) and,

finally, Rep. Act No. 8800, also known as the Safeguard Measures Act ("SMA") 2 soon after it joined the

General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement. 3

The SMA provides the structure and mechanics for the imposition of emergency measures, including

tariffs, to protect domestic industries and producers from increased imports which inflict or could inflict

serious injury on them. 4 The wisdom of the policies behind the SMA, however, is not put into question

by the petition at bar. The questions submitted to the Court relate to the means and the procedures

ordained in the law to ensure that the determination of the imposition or non-imposition of a safeguard

measure is proper.

Antecedent Facts

Petitioner Southern Cross Cement Corporation ("Southern Cross") is a domestic corporation engaged in

the business of cement manufacturing, production, importation and exportation. Its principal

stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation, purportedly the largest

cement manufacturers in Japan. 5

Private respondent Philippine Cement Manufacturers Corporation 6 ("Philcemcor") is an association of

domestic cement manufacturers. It has eighteen (18) members, 7 per Record. While Philcemcor heralds

itself to be an association of domestic cement manufacturers, it appears that considerable equity

holdings, if not controlling interests in at least twelve (12) of its member-corporations, were acquired by

the three largest cement manufacturers in the world, namely Financiere Lafarge S.A. of France, Cemex

S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland (formerly Holderbank Financiere Glaris, Ltd., then

Holderfin B.V.). 8

On 22 May 2001, respondent Department of Trade and Industry ("DTI") accepted an application from

Philcemcor, alleging that the importation of gray Portland cement 9 in increased quantities has caused

declines in domestic production, capacity utilization, market share, sales and employment; as well as

caused depressed local prices. Accordingly, Philcemcor sought the imposition at first of provisional, then

later, definitive safeguard measures on the import of cement pursuant to the SMA. Philcemcor filed the

application in behalf of twelve (12) of its member-companies. 10

After preliminary investigation, the Bureau of Import Services of the DTI, determined that critical

circumstances existed justifying the imposition of provisional measures. 11 On 7 November 2001, the DTI

issued an Order, imposing a provisional measure equivalent to Twenty Pesos and Sixty Centavos (P20.60)

per forty (40) kilogram bag on all importations of gray Portland cement for a period not exceeding two

hundred (200) days from the date of issuance by the Bureau of Customs (BOC) of the

implementing Customs  Memorandum  Order. 12 The corresponding Customs  Memorandum  Order was

issued on 10 December 2001, to take effect that same day and to remain in force for two hundred (200)

days. 13

In the meantime, the Tariff Commission, on 19 November 2001, received a request from the DTI for a

formal investigation to determine whether or not to impose a definitive safeguard measure on imports

of gray Portland cement, pursuant to Section 9 of the SMA and its Implementing Rules and Regulations.

A notice of commencement of formal investigation was published in the newspapers on 21 November

2001. Individual notices were likewise sent to concerned parties, such as Philcemcor, various importers

and exporters, the Embassies of Indonesia, Japan and Taiwan, contractors/builders associations, industry

associations, cement workers' groups, consumer groups, non-government organizations and concerned

government agencies. 14 A preliminary conference was held on 27 November 2001, attended by several

concerned parties, including Southern Cross. 15 Subsequently, the Tariff Commission received several

position papers both in support and against Philcemcor's application. 16 The Tariff Commission also

visited the corporate offices and manufacturing facilities of each of the applicant companies, as well as

that of Southern Cross and two other cement importers. 17

On 13 March 2002, the Tariff Commission issued its Formal Investigation Report ("Report"). Among the

factors studied by the Tariff Commission in its Report were the market share of the domestic

industry, 18 production and sales, 19 capacity utilization, 20 financial performance and

profitability, 21 and return on sales. 22 The Tariff Commission arrived at the following conclusions:

1. The circumstances provided in Article XIX of GATT 1994 need not be

demonstrated since the product under consideration (gray Portland

cement) is not the subject of any Philippine obligation or tariff

concession under the WTO Agreement. Nonetheless, such inquiry is

governed by the national legislation (R.A. 8800) and the terms and

conditions of the Agreement on Safeguards.

2. The collective output of the twelve (12) applicant companies constitutes a

major proportion of the total domestic production of gray Portland

cement and blended Portland cement.

3. Locally produced gray Portland cement and blended Portland cement

(Pozzolan) are "like" to imported gray Portland cement.

4. Gray Portland cement is being imported into the Philippines in increased

quantities, both in absolute terms and relative to domestic

production, starting in 2000. The increase in volume of imports is

recent, sudden, sharp and significant.

5. The industry has not suffered and is not suffering significant overall

impairment in its condition, i.e., serious injury.

6. There is no threat of serious injury that is imminent from imports of gray

Portland cement.

7. Causation has become moot and academic in view of the negative

determination of the elements of serious injury and imminent threat

of serious injury. 23

Accordingly, the Tariff Commission made the following recommendation, to wit:

The elements of serious injury and imminent threat of serious injury not having

been established, it is hereby recommended that no definitive general

safeguard measure be imposed on the importation of gray Portland cement. 24

The DTI received the Report on 14 March 2002. After reviewing the report, then DTI Secretary Manuel

Roxas II ("DTI Secretary") disagreed with the conclusion of the Tariff Commission that there was no

serious injury to the local cement industry caused by the surge of imports. 25 In view of this

disagreement, the DTI requested an opinion from the Department of Justice ("DOJ") on the DTI

Secretary's scope of options in acting on the Commission's recommendations. Subsequently, then DOJ

Secretary Hernando Perez rendered an opinion stating that Section 13 of the SMA precluded a review by

the DTI Secretary of the Tariff Commission's negative finding, or finding that a definitive safeguard

measure should not be imposed. 26

On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the conclusions of the Tariff

Commission, the DTI Secretary noted the DTI's disagreement with the conclusions. However, he also

cited the DOJ Opinion advising the DTI that it was bound by the negative finding of the Tariff

Commission. Thus, he ruled as follows:

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

recommendations.

IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA 8800

which states:

"In the event of a negative final determination; or if the cash bond is

in excess of the definitive safeguard duty assessed, the Secretary

shall immediately issue, through the Secretary of Finance, a written

instruction to the Commissioner of Customs, authorizing the return

of the cash bond or the remainder thereof, as the case may be,

previously collected as provisional general safeguard measure within

ten (10) days from the date a final decision has been made;

Provided, that the government shall not be liable for any interest on

the amount to be returned. The Secretary shall not accept for

consideration another petition from the same industry, with respect

to the same imports of the product under consideration within one

(1) year after the date of rendering such a decision."

The DTI hereby issues the following:

The application for safeguard measures against the importation of

gray Portland cement filed by PHILCEMCOR (Case No. 02-2001) is

hereby denied. 27 (Emphasis in the original)

Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days later, it filed with the Court of

Appeals a Petition for Certiorari, Prohibition and Mandamus 28 seeking to set aside the DTI Decision, as

well as the Tariff Commission's Report. Philcemcor likewise applied for a Temporary   Restraining 

Order/Injunction to enjoin the DTI and the BOC from implementing the questioned Decision and Report.

It prayed that the Court of Appeals direct the DTI Secretary to disregard the Report and to render

judgment independently of the Report. Philcemcor argued that the DTI Secretary, vested as he is under

the law with the power of review, is not bound to adopt the recommendations of the Tariff Commission;

and, that the Report is void, as it is predicated on a flawed framework, inconsistent inferences and

erroneous methodology. 29

On 10 June 2002, Southern Cross filed its Comment. 30 It argued that the Court of Appeals had no

jurisdiction over Philcemcor's Petition, for it is on the Court of Tax Appeals ("CTA") that the SMA

conferred jurisdiction to review rulings of the Secretary in connection with the imposition of a safeguard

measure. It likewise argued that Philcemcor's resort to the special civil action of certiorari is improper,

considering that what Philcemcor sought to rectify is an error of judgment and not an error of

jurisdiction or grave abuse of discretion, and that a petition for review with the CTA was available as a

plain, speedy and adequate remedy. Finally, Southern Cross echoed the DOJ Opinion that Section 13 of

the SMA precludes a review by the DTI Secretary of a negative finding of the Tariff Commission.

After conducting a hearing on 19 June 2002 on Philcemcor's application for preliminary injunction, the

Court of Appeals' Twelfth Division 31 granted the writ sought in its Resolution dated 21 June

2002. 32 Seven days later, on 28 June 2002, the two-hundred (200)-day period for the imposition of the

provisional measure expired. Despite the lapse of the period, the BOC continued to impose the

provisional measure on all importations of Portland cement made by Southern Cross. The uninterrupted

assessment of the tariff, according to Southern Cross, worked to its detriment to the point that the

continued imposition would eventually lead to its closure. 33

Southern Cross timely filed a Motion   for   Reconsideration of the Resolution on 9 September 2002.

Alleging that Philcemcor was not entitled to provisional relief, Southern Cross likewise sought a

clarificatory order as to whether the grant of the writ of preliminary injunction could extend the earlier

imposition of the provisional measure beyond the two hundred (200)-day limit imposed by law. The

appeals court failed to take immediate action on Southern Cross' motion despite the four (4) motions for

early resolution the latter filed between September of 2002 and February of 2003. After six (6) months,

on 19 February 2003, the Court of Appeals directed Philcemcor to comment on Southern Cross's Motion 

for Reconsideration. 34 After Philcemcor filed itsOpposition 35 on 13 March 2003, Southern Cross filed

another set of four (4) motions for early resolution.

Despite the efforts of Southern Cross, the Court of Appeals failed to directly resolve the Motion for 

Reconsideration. Instead, on 5 June 2003, it rendered a Decision, 36 granting in part Philcemcor's

petition. The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged

grave abuse of discretion. It refused to annul the findings of the Tariff Commission, citing the rule that

factual findings of administrative agencies are binding upon the courts and its corollary, that courts

should not interfere in matters addressed to the sound discretion and coming under the special technical

knowledge and training of such agencies. 37 Nevertheless, it held that the DTI Secretary is not bound by

the factual findings of the Tariff Commission since such findings are merely recommendatory and they

fall within the ambit of the Secretary's discretionary review. It determined that the legislative intent is to

grant the DTI Secretary the power to make a final decision on the Tariff Commission's

recommendation. 38 The dispositive portion of theDecision reads:

WHEREFORE, based on the foregoing premises, petitioner's prayer to set aside

the findings of the Tariff Commission in its assailed Report dated March 13,

2002 is DENIED. On the other hand, the assailed April 5, 2002 Decision of the

Secretary of the Department of Trade and Industry is hereby SET ASIDE.

Consequently, the case is REMANDED to the public respondent Secretary of

Department of Trade and Industry for a final decision in accordance with RA

8800 and its Implementing Rules and Regulations.

SO ORDERED. 39

On 23 June 2003, Southern Cross filed the present petition, assailing the appellate court's Decision for

departing from the accepted and usual course of judicial proceedings, and not deciding the substantial

questions in accordance with law and jurisprudence. The petition argues in the main that the Court of

Appeals has no jurisdiction over Philcemcor's petition, the proper remedy being a petition for review

with the CTA conformably with the SMA, and; that the factual findings of the Tariff Commission on the

existence or non-existence conditions warranting the imposition of general safeguard measures are

binding upon the DTI Secretary.

The timely filing of Southern Cross's petition before this Court necessarily prevented the Court of

Appeals Decision from becoming final. 40 Yet on 25 June 2003, the DTI Secretary issued a new Decision,

ruling this time that in light of the appellate court's Decision there was no longer any legal impediment to

his deciding Philcemcor's application for definitive safeguard measures. 41 He made a determination

that, contrary to the findings of the Tariff Commission, the local cement industry had suffered serious

injury as a result of the import surges. 42 Accordingly, he imposed a definitive safeguard measure on the

importation of gray Portland cement, in the form of a definitive safeguard duty in the amount of

P20.60/40 kg. bag for three years on imported gray Portland Cement. 43

On 7 July 2003, Southern Cross filed with the Court a "Very  Urgent   Application   for   a   Temporary 

Restraining Order and/or A Writ of Preliminary Injunction" ("TRO Application"), seeking to enjoin the DTI

Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition before this Court.

Philcemcor filed an opposition, claiming, among others, that it is not this Court but the CTA that has

jurisdiction over the application under the law.

On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary's

25 June 2003 Decision which imposed the definite safeguard measure. Prescinding from this action,

Philcemcor filed with this Court a Manifestation and Motion to Dismiss in regard to Southern Cross's

petition, alleging that it deliberately and willfully resorted to forum-shopping. It points out that Southern

Cross's TRO Application seeks to enjoin the DTI Secretary's second decision, while its Petition before the

CTA prays for the annulment of the same decision. 44

Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor also argues that the CTA,

being a special court of limited jurisdiction, could only review the ruling of the DTI Secretary when a

safeguard measure is imposed, and that the factual findings of the Tariff Commission are not binding on

the DTI Secretary. 45

After giving due course to Southern Cross's Petition, the Court called the case for oral argument on 18

February 2004. 46 At the oral argument, attended by the counsel for Philcemcor and Southern Cross and

the Office of the Solicitor General, the Court simplified the issues in this wise: (i) whether theDecision of

the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the Court of

Appeals has jurisdiction, whether itsDecision is in accordance with law; and, (iii) whether a Temporary 

Restraining Order is warranted. 47

During the oral arguments, counsel for Southern Cross manifested that due to the imposition of the

general safeguard measures, Southern Cross was forced to cease operations in the Philippines in

November of 2003. 48

Propriety of the Temporary Restraining Order

Before the merits of the Petition, a brief comment on Southern Cross's application for provisional relief.

It sought to enjoin the DTI Secretary from enforcing the definitive safeguard measure he imposed in his

25 June 2003 Decision. The Court did not grant the provisional relief for it would be tantamount to

enjoining the collection of taxes, a peremptory judicial act which is traditionally frowned upon, 49 unless

there is a clear statutory basis for it.50 In that regard, Section 218 of the Tax Reform Act of 1997

prohibits any court from granting an injunction to restrain the collection of any national internal revenue

tax, fee or charge imposed by the internal revenue code. 51 A similar philosophy is expressed by Section

29 of the SMA, which states that the filing of a petition for review before the CTA does not stop,

suspend, or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of

other appropriate safeguard measures. 52 This evinces a clear legislative intent that the imposition of

safeguard measures, despite the availability of judicial review, should not be enjoined notwithstanding

any timely appeal of the imposition. cdasia

The Forum-Shopping Issue

In the same breath, we are not convinced that the allegation of forum-shopping has been duly proven, or

that sanction should befall upon Southern Cross and its counsel. The standard by Section 5, Rule 7 of the

1997 Rules of Civil Procedure in order that sanction may be had is that "the acts of the party or his

counsel clearly constitute willful and deliberate forum shopping." 53 The standard implies a malicious

intent to subvert procedural rules, and such state of mind is not evident in this case.

The Jurisdictional Issue

On to the merits of the present petition.

In its assailed Decision, the Court of Appeals, after asserting only in brief that it had jurisdiction over

Philcemcor's Petition, discussed the issue of whether or not the DTI Secretary is bound to adopt the

negative recommendation of the Tariff Commission on the application for safeguard measure. The Court

of Appeals maintained that it had jurisdiction over the petition, as it alleged grave abuse of discretion on

the part of the DTI Secretary, thus:

A perusal of the instant petition reveals allegations of grave abuse of discretion

on the part of the DTI Secretary in rendering the assailed April 5, 2002 Decision

wherein it was ruled that he had no alternative but to abide by the findings of

the Commission on the matter of safeguard measures for the local cement

industry. Abuse of discretion is admittedly within the ambit of certiorari.

Grave abuse of discretion implies such capricious and whimsical exercise of

judgment as is equivalent to lack of jurisdiction. It is alleged that, in the assailed

Decision, the DTI Secretary gravely abused his discretion in wantonly evading to

discharge his duty to render an independent determination or decision in

imposing a definitive safeguard measure. 54

We do not doubt that the Court of Appeals' certiorari powers extend to correcting grave abuse of

discretion on the part of an officer exercising judicial or quasi-judicial functions. 55 However, the special

civil action of certiorari is available only when there is no plain, speedy and adequate remedy in the

ordinary course of law. 56 Southern Cross relies on this limitation, stressing that Section 29 of the SMA is

a plain, speedy and adequate remedy in the ordinary course of law which Philcemcor did not avail of.

The Section reads:

Section 29. Judicial Review. — Any interested party who is adversely affected by

the ruling of   the Secretary   in   connection with  the   imposition of  a   safeguard 

measure may file with the CTA, a petition for review of such ruling within thirty

(30) days from receipt thereof. Provided, however, that the filing of such

petition for review shall not in any way stop, suspend or otherwise toll the

imposition or collection of the appropriate tariff duties or the adoption of other

appropriate safeguard measures, as the case may be.

The petition for review shall comply with the same requirements and shall

follow the same rules of procedure and shall be subject to the same disposition

as in appeals in connection with adverse rulings on tax matters to the Court of

Appeals. 57 (Emphasis supplied)

It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review

the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. The Court has

long recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving

internal revenue and customs duties to such a specialized court. 58 By the very nature of its function, the

CTA is dedicated exclusively to the study and consideration of tax problems and has necessarily

developed an expertise on the subject. 59

At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a

case should be clearly conferred and should not be deemed to exist on mere

implication. 60 Concededly, Rep. Act No. 1125, the statute creating the CTA, does not extend to it the

power to review decisions of the DTI Secretary in connection with the imposition of safeguard

measures. 61 Of course, at that time which was before the advent of trade liberalization the notion of

safeguard measures or safety nets was not yet in vogue.

Undeniably, however, the SMA expanded the jurisdiction of the CTA by including review of the rulings of

the DTI Secretary in connection with the imposition of safeguard measures. However, Philcemcor and

the public respondents agree that the CTA has appellate jurisdiction over a decision of the DTI Secretary

imposing a safeguard measure, but not when his ruling is not to impose such measure.

In a related development, Rep. Act No. 9282, enacted on 30 March 2004, expressly vests unto the CTA

jurisdiction over "[d]ecisions of the Secretary of Trade and Industry, in case of nonagricultural product,

commodity or article . . . involving . . . safeguard measures under Republic Act No. 8800, where either 

party may appeal the decision to impose or not to impose said duties." 62 Had Rep. Act No. 9282 already

been in force at the beginning of the incidents subject of this case, there would have been no need to

make any deeper inquiry as to the extent of the CTA's jurisdiction. But as Rep. Act No. 9282 cannot be

applied retroactively to the present case, the question of whether such jurisdiction extends to a decision

not to impose a safeguard measure will have to be settled principally on the basis of the SMA.

Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire jurisdiction over

the petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the

petition must be filed by an interested party adversely affected by the ruling; and (iii) such ruling must be

in connection with the imposition of a safeguard measure. The first two requisites are clearly present.

The third requisite deserves closer scrutiny.

Contrary to the stance of the public respondents and Philcemcor, in this case where the DTI Secretary

decides not to impose a safeguard measure, it is the CTA which has jurisdiction to review his decision.

The reasons are as follows:

First. Split jurisdiction is abhorred.

Essentially, respondents' position is that judicial review of the DTI Secretary's ruling is exercised by two

different courts, depending on whether or not it imposes a safeguard measure, and in either case the

court exercising jurisdiction does so to the exclusion of the other. Thus, if the DTI decision involves the

imposition of a safeguard measure it is the CTA which has appellate jurisdiction; otherwise, it is the Court

of Appeals. Such setup is as novel and unusual as it is cumbersome and unwise. Essentially, respondents

advocate that Section 29 of the SMA has established split appellate jurisdiction over rulings of the DTI

Secretary on the imposition of safeguard measure.

This interpretation cannot be favored, as the Court has consistently refused to sanction split

jurisdiction. 63 The power of the DTI Secretary to adopt or withhold a safeguard measure emanates from

the same statutory source, and it boggles the mind why the appeal modality would be such that one

appellate court is qualified if what is to be reviewed is a positive determination, and it is not if what is

appealed is a negative determination. In deciding whether or not to impose a safeguard measure,

provisional or general, the DTI Secretary would be evaluating only one body of facts and applying them

to one set of laws. The reviewing tribunal will be called upon to examine the same facts and the same

laws, whether or not the determination is positive or negative.

In short, if we were to rule for respondents we would be confirming the exercise by two judicial bodies

of jurisdiction over basically the same subject matter — precisely the split-jurisdiction situation which is

anathema to the orderly administration of justice. 64 The Court cannot accept that such was the

legislative motive especially considering that the law expressly confers on the CTA, the tribunal with the

specialized competence over tax and tariff matters, the role of judicial review without mention of any

other court that may exercise corollary or ancillary jurisdiction in relation to the SMA. The provision

refers to the Court of Appeals but only in regard to procedural rules and dispositions of appeals from the

CTA to the Court of Appeals. 65

The principle enunciated in Tejada v. Homestead Property Corporation 66 is applicable to the case at bar:

The Court agrees with the observation of the [that] when an administrative

agency or body is conferred quasi-judicial functions, all controversies relating to 

the subject matter pertaining to  its  specialization are deemed to be included 

within the jurisdiction of said administrative agency or body. Split jurisdiction is 

not favored. 67

Second. The interpretation of the provisions of the SMA favors vesting untrammeled appellate

jurisdiction on the CTA.

A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from

reviewing a negative determination by the DTI Secretary nor conferred on the Court of Appeals such

review authority. Respondents note, on the other hand, that neither did the law expressly grant to the

CTA the power to review a negative determination. However, under the clear text of the law, the CTA is 

vested with jurisdiction to review the ruling of the DTI Secretary "in connection with the imposition of a 

safeguard measure." Had the law been couched instead to incorporate the phrase "the ruling imposing a

safeguard measure," then respondent's claim would have indisputable merit. Undoubtedly, the phrase

"in connection with" not only qualifies but clarifies the succeeding phrase "imposition of a safeguard

measure." As expounded later, the phrase also encompasses the opposite or converse ruling which is the

non-imposition of a safeguard measure.

In the American case of Shaw v. Delta Air Lines, Inc., 68 the United States Supreme Court, in interpreting

a key provision of the Employee Retirement Security Act of 1974, construed the phrase "relates to" in its

normal sense which is the same as "if it has connection with or reference to." 69 There is no serious

dispute that the phrase "in connection with" is synonymous to "relates to" or "reference to," and that all

three phrases are broadly expansive. This is affirmed not just by jurisprudential fiat, but also the acquired

connotative meaning of "in connection with" in common parlance. Consequently, with the use of the

phrase "in connection with," Section 29 allows the CTA to review not only the ruling imposing a

safeguard measure, but all other rulings related or have reference to the application for such measure.

Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in

Section 29 of the SMA. A literalist reading or linguistic survey may not satisfy. Even the US Supreme

Court in New York State Blue Cross Plans v. Travelers Ins. 70 conceded that the phrases "relate to" or "in

connection with" may be extended to the farthest stretch of indeterminacy for, universally, relations or

connections are infinite and stop nowhere. 71 Thus, in the case the US High Court, examining the same

phrase of the same provision of law involved in Shaw, resorted to looking at the statute and its

objectives as the alternative to an "uncritical literalism." 72 A similar inquiry into the other provisions of

the SMA is in order to determine the scope of review accorded therein to the CTA. 73

The authority to decide on the safeguard measure is vested in the DTI Secretary in the case of non-

agricultural products, and in the Secretary of the Department of Agriculture in the case of agricultural

products. 74 Section 29 is likewise explicit that only the rulings of the DTI Secretary or the Agriculture

Secretary may be reviewed by the CTA. 75 Thus, the acts of other bodies that were granted some powers

by the SMA, such as the Tariff Commission, are not subject to direct review by the CTA.

Under the SMA, the Department Secretary concerned is authorized to decide on several matters. Within

thirty (30) days from receipt of a petition seeking the imposition of a safeguard measure, or from the

date he made motu proprio initiation, the Secretary shall make a preliminary determination on whether

the increased imports of the product under consideration substantially cause or threaten to cause

serious injury to the domestic industry. 76 Such ruling is crucial since only upon the Secretary's positive

preliminary determination that a threat to the domestic industry exists shall the matter be referred to

the Tariff Commission for formal investigation, this time, to determine whether the general safeguard

measure should be imposed or not. 77 Pursuant to a positive preliminary determination, the Secretary

may also decide that the imposition of a provisional safeguard measure would be warranted under

Section 8 of the SMA. 78 The Secretary is also authorized to decide, after receipt of the report of the

Tariff Commission, whether or not to impose the general safeguard measure, and if in the affirmative,

what general safeguard measures should be applied. 79 Even after the general safeguard measure is

imposed, the Secretary is empowered to extend the safeguard measure, 80 or terminate, reduce or

modify his previous rulings on the general safeguard measure. 81

With the explicit grant of certain powers involving safeguard measures by the SMA on the DTI Secretary,

it follows that he is empowered to rule on several issues. These are the issues which arise in connection

with, or in relation to, the imposition of a safeguard measure. They may arise at different stages — the

preliminary investigation stage, the post-formal investigation stage, or the post-safeguard measure stage

— yet all these issues do become ripe for resolution because an initiatory action has been taken seeking

the imposition of a safeguard measure. It is the initiatory action for the imposition of a safeguard

measure that sets the wheels in motion, allowing the Secretary to make successive rulings, beginning

with the preliminary determination.

Clearly, therefore, the scope and reach of the phrase "in connection with," as intended by Congress,

pertain to all   rulings   of   the   DTI   Secretary   or   Agriculture   Secretary   which   arise   from   the   time   an 

application or motu proprio initiation for the imposition of a safeguard measure is taken. Indeed, the

incidents which require resolution come to the fore only because there is an initial application or action

seeking the imposition of a safeguard measure. From the legislative standpoint, it was a matter of sense

and practicality to lump up the questions related to the initiatory application or action for safeguard

measure and to assign only one court and; that is the CTA to initially review all the rulings related to such

initiatory application or action. Both directions Congress put in place by employing the phrase "in

connection with" in the law.

Given the relative expanse of decisions subject to judicial review by the CTA under Section 29, we do not

doubt that a negative ruling refusing to impose a safeguard measure falls within the scope of its

jurisdiction. On a literal level, such negative ruling is "a ruling of the Secretary in connection with the

imposition of a safeguard measure," as it is one of the possible outcomes that may result from the initial

application or action for a safeguard measure. On a more critical level, the rulings of the DTI Secretary in

connection with a safeguard measure, however diverse the outcome may be, arise from the same grant

of jurisdiction on the DTI Secretary by the SMA. 82 The refusal by the DTI Secretary to grant a safeguard

measure involves the same grant of authority, the same statutory prescriptions, and the same degree of

discretion as the imposition by the DTI Secretary of a safeguard measure.

The position of the respondents is one of "uncritical literalism" 83 incongruent with the animus of the

law. Moreover, a fundamentalist approach to Section 29 is not warranted, considering the absurdity of

the consequences.

Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et Absurdum. 84

Even assuming arguendo that Section 29 has not expressly granted the CTA jurisdiction to review a

negative ruling of the DTI Secretary, the Court is precluded from favoring an interpretation that would

cause inconvenience and absurdity. 85 Adopting the respondents' position favoring the CTA's minimal

jurisdiction would unnecessarily lead to illogical and onerous results.

Indeed, it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing

a safeguard measure but not to those declining to impose the measure. Respondents might argue that

the right to relief from a negative ruling is not lost since the applicant could, as Philcemcor did, question

such ruling through a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure,

in lieu of an appeal to the CTA. Yet these two reliefs are of differing natures and gravamen. While an

appeal may be predicated on errors of fact or errors of law, a special civil action forcertiorariis grounded

on grave abuse of discretion or lack of or excess of jurisdiction on the part of the decider. For a special

civil action for certiorari to succeed, it is not enough that the questioned act of the respondent is wrong.

As the Court clarified in Sempio v. Court of Appeals:

A tribunal, board or officer acts without jurisdiction if it/he does not have the

legal power to determine the case. There is excess of jurisdiction where, being

clothed with the power to determine the case, the tribunal, board or officer

oversteps its/his authority as determined by law. And there is grave abuse of

discretion where the tribunal, board or officer acts in a capricious, whimsical,

arbitrary or despotic manner in the exercise of his judgment as to be said to be

equivalent to lack of jurisdiction. Certiorari is often resorted to in order to

correct errors of jurisdiction. Where the error is one of law or of fact, which is a

mistake of judgment, appeal is the remedy. 86

It is very conceivable that the DTI Secretary, after deliberate thought and careful evaluation of the

evidence, may either make a negative preliminary determination as he is so empowered under Section 7

of the SMA, or refuse to adopt the definitive safeguard measure under Section 13 of the same law.

Adopting the respondents' theory, this negative ruling is susceptible to reversal only through a special

civil action for certiorari, thus depriving the affected party the chance to elevate the ruling on appeal on

the rudimentary grounds of errors in fact or in law. Instead, and despite whatever indications that the

DTI Secretary acted with measure and within the bounds of his jurisdiction are, the aggrieved party will

be forced to resort to a gymnastic exercise, contorting the straight and narrow in an effort to

discombobulate the courts into believing that what was within was actually beyond and what was

studied and deliberate actually whimsical and capricious. What then would be the remedy of the party

aggrieved by a negative ruling that simply erred in interpreting the facts or the law? It certainly cannot

be the special civil action for certiorari, for as the Court held in Silverio v. Court of Appeals: "Certiorari is a

remedy narrow in its scope and inflexible in its character. It is not a general utility tool in the legal

workshop." 87

Fortunately, this theoretical quandary need not come to pass. Section 29 of the SMA is worded in such a

way that it places under the CTA's judicial review all rulings of the DTI Secretary, which are connected

with the imposition of a safeguard measure. This is sound and proper in light of the specialized

jurisdiction of the CTA over tax matters. In the same way that a question of whether to tax or not to tax

is properly a tax matter, so is the question of whether to impose or not to impose a definitive safeguard

measure.

On another note, the second paragraph of Section 29 similarly reveals the legislative intent that rulings

of the DTI Secretary over safeguard measures should first be reviewed by the CTA and not the Court of

Appeals. It reads:

The petition for review shall comply with the same requirements and shall

follow the same rules of procedure and shall be subject to the same disposition

as in appeals in connection with adverse rulings on tax matters to the Court of

Appeals.

This is the only passage in the SMA in which the Court of Appeals is mentioned. The express wish of

Congress is that the petition conform to the requirements and procedure under Rule 43 of the Rules of

Civil Procedure. Since Congress mandated that the form and procedure adopted be analogous to a

review of a CTA ruling by the Court of Appeals, the legislative contemplation could not have been that

the appeal be directly taken to the Court of Appeals.

Issue   of   Binding   Effect   of   Tariff 

Commission's   Factual   Determination 

on DTI Secretary.

The next issue for resolution is whether the factual determination made by the Tariff Commission under

the SMA is binding on the DTI Secretary. Otherwise stated, the question is whether the DTI Secretary

may impose general safeguard measures in the absence of a positive final determination by the Tariff

Commission.

The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of the Tariff

Commission do not necessarily constitute a final decision. Section 13 details the procedure for the

adoption of a safeguard measure, as well as the steps to be taken in case there is a negative final

determination. The implication of the Court of Appeals' holding is that the DTI Secretary may adopt a

definitive safeguard measure, notwithstanding a negative determination made by the Tariff Commission.

Undoubtedly, Section 13 prescribes certain limitations and restrictions before general safeguard

measures may be imposed. However, the most fundamental restriction on the DTI Secretary's power in 

that   respect   is   contained   in   Section   5   of   the   SMA  —   that   there   should   first   be   a   positive   final  

determination of the Tariff Commission — which the Court of Appeals curiously all but ignored. Section 5

reads:

Sec. 5. Conditions for the Application of General Safeguard Measures. — The

Secretary shall   apply   a   general   safeguard   measure   upon   a   positive   final 

determination of the [Tariff] Commission that a product is being imported into

the country in increased quantities, whether absolute or relative to the

domestic production, as to be a substantial cause of serious injury or threat

thereof to the domestic industry; however, in the case of non-agricultural

products, the Secretary shall first establish that the application of such

safeguard measures will be in the public interest. (emphasis supplied)

The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a

"positive final determination." This power lodged in the Tariff Commission, must be distinguished from

the power to impose the general safeguard measure which is properly vested on the DTI Secretary. 88

All in all, there are two condition precedents that must be satisfied before the DTI Secretary may impose

a general safeguard measure on grey Portland cement. First, there must be a positive final determination

by the Tariff Commission that a product is being imported into the country in increased quantities

(whether absolute or relative to domestic production), as to be a substantial cause of serious injury or

threat to the domestic industry. Second, in the case of non-agricultural products the Secretary must

establish that the application of such safeguard measures is in the public interest. 89 As Southern Cross

argues, Section 5 is quite clear-cut, and it is impossible to finagle a different conclusion even through

overarching methods of statutory construction. There is no safer nor better settled canon of

interpretation that when language is clear and unambiguous it must be held to mean what it plainly

expresses: 90 In the quotable words of an illustrious member of this Court, thus:

[I]f a statute is clear, plain and free from ambiguity, it must be given its literal

meaning and applied without attempted interpretation. The verba legisor plain

meaning rule rests on the valid presumption that the words employed by the

legislature in a statute correctly express its intent or will and preclude the court

from construing it differently. The legislature is presumed to know the meaning

of the words, to have used words advisedly, and to have expressed its intent by

the use of such words as are found in the statute. 91

Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA, 92 which interprets Section 5

of the law, likewise requires a positive final determination on the part of the Tariff Commission before

the application of the general safeguard measure.

The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI

Secretary. The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to

make a "positive final determination." This power, which belongs to the Tariff Commission, must be

distinguished from the power to impose general safeguard measure properly vested on the DTI

Secretary. The distinction is vital, as a "positive final determination" clearly antecedes, as a condition

precedent, the imposition of a general safeguard measure. At the same time, a positive final

determination does not necessarily result in the imposition of a general safeguard measure. Under

Section 5, notwithstanding the positive final determination of the Tariff Commission, the DTI Secretary is

tasked to decide whether or not that the application of the safeguard measures is in the public interest.

It is also clear from Section 5 of the SMA that the positive final determination to be undertaken by the

Tariff Commission does not entail a mere gathering of statistical data. In order to arrive at such

determination, it has to establish causal linkages from the statistics that it compiles and evaluates: after

finding there is an importation in increased quantities of the product in question, that such importation

is a substantial cause of serious threat or injury to the domestic industry.

The Court of Appeals relies heavily on the legislative record of a congressional debate during

deliberations on the SMA to assert a purported legislative intent that the findings of the Tariff

Commission do not bind the DTI Secretary. 93 Yet as explained earlier, the plain meaning of Section 5

emphasizes that only if the Tariff Commission renders a positive determination could the DTI Secretary

impose a safeguard measure. Resort to the congressional records to ascertain legislative intent is not

warranted if a statute is clear, plain and free from ambiguity. The legislature is presumed to know the

meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such

words as are found in the statute. 94

Indeed, the legislative record, if at all to be availed of, should be approached with extreme caution, as

legislative debates and proceedings are powerless to vary the terms of the statute when the meaning is

clear. 95 Our holding in Civil Liberties Union v. Executive Secretary 96 on the resort to deliberations of the

constitutional convention to interpret the Constitution is likewise appropriate in ascertaining statutory

intent:

While it is permissible in this jurisdiction to consult the debates and proceedings

of the constitutional convention in order to arrive at the reason and purpose of

the resulting Constitution, resort thereto may be had only when other guides

fail as said proceedings are powerless to vary the terms of the Constitution

when the meaning is clear. Debates in the constitutional convention "are of

value as showing the views of the individual members, and as indicating the

reasons for their votes, but they give us no light as to the views of the large

majority who did not talk . . . We think it safer to construe the constitution from

what appears upon its face." 97

Moreover, it is easy to selectively cite passages, sometimes out of their proper context, in order to assert

a misleading interpretation. The effect can be dangerous. Minority or solitary views, anecdotal

ruminations, or even the occasional crude witticisms, may improperly acquire the mantle of legislative

intent by the sole virtue of their publication in the authoritative congressional record. Hence, resort to

legislative deliberations is allowable when the statute is crafted in such a manner as to leave room for

doubt on the real intent of the legislature.

Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to impose a general

safeguard measure by preconditioning such imposition on a positive determination by the Tariff

Commission. Such legislative intent should be given full force and effect, as the executive power to

impose definitive safeguard measures is but a delegated power — the power of taxation, by nature and

by command of the fundamental law, being a preserve of the legislature. 98 Section 28(2), Article VI of

the 1987 Constitution confirms the delegation of legislative power, yet ensures that the prerogative of

Congress to impose limitations and restrictions on the executive exercise of this power: DCcIaE

The Congress may, by law, authorize the President to fix within specified limits,

and subject to such limitations and restrictions as it may impose, tariff rates,

import and export quotas, tonnage and wharfage dues, and other duties or

imposts within the framework of the national development program of the

Government. 99

The safeguard measures which the DTI Secretary may impose under the SMA may take the following

variations, to wit: (a) an increase in, or imposition of any duty on the imported product; (b) a decrease in

or the imposition of a tariff-rate quota on the product; (c) a modification or imposition of any

quantitative restriction on the importation of the product into the Philippines; (d) one or more

appropriate adjustment measures, including the provision of trade adjustment assistance; and (e) any

combination of the above-described actions. Except for the provision of trade adjustment assistance, the

measures enumerated by the SMA are essentially imposts, which precisely are the subject of delegation

under Section 28(2), Article VI of the 1987 Constitution. 100

This delegation of the taxation power by the legislative to the executive is authorized by the Constitution

itself. 101 At the same time, the Constitution also grants the delegating authority (Congress) the right to

impose restrictions and limitations on the taxation power delegated to the President. 102 The

restrictions and limitations imposed by Congress take on the mantle of a constitutional command, which

the executive branch is obliged to observe.

The SMA empowered the DTI Secretary, as alter ego of the President, 103 to impose definitive general

safeguard measures, which basically are tariff imposts of the type spoken of in the Constitution.

However, the law did not grant him full, uninhibited discretion to impose such measures. The DTI

Secretary authority is derived from the SMA; it does not flow from any inherent executive power. Thus,

the limitations imposed by Section 5 are absolute, warranted as they are by a constitutional fiat. 104

Philcemcor cites our 1912 ruling in Lamb v. Phipps 105 to assert that the DTI Secretary, having the final

decision on the safeguard measure, has the power to evaluate the findings of the Tariff Commission and

make an independent judgment thereon. Given the constitutional and statutory limitations governing

the present case, the citation is misplaced. Lamb pertained to the discretion of the Insular Auditor of the

Philippine Islands, whom, as the Court recognized, "[t]he statutes of the United States require[d] . . . to

exercise his judgment upon the legality . . . [of] provisions of law and resolutions of Congress providing

for the payment of money, the means of procuring testimony upon which he may act." 106

Thus in Lamb, while the Court recognized the wide latitude of discretion that may have been vested on

the Insular Auditor, it also recognized that such latitude flowed from, and is consequently limited by,

statutory grant. However, in this case, the provision of the Constitution in point expressly recognizes the

authority of Congress to prescribe limitations in the case of tariffs, export/import quotas and other such

safeguard measures. Thus, the broad discretion granted to the Insular Auditor of the Philippine Islands

cannot be analogous to the discretion of the DTI Secretary which is circumscribed by Section 5 of the

SMA.

For that matter, Cariño   v. Commissioner  on  Human  Rights, 107 likewise cited by Philcemcor, is also

inapplicable owing to the different statutory regimes prevailing over that case and the present petition.

In Cariño, the Court ruled that the constitutional power of the Commission on Human Rights (CHR) to

investigate human rights' violations did not extend to adjudicating claims on the merits. 108 Philcemcor

claims that the functions of the Tariff Commission being "only investigatory," it could neither decide nor

adjudicate. 109

The applicable law governing the issue in Cariño is Section 18, Article XIII of the Constitution, which

delineates the powers and functions of the CHR. The provision does not vest on the CHR the power to

adjudicate cases, but only to investigate all forms of human rights violations. 110 Yet, without modifying

the thorough disquisition of the Court in Cariño on the general limitations on the investigatory power,

the precedent is inapplicable because of the difference in the involved statutory frameworks. The

Constitution does not repose binding effect on the results of the CHR's investigation. 111 On the other

hand, through Section 5 of the SMA and under the authority of Section 28(2), Article VI of the

Constitution, Congress did intend to bind the DTI Secretary to the determination made by the Tariff

Commission. 112 It is of no consequence that such determination results from the exercise of

investigatory powers by the Tariff Commission since Congress is well within its constitutional mandate to

limit the authority of the DTI Secretary to impose safeguard measures in the manner that it sees fit.

The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13 of the SMA's

Implementing Rules in support of the view that the DTI Secretary may decide independently of the

determination made by the Tariff Commission. Admittedly, there are certain infelicities in the language

of Section 13 and Rule 13. But reliance should not be placed on the textual imprecisions. Rather, Section

13 and Rule 13 must be viewed in light of the fundamental prescription imposed by Section 5. 113

Section 13 of the SMA lays down the procedure to be followed after the Tariff Commission renders its

report. The provision reads in full:

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

the Commission shall recommend to the Secretary an appropriate definitive

measure, in the form of:

(a) An increase in, or imposition of, any duty on the imported

product;

(b) A decrease in or the imposition of a tariff-rate quota (MAV) on

the product;

(c) A modification or imposition of any quantitative restriction on the

importation of the product into the Philippines;

(d) One or more appropriate adjustment measures, including the

provision of trade adjustment assistance;

(e) Any combination of actions described in subparagraphs (a) to (d).

The Commission may also recommend other actions, including the initiation of

international negotiations to address the underlying cause of the increase of

imports of the product, to alleviate the injury or threat thereof to the domestic

industry, and to facilitate positive adjustment to import competition.

The general safeguard measure shall be limited to the extent of redressing or

preventing the injury and to facilitate adjustment by the domestic industry from

the adverse effects directly attributed to the increased imports: Provided, 

however, That when quantitative import restrictions are used, such measures

shall not reduce the quantity of imports below the average imports for the

three (3) preceding representative years, unless clear justification is given that a

different level is necessary to prevent or remedy a serious injury.

A general safeguard measure shall not be applied to a product originating from

a developing country if its share of total imports of the product is less than

three percent (3%): Provided, however, That developing countries with less than

three percent (3%) share collectively account for not more than nine percent

(9%) of the total imports.

The decision imposing a general safeguard measure, the duration of which is

more than one (1) year, shall be reviewed at regular intervals for purposes of

liberalizing or reducing its intensity. The industry benefiting from the application

of a general safeguard measure shall be required to show positive adjustment

within the allowable period. A general safeguard measure shall be terminated

where the benefiting industry fails to show any improvement, as may be

determined by the Secretary.

The Secretary shall issue a written instruction to the heads of the concerned

government agencies to implement the appropriate general safeguard measure

as determined by the Secretary within fifteen (15) days from receipt of the

report.

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

the definitive safeguard duty assessed, the Secretary shall immediately issue,

through the Secretary of Finance, a written instruction to the Commissioner of

Customs, authorizing the return of the cash bond or the remainder thereof, as

the case may be, previously collected as provisional general safeguard measure

within ten (10) days from the date a final decision has been made: Provided,

That the government shall not be liable for any interest on the amount to be

returned. The Secretary shall not accept for consideration another petition from

the same industry, with respect to the same imports of the product under

consideration within one (1) year after the date of rendering such a decision.

When the definitive safeguard measure is in the form of a tariff increase, such

increase shall not be subject or limited to the maximum levels of tariff as set

forth in Section 401(a) of the Tariff and Customs Code of the Philippines.

To better comprehend Section 13, note must be taken of the distinction between the investigatory and

recommendatory functions of the Tariff Commission under the SMA.

The word "determination," as used in the SMA, pertains to the factual findings on whether there are

increased imports into the country of the product under consideration, and on whether such increased

imports are a substantial cause of serious injury or threaten to substantially cause serious injury to the

domestic industry. 114 The SMA explicitly authorizes the DTI Secretary to make a preliminary

determination, 115 and the Tariff Commission to make the final determination. 116 The distinction is

fundamental, as these functions are not interchangeable. The Tariff Commission makes its determination

only after a formal investigation process, with such investigation initiated only if there is a positive

preliminary determination by the DTI Secretary underSection 7 of the SMA. 117 On the other hand, the

DTI Secretary may impose definitive safeguard measure only if there is a positive final determination

made by the Tariff Commission. 118

In contrast, a "recommendation" is a suggested remedial measure submitted by the Tariff Commission

under Section 13 after making a positive final determination in accordance with Section 5. The Tariff

Commission is not empowered to make a recommendation absent a positive final determination on its

part. 119 Under Section 13, the Tariff Commission is required to recommend to the [DTI] Secretary an

"appropriate definitive measure." 120 The Tariff Commission "may also recommend other actions,

including the initiation of international negotiations to address the underlying cause of the increase of

imports of the products, to alleviate the injury or threat thereof to the domestic industry and to facilitate

positive adjustment to import competition." 121

The recommendations of the Tariff Commission, as rendered under Section 13, are not obligatory on the

DTI Secretary. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by

the Tariff Commission. In fact, the SMA requires that the DTI Secretary establish that the application of

such safeguard measures is in the public interest, notwithstanding the Tariff Commission's

recommendation on the appropriate safeguard measure based on its positive final

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

with the command of Section 28(2), Article VI of the 1987 Constitution that only the President may be

empowered by the Congress to impose appropriate tariff rates, import/export quotas and other similar

measures. 123 It is the DTI Secretary, as alter ego of the President, who under the SMA may impose such

safeguard measures subject to the limitations imposed therein. A contrary conclusion would in essence

unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff

measures. That is why the SMA empowers the DTI Secretary to adopt safeguard measures other than

those recommended by the Tariff Commission.

Unlike the recommendations of the Tariff Commission, its determination has a different effect on the DTI

Secretary. Only on the basis of a positive final determination made by the Tariff Commission under

Section 5 can the DTI Secretary impose a general safeguard measure. Clearly, then the DTI Secretary

is bound by the determination made by the Tariff Commission.

Some confusion may arise because the sixth paragraph of Section 13 124 uses the variant word

"determined" in a different context, as it contemplates "the appropriate general safeguard measure as

determined by the Secretary within fifteen (15) days from receipt of the report." Quite plainly, the word

"determined" in this context pertains to the DTI Secretary's power of choice of the appropriate

safeguard measure, as opposed to the Tariff Commission's power to determine the existence of

conditions necessary for the imposition of any safeguard measure. In relation to Section 5, such choice

also relates to the mandate of the DTI Secretary to establish that the application of safeguard measures

is in the public interest, also within the fifteen (15) day period. Nothing in Section 13 contradicts the

instruction in Section 5 that the DTI Secretary is allowed to impose the general safeguard measures only

if there is a positive determination made by the Tariff Commission.

Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned "Final Determination by the

Secretary." The assailed Decision and Philcemcor latch on this phraseology to imply that the factual

determination rendered by the Tariff Commission under Section 5 may be amended or reversed by the

DTI Secretary. Of course, implementing rules should conform, not clash, with the law that they seek to

implement, for a regulation which operates to create a rule out of harmony with the statute is a

nullity. 125 Yet imperfect draftsmanship aside, nothing in Rule 13.2 implies that the DTI Secretary can set

aside the determination made by the Tariff Commission under the aegis of Section 5. This can be seen by

examining the specific provisions of Rule 13.2, thus:

RULE 13.2. Final Determination by the Secretary

RULE 13.2.a. Within fifteen (15) calendar days from receipt of the Report of the

Commission, the Secretary shall make a decision, taking into consideration the

measures recommended by the Commission.

RULE 13.2.b. If the determination is affirmative, the Secretary shall issue, within

two (2) calendar days after making his decision, a written instruction to the

heads of the concerned government agencies to immediately implement the

appropriate general safeguard measure as determined by him. Provided,

however, that in the case of non-agricultural products, the Secretary shall first

establish that the imposition of the safeguard measure will be in the public

interest.

RULE 13.2.c. Within two (2) calendar days after making his decision, the

Secretary shall also order its publication in two (2) newspapers of general

circulation. He shall also furnish a copy of his Order to the petitioner and other

interested parties, whether affirmative or negative. (Emphasis supplied.)

Moreover, the DTI Secretary does not have the power to review the findings of the Tariff Commission for

it is not subordinate to the Department of Trade and Industry ("DTI"). It falls under the supervision, not

of the DTI nor of the Department of Finance (as mistakenly asserted by Southern Cross), 126 but of

the National Economic Development Authority, an independent planning agency of the government of 

co-equal rank as the DTI. 127 As the supervision and control of a Department Secretary is limited to the

bureaus, offices, and agencies under him, 128 the DTI Secretary generally cannot exercise review

authority over actions of the Tariff Commission. Neither does the SMA specifically authorize the DTI

Secretary to alter, amend or modify in any way the determination made by the Tariff Commission. The

most that the DTI Secretary could do to express displeasure over the Tariff Commission's actions is to

ignore its recommendation, but not its determination.

The word "determination" as used in Rule 13.2 of the Implementing Rules is dissonant with the same

word as employed in the SMA, which in the latter case is undeviatingly in reference to the determination

made by the Tariff Commission. Beyond the resulting confusion, however, the divergent use in Rule 13.2

is explicable as the Rule textually pertains to the power of the DTI Secretary to review the

recommendations of the Tariff Commission, not the latter's determination. Indeed, an examination of

the specific provisions show that there is no real conflict to reconcile. Rule 13.2 respects the logical order

imposed by the SMA. The Rule does not remove the essential requirement under Section 5 that a

positive final determination be made by the Tariff Commission before a definitive safeguard measure

may be imposed by the DTI Secretary.

The assailed Decision characterizes the findings of the Tariff Commission as merely recommendatory and

points to the DTI Secretary as the authority who renders the final decision. 129 At the same time,

Philcemcor asserts that the Tariff Commission's functions are merely investigatory, and as such do not

include the power to decide or adjudicate. These contentions, viewed in the context of the fundamental

requisite set forth by Section 5, are untenable. They run counter to the statutory prescription that a

positive final determination made by the Tariff Commission should first be obtained before the definitive

safeguard measures may be laid down.

Was it anomalous for Congress to have provided for a system whereby the Tariff Commission may

preclude the DTI, an office of higher rank, from imposing a safeguard measure? Of course, this Court

does not inquire into the wisdom of the legislature but only charts the boundaries of powers and

functions set in its enactments. But then, it is not difficult to see the internal logic of this statutory

framework.

For one, as earlier stated, the DTI cannot exercise review powers over the Tariff Commission which is not

its subordinate office.

Moreover, the mechanism established by Congress establishes a measure of check and balance involving

two different governmental agencies with disparate specializations. The matter of safeguard measures is

of such national importance that a decision either to impose or not to impose then could have ruinous

effects on companies doing business in the Philippines. Thus, it is ideal to put in place a system which

affords all due deliberation and calls to fore various governmental agencies exercising their particular

specializations.

Finally, if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard

measure, it is because such safeguard measure is the exception, rather than the rule. The Philippines is

obliged to observe its obligations under the GATT, under whose framework trade liberalization, not

protectionism, is laid down. Verily, the GATT actually prescribes conditions before a member-country

may impose a safeguard measure. The pertinent portion of the GATT Agreement on Safeguards reads:

2. A Member may only apply a safeguard measure to a product only if that

member has determined, pursuant to the provisions set out below, that such

product is being imported into its territory in such increased quantities,

absolute or relative to domestic production, and under such conditions as to

cause or threaten to cause serious injury to the domestic industry that produces

like or directly competitive products. 130

3.(a) A Member may apply a safeguard measure only following an investigation

by the competent authorities of that Member pursuant to procedures

previously established and made public in consonance with Article X of the

GATT 1994. This investigation shall include reasonable public notice to all

interested parties and public hearings or other appropriate means in which

importers, exporters and other interested parties could present evidence and

their views, including the opportunity to respond to the presentations of other

parties and to submit their views, inter alia, as to whether or not the application

of a safeguard measure would be in the public interest. The competent

authorities shall publish a report setting forth their findings and reasoned

conclusions reached on all pertinent issues of fact and law. 131

The SMA was designed not to contradict the GATT, but to complement it. The two requisites laid down in

Section 5 for a positive final determination are the same conditions provided under the GATT Agreement

on Safeguards for the application of safeguard measures by a member country. Moreover, the

investigatory procedure laid down by the SMA conforms to the procedure required by the GATT

Agreement on Safeguards. Congress has chosen the Tariff Commission as the competent authority to

conduct such investigation. Southern Cross stresses that applying the provision of the GATT Agreement

on Safeguards, the Tariff Commission is clearly empowered to arrive at binding conclusions. 132 We

agree: binding on the DTI Secretary is the Tariff Commission's determinations on whether a product is

imported in increased quantities, absolute or relative to domestic production and whether any such

increase is a substantial cause of serious injury or threat thereof to the domestic industry. 133

Satisfied as we are with the proper statutory paradigm within which the SMA should be analyzed, the

flaws in the reasoning of the Court of Appeals and in the arguments of the respondents become

apparent. To better understand the dynamics of the procedure set up by the law leading to the

imposition of definitive safeguard measures, a brief step-by-step recount thereof is in order.

1. After the initiation of an action involving a general safeguard measure, 134 the DTI Secretary makes a

preliminary determination whether the increased imports of the product under consideration

substantially cause or threaten to substantially cause serious injury to the domestic industry, 135 and

whether the imposition of a provisional measure is warranted under Section 8 of the SMA. 136 If the

preliminary determination is negative, it is implied that no further action will be taken on the application.

2. When his preliminary determination is positive, the Secretary immediately transmits the records

covering the application to the Tariff Commission for immediate formal investigation. 137

3. The Tariff Commission conducts its formal investigation, keyed towards making a final determination.

In the process, it holds public hearings, providing interested parties the opportunity to present evidence

or otherwise be heard. 138 To repeat, Section 5 enumerates what the Tariff Commission is tasked to

determine: (a) whether a product is being imported into the country in increased quantities, irrespective

of whether the product is absolute or relative to the domestic production; and (b) whether the

importation in increased quantities is such that it causes serious injury or threat to the domestic

industry. 139The findings of the Tariff Commission as to these matters constitute the final determination,

which may be either positive or negative.

4. Under Section 13 of the SMA, if the Tariff Commission makes a positive determination, the Tariff

Commission "recommends to the [DTI] Secretary an appropriate definitive measure." The Tariff

Commission "may also recommend other actions, including the initiation of international negotiations to

address the underlying cause of the increase of imports of the products, to alleviate the injury or threat

thereof to the domestic industry, and to facilitate positive adjustment to import competition." 140

5. If the Tariff Commission makes a positive final determination, the DTI Secretary is then to decide,

within fifteen (15) days from receipt of the report, as to what appropriate safeguard measures should he

impose.

6. However, if the Tariff Commission makes a negative final determination, the DTI Secretary cannot

impose any definitive safeguard measure. Under Section 13, he is instructed instead to return whatever

cash bond was paid by the applicant upon the initiation of the action for safeguard measure.

The Effect of the Court's Decision

The Court of Appeals erred in remanding the case back to the DTI Secretary, with the instruction that the

DTI Secretary may impose a general safeguard measure even if there is no positive final determination

from the Tariff Commission. More crucially, the Court of Appeals could not have acquired jurisdiction

over Philcemcor's petition for certiorari in the first place, as Section 29 of the SMA properly vests

jurisdiction on the CTA. Consequently, the assailed Decision is an absolute nullity, and we declare it as

such.

What is the effect of the nullity of the assailed Decision on the 5 June 2003 Decision of the DTI Secretary

imposing the general safeguard measure? We have recognized that any initial judicial review of a DTI

ruling in connection with the imposition of a safeguard measure belongs to the CTA. At the same time,

the Court also recognizes the fundamental principle that a null and void judgment cannot produce any

legal effect. There is sufficient cause to establish that the 5 June 2003 Decision of the DTI Secretary

resulted from the assailed Court of Appeals Decision, even if the latter had not yet become final.

Conversely, it can be concluded that it was because of the putative imprimatur of the Court of

Appeals' Decision that the DTI Secretary issued his ruling imposing the safeguard measure. Since the 5

June 2003 Decision derives its legal effect from the void Decision of the Court of Appeals, this ruling of

the DTI Secretary is consequently void. The spring cannot rise higher than the source.

The DTI Secretary himself acknowledged that he drew stimulating force from the appellate

court's Decision for in his own 5 June 2003 Decision, he declared:

From the aforementioned ruling, the CA has remanded the case to the DTI

Secretary for a final decision. Thus, there is no legal impediment for the

Secretary to decide on the application. 141

The inescapable conclusion is that the DTI Secretary needed the assailed Decision of the Court of Appeals

to justify his rendering a second Decision. He explicitly invoked the Court of Appeals' Decision as basis for

rendering his 5 June 2003 ruling, and implicitly recognized that without such Decision he would not have

the authority to revoke his previous ruling and render a new, obverse ruling.

It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of the void Decision, it

being an attempt to carry out such null judgment. There is therefore no choice but to declare it void as

well, lest we sanction the perverse existence of a fruit from a non-existent tree. It does not even matter

what the disposition of the 25 June 2003 Decision was, its nullity would be warranted even if the DTI

Secretary chose to uphold his earlier ruling denying the application for safeguard measures.

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

which is not yet final and actually pending review on appeal. Had it been a judge who attempted to

enforce a decision that is not yet final and executory, he or she would have readily been subjected to

sanction by this Court. The DTI Secretary may be beyond the ambit of administrative review by this

Court, but we are capacitated to allocate the boundaries set by the law of the land and to exact fealty to

the legal order, especially from the instrumentalities and officials of government.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is DECLARED NULL

AND VOID and SET ASIDE. The Decisionof the DTI Secretary dated 25 June 2003 is also DECLARED NULL

AND VOID and SET ASIDE. No Costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 118216. March 9, 2000.]

DELTAVENTURES RESOURCES, INC., petitioner, vs. HON. FERNANDO P.

CABATO, Presiding Judge Regional Trial Court, La Trinidad, Benguet, Branch

62; HON. GELACIO L. RIVERA, JR., Executive Labor Arbiter, NLRC-CAR, Baguio

City, ADAM P. VENTURA, Deputy-Sheriff, NLRC-CAR, Baguio City; ALEJANDRO

BERNARDINO, AUGUSTO GRANADOS, PILANDO TANGAY, NESTOR RABANG,

RAY DAYAP, MYRA BAYAONA, VIOLY LIBAO, AIDA LIBAO, JESUS GATCHO and

GREGORIO DULAY,respondents.

Oreta Suarez & Narvasa for petitioner.

The Solicitor General for public respondents.

E.L. Gayo & Associates for private respondent.

SYNOPSIS

On July 15, 1992, a decision was rendered by the National Labor Relations Commission in the NLRC case

entitled Alejandro, et al. vs. Green Mountain Farm, Roberto Ongpin and Almus Alabe. On May 19, 1994,

private respondents filed before the Commission a motion for the issuance of a writ of execution as

respondent's appeal to the Commission and the Supreme Court were respectively denied. On June 16,

1994, the Executive Labor Arbiter issued a writ of execution and the sheriff proceeded to enforce the

writ by garnishing certain personal properties to satisfy the monetary award, but proceeded to levy upon

a real property registered in the name of Roberto Ongpin due to inadequacy of the personal property.

On July 27, 1994, a month before the scheduled auction sale petitioner filed before the Commission a

third-party claim asserting ownership levied upon by the sheriff's notice of sale. Due to this claim, the

Executive Labor Arbiter issued an order suspending the auction sale until the merits of petitioner's claim

had been resolved. Inspite of the filing of the third party complaint, petitioner filed with the Regional

Trial Court of La Trinidad, Benguet a complaint for injunction and damages with prayer for the issuance

of a TRO. Private respondents-laborers moved for the dismissal of the complaint on the ground of the

court's lack of jurisdiction over the case. On November 7, 1994, after both parties had submitted their

respective briefs, respondent court rendered a decision dismissing the case for lack of jurisdiction.

Petitioner filed a motion for reconsideration, but the same was denied. Hence, this petition. DIETHS

The Supreme Court found the petition devoid of merit. The Court ruled that the complaint filed before

the trial court was for recovery of possession and injunction, but in essence it was an action challenging

the legality or propriety of the levy vis-à-vis the alias writ of execution, including the acts performed by

the Labor Arbiter and the Deputy Sheriff implementing the writ. The complaint was in effect a motion to

quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor

Arbiter, to wit, illegal dismissal and unfair labor practice. Considering the factual setting, it is then logical

to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter

beyond the jurisdiction of the regional trial courts. Thus, the Court found no grave abuse of discretion on

the part of respondent Judge in denying petitioner's motion for the issuance of an injunction against the

execution of the decision of the National Labor Relations Commission. Accordingly, the petition was

denied and the assailed orders of respondent judge were affirmed.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION OVER THE SUBJECT MATTER CONFERRED BY LAW

AND DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT. — Basic as a hornbook principle,

jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the

complaint which comprise a concise statement of the ultimate facts constituting the petitioner's cause of

action. Thus we have held that: "Jurisdiction over the subject-matter is determined upon the allegations

made in the complaint, irrespective of whether the plaintiff is entitled or not entitled to recover upon the

claim asserted therein — a matter resolved only after and as a result of the trial."

2. ID.; ID.; JURISDICTION; COURTS HAVE NO JURISDICTION TO ACT ON LABOR CASES OR VARIOUS

INCIDENTS ARISING THEREFROM, INCLUDING THE EXECUTION OF DECISIONS, AWARDS OR ORDERS;

CASE AT BAR. — Ostensibly the complaint before the trial court was for the recovery of possession and

injunction, but in essence it was an action challenging the legality or propriety of the levy vis-a-vis the

alias writ of execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff

implementing the writ. The complaint was in effect a motion to quash the writ of execution of a decision

rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and

Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that the subject

matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of

regional trial courts. Precedent abound confirming the rule that said courts have no jurisdiction to act on

labor cases or various incidents arising therefrom, including the execution of decisions, awards or orders.

Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official concerned

under the Department of Labor and Employment. To hold otherwise is to sanction split jurisdiction which

is obnoxious to the orderly administration of justice.

3. LABOR AND SOCIAL LEGISLATION; NATIONAL LABOR RELATIONS COMMISSION; REGIONAL TRIAL

COURT HAS NO JURISDICTION TO ISSUE RESTRAINING ORDER OR INJUNCTION TO ENJOIN THE

EXECUTION OF ANY DECISION THEREOF. — It must be noted that the Labor Code in Article 254 explicitly

prohibits issuance of a temporary or permanent injunction or restraining order in any case involving or

growing out of labor disputes by any court or other entity (except as otherwise provided in Arts. 218 and

264). As correctly observed by court a quo, the main issue and the subject of the amended complaint for

injunction are questions interwoven with the execution of the Commission's decision. No doubt the

aforecited prohibition in Article 254 is applicable. Petitioner should have filed its third-party claim before

the Labor Arbiter, from whom the writ of execution originated, before instituting said civil case. The

NLRC's Manual on Execution of Judgment, issued pursuant to Article 218 of the Labor Code, provides the

mechanism for a third-party claimant to assert his claim over a property levied upon by the sheriff

pursuant to an order or decision of the Commission or of the Labor Arbiter. The power of the Labor

Arbiter to issue a writ of execution carries with it the power to inquire into the correctness of the

execution of his decision and to consider whatever supervening events might transpire during such

execution. Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding

the time-honored principle that a Regional Trial Court, being a co-equal body of the National Labor

Relations Commission, has no jurisdiction to issue any restraining order or injunction to enjoin the

execution of any decision of the latter.

D E C I S I O N

QUISUMBING, J p:

This special civil action for certiorari seeks to annul the Order dated November 7, 1994, 1 of respondent

Judge Fernando P. Cabato of the Regional Trial Court of La Trinidad, Benguet, Branch 62, in Civil Case No.

94-CV-0948, dismissing petitioner's amended third-party complaint, as well as the Order dated

December 14, 1994, 2 denying motion for reconsideration. dctai

On July 15, 1992, a Decision 3 was rendered by Executive Labor Arbiter Norma Olegario, National Labor

Relations Commission — Regional Arbitration Board, Cordillera Autonomous Region (Commission), in

NLRC Case No. 01-08-0165-89 entitled "Alejandro Bernardino, et al. vs. Green Mountain Farm, Roberto 

Ongpin and Almus Alabe," the dispositive portion of which reads as follows:

"WHEREFORE, judgment is hereby rendered declaring the respondents guilty of

Illegal Dismissal and Unfair Labor Practice and ordering them to pay the

complainants, in solidum, in the amounts herein below listed:

1. Violy Libao P131,368.07

2. Myra Bayaona 121,470.23

3. Gregorio Dulay 128,362.17

4. Jesus Gatcho 126,475.17

5. Alejandro Bernardino 110,158.20

6. Pilando Tangay 107,802.66

7. Aida Libao 129,967.34

8. Rey Dayap 123,289.21

9. Nestor Rabang 90,611.69

10. Augusto Granados 108,106.03

plus attorney's fees in the amount of P10,000.00.

Respondent Almus Alabe is also ordered to answer in exemplary damages in the

amount of P5,000.00 each to all the complainants.

xxx xxx xxx

SO ORDERED." 4

On May 19, 1994, complainants in the abovementioned labor case, filed before the Commission a

motion for the issuance of a writ of execution as respondent's appeal to the Commission and this

Court 5 were respectively denied.

On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned in view

of Labor Arbiter Olegario's transfer, issued a writ of execution 6 directing NLRC Deputy Sheriff Adam

Ventura to execute the judgment against respondents, Green Mountain Farm, Roberto Ongpin and

Almus Alabe. Sheriff Ventura then proceeded to enforce the writ by garnishing certain personal

properties of respondents. Finding that said judgment debtors do not have sufficient personal properties

to satisfy the monetary award, Sheriff Ventura proceeded to levy upon a real property covered by Tax

Declaration No. 9697, registered in the name of Roberto Ongpin, one of the respondents in the labor

case. Thereafter, Sheriff Ventura caused the publication on the July 17, 1994 edition of the Baguio

Midland Courier the date of the public auction of said real property. cdtai

On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed before the

Commission a third-party claim 7 asserting ownership over the property levied upon and subject of the

Sheriff's notice of sale. Labor Arbiter Rivera thus issued an order directing the suspension of the auction

sale until the merits of petitioner's claim has been resolved. 8

However, on August 16, 1994, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a

complaint for injunction and damages, with a prayer for the issuance of a temporary restraining order

against Sheriff Ventura, reiterating the same allegations it raised in the third party claim it filed with the

Commission. The petition was docketed as Civil Case No. 94-CV-0948, entitled "Deltaventures Resources, 

Inc., petitioner vs. Adam P. Ventura, et al., defendants." The next day, August 17, 1994, respondent Judge

Cabato issued a temporary restraining order, enjoining respondents in the civil case before him to hold in

abeyance any action relative to the enforcement of the decision in the labor case. 9

Petitioner likewise filed on August 30, 1994, an amended complaint 10 to implead Labor Arbiter Rivera

and herein private respondent-laborers.

Further, on September 20, 1994, petitioner filed with the Commission a manifestation 11 questioning the

latter's authority to hear the case, the matter being within the jurisdiction of the regular courts. The

manifestation, however, was dismissed by Labor Arbiter Rivera on October 3, 1994. 12

Meanwhile, on September 20, 1994, private respondent-laborers, moved for the dismissal of the civil

case on the ground of the court's lack of jurisdiction.13 Petitioner filed its opposition to said motion on

October 4, 1994. 14

On November 7, 1994, after both parties had submitted their respective briefs, respondent court

rendered its assailed decision premised on the following grounds:

"First, this Court is of equal rank with the NLRC, hence, has no jurisdiction to

issue an injunction against the execution of the NLRC decision. . . . .

Second, the NLRC retains authority over all proceedings anent the execution of

its decision. This power carries with it the right to determine every question

which may be involved in the execution of its decision. . . . .

Third, Deltaventures Resources, Inc. should rely on and comply with the Rules of

the NLRC because it is the principal procedure to be followed, the Rules of Court

being merely suppletory in application, . . . .

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

the defendants have filed their formal answer to the amended complaint, they

moved to dismiss it for lack of jurisdiction.

Lastly, the plaintiff, having in the first place addressed to the jurisdiction of the

NLRC by filing with it a Third Party Claim may not at the same time pursue the

present amended Complaint under the forum shopping rule." 15

Their motion for reconsideration having been denied by respondent Judge, 16 petitioner promptly filed

this petition now before us.

In spite of the many errors assigned by petitioner, 17 we find that here the core issue is whether or not

the trial court may take cognizance of the complaint filed by petitioner and consequently provide the

injunctive relief sought. Such cognizance, in turn, would depend on whether the acts complained of are

related to, connected or interwoven with the cases falling under the exclusive jurisdiction of the Labor

Arbiter or of the NLRC.

Petitioner avers that court a quo erred in dismissing the third-party claim on the ground of lack of

jurisdiction. Further, it contends that the NLRC-CAR did not acquire jurisdiction over the claim for it did

not impugn the decision of the NLRC-CAR but merely questioned the propriety of the levy made by

Sheriff Ventura. In support of its claim, petitioner asserts that the instant case does not involve a labor

dispute, as no employer-employee relationship exists between the parties. Nor is the petitioner's case

related in any way to either parties' case before the NLRC-CAR hence, not within the jurisdiction of the

Commission.

Basic as a hornbook principle, jurisdiction over the subject matter of a case is conferred by law and

determined by the allegations in the complaint 18which comprise a concise statement of the ultimate

facts constituting the petitioner's cause of action. 19 Thus we have held that:

"Jurisdiction over the subject-matter is determined upon the allegations made

in the complaint, irrespective of whether the plaintiff is entitled or not entitled

to recover upon the claim asserted therein — a matter resolved only after and

as a result of the trial." 20

Petitioner filed the third-party claim before the court a quo by reason of a writ of execution issued by the

NLRC-CAR Sheriff against a property to which it claims ownership. The writ was issued to enforce and

execute the commission's decision in NLRC Case No. 01-08-0165-89 (Illegal Dismissal and Unfair Labor

Practice) against Green Mountain Farm, Roberto Ongpin and Almus Alabe.

Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in

essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of

execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the

writ. The complaint was in effect a motion to quash the writ of execution of a decision rendered on a

case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor

Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the third

party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts.

Precedents abound confirming the rule that said courts have no jurisdiction to act on labor cases or

various incidents arising therefrom, including the execution of decisions, awards or

orders. 21 Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official

concerned under the Department of Labor and Employment. To hold otherwise is to sanction split

jurisdiction which is obnoxious to the orderly administration of justice. 22

Petitioner failed to realize that by filing its third-party claim with the deputy sheriff, it submitted itself to

the jurisdiction of the Commission acting through the Labor Arbiter. It failed to perceive the fact that

what it is really controverting is the decision of the Labor Arbiter and not the act of the deputy sheriff in

executing said order issued as a consequence of said decision rendered. LLphil

Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is

terminated. 23 Whatever irregularities attended the issuance and execution of the alias writ of execution

should be referred to the same administrative tribunal which rendered the decision. 24 This is because

any court which issued a writ of execution has the inherent power, for the advancement of justice, to

correct errors of its ministerial officers and to control its own processes. 25

The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by

Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over

incidents arising from, in connection with or relating to labor disputes, as the controversy under

consideration, to the exclusion of the regular courts.

Having established that jurisdiction over the case rests with the Commission, we find no grave abuse of

discretion on the part of respondent Judge Cabato in denying petitioner's motion for the issuance of an

injunction against the execution of the decision of the National Labor Relations Commission.

Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits issuance of a

temporary or permanent injunction or restraining order in any case involving or growing out of labor

disputes by any court or other entity (except as otherwise provided in Arts. 218 and 264). As correctly

observed by court a quo, the main issue and the subject of the amended complaint for injunction are

questions interwoven with the execution of the Commission's decision. No doubt the aforecited

prohibition in Article 254 is applicable.

Petitioner should have filed its third-party claim before the Labor Arbiter, from whom the writ of

execution originated, before instituting said civil case. The NLRC's Manual on Execution of

Judgment, 26 issued pursuant to Article 218 of the Labor Code, provides the mechanism for a third-party

claimant to assert his claim over a property levied upon by the sheriff pursuant to an order or decision of

the Commission or of the Labor Arbiter. The power of the Labor Arbiter to issue a writ of execution

carries with it the power to inquire into the correctness of the execution of his decision and to consider

whatever supervening events might transpire during such execution.

Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding the time-

honored principle that a Regional Trial Court, being a co-equal body of the National Labor Relations

Commission, has no jurisdiction to issue any restraining order or injunction to enjoin the execution of

any decision of the latter. 27

WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed Orders of respondent

Judge Fernando P. Cabato dated November 7, 1994 and December 14, 1994, respectively are AFFIRMED.

The records of this case are hereby REMANDED to the National Labor Relations Commission for further

proceedings.

Costs against petitioner.

SO ORDERED. Cdpr

THIRD DIVISION

[G.R. No. 184778. October 2, 2009.]

BANGKO SENTRAL NG PILIPINAS MONETARY BOARD and CHUCHI

FONACIER, petitioners, vs. HON. NINA G. ANTONIO-VALENZUELA, in her

capacity as Regional Trial Court Judge of Manila, Branch 28; RURAL BANK OF

PARAÑAQUE, INC.; RURAL BANK OF SAN JOSE (BATANGAS), INC.; RURAL

BANK OF CARMEN (CEBU), INC.; PILIPINO RURAL BANK, INC.; PHILIPPINE

COUNTRYSIDE RURAL BANK, INC.; RURAL BANK OF CALATAGAN (BATANGAS),

INC. (now DYNAMIC RURAL BANK); RURAL BANK OF DARBCI, INC.; RURAL

BANK OF KANANGA (LEYTE), INC. (now FIRST INTERSTATE RURAL BANK);

RURAL BANK OF BISAYAS MINGLANILLA (now BANK OF EAST ASIA); and SAN

PABLO CITY DEVELOPMENT BANK, INC., respondents.

DECISION

VELASCO, JR., J p:

The Case

This is a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a Temporary

Restraining Order (TRO)/Writ of Preliminary Injunction, questioning the Decision dated September 30,

2008 1 of the Court of Appeals (CA) in CA-G.R. SP No. 103935. The CA Decision upheld the Order 2dated

June 4, 2008 of the Regional Trial Court (RTC), Branch 28 in Manila, issuing writs of preliminary injunction

in Civil Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08-

119250, 08-119251, and 08-119273, and the Order dated May 21, 2008 that consolidated the civil

cases. IcCEDA

The Facts

In September of 2007, the Supervision and Examination Department (SED) of the Bangko Sentral  ng 

Pilipinas (BSP) conducted examinations of the books of the following banks: Rural Bank of Parañaque,

Inc. (RBPI), Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank,

Inc., Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural

Bank), Rural Bank of Darbci, Inc., Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank),

Rural Bank de Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development Bank, Inc.

After the examinations, exit conferences were held with the officers or representatives of the banks

wherein the SED examiners provided them with copies of Lists of Findings/Exceptions containing the

deficiencies discovered during the examinations. These banks were then required to comment and to

undertake the remedial measures stated in these lists within 30 days from their receipt of the lists, which

remedial measures included the infusion of additional capital. Though the banks claimed that they made

the additional capital infusions, petitioner Chuchi Fonacier, officer-in-charge of the SED, sent separate

letters to the Board of Directors of each bank, informing them that the SED found that the banks failed to

carry out the required remedial measures. In response, the banks requested that they be given time to

obtain BSP approval to amend their Articles of Incorporation, that they have an opportunity to seek

investors. They requested as well that the basis for the capital infusion figures be disclosed, and noted

that none of them had received the Report of Examination (ROE) which finalizes the audit findings. They

also requested meetings with the BSP audit teams to reconcile audit figures. In response, Fonacier

reiterated the banks' failure to comply with the directive for additional capital infusions.

On May 12, 2008, the RBPI filed a complaint for nullification of the BSP ROE with application for a TRO

and writ of preliminary injunction before the RTC docketed as Civil Case No. 08-119243 against Fonacier,

the BSP, Amado M. Tetangco, Jr., Romulo L. Neri, Vicente B. Valdepenas, Jr., Raul A. Boncan, Juanita D.

Amatong, Alfredo C. Antonio, and Nelly F. Villafuerte. RBPI prayed that Fonacier, her subordinates,

agents, or any other person acting in her behalf be enjoined from submitting the ROE or any similar

report to the Monetary Board (MB), or if the ROE had already been submitted, the MB be enjoined from

acting on the basis of said ROE, on the allegation that the failure to furnish the bank with a copy of the

ROE violated its right to due process.

The Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc.,

Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc., Rural Bank of Darbci,

Inc., Rural Bank of Kananga (Leyte), Inc., and Rural Bank de Bisayas Minglanilla followed suit, filing

complaints with the RTC substantially similar to that of RBPI, including the reliefs prayed for, which were

raffled to different branches and docketed as Civil Cases Nos. 08-119244, 08-119245, 08-119246, 08-

119247, 08-119248, 08-119249, 08-119250, and 08-119251, respectively.

On May 13, 2008, the RTC denied the prayer for a TRO of Pilipino Rural Bank, Inc. The bank filed a motion

for reconsideration the next day.

On May 14, 2008, Fonacier and the BSP filed their opposition to the application for a TRO and writ of

preliminary injunction in Civil Case No. 08-119243 with the RTC. Respondent Judge Nina Antonio-

Valenzuela of Branch 28 granted RBPI's prayer for the issuance of a TRO. ATaDHC

The other banks separately filed motions for consolidation of their cases in Branch 28, which motions

were granted. Judge Valenzuela set the complaint of Rural Bank of San Jose (Batangas), Inc. for hearing

on May 15, 2008. Petitioners assailed the validity of the consolidation of the nine cases before the RTC,

alleging that the court had already prejudged the case by the earlier issuance of a TRO in Civil Case No.

08-119243, and moved for the inhibition of respondent judge. Petitioners filed a motion for

reconsideration regarding the consolidation of the subject cases.

On May 16, 2008, San Pablo City Development Bank, Inc. filed a similar complaint against the same

defendants with the RTC, and this was docketed as Civil Case No. 08-119273 that was later on

consolidated with Civil Case No. 08-119243. Petitioners filed an Urgent Motion to Lift/Dissolve the TRO

and an Opposition to the earlier motion for reconsideration of Pilipino Rural Bank, Inc.

On May 19, 2008, Judge Valenzuela issued an Order granting the prayer for the issuance of TROs for the

other seven cases consolidated with Civil Case No. 08-119243. On May 21, 2008, Judge Valenzuela issued

an Order denying petitioners' motion for reconsideration regarding the consolidation of cases in Branch

28. On May 22, 2008, Judge Valenzuela granted the urgent motion for reconsideration of Pilipino Rural

Bank, Inc. and issued a TRO similar to the ones earlier issued.

On May 26, 2008, petitioners filed a Motion to Dismiss against all the complaints (except that of the San

Pablo City Development Bank, Inc.), on the grounds that the complaints stated no cause of action and

that a condition precedent for filing the cases had not been complied with. On May 29, 2008, a hearing

was conducted on the application for a TRO and for a writ of preliminary injunction of San Pablo City

Development Bank, Inc.

The Ruling of the RTC

After the parties filed their respective memoranda, the RTC, on June 4, 2008, ruled that the banks were

entitled to the writs of preliminary injunction prayed for. It held that it had been the practice of the SED

to provide the ROEs to the banks before submission to the MB. It further held that as the banks are the

subjects of examinations, they are entitled to copies of the ROEs. The denial by petitioners of the banks'

requests for copies of the ROEs was held to be a denial of the banks' right to due process.

The dispositive portion of the RTC's order reads:

WHEREFORE, the Court rules as follows:

1)Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Rural Bank of Paranaque Inc. is directed to

post a bond executed to the defendants, in the amount of

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

all damages which they may sustain by reason of the injunction if the

Court should finally decide that the plaintiff was not entitled thereto.

After posting of the bond and approval thereof, let a writ of

preliminary injunction be issued to enjoin and restrain the

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report.

2)Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Rural Bank of San Jose (Batangas), Inc. is

directed to post a bond executed to the defendants, in the amount

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

defendants all damages which they may sustain by reason of the

injunction if the Court should finally decide that the plaintiff was not

entitled thereto. After posting of the bond and approval thereof, let

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

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report. ESIcaC

3)Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Rural Bank of Carmen (Cebu), Inc. is directed

to post a bond executed to the defendants, in the amount of

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

all damages which they may sustain by reason of the injunction if the

Court should finally decide that the plaintiff was not entitled thereto.

After posting of the bond and approval thereof, let a writ of

preliminary injunction be issued to enjoin and restrain the

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report.

4)Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Pilipino Rural Bank Inc. is directed to post a

bond executed to the defendants, in the amount of P500,000.00 to

the effect that the plaintiff will pay to the defendants all damages

which they may sustain by reason of the injunction if the Court

should finally decide that the plaintiff was not entitled thereto. After

posting of the bond and approval thereof, let a writ of preliminary

injunction be issued to enjoin and restrain the defendants from

submitting the Report of Examination or any other similar report

prepared in connection with the examination conducted on the

plaintiff, to the Monetary Board. In case such a Report on

Examination [sic] or any other similar report prepared in connection

with the examination conducted on the plaintiff has been submitted

to the Monetary Board, the latter and its members (i.e., defendants

Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and

Villafuerte) are enjoined and restrained from acting on the basis of

said report.

5)Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Philippine Countryside Rural Bank Inc. is

directed to post a bond executed to the defendants, in the amount

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

defendants all damages which they may sustain by reason of the

injunction if the Court should finally decide that the plaintiff was not

entitled thereto. After posting of the bond and approval thereof, let

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

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report.

6)Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Dynamic Bank Inc. (Rural Bank of Calatagan)

is directed to post a bond executed to the defendants, in the amount

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

defendants all damages which they may sustain by reason of the

injunction if the Court should finally decide that the plaintiff was not

entitled thereto. After posting of the bond and approval thereof, let

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

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report.

7)Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Rural Bank of DARBCI, Inc. is directed to post

a bond executed to the defendants, in the amount of P500,000.00 to

the effect that the plaintiff will pay to the defendants all damages

which they may sustain by reason of the injunction if the Court

should finally decide that the plaintiff was not entitled thereto. After

posting of the bond and approval thereof, let a writ of preliminary

injunction be issued to enjoin and restrain the defendants from

submitting the Report of Examination or any other similar report

prepared in connection with the examination conducted on the

plaintiff, to the Monetary Board. In case such a Report on

Examination [sic] or any other similar report prepared in connection

with the examination conducted on the plaintiff has been submitted

to the Monetary Board, the latter and its members (i.e., defendants

Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and

Villafuerte) are enjoined and restrained from acting on the basis of

said report. cIDHSC

8)Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Rural Bank of Kananga Inc. (First Intestate

Bank), is directed to post a bond executed to the defendants, in the

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

defendants all damages which they may sustain by reason of the

injunction if the Court should finally decide that the plaintiff was not

entitled thereto. After posting of the bond and approval thereof, let

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

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report.

9)Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section 4(b) of the Revised

Rules of Court, plaintiff Banco Rural De Bisayas Minglanilla (Cebu)

Inc. (Bank of East Asia) is directed to post a bond executed to the

defendants, in the amount of P500,000.00 to the effect that the

plaintiff will pay to the defendants all damages which they may

sustain by reason of the injunction if the Court should finally decide

that the plaintiff was not entitled thereto. After posting of the bond

and approval thereof, let a writ of preliminary injunction be issued to

enjoin and restrain the defendants from submitting the Report of

Examination or any other similar report prepared in connection with

the examination conducted on the plaintiff, to the Monetary Board.

In case such a Report on Examination [sic] or any other similar report

prepared in connection with the examination conducted on the

plaintiff has been submitted to the Monetary Board, the latter and

its members (i.e., defendants Tetangco, Neri, Valdepenas, Boncan,

Amatong, Antonio, and Villafuerte) are enjoined and restrained from

acting on the basis of said report.

10)Re:   Civil   Case  No.   08-119273. Pursuant to Rule 58, Section 4(b) of the

Revised Rules of Court, plaintiff San Pablo City Development Bank,

Inc. is directed to post a bond executed to the defendants, in the

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

defendants all damages which they may sustain by reason of the

injunction if the Court should finally decide that the plaintiff was not

entitled thereto. After posting of the bond and approval thereof, let

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

defendants from submitting the Report of Examination or any other

similar report prepared in connection with the examination

conducted on the plaintiff, to the Monetary Board. In case such a

Report on Examination [sic] or any other similar report prepared in

connection with the examination conducted on the plaintiff has been

submitted to the Monetary Board, the latter and its members ( i.e.,

defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,

and Villafuerte) are enjoined and restrained from acting on the basis

of said report. 3

The Ruling of the CA

Petitioners then brought the matter to the CA via a petition for  certiorari under Rule 65 claiming grave

abuse of discretion on the part of Judge Valenzuela when she issued the orders dated May 21, 2008 and

June 4, 2008.

The CA ruled that the RTC committed no grave abuse of discretion when it ordered the issuance of a writ

of preliminary injunction and when it ordered the consolidation of the 10 cases.

It held that petitioners should have first filed a motion for reconsideration of the assailed orders, and

failed to justify why they resorted to a special civil action of certiorari instead.

The CA also found that aside from the technical aspect, there was no grave abuse of discretion on the

part of the RTC, and if there was a mistake in the assessment of evidence by the trial court, that should

be characterized as an error of judgment, and should be correctable via appeal. HcACTE

The CA held that the principles of fairness and transparency dictate that the respondent banks are

entitled to copies of the ROE.

Regarding the consolidation of the 10 cases, the CA found that there was a similarity of facts, reliefs

sought, issues raised, defendants, and that plaintiffs and defendants were represented by the same sets

of counsels. It found that the joint trial of these cases would prejudice any substantial right of

petitioners.

Finding that no grave abuse of discretion attended the issuance of the orders by the RTC, the CA denied

the petition.

On November 24, 2008, a TRO was issued by this Court, restraining the CA, RTC, and respondents from

implementing and enforcing the CA Decision dated September 30, 2008 in CA-G.R. SP No. 103935. 4

By reason of the TRO issued by this Court, the SED was able to submit their ROEs to the MB. The MB then

prohibited the respondent banks from transacting business and placed them under receivership under

Section 53 of Republic Act No. (RA) 8791 5 and Sec. 30 of RA 7653 6 through MB Resolution No. 1616

dated December 9, 2008; Resolution Nos. 1637 and 1638 dated December 11, 2008; Resolution Nos.

1647, 1648, and 1649 dated December 12, 2008; Resolution Nos. 1652 and 1653 dated December 16,

2008; and Resolution Nos. 1692 and 1695 dated December 19, 2008, with the Philippine Deposit

Insurance Corporation as the appointed receiver.

Now we resolve the main petition.

Grounds in Support of Petition

I.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT

THE INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT VIOLATED

SECTION 25 OF THE NEW CENTRAL BANK ACT AND EFFECTIVELY

HANDCUFFED THE BANGKO SENTRAL FROM DISCHARGING ITS

FUNCTIONS TO THE GREAT AND IRREPARABLE DAMAGE OF THE

COUNTRY'S BANKING SYSTEM;

II.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT

RESPONDENTS ARE ENTITLED TO BE FURNISHED COPIES OF THEIR

RESPECTIVE ROEs BEFORE THE SAME IS SUBMITTED TO THE

MONETARY BOARD IN VIEW OF THE PRINCIPLES OF FAIRNESS AND

TRANSPARENCY DESPITE LACK OF EXPRESS PROVISION IN THE NEW

CENTRAL BANK ACT REQUIRING BSP TO DO THE SAME;

III.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DEPARTING FROM

WELL-ESTABLISHED PRECEPTS OF LAW AND JURISPRUDENCE:

A.THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED RESORT TO

PETITION FOR CERTIORARI UNDER RULE 65 INSTEAD OF

FIRST FILING A MOTION FOR RECONSIDERATION

B.RESPONDENT BANKS' ACT OF RESORTING IMMEDIATELY TO THE

COURT WAS PREMATURE SINCE IT WAS MADE IN UTTER

DISREGARD OF THE PRINCIPLE OF PRIMARY JURISDICTION

AND EXHAUSTION OF ADMINISTRATIVE REMEDY

C.THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION BY THE

REGIONAL TRIAL COURT WAS NOT ONLY IMPROPER BUT

AMOUNTED TO GRAVE ABUSE OF DISCRETION 7

Our Ruling

The petition is meritorious.

In Lim v. Court of Appeals it was stated:

The requisites for preliminary injunctive relief are: (a) the invasion of right

sought to be protected is material and substantial; (b) the right of the

complainant is clear and unmistakable; and (c) there is an urgent and

paramount necessity for the writ to prevent serious damage.

As such, a writ of preliminary injunction may be issued only upon clear showing

of an actual existing right to be protected during the pendency of the principal

action. The twin requirements of a valid injunction are the existence of a right

and its actual or threatened violations. Thus, to be entitled to an injunctive writ,

the right to be protected and the violation against that right must be shown. 8

These requirements are absent in the present case.

In granting the writs of preliminary injunction, the trial court held that the submission of the ROEs to the

MB before the respondent banks would violate the right to due process of said banks. cHDEaC

This is erroneous.

The respondent banks have failed to show that they are entitled to copies of the ROEs. They can point to

no provision of law, no section in the procedures of the BSP that shows that the BSP is required to give

them copies of the ROEs. Sec. 28 of RA 7653, or the New Central Bank Act, which governs examinations

of banking institutions, provides that the ROE shall be submitted to the MB; the bank examined is not

mentioned as a recipient of the ROE.

The respondent banks cannot claim a violation of their right to due process if they are not provided with

copies of the ROEs. The same ROEs are based on the lists of findings/exceptions containing the

deficiencies found by the SED examiners when they examined the books of the respondent banks. As

found by the RTC, these lists of findings/exceptions were furnished to the officers or representatives of

the respondent banks, and the respondent banks were required to comment and to undertake remedial

measures stated in said lists. Despite these instructions, respondent banks failed to comply with the

SED's directive.

Respondent banks are already aware of what is required of them by the BSP, and cannot claim violation

of their right to due process simply because they are not furnished with copies of the ROEs. Respondent

banks were held by the CA to be entitled to copies of the ROEs prior to or simultaneously with their

submission to the MB, on the principles of fairness and transparency. Further, the CA held that if the

contents of the ROEs are essentially the same as those of the lists of findings/exceptions provided to said

banks, there is no reason not to give copies of the ROEs to the banks. This is a flawed conclusion, since if

the banks are already aware of the contents of the ROEs, they cannot say that fairness and transparency

are not present. If sanctions are to be imposed upon the respondent banks, they are already well aware

of the reasons for the sanctions, having been informed via the lists of findings/exceptions, demolishing

that particular argument. The ROEs would then be superfluities to the respondent banks, and should not

be the basis for a writ of preliminary injunction. Also, the reliance of the RTC on  Banco Filipino  v. 

Monetary Board 9 is misplaced. The petitioner in that case was held to be entitled to annexes of the

Supervision and Examination Sector's reports, as it already had a copy of the reports themselves. It was

not the subject of the case whether or not the petitioner was entitled to a copy of the reports. And the

ruling was made after the petitioner bank was ordered closed, and it was allowed to be supplied with

annexes of the reports in order to better prepare its defense. In this instance, at the time the respondent

banks requested copies of the ROEs, no action had yet been taken by the MB with regard to imposing

sanctions upon said banks.

The issuance by the RTC of writs of preliminary injunction is an unwarranted interference with the

powers of the MB. Secs. 29 and 30 of RA 7653 10 refer to the appointment of a conservator or a receiver

for a bank, which is a power of the MB for which they need the ROEs done by the supervising or

examining department. The writs of preliminary injunction issued by the trial court hinder the MB from

fulfilling its function under the law. The actions of the MB under Secs. 29 and 30 of RA 7653 "may not be

restrained or set aside by the court except on petition for  certiorari on the ground that the action taken

was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of

jurisdiction". The writs of preliminary injunction order are precisely what cannot be done under the law

by preventing the MB from taking action under either Sec. 29 or Sec. 30 of RA 7653.

As to the third requirement, the respondent banks have shown no necessity for the writ of preliminary

injunction to prevent serious damage. The serious damage contemplated by the trial court was the

possibility of the imposition of sanctions upon respondent banks, even the sanction of closure. Under the

law, the sanction of closure could be imposed upon a bank by the BSP even without notice and hearing.

The apparent lack of procedural due process would not result in the invalidity of action by the MB. This

was the ruling in Central  Bank of  the Philippines  v.  Court  of Appeals. 11 This "close now, hear later"

scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of the

bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders,

and the general public. The writ of preliminary injunction cannot, thus, prevent the MB from taking

action, by preventing the submission of the ROEs and worse, by preventing the MB from acting on such

ROEs. IaDcTC

The trial court required the MB to respect the respondent banks' right to due process by allowing the

respondent banks to view the ROEs and act upon them to forestall any sanctions the MB might impose.

Such procedure has no basis in law and does in fact violate the "close now, hear later" doctrine. We held

in Rural Bank of San Miguel, Inc. v. Monetary Board, Bangko Sentral ng Pilipinas:

It is well-settled that the closure of a bank may be considered as an exercise of

police power. The action of the MB on this matter is final and executory. Such

exercise may nonetheless be subject to judicial inquiry and can be set aside if

found to be in excess of jurisdiction or with such grave abuse of discretion as to

amount to lack or excess of jurisdiction. 12

The respondent banks cannot — through seeking a writ of preliminary injunction by appealing to lack of

due process, in a roundabout manner — prevent their closure by the MB. Their remedy, as stated, is a

subsequent one, which will determine whether the closure of the bank was attended by grave abuse of

discretion. Judicial review enters the picture only after the MB has taken action; it cannot prevent such

action by the MB. The threat of the imposition of sanctions, even that of closure, does not violate their

right to due process, and cannot be the basis for a writ of preliminary injunction.

The "close now, hear later" doctrine has already been justified as a measure for the protection of the

public interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits.

Unless adequate and determined efforts are taken by the government against distressed and

mismanaged banks, public faith in the banking system is certain to deteriorate to the prejudice of the

national economy itself, not to mention the losses suffered by the bank depositors, creditors, and

stockholders, who all deserve the protection of the government. 13

The respondent banks have failed to show their entitlement to the writ of preliminary injunction. It must

be emphasized that an application for injunctive relief is construed strictly against the pleader. 14 The

respondent banks cannot rely on a simple appeal to procedural due process to prove entitlement. The

requirements for the issuance of the writ have not been proved. No invasion of the rights of respondent

banks has been shown, nor is their right to copies of the ROEs clear and unmistakable. There is also no

necessity for the writ to prevent serious damage. Indeed the issuance of the writ of preliminary

injunction tramples upon the powers of the MB and prevents it from fulfilling its functions. There is no

right that the writ of preliminary injunction would protect in this particular case. In the absence of a clear

legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. 15 In the absence of

proof of a legal right and the injury sustained by the plaintiff, an order for the issuance of a writ of

preliminary injunction will be nullified. 16

Courts are hereby reminded to take greater care in issuing injunctive relief to litigants, that it would not

violate any law. The grant of a preliminary injunction in a case rests on the sound discretion of the court

with the caveat that it should be made with great caution. 17 Thus, the issuance of the writ of

preliminary injunction must have basis in and be in accordance with law. All told, while the grant or

denial of an injunction generally rests on the sound discretion of the lower court, this Court may and

should intervene in a clear case of abuse. 18

WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision dated September 30, 2008 in

CA-G.R. SP No. 103935 is herebyREVERSED. The assailed order and writ of preliminary injunction of

respondent Judge Valenzuela in Civil Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-

119247, 08-119248, 08-119249, 08-119250, 08-119251, and 08-119273 are hereby

declared NULL and VOID.

SO ORDERED.

SECOND DIVISION

[G.R. No. 66321. October 31, 1984.]

TRADERS ROYAL BANK, petitioner, vs. THE HON. INTERMEDIATE APPELLATE

COURT, HON. JESUS R. DE VEGA, as Presiding Judge of the Regional Trial

Court, Third Judicial Region, Branch IX, Malolos, Bulacan, LA TONDEÑA, INC.,

VICTORINO P. EVANGELISTA, in his capacity as Ex-Oficio Provincial Sheriff of

Bulacan, and/or any and all his DEPUTIES, respondents.

San Juan, Africa, Gonzales & San Agustin for petitioner.

San Jose, Enriquez & San Jose for respondent La Tondeña Inc.

SYLLABUS

REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; INDEPENDENT VINDICATORY ACTION MAY BE

FILED BY THIRD PARTY WHOSE PROPERTY HAS BEEN WRONGFULLY LEVIED UPON BY ATTACHMENT. —

Section 14, Rule 57 of the Rules of Court explicitly sets forth the remedy that may be availed of by a

person who claims to be the owner of property levied upon by attachment, viz: to lodge a third-party

claim with the sheriff and if the attaching creditor posts an indemnity bond in favor of the sheriff, to file a

separate and independent action to vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314).

2. ID.; ID.; INJUNCTION; COURTS MAY NOT INTERFERE WITH JUDGMENT OF ANOTHER COURT OF

COORDINATE AND CONCURRENT JURISDICTION BY INJUNCTION; RULE IS APPLICABLE ONLY WHERE NO

THIRD-PARTY CLAIMANT IS INVOLVED; PURPOSE OF THAT RULE. — Generally, the rule that no court has

the power to interfere by injunction with the judgments or decrees of a concurrent or coordinate

jurisdiction having equal power to grant the injunctive relief sought by injunction, is applied in

cases where  no   third-party   claimant   is   involved, in order to prevent one court from nullifying the

judgment or process of another court of the same rank or category, a power which devolves upon the

proper appellate court. The purpose of the rule is to avoid conflict of power between different courts of

coordinate jurisdiction and to bring about a harmonious and smooth functioning of their proceedings.

3. ID.; ID.; ATTACHMENT; INTERVENTION IN AN ATTACHMENT PROCEEDING; CUMULATIVE AND

SUPPLETORY TO THE RIGHT TO BRING AN INDEPENDENT SUIT. — Intervention as a means of protecting

the third-party claimant's right in an attachment proceeding is not exclusive but cumulative and

suppletory to the right to bring an independent suit. The denial or dismissal of a third-party claim to

property levied upon cannot operate to bar a subsequent independent action by the claimant to

establish his right to the property even if he failed to appeal from the order denying his original third-

party claim.

D E C I S I O N

ESCOLIN, J p:

The issue posed for resolution in this petition involves the authority of a Regional Trial Court to issue, at

the instance of a third-party claimant, an injunction enjoining the sale of property previously levied upon

by the sheriff pursuant to a writ of attachment issued by another Regional Trial Court.

The antecedent facts, undisputed by the parties, are set forth in the decision of the respondent

Intermediate Appellate Court thus:

"Sometime on March 18, 1983 herein petitioner Traders Royal Bank instituted a

suit against the Remco Alcohol Distillery, Inc. (REMCO) before the Regional Trial

Court, Branch CX, Pasay City, in Civil Case No. 9894-P, for the recovery of the

sum of Two Million Three Hundred Eighty Two Thousand Two Hundred Fifty

Eight & 71/100 Pesos (P2,382,258.71) obtaining therein a writ of preliminary

attachment directed against the assets and properties of Remco Alcohol

Distillery, Inc.

"Pursuant to said writ of attachment issued in Civil Case No. 9894-P, Deputy

Sheriff Edilberto Santiago levied among others about 4,600 barrels of aged or

rectified alcohol found within the premises of said Remco Distillery Inc. A third

party claim was filed with the Deputy Sheriff by herein respondent La Tondeña,

Inc. on April 1, 1982 claiming ownership over said attached property

(Complaint, p. 17, Rollo).

"On May 12, 1982, private respondent La Tondeña, Inc. filed a complaint-in-

intervention in said Civil Case No, 9894, alleging among others, that 'it had

made advances to Remco Distillery Inc. which totalled P3M and which remains

outstanding as of date' and that the 'attached properties are owned by La

Tondeña, Inc.' (Annex '3' to petitioner's Motion to Dismiss dated July 27, 1983

— Annex "C" to the petition).

"Subsequently, private respondent La Tondeña, Inc., without the foregoing

complaint-in-intervention having been passed upon by the Regional Trial Court,

Branch CX, (Pasay City), filed in Civil Case No. 9894-P a 'Motion to Withdraw'

dated October 8, 1983, praying that it be allowed to withdraw alcohol and

molasses from the Remco Distillery Plant (Annex 4 to Petitioner's Motion to

Dismiss — Annex C, Petition) and which motion was granted per order of the

Pasay Court dated January 27, 1983, authorizing respondent La Tondeña, Inc. to

withdraw alcohol and molasses from the Remco Distillery Plant at Calumpit,

Bulacan (Annex 'I' to Reply to Plaintiff's Opposition dated August 2, 1983 —

Annex E to the Petition).

"The foregoing order dated January 27, 1983 was however reconsidered by the

Pasay Court by virtue of its order dated February 18, 1983 (Annex A — Petition,

p. 15) declaring that the alcohol 'which has not been withdrawn remains in the

ownership of defendant Remco Alcohol Distillery Corporation' and which order

likewise denied La Tondeña's motion to intervene.

"A motion for reconsideration of the foregoing order of February 18, 1983 was

filed by respondent La Tondeña, Inc., on March 8, 1983 reiterating its request

for leave to withdraw alcohol from the Remco Distillery Plant, and praying

further that the 'portion of the order dated February 18, 1983' declaring Remco

to be the owner of subject alcohol, 'be reconsidered and striken off said order'.

This motion has not been resolved (p. 4, Petition) up to July 18, 1983 when a

manifestation that it was withdrawing its motion for reconsideration was filed

by respondent La Tondeña Inc.

"On July 19, 1983, private respondent La Tondeña Inc. instituted before the

Regional Trial Court, Branch IX, Malolos, Bulacan presided over by Respondent

Judge, Civil Case No. 7003-M, in which it asserted its claim of ownership over

the properties attached in Civil Case No. 9894-P, and likewise prayed for the

issuance of a writ of Preliminary Mandatory and Prohibitory Injunction (Annex

B, id).

"A Motion to Dismiss and/or Opposition to the application for a writ of

Preliminary Injunction by herein respondent La Tondeña Inc. was filed by

petitioner on July 27, 1983 (Annex C, p. 42, id.)

"This was followed by respondent La Tondeña's opposition to petitioner's

Motion to Dismiss on August 1, 1983 (Annex D, p. 67, id.).

"A reply on the part of petitioner was made on the foregoing opposition on

August 3, 1983 (p. 92, id.).

"Hearings were held on respondent La Tondeña's application for injunctive

relief and on petitioner's motion to dismiss on August 8, 19 & 23, 1983 (p. 5,

id.).

"Thereafter, the parties filed their respective memoranda (Annex F, p. 104;

Annex G, p. 113, Rollo).

"Subsequently, the questioned order dated September 28, 1983 was issued by

the respondent Judge declaring respondent La Tondeña Inc. to be the owner of

the disputed alcohol, and granting the latter's application for injunctive relief

(Annex H-1, id.).

"On October 6, 1983, respondent Sheriff Victorino Evangelista issued on

Edilberto A. Santiago Deputy Sheriff of Pasay City the corresponding writ of

preliminary injunction (Annex N, p. 127, id.).

"This was followed by an order issued by the Pasay Court dated October 11,

1983 in Civil Case No, 9894-P requiring Deputy Sheriff Edilberto A. Santiago to

enforce the writ of preliminary attachment previously issued by said court, by

preventing respondent sheriff and respondent La Tondeña, Inc. from

withdrawing or removing the disputed alcohol from the Remco ageing

warehouse at Calumpit, Bulacan, and requiring the aforenamed respondents to

explain and show cause why they should not be cited for contempt for

withdrawing or removing said attached alcohol belonging to Remco, from the

latter's ageing warehouse at Calumpit, Bulacan (Annex F, p. 141, Petition)."

Thereafter, petitioner Traders Royal Bank filed with the Intermediate Appellate Court a petition for

certiorari and prohibition, with application for a writ of preliminary injunction, to annul and set aside the

Order dated September 28, 1983 of the respondent Regional Trial Court of Malolos, Bulacan, Branch IX,

issued in Civil Case No. 7003-M; to dissolve the writ of preliminary injunction dated October 6, 1983

issued pursuant to said order; to prohibit respondent Judge from taking cognizance of and assuming

jurisdiction over Civil Case No. 7003-M; and to compel private respondent La Tondeña, Inc., and Ex-Oficio

Provincial Sheriff of Bulacan to return the disputed alcohol to their original location at Remco's ageing

warehouse at Calumpit, Bulacan. LibLex

In its decision, the Intermediate Appellate Court dismissed the petition for lack of legal and factual basis,

holding that the respondent Judge did not abuse his discretion in issuing the Order of September 28,

1983 and the writ of preliminary injunction dated October 3, 1983, citing the decision in Detective and

Protective Bureau vs. Cloribel (26 SCRA 255). Petitioner moved for reconsideration, but the respondent

court denied the same in its resolution dated February 2, 1984.

Hence, this petition.

Petitioner contends that respondent Judge of the Regional Trial Court of Bulacan acted without

jurisdiction in entertaining Civil Case No. 7003-M, in authorizing the issuance of a writ of preliminary

mandatory and prohibitory injunction, which enjoined the sheriff of Pasay City from interferring with La

Tondeña's right to enter and withdraw the barrels of alcohol and molasses from Remco's ageing

warehouse and from conducting the sale thereof, said merchandise having been previously levied upon

pursuant to the attachment writ issued by the Regional Trial Court of Pasay City in Civil Case No. 9894-P.

It is submitted that such order of the Bulacan Court constitutes undue and illegal interference with the

exercise by the Pasay Court of its coordinate and co-equal authority on matters properly brought before

it.

We find the petition devoid of merit.

There is no question that the action filed by private respondent La Tondeña, Inc., as third-party claimant,

before the Regional Trial Court of Bulacan in Civil Case No. 7003-M wherein it claimed ownership over

the property levied upon by Pasay City Deputy Sheriff Edilberto Santiago is sanctioned by Section 14,

Rule 57 of the Rules of Court. Thus —

"If property taken be claimed by any person other than the party against whom

attachment had been issued or his agent, and such person makes an affidavit of

his title thereto or right to the possession thereof, stating the grounds of such

right or title, and serves such affidavit upon the officer while the latter has

possession of the property, and a copy thereof upon the attaching creditor, the

officer shall not be bound to keep the property under the attachment, unless

the attaching creditor or his agent, on demand of said officer, secures him

against such claim by a bond in a sum not greater than the value of the property

attached. In case of disagreement as to such value, the same shall be decided by

the court issuing the writ of attachment. The officer shall not be liable for

damages, for the taking or keeping of such property, to any such third-party

claimant, unless such a claim is so made and the action upon the bond brought

within one hundred and twenty (120) days from the date of the filing of said

bond. But   nothing   herein   contained   shall   prevent   such   third   person   from 

vindicating his claim to the property by proper action. . . . "

The foregoing rule explicitly sets forth the remedy that may be availed of by a person who claims to be

the owner of property levied upon by attachment, viz: to lodge a third-party claim with the sheriff, and if

the attaching creditor posts an indemnity bond in favor of the sheriff, to file a separate and independent

action to vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314). And this precisely was the

remedy resorted to by private respondent La Tondeña when it filed the vindicatory action before the

Bulacan Court. prcd

The case before us does not really present an issue of first impression. In Manila Herald Publishing Co.,

Inc. vs. Ramos, 1 this Court resolved a similar question in this wise:

"The objection that at once suggests itself to entertaining in Case No. 12263 the

motion to discharge the preliminary attachment levied in Case No. 11531 is that

by so doing one judge would interfere with another judge's actuations. The

objection is superficial and will not bear analysis.

"It has been seen that a separate action by the third party who claims to be the

owner of the property attached is appropriate. If this is so, it must be admitted

that the judge trying such action may render judgment ordering the sheriff of

whoever has in possession the attached property to deliver it to the plaintiff-

claimant or desist from seizing it. It follows further that the court may make an

interlocutory order, upon the filing of such bond as may be necessary, to

release the property pending final adjudication of the title. Jurisdiction over an

action includes jurisdiction over an interlocutory matter incidental to the cause

and deemed necessary to preserve the subject matter of the suit or protect the

parties' interests. This is self-evident.

xxx xxx xxx

"It is true of course that property in custody of the law can not be interfered

without the permission of the proper court, and property legally attached is

property in custodia legis. But for the reason just stated, this rule is confined to

cases where the property belongs to the defendant or one in which the

defendant has proprietary interest. When the sheriff acting beyond the bounds

of his office seizes a stranger's property, the rule does not apply and

interference with his custody is not interference with another court's order of

attachment.

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

be meritorious, for that matter. Speculations are however beside the point. The

title is the very issue in the case for the recovery of property or the dissolution

of the attachment, and pending final decision, the court may enter any

interlocutory order calculated to preserve the property in litigation and protect

the parties' rights and interests."

Generally, the rule that no court has the power to interfere by injunction with the judgments or decrees

of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief sought by

injunction, is applied in cases where no third-party claimant is involved, in order to prevent one court

from nullifying the judgment or process of another court of the same rank or category, a power which

devolves upon the proper appellate court. 2 The purpose of the rule is to avoid conflict of power

between different courts of coordinate jurisdiction and to bring about a harmonious and smooth

functioning of their proceedings.

It is further argued that since private respondent La Tondeña, Inc., had voluntarily submitted itself to the

jurisdiction of the Pasay Court by filing a motion to intervene in Civil Case No. 9894-P, the denial or

dismissal thereof constitutes a bar to the present action filed before the Bulacan Court.

We cannot sustain the petitioner's view. Suffice it to state that intervention as a means of protecting the

third-party claimant's right in an attachment proceeding is not exclusive but cumulative and suppletory

to the right to bring an independent suit. 3 The denial or dismissal of a third-party claim to property

levied upon cannot operate to bar a subsequent independent action by the claimant to establish his right

to the property even if he failed to appeal from the order denying his original third-party claim. 4

WHEREFORE, the instant petition is hereby dismissed and the decision of the Intermediate Appellate

Court in AC G.R. No. SP-01860 is affirmed, with costs against petitioner Traders Royal Bank.

SO ORDERED.

FIRST DIVISION

[G.R. No. 196171. December 10, 2012.]

RCBC CAPITAL CORPORATION, petitioner, vs. BANCO DE ORO UNIBANK,

INC., respondent.

[G.R. No. 199238. December 10, 2012.]

BANCO DE ORO UNIBANK, INC., petitioner, vs. COURT OF APPEALS and RCBC

CAPITAL CORPORATION, respondents.

DECISION

VILLARAMA, JR., J p:

Before the Court are two consolidated petitions separately filed by the parties in an arbitration case

administered by the International Chamber of Commerce-International Court of Arbitration (ICC-ICA)

pursuant to the arbitration clause in their contract.

The Case

In G.R. No. 196171, a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended,

RCBC Capital Corporation (RCBC) seeks to reverse the Court of Appeals (CA) Decision 1 dated December

23, 2010 in CA-G.R. SP No. 113525 which reversed and set aside the June 24, 2009 Order 2 of the

Regional Trial Court (RTC) of Makati City, Branch 148 in SP Proc. Case No. M-6046.

In G.R. No. 199238, a petition for certiorari under Rule 65, Banco De Oro Unibank, Inc. (BDO) assails the

Resolution 3 dated September 13, 2011 in CA-G.R. SP No. 120888 which denied BDO's application for the

issuance of a stay order and/or temporary restraining order (TRO)/preliminary injunction against the

implementation of the Writ of Execution 4 dated August 22, 2011 issued by the Makati City RTC, Branch

148 in SP Proc. Case No. M-6046.

Factual Antecedents

On May 24, 2000, RCBC entered into a Share Purchase Agreement 5 (SPA) with Equitable-PCI Bank, Inc.

(EPCIB), George L. Go and the individual shareholders 6 of Bankard, Inc. (Bankard) for the sale to RCBC of

226,460,000 shares (Subject Shares) of Bankard, constituting 67% of the latter's capital stock. After

completing payment of the contract price (P1,786,769,400), the corresponding deeds of sale over the

subject shares were executed in January 2001. ITcCaS

The dispute between the parties arose sometime in May 2003 when RCBC informed EPCIB and the other

selling shareholders of an overpayment of the subject shares, claiming there was an overstatement of

valuation of accounts amounting to P478 million and that the sellers violated their warranty under

Section 5 (g) of the SPA. 7

As no settlement was reached, RCBC commenced arbitration proceedings with the ICC-ICA in accordance

with Section 10 of the SPA which states:

Section 10.Arbitration. —

Should there be any dispute arising between the parties relating to this

Agreement including the interpretation or performance hereof which cannot be

resolved by agreement of the parties within fifteen (15) days after written

notice by a party to another, such matter shall then be finally settled by

arbitration under the Rules of Conciliation and Arbitration of the International

Chamber of Commerce in force as of the time of arbitration, by three

arbitrators appointed in accordance with such rules. The venue of arbitration

shall be in Makati City, Philippines and the arbitration proceedings shall be

conducted in the English language. Substantive aspects of the dispute shall be

settled by applying the laws of the Philippines. The decision of the arbitrators

shall be final and binding upon the parties hereto and the expenses of

arbitration (including without limitation the award of attorney's fees to the

prevailing party) shall be paid as the arbitrators shall determine. 8

In its Request for Arbitration 9 dated May 12, 2004, Claimant RCBC charged Bankard with deviating from

and contravening generally accepted accounting principles and practices, due to which the financial

statements of Bankard prior to the stock purchase were far from fair and accurate, and resulted in the

overpayment of P556 million. For this violation of sellers' representations and warranties under the SPA,

RCBC sought its rescission, as well as payment of actual damages in the amount of P573,132,110, legal

interest on the purchase price until actual restitution, moral damages and litigation and attorney's fees,

with alternative prayer for award of damages in the amount of at least P809,796,082 plus legal interest.

In their Answer, 10 EPCIB, Go and the other selling individual shareholders (Respondents) denied RCBC's

allegations contending that RCBC's claim is one for overpayment or price reduction under Section 5 (h) of

the SPA which is already time-barred, the remedy of rescission is unavailable, and even assuming that

rescission is permitted by the SPA, RCBC failed to file its claim within a reasonable time. They further

asserted that RCBC is not entitled to its alternative prayer for damages, being guilty of laches and failing

to set out the details of the breach as required under Section 7 of the SPA. A counterclaim for litigation

expenses and costs of arbitration in the amount of US$300,000, as well as moral and exemplary

damages, was likewise raised by the Respondents. ASTIED

RCBC submitted a Reply 11 to the aforesaid Answer.

Subsequently, the Arbitration Tribunal was constituted. Mr. Neil Kaplan was nominated by RCBC; Justice

Santiago M. Kapunan (a retired Member of this Court) was nominated by the Respondents; and Sir Ian

Barker was appointed by the ICC-ICA as Chairman.

On August 13, 2004, the ICC-ICA informed the parties that they are required to pay US$350,000 as

advance on costs pursuant to Article 30 (3) of the ICC Rules of Arbitration (ICC Rules). RCBC paid its share

of US$107,000, the balance remaining after deducting payments of US$2,500 and US$65,000 it made

earlier. Respondents' share of the advance on costs was thus fixed at US$175,000.

Respondents filed an Application for Separate Advances on Costs 12 dated September 17, 2004 under

Article 30 (2) of the ICC Rules, praying that the ICC fix separate advances on the cost of the parties'

respective claims and counterclaims, instead of directing them to share equally on the advance cost of

Claimant's (RCBC) claim. Respondents deemed this advance cost allocation to be proper, pointing out

that the total amount of RCBC's claim is substantially higher — more than 40 times — the total

amount of their counterclaims, and that it would be unfair to require them to share in the costs of

arbitrating what is essentially a price issue that is now time-barred under the SPA.

On September 20, 2004, the ICC-ICA informed Respondents that their application for separate advances

on costs was premature pending the execution of the Terms of Reference (TOR). 13 The TOR was settled

by the parties and signed by the Chairman and Members of the Arbitral Tribunal by October 11, 2004. On

December 3, 2004, 14 the ICC-ICA denied the application for separate advances on costs and invited

anew the Respondents to pay its share in the advance on costs. However, despite reminders from the

ICC-ICA, Respondents refused to pay their share in the advance cost fixed by the ICC-ICA. On December

16, 2004, the ICC-ICA informed the parties that if Respondents still failed to pay its share in the advance

cost, it would apply Article 30 (4) of the ICC Rules and request the Arbitration Tribunal to suspend its

work and set a new time limit, and if such requested deposit remains unpaid at the expiry thereof, the

counterclaims would be considered withdrawn. 15 ECDAcS

In a fax-letter dated January 4, 2005, the ICC-ICA invited RCBC to pay the said amount in substitution of

Respondents. It also granted an extension until January 17, 2005 within which to pay the balance of the

advance cost (US$175,000). RCBC replied that it was not willing to shoulder the share of Respondents in

the advance on costs but nevertheless requested for a clarification as to the effect of such refusal to

substitute for Respondents' share. 16

On March 10, 2005, the ICC-ICA instructed the Arbitration Tribunal to suspend its work and granted the

parties a final time-limit of 15 days to pay the balance of the advance on costs, failing which the claims

shall be considered withdrawn, without prejudice to their reintroduction at a later date in another

proceeding. The parties were advised that if any of them objects to the measure, it should make a

request in writing within such period. 17 For the same reason of non-receipt of the balance of the

advance cost, the ICC-ICA issued Procedural Order No. 3 for the adjournment of the substantive hearings

and granting the Respondents a two-month extension within which to submit their brief of evidence and

witnesses.

RCBC objected to the cancellation of hearings, pointing out that Respondents have been given ample

time and opportunity to submit their brief of evidence and prepare for the hearings and that their

request for postponement serves no other purpose but to delay the proceedings. It alleged that

Respondents' unjustified refusal to pay their share in the advance on costs warrants a ruling that they

have lost standing to participate in the proceedings. It thus prayed that Respondents be declared as in

default, the substantive hearings be conducted as originally scheduled, and RCBC be allowed to submit

rebuttal evidence and additional witness statements. 18

On December 15, 2005, the ICC-ICA notified the parties of its decision to increase the advances on costs

from US$350,000 to US$450,000 subject to later readjustments, and again invited the Respondents to

pay the US$100,000 increment within 30 days from notice. Respondents, however, refused to pay the

increment, insisting that RCBC should bear the cost of prosecuting its own claim and that compelling the

Respondents to fund such prosecution is inequitable. Respondents reiterated that it was willing to pay

the advance on costs for their counterclaim. 19 HTScEI

On December 27, 2005, the ICC-ICA advised that it was not possible to fix separate advances on costs as

explained in its December 3, 2004 letter, and again invited Respondents to pay their share in the advance

on costs. Respondents' response contained in the letter dated January 6, 2006 was still the same: it was

willing to pay only the separate advance on costs of their counterclaim. 20 In view of Respondents'

continuing refusal to pay its equal share in the advance on costs and increment, RCBC wrote the ICC-ICA

stating that the latter should compel the Respondents to pay as otherwise RCBC will be prejudiced and

the inaction of the ICC-ICA and the Arbitration Tribunal will detract from the effectiveness of arbitration

as a means of settling disputes. In accordance with Article 30 (4) of the ICC Rules, RCBC reiterated its

request to declare the Respondents as in default without any personality to participate in the

proceedings not only with respect to their counterclaims but also to the claim of RCBC. 21

Chairman Ian Barker, in a letter dated January 25, 2006, stated in part:

xxx xxx xxx

2.The Tribunal has no power under the ICC Rules to order the Respondents

to pay the advance on costs sought by the ICC or to give the Claimant any

relief against the Respondents' refusal to pay. The ICC Rules differ from, for

example, the Rules of the LCIA (Article 24.3) which enables a party paying the

share of costs which the other party has refused to pay, to recover  "that 

amount as a debt immediately due from the defaulting party."

3.The only sanction under the ICC Rules is contained within Article 30 (4).

Where a request for an advance on costs has not been complied with, after

consultation with the Tribunal, the Secretary-General may direct the Tribunal

to suspend its work. After expiry of a time limit, all claims and counterclaims

are then considered as withdrawn. This provision cannot assist a Claimant

who is anxious to litigate its claim. Such a Claimant has to pay the sums

requested (including the Respondents' share) if it wishes the arbitration to

proceed.

4.It may be possible for a Claimant in the course of the arbitral hearing (or

whenever costs are being considered by the Tribunal) to make submissions

based on the failure of the Respondents to pay their share of the costs

advance. What relief, if any, would have to be then determined by the

Tribunal after having heard submissions from the Respondents. cSHIaA

5.I should be pleased if the Claimant will advise the Tribunal of its intention

in relation to the costs advance. If the costs are not paid, the arbitration

cannot proceed. 22 (Italics in the original; emphasis supplied)

RCBC paid the additional US$100,000 under the second assessment to avert suspension of the

Arbitration Tribunal's proceedings.

Upon the commencement of the hearings, the Arbitration Tribunal decided that hearings will be initially

confined to issues of liability (liability   phase) while the substantial issues will be heard on a later

date (quantum phase).

Meanwhile, EPCIB's corporate name was officially changed to Banco De Oro (BDO)-EPCIB after its merger

with BDO was duly approved by the Securities and Exchange Commission. As such, BDO assumed all the

obligations and liabilities of EPCIB under the SPA.

On September 27, 2007, the Arbitration Tribunal rendered a Partial Award 23 (First Partial Award) in ICC-

ICA Case No. 13290/MS/JB/JEM, as follows:

15AWARD AND DIRECTIONS

15.1The Tribunal makes the following declarations by way of Partial Award:

(a)The Claimant's claim is not time-barred under the provisions of

this SPA.

(b)The Claimant is not estopped by its conduct or the equitable

doctrine of laches from pursuing its claim.

(c)As detailed in the Partial Award, the Claimant has established the

following breaches by the Respondents of clause 5(g) of

the SPA:

i)the assets, revenue and net worth of Bankard were

overstated by reason of its policy on and

recognition of Late Payment Fees;

ii)reported receivables were higher than their realisable

values by reason of the 'bucketing' method,

thus overstating Bankard's assets; and cDACST

iii)the relevant Bankard statements were inadequate and

misleading in that their disclosures caused

readers to be misinformed about Bankard's

accounting policies on revenue and

receivables.

(d)Subject to proof of loss the Claimant is entitled to damages for the

foregoing breaches.

(e)The Claimant is not entitled to rescission of the SPA.

(f)All other issues, including any issue relating to costs, will be dealt

with in a further or final award.

15.2A further Procedural Order will be necessary subsequent to the delivery of

this Partial Award to deal with the determination of quantum and in particular,

whether there should be an Expert appointed by the Tribunal under Article

20(4) of the ICC Rules to assist the Tribunal in this regard.

15.3This Award is delivered by a majority of the Tribunal (Sir Ian Barker and Mr.

Kaplan). Justice Kapunan is unable to agree with the majority's conclusion on

the claim of estoppel brought by the Respondents. 24 (Emphasis supplied)

On October 26, 2007, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No. M-6046) a

motion to confirm the First Partial Award, while Respondents filed a motion to vacate the same.

ICC-ICA by letter 25 dated October 12, 2007 increased the advance on costs from US$450,000 to

US$580,000. Under this third assessment, RCBC paid US$130,000 as its share on the increment.

Respondents declined to pay its adjudged total share of US$290,000 on account of its filing in the RTC of

a motion to vacate the First Partial Award. 26 The ICC-ICA then invited RCBC to substitute for

Respondents in paying the balance of US$130,000 by December 21, 2007. 27 RCBC complied with the

request, making its total payments in the amount of US$580,000. 28

While RCBC paid Respondents' share in the increment (US$130,000), it reiterated its plea that

Respondents be declared as in default and the counterclaims deemed as withdrawn. 29

Chairman Barker's letter dated December 18, 2007 states in part: aHECST

xxx xxx xxx

8.Contrary to the Complainant's view, the Tribunal has no jurisdiction to declare

that the Respondents have no right to participate in the proceedings

concerning the claim. Article 30(4) of the ICC Rules applies only to

any counterclaim of the Respondents.

9.The Tribunal interprets the Claimant's latest letter as an application by the

Claimant to the Tribunal for the issue of a partial award against the

Respondents in respect of their failure to pay their share of the

ICC's requests for advance on costs.

10.I should be grateful if the Claimant would confirm that this is the situation. If

so, the Claimant should propose a timetable for which written

submissions should be made by both parties. This is an application

which can be considered by the Tribunal on written

submissions. 30(Emphasis supplied)

RCBC, in a letter dated December 26, 2007, confirmed the Arbitration Tribunal's interpretation that it

was applying for a partial award against Respondents' failure to pay their share in the advance on

costs. 31

Meanwhile, on January 8, 2008, the Makati City RTC, Branch 148 issued an order in SP Proc. Case No. M-

6046 confirming the First Partial Award and denying Respondents' separate motions to vacate and to

suspend and inhibit Barker and Kaplan. Respondents' motion for reconsideration was likewise denied.

Respondents directly filed with this Court a petition for review on certiorari under Rule 45, docketed

as G.R. No. 182248 and entitled Equitable PCI Banking Corporation v. RCBC Capital Corporation. 32 In our

Decision dated December 18, 2008, we denied the petition and affirmed the RTC's ruling confirming the

First Partial Award.

On January 18, 2008, the Arbitration Tribunal set a timetable for the filing of submission by the parties

on whether it should issue a Second Partial Award in respect of the Respondents' refusal to pay an

advance on costs to the ICC-ICA.

In compliance, RCBC filed on February 7, 2008 an Application for Reimbursement of Advance on Costs

Paid, praying for the issuance of a partial award directing the Respondents to reimburse its payment in

the amount of US$290,000 representing Respondents' share in the Advance on Costs and to consider

Respondents' counterclaim for actual damages in the amount of US$300,000, and moral and exemplary

damages as withdrawn for their failure to pay their equal share in the advance on costs. RCBC invoked

the plain terms of Article 30 (2) and (3) to stress the liability of Respondents to share equally in paying

the advance on costs where the Arbitration Tribunal has fixed the same. 33 ICAcHE

Respondents, on the other hand, filed their Opposition 34 to the said application alleging that the

Arbitration Tribunal has lost its objectivity in an unnecessary litigation over the payment of Respondents'

share in the advance costs. They pointed out that RCBC's letter merely asked that Respondents be

declared as in default for their failure to pay advance costs but the Arbitration Tribunal, while denying

the request offered an alternative to RCBC: a Partial Award for Respondents' share in the advance costs

even if it was clear from the language of RCBC's December 11, 2007 letter that it had no intention of

litigating for the advance costs. Chairman Barker, after ruling earlier that it cannot grant RCBC's request

to declare the Respondents as having no right to participate in the proceedings concerning the claim,

interpreted RCBC's letter as an application for the Arbitration Tribunal to issue a partial award in respect

of such refusal of Respondents to pay their share in the advance on costs, and subsequently directed the

parties to make submissions on the matter. Aside from violating their right to due process and to be

heard by an impartial tribunal, Respondents also argued that in issuing the award for advance cost, the

Arbitration Tribunal decided an issue beyond the terms of the TOR.

Respondents also emphasized that the parties agreed on a two-part arbitration: the first part of the

Tribunal's proceedings would determine Respondents' liability, if any, for alleged violation of Section 5

(g) and (h) of the SPA; and the second part of the proceedings would determine the amounts owed by

one party to another as a consequence of a finding of liability or lack thereof. An award for

"reimbursement of advances for costs" clearly falls outside the scope of either proceedings. Neither can

the Tribunal justify such proceedings under Article 23 of the ICC Rules (Conservatory and Interim

Measures) because that provision does not contemplate an award for the reimbursement of advance on

costs in arbitration cases. Respondents further asserted that since the advances on costs have been paid

by the Claimant (RCBC), the main claim and counterclaim may both be heard by the Arbitration Tribunal.

In his letter dated March 13, 2008, Chairman Barker advised the parties, as follows:

1.The Tribunal acknowledges the Respondents' response to the Claimant's

application for a Partial Award, based on the Respondents' failure to

pay their share of the costs, as requested by the ICC. aESTAI

2.The Tribunal notes that neither party has referred to an article by Mat[t]hew

Secomb on this very subject which appears in the ICC Bulletin Vol.

14 No. 1 (Spring 2003). To assist both sides and to ensure that the

Tribunal does not consider material on which the parties have not

been given an opportunity to address, I attach a copy of this article,

which also contains reference to other scholarly works on the

subject.

3.The Tribunal will give each party seven days within which to submit further

written comments as a consequence of being alerted to the above

authorities. 35 (Additional emphasis supplied)

The parties complied by submitting their respective comments.

RCBC refuted Respondents' allegation of partiality on the part of Chairman Barker and reiterated the

prayer in its application for reimbursement of advance on costs paid to the ICC-ICA. RCBC

contended that  based on Mr.  Secomb's  article, whether the "contractual" or "provisional measures"

approach is applied, the Arbitration Tribunal is vested with jurisdiction and authority to render an award

with respect to said reimbursement of advance cost paid by the non-defaulting party. 36

Respondents, on the other hand, maintained that RCBC's application for reimbursement of advance cost

has no basis under the ICC Rules. They contended that no manifest injustice can be inferred from an act

of a party paying for the share of the defaulting party as this scenario is allowed by the ICC Rules. Neither

can a partial award for advance cost be justified under the "contractual approach" since the matter of

costs for arbitration is between the ICC and the parties, not the Arbitration Tribunal and the parties. An

arbitration tribunal can issue decisions on costs only for those costs not fixed by the ICC. 37

Respondents reiterated their position that Article 30 (3) envisions a situation whereby a party would

refuse to pay its share on the advance on costs and provides a remedy therefor — the other party "shall

be free to pay the whole of the advance on costs." Such party's reimbursement for payments of the

defaulting party's share depends on the final arbitral award where the party liable for costs would be

determined. This is the only remedy provided by the ICC Rules. 38

On May 28, 2008, the Arbitration Tribunal rendered the Second Partial Award, 39 as follows: DEHcTI

7AWARD

7.1Having read and considered the submissions of both parties, the Tribunal

AWARDS, DECLARES AND ORDERS as follows:

(a)The Respondents are forthwith to pay to the Claimant the sum of

US$290,000.

(b)The Respondents' counterclaim is to be considered as withdrawn.

(c)All other questions, including interest and costs, will be dealt with

in a subsequent award. 40

The above partial award was received by RCBC and Respondents on June 12, 2008.

On July 11, 2008, EPCIB filed a Motion to Vacate Second Partial Award 41 in the Makati City RTC, Branch

148 (SP Proc. Case No. M-6046). On July 10, 2008, RCBC filed in the same court a Motion to Confirm

Second Partial Award. 42

EPCIB raised the following grounds for vacating the Second Partial Award: (a) the award is voidab 

initio having been rendered by the arbitrators who exceeded their power or acted without it; and (b) the

award was procured by undue means or issued with evident partiality or attended by misbehavior on the

part of the Tribunal which resulted in a material prejudice to the rights of the Respondents. EPCIB argued

that there is no express agreement either in the SPA or the ICC Rules for such right of reimbursement.

There is likewise no implied agreement because from the ICC Rules, the only inference is that the parties

agreed to await the dispositions on costs liability in the Final Award, not before.

On the ruling of the Arbitration Tribunal that Respondents' application for costs are not counterclaims,

EPCIB asserted that this is contrary to Philippine law as it is basic in our jurisdiction that counterclaims

for litigation expenses, moral and exemplary damages are proper counterclaims, which rule should be

recognized in view of Section 10 of the SPA which provides that "substantive aspects of the dispute shall

be settled by applying the laws of the Philippines." Finally, EPCIB takes issue with Chairman Barker's

interpretation of RCBC's December 11, 2007 letter as an application for a partial award for

reimbursement of the substituted payments. Such conduct of Chairman Barker is prejudicial and proves

his evident partiality in favor of RCBC. CSIHDA

RCBC filed its Opposition, 43 asserting that the Arbitration Tribunal had jurisdiction to consider

Respondents' counterclaim as withdrawn, the same having been abandoned by not presenting any

computation or substantiation by evidence, their only computation relates only to attorney's fees which

are simply cost of litigation properly brought at the conclusion of the arbitration. It also pointed out that

the Arbitration Tribunal was empowered by the parties' arbitral clause to determine the manner of

payment of expenses of arbitration, and that the Second Partial Award was based on authorities and

treatises on the mandatory and contractual nature of the obligation to pay advances on costs.

In its Reply, 44 EPCIB contended that RCBC had the option to agree to its proposal for separate advances

on costs but decided against it; RCBC's act of paying the balance of the advance cost in substitution of

EPCIB was for the purpose of having EPCIB defaulted and the latter's counterclaim withdrawn. Having

agreed to finance the arbitration until its completion, RCBC is not entitled to immediate reimbursement

of the amount it paid in substitution of EPCIB under an interim award, as its right to a partial or total

reimbursement will have to be determined under the final award. EPCIB asserted that the matter of

reimbursement of advance cost paid cannot be said to have properly arisen during arbitration. EPCIB

reiterated that Chairman Barker's interpretation of RCBC's December 11, 2007 letter as an application for

interim award for reimbursement is tantamount to a promise that the award will be issued in due

course.

After a further exchange of pleadings, and other motions seeking relief from the court in connection with

the arbitration proceedings (quantum phase), the Makati City RTC, Branch 148 issued the Order 45 dated

June 24, 2009 confirming the Second Partial Award and denying EPCIB's motion to vacate the same. Said

court held that since the parties agreed to submit any dispute under the SPA to arbitration and to be

bound by the ICC Rules, they are also bound to pay in equal shares the advance on costs as provided in

Article 30 (2) and (3). It noted that RCBC was forced to pay the share of EPCIB in substitution of the latter

to prevent a suspension of the arbitration proceedings, while EPCIB's non-payment seems more like a

scheme to delay such proceedings. On the Arbitration Tribunal's ruling on EPCIB's counterclaim, no error

was committed in considering it withdrawn for failure of EPCIB to quantify and substantiate it with

supporting evidence. As to EPCIB's claim for attorney's fees, the RTC agreed that these should be brought

only at the close of arbitration.

EPCIB moved to reconsider the June 24, 2009 Order and for the voluntary inhibition of the Presiding

Judge (Judge Oscar B. Pimentel) on the ground that EPCIB's new counsel represented another client in

another case before him in which said counsel assailed his conduct and had likewise sought his

inhibition. Both motions were denied in the Joint Order 46 dated March 23, 2010. cDHAaT

On April 14, 2010, EPCIB filed in the CA a petition for review 47 with application for TRO and/or writ of

preliminary injunction (CA-G.R. SP No. 113525) in accordance with Rule 19, Section 4 of the Special Rules

of Court on Alternative Dispute Resolution 48 (Special ADR Rules). EPCIB assailed the Makati City RTC,

Branch 148 in denying its motion to vacate the Second Partial Award despite (a) said award having been

rendered in excess of jurisdiction or power, and contrary to public policy; (b) the fact that it was issued

with evident partiality and serious misconduct; (c) the award deals with a dispute not contemplated

within the terms of submission to arbitration or beyond the scope of such submission, which therefore

ought to be vacated pursuant to Article 34 of the UNCITRAL Model Law; and (d) the Presiding Judge

having exhibited bias and prejudice against BDO and its counsel as confirmed by his pronouncements in

the Joint Order dated March 23, 2010 in which, instead of recusing himself, he imputed malice and

unethical conduct in the entry of appearance of Belo Gozon Elma Asuncion and Lucila Law Offices in SP

Proc. Case No. M-6046, which warrants his voluntary inhibition.

Meanwhile, on June 16, 2010, the Arbitration Tribunal issued the Final Award, 49 as follows:

15AWARD

15.1The Tribunal by a majority (Sir Ian Barker & Mr. Kaplan) awards, declares

and adjudges as follows:

(a)the Respondents are to pay damages to the Claimant for breach

of the sale and purchase agreement for Bankard shares in

the sum of P348,736,920.29.

(b)The Respondents are to pay to the Claimant the sum of

US$880,000 in respect of the costs of the arbitration as

fixed by the ICC Court.

(c)The Respondents are to pay to the Claimant the sum of

US$582,936.56 for the fees and expenses of Mr. Best.

(d)The Respondents are to pay to the Claimant their expenses of the

arbitration as follows: cDCIHT

Experts' fees P7,082,788.55Costs of without prejudice meeting P22,571.45Costs of arbitration hearings P553,420.66Costs of transcription service P483,597.26 ––––––––––––â€

“Total P8,144,377.62

===========

(e)The Respondents are to pay to the Claimant the sum of

P7,000,000 for party-and-party legal costs.

(f)The Counterclaims of the Respondents are all dismissed.

(g)All claims of the Claimant are dismissed, other than those referred

to above.

15.2Justice Kapunan does not agree with the majority of the members of the

Tribunal and has issued a dissenting opinion. He has refused to sign

this Award. 50

On July 1, 2010 BDO filed in the Makati City RTC a Petition to Vacate Final Award  Ad 

Cautelam, 51 docketed as SP Proc. Case No. M-6995, which was raffled to Branch 65.

On July 28, 2010, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No. M-6046) a Motion

to Confirm Final Award. 52 BDO filed its Opposition with Motion to Dismiss 53 on grounds that a Petition

to Vacate Final Award Ad  Cautelam had already been filed in SP Proc. Case No. M-6995. BDO also

pointed out that RCBC did not file the required petition but instead filed a mere motion which did not go

through the process of raffling to a proper branch of the RTC of Makati City and the payment of the

required docket/filing fees. Even assuming that Branch 148 has jurisdiction over RCBC's motion to

confirm final award, BDO asserted that RCBC had filed before the Arbitration Tribunal an Application for

Correction and Interpretation of Award under Article 29 of the ICC Rules, which is irreconcilable with its

Motion to Confirm Final Award before said court. Hence, the Motion to Confirm Award was filed

precipitately. TICDSc

On August 18, 2010, RCBC filed an Omnibus Motion in SP Proc. Case No. M-6995 (Branch 65) praying for

the dismissal of BDO's Petition to Vacate Final Award or the transfer of the same to Branch 148 for

consolidation with SP Proc. Case No. M-6046. RCBC contended that BDO's filing of its petition with

another court is a blatant violation of the Special ADR Rules and is merely a subterfuge to commit forum-

shopping. BDO filed its Opposition to the Omnibus Motion. 54

On October 28, 2010, Branch 65 issued a Resolution 55 denying RCBC's omnibus motion and directing

the service of the petition to RCBC for the latter's filing of a comment thereon. RCBC's motion for

reconsideration was likewise denied in the said court's Order dated December 15, 2010. RCBC then filed

its Opposition to the Petition to Vacate Final Award Ad Cautelam.

Meanwhile, on November 10, 2010, Branch 148 (SP Proc. Case No. M-6046) issued an

Order 56 confirming the Final Award "subject to the correction/interpretation thereof by the Arbitral

Tribunal pursuant to the ICC Rules and the UNCITRAL Model Law," and denying BDO's Opposition with

Motion to Dismiss.

On December 30, 2010, George L. Go, in his personal capacity and as attorney-in-fact of the other listed

shareholders of Bankard, Inc. in the SPA (Individual Shareholders), filed a petition in the CA, CA-G.R. SP

No. 117451, seeking to set aside the above-cited November 10, 2010 Order and to enjoin Branch 148

from further proceeding in SP Proc. Case No. M-6046. By Decision 57 dated June 15, 2011, the CA

dismissed the said petition. Their motion for reconsideration of the said decision was likewise denied by

the CA in its Resolution 58 dated December 14, 2011.

On December 23, 2010, the CA rendered its Decision in CA-G.R. SP No. 113525, the dispositive portion of

which states:

WHEREFORE, premises considered, the following are hereby REVERSED and SET

ASIDE:

1.the Order dated June 24, 2009 issued in SP Proc. Case No. M-6046

by the Regional Trial Court of Makati City, Branch 148,

insofar as it denied the Motion to Vacate Second Partial

Award dated July 8, 2008 and granted the Motion to

Confirm Second Partial Award dated July 10, 2008; cACEaI

2.the Joint Order dated March 23, 2010 issued in SP Proc. Case No.

M-6046 by the Regional Trial Court of Makati City, Branch

148, insofar as it denied the Motion for Reconsideration

dated July 28, 2009 relative to the motions concerning

the Second Partial Award immediately mentioned above;

and

3.the Second Partial Award dated May 28, 2008 issued in

International Chamber of Commerce Court of Arbitration

Reference No. 13290/MS/JB/JEM.

SO ORDERED. 59

RCBC filed a motion for reconsideration but the CA denied the same in its Resolution 60 dated March 16,

2011. On April 6, 2011, it filed a petition for review on certiorari in this Court (G.R. No. 196171).

On February 25, 2011, Branch 65 rendered a Decision 61 in SP Proc. Case No. M-6995, as follows:

WHEREFORE, premises considered, the Final Award dated June 16, 2010 in ICC

Ref. No. 13290/MS/JB/JEM is hereby VACATED with cost against the

respondent.

SO ORDERED. 62

In SP Proc. Case No. M-6046, Branch 148 issued an Order 63 dated August 8, 2011 resolving the following

motions: (1) Motion for Reconsideration filed by BDO, Go and Individual Shareholders of the November

10, 2010 Order confirming the Final Award; (2) RCBC's Omnibus Motion to expunge the motion for

reconsideration filed by Go and Individual Shareholders, and for execution of the Final Award; (3) Motion

for Execution filed by RCBC against BDO; (4) BDO's Motion for Leave to File Supplement to the Motion

for Reconsideration; and (5) Motion for Inhibition filed by Go and Individual Shareholders. Said Order

decreed:

WHEREFORE, premises considered, it is hereby ORDERED, to wit: IcaEDC

1.Banco De Oro's Motion for Reconsideration, Motion for Leave to File

Supplement to Motion for Reconsideration, and Motion to Inhibit

areDENIED for lack of merit.

2.RCBC Capital's Motion to Expunge, Motion to Execute against Mr. George L.

Go and the Bankard Shareholders, and the Motion to Execute against Banco De

Oro are hereby GRANTED.

3.The damages awarded to RCBC Capital Corporation in the amount of

PhP348,736,920.29 is subject to an interest of 6% per annum reckoned from the

date of RCBC Capital's extra-judicial demand or from May 5, 2003 until the

confirmation of the Final Award. Likewise, this compounded amount is subject

to 12% interest per annum from the date of the confirmation of the Final Award

until its satisfaction. The costs of the arbitration amounting to US$880,000.00,

the fees and expenses of Mr. Best amounting to US$582,936.56, the Claimant's

expenses of the arbitration amounting to PhP8,144,377.62, and the party-and-

party legal costs amounting to PhP7,000,000.00 all ruled in favor of RCBC

Capital Corporation in the Final Award of the Arbitral Tribunal dated June 16,

2010 are subject to 12% legal interest per annum, also reckoned from the date

of the confirmation of the Final Award until its satisfaction.

4.Pursuant to Section 40 of R.A. No. 9285, otherwise known as the Alternative

Dispute Resolution Act of 2004 in relation to Rule 39 of the Rules of Court, since

the Final Award have been confirmed, the same shall be enforced in the same

manner as final and executory decisions of the Regional Trial Court, let a writ of

execution be issued commanding the Sheriff to enforce this instant Order

confirming this Court's Order dated November 10, 2010 that judicially

confirmed the June 16, 2010 Final Award.

SO ORDERED. 64

Immediately thereafter, RCBC filed an Urgent Motion for Issuance of a Writ of Execution. 65 On August

22, 2011, after approving the execution bond, Branch 148 issued a Writ of Execution for the

implementation of the said court's "Order dated August 8, 2011 confirming the November 10, 2010

Order that judicially confirmed the June 16, 2010 Final Award . . . ." 66 aDcHIS

BDO then filed in the CA, a "Petition for Review (With Application for a Stay Order or Temporary

Restraining Order and/or Writ of Preliminary Injunction," docketed as CA-G.R. SP No. 120888. BDO

sought to reverse and set aside the Orders dated November 10, 2010 and August 8, 2011, and any writ

of execution issued pursuant thereto, as well as the Final Award dated June 16, 2010 issued by the

Arbitration Tribunal.

In its Urgent Omnibus Motion 67 to resolve the application for a stay order and/or TRO/writ of

preliminary injunction, and to quash the Writ of Execution dated August 22, 2011 and lift the Notices of

Garnishment dated August 22, 2011, BDO argued that the assailed orders of execution (Writ of Execution

and Notice of Garnishment) were issued with indecent haste and despite the non-compliance with the

procedures in Special ADR Rules of the November 10, 2010 Order confirming the Final Award. BDO was

not given sufficient time to respond to the demand for payment or to elect the method of satisfaction of

the judgment debt or the property to be levied upon. In any case, with the posting of a bond by BDO,

Branch 148 has no jurisdiction to implement the appealed orders as it would pre-empt the CA from

exercising its review under Rule 19 of the Special ADR Rules after BDO had perfected its appeal. BDO

stressed that the bond posted by RCBC was for a measly sum of P3,000,000.00 to cause execution

pending appeal of a monetary award that may reach P631,429,345.29. RCBC also failed to adduce

evidence of "good cause" or "good reason" to justify discretionary execution under Section 2 (a), Rule 39

of the Rules of Court.

BDO further contended that the writ of execution should be quashed for having been issued with grave

abuse of discretion amounting to lack or excess of jurisdiction as Branch 148 modified the Final Award at

the time of execution by imposing the payment of interests though none was provided therein nor in the

Order confirming the same.

During the pendency of CA-G.R. SP No. 120888, Branch 148 continued with execution proceedings and

on motion by RCBC designated/deputized additional sheriffs to replace Sheriff Flora who was supposedly

physically indisposed. 68 These court personnel went to the offices/branches of BDO attempting to serve

notices of garnishment and to levy the furniture, fixtures and equipment. EcAHDT

On September 12, 2011, BDO filed a Very Urgent Motion to Lift Levy and for Leave to Post Counter-

Bond 69 before Branch 148 praying for the lifting of the levy of BDO Private Bank, Inc. (BPBI) shares and

the cancellation of the execution sale thereof scheduled on September 15, 2011, which was set for

hearing on September 14, 2011. BDO claimed that the levy was invalid because it was served by the RTC

Sheriffs not to the authorized representatives of BPBI, as provided under Section 9 (b), Rule 39 in relation

to Section 7, Rule 57 of the Rules of Court stating that a notice of levy on shares of stock must be served

to the president or managing agent of the company which issued the shares. However, BDO was advised

by court staff that Judge Sarabia was on leave and the case could not be set for hearing.

In its Opposition to BDO's application for injunctive relief, RCBC prayed for its outright denial as BDO's

petition raises questions of fact and/or law which call for the CA to substitute its judgment with that of

the Arbitration Tribunal, in patent violation of applicable rules of procedure governing domestic

arbitration and beyond the appellate court's jurisdiction. RCBC asserted that BDO's application has

become moot and academic as the writ of execution was already implemented and/or enforced. It also

contended that BDO has no clear and unmistakable right to warrant injunctive relief because the issue of

jurisdiction was already ruled upon in CA-G.R. SP No. 117451 which dismissed the petition filed by Go

and the Individual Shareholders of Bankard questioning the authority of Branch 148 over RCBC's motion

to confirm the Final Award despite the earlier filing by BDO in another branch of the RTC (Branch 65) of a

petition to vacate the said award.

On September 13, 2011, BDO, to avert the sale of the BPBI shares scheduled on September 15, 2011 and

prevent further disruption in the operations of BDO and BPBI, paid under protest by tendering a

Manager's Check in the amount of P637,941,185.55, which was accepted by RCBC as full and complete

satisfaction of the writ of execution. BDO manifested before Branch 148 that such payment was made

without prejudice to its appeal before the CA. 70

On even date, the CA denied BDO's application for a stay order and/or TRO/preliminary injunction for

non-compliance with Rule 19.25 of the Special ADR Rules. The CA ruled that BDO failed to show the

existence of a clear right to be protected and that the acts sought to be enjoined violated any right.

Neither was BDO able to demonstrate that the injury to be suffered by it is irreparable or not susceptible

to mathematical computation.

BDO did not file a motion for reconsideration and directly filed with this Court a petition

for certiorari with urgent application for writ of preliminary mandatory injunction (G.R. No. 199238).

The Petitions

In G.R. No. 196171, RCBC set forth the following grounds for the reversal of the CA Decision dated

December 23, 2010:

I.

THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF

THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR IN VACATING

THE SECOND PARTIAL AWARD ON THE BASIS OF CHAIRMAN BARKER'S

ALLEGED PARTIALITY, WHICH IT CLAIMS IS INDICATIVE OF BIAS CONSIDERING

THAT THE ALLEGATIONS CONTAINED IN BDO/EPCIB'S PETITION FALL SHORT

OF THE JURISPRUDENTIAL REQUIREMENT THAT THE SAME BE SUPPORTED BY

CLEAR AND CONVINCING EVIDENCE. IaEHSD

II.

THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF

THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR WHEN IT

REVERSED THE ARBITRAL TRIBUNAL'S FINDINGS OF FACT AND LAW IN THE

SECOND PARTIAL AWARD IN PATENT CONTRAVENTION OF THE SPECIAL ADR

RULES WHICH EXPRESSLY PROHIBITS THE COURTS, IN AN APPLICATION TO

VACATE AN ARBITRAL AWARD, FROM DISTURBING THE FINDINGS OF FACT

AND/OR INTERPRE[TA]TION OF LAW OF THE ARBITRAL TRIBUNAL. 71

BDO raises the following arguments in G.R. No. 199238:

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN PERFUNCTORILY

DENYING PETITIONER BDO'S APPLICATION FOR STAY ORDER, AND/OR

TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION DESPITE

THE EXISTENCE AND CONCURRENCE OF ALL THE ELEMENTS FOR THE

ISSUANCE OF SAID PROVISIONAL RELIEFS EICScD

A.PETITIONER BDO HAS CLEAR AND UNMISTAKABLE RIGHTS TO BE PROTECTED

BY THE ISSUANCE OF THE INJUNCTIVE RELIEF PRAYED FOR, WHICH,

HOWEVER, WERE DISREGARDED BY PUBLIC RESPONDENT WHEN IT

DENIED PETITIONER BDO'S PRAYER FOR ISSUANCE OF A STAY ORDER

AND/OR TRO

B.PETITIONER BDO'S RIGHT TO DUE PROCESS AND EQUAL PROTECTION OF THE

LAW WAS GROSSLY VIOLATED BY THE RTC-MAKATI CITY BRANCH

148, THE DEPUTIZED SHERIFFS AND RESPONDENT RCBC CAPITAL,

WHICH VIOLATION WAS AIDED BY PUBLIC RESPONDENT'S INACTION

ON AND EVENTUAL DENIAL OF THE PRAYER FOR STAY ORDER

AND/OR TRO

C.DUE TO THE ACTS AND ORDERS OF RTC BRANCH 148, PETITIONER BDO

SUFFERED IRREPARABLE DAMAGE AND INJURY, AND THERE WAS

DIRE AND URGENT NECESSITY FOR THE ISSUANCE OF THE

INJUNCTIVE RELIEF PRAYED FOR WHICH PUBLIC RESPONDENT

DENIED IN GRAVE ABUSE OF DISCRETION 72

Essentially, the issues to be resolved are: (1) whether there is legal ground to vacate the Second Partial

Award; and (2) whether BDO is entitled to injunctive relief in connection with the execution proceedings

in SP Proc. Case No. M-6046.

In their TOR, the parties agreed on the governing law and rules as follows:

Laws to be Applied

13The Tribunal shall determine the issues to be resolved in accordance with the

laws of the Republic of the Philippines.

Procedure to be Applied

14The proceedings before the Tribunal shall be governed by the ICC Rules of

Arbitration (1 January 1998) and the law currently applicable to

arbitration in the Republic of the Philippines. 73

As stated in the Partial Award dated September 27, 2007, although the parties provided in Section 10 of

the SPA that the arbitration shall be conducted under the ICC Rules, it was nevertheless arbitration under

Philippine law since the parties are both residents of this country. The provisions of Republic Act No.

876 74 (RA 876), as amended by Republic Act No. 9285 75 (RA 9285) principally applied in the arbitration

between the herein parties. 76 aCSDIc

The pertinent provisions of R.A. 9285 provide:

SEC. 40.Confirmation of Award. — The confirmation of a domestic arbitral

award shall be governed by Section 23 of R.A. 876.

A domestic arbitral award when confirmed shall be enforced in the same

manner as final and executory decisions of the Regional Trial Court.

The confirmation of a domestic award shall be made by the regional trial court

in accordance with the Rules of Procedure to be promulgated by the Supreme

Court.

xxx xxx xxx

SEC. 41.Vacation Award. — A party to a domestic arbitration may question the

arbitral award with the appropriate regional trial court in accordance with the

rules of procedure to be promulgated by the Supreme Court only on those

grounds enumerated in Section 25 of Republic Act No. 876. Any other ground

raised against a domestic arbitral award shall be disregarded by the regional

trial court.

Rule 11.4 of the Special ADR Rules sets forth the grounds for vacating an arbitral award:

Rule 11.4.Grounds. — (A) To vacate an arbitral award. — The arbitral award

may be vacated on the following grounds:

a.The arbitral award was procured through corruption, fraud or other undue

means;

b.There was evident partiality or corruption in the arbitral tribunal or any of

its members;

c.The arbitral tribunal was guilty of misconduct or any form of misbehavior that

has materially prejudiced the rights of any party such as refusing to postpone a

hearing upon sufficient cause shown or to hear evidence pertinent and material

to the controversy;

d.One or more of the arbitrators was disqualified to act as such under the law

and willfully refrained from disclosing such disqualification; or cDEHIC

e.The arbitral tribunal exceeded its powers, or so imperfectly executed them,

such that a complete, final and definite award upon the subject matter

submitted to them was not made.

The award may also be vacated on any or all of the following grounds:

a.The arbitration agreement did not exist, or is invalid for any ground for the

revocation of a contract or is otherwise unenforceable; or

b.A party to arbitration is a minor or a person judicially declared to be

incompetent.

xxx xxx xxx

In deciding the petition to vacate the arbitral award, the court shall disregard

any other ground than those enumerated above. (Emphasis supplied)

Judicial Review

At the outset, it must be stated that a review brought to this Court under the Special ADR Rules is not a

matter of right. Rule 19.36 of said Rules specified the conditions for the exercise of this Court's

discretionary review of the CA's decision.

Rule 19.36.Review discretionary. â€” A review by the Supreme Court is not a

matter of right, but of sound judicial discretion, which will be granted only

for serious and compelling reasons resulting in grave prejudice to the

aggrieved party. The following, while neither controlling nor fully measuring the

court's discretion, indicate the serious and compelling, and necessarily,

restrictive nature of the grounds that will warrant the exercise of the Supreme

Court's discretionary powers, when the Court of Appeals:

a.Failed to apply the applicable standard or test for judicial review prescribed

in these Special ADR Rules in arriving at its decision resulting in substantial

prejudice to the aggrieved party; acCETD

b.Erred in upholding a final order or decision despite the lack of jurisdiction of

the court that rendered such final order or decision;

c.Failed to apply any provision, principle, policy or rule contained in these

Special ADR Rules resulting in substantial prejudice to the aggrieved party; and

d.Committed an error so egregious and harmful to a party as to amount to an

undeniable excess of jurisdiction.

The mere fact that the petitioner disagrees with the Court of Appeals'

determination of questions of fact, of law or both questions of fact and law,

shall not warrant the exercise of the Supreme Court's discretionary power. The

error imputed to the Court of Appeals must be grounded upon any of the

above prescribed grounds for review or be closely analogous thereto.

A mere general allegation that the Court of Appeals has committed serious and

substantial error or that it has acted with grave abuse of discretion resulting in

substantial prejudice to the petitioner without indicating with specificity the

nature of such error or abuse of discretion and the serious prejudice suffered by

the petitioner on account thereof, shall constitute sufficient ground for the

Supreme Court to dismiss outright the petition. (Emphasis supplied)

The applicable standard for judicial review of arbitral awards in this jurisdiction is set forth in Rule 19.10

which states:

Rule 19.10.Rule on judicial   review on arbitration  in  the Philippines. — As a

general rule, the court can only vacate or set aside the decision of an arbitral

tribunal upon a clear showing that the award suffers from any of the infirmities

or grounds for vacating an arbitral award under Section 24 of Republic Act No.

876 or under Rule 34 of the Model Law in a domestic arbitration, or for setting

aside an award in an international arbitration under Article 34 of the Model

Law, or for such other grounds provided under these Special Rules.

xxx xxx xxx

The court shall not set aside or vacate the award of the arbitral tribunal merely

on the ground that the arbitral tribunal committed errors of fact, or of law, or of

fact and law, as the court cannot substitute its judgment for that of the arbitral

tribunal. (Emphasis supplied) DAaHET

The above rule embodied the stricter standard in deciding appeals from arbitral awards established by

jurisprudence. In the case of Asset Privatization Trust v. Court of Appeals, 77 this Court held:

As a rule, the award of an arbitrator cannot be set aside for mere errors of

judgment either as to the law or as to the facts. Courts are without power to

amend or overrule merely because of disagreement with matters of law or facts

determined by the arbitrators. They will not review the findings of law and fact

contained in an award, and will not undertake to substitute their judgment for

that of the arbitrators, since any other rule would make an award the

commencement, not the end, of litigation. Errors of law and fact, or an

erroneous decision of matters submitted to the judgment of the arbitrators, are

insufficient to invalidate an award fairly and honestly made. Judicial review of

an arbitration is, thus, more limited than judicial review of a trial. 78

Accordingly, we examine the merits of the petition before us solely on the statutory ground raised for

vacating the Second Partial Award: evident partiality, pursuant to Section 24 (b) of the Arbitration Law

(RA 876) and Rule 11.4 (b) of the Special ADR Rules.

Evident Partiality

Evident partiality is not defined in our arbitration laws. As one of the grounds for vacating an arbitral

award under the Federal Arbitration Act (FAA) in the United States (US), the term "encompasses both an

arbitrator's explicit bias toward one party and an arbitrator's inferred bias when an arbitrator fails to

disclose relevant information to the parties." 79

From a recent decision 80 of the Court of Appeals of Oregon, we quote a brief discussion of the common

meaning of evident partiality:

To determine the meaning of "evident partiality," we begin with the terms

themselves. The common meaning of "partiality" is "the inclination to favor

one side." Webster's Third New Int'l Dictionary 1646 (unabridged ed 2002); see 

also id. (defining "partial" as "inclined to favor one party in a cause or one side

of a question more than the other: biased, predisposed" (formatting in

original)). "Inclination," in turn, means "a particular disposition of mind or

character: propensity, bent" or "a tendency to a particular aspect, state,

character, or action." Id. at 1143 (formatting in original); see also id. (defining

"inclined" as "having inclination, disposition, or tendency"). ECcTaS

The common meaning of "evident" is "capable of being perceived esp[ecially] by

sight: distinctly visible: being in evidence: discernable[;] . . . clear to the

understanding: obvious, manifest, apparent." Id. at 789 (formatting in

original); see  also   id. (stating that synonyms of "evident" include "apparent,

patent, manifest, plain, clear, distinct, obvious, [and] palpable" and that,

"[s]ince evident rather naturally suggests evidence, it may imply the existence

of signs and indications that must lead to an identification or inference"

(formatting in original)). (Emphasis supplied)

Evident partiality in its common definition thus implies "the existence of signs and indications that must

lead to an identification or inference" of partiality.81 Despite the increasing adoption of arbitration in

many jurisdictions, there seems to be no established standard for determining the existence of evident

partiality. In the US, evident partiality "continues to be the subject of somewhat conflicting and

inconsistent judicial interpretation when an arbitrator's failure to disclose prior dealings is at issue." 82

The first case to delineate the standard of evident partiality in arbitration proceedings

was Commonwealth Coatings  Corp.  v.  Continental  Casualty Co.,  et  al. 83 decided by the US Supreme

Court in 1968. The Court therein addressed the issue of whether the requirement of impartiality applies

to an arbitration proceeding. The plurality opinion written by Justice Black laid down the rule that the

arbitrators must disclose to the parties "any dealings that might create an impression of possible

bias," 84 and that underlying such standard is "the premise that any tribunal permitted by law to try

cases and controversies not only must be unbiased but also must avoid even the appearance of

bias." 85 In a separate concurring opinion, Justice White joined by Justice Marshall, remarked that "[t]he

Court does not decide today that arbitrators are to be held to the standards of judicial decorum of Article

III judges, or indeed of any judges." 86 He opined that arbitrators should not automatically be

disqualified from an arbitration proceeding because of a business relationship where both parties are

aware of the relationship in advance, or where the parties are unaware of the circumstances but the

relationship is trivial. However, in the event that the arbitrator has a "substantial interest" in the

transaction at hand, such information must be disclosed. HSDIaC

Subsequent cases decided by the US Court of Appeals Circuit Courts adopted different approaches, given

the imprecise standard of evident partiality inCommonwealth Coatings.

In Morelite  Construction  Corp.   v.  New  York  District   Council   Carpenters  Benefit   Funds, 87 the Second

Circuit reversed the judgment of the district court and remanded with instructions to vacate the

arbitrator's award, holding that the existence of a father-son relationship between the arbitrator and the

president of appellee union provided strong evidence of partiality and was unfair to appellant

construction contractor. After examining prior decisions in the Circuit, the court concluded that —

. . . we cannot countenance the promulgation of a standard for partiality as

insurmountable as "proof of actual bias" — as the literal words ofSection 

10 might suggest. Bias is always difficult, and indeed often impossible, to

"prove." Unless an arbitrator publicly announces his partiality, or is overheard in

a moment of private admission, it is difficult to imagine how "proof" would be

obtained. Such a standard, we fear, occasionally would require that we enforce

awards in situations that are clearly repugnant to our sense of fairness, yet do

not yield "proof" of anything.

If the standard of "appearance of bias" is too low for the invocation of Section

10, and "proof of actual bias" too high, with what are we left? Profoundly

aware of the competing forces that have already been discussed, we hold

that "evident partiality" within the meaning of 9 U.S.C. § 10 will be found

where a reasonable person would have to conclude that an arbitrator was

partial to one party to the arbitration. . . . 88 (Emphasis supplied)

In Apperson v. Fleet Carrier Corporation, 89 the Sixth Circuit agreed with the Morelite court's analysis,

and accordingly held that to invalidate an arbitration award on the grounds of bias, the challenging party

must show that "a reasonable person would have to conclude that an arbitrator was partial" to the other

party to the arbitration.

This "myriad of judicial interpretations and approaches to evident partiality" resulted in a lack of a

uniform standard, leaving the courts "to examine evident partiality on a case-by-case basis." 90 The case

at bar does not present a non-disclosure issue but conduct allegedly showing an arbitrator's partiality to

one of the parties. TAHCEc

EPCIB/BDO, in moving to vacate the Second Partial Award claimed that the Arbitration Tribunal exceeded

its powers in deciding the issue of advance cost not contemplated in the TOR, and that Chairman Barker

acted with evident partiality in making such award. The RTC held that BDO failed to substantiate these

allegations. On appeal, the CA likewise found that the Arbitration Tribunal did not go beyond the

submission of the parties because the phrasing of the scope of the agreed issues in the TOR ("[t]he issues

to be determined by the Tribunal are those issues arising from the said Request for Arbitration, Answer

and Reply and such other issues as may properly arise during the arbitration") is broad enough to

accommodate a finding on the liability and the repercussions of BDO's failure to share in the advances on

costs. Section 10 of the SPA also gave the Arbitration Tribunal authority to decide how the costs should

be apportioned between them.

However, the CA found factual support in BDO's charge of partiality, thus:

On the issue on evident partiality, the rationale in the American case

of Commonwealth  Coatings  Corp.   v.  Continental  Cas.  Co. appears to be very

prudent. In Commonwealth, the United States Supreme Court reasoned that

courts "should . . . be even more scrupulous to safeguard the impartiality of

arbitrators than judges, since the former have completely free rein to decide

the law as well as the facts, and are not subject to appellate review" in general.

This taken into account, the Court applies the standard demanded of the

conduct of magistrates by analogy. After all, the ICC Rules require that an

arbitral tribunal should act fairly and impartially. Hence, an arbitrator's conduct

should be beyond reproach and suspicion. His acts should be free from the

appearances of impropriety.

An examination of the circumstances claimed to be illustrative of Chairman

Barker's partiality is indicative of bias. Although RCBC had repeatedly asked for

reimbursement and the withdrawal of BDO's counterclaims prior to Chairman

Barker's December 18, 2007 letter, it is baffling why it is only in the said letter

that RCBC's prayer was given a complexion of being an application for a partial

award. To the Court, the said letter signaled a preconceived course of action

that the relief prayed for by RCBC will be granted. HaTISE

That there was an action to be taken beforehand is confirmed by Chairman

Barker's furnishing the parties with a copy of the Secomb article. This article

ultimately favored RCBC by advancing its cause. Chairman Barker makes it

appear that he intended good to be done in doing so but due process dictates

the cold neutrality of impartiality. This means that "it is not enough . . . [that]

cases [be decided] without bias and favoritism. Nor is it sufficient that . . .

prepossessions [be rid of]. [A]ctuations should moreover inspire that belief."

These put into the equation, the furnishing of the Secomb article further

marred the trust reposed in Chairman Barker. The suspicion of his partiality on

the subject matter deepened. Specifically, his act established that he had pre-

formed opinions.

Chairman Barker's providing of copies of the said text is easily interpretable that

he had prejudged the matter before him. In any case, the Secomb article tackled

bases upon which the Second Partial Award was founded. The subject article

reflected in advance the disposition of the ICC arbitral tribunal . The award can

definitely be viewed as an affirmation that the bases in the Secomb article were

adopted earlier on. To the Court, actuations of arbitrators, like the language of

judges, "must be guarded and measured lest the best of intentions be

misconstrued."

xxx xxx xxx 91 (Emphasis supplied)

We affirm the foregoing findings and conclusion of the appellate court save for its reference to

the obiter in Commonwealth Coatings that arbitrators are held to the same standard of conduct imposed

on judges. Instead, the Court adopts the reasonable impression of partiality standard, which requires a

showing that a reasonable person would have to conclude that an arbitrator was partial to the other

party to the arbitration. Such interest or bias, moreover, "must be direct, definite and capable of

demonstration rather than remote, uncertain, or speculative." 92 When a claim of arbitrator's evident

partiality is made, "the court must ascertain from such record as is available whether the arbitrators'

conduct was so biased and prejudiced as to destroy fundamental fairness." 93 HICSTa

Applying the foregoing standard, we agree with the CA in finding that Chairman Barker's act of furnishing

the parties with copies of Matthew Secomb's article, considering the attendant circumstances, is

indicative of partiality such that a reasonable man would have to conclude that he was favoring the

Claimant, RCBC. Even before the issuance of the Second Partial Award for the reimbursement of advance

costs paid by RCBC, Chairman Barker exhibited strong inclination to grant such relief to RCBC,

notwithstanding his categorical ruling that the Arbitration Tribunal "has no power  under the ICC Rules to

order the Respondents to pay the advance on costs sought by the ICC or to give the Claimant any relief

against the Respondents' refusal to pay."94 That Chairman Barker was predisposed to grant relief to

RCBC was shown by his act of interpreting RCBC's letter, which merely reiterated its plea to declare the

Respondents in default and consider all counterclaims withdrawn — as what the ICC Rules provide —

as an application to the Arbitration Tribunal to issue a partial award in respect of BDO's failure to share in

the advance costs. It must be noted that RCBC in said letter did not contemplate the issuance of a partial

order, despite Chairman Barker's previous letter which mentioned the possibility of granting relief upon

the parties making submissions to the Arbitration Tribunal. Expectedly, in compliance with Chairman

Barker's December 18, 2007 letter, RCBC formally applied for the issuance of a partial award ordering

BDO to pay its share in the advance costs.

Mr. Secomb's article, "Awards   and   Orders   Dealing   with   the   Advance   on   Costs   in   ICC   Arbitration: 

Theoretical Questions and Practical Problems" 95specifically dealt with the situation when one of the

parties to international commercial arbitration refuses to pay its share on the advance on costs. After a

brief discussion of the provisions of ICC Rules dealing with advance on costs, which did not provide for

issuance of a partial award to compel payment by the defaulting party, the author stated:

4.As we can see, the Rules have certain mechanisms to deal with defaulting

parties. Occasionally, however, parties have sought to use other methods to

tackle the problem of a party refusing to pay its part of the advance on costs.

These have included seeking an order or award from the arbitral tribunal

condemning the defaulting party to pay its share of the advance on costs.

Such applications are the subject of this article. 96 acSECT

By furnishing the parties with a copy of this article, Chairman Barker practically armed RCBC with

supporting legal arguments under the "contractual approach" discussed by Secomb. True enough, RCBC

in its Application for Reimbursement of Advance Costs Paid utilized said approach as it singularly focused

on Article 30 (3) 97 of the ICC Rules and fiercely argued that BDO was contractually bound to share in the

advance costs fixed by the ICC. 98 But whether under the "contractual approach" or "provisional

approach" (an application must be treated as an interim measure of protection under Article 23 [1]

rather than enforcement of a contractual obligation), both treated in the Secomb article, RCBC

succeeded in availing of a remedy which was not expressly allowed by the Rules but in practice has been

resorted to by parties in international commercial arbitration proceedings. It may also be mentioned that

the author, Matthew Secomb, is a member of the ICC Secretariat and the "Counsel in charge of the file",

as in fact he signed some early communications on behalf of the ICC Secretariat pertaining to the

advance costs fixed by the ICC. 99 This bolstered the impression that Chairman Barker was predisposed

to grant relief to RCBC by issuing a partial award.

Indeed, fairness dictates that Chairman Barker refrain from suggesting to or directing RCBC towards a

course of action to advance the latter's cause, by providing it with legal arguments contained in an article

written by a lawyer who serves at the ICC Secretariat and was involved or had participation — insofar as

the actions or recommendations of the ICC — in the case. Though done purportedly to assist both

parties, Chairman Barker's act clearly violated Article 15 of the ICC Rules declaring that "[i]n all cases, the

Arbitral Tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity

to present its case." Having pre-judged the matter in dispute, Chairman Barker had lost his objectivity in

the issuance of the Second Partial Award.

In fine, we hold that the CA did not err in concluding that the article ultimately favored RCBC as it

reflected in advance the disposition of the Arbitral Tribunal, as well as "signalled a preconceived course

of action that the relief prayed for by RCBC will be granted." This conclusion is further confirmed by the

Arbitral Tribunal's pronouncements in its Second Partial Award which not only adopted the "contractual

approach" but even cited Secomb's article along with other references, thus: CScaDH

6.1It appears to the Tribunal that the issue posed by this application is

essentially a contractual one. . . .

xxx xxx xxx

6.5Matthew Secomb, considered these points in the article in 14 ICC Bulletin

No. 1 (2003) which was sent to the parties. At Para. 19, the learned

author quoted from an ICC Tribunal (Case No. 11330) as follows:

"The   Arbitral   Tribunal   concludes   that   the   parties   in 

arbitrations   conducted   under   the   ICC   Rules   have   a 

mutually   binding   obligation   to   pay   the   advance   on 

costs as determined by the ICC Court, based on Article 

30-3 ICC Rules which â€” by reference â€” forms part of 

the   parties'   agreement   to   arbitration   under   such 

Rules." 100

The Court, however, must clarify that the merits of the parties' arguments as to the propriety of the

issuance of the Second Partial Award are not in issue here. Courts are generally without power to amend

or overrule merely because of disagreement with matters of law or facts determined by the arbitrators.

They will not review the findings of law and fact contained in an award, and will not undertake to

substitute their judgment for that of the arbitrators. A contrary rule would make an arbitration award

the commencement, not the end, of litigation. 101 It is the finding of evident partiality which constitutes

legal ground for vacating the Second Partial Award and not the Arbitration Tribunal's application of the

ICC Rules adopting the "contractual approach" tackled in Secomb's article.

Alternative dispute resolution methods or ADRs — like arbitration, mediation, negotiation and

conciliation — are encouraged by this Court. By enabling parties to resolve their disputes amicably, they

provide solutions that are less time-consuming, less tedious, less confrontational, and more productive

of goodwill and lasting relationship. 102 Institutionalization of ADR was envisioned as "an important

means to achieve speedy and impartial justice and declog court dockets." 103 The most important

feature of arbitration, and indeed, the key to its success, is the public's confidence and trust in the

integrity of the process. 104 For this reason, the law authorizes vacating an arbitral award when there is

evident partiality in the arbitrators. aAcHCT

Injunction Against Execution

of Arbitral Award

Before an injunctive writ can be issued, it is essential that the following requisites are present: (1) there

must be a right inesse or the existence of a right to be protected; and (2) the act against which injunction

to be directed is a violation of such right. The onus probandi is on movant to show that there exists a

right to be protected, which is directly threatened by the act sought to be enjoined. Further, 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 a serious damage. 105

Rule 19.22 of the Special ADR Rules states:

Rule 19.22.Effect of appeal. — The appeal shall not stay the award, judgment,

final order or resolution sought to be reviewed unless the Court of Appeals

directs otherwise upon such terms as it may deem just.

We find no reversible error or grave abuse of discretion in the CA's denial of the application for stay

order or TRO upon its finding that BDO failed to establish the existence of a clear legal right to enjoin

execution of the Final Award confirmed by the Makati City RTC, Branch 148, pending resolution of its

appeal. It would be premature to address on the merits the issues raised by BDO in the present petition

considering that the CA still has to decide on the validity of said court's orders confirming the Final

Award. But more important, since BDO had already paid P637,941,185.55 in manager's check, albeit

under protest, and which payment was accepted by RCBC as full and complete satisfaction of the writ of

execution, there is no more act to be enjoined.

Settled is the rule that injunctive reliefs are preservative remedies for the protection of substantive rights

and interests. Injunction is not a cause of action in itself, but merely a provisional remedy, an adjunct to

a main suit. When the act sought to be enjoined has become fait accompli, the prayer for provisional

remedy should be denied. 106

Thus, the Court ruled in Go v. Looyuko 107 that when the events sought to be prevented by injunction or

prohibition have already happened, nothing more could be enjoined or prohibited. Indeed, it is a

universal principle of law that an injunction will not issue to restrain the performance of an act already

done. This is so for the simple reason that nothing more can be done in reference thereto. A writ of

injunction becomes moot and academic after the act sought to be enjoined has already been

consummated. ADTCaI

WHEREFORE, premises considered, the petition in G.R. No. 199238 is DENIED. The Resolution dated

September 13, 2011 of the Court of Appeals in CA-G.R. SP No. 120888 is AFFIRMED.

The petition in G.R. No. 196171 is DENIED. The Decision dated December 23, 2010 of the Court of

Appeals in CA-G.R. SP No. 113525 is herebyAFFIRMED.

SO ORDERED.

SECOND DIVISION

[G.R. No. 155108. April 27, 2005.]

REPUBLIC OF THE PHILIPPINES, Represented by Department of Public Works

and Highways (DPWH) under Secretary Simeon Datumanong and

Undersecretary Edmundo V. Mir, then Chairman Of Bid and Awards

Committee (BAC), Assistant Secretary Bashir D. Rasuman, BAC Vice-Chairman,

Director Oscar D. Abundo, BAC Member Director OIC-Director Antonio V.

Malano, Jr., BAC Member and Project Director Philip F. Menez, petitioner, vs.

EMILIANO R. NOLASCO, respondent.

D E C I S I O N

TINGA, J p:

An obiter dictum is a nonessential, welcome and sublime like a poem of love in a last will or unwanted

and asinine as in brickbats in a funeral oration. It is neither enforceable as a relief nor the source of a

judicially actionable claim. However, by reason of its non-binding nature, the pronouncement does not

generally constitute error of law or grave abuse of discretion, even if it proves revelatory of the

erroneous thinking on the part of the judge. It is chiefly for that reason that this petition is being denied,

albeit with all clarifications necessary to leave no doubt as to the status and legal effect of the

controvertibleOrder dated 6 September 2002 issued by Judge Juan C. Nabong, Jr. of the Regional Trial

Court (RTC) of Manila, Branch 32.

The root of the dispute is a public works project, the Agno River Flood Control Project ("Project"), the

undertaking of which has been unfortunately delayed due to the present petition. Funding for the

project was to be derived primarily through a loan from the Japan Bank for International Cooperation

(JBIC). A Bid and Awards Committee (BAC) was constituted by the Department of Public Works and

Highways (DPWH) for the purpose of conducting international competitive bidding for the procurement

of the contract for Package II — the Guide Channel to Bayambang under Phase II of the Project. 1 Six (6)

pre-qualified contractors submitted their bids for the project, among them the present intervenors

Daewoo Engineering and Construction Co., Ltd. (Daewoo), and China International Water and Electric

Corp. (China International).

However, even before the BAC could come out with its recommendations, a legal challenge had already

been posed to preempt the awarding of the contract to Daewoo. On 19 February 2002, Emiliano R.

Nolasco, a self-identified taxpayer and newspaper publisher/editor-in-chief, 2 filed a Petition, seeking a

temporary restraining order and/or preliminary injunction, with the RTC of Manila, naming the DPWH

and the members of the BAC as respondents. He alleged having obtained copies of "Confidential Reports

from an Unnamed DPWH Consultant," which he attached to his petition. Nolasco argued that based on

the confidential reports it was apparent that Daewoo's bid was unacceptable and the putative award to

Daewoo, illegal, immoral, and prejudicial to the government and the Filipino taxpayers. Invoking his right

as a taxpayer, Nolasco prayed that the DPWH and BAC be restrained from awarding the contract to

Daewoo and Daewoo disqualified as a bidder. 3

The petition was raffled to the sala of Judge Nabong and docketed as Civil Case No. 02-102923. An ex-

parte hearing was conducted on the prayer for a temporary restraining order (TRO), with Nolasco alone

in attendance. Petitioner issued an Order dated 4 March 2002 directing the issuance of a TRO, enjoining

the DPWH and the BAC from awarding the contract to Daewoo "and that [Daewoo] be disqualified as

bidder and its bidders be rejected" from carrying out the Project. 4 The term of the TRO was for a period

of twenty (20) days.

Upon learning of the TRO, the DPWH and the BAC, through the Office of the Solicitor General (OSG), filed

a Motion to Dismiss Petition with Motion for Dissolution of Temporary Restraining Order Dated March 4, 

2002. 5 While noting the impropriety of a twenty (20)-day TRO without prior notice or hearing, they

pointed out that Republic Act No. 8975 precisely prohibited the issuance by any court, save the Supreme

Court, of a TRO or preliminary injunction which restrains or prohibits the bidding for or awarding of a

contract/project of the national government. Accordingly, they prayed that the petition be dismissed and

the TRO dissolved.

This new motion was set for hearing on 21 March 2002, and thereupon the parties were afforded the

opportunity to argue their case. Then, on 27 March 2002, the RTC issued an order dismissing Nolasco's

petition. The dismissal of the petition was warranted, according to the RTC, as it was a suit against the

State, which had been sued without its consent. 6 The RTC also noted that Nolasco had not established

that he would sustain a direct injury should the contract be awarded to Daewoo, and that the general

interest which may have been possessed by Nolasco along with all members of the public would not

suffice. 7

Interestingly, on 2 April 2002, the OSG claims to have received a copy of an alleged order dated 22

March 2002 purportedly signed by Petitioner which denied the motion to dismiss, gave the petition due

course, and granted the preliminary injunction subject to the posting of an injunction bond in the

amount of Five Hundred Thousand Pesos (P500,000.00). 8 However, in a Certification signed by Loida P.

Moralejo, Officer-in-Charge of RTC Branch 32, it was attested that the signature in this order was

spurious, and affirmed instead the Order dated 22 March 2002 dismissing the petition. 9

In the meantime, the BAC issued Resolution No. MFCDP-RA-02 dated 1 April 2002. The BAC noted

therein that among the three lowest bidders were Daewoo and China International, and that based on

the bid amounts "as corrected," the bid of Daewoo was the lowest of the three, followed by China

International's. 10 As a result, the BAC resolved to recommend the award of the contract for the Project

to Daewoo. Then DPWH Secretary Simeon Datumanong approved the recommendation by affixing his

signature on the Resolution on the same day. 11 A copy of the Resolution and the Bid Evaluation Report

was furnished to JBIC for "review and concurrence." 12

For his part, Nolasco filed a motion for reconsideration dated 3 April 2002, seeking the reversal of

the Order dated 27 March 2002 dismissing his petition. Nolasco set this motion for reconsideration for

hearing on 18 April 2002, but none apparently ensued. 13 The OSG filed

itsOpposition/Comment/Manifestation dated 24 April 2002 wherein it prayed that it be allowed to adopt

its earlier motion to dismiss as its opposition to the motion for reconsideration. The RTC granted OSG's

prayer in an Order dated 13 May 2002. 14 In the same Order, the RTC likewise stated that "in the spirit of

comprehensive fairness, this Court must, and hereby, [set] the hearing on the reception of petitioner's

evidence on this Motion [for Reconsideration]" on 17 May 2002. 15

During the hearing of 17 May 2002, the OSG asked Judge Nabong to clarify his directive that a hearing be

had for the reception of Nolasco's evidence. Judge Nabong clarified that his bent was for petitioner to

present his evidence but no longer on the question of whether a TRO or injunction should be issued. The

RTC granted the OSG's prayer to submit a motion for reconsideration of this order, which the OSG did on

31 May 2002. 16 In the motion for reconsideration, the OSG argued that it was unnecessary to receive

Nolasco's evidence, considering that the dismissal of the petition was grounded on pure questions of

law. It also sought clarification of Judge Nabong's remarks during the 17 May 2002 hearing, which

seemed to imply that this new hearing would actually be on the merits of the petition.

This new OSG motion was submitted to the RTC during the hearing of 28 June 2002, wherein Petitioner

announced that the motion was to be resolved in due time. At the same time, the RTC allowed Nolasco

to adduce his evidence over the objections of the OSG. Nolasco presented a witness, Engineer Shohei

Ezaki, a DPWH consultant hired by JBIC who testified pursuant to a subpoena earlier issued by the court.

Ezaki testified as to the Evaluation Report and Result prepared by his consultant firm and which had

been earlier attached to Nolasco's petition. Nolasco also intimated its intention to present DPWH

Director Philip F. Meñez as a witness on his behalf. In the hearing of 2 August 2002, the OSG manifested

that it would file motions opposing the presentation of witnesses by Nolasco and the issuance of

subpoenas requiring their testimony. In its order issued in open court on 2 August 2002, the RTC

deferred the further presentation of Nolasco's witnesses pending the filing of OSG's motions.

At that point, the proceedings thus far undertaken had been unorthodox. Then the course veered

sharply to the bizarre. Nolasco filed a motion dated 12 August 2002, seeking the rendition of a partial

judgment and dismissal of his own petition, based on the proceedings that had transpired during the

hearings held on 28 June and 2 August 2002. 17 In the motion, Nolasco reiterated his submission that

based on the evidence presented thus far, Daewoo should have been disqualified from bidding on the

project. While the prayer for the dismissal of the motion for reconsideration was anchored on the need

"to abbreviate the proceedings" so as to implement the projects, the motion nonetheless urged the

court, to issue a partial judgment and award the bid for the Project to China International. Nolasco

likewise filed a Formal Offer of Evidence dated 29 August 2002. The offered evidence included various

documents and the testimony of Nolasco and his witnesses previously heard by the court. Both

submissions of Nolasco were vigorously objected to by the OSG in pleadings filed to that effect. 18

Then, on 6 September 2002, the RTC issued the Order now assailed before this Court. It included a brief

discussion of the factual antecedents, as well as the 27 March 2002 Order dismissing the petition and the

various pleadings filed by the parties prior and subsequent to the dismissal of the petition. The last two

pages of the four (4)-page Order proceeded to dissect the testimonies and ultimate dispositions therein.

The last three paragraphs of the Orderand its fallo are replicated below in full:

In the hearing, however, on August 21, 2002, Atty. Abelardo M. Santos for

petitioner in open court, formally offered the testimony of Mr. Ezaki, although,

before the start of his testimony Atty. Santos Manifested: "Your Honor,   the 

purpose  of   the   testimony  of   this  witness   is   to   show  that   they  had  made  a 

technical study of all the pre-qualified bidders referring to the Agno River Flood 

Control Project, Phase II."

Eng'r Shohel Ezaki, hired by the Japan Bank for International Cooperation (JBIC)

through which the funding, granted by the Overseas Development Assistance

(ODA), is covered and flows through, and the DPWH and President, Philippines

Office, Nippon Koie Company, Ltd., (testifying under an issued subpoena duces 

tecum ad testificandum) testified that the Evaluation Report and Result of their

consultant firm in association with the PKII and the Basic Team Inc., (doing

evaluation works for the DPWH) disqualified DAEWOO and ITALIAN THAI on

Packages 1 and 2, Phase II. Insofar, moreover, as regards Package 1, Phase II,

the bids submitted by TOA Corporation is the lowest evaluated responsive bid.

The second lowest evaluated responsive bid is that of China State Construction

Engineering. In open court, on August 2, 2002, Director Eng'r. Philip F. Menez,

Major Floor Control & Drainage Project-Project Management Office, Cluster II,

DPWH, confirmed the award to TOA Corporation, the evaluated responsive bid,

Package 1.

All told, and presently, and urgently, there is the need to implement the

PROJECTS in this petition so as not to affect the ODA funding, harnessed

through JBIC. More so, in addition, and a thoughtful consideration of pleadings

and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing,

respondent BAC has strayed from fairly applying the Bidding Laws, Guidelines,

Rules, and Regulations, and Bid Tender Documents and, as a matter of fairness,

and in the interest of justice, considering other bidders whose bids have been

evaluated by the Technical Working Group including the consultant, Nippon

Koie Company, Ltd., in association with the PKII and the Basic Team, Inc., to be

substantially responsive, the   Honorable   Simeon   P.   Datumanong   must   now 

seriously consider and effect the award of Package 2, PHASE II, of the Agno River 

Floor   Control   Project, as duly recommended by the Consultants and the

Technical Working Group, DPWH, to China International Water & Electric

Corporation being the lowest evaluated responsive bid.

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the

Petition is hereby DISMISSED.

SO ORDERED. (Emphasis supplied) 19

The OSG received a copy of the Order dated 6 September 2002 on 17 September 2002. It opted to file

a Petition for Review on Certiorari under Rule 45 with this Court, instead of resorting to a motion for

reconsideration, to avert unnecessary delay of the implementation of the Project which would result in

millions of pesos in damages. The OSG thus alleges that the petition raises pure questions of law, thereby

dispensing with recourse to the Court of Appeals. 20

The OSG also notes that in a letter to the DPWH dated 21 June 2002, JBIC, through Chief Representative

Mitsuru Taruki, let it be known that it had decided to hold in abeyance its concurrence to the project, as

"the issue [was] now under the jurisdiction of the appropriate Philippine courts and other relevant

organizations of the Philippine government," and that it would be prudent to wait "for the decisions of

the proper authorities before taking any action on the matter." 21 It is likewise worth noting at this

juncture that Nolasco had also filed a verified complaint against the Chairman and members of the BAC

with the Presidential Anti-Graft Commission, as well as another complaint with the National Economic

Development Authority and a complaint-letter with JBIC itself requesting that the bank reject the award

to Daewoo. 22

Since the filing of the present petition, both Daewoo and China International have since participated in

the case. Daewoo filed a Comment-in-Interventiondated 10 January 2003, which this Court treated as a

petition-In-intervention. 23 Upon order of this Court, China International filed a Comment-in-

Intervention dated 5 February 2003.

Petitioner imputes error to the RTC in taking notice of and resolving Nolasco's Motion to Issue Partial 

Judgment and Motion to Dismiss Petition, which they characterize as a "trifle." Substantively, it asserts

that the RTC erred in directing the DPWH to perform an affirmative act even though the court had no

more jurisdiction over the petition, considering that the RTC never resolved the motion for

reconsideration filed by Nolasco. It also avers that Nolasco's original petition had been substantially

amended, without leave of court and without notice to the Petitioner, and that they had not been

afforded the opportunity to file an answer to the petition. Moreover, the RTC is alleged to have erred in

directing the award of the subject package to China International, a stranger to the case, without

ordering the inclusion of Daewoo as an indispensable party.

We can recast the legal question within the framework of whether the RTC committed a reversible error

in assailed Order dated 6 September 2002. It is a mark of the strangeness of this case that Petitioner

seeks the nullification of a dispositive order that affirms the very dismissal of the case they likewise seek.

However, given the circumstances, the dilemma of Petitioner is understandable. While the  fallo of the

assailed Order is indeed favorable to them, the body thereof is a palpable source of mischief.

Petitioner assails only the Order of 6 September 2002. However, it behooves this Court to be more

comprehensive in approach, in part to elucidate on the proper steps that should be undertaken by lower

court judges when confronted with complaints or petitions affecting national government infrastructure

projects. Our review will necessarily entail an examination of the propriety of the procedure adopted by

the RTC in disposing of Nolasco's petition. It would be best for the Court to diagram the procedures

undertaken below like a grammar school teacher to illustrate the multiple errors attendant in this case.

From a chronological standpoint, the first matter for discussion would be Nolasco's Petition before the

RTC.

The caption of the Petition states that it is for "Issuance of a Temporary Restraining Order and/or

Preliminary Injunction." 24 In the Petition, Nolasco averred that he received a letter from a resident of

Bayambang, Pangasinan, regarding the latter's "observations on the Public Bidding" made on the Project;

that Nolasco contacted his sources at the DPWH and learned that the Project would be awarded to

Daewoo; that he obtained a Confidential Report from "an Unnamed DPWH Consultant" which allegedly

concluded that Daewoo's bid was unacceptable. From these premises, Nolasco argued that he was

entitled to the issuance of a temporary restraining order or preliminary injunction, as the award to the

contracts to Daewoo would probably cause injustice to him as a taxpayer. As prayer, Nolasco asked that

the respondents therein (herein Petitioner) be restrained from awarding the contracts to Daewoo and

that Daewoo be disqualified as a bidder and its bid rejected.

It would be difficult to ascertain the nature of Nolasco's action if the Court were obliged to rely alone on

the caption of his pleading. The caption describes the Petition as one for issuance of a temporary

restraining order and/or preliminary injunction; hence, implying that the action seeks only provisional

reliefs without the necessary anchor of a final relief. Moreover, the use of "Petition" in lieu of

"Complaint" seemingly implies that the action brought forth is the special civil action of prohibition

under Rule 65, yet this is not supported by the body of the pleading itself as it is bereft of the necessary

allegations of grave abuse of discretion or absence/excess of jurisdiction and the absence of any other

plain speedy and adequate remedy. 25

Nonetheless, the principle consistently adhered to in this jurisdiction is that it is not the caption but the

allegations in the complaint or other initiatory pleading which give meaning to the pleading and on the

basis of which such pleading may be legally characterized. 26 An examination of the "petition" reveals

that it should be considered as a complaint for injunction, with a prayer for the provisional relief of

temporary restraining order/preliminary injunction. After all, the Petition prayed that respondents

therein (Petitioner herein) be restrained from awarding the contracts to Daewoo, citing as basis thereof

its "unacceptability," as purportedly established by the evaluation report.

Nonetheless, the prayer for the issuance of a temporary restraining order or preliminary injunction

affecting the bidding or awarding of a national government contract or project, would have called for the

application of Republic Act No. 8975 and the corresponding denial of the prayer for provisional relief.

Still, the RTC instead issued a TRO in its Order dated 4 March 2002.

Republic Act No. 8975 definitively enjoins all courts, except the Supreme Court, from issuing any

temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the

government, or any of its subdivisions, officials or any person or entity to restrain, prohibit or compel the

bidding or awarding of a contract or project of the national government, 27 precisely the situation that

obtains in this case with respect to the Agno River Project. The only exception would be if the matter is

of extreme urgency involving a constitutional issue, such that unless the temporary restraining order is

issued, grave injustice and irreparable injury will arise. 28 The TRO issued by the RTC failed to take into

consideration said law. Neither did it advert to any extreme urgency involving a constitutional issue, as

required by the statute. The law ordains that such TRO is void, 29 and the judge who issues such order

should suffer the penalty of suspension of at least sixty (60) days without pay. 30

Nevertheless, there is no need to belabor this point since the TRO no longer subsists. It appears that the

RTC subsequently realized the import of Republic Act No. 8975 as it cited the same in its 27 March

2002 Order dismissing the Petition:

Applying Republic Act No. 8975, most particularly Section 3 thereof,

and Administrative Circular No. 11-2000 issued on November 13, 2000 by the

Honorable Hilario G. Davide, Jr., Chief Justice, Supreme Court, all parties having

copies, the Petition at bench ought to be dismissed outrightly (sic). 31

However, it must be clarified that Republic Act No. 8975 does not ordinarily warrant the outright

dismissal of any complaint or petition before the lower courts seeking permanent injunctive relief from

the implementation of national government infrastructure projects. What is expressly prohibited by the

statute is the issuance of the provisional reliefs of temporary restraining orders, preliminary injunctions,

and preliminary mandatory injunctions. It does not preclude the lower courts from assuming jurisdiction

over complaints or petitions that seek as ultimate relief the nullification or implementation of a national

government infrastructure project. A statute such as Republic Act No. 8975 cannot diminish the

constitutionally mandated judicial power to determine whether or not there has been a grave abuse of

discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of

government. 32 Section 3 of the law in fact mandates, thus:

If after due hearing the court finds that the award of the contract is null and

void, the court may, if appropriate under the circumstances, award the contract

to the qualified and winning bidder or order a rebidding of the same, without

prejudice to any liability that the guilty party may incur under existing laws.

Thus, when a court is called upon to rule on an initiatory pleading assailing any material aspect pertinent

to a national government infrastructure project, the court ordinarily may not dismiss the action based

solely on Republic Act No. 8975 but is merely enjoined from granting provisional reliefs. If no other

ground obtains to dismiss the action, the court should decide the case on the merits. As we recently held

in Opiña v. NHA: 33

Unquestionably, the power to issue injunctive writs against the implementation

of any government infrastructure project is exclusively lodged with this Court,

pursuant to Section 3 of Rep. Act No. 8975. But while lower courts are

proscribed thereunder from issuing restraining orders and/or writs of

preliminary injunction to stop such projects, the proscription does  not  mean 

that   such   courts   are   likewise  bereft   of   authority   to   take   cognizance  of   the 

issue/issues raised in the principal action, as long as such action and the relief 

sought are within their jurisdiction.

Accordingly, it was not proper for the RTC to cite Republic Act No. 8975 as basis for the dismissal of

Nolasco's petition since the statute does not bar the institution of an action that seeks to enjoin the

implementation of a national government project, but merely the issuance of provisional orders

enjoining the same. However, the RTC cited two other grounds for the dismissal of the case — that

Nolasco's general interest as a taxpayer was not sufficient to establish any direct injury to him should the

Project be awarded to Daewoo; and that the petition was a suit against the State, which may not be sued

without its consent.

We shall defer for now a review of these two grounds cited by the RTC for the dismissal of Nolasco's

petition, and instead focus on the proper steps that should have been undertaken owing to the dismissal

of the case. Nolasco filed a motion for reconsideration or the dismissal of the case, a remedy available to

him since the 27 March 2002 Order is a final order that disposed of the case. 34 Petitioner responded

with an all-encompassingOpposition/Comment/Manifestation   (Re:   Petitioner's   Motion   for 

Reconsideration). Both of these submissions were set for hearing before the RTC. The RTC could have

very well resolved the motion for reconsideration based on the pleadings submitted. Yet, in

its Order dated 13 May 2002, it declared:

However, be that as it may, in the spirit of comprehensive fairness, this Court

must, and hereby, sets the hearing on the Reception of Petitioner's evidence on

this Motion on May 17, 2002 at 9:00 A.M. 35

As far as determinable, there is no legal or jurisprudential standard of "comprehensive fairness," a

phrase that reeks of pomposity without admitting to any concrete meaning. Neither is there any

mandatory rule directing a court to conduct a hearing to receive evidence on a motion for

reconsideration.Nonetheless, a motion for reconsideration, as with all other motions which may not be

acted upon without prejudicing the rights of the adverse party, is required to be set for hearing by the

applicant, 36 and to be heard with due notice to all parties concerned. 37

It is certainly within acceptable bounds of discretion for the trial judge to require or allow the movant for

reconsideration to present evidence in support of the arguments in the motion, and in fact desirable if

such evidence should be necessarily appreciated for a fair and correct disposition of the motion for

reconsideration. Yet caution should be had. At this stage, the issues and evidence submitted for

appreciation and resolution of the trial court should be limited to the matters pertinent to the motion for

reconsideration. In this case, the RTC in hearing the motion for reconsideration, should have focused on

the issues of lack of standing on the part of Nolasco and non-suability of the State, as these were the

grounds on which dismissal of the petition was predicated. It would entail a fundamental reconsideration

of these two key concerns for Nolasco's motion to have been granted and the petition readmitted.

Instead, the RTC, upon Nolasco's insistence, proceeded instead to hear the case on the merits. The RTC

allowed Nolasco's witness, Engineer Ezaki to testify as to the authenticity and veracity of the bid

evaluation report attached to Nolasco's petition, and to affirm the conclusion that Daewoo was not a

qualified bidder. 38 This unusual turn of events arouses suspicion. The RTC had earlier dismissed the

petition on legal grounds, yet it was now considering factual matters as basis for review on

reconsideration. The petitioner, through counsel, appears to have strenuously objected to this furtive

and dubious recourse by Nolasco, but to no avail.

Then, despite the fact that other witnesses of Nolasco were still scheduled to be heard, Nolasco filed

the Motion to Issue Partial Judgment and to Dismiss Petition. He expressly prayed that his very own

motion for reconsideration of the petition be dismissed. From this motion, it is difficult to ascertain why

exactly Nolasco wanted the RTC to deny his own motion for reconsideration and to affirm the dismissal

of his own petition, though there is the expressed concern "in order to abbreviate the proceedings in

view of the need to implement the subject projects of this petition the soonest possible time." 39 At the

same time, and in the same pleading, Nolasco still asserted that Daewoo was not qualified to be awarded

the project, and emphasizes that such contention was borne out by the evidence he had presented thus

far. Accordingly, he likewise prayed that partial judgment be rendered on the petition, calling on the RTC

to conclude that China International won the Project, it being the lowest evaluated responsive bid. 40

It bears noting that at this stage, there were two pending motions before the RTC, both filed by Nolasco,

which had at issue whether or not his petition should be dismissed. The first was Nolasco's motion for

reconsideration praying for the reinstatement of his petition. The second was Nolasco's Motion  for 

Partial Judgment and to Dismiss Petition, praying for the dismissal of his petition. Palpably, Nolasco had

opted to hedge his chips on both red and black, which is not normally done for obvious reasons. Neither

did Nolasco, in his latter pleading, expressly withdraw his earlier motion for reconsideration, although his

subsequent prayer for the dismissal of his own earlier motion sufficiently evinced such intent.

This Motion for Partial Judgment and to Dismiss Petition is truly an odd duckling of a pleading, which

unfortunately did not blossom into a swan but from it instead emerged an even uglier duck — the 6

September 2002 Order, which dismissed the petition yet intoned that DPWH Secretary Datumanong

"must now seriously consider and effect the award" of the project to China International.

There is no doubt that the assailed Order dated 6 September 2002 sought to resolve the Motion for 

Partial Judgment and to Dismiss Petition. This is evident from the first sentence of the Order, which

states: "Before the Court is petitioner's Motion to Issue Partial Judgment and to Dismiss Petition filed on

August 16, 2002. . . ." No other pending motion, such as the motion for reconsideration, was adverted to

as being subject for resolution by the said Order.

Now, the Motion   for   Partial   Judgment  and   to  Dismiss   Petition seeks reliefs A and B — that China

International be awarded the project; and that the motion for reconsideration be dismissed. There is no

doubt that relief B was unequivocally granted by the trial court, with the following disposal:

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the

Petition is hereby DISMISSED.

SO ORDERED. 41

But did the trial court grant relief A that China International be awarded the project?

All told, and presently, and urgently, there is the need to implement the

PROJECTS in this petition so as not to affect the ODA funding, harnessed

through JBIC. More so, in addition, and a thoughtful consideration of pleadings

and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing,

respondent BAC has strayed from fairly applying the Bidding Laws, Guidelines,

Rules, and Regulations, and Bid Tender Documents and, as a matter of fairness,

and in the interest of justice, considering other bidders whose bids have been

evaluated by the Technical Working Group including the consultant, Nippon

Koie Company, Ltd., In association with the PKII and the Basic Team, Inc., to be

substantially responsive, the Honorable Simeon P. Datumanong must now

seriously consider and effect the award of Package 2, PHASE II, of the Agno

River Floor Control Project, as duly recommended by the Consultants and the

Technical Working Group, DPWH, to China International Water & Electric

Corporation being the lowest evaluated responsive bid. 42 (emphasis supplied)

Contrast this with Nolasco's prayer on the same relief in his Motion for Partial Judgment and to Dismiss 

Petition, thus:

WHEREFORE, in view of the foregoing premises, and in consideration of equity

and petitioner's moral obligation and in order to abbreviate the proceedings in

view of the need to implement the subject projects of this petition the soonest

possible time so an not to jeopardize the funding granted by the Overseas

Development Assistance (ODA) fund through the Japan Bank For International

Cooperation (JBIC), it is respectfully prayed unto this Honorable Court to issue

its partial judgment on the petition. An [sic] in view of the foregoing findings

that clear violation of bidding laws, rules and regulations, the respondents' Bid

Tender Documents, has been committed by the respondents members of the

BAC, and in fairness to the other bidder whose bids have been evaluated by the

Technical Working Group including the consultant, Nippon Koie Company, Ltd.,

in association with the PKIII and the Basic Team, Inc. to be substantially

responsive, the Bid of China International Water & Electric Corporation being

the lowest evaluated responsive bid must be awarded the project, package 2, 

Phase   II,   of   the  Agno  River   Flood  Control   Projects   as   recommended  by   the 

Consultants   and   the   Technical   Working   Group   of   the   respondents.   The 

respondent, Honorable Secretary Simeon Datumanong is hereby directed to take 

steps to attain this end. 43 (Emphasis supplied)

Unmistakably though, the controverted portion of the Order, urging the DPWH Secretary "to consider"

awarding the Project to China International does not form part of the dispositive portion or  fallo. What

should be deemed as the dispositive portion in this case is the final paragraph of the Resolution, which

reads: "WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the Petition is

hereby DISMISSED."

The Court recently explicated the contents of a proper dispositive portion in Velarde v.  Social Justice 

Society: 44

In a civil case as well as in a special civil action, the disposition should state

whether the complaint or petition is granted or denied, the specific relief

granted, and the costs. The following test of completeness may be applied.

First, the parties should know their rights and obligations. Second, they should

know how to execute the decision under alternative contingencies. Third, there

should be no need for further proceedings to dispose of the issues. Fourth, the

case should be terminated by according the proper relief. The "proper relief"

usually depends upon what the parties seek in their pleadings. It may declare

their rights and duties, command the performance of positive prestations, or

order them to abstain from specific acts. The disposition must also adjudicate

costs. 45

We have ruled before against recognizing statements in the body of a decision as part of the dispositive

portion. In Velarde, the respondents insisted that a statement by the trial court found on page ten (10)

of the fourteen (14)-page decision should be considered as part of the dispositive portion. The Court

disagreed, 46 and cited the precedent in Magdalena Estate, Inc. v. Hon. Caluag: 47

. . . The quoted finding of the lower court cannot supply deficiencies in the

dispositive portion. It is a mere opinion of the court and the rule is settled that

where there is a conflict between the dispositive part and the opinion, the

former must prevail over the latter on the theory that the dispositive portion is

the final order while the opinion is merely a statement ordering nothing. 48

In Contreras v. Felix, 49 the Court reasoned:

More to the point is another well-recognized doctrine, that the final judgment

as rendered is the judgment of the court irrespective of all seemingly contrary

statements in the decision. "A judgment must be distinguished from an opinion.

The latter is the informal expression of the views of the court and cannot prevail

against its final order or decision. While the two may be combined in one

instrument, the opinion forms no part of the judgment. So, . . . there is a

distinction between the findings and conclusions of a court and its Judgment.

While they may constitute its decision and amount to the rendition of a

judgment, they are not the judgment itself. They amount to nothing more than

an order for judgment, which must, of course, be distinguished from the

judgment." (1 Freeman on Judgments, p. 6.) At the root of the doctrine that the

premises must yield to the conclusion is perhaps, side by side with the needs of

writing finis to litigations, the recognition of the truth that "the trained intuition

of the judge continually leads him to right results for which he is puzzled to give

unimpeachable legal reasons." "It is an everyday experience of those who study

judicial decisions that the results are usually sound, whether the reasoning from

which the results purport to flow is sound or not." (The Theory of Judicial

Decision, Pound, 36 Harv. Law Review, pp. 9, 51.) It is not infrequent that the

grounds of a decision fail to reflect the exact views of the court, especially those

of concurring justices in a collegiate court. We often encounter in judicial

decisions, lapses, findings, loose statements and generalities which do not bear

on the issues or are apparently opposed to the otherwise sound and considered

result reached by the court as expressed in the dispositive part, so called, of the

decision. 50

Moreover, we are guided by the evident fact that the respondent-judge did not intend to make his

conclusions on who should be awarded the Project as part of the dispositive portion of his order. The

language deliberately employed in the order, "must now seriously consider and effect the award,"

indicates that the judge was hesitant to definitively grant the relief sought by Nolasco, which was that

the trial court award the bid to China International and direct Sec. Datumanong to take steps towards

this end. Instead, it stated that Sec. Datumanong "must now seriously consider and effect the award" to

China International. Undoubtedly, the word "must" is mandatory in character, but it is used in

conjunction with "consider". In short, the trial court noted that the DPWH Secretary "must think about"

effecting an award to China International.

Imagine if Nolasco had tried to judicially enforce this portion of the decision. Agents of the court would

be sent over to the DPWH offices to confront the DPWH Secretary. What else could they say but, "Sir,

have you seriously considered effecting the award to China International?" Of course, the DPWH

Secretary can reply, "Yes, but I decided to award the bid anyway to Daewoo," and such averment would

evince satisfactory compliance with the assailedOrder. After all, the Order did not require that the DPWH

award the bid to China International, only that the DPWH consider such a measure.

These premises considered, we cannot agree with Petitioner' characterization of this portion of

the Order as granting affirmative relief in favor of China International. 51 No such affirmative relief was

rendered in favor of China International, as such was not included as part of the  fallo. Nor was there an

evident intent on the part of the judge to grant such affirmative relief, on account of the language he

employed, recommendatory in character as it ultimately was.

Still, if the Court were to construe this assailed portion of the Order as belonging to the dispository part,

such disposition, effectively concluding that China International and not DAEWOO should be awarded

the bid, would run contrary to law.

It must be remembered that Nolasco's prayer that the trial court award the bid to China International

utilized as legal basis the power of the trial courts to issue partial or separate judgments. Yet by any

objective standard, there is no merit in allowing for such a relief in this case. Section 5, Rule 36 of the

Rules of Civil Procedure, which governs separate judgments, states:

Sec. 5. Separate   judgments. — When more than one claim for relief is

presented in an action, the court, at any stage, upon a determination of the

issues material to a particular claim and all counterclaims arising out of the

transaction or occurrence which is the subject matter of the claim, may render a

separate judgment disposing of such claim. The judgment shall terminate the

action with respect to the claim so disposed of and the action shall proceed as

to the remaining claims. . . .

On paper, Nolasco's petition prays for two reliefs, that the petitioner be restrained from awarding the

Project to Daewoo, and that Daewoo be disqualified as a bidder and its bid be rejected. Yet these reliefs

are obviously intertwined for the allowance of one would necessarily lead to the grant of the other. The

multiple reliefs referred to in the provision refer to those sufficiently segregate from each other that the

allowance of one at a preliminary stage will not preclude litigation on the merits of the others.

More importantly, the rule is explicit that partial judgment with regards one of the reliefs is warranted

only after "a determination of the issues material to a particular claim and all counterclaims arising out

of the transaction or occurrence which is the subject matter of the claim." Herein, the partial judgment

was sought even before the respondents had the chance to file their answer to the petition. Moreover, it

was prayed for at a point when, at even such a preliminary stage, the claimant was actually somehow

able to already present evidence in support of his claim, but before the respondents had the chance to

rebut this claim or support countervailing evidence.

At bare minimum, the allowance of a partial judgment at this stage would constitute a denial of

constitutional due process. It would condemn before hearing, and render judgment before trial. 52 Had

indeed partial judgment been granted in the assailed Order, it would have been rendered before the

Petitioner were afforded the opportunity to rebut the evidence of Nolasco, or to present their own

countervailing evidence. While the allowance of partial judgments may expedite the litigation of claims,

it cannot be sanctioned at a stage when the trial judge has not had the opportunity to hear all sides to

the claim. In fact, it was highly imprudent for the respondent judge to have concluded, as he did in

his Order, that it was an admitted fact that the BAC had strayed from fairly applying the Bidding Laws,

Guidelines, Rules, and Regulations, and Bid Tender Documents, considering that the Petitioner had not

even filed an answer or been allowed the opportunity to present any evidence on its behalf.

And there is the fact that as of the moment the assailed Order was rendered, Nolasco's petition had

already been dismissed by the earlier Order dated 27 March 2002. In order that the prayer for partial

judgment could have been granted by the RTC, it would have been first necessary to reinstate Nolasco's

dismissed petition, such as by granting Nolasco's motion for reconsideration. The respondent judge

never reinstated the petition, which has stood dismissed since 27 March 2002. Thus, none of the reliefs

prayed for by Nolasco in his Petition, much less the prayer for partial judgment, could have ever been

granted by the respondent-judge.

Thus, the dispositive portion of the assailed Order correctly limited itself to the denial of Nolasco's

motion for reconsideration without allowing any other relief that Nolasco prayed for in his Motion for 

Partial Judgment and to Dismiss Petition. Had the judge instead opted to grant partial judgment and

direct the award of the Project to China International, the Court would not hesitate to strike down such

award. Yet the judge did not act so unequivocally, and merely advised that the DPWH Secretary should

consider such an option. Perhaps the propriety of such advice can be appropriately questioned, in light of

our view that such conclusion was derived without allowing the DPWH or an injured party such as

Daewoo opportunity to be heard and to present their own evidence. Nonetheless, such advisory opinion

has no binding effect, especially if construed as directing the award of the Project to China International.

Accordingly, for that reason alone and with the necessary clarifications made, there is no reason to set

aside the assailed Order dated 6 September 2002, especially considering that its final disposition

dismissing Nolasco's motion for reconsideration is ultimately correct.

Nolasco's petition had been correctly dismissed by the RTC on two grounds: that Nolasco's general

interest as a taxpayer was not sufficient to establish any direct injury to him should the Project be

awarded to Daewoo; and that the petition was a suit against the State, which may not prosper without

its consent. Given that none of the parties are actually praying that Nolasco's motion for reconsideration

be granted or that Nolasco's petition be reinstated, we need not review in depth the rationale of the RTC

in dismissing Nolasco's petition. The mere invocation of standing as a tax payer does not mean that in

each and every instance where such a ground is invoked courts are left with no alternative except to

hear the parties, for the courts are vested with discretion whether or not a taxpayer's suit should be

entertained. 53 We likewise find no error on the part of the RTC when it cited as basis for the dismissal of

Nolasco's petition, our ruling in Bugnay Construction & Development Corp. v. Laron 54 that the taxpayer-

plaintiff must specifically prove that he has sufficient interest in preventing the illegal expenditure of

money raised by taxation, and that he will sustain a direct injury as a result of the enforcement of the

questioned statute or contract. 55

We also find no error on the part of the RTC in regarding Nolasco's petition as a suit against the State

without the latter's consent. An unincorporated government agency such as the DPWH is without any

separate juridical personality of its own and hence enjoys immunity from suit. 56 Even in the exercise of

proprietary functions incidental to its primarily governmental functions, an unincorporated agency still

cannot be sued without its consent. 57Moreover, it cannot be said that the DPWH was deemed to have

given its consent to be sued by entering into a contract, for at the time the petition was filed by Nolasco,

the DPWH had not yet entered into a contract with respect to the Project.

Surprisingly, and with no apparent benefit on its behalf, Petitioner imputes error on the part of the RTC

when the court, in the fallo of the assailed Order, directed the dismissal of the "Motion for

Reconsideration of the Petition," pointing out that such pleading was never filed by Nolasco, 58 and

accordingly prays "that the order dismissing the alleged Motion for Reconsideration of Petition be

declared null and void." 59 However, Nolasco did file a "Motion for Reconsideration" to the order

dismissing the petition, and in his Motion for Partial Judgment and to Dismiss Petition, Nolasco similarly

prays that "the Motion for Reconsideration of the Petition be dismissed." We have no doubt, infelicitous

wording aside, that the "Motion for Reconsideration of the Petition" adverted to in the fallo refers to

Nolasco's own motion for reconsideration, the denial of which Nolasco also prayed for in the Motion for 

Partial Judgment and to Dismiss Petition that was the subject of the assailed Order. And as just discussed,

the denial of the Nolasco's motion for reconsideration was in order.

Notably, this Court has not engaged in a review of the award of the Project to Daewoo. Notwithstanding

the fact that the parties have prayed that the Court either effect the award of the Project to Daewoo or

direct the award to China International, the Court deems it improper to conduct a de novo factual finding

on which entity should be awarded the project. The Court is not a trier of facts, and it would be offensive

to established order and the hierarchy of courts for this Court to initiate such factual review. Had the RTC

conducted a valid trial on the merits, perhaps this Court could eventually review the lower court's

findings on the matter, but the RTC properly dismissed the case, and it would be unbecoming on the part

of this Court to suddenly engage in an initial trial on the merits on appellate review.

This is a stance not borne out of hesitance to tackle the issue, or avoid the sort of ruling that may satisfy

one party or the other as "definitive," but arrived at out of necessity to preserve the integrity of our civil

procedure, including the hierarchy of our courts and the limits of this Court's power of judicial review.

Precisely, the messy milieu presented before us occurred because the RTC and Nolasco compromised

our court processes to destructive ends, and it is this Court's function to reassert the rules, to restore

order, and not compound to the sloppiness by itself violating procedural order.

The executive department is acknowledged to have wide latitude to accept or reject a bid, or even after

an award has been made, to revoke such award. From these actions taken, the court will not generally

interfere with the exercise of discretion by the executive department, unless it is apparent that the

exercise of discretion is used to shield unfairness or injustice. 60 This policy of non-interference can

hardly be countermanded by reason of a claim anchored on an unofficial document such as the

"Confidential Reports from an Unnamed DPWH Consultant" presented by Nolasco, especially when the

probative value thereof has hardly been passed upon by a proper trier of facts.

More importantly, the Court, the parties, and the public at large are bound to respect the fact that

official acts of the Government, including those performed by governmental agencies such as the DPWH,

are clothed with the presumption of regularity in the performance of official duty. and cannot be

summarily, prematurely and capriciously set aside. 61 Such presumption is operative not only upon the

courts, but on all persons, especially on those who deal with the government on a frequent basis. There

is perhaps a more cynical attitude fostered within the popular culture, or even through anecdotal

traditions. Yet, such default pessimism is not embodied in our system of laws, which presumes that the

State and its elements act correctly unless otherwise proven. To infuse within our legal philosophy a

contrary, gloomy pessimism would assure that the State would bog down, wither and die.

Instead, our legal framework allows the pursuit of remedies against errors of the State or its components

available to those entitled by reason of damage or injury sustained. Such litigation involves

demonstration of legal capacity to sue or be sued, an exhaustive trial on the merits, and adjudication

that has basis in duly proven facts and law. No proper and viable legal challenge has emerged impugning

the award of the Project by DPWH to Daewoo, Nolasco'sPetition being woefully insufficient to that

purpose. It is tragic perhaps that the irresponsible actions of Judge Nabong, and their ultimate

embodiment in his obiter dictain the assailed Order, somehow fostered the illusion that there was a

serious legal cloud hovering over the award by DPWH to Daewoo. We rule that there is none, that the

RTC acted correctly in granting the Petitioner's motion to dismiss Nolasco's Petition and in denying the

subsequent motion for reconsideration to the dismissal. These are the only relevant matters properly

brought for judicial review and everything else is unnecessary verbiage.

For the same reason, we cannot allow the Petitioner's prayer for damages against Nolasco. The matter of

damages is one that has to be properly litigated before the triers of fact, and certainly has not been

passed upon by the RTC. Yet it does not necessarily follow that no liability arises from the filing of the

initiatory petition, or the facts succeeding thereto. It does not escape our attention that on 2 April 2002,

the OSG was served a spurious order purportedly giving due course to Nolasco's petition and granting

the sought-for preliminary injunction. This incident cannot pass without comment by this Court, which

cannot sanction the circulation of fake judicial orders, and should be duly investigated by the National

Bureau of Investigation for appropriate action.

Finally, it likewise appears that Judge Nabong, by issuing the temporary restraining order dated 4 March

2002, violated Section 6 of Republic Act No. 8975, which penalizes the judge who issues a temporary

restraining order enjoining the bidding or awarding of a contract or project of the national

government. 62 Yet to his credit, Judge Nabong recalled the TRO upon realizing his error, thus a

REPRIMAND should suffice under the circumstances.

WHEREFORE, premises considered, the Petition is DENIED. The assailed Order dated 6 September 2004 is

AFFIRMED, with the QUALIFICATION that last paragraph of the body of the Order, which states that the

DPWH Secretary "must now seriously consider and effect the award of Package 2, Phase II of the Agno

River Flood Control Project. . . " is OBITER DICTA and hence of no binding force.

The National Bureau of Investigation is hereby DIRECTED to investigate the circumstances surrounding

the alleged spurious order dated 22 March 2002 served on the Office of the Solicitor General and

determine possible criminal liabilities for the creation of such forged document.

Judge Juan Nabong is hereby REPRIMANDED for failure to observe Section 6 of Republic Act No. 8975,

and WARNED that a subsequent repetition of the same shall be dealt with more severely.

No costs.

SO ORDERED.

FIRST DIVISION

[G.R. No. 145328. March 23, 2006.]

EDUARDO F. HERNANDEZ, MA. ENCARNACION R. LEGASPI, JAIME BLANCO,

JR., ENRIQUE BELO, CARLOS VIAPLANA, CARL FURER, VIVENCIO TINIO,

MICHAEL BRIGGS, ROSA CARAM, FAUSTO PREYSLER, ROBERT KUA, GEORGE

LEE, GUILLERMO LUCHANGCO, PETER DEE, LUISA MARQUEZ, ANGELITA LILLES,

JUAN CARLOS, HOMER GO, AMADEO VALENZUELA, EMILIO CHING, ANTONIO

CHAN, MURLI SABNANI, MARCOS ROCES, RAYMUNDO FELICIANO, NORMA

GAFFUD, ALF HOLST, LOURDES P. ROQUE, MANUEL DY, RAUL FERNANDEZ,

VICTORIA TENGCO, CHI MO CHENG, BARANGAY DASMARIÑAS, AND HON.

FRANCISCO B. IBAY, petitioners, vs. NATIONAL POWER

CORPORATION, respondent.

D E C I S I O N

CHICO-NAZARIO, J p:

Although Presidential Decree No. 1818 prohibits any court from issuing injunctions in cases involving

infrastructure projects, the prohibition extends only to the issuance of injunctions or restraining orders

against administrative acts in controversies involving facts or the exercise of discretion in technical cases.

On issues clearly outside this dimension and involving questions of law, this Court declared that courts

could not be prevented from exercising their power to restrain or prohibit administrative acts. 1 In such

cases, let the hammer fall and let it fall hard.

With health risks linked to exposure to electromagnetic radiation as their battle cry, petitioners, all

residents of Dasmariñas Village, are clamoring for the reversal of the decision 2 dated 3 May 2000 of

the Court of Appeals in CA-G.R. SP No. 57849 as well as the resolution dated 27 September 2000,

denying their motion for reconsideration.

The assailed decision 3 of the Court of Appeals reversed the order of the Regional Trial Court of Makati,

issuing a writ of preliminary injunction against respondent National Power Corporation (NAPOCOR) to

stay the latter from energizing and transmitting high voltage electric current through its cables erected

from Sucat, Parañaque to Araneta Ave., Quezon City.

But, first, the facts:

Sometime in 1996, NAPOCOR began the construction of 29 decagon-shaped steel poles or towers with a

height of 53.4 meters to support overhead high tension cables in connection with its 230 Kilovolt Sucat-

Araneta-Balintawak Power Transmission Project. Said transmission line passes through the Sergio

Osmeña, Sr. Highway (South Superhighway), the perimeter of Fort Bonifacio, and Dasmariñas Village

proximate to Tamarind Road, where petitioners' homes are.

Said project later proved to be petitioners' bane of existence.

Alarmed by the sight of the towering steel towers, petitioners scoured the internet on the possible

adverse effects that such a structure could cause to their health and well-being. Petitioners got hold of

published articles and studies linking the incidence of a fecund of illnesses to exposure to

electromagnetic fields. These illnesses range from cancer to leukemia.

Petitioners left no stones unturned to address their malady. They aired this growing concern to the

NAPOCOR, which conducted a series of meetings with them.

NAPOCOR received flak from Representative Francis Joseph G. Escudero, who in his Privilege Speech

dated 10 May 1999, denounced the cavalier manner with which NAPOCOR ignored safety and

consultation requirements in the questioned project.

Petitioners brought their woes to the attention of Rep. Arnulfo Fuentebella, Chairman of the House

Committee on Energy, wherein NAPOCOR was asked to shed light on the petitioners' problem. In a letter

dated 8 November 1999, NAPOCOR President Federico Puno stated that NAPOCOR was still in the

process of coming up with a "win-win" solution to the concerns of the Dasmariñas Village and Forbes

Park residents. 4

In a letter dated 10 August 1999 addressed to Congressman Arnulfo P. Fuentebella, NAPOCOR's

President wrote:

We have discussed the matter with the Dasmariñas and Forbes residents and

we have come up with four (4) options on how to address the problem, to

wit: IaTSED

Option Cost

Option 1: Transfer the line to Lawton Avenue P111.84 million

(proposal of Dasmariñas/Forbes)

Option 2: Maintain 12 meters distance along P77.60 million

the village

Option 3: Construct an underground line P482.00 million

Option 4: Reroute along C-5 and South Luzon P1,018.83 million

Expressway (combination of overhead

and underground) 5

Negotiations between petitioners and the NAPOCOR reached an impassé, with petitioners vying for

the relocation of the transmission lines to Fort Bonifacio on one hand, and the NAPOCOR insisting on a

12-meter easement widening, on the other. 6

Thus, petitioners, on 9 March 2000 filed a Complaint 7 for Damages with Prayer for the Issuance of a

Temporary Restraining Order and/or a Writ of Preliminary Injunction against NAPOCOR. Harping on the

hazardous effects of exposure to electromagnetic radiation to the health and safety to themselves and

their families, petitioners, through the instant case, sought what they had failed to achieve through

amicable means with NAPOCOR and prayed, inter   alia, for damages and the relocation of the

transmission lines to Lawton Avenue, Fort Bonifacio.

On 13 March 2000, Judge Francisco B. Ibay issued an order 8 in Civil Case No. 00-352, which temporarily

restrained the respondent from energizing and transmitting high voltage electric current through the

said project. The pertinent portion of the said order reads:

Acting on the plaintiffs' "Urgent Omnibus Motion," it appearing that the subject

area will be energized by midnight tonight based on a report taken from

Representative Joker P. Arroyo by plaintiffs' counsel, so as not to render moot

and academic the instant case, as prayed for, defendant National Power

Corporation is ordered to maintain the status quo and/or be enjoined from

energizing and transmitting high voltage electric current through its cables for

forty eight (48) hours starting 4 o'clock in the afternoon today and ending 4

o'clock in the afternoon of 15 March 2000. 9

By order 10 of 15 March 2000, the trial court extended the restraining order for 18 more days.

NAPOCOR filed a Petition for Certiorari with Prayer for Temporary Restraining Order and Preliminary

Injunction with the Court of Appeals assailing the above order by the trial court. Alluding to Presidential

Decree No. 1818 (1981), "Prohibiting Courts from Issuing Restraining Orders or Preliminary Injunctions in 

Cases   Involving   Infrastructure   and   Natural   Resource   Development   Projects   of,   and   Public   Utilities 

Operated by, the Government," particularly Sec. 1, NAPOCOR stalwartly sought the dismissal of the case

on the ground of lack jurisdiction. Presidential Decree No. 1818 provides:

Section 1.No Court in the Philippines shall have jurisdiction to issue any

restraining order, preliminary injunction or preliminary mandatory injunction in

any case, dispute, or controversy involving an infrastructure project, or a

mining, fishery, forest or other natural resource development project of the

government, or any public utility operated by the government, including among

other public utilities for transport of the goods or commodities, stevedoring and

arrastre contracts, to prohibit any person or persons, entity or government

official from proceeding with or continuing the execution or implementation of

any such project, or the operation of such public utility or pursuing any lawful

activity necessary for such execution, implementation or operation.

In the interregnum, by order dated 3 April 2000, the trial court ordered the issuance of a writ of

preliminary injunction against NAPOCOR. 11 The trial court articulated that an injunction was necessary

to stay respondent NAPOCOR's activation of its power lines due to the possible health risks posed to the

petitioners. Asserting its jurisdiction over the case, the trial court was of the view that Presidential

Decree No. 1818 and jurisprudence proscribing injunctions against infrastructure projects do not find

application in the case at bar because of the health risks involved.

The trial court, thus, enjoined the NAPOCOR from further preparing and installing high voltage cables to

the steel pylons erected near petitioners' homes and from energizing and transmitting high voltage

electric current through said cables while the case is pending final adjudication, upon posting of the bond

amounting to P5,000,000.00 executed to the effect that petitioners will pay all the damages the

NAPOCOR may sustain by reason of the injunction if the Court should finally decide that the petitioners

are not entitled thereto. 12

In light of the foregoing order of the trial court, the petition which NAPOCOR filed with the Court of

Appeals was later amended to include the prayer for the nullification and injunction of the Order dated 3

April 2000 of the trial court.

In the challenged decision of 3 May 2000, the Court of Appeals reversed the trial court's order, with the

following fallo: ECHSDc

WHEREFORE, premises considered, the instant petition for certiorari is hereby

GRANTED. The assailed orders of the respondent court, dated March 13, 2000

and April 3, 2000, are hereby REVERSED and SET ASIDE. 13

In the Court of Appeals' rationale, the proscription on injunctions against infrastructure projects of the

government is clearly mandated by the above-quoted Section 1 of Presidential Decree No. 1818, as

reiterated by the Supreme Court in its Circulars No. 2-91 and No. 13-93, dated 15 March 1991 and 5

March 1993, respectively.

As their motion for reconsideration was met with similar lack of success, petitioners, in a last attempt at

vindication, filed the present petition for review on the following arguments:

I.

TEMPORARY RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS WERE

PURPOSELY DESIGNED TO ADDRESS MATTERS OF EXTREME URGENCY WHERE

THERE IS PROBABILITY OF GRAVE INJUSTICE AND IRREPARABLE INJURY. 14

II.

THE RULE ON PRELIMINARY INJUNCTION MERELY REQUIRES THAT UNLESS

RESTRAINED, THE ACT COMPLAINED OF WILL PROBABLY WORK INJUSTICE TO

THE APPLICANT OR PROBABLY VIOLATE HIS RIGHTS AND TENDS TO RENDER THE

JUDGMENT INEFFECTUAL. 15 (Emphasis in the original.)

Fundamental to the resolution of the instant petition is the issue of whether or not the trial court may

issue a temporary restraining order and preliminary injunction to enjoin the construction and operation

of the 29 decagon-shaped steel poles or towers by the NAPOCOR, notwithstanding Presidential Decree

No. 1818.

Petitioners clutch on their stand that Presidential Decree No. 1818 could not be construed to apply to

cases of extreme urgency as in the present case when no less than the rights of the petitioners to health

and safety hangs on the balance.

We find the petition to be imbued with merit.

Presidential Decree No. 1818 was issued on 16 January 1981, prohibiting judges from issuing restraining

orders against government infrastructure projects. In part, the decree says, "No court in the Philippines

shall have jurisdiction to issue any restraining order, preliminary injunction or preliminary order,

preliminary mandatory injunction in any case, dispute or controversy involving an infrastructure project."

Realizing the importance of this decree, this Tribunal had issued different circulars to implement this

particular law.

Presidential Decree No. 1818 16 prohibits courts from issuing injunctions against government

infrastructure projects. In Garcia v. Burgos, 17 Presidential Decree No. 1818 was held to prohibit courts

from issuing an injunction against any infrastructure project in order not to disrupt or hamper the pursuit

of essential government projects or frustrate the economic development effort of the nation.

While its sole provision would appear to encompass all cases involving the implementation of projects

and contracts on infrastructure, natural resource development and public utilities, this rule, however, is

not absolute as there are actually instances when Presidential Decree No. 1818 should not find

application. In a spate of cases, this Court declared that although Presidential Decree No. 1818 prohibits

any court from issuing injunctions in cases involving infrastructure projects, the prohibition extends only

to the issuance of injunctions or restraining orders against administrative acts in controversies

involving facts or the exercise of discretion in technical cases. On issues clearly outside this dimension

and involving questions of law, this Court declared that courts could not be prevented from exercising

their power to restrain or prohibit administrative acts. 18

In the case at bar, petitioners sought the issuance of a preliminary injunction on the ground that the

NAPOCOR Project impinged on their right to health as enshrined in Article II, Section 15 of the 1987

Constitution, which provides:

Sec. 15.The State shall protect and promote the right to health of the people

and instill consciousness among them.

To boot, petitioners, moreover, harp on respondent's failure to conduct prior consultation with them, as

the community affected by the project, in stark violation of Section 27 of the Local Government Code

which provides: "no project or program shall be implemented by government authorities unless the

consultations mentioned are complied with, and prior approval of the Sanggunian concerned is

observed."

From the foregoing, whether there is a violation of petitioners' constitutionally protected right to health

and whether respondent NAPOCOR had indeed violated the Local Government Code provision on prior

consultation with the affected communities are veritable questions of law that invested the trial court

with jurisdiction to issue a TRO and subsequently, a preliminary injunction. As such, these questions of

law divest the case from the protective mantle of Presidential Decree No. 1818.

Moreover, the issuance by the trial court of a preliminary injunction finds legal support in Section 3 of

Rule 58 of the Rules of Court which provides:

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

injunction may be granted when it is established: cECaHA

(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 actsprobably in

violation of the rights of the applicant respecting the subject of the action or

proceeding, and tending to render the judgment ineffectual. (3a) (Emphasis

supplied.)

The rule on preliminary injunction merely requires that unless restrained, the act complained of

will probably violate his rights and tend to render the judgment ineffectual.

Here, there is adequate evidence on record to justify the conclusion that the project of

NAPOCOR probably imperils the health and safety of the petitioners so as to justify the issuance by the

trial court of a writ of preliminary injunction.

Petitioners adduced in evidence copies of studies linking the incidence of illnesses such as cancer and

leukemia to exposure to electromagnetic fields. The records bear out, to boot, a copy of a brochure of

NAPOCOR regarding its Quezon Power Project from which will be supplying NAPOCOR with the power

which will pass through the towers subject of the controversy. The NAPOCOR brochure provides that

because of the danger concomitant with high voltage power, Philippine laws mandate that the power

lines should be located within safe distances from residences. And the Quezon Power Project mandates

an easement of 20 meters to the right and 20 meters to the left which falls short of the 12-meter

easement that NAPOCOR was proposing to petitioners.

Likewise on record, are copies of letters of NAPOCOR President Federico Puno to Rep. Arnulfo

Fuentebella, Chairman of the House Committee on Energy, stating updates on the negotiations being

undertaken by the NAPOCOR and the Dasmariñas Village and Forbes Park residents. Also on file is the

Privilege Speech dated 10 May 1999 of Representative Francis Joseph G. Escudero, who denounced the

cavalier manner with which NAPOCOR ignored safety and consultation requirements in the questioned

project.

With a member of Congress denouncing the subject project of NAPOCOR because of the very same

health and safety ills that petitioners now hew to in this petition, and with documents on record to show

that NAPOCOR made representations to petitioners that they are looking into the possibility of relocating

the project, added to the fact that there had been series of negotiations and meetings between

petitioners and NAPOCOR as well as related agencies, there is ample indicia to suggest to the mind of the

court that the health concerns of the petitioners are, at the very least, far from imaginary.

Indeed, if there is no cause for concern, NAPOCOR would not have been stirred to come up with options

to address the woes of petitioners, nor would Congressman Escudero have fired away those strong

words of censure, assailing what to Congressman Escudero smacks of a "cavalier manner by which the

NAPOCOR has responded to earnest pleas for a review of its practice of installing massive pylons

supporting high tension cables in densely populated areas." 19

True, the issue of whether or not the transmission lines are safe is essentially evidentiary in nature, and

pertains to the very merits of the action below. In fact, petitioners recognize that the conclusiveness of

their life, health and safety concerns still needs to be proved in the main case below and they are

prepared to do so especially in the light of some studies cited by respondent that yield contrary results in

a disputed subject. Despite the parties' conflicting results of studies made on the issue,

the possibility that the exposure to electromagnetic radiation causes cancer and other disorders is still,

indeed, within the realm of scientific scale of probability.

Equally important, we take judicial notice that the area alluded to as location of the NAPOCOR project is

a fragile zone being proximate to local earthquake faults, particularly the Marikina fault, among other

zones. This is not to mention the risks of falling structures caused by killer tornadoes and super

typhoons, the Philippines, especially Central Luzon, being situated along the typhoon belt.

Moreover, the Local Government Code, requires conference with the affected communities of a

government project. NAPOCOR, palpably, made a shortcut to this requirement. In fact, there appears a

lack of exhaustive feasibility studies on NAPOCOR's part before making a go with the project on hand;

otherwise, it should have anticipated the legal labyrinth it is now caught in.

These are facts, which the trial court could not ignore, and form as sufficient basis to engender the cloud

of doubt that the NAPOCOR project could, indeed, endanger the lives of the petitioners. A preliminary

injunction is likewise justified prior to a final determination of the issues of whether or not NAPOCOR

ignored safety and consultation requirements in the questioned project. Indeed, the court

could, nay should, grant the writ of preliminary injunction if the purpose of the other party is to shield a

wrongdoing. A ruling to the contrary would amount to an erosion of judicial discretion.

After all, for a writ of preliminary injunction to be issued, the Rules do not require that the act

complained of be in violation of the rights of the applicant. Indeed, what the Rules require is that the act

complained of be probably in violation of the rights of the applicant. Under the Rules of Court,

probability is enough basis for injunction to issue as a provisional remedy, which is different from

injunction as a main action where one needs to establish absolute certainty as basis for a final and

permanent injunction. EADSIa

Pending the final determination of the trial court on the main case for damages, of whether or not the

NAPOCOR Project infringes on petitioners' substantive right to health and pending determination of the

question of whether there was non-observance of the prior-consultation proviso under the Local

Government Code, it is prudent to preserve the status quo. In Phil. Ports Authority v. Cipres Stevedoring 

& Arrastre, Inc., 20 we held:

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

judgment of final order, requiring a party, court, agency, or person to refrain

from a particular act or acts. It is a preservative remedy to ensure the

protection of a 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 of a litigation would be useless as far as the party

applying for the writ is concerned.

At times referred to as the "Strong Arm of Equity," we have consistently ruled

that there is no power the exercise of which is more delicate and which calls for

greater circumspection than the issuance of an injunction. It should only be

extended in cases of great injury where courts of law cannot afford an adequate

or commensurate remedy in damages; "in cases of extreme urgency; where the 

right is very clear; where considerations of relative inconvenience bear strongly 

in   complainant's   favor;   where   there   is   a   willful   and   unlawful   invasion   of 

plaintiff's   right   against   his   protest   and   remonstrance,   the   injury   being   a 

continuing one, and where the effect of the mandatory injunction is rather to 

reestablish and maintain a preexisting continuing relation between the parties, 

recently and arbitrarily interrupted by the defendant, than to establish a new 

relation." (Emphasis supplied.)

What is more, contrary to respondents' assertion, there is not a single syllable in the circulars issued by

this Court enjoining the observance of Presidential Decree No. 1818, which altogether and absolutely,

ties the hands of the courts from issuing a writ of preliminary injunction. What Circular 2-91 21 dated 15

March 1991 seeks to enjoin is the indiscriminate issuance of court injunctions. The same holds for

Circular 13-93 22 dated 5 March 1993 and Circular 68-94. 23 And, in Circular No. 7-99, judges are

enjoined to observe utmost caution, prudence and judiciousness in the issuance of temporary restraining

order and in the grant of writs of preliminary injunction to avoid any suspicion that its issuance or grant

was for consideration other than the strict merits of the case. 24

There is not a hint from the foregoing circulars suggesting an unbridled prohibition against the issuance

of temporary restraining orders or preliminary injunctions.

In sum, what Presidential Decree No. 1818 aims to avert is the untimely frustration of government

infrastructure projects, particularly by provisional remedies, to the detriment of the greater good by

disrupting the pursuit of essential government projects or frustrate the economic development effort of

the nation. Presidential Decree No. 1818, however, was not meant to be a blanket prohibition so as to

disregard the fundamental right to health, safety and well-being of a community guaranteed by the

fundamental law of the land. 25

Lest we be misconstrued, this decision does not undermine the purpose of the NAPOCOR project which

is aimed towards the common good of the people. But, is the promotion of the general welfare at

loggerheads with the preservation of the rule of law? We submit that it is not. 26

In the present case, the far-reaching irreversible effects to human safety should be the primordial

concerns over presumed economic benefits per se as alleged by the NAPOCOR.

Not too long ago, the Court, in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village 

Association,   Inc., 27 upheld the validity of the writ of preliminary injunction issued by the Court of

Appeals enjoining the implementation of the Metropolitan Manila Development Authority's proposed

action of opening of the Neptune Street to public vehicular traffic. We were categorical —

Not infrequently, the government is tempted to take legal shortcuts to solve

urgent problems of the people. But even when government is armed with the

best of intention, we cannot allow it to run roughshod over the rule of law.

Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA

to open for public use a private road in a private subdivision. While we hold that

the general welfare should be promoted, we stress that it should not be

achieved at the expense of the rule of law. 28

In hindsight, if, after trial, it turns out that the health-related fears that petitioners cleave on to have

adequate confirmation in fact and in law, the questioned project of NAPOCOR then suffers from a

paucity of purpose, no matter how noble the purpose may be. For what use will modernization serve if it

proves to be a scourge on an individual's fundamental right, not just to health and safety, but, ostensibly,

to life preservation itself, in all of its desired quality?

WHEREFORE, the petition is GRANTED. The decision dated 3 May 2000 of the Court of Appeals in CA-G.R.

SP No. 57849 is REVERSED as well as the resolution dated 27 September 2000. The Order dated 3 April

2000 of the Regional Trial Court of Makati in Civil Case No. 00-352 is hereby REINSTATED. No

pronouncement as to costs

SO ORDERED. IAEcCa

FIRST DIVISION

[G.R. No. 176657. September 1, 2010.]

DEPARTMENT OF FOREIGN AFFAIRS and BANGKO SENTRAL NG

PILIPINAS, petitioners, vs. HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE

PRESIDING JUDGE OF BRANCH 71 OF THE REGIONAL TRIAL COURT IN PASIG

CITY and BCA INTERNATIONAL CORPORATION, respondents.

DECISION

LEONARDO-DE CASTRO, J p:

Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the Rules of Court with a

prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction filed by

petitioners Department of Foreign Affairs (DFA) and Bangko Sentral ng Pilipinas (BSP). Petitioners pray

that the Court declare as null and void the Order 1 dated February 14, 2007 of respondent Judge Franco

T. Falcon (Judge Falcon) in Civil Case No. 71079, which granted the application for preliminary injunction

filed by respondent BCA International Corporation (BCA). Likewise, petitioners seek to prevent

respondent Judge Falcon from implementing the corresponding Writ of Preliminary Injunction dated

February 23, 2007 2 issued pursuant to the aforesaid Order.

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

Being a member state of the International Civil Aviation Organization (ICAO), 3 the Philippines has to

comply with the commitments and standards set forth in ICAO Document No. 9303 4 which requires the

ICAO member states to issue machine readable travel documents (MRTDs) 5 by April 2010.

Thus, in line with the DFA's mandate to improve the passport and visa issuance system, as well as the

storage and retrieval of its related application records, and pursuant to our government's ICAO

commitments, the DFA secured the approval of the President of the Philippines, as Chairman of the

Board of the National Economic and Development Authority (NEDA), for the implementation of the

Machine Readable Passport and Visa Project (the MRP/V Project) under the Build-Operate-and-Transfer

(BOT) scheme, provided for by Republic Act No. 6957, as amended by Republic Act No. 7718 (the BOT

Law), and its Implementing Rules and Regulations (IRR). Thus, a Pre-qualification, Bids and Awards

Committee (PBAC) published an invitation to pre-qualify and bid for the supply of the needed machine

readable passports and visas, and conducted the public bidding for the MRP/V Project on January 10,

2000. Several bidders responded and BCA was among those that pre-qualified and submitted its

technical and financial proposals. On June 29, 2000, the PBAC found BCA's bid to be the sole complying

bid; hence, it permitted the DFA to engage in direct negotiations with BCA. On even date, the PBAC

recommended to the DFA Secretary the award of the MRP/V Project to BCA on a BOT

arrangement. DHTECc

In compliance with the Notice of Award dated September 29, 2000 and Section 11.3, Rule 11 of the IRR

of the BOT Law, 6 BCA incorporated a project company, the Philippine Passport Corporation (PPC) to

undertake and implement the MRP/V Project.

On February 8, 2001, a Build-Operate-Transfer Agreement 7 (BOT Agreement) between the DFA and PPC

was signed by DFA Acting Secretary Lauro L. Baja, Jr. and PPC President Bonifacio Sumbilla. Under the

BOT Agreement, the MRP/V Project was defined as follows:

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

undertaken in the fulfillment of the Machine Readable Passport and Visa Project

as defined in the Request for Proposals (RFP), a copy of which is hereto attached

as Annex A, including but not limited to project financing, systems

development, installation and maintenance in the Philippines and Foreign

Service Posts (FSPs), training of DFA personnel, provision of all project

consumables (related to the production of passports and visas, such as printer

supplies, etc.), scanning of application and citizenship documents, creation of

data bases, issuance of machine readable passports and visas, and site

preparation in the Central Facility and Regional Consular Offices (RCOs)

nationwide. 8

On April 5, 2002, former DFA Secretary Teofisto T. Guingona and Bonifacio Sumbilla, this time as BCA

President, signed an Amended BOT Agreement 9in order to reflect the change in the designation of the

parties and to harmonize Section 11.3 with Section 11.8 10 of the IRR of the BOT Law. The Amended BOT

Agreement was entered into by the DFA and BCA with the conformity of PPC.

The two BOT Agreements (the original version signed on February 8, 2001 and the amended version

signed April 5, 2002) contain substantially the same provisions except for seven additional paragraphs in

the whereas clauses and two new provisions — Section 9.05 on Performance and Warranty Securities

and Section 20.15 on Miscellaneous Provisions. The two additional provisions are quoted below:

Section 9.05.The PPC has posted in favor of the DFA the performance security

required for Phase 1 of the MRP/V Project and shall be deemed, for all intents

and purposes, to be full compliance by BCA with the provisions of this Article

9. STcAIa

xxx xxx xxx

Section 20.15.It is clearly and expressly understood that BCA may assign, cede

and transfer all of its rights and obligations under this Amended BOT Agreement

to PPC, as fully as if PPC is the original signatory to this Amended BOT

Agreement, provided however that BCA shall nonetheless be jointly and

severally liable with PPC for the performance of all the obligations and liabilities

under this Amended BOT Agreement. 11

Also modified in the Amended BOT Agreement was the Project Completion date of the MRP/V Project

which set the completion of the implementation phase of the project within 18 to 23 months from the

date of effectivity of the Amended BOT Agreement as opposed to the previous period found in the

original BOT Agreement which set the completion within 18 to 23 months from receipt of the NTP

(Notice to Proceed) in accordance with the Project Master Plan.

On April 12, 2002, an Assignment Agreement 12 was executed by BCA and PPC, whereby BCA assigned

and ceded its rights, title, interest and benefits arising from the Amended BOT Agreement to PPC.

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

into six phases:

Phase 1.Project Planning Phase — The Project Proponent [BCA] shall prepare

detailed plans and specifications in accordance with Annex A of this [Amended]

BOT Agreement within three (3) months from issuance of the NTP (Notice to

Proceed) [from the date of effectivity of this Amended BOT Agreement]. This

phase shall be considered complete upon the review, acceptance and approval

by the DFA of these plans and the resulting Master Plan, including the Master

Schedule, the business process specifications, the acceptance criteria, among

other plans.

xxx xxx xxx

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

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

Phase 2.Implementation of the MRP/V Project at the Central Facility —

Within six (6) months from issuance of the CA for Phase 1, the PROJECT

PROPONENT [BCA] shall complete the implementation of the MRP/V Project in

the DFA Central Facility, and establish the network design between the DFA

Central Facility, the ten (10) RCOs [Regional Consular Offices] and the eighty

(80) FSPs [Foreign Service Posts]. ITEcAD

xxx xxx xxx

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

Offices — This phase represents the replication of the systems as approved

from the Central Facility to the RCOs throughout the country, as identified in

the RFP [Request for Proposal]. The approved systems are those implemented,

evaluated, and finally approved by DFA as described in Phase 1. The Project

Proponent [BCA] will be permitted to begin site preparation and the scanning

and database building operations in all offices as soon as the plans are agreed

upon and accepted. This includes site preparation and database building

operations in these Phase-3 offices.

Within six (6) months from issuance of CA for Phase 2, the Project Proponent

[BCA] shall complete site preparation and implementation of the approved

systems in the ten (10) RCOs, including a fully functional network connection

between all equipment at the Central Facility and the RCOs.

Phase 4.Full Implementation, including all Foreign Service Posts — Within

three (3) to eight (8) months from issuance of the CA for Phase-3, the Project

Proponent [BCA] shall complete all preparations and fully implement the

approved systems in the eighty (80) FSPs, including a fully functional network

connection between all equipment at the Central Facility and the FSPs. Upon

satisfactory completion of Phase 4, a CA shall be issued by the DFA.

Phase 5.In Service Phase — Operation and maintenance of the complete

MRP/V Facility to provide machine readable passports and visas in all

designated locations around the world.

Phase 6.Transition/Turnover — Transition/Turnover to the DFA of all

operations and equipment, to include an orderly transfer of ownership of all

hardware, application system software and its source code and/or licenses

(subject to Section 5.02 [H]), peripherals, leasehold improvements, physical and

computer security improvements, Automated Fingerprint Identification

Systems, and all other MRP/V facilities shall commence at least six (6) months

prior to the end of the [Amended] BOT Agreement. The transition will include

the training of DFA personnel who will be taking over the responsibilities of

system operation and maintenance from the Project Proponent [BCA]. The

Project Proponent [BCA] shall bear all costs related to this transfer. 13 (Words in

brackets appear in the Amended BOT Agreement)

To place matters in the proper perspective, it should be pointed out that both the DFA and BCA impute

breach of the Amended BOT Agreement against each other.

According to the DFA, delays in the completion of the phases permeated the MRP/V Project due to the

submission of deficient documents as well as intervening issues regarding BCA/PPC's supposed financial

incapacity to fully implement the project. cIADaC

On the other hand, BCA contends that the DFA failed to perform its reciprocal obligation to issue to BCA

a Certificate of Acceptance of Phase 1 within 14 working days of operation purportedly required by

Section 14.04 of the Amended BOT Agreement. BCA bewailed that it took almost three years for the DFA

to issue the said Certificate allegedly because every appointee to the position of DFA Secretary wanted

to review the award of the project to BCA. BCA further alleged that it was the DFA's refusal to approve

the location of the DFA Central Facility which prevented BCA from proceeding with Phase 2 of the MRP/V

Project.

Later, the DFA sought the opinion of the Department of Finance (DOF) and the Department of Justice

(DOJ) regarding the appropriate legal actions in connection with BCA's alleged delays in the completion

of the MRP/V Project. In a Letter dated February 21, 2005, 14 the DOJ opined that the DFA should issue a

final demand upon BCA to make good on its obligations, specifically on the warranties and

responsibilities regarding the necessary capitalization and the required financing to carry out the MRP/V

Project. The DOJ used as basis for said recommendation, the Letter dated April 19, 2004 15 of DOF

Secretary Juanita Amatong to then DFA Secretary Delia Albert stating, among others, that BCA may not

be able to infuse more capital into PPC to use for the completion of the MRP/V Project.

Thus, on February 22, 2005, DFA sent a letter 16 to BCA, through its project company PPC, invoking BCA's

financial warranty under Section 5.02 (A) of the Amended BOT Agreement. 17 The DFA required BCA to

submit (a) proof of adequate capitalization (i.e., full or substantial payment of stock subscriptions); (b) a

bank guarantee indicating the availability of a credit facility of P700 million; and (c) audited financial

statements for the years 2001 to 2004.

In reply to DFA's letter, BCA, through PPC, informed the former of its position that its financial capacity

was already passed upon during the prequalification process and that the Amended BOT Agreement did

not call for any additional financial requirements for the implementation of the MRP/V Project.

Nonetheless, BCA submitted its financial statements for the years 2001 and 2002 and requested for

additional time within which to comply with the other financial requirements which the DFA insisted

on. 18

According to the DFA, BCA's financial warranty is a continuing warranty which requires that it shall have

the necessary capitalization to finance the MRP/V Project in its entirety and not on a "per phase" basis as

BCA contends. Only upon sufficient proof of its financial capability to complete and implement the whole

project will the DFA's obligation to choose and approve the location of its Central Facility arise. The DFA

asserted that its approval of a Central Facility site was not ministerial and upon its review, BCA's

proposed site for the Central Facility was purportedly unacceptable in terms of security and facilities.

Moreover, the DFA allegedly received conflicting official letters and notices 19 from BCA and PPC

regarding the true ownership and control of PPC. The DFA implied that the disputes among the

shareholders of PPC and between PPC and BCA appeared to be part of the reason for the hampered

implementation of the MRP/V Project. HCaEAT

BCA, in turn, submitted various letters and documents to prove its financial capability to complete the

MRP/V Project. 20 However, the DFA claimed these documents were unsatisfactory or of dubious

authenticity. Then on August 1, 2005, BCA terminated its Assignment Agreement with PPC and notified

the DFA that it would directly implement the MRP/V Project. 21 BCA further claims that the termination

of the Assignment Agreement was upon the instance, or with the conformity, of the DFA, a claim which

the DFA disputed.

On December 9, 2005, the DFA sent a Notice of Termination 22 to BCA and PPC due to their alleged

failure to submit proof of financial capability to complete the entire MRP/V Project in accordance with

the financial warranty under Section 5.02 (A) of the Amended BOT Agreement. The Notice states:

After a careful evaluation and consideration of the matter, including the reasons

cited in your letters dated March 3, May 3, and June 20, 2005, and upon the

recommendation of the Office of the Solicitor General (OSG), the Department is

of the view that your continuing default in complying with the requisite bank

guarantee and/or credit facility, despite repeated notice and demand, is legally

unjustified.

In light of the foregoing considerations and upon the instruction of the

Secretary of Foreign Affairs, the Department hereby formally

TERMINATE(sic) the Subject Amended BOT Agreement dated 5 April

2005 (sic) 23 effective 09 December 2005. Further, and as a consequence of this

termination, the Department formally DEMAND (sic) that you pay within ten

(10) days from receipt hereof, liquidated damages equivalent to the

corresponding performance security bond that you had posted for the MRP/V

Project.

Please be guided accordingly.

On December 14, 2005, BCA sent a letter 24 to the DFA demanding that it immediately reconsider and

revoke its previous notice of termination, otherwise, BCA would be compelled to declare the DFA in

default pursuant to the Amended BOT Agreement. When the DFA failed to respond to said letter, BCA

issued its own Notice of Default dated December 22, 2005 25 against the DFA, stating that if the default

is not remedied within 90 days, BCA will be constrained to terminate the MRP/V Project and hold the

DFA liable for damages.

BCA's request for mutual discussion under Section 19.01 of the Amended BOT Agreement 26 was

purportedly ignored by the DFA and left the dispute unresolved through amicable means within 90 days.

Consequently, BCA filed its Request for Arbitration dated April 7, 2006 27 with the Philippine Dispute

Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the Amended BOT Agreement which

provides: cCaATD

Section 19.02.Failure to Settle Amicably — If the Dispute cannot be settled

amicably within ninety (90) days by mutual discussion as contemplated under

Section 19.01 herein, the Dispute shall be settled with finality by an arbitrage

tribunal operating under International Law, hereinafter referred to as

the "Tribunal", under the UNCITRAL Arbitration Rules contained in Resolution

31/98 adopted by the United Nations General Assembly on December 15, 1976,

and entitled "Arbitration   Rules   on   the   United   Nations   Commission   on   the 

International   Trade   Law".The DFA and the BCA undertake to abide by and

implement the arbitration award. The place of arbitration shall be Pasay City,

Philippines, or such other place as may mutually be agreed upon by both

parties. The arbitration proceeding shall be conducted in the English

language. 28

As alleged in BCA's Request for Arbitration, PDRCI is a non-stock, non-profit organization composed of

independent arbitrators who operate under its own Administrative Guidelines and Rules of Arbitration as

well as under the United Nations Commission on the International Trade Law (UNCITRAL) Model Law on

International Commercial Arbitration and other applicable laws and rules. According to BCA, PDRCI can

act as an arbitration center from whose pool of accredited arbitrators both the DFA and BCA may select

their own nominee to become a member of the arbitral tribunal which will render the arbitration award.

BCA's Request for Arbitration filed with the PDRCI sought the following reliefs:

1.A judgment nullifying and setting aside the Notice of Termination dated

December 9, 2005 of Respondent [DFA], including its demand to Claimant [BCA]

to pay liquidated damages equivalent to the corresponding performance

security bond posted by Claimant [BCA];

2.A judgment (a) confirming the Notice of Default dated December 22, 2005

issued by Claimant [BCA] to Respondent [DFA]; and (b) ordering Respondent

[DFA] to perform its obligation under the Amended BOT Agreement dated April

5, 2002 by approving the site of the Central Facility at the Star Mall Complex on

Shaw Boulevard, Mandaluyong City, within five days from receipt of the Arbitral

Award; and

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

reasonably estimated at P50,000,000.00 as of this date, representing lost

business opportunities; financing fees, costs and commissions; travel expenses;

legal fees and expenses; and costs of arbitration, including the fees of the

arbitrator/s. 29 TAScID

PDRCI, through a letter dated April 26, 2006, 30 invited the DFA to submit its Answer to the Request for

Arbitration within 30 days from receipt of said letter and also requested both the DFA and BCA to

nominate their chosen arbitrator within the same period of time.

Initially, the DFA, through a letter dated May 22, 2006, 31 requested for an extension of time to file its

answer, "without prejudice to jurisdictional and other defenses and objections available to it under the

law." Subsequently, however, in a letter dated May 29, 2006, 32 the DFA declined the request for

arbitration before the PDRCI. While it expressed its willingness to resort to arbitration, the DFA pointed

out that under Section 19.02 of the Amended BOT Agreement, there is no mention of a specific body or

institution that was previously authorized by the parties to settle their dispute. The DFA further claimed

that the arbitration of the dispute should be had before an ad hoc arbitration body, and not before the

PDRCI which has as its accredited arbitrators, two of BCA's counsels of record. Likewise, the DFA insisted

that PPC, allegedly an indispensable party in the instant case, should also participate in the arbitration.

The DFA then sought the opinion of the DOJ on the Notice of Termination dated December 9, 2005 that

it sent to BCA with regard to the MRP/V Project.

In DOJ Opinion No. 35 (2006) dated May 31, 2006, 33 the DOJ concurred with the steps taken by the

DFA, stating that there was basis in law and in fact for the termination of the MRP/V Project. Moreover,

the DOJ recommended the immediate implementation of the project (presumably by a different

contractor) at the soonest possible time.

Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for the latter to provide the

former passports compliant with international standards. The BSP then solicited bids for the supply,

delivery, installation and commissioning of a system for the production of Electronic Passport Booklets or

e-Passports. 34

For BCA, the BSP's invitation to bid for the supply and purchase of e-Passports (the e-Passport Project)

would only further delay the arbitration it requested from the DFA. Moreover, this new e-Passport

Project by the BSP and the DFA would render BCA's remedies moot inasmuch as the e-Passport Project

would then be replacing the MRP/V Project which BCA was carrying out for the DFA. HTCDcS

Thus, BCA filed a Petition for Interim Relief 35 under Section 28 of the Alternative Dispute Resolution Act

of 2004 (R.A. No. 9285), 36 with the Regional Trial Court (RTC) of Pasig City, Branch 71, presided over by

respondent Judge Falcon. In that RTC petition, BCA prayed for the following:

WHEREFORE, BCA respectfully prays that this Honorable Court, before the

constitution of the arbitral tribunal in PDRCI Case No. 30-2006/BGF, grant

petitioner interim relief in the following manner:

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

restraining Respondents [DFA and BSP], their agents, representatives,

awardees, suppliers and assigns (i) from awarding a new contract to implement

the Project, or any similar electronic passport or visa project; or (ii) if such

contract has been awarded, from implementing such Project or similar projects

until further orders from this Honorable Court;

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

Respondents [DFA and BSP], their agents, representatives, awardees, suppliers

and assigns to desist (i) from awarding a new contract to implement the Project

or any similar electronic passport or visa project; or (ii) if such contract has been

awarded, from implementing such Project or similar projects, and to maintain

the status quo ante pending the resolution on the merits of BCA's Request for

Arbitration; and

(c)render judgment affirming the interim relief granted to BCA until the dispute

between the parties shall have been resolved with finality.

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

BCA alleged, in support for its application for a Temporary Restraining Order (TRO), that unless the DFA

and the BSP were immediately restrained, they would proceed to undertake the project together with a

third party to defeat the reliefs BCA sought in its Request for Arbitration, thus causing BCA to suffer

grave and irreparable injury from the loss of substantial investments in connection with the

implementation of the MRP/V Project.

Thereafter, the DFA filed an Opposition (to the Application for Temporary Restraining Order and/or Writ

of Preliminary Injunction) dated January 18, 2007, 38 alleging that BCA has no cause of action against it

as the contract between them is for machine readable passports and visas which is not the same as the

contract it has with the BSP for the supply of electronic passports. The DFA also pointed out that the

Filipino people and the government's international standing would suffer great damage if a TRO would

be issued to stop the e-Passport Project. The DFA mainly anchored its opposition on Republic Act No.

8975, which prohibits trial courts from issuing a TRO, preliminary injunction or mandatory injunction

against the bidding or awarding of a contract or project of the national government. ICHcTD

On January 23, 2007, after summarily hearing the parties' oral arguments on BCA's application for the

issuance of a TRO, the trial court ordered the issuance of a TRO restraining the DFA and the BSP, their

agents, representatives, awardees, suppliers and assigns from awarding a new contract to implement

the Project or any similar electronic passport or visa project, or if such contract has been awarded, from

implementing such or similar projects.39 The trial court also set for hearing BCA's application for

preliminary injunction.

Consequently, the DFA filed a Motion for Reconsideration 40 of the January 23, 2007 Order. The BSP, in

turn, also sought to lift the TRO and to dismiss the petition. In its Urgent Omnibus Motion dated

February 1, 2007, 41 the BSP asserted that BCA is not entitled to an injunction, as it does not have a clear

right which ought to be protected, and that the trial court has no jurisdiction to enjoin the

implementation of the e-Passport Project which, the BSP alleged, is a national government project under

Republic Act No. 8975.

In the hearings set for BCA's application for preliminary injunction, BCA presented as witnesses, Mr.

Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr. from the Independent Verification and

Validation Contractor commissioned by the DFA under the Amended BOT Agreement, and DFA Assistant

Secretary Domingo Lucenario, Jr. as adverse party witness.

The DFA and the BSP did not present any witness during the hearings for BCA's application for

preliminary injunction. According to the DFA and the BSP, the trial court did not have any jurisdiction

over the case considering that BCA did not pay the correct docket fees and that only the Supreme Court

could issue a TRO on the bidding for a national government project like the e-Passport Project pursuant

to the provisions of Republic Act No. 8975. Under Section 3 of Republic Act No. 8975, the RTC could only

issue a TRO against a national government project if it involves a matter of extreme urgency involving a

constitutional issue, such that unless a TRO is issued, grave injustice and irreparable injury will arise.

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

Application for Temporary Restraining Order and/or Writ of Preliminary Injunction)] and Opposition [to

Motion for Reconsideration (To the Temporary Restraining Order dated January 23, 2007)] and Urgent

Omnibus Motion [(i) To Lift Temporary Restraining Order; and (ii) To Dismiss the Petition] dated January

31, 2007. 42 The DFA and the BSP filed their separate Replies (to BCA's Omnibus Comment) dated

February 9, 2007 43 and February 13, 2007, 44 respectively.

On February 14, 2007, the trial court issued an Order granting BCA's application for preliminary

injunction, to wit:

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

over the instant petition and to issue the provisional remedy prayed for, and

therefore, hereby GRANTS petitioner's [BCA's] application for preliminary

injunction. Accordingly, upon posting a bond in the amount of Ten Million Pesos

(P10,000,000.00), let a writ of preliminary injunction issue ordering respondents

[DFA and BSP], their agents, representatives, awardees, suppliers and assigns to

desist (i) from awarding a new contract to implement the project or any similar

electronic passport or visa project or (ii) if such contract has been awarded from

implementing such project or similar projects.

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

reconsideration and to lift temporary restraining Order are now moot and

academic by reason of the expiration of the TRO. 45 CTAIHc

On February 16, 2007, BCA filed an Amended Petition, 46 wherein paragraphs 3.3 (b) and 4.3 were

modified to add language to the effect that unless petitioners were enjoined from awarding the e-

Passport Project, BCA would be deprived of its constitutionally-protected right to perform its contractual

obligations under the original and amended BOT Agreements without due process of law. Subsequently,

on February 26, 2007, the DFA and the BSP received the Writ of Preliminary Injunction dated February

23, 2007.

Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition for Certiorari 47 and prohibition

under Rule 65 of the Rules of Court with a prayer for the issuance of a temporary restraining order

and/or a writ of preliminary injunction, imputing grave abuse of discretion on the trial court when it

granted interim relief to BCA and issued the assailed Order dated February 14, 2007 and the writ of

preliminary injunction dated February 23, 2007.

The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary Restraining Order and/or

Writ of Preliminary Injunction dated March 5, 2007. 48

On March 12, 2007, the Court required BCA to file its comment on the said petition within ten days from

notice and granted the Office of the Solicitor General's urgent motion for issuance of a TRO and/or writ

of preliminary injunction, 49 thus:

After deliberating on the petition for certiorari and prohibition with temporary

restraining order and/or writ of preliminary injunction assailing the Order dated

14 February 2007 of the Regional Trial Court, Branch 71, Pasig City, in Civil Case

No. 71079, the Court, without necessarily giving due course thereto, resolves to

require respondents to COMMENT thereon (not to file a motion to dismiss)

within ten (10) days from notice.

The Court further resolves to GRANT the Office of the Solicitor General's urgent

motion for issuance of a temporary restraining order and/or writ of preliminary

injunction dated 05 March 2007 and ISSUE a TEMPORARY RESTRAINING

ORDER, as prayed for, enjoining respondents from implementing the assailed

Order dated 14 February 2007 and the Writ of Preliminary Injunction dated 23

February 2007, issued by respondent Judge Franco T. Falcon in Civil Case No.

71079 entitled BCA International Corporation vs. Department of Foreign Affairs 

and Bangko Sentral  ng Pilipinas, and from conducting further proceedings in

said case until further orders from this Court. TAcSaC

BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO, 50 to which the DFA and the BSP

filed their Reply dated August 14, 2007. 51

In a Resolution dated June 4, 2007, 52 the Court denied BCA's motion to lift TRO. BCA filed another

Urgent Omnibus Motion dated August 17, 2007, for the reconsideration of the Resolution dated June 4,

2007, praying that the TRO issued on March 12, 2007 be lifted and that the petition be denied.

In a Resolution dated September 10, 2007, 53 the Court denied BCA's Urgent Omnibus Motion and gave

due course to the instant petition. The parties were directed to file their respective memoranda within

30 days from notice of the Court's September 10, 2007 Resolution.

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

ISSUES

I

WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE ISSUED THE

ASSAILED ORDER, WHICH EFFECTIVELY ENJOINED THE IMPLEMENTATION OF

THE E-PASSPORT PROJECT — A NATIONAL GOVERNMENT PROJECT UNDER

REPUBLIC ACT NO. 8975.

II

WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN GRANTING

RESPONDENT BCA'S "INTERIM RELIEF" INASMUCH AS:

(I)RESPONDENT BCA HAS NOT ESTABLISHED A CLEAR RIGHT THAT

CAN BE PROTECTED BY AN INJUNCTION; AND

(II)RESPONDENT BCA HAS NOT SHOWN THAT IT WILL SUSTAIN

GRAVE AND IRREPARABLE INJURY THAT MUST BE

PROTECTED BY AN INJUNCTION. ON THE CONTRARY, IT IS

THE FILIPINO PEOPLE, WHO PETITIONERS PROTECT, THAT

WILL SUSTAIN SERIOUS AND SEVERE INJURY BY THE

INJUNCTION. 54

At the outset, we dispose of the procedural objections of BCA to the petition, to wit: (a) petitioners did

not follow the hierarchy of courts by filing their petition directly with this Court, without filing a motion

for reconsideration with the RTC and without filing a petition first with the Court of Appeals; (b) the

person who verified the petition for the DFA did not have personal knowledge of the facts of the case

and whose appointment to his position was highly irregular; and (c) the verification by the Assistant

Governor and General Counsel of the BSP of only selected paragraphs of the petition was with the

purported intent to mislead this Court. IDaCcS

Although the direct filing of petitions for certiorari with the Supreme Court is discouraged when litigants

may still resort to remedies with the lower courts, we have in the past overlooked the failure of a party

to strictly adhere to the hierarchy of courts on highly meritorious grounds. Most recently, we relaxed the

rule on court hierarchy in the case of Roque, Jr. v. Commission on Elections, 55 wherein we held:

The policy on the hierarchy of courts, which petitioners indeed failed to

observe, is not an iron-clad rule. For indeed the Court has full discretionary

power to take cognizance and assume jurisdiction of special civil actions

for certiorari and mandamus filed directly with it for exceptionally compelling

reasons or if warranted by the nature of the issues clearly and specifically

raised in the petition. 56 (Emphases ours.)

The Court deems it proper to adopt a similarly liberal attitude in the present case in consideration

of the transcendental importance of an issue raised herein. This is the first time that the Court is

confronted with the question of whether an information and communication technology project,

which does not conform to our traditional notion of the term "infrastructure," is covered by the

prohibition on the issuance of court injunctions found in Republic Act No. 8975, which is entitled

"An Act to Ensure the Expeditious Implementation and Completion of Government Infrastructure

Projects by Prohibiting Lower Courts from Issuing Temporary Restraining Orders, Preliminary

Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for Violations Thereof, and

for Other Purposes." Taking into account the current trend of computerization and modernization

of administrative and service systems of government offices, departments and agencies, the

resolution of this issue for the guidance of the bench and bar, as well as the general public, is both

timely and imperative.

Anent BCA's claim that Mr. Edsel T. Custodio (who verified the Petition on behalf of the DFA) did not

have personal knowledge of the facts of the case and was appointed to his position as Acting Secretary

under purportedly irregular circumstances, we find that BCA failed to sufficiently prove such allegations.

In any event, we have previously held that "[d]epending on the nature of the allegations in the petition,

the verification may be based either purely on personal knowledge, or entirely on authentic records, or

on both sources." 57 The alleged lack of personal knowledge of Mr. Custodio (which, as we already

stated, BCA failed to prove) would not necessarily render the verification defective for he could have

verified the petition purely on the basis of authentic records.

As for the assertion that the partial verification of Assistant Governor and General Counsel Juan de

Zuniga, Jr. was for the purpose of misleading this Court, BCA likewise failed to adduce evidence on this

point. Good faith is always presumed. Paragraph 3 of Mr. Zuniga's verification indicates that his partial

verification is due to the fact that he is verifying only the allegations in the petition peculiar to the BSP.

We see no reason to doubt that this is the true reason for his partial or selective verification. HACaSc

In sum, BCA failed to successfully rebut the presumption that the official acts (of Mr. Custodio and Mr.

Zuniga) were done in good faith and in the regular performance of official duty. 58 Even assuming the

verifications of the petition suffered from some defect, we have time and again ruled that "[t]he ends of

justice are better served when cases are determined on the merits — after all parties are given full

opportunity to ventilate their causes and defenses — rather than on technicality or some procedural

imperfections." 59 In other words, the Court may suspend or even disregard rules when the demands of

justice so require. 60

We now come to the substantive issues involved in this case.

On whether the trial court had jurisdiction

to issue a writ of preliminary injunction in

the present case

In their petition, the DFA and the BSP argue that respondent Judge Falcon gravely abused his discretion

amounting to lack or excess of jurisdiction when he issued the assailed orders, which effectively enjoined

the bidding and/or implementation of the e-Passport Project. According to petitioners, this violated the

clear prohibition under Republic Act No. 8975 regarding the issuance of TROs and preliminary injunctions

against national government projects, such as the e-Passport Project.

The prohibition invoked by petitioners is found in Section 3 of Republic Act No. 8975, which reads:

Section 3.Prohibition   on   the   Issuance   of   Temporary   Restraining   Orders, 

Preliminary  Injunctions  and Preliminary Mandatory   Injunctions. — No court,

except the Supreme Court, shall issue any temporary restraining order,

preliminary injunction or preliminary mandatory injunction against the

government, or any of its subdivisions, officials or any person or entity, whether

public or private, acting under the 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. cACHSE

This prohibition shall apply in all cases, disputes or controversies instituted by a

private party, including but not limited to cases filed by bidders or those

claiming to have rights through such bidders involving such contract/project.

This prohibition shall not apply when the matter is of extreme urgency involving

a constitutional issue, such that unless a temporary restraining order is issued,

grave injustice and irreparable injury will arise. The applicant shall file a bond, in

an amount to be fixed by the court, which bond shall accrue in favor of the

government if the court should finally decide that the applicant was not entitled

to the relief sought.

If after due hearing the court finds that the award of the contract is null and

void, the court may, if appropriate under the circumstances, award the contract

to the qualified and winning bidder or order a rebidding of the same, without

prejudice to any liability that the guilty party may incur under existing laws.

From the foregoing, it is indubitable that no court, aside from the Supreme Court, may enjoin a "national

government project" unless the matter is one of extreme urgency involving a constitutional issue such

that unless the act complained of is enjoined, grave injustice or irreparable injury would arise.

What then are the "national government projects" over which the lower courts are without jurisdiction

to issue the injunctive relief as mandated by Republic Act No. 8975?

Section 2 (a) of Republic Act No. 8975 provides:

Section 2.Definition of Terms. —

(a)"National government projects" shall refer to all current and future national

government infrastructure, engineering works and service contracts, including

projects undertaken by government-owned and -controlled corporations, all

projects covered by Republic Act No. 6975, as amended by Republic Act No.

7718, otherwise known as the Build-Operate-and-Transfer Law, and other

related and necessary activities, such as site acquisition, supply and/or

installation of equipment and materials, implementation, construction,

completion, operation, maintenance, improvement, repair and rehabilitation,

regardless of the source of funding.

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

enumerated in Section 2 (a), to wit:

(a)current and future national government infrastructure projects,

engineering works and service contracts, including projects

undertaken by government-owned and -controlled corporations;

(b)all projects covered by R.A. No. 6975, as amended by R.A. No. 7718, or the

Build-Operate-and-Transfer (BOT) Law; and

(c)other related and necessary activities, such as site acquisition, supply and/or

installation of equipment and materials, implementation,

construction, completion, operation, maintenance, improvement

repair and rehabilitation, regardless of the source of funding. EcHIAC

Under Section 2 (a) of the BOT Law as amended by Republic Act No. 7718, 61 private sector

infrastructure or development projects are those normally financed and operated by the public sector

but which will now be wholly or partly implemented by the private sector, including but not limited

to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation,

telecommunications, railroads and railways, transport systems, land reclamation projects, industrial

estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses,

warehouses, solid waste management, information technology networks and database

infrastructure, education and health facilities, sewerage, drainage, dredging, and other infrastructure

and development projects as may be authorized by the appropriate agency.

In contrast, Republic Act No. 9184, 62 also known as the Government Procurement Reform Act, defines

infrastructure projects in Section 5 (k) thereof in this manner:

(k)Infrastructure   Projects — include the construction, improvement,

rehabilitation, demolition, repair, restoration or maintenance of roads and

bridges, railways, airports, seaports, communication facilities, civil works

components of information technology projects, irrigation, flood control and

drainage, water supply, sanitation, sewerage and solid waste management

systems, shore protection, energy/power and electrification facilities, national

buildings, school buildings, hospital buildings and other related construction

projects of the government. (Emphasis supplied.)

In the present petition, the DFA and the BSP contend that the bidding for the supply, delivery,

installation and commissioning of a system for the production of Electronic Passport Booklets, is a

national government project within the definition of Section 2 of Republic Act No. 8975. Petitioners also

point to the Senate deliberations on Senate Bill No. 2038 63 (later Republic Act No. 8975) which allegedly

show the legislative's intent to expand the scope and definition of national government projects to cover

not only the infrastructure projects enumerated in Presidential Decree No. 1818, but also future projects

that may likewise be considered national government infrastructure projects, like the e-Passport Project,

to wit:

Senator Cayetano. . . . Mr. President, the present bill, the Senate Bill No. 2038,

is actually an improvement of P.D. No. 1818 and definitely not a repudiation of

what I have earlier said, as my good friend clearly stated. But this is really an

effort to improve both the scope and definition of the term "government

projects" and to ensure that lower court judges obey and observe this

prohibition on the issuance of TROs on infrastructure projects of the

government.

xxx xxx xxx

Senator Cayetano. That is why, Mr. President, I did try to explain why I would

accept the proposed amendment, meaning the totality of the repeal of P.D.

1818 which is not found in the original version of the bill, because of my earlier

explanation that the definition of the term 'government infrastructure project'

covers all of those enumerated in Section 1 of P.D. No. 1818. And the reason for

that, as we know, is we do not know what else could be considered government

infrastructure project in the next 10 or 20 years. ITcCSA

. . . So, using the Latin maxim of expression unius est exclusion alterius, which

means what is expressly mentioned is tantamount to an express exclusion of

the others, that is the reason we did not include particularly an enumeration of

certain activities of the government found in Section 1 of P.D. No. 1818.

Because to do that, it may be a good excuse for a brilliant lawyer to say 'Well,

you know, since it does not cover this particular activity, ergo, the Regional Trial

Court may issue TRO.

Using the foregoing discussions to establish that the intent of the framers of the law was to broaden the

scope and definition of national government projects and national infrastructure projects, the DFA and

the BSP submit that the said scope and definition had since evolved to include the e-Passport Project.

They assert that the concept of "infrastructure" must now refer to any and all elements that provide

support, framework, or structure for a given system or organization, including information technology,

such as the e-Passport Project.

Interestingly, petitioners represented to the trial court that the e-Passport Project is a BOT project but in

their petition with this Court, petitioners simply claim that the e-Passport Project is a national

government project under Section 2 of Republic Act No. 8975. This circumstance is significant, since

relying on the claim that the e-Passport Project is a BOT project, the trial court ruled in this wise:

The prohibition against issuance of TRO and/or writ of preliminary injunction

under RA 8975 applies only to national government infrastructure project

covered by the BOT Law, (RA 8975, Sec. 3[b] in relation to Sec. 2).

The national government projects covered under the BOT are enumerated

under Sec. 2 of RA 6957, as amended, otherwise known as the BOT Law.

Notably, it includes "information technology networks and database

infrastructure."

In relation to information technology projects, infrastructure projects refer to

the "civil works components" thereof. (R.A. No. 9184 [2003], Sec. 5[c]

{sic}). 64

Respondent BSP's request for bid, for the supply, delivery, installation and

commissioning of a system for the production of Electronic Passport Booklets

appears to be beyond the scope of the term "civil works." Respondents did not

present evidence to prove otherwise. 65 (Emphases ours.)

From the foregoing, it can be gleaned that the trial court accepted BCA's reasoning that, assuming the e-

Passport Project is a project under the BOT Law, Section 2 of the BOT Law must be read in conjunction

with Section 5 (c) of Republic Act No. 9184 or the Government Procurement Reform Act to the effect

that only the civil works component of information technology projects are to be considered

"infrastructure." Thus, only said civil works component of an information technology project cannot be

the subject of a TRO or writ of injunction issued by a lower court. ASTcEa

Although the Court finds that the trial court had jurisdiction to issue the writ of preliminary injunction,

we cannot uphold the theory of BCA and the trial court that the definition of the term "infrastructure

project" in Republic Act No. 9184 should be applied to the BOT Law.

Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein, including the term

"infrastructure project," with the following phrase: "For purposes of this Act, the following terms or

words and phrases shall mean or be understood as follows . . . ."

This Court has stated that the definition of a term in a statute is not conclusive as to the meaning of the

same term as used elsewhere. 66 This is evident when the legislative definition is expressly made for the

purposes of the statute containing such definition. 67

There is no legal or rational basis to apply the definition of the term "infrastructure project" in one

statute to another statute enacted years before and which already defined the types of projects it

covers. Rather, a reading of the two statutes involved will readily show that there is a legislative intent to

treat information technology projects differently under the BOT Law and the Government Procurement

Reform Act.

In the BOT Law as amended by Republic Act No. 7718, the national infrastructure and development

projects covered by said law are enumerated in Section 2 (a) as follows:

SEC. 2.Definition of Terms. — The following terms used in this Act shall have

the meanings stated below:

(a)Private   sector   infrastructure   or   development   projects — The

general description of infrastructure or development projects

normally financed and operated by the public sector but which will

now be wholly or partly implemented by the private sector, including

but not limited to, power plants, highways, ports, airports, canals,

dams, hydropower projects, water supply, irrigation,

telecommunications, railroads and railways, transport systems, land

reclamation projects, industrial estates of townships, housing,

government buildings, tourism projects, markets, slaughterhouses,

warehouses, solid waste management, information technology

networks and database infrastructure, education and health

facilities, sewerage, drainage, dredging, and other infrastructure and

development projects as may be authorized by the appropriate

agency pursuant to this Act. Such projects shall be undertaken

through contractual arrangements as defined hereunder and such

other variations as may be approved by the President of the

Philippines. EHcaAI

For the construction stage of these infrastructure projects, the

project proponent may obtain financing from foreign and/or

domestic sources and/or engage the services of a foreign and/or

Filipino contractor: Provided, That, in case an infrastructure or a

development facility's operation requires a public utility franchise,

the facility operator must be a Filipino or if a corporation, it must be

duly registered with the Securities and Exchange Commission and

owned up to at least sixty percent (60%) by Filipinos: Provided, 

further, That in the case of foreign contractors, Filipino labor shall be

employed or hired in the different phases of construction where

Filipino skills are available:Provided,   finally, That projects which

would have difficulty in sourcing funds may be financed partly from

direct government appropriations and/or from Official Development

Assistance (ODA) of foreign governments or institutions not

exceeding fifty percent (50%) of the project cost, and the balance to

be provided by the project proponent. (Emphasis supplied.)

A similar provision appears in the Revised IRR of the BOT Law as amended, to wit:

SECTION 1.3.DEFINITION OF TERMS

For purposes of these Implementing Rules and Regulations, the terms and

phrases hereunder shall be understood as follows:

xxx xxx xxx

v.Private Sector Infrastructure or Development Projects — The

general description of infrastructure or Development Projects

normally financed, and operated by the public sector but which will

now be wholly or partly financed, constructed and operated by the

private sector, including but not limited to, power plants, highways,

ports, airports, canals, dams, hydropower projects, water supply,

irrigation, telecommunications, railroad and railways, transport

systems, land reclamation projects, industrial estates or townships,

housing, government buildings, tourism projects, public markets,

slaughterhouses, warehouses, solid waste management, information

technology networks and database infrastructure, education and

health facilities, sewerage, drainage, dredging, and other

infrastructure and development projects as may otherwise be

authorized by the appropriate Agency/LGU pursuant to the Act or

these Revised IRR. Such projects shall be undertaken through

Contractual Arrangements as defined herein, including such other

variations as may be approved by the President of the Philippines.

xxx xxx xxx

SECTION 2.2.ELIGIBLE TYPES OF PROJECTS

The Construction, rehabilitation, improvement, betterment, expansion,

modernization, operation, financing and maintenance of the following types of

projects which are normally financed and operated by the public sector which

will now be wholly or partly financed, constructed and operated by the private

sector, including other infrastructure and development projects as may be

authorized by the appropriate agencies, may be proposed under the provisions

of the Act and these Revised IRR, provided however that such projects have a

cost recovery component which covers at least 50% of the Project Cost, or as

determined by the Approving Body: 2005cdasia

xxx xxx xxx

h.Information technology (IT) and data base infrastructure, including

modernization of IT, geo-spatial resource mapping and cadastral

survey for resource accounting and planning. (Underscoring

supplied.)

Undeniably, under the BOT Law, wherein the projects are to be privately funded, the entire information

technology project, including the civil works component and the technological aspect thereof, is

considered an infrastructure or development project and treated similarly as traditional "infrastructure"

projects. All the rules applicable to traditional infrastructure projects are also applicable to information

technology projects. In fact, the MRP/V Project awarded to BCA under the BOT Law appears to include

both civil works (i.e., site preparation of the Central Facility, regional DFA offices and foreign service

posts) and non-civil works aspects (i.e., development, installation and maintenance in the Philippines and

foreign service posts of a computerized passport and visa issuance system, including creation of

databases, storage and retrieval systems, training of personnel and provision of consumables).

In contrast, under Republic Act No. 9184 or the Government Procurement Reform Act, which

contemplates projects to be funded by public funds, the term "infrastructure project" was limited to only

the "civil works component" of information technology projects. The non-civil works component of

information technology projects would be treated as an acquisition of goods or consulting services as the

case may be.

This limited definition of "infrastructure project" in relation to information technology projects under

Republic Act No. 9184 is significant since the IRR of Republic Act No. 9184 has some provisions that are

particular to infrastructure projects and other provisions that are applicable only to procurement of

goods or consulting services. 68

Implicitly, the civil works component of information technology projects are subject to the provisions on

infrastructure projects while the technological and other components would be covered by the

provisions on procurement of goods or consulting services as the circumstances may warrant.

When Congress adopted a limited definition of what is to be considered "infrastructure" in relation to

information technology projects under the Government Procurement Reform Act, legislators are

presumed to have taken into account previous laws concerning infrastructure projects (the BOT Law and

Republic Act No. 8975) and deliberately adopted the limited definition. We can further presume that

Congress had written into law a different treatment for information technology projects financed by

public funds vis-a-vis privately funded projects for a valid legislative purpose.

The idea that the definitions of terms found in the Government Procurement Reform Act were not

meant to be applied to projects under the BOT Law is further reinforced by the following provision in the

IRR of the Government Procurement Reform Act: ScCIaA

Section 1.Purpose and General Coverage

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

A," is promulgated pursuant to Section 75 of Republic Act No. 9184 (R.A. 9184),

otherwise known as the "Government Procurement Reform Act" (GPRA), for the

purpose of prescribing the necessary rules and regulations for the

modernization, standardization, and regulation of the procurement activities of

the government. This IRR-A shall cover all fully domestically-funded

procurement activities from procurement planning up to contract

implementation and termination, except for the following:

a)Acquisition of real property which shall be governed by Republic Act No. 8974

(R.A. 8974), entitled "An Act to Facilitate the Acquisition of Right-of-Way Site or

Location for National Government Infrastructure Projects and for Other

Purposes," and other applicable laws; and

b)Private sector infrastructure or development projects and other

procurement covered by Republic Act No. 7718 (R.A. 7718), entitled "An Act

Authorizing the Financing, Construction, Operation and Maintenance of

Infrastructure Projects by the Private Sector, and for Other Purposes," as

amended: Provided, however, That for the portions financed by the

Government, the provisions of this IRR-A shall apply.

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

subsequent issuance. (Emphases supplied.)

The foregoing provision in the IRR can be taken as an administrative interpretation that the provisions of

Republic Act No. 9184 are inapplicable to a BOT project except only insofar as such portions of the BOT

project that are financed by the government.

Taking into account the different treatment of information technology projects under the BOT Law and

the Government Procurement Reform Act, petitioners' contention the trial court had no jurisdiction to

issue a writ of preliminary injunction in the instant case would have been correct if the e-Passport

Project was a project under the BOT Law as they represented to the trial court.

However, petitioners presented no proof that the e-Passport Project was a BOT project. On the contrary,

evidence adduced by both sides tended to show that the e-Passport Project was a procurement contract

under Republic Act No. 9184.

The BSP's on-line request for expression of interest and to bid for the e-Passport Project 69 from the BSP

website and the newspaper clipping 70 of the same request expressly stated that "[t]he two stage

bidding procedure under Section 30.4 of the Implementing Rules and Regulation (sic) Part-A of Republic

Act No. 9184 relative to the bidding and award of the contract shall apply." During the testimony of DFA

Assistant Secretary Domingo Lucenario, Jr. before the trial court, he admitted that the e-Passport Project

is a BSP procurement project and that it is the "BSP that will pay the suppliers." 71 In petitioners'

Manifestation dated July 29, 2008 72 and the Erratum 73 thereto, petitioners informed the Court that a

contract "for the supply of a complete package of systems design, technology, hardware, software, and

peripherals, maintenance and technical support, ecovers and datapage security laminates for the

centralized production and personalization of Machine Readable Electronic Passport" was awarded to

Francois Charles Oberthur Fiduciaire. In the Notice of Award dated July 2, 2008 74 attached to

petitioners' pleading, it was stated that the failure of the contractor/supplier to submit the required

performance bond would be sufficient ground for the imposition of administrative penalty under Section

69 of the IRR-A of Republic Act No. 9184. STcEaI

Being a government procurement contract under Republic Act No. 9184, only the civil works component

of the e-Passport Project would be considered an infrastructure project that may not be the subject of a

lower court-issued writ of injunction under Republic Act No. 8975.

Could the e-Passport Project be considered as "engineering works or a service contract" or as "related

and necessary activities" under Republic Act No. 8975 which may not be enjoined?

We hold in the negative. Under Republic Act No. 8975, a "service contract" refers to " infrastructure

contracts entered into by any department, office or agency of the national government with private

entities and nongovernment organizations for services related or incidental to the functions and

operations of the department, office or agency concerned." On the other hand, the phrase "other

related and necessary activities" obviously refers to activities related to a government infrastructure,

engineering works, service contract or project under the BOT Law. In other words, to be considered a

service contract or related activity, petitioners must show that the e-Passport Project is an infrastructure

project or necessarily related to an infrastructure project. This, petitioners failed to do for they saw fit

not to present any evidence on the details of the e-Passport Project before the trial court and this Court.

There is nothing on record to indicate that the e-Passport Project has a civil works component or is

necessarily related to an infrastructure project.

Indeed, the reference to Section 30.4 75 of the IRR of Republic Act No. 9184 (a provision specific to the

procurement of goods) in the BSP's request for interest and to bid confirms that the e-Passport Project is

a procurement of goods and not an infrastructure project. Thus, within the context of Republic Act No.

9184 — which is the governing law for the e-Passport Project — the said Project is not an

infrastructure project that is protected from lower court issued injunctions under Republic Act No. 8975,

which, to reiterate, has for its purpose the expeditious and efficient implementation and completion of

government infrastructure projects.

We note that under Section 28, Republic Act No. 9285 or the Alternative Dispute Resolution Act of

2004, 76 the grant of an interim measure of protection by the proper court before the constitution of an

arbitral tribunal is allowed:

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

with an arbitration agreement for a party to request, before constitution of the

tribunal, from a Court an interim measure of protection and for the Court to

grant such measure. After constitution of the arbitral tribunal and during

arbitral proceedings, a request for an interim measure of protection, or

modification thereof, may be made with the arbitral tribunal or to the extent

that the arbitral tribunal has no power to act or is unable to act effectively, the

request may be made with the Court. The arbitral tribunal is deemed

constituted when the sole arbitrator or the third arbitrator, who has been

nominated, has accepted the nomination and written communication of said

nomination and acceptance has been received by the party making the request.

(a)The following rules on interim or provisional relief shall be

observed:

(1)Any party may request that provisional relief be

granted against the adverse party. HICSaD

(2)Such relief may be granted:

(i)to prevent irreparable loss or injury;

(ii)to provide security for the performance of

any obligation;

(iii)to produce or preserve any evidence; or

(iv)to compel any other appropriate act or

omission.

(3)The order granting provisional relief may be

conditioned upon the provision of security or any act or

omission specified in the order.

(4)Interim or provisional relief is requested by written

application transmitted by reasonable means to the Court

or arbitral tribunal as the case may be and the party

against whom the relief is sought, describing in

appropriate detail the precise relief, the party against

whom the relief is requested, the grounds for the relief,

and the evidence supporting the request.

(5)The order shall be binding upon the parties.

(6)Either party may apply with the Court for assistance in

implementing or enforcing an interim measure ordered

by an arbitral tribunal.

(7)A party who does not comply with the order shall be

liable for all damages resulting from noncompliance,

including all expenses and reasonable attorney's fees,

paid in obtaining the order's judicial enforcement.

Section 3 (h) of the same statute provides that the "Court" as referred to in Article 6 of the Model Law

shall mean a Regional Trial Court.

Republic Act No. 9285 is a general law applicable to all matters and controversies to be resolved through

alternative dispute resolution methods. This law allows a Regional Trial Court to grant interim or

provisional relief, including preliminary injunction, to parties in an arbitration case prior to the

constitution of the arbitral tribunal. This general statute, however, must give way to a special law

governing national government projects, Republic Act No. 8975 which prohibits courts, except the

Supreme Court, from issuing TROs and writs of preliminary injunction in cases involving national

government projects. DCcAIS

However, as discussed above, the prohibition in Republic Act No. 8975 is inoperative in this case, since

petitioners failed to prove that the e-Passport Project is national government project as defined therein.

Thus, the trial court had jurisdiction to issue a writ of preliminary injunction against the e-Passport

Project.

On whether the trial court's issuance of a

writ of injunction was proper

Given the above ruling that the trial court had jurisdiction to issue a writ of injunction and going to the

second issue raised by petitioners, we answer the question: Was the trial court's issuance of a writ of

injunction warranted under the circumstances of this case?

Petitioners' attack on the propriety of the trial court's issuance of a writ of injunction is two-pronged: (a)

BCA purportedly has no clear right to the injunctive relief sought; and (b) BCA will suffer no grave and

irreparable injury even if the injunctive relief were not granted.

To support their claim that BCA has no clear right to injunctive relief, petitioners mainly allege that the

MRP/V Project and the e-Passport Project are not the same project. Moreover, the MRP/V Project

purportedly involves a technology (the 2D optical bar code) that has been rendered obsolete by the

latest ICAO developments while the e-Passport Project will comply with the latest ICAO standards (the

contactless integrated circuit). Parenthetically, and not as a main argument, petitioners imply that BCA

has no clear contractual right under the Amended BOT Agreement since BCA had previously assigned all

its rights and obligations under the said Agreement to PPC.

BCA, on the other hand, claims that the Amended BOT Agreement also contemplated the supply and/or

delivery of e-Passports with the integrated circuit technology in the future and not only the machine

readable passport with the 2D optical bar code technology. Also, it is BCA's assertion that the integrated

circuit technology is only optional under the ICAO issuances. On the matter of its assignment of its rights

to PPC, BCA counters that it had already terminated (purportedly at DFA's request) the assignment

agreement in favor of PPC and that even assuming the termination was not valid, the Amended BOT

Agreement expressly stated that BCA shall remain solidarily liable with its assignee, PPC. ISCHET

Most of these factual allegations and counter-allegations already touch upon the merits of the main

controversy between the DFA and BCA, i.e., the validity and propriety of the termination of the Amended

BOT Agreement (the MRP/V Project) between the DFA and BCA. The Court deems it best to refrain from

ruling on these matters since they should be litigated in the appropriate arbitration or court proceedings

between or among the concerned parties.

One preliminary point, however, that must be settled here is whether BCA retains a right to seek relief

against the DFA under the Amended BOT Agreement in view of BCA's previous assignment of its rights to

PPC. Without preempting any factual finding that the appropriate court or arbitral tribunal on the matter

of the validity of the assignment agreement with PPC or its termination, we agree with BCA that it

remained a party to the Amended BOT Agreement, notwithstanding the execution of the assignment

agreement in favor of PPC, for it was stipulated in the Amended BOT Agreement that BCA would be

solidarily liable with its assignee. For convenient reference, we reproduce the relevant provision of the

Amended BOT Agreement here:

Section 20.15.It is clearly and expressly understood that BCA may assign, cede

and transfer all of its rights and obligations under this Amended BOT Agreement

to PPC [Philippine Passport Corporation], as fully as if PPC is the original

signatory to this Amended BOT Agreement,provided however that BCA shall

nonetheless be jointly and severally liable with PPC for the performance of all

the obligations and liabilities under this Amended BOT Agreement. (Emphasis

supplied.)

Furthermore, a review of the records shows that the DFA continued to address its correspondence

regarding the MRP/V Project to both BCA and PPC, even after the execution of the assignment

agreement. Indeed, the DFA's Notice of Termination dated December 9, 2005 was addressed to Mr.

Bonifacio Sumbilla as President of both BCA and PPC and referred to the Amended BOT Agreement

"executed between the Department of Foreign Affairs (DFA), on one hand, and the BCA International

Corporation and/or the Philippine Passport Corporation (BCA/PPC)." At the very least, the DFA is

estopped from questioning the personality of BCA to bring suit in relation to the Amended BOT

Agreement since the DFA continued to deal with both BCA and PPC even after the signing of the

assignment agreement. In any event, if the DFA truly believes that PPC is an indispensable party to the

action, the DFA may take necessary steps to implead PPC but this should not prejudice the right of BCA

to file suit or to seek relief for causes of action it may have against the DFA or the BSP, for undertaking

the e-Passport Project on behalf of the DFA.

With respect to petitioners' contention that BCA will suffer no grave and irreparable injury so as to justify

the grant of injunctive relief, the Court finds that this particular argument merits consideration. TAScID

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

SEC. 7.Contract   Termination. — In the event that a project is revoked,

cancelled or terminated by the Government through no fault of the project

proponent or by mutual agreement, the Government shall compensate the

said project proponent for its actual expensesincurred in the project plus a

reasonable rate of return thereon not exceeding that stated in the contract as

of the date of such revocation, cancellation or termination: Provided, That the

interest of the Government in this instances shall be duly insured with the

Government Service Insurance System [GSIS] or any other insurance entity duly

accredited by the Office of the Insurance Commissioner: Provided, finally, That

the cost of the insurance coverage shall be included in the terms and conditions

of the bidding referred to above.

In the event that the government defaults on certain major obligations in the

contract and such failure is not remediable or if remediable shall remain

unremedied for an unreasonable length of time, the project

proponent/contractor may, by prior notice to the concerned national

government agency or local government unit specifying the turn-over

date, terminate the contract. The project proponent/contractor shall be

reasonably compensated by the Government for equivalent or proportionate

contract cost as defined in the contract. (Emphases supplied.)

In addition, the Amended BOT Agreement, which is the law between and among the parties to it,

pertinently provides:

Section 17.01.Default — In case a party commits an act constituting an event

of default, the non-defaulting party may terminate this Amended BOT

Agreement by serving a written notice to the defaulting party specifying the

grounds for termination and giving the defaulting party a period of ninety (90)

days within which to rectify the default. If the default is not remedied within

this period to the satisfaction of the non-defaulting party, then the latter will

serve upon the former a written notice of termination indicating the effective

date of termination.

Section 17.02.Proponents Default — If this Amended BOT Agreement

is terminated by reason of the BCA's default, the DFA shall have the following

options:

A.Allow the BCA's unpaid creditors who hold a lien on the MRP/V

Facility to foreclose on the MRP/V Facility. The right of

the BCA's unpaid creditors to foreclose on the MRP/V

Facility shall be valid for the duration of the effectivity of

this Amended BOT Agreement; or,

B.Allow the BCA's unpaid creditors who hold a lien on the MRP/V

Facility to designate a substitute BCA for the MRP/V

Project, provided the designated substitute BCA is

qualified under existing laws and acceptable to the DFA.

This substitute BCA shall hereinafter be referred to as the

"Substitute BCA." The Substitute BCA shall assume all the

BCA's rights and privileges, as well as the obligations,

duties and responsibilities hereunder; provided, however,

that the DFA shall at all times and its sole option, have the

right to invoke and exercise any other remedy which may

be available to the DFA under any applicable laws, rules

and/or regulations which may be in effect at any time and

from time to time. The DFA shall cooperate with the

creditors with a view to facilitating the choice of a

Substitute BCA, who shall take-over the operation,

maintenance and management of the MRP/V Project,

within three (3) months from the BCA's receipt of the

notice of termination from the DFA. The Substituted BCA

shall have all the rights and obligations of the previous

BCA as contained in this Amended BOT Agreement;

or TCAScE

C.Take-over the MRP/V Facility and assume all attendant liabilities

thereof.

D.In all cases of termination due to the default of the BCA, it shall

pay DFA liquidated damages equivalent to the applicable

the(sic) Performance Security.

Section 17.03.DFA's Default — If this Amended BOT Agreement is terminated

by the BCA by reason of the DFA's Default, the DFA shall:

A.Be obligated to take over the MRP/V Facility on an "as is, where

is" basis, and shall forthwith assume attendant liabilities

thereof; and

B.Pay liquidated damages to the BCA equivalent to the following

amounts, which may be charged to the insurance

proceeds referred to in Article 12:

(1)In the event of termination prior to completion of the

implementation of the MRP/V

Project, damages shall be paid equivalent to

the value of completed implementation,

minus the aggregate amount of the attendant

liabilities assumed by the DFA, plus ten

percent (10%) thereof. The amount of such

compensation shall be determined as of the

date of the notice of termination and shall

become due and demandable ninety (90) days

after the date of this notice of termination.

Under this Amended BOT Agreement, the

term "Value of the Completed

Implementation" shall mean the aggregate of

all reasonable costs and expenses incurred by

the BCA in connection with, in relation to

and/or by reason of the MRP/V Project,

excluding all interest and capitalized interest,

as certified by a reputable and independent

accounting firm to be appointed by the BCA

and subject to the approval by the DFA, such

approval shall not be unreasonably withheld.

(2)In the event of termination after completion of

design, development, and installation of the

MRP/V Project, just compensation shall be

paid equivalent to the present value of the

net income which the BCA expects to earn or

realize during the unexpired or remaining

term of this Amended BOT Agreement using

the internal rate of return on equity (IRRe)

defined in the financial projections of the BCA

and agreed upon by the parties, which is

attached hereto and made as an integral part

of this Amended BOT Agreement as Schedule

"1". (Emphases supplied.) TASCEc

The validity of the DFA's termination of the Amended BOT Agreement and the determination of the

party or parties in default are issues properly threshed out in arbitration proceedings as provided for by

the agreement itself. However, even if we hypothetically accept BCA's contention that the DFA

terminated the Amended BOT Agreement without any default or wrongdoing on BCA's part, it is not

indubitable that BCA is entitled to injunctive relief.

The BOT Law expressly allows the government to terminate a BOT agreement, even without fault on the

part of the project proponent, subject to the payment of the actual expenses incurred by the proponent

plus a reasonable rate of return.

Under the BOT Law and the Amended BOT Agreement, in the event of default on the part of the

government (in this case, the DFA) or on the part of the proponent, the non-defaulting party is allowed

to terminate the agreement, again subject to proper compensation in the manner set forth in the

agreement.

Time and again, this Court has held that to be entitled to injunctive relief the party seeking such relief

must be able to show grave, irreparable injury that is not capable of compensation.

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

Generally, injunction is a preservative remedy for the protection of one's

substantive right or interest. It is not a cause of action in itself but merely a

provisional remedy, an adjunct to a main suit. It is resorted to only when there

is a pressing necessity to avoid injurious consequences which cannot be

remedied under any standard compensation. The application of the injunctive

writ rests upon the existence of an emergency or of a special reason before the

main case can be regularly heard. The essential conditions for granting such

temporary injunctive relief are that the complaint alleges facts which appear to

be sufficient to constitute a proper basis for injunction and that on the entire

showing from the contending parties, the injunction is reasonably necessary to

protect the legal rights of the plaintiff pending the litigation. Two requisites are

necessary if a preliminary injunction is to issue, namely, the existence of a right

to be protected and the facts against which the injunction is to be directed are

violative of said right. In particular, for a writ of preliminary injunction to issue,

the existence of the right and the violation must appear in the allegation of the

complaint and a preliminary injunction is proper only when the plaintiff

(private respondent herein) appears to be entitled to the relief demanded in

his complaint. (Emphases supplied.)

We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro Corporation, 78 where we likewise

opined: cEaCTS

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

showing by the complaint that there exists a right to be protected and that the

acts against which the writ is to be directed are violative of the said right. It

must be shown that the invasion of the right sought to be protected is material

and substantial, that the right of complainant is clear and unmistakable and that

there is an urgent and paramount necessity for the writ to prevent serious

damage. Moreover, an injunctive remedy may only be resorted to when there

is a pressing necessity to avoid injurious consequences which cannot be

remedied under any standard compensation. (Emphasis supplied.)

As the Court explained previously in Philippine Airlines, Inc. v. National Labor Relations Commission: 79

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

recurrence that no fair and reasonable redress can be had therefor in a court of

law, or where there is no standard by which their amount can be measured

with reasonable accuracy, that is, it is not susceptible of mathematical

computation. It is considered irreparable injury when it cannot be adequately

compensated in damages due to the nature of the injury itself or the nature of

the right or property injured or when there exists no certain pecuniary

standard for the measurement of damages. (Emphases supplied.)

It is still contentious whether this is a case of termination by the DFA alone or both the DFA and BCA. The

DFA contends that BCA, by sending its own Notice of Default, likewise terminated or "abandoned" the

Amended BOT Agreement. Still, whether this is a termination by the DFA alone without fault on the part

of BCA or a termination due to default on the part of either party, the BOT Law and the Amended BOT

Agreement lay down the measure of compensation to be paid under the appropriate circumstances.

Significantly, in BCA's Request for Arbitration with the PDRCI, it prayed for, among others, "a judgment

ordering respondent [DFA] to pay damages to Claimant [BCA], reasonably estimated at P50,000,000.00

as of [the date of the Request for Arbitration], representing lost business opportunities; financing fees,

costs and commissions; travel expenses; legal fees and expenses; and costs of arbitration, including the

fees of the arbitrator/s." 80 All the purported damages that BCA claims to have suffered by virtue of the

DFA's termination of the Amended BOT Agreement are plainly determinable in pecuniary terms and can

be "reasonably estimated" according to BCA's own words.

Indeed, the right of BCA, a party which may or may not have been in default on its BOT contract, to have

the termination of its BOT contract reversed is not guaranteed by the BOT Law. Even assuming BCA's

innocence of any breach of contract, all the law provides is that BCA should be adequately compensated

for its losses in case of contract termination by the government. HAIDcE

There is one point that none of the parties has highlighted but is worthy of discussion. In seeking to

enjoin the government from awarding or implementing a machine readable passport project or any

similar electronic passport or visa project and praying for the maintenance of the status   quo 

ante pending the resolution on the merits of BCA's Request for Arbitration, BCA effectively seeks to

enjoin the termination of the Amended BOT Agreement for the MRP/V Project.

There is no doubt that the MRP/V Project is a project covered by the BOT Law and, in turn, considered a

"national government project" under Republic Act No. 8795. Under Section 3 (d) of that statute, trial

courts are prohibited from issuing a TRO or writ of preliminary injunction against the government to

restrain or prohibit the termination or rescission of any such national government project/contract.

The rationale for this provision is easy to understand. For if a project proponent — that the government

believes to be in default — is allowed to enjoin the termination of its contract on the ground that it is

contesting the validity of said termination, then the government will be unable to enter into a new

contract with any other party while the controversy is pending litigation. Obviously, a court's grant of

injunctive relief in such an instance is prejudicial to public interest since government would be

indefinitely hampered in its duty to provide vital public goods and services in order to preserve the

private proprietary rights of the project proponent. On the other hand, should it turn out that the project

proponent was not at fault, the BOT Law itself presupposes that the project proponent can be

adequately compensated for the termination of the contract. Although BCA did not specifically pray for

the trial court to enjoin the termination of the Amended BOT Agreement and thus, there is no direct

violation of Republic Act No. 8795, a grant of injunctive relief as prayed for by BCA will indirectly

contravene the same statute.

Verily, there is valid reason for the law to deny preliminary injunctive relief to those who seek to contest

the government's termination of a national government contract. The only circumstance under which a

court may grant injunctive relief is the existence of a matter of extreme urgency involving a

constitutional issue, such that unless a TRO or injunctive writ is issued, grave injustice and irreparable

injury will result.

Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer grave and irreparable

injury since the bidding out and award of the e-Passport Project would be tantamount to a violation of

its right against deprivation of property without due process of law under Article III, Section 1 of the

Constitution. We are unconvinced.

Article III, Section 1 of the Constitution provides "[n]o person shall be deprived of life, liberty, or property

without due process of law, nor shall any person be denied the equal protection of the laws." Ordinarily,

this constitutional provision has been applied to the exercise by the State of its sovereign powers such

as, its legislative power, 81 police power, 82 or its power of eminent domain. 83 TSADaI

In the instant case, the State action being assailed is the DFA's termination of the Amended BOT

Agreement with BCA. Although the said agreement involves a public service that the DFA is mandated to

provide and, therefore, is imbued with public interest, the relationship of DFA to BCA is primarily

contractual and their dispute involves the adjudication of contractual rights. The propriety of the DFA's

acts, in relation to the termination of the Amended BOT Agreement, should be gauged against the

provisions of the contract itself and the applicable statutes to such contract. These contractual and

statutory provisions outline what constitutes due process in the present case. In all, BCA failed to

demonstrate that there is a constitutional issue involved in this case, much less a constitutional issue of

extreme urgency.

As for the DFA's purported failure to appropriate sufficient amounts in its budget to pay for liquidated

damages to BCA, this argument does not support BCA's position that it will suffer grave and irreparable

injury if it is denied injunctive relief. The DFA's liability to BCA for damages is contingent on BCA proving

that it is entitled to such damages in the proper proceedings. The DFA has no obligation to set aside

funds to pay for liquidated damages, or any other kind of damages, to BCA until there is a final and

executory judgment in favor of BCA. It is illogical and impractical for the DFA to set aside a significant

portion of its budget for an event that may never happen when such idle funds should be spent on

providing necessary services to the populace. For if it turns out at the end of the arbitration proceedings

that it is BCA alone that is in default, it would be the one liable for liquidated damages to the DFA under

the terms of the Amended BOT Agreement.

With respect to BCA's allegation that the e-Passport Project is grossly disadvantageous to the Filipino

people since it is the government that will be spending for the project unlike the MRP/V Project which

would have been privately funded, the same is immaterial to the issue at hand. If it is true that the award

of the e-Passport Project is inimical to the public good or tainted with some anomaly, it is indeed a cause

for grave concern but it is a matter that must be investigated and litigated in the proper forum. It has no

bearing on the issue of whether BCA would suffer grave and irreparable injury such that it is entitled to

injunctive relief from the courts.

In all, we agree with petitioners DFA and BSP that the trial court's issuance of a writ of preliminary

injunction, despite the lack of sufficient legal justification for the same, is tantamount to grave abuse of

discretion.

To be very clear, the present decision touches only on the twin issues of (a) the jurisdiction of the trial

court to issue a writ of preliminary injunction as an interim relief under the factual milieu of this case;

and (b) the entitlement of BCA to injunctive relief. The merits of the DFA and BCA's dispute regarding the

termination of the Amended BOT Agreement must be threshed out in the proper arbitration

proceedings. The civil case pending before the trial court is purely for the grant of interim relief since the

main case is to be the subject of arbitration proceedings. STcaDI

BCA's petition for interim relief before the trial court is essentially a petition for a provisional remedy

(i.e., preliminary injunction) ancillary to its Request for Arbitration in PDRCI Case No. 30-2006/BGF. BCA

specifically prayed that the trial court grant it interim relief pending the constitution of the arbitral

tribunal in the said PDRCI case. Unfortunately, during the pendency of this case, PDRCI Case No. 30-

2006/BGF was dismissed by the PDRCI for lack of jurisdiction, in view of the lack of agreement between

the parties to arbitrate before the PDRCI. 84 In Philippine National Bank v.  Ritratto Group,  Inc., 85we

held:

A writ of preliminary injunction is an ancillary or preventive remedy that may

only be resorted to by a litigant to protect or preserve his rights or interests and

for no other purpose during the pendency of the principal action. The dismissal

of the principal action thus results in the denial of the prayer for the issuance

of the writ. . . . . (Emphasis supplied.)

In view of intervening circumstances, BCA can no longer be granted injunctive relief and the civil

case before the trial court should be accordingly dismissed. However, this is without prejudice to

the parties litigating the main controversy in arbitration proceedings, in accordance with the

provisions of the Amended BOT Agreement, which should proceed with dispatch.

It does not escape the attention of the Court that the delay in the submission of this controversy to

arbitration was caused by the ambiguity in Section 19.02 of the Amended BOT Agreement regarding the

proper body to which a dispute between the parties may be submitted and the failure of the parties to

agree on such an arbitral tribunal. However, this Court cannot allow this impasse to continue indefinitely.

The parties involved must sit down together in good faith and finally come to an understanding

regarding the constitution of an arbitral tribunal mutually acceptable to them.

WHEREFORE, the instant petition is hereby GRANTED. The assailed Order dated February 14, 2007 of the

Regional Trial Court of Pasig in Civil Case No. 71079 and the Writ of Preliminary Injunction dated

February 23, 2007 are REVERSED and SET ASIDE. Furthermore, Civil Case No. 71079 is

hereby DISMISSED.

No pronouncement as to costs.

SO ORDERED.

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 p:

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.

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. 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 Crossarmsdated 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: aTEHCc

a.Nerwin is the lowest complying and responsive bidder;

b.The price difference for the four (4) schedules between the bid of

Nerwin Industries (lowest responsive and complying bidder) and the

second lowest bidder in the amount of $1.47 million for the poles

and $0.475 million for the crossarms, is deemed substantial and

extremely advantageous to the government. The price difference is

equivalent to 7,948 pcs. of poles and 20.967 pcs. of crossarms;

c.The price difference for the three (3) schedules between the bids

of Nerwin and the Tri-State Pole and Piling, Inc. approximately in the

amount of $2.36 million for the poles and $0.475 million for the

crossarms are equivalent to additional 12.872 pcs. of poles and

20.967 pcs. of crossarms; and

d.The bidder and manufacturer are capable of supplying the

woodpoles and specified in the bid documents and as based on the

pre-award inspection conducted.

However, on December 19, 2000, NEA's 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, . . . , 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. IaAHCE

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 IDSEAH

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 ITSaHC

Thence, respondents commenced in the Court of Appeals (CA) a special civil action for certiorari (CA-G.R.

SP No. 83144), alleging that the RTC had thereby committed grave abuse of discretion amounting to lack

or excess of jurisdiction in holding that Nerwin had been entitled to the issuance of the writ of

preliminary injunction despite the express prohibition from the law and from the Supreme Court; in

issuing the TRO in blatant violation of the Rules  of  Court and established jurisprudence; in declaring

respondents in default; and in disqualifying respondents' counsel from representing them. 7

On October 22, 2004, the CA promulgated its decision, 8 to wit:

WHEREFORE, the petition is GRANTED. The assailed Orders dated July 30 and

December 29, 2003 are hereby ANNULED and SET ASIDE. Accordingly, Civil Case

No. 03106921, private 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

The petition fails.

In its decision of October 22, 2004, the CA explained why it annulled and set aside the assailed orders of

the RTC issued on July 20, 2003 and December 29, 2003, and why it altogether dismissed Civil Case No.

03106921, as follows: DcSACE

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 8975which 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 xxx xxx

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

government as defined under Section 2 hereof; aSCHcA

xxx xxx xxx

This prohibition shall apply in all cases, disputes or controversies

instituted by a private party, including but not limited to cases filed

by bidders or those claiming to have rights through such bidders

involving such contract/project. This prohibition shall not apply when

the matter is of extreme urgency involving a constitutional issue,

such that unless a temporary restraining order is issued, grave

injustice and irreparable injury will arise. . . .

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.   11-2000which

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 inRepublic 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." SDaHEc

Thus, there is nothing from the law or 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: SACEca

(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. DHITCc

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 forcertiorari,

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. DAHEaT

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:

. . . 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) cSATDC

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 aSTECA

(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:

. . . 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 . . . . 18

In this regard, the Rules of Court grants a broad latitude to the trial courts considering that conflicting

claims in an application for a provisional writ more often than not involve and require a factual

determination that is not the function of the appellate courts. 19 Nonetheless, the exercise of such

discretion must be sound, that is, the issuance of the writ, though discretionary, should be upon the

grounds and in the manner provided by law. 20 When that is done, the exercise of sound discretion by

the issuing court in injunctive matters must not be interfered with except when there is manifest

abuse. 21

Moreover, judges dealing with applications for the injunctive relief ought to be wary of improvidently or

unwarrantedly issuing TROs or writs of injunction that tend to dispose of the merits without or before

trial. Granting an application for the relief in disregard of that tendency is judicially impermissible, 22 for

it is never the function of a TRO or preliminary injunction to determine the merits of a case, 23 or to

decide controverted facts. 24 It is but a preventive remedy whose only mission is to prevent threatened

wrong, 25 further injury, 26 and irreparable harm 27 or injustice 28 until the rights of the parties can be 

settled. Judges should thus look at such relief only as a means to protect the ability of their courts to

render a meaningful decision. 29 Foremost in their minds should be to guard against a change of

circumstances that will hamper or prevent the granting of proper reliefs after a trial on the merits. 30 It

is well worth remembering that the writ of preliminary injunction should issue only to prevent the

threatened continuous and irremediable injury to the applicant before the claim can be justly and

thoroughly studied and adjudicated. 31 DEcSaI

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petitioner to pay the

costs of suit.

The Court Administrator shall disseminate this decision to the lower courts for their guidance.

SO ORDERED.

SECOND DIVISION

[G.R. No. 156015. August 11, 2005.]

REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in

his capacity as former Chief of the Intelligence Service, Armed Forces of the

Philippines (ISAFP), and former Commanding General, Presidential Security

Group (PSG), and MAJ. DAVID B. DICIANO, in his capacity as an Officer of

ISAFP and former member of the PSG, petitioners, vs. HON. VICTORINO

EVANGELISTA, in his capacity as Presiding Judge, Regional Trial Court, Branch

223, Quezon City, and DANTE LEGASPI, represented by his attorney-in-fact,

Paul Gutierrez, respondents.

The Solicitor General for petitioners.

Adaza & Adaza for private respondent.

Rashid A. Saber for intervenor.

SYLLABUS

1.CIVIL LAW; AGENCY; REVOCATION; ELUCIDATED. — Article 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. 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. 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 irrevocability is because the agency becomes part of

another obligation or agreement. It is not solely the rights of the principal but also that of the agent and

third persons which are affected. Hence, the law provides that in such cases, the agency cannot be

revoked at the sole will of the principal.

2.REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DISCUSSED. — A writ of

preliminary injunction is an ancillary 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

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 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. 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 headed to establish the applicant's rights or

interests in the subject matter of the main action. It is not required that the applicant should conclusively

show that there was a violation of his rights as this issue will still be litigated in the main case. Thus, an

applicant for a writ is required only to show that he has an ostensible right to the final relief prayed for in

his complaint.

3.POLITICAL LAW; ADMINISTRATIVE LAW; JUDGES; PARTIALITY; NOT SUFFICIENTLY ESTABLISHED. — 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 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

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.

D E C I S I O N

PUNO, J p:

The case at bar stems from a complaint for damages, with prayer for the issuance of a writ of preliminary

injunction, filed by private respondent Dante Legaspi, through his attorney-in-fact Paul Gutierrez, against

petitioners Gen. Jose M. Calimlim, Ciriaco Reyes and Maj. David Diciano before the Regional Trial Court

(RTC) of Quezon City. 1

The Complaint alleged that private respondent Legaspi is the owner of a land located in Bigte,

Norzagaray, Bulacan. In November 1999, petitioner Calimlim, representing the Republic of the

Philippines, and as then head of the Intelligence Service of the Armed Forces of the Philippines and the

Presidential Security Group, entered into a Memorandum of Agreement (MOA) with one Ciriaco Reyes.

The MOA granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan. Petitioner

Diciano signed the MOA as a witness. 2 It was further alleged that thereafter, Reyes, together with

petitioners, started, digging, tunneling and blasting works on the said land of Legaspi. The complaint also

alleged that petitioner Calimlim assigned about 80 military personnel to guard the area and encamp

thereon to intimidate Legaspi and other occupants of the area from going near the subject land.

On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his nephew, private

respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the treasure

hunting activities on Legaspi's land and to file charges against those who may enter it without the latter's

authority. 3 Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the land.

On February 29, 2000, Gutierrez filed a case for damages and injunction against petitioners for illegally

entering 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 P5,000.00 as appearance fee per court

hearing and defray all expenses for the cost of the litigation. 4 Upon the filing of the complaint, then

Executive Judge Perlita J. Tria Tirona issued a 72-hour temporary restraining order (TRO) against

petitioners.

The case 5 was subsequently raffled to the RTC of Quezon City, Branch 223, then presided by public

respondent Judge Victorino P. Evangelista. On March 2, 2000, respondent judge issued another 72-hour

TRO and a summary hearing for its extension was set on March 7, 2000.

On March 14, 2000, petitioners filed a Motion to Dismiss 6 contending: first, there is no real party-in-

interest as the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as

evidenced by a Deed of Revocation, 7 and, second, Gutierrez failed to establish that the alleged armed

men guarding the area were acting on orders of petitioners. On March 17, 2000, petitioners also filed a

Motion for Inhibition 8 of the respondent judge on the ground of alleged partiality in favor of private

respondent. SATDEI

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. 9 The trial court ordered thus:

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

(P100,000.00), let a Writ of Preliminary Injunction issue enjoining the

defendants as well as their associates, agents or representatives from

continuing to occupy and encamp on the land of the plaintiff LEGASPI as well as

the vicinity thereof; from digging, tunneling and blasting the said land of

plaintiff LEGASPI; from removing whatever treasure may be found on the said

land; from preventing and threatening the plaintiffs and their representatives

from entering the said land and performing acts of ownership; from threatening

the plaintiffs and their representatives as well as plaintiffs' lawyer.

On even date, the trial court issued another Order 10 denying petitioners' motion to dismiss and

requiring petitioners to answer the complaint. On April 4, 2000, it likewise denied petitioners' motion for

inhibition. 11

On appeal, the Court of Appeals affirmed the decision of the trial court. 12

Hence this petition, with the following assigned errors:

I

WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE

RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.

II

WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.

III

WHETHER RESPONDENT JUDGE OUGHT TO HAVE INHIBITED HIMSELF FROM

FURTHER PROCEEDING WITH THE CASE.

We find no merit in the petition.

On the first issue, petitioners claim that the special power of attorney of Gutierrez to represent Legaspi

has already been revoked by the latter. Private respondent Gutierrez, however, contends that the

unilateral revocation is invalid as his agency is coupled with interest.

We agree with private respondent. EHTIDA

Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render

some service or do something in representation or on behalf of another, known as the principal, with the

consent or authority of the latter. 13

A contract of agency is generally revocable as it is a personal contract of representation based on trust

and confidence reposed by the principal on his agent. As the power of the agent to act depends on the

will and license of the principal he represents, the power of the agent ceases when the will or permission

is withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will. 14

However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e.,

if a bilateral contract depends upon the agency.15 The reason for its irrevocability is because the agency

becomes part of another obligation or agreement. It is not solely the rights of the principal but also that

of the agent and third persons which are affected. Hence, the law provides that in such cases, the agency

cannot be revoked at the sole will of the principal.

In the case at bar, we agree with the finding of the trial and appellate courts that the agency granted by

Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It is clear from the

records that Gutierrez was given by Legaspi, inter alia, the power to manage the treasure hunting

activities in the subject land; to file any case against anyone who enters the land without authority

from Legaspi; to engage the services of lawyers to carry out the agency; and, to dig for any treasure

within the land and enter into agreements relative thereto . It was likewise agreed upon that Gutierrez

shall be entitled to 40% of whatever treasure may be found in the land . Pursuant to this authority and

to protect 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. 16 When an agency is constituted as a clause in a bilateral contract, that is, when the agency is

inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal as the

agency shall now follow the condition of the bilateral agreement. 17 Consequently, the Deed of

Revocation executed by Legaspi has no effect. The authority of Gutierrez to file and continue with the

prosecution of the case at bar is unaffected.

On the second issue, we hold that the issuance of the writ of preliminary injunction is justified. A writ of

preliminary injunction is an ancilliary or preventive remedy that is resorted to by a litigant to protect or

preserve his rights or interests and for no other purpose during the pendency of the principal action. 18It

is issued by the court to prevent threatened or continuous irremediable injury to the applicant before his

claim can be thoroughly studied and adjudicated. 19 Its aim is to preserve the status quo ante until the

merits of the case can be heard fully, upon the 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. cHAaCE

It is crystal clear that at the hearing for the issuance of a writ of preliminary injunction, mere  prima 

facie evidence is needed to establish the applicant's rights or interests in the subject matter of the main

action. 21 It is not required that the applicant should conclusively show that there was a violation of his

rights as this issue will still be fully litigated in the main case. 22 Thus, an applicant for a writ is required

only to show that he has an ostensible right to the final relief prayed for in his complaint. 23

In the case at bar, we find that respondent judge had sufficient basis to issue the writ of preliminary

injunction. It was established, prima facie, that Legaspi has a right to peaceful possession of his

land, pendente lite. Legaspi had title to the subject land. It was likewise established that the diggings

were conducted by petitioners in the enclosed area of 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. 24 It bears to stress again 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, 25 the adverse and

erroneous rulings of a judge on the various motions of a party do not sufficiently prove bias and

prejudice to disqualify him. To be disqualifying, it must be shown that the bias and prejudice stemmed

from an extrajudicial source and result in an opinion on the merits on some basis other than what the

judge learned from his participation in the case. Opinions formed in the course of judicial proceedings,

although erroneous, as long as based on the evidence adduced, do not prove bias or prejudice. We also

emphasized that repeated rulings against a litigant, no matter how erroneously, vigorously and

consistently expressed, do not amount to bias and prejudice which can be a bases for the disqualification

of a judge.

Finally, the inhibition of respondent judge in hearing the case for damages has become moot and

academic in view of the 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. CDAHaE

SO ORDERED.

THIRD DIVISION

[G.R. No. 136114. January 22, 2004.]

LANDBANK OF THE PHILIPPINES, petitioner, vs. CONTINENTAL WATCHMAN

AGENCY INCORPORATED AND THE COURT OF APPEALS, respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J p:

We have consistently held that there is no grave abuse of discretion in the issuance of a writ of

preliminary injunction where a party was not deprived of its day in court, as it was heard and had

exhaustively presented all its arguments and defenses. 1 Hence, when contending parties were both

given ample time and opportunity to present their respective evidence and arguments in support of their

opposing contentions, no grave abuse of discretion can be attributed to the trial court which issued the

writ of preliminary injunction, as it is given a generous latitude in this regard, pursuant to Section 4, Rule

58 of the 1997 Rules of Civil Procedure, as amended.

Assailed in this petition for certiorari under Rule 65 of the same Rules is the Decision 2 dated July 31,

1998 of the Court of Appeals in CA-G.R. SP No. 46890, entitled "Land Bank of the Philippines versus Judge 

Vivencio S. Baclig  and Continental  Watchman Agency Incorporated," the dispositive portion of which

reads:

"WHEREFORE, premises considered, the petition is hereby denied due course

and the same DISMISSED. Let the original record of the case be remanded to

the court a quo immediately upon the finality hereof.

"SO ORDERED." 3

On September 28, 1996, Land Bank of the Philippines (LBP), herein petitioner, caused to be published in

the Philippine Daily Inquirer, a newspaper of general circulation, an "Invitation to Pre-Qualify," inviting

reputable security agencies to pre-qualify for security guard services in the different LBP offices,

properties and installations nationwide. Continental Watchmen Agency Incorporated (CWAI), herein

private respondent, and other security agencies responded to the invitation and participated in the

public bidding.

In the bidding proper held on June 10, 1997, all the pre-qualified security agencies, private respondent

included, submitted their individual sealed bid proposals to petitioner's Special Committee for the

Selection of Security Agencies (Bid Committee). Private respondent submitted a bid for three (3) areas,

namely, Area I, Area III, and Area V, all in Luzon.

After all the bids were opened and evaluated, it turned out that private respondent was the lowest

bidder for those three areas.

However, on June 18, 1997, the Bid Committee declared private respondent disqualified because (1) its

bid price was below the monthly salary of a guard prescribed by the Philippine Association of Detective

and Protective Agency Operators, Inc.; and (2) it violated petitioner's Bid Bulletin No. 1 requiring that the

bid price should include night differential pay for all the guards.

Private respondent asked for reconsideration but was denied by the Bid Committee.

Hence, on July 22, 1997, private respondent filed with the Regional Trial Court, Branch 17, Manila, a

petition for injunction and damages with a prayer for a preliminary mandatory injunction against

petitioner LBP, docketed as Civil Case No. 97-84264.

On August 1, 1997, after the hearing wherein both parties presented their respective evidence, the trial

court issued a temporary restraining order (TRO) effective for twenty (20) days. At the same time, the

trial court set for hearing private respondent's application for preliminary injunction. This incident was

heard on August 22, 1997. Thereafter, the trial court issued an Order directing the issuance of a writ of

preliminary injunction, thus: TCaAHI

"WHEREFORE, the petition for the issuance of a writ of preliminary injunction is

hereby granted. Upon the filing of a bond in the sum of Fifty Thousand Pesos

(P50,000.00), Philippine currency, and the approval thereof by the Court, let a

writ issue directing the defendant, its attorneys, representatives and other

persons assisting it, to cease and desist from awarding the contract for security

agencies for Area I, Area III and Area V in Luzon to any security agency, until

further orders from the Court.

"SO ORDERED." 4

Meanwhile, on August 27, 1997, petitioner filed its "Answer with Special and/or Affirmative Defenses

and Compulsory Counterclaim." 5

On September 2, 1997, a writ of preliminary injunction 6 was accordingly issued.

On January 12, 1998, the trial court issued an Order denying petitioner's motion for reconsideration of its

Order directing the issuance of a writ of preliminary injunction.

Consequently, on February 23, 1998, petitioner filed with respondent Court of Appeals a "Petition

for Certiorari and Prohibition with Preliminary Injunction and Temporary Restraining Order" under Rules

58 and 65 of the 1997 Rules of Civil Procedure, as amended, alleging that the two Orders of the trial

court dated August 22, 1997 and January 12, 1998 were issued without jurisdiction or with grave abuse

of discretion. 7

On July 31, 1999, the Court of Appeals issued its assailed Decision dismissing the petition, thus:

"WHEREFORE, premises considered, the petition is hereby denied due course

and the same DISMISSED. Let the original record of the case be remanded to

the court a quo immediately upon the finality hereof.

"SO ORDERED." 8

The Court of Appeals ratiocinated as follows:

"After a fine filtration of the record ('expediente') and a close look at the two

assailed orders, We agree with the private respondent that the respondent

court did not commit any grave abuse of discretion in issuing them. At this

juncture, it is well to state that the special civil action forcertiorari is a remedy

designed for the correction of errors of jurisdiction and not errors of judgment

(Ramnani vs. Court of Appeals, 221 SCRA 582). It will not even issue for simple

abuse of discretion (University of the Philippines vs. Civil  Service Commission,

228 SCRA 207). Parenthetically, grave abuse of discretion implies such

capricious and whimsical exercise of judgment as is equivalent to lack of

jurisdiction (Planters Products,  Inc. vs. Court of Appeals, 193 SCRA 563), or in

other words, where the power is exercised in an arbitrary or despotic manner

by reason of passion or personal hostility — and it must be so patent and gross

as to amount to an evasion of positive duty or to a virtual refusal to perform the

duty enjoined or to act at all in contemplation of law (Bustamante 

vs. Commission on Audit, 216 SCRA 134; Philippine Airlines, Inc.vs. Confesor, 231

SCRA 41). In the case at bench, the record does not show such kind of actuation

on the part of the respondent judge. As long as a court or quasi-judicial body

acts within its jurisdiction, any alleged errors committed in the exercise of its

jurisdiction will amount to nothing more than errors of judgment which are

reviewable by timely appeal and not by a special civil action of certiorari (New 

York Marine Managers, Inc. vs.Court of Appeal, 249 SCRA 416; Commissioner on 

Internal Revenue vs. Court of Appeals, 257 SCRA 200).

"Furthermore, this being a petition for certiorari, factual matters are not proper

for consideration (Insular Bank of Asia and America vs. Court of Appeals, 228

SCRA 420; Navarro vs. Commission on Elections, 228 SCRA 596), for this Court

has to confine itself to the issue of whether or not the respondent court lacked

or exceeded its jurisdiction or committed grave abuse of discretion (San Pedro 

vs. Court of Appeals, 253 SCRA 145) — it cannot review conclusion of fact (Holy 

Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358). Anyway, it should be

stated that the grant or denial of an injunction rests on the sound discretion of

the trial court (Technology   Developers,   Inc. vs. Court   of   Appeals, 193 SCRA

147; Avila vs.Tapucar, 201 SCRA 148) — and the same will not be interfered

with by appellate courts except on a clear abuse of discretion (S & A Gaisano 

Incorporated vs. Hidalgo, 19 SCRA 224), which situation appeared wanting in

the case at bench. We took note that the respondent court conducted hearings

before issuing a writ of preliminary injunction. More. The private respondent

was even required to put a bond to answer for possible damages which may

arise from the issuance of said writ of preliminary injunction. On this score, We

wish to advert to Supreme Court rulings that erroneous conclusions or errors of

judgment or of procedure, not relating to the court's jurisdiction or involving

grave abuse of discretion, are not reviewable by certiorari under Rule 65 of the

Rules of Court (Rodriguez vs. Court of Appeals, 245 SCRA 150; Commissioner on 

Internal   Revenue   vs. Court   of   Appeals, supra; Santiago   Land   Development 

Company  vs. Court  of  Appeals, 258 SCRA 535). For, as already stated, such

errors are reviewable by timely appeal.

"Similarly, the special civil action of prohibition must be based on jurisdictional

grounds against the trial court's judgment (Vda. De Suan vs. Unson, 185 SCRA

437). It is designed to prevent the use of the strong arm of the law in an

oppressive or vindictive manner (Planas vs. Gil, 67 SCRA 62;Lopez vs. City Judge,

18 SCRA 616). To justify its issuance, there are certain requisites which must be

complied with (Guingona   vs. City   Fiscal   of  Manila, 137 SCRA 597), which

requisites the petitioner failed to comply. Also, said recourse is available only

when there is no appeal or any plain, speedy or adequate remedy in the

ordinary course of law (Pilar Development Corporation vs. Court of Appeal, 225

SCRA 549). Undeniably, appeal will be available in the case at bench." 9

Petitioner filed a motion for reconsideration but was denied by the Appellate Court in its Resolution

dated September 22, 1998.

Hence, the present petition for certiorari alleging:

"IT IS MOST RESPECTFULLY SUBMITTED THAT THE HONORABLE COURT OF

APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT PROMULGATED AND

ISSUED THE DECISION DATED JULY 31, 1998 AND RESOLUTION DATED

SEPTEMBER 22, 1998 UPHOLDING THE QUESTIONED ORDERS OF THE

RESPONDENT COURT IN CIVIL CASE NO. 97-84264 DATED AUGUST 22, 1997

AND JANUARY 12, 1998."10

Petitioner submits inter alia that the Court of Appeals, by dismissing its petition, in effect compelled it to

enter into a contract for security guard services with private respondent and as a result, Civil Case No.

97-84264 has been prematurely resolved.

Private respondent, on the other hand, counters that respondent Court of Appeals did not act with grave

abuse of discretion in affirming the Order of the trial court directing the issuance of the writ of

preliminary injunction. In the first place, the Order was issued after a hearing wherein the parties were

given the opportunity to present their respective evidence. Secondly, private respondent, being the

lowest bidder, has a clear right to an injunction. Lastly, whatever error the trial court may have

committed is only an error of judgment, not correctible by certiorari.

The petition must fail. EaCDAT

First, petitioner's remedy is an appeal to this Court from the Court of Appeals' Decision dated July 31,

1998 by way of a petition for review on certiorariunder Rule 45. Instead, it filed this petition

for certiorari under Rule 65 only on November 18, 1998 or forty three (43) days after it received the

Appellate Court's Decision denying its motion for reconsideration. Apparently, petitioner resorted

to certiorari because it failed to interpose an appeal seasonably. This, of course, is a procedural flaw.

Time and again we have reminded members of the bench and bar that the special civil action

of certiorari cannot be used as a substitute for a lost appeal. 11

Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the

interest of justice, has the discretion to treat a petition for certiorari as a petition for review

on certiorari under Rule 45, especially if filed within the reglementary period for filing a petition for

review. 12 In this case, however, we find no reason to justify a liberal application of the Rules.

Even assuming that the present petition is a proper remedy, still it is dismissible. Based on the evidence

presented by private respondent, the trial court found that all   the requisites   for   the  issuance of  an 

injunctive writ were present. 13 Although petitioner presented evidence to rebut private respondent's

assertions, those will be better assessed and considered in the trial proper. The assailed injunctive writ is

not a judgment on the merits of the case, contrary to the submission of petitioner, for a writ of

preliminary injunction is generally based solely on initial and incomplete evidence. The evidence

submitted during the hearing of the incident is not conclusive or complete for only a "sampling" is

needed to give the trial court an idea of the justification for the preliminary injunction pending the

decision of the case on the merits. 14 As such, the findings of fact and opinion of a court when issuing

the writ of preliminary injunction are interlocutory in nature and made before the trial on the merits is

commenced or terminated. Furthermore, it does not necessarily proceed that when a writ of preliminary

injunction is issued, a final injunction will follow, as erroneously argued by petitioner. There are vital

facts that have yet to be presented during the trial which may not be obtained or presented during the

hearing on the application for the injunctive writ. 15 Clearly, petitioner's contention that the trial court

and the Court of Appeals had already disposed of the main case lacks merit.

Also, the sole object of a preliminary injunction is to preserve the status quo until the merits of the case

can be heard. 16 Here, after evaluating the evidence presented by both contending parties, the trial

court held that justice would be better served if the status quo is preserved until the final determination

of the merits of the case. We find nothing whimsical, arbitrary, or capricious in such ruling.

Significantly, the rule is well-entrenched that the issuance of the writ of preliminary injunction rests upon

the sound discretion of the trial court. It bears reiterating that Section 4 of Rule 58 gives generous

latitude to the trial courts in this regard for the reason that conflicting claims in an application for a

provisional writ more often than not involve a factual determination which is not the function of the

appellate courts. Hence, the exercise of sound judicial discretion by the trial court in injunctive matters

must not be interfered with except when there is manifest abuse, 17 which is wanting in the present

case.

In sum, we find the petition bereft of merit. It is not the proper remedy and even if it is, no grave abuse

of discretion was committed by respondent Court of Appeals.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

THIRD DIVISION

[G.R. No. 175145. March 28, 2008.]

SPOUSES ALFREDO and SHIRLEY YAP, petitioners, vs. INTERNATIONAL

EXCHANGE BANK, 1 SHERIFF RENATO C. FLORA and/or OFFICE OF THE CLERK

OF COURT, REGIONAL TRIAL COURT, MAKATI CITY, respondents.

D E C I S I O N

CHICO-NAZARIO, J p:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which

seeks to set aside the Resolution 2 of the Court of Appeals in CA-G.R. SP No. 95074 dated 11 July 2006

which dismissed petitioner-spouses Alfredo and Shirley Yap's petition for certiorari which questioned the

Order 3 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and

dissolving the Writ of Preliminary Injunction dated 13 August 2001, and its Resolution 4 dated 9 October

2006 denying petitioners' Motion for Reconsideration.

The factual antecedents are as follows:

Respondent International Exchange Bank (iBank, for brevity) filed a collection suit with application for

the issuance of a writ of preliminary attachment against Alberto Looyuko and Jimmy T. Go in the RTC of

Makati. The case was raffled to Branch 150 and was docketed as Civil Case No. 98-791. On 7 October

1999, the trial court rendered a Decision in favor of respondent iBank and found Alberto Looyuko and

Jimmy T. Go liable, ordering them to pay the amount of ninety-six million pesos (P96,000,000.00), plus

penalty.

A Writ of Execution on the judgment against Mr. Looyuko was implemented. Thereafter, a Writ of

Execution was issued against Mr. Go for his part of the liability. Thereupon, respondent Renato C. Flora,

Sheriff of Branch 150 of the RTC of Makati City, issued a Notice of Sheriff's Sale on 12 May 2000 notifying

all the parties concerned, as well as the public in general, that the following real properties, among other

properties, covered by Transfer Certificates of Title (TCTs) No. PT-66751, No. PT-66749, No. 55469 and

No. 45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs

No. 4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, allegedly owned by Mr. Go will be

sold at public auction on 15 June 2000. 5 Said public auction did not push through

On 13 June 2000, petitioner-spouses Alfredo and Shirley Yap filed a Complaint for Injunction with Prayer

for Temporary Restraining Order and/or Preliminary Injunction with the RTC of Pasig City. The case was

docketed as Civil Case No. 67945 and was raffled to Branch 158 thereof. Petitioners sought to stop the

auction sale alleging that the properties covered by TCTs No. PT-66751, No. PT-66749, No. 55469 and No.

45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs No.

4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, are already owned by them by virtue

of Deeds of Absolute Sale 6 executed by Jimmy Go in their favor. They further alleged that respondent

sheriff disregarded their right over the properties despite their execution of an Affidavit of Adverse Claim

to prove their claim over the properties and the publication of a Notice to the Public warning that

various deeds had already been issued in their favor evidencing their right over the same.

A second Notice of Sheriff's Sale dated 30 June 2000 was issued by Sheriff Flora scheduling a public

auction on 24 July 2000 for the afore-mentioned properties. The public auction did not happen anew.

Thereafter, a third Notice of Sheriff's Sale dated 21 July 2000 scheduling a public auction on 22 August

2000 was issued.

On 21 August 2000, the RTC of Pasig City, Branch 158, issued an Order in Civil Case No. 67945 denying

petitioners' application for a writ of preliminary injunction. 7

As scheduled, the public auction took place on 22 August 2000 for which respondent sheriff issued a

Certificate of Sale stating that the subject properties had been sold at public auction in favor of

respondent iBank, subject to the third-party claims of petitioners. 8

Petitioners filed with the RTC of Pasig City the instant case for Annulment of Sheriff's Auction Sale

Proceedings and Certificate of Sale against iBank, the Clerk of Court and Ex-Officio Sheriff of RTC Makati

City, and Sheriff Flora. The case was docketed as Civil Case No. 68088 and was raffled to Branch 264. The

Complaint was amended to include a prayer for the issuance of a Temporary Restraining Order and/or

Writ of Preliminary Injunction. 9

Engracio M. Escariñas, Jr., Clerk of Court VII and Ex-Officio Sheriff of RTC Makati City, filed his Answer

while respondents iBank and Sheriff Flora filed an Omnibus Motion (Motion to Refer the Complaint to

the Office of the Clerk of Court for Raffle in the Presence of Adverse Party and Motion to Dismiss) dated

17 October 2000. 10

In an Order dated 20 February 2001, Hon. Leoncio M. Janolo, Jr. denied the Omnibus Motion for lack of

merit. 11 Respondents iBank and Sheriff Flora filed a Motion for Reconsideration dated 26 February

2001. 12

A hearing was held on the application for preliminary injunction. On 18 July 2001, an Order was issued by

Judge Janolo granting petitioners' application for issuance of a writ of preliminary injunction. The Order

reads:

WHEREFORE, premises considered, plaintiffs' application for issuance of a Writ

of Preliminary Injunction is GRANTED, and defendants and their representatives

are enjoined from proceeding further with the execution, including

consolidating title and taking possession thereof, against plaintiffs' real

properties covered by Transfer Certificates of Title Nos. PT-66751, PT-66749,

55469, 45229, 4621, 52987 and 36489.

The Writ of Preliminary Injunction shall be issued upon plaintiffs' posting of a

bond executed to defendant in the amount of Three Million Pesos

(P3,000,000.00) to the effect that plaintiffs will pay defendants all damages

which the latter may sustain by reason of the injunction if it be ultimately

decided that the injunction is unwarranted. 13

On 13 August 2001, upon posting a bond in the amount of three million pesos (P3,000,000.00), Judge

Janolo issued the Writ of Preliminary Injunction. 14

Respondents iBank and Sheriff Flora filed on 29 August 2001 a Motion for Reconsideration 15 of the

order granting the Writ of Preliminary Injunction which the trial court denied in an Order dated 21

November 2001. 16

With the denial of their Motion for Reconsideration, respondents iBank and Sheriff Flora filed with the

Court of Appeals a Petition for Certiorari,Prohibition and Mandamus with prayer for issuance of

Temporary Restraining Order and/or Preliminary Injunction 17 praying that it: (a) issue immediately a

temporary restraining order enjoining Judge Janolo from taking any action or conducting any further

proceeding on the case; (b) annul the Orders dated 18 July 2001 and 21 November 2001; and (c) order

the immediate dismissal of Civil Case No. 68088.

In its decision dated 18 July 2003, the Court of Appeals dismissed the Petition. 18 It explained that no

grave abuse of discretion was committed by Judge Janolo in promulgating the two Orders. It emphasized

that its ruling only pertains to the propriety or impropriety of the issuance of the preliminary injunction

and has no bearing on the main issues of the case which are still to be resolved on the merits. The Very

Urgent Motion for Reconsideration filed by respondents iBank and Sheriff Flora was denied for lack of

merit. 19

Respondents iBank and Sheriff Flora thereafter filed with this Court a Petition for  Certiorari which we

dismissed. The Court's Resolution dated 7 March 2005 reads:

Considering the allegations, issues and arguments adduced in the petition

for certiorari, the Court Resolves to DISMISS the petition for being a wrong

remedy under the Rules and evidently used as a substitute for the lost remedy

of appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

Besides, even if treated as a petition under Rule 65 of the said Rules, the same

would be dismissed for failure to sufficiently show that the questioned

judgment is tainted with grave abuse of discretion. 20

Accordingly, an Entry of Judgment was issued by the Supreme Court certifying that the resolution

dismissing the case had become final and executory on 30 July 2005. 21

Subsequently, respondents iBank and Sheriff Flora filed with the RTC of Pasig City, Branch 264, an

Omnibus Motion (To Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January

2006 praying that their pending Motion for Reconsideration dated 26 February 2001 which seeks for the

dismissal of the case be resolved and/or the Writ of Preliminary Injunction previously issued be

dissolved. 22

On 9 February 2006, petitioners filed their Comment thereon with Motion to Cite in Contempt the

counsel 23 of respondents. They pray that the pending Motion for Reconsideration be denied for being

devoid of merit, and that the Motion to Dissolve Writ of Preliminary Injunction be also denied, it being a

clear defiance of the directive of the Supreme Court which ruled with finality that the injunction issued

by the trial court was providently issued and was not tainted with grave abuse of discretion. They further

ask that respondents' counsel be cited in contempt of court and be meted out the appropriate

penalty.24 Respondents filed a Reply dated 20 February 2006.

In a Manifestation dated 24 March 2006, respondents iBank and Sheriff Flora submitted an Affidavit of

Merit to emphasize their resolve and willingness, among other things, to file a counter-bond to cover

whatever damages petitioners may suffer should the trial court decide to dissolve the writ of preliminary

injunction. 25 Petitioners filed a Counter-Manifestation with Second Motion to Cite Respondents'

Counsel in Direct Contempt of Court 26 to which respondents filed an Opposition. 27 Petitioners filed a

Reply thereto. 28

In an Order 29 dated 29 April 2006, the trial court recalled and dissolved the Writ of Preliminary

Injunction dated 13 August 2001, and ordered respondents to post a counter-bond amounting to ten

million pesos. It directed the Branch Clerk of Court to issue a Writ Dissolving Preliminary Injunction upon

the filing and approval of the required counter-bond. The dispositive portion of the Order reads:

WHEREFORE, this Court's writ of preliminary injunction dated August 13, 2001 is

recalled and dissolved. Defendants are hereby ordered to post a counter-bond

amounting to ten million pesos (P10,000,000.00) to cover the damages plaintiffs

would incur should a favorable judgment be rendered them after trial on the

merits.

The Branch Clerk of Court is directed to issue a Writ Dissolving Preliminary

Injunction upon the filing and approval of defendants' counter-bond. 30

The trial court explained its ruling in this wise:

In our jurisdiction, the provisions of Rule 58 of the Revised Rules of Court allow

the issuance of preliminary injunction. This court granted plaintiffs' prayer

preliminary injunction in the Order dated July 18, 2001 and the corresponding

writ issued on August 13, 2001.

Defendants in this case, however, are not without remedy to pray for

dissolution of preliminary injunction already granted because it is only

interlocutory and not permanent in nature.

The provisions of Section 6, Rule 58 of the Revised Rules of Court allow

dissolution of the injunction granted provided there is affidavit of party or

persons enjoined; an opportunity to oppose by the other party; hearing on the

issue, and filing of a bond to be fixed by the court sufficient to compensate

damages applicant may suffer by dissolution thereby.

A preliminary injunction is merely a provisional remedy, an adjunct to the main

case subject to the latter's outcome. Its sole objective is to preserve the status 

quo until the trial court hears fully the merits of the case. The  status quo is the

last actual, peaceable and uncontested situation which precedes a controversy.

The status quo should be that existing at the time of the filing of the case. A

preliminary injunction should not establish new relations between the parties,

but merely maintain or re-establish the pre-existing relationship between them.

. . . .

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

and constitutes grave abuse of discretion. . . . . In the case at bar, plaintiffs' deed

of sale was purported to be not duly notarized. As such, the legal right of what

the plaintiffs claim is still doubtful and such legal right can only be threshed out

in a full blown trial where they can clearly establish the right over the disputed

properties.

Moreover, defendants are willing to post a counter bond which could cover up

to the damages in favor of plaintiffs in case the judgment turns out to be

adverse to them. Under the Rules of Civil Procedure, this is perfectly allowed

and the dissolution of the writ of injunction can accordingly be issued. In the

case of Lasala vs. Fernandez, the highest court has enunciated that "a court has

the power to recall or modify a writ of preliminary injunction previously issued

by it. The issuance or recall of a preliminary writ of injunction is an interlocutory

matter that remains at all times within the control of the court." (G.R. No. L-

16628, May 23, 1962). The defendants had shown that dissolution of the writ of

injunction is just and proper. It was duly shown that great and irreparable injury

would severely cause the defendants if the writ of injunction shall continue to

exist. 31

On 5 May 2006, petitioners filed a Petition for Certiorari before the Court of Appeals asking that the trial

court's Order dated 29 April 2006 be set aside. 32

During the pendency of the Petition for Certiorari, petitioners filed before the trial court a Very Urgent

Motion to Suspend Proceedings 33 to which respondents filed a Comment. 34

On 11 July 2006, the Court of Appeals resolved to dismiss outright the Petition for Certiorari for failure of

petitioners to file a motion for reconsideration of the Order dated 29 April 2006. 35 The Motion for

Reconsideration 36 filed by petitioners was denied. 37

After being granted an extension of thirty days within which to file a petition for  certiorari, petitioners

filed the instant Petition on 14 December 2006. They made the following assignment of errors:

I

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR.

GRAVELY ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF

JURISDICTION IN DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION DATED

13 AUGUST 2001.

1. DESPITE THE FACT THAT THE COURT OF APPEALS RESOLVED WITH FINALITY

THAT YOUR PETITIONERS WILL "SUFFER IRREPARABLE INJURY"

(C.A.'s emphasis) IF NO INJUNCTION IS ISSUED.

2. DESPITE THE FACT THAT THE HON. SUPREME COURT RULED WITH FINALITY

THAT THE COURT A QUO DID NOT ABUSE ITS JURISDICTION WHEN IT

ISSUED THE INJUNCTION DATED 13 AUGUST 2001, THUS,

SUSTAINING THE REGULARITY OF THE WRIT OF PRELIMINARY

INJUNCTION.

II

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR.

GRAVELY ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF

JURISDICTION BY FIXING THE PHP10,000,000.00 COUNTER-BOND DESPITE THE

FACT THAT THE IRREPARABLE DAMAGE TO PETITIONERS AS A RESULT OF

DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION IS INCAPABLE OF

PECUNIARY ESTIMATION OR COULD NOT BE QUANTIFIED.

III

THE HONORABLE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS

DISCRETION IN OUTRIGHTLY DISMISSING YOUR PETITIONERS PETITION FOR

CERTIORARI IN CA-GR SP NO. 95074, AS IT FAILED TO APPLY EXISTING

JURISPRUDENCE TO THE EFFECT THAT A MOTION FOR RECONSIDERATION MAY

BE DISPENSED WITH WHERE THE CONTROVERTED ACT IS PATENTLY ILLEGAL OR

WAS PERFORMED WITHOUT JURISDICTION OR IN EXCESS OF JURISDICTION AS

HELD IN HAMILTON VS. LEVY, (344 SCRA 821)

IV

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND GRAVELY ABUSED

ITS DISCRETION WHEN IT DENIED PETITIONERS' MOTION FOR

RECONSIDERATION CLEARLY POINTING OUT TO THE COURT THAT AS AN

EXCEPTION TO THE RULE, THE REQUIRED MOTION FOR RECONSIDERATION MAY

BE DISPENSED WITH.

At the outset, it must be said that the Writ of Preliminary Injunction dated 13 August 2001 issued by the

trial court has not yet been actually dissolved because respondents have not posted the required

counter-bond in the amount of P10,000,000.00. The dissolution thereof is primed on the filing of the

counter-bond.

Petitioners argue that the trial court abused its discretion when it ordered the dissolution of the Writ of

Preliminary Injunction, the propriety of its issuance having been affirmed by both the Court of Appeals

and the Supreme Court. There being an Order by this Court that the injunction issued by the trial court

was not tainted with grave abuse of discretion, the dissolution of said writ is a clear defiance of this

Court's directive.

Respondents, on the other hand, contend that the trial court has the authority and prerogative to set

aside the Writ of Preliminary Injunction. They add that since petitioners' Deed of Sale was not duly

notarized, the latter's application for preliminary injunction is devoid of factual and legal bases. They

assert that, not being public documents, the subject deeds of sale are nothing but spurious, if not

falsified, documents. They add that the continuance of the Writ of Preliminary Injunction would cause

them irreparable damage because it continues to incur damage not only for the nonpayment of the

judgment award (in Civil Case No. 98-791 before the RTC of Makati City, Br. 150), but also for

opportunity losses resulting from the continued denial of its right to consolidate title over the levied

properties.

There is no dispute that both the Court of Appeals and this Court have ruled that the issuance of the Writ

of Preliminary Injunction by the trial court was not tainted with grave abuse of discretion. Respondents

tried to undo the issuance of said writ but to no avail. The Resolution on the matter attained finality on

30 July 2005 and an entry of judgment was made.

This, notwithstanding, respondents filed with the RTC of Pasig City, Branch 264, an Omnibus Motion (To

Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January 2006 praying that

their Motion for Reconsideration dated 26 February 2001 of the trial court's denial of their Motion to

Dismiss which the trial court failed to resolve, be resolved and/or the Writ of Preliminary Injunction

previously issued be dissolved. With this Omnibus Motion, the trial court issued the Order dated 13

August 2001 recalling and dissolving the Writ of Preliminary Injunction conditioned on the filing of a

P10,000,000.00 counter-bond.

The question is: Under the circumstances obtaining in this case, may the trial court recall and dissolve

the preliminary injunction it issued despite the rulings of the Court of Appeals and by this Court that its

issuance was not tainted with grave abuse of discretion?

We hold that the trial court may still order the dissolution of the preliminary injunction it previously

issued. We do not agree with petitioners' argument that the trial court may no longer dissolve the

preliminary injunction because this Court previously ruled that its issuance was not tainted with grave

abuse of discretion.

The issuance of a preliminary injunction is different from its dissolution. Its issuance is governed by

Section 3, 38 Rule 58 of the 1997 Rules of Civil Procedure while the grounds for its dissolution are

contained in Section 6, Rule 58 of the 1997 Rules of Civil Procedure. As long as the party seeking the

dissolution of the preliminary injunction can prove the presence of any of the grounds for its dissolution,

same may be dissolved notwithstanding that this Court previously ruled that its issuance was not tainted

with grave abuse of discretion.

Section 6 of Rule 58 reads:

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or 

restraining order. — The application for injunction or restraining order may be

denied, upon a showing of its insufficiency. The injunction or restraining order

may also be denied, or, if granted, may be dissolved, on other grounds upon

affidavits of the party or person enjoined, which may be opposed by the

applicant also by affidavits. It may further be denied, or, if granted, may be

dissolved, if it appears after hearing that although the applicant is entitled to

the injunction or restraining order, the issuance or continuance thereof, as the

case may be, would cause irreparable damage to the party or person enjoined

while the applicant can be fully compensated for such damages as he may

suffer, and the former files a bond in an amount fixed by the court conditioned

that he will pay all damages which the applicant may suffer by the denial or the

dissolution of the injunction or restraining order. If it appears that the extent of

the preliminary injunction or restraining order granted is too great, it may be

modified.

Under the afore-quoted section, a preliminary injunction may be dissolved if it appears after hearing that

although the applicant is entitled to the injunction or restraining order, the issuance or continuance

thereof, as the case may be, would cause irreparable damage to the party or person enjoined while the

applicant can be fully compensated for such damages as he may suffer, and the former files a bond in an

amount fixed by the court on condition that he will pay all damages which the applicant may suffer by

the denial or the dissolution of the injunction or restraining order. Two conditions must concur: first, the

court in the exercise of its discretion, finds that the continuance of the injunction would cause great

damage to the defendant, while the plaintiff can be fully compensated for such damages as he may

suffer; second, the defendant files a counter-bond. 39 The Order of the trial court dated 29 April 2006 is

based on this ground.

In the case at bar, the trial court, after hearing, found that respondents duly showed that they would

suffer great and irreparable injury if the injunction shall continue to exist. As to the second condition, the

trial court likewise found that respondents were willing to post a counter-bond which could cover the

damages that petitioners may suffer in case the judgment turns out to be adverse to them. The Order of

the trial court to recall and dissolve the preliminary injunction is subject to the filing and approval of the

counter-bond that it ordered. Failure to post the required counter-bond will necessarily lead to the non-

dissolution of the preliminary injunction. The Order of Dissolution cannot be implemented until and

unless the required counter-bond has been posted.

The well-known rule is that the matter of issuance of a writ of preliminary injunction is addressed to the

sound judicial discretion of the trial court, and its action shall not be disturbed on appeal unless it is

demonstrated that it acted without jurisdiction or in excess of jurisdiction or, otherwise, in grave abuse

of discretion. By the same token, the court that issued such a preliminary relief may recall or dissolve the

writ as the circumstances may warrant. 40 In the case on hand, the trial court issued the order of

dissolution on a ground provided for by the Rules of Court. The same being in accordance with the rules,

we find no reason to disturb the same.

Petitioners contend that the Court of Appeals erred and gravely abused its discretion when it dismissed

outright their Petition for Certiorari by failing to apply existing jurisprudence that a motion for

reconsideration may be dispensed with where the controverted act is patently illegal or was performed

without jurisdiction or in excess of jurisdiction. On the other hand, respondents urge the Court to deny

the Petition for Review, arguing that the Court of Appeals properly applied the general rule that the filing

of a motion for reconsideration is a condition sine qua non in order that certiorari will lie.

We find petitioners' contention to be untenable.

The rule is well settled that the filing of a motion for reconsideration is an indispensable condition to the

filing of a special civil action for certiorari. 41 It must be stressed that a petition for certiorari is an

extraordinary remedy and should be filed only as a last resort. The filing of a motion for reconsideration

is intended to afford the trial court an opportunity to correct any actual error attributed to it by way of

re-examination of the legal and factual issues. 42 By their failure to file a motion for reconsideration,

they deprived the trial court of the opportunity to rectify any error it committed, if there was any.

Moreover, a perusal of petitioners' petition for certiorari filed with the Court of Appeals shows that they

filed the same because there was no appeal, or any plain, speedy and adequate remedy in the course of

law except via a petition for certiorari. When same was dismissed by the Court of Appeals for failure to

file a motion for reconsideration of the trial court's Order, they argue that while the filing of a motion for

reconsideration is a sine qua non before a petition for certiorari is instituted, the same is not entirely

without exception like where the controverted act is patently illegal or was performed without

jurisdiction or in excess of jurisdiction. It was only when the Court of Appeals dismissed their Petition did

they argue that exceptions to the general rule should apply. Their invocation of the application of the

exceptions was belatedly made. The application of the exceptions should be raised in their Petition

for Certiorari and not when their Petition has already been dismissed. They must give their reasons and

explain fully why their case falls under any of the exceptions. This, petitioners failed to do.

Petitioners' argument that they filed the Petition for Certiorari without filing a motion for

reconsideration because there is no appeal, or any plain, speedy and adequate remedy in the course of

law except via a Petition for Certiorari does not convince. We have held that the "plain" and "adequate

remedy" referred to in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of the

assailed Order or Resolution. 43 The mere allegation that there is "no appeal, or any plain, speedy and

adequate remedy" is not one of the exceptions to the rule that a motion for reconsideration is a  sine qua 

nonbefore a petition for certiorari may be filed.

All told, we hold that the act of the trial court of issuing the Order dated 29 April 2006 was not patently

illegal or performed without or in excess of jurisdiction. The Court of Appeals was correct in dismissing

outright petitioners' Petition for Certiorari for failing to file a motion for reconsideration of the trial

court's Order.

Our pronouncements in this case are confined only to the issue of the dissolution of the preliminary

injunction and will not apply to the merits of the case.

WHEREFORE, all considered, the Petition is hereby DENIED. The Resolutions of the Court of Appeals in

CA-GR SP No. 95074 dated 11 July 2006 and 9 October 2006 are AFFIRMED. The Order dated 29 April

2006 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and

dissolving the Writ of Preliminary Injunction dated 13 August 2001 is AFFIRMED. Upon the posting by

respondents of the counter-bond required, the trial court is directed to issue the Writ Dissolving

Preliminary Injunction. No costs.

SO ORDERED.