G.R.Nos. 139275-76 and 140949 November 25, 2004 LRTA vs.

CA
and T.N. LAL & CO., LTD. D E C I S I O N AUSTRIA-MARTINEZ, J.:
Both filed by petitioner Light Rail Transit Authority (LRTA), G.R. Nos.
139275-76 assail the Decision dated February 26, 1999, rendered by
the Court of Appeals (CA) in the consolidated petitions docketed as
CA-G.R. SP Nos. 44220 and 44227;
1
G.R. No. 140949, on the other
hand, questions the Decision dated November 12, 1999, issued by
the CA in CA-G.R. SP No. 52382.
2
These cases originated from the
orders issued by the Regional Trial Court of Pasay City (Branch 111)
in Civil Case No. 97-0423.
The antecedent facts of these consolidated petitions were summed
up by the CA in CA-G.R. SP Nos. 44220 and 44227, as follows:
On October 1, 1986, T.N. LAL & CO., LTD. (private
respondent herein and hereafter to be referred to as LAL
for short) donated a stereo system to the LRTA, to provide
music for relaxation and amusement in the 18 stations
and all the rail vehicles of LRTA along its Line 1. On March
19, 1990, LAL and the LRTA entered into an agreement
whereby LAL was authorized to air commercial
advertisements through the aforesaid stereo system for a
period of five (5) years and three (3) months from March
19, 1990, in consideration of a fee equivalent to thirty
percent (30%) of the gross sales of advertisements (less
any agency commission) annually, with minimum annual
guaranteed fees. Subsequently, the period of the contract
was amended to five (5) years from April 1, 1992, or until
March 31, 1997.
On March 31, 1997, LAL filed an action for reformation of
contract and damages (with application for preliminary
mandatory & prohibitory injunction and Temporary
Restraining Order) against LRTA with the Regional Trial
Court at Pasay City, and the same was docketed as Civil
Case No. 97-0423 and raffled to Branch 111, presided over
by the respondent judge.
The complaint alleged that vibrations and noises coming
from the light rail vehicles caused disruptions in the sound
system, resulting in a sharp decline of advertisements
aired over the said system. LAL requested for a
moratorium of the agreement until the said problem can
be solved, but LRTA refused to grant such request. Hence,
the complaint prays that the contract be reformed by
including therein a provision allowing a moratorium in
case of disruption affecting the system attributable to
mechanical/technical problems in the LRT line or light rail
vehicles, including a pro rata extension of the agreement.
The complaint also prays for a temporary restraining order
and preliminary injunction ordering the defendant to
maintain the status quo and prohibiting it or any of its
agents from disrupting, cutting, severing or disconnecting
the electric power supplied to the plaintiffs sound system.
Upon receipt of the complaint, the respondent Judge
issued a Temporary Restraining Order enjoining the
parties to maintain the status quo, and restraining the
LRTA from disrupting, cutting, severing or disconnecting
the electric power supplied to LALs sound system
installed in all the LRT stations and vehicles. The TRO was
to expire on April 20, 1997.
On April 16, 1997, after notice and hearing, the respondent judge
issued an Order, the dispositive portion of which is as follows:
WHEREFORE, with all the foregoing considerations, and
subject to the condition of plaintiff posting a bond in the
amount of Five Hundred Thousand Pesos (P500,000.00),
Philippine Currency, conditioned to answer for any
damage which the defendant may suffer by reason of the
injunction herein granted, let therefore, a Writ of
Preliminary Injunction be issued in favor of the plaintiff
against the defendant who is enjoined from:
(a) Terminating or declaring as terminated the
Agreement dated March 19, 1990 as amended
on August 6, 1993 and to observe the status
quo before March 31, 1997; and,
(b) As a consequence thereof, to desist from
removing, disrupting, interfering, disconnecting
or tampering the power supply leading to
plaintiffs sound system, in all places, sites and
locations within the defendants area of
responsibility for the duration of this
proceedings, UNLESS THIS ORDER IS EARLIER
RECALLED by this Court.
SO ORDERED. (p. 57, Rollo)
On April 22, 1997, LRTA filed a Manifestation alleging that the
failure of LAL to post a bond has rendered the Order dated April 16,
1997 ineffective. On the same day, LRTA unplugged the electrical
connection of the sound system.
However, on April 25, 1997, LAL filed an injunction bond in the
amount of P500,000.00, and the writ of preliminary injunction was
issued by the respondent judge. The same was served on LRTA on
the same day.
On April 25, 1997, LAL filed a "Motion to Cite the Defendant in
Contempt", alleging that on April 22, 1997, in defiance of the courts
Order of March 31, 1997 (sic), the defendant disconnected and cut
off the power supply to its sound system thereby disrupting and
disturbing the regular programs and advertisements aired therein.
The motion was set for hearing on April 29, 1997.
On April 28, 1997, LRTA filed a motion for postponement which was
granted and the hearing was reset to May 15, 1997. However, the
respondent judge issued an order dated April 29, 1997, the
dispositive portion of which is as follows:
WHEREFORE, pending resolution of plaintiffs Motion To
Cite Defendant In Contempt which is calendared anew on
May 15, 1997 at 8:30 A.M., defendant Light Rail Transit
Authority as well as its counsel are hereby ORDERED to
comply with the Order of this Court dated April 16, 1997
to cause the complete restoration of the sound system to
its original status/condition immediately upon receipt
hereof. Let this Order be served for prompt
implementation by the Sheriff of this Court who is
directed to submit his report/return on the action taken in
this regard.
so ordered. (p. 32, Rollo)
On April 30, 1997, the LRTA filed a motion for
reconsideration of the said order.
On May 5, 1997, LAL filed another motion to cite
Evangeline M. Razon, Geronima P. Anastacio and Atty.
Moises S. Tolentino, [Jr.] for civil contempt, for refusing to
comply with the order of the court dated April 29, 1997.
The motion was requested to be submitted for[to] the
court for proper decision "immediately upon receipt
hereof".
On May 7, 1997, LRTA filed an opposition to the two
motions to cite in contempt.
On May 13, 1997, the respondent judge issued the herein
assailed order the dispositive portion of which is as
follows:
WHEREFORE, this Court finds the defendants guilty of
indirect contempt for defying the Orders of April 16 and
29, 1997 and the Writ of Preliminary Injunction issued in
this case. Since the act committed can still be corrected or
capable of being undone by the officers of the defendant
corporation and/or its agents/operators themselves, let
therefore a Warrant of Arrest be issued against the
following persons, namely:
1) Evangeline M. Razon, Officer-in-charge, LRTA;
2) Geronima P. Anastacio, Head of LRTA, Legal
Department; and,
3) Moises S. Tolentino, [Jr.], General Manager, Metro
Transit Organization, Operators of the LRT system.
for their apprehension and incarceration/imprisonment
until such time when they have performed or cause to be
performed the act complained of in this case, by
reconnecting, replugging or reactivating plaintiffs sound
system at all LRT facilities and restoring them in the same
state and condition as it was on April 16, 1997.
SO ORDERED. (p. 25, Rollo)
Accordingly, warrants of arrest were issued against the
persons named in the order. Motions to quash warrants of
arrest were filed by LRTA, Evangeline M. Razon, [and]
Geronima P. Anastacio. At the same time, the LRTA filed a
motion for the respondent judge to inhibit himself from
further hearing the case.
3

Atty. Moises S. Tolentino, Jr., General Manager of Metro Transit
Organization (operators of the LRT system), then filed a special civil
action for certiorari and prohibition (CA-G.R. SP No. 44227) on May
21, 1997, assailing the trial courts order dated May 13, 1997,
finding him, Evangeline M. Razon, and Geronima P. Anastacio, guilty
of indirect contempt and ordering the issuance of warrants of arrest
against them. Atty. Tolentino contended that the trial court issued
the orders in disregard of substantive and procedural due process.
4

Petitioner LRTA, meanwhile, filed a special civil action for certiorari
(CA-G.R. SP No. 44220) on May 28, 1997, seeking the annulment of
the following orders issued by the trial court: (1) Order dated April
29, 1997, ordering petitioner to comply with the trial courts Order
dated April 16, 1997; and (2) Order dated May 13, 1997, denying
petitioners motion for reconsideration and finding Atty. Tolentino,
Razon, and Anastacio, guilty of indirect contempt and ordering the
issuance of warrants of arrest against them.
CA-G.R. SP Nos. 44220 and 44227 were thereafter consolidated as
both involved related issues.
5

On February 26, 1999, the CA rendered its decision in the above-
mentioned cases, the decretal portion of which reads:
WHEREFORE, the petitions filed in these cases are hereby
GIVEN DUE COURSE, and judgment is hereby rendered
ANNULLING AND SETTING ASIDE the Order dated May
13, 1997 and the warrants of arrest in connection
therewith, issued by the respondent judge in Civil Case
No. 97-0423.
SO ORDERED.
6

While the CA annulled the Order dated May 13, 1997 and the
warrants of arrest issued by the trial court in Civil Case No. 97-0423,
it nevertheless ruled that the writ of preliminary injunction issued by
the trial court per Order dated April 16, 1997, as well as the Order
dated April 29, 1997, is valid and binding.
7

Respondent then filed with the trial court a Motion to Enforce the
Order dated April 16, 1997. Petitioner, on the other hand, filed a
Manifestation asking that the resolution of respondents motion be
suspended on the ground that there appears to be an inconsistency
with the body and the dispositive portion of the CAs decision.
8

Notwithstanding petitioners manifestation, the trial court issued an
order dated April 7, 1999, granting respondents motion and
ordering petitioner to immediately restore the power supply to
respondents sound system within 24 hours.
9
Petitioner filed a
motion for reconsideration but the trial court denied it in another
(second) order dated April 7, 1999.
On April 22, 1999, the trial court issued an order amending the
second order dated April 7, 1999, to be dated April 20, 1999.
10

Thus, petitioner filed on April 22, 1999, another special civil action
for certiorari (CA-G.R. SP No. 52382) with the CA, contesting the trial
courts orders dated April 7, 1999 and April 20, 1999 (previously
dated April 7, 1999).
Petitioner alleged that the assailed orders were issued with grave
abuse of discretion, as these are not in accordance with the CAs
decision dated February 26, 1999.
11

In the meantime, petitioner, on April 14, 1999, filed in CA-G.R. SP
Nos. 44220 and 44227 a Motion for Clarification of Decision,
12
but it
was denied by the CA per Resolution dated May 21,
1999.
13
Petitioner sought reconsideration but it was also denied per
Resolution dated July 9, 1999,
14
prompting petitioner to institute on
July 29, 1999, a petition for certiorari with this Court, docketed as
G.R. Nos. 139275-76.
The CA then promulgated its decision in CA-G.R. SP No. 52382 on
November 12, 1999, dismissing the petition and affirming the
assailed orders dated April 7, 1999 and April 20, 1999. Petitioner
elevated the dismissal to this Court via petition for review filed on
December 20, 1999, docketed as G.R. No. 140949.
On February 21, 2000, the Court ordered the consolidation of G.R.
Nos. 139275-76 and G.R. No. 140949.
15

In G.R. Nos. 139275-76, petitioner raises the following issues:
I
IF THE BODY OF THE DECISION IN THE SAID
CONSOLIDATED CASES IS IN CONFLICT WHICH HAS
BECOME FINAL CONFLICTS WITH THE DISPOSITIVE
PORTION THEREOF, WHICH OF THEM SHALL PREVAIL?
II
CAN THE LIFETIME OF AN EXPIRED CONTRACT BE
EXTENDED BY A PRELIMINARY INJUNCTION?
16

In G.R. No. 140949, the following:
1. CAN A BODY OF THE DECISION [WHICH DOES NOT
HAVE ANY SUPPORT IN OR CONTRARY TO THE
DISPOSITIVE PORTION THEREOF] BE ENFORCED OR
EXECUTED?
2. WHETHER OR NOT THE ORDER OF THE TRIAL COURT A
QUO DATED APRIL 7, 1999 AND THE OTHER ONE ALSO
DATED APRIL 7, 1999 [WHICH WAS LATER AMENDED BY
THE TRIAL COURT A QUO TO BE DATED APRIL 20, 1999
IN AN ORDER DATED APRIL 22, 1999] ENFORCING THE
BODY OF THE DECISION OF THE HONORABLE COURT OF
APPEALS DATED FEBRUARY 26, 1999 IN CA-G.R. SP NO.
44220 AND CA-G.R. SP NO. 44227 ARE NULL AND VOID.
17

Petitioners argument rests mainly on its adamant belief that the
discussion of the CA in the body of its Decision dated February 26,
1999, rendered in CA-G.R. SP Nos. 44220 and 44227, is inconsistent
with its fallo, which nullified and set aside the trial courts order
dated May 13, 1997. According to petitioner, since the May 13, 1997
order is premised on the April 16, 1997 (granting the issuance of
the writ of preliminary injunction) and April 29, 1997 (enforcing
compliance with the injunctive writ) orders, therefore, these orders
are likewise invalid, and respondent cannot seek its enforcement.
The Court, however, has carefully read the assailed decision and
cannot find anything inconsistent with the body and fallo. Even a
student of law can understand its import. It has been said that, to
understand the dispositive portion of a decision, one has only to
ascertain the issues of the action.
18

CA-G.R. SP Nos. 44220 and 44227 involved three issues. First is
whether or not an injunction order, as embodied in the April 16,
1997 order, is effective prior to the posting of an injunction bond
and the issuance of the injunctive writ;
19
second, whether or not the
Order of April 29, 1997 is valid and binding;
20
and the third is
whether or not the petitioners were validly held guilty of contempt
of court per Order dated May 13, 1997.
21

On the first issue, the CA categorically ruled that the April 16, 1997
order is binding even without the filing of the injunction bond.
22
On
the second issue, the CA likewise ruled that the April 29, 1997 Order
is valid and binding.
23
It was on the third issue that the CA found
grave abuse of discretion committed by the trial court, and the
Order dated May 13, 1997 was consequently rendered null and void.
The CA is clear on this score. It held, viz.:
The Motion to Cite Defendant in Contempt, dated April
23, 1997 (Annex "G", Petition, SP No. 44227) does not
name them as respondents. It prays only that the
defendant (LRTA) "and its officers and employees who are
responsible for the act complained of" be held in
contempt. It is only in the Motion to Cite Defendants for
Civil Contempt Under Rule 71, Section 7 of the Revised
Rules of Court dated May 5, 1997 (sic) that Evangeline M.
Razon, Geronima P. Atanacio, and Moises S. Tolentino, [Jr.]
are mentioned as "responsible on the continuing defiance
of the Orders of the Honorable Court." But the said
motion was fatally defective in that it did not contain a
proper notice of hearing, as required by Sec. 4, Rule 15 of
the Revised Rules of Court. It only contains the request to
the Branch Clerk of Court that the said motion be
submitted to the court "immediately upon receipt hereof."
Worst of all, the respondent judge issued his disputed
order , two (2) days before the date that he himself fixed
for the hearing of the motion to cite the defendant in
contempt. Clearly, the said persons were denied their day
in court.
Moreover, we have reviewed the transcript of the ex parte
hearing conducted by the respondent judge on April 29,
1997 (on the motion to cite defendant in contempt dated
April 23, 1997), and we find that the evidence presented
against the abovenamed persons (who are now facing
warrants of arrest) were basically hearsay testimony. The
respondent judge acted with grave abuse of discretion in
issuing his disputed order, and its corresponding warrants
of arrest, without a hearing, and on the basis of flimsy
evidence.
24
(Emphasis Ours)
It is plain to see that only the May 13, 1997 order was nullified by
the CA. The April 16 and 29, 1997 orders remain valid and binding.
Petitioners argument that these two orders should likewise have
been nullified because the May 13, 1997 order is based thereon, is
misplaced. The nullity of the May 13, 1997 order was not based on
these 2 orders, but on grounds of lack of due process and evidence.
These grounds inevitably led to the dispositive portion of the CAs
decision. It must be stressed that it is the dispositive part of the
judgment that actually settles and declares the rights and
obligations of the parties, finally, definitively, and authoritatively,
notwithstanding the existence of inconsistent statements in the
body that may tend to confuse.
25

If there was any error committed by the CA, it was in failing to state
in the dispositive portion of the decision that the petition was only
partially granted. But this does not affect the decision, as its import
can be grasped notwithstanding the lapse. Consequently, the
Decision dated February 26, 1999 in CA-G.R. SP Nos. 44220 and
44227 nullifying the Order dated May 13, 1997 is a valid decision.
Nevertheless, the Court agrees with petitioner that the trial court
committed grave abuse of discretion in issuing the injunctive writ.
Section 3 of Rule 58 of the Rules of Court provides for the
grounds justifying the issuance of a preliminary injunction,
to wit:
SEC. 3. Grounds for issuance of preliminary injunction. - A
preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded,
and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts
complained of, or in requiring the performance of an act
or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance
of the act or acts complained of during the litigation
would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render
the judgment ineffectual.
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. To be entitled to
an injunctive writ, the petitioner has the burden to establish the
following requisites:
26

(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.
In the present case, respondents entitlement to the injunctive writ is
found on its prima facie legal right to remain in the premises and
continue broadcasting commercial advertisements within the LRT
stations. The only way to determine this is to look into the terms of
the contract between petitioner and respondent, as it provides for
their respective rights and obligations. It is fundamental that if the
terms of a contract are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of its stipulations shall
control. No amount of extrinsic aids are required and no further
extraneous sources are necessary in order to ascertain the parties
intent
27

The "Agreement" contains the following stipulations, inter alia:
Whereas, for purposes of adjusting the five-year period
corresponding to the annual minimum guaranteed
amount disrupted by the start-up ninety-day period and
the six-month moratorium period effective September 1,
1990, to end March 1, 1991, the parties have agreed to
formally amend the "Agreement" to reflect the changes
thereon;

1. Article I (a) of the "Agreement" is hereby amended to
read as follows:
(a.) This Agreement shall be effective for five (5) years to
commence on April 1, 1992 until March 31, 1997, unless
sooner terminated as provided hereunder."
28

The contract explicitly states that it was due to expire on March 31,
1997, the same day respondent filed its action for reformation of
contract. When the trial court issued its Order dated April 16, 1997,
ordering petitioner to refrain from terminating the contract and to
retain respondents services until further orders from the court, the
contract had already expired. Respondent, therefore, has no clear
and unmistakable right to be protected by the issuance of the writ.
This is but a consequence of their stipulation of a determinate
period for its expiration.
29
The injunction, in effect, virtually extended
the original period agreed upon.
It was the trial courts belief that to allow the contract to expire
would render respondents action for reformation of contract moot
and academic.
30
Needless to say, a contract can be renewed, revived
or extended only by mutual consent of the parties. No court can
compel a party to agree to a contract through the instrumentality of
a writ of preliminary injunction.
31
Also, the possibility of irreparable
damage without proof of actual existing right is not a ground for an
injunction.
32

WHEREFORE, the petitions in G.R. Nos. 139275-76 and 140949, are
hereby GRANTED. The Decision dated February 26, 1999, in CA-G.R.
SP Nos. 44220 and 44227, and the Decision dated November 12,
1999, in CA-G.R. SP No. 52382, rendered by the Court of Appeals
are hereby SET ASIDE. Consequently, the Orders dated April 16 and
29, 1997, issued by the Regional Trial Court of Pasay City (Branch
111) in Civil Case No. 97-0423, and all other orders appurtenant
thereto, are NULLIFIED.
The trial court is ORDERED to proceed with Civil Case No. 97-0423
with immediate dispatch.






















G.R. No. 144755 June 8, 2005
SPOUSES ELISEO F. ESTARES and ROSENDA P. ESTARES, petitioners,
vs.COURT OF APPEALS, HON. DAMASO HERRERA as Presiding Judge
of the RTC, Branch 24, Bian, Laguna PROMINENT LENDING &
CREDIT CORPORATION, PROVINCIAL SHERIFF OF LAGUNA and
Sheriff IV ARNEL G. MAGAT, respondents.
D E C I S I O N AUSTRIA-MARTINEZ, J.:
Before us is a petition for certiorari and prohibition under Rule 65 of
the Rules of Court which assails the Decision1 and Resolution of the
Court of Appeals dated April 17, 2000 and July 7, 2000, respectively,
in CA-G.R. SP No. 56123.
The factual background of the case is as follows:
On May 21, 1999, petitioner Spouses Eliseo F. Estares and Rosenda
P. Estares (Estares spouses for brevity) filed a complaint for
"Damages and Preliminary Prohibitory Injunction" against private
respondent Prominent Lending & Credit Corporation (PLCC) before
the Regional Trial Court, Branch 24, Bian, Laguna, docketed as Civil
Case No. B-5476.2
They alleged that: on January 12, 1998, they obtained a loan from
PLCC for P800,000.00 secured by a real estate mortgage over a 363-
square meter parcel of land with improvements situated in the
Municipality of Santa Rosa, Laguna, covered by Transfer Certificate
of Title (TCT) No. 99261; the promissory note and the real estate
mortgage were falsified because they affixed their signatures on two
blank documents; the monthly interest of 3.5% and 3% penalty on
each delayed monthly interest are different from the 18% interest
per annum to which they agreed to; for failure to pay their
obligation despite repeated demands, PLCC filed a petition for
extrajudicial foreclosure with the Office of the Provincial Sheriff of
Laguna; and on June 8, 1999, the Sheriff sent a Notice of
Extrajudicial Sale to the Estares spouses.
Accordingly, the Estares spouses sought to declare as null and void
the promissory note and the real estate mortgage for not reflecting
their true agreement. In the interim, they prayed for a temporary
restraining order (TRO) and/or writ of preliminary injunction to
enjoin PLCC from taking possession of the mortgaged property and
proceeding with the extrajudicial sale scheduled on July 13, 1999 at
10:00 a.m.
On June 30, 1999, the Estares spouses amended their complaint to
include the Register of Deeds of Laguna-Calamba Branch, the
Provincial Sheriff of Laguna and Sheriff IV Arnel G. Magat as party-
defendants.3
On July 12, 1999, the trial court issued a TRO in favor of the Estares
spouses.4 The parties subsequently agreed to maintain the status
quo until August 20, 1999.5
On August 6, 1999, PLCC filed its Answer with Counterclaim alleging
that the Estares spouses were duly apprised of the terms and
conditions of the loan, including the rate of interest, penalties and
other charges, in accordance with the Truth in Lending Act or
Republic Act No. 3765. It opposed the prayer for restraining order
on the ground that there is no factual and legal basis for its
issuance since the Estares spouses fear of eviction is false.6
At the hearing on the Estares spouses application for a writ of
preliminary injunction, Rosenda P. Estares (Rosenda for brevity)
testified that: the loan proceeds of P637,000.00, received on January
12, 1998, was used in the improvement and renovation of their
boarding house; they did not question PLCC in writing why they
only received P637,000.00; when they received the Statement of
Account, they did not question the figures appearing therein; when
they received PLCCs demand letter, they went to the formers office
not to question the loans terms and conditions but merely to
request for extension of three months to pay their obligation. They
adduced in evidence the promissory note, real estate mortgage,
statement of account, petition for extrajudicial foreclosure and the
notice of extrajudicial sale. The Estares spouses then rested their
case.
In opposition to the application for a writ of preliminary injunction,
PLCC presented its manager, Rey Arambulo, who testified that the
Estares spouses were duly apprised of the terms and conditions of
the loan, including the rate of interest, penalties and other charges,
in accordance with the Truth in Lending Act or Republic Act No.
3765. It submitted the same evidence offered by the Estares
spouses, along with the latters credit application, the credit
investigation report, the receipts PLCC issued, and the disclosure
statement on the loan.
On August 18, 1999, the trial court denied the Estares spouses
application for a writ of preliminary injunction, holding that the
latter failed to establish the facts necessary for an injunction to
issue.7
On August 31, 1999, the Estares spouses filed a motion for
reconsideration.8 During the hearing on the motion for
reconsideration on September 17, 1999, Eliseo P. Estares (Eliseo for
brevity) moved that he be allowed to testify on the circumstances of
the loan but the trial court denied it. The trial court deemed it best
that he be presented during the trial on the merits.9 On October 1,
1999, the trial court denied the motion for reconsideration.10
On December 7, 1999, the Estares spouses filed a petition for
certiorari and prohibition in the Court of Appeals ascribing grave
abuse of discretion upon the trial court in issuing the Orders dated
August 18, 1999 and October 1, 1999 which denied their prayer for
a writ of preliminary injunction and motion for reconsideration,
respectively.11
On December 14, 1999, without giving due course to the petition,
the Court of Appeals issued a Resolution requiring the PLCC to file
its comment to the petition. The action on the Estares spouses
application for a TRO and writ of preliminary injunction was
deferred and held in abeyance until after receipt of the comment.12
With no restraining order enjoining him, Sheriff Magat conducted
an auction sale on January 5, 2000, with PLCC as highest bidder for
P1,500,000.00.13
In its Comment dated January 15, 2000, PLCC claimed that the trial
court did not commit grave abuse of discretion in denying the
Estares spouses application for a writ of preliminary injunction since
the latter failed to prove their right to injunctive relief and the
action sought to be enjoined has been rendered moot by the
auction sale conducted on January 5, 2000.14
On April 17, 2000, the Court of Appeals dismissed the petition for
lack of merit, holding that the trial court did not abuse its discretion
in denying the Estares spouses application for a writ of preliminary
injunction since the latter failed to prove the requisites for the
issuance thereof. 15
The Estares spouses then moved for reconsideration of the April 17,
2000 decision. In addition, they prayed that the auction sale on
January 5, 2000, as well as the minutes of auction sale and
certificate of sale, be declared null and void not only because there
was no publication of the notice of auction sale but the auction sale
preempted the Court of Appeals in the disposition of the case and
was conducted in defiance of the Resolution dated December 14,
1999.16
On July 7, 2000, the Court of Appeals denied the Estares spouses
motion for reconsideration.17
On September 16, 2000, the Estares spouses filed the present
petition for certiorari and prohibition anchored on the following
grounds:
I
THE COURT OF APPEALS ERRED IN NOT GRANTING A WRIT OF
PRELIMINARY INJUNCTION TO PREVENT RESPONDENTS PLCC AND
PROVINCIAL SHERIFF OF LAGUNA/ SHERIFF ARNEL MAGAT FROM
FORECLOSING THE MORTGAGE AND CONDUCTING THE AUCTION
SALE OF PETITIONERS PROPERTY AND/OR IN UPHOLDING THE
ORDER DATED AUGUST 18, 1999 OF JUDGE DAMASO A. HERRERA,
RTC-BRANCH 24, LAGUNA.
II
THE COURT OF APPEALS ERRED IN NOT DECLARING AS NULL AND
VOID AND/OR SETTING ASIDE THE AUCTION SALE OF THE
PETITIONERS HOUSE AND LOT CONDUCTED BY SHERIFF ARNEL
MAGAT ON JANUARY 5, 2000 FOR LACK OF RE-PUBLICATION OF
NOTICE OF EXTRA-JUDICIAL SALE, FOR PRE-EMPTING THE COURT
OF APPEALS IN DECIDING THE CASE, AND FOR RENDERING THE
PETITION IN CA-G.R. SP NO. 56123 MOOT AND ACADEMIC.
III
THE COURT OF APPEALS ERRED IN NOT DECLARING DENIAL OF
DUE PROCESS TO OVERSEAS CONTRACT WORKER ELISEO ESTARES
WHEN JUDGE DAMASO A. HERRERA REFUSED TO ALLOW HIM TO
TESTIFY ON THE CIRCUMSTANCES OF THEIR LOAN WITH PLCC.18
Anent the first ground, the Estares spouses insist that they firmly
established their right to injunctive relief. They claim that the
promissory note, credit application, disbursement voucher,
disclosure statement and real estate mortgage are falsified; the
promissory note is not reflective of the true amount of the loan, as
well as the term, interest and charges thereon; the P126,362.28
represent additional charges, not as part of the loan, that were not
agreed upon prior to or before the consummation of the loan; and
the amount of the loan and rate of interest stated in the falsified
promissory note are fictitious or simulated.
With respect to the second ground, they maintain that the auction
sale conducted on January 5, 2000 should be nullified because it
lacked republication of the notice of auction sale and it was
conducted in violation of the Court of Appeals Resolution dated
December 14, 1999 which enjoined the parties to maintain the
status quo pending the filing by the respondents of their Comment
to the petition. They argue that PLCC and Sheriff Magat preempted
the Court of Appeals from resolving their petition by conducting the
auction sale on January 5, 2000.
As to the third ground, they aver that Eliseo was denied due
process when the trial court refused to allow him to testify during
the hearing on the motion for reconsideration. They contend that
Eliseo, an overseas contract worker, purposely took leave from work
in the Middle East to testify on the circumstances of the loan and
his testimony was material to clarify the matter of notarization of
the real estate mortgage and show that said document was falsified.
On October 2, 2000, the Court granted the TRO prayed for in the
petition and required the respondents to comment thereon.19
In its Comment dated October 25, 2000, PLCC asserts that the
petition should be dismissed for being deficient on both procedural
and substantive aspects.
As to the procedural aspect, PLCC posits that the petition is filed
beyond the sixty-day period required by the rules and therefore
filed out of time. PLCC further claims that the verification and
certification of non-forum shopping are both insufficient. The
verification speaks of a "Pre-Trial Brief" while the certification of
non-forum shopping was executed only by Rosenda.
As to the substance of the petition, PLCC argues that the Estares
spouses failed to establish their right to injunctive relief; the validity
of the January 5, 2000 auction sale was brought only in the motion
for reconsideration which is improper because it is a factual issue
best addressed to the trial court; Sheriff Magat did not preempt the
Court of Appeals in deciding CA-G.R. SP No. 56123 when he
conducted the auction sale on January 5, 2000 because the
Resolution dated December 14, 1999 of the said court did not
suspend or restrain the sheriff from conducting the foreclosure sale;
Eliseo was not denied due process because he sought to testify on
factual matters in the hearing on their motion for reconsideration
which is improper as factual matters are best brought and proved
during the trial on the merits of the case.
The Court gave due course to the petition and required the parties
to submit their respective memoranda20 which they complied
with.21
Before ruling on the issues raised in the petition, it is necessary to
dwell on the procedural aspects of the case.
From a reading of the grounds on which the instant petition for
certiorari and prohibition are based, it is readily apparent that the
Estares spouses are appealing a decision of the Court of Appeals by
resorting to Rule 65, when their remedy should be based on Rule 45
of the Rules of Court. A petition for review under Rule 45 is not
similar to a petition for certiorari under Rule 65.
Under Rule 45, decisions, final orders or resolutions of the Court of
Appeals in any case, i.e., regardless of the nature of the action or
proceedings involved, may be appealed to us by filing a petition for
review on certiorari, which would be but a continuation of the
appellate process over the original case.22 In contrast, a special civil
action under Rule 65 is an independent action based on the specific
grounds therein provided and proper only if there is no appeal or
any plain, speedy and adequate remedy in the ordinary course of
law.23 Thus, certiorari cannot be availed of as a substitute for the
lost remedy of an ordinary appeal.24
By their own account, the Estares spouses received the Order dated
July 7, 2000 denying their motion for reconsideration from the Court
of Appeals on July 18, 2000. Instead of filing a petition for review
with this Court within 15 days thereof or until August 2, 2000, they
filed this special civil action by registered mail on September 16,
2000 or 60 days from receipt of the Order dated July 7, 2000. By
then, they had already lost the remedy of appeal. By availing of a
wrong remedy, the instant petition should have merited outright
dismissal.
Concerning the verification, we note that Rosenda stated therein
that she caused the preparation of the "foregoing Pre-Trial Brief"
but we consider the same as a slight error and honest mistake in
the preparation of the petition. In any event, the purpose of
requiring a verification is simply to secure an assurance that the
allegations of the petition have been made in good faith; or are true
and correct, not merely speculative.25 This requirement is simply a
condition affecting the form of pleadings, and noncompliance
therewith does not necessarily render it fatally defective.26 Indeed,
verification is only a formal, not a jurisdictional, requirement.27
With regard to the certification of non-forum shopping signed only
by Rosenda, the rule is that the certificate of non-forum shopping
must be signed by all the petitioners or plaintiffs in a case and the
signing by only one of them is insufficient because a lone signatory
cannot be presumed to have personal knowledge of the matters
required to be stated in the attestation.28
However, the Court has also stressed that the rules on forum
shopping, which were designed to promote and facilitate the
orderly administration of justice, should not be interpreted with
such absolute literalness as to subvert its own ultimate and
legitimate objective which is simply to prohibit and penalize the
evils of forumshopping.29 The fact that the rules on forumshopping
require strict compliance merely underscores its mandatory nature
that it cannot be dispensed with or its requirements altogether
disregarded, but it does not thereby interdict substantial compliance
with its provisions under justifiable circumstances.30
We find that the execution by Rosenda of the certificate of non-
forum shopping in behalf of her co-petitioner and husband, Eliseo,
constitutes substantial compliance with the Rules. After all they
share a common interest in the property involved since it is
conjugal property, and the petition questioning the propriety of the
decision of the Court of Appeals originated from an action brought
by the spouses, and is clearly intended for the benefit of the
conjugal partnership. Considering that the husband was at that time
an overseas contract worker working in Algeria, whereas the petition
was prepared in Sta. Rosa, Laguna, a rigid application of the rules
on forumshopping that would disauthorize the wifes signing the
certification in her behalf and that of her husband is too harsh and
clearly uncalled for.31
In any event, we find that this petition must still be dismissed as the
Court of Appeals did not commit any grave abuse of discretion
amounting to want or excess of jurisdiction in dismissing the
petition.
Generally, injunction is a preservative remedy for the protection of
substantive rights or interests. It is not a cause of action in itself but
merely a provisional remedy, an adjunct to a main suit. The
controlling reason for the existence of the judicial power to issue
the writ is that the court may thereby prevent a threatened or
continuous irremediable injury to some of the parties before their
claims can be thoroughly investigated and advisedly adjudicated. It
is to be resorted to only when there is a pressing necessity to avoid
injurious consequences which cannot be remedied under any
standard of compensation. The application of the writ rests upon an
alleged existence of an emergency or of a special reason for such
an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the
complaint alleges facts which appear to be sufficient to constitute a
cause of action for injunction and that on the entire showing from
both sides, it appears, in view of all the circumstances, that the
injunction is reasonably necessary to protect the legal rights of
plaintiff pending the litigation.32
The Estares spouses had the burden in the trial court to establish
the following requirements for them to be entitled to injunctive
relief: (a) the existence of their right to be protected; and (b) that
the acts against which the injunction is to be directed are violative
of such right.33] To be entitled to an injunctive writ, 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.34 Thus, 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.35
In the present case, the Estares spouses failed to establish their right
to injunctive relief. They do not deny that they are indebted to PLCC
but only question the amount thereof. Their property is by their
own choice encumbered by a real estate mortgage. Upon the
nonpayment of the loan, which was secured by the mortgage, the
mortgaged property is properly subject to a foreclosure sale.
Rosendas testimony sealed the fate of the necessity of the writ of
preliminary injunction. She admitted that: they did not question
PLCC in writing why they only received P637,000.00; they did not
question the figures appearing in the Statement of Account when
they received it; and, when they received PLCCs demand letter, they
went to the formers office not to question the loans terms and
conditions but merely to request for extension of three months to
pay their obligation.36 She acknowledged that they only raised the
alleged discrepancy of the amount loaned and the amount received,
as well as the blank documents which they allegedly signed, after
PLCC initiated the foreclosure proceedings.37
It must be stressed 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.38 As such, a trial courts decision to grant or to deny
injunctive relief will not be set aside on appeal unless the court
abused its discretion. In granting or denying injunctive relief, a court
abuses its discretion when it lacks jurisdiction, fails to consider and
make a record of the factors relevant to its determination, relies on
clearly erroneous factual findings, considers clearly irrelevant or
improper factors, clearly gives too much weight to one factor, relies
on erroneous conclusions of law or equity, or misapplies its factual
or legal conclusions.39
In the present case, the Estares spouses clearly failed to prove that
they have a right protected and that the acts against which the writ
is to be directed are violative of said right. Hence, the Court of
Appeals did not commit a grave abuse of its discretion amounting
to excess or lack of jurisdiction in dismissing petitioners petition for
certiorari.
There is likewise no merit to the claim that the Court of Appeals
gravely abused its discretion when it denied the prayer to nullify the
auction sale held on January 5, 2000 for lack of republication of the
notice of auction sale and for preempting the Court of Appeals in
deciding the case and rendering the petition in CA-G.R. SP No.
56123 moot and academic.
The absence of republication of the notice of auction sale is a
factual matter which by the weight of judicial precedents cannot be
inquired into by this Court in a petition for certiorari. It is best
addressed to the attention of the trial court and taken up in the trial
of the case, necessitating presentation of evidence by both parties.
The propriety of the auction sale is a matter which the trial court is
in the best position to determine. For it is basic that certiorari under
Rule 65 is a remedy narrow in scope and inflexible in character. It is
not a general utility tool in the legal workshop.40 It offers only a
limited form of review. Its principal function is to keep an inferior
tribunal within its jurisdiction.41 It can be invoked only for an error
of jurisdiction, that is, one where the act complained of was issued
by the court, officer or a quasi-judicial body without or in excess of
jurisdiction, or with grave abuse of discretion which is tantamount
to lack or in excess of jurisdiction,42 not to be used for any other
purpose,43 such as to cure errors in proceedings or to correct
erroneous conclusions of law or fact.44 Again suffice it to say that
the only issue settled here is the propriety of the non-issuance of a
writ of preliminary injunction pending the final outcome of the case.
As to petitioners assertion that the Court of Appeals in its
Resolution dated December 14, 1999 impliedly directed the parties
to maintain the status quo, we deemed it worthy to quote in full the
said Resolution, thus:
Without necessarily giving due course to the petition, the Court
requires the respondents to file their comment (not motion to
dismiss) within ten (10) days from notice, which may be treated as
their Answer should the petition be given due course.
Respondents are likewise ordered to show cause in the same
Comment why a temporary restraining order and writ of preliminary
injunction should not be issued.
The action of the petitioners application for a temporary restraining
order and writ of preliminary injunction is deferred and held in
abeyance until after receipt of respondents Comment.45
Clearly, the Court of Appeals did not give due course to the petition
but merely required PLCC to comment thereon. The Court of
Appeals did not enjoin the conduct of the auction sale. In any case,
the necessity for the issuance of the writ of injunction has been
found wanting.
Lastly, the Estares spouses claim that Eliseo was denied due process
when the trial court refused to allow him to testify during hearing
on the motion for reconsideration deserves scant consideration.
It must be remembered that a writ of preliminary injunction is
generally based solely on initial and incomplete evidence. 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.46
We note that it was the Estares spouses choice to present only
Rosenda to testify on the circumstances of the loan at the hearing
on their application for a writ of preliminary injunction and they
cannot assert that Eliseo should have been accorded that
opportunity during the hearing on the motion for reconsideration.
The essence of due process is found in the reasonable opportunity
to be heard and submit any evidence one may have in support of
one's defense. What the law proscribes is the lack of opportunity to
be heard.47 As long as a party is given the opportunity to defend
his interests in due course, he would have no reason to complain,
for it is this opportunity to be heard that makes up the essence of
due process.48 Eliseo cannot complain that he was deprived of due
process since he is given the full opportunity to testify on the
circumstances of the loan during the trial of the main case.49
All told, no grave abuse of discretion could therefore be imputed to
the Court of Appeals in dismissing petitioners petition for certiorari
with prohibition, for lack of merit.
WHEREFORE, the instant petition for certiorari and prohibition is
DISMISSED. The assailed Decision and Resolution of the Court of
Appeals dated April 17, 2000 and July 7, 2000, respectively, in CA-
G.R. SP No. 56123 are AFFIRMED in all respects. The temporary
restraining order issued by this Court is lifted. Costs against
petitioners.



























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.
R E S O L U T I O N
QUISUMBING, J.:
This petition for review seeks to reverse the decision
1
promulgated
on August 27, 1999, of the Court of Appeals in CA-G.R. SP No.
51375. The appellate court enjoined the enforcement of the writ of
preliminary injunction dated April 14, 1998, issued by the Regional
Trial Court of Balanga, Bataan, Branch 1, in Civil Case No. 6695
against private respondent, Antonio Santos.
The factual antecedents of this case are as follows:
On August 22, 1969, the Bureau of Lands declared Francisco
Domingo, Reynaldo Florida, Cornelio Pilipino and Severino Vistan,
lawful possessors of Lot 1379 of the Morong, Bataan Cadastre. Lot
1379 consists of 144 hectares. Domingo, Florida, Pilipino and Vistan
through their forebears and by themselves had been in open,
notorious, and exclusive possession of portions of Lot 1379 since
1933 in the concept of owners. The Bureau then directed them to
confirm their titles over the property by filing the appropriate
applications for the portions of the property respectively occupied
by them.1wphi1.nt
In October 1970, petitioner bought the respective portions of
Domingo, Florida, Pilipino and Vistan, totaling 69,932 square meters
and entered into a compromise settlement with six other persons
occupying the property, whose applications had been rejected by
the Bureau. Petitioner then filed an application for land registration
docketed as LRC Cad. Rec. No. N-209 with the then Court of First
Instance of Bataan, Branch 1. The application was contested by
several oppositors, among them the heirs of one Toribio Alejandro.
On December 20, 1991, the trial court decided the land registration
case in petitioners favor. The losing parties appealed to the Court
of Appeals, where the case was docketed as CA-G.R. CV No. 40452.
On March 14, 2000, the appellate court affirmed the lower courts
decision.
2

In June 1997, a group of occupants entered the land, destroyed the
fences and drove away livestock owned by petitioner.
On October 9, 1997, petitioner filed a complaint for injunction with
damages, with a prayer for a temporary restraining order, docketed
as Civil Case No. 6695, with the RTC of Balanga, Bataan. Named as
defendants were Juanito Infante, Domingo Infante, Lito Mangalidan,
Jaime Aquino, John Doe, Peter Doe, and Richard Doe.
The trial court issued the temporary restraining order (TRO) and on
January 16, 1998, the sheriff served copies on the defendants. The
sheriff accompanied petitioners president to the property where
they found five (5) persons cultivating the land. The latter refused to
give their names or receive copies of the TRO. They claimed that
they were only farm workers of a certain Antonio Santos who
allegedly owned the land.
3

On April 14, 1998, the trial court issued a writ of preliminary
injunction restraining the defendants or persons acting on their
behalf from entering and cultivating the disputed property. The
aforementioned writ was also served upon respondent who was
occupying a portion of Lot No. 1379.
4

On February 24, 1999, private respondent filed a special civil action
for certiorari docketed as CA-G.R. SP No. 51375 with the Court of
Appeals. Private respondent averred that he only learned about the
writ of preliminary injunction on February 16, 1999, when he
secured a copy of the order. He claimed that he was an innocent
purchaser for value of the property from Francisco, Armando, and
Conchita, all surnamed Alejandro and the injunction prevented him
from using his property. He alleged that he was not a party to Civil
Case No. 6695 and that it was grave abuse of discretion for the trial
court to enforce the injunctive writ against him since it did not have
jurisdiction over him.
On August 27, 1999, the appellate court decided CA-G.R. SP No.
51375 in private respondents favor, thus:
WHEREFORE, premises considered the instant Petition is
hereby GRANTED. Public respondent is enjoined from
imposing the questioned writ of preliminary injunction
dated April 14, 199[8] against petitioner [Santos].
SO ORDERED.
5

Hence, the instant petition, submitting the following issues for our
consideration:
A. WHETHER [PRIVATE] RESPONDENT 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 petitioners property, including private
respondent. Since the latter personally received the injunctive order
on June 5, 1998, he was already forewarned to intervene in Civil
Case No. 6695 if he had any right or interest to protect in the
disputed property. This he failed to do. Since private respondent did
not then take the opportunity to present his side, he cannot now
claim that he was denied due process when the writ was enforced
against him.
In his comment, private respondent counters that he was not legally
bound nor required by law to file his pleadings in Civil Case No.
6695 as he was not a party in said case. Likewise, he was not
required to act on or protest the injunctive writ in the
aforementioned civil case. Private respondent avers that what
petitioner wants is to have a continuing writ in its favor, to include
not only the defendants in Civil Case No. 6695 but also all those
who may subsequently intrude into the land dispute. Private
respondent submits that the court a quo committed no error in
describing petitioners posture as a violation of the fundamental
rights to notice and hearing.
We have minutely scrutinized the order granting the writ of
preliminary injunction and are unable to say that the writ applied to
private respondent. The order merely stated "[L]et a writ of
preliminary injunction be issued enjoining and restraining the
defendants or any person or persons acting in their place or stead
from further entering and cultivating the said land of the plaintiff
subject matter of this case until further order from the Court."
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 petitioners
lot."
8
Neither was he a trespasser then.
9
Also, nothing in the records
indicate that private respondent was acting on behalf of any of the
defendants. Taking all these into consideration, we must hold that
the writ of preliminary injunction thus cannot be made to apply to
private respondent.
A preliminary injunction is an order granted at any stage of an
action prior to final judgment, requiring a person to refrain from a
particular act.
10
As an ancillary or preventive remedy, a writ of
preliminary injunction may therefore be resorted to by a party to
protect or preserve his rights and for no other purpose during the
pendency of the principal action.
11
Its object is to preserve the
status quo until the merits of the case can be heard.
12
It is not a
cause of action in itself but merely a provisional remedy, an adjunct
to a main suit.
13
Thus, a person who is not a party in the main suit,
like private respondent in the instant case, cannot be bound by an
ancillary writ, such as the writ of preliminary injunction issued
against the defendants in Civil Case No. 6695. He cannot be
affected by any proceeding to which he is a stranger.
14

Second, petitioner contends that the Court of Appeals erred when it
observed that petitioner should have impleaded private respondent
as defendant in Civil Case No. 6695 pursuant to Section 11, Rule 3
of the 1997 Rules of Civil Procedure.
15
Instead, private respondent
should have intervened in Civil Case No. 6695 to protect his rights.
Petitioner avers that at the time the injunctive writ was issued, it had
already rested its case and to require it to amend its complaint to
include private respondent was too late.
Private respondent counters that there was no reason why Section
11, Rule 3 of the 1997 Rules of Civil Procedure should not be made
to apply to Civil Case No. 6695. He argues that contrary to
petitioners posture, his inclusion as a defendant in Civil Case No.
6695 is procedurally correct since no final judgment had yet been
rendered in said case. Moreover, he avers that petitioner cannot
insist that private respondent be vigilant in protecting his rights by
intervening in Civil Case No. 6695.1wphi1.nt
We agree with private respondent. First, private respondent had no
duty to intervene in the proceedings in Civil Case No. 6695.
Intervention in an action is neither compulsory nor mandatory but
only optional and permissive.
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. Petitioners insistence that it had rested its case and hence
was too late to include defendant finds no support in Section 11.
The rule categorically provides that "Parties may be dropped or
added by order of the court on motion of any party or on its own
initiative at any stage of the action (stress supplied) and on such
terms as are just."
21
We find it inexplicable why petitioner pointedly
resisted the advice of the appellate court to implead private
respondent as an additional defendant in Civil Case No. 6695.
WHEREFORE, the instant petition is DENIED and the assailed
decision of the Court of Appeals in CA-G.R. SP No.
51375 AFFIRMED. No pronouncement as to costs.
























































CHINA BANKING
CORPORATION, SPOUSES JOEY
& MARY JEANNIE CASTRO and
SPOUSES RICHARD & EDITHA
NOGOY,
Petitioners,
- versus -
BENJAMIN CO, ENGR. DALE
OLEA and THREE KINGS
CONSTRUCTION & REALTY
CORPORATION,
Respondents.
G.R. No. 174569
Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
Promulgated:
September 17, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - x
D E C I S I O N
CARPIO MORALES, J.:
Petitioner China Banking Corporation sold a lot located at St.
Benedict Subdivision, Sindalan, San Fernando, Pampanga, which was
covered by Transfer Certificate of Title (TCT) No. 450216-R to
petitioner-spouses Joey and Mary Jeannie Castro (the Castro
spouses). It sold two other lots also located in the same place
covered by TCT Nos. 450212-R and 450213-R to petitioner-spouses
Richard and Editha Nogoy (the Nogoy spouses).
The lots of the Castro spouses and the Nogoy spouses are
commonly bound on their southeastern side by Lot No. 3783-E,
which is covered by TCT No. 269758-R in the name of respondent
Benjamin Co (Co) and his siblings.
Co and his siblings entered into a joint venture with respondent
Three Kings Construction and Realty Corporation for the
development of the Northwoods Estates, a subdivision project
covering Lot No. 3783-E and adjacent lots. For this purpose, they
contracted the services of respondent, Engineer Dale Olea.
In 2003, respondents started constructing a perimeter wall on Lot
No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote
respondents asking them to stop constructing the wall, and remove
all installed construction materials and restore the former condition
of Lot No. [3]783-E which they (petitioners) claimed to be a road
lot.
1
They also claimed that the construction obstructed and closed
the only means of ingress and egress of the Nogoy spouses and
their family, and at the same time, caved in and impeded the
ventilation and clearance due the Castro spouses residential house.
2

Petitioners demand remained unheeded, prompting them to file
before the Regional Trial Court (RTC) of San Fernando, Pampanga a
complaint,
3
docketed as Civil Case No. 12834, for injunction,
restoration of road lot/right of way and damages with prayer for
temporary restraining order and/or writ of preliminary injunction.
Before respondents filed their Answer,
4
petitioners filed an Amended
Complaint,
5
alleging that the construction of the perimeter wall was
almost finished and thus modifying their prayer for a writ of
preliminary injunction to a writ of preliminary mandatory injunction,
viz:
WHEREFORE, it is respectfully prayed of this Honorable Court that:
A. Before trial on the merits, a temporary restraining order be issued
immediately restraining the defendants from doing further
construction of the perimeter wall on the premises, and thereafter, a
writ ofpreliminary mandatory injunction be issued enjoining the
defendants from perpetrating and continuing with the said act and
directing them jointly and severally, to restore the road lot, Lot
3783-E to its previous condition.
x x x x
6
(Underscoring in the original; emphasis supplied)
After hearing petitioners application for a writ of preliminary
mandatory injunction, Branch 44 of the San Fernando, Pampanga
RTC denied the same, without prejudice to its resolution after the
trial of the case on the merits, in light of the following
considerations:
After a judicious evaluation of the evidence, the Commissioners
Report on the Conduct of the Ocular Inspection held on February
14, 2004, as well as the pleadings, the Court is of the opinion and
so holds that a writ of preliminary injunction should not be issued
at this time. Plaintiffs have not clearly shown that their rights have
been violated and that they are entitled to the relief prayed for and
that irreparable damage would be suffered by them if an injunction
is not issued. Whether lot 3783-E is a road lot or not is a factual
issue which should be resolved after the presentation of evidence.
This Court is not inclined to rely only on the subdivision plans
presented by plaintiffs since, as correctly argued by defendants, the
subdivision plans do not refer to lot 3783-E hence are not
conclusive as to the status or classification of lot 3783-E. This court
notes further that Subdivision Plan Psd-03-000577 of Lot 3783 from
which the other subdivision plans originates [sic] does not indicate
lot 3783-E as a road lot.
Even the physical evidence reveals that lot 3783-E is not a road lot.
The Court noticed during the ocular inspection on February 14,
2004, that there is a PLDT box almost in front of lot 3783-E. There is
no visible pathway either in the form of a beaten path or paved
path on lot 3783-E. Visible to everyone including this court are wild
plants, grasses, and bushes of various kinds. Lot 3783-E could not
have been a road lot because Sps. Nogoy, one of the plaintiffs, even
built a structure on lot 3783-E which they used as a coffin factory.
Plaintiffs failed to prove that they will be prejudiced by the
construction of the wall. The ocular inspection showed that they will
not lose access to their residences. As a matter of fact, lot 3783-E is
not being used as an access road to their residences and there is an
existing secondary road within St. Benedict Subdivision that serves
as the main access road to the highway. With respect to the
blocking of ventilation and light of the residence of the Sps. Castro,
suffice it to state that they are not deprived of light and ventilation.
The perimeter wall of the defendants is situated on the left side of
the garage and its front entrance is still open and freely accessible.
This is indeed an issue of fact which should be ventilated in a full
blown trial, determinable through further presentation of evidence
by the parties. x x x
x x x x
WHEREFORE, premises considered, plaintiffs application for
the issuance of a writ of preliminary mandatory injunction is denied
without prejudice to its resolution after the trial of the case on the
merits.
7
(Underscoring supplied)
Their Motion for Reconsideration
8
having been denied, petitioners
filed a petition for certiorari
9
before the Court of Appeals which
dismissed the same
10
and denied their subsequent Motion for
Reconsideration.
11

Hence, the petitioners filed the present petition,
12
faulting the Court
of Appeals in
I.
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH THE BASIC
GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II.
. . . PROMOTING THE LOWER COURTS RATIOCINATION
THAT PETITIONERS ARE SEEKING THE ESTABLISHMENT OF
AN EASEMENT OF RIGHT OF WAY, WHEN THEY ARE
CLAIMING THE ENFORCEMENT OF THE STATUTORY
PROHIBITION AGAINST CLOSURE OR DISPOSITION OF AN
ESTABLISHED ROAD LOT.
III.
. . . SANCTION[ING] THE LOWER COURTS PATENT GRAVE
ABUSE OF DISCRETION IN PERFUNCTORILY DENYING
PETITIONERS APPLICATION FOR WRIT OF PRELIMINARY
INJUNCTION.
13

It is settled that the grant of a preliminary mandatory injunction
rests on the sound discretion of the court, and the exercise of
sound judicial discretion by the lower court should not be interfered
with except in cases of manifest abuse.
14

It is likewise settled that a court should avoid issuing a writ of
preliminary mandatory injunction which would effectively dispose of
the main case without trial.
15

In the case at bar, petitioners base their prayer for preliminary
mandatory injunction on Section 44 of Act No. 496 (as amended by
Republic Act No. 440), Section 50 of Presidential Decree 1529, and
their claim that Lot No. 3783-E is a road lot.
To be entitled to a writ of preliminary injunction, however, the
petitioners must establish the following requisites: (a) the invasion of
the right sought to be protected is material and substantial; (b) the
right of the complainant is clear and unmistakable; and (c) there is
an urgent and permanent necessity for the writ to prevent serious
damage.
16

Since a preliminary mandatory injunction commands the
performance of an act, it does not preserve the status quo and is
thus more cautiously regarded than a mere prohibitive
injunction.
17
Accordingly, the issuance of a writ of preliminary
mandatory injunction is justified only in a clear case, free from
doubt or dispute.
18
When the complainants right is thus doubtful or
disputed, he does not have a clear legal right and, therefore, the
issuance of injunctive relief is improper.
Section 44 of Act 496,
19
which petitioners invoke, provides:
x x x x
Any owner subdividing a tract of registered land into lots shall file
with the Chief of the General Land Registration Office a subdivision
plan of such land on which all boundaries, streets and passageways,
if any, shall be distinctly and accurately delineated. If no streets or
passageways are indicated or no alteration of the perimeter of the
land is made, and it appears that the land as subdivided does not
need of them and that the plan has been approved by the Chief of
the General Land Registration Office, or by the Director of Lands as
provided in section fifty-eight of this Act, the Register of Deeds may
issue new certificates of title for any lot in accordance with said
subdivision plan. If there are streets and/or passageways, no new
certificates shall be issued until said plan has been approved by the
Court of First Instance of the province or city in which the land is
situated. A petition for that purpose shall be filed by the registered
owner, and the court after notice and hearing, and after considering
the report of the Chief of the General Land Registration Office, may
grant the petition, subject to the condition, which shall be noted on
the proper certificate, that no portion of any street or passageway
so delineated on the plan shall be closed or otherwise disposed of
by the registered owner without approval of the court first had, or
may render such judgment as justice and equity may
require.
20
(Underscoring supplied by the petitioners)
Section 50 of Presidential Decree No. 1529,
21
which petitioners
likewise invoke, provides:
SECTION 50. Subdivision and consolidation plans. Any owner
subdividing a tract of registered land into lots which do not
constitute a subdivision project as defined and provided for under
P.D. No. 957, shall file with the Commissioner of Land Registration
or with the Bureau of Lands a subdivision plan of such land on
which all boundaries, streets, passageways and waterways, if any,
shall be distinctly and accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the
Commissioner of Land Registration or the Bureau of Lands together
with the approved technical descriptions and the corresponding
owner's duplicate certificate of title is presented for registration, the
Register of Deeds shall, without requiring further court approval of
said plan, register the same in accordance with the provisions of the
Land Registration Act, as amended: Provided, however, that the
Register of Deeds shall annotate on the new certificate of title
covering the street, passageway or open space, a memorandum to
the effect that except by way of donation in favor of the national
government, province, city or municipality, no portion of any street,
passageway, waterway or open space so delineated on the plan
shall be closed or otherwise disposed of by the registered owner
without the approval of the Court of First Instance of the province
or city in which the land is situated. x x x
22
(Underscoring supplied
by petitioner)
The best evidence thus that Lot No. 3783-E is a road lot would be a
memorandum to that effect annotated on the certificate of title
covering it. Petitioners presented TCT No. 185702-R covering Lot
No. 3783-E in the name of Sunny Acres Realty Management
Corporation which states that the registration is subject to "the
restrictions imposed by Section 44 of Act 496, as amended by Rep.
Act No. 440."
23
The annotation does not explicitly state, however,
that Lot No. 3783-E is a road lot.1awphi1.net
In any event, TCT No. 185702-R had been cancelled and in its stead
was issued TCT No. 247778-R
24
which, in turn, was cancelled by TCT
No. 269758-R
25
in the name of respondent Co and his siblings.
TCT No. 247778-R and respondent Cos TCT No. 269758-R do not
now contain the aforementioned memorandum annotated on TCT
No. 185702-R re the registration being "subject to restrictions
imposed by Section 44 of Act 496, as amended by Republic Act No.
440." Given the immediately foregoing circumstances, there is doubt
on whether Lot No. 3783-E is covered by a road lot.
While petitioners correctly argue that certain requirements must be
observed before encumbrances, in this case the condition of the
lots registration as being subject to the law, may be discharged and
before road lots may be appropriated
26
gratuity assuming that the
lot in question was indeed one, TCT Nos. 247778-R and 269758-R
enjoy the presumption of regularity
27
and the legal requirements for
the removal of the memorandum annotated on TCT No. 185702-R
are presumed to have been followed.
28

At all events, given the following factual observations of the trial
court after conducting an ocular inspection of Lot 3783-E, viz:
x x x The ocular inspection showed that [petitioners] will not lose
access to their residences. As a matter of fact, lot 3783-E is not
being used as an access road to their residences and there is an
existing secondary road within St. Benedict Subdivision that serves
as the main access road to the highway.
29
With respect to the
blocking of ventilation and light of the residence of the Sps. Castro,
suffice it to state that they are not deprived of light and ventilation.
The perimeter wall of the defendants is situated on the left side of
the garage and its front entrance is still open and freely accessible,
30

and the absence of a showing that petitioners have an urgent and
paramount need for a writ of preliminary mandatory injunction to
prevent irreparable damage, they are not entitled to such writ.
WHEREFORE, the petition is DENIED.


















G.R. No. 157494 December 10, 2004 BACOLOD CITY WATER
DISTRICT, petitioner,
vs. THE HON. EMMA C. LABAYEN, Presiding Judge, RTC of
Bacolod City, Br. 46 and the City of Bacolod,respondents. D E C I
S I O N PUNO, J.:
First, the chronology of facts. Petitioner Bacolod City Water District
(BACIWA) is a water district established pursuant to Presidential
Decree No. 198 as a government-owned and controlled corporation
with original charter. It is in the business of providing safe and
potable water to Bacolod City.
Public respondent City of Bacolod is a municipal corporation created
by Commonwealth Act No. 326, otherwise known as the Charter of
Bacolod.
On March 26, 1999, respondent City filed a case for Injunction With
a Prayer for Temporary Restraining Order And/Or Preliminary
Mandatory Injunction against petitioner in the sala of public
respondent judge. The petition stated that on January 15, 1999,
BACIWA published in the Visayan Daily Star,
1
a local paper of
general circulation, a Schedule of Automatic Water Rates
Adjustments for the years 1999, 2000 and 2001. The rates were
supposed to take effect seven (7) days after its posting in the local
papers or on January 22, 1999. The increase was aborted after
petitioner unilaterally suspended the January 22, 1999 scheduled
implementation. On March 15, 1999, however, petitioner announced
that the rate hike will be implemented on April 1, 1999.
2

Respondent City opposed. It alleged that the proposed water rates
would violate due process as they were to be imposed without the
public hearing required under Letter of Instructions No. 700
3
and
Presidential Decree No. 1479.
4
Hence, it prayed that before the
hearing of the main case, a temporary restraining order or a
preliminary injunction be issued.
5

On March 30, 1999, the court a quo issued an Order
6
summoning
the parties with their counsels to attend the preliminary hearing for
the issuance of a temporary restraining order or preliminary
mandatory injunction. On April 8, 1999, it required the parties to
simultaneously submit their respective memoranda on whether it
had jurisdiction over the case and whether a public hearing was
conducted re the proposed increase in water rates.
7

Petitioner filed its Position Paper dated April 15, 1999. It attached
documents evidencing the conduct of extensive and lengthy public
hearings in fifty-eight (58) of the sixty-one (61) barangays of
Bacolod City. It opined that original jurisdiction over cases on rate
review is vested in the Local Water Utilities Administration (LWUA);
appellate jurisdiction is vested in the National Water Resources
[Board] (NWRB) whose decisions shall be appealable to the Office of
the President.
8

On May 5, 1999, petitioner also filed a Motion to Dismiss. In an
Order
9
dated May 7, 1999, the court directed respondent City to file
its Opposition to petitioners Motion to Dismiss within fifteen (15)
days.
On June 17, 1999, respondent City filed a Motion to Set [for]
Hearing
10
its application for a temporary restraining order or
preliminary mandatory injunction. It alleged that the parties had
already submitted their respective memoranda and it has already
submitted its Opposition to petitioners Motion to Dismiss. It also
alleged that petitioner had already effected the water rates increase
and collection, hence, causing irreparable injury to the public.
Petitioner opposed the Motion. On July 20, 1999, respondent City
filed its Reply to Opposition and reiterated that the application for
the issuance of a temporary restraining order or preliminary
mandatory injunction be heard since petitioner continued to violate
the right of the public to due process and it might take time before
the case would be finally resolved.
11
On the same date, petitioner
filed a Manifestation and Motion
12
stating that the hearing may no
longer be necessary as the respective positions of both parties have
already been presented and amplified in their pleadings and
memoranda.
On July 22, 1999, respondent trial court issued an Order
13
stating
that there was no more need to hear the caseon the merits
14
as
both parties have already submitted their position papers and
documents to prove their respective allegations.
On July 23, 1999, petitioner filed its Reply
15
to respondent Citys
Opposition to the Motion to Dismiss reiterating that petitioner
failed to exhaust administrative remedies provided by law hence the
petition be dismissed for utter lack of merit.
After a hiatus of nearly seven (7) months, or on February 18, 2000,
respondent City filed an Urgent Motion for the Issuance of
Temporary Restraining Order And[/]Or Writ of Preliminary
Injunction
16
praying that the case be set for hearing on February 24,
2000. On the same date requested, respondent court heard
respondents application for temporary restraining order and issued
an Order
17
commanding petitioner to stop, desist and refrain from
implementing the proposed water rates for the year 2000 which
were then supposed to take effect on March 1, 2000.
On March 7, 2000, petitioner filed an Urgent Motion for
Reconsideration and Dissolution of the Temporary Restraining
Order.
18
Respondent court a quo issued on March 10, 2000 an
Order
19
directing respondent City to file an Opposition to the
Urgent Motion. In its Opposition, respondent City
20
contended that
the temporary restraining order issued was not infirmed with
procedural and substantive defects. It also averred that respondent
court has jurisdiction over the case since the sole question of the
lack of public hearing does not require the special knowledge or
expertise of an administrative agency and may be resolved by
respondent court, hence the doctrine of primary jurisdiction does
not apply.
Respondent court continued with the proceedings by receiving the
evidence of petitioner in support of its Motion for Reconsideration
and Dissolution of Temporary Restraining Order. It further issued
Orders dated March 17, 2000
21
and March 20, 2000.
22

On April 6, 2000, respondent court issued an Order
23
finding
petitioners Urgent Motion for Reconsideration and Dissolution of
Temporary Restraining Order moot and academic considering
petitioners compliance of said temporary restraining order.
Four (4) days after, in an Order
24
dated April 10, 2000, it denied
petitioners Motion to Dismiss for lack of merit.
On April 19, 2000, respondent City filed a Manifestation praying that
respondent trial court issue a writ of preliminary injunction against
petitioner, stating thus:
A Temporary Restraining Order was issued against the
respondents which, however, expired before the parties
were able to finish the presentation of their respective
witnesses and evidences;
The instant case was submitted for resolution and decision
of this Honorable Court during the last week of March but
while awaiting the decision of this Honorable Court,
several complaints had reached the petitioner that the
respondents had already reflected in the water billings for
the month of April the new water rates for the year 2000;
x x x
25

Petitioner, for its part, filed a Motion for Reconsideration
26
of
respondent trial courts Order denying its Motion to Dismiss.
Respondent City filed an Opposition to [the] Motion for
Reconsideration
27
on June 1, 2000.
Respondent court did not act upon petitioners Motion for
Reconsideration until respondent City filed an [Ex Parte] Motion for
Speedy Resolution
28
of the case on October 6, 2000 praying that the
case be resolved before the year 2000 ends in order to prevent the
implementation of the water rates increase for the year 2001 which
was to be imposed allegedly without the benefit of a public hearing.
On December 21, 2000, respondent court issued the assailed
Decision
29
granting the final injunction which allegedly confirmed
the previous preliminary injunction.
Petitioner filed its Motion for Reconsideration
30
of the assailed
Decision on January 11, 2001 asserting, among others, that the case
was not yet ripe for decision when the court granted the final
injunction, the petitioner having had no opportunity to file its
answer, avail of the mandatory pre-trial conference and have the
case tried on the merits.
Respondent court denied the Motion for Reconsideration for lack of
merit in an Order
31
dated January 24, 2001. Petitioner then filed a
special civil action for certiorari under Rule 65 in the Court of
Appeals. It alleged that public respondent judge acted without or in
excess of jurisdiction and/or with grave and patent abuse of
discretion amounting to lack or excess of jurisdiction when she
issued the final injunction in disregard of petitioners basic right to
due process.
32

The Court of Appeals dismissed the petition for review on certiorari,
ratiocinating thus:
In the case at bar, the [O]rder of public respondent dated
24 February 2000, though termed by BACIWA as a
temporary restraining order, is in fact a preliminary
injunction. The period of the restraint was not limited. By
its wordings, it can be safely inferred that the increased
water rates must not be effected until final disposition of
the main case. This note of semi-permanence simply
cannot issue from a mere temporary restraining order. It
must be further noted that the temporary restraining
order has been elevated to the same level as the
preliminary injunction in the procedure, grounds and
requirements of its obtention by S[ection] 4, Rule 58. Thus,
to set [a] distinction, the present practice is to
categorically refer to it as a temporary restraining order. In
which case, the omission by the public respondent in
referring to the 24 February 2000 order as a temporary
restraining order could not have been a mere oversight
but deliberate.
33

Resorting to this Court, petitioner raises the following issues:
I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED AND REFUSED TO RULE THAT RESPONDENT
COURT HAD ACTED WITHOUT OR IN EXCESS OF
JURISDICTION AND/OR WITH GRAVE ABUSE OF
DISCRETION FOR ARBITRARILY AND CAPRICIOUSLY
RENDERING A DECISION PURPORTING TO ISSUE A FINAL
INJUNCTION AND CONFIRMING ITS ALLEGED
PRELIMINARY INJUNCTION, DESPITE THE FACT THAT:
A. NO PRELIMINARY INJUNCTION HAD BEEN
ISSUED;
B. THE RESPONDENT LOWER COURT DID NOT
RESOLVE HEREIN PETITIONERS MOTION FOR
RECONSIDERATION OF THE ORDER DENYING
PETITIONERS MOTION TO DISMISS;
C. THE HEREIN PETITIONER HAD NOT YET FILED
ITS ANSWER TO THE PETITION;
D. THERE WAS STILL NO JOINDER OF THE
ISSUES SINCE NO ANSWER HAD YET BEEN
FILED;
E. THE MANDATORY PRE-TRIAL CONFERENCE
WAS NOT YET CONDUCTED;
F. THERE WAS NO TRIAL ON THE MERITS FOR
THE MAIN CASE.
II
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
INSISTED THAT THE 24 FEBRUARY 2000 ORDER (ANNEX R)
ISSUED BY THE TRIAL COURT WAS A PRELIMINARY
INJUNCTION WHEN THE RECORDS CLEARLY AND
INDUBITABLY SHOW THAT IT WAS A TEMPORARY
RESTRAINING ORDER (TRO).
III
BY DISMISSING THE PETITION FOR CERTIORARI, THE
COURT OF APPEALS GRAVELY ERRED WHEN IT
EFFECTIVELY PREVENTED PETITIONER FROM FULLY
VENTILATING ITS CASE IN THE MAIN ACTION DUE TO
THE IRREGULAR AND CONFUSED PROCEEDINGS
CONDUCTED BY THE RESPONDENT COURT.
34

We rule in favor of petitioner.
The initial issue is the proper characterization of the Order dated
February 24, 2000.
The sequence of events and the proceedings that transpired in the
trial court make a clear conclusion that the Order issued was a
temporary restraining order and not a preliminary injunction.
First. We quote the pertinent parts of the questioned Order:
x x x
When this motion was called for hearing wherein both
parties have argued exhaustedly their respective sides, this
court denied the ten (10) days extension for further
amplification of the arguments of the respondent to
oppose the said motion for issuance of a temporary
restraining order.
It appearing therefore, that the acts of the defendant will
actually affect the plaintiff before the decision of this court
can be rendered and in order to afford the court to pass
on the issues without the same becoming moot and
academic and considering the urgency of the matter that
immediate action should be taken, and pursuant to
Administrative Circular No. 6, Paragraph 4 and sub-
paragraph 15 and The Interim Rules and Guidelines [set
forth] by the Rules of Court, this court hereby orders the
respondent[,] its agents, representatives or any person
acting in his behalf to stop, desist and refrain from
implementing in their billings the new water rate
increase which will start on March 1, 2000. The Deputy
Provincial Sheriff of this court is hereby ordered to furnish
copy of this order to the respondent Bacolod City Water
District as well as to its agents or representatives acting
[o]n his behalf.
x x x
35
(emphases supplied)
It can be gleaned from the afore-quoted Order that what the trial
court issued was a temporary restraining order and not a
preliminary injunction. The trial court has always referred to it as a
temporary restraining order in the succeeding Orders it issued on
March 10, 2000
36
and April 6, 2000.
37

The parties, in their succeeding pleadings,
38
also referred to the
assailed Order as a temporary restraining order. The petitioner filed
an Urgent Motion for Reconsideration and Dissolution
of Temporary Restraining Order (TRO)
39
on March 1, 2000. This
was opposed by respondent City itself in its Opposition to Motion
for Reconsideration and Dissolution of Temporary Restraining
Order (TRO)
40
dated March 14, 2000. Further, respondent City, in its
Manifestation dated April 19, 2000 stated, viz:
x x x
A Temporary Restraining Order was issued against the
respondents which, however, expired before the parties
were able to finish the presentation of their respective
witnesses and evidences;
x x x
WHEREFORE, it is most respectfully prayed that while
waiting for the decision and order of the Honorable
Court, a preliminary injunction as prayed for in the
petition be issued against the respondents.
x x x
41
(emphases supplied)
It can be gleaned from the foregoing that both parties and
respondent trial court have consistently referred to the directive as a
temporary restraining order. It was only in the respondent courts
assailed Decision that the Order was referred to as a preliminary
injunction, viz:
x x x
This Court therefore grants the final injunction prayed for
restraining the respondent from the commission of the act
complained of for the year 2001 and hereby confirming
the preliminary injunction previously ordered.
x x x
42
(emphasis supplied)
Again, it was only when petitioner expressed its vehement objection
on the ruling that the final injunction confirmed the preliminary
injunction previously issued, when the respondent City and the
respondent trial court started to insist that the questioned Order
was a preliminary injunction. Given the previous undeviating
references to it as a temporary restraining order, respondents
cannot now consider it as a preliminary injunction to justify the
validity of the assailed Decision. The attendant facts and
circumstances clearly show that the respondent trial court issued a
temporary restraining order.
Second. Injunction is a judicial writ, process or proceeding whereby
a party is ordered to do or refrain from doing a certain act. It may
be the main action or merely a provisional remedy for and as an
incident in the main action.
43

The main action for injunction is distinct from the provisional or
ancillary remedy of preliminary injunction which cannot exist except
only as part or an incident of an independent action or proceeding.
As a matter of course, in an action for injunction, the auxiliary
remedy of preliminary injunction, whether prohibitory or mandatory,
may issue. Under the law, the main action for injunction seeks a
judgment embodying a final injunction which is distinct from, and
should not be confused with, the provisional remedy of preliminary
injunction, the sole object of which is to preserve the status
quo until the merits can be heard.
44
A preliminary injunction is
granted at any stage of an action or proceeding prior to the
judgment or final order. It persists until it is dissolved or until the
termination of the action without the court issuing a final
injunction.
45

A restraining order, on the other hand, is issued to preserve
the status quo until the hearing of the application for preliminary
injunction which cannot be issued ex parte. Under Rule 58
46
of the
Rules of Court, a judge may issue a temporary restraining order with
a limited life of twenty (20) days from date of issue. If before the
expiration of the twenty (20)-day period the application for
preliminary injunction is denied, the temporary restraining order
would be deemed automatically vacated. If no action is taken by
the judge on the application for preliminary injunction within the
said twenty (20) days, the temporary restraining order
would automatically expire on the 20th day by the sheer force of
law, no judicial declaration to that effect being necessary.
47

Hence, in the case at bar, since no preliminary injunction was issued,
the temporary restraining order granted automatically expired after
twenty (20) days under the Rules. The fact that respondent court
merely ordered "the respondent[,] its agents, representatives or any
person acting in his behalf to stop, desist and refrain from
implementing in their billings the new water rate increase which will
start on March 1, 2000"
48
without stating the period for the restraint
does not convert the temporary restraining order to a preliminary
injunction.
The rule against the non-extendibility of the twenty (20)-day limited
period of effectivity of a temporary restraining order is absolute if
issued by a regional trial court. The failure of respondent court to fix
a period for the ordered restraint did not lend the temporary
restraining order a breath of semi-permanence which can only be
characteristic of a preliminary injunction. The twenty (20)-day period
provided by the Rules of Court should be deemed incorporated in
the Order where there is an omission to do so. It is because of this
rule on non-extendibility that respondent City was prompted to
move that hearings be set for its application of a preliminary
injunction. Respondent City cannot take advantage of this omission
by respondent trial court.
Third. Even if we assume that the issued Order was a preliminary
injunction, petitioner is correct in contending that the assailed
Decision is premature.
The records reveal that respondent court did not resolve petitioners
Motion for Reconsideration of the Order denying its Motion to
Dismiss before it issued the assailed Decision. Consequently, there
was no answer filed by petitioner, no joinder of issues, no
mandatory pre-trial conference, and no trial on the merits, yet, a
Decision was handed down by the respondent trial court.
The short circuiting of the procedural process denied the petitioner
due process of law. It was not able to allege its defenses in an
answer and prove them in a hearing. The convoluted procedure
allowed by the respondent trial court and the pleadings filed by the
parties which are not models of clarity certainly created confusion.
But this confusion should not be seized as a reason to deny a party
the constitutional right to due process. Over and above every
desideratum in litigation is fairness. All doubts should be resolved in
favor of fairness.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals dated November 27, 2002 and
February 28, 2003, respectively, are REVERSED and SET ASIDE. The
case is remanded to the court a quo for further proceedings.










BACOLOD CITY WATER DISTRICTv.LABAYEN
FACTS
Respondent City filed a case for Injunction with a Prayer for
Temporary Restraining Orderand/or Preliminary Mandatory
Injunction
(TRO and/or PMI for brevity)
against Petitioner for theimplementation of its new rates because it
was imposed without public hearing in violation of dueprocess. At
first, the complaint was dismissed for failure to exhaust
administrative remedies. Later,Respondent City filed an Urgent
Motion for the Issuance of TRO and/or PMI praying that the case be
setfor hearing. The Court granted the TRO. The judge issued a final
injunction allegedly confirming theprevious preliminary injunction
which is in truth, the judge referring to is the TRO earlier
issued.Petitioner filed a Motion for Reconsideration raising that it
issued a final injunction without thepetitioner being heard which
was denied. The petitioner filed a Petition for Review at the Court of
Appeals but was likewise, denied on the ground that the TRO earlier
issued has been elevated to thesame level as the preliminary
injunction in the procedure, grounds and requirements by Section 4,
Rule58 because the Judge has deliberately omitted to call it as TRO
in the latter orders.:
ISSUE
Whether or not there is a writ of preliminary injunction issued.:
HELD
NONE. It was clear that a TRO was clearly stated in the order. It was
only when Petitionerexpressed its vehement objection on the latter
Order when Respondents just wanted to construe theTRO as a
preliminary injunction to justify the validity of the final injunction. A
restraining order, is issuedto preserve the
status quo
until the hearing of the application for preliminary injunction which
cannotbe issued
ex parte
. Under Rule 58 of the Rules of Court, a judge may issue a
temporary restraining orderwith a limited life of twenty (20) days
from date of issue. If no action is taken by the judge on
theapplication for preliminary injunction within the said twenty (20)
days, the temporary restraining orderwould automatically vacated
and expire on the 20th day by the sheer force of law, no
judicialdeclaration to that effect being necessary. The failure of
respondent court to fix a period for the orderedrestraint did not
lend the temporary restraining order a breath of semi-permanence
which can only becharacteristic of a preliminary injunction. The
twenty (20) day period provided by the Rules of Courtshould be
deemed incorporated in the Order where there is an omission to do
so. The court held that itis because of this rule on non-extendibility
that Respondent City was prompted to move that hearingsbe set for
its application of a preliminary injunction. Now, they cannot take
advantage of this omissionby respondent trial court.








G.R. No. 79128 June 16, 1988
ORTIGAS & COMPANY Limited Partnership, petitioner,
vs.
COURT OF APPEALS and SPS DALTON B. KING and CECILIA F.
KING, respondents.

YAP, C.J.:
Challenged in this petition is the writ of preliminary mandatory
injunction issued by the respondent it Court of Appeals directing
the petitioner herein to reconnect and restore the electrical service
to Gondola Unit No. 8 of private respondent at the Greenhills
Shopping Center upon the filing by the latter of an injunction bond
in the amount of P15,000. The respondent court annulled and set
aside the order of the Regional Trial Court of Pasig, Metro Manila,
Branch 152, dated March 19, 1987 entitled "Dalton B. King, et al. vs.
Ortigas and Company, Limited Partnership" dated March 19, 1987,
which denied plaintiffs application for preliminary mandatory
injunction.
We deal in this case only with the matter of the issuance of the writ
of preliminary mandatory injunction to compel petitioners to
reconnect the electrical service to private respondents. We are not
called upon to review the merits of the case, for this has still to be
tried and decided by the court a quo.
The antecedent facts are as follows:
In a letter agreement dated October 28, 1983, Ortigas and
Company, Limited Partnership (Ortigas for brevity) through its
Greenhills Shopping Center (GSC) Manager, Manuel Lozano, Jr.,
leased to Wellington Syquiatco a unit in Gondola alley (Unit No. 8)
at Greenhills Shopping Center, San Juan, Metro Manila for a period
of ten (10) years at a monthly rental of P1,500.00 starting December
1, 1983 and increasing gradually every year thereafter. The subject
unit was used for the operation of a snack counter, known as "Pied
Piper."
On May 10, 1984, Wellington Syquiatco, with the approval of
Ortigas, subleased the subject unit to herein respondent spouses
(King spouses for brevity) who occupied the premises effective May
15, 1984. Later, Wellington Syquiatco, for valuable consideration
(P97,000.00) sold to King spouses his leasehold rights and
obligations over the subject Gondola/unit. This transfer of rights was
approved by Ortigas on September 18, 1984.
In August, 1985, Ortigas dismissed its GSC Manager and undertook
an audit of his performance. Ortigas dissevered that the letter-lease
agreements signed by the GSC Manager, allegedly without
appropriate authority, uniformly included a clause providing that "6.
Electric and water bins shall be for our (i.e. Ortigas) account."Ortigas
also discovered later that the GSC Manager owned one Gondola
unit (Unit No. 1).
Ortigas' new manager, Jose Lim III, met with the Gondola lessees in
March 1986 and proposed to correct the inequities in the lease
agreements. Individual electric meters were to be installed in the
respective units. A new contract for the Gondola units was
submitted to the lessees, which provided among others that
"electric and other utility costs' were for the lessees" account. The
Kings did not sign the new lease agreement.
The electricity bin for May and June, 1986, amounted to P3,480.02
(including cost of meter installation) and P2,456.53, respectively,
which Ortigas tried to collect from the King spouses. In a letter
dated July 28, 1986, the latter protested the bill, citing paragraph
No. 6 of the letter contract of October 28, 1983 which provided that
electric and water bills were for the account of Ortigas.
The subsequent electricity bins for the months of July, August,
September and October amounted to P2,069.06, P2,097.74,
P2,018.10 and P2,051.58, respectively, which including the unpaid
bills for May and June, totalled P14,174.03. When the Kings refused
to pay the big, Ortigas disconnected the electricity supply to them.
As a consequence, the Kings filed on January 16, 1987, a complaint
against Ortigas with the Regional Trial Court of Pasig, Metro Manila,
Branch 152, docketed as Civil Case No. 54202, for specific
performance and damages, with prayer for the issuance of a writ of
preliminary mandatory injunction to compel restoration and
reconnection of the electric power supply to plaintiffs Gondola unit.
Ortigas filed an opposition, dated February 9, 1987, to plaintiffs'
application for a writ of preliminary mandatory injunction, alleging
among others that there was a typographical error in Paragraph No.
6 of the letter agreement, consisting of the omission of the letter
"y" from the word "our;" that taking advantage of such
typographical error, the plaintiffs consumed electricity amounting to
a monthly average of P2,362.17, while paying a monthly rental
initially at Pl,500.00, thereby making Ortigas subsidize their
occupancy of the leased premises to the tune of more than P800
per month. Ortigas further alleged that to grant the writ of
preliminary mandatory injunction would allow plaintiffs to enrich
themselves unjustly at the expense of defendant.
After hearing the oral arguments of the parties and considering
their pleadings the trial court on March 19, 1987 denied plaintiff
application for a writ of preliminary mandatory injunction.
The plaintiffs filed a petition with the respondent Court of Appeals
for the annulment of the order of the court a quo dated March 19,
1987, denying their application for a writ of preliminary mandatory
injunction. As stated above, the respondent appellate court issued
its questioned decision dated June 30, 1987, annulling the order of
the court a quo and issuing itself the writ of preliminary mandatory
injunction prayed for by the Kings upon the filing of a bond of
P15,000.00.
The basic issue which we have to determine is whether the court a
quo committed a grave abuse of discretion in denying plaintiffs'
application for a preliminary mandatory injunction.
We find no such grave abuse of discretion committed by the trial
court which would justify the setting aside of its order by the
respondent appellate court and the issuance by the latter of the writ
of preliminary mandatory injunction.
The writ of preliminary injunction, in general, cannot be sought as a
matter of right, but its grant or refusal rests in the sound discretion
of the court under the circumstances and the facts of the particular
case. The writ is the "strong arm of equity" and therefore should not
be used to sanction inequity.
The defendant in the case, the petitioner herein, was able to show
that the electricity consumed per month by the King spouses was
way above the amount of the monthly rentals which they were
paying to the petitioner, thereby in effect making the latter
subsidize the business of the former in the leased premises. Such an
obviously inequitable situation by which private respondents
enriched themselves at the expense of petitioner cannot be ignored,
as private respondents wanted the trial court to do, by insisting on
a strict adherence to the letter of the contract, which petitioner
questioned, alleging inter alia obvious mistake and collusion, and
non-approval of the contract by the principal of the signatory for
the lessor defenses which must eventually be considered by the
courta quo in deciding the merits of the case. It is thus not a simple
case of a contracting party having made a bad bargain and who
must be made to abide by it. The trial court, considering the
equities of the case, refused to issue the preliminary mandatory
injunction. We hold that in refusing to do so the trial court did not
commit a grave abuse of discretion.
In general, courts should avoid issuing a writ of preliminary
injunction which in effect disposes of the main case without trial.
This is precisely the effect of the writ of preliminary mandatory
injunction issued by the respondent appellate court. Having granted
through a writ of preliminary mandatory injunction the main prayer
of the complaint, there is practically nothing left for the trial court
to try except the plaintiffs' claim for damages.
WHEREFORE, the appealed decision of the respondent Court of
Appeals dated June 30, 1987 is reversed and set aside.










G.R. No. 82985 April 22, 1991 MERVILLE PARK HOMEOWNERS
ASSOCIATION, INC., ,
vs. HON. FRANCISCO X. VELEZ and EDGARDO M. SALANDANAN

Petitioner Merville Park Homeowners Association, Inc. ("MPHAI"), a
non-stock, non-profit corporation, became the owner of the
pipelines and waterworks system ("waterworks system") of Merville
Park Subdivision in Paranaque, Metro Manila, by virtue of a deed of
donation dated 24 February 1977 executed in its favor by Merville
Development Corporation.

On 19 December 1978, MPHAI, through its then President Ernesto
N. Gonzales, entered into a contract of lease with private
respondent Edgardo Salandanan covering its waterworks system to
insure efficient water service within the Merville Park Subdivision
("Subdivision"). That lease contract required respondent Salandanan
to construct additional wells, to put into full operational condition
Wells Nos. 4 and 5 as well as to rehabilitate Wells Nos. 1, 2 and 3.
The contract also allowed respondent Salandanan to increase
annually the water rates but only to the extent of ten percent (10%)
of the preceding year's rates. The water rates set out in the contract
could be charged only upon completion of Well No. 5. The lease
contract was later on amended to provide for, inter alia, a period of
ten (10) years commencing from its signing on 20 July 1981. In that
amended contract, the parties agreed to increase the water rates
which increase was in turn approved by the National Water
Resources Council. It was also there provided that each homeowner
shall pay a deposit in the amount of P300.00 which was to be used
to pay for respondent Salandanan's overdue electric bill with
Meralco, and thereafter, to be credited against the homeowner's
future water bills.

Subsequently, respondent Salandanan again asked for an increase in
water rates. MPHAI was at first adamant to the point of filing a case
in court against respondent Salandanan. But sometime in 1982,
MPHAI and respondent Salandanan arrived at a compromise. In that
compromise agreement, MPHAI consented to an increase in the
water rates as urged by respondent Salandanan but conditioned
upon his completion of Well No. 2 (New Madrid Well). The
compromise agreement was later amended and provided for a new
water rate schedule effective 1 July 1984, but similarly conditioned
upon Salandanan's completion of Well No. 2.

On 16 July 1985, MPHAI commenced an action, Civil Case No.
11124, before Branch 136 of the Regional Trial Court (RTC) of
Makati, presided over by Judge Ricardo Francisco, against
respondent Salandanan. In this suit, MPHAI sought to rescind the
amended lease contract and the amended compromise agreement,
and prayed for issuance of a writ of preliminary mandatory
injunction. MPHAI alleged in its complaint that sometime in 1984
for failure of respondent Salandanan to pay his electric bills
amounting to P1,035,000.00, Meralco had cut off the electric power
supply of his rented water pumps resulting in a severe water
shortage within the Subdivision and thereby endangering the lives
and health of the residents thereof; that aside from respondent
Salandanan's failure to pay his electric bills, he had violated his
contract with petitioner by neglecting to drill and complete new
wells and undertake immediate repairs of broken water pumps; that
there was an immediate need to issue a writ of preliminary
mandatory injunction in its favor to enable it to take possession and
control of the water works system.

Judge Francisco, in an order dated 23 July 1985, granted MPHAI's
prayer for a writ of preliminary mandatory injunction and directed
respondent Salandanan to turn over to MPHAI the operation and
control of the waterworks system. This prompted respondent
Salandanan to file an urgent motion for reconsideration stating,
among other things, that the regular courts had no jurisdiction over
the subject matter of the case, the same being under the
jurisdiction of the National Water Resources Council; and that the
case was filed prematurely considering that MPHAI had not as yet
exhausted the available administrative remedies.

After private respondent had filed an answer with counterclaim and
third-party complaint, the case was re-raffled to Branch 180
presided over by Judge Benigno M. Puno, who in an order dated 12
August 1985, lifted the writ of preliminary mandatory injunction. The
case, however, was once more reraffled and this time it went to
Branch 149 with Judge Manuel Yuzon, presiding. Judge Yuzon, upon
MPHAI's motion for reconsideration and upon its filing of a surety
bond in the amount of P26,000.00, issued an order dated 11 August
1986 reinstating the writ of preliminary mandatory injunction.
Respondent Salandanan, however, in turn moved for reconsideration
on the ground that such a writ was not a proper remedy to deliver
property in the possession of one party to another. But, before
Salandanan's motion could be resolved, the case was, for the third
time, re-raffled and transferred this time to the sala of respondent
Judge Francisco X. Velez. Judge Velez, on 6 August 1987, issued an
order lifting and setting aside the writ, and on 30 March 1988, an
order directing the Deputy Sheriff to return and restore to
respondent Salandanan the possession of the waterworks system.

And so the present Petition for Certiorari was filed.
The Court issued a Temporary Restraining Order on 6 May 1988
enjoining respondent Judge Velez from enforcing his two (2) orders,
ordering petitioner MPHAI to file a bond in the amount of
P50,000.00, and requiring private respondent Salandanan to file a
Comment on the Petition. After additional pleadings and counter-
pleadings, the Court granted due course to the Petition and
required the parties to file simultaneous Memoranda. The parties
complied; private respondent Salandanan also submitted a
Supplemental Memorandum.

Deliberating on the instant Petition for Certiorari and after careful
examination of the record of this case, the Court considers that
petitioner has failed to show any grave abuse of discretion, or any
act without or in excess of jurisdiction, on the part of respondent
Judge in issuing the orders dated 6 August 1987 and 30 March
1988, lifting and setting aside the writ of preliminary mandatory
injunction earlier issued in Civil Case No. 11124, and ordering
private respondent restored to the possession of the waterworks
system involved.

A preliminary mandatory injunction is not a proper remedy to take
property, possession of which is being disputed, out of the
possession and control of one party and to deliver the same to the
other party. It may issue pendente lite only in cases of extreme
urgency, where the right to the possession, during the pendency of
the main case, of the property involved is very clear; where
considerations of relative inconvenience bear strongly in favor of the
complainant seeking the possession pendente lite; where there was
wilful and unlawful invasion of plaintiffs rights, over his protest and
remonstrance, the injury being a continuing one; where the effect of
the preliminary mandatory injunction is to re-establish and maintain
a pre-existing and continuing relationship between the parties,
recently and arbitrarily interrupted by the defendant, rather than to
establish a new relationship during the pendency of the principal
case.
1
Obviously, it is for the party requesting the writ to
demonstrate clearly the presence of one or more of the above
grounds.

Under the terms and conditions of the amended contract of lease,
private respondent Salandanan is entitled to possess and manage
the waterworks system for a period of ten (10) years beginning 20
March 1981, unless, of course, the contract is judicially rescinded.
Petitioner's action for the rescission of the amended lease contract
was pending before the trial court at the time petitioner had
recourse to the Supreme Court, and that action, so far as the
records before us show, remains pending to this date. Petitioner has
failed to show the existence of some extraordinary situation
imposing upon it irreparable injury and clearly calling for the
issuance and maintenance of the writ of preliminary mandatory
injunction. Petitioner alleged that sometime in 1984, the power
supply of the water pumps had been cut off by Meralco for failure
of private respondent Salandanan to pay his electric bills, resulting
in a severe water shortage within the Subdivision. There was,
however, no showing that this condition remained subsisting three
(3) years later, at the time respondent Judge's orders here assailed
were rendered (August 1987 and March 1988) and at the time the
Petition for Certiorari was filed (May 1988) before the Supreme
Court. There was, in other words, no showing that the severe water
shortage had not been remedied at or before the said material
times and that a clear and present danger of the same or similar
default on Salandanan's part, threatening the same severe
consequences for the subdivision residents, persisted. On the
contrary, it appears from the record that the Metropolitan
Waterworks and Sewerage System ("MWSS") had commenced
servicing the Subdivision before issuance of the respondent Judge's
orders here sought to be annulled, which circumstance surely
reduced the probabilities of recurrence of such breakdown of water
supply. Succinctly put, petitioner has not shown that the continued
possession of the leased waterworks system by respondent
Salandanan created a continuing, clear and imminent danger that
the Subdivision would suffer from lack of adequate supply of
potable water.

Accordingly, the Court believes that respondent Judge was not
merely acting arbitrarily and capriciously in holding that private
respondent Salandanan was entitled to be maintained in the
possession of the leased waterworks system pending resolution of
the on-going action for rescission of the amended contract of lease
and amended compromise agreement. At the same time, it appears
to the Court that the relations between the petitioner MPHAI and
private respondent Salandanan have been strained and frayed by
the controversies and litigation between them. In order to protect
the Subdivision residents from the hardships that would ensue from
any recurrence of the problems encountered in 1984 after delivery
of the possession of the waterworks system to private respondent
Salandanan, private respondent should be required to post either a
cash deposit or a surety bond from a surety company of indubitable
solvency, in the amount of P100,000.00, conditioned upon the
continued and adequate supply of potable water to Subdivision
residents by private respondent and faithful compliance with his
other obligations under existing agreements with petitioner. This
deposit or bond shall be in addition to any performance bond
required from private respondent under existing contractual
arrangements. Moreover, it goes without saying that the trial court
has full authority to issue such further order or orders may become
necessary to protect adequately the Subdivision residents from
disruption of water service within the Subdivision, attributable to the
failure of either petitioner MPHAI or private respondent Salandanan
to comply with any of their respective contractual obligations during
the pendency of the action for rescission of contract.

WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack
of merit. Private respondent Salandanan is hereby REQUIRED to put
up either a cash deposit or a surety bond issued by a surety
company of indubitable solvency acceptable to this Court in the
amount of P100,000.00, within a non-extendible period of ten (10)
days from notice hereof, to indemnify the members of petitioner
MPHAI for any damages or inconvenience they may suffer by reason
of failure of private respondent Salandanan to provide a continuous
and adequate supply of potable water and otherwise to comply
faithfully with all of his obligations under the amended contract of
lease and amended compromise agreement. No pronouncement as
to costs. This Resolution is immediately executory.


G.R. No. L-30070 August 29, 1980 FEDERICO DECANO, petitioner-
appellee,
vs. ROMEO F. EDU, as Acting Commissioner of Land
Transportation and CIPRIANO POSADAS, as Acting Registrar,
Land Transportation Commission, Dagupan City
Agency, respondents-appellants. TEEHANKEE, J.:
In this appeal, the Court upholds the jurisdiction of the Court of
First Instance of Pangasinan over the petition for "Mandamus and
Injunction" filed by herein petitioner-appellee against respondents-
appellants, although the official station of the first named
respondent, whose official actuation is assailed, is in Quezon City
which is outside the jurisdictional district of the said court. The main
issue raised is the correctness and legality of said national official's
order dismissing petitioner from the service of the Land
Transportation Commission, and the power of judicial review of the
administrative decisions of national officials is not confined to the
courts of first instance of Metropolitan Manila where their offices
are maintained to the exclusion of the courts of first instance in
those localities where the aggrieved parties reside and the
questioned decisions are sought to be enforced. The Court further
affirms the decision of said court adjudging the order of removal
from office as null and void for having been issued by said
respondent who was not the appointing authority and had no
authority to remove, since under the applicable law, the power to
remove petitioner was vested in the department head as the
appointing authority.
The facts are undisputed.
On September 12, 1962, the then Undersecretary of Public Works
and Communications issued to Federico Decano, herein petitioner-
appellee, a temporary appointment to the position of janitor in the
Motor Vehicles Office,
1
Dagupan City Agency, with compensation at
the rate of P1,440.00 per annum. The appointment having been
approved by the Commissioner of Civil Service, the said appointee
assumed office on September 10, 1962 and he served therein for
almost four years, or until April 29, 1966 when herein respondent-
appellant Cipriano Posadas, as Acting Registrar, Land Transportation
Commission, Dagupan City, received a telegram from respondent-
appellant Romeo F. Edu, in his then capacity as Acting
Commissioner of Land Transportation Commission (LTC), terminating
his (Decano's) services effective as of the close of business on that
day.
Shortly thereafter, the aggrieved petitioner-appellee filed before the
Court of First Instance of Pangasinan a petition for "Mandamus and
Injunction" claiming that the aforementioned officials of the LTC
acted without power and in excess of authority in removing him
from the service, and therefore praying of the court to declare as
null and void the order for his removal, to declare him entitled to
the position, to compel his reinstatement and payment of his
regular salary, and to enjoin, preliminary, and then permanently,
respondents from disturbing, molesting or otherwise ousting him
from his position as janitor.
As prayed for, a writ of preliminary injunction was issued by the trial
court at the commencement of the proceedings commanding
respondents "to desist and refrain from disturbing, molesting or
otherwise ousting the petitioner from his position as janitor in the
Land Transportation Commission, Dagupan City Agency, and to pay
the petitioner his corresponding salary from the date of notice of
said preliminary injunction, until further orders from the Court."
After trial, while agreeing with respondent Edu that petitioner's
appointment as janitor was temporary and therefore the latter could
be ousted from his position at any time with or without cause, the
lower court nevertheless declared in its judgment of October 29,
1968 that petitioner's removal was null and void upon the ground
that under the law, respondent Commissioner of Land
Transportation was not the appointing authority insofar as the
position of petitioner and an other minor positions in his office were
concerned; and thus lacking the power of appointment, said
respondent had neither the power of removal.
Hence, this appeal interposed by respondents-appellants which we
find to be not well taken.
There is no question that petitioner could be removed from office at
any time, for it has been held repeatedly
2
that the acceptance of a
temporary appointment divests an appointee of the right to security
of tenure against removal without cause. it is readily apparent from
petitioner's appointment papers that the character of his term of
office was "Temporary" and signed by the then Undersecretary of
Public Works and Communications.
3
He could therefore be
removed at the pleasure of the appointing official.
But this is not to say that petitioner could be removed by the
respondent Commissioner of Land Transportation since the latter
was not the official who appointed him but the Undersecretary
acting for the Secretary of Public Works and Communications nor
had said respondent been granted by law the power of removal.
Per section 79(d) of the Revised Administrative Code, the provision
then in force, it is the department head, upon the recommendation
of the chief of the bureau or office concerned, who has the power
to "appoint all subordinate officers and employees whose
appointment is not expressly vested by the law in the President of
the Philippines;
4
and it is also the department head who may
remove or punish such employees, except as especially provided
otherwise in the Civil Service Law."
5
It appears that this provision
has been precisely applied in the appointment of petitioner, for
upon the recommendation of the then Administrator of the defunct
Motor Vehicles Office, it was signed and issued by the
Undersecretary of Public Works and Communications.
It should be further noted that after petitioner's aforementioned
appointment as janitor in the then Motor Vehicles Office, Republic
Act No. 4136 known as the Transportation and Traffic Code created
the Land Transportation Commission from which law respondent
Edu is supposed to have derived his powers as Commissioner.
Perusal of this law however shows nothing that vests in the said
commissioner any power to appoint or to remove employees in that
new office. On the contrary, the placement of said commission
under the Department of Public Works and Communications is
specifically provided.
6
Hence, the power to appoint, and the
corollary power to remove, employees in the Land Transportation
Commission thus remained with the Secretary of Public Works and
Communications. As generally the power to remove is inherent in
the power to appoint
7
, it follows that the termination of petitioner's
services by respondent Edu, who then had no power to appoint,
was without authority and therefore null and void.
In seeking reversal of the trial court's decision, respondents make
capital of the fact that the petition for mandamus with injunction
was filed in the Court of First Instance of Pangasinan while
respondent Edu holds office in Quezon City which, they claim, is
beyond the territorial jurisdiction of the said court. Respondents cite
the long line of cases from the 1960 case of Acosta vs.
Alvendia
8
where this Court, pursuant to sec. 44 (h) of the Judiciary
Act, jointly or alternatively with sec. 4, Rule 65 of the Rules of Court
and/or section 2 of Rule 58, ruled that a court of first instance has
no jurisdiction to require or control the execution of an act
committed beyond the limits of its territorial jurisdiction. These
cases invariably involved petitions for writs of injunction seeking to
control the actions of courts or officers outside the territorial
jurisdiction of the respondent courts of first instance where said
petitions had been filed. The Acosta ruling of non-jurisdiction does
not apply, however, to the facts and circumstances at bar.
Here, petitioner seeks primarily the annulment of the dismissal order
issued by respondent Edu, mandamus and injunction being then
merely coronary remedies to the main relief sought, and what is
prayed to be enjoined, as in fact the trial court did enjoin by
preliminary injunction, is the implementation of the termination
order against the petitioner. It is true that the order of dismissal was
issued by respondent Edu, but it was to be implemented in
Dagupan City by his subordinate officer, respondent Acting
Registrar of the LTC stationed at Dagupan City. Insofar, therefore, as
respondent Edu is concerned, the order terminating the services of
respondent was a fait accompli and this he had done without
authority, as earlier discussed. The injunction is question,
consequently, must be taken only to restrain the implementation of
respondent Edu's order by his co-respondent whose official station
at Dagupan City is within the territorial boundaries of the trial
court's jurisdictional district.
Thus, in Director of the Bureau of Telecommunications vs. Aligaen,
et al.,
9
in which the acts sought to be controlled by "Injunction with
Preliminary Injunction" were relative to the establishment of a local
telephone system being done within the territorial boundaries of the
judicial district of the Court of First Instance of Roxas, the Court
similarly upheld the jurisdiction of the Court of First Instance of
Roxas over the petition, although two of the respondents named
therein the Director of the Bureau of Telecommunications, and the
Regional Superintendent of Region IV of the Bureau of
Telecommunications had their official stations at Manila and Iloilo
City, respectively, as follows:
... In the instant case, the acts relative to the
establishment of a local telephone system by
petitioners were being done within the territorial
boundaries of the province or district of
respondent Court, and so said Court had
jurisdiction to restrain them by injunction. It
does not matter that some of the respondents
in the trial court, at whom the injunction order
was issued, had their official 'residence outside
the territorial jurisdiction of the trial court. In the
case of Gonzales vs. Secretary of Public Works,
et al., (G.R. No. L-21988, September 30, 1966, 18
SCRA 296), wherein the only question raised was
whether the Court of First Instance of Davao had
jurisdiction to entertain a case the main purpose
of which was to prevent the enforcement of a
decision of the Secretary of Public Works who
was in Manila this Court held that, inasmuch as
the acts sought to be restrained were to be
performed within the territorial boundaries of
the province of Davao, the Court of First
Instance of Davao had jurisdiction to hear and
decide the case, and to issue the necessary
injunction order. This Gonzales case was an
action for certiorari and prohibition with
preliminary injunction and/or preliminary
mandatory injunction to prevent the demolition
of Gonzales' dam in Davao in compliance with
the order of the Secretary of Public Works.
It follows, therefore, that since the acts to be
restrained were being done in Roxas City, or
within the territorial jurisdiction of respondent
court, the latter had jurisdiction to restrain said
acts even if the office of respondent Director of
the Bureau of Telecommunications is in Manila,
and that of respondent Regional Superintendent
of Region IV is in Iloilo City.
As in the above-cited case of Aligaen, the national official stationed
at Quezon City, namely, respondent Commissioner Edu, was
impleaded as respondent in the Pangasinan court for a complete
determination of the issues involved, the legality of Edu's order of
dismissal being the pivotal issue to determine the merits of the
mandamus and injunction aspects of the petition. In other words,
Mr. Edu was joined as respondent not for injunction purposes but
mainly for testing the legality of his dismissal order and his
transmittal thereof to his corespondent registrar at Dagupan City to
implement the same and terminate the services of the petitioner in
Dagupan City.
As held by the Court in the 1965 case of Gayacao vs. The Honorable
Executive Secretary, etc, et al.,
10
where the issue is the correctness
of a national official's decision, the provincial courts of first instance
have equal jurisdiction with the Manila courts to review decisions of
national officials, as otherwise litigants of ted means would
practically be denied access to the courts of the localities where the
reside and where the questioned acts are sought to be enforced.
Thus, Justice J.B.L. Reyes stressed on behalf of the Court that
A careful analysis of the allegations made in the
petition wig show that the petitioner's principal
complaint was that the decision of the Director
of Lands, as affirmed by the Secretary of
Agriculture and the Executive Secretary, was
contrary to law in giving retroactive application
to Lands Administrative Order No. 7-1. In other
words, the remedy sought was the judicial
review of the administrative decision in question
and its annulment on account of errors of law
allegedly committed. ...
The doctrines invoked in support of the theory
of non-jurisdiction (Castano vs. Lobingier, 7 Phil.
91;Acosta vs. Alvendia, L-14958, Oct. 31,
1960; Samar Mining Co. vs. Arnado, L-17109,
June 30, 1961) are inapplicable, in that those
cases involved petitions for writs of injunction
seeking to control the actions of courts or
officers outside the territorial jurisdiction of the
respondent courts involved. Here the sole point
in issue is whether the decision of the
respondent public officers was legally correct or
not and without going into the merits of the
case, we see no cogent reason why this power
of judicial review should be confined to the
courts of first instance of the locality where the
offices of respondents are maintained, to
the exclusion of the courts of first instance in
those localities where the plaintiffs
reside, and where the questioned decisions are
being enforced.
It is easy to see that if the contested ruling of
the court below is sustained, the same would
result not only in hardship to litigants of limited
means, practically amounting to denial of access
to the courts, but would also unnecessarily
encumber the Manila courts whose dockets are
already over burdened. Actually, since Ortua
vs. Singson, 59 Phil. 440, the power of provincial
courts of first instance to review administrative
decisions of national officials has
been consistently recognized.
While the petitioner herein also prayed that the
land authorities be ordered to reinstate her
original application, such remedy is purely
a corollary to the main relief sought; for, as the
allegations now stand, reversal' of the
questioned administrative decision would
necessarily lead to the same result.
Respondents finally raise a technical point referring to the allegedly
defective verification of the petition filed in the trial court,
contending that the clause in the verification statement "that I have
read the contents of the said petition; and that [to] the best of my
knowledge are true and correct" is insufficient since under section 6
of Rule 7,
11
it is required that the person verifying must have read
the pleading and that the allegations thereof are true of his own
knowledge. We do not see any reason for rendering the said
verification void. The statement "to the best of my knowledge are
true and correct" referring to the allegations in the petition does
not mean mere "knowledge, information and belief." It constitutes
substantial compliance with the requirement of section 6 of Rule 7,
as held in Madrigal vs. Rodas.
12
At any rate, this petty technicality
deserves scant consideration where the question at issue is one
purely of law and there is no need of delving into the veracity of
the allegations in the petition, which are not disputed at all by
respondents. As we have held time and again, imperfections of form
and technicalities of procedure are to be disregarded except where
substantial rights would otherwise be prejudiced.
ACCORDINGLY, the decision appealed from is hereby affirmed.































[G.R. Nos. 135180-81; 135425-26. August 16, 2000] Heirs of the
Late Justice JOSE B. L. REYES represented by ADORACION D. REYES
and Heirs of EDMUNDO A. REYES, namely, MA. TERESA P. REYES
and CARLOS P. REYES, petitioners, vs. COURT OF APPEALS AND
METRO MANILA BUILDERS, INC., respondents.D E C I S I O
NPARDO, J.:
The cases before the Court are consolidated petitions for review on
certiorari to nullify: (1) the decision of the Court of Appeals[1]
setting aside that of the Metropolitan Trial Court, Pasay City, Branch
45[2] and the orders of the Regional Trial Court, Pasay City branch
231[3], and ordering petitioners to restore the subject property to
the possession of respondent MMB, Inc. until the expiration of the
lease contract, and (2) the resolution of the Court of Appeals[4]
allowing execution pending appeal[5] of its aforesaid decision and
issuing a writ of execution[6] depriving petitioners of possession of
the leased property and giving its possession to respondent MMB,
Inc.[7] which was a deforciant and worse, declaring petitioners guilty
of indirect contempt of court and sentencing them to pay a fine of
P30,000.00.
The factual background of the case dates back to November 30,
1976. Brothers Justice Jose Benedicto Luna Reyes (also known as
Justice J. B. L. Reyes) and Dr. Edmundo A. Reyes were co-owners of
a parcel of land located at Taft Avenue, Pasay City, near Buendia,
with a land area of more than one hectare, covered by two Transfer
Certificates of Title[8]. On November 30, 1976, the brothers entered
into a 25-year lease contract[9]with Metro Manila Builders, Inc.
(MMB, Inc.) at a very low rate of rental (P15,000.00 to P30,000.00 a
month) in consideration of the fact that the lessee would cover all
present and future improvements in the property with insurance
against certain risks and maintain the premises in good, sanitary
and tenantable condition at all times.
However, in the course of the lease, petitioners found out that
respondent MMB, Inc. had not properly maintained the premises or
covered the same with an adequate insurance policy. Worse,
respondent MMB, Inc. had sub-leased the property to third parties
and was earning therefrom about P500,000.00 a month. On
December 2, 1996, petitioners served on respondent MMB, Inc. a
notice terminating the lease contract and demanding that they
vacate and surrender the premises subject of the lease to
petitioners.
Failing to do so, on February 3, 1997, petitioners filed with the
Metropolitan Trial Court, Pasay City, Branch 45 a complaint for
unlawful detainer[10] based on breach of the contract of lease.
On March 5, 1997, respondent MMB, Inc. filed its answer to the
complaint. MMB, Inc. did not deny the violations imputed to it but
questioned the absence of a judicial rescission of the contract of
lease.[11]
On May 9, 1997, the trial court rendered a decision in favor of
petitioners, thus:
"WHEREFORE, and considering the foregoing, judgment is hereby
rendered in favor of the plaintiff heirs of J.B.L. Reyes, thru Adoracion
D. Reyes, and heirs of Edmundo Reyes namely Ma. Teresa P. Reyes,
and Carlos P. Reyes and against the defendant Metro Manila
Builders, Inc. ordering the latter:
1. And all persons claiming right under it to vacate, surrender and
cede possession of the leased premises to plaintiffs;
2. To pay plaintiffs, P300,000.00 for every month from notice to
vacate until possession is finally turned over to plaintiffs, with legal
interest;
3. To pay plaintiff the amount of P20,000.00 as for attorneys fees;
and,
4. To pay the cost of suit"[12]
On May 16, 1997, petitioners filed with the Metropolitan Trial Court,
Pasay City, Branch 45 a motion for execution of the judgment of
eviction.[13] On the other hand, respondent appealed the decision
to the Regional Trial Court, Pasay City, Branch 113.[14] However,
respondents failed to file their appeal memorandum on time and so
the court dismissed their appeal. In its appeal to the RTC,
respondent MMB, Inc. never raised the issue of jurisdiction. Hence,
on November 5, 1997, respondent MMB, Inc. filed an appeal to the
Court of Appeals.[15]
On November 26, 1997, MTC Branch 45, Pasay City,[16] granted the
motion for execution that petitioners filed. Consequently, on
December 1, 1997, the trial court issued the corresponding writ of
execution.[17] However, on December 8, 1997, the Court of Appeals
issued a temporary restraining order[18] against the execution of
the ejectment judgment.
Even before the appellate court could rule on the injunctive relief,
respondent MMB, Inc. withdrew its appeal.[19] In a resolution dated
February 17, 1998, the Court of Appeals allowed the withdrawal.[20]
Simultaneously with the withdrawal of the first CA case,[21] on
February 17, 1998, private respondent also filed a petition for
annulment of the ejectment decision before the Regional Trial
Court, Pasay City, Branch 231 (RTC 231)[22] on the ground that the
MTC had no jurisdiction over the ejectment case. MMB, Inc. prayed
for a temporary restraining order and/or preliminary injunction
against the execution of the ejectment decision. The court, however,
did not issue a temporary restraining order (TRO) against MTC
Branch 45, Pasay City.
On March 5, 1998, petitioners filed with the Regional Trial Court
their memorandum in support of their opposition against the
injunctive relief sought by MMB, Inc.[23] On March 20, 1998,
petitioners filed with the same court a motion to dismiss.[24]
In an attempt to dramatize its plea, on March 23, 1998, respondent
MMB, Inc. filed another petition with the Court of Appeals[25], for
certiorari and mandamus complaining about what it termed as the
sub-silencio denial by the lower court of their application for
injunctive relief.[26]
On March 23, 1998, the Court of Appeals issued a resolution giving
petitioners, as respondents therein, ten ((10) days from notice within
which to file their comment on the petition, not a motion to
dismiss, and in the meantime, restrained them from enforcing the
writ of execution in Civil Case No. 113-97, MTC-Pasay City, Branch
45.[27]
Incidentally, the resolution was signed by only two members of the
Court of Appeals, Special Fourth Division, namely, Justice Demetrio
G. Demetria, ponente, and Justice Ramon A. Barcelona, member,
concurring. Justice Omar U. Amin, member, did not sign. Hence, the
resolution is void, which the division clerk of court should not have
received for filing, much less served on the parties. By law, the
attendance of three members of the Court of Appeals shall
constitute a quorum for the sessions of a division. The unanimous
vote of three members of a division shall be necessary for the
pronouncement of a decision, or final resolution which shall be
reached in consultation before the writing of the opinion by any
member of the division.[28] This rule applies to interlocutory
resolutions.[29] True, any member of the Court of Appeals may issue
preliminary injunction or temporary restraining order.[30] However,
this power is exercised only in case of extreme urgency, and in the
tradition of the Supreme Court, the Court en banc or division ratifies
or confirms the act of the single justice at the very next session of
the Court.
On April 14, 1998, upon motion of petitioners, RTC-Pasay 231 issued
an order dismissing the petition on the ground that respondent's
remedy is appeal in due time which, when withdrawn, was
effectively abandoned. The Regional Trial Court, Pasay City, Branch
231, thus ruled:
"If jurisdiction was indeed a valid concern of the petitioner, it should
have been raised at the first opportunity i.e. At the inception of the
ejectment case before the Metropolitan Trial Court. Although, the
question of jurisdiction may be raised at any stage of the
proceedings, it should not be used as a scheme to delay the
proceedings and petitioner cannot feign ignorance or inadvertence
in a manner aptly illustrated by the respondents, to wit:
6.1 What gave petitioner away is its silence on why it failed, nay
refused to raise the issue of jurisdiction in its petition before the
appellate court. Jurisdiction it is elementary may be raised anytime
even before the first time on appeal. (Govt. vs. American Surety
Company 11 PHIL 203; Vda De Roxas vs. Rafferty, 37 PHIL 957;
People vs. Que Po Lay, 94 PHIL 6400).
Furthermore, this Court reiterates that the remedy under Rule 47 is
unavailable to the petitioner." It can be availed of only "as the last
remedy and cannot be resorted to if the ordinary remedies of a new
trial, appeal, petition for relief or other appropriate remedies are
available." In this case, appeal is the ordinary remedy which was
available to and had in fact been availed of by the petitioner.
Lamentably, it caused the withdrawal of its appeal expressing
preference and venturing to obtain instead relief under Rule 47
which appears inappropriate under the circumstances."[31]
With the imminent expiration of the temporary restraining order,[32]
respondent MMB, Inc. filed with the Court of Appeals a series of
petitions and motions urging the Court of Appeals to issue
injunctive relief.[33] Thus, on May 14, 1998, respondent MMB, Inc.
filed with the Court of Appeals a motion for leave of court to admit
a supplemental petition.[34]
On May 18, 1998, respondent MMB, Inc. filed with the Court of
Appeals an urgent motion for the issuance of another temporary
restraining order in the second CA case.[35] Respondent sought a
TRO to enjoin the MTC-Branch 45, Pasay City from enforcing the
writ of execution of the decision in Civil Case No. 113-97 and the
Regional Trial Court from proceeding with Civil Case No. 98-0366
pending the resolution of the supplemental petition.
Also on the same date, respondent filed with the Court of Appeals a
manifestation alleging that it filed with the Regional Trial Court,
Quezon City, Branch 88 an action for annulment of the unilateral
termination of lease contract and damages.[36] On the ground that
such case was still pending, respondents prayed for a temporary
restraining order and a writ of preliminary injunction to prevent the
execution of the judgment in Civil Case No. 113-97.[37]
On May 20, 1998, respondent MMB, Inc. filed with the Court of
Appeals[38] another case seeking to set aside the order of the RTC
Pasay, Branch 231, dismissing the action and praying that a
temporary restraining order be issued against the MTC-45 Pasay
City enjoining the writ of execution issued in Civil Case No. 113-97,
to desist from proceeding with CA-G. R. SP No. 47158, to declare
the order of respondent judge in Civil Case No. 98-0366 as null and
void for being issued in grave abuse of discretion, without or in
excess of its jurisdiction, and to declare the TRO/injunction
permanent.
On May 22, 1998, the Court of Appeals consolidated the second[39]
and third[40] CA cases.
In the meantime, on June 29, 1998, the Court of Appeals issued a
resolution in the third CA case,[41] as follows:
"We hereby resolve:
a. to require the respondent in CA GR SP. No. 47720 to file the
petition, not a motion to dismiss, which may be considered as their
answer should we decide to give it due course;
b. Considering that respondent's comment and petitioner's reply in
C.A. G.R. SP. No. 47158, to set for hearing the application for
preliminary injunction on July 15, 1998, at 2:00 A.M. at Paras Hall,
Court of Appeals, Ma. Orosa St., Ermita Manila; and
c. For a comprehensive appreciation of the consolidated cases
before us, to require the RTC Branch 231 of Pasay City to Elevate
the Original Records of Civil Case No. 98-0366 and other pertinent
pleadings and papers related thereto within five (5) days from
notice.[42]
On July 2, 1998, respondents filed with the Regional Trial Court,
Branch 110, Pasay City a petition seeking a temporary restraining
order to enjoin MTC Branch 45, Pasay City,[43] and the sheriff [44]
from enforcing the writ of execution issued on December 1, 1997.
In compliance with the said resolution, on July 15, 1998, petitioners
filed their comment/opposition, alleging that:
a. The petition of private respondent is moot and academic as the
entire premises has already been turned over by the sheriff of MTC-
45 Albert Zaragoza except 14 lessees which were allowed by the
petitioners to remove their improvements within fifteen days;
b. Assuming the dismissal of the petition for annulment was
erroneous, the remedy is appeal not certiorari;
c. Private respondent is guilty of forum shopping as the issue
pending in the Second CA Case, which in RTC-Q.C. is docketed as
Civil Case No. Q-98-34382 (for annulment of unilateral termination
of lease contract) and the third CA Case are one and the same;
d. Judge Ylagan committed no abuse of discretion. Petitioners are
not guilty of contempt since there is no order violated;
e. The dismissal order (April 14, 1998) did not pre-empt the Second
CA case;
f. Private respondent failed to allege, much less prove, irreparable
injury to it.
On August 21, 1998, the Court of Appeals promulgated its decision,
the dispositive portion of which reads as follows:
"WHEREFORE, the decision of the Metropolitan Trial Court, Branch
45, Pasay City in Civil Case No. 113-97 dated May 9, 1997 is SET
ASIDE and the orders dated March 23, 1998 and April 14, 1998,
issued in Civil Case No. 98-0366 are likewise SET ASIDE. Private
respondent is hereby ordered to restore the subject property in the
possession of petitioner and are hereby permanently enjoined from
further committing acts disturbing physical possession of the subject
property by petitioner until after the expiration of the Contract of
Lease.[45]
On the same date the decision of the Court of Appeals was
promulgated, respondent MMB, Inc. filed with that court a very
urgent ex-parte motion for execution pending appea1.[46] On
August 26, 1998, the Court of Appeals required petitioners to
comment on such motion for execution pending appeal within ten
(10) days from notice.[47]
On August 25, 1998, respondent filed with the Court of Appeals
another motion ex-parte for execution pending appeal, motion to
cite in contempt and motion to stop demolition.[48]
On August 27, 1998, the Court of Appeals issued a resolution
stating thus:
"a. Considering that discretionary execution may only issue after due
hearing pursuant to Section (2)a, Rule 39 of the 1997 Rules on Civil
Procedure, to set for hearing the very urgent motion for execution
pending appeal on September 1, 1998, at 10:00 AM at Moran Hall,
Court of Appeals x x x;
"b. To require private respondents and counsel to explain within five
(5) days from receipt hereof why they should not be cited for
contempt; and
"c. To restrain private respondents and all persons acting in their
behalf from further demolishing the buildings and improvements on
the subject premises.[49]
On August 31, 1998, petitioners filed with the Court of Appeals a
motion requesting for an extension of time to file explanation on
the motion to declare petitioners and counsel in contempt.[50] In a
resolution dated September 3, 1998, the Court of Appeals granted
the motion, giving petitioners and counsel ten (10) days from
September 1, 1998, or up to September 11, 1998, within which to
file the explanation.[51] The case was set for oral argument, parties
were directed to submit simultaneously their respective memoranda
to the very urgent motion for the issuance of a writ of execution
pending appeal/motion to stop demolition within ten (10) days from
date, or until September 11, 1998.[52]
On September 11, 1998, petitioners filed with the Court of Appeals
a motion for extension of time to file comment/memorandum for at
least five (5) days from September 11, 1998, or up September 16,
1998 .[53]
On September 14, 1998, petitioners filed with the Supreme Court a
petition for review of the decision of the Court of Appeals.[54] On
September 17, 1998, petitioners filed with the Court of Appeals their
consolidated comment to the very urgent motion for execution
pending appeal, manifestation/motion to cite in contempt/motion
to stop demolition, with motion to defer consideration.[55]
The Court of Appeals, however, despite the pending petition with
this Court, promulgated on September 18, 1998, its resolution, the
dispositive portion of which reads:
"Accordingly, this Court hereby RESOLVES to grant the instant
petition.
"1. A writ of Execution Pending Appeal of the Decision of this Court
dated August 21, 1998 is hereby issued.
"The Division Clerk of this Court is hereby ordered to furnish a
certified true copy of this resolution and the decision of this Court
dated August 21, 1998 to the Metropolitan Trial Court, Branch 45,
and Regional Trial Court, Branch 231 both of Pasay City.
"2. Private respondents and their counsel are hereby adjudged guilty
of indirect contempt of this Honorable Court and are hereby
sentenced to pay a fine of P30,000.00. Private respondents and
counsel are also directed to make a complete restoration to
petitioner of the subject property.
"SO ORDERED."[56]
On September 21, 1998, the Court of Appeals designated a special
sheriff[57] to enforce the writ, and on the same day, he evicted
petitioners from the premises and restored possession in favor of
private respondent.[58]
On September 29, 1998, petitioners filed with the Supreme Court a
petition for certiorari to nullify the resolution of the Court of
Appeals allowing execution pending appeal and the writ of
execution issued pursuant thereto and more, finding petitioners
guilty of indirect contempt of court and sentencing them to pay a
fine of P30,000.00.[59]
The issues raised in the petitions may be summed up as to whether
or not the Court of Appeals erred:
1. In ruling that the nature of the complaint is for rescission of
contract, not ejectment, over which the Metropolitan Trial Court,
Pasay City did not have jurisdiction;
2. In directing that respondent MMB, Inc. be restored in possession
of the leased premises;
3. In immediately executing its resolution dated September 18,
1998, transferring possession of the property from petitioners to
respondent MMB, Inc. by a "special sheriff".
4. In declaring petitioners guilty of indirect contempt of court, and
sentencing them to pay a fine of P30,000.00.
The crux of the case is whether there was a need for judicial
rescission of the contract of lease before respondent MMB, Inc. may
be compelled to move out of the leased premises.
We find the petitions impressed with merit.
We rule that there is no need for a judicial rescission of the lease
contract between lessors heirs of Justice J. B. L. Reyes, et al. and
lessee MMB, Inc. The contract provides:
"Section 18, paragraph 4 (a) In the event of default or breach of any
of the condition of this contract x x x.
(b) x x x the LESSOR may, in his absolute discretion declare the
contract cancelled and terminated and require the TENANT to
vacate the leased premises x x x
MMB, Inc. violated the following conditions of the contract:
1. Par. 8 requiring MMB, Inc. to cover all buildings and
improvements on the leased premises with insurance against fire,
earthquake and extended coverage risks;
2. Par. 9 and 10 of the contract requiring MMB, Inc. to maintain the
leased premises and all the buildings and improvements thereon in
a state of security and first class repair, in a clean and sanitary
condition, to repair and restore or reconstruct such damaged on
destroyed improvements;
3. Par. 11 of the contract requiring defendant to secure LESSOR's
prior written consent before it may assign or transfer any of its
rights under the contacts.
We have ruled that "there is nothing wrong if the parties to a lease
contract agreed on certain mandatory provisions concerning their
respective rights and obligations, such as the procurement of the
insurance and the rescission clause. For it is well to recall that
contracts are respected as the law between the contracting parties,
and they may establish such stipulations, clauses, terms and
conditions as they may want to include. As long as such agreements
are not contrary to law, morals, good customs, public policy or
public order they shall have the force of law between them."[60]
The law on obligations and contracts does not prohibit parties from
entering into agreement providing that a violation of the terms of
the contract would cause its cancellation even without judicial
intervention.[61] This is what petitioners and respondent entered
into, a lease contract with stipulation that the contract is rescinded
upon violation of its substantial provisions, which MMB, Inc. does
not deny they violated.
The basic issue having been disposed of, we need not resolve the
other issues petitioners raised.
On hindsight, the Court of Appeals declared petitioners guilty of
indirect contempt of court because they implemented the writ of
execution of the trial court despite the order of the court to elevate
the entire original records. And petitioners proceeded to demolish
the improvements on the property without authority of the Court of
Appeals. However, this was because the temporary restraining order
issued by the Court of Appeals had lapsed after sixty (60) days.[62]
No more restraining order was in effect until the court decided the
case on its merits. Hence, petitioners acted in good faith in the
exercise of their proprietary rights. There was no willful
disobedience to a lawful order. Petitioners were not guilty of
contempt. The salutary rule is that the power to punish for
contempt must be exercised on the preservative, not vindictive
principle, and on the corrective and not retaliatory idea of
punishment.[63] The courts must exercise the power to punish for
contempt for purposes that are impersonal because that power is
intended as a safeguard not for the judges as persons but for the
functions that they exercise.[64] The court must exercise the power
of contempt judiciously and sparingly, with utmost self-restraint.[65]
One final word. It was bad enough that the Court of Appeals erred
in ruling that the lease contract must be judicially rescinded before
respondent MMB, Inc. may be evicted from the premises. It was
worse that the Court of Appeals immediately enforced its decision
pending appeal restoring respondent in possession of the leased
premises and worst, appointed a special sheriff to carry out the writ
of execution. In the first place, we emphatically rule that the Court
of Appeals has no authority to issue immediate execution pending
appeal of its own decision. Discretionary execution under Rule 39,
Section 2 (a), 1997 Rules of Civil Procedure, as amended, is allowed
pending appeal of a judgment or final order of the trial court, upon
good reasons to be stated in a special order after due hearing. A
judgment of the Court of Appeals cannot be executed pending
appeal. Once final and executory, the judgment must be remanded
to the lower court, where a motion for its execution may be filed
only after its entry.[66] In other words, before its finality, the
judgment cannot be executed. There can be no discretionary
execution of a decision of the Court of Appeals. In the second
place, even in discretionary executions, the same must be firmly
founded upon good reasons. The court must state in a special
order the "good reasons" justifying the issuance of the writ.[67] The
good reasons allowing execution pending appeal must constitute
superior circumstances demanding urgency that will outweigh the
injuries or damages to the adverse party if the decision is
reversed.[68] Jurisprudence teaches us what are "good reasons" that
justify a premature execution of judgment, such as "deterioration of
commodities subject of litigation"[69] and "the deteriorating
condition of the vessel, M/V 'Valiant' . . . left to rot at the pier and
without a crew to guard it".[70]In this case, the good reasons given
by the Court of Appeals to support the discretionary execution of its
decision are (1) that respondent would be deprived of income from
its business endeavors; (2) that "it is of public knowledge" that the
Court of Appeals and the Supreme Court are clogged with cases
and it may take some time before the decision in the case may
attain its finality; and (3) that petitioners acted with bad faith and
malice.[71] None of the cited reasons is "good" enough. According
to jurisprudence, respondent's precarious financial condition is not a
compelling circumstance warranting immediate execution.[72] The
assertion that "it is of public knowledge" that the Supreme Court is
clogged with cases that may take time to decide mocks the integrity
and derides the competence of this Court. The remark erodes and
undermines the people's trust and confidence in the judiciary,
ironically coming from one of its subordinate courts. This is an
assault on the Supreme Court that borders on contempt; we cannot
permit such attack to pass without sanction. This we cannot
countenance. Litigants, lawyers and judges share the responsibility
of unclogging the dockets of the judiciary.[73] No lower court
justice or judge may deride, chastise or chide the Supreme Court
even speaking "with due respect" in his ponencia. In fact, it is the
duty of lower courts to obey the decisions of the Supreme Court
and render obeisance to its status as the apex of the hierarchy of
courts. "A becoming modesty of inferior courts demands conscious
realization of the position that they occupy in the interrelation and
operation of the integrated judicial system of the nation."[74] "There
is only one Supreme Court from whose decision all other courts
should take their bearings" so spoke Justice J. B. L. Reyes.[75] We
echo this golden nugget of advice. If a judge of a lower court
cannot do so in conscience, he has no alternative but to yield his
judicial robe and resign.[76] More, it has been held that urgency
resulting from years of delay in the disposal of a case is not a good
reason for premature execution of the decision.[77] Bad faith and
malice are not indicated simply because petitioners insisted on their
rights and exhausted judicial remedies. On the contrary, good faith
is always presumed.[78] In the third place, on September 14, 1998,
petitioners elevated the decision of the Court of Appeals to the
Supreme Court by petition for review.[79] By the mere fact of the
filing of the petition, the finality of the Court of Appeals' decision
was stayed, and there could be no entry of judgment therein,[80]
and, hence, no premature execution could be had. The Court of
Appeals adopted its resolution granting execution pending appeal
on September 18, 1998, after the petition for review was already
filed in the Supreme Court.[81] It thereby encroached on the
hallowed grounds of the Supreme Court. Worst of all, the Court of
Appeals has no authority to appoint a special sheriff.[82] It
appointed an employee of the mailing section, who was not even
bonded as required by law.[83] Such display of keen interest in the
immediate execution of its decision coupled with the exercise of
excessive authority by illegally appointing a "special sheriff' makes
the concerned members of the Court of Appeals liable to
disciplinary action and the imposition of appropriate penalty.[84]
WHEREFORE, the Court declares VOID the resolution of the Court of
Appeals, dated September 18, 1998 in CA-G. R. SP No. 47158 and
SP No. 47720, and the writ of execution dated September 21, 1998,
issued pursuant thereto. Petitioners are acquitted of the charge of
contempt of court.
The Court REVERSES the decision of the Court of Appeals
promulgated on August 21, 1998, in CA-G. R. SP No. 47158 and SP
No. 47720, and REINSTATES the decision of the Regional Trial Court,
Pasay City, Branch 231, dated March 23, 1998, and order dated April
14, 1998, in Civil Case 98-0366.
Costs against respondent MMB, Inc.
Let a copy of this decision be furnished to the Presiding Justice,
Court of Appeals, Manila, for dissemination to the Associate Justices,
Court of Appeals, for their information and guidance.

BROCKA vs ENRILE December 10, 1990(192 SCRA 183)
HELD: The primary issue here is the legality of enjoining the
criminal prosecution of a case, since the two other issues raised by
Brocka, et al. are matters of defense against the sedition charge. We
rule in favor of Brocka, et al. and enjoin their criminal prosecution
for the second offense of inciting to sedition. Indeed, the general
rule is that criminal prosecution may not be restrained or stayed by
injunction, preliminary or final. There are however exceptions,
among which are: a. To afford adequate protection to the
constitutional rights of the accused " b. When necessary for the
orderly administration of justice or to avoid oppression or
multiplicity of actions "
c. When there is a pre-judicial question which is sub judice
d. When the acts of the officer are without or in excess of authority
e. Where the prosecution is under an invalid law, ordinance or
regulation
f. When double jeopardy is clearly apparent "
g. Where the court has no jurisdiction over the offense
h. Where it is a case of persecution rather than prosecution
i. Where the charges are manifestly false and motivated by the lust
for vengeance, and
j. When there is clearly no prima facie case against the accused and
a motion to quash on that ground has been denied. In the petition
before us, Brocka, et al. have cited the circumstances to show that
the criminal proceedings had become a case of persecution, having
been undertaken by state officials in bad faith
LINO BROCKA, BENJAMIN CERVANTES, COSME GARCIA, RODOLFO
SANTOS, VALENTINO SALIPSIP, RICARDO VEGA, ERIC MARIANO,
JOSE EMMANUEL OYALES, RONNIE MATTA, ALFREDO VIAJE, RUBEN
EUGENIO, REYNALDO ORTIZ, ORLANDO ORTIZ, NOEL REYES,
EDUARDO IMPERIAL, NESTOR SARMIENTO, FRANCO PALISOC,
VIRGILIO DE GUZMAN, ALBERTO REYES, JESSIE PINILI, ROMULO
AUGUIS, DOMINADOR RESURRECION III, RONNIE LAYGO, ROSAURO
ROQUE, CLARENCE SORIANO, OCTAVO DEPAWA, CARLITO LA
TORRE, SEVERNO ILANO, JR., DOMINGO CAJIPE, ALAN ALEGRE,
RAMON MARTINEZ, MA. GILDA HERNANDEZ, EDNA P. VILLANUEVA,
DOLLY S. CANU, MELQUIADES C. ATIENZA, ELIGIO P. VERA CRUZ,
ROGER C. BAGAN, ABUNDIO M. CALISTE, Petitioners, vs. JUAN
PONCE ENRILE, MAJ. GENERAL FIDEL V. RAMOS, BRIG. GENERAL
PEDRO BALBANERO, COL. ABAD, COL. DAWIS, SERGIO APOSTOL,
P/LT, RODOLFO M. GARCIA and JUDGE RICARDO TENSUAN,
Respondents. D E C I S I O N MEDIALDEA, J.:
This petition was originally filed on February 13, 1985 to secure the
release of petitioners on habeas corpus and to permanently enjoin
the City Fiscal of Quezon City from investigating charges of "Inciting
to Sedition" against petitioners Lino Brocka, Benjamin Cervantes,
Cosme Garcia and Rodolfo Santos, (hereafter Brocka, et al.). On
learning that the corresponding informations for this offense has
been filed by the City Fiscal against them on February 11, 1985, a
supplemental petition was filed on February 19, 1985 (p. 51, Rollo)
to implead the Presiding Judge, 1 and to enjoin the prosecution of
Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 (p. 349, Rollo)
and the issuance of warrants for their arrests, including their
arraignment. Since then President Ferdinand E. Marcos had ordered
the provisional release of Brocka, et al., the issue on habeas corpus
has become moot and academic (p. 396, Rollo). We shall thus focus
on the question of whether or not the prosecution of the criminal
cases for Inciting to Sedition may lawfully be enjoined.:-cralaw
Petitioners were arrested on January 28, 1985 by elements of the
Northern Police District following the forcible and violent dispersal
of a demonstration held in sympathy with the jeepney strike called
by the Alliance of Concerned Transport Organization (ACTO).
Thereafter, they were charged with Illegal Assembly in Criminal
Cases Nos. 37783, 37787 and 37788 with Branch 108, Regional Trial
Court, NCJR, Quezon City. 2
Except for Brocka, et al. who were charged as leaders of the offense
of Illegal Assembly and for whom no bail was recommended, the
other petitioners were released on bail of P3,000.00 each. Brocka, et
al.'s provisional release was ordered only upon an urgent petition
for bail for which daily hearings from February 1-7, 1985 were held.
However, despite service of the order of release on February 9,
1985, Brocka, et al. remained in detention, respondents having
invoked a Preventive Detention Action (PDA) allegedly issued
against them on January 28, 1985 (p. 6, Rollo). Neither the original,
duplicate original nor certified true copy of the PDA was ever shown
to them (p. 367, Rollo).
Brocka, et al. were subsequently charged on February 11, 1985 with
Inciting to Sedition, docketed as Criminal Cases Nos. Q-38023, Q-
38024 and Q-38025 (p. 349, Rollo), without prior notice to their
counsel (p. 7, Rollo). The original informations filed recommended
no bail (p. 349, Rollo). The circumstances surrounding the hasty
filing of this second offense are cited by Brocka, et al. (quoting from
a separate petition filed on their behalf in G.R. Nos. 69848-50
entitled "Sedfrey A. Ordoez vs. Col. Julian Arzaga, et al."), as
follows: "x x x
"6. The sham' character of the inquest examination concocted by all
respondents is starkly bizarre when we consider that as early as
10:30 A.M. today, February 11, 1985, Benjamin Cervantes was able
to contact undersigned petitioner by phone informing counsel that
said Benjamin Cervantes and the 4 other persons who are the
subjects of this petition will be brought before the Quezon City
Fiscal at 2:30 for undisclosed reasons: subsequently, another phone
call was received by petitioning counsel informing him that the
appearance of Benjamin Cervantes et al. was to be at 2:00 P.M.
When petitioning counsel arrived in the office of Assistant City Fiscal
Arturo Tugonon, the complainants' affidavits had not yet been
received by any of the panel of three assistant city fiscals, although
the five persons under detention were already in the office of said
assistant fiscal as early as 2:00 P.M. It was only at 3:00 when a
representative of the military arrived bringing with him alleged
statements of complainants against Lino Broka (sic) et al. for alleged
inciting to sedition, whereupon undersigned counsel asked
respondent Colonel Agapito Abad 'who ordered the detained
persons to be brought to the office of Assistant Fiscal Arturo
Tugonon since there were no charges on file;' and said Colonel
Agapito Abad said aloud: 'I only received a telephone call from
Colonel Arzaga about 11:00 A.M. to bring the detained persons
today I am only the custodian.' At 3:15, petitioning counsel
inquired from the Records Custodian when the charges against Lino
Broka (sic) had been officially received and he was informed that the
said charges were never coursed through the Records Office.
"7. Under the facts narrated above, respondents have conspired to
use the strong arm of the law and hatched the nefarious scheme to
deprive Lino Broka (sic) et al. the right to bail because the
utterances allegedly constituting inciting to sedition under Article
142 of the Revised Penal Code are, except for varying nuances,
almost verbatim the same utterances which are the subject of
Criminal Cases No. 37783, 37787 and 37788 and for which said
detained persons are entitled to be released on bail as a matter of
constitutional right. Among the utterances allegedly made by the
accused and which the respondents claimed to be violative of
Article 142 of the Revised Penal Code are: 'Makiisa sa mga drivers,
"Makiisa sa aming layunin, "Digmaang bayan ang sagot sa
kahirapan,' Itigil ang pakikialam ng imperyalismo sa Pilipinas,'
'Rollback ng presyo ng langis sa 95 Centavos.' (See Annex B)
"8. That when petitioning counsel and other members of the
defense panel requested that they be given 7 days within which said
counsel may confer with their clients the detained persons
named above, the panel of assistant fiscals demanded that said
detained persons should sign a 'waiver' of their rights under Article
125 of the Revised Penal Code as a condition for the grant of said
request, which is a harassing requirement considering that Lino
Broka (sic) et al. were already under the detention, albeit illegally,
and they could not have waived the right under Rule 125 which
they did not enjoy at the time the ruling was made by the panel of
assistant city fiscals." (pp. 4-6, Rollo in G.R. 69848-50).
They were released provisionally on February 14, 1985, on orders of
then President F. E. Marcos. The circumstances of their release are
narrated in Our resolution dated January 26, 1985, as quoted in the
Solicitor General's Manifestation as follows:
"G.R. Nos. 69848-50 (Sedfrey A. Ordoez, Petitioner, vs. Col. Julian
Arzaga, et al., Respondents). Petitioner Sedfrey A. Ordoez filed
this petition for habeas corpus in behalf of Lino Brocka, Benjamin
Cervantes, Cosme Garcia, Alexander Luzano, and Rodolfo Santos,
who were all detained under a Preventive Detention Action (PDA)
issued by then President Ferdinand E. Marcos on January 28, 1985.
They were charged in three separate informations of the crime of
illegal assembly under Art. 146, paragraph 3 of the Revised Penal
Code, as amended by PD 1834. On February 7, 1985, the Honorable
Miriam Defensor Santiago, Regional Trial Judge of Quezon City,
issued a resolution in the above criminal cases, directing the release
of the five accused on bail of P6,000.00 for each of them, and from
which resolution the respondent fiscals took no appeal. Immediately
thereafter, the accused filed their respective bail bonds. This
notwithstanding, they continued to be held in detention by order of
the respondent colonels; and on February 11, 1985, these same
accused were 'reinvestigated,' this time on charges of 'inciting to
sedition' ** under Art. 142 of the Revised Penal Code, following
which corresponding cases were filed. The respondents complied
with Our resolution requiring them, inter alia, to make a RETURN of
the writ of habeas corpus. In their RETURN, it appeared that all the
accused had already been released, four of them on February 15,
1985 and one February 8, 1985. The petitioner, nevertheless, argued
that the petition has not become moot and academic because the
accused continue to be in the custody of the law under an invalid
charge of inciting to sedition." (p. 395, Rollo).
Hence, this petition.
Brocka, et al. contend that respondents' manifest bad faith and/or
harassment are sufficient bases for enjoining their criminal
prosecution, aside from the fact that the second offense of inciting
to sedition is illegal, since it is premised on one and the same act of
attending and participating in the ACTO jeepney strike. They
maintain that while there may be a complex crime from a single act
(Art. 48, RTC), the law does not allow the splitting of a single act
into two offenses and filing two informations therefor, further, that
they will be placed in double jeopardy.
The primary issue here is the legality of enjoining the criminal
prosecution of a case, since the two other issues raised by Brocka,
et al. are matters of defense against the sedition charge.
We rule in favor of Brocka, et al. and enjoin their criminal
prosecution for the second offense of inciting to sedition.
Indeed, the general rule is that criminal prosecution may not be
restrained or stayed by injunction, preliminary or final. There are
however exceptions, among which are:
"a. To afford adequate protection to the constitutional rights of the
accused (Hernandez vs. Albano, et al., L-19272, January 25, 1967, 19
SCRA 95);
"b. When necessary for the orderly administration of justice or to
avoid oppression or multiplicity of actions (Dimayuga, et al. vs.
Fernandez, 43 Phil. 304; Hernandez vs. Albano, supra; Fortun vs.
Labang, et al., L-38383, May 27, 1981, 104 SCRA 607);
"c. When there is a pre-judicial question which is sub judice (De
Leon vs. Mabanag, 70 Phil. 202);
"d. When the acts of the officer are without or in excess of authority
(Planas vs. Gil, 67 Phil. 62);
"e. Where the prosecution is under an invalid law, ordinance or
regulation (Young vs. Rafferty, 33 Phil. 556; Yu Cong Eng vs.
Trinidad, 47 Phil. 385, 389);
"f. When double jeopardy is clearly apparent (Sangalang vs. People
and Avendia, 109 Phil. 1140);
"g. Where the court has no jurisdiction over the offense (Lopez vs.
City Judge, L-25795, October 29, 1966, 18 SCRA 616);
"h. Where it is a case of persecution rather than prosecution (Rustia
vs. Ocampo, CA-G.R. No. 4760, March 25, 1960);
"i. Where the charges are manifestly false and motivated by the lust
for vengeance (Recto vs. Castelo, 18 L.J. [1953], cited in Raoa vs.
Alvendia, CA-G.R. No. 30720-R, October 8, 1962; Cf, Guingona, et al
vs. City Fiscal, L-60033, April 4, 1984, 128 SCRA 577); and
"j. When there is clearly no prima facie case against the accused and
a motion to quash on that ground has been denied (Salonga vs.
Pao, et al., L-59524, February 18, 1985, 134 SCRA 438).
"7. Preliminary injunction has been issued by the Supreme Court to
prevent the threatened unlawful arrest of petitioners (Rodriguez vs.
Castelo, L-6374, August 1, 1958)." (cited in Regalado, Remedial Law
Compendium, p. 188, 1988 Ed.)
In the petition before Us, Brocka, et al. have cited the circumstances
to show that the criminal proceedings had become a case of
persecution, having been undertaken by state officials in bad faith.:
nad
Respondents, on the other hand, had invoked a PDA in refusing
Brocka, et al.'s release from detention (before their release on orders
of then Pres. Marcos). This PDA was, however, issued on January 28,
1985, but was invoked only on February 9, 1985 (upon receipt of
the trial court's order of release). Under the guidelines issued, PDAs
shall be invoked within 24 hours (in Metro Manila) or 48 hours
(outside Metro Manila). (Ilagan v. Enrile, G.R. No. 70748, October 28,
1985, 139 SCRA 349). Noteworthy also is Brocka, et al.'s claim that,
despite subpoenas for its production, the prosecution merely
presented a purported xerox copy of the invoked PDA (par. 4,
Counter-Rejoinder, p. 367, Rollo).
The foregoing circumstances were not disputed by the Solicitor
General's office. In fact they found petitioner's plight "deplorable"
(par. 51, Manifestation, p. 396, Rollo).
The hasty filing of the second offense, premised on a spurious and
inoperational PDA, certainly betrays respondent's bad faith and
malicious intent to pursue criminal charges against Brocka, et al.
We have expressed Our view in the Ilagan case that "individuals
against whom PDAs have been issued should be furnished with the
original, and the duplicate original, and a certified true copy issued
by the official having official custody of the PDA, at the time of the
apprehension" (supra, p. 369).
We do not begrudge the zeal that may characterize a public
official's prosecution of criminal offenders. We, however, believe that
this should not be a license to run roughshod over a citizen's basic
constitutional lights, such as due process, or manipulate the law to
suit dictatorial tendencies.
We are impelled to point out a citizen's helplessness against the
awesome powers of a dictatorship. Thus, while We agree with the
Solicitor General's observation and/or manifestation that Brocka, et
al. should have filed a motion to quash the information, We,
however, believe that such a course of action would have been a
futile move, considering the circumstances then prevailing. Thus, the
tenacious invocation of a spurious and inoperational PDA and the
sham and hasty preliminary investigation were clear signals that the
prosecutors intended to keep Brocka, et al. in detention until the
second offense of "Inciting to Sedition" could be facilitated and
justified without need of issuing a warrant of arrest anew. As a
matter of fact the corresponding informations for this second
offense were hastily filed on February 11, 1985, or two days after
Brocka, et al.'s release from detention was ordered by the trial judge
on February 9, 1985.
Constitutional rights must be upheld at all costs, for this gesture is
the true sign of democracy. These may not be set aside to satisfy
perceived illusory visions of national grandeur.: nad
In the case of J. Salonga v. Cruz Pao, We point out:
"Infinitely more important than conventional adherence to general
rules of criminal procedure is respect for the citizen's right to be
free not only from arbitrary arrest and punishment but also from
unwarranted and vexatious prosecution . . ." (G.R. No. L-59524,
February 18, 1985, 134 SCRA 438-at p. 448).
We, therefore, rule that where there is manifest bad faith that
accompanies the filing of criminal charges, as in the instant case
where Brocka, et al. were barred from enjoying provisional release
until such time that charges were filed, and where a sham
preliminary investigation was hastily conducted, charges that are
filed as a result should lawfully be enjoined.
ACCORDINGLY, the petition is hereby GRANTED. The trial court is
PERMANENTLY ENJOINED from proceeding in any manner with the
cases subject of the petition. No costs.












G.R. No. 142616 July 31, 2001
PHILIPPINE NATIONAL BANK, petitioner, vs.RITRATTO GROUP INC.,
RIATTO INTERNATIONAL, INC., and DADASAN GENERAL
MERCHANDISE, respondents.KAPUNAN, J.:
In a petition for review on certiorari under Rule 45 of the Revised
Rules of Court, petitioner seeks to annul and set aside the Court of
Appeals' decision in C.A. CV G.R. S.P. No. 55374 dated March 27,
2000, affirming the Order issuing a writ of preliminary injunction of
the Regional Trial Court of Makati, Branch 147 dated June 30, 1999,
and its Order dated October 4, 1999, which denied petitioner's
motion to dismiss.
The antecedents of this case are as follows:
Petitioner Philippine National Bank is a domestic corporation
organized and existing under Philippine law. Meanwhile,
respondents Ritratto Group, Inc., Riatto International, Inc. and
Dadasan General Merchandise are domestic corporations, likewise,
organized and existing under Philippine law.
On May 29, 1996, PNB International Finance Ltd. (PNB-IFL) a
subsidiary company of PNB, organized and doing business in Hong
Kong, extended a letter of credit in favor of the respondents in the
amount of US$300,000.00 secured by real estate mortgages
constituted over four (4) parcels of land in Makati City. This credit
facility was later increased successively to US$1,140,000.00 in
September 1996; to US$1,290,000.00 in November 1996; to
US$1,425,000.00 in February 1997; and decreased to
US$1,421,316.18 in April 1998. Respondents made repayments of
the loan incurred by remitting those amounts to their loan account
with PNB-IFL in Hong Kong.
However, as of April 30, 1998, their outstanding obligations stood at
US$1,497,274.70. Pursuant to the terms of the real estate
mortgages, PNB-IFL, through its attorney-in-fact PNB, notified the
respondents of the foreclosure of all the real estate mortgages and
that the properties subject thereof were to be sold at a public
auction on May 27, 1999 at the Makati City Hall.
On May 25, 1999, respondents filed a complaint for injunction with
prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order before the Regional Trial Court of
Makati. The Executive Judge of the Regional Trial Court of Makati
issued a 72-hour temporary restraining order. On May 28, 1999, the
case was raffled to Branch 147 of the Regional Trial Court of Makati.
The trial judge then set a hearing on June 8, 1999. At the hearing of
the application for preliminary injunction, petitioner was given a
period of seven days to file its written opposition to the application.
On June 15, 1999, petitioner filed an opposition to the application
for a writ of preliminary injunction to which the respondents filed a
reply. On June 25, 1999, petitioner filed a motion to dismiss on the
grounds of failure to state a cause of action and the absence of any
privity between the petitioner and respondents. On June 30, 1999,
the trial court judge issued an Order for the issuance of a writ of
preliminary injunction, which writ was correspondingly issued on
July 14, 1999. On October 4, 1999, the motion to dismiss was
denied by the trial court judge for lack of merit.
Petitioner, thereafter, in a petition for certiorari and prohibition
assailed the issuance of the writ of preliminary injunction before the
Court of Appeals. In the impugned decision,1 the appellate court
dismissed the petition. Petitioner thus seeks recourse to this Court
and raises the following errors:
1.
THE COURT OF APPEALS PALPABLY ERRED IN NOT DISMISSING THE
COMPLAINT A QUO, CONSIDERING THAT BY THE ALLEGATIONS OF
THE COMPLAINT, NO CAUSE OF ACTION EXISTS AGAINST
PETITIONER, WHICH IS NOT A REAL PARTY IN INTEREST BEING A
MERE ATTORNEY-IN-FACT AUTHORIZED TO ENFORCE AN
ANCILLARY CONTRACT.
2.
THE COURT OF APPEALS PALPABLY ERRED IN ALLOWING THE TRIAL
COURT TO ISSUE IN EXCESS OR LACK OF JURISDICTION A WRIT OF
PRELIMINARY INJUNCTION OVER AND BEYOND WHAT WAS
PRAYED FOR IN THE COMPLAINT A QUO CONTRARY TO CHIEF OF
STAFF, AFP VS. GUADIZ JR., 101 SCRA 827.2
Petitioner prays, inter alia, that the Court of Appeals' Decision dated
March 27, 2000 and the trial court's Orders dated June 30, 1999 and
October 4, 1999 be set aside and the dismissal of the complaint in
the instant case.3
In their Comment, respondents argue that even assuming arguendo
that petitioner and PNB-IFL are two separate entities, petitioner is
still the party-in-interest in the application for preliminary injunction
because it is tasked to commit acts of foreclosing respondents'
properties.4 Respondents maintain that the entire credit facility is
void as it contains stipulations in violation of the principle of
mutuality of contracts.5 In addition, respondents justified the act of
the court a quo in applying the doctrine of "Piercing the Veil of
Corporate Identity" by stating that petitioner is merely an alter ego
or a business conduit of PNB-IFL.6
The petition is impressed with merit.
Respondents, in their complaint, anchor their prayer for injunction
on alleged invalid provisions of the contract:
GROUNDS
I
THE DETERMINATION OF THE INTEREST RATES BEING LEFT TO THE
SOLE DISCRETION OF THE DEFENDANT PNB CONTRAVENES THE
PRINCIPAL OF MUTUALITY OF CONTRACTS.
II
THERE BEING A STIPULATION IN THE LOAN AGREEMENT THAT THE
RATE OF INTEREST AGREED UPON MAY BE UNILATERALLY
MODIFIED BY DEFENDANT, THERE WAS NO STIPULATION THAT THE
RATE OF INTEREST SHALL BE REDUCED IN THE EVENT THAT THE
APPLICABLE MAXIMUM RATE OF INTEREST IS REDUCED BY LAW OR
BY THE MONETARY BOARD.7
Based on the aforementioned grounds, respondents sought to
enjoin and restrain PNB from the foreclosure and eventual sale of
the property in order to protect their rights to said property by
reason of void credit facilities as bases for the real estate mortgage
over the said property.8
The contract questioned is one entered into between respondent
and PNB-IFL, not PNB. In their complaint, respondents admit that
petitioner is a mere attorney-in-fact for the PNB-IFL with full power
and authority to, inter alia, foreclose on the properties mortgaged
to secure their loan obligations with PNB-IFL. In other words, herein
petitioner is an agent with limited authority and specific duties
under a special power of attorney incorporated in the real estate
mortgage. It is not privy to the loan contracts entered into by
respondents and PNB-IFL.
The issue of the validity of the loan contracts is a matter between
PNB-IFL, the petitioner's principal and the party to the loan
contracts, and the respondents. Yet, despite the recognition that
petitioner is a mere agent, the respondents in their complaint
prayed that the petitioner PNB be ordered to re-compute the
rescheduling of the interest to be paid by them in accordance with
the terms and conditions in the documents evidencing the credit
facilities, and crediting the amount previously paid to PNB by herein
respondents.9
Clearly, petitioner not being a part to the contract has no power to
re-compute the interest rates set forth in the contract. Respondents,
therefore, do not have any cause of action against petitioner.
The trial court, however, in its Order dated October 4, 1994, ruled
that since PNB-IFL, is a wholly owned subsidiary of defendant
Philippine National Bank, the suit against the defendant PNB is a
suit against PNB-IFL.10 In justifying its ruling, the trial court, citing
the case of Koppel Phil. Inc. vs. Yatco,11 reasoned that the
corporate entity may be disregarded where a corporation is the
mere alter ego, or business conduit of a person or where the
corporation is so organized and controlled and its affairs are so
conducted, as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation.12
We disagree.
The general rule is that as a legal entity, a corporation has a
personality distinct and separate from its individual stockholders or
members, and is not affected by the personal rights, obligations and
transactions of the latter.13 The mere fact that a corporation owns
all of the stocks of another corporation, taken alone is not sufficient
to justify their being treated as one entity. If used to perform
legitimate functions, a subsidiary's separate existence may be
respected, and the liability of the parent corporation as well as the
subsidiary will be confined to those arising in their respective
business. The courts may in the exercise of judicial discretion step in
to prevent the abuses of separate entity privilege and pierce the veil
of corporate entity.
We find, however, that the ruling in Koppel finds no application in
the case at bar. In said case, this Court disregarded the separate
existence of the parent and the subsidiary on the ground that the
latter was formed merely for the purpose of evading the payment of
higher taxes. In the case at bar, respondents fail to show any cogent
reason why the separate entities of the PNB and PNB-IFL should be
disregarded.
While there exists no definite test of general application in
determining when a subsidiary may be treated as a mere
instrumentality of the parent corporation, some factors have been
identified that will justify the application of the treatment of the
doctrine of the piercing of the corporate veil. The case of Garrett vs.
Southern Railway Co.14 is enlightening. The case involved a suit
against the Southern Railway Company. Plaintiff was employed by
Lenoir Car Works and alleged that he sustained injuries while
working for Lenoir. He, however, filed a suit against Southern
Railway Company on the ground that Southern had acquired the
entire capital stock of Lenoir Car Works, hence, the latter
corporation was but a mere instrumentality of the former. The
Tennessee Supreme Court stated that as a general rule the stock
ownership alone by one corporation of the stock of another does
not thereby render the dominant corporation liable for the torts of
the subsidiary unless the separate corporate existence of the
subsidiary is a mere sham, or unless the control of the subsidiary is
such that it is but an instrumentality or adjunct of the dominant
corporation. Said Court then outlined the circumstances which may
be useful in the determination of whether the subsidiary is but a
mere instrumentality of the parent-corporation:
The Circumstance rendering the subsidiary an instrumentality. It is
manifestly impossible to catalogue the infinite variations of fact that
can arise but there are certain common circumstances which are
important and which, if present in the proper combination, are
controlling.
These are as follows:
(a) The parent corporation owns all or most of the capital
stock of the subsidiary.
(b) The parent and subsidiary corporations have common
directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock
of the subsidiary or otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other
expenses or losses of the subsidiary.
(g) The subsidiary has substantially no business except with
the parent corporation or no assets except those conveyed to or by
the parent corporation.
(h) In the papers of the parent corporation or in the
statements of its officers, the subsidiary is described as a
department or division of the parent corporation, or its business or
financial responsibility is referred to as the parent corporation's own.
(i) The parent corporation uses the property of the subsidiary
as its own.
(j) The directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their orders
from the parent corporation.
(k) The formal legal requirements of the subsidiary are not
observed.
The Tennessee Supreme Court thus ruled:
In the case at bar only two of the eleven listed indicia occur,
namely, the ownership of most of the capital stock of Lenoir by
Southern, and possibly subscription to the capital stock of Lenoir. . .
The complaint must be dismissed.
Similarly, in this jurisdiction, we have held that the doctrine of
piercing the corporate veil is an equitable doctrine developed to
address situations where the separate corporate personality of a
corporation is abused or used for wrongful purposes. The doctrine
applies when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend crime, or when
it is made as a shield to confuse the legitimate issues, or where a
corporation is the mere alter ego or business conduit of a person,
or where the corporation is so organized and controlled and its
affairs are so conducted as to make it merely an instrumentality,
agency, conduit or adjunct of another corporation.15
In Concept Builders, Inc. v. NLRC,16 we have laid the test in
determining the applicability of the doctrine of piercing the veil of
corporate fiction, to wit:
1. Control, not mere majority or complete control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate
mind, will or existence of its own.
2. Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a statutory or
other positive legal duty, or dishonest and, unjust act in
contravention of plaintiffs legal rights; and,
3. The aforesaid control and breach of duty must proximately
cause the injury or unjust loss complained of.
The absence of any one of these elements prevents "piercing the
corporate veil." In applying the "instrumentality" or "alter ego"
doctrine, the courts are concerned with reality and not form, with
how the corporation operated and the individual defendant's
relationship to the operation.17
Aside from the fact that PNB-IFL is a wholly owned subsidiary of
petitioner PNB, there is no showing of the indicative factors that the
former corporation is a mere instrumentality of the latter are
present. Neither is there a demonstration that any of the evils
sought to be prevented by the doctrine of piercing the corporate
veil exists. Inescapably, therefore, the doctrine of piercing the
corporate veil based on the alter ego or instrumentality doctrine
finds no application in the case at bar.
In any case, the parent-subsidiary relationship between PNB and
PNB-IFL is not the significant legal relationship involved in this case
since the petitioner was not sued because it is the parent company
of PNB-IFL. Rather, the petitioner was sued because it acted as an
attorney-in-fact of PNB-IFL in initiating the foreclosure proceedings.
A suit against an agent cannot without compelling reasons be
considered a suit against the principal. Under the Rules of Court,
every action must be prosecuted or defended in the name of the
real party-in-interest, unless otherwise authorized by law or these
Rules.18 In mandatory terms, the Rules require that "parties-in-
interest without whom no final determination can be had, an action
shall be joined either as plaintiffs or defendants."19 In the case at
bar, the injunction suit is directed only against the agent, not the
principal.
Anent the issuance of the preliminary injunction, the same must be
lifted as it is a mere provisional remedy but adjunct to the main
suit.20 A writ of preliminary 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. Further, there is no showing that respondents are entitled to
the issuance of the writ. Section 3, Rule 58, of the 1997 Rules of
Civil Procedure provides:
SECTION 3. Grounds for issuance of preliminary injunction. A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited
period or perpetually,
(b) That the commission, continuance or non-performance of
the acts or acts complained of during the litigation would probably
work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or suffering to
be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
Thus, 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.21 Respondents do not
deny their indebtedness. Their properties are by their own choice
encumbered by real estate mortgages. Upon the non-payment of
the loans, which were secured by the mortgages sought to be
foreclosed, the mortgaged properties are properly subject to a
foreclosure sale. Moreover, respondents questioned the alleged void
stipulations in the contract only when petitioner initiated the
foreclosure proceedings. Clearly, respondents have failed to prove
that they have a right protected and that the acts against which the
writ is to be directed are violative of said right.22 The Court is not
unmindful of the findings of both the trial court and the appellate
court that there may be serious grounds to nullify the provisions of
the loan agreement. However, as earlier discussed, respondents
committed the mistake of filing the case against the wrong party,
thus, they must suffer the consequences of their error.
All told, respondents do not have a cause of action against the
petitioner as the latter is not privy to the contract the provisions of
which respondents seek to declare void. Accordingly, the case
before the Regional Trial Court must be dismissed and the
preliminary injunction issued in connection therewith, must be lifted.
IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The
assailed decision of the Court of Appeals is hereby REVERSED. The
Orders dated June 30, 1999 and October 4, 1999 of the Regional
Trial Court of Makati, Branch 147 in Civil Case No. 99-1037 are
hereby ANNULLED and SET ASIDE and the complaint in said case
DISMISSED.
























































G.R. No. 140228 November 19, 2004FRANCISCO MEDINA,
MARIA MEDINA, RAYMUNDO MEDINA, ENRIQUE MEDINA,
EDGARDO MEDINA, EVELYN MEDINA, ERNIE MEDINA, ELPIDIO
MEDINA, EDWIN MEDINA, ELEONOR MEDINA, TEOFILO MEDINA,
JR., EUGENE MEDINA, ELVIRA MEDINA, ANATALIO MEDINA, MARIO
MEDINA, CORNELIO MEDINA, ERNESTO MEDINA, IGNACIO
CONSTANTINO, SANTOS CONSTANTINO, HERMOGENES
CONSTANTINO, FLORENCIO CONSTANTINO, VIRGINIA
CONSTANTINO, MARCELO GEREMILLO, ROSILA GEREMILLO,
ERNESTO GEREMILLO, MERCEDES GEREMILLO, MELENCIO
GEREMILLO, BALBINO MEDINA, CRISANTA MEDINA, YOLANDA
MEDINA, LYDIA MEDINA, RENATO MEDINA, EUFEMIA MEDINA,
VIRGILIO MEDINA, SONIA MEDINA, LUZVIMINDA MEDINA, CRISPIN
MEDINA, REMIGIO M. RODOLFO, MILAGROS M. RODOLFO, NIDA M.
RODOLFO, BELEN M. RODOLFO, MANUEL M. RODOLFO, ALFREDO
M. RODOLFO, SALLY AREVALO, ELMER AREVALO, CELSO AREVALO,
JR., VINCENT AREVALO, NENE AREVALO, THE HEIRS OF NAZARIA
CRUZ and SANTOS AREVALO, petitioners, vs.GREENFIELD
DEVELOPMENT CORPORATION, respondent.D E C I S I O
NAUSTRIA-MARTINEZ, J.:
The propriety of the writ of preliminary injunction issued by the
Regional Trial Court of Muntinlupa City (Branch 276) in Civil Case
No. 98-233 is the sole issue in this petition for review on certiorari,
assailing the decision of the Court of Appeals nullifying said writ.
Petitioners are the grandchildren of Pedro Medina from two
marriages. In his first marriage to Isadora San Jose, Pedro sired
three children: Rafael, Rita and Remegia; in his second marriage, this
time to Natalia Mullet, Pedro had five: Cornelio, Brigida, Balbino,
Crisanta and Rosila. Except for Balbino and Crisanta, all of Pedro's
children likewise bore children, the petitioners in this case.1
On June 5, 1962, Pedro, his brother Alberto Medina and his niece
Nazaria Cruz (Alberto's daughter) executed a notarized Contract to
Sell in favor of respondent Greenfield Development Corporation
over a parcel of land located in Muntinlupa City, then in the
Province of Rizal, covered by Transfer Certificate of Title (TCT) No.
100177 (Lot 90-A) and measuring 17,121 square meters.2 A
notarized Deed of Sale covering said property was subsequently
entered into on June 27, 1962, in favor of respondent, and this time
signed by Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta,
Rosila, and Alberto, all surnamed Medina, and Nazaria Cruz, as
vendors.3
Thereafter, a notarized Deed of Absolute Sale with Mortgage was
executed on September 4, 1964 in favor of respondent over Lot 90-
B covered by TCT No. 100178, measuring 16,291 square meters.
Signing as vendors were Pedro, Cornelio, Brigida, Balbino, Gregoria,
Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria
Cruz.4
By virtue of these sales, respondent was able to register in its name
the title to the two parcels of land with TCT No. 100578 covering
Lot 90-A and TCT No. 133444 covering Lot 90-B. These properties
were consolidated with other lots and were eventually registered on
July 19, 1995, in the name of respondent under TCT Nos. 202295,
202296 and 202297.5
On November 6, 1998, petitioners instituted Civil Case No. 98-233,
an action for annulment of titles and deeds, reconveyance, damages
with preliminary injunction and restraining order, against respondent
and the Register of Deeds of Makati.6 Included in the complaint are
the heirs of Nazaria Cruz, as unwilling co-plaintiffs.7 Petitioners
allege in their complaint that they are co-owners of these two
parcels of land. While the titles were registered in the names of
Pedro, Alberto, Cornelio, Brigida and Gregoria, all surnamed Medina,
they alleged that they were recognized as co-owners thereof. In
support of their case, petitioners maintain that the deeds of sale on
these properties were simulated and fictitious, and the signatures of
the vendors therein were fake. Despite the transfer of the title to
respondent's name, they remained in possession thereof and in fact,
their caretaker, a certain Santos Arevalo and his family still reside on
a portion of the property. On July 13, 1998, petitioners caused an
adverse claim to be annotated on the titles. After discovering the
annotation, respondent constructed a fence on the property and
posted security personnel, barring their ingress and egress. Thus,
petitioners sought, among others, the issuance of a temporary
restraining order and a writ of preliminary injunction enjoining
respondent and its agents and representatives from preventing
petitioners to exercise their rights over the properties.8
Respondent denied the allegations, stating that petitioners have no
valid claim on the properties as it is already titled in its name by
virtue of the public documents executed by their predecessors. As
counterclaim, respondent alleged that Santos Arevalo is not
petitioners' caretaker and it was them who employed him as
caretaker.9
On January 18, 1999, the trial court issued its resolution granting
petitioners' prayer for injunctive relief. The dispositive portion of the
resolution reads:
Let therefore an injunction issue, enjoining and directing defendant
GREENFIELD DEVELOPMENT CORPORATION, its security guards,
agents, representatives, and all those claiming rights under it, from
preventing plaintiffs and their caretaker Santos Arevalo, from
entering and going out of the subject premises, and from
preventing them to exercise their property rights, upon payment of
a bond in the amount of P100,000.00.
It is SO ORDERED.10
Respondent filed a special civil action for certiorari and prohibition
with the Court of Appeals, docketed as CA-G.R. SP No. 52015. On
July 16, 1999, the Court of Appeals11 rendered its decision nullifying
the trial court's resolution, the dispositive portion of which provides:
IN THE (sic) LIGHT OF ALL THE FOREGOING, the petition is hereby
GRANTED. The assailed Resolution of the Public Respondent Judge,
dated January 18, 1999, in Civil Case No. 98-233 is hereby
NULLIFIED.
SO ORDERED.12
Petitioners now seek recourse with this Court, alleging the following
grounds:
I
THE COURT OF APPEALS ERRED IN RELYING HEAVILY ON THE
ANTECEDENT FACTS NARRATED IN THE PETITION OF THE
RESPONDENT IN CA-G.R. SP NO. 52015 AND ADOPTED THE SAME
AS ITS OWN WITHOUT EVIDENTIARY SUPPORT
II
THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
UPHOLDING THE VALIDITY OF THE DEEDS OF SALE IN FAVOR OF
THE RESPONDENT AND IN HOLDING THAT RESPONDENT'S
TRANSFER CERTIFICATES OF TITLE ARE VALID DESPITE THE FACT
THAT THE SAID ISSUES ARE YET TO BE TRIED
III
THE COURT OF APPEALS ERRED IN PRESUMING THAT NOTARIZED
DOCUMENTS ARE VALID AND THAT RESPONDENT'S TORRENS
TITLES ARE INDEFEASIBLE ON THE WRONG NOTION THAT THE
RESPONDENT WAS PRESUMED INNOCENT PERSON
IV
THE COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING
THAT RESPONDENT WAS IN CONSTRUCTIVE POSSESSION OF THE
SUBJECT PREMISES NOTWITHSTANDING THAT PETITIONERS ARE IN
ACTUAL POSSESSION THEREOF
V
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONERS'
RIGHT TO IMPUGN RESPONDENT'S TITLES HAVE (SIC) PRESCRIBED
SINCE AN ACTION OR DEFENSE BASED ON THE INEXISTENCE OF A
CONTRACT DOES NOT PRESCRIBE13
As stated at the outset, the sole issue in this case is whether or not
the trial court erred in granting petitioners' prayer for injunctive
relief. This Court's resolution will revolve only on the propriety of
the injunction. Any reference to the validity or invalidity of the
transfers and the titles is merely preliminary, as the matter should
be resolved after trial on the merits.
It was the trial court's opinion that petitioners are entitled to the
injunction for the following reasons:
The Court however holds suspect the acquisition by Greenfield
Development Corporation of the two parcels. Lot 90-A covered by
Transfer Certificate of Title No. 100177, was promised to be sold to
defendant under a contract to sell but the other co-owners did not
sign this Contract to Sell, who all denied knowledge of the same.
No contract of Sale followed this Contract to Sell which cannot be
the bases of the issuance of a new title. A Contract to Sell is only a
promise to sell, and is not a deed of sale, specially as this Contact
to Sell is not signed by all of the registered owners.
This Court cannot also understand how the document, denominated
as DEED OF ABSOLUTE SALE WITH MORTGAGE can be the bases
(sic) of a new title. The absoluteness of the sale, is contradicted by
the mortgage it also provides. There is absoluteness of sale only
when the buyer upon execution of the contract, pay (sic) in full the
consideration and ownership passes to the Vendee. The registered
owners of Lot 90-B covered by Transfer Certificate of Title No.
100178 even deny having executed this document of Deed of
Absolute Sale with Mortgage.
Until these matters are threshed out at the trial on the merits, and
after this is fully explained and determined, whether the properties
were actually sold to Defendant Greenfield Development
Corporation, irreparable injury will visit the landowner if the claim of
ownership by Greenfield Development Corporation is allowed and
not enjoined.14
The Court of Appeals, however, disagreed with the trial court. It
noted that the trial court relied mainly on petitioners' allegations in
the complaint, which were not supported by substantial evidence,
and ignored the presumption of validity ascribed to the duly
notarized deeds of conveyances and the titles issued to respondent.
The Court of Appeals also found that respondent is in constructive
possession of the properties in dispute considering that it is already
the registered owner thereof since 1962. Lastly, the Court of Appeals
held that petitioners' right to impugn respondent's title to the
property has already prescribed.15
Section 3, Rule 58 of the Rules of Court provides for the grounds
justifying the issuance of a preliminary injunction, to wit:
SEC. 3. Grounds for issuance of preliminary injunction. - A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act
or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening or is
attempting to do, or is procuring or suffering to be done, some act
or acts probably in violation of the rights of the applicant respecting
the subject of the action or proceeding, and tending to render the
judgment ineffectual.
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. Its sole aim is to
preserve the status quo until the merits of the case can be heard
fully.16 Thus, to be entitled to an injunctive writ, the petitioner has
the burden to establish the following requisites:17
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.
Hence, petitioners' entitlement to the injunctive writ hinges on their
prima facie legal right to the properties subject of the present
dispute. The Court notes that the present dispute is based solely on
the parties' allegations in their respective pleadings and the
documents attached thereto. We have on one hand, petitioners'
bare assertion or claim that they are co-owners of the properties
sold by their predecessors to respondent, and on the other,
respondent's claim of ownership supported by deeds of
conveyances and torrens titles in their favor. From these alone, it is
clear that petitioners failed to discharge the burden of clearly
showing a clear and unmistakable right to be protected. Where the
complainant's right or title is doubtful or disputed, injunction is not
proper. The possibility of irreparable damage without proof of actual
existing right is not a ground for an injunction.18
Petitioners contend that the Court of Appeals should not have relied
on respondent's allegations regarding the circumstances
surrounding the sales and the transfer of the titles. Petitioners point
out that trial on the merits of the case is still ongoing and
respondent is yet to adduce evidence in support of its contention.
The same, however, applies to petitioners' cause of action. They only
have their own allegations and are yet to prove their claim. And as
stated earlier, the only bases from which the propriety of the
injunction can be determined are their respective pleadings and
documents. What tilt the balance in respondent's favor are the
notarized documents and the titles to the properties. The well-
settled rule is that a document acknowledged before a notary public
enjoys the presumption of regularity. It is a prima facie evidence of
the facts therein stated. To overcome this presumption, there must
be presented evidence that is clear and convincing. Absent such
evidence, the presumption must be upheld.19 In addition, the titles
in the name of respondent, having been registered under the
Torrens system, are generally a conclusive evidence of the
ownership of the land referred to therein,20 and a strong
presumption exists that the titles are regularly issued and valid.21
Therefore, until and unless petitioners show that the documents are
indeed spurious and the titles invalid, then the presumptions must
prevail at this juncture.
Petitioners, however, argue that the presumption of validity of the
notarized documents and titles cannot be applied in respondent's
case as it is not an innocent purchaser.22 According to petitioners,
respondent is fully aware that at the time that the Contract to Sell
was entered into in 1962, Leon Medina who is a co-owner of the
property then covered by TCT No. 21314, was already dead. Suffice
it to say that these arguments already involve the merits of the
main case pending before the trial court, which should not even be
preliminarily dealt with, as it would be premature.
Equally pertinent is the rule that courts should avoid issuing a writ
of preliminary injunction, which in effect, would dispose of the main
case without trial.23 The ground relied upon by the trial court in
issuing the writ of preliminary injunction in this case is its doubt
over the acquisition of the properties by respondent.24 Such basis
would be virtually recognizing petitioners' claim that the deeds of
conveyances and the titles are a nullity without further proof, to the
detriment of the doctrine of presumption of validity in favor of
these documents. There would, in effect, be a prejudgment of the
main case and a reversal of the rule on the burden of proof since it
would assume the proposition which the petitioners are inceptively
duty bound to prove.25
Petitioners also claim that they are in actual possession of the
property. As alleged in their complaint, they instituted Santos
Arevalo, a co-petitioner, as caretaker.26 They also alleged in their
petition filed before this Court that Balbino and Yolanda Medina
and their respective families are still residing on a portion of the
property.27 Respondent belies their claim, declaring that it
employed Arevalo as caretaker. Respondent presented a notarized
Receipt and Quitclaim dated April 26, 1994, signed by Arevalo, who
attested that he was employed by respondent as caretaker and that
his stay on the property was a mere privilege granted by
respondent.
Possession and ownership are two different legal concepts. Just as
possession is not a definite proof of ownership, neither is non-
possession inconsistent with ownership. Even assuming that
petitioners' allegations are true, it bears no legal consequence in the
case at hand because the execution of the deeds of conveyances is
already deemed equivalent to delivery of the property to
respondent, and prior physical delivery or possession is not legally
required.28 Under Article 1498 of the Civil Code, "when the sale is
made through a public instrument, the execution thereof shall be
equivalent to the delivery of the object of the contract, if from the
deed the contrary does not appear or cannot be inferred."
Possession is also transferred, along with ownership thereof, to
respondent by virtue of the notarized deeds of conveyances.29
In sum, the trial court committed grave abuse of discretion in
issuing the writ of preliminary injunction, and the Court of Appeals
was correct in nullifying the same.
The Court, however, finds that it was precipitate for the Court of
Appeals to rule that petitioners' action is barred by prescription. As
previously stressed, the parties are yet to prove their respective
allegations and the trial court is yet to receive the evidence. There is
nothing on record that can conclusively support the conclusion that
the action is barred by prescription. Hence, the Court of Appeals
should not have made such ruling.
WHEREFORE, the petition is hereby DENIED for lack of merit. The
Decision dated July 16, 1999 rendered by the Court of Appeals in
CA-G.R. SP No. 52015 is AFFIRMED, except as to its view on
prescription, as discussed in the body of the text.
Let the original records of this case be remanded to the Regional
Trial Court of Muntinlupa City (Branch 276) with dispatch for further
proceedings.











G.R. No. 121158 December 5, 1996CHINA BANKING
CORPORATION, ATTYS. REYNALDO M. CABUSORA and RENATO C.
TAGUIAM, petitioners, vs.COURT OF APPEALS, HON. PEDRO T.
SANTIAGO, SPS. SO CHING and CRISTINA SO, and NATIVE WEST
INTERNATIONAL TRADING CORP., respondents.FRANCISCO, J.:p
China Banking Corporation (China Bank) extended several loans to
Native West International Trading Corporation (Native West) and to
So Ching, Native West's president. Native West in turn executed
promissory notes 1 in favor of China Bank. So Ching, with the
marital consent of his wife, Cristina So, additionally executed two
mortgages over their properties, viz., a real estate mortgage
executed on July 27, 1989 covering a parcel of land situated in
Cubao, Quezon City, under TCT No. 277797 2, and another executed
on August 10, 1989 covering a parcel of land located in
Mandaluyong, under TCT No. 5363. 3 The promissory notes matured
and despite due demands by China Bank neither private
respondents Native West nor So Ching paid. Pursuant to a provision
embodied in the two mortgage contracts, China Bank filed petitions
for the extra-judicial foreclosure of the mortgaged properties before
Notary Public Atty. Renato E. Taguiam for TCT No. 277797, 4 and
Notary Public Atty. Reynaldo M. Cabusora for TCT No. 5363, 5
copies of which were given to the spouses So Ching and Cristina So.
After due notice and publication, the notaries public scheduled the
foreclosure sale of the spouses' real estate properties on April 13,
1993. Eight days before the foreclosure sale, however, private
respondents filed a complaint 6 with the Regional Trial Court 7 for
accounting with damages and with temporary restraining order
against petitioners alleging the following causes of action:
A. Defendants failed to comply with the mandates of
Administrative Order No. 3 of the Supreme Court dated October 19,
1984.
B. Defendants failed to comply with the mandates of Section
2 Presidential Decree No. 1079 dated January 28, 1977.
C. MORTGAGORS liability limited to P6,500,000.00 and
P3,500,000.00 respectively in the Mortgages Annexes A and B
respectively, but the same are not included in the notice of
foreclosure.
D. Violation of Truth in Lending Act (RP Act No. 3765).
E. In all the loans granted by DEFENDANT-BANK to plaintiffs
and Borrowers, the Bank charged interests in excess of the rate
allowed by the Central Bank.
F. Violation of Article 1308 of the Civil Code. 8
On April 7, 1993, the trial court issued a temporary restraining order
to enjoin the foreclosure sale. Thereafter counsels for the respective
parties agreed to file their pleadings and to submit the case,
without further hearing, for resolution. On April 28, 1993, the trial
court, without passing upon the material averments of the
complaint, issued an Order granting the private respondents' prayer
for the issuance of preliminary injunction with the following
proffered justification:
From the foregoing, it is quite apparent that a question of
accounting poses a thorny issue as between the litigants. Variance
in the amounts involved relating to the loan agreements must be
judiciously passed upon by the Court and this is only possible if a
trial on the merits could be had as the matters appurtenant thereto
are evidentiary in nature.
Under the premises, the accounting issue being evidentiary in
character calls for an issuance of a writ of preliminary injunction
pending the adjudication of the case. The issuance thereof at this
particular stage of the case is merely a preventive remedy designed
to protect from irreparable injury to property or other rights plaintiff
may suffer, which a court of equity may take cognizance of by
commanding acts to be done or prohibiting their commission, as in
the instant suit, to restrain notaries public Cabusora and Taguiam as
well as defendant China Banking Corporation from continuing with
the auction sale of the subject properties, until further orders from
this Court.
Wherefore, premises considered, finding that the circumstances
warrant the issuance of a preliminary injunction, plaintiff's prayer is
hereby GRANTED. Consequent thereto, plaintiffs are hereby ordered
to post a bond amounting to P1 (ONE) Million to answer for
whatever damages defendant may suffer as a consequence of the
writ. 9
Petitioners moved for reconsideration, but it was denied in an Order
dated September 23, 1993. To annul the trial court's Orders of April
28, 1993 and September 23, 1993, petitioners elevated the case
through certiorari and prohibition 10 before public respondent
Court of Appeals. 11 In a decision dated January 17, 1995,
respondent Court of Appeals held that Administrative Circular No. 3
is the governing rule in extra-judicial foreclosure of mortgage, which
circular petitioners however failed to follow, and with respect to the
publication of the notice of the auction sale, the provisions of P.D.
No. 1079 is the applicable statute, 12 which decree petitioners
similarly failed to obey. Respondent Court of Appeals did not pass
upon the other issues and confined its additional lengthy discussion
on the validity of the trial court's issuance of the preliminary
injunction, finding the same neither capricious nor whimsical
exercise of judgment that could amount to grave abuse of
discretion. 13 The Court of Appeals accordingly dismissed the
petition, as well as petitioners' subsequent motion for
reconsideration. 14 Hence, the instant petition under Rule 45 of the
Rules of Court reiterating the grounds raised before respondent
court, to wit:
I. PETITIONER CBC'S PETITIONS TO EXTRAJUDICIALLY
FORECLOSE THE REAL ESTATE MORTGAGES OF JULY 27, 1989 AND
AUGUST 10, 1989 THRU PETITIONERS-NOTARIES PUBLIC, AND THE
SCHEDULED FORECLOSURE SALE ARE VALID AND LAWFUL;
II. PRIVATE RESPONDENTS AND PETITIONER CBC HAD
EXPRESSLY AGREED TO CONSIDER THE SAME MORTGAGES AS
VALID SECURITIES FOR PROMPT AND FULL PAYMENT OF ALL AND
ANY OBLIGATIONS OF THE FORMER FROM THE LATTER;
III. THE SUPPOSED VARIANCE IN THE TOTAL AMOUNT OF
UNPAID LOANS IS NOT A VALID BASIS TO ENJOIN THE
FORECLOSURE OF THE QUESTIONED MORTGAGES. THE MERE
FAILURE TO PAY THE LOAN SECURED BY SAID MORTGAGES IS THE
ONLY, SINGLE REASON FOR THEIR LAWFUL FORECLOSURE;.

IV. PETITIONER BANK HAD FURNISHED PRIVATE
RESPONDENTS WITH COPIES OF DISCLOSURE STATEMENTS IN
COMPLIANCE WITH THE TRUTH IN LENDING ACT, AND CHARGED
THEM INTERESTS IN ACCORDANCE WITH LAW AND PURSUANT TO
ITS EXPRESS AGREEMENT WITH THE LATTER;
V. THE P1.0 MILLION INJUNCTION BOND REQUIRED BY THE
HONORABLE COURT A QUO ON PRIVATE RESPONDENTS IS
GROSSLY AND PATENTLY INADEQUATE. 15
At the outset, the Court's attention is drawn to the fact that since
the filing of this suit before the trial court, none of the substantial
issues have been resolved. To avoid and gloss over the issues raised
by the parties, as what the trial court and respondent Court of
Appeals did, would unduly prolong this litigation involving a rather
simple case of foreclosure of mortgage. Undoubtedly, this will run
counter to the avowed purpose of the rules, i.e., to assist the parties
in obtaining just, speedy and inexpensive determination of every
action or proceeding. 16 The Court, therefore, feels that the central
issues of the case, albeit unresolved by the courts below, should
now be settled specially as they involved pure questions of law.
Furthermore, the pleadings of the respective parties on file have
amply ventilated their various positions and arguments on the
matter necessitating prompt adjudication.
Now to the core issues.
As the Court sees it, the crucial issues are: (1) whether or not the
loans in excess of the amounts expressly stated in the mortgage
contracts can be included as part of the loans secured by the real
estate mortgages, (2) whether or not petitioners can extra-judicially
foreclose the properties subject of the mortgages, (3) whether or
not Administrative Order No. 3 should govern the extra-judicial
foreclosure of the properties, and (4) whether or not the writ of
preliminary injunction issued by the trial court is valid.
Petitioners aver that the additional loans extended in favor of
private respondents in excess of P6,500,000.00 and P3,500,000.00
amounts respectively stipulated in the July 27, 1989 and August 10,
1989 mortgage contracts are also secured by the same collaterals
or real estate properties, citing as bases the introductory paragraph
("whereas clause") of the mortgage contracts, as well as the
stipulations stated therein under the first and second paragraphs.
Private respondents for their part argue that the additional loans are
clean loans, relying on some isolated parts of the same introductory
paragraph and first paragraph of the contracts, and also of the third
paragraph.
As both parties offered a conflicting interpretation of the contract,
then judicial determination of the parties' intention is thus,
inevitable. 17 Hereunder are the pertinent identical introductory
paragraphs and paragraphs 1 to 3 of the July 27, 1989 and August
10, 1989 mortgage contracts:
WHEREAS, the MORTGAGEE has granted, and may from time to
time hereafter grant to the MORTGAGOR(S)/either of them/and/or
NATIVE WEST INTERNATIONAL TRADING CORP. hereinafter
called the DEBTOR(S) credit facilities not exceeding SIX MILLION
FIVE HUNDRED THOUSAND PESOS ONLY (P6,500,000.00)* Philippine
currency, and the MORTGAGEE had required the MORTGAGOR(S) to
give collateral security for the payment of any and all obligations
heretofore contracted/incurred and which may thereafter be
contracted/incurred by the MORTGAGOR(S) and/or DEBTOR(S), or
any one of them, in favor of the MORTGAGEE;
NOW, THEREFORE, as collateral security for the payment of the
principal and interest of the indebtedness/obligations herein
referred to and the faithful performance by the MORTGAGOR(S) of
his (her, its) obligations hereunder, the MORTGAGOR(S) hereby
execute(s) a FIRST MORTGAGE, in favor of the MORTGAGEE, free
from all liens and encumbrances of any kind, that (those) certain
parcel(s) of land, together with all the
buildings/machineries/equipment improvements now existing
thereon, and which may hereafter be placed thereon, described in
the Schedule of mortgaged properties described hereunder and/or
which is hereto attached, marked Exhibit "A" and made a part
thereof.
1. It is agreed that this mortgage shall respond for all the
obligations contracted/incurred by the MORTGAGOR(S) and/or
DEBTOR(S) or any one of them, in favor of the MORTGAGEE up to
the said sum of SIX MILLION FIVE HUNDRED THOUSAND PESOS
ONLY (P6,500,000.00)* regardless of the manner in which the said
obligations may have been contracted/incurred by the
MORTGAGOR(S) and/or DEBTOR(S) whether by advances or loans
made to him (her, it) by the MORTGAGEE, by the negotiation of
mercantile documents, including trust receipts, by the execution by
the MORTGAGOR(S) and/or DEBTOR(S) of money market
instruments/commercial papers, undertakings of guaranty of
suretyship, or by endorsement of negotiable instruments, or
otherwise, the idea being to make this deed a comprehensive and
all embracing security that it is.
2. Payments on account of the principal and interest of the
credit granted by the MORTGAGEE to the MORTGAGOR(S) and/or
DEBTOR(S) may be made from time to time, and as often as the
MORTGAGOR(S) may elect; provided, however, that in the event of
such payments being so made that the indebtedness to the
MORTGAGEE may from time to time be reduced the MORTGAGEE
may make further advances and all sums whatsoever advanced by
the MORTGAGEE shall be secured by this mortgage, and partial
payments of said indebtedness from time to time shall not thereby
be taken to reduce by the amount of such payments the credit
hereby secured. The said credit shall extend to any account which
shall, within the said limit of P6,500,000.00* exclusive of interest, be
fluctuating and subject to increase or decrease from time to time as
the MORTGAGEE may approve, and this mortgage shall stand as
security for all indebtedness of the MORTGAGOR(S) and/or
DEBTOR(S), or any one of them, at any and all times outstanding,
regardless of partial or full payments at any time or times made by
the MORTGAGOR(S) and/or DEBTOR(S).
3. It is hereby agreed that the MORTGAGEE may from time
to time grant the MORTGAGOR(S)/DEBTOR(S) credit facilities
exceeding the amount secured by this mortgage, without affecting
the liability of the MORTGAGOR(S) under this mortgage up to the
amount stipulated. 18
An important task in contract interpretation is the ascertainment of
the intention of the contracting parties which is accomplished by
looking at the words they used to project that intention in their
contract, i.e., all the words, not just a particular word or two, and
words in context, not words standing alone. 19 Indeed, Article 1374
of the Civil Code, states that "the various stipulations of a contract
shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly." Applying the
rule, we find that the parties intent is to constitute the real estate
properties as continuing securities liable for future obligations
beyond the amounts of P6.5 million and P3.5 million respectively
stipulated in the July 27, 1989 and August 10, 1989 mortgage
contracts. Thus, while the "whereas" clause initially provides that
"the mortgagee has granted, and may from time to time hereafter
grant to the mortgagors . . . credit facilities not exceeding six million
five hundred thousand pesos only (P6,500,000.00)**" yet in the same
clause it provides that "the mortgagee had required the
mortgagor(s) to give collateral security for the payment of any and
all obligations heretofore contracted/incurred and which may
thereafter be contracted/incurred by the mortgagor(s) and/or
debtor(s), or any one of them, in favor of the mortgagee" which
qualifies the initial part and shows that the collaterals or real estate
properties serve as securities for future obligations. The first
paragraph which ends with the clause, "the idea being to make this
deed a comprehensive and all embracing security that it is" supports
this qualification.
Similarly, the second paragraph provides that "the mortgagee may
take further advances and all sums whatsoever advanced by the
mortgagee shall be secured by this mortgagee . . ." And although it
was stated that "[t]he said credit shall extend to any account which
shall, within the said limit of P6,500,000.00 exclusive of interest", this
part of the second sentence is again qualified by its succeeding
portion which provides that "this mortgage shall stand as security
for all indebtedness of the mortgagor(s) and/or debtor(s), or any
one of them, at any and all times outstanding . . ." Again, under the
third paragraph, it is provided that "the mortgagee may from time
to time grant the mortgagor(s)/debtor(s) credit facilities exceeding
the amount secured by this mortgage . . ." The fourth paragraph, 20
in addition, states that ". . . all such withdrawals, and payments,
whether evidenced by promissory notes or otherwise, shall be
secured by this mortgage" which manifestly shows that the parties
principally intended to constitute the real estate properties as
continuing securities for additional advancements which the
mortgagee may, upon application, extend. It is well settled that
mortgages given to secure future advancements or loans are valid
and legal contracts, and that the amounts named as consideration
in said contracts do not limit the amount for which the mortgage
may stand as security if from the four corners of the instrument the
intent to secure future and other indebtedness can be gathered. 21
Anent the second issue, we find that petitioners are entitled to
foreclose the mortgages. In their complaint for accounting with
damages pending with the trial court, private respondents averred
that:
8. Up to and until February, 1993, PLAINTIFF-CORPORATION
had paid to the DEFENDANT-BANK, the amount of THREE
HUNDRED FIFTY THOUSAND (P350,000.00) Pesos, Philippine
Currency, and was willing to pay the balance in installments of
FOUR HUNDRED THOUSAND (P400,000.00) Pesos, Philippine
Currency, every month, in the meantime, but the DEFENDANT-BANK
refused to accept, demanding instead SEVEN HUNDRED MILLION
(P700,000,000.00) Pesos, Philippine Currency, a month.
9. Inspite of the expressed willingness and commitment of
plaintiffs to pay their obligation in a manner which they could
afford, on March 11, 1993, MORTGAGORS and DEFENDANT-
CORPORATION, each received a Letter of Demand from
DEFENDANT-BANK, for the payment of P28,775,615.14 exclusive of
interest and penalty evidenced by 11 promissory notes enclosed
therein . . . .
10. Upon receipt of the letter, PLAINTIFF-CORPORATION
through its President pleaded with the Chairman of the Board of the
DEFENDANT-BANK, through whom Defendant-Corporation was
transacting business with, to accept its offer of payment of FOUR
HUNDRED THOUSAND (P400,000.00) Pesos, Philippine Currency, a
month, in the meantime, which was again refused by the said
Chairman. 22
which allegations are a clear admission that they were unable to
settle to the fullest their obligation. Foreclosure is valid where the
debtors, as in this case, are in default in the payment of their
obligation. 23 The essence of a contract of mortgage indebtedness
is that a property has been identified or set apart from the mass of
the property of the debtor-mortgagor as security for the payment
of money or the fulfillment of an obligation to answer the amount
of indebtedness, in case of default of payment. 24 It is a settled rule
that in a real estate mortgage when the obligation is not paid when
due, the mortgagee has the right to foreclose the mortgage and to
have the property seized and sold in view of applying the proceeds
to the payment of the obligation. 25 In fact, aside from the
mortgage contracts, the promissory notes executed to evidence the
loans also authorize the mortgagee to foreclose on the mortgages.
Thus:
. . . CHINA BANKING CORPORATION is hereby authorized to sell at
public or private sales such securities or things of value for the
purpose of applying their proceeds to such payments. 26
And while private respondents aver that they have already paid ten
million pesos, an allegation which has still to be settled before the
trial court, the same cannot be utilized as a shield to enjoin the
foreclosure sale. A mortgage given to secure advancements, we
repeat, is a continuing security and is not discharged by repayment
of the amount named in the mortgage, until the full amount of the
advancements are paid. 27
With respect to the third issue, we find private respondents'
contention that Administrative Order No. 3 is the governing rule in
foreclosure of mortgages misplaced. The parties, we note, have
stipulated that the provisions of Act No. 3135 is the controlling law
in case of foreclosure. Thus:
17. The MORTGAGOR(S) hereby grant(s) unto the
MORTGAGEE full and irrevocable power of attorney coupled with
interest, in the event of breach of any of the conditions of this
mortgage, to sell, in its discretion, the mortgaged properties at
public auction, for cash and to the highest bidder, in the Province or
City where the mortgaged properties are located, before the Sheriff,
or a Notary Public, without court proceedings, after posting notices
of sale for a period of twenty days in three public places in said
place; and after publication of such notice in a newspaper of
general circulation in the said place once a week, for three
consecutive weeks, and the MORTGAGEE is hereby authorized to
execute the deed of sale and all such other documents as may be
necessary in the premises all in accordance with the provisions of
Act No. 3135 of the Philippine Legislature, as amended, and Section
78 of Republic Act No. 337: . . . 28 (Emphasis supplied.)
By invoking the said Act, there is no doubt that it must "govern the
manner in which the sale and redemption shall be effected." 29
Clearly, the fundamental principle that contracts are respected as
the law between the contracting parties finds application in the
present case, 30 specially where they are not contrary to law,
morals, good customs and public policy.
Moreover, Administrative Order No. 3 is a directive for executive
judges and clerks of courts which, under its preliminary paragraph,
is "[i]n line with the responsibility of an Executive Judge, under
Administrative Order No. 6, dated June 30, 1975, for the
management of courts within his administrative area, included in
which is the task of supervising directly the work of the Clerk of
Court, who is also the Ex-Oficio Sheriff, and his staff, . . . ." Surely, a
petition for foreclosure with the notary public is not within the
contemplation of the aforesaid directive as the same is not filed
with the court. At any rate, Administrative Order No. 3 cannot
prevail over Act No. 3135, as amended. It is an elementary principle
in statutory construction that a statute is superior to an
administrative directive and the former cannot be repealed or
amended by the latter.
On the last issue, we find that the issuance of the writ of injunction
by the trial court unjustified. A writ of preliminary injunction, as an
ancillary or preventive remedy, may only be resorted to by a litigant
to protect or preserve his rights or interests and for no other
purpose during the pendency of the principal action. 31 But before
a writ of preliminary injunction may be issued, there must be a clear
showing by the complaint that there exists a right to be protected
and that the acts against which the writ is to be directed are
violative of the said right. 32 In the case at bench, we fail to see any
reason why the foreclosure of the mortgages should be enjoined.
On the face of the clear admission by private respondents that they
were unable to settle their obligations which were secured by the
mortgages, petitioners have a clear right to foreclose the mortgages
which is a remedy provided by law. Thus, in Caltex Philippines, Inc.
v. Intermediate Appellate Court, 33 we reiterated the rule that:
. . . where a debt is secured by a mortgage and there is a default in
payment on the part of the mortgagor, the mortgagee has a choice
of one (1) or two (2) remedies, but he cannot have both. The
mortgagee may:
1) foreclosure the mortgage; or
2) file an ordinary action to collect the debt.
When the mortgagee chooses the foreclosure of the mortgage as a
remedy, he enforces his lien by the sale on foreclosure of the
mortgaged property. The proceeds of the sale will be applied to the
satisfaction of the debt. With this remedy, he has a prior lien on the
property. In case of a deficiency, the mortgagee has the right to
claim for the deficiency resulting from the price obtained in the sale
of the real property at public auction and the outstanding
obligation at the time of the foreclosure proceedings (Soriano v.
Enriquez, 24 Phil 584; Banco de Islas Filipinas v. Concepcion Hijos,
53 Phil 86; Banco Nacional v. Barreto, 53 Phil 101).
On the other hand, if the mortgagee resorts to an action to collect
the debt, he thereby waives his mortgage lien. He will have no more
priority over the mortgaged property. If the judgment in the action
to collect is favorable to him, and it becomes final and executory, he
can enforce said judgment by execution. He can even levy execution
on the same mortgaged property, but he will not have priority over
the latter and there may be other creditors who have better lien on
the properties of the mortgagor. 34
WHEREFORE, the instant petition is hereby GRANTED. The assailed
Decision, as well as the Resolution, of the Court of Appeals dated
January 17, 1995 and July 7, 1995, respectively, are hereby
REVERSED and SET ASIDE. The preliminary writ of injunction issued
by the trial court is hereby NULLIFIED. This case is REMANDED to
the court of origin for further proceedings in conformity with this
decision.










































G.R. No. 167434 February 19, 2007 SPOUSES RAMON M. NISCE
and A. NATIVIDAD PARAS-NISCE, Petitioners, vs. EQUITABLE PCI
BANK, INC., Respondent.D E C I S I O NCALLEJO, SR., J.:
On November 26, 2002, Equitable PCI Bank
1
(Bank) as creditor-
mortgagee filed a petition for extrajudicial foreclosure before the
Office of the Clerk of Court as Ex-Officio Sheriff of the Regional Trial
Court (RTC) of Makati City. It sought to foreclose the following real
estate mortgage contracts executed by the spouses Ramon and
Natividad Nisce over two parcels of land covered by Transfer
Certificate of Title (TCT) Nos. S-83466 and S-83467 of the Registry
of Deeds of Rizal: one dated February 26, 1974; two (2) sets of
"Additional Real Estate Mortgage" dated September 27, 1978 and
June 3, 1996; and an "Amendment to Real Estate Mortgage" dated
February 28, 2000. The mortgage contracts were executed by the
spouses Nisce to secure their obligation under Promissory Note
Nos. 1042793 and BD-150369, including a Suretyship Agreement
executed by Natividad. The obligation of the Nisce spouses
totaled P34,087,725.76 broken down as follows:
Spouses Ramon & Natividad Nisce - - - - - P17,422,285.99
Natividad P. Nisce (surety) - - - - - - - - - - US$57,306.59
and - - - - - - - - - - - - P16,665,439.77
2

On December 2, 2002, the Ex-Officio Sheriff set the sale at public
auction at 10:00 a.m. on January 14, 2003,
3
or on January 30, 2003
in the event the public auction would not take place on the earlier
setting.
On January 28, 2003, the Nisce spouses filed before the RTC of
Makati City a complaint for "nullity of the Suretyship Agreement,
damages and legal compensation" with prayer for injunctive relief
against the Bank and the Ex-Officio Sheriff. They alleged the
following: in a letter
4
dated December 7, 2000 they had requested
the bank (through their lawyer-son Atty. Rosanno P. Nisce) to setoff
the peso equivalent of their obligation against their US dollar
account with PCI Capital Asia Limited (Hong Kong), a subsidiary of
the Bank, under Certificate Deposit No. 01612
5
and Account No.
090-0104 (Passbook No. 83-3041);
6
the Bank accepted their offer
and requested for an estimate of the balance of their account; they
complied with the Banks request and in a letter dated February 11,
2002, informed it that the estimated balance of their account as of
December 1991 (including the 11.875% per annum interest) was
US$51,000.42,
7
and that as of December 2002, Natividads US dollar
deposit with it amounted to at least P9,000,000.00; they were
surprised when they received a letter from the Bank demanding
payment of their loan account, and later a petition for extrajudicial
foreclosure.
The spouses Nisce also pointed out that the petition for foreclosure
filed by the Bank included the alleged obligation of Natividad as
surety for the loan of Vista Norte Trading Corporation, a company
owned and managed by their son Dino Giovanni P. Nisce
(P16,665,439.77 and US$57,306.59). They insisted, however, that the
suretyship agreement was null and void for the following reasons:
(a) x x x [I]t was executed without the knowledge and
consent of plaintiff Ramon M. Nisce, who is by law the
administrator of the conjugal partnership;
(b) The suretyship agreement did not redound to the
benefit of the conjugal partnership and therefore did not
bind the same;
(c) Assuming, arguendo, that the suretyship contract was
valid and binding, any obligation arising therefrom is not
covered by plaintiffs real estate mortgages which were
constituted to secure the payment of certain specific
obligations only.
8

The spouses Nisce likewise alleged that since they and the Bank
were creditors and debtors with respect to each other, their
obligations should have been offset by legal compensation to the
extent of their account with the Bank.
To support their plea for a writ of preliminary and prohibitory
injunction, the spouses Nisce alleged that the amount for which
their property was being sold at public auction (P34,087,725.76) was
grossly excessive; the US dollar deposit of Natividad with PCI Capital
Asia Ltd. (Hong Kong), and the obligation covered by the suretyship
agreement had not been deducted. They insisted that their property
rights would be violated if the sale at public auction would push
through. Thus, the spouses Nisce prayed that they be granted the
following reliefs:
(1) that upon the filing of this Complaint and/or after due
notice and summary hearing, the Honorable Court
immediately issue a temporary restraining order (TRO)
restraining defendants, their representatives and/or
deputies, and other persons acting for and on their behalf
from proceeding with the extrajudicial foreclosure sale of
plaintiffs mortgaged properties on 30 January 2003 or on
any other dates subsequent thereto;
(2) that after due notice and hearing and posting of the
appropriate bond, the Honorable Court convert the TRO
to a writ of preliminary prohibitory injunction;
(3) that after trial on the merits, the Honorable Court
render judgment
(a) making the preliminary injunction final and
permanent;
(b) ordering defendant Bank to set off the
present peso value of Mrs. Nisces US dollar time
deposit, inclusive of stipulated interest, against
plaintiffs loan obligations with defendant Bank;
(c) declaring the Deed of Suretyship dated 25
May 1998 null and valid and without any
binding effect as to plaintiff spouses, and
ordering defendant Bank to exclude the
amounts covered by said suretyship contract
from plaintiffs obligations with defendant Bank;
(d) ordering defendant Bank to pay plaintiffs the
following sums:
(i) at least P3,000,000.00 as moral
damages;
(ii) at least P1,500,000.00 as exemplary
damages; and
(iii) at least P500,000.00 as attorneys
fees and for other expenses of
litigation.
Plaintiffs further pray for costs of suit and such other reliefs as may
be deemed just and equitable.
9

On same day, the Bank filed an "Amended Petition" with the Office
of the Executive Judge for extrajudicial foreclosure of the Real Estate
Mortgage to satisfy the spouses loan account of P30,533,552.24,
exclusive of interests, penalties and other charges; and the amounts
of P16,665,439.77 and US$57,306.59 covered by the suretyship
agreement executed by Natividad Nisce.
10

In the meantime, the parties agreed to have the sale at public
auction reset to January 30, 2003.
In its Answer to the complaint, the Bank alleged that the spouses
had no cause of action for legal compensation since PCI Capital was
a different corporation with a separate and distinct personality; if at
all, offsetting may occur only with respect to the spouses
US$500.00 deposit account in its Paseo de Roxas branch.
In the meantime, the Ex-Officio Sheriff set the sale at public auction
at 10:00 a.m. on March 5 and 27, 2003.
11
The spouses Nisce then
filed a Supplemental Complaint with plea for a temporary
restraining order to enjoin the sale at public auction.
12
Thereafter,
the RTC conducted hearings on the plaintiffs plea for a temporary
restraining order, and the parties adduced testimonial and
documentary evidence on their respective arguments.
The Case for the Spouses Nisce
Natividad frequently traveled abroad and needed a facility with easy
access to foreign exchange. She inquired from E.P. Nery, the Bank
Manager for PCI Bank Paseo de Roxas Branch, about opening an
account. He assured her that she would be able to access it from
anywhere in the world. She and Nery also agreed that any balance
of account remaining at maturity date would be rolled over until
further instructions, or until she terminated the facility.
13
Convinced,
Natividad deposited US$20,500.00 on July 19, 1984, and was issued
Passbook No. 83-3041.
14
Upon her request, the bank transferred the
US$20,000.00 to PCI Capital Asia Ltd. in Hong Kong via cable
order.
15

On July 11, 1996, the spouses Nisce secured a P20,000,000.00 loan
from the Bank under Promissory Note No. BD-150369.
16
The
maturity date of the loan was July 11, 2001, payable in monthly
installments at 16.731% interest per annum. To secure the payment
of the loan account, they executed an Amendment to the Real
Estate Mortgage over the properties
17
located in Makati City
covered by TCT Nos. S-83466 and S-83467.
18
They later secured
another loan of P13,089,936.90 on March 1, 2000 (to mature on
March 1, 2005) payable quarterly at 13.9869% interest per annum;
this loan agreement is evidenced by Promissory Note (PN) No.
1042793
19
and covered by a Real Estate Mortgage
20
executed on
February 28, 2000. They made a partial payment ofP13,866,666.50
on the principal of their loan account covered by PN No. BD-
150369, and P5,348,239.82 on the interests.
21
These payments are
evidenced by receipts and checks.
22
However, there were payments
totalingP4,600,000.00 received by the Bank but were not covered by
checks or receipts.
23
As of September 2000, the balance of their loan
account under PN No. BD-150369 was only P4,333,333.46.
24
They
also made partial payment on their loan account under PN No.
1042793 which, as of May 30, 2001, amounted to P2,218,793.61.
25

On July 20, 1984, PCI Capital issued Certificate of Deposit No. CD-
01612;
26
proof of receipt of the US$20,000.00 transferred to it by PCI
Bank Paseo de Roxas Branch as requested by Natividad. The deposit
account was to earn interest at the rate of 11.875% per annum, and
would mature on October 22, 1984, thereafter to be payable at the
office of the depositary in Hong Kong upon presentation of the
Certificate of Deposit.
In June 1991, two sons of the Nisce spouses were stranded in Hong
Kong. Natividad called the Bank and requested for a partial release
of her dollar deposit to her sons. However, she was informed that
according to its computer records, no such dollar account existed.
Sometime in November 1991, she submitted her US dollar passbook
with a xerox copy of the Certificate of Deposit for the PCIB to
determine the whereabouts of the account.
27
She reiterated her
request to the Bank on January 27, 1992
28
and September 11,
2000.
29

In the meantime, in 1994, the Equitable Banking Corporation and
the PCIB were merged under the corporate name Equitable PCI
Bank.
In a letter dated December 7, 2000, Natividad confirmed to the
Bank, through Ms. Shellane R. Casaysayan, her offer to settle their
loan account by offsetting the peso equivalent of her dollar account
with PCI Capital under Account No. 090-0104.
30
Their son, Atty.
Rosanno Nisce, later wrote the Bank, declaring that the estimated
balance of the US dollar account with PCI Capital as of December
1991 was US$51,000.42.
31
Atty. Nisce corroborated this in his
testimony, and stated that Ms. Casaysayan had declared that she
would refer the matter to her superiors.
32
A certain Rene Esteven
also told him that another offer to setoff his parents account had
been accepted, and he was assured that its implementation was
being processed.
33
On cross examination, Atty. Nisce declared that
there was no response to his request for setoff,
34
and that Esteven
assured him that the Bank would look for the records of his
mothers US dollar savings deposit.
35
He was later told that the Bank
had accepted the offer to setoff the account.
36

The Case for the Bank
The Bank adduced evidence that, as of January 31, 2003, the
balance of the spouses account under the two promissory notes,
including interest and penalties, was P30,533,552.24.
37
It had agreed
to restructure their loans on March 31, 1998, but they nevertheless
failed to pay despite repeated demands.
38
The spouses had also
been furnished with a statement of their account as of June 2001.
Thus, under the terms of the Real Estate Mortgage and Promissory
Notes, it had the right to the remedy of foreclosure. It insisted that
there is no showing in its records that the spouses had delivered
checks amounting to P4,600,000.00.
39

According to the Bank, Natividads US$20,000.00 deposit with the
PCIB Paseo de Roxas branch was transferred to PCI Capital via cable
order,
40
and that it later issued Certificate of Deposit No. 01612
(Non-transferrable).
41
In a letter dated May 9, 2001, it informed
Natividad that it had acted merely as a conduit in facilitating the
transfer of the funds, and that her deposit was made with PCI
Capital and not with PCIB. PCI Capital had a separate and distinct
personality from the PCIB, and a claim against the former cannot be
made against the latter. It was later advised that PCI Capital had
already ceased operations.
42

The spouses Nisce presented rebuttal documentary evidence to
show that PCI Capital was registered in Hong Kong as a corporation
under Registration No. 84555 on February 27, 1989
43
with an
authorized capital stock of 50,000,000 (with par value of HKD1.00);
the PCIB subscribed to 29,039,993 issued shares at the par value of
HKD1.00 per share;
44
on October 25, 2004, the corporate name of
PCI Capital was changed to PCI Express Padala (HK) Ltd.;
45
and the
stockholdings of PCIB remained at 29,039,999 shares.
46

On March 24, 2003, the RTC issued an Order
47
granting the spouses
Nisces plea for a writ of preliminary injunction on a bond
of P10,000,000.00. The dispositive portion of the Order reads:
WHEREFORE, in order not to render the judgment ineffectual, upon
filing by the plaintiffs and the approval thereof by the court of a
bond in the amount of Php10,000,000.00, which shall answer for any
damage should the court finally decide that plaintiffs are not
entitled thereto, let a writ of preliminary injunction issue enjoining
defendants Equitable-PCI Bank, Atty. Engracio M. Escasinas, Jr., and
any person or entity acting for and in their behalf from proceeding
with the extrajudicial foreclosure sale of TCT Nos. 437678 and
437679 registered in the names of the plaintiffs.
48

After weighing the parties arguments along with their documentary
evidence, the RTC declared that justice would be best served if a
writ of preliminary injunction would be issued to preserve the status
quo. It had yet to resolve the issue of setoff since only Natividad
dealt with the Bank regarding her dollar account. It also had to
resolve the issue of whether the Bank had failed to credit the
amount of P4,600,000.00 to the spouses Nisces account under PN
No. BD-150369, and their claim that the Bank had effectively
accelerated the respective maturity dates of their loan.
49
The
spouses Nisce posted the requisite bond which was approved by
the RTC.1awphi1.net
The Bank opted not to file a motion for reconsideration of the
order, and instead assailed the trial courts order before the CA via
petition for certiorari under Rule 65 of the Rules of Court. The Bank
alleged that the RTC had acted without or in excess of its
jurisdiction, or with grave abuse of its discretion amounting to lack
or excess of jurisdiction when it issued the assailed order;
50
the
spouses Nisce had failed to prove the requisites for the issuance of
a writ of preliminary injunction; respondents claim that their
account with petitioner had been extinguished by legal
compensation has no factual and legal basis. It further asserted that
according to the evidence, Natividad made the US$20,000.00
deposit with PCI Capital before it merged with Equitable Bank
hence, the Bank was not the debtor of Natividad relative to the
dollar account. The Bank cited the ruling of this Court in Escao v.
Heirs of Escao and Navarro
51
to support its arguments. It insisted
that the spouses Nisce had failed to establish "irreparable injury" in
case of denial of their plea for injunctive relief.
The spouses, for their part, pointed out that the Bank failed to file a
motion for reconsideration of the trial courts order, a condition sine
qua non to the filing of a petition for certiorari under Rule 65 of the
Rules of Court. Moreover, the error committed by the trial court is a
mere error of judgment not correctible by certiorari; hence, the
petition should have been dismissed outright by the CA. They
reiterated their claim that they had made a partial payment
of P4,600,000.00 on their loan account which petitioner failed to
credit in their favor. The Bank had agreed to debit their US dollar
savings deposit in the PCI Capital as payment of their loan account.
They insisted that they had never deposited their US dollar account
with PCI Capital but with the Bank, and that they had never
defaulted on their loan account. Contrary to the Banks claim, they
would have suffered irreparable injury had the trial court not
enjoined the extrajudicial foreclosure of the real estate mortgage.
On December 22, 2004, the CA rendered judgment granting the
petition and nullifying the assailed Order of the RTC.
52
The appellate
court declared that a petition for certiorari under Rule 65 of the
Rules of Court may be filed despite the failure to file a motion for
reconsideration, particularly in instances where the issue raised is
one of law; where the error is patent; the assailed order is void, or
the questions raised are the same as those already ruled upon by
the lower court. According to the appellate court, the issue raised
before it was purely one of law: whether the loan account of the
spouses was extinguished by legal compensation. Thus, a motion for
the reconsideration of the assailed order was not a prerequisite to a
petition for certiorari under Rule 65.
The appellate court further declared that the trial court committed
grave abuse of its discretion in issuing the assailed order, since no
plausible reason was given by the spouses Nisce to justify the
injunction of the extrajudicial foreclosure of the real estate
mortgage. Given their admission that they had not settled the
obligations secured by the mortgage, the Bank had a clear right to
seek the remedy of foreclosure.
The CA further declared as devoid of factual basis the spouses
Nisces argument that the Bank should have applied, by way of legal
compensation, the peso equivalent of their time deposit with PCI
Capital as partial settlement of their obligations. It held that for
compensation to take place, the requirements set forth in Articles
1278 and 1279 of the Civil Code of the Philippines must be present;
in this case, the parties are not mutually creditors and debtors of
each other. It pointed out that the time deposit which the spouses
Nisce sought to offset against their obligations to the Bank is
maintained with PCI Capital. Even if PCI Capital is a subsidiary of the
Bank, compensation cannot validly take place because the Bank and
PCI Capital are two separate and distinct corporations. It pointed
out the settled principle "that a corporation has a personality
separate and distinct from its stockholders and from other
corporations to which it may be connected."
The CA further declared that the alleged P4,600,000.00 payment on
PN No. BD-150369 was not pleaded in the spouses complaint and
supplemental complaint before the court a quo. What they alleged,
aside from legal compensation, was that the mortgage is not liable
for the obligation of Natividad Nisce as surety for the loans
obtained by a trading firm owned and managed by their son. The
CA further pointed out that the Bank precisely amended the petition
for foreclosure sale by deleting the claim for Natividads obligation
as surety. The appellate court concluded that the injunctive writ was
issued by the RTC without factual and legal basis.
53

The spouses Nisce moved to have the decision reconsidered, but
the appellate court denied the motion. They thus filed the instant
petition for review on the following grounds:
5.1. THE HONORABLE COURT OF APPEALS ERRED IN
TAKING COGNIZANCE OF THE PETITION FOR CERTIORARI
DESPITE THE BANKS FAILURE TO FILE A MOTION FOR
RECONSIDERATION WITH THE TRIAL COURT.
5.2. THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT PREMATURELY RULED ON
THE MERITS OF THE MAIN CASE.
5.3. THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT RESPONDENT JUDGE HAD COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN ISSUING A TEMPORARY
RESTRAINING ORDER AND A WRIT OF PRELIMINARY
INJUNCTION IN FAVOR OF THE SPOUSES NISCE.
54

Petitioners aver that the CA erred in not dismissing respondent
Banks petition for certiorari outright because of the absence of a
condition precedent: the filing of a motion for reconsideration of
the assailed Order of the RTC before filing the petition for certiorari
in the CA. They insist that respondent banks failure to file a motion
for reconsideration of the assailed Order deprived the RTC of its
option to resolve the issue of whether it erred in issuing the writ of
preliminary injunction in their favor.
Petitioners insist that in resolving whether a petition for a writ of
preliminary injunction should be granted, the trial court and the
appellate court are not to resolve the merits of the main case. In
this case, however, the CA resolved the bone of contention of the
parties in the trial court: whether the loan account of petitioners
with respondent bank had been extinguished by legal compensation
against petitioner Natividad Nisces US dollar savings account with
PCI Capital in Hong Kong. The CA reversed the assailed order of the
trial court by resolving the main issue in the trial court on its merits,
and declaring that the US dollar savings deposit of the petitioner
Natividad Nisce with the PCI Capital cannot be used to offset the
loan account of petitioners with respondent bank. In fine, according
to petitioners, the CA preempted the ruling of the RTC on the main
issue even before the parties could be given an opportunity to
complete the presentation of their respective evidences. Petitioners
point out that in the assailed Order, the RTC declared that to
determine whether respondent had credited petitioners for the
amount ofP4,600,000.00 under PN No. BD-150369 and whether
respondent as mortgagee-creditor accelerated the maturities of the
two (2) promissory notes executed by petitioner, there was a need
for a full-blown trial and an exhaustive consideration of the
evidence of the parties.
Petitioners further insist that a petition for a writ of certiorari is
designed solely to correct errors of jurisdiction and not errors of
judgment, such as errors in the findings and conclusions of the trial
court. Petitioners maintain that the trial courts erroneous findings
and conclusions (according to respondent bank) are not the proper
subjects for a petition for certiorari. Contrary to the findings of the
CA, they did not admit in the trial court that they were in default in
the payment of their loan obligations. They had always maintained
that they had no outstanding obligation to respondent bank
precisely because their loan account had been offset by the US
dollar deposit of petitioner Natividad Nisce, and that they had made
check payments of P4,600,000.00 which respondent bank had not
credited in their favor. Likewise erroneous is the CA ruling that they
would not suffer irreparable damage or injury if their properties
would be sold at public auction following the extrajudicial
foreclosure of the mortgage. Petitioners point out that their
conjugal home stands on the subject properties and would be lost if
sold at public auction. Besides, petitioners aver, the injury to
respondent bank resulting from the issuance of a writ of preliminary
injunction is amply secured by the P10,000,000.00 injunction bond
which they had posted.
For its part, respondent avers that, as held by the CA, the
requirement of the filing of a motion for reconsideration of the
assailed Order admits of exceptions, such as where the issue
presented in the appellate court is the same issue presented and
resolved by the trial court. It insists that petitioners failed to prove a
clear legal right to injunctive relief; hence, the trial court committed
grave abuse of discretion in issuing a writ of preliminary injunction.
Respondent maintains that the sole issue involved in the petition for
certiorari of respondent in the CA was whether or not the trial court
committed grave abuse of its discretion in issuing the writ of
preliminary injunction. Necessarily, the CA would have to delve into
the circumstances behind such issuance. In so doing, the CA had to
consider and calibrate the testimonial and documentary evidence
adduced by the parties. However, the RTC and the CA did not
resolve with finality the threshold factual and legal issue of whether
the loan account of petitioners had been paid in full before it filed
its petition for extrajudicial foreclosure of the real estate mortgage.
The Ruling of the Court
The Petition in the
Court of Appeals
Not Premature
The general rule is that before filing a petition for certiorari under
Rule 65 of the Rules of Court, the petitioner is mandated to comply
with a condition precedent: the filing of a motion for
reconsideration of the assailed order, and the subsequent denial of
the court a quo. It must be stressed that a petition for certiorari is
an extraordinary remedy and should be filed only as a last resort.
The filing of a motion for reconsideration is intended to afford the
public respondent an opportunity to correct any actual error
attributed to it by way of re-examination of the legal and factual
issues.
55
However, the rule is subject to the following recognized
exceptions:
(a) where the order is a patent nullity, as where the court a quo has
no jurisdiction; (b) where the questions raised in the certiorari
proceeding have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower
court; (c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the action
is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived
of due process and there is extreme urgency for relief; (f) where, in
a criminal case, relief from an order of arrest is urgent and the
granting of such relief by the trial court is improbable; (g) where the
proceedings in the lower court are a nullity for lack of due process;
(h) where the proceedings was ex parte or in which the petitioner
had no opportunity to object; and (i) where the issue raised is one
purely of law or public interest is involved.
56

As will be shown later, the March 24, 2003 Order of the trial court
granting petitioners plea for a writ of preliminary injunction was
issued with grave abuse of discretion amounting to excess or lack of
jurisdiction and thus a nullity. If the trial court issues a writ of
preliminary injunction despite the absence of proof of a legal right
and the injury sustained by the plaintiff, the writ is a nullity.
57

Petitioners Are Not
Entitled to a Writ of
Preliminary Prohibitory
Injunction
Section 3, Rule 58 of the Rules of Court provides that a preliminary
injunction may be granted when the following have been
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 tendering to
render the judgment ineffectual.
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. The exercise of sound judicial discretion by the lower
court should not be interfered with except in cases of manifest
abuse. Injunction is a preservative remedy for the protection of the
parties substantive rights and interests. The sole aim of a
preliminary injunction is to preserve the status quo within the last
actual status that preceded the pending controversy until the merits
of the case can be heard fully. Moreover, a petition for a preliminary
injunction is an equitable remedy, and one who comes to claim for
equity must do so with clean hands. It is to be resorted to by a
litigant to prevent or preserve a right or interest where there is a
pressing necessity to avoid injurious consequences which cannot be
remedied under any standard of compensation. A petition for a writ
of preliminary injunction rests upon an alleged existence of an
emergency or of a special reason for such a writ before the case can
be regularly tried. By issuing a writ of preliminary injunction, the
court can thereby prevent a threatened or continued irreparable
injury to the plaintiff before a judgment can be rendered on the
claim.
58

The plaintiff praying for a writ of preliminary injunction must further
establish that he or she has a present and unmistakable right to be
protected; that the facts against which injunction is directed violate
such right;
59
and there is a special and paramount necessity for the
writ to prevent serious damages. In the absence of proof of a legal
right and the injury sustained by the plaintiff, an order for the
issuance of a writ of preliminary injunction will be nullified. Thus,
where the plaintiffs right is doubtful or disputed, a preliminary
injunction is not proper. The possibility of irreparable damage
without proof of an actual existing right is not a ground for a
preliminary injunction.
60

However, to establish the essential requisites for a preliminary
injunction, the evidence to be submitted by the plaintiff need not
be conclusive and complete.
61
The plaintiffs are only required to
show that they have an ostensible right to the final relief prayed for
in their complaint.
62
A writ of preliminary injunction is generally
based solely on initial or incomplete evidence.
63
Such evidence need
only be a sampling intended merely to give the court an evidence
of justification for a preliminary injunction pending the decision on
the merits of the case, and is not conclusive of the principal action
which has yet to be decided.
64

It bears stressing that findings of the trial court granting or denying
a petition for a writ of preliminary injunction based on the evidence
on record are merely provisional until after the trial on the merits of
the case shall have been concluded.
65

The trial court, in granting or dismissing an application for a writ of
preliminary injunction based on the pleadings of the parties and
their respective evidence must state in its order the findings and
conclusions based on the evidence and the law. This is to enable
the appellate court to determine whether the trial court committed
grave abuse of its discretion amounting to excess or lack of
jurisdiction in resolving, one way or the other, the plea for injunctive
relief. The trial courts exercise of its judicial discretion whether to
grant or deny an application for a writ of preliminary injunction
involves the assessment and evaluation of the evidence, and its
findings of facts are ordinarily binding and conclusive on the
appellate court and this Court.
66

We agree with respondents contention that as creditor-mortgagee,
it has the right under the real estate mortgage contract and the
amendment thereto to foreclose extrajudicially, the real estate
mortgage and sell the property at public auction, considering that
petitioners had failed to pay their loans, plus interests and other
incremental amounts as provided for in the deeds. Petitioners
contend, however, that if respondent bank extrajudicially forecloses
the real estate mortgage and has petitioners property sold at public
auction for an amount in excess of the balance of their loan
account, petitioners contractual and substantive rights under the
real estate mortgage would be violated; in such a case, the
extrajudicial foreclosure sale may be enjoined by a writ of
preliminary injunction.
Respondent bank sought the extrajudicial foreclosure of the real
estate mortgage and was to sell the property at public auction
for P30,533,552.24. The amount is based on Promissory Notes No.
1042793 and BD-150369, interests, penalty charges, and attorneys
fees, as of January 31, 2003, exclusive of all interests, penalties,
other charges, and foreclosure costs accruing
thereafter.
67
Petitioners asserted before the trial court that
respondents sought the extrajudicial foreclosure of the mortgaged
deed for an amount far in excess of what they owed, because the
latter failed to credit P4,600,000.00 paid in checks but without any
receipts having been issued therefor; and the P9,000,000.00 peso
equivalent of the US$20,000.00 deposit of petitioner Natividad Nisce
with PCIB under Passbook No. 83-3041 and Certificate of Deposit
No. CD-01612 issued by PCI Capital on July 23, 1984. Petitioners
maintain that the US$20,000.00 dollar deposit should be setoff
against their account with respondent against their loan account, on
their claim that respondent is their debtor insofar as said deposit is
concerned.
It was the burden of petitioners, as plaintiffs below, to adduce
preponderant evidence to prove their claim that respondent bank
was the debtor of petitioner Natividad Nisce relative to her dollar
deposit with PCIB, and later transferred to PCI Capital in Hong Kong,
a subsidiary of respondent Bank. Petitioners, however, failed to
discharge their burden.
Under Article 1278 of the New Civil Code, compensation shall take
place when two persons, in their own right, are creditors and
debtors of each other. In order that compensation may be proper,
petitioners were burdened to establish the following:
(1) That each one of the obligors be bound principally,
and that he be at the same time a principal creditor of the
other;
(2) That both debts consist in a sum of money, or if the
things due are consumable, they be of the same kind, and
also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and
communicated in due time to the debtor.
68

Compensation takes effect by operation of law when all the
requisites mentioned in Article 1279 of the New Civil Code are
present and extinguishes both debts to the concurrent amount even
though the creditors and debtors are not aware of the
compensation. Legal compensation operates even against the will of
the interested parties and even without their consent.
69
Such
compensation takes place ipso jure; its effects arise on the very day
on which all requisites concur.
70

As its minimum, compensation presupposes two persons who, in
their own right and as principals, are mutually indebted to each
other respecting equally demandable and liquidated obligations
over any of which no retention or controversy commenced and
communicated in due time to the debtor exists. Compensation, be it
legal or conventional, requires confluence in the parties of the
characters of mutual debtors and creditors, although their rights as
such creditors or their obligations as such debtors need not spring
from one and the same contract or transaction.
71

Article 1980 of the New Civil Code provides that fixed, savings and
current deposits of money in banks and similar institutions shall be
governed by the provisions concerning simple loans. Under Article
1953, of the same Code, a person who secures a loan of money or
any other fungible thing acquires the ownership thereof, and is
bound to pay the creditor an equal amount of the same kind and
quality. The relationship of the depositors and the Bank or similar
institution is that of creditor-debtor. Such deposit may be setoff
against the obligation of the depositor with the bank or similar
institution.
When petitioner Natividad Nisce deposited her US$20,500.00 with
the PCIB on July 19, 1984, PCIB became the debtor of petitioner.
However, when upon petitioners request, the amount of
US$20,000.00 was transferred to PCI Capital (which forthwith issued
Certificate of Deposit No. 01612), PCI Capital, in turn, became the
debtor of Natividad Nisce. Indeed, a certificate of deposit is a
written acknowledgment by a bank or borrower of the receipt of a
sum of money or deposit which the Bank or borrower promises to
pay to the depositor, to the order of the depositor; or to some
other person; or to his order whereby the relation of debtor and
creditor between the bank and the depositor is created.
72
The
issuance of a certificate of deposit in exchange for currency creates
a debtor-creditor relationship.
73

Admittedly, PCI Capital is a subsidiary of respondent Bank. Even
then, PCI Capital [PCI Express Padala (HK) Ltd.] has an independent
and separate juridical personality from that of the respondent Bank,
its parent company; hence, any claim against the subsidiary is not a
claim against the parent company and vice versa.
74
The evidence on
record shows that PCIB, which had been merged with Equitable
Bank, owns almost all of the stocks of PCI Capital. However, the fact
that a corporation owns all of the stocks of another corporation,
taken alone, is not sufficient to justify their being treated as one
entity. If used to perform legitimate functions, a subsidiarys
separate existence shall be respected, and the liability of the parent
corporation, as well as the subsidiary shall be confined to those
arising in their respective business.
75
A corporation has a separate
personality distinct from its stockholders and from other
corporations to which it may be conducted. This separate and
distinct personality of a corporation is a fiction created by law for
convenience and to prevent injustice.
This Court, in Martinez v. Court of Appeals
76
held that, being a mere
fiction of law, peculiar situations or valid grounds can exist to
warrant, albeit sparingly, the disregard of its independent being and
the piercing of the corporate veil. The veil of separate corporate
personality may be lifted when, inter alia, the corporation is merely
an adjunct, a business conduit or an alter ego of another
corporation or where the corporation is so organized and controlled
and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation;
or when the corporation is used as a cloak or cover for fraud or
illegality; or to work injustice; or where necessary to achieve equity
or for the protection of the creditors. In those cases where valid
grounds exist for piercing the veil of corporate entity, the
corporation will be considered as a mere association of persons. The
liability will directly attach to them.
77

The Court likewise declared in the same case that the test in
determining the application of the instrumentality or alter ego
doctrine is as follows:
1. Control, not mere majority or complete stock control,
but complete dominion, not only of finances but of policy
and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its
own;
2. Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or dishonest and
unjust act in contravention of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complaint of.
The Court emphasized that the absence of any one of these
elements prevents "piercing the corporate veil." In applying the
"instrumentality" or "alter ego" doctrine, the courts are concerned
with reality and not form, with how the corporation operated and
the individual defendants relationship to that operation.
78

Petitioners failed to adduce sufficient evidence to justify the piercing
of the veil of corporate entity and render respondent Bank liable for
the US$20,000.00 deposit of petitioner Natividad Nisce as debtor.
On hindsight, petitioners could have spared themselves the
expenses and tribulation of a litigation had they just withdrawn their
deposit from the PCI Capital and remitted the same to respondent.
However, petitioner insisted on their contention of setoff.
On the P4,600,000.00 paid in checks allegedly remitted by
petitioners to respondent in partial payment of their loan account,
petitioners failed to adduce in evidence the checks to show that,
indeed, the checks were drawn by petitioners and delivered to
respondent, and that respondent was able to cash the checks. The
only evidence adduced by petitioners is a piece of paper listing the
serial numbers of the checks and the amount of each check:
PAYMENTS MADE & RECEIVED BY EBC BUT W/O RECEIPTS
1. Dec. 29, 1997 - EBC-0000039462 -
P2,000,000.0
0
2. Jan. 22, 1998 - EBC-213016118C - 1,000,000.00
3. Feb. 24, 1998 - UB -0000074619 - 800,000.00
4. Mar. 23, 1998 - EBC-213016121C - 800,000.00


P4,600,000.00

79

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack
of merit. The Decision of the Court of Appeals is AFFIRMED. Costs
against petitioners.





















































SUPREME COURT
EN BANC
ASSET PRIVATIZATION
TRUST, as Trustee of the
Government of the
Republic of the Philippines,
Petitioner,
-versus- G.R. No. 101344
October 1, 1992
COURT OF APPEALS, JOB C.
MADAYAG Presiding Judge
of the Regional Trial Court
of Makati, Br. 145, and
JOHANNESBURG
PACKAGING CORP,
Respondents.
x----------------------------------------------------x
D E C I S I O N
BELLOSILLO, J.:
This is a petition for review on certiorari of the Decision[1] of the
Court of Appeals in CA-G.R. No. 24632, promulgated 11 July 1991,
dismissing the Petition for Certiorari and Prohibition which assailed
the Order[2] of April 1991 of the Regional Trial Court of Makati, Br.
145, in Civil Case No. 16960, and its Resolution of 20 August 1991
denying petitioners motion for reconsideration.
chanroblespublishingcompany

The Order of 1 April 1991 of the trial court states:
Finding the grounds stated in plaintiffs URGENT MOTION
FOR ISSUANCE OF RESTRAINING ORDER (AND LATER
WRIT OF INJUNCTION AGAINST DEFENDANT ASSET
PRIVATIZATION TRUST [APT], dated March 29, 1991 . . . to
be meritorious, the same is hereby granted. Therefore the
Court resolved to issue this Temporary Restraining Order
restraining and prohibiting (a) defendant APT from
repossessing from the plaintiff JPC of Paragon Paper Mills,
its facilities and plant site at Orani, Bataan, either through
a physical takeover and/or enforcement of the Summary
decision in Civil Case No. 585 for unlawful detainer . . . or
through the military assistance; and (b) defendant APT
from pursuing/or continuing Civil Case No. 585 on appeal
or at any stage before any court until (1) Civil Case No.
16960 of this Court, (2) CA-G.R. SP No. 20042 before the
Court of Appeals, and (c) G.R. No. 95509 before the
Supreme Court, are finally decided.
chanroblespublishingcompany
x x x
This temporary restraining order is valid for a period of
twenty (20) days from receipt of this order by the parties.

In dismissing the petition for certiorari and prohibition, respondent
Court of Appeals explained

Indeed, a cursory reading of the questioned order shows
that it was issued merely to restrain the defendants in Civil
Case No. 16960 from doing the acts complained of in the
motion until after hearing on the incident for issuance of
writ of preliminary injunction which was set for April 12,
1991. In no way did it determine the issues raised in the
respondents motion. And by this time, the twenty-day
lifespan of the temporary restraining order has already
expired, to be precise, since April 21, 1991. The
respondent Court, therefore, should be allowed to hear
the incident for issuance of writ of preliminary injunction
and thereafter resolve it.[3] chanroblespublishingcompany

Petitioner APT now comes to Us on a petition for review
of the Order of 1 April 1991 on the ground that the
respondent court (1) committed a reversible error of law
in upholding the validity of the restraining order of 1 April
1991; (2) gravely abused its discretion in dismissing the
petition for certiorari and allowing the trial court to hear
the pending incident for injunction and thereafter
resolving it; and, (3) erred in remanding the contempt
charge against the APT lawyers to the lower court for
rendition of judgment despite the protestations of
petitioner that the trial court was devoid of jurisdiction to
hear and decide it.

A word on the background of the case: On 1 August 1986, the
Paragon Paper Plant was put up for cash sale in a public auction as
a consequence of the foreclosure by the Development Bank of the
Philippines (DBP) of the mortgage constituted in its favor by the
Paragon Paper Industries, Inc., over the latters parcels of land
situated in Orani, Bataan, including the improvements, machinery
and equipment thereon.[4] Private respondent Johannesburg
Packaging Corporation (JPC) with its cash bid of P120,579,000.00
won in the bidding, subject to the terms and conditions set forth in
DBP Resolution No. 1319 of 20 August 1986.[5] While awaiting
Presidential approval of the sale, private respondent was allowed to
enter the premises of the Paragon, Paper Plant to clean, repair and
test-run the mill and equipment. Eventually the sale was approved
by the President as attested by the Notice of Approval sent to
private respondent.[6] chanroblespublishingcompany

On 22 May 1987, by reason of the failure of private respondent to
pay the full amount of its cash bid within the stipulated period,
including the extensions it obtained, DBP rescinded the sale.[7] To
avoid the rescission, private respondent filed an action before the
Regional Trial Court of Makati, docketed as Civil Case No. 16960,
captioned Johannesburg, Packaging Corporation and Romeo
Cabalinan vs. Development Bank of the Philippines, et al.[8]
chanroblespublishingcompany

On 10 June 1987, the trial court issued a restraining order directing
defendants therein and all persons acting under them to desist from
implementing the Order of 22 May 1987 rescinding the Award of
Sale in favor of plaintiffs therein and the repossession/take-over
from plaintiffs of the Paragon Paper Mill/Plant and facilities at Orani,
Bataan, scheduled on 15 June 1987.[9]

On 29 June 1987, private respondent filed an amended complaint
10 impleading petitioner to whom Paragon Paper Industries, Inc.,
and Paragon Paper Plant have been conveyed on 27 February 1987
pursuant to Proclamation No. 50.

On 11 August 1987, the trial court directed defendants therein to
maintain the status quo ante litem until further orders.[11]

On 21 November 1988, petitioner prayed for the lifting of the status
quo litem order on the ground that private respondent failed to
make good its offer to pay its outstanding balance to petitioner
despite the extended period. Petitioner also prayed for leave to file
answer.[12]

On 15 September 1989, the trial court through respondent Judge
issued an order

WHEREFORE, the Court hereby resolves: (1) To deny
defendant APTs motion to set aside status quo order and
for reconsideration, respectively dated November 21, 1988
and April 19, 1989; (2) To dismiss or drop defendant APT
from this action for not being a real party in interest; and
(3) To order plaintiffs to pay their obligation with
defendant DBP, subject to whatever compromise
agreement they may arrive at with respect to the payment
of the unpaid principal, interests and/or extension
fees.[13]

The Order of 15 September 1989 was elevated by DBP on certiorari
to the Court of Appeals, docketed as CA-G.R. SP No. 20042. On 27
July 1990, respondent Court of Appeals (First Division) rendered a
decision the dispositive portion of which reads
chanroblespublishingcompany

Premises considered, judgment is hereby rendered
granting the Petition. (1) The orders dated September 15,
1989 and December 28, 1989 are hereby declared null and
void; (2) The APT is reinstated as a party defendant; (3)
The orders dated August 11, 1987 . . . suspending the
period within which to maintain the status quo, are
ordered lifted and net aside. The petitioner and the other
defendants in Civil Case No. 16960 may file their
responsive pleadings within fifteen (15) days from notice
hereof.[14]

This decision of the Court of Appeals in CA-G.R. SP No. 20042 is
now the subject of G.R. No. 95509 pending before the Court.
chanroblespublishingcompany

On 14 December 1990, petitioner sent a letter to private respondent
with a demand to vacate the premises of the Paragon Paper Plant in
Orani, Bataan, within fifteen (15) days from receipt thereof. The
demand unheeded, petitioner filed an action for unlawful detainer
with the Municipal Circuit Trial Court of Orani-Samal, Bataan, which
rendered judgment in favor of petitioner.[15] The decision was
affirmed on appeal by the RTC of Bataan. Private respondent then
appealed to the Court of Appeals, docketed as CA-G.R. SP No.
25013, which reversed the appealed judgment; consequently, the
complaint for unlawful detainer was dismissed, the writ of
preliminary mandatory injunction was annulled and set aside, and
the possession of the questioned premises was restored to private
respondent.[16] This is now the subject of the petition in G.R. No.
103277.[17]

On 1 April 1991, the trial court issued the questioned Order
directing the issuance of a restraining order and setting the hearing
of the motion for a writ of preliminary injunction on 12 April 1991.
To stop the issuance of the writ, petitioner went on certiorari to the
Court of Appeals, docketed as CA-G.R. SP No. 24632, assailing the
validity of the Order of the April 1991.

On 11 July 1991, the Court of Appeals dismissed the petition.
Hence, the instant recourse.

The three (3) points raised by petitioner may be simplified into
whether the trial court has the authority to issue a restraining order
or a writ of injunction against APT in Civil Case No. 16960.

The law authorizing the issuance of a restraining order is Sec. 5,
Rule 85, of the Rules of Court, as amended by B.P. 224 on 16 April
1982, which states chanroblespublishingcompany SECTION 5.
Preliminary injunction not granted without notice, issuance of
restraining order. No preliminary injunction shall be granted
without notice to the defendant. If it shall appear from the facts
shown by affidavits or by the verified complaint that great or
irreparable injury would result to the applicant before the matter
can be heard on notice, the judge to whom the application for
preliminary injunction was made, may issue a restraining order to be
effective only for a period of twenty days from date of its issuance.
Within the said twenty-day period, the judge must cause an order
to be served on the defendant, requiring him to show cause, at a
specified time and place, why the injunction should not be granted,
and determine within the same period whether or not preliminary
injunction should be granted, and shall accordingly issue the
corresponding order. In the event that the application for
preliminary injunction is denied, the restraining order is deemed
automatically vacated.
Apparently, the basic purpose of a restraining order is to preserve
the status quo until the hearing of the application for preliminary
injunction, and that insofar as lower courts are concerned, its 20-day
effectivity period is non-extendible. It automatically terminates at
the end of such period without the need of any judicial declaration
to that effect and the lower courts, including the Court of Appeals,
have no discretion to extend the same.[18] Only this Court can. It is
settled that, generally, the exercise of sound discretion in issuing a
restraining order by the lower court will not be interfered with.[19]

In the case before Us, however, We agree with petitioner that no
restraining order lies against it in view of Sec. 31 of Proclamation
No 50-A dated 15 December 1986 which provides
chanroblespublishingcompany

No court or administrative agency shall issue any
restraining order or injunction against the Trust in
connection with the acquisition, sale or disposition of
assets transferred to it . . . Nor shall such order or
injunction be issued against any purchaser of assets sold
by the Trust to prevent such purchaser from taking
possession of any assets purchased by him.

The respondent Court of Appeals after noting that the
restraining order had already expired, went on to hold
that the trial court should be allowed to hear the incident
on the issuance of a writ of preliminary injunction.
chanroblespublishingcompany

Indeed, this is not the first time that the propriety of the issuance of
the writ by the lower court against APT was raised. In Mantruste
Systems, Inc. vs. Court of Appeals,[20] this Court through Mme.
Justice Carolina Grio-Aquino, ruled that

Courts may not substitute their judgment for that of APT,
nor block, by an injunction the discharge of its functions
and the implementation of its decision in connection with
the acquisition, sale or disposition of assets transferred to
it.

We have expressly ruled therein, in addition, that Proclamation No.
50-A does not infringe any provision of the Constitution. Thus
The President, in the exercise of her legislative power
under the Freedom Constitution, issued Proclamation No.
50-A prohibiting the courts from issuing restraining orders
and writs of injunction against the APT and the purchasers
of any assets sold by it, to prevent courts from interfering
in the discharge, by this instrumentality of the executive
branch of the Government, of its task of carrying out the
expeditious disposition and privatization of certain
government corporations and/or the assets thereof (Proc.
No. 50), absent any grave abuse of discretion amounting
to excess or lack of jurisdiction on its part. This
proclamation, not being inconsistent with the Constitution
and not having been repealed or revoked by Congress,
has remained operative (Sec. 3, Art. XVIII, 1987
Constitution).[21] chanroblespublishingcompany

Quite significantly, the records do not disclose any grave abuse of
discretion committed by petitioner amounting to excess or lack of
jurisdiction in its effort to take possession of the assets transferred
to it by DBP. As We view it, petitioner simply availed of judicial
processes to recover the transferred assets formerly owned by
private respondent. Private respondent also argues that petitioner
has never questioned the no-injunction rule in its original petition
for certiorari before respondent Court of Appeals and that this is
the first time that petitioner invokes Proclamation No. 50-A. Private
respondent further states that it acquired the property through
public auction as early as 1 August 1986 while the transfer of assets
of DBP to petitioner was made on 27 February 1989.
chanroblespublishingcompany

We have opted to consider the no-injunction rule even if the issue
is raised only for the first time in this appeal because the acts of
APT are vested with public interest and that under Proclamation No.
50 it is mandated to carry out the expeditious disposition and/or
privatization of certain government corporations and/or assets
thereof. Besides, this Court is invested with authority to review such
matters as may be necessary to serve best the interest of justice,
even if they are not assigned as errors in the appeal.[22]
chanroblespublishingcompany

As regards the contention of private respondent that its transaction
over the subject property antedated the creation of petitioner on 8
December 1986 and that the transfer of the property from DBP to
petitioner was made on 27 February 1987, We quote with approval
the observations of petitioner

While the statistical dates cited by private respondent vis-
a-vis the petitioner APTs creation and the execution of
the Deed of Transfer between DBP and APT may be
accurate, the private respondent conveniently ignored the
fact that the DBP rescinded and cancelled the award of
sale made in its favor on May 22, 1987 for repeated
violation of the terms thereof which consisted in its failure
to pay in cash the balance of its bid price in the amount
of P110,579.00. Moreover, the effective date of transfer of
DBPs claims, securities, and assets was made retroactive
to June 30, 1986 as provided in said Deed of Transfer.
Consequently, the DBP made a valid transfer of its
financial claims and assets to the petitioner under
Proclamation No. 50 dated December 8, 1986.[23]

It may be worth emphasizing, as correctly observed by respondent
Court of Appeals, that the temporary restraining order issued by the
trial court already expired on 21 April 1991. There is therefore no
more temporary restraining order to be struck down. Nonetheless,
this Court resolves this petition consistent with its function of
formulating guiding precepts, doctrines or rules for the proper
guidance of bench and bar, especially as the matter at issue
concerns public interest.[24]

In fine, We hold that respondent Judge Job B. Madayag, or any
court of administrative agency for that matter, is devoid of authority
to issue any restraining order or injunction against petitioner as
regards the acquisition, sale or disposition of assets transferred to it
nor against any purchaser of assets sold by petitioner to prevent
such purchaser of assets sold by petitioner to prevent such
purchaser from taking possession thereof, pursuant to Proclamation
No. 50-A, absent any grave abuse of discretion on the part of
petitioner amounting to excess or lack of jurisdiction.
chanroblespublishingcompany

As regards the contempt charge against the APT lawyers,
considering that it was not touched upon in the questioned order of
the trial court, We prefer to refrain from treating the matter. As
correctly noted by respondent court, even if there is such charge of
contempt against the petitioner, the matter must, perforce, be heard
by the respondent [trial] Court and the petitioner has the remedy of
appeal available to it in the rules, in case of an adverse
decision.[25] chanroblespublishingcompany

PREMISES CONSIDERED, the judgment under review is MODIFIED
by sustaining the respondent Court of Appeals to the extent that it
dismissed the petition in CA-G.R. No. 24632 on the ground that
anyway the temporary restraining order in question had already
expired, and in refraining from resolving the contempt charge
against the lawyers of petitioner; however, its ruling allowing the
trial court to proceed with the hearing on the preliminary injunction
is REVERSED and SET ASIDE, consistent with the mandate of
Proclamation No. 50-A. No costs















































G.R. No. 84324 April 5, 1990 SANTIAGO AQUINO, TERENCIO
YUMANG, JR. and FULGENCIO ICARO, petitioners, vs. HON.
GUILLERMO R. LUNTOK, Presiding Judge, Regional Trial Court,
Branch XXIX, Libmanan, Camarines Sur and LUDOVICO B. PERALTA,
respondents. Estanislao L. Cesa, Jr. for private respondents.
REGALADO, J.:

In this special civil action for certiorari, with an application for
preliminary injunction and/or restraining order, petitioners seek the
annulment of the following orders of respondent judge in Civil Case
No. L-361 of the Regional Trial Court of Camarines Sur, entitled
"Ludovico B. Peralta vs. Henry B. Raola et al.," to wit: (1) Temporary
restraining order (TRO, for brevity), dated August 27, 1987, enjoining
petitioners herein for a period of twenty (20) days from proceeding
or taking action against herein private respondent; (2) Order, dated
September 16, 1987, extending the efficacy of said TRO for another
period of twenty (20) days; (3) Order, dated October 6, 1987,
indirectly extending the efficacy of the TRO for an uncertain period;
(4) Order, dated November 4, 1987, granting the application for a
writ of preliminary injunction; and (5) Order, dated November 5,
1987, approving the bond filed by private respondent which led to
the eventual issuance of the writ of November 11, 1987.

It is of record, however, that the Court of Appeals had previously
rendered judgment on May 11, 1988, in CA-G.R. SP No. 13186, 1
likewise an original action for certiorari for the annulment of the
aforesaid orders of August 27, 1987, September 16, 1987 and
October 6, 1987, wherein it dismissed the petition for being moot
since a writ of preliminary injunction had already been issued by
respondent judge. We take cognizance of the finality and entry of
such judgment, 2 for which reason this Court shall primarily
consider only the prayer for the annulment of the orders, dated
November 4, 1987 and November 5, 1987, and the writ of
November 11, 1987 in the present petition.

Reduced to its essential terms, the present petition raises a
question, apparently of first impression, concerning the validity of a
writ of preliminary injunction issued beyond the 20-day period of
the effectivity of a restraining order and during the extended
efficacy of such order. Indeed, in the cases treating on the matter of
TROs, it appears that only the propriety of orders extending the
efficacy of the initial TRO, or the issuance of another TRO after the
first had automatically expired after the twentieth day of its
issuance, have been squarely ruled upon, but not the question of
the validity of a writ of preliminary injunction issued to restrain the
same act complained of after the lapse of the 20-day period of the
TRO.

The records show that petitioners, in their capacity as Provincial
Auditor of Camarines Sur, State Auditor I of the Provincial Auditor's
Office and State Examiner of the Provincial Auditor's Office,
respectively, conducted an audit of private respondent's accounts as
Municipal Treasurer of Libmanan, Camarines Sur and found a cash
shortage of P274,011.17 under his accountability. 3

Allegedly pursuant to Section 157, Batas Pambansa Blg. 337,
petitioners seized private respondent's cash, books, papers and
accounts and the latter was suspended from office. As a
consequence, private respondent requested reinvestigation by the
Commission on Audit. 4 Pending action on the request, private
respondent filed a petition dated August 26, 1987 with the trial
court, presided over by respondent judge, for prohibition with
injunction and with a prayer for a restraining order and damages. 5

Forthwith, respondent judge issued the TRO of August 27, 1987,
enjoining all respondents therein, their agents and/or
representatives, for a period of twenty (20) days from date thereof,
to desist from proceeding or taking action against private
respondent based on petitioner Yumang's report and from
exercising such derivative powers and functions. 6

On September 16, 1987, which was the last day of effectivity of the
TRO, respondent judge, on motion filed by private respondent,
issued an order extending the efficacy of the TRO for another
period of twenty (20) days, or until October 6, 1987. 7

On September 24, 1987, likewise upon motion of private
respondent, respondent judge issued an order directing petitioners
to return to private respondent the cash, books and other papers
they had seized. Thereupon, petitioner Aquino filed a motion for the
reconsideration of said order, to which private respondent filed his
opposition. Under date of October 5, 1987, petitioners also filed
their answer to the petition, with an opposition to the application
for preliminary injunction. 8

On October 6, 1987, the last day of the extended effectivity of the
TRO, private respondent filed another motion for extension of the
efficacy of the restraining order. On the same date, respondent
judge issued an order directing petitioners to refrain from taking
any action against private respondent until the motion is resolved. 9

In a petition dated October 27, 1987, petitioners instituted in the
Court of Appeals an original action for certiorari, with an application
for preliminary injunction and/or restraining order, docketed therein
as CA-G.R. SP No. 13186 and entitled "Santiago Aquino, et al. vs.
Hon. Guillermo Luntok, et al.," precisely putting in issue and
assailing the validity of the aforesaid multiple restraining orders
dated August 27, 1987, September 16, 1987 and October 6, 1987.
10

While said petition was pending, respondent judge issued an order,
dated November 4, 1987, granting the application of private
respondent for a writ of preliminary injunction. 11 A day later,
respondent judge issued another order, dated November 5, 1987,
approving the bond filed by private respondent. 12 On November
11, 1987, respondent judge issued the corresponding writ of
preliminary injunction. 13

As an offshoot thereof and as hereinbefore noted, the Court of
Appeals rendered a decision on May 11, 1988 dismissing the
petition for certiorari in CA-G.R. SP No. 13186 on the ground of
mootness, since respondent judge had already granted the writ of
preliminary injunction, thus:

Under the factual milieu of this case, no practical effect could be
had since the respondent court had already granted a writ of
preliminary injunction on November 4, 1987. 14

As earlier explained, the other orders of respondent judge, dated
November 4, 1987 and November 5, 1987, and the validity of the
writ issued on November 11, 1987, are now before us for resolution
in the present action.

Petitioners asseverate that the questioned writ of preliminary
injunction is null and void, it being in reality a fourth restraining
order issued beyond the 20-day effectivity of the preceeding TRO.
15 Further, petitioners claim that the injunction was issued in utter
disregard of the doctrine of exhaustion of administrative remedies,
private respondent having brought the action below pending his
request for reinvestigation with the Commission on Audit. 16

On the charge of non-exhaustion of administrative remedies,
although it is well-settled in our jurisdiction that, unless otherwise
provided by law or required by public interest, before bringing an
action in or resorting to the courts of justice all remedies of
administrative character affecting or determinative of the
controversy at that level should first be exhausted by the aggrieved
party, 17 this doctrine is not a hard and fast rule. In the present
case, we are inclined to subscribe to private respondent's invocation
of the urgency of judicial intervention, as one of the admitted
exceptions to the rule, 18 which likewise would be in keeping with
the court's broad discretion in granting injunctions. Whatever
circumstances warranted the grant of injunction in the court below
would be no different than the circumstances which created the
urgency, and there can ordinarily be no better judge to determine
the existence thereof than the trial court itself.

Thus, it has been said that the court which is to exercise the
discretion of granting an injunction is the court of original
jurisdiction and not the appellate court; 19 and a preliminary
injunction will usually be granted when it is made to appear that
there is a substantial controversy between the parties and one of
them is committing an act or threatening the immediate
commission of an act that will cause irreparable injury or destroy
the status quo of the controversy before a full hearing can be had
on the merits of the case. The only limitations to such discretion
would be that it must have been exercised upon the grounds and in
the manner provided by law, 20 an inquiry into which is precisely
part of the subject of our immediately succeeding discussion on the
matter of the status of the injunction in controversy.

Contrary to petitioners' position, we are disposed to sustain the
validity of the writ of preliminary injunction in question. A temporary
restraining order, while being in effect a species of injunction, is in
some respects to be distinguished therefrom. It is an interlocutory
order or writ issued by the court as a restraint on the defendant
until the propriety of granting a preliminary injunction can be
determined, thus going no further in its operation than to preserve
the status quo until that determination. When such determination is
made, the whole force of the order ceases by its own limitations
and become functus officio, having by then served its purpose. 21

On this basis lies the mootness of the issue on the propriety of the
issuance of successive restraining orders upon the approval of the
application for a writ of preliminary injunction, as ruled by the Court
of Appeals. With the grant of the writ, hearing the petition which
sought the annulment of the three antecedent TROs would be
inutile as the writ has been substituted for and subserves the
purpose of the prior restraining orders.

It is worth noting, nonetheless, that Section 5, Rule 58 of the Rules
of Court, as amended by Batas Pambansa Blg. 224 effective April 16,
1982, sets a specific period for the juridical life span of a TRO, thus:

No preliminary injunction shall be granted without notice to the
defendant. If it shall appear from the facts shown by affidavits or by
the verified complaint that great or irreparable injury would result to
the applicant before the matter can be heard on notice, the judge
to whom the application for preliminary injunction was made, may
issue a restraining order to be effective only for a period of twenty
days from date of its issuance. Within said twenty-day period, the
judge must cause an order to be served on the defendant, requiring
him to show cause, at a specified time and place, why the injunction
should not be granted, and determine within the same period
whether or not the preliminary injunction shall be granted, and shall
accordingly issue the corresponding order. In the event that the
application for preliminary injunction is denied, the restraining order
is deemed automatically vacated. . . .

The 20-day period of effectivity of a TRO is non-extendible; the
restraining order automatically terminates at the end of such period
without the need of any judicial declaration to that effect. 22 Any
extension would, therefore, ordinarily, be disallowed. But, when
injunction is subsequently granted, as in the case at bar, any defect
in the order brought about by the extension of its enforceability is
deemed cured. 23

The status or validity of the writ of preliminary injunction itself,
however, remains in question. From a reading of the above-cited
provision, it may appear that the order granting the injunction must
issue within the same 20-day period. Be that as it may, we are
constrained to enunciate, since the contrary is not expressed or
otherwise indicated therein, that the mandatory tenor of the
aforecited provision should not be taken to mean that a writ issued
beyond the time frame is an absolute nullity, provided that, aside
from the existence of any of the grounds for its issuance the
determination of which is largely addressed to the trial court, the
other requirements prescribed by the rules are present, namely,
healing and posting of a bond. Instead, the obligatory import of the
rule should be considered as a directive for the judge to act with
corresponding dispatch on the application for preliminary injunction
within the 20-day period if a TRO has been issued, with a
proscription against an ex parte proceeding on such application
since it would deprive the affected parties of the opportunity to be
heard.

Indeed, a look at the history of the provision would reveal that
Batas Pambansa Blg. 224 was adopted precisely as a reaction
against the indiscriminate issuance of writs of preliminary injunction
which, not infrequently, converted the writ from an instrument in
furtherance of justice to a shield for injustice. 24 This was made
possible not only by unscrupulous lawyers and adventurous litigants
but also by idle and corrupt judges who tolerated the improvident
and ex parte issuance thereof and, in the case of TRO's apparently
oblivious of or insensitive to the fact that these were not
conditioned on the posting of bonds to indemnify the parties
against whom they were issued.

In the instant case, we note that the protection of such bond has
been required. Also, it is of record that herein petitioners and
private respondent were given an opportunity to be heard and, in
fact, a hearing was conducted by the trial court before the issuance
of the writ of preliminary injunction to determine the existence of a
valid ground therefor. 25

We are constrained to sustain such action of the trial court since,
except for the delay in the resolution of the application for and the
subsequent issuance of the writ, the other requisites provided by
the rules for the grant thereof have been observed. These
considerations notwithstanding, we are aware that under the
present state of the law which does not nullify a writ of preliminary
injunction issued beyond the 20-day period where a TRO has been
granted, the courts may thereby be allowed to do by indirection
that which should not be done directly. This is a matter, however,
which should be remedied by the corresponding amendment of the
rule if the intent is to nullify a writ of preliminary injunction thus
belatedly issued.

Consequently, there being no other sufficient ground 26 to dissolve
the injunction in controversy, the grant of the writ must sequences
of the be upheld but without prejudice to the consequences of the
conduct of respondent judge. The circumstances under which the
writ was granted after a protracted delay, punctuated by dubious
orders issued in the interim, certainly cannot be countenanced lest
such conduct be replicated in circumvention of the rules.
Specifically, respondent judge failed to observe Rule 3.01 of Canon
3 of the Code of Judicial Conduct, which calls for a judge to be
faithful to the law and maintain professional competence, and Rule
3.05 which admonishes all judges to dispose of the court's business
promptly and decide cases within the required periods. Definitely,
this Court cannot gloss over the challenged actuations of
respondent judge which are amply reflected in the records of this
case.

IN VIEW OF ALL THE FOREGOING, the present petition is hereby
DISMISSED. The grant of the writ of preliminary injunction by
respondent judge is hereby SUSTAINED and the Regional Trial Court
at Libmanan, Camarines Sur or to which Civil Case No. L-361 is
presently assigned is hereby DIRECTED to expediently hear and
decide the same on the merits within a mandatory period of thirty
(30) days from the finality of this judgment. Respondent judge is
hereby REPRIMANDED with a stern warning that a repetition of the
same or any similar action shall be more severely dealt with by the
Court. The temporary restraining order issued pursuant to our
resolution of August 22, 1988 is hereby LIFTED.

































































































G.R. No. L-31135 May 29, 1970 THE DIRECTOR OR OFFICER-IN-
CHARGE OF THE BUREAU OF TELECOMMUNICATIONS, LEON
CERVANTES, in his capacity as Regional Superintendent of
Region IV, Bureau of Telecommunications, Iloilo City, and
VIVENCIO ALAGBAY, in his capacity as Chief Operator, Bureau of
Telecommunications, Roxas City, petitioners,
vs. HON. JOSE A. ALIGAEN, in his capacity as Judge of the Court
of First Instance of Capiz, Branch II, and JOSE, M. F.
BELO, respondents.Office of the Solicitor General Felix V. Makasiar,
Assistant Solicitor General Conrado T. Limcaoco and Solicitor Pedro
A. Ramirez for petitioners.Siguion Reyna, Montecillo, Belo &
Ongsiako for respondent Jose M. F. Belo.ZALDIVAR, J.:
On August 1, 1969, herein respondent Jose M. F. Belo filed with the
Court of First Instance of Capiz, presided over by respondent Judge
Jose A. Aligaen, a verified petition captioned "Injunction with
Preliminary Injunction" (Civil Case No. V-3192), naming as
respondents therein the Director of the Bureau of
Telecommunications, Leo Cervantes, the Regional Superintendent of
Region IV of the Bureau of Telecommunications with station in Iloilo
City, and their agents and/or representatives acting in their behalf,
and Vivencio Alagbay, Chief Operator of the Bureau of
Telecommunications in Roxas City. The petitioner alleged that he,
Belo, was the grantee of a Congressional franchise, Republic Act No.
2957, as amended, to establish, maintain and operate a telephone
system in Roxas City and in the province of Capiz, which franchise
was confirmed and given effect by the order, dated June 26, 1961,
of the Public Service Commission; that pursuant to said franchise he
had put up in Roxas City, since July, 1961, at a cost of P417,041.27,
an automatic telephone system which had been operating and
rendering good service with 410 telephones and sufficient reserves
for additional lines when needed; that the Bureau of
Telecommunications, through therein respondents, was starting to
establish, maintain and operate in the same geographical area of
Roxas City another local telephone system which would directly
compete with, and seriously prejudice, the telephone system that he
was already operating and would render ineffective his franchise;
that the Bureau of Telecommunications was not authorized to
establish an additional local telephone system in places where there
was no demand for it, as in Roxas City, that no prior inquiry was
ever made by the authorities concerned if there was any need for
another telephone system in Roxas City; that therein respondents
had never attempted to negotiate with him for the use of his
facilities in conjunction with the national hook-up of a telephone
system; that the telephone system that he was operating was
already connected with the Philippine Long Distance Telephone
Company, which is a national system; and that he would suffer
serious and irreparable loss and injury if therein respondents would
go ahead with the establishment of a new telephone system. Belo
then prayed the Court of First Instance of Capiz that due to the
urgency of the matter a writ of preliminary injunction be issued ex
parte, enjoining therein respondents from establishing another local
telephone system in Roxas City; that after hearing, the writ be made
permanent; and that damages be assessed against therein
respondents in their personal and individual capacities.
On the same day, August 1, 1969, Judge Jose A. Aligaen of the
Court of First Instance of Capiz, entered an order authorizing the
issuance of the writ of preliminary injunction prayed for upon Belo's
posting a bond of P5,000, and, accordingly, a writ of preliminary
injunction was issued, restraining therein respondents, their agents,
and representatives, from further committing and continuing the
acts complained of, and from constructing another telephone
system in Roxas City.
1

On August 5, 1969, Belo filed with the Court of First Instance of
Capiz, an urgent motion to declare Vivencio Alagbay and his agents
in contempt of court because in spite of the injunction they
continued the work of installing the new telephone system in Roxas
City. This motion was amended on August 9, 1969, to include the
Director of the Bureau of Telecommunications and Leon Cervantes,
the Regional Director of the Bureau, to be cited for contempt. On
August 9, 1969 Vivencio Alagbay filed his opposition to the motion,
alleging that as a mere employee of the Bureau of
Telecommunications he had nothing to do with the construction of
the telephone exchange, and that it was the International Telegraph
and Telephone Philippines, Inc. (ITT for short) over which he had no
supervision and control, that was working on the project. On the
same date, the respondents in the court below filed a joint motion
for dissolution of the writ of injunction, offering at the same time to
put up a counterbond in the sum of P20,000, to which motion Belo
filed his opposition, then respondents below filed their reply to the
opposition and Belo filed his rejoinder to the reply.
The Solicitor General, upon request of the Director of the Bureau of
Telecommunications, filed, on August 27, 1969, an answer to the
petition for injunction of Belo, denying the material allegations
thereof and setting up special and affirmative defenses, to wit: (1)
that the trial court did not have jurisdiction over the case, it being a
suit against the Government which had not given its consent to be
sued; (2) that the court had no jurisdiction to issue the writ of
injunction against the Director of the Bureau of Telecommunications
whose official residence was beyond the territorial jurisdiction of the
court; (3) that the Bureau of Telecommunications had authority to
operate its own telecommunications network in the whole country
pursuant to Section 1930 of the Revised Administrative Code,
without need of a legislative franchise; (4) that the Bureau of
Telecommunications was not prohibited from expanding its
telephone system and that its operations were not limited to non-
commercial activities; (5) that the Bureau of Telecommunications
had entered into an agreement with ITT for the supply and
installation of expanded telecommunications network project, which,
when completed, would cover not only telephone services but also
data processing computer, telegraphic transfers, etc. which services
have not been made available by Belo; (6) that it was the ITT, and
not the Bureau of Telecommunications, that was actually
constructing the telecommunications system in Roxas City; (7) that
Belo's franchise, as per section 12 of Republic Act No. 2957, is not
exclusive; (8) that there being 67,800 residents in Roxas City out of
which only a total of 410 are being served, the facilities of Belo are
inadequate or inefficient. Respondents below alleged as
counterclaim that the writ of preliminary injunction was
improvidently issued and was causing a damage of P10,000 for
every day of delay in the completion of the project.
On September 1, 1969, the City Fiscal of Roxas City, not knowing
that an answer had already been filed by the Solicitor General, filed
a motion to dismiss upon the grounds of: (1) lack of jurisdiction
over the persons of therein respondents, the subject matter of the
action, and the nature of the action; and (2) failure to state a cause
of action.
After hearing on the motion to declare Vivencio Alagbay in
contempt, the lower court, its order of September 3, 1969, held
Vivencio Alagbay and the men working under him, even if they be
working under the guise of being workers of the ITT, liable for
contempt of court, but the court did not impose any penalty on
them because they had stopped working and only declared that
they would be arrested and confined in jail should they resume the
work of erecting telephone poles and connecting telephone cables
and wires. At the same time the lower court denied the motion for
the dissolution of the injunction.
2

Belo moved, on September 11, 1969, to reconsider the order of
September 3, 1969, praying that appropriate penalty be imposed on
Alagbay and the men working under him. Petitioner Alagbay also
filed a motion for the reconsideration of said order.
In the meantime, on September 10, 1969, the respondents in the
court below filed a motion for preliminary hearing on the affirmative
defenses alleged in their answer, as well as the motion to dismiss.
On September 15, 1969, Belo filed his reply to the answer, and his
answer to the counterclaim.
In an order, dated October 1, 1969, the Court of First Instance of
Capiz denied the motions filed by Alagbay and Belo for the
reconsideration of the order of September 3, 1969. In a separate
order also of the same date, the court denied the motion to dismiss
the petition and set the pre-trial of the case for October 23, 1969.
3

Seeking to annul and set-aside the various orders issued by the
Court of First Instance of Capiz, namely, those dated August 1, 1961,
granting the motion for the issuance of a writ of preliminary
injunction, and the writ of preliminary injunction issued pursuant
thereto; the order dated September 3, 1969 holding Alagbay and
the men working under him in contempt of court; and the orders
issued on October 1, 1969 denying Alagbay's motion for
reconsideration and the motion to dismiss filed by the respondents
below and setting the pre-trial of the case for October 23, 1969, the
instant petition for a writ of certiorari and prohibition with
preliminary injunction was filed with this Court by herein petitioners,
the Director or Officer-in-charge of the Bureau of
Telecommunications, Leon Cervantes and Vivencio Alagbay, on
October 27, 1969, praying that pending the determination of the
case on the merits, a writ of preliminary injunction be issued, ex
parte and without bond, restraining herein respondent Judge Jose
Aligaen, who presides the Court of First Instance of Capiz, from
enforcing the abovecited orders, and from taking cognizance of Civil
Case No. V-3192 of said court until further orders from this Court.
By resolution, dated October 30, 1969, this Court issued the writ of
preliminary injunction prayed for, and required herein respondents
to file their answer.
Herein respondent Jose M. F. Belo filed his answer, making certain
admissions and denials of the allegations in the petition for
certiorari and prohibition, and rebutted the grounds alleged in
support of the petition.
Before this Court herein petitioners now contend that:
(a) Respondent court has no jurisdiction to hear
and determine the case because it involves a
suit against the Government which has not given
its consent to be sued;
(b) Respondent court has no jurisdiction, power
and authority to issue writs of certiorari,
prohibition, mandamus and injunction requiring
the execution of acts by, or controlling the acts
of, national officials with residences and offices
beyond its territorial jurisdiction;
(c) Respondent court acted with grave abuse of
discretion amounting to lack of jurisdiction in
issuing ex parte the orders and writ of injunction
complained of despite the fact that respondent
Belo's complaint states no cause of action and,
therefore, he is not entitled to the main relief;
and it follows that he is not entitled to the writ
of preliminary injunction;
(d) Respondent court acted with grave abuse of
discretion amounting to lack of jurisdiction in
refusing to dissolve the ex parte writ of
preliminary injunction despite petitioners' offer
to put up a counterbond.
1. Petitioners argue that the Bureau of Telecommunications is an
entity of the Government of the Republic of the Philippines, created
pursuant to Executive Order No. 94, series of 1947, and charged
with the governmental function of operating and maintaining a
telecommunications network in the entire length and breadth of the
country, and the action against the Director of the Bureau of
Telecommunications and his subordinates was tantamount to a suit
against the Government which cannot be done without the consent
of the Government.
4

On the other hand, respondent Belo argues that even if petitioners
are officers of the Government their act of establishing a local
telephone system in Roxas City is without authority of law, and
violates his rights, hence the action for the redress of injuries that
he suffered or would suffer is not a suit against the State.
5

We sustain the stand of respondent Belo. We hold that the suit
commenced by said respondent against herein petitioners cannot
be considered as a suit against the State.
Decisive in the resolution of the issues raised by petitioners in the
present case are the provisions of the franchise granted to
respondent Belo, and the powers and functions of the Bureau of
Telecommunications. The franchise, Republic Act No. 2957, granted
to Belo "the right and privilege to construct, maintain, and operate
in the Province of Capiz and Roxas City, a telephone system to carry
on the business of electrical transmission of conversations and
signals in "said province and city,"
6
but the rights granted therein"
shall not be exclusive;"
7
that the "Philippine Government shall have
the privilege, without compensation, of using the poles of the
grantee to attach one ten-pin crossarm, and to install, maintain and
operate wires of its telegraph system thereon; Provided,however,
that the Bureau of Telecommunications shall have the right to place
additional crossarms and wires on the poles of the grantee by
paying a compensation, the rate of which is to be agreed upon by
the Director of Telecommunications and the grantee;"
8
and that "it
is expressly provided that in the event the Philippine Government
should desire to maintain and operate for itself the system and
enterprise herein authorized, the grantee shall surrender his
franchise and will turn over to the Government said system and all
serviceable equipment therein, at cost, less reasonable
depreciation."
9

The powers and duties of the Bureau of Telecommunications, on the
other hand, as provided in Executive Order No. 94 of July 1, 1947,
insofar as relevant to the instant case are as follows:
Sec. 79. The Bureau of Telecommunications shall
exercise the following powers and duties:
'(a) To operate and maintain
existing wire-telegraph and
radio telegraph offices,
stations, and facilities, and
those to be established to
restore the pre-war
telecommunication service
under the Bureau of Posts, as
well as such additional
offices or stations as may
hereafter be established to
provide telecommunications
service in places requiring
such service;
'(b) To investigate,
consolidate, negotiate for,
operate and maintain wire-
telephone or radio
telecommunications service
throughout the Philippines
by utilizing such existing
facilities in cities, towns, and
provinces as may be found
feasible and under such
terms and conditions or
arrangements with the
present owners or operators
thereof as may be agreed
upon to the satisfaction of all
concerned.'
From the above-quoted provisions, it is clear that the Bureau of
Telecommunications is empowered to establish telecommunications
service in places where such service does not exist, but in places
where such service already exists it may only negotiate for, operate
and maintain a telecommunication system by utilizing such existing
facilities in cities, towns and provinces under such terms, conditions
or arrangements as may be agreed upon with their owners or
operators.
It is not denied that respondent Belo had already established, since
July 1961, an automatic telephone system in Roxas City. Respondent
Belo was operating the telephone system when the Bureau of
Telecommunications, through petitioners, took steps to establish
another local telephone system without having made any
negotiation with respondent Belo for the utilization of the existing
facilities being used by said respondent under terms, conditions and
arrangements that would be satisfactory to all concerned which
acts gave rise to the filing by respondent Belo of Civil Case No. V-
3192 for injunction in the Court of First Instance of Capiz on August
1, 1969. The officers of the Bureau of Telecommunications,
therefore, attempted to establish a local telephone system in Roxas
City in violation of law and the rights of respondent Belo. Inasmuch
as the State authorizes only legal acts by its officers, unauthorized
acts of government officials or officers are not acts of the State, and
an action against the officials or officers by one whose rights have
been invaded or violated by such acts, for the protection of his
rights, is not a suit against the State within the rule of immunity of
the State from suit.
10
In the same tenor, it has been said that an
action at law or suit in equity against a State officer or the director
of a State department on the ground that, while claiming to act for
the State, he violates or invades the personal and property rights of
the plaintiff, under an unconstitutional act or under an assumption
of authority which he does not have, is not a suit against the State
within the constitutional provision that the State may not be sued
without its consent.
11

2. In support of their contention that respondent court did not have
jurisdiction to issue the writ of injunction in question, herein
petitioners argue that the office of petitioner Director of the Bureau
of Telecommunications is in Manila, and that of petitioner Regional
Superintendent of Region IV is in Iloilo City, both of which places
are outside the territorial jurisdiction of respondent court, hence
their actions could not be controlled or enjoined by respondent
Court.
12

Respondent Belo, on the contrary, contends that the Court of First
Instance has power to issue the writ of injunction under Sec. 44, of
the Judiciary Act of 1948; that the respondents in the lower court
(now petitioners in this Court) were joined as such respondents
because they were necessary to a complete determination of the
questions involved and were the ones responsible for the project of
establishing a new telephone system in Roxas City; that their acts,
violative of herein respondent Belo's rights, were committed or
being pursued in Roxas City which is within the territorial jurisdiction
of the court.
13

We find merit in the contention of respondent Belo. The ruling in
the cases relied upon by petitioners, namely:Acosta v.
Alvendia, supra; Samar Mining Co. v. Arnado, supra; Alhambra
Cigar and Cigarette Co. v. The National Administrator of Regional
Office No. 2, supra, is to the effect that the court of first instance
has no jurisdiction to restrain by injunction acts committed outside
the territorial boundaries of their respective provinces or districts.
InAcosta v. Alvendia, this Court held that, pursuant to Sec. 44(h) of
the Judiciary Act and Sec. 2, Rule 60 of the Rules of Court,
14
courts
of first instance have jurisdiction to control or restrain acts
committed or about to be committed within the territorial
boundaries of their respective provinces and districts by means of
the writ of injunction. In the instant case, the acts relative to the
establishment of a local telephone system by petitioners were being
done within the territorial boundaries of the province or district of
respondent court, and so said court had jurisdiction to restrain them
by injunction. It does not matter that some of the respondents in
the trial court, against whom the injunctive order was issued, had
their official residences outside the territorial jurisdiction of the trial
court. In the case of Gonzales v. Secretary of Public Works, et
al.,
15
wherein the only question raised was whether the Court of
First Instance of Davao had jurisdiction to entertain a case the main
purpose of which was to prevent the enforcement of a decision of
the Secretary of Public Works who was in Manila, this Court held
that inasmuch as the acts sought to be restrained were to be
performed within the territorial boundaries of the province of
Davao, the Court of First Instance of Davao had jurisdiction to hear
and decide the case, and to issue the necessary injunctive order.
This Gonzales case was an action for certiorari and prohibition with
preliminary injunction and/or preliminary mandatory injunction to
prevent the demolition of Gonzales' dam in Davao in compliance
with the order of the Secretary of Public Works.
It follows, therefore, that since the acts to be restrained were being
done in Roxas City, or within the territorial jurisdiction of
respondent court, the latter had jurisdiction to restrain said acts
even if the office of respondent Director of the Bureau of
Telecommunications is in Manila, and that of respondent Regional
Superintendent of Region IV is in Iloilo City.
3. Petitioners also maintain that respondent Belo's petition for
injunction before respondent court states no cause of action, and
respondent court committed a grave abuse of discretion in issuing
the orders and the writ of preliminary injunction now in question.
16

The contention of petitioners has no merit. A cause of action is "an
act or omission of one party in violation of the legal right or rights
of the other; and its essential elements are legal right of the
plaintiff, correlative obligation of the defendant, and act or omission
of the defendant in violation of said legal right."
17
The petition filed
with the respondent lower court clearly alleges: (1) the legal right of
respondent Belo to establish and operate a telephone system in
Roxas City as authorized by a legislative franchise and the certificate
of public convenience issued by the Public Service Commission, and
his having actually established the telephone system and operating
the same; (2) the violation of respondent Belo's right by the
unauthorized or illegal acts of the petitioners in taking steps to
install another telephone system in Roxas City without previously
having negotiated or entered into any arrangement with respondent
Belo as required by law; and (3) the injury that would be caused to
respondent Belo by the acts of petitioners. Certainly the petitioners
herein more so because they are officials or officers of the
government have a correlative obligation to respect the right of
respondent Belo, or to act in accordance with law. The allegations in
the petition, which was under oath, served as a basis for respondent
court to exercise its sound discretion whether or not to issue the
writ of preliminary injunction. We do not see in the actuation of
respondent court any whimsical or capricious exercise of judgment
when it issued the writ of preliminary injunction in question. In its
order authorizing the issuance of the writ respondent court said:
That it has not been shown that petitioner (Belo)
is remiss in his operation under his franchise,
and that the establishment, maintenance and
operation of another local telephone system in
the same geographical area of Roxas City will
result in direct competition with petitioner which
is contrary to the franchise granted to him; and
that the continuance of the acts complained of
would work serious and irreparable loss and
injury to the petitioner (Belo) unless restrained.
We believe that respondent court had acted in accordance with the
provisions of Section 3, Rule 58 of the Rules of Court. By its order it
can be gathered that respondent court had found respondent Belo
(petitioner below) entitled to the relief demanded, when it said "that
the continuance of the acts complained of would work serious and
irreparable loss and injury to the petitioner unless restrained." The
respondent court considered it necessary to issue the writ because
the continuance of the acts of installing the new telephone system
by the respondents below (petitioners herein) would render the
judgment in the petition for injunction ineffectual.
Petitioners herein anchor their contention that respondent court
committed a grave abuse of discretion when it issued the writ of
preliminary injunction because the Bureau of Telecommunications
has the power to establish a telephone system in Roxas City, so that
respondent court should not have restrained the Director of the
Bureau and the men under him from pursuing the work of installing
the telephone system. The power of the Bureau of
Telecommunications to establish, operate and maintain a nationwide
telephone system is conceded. But that power is subject to a
limitation, and that limitation is, that in cities, towns or provinces
where telephone systems are already in operation it should utilize
such existing facilities under such terms and conditions or
arrangements with the owners or operators of those systems as may
be agreed upon to the satisfaction of all concerned. The Bureau of
Telecommunications can even expropriate the local facilities if it
becomes necessary to resort to this recourse. Thus, this Court, in the
case of Republic v. Philippine Long Distance Telephone Co.,
18
said:
The Bureau of Telecommunications, under
Section 79(b) of Executive Order No. 94, may
operate and maintain wire telephone or radio
telephone communications throughout the
Philippines by utilizing existing facilities in cities,
towns and provinces under such terms and
conditions or arrangement with present owners
or operators as may be agreed upon to the
satisfaction of all concerned; but there is nothing
in this section that would exclude resort to
condemnation proceedings where unreasonable
or unthinking terms and conditions are exacted,
to the extent of crippling or seriously hampering
the operation of said Bureau.
It is claimed by petitioners that the project of the Bureau of
Telecommunications in Roxas City is a part of a nationwide
telecommunications expansion project, as contemplated in Republic
Act 2612, and that Roxas City had been chosen as the site of one of
the telephone exchanges and of one of the base points in the
turnkey installation projects. It will be noted that the respondent
court did not enjoin the Bureau of Telecommunications from
working on its telephone exchange and turnkey installation project
in Roxas City in relation to its alleged nationwide
telecommunications expansion project. The respondent court only
enjoined the petitioners herein "to desist and refrain from
establishing, maintaining and operating another local telephone
system in the geographical area of Roxas City ..."
19
In other words,
the petitioners could go on with the work on the installation of the
national hook-up, but not to establish another local telephone
system. The idea of respondent court, as gathered from its order
authorizing the issuance of the writ, was to prevent the competition
between the new telephone system and the system already
operated by respondent Belo. Respondent Belo alleged in his
petition before respondent lower court and the allegation is not
denied that the officials or authorities of the Bureau of
Telecommunications had never attempted to negotiate with him for
the use of the facilities of his local telephone system in conjunction
with the Bureau's national hook-up project. It is plain, therefore, that
petitioners herein did not act in accordance with law.
It is Our considered view that the powers and duties of the Bureau
of Telecommunications in connection with the operation and
maintenance of a nationwide telecommunications system are as
provided, and delimited, in Section 79 of Executive Order No. 94,
series of 1947. We believe that the provision of paragraph (b) of
Section 79 of the Executive Order, which authorizes the Bureau of
Telecommunications "to investigate, consolidate, negotiate for,
operate and maintain wire telephone or radio telecommunication
service throughout the Philippines by utilizing such existing facilities
... under such terms and conditions or arrangements with the
present owners or operators as may be agreed upon ...", was
intended to protect the operators of telephone systems already
existing and duly authorized by law to operate. The Bureau of
Telecommunications may take steps to improve the telephone
service in any locality in the Philippines, but in so doing it must first
enter into negotiation or arrangement with the operator or owner
of the existing telephone system. We believe that the intention of
the executive order, precisely, is to avoid a competition which would
prove ruinous or disadvantageous to both the government and the
private operator. When a private person or entity is granted a
legislative franchise to operate a telephone system, or any public
utility for that matter, the government has the correlative obligation
to afford the grantee of the franchise all the chances or opportunity
to operate profitably, as long as public convenience is properly
served, rather than promote a competition with the grantee. We can
not accept the view, as urged by herein petitioners, that the Bureau
of Telecommunications can install and operate a telephone system
in any place in the Philippines regardless of the rights and interests
of existing private operators, especially if the existing operator is a
grantee of a legislative franchise. That view is not in consonance
with the provisions of paragraph (b) of Section 79 of Executive
Order No. 94, series of 1947. Indeed, it should be the concern of the
Bureau of Telecommunications and the Public Service Commission
that telephone services in the country are efficient and satisfactory.
But in promoting satisfactory service the rights and interests of prior
operators should not be wantonly disregarded. If the Bureau of
Telecommunications believes that it has to embark on a project of
improving the telephone service in a particular place, it should
negotiate or arrange with the existing operator as provided in
paragraph (b) of Section 79 of Executive Order No. 94. If no
satisfactory arrangement can be arrived at between the Bureau of
Telecommunications and the existing operator, the Bureau of
Telecommunications may resort to expropriation as suggested in the
decision of this Court in the case of Republic v. Philippine Long
Distance Telephone Co., supra. Or, if the government would decide
to operate the telephone system to the exclusion of the grantee of
the legislative franchise, the grantee may be required to surrender
his franchise and turn over to the government the telephone system
he is operating. We have noted that all legislative franchises for the
operation of a telephone system contain a proviso similar to that of
Section 18 of the franchise of respondent Belo (Rep. Act 2957), as
follows:
Sec. 18. It is expressly provided that in the event
the Philippine Government should desire to
maintain and operate for itself the system and
enterprise herein authorized, the guarantee shall
surrender his franchise and will turn over to the
Government said system and all serviceable
equipment therein, at cost, less reasonable
depreciation.
It is urged by herein petitioners that the franchise granted to
respondent Belo is not exclusive. This is true, but it does not follow
that any person or entity not even the Bureau of
Telecommunications can put up another telephone system in
Roxas City in a manner not in accordance with law.
Notwithstanding a franchise is not exclusive so
as to prevent the grant of a similar franchise to
another or to prevent competition on the part of
a person or entity duly authorized in that regard,
such a franchise has been regarded or
characterized as exclusive against one who
carries a competing operation without due
authorization or in violation of the law
governing the matter.
20

There is authority for the view, however, that the
owner of a franchise which is not exclusive, in
that ... does not prevent the grantor from
granting a similar franchise to another or does
not prevent lawful competition on the part of
public authorities, is entitled to relief by
injunction against competition which is illegal or
is carried on by one not authorized in that
regard, in the case either of actual or of
threatened injury from such competition.
21

And so in the case at bar, because the Director of the Bureau of
Telecommunications, or any of the herein petitioners, had not
negotiated or made arrangement with respondent Belo before
taking steps to install a new local telephone system in Roxas City, as
required in paragraph (b) of Section 79 of Executive Order No. 94,
the respondent court had properly issued the writ of preliminary
injunction enjoining said petitioners to "desist and refrain from
establishing, maintaining and operating another local telephone
system in ... Roxas City."
4. It is also the contention of the petitioners that respondent court
committed a grave abuse of discretion when it refused to dissolve
the writ of preliminary injunction in spite of petitioners' offer to put
up a counterbond of P20,000, although the Government is exempt
from filing a bond. Under the circumstances obtaining in this case,
this contention has no merit.
The mere filing of a counterbond does not necessarily warrant the
dissolution of the writ of preliminary injunction. Under Section 6 of
Rule 58 of the Rules of Court, a preliminary injunction, if granted,
may be dissolved "if it appears after hearing that although the
plaintiff is entitled to the injunction, the continuance thereof, as the
case may be, would cause great damage to the defendant while the
plaintiff can be fully compensated for such damages as he may
suffer, and the defendant files a bond in an amount fixed by the
judge conditioned that he will pay all damages which the plaintiff
may suffer by the ... dissolution of the injunction." Under this quoted
provision of the rules of court, the court is called upon to exercise
its discretion in determining or weighing the relative damages that
may be suffered by the parties. If the damages that may be suffered
by the defendant by the continuance of the injunction outweigh the
damages that may be suffered by the plaintiff by the dissolution of
the injunction, then the injunction should be dissolved. In the case
at bar the respondent court, in refusing to dissolve the writ of
preliminary injunction, took into consideration that "the petitioner
(Belo) will suffer great and irreparable injury considering the
tremendous investment of the petitioner, his time and gigantic
efforts made to put up telephone service in Roxas City." An
injunction issued to stop an unauthorized act should not be
dissolved by the mere filing of a counterbond, otherwise, the
counterbond would come the vehicle of the commission or
continuance of an unauthorized or illegal act which the injunction
precisely is intended to prevent.
22

We hold, therefore, that respondent court did not commit a grave
abuse of discretion when it refused to dissolve the writ of
preliminary injunction it had issued.
Having thus declared that respondent court had jurisdiction to issue
the writ of preliminary injunction in question, and that it did not
abuse its discretion in refusing to dissolve the said writ, it follows
that it also acted with jurisdiction when it issued the orders of
August 1, 1969, of September 3, 1969, and of October 1, 1969,
which are questioned in these proceedings.
23

IN VIEW OF THE FOREGOING, the writ of preliminary injunction
issued by this Court on October 30, 1969 is dissolved, and the
instant petition for certiorari and prohibition is dismissed. The
questioned writ of preliminary injunction and the orders issued by
respondent court (Annexes B, C, M, Q and Q-1 of the Petition) are
held valid. No pronouncement as to costs. It is so ordered.

























































































































G.R. No. L-23868 October 22, 1970 ZACARIAS C.
AQUINO, petitioner,
vs. FRANCISCO SOCORRO and COURT OF APPEALS, respondents.
Tranquilino O. Calo, Jr. for petitioner. Alfaro and Associates for
respondent Francisco Socorro. CASTRO, J.:.
On February 14, 1964 the Court of Appeals, upon petition of
Francisco Socorro in CA-G.R. 33560-R,
1
issued a writ of preliminary
injunction in his favor upon his posting a P1,000 bond. The writ of
preliminary injunction, among others, restrained Zacarias Aquino
"from entering, cutting, hauling, selling and/or exporting logs or
other forest products from the forest area" subject of litigation.
Aquino, however, filed a counterbond in the amount of P2,000,
effecting the immediate dissolution of the writ.
The Court of Appeals, on June 29, 1964, dismissed Socorro's petition
re the main action, for lack of jurisdiction to entertain the same.
Socorro subsequently appealed the decision of the appellate court
to this Court. We affirmed the appellate court's decision in a
resolution dated December 24, 1964 in case G.R. L-23608.
On July 15, 1964, before the appellate court's decision dismissing
Socorro's petition became final, Aquino filed with the appellate
court his claim for damages in the amount of P199,000 on account
of the wrongful issuance of the writ of preliminary injunction. The
appellate court denied Aquino's claim, for want of bad faith and
malice on the part of Socorro in filing his petition and securing the
issuance of the writ of preliminary injunction. Aquino's subsequent
motion for reconsideration was denied.
Hence, the present petition for certiorari to review the resolution of
the Court of Appeals denying his claim for damages.
Aquino contends that the respondent appellate court erred in
denying his claim for damages on the ground of want of bad faith
and malice on the part of the respondent Socorro in filing the
petition for certiorari re the main case and securing the issuance of
the writ of preliminary injunction. He invokes the provisions of
Section 9, Rule 58 in relation to Section 20, Rule 57, of the Rules of
Court. Section 9, Rule 58 recites:.
Judgement to include damages against party
and surities. Upon the trial the amount of
damages to be awarded to the plaintiff, or to
the defendant, as the case may be, upon the
bond of the other party, shall be claimed,
ascertained, and awarded under the same
procedure as prescribed in Section 20 of Rule
57.
Section 20, Rule 57 reads:.
Claim for damages on account of illegal
attachment. If the judgment on the action be
in favor of the party against whom attachment
was issued, be may recover, upon the bond
given or deposit made by the attaching creditor,
any damages resulting from the attachment.
Such damages may be awarded only upon
application and after proper hearing, and shall
be included in the final judgment. The
application must be filed before the trial or
before appeal is perfected or before the
judgment becomes executory, with due notice to
the attaching creditor and his surety or sureties,
setting forth the facts showing his right to
damages and the amount thereof.
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 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.
Aquino points out that the said provisions do not require a claimant
who seeks to recover damages on account of the wrongful issuance
of a writ of preliminary injunction, to prove bad faith and malice on
the part of the party who obtained the issuance of the writ. To
reinforce his contention, he invokes the provisions of Section 4 (b)
of Rule 58 of the Rules of Court. This rule, Aquino avers, makes the
party applying for an injunction liable for all damages sustained by
the other party if the court finally decides the party applicant as not
entitled thereto. He maintains that, in the case at bar, the
dissolution of the writ of preliminary injunction by the respondent
appellate court clearly demonstrates that the respondent Socorro
was not entitled thereto.
Socorro, on the other hand, plays for the dismissal of the present
petition on the following grounds: (1) The petitioner "refused to
prosecute his claim for damages ... in the main action then already
on appeal to this Court;" (2) The petitioner "failed to state in his
motion claiming for damages the facts upon which his rights
thereto are based;" (3) The petitioner, if "suing on the bond ... has
no more cause of action as the said bond had already been
dissolved 2 upon motion by the petitioner Aquino;" and (4) The
petitioner, if "suing beyond the bond ... failed to show, or there is
no showing that the respondent Socorro," in filing his petition
for certiorari and securing the issuance of the writ of preliminary
injunction, "was motivated by malice or bad faith."
The present case raises the question of whether Aquino's claim for
damages on account of the improvident issuance by the respondent
appellate court of the writ of preliminary injunction should be
dismissed on the ground that he has failed to show or prove bad
faith and malice on the part of the respondent Socorro in obtaining
the issuance of the writ of preliminary injunction.
In Pacis vs. The Commission on Elections,
3
this Court made an
extensive discussion of the principles applicable to the recovery of
damages caused through the improvident issuance of a writ of
preliminary injunction. This Court said that "damages sustained as a
result of a wrongfully obtained injunction may be recovered upon
the injunction bond required to be filed with the court." The same
provisions permitting the issuance of the writ of preliminary
injunction require the filing of a bond before the grant of the writ.
"The statutory undertaking of the bond is that it shall answer for all
damages which the party to be restrained may sustain by reason of
the injunction if the court should finally decide that the plaintiff was
not entitled thereto. Malice or lack of good faith is not an element
of recovery on the bond. This must be so, because to require malice
as a prerequisite would make the filing of the bond a useless
formality."
Continuing, this Court said that "the dissolution of the injunction,
even if the injunction was obtained in good faith, amounts to a
determination that the injunction was wrongfully obtained and a
right of action on the injunction bond immediately accrues." Thus,
for the purpose of recovery upon the injunction bond, "the
dissolution of the injunction because of the failure of petitioner's
main cause of action" provides the "actionable wrong" for the
purpose of recovery upon the bond.
This Court also stressed, in the same case, that "there is nothing in
the Rules of Court which allows recovery of damages other than
upon the bond pledged by the party suing for an injunction. Section
9, Rule 58, limits recovery only upon the bond, and it specifically
states that ... 'the amount of damages to be awarded to the plaintiff,
or to the defendant, as the case may be, upon the bond of the
other party, shall be claimed, ascertained, and awarded under the
same procedure as prescribed in Section 20 of Rule 57.' " Under this
provision, the party restrained, if he can recover anything, can
recover only by reason of and upon the bond the only security
and protection conceded to him by the rules. Consequently, the rule
limits the amount of recovery in a suit on an injunction bond to the
sum thus fixed, the amount measuring the extent of the assumed
liability.
This Court also finds it necessary to restate the rule in Molina vs.
Somes
4
that "an action for damages for the improper suing out of
an injunction must be maintained upon the same principles which
govern an action for the wrongful bringing of an action." This rule,
however, applies only when the party restrained pursues his claim
for damages not upon the injunction bond. In such a case where
the party restrained sues not on the injunction bond, the rules
accord him no relief by way of a claim for damages unless he can
establish that the party applicant secured the issuance of the writ
maliciously and without probable cause. This Court stated that "...
when the process has been sued out maliciously there may be a
right of action in favor of the defendant. But this right depends
upon the law governing malicious prosecutions, and has no relation
to the claim for damages urged by the defendant in this case. ..."
5

Additionally, this Court, citing Palmer vs. Foley (71 N.Y. 106, 108),
said:. It seems that, without some security given before the granting
of an injunction order, or without some order of the court or a
judge, requiring some act on the part of the plaintiff, which is
equivalent to the giving of security such as a deposit of money
in court the defendant has no remedy for any damages which he
may sustain from the issuing of the injunction, unless the conduct
of the plaintiff has been such as to give ground for an action for
malicious prosecution.
In the case at bar, the record reveals that the petitioner Aquino, in
the proceedings before the respondent appellate court filed a
counterbond in the amount of P2,000 and opposed the injunction
bond filed by the respondent Socorro on the ground of its
insufficiency. In effect, those brought about the immediate
dissolution of the writ of preliminary injunction. Thus Aquino
pursues his claim for damages in the amount of P199,000 no longer
upon the injunction bond in the amount of P1,000 filed by Socorro
with the respondent appellate court. This being the case, applicable
here is the holding in Molina vs. Somes, supra, that an application
for damages on account of the improvident issuance of a
preliminary injunction writ must be governed by the same principles
applicable to an action for the wrongful bringing of action. Before
the respondent's liability can attach, it must appear that he filed his
petition for certiorari re the main action and obtained the issuance
of the writ of preliminary injunction maliciously and without
probable cause. These two essential requisites, malicious
prosecution and lack of probable cause, are neither alleged nor
proved in this case before us. Nothing in the record tends to
establish the liability of the respondent Socorro.
ACCORDINGLY, the present petition for certiorari is hereby denied.
No cost.