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THUNDER SECURITY

AGENCY/
LOURDES M. LASALA,
Petitioner,

AND

INVESTIGATION

- versus -

NATIONAL FOOD AUTHORITY (REGION I) and NFA


REGIONAL
BIDS AND AWARDS COMMITTEE (REGION I),
Respondents.

G.R. No. 182042


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

Promulgated:
July 27, 2011

Before this Court is a petition [1] for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, seeking to reverse the Decision [2] dated July 18, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
93642, which set aside the Orders[3] dated August 27, 2003 and December 1, 2005 of the Regional Trial Court (RTC)
of San Fernando City, La Union, Branch 66 in Civil Case No. 6846.

The facts are as follows:

Sometime in September 2002, petitioner Thunder Security and Investigation Agency, owned and operated
by petitioner Lourdes M. Lasala as sole proprietor, entered into a Contract for Security Services [4] with respondent
National Food Authority (NFA), Region I. The contract provided that Thunder Security will provide 132 security
guards to safeguard the NFAs personnel, offices, facilities and properties in Region I for a period of one year from
September 15, 2002 to September 15, 2003.

Subsequently, Republic Act (R.A.) No. 9184[5] was enacted on January 10, 2003, and took effect on January
26, 2003. Said law expressly repealed, among others, Executive Order (E.O.) No. 40, Series of 2001 [6] which
governed the bidding procedure of service contracts in the Government.

Since petitioners contract with the NFA was about to expire on September 15, 2003, the NFA caused the
publication of an Invitation to Apply for Eligibility and to Bid on May 11 and 18, 2003, intended for all private
security agencies.[7] Petitioner paid the bidding fee of P 1,000.00 on May 21, 2003 to signify its intention to
participate in the bidding process. However, on June 9, 2003, the NFA, through Assistant Regional Director

Victoriano Molina, chairman of respondent NFA-Regional Bids and Awards Committee (NFA-RBAC), notified petitioner
to submit the required documents not later than June 19, 2003 in order to qualify for the bidding. [8] On June 26,
2003, the NFA-RBAC informed petitioner that its application to bid had been rejected due to its failure to submit the
required documents.[9] Aggrieved, petitioner sent a letter of protest to the NFA on July 10, 2003, contending that
until the Implementing Rules and Regulations (IRR) of R.A. No. 9184 can be promulgated, no bidding should take
place.[10]Notwithstanding, respondents rejected petitioners application. Respondents defended their position, citing
an instruction coming from then NFA Administrator Arthur C. Yap which directed that in the absence of the said IRR
and due to the exigency of the service, respondents projects would be temporarily guided by the provisions of E.O.
No. 40, among others, provided the same are consistent with R.A. No. 9184. [11]

Unfazed, petitioner filed before the RTC a Petition [12] for Prohibition and Preliminary Injunction, with a
prayer for the issuance of a Temporary Restraining Order (TRO) plus Damages, seeking, among others, to enjoin
respondents from awarding the contract to another security agency. On August 8, 2003, the RTC issued a TRO
against respondents.[13] Correlatively, in its Order[14] dated August 27, 2003, the RTC granted the writ of preliminary
injunction in favor of petitioner and directed respondents to desist from terminating petitioners services until further
orders from the RTC. The RTC held that the composition and the orders of the NFA-RBAC were void because the IRR
of R.A. No. 9184 has not yet been promulgated. The RTC also found that no observers from the private sector were
present in the bidding process as required by law. The RTC ordered:
WHEREFORE, premises considered[,] let [a] Writ of Preliminary Injunction [be issued]
against respondents National Food Authority Region I and the Regional Bid and Awards Committee
(RBAC) enjoining and restraining said respondents and all persons acting in their behalf from
awarding the contract for security services in NFA Region I and from terminating the services of
petitioner until further orders from the Court, upon payment of an Injunction Bond in the amount
of Php50,000.00 in the name of the respondents to answer for any and all damages which the
respondents may suffer in the event that the Court should finally decide that petitioner is not
entitled to the issuance thereof.
Let the Pre-trial Conference of this case be set on September 22, 2003 at 2:00 oclock in
the afternoon.
SO ORDERED.[15]

Respondents filed a Motion for Reconsideration [16] on September 23, 2003, contending that per Minutes of the
Meeting[17] for public bidding held on July 16, 2003, three independent observers were actually present, namely,
Floriano S. Gallano, Jenny Lilan and Antonita S. Hagad. On October 8, 2003, IRR Part A[18] (IRR-A) of R.A. No. 9184
also

took

effect. Nonetheless,

the

RTC

denied

respondents

motion

for

reconsideration

in

its

Order[19] dated December 1, 2005. Thus, respondents sought recourse from the CA by way of certiorari under Rule
65 of the 1997 Rules of Civil Procedure, as amended, charging the RTC of grave abuse of discretion in the issuance
of the said orders.[20]

On July 18, 2007, the CA granted the petition. It held that the RTC gravely abused its discretion when it
issued the writ of preliminary injunction against respondents despite the utter lack of basis and justification for its
issuance. The CA highlighted that while IRR-A of R.A. No. 9184 took effect on October 8, 2003, [21] and thus could not
have been applied by the RTC in its August 27, 2003 Order, its failure to consider the said IRR-A in resolving
respondents motion for reconsideration amounted to grave abuse of discretion. The CA added that contrary to the
trial courts ruling, there were three observers present during the bidding process, as shown by the Minutes of the
Meeting for public bidding held on July 16, 2003. The CA further opined that petitioner did not appear to possess a
clear legal right to enjoin the awarding of the contract considering that petitioners right to participate in the bidding
was itself dubious as petitioner failed to submit the necessary documents required by respondents. However, the
CA clarified that its decision was merely focused on the issue of the impropriety of the issuance of the writ of
preliminary injunction and not on the issues of the propriety of the award of the contract and damages. Thus, the
CA held that the latter issues should still be heard by the RTC. [22] The dispositive portion of the CA decision reads:
WHEREFORE, in view of the foregoing, the instant PETITION is hereby GRANTED. The
Orders issued by Branch 66 of the Regional Trial Court of San Fernando City, La Union dated
August 27, 2003 and December 1, 2005 in Civil Case No. 6846 are hereby SET ASIDE.
SO ORDERED.[23]

Petitioner filed a Motion for Reconsideration[24] but the CA denied the same in its Resolution[25] dated March 5, 2008.

Hence, this petition which raised the following issues:


1.

Whether the Court of Appeals committed a reversible error when it held that the
respondents did not err in applying E.O. 40 in the conduct of the bidding[;]

2.

Whether the Court of Appeals committed a reversible error when it held that there was no
irregularity attending the questioned bidding[; and]

3.

Whether the Court of Appeals committed a reversible error when it reversed the Orders of
[the RTC] granting injunctive relief to herein petitioner[.][26]

Petitioner emphasizes that R.A No. 9184, which expressly repealed E.O. No. 40, was already in force at the
time the bidding was conducted in this case on July 16, 2003; hence, it was error for the NFA and the NFA-RBAC to
conduct the public bidding in accordance with E.O. No. 40. Petitioner also abandons its initial stance regarding the
need for implementing rules and regulations, and now argues that even without its IRR, R.A. No. 9184 can be
understood and enforced. Petitioner adds that there is no provision of law or jurisprudence which requires that there
must first be an IRR before a law takes effect, and adds that NFA Administrator Arthur C. Yap and his subordinates
cannot suspend the operation of R.A. No. 9184 and order that bidding be conducted in accordance with E.O. No. 40

which was already repealed. Petitioner also insists that there was an irregularity in the bidding process as the
observers presented by respondents were allegedly not independent and cannot be relied upon to observe the
process diligently. Petitioner further insists that the presence or absence of observers in the bidding process is a
question of fact which the CA cannot tackle in a petition for certiorari under Rule 65. As such, the CA should have
remanded the case to the RTC for the determination of the question of fact. [27]

On the other hand, respondents through the Office of the Government Corporate Counsel (OGCC), counter
that petitioner failed to present any evidence before the RTC and the CA to substantiate its claim that the NFA-RBAC
was not constituted in accordance with R.A. No. 9184. Having alleged a violation of law, it was incumbent upon
petitioner to prove by sufficient evidence that there was indeed such violation. The OGCC points out that unlike
petitioner, respondents were able to prove sufficiently that there were actually three observers present during the
bidding process, which fact the RTC failed to consider. Moreover, the OGCC argues that respondents reliance on E.O.
No. 40, pending the promulgation of the IRR of R.A. No. 9184, was allowed by Section 77 [28] of IRR-A. There was
likewise no violation of any clear and unmistakable right of petitioner as to warrant the issuance of the writ of
preliminary injunction. The OGCC points out that the rejection of petitioners application was actually petitioners own
fault because petitioner failed to submit the necessary documents despite several notices. Finally, the OGCC
stresses that the trial court judge issued the writ of preliminary injunction in violation of the law and with grave
abuse of discretion because it effectively and indefinitely renewed and extended the contract between the parties
contrary to jurisprudence that no court can compel a party to agree to a contract through the instrumentality of a
writ of preliminary injunction.[29]

Essentially, the sole issue for our resolution is whether the CA erred in setting aside the RTC orders which
granted injunctive relief to petitioner.

The petition is bereft of merit.

Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, provides the grounds for the issuance
of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or nonperformance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the rights of the

applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.

Based on the foregoing provision, we held in Philippine Ports Authority v. Cipres Stevedoring & Arrastre,
Inc.,[30] to wit:
A preliminary injunction is an order granted at any stage of an action prior to judgment
of final order, requiring a party, court, agency, or person to refrain from a particular act or acts. It
is a preservative remedy to ensure the protection of a partys substantive rights or interests
pending the final judgment in the principal action. A plea for an injunctive writ lies upon the
existence of a claimed emergency or extraordinary situation which should be avoided for
otherwise, the outcome of a litigation would be useless as far as the party applying for the writ is
concerned.
At times referred to as the Strong Arm of Equity, we have consistently ruled that there is
no power the exercise of which is more delicate and which calls for greater circumspection than
the issuance of an injunction. It should only be extended in cases of great injury where courts of
law cannot afford an adequate or commensurate remedy in damages; in cases of extreme
urgency; where the right is very clear; where considerations of relative inconvenience bear
strongly in complainants favor; where there is a willful and unlawful invasion of plaintiffs right
against his protest and remonstrance, the injury being a continuing one, and where the effect of
the mandatory injunction is rather to reestablish and maintain a preexisting continuing relation
between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new
relation.
For the writ to issue, two requisites must be present, namely, the existence of
the right to be protected, and that the facts against which the injunction is to be
directed are violative of said right. It is necessary that one must show an unquestionable
right over the premises.[31]

Thus, the following requisites must be proved before a writ of preliminary injunction, be it mandatory or
prohibitory, will issue:
(1)

The applicant must have a clear and unmistakable right to be protected,


that is a right in esse;

(2)

There is a material and substantial invasion of such right;

(3)

There is an urgent need for the writ to prevent irreparable injury to the applicant; and

(4) No other ordinary, speedy, and adequate remedy exists to prevent the infliction of irreparable
injury.[32]

In this case, it is apparent that when the RTC issued its December 1, 2005 Order, petitioner has no more
legal rights under the service contract which already expired onSeptember 15, 2003. Therefore, it has not met the
first vital requisite that it must have material and substantial rights that have to be protected by the courts. [33] It
bears stressing that an injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will
not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a
cause of action. There must exist an actual right. [34] Verily, petitioner cannot lay claim to an actual, clear and
positive right based on an expired service contract.

Moreover, well-entrenched in this jurisdiction that no court can compel a party to agree to a contract
through the instrumentality of a writ of preliminary injunction. [35] A contract can be renewed, revived or extended
only by mutual consent of the parties.[36] By issuing the assailed orders most particularly its December 1, 2005
Order, the RTC in effect extended the life of the parties expired contract in clear contravention of our earlier
pronouncements.

In sum, we find that the CA committed no reversible error in rendering the assailed decision which would
warrant the modification, much less, the reversal thereof.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision dated July 18,
2007 of the Court of Appeals in CA-G.R. SP No. 93642 isAFFIRMED.

With costs against the petitioner.

BP
PHILIPPINES,
INC.
(FORMERLY
vs.
CLARK TRADING CORPORATION, Respondent.

BURMAH

CASTROL

PHILIPPINES,

INC.), Petitioner,

This Petition for Review on Certiorari under Rule 46 of the Rules of Court assails the Court of Appeals Decision 1dated
August ? 2006 and Resolution2 dated October 30, 2006 in CA G.R. ------- entitled
Burmah Castrol Philippines, Inc. v. Clark Trading Corporation, which affirmed the Decision 3 dated December 15,
2002 of the Regional Trial Court (RTC), Branch 57, Angeles City in Civil Case No. 9301.
BP Philippines, Inc. (petitioner), a corporation "engaged in the development, manufacture, importation, distribution,
marketing, and wholesale of: (i) the products of the BURMAH CASTROL GROUP, including, x x x the CASTROL range
of lubricants and associated products x x x," 4 filed a Complaint5 for "injunction with prayer for preliminary injunction
and temporary restraining order (TRO) and damages" in the RTC against respondent Clark Trading Corporation,
owner of Parkson Duty Free, which, in turn, is a duty free retailer operating inside the Clark Special Economic Zone
(CSEZ). Parkson Duty Free sells, among others, imported duty-free Castrol products not sourced from petitioner.
Petitioner alleged that sometime in 1994 it had entered into a Marketing and Technical Assistance Licensing
Agreement6 and a Marketing and Distribution Agreement 7 (agreements) with Castrol Limited, U.K., a corporation

organized under the laws of England, and the owner and manufacturer of Castrol products. Essentially, under the
terms of the agreements,8 Castrol Limited, U.K. granted petitioner the title "exclusive wholesaler importer and
exclusive distributor" of Castrol products in the territory of the Philippines. 9 Under the July 22, 1998 Variation
"territory" was further clarified to include duty-free areas.10
Petitioner claimed that respondent, by selling and distributing Castrol Products 11 not sourced from petitioner in the
Philippines, violated petitioners exclusive rights under the agreements. Despite a cease and desist letter 12dated
September 14, 1998 sent by petitioner, respondent continued to distribute and sell Castrol products in its duty-free
shop. Petitioner, citing Yu v. Court of Appeals13 as basis for its claim, contended that the unauthorized distribution
and sale of Castrol products by respondent "will cause grave and irreparable damage to its goodwill and
reputation."
To support the application for TRO, petitioner presented the testimony of a certain Farley 14 Cuizon, one of the people
who conducted a test-buy on October 30, 1998 at Parkson Duty Free. 15 Cuizon testified that he had purchased one
box containing twelve (12) bottles with red caps of Castrol GTX motor oil, and that these red caps signified that the
Castrol motor oil did not come from petitioner, since the bottles of Castrol motor oil petitioner sold had white caps.
Moreover, Cuizon further testified that the bottles of Castrol motor oil bought from Parkson Duty Free had on them
printed labels stating that these "may not be resold outside North America." 16 However, on cross-examination, he
testified that no patent violation existed since the red caps on the Castrol GTX products were not significant.
On March 4, 1999, the RTC issued an Order directing the issuance of a TRO for a period of twenty (20) days
enjoining respondent "from selling and distributing Castrol products until further orders x x x." 17
On April 15, 1999, the RTC denied petitioners prayer for the issuance of a writ of preliminary injunction, there being
no sufficient justification for the relief.18
Respondent, in its answer,19 stated that petitioner had no cause of action. Respondent alleged that it was a stranger
to the agreements, it being neither a party nor a signatory thereto. Based on the theory that only parties to a
contract were bound by it, respondent claimed that it could not be held liable for violations of the terms of the
agreements. While respondent admitted that it distributed and sold Castrol products, it also posited that it only
conducted its business within the confines of the CSEZ in accordance with Executive Order Nos. 140, 20 25021and
250-A.22 Since petitioner was not authorized to operate, distribute and sell within the CSEZ, respondent did not
violate the agreements because its efficacy only covers an area where petitioner is allowed by law to distribute.
After trial on the merits, the RTC dismissed the complaint. It ruled that the factual circumstances of the Yu case
were different from the present case since respondent was operating a duty-free shop inside the CSEZ. It noted that
"the Castrol products sold by [respondent] therefore [was] legal provided that they only [sold] the same in their
store inside Clark and to customers allowed to make said purchase and for their consumption." 23 With regard to the
propriety of the issuance of a preliminary injunction, the RTC ruled:
[Petitioner] failed to show xxx [any] act by [respondent] [that constitutes] an injurious invasion of its rights
stemming from a contract it signed with another party coupled by the limited scope of the transaction of
[respondent] and its customers.
Hence, [petitioner] cannot be entitled to an injunction in the instant case. It has not shown that it has a right which
must be protected by this court, and it failed to show also that defendant is guilty of acts which [violate] its rights."
xxxx
WHEREFORE, premises considered, the complaint filed by [petitioner] is hereby ordered DISMISSED. 24
On appeal, the Court of Appeals affirmed the ruling of the RTC. Petitioner was not able to establish the existence of
a clear legal right to be protected and the acts which would constitute the alleged violation of said right. The
circumstances under which the Yu case was decided upon were different from that of the present case. The Court of
Appeals pointed out the different circumstances in the following manner:
Firstly, in Yu, the High Court did not make a final determination of the rights and obligations of the parties in
connection with the exclusive sales agency agreement of wall covering products between Philip Yu and the House of
Mayfair in England. Said case reached the High Court in connection with the incident on the preliminary injunction
and the main suit for injunction was still pending with the Regional Trial Court of Manila. The High Court

categorically stated that their "observations" do not in the least convey the message that they "have placed the
cart ahead of the horse, so to speak." This is the reason why in the dispositive portion of said case, the High Court
remanded the case to the court of origin.
In the instant case, the trial court already rendered its assailed Decision which found that [petitioner] has not shown
that it has a right which must be protected and that [respondent] is not guilty of acts which violate [petitioners]
right. Thus, We fail to see how the High Courts "observations" in the Yu case should be cited as a controlling
precedent by [petitioner].
Secondly, in Yu, it appears that Philip Yu has an exclusive sales agency agreement with the House of Mayfair in
England since 1987 to promote and procure orders for Mayfair wall covering products from customers in the
Philippines. Despite [the] said exclusive sales agency agreement, Yus dealer, Unisia Merchandising Co., Inc.,
engaged in a sinister scheme of importing the same goods, in concert with the FNF Trading in West Germany, and
misleading the House of Mayfair into believing that the wallpaper products ordered via said trading German firm
were intended for shipment to Nigeria, although they were actually shipped to and sold in the Philippines.
In the case at bar, [respondent], who is a registered locator doing business at the Parkson Duty Free Shop within the
[CSEZ] administered by the Clark Development Corporation, was not a dealer of [petitioner] nor was there any
business dealing or transaction at all between [petitioner] and [respondent]. In fact, it was established in evidence,
through the testimony of Adrian Phillimore, [petitioner]s very own witness, that respondent was already selling
imported Castrol GTX products even prior to the execution of the Variation to Marketing and Distribution Agreement
dated 23 July 1998 between [petitioner] and Castrol Limited, a corporation established under the laws of England.
Further, [petitioner] failed to show that [respondents] duty free importation of said Castrol GTX products which
were sold at its Parkson Duty Free Shop was a sinister scheme employed by [respondent] in order to by-pass
[petitioner].
Thirdly, in Yu, the House of Mayfair of England, in its correspondence to FNF Trading of West Germany, even took
the cudgels for Philip Yu in seeking compensation for the latters loss as a consequence of the scheme of the dealer
Unisia Merchandising Co., Inc., in concert with FNF Trading.
In the case at bar, [petitioner] did not allege in its Complaint nor prove who the supplier of [respondent] was with
respect to said Castrol GTX products sold in Parkson Duty Free Shop. There is no showing that [respondent] sought
Castrol Limited of England in order to procure Castrol GTX products for retailing inside the duty free shop of
[respondent] within the Clark Special Economic Zone, with the intention of violating the purported exclusive
marketing and distributorship agreement between [petitioner] and Castrol Limited of England. Neither do We find
any showing that Castrol Limited of England took up the cudgels for [petitioner], by corresponding with
[respondent], in connection with the latters retailing of Castrol GTX products with red caps in its duty free shop at
the Clark Special Economic Zone.
Fourthly, in Yu, the House of Mayfair in England was duped into believing that the goods ordered through FNF
Trading of West Germany were to be shipped to Nigeria only, but the goods were actually sent to and sold in the
Philippines. Considering this circumstance, the Supreme Court stated that "(a) ploy of this character is akin to the
scenario of a third person who induces a party to renege on or violate his undertaking under a contract, thereby
entitling the other contracting party to relief therefrom (Article 1314, New Civil Code)."
In the instance case, there is no evidence that any party was duped and that [respondent], who is not a privy to the
marketing and distribution agreement between [petitioner] and Castrol Limited of England, employed any sinister
scheme or ploy at all. We do not find any showing of a scenario whereby [respondent] induced any party to renege
or violate its undertaking under said agreement, thereby entitling [petitioner] to injunctive relief and damages.
Thus, [petitioners] insistence that [respondents] obligation to [petitioner] does not arise from contract, but from
law, which protects parties to a contract from the wrongful interference of strangers, does not have any factual or
legal basis.
xxxx
Considering the foregoing findings, [petitioner] is not entitled to a permanent injunction and damages. [Petitioner]
failed to establish the existence of a clear legal right to be protected and the acts of [respondent] which are
violative of said right. In the absence of any actual, existing, clear legal right to be protected, injunction does not lie
and consequently, there is no ground for the award of damages as claimed by [petitioner].

In any event, We take note, at this juncture, that [respondent] is a registered locator operating the Parkson Duty
Free Shop within the confines of the Clark Special Economic Zone. In said duty free operation, goods sold within the
duty free shops are imported duty free and also resold as such.
Section 1 of Executive Order No. 250, as amended, provides:
SECTION 1. Allowable Areas for Duty Free Shop Operation. - The moratorium on the establishment of duty free
stores/outlets imposed by E.O. No. 140 is hereby lifted. Accordingly, duty free stores/outlets, whether operated by
the government and/or private entities, may be established within the countrys international ports of entry subject
to the terms and conditions set forth in E.O. No. 46, as amended, and in the secured and fenced-in areas of special
economic zones/freeports pursuant to the provisions of the Bases Conversion and Development Act of 1992 (RA
7227), establishing the Subic Special Economic Zone/Freeport Zone, Clark Special Economic Zone, John Hay Special
Economic Zone, Poro Point Special Economic and Freeport Zone; RA 7922 (Establishing the Sta. Ana, Cagayan
Special Economic Zone and Freeport); RA 7903 (Creating the Zamboanga City Special Economic Zone and Freeport).
xxxx
WHEREFORE, premises considered, the appeal is DENIED for lack of merit. The Decision dated 15 December 2002
of the Regional Trial Court of Angeles City, Branch 57 in Civil Case No. 9301 is AFFIRMED.
Costs against [petitioner].25
Petitioner moved for reconsideration but the same was denied for lack of merit. 26
Hence, this petition.
Petitioner reiterates that it is entitled to have its proprietary rights under the agreements protected by an
injunction. It argues that the fact that respondent was operating inside the CSEZ was inconsequential since the
agreements specifically covered the whole Philippines, including duty-free zones pursuant to the agreements.
Moreover, petitioner claims that the Court of Appeals erred in affirming the RTC ruling that the Yu case does not
apply. Thus, respondents continued unauthorized, illegal and illegitimate sale of Castrol GTX motor oil has caused
petitioner to suffer damages to its goodwill and business reputation and resulted to losses in business opportunities.
Respondent, for its part, argues that the case should be dismissed for lack of merit. It contends that it is not a party
to the agreements and as such, under Article 1311 27 of the Civil Code, it cannot be bound to the contract. It also
argues that the Yu case is inapplicable here since, unlike in that case, unfair competition as defined under Article
2828 of the Civil Code is not present in the case now before us.
The facts of this case and the allegations of the parties raise the question of whether petitioner is entitled to
injunction against third-persons on the basis of its marketing and distribution agreements.
The petition is without merit.
We agree with the Court of Appeals that the Yu case is inapplicable to the present case. To reiterate and as pointed
out by the Court of Appeals, aside from the Yu case being issued during the pendency of the main action for
injunction, the Court made the following observation:
Another circumstance which respondent court overlooked was petitioners suggestion, which was not disputed by
herein private respondent in its comment, that the House of Mayfair in England was duped into believing that the
goods ordered through the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and
sold in the Philippines. A ploy of this character is akin to the scenario of a third person who induces a
party to renege on or violate his undertaking under a contract, thereby entitling the other contracting
party to relief therefrom (Article 1314, New Civil Code). The breach caused by private respondent was even
aggravated by the consequent diversion of trade from the business of petitioner to that of private respondent
caused by the latters species of unfair competition as demonstrated no less by the sales effected inspite of this
Courts restraining order. This brings Us to the irreparable mischief which respondent court misappreciated when it
refused to grant the relief simply because of the observation that petitioner can be fully compensated for the
damage. x x x.29 (Emphasis supplied.)

This badge of "irreparable mischief" as observed by the Court caused the Yu case to be remanded for the issuance
of a preliminary injunction.
In contrast, the present case deals with the main action for injunction. In Bacolod City Water District v. Labayen,30we
have discussed the nature of an action for injunction, to wit:
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.
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.1wphi1 As a matter of course, in an action for injunction, the auxiliary remedy of preliminary
injunction, whether prohibitory or mandatory, may issue. Under the law, the main action for injunction seeks a
judgment embodying a final injunction which is distinct from, and should not be confused with, the provisional
remedy of preliminary injunction, the sole object of which is to preserve the status quo until the merits can be
heard. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final
order. It persists until it is dissolved or until the termination of the action without the court issuing a final injunction.
(Emphasis supplied, citations omitted.)
In the present case, neither the RTC nor the Court of Appeals found any nefarious scheme by respondent to induce
either party to circumvent, renege on or violate its undertaking under the marketing and distribution agreements.
We note that no allegation was made on the authenticity of the Castrol GTX products sold by respondent. Thus,
there is nothing in this case that shows a ploy of the character described in the Yu case, so this is clearly
distinguishable from that case.
As we have already stated, the writ of injunction would issue:
Upon the satisfaction of two requisites, namely: (1) the existence of a right to be protected; and (2) acts which are
violative of said right. In the absence of a clear legal right, the issuance of the injunctive relief constitutes grave
abuse of discretion. Injunction is not designed to protect contingent or future rights. Where the complainants right
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.31
Respondent not being able to prove and establish the existence of a clear and actual right that ought to be
protected, injunction cannot issue as a matter of course. Consequently, the Court does not find any ground for the
award of damages.
WHEREFORE, the petition is DENIED. The Court of Appeal Decision in CA-G.R. CV No. ? is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.

NATIONAL
ASSOCIATION
OF
ELECTRICIY
CONSUMERS FOR REFORMS, INC. (NASECORE),
represented by PETRONILO ILAGAN; FEDERATION
OF VILLAGE ASSOCIATIONS (FOVA), represented
by SIEFRIEDO VELOSO; and FEDERATION OF LAS
PIAS VILLAGE (FOLVA), represented by BONIFACIO
DAZO,
Petitioners,

G. R. No. 190795

- versus -

Present:

ENERGY REGULATORY COMMISSION (ERC) and


MANILA ELECTRIC COMPANY, INC. (MERALCO),
Respondents.

CARPIO, J.,
Chairperson,
*
LEONARDO-DE CASTRO,
BRION,
PEREZ, and
SERENO, JJ.
Promulgated:
July 6, 2011

The Energy Regulatory Commission (ERC), created under the Electric Power Industry Reform Act of
2001(EPIRA),[1] used to apply the Return on Rate Base (RORB) method to determine the proper amount a
distribution utility (DU) may charge for the services it provides. The RORB scheme had been the method for
computing allowable electricity charges in the Philippines for decades, before the onset of the EPIRA. Section 43(f)
of the EPIRA allows the ERC to shift from the RORB methodology to alternative forms of internationally accepted
rate-setting methodology, subject to multiple conditions.[2] The ERC, through a series of resolutions, adopted the
Performance-Based Regulation (PBR) method to set the allowable rates DUs may charge their customers. [3] Meralco,
a DU, applied for an increase of its distribution rate under the PBR scheme docketed as ERC Case No. 2009-057 RC
(MAP2010 case) on 7 August 2009. Petitioners NASECORE, FOLVA, FOVA, and Engineer Robert F. Mallillin (Mallillin) all
filed their own Petitions for Intervention to oppose the application of Meralco. [4]

At the initial hearing, on 6 October 2009, the following entered their appearances: (1) Meralco, (2) Mallillin,
and (3) FOVA. Petitioners NASECORE and FOLVA failed to appear despite due notice. [5]

Meralco presented its first witness on 13 November 2009. At the date of hearing, FOLVA failed to appear
despite due notice.[6] Likewise, on 19 November 2009, the continuation of Meralcos presentation of its witness,
petitioners NASECORE, FOVA, and FOLVA all failed to appear despite due notice. [7] NASECORE had sent a letter
requesting that it be excused from the said hearing, but reserved its right to cross-examine the witness presented
by Meralco. The latter objected to this request by virtue of the ERCs Rules of Practice and Procedure. ERC ruled that
the absence of NASECORE and FOVA was deemed a waiver of their right to cross-examine Meralcos first witness. [8]

At the 26 November 2009 hearing, NASECORE and FOLVA again failed to attend the hearing despite due
notice. Upon motion by Meralco, ERC declared that NASECORE had waived its right to cross-examine the second
witness of Meralco for failure to attend the said hearing. ERC then gave Meralco five (5) days from said date of
hearing within which to file its Formal Offer of Evidence. FOVA and all the other Intervenors were, likewise, given ten
(10) days from receipt thereof to file their comments thereon and fifteen (15) days from said date of hearing to file
their position papers or Memoranda.[9]

On 1 December 2009, Meralco filed its Formal Offer of Evidence with compliance. On 7 December 2009, it
was directed by ERC to submit additional documents to facilitate the evaluation of its application.

Petitioner NASECORE claims that it was only on 8 December 2009, that it received Meralcos Formal Offer of
Evidence, together with a copy of the 7 December 2009 ERC Order. Thus, it believes that it has until 18 December
2009 to file its comment thereon.

On 10 December 2009, Petitioner NASECORE filed with ERC a Manifestation with Motion dated 9 December
2009 requesting that the ERC direct applicant Meralco to furnish intervenor NASECORE all the items in ERCs
directive/Order dated 7 December 2009; to furnish Intervenor NASECORE a copy of the Records of the Proceedings
of the hearings held on 19 and 26 November 2009; and to grant the same intervenor fifteen (15) days, from receipt
of applicants compliance with the ERCs Order dated 7 December2009, within which to file its comment to applicants
Formal Offer of Evidence.

On 14 December 2009,[10] Meralcos application in the MAP 2010 case was approved by ERC. Petitioner
NASECORE protests this claiming approval as premature, that there were still four days before the expiration of the
period given to it to file its opposition to the formal offer of evidence of Meralco, and before petitioner NASECORE
received its copy of the documents Meralco was required to additionally submit in the 7 December 2009 ERC Order.

A day after the aforementioned Decision, or on 15 December 2009, petitioner NASECORE allegedly
received the additional documents Meralco submitted in compliance with the ERCs 7 December 2009 Order.

Malillin filed his Motion for Reconsideration (MR) before the ERC. [11] Instead of filing their own motions for
reconsideration, petitioners came directly to this Court via a Petition for Certiorari under Rule 65 of the Rules of
Court with an Urgent Prayer for the Issuance of a Temporary Restraining Order (TRO) or Status Quo Order.
Allegations in the Instant Petition; Meralcos and
ERCs Comments

Petitioners main assertion is that the ERC Decision approving the MAP 2010 application of Meralco is null and
void for having been issued in violation of their right to due process of law. [12] They further ask this Court to stay the
execution of the aforementioned Decision for being void, to wit:

As already shown earlier, the assailed ERC Decision is a patent nullity due to lack of due
process of law. Thus, being a void decision, it can not (sic) be the source of any right on the part
of MERALCO to collect additional charges from their customers. Invariably, the 4.3 million
customers of MERALCO has (sic) no obligation whatsoever to pay additional distribution charges
to MERALCO. To implement such void ERC decision, is plainly oppressive, confiscatory, and unjust.
[13]

On 26 January 2010, Meralco filed its Comment to the instant Petition. Meralco contends that the said
Petition should be denied due course or dismissed for the following reasons:

1.

Petitioners have availed of an improper remedy;[14]

2.

Petitioners have failed to observe the proper hierarchy of courts; [15]

3.

Petitioners were amply afforded the right to participate in the proceedings and have thus been
afforded sufficient opportunity to be heard;[16] and

4.

Meralco has already voluntarily suspended the implementation of the approved MAP 2010 rates
rendering the issues raised in this Petition moot. [17]

Meralco furthermore opposes petitioners prayer for the issuance of a TRO or Status quo order. It argues
that petitioners failed to present an urgent and paramount necessity for the issuance of the writ considering that
Meralco already voluntarily suspended the implementation of the assailed Decision pending resolution of Mallillins
MR. In fact, on 1 February 2010, ERC issued an Order suspending the implementation of the 14 December 2009
Decision pending the resolution of Mallillins MR.

On 27 August 2010, ERC filed its Comment. The ERC argued that a Petition for Certiorari under Rule 65 is
not the proper remedy in the case at bar; that there was no denial of petitioners right to procedural due
process; and that its 10 March 2010 order has rendered the instant petition moot. In this Order, the ERC granted the
MR of Mallillin and directed the implementation of the therein reflected revised distribution rates.
New Allegations in the Reply and Meralcos Comment
Thereon

On 8 April 2010, petitioners filed their Reply to Meralcos Comment. In their Reply, petitioners, for the first
time, put forward the following arguments:

(1)

Meralco, from 2003-2008, has been earning more than the 12% rate of recovery considered by law
as just and reasonable.

Petitioners newly argue that the ERC erred in approving Meralcos application for increasing its charges in
spite of the validation by the Commission on Audit (COA), through a report, of a computation showing Meralcos
income as exceeding the 12% mandated by law. Petitioners conclude thus:

In view of the COA Audit Report (x x x), the position of the herein petitioners
were validated, i.e., that Meralcos rate increase of P0.0865/KWh granted in 2003 was not only
unnecessary but also unreasonable, hence MERALCO should not only be ordered to roll back its
rate but also to refund its excess revenues to consumers.

(2)

Questionable rate-setting methodology adopted by ERC.

According to petitioners, this Court ordered the ERC to consider the 2003 increase it granted to Meralco as
provisional until it has taken action on the COA Audit Report but that ERC disregarded this order because of its
adamant position that the PBR rate fixing methodology is the be-all-and-end-all of its rate fixing function while
sacrificing the interests of millions of consumers. [18]

They argue that it is not the validity of the rate setting methodology employed but the reasonableness of the rates
to be applied that ought to be the controlling factor in determining the rates that a public utility should be allowed
to implement.[19]

Thus, the ERC should not limit itself with the use of the PBR method if it would result in unreasonable rates.
Rather, the ERC should have the authority to employ any method so long as the result was reasonable to both
consumer and investor. In effect, petitioners are asking this court to adopt the end result doctrine, which was
pronounced by the U.S. Supreme Court in National Power Commission v. Hope Natural Gas Co.[20] and cited in the
concurring opinion of former Chief Justice Fred Ruiz Castro in Republic v. Medina.[21]

Petitioners contend that the use of the PBR method results in disadvantage to the public, viz:
In fine, MERALCO succeeded in wangling from the ERC through an internationally accepted ratesetting methodology (i.e, Performance Based Rate [PBR]) a rate that will not only guarantee that
its operations shall remain viable but a rate that will give it astronomical profits at the expense of
the consuming public whom it is obligated to serve.

A table showing that the common stockholders of Meralco, for the last 21 years, had earned 424% on their
actual investment, per year, was also presented by petitioners. Petitioners conclude that these numbers negate any
argument that Meralco needs a rate increase, irrespective of any under rate methodology applied. [22]
The Issue of the Validity of the PBR was not Squarely Raised in
this Petition; the Sole Issue is the Denial of Due Process

We have ruled that issues not previously ventilated cannot be raised for the first time on appeal, much less
when first proposed in the reply to the comment on the petition for review. [23] To allow petitioners to blindside
Meralco with such newly raised issues violates the latters due process rights. Having been raised for the first time,
this Court cannot rule on the issues regarding the unreasonableness of Meralcos rates and the validity of the choice
of the PBR method. If petitioners wanted to include these issues for resolution, the proper procedure was for them
to ask this Court to allow them to amend their Petition for the inclusion of the aforementioned issues. Thus, we rule

that the sole issue for resolution in this case is whether or not petitioners right to due process of law was violated
when the ERC issued its Order before the expiration of the period granted to petitioners to file their comment.
There Has Been No Denial of Due Process, at most only an
Irregularity in the Precipitate Issuance of the Assailed Decision,
which Irregularity ERC has Sought to Remedy

In Cooperative Devt. Authority v. Dolefil Agrarian Reform Beneficiaries Coop., Inc. et al., [24] it was held that
the appellate court violated the therein petitioners right to be heard when it rendered judgment against them
without allowing them to file their comment or opposition.

In the case at bar, petitioners were required to file their comment on the formal offer of evidence of
Meralco. However, the ERC rendered its Decision prior to the lapse of the period granted to petitioners. According to
petitioners, ERCs failure to accord them a reasonable opportunity to present their oppositions or comments on the
application of Meralco clearly denied them due process of law. The ERC committed grave abuse of discretion when it
deprived them of their opportunity to be heard.

This prompted Petitioners to file the present Petition on 20 January 2010.

This Court is of the Opinion that considering the facts in this case, including all the events that occurred
both prior to and subsequent to the issuance of the 14 December 2010 Decision, the ERC did not deprive
petitioners of their right to be heard.

Petitioners claim that that they were not given a chance to submit their evidence or memorandum in
support of their position that Meralco had been charging rates that were beyond the 12% reasonable rate of return
established in jurisprudence.[25] The records show, however, that they had been given notice to attend all the
hearings conducted by the ERC, but that they voluntarily failed to appear in or attend those hearings.

Furthermore, after the issuance of the assailed Order, Mallillin filed an MR before petitioners filed their
Petition in this Court. On 25 January 2010, the ERC issued an Order directing Petitioners NASECORE, FOLVA, and
FOVA to file their respective comments on Mallillins MR. Petitioners were given a period of ten days from receipt of
the order, to file their comments. The ERC also scheduled the hearing on the said MR on 5 February 2010.

On 26 January 2010, Meralco filed a Manifestation and Motion wherein it expressed its decision to
voluntarily suspend the implementation of the 14 December 2009 Decision pending the ERCs resolution of Mallillins
MR.

Instead of filing their comments, petitioners NASECORE and FOVA, through separate letters respectively
dated 28 January 2010 and 31 January 2010, sought to excuse themselves from participating in the proceedings
before the ERC on the ground that they have already filed the present Petition.

On 1 February 2010, the ERC issued an Order suspending the implementation of the herein questioned 14
December 2010 Decision pending the resolution of the MR.

During the 5 February 2010 hearing, only Meralco appeared. Neither petitioners nor Mallillin participated in
the proceedings.

On 10 March 2010, ERC issued an Order granting the MR with modification, the dispositive portion of which
reads:
WHEREFORE, the foregoing premises considered, the Motion for Reconsideration filed by
Engr. Robert F. Mallillin is hereby GRANTED WITH MODIFICATION. Accordingly, MERALCO is hereby
directed to implement the revised distribution rates, excluding all rate distortions, as shown in the
foregoing table. Consequently, the Order dated February 1, 2010 issued by the Commission
granting the deferment of the implementation of the Decision dated December 14, 2009 pending
final resolution of Engr. Mallillins motions is hereby LIFTED.
SO ORDERED.[26]
Where opportunity to be heard either through oral arguments or through pleadings is granted, there is no
denial of due process. It must not be overlooked that prior to the issuance of the assailed Decision, petitioners were
given several opportunities to attend the hearings and to present all their pleadings and evidence in the
MAP2010 case. Petitioners voluntarily failed to appear in most of those hearings.
Although it is true that the ERC erred in prematurely issuing its Decision, its subsequent act of ordering
petitioners to file their comments on Mallillins MR cured this defect. We have held that any defect in the observance
of due process requirements is cured by the filing of a MR. [27] Thus, denial of due process cannot be invoked by a
party who has had the opportunity to be heard on his MR. [28] Even though petitioners never filed a MR, the fact that
they were still given notice of Mallillins filing of a MR and the opportunity to file their comments thereto makes
immaterial ERCs failure to admit their comment in the MAP 2010 case. After all, petitioners allegations in their unfiled
comment could have still, easily and just as effectively, been raised in the MAP 2010 case by incorporating the
arguments in the comment to be filed in the MR case. It must be remembered that the standard of due process
impressed upon administrative tribunals allows a certain degree of latitude as long as fairness is not ignored. [29]
The opportunity granted by the ERC of, technically, allowing petitioners to finally be able to file their
comment in the case, resolves the procedural irregularity previously inflicted upon petitioners.

We find that there has been no denial of due process and that any irregularity in the premature issuance of
the assailed Decision has been remedied by the ERC through its Order which gave petitioners the right to
participate in the hearing of the MR filed by Mallillin.

Petitioners have Chosen the Wrong Remedy and the Wrong


Forum; the Real Motive for Bringing Petition was to Obtain an
indefinite TRO, this the Court cannot Countenance

Section 1, Rule 23 of the ERCS Rules of Procedure expressly provides for the remedy of filing a motion for
reconsideration, viz:
A party adversely affected by a final order, resolution, or decision of the Commission
rendered in an adjudicative proceeding may, within fifteen (15) days from receipt of a copy
thereof, file a motion for reconsideration. In its motion, the movant may also request for
reopening of the proceeding for the purpose of taking additional evidence in accordance with
Section 17 of Rule 18. No more than one motion for reconsideration by each party shall be
entertained.

Rule 65 of the Rules of Civil Procedure provides that a petition for certiorari may be filed when there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law. The plain and adequate remedy
referred to in Rule 65 is a motion for reconsideration of the assailed decision. [30] Thus, it is a well-settled rule that
the filing of a motion for reconsideration is a condition sine qua non before the filing of a special civil action for
certiorari.[31] The purpose of this rule is to give the lower court the opportunity to correct itself. [32] However, this
requirement is not an ironclad rule. The prior filing of a motion for reconsideration may be dispensed with if
petitioners are able to show a concrete, compelling, and valid reason for doing so. [33] The Court may brush aside the
procedural barrier and take cognizance of the petition if it raises an issue of paramount importance and
constitutional significance.[34] Thus:
True, we had, on certain occasions, entertained direct recourse to this Court as an exception
to the rule on hierarchy of courts. In those exceptional cases, however, we recognized an
exception because it was dictated by public welfare and the advancement of public policy, or
demanded by the broader interest of justice, or the orders complained of were found to be
patent nullities, or the appeal was considered as clearly an inappropriate remedy. [35]

Petitioners claim that they did not file any motion for reconsideration with the ERC in order to prevent the
imminent miscarriage of justice, that the issue involves the principles of social justice, that the Decision sought to
be set aside is a patent nullity and that the need for relief therefore is extremely urgent [36]; because they believe
that the same would be a futile exercise considering that the ERC had blatantly disregarded the Supreme Court
directive to consider the last increase of Meralco as provisional until ERC has taken action on the COA Audit Report;
[37]

and because an appeal would be slow, inadequate, and insufficient. [38]


They also claim that the direct resort to the Supreme Court resorted to by them is in order to timely

prevent a grave injustice to the 4.3 million customers of Meralco who stand to suffer by reason of a patently void
decision by ERC which would result in additional monthly billing of at least half a billion pesos; [39] because time is of
the essence; and because transcendental constitutional issues are involved in this case. [40]
Petitioners further argue that their decision to go directly to this Court is justified because of the number of
consumers affected by the said Decision; because the amount involved in the controversy is so huge (P605.25
million [plus 12% VAT] additional billing per month); because it is violative of the provisions of EPIRA; because it is

contrary to the constitutional provisions on social justice, and because it is in utter disregard of the COA Audit
Report.[41]
We do not uphold petitioners arguments on this matter.
In Cervantes v. CA,[42] this Court ruled:
It must be emphasized that a writ of certiorari is a prerogative writ, never demandable as a
matter of right, never issued except in the exercise of judicial discretion. Hence, he who seeks a
writ of certiorari must apply for it only in the manner and strictly in accordance with the
provisions of the law and the Rules. Petitioner may not arrogate to himself the determination of
whether a motion for reconsideration is necessary or not. To dispense with the requirement of
filing a motion for reconsideration, petitioner must show a concrete, compelling, and valid
reason for doing so, which petitioner failed to do. Thus, the Court of Appeals correctly dismissed
the petition.

The general statements used by Petitioner to excuse their direct recourse to this Court are not the
concrete, compelling, and valid reasons required by jurisprudence to justify their failure to comply with the
mandated procedural requirements. In addition to this, the urgency of the resolution of matters raised by
petitioners is negated, by the fact that rates approved by the ERC, in the exercise of its rate-fixing powers, are in a
sense, inherently only provisional.
Furthermore, this Court finds that the real motive behind the filing of the present Petition is to obtain an
indefinite TRO and this, the Court cannot countenance. Section 9, Rule 58 of the Rules of Court provides the rules
for permanent injunctions, to wit:
Sec. 9. When final injunction granted.
If after the trial of the action it appears that the applicant is entitled to have the act or acts
complained of permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or continuance of the act or acts
or confirming the preliminary mandatory injunction.

Petitioners assert that this Court should issue a TRO because of the huge amount that would unduly
burden the consumers with the continued application of the MAP 2010rates. According to petitioners, if not stayed, the
present financial hardships of 4.3 million MERALCO customers due to the global financial meltdown and the recent
calamities in the country will surely further worsen. Petitioners also claim that there is an extreme urgency to
secure a TRO, considering that the assailed Decision is immediately executory.
The purpose of a TRO is to prevent a threatened wrong and to protect the property or rights involved from
further injury, until the issues can be determined after a hearing on the merits. [43] Under Section 5, Rule 58 of the
1997 Rules of Civil Procedure, a TRO may be issued only if it appears from the facts shown by affidavits or by a
verified application that great or irreparable injury would be incurred by an applicant before the writ of preliminary
injunction could be heard.

If such irreparable injury would result from the non-issuance of the requested writ or if the extreme
urgency referred to by petitioners indeed exists, then they should have been more vigilant in protecting their rights.

As they have all been duly notified of the proceedings in the ERC case, they should have appeared before the ERC
and participated in the trials.

We find that petitioners erred in thinking that the non-issuance of the TRO they requested would put
consumers in danger of suffering an irreparable injury. But this asserted injury can be repaired, because, had
petitioners participated in the proceedings before the ERC and the latter had found merit in their appeal, the undue
increase in electric bills shall be refunded to the consumers.

All the other issues raised by petitioners in connection with the MAP 2010 case are factual in nature and
should be raised before the ERC not before this Court. Allegations and issues in connection with the rate increases
under ERC Case No. 2008-018- RC and ERC Case No. 2008-004-RC, including the question of whether Meralco
improperly exceeded the 12% maximum rate of return provided by law, are more properly to be disposed of in
another pending case, G.R. No. 191150.[44]

Before finally disposing of this case, we deem it proper to warn the ERC that it cannot give a deadline to
parties before it that it will not respect. Even though the ERC, as an administrative agency, is not bound by the
rigidity of certain procedural requirements, it is still bound by law and practice to observe the fundamental and
essential requirements of due process in justiciable cases presented before it.

WHEREFORE, the instant petition is hereby DISMISSED.

SPS. GONZALO T. DELA ROSA & CRISTETA


DELA ROSA,
Petitioners,
- versus HEIRS OF JUAN VALDEZ and
POTENCIANO
MALVAR
AND
MALVAR,
Respondents.

SPOUSES
LOURDES

G.R. No. 159101


Present:
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:
July 27, 2011

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court with Prayer for Temporary Restraining
Order and/or a Writ of Preliminary Injunction assailing the Decision [1] dated June 10, 2003 and Resolution [2] dated
July 24, 2003 of the Court of Appeals in CA-G.R. SP No. 76081. The Court of Appeals found that Judge Felix S.
Caballes of the Regional Trial Court (RTC), Branch 71 of Antipolo City, did not commit grave abuse of discretion in
issuing the Orders dated December 16, 2002[3] and February 28, 2003[4] in Civil Case No. 00-6015, which granted
the issuance of a writ of preliminary mandatory injunction, placing spouses Juan [5] and Apolinaria Valdez (spouses
Valdez) and spouses Potenciano and Lourdes Malvar (spouses Malvar) in possession of Lot 4, Psd-76374, located in
Barrio Sta. Cruz, Antipolo City, Rizal, with an area of 103 hectares (subject property).

The instant Petition traces its roots to a Complaint for Quieting of Title and Declaration of Nullity of Transfer
Certificates of Title[6] involving the subject property, filed before the RTC by Manila Construction Development
Corporation of the Philippines (MCDC), against Gonzalo and Cristeta dela Rosa (spouses Dela Rosa) and Juan, Jose,
Pedro and Maria, all surnamed De la Cruz, docketed as Civil Case No. 00-6015. Complaints-in-intervention were filed
in the said case by (1) North East Property Ventures, Inc. (NEPVI), [7] and (2) spouses Valdez and spouses Malvar.
[8]

The spouses Malvar were the grantees/assignees under a Deed of Absolute Transfer/Conveyance [9] over the

subject property executed by the spouses Dela Rosa on September 6, 2001.

The RTC took note of the following facts in its Order dated December 16, 2002:
In its complaint, plaintiff MCDC in substance states that: thru its President, Honor P.
Moslares, the subject property consisting an area of 103 hectares was acquired by virtue of the
Deed of Absolute Sale executed on January 16, 1996. It is further stated that Juan Valdez and
Apolinaria Valdez were awarded with Sales Patent after compliance with corresponding
requirements. Plaintiff MCDC and its predecessor-in-interest Juan Valdez have been in continuous,
adverse and open possession of the property in the concept of owners.
However, plaintiff MCDC has been unlawfully deprived of the possession and enjoyment
of the property because of the continuing acts of dispossession committed and perpetuated by

the defendants spouses Gonzales and Cristeta dela Rosa as well as the other defendants and
other occupants who have no property right at all. As a result plaintiff [MCDC] has suffered and
continues to suffer grave and irreparable damages and injuries; thus, the writ of preliminary
injunction is urgently necessary to prevent further acts of dispossession of plaintiff MCDC.
While in the Complaint-in-intervention of Intervenor North East Property Ventures, Inc. it
is substantially alleged that: It claims to be the co-owner to the extent of one half or fifty percent
(50%) of the subject parcel of land according to a Deed of Absolute Conveyance/Transfer for
valuable services to be rendered; and for the amounts to be advanced by intervenor corporation
needed to update the real estate taxes; and to clear the title of Juan Valdez from overlapping titles
from the adverse claim of the interlopers; and the removal of the defendants and other occupants
from the disputed property. Intervenor North East Property Ventures, Inc. sought for the relief to
be placed in possession of the property by the process of the writ of mandatory injunction.
Whereas, in the subsequent complaint-in-intervention, intervenors Valdez spouses state
that they are the absolute owners of the subject parcel of land being the vendees/grantees of
Sales Patent No. 38713 dated September 5, 1983 which was preceded by Sales Application dated
July 21, 1968 and Order of Sales Patent No. (IV-1) 13442 issued on August 31, 1983, and paid
under official receipt No. 6010195. On the other hand, intervenors Malvar spouses allege that
they are the grantees/assignees under the Deed of Absolute Transfer/Conveyance executed on
September 6, 2001 by the intervenors spouses Valdez.
Indubitably, the pleadings reveal admitted and uncontroverted facts, to wit:
1.

The subject matter of this case is a parcel of land located at Barrio


Sta. Cruz, Antipolo City consisting of one hundred three (103) hectares,
more or less;

2.

Defendants dela Rosa spouses and Intervenors Valdez spouses


have been in possession of the said parcel of land in question;

3.

Several portions of the disputed property have been occupied by


the other unknown defendants and numerous occupants;

4.

Certification dated April 11, 2002 certified that Transfer Certificate


of Title No. 541423-A was not recorded in the Registry of
Deeds, Marikina City;

5.

Certification dated April 12, 2002 certified that Transfer Certificate


of Title No. 541423-A was not recorded in the Registry of
Deeds, Antipolo City.

To dovetail the uncontroverted or admitted facts and the evidence presented, this Court
has found that:
On the side of plaintiff MCDC:
1.

MCDCs right or claim on the disputed parcel of land is based on Sales Patent
No. 38713 issued in the name of plaintiff-intervenor Juan Valdez;

2.

The price or consideration stipulated in the Deed of Absolute Sale dated


January 16, 1996 covering the realty was not paid; thus, the sale is simulated
according to the handwritten letter dated April 5, 2002 of plaintiff MCDC and
according to the Joint Venture Agreement;

3.

The terms and conditions of the Joint Venture Agreement were not complied
with as shown by the very allegations in paragraphs 12, 14 and 15 by the plaintiff
[MCDC] in its complaint against defendant Dela Rosa spouses.

On the part of defendants Dela Rosa spouses:


1.

Defendants Dela Rosa have been in the physical possession of the


substantial portions of the questioned property;

2.

They base their claim of possession and ownership: Firstly, on the Titulo de
Propriedad No. 4136 that was previously nullified in the Intestate Estate of Don
Mariano San Pedro y Esteban vs. Court of Appeals reported in Volume 265
Supreme Court Reports Annotated page 733; Secondly, Transfer Certificate of

Title No. 451423-A in the name of defendant Cristeta dela Rosa shows on its
face the following:
a. June 16, 1934 was certified the date of original registration; while, the dates
of survey of the subject land were on July 14-25, 1969 and the approval
was on June 30, 1971;
b. The technical description of the disputed property Lot 4 of the plaintiff
[MCDC] in the Sales Patent No. 38713 was copied and manipulated in
TCT No. 451423-A to be as Lots 4-A and 4-B;
3. TCT No. 451423-A was not recorded in the Registry of Deeds of Marikina according to
the certification dated April 11, 2002 and was not recorded in the Registry of
Deeds of Antipolo City per certification dated April 12, 2002.
On the side of plaintiff-intervenor North East Property Ventures, Inc.:
1.
2.
3.

Deed of Absolute Transfer/Conveyance executed on 3 rd September 1999 by


the plaintiffs-intervenors Juan Valdez and Apolinaria Valdez;
Special Power of Attorney dated also 3rd September 1999;
Complaint-in-Intervention failed to attach any document showing
accomplishment of any of the terms and conditions of the transfer/conveyance.

On the part of plaintiff-intervenor spouses Juan Valdez and Apolinaria Valdez and plaintiffintervenor spouses Potenciano Malvar and Lourdes Malvar:
1.

Sales Application No. (IV-1) 1344-2 dated July 21, 1968 filed by plaintiffintervenor Juan Valdez;

2.

Official Receipt No. 6030195 dated April 26, 1983, payor Juan Valdez covering
Lot 4;

3.

Order: Issuance of Patent dated August 31, 1983 signed and issued on 05
September 1983;

4.

Sales Patent No. 38713 issued on September 05, 1983;

5.

Transmittal Letter dated December 3, 1993 of Sales Patent No. 38713 to the
Registry of Deeds, Marikina, Rizal, for registration and issuance of certificate of
title;

6.

1st Indorsement dated August 1, 1994 issued by the Land Registration


Authority;

7.

December 5, 1990 Official communication by Land Management Bureau signed


by Director Abelardo Palad, Jr. relating to 1st Indorment of Land Registration
Authority (LRA) clarifying the existence of Sales Patent No. 38713 issued in the
name of Juan Valdez for Lot 4, Psd-76374;

8.

August 15, 1994 Reply of Artemio B. Cana, Acting Register of Deeds, Marikina
City to the 1st Indorsement dated August 1, 1994 of the Land Registration
Authority;

9.

Letter of Official Inquiry dated November 21, 1994 by the Hon. Estanislao U.
Valdez on the request for assistance of Intervenor Juan Valdez on Sales Patent No.
37813;

10.

Letter dated August 1, 1994 of Juan Valdez to the Register of Deeds, Marikina
City, requesting for registration of Sales Patent No. 37813;

11.
12.

Plan Psd-76374 of Lot 4 covered by Sales Patent No. 37813;


Deed of Absolute Transfer/Conveyance dated 06 September 2001 executed by
Intervenors Juan Valdez and Apolinaria Valdez in favor of Intervenor Potenciano
Malvar family corporation, Noel Rubber Development Corporation;

13.

Deeds of Absolute Sale dated 06 September 2001 selling 150,000 or 15 hectares


of Lot 4 covered by Sales Patent.

Noticeably, plaintiff MCDC; Intervenor North East Property Ventures, Inc. and Intervenor
Valdez spouses and Malvar spouses under separate applications have commonly prayed for the
relief of mandatory injunction; although plaintiff MCDC initially sought for the relief of preventive
injunction; however, all the prayers for reliefs of mandatory injunction have conjoined against
defendants dela Rosa spouses and the other occupants of Lot 4, the land in controversy.
[10]
(Citations omitted.)

The RTC had to determine: (1) whether or not it should issue a writ of preliminary mandatory injunction in
Civil Case No. 00-6015, directing that a party or parties be placed in possession of the subject property; and (2) in
whose favor should such writ be issued.

In its Order dated December 16, 2002, the RTC granted the joint prayer for the issuance of a writ of
preliminary mandatory injunction of the spouses Valdez and spouses Malvar, decreeing thus:
WHEREFORE, premises considered, this Court orders the issuance of the Writ of
Preliminary Mandatory Injunction to place Intervenor Spouses Juan Valdez and Apolinaria Valdez
and the Intervenor Spouses Potenciano Malvar and Lourdes Malvar in the possession of the
subject parcel of land Lot 4 covered by Sales Patent No. 38713 dated September 5, 1983 in the
name of Juan Valdez upon posting the bond in the amount of P1,000,000.00 subject to the
approval of the Court which shall answer for damages that defendant may suffer if it is found that
said intervenors are not entitled thereto.[11]

The spouses Dela Rosa filed a Motion for Reconsideration of the aforementioned Order, but it was denied
by the RTC in another Order[12] dated February 28, 2003.According to the RTC, the issues and evidence presented by
the spouses Dela Rosa in their Motion for Reconsideration merely re-hashed those already thoroughly discussed in
the Order dated December 16, 2002, thus, there was no valid reason to alter, modify, or reverse said order.

Aggrieved, the spouses Dela Rosa filed a Petition for Certiorari before the Court of Appeals, which was
docketed as CA-G.R. SP No. 76081. The spouses Dela Rosa prayed that the Orders dated December 16, 2002 and
February 28, 2003 be annulled for having been issued by RTC Judge Caballes with grave abuse of discretion and
that the enforcement of the same orders be enjoined.

On June 10, 2003, the Court of Appeals rendered its Decision dismissing the spouses Dela Rosas Petition
for Certiorari and, thus, upholding the RTC Orders dated December 16, 2002 and February 28, 2003. The appellate
court agreed with the RTC that there are ample justifications for the issuance of the writ of preliminary mandatory
injunction in favor of the spouses Valdez and spouses Malvar. The dispositive portion of the Court of Appeals
judgment states that WHEREFORE, the petition is DISMISSED.Respondent judge is DIRECTED to try the case on the
merits with reasonable dispatch.[13]

On July 1, 2003, the spouses Dela Rosa filed a Motion for Reconsideration of the foregoing Decision,
however, it was denied for lack of merit by the Court of Appeals in its Resolution dated July 24, 2003.

The spouses Dela Rosa now comes before this Court via the instant Petition for Review with prayer for the
issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction.

In a Resolution[14] dated October 8, 2003, the Court issued a TRO enjoining the Court of Appeals, the RTC,
and the spouses Valdez and spouses Malvar, and their agents, representatives, and anyone acting on their behalf,
from implementing and enforcing the Decision dated June 10, 2003 and Resolution dated July 24, 2003 of the Court
of Appeals in CA-G.R. SP No. 76081. The Court also required the spouses Dela Rosa to post a bond in the amount
of P500,000.00 in cash or surety to answer for all damages which the spouses Valdez and spouses Malvar might
sustain by reason of the TRO if the Court should finally decide that the spouses Dela Rosa were not entitled thereto.

The spouses Valdez and spouses Malvar filed several motions to lift the TRO, but these were all denied by
the Court,[15] hence, the TRO remained effective and binding.

The spouses Dela Rosa made the following assignment of errors in the Petition at bar:
I
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR IN
AFFIRMING THE ORDER OF THE REGIONAL TRIAL COURT, BRANCH 71, ANTIPOLO CITY ORDERING
THE ISSUANCE OF A WRIT OF A PRELIMINARY MANDATORY INJUNCTION IN FAVOR OF THE PRIVATE
RESPONDENTS SPOUSES VALDEZ AND SPOUSES MALVAR IN ORDER TO TAKE AWAY FROM THE
PETITIONERS THE POSSESSION OF THE LAND IN QUESTION AND TO PLACE THE PRIVATE
RESPONDENTS IN POSSESSION THEREOF.
II
THE HONORABLE COURT OF APPEALS ERRED IN APPRECIATING THE EXHIBITS RELIED UPON BY
THE RESPONDENT JUDGE IN ISSUING THE WRIT OF PRELIMINARY MANDATORY INJUNCTION WHICH
ARE FAKE, FALSIFIED, SPURIOUS, AND NON-EXISTENT.
III
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR IN
SUSTAINING THE ISSUANCE OF A WRIT OF PRELIMINARY MANDATORY INJUNCTION WHICH
APPARENTLY AND GLARINGLY AMOUNTED TO A PREJUDGMENT OF THE CASE NOTWITHSTANDING
THE FACT THAT NO TRIAL ON THE MERITS HAS AS YET BEEN STARTED.
IV
THE HONORABLE COURT OF APPEALS ALSO SERIOUSLY ERRED WHEN IT DELIBERATELY IGNORED
THE ARGUMENTS RAISED IN THE MOTION FOR RECONSIDERATION DESPITE ITS OWN ADMISSION
THAT IT CANNOT PASS UPON THE FACTUAL FINDINGS OF THE RESPONDENT JUDGE. [16]

Essentially, the Court must resolve herein the issue of whether or not the Court of Appeals erred in
dismissing the spouses Dela Rosas Petition for Certiorari which, in turn, is dependent on the question of whether or

not the RTC committed grave abuse of discretion, amounting to lack or excess of jurisdiction, in issuing a writ of
preliminary mandatory injunction, which placed the spouses Valdez and spouses Malvar in possession of the subject
property during the pendency of Civil Case No. 00-6015. For this reason, the Court shall address and concern itself
only with the assailed writ, but not with the merits of the case pending before the RTC. A preliminary injunction is
merely a provisional remedy, adjunct to the main case and subject to the latter's outcome. It is not a cause of
action in itself.[17]

A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment
or final order. It may be: (1) a prohibitory injunction, which commands a party to refrain from doing a particular act;
or (2) a mandatory injunction, which commands the performance of some positive act to correct a wrong in the
past.[18]

Section 3, Rule 58 of the Revised Rules of Court, enumerates the grounds for the issuance of a writ of
preliminary injunction, whether prohibitive or mandatory:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained
of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.

A preliminary mandatory injunction is more cautiously regarded than a mere prohibitive injunction since,
more than its function of preserving the status quo between the parties, it also commands the performance of an
act. Accordingly, the issuance of a writ of preliminary mandatory injunction is justified only in a clear case, free from
doubt or dispute. When the complainant's right is doubtful or disputed, he does not have a clear legal right and,
therefore, the issuance of a writ of preliminary mandatory injunction is improper. While it is not required that the
right claimed by applicant, as basis for seeking injunctive relief, be conclusively established, it is still necessary to
show, at least tentatively, that the right exists and is not vitiated by any substantial challenge or contradiction. [19]
Sine dubio, the grant or denial of a writ of preliminary injunction in a pending case, rests on the sound
discretion of the court taking cognizance of the case since the assessment and evaluation of evidence towards that
end involve findings of facts left to the said court for its conclusive determination. Hence, the exercise of judicial
discretionby a court in injunctive matters must not be interfered with except when there is grave abuse of
discretion. Grave abuse of discretion in the issuance of writs of preliminaryinjunction implies a capricious and

whimsical exercise of judgment that is equivalent to lack of jurisdiction, or where the power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law. [20]

In the instant Petition, the Court finds that the RTC did not commit grave abuse of discretion in issuing the
writ of preliminary mandatory injunction in favor of the spouses Valdez and spouses Malvar. Consequently, the
Court of Appeals did not commit any reversible error in dismissing the spouses Dela Rosas Petition for Certiorari.

A scrutiny of the RTC Orders dated December 16, 2002 and February 28, 2003 easily reveals that these
were based on substantial evidence and pertinent jurisprudence.

In its Order dated December 16, 2002, the RTC thoroughly discussed its factual and legal bases for
granting the challenged writ in favor of the spouses Valdez and spouses Malvar:
This Court honestly believes, after in-depth evaluation of the material and relevant
averments in the pleadings, annexes thereto, and documents formally offered and admitted, and
the established and unconverted facts, that the joint application for mandatory injunction of the
Intervenors Valdez spouses and Malvar spouses is meritorious.
Firstly, because neither the plaintiff MCDC nor the intervenor North East Property
Ventures, Inc. has shown by credible facts to underwrite the clear legal right to be entitled to the
relief of injunction since their proprietary right or rights of dominion under their respective
muniments of title were subject to conditions which were not complied with correspondingly.
Notably, the Joint Venture Agreement (Annex I, Complaint-in-Intervention of Intervenor Valdez)
has qualified the Deed of Absolute Sale (Exhibit B) since both deeds involved the same parties
covering the same disputed parcel of land; hence, both deeds are to be interpreted jointly and to
be harmonized (Philippine National Construction Corporation vs. Mars Construction Enterprises,
Inc., 323 SCRA 624).
Secondly, consequentially because the parties primarily and ultimately affected by the continuing
and manifold acts of dispossession are the intervenors, the spouses Juan Valdez and Apolinaria
Valdez and the Malvar spouses, who evidently by the facts and circumstances borne out by the
pleadings and by the evidence, have already shown to have established clear legal rights to be
entitled to the relief of writ of mandatory injunction under the salutary ruling that enunciates:
x x x In Visayan Realty, Inc. vs. Meer[,] we ruled that the approval of a sales
application merely authorized the applicant to take possession of the land so
that he could comply with the requirements prescribed by law before a final
patent could be issued in his favor. Meanwhile, the government still remained
the owner thereof, as in fact the application could still be cancelled and the land
awarded to another applicant should it be shown that the legal requirements
had not been complied with. What divests the government of title to the land is
the issuance of the sales patent and its subsequent registration with the
Register of Deeds. x x x (Development Bank of the Philippines vs. Court of
Appeals, 253 SCRA 414, 419-420) Underlining supplied.
Other considerations why the relief of preliminary mandatory injunction precludes the
preventive injunction are: the acts of dispossession have become manifold and have perpetuated
with impunity by the defendants and those whose occupancies were derived from them and the
degree of violations of the rights of the plaintiffs-intervenors Valdez and Malvar has reached the
extremes on one hand; and the other the undisputed fact that the supposed title of ownership of
defendant dela Rosas, has been certified to be non-existent (Annexes B and C, Reply to
Opposition to Motion to Conduct Hearing etc.) by the concerned Registry of Deeds while the Titulo
de Propriedad No. 4136 where defendants dela Rosas right to occupy was fatuously derived was

nullified in the case of the Intestate Estate of Don Mariano San Pedro y Esteban vs. Court of
Appeals, 265 SCRA 733.
The situations as established relative to the preliminary mandatory injunction in this case
is clearly within the ambit of the exceptional or extreme urgency cases of: x x x 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 willful 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 x x x authoritatively
mentioned in G.R. No. 104782 prom. March 30, 1993, entitled Nelly Raspado vs. Court of Appeals,
220 SCRA 650, 653.
Measured by the parameters of judicial discretion specified in the immediate proceeding
paragraph, the grant of preliminary writ of mandatory injunction to place in possession of the
property in question intervenors Valdez Spouses including Intervenors Malvar Spouses would be
justified and consistent with the ruling that:
In effect, petitioners occupation of the land in question, after the denial
of its application for Miscellaneous Sales Patent, became subsequently
illegal. Petitioners members have, as a consequence, become squatters whose
continuous possession of the land may now be considered to be in bad
faith. This is unfortunate because squatters acquire no legal right over the land
they are occupying.
Although as a general rule, a court should not by means of a
preliminary injunction, transfer property in litigation from the possession of one
party to another, this rule admits of some exceptions. For example, when there
is a clear finding of ownership and possession of the land or unless the subject
property is covered by a torrens title pointing to one of the parties as the
undisputed owner. In the case at bench, the land subject of the suit is covered
by a torrens title under the name of NHA. (Cagayan de Oro City Landless
Residents Asso. Inc. vs. Court of Appeals, 254 SCRA 220, 232-233).
This aforecited ruling is squarely applicable in this case because, as previously shown,
the intervenors Valdez and Malvar have established a clear and legal right of ownership and
possession and the alleged TCT No. 451423-A of the defendants spouses dela Rosa is nonexistent.
Nevertheless, the existence in the land records of the Bureau of Lands now the Land
Management Bureau of the Sales Patent (Exhibit F) the recording in the Map of the Cadastral
module of the Lungsod Silangan of the subject property in the name of Juan Valdez are sufficient
actual caveat emptor to defendants dela Rosa and their privies, [assignees] or [transferees].Thus,
actual notice of the Sales Patent No. 38713 (Exhibit F) has a binding [effect] on defendants dela
Rosa and those whose rights were derived from them.[21]

Instead of summarily dismissing the spouses Dela Rosas Motion for Reconsideration of the Order dated
December 16, 2002, the RTC still extensively addressed in its Order dated February 28, 2003 each of the issues
raised by the spouses Dela Rosa in their motion, to wit:
With respect to the issue of absence of clear legal right on the part of the intervenors
Valdez spouses and Malvar spouses, the Court believes that the pieces of documentary evidence
detailed in the order sought to be reconsidered are overwhelming. While the thrust of defendant
spouses motion on the falsity or non-existence of the Sales Patent No. 37813 (Exhibit F) is
predicated on the letter dated October 2, 1994 of Abelardo Palad, Jr., Director of Lands
Management Bureau, however, the Court believes that the same bears no evidentiary value or
credence, simply because it is unsigned and without any certification or authentication. Besides,
the letter merely certifies that the alleged Sales Patent No. 38713 x x x does not appear to have
been recorded or entered in the Sales Patent Registry Book.

This Court perforce gave credence and probative value to the December 5, 1990 Official
Communication (Exhibit H) of Land Management Bureau, signed by Director Abelardo Palad, Jr.
stating in no uncertain terms that:
x x x In connection therewith, please be informed that a perusal to our
official records show that Sales Patent No. 37813 was issued by this Office in the
name of Juan Valdez for Lot 4, Psd-76374, situated in Sta. Cruz, Antipolo, Rizal,
covering an area of 1,033,760 square meters on September 5, 1983.
relative to the 1st Indorsement (Exhibit G) of the Land Registration Authority (LRA) clarifying the
existence of Sales Patent No. 38713 (Exhibit F) issued in the name of Intervenor Juan Valdez for
Lot 4, Psd-763774.
What is predominantly telling is the fact of payment under Official Receipt No. 6030195 (Exhibit E)
dated April 26, 1983 received by the then Bureau of Lands as due consideration by Intervenor
Valdez for the purchase of the subject parcel of land.
As regards the issue of non-violation of Intervenors rights by defendants dela Rosas on the ground
that a clear legal right has not been established, it would be too repetitious for the Court to restate what had been thoroughly and previously discussed in the assailed order like the other rehashed issues raised in the instant motion. The falsity of defendants claim as to the non-existence
of Sales Patent No. 38713 under the name of Intervenor Juan Valdez has also been shown and
explained by documents on record and therefore should need no further elucidation.
Nevertheless, to clear the minds of any air of doubt, the transmittal of the Letter (Annex Q,
Complaint-in-Intervention) dated December 3, 1993 of the Sales Patent No. 38713 (Exhibit F)
issued to Intervenor Valdez to the Registry of Deeds precisely states that:
We are forwarding to you the above-noted patent for registration and
issuance of the corresponding certificate of title.
Please notify the patentee as soon as the owners duplicate certificate
of title is ready for release.
as well as the August 15, 1994 Letter Reply (Exhibit I) of Artemio Cana, Acting Registry of Deeds
stating that:
In compliance and to comment your first Indorsement of August 1, 1994 relative
to the Sales Patent No. 38713 issued by the Bureau of Lands on September 5,
1983 in the name of Juan O. Valdez, which patent is sought to be registered, I
have the honor, very respectfully, to inform your good office that Original
Certification of title issued pursuant to Sales, Free and Homestead Patents, by
procedural standards followed in this office, are personally delivered by DENR,
PENRO Officials to this office, afterwhich, registration is effected upon
representation of its owners. (Underlining for emphasis.)
And the letter dated August 1, 1994 (Exhibit K) are indicia of efforts to have the Sales Patent No.
38713 (Exhibit F) registered and those efforts, having been entered in the day book of Registry of
Deeds of Marikina, as well as in the Land Registration Authority, is a constructive notice of the
registration of sales patent to bind the defendants, their representatives, attorneys and privies as
they have been bound by actual notice when defendants dela Rosa spouses claimed as theirs and
caused to have Lot 4, PSD-76374 technically described under Sales Patent No. 38713 (Exhibit F)
to be subdivided into Lot 4-A, Lot 4-B and Lot 4-C to be supplanted as the property described in
defendants Transfer Certificate of Title No. 451423-A. Defendants certificate of title therefore is
the proverbial skeleton hidden in the closet.
On the other hand, defendants-spouses dela Rosas assertions against the certifications on the
non-existence of their TCT No. 451423-A by the Registry of Deeds of Marikina City and the
Registry of Deeds of Antipolo City, by citing LRC Case No. 94-1492 pending also before this Court
only logically highlights or underscores the falsity of their Transfer Certificate of Title No. 451423A. Defendants dilemma is aggravated or compounded by the revelation in the technical
description of their Transfer Certificate of Title No. 451423-A that Lot 4, Psd-76374 of Intervenors
Sales Patent No. 38713 (Exhibit F) as pointed out in the preceding paragraph, was supplanted
therein. Likewise, the date of survey July 14-25, 1969 of the subject property Lot 4-Psd-76374 and
the date of approval June 30, 1971 was also copied from Intervenors Sales Patent No. 38713.
With reference to the issue as to the non-existence of extreme urgencies or necessity of
the writ of preliminary mandatory injunction; this Court has culled from the records that long
before or in 1993 the filing of an ejectment case (Civil Case No. 2107, Branch II, MTC, Antipolo

City) defendants dela Rosa had already intruded into the portions of the land in controvery
(Decision dated April 22, 1993, Annex D of the complaint of MCDC).
The indiscriminate disposition by defendants either by lease or sale of right has caused
and continued to cause grave and irreparable material damages and moral injuries to the
Intervenors. And because of the questionable and conflicting documents, the Deed of Absolute
Sale executed on July 28, 1976 in their favor covering the notorious Titulo de Propriedad No.
4136 that was nullified in the Intestate Estate of Don Mariano San Pedro y Esteban vs. Court of
Appeals, 265 SCRA 733 and because of the doubtful TCT No. 451423-A allegedly issued on 10 July
1974, the defendants were able to sell rights to occupy other portions of the subject property,
while other syndicated groups were emboldened to sell also rights of occupancy, thus conflicts of
rights have become inevitable resulting to the breakdown of peace and order in the communities.
Again it must be stressed that as a general rule a parcel of land in dispute cannot be
taken from one party and given to another by an injunctive writ. But that is not absolute or
without exception. The exception to the general rule is when there is a clear finding of ownership
of the land in litigation, as in this case. And the Court honestly believes that the grant of the
questioned writ to the herein intervenors falls within the exceptional cases (Nely Raspado vs.
Court of Appeals, 220 SCRA 650, 653; Cagayan de Oro Landless Residents Asso., Inc. vs. Court of
Appeals, 254 SCRA 232) for reasons previously discussed. Further the grant of the writ of
preliminary mandatory injunction is merely pendente lite, and the intervenors have already filed a
bond as required by the Court, in the amount of ONE MILLION PESOS (P1,000,000.00) for
defendants protection, if it is found that intervenors are not entitled thereto. [22]
Evidently, there are ample justifications for the grant by the RTC of a writ that places the subject property
in the possession of the spouses Valdez and spouses Malvar for the duration of the trial of Civil Case No. 006015. Sales Patent No. 38713, covering the subject property, had already been issued to Juan Valdez which makes
him, at the very least, the equitable owner of the said property. There is already a request for the registration of
Sales Patent No. 38713 pending before the Registry of Deeds of Marikina City.The spouses Valdez acknowledge the
transfer of the subject property to the spouses Malvar. In contrast, the title of the spouses Dela Rosa to the subject
property is nebulous. The spouses Dela Rosas title is based on TCT No. 451423-A in Cristeta dela Rosas name, which
is not registered with the Registry of Deeds of Marikina City or Antipolo City. TCT No. 451423-A is also traced back
to Titulo de Propriedad No. 4136, which, in the Intestate Estate of the late Don Mariano San Pedro y Esteban v.
Court of Appeals,[23] was already declared null and void, and from which no rights could be derived.

There is no reason for the Court to deviate from the foregoing findings of the RTC, as affirmed by the Court
of Appeals. It is worth stressing that the assessment and evaluation of evidence in the issuance of the writ of
preliminary injunction involves findings of facts ordinarily left to the trial court for its conclusive determination. The
Court has time and again ruled that conclusions and findings of fact of the trial court are entitled to great weight
and should not be disturbed on appeal, unless strong and cogent reasons dictate otherwise. This is because the trial
court is in a better position to examine the real evidence, as well as to observe the demeanor of the witnesses while
testifying in the case.[24]

There is likewise no merit in the spouses Dela Rosas contention that the RTC Orders dated December 16,
2002 and February 28, 2003 amounted to a prejudgment of the case, there being no trial on the merits of Civil Case
No. 00-6015 as yet. In Levi Strauss (Phils.) Inc. v. Vogue Traders Clothing Company, [25] the Court already explicated
that:

Indeed, a writ of preliminary injunction is generally based solely on initial and incomplete
evidence adduced by the applicant (herein petitioner). The evidence submitted during the
hearing of the incident is not conclusive, for only a "sampling" is needed to give the trial court an
idea of the justification for its issuance pending the decision of the case on the merits. As such,
the findings of fact and opinion of a court when issuing the writ of preliminary injunction are
interlocutory in nature. Moreover, the sole object of a preliminary injunction is to preserve
the status quo until the merits of the case can be heard. Since Section 4 of Rule 58 of the Rules
of Civil Procedure gives the trial courts sufficient discretion to evaluate the conflicting claims in an
application for a provisional writ which often involves a factual determination, the appellate courts
generally will not interfere in the absence of manifest abuse of such discretion. A writ of
preliminary injunction would become a prejudgment of a case only when it grants the main prayer
in the complaint or responsive pleading, so much so that there is nothing left for the trial court to
try except merely incidental matters. x x x. [26]

The RTC Orders dated December 16, 2002 and February 28, 2003 have settled nothing more than the
question of which party/parties is/are entitled to possession of the subject property while Civil Case No. 00-6015 is
still being heard. The findings of fact and opinion of the RTC, based on the evidence that had so far been submitted
by the parties, are merely interlocutory in nature. Even with its issuance of said Orders, the RTC is not precluded
from proceeding with Civil Case No. 00-6015 to receive additional evidence and hear further arguments that will
help said trial court to determine with finality the rightful owner/s and possessor/s of the subject property.

WHEREFORE, the Petition is DENIED. The Decision dated June 10, 2003 and Resolution dated July 24, 2003 of the
Court of Appeals in CA-G.R. SP No. 76081 areAFFIRMED. Furthermore, the TRO issued by the Court in its Resolution
dated October 8, 2003 is LIFTED and the surety bond posted by the spouses Dela Rosa isCANCELLED. The RTC,
Branch 71 of Antipolo City is ORDERED to proceed with the hearing of Civil Case No. 00-6015 with dispatch.
Costs against the spouses Dela Rosa.

JOY MART CONSOLIDATED CORPORATION, petitioners,


vs.
HON. COURT OF APPEALS, PHOENIX OMEGA DEVELOPMENT AND MANAGEMENT CORPORATION and
LIGHT RAIL TRANSIT AUTHORITY, respondents.
Does a trial court possess jurisdiction to dissolve a writ of preliminary injunction which is pending review
oncertiorari in the Court of Appeals?
In 1978-79, the government planned the Light Rail Transit (LRT) system to service the transportation requirements
of the commuting public from Baclaran to Balintawak Monument and vice versa. The property of Joy Mart at
Carriedo Street, Sta. Cruz, Manila, where the Isetann Department Store is located, and three (3) other adjoining
parcels of land (with a total area of 1,611 sq. m., on which stands the Presidente Hotel leased by Joy Mart) was
among the properties that would be needed for the LRT system and were being considered for expropriation should
negotiations for their acquisition fail. As a gesture of cooperation with the government, Joy Mart consented to sell
the property and give up its leasehold rights over the adjacent properties, provided, it would be given the first
option to redevelop the entire area denominated as the consolidated block of the LRT Carriedo station
encompassing Joy Mart's properties.
On September 8, 1982, while negotiations for the purchase of the properties were ongoing between Joy Mart and
the Special Committee on Land and Property Acquisition of the Light Rail Transit Authority (LRTA), the latter entered
into a contract with the Philippine General Hospital Foundation Inc. which had been granted the right, authority, and
license to develop the areas adjacent to the LRT stations and to manage and operate the concessions to be
established in Caloocan, Manila, and Pasay, with the right to sublease, assign, and transfer any of its rights and
interests therein.
On February 22, 1983, Joy Mart conveyed its property and waived its leasehold rights on the adjacent lots in favor
of the government, through the LRTA, under a Deed of Absolute Sale. The Deed provided, among other things, that
"upon recommendation of the special panel created by the LRTA Committee on Land and Property Acquisition. LRTA
agreed that Joy Mart, the owner of Isetann and lessee of the Presidente Hotel, should be given the first option in the
redevelopment of the consolidated block, notwithstanding their compensation for the property."
As partial compliance with the aforestated first option, the PGH Foundation subleased to Joy Mart the LRT Carriedo
station covering the consolidated block for the purpose of constructing a multi-storey building of first class
materials.
Subsequently, Joy Mart submitted to LRTA its plans for the construction of the building occupying the consolidated
block. However, LRTA informed Joy Mart that the proposed building should occupy only an area of 1,141.20 square
meters as the rest of the areas within the consolidated block would be used by the LRT station and as set-back area
or open space for the benefit of the commuting public.
When Joy Mart reminded LRTA of the contract provisions over the consolidated block, the former was assured that,
in the event any area in the consolidated block was to be released for redevelopment, the first option of Joy Mart
would be respected and implemented.

On August 30, 1984, an Addendum to the Sublease Agreement was executed between Joy Mart and the PGH
Foundation increasing the area to be used and occupied by Joy Mart. Aside from the increase of monthly rental and
provision for an escalation clause, Joy Mart was made to pay "goodwill" in the sum of P3.0 Million.
Pursuant to its understanding with, and the assurances of, LRTA, Joy Mart constructed an eight-storey building with
ten levels fully airconditioned in the subject area. Joy Mart had to borrow P50.0 Million for this project. The feasibility
study on the viability of this project was conditioned upon Joy Mart serving the business requirements in the LRT
Carriedo station and maintaining its first option to redevelop and occupy any available area therein.
On November 28, 1986, LRTA entered into Commercial Stalls Concession Contract with the Phoenix Omega
Development and Management Corporation ("Phoenix" for brevity) awarding to it all the areas and commercial
spaces within the three LRT terminals and the fifteen (15) on-line stations.
In the third quarter of 1987, Joy Mart learned of the contract between LRTA and Phoenix when construction activities
commenced within the consolidated block of the LRT Carriedo station.
Joy Mart made representations with the LRTA and reiterated its first option to redevelop the subject area, but to no
avail.
Joy Mart filed a complaint for specific performance of contract and damages for breach of contract with injunction
against the LRTA and Phoenix on August 21, 1987. The case entitled "Joy Mart vs. LRTA and Phoenix," was docketed
as Civil Case No. 87-41731 in the Regional Trial Court of Manila. Branch XXXII. Joy Mart asked that LRTA be ordered
to award to it, either by sale, or lease, the redevelopment of the area known as the consolidated block of the LRT
Carriedo station which is part of the area subject of the Deed of Absolute Sale dated February 22, 1983, executed
by Joy Mart in favor of the Government or LRTA. Joy Mart also asked the court to issue a writ of preliminary
injunction and/or restraining order "commanding the respondents (LRTA and Phoenix) individually and collectively,
their officers and employees, to cease and desist from the construction being had in the property adjacent to the
leased premises."
On September 25, 1987, the trial court, presided by Judge (now Court of Appeals Justice) Artemon D. Luna, after
hearing the parties and considering their respective memorandums in amplification of oral arguments, issued a writ
of preliminary injunction "commanding the defendant Phoenix to cease and desist from continuing with the
construction going on adjacent to the property on lease to the plaintiff by LRTA, until further orders from this court,
upon posting by the plaintiff of a P10,000.00 bond approved by the court, which may answer for any damages that
the defendants may sustain by reason of the issuance of this writ" (p. 41. Rollo).
Phoenix sought relief in the Court of Appeals by filing a Petition for Certiorari and Prohibition (CA-G.R. SP No. 12998)
praying the appellate court: (1) to require the trial court to immediately lift the writ of injunction and/or to refrain
from further carrying out or implementing it; and (2) after due hearing: (a) reverse and set aside the order granting
the writ of preliminary injunction; (b) dissolve the writ of injunction dated September 23, 1987; and (c) prohibit the
trial judge from taking cognizance of the case and to remand it to Branch IX of the Regional Trial Court of Manila
which had first taken cognizance of the case. The petition was docketed as CA-G.R. SP No. 12998 and raffled to the
Sixteenth Division of the Court of Appeals which gave due course to the petition but did not issue a restraining
order against the trial court.
Meanwhile, in the trial court, the LRTA and Phoenix filed separate answers to Joy Mart's complaint in Civil Case No.
87-41731. The pre-trial of the case was set on November 13, 1987. As Phoenix and Joy Mart were, exploring
avenues for an amicable settlement, the pre-trial conference was re-set on December 11, 1987, January 14, 1988,
and lastly on March 2, 1988 when it was declared terminated.
On May 30, 1988, while their certiorari petition to review the writ of preliminary injunction issued by Judge Luna
(CA-G.R. SP No. 12998) was still pending in the Court of Appeals, the LRTA and Phoenix filed in the trial court a joint
petition to dissolve the said Writ of Preliminary Injunction, offering to post a counterbond for that purpose. They
alleged that the writ of preliminary injunction was causing tremendous losses to LRTA and Phoenix because they
have been unable to use the commercial stalls in the consolidated block while Joy Mart could be compensated for
any loss it may suffer if the injunction were lifted; "that at a rate of P1,000.00 monthly rental per square meter, the
28 stalls would earn P305,800.00 a month (tsn, idem), that since September 21, 1987 when the injunction was
issued up to the present, Phoenix should have earned P2,752.200.00 and suffered as much in damages which it will
continue to suffer if the injunction is not lifted" (p. 80. Rollo). They pleaded that they "are as much entitled to the
protection of their rights as plaintiff, that if fair play gives the plaintiff a right to prolong the litigation, fairness also

demands that defendants be relieved of the thousands of pesos in damages that they suffer for every day of delay
in this case occasioned by the imposition of the injunction" (p. 69. Rollo).
Joy Mart opposed the petition to dissolve the injunction. The petition was heard on June 17, 1988 with the parties
orally arguing their respective sides of the question.
On July 6, 1988, the trial court dissolved the writ of preliminary injunction on the ground that its continuance would
cause great damage to the respondents, while the petitioner's claim for damages, which was yet to be proven, can
be fully compensated. Joy Mart filed a motion for reconsideration. LRTA and Phoenix opposed it. The trial court
denied Joy Mart's Motion for Reconsideration on August 9, 1988, stating thus:
The petition for dissolution is based on pertinent portion of Section 6, Rule 58 of the Rules of
Court, that the continuance of the injunction would cause great and irreparable damage to
defendants while plaintiff can be fully compensated for whatever damages that it may suffer. The
evidence adduced during the hearing of the petition for dissolution of the writ showed that the
continuance of the writ would cause great damages to defendants and plaintiff's claim for
damages, if any and which it has yet to prove, can be fully compensated.
The order of dissolution expressed in no uncertain terms that this Court may not be ascribed as
having pre-empted the authority and jurisdiction of the Court of Appeals over
the certiorariproceedings. The authority of this Court to dissolve the writ is inferable in Section 6,
Rule 58, Rules of Court that it may dissolve the writ if it appears during the hearing that although
plaintiff is entitled to the injunction, its continuance would cause great damage to the defendants
while the plaintiff can be fully compensated for such damages as it may suffer (Cf. Tiaoqui and
Imperial vs. Horilleno, 63 Phil. 116, 120). (pp. 70-71, Rollo.)
On August 17, 1988, the Sixteenth Division of the Court of Appeals upon being apprised by Phoenix of the trial
court's action, dismissed Phoenix's petition for certiorari (CA-G.R. SP No. 12998) for having become moot and
academic.
On September 14, 1989, Joy Mart sought relief in the Court of Appeals from Judge Luna's order lifting the writ of
preliminary injunction. In its petition for certiorari with preliminary injunction and restraining order (CA-G.R. SP No.
15618, assigned to the Ninth Division of the Court of Appeals), Joy Mart prayed that:
. . . a temporary restraining order be forthwith issued commanding the Honorable respondent
Court to refrain from further proceeding in the matter sought to be reviewed . . . ; (c) the
application for a writ of preliminary injunction be granted restraining respondent Phoenix from
continuing its subleasing and construction activities adjacent to the premises leased to petitioner
by respondent LRTA until the main case is finally decided; and (d) a judgment be rendered
declaring the order of 6 July 1988, as well as the order of 9 August 1988, of the Honorable
respondent Court to be null and void, and upholding the order of 21 September 1987 to be valid
and binding. (pp. 39-40, Rollo.)
The Court of Appeals, Ninth Division, gave due course to the petition and required the respondents to answer within
ten (10) days from notice. The Court temporarily restrained the respondents "from implementing the questioned
orders of 6 July 1988 and 9 August 1988, and for private respondent Phoenix to refrain from engaging in subleasing
and construction activities in the questioned premises, and from implementing the sublease contracts if already
signed, or the occupancy of the commercial stalls if already constructed, until further orders from this court" (pp.
17-18, Rollo). It set the hearing of the application for a writ of preliminary injunction on September 29, 1988.
Despite the temporary restraining order which it received on September 19, 1988, Phoenix continued its
construction activities and allowed its tenants to occupy the finished stalls. Whereupon Joy Mart filed a motion
praying the Court of Appeals to declare Phoenix in contempt of court.
After hearing the application for a writ of preliminary injunction, the opposition and answers of the LRTA and
Phoenix, and the memoranda of the parties, the Court of Appeals, Ninth Division, on February 28, 1989, dismissed
Joy Mart's petition.
Hence, this petition for review in which Joy Mart alleges that the Court of Appeals erred:

1. in not finding that the trial court lost jurisdiction to act on the motion to dissolve the writ of
preliminary injunction, after the said writ had been elevated to the Court of Appeals, Sixteenth
Division, for review;
2. in not finding that Phoenix is guilty of forum-shopping; and
3. in not finding Phoenix guilty of contempt, of court, and in not issuing a writ of preliminary
mandatory injunction.
These assignments of error are reducible to the lone issue of whether the trial court continued to have control of the
writ of preliminary injunction even after the same had been raised to the Court of Appeals for review.
The answer is no. After the LRTA and Phoenix had elevated the writ of preliminary injunction even after the same
had been raised to the Court of Appeals for review.
The answer is no. After the LRTA and Phoenix had elevated the writ of preliminary injunction to the Court of Appeals
for determination of the propriety of its issuance (CA-G.R. SP No. 12998), the trial court (notwithstanding the
absence of a temporary restraining order from the appellate court) could not interfere with or preempt the action or
decision of the Court of Appeals on the writ of preliminary injunction whose annulment was sought therein by
Phoenix and the LRTA.
In petitioning the trial court to lift the writ of preliminary injunction which they themselves had brought up to the
Court of Appeals for review, Phoenix and the LRTA engaged in forum-shopping. After the question of whether the
writ of preliminary injunction should be annulled or continued had been elevated to the Court of Appeals for
determination, the trial court lost jurisdiction or authority to act on the same matter. By seeking from the trial court
an order lifting the writ of preliminary injunction, Phoenix and LRTA sought to divest the Court of Appeals of its
jurisdiction to review the writ. They improperly tried to moot their own petition in the Court of Appeals a clear
case of trifling with the proceedings in the appellate court or of disrespect for said court.
In Prudential Bank vs. Castro, 142 SCRA 223, 231 where the trial judge issued an order changing or correcting his
previous order which had been elevated to the Supreme Court for review, the judge's actuation was deemed to be
"disrespectful of this Court."
(e) Respondent Judge, in his Order of March 13, 1985, gave course to the appeal of Complainant
Bank although he had already ruled that the latter had lost the right of appeal. That Order of
March 13, 1985 was issued after Complainant Bank had instituted G.R. No. 69907 on February 19,
1985, asking that Respondent Judge be ordered to allow its appeal from the summary judgment.
The order of March 13, 1985 was clearly intended to render G.R. No. 69907 moot and academic.
Said Order was disrespectful of this Court. If at all, Respondent Judge should have come to this
Court in said G.R. No. 69907, to ask for leave to allow the appeal of Complainant Bank with
admission that he had realized that his previous denial of the appeal was erroneous.
The actuation of Judge Luna in Civil Case No. 87-41731 can be categorized as such. It is not excused by the fact that
Phoenix and LRTA were presenting evidence of losses and damages in support of their motion to lift the writ of
preliminary injunction, for that could as easily have been done by them in the Court of Appeals which possesses
"the power to try cases and conduct hearing, receive evidence and perform any and all acts necessary to resolve
factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and
conduct new trials or further proceedings" (Sec. 9, par. [3], 2nd par.. B.P. Blg. 129).
The trial judge played into the hands of Phoenix and the LRTA, and acted with grave abuse of discretion amounting
to excess of jurisdiction in granting their motion to dissolve the writ of injunction. Judicial courtesy behooved the
trial court to keep its hands off the writ of preliminary injunction and defer to the better judgment of the Court of
Appeals the determination of whether the writ should be continued or discontinued.
The non-issuance of a temporary restraining order by the Court of Appeals upon receipt of the petition in CA-G.R. SP
No. 12998 simply meant that the trial court could proceed to hear and decide the main complaint of Joy Mart for
specific performance of contract and damages against the LRTA and Phoenix. It did not give the lower court a
license to interfere with the appellate court's disposition of the writ of preliminary injunction.

By simply "noting" that the trial court's order lifting the writ of preliminary injunction had mooted the case before it,
the Court of Appeals displayed regrettable indifference toward the lower court's interference with the exercise of
the appellate court's jurisdiction to decide and dispose of the petition for certiorari pending before it. Instead of
being jealous of its jurisdiction, the Appellate Court was simply glad to be rid of the case.
The Court of Appeals' reasoning that the trial court did not overlap or encroach upon its (the Court of Appeals')
jurisdiction because the trial court "was actually delving into a new matter the propriety of the continuance of the
writ of preliminary injunction in view of developments and circumstances occurring after the issuance of the
injunction" (pp. 51-52, Rollo), is unconvincing, for the issue of the impropriety of issuing the writ of preliminary
injunction was inseparable from the issue of whether the writ should be maintained or not. By lifting the writ of
injunction before the Court of Appeals could rule on whether or not it was properly issued, the trial court in effect
preempted the Court of Appeals' jurisdiction and flouted its authority.
The private respondents' application to the trial court for the dissolution of the writ of preliminary injunction that
was pending review in the Court of Appeals was a form of forum shopping which this Court views with extreme
disapproval. The lower court's proceeding being void for lack of jurisdiction, the writ of preliminary injunction should
be reinstated, and the petition to annul the writ (CA-G.R. SP No. 12998) should be dismissed on the ground of forum
shopping as provided in Rule No. 17 of the Interim Rules and Guidelines, Rules of Court.
17. Petitions for writs of certiorari, etc. No petition for certiorari, mandamus,
prohibition, habeas corpus or quo warranto may be filed in the Intermediate Appellate Court if
another similar petition has been filed or is still pending in the Supreme Court. Nor may such
petition be filed in the Supreme Court if a similar petition has been filed or is still pending in the
Intermediate Appellate Court, unless it be to review the action taken by the Intermediate
Appellate Court on the petition filed with it. A violation of this rule shall constitute contempt of
court and shall be a cause for the summary dismissal of both petitions, without prejudice to the
taking of appropriate action against the counsel or party concerned.
The dismissal of Phoenix and LRTA's petition in G.R. No. SP 12998 by the Court of Appeals (Sixteenth Division) was
correct, but it should be for violation of Rule 17 of the Interim Rules and Guidelines (forum-shopping), not because
the petition had become moot and academic.
The dismissal of Joy Mart's petition for certiorari in. CA-G.R. SP No. 15618 by the Court of Appeals (Ninth Division) is
annulled and set aside for grave abuse of discretion.
WHEREFORE, the petition for review is GRANTED. The Court of Appeals' decision dated February 28, 1989 in CA G.R.
SP No. 115618, dismissing Joy Mart's petition for certiorari and upholding the dissolution by the Regional Trial Court
of Manila, Branch 32, of the preliminary writ of injunction in Civil Case No. 87-41731, is hereby annulled and set
aside and the preliminary writ of injunction issued by the trial court on September 23, 1987 in Civil Case No. 8741731 is reinstated. However, if in the meantime the construction and occupancy of the private respondents'
commercial stalls sought to be stopped by the injunction have been completed, the rentals received by the private
respondents after the finality of this decision shall be deposited by them, or the lessees, in the Regional Trial Court
to await the final judgment in Civil Case No. 87-41731. Costs against the private respondents.
The Court of Appeals, Ninth Division, is ordered to hear and decide Joy Mart's petition to declare Phoenix in
contempt of court for having allegedly defied and disobeyed the Court's temporary restraining order of September
15, 1988 in CA-G.R. SP No. 115618.
SO ORDERED.

G.R. No. L-14925

April 30, 1960

MARTA
VDA.
DE
LA
CRUZ, petitioner,
vs.
HON. JUDGE GENARO TAN TORRES, Judge of the Court of First Instance of Nueva Ecija, and ROSALINDA
Z. TIONGCO, respondents.

Alfonso
G.
Pedro D. Maldia for respondents.

Espinosa

for

petitioner.

REYES, J. B. L., J.:


In a complaint dated October 22, 1958, filed with the Court of First Instance of Nueva Ecija and docketed therein as
Civil Case No. 3016, plaintiff Rosalinda Z. Tiongco alleged that she is the owner in fee simple and in actual and
material possession of Lot No. 1856 of the Sta. Rosa Cadastre (therein described by metes and bounds); that she
has introduced improvements on the land, and has, in fact, ready for harvest the palay she planted thereon; that on
October 19, 1958, defendant Marta de la Cruz, accompanied by her children and several armed men, entered the
said lot and destroyed plaintiff's barbed wire fences; that once in the land, they destroyed the house of the
plaintiff's tenant erected thereon, and manifested that "they shall be back and shall harvest the palay of the
plaintiff thru force and intimidation"; that again, in the morning of October 22, 1958, defendant intimated that by
noon of the same day, she would, with the aid of armed men, enter upon the land and harvest the palay thru force;
and that, unless the defendant and other persons, acting for and in her behalf, be enjoined from doing so, she
(plaintiff) would suffer irreparable injury and damage. Wherefore, plaintiff prayed that after due hearing and the
giving of a bond in the sum as the court may fix, a writ of preliminary injunction be issued prohibiting the defendant
and her agents from entering the land and further molesting her in her possession; that after trial on the merits,
said restraining order be made permanent; and finally, that defendant be ordered to pay to the plaintiff the sum of
P5,000.00 as damages and P2,000.00 as attorney's fees.
In its order of November 5, 1958, the lower court caused the issuance of a writ of preliminary injunction; and as the
instant petition revolves on the propriety of this order, it is hereunder quoted in full:
When this case was called for hearing on October 28, 1958, in connection with the issuance of a writ of
preliminary injunction, Atty. Alfonso G. Espinosa appeared for the defendant, and asked for five days within
which to submit his opposition to the petition for the issuance of a writ of preliminary injunction, which was
granted. On November 4, 1958, when this case was called again for hearing, Atty. Pedro Maldia, counsel for
the plaintiff, and Atty. Alfonso G. Espinosa, counsel for the defendant, appeared and asked the court that
they be given until today to file an amicable settlement regarding the issuance of the writ of preliminary
injunction. The Court granted the said petition, and accordingly, a written manifestation, dated November
4, 1958, signed by the attorney for the defendant was filed wherein, among other things, it is stated that
the defendant is agreeable to the issuance of the writ of preliminary injunction provided that she be
allowed to file a counter-bond in order to preserve her possession and preservation of the palay in
question.
WHEREFORE, the Court orders the issuance of a writ of preliminary injunction against the defendant Marta
Vda. de la Cruz, her children, agents, or any person acting in her behalf, from entering Lot No. 1856 of the
Sta. Rosa Cadastre, the land under litigation, and from harvesting the palay growing thereon, until further
orders of this Court. If and when the defendant wants to the writ of preliminary injunction by filing a
counterbond or any justifiable reason, she should file the correspond petition.
SO ORDERED.
Against this order and from another order denying motion to dissolve the writ of preliminary injunction, the
defendant filed the present petition for certiorari and mandamus, wherein, contending that the issuance of the said
writ was improper, he urges (a) that injunction, being merely a provisional remedy, cannot stand alone the main
action; (b) that the allegations in the complaint are insufficient to warrant the issuance of the provisional writ; (c)
that the issuance thereof was improper in that there is no showing that he was ever served a copy plaintiff's bond;
and lastly, (d) that the lower court should have considered his readiness to file a counterbond for the purpose of
quashing the writ already issued.
We find no merit in petitioner's contentions. Section 1 of Rule 60 of the Rules of Court provides for two classes of
injunction, to wit: (a) the preliminary injunction, and (b) the final injunction. The first is essentially a provisional
remedy which may be granted at any stage of an action prior to final judgment, while the second is the one
included in the judgment as the relief or part of the relief prayed for in the complaint. What may not stand alone as
an independent suit by itself is one which exclusively seeks the issuance of a writ of preliminary injunction, a
remedy that must be ancillary to principal case. There can be no serious question, however, on the propriety of
issuing such a provisional remedy an action for injunction, wherein the entirety of the relief sought consists in
restraining the commission or continuance of the act complained of, either for a limited period perpetually. This, in
fact, is authorized under section 3, paragraph (a), of Rule 60 of the Rules (see also Calo vs. Roldan, 76 Phil., 445).

In this instance, the plaintiff-respondent alleges ownership and peaceful possession over the parcel of land in
dispute, but that the defendant threatens to commit and, some time previously had actually committed, acts of
dispossession and destruction that have resulted, and will continue to result, in serious and irreparable damage and
injury to the plaintiff unless the defendant is enjoined from further carrying out her threats. Upon the foregoing
bases, we are not prepared to rule, in the absence of a contrary showing, that the lower court abused its discretion
in issuing the writ complained of.
As to the assertion that the defendant was not served with a copy of the plaintiff's bond, we believe that such fact is
merely a formal defect which does not adversely affect the writ already issued and is, certainly, not a reversible
error of the lower court. As held in Rodolfa vs. Alfonso, et al., 76 Phil. 232, this formal defect may be cured by
subsequent notice to or knowledge of the defendant. Indeed, it may be considered waived where, as in this case,
the defendant seeks to file a counterbond. At most, the defendant herein may ask the court, if no notice has yet
been given, to order the plaintiff to serve her a copy of the bond.
Coming to the last question, it would appear that the writ of preliminary injunction was issued mainly upon the
manifestation of the parties, which, among other things, expressed that "the defendant is agreeable to the issuance
of the writ . . . provided she be allowed to file a counterbond", so that, accordingly, the court stated that "if and
when the defendant wants to lift the writ of preliminary injunction by filing a counterbond or for any justifiable
reason, she should file the corresponding petition." From this, petitioner apparently concludes that the mere offer to
file a counterbond is sufficient to quash the writ complained of. This is erroneous. It is incorrect and improper to
assume that the manifestation of the parties was the only factor that moved the court to grant the provisional
remedy. For one thing, the order itself requires that the necessary petition be first filed and for another, the lower
court's discretion in the regard cannot be controlled by the mere agreement of the parties. As already intimated,
the writ may be granted or dissolved only upon good and valid grounds, the determination and sufficiency of which
rest within the sound discretion of the court. It follows, also, that, in the absence of grounds such as the
insufficiency of the allegations of the complaint or that the continuance of the writ already granted would cause
great damage to the defendant, while the plaintiff may be fully compensated for such damages as he may suffer
(Sec. 6 Rule 60, Rules of Court), the mere offer of a counterbond does not suffice to warrant the dissolution of the
preliminary writ of injunction. Certainly, a threatened destruction of property may not be countenanced even if the
party against whom the writ is directed is willing to pay for all damages he may cause thereby.
In passing, it may be noted that this petition should have been addressed to the Court of Appeals, being a case
involving a remedy in aid of its appellate jurisdiction; but since no serious question of fact is here involved, and in
order to save time, we prefer to have it disposed of here and now.
Wherefore, the petition is dismissed with costs against the petitioner.

[G.R. No. 102930. July 10, 1995.]


BONIFACIO MONTILLA PEA, Petitioner, v. HONORABLE COURT OF APPEALS and OPPEN
MONTILLA, Respondents.

SYLLABUS

1. REMEDIAL LAW; COURT OF APPEALS; HAS NO JURISDICTION IN A CERTIORARI PROCEEDING INVOLVING AN


INCIDENT IN A CASE TO RULE ON THE MERITS OF THE MAIN CASE ITSELF NOT ON APPEAL BEFORE IT. It should
have been enough, nonetheless, for the appellate court to merely set aside the questioned orders of the trial court
for having been issued by the latter with grave abuse of discretion. In likewise enjoining permanently herein
petitioner "from entering in, and interfering with the use or occupation and enjoyment of, petitioners (now private
respondent) residential house and compound," the appellate court, in effect, precipitately resolved with finality the
case for injunction that was yet to be heard on the merits by the lower court. Elevated to the appellate court, it
might be stressed, were mere incidents of the principal case still then pending with the trial court. In Municipality of
Bian, Laguna v. Court of Appeals, 219 SCRA 69, we ruled that the Court of Appeals would have "no jurisdiction in
a certiorari proceeding involving an incident in a case to rule on the merits of the main case itself which was not on
appeal before it." The Court realizes that there could be occasions when a felicitous disposition of the case becomes
compelling in the interest of justice. This extraordinary recourse, however, is done sparingly and only when highly
exceptional circumstances can justify its exercise.

This petition for review on certiorari assails the decision of the Court of Appeals which has nullified two (2) orders of
the court a quo in a controversy before it relative to the possession, use and enjoyment of a piece of property.
Soledad Oppen Montilla, a widow of about 85 years of age, and Bonifacio Pea, her grandson, are the plaintiff and
the defendant, respectively, in Civil Case No. 394 before the Regional Trial Court of Negros Occidental, Branch 62,
stationed in Bago City. The defendants is one of the sons of Lina Montilla Pea, who in turn, is a daughter of the
plaintiff. Atty Magdaleno Pea, counsel for and attorney-in-fact of the plaintiff, is the other son of Lina Montilla Pea
and the elder brother of the defendant. The plaintiffs husband, Bonifacio Montilla, has long been deceased. Besides
Lina M. Pea the plaintiff has a son, named Candido Montilla, who is under Soledads judicial guardianship.
The principal allegations contained in the verified complaint in Civil Case No. 394, filed on 19 September 1990 and
held by the appellate court to be a case for injunction, with preliminary prohibitory injunction and restraining order,
read thusly:jgc:chanrobles.com.ph
"COMES NOW plaintiff, through undersigned counsel, to the Honorable Court respectfully alleges
that:jgc:chanrobles.com.ph
"1. She is of legal age, Filipino, a widow and a resident of Paraaque, Metro Manila; while defendant Bonifacio Pea
is of legal age, Filipino, married and a resident of Bacolod City, Negros Occidental, where he may be served with
summons at the residence of Mr. James Chang near the Chinese Temple at the Capitol Shopping Center.
"2. She is the sole owner of a residential house and compound located in Barrio Ubay, Pulupandan, Negros
Occidental, which she had caused to be erected and constructed way back in 1993 with her own paraphernal funds.
"3. On April 3rd 1990, acting for herself and as the then judicial guardian of the incompetent Candido Oppen
Montilla, plaintiff executed and delivered to Atty. Magdaleno M. Pea a Special Power of Attorney, with full power
and authority to do and perform the following acts and deeds, among others:jgc:chanrobles.com.ph
"1. To take over the management of our agriculture and aquaculture businesses, including but not limited to the
exercise of general administration, control and supervision of all the aspects of its farming operations, finance,
management, sales, etc.;

2. To develop, subdivide, integrate or consolidate the sugar and/or prawn farms located in Negros Occidental, as
our said Attorney-in-Fact may deem appropriate for the purpose of promoting and enhancing the productivity
thereof;
x

7. To sue and prosecute before any courts of law . . ., any person, firm, entity, . . ., whether civil, criminal or
administrative, who may have committed acts in derogation of our rights and interests as owners of the said
businesses, for the recovery of moneys for properties lost and/or restitution of any damage caused upon us or on
the aforesaid businesses;
x

"4. On July 7, 1990, plaintiff also issued a MEMORANDUM FOR SLC MONTILLA FARMS directing, among
others:jgc:chanrobles.com.ph
"1. Bonifacio M. Pea is hereby ordered to turn over management, cash, equipment and other properties of
Soledad Lina and Candido Montilla Farms to Atty. Magdaleno M. Pea and Candido M. Pea.
x

4. Bonifacio Pea is strictly prohibited from interfering in the operation of SLC Montilla Farms and in my residence in
Ubay, Pulupandan. Atty. Magdaleno M. Pea and Candido M. Pea are therefore authorized to effects this.
x

6. Any and all prior authority issued to Bonifacio M. Pea is hereby revoked.
x

"5. As thus directed, Atty. Magdaleno M. Pea took over possession of plaintiffs aforesaid residential house on
September 4, 1990.
"6. Thereafter, late in the afternoon of September 12, 1990, defendant Bonifacio M. Pea, accompanied by the local
Provincial Commander of the Philippine Constabulary and a group of more than thirty (30) military personnel, riding
on an Armored Personnel Carrier, a B-150 assault vehicle, and a Hummer jeep, tried to enter and retake possession
of said house of the plaintiff, but was fortunately dissuaded by the latters gatekeeper until the arrival of Atty.
Magdaleno M. Pea some twenty (20) minutes later.
"7. On Atty. Magdaleno M. Peas arrival thereat, he allowed the Provincial Commander and the defendant to go
inside the house for a dialogue; but he refused entry into the premises to the rest of defendants military escort.
"8. Upon being shown by Atty. Magdaleno M. Pea the above-mentioned written authorizations given him by
plaintiff, the Provincial Commander advised defendant to peacefully leave the premises as he has no right to insist
on occupying the same.
"9. However, soon thereafter and beyond the hearing of said military officer, defendant threatened plaintiffs
authorized representative, Atty. Magdaleno M. Pea, that he would be back to retake possession of the premises,
through the use of force if need be.
"10. Thus, to avoid trouble and possible bloodshed should defendant persist and make good on his threatened
unlawful action, plaintiff has no other recourse but to resort to this Honorable Court for relief.
"11. On the other hand, plaintiff, as the owner of the premises, is entitled to be secure in her peaceful and
continued possession; and, through the writ of injunction, both preliminary and then final, she should be protected
against such declared intention of defendant to oust her therefrom, through the threatened use of force
"12. In the meantime, great and irreparable injury, and possible bloodshed would be caused the herein plaintiff and
her personnel in the premises unless a restraining order is issued upon the filing of this Complaint under the
provisions of paragraph 8 of the interim rules and guidelines of the Supreme Court.
"In further support of this application for a restraining order, plaintiff is attaching hereto the affidavits of another
witness as Annex C and integral part hereof.
"13. Plaintiff is willing and hereby offers to post a bond in such amount as the Honorable Court may fix, conditioned
that she will pay the defendant all damages which he may sustain by reason of the injunction if it should be finally
decided that she is not entitled thereto.

"14. Earnest efforts have been exerted by plaintiffs authorized representative to reach a compromises, but to no
avail.
"15. Finally, because of such unwarranted and illegal acts and threats of the defendant, plaintiff is forced to retain
the services and counsel for a fee of P30,000.00, and a per diem of P500.00 each time this case is set for hearing,
in this first instance.
"WHEREFORE, it is respectfully prayed that:jgc:chanrobles.com.ph
"a. Upon the filing of this Complaint and pending hearing of the application for writ no preliminary injunction, an
Order issue restraining, enjoining and prohibiting the defendant Bonifacio M. Pea from entering in, and interfering
with the use, occupation and enjoyment of, plaintiffs residential house and compound in Barrio Ubay, Pulupandan,
Negros Occidental;
"b. After hearing the foregoing application therefor, and within the 20-day effective period of such order, that the
corresponding writ of preliminary injunction issue; and
"c. After trial on the merits, that Judgment be rendered making such preliminary injunction permanent, and finding
said defendant liable unto the plaintiff in the amount of P30,000.00 plus P500.00 per hearing conducted in this
case, as and for attorneys fees; plus the costs.
"Plaintiff further prays for such other relief as may be deemed just and equitable in the premises.
"Bacolod City for Bago City, September 19, 1990." 1
The presiding Judge forthwith issued a temporary restraining order and set for hearing the application for an
issuance of a preliminary injunction. The pertinent portions of the restraining order provided:jgc:chanrobles.com.ph
"After a careful perusal of the facts alleged in the complaint, the Court believes that great damage and irreparable
injury would result to the plaintiff if the defendant is not prevented from doing the acts complained of before the
matter at issue could be heard on notice and considering the urgency of the matter at issue, as prayed for, a
temporary restraining order is hereby issue.
"WHEREFORE, in accordance with Section 8 of the Interim Rules and Guidelines of the Rules of Court, defendant
Bonifacio Pea and/or any of his representatives, agents or persons acting under his orders are hereby temporarily
restrained from entering in, and interfering with the use, occupation and enjoyment of, plaintiffs residential house
and compound in Barrio Ubay, Pulupandan, Negros Occidental, UNTIL FURTHER ORDERS FROM THIS COURT.
"Let the hearing for the issuance of a Writ of Preliminary Injunction be set on September 25, 1990, at 2:00 oclock in
the afternoon, on which time and date the defendant is directed to appear and to show cause, if there is any, why
the writ of preliminary injunction should not be granted. Let a copy of this order be served immediately upon the
defendant, at the expense of the plaintiff, together with the summons and copies of the complaint filed by the
plaintiff.
"SO ORDERED." 2
On 04 October 1990, defendant Bonifacio Pea filed his answer, along with a counterclaim, denying all the material
allegations of the complaint, except paragraph 1, which he admitted in toto, and paragraph 5, which he accepted
with qualifications. In support of his denial of paragraph 2, he claimed that the residential house and compound in
question were owned by SLC Montilla Farms. Relative to paragraph 3, he alleged that the special power of attorney
executed by plaintiff was legally infirmed. Regarding paragraph 4, he said that a mere unilateral act of plaintiff, she
being only one of the co-owners of SLC Montilla Farms, was not binding upon the co-ownership. He grave no reason
to support his denial of paragraphs 6, 7 and 8. In denying paragraphs 9 and 10, he averred that, being a younger
brother, he could not have threatened his older brother Atty. Magdaleno. In regard to paragraphs 11,12 and 13, he
contended that the grounds for the prayed issuance of the writ of preliminary injunction were patently not extant. In
connection with paragraph 14, he denied that earnest efforts were at all exerted by the plaintiff for an amicable
settlement of the case. In respect of paragraph 15, he stated that the subject residential house, should, at the very
least, be considered the conjugal property of his grandparents, the late Bonifacio Montilla and the plaintiff Soledad
O. Montilla. The defendant concluded with this prayer:jgc:chanrobles.com.ph
"WHEREFORE, in the light of the foregoing, it is most respectfully prayed of this Honorable Court to forthwith order
the dismissal of the above-entitled case and on the counter-claimed to render judgment directing plaintiff through
her alleged representative to pay defendant the amount of P100,000.00 as attorneys fees and the amount of
P2,000.00 for every court appearance.
"Defendant further prays for such other relief and remedies which this Honorable Court may consider just and
reasonable.
"Bacolod City for Bago City, October 4, 1990." 3

The plaintiff filed, on 08 October 1990, her answer to the counterclaim.


On 09 October 1990, the hearing on the preliminary injunction was terminated and, in an order of even date, the
presiding Judge required the parties to submit their respective memoranda; they both did on 15 October 1990.
In his order of 22 October 1990, the trial Judge held:jgc:chanrobles.com.ph
"WHEREFORE, the plaintiffs prayer for the issuance of preliminary injunction is hereby denied for lack of merit.
Accordingly, defendant Bonifacio Pea is reinstated to his possession of the residential house at Ubay, Pulupandan,
Negros Occidental.
"SO ORDERED." 4
On 15 November 1990, plaintiffs counsel filed a Manifestation stating that on 09 November 1990 he received by
mail the order of 22 October 1990; that he intended to file a motion for reconsideration; and that he was filing the
manifestation because of the reported move of the defendant to secure enforcement of the order of 22 October
1990.
On 20 November 1990, upon an ex-parte motion filed by the defendant, the judge issued another order, the
dispositive portion of which read:jgc:chanrobles.com.ph
"In view of the foregoing and finding the herein motion of the defendant to be reasonable and fully impressed with
merit, the same is hereby granted and as prayed for by the defendant thru his counsel, the Provincial Commander
of the Philippine Constabulary or any of his authorized representative is hereby authorized and deputized to assist
the Deputy Sheriff of this court in the immediate implementation and execution of the order of this court dated
October 22, 1990.
"SO ORDERED." 5
On 21 November 1990, the plaintiff filed a Motion for Clarification and Reconsideration of the Order of 22 October
1990. The Judge promptly set the motion for a hearing; forthwith, the Judge issued a 5-page order, the decretal
portion of which stated:jgc:chanrobles.com.ph
"WHEREFORE, finding no merit on the instant Motion for Clarification and Reconsideration, the same is hereby
denied and the order of this court dated November 20, 1990, is hereby ordered immediately enforceable. The
Deputy sheriff of this court is hereby ordered to serve the said order of November 20, 1990, to the Sheriff thru her
agent or attorney-in-fact Atty. Magdaleno Pea, or her duly authorized representative and to make a return thereof
to the court as provided for by law.
"SO ORDERED." 6
The following day, 22 November 1990, the plaintiff filed with the Court of Appeals a petition forcertiorari, with
preliminary injunction and temporary restraining order, basically anchored on the following
grounds:jgc:chanrobles.com.ph
"5.1 By issuing the order dated October 22, 1990 (Annex E hereof), respondent judge acted with grave abuse of
discretion amounting to lack of jurisdiction, considering that the portion of said order directing the reinstatement of
private respondent to the house subject matter of controversy partakes the nature of a preliminary mandatory
injunction, the issuance of which is not warranted under the circumstances;
"5.2 By issuing the order of execution or implementation dated November 20, 1990 (Annex G hereof), respondent
judge likewise committed grave abuse of discretion amounting to lack of jurisdiction, considering that the order
dated October 22, 1990 (Annex E hereof) has not yet attained finality, and that the same is not immediately
executory in the light of Section 4, Rule 39 of the New Rules of Court." 7
On 23 November 1990, the appellate court issued a resolution requiring the defendant to file comment on the
petition and restraining in the meantime the implementation of the trial courts orders of 22 October 1990 and 20
November 1990. The appellate court set the plaintiffs application for the issuance of a writ of preliminary injunction
for hearing on 21 December 1990, which was later reset to 28 December 1990 in order to secure the personal
attendance of the parties and to explore the possibility of an amicable settlement. As so scheduled, the parties
appeared but the parties failed to reach an agreement.
On 03 January 1991, the appellate court issued a resolution granting plaintiffs application for a preliminary
injunction against the implementation of the orders of 22 October 1990 and 20 November 1990 of the trial court.
On 22 January 1991, the appellate court issued a resolution giving due course to the petition forcertiorari and
requiring the defendant to file an answer. On 05 February 1991, acting on the "Motion for Reconsideration and To
Submit the Case for Decision," dated 16 January 1991, filed by the defendant and the "Manifestation/ Motion,"

dated 23 January 1991, filed by the plaintiff, the appellate court issued a resolution ordering the Branch Clerk of
Court of the court a quo to elevate the records of Civil Case No. 394. On even date, the defendant submitted his
"Comment to Main and Supplemental Petition."cralaw virtua1aw library
On 30 May 1991, the appellate court rendered its judgment, the dispositive portion of which
read:jgc:chanrobles.com.ph
"WHEREFORE, the petition is GRANTED. The orders of October 22, 1990, November 20 and 21, 1990 are declared
null and void. The preliminary injunction is made permanent, and private respondent Bonifacio M. Pea is hereby
restrained and prohibited from entering in, and interfering with the use, occupation and enjoyment of, petitioners
residential house and compound in Barrio Ubay, Pulupandan, Negros Occidental." 8
In this petition for review, defendant Bonifacio Montilla Pea, now herein petitioner, is raising two question,
viz:jgc:chanrobles.com.ph
"DID THE RESPONDENT COURT OF APPEALS EXCEED ITS JURISDICTION WHEN, IN A SPECIAL CIVIL ACTION OF
CERTIORARI, IT DID NOT CONFINE ITSELF TO THE ISSUE OUTLINED IN THE PETITION BUT INSTEAD PROCEEDED TO
DECIDE THE ISSUES OF THE CASE FILED IN THE COURT OF ORIGIN ON THE MERITS AND WITHOUT BENEFIT OF
TRIAL?
"DID THE RESPONDENT COURT OF APPEALS ERR WHEN IT SET ASIDE THE QUESTIONED INTERLOCUTORY ORDERS
OF THE TRIAL COURT?" 9
We agree with the appellate court that the main action, such as may be gleaned from a reading of the allegations
found in the complaint, appears to be one for injunction. On the basis of its findings, which are not without
substantial support from the records, the appellate court has acted judiciously, initially, in issuing a temporary
restraining order and, later, in granting the application made by private respondent for a writ of preliminary
injunction against the orders of 22 October 1990 and 20 November 1990 of the trial court.
The pleadings, along with the evidence adduced by the parties at the hearing before the trial court on the prayer
for preliminary injunction, would disclose that petitioner was not in possession of the property in question at the
time case was initiated by private respondent on 19 September 1990; that private respondent (through Atty.
Magdaleno M. Pea) had previously taken over actual and physical possession thereof; that the property was under
co-ownership by and among Soledad Montilla, Candido Montilla and Lina Montilla Pea; that the holding of private
respondent, together with Candido Montilla, in the c o-ownership constituted well more than a majority interest (5/6
in the residential house and 2/3 in the lot), with Lina Montilla Pea, the mother of petitioner, owning the minority
share (1/6 in the house and 1/3 in the lot); and that, most importantly, petitioner himself would appear to have no
actual interest in the co-ownership nor any valid proprietary claim on the property itself.
It should have been enough, nonetheless, for the appellate court to merely set aside the questioned orders of the
trial court for having been issued by the latter with grave abuse of discretion. In likewise enjoining permanently
herein petitioner "from entering in, and interfering with the use or occupation and enjoyment of, petitioners (now
private respondent) residential house and compound," the appellate court, in effect, precipitately resolved with
finality the case for injunction that was yet to be heard on the merits by the lower court. Elevated to the appellate
court, it might be stressed, were mere incidents of the principal case still then pending with the trial court. In
Municipality of Bian, Laguna v. Court of Appeals, 219 SCRA 69, we ruled that the Court of Appeals would have "no
jurisdiction in a certiorari proceeding involving an incident in a case to rule on the merits of the main case itself
which was not on appeal before it."cralaw virtua1aw library
The Court realizes that there could be occasions when a felicitous disposition of the case becomes compelling in the
interest of justice. This extraordinary recourse, however, is done sparingly and only when highly exceptional
circumstances can justify its exercise. The instant case falls far too short to call for another deviation from the rule
that otherwise requires a full ventilation in the standard manner of a justiciable controversy.
WHEREFORE, the decision of the appellate court is MODIFIED by SUSTAINING that part which sets aside the
questioned orders of the trial court and by DELETING the portion which enjoins permanently petitioner from
interfering with the use, possession and enjoyment of the property in litigation. The case is hereby REMANDED to
the court of origin for further proceedings on its merits. No special pronouncement on cost.
SO ORDERED.

G.R. No. 142616

July 31, 2001

PHILIPPINE
vs.
RITRATTO
GROUP
INC.,
MERCHANDISE,respondents.

NATIONAL
RIATTO

INTERNATIONAL,

BANK, petitioner,
INC.,

and

DADASAN

GENERAL

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. 10In 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. 13The
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.14is
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 nonpayment 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. 22The
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.
SO ORDERED.

G.R. No. 79128 June 16, 1988


ORTIGAS
&
COMPANY
Limited
vs.
COURT OF APPEALS and SPS DALTON B. KING and CECILIA F. KING, respondents.

Partnership, petitioner,

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 court a
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.
SO ORDERED.

G.R. No. 174996, December 03, 2014


BRO. BERNARD OCA, FSC, BRO. DENNIS MAGBANUA, FSC, MRS. CIRILA MOJICA, MRS. JOSEFINA
PASCUAL AND ST. FRANCIS SCHOOL OF GENERAL TRIAS, CAVITE, INC., Petitioner,v. LAURITA
CUSTODIO, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before this Court is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure assailing the
Decision1 dated September 16, 2005 as well as the Resolution 2 dated October 9, 2006 of the Court of Appeals in CAG.R. SP No. 79791, entitled Bro. Bernard Oca, FSC, Bro. Dennis Magbanua, FSC, Mrs. Cirila Mojica, Mrs. Josefina
Pascual and St. Francis School of General Trias, Cavite, Inc. v. Hon. Norbert J. Quisumbing, Jr., in his capacity as
Presiding Judge, Regional Trial Court, Branch 21, Imus, Cavite, and Mrs. Laurita Custodio. Through said rulings, the
appellate court dismissed the petition for certiorari under Rule 65 with application for the issuance of a temporary
restraining order and/or writ of preliminary injunction against the Orders dated August 5, 2003, 3 August 21,
20034 and October 8, 20035 issued by Branch 21 of the Regional Trial Court (RTC) of Imus, Cavite in SEC Case No.
024-02, entitled Laurita Custodio, plaintiff, versus Bro. Bernard Oca, Bro. Dennis Magbanua, Mrs. Cirila Mojica, Mrs.

Josefina Pascual, and St. Francis School, defendants.


The factual backdrop of the case
The facts of this case, as narrated in the assailed September 16, 2005 Decision of the Court of Appeals, are as
follows:
On July 9, 1973, petitioner St. Francis School of General Trias Cavite, Inc. (School) was organized and established as
a non-stock and non-profit educational institution. The organization and establishment of the school was
accomplished through the assistance of the La Salle Brothers without any formal agreement with the School. Thus,
the incorporators of the School consist of the following persons: private respondent Custodio, petitioner Cirila Mojica
(Mojica), petitioner Josefina Pascual (Pascual), Rev. Msgr. Feliz Perez, Bro. Vernon Poore, FSC. The five original
incorporators served as the Schools Members and Board of Trustees until the deaths of Bro. Poore and Msgr. Perez.
On September 8, 1988, to formalize the relationship between the De La Salle Greenhills (DLSG) and the School, a
Memorandum of Agreement (MOA) was executed. This agreement permitted DLSG to exercise supervisory powers
over the Schools academic affairs. Pursuant to the terms of the MOA, DLSG appointed supervisors who sit in the
meetings of the Board of Trustees without any voting rights. The first such supervisor was Bro. Victor Franco. Later
on, Bro. Franco also became a member of the Board of Trustees and President of the School. Then, on September 8,
1998, petitioner Bro. Bernard Oca joined Bro. Franco as DLSG supervisor. In a while, Bro. Oca also served as a
member of the Board of Trustees and President of the School. Bro. Dennis Magbanua also joined Bro. Franco and
Bro. Oca as DLSG supervisor and also as a Treasurer of the School.
Petitioners declare that the membership of the DLSG Brothers in the Board of Trustee[s] as its officers was valid
since an election was conducted to that effect.
On the other hand, Custodio challenges the validity of the membership of the DLSG Brothers and their purported
election as officers of the School. The legality of the membership and election of the DLSG Brothers is the main
issue of the case in the lower court.
Custodio alleges that sometime in 1992, Bro. Franco was invited by Mrs. Mojica to act as President of the School.
This is because there was only the Tres Marias (referring to the original incorporators, Pascual, Mojica and Custodio)
who [were] left to manage the affairs of the school. Bro. Franco accepted the invitation. However, while Bro. Franco
acted as President and presided over meetings of the Tres Marias, he never participated in the operation of the
School and never exercised voting rights.
Custodio further alleges that on September 8, 1998, during one of the informal meetings held at the School, Bro.
Franco unilaterally declared the said meeting as the Board of Trustees Meeting and at the same time an Annual
Meeting of the Members of the Corporation. During the meeting, Bro. Franco declared that the corporation is
composed of the Tres Marias and their husbands, Dr. Castaneda and himself (Bro. Franco) as members. On the other
hand, the Board of Trustees was declared to be composed of Bro. Oca, the Tres Marias and himself (Bro. Franco).
According to Custodio, when Bro. Franco eventually left and became inactive in the School, Bro. Oca assumed his
position as President and Chairman of the Board of Trustees, without being formally admitted as member of the
School and without the benefit of an actual election.
Custodio further states that on December 6, 2000, Bro. Magbanua was introduced to the original incorporators for
the first time. Automatically, he was declared as Member of the School and at the same time, Treasurer by Bro. Oca,
also without any formal admission into the corporate membership and without the benefit of an actual election.
Custodio alleges that clearly the composition of the membership of the School had no basis there being no formal
admission as members nor election as officers.
It appears that the legality of the membership and assumption as officers of the DLSG Brothers was questioned by
Custodio following a disagreement regarding a proposed MOA that would replace the existing MOA with the DLSG
Brothers and her removal as Curriculum Administrator through the Board of Trustee[s].
Under the proposed MOA, DLSG will supervise and control not only the academic affairs of the School but also the
matters of the finance, administration and operations of the latter. Custodio vigorously opposed the proposed MOA.
Consequently, unable to convince Custodio and the academic populace to accept the MOA, the DLSG brothers
withdrew [their] academic support from the School. A day after the rejection of the proposed MOA, Mojica and
Pascual retired as Administrators for Finance and Physical Resource Development (PRD), respectively. However,
they maintained their positions as Members and Trustees of the School.
Custodio contends that while Pascual and Mojica remained to be Members and Trustees of the School, upon
retirement, they stopped reporting for work. Mr. Al Mojica, son of Mrs. Mojica, who was then the school cashier, also
stopped reporting for work. Thus, Custodio avers that being the only remaining Administrator, she served as the
Over-all Director of the School. Being the Over-all Director, Custodio made appointments to fill in the vacuum
created by the sudden retirement of Pascual and Mojica. Hence, she appointed Mr. Joseph Custodio as OIC both for

Finance and PRD and [Ms. Herminia] Reynante as Cashier.


Upon the appointment of Joseph Custodio and Reynante, a special meeting was called by Bro. Oca in which the
petitioners alleged that the prior organizational structure was restored, and the retirement of Pascual and Mojica
disapproved by proper corporate action. It was agreed to in the meeting that the school was going to revert to the
three-man co-equal structure with Pascual as PRD head, Mojica as Finance head and Custodio as Curriculum
Administrator.
In the same meeting, petitioners alleged that Custodio admitted to having opened an account with the Luzon
Development Bank in her own name for the alleged purpose of depositing funds for and in behalf of the School.
Petitioners alleged that a directive was issued for the immediate closing of this account. Still, Custodio refused to
close such account.
Subsequently, on January 31, 2002, Mojica and Pascual formally resigned from their administrative posts. As such
as a replacement, Atty. Eleuterio A. Pascual and Mr. Florante N. Mojica[,] Jr. were appointed by the Board of Trustees
as PRD Administrator and Finance Administrator respectively.
According to petitioners, due to the repeated refusal of Custodio to close the account she opened in her own name
with the Luzon Development Bank, the Board of Trustees, in a meeting held on March 7, 2002, approved a
resolution to file a case against the latter. Consequently, the Board of Trustees also approved resolutions to the
effect that Custodio, Mr. Joseph Custodio and Reynante be stopped from performing their functions in the School.
On June 7, 2002, Custodio filed a Complaint in the RTC of Trece Martirez City, questioning the legality of the Board of
the School. The case was docketed as Civil Case No. TMCV-0033-02, entitled Laurita Custodio v. Bro. Bernard Oca, et
al. Custodio prayed for the issuance of a temporary restraining order and/or writ of preliminary injunction for the
purpose of preventing Bro. Oca as President of the corporation, from calling a special membership meeting to
remove Custodio as Member of the School and the Board of Trustees. The case was dismissed on July 4, 2002. 6
Summary of the legal proceedings
involved in the present controversy
On July 8, 2002, the Board of Trustees of St. Francis School resolved to remove respondent Laurita Custodio as a
member of the Board of Trustees and as a member of the Corporation pursuant to Sections 28 and 91 of the
Corporation Code as indicated in Resolution No. 011-2002.7
Subsequently, respondent was issued a Memorandum dated July 23, 2002 and signed by petitioner Bro. Bernard
Oca, in his capacity as Chairman of the Board of Trustees, wherein she was informed of her immediate removal as
Curriculum Administrator of St. Francis School on the grounds of willful breach of trust and loss of confidence and
for failure to explain the charges against her despite notice from the Board of Trustees. 8
In reaction to her removal, respondent filed with the trial court, on October 3, 2002, a Complaint with Prayer for the
Issuance of a Preliminary Injunction against petitioners again assailing the legality of the membership of the Board
of Trustees of St. Francis School.9
During the submission of pleadings, respondent filed a Manifestation and Motion. She alleged that on October 8,
2002, her son, Joseph Custodio, was being prevented from entering the premises of the school. Also, respondent
alleges that a meeting with the parents of the Schools students was convened wherein the parents were informed
that she had been removed as Member of the corporation and the Board of Trustees, and as Curriculum
Administrator. As such, petitioners directed the parents to give all payments regarding matriculation and other fees
to the corporate treasurer.10
On October 14, 2002, respondent filed another Motion for Clarification asking the trial court to issue an order as to
whom the matriculation fees should be paid pending the hearing of the complaint and the earlier Manifestation and
Motion.11
Acting on the motions filed by respondent, the trial court in an Order dated October 21, 2002, appointed Herminia
Reynante (Reynante) as cashier of the school and required all parties to turn over all money previously collected
with respect to matriculation fees and other related collectibles of the school to the latter. 12
At this point, it should be noted that petitioners Cirila Mojica and Josefina Pascual put up another school called the
Academy of St. John with the same structure as petitioner St. Francis School. This fact was testified to by
petitioners counsel Atty. Armando Fojas during the preliminary hearings on the main case. 13
On October 30, 2002, petitioners filed a Motion for Reconsideration seeking to set aside the October 21, 2002 Order
of the trial court. Petitioners aver that had they been given an opportunity to be heard and to present evidence to
oppose the appointment of Reynante, proof would have been adduced to demonstrate the latters lack of moral
integrity to act as court appointed cashier.14

Subsequently, on February 19, 2003, petitioners filed a Manifestation informing the trial court that in compliance
with its October 21, 2002 Order, they took steps to turn over the amount of P397,127.64, representing collections
from matriculation fees, but the same was not accepted by the court appointed cashier, Reynante, who preferred to
receive the amount in cash.15
On February 26, 2003, respondent filed her Comment in which she averred that contrary to petitioners claim,
petitioners had not complied with the October 21, 2002 Order for failure to include in their accounting, the funds
allegedly in Special Savings Deposit No. 239 and Special Savings Deposit No. 459 or the retirement fund for the
teachers of the School, amounts paid by the canteen concessionaire, and amounts paid to three resigned
teachers.16
In an Order17 dated March 24, 2003, the trial court acted upon petitioners February 19, 2003 Manifestation and
respondents February 26, 2003 Comment. The text of the said March 24, 2003 Order is reproduced herein:
This treats of the defendants explanation, manifestation and plaintiffs comment thereto.
A perusal of the allegations of the defendants pleadings shows that they merely turned-over a managers check in
the amount of P397,127.64 representing money collected from the students from October 2002 to December 2002.
The Order of October 21, 2002 directed plaintiff and defendants, as well as Mr. Al Mojica to turn over to Ms.
Herminia Reynante all money previously collected and to submit a report on what have been collected, how much,
from whom and the dates collected.
Defendants and Mr. Al Mojica are hereby directed, within ten days from receipt hereof, to submit a report and to
turn-over to Ms. Herminia Reynante all money collected by them, more particularly:
1. P4,339,607.54 deposited in the Special Savings Deposit No. 239 (Rural Bank of General Trias, Inc.);
2. P5,639,856.11 deposited in Special Savings Deposit No. 459 (Rural Bank of General Trias, Inc.);
3. P92,970.00 representing amount paid by the school canteen;
4. Other fees collected from January 2003 to February 19, 2003;
5. Accounting on how and how much defendants are paying Ms. Daisy Romero and three (3) other teachers who
already resigned.18
On April 18, 2003, petitioners filed a Manifestation, Observation, Compliance, Exception and Motion to the March
24, 2003 Order of the trial court which contests the inclusion of specific funds to be turned over to Reynante. 19
In the first questioned Order20 dated August 5, 2003, the lower court denied the Manifestation and Motion of
petitioners and reiterated its order for petitioners to turn over the items enumerated in its March 24, 2003 Order.
Subsequently, in the second questioned Order21 dated August 21, 2003, the trial court, acting favorably on private
respondents October 9, 2002 Manifestation and Motion ruled:
WHEREFORE, in view of the foregoing, the motion is granted. Accordingly, a status quoorder is hereby issued
wherein the plaintiff is hereby allowed to continue discharging her functions as school director and curriculum
administrator as well as those who are presently and actually discharging functions as school officer to continue
performing their duties until the application for the issuance of a temporary restraining order is resolved. 22
On September 1, 2003, petitioners filed a Motion for Clarification of the August 5, 2003 Order.23
In an Order24 dated October 8, 2003, the court ruled, to wit:
WHEREFORE, in view of the foregoing, the defendants are hereby ordered to comply with the mandate contained in
the order[s] dated March 24 and August 5, 2003.
Defendants are further directed to inform the court of the total amount of the funds deposited reserved for
teachers retirement, and in what bank and under what account the same is deposited. 25
Dissatisfied with the rulings made by the trial court, petitioners filed with the Court of Appeals a petition
for certiorari under Rule 65 with application for the issuance of a temporary restraining order and/or writ of
preliminary injunction to nullify, for having been issued with grave abuse of discretion amounting to lack or in
excess of jurisdiction, the Orders dated August 5, 2003, August 21, 2003 and October 8, 2003 that were issued by
the trial court.

However, the Court of Appeals frustrated petitioners move through the issuance of the assailed September 16,
2005 Decision which dismissed outright petitioners special civil action for certiorari. Petitioners moved for
reconsideration but this was also thwarted by the Court of Appeals in the assailed October 9, 2006 Resolution.
Thus, petitioners filed the instant petition and submitted the following issues for consideration in their
Memorandum26 dated October 3, 2007:
A.
WHETHER OR NOT THE COURT OF APPEALS, CONTRARY TO LAW AND JURISPRUDENCE, COMMITTED REVERSIBLE
ERROR IN RULING THAT THE TRIAL COURT HAD NOT DEPRIVED PETITIONERS OF DUE PROCESS IN ISSUING ITS
ORDERS OF 5 AUGUST 2003, 21 AUGUST 2003 AND 8 OCTOBER 2003.
B.
WHETHER OR NOT THE COURT OF APPEALS, CONTRARY TO LAW AND JURISPRUDENCE, COMMITTED REVERSIBLE
ERROR IN RULING THAT THE TRIAL COURT DID NOT GRAVELY ABUSE ITS DISCRETION IN DISREGARDING THE
PROVISIONS OF THE INTERIM RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES PERTAINING TO THE
ISSUANCE OF A STATUS QUO ORDER AND THE REQUIREMENTS THEREOF.27
On the other hand, respondent puts forward the following arguments in her Memorandum 28 dated October 9, 2007:
THE HONORABLE COURT OF APPEALS WAS CORRECT WHEN IT RULED THAT THE TRIAL COURT (RTC Br. 21) HAD NOT
DEPRIVED PETITIONERS OF DUE PROCESS IN ISSUING ITS ORDERS OF 5 AUGUST 2003, 21 AUGUST 2003 AND 8
OCTOBER 2003.
THE HONORABLE COURT OF APPEALS WAS CORRECT WHEN IT RULED THAT THE TRIAL COURT (RTC Br. 21) DID NOT
COMMIT GRAVE ABUSE OF DISCRETION WHEN IT ISSUED A STATUS QUO ORDER.29
In fine, the sole issue in this case is whether or not the trial court committed grave abuse of discretion in issuing the
assailed Orders dated August 5, 2003, August 21, 2003 and October 8, 2003.
Petitioners argue that the Court of Appeals, in its assailed September 16, 2005 Decision, failed to consider that no
adequate proceedings had been accorded to the petitioners by the trial court for the exercise of its right to be heard
on the matters subject of the questioned Orders. Furthermore, petitioners point out that the Court of Appeals
erroneously gave its imprimatur to the trial courts issuance of the assailed Status Quo Order dated August 21,
2003 without first requiring and accepting from respondent the requisite bond that is required under the Interim
Rules of Procedure for Intra-Corporate Controversies.
On the other hand, respondent maintains that the manner of the issuance of the assailed Orders of the trial court
did not violate the due process rights of petitioners. Respondent also claims that a valid ground for the issuance of
the assailed Status Quo Order dated August 21, 2003 did exist and that the alleged failure of the trial court to
require the posting of a bond prior to the issuance of astatus quo order was mooted by the assailed Order dated
October 8, 2003 which required respondent and Reynante to file a bond in the amount of P300,000.00 each.
We find the petition to be partly meritorious.
In the case of Garcia v. Executive Secretary,30 we reiterated what grave abuse of discretion means in this
jurisdiction, to wit:
Grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion, as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and
so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act
at all in contemplation of law.
With regard to the right to due process, we have emphasized in jurisprudence that while it is true that the right to
due process safeguards the opportunity to be heard and to submit any evidence one may have in support of his
claim or defense, the Court has time and again held that where the opportunity to be heard, either through verbal
arguments or pleadings, is accorded, and the party can present its side or defend its "interest in due course,"
there is no denial of due process because what the law proscribes is the lack of opportunity to be heard. 31
In the case at bar, we find that petitioners were not denied due process by the trial court when it issued the
assailed Orders dated August 5, 2003, August 21, 2003 and October 8, 2003. The records would show that
petitioners were given the opportunity to ventilate their arguments through pleadings and that the same pleadings
were acknowledged in the text of the questioned rulings. Thus, petitioners cannot claim grave abuse of discretion

on the part of the trial court on the basis of denial of due process.
However, with respect to the assailed Status Quo Order dated August 21, 2003, we find that the trial court has
failed to comply with the pertinent procedural rules regarding the issuance of a status quo order.
Jurisprudence tells us that a status quo order is merely intended to maintain the last, actual, peaceable and
uncontested state of things which preceded the controversy. It further states that, unlike a temporary restraining
order or a preliminary injunction, a status quo order is more in the nature of a cease and desist order, since it
neither directs the doing or undoing of acts as in the case of prohibitory or mandatory injunctive relief. 32
Pertinently, the manner of the issuance of a status quo order in an intra-corporate suit such as the case at bar is
governed by Section 1, Rule 10 of the Interim Rules of Procedure for Intra-Corporate Controversies which reads:
SECTION 1. Provisional remedies. - A party may apply for any of the provisional remedies provided in the Rules of
Court as may be available for the purposes. However, no temporary restraining order or status quo order shall be
issued save in exceptional cases and only after hearing the parties and the posting of a bond.
In the case before us, the trial courts August 21, 2003 Status Quo Order conflicted with the rules and jurisprudence
in the following manner:
First, the directive to reinstate respondent to her former position as school director and curriculum administrator is
a command directing the undoing of an act already consummated which is the exclusive province of prohibitory or
mandatory injunctive relief and not of a status quo order which is limited only to maintaining the last, actual,
peaceable and uncontested state of things which immediately preceded the controversy. It must be remembered
that respondent was already removed as trustee, member of the corporation and curriculum administrator by the
Board of Trustees of St. Francis School of General Trias, Cavite, Inc. months prior to her filing of the present case in
the trial court.
Second, the trial courts omission of not requiring respondent to file a bond before the issuance of theStatus
Quo Order dated August 21, 2003 is in contravention with the express instruction of Section 1, Rule 10 of the
Interim Rules of Procedure for Intra-Corporate Controversies. Even the subsequent order to post a bond as
indicated in the assailed October 8, 2003 Order did not cure this defect because a careful reading of the nature and
purpose of the bond would reveal that it was meant by the trial court as security solely for the teachers retirement
fund, the possession of which was given by the trial court to respondent and Reynante. It was never intended and
can never be considered as the requisite security, in compliance with the express directive of procedural law, for
the assailed Status Quo Order dated August 21, 2003. In any event, there is nothing on record to indicate that
respondent had complied with the posting of the bond as directed in the October 8, 2003 Order except for the
respondents unsubstantiated claim to the contrary as asserted in her Memorandum. 33
Third, it is settled in jurisprudence that an application for a status quo order which in fact seeks injunctive relief
must comply with Section 4, Rule 58 of the Rules of Court: i.e., the application must be verified aside from the
posting of the requisite bond.34 In the present case, the Manifestation and Motion, through which respondent
applied for injunctive relief or in the alternative a status quo order, was merely signed by her counsel and was
unverified.
In conclusion, we rule that no grave abuse of discretion was present in the issuance of the assailed August 5, 2003
and October 8, 2003 Orders of the trial court. However, we find that the issuance of the assailed August 21,
2003 Status Quo Order was unwarranted for non-compliance with the rules. Therefore, the said status quo order
must be set aside.
At this point, the Court finds it apropos to note that the Status Quo Order on its face states that the same is
effective until the application for the issuance of a temporary restraining order is resolved. However, respondents
prayer for a temporary restraining order or a writ of preliminary injunction in her Complaint still appears to be
pending before the trial court. For this reason, the Court deems it necessary to direct the trial court to resolve the
same at the soonest possible time.
WHEREFORE, premises considered, the petition is PARTLY GRANTED. The assailed Decision dated September 16,
2005 and the Resolution dated October 9, 2006 of the Court of Appeals in CA-G.R. SP No. 79791 are
hereby AFFIRMED in part insofar as they upheld the assailed August 5, 2003 and October 8, 2003 Orders of the
trial court. They are REVERSED with respect to the assailed August 21, 2003 Status Quo Order which is hereby SET
ASIDE for having been issued with grave abuse of discretion. The trial court is further DIRECTED to resolve
respondents application for injunctive relief with dispatch.
SO ORDERED

G.R. No. L-50402 August 19, 1982


PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK and THE MANILA BANKING CORPORATION, petitioners
vs.
NATIONAL MINES & ALLIED WORKERS UNION (NAMAWU-MIF), NATIONAL LABOR RELATIONS
COMMISSION (REGIONAL BRANCH NO. IV) ATLAS CONSOLIDATED MINING AND DEVELOPMENT
CORPORATION, respondents.

Petition for certiorari filed on April 23, 1979 to annul and set aside the order of April 18, 1979 of the National Labor
Relations Commission issued in N.L.R.C. Case No. RB-IV-3322-75, thru Labor Arbiter Manuel H. Lorenzo, praying at
the same time that this Court order the said respondent Commission to stop delivery of the check of P4,298,307.77
of private respondent Atlas Consolidated Mining and Development and/or for Us to stop payment to the respondent
Union on the ground that the issuance of said order of April 18, 1979 was a grave abuse of discretion and/or in
excess of the Commission's jurisdiction.
On May 4, 1979, We issued the following resolution: 1wph1.t
On December 22, 1975 the National Mines & Allied Workers' Union obtained in NLRC Case No. RBVI-3322-75 a judgment ordering the Philippine Iron Mines, Inc. to pay the union P4,298,307.77 as
severance pay, etc. The judgment became final and executory on January 6, 1976.
On April 18, 1979 the NLRC, through a Labor Arbiter, granted the union's ex parte motion of April
16, 1979 for the garnishment of the amount of P4,298,307.77 due from Atlas Consolidated Mining
and Development Corporation to the Philippine Commercial and Industrial Bank and the Manila
Banking Corporation, as part of the price for which the mining machinery and equipment of the
Philippine Iron Mines (acquired under foreclosure sale by the two banks) was sold by the two
banks to Atlas. (The total price was thirty million pesos.)
On that same date, April 18, Atlas complied with the writ of garnishment and delivered to the
sheriff a check for P4,298,307.77.
The order of garnishment and Atlas' compliance with it are assailed in this certiorari proceeding
on the ground of lack of jurisdiction since the two banks were not parties in the labor case and the
funds garnished were not due to the judgment debtor, Philippine Iron Mines.
After deliberating on these facts, the Court Resolved (1) to REQUIRE the respondents within ten
(10) days from notice to ANSWER the petition (not to file a motion to dismiss) and (2) to ISSUE a
WRIT OF PRELIMINARY INJUNCTION after the petitioners had filed a satisfactory bond in the sum of
one hundred thousand pesos (P100,000). It should be specified in the writ that Atlas is directed to
stop payment on the said check, that respondent Union is enjoined from cashing the check and, if
the check has not yet been delivered to the union, then respondent sheriff is directed to return
the check to Atlas. If the check has been delivered to the Union, the latter is enjoined from
distributing the proceeds thereof to its members and to return the check to Atlas. (Vol. 1, Record.)
with the corresponding writ of preliminary injunction after the required bond was filed on May 9,
1979, after petitioners filed their supplemental petition of April 24, 1979 and Urgent Motion of
April 30, 1979.
It appears, however, as stated in the answer of respondent Union dated October 10, 1979, that "the check turned
over by the Sheriff of the NLRC to herein respondent on April 20, 1979 was encashed on April 23, 1979 and the
proceeds thereof were duly distributed to its members/claimants on the same day (April 23, 1979) and everyday
thereafter, until the distribution was finished on May 5, 1979. In fact, on May 10, 1979, respondent union filed with
the Labor Arbiter a "Report of Compliance and Motion for Admission and Approval of Schedule of Distribution" dated
May 10, 1979, a copy of which is herewith attached and made part hereof as Annex "18". A corresponding order
approving the aforesaid distribution was issued by Labor Arbiter Manuel B. Lorenzo on May 12, 1979, a copy of
which is herewith attached and made part hereof as Annex "19". Under the present circumstances, respondent
union can only invoke the following legal principle: 1wph1.t

The established principle is that when the events sought to be prevented by injunction or
prohibition have already happened, nothing more could be enjoined or prohibited because nothing
more could be done in reference thereto. (Aragones vs. Subido, L-24303, Sept. 23, 1968, 25 SCRA
95) (Pp. 442- 443, Vol. II, Record.)
Thus, in the light of the prayer of the petition herein which reads: 1wph1.t
WHEREFORE, petitioners respectfully pray that:
1. This Petition is given due course;
2. Pending determination of the merits of this Petition, a Writ of Preliminary Mandatory Injunction
upon such bond as this Honorable Court may fix, be issued ordering the Atlas Consolidated Mining
and Development Corporation to stop payment of the check delivered to the NLRC Sheriff, the
National Labor Relations Commission (Regional Branch No. IV), particularly the Sheriff thereof,
from delivering said check to the Union, and the National Mines & Allied Workers' Union
(NAMAWU-MIF) from distributing the proceeds of the said check to its members; and to return the
proceeds of the chock for P4,341,290.84 to the petitioners;
3. After appropriate proceedings, judgment be rendered making the Writ of Preliminary Mandatory
Injunction permanent and setting aside the NLRC Order dated 18 April 1979.
Petitioners likewise pray for such other relief as may be deemed just and equitable under the
premises. (Page 18, Vol. I, Record.)
it would seem that this case is now moot and academic, the prohibitory injunction prayed for being already
impossible of enforcement, the acts sought to be enjoined having been already consummated.
But it is obvious from the allegations of the petition that the main and real remedy aimed at by petitioners is for
them to be considered as in no way liable for the money paid to the laborers of respondent Philippine Iron Mines by
virtue of the writ of execution and garnishment in question and that the obedience or compliance thereto by
respondent Atlas was uncalled for, hence Atlas should be held still liable to them for the amount aforementioned it
had delivered to the Sheriff in order to complete the P30 M purchase price of the PIM properties sold by them to
Atlas.
To complete the material facts summarized in our abovequoted resolution of May 4, 1979, We have only to add the
following:
1. That the judgment obtained by the respondent Union from the NLRC on December 22, 1975 was the result of an
unfair labor practice case filed by said Union against PIM because of its failure to comply with the condition imposed
upon it by the Minister of Labor when it was granted clearance to shut down its operation and lay off all its
personnel due to its bankruptcy to the effect that said clearance was "subject to such rights and benefits accruing
to the workers and employees of your company under (the) existing collective bargaining agreement and relevant
provisions of the Labor Code."
2. That PIM was a mortgage debtor separately of the Development Bank of the Philippines and of herein petitioners,
3. On account of the failure of PIM to pay its obligations just referred to, PCIB and Manila Bank foreclosed all
mortgages in their favor on December 20, 1975 and as they were the only bidders at the auction sale, they
eventually secured final conveyances in their favor of said properties.
4. To be sure, respondent Union had already been able to levy on certain properties of PIM which allegedly were not
covered by the mortgages to petitioners, and so there are now in the lower courts suits wherein petitioners and the
Union are contesting as to who of them have the superior right over said properties. Additionally, there is a
proceeding for contempt pending in the NLRC because petitioners' men would not allow the Sheriff to enforce
execution of some of said properties.
We do not see any need to clutter this opinion with the details of those suits and contempt proceedings, considering
the view We are taking of the primordial issue as to whether or not petitioners, as auction purchasers of the

properties of PIM mortgaged to them and as sellers thereof to Atlas are subject to the claims of the Union finally
adjudged by the NLRC.
There are, to Our mind, at least two indubitable grounds why petitioners are liable to the Union for the judgment
against PIM.
a. The deed of Sale (Annex M, Petition) by which petitioners conveyed their rights to Atlas, contains the following
unequivocal and unambiguous warranties: 1wph1.t
1. Warranties of Sellers. Sellers (the petitioners in the case at bar) warrant that (1) they
have full and sufficient title over the PROPERTIES and that (2) the PROPERTIES are free from all
liens and encumbrances, (3) the BUYER (Atlas) being hereby saved free and harmless from all
claims in incidental actions of National Mines & Allied Workers' Union (NAMAWU) including its
action for annulment of the Sheriffs sale with respect to the contents of a certain bodega (Civil
Case No. 2727 of Branch II of the Camarines Norte CFI); (4) the SELLERS have full rights and
capacity to convey title to and effect peaceful delivery of these properties their authority to do so
having been obtained from the government of the Republic of the Philippines, copy of which is
enclosed and made an integral part hereof; and taxes and charges thereon have been fully paid
and should any be accrued on the plate of these presents, the same shall be for SELLERS account.
(Emphasis supplied.) (Page 789, Vol. 11, Record.)
As Atlas very aptly puts it in its reply-memorandum dated June 13, 1980: 1wph1.t
To the extent of being repetitious but if only to bring home the point, under the above-quoted
Deed of Sale unconditionally and unqualifiedly protective of Atlas, the petitioners, as the sellers,
legally and validly warranted unto Atlas, as the buyer, (1) full and (2) unencumbered title to the
subject properties, (3) that they have full rights and capacity to convey title to and effect peaceful
delivery of these properties to Atlas, and, very importantly, (4) that they shall hold Atlas " free and
harmless from all claims and incidental actions of National Mines & Allied Workers Unions
(NAMAWU)" inclusive of NAMAWU's action for annulment (Civil Case No. 2727, Branch 11, CFICamarines Norte).
The above warranties of the petitioners in favor of Atlas need no further interpretation. With due
respect, this Honorable Court must instead apply and enforce these warranties against the
petitioners, pristinely and unequivocally clear as these warranties are.
Clearly, the facts of the instant petition viewed vis-a-vis the above- quoted legal and contractual
warranties, guarantees and duties of the petitioners in favor of Atlas show that the former
have no cause of action against the latter. (Page 790, Vol. II, Record.)
b. We cannot but agree with the Solicitor General that: 1wph1.t
Fourthly, since the decision of December 22, 1975 in the aforementioned NLRC case was brought
about by the cessation or shutdown of business by PIM, its workers enjoy first preference as
regards wages due for services rendered prior to the bankruptcy or liquidation, as against other
creditors, like herein petitioners, notwithstanding any provision of law to the contrary. Thus,
Article 110 of the New Labor Code, as amended, as well as Section 10, Rule VIII, Book II, of the
Rules and Regulations Implementing the New Labor Code provide: 1wph1.t
Art. 110. Worker Preference in case of bankcruptcy. In the event of
bankcruptcy or liquidation of an employer's business, his workers shall enjoy
first preference as regards wages due them for services rendered during the
period prior to the bankcruptcy or liquidation, any provision of law to the
contrary notwithstanding. Unpaid wages shall be paid in full before other
creditors may establish any claim to share in the assets of the employer. (New
Labor Code)
Section 10. Payment of wages in case of bankcruptcy. Unpaid wages earned
by the employees before the declaration of bankcruptcy or judicial liquidation of
the employer's business shall be given first preference and shall be paid in full

before other creditors may establish any claim to a share in the assets of the
employees. (Rules and Regulations Implementing the Labor Code, Book III, Rule
VIII)
It must be noted that the word 'wage' paid to any employee is defined as "the remuneration or
earnings, however designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written contract of employment for work
done or to be done, or for services rendered or to be rendered, and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging or other facilities
customarily furnished by the employer to the employees." (Art. 97, par. f, Title II, Chapter I, New
Labor Code). Stated differently, 'wages' refer to all remunerations, earnings and other benefits in
terms of money accruing to the (employees or workers for services rendered.
Thus, all benefits of the employees under a Collective Bargaining Agreement, like severance pay,
educational allowance, accrued vacation leave earned but not enjoyed, as wen as workmen's
compensation awards and unpaid salaries for services rendered, fan under the term 'wages' which
enjoy first preference over all other claims against the employer. As such, therefore, even if the
employer's properties encumbered by means of a mortgage contract, still the workers'wages
which enjoy first preference in case of bankcruptcy or liquidation are duly protected by an
automatic first lien over and above all other earlier encumbrances on the said properties.
Otherwise, workers'wages may be imperilled by foreclosure of mortgages, and as a consequence,
the aforecited provision of the New Labor Code would be rendered meaningless. (Pp. 760-762, Vol.
II, Record
The reason behind the provisions of the Labor Code giving preference to claims of labor in the liquidation of a
business or industrial concern is patent and manifest. It is but humane and partakes of the divine that labor, as
human beings, must be treated over and above chattels, machineries and other kinds of properties and the
interests of the employer who can afford and survive the hardships of life better than their workers. Universal sense
of human justice, not to speak of our specific social justice and protection to labor constitutional injunctions dictate
the preferential lien that the above provisions accord to labor.
Petitioners are trying to make much of the circumstance that the foreclosure sale in their favor antedated by two
days the judgment of the NLRC. In this connection, We hold that the right of the Union members over the properties
or assets of PIM became vested from the date the Minister of Labor approved PIM's application for clearance on May
7, 1975. In the most legal sense and, again, consonant with the principles of social justice and protection to labor
under the Constitution of the Philippines above referred to the NLRC decision was only confirmatory of such right,
not unlike the juridical effect of the issuance of a Torrens title over a piece of land already covered by a legitimate
Spanish title. And so, when petitioners acquired the properties of PIM in the foreclosure sales, those properties were
already encumbered in favor of the Union members/claimants by force of law. Worse, petitioners were well aware
they were foreclosing on properties of a mortgage debtor who had already secured from the Ministry of Labor a
corresponding clearance for shutdown due to liquidation, and, needless to say, petitioners are presumed to know
the law on the matter already referred to above.
Indeed, from whatever point of view We try to look at the situation of petitioners, it always comes out that they
cannot cheat the Union claimants/members of what is due them by law for work actually done by them and other
benefits. They bought the properties in question with open eyes.t@lF They sold the same knowing they were
saddled with the rights of the laborers of PIM under the clearance of the Ministry of Labor. The deed of sale
included, as it should, a warranty that the properties are free from all liens and encumbrances. ATLAS had the right
to receive the properties free from any lien and encumbrance, and when the garnishment was served on it, it was
perfectly in the right in slashing the P4,298,307.77 from the P30M it had to pay petitioners in order to satisfy the
long existing and vested right of the laborers of financially moribund PIM, without any liability to petitioners for
reimbursement thereof.
With this declaration of the respective rights of the parties, it follows that all proceedings or suits pending in the
lower courts are subordinated to such declaration, if they may not be deemed already moot and academic.
PREMISES CONSIDERED, judgment is hereby rendered dismissing the petition and settling the respective rights of
the parties hereto as above declared, with costs against petitioners.

.R. No. L-57586 October 8, 1986


AQUILINO RIVERA, ISAMU AKASAKO and FUJIYAMA HOTEL & RESTAURANT, INC., petitioners,
vs.
THE HON. ALFREDO C. FLORENDO, as Judge of the Court of First Instance of Manila (Branch XXXVI),
LOURDES JUREIDINI and MILAGROS TSUCHIYA, respondents.

This is a petition for certiorari and prohibition with preliminary injunction seeking the annulment of the following
Orders of the then Court of First Instance of Manila, Branch XXXVI: (a) Order dated June 5, 1981 directing the
issuance of a writ of preliminary mandatory injunction requiring petitioners Fujiyama Hotel & Restaurant, Inc., Isamu
Akasako and Aquilino Rivera to allow respondents Lourdes Jureidini and Milagros Tsuchiya to manage the corporate
property upon filing of a bond in the amount of P30,000.00 (Rollo, pp. 43-57) and (b) Order dated July 24, 1981
denying petitioners' motion for reconsideration and motion to dismiss for lack of jurisdiction but increasing the bond
to P120,000.00 (Rollo, p. 81).
Petitioner corporation was organized and register under Philippine laws with a capital stock of P1,000,000.00
divided into 10,000 shares of P100.00 par value each by the herein petitioner Rivera and four (4) other
incorporators. Sometime thereafter petitioner Rivera increased his subscription from the original 1,250 to a total of
4899 shares (Rollo, p. 4).
Subsequently, Isamu Akasako, a Japanese national and co-petitioner who is allegedly the real owner of the shares of
stock in the name of petitioner Aquilino Rivera, sold 2550 shares of the same to private respondent Milagros
Tsuchiya for a consideration of P440,000.00 with the assurance that Milagros Tsuchiya will be made the President
and Lourdes Jureidini a director after the purchase. Aquilino Rivera who was in Japan also assured private
respondents by overseas call that he will sign the stock certificates because Isamu Akasako is the real owner.
However, after the sale was consummated and the consideration was paid with a receipt of payment therefor
shown, Aquilino Rivera refused to make the indorsement unless he is also paid. (Rollo, pp. 51-52).
It also appears that the other incorporators sold their shares to both respondent Jureidini and Tsuchiya such that
both respondents became the owners of a total of 3300 shares or the majority out of 5,649 outstanding subscribed
shares of the corporation (Rollo, pp. 4-5), and that there was no dispute as to the legality of the transfer of the stock
certificate Exhibits "B-1" to "B-4" to Jureidini, all of which bear the signatures of the president and the secretary as
required by the Corporation Law with the proper indorsements of the respective owners appearing thereon. Exhibits
"B-1" to "B-4" are specifically indorsed to her while Exhibits "B-2" and "B-3" are indorsed in blank. Aquilino Rivera
admitted the genuineness of an the signatures of the officers of the corporation and of an the indorsee therein.
(Order dated June 5, 1981, Civil Case No. 13273, Rollo, pp. 51-53).

Nonetheless, private respondents attempted several times to register their stock certificates with the corporation
but the latter refused to register the same. (Ibid., Rollo, pp. 54-55). Thus, private respondents filed a special civil
action for mandamus and damages with preliminary mandatory injunction and/or receivership naming herein
petitioners as respondents, docketed as Special Civil Action No. 13273, "Lourdes Jureidini, et al. v. Fujiyama Hotel et
al." of the Court of First Instance of Manila, Branch XXXVI presided by respondent Judge. Petitioners' counsel Atty.
Marcelino A. Bueno, upon receipt of the summons and a copy of the aforesaid petition, filed an answer thereto with
denials, special and affirmative defenses and counterclaim. Thereafter, a hearing was held on the application for
preliminary mandatory injunction and/or receivership, after which respondent Judge issued an order for a writ of
preliminary mandatory injunction authorizing respondent Jureidini and Tsuchiya to manage the corporation's hotel
and restaurant, upon the filing of a bond in the amount of P30,000.00. Then through another counsel Atty. Eriberto
D. Ignacio in collaboration with their counsel of record, Atty. Marcelino A. Bueno, petitioners (respondents therein)
filed a motion to dismiss the petition on the ground that respondent Judge has no jurisdiction to entertain the case,
while through Atty. Bueno, they filed a motion for reconsideration of the Order granting the issuance of a writ of
mandatory preliminary injunction. Private respondents filed their opposition to both motions and on July 24, 1981,
respondent Judge issued an Order denying both the motion for reconsideration and the motion to dismiss the
petition but increased the amount of the bond from P30,000.00 to P120,000.00 to sufficiently protect the interests
of herein petitioners. (Rollo, p. 81).
Hence, this petition.
After filing the petition, Atty. Eriberto D. Ignacio withdrew as counsel for petitioners on August 6, 1981. Such
withdrawal was confirmed by petitioner Isamu Akasako (Rollo, p. 83). On August 10, 1981 the appearance of Isaca
& Espiritu Law Offices as counsel in substitution of former counsel Attys. Marcelino A. Bueno and Eriberto D. Ignacio
was received by this Court. (Rollo, p. 84); all of which were noted in the resolution of the First Division of this Court
dated August 17, 1981. (Rollo, p. 160).
The new counsel filed a Manifestation and Motion praying that the therein attached Supplement and certified copies
of the questioned orders and writs be admitted and considered as part of petitioners' original petition for certiorari
and Prohibition with Preliminary injunction. (Rollo, pp. 85-131). On August 14, 1981 petitioners filed an Urgent
Motion for Restraining Order and Other Provisional Injunctive Reliefs (Rollo, pp. 154-159). In the same resolution of
August 17, 1981, after deliberating on the petition and supplemental to the petition, the Court Resolved: (a) to
require the respondents to comment thereon (not to file a motion to dismiss within ten (10) days from notice and
(b) upon petitioners' filing of an injunction bond in the amount of P30,000.00 to issue a Writ of Preliminary
Injunction enjoining respondents from enforcing the writ of preliminary mandatory injunction dated June 23, 1981
issued in Civil Case No. 132673. (Rollo, p. 160). Said bond was filed on August 20, 1981 (Rollo, p. 161) and
accordingly, a writ of preliminary injunction was issued by this Court on August 21, 1981 (Rollo, pp. 172-173).
Subsequently, petitioners filed a manifestation and urgent motion on August 28, 1981 praying that private
respondent Lourdes Jureidini and her counsel Atty. Arthur Canlas be declared in contempt of court for the former's
alleged defiant refusal: (a) to acknowledge receipt of the Writ of Preliminary Injunction of August 21, 1981 and (b) to
comply with the said writ issued by this Court. (Rollo, pp. 174-180).
Comment thereon was filed by private respondents through counsel (Rollo, pp. 185-199) in compliance with the
resolution of the First Division dated August 17, 1981 (Rollo, p. 160), praying for the immediate lifting of the
preliminary injunction. Said comment of private respondents was noted in the resolution of October 5, 1981 (Rollo,
p. 200) which also required respondents to comment on the supplement to the petition.
On October 2, 1981, comment on the manifestation and urgent motion to declare Jureidini and her counsel in
contempt of court was filed by counsel for private respondent (Reno, pp. 201-214) in compliance with the resolution
of September 14, 1981 (Rollo, p. 181).
In the resolution of October 26, 1981 (Reno, p. 215) the Court Resolved to require petitioners to file a reply to
aforesaid comment. (Rollo, p. 215).
Meanwhile, supplemental comment on the supplement to the petition was filed by private respondents on October
14, 1981 (Rollo, pp. 216-222) reiterating their stand that it is the ordinary court and not the Securities and
Exchange Commission (SEC) that has jurisdiction to entertain the case as the controversies did not arise from the
intra-corporate relationship among the parties.
On October 21, 1981, petitioner filed: (a) motion for leave to file reply to comment of respondents on the petition
and supplemental petition required in the resolution of August 17, 1981 (Rollo, pp. 223-224) and (b) the attached

Reply (Rollo, pp. 225-241). On November 25, 1981, petitioners filed their Reply to respondents' Comment on
petitioners' manifestation and urgent motion to declare them in contempt. (Rollo, pp. 246-257).
On December 7, 1981 Atty. Bobby P. Yuseco entered his appearance as collaborating counsel for petitioners (Rollo,
p. 258) and filed an urgent petition for early resolution of petitioners' motion to hold private respondents in
contempt and for issuance of Order clarifying Writ of Injunction dated August 21, 1981. (Rollo, pp. 259-261).
In the resolution of January 18, 1982, this case and all pending incidents were set for hearing on February 3, 1982.
(Rollo, p. 268).
On February 1, 1982, Lesaca and Espiritu Law Offices filed a Manifestation and Motion for Leave to withdraw as
counsel for petitioners. (Rollo, pp. 274-275).
When this case was called for hearing on February 3, 1982, counsel for both parties appeared and argued their
causes and both were required by the Court within an unextendible period of ten (10) days to file their respective
memoranda in support of their positions on an pending incidents of the case at bar while the hearing on the
contempt proceedings was reset for February 10, 1982 where the personal appearance of private respondent
Lourdes Jureidini through her counsel was required. (Rollo, p. 279).
On February 9, 1982, counsel for private respondent Jureidini filed an Urgent Motion and Manifestation that he was
informed by his client that she is physically exhausted and is beset with hypertension and praying that she be
excused from appearing at the hearing set for February 10, 1982, that the hearing be cancelled and the contempt
incident be considered submitted for decision on the basis of pleadings previously filed. (Rollo, pp. 280-282).
On the same date, February 9, 1982, counsel for petitioners filed his Memorandum in support of his oral argument
at the hearing of February 3, 1982, (Rollo, pp. 283-287) while a supplement thereto was filed on February 12, 1982.
(Rollo, pp. 291-294).
At the hearing of February 10, 1982, private respondent Lourdes Jureidini and her counsel failed to appear.
Accordingly the Court Resolved: (a) to IMPOSE on said counsel Atty. Canlas a fine of P200.00 or to suffer
imprisonment if said fine is not paid; (b) to RESET the hearing on the contempt incidents on March 3, 1982 and (c)
to REQUIRE the presence of Atty. Canlas and respondent Lourdes Jureidini and of complainants Attys. Bibiano P.
Lasaca, Rodolfo A. Espiritu and Renato T. Paqui. (Resolution of February 10, 1982, Rollo, p. 290).
On February 15, 1982, private respondents file their memorandum in compliance with the resolution of this Court of
February 3, 1982 while petitioners on February 25, 1982 filed their reply thereto.
At the hearing of March 3, 1982, both counsel as well as private respondent Lourdes Jureidini, Attys. Bibiano P.
Lesaca, Rodolfo A. Espiritu and Renato R. Paguio appeared. Atty. Canlas, Lourdes Jureidini, Atty. Lesaca and a
representative of the petitioners were interpellated by the Court. Thereafter, the incident was declared submitted
for resolution. (Resolution of March 3, 1982, Rollo, p. 316).
On March 5, 1982, counsel for private respondents filed his compliance with the resolution of February 10, 1982
enclosing a check payable to this Court in the amount of P200.00 in payment of the fine imposed with motion for
reconsideration explaining why he should not be declared in contempt and praying that the aforesaid resolution of
February 10, 1982 be set aside, (Rollo, pp. 312-314). However, in the resolution of March 10, 1982, (Rollo, p. 317)
the Court acting on the compliance of Atty. Arthur Canlas with motion for reconsideration, denied the motion and
required the Chief of the Docket Division to return to Atty. Canlas the check in the amount of P200.00 it being an out
of town check, and Atty. Canlas to pay the fine in cash, and to show cause why he should not be disciplinary dealt
with or held in contempt for wilful delay in paying the fine by mail through an out of town check contrary to his
manifestation at the hearing that he had promptly paid the fine, both within forty eight hours from notice.
Meanwhile, counsel for petitioners filed on April 6, 1982 an Urgent Petition for Permission to Implement Injunction
Writ issued on August 21, 1981 (Rollo, pp. 323-325) which was granted in the resolution of May 26, 1982 (Rollo, p.
313). In the same resolution the Court ordered Lourdes Jureidini and Milagros Tsuchiya to strictly and immediately
comply with the Court's aforesaid writ of preliminary injunction; indicated that it would resolve the pending incident
for contempt against private respondent Lourdes Jureidini when the Court decides the case on the merits; and gave
the parties thirty (30) days from notice within which to submit simultaneously their respective memoranda on the
merits of the case.

On May 31, 1982, counsel for private respondent Atty. Canlas filed in compliance with the resolution of March 10,
1982, his explanation and manifestation why he should not be disciplinarily dealt with and held in contempt of
Court (Rollo, pp. 316-318). In the resolution of June 2, 1982, the Court Resolved to set aside and lift the Order of
Atty. Canlas' arrest and commitment it had issued on March 31, 1982 but found the explanation and manifestation
of Atty. Canlas dated May 29, 1982 unsatisfactory. In view thereof, he was reprimanded for negligence and undue
delay in complying with the Court's resolution. (Rollo, p. 319).
On June 18, 1982, counsel for petitioners allegedly for purposes of clarification as to the laws involved in the matter
of contempt of Lourdes Jureidini, filed a pleading entitled "Re Incident of Contempt against Lourdes Jureidini." (Rollo,
pp. 320-326) which was noted by the Court in the resolution of July 7, 1982. (Rollo, p. 328).
Counsel for private respondents manifested (Rollo, p. 329), on July 12, 1982 that they are adopting the
memorandum submitted in the preliminary injunction incident as their memorandum in the main case. Said
manifestation was noted in the resolution of July 26, 1982. (Rollo, p. 331). Counsel for petitioners manifested (Rollo,
p. 333) that they are adopting their memorandum in support of argument last February 3, 1982 as their combined
memoranda on the merits of the case. Said manifestation was noted in the resolution of September 15, 1982.
(Rollo, p. 334). In the resolution of November 29, 1982, this case was transferred to the Second Division. (Rollo, p.
336).
In their petition and supplemental petition, petitioners raised the following issues:
I
THE RESPONDENT COURT OF FIRST INSTANCE HAS NO JURISDICTION OVER THE PETITION FOR
mandamus AND RECEIVERSHIP "AS WELL AS IN PLACING THE CORPORATE ASSETS UNDER
PROVISIONAL RECEIVERSHIP IN THE GUISE OF A WRIT OF PRELIMINARY MANDATORY INJUNCTION.
II
EVEN FALSELY ASSUMING THAT THE RESPONDENT COURT HAD JURISDICTION, THE PRIVATE
RESPONDENTS' PRINCIPAL ACTION OF mandamus IS AN IMPROPER COURSE OF ACTION.
III
ASSUMING ARGUENDO THAT WHAT THE RESPONDENT COURT FOUND IS TRUE, NAMELY THAT
PRIVATE RESPONDENTS "ARE OUTSIDERS" AND "NOT YET STOCKHOLDERS," THUS, HAVING NO
PERSONALLY AT ALL, THEN PROVISIONAL RECEIVERSHIP, ALBEIT CLOTHED AS A "WRIT OF
PRELIMINARY MANDATORY INJUNCTION" WAS ILLEGALLY ISSUED DE HORS ITS JURISDICTION.
IV
ASSUMING ARGUENDO THAT THE RESPONDENT COURT HAD JURISDICTION OVER BOTH THE
PETITION FOR mandamus AS WELL AS THE PROVISIONAL RECEIVERSHIP STILL THE RESPONDENT
COURT ACTED IN EXCESS OF ITS JURISDICTION OR IN GRAVE ABUSE OF ITS DISCRETION TO GRANT
RECEIVERSHIP OVER THE MANAGEMENT OF THE CORPORATE BUSINESS AND ASSETS WHICH
NEVER WAS NOR IS A SUBJECT MATTER OF LITIGATION.
V
EVEN GRANTING FOR THE SAKE OF AGRGUMENT THAT THE RESPONDENT
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE; NONETHELESS IT WAS IN
OF ITS DISCRETION TO UNILATERALLY GRANT TO A "PARTY-IN-LITIGATION,"
RESPONDENTS HEREIN, THE MANAGEMENT OF THE CORPORATE BUSINESS.
Supplemental Petition; Rollo, pp. 2-18; 88-131).
I

COURT HAD
GRAVE ABUSE
THE PRIVATE
(Petition and

The crucial issue in this case is whether it is the regular court or the Securities and Exchange Commission that has
jurisdiction over the present controversy.
Presidential Decree No. 902-A provides:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving
(a) ...
(b) Controversies arising out of intra-corporate or partnership relations and among stockholders,
members, or associates; between any or all of them and the corporation, partnership or
association of which they are stockholders, members, or associates, respectively and between
such corporations, partnership or association and the State insofar as it concerns their individual
franchise or right to exist as such entity.
It has already been settled that an intracorporate controversy would call for the jurisdiction of the Securities and
Exchange Commission. (Philippine School of Business Administration v. Lanao, 127 SCRA 781, February 24, 1984).
On the other hand, an intra-corporate controversy has been defined as "one which arises between a stockholder
and the corporate. There is no distinction, qualification, nor any exemption whatsoever." (Philex Mining Corporation
v. Reyes, 118 SCRA 605, November 19, 1982). This Court has also ruled that cases of private respondents who are
not shareholders of the corporation, cannot be a "controversy arising out of intracorporate or partnership relations
between and among stockholders, members or associates; between any or all of them and the corporation,
partnership or association, of which they are stockholders, members or associates, respectively." (Sunset View
Condominium Corporation v. Campos, Jr., 104 SCRA 303, April 27, 1981).
Under Batas Pambansa Blg. 68 otherwise known as "The Corporation Code of the Philippines," shares of stock are
transferred as follows:
SEC. 63. Certificate of stock and transfer of shares. The capital stock of stock corporations shall
be divided into shares for which certificates signed by the president or vice-president,
countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation
shall be issued in accordance with the by-laws. Shares of stock so issued are personal property
and may be transferred by delivery of the certificate or certificates indorsed by the owner or his
attorney-in- fact or other person legally authorized to make the transfer. No transfer, however,
shall be valid, except as between the parties, until the transfer is recorded in the book of the
corporation showing the names of the parties to the transaction, the date of the transfer, the
number of the certificate or certificates and the number of shares transferred.
xxx xxx xxx
As confirmed by this Court, "shares of stock may be transferred by delivery to the transferee of the certificate
properly indorsed. 'Title may be vested in the transferee by delivery of the certificate with a written assignment or
indorsement thereof ' (18 C.J. S. 928). There should be compliance with the mode of transfer prescribed by law (18
C.J.S. 930)' " (Nava v. Peers Marketing Corp. 74 SCRA 65, 69, Nov. 25, 1976)
As the bone of contention in this case, is the refusal of petitioner Rivera to indorse the shares of stock in question
and the refusal of the Corporation to register private respondents' shares in its books, there is merit in the findings
of the lower court that the present controversy is not an intracorporate controversy; private respondents are not yet
stockholders; they are only seeking to be registered as stockholders because of an alleged sale of shares of stock to
them. Therefore, as the petition is filed by outsiders not yet members of the corporation, jurisdiction properly
belongs to the regular courts.
II
On the other hand, there is merit in petitioners' contention that private respondents' principal action of mandamus
is an improper course of action.

It is evident that mandamus wig not lie in the instant case where the shares of stock in question are not even
indorsed by the registered owner Rivera who is specifically resisting the registration thereof in the books of the
corporation. Under the above ruling, even the shares of stock which were purchased by private respondents from
the other incorporators cannot also be the subject of mandamus on the strength of mere indorsement of the
supposed owners of said shares in the absence of express instructions from them. The rights of the parties will have
to be threshed out in an ordinary action.
III-V
Petitioners insist that what was issued was a provisional receivership, while private respondents maintain that the
trial court issued a Writ of Preliminary Mandatory Injunction. Be that as it may, it appears obvious that from the
abovementioned rulings of this Court, petitioners' contention that respondent Judge in the issuance thereof
committed acts of grave abuse of discretion, is well taken.
In the Order dated June 5, 1981, in Civil Case No. 132673, the basis of aforesaid Writ was as follows:
Finally, the Court, after assessing the evidence, finds that the issuance of a preliminary
mandatory injunction is proper. Respondents Isamu Akasako and Aquilino Rivera, thru their
simulated relationship, have succeeded for two years since 1979 to deprive the petitioners to
participate in the profit and management of the corporation of which they are the majority
stockholders considering that the stocks certificates appearing in the name of Aquilino Rivera
(Exh. "8") is 55% to 75% of the total stocks of the corporation by Isamu Akasako would only
prolong the injustice committed against the petitioners and the damages they would suffer would
be irreparable. The Court is aware that preliminary mandatory injunction is the exception rather
than the rule, but according to the Code Commission, in its report on page 98, "the writ of
preliminary mandatory injunction is called for by the fact that there are at present prolonged
litigation between owner and usurper and the former is deprived of his possession even when he
has an immediate right thereto." In the instant case, the right of the petitioners is clear and
unmistakable on the law and the facts and there exists an urgent and paramount necessity for the
issuing of the writ in order to prevent extreme or rather serious damage which ensues from
withholding it. (43 C.J.S. 413)
WHEREFORE, in view of the foregoing circumstances, let a writ of preliminary mandatory
injunction issue requiring respondents to allow petitioners to manage the corporate property
known as the Fujiyama Hotel & Restauarant, Inc. upon petitioners' filing of a bond in the amount
of P30,000.00.
A mandatory injunction is granted only on a showing (a) that the invasion of the right is material and substantial;
(b) the right of complainant is clear and unmistakable; and (c) there is an urgent and permanent necessity for the
writ to prevent serious damage. (Pelejo v. Court of Appeals, 117 SCRA 668, Oct. 18, 1982).
A mandatory injunction which commands the performance of some specific act is regarded as of a more serious
nature than a mere prohibitive injunction, the latter being intended generally to maintain the status quo only. While
our courts, being both of law and equity, have jurisdiction to issue a mandatory writ, it has always been held that its
issuance would be justified only in clear cases; that it is generally improper to issue it before final hearing because
it tends to do more than maintain the status quo; that it should be issued only where there is a willful and unlawful
invasion of plaintiff's right and that the latter's case is one free from doubt and dispute. (National Marketing v.
Cloribel, 22 SCRA 1038, March 13, 1968).
Respondent court in the instant case violated the fundamental rule of injunctions that a mandatory injunction will
not issue in favor of a party whose rights are not clear and free of doubt or as yet undetermined. (Namarco v.
Cloribel, 22 SCRA 1038-1039, March 13, 1968). It will be recalled that the disputed shares of stock were purchased
not from the registered owner but from a Japanese national who allegedly was the real owner thereof. It was also
alleged that the registered owner was only a dummy of Akasako. it is also true that the trial court has already made
findings to that effect at the hearing for the issuance of the Order of June 5, 1981. Nonetheless, these are
contentious issues that should properly be ventilated at the trial on the merits. As correctly stated in petitioners'
motion for reconsideration, the Order of the trial court is in effect a judgment on the merits, declaring expressly or
impliedly that petitioners are stockholders of the Corporation at the hearing of only the incident for the issuance of
a Writ of Preliminary Injunction. On the other hand if the Order amounts to a judgment on the merits, the lower
court should first rule on what private respondents seek, the registration of their shareholdings in the books of the
corporation and the issuance of new stock certificates. It is only thereafter that the subsequent act of management

may be ordered and the period of finality of such a judgment should be in accordance with the Rules of Court,
giving the respondents the right to an appeal or review and not be immediately executory as the Writ of Preliminary
Mandatory Injunction would infer. (Rollo, p. 65).
Another fundamental rule which appears to have been violated in the case at bar is that no advantage may be
given to one to the prejudice of the other, a court should not by means of a preliminary injunction transfer the
property in litigation from the possession of one party to another where the legal title is in dispute and the party
having possession asserts ownership thereto. (Rodulfo v. Alonso, 76 Phil. 225), February 28, 1946). Similarly, the
primary purpose of an injunction is to preserve the status quo, that is the last actual peaceable uncontested status
which preceded the controversy. In the instant case, petitioner Rivera is the registered majority and controlling
stockholder of the corporation before the ensuing events transpired. By the issuance of the Writ in question he
appears to have been deprived of his rights as stockholder thereof apart from his status as Chairman of the Board
and President of the corporation, with Akasako as the Manager of the two restaurants in this case; the same being
the last uncontested status which preceded the controversy. (Rollo, p. 127).
On the contempt incident involving private respondent Lourdes Jureidini, a Manifestation and Urgent Motion was
filed by petitioners to declare her in contempt of Court for allegedly refusing to acknowledge receipt of the Writ of
Preliminary Injunction issued by this Court and for allegedly refusing to comply therewith. Attributed to her were the
following statements: "I will not obey that ... Yes, I am higher than the Supreme Court ... I will obey only what my
lawyer tells me."
In her explanation however, filed through her counsel she denied having uttered the statements alluded to her, the
truth of the matter being that she was alone in the restaurant when this Court's process server, accompanied by
petitioners' lawyers, approached her and demanded that she vacate the premises and surrender the management
of the Restaurant. Fazed by the unusual display of lawyers she requested that she be given time to confer with her
counsel Said request allegedly precipitated the remark from Petitioners' counsel that neither respondent herself, nor
her counsel can be higher than the Supreme Court and that any conference seeking to clarify the effect of the Writ
of Preliminary Injunction would be futile. (Rollo, pp. 174-175).
It was likewise explained that respondent Jureidini did not sign and acknowledge receipt of the Writ because it was
not addressed to her but to the lower court and to her counsel.
Respondent's counsel says that the incident was concocted and devised by the petitioners and their counsel to
serve no salutary purpose but to scare and harass respondent Jureidini. He also stated that "it is equally improper,
at least in practice, for lawyers to accompany officers of the Court in serving or otherwise executing processes of
said court as to create a seeming suspicion to the public that lawyers are not involved only professionally in the
case they handle but signify their personal interests as well." (Rollo, pp. 208-209).
When this contempt incident was heard on March 3, 1982, Atty. Arthur A. Canlas, counsel for private respondent
Lourdes Jureidini, Jureidini herself, Atty. Bibiano P. Lesaca a representative of the petitioners were interpellated by
the Court. Thereafter, the incident was declared submitted for resolution. (Resolution of March 3, 1982; Rollo, p.
316).
Thereafter, counsel for petitioner filed a pleading "The Incident of Contempt of Lourdes Jureidini" in the form of a
summation of the incident and reiteration of petitioners' charges of contempt.
Counsel for petitioner invokes the provisions of: Section 3, Rule 71 on Indirect Contempt and par. (b) thereof, on
Disobedience of or Resistance to a Lawful Writ, Process, Order, Judgement or Command of a Court; or Injunction
granted by a Court or Judge ... ; (2) Section 6, Rule 71 regarding punishment or penalty thereof and (3) Section 5,
Rule 135, par. (e) to compel obedience to its judgments, orders and processes, and to the lawful orders of a judge
out of Court, in a case pending therein.
On the incident itself, petitioners' counsel stressed that present when the writ was served were attorneys for
petitioners Bibiano P. Lesaca, and Renato P. Paguio in the company of petitioners Isamu Akasako, Akasako's
assistants Furnio, Fujihara and Isamu Tajewakai and this Court's process server, before whose presence the alleged
contemptuous acts were committed.
Counsel for petitioners also reminded the Court that the first summons of the Court were answered only by counsel
for private respondent Jureidini while the latter feigned sickness without a medical certificate. The hearing for the
contempt charge was reset but neither counsel for private respondent nor the latter appeared for which non-

appearance Atty. Canlas was fined P200.00 for contempt when finally both counsel and client appeared on the third
day, the hearing was set.
At that hearing, counsel for petitioners narrated that Attys. Lesaca and Paguio and two Japanese nationals testified
in unison that Lourdes Jureidini not only disregarded the writ but distinctly uttered the complained of statements.
Petitioners' counsel laid emphasis on the fact that Lourdes Jureidini is a graduate of nursing, who speaks in straight
polished English, capable of understanding the Writ of Mandatory Injunction of the Respondent Court served on
petitioners by herself and a Deputy Sheriff of Manila, but incredibly unable to understand the Writ issued by the
Supreme Court. She was assessed as "overbearing to the point of insolence" and capable of uttering "I am higher
than the Supreme Court."
There is no question that disobedience or resistance to a lawful writ, process, order, judgment or command of a
court, or injunction granted by a court or judge, more particularly in this case, the Supreme Court, constitutes
Indirect Contempt punishable under Rule 71 of the Rules of Court. (Rule 71, Section 3(b) and Section 6).
It has been held that contempt of court is a defiance of the authority, justice or dignity of the court, such conduct as
tends to bring the authority and administration of the law into disrespect or to interfere with or prejudice parties
litigant or their witnesses during litigation. It is defined as a disobedience to the court by setting up an opposition to
its authority justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders but such
conduct as tends to bring the authority of the court and the administration of law into disrepute or in some manner
to impede the due administration of justice (Halili v. Court of Industrial Relations, 136 SCRA 135, April 30, 1985).
However, it is also well settled that "the power to punish for contempt of court should be exercised on the
preservative and not on the vindictive principle. Only occasionally should the court invoke its inherent power in
order to retain that respect without which the administration of justice must falter or fail." (Villavicencio v. Lukban,
39 Phil. 778 [1919]; Gamboa v. Teodoro, et al., 91 Phil. 274 [1952]; Sulit v. Tiangco, 115 SCRA 207 [1982]; Lipata v.
Tutaan, 124 SCRA 880 [1983]). "Only in cases of clear and contumacious refusal to obey should the power be
exercised. A bona fide misunderstanding of the terms of the order or of the procedural rules should not immediately
cause the institution of contempt proceedings." "Such power 'being drastic and extra-ordinary in its nature ...
should not be resorted to ... unless necessary in the interest of justice.' " (Gamboa v. Teodoro, et al.,supra).
In the case at bar, although private respondent Jureidini did not immediately comply with the Writ of Injunction
issued by this Court, it appears reasonable on her part to request that she be allowed to confer with her lawyer first
before she makes any move of her own. It is likewise reasonable for counsel for private respondent to request that
he be given time to file a motion for clarification with the Supreme Court.
It will also be noted that the testimonies produced at the hearing to establish the fact that she had uttered the
alleged contemptuous statements alluded to her were those of Attys. Lesaca and Paguio and two Japanese
nationals, a one-sided version for the petitioners.
It appears to Us that the version of counsel for private respondent is more in accord with human experience:
Jureidini who was alone in the Restaurant was fazed by the unusual display of might and by the presence of lawyers
demanding that she vacate premises and surrender the management of the Restaurant (Rollo, p. 204), this is more
believable than the version of counsel for petitioners who summed her up as a person "overbearing to the point of
insolence" and capable of uttering" I am higher than the Supreme Court." It would therefore be more reasonable to
believe that what she uttered in that situation where she felt threatened, was more in self-defense and not an open
defiance of the Supreme Court.
Jureidini cannot also be faulted for finding it difficult to understand the writ issued against her by the Supreme Court
as she believed that not only have she and her correspondent the legal right to manage the restaurant but the
equitable right as well, having been placed in possession of the corporate property only after posting a bond of
P120,000.00. (Rollo, pp. 197-198).
In connection with this incident, Jureidini through her counsel filed her comment on October 2, 1981 (Rollo, p. 201)
contrary to the allegation of petitioners' counsel that it was only Atty. Canlas who filed his comment.
WHEREFORE, the assailed orders of respondent Judge are SET ASIDE; the complaint (special civil action for
mandamus with damages, etc.) should ordinarily be dismissed without prejudice to the filing of the proper action;
but as all parties are already duly represented, We hereby consider the case as an ordinary civil action for specific

performance, and the case is therefore remanded to the lower court for trial on the merits; the charge of contempt
against respondent Jureidini is DISMISSED but the order of Our Court restraining respondent from taking over the
management of the restaurant remains until after this case is decided.
SO ORDERED

G.R. No. 75736 September 29, 1988


ASSOCIATED LABOR UNIONS (ALU-TUCP), (For And In Behalf Of Its Direct Members, Namely, WARREN
MAPUTI, RODRIGO CATIPAY, GILBERTO REDOBLADO ROBERTO RONOLO and 134 Others), petitioners,
vs.
HONORABLE ANTONIO V. BORROMEO AND BELYCA CORPORATION, Represented By BELLO M.
CASANOVA, SR., President & General Manager, respondents.

The Court issues the writs prayed for in this petition for certiorari and prohibition filed by the petitioner, the
Associated Labor Unions.
It appears that on June 24, 1986, as a consequence of a controversy arising from charges of unfair labor practices
against the respondent, BELYCA Corporation, a firm engaged in livestock farming, the petitioner filed a notice of
strike with the then Ministry of Labor and Employment, Region X, at Cagayan de Oro City. On July 2, 1986, it filed a
complaint for various offenses against the private respondent ranging from unfair labor practice to non-payment of
the minimum wages. On July 24, 1986, it struck.
On the same date, the private respondent commenced suit for injunction with the respondent Regional Trial Court. It
alleged that the petitioner had obstructed free ingress to the firm's premises, "preventing workers of Belyca farms
from entering the business establishments ... preventing said workers from giving feeds and/or food to the hogs and
fowls which would kill all of said hogs and fowls if not attended to this very day ..." 1 (The private respondent
maintains "about 7,500 hogs and with 8,000 fowls with a total value of about P10,000.00." 2) On the same day, the
respondent judge issued a temporary restraining order (TRO) "commanding herein defendants [the striking
workers], their agents and/or representatives to allow plaintiff [the private-respondent) or workers or authorized
representatives free passage to and from Belyca Farms, located at Kalasungay Malaybalay, Bukidnon to feed
plaintiffs seven thousand five hundred (7,500) hogs and eight thousand (8,000) fowls." 3
On August 4, 1986, the petitioner filed a motion for reconsideration (to lift TRO as well as for the dismissal of the
case on the ground of lack of jurisdiction. On August 14, 1986, the respondent judge denied the motion.

Also on August 14, 1986, Belyca Corporation filed an urgent motion "for extension of the life of the restraining order
previously issued to another twenty days." The petitioner opposed the motion. On August 19, 1986, however, the
respondent judge granted it stating:
WHEREFORE, for the sake of justice and fairness, the temporary mandatory order dated July 24,
1986 which expired on August 13, 1986 is hereby extended to another period of twenty (20) days
to be counted from August 13, 1986. It will expire on October 2, 1986 which is the date of the
hearing of the main petition.
Done this 19th day of August, 1986 at Malaybalay, Bukidnon.
[Please note the erroneous reckoning of the expiration date of the TRO which should be September 2, 1 986, after
the twenty-day extension (from August 13), and not October 2, 1986 as stated in the Order of August 19, 1986 the
decretal portion of which is quoted above. It is self-evident that twenty (20) days from August 13, 1986 would be
September 2, 1986 and not October 2, 1 986.]
The petitioner then came to this Court.
As the Court has indicated at the outset, the petition is granted.
The courts of law have no jurisdiction to act on labor cases or various incidents arising therefrom. That is basic and
elementary. Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor officials of the
Department of Labor, thus:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the
original and exclusive jurisdiction to hear and decide within thirty (30) working days after
submission of the case by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and conditions of
employment;
3. All money claims of workers, including those based on non- payment or underpayment of
wages, overtime compensation, separation pay and other benefits provided by law or appropriate
agreement, except
claims for employees' compensation, social security, medicare and maternity benefits.
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving the
legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters. 4
xxx xxx xxx
ART. 128 ...
(b) The Minister of Labor or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions of this
Code based on the findings of labor regulation officers or industrial safety engineers made in the
course of inspection, and to issue writs of execution to the appropriate authority for the
enforcement of their order, except in cases where the employer contests the findings of the labor

regulations officer and raise issues which cannot be resolved without co considering evidentiary
matters that are not verifiable in the normal course of inspection. 5
It was only very recently that the Court promulgated Silva Pipe Workers Union NATU v. Filipino Pipe & Foundry
Corporation, 6 where it was held:
The contention of the Company that the CFI had jurisdiction over the civil case inasmuch as it was
brought principally to prevent the further commission of unlawful acts, is not well-taken. The
ruling laid down in National Garments and Textile Workers' Union-PAFLU, etc., vs. Hon.
Hermogenes Caluag, et al., L-9104, 99 Phil. 1067 (1956), is in point:
It appearing that the issue involved in the main case is interwoven with the
unfair labor case pending before the CIR as to which its jurisdiction is exclusive,
it is evident that it does not come under the jurisdiction of the trial court even if
it involves acts of violence, intimidation and coercion as averred in the
complaint. These acts come within the purview of Section 9 (d) of RA 875 which
may be enjoined by CIR.
In a long line of decided cases, this Court has also invariably held that the Court of Industrial
Relations has exclusive jurisdiction over labor disputes involving unfair labor practice, with the
exclusive power to issue a temporary restraining order to enjoin acts in connection therewith.
Thus:
Cases involving unfair labor practices fall within the exclusive jurisdiction of the
CIR, and in the exercise of its jurisdiction said court has the exclusive power to
issue a temporary restraining order to enjoin any acts committed in connection
with said labor dispute. (PAFLU, et al., vs. Tan, 99 Phil. 854; Phil.
Communications, Electronic and Electricity Workers Federation vs. Nolasco, L24984, July 29,1968; National Garment and Textile Workers' Union vs. Hon. H.
Caluag, No. I,9104, 99 Phil. 1067, and Erlanger and Galinger, Inc. vs. Erlanger
and Galinger Employees Association-NATU G.R. No. 1,11907,104 Phil. 17
[19581).
The reason for such exclusive jurisdiction is that since picketing and strikes may be mere
incidents or consequences of an unfair labor practice, it is but proper that a Writ of Injunction
prayed for in connection with that labor dispute originate from the Court having jurisdiction over
the main case inasmuch as it is that Court that has cognizance of all relevant facts (Erlanger &
Galinger, Inc. vs. Erlanger & Galinger Employees Association-NATU 104 Phil. 21 [19581).
It is clear then that the Court a quo acted without jurisdiction in the case before it.

That the case in question involves a labor dispute is patent from the records. In rendering his ruling, the respondent
judge himself was aware that the dispute was the result of an impasse between employer and employees, an
impasse cognizable alone by the National Labor Relations:
... This Court agrees in toto with the defendants that it has no jurisdiction to decide on the
question of legality or illegality of strikes and lockouts, inasmuch as the power to decide on said
legal question properly belongs to the National Labor Relations Commission, Ministry of Labor.
There is no shadow of a doubt that defendants are workers or employees of plaintiff Belyca
Corporation and likewise it is undisputed that their demands for increase of wages, reinstatement
and other demands fall within the exclusive original jurisdiction of the National Labor Relations
Commission or Labor Arbiters of the Ministry of Labor. ... 8
The respondent judge can not enjoin acts carried out as a consequence of the strike without unavoidably ruling on
the legality of the strike itself. ("The strike can continue. It does not mean that this Court has ruled on the legality or
illegality of the said strike." 9) To say indeed that the workers had obstructed free passage to the strike-bound firm,
is, by necessity, to say that the strike was illegal, notwithstanding the judge's own words of caution (that he was not
ruling on the legality or illegality of the strike). For under the Labor Code:

(E) No person engaged in picketing shall commit any act of violence, coercion, or intimidation or
obstruct the free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares. 10
This is clear from his very order:
This provision of law is cited in order to guide the defendants that their demands from their
employer should be made in lawful, friendly and diplomatic manner and they should never resort
to force, violence and intimidation or they should not apply the law of jungle, and should instead
apply the law of the land. Defendants are hereby advised to ventilate their demands for increase
of wages, reinstatement and the like, in a lawful and diplomatic manner in the proper forum which
is the National Labor Relations Commission, Ministry of Labor. The defendants are likewise
advised to have a diplomatic conference with the management of plaintiff- corporation in order
that their demands can be ventilated and heard in a lawful, friendly and diplomatic manner. The
philosophy of this step is to avoid trouble, disorder, chaos and bloodshed which are unwarranted
and unnecessary among educated and civilized people like the defendants and officers of plaintiffcorporation. 11
What is even clearer is the fact that in labor cases, injunction itself stands as an exceptional remedy. It does not lie
save in those cases as the Labor Code provides. Thus:
ART. 255. Injunction prohibited.No temporary or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall be issued by any court or other entity, except
as otherwise providede in Article 218 and 264 of this Code. 12
The provisions referred to are as follows:
(e) To enjoin or restrain any actual or threatened commission of any or all Prohibited or unlawful
acts in any labor dispute which, if not restrained forthwith, may cause grave or irreparable
damage to any patty or render ineffectual any decision in favor of such party. Provided, That no
temporary injunction against the commission of acts Prohibited under Article 265 of this Code
shall be issued by the Commission, except after due notice and hearing and in accordance with its
rules: Provided, further, That any ex parte restraining order issued by the Commission, or its
Chairman or Vice Chairman when the Commission is not in session and as may be prescribed by
its rules, shall be valid for a period not exceeding twenty (20) days Provided, finally, That the
receipt of evidence for the application of a writ of injunction may be delegated by the Commission
to any of its Labor Arbiters who shall, in cases where the parties are not residents of Metro Manila,
conduct such hearings in such places as he may determine to be accessible to the parties and its
witnesses and shall submit thereafter his recommendation to the Commission. 13
xxx xxx xxx
(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy, banks, hospitals, and exportoriented industries, including those within export processing zones, the Minister of Labor and
Employment shall assume jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or certification shall have the effect
artifical of automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the- strike or lockout. The Minister may seek the assistance of law
enforcement agencies to ensure compliance with this provision as well as with such orders as he
may issue to enforce the same.
The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries where in his opinion labor disputes may adversely affect the national
interest, and from intervening at any time and assuming jurisdiction over any labor dispute
adversely affecting the national interest in order to settle or terminate the same. 14

The fact that the poultry and piggery maintained by the private respondent required close care and attention does
not warrant the respondent judge's assumption of jurisdiction. It did not confer on him the competence he did not
have. Jurisdiction is vested by law and not by the demands of emergency. 15
This is not, of course, to say that the strike in question was, ergo, legal. As we said, concerted acts of labor are the
do of the labor officials, not the judiciary. Assuming, then, that the private respondent had cause for complaint and
that the strike was illegal or had become illegal as a result of the strikers' resort to illegal acts the courts are not the
proper forum for it.
The gross haste, furthermore, with which the challenged TRO was issued (it was issued on the same day the
complaint was filed)and based on the bare word alone of Belyca (that the strikers had behaved unlawfully in the
course of the strike)has not eluded this Court. This is a grave abuse of discretion. Plainly, it denied the workers
due process of law.
It is likewise a serious abuse of discretion on the part of the respondent judge to extend such a TRO. Under the
Rules of Court as amended 16 a TRO has a non-extendible lifetime of twenty days (that is, assuming that the TRO
itself was valid) upon the expiration of which, it dies a natural death. (In this case, the respondent judge extended
the life of the TRO to fifty (50)days from August 13, 1986 to October 2, 1986as stated in the order itself.) If a
writ of preliminary injunction is granted, the writ then takes its place. But it cannot substitute for the writ (if one is
not granted within the twenty-day period) by the simple expedient of "extending" its life. The issuance of
"perpetual" TROs was precisely the motivating factor behind the amendment of the Rules. In Dionisio v. Court of
first Instance of South Cotabato, Branch II, 17 we thus said:
The above-quoted amendatory provision (BP 224) was adopted as a reaction against the
indiscriminate issuance of ex parte preliminary injunctions which, not infrequently, converted the
writ from an instrument in furtherance of justice to a shield for injustice. Thereunder, in no case
may a preliminary injunction be issued without notice. The rule is absolute. Nevertheless, if it
appears that great or irreparable injury would result to the applicant before his application for
preliminary injunction could be heard on notice, the judge could issue a temporary restraining
order with a limited life of 20 days from date of issue. If before the expiration of the 20-day
period, the application for preliminary injunction is denied, the temporary restraining order would
thereby be deemed automatically vacated. But if no action is taken by the judge on the
application for preliminary injunction within the said 20 days, the temporary restraining order
would automatically expire on the 20th day by the sheer force of law, no judicial declaration to
that effect being necessary. Thus, by the terms of Batas Pambansa Blg. 224, a temporary
restraining order can no longer exist indefinitely; it has become truly temporary. 18
Neither can we countenance the respondent judge's resort to military assistance in order to implement his order. It
diminishes in no small measure the rights of the workingman enshrined in the Constitution. 19
To permit, furthermore, the issuance of a TRO founded on management's concern for animals (or other properties of
the firm) is to open posterns behind the ban (or regulation) of injunction under the Labor Code, and to frustrate the
right to strike itself, since a strike is designed precisely to stop the wheels of the factory. In any event, the Code has
left the discretion to the Secretary of Labor to determine which strikes are subject to injunction and State
intervention. 20 The courts, to reiterate, have no business interposing their intruding finger.
What has become increasingly apparent is the fact that the respondent judge had allowed himself to be the private
respondent 's intrument, witting or unwitting, in its (the private respondent's) effort to counter the impact of the
strike. This is evident from the orders now complained of. Res ipsa loquitur. 21 But let, likewise, the counsels for the
respondent firm be reprimanded for what would appear as an attempt on their paret to mainpuate the courts and
the court processes.
WHEREFORE, the petition is GRANTED. The orders, dated July 24, 1986, August 14, 1986, and August 19, 1986 are
hereby declared NULL AND VOID. Costs against the private responent.
SO ORDERED.

[G.R. No. 78265. January 22, 1990.]


SPOUSES ESTANISLAO and EDNA CARBUNGCO, Petitioners, v. COURT OF APPEALS, TENTH DIVISION,
and SPOUSES ELIAS and ISIDRA CUNANAN, Respondents.
Eliseo M. Cruz, for Petitioners.
Frias, Rosales and Ruiz for Private Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; PRELIMINARY INJUNCTION; A JUDGE MAY NOT ISSUE ANOTHER RESTRAINING
ORDER OF INDEFINITE DURATION AFTER THE FIRST ORDER HAD AUTOMATICALLY EXPIRED. Under Sec. 5. of Rule
58 of the Rules of Court as amended by Batas Pambansa Blg. 224, a judge (or justice) may issue a temporary
restraining order with a limited life of 20 days from date of issue. In the case of Board of Transportation v. Castro,
125 SCRA 410, We held: "If before the expiration of the 20-day period the application for preliminary injunction is
denied, the temporary restraining order would thereby be deemed automatically vacated. If no action is taken by
the judge on the application for preliminary injunction within the said 20 days, the temporary restraining order
would automatically expire on the 20th day by the sheer force of law, no judicial declaration to that effect being
necessary. A temporary restraining order CAN NO LONGER EXIST INDEFINITELY for it has become truly temporary."

DECISION

PARAS, J.:

The sole issue in this case is whether or not the respondent Court of Appeals may issue another temporary
restraining order of indefinite duration after the first had automatically expired on the twentieth (20th) day of its
issuance without private respondents having taken steps to obtain a preliminary injunction.
Respondents were required to comment on the petition in a resolution of this Court dated May 20, 1987. For failure
of respondents to file their comment, petitioners filed a Motion for judgment on the pleadings which was received
by this Court on August 5, 1987. Respondents were ordered to comment on the aforesaid motion, in a resolution
dated August 26, 1987. Again, respondents failed to file their comment. The Court, in a resolution dated February
15, 1988, gave due course to the petition and considered this case submitted for deliberation.
Petitioners invoke the corrective powers of this Court to set aside the second restraining order which had been
allegedly issued with grave abuse of discretion amounting to lack or excess of jurisdiction.
This petition is impressed with merit.
The record discloses that a restraining order was issued against petitioners by respondent court on March 11, 1987
(p.9, Rollo). On April 9, 1987, respondent Court issued another restraining order "in view of the special
circumstances under which this case is being heard . . . ." (p. 47, Rollo)
There is no doubt that the Court of Appeals may issue a temporary restraining order as held in the case of Delbros
Hotel Corporation v. Intermediate Appellate Court (GR No. 72566, April 12, 1988). In that case, this Court held that
Sec. 5 of Rule 58 of the Rules of Court as amended by BP Blg. 224, which reads:jgc:chanrobles.com.ph
"Sec. 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 (20) days from date of its issuance. Within the said 20-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."cralaw virtua1aw library
is also applicable to the Court of Appeals.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
Under the said provision, a judge (or justice) may issue a temporary restraining order with a limited life of 20 days
from date of issue. In the case of Board of Transportation v. Castro, 125 SCRA 410, We held:jgc:chanrobles.com.ph
"If before the expiration of the 20-day period the application for preliminary injunction is denied, the temporary
restraining order would thereby be deemed automatically vacated. If no action is taken by the judge on the
application for preliminary injunction within the said 20 days, the temporary restraining order would automatically
expire on the 20th day by the sheer force of law, no judicial declaration to that effect being necessary. A temporary
restraining order CAN NO LONGER EXIST INDEFINITELY for it has become truly temporary." (p. 5, Rollo)
The second restraining order issued is therefore a patent nullity.cralawnad
PREMISES CONSIDERED, the petition is hereby GRANTED in the sense that the second restraining order is SET ASIDE
and this case is REMANDED to the respondent Court of Appeals for resolution on the merits.
SO ORDERED.

[G.R. No. 121517. March 31, 2000]


RAY U. VELASCO, JOSEYMOUR P. ECOBIZA, WILHELM BARLIS AND BERNABE ALABASTRO, petitioners, vs.
COURT OF APPEALS, FIRMWOOD DEVELOPMENT CORPORATION AND STA. CLARA HOUSING INDUSTRIES,
INC., respondents.
DECISION
BELLOSILLO, J.:
This is a petition for review on certiorari praying for the reversal of the decision of the Court of Appeals [1] which
affirmed the orders of the trial court granting private respondents' separate motion for summary judgment with
prayer for damages. Oldmis o
A civil action was filed sometime in 1987 with the Regional Trial Court of Davao City, docketed as Civil Case No.
18567-87, by Naty Dy, Sencio Dy and Denver Builders Supply, Inc., against Nordy Diploma, Corazon Diploma,
George Diploma and Sta. Clara Housing Industries, Inc. The complaint alleged that on 31 October 1987 Naty Dy of
Denver Builders Supply (DENVER for brevity) and Nordy Diploma of Sta. Clara Housing Industries, Inc. (STA. CLARA
for brevity) entered into a "joint partnership venture" agreement to operate the Sta. Clara plant in Davao City; that
Naty Dy contributed a huge sum of money to the partnership which still owed her P13,623,265.69; that defendants
unilaterally dissolved the partnership and started to dispose the goods and stocks thereof so that plaintiffs sought a
judicial termination of the partnership as well as for accounting and damages. Plaintiffs also prayed for a temporary
restraining order and writ of preliminary injunction against defendants including STA. CLARA, which was granted by
the trial court in an order issued on 8 June 1987.
The defendants and STA. CLARA questioned the order in a petition for certiorari with the Court of Appeals. The
appellate court granted the petition and set aside the writ of preliminary injunction. Not satisfied with the decision
of the Court of Appeals however, the Dy spouses and DENVER elevated the matter to this Court. The petition,
docketed as G.R. No. 79586, elicited on 4 September 1987 a temporary restraining order against the Diplomas and
STA. CLARA enjoining the latter, their agents, representatives and/or any person or persons acting upon their orders
or in their place and stead from withdrawing and/or further disposing of the plywood inventory in Sta. Clara Housing
Industries, Inc. plant or warehouse as litigated in CA-G.R. SP No. 12167, Nordy P. Diploma, et al., petitioners, v. Hon.
Anita Alfelor Alagaban, etc., et al., respondents.
Based on reports that several crates of plywood were being hauled out of the premises of STA. CLARA by the
Diplomas in violation of the temporary restraining order issued by this Court, Joseymour Ecobiza, Deputy Sheriff of
RTC-Br. 13, Davao City, accompanied by Atty. Bernabe Alabastro, caused to be seized on 26 October 1987 eleven
(11) crates of plywood allegedly being transported to Tefasco Wharf at Ilang, Davao City. These crates had the

markings of STA. CLARA and Firmwood Development Corporation (FIRMWOOD for brevity). Deputy Sheriff Joseymour
Ecobiza executed an affidavit that the seizure was effected pursuant to the temporary restraining order issued by
this Court against the Diplomas and STA. CLARA. [2]
On 18 November 1987 respondent FIRMWOOD filed with the Regional Trial Court of Davao City a complaint for
delivery of personal property and damages as well as attorneys fees, docketed as Civil Case No. 18841-87, against
herein petitioners Ray U. Velasco, ex-officio sheriff of the Regional Trial Court of Davao City, Joseymour Ecobiza,
Deputy Sheriff of Davao City, Wilhelm Barlis, former Commanding Officer of the 439th Infantry Battalion in Toril,
Davao City, and Atty. Bernabe Alabastro, counsel for plaintiffs Naty Dy and Sencio Dy in Civil Case No. 18567-87.
FIRMWOOD alleged in its complaint that since it owned the eleven (11) crates of plywood seized by petitioners it
had the right to the possession thereof or to the payment of the value of the plywood seized in case delivery could
not be made. It also prayed for reimbursement of its expenses of P5,000.00, P50,000.00 for temperate damages,
another P50,000.00 for exemplary damages and still another P50,000.00 for attorneys fees.
On 11 January 1988 this Court set aside the temporary restraining order it issued on 4 September 1987 in G.R. No.
79586. Ncm
On 28 February 1988 petitioners filed their answer with counterclaim in Civil Case No. 18841-87 alleging that
respondent FIRMWOOD was not the owner of the eleven (11) crates of plywood they seized but respondent STA.
CLARA, hence, FIRMWOOD was not entitled to the recovery thereof. Petitioners contended that they had the
authority to seize the crates of plywood and put them under custodia legis by virtue of the temporary restraining
order issued by this Court on 4 September 1987 in G.R. No. 79586.
On 26 May 1988 respondent STA. CLARA filed a complaint in intervention alleging that it had a legal interest in the
matter in litigation it being answerable for damages arising from a warranty to deliver the goods to respondent
FIRMWOOD; that the latter was the true and lawful owner of the eleven (11) crates of plywood which were milled for
it by respondent STA. CLARA; and, that since the temporary restraining order issued by this Court had been lifted,
respondent STA. CLARA continued to enjoy the conduct of its regular business without interference from any person,
entity or even court.[3]
Petitioners also filed their answer to the complaint in intervention denying ownership of respondent FIRMWOOD
over the crates of plywood and asserting STA. CLARAs ownership thereof.
On 30 August 1988 respondent FIRMWOOD filed a Motion for Summary Judgment alleging that aside from the
amount of damages due it there was no genuine issue as to any material fact of the case, STA. CLARA having
confirmed FIRMWOODs ownership over the eleven (11) crates of plywood. On 12 September 1988 respondent STA.
CLARA also filed a Motion for Summary Judgment alleging the same grounds raised by FIRMWOOD and further
contending that petitioners did not have the authority to hold the property in custodia legis.
On 29 November 1988 the trial court granted private respondents motions for summary judgment and ordered
petitioners and their privies and agents to release from their possession and custody the eleven (11) crates of
plywood and deliver the same to respondents FIRMWOOD and/or STA. CLARA, or in case of loss, to pay their
declared value of P140,000.00 or such amount as may be proved during the hearing for the purpose only of
determining their actual value as well as the total amount of damages private respondents could prove against
petitioners.[4]
On 7 February 1989 the trial court issued another order directing petitioners to pay the amounts incurred by
respondent FIRMWOOD in filing the complaint, i.e., P390.00 for filing fee, another P390.00 for the Judiciary
Development Fund, P25.00 for sheriffs fee, plus attorneys fees of P20,000.00 for respondent FIRMWOOD
and P30,000.00 for respondent STA. CLARA.
Petitioners appealed the two (2) orders of the trial court to the Court of Appeals which however dismissed the
appeal and affirmed the questioned orders. The appellate court held that the pleadings, annexes and affidavits of
private respondents in support of their respective motions for summary judgment were sufficient to overcome
petitioners' opposition and to justify the finding that there was no legitimate defense to the action. It also held that
the Courts resolution of 11 January 1988 lifting the temporary restraining order issued in G.R. No. 79586 had
mooted whatever claim petitioners had over the seized property. The Court of Appeals also sustained the award of
damages by the trial court to respondent FIRMWOOD whose property was wrongfully attached or seized under Rule
60, Sec. 7, of the Rules of Court, as amended.

Petitioners now allege before us that the Court of Appeals erred in the appreciation of the facts of the case and in
deciding the legal questions contrary to law and jurisprudence. In support thereof petitioners assert that respondent
FIRMWOOD is not the true and lawful owner of the eleven (11) crates of plywood; hence its representations in its
complaint for delivery of personal property before the trial court were false and made in bad faith. Petitioners also
contend that the crates of plywood seized by petitioner deputy sheriff Joseymour Ecobiza pursuant to the temporary
restraining order of this Court in G.R. No. 79586 were still in custodia legis and could not be the subject of an action
for replevin; and, that the temporary restraining order issued by this Court was lifted only on 13 January 1988 or
long after the complaint for replevin was instituted on 11 November 1987. Petitioners further contend that their
admission that the owner of the plywood at that time was respondent STA. CLARA cannot be the basis for summary
judgment because there are triable issues that need to be resolved, namely: (a) whether the seizure of the plywood
by petitioner Ecobiza by virtue of this Courts temporary restraining order was lawful; (b) whether the subject
plywood can be replevied even if it were in custodialegis; and, (c) whether respondent FIRMWOOD has any cause of
action against petitioners. Ncmmis
The crux of the controversy is whether the summary judgment rendered by the trial court in favor of private
respondents was proper and, consequently, whether the award of damages to private respondents was correct.
We find no cogent reason to sustain the petition. Rule 34 of the Rules of Court, now Rule 35 of the 1997 Rules of
Civil Procedure as amended, which gives authority to trial courts to grant relief by summary judgment is intended to
expedite or promptly dispose of cases where the facts appear undisputed and certain from the pleadings,
admissions and affidavits. This rule does not vest in the court summary jurisdiction to try the issues on pleadings
and affidavits but gives the court limited authority to enter summary judgment only if it clearly appears that there
is no genuine issue of material fact. On a motion for summary judgment, the court is not authorized to decide an
issue of fact but to determine whether the pleadings and records before the court create an issue of fact to be tried.
[5]
It is impossible to state a general rule for determining whether a genuine issue of fact exists in a particular case.
The determination will depend upon the particular circumstances of each case. Nevertheless, the language used by
courts in making a determination in particular cases may serve to indicate the manner in which a court should
approach the question to be determined. It is repeated often enough that the court is not authorized to try the issue
of fact but to determine whether there is an issue to be tried. Where the motion is made by a claimant, the
defending party must show that he has a plausible ground of defense, something fairly arguable and of a
substantial character.[6]
Applying these legal principles, we find that the trial court committed no error in rendering a summary judgment.
The material averments of the complaint of respondent FIRMWOOD state that the latter is the owner of eleven (11)
crates of plywood which were taken or seized by petitioners but the seizure was not for tax assessment or by virtue
of execution or attachment. While the answer of petitioners alleged that the owner of the plywood was respondent
STA. CLARA, and not FIRMWOOD, petitioners admitted that the goods contained the label and markings of
FIRMWOOD.[7] STA. CLARA filed its complaint in intervention [8]stating that it was joining FIRMWOOD in its suit to
recover possession of the plywood seized and detained by petitioners; that FIRMWOOD was the true and lawful
owner of the subject property as the same was milled by STA. CLARA for FIRMWOOD; that STA. CLARA had the right
to the possession of the plywood in order that it could discharge its obligation under a warranty to deliver the goods
to FIRMWOOD; and finally, that the temporary restraining order previously issued by this Court which was the basis
of petitioners in seizing the goods had already been lifted.
In their answer to the complaint in intervention, petitioners had deemed admitted the ownership and right of
possession of STA. CLARA over the plywood taken by them and the fact that the temporary restraining order of this
Court by virtue of which the seizure was effected had already been lifted. Petitioners admitted in par. 17.2 of their
answer to the complaint in intervention that if they were "not maliciously dragged into this unfounded suit, subject
plywood would have been turned over to the Intervenor (Sta. Clara) which is the owner x x x x" [9] Scnc m
The remaining issue raised by petitioners in objecting to the reliefs prayed for in the complaints of private
respondents is whether petitioners possessed the authority to seize and hold under their custody the crates of
plywood by virtue of the temporary restraining order of this Court which undisputedly had been lifted and of no
more force and effect.[10] There is therefore absent in this case any genuine issue of fact but a question purely of
law. It has been held that even the existence of an important or complicated question of law where there is no issue
as to the facts is not a bar to a summary judgment.[11]
The trial court as well as the Court of Appeals found as undisputably settled based on the records that the right of
possession of the eleven (11) crates of plywood belonged to respondents STA. CLARA and/or FIRMWOOD and the
only disagreement of the parties was that the property could not be disposed of by respondent STA. CLARA because
of the temporary restraining order issued by this Court on 4 September 1987 which allegedly gave authority to
petitioner Deputy Sheriff Ecobiza to seize the crates of plywood necessary to protect the outcome of Civil Case No.

18567-87. In rendering summary judgment in favor of private respondents in the replevin case, the trial court found
them to be entitled to the possession of the subject property wrongfully detained by petitioners as the temporary
restraining order from which they derived their authority to seize the property had already been lifted and set aside.
Petitioners allege that during the time they effected the seizure of the plywood they had the authority to do so as
they were implementing the temporary restraining order which was then in full force and effect.
This contention has no merit. It is a basic procedural postulate that a preliminary injunction which necessarily
includes a temporary restraining order should never be used to transfer the possession or control of a thing to a
party who did not have such possession or control at the inception of the case. [12] The temporary restraining order
issued by this Court on 4 September 1987 merely restrained respondent STA. CLARA and all its agents and
representatives from withdrawing and disposing of the plywood inventory in STA. CLARAs plant or warehouse until
further orders from this Court. [13] The order did not contain any directive whatsoever to any of the petitioners to
seize property belonging to STA. CLARA or to keep the property seized in their possession. The petitioners, by what
they did, took the law into their own hands without any specific order from this Court; hence, the seizure made by
them on 26 October 1987 was void and illegal even if the intention of petitioners was to prevent the alleged
violation of the temporary restraining order. Any violation of the injunction or temporary restraining order which is
in full force or effect constitutes contempt of court and is punishable as such, and the remedy of the aggrieved
party is to institute contempt proceedings where the court in appropriate cases may punish the violator for the
purpose of preserving and enforcing the rights of the persons for whose protection the injunction or restraining
order was granted. Clearly, with the subsequent lifting of the temporary restraining order the subject crates of
plywood seized by petitioners devoid of legal authority were never placed at any time under custodia legis that
would prevent private respondents from recovering their possession over the same. The amount of damages
directed by the trial court to be paid to private respondents by petitioners arising from the wrongful taking of the
property is a factual matters binding and conclusive upon this Court.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals of 31 January 1995 affirming the orders
of the trial court is AFFIRMED. Petitioners are directed to deliver the possession of the eleven (11) crates of plywood
to private respondents, or in case of loss or inability to restore possession thereof as required, to pay private
respondents the declared value thereof in the amount of P140,000.00, and to pay private respondent Firmwood
Development Corporation (FIRMWOOD) attorneys fees of P20,000.00 plus P805.00 for filing fee, Judiciary
Development Fund and sheriff's fee, and also to respondent Sta. Clara Housing Industries, Inc. (STA. CLARA)
attorneys fees of P30,000.00 as fixed by the trial court. Costs against petitioners.
SO ORDERED. S

[G.R. No. 137326. August 25, 2003]


ROSARIO TEXTILE MILLS, INC., CORPORATE OFFICERS AND BOARD OF DIRECTORS OF ROSARIO TEXTILE
MILLS, INC., and EDILBERTO YUJUICO, petitioners, vs. COURT OF APPEALS, HONORABLE LUIS R.
TONGCO, Presiding Judge, Branch 155, Regional Trial Court, Pasig City, PETER PAN CORP. and
RMC GARMENTS, INC., respondents.
The Case
Before us is a petition for review on certiorari[1] assailing the Decision[2] of the Court of Appeals dated 31 July
1998, as well as the Resolution dated 22 January 1999 denying the motion for reconsideration in CA-G.R. SP No.
46825. The Court of Appeals dismissed the special civil action for certiorari questioning the Orders [3] dated 23 May
1997 and 4 December 1997 of the Regional Trial Court of Pasig City, Branch 155 (trial court) in Civil Case No. 54163.
The Antecedents
On 1 August 1984, RMC Garments, Inc. (RMC) leased from Peter Pan Corporation (Peter Pan) its properties
(Leased Premises) located on Ortigas Avenue Extension, Pasig, Metro Manila. The Leased Premises were covered by
Transfer Certificates of Title Nos. 144376 (7060), 144377 (7061), and 144460 (7062) issued in the name of Peter

Pan by the Rizal Register of Deeds. RMC, a garments manufacturing company, installed machinery on the Leased
Premises and brought in furniture, office equipment and supplies.
On 20 December 1986, Rosario Textile Mills Corp. (Rosario Textile) advised RMC in a letter that it had acquired
the Leased Premises, including the chattels found inside, from GBC Corporation (GBC) through a Deed of
Assignment of Rights and Interests. GBC in turn, bought the Leased Premises at a foreclosure sale by the
Development Bank of the Philippines (DBP) on 15 August 1983. Rosario Textile demanded that RMC vacate the
Leased Premises within 10 days and warned that it would avail of its rights of ownership either judicially or extrajudicially if RMC failed to do so. RMC replied that it neither mortgaged to DBP nor sold to Rosario Textile the Leased
Premises. RMC explained that Rosario Textile may have mistaken it for Riverside Mills Corporation, another
garments corporation whose properties DBP had foreclosed.
Despite this letter, Rosario Textile proceeded to exercise its right of self-help. Representatives of Rosario Textile
entered the Leased Premises in the evening of 2 January 1987 and cut off RMCs power supply and communication
lines. They barricaded the road leading to the Leased Premises, padlocked the entrances and posted guards to
prevent entry. Subsequently, Rosario Textile removed the machinery, equipment, garments and other chattels found
inside the Leased Premises.
RMC and Peter Pan filed an injunction suit in the trial court to remove all the obstructions and the grant of a
right of way to the Leased Premises. Rosario Textile, DBP and the Philippine National Bank (PNB) opposed the
injunction on the ground that RMC had not shown a clear right in esse that the court should protect.
On 20 January 1987, the trial court issued an Order [4] granting RMC access to the Leased Premises upon
posting a P50,000 bond. Upon entry, RMC representatives discovered the removal of its chattels from the Leased
Premises. Consequently, RMC filed a motion for the issuance of a writ of preliminary mandatory injunction for the
return of the missing chattels.Rosario Textile opposed the motion claiming ownership over the building and its
contents.
The trial court granted RMCs motion in the Order dated 23 February 1987, the dispositive portion of which
reads:
Wherefore, plaintiffs said Very Urgent Motion to Return Plaintiffs Garment/Sewing Machines, dated February 3, 1987
is hereby granted, and defendant Rosario Textile Mills Corporation, its agents and all persons acting on
its behalf are hereby directed to return forthwith all the sewing machines taken and removed by it
from plaintiffs premises, particularly those enumerated in Annex A of plaintiffs said very urgent
motion. (Emphasis supplied)
x x x.[5]
Rosario Textile assailed the Order in a special civil action for certiorari with the Court of Appeals. The Court of
Appeals upheld the validity of the Order in a Decision dated 30 June 1987. The Supreme Court affirmed the
Decision, which attained finality with the entry of judgment on 17 August 1988.
On 2 February 1989, the trial court issued an Order [6] requiring Rosario Textile to comply with the 20 January
1987 and 23 February 1987 Orders. The trial court reiterated its orders directing defendants to allow entry to the
Leased Premises and to return the various machineries they took. The Sheriffs Report stated that copy of the Order
was served on Rosario Textiles counsel in the presence of its Vice-President for Operations/Personnel, Mr. Antonio
Angco. However, Rosario Textile did not comply. In 1993 and 1994, RMC filed two motions to cite Rosario Textiles
board of directors and officers in contempt of court for refusing to comply with the trial courts final order. Rosario
Textiles board of directors and officers opposed the motion claiming they had no knowledge of the order requiring
them to return the sewing machines since their counsel did not inform them of the order. On 8 April 1996, the trial
court issued another Order[7] requiring the responsible officers [8] of Rosario Textile (petitioners officers) to return the
sewing machines within 5 days from notice under pain of contempt. Petitioners officers moved for reconsideration,
which the trial court denied on 30 August 1996.
Petitioners filed a Manifestation and Compliance on 7 January 1997 stating that they could no longer return
the sewing machines since these were gutted by the fire that razed Rosario Textiles warehouse 6 years before on 22
August 1991. Petitioners attached the fire marshals report stating that the fire was accidental.

On 23 May 1997, the trial court issued the Order ruling that the alleged destruction of the sewing machines
did not extinguish petitioners obligation to return these machines. The trial court held that petitioners were already
in default at the time the fire allegedly destroyed the machines. The dispositive portion of the Order reads:
WHEREFORE, in view of the foregoing, and pursuant to Administrative Circular No. 22-95, Re: Amendment of
Sections 1 and 6, Rule 71 of the Rules of Court, the responsible officers of defendant namely, Edilberto V.
Yujuico, Chairman of the Board, Antonio E. Angco, VP-Administration, Romualdo Dizon, Director,
Ricardo S.D. Ledesma, Director, and Elpidio C. Ocampo, Director, are hereby ordered to make complete
restitution to the plaintiff of the value of the sewing machines they failed to return, within ten (10)
days from receipt of a copy of this Order.[9] (Emphasis supplied)
The trial court denied petitioners motion for reconsideration in the Order dated 4 December 1997. [10]
Petitioners assailed the Orders dated 23 May and 4 December 1997 in a petition for certiorari with the Court of
Appeals. Petitioners contended that the trial court gravely abused its discretion when it ordered petitioners to make
a complete restitution of the value of the sewing machines pursuant to Supreme Court Administrative Circular No.
22-95. They also claimed that the trial court gravely abused its discretion in denying the motion for reconsideration
based on the doctrine of piercing the veil of corporate fiction and on the theory of special capacities.
The Court of Appeals dismissed the petition for lack of merit in the assailed Decision dated 31 July 1998. The
appellate court denied the motion to reconsider the same in the Resolution dated 22 January 1999.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals held that a violation of a writ of injunction subjects a party to a citation for civil or
criminal contempt, punishable by a fine or imprisonment. Courts may punish for contempt officers and agents of
corporations for breach of an injunction regardless of whether the injunction is directed against them or the
corporation only. The trial court did not deny petitioners officers due process even though they were not impleaded
as parties in the main case. The trial court gave petitioners sufficient opportunity to be heard and to present their
side in the contempt proceedings. The Court of Appeals explained that since petitioners violated the writ of
injunction issued for the benefit of a private party, a civil contempt arose, which only requires a quantum of
evidence higher than a mere preponderance. Simply put, the law does not require proof beyond reasonable doubt in
civil contempt.
The Court of Appeals also held that the trial courts order of complete restitution of the value of the sewing
machines was not a prejudgment of the case on the issue of ownership. The Court of Appeals explained that the
trial court did not order restitution of the value of the sewing machines as a declaration of ownership in RMCs
favor. Rather, the trial court used the value only as a measure of the amount of penalty for the violation of the
injunction when restitution of the machines became impossible.
The Issues
Petitioners contend that:
a. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW BY SUBSTITUTING ITS OWN
INTERPRETATION OF THE DECISION OF THE LOWER COURT THAT THE VALUE OF THE SEWING
MACHINES WAS USED BY THE TRIAL COURT ONLY AS A MEASURE OF THE AMOUNT OF PENALTY FOR
THE VIOLATION OF THE INJUNCTION IN VIEW OF THE ALLEGATION OF PETITIONERS THAT RESTITUTION
IS NO LONGER POSSIBLE;
b. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT UPHELD AS VALID THE ORDER
OF THE LOWER COURT ORDERING THE CORPORATE OFFICERS OF PETITIONER ROSARIO TEXTILE TO
MAKE COMPLETE RESTITUTION TO RMC OF THE VALUE OF THE SEWING MACHINES;
c. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT UPHELD THE DENIAL OF THE
MOTION FOR RECONSIDERATION OF ITS ORDER DATED 23 MAY 1997 FILED BY PETITIONERS BASED
ON THE DOCTRINE OF PIERCING THE CORPORATE VEIL AND ON THE THEORY OF SPECIAL CAPACITIES;

d. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT RULED THAT THE CORPORATE
OFFICERS OF ROSARIO TEXTILE WERE VALIDLY DECLARED IN CONTEMPT OF COURT.
Two principal issues arise from petitioners contentions: (1) whether the order finding petitioners in contempt of
court is valid; and (2) whether complete restitution of the value of the sewing machines by petitioners in their
personal capacities is proper.
The Courts Ruling
The petition is bereft of merit.
Whether the Order Finding Petitioners Guilty
of Indirect Contempt is Valid
No Denial of Due Process
Petitioners officers lament their citation for indirect contempt on the ground that the trial court did not give
them notice of the injunction order they supposedly violated. Petitioners claim that the trial court merely presumed
their knowledge of the injunction order from its receipt by Rosario Textiles former counsel.
Whether petitioners officers had notice or knowledge of the injunction order is patently a question of fact
beyond the pale of Rule 45 of the Rules of Court, which mandates that only questions of law be raised in the
petition. In a petition for review on certiorari, the Courts jurisdiction is limited to reviewing errors of law that the
lower courts may have committed. [11]Moreover, prevailing jurisprudence uniformly holds that findings of fact of the
trial court, particularly when affirmed by the Court of Appeals, are generally binding on this Court. Hence, the trial
courts factual finding affirmed by the Court of Appeals that petitioners had knowledge of the injunction order is
binding on us. Indeed, the Court of Appeals had sufficiently disposed of this issue as follows:
We find that the officers of the petitioner corporation cannot credibly disclaim knowledge of the order requiring the
corporation to return the sewing machines. They claim that their lawyer never informed them of the said order. The
petitioners do not dispute the allegation made by the private respondent that the president of the petitioner
corporation and that of the respondent corporation met in the presence of then Department of Trade and Industry
Secretary, Jose Concepcion, for the amicable settlement of the controversy and that the president of the private
respondent corporation asked for the return of the sewing machines but the president of the petitioner corporation
refused. The petitioners knew or should have known that their personnel took possession of the chattels inside the
private respondents factory and transferred them to the petitioners warehouse and that the private respondent
demanded the return of the subject machines. The sheriffs Report dated February 22, 1989 states that the legal
counsel for the petitioner corporation and the Vice-President for operations and personnel were present when he
tried to enforce the order of the court against the petitioner but he was prevented by its security officers. It is not
believable that the officers of the corporation were unaware of the sheriffs attempts to enforce the final order
against the corporation ordering it to release, among others, more than 120 units of sewing machines (pp. 172-174,
Rollo, CA GR SP No. 11445) from its warehouse. At the very least, the officers of the petitioner corporation had
actual notice of the order.
We likewise reject the claim of petitioners officers that the trial court did not afford them sufficient notice and
opportunity to be heard in the contempt proceedings. To comply with the procedural requirements of indirect
contempt under Rule 71 of the Rules of Court, there must be (1) a complaint in writing which may either be a
motion for contempt filed by a party or an order issued by the court requiring a person to appear and explain his
conduct, and (2) an opportunity for the person charged to appear and explain his conduct. [12]
The trial court complied with these requirements in this case. When RMC filed motions for contempt, the trial
court gave petitioners officers an opportunity to explain their side.Petitioners officers filed oppositions to the
motions for contempt and even filed motions to reconsider the orders of the trial court requiring them to return the
sewing machines.
Distinction Between Civil and Criminal Contempt

Equally devoid of merit is petitioners argument that the Supreme Court treats contempt proceedings
regardless of whether these are civil or criminal as partaking of the nature of a criminal proceeding. It is not correct
to say that in contempt proceedings a court should observe all the due process requirements attending a criminal
proceeding and that proof beyond reasonable doubt should support a finding of contempt of court.
In Cagayan Valley Enterprises, Inc. v. Court of Appeals,[13] the Court held:
xxx True it is that generally, contempt proceedings are characterized as criminal in nature, but the more accurate
juridical concept is that contempt proceedings may actually be either civil or criminal, even if the distinction
between one and the other may be so thin as to be almost imperceptible. But it does exist in law. It is criminal when
the purpose is to vindicate the authority of the court and protect its outraged dignity. It is civil when there is failure
to do something ordered by a court to be done for the benefit of a party (3 Moran Rules of Court, pp. 343-344, 1970
ed.; see also Perkins vs. Director of Prisons, 58 Phil. 272; Harden vs. Director of Prisons, 81 Phil. 741.)
Thus, the Court held in Remman Enterprises, Inc. v. Court of Appeals[14] that:
In general, criminal contempt proceedings should be conducted in accordance with the principles and rules
applicable to criminal cases, in so far as such procedure is consistent with the summary nature of contempt
proceedings. So it has been held that the strict rules that govern criminal prosecutions apply to a prosecution for
criminal contempt, that the accused is to be afforded many of the protections provided in regular criminal cases,
and that proceedings under statutes governing them are to be strictly construed. However, criminal proceedings
are not required to take any particular form so long as the substantial rights of the accused are preserved.
Civil contempt proceedings, on the other hand, are generally held to be remedial and civil in nature; that is, for the
enforcement of some duty, and essentially a remedy resorted to, to preserve and enforce the rights of
a private party to an action and to compel obedience to a judgment or decree intended to benefit such
a party litigant. The rules of procedure governing criminal contempt proceedings, or criminal
prosecutions, ordinarily are inapplicable to civil contempt proceedings. (Emphasis supplied)
The contempt involved in this case is civil since it arose from petitioners act of defying the trial courts writ of
preliminary injunction, which clearly ordered petitioners officers to return all the sewing machines taken from the
Leased Premises.
Whether Restitution of the Value of the Sewing
Machines by Petitioners in their Personal
Capacities is Proper
Petitioners contend that the Court of Appeals went beyond the issues properly cognizable in a special civil
action for certiorari in substituting its own justification for the validity of the trial courts orders. This contention
deserves scant consideration. Such a narrow interpretation will deprive appellate courts of the power to sustain
orders of trial courts that are correct in the result even though the appellate courts may have different reasons for
sustaining the orders. In any event, in the present case the trial court correctly cited Supreme Court Administrative
Circular No. 22-95 in requiring restitution, which the appellate court amplified as the basis for determining the
amount of the restitution.
Rosario Textile also contends that the Court of Appeals failed to address directly the issue on whether the trial
courts reliance on the doctrine of piercing the veil of corporate fiction is proper. Rosario Textile also asserts that the
appellate court failed to address the question whether the orders constituted a partial judgment of the
case. Petitioners officers argue that there is no basis in piercing the veil of corporate fiction to make them
personally liable for the value of the sewing machines. They point out that no fraudulent scheme exists in this case
and the corporation is fully capable of satisfying the obligation. They further argue that the orders in effect made a
finding that RMC is the owner of the sewing machines which issue must still be resolved in the main case.
These arguments do not persuade us.
RMC initiated this action way back in 1986 or more than 17 years ago today. The trial court issued in 1987 the
first of several orders to the agents and persons acting in behalf of Rosario Textile to return the sewing machines in

1987. The Court of Appeals and the Supreme Court sustained this order more than 15 years ago in 1988. Still, RMCs
efforts to recover possession of the sewing machines proved futile. RMC then sought to cite petitioners in contempt
of court in 1993 and 1994 since non-compliance with the trial courts orders was in utter disregard of the courts
authority.
Petitioners continued to defy the trial courts orders to return the sewing machines until they manifested in
1997 that a fire destroyed the sewing machines in 1991. The trial court then directed the petitioners to restitute the
monetary value of the destroyed sewing machines in their personal capacities on the ground that petitioners were
in delay at the time of the destruction of the machines. The trial court justified its order by correctly invoking
Supreme Court Administrative Circular No. 22-95. In denying petitioners motion for reconsideration, the trial court in
addition applied the doctrine of piercing the veil of corporate fiction and the theory on personal capacities.
An injunction duly issued must be obeyed, however erroneous the action of the court may be, until a higher
court overrules such decision. [15] As affirmed by the Court of Appeals and this Court, the trial court properly issued
the injunction order directing petitioners to return the sewing machines.
Supreme Court Administrative Circular No. 22-95 which took effect on 16 November 1995 amended Sections 1
and 6, Rule 71 of the Rules of Court [16] which provide the penalties for direct and indirect contempt committed
against superior and inferior courts. Section 6 of Rule 71 as amended reads:
SECTION 6. Punishment if found guilty. If the accused is thereupon adjudged guilty of contempt committed against
a superior court or judge, he may be fined not exceeding thirty thousand pesos or imprisoned not more than six (6)
months, or both; if adjudged guilty of contempt committed against an inferior court or judge, he may be fined not
exceeding five thousand pesos or imprisoned not more than one (1) month, or both, and if the contempt
consists in the violation of an injunction, he may also be ordered to make complete restitution to the
party injured by such violation. (Emphasis supplied)
Under the amendment, in case of violation of writs of injunction or restraining orders, the rule now provides
that the court may order complete restitution through the return of the property or the payment of the amount
alleged and proved.[17] As aptly pointed out by RMC, restitution is defined as the act of making good or giving
equivalent for any loss, damage or injury; and indemnification. [18] Petitioners are not excused from complying with
the writ of injunction on the ground a fire destroyed the machines, considering that the fire occured years after the
court had ordered petitioners to return the machines.
In Quinio v. Court of Appeals,[19] Toyota Bel Air, Inc. similarly failed to comply repeatedly with a final order of
the trial court to return a vehicle to the adverse party. The trial court then directed the corporations President and
General Manager to comply. For their continued defiance, the Court affirmed the citation for contempt and ordered
Toyota Bel Air, Inc.s president, general manager and counsel incarcerated until they return the vehicle.
Unlike in the Quinio case, there is nothing more to return in this case because of the destruction of the sewing
machines. However, just like in Quinio, petitioners officers must be held personally liable for the restitution of the
money equivalent of the lost sewing machines. Petitioners have only themselves to blame for refusing to return the
sewing machines while still able to do so. Verily, the trial courts orders were merely an offshoot of the contempt
proceedings and not a judgment on the merits of the case. As correctly pointed out by the Court of Appeals, the
trial court ordered the restitution of the value of the sewing machines not as a declaration of ownership in RMCs
favor but pursuant to Supreme Court Administrative Circular No. 22-95.Not only did Rosario Textile deprive RMC of
the sewing machines. Petitioners blatantly disregarded the trial courts orders to return the same despite their ability
to comply with the orders.Petitioners have not shown any justifiable reason why they have repeatedly ignored the
trial courts orders.
We affirm the complete restitution of the value of the sewing machines to RMC by petitioners consistent with
the remedial and preservative principles of citations for contempt, and as demanded by the respect due the orders,
writs and processes of the courts of justice.
WHEREFORE, we DENY the petition for lack of merit.
SO ORDERED.

G.R. No. L-25434 July 25, 1975


HONORABLE ARSENIO N. ROLDAN, JR., in his capacity as Acting Commissioner, Philippine Fisheries
Commission,
and
THE
PHILIPPINE
NAVY, petitioners,
vs.
HONORABLE FRANCISCO ARCA, as Presiding Judge of the Court of First Instance of Manila (Branch 1)
and MORABE, DE GUZMAN & COMPANY, respondents.
Office of the Solicitor General Arturo A. Alafriz and Solicitor Augusto M. Amores for petitioners.
J. C. Yuseco and A.R. Narvasa for private respondent.

MAKASIAR, J.:
A petition for certiorari and prohibition with preliminary injunction to restrain respondent Judge from enforcing his
order dated October 18, 1965, and the writ of preliminary mandatory injunction thereunder issued.
On April 3, 1964, respondent company filed with the Court of First Instance of Manila a civil case docketed as No.
56701 against petitioner Fisheries Commissioner Arsenio N. Roldan, Jr., for the recovery of fishing vessel Tony Lex VI
(one of two fishing boats in question) which had been seized and impounded by petitioner Fisheries Commissioner
through the Philippine Navy.
On April 10, 1964, respondent company prayed for a writ of preliminary mandatory injunction with respondent
court, but said prayer was, however, denied.

On April 28, 1964, the Court of First Instance of Manila set aside its order of April 10, 1964 and granted respondent
company's motion for reconsideration praying for preliminary mandatory injunction. Thus, respondent company
took Possession of the vessel Tony Lex VI from herein petitioners by virtue of the abovesaid writ.
On December 10, 1964, the Court of First Instance of Manila dismissed Civil Case No. 56701 for failure of therein
petitioner (respondent company herein) to prosecute as well as for failure of therein defendants (petitioners
herein)to appear on the scheduled date of hearing. The vessel, Tony Lex VI or Srta. Winnie however, remained in the
possession of respondent company.
On July 20, 1965, petitioner Fisheries Commissioner requested the Philippine Navy to apprehend vessels Tony Lex VI
and Tony Lex III, also respectively called Srta. Winnie and Srta. Agnes, for alleged violations of some provisions of
the Fisheries Act and the rules and regulations promulgated thereunder.
On August 5 or 6, 1965, the two fishing boats were actually seized for illegal fishing with dynamite. Fish caught with
dynamite and sticks of dynamite were then found aboard the two vessels.
On August 18, 1965, the Fisheries Commissioner requested the Palawan Provincial Fiscal to file criminal charges
against the crew members of the fishing vessels.
On September 30, 1965, there were filed in the court of First Instance of Palawan a couple of informations, one
against the crew members of Tony Lex III, and another against the crew members of Tony Lex VI both for
violations of Act No. 4003, as amended by Commonwealth Acts Nos. 462, 659 and 1088, i.e., for illegal fishing with
the use of dynamite. On the same day, the Fiscal filed an ex parte motion to hold the boats in custody as
instruments and therefore evidence of the crime (p. 54, rec.), and cabled the Fisheries Commissioner to detain the
vessels (p. 56, rec.).
On October 2 and 4, likewise, the Court of First Instance of Palawan ordered the Philippine Navy to take the boats in
custody.
On October 2, 1965, respondent company filed a complaint with application for preliminary mandatory injunction,
docketed as Civil Case No. 62799 with the Court of First Instance of Manila against herein petitioners. Among
others, it was alleged that at the time of the seizure of the fishing boats in issue, the same were engaged in
legitimate fishing operations off the coast of Palawan; that by virtue of the offer of compromise dated September
13, 1965 by respondent company to the Secretary of Agriculture and Natural Resources, the numerous violations of
the Fishery Laws, if any, by the crew members of the vessels were settled.
On October 9, 1965, petitioners, represented by the Solicitor General, opposed the above-mentioned complaint,
alleging among others, that: (1) the issuance of the writ would disrupt the status quo of the parties and would
render nugatory any decision of the respondent court favorable to the defendant; (2) that the vessels, being
instruments of a crime in criminal cases Nos. 3416 and 3417 filed with the Court of First Instance of Palawan, the
release of the vessels sans the corresponding order from the above-mentioned court would deprive the same of its
authority to dispose of the vessels in the criminal cases and the Provincial Fiscal would not be able to utilize said
vessels as evidence in the prosecution of said cases; (3) that as petitioners herein were in possession of one of the
vessels in point, they cannot now be deprived of the legal custody thereof by reason of the dismissal of Civil Case
No. 56701; (4) that petitioner Fisheries Commissioner has the power to seize and detain the vessels pursuant to
Section 5 of Republic Act No. 3215 in relation to Sections 903 and 2210 of the Revised Tariff and Customs Code; (5)
that respondents herein have not exhausted administrative remedies before coming to court; (6) that the
compromise agreement approved by the Secretary of Agriculture and Natural Resources and indorsed to the
Fisheries Commissioner is never a bar to the prosecution of the crime perpetrated by the crew members of the
vessels belonging to respondent company.
And again, on October 15, 1965, herein petitioners filed their memorandum praying for the denial of the application
for preliminary mandatory injunction. On the same day, October 15, 1965, herein petitioners filed an urgent motion
to submit additional documentary evidence.
On October 18, 1965, herein petitioners, as defendants in said Civil Case No. 62799, filed their answer to the
complaint with affirmative defenses, reiterating the grounds in their opposition to the issuance of a writ of
preliminary mandatory injunction and adding that herein private respondent admitted committing the last violation
when it offered in its letter dated September 21, 1965 to the Acting Commissioner of Fisheries, to compromise said
last violation (Exh. 12, pp. 60-61, rec.).

On said day, October 18, 1965, the respondent Judge issued the challenged order granting the issuance of the writ
of preliminary mandatory injunction and issued the preliminary writ upon the filing by private respondent of a bond
of P5,000.00 for the release of the two vessels(pp. 95-102, rec.).
On October 19, 1965, herein petitioners filed a motion for reconsideration of the order issuing the preliminary writ
on October 18, 1965 on the ground, among others, that on October 18, 1965 the Philippine Navy received from the
Palawan Court of First Instance two orders dated October 2 and 4, 1965 requiring the Philippine Navy to hold the
fishing boats in custody and directing that the said vessels should not be released until further orders from the
Court, and that the bond of P5,000.00 is grossly insufficient to cover the Government's losses in case the two
vessels, which are worth P495,000.00, are placed beyond the reach of the Government, thus frustrating their
forfeiture as instruments of the crime (pp. 103-109, rec.).1wph1.t
On November 23, 1965, respondent Judge denied the said motion for reconsideration (p. 110, rec.).
WE rule that the respondent Judge of the Manila Court of First Instance acted without jurisdiction and with grave
abuse of discretion when he issued on October 18, 1965 the order directing the issuance of a writ of preliminary
mandatory injunction and when he refused to reconsider the same.
I
When the respondent Judge issued the challenged order on October 18, 1965 and the writ of preliminary mandatory
injunction pursuant thereto, the fishing vessels were already under the jurisdiction of the Court of First Instance of
Palawan by virtue of its orders of October 2 and 4, 1965, upon motion of the Provincial Fiscal (pp. 54, 55, rec.),
directing the Philippine Navy to detain (pp. 108, 109, rec.) said vessels, which are subject to forfeiture as
instruments of the crime, to be utilized as evidence in Criminal Cases Nos. 3416 and 3417 for illegal fishing pending
in said court (pp. 54-55, rec.). The said vessels were seized while engaging in prohibited fishing within the territorial
waters of Palawan (pp. 45, 48,-53, rec.) and hence within the jurisdiction of the Court of First Instance of Palawan, in
obedience to the rule that "the place where a criminal offense was committed not only determines the venue of the
action but is an essential element of jurisdiction"(Lopez vs. Paras, L-25795, Oct. 29, 1966, 18 SCRA 616, 619). The
jurisdiction over the vessels acquired by the Palawan Court of First Instance cannot be interfered with by another
Court of First Instance. The orders of October 2 and 4, 1965 by the Palawan Court of First Instance expressly direct
the Philippine Navy "to hold in custody" the two vessels and that "same should not be released without prior order
or authority from this Court" (pp. 108, 109, rec.). Only the Palawan court can order the release of the two vessels.
Not even the Secretary of Agriculture and Natural Resources nor the Fisheries Commissioner can direct that the
fishing boats be turned over to private respondent without risking contempt of court.
The grave abuse of discretion committed by the respondent Judge was heightened by the fact that he did not
reconsider his order of October 18, 1965 after he was informed by petitioners in their motion for reconsideration
filed on October 19, 1965 that the Palawan Court of First Instance had already issued the two orders dated October
2 and 4, 1965 directing the Philippine Navy to hold in custody the fishing boats until further orders.
It is basic that one court cannot interfere with the judgments, orders or decrees of another court of concurrent or
coordinate jurisdiction having equal power to grant the relief sought by injunction; because if coordinate courts
were allowed to interfere with each other's judgments, decrees or injunctions, the same would obviously lead to
confusion and might seriously hinder the administration of justice (Ongsinco, etc. vs. Tan, et al., 97 Phil. 330; PNB
vs. Javellana, 92 Phil. 525; Montesa vs. Manila Cordage Company, 92 Phil. 25; Hubahib vs. Insular Drug Company,
64 Phil. 119; Hacbang, et al. vs. The Leyte Auto Bus Company, et al., G.R. No. L-17907, May 30, 1963, 8 SCRA, 103,
107-109; NPC vs. Hon. Jesus de Vera, G.R. No. L-15763, Dec. 22, 1961, 3 SCRA, 646, 648; Cabigao vs. del Rosario,
44 Phil. 182; Araneta & Uy vs. Commonwealth Insurance Company, 55 OG 431; Moran, Comments on the Rules of
Court, Vol. III, 1970 ed., p. 64).
As early as October 2 and 4, 1965, the two boats were already in custodia legis under the sole control of the
Palawan Court of First Instance. The Manila Court of First Instance cannot interfere with and change that possession
(Hacbang vs. Leyte Bus Co., Inc., supra; NPC vs. Hon. Jesus de Vera, supra).
It is immaterial that the vessels were then in the Philippine Navy basin in Manila; for the same in no way impugns
the jurisdiction already vested in the Palawan court, which has custody thereof through the Philippine Navy. This is
analogous to the situation in Colmenares versus Villar (L-27124, May 29, 1970, 33 SCRA 186, 188-9), wherein We
ruled "where the illegal possession of firearms was committed in the town where the Court sits, the fact that the
firearms were confiscated from the accused in another town does not affect the jurisdiction of the Court" (pp. 186,
189).

It is likewise of no moment that the herein respondents were not notified by the herein petitioners of the seizure of
the questioned vessels by the Philippine Navy, because such previous notice is not required by law.
II
The dismissal on December 10, 1964 of the first Civil Case No. 56701 by the Court of First Instance of Manila had
the necessary effect of automatically dissolving the writ of preliminary mandatory injunction issued therein on April
28, 1964, directing the return of fishing vessel Tony Lex VI (pp. 156-157, rec.). Such a preliminary writ, like any
other interlocutory order, cannot survive the main case of which it was but an incident; because "an ancillary writ of
preliminary injunction loses its force and effect after the dismissal of the main petition" (National Sugar Workers'
Union, etc., vs. La Carlota Sugar Central, et al., L-23569, May 25, 1972, 45 SCRA 104, 109; Lazaro vs. Mariano, 59
Phil. 6Z7, 631; Saavedra vs. Ibaez, 56 Phil. 33, 37; Hi Caiji vs. Phil. Sugar Estate and Development Company, 50
Phil. 592, 594).1wph1.t
Moreover, the writ of preliminary injunction issued on April 28, 1964 in Civil Case No. 56701 was directed against
the detention of the vessel Tony Lex VI for violations committed prior to August 5, 1965, and therefore cannot and
does not extend to the seizure and detention of said vessel for violations on August 5 or 6, 1965, which violations
were not and could not possibly be the subject-matter of said Civil Case No. 56701 which was filed on April 3, 1964
(p. 12, rec.).
III
Herein petitioners can validly direct and/or effect the seizure of the vessels of private respondent for illegal fishing
by the use of dynamite and without the requisite licenses.
Section 4 of Republic Act No. 3512 approved on March 20, 1963 empowers the Fisheries Commissioner to carry out
the provisions of the Fisheries Act, as amended, and all rules and regulations promulgated thereunder, to make
searches and seizures personally or through his duly authorized representatives in accordance with the Rules of
Court, of "explosives such as ... dynamites and the like ...; including fishery products, fishing equipment, tackle and
other things that are subject to seizure under existing fishery laws"; and "to effectively implement the enforcement
of existing fishery laws on illegal fishing."
Paragraph 5 of Section 4 of the same Republic Act 3512 likewise transferred to and vested in the Philippine Fisheries
Commission "all the powers, functions and duties heretofore exercised by the Bureau of Customs, Philippine Navy
and Philippine Constabulary over fishing vessels and fishery matters ..."
Section 12 of the Fisheries Act, otherwise known as Republic Act No. 4003, as amended, prohibits fishing with
dynamites or other explosives which is penalized by Section 76 thereof "by a fine of not less than P1,500.00 nor
more than P5,000.00, and by imprisonment for not less than one (1) year and six (6) months nor more than five (5)
years, aside from the confiscation and forfeiture of all explosives, boats, tackles, apparel, furniture, and other
apparatus used in fishing in violation of said Section 12 of this Act." Section 78 of the same Fisheries Law provides
that "in case of a second offense, the vessel, together with its tackle, apparel, furniture and stores shall be forfeited
to the Government."
The second paragraph of Section 12 also provides that "the possession and/or finding, of dynamite, blasting caps
and other explosives in any fishing boat shall constitute a presumption that the said dynamite and/or blasting
capsand explosives are being used for fishing purposes in violation of this Section, and that the possession or
discovery in any fishing boat or fish caught or killed by the use of dynamite or other explosives, under expert
testimony, shall constitute a presumption that the owner, if present in the fishing boat, or the fishing crew have
been fishing with dynamite or other explosives." (Emphasis supplied).
Under Section 78 of the Fisheries Act, as amended, any person, association or corporation fishing in deep sea
fishery without the corresponding license prescribed in Sections 17 to 22 Article V of the Fisheries Act or any other
order or regulation deriving force from its provisions, "shall be punished for each offense by a fine of not more than
P5,000.00, or imprisonment, for not more than one year, or both, in the discretion of the Court; Provided, That in
case of an association or corporation, the President or manager shall be directly responsible for the acts of his
employees or laborers if it is proven that the latter acted with his knowledge; otherwise the responsibility shall
extend only as far as fine is concerned: Provided, further, That in the absence of a known owner of the vessel, the
master, patron or person in charge of such vessel shall be responsible for any violation of this Act: and Provided,

finally, That in case of a second offense, the vessel together with its tackle, apparel, furniture and stores shall be
forfeited to the Government" (Emphasis supplied).
Under Section 13 of Executive Order No. 389 of December 23, 1950, reorganizing the Armed Forces of the
Philippines, the Philippine Navy has the function, among others, "to assist the proper governmental agencies in the
enforcement of laws and regulations pertaining to ... fishing ..." (46 OG 5905, 5911).
Section 2210 of the Tariff and Customs Code, as amended by PD No. 34 of October 27, 1972, authorized any official
or person exercising police authority under the provisions of the Code, to search and seize any vessel or air craft as
well as any trunk, package, bag or envelope on board and to search any person on board for any breach or violation
of the customs and tariff laws.
When the Philippine Navy, upon request of the Fisheries Commissioner, apprehended on August 5 or 6, 1965 the
fishing boats Tony Lex III and Tony Lex VI, otherwise known respectively as Srta. Agnes and Srta. Winnie, these
vessels were found to be without the necessary license in violation of Section 903 of the Tariff and Customs Code
and therefore subject to seizure under Section 2210 of the same Code, and illegally fishing with explosives and
without fishing license required by Sections 17 and 18 of the Fisheries Law (pp. 46-47, rec.).1wph1.t
The operation of the fishing boat Tony Lex III was suspended pursuant to the order dated January 28, 1964 issued
by the Commissioner of Fisheries pending the final determination of the case against it for illegal fishing with
explosives on January 21, 1964 (p. 34, rec.) and remained suspended until its apprehension on August 5 or 6, 1965
(p. 46, rec.).
For illegal fishing with explosives on March 23, 1963, the renewal of the fishing boat license of Tony Lex VI was
suspended for one year from the time said boat was moored at Pier 14 at North Harbor, Manila, without prejudice to
the institution of a criminal case against its owner and/or operator, pursuant to the order dated May 19, 1964
issued by the Commissioner of Fisheries (pp. 35-36, rec.), the motion for reconsideration of which order was denied
by the Commissioner of Fisheries in an order dated August 17, 1964 (pp. 41-42, rec.).
For illegal fishing with dynamite on March 28, 1963, the operation of Tony Lex VI was suspended by the
Commissioner of Fisheries in an order dated April 1, 1963 (p. 62, rec.).
For illegal fishing again with explosives on April 25, 1963, the fishing boat Tony Lex VI together with its tackle,
apparel, furniture and all other apparatus used in fishing was ordered confiscated and forfeited in favor of the
Government and a fine in the amount of P5,000.00 was imposed on its owners-operators, without prejudice to the
filing of the necessary criminal action, pursuant to the order of June 2, 1964 of the Commissioner of Fisheries(pp.
37-38, rec.).
Again, for comitting the same violation on June 19, 1963, a fine in the amount of P5,000.00 was imposed on the
owners-operators of fishing boat Tony Lex VI pursuant to the order of June 4, 1964 issued by the Commissioner of
Fisheries (pp. 39-40, rec.)..
It appears, therefore, that since January 28, 1964, the fishing boat Tony Lex III was suspended from operating and
was ordered moored at Pier 14, North Harbor, Manila (pp. 34, 46-47, rec.); and that the fishing vessel Tony Lex VI
was suspended for one year from May 24, 1964 and was actually ordered forfeited to the Government pursuant to
the order of June 2, 1964 for repeated violations of Section 12 of the Fisheries Act (pp. 37- 38. rec.).1wph1.tAs a
matter of fact, when apprehended on August 5 or 6, 1965, both vessels were found to be without any license or
permit for coastwise trade or for fishing and unlawfully fishing with explosives, for which reason their owners and
crew were accordingly indicted by the Provincial Fiscal of Palawan for illegal fishing with dynamite and without the
requisite license (pp. 48-53, rec.).
As heretofore intimated, the two fishing boats were apprehended on numerous occasions for fishing with dynamite
from March 28, 1963 to March 11, 1964, which violations private respondent, as owner-operator, sought to
compromise by offering to pay a fine of P21,000.00 for all said prior violations.
Such previous violations of Sections 12, 17 and 18 of the Fisheries Act committed by the two fishing boats, Tony Lex
III and Tony Lex VI, from March 28, 1963 until August 5 or 6, 1965, rendered the said vessels subject to forfeiture
under Sections 76 and 78 of the Fisheries Act, as amended.

Search and seizure without search warrant of vessels and air crafts for violations of the customs laws have been the
traditional exception to the constitutional requirement of a search warrant, because the vessel can be quickly
moved out of the locality or jurisdiction in which the search warrant must be sought before such warrant could be
secured; hence it is not practicable to require a search warrant before such search or seizure can be constitutionally
effected (Papa vs. Mago, L-27360, Feb. 28, 1968, 22 SCRA 857, 871-74; Magoncia vs. Palacio, 80 Phil. 770, 774;
Caroll vs. U.S. 267, pp. 132, 149, 158; Justice Fernando, The Bill of Rights, 1972 ed., p. 225; Gonzales, Philippine
Constitutional Law, 1966 ed., p. 300).
The same exception should apply to seizures of fishing vessels breaching our fishery laws. They are usually
equipped with powerful motors that enable them to elude pursuing ships of the Philippine Navy or Coast Guard.
Another exception to the constitutional requirement of a search warrant for a valid search and seizure, is a search
or seizure as an incident to a lawful arrest (Alvero vs. Dizon, 76 Phil. 637; Justice Fernando, The Bill of Rights, 1972
ed., p. 224). Under our Rules of Court, a police officer or a private individual may, without a warrant, arrest a person
(a) who has committed, is actually committing or is about to commit an offense in his presence; (b) who is
reasonably believed to have committed an offense which has been actually committed; or (c) who is a prisoner who
has escaped from confinement while serving a final judgment or from temporary detention during the pendency of
his case or while being transferred from one confinement to another (Sec. 6, Rule 113, Revised Rules of Court). In
the case at bar, the members of the crew of the two vessels were caught in flagrante illegally fishing with dynamite
and without the requisite license. Thus their apprehension without a warrant of arrest while committing a crime is
lawful. Consequently, the seizure of the vessel, its equipment and dynamites therein was equally valid as an
incident to a lawful arrest.
The alleged compromise approved by the Secretary of Agriculture and Natural Resources on September 13, 1965
(pp. 63-64, 158-159, rec.) cannot be invoked by the respondents because the said compromise referred to about
thirty violations of the fisheries law committed by the private respondent from March 28, 1963 to March 11, 1964.
The violations by the two vessels of private respondent by reason of which these vessels were apprehended and
detained by the Philippine Navy upon request of the Commissioner of Fisheries, were committed on August 5 or 6,
1965.
Moreover, the power to compromise would exist only before a criminal prosecution is instituted; otherwise the
Department Secretary or any of his sub-alterns can render criminal prosecutions for violations of the fisheries law a
mere mockery. It is not in the public interest nor is it good policy to sustain the viewpoint that the Department
Secretary can compromise criminal cases involving public, not private, offenses after the indictment had been
instituted in court. The fishing vessels together with all their equipment and the dynamites found therein are not
only evidence of the crime of illegal fishing but also subject to forfeiture in favor of the Government as instruments
of the crime (Art. 45, Revised Penal Code, Sec. 78, Act No. 4003, as amended). Section 80(j) of Act No. 4003, as
amended, precludes such a compromise the moment the Fisheries Commissioner decides to prosecute the criminal
action in accordance with Sections 76 and 78 of the other penal provisions of the fisheries law. Furthermore, any
compromise shall be upon the recommendation of the Fisheries Commission (Section 80[i], Act No. 4003), which did
not recommend such a compromise for the violation on August 5 or 6, 1965 of Section 12 in relation to Sections 76
and 78 of Act No. 4003, as amended. On the contrary, the Fisheries Commissioner requested the Provincial Fiscal to
institute the criminal cases (pp. 43-45, rec.) and the Provincial Fiscal filed the corresponding informations docketed
as Criminal Cases Nos. 3416 and 3417 on September 30, 1965 against the owners and the members of the crew of
the vessels (pp. 48-53, rec.).
It should be noted that in the first indorsement dated September 13, 1965 of the Secretary of Agriculture and
Natural Resources approving the compromise fine of P21,000.00 for the various violations committed previous to
August 5 or 6, 1965 (pp. 34-42, 47, 58-64, 149-155, 158-159, rec.), the Department Secretary "believes that the
offer made by the company was an implied admission of violations of said provisions of the Fisheries Law and
regulations, ..." (pp. 63, 158, rec.). The said approval was granted after the private respondent filed a motion for
reconsideration of the indorsement dated March 5, 1965 of the Secretary of Agriculture and Natural Resources
disapproving the offer by private respondent to pay the fine by way of compromise.
There can be no dispute that the term fishing boat (employed in the second paragraph of Section 12 of the Fisheries
Act applies to the vessels Tony Lex III and Tony Lex VI. Even private respondent refers to said fishing boats as fishing
vessels "engaged in fishing operations" or "in commercial fishing" in paragraph IV of its complaint in Civil Case No.
62799 (p. 18, rec.), as well as in its various communications to the Fisheries Commissioner (pp. 60-61, 65, 82,
rec.).1wph1.t The two fishing vessels Tony Lex III and Tony Lex VI likewise fall under the term vessel used in
Sections 17, 76 and 78, as well as the term boats utilized in the second paragraph of Section 76 of the Fisheries Act.
They can also fall under the term fishing equipment employed in Section 4 of Republic Act No. 3512; because a
fishing equipment is never complete and cannot be effectively used in off-shore or deep-sea fishing without the

fishing boat or fishing vessel itself. And these two vessels of private respondent certainly come under the
term fishing vessels employed in paragraph 5 of Section 4 of the same Republic Act 3512 creating the Fisheries
Commission.
Hence, no useful purpose can be served in trying to distinguish between boat and vessel with reference to Tony Lex
III and Tony Lex VI. As a matter of fact, the accepted definition of vessel includes "every description of water craft,
large or small, used or capable of being used as a means of transportation on water" (Cope versus Vallete, etc., 199
U.S. 625; U.S. vs. Holmes, 104 Fed. 884; Charles Barnes Co. vs. One Dredge Boat, 169 Fed. 895; and Yu Con vs. Ipil,
41 Phil. 780).
The word boat in its ordinary sense, means any water craft (Monongahela River Construction, etc. vs. Hardsaw, 77
NE 363, 365). The fishing boats Tony Lex III and Tony Lex VI are likewise vessels within the meaning of the
term vessel used in Sections 903 and 2210 of the Tariff and Customs Code.
WHEREFORE, THE PETITION IS HEREBY GRANTED AND THE ORDER OF RESPONDENT JUDGE DATED OCTOBER 18,
1965, THE WRIT OF PRELIMINARY MANDATORY INJUNCTION ISSUED THEREUNDER AND THE ORDER DATED
NOVEMBER 23, 1965, ARE HEREBY SET ASIDE AS NULL AND VOID, WITH COSTS AGAINST PRIVATE RESPONDENT.
[G.R. No. 136760. July 29, 2003]
THE SENATE BLUE RIBBON COMMITTEE, represented by its Chairman, SENATOR AQUILINO Q. PIMENTEL,
JR., petitioner, vs. HON. JOSE B. MAJADUCON, Presiding Judge of Branch 23, Regional Trial
Court of General Santos City, and ATTY. NILO J. FLAVIANO, respondents.
[G.R. No. 138378. July 29, 2003]
AQUILINO Q. PIMENTEL, JR., petitioner, vs. THE HONORABLE JOSE S. MAJADUCON, in his capacity as
Presiding Judge of Branch 23, Regional Trial Court, General Santos City, respondent.
DECISION
YNARES-SANTIAGO, J.:
For resolution are two consolidated petitions: (a) G.R. No. 136760, for certiorari, prohibition, mandamus and
preliminary injunction, assailing the resolution dated November 11, 1998 of Judge Jose S. Majaducon of the Regional
Trial Court of General Santos City, Branch 23, which denied the Senate Blue Ribbon Committees motion to dismiss
the petition for prohibition, injunction with writ of preliminary injunction filed by private respondent Atty. Nilo J.
Flaviano; and (b) G.R. No. 138378, for review of the resolution dated April 15, 1999 of respondent Judge Majaducon
declaring petitioner Senator Aquilino Q. Pimentel, Jr. guilty of indirect contempt of court.
The antecedent facts are as follows:
G.R. No. 136760:
On August 28, 1998, Senator Blas F. Ople filed Senate Resolution No. 157 directing the Committee on National
Defense and Security to conduct an inquiry, in aid of legislation, into the charges of then Defense Secretary Orlando
Mercado that a group of active and retired military officers were organizing a coup detat to prevent the
administration of then President Joseph Estrada from probing alleged fund irregularities in the Armed Forces of the
Philippines.[1]
On the same date, Senator Vicente C. Sotto III also filed Resolution No. 160, directing the appropriate senate
committee to conduct an inquiry, in aid of legislation, into the alleged mismanagement of the funds and investment
portfolio of the Armed Forces Retirement and Separation Benefits System (AFP-RSBS) xxx. [2]
The Senate President referred the two resolutions to the Committee on Accountability of Public Officers and
Investigations (Blue Ribbon Committee) and the Committee on National Defense and Security.

During the public hearings conducted by the Senate Blue Ribbon Committee (hereafter called the Committee),
it appeared that the AFP-RSBS purchased a lot in General Santos City, designated as Lot X, MR-1160, for P10,500.00
per square meter from private respondent Atty. Nilo J. Flaviano. However, the deed of sale filed with the Register of
Deeds indicated that the purchase price of the lot was only P3,000.00 per square meter.
The Committee thereafter caused the service of a subpoena to respondent Atty. Flaviano, directing him to
appear and testify before it. Respondent refused to appear at the hearing.Instead, he filed a petition for prohibition
and preliminary injunction with prayer for temporary restraining order with the Regional Trial Court of General
Santos City, Branch 23, which was docketed as SP Civil Case No. 496.
On October 21, 1998, the trial court issued a Temporary Restraining Order directing the Committee to CEASE
and DESIST from proceeding with the inquiry in P.S. 160 particularly in General Santos City and/or anywhere in
Region XI or Manila on matters affecting the patenting/titling and sale of Lot X, MR-1160-D to AFP-RSBS, and from
issuing subpoenas to witnesses from Region XI, particularly from General Santos City, pending the hearing of the
petition for prohibition and injunction.[3]
On November 5, 1998, the Committee filed a motion to dismiss the petition on the grounds of (a) lack of
jurisdiction, and (b) failure to state a valid cause of action. It further argued that the issuance of the Temporary
Restraining Order was invalid for violating the rule against ex-parte issuance thereof; and that the same was not
enforceable beyond the territorial jurisdiction of the trial court.
On November 11, 1998, the trial court denied petitioners motion to dismiss and granted the writ of preliminary
injunction, thus:
WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is DENIED, and the WRIT OF PRELIMINARY INJUNCTION
is hereby issued against respondent. It is enjoined from enforcing its subpoenas to petitioner in Region XI to appear
and testify before it in any of its inquiry or investigation anywhere in the Philippines regarding the acquisition by the
AFP-RSBS of Lot X, MR-1160-D, located in General Santos City. The bond of petitioner filed on October 21, 1998, for
P500,000.00 for the TRO also serves as his bond in this injunction.
SO ORDERED.[4]
Hence, the instant petition for certiorari which was docketed as G.R. No. 136760, alleging that respondent
Judge Majaducon committed grave abuse of discretion and/or acted without or in excess of jurisdiction when he:
I. DENIED PETITIONERS MOTION TO DISMISS THE PETITION FOR PROHIBITION AND PRELIMINARY
INJUNCTION FILED BY PRIVATE RESPONDENT, ATTY. NILO J. FLAVIANO, AGAINST THE PETITIONER
IN SP. CIVIL CASE NO. 496.
II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE FOR A PERIOD OF TWENTY (20) DAYS
AGAINST THE PETITIONER ON OCTOBER 21, 1998, AND (2) A WRIT OF PRELIMINARY INJUNCTION
ON NOVEMBER 11, 1998 ENJOINING THE PETITIONER FROM ENFORCING ITS SUBPOENAS TO
PRIVATE RESPONENT IN REGION XI.
III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE RIBBON IN GRANTING INJUNCTIVE RELIEF TO
PRIVATE RESPONDENT.[5]
G.R. No. 138378:
On January 13, 1999, the newspaper, The Philippine Star published a news report on the filing by the
Committee with this Court of the petition for certiorari which was docketed as G.R. No. 136760. The news report
quoted portions of the petition filed by the Committee, alleging that Regional Trial Court Judge Majaducon was guilty
of gross ignorance of the rules and procedures when he issued the temporary restraining order and the writ of
preliminary injunction because, under the principle of separation of powers, courts cannot interfere with the
exercise by the legislature of its authority to conduct investigations in aid of legislation. [6]
Reacting to the aforesaid news report, respondent Judge Majaducon motu proprio initiated a charge for indirect
contempt of court against Senator Aquilino Q. Pimentel, Jr., news reporter Perseus Echeminada, Philippine Star
publisher Maximo Soliven, editor-in-chief Ramon J. Farolan, and executive editor Bobby G. dela Cruz, which was

docketed as Special Civil Case No. 496. Judge Majaducon averred that the news report created in the minds of the
reader the impression that he violated the separation of powers clause of the Constitution and that he was guilty of
gross ignorance of the rules and procedures.
After the respondents submitted their respective answers, a decision was rendered on April 15, 1999 finding
petitioner Pimentel guilty of indirect contempt.
Hence, the instant petition based on the following grounds:
I. THE EXPRESSION GROSS IGNORANCE OF THE RULES OF PROCEDURE OR GROSS IGNORANCE OF THE
LAW IN REFERENCE TO THE RESPONDENTS EX-PARTE ISSUANCE OF INJUNCTIVE RELIEF IS NOT
PEJORATIVE AS TO CONSTITUTE A GROUND FOR INDIRECT CONTEMPT.
II. THIS HONORABLE COURT ITSELF USES GROSS IGNORANCE OF THE LAW AND OTHER EXPRESSIONS OF
SIMILAR FORCEFUL IMPORT IN DESCRIBING GROSS AND PALPABLE ERRORS OF JUDGES.
III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE PETITIONER, THE RESPONDENT JUDGE HAS, IN
EFFECT, PREEMPTED THIS HONORABLE COURT IN RESOLVING THE ISSUES RAISED AGAINST HIM
IN G.R. NO. 136760.
IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE RIBBON PETITION IN G.R. NO. 136760, OR
EXCERPTS THEREOF WAS A LEGITIMATE EXERCISE OF FREEDOM OF EXPRESSION AND OF THE
PRESS.
The two petitions, namely, G.R. No. 136760 and G.R. No. 138378, were ordered consolidated on December 11,
2000.
The issues for resolution in these joint petitions are: (a) whether or not respondent Judge Jose Majaducon
committed grave abuse of discretion when he dismissed petitioners motion to dismiss the petition for prohibition
and issued the writ of preliminary injunction; and (b) whether or not respondent Judge erred in convicting petitioner
Pimentel of indirect contempt of court.
On the first issue, petitioner Committee contends that courts have no jurisdiction to restrain Congress from
performing its constitutionally vested function to conduct investigations in aid of legislation, following the principle
of separation of powers. Moreover, the petition filed by respondent Flaviano before the trial court failed to state a
cause of action considering that the legislative inquiry did not deal with the issuance of the patent and title to Lot X,
MR-1160-D in the name of AFP-RSBS, which is well within the courts jurisdiction, but with the anomaly in the
purchase thereof, which falls squarely within the ambit of Senate Resolutions Nos. 157 [7] and 160.[8]
On the other hand, respondent Flaviano contends that the trial court may properly intervene into
investigations by Congress pursuant to the power of judicial review vested in it by the Constitution. He avers that
he has a valid cause of action to file the petition for prohibition considering that the Committees investigation will
delve into the validity of the patenting and titling of Lot X, MR-1160-D which, as admitted by petitioner, falls within
the competence of judicial courts. In fact, the validity of the purchase by AFP-RSBS of the subject lot is already the
subject of a pending action before the Regional Trial Court of General Santos City and the Ombudsman of
Mindanao. Finally, he cites the case of Bengzon v. Senate Blue Ribbon Committee,[9] and argues that preliminary
injunction may issue in cases pending before administrative bodies such as the Ombudsman or the Office of the
Prosecutor as long as the right to self-incrimination guaranteed by the Bill of Rights is in danger. Furthermore, an
information against him has been filed with the Sandiganbayan.
We find for petitioner. There is grave abuse of discretion when the respondent acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is bereft of any factual and
legal justification.[10] In this case, the assailed resolution of respondent Judge Majaducon was issued without legal
basis.
The principle of separation of powers essentially means that legislation belongs to Congress, execution to the
Executive, and settlement of legal controversies to the Judiciary. Each is prevented from invading the domain of the
others.[11] When the Senate Blue Ribbon Committee served subpoena on respondent Flaviano to appear and testify
before it in connection with its investigation of the alleged misuse and mismanagement of the AFP-RSBS funds, it

did so pursuant to its authority to conduct inquiries in aid of legislation. This is clearly provided in Article VI, Section
21 of the Constitution, thus:
The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of
legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected
by such inquiries shall be respected.
Hence, the Regional Trial Court of General Santos City, or any court for that matter, had no authority to
prohibit the Committee from requiring respondent to appear and testify before it.
The ruling in Bengzon, cited by respondent, does not apply in this case. We agree with petitioner Committee
that the factual circumstances therein are different from those in the case at bar. In Bengzon, no intended
legislation was involved and the subject matter of the inquiry was more within the province of the courts rather
than of the legislature. More specifically, the investigation in the said case was an offshoot of the privilege speech
of then Senator Enrile, who urged the Senate to look into a possible violation of the Anti-Graft and Corrupt Practices
Act by the relatives of then President Corazon Aquino, particularly Mr. Ricardo Lopa, in connection with the alleged
sale of 36 to 39 corporations belonging to Benjamin Romualdez. On the other hand, there was in this case a clear
legislative purpose, as stated in Senate Resolution No. 160, and the appropriate Senate Committee was directed to
look into the reported misuse and mismanagement of the AFP-RSBS funds, with the intention of enacting
appropriate legislation to protect the rights and interests of the officers and members of the Armed Forces of the
Philippines. Further, in Bengzon, the validity of the sale of Romualdezs corporations was pending with the
Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct its investigation. In short, the issue
had already been pre-empted by the court.
In the instant case, the complaint against respondent Flaviano regarding the anomaly in the sale of Lot X, MR1160 was still pending before the Office of the Ombudsman when the Committee served subpoena on him. In other
words, no court had acquired jurisdiction over the matter. Thus, there was as yet no encroachment by the
legislature into the exclusive jurisdiction of another branch of the government. Clearly, there was no basis for the
respondent Judge to apply the ruling in Bengzon. Hence, the denial of petitioners motion to dismiss the petition for
prohibition amounted to grave abuse of discretion.
In G.R. No. 138378, petitioner, Senator Aquilino Pimentel, Jr., contends that respondent judge erred in finding
him, as representative of the Committee, guilty of indirect contempt of court under Rule 71, Section 3(d) of the
1997 Rules of Civil Procedure. According to Pimentel, the phrase gross ignorance of the rules of law and procedure,
which the Committee used in the petition, is not depreciatory, but merely a description of normal usage in petitions
where the acts of lower courts are challenged before higher judicial bodies. In fact, this Court often uses the phrase
in its decisions to describe judges who commit gross and palpable mistakes in their interpretation and application of
the law. Petitioner further maintains that when the Committee used the phrase, it did so without malice. Rather, it
was only to stress the unfamiliarity of or disregard by the respondent Judge of a basic rule of procedure, and to
buttress its arguments in support of its petition for certiorari.
Petitioner Pimentel also contends that he had no participation in the publication in the Philippine Star of
excerpts from the Committees petition for certiorari. Even assuming arguendothat it was within his control, he
pointed out that he could not have prevented the editors and writers of the newspaper from publishing the same,
lest he violate their constitutional right of free expression. Indeed, the report by the Philippine Star of the filing of
the petition and the reproduction of its contents was a legitimate exercise of press freedom.
Respondent Judge counters that Pimentel was guilty of indirect contempt of court, first, for causing the
publication of the Committees petition in the Philippine Star notwithstanding that the same was sub
judice; second, for making derogatory remarks in the petition itself which affected the honor and integrity of the
respondent judge and degraded the administration of justice; and third, for making it appear that an administrative
complaint was filed against respondent Judge for gross ignorance of the law. These, he said, constituted malicious
and false report which obstructed the administration of justice.
Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:
Section 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has been filed, and
an opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to
be heard by himself or counsel, a person guilty of any of the following acts may be punished for indirect contempt:

xxxxxxxxx
d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of
justice; x x x.
After deliberating on the parties arguments, we find that petitioner Pimentel is not guilty of improper conduct
which obstructs or degrades the administration of justice.
Verily, it does not appear that Pimentel caused the publication in the Philippine Star of the fact of filing of the
petition for certiorari by the Committee and the reproduction of excerpts thereof. He had no right to choose which
news articles will see print in the newspaper. Rather, it is the publisher thereof which decides which news events
will be reported in the broadsheet.In doing so, it is allowed the widest latitude of choice as to what items should see
the light of day so long as they are relevant to a matter of public interest, pursuant to its right of press freedom. [12]
Respondent Judges allegation that petitioner made it appear that an administrative complaint was filed
against him is without basis. From a careful perusal of the records, it appears that while the Committee prayed for
the imposition of administrative sanctions against respondent Judge Majaducon for gross ignorance of the law, no
formal administrative complaint was instituted separately from the petition for certiorari.
Finally, the statement that respondent Judge was grossly ignorant of the rules of law and procedure does not
constitute improper conduct that tends to impede, obstruct or degrade the administration of justice. As correctly
argued by petitioner, the phrase gross ignorance of the rules of law and procedure is ordinarily found in
administrative complaints and is a necessary description to support a petition which seeks the annulment of an
order of a judge wherein basic legal principles are disregarded.
In Spouses Bacar v. Judge De Guzman, Jr.,[13] it was held that when the law is so elementary, not to know it or
to act as if a judge does not know it, constitutes gross ignorance of the law. In this case, there was no showing that
petitioner Pimentel, as representative of the Committee, used the phrase to malign the trial court. Rather, it was
used to express what he believed as a violation of the basic principle of separation of powers.
In this connection, it bears stressing that the power to declare a person in contempt of court must be
exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment.
[14]
This was aptly expressed in the case of Nazareno v. Barnes:[15]
A judge, as a public servant, should not be so thin-skinned or sensitive as to feel hurt or offended if a citizen
expresses an honest opinion about him which may not altogether be flattering to him. After all, what matters is that
a judge performs his duties in accordance with the dictates of his conscience and the light that God has given him.
A judge should never allow himself to be moved by pride, prejudice, passion, or pettiness in the performance of his
duties. He should always bear in mind that the power of the court to punish for contempt should be exercised for
purposes that are impersonal, because that power is intended as a safeguard not for the judges as persons but for
the functions that they exercise.
WHEREFORE, in view of the foregoing, the petitions docketed as G.R. Nos. 136760 and 138378
are GRANTED. The resolution of the Regional Trial Court of General Santos City, Branch 23, in Special Civil Case No.
496 dated November 11, 1998, which denied the Senate Blue Ribbon Committees motion to dismiss, is REVERSED
and SET ASIDE. The Writ of Preliminary Injunction issued by the trial court on November 11, 1998 is DISSOLVED. The
resolution dated April 15, 1999, which declared Senator Aquilino Q. Pimentel, Jr. guilty of indirect contempt of court,
is REVERSED and SET ASIDE. The petition for indirect contempt is ordered DISMISSED.
SO ORDERED.

A.M. No. 3180 June 29, 1988


RICARDO L. PARAS, complainant,
vs.
JUDGE REYNALDO ROURA, REGIONAL TRIAL COURT, BRANCH 55, MACABEBE, PAMPANGA, ATTY.
FRUMENCIO C. PULGAR and MR. DIOSDADO CARREON, DEPUTY SHERIFF, REGIONAL TRIAL COURT,
BRANCH 55, MACABEBE, PAMPANGA, respondents.

This is an administrative case against: (1) Judge Reynaldo Roura, Regional Trial Court, Branch 55, Macabebe,
Pampanga; (2) Atty. Frumencio C. Pulgar, Makati, Manila and (3) Mr. Diosdado Carreon, Deputy Sheriff, Regional Trial
Court, Branch 55, Macabebe, Pampanga for disregarding and violating a Resolution of the Court of Appeals dated
3 March 1987 issued in CA-G.R. No. 11443 entitled "Philippine Rabbit Bus Lines, Inc. vs. Hon. Reynaldo V. Roura, etc.
et al." The complainant is Mr. Ricardo L. Paras, who apparently filed this Complaint in his capacity as General
Manager of Philippine Rabbit Bus Lines, Inc. ("Philippine Rabbit").
This administrative case arose from the following undisputed facts.
On 8 August 1986, respondent Judge Roura rendered a Decision finding Oscar G. Tiglao, former driver of the
Philippine Rabbit, guilty of the crime of damage to property with multiple serious physical injuries through reckless
imprudence. This Decision awarded complainant Rosanna Del Rosario the following sums: P74,861.82 for actual
damages: P54,000.00 for lost income; and P150,000.00 for moral damages. The Decision became final and
executory and a Writ of Execution was issued against Oscar G. Tiglao.

Because the Writ of Execution was returned unsatisfied, respondent Judge issued an Order dated 5 December 1986
directing issuance of a Subsidiary Writ of Execution against the employer of Oscar G. Tiglao, that is, the Philippine
Rabbit. Upon receipt of this Order, Philippine Rabbit filed a Notice of Appeal which was denied by the respondent
Judge in an Order dated 14 January 1987. Meantime, on 6 December 1986, a Subsidiary Writ of Execution was
issued to respondent Deputy Sheriff Carreon. Two months later, on 6 February 1987, respondent Sheriff Carreon
levied upon an Isuzu bus of Philippine Rabbit, with body No. 239. Respondent Sheriff Carreon issued a Notice of Sale
of Philippine Rabbit Bus No. 239 and scheduled the public auction sale thereof on 6 March 1987.
Philippine Rabbit's Motion for Reconsideration of the 5 December 1986 Order of respondent Judge was denied in
another order dated 27 February 1987.
On 2 March 1987, Philippine Rabbit went on a Petition for certiorari and Prohibition, with prayer for a preliminary
mandatory injunction, before the Court of Appeals, seeking to enjoin the implementation of the Subsidiary Writ of
Execution issued on 6 December 1986. Philippine Rabbit impleaded respondents Judge Roura, Deputy Sheriff
Carreon, and complainant Rosanna del Rosario "represented (therein) by Atty. Frumencio N. Pulgar." On 3 March
1987, the Court of Appeals issued a Resolution, the relevant part of which read as follows:
In the meantime, in order that the issues raised in this petition may not be considered moot and
academic. let a temporary restraining order be issued enjoining the herein respondents or any
person or persons acting for and on their behalf from implementing the questioned Subsidiary Wr
it of Execution dated December 6, 1986 and from proceeding with the scheduled Sheriff Sale to
be held on March 6,1987 at 9:30 A.M. until further Order (sic) from this court.
SO ORDERED.
Pursuant to the above Resolution, a Temporary Restraining Order addressed to all three (3) respondents herein was
issued by the Court of Appeals on the same date.
By Letter dated 30 March 1987, respondent Pulgar, acting as counsel for Rosanna del Rosario, reminded Deputy
Sheriff Carreon that the Temporary Restraining Order, dated 3 March 1987, issued by the Court of Appeals had
expired on 24 March 1987. Respondent Pulgar cited B.P. 224 as well as Dionisio us. Court of First Instance, South
Cotabato, Branch II, 124 SCRA 222 (1983) and Ubarra vs. Tecson, 134 SCRA 4 (1985) and requested the Deputy
Sheriff to proceed with the sale of Philippine Rabbit Bus No. 239 on 10 April 1987. Acting on this request,
respondent Deputy Sheriff Carreon issued a Sheriff's Notice of Sale on 7 April 1987 setting the date of the public
auction sale of Bus Nos. 239 on 14 April 1987.
Philippine Rabbit reacted by filing, on 13 April 1987, with the Court of Appeals an Urgent Motion seeking the
extension of the lifetime of the Temporary Restraining Order on the same date and by filing with the respondent
Judge an "Urgent Ex-Parte Motion to Hold in Abeyance the scheduled sale of PRBL Inc. property."
In his Order dated 14 April 1987, respondent Judge denied Philippine Rabbit's Ex-Parte Motion for having become
moot and academic, the auction sale of Philippine Rabbit Bus No. 239 having taken place as scheduled and Rosanna
del Rosario, being the highest bidder, having already bought Bus No. 239 for the amount of P250,000.00.
By Resolution dated 8 May 1987, the Court of Appeals, among other things, granted Philippine Rabbit's application
for a preliminary injunction, the effectivity of which was conditioned upon Philippine Rabbit's filing a bond covering
the award of damages by the trial court. Upon subsequent motion of Philippine Rabbit, the Court of Appeals by still
another Resolution dated 30 June 1987, resolved to annul the 14 April 1987 auction sale conducted by respondent
Deputy Sheriff Carreon, as violative of its Resolutions dated 3 March 1987 and 8 May 1987. The Court of Appeals
ordered respondent Judge to release Bus No. 239 to Philippine Rabbit, the latter having posted the required bond.
In this administrative case, complainant contends that respondents Judge Roura, Deputy Sheriff Carreon and Atty.
Pulgar are administratively liable for implementing the Subsidiary Writ of Execution notwithstanding the presence of
the Temporary Restraining Order of 3 March 1987 issued by the Court of Appeals restraining the respondents from
implementing that Subsidiary Writ of Execution "until further order (sic) from [the Court of Appeals]. It appears to be
complainant's theory that the phrase "until further order from [the Court of Appeals)" had the effect of restraining
respondents from implementing the Subsidiary Writ indefinitely until the restraining order is lifted by the issuing
court.
This administrative complaint has no legal basis.

Section 8 of the Interim Rules and Guidelines embodied in the en banc Resolution of the Supreme Court dated 11
January 1983, which section in effect reproduces Section 5, Rule 58 of the Rules of Court, as amended by B.P. Blg.
224 dated 16 April 1982, set out a general rule concerning the duration of effectivity of restraining orders issued by
"all inferior courts" in the following terms:
Section 8. 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 a 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 court
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 shall accordingly issue the
corresponding order. In the event that the application for preliminary injunction is denied, the
restraining order is deemed automatically vacated. (Emphasis supplied)
In Celso Defalobos v. Hon. Gregorio U. Aquilizan, etc., et al., 1 this Court dealt with the effect of lapse of the 20-day
period upon restrainng orders. There, in ordering the release on habeas corpus of petitioner who had been
imprisoned for contempt of court for disregarding a temporary restraining order issued by the respondent court, the
Supreme Court said:
At the outset, the extension by the respondent judge of the restraining order issued on March 23,
1983 was already void for being violative of Batas Pambansa Blg. 224. It is well-settled that the
life span of a temporary restraining order automatically expires onthe 20th day by the sheer force
of law and no judicial declaration to that effect is necessary (See Ortigas & Co. Ltd. Partnesrship
v. Hon. Vivencio M. Ruiz, et al., G.R. No. 33952, March 9, 1987). Therefore, as correctly contended
by the Solicitor-General, there was no effective restraining order which the petitioner could have
disobeyed. .... 2
More recently, on 12 April 1988, in Delbros Hotel Corporation v. The Intermediate Appellate Court, etc., et al.,G.R.
No. 72566, the Supreme Court in a ten (10) to four (4) decision (with one abstention) held that the abovequoted
Section 8 of the Interim Rules and Guidelines is applicable to temporary restraining orders issued by the Court of
Appeals. The majority, speaking through Mr. Justice Fernan, said:
The applicability of the above-quoted provision to the then Intermediate Appellate Court, now the
Court of Appeals, can hardly be doubted. The Interim Rules and Guidelines were promulgated to
implement the Judiciary Reorganization Act of 1981 (B.P. Blg. 129) which included the
Intermediate Appellate Court among the Courts reorganized thereunder. This is emphasized in the
preamble of the Interim Rules which states that the same shall apply to all inferior courts
according to the Constitution." The term "inferior courts" as used therein refers to all courts
except the Supreme Court, the Sandiganbayan and the Court of Tax Appeals. Thus, paragraphs 14
and 15 of the Interim Rules expressedly provide for Procedure in the Intermediate Appellate
Court."
Indeed, if paragraph 8 of the Interim Rules were not intended to apply to temporary restraining
orders issued by the respondent Court, there would have been absolutely no reason for the
inclusion of said paragraph in the Interim Rules. The limited life-span of temporary restraining
orders issued by the regional trial courts and municipal trial courts is already provided for in B.P.
Big. 224. It was precisely to include the Intermediate Appellate Court within the same limitation as
to the effectivity of its temporary restraining orders that B.P. Blg. 224 was incorporated in the
Interim Rules, with the significant change of the word "judge" to "court" so as to make it clear and
unequivocal that the temporary restraining orders contemplated therein are those issued not only
by trial judges but also by justices of the appellate court.
Private respondents argue that it is impractical to apply paragraph 8 of the Interim Rules to the
respondent court because the latter's processes are enforceable throughout the country and there
could be instances when the twenty-day period of the effectivity of a temporary restraining order
would lapse before it is served on the parties concerned. This allegation appears to be more
illusory and imaginary than real. Private respondents have not cited any single, actual instance
when such eventuality had occured. Its possibility is deemed remote and unlikely considering the
present state of fast and efficient modes of communication as well as the presumed eagerness of

a party-litigant who has secured a temporarily restraining order to have the same immediately
served on the parties conceirned with the least waste of time.
It follows, therefore, that respondent Judge Roura did not violate any legally effective act or order of the Court of
Appeals when he dismissed Philippine Rabbit's ex parte Motion to Hold in Abeyance the scheduled sale of PRBL Inc.
property. Similarly, the Temporary Restraining Order of 3 March 1987 of the Court of Appeals had already lapsed
when Deputy Sheriff Carreon implemented anew on 14 April 1987 the Subsidiary Writ of Execution and Atty. Pulgar's
act of requesting in writing the Deputy Sheriff to proceed with the Notice of Sale upon expiration of the twenty-day
period, was strictly in accordance with law. There was no legal impediment to the acts of Atty. Pulgar and Deputy
Sheriff Carreon. Finally, there is nothing in the record to suggest that the respondents acted otherwise than in entire
good faith.

REPUBLIC ACT NO. 8975

November 7, 2000

AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION OF GOVERNMENT


INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS FROM ISSUING TEMPORARY RESTRANING
ORDERS. PRELIMINARY INJUNCTIONS OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING
PENALTIES FOR VIOLATIONS THEREOF, AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines Congress assembled:
Section 1. Declaration of Policy. - Article XII, Section 6 of the Constitution states that the use of property bears a
social function, and all economic agents shall contribute to the common good. Towards this end, the State shall
ensure the expeditious and efficient implementation and completion of government infrastructure projects to avoid
unnecessary increase in construction, maintenance and/or repair costs and to immediately enjoy the social and
economic benefits therefrom.
Section 2. Definition of Terms.
(a) National government projects" shall refer to all current and future national government infrastructure,
engineering works and service contracts, including projects undertaken by government-owned and
controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No.
7718, otherwise known as the Build-Operate-and-Transfer Law, and other related and necessary activities
such as site acquisition, supply and/or installation of equipment and materials, implementation,
construction, completion, operation, maintenance, improvement, repair and rehabilitation, regardless of
the source of funding.
(b) "Service contracts" shall refer to infrastructure contracts entered into by any department, office or
agency of the national government with private entities and non-government organizations for services
related or incidental to the functions and operations of the department, office or agency concerned.
Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Mandatory Injunctions. No
court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary
mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether
public or private acting under the government direction, to restrain, prohibit or compel the following acts:
(a) Acquisition, clearance and development of the right-of-way and/or site or location of any national
government project;
(b) Bidding or awarding of contract/ project of the national government as defined under Section 2 hereof;
(c) Commencement prosecution, execution, implementation, operation of any such contract or
project;1awphil.net
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for such contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not
limited to cases filed by bidders or those claiming to have rights through such bidders involving such
contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The
applicant shall file a bond, in an amount to be fixed by the court, which bond shall accrue in favor of the
government if the court should finally decide that the applicant was not entitled to the relief sought.
In after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate
under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same,
without prejudice to any liability that the guilty party may incur under existing laws.
Section 4. Nullity of Writs and Orders. Any temporary restraining order, preliminary injunction or preliminary
mandatory injunction issued in violation of Section 3 hereof is void and of no force and effect.

Section 5. Designation of Regional Trial Courts. - The Supreme Court may designate regional trial courts to act as
commissioners with the sole function of receiving facts of the case involving acquisition clearance and development
of right-of-way for government infrastructure projects. The designated regional trial court shall within thirty (30)
days from the date of receipt of the referral, forwards its findings of facts to the Supreme Court for appropriate
action.
Section 6. Penal Sanction. In addition to any civil and criminal liabilities he or she may incur under existing laws,
any judge who shall issue a temporary restraining order, preliminary injunction or preliminary mandatory injunction
in violation of Section 3 hereof, shall suffer the penalty of suspension of at least sixty (60) days without pay.
Section 7. Issuance of Permits. Upon payment in cash of the necessary fees levied under Republic Act No. 7160,
as amended, otherwise known as the Local Government Code of 1991, the governor of the province or mayor of a
highly-urbanized city shall immediately issue the necessary permit to extract sand, gravel and other quarry
resources needed in government projects. The issuance of said permit shall consider environmental laws, land use
ordinances and the pertinent provisions of the Local Government Code relating to environment.
Section 8. Separability Clause. - If any provision of this Act is declared unconstitutional or invalid, other parts or
provisions hereof not affected thereby shall continue to be of full force and effect.
Section 9. Repealing Clause. - All laws, decrees, including Presidential Decree No. 605, 1818 and Republic Act No.
7160, as amended, orders, rules and regulations or parts thereof inconsistent with this Act are hereby repealed or
amended accordingly.
Section 10. Effectivity Clause. This Act shall take effect fifteen (15) days following its publication in at least two
(2) newspapers of general circulation.
Approved: November 7, 2000