Mangila vs. CA/Loreta Guina GRN 125027 August 12, 2002 Carpio, J.

.: FACTS: Petitioner Mangila hired the freight service of private respondent Guina for the importation of seafoods to USA. Petitioner failed to pay the services rendered by Air Swift International a business operating under the sole proprietorship of Guina. The latter filed a case for collection of money but summons were unsuccessfully served thus a writ of Preliminary Attachment was issued. Petitioner filed a motion to discharge without submitting herself to the jurisdiction of the court. The CA upheld the validity of the issuance of the writ attachment and sustained the filing of the case in Pasay as the proper venue, despite stipulation in the contract that in case of complaints, cases should be filed in Makati City. Pasay City is the office location of Air Swift. ISSUE: Whether or not the venue of the swift was properly laid when it was filed in Pasay City where the sole proprietorship business of the respondent was located. RULING: A mere stipulation on the venue of an action is not enough to preclude the parties from bringing a case in other venues. The partiers must be able to show that the stipulation is exclusive. In the present case there are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the only or exclusive venue where the action would be instituted. Nevertheless, we hold that Pasay is not the proper venue. In this case it was established that petitioner resides in Pampanga while respondent resides in Paraaque. The case was filed in Pasay where the business is located. A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise The law does not vest a separate legal personality on the sole proprietorship to empower it to file or defend an action in court. Thus, not being

vested with legal personality to file this case, the sole proprietorship is not the plaintiff but Guina herself.

Chuidian vs. Sandiganbayan, January 19, 2001 The rule contemplates that the defect must be in the very issuance of the attachment writ. Supervening events which may or may not justify the discharge of the writ are not within the purview of this particular rule. When the preliminary attachment is issued upon a ground. which is at the same time the applicant's cause of action, the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and affidavits on which the writ was based, the reason being that the hearing on such a motion for dissolution of the writ would be tantamount to a trial of the merits of the action. Thus, this Court has time and again ruled that the merits of the action in which a writ of preliminary attachment has been issued are not triable on a motion for dissolution of the attachment, otherwise an applicant for the lifting of the writ could force a trial of the merits of the case on a mere motion. Moreover, we have held that when the writ of attachment is issued upon a ground which is at the same time the applicant's cause of action, the only other way the writ can be lifted or dissolved is by a counterbond, in accordance with Section 12 of the same rule. To reiterate, there are only two ways of quashing a writ of attachment: (a) by filing a counterbond immediately; or (b) by moving to quash on the ground of improper and irregular issuance. These grounds for the dissolution of an attachment are fixed in Rule 57 of the Rules of Court and

the power of the Court to dissolve an attachment is circumscribed by the grounds specified therein CHUIDIAN V. SANDIGANBAYAN 349 SCRA 745 (Jan. 2001)

LUZ DU, petitioner, vs. STRONGHOLD INSURANCE CO., INC., respondent. DECISION

Facts: The government filed before the Sandiganbayan a complaint against several individuals, including D, for restitution of ill-gotten wealth. The government asked for the issuance of a writ of attachment and this was granted. D assailed the propriety of the issuance of the writ.

PANGANIBAN, J.: Preference is given to a duly registered attachment over a subsequent notice of lis pendens, even if the beneficiary of the notice acquired the subject property before the registration of the attachment. Under the torrens system, the auction sale of an attached realty retroacts to the date the levy was registered. The Case

Issue: Whether the issuance of the writ was proper.

Held: Yes. In order to quash a writ of attachment, a party may file a counterbond (Rule 57 12) or to quash the attachment on the ground that it was irregularly or improvidently issued (Rule 57 13). The grounds cited by D have nothing to do with the issuance of the writ. His grounds were facts that took place after the writ had already been implemented. Supervening events, which may or may not justify the discharge of the writ, are not within the purview of Rule 57 13.

Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the March 19, 2002 Decision and the December 5, 2002 Resolution of the Court of Appeals (CA) in CA-GR CV No. 50884. The CA disposed as follows: Parenthetically, when the decision in Civil Case No. 90-1848 became final and executory, levy on execution issued and the attached property sold at public auction, the latter retroacts to the date of the levy. Said the High Court: In line with the same principle, it was held that where a preliminary attachment in favor of A was recorded on November 11, 1932, and the private sale of the attached property in favor of B was executed on May 29, 1933, the attachment lien has priority over the private sale, which means that the purchaser took the property subject to such attachment lien and to all of its consequences, one of which is the subsequent sale on execution (Tambao v. Suy, 52 Phil. 237). The auction sale being a necessary sequel to the levy, it enjoys the same preference as the attachment lien enjoys over the private sale. In other words, the auction sale retroacts to the date of the levy. [Were] the rule be otherwise, the preference enjoyed by the levy of execution would be meaningless and illusory (Capistrano v. Phil. Nat. Bank, 101 Phil. 1117). (Underscoring supplied) By and large, We find no reversible error in the appealed decision.

IN VIEW OF ALL THE FOREGOING, the instant appeal is ordered DISMISSED. No pronouncement as to cost. The questioned Resolution, on the other hand, denied petitioners Motion for Reconsideration. The Facts The CA narrated the facts as follows: x x x Aurora Olarte de Leon was the registered owner of Lot No. 10-A (LRC Psd 336366) per Transfer Certificate of Title No. 582/T-3. Sometime in January 1989, De Leon sold the property to Luz Du under a Conditional Deed of Sale wherein said vendee paid a down payment of P75,000.00 leaving a balance of P95,000.00. Then again, on April 28, 1989, Aurora de Leon sold [the] same property to spouses Enrique and Rosita Caliwag without prior notice to Luz Du. As a result, Transfer Certificate of Title No. 582/T-3 was cancelled and Transfer Certificate of Title No. 2200 was issued in favor of the Caliwag spouses. Meanwhile, Stronghold Insurance Corp., Inc. x x x commenced Civil Case No. 90-1848 against spouses Rosita and Enrique Caliwag et al., for allegedly defrauding Stronghold and misappropriating the companys fund by falsifying and simulating purchases of documentary stamps. The action was accompanied by a prayer for a writ of preliminary attachment duly annotated at the back of Transfer Certificate of Title No. 2200 on August 7, 1990. On her part, on December 21, 1990, Luz Du initiated Civil Case No. 60319 against Aurora de Leon and the spouses Caliwag for the annulment of the sale by De Leon in favor of the Caliwags, anchored on the earlier mentioned Deed of Conditional Sale. On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the back of Transfer Certificate of Title No. 2200. On February 11, 1991, the decision was handed down in Civil Case No. 90-1848 in favor of Stronghold, ordering the spouses Caliwag jointly and severally to pay the plaintiff P8,691,681.60, among others. When the decision became final and executory, on March 12, 1991, a notice of levy on execution was annotated on Transfer Certificate of Title No. 2200 and the attached property was sold in a public auction. On [August] 5, 1991, the certificate of sale and the final Deed of Sale in favor of Stronghold were inscribed and annotated leading

to the cancellation of Transfer Certificate of Title No. 2200 and in lieu thereof, Transfer Certificate of Title No. 6444 was issued in the name of Stronghold. It came to pass that on August 5, 1992, Luz Du too was able to secure a favorable judgment in Civil Case No. 60319 and which became final and executory sometime in 1993, as well. Under the above historical backdrop, Luz Du commenced the present case (docketed as Civil Case No. 64645) to cancel Transfer Certificate of Title No. 6444 in the name of Stronghold with damages claiming priority rights over the property by virtue of her Notice Of Lis Pendens under Entry No. 13305 and inscribed on January 3, 1991, and the final and executory decision in Civil Case No. 60319 she filed against spouses Enrique and Rosita Caliwag. According to Luz Du, despite her said notice of lis pendens annotated, Stronghold still proceeded with the execution of the decision in Civil Case No. 90-1848 against the subject lot and ultimately the issuance of Transfer Certificate of Title No. 6444 in its (Strongholds) name. The trial court ruled that Stronghold had superior rights over the property because of the prior registration of the latters notice of levy on attachment on Transfer Certificate of Title (TCT) No. 2200. For this reason, it found no basis to nullify TCT No. 6444, which was issued in the name of respondent after the latter had purchased the property in a public auction. Ruling of the Court of Appeals Sustaining the trial court in toto, the CA held that Strongholds notice of levy on attachment had been registered almost five (5) months before petitioners notice of lis pendens. Hence, respondent enjoyed priority in time. Such registration, the appellate court added, constituted constructive notice to petitioner and all third persons from the time of Strongholds entry, as provided under the Land Registration Act -- now the Property Registration Decree. The CA also held that respondent was a purchaser in good faith. The necessary sequels of execution and sale retroacted to the time when Stronghold registered its notice of levy on attachment, at a time when there was nothing on TCT No. 2200 that would show any defect in the title or any adverse claim over the property. Hence, this Petition. Issues

Petitioner submits the following issues for our consideration: I. Whether a Notice of Levy on Attachment on the property is a superior lien over that of the unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional Sale. II. Whether the acquisition of the subject property by Respondent Stronghold was tainted with bad faith. The Courts Ruling The Petition has no merit. Main Issue: Superiority of Rights Petitioner submits that her unregistered right over the property by way of a prior conditional sale in 1989 enjoys preference over the lien of Stronghold -- a lien that was created by the registration of respondents levy on attachment in 1990. Maintaining that the ruling in Capistrano v. PNB was improperly applied by the Court of Appeals, petitioner avers that unlike the circumstances in that case, the property herein had been sold to her before the levy. We do not agree. The preference given to a duly registered levy on attachment or execution over a prior unregistered sale is well-settled in our jurisdiction. As early as Gomez v. Levy Hermanos, this Court has held that an attachment that is duly annotated on a certificate of title is superior to the right of a prior but unregistered buyer. In that case, the Court explained as follows: x x x. It is true that she bought the lots with pacto de retro but the fact of her purchase was not noted on the certificates of title until long after the attachment and its inscription on the certificates. In the registry, therefore, the attachment appeared in the nature of a real lien when Apolonia Gomez had her purchase recorded. The legal effect of the notation of said lien was to subject and subordinate the right of Apolonia Gomez, as purchaser, to the lien. She acquired the ownership of the said parcels only from the date of the recording of her title

in the register, which took place on November 21, 1932 (sec. 51 of Act No. 496; LiongWong-Shih vs. Sunico and Peterson, 8 Phil. 91; Tabigue vs. Green, 11 Phil. 102; Buzon vs. Lucauco, 13 Phil. 354; and Worcester vs. Ocampo and Ocampo, 34 Phil. 646), and the right of ownership which she inscribed was not an absolute but a limited right, subject to a prior registered lien, by virtue of which Levy Hermanos, Inc. was entitled to the execution of the judgment credit over the lands in question, a right which is preferred and superior to that of the plaintiff (sec, 51, Act No. 496 and decisions cited above). x x x Indeed, the subsequent sale of the property to the attaching creditor must, of necessity, retroact to the date of the levy. Otherwise, the preference created by the levy would be meaningless and illusory, as reiterated in Defensor v. Brillo: x x x. The doctrine is well-settled that a levy on execution duly registered takes preference over a prior unregistered sale; and that even if the prior sale is subsequently registered before the sale in execution but after the levy was duly made, the validity of the execution sale should be maintained, because it retroacts to the date of the levy; otherwise, the preference created by the levy would be meaningless and illusory. Even assuming, therefore, that the entry of appellants sales in the books of the Register of Deeds on November 5, 1949 operated to convey the lands to them even without the corresponding entry in the owners duplicate titles, the levy on execution on the same lots in Civil Case No. 1182 on August 3, 1949, and their subsequent sale to appellee Brillo (which retroacts to the date of the levy) still takes precedence over and must be preferred to appellants deeds of sale which were registered only on November 5, 1949. This result is a necessary consequence of the fact that the properties herein involved were duly registered under Act No. 496, and of the fundamental principle that registration is the operative act that conveys and binds lands covered by Torrens titles (sections 50, 51, Act 496). Hence, if appellants became owners of the properties in question by virtue of the recording of the conveyances in their favor, their title arose already subject to the levy in favor of the appellee, which had been noted ahead in the records of the Register of Deeds. (Citations omitted, italics supplied) The Court has steadfastly adhered to the governing principle set forth in Sections 51 and 52 of Presidential Decree No. 1529: SEC. 51. Conveyance and other dealings by registered owner. - An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary

instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or the city where the land lies. SEC. 52. Constructive notice upon registration. - Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.(Italics supplied) As the property in this case was covered by the torrens system, the registration of Strongholds attachment was the operative act that gave validity to the transfer and created a lien upon the land in favor of respondent. Capistrano Ruling Correctly Applied The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. That was the import of Capistrano v. PNB, which held that precedence should be given to a levy on attachment or execution, whose registration was before that of the prior sale. In Capistrano, the sale of the land in question -- though made as far back as 1946 -- was registered only in 1953, after the property had already been subjected to a levy on execution by the Philippine National Bank. The present case is not much different. The stipulation of facts shows that Stronghold had already registered its levy on attachment before petitioner annotated her notice of lis pendens. As in Capistrano, she invokes the alleged superior right of a prior unregistered buyer to overcome respondents lien. If either the third-party claim or the subsequent registration of the prior sale was insufficient to defeat the previously registered attachment lien, as ruled by the Court in Capistrano, it follows that a notice of lis pendens is likewise insufficient for the same purpose. Such notice does not establish a lien or an encumbrance on the property affected. As the name suggests, a notice of lis pendens with respect to a disputed property is intended merely to inform third

persons that any of their transactions in connection therewith -- if entered into subsequent to the notation -- would be subject to the result of the suit. In view of the foregoing, the CA correctly applied Capistrano, as follows: x x x the rule now followed is that if the attachment or levy of execution, though posterior to the sale, is registered before the sale is registered, it takes precedence over the latter. The rule is not altered by the fact that at the time of the execution sale the Philippine National Bank had information that the land levied upon had already been deeded by the judgment debtor and his wife to Capistrano. The auction sale being a necessary sequel to the levy, for this was effected precisely to carry out the sale, the purchase made by the bank at said auction should enjoy the same legal priority that the levy had over the sale in favor of plaintiff. In other words, the auction sale retroacts to the date of the levy. Were the rule otherwise, the preference enjoyed by the levy of execution in a case like the present would be meaningless and illusory. (Citations omitted, italics supplied) Second Issue: Taking in Bad Faith We now tackle the next question of petitioner: whether Stronghold was a purchaser in good faith. Suffice it to say that when Stronghold registered its notice of attachment, it did not know that the land being attached had been sold to petitioner. It had no such knowledge precisely because the sale, unlike the attachment, had not been registered. It is settled that a person dealing with registered property may rely on the title and be charged with notice of only such burdens and claims as are annotated thereon. This principle applies with more force to this case, absent any allegation or proof that Stronghold had actual knowledge of the sale to petitioner before the registration of its attachment. Thus, the annotation of respondents notice of attachment was a registration in good faith, the kind that made its prior right enforceable. Moreover, it is only after the notice of lis pendens is inscribed in the Office of the Register of Deeds that purchasers of the property become bound by the judgment in the case. As Stronghold is deemed to have acquired the property -- not at the time of actual purchase but at the time of the attachment -- it was an innocent purchaser for value and in good faith.

WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED.

Respondent Readycon Trading and Construction Corporation (READYCON, for brevity) is likewise a corporate entity organized in accordance with Philippine laws. Its primary business is the manufacture and sale of asphalt materials.5 The facts of this case are not in dispute. WENCESLAO had a contract with the Public Estates Authority (PEA) for the improvement of the main expressway in the R-1 Toll Project along the Coastal Road in Paraaque City. To fulfill its obligations to the PEA, WENCESLAO entered into a contract with READYCON on April 16, 1991. READYCON agreed to sell to WENCESLAO asphalt materials valued at P1,178,308.75. The contract bore the signature of co-petitioner Dominador Dayrit, as signatory officer for WENCESLAO in this agreement. Under the contract, WENCESLAO was bound to pay respondent a twenty percent (20%) downpayment, or P235,661.75, upon delivery of the materials contracted for. The balance of the contract price, amounting to P942,647, was to be paid within fifteen (15) days thereof. It was further stipulated by the parties that respondent was to furnish, deliver, lay, roll the asphalt, and if necessary, make the needed corrections on a prepared base at the jobsite.6 On April 22, 1991, READYCON delivered the assorted asphalt materials worth P1,150,531.75. Accordingly, WENCESLAO paid the downpayment of P235,661.75 to READYCON. Thereafter, READYCON performed its obligation to lay and roll the asphalt materials on the jobsite.7 Fifteen (15) days after performance of said work, READYCON demanded that WENCESLAO pay the balance of the contract price. WENCESLAO, however, ignored said demand. On May 30, 1991, the counsel for READYCON wrote a demand letter to WENCESLAO asking that it make good on the balance it owed. Again, WENCESLAO failed to heed the demand. It did not even bother to reply to the demand letter.8 In view of this development, on July 19, 1991, READYCON filed a complaint with the Regional Trial Court of Pasig City for collection of a sum of money and damages, with prayer for writ of preliminary attachment against D.M. Wenceslao and/or Dominador Dayrit, docketed as Civil Case No. 61159. READYCON demanded payment of P1,014,110.45 from petitioners herein with P914,870.75 as the balance of contract price, as well as payment of P99,239.70, representing another unpaid account.9

G.R. No. 154106

June 29, 2004

D.M. WENCESLAO and ASSOCIATES, INC., and/or DOMINADOR S. DAYRIT, petitioners, vs. READYCON TRADING AND CONSTRUCTION CORP., respondent. DECISION QUISUMBING, J.: This petition for review assails the decision1 of the Court of Appeals, dated January 30, 2002, as well as its resolution2 dated June 20, 2002 in CA-GR CV No. 49101, denying petitioners motion for reconsideration. The appellate court affirmed the decision3 of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, ordering petitioners to pay the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid to Readycon Trading and Construction Corp., plus damages. Petitioner D.M. Wenceslao and Associates, Inc. (WENCESLAO, for brevity) is a domestic corporation, organized under and existing pursuant to Philippine laws, engaged in the construction business, primarily infrastructure, foundation works, and subdivision development. Its co-petitioner, Dominador Dayrit, is the vice-president of said company.4

As READYCON timely posted the required bond of P1,150,000, its application for the writ of preliminary attachment was granted. On September 5, 1991, the RTC Sheriff attached certain assets of WENCESLAO, particularly, the following heavy equipments: One (1) asphalt paver, one (1) bulldozer, one (1) dozer and one (1) grader.10 On September 16, 1991, WENCESLAO moved for the release of the attached equipments and posted its counter-bond. The trial court granted the motion and directed the RTC Sheriff to return the attached equipments. On September 25, 1991, the Sheriff released the attached heavy machineries to WENCESLAO.11 In the proceedings below, WENCESLAO admitted that it owed READYCON P1,014,110.45 indeed. However, it alleged that their contract was not merely one of sale but also of service, namely, that respondent shall lay the asphalt in accordance with the specifications and standards imposed by and acceptable to the government. WENCESLAO also alleged that since the contract did not indicate this condition with respect to the period within which the balance must be paid, the contract failed to reflect the true intention of the parties.12 It alleged READYCON agreed that the balance in the payments would be settled only after the government had accepted READYCONs work as to its quality in laying the asphalt. By way of counterclaim, WENCESLAO prayed for the payment of damages caused by the filing of READYCONs complaint and the issuance of the writ of attachment despite lack of cause.13 On December 26, 1994, the RTC rendered judgment in this wise: WHEREFORE, judgment is hereby rendered ordering the defendant D.M. Wenceslao & Associates, Inc. to pay plaintiff as follows: 1. The amount of P1,014,110.45 with interest at the rate of 12% per annum (compounded annually) from August 9, 1991, date of filing of the complaint, until fully paid. 2. The amount of P35,000.00 as and for attorneys fees and expenses of litigation. 3. Costs of suit.

The counterclaim of the defendants is dismissed for lack of merit.14 Dissatisfied with the decision, the petitioners appealed to the Court of Appeals. The appellate court, however, affirmed in toto the decision of the lower court.15 In denying the appeal, the appellate court found that contrary to WENCESLAOs assertion, malice and bad faith in obtaining a writ of attachment must be proved before a claim for damages on account of wrongful attachment will prosper, citing Philippine Commercial International Bank v. Intermediate Appellate Court, 196 SCRA 29 (1991). The CA stressed that the trial court found neither malice nor bad faith relative to the filing of the complaint and the obtaining of the writ of attachment. Also, according to the CA, petitioners did not adduce evidence to show that the attachment caused damage to the cited pieces of heavy equipment.16 The appellate court also found that the trial court correctly interpreted the period for payment of the balance. It held that the text of the stipulation that the balance shall be paid within fifteen days is clear and unmistakable. Granting that the sales contract was not merely for supply and delivery but also for service, the balance was already due and demandable when demand was made on May 30, 1991, which was a month after READYCON performed its obligation.17 Hence, the instant petition, wherein petitioners raise the following issues: 1. WHETHER OR NOT QUESTIONS OF FACTS ARE RAISED IN THE APPEAL BY CERTIORARI; 2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENT LIABLE FOR COMPENSATORY DAMAGES FOR THE WRONGFUL ISSUANCE OF THE WRIT OF PRELIMINARY ATTACHMENT; 3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THE OBLIGATION [AS] NOT YET DUE AND DEMANDABLE.18 We find proper for resolution two issues: (1) Is respondent READYCON liable to petitioner WENCESLAO for damages caused by the issuance and enforcement of the writ of preliminary attachment? (2) Was the obligation of WENCESLAO to pay READYCON already due and demandable as of May 30, 1991?

On the first issue, petitioners rely mainly on Lazatin v. Twano and Castro, 112 Phil. 733 (1961), reiterated in MC Engineering v. Court of Appeals, 380 SCRA 116 (2002). In Lazatin, we held that actual or compensatory damages may be recovered for wrongful, though not malicious, attachment. Lazatin also held that attorneys fees may be recovered under Article 2208 of the Civil Code.19 Petitioners contend that Lazatin applies in the instant case because the wrongful attachment of WENCESLAOs equipment resulted in a paralysis of its operations, causing it to sustain a loss of P100,000 per day in terms of accomplishment of work. Since the attachment lasted 19 days it suffered a total loss of P1.9 million. Aside from that, it had to spend P50,000 on the pullout of the equipment and another P100,000 to repair and restore them to their former working condition.20 Respondent counters that inasmuch as a preliminary attachment is an available ancillary remedy under the rules, a penalty cannot be meted out for the enforcement of a right, such as in this case when it sought such relief. It stresses that the writ was legally issued by the RTC, upon a finding that READYCON sought the relief without malice or bad faith. Furthermore, WENCESLAO failed to show concrete and credible proof of the damages it suffered. The issuance of a writ and its enforcement entail a rigorous process where the court found that it was not attended by malice or bad faith. It cites Mindanao Savings and Loan Association v. Court of Appeals, 172 SCRA 480 (1989), to the effect where a counter-bond is filed, the right to question the irregularity and propriety of the writ of attachment must be deemed waived since the ground for the issuance of the writ forms the core of the complaint.21 We find for the respondent on this issue. However, its reliance upon Mindanao Savings and Loan Association is misplaced. It is to be stressed that the posting of a counter-bond is not tantamount to a waiver of the right to damages arising from a wrongful attachment. This we have made clear in previous cases, e.g., Calderon v. Intermediate Appellate Court,22 where we ruled that: Whether the attachment was discharged by either of the two (2) ways indicated in the law, i.e., by filing a counterbond or by showing that the order of attachment was improperly or irregularly issued, the liability of the surety on the attachment bond subsists because the final reckoning is when "the Court shall finally adjudge that the attaching creditor was not entitled" to the issuance of the attachment writ in the first place. The attachment debtor cannot be deemed to have waived any defect in the issuance of the attachment writ by simply availing himself of one way of discharging the attachment writ, instead of the other. Moreover, the filing of a counterbond is a speedier way of discharging the attachment writ maliciously sought out by the attaching party creditor instead of the other way, which in most instances like in the

present case, would require presentation of evidence in a fullblown trial on the merits and cannot easily be settled in a pending incident of the case.23 The point in Mindanao Savings, alluded to by respondent, pertained to the propriety of questioning the writ of attachment by filing a motion to quash said writ, after a counter-bond had been posted by the movant. But nowhere in Mindanao Savings did we rule that filing a counter-bond is tantamount to a waiver of the right to seek damages on account of the impropriety or illegality of the writ. We note that the appellate court, citing Philippine Commercial & Industrial Bank, 196 SCRA 29 (1991), stressed that bad faith or malice must first be proven as a condition sine qua non to the award of damages. The appellate court appears to have misread our ruling, for pertinently what this Court stated was as follows: The silence of the decision in GR No. 55381 on whether there was bad faith or malice on the part of the petitioner in securing the writ of attachment does not mean the absence thereof. Only the legality of the issuance of the writ of attachment was brought in issue in that case. Hence, this Court ruled on that issue without a pronouncement that procurement of the writ was attended by bad faith. Proof of bad faith or malice in obtaining a writ of attachment need be proved only in the claim for damages on account of the issuance of the writ. We affirm the finding of the respondent appellate court that malice and bad faith attended the application by PCIB of a writ of attachment.24 Plainly, we laid no hard and fast rule that bad faith or malice must be proved to recover any form of damages. In Philippine Commercial & Industrial Bank, we found bad faith and malice to be present, thereby warranting the award of moral and exemplary damages. But we denied the award of actual damages for want of evidence to show said damages. For the mere existence of malice and bad faith would not per se warrant the award of actual or compensatory damages. To grant such damages, sufficient proof thereon is required. Petitioners cite Lazatin and MC Engineering insofar as proof of bad faith and malice as prerequisite to the claim of actual damages is dispensed with. Otherwise stated, in the present case, proof of malice and bad faith are unnecessary because, just like in Lazatin and MC Engineering, what is involved here is the issue of actual and compensatory damages. Nonetheless, we find that petitioner is not entitled to an award of actual or compensatory damages. Unlike Lazatin and MC Engineering, wherein the respective complaints were dismissed for being unmeritorious, the writs of attachment were found to be wrongfully issued, in the present case, both the trial and the appellate courts held that the complaint had

merit. Stated differently, the two courts found READYCON entitled to a writ of preliminary attachment as a provisional remedy by which the property of the defendant is taken into custody of the law as a security for the satisfaction of any judgment which the plaintiff may recover.25 Rule 57, Section 4 of the 1997 Rules of Civil Procedure states that: SEC. 4. Condition of applicants bond. - The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto (italics for emphasis). In this case, both the RTC and the Court of Appeals found no reason to rule that READYCON was not entitled to issuance of the writ. Neither do we find now that the writ is improper or illegal. If WENCESLAO suffered damages as a result, it is merely because it did not heed the demand letter of the respondent in the first place. WENCESLAO could have averted such damage if it immediately filed a counter-bond or a deposit in order to lift the writ at once. It did not, and must bear its own loss, if any, on that account. On the second issue, WENCESLAO admits that it indeed owed READYCON the amount being claimed by the latter. However, it contends that while the contract provided that the balance was payable within fifteen (15) days, said agreement did not specify when the period begins to run. Therefore, according to petitioner, the appellate court erred when it held the contract clear enough to be understood on its face. WENCESLAO insists that the balance of the purchase price was payable only "upon acceptance of the work by the government." In other words, the real intent of the parties was that it shall be due and demandable only fifteen days after acceptance by the government of the work. This is common practice, according to petitioner. Respondent argues that the stipulation in the sales contract is very clear that it should be paid within fifteen (15) days without any qualifications and conditions. When the terms of a contract are clear and readily understandable, there is no room for construction. Even so, the contention was mooted and rendered academic when, a few days after institution of the complaint, the government accepted the work but WENCESLAO still failed to pay respondent.

Under Article 1582 of the Civil Code, the buyer is obliged to pay the price of the thing sold at the time stipulated in the contract. Both the RTC and the appellate court found that the parties contract stated that the buyer shall pay the manufacturer the amount of P1,178,308.75 in the following manner: 20% downpayment - P235,661.75 Balance payable within fifteen (15) days P942,647.00 Following the rule on interpretation of contracts, no other evidence shall be admissible other than the original document itself,26 except when a party puts in issue in his pleading the failure of the written agreement to express the true intent of the parties.27 This was what the petitioners wanted done. However, to rule on whether the written agreement failed to express the true intent of the parties would entail having this Court reexamine the facts. The findings of the trial court as affirmed by the appellate court on this issue, however, bind us now. For in a petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, this Court may not review the findings of fact all over again. Suffice it to say, however, that the findings by the RTC, then affirmed by the CA, that the extra condition being insisted upon by the petitioners is not found in the sales contract between the parties. Hence it cannot be used to qualify the reckoning of the period for payment. Besides, telling against petitioner WENCESLAO is its failure still to pay the unpaid account, despite the fact of the works acceptance by the government already. With submissions of the parties carefully considered, we find no reason to warrant a reversal of the decisions of the lower courts. But since Dominador Dayrit merely acted as representative of D.M. Wenceslao and Associates, Inc., in signing the contract, he could not be made personally liable for the corporations failure to comply with its obligation thereunder. Petitioner WENCESLAO is properly held liable to pay respondent the sum of P1,014,110.45 with interest rate of 12% per annum (compounded annually) from August 9, 1991, the date of filing of the complaint, until fully paid, plus damages. WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 49101, affirming the judgment of the Regional Trial Court of Pasig City, Branch 165, in Civil Case No. 61159, are AFFIRMED. No pronouncement as to costs. SO ORDERED.

GONZAGA-REYES, J.: This is a petition for review on certiorari filed by petitioner Teresita Idolor which seeks to set aside the decision of the respondent Court of Appeals which reversed the Orderof the Regional Trial Court of Quezon Citygranting Idolors prayer for the issuance of a writ of preliminary injunction and the resolution denying petitioners motion for reconsideration. On March 21, 1994, to secure a loan of P520,000.00, petitioner Teresita Idolor executed in favor of private respondent Gumersindo De Guzman a Deed of Real Estate Mortgage with right of extra-judicial foreclosure upon failure to redeem the mortgage on or before September 20, 1994. The object of said mortgage is a 200-square meter property with improvements located at 66 Ilocos Sur Street, Barangay Ramon Magsaysay, Quezon City covered by TCT No. 25659. On September 21, 1996, private respondent Iluminada de Guzman, wife of Gumersindo de Guzman, filed a complaint against petitioner Idolor before the Office of the Barangay Captain of Barangay Ramon Magsaysay, Quezon City, which resulted in a Kasunduang Pag-aayos which agreement is quoted in full: Kami, ang (mga) may sumbong at (mga) ipinagsusumbong sa usaping binabanggit sa itaas, ay nagkakasundo sa pamamagitan nito na ayusin ang aming alitan gaya ng sumusunod: Na ako si Teresita V. Idolor of legal age ay nakahiram ng halagang P520,000.00 noong September 20, 1994. Na ang nasabing halaga ay may nakasanlang titulo ng lupa (TCT No. 25659) under Registry receipt 3420 dated July 15, 1996. Na ako si Teresita V. Idolor ay humihingi ng 90 days palugit (grace period) to settle the said amount. TERESITA V. IDOLOR, petitioner, vs. HON. COURT OF APPEALS, SPS. GUMERSINDO DE GUZMAN and ILUMINADA DE GUZMAN and HON. PRUDENCIO CASTILLO, JR., Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 220, Quezon City, respondents. DECISION Failure to settle the above account on or before December 21, 1996, I agree to execute a deed of sale with the agreement to repurchase without interest within one year. Total amount of P1,233,288.23 inclusive of interest earned. At nangangako kami na tutupad na tunay at matapat sa mga katakdaan ng pag-aayos na inilahad sa itaas.

Petitioner failed to comply with her undertaking; thus private respondent Gumersindo filed a motion for execution before the Office of the Barangay captain who subsequently issued a certification to file action. On March 21, 1997, respondent Gumersindo De Guzman filed an extra judicial foreclosure of the real estate mortgage pursuant to the parties agreement set forth in the real estate mortgage dated March 21, 1994. On May 23, 1997, the mortgaged property was sold in a public auction to respondent Gumersindo, as the highest bidder and consequently, the Sheriffs Certificate of Sale was registered with the Registry of Deeds of Quezon City on June 23, 1997. On June 25, 1998, petitioner filed with the Regional Trial Court of Quezon City, Branch 220, a complaint for annulment of Sheriffs Certificate of Sale with prayer for the issuance of a temporary restraining order (TRO) and a writ of preliminary injunction against private respondents, Deputy Sheriffs Marino Cachero and Rodolfo Lescano and the Registry of Deeds of Quezon City alleging among others alleged irregularity and lack of notice in the extra-judicial foreclosure proceedings subject of the real estate mortgage. In the meantime, a temporary restraining order was issued by the trial court. On July 28, 1998, the trial court issued a writ of preliminary injunction enjoining private respondents, the Deputy Sheriffs and the Registry of Deeds of Quezon City from causing the issuance of a final deed of sale and consolidation of ownership of the subject property in favor of the De Guzman spouses. The trial court denied the motion for reconsideration filed by the de Guzman spouses. Spouses de Guzman filed with the respondent Court of Appeals a petition for certiorari seeking annulment of the trial courts order dated July 28, 1998 which granted the issuance of a preliminary injunction. On September 28, 1999, the respondent court granted the petition and annulled the assailed writ of preliminary injunction. Teresita Idolor filed her motion for reconsideration which was denied in a resolution dated February 4, 2000. Hence this petition for review on certiorari filed by petitioner Teresita V. Idolor. The issues raised by petitioner are: whether or not the respondent Court of Appeals erred in ruling (I) that petitioner has no more proprietary right to the issuance of the writ of injunction, (2) that the Kasunduang Pag-aayos did not ipso facto result in novation of the real estate mortgage, (3) that the Kasunduang Pag-aayos is merely a promissory note of petitioner to private

respondent spouses; and (4) that the questioned writ of preliminary injunction was issued with grave abuse of discretion. The core issue in this petition is whether or not the respondent Court erred in finding that the trial court committed grave abuse of discretion in enjoining the private and public respondents from causing the issuance of a final deed of sale and consolidation of ownership of the subject parcel of land in favor of private respondents. Petitioner claims that her proprietary right over the subject parcel of land was not yet lost since her right to redeem the subject land for a period of one year had neither lapsed nor run as the sheriffs certificate of sale was null and void; that petitioner and the general public have not been validly notified of the auction sale conducted by respondent sheriffs; that the newspaper utilized in the publication of the notice of sale was not a newspaper of general circulation. We do not agree. Injunction is a preservative remedy aimed at protecting substantive rights and interests. Before an injunction can be issued, it is essential that the following requisites be present: 1) there must be a right in esse or the existence of a right to be protected; 2) the act against which the injunction is to be directed is a violation of such right. Hence the existence of a right violated, is a prerequisite to the granting of an injunction. Injunction is not designed to protect contingent or future rights. Failure to establish either the existence of a clear and positive right which should be judicially protected through the writ of injunction or that the defendant has committed or has attempted to commit any act which has endangered or tends to endanger the existence of said right, is a sufficient ground for denying the injunction. The controlling reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly investigated and advisedly adjudicated. It is to be resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard of compensation. In the instant case, we agree with the respondent Court that petitioner has no more proprietary right to speak of over the foreclosed property to entitle her to the issuance of a writ of injunction. It appears that the mortgaged property was sold in a public auction to private respondent Gumersindo on May 23, 1997 and the sheriffs certificate of sale was registered with the Registry of Deeds of Quezon City on June 23, 1997. Petitioner had one year from the registration of the sheriffs sale to redeem the property but she failed to exercise her right on or before June 23, 1998, thus spouses de Guzman are now entitled to a

conveyance and possession of the foreclosed property. When petitioner filed her complaint for annulment of sheriffs sale against private respondents with prayer for the issuance of a writ of preliminary injunction on June 25, 1998, she failed to show sufficient interest or title in the property sought to be protected as her right of redemption had already expired on June 23, 1998, i.e. two (2) days before the filing of the complaint. It is always a ground for denying injunction that the party seeking it has insufficient title or interest to sustain it, and no claim to the ultimate relief sought - in other words, that she shows no equity. The possibility of irreparable damage without proof of actual existing right is not a ground for an injunction. Petitioners allegation regarding the invalidity of the sheriffs sale dwells on the merits of the case; We cannot rule on the same considering that the matter should be resolved during the trial on the merits. Petitioner next contends that the execution of the Kasunduang Pag-aayos dated September 21, 1996 between her and spouses de Guzman before the Office of the Lupon Tagapamayapa showed the express and unequivocal intention of the parties to novate or modify the real estate mortgage; that a comparison of the real estate mortgage dated March 21, 1994 and the Kasunduang Pag-aayos dated September 21, 1996 revealed the irreconciliable incompatibility between them, i.e., that under the first agreement, the amount due was five hundred twenty thousand (P520,000) pesos only payable by petitioner within six (6) months, after which it shall earn interest at the legal rate per annum and non-payment of which within the stipulated period, private respondents have the right to extra-judicially foreclose the real estate mortgage while under the second agreement, the amount due was one million two hundred thirty three thousand two hundred eighty eight and 23/100 (P1,233,288.23) inclusive of interest, payable within 90 days and in case of non payment of the same on or before December 21, 1996, petitioner should execute a deed of sale with right to repurchase within one year without interest; that the second agreement Kasunduang Pag-aayos was a valid new contract as it was duly executed by the parties and it changed the principal conditions of petitioners original obligations. Petitioner insists that the Kasunduang Pag-aayos was not a mere promissory note contrary to respondent courts conclusion since it was entered by the parties before the Lupon Tagapamayapa which has the effect of a final judgment. We are not persuaded. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates it, either by changing its objects or principal conditions, or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. Under the law, novation is never presumed. The parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one.

Accordingly, it was held that no novation of a contract had occurred when the new agreement entered into between the parties was intended to give life to the old one. A review of the Kasunduang Pag-aayos which is quoted earlier does not support petitioners contention that it novated the real estate mortgage since the will to novate did not appear by express agreement of the parties nor the old and the new contracts were incompatible in all points. In fact, petitioner expressly recognized in the Kasunduan the existence and the validity of the old obligation where she acknowledged her long overdue account since September 20, 1994 which was secured by a real estate mortgage and asked for a ninety (90) days grace period to settle her obligation on or before December 21, 1996 and that upon failure to do so, she will execute a deed of sale with a right to repurchase without interest within one year in favor of private respondents. Where the parties to the new obligation expressly recognize the continuing existence and validity of the old one, where, in other words, the parties expressly negated the lapsing of the old obligation, there can be no novation. We find no cogent reason to disagree with the respondent courts pronouncement as follows: In the present case, there exists no such express abrogation of the original undertaking. The agreement adverted to (Annex 2 of Comment, p.75 Rollo) executed by the parties on September 21, 1996 merely gave life to the March 21, 1994 mortgage contract which was then more than two years overdue. Respondent acknowledged therein her total indebtedness in the sum of P1,233,288.23 including the interests due on the unpaid mortgage loan which amount she promised to liquidate within ninety (90) days or until December 21, 1996, failing which she also agreed to execute in favor of the mortgagee a deed of sale of the mortgaged property for the same amount without interest. Evidently, it was executed to facilitate easy compliance by respondent mortgagor with her mortgage obligation. It (the September 21, 1996 agreement) is not incompatible and can stand together with the mortgage contract of March 21, 1994. A compromise agreement clarifying the total sum owned by a buyer with the view that he would find it easier to comply with his obligations under the Contract to Sell does not novate said Contract to Sell (Rillo v. Court of Appeals, 274 SCRA 461 [1997]). Respondent correctly argues that the compromise agreement has the force and effect of a final judgment. That precisely is the reason why petitioner resorted to the foreclosure of the mortgage on March 27, 1997, after her failure to comply with her obligation which expired on December 21, 1996.

Reliance by private respondent upon Section 417 of the New Local Government Code of 1991, which requires the lapse of six (6) months before the amicable settlement may be enforced, is misplaced. The instant case deals with extra judicial foreclosure governed by ACT No. 3135 as amended. Notably, the provision in the Kasunduang Pag-aayos regarding the execution of a deed of sale with right to repurchase within one year would have the same effect as the extra-judicial foreclosure of the real estate mortgage wherein petitioner was given one year from the registration of the sheriffs sale in the Registry of property to redeem the property, i.e., failure to exercise the right of redemption would entitle the purchaser to possession of the property. It is not proper to consider an obligation novated by unimportant modifications which do not alter its essence. It bears stress that the period to pay the total amount of petitioners indebtedness inclusive of interest amounted to P1,233,288.23 expired on December 21, 1996 and petitioner failed to execute a deed of sale with right to repurchase on the said date up to the time private respondents filed their petition for extra-judicial foreclosure of real estate mortgage. The failure of petitioner to comply with her undertaking in the kasunduan to settle her obligation effectively delayed private respondents right to extra-judicially foreclose the real estate mortgage which right accrued as far back as 1994. Thus, petitioner has not shown that she is entitled to the equitable relief of injunction. WHEREFORE, the petition is DENIED. The decision of the respondent Court of Appeals dated September 28, 1999 is hereby AFFIRMED. SO ORDERED.

RIMEO S. GUSTILO, complainant, vs. HON. RICARDO S. REAL, SR., Presiding Judge, 2nd Municipal Circuit Trial Court of Victorias- Manapla, Negros Occidental, respondent. RESOLUTION QUISUMBING, J.: In a verified complaint dated June 15, 1997, Rimeo S. Gustilo charged respondent Judge Ricardo S. Real, Sr., of the Municipal Circuit Trial Court of Victorias-Manapla, Negros Occidental with gross misconduct, gross incompetence, gross ignorance of the law, and violation of the Anti-Graft and Corrupt Practices Act relative to Civil Case No. 703-M entitled Weddy C. Libo-on v. Rimeo S. Gustilo, et al. for recounting of ballots of Precinct Nos. 27 and 27-A, Barangay Punta Mesa, Manapla, Negros Occidental. Complainant avers that he was a candidate for punong barangay of Barangay Punta Mesa, Manapla, Negros Occidental in the May 12, 1997 elections. His lone opponent was Weddy C. Libo-on, then the incumbent punong barangay and the representative of the Association of Barangay Captains (ABC) to the Sangguniang Bayan of Manapla and the Sangguniang Panlalawigan of Negros Occidental. Both complainant and Libo-on garnered eight hundred nineteen (819) votes during the elections, resulting in a tie. The breaking of the tie by the Board of Canvassers was in complainants favor and he was proclaimed duly elected punong barangay of Punta Mesa, Manapla.

On May 20, 1997, his opponent filed an election protest case, docketed as Civil Case No. 703M, before the MCTC of Victorias-Manapla, Negros Occidental. Libo-on sought the recounting of ballots in two precincts, preliminary prohibitory injunction, and damages. On May 21, 1997, respondent ordered the issuance of summons to the parties and set the hearing on June 6, 1997. On May 27, 1997, however, Libo-on filed a motion to advance the hearing to May 29 and 30, 1997. The next day, respondent granted Libo-ons motion. The hearing was advanced to May 29 and 30, 1997 cancelling the hearing for June 6, 1997. Complainant avers that he was not furnished a copy of this Order dated May 28, 1997. On May 29, 1997, respondent judge issued a temporary restraining order (TRO) and annulled the proclamation of complainant as the duly elected punong barangay of Punta Mesa, Manapla. Complainant declares that no copy of this Order dated May 29, 1997 was served on him. That same day, however, he was able to secure copies of the orders of respondent dated May 28 and May 29, 1997 from the COMELEC Registrar of Manapla, Negros Occidental and the Department of Interior and Local Government (DILG). Moreover, it was only in the afternoon of May 29, 1997 that complainant received a copy of Libo-ons petition in Civil Case No. 703-M and respondents Order dated May 21, 1997. On May 30, 1997, complainant took his oath of office as punong barangay. That same day, he also filed a petition for certiorari before the Regional Trial Court of Silay City, Negros Occidental, Branch 69 docketed as Special Civil Action No. 1936-69. On June 5, 1997, the RTC lifted the TRO issued by respondent and declared as null and void the order nullifying complainants proclamation as duly elected punong barangay. Believing that respondent could not decide Civil Case No. 703-M impartially, complainant moved for his inhibition. On June 11, 1997, respondent denied complainants motion for inhibition and after hearing Libo-ons motion for permanent injunction, issued a second TRO to maintain the status quo between the contending parties.

Complainant argues that by issuing the second TRO, respondent reversed the order of the RTC of Silay City dated June 5, 1997. He also claims that by preventing him from assuming office, he was excluded by the DILG from participating in the election of the Liga ng Mga Barangay on June 14, 1997. In his Comment, respondent denied the allegations. He claimed that when Libo-on filed his motion to advance the hearing of the prayer for injunction on May 27, 1997 in Civil Case No. 703-M, complainant was served a copy by registered mail as shown by the registry receipts attached to said motion. Considering the urgency of the matter and since there was substantial compliance with due process, he issued the Order of May 28, 1997 which cancelled the hearing set for June 6, 1997 and advanced it to May 29 and 30, 1997. Respondent claims that on May 29, 1997, Libo-on and his counsel appeared but complainant did not, despite due notice. The hearing then proceeded, with Libo-on presenting his evidence. As a result, he issued the TRO prayed for and annulled complainants proclamation. Respondent admits that the Order of May 29, 1997, particularly the annulment of complainants proclamation, was outside the jurisdiction of his court. But since the COMELEC ignored Libo-ons petition for correction of erroneous tabulation and Libo-on had no other remedy under the law, he was constrained to annul complainants proclamation, which from the very beginning was illegal. He justified his action by our rulings in Bince, Jr. v. COMELEC, 312 Phil. 316 (1995) and Tatlonghari v. COMELEC, 199 SCRA 849 (1991), which held that a faulty tabulation cannot be the basis of a valid proclamation. Respondent also faults the RTC of Silay City for issuing the Order dated June 5, 1997, which lifted the TRO he issued and declared void his nullification of complainants proclamation. Respondent contends that complainant should first have exhausted all remedies in his court before resorting to the special civil action for certiorari with the RTC. The latter court, in turn, should have dismissed the action for certiorari for failure to exhaust judicial remedies. With respect to his Order of June 11, 1997, respondent explains that it was never meant to reverse the Order of the RTC of Silay City dated June 5, 1997. He points out that both parties in Civil Case No. 703-M were present during the hearing after due notice. After receiving their evidence, he found that unless a TRO was issued, Libo-on would suffer a grave injustice and irreparable injury. He submits that absent fraud, dishonesty, or corruption, his acts, even if erroneous, are not the subject of disciplinary action. In its evaluation and recommendation report dated November 29, 1999, the Office of the Court Administrator (OCA) found that respondents errors were not honest mistakes in the performance of his duties. Rather, his actions showed a bias in favor of Libo-on and evinced

a pattern to prevent the complainant from assuming office as the duly elected punong barangay despite his having been proclaimed as such by the Board of Canvassers. The OCA recommends that respondent be fined P20,000.00 and warned that a repetition of similar acts in the future will be dealt with more severely. Supreme Court Administrative Circular No. 20-95 provides: 2. The application for a TRO shall be acted upon only after all parties are heard in a summary hearing conducted within twenty-four (24) hours after the records are transmitted to the branch selected by raffle. The records shall be transmitted immediately after raffle (Emphasis supplied). xxx 4. With the exception of the provisions which necessarily involve multiple-sala stations, these rules shall apply to single-sala stations especially with regard to immediate notice to all parties of all applications for TRO. The foregoing clearly show that whenever an application for a TRO is filed, the court may act on the application only after all parties have been notified and heard in a summary hearing. In other words, a summary hearing may not be dispensed with. In the instant case, respondent admits that he issued the injunctive writ sought on May 29, 1997 after receiving the applicants evidence ex parte. His failure to abide by Administrative Circular No. 20-95 in issuing the first TRO is grave abuse of authority, misconduct, and conduct prejudicial to the proper administration of justice. Worse, he compounded the infraction by annulling complainants proclamation as the duly elected punong barangay of Punta Mesa, Manapla and prohibiting him from assuming office. Respondent admits that his court was not vested with the power or jurisdiction to annul the proclamation, but seeks to justify his action on the ground that the proclamation was void ab initio. In so doing, respondent wantonly usurped a power exclusively vested by law in the COMELEC. A judge is expected to know the jurisdictional boundaries of courts and quasijudicial bodies like the COMELEC as mapped out by the Constitution and statutes and to act only within said limits. A judge who wantonly arrogates unto himself the authority and power vested in other agencies not only acts in oppressive disregard of the basic requirements of due process, but also creates chaos and contributes to confusion in the administration of justice. Respondent, in transgressing the jurisdictional demarcation lines between his court and the COMELEC, clearly failed to realize the position that his court occupies in the interrelation and operation of the countrys justice system. He displayed a marked ignorance of basic laws

and principles. Rule 3.01 of the Code of Judicial Conduct provides that a judge shall be faithful to the law and maintain professional competence. By annulling complainants proclamation as the duly elected punong barangay, despite being aware of the fact that his court had no power to do so, not only is respondent guilty of grave abuse of authority, he also manifests unfaithfulness to a basic legal rule as well as injudicious conduct. Moreover, in willfully nullifying complainants proclamation despite his courts want of authority, respondent knowingly issued an unjust order. Note that the RTC of Silay City corrected respondents errors by declaring null and void his Order dated May 29, 1997. Nonetheless, he compounded his previous errors of judgment by proceeding to hear Libo-ons motion for permanent injunction and issuing a second TRO on June 11, 1997 on the ground that extreme urgency and grave injustice and irreparable injury will arise if no injunctive remedy were granted. Respondent insists that his act did not reverse the Order of the RTC in Special Civil Action No. 1936-69, since the second TRO he issued satisfied the notice and hearing requirements of Circular No. 20-95. Before an injunctive writ can be issued, it is essential that the following requisites be present: (1) there must be a right in esse or the existence of a right to be protected; and (2) the act against which injunction to be directed is a violation of such right. The onus probandi is on movant to show that there exists a right to be protected, which is directly threatened by the act sought to be enjoined. Further, there must be a showing that the invasion of the right is material and substantial and that there is an urgent and paramount necessity for the writ to prevent a serious damage. In this case, complainant had been duly proclaimed as the winning candidate for punong barangay. He had taken his oath of office. Unless his election was annulled, he was entitled to all the rights of said office. We do not see how the complainants exercise of such rights would cause an irreparable injury or violate the right of the losing candidate so as to justify the issuance of a temporary restraining order to maintain the status quo. We see no reason to disagree with the finding of the OCA that the evident purpose of the second TRO was to prevent complainant from participating in the election of the Liga ng mga Barangay. Respondent must be held liable for violating Rule 3.02 of the Code of Judicial Conduct which provides that, In every case, a judge shall endeavor diligently to ascertain the facts and the applicable law unswayed by partisan interests, public opinion, or fear of criticism. In a similar case, a judge was fined P5,000.00 for failure to observe the requirements of Administrative Circular No. 20-95 when he issued a TRO enjoining a duly proclaimed barangay captain from participating in the elections of officers of the ABC of Taft, Eastern Samar. Note, however, that in the instant case, the respondents infractions are not limited to

the mere issuance of a restraining order without conducting the summary conference required by Administrative Circular No. 20-95. He also annulled the proclamation of the complainant knowing very well that he had no such authority. When his first restraining order was set aside and nullification of complainants proclamation was declared null and void by the RTC of Silay City, a superior court, he again issued a TRO, which showed his partiality to complainants political rival. Respondent is thus guilty of violating Rules 3.01 and 3.02 of the Code of Judicial Conduct; knowingly rendering an unjust order; gross ignorance of the law or procedure; as well as bias and partiality. All of the foregoing are serious charges under Rule 140, Section 3 of the Rules of Court. We agree with the sanction recommended by the OCA, finding it to be in accord with Rule 140, Section 10 (A) of the Rules of Court. WHEREFORE, this COURT finds respondent judge GUILTY of violating Rules 3.01 and 3.02 of the Code of Judicial Conduct, knowingly rendering an unjust order, gross ignorance of the law and procedure, and bias and partiality. Accordingly, a fine of Twenty Thousand Pesos (P20,000.00) is hereby imposed upon respondent with a STERN WARNING that a repetition of the same or similar acts will be dealt with more severely. SO ORDERED.

ALEMARS SIBAL & SONS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NLM-KATIPUNAN (representing the group of CHARITO ALIMORONG), respondents. DECISION PARDO, J.: The petition before the Court is for certiorari to set aside the resolutions of the National Labor Relations Commission dismissing the appeal of petitioner and upholding the order of the Labor Arbiter to proceed with the execution of the decision rendered in favor of private respondent. On January 30, 1984, private respondent NLM Katipunan, representing the group of Charito Alimurong, filed with the Department of Labor and Employment a notice of strike, raising charges of unfair labor practice (ULP) and illegal dismissal against petitioner. Thereafter, the charges were elevated to respondent National Labor Relations Commission (NLRC) for compulsory arbitration. On April 29, 1985, Labor Arbiter Emilio V. Pealosa rendered a decision ordering petitioner to pay private respondent separation pay equivalent to one-half () month pay for every year of service. On December 23, 1985, the Research and Information Unit of the NLRC submitted its computation of the separation pay due to private respondent, which amounted to a total of P207,365.33. On January 4, 1988, private respondent filed with the Labor Arbiter a motion for execution of the decision of the Labor Arbiter. Petitioner did not file any opposition thereto.

At the hearing held on April 19, 1988, petitioner and private respondent agreed to the computation of the separation pay. The terms of settlement are as follows: "As agreed upon by the parties, a downpayment of P20,736.53 will be paid in May 1988 which is equivalent to 10% of the total money judgment. In June 1988, P41,473.06 will be paid by respondent and the rest covering the initial forty four (44) will be paid July 1988. The balance of the P207,365.20 will be spread over a fifteen (15) months period." "(Sgd) Counsel .....................(Sgd) Counsel for Complainant.....................for Respondent" Thus, Labor Arbiter Jose de Vera directed petitioner to pay the agreed amount of P20,736.53 representing 10% of the total amount of the separation pay due the complainants on May 16, 1988. On June 10, 1988, the Rehabilitation Receiver of petitioner submitted a Manifestation with Motion, alleging that petitioner was not yet in a position to comply with the directive of Labor Arbiter de Vera for the reason that it was still under Rehabilitation Receivership by virtue of the order of the Securities and Exchange Commission (SEC) dated August 1, 1984. Thus, it sought deferment of such payment until the SEC will issue an order formally approving the rehabilitation of petitioner and allowing complainants to file their claims with the Rehabilitation Receiver. Suprema Due to the failure of petitioner to comply with its obligation to pay the first batch of complainants their separation pay, the Labor Arbiter granted the motion for execution of private respondent in an order dated July 18, 1988. On August 5, 1988, petitioner filed a motion for reconsideration of the order granting the motion for execution, contesting the amount computed by the Research Information Unit of the National Labor Relations Commission. On September 9, 1988, Labor Arbiter Jose De Vera denied the motion, stating as follows: "respondent failed to manifest any objection or to submit its comment on the computation made by the Research and Information Unit, this Branch. In fact, on March 17, 1988, it submitted a proposal as to how the complainants claim for separation pay would be satisfied. Further, when

the complainants agreed to accept payment of their separation pay on scheduled basis, the first payment of P20,736.53 scheduled in May 1988, which was agreed upon by the parties, said respondent failed to comply and instead, it filed a Manifestation with Motion praying for the deferment of execution until the Securities and Exchange Commission issues an Order formally approving the rehabilitation of the respondent. Besides, the respondent Motion for Reconsideration is filed out of time considering that as per bailiffs return, respondent received the questioned Order on July 26, 1988 while its Motion was filed only on August 5, 1988, or more than ten (10) days from receipt of the Order." On September 26, 1988, petitioner filed with the Labor Arbiter a Motion to Suspend Execution, citing as reason therefor the order issued by the Securities and Exchange Commission which states: "All actions for claims against the corporation before any court, tribunal or body are suspended accordingly." On October 27, 1988, petitioner appealed the Labor Arbiters order for the issuance of a writ of execution to the NLRC. In a decision dated October 13, 1993, the NLRC dismissed the appeal. On February 2, 1994, the NLRC likewise denied the petitioners motion for reconsideration. Hence, this petition. Juris Petitioner contends that public respondent should have denied the order of the Labor Arbiter for the immediate payment of separation pay in favor of private respondent. Petitioner insists that a stay of execution of monetary award is justified in this case because of the order of the Securities and Exchange Commission suspending all claims against petitioner pending before any court, tribunal or body. The Solicitor General, in his Manifestation, recommends that the petition be given due course without prejudice to the subsequent receipt of separation pay by private respondent in accordance with the preference and concurrence of credits under the Civil Code, the Insolvency Law and Article 110 of the Labor Code.

Respondent National Labor Relations Commission, on the other hand, contends that petitioner is bound by its agreement with private respondent as to the computation of separation pay to be paid. The NLRC emphasizes that the order of execution made by the Labor Arbiter had reached finality and stresses that petitioners succeeding motions had been filed out of time. We note that at the time this petition had been filed on May 4, 1994, petitioner had been placed under rehabilitation receivership. Jurisprudence has established that a stay of execution may be warranted by the fact that a petitioner corporation has been placed under rehabilitation receivership. However, it is undisputed that on March 5, 1997, the Securities and Exchange Commission issued an order approving the proposed rehabilitation plan of petitioner and placing it under liquidation pursuant to Presidential Decree 902-A. Subject to the control of the SEC, the liquidator, Ledesma, Saludo & Associates, was ordered to "wind up the affairs of the corporation, continue to manage the corporation for purposes of liquidation in order to protect the interest of its creditors and avoid dissipation, loss, wastage, or destruction of the remaining assets and other properties of the corporation and to ensure orderly payment of claims against such corporation in accordance with applicable laws." Scjuris Thus, petitioner pointed out that the SECs order suspending all claims against it pending before any other court, tribunal or body was pursuant to the rehabilitation receivership proceedings. Such order was necessary to enable the rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder the rescue of the distressed company. Since receivership proceedings have ceased and petitioners rehabilitation receiver and liquidator, Ledesma Saludo & Associates, has been given the imprimatur to proceed with corporate liquidation, the cited order of the Securities and Exchange Commission has been rendered functus officio. Thus, there is no legal impediment for the execution of the decision of the Labor Arbiter for the payment of separation pay. Considering that petitioners monetary obligation to private respondent is long overdue and that petitioner has signified its willingness to comply with such obligation by entering into an agreement with private respondent as to the amount and manner of payment, petitioner can not delay satisfaction of private respondents claim. However, due to events subsequent to the filing of this petition, private respondent must present its claim with the rehabilitation receiver and liquidator of petitioner, subject to the rules on preference of credits. WHEREFORE, the Court hereby DISMISSES the petition and directs private respondent to file its claim with the rehabilitation receiver/ liquidator of petitioner in SEC EB No. 81 entitled "In the Matter of the Liquidation of Alemars Sibal & Sons" pending before the Securities and Exchange Commission.

No costs. SO ORDERED.

MICHAEL J. LAGROSAS, PETITIONER, VS. BRISTOL-MYERS SQUIBB (PHIL.), INC./MEAD JOHNSON PHIL., RICHARD SMYTH AS GENERAL MANAGER AND FERDIE SARFATI, AS MEDICAL SALES DIRECTOR, RESPONDENTS. G.R. NO. 170684 BRISTOL-MYERS SQUIBB (PHIL.), INC./MEAD JOHNSON PHIL., PETITIONER, VS. COURT OF APPEALS AND MICHAEL J. LAGROSAS, RESPONDENTS. DECISION QUISUMBING, J.: Before this Court are two consolidated petitions. The first petition, docketed as G.R. No. 168637, filed by Michael J. Lagrosas, assails the Decision [1] dated January 28, 2005 and the Resolution [2] dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885. The second petition, docketed as G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil., assails the Resolutions [3] dated August 12, 2005 and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885. The facts are undisputed. Michael J. Lagrosas was employed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. from January 6, 1997 until March 23, 2000 as Territory Manager in its Medical Sales Force Division. [4] On February 4, 2000, Ma. Dulcinea S. Lim, also a Territory Manager and Lagrosas' former girlfriend, attended a district meeting of territory managers at McDonald's Alabang Town Center. After the meeting, she dined out with her friends. She left her car at McDonald's and rode with Cesar R. Menquito, Jr. When they returned to McDonald's, Lim saw Lagrosas' car parked beside her car. Lim told Menquito not to stop his car but Lagrosas followed them and slammed Menquito's car thrice. Menquito and Lim alighted from the car. Lagrosas approached them and hit Menquito with a metal steering wheel lock. When Lim tried to intervene, Lagrosas accidentally hit her head. Upon learning of the incident, Bristol-Myers required Lagrosas to explain in writing why he should not be dismissed for assaulting a co-employee outside of business hours. While the offense is not covered by the Code of Discipline for Territory Managers, the Code states that "other infractions not provided for herein shall be penalized in the most appropriate manner at the discretion of management." [5] In his memo, Lagrosas admitted that he accidentally hit Lim

when she tried to intervene. He explained that he did not intend to hit her as shown by the fact that he never left the hospital until he was assured that she was all right. [6] In the disciplinary hearing that followed, it was established that Lagrosas and Lim had physical confrontations prior to the incident. But Lagrosas denied saying that he might not be able to control himself and hurt Lim and her boyfriend if he sees them together. On March 23, 2000, Bristol-Myers dismissed Lagrosas effective immediately. [7] Lagrosas then filed a complaint [8] for illegal dismissal, non-payment of vacation and sick leave benefits, 13th month pay, attorney's fees, damages and fair market value of his Team Share Stock Option Grant. On February 28, 2002, Labor Arbiter Renaldo O. Hernandez rendered a Decision [9] in NLRC NCR Case No. 00-03-02821-99, declaring the dismissal illegal. He noted that while Lagrosas committed a misconduct, it was not connected with his work. The incident occurred outside of company premises and office hours. He also observed that the misconduct was not directed against a co-employee who just happened to be accidentally hit in the process. Nevertheless, Labor Arbiter Hernandez imposed a penalty of three months suspension or forfeiture of pay to remind Lagrosas not to be carried away by the mindless dictates of his passion. Thus, the Arbiter ruled: WHEREFORE, premises considered, judgment is hereby [rendered] finding that respondent company illegally dismissed complainant thus, ORDERING it: 1) [t]o reinstate him to his former position without loss of seniority rights, privileges and benefits and to pay him full backwages reckoned from [the] date of his illegal dismissal on 23 March 2000 including the monetary value of his vacation/sick leave of 16 days per year reckoned from July 1, 2000 until actually reinstated, less three (3) months salary as penalty for his infraction; 2) to pay him the monetary equivalent of his accrued and unused combined sick/vacation leaves as of June 30, 2000 of 16 days x 3 years and 4 months - 10 days x P545.45 = P23,636.16 and the present fair market value of his Team Share stock option grant for eight hundred (800) BMS common shares of stock listed in the New York Stock Exchange which vested in complainant as of 01 July 1997, provisionally computed as 90% (800 shares x US$40.00 per share x P43.20/US$ = P1,244,160.00). 3) to pay him Attorney's fee of 10% on the entire computable amount. All other claims of complainant are dismissed for lack of merit.

SO ORDERED. [10] On appeal, the National Labor Relations Commission (NLRC) set aside the Decision of Labor Arbiter Hernandez in its Decision [11] dated September 24, 2002. It held that Lagrosas was validly dismissed for serious misconduct in hitting his co-employee and another person with a metal steering wheel lock. The gravity and seriousness of his misconduct is clear from the fact that he deliberately waited for Lim and Menquito to return to McDonald's. The NLRC also ruled that the misconduct was committed in connection with his duty as Territory Manager since it occurred immediately after the district meeting of territory managers. Lagrosas moved for reconsideration. On May 7, 2003, the NLRC issued a Resolution reversing its earlier ruling. It ratiocinated that the incident was not work-related since it occurred only after the district meeting of territory managers. It emphasized that for a serious misconduct to merit dismissal, it must be connected with the employee's work. The dispositive portion of the Resolution states: WHEREFORE, premises considered, We find this time no reason to alter the Labor Arbiter's Decision of February 28, 2002 and hereby affirm the same in toto. We vacate our previous Decision of September 24, 2002. SO ORDERED. [13] Bristol-Myers filed a motion for reconsideration which the NLRC denied in an Order dated February 4, 2004 in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA No. 03164602). [14] Later, Labor Arbiter Hernandez issued a writ of execution. [15] Notices of garnishment were then served upon the Philippine British Assurance Co., Inc. for the supersedeas bond posted by Bristol-Myers and the Bank of the Philippine Islands for the balance of the judgment award. [16] Bristol-Myers moved to quash the writ of execution contending that it timely filed a petition for certiorari with the Court of Appeals. The appellate court gave due course to Bristol-Myers' petition and issued a temporary restraining order (TRO) [17] enjoining the enforcement of the writ of execution and notices of garnishment. Upon the expiration of the TRO, the appellate court issued a writ of preliminary injunction dated September 17, 2004. [18] Bristol-Myers then moved to discharge and release the TRO cash bond. It argued that since it has posted an injunction cash bond, the TRO cash bond should be legally discharged and released. On January 28, 2005, the appellate court rendered the following Decision: WHEREFORE, the petition is GRANTED. The Resolution of May 7, 2003 and the Order of February 4, 2004 in NLRC NCR Case No. [00-03-02821-99] (NLRC NCR CA No. [031646[12]

02]), are REVERSED and SET ASIDE. The public respondent NLRC's Decision dated September 24, 2002 which reversed the Labor Arbiter's decision and in effect sustained the legality of the private respondent's termination and the dismissal of his claim for the fair market value of the [Team Share] stock option grant is REINSTATED and AFFIRMED, with MODIFICATION that the petitioner shall pay the private respondent the monetary equivalent of his accrued and unused combined sick/vacation leave plus ten (10%) percent thereof, as attorney's fees. The injunction bond and the TRO bond previously posted by the petitioner are DISCHARGED. SO ORDERED. [19] The appellate court considered the misconduct as having been committed in connection with Lagrosas' duty as Territory Manager since it occurred immediately after the district meeting of territory managers. It also held that the gravity and seriousness of the misconduct cannot be denied. Lagrosas employed such a degree of violence that caused damage not only to Menquito's car but also physical injuries to Lim and Menquito. Lagrosas filed a motion for reconsideration which the appellate court denied. In the meantime, Bristol-Myers moved to release the TRO cash bond and injunction cash bond in view of the Decision dated January 28, 2005. On August 12, 2005, the appellate court denied the motion as premature since the decision is not yet final and executory due to Lagrosas' appeal to this Court. [20] Bristol-Myers filed a motion for reconsideration. On October 28, 2005, the appellate court resolved: WHEREFORE, the petitioner's Motion [f]or Reconsideration dated September 6, 2005 is PARTIALLY GRANTED and the Resolution of August 12, 2005 is RECONSIDERED and SET ASIDE. The temporary restraining order cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000.00) which was posted by the petitioners on July 19, 2004 is ordered DISCHARGED and RELEASED to the petitioners. SO ORDERED. [21] The appellate court held that upon the expiration of the TRO, the cash bond intended for it also expired. Thus, the discharge and release of the cash bond for the expired TRO is proper. But the appellate court disallowed the discharge of the injunction cash bond since the writ of preliminary injunction was issued pendente lite. Since there is a pending appeal with the Supreme Court, the Decision dated January 28, 2005 is not yet final and executory.

Hence, the instant petitions. In G.R. No. 168637, Lagrosas assigns the following errors: I. ...THE HONORABLE COURT OF APPEALS IN DECLARING THAT THE TERMINATION OF EMPLOYMENT OF THE PETITIONER-APPELLANT WAS LEGAL HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURT'S POWER OF REVIEW AND/OR SUPERVISION. II. ...THE HONORABLE COURT OF APPEALS IN IMPOSING THE PENALTY OF DISMISSAL, BEING A PENALTY TOO HARSH IN THIS CASE, DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURT'S POWER OF REVIEW AND/OR SUPERVISION. [22] In G.R. No. 170684, Bristol-Myers raises the following issue: [WHETHER OR NOT THE HONORABLE] COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISALLOWING THE RELEASE AND DISCHARGE OF PETITIONER'S INJUNCTION BOND. [23] Simply put, the basic issues in the instant petitions are: (1) Did the Court of Appeals err in finding the dismissal of Lagrosas legal? and (2) Did the Court of Appeals err in disallowing the discharge and release of the injunction cash bond? On the first issue, serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrong conduct. It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. However serious such misconduct, it must, nevertheless, be in connection with the employee's work to constitute just cause for his separation. The act complained of must be related to the performance of the employee's duties such as would

show him to be unfit to continue working for the employer. [24] Thus, for misconduct or improper behavior to be a just cause for dismissal, it (a) must be serious; (b) must relate to the performance of the employee's duties; and (c) must show that the employee has become unfit to continue working for the employer. [25] Tested against the foregoing standards, it is clear that Lagrosas was not guilty of serious misconduct. It may be that the injury sustained by Lim was serious since it rendered her unconscious and caused her to suffer cerebral contusion that necessitated hospitalization for several days. But we fail to see how such misconduct could be characterized as work-related and reflective of Lagrosas' unfitness to continue working for Bristol-Myers. Although we have recognized that fighting within company premises may constitute serious misconduct, we have also held that not every fight within company premises in which an employee is involved would automatically warrant dismissal from service. [26] More so, in this case where the incident occurred outside of company premises and office hours and not intentionally directed against a co-employee, as hereafter explained. First, the incident occurred outside of company premises and after office hours since the district meeting of territory managers which Lim attended at McDonald's had long been finished. McDonald's may be considered an extension of Bristol-Myers' office and any business conducted therein as within office hours, but the moment the district meeting was concluded, that ceased too. When Lim dined with her friends, it was no longer part of the district meeting and considered official time. Thus, when Lagrosas assaulted Lim and Menquito upon their return, it was no longer within company premises and during office hours. Second, Bristol-Myers itself admitted that Lagrosas intended to hit Menquito only. In the Memorandum [27] dated March 23, 2000, it was stated that "You got out from your car holding an umbrella steering wheel lock and proceeded to hit Mr. Menquito. Dulce tried to intervene, but you accidentally hit her on the head, knocking her unconscious." [28] Indeed, the misconduct was not directed against a co-employee who unfortunately got hit in the process. Third, Lagrosas was not performing official work at the time of the incident. He was not even a participant in the district meeting. Hence, we fail to see how his action could have reflected his unfitness to continue working for Bristol-Myers. In light of Bristol-Myers' failure to adduce substantial evidence to prove that Lagrosas was guilty of serious misconduct, it cannot use this ground to justify his dismissal. Thus, the dismissal of Lagrosas' employment was without factual and legal basis. On the second issue, it is settled that the purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be

thoroughly studied and adjudicated. Its sole aim is to preserve the status quo until the merits of the case can be heard fully. [29] A preliminary injunction may be granted only when, among other things, the applicant, not explicitly exempted, files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued. [30] The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction, and the bond is usually conditioned accordingly. [31] In this case, the Court of Appeals issued the writ of preliminary injunction to enjoin the implementation of the writ of execution and notices of garnishment "pending final resolution of this case or unless the [w]rit is sooner lifted by the Court." [32] By its Decision dated January 28, 2005, the appellate court disposed of the case by granting Bristol-Myers' petition and reinstating the Decision dated September 24, 2002 of the NLRC which dismissed the complaint for dismissal. It also ordered the discharge of the TRO cash bond and injunction cash bond. Thus, both conditions of the writ of preliminary injunction were satisfied. Notably, the appellate court ruled that Lagrosas had no right to the monetary awards granted by the labor arbiter and the NLRC, and that the implementation of the writ of execution and notices of garnishment was properly enjoined. This in effect amounted to a finding that Lagrosas did not sustain any damage by reason of the injunction. To reiterate, the injunction bond is intended to protect Lagrosas against loss or damage by reason of the injunction only. Contrary to Lagrosas' claim, it is not a security for the judgment award by the labor arbiter. [33] Considering the foregoing, we hold that the appellate court erred in disallowing the discharge and release of the injunction cash bond. WHEREFORE, the two consolidated petitions are GRANTED. In G.R. No. 168637, filed by Michael J. Lagrosas, the Decision dated January 28, 2005, and the Resolution dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The Resolution

dated May 7, 2003, and the Order dated February 4, 2004 of the NLRC in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA No. 031646-02) are REINSTATED and hereby AFFIRMED. In G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil., the Resolutions dated August 12, 2005 and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The injunction cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000) which was posted by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. on September 17, 2004 is hereby ordered DISCHARGED and RELEASED to it. No pronouncement as to costs. SO ORDERED.