THIRD DIVISION

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

LIMITLESS POTENTIALS, INC., petitioner, vs. HON. COURT OF APPEALS,
CRISOSTOMO YALUNG, and ATTY. ROY MANUEL VILLASOR, respondents.

D E C I S I O N
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul and set aside: (1) The Decision, 1 dated 16 September 2003, of the Court of
Appeals in CA-G.R. SP No. 73463 entitled, Limitless Potentials, Inc. vs. Hon. Manuel D. Victorio,in his
capacity as the Presiding Judge of the Regional Trial Court of Makati City, Branch 141, Crisostomo Yalung,
and Atty. Roy Manuel Villasor, which dismissed herein petitioner's Petition for Certiorari under Rule 65
of the 1997 Revised Rules of Civil Procedure for lack of merit, and (2) The Resolution, 2 dated 8 July 2004,
of the appellate court in the same case which denied petitioner's Motion for Reconsideration because
the issues and arguments raised therein had already been passed upon and judiciously resolved in the
Decision dated 16 September 2003.
The controversy of this case stemmed from the following facts:
On 12 October 1995, Digital Networks Communications and Computers, Inc. (Digital) and herein
petitioner Limitless Potentials, Inc. (LPI), a domestic corporation duly organized and existing under
Philippine laws, entered into a Billboard Advertisement Contract whereby petitioner was to construct
one billboard advertisement for Digital's product for a period of one year, with an agreed rental of
P60,000.00 per month plus Value Added Tax (VAT). It was agreed, among other things, that Digital will
make a three-month deposit in the following manner, to wit: (a) P60,000.00 plus VAT upon the signing of
the contract, and (b) P120,000.00 plus VAT upon completion of the billboard. Digital complied with the
aforesaid agreement.
The billboard, however, was destroyed by unknown persons. In view thereof, the contract between
Digital and the petitioner was considered terminated. Digital demanded for the return of their rental
deposit for two months, but the petitioner refused to do so claiming that the loss of the billboard was
due toforce majeure and that any cause of action should be directed against the responsible persons.
Thus, on 18 April 1997, Digital commenced a suit against herein petitioner before the Metropolitan Trial
Court (MeTC) of Makati City, Branch 66, presided over by then Judge Estela Perlas-Bernabe (Judge
Perlas-Bernabe), 3 for the return of Digital's deposit, which was equivalent to two months rental
inclusive of VAT and attorney's fees. The case was docketed as Civil Case No. 55170.
On 18 June 1997, consistent with its defense against Digital's Complaint, petitioner filed a Third-Party
Complaint 4 against Macgraphics Carranz International Corporation (Macgraphics) and herein private
respondents Bishop Crisostomo Yalung (Bishop Yalung) and Atty. Roy Manuel Villasor (Atty. Villasor)
alleging that it had entered into a contract of lease with Roman Catholic Archbishop of Manila (RCAM),
as represented by the private respondents, over a space inside San Carlos Manor Seminary in Guadalupe
Viejo, Makati City, where petitioner erected the subject billboard. Petitioner further averred that despite
its full compliance with the terms and conditions of the lease contract, herein private respondents,
together with their cohorts, maliciously dismantled and destroyed the subject billboard and prevented
its men from reconstructing it. Thereafter, petitioner learned that Macgraphics had "cajoled and
induced" RCAM, through the private respondents, to destroy the subject billboard to enable
Macgraphics to erect its own billboard and advertising signs. Thus, by way of affirmative defenses,
petitioner claimed that: (a) the destruction of the subject billboard was not of its own making and
beyond its control, and (b) Digital's cause of action, if any, should be directed against the private
respondents and Macgraphics. Hence, petitioner prayed that judgment be rendered in its favor and to
hold private respondents liable for the following: (a) moral damages in the amount of P1,000,000.00; (b)
exemplary, temperate and nominal damages amounting to P300,000.00; (c) P300,000.00 as attorney's
fees; (d) P50,000.00 as litigation expenses; and (e) costs of suit, allegedly suffered or incurred by it
because of the willful destruction of the billboard by the private respondents.
In response, private respondents filed a Motion to Dismiss the aforesaid Third-Party Complaint based on
the following grounds: (1) litis pendentia; (2) lack of cause of action; (3) forum shopping; and (4) lack of
privity of contract. The MeTC, in an Order dated 25 August 1997, 5 denied the said Motion to Dismiss.
Petitioner filed an Amended Third-Party Complaint. Again, private respondents filed a Motion to Dismiss
Amended Third-Party Complaint. However, the MeTC also denied the Motion to Dismiss Amended Third-
Party Complaint in an Order dated 10 October 1997. 6
On 9 December 1997, private respondents filed a Petition for Certiorari with Prayer for Preliminary
Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of Makati
City, assailing the Orders dated 25 August 1997 and 10 October 1997 of the MeTC of Makati City denying
their Motion to Dismiss Third-Party Complaint and Motion to Dismiss Amended Third-Party Complaint,
respectively, in Civil Case No. 55170.
The RTC issued an Order on 6 February 1998, 7 granting private respondents' prayer for a writ of
preliminary injunction, conditioned upon the posting of an injunction bond in the amount of P10,000.00.
Thus, the MeTC was enjoined from hearing the Third-Party Complaint in Civil Case No. 55170. The
pertinent portion of the aforesaid Order reads, as follows:
When the application for temporary restraining order and/or preliminary
injunction was heard this afternoon, [herein petitioner] who did not file
comment on the petition appeared thru counsel Emmanuel Magnaye. It was
brought out to the attention of this Court that respondent judge is poised on
pursuing the hearing of the case before her despite the pendency of this
petition. It appeared that the case was set by respondent judge for hearing ex-
parte for the reception of [herein petitioner's] evidence on 23 February 1998. It
also appeared that [herein private respondents] were declared in default
despite the fact that they have filed their answer and the motion to lift such
order of default and for admission of the answer was denied by respondent
judge.
Upon consideration of the allegations in the petition and the oral
manifestations and admissions of both parties, this Court hereby resolves to
issue the writ of preliminary injunction in order to preserve the status quo as
well as not to render the issue herein raised moot and academic.
WHEREFORE, the motion for preliminary injunction is granted. Accordingly,
upon the filing by [herein private respondents] of a bond in the amount of
P10,000.00, let a writ of preliminary injunction be issued, enjoining respondent
judge, or her successor, from hearing the [T]hird [P]arty [C]omplaint against
[herein private respondents] in Civil Case No. 55170 until further orders from
this Court. 8
Subsequently, however, the RTC rendered a Decision 9 on 28 April 2000, dismissing the Petition
for Certiorari filed by private respondents, the dispositive portion of which reads: IaEACT
WHEREFORE, the petition is hereby dismissed for lack of merit. The preliminary
injunction issued by this Court on 6 February 2000 10 (sic) is hereby dissolved.
Costs against [herein private respondents]. 11
Disgruntled, private respondents filed an Urgent Motion for Reconsideration, which was denied by the
RTC in its Order 12 dated 26 June 2000.
Petitioner filed its Motion for Judgment Against the Bond, and in compliance with the directive of the
RTC, the petitioner filed a pleading 13 specifying its claims, thus: (a) attorney's fees in the sum of
P74,375.00; and (b) moral damages for the tarnished good will in the sum of P1,000,000.00.
The RTC, in its Order dated 3 April 2002, 14 denied petitioner's Motion for Judgment Against the Bond
declaring that the preliminary injunction was not wrongfully obtained; therefore, the claim for damages
on the bond is untenable.
Aggrieved, the petitioner moved for the reconsideration of the aforesaid Order, which was also denied
by the RTC in its Order dated 6 August 2002. 15
Dissatisfied, the petitioner filed a Petition for Certiorari under Rule 65 of the Revised Rules of Civil
Procedure before the Court of Appeals assailing the Orders of the RTC dated 3 April 2002 and 6 August
2002 for having been issued with grave abuse of discretion amounting to lack and/or excess of
jurisdiction.
On 6 November 2002, the Court of Appeals issued a Resolution 16 dismissing the Petition for failure to
show proof that a certain Quirino B. Baterna has been duly authorized by the petitioner to file the
Petition for and in its behalf. Petitioner moved for the reconsideration of the aforesaid Resolution, which
was granted by the appellate court in its Resolution dated 24 January 2003 17 thereby reinstating the
Petition for Certiorari filed by the petitioner.
On 16 September 2003, the Court of Appeals rendered a Decision dismissing the Petition filed by the
petitioner for utter lack of merit. The petitioner filed a Motion for Reconsideration based on the
following grounds:
I. The dismissal of the petition and dissolution of the injunction amount to a
determination that the injunction was wrongfully or improvidently
obtained.
II. The petitioner suffered damages by reason of the issuance of the injunction.
III. The damages claimed by the petitioner are covered by the injunction bond.
The Court of Appeals through a Resolution dated 8 July 2004, denied the petitioner's Motion for
Reconsideration.

Hence, this Petition.
Petitioner pointed out two basic legal issues wherein the appellate court committed serious and
reversible errors, to wit:
I. Is malice or bad faith a condition sine qua non for liability to attach on the
injunction bond?
II. Are attorney's fees, litigation costs, and cost of delay by reason of the
injunction covered by the injunction bond?
Petitioner argues that malice or lack of good faith is not an element of recovery on the bond. The
dissolution of the injunction, even if the injunction was obtained in good faith, amounts to a
determination that the injunction was wrongfully obtained and a right of action on the injunction
immediately accrues to the defendant. The petitioner maintains that the attorney's fees, litigation costs,
and cost of delay by reason of the injunction are proper and valid items of damages which can be
claimed against the injunction bond. Hence, having proven through testimonial and documentary
evidence that it suffered damages because of the issuance of the writ of injunction, and since malice or
lack of good faith is not an element of recovery on the injunction bond, petitioner asserts that it can
properly collect such damages on the said bond. DAcaIE
Private respondent Bishop Yalung on the other hand, prays for the outright dismissal of the present
Petition due to the alleged failure of the petitioner to comply with the mandatory rule on proper
certification on non-forum shopping under Section 5, Rule 7 of the 1997 Revised Rules of Civil Procedure.
According to him, it is not sufficient for Mr. Baterna to make the undertaking that "I have not
commenced any other action or proceeding involving the same issue in the Supreme Court, etc."
inasmuch as such undertaking should have been made by the principal party, namely, the petitioner. He
underscores that the verification/disclaimer of forum shopping executed by Mr. Baterna on behalf of the
petitioner is legally defective for failure to enumerate with particularity the multiple civil and criminal
actions, which were filed by him and the petitioner against the private respondents.
Private respondent Bishop Yalung also avers that the petitioner is not entitled to collect damages on the
injunction bond filed before the court a quo. Primarily, as the appellate court mentioned in its Decision,
the preliminary injunction was directed not against the petitioner but against the MeTC. The petitioner
was not restrained from doing any act. What was restrained was the hearing of the Third-Party
Complaint while the Petition for Certiorari was pending, "in order to preserve the status quo and not to
render the issue therein moot and academic." 18 Also, the fact that the decision is favorable to the party
against whom the injunction was issued does not automatically entitle the latter to recover damages on
the bond. Therefore, the petitioner cannot claim that it suffered damages because of the issuance of the
writ of injunction.
Private respondent Atty. Villasor shares the same argument as that of his co-respondent Bishop Yalung
that it was the MeTC which was enjoined and not herein petitioner. Private respondent Atty. Villasor
further alleged that in the Special Civil Action for Certiorari, the action is principally against any tribunal,
board, or officer exercising judicial or quasi-judicial functions who has acted without or in excess of
jurisdiction or with grave abuse of discretion. Thus, private respondents' Petition for Certiorari before
the RTC principally pertains to the MeTC and not to herein petitioner. Additionally, private respondent
Atty. Villasor argues that it was petitioner who was benefited by such writ of preliminary injunction,
because the injunction left Digital unable to prosecute Civil Case No. 55170 against herein petitioner.
Lastly, private respondent Atty. Villasor claims that petitioner did not oppose their application for a writ
of preliminary injunction at the hearing wherein petitioner was duly represented by counsel.
Simply stated, the threshold issues are:
I. Can petitioner recover damages from the injunction bond?
II. Was petitioner able to substantiate the damages?
Quite apart from the above, there appears to be another question concerning the alleged violation by
the petitioner of the mandatory rule on proper certification on non-forum shopping.
In the case at bar, petitioner repeatedly argues that malice or lack of good faith is not an element of
recovery on the injunction bond. In answering this issue raised by petitioner, this Court must initially
establish the nature of the preliminary injunction, the purpose of the injunction bond, as well as the
manner of recovering damages on the said bond.
A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and
protect certain rights and interests during the pendency of an action. 19 It is an order granted at any
stage of an action, prior to the judgment or final order, requiring a party, court, agency or person to
perform or to refrain from performing a particular act or acts. A preliminary injunction, as the term itself
suggests, is merely temporary, subject to the final disposition of the principal action. 20 It is issued to
preserve the status quo ante, which is the last actual, peaceful, and uncontested status that preceded
the actual controversy, 21 in order to protect the rights of the plaintiff during the pendency of the suit.
Otherwise, if no preliminary injunction is issued, the defendant may, before final judgment, do the act
which the plaintiff is seeking the court to restrain. This will make ineffectual the final judgment that the
court may afterwards render in granting relief to the plaintiff. 22 The status quo should be existing ante
litem motam, or at the time of the filing of the case. For this reason, a preliminary injunction should not
establish new relations between the parties, but merely maintain or re-establish the pre-existing
relationship between them. 23
The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to
some of the parties before their claims can be thoroughly studied and adjudicated. Thus, to be entitled
to an injunctive writ, the petitioner has the burden to establish the following requisites: ETIDaH
(1) a right in esse or a clear and unmistakable right to be protected;
(2) a violation of that right;
(3) that there is an urgent and permanent act and urgent necessity for the writ
to prevent serious damage. 24
A preliminary injunction or temporary restraining order may be granted only when, among other things,
the applicant, not explicitly exempted, files with the court, where the action or proceeding is pending,
a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect
that the applicant will pay such party or person all damages which he may sustain by reason of the
injunction or temporary restraining order if the court should finally decide that the applicant was not
entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be
issued. 25 Thus, the posting of a bond is a condition sine qua non for a writ of preliminary injunction to
be issued.
The injunction bond is intended as a security for damages in case it is finally decided that the injunction
ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or
damage by reason of the injunction, 26 and the bond is usually conditioned accordingly.
The damages sustained as a result of a wrongfully obtained injunction may be recovered upon the
injunction bond which is required to be deposited with court. 27 Rule 57, Section 20, of the 1997 Revised
Rules of Civil Procedure, which is similarly applicable to preliminary injunction, 28 has outlined the
procedure for the filing of a claim for damages against an injunction bond. The aforesaid provision of law
pertinently provides:
SEC. 20. Claim for damages on account of improper, irregular or excessive
attachment. An application for damages on account of improper, irregular or
excessive attachment must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice to the
attaching party and his surety or sureties, setting forth the facts showing his
right to damages and the amount thereof. Such damages may be awarded only
after proper hearing and shall be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party against whom
the attachment was issued, he must claim damages sustained during the
pendency of the appeal by filing an application in the appellate court, with
notice to the party in whose favor the attachment was issued or his surety or
sureties, before the judgment of the appellate court becomes executory. The
appellate court may allow the application to be heard and decided by the trial
court.
Nothing herein contained shall prevent the party against whom the attachment
was issued from recovering in the same action the damages awarded to him
from any property of the attaching party not exempt from execution should the
bond or deposit given by the latter be insufficient or fail to fully satisfy the
award. 29
Now, it can be clearly gleaned that there is nothing from the aforequoted provision of law which requires
an enjoined party, who suffered damages by reason of the issuance of a writ of injunction, to prove
malice or lack of good faith in the issuance thereof before he can recover damages against the injunction
bond. This Court was very succinct in the case of Aquino v. Socorro, 30 citing the case of Pacis v.
Commission on Elections, 31 thus:
Malice or lack of good faith is not an element of recovery on the bond. This
must be so, because to require malice as a prerequisite would make the filing of
a bond a useless formality. The dissolution of the injunction, even if the
injunction was obtained in good faith, amounts to a determination that the
injunction was wrongfully obtained and a right of action on the injunction bond
immediately accrues. Thus, for the purpose of recovery upon the injunction
bond, the dissolution of the injunction because of petitioner's main cause of
action provides the actionable wrong for the purpose of recovery upon the
bond.

We, therefore, agree with the petitioner that indeed, malice or lack of good faith is not a condition sine
qua non for liability to attach on the injunction bond.
With respect to the issue raised by the petitioner regarding the coverage of the injunction bond, this
Court finds it necessary to quote once again the provision of Section 4 (b), Rule 58 of the 1997 Revised
Rules of Civil Procedure, to wit:
Unless exempted by the court, the applicant files with the court where the
action or proceeding is pending, a bond executed to the party or person
enjoined, in an amount to be fixed by the court, to the effect that the applicant
will pay to such party or person all damages which he may sustain by reason of
the injunction or temporary restraining order if the court should finally decide
that the applicant was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued.
The aforesaid provision of law clearly provides that the injunction bond is answerable for all damages.
The bond insures with all practicable certainty that the defendant may sustain no ultimate loss in the
event that the injunction could finally be dissolved. 32 Consequently, the bond may obligate the
bondsmen to account to the defendant in the injunction suit for all damages, or costs and reasonable
counsel's fees, incurred or sustained by the latter in case it is determined that the injunction was
wrongfully issued. 33 Likewise, the posting of a bond in connection with a preliminary injunction does
not operate to relieve the party obtaining an injunction from any and all responsibility for damages that
the writ may thereby cause. It merely gives additional protection to the party against whom the
injunction is directed. It gives the latter a right of recourse against either the applicant or his surety or
against both. 34
The contention of the petitioner, thus, is tenable. Attorney's fees, litigation costs, and costs of delay can
be recovered from the injunction bond as long as it can be shown that said expenses were sustained by
the party seeking recovery by reason of the writ of preliminary injunction, which was later on
determined as not to have been validly issued and that the party who applied for the said writ was not
entitled thereto. The case of Aquino v. Socorro, 35citing the case of Pacis v. Commission on
Elections, 36 holds that the dissolution of the injunction, even if the injunction was obtained in good
faith, amounts to a determination that the injunction was wrongfully obtained and a right of action on
the injunction bond immediately accrues. It is also erroneous for the appellate court to rule that
petitioner is not entitled to claim damages from the injunction bond simply because the preliminary
injunction was directed against the MeTC and not against the petitioner. The MeTC does not stand to
suffer damages from the injunction because it has no interest or stake in the Petition pending before it.
Damage or loss is suffered by the party whose right to pursue its case is suspended or delayed, which in
this case, is the petitioner. Upon issuance of the writ of injunction, it is the petitioner who will stand to
suffer damages for the delay in the principal case because, had it not been for the injunction, the
petitioner would not have incurred additional expenses for attending the separate hearings on the
injunction, and the RTC can already decide the main case and make a prompt determination of the
respective rights of the parties therein. Hence, even if the preliminary injunction was directed against
the MeTC and not against the petitioner, it is the latter which has the right to recover from the injunction
bond the damages which it might have suffered by reason of the said injunction. aHICDc
As to the second main issue in the present case, although we do recognize that the petitioner had a right
to recover damages from the injunction bond, however, we agree in the findings of the Court of Appeals,
which affirmed the findings of the RTC, that the petitioner did not sustain any damage by reason of the
issuance of the writ of injunction. In the petitioner's Motion for Judgment Against the
Bond, 37 petitioner stated therein, thus:
5. There can be no serious debate that the issuance of the Writ of Preliminary
injunction, all at the instance of [herein private respondents], resulted in actual
and pecuniary damages on the part of [herein petitioner] in the amount more
than the value of the bond posted by [private respondents]. The attorney's fees
for expenses in litigation alone expended by [petitioner] to defend itself in this
proceedings, not to mention other pecuniary damages, amounts to
P10,000.00. 38
In the case at bar, petitioner is claiming attorney's fees in the sum of P74,375.00 it allegedly paid to
defend itself in the main case for certiorari, which it would not have spent had the private respondents
not filed their nuisance Petition and secured a writ of preliminary injunction. Likewise, by reason of the
unfounded suit, the good will of the petitioner was brought to bad light, hence, damaged. 39 It is
noteworthy to mention that the undertaking of the injunction bond is that it shall answer for all
damages which the party to be restrained may sustain by reason of the injunction if the court should
finally decide that the plaintiff was not entitled thereto. Apparently, as the appellate court pointed out in
its Decision dated 16 September 2003, the damages being claimed by the petitioner were not by reason
of the injunction but the litigation expenses it incurred in defending itself in the main case for certiorari,
which is definitely not within the coverage of the injunction bond. Thus, this Court is not convinced that
the attorney's fees in the amount of P74,375.00 as well as the moral damages for the tarnished good will
in the sum of P1,000,000.00 were suffered by the petitioner because of the issuance of the writ of
injunction.
Furthermore, this Court will not delve into the sufficiency of evidence as to the existence and amount of
damages suffered by petitioner for it is already a question of fact. It is settled that the factual findings of
the trial court, particularly when affirmed by the Court of Appeals, are binding on the Supreme
Court. 40 Although this rule is subject to exceptions, 41 the present case does not fall into any of those
exceptions which would have allowed this Court to make its own determination of facts. This Court
upholds the factual findings of both the RTC and the Court of Appeals that there is insufficient evidence
to establish that petitioner actually suffered damages because of the preliminary injunction issued by the
RTC.
Now, on the matter of proper certification on non-forum shopping.
The requirement of a Certification on Non-Forum Shopping is contained in Rule 7, Section 5, of the 1997
Revised Rules of Civil Procedure, which states that:
The plaintiff or principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues
in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof;
and (c) if he should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact within five (5) days therefrom
to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for
the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute indirect
contempt of court without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.
Private respondent Bishop Yalung might have overlooked the Secretary's Certificate 42 attached to the
petitioner's Petition for Review, which authorized Mr. Baterna, President of herein petitioner LPI, to
represent the latter in this case. According to the Secretary's Certificate, the Board of Directors of
petitioner LPI, at a special meeting held on 12 August 2004 at its office at No. 812 J.P. Rizal St., Makati
City, during which there was a quorum, the following resolutions were approved, to wit:
RESOLVED, AS IT IS HEREBY RESOLVED, that the corporation reiterates the
authority of its President, Mr. Quirino B. Baterna, to represent the corporation
in all cases by and/or against the corporation vis--vis the Roman Catholic
Archbishop of Manila/Crisostomo Yalung, Roy Villasor/Digital Netwrok (sic)
Communications and Computers, Inc., and/or MacGraphics Carranz
International Corporation, to file a Petition for Review on Certiorari with the
Supreme Court docketed as G.R. No. 164459 to assert/protect LPI's rights and
interests in connection with C.A.-G.R. No. 73463, entitled "Limitless Potentials,
Inc. vs. Hon. Manuel Victorio, et al.," Honorable Court of Appeals,
Manila. DaAISH
RESOLVED FURTHERMORE, that any and all acts of our President, concerning
the above-referenced subject matter are hereby affirmed, confirmed and
ratified by the corporation for all legal intents and purposes. 43
Private respondent Bishop Yalung further argued that Mr. Baterna failed to enumerate in the
Certification against Forum Shopping the multiple cases filed by him and the petitioner against private
respondents. This is also erroneous.

Forum shopping consists of filing multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. 44 It exists
where the elements of litis pendentia 45 are present or where a final judgment in one case will amount
to res judicata in another. 46 It may be resorted to by a party against whom an adverse judgment or
order has been issued in one forum, in an attempt to seek a favorable opinion in another, other than by
an appeal or a special civil action for certiorari. 47
As the RTC correctly found, there was no violation of the rule against forum shopping. The cause of
action in petitioner's case for consignation and damages docketed as Civil Case No. 95-1559, 48 is
different from the cause of action in its Third-Party Complaint in Civil Case No. 55170. The damages
sought in the first case were those suffered by petitioner by reason of the alleged breach of the contract
of lease by the RCAM; whereas the damages sought in the Third-Party Complaint were those allegedly
suffered by petitioner owing to the destruction of its billboard by the private respondents, thereby
terminating the Billboard Advertisement Contract between petitioner and Digital. Digital also sued
petitioner for recovery of the rental deposits it had already paid under the same contract. Consequently,
petitioner had to engage the services of counsel and incurred litigation expenses in order to defend itself
in the case filed against it by Digital. Thus, the two actions are completely different and distinct from
each other so much so that a decision in either case could not be pleaded as res judicata in the other.
Hence, there is no forum shopping that would necessitate the outright dismissal of this case.
WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of
the Court of Appeals dated 16 September 2003 and 8 July 2004, respectively, affirming the Decision of
the RTC dated 28 April 2000, denying herein petitioner's motion to recover damages against the
injunction bond, are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

THIRD DIVISION
[G.R. No. 166854. December 6, 2006.]
SEMIRARA COAL CORPORATION (now SEMIRARA MINING
CORPORATION), petitioner, vs. HGL DEVELOPMENT CORPORATION and HON.
ANTONIO BANTOLO, Presiding Judge, Branch 13, Regional Trial Court, 6th
Judicial Region, Culasi, Antique,respondents.

D E C I S I O N
QUISUMBING, J p:
Before us is a petition for review on certiorari assailing the Decision 1 dated January 31, 2005, of the
Court of Appeals in CA G.R. CEB SP No. 00035 which affirmed the Resolution 2 dated September 16, 2004
of the Regional Trial Court of Culasi, Antique, Branch 13.
The facts are as follows:
Petitioner Semirara Mining Corporation is a grantee by the Department of Energy (DOE) of a Coal
Operating Contract under Presidential Decree No. 9723 over the entire Island of Semirara, Antique,
which contains an area of 5,500 hectares more or less. 4
Private respondent HGL Development Corporation is a grantee of Forest Land Grazing Lease Agreement
(FLGLA) No. 184 by the then Ministry of Environment and Natural Resources, 5 over 367 hectares of land
located at the barrios of Bobog and Pontod, Semirara, Caluya, Antique. The FLGLA No. 184 was issued on
September 28, 1984 6 for a term of 25 years, to end on December 31, 2009. Since its grant, HGL has
been grazing cattle on the subject property.
Sometime in 1999, petitioner's representatives approached HGL and requested for permission to allow
petitioner's trucks and other equipment to pass through the property covered by the FLGLA. HGL
granted the request on condition that petitioner's use would not violate the FLGLA in any way.
Subsequently, however, petitioner erected several buildings for petitioner's administrative offices and
employees' residences without HGL's permission. Petitioner also conducted blasting and excavation;
constructed an access road to petitioner's minesite in the Panaan Coal Reserve, Semirara; and
maintained a stockyard for the coal it extracted from its mines. Thus, the land which had been used for
cattle grazing was greatly damaged, causing the decimation of HGL's cattle.
On September 22, 1999, HGL wrote petitioner demanding full disclosure of petitioner's activities on the
subject land as well as prohibiting petitioner from constructing any improvements without HGL's
permission. Petitioner ignored the demand and continued with its activities. SAEHaC
On December 6, 2000, the Department of Environment and Natural Resources (DENR) unilaterally
cancelled FLGLA No. 184 and ordered HGL to vacate the premises. The DENR found that HGL failed to
pay the annual rental and surcharges from 1986 to 1999 and to submit the required Grazing Reports
from 1985 to 1999 or pay the corresponding penalty for non-submission thereof. 7
HGL contested the findings and filed a letter of reconsideration on January 12, 2001, which was denied
by DENR Secretary Heherson Alvarez in a letter-order dated December 9, 2002. The DENR stated that it
had coordinated with the DOE, which had jurisdiction over coal or coal deposits and coal-bearing lands,
and was informed that coal deposits were very likely to exist in Sitios Bobog and Pontod. Hence, unless it
could be proved that coal deposits were not present, HGL's request had to be denied. 8
HGL sent a letter dated March 6, 2003 to DENR Secretary Alvarez seeking reconsideration. The DENR did
not act on the letter and HGL later withdrew this second letter of reconsideration in its letter of August
4, 2003.
On November 17, 2003, HGL filed a complaint against the DENR for specific performance and damages
with prayer for a temporary restraining order and/or writ of preliminary injunction, docketed as Civil
Case No. 20675 (2003) with the Regional Trial Court of Caloocan City. A writ of preliminary injunction
was issued by the Caloocan City RTC on December 22, 2003, enjoining the DENR from enforcing its
December 6, 2000 Order of Cancellation.
Meanwhile, HGL had also filed on November 17, 2003, a complaint against petitioner for Recovery of
Possession and Damages with Prayer for TRO and/or Writ of Preliminary Mandatory Injunction, docketed
as Civil Case No. C-146 with the Regional Trial Court of Culasi, Antique, Branch 13. 9
On December 1, 2003, the Antique trial court heard the application for Writ of Preliminary Mandatory
Injunction in Civil Case No. C-146. Only HGL presented its evidence. Reception for petitioner's evidence
was set to March 23-24, 2004. Petitioner was notified. But, on March 19, 2004, petitioner's President
wrote the court asking for postponement since its counsel had suddenly resigned. The trial court refused
to take cognizance of the letter and treated it as a mere scrap of paper since it failed to comply with the
requisites for the filing of motions and since it was not shown that petitioner's President was authorized
to represent petitioner. Because of petitioner's failure to attend the two scheduled hearings, the trial
court, in an Order dated March 24, 2004, deemed the application for issuance of a Writ of Preliminary
Mandatory Injunction submitted for decision. Meanwhile, petitioner had filed its Answer dated February
26, 2004, raising among others the affirmative defense that HGL no longer had any right to possess the
subject property since its FLGLA has already been cancelled and said cancellation had already become
final.
On April 14, 2004, petitioner filed a verified Omnibus Motion praying that the trial court reconsider its
Order of March 24, 2004, since petitioner's failure to attend the hearing was due to an accident.
Petitioner also prayed that the trial court admit as part of petitioner's evidence in opposition to the
application for injunction, certified copies of the DENR Order of Cancellation dated December 6, 2000;
HGL's letter of reconsideration dated January 12, 2001; letter of DENR Secretary Alvarez dated December
9, 2002 denying reconsideration of the order; and registry return receipt showing HGL's receipt of the
denial of reconsideration. In the alternative, petitioner prayed that the case be set for preliminary
hearing on its affirmative defense of lack of cause of action and forum-shopping. 10 Public respondent
denied the Omnibus Motion in a Resolution dated June 21, 2004. IHcTDA
Petitioner filed a motion for reconsideration of the said resolution. Upon HGL's opposition, the motion
was declared submitted for resolution in accordance with the trial court's Order of August 5, 2004. 11
On September 16, 2004, the trial court granted the prayer for issuance of a Writ of Preliminary
Mandatory Injunction. 12 Petitioner did not move for reconsideration of the order. The Writ of
Preliminary Mandatory Injunction was accordingly issued by the trial court on October 6, 2004. 13 The
writ restrained petitioner or its agents from encroaching on the subject land or conducting any activities
in it, and commanded petitioner to restore possession of the subject land to HGL or its agents.
Petitioner questioned the Resolution dated September 16, 2004, and the Writ of Preliminary Mandatory
Injunction dated October 6, 2004 before the Court of Appeals in a petition for certiorari, raising eight
issues. On January 31, 2005, however, the appellate court dismissed the petition. The Court of Appeals in
its decision by Justice Magpale ruled on the issues posed before the appellate court:
1. PRIVATE RESPONDENT HAS NO LEGAL RIGHT OR CAUSE OF ACTION UNDER
THE PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO THE
ANCILLARY REMEDY OF INJUNCTION;
2. PRIVATE RESPONDENT DID NOT COME TO COURT WITH "CLEAN HANDS";
3. RESPONDENT JUDGE UNJUSTIFIABLY AND ARBITRARILY DEPRIVED
PETITIONER OF ITS FUNDAMENTAL RIGHT TO DUE PROCESS BY NOT
GIVING IT AN OPPORTUNITY TO PRESENT EVIDENCE IN OPPOSITION
TO THE MANDATORY INJUNCTION;
4. RESPONDENT JUDGE IMMEDIATELY GRANTED THE APPLICATION FOR THE
ISSUANCE OF A WRIT OF MANDATORY INJUNCTION WITHOUT FIRST
RESOLVING THE PENDING MOTION FOR RECONSIDERATION DATED
JULY 12, 2004 OF PETITIONER;
5. RESPONDENT JUDGE DID NOT CONSIDER OR ADMIT THE CERTIFIED TRUE
COPIES OF THE OFFICIAL RECORDS OF THE DENR CANCELLING
PRIVATE RESPONDENT'S FLGLA AS EVIDENCE AGAINST THE
MANDATORY INJUNCTION PRAYED FOR;
6. RESPONDENT JUDGE SHOULD HAVE GRANTED PETITIONER'S MOTION FOR
PRELIMINARY HEARING ON ITS AFFIRMATIVE DEFENSE THAT
PRIVATE RESPONDENT UNDER ITS COMPLAINT HAS NO CAUSE OF
ACTION AGAINST PETITIONER;
7. RESPONDENT JUDGE SHOULD HAVE DISMISSED THE COMPLAINT OUTRIGHT
FOR VIOLATION OF THE RULES ON FORUM SHOPPING BY PRIVATE
RESPONDENT;
8. THE MANDATORY INJUNCTION ISSUED IN THE INSTANT CASE IS VIOLATIVE OF
THE PROVISIONS OF PRESIDENTIAL DECREE 605. 14
The Court of Appeals in the assailed Decision dated January 31, 2005, opined and ruled as follows (which
we quote verbatim):
Anent the first issue, WE rule against the petitioner.
Perusal of the allegations in the Complaint filed by the private respondent with
the court a quo show that its cause of action is mainly anchored on the Forest
Land Grazing Lease Agreement ("FLGLA") executed by and between said private
respondent and the Department of Environment and Natural Resources (DENR)
which became effective on August 28, 1984 and to expire on December 31,
2009. CAaDTH
Under the said lease agreement, the private respondent was granted
permission to use and possess the subject land comprising of 367-hectares
located at the barrios of Bobog and Pontod, Semirara Island, Antique for cattle-
grazing purposes.
However, petitioner avers that the "FLGLA" on which private respondent's
cause of action is based was already cancelled by the DENR by virtue of its
Orders dated December 6, 2000 and December 9, 2002.
While it is true that the DENR issued the said Orders cancelling the "FLGLA", the
same is not yet FINAL since it is presently the subject of Civil Case No. 20675
pending in the Regional Trial Court (RTC) of Caloocan City. Thus, for all intents
and purposes, the "FLGLA" is still subsisting.

The construction of numerous buildings and the blasting activities thereon by
the petitioner undertaken without the consent of the private respondent
blatantly violates the rights of the latter because it reduced the area being used
for cattle-grazing pursuant to the "FLGLA".
From the foregoing it is clear that the three (3) indispensable requisites of a
cause of action, to wit: (a) the right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (b) an obligation on the part of
the named defendant to respect or not to violate such right; (c) an act or
omission on the part of such defendant is violative of the right of plaintiff or
constituting a breach of the obligation of defendant to the plaintiff for which
the latter may maintain an action for recovery of damages, are PRESENT.
Hence, having established that private respondent herein has a cause of action
under the principal action in Civil Case No. C-146, necessarily it also has a cause
of action under the ancillary remedy of injunction.
Anent the third issue, WE rule against the petitioner.
This Court finds that the petitioner was not deprived of due process.
It appears from the records of the instant case that the petitioner was given two
(2) settings for the reception of its evidence in support of its opposition to the
prayer of herein private respondent for the issuance of a writ of preliminary
mandatory injunction. Unfortunately, on both occasions, petitioner did not
present its evidence.
Petitioner claims that its failure to attend the hearings for the reception of its
evidence was excusable due to the sudden resignation of its lawyer and as such,
nobody can attend the hearings of the case.
WE are not persuaded.
Scrutiny of the pleadings submitted by both parties shows that petitioner's
lawyer, Atty. Mary Catherine P. Hilario, affiliates herself with the law firm of
BERNAS SAN JUAN & ASSOCIATE LAW OFFICES with address at 2nd Floor, DMCI
Plaza 2281 Pasong Tamo Extension, Makati City, by signing on and in behalf of
the said law office. This Court takes judicial notice of the fact that law offices
employ more than one (1) associate attorney aside from the name partners. As
such, it can easily assign the instant case to its other lawyers who are more than
capable to prepare the necessary "motion for postponement" or personally
appear to the court a quo to explain the situation.
Even assuming arguendo that Atty. Hilario is the only one who is knowledgeable
of the facts of the case, still, petitioners cannot claim that there was violation of
due process because the "ESSENCE of due process is reasonable opportunity to
be heard . . . . What the law proscribed is lack of opportunity to be heard." In
the case at bar, petitioner was given two (2) settings to present its evidence but
it opted not to. HEDCAS
Lastly, a prayer for the issuance of a writ of preliminary mandatory injunction
demands urgent attention from the court and as such, delay/s is/are frowned
upon due to the irreparable damage/s that can be sustained by the movant.
Anent the fourth issue, WE rule against the petitioner.
Petitioner claims that the court a quo gravely erred when it issued the writ of
preliminary injunction without first resolving its Motion for Reconsideration
dated July 12, 2004.
WE rule that the public respondent cannot be faulted for not resolving the
Motion for Reconsideration dated July 12, 2004 because the same partakes of
the nature of a second motion for reconsideration of the Order dated March 24,
2004.
Records readily disclose that a prior motion for reconsideration was filed by the
petitioner herein assailing the Order dated March 24, 2004. Although captioned
as "Omnibus Motion" the same was really a motion for reconsideration. Said
"Omnibus Motion" was resolved by the court a quo in its Order dated June 21,
2004.
Hence, the public respondent is no longer duty bound to resolve the
subsequent, reiterative and second motion for reconsideration.
Anent the fifth issue, WE rule against the petitioner.
The court a quo was correct in disregarding the documentary evidence
submitted by the petitioner in support of its opposition to the prayer for the
issuance of a writ of preliminary mandatory injunction.
The documentary evidence submitted by the petitioner herein with the court a
quo were merely attached to an "Omnibus Motion" and was not properly
identified, marked and formally offered as evidence which is a blatant disregard
and violation of the Rules on Evidence.
Considering the above discussions, this Court finds that the public respondent
did not abuse his discretion in issuing the assailed resolution.
Anent the eighth issue, WE likewise rule against the petitioner.
Presidential Decree (PD) 605 is the law "Banning the Issuance by Courts of
Preliminary Injunctions in Cases Involving Concessions, Licenses, and Other
Permits Issued by Public Administrative Officials or Bodies for the Exploitation
of Natural Resources."
Section 1 thereof provides that "No court of the Philippines shall have
jurisdiction to issue any restraining order, preliminary injunction or preliminary
mandatory injunction in any case involving or growing out of the issuance,
suspension, revocation, approval or disapproval of any concession, license,
permit, patent or public grant of any kind for the disposition, exploitation,
utilization, exploration and development of the natural resources of the
country."
The instant case is not within the purview of the above-cited law because the
issue/s raised herein does not involve or arise out of petitioner's coal operation
contract.
The case filed with the court a quo is principally based on the alleged
encroachment by the petitioner of the subject land over which private
respondent claims it has authority to occupy or possess until December 31,
2009 pursuant to FLGLA No. 184.
As such, the preliminary mandatory injunction issued by the court a quo did not
in any way affect the efficacy of the petitioner's coal concession or license.
WHEREFORE, the instant petition for certiorari is DENIED and consequently, the
assailed Resolution is hereby AFFIRMED. SCaEcD
SO ORDERED. 15
Hence, this instant petition. On February 23, 2005, this Court issued a TRO enjoining the implementation
and enforcement of the Court of Appeals Decision dated January 31, 2005. 16
Petitioner submits in the petition now the following grounds:
I
THE RESOLUTION DATED 16 SEPTEMBER 2004 AND THE WRIT OF PRELIMINARY
MANDATORY INJUNCTION DATED 6 OCTOBER 2004 ISSUED BY PUBLIC
RESPONDENT ARE A PATENT NULLITY AS PRIVATE RESPONDENT CLEARLY HAS
NO LEGAL RIGHT OR CAUSE OF ACTION UNDER ITS PRINCIPAL ACTION OR
COMPLAINT, MUCH LESS, TO THE ANCILLARY REMEDY OF PRELIMINARY
MANDATORY INJUNCTION;
II
A WRIT OF PRELIMINARY MANDATORY INJUNCTION CANNOT BE USED TO TAKE
PROPERTY OUT OF THE POSSESSION OF ONE PARTY AND PLACE IT INTO THAT
OF ANOTHER WHO HAS NO CLEAR LEGAL RIGHT THERETO;
III
PRIVATE RESPONDENT'S COMPLAINT IN CIVIL CASE NO. C-146 IS IN THE NATURE
OF AN ACCION PUBLICIANA, NOT FORCIBLE ENTRY; HENCE, A WRIT OF
PRELIMINARY MANDATORY INJUNCTION IS NOT A PROPER REMEDY;
IV
PETITIONER WAS UNJUSTIFIABLY AND ARBITRARILY DEPRIVED OF ITS
FUNDAMENTAL RIGHT TO DUE PROCESS WHEN IT WAS DENIED THE RIGHT TO
PRESENT EVIDENCE IN OPPOSITION TO THE APPLICATION FOR PRELIMINARY
MANDATORY INJUNCTION;
V
THE PUBLIC RESPONDENT DELIBERATELY WITHHELD THE RESOLUTION OF
PETITIONER'S MOTION FOR RECONSIDERATION DATED 12 JULY 2004 AND
PROCEEDED TO PREMATURELY ISSUE THE PRELIMINARY MANDATORY
INJUNCTION IN VIOLATION OF PETITIONER'S RIGHT TO FAIR PLAY AND JUSTICE;
VI
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN:
1) HE REFUSED OR FAILED TO ADMIT AND/OR CONSIDER THE
CERTIFIED DENR RECORDS OF THE DENR ORDER
CANCELLING PRIVATE RESPONDENT'S FLGLA;
2) HE REFUSED OR FAILED TO CONDUCT A HEARING ON THESE
CERTIFIED PUBLIC DOCUMENTS WHICH CONCLUSIVELY
PROVE PRIVATE RESPONDENT'S LACK OF CAUSE OF
ACTION UNDER THE PRINCIPAL ACTION; AND
3) HE REFUSED OR FAILED TO DISMISS THE COMPLAINT OUTRIGHT
FOR VIOLATING THE RULES ON FORUM SHOPPING BY
PRIVATE RESPONDENT. 17
Before this Court decides the substantive issues raised herein, certain procedural issues that were raised
by the parties must first be addressed. ADaECI
Petitioner contends that it was improper for the Regional Trial Court of Antique to issue the writ of
preliminary mandatory injunction (and for the Court of Appeals to affirm the same) without giving it an
opportunity to present evidence and without first resolving the Motion for Reconsideration dated July
12, 2004. But as borne by the records of the case, it is evident that petitioner had the opportunity to
present evidence in its favor during the hearing for the application of the writ of preliminary mandatory
injunction before the lower court. However, petitioner's failure to present its evidence was brought by
its own failure to appear on the hearing dates scheduled by the trial court. Thus, petitioner cannot
complain of denial of due process when it was its own doing that prevented it from presenting its
evidence in opposition to the application for a writ of preliminary mandatory injunction. It must be
pointed out that the trial court correctly refused to take cognizance of the letter of petitioner's President
which prayed for the postponement of the scheduled hearings. Said letter was not a proper motion that
must be filed before the lower court for the stated purpose by its counsel of record. Moreover, there
was absolutely no proof given that the sender of the letter was the duly authorized representative of
petitioner.
Second, the filing of the motion for reconsideration dated July 12, 2004, which essentially reproduced
the arguments contained in the previously filed and denied Omnibus Motion dated April 14, 2004,
renders the said motion for reconsideration dated July 12, 2004, a mere pro forma motion. Moreover,
the motion for reconsideration dated June 12, 2004, being a second motion for reconsideration, the trial
court correctly denied it for being a prohibited motion. 18

Third, it must be stated that the petition for certiorari before the Court of Appeals should not have
prospered because petitioner failed to file a motion for reconsideration from the assailed resolution of
the Regional Trial Court of Antique, granting the writ of preliminary mandatory injunction. Well settled is
the rule that before a party may resort to the extraordinary writ of certiorari, it must be shown that
there is no other plain, speedy and adequate remedy in the ordinary course of law. Thus, it has been
held by this Court that a motion for reconsideration is a condition sine qua non for the grant of the
extraordinary writ of certiorari. 19 Here, a motion for reconsideration was an available plain, speedy and
adequate remedy in the ordinary course of law, designed to give the trial court the opportunity to
correct itself.
Now on the merits of the instant petition.
The pivotal issue confronting this Court is whether the Court of Appeals seriously erred or committed
grave abuse of discretion in affirming the September 16, 2004 Resolution of the Regional Trial Court of
Antique granting the writ of preliminary mandatory injunction.
Under Article 539 of the New Civil Code, a lawful possessor is entitled to be respected in his possession
and any disturbance of possession is a ground for the issuance of a writ of preliminary mandatory
injunction to restore the possession. 20 Thus, petitioner's claim that the issuance of a writ of preliminary
mandatory injunction is improper because the instant case is allegedly one for accion
publiciana deserves no consideration. This Court has already ruled in Torre, et al. v. Hon. J. Querubin, et
al. 21 that prior to the promulgation of the New Civil Code, it was deemed improper to issue a writ of
preliminary injunction where the party to be enjoined had already taken complete material possession of
the property involved. However, with the enactment of Article 539, the plaintiff is now allowed to avail
of a writ of preliminary mandatory injunction to restore him in his possession during the pendency of his
action to recover possession. 22
It is likewise established that a writ of mandatory injunction is granted upon a showing that (a) the
invasion of the right is material and substantial; (b) the right of complainant is clear and unmistakable;
and (c) there is an urgent and permanent necessity for the writ to prevent serious damage. 23
In the instant case, it is clear that as holder of a pasture lease agreement under FLGLA No. 184, HGL has a
clear and unmistakable right to the possession of the subject property. Recall that under the FLGLA, HGL
has the right to the lawful possession of the subject property for a period of 25 years or until 2009. As
lawful possessor, HGL is therefore entitled to protection of its possession of the subject property and any
disturbance of its possession is a valid ground for the issuance of a writ of preliminary mandatory
injunction in its favor. The right of HGL to the possession of the property is confirmed by petitioner itself
when it sought permission from HGL to use the subject property in 1999. In contrast to HGL's clear legal
right to use and possess the subject property, petitioner's possession was merely by tolerance of HGL
and only because HGL permitted petitioner to use a portion of the subject property so that the latter
could gain easier access to its mining area in the Panaan Coal Reserve. aACEID
The urgency and necessity for the issuance of a writ of mandatory injunction also cannot be denied,
considering that HGL stands to suffer material and substantial injury as a result of petitioner's continuous
intrusion into the subject property. Petitioner's continued occupation of the property not only results in
the deprivation of HGL of the use and possession of the subject property but likewise affects HGL's
business operations. It must be noted that petitioner occupied the property and prevented HGL from
conducting its business way back in 1999 when HGL still had the right to the use and possession of the
property for another 10 years or until 2009. At the very least, the failure of HGL to operate its cattle-
grazing business is perceived as an inability by HGL to comply with the demands of its customers and
sows doubts in HGL's capacity to continue doing business. This damage to HGL's business standing is
irreparable injury because no fair and reasonable redress can be had by HGL insofar as the damage to its
goodwill and business reputation is concerned.
Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its order dated
December 6, 2000. But as rightly held by the Court of Appeals, the alleged cancellation of FLGLA No. 184
through a unilateral act of the DENR does not automatically render the FLGLA invalid since the unilateral
cancellation is subject of a separate case which is still pending before the Regional Trial Court of
Caloocan City. Notably, said court has issued a writ of preliminary injunction enjoining the DENR from
enforcing its order of cancellation of FLGLA No. 184.
The Court of Appeals found that the construction of numerous buildings and blasting activities by
petitioner were done without the consent of HGL, but in blatant violation of its rights as the lessee of the
subject property. It was likewise found that these unauthorized activities effectively deprived HGL of its
right to use the subject property for cattle-grazing pursuant to the FLGLA. It cannot be denied that the
continuance of petitioner's possession during the pendency of the case for recovery of possession will
not only be unfair but will undeniably work injustice to HGL. It would also cause continuing damage and
material injury to HGL. Thus, the Court of Appeals correctly upheld the issuance of the writ of
preliminary mandatory injunction in favor of HGL.
WHEREFORE, the instant petition is DENIED. The Decision dated January 31, 2005, of the Court of
Appeals in CA G.R. CEB SP No. 00035, which affirmed the Resolution dated September 16, 2004 of the
Regional Trial Court of Culasi, Antique, Branch 13, as well as the Writ of Preliminary Mandatory
Injunction dated October 6, 2004 issued pursuant to said Resolution, is AFFIRMED. The temporary
restraining order issued by this Court is hereby lifted. No pronouncement as to costs.
SO ORDERED.



SECOND DIVISION
[G.R. No. 174569. September 17, 2008.]
CHINA BANKING CORPORATION, SPOUSES JOEY & MARY JEANNIE CASTRO and
SPOUSES RICHARD & EDITHA NOGOY,petitioners, vs. BENJAMIN CO, ENGR.
DALE OLEA and THREE KINGS CONSTRUCTION & REALTY
CORPORATION, respondents.

D E C I S I O N
CARPIO-MORALES, J p:
Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision, Sindalan, San
Fernando, Pampanga, which was covered by Transfer Certificate of Title (TCT) No. 450216-R to
petitioner-spouses Joey and Mary Jeannie Castro (the Castro spouses). It sold two other lots also located
in the same place covered by TCT Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha
Nogoy (the Nogoy spouses). CSEHcT
The lots of the Castro spouses and the Nogoy spouses are commonly bound on their southeastern side
by Lot No. 3783-E, which is covered by TCT No. 269758-R in the name of respondent Benjamin Co (Co)
and his siblings.
Co and his siblings entered into a joint venture with respondent Three Kings Construction and Realty
Corporation for the development of the Northwoods Estates, a subdivision project covering Lot No.
3783-E and adjacent lots. For this purpose, they contracted the services of respondent, Engineer Dale
Olea.
In 2003, respondents started constructing a perimeter wall on Lot No. 3783-E.
On November 28, 2003, petitioners, through counsel, wrote respondents asking them to stop
constructing the wall, and remove all installed construction materials and restore the former condition
of Lot No. [3]783-E which they (petitioners) claimed to be a road lot. 1 They also claimed that the
construction obstructed and closed the only means of ingress and egress of the Nogoy spouses and their
family, and at the same time, caved in and impeded the ventilation and clearance due the Castro
spouses' residential house. 2
Petitioners' demand remained unheeded, prompting them to file before the Regional Trial Court (RTC) of
San Fernando, Pampanga a complaint, 3docketed as Civil Case No. 12834, for injunction, restoration of
road lot/right of way and damages with prayer for temporary restraining order and/or writ of
preliminary injunction.
Before respondents filed their Answer, 4 petitioners filed an Amended Complaint, 5 alleging that the
construction of the perimeter wall was almost finishedand thus modifying their prayer for a writ of
preliminary injunction to a writ of preliminary mandatory injunction, viz.: STECDc
WHEREFORE, it is respectfully prayed of this Honorable Court that:
A. Before trial on the merits, a temporary restraining order be issued
immediately restraining the defendants from doing
further construction of the perimeter wall on the
premises, and thereafter, a writ
of preliminary mandatory injunction be issued enjoining
the defendants from perpetrating and continuing with
the said act and directing them jointly and severally, to
restore the road lot, Lot 3783-E to its previous condition.
xxx xxx xxx 6 (Underscoring in the original; emphasis supplied)
After hearing petitioners' application for a writ of preliminary mandatory injunction, Branch 44 of the
San Fernando, Pampanga RTC denied the same, without prejudice to its resolution after the trial of the
case on the merits, in light of the following considerations:
After a judicious evaluation of the evidence, the Commissioner's Report on the
Conduct of the Ocular Inspection held on February 14, 2004, as well as the
pleadings, the Court is of the opinion and so holds that a writ of preliminary
injunction should not be issued at this time. Plaintiffs have not clearly shown
that their rights have been violated and that they are entitled to the relief
prayed for and that irreparable damage would be suffered by them if an
injunction is not issued. Whether lot 3783-E is a road lot or not is a factual issue
which should be resolved after the presentation of evidence. This Court is not
inclined to rely only on the subdivision plans presented by plaintiffs since, as
correctly argued by defendants, the subdivision plans do not refer to lot 3783-E
hence are not conclusive as to the status or classification of lot 3783-E. This
court notes further thatSubdivision Plan Psd-03-000577 of Lot 3783 from which
the other subdivision plans originates [sic] does not indicate lot 3783-E as a
road lot.
Even the physical evidence reveals that lot 3783-E is not a road lot. The Court
noticed during the ocular inspection on February 14, 2004, that there is a PLDT
box almost in front of lot 3783-E. There is no visible pathway either in the form
of a beaten path or paved path on lot 3783-E. Visible to everyone including this
court are wild plants, grasses, and bushes of various kinds. Lot 3783-E could not
have been a road lot because Sps. Nogoy, one of the plaintiffs, even built a
structure on lot 3783-E which they used as a coffin factory.
Plaintiffs failed to prove that they will be prejudiced by the construction of the
wall. The ocular inspection showed that they will not lose access to their
residences. As a matter of fact, lot 3783-E is not being used as an access road to
their residences and there is an existing secondary road within St. Benedict
Subdivision that serves as the main access road to the highway. With respect to
the blocking of ventilation and light of the residence of the Sps. Castro, suffice it
to state that they are not deprived of light and ventilation. The perimeter wall
of the defendants is situated on the left side of the garage and its front
entrance is still open and freely accessible.
This is indeed an issue of fact which should be ventilated in a full blown trial,
determinable through further presentation of evidence by the parties. . . .
xxx xxx xxx
WHEREFORE, premises considered, plaintiffs' application for the issuance of a
writ of preliminary mandatory injunction is denied without prejudice to its
resolution after the trial of the case on the merits. 7 (Underscoring
supplied) cSATEH
Their Motion for Reconsideration 8 having been denied, petitioners filed a petition for certiorari 9 before
the Court of Appeals which dismissed the same 10and denied their subsequent Motion for
Reconsideration. 11
Hence, the petitioners filed the present petition, 12 faulting the Court of Appeals in
I.
. . . DECID[ING] AND RESOLV[ING] A QUESTION OF SUBSTANCE NOT IN ACCORD
WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE NO. 1529) AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II.
. . . PROMOTING THE LOWER COURT'S RATIOCINATION THAT PETITIONERS ARE
SEEKING THE ESTABLISHMENT OF AN EASEMENT OF RIGHT OF WAY, WHEN
THEY ARE CLAIMING THE ENFORCEMENT OF THE STATUTORY PROHIBITION
AGAINST CLOSURE OR DISPOSITION OF AN ESTABLISHED ROAD LOT.
III.
. . . SANCTION[ING] THE LOWER COURT'S PATENT GRAVE ABUSE OF DISCRETION
IN PERFUNCTORILY DENYING PETITIONERS' APPLICATION FOR WRIT OF
PRELIMINARY INJUNCTION. 13
It is settled that the grant of a preliminary mandatory injunction rests on the sound discretion of the
court, and the exercise of sound judicial discretion by the lower court should not be interfered with
except in cases of manifest abuse. 14
It is likewise settled that a court should avoid issuing a writ of preliminary mandatory injunction which
would effectively dispose of the main case without trial. 15
In the case at bar, petitioners base their prayer for preliminary mandatory injunction on Section 44 of Act
No. 496 (as amended by Republic Act No. 440), Section 50 of Presidential Decree 1529, and their claim
that Lot No. 3783-E is a road lot. DTaSIc
To be entitled to a writ of preliminary injunction, however, the petitioners must establish the following
requisites: (a) the invasion of the right sought to be protected is material and substantial; (b) the right of
the complainant is clear and unmistakable; and (c) there is an urgent and permanent necessity for the
writ to prevent serious damage. 16
Since a preliminary mandatory injunction commands the performance of an act, it does not preserve
the status quo and is thus more cautiously regarded than a mere prohibitive injunction. 17 Accordingly,
the issuance of a writ of preliminary mandatory injunction is justified only in a clear case, free from
doubt or dispute. 18 When the complainant's right is thus doubtful or disputed, he does not have a clear
legal right and, therefore, the issuance of injunctive relief is improper.
Section 44 of Act 496, 19 which petitioners invoke, provides:
xxx xxx xxx
Any owner subdividing a tract of registered land into lots shall file with the Chief
of the General Land Registration Office a subdivision plan of such land on which
all boundaries, streets and passageways, if any, shall be distinctly and accurately
delineated. If no streets or passageways are indicated or no alteration of the
perimeter of the land is made, and it appears that the land as subdivided does
not need of them and that the plan has been approved by the Chief of the
General Land Registration Office, or by the Director of Lands as provided in
section fifty-eight of this Act, the Register of Deeds may issue new certificates of
title for any lot in accordance with said subdivision plan. If there are streets
and/or passageways, no new certificates shall be issued until said plan has been
approved by the Court of First Instance of the province or city in which the land
is situated. A petition for that purpose shall be filed by the registered owner,
and the court after notice and hearing, and after considering the report of the
Chief of the General Land Registration Office, may grant the petition, subject to
the condition, which shall be noted on the proper certificate, that no portion of
any street or passageway so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without approval of the court first had, or
may render such judgment as justice and equity may require. 20 (Underscoring
supplied by the petitioners)

Section 50 of Presidential Decree No. 1529, 21 which petitioners likewise invoke, provides:
SEC. 50. Subdivision and consolidation plans. Any owner subdividing a tract
of registered land into lots which do not constitute a subdivision project as
defined and provided for under P.D. No. 957, shall file with the Commissioner of
Land Registration or with the Bureau of Lands a subdivision plan of such land on
which all boundaries, streets, passageways and waterways, if any, shall be
distinctly and accurately delineated.
If a subdivision plan, be it simple or complex, duly approved by the
Commissioner of Land Registration or the Bureau of Lands together with the
approved technical descriptions and the corresponding owner's duplicate
certificate of title is presented for registration, the Register of Deeds shall,
without requiring further court approval of said plan, register the same in
accordance with the provisions of the Land Registration Act, as amended:
Provided, however, that the Register of Deeds shall annotate on the new
certificate of title covering the street, passageway or open space, a
memorandum to the effect that except by way of donation in favor of the
national government, province, city or municipality, no portion of any street,
passageway, waterway or open space so delineated on the plan shall be closed
or otherwise disposed of by the registered owner without the approval of the
Court of First Instance of the province or city in which the land is situated. . .
. 22 (Underscoring supplied by petitioner) CDHcaS
The best evidence thus that Lot No. 3783-E is a road lot would be a memorandum to that effect
annotated on the certificate of title covering it. Petitioners presented TCT No. 185702-R covering Lot No.
3783-E in the name of Sunny Acres Realty Management Corporation which states that the registration is
subject to "the restrictions imposed by Section 44 of Act 496, as amended by Rep. Act No. 440." 23 The
annotation does not explicitly state, however, that Lot No. 3783-E is a road lot.
In any event, TCT No. 185702-R had been cancelled and in its stead was issued TCT No. 247778-
R 24 which, in turn, was cancelled by TCT No. 269758-R 25 in the name of respondent Co and his siblings.
TCT No. 247778-R and respondent Co's TCT No. 269758-R do not now contain the aforementioned
memorandum annotated on TCT No. 185702-R re the registration being "subject to restrictions imposed
by Section 44 of Act 496, as amended by Republic Act No. 440." Given the immediately foregoing
circumstances, there is doubt on whether Lot No. 3783-E is covered by a road lot.
While petitioners correctly argue that certain requirements must be observed before encumbrances, in
this case the condition of the lot's registration as being subject to the law, may be discharged and before
road lots may be appropriated 26 gratuity assuming that the lot in question was indeed one, TCT Nos.
247778-R and 269758-R enjoy the presumption of regularity 27 and the legal requirements for the
removal of the memorandum annotated on TCT No. 185702-R are presumed to have been followed. 28
At all events, given the following factual observations of the trial court after conducting an ocular
inspection of Lot 3783-E, viz.:
. . . The ocular inspection showed that [petitioners] will not lose access to their
residences. As a matter of fact, lot 3783-E is not being used as an access road to
their residences and there is an existing secondary road within St. Benedict
Subdivision that serves as the main access road to the highway. 29 With respect
to the blocking of ventilation and light of the residence of the Sps. Castro,
suffice it to state that they are not deprived of light and ventilation. The
perimeter wall of the defendants is situated on the left side of the garage and
its front entrance is still open and freely accessible, 30 EHCaDS
and the absence of a showing that petitioners have an urgent and paramount need for a writ of
preliminary mandatory injunction to prevent irreparable damage, they are not entitled to such
writ.
WHEREFORE, the petition is DENIED.
SO ORDERED.
























EN BANC
[G.R. No. 4891. March 23, 1909.]
SOFIA DEVESA, plaintiff-appellee, vs. CRISPIN ARBES, defendant-appellant.
Leocadio Joaquin, for appellant.
Sofia Devesa, on her own behalf.

SYLLABUS
1. INJUNCTIONS; SPECIAL REMEDY OF THE CODE OF CIVIL PROCEDURE DISTINGUISHED
FROM THE OLD SPANISH WRITS. Injunctions or interdictos prohibitorios, for the issuance of
which provision is made in the new Code of Civil Procedure, while they resemble the interdictal
actions of the Spanish procedural law in some respects, are wholly distinct therefrom and, as a rule,
the circumstances under which, in accordance with the Spanish law, interdictos de adquirir, de
retener, de recobrar or de despojo properly issued would not justify nor sustain the issuance of an
injunction, interdicto prohibitorio, as defined and provided in the new Code of Civil Procedure.
2. ID.; LIMITATION UPON USE OF WRITS OF INJUNCTION. An injunction is a special
remedy contained in the new Code of Civil Procedure and adopted from American and English law
of procedure, and the accepted American doctrine limiting its use to cases where there is no other
adequate remedy, and otherwise controlling the issue thereof, must be deemed to limit its use in
like manner in this jurisdiction.
3. ID.; WRITS NOT AVAILABLE FOR RECOVERY OF PROPERTY WHEN TITLE IS NOT
ESTABLISHED. Injunctions, as a rule, will not be granted to take property out of the possession or
control of one party and place it into that of another whose title has not clearly been established by
law.
4. ID.; SPANISH WRITS REPLACED BY SPECIAL REMEDIES. The interdicto de recobrar or
de despojo may be said have been replaced and perhaps abrogated by the summary remedies
prescribed in section 80 of the new Code of Civil Procedure.
5. ID.; PROPERTY CLAIMS AGAINST ADMINISTRATOR REQUIRE SEPARATE ACTION.
Contested claims of an administrator, that certain rights of possession and ownership are the
property of the estate which he represents, must be determined in a separate action, and not in
the course of the administration proceedings.

D E C I S I O N
CARSON, J p:
Plaintiff alleging that the defendant, acting as administrator of the estate of Gregoria
Arbes, deceased, had unlawfully taken possession of certain rice lands and coconut groves, the
property of the plaintiff, prayed for an injunction restraining defendant from continuing in
possession and enjoying the fruits of the land in question until and unless he obtained a final
judgment in a proper action declaring these lands to be the property of the estate of which he is
administrator, and prayed further that a preliminary injunction be issued restraining defendant
from continuing in possession or enjoying the fruits of the land in question pending the trial of the
cause.
The complaint alleges that the property in question was assigned to plaintiff's deceased
husband under the terms of an extrajudicial partition contract executed in the year 1887 by the
heirs of Gregoria Arbes, plaintiff's husband's first wife, and that ever since that date until the
defendant took possession of this land, plaintiff and her husband had continued in the quiet,
peaceable, and exclusive possession thereof. The trial court, apparently without giving the
defendant are opportunity to be heard, granted the preliminary injunction prayed for, conditioned
upon the execution of a bond for costs and damages, whereupon the defendant presented a
motion which though irregular in form may fairly be regarded as a demurrer to the complaint on
the ground that the facts alleged do not constitute a cause of action, and prayed that the
preliminary injunction be dissolved.
The trial court overruled the demurrer and declined to dissolve the preliminary
injunction, and defendant without excepting to the ruling of the court withdrew his motion and
filed answer. In this answer defendant admitted having taken possession of the land in question, as
alleged by the plaintiff, but denied plaintiff's allegation that she and her husband had been in the
exclusive possession thereof, and alleged that the land in question was the property of Gregoria
Arbes, deceased, of whose estate he is the administrator, and that after the death of Gregoria
Arbes, it passed pro indiviso to her heirs, who from the time of her death continued in joint
possession thereof, until he took possession upon his appointment as administrator; he also
alleged that one of the heirs, Vicente Sola, widower of Gregoria Arbes, deceased, married the
plaintiff; that plaintiff's claim to an interest in the property in question is or should be strictly
limited to the interest which she is entitled to take from her husband, since deceased; and that
while it is true that she and her husband exercised certain rights of possession of the land in
question, they never had exclusive possession, and such rights of possession as they did exercise
were exercised not only on their own behalf but on behalf of all the heirs of Gregoria Arbes.
Upon these pleadings the parties went to trial, and plaintiff introduced evidence tending
to prove that the land in question was originally the property of her husband, Vicente Sola,
acquired by him, not from his first wife, Gregoria Arbes, but by purchase, in part prior to, and in
part after his marriage with the first wife; she also introduced in evidence a document, dated
January 31, 1887, purporting to be a partition agreement between her husband Sola, and the other
heirs of Gregoria Arbes who died a short time prior to the execution of the instrument, whereby
the land in question was assigned to Sola as his property. Plaintiff further introduced testimony
which clearly established her allegation that from the date of that instrument until the time when
defendant took possession of the land, she and her husband had the exclusive possession thereof.
Defendant did not deny the execution of the partition agreement, and wholly failed to
prove that the land in question was or is a part of the estate of Gregoria Arbes, deceased, or to
established his allegation that plaintiff and her husband were not in the exclusive possession of the
land in question from the date of its execution to the time when he took possession as
administrator, or that they held possession thereof jointly with the other heirs of Gregoria Arbes.
He insisted, however, that the agreement was not binding upon the heirs of Gregoria Arbes,
because at the date of its execution two of them, a niece and a nephew, were minors and
incapable of executing such a document, although it appears that they were represented upon that
occasion by their respective fathers who married sisters of Gregoria Arbes, and signed the
instrument as the legal representatives of these minor heirs.
The trial court on the pleadings and proof submitted at the trial found that the plaintiff
was entitled to the possession of the land in question, and rendered final judgment in accordance
with the prayer of the complaint, granting a final injunction perpetually restraining the defendant
administrator from continuing in possession of the land in question or enjoying the fruits thereof.
We are in entire accord with the trial judge as to his findings of fact, and agree with him
that the evidence of record establishes plaintiff's right of possession in and to the lands in question:
for without deciding whether the extrajudicial partition agreement between the heirs of Gregoria
Arbes, deceased, executed in 1887, conveyed to plaintiff's deceased husband the absolute right of
ownership in the land assigned to him thereby; or whether that agreement, which was executed
before the present Code of Civil Procedure went into effect, can be successfully attacked at this
time by the minor heirs, because of the apparent lack of judicial approbation of the action of their
legal representatives; it is sufficient, for the purposes of this decision, to point out that plaintiff,
and her husband having been in exclusive possession of this land, under a claim based on the
partition agreement, for more than fifteen years, the defendant, in his capacity of administrator,
had no lawful authority to take possession thereof without plaintiff's consent, in the absence of a
final judgment of a competent court securing to him his alleged right of possession; and that
defendant having failed to prove that the estate of which he is administrator is the true owner of
all or any part of the land in question, the plaintiff is entitled to be replaced in possession.
We are of opinion, however, that the remedy by injunction sought by the plaintiff and
allowed by the trial court was not the proper remedy for the cause of action set out in the
pleadings and established by the evidence, and that, in accordance with the provisions of section
126 of the Code of Civil Procedure, the court should have granted "relief consistent with the case
made by the complaint and supported by the evidence and embraced within the issue," and to that
end should have required an amendment of the complaint by striking out the prayer for an
injunction and substituting therefor a prayer for judgment for possession of the land described in
the complaint, and upon the complaint thus amended, judgment should have been rendered in
favor of the plaintiff.
Both the parties to this action appear to have labored under a misapprehension as to
the purpose, scope, and limitations of the special remedy, known as an injunction, and defined in
section 162 of the Code of Civil Procedure. The records in many cases in this court disclose a
considerable degree of doubt and uncertainty in the minds of counsel as to the function of this
remedy, and in some cases a wholly erroneous concept of the purpose and object for which it is
provided. This erroneous concept may, perhaps, be due to the fact that in the Spanish version of
the new Code of Civil Procedure, the term injunction is translated interdicto prohibitorio, which
may thus have given rise to the impression that the remedy by injunction is similar in character to
the summary interdictal actions of the Spanish procedural law; but while the injunction resembles
in many respects theinterdicto of the Roman law, especially the decretal (decretale, quod praetor
re nata implorantibus decrevit), and while it also resembles to a certain degree in its operation and
effect, the interdictos de adquirir, de retener, and de recobrar or de despojo of the Spanish
procedural law; nevertheless, it is wholly distinct therefrom, and, as a rule, the circumstances
under which, in accordance with the former procedural law, these interdictos properly issued,
would not justify nor sustain the issuance of an injunction, as defined and provided in the new
Code of Civil Procedure. An injunction is a "special remedy" adopted in that code from American
practice, and originally borrowed from English legal procedure, which was there issued by the
authority and under the seal of a court of equity, and limited, as in other cases where equitable
relief is sought, to cases where there is no "plain, adequate, and complete remedy at law" (30
Barb., 549; 5 R. I., 472; 121 N. Y., 46; SI Pa., 387; 32 Ala., N.S. 723; 37 N. H., 254; 61 Hun., 140: 145
U. S., 459; 141 Ill., 572; 49 Fed. Rep., 517; 37 id., 67; 34 id., 357; 129 Md., 464; 109 N. C., 21; 83
Wis., 426: 115 Mo., 613), which "will not be granted while the rights between the parties are
undetermined, except in extraordinary cases where material and irreparable injury will be done,"
which can not be compensated in damages, and where there will be no adequate remedy 93
Bosw., 60; 1 Beasl., 247, 542; 15 Md., 22; 13 Cal., 156, 190; 6 Wis., 680: 16 Tex., 410; 28 Mo., 210;
24 Fla., 542; 39 N. H., 182: 12 Cush., 410; 27 Ga., 499; 1 McAll., 271; 54 Fed. Rep., 1005; 64 Vt.,
643), and which will not, as a rule, be granted, to take property out of the possession of one party
and put it into that of another whose title has not been established by law. (144 U. S., 119; 40 W.
N. C. Pa., 121.)

This court has frequently held, when treating of the special remedies by injunction,
mandamus and prohibition, which are provided in the new Code of Procedure in Civil Cases, that
the accepted American doctrine limiting the use of these remedies to cases where there is no other
adequate remedy, and otherwise controlling the issuance of these writs, and must be deemed to
limit their use in like manner in this jurisdiction, when not otherwise provided by law: to hold
otherwise would be to render practically of no effect the various provisions of the code touching
many if not most of the ordinary actions, and the enforcement of judgment in such actions; for it
may well be supposed that if a complainant could secure relief by injunction in every case where
"the defendant is doing or threatens or is about to do, or is procuring or suffering to be done, some
act probably in violation of the plaintiff's rights" and could enforce the judgment granting the
injunction by the summary contempt proceedings authorized in section 172 of the code to punish
violations of injunctions, he would seldom elect to enforce his rights in such cases by the ordinary
remedies, involving as they do the difficult and of times fruitless labor of enforcing judgments
obtained therein by execution. But so many cases have come before us where preliminary
injunctions have been issued apparently without regard to this rule, that we are satisfied that the
erroneous impression still prevails, in some quarters, that a preliminary injunction must issue
where a prima facie showing is made of the existence of the circumstances under which such
injunctions may be granted as set out in section 164 of the Code of Civil Procedure, without
keeping in mind the fact that applications for injunctions are made to the sound discretion of the
court, and that the exercise of that discretion is controlled by the accepted doctrines touching the
granting of injunctions in such cases; and we may add that the records also disclose in dangerous
tendency to grant permanent injunctions on insufficient grounds, as a result of a similar erroneous
construction of the provisions of the code in that regard.
No brief was filed by plaintiff on appeal, and the contentions of the parties in the court
below are not very clearly set out in the very short brief of the defendant and appellant. It appears,
however, that defendant challenged the jurisdiction of the trial court, on the ground that the
summary interdictal actions of the Spanish procedural law have been done away with by the
provisions of the new Code of Procedure in Civil Cases, the interdicto de recobrar or de
despojo having been expressly displaced by the summary remedies prescribed in section 80 of the
new code, for the recovery of lands or buildings of which one is deprived by force, intimidation,
fraud, or strategy within a year prior to the institution of the action; and defendant insists that the
action instituted by plaintiff, while in form a proceeding praying for an injunction under the new
code, assimilated to the former proceeding praying for an interdicto de recobrar or de despojo, is
in fact an action which could only be maintained under the provisions of section 80 of the new
code, of which original jurisdiction is conferred upon the courts of the justice of the peace,
exclusive of the Court of First Instance. Plaintiff and appellee on the other hand seems to have
insisted that the injunction proceedings instituted by her were assimilated rather to the summary
action known as the interdictor de retener and that the facts alleged and proven establishing her
right to an interdicto de retener, under the old law, she is entitled to an injunction under the new
code, that remedy being the equivalent provided by the new code for the interdicto of the old law.
But while we agree with defendant and appellant that the summary remedies provided
in section 80 may be said to replace and perhaps abrogate the old interdicto de recobrar or de
despojo, and that if the facts alleged and proven made out a cause of action under that section
and, therefore, within the exclusive jurisdiction of the court of the justice of the peace, it would be
necessary to hold that the trial court was wholly without original jurisdiction; and while we can not
agree with the plaintiff and appellee that the facts set out in the pleadings and evidence would
support the issuance of an interdicto de retener, even under the former procedure, because
possession of the land and buildings had been actually lost to plaintiff when the action was
instituted, nor can we agree with her that even if a proper case for the granting of an interdicto de
retener under the old procedure had been established, it necessarily follows that an injunction
should issue under the new procedure; and without deciding whether all the summary interdictal
remedies of the Spanish law have been wholly and in all cases abolished under the provisions of
the new code, it is sufficient for the purpose of this decision to hold that since there is nothing in
the allegations or proof to show that defendant obtained possession of the land in question by
force, intimidation, fraud, or strategy, the action is not in the nature of the summary remedy
known to the old law as an interdicto de recobrar or de despojo, nor is it the summary remedy of
forcible entry and wrongful detainer provided in section 80 of the new code, and therefor it does
not fall within the exclusive jurisdiction of the court of the justice of the peace, to the exclusion of
the Court of First Instance, which tried the case.
What has been said disposes of all the errors assigned by appellant, except his
assignment of error based on his contention that the administrator having taken possession as an
officer of the court wherein the estate was being administered, his conduct in that regard should
not be questioned, except in the course of the administration proceedings.
We have frequently held that a contested claim of an administrator that certain rights of
possession and ownership are the property of the estate which he represents must be determined
in a separate action, and not in the course of the administration proceedings; and it should not be
necessary to add that the mere fact that an administrator holds letters of appointment from some
court, in nowise authorizes him to take possession of property held by another under a claim of a
right to possession until and unless he successfully establishes his right to possession of such
property in a proper proceeding in a competent court.
Ten days from the date of this decision let judgment be entered, reversing the judgment
of the trial court and dissolving the preliminary and permanent injunctions issued therein, without
costs to either party in this instance, and ten days thereafter let the record be returned to the court
below where, upon the amendment of the complaint along the lines therein indicated, judgment
will be rendered in favor of the plaintiff for the possession of the lands described in the complaint,
together with the costs in the Court of First Instance, but without damages, which were not
satisfactorily established by the evidence of record. So ordered.











































THIRD DIVISION
[G.R. No. 158141. July 11, 2006.]
FAUSTO R. PREYSLER, JR., petitioner, vs. COURT OF APPEALS and FAR EAST
ENTERPRISES, INC., respondents.
D E C I S I O N
QUISUMBING, J p:
This petition for review assails the Decision 1 dated January 20, 2003 and Resolution 2 dated May 20,
2003 of the Court of Appeals in CA-G.R. SP No. 52946. The Court of Appeals lifted the amended writ of
preliminary injunction dated December 29, 1998 issued by the Regional Trial Court, Branch 14 of
Nasugbu, Batangas in Civil Case No. 345 and reinstated the original writ dated December 12, 1996.
The antecedent facts are as follows:
Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner Fausto Preysler, Jr.
and his wife owned lots therein and also two parcels of land adjacent to the subdivision. These two
parcels were bounded on the North and West by the China Sea and on the East and South by the
subdivision. To gain access to the two parcels petitioner has to pass through private respondent's
subdivision. Petitioner offered P10,000 for the easement of right of way but private respondent refused
it for being grossly inadequate. Private respondent then barricaded the front gate of petitioner's
property to prevent petitioner and his family from using the subdivision roads to access said parcels.
The petitioner filed, with the Regional Trial Court of Nasugbu, Batangas, a Complaint for Right of Way
with prayer for preliminary prohibitive injunction against private respondent. After due hearing, the trial
court, in an Order dated November 5, 1996, held that barricading the property to prevent the petitioner
from entering it deprived him of his ownership rights and caused irreparable damage and injuries. It
ordered herein private respondent:
1) To remove or cause or allow the removal of the barricade (six
concrete posts) installed by it on the front gate of the
plaintiffs' properties fronting Sea Cliff Drive;
2) To cease, desist and refrain from obstructing or hindering
plaintiffs' entry into and exit from their subject properties
and/or their free passage over Sea Cliff Drive from and to
the public highway near the gate of the Tali Beach
Subdivision pending termination of this litigation on the
merits and/or unless a contrary order is issued
henceforth. 3
Accordingly, the writ of preliminary injunction was issued on December 12, 1996. TICaEc
On July 8, 1998, petitioner used the subdivision road to transport heavy equipment and construction
materials to develop his property. Consequently, private respondent moved to dissolve the writ claiming
that the petitioner violated its right to peaceful possession and occupation of Tali Beach Subdivision
when petitioner brought in heavy equipment and construction materials. Private respondent maintained
that the damages that may be caused to it far outweigh the alleged damages sought to be prevented by
the petitioner. It alleged that there is an alternate route available to petitioner, particularly the barangay
road leading to Balaytigue and the Calabarzon Road.
For his part, the petitioner moved to clarify the December 12, 1996 writ and asked the court to clearly
define the action required of private respondent to avert further damage and inconvenience to
petitioner. Petitioner prayed that his contractors, visitors, and other representatives be allowed access
and persons he has authorized be allowed to install power lines over private respondent's property.
On December 29, 1998, the trial court issued a Joint Resolution amending the order in the original writ to
read as follows:
1. To remove or cause or allow the removal of the barricade (six concrete posts)
installed by it on the front gate of the plaintiffs' properties fronting Sea Cliff
Drive.
2. To cease, desist and refrain from obstructing or hindering plaintiffs' (including
plaintiffs' visitors, guests, contractors, and other persons authorized by or
acting for and/or under said plaintiffs) entry into and exit from their subject
properties and/or their free passage over Sea Cliff Drive and other connecting
subdivision roads, from and to the public highway near the gate of the Tali
Beach Subdivision, pending the termination of this litigation on the merits
and/or unless a contrary order is issued henceforth.
3. To cease, desist and refrain from hindering or obstructing plaintiffs'
contractors, guests, visitors and other authorized persons to bring along with
them their motor vehicles, equipments, materials, supplies, machineries and
other items necessary for the needs of the plaintiffs' properties.
4. To cease, desist and refrain from hindering or obstructing the plaintiffs
and/or persons authorized by them, to install electric power lines over the Tali
Beach Subdivision for plaintiffs' electric power requirements. 4
Private respondent filed a petition for certiorari with the Court of Appeals, which set aside the amended
writ dated December 29, 1998 and reinstated the original writ dated December 12, 1996 with
modification as to the amount of the bond. The petitioner moved for reconsideration, but the same was
denied.SIcEHC
Petitioner now comes before us claiming that the Court of Appeals:
I
. . . [GRAVELY] ERRED IN FINDING AND CONCLUDING THAT THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN ISSUING: (1) THE JOINT
RESOLUTION DATED 29 DECEMBER 1998, . . . (2) THE AMENDED WRIT OF
PRELIMINARY INJUNCTION (MANDATORY AND PROHIBITORY) OF EVEN DATE . .
. AND (3) THE ORDER DATED 8 MARCH 1999 DENYING THE MOTION FOR
RECONSIDERATION TO RECONSIDER AND SET ASIDE THE JOINT RESOLUTION. . .
.
II
. . . OVERSTEPPED THE BOUNDARY OF ITS AUTHORITY AND JURISDICTION IN
RESOLVING FACTUAL MATTERS, HOWEVER, ERRONEOUS, COULD NOT BE
REVIEWED UNDER THE EXTRAORDINARY WRIT OF CERTIORARI BUT BY
ORDINARY APPEAL, INSTEAD OF CONFINING ITSELF TO DETERMINE WHETHER
OR NOT THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN
ISSUING THE JOINT RESOLUTION, . . . THE AMENDED WRIT OF PRELIMINARY
INJUNCTION (MANDATORY AND PROHIBITORY), . . . AND THE ORDER DATED 6
MARCH 1996 DENYING THE MOTION TO RECONSIDER THE JOINT RESOLUTION. .
. .
III
. . . EXCEEDED ITS JURISDICTION AND AUTHORITY IN SETTING ASIDE THE JOINT
RESOLUTION, . . . LIFTING THE AMENDED WRIT OF PRELIMINARY INJUNCTION
DATED 29 DECEMBER 1998, . . . AND RESTRICTING OR LIMITING PASSAGE OVER
THE TALI BEACH SUBDIVISION ROADS TO INGRESS AND EGRESS OF PETITIONER
AND MEMBERS OF THE LATTER'S HOUSEHOLD IN UTTER VIOLATION OF THE
LAW ON EASEMENT, IN GENERAL, AND LEGAL EASEMENT OF RIGHT OF WAY IN
PARTICULAR. 5
Simply, the issue is whether there was a legal basis for the issuance of the amended writ of injunction.
Likewise, we need to resolve whether the right of passage allowed in the uncontested original writ
applies not only to the petitioner and his household, but also to his visitors, contractors, construction
workers, authorized persons, heavy equipment machinery, and construction materials as well as the
installation of power lines.
Petitioner contends that inherent in the right of way under Article 649 6 of the New Civil Code is the
right to cultivate and develop the property, which is an attribute of ownership provided under Article
428. 7 According to petitioner, the passage of heavy equipment and construction materials through the
subdivision is granted by Article 656. 8 Petitioner adds that he was not seeking the right of way only for
occasional visits to his property but also to develop, use and enjoy it.
Private respondent claims that what was granted in the original writ was not the easement of right of
way but only the maintenance of the status quo. It maintains that from the very beginning, petitioner
and his household were allowed into the subdivision only because petitioner owned several lots in the
subdivision. Hence, according to private respondent, the Court of Appeals properly dissolved the
amended writ as the status quo protected by the original writ did not include the passage of construction
workers in petitioner's property outside the subdivision. Private respondent stresses that at the time the
original writ was applied for there was no construction work yet. EcICSA
Private respondent argues that its recognition of the original writ should not be construed as admitting
that petitioner had a right of way; and with no easement of right of way, petitioner cannot claim other
rights under the law on easement. It further contends that acts prohibited and allowed under the
amended writ amounted to a premature adjudication on the merits of the main case on whether or not
petitioner has a right of way, which is still pending before the trial court.
Prefatorily, we note that what was granted by the trial court was the preliminary injunction, and that the
main case for right of way has not yet been settled. We have in previous cases 9 said that the objective
of a writ of preliminary injunction is to preserve the status quo until the merits of the case can be fully
heard. Status quo is the last actual, peaceable and uncontested situation which precedes a
controversy. 10 The Court of Appeals was correct in its findings that the last actual, peaceful and
uncontested situation that preceded the controversy was solely the access of petitioner and his
household to his property outside the subdivision for visits and inspections. At the time the writ was
applied for in 1995, there was still no construction going on in the property. It was merely raw land. The
use of the subdivision roads for ingress and egress of construction workers, heavy equipment, delivery of
construction materials, and installation of power lines, are clearly not part of the status quo in the
original writ. Along this line, the Court of Appeals properly set aside the amended writ and reinstated the
original writ.
However, under Article 656 of the New Civil Code, if the right of way is indispensable for the
construction, repair, improvement, alteration or beautification of a building, a temporary easement is
granted after payment of indemnity for the damage caused to the servient estate. In our view, however,
"indispensable" in this instance is not to be construed literally. Great inconvenience is sufficient. 11 In
the present case, the trial court found that irrespective of which route petitioner used in gaining access
to his property, he has to pass private respondent's subdivision. Thus we agree that petitioner may be
granted a temporary easement. This temporary easement in the original writ differs from the permanent
easement of right of way now being tried in the main case.

The law provides that temporary easement is allowed only after the payment of the proper indemnity.
As there are neither sufficient allegations nor established facts in the record to help this Court determine
the proper amount of indemnity, it is best to remand the case to the trial court for such
determination. aSCDcH
Additionally, we find that the installation of electric power lines is a permanent easement not covered by
Article 656. Article 656 deals only with the temporary easement of passage. Neither can installation of
electric power lines be subject to a preliminary injunction for it is not part of the status quo. Besides,
more damage would be done to both parties if the power lines are installed only to be removed later
upon a contrary judgment of the court in the main case.
WHEREFORE, the petition is PARTIALLY GRANTED.
We hereby order (a) private respondent to allow the right of passage thru the subdivision by the
petitioner's visitors and guests, contractors, construction workers, heavy equipment vehicles, and
delivery construction materials; and (b) petitioner to pay private respondent the indemnity therefor to
be determined by the trial court. The case is hereby REMANDED to the trial court for the determination
of the proper amount of indemnity for the temporary easement under Article 649.
No pronouncement as to costs.
SO ORDERED.




















EN BANC
[G.R. No. 5734. August 17, 1911.]
MARCELO MANTILE, ET AL., plaintiffs-appellees, vs. ALEJANDRO CAJUCOM, ET
AL., defendants-appellants.
Ramon Diokno, for appellants.
Allen A. Garner, for appellees.
SYLLABUS
1. PRELIMINARY INJUNCTION; ACTS ALREADY PERFORMED CAN NOT BE PROHIBITED;
CONTEMPT. Section 162 of the Code of Civil Procedure, in defining a preliminary injunction,
states: That it is the order or writ which prohibits a particular person from performing a particular
act, and therefore, if a writ of preliminary injunction has been issued against a particular person,
enjoining him, for example, from performing any act whatever that may tend to close and obstruct
an irrigation ditch by preventing the passage of the water, when the said ditch was already closed,
it can not be understood that the person, against whom the prohibitory order was issued, willfully
disregarded and disobeyed the said judicial writ by not removing the obstacle that prevented the
flow of the water, because this last operation is not covered by the writ of injunction.
2. ID.; ID.; ID. If in a writ of preliminary injunction those who become the defendants
are not enjoined or required to remove the impediment or obstacle complained of as being
prejudicial to the rights and interests of the plaintiff, but merely to abstain or desist from
performing any act contrary and prejudicial to such rights and interests, the mere fact of their not
having taken out or removed the obstacle or impediment, which already existed at the time of the
issuance of the injunction, does not constitute disobedience to, or contempt of, a judicial order,
because what has already been done can not be prohibited. (Municipal Council of Sta. Rosa vs.
Provincial Board of La Laguna, 3 Phil. Rep., 206.)
3. IRRIGATION RIGHTS; LAW OF WATERS. The legal provisions applicable to the use
and utilization of the waters of public or private domain are to be found in articles 407 to 425 of
the Civil Code, and the cases not therein provided for are governed by the Special Law of Waters of
August 3, 1866, published, with Cumplase decree of September 21, 1871, in the Official Gazette of
the 24th of the same month and year.
D E C I S I O N
TORRES, J p:
This is an appeal by the defendants from the judgment rendered in the matter of the
principal issue, and in the incidental one of contempt of court.
THE INCIDENTAL ISSUE OF CONTEMPT.
On June 22,1908, the attorneys for the plaintiffs Marcelo Mantile, Sebastian Bancod,
Adriano Espaol, Gregorio Corpus, Claudio Angeles, Doroteo Dacuno, Fernando Polintan, Maximino
Fajardo, Catalino Rubio, Alejandro Caisip, Diego Santiago, Eugenio Ronquillo, Raymundo Santiago,
Simon de la Cruz, Anacleto de los Reyes, Rafael Mendoza, Marcelino Fajardo, Tomas Marcelo,
Inocencio Santiago, Eugenio Angeles, Segundo Ramos, and Geronimo Rojas, filed a written
complaint against Alejandro Cajucom and Timoteo Cajucom wherein they prayed for the issuance
of a writ of preliminary injunction to restrain the defendants from continuing to close the canal
or estero called Paligui ng Buquid Puntang Piniping, in the barrio of Biga of the pueblo of Bongabon,
and through which the water ran that irrigated the sementeras, or rice fields of which the plaintiffs
were the owners, and from obstructing the course of such water, and furthermore that, after the
hearing of the case, a writ of perpetual injunction be issued against the said defendants, and that
the latter be sentenced to pay to each of the twenty-two plaintiffs the amount of the losses and
damages caused him, and the costs.
The plaintiffs having furnished bond, the court, by order of July 26, 1908, directed that
preliminary injunction issue against the said defendants, their agents and representatives,
restraining them from performing any act whatever that might tend to close or obstruct the canal
or estero called Paligui ng Buquid Puntang Piniping, in the barrio and pueblo before-mentioned, of
the Province of Nueva Ecija, and to refrain from hindering the passage of the water that flowed
through the said canal. The defendants were notified of this writ and it was served upon them on
the 29th of the same month.
By a petition of July 6, 1908, counsel for the plaintiffs set forth under oath that,
according to information he had received, the defendants were continuing to obstruct and hinder
the pasage of the water, in disobedience to the judicial order, and prayed that the' said defendants
be notified to appear and state their reasons, if any they had, why they should not be punished for
contempt of court for disobedience to the writ of preliminary injunction issued. This petition was
granted and the defendants having been notified, they alleged in writing, on the 14th of the same
month, that they had been notified on the 3d of July of the said writ by the sheriff of Nueva Ecija
and since then had complied with the order of the court, but called attention to the fact that the
stream had been closed by two tenants of the defendant, Alejandro Cajucom, on the 1st of the
preceding month of July, since which date neither they, the defendants, nor any other person in
their representation, had done anything' whatever to the stream or ditch in question; wherefore
they prayed that the two men who closed the said stream be examined, and that, in view of such
facts. the charge of contempt of court be dismissed, and the plaintiffs be sentenced to pay the
costs, and the damages occasioned.
The court, after the witnesses summoned had been examined, decided, on August 20,
1908, that the defendants had committed contempt of cost and imposed upon each of them a fine
of P200, and imprisonment until they should duly comply with the writ of injunction, and
sentenced each of them to pay one-half of the costs.
Defendants excepted to this judgment and, the required bill of exceptions having been
submitted, the Supreme Court, in its decision of January 11, [31] 1910, 1 dismissed the appeal on
the ground that the said bill of exceptions had been improperly admitted, inasmuch as the order
issued in connection with the incidental question of contempt of court, could be reviewed only
after the rendition of judgment on the main issue, and not until then could the said incident of
contempt be, by means of a bill of exceptions, submitted to this court; therefore the records in the
case were remanded to the court below, later to be transmitted to the clerk of this court upon the
filing of the main record with the bill of exceptions.
By the writ of preliminary injunction issued on June 26, 1908, the original of which is on
file, page 7 of the main record, the defendants Alejandro and Timoteo Cajucom, their attorneys,
representatives and agents, were enjoined from performing any act whatever that might tend to
close and obstruct the canal, a branch called Paligui ng Buquid Puntang Piniping, of
an estero situated in the barrio of Biga of the pueblo of Bongabon, Nueva Ecija, and to cease to
obstruct or hinder the course of the water that should flow through the said branch.
In the written complaint presented on June 22, 1908, it is averred that the said canal
or estero was closed by the representatives of the defendants on the 1st of June of the year therein
stated, and that since then the water which it ordinarily carried had ceased to flow through it the
plaintiffs' lands thereby being deprived of irrigation. So that when the writ of injunction was issued
on the 26th of the said month, it was taken for granted that the estero or canal in question was
closed and that the water did not run through it, as occurred prior to the said 1st of June; and
counsel for the plaintiffs, in charging, by a writing of July 6, 1908, that contempt of court was
committed, stated that the defendants, according to the information he had, were still obstructing
and hindering the passage of the water, in disobedience of the writ of injunction.
The defendants having been notified to show cause why they should not be punished
for contempt of court and disobedience of the preliminary injunction issued by the court, answered
that since the 3d of July, the date when they were notified by the deputy sheriff, they had complied
with the prohibitory order and had not done anything whatever, by themselves or through others
in their representation, to the stream or ditch in question, which was closed by two tenants of one
of the defendants, Alejandro Cajucom, on June 1, 1908, as acknowledged by said tenants.
The writ issued by the court contained no order instructing the defendants to raise or
remove the obstructions that prevented the water from flowing through the said canal or ditch.
The canal was obstructed and closed on June 1st, and when the persons who closed it
were notified on July 3 that they should abstain from performing any act whatever tending to
obstruct and prevent the flow of water, the canal or ditch still remained closed, and the record
shows no proof that it was afterwards opened to the passage of water, nor that, after the
defendants had been notified of the injunction, they again closed it. The fact that the latter failed
to remove the obstruction they had placed in the said canal or estero for the purpose of preventing
the passage of the water, since they were not ordered so to do by the judicial writ, is not sufficient
to make them liable for contempt of court.
The act of the closing of the canal occurred prior to the issuance of the writ, and, since a
thing that has already been done can not be prohibited, by the mere fact of there not having been
done what was not ordered in the writ it can not be held that a judicial order was disobeyed and
willfully disregarded.
Section 162 of the Code of Civil Procedure prescribes:
"An injunction is a writ or order requiring a person to refrain from a
particular act."
The said writ prohibited the performance of any act that would obstruct, close, or
hinder the course of the water through the Piniping canal or creek, when it was already obstructed-
and closed; and as the removal of the impediment or obstruction was not ordered, the defendants
were not obliged to perform any particular act, and their inaction in leaving the canal closed does
not constitute contempt of court, as they did not violate any judicial prohibition.

The record shows that the prohibition was issued after the closing of the canal; hence, if
the defendants did not remove the obstruction, they disobeyed no order. In the syllabus of
decision No. 1697, Municipal council of Santa Rosa vs. Provincial Board of La Laguna (3 Phil. Rep.,
206), the rule was laid down that the commission of an act already done can not be enjoined. To
say that it could, would be nonsense.
THE MAIN ISSUE.
On January 28, 1909, the plaintiffs filed an amended complaint, with the permission of
the court, wherein they alleged that certain of them named Maria Marcelo, Crisanto Rubio, Alipio
Espaol or Estaol, Marcelo Mantile, Adriano Espaol or Estaol, Sebastian Bancod, Claudio
Angeles, Diego Santiago, Raymundo Santiago, Anacleto de los Reyes, Rafael Mendoza, Clemente
Alivia, Marcelino Fajardo, and Segundo Ramos had been, on or about June 1, 1908, and were at the
time, the proprietors and owners of rice lands situated in the barrio of Biga of the pueblo of
Bongabon, and that the other plaintiffs were planters and cultivators of some portions of the said
lands; that (following the statement in the complaint as to the boundaries or adjacent lands of each
of their respective properties) the said Paligui ng Buquid Puntang Piniping estero or creek existed
and had always existed in the aforementioned barrio; that water flowed through it on or about
June 1, 1908, and the plaintiffs used that water in the cultivation of their above-mentioned lands;
that, on or about the date aforesaid, the defendants, by themselves and through their agents and
representatives, obstructed and closed the mouth of the estero in such manner that the lands
described were deprived of the water that had flowed and should flow through the said estero;
that, on or about the 4th of October of the same year before mentioned, the continual heavy rains
and high floods carried away the obstruction in the said Paligui ng Buquid Puntang Piniping estero;
that, in view of the statements made by the defendants, they believed that the latter would again
close the estero in order to obstruct the passage of the water to their (the plaintiffs') properties;
and that the plaintiffs, through the closing of the saidestero or creek, suffered losses and damages
in the following amounts: Maria Marcelo, P1,500; Crisanto Rubio, P250; Alipio Espaol, P75;
Marcelo Mantile, P2,500; Adriano Espaol, P75; Sebastian Bancod, P400; Gregorio Corpus, P150;
Claudio Angeles, P250; Doroteo Dacuno, P250; Fernando Polintan, P250; Maximino Fajardo, P200;
Catalino Rubio, P300; Alejandro Caisip, P270; Diego Santiago, P800; Eugenio Ronquillo, P486;
Raymundo Santiago, P650; Simeon [Simon] de la Cruz, P480; Anacleto de los Reyes, P180; Rafael
Mendoza, P300; Marcelino Fajardo, P340; Tomas Marcelo, P270; Inocencio Santiago, P375; Eugenio
Angeles, P375; Geronimo Rojas, P135; Segundo Ramos, P390, and Clemente Alivia, P219; and the
complaint concluded by asking the court to render judgment against the defendants, and, at the
termination of the trial, to issue a perpetual injunction enjoining them from closing the
said estero or creek, or in any manner obstructing the course of the water therein, and
furthermore, to sentence them to pay to the plaintiffs the losses and damages suffered by them,
and the costs of the suit.
On February 11, 1909, the defendants' counsel, answering the amended complaint,
made a general denial of each and all the allegations of the said complaint and alleged, as a special
defense, that the irrigation canal in question belonged to the defendants; that the mouth of the
said Paligui ng Buquid Puntang Piniping canal did not previously exist and was opened only at the
request of Marcelo Mantile; and that the plaintiffs' lands were provided with another irrigation
ditch independent of the one herein concerned. Said counsel therefore prayed that his clients be
absolved from the complaint, that the irrigation canal in question be declared to belong to the
defendants, and that the plaintiffs be sentenced to pay the costs.
On April 26, 1909, the case came up for hearing, testimony was adduced by both parties
and the court, after consideration of the evidence, rendered judgment on July 26, 1909, enjoining
the defendant Alejandro Cajucom from closing the Paligui ng Buquid Puntang Piniping estero or
creek, or in any manner obstructing the course of the water running therein. The preliminary
injunction issued against the defendant, his agents and representatives, by the Hon. Judge
Estanislao Yusay, was thus rendered perpetual, and the said defendant was sentenced to pay the
following sums, for losses and damages: To Maria Marcelo, P196.50; Crisanto Rubio, P139.50;
Alipio Espaol, P75; Marcelo Mantile, P800.25; Adriano Espaol, P75; Sebastian Bancod, P142.50;
Gregorio Corpus, P90.12; Claudio Angeles, P97.87; Doroteo Dacuno, P90.37; Fernando Polintan,
P80.87; Maximino Fajardo, P75.37; Alejandro Caisip, P75; Catalino Rubio, P84; Diego Santiago,
P131.25; Eugenio Ronquillo, P131.25; Raymundo Santiago, P540; Simon de la Cruz, P135; Anacleto
de los Reyes, P90; Rafael Mendoza, P195; Marcelino Fajardo, P180; Geronimo Rojas, P90; Segundo
Ramos, P210; Clemente Alivia, P109.50, and to Tomas Marcelo, Inocencio Santiago, and Eugenio
Angeles, tenants-on-shares of Maria Marcelo, the sum of P196.50. Counsel for the defendant,
Alejandro Cajucom, excepted to this judgment and prayed for a new trial on the grounds that the
said judgment was not sufficiently supported by the weight of the evidence and was contrary to
law. This motion was overruled by an order of September 2, and exception thereto was taken by
the appellant who duly filed the proper bill of exceptions, which was certified to and forwarded to
the clerk of this court.
Counsel for the appellants having been authorized, by an order of February 12, 1910, to
present the facts relative to the charge of contempt of court, as an incident of the main issue, and
upon his petition, the Supreme Court ruled that the bill of exceptions relative to the matter of the
contempt of court, together with the evidence therewith submitted, should be held to be an
integral part of the said main issue with the bill of exceptions thereto pertaining.
With regard to the main issue of this suit, the object of the plaintiffs is to obtain from
the court an order decreeing the former preliminary injunction to be perpetual. This claim, which is
opposed by the defendants, presupposes a right on the part of the plaintiffs to use and profit by
the water that runs through the Piniping estero or creek, to the benefit of their respective
agricultural lands.
The law applicable to the present contention is found in articles 407 to 425 of the Civil
Code, in the last of which it is provided:
"In all that is not expressly determined by the provisions of this
chapter, the special law of waters shall be observed."
This law is that of August 3, 1866, which was extended to the Philippine Islands by the
royal decree of the 8th of the same month and year and published with the Decreto de cumplase of
the Gobierno General of September 21, 1871, in the Official Gazette of the 24th of the same month
and year, on account of the subsequent law of June 13, 1879, in force in Spain, not having been
promulgated in these Islands. It contains, among others, the provisions found in articles 30 to 65
applicable to the case at bar.
The scant data and the insufficiency of the evidence offered by the record, preclude this
court's deciding, in accordance with the law, upon the pleadings and the proofs submitted by the
parties, the several issues raised in the course of this litigation, and for this reason we esteem it
proper that the case be reopened for the conduct of the following proceedings:
1. An ocular inspection shall be made by the justice or auxiliary justice of the peace,
attended by expert surveyors one of which latter to be appointed by each of the parties to the
suit for the purpose of determining whether the water from the estero named Sapang Cabasan
issues from a spring called Sibul; whether this spring and the said estero are upon the land owned
by the defendants, and, if not, who is the owner of the land on which they are located, and
whether he is a third person who is not a party to this suit.
2. Whether the creek, estero, or ditch, named Paligui Puntang Piniping, is connected or
united with the Sapang Cabasan estero, and whether the said Puntang Piniping creek or canal
crosses the lands of defendants or those of the plaintiffs.
3. To ascertain at what point or place either of the said Cabasan or Piniping canals was
closed; whether the closure was made on the land of defendants or on that of the plaintiffs, and
whether, on account of such closure, the course of the water was completely obstructed and
prevented from entering the lands of the plaintiffs.
4. Whether the Paligui Puntang Piniping creek, canal, or estero passes through
the sitio called Pinagtubuhan, or receives water from some other spring, creek, or canal, stating the
name of the same and whether it is distinct and separate from the Sapang Cabasan estero.
A rough sketch must be drawn that shall show the location of the lands of the
defendants and those of the plaintiffs; the points where the said twoesteros and the Sibul Spring
are situated; the exact point where the closure of the canal was effected; which of the lands are
situated in high places and which in low places; and in what direction the water flows after rising
from the Sibul Spring and entering into the Sapang Cabasan estero.
5. An investigation and report shall be made. as to whether the Puntang Piniping canal
or estero is of recent formation and was excavated but a short time ago, or whether, by the signs
observed on its banks, it appears that it was opened many years ago, stating since when it has been
opened.
6. Investigation and report shall be made as to whether the plaintiffs' lands receive
irrigation water from any spring, estero, or creek, other than those before mentioned, and, if so,
their names and the distances between them, and the latter shall be noted on the rough sketch
drawn by the surveyors.

From the result obtained from these proceedings, and the rough sketch drawn by the
experts, we shall easily be able to arrive at a conclusion as to whether the defendants had or had
not a right to close the Cabasan or Puntang Piniping creek, thus depriving the
plaintiffs' sementeras of the water flowing through it, or whether, on the other hand, the plaintiffs
had a right to the enjoyment and use of such water for the irrigation of their lands, and whether,
through the want of the same, they suffered losses and damages by fault of the said defendants.
For the foregoing reasons, justice demands, in our opinion, that we find that the
defendants Alejandro and Timoteo Cajucom did not commit any act whatever constituting
contempt of a judicial order. The order of August 20, 1908 is reversed. No special finding is made as
to the costs of the incidental proceedings.
The judgment appealed from, of July 26, 1909, is set aside, and the record of the case
shall be remanded, with a certified copy of this decision, to the court below in order that the judge
may proceed with a rehearing and conduct the proceedings hereinbefore specified, and in due
season render judgment wherein he shall take into account the evidence already contained in the
record, together with such new evidence as may be admitted, in accordance with this decision and
in harmony with the law. So ordered.

















EN BANC
[G.R. No. L-5656. March 24, 1954.]
JUAN G. FELICIANO, ET AL., petitioners-appellants, vs. MARIANO ALIPIO, ET
AL., respondents-appellees.
K. V. Faylona for appellants.
Solicitor General Juan R. Liwag and Solicitor Felix V. Makasiar for appellees.

SYLLABUS
ACTION FOR DECLARATORY RELIEF CONSIDERED AS ONE FOR PROHIBITION. Although
the petition filed against public Officers is for declaratory relief, yet if it prays also for the issuance
of a permanent injunction from carrying out the provisions of a Department Circular on grounds of
unconstitutionality, the same is equivalent to an action for prohibition and the court should not
dismiss the petition but should proceed with the case considering the action as one for prohibition.

D E C I S I O N
JUGO, J p:
On September 21, 1951, the Director of Public Schools issued Circular No. 20, series of
1951, which reads as follows:
"PUBLIC SCHOOL PUPILS AND STUDENTS MAY BE REQUIRED TO SALUTE THE
FLAG"
To Division Superintendents:
"1. Quoted in the inclosure to this Circular for the information and
guidance of school officials and teachers, is Opinion No. 370, series of 1951, of
the Honorable, the Secretary of Justice, 'regarding the power of the Director of
Public Schools to require all pupils and students in public schools to salute the
flag, on pain of being barred from admission to, or expelled from, such schools.'
"This Circular revokes Circular No. 33, series of 1948.
"(Sgd.) BENITO PANGILINAN
"Director of Public Schools"
The petitioners filed before the Court of First Instance of Tarlac a petition for
declaratory relief and mandatory injunction, praying that the above circular be declared null and
void, and that preliminary injunction be issued prohibiting the respondents Mariano Alipio and
other teachers of the Malacampa Elementary School, and the Director of Public Schools, from
carrying out the provisions of said circular, and that, after trial, the preliminary injunction be made
permanent.
The Provincial Fiscal of Tarlac filed a motion to dismiss the petition on the ground that
under section 2, Rule 66, it was not a case in which a declaratory judgment could be rendered. The
court dismissed the case. Hence, the petitioners have appealed to this Court.
It is not necessary to decide whether the petition for declaratory judgment may be
granted in this case, because in the petition presented in the court below, in addition to the
declaratory judgment, the petitioners prayed for the issuance of a permanent injunction, which is
equivalent to an action for prohibition against public officers, and as such we consider it, without
passing at this stage of the proceedings on the merits of said action.
In the present case, we cannot consider the question as to the constitutionality of the
circular as this will be decided after the regular hearing.
In view of the foregoing, the order of the court dismissing the petition is reversed, and
the case returned to the Court of First Instance of Tarlac for further proceedings as in an action for
prohibition, without costs. So ordered.

























FIRST DIVISION
[G.R. No. 168008. August 17, 2011.]
PETRONILO J. BARAYUGA, petitioner, vs. ADVENTIST UNIVERSITY OF THE
PHILIPPINES, THROUGH ITS BOARD OF TRUSTEES, REPRESENTED BY ITS
CHAIRMAN, NESTOR D. DAYSON, respondents.
DECISION
BERSAMIN, J p:
The injunctive relief protects only a right in esse. Where the plaintiff does not demonstrate that he has
an existing right to be protected by injunction, his suit for injunction must be dismissed for lack of a
cause of action.
The dispute centers on whether the removal of the petitioner as President of respondent Adventist
University of the Philippines (AUP) was valid, and whether his term in that office was five years, as he
insists, or only two years, as AUP insists.
We hereby review the decision promulgated on August 5, 2004, 1 by which the Court of Appeals (CA)
nullified and set aside the writ of preliminary injunction issued by the Regional Trial Court (RTC), Branch
21, in Imus, Cavite to prevent AUP from removing the petitioner.
Antecedents
AUP, a non-stock and non-profit domestic educational institution incorporated under Philippine laws on
March 3, 1932, was directly under the North Philippine Union Mission (NPUM) of the Southern Asia
Pacific Division of the Seventh Day Adventists. During the 3rd Quinquennial Session of the General
Conference of Seventh Day Adventists held from November 27, 2000 to December 1, 2000, the NPUM
Executive Committee elected the members of the Board of Trustees of AUP, including the Chairman and
the Secretary. Respondent Nestor D. Dayson was elected Chairman while the petitioner was chosen
Secretary.
On January 23, 2001, almost two months following the conclusion of the 3rd Quinquennial Session, the
Board of Trustees appointed the petitioner President of AUP. 2 During his tenure, or from November 11
to November 13, 2002, a group from the NPUM conducted an external performance audit. The audit
revealed the petitioner's autocratic management style, like making major decisions without the approval
or recommendation of the proper committees, including the Finance Committee; and that he had
himself done the canvassing and purchasing of materials and made withdrawals and reimbursements for
expenses without valid supporting receipts and without the approval of the Finance Committee. The
audit concluded that he had committed serious violations of fundamental rules and procedure in the
disbursement and use of funds. cTDaEH
The NPUM Executive Committee and the Board of Trustees decided to immediately request the services
of the General Conference Auditing Service (GCAS) to determine the veracity of the audit findings.
Accordingly, GCAS auditors worked in the campus from December 4 to December 20, 2002 to review the
petitioner's transactions during the period from April 2002 to October 2002. On December 20, 2002,
CGAS auditors reported the results of their review, and submitted their observations and
recommendations to the Board of Trustees.
Upon receipt of the CGAS report that confirmed the initial findings of the auditors on January 8, 2003,
the NPUM informed the petitioner of the findings and required him to explain.
On January 15, 2003, Chairman Dayson and the NPUM Treasurer likewise informed the petitioner inside
the NPUM office on the findings of the auditors in the presence of the AUP Vice-President for Financial
Affairs, and reminded him of the possible consequences should he fail to satisfactorily explain the
irregularities cited in the report. He replied that he had already prepared his written explanation.
The Board of Trustees set a special meeting at 2 p.m. on January 22, 2003. Being the Secretary, the
petitioner himself prepared the agenda and included an item on his case. In that meeting, he provided
copies of the auditors' report and his answers to the members of the Board of Trustees. After hearing his
explanations and oral answers to the questions raised on issues arising from the report, the members of
the Board of Trustees requested him to leave to allow them to analyze and evaluate the report and his
answers. Despite a long and careful deliberation, however, the members of the Board of Trustees
decided to adjourn that night and to set another meeting in the following week considering that the
meeting had not been specifically called for the purpose of deciding his case. The adjournment would
also allow the Board of Trustees more time to ponder on the commensurate disciplinary measure to be
meted on him.
On January 23, 2003, Chairman Dayson notified the petitioner in writing that the Board of Trustees
would hold in abeyance its deliberation on his answer to the auditors' report and would meet again at
10:00 a.m. on January 27, 2003. Chairman Dayson indicated that some sectors in the campus had not
been properly represented in the January 22, 2003 special meeting, and requested the petitioner as
Secretary to ensure that all sectors are duly represented in the next meeting of the Board of Trustees. 3
In the January 27, 2003 special meeting, the petitioner sent a letter to the Board of Trustees. The
members, by secret ballot, voted to remove him as President because of his serious violations of
fundamental rules and procedures in the disbursement and use of funds as revealed by the special audit;
to appoint an interim committee consisting of three members to assume the powers and functions of
the President; and to recommend him to the NPUM for consideration as Associate Director for
Secondary Education. 4
On January 28, 2003, the petitioner was handed inside the NPUM office a letter, together with a copy of
the minutes of the special meeting held the previous day. In turn, he handed to Chairman Dayson a letter
requesting two weeks within which to seek a reconsideration, stating that he needed time to obtain
supporting documents because he was then attending to his dying mother. 5
In the evening of January 28, 2003, the Board of Trustees, most of whose members had not yet left
Cavite, reconvened to consider and decide the petitioner's request for reconsideration. During the
meeting, he made an emotional appeal to allow him to continue as President, promising to immediately
vacate his office should he again commit any of the irregularities cited in the auditors' report. He added
that should the Board of Trustees not favor his appeal, he would settle for a retirement package for him
and his wife and would leave the church. AaEcDS
The Board of Trustees denied the petitioner's request for reconsideration because his reasons were not
meritorious. Board Member Elizabeth Role served the notice of the denial on him the next day, but he
refused to receive the notice, simply saying Alam ko na yan. 6
The petitioner later obtained a copy of the inter-school memorandum dated January 31, 2003 informing
AUP students, staff, and faculty members about his relief as President and the appointment of an interim
committee to assume the powers and duties of the President.
On February 4, 2003, the petitioner brought his suit for injunction and damages in the RTC, with prayer
for the issuance of a temporary restraining order (TRO), impleading AUP and its Board of Trustees,
represented by Chairman Dayson, and the interim committee. His complaint alleged that the Board of
Trustees had relieved him as President without valid grounds despite his five-year term; that the Board
of Trustees had thereby acted in bad faith; and that his being denied ample and reasonable time to
present his evidence deprived him of his right to due process. 7
The suit being intra-corporate and summary in nature, the application for TRO was heard by means of
affidavits. In the hearing of February 7, 2003, the parties agreed not to harass each other. The RTC used
the mutual agreement as its basis to issue a status quo order on February 11, 2003. 8
In their answer with counterclaim, the respondents denied the allegations of the petitioner, and averred
that he had been validly removed for cause; and that he had been granted ample opportunity to be
heard in his defense. 9
Order of the RTC
On March 21, 2003, after summary hearing, the RTC issued the TRO enjoining the respondents and
persons acting for and in their behalf from implementing the resolution removing him as President
issued by the Board of Trustees during the January 27, 2003 special meeting, and enjoining the interim
committee from performing the functions of President of AUP. The RTC did not require a bond. 10
After further hearing, the RTC issued on April 25, 2003 its controversial order, 11 granting the
petitioner's application for a writ of preliminary injunction. It thereby resolved three issues,
namely: (a) whether the special board meetings were valid; (b) whether the conflict-of-interest provision
in the By-Laws and Working Policy was violated; and (c) whether the petitioner was denied due process.
It found for the petitioner upon all the issues. On the first issue, it held that there was neither a written
request made by any two members of the Board of Trustees nor proper notices sent to the members as
required by AUP's By-Laws, which omissions, being patent defects, tainted the special board meetings
with nullity. Anent the second issue, it ruled that the purchase of coco lumber from his balae (i.e.,
mother-in-law of his son) was not covered by the conflict-of-interest provision, for AUP's Model
Statement of Acceptance form mentioned only the members of the immediate family and did not extend
to the relationship between him and his balae. On the third issue, it concluded that he was deprived of
due process when the Board of Trustees refused to grant his motion for reconsideration and his request
for additional time to produce his evidence, and instead immediately implemented its decision by
relieving him from his position without according him the treatment befitting a university President.
Proceedings in the CA
With the Interim Rules for Intra-Corporate Controversies prohibiting a motion for reconsideration, the
respondents forthwith filed a petition for certiorari in the CA, 12 contending that the petitioner's
complaint did not meet the requirement that an injunctive writ should be anchored on a legal right; and
that he had been merely appointed, not elected, as President for a term of office of only two years, not
five years, based on AUP's amended By-Laws. AHcaDC
In the meanwhile, on September 17, 2003, the petitioner filed a supplemental petition in the
CA, 13 alleging that after the commencement of his action, he filed in the RTC an urgent motion for the
issuance of a second TRO to enjoin the holding of an AUP membership meeting and the election of a new
Board of Trustees, capitalizing on the admission in the respondents' answer that he had been elected in
2001 to a five-year term of office. He argued that the admission estopped the respondents from insisting
to the contrary.
The respondents filed in the CA a verified urgent motion for a TRO and to set a hearing on the
application for preliminary injunction to enjoin the RTC from implementing the assailed order granting a
writ of preliminary injunction and from further proceeding in the case. The petitioner opposed the
motion for TRO, but did not object to the scheduling of preliminary injunctive hearings.
On February 24, 2004, the CA issued a TRO to enjoin the RTC from proceeding for a period of 60 days,
and declared that the prayer for injunctive relief would be resolved along with the merits of the main
case.
The petitioner sought a clarification of the TRO issued by the CA, considering that his cause of action in
his petitions to cite the respondents in indirect contempt dated March 5, 2004 and March 16, 2004 filed
in the RTC involved the election of a certain Robin Saban as the new President of AUP in blatant and
malicious violation of the writ of preliminary injunction issued by the RTC. In clarifying the TRO, the CA
explained that it did not go beyond the reliefs prayed for in the respondents' motion for TRO and
preliminary injunctive hearings.
On August 5, 2004, the CA rendered its decision nullifying the RTC's writ of preliminary injunction. It
rejected the petitioner's argument that Article IV, Section 3 of AUP's Constitution and By-Laws and
Working Policy of the Conference provided a five-year term for him, because the provision was
inexistent. It ruled that the petitioner's term of office had expired on January 22, 2003, or two years from
his appointment, based on AUP's amended By-Laws; that, consequently, he had been a mere de
facto officer appointed by the members of the Board of Trustees; and that he held no legal right
warranting the issuance of the writ of preliminary injunction.
The CA declared that the rule on judicial admissions admitted of exceptions, as held in National Power
Corporation v. Court of Appeals, 14 where the Court held that admissions were not evidence that
prevailed over documentary proof; that the petitioner's being able to answer the results of the special
audit point-by-point belied his allegation of denial of due process; that AUP was the party that stood to
be injured by the issuance of the injunctive writ in the form of a "demoralized administration, studentry,
faculty and staff, sullied reputation, and dishonest leadership;" and that the assailed RTC order sowed
confusion and chaos because the RTC thereby chose to subordinate the interest of the entire AUP
community to that of the petitioner who had been deemed not to have satisfied the highest ideals
required of his office.
Issues
Undeterred, the petitioner has appealed, contending that:
I.
THE COURT OF APPPEALS HAS DECIDED CONTRARY TO LAW AND
JURISPRUDENCE WHEN IT RULED THAT THE EXTRAORDINARY WRIT
OF CERTIORARI APPLIED IN THE CASE AT BAR.
II.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH THE ESTABLISHED LAW AND JURISPRUDENCE THAT
"ADMISSIONS, VERBAL OR WRITTEN, MADE BY A PARTY IN THE COURSE OF THE
PROCEEDINGS IN THE SAME CASE, DOES NOT REQUIRE PROOF," BY REQUIRING
PETITIONER BARAYUGA TO PRESENT EVIDENCE THAT HIS TERM AS PRESIDENT
OF AUP IS FOR FIVE (5) YEARS. AIDSTE
III.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT RULED THAT
PETITIONER BARAYUGA HAS ONLY A TERM OF TWO (2) YEARS INSTEAD OF FIVE
(5) YEARS AS CLEARLY ADMITTED BY PRIVATE RESPONDENT AUP IN ITS
ANSWER.
IV.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW AND JURISPRUDENCE BY SOLELY RELYING ON THE CASE
OF NATIONAL POWER CORPORATION v. COURT OF APPEALS, WHICH INVOLVE
FACTS DIFFERENT FROM THE PRESENT CASE.
V.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT UNJUSTIFIABLY
ALLOWED THE WAIVER OF NOTICE FOR THE SPECIAL MEETING OF THE BOARD
OF TRUSTEES.
VI.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT
IN ACCORD WITH LAW AND ESTABLISHED FACTS WHEN IT ERRONEOUSLY
CONCLUDED THAT PETITIONER BARAYUGA WAS MERELY OCCUPYING THE
POSITION OF AUP PRESIDENT IN A HOLD-OVER CAPACITY. TDSICH
The petitioner argues that the assailed RTC order, being supported by substantial evidence, accorded
with law and jurisprudence; that his tenure as President under the Constitution, By-Laws and the
Working Policy of the Conference was for five years, contrary to the CA's findings that he held the
position in a hold-over capacity; that instead, the CA should have applied the rule on judicial admission,
because the holding in National Power Corporation v. Court of Appeals, cited by the CA, did not apply,
due to AUP not having presented competent evidence to prove that he had not been elected by the
Board of Trustees as President of AUP; and that his removal during the special board meeting that was
invalidly held for lack of notice denied him due process.
AUP counters that:
I
PETITIONER IS NOT AN ELECTED TRUSTEE OF THE AUP BOARD, NOR WAS (HE)
ELECTED AS PRESIDENT, AND AS SUCH, HE CAN CLAIM NO RIGHT TO THE AUP
PRESIDENCY, BEING TWICE DISQUALIFIED BY LAW, WHICH RENDERS MOOT AND
ACAMEDIC ALL OF THE ARGUMENTS IN THIS PETITION.
II
EVEN IF WE FALSELY ASSUME EX GRATIA THAT PETITIONER IS AN ELECTED
TRUSTEE AND ELECTED PRESIDENT, THE TWO (2) YEAR TERM PROVIDED IN
AUP'S BY-LAWS REQUIRED BY THE CORPORATION CODE AND APPROVED BY
THE SEC IS WHAT GOVERNS THE INTRA-CORPORATE CONTROVERSY, THE
AUP'S ADMISSION IN ITS ANSWER THAT HE HAS A FIVE (5) YEAR TERM BASED
ON HIS INVOKED SAMPLE CONSTITUTION, BY-LAWS AND POLICY OF THE
SEVENTH DAY ADVENTIST NOTWITHSTANDING.
III
PURSUANT TO THE RULES AND SETTLED JURISPRUDENCE, THE ADMISSION IN
THE ANSWER IS NOT EVEN PREJUDICIAL AT ALL.
IV
EVEN IF WE FALSELY ASSUME, JUST FOR THE SAKE OF ARGUMENT, THAT THE
PETITIONER HAD A FIVE (5) YEAR TERM AS UNIVERSITY PRESIDENT, HE WAS
NONETHELESS VALIDLY TERMINATED FOR LOSS OF CONFIDENCE, GIVEN THE
NUMEROUS ADMITTED ANOMALIES HE COMMITTED.
V
PETITIONER CANNOT COMPLAIN THAT NOTICES OF THE BOARD MEETING WERE
NOT SENT TO ALL "THE TWENTY FIVE (25) TRUSTEES OF THE AUP BOARD",
SINCE: [1] AS THE AUP SECRETARY, IT WAS HE WHO HAD THE DUTY TO SEND
THE NOTICES; [2] WORSE, HE ATTENDED AND EXHAUSTIVELY DEFENDED HIS
WRITTEN ANSWER IN THE AUP BOARD OF TRUSTEES MEETING, THUS, WAIVING
ANY "NOTICE OBJECTION"; [3] WORST OF ALL, HIS AFTERTHOUGHT OBJECTION
IS DECEPTIVELY FALSE IN FACT.
The decisive question is whether the CA correctly ruled that the petitioner had no legal right to the
position of President of AUP that could be protected by the injunctive writ issued by the RTC.
Ruling
We deny the petition for review for lack of merit. cAHITS
1.
Petition is already moot
The injunctive writ issued by the RTC was meant to protect the petitioner's right to stay in office as
President. Given that the lifetime of the writ of preliminary injunction was co-extensive with the duration
of the act sought to be prohibited, 15 this injunctive relief already became moot in the face of the
admission by the petitioner himself, through his affidavit, 16 that his term of office premised on his
alleged five-year tenure as President had lasted only until December 2005. In short, the injunctive writ
granted by the RTC had expired upon the end of the term of office (as posited by him).
The mootness of the petition warranted its denial. When the resolution of the issue submitted in a case
has become moot and academic, and the prayer of the complaint or petition, even if granted, has
become impossible of enforcement for there is nothing more to enjoin the case should be
dismissed.17 No useful purpose would then be served by passing on the merits of the petition, because
any ruling could hardly be of any practical or useful purpose in the premises. It is a settled rule that a
court will not determine a moot question or an abstract proposition, nor express an opinion in a case in
which no practical relief can be granted. 18 Indeed, moot and academic cases cease to present any
justiciable controversies by virtue of supervening events, 19 and the courts of law will not determine
moot questions, 20 for the courts should not engage in academic declarations and determine a moot
question. 21
2.
RTC acted in patently grave abuse of discretion
in issuing the TRO and writ of injunction
Nonetheless, the aspect of the case concerning the petitioner's claim for damages has still to be decided.
It is for this reason that we have to resolve whether or not the petitioner had a right to the TRO and the
injunctive writ issued by the RTC.
A valid writ of preliminary injunction rests on the weight of evidence submitted by the plaintiff
establishing: (a) a present and unmistakable right to be protected; (b) the acts against which the
injunction is directed violate such right; and (c) a special and paramount necessity for the writ to prevent
serious damages. 22 In the absence of a clear legal right, the issuance of the injunctive writ constitutes
grave abuse of discretion 23 and will result to nullification thereof. Where the complainant's right is
doubtful or disputed, injunction is not proper. The possibility of irreparable damage sans proof of an
actual existing right is not a ground for a preliminary injunction. 24
It is clear to us, based on the foregoing principles guiding the issuance of the TRO and the writ of
injunction, that the issuance of the assailed order constituted patently grave abuse of discretion on the
part of the RTC, and that the CA rightly set aside the order of the RTC.
To begin with, the petitioner rested his claim for injunction mainly upon his representation that he was
entitled to serve for five years as President of AUP under the Constitution, By-Laws and Working Policy
of the General Conference of the Seventh Day Adventists (otherwise called the Bluebook). All that he
presented in that regard, however, were mere photocopies of pages 225-226 of the Bluebook, which
read:
Article IV-Board of Directors
Sec. 1.This school operated by the _____________ Union Conference/Mission
of Seventh-Day Adventists shall be under the direct control of a board of
directors, elected by the constituency in its quinquennial sessions. The board of
directors shall consist of 15 to 21 members, depending on the size of the
institution. Ex officio members shall be the union president as chairperson, the
head of the school as secretary, the union secretary, the union treasurer, the
union director of education, the presidents of the conferences/missions within
the union. . . . . DICcTa
Sec. 2.The term of office of members of the board of directors shall be five
years to coincide with the _________________ Union Conference/Mission
quinquennial period.
Sec. 3.The duties of the board of directors shall be to elect quinquenially the
president, . . . .
Yet, the document had no evidentiary value. It had not been officially adopted for submission to and
approval of the Securities and Exchange Commission. It was nothing but an unfilled model form. As such,
it was, at best, only a private document that could not be admitted as evidence in judicial proceedings
until it was first properly authenticated in court.
Section 20, Rule 132 of the Rules of Court requires authentication as a condition for the admissibility of a
private document, to wit:
Section 20.Proof of private document. Before any private document offered
as authentic is received in evidence, its due execution and authenticity must be
proved either:
(a)By anyone who saw the document executed or written; or
(b)By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed
to be. (21 a)
For the RTC to base its issuance of the writ of preliminary injunction on the mere photocopies of the
document, especially that such document was designed to play a crucial part in the resolution of the
decisive issue on the length of the term of office of the petitioner, was gross error.
Secondly, even assuming that the petitioner had properly authenticated the photocopies of
the Bluebook, the provisions contained therein did not vest the right to an office in him. An unfilled
model form creates or establishes no rights in favor of anyone.
Thirdly, the petitioner's assertion of a five-year duration for his term of office lacked legal basis.
Section 108 of the Corporation Code determines the membership and number of trustees in an
educational corporation, viz.:
Section 108.Board of trustees. Trustees of educational institutions
organized as educational corporations shall not be less than five (5) nor more
than fifteen (15): Provided, however, That the number of trustees shall be in
multiples of five (5).
Unless otherwise provided in the articles of incorporation or the by-laws, the
board of trustees of incorporated schools, colleges, or other institutions of
learning shall, as soon as organized, so classify themselves that the term of
office of one-fifth (1/5) of their number shall expire every year.Trustees
thereafter elected to fill vacancies, occurring before the expiration of a
particular term, shall hold office only for the unexpired period. Trustees
elected thereafter to fill vacancies caused by expiration of term shall hold
office for five (5) years. A majority of the trustees shall constitute a quorum for
the transaction of business. The powers and authority of trustees shall be
defined in the by-laws.
For institutions organized as stock corporations, the number and term of
directors shall be governed by the provisions on stock corporations.
The second paragraph of the provision, although setting the term of the members of the Board of
Trustees at five years, contains a proviso expressly subjecting the duration to what is otherwise
provided in the articles of incorporation or by-laws of the educational corporation. That contrary
provision controls on the term of office. 25
In AUP's case, its amended By-Laws provided the term of the members of the Board of Trustees, and the
period within which to elect the officers, thusly:
Article I
Board of Trustees
Section 1.At the first meeting of the members of the corporation, and
thereafter every two years, a Board of Trustees shall be elected. It shall be
composed of fifteen members in good and regular standing in the Seventh-day
Adventist denomination, each of whom shall hold his office for a term of two
years, or until his successor has been elected and qualified. If a trustee ceases
at any time to be a member in good and regular standing in the Seventh-day
Adventist denomination, he shall thereby cease to be a trustee.
xxx xxx xxx
Article IV
Officers
Section 1.Election of officers. At their organization meeting, the members
of the Board of Trustees shall elect from among themselvesa Chairman, a Vice-
Chairman, a President, a Secretary, a Business Manager, and a Treasurer. The
same persons may hold and perform the duties of more than one office,
provided they are not incompatible with each other. 26 HICSaD
In light of foregoing, the members of the Board of Trustees were to serve a term of office of only two
years; and the officers, who included the President, were to be elected from among the members of the
Board of Trustees during their organizational meeting, which was held during the election of the Board
of Trustees every two years. Naturally, the officers, including the President, were to exercise the powers
vested by Section 2 of the amended By-Laws for a term of only two years, not five years.
Ineluctably, the petitioner, having assumed as President of AUP on January 23, 2001, could serve for only
two years, or until January 22, 2003. By the time of his removal for cause as President on January 27,
2003, he was already occupying the office in a hold-over capacity, and could be removed at any time,
without cause, upon the election or appointment of his successor. His insistence on holding on to the
office was untenable, therefore, and with more reason when one considers that his removal was due to
the loss of confidence on the part of the Board of Trustees.
4.
Petitioner was not denied due process
The petitioner complains that he was denied due process because he was deprived of the right to be
heard and to seek reconsideration; and that the proceedings of the Board of Trustees were illegal due to
its members not being properly notified of the meeting.
Still, the petitioner fails to convince us.
The requirements of due process in an administrative context are satisfied when the parties are afforded
fair and reasonable opportunity to explain their respective sides of the controversy, 27 for the essence of
due process is an opportunity to be heard. 28 Here, the petitioner was accorded the full opportunity to
be heard, as borne by the fact that he was granted the opportunity to refute the adverse findings
contained in the GCAS audit report and that the Board of Trustees first heard his side during the board
meetings before his removal. After having voluntarily offered his refutations in the proceedings before
the Board of Trustees, he should not now be permitted to denounce the proceedings and to plead the
denial of due process after the decision of the Board of Trustees was adverse to him.
Nor can his urging that the proceedings were illegal for lack of prior notification be plausible in light of
the fact that he willingly participated therein without raising the objection of lack of notification.
Thereby, he effectively waived his right to object to the validity of the proceedings based on lack of due
notice.29
5.
Conclusion
The removal of the petitioner as President of AUP, being made in accordance with the AUP Amended By-
Laws, was valid. With that, our going into the other issues becomes unnecessary. We conclude that the
order of the RTC granting his application for the writ of preliminary injunction was tainted with
manifestly grave abuse of discretion; that the CA correctly nullified and set aside the order; and that his
claim for damages, being bereft of factual and legal warrant, should be dismissed.
WHEREFORE, we DENY the petition for review on certiorari for lack of merit, and hereby DISMISS SEC
Case No. 028-03 entitled Dr. Petronilo Barayuga v. Nelson D. Dayson, et al.
The petitioner shall pay the cost of suit.
SO ORDERED.






SECOND DIVISION
[G.R. No. 183367. March 14, 2012.]
AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS GARCIA, and LYDIA
MARCIANO, petitioners, vs. MUNICIPALITY OF PADRE GARCIA BATANGAS
PROVINCE, respondent.

DECISION
SERENO, J p:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the Court
of Appeals (CA) Resolutions in CA-G.R. SP No. 102540 dated 26 March 2008 1 and 16 June 2008, which
denied petitioners' Motion for the issuance of a status quo order and Motion for issuance of a temporary
restraining order (TRO) and/or writ of preliminary injunction.
Statement of the Facts and the Case
In 1993, fire razed to the ground the old public market of respondent Municipality of Padre Garcia,
Batangas. The municipal government, through its then Municipal Mayor Eugenio Gutierrez, invited
petitioner Australian Professional Realty, Inc. (APRI) to rebuild the public market and construct a
shopping center.
On 19 January 1995, a Memorandum of Agreement (MOA) 2 was executed between petitioner APRI and
respondent, represented by Mayor Gutierrez and the members of the Sangguniang Bayan. Under the
MOA, APRI undertook to construct a shopping complex in the 5,000-square-meter area. In return, APRI
acquired the exclusive right to operate, manage, and lease stall spaces for a period of 25 years.
In May 1995, Victor Reyes was elected as municipal mayor of respondent. On 6 February 2003,
respondent, through Mayor Reyes, initiated a Complaint for Declaration of Nullity of Memorandum of
Agreement with Damages before the Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial
Region, Branch 87. The Complaint was docketed as Civil Case No. 03-004.
On 12 February 2003, the RTC issued summons to petitioners, requiring them to file their Answer to the
Complaint. However, the summons was returned unserved, as petitioners were no longer holding office
in the given address.
On 2 April 2003, a Motion for Leave of Court to Effect Service by Publication was filed by respondent
before the RTC and subsequently granted by the trial court.
On 24 November 2003, the RTC issued an Order declaring petitioners in default and allowing respondent
to present evidence ex parte. SETaHC
On 6 October 2004, a Decision was rendered by the RTC, which, after narrating the testimonial evidence
for respondent, stated:
After the completion of the testimony of Victor M. Reyes, counsel for the
petitioner manifested that he will file the formal offer of evidence in writing.
On July 19, 2004, counsel for the petitioner filed before this Court his Formal
Offer of Documentary Exhibits consisting of Exhibits "A" to "H", inclusive of
submarkings.
On August 18, 2004 an order was issued by the Court admitting all the exhibits
formally offered by the petitioner thru counsel and this case was ordered
submitted for resolution of the Court.
There is no opposition in the instant petition.
WHEREFORE, in view thereof, and finding the petition to be sufficient in form
and substance, it being supported by sufficient evidence, judgement (sic) is
hereby rendered in favor of the plaintiff as against the respondents as follows:
(a)The Memorandum of Agreement is hereby declared null and void for being
contrary to law and public policy, particularly R.A. 6957 and R.A.
7718;
(b)The respondents are hereby ordered to pay the amount of FIVE MILLION
PESOS (P5,000,000.00) in favor of the plaintiff for damages caused to
the latter;
(c)The structures found within the unfinished PADRE GARCIA SHOPPING
CENTER are hereby declared forfeited in favor of the Municipality of
Padre Garcia.
SO ORDERED. 3
There having been no timely appeal made, respondent filed a Motion for Execution of Judgment, which
was granted by the RTC. A Writ of Execution was thus issued on 15 July 2005.
After learning of the adverse judgment, petitioners filed a Petition for Relief from Judgment dated 18
July 2005. This Petition was denied by the RTC in an Order dated 15 June 2006. In another Order dated
14 February 2008, the trial court denied the Motion for Reconsideration.
Petitioners later filed before the CA a Petition for Certiorari and Prohibition dated 28 February 2008,
docketed as CA-G.R. SP No. 102540. On 7 March 2008, petitioners filed before the CA a Motion for the
Issuance of Status Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction. 4 The motion prayed for an order to restrain the RTC from "further proceeding
and issuing any further Order, Resolution, Writ of Execution, and any other court processes" 5 in the case
before it.
On 26 March 2008, the CA issued a Resolution denying the said motion, stating thus:
After a careful evaluation of petitioners' Motion for Issuance of Status
Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ
of Preliminary Injunction, We find that the matter is not of extreme urgency and
that there is no clear and irreparable injury that would be suffered by the
petitioners if the prayer for the issuance of a Status Quo Order, Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction is not granted.
In Ong Ching Kian Chuan v. Court of Appeals, it was held that, to be entitled to
injunctive relief, the petitioner must show, inter alia, the existence of a clear
and unmistakable right and an urgent and paramount necessity for the writ to
prevent serious damage.
WHEREFORE, petitioners' prayer for the issuance of a Status Quo Order,
Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby
DENIED for lack of merit. 6 caHIAS
On 16 June 2008, the CA denied the Motion for Reconsideration of the 26 March 2008 Resolution,
stating that the mere preservation of the status quo is not sufficient to justify the issuance of an
injunction.
On 8 July 2008, petitioners filed the instant Petition for Review on Certiorari dated 6 July 2008.
Petitioners claim that the amount of APRI's investment in the Padre Garcia Shopping Center is estimated
at P30,000,000, the entirety of which the RTC declared forfeited to respondent without just
compensation. At the time of the filing of the Petition, APRI had 47 existing tenants and lessees and was
deriving an average monthly rental income of P100,000. The Decision of the RTC was allegedly arrived at
without first obtaining jurisdiction over the persons of petitioners. The execution of the allegedly void
judgment of the RTC during the pendency of the Petition before the CA would probably work injustice to
the petitioners, as the execution would result in an arbitrary declaration of nullity of the MOA without
due process of law.
Petitioners further allege that respondent did not exercise reasonable diligence in inquiring into the
former's address in the case before the RTC. The Process Server Return, with respect to the unserved
summons, did not indicate the impossibility of a service of summons within a reasonable time, the
efforts exerted to locate APRI, or any inquiry as to the whereabouts of the said petitioner.
On 6 August 2008, this Court required respondent to file its Comment. On 13 February 2009, the
Comment was filed, alleging among others that despite the RTC's issuance of a Writ of Execution,
respondent did not move to implement the said writ out of administrative comity and fair play. Even if
the writ were implemented, petitioners failed to state in categorical terms the serious injury they would
sustain.
Respondent further argues that it is now in possession of the contracts that the lessees of the Padre
Garcia Shopping Center executed with APRI. Thus, there are "actions [that militate] against the
preservation of the present state of things," 7 as sought to be achieved with the issuance of a status
quo order.
On 2 June 2009, petitioners filed their Reply to respondent's Comment.
On 3 March 2010, this Court issued a Resolution requiring the parties to inform the Court of the present
status of CA-G.R. SP No. 102540. On 15 April 2010, respondent manifested that after the parties filed
their respective Memoranda, the CA considered the case submitted for decision. On 12 May 2010,
petitioners filed their Compliance, stating that the appellate court, per its Resolution dated 7 August
2008, held in abeyance the resolution of CA-G.R. SP No. 102540, pending resolution of the instant
Petition.
The Court's Ruling
The Petition is denied for failure to show any grave abuse of discretion on the part of the CA.
Procedural Issue: Propriety of
a Petition for Review under
Rule 45
Before proceeding to the substantive issues raised, we note that petitioners resorted to an improper
remedy before this Court. They filed a Petition for Review on Certiorari under Rule 45 of the Rules of
Court to question the denial of their Motion for the issuance of an injunctive relief. aATEDS
Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be taken from an interlocutory order.
An interlocutory order is one that does not dispose of the case completely but leaves something to be
decided upon. 8 An order granting or denying an application for preliminary injunction is interlocutory in
nature and, hence, not appealable. 9 Instead, the proper remedy is to file a Petition for Certiorari and/or
Prohibition under Rule 65. 10
While the Court may dismiss a petition outright for being an improper remedy, it may in certain
instances proceed to review the substance of the petition.11 Thus, this Court will treat this Petition as if
it were filed under Rule 65.
Substantive Issue: Grave
abuse of discretion on the part
of the CA
The issue that must be resolved by this Court is whether the CA committed grave abuse of discretion in
denying petitioners' Motion for the Issuance ofStatus Quo Order and Motion for Issuance of Temporary
Restraining Order and/or Writ of Preliminary Injunction (Motion for Injunction).
A writ of preliminary injunction and a TRO are injunctive reliefs and preservative remedies for the
protection of substantive rights and interests. 12 An application for the issuance of a writ of preliminary
injunction and/or TRO may be granted upon the filing of a verified application showing facts entitling the
applicant to the relief demanded.
Essential to granting the injunctive relief is the existence of an urgent necessity for the writ in order to
prevent serious damage. A TRO issues only if the matter is of such extreme urgency that grave injustice
and irreparable injury would arise unless it is issued immediately. 13 Under Section 5, Rule 58 of the Rule
of Court, 14 a TRO may be issued only if it appears from the facts shown by affidavits or by the verified
application that great or irreparable injury would be inflicted on the applicant before the writ of
preliminary injunction could be heard.
Thus, to be entitled to the injunctive writ, petitioners must show that (1) there exists a clear and
unmistakable right to be protected; (2) this right is directly threatened by an act sought to be enjoined;
(3) the invasion of the right is material and substantial; and (4) there is an urgent and paramount
necessity for the writ to prevent serious and irreparable damage. 15
The grant or denial of a writ of preliminary injunction in a pending case rests on the sound discretion of
the court taking cognizance of the case, since the assessment and evaluation of evidence towards that
end involves findings of fact left to the said court for its conclusive determination. 16 Hence, the exercise
of judicial discretion by a court in injunctive matters must not be interfered with, except when there is
grave abuse of discretion. 17
Grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and
whimsical exercise of judgment equivalent to lack of jurisdiction; or the exercise of power in an arbitrary
or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law. 18 The burden is thus on petitioner to show in his application that there is meritorious ground for
the issuance of a TRO in his favor. 19
In this case, no grave abuse of discretion can be imputed to the CA. It did not exercise judgment in a
capricious and whimsical manner or exercise power in an arbitrary or despotic manner.
No clear legal right
A clear legal right means one clearly founded in or granted by law or is enforceable as a matter of
law. 20 In the absence of a clear legal right, the issuance of the writ constitutes grave abuse of
discretion. 21 The possibility of irreparable damage without proof of an actual existing right is not a
ground for injunction. 22 CHTAIc
A perusal of the Motion for Injunction and its accompanying Affidavit filed before the CA shows that
petitioners rely on their alleged right to the full and faithful execution of the MOA. However, while the
enforcement of the Writ of Execution, which would nullify the implementation of the MOA, is manifestly
prejudicial to petitioners' interests, they have failed to establish in their Petition that they possess a clear
legal right that merits the issuance of a writ of preliminary injunction. Their rights under the MOA have
already been declared inferior or inexistent in relation to respondent in the RTC case, under a judgment
that has become final and executory. 23 At the very least, their rights under the MOA are precisely
disputed by respondent. Hence, there can be no "clear and unmistakable" right in favor of petitioners to
warrant the issuance of a writ of injunction. Where the complainant's right or title is doubtful or
disputed, injunction is not proper. 24
The general rule is that after a judgment has gained finality, it becomes the ministerial duty of the court
to order its execution. No court should interfere, by injunction or otherwise, to restrain such
execution. 25 The rule, however, admits of exceptions, such as the following: (1) when facts and
circumstances later transpire that would render execution inequitable or unjust; or (2) when there is a
change in the situation of the parties that may warrant an injunctive relief. 26 In this case, after the
finality of the RTC Decision, there were no supervening events or changes in the situation of the parties
that would entail the injunction of the Writ of Execution.
No irreparable injury
Damages are irreparable where there is no standard by which their amount can be measured with
reasonable accuracy. 27 In this case, petitioners have alleged that the loss of the public market entails
costs of about P30 million in investments, P100,000 monthly revenue in rentals, and amounts as yet
unquantified but not unquantifiable in terms of the alleged loss of jobs of APRI's employees and
potential suits that may be filed by the leaseholders of the public market for breach of contract. Clearly,
the injuries alleged by petitioners are capable of pecuniary estimation. Any loss petitioners may suffer is
easily subject to mathematical computation and, if proven, is fully compensable by damages. Thus, a
preliminary injunction is not warranted. 28 With respect to the allegations of loss of employment and
potential suits, these are speculative at best, with no proof adduced to substantiate them.
The foregoing considered, the CA did not commit grave abuse of discretion in denying the Motion for
Injunction. In any case, petitioners may still seek recourse in their pending Petition before the Court of
Appeals.
WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions dated 26 March 2008 and 16 June
2008 in CA-G.R. SP No. 102540 areAFFIRMED. The Court of Appeals is directed to proceed with dispatch
to dispose of the case before it. SaICcT
SO ORDERED.




















FIRST DIVISION
[G.R. No. 164548. September 27, 2006.]
PHILIPPINE NATIONAL BANK, petitioner, vs. RJ VENTURES REALTY &
DEVELOPMENT CORPORATION and RAJAH BROADCASTING NETWORK,
INC., respondents.
D E C I S I O N
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review filed under Rule 45 of the Rules of Court assailing the 31 March
2004 Decision 1 and the 8 July 2004 Resolution2 of the Court of Appeals in CA-G.R. SP No. 56119. The
challenged Decision disposed, thus:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED, the
assailed Orders dated July 28, 1999 and October 26, 1999, respectively,
[are] REVERSED AND SET ASIDE, and the preliminary injunction earlier issued is
reinstated. No cost. 3
The assailed Resolution denied petitioner Philippine National Bank's (PNB's) Motion for Reconsideration
dated 3 May 2004.
The Antecedents
As culled from the records, the facts show that on 26 February 1999, respondents RJ Ventures Realty &
Development Corporation (RJVRD) and Rajah Broadcasting Network, Inc. (RBN) filed a Complaint for
Injunction with Prayer for Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction 4 against petitioner PNB and Juan S. Baun, Jr. 5 with the Regional Trial Court (RTC), Branch 66
of Makati City, and docketed as Civil Case No. 99-452.
In its Complaint, respondents contended that on 13 June 1996, First Women's Credit Corporation (FWCC)
received an invitation to bid from PNB anent the sale of an 8,000 square meter property, located at
Paseo de Roxas corner Sen. Gil. Puyat Avenue, Makati City, and covered by Transfer Certificate of Title
No. S-15223 (Buendia Property). 6 On 10 July 1996, FWCC bid the amount of P455,000.00 per square
meter or a total of P3,640,000,000.00; and pursuant to PNB Rules and Regulations on the Acceptance
and Evaluation of Proposals, it deposited ten percent (10%) of the offered price or P364,000,000.00 with
the PNB by way of two checks, No. 418796 and No. 418797, in the amounts of P312,000,000.00 and
P52,000,000.00, respectively.7 On 11 July 1996, FWCC submitted a revised offer increasing its bid by
P5,000.00 per square meter or a total additional amount of P40,000,000.00. In view of the increase,
FWCC deposited with PNB an additional amount of P4,000,000.00. 8 On 17 July 1996, FWCC was
awarded the Buendia Property. 9PNB's Notice of Award to FWCC set a condition that within thirty (30)
calendar days from receipt of the same, the successful offeror shall tender payment of the balance of the
purchase price in the form of a manager's or cashier's check. 10 On 24 July 1996, FWCC, invoking Section
7.2 11 of the PNB Rules requested PNB to finance the entire balance of the purchase price. 12 On 17
September 1996 and pending action on its loan application, FWCC assigned all its rights, claims, interest,
and title over the Buendia Property to RJVRD. 13 The latter assumed the right to purchase the Buendia
Property and the obligations of FWCC to PNB on the balance of the bid price. TaEIAS
Respondents further posited that PNB initially refused to finance the entire balance of the purchase price
except to the extent of seventy-five percent (75%) thereof. 14 However, PNB finally agreed to grant a
loan to RJVRD equivalent to eighty percent (80%) of the purchase price or for the amount of
P2,944,000,000.00. The grant was conditioned on the deposit by RJVRD with PNB of an additional ten
percent (10%) of the purchase price to the first ten percent (10%) downpayment which the former had
paid. Otherwise stated, RJVRD was required to raise an additional amount of
P368,000,000.00. 15Moreover, to allow RJVRD to raise the additional amount, PNB proposed to lend
RBN the required amount, the latter being an affiliate company of RJVRD, which amount will be available
for relending to RJVRD. 16
Respondents described the said arrangement in this wise:
15.0 PNB shall extend a loan to RBN in the amount of P350,000,000.00 which in
turn would be loaned to RJVRD.
15.1 The proceeds of the loan shall be used by RJVRD to partially pay the
additional 10% or P368,000,000.00 deposit on the Property. PNB documents
would however show that the loan was for the expansion of RBN.
15.2 Mr. Ramon P. Jacinto, the majority stockholder of RJVRD will pledge to PNB
70% of his shares of stock in RBN and 40% of his shares of stock in FWCC. 17
Moreover, in their Complaint a quo, respondents avowed that on 30 September 1996, following the
payment by RJVRD to PNB of the additional deposit of P368,000,000.00, the parties entered into a loan
agreement wherein PNB will finance the balance of the purchase price in the amount of
P2,944,000,000.00 subject to conditions, inter alia, that after the transfer of the Buendia Property in the
name of RJVRD, the same shall be mortgaged in favor of PNB. On even date, RJVRD and PNB executed a
Loan Agreement. 18 A Deed of Sale 19 and a Real Estate Mortgage, 20 both dated 30 September 1996
were similarly executed between RJVRD and PNB over the Buendia Property. The Loan Agreement
included a two-way peso/dollar convertibility feature at the option of RJVRD; hence, to avail of a lower
interest rate, RJVRD converted its peso loan to US dollar based on a rate of exchange of P26.23 to
US$1.00, or for a total amount of US$112,237,895.54.
Respondents claimed that RJVRD undertook to engage foreign investors for the project. It entered into
negotiations with Hyundai Construction of South Korea which were eventually suspended. Its talks with
Siemens of Austria, and Property Investment and Development Management Corporation of Singapore
failed. 21 Respondents interposed further that the Asian currency crisis on 11 July 1997 caused a
depreciation of the Philippine peso which correspondingly increased the obligation of RJVRD to PNB
from P2,944,000,000.00 to P5,405,301,470.82 inclusive of interest. 22 On 30 September 1997, in an
effort to continue the project, RJVRD entered into a joint venture agreement with Fil-Estate
Management Incorporated for the development of the Buendia Property. RBN secured another loan
from PNB in the amount of P100,000,000.00, part of which was used in paying the interest for the loan it
had secured in favor of RJVRD. In addition, as and by way of security, RBN assigned in favor of PNB, all its
rights and interest over radio and television frequencies issued by the National Telecommunications
Commission, located in Tuguegarao, Baguio, Manila, Cebu, Bacolod, Iloilo, including those in Cagayan de
Oro (FM Stations), and Manila (AM Station and TV-UHF Station). 23 On September 1997, RJVRD paid PNB
the accrued interest on the loan amounting to P353,478,628.88. RBN also updated its first account with
PNB by paying about P41,000,00.00. In March 1998, RJVRD, RBN and PNB entered into discussions on
the restructuring of the loans. Respondents alleged that while discussions were ongoing, the accounts of
RJVRD and RBN became delinquent. 24 PNB sent RJVRD, a notice, 25 dated 2 June 1998, declaring their
accounts delinquent and demanding the settlement of the same.26
Respondents asserted that prior to 11 June 1998, in line with the continuing discussions between PNB
and RBN for the restructuring of the loan, PNB required the redenomination of RBN's loan as a condition
for its restructuring. 27 On 11 June 1998, RBN sent a letter to PNB in agreement to the redenomination
of the loan, stating therein the agreed terms for the restructuring of the loan. RJVRD sent a letter to PNB
agreeing to redenominate its own loan based on PNB's initial proposal, which letter was returned to
RJVRD for the reason that, at that time, the proposals for the restructuring of the RJVRD loan component
did not call for the redenomination of the loan of RJVRD. 28 On 24 June 1998, RBN sent a letter to PNB,
confirming to redenominate the loan under the terms stated in its letter of 11 June 1998. 29 On 9
September 1998, respondents asseverated that PNB made a call to RJVRD, asking the latter to
redenominate its loans. On the same date, RJVRD sent PNB, a letter in agreement to the
redenomination. 30 On 23 October 1998, the RJ Groups of Companies sent Mr. Benjamin Palma Gil,
president of PNB, a proposal for the settlement of respondents' accounts, including a request for the
restructuring of the loans. 31
On 25 January 1999, PNB, through its counsel, sent RBN a demand letter, requiring the latter to settle
their outstanding account of P841,460,891.91. 32 In a letter similarly dated 25 January 1999, PNB by
counsel, demanded from RJVRD the settlement of its total obligation of P5,405,301,470.82. 33 On 28
January 1999, RBN sent a letter to PNB's counsel, expressing its surprise to receive the demand letter
despite their continuing negotiations with PNB for the restructuring of its accounts. 34 In its letter, RBN
said that it was, in fact, required by PNB to redenominate its dollar loans into pesos as an initial step for
the restructuring of the account, and which it has complied. 35 On even date, RJVRD sent a letter to
PNB's counsel emphasizing that it had not been advised of any adverse development in their negotiation
with PNB nor had it been informed of the discontinuance of the negotiation. RJVRD sought for additional
time to justify its proposal to PNB with the aim of arriving at a friendly settlement. 36
On 18 February 1999, PNB made a demand to RBN to turnover the possession and/or control of
Broadcasting Equipment Inventory located at No. 33, Dominican Hills, Baguio City. 37 On 18 February
1999, RJVRD received a Notice of Extrajudicial Sale, dated 1 February 1999 for the sale of the Buendia
Property 38 to be held on 2 March 1999 at the City Hall, Makati City. caIDSH
Respondents manifested in their Complaint that when RJVRD, as assignee of FWCC purchased the
Buendia Property from PNB, the Philippine economy was progressive; that it was under this favorable
economic scenario that RJVRD agreed to the terms and conditions of the loan agreements; however,
following the Asian economic crisis of July 1997, and with the depreciation of the Philippine peso, the
loan of RJVRD which was denominated in US dollars rose from P2,944,000,000.00 (US$112,237,895.54)
to P5,405,301,470.82. 39 According to respondents, from the original contract price of
P3,680,000,000.00, RJVRD already made a payment of P736,000,000.00, representing twenty-percent
(20%) of the value of the Buendia Property and P353,478,628.88, representing interest on the loan or a
total of P1,089,478,628.88; and that PNB never effectively lost control over the Buendia Property,
considering that simultaneous with the execution of the Loan Agreement between RJVRD and PNB,
RJVRD executed a Real Estate Mortgage over the Buendia Property in favor of PNB. Furthermore,
respondents sought to find recourse under Article 19 40 of the Civil Code. They contended that the
action on the part of PNB to foreclose the collaterals pledged or mortgaged by RJVRD and RBN, including
the extrajudicial sale of the Buendia Property on 2 March 1999 at the City Hall of Makati City, and the
planned take over of RBN's radio facilities in Baguio City would be, among others, premature. 41

Finally, in support of its Application for the Issuance of a Temporary Restraining Order and a Writ of
Preliminary Injunction, respondents alleged that RJVRD and RNB would suffer great and irreparable
injury by the extrajudicial foreclosure of the property and the take over of RBN's radio facilities in Baguio,
unless a Temporary Restraining Order and/or Writ of Preliminary Injunction is issued enjoining
defendants from implementing the Notice of Extrajudicial Sale dated 1 February 1999, and enjoining PNB
from taking possession and control of RBN's radio facilities in Baguio City. Respondents maintained that
the commission or continuance of the acts complained of during the litigation or the non-performance
thereof would work injustice to RJVRD and RBN. They manifested their willingness to post a bond as the
court a quo may fix in its discretion, to answer for whatever damages PNB may sustain for the reason of
the restraining order or injunction, if finally determined that respondents are not entitled thereto.
Acting on respondent's prayer for the issuance of a Temporary Restraining Order, the RTC, issued an
Order 42 dated 2 March 1999, denying the same. The RTC held that the evidence showed that
respondents are in default of payment of its loan from PNB, amounting to P5,405,301,470.82, including
interests and penalties. According to the RTC, the respondents failed to prove that they have a clear right
to restrain the foreclosure of the Buendia Property; whereas, it is PNB which has a clear right to the
Buendia Property. The RTC opined that the evidence failed to prove that respondents will suffer
"irreparable injury" if the foreclosure of the Buendia Property is not enjoined, for under the law,
respondents have one (1) year from the date of the registration of the sale with the Register of Deeds
within which to redeem the Buendia Property; thus, respondents will have a chance to recover the
ownership thereof by way of redemption. Finally, the RTC ruled that the rule of equity is on the side of
PNB considering that the Buendia Property was formerly owned by PNB. The RTC denied the application
for Temporary Restraining Order for lack of merit, and held that the exposure of PNB in the transaction
amounted to P5,405,301,470.82, while the exposure of respondents is P1,089,478,628.00. 43
On 2 March 1999, the Buendia Property was sold in a public auction conducted by Atty. Juan S. Buan,
Notary Public of Makati City. 44 There being no other bidder, the Buendia Property was sold to PNB for
the amount of P2,800,000,000.00. On 3 May 1999, RBN received a Notice of Extrajudical Sale from PNB,
specifying therein that the property covered by Broadcating Equipment Inventory located at No. 33
Dominical Hills, Baguio City will be sold for cash at public auction to the highest bidder on 10 May 1999,
at the City Hall, Baguio City, pursuant to the terms of the Deed of Chattel Mortgage dated 19 June 1994
to satisfy the mortgage indebtedness of P841,460,491.91. 45
Following this development, on 4 May 1999, respondents filed an Urgent Application for the Issuance of
a Temporary Restraining Order and/or Writ of Preliminary Injunction. 46 Respondents prayed that a
Temporary Restraining Order be issued enjoining PNB or any persons acting under its instructions from
foreclosing on any other collaterals pledged or mortgaged by respondents to PNB, particularly that which
is subject of the Notice of Extrajudicial Sale to be conducted by Notary Public Perlita Chan-Rondez in
Baguio City on 10 May 1999. It was likewise prayed that after due proceedings, a Writ of Preliminary
Injunction be similarly issued. 47
On 7 May 1999, the RTC issued an Order 48 granting the Writ of Preliminary Injunction respondents'
application for the issuance of a Temporary Restraining Order (TRO), upon posting of a bond in the
amount of P1,000,000.00. aHSTID
On 27 May 1999, the RTC issued an Order, 49 granting the Writ of Preliminary Injunction, enjoining PNB
from foreclosing all collaterals pledged or mortgaged by respondents to PNB, in particular those
described in Exhibits A to L thereof, after the posting of a bond in the amount of
P5,000,000.00. 50According to the court, the right of PNB to foreclose the chattel mortgages is still
challenged by the respondents and therefore, is not yet clearly established. Hence, if PNB is allowed to
foreclose the subject chattel mortgages, the determination of the right of PNB to foreclose the subject
properties will become moot and academic. Subsequently, on 28 May 1999, a Writ of Preliminary
Injunction was issued.
On 9 June 1999, PNB filed a Motion for Reconsideration 51 of the Order of 27 May 1999. PNB
averred, inter alia, that RBN failed to produce any evidence to substantiate and support its claim that it is
entitled to the Writ of Preliminary Injunction in order to enjoin PNB from foreclosing on the subject
chattels. According to PNB, it was able to show that RBN failed without justifiable cause or reason to
service the credit facilities extended to it. PNB advanced the argument that RBN has no clear right
in esse; therefore, it cannot seek relief from the court. PNB claimed that they were able to prove
irreparable damage to the bank if PNB will be enjoined from foreclosing on the chattel mortgages. PNB
maintained that proceeding with the auction sale of the subject properties would lower the bank's "past
due ratio" approximately by 2%; hence, with the decrease in the bank's "past due ratio percentage,"
there would be no legal impediment to PNB's resumption to full lending operations since the Bangko
Sentral ng Pilipinas' recommendation for stoppage of grants of new loans is anchored on PNB's current
high "past due ratio." In support of its Motion for Reconsideration, PNB further theorized that decreasing
its "past due ratio" would improve investors' confidence; hence, substantially enhancing the viability of
PNB in its move to attain full privatization by the year 2000.
In its Opposition, 52 respondents submitted that during the hearing of the application for a Writ of
Preliminary Injunction, the court expressed its position that it will not receive evidence relative to the
merits of the case as the same would pre-empt the resolution of the merits or dispose of the main case
without trial; therefore, by agreement of the parties, the principal issue was limited to whether RBN will
suffer irreparable injury if the writ of preliminary injunction is not issued. According to respondents, the
damage to RBN's image, loss of listenership, advertisers, staff and employees is unquantifiable in
monetary terms. Irreparable damage would be caused to RBN if PNB is allowed to foreclose its
equipments. It would also disrupt, if not, paralyze, the operations of RBN's stations. They further
asserted that there is no reason to disturb the injunction issued by the court absent a showing of
manifest abuse.
On 28 July 1999, the RTC issued an Order 53 granting PNB's Motion for Reconsideration. This was
subsequently rectified in the Order of 29 July 1999 as to the date of the Writ of Preliminary Injunction
from May 28, 1998 to May 28, 1999. 54 In lifting the Writ of Preliminary Injunction of 28 May 1999, the
RTC rationalized that the failure of RBN to pay the three (3) credit facilities it obtained from defendant
PNB was established; thus, RBN was considered to have effectively "defaulted" on its loan obligation. In
the same Order, the RTC concluded that RBN made express admission of its delinquency in its Complaint.
Moreover, the RTC held that the "cross-default provision" 55 embodied in the Loan Agreement between
the parties establishes against the grant of the injunction.
Respondents moved for a reconsideration of the 28 July 1999 Order, submitting that there was no
reason to disturb the preliminary injunction order as there was no showing of a manifest abuse by then
Presiding Judge Hon. Eriberto U. Rosario, in the issuance thereof. Respondents explicated, inter alia, that
the sufficiency of their application was already passed upon by the RTC through the Order dated 27 May
1999. SaCIDT
On 26 October 1999, the RTC issued an Order, 56 denying respondents' Motion for Reconsideration for
the lifting of the Writ of Preliminary Injunction dated 28 May 1999.
Aggrieved, on 7 December 1999, respondents filed with the Court of Appeals a Petition
for Certiorari under Rule 65 of the Rules of Court assailing the Orders dated 28 July 1999 and 26 October
1999, imputing grave abuse of discretion on the part of the RTC in dissolving the Writ of Preliminary
Injunction earlier issued.
Before the appellate court, respondents argued that the sufficiency of their application for preliminary
injunction was already raised and passed upon by the RTC in the Injunction Order dated 27 May 1999;
however, PNB was not able to allege "other grounds" for the lifting thereof as mandated by Section 6 of
Rule 58 of the Rules of Court. 57 Moreover, respondents asserted that on the issue of the purported
delinquency, the RTC failed to consider PNB's judicial admissions, whereby the rights of PNB should be
those of a seller covered by the law on Sales (Title VI, Book IV, Civil Code), and not those of a money-
lender covered by the law on Loans (Title XI, Book IV, Civil Code); hence, PNB's rights as a seller are
either to rescind the sale, retrieve the title to the property transferred to the buyer, and exact payment
of damages or to leave the property with the buyer, to exact payment of the entire price with interest,
and recover damages thereby suffered. According to the respondents, the PNB as seller had recovered
through foreclosure the Buendia Property. They alleged that: PNB had forfeited in its favor as mortgagor,
the payments already made by RJVRD and the interest thereon; PNB is in the process of recovering as
mortgagor and seller additional damages in the form of interests, penalties, charges, attorney's fees, etc;
and PNB is in the process of recovering as mortgagor, by way of the foreclosure of mortgage, other realty
and chattels of significant value. Respondents contended that there was no grave abuse of discretion in
the issuance of the Writ of Preliminary Injunction because the contemplated foreclosure of the other
properties will work injustice to RBN and would render ineffectual any judgment on the merits of the
case ineffectual.

Anent the issue of whether respondents will suffer irreparable injury, respondents pleaded that although
the immediate effect of a Writ of Preliminary Injunction may be quantifiable in pesos, the effect on the
respondents is its viability that stands to be affected in the long-term. Respondents rationalized that the
foreclosure of the radio equipment will result in the stoppage of operations, and eventually, the loss of
the image of the station. These factors will cause the loss of its listenership and client confidence, which
cannot be quantifiable in monetary terms. Moreover, respondents set forth the contention that even as
PNB suggested that after foreclosure, the radio equipment would either be sold to improve PNB's
liquidity or disposed by way of lease-purchase agreement, there exists no assurance that RBN can
repurchase the foreclosed collaterals.
The Ruling of the Court of Appeals
On 9 December 1999, the Court of Appeals issued a Resolution 58 temporarily enjoining PNB from
foreclosing any collateral pledged or mortgaged by RJVRD and RBN, and from taking possession and
control of the latter's radio facilities in Baguio City, until further orders from the appellate court. In
granting the same, the Court of Appeals underscored that the purpose of the temporary injunctive relief
is to preserve the status quo ante between the parties, and so as not to render moot and academic the
relief prayed for in the Petition. Accordingly, the Court of Appeals set the hearing on the application for
the issuance of a preliminary injunction on 11 January 2000.
On 10 January 2000, the PNB filed a Comment with the Court of Appeals, disputing the imputation of
grave abuse of discretion on the part of the RTC when it lifted the preliminary injunction. The PNB
opposed respondents' claim that there exists in their favor a right to be protected. According to PNB, the
foreclosure of the collaterals shall be effective upon the default of RBN, which default had been
established as RBN was unable to properly service the loan agreements without justifiable cause and
despite due demand. Anent the issue on the existence of irreparable injury, PNB challenged respondents'
contention by arguing that there is, in fact, a pecuniary standard by which RBN's damage can be
measured per the testimony of RBN's witness that it will suffer a loss of P1.2 Billion for the next ten (10)
years. PNB further posited that there were no judicial admissions on their part to the effect that RJVRD
and RBN are not delinquent. In furtherance of its opposition, PNB averred that it acted in two separate
capacities as seller and lender. As a seller, PNB owned the Buendia Property and offered it for sale to
interested parties. PNB accepted the bid of RJVRD and the property was sold to the latter. As a lender,
PNB supplied the credit facility to RJVRD as the latter needed to borrow money to finance the payment
of the remaining balance. PNB insisted that these two transactions cannot be treated as one and the
same; hence, there is nothing that prevents it from acting as a seller and lender at the same time. In fine,
PNB maintained that RJVRD did not default on the payment of the purchase price for such was
completely paid; rather, it defaulted on the payment of the loan, on its principal, and interest. SEcAIC
On 4 February 2000, the Court of Appeals issued a Resolution, 59 granting the Writ of Preliminary
Injunction, enjoining PNB and its agents from foreclosing the collaterals pledged and mortgaged by
RJVRD and RBN and from taking over possession and control of RBN radio facilities in Baguio City. The
appellate court, held, viz:
The principal action in the petition at bar dwells on the controversy on whether
or not the respondent court committed grave abuse of discretion in issuing the
order lifting and setting aside the injunctive relief earlier issued in Civil Case No.
4592 (sic). If no preliminary injunction is issued in this case, pending resolution
of such main petition, respondent will proceed to foreclose the pledged or
mortgaged collaterals. In that eventuality, petitioners stand to sustain injury
and irreparable damage, the loss of its properties, income[,] and clientele
listeners in the subject radio broadcasting station in Baguio City, even before
the instant certiorari proceeding could be resolved. To allow the impending
foreclosure to proceed, at this point in time, will surely be violative of
petitioners' right to be heard and to due process. It is for this reason, for the
preservation of the status quo between the parties, pending decision of the
main petition and in order not to render the same moot and academic, We feel
justified to grant the preliminary injunction prayed for.
IN VIEW OF ALL THE FOREGOING, pending final resolution of the petition at bar,
let a Writ of Preliminary Injunction be issued in this case enjoining the
respondent PNB, its officers or agents from foreclosing the collateral pledged
and mortgaged by petitioners, RJ Ventures Realty & Development Corporation
and Rajah Broadcasting Network, Inc., from taking over possession and control
of RBN radio facilities in Baguio City, upon the posting of a P1,000,000.00
injunction bond.
Undeterred, PNB filed a Motion for Reconsideration praying that the Order of 4 February 2000 be set
aside and the Writ of Preliminary Injunction issued by the Court of Appeals be immediately lifted and
dissolved.
Acting on the Motion, the Court of Appeals, rendered the assailed Decision dated 31 March 2004,
denying the same. In the same order, the appellate court, reversed and set aside the Orders dated 28
July 1999 and 26 October 1999 of the RTC; hence, effectively reinstating the Writ of Preliminary
Injunction earlier issued on 28 May 1999. The Court of Appeals held that the RTC was not asked to make
a definitive conclusion on the issue of whether RBN was indeed guilty of default in paying its loan nor
was it asked to resolve whether RBN committed a breach against PNB which necessitated foreclosure. A
determination of whether there was default or breach can be only be reached after the principal action
is set for trial on the merits after the parties are given opportunity to present evidence in support of
their respective claims.
The appellate court decreed, to wit:
It must be emphasized that a preliminary injunction may be granted at any
stage of an action prior to final judgment, requiring a person to refrain from a
particular act. As the term itself suggests, it is merely temporary, subject to the
final disposition of the principal action. The justification for the preliminary
injunction is urgency. It is based on evidence tending to show that the action
complained of must be stayed lest the movant suffer irreparable injury or the
final judgment granting the relief sought become ineffectual. Necessarily, that
evidence need only be a "sampling," as it were, and intended merely to give the
court an idea of the justification for the preliminary injunction pending the
decision of the case on the merits. The evidence submitted at the hearing on the
motion for preliminary injunction is not conclusive of the principal action, which
has yet to be decided. (Olalia vs. Hizon, 196 SCRA 665 [1991]).
Anent the issue of whether RBN would sustain "irreparable injury" should the
chattel mortgage be foreclosed, it bears repeating that the evidence to be
submitted at the hearing on the motion for preliminary injunction need not be
conclusive and complete. On this score, We find petitioners to have sufficiently
established the existence of irreparable injury to justify, albeit provisionally, the
restraint of the act complained against them. DASEac
We find that the potential injury demonstrated by the various testimonies
presented by petitioners more than satisfies the legal and jurisprudential
requirements of "irreparable injury." There is no gainsaying in that the
foreclosure of the subject radio equipment[s] would inevitably result in
stoppage of operations. This, in turn, shall result to (sic) the station's tarnished
image and consequent loss of public listenership. Loss of listenership then leads
to loss of confidence of the station's patrons and advertising clients that would
cause serious repercussions on its ability to sustain its operations. Undoubtedly,
the loss of image and reputation by a radio station are matters that are not
quantifiable in terms of monetary value.
All told, We find the court a quo's lifting of the injunction earlier issued tainted
with grave abuse of discretion properly correctable by the special writ
of certiorari. 60
On 4 May 2004, PNB moved for the reconsideration thereon. On 8 July 2004, the Court of Appeals
rendered a Resolution, finding no justification to compel a modification or reversal of the 31 March 2004
Decision.
Hence, the instant Petition.
The Issues
PNB recites the following statement of the issues, viz:
I
WHETHER OR NOT THE PETITION FILED BY PNB INVOLVES QUESTIONS OF FACTS
WHICH SHOULD BE A CAUSE FOR ITS DISMISSAL;
II
WHETHER OR NOT THE DEFAULT BY RJVRD AND RBN IN THE PAYMENT OF
THEIR RESPECTIVE LOAN OBLIGATIONS TO PNB JUSTIFIES THE DENIAL OF THE
ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION FOR THE FORECLOSURE
OF THE MORTGAGED PROPERTIES;
III
WHETHER OR NOT RBN'S ADMISSION OF ITS FAILURE TO SETTLE ITS LOAN
OBLIGATION IN FULL GIVES PNB A CLEAR RIGHT TO FORECLOSE THE
MORTGAGE;
IV
WHETHER OR NOT [THE] RIGHT OF RJVRD AND RBN TO A WRIT OF INJUNCTION
IS CLEAR, EXISTING[,] AND UNMISTAKABLE; and
V
WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAD LEGAL BASIS IN
REVERSING AND SETTING ASIDE THE ORDER DATED JULY 28, 1999 AND
OCTOBER 26, 1999 OF THE REGIONAL TRIAL COURT OF MAKATI, BRANCH 66,
AND THEREBY ISSUING A WRIT OF CERTIOARI IN FAVOR OF RJVRD AND RBN. 61
The Ruling of the Court
The pivotal issue in the instant Petition is whether the Court of Appeals correctly reinstated the Writ of
Preliminary Injunction dated 28 May 1999. Hence, the question is whether respondents RJVRD and RBN
are entitled to the Writ of Preliminary Injunction. It is for this reason that we shall address and concern
ourselves only with the assailed writ, but not with the merits of the case pending before the trial court.
A preliminary injunction is merely a provisional remedy, adjunct to the main case subject to the latter's
outcome. 62 It is not a cause of action in itself. 63

This Petition has no merit. ACcISa
Foremost, we reiterate that the sole object of a preliminary injunction is to maintain the status quo until
the merits can be heard. 64 A preliminary injunction65 is an order granted at any stage of an action prior
to judgment of final order, requiring a party, court, agency, or person to refrain from a particular act or
acts. It is a preservative remedy to ensure the protection of a party's substantive rights or interests
pending the final judgment in the principal action. A plea for an injunctive writ lies upon the existence of
a claimed emergency or extraordinary situation which should be avoided for otherwise, the outcome of a
litigation would be useless as far as the party applying for the writ is concerned. 66
The grounds for the issuance of a Writ of Preliminary Injunction are prescribed in Section 3 of Rule 58 of
the Rules of Court. Thus:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring the performance of an act or acts, either for
a limited period or perpetually;
(b) That the commission, continuance or nonperformance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
Otherwise stated, for a Writ of Preliminary Injunction to issue, the following requisites must be present,
to wit: (1) the existence of a clear and unmistakable right that must be protected, and (2) an urgent and
paramount necessity for the writ to prevent serious damage. 67 Indubitably, this Court has likewise
stressed that the very foundation of the jurisdiction to issue a writ of injunction rests in the existence of
a cause of action and in the probability of irreparable injury, inadequacy of pecuniary compensation and
the prevention of multiplicity of suits. 68 Sine dubio, the grant or denial of a writ of preliminary
injunction in a pending case rests in the sound discretion of the court taking cognizance of the case since
the assessment and evaluation of evidence towards that end involve findings of facts left to the said
court for its conclusive determination. 69 Hence, the exercise of judicial discretion by a court in
injunctive matters must not be interfered with except when there is grave abuse of discretion. 70 Grave
abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and whimsical
exercise of judgment that is equivalent to lack of jurisdiction, or where the power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in
contemplation of law. 71
We find the conclusions reached by the Court of Appeals to be in accord with law.
The Supreme Court is not a trier of facts. 72 While this is perhaps one of our more emphatic doctrines, it
admits of certain exceptions, inter alia, when the findings of the Court of Appeals are contrary to those
of the trial court. 73 In the case at bar, we apply the exception and proceed to make a determination of
whether there is a factual and legal bases for a Writ of Preliminary Injunction to issue. SHcDAI
First, respondents were able to establish a clear and unmistakable right to the possession of the subject
collaterals. Evidently, as owner of the subject collaterals that stand to be extrajudicially foreclosed,
respondents are entitled to the possession and protection thereof. RBN as the owner and operator of
the subject radio equipment and radio stations have a clear right over them. The instant case does not
involve abstract rights, or a future and contingent rights, but a right that is already in existence. To our
minds, petitioner's claim that respondents have lost their rights to the subject collaterals in the face of
their admission of default is best threshed out in a full-blown trial a quo where the merits of the case can
be tried and determined. Significantly, to give the trial court a fair idea of whether a justification for the
issuance of the writ exists, only a "sampling" of the evidence is needed, pending a decision on the merits
of the case. 74 Hence, the determination of respondents' default and the legality of the defenses they
adduced are matters appropriately subject of the trial on the merits.
Second, there is an urgent and paramount necessity to prevent serious damage. Indeed, an injunctive
remedy may only be resorted to when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation. 75 PNB assails the existence of this
ground by raising the argument that there is, in actuality, a pecuniary standard by which RBN's damage
can be measured, as evidenced by the testimony of RBN's witness that it will suffer a loss of P1.2 Billion
for the next ten (10) years.
To be sure, this court has declared that the term irreparable injury has a definite meaning in law. It does
not have reference to the amount of damages that may be caused but rather to the difficulty of
measuring the damages inflicted. If full compensation can be obtained by way of damages, equity will
not apply the remedy of injunction. 76 The Court of Appeals declared that the evidence adduced by
respondents more than satisfies the legal and jurisprudential requirements of irreparable injury. It
behooves this court to appreciate the unique character of the collaterals that stand to be affected should
the Writ of Preliminary Injunction be dissolved as PNB would have it. The direct and inevitable result
would be the stoppage of the operations of respondents' radio stations, consequently, losing its
listenership, and tarnishing the image that it has built over time. It does not stretch one's imagination to
see that the cost of a destroyed image is significantly the loss of its good name and reputation. As aptly
appreciated by the appellate court, the value of a radio station's image and reputation are not
quantifiable in terms of monetary value. This conclusion can be gleaned from the testimony of
respondents' witness, Jose E. Escaner, Jr., General Manager of RBN, thus:
Atty. Mendoza:
Q: Now, in your forty (40) years in the broadcast (sic) industry, have you had
any personal experience in (sic) any actual interruption in the
operations of a radio station programming?
Witness:
A: Yes, when I was handling the network of the then Ambassador Nanding
Cojuanco within which the radio stations were sequestered and
sometime or the other it (sic) went off the air and immediately, we
do not have any revenues, so much so that we actually suffered two
(2) to three (3) years.
Atty. Mendoza:
Q: And how long did it take for that station in Cebu that you mentioned to
retain its listenership day? (sic)
Witness:
A: Well, honestly, until now its airtime, because of its image, status image (sic)
which is the reputation of an AM Station while they are still
recouping other stations, the other reports came over (sic) and
practically brought their ratings down, so, until now they still have to
recoup.
Atty. Mendoza:
Q: What radio station are you referring to?
Witness:
A: DYRB.
Atty. Mendoza:
Q: What would be the consequence if the radio stations of RBN stops (sic)
operation (sic)? DSHTaC
Witness:
A: It will lose whatever image it has generated to this point and (sic) time, it will
cost irreparable damage not only to its operation but most of all (sic)
its image as being built by RNB. Rajah Broadcasting Network and I
doubt very much if it will still be able to recoup to a very good result,
what we are now generating.
Atty. Mendoza:
That is all for the witness, Your Honor.
COURT:
Alright (sic), cross.
Atty. dela Vega:
With the permission of the Honorable Court.
xxx xxx xxx
Atty. dela Vega:
Q: Based from (sic) your experienced (sic) as the person engaged in media
practice Mr. Witness, with respect to the possession, let us go to the
heart of the matter as of this point and time.
COURT:
You shoot the question straight.
Atty. dela Vega:
Yes, Your Honor.
(continuing to (sic) the witness
Q Will it made a difference to the operations of a radio station and relation with
the listeners and their clients if technical equipments, in (sic) the
technical equipments, the ownership over the sale are transferred to
another person?
Witness:
A: If you take the equipment immediately that would mean stopping our
operations. That would mean stopping our day to day
communication with our listenership. That they will be wondering,
that will cost damage and (sic) our image immediately. That will cost
damage to our contracts right now without keeping with our clients.
Atty. dela Vega:
Q: Usually that person who owns that particular equipment will get the
particular equipment. When you say get, what do you mean by get
Mr. Witness?
Witness:
A: If for instance was what we are talking about right now, you are going to
foreclose, ok, (sic), what will we use?
Atty. dela Vega:
Q: Assuming Mr. Witness, that the creditor of Rajah Broadcasting Network will
not get, will not get the equipment, will not get their account, will it
adversely affect the operations of Rajah Broadcating?
Witness:
A: Still it will. IESAac
Atty. dela vega:
Q: In what way?
Witness:
A: Because that will have an effect now on our relation with our clientele. The
image will be doubt (sic). The will be doubt, there be vacillation in
the planning of the media plans, vacillation in the buying of airtime.

Atty. dela Vega:
Q It will affect?
Witness:
A: It will affect. The confidence is there.
Atty. dela Vega:
Q: It will affect?
Witness:
A: We do not want our clientele to lose confidence. 77
Evidently, there exists in the case at bar a pressing necessity to avoid injurious consequences to
respondents which cannot be remedied under any standard compensation. After a careful scrutiny of the
attendant circumstances, we do not find herein a reason for reversing the reinstatement by the Court of
Appeals of the Writ of Preliminary Injunction earlier issued.
The Fallo
WHEREFORE, the Petition is DENIED. The Decision dated 31 March 2004 and the Resolution dated 8 July
2004 of the Court of Appeals in CA-G.R. SP No. 56119, reversing and setting aside the 28 July 1999 and
26 October 1999 Orders of the RTC, Branch 66 of Makati City in Civil Case No. 99-452, and reinstating the
Writ of Preliminary Injunction issued on 28 May 1999 are AFFIRMED. Costs against petitioners. aTDcAH
SO ORDERED.







































EN BANC
[G.R. No. 177130. June 7, 2011.]
HON. EDUARDO ERMITA in his official capacity as THE EXECUTIVE
SECRETARY, petitioner, vs. HON. JENNY LIND R. ALDECOA-DELORINO, Presiding
Judge, Branch 137, Regional Trial Court, Makati City, ASSOCIATION OF
PETROCHEMICAL MANUFACTURERS OF THE PHILIPPINES, representing JG
Summit Petrochemical Corporation, et al., respondents.

DECISION
CARPIO MORALES, J p:
Then Executive Secretary petitioner Eduardo Ermita assailed via certiorari the writ of preliminary
injunction granted by public respondent Judge Jenny Lind R. Aldecoa Delorino, then Presiding Judge of
the Regional Trial Court of Makati City, Branch 137, by Omnibus Order 1 dated February 6, 2007 in favor
of private respondent Association of Petrochemical Manufacturers of the Philippines (APMP or private
respondent) denying petitioner's Motion to Dismiss and enjoining the government from implementing
Executive Order No. 486. CAHTIS
Executive Order No. 486 (E.O. 486) issued on January 12, 2006 by then President Gloria Macapagal-
Arroyo reads:
LIFTING THE SUSPENSION OF THE APPLICATION OF THE TARIFF REDUCTION
SCHEDULE ON PETROCHEMICALS AND CERTAIN PLASTIC PRODUCTS UNDER
THE COMMON EFFECTIVE PREFERENTIAL TARIFF (CEPT) SCHEME FOR THE
ASEAN FREE TRADE AREA (AFTA)
WHEREAS, Executive Order 234 dated 27 April 2000, which implemented the
2000-2003 Philippine schedule of tariff reduction of products transferred from
the Temporary Exclusion List and the Sensitive List to the Inclusion List of the
accelerated CEPT Scheme for the AFTA, provided that the CEPT rates on
petrochemicals and certain plastic products will be reduced to 5% on 01
January 2003;
WHEREAS, Executive Order 161 issued on 9 January 2003 provides for the
suspension of the application of the tariff reduction schedule on petrochemicals
and certain products in 2003 and 2004 only;
WHEREAS, the government recognizes the need to provide an enabling
environment for the naphtha cracker plant to attain international
competitiveness;
WHEREAS, the NEDA Board approved the lifting of the suspension of the
aforesaid tariff reduction schedule on petrochemicals and certain plastic
products and the reversion of the CEPT rates on these products to EO 161 (s.
2003) levels once the naphtha cracker plant is in commercial operation;
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic
of the Philippines, pursuant to the powers vested in me under Section 402 of
the Tariff and Customs Code of 1978 (Presidential Decree No. 1464), as
amended, do hereby order:
SECTION 1. The articles specifically listed in Annex "A" (Articles Granted
Concession under the CEPT Scheme for the AFTA) hereof, as classified under
Section 104 of the Tariff and Customs Code of 1978, as amended, shall be
subject to the ASEAN CEPT rates in accordance with the schedule indicated in
Column 4 of Annex "A". The ASEAN CEPT rates so indicated shall be accorded to
imports coming from ASEAN Member States applying CEPT concession to the
same product pursuant to Article 4 of the CEPT Agreement and Its
Interpretative Notes.
SECTION 2. In the event that any subsequent change is made in the basic (MFN)
Philippine rate of duty on any of the article listed in Annex "A" to a rate lower
than the rate prescribed in Column 4 of Annex "A", such article shall
automatically be accorded the corresponding reduced duty.
SECTION 3. From the date of effectivity of this Executive Order, all articles
listed in Annex "A" entered into or withdrawn from warehouses in the
Philippines for consumption shall be imposed the rates of duty therein
prescribed subject to qualification under the Rules of Origin as provided for in
the Agreement on the CEPT Scheme for the AFTA signed on 28 January 1992.
SECTION 4. The Department of Trade and Industry, in coordination with
National Economic and Development Authority, the Department of Finance, the
Tariff Commission and the Bureau of Customs, shall promulgate the
implementing rules and regulations that will govern the reversion of the CEPT
rates on petrochemicals and plastic products to EO 161 (s. 2003) levels once the
naphtha cracker plant is in commercial operation.
SECTION 5. All presidential issuances, administrative rules and regulations, or
parts thereof, which are contrary to or inconsistent with this Executive Order
are hereby revoked or modified accordingly.
SECTION 6. This Executive Order shall take effect immediately following its
complete publication in two (2) newspapers of general circulation in the
Philippines.
Done in the City of Manila, this 12th day of January in the year of Our Lord Two
Thousand and Six. (emphasis supplied)
The above issuance in effect reduces protective tariff rates from 10% to 5% on the entry of inexpensive
products, particularly plastic food packaging, from ASEAN Free Trade (AFTA) member countries into the
Philippines.
APMP, an organization composed of manufacturers of petrochemical and resin products, opposed the
implementation of E.O. 486. Contending that the E.O. would affect local manufacturers, it filed a petition
before the RTC of Makati, docketed as Civil Case No. 06-2004, seeking the declaration of its
unconstitutionality for being violative of Sec. 4 of Republic Act No. 6647 which prohibits the President
from increasing or reducing taxes while Congress is in session 2 and Sec. 402 (e) 3 of the Tariff and
Customs Code. It thereupon prayed for the issuance of a writ of preliminary injunction to enjoin its
implementation. STaIHc
Petitioner contends that public respondent gravely abused her discretion in assuming jurisdiction over
the petition for prohibition and granting the writ of preliminary injunction as the exercise of the quasi-
legislative functions of the President cannot be enjoined. He avers that writs of prohibition lie only
against those persons exercising judicial, quasi-judicial or ministerial functions.
By granting injunctive relief, petitioner contends that public respondent effectively preempted the trial
of and pre-judged the case, given that what private respondent seeks is to stop the implementation of
E.O. 486. Further, petitioner contends that the grant of injunctive relief was not supported by fact and
law, for what APMP sought to be protected was "future economic benefits" which may be affected by
the implementation of the E.O. benefits which its members have no right to since protective tariff
rates are government privileges wherein no one can claim any vested right to.
On the merits, petitioner maintains that E.O. 486 is not constitutionally infirm, it having been issued
under the authority of Secs. 401 and 402 of the Tariff and Customs Code which set no limitations on the
President's power to adjust tariff rate and serve as the government's response to its AFTA commitment
on Common Effective Preferential Tariff (CEPT).
Since it is only the Omnibus Order denying the Motion to Dismiss and granting a writ of preliminary
injunction that is being assailed, the Court will not pass on the constitutionality of E.O. 486 which is still
pending before the trial court.
Private respondent prays in its Comment for the denial of the present petition, alleging that, among
other things, the petition is premature as petitioner failed to file a Motion for Reconsideration of the
assailed Omnibus Order of public respondent, and maintaining the propriety of the remedy of
prohibition which it filed to assail the E.O.
The issues then are:
1. Whether public respondent erred in assuming jurisdiction over the petition
for prohibition and not granting petitioner's motion to dismiss the
petition;
2. Whether a motion for reconsideration should have been filed by petitioner;
and
3. Whether public respondent erred in granting the writ of preliminary
injunction in favor of APMP.
On the issue of jurisdiction
Rule 65, Sec. 2 of the Rules of Court provides:
Sec. 2. Petition for Prohibition. When the proceedings of any tribunal,
corporation, board, officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are without or in excess of its jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in
the proper court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further proceedings in
the action or matter specified therein, or otherwise granting such incidental
reliefs as law and justice may require. (emphasis supplied)
Holy Spirit Homeowners' Association v. Defensor 4 expounds on prohibition as a remedy to assail
executive issuances:
A petition for prohibition is also not the proper remedy to assail an IRR issued
in the exercise of a quasi-legislative function. Prohibition is an extraordinary
writ directed against any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, ordering said
entity or person to desist from further proceedings when said proceedings are
without or in excess of said entity's or person's jurisdiction, or are accompanied
with grave abuse of discretion, and there is no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law. Prohibition lies against
judicial or ministerial functions, but not against legislative or quasi-legislative
functions. Generally, the purpose of a writ of prohibition is to keep a lower
court within the limits of its jurisdiction in order to maintain the administration
of justice in orderly channels. Prohibition is the proper remedy to afford relief
against usurpation of jurisdiction or power by an inferior court, or when, in the
exercise of jurisdiction in handling matters clearly within its cognizance the
inferior court transgresses the bounds prescribed to it by the law, or where
there is no adequate remedy available in the ordinary course of law by which
such relief can be obtained. Where the principal relief sought is to invalidate an
IRR, petitioners' remedy is an ordinary action for its nullification, an action
which properly falls under the jurisdiction of the Regional Trial Court. In any
case, petitioners' allegation that "respondents are performing or threatening to
perform functions without or in excess of their jurisdiction" may appropriately
be enjoined by the trial court through a writ of injunction or a temporary
restraining order. (emphasis supplied)ESTDcC
Be that as it may, it is settled that what determines the nature of the action and which court has
jurisdiction over it are the allegations in the complaint and the character of the relief sought. 5 A
perusal of the petition of APMP before the trial court readily shows that it is not a mere petition for
prohibition with application for the issuance of a writ of preliminary injunction. For it is also one
for certiorari as it specifically alleges that E.O. 486 is invalid for being unconstitutional, it having been
issued in contravention of Sec. 4 of R.A. 6647 and Sec. 402 (e) of the Tariff and Customs Code, hence, its
enforcement should be enjoined and petitioner prohibited from implementing the same.
Petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to
review and/or prohibit or nullify, when proper, acts of legislative and executive officials. 6 Thus, even if
the petition was denominated as one for prohibition, public respondent did not err in treating it also as
one for certiorari and taking cognizance of the controversy.
On the propriety of filing a motion
for reconsideration
Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first filed
before the respondent tribunal, to allow it an opportunity to correct its assigned errors. 7 This rule,
however, is not without exceptions.
The rule is, however, circumscribed by well-defined exceptions, such as (a)
where the order is a patent nullity, as where the court a quo had no jurisdiction;
(b) where the questions raised in the certiorari proceeding have been duly
raised and passed upon by the lower court, or are the same as those raised and
passed upon in the lower court; (c) where there is an urgent necessity for the
resolution of the question and any further delay would prejudice the interests
of the Government or of the petitioner or the subject matter of the action is
perishable; (d) where, under the circumstances, a motion for reconsideration
would be useless; (e) where petitioner was deprived of due process and there is
extreme urgency for relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial court is improbable;
(g) where the proceedings in the lower court are a nullity for lack of due
process; (h) where the proceedings were ex parte, or in which the petitioner
had no opportunity to object; and (i) where the issue raised is one purely of
law or where public interest is involved. 8 (emphasis supplied)
The present case involves the constitutionality and implementation of an executive issuance involving
tariff rates and, as alleged by petitioner, the Government's commitments under the AFTA. Clearly, the
filing of a motion for reconsideration may be dispensed with following exceptions (c ) and (i) in the above
enumeration in Siok Ping Tang.
On the grant of the writ of
preliminary injunction
APMP alleges that it is composed of manufacturers of petrochemical products and that the
implementation of the assailed E.O. reducing tariff rates on certain petroleum-based products will result
in the local market being flooded with lower-priced imported goods which will, consequently, adversely
affect their sales profits. In granting the assailed writ, public respondent held that, based on the initial
evidence presented, the APMP stands to lose "substantial revenues" and some of its members "may
eventually have to close up or stop ongoing works on their Naphtha Cracker plants" if E.O. 486 is
implemented. Public respondent thus ruled that the APMP was entitled to the writ as it has a "valuable
stake in the petrochemical industry" and the enforcement of E.O. 486 will adversely affect its members;
and that petitioner violated APMP's right on the strength of an invalid executive issuance.
Public respondent noted that the Southern Cross case cited by petitioner which ruled that no court is
allowed to grant injunction to restrain the collection of taxes is inapplicable in the present case, since
restraining the implementation of E.O. 486 will not deprive the Government of revenues; instead, it will
result in more revenues as the proposed reduction of rates will be enjoined.
Public respondent thus concluded that there is sufficient basis for the issuance of a writ of preliminary
injunction in favor of APMP.
It is well to emphasize that the grant or denial of a writ of preliminary injunction in a pending case rests
on the sound discretion of the court taking cognizance thereof. 9 In the present case, however, where it
is the Government which is being enjoined from implementing an issuance which enjoys the
presumption of validity, such discretion must be exercised with utmost caution. Executive Secretary v.
Court of Appeals, 10 enlightens: cDAITS
In Social Security Commission v. Judge Bayona, we ruled that a law is presumed
constitutional until otherwise declared by judicial interpretation.The
suspension of the operation of the law is a matter of extreme delicacy
because it is an interference with the official acts not only of the duly elected
representatives of the people but also of the highest magistrate of the land.
In Younger v. Harris, Jr., the Supreme Court of the United States emphasized,
thus:
Federal injunctions against state criminal statutes, either in their
entirety or with respect to their separate and distinct prohibitions,
are not to be granted as a matter of course, even if such statutes
are unconstitutional. No citizen or member of the community is
immune from prosecution, in good faith, for his alleged criminal acts.
The imminence of such a prosecution even though alleged to be
unauthorized and, hence, unlawful is not alone ground for relief in
equity which exerts its extraordinary powers only to prevent
irreparable injury to the plaintiff who seeks its aid. 752 Beal v.
Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61 S.Ct. 418, 420, 85
L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this
rule, that:
"It does not appear from the record that petitioners have been
threatened with any injury other than that incidental to every
criminal proceeding brought lawfully and in good faith . . ." 319 U.S.,
at 164, 63 S.Ct., at 881.
The possible unconstitutionality of a statute, on its face, does not
of itself justify an injunction against good faith attempts to enforce
it, unless there is a showing of bad faith, harassment, or any other
unusual circumstance that would call for equitable relief. The "on
its face" invalidation of statutes has been described as "manifestly
strong medicine," to be employed "sparingly and only as a last
resort," and is generally disfavored.
To be entitled to a preliminary injunction to enjoin the
enforcement of a law assailed to be unconstitutional, the party
must establish that it will suffer irreparable harm in the absence of
injunctive relief and must demonstrate that it is likely to succeed
on the merits, or that there are sufficiently serious questions going
to the merits and the balance of hardships tips decidedly in its
favor. The higher standard reflects judicial deference toward
"legislation or regulations developed through presumptively
reasoned democratic processes." Moreover, an injunction will alter,
rather than maintain, the status quo, or will provide the movant with
substantially all the relief sought and that relief cannot be undone
even if the defendant prevails at a trial on the merits. Considering
that injunction is an exercise of equitable relief and authority, in
assessing whether to issue a preliminary injunction, the courts must
sensitively assess all the equities of the situation, including the public
interest. In litigations between governmental and private parties,
courts go much further both to give and withhold relief in
furtherance of public interest than they are accustomed to go when
only private interests are involved. Before the plaintiff may be
entitled to injunction against future enforcement, he is burdened
to show some substantial hardship. (emphasis supplied)
Indeed, a writ of preliminary injunction is issued precisely to prevent threatened or continuous
irremediable injury to some of the parties before their claims can be thoroughly studied or adjudicated
to preserve the status quo until the merits of the case can be heard fully. Still, even if it is a temporary
and ancillary remedy, its issuance should not be trifled with, and an applicant must convincingly show its
entitlement to the relief. St. James College of Paraaque v. Equitable PCI Bank, 11 explains:
Under Section 3, Rule 58 of the Rules of Court, an application for a writ of
preliminary injunction may be granted if the following grounds are established,
thus:
(a) That the applicant is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring the performance of an act or acts, either for
a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
And following jurisprudence, these requisites must be proved before a writ of
preliminary injunction, be it mandatory or prohibitory, will issue: HcDATC
(1) The applicant must have a clear and unmistakable
right to be protected, that is a right in esse;
(2) There is a material and substantial invasion of
such right;
(3) There is an urgent need for the writ to prevent
irreparable injury to the applicant; and
(4) No other ordinary, speedy, and adequate remedy
exists to prevent the infliction of irreparable injury.
(emphasis supplied)
It is thus ineluctable that for it to be entitled to the writ, the APMP must show that it has a clear
and unmistakable right that is violated and that there is an urgent necessity for its
issuance. 12 That APMP had cause of action and the standing to interpose the action for
prohibition did not ipso facto call for the grant of injunctive relief in its favor without it proving its
entitlement thereto.
Transfield Philippines, Inc. v. Luzon Hydro Corporation, 13 illuminates on the right of a party to injunctive
relief:
Before a writ of preliminary injunction may be issued, there must be a clear
showing by the complaint that there exists a right to be protected and that the
acts against which the writ is to be directed are violative of the said right. It
must be shown that the invasion of the right sought to be protected is
material and substantial, that the right of complainant is clear and
unmistakable and that there is an urgent and paramount necessity for the
writ to prevent serious damage. Moreover, an injunctive remedy may only be
resorted to when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation. (emphasis
supplied)
Contrary to public respondent's ruling, APMP failed to adduce any evidence to prove that it had a clear
and unmistakable right which was or would be violated by the enforcement of E.O. 486. The filing of the
petition at the court a quo was anchored on APMP and its members' fear of loss or reduction of their
income once E.O. 486 is implemented and imported plastic and similar products flood the domestic
market due to reduced tariff rates. As correctly posited by petitioner, APMP was seeking protection
over "future economic benefits" which, at best, it had an inchoate right to.
More importantly, tariff protection is not a right, but a privilege granted by the government and,
therefore, APMP cannot claim redress for alleged violation thereof. In a similar case wherein the validity
of R.A. 9337 with respect to provisions authorizing the President to increase the value-added tax (VAT)
rates, the Court held:
The input tax is not a property or a property right within the constitutional
purview of the due process clause. A VAT-registered person's entitlement to
the creditable input tax is a mere statutory privilege.
The distinction between statutory privileges and vested rights must be borne
in mind for persons have no vested rights in statutory privileges. The state
may change or take away rights, which were created by the law of the state,
although it may not take away property, which was vested by virtue of such
rights. 14 (emphasis supplied)
Assuming arguendo that it was upon the government's assurances that the members of APMP allegedly
"invested hundred of millions of dollars in putting up the necessary infrastructure," that does not vest
upon APMP a right which must be protected.
Respecting the element of "irreparable injury," the landmark case of Social Security Commission v.
Bayona 15 teaches:
Damages are irreparable within the meaning of the rule relative to the
issuance of injunction where there is no standard by which their amount can
be measured with reasonable accuracy (Crouc v. Central Labor Council, 83 ALR,
193). "An irreparable injury which a court of equity will enjoin includes that
degree of wrong of a repeated and continuing kind which produce hurt,
inconvenience, or damage that can be estimated only by conjecture, and not
by any accurate standard of measurement" (Phipps v. Rogue River Valley Canal
Co., 7 ALR, 741). An irreparable injury to authorize an injunction consists of "a
serious charge of, or is destructive to, the property it affects, either physically or
in the character in which it has been held and enjoined, or when the property
has some peculiar quality or use, so that its pecuniary value will not fairly
recompense the owner of the loss thereof" (Dunker v. Field and Tub Club, 92 P.,
502). (emphasis supplied) ACIESH
As does the more recent case of Philippine Air Lines v. National Labor Relations Commission: 16
An injury is considered irreparable if it is of such constant and frequent
recurrence that no fair and reasonable redress can be had therefor in a court
of law, or where there is no standard by which their amount can be measured
with reasonable accuracy, that is, it is not susceptible of mathematical
computation. It is considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself or the nature of
the right or property injured or when there exists no certain pecuniary standard
for the measurement of damages. (emphasis supplied)
In the present case, aside from APMP's allegations that the reduced tariff rates will adversely affect its
members' business and may lead to closure, there is no showing what "irreparable injury" it stood to
suffer with the implementation of E.O. 486.
IN FINE, not only is there no showing of a clear right on the part of APMP which was violated; the injury
sought to be protected is prospective in nature, hence, the injunctive relief should not have been
granted.
WHEREFORE, the petition is PARTLY GRANTED. The Omnibus Order dated February 6, 2007 issued by
public respondent Hon. Judge Jenny Lind R. Aldecoa-Delorino is REVERSED insofar as it granted a Writ of
Preliminary Injunction in favor of private respondent, Association of Petrochemical Manufacturers of the
Philippines (APMP). Accordingly, the Writ is DISSOLVED, and the case REMANDED to the court of origin
for further appropriate proceedings.
SO ORDERED.













































THIRD DIVISION
[G.R. No. 169802. June 8, 2007.]
OVERSEAS WORKERS WELFARE ADMINISTRATION, represented by
Administrator Marianito D. Roque, petitioner, vs. ATTY. CESAR L. CHAVEZ,
OPHELIA N. ALMENARIO, ELVIRA ADOR, REYNALDO TAYAG, TORIBIO ROBLES,
JR., ROSSANE BAHIA, RACQUEL LLAGAS-KUNTING, MA. STELLA A. DULCE,
ROSSANA SIRAY, EDUARDO MENDOZA, JR., PRISCILLA BARTOLO, ROSE
VILLANUEVA, CHERRY MOLINA, MARY ROSE RAMOS, MA. MINERVA PAISO,
RODERIC DELOS REYES, RENATO DELA CRUZ, MARIVIC DIGMA, JESSIE
BALLESTEROS, DONATO DAGDAG, MARK TUMIBAY, CYNTHIA FRUEL,
DEMETRIO SORIANO, MILAGROS GUEVARRA, ANGELITA LACSON, BERT
BUQUID, JUN SAMORANAS, TEODORO TUTAY, LEAH YOGYOG, MARIE CRUZ
and CONCEPCION BRAGAS REGALADO, respondents.

D E C I S I O N
CHICO-NAZARIO, J p:
The Case
Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the instant
Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22 September 2005
Decision 1 of the Court of Appeals in CA-G.R. SP No. 87702, which affirmed the Order 2 dated 30
September 2004, of the Regional Trial Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415-
CFM. The RTC granted the issuance of a writ of preliminary injunction restraining OWWA from
implementing its new organizational structure.
Factual Antecedents
OWWA is a government agency tasked primarily to protect the interest and promote the welfare of
overseas Filipino workers (OFWs). 3 OWWA traces its beginnings to 1 May 1977, when the Welfare and
Training Fund for Overseas Workers in the Department of Labor and Employment (DOLE) was created by
virtue of Letter of Instructions No. 537, with the main objective, inter alia, of providing social and welfare
services to OFW, including insurance coverage, social work, legal and placement assistance, cultural and
remittances services, and the like. On 1 May 1980, Presidential Decree No. 1694 was signed into law,
formalizing the operations of a comprehensive Welfare Fund (Welfund), as authorized and created under
Letter of Instructions No. 537. Presidential Decree No. 1694 further authorized that contributions to the
Welfare and Training Fund collected pursuant to Letter of Instructions No. 537 be transferred to the
Welfund. On 16 January 1981, Presidential Decree No. 1809 was promulgated, amending certain
provisions of Presidential Decree No. 1694. 4 Subsequently, Executive Order No. 126 was passed which
reorganized the Ministry of Labor and Employment. Executive Order No. 126 also renamed the Welfare
Fund as the OWWA. ACDTcE
From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA structure
duly approved by the Department of Budget and Management (DBM) and the Civil Service Commission
(CSC), the OWWA Board of Trustees passed Resolution No. 001, 5 Series of 2004, bearing the title
"Approving the Structure of the Overseas Workers Welfare Administration," and depicting the
organizational structure and staffing pattern of the OWWA, as approved by Patricia A. Sto. Tomas (Sto.
Tomas), then Chair of the OWWA Board of Trustees and then Secretary of the DOLE. According to
Resolution No. 001, the structuring of the OWWA will stabilize the internal organization and promote
careerism among the employees. It will also ensure a more efficient and effective delivery of programs
and services to member-OFWs. Resolution No. 001 resolved, thus:
RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure
which is hereto attached and made an integral part of this Resolution,
comprising mainly of the approved organizational chart, functional descriptions
and staffing pattern, subject to the following:
a. There will be no displacement of existing regular employees;
b. There will be no temporary appointments; and
c. There will be no hiring of casuals, contractuals or consultants in
the new structure. DACTSa
RESOLVED further, that the OWWA Structure be immediately submitted for the
appropriate actions of competent authorities, particularly the DBM and CSC. 6
On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved the organizational structure
and staffing pattern of the OWWA. 7 In her approval thereof, she stated that the total funding
requirements for the revised organizational structure shall be P107,546,379 for four hundred (400)
positions. Moreover, DBM Secretary Boncodin underscored that the funding shall come solely from the
OWWA funds and that no government funds shall be released for the implementation of the changes
made.
On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01, 8 advising the
officials and employees of the OWWA that the DBM had recently approved OWWA's organizational
chart, functional statements, and the staffing pattern. Advisory No. 01 also announced that a Placement
Committee will be created to evaluate and recommend placement of all regular/permanent incumbents
of OWWA in the new organizational chart and staffing pattern. All employees were asked to indicate in
writing their interest or preference in any of the approved plantilla item, especially for promotion to the
Human Resources Management Division, not later than 11 June 2004. Further, Advisory No. 01
emphasized that the OWWA Board of Trustees, thru its Resolution No. 001, Series of 2004, had declared
the policy that there will be no displacement of existing regular/permanent employees. Qualified casual
and contractual personnel may apply for any vacant item only after all regular/permanent employees of
OWWA had been placed.
Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No. 171, Series of
2004, creating a Placement Committee to evaluate qualifications of employees; and to recommend their
appropriate placement in the new organizational chart, functional statements and staffing pattern of the
OWWA. Administrative Order No. 171 was partially amended by Administrative Order No. 171-A, issued
by DOLE Acting Secretary Manuel G. Imson (Imson), authorizing the Placement Committee to
recommend to the OWWA Administrator their evaluations, which shall thereafter be endorsed to the
DOLE Secretary for consideration. 9
The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and
regulations on its recommended placement of all personnel of OWWA based on the following
parameters, to wit: 10
1. There would be no diminution nor displacement of permanent/regular
employees of OWWA.
2. Qualified casuals and contractual personnel may likewise be considered in
the staffing pattern only after ensuring that the
regular(s)/permanent employees of OWWA have already been
placed.
3. Decentralization of functions to bring OWWA services closer to the public
shall be adopted. Thus, priority in some promotions shall be given to
those who opt to be assigned in the regional offices, aside from
performance.
4. Deployment in the overseas posts shall be made on rotation basis from both
the frontline and the administrative staff, based on
performance. DETACa
5. Regular/permanent incumbents interested for promotion should indicate
their interest in writing to the Placement Committee: Attn: The
Chairperson.
6. Those who may opt to retire should submit to the HRMD, their application for
retirement, copy furnished the Budget Division for budget allocation
purposes.
The Placement Committee should complete its task not later than June 30,
2004.
On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA officials and
employees to an orientation on the new structure, functions and staffing pattern of the OWWA.
Moreover, Advisory No. 02 required the holding of elections for the First and Second Level
Representatives who will elect from among themselves the regular official representatives and
alternates in the Placement Committee deliberations. On 11 June 2004, Advisory No. 03 was issued,
announcing the conduct of an election for representatives and alternates representing the employees in
the first [Salary Grades (SG) 1-9] and second level (SG 10-24), pursuant to Administrative Order No. 171,
dated 3 June 2004, as amended by Administrative Order No. 171-A.
On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of
2004, 11 prescribing the guidelines on the placement of personnel in the new staffing pattern of the
OWWA.
On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the
Organizational Structure of the OWWA, as approved by OWWA Board Resolution No. 001, Series of
2004, with Prayer for the Issuance of a Writ of Preliminary Injunction 12 against herein petitioner OWWA
and its Board of Trustees. 13 The case was docketed as Civil Case No. 04-0415-CFM. DAETcC
In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual
employees, 76 contractual workers, and 356 officers and employees, which number does not include the
85 contractual employees in the Office of the Secretariat of the OWWA Medicare. 14 Respondents
posited that the approved Organizational Structure and Staffing Pattern of the OWWA increases the
number of regular plantilla positions from 356 to 400; however, the increase of 42 positions will not
absorb the aforementioned consultants and casual and contractual workers. They further averred that
the plantilla positions in the Central Office will be reduced from 250 to 140, while the regional offices will
have an increase of 164 positions. According to the respondents, the resulting decrease in the number of
employees in the Central Office will result in the constructive dismissal of at least 110 employees.
Meanwhile, the deployment of the regular central office personnel to the regional offices will displace
the said employees, as well as their families.
Respondents challenged the validity of the new organizational structure of the OWWA. In fine, they
contended that the same is null and void; hence, its implementation should be prohibited. EIASDT

Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners from: 1)
implementing its organizational structure as approved by the OWWA Board of Trustees in its Resolution
dated 9 January 2004; and 2) advertising and proceeding with the recruitment and placement of new
employees under the new organizational structure. 15
Further, respondents prayed that after trial on the merits, OWWA's organizational structure be declared
as unconstitutional and contrary to law; and the OWWA Board of Trustees be declared as having acted
contrary to the Constitution and existing laws, and with grave abuse of discretion in approving
Resolution No. 001, dated 9 January 2004. 16
The Ruling of the RTC
On 30 September 2004, the RTC rendered an Order 17 granting respondents' prayer for a writ of
preliminary injunction upon the filing of a bond in the sum of P100,000.00. In the grant thereof, the RTC
reasoned that any move to reorganize the structure of the OWWA requires an amendatory law. It
deemed Resolution No. 001 was not merely a "formalization of the organizational structure and staffing
pattern of the OWWA," but a disruption of the existing organization which disturbs and displaces a
number of regular employees, including consultants and casual and contractual employees.
The RTC ratiocinated in this wise:
. . . All told, what is being done now at OWWA is a reorganization of its
structure as originally conceived under P.D. No. 1694 [Organization and
Administration of the Welfare for Overseas Workers] and P.D. No. 1809
[Amending Certain Provisions of Presidential Decree 1694, Creating the
"Welfare Fund for Overseas Workers"]. In the (sic) light of Section 11 of R.A. No.
6656 which provides that "the executive branch of the government shall
implement reorganization schemes within a specified period of time authorized
by law", this court doubts whether a reorganization of OWWA can be effected
without an enabling law.
Further, defendants do not dispute the fact that while the mechanics of the
reorganization is still being forged, the DOLE already processed applications and
eventually hired employees not from among the existing employees of the
OWWA. This appears to be in contravention of Section 4 of R.A. No. 6656 which
provides:
"Sec. 4. Officers and employees holding permanent appointments shall be given
preference for appointment to the new positions in the approved staffing
pattern comparable to their former position or in case there are not enough
comparable positions, to positions next lower in rank.
"No new employees shall be taken in until all permanent officers and employees
have been appointed, including temporary and casual employees who possess
the necessary qualification requirements, among which is the appropriate civil
service eligibility for permanent appointment to positions in the approved
staffing pattern, in case there are still positions to be filled, unless such positions
are policy-determining, primarily confidential or highly technical in nature."
Furthermore, defendant's (sic) do not dispute the fact that the Placement
Committee was hastily constituted, that its members were not educated of
their task of job placement, that there was no real to goodness (sic) personnel
evaluation and, finally, the Chairman of the Committee was simply hand-picked
by the DOLE Secretary contrary to the explicit injunction of Section 8 of the
Implementing Rules of R.A No. 6656 that "the members shall elect their
Chairman." 18
The RTC also cited the protection afforded by the Constitution to workers, specifically, officers or
employees of the Civil Service in ruling that the existing organization of the OWWA need not be
disturbed in any way and no single worker will be removed or displaced. Thus:
This court entertains no doubt that as workers, plaintiffs enjoy a right that is
protected both by the Constitution and statutes. Thus, "(n)o officer or employee
of the civil service shall be removed or suspended except for cause provided by
law. "(Sec. 2, par. 3, Art. IX, Constitution). "No person shall be deprived of life,
liberty, or property without due process of law, nor shall any person be denied
the equal protection of the laws." (Sec. 1, Art. III; ibid.). A person's job is his
property. In many cases, as in the Philippine setting, one's job also means one's
life and the lives of those who depended on him. Hence, it is a policy of the
State to "free the people from poverty through policies that provide adequate
social services, promote full employment, a rising standard of living, and an
improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that, contrary to
law, tends to deprive a worker of his work, violates his rights. 19
Finally, the RTC defended its jurisdiction over the controversy despite petitioner's protestations that
jurisdiction over respondents' complaint is lodged in the administrative agencies tasked to implement
the new OWWA structure. It ruled that the doctrine of primary jurisdiction is applicable only where the
administrative agency exercises its quasi-judicial or administrative function; but, where what is
challenged is the constitutionality of a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative functions, regular courts have jurisdiction over the matter. 20
Therefore, the RTC, in its Order, dated 30 September 2004, granted respondents' prayer for a writ of
preliminary injunction, to wit:
WHEREFORE, upon plaintiff's (sic) filing of a bond in the sum of P100,000.00, let
a writ of preliminary injunction issue in: 1) restraining the defendants from
implementing the new organizational structure of OWWA approved by the
Board of Trustees on January 9, 2004 and 2) restraining the defendants from
advertising and proceeding with the recruitment and placement of new
employees under the new organizational structure. 21
Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General
(OSG), 22 filed with the Court of Appeals, a Petition forCertiorari and Prohibition with Prayer for Issuance
of a Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court,
assailing the RTC Order of 30 September 2004. 23
The Ruling of the Appellate Court
On 22 September 2005, the Court of Appeals rendered the assailed Decision, which dismissed the
petition. It affirmed the court a quo's findings that respondents possess a clear and legal right to the
immediate issuance of the writ. It resolved that it was proper for the RTC to restrain, for the meantime,
the implementation of OWWA's reorganization to prevent injury until after the main case is heard and
decided. 24 It found respondents' allegations sufficient to prove the existence of a right that should be
protected by a writ of preliminary injunction. Thus: CDAcIT
Petitioner averred, too, that majority of the casuals, contractuals and
consultants have been employed for more than ten (10) years, if not twenty
(20) years, and were not regularized simply due to lack of regular positions in
the plantilla or the freezing of recruitment thereto.
To be sure, private respondents have convincingly adduced evidence of specific
acts to substantiate their claim of impending injury and not merely allegations
of facts and conclusions of law, but factual evidence of a clear and unmistakable
right of being displaced or dismissed by the planned reorganization. These
allegations are substantial enough to prove the right in esse. At best, the anxiety
of being dismissed or displaced is not premature, speculative and purely
anticipatory, but based on real fear which shows a threatened or direct injury[,]
it appearing that the reorganization of the OWWA is already slowly being put
into motion.
Apropos, having successfully established a direct and personal injury as a
consequence of the new reorganization[al] structure, it was only proper for the
court a quo to grant the writ of preliminary injunction to restrain, for the
meantime, the implementation of the reorganization to prevent injury on
respondents until after the main case is heard and decided. Truly, as correctly
observed by the trial court, private respondents enjoy a right that is protected
both by the Constitution and statutes. A person's job is not only his property
but his very life. The constitutional protection of the right to life is not just a
protection of the right to be alive or to the security of one's limb against
physical harm. The right to life is also a right to a good life(Bernas, The
Constitution of the Republic of the Philippines, A Commentary, Volume I, First
Edition, 1997) which includes the right to earn a living or the right to a
livelihood. A fortiori, the requisites for preliminary injunction to issue have
adequately been established: the existence of a clear and unmistakable right,
and the acts violative of said right. caHCSD
While the evidence to be submitted at the hearing on the motion for
preliminary injunction need not be conclusive and complete, We find that
private respondents have adequately shown that they are in clear danger of
being irreparably injured unless the status quo is observed, in the meantime . . .
. 25
The appellate court was likewise of the opinion that the substantial issues raised before the court a
quo anent the validity of the organizational structure of the OWWA; the alleged lack of authority of the
DBM to approve the same including the alleged violation by the OWWA of relevant statutes; the lack of
consultation prior to the reorganization; and the supposed illegal constitution of the Placement
Committee, are matters which the RTC is behooved to resolve. In finding no error on the part of the RTC,
the Court of Appeals said that without an injunctive relief, any decision that may be rendered in the suit
would already be ineffective, moot and academic. 26 cEaCAH

Aggrieved, petitioner through the OSG, 27 filed the instant petition.
In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be reversed
and set aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for lack of merit. 28
The Issue
The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the writ of
preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred in affirming the
RTC in its grant of the assailed writ of preliminary injunction. Clearly, we are thus confined to the matter
of the propriety of the issuance of the writ of preliminary injunction by the trial court, and not to the
merits of the case which is still pending before the latter.
The Case for the Petitioner
First, in support of their petition, petitioner posits that the OWWA has already implemented the new
organizational structure as the advertisement, recruitment, and placement of OWWA employees have
been accomplished; and in the process, none of the respondents have been dismissed. Moreover, the
act sought to be prevented has long been consummated; hence, the remedy of injunction should no
longer be entertained.
Second, petitioner adduces the proposition that the reorganization of the OWWA does not require an
amendatory law contrary to the holding of the courta quo. The OSG maintains that there was no
previous OWWA structure in the first place; and neither did Presidential Decree No. 1694 29 nor
Presidential Decree No. 1809, 30 provide for an organizational structure for the OWWA.
Third, petitioner disputes the existence of the rights of respondents to be protected by the preliminary
injunctive writ sought on the ground that the latter did not shown any legal right which needs the
protection thereof, nor did they show that any such right was violated to warrant the issuance of a
preliminary injunction. Petitioner asserts that respondents did not claim that they are the consultants or
casual or contractual workers who would allegedly be displaced; and neither did respondents show that
there is only one right or cause of action pertaining to all of them. Neither was there a violation of their
rights because respondents have all been given appointments in the new OWWA organizational
structure. 31
Finally, on respondents' allegation that the reorganization of the OWWA will reassign permanent
employees to its regional offices, and consequently, displace them and their families, petitioner counters
that an employee may be reassigned from one organizational unit to another in the same agency,
provided that such reassignment shall not involve a reduction in rank, status or salary. 32
The Case for the Respondents
Respondents argue that the petitioner railroaded and raced against time to implement the new OWWA
organizational structure. They claim that in the process, petitioner exhibited manifest bad faith and
injustice. What existed was a hasty reorganization and restructuring of the OWWA without adequate
study and consultation, which was thereafter submitted and immediately approved by the Board of
Trustees. They insist that the creation of an organizational structure of the OWWA would require a
presidential fiat or a legislative enactment pursuant to Republic Act No. 6656. 33
Further, respondents maintain that their right in esse was established during the proceedings for the
issuance of the writ of preliminary injunction, as their complaint sufficiently showed the rights and
interests of the parties. They alleged that at no stage in the proceedings did petitioner question such
rights. In fact, petitioner made a waiver in open court to the effect that it was not presenting testimonial
evidence. According to the respondents, such an act was constitutive of an admission by petitioner of
the existence of a right in esse in their favor. CASTDI
The Ruling of the Court
Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at any stage
of an action prior to the judgment or final order requiring a party or a court, an agency or a person to
refrain from a particular act or acts. 34 Section 3, Rule 58 of the Rules of Court, enumerates the grounds
for the issuance of a writ of preliminary injunction as follows: cSEDTC
Sec. 3. Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring the performance of an act or acts, either for
a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.
A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final
order. 35 It persists until it is dissolved or until the termination of the action without the court issuing a
final injunction. 36 To be entitled to an injunctive writ, petitioner must show, inter alia, the existence of
a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious
damage. 37 A writ of preliminary injunction is generally based solely on initial and incomplete
evidence. 38 The evidence submitted during the hearing on an application for a writ of preliminary
injunction is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of
the justification for the preliminary injunction pending the decision of the case on the merits. 39 In fact,
the evidence required to justify the issuance of a writ of preliminary injunction in the hearing thereon
need not be conclusive or complete. 40 It must also be stressed that it does not necessarily proceed that
when a writ of preliminary injunction is issued, a final injunction will follow. 41
Moreover, the grant or denial of a preliminary injunction is discretionary on the part of the trial
court. 42 Thus, the rule is, the matter of the issuance of a writ of preliminary injunction is addressed to
the sound discretion of the trial court, unless the court commits grave abuse of discretion. 43 In Toyota
Motor Phils. Corporation Workers' Association (TMPCWA) v. Court of Appeals, 44 this Court pronounced
that grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and
whimsical exercise of judgment that is equivalent to lack of jurisdiction; or the exercise of power in an
arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in
contemplation of law. It is clear that the assessment and evaluation of evidence in the issuance of the
writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its conclusive
determination. 45 The duty of the court taking cognizance of a prayer for a writ of preliminary injunction
is to determine whether the requisites necessary for the grant of an injunction are present in the case
before it.46 However, as earlier stated, if the court commits grave abuse of its discretion in the issuance
of the writ of preliminary injunction, such that the act amounts to excess or lack of jurisdiction, the same
may be nullified through a writ of certiorari or prohibition.
More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the main case
subject to the latter's outcome, the sole objective of which is to preserve the status quo until the trial
court hears fully the merits of the case. 47 The status quo should be that existing at the time of the filing
of the case. 48 The status quo usually preserved by a preliminary injunction is the last actual, peaceable
and uncontested status which preceded the actual controversy. 49 The status quo ante litem is,
ineluctably, the state of affairs which is existing at the time of the filing of the case. Indubitably, the trial
court must not make use of its injunctive power to alter such status. 50
We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave abuse of
discretion amounting to lack of jurisdiction.
In the case at bar, the RTC did not maintain the status quo when it issued the writ of preliminary
injunction. Rather, it effectively restored the situation prior to the status quo, in effect, disposing the
issue of the main case without trial on the merits. What was preserved by the RTC was the state of
affairs before the issuance of Resolution No. 001, which approved the structure of the OWWA, and the
subsequent administrative orders pursuant to its passing. The RTC forgot that what is imperative in
preliminary injunction cases is that the writ can not be effectuated to establish new relations between
the parties. Hence, we find herein an application of the lessons that can be learned from Rualo v.
Pitargue. 51 In Rualo, this Court determined, among others, the propriety of the writ of preliminary
injunction which was issued restraining the Bureau of Internal Revenue from further implementing its
reorganization, and enforcing the orders 52 pursuant thereto. This Court, in lifting the therein assailed
writ, underscored the legal proscription which states that courts should avoid issuing a writ of
preliminary injunction which would in effect dispose of the main case without trial. 53 According to the
Court in Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the status
quo but restored the situation before the status quo, that is, the situation before the issuance of the
Revenue Travel Assignment Orders. 54 The Court further declared that what existed was an acceptance
of therein respondents' premise of the illegality of the reorganization, and a prejudgment on the
constitutionality of the assailed issuances. 55 As in Rualo, we find herein a similar case where the RTC
admitted hook, line and sinker the mere allegations of respondents that the reorganization as instituted
was unlawful without the benefit of a full trial on the merits. It also did not maintain the status quo but
restored the landscape before the implementation of OWWA's reorganization. In thus issuing the writ of
preliminary injunction, the substantive issues of the main case were resolved by the trial court. What
was done by the RTC was quite simply a disposition of the case without trial. This is an error in law and
an exercise of grave abuse of discretion. Furthermore, we find that the RTC similarly prejudged the
validity of the issuances released by the OWWA Board of Trustees, as well as the other governmental
bodies (i.e., DBM, DOLE), which approved the organizational structure and staffing pattern of the
OWWA. In Rualo, this Court asserted the presumption of regularity of the therein assailed government
issuances. In this case, we accentuate the same presumption.

Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed ancillary writ
of preliminary injunction on the material ground that the records do not support respondents'
entitlement thereto.
We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This Court is not
convinced that respondents were able to show a clear and unmistakable legal right to warrant their
entitlement to the writ. A mere blanket allegation that they are all officers and employees of the OWWA
without a showing of how they stand to be directly injured by the implementation of its questioned
organizational structure does not suffice to prove a rightin esse. As was aptly raised by the petitioner,
respondents did not show that they were dismissed due to the challenged reorganization. There was no
showing that they are the employees who are in grave danger of being displaced. Respondents were
similarly wanting in proving that they are the consultants and contractual and casual employees, who
will allegedly suffer by reason of the re-organization. This Court is consistently adamant in demanding
that a clear and positive right especially calling for judicial protection must be established. 56 As has
been reiterated, injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it
will not issue to protect a right not in esse and which may never arise, or to restrain an action which did
not give rise to a cause of action. 57 In contrast, the rights of OWWA are accorded to it by law. The
importance of the reorganization within the body and the benefits that will accrue thereto were
accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution declared,inter
alia, that the structuring of the OWWA will stabilize the internal organization and promote careerism
among the employees, as well as ensure a more efficient and effective delivery of programs and services
to member-OFWs. 58 However, we go further to opine that even the question of whether the OWWA
requires an amendatory law for its reorganization is one that should be best threshed out in the
disposition of the merits of the case. Indeed, the question as to the validity of the OWWA reorganization
remains the subject in the main case pending before the trial court. Its annulment is outside the realm of
the instant Petition. AaHTIE
Assuming arguendo that respondents stand to be in danger of being transferred due to the
reorganization, under the law, any employee who questions the validity of his transfer should appeal to
the CSC. 59 Even then, administrative remedies must be exhausted before resort to the regular courts
can be had.
Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been accomplished.
Injunction will not lie where the acts sought to be enjoined have already been accomplished or
consummated. 60 The wheels of OWWA's reorganization started to run upon the approval by the Board
of Trustees of its Resolution No. 001 entitled, "Approving the Structure of the Overseas Workers Welfare
Administration." Subsequently, a series of issuances which approved the organizational structure and
staffing pattern of the agency was issued by the DBM, the OWWA Administrator, and by the DOLE.
Resolution No. 001 has already been implemented. Case law has it that a writ of preliminary injunction
will not issue if the act sought to be enjoined is a fait accompli.
A writ of preliminary injunction being an extraordinary event, 61 one deemed as a strong arm of equity
or a transcendent remedy, 62 it must be granted only in the face of actual and existing substantial rights.
In the absence of the same, and where facts are shown to be wanting in bringing the matter within the
conditions for its issuance, the ancillary writ must be struck down for having been rendered in grave
abuse of discretion.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22 September 2005
in CA-G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the
Regional Trial Court pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415-CFM is
LIFTED and SET ASIDE.
SO ORDERED.














































FIRST DIVISION
[G.R. No. 139767. August 5, 2003.]
FELIPE SY DUNGOG, petitioner, vs. COURT OF APPEALS, JUAN A. GATO, in his
official capacity as RTC Sheriff, Lapu-Lapu City and CARLOS GOTHONG LINES,
INC., respondents.
Agapito P. Pagayanan, Jr. for petitioner.
Francisco V. Mijares, Jr. for respondent.

SYNOPSIS
Carlos Gothong Lines filed a complaint for specific performance against the spouses Dungog (parents of
herein petitioner) to enforce the contract of sale of the parcel of land owned by various individuals.
Gothong Lines faulted the spouses Dungog for non-delivery of some parcels of land, which resulted to an
overpayment in the amount paid. The spouses Dungog, however, contended that it was Gothong Lines
which breached the contract by stopping payment on the last four checks intended as the last
installments for the land. The spouses Dungog opposed Gothong Lines' application for a writ of
preliminary injunction on the ground that Gothong Lines violated the terms of the contract and the other
contemporaneous agreements between them. However, the trial court granted the prayer for
injunction, enjoining the spouses Dungog from cancelling the contract to sell. Thereafter, a writ of
preliminary injunction was issued. Petitioner assailed the order and the writ in a special civil action
for certiorari before the Court of Appeals. The appellate court dismissed outright the petition, as well as
denied the motion for reconsideration. Thus, he filed the instant petition questioning the propriety of
the writ of preliminary injunction issued by the trial court. ScaHDT
In denying the petition, the Supreme Court ruled that petitioner committed a procedural blunder in filing
a special civil action for certiorari to assail the order and the writ. The petition was not a party to the civil
case and, therefore, could not assail the writ of preliminary injunction through a petition
forcertiorari before the Court of Appeals. The appellate court was correct in saying that the petitioner
does not possess the requisite standing to file such suit.

SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PLEADINGS; MOTION FOR INTERVENTION; PURPOSE THEREOF.
A motion to intervene may be filed at any time before rendition of judgment by the trial court. The
purpose of intervention is not to obstruct or unnecessarily delay the placid operation of the machinery of
trial. The purpose is merely to afford one, not an original party but possessing a certain right or interest
in the pending case, the opportunity to appear and be joined so he could assert or protect such right or
interest.
2. ID.; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DEFINED; PURPOSE THEREOF TO PRESERVE
THE STATUS QUO OF THE MATTER SUBJECT OF THE ACTION; CONSTRUED. Preliminary injunction is an
order granted at any stage of an action, prior to the judgment or final order, requiring a party, court,
agency or person to perform or to refrain from performing a particular act or acts. A preliminary
injunction, as the term itself suggests, is merely temporary, subject to the final disposition of the
principal action. Its purpose is to preserve the statusquo of the matter subject of the action to protect
the rights of the plaintiff during the pendency of the suit. Otherwise, if no preliminary injunction is
issued, the defendant may, before final judgment, do the act which the plaintiff is seeking the court to
restrain. This will make ineffectual the final judgment that the court may afterwards render in granting
relief to the plaintiff. The issuance of a writ of preliminary injunction rests entirely within the discretion
of the court and is generally not interfered with except in cases of manifest abuse. The assessment and
evaluation of evidence in the issuance of the writ of preliminary injunction involve findings of facts
ordinarily left to the trial court for its conclusive determination.
3. ID.; ID.; ID.; WHEN PROPER; CASE AT BAR. Under Section 3, Rule 58 of the 1997 Rules on Civil
Procedure, a preliminary injunction is proper when the plaintiff appears entitled to the relief demanded
in the complaint. The trial court found that Gothong Lines had already paid P51,248,348.26 out of the
total consideration of P65,520,475.00. Gothong Lines also consigned with the court an additional
P4,048,950.00 leaving a balance of P10,223,176.74. The trial court likewise found that 78% of the
properties were already in the possession of Gothong Lines. Moreover, the status quo, which is the last
actual peaceable uncontested status that preceded the controversy, was that Gothong Lines had access
to the lots subject of the Contract through the entrance gate in Lot 1031-F. That is why Gothong Lines
commenced construction of its pier and the development of the roads within the parcels of land covered
by the Contract. The issuance of the Writ would no doubt preserve the status quo between the Spouses
Dungog and Gothong Lines that existed prior to the filing of the case. We agree with the trial court that
the status quo should be maintained until the issue on the parties' respective rights and obligations
under the Contract is determined after the trial.

D E C I S I O N
CARPIO, J p:
The Case
This petition for review on certiorari 1 assails the Decision 2 dated 14 May 1999 of the Court of Appeals
in CA-G.R. SP No. 48788, as well as the Resolution dated 24 August 1999 denying the motion for
reconsideration. The Court of Appeals dismissed outright the petition for certiorari, prohibition and
mandamus filed by petitioner Felipe Sy Dungog ("Felipe") against respondents. The petition questioned
the propriety of the Order 3 dated 14 August 1998 ("Order") and the writ of preliminary injunction
("Writ") dated 18 August 1998 issued by the Regional Trial Court of Cebu, Lapu-Lapu City, Branch 53
("trial court") in Civil Case No. 5020-L.
The Antecedents
Tracing the roots of this controversy, Felipe alleges 4 that he and his sister, Fortune, agreed to sell their
lots in Canjulao, Cebu, through their parents, Juan L. Dungog and Emma S. Dungog ("Spouses Dungog").
The Spouses Dungog convinced other lot owners in Canjulao to sell their lots either directly to them or to
Felipe and his sister. On 31 December 1996, the Spouses Dungog entered into a Contract to Sell
("Contract") with private respondent Carlos A. Gothong Lines, Inc. ("Gothong Lines") covering several lots
in Canjulao. The lots which the Spouses Dungog contracted to sell to Gothong Lines belonged to various
individuals as listed in the Contract's Annex "A" 5 which specified the corresponding approximate land
areas of each lot. Among these was Lot 1031-F registered in the name of Felipe and covered by Transfer
Certificate of Title No. 10359 of the Register of Deeds of Lapu-Lapu City. Under the Contract, Gothong
Lines was to pay on installment basis the purchase price of P65,520,475.00 computed at P500 per square
meter. Thus, Gothong Lines paid a down payment of P12,000,000.00. For the balance of
P53,520,475.00, 6 Gothong Lines issued 15 postdated checks of P3,568,031.00 each beginning on 31
January 1997 as payment for 15 equal monthly installments. Gothong Lines made good all the checks,
except the last 4 checks dated 30 December 1997, 31 January 1998, 28 February 1998 and 30 March
1998, which bounced due to Gothong Lines' stop payment order.
Felipe alleges further that as of 31 December 1997, his parents had delivered 66 parcels of land to
Gothong Lines with a total area of 101,104.20 square meters valued at P50,552,100.00. Felipe also states
that as of the same date, Gothong Lines had paid P51,248,345.00 in encashed checks plus the initial
down payment of P12,000,000.00. This left an overpayment of P696,245.00 in the hands of the Spouses
Dungog. Felipe claims, however, that despite Gothong Lines' stop payment order of its last four checks,
the Spouses Dungog still delivered in February 1998, 8 parcels of land with a total land area of 11,590
square meters valued at P5,795,000.00. Among those delivered was Lot 1031-F. The Spouses Dungog
demanded payment for these 8 parcels of land, but Gothong Lines refused to pay. The Spouses Dungog
became frustrated with Gothong Lines' complete silence on their demands for payment, as well as the
earlier stop payment order on the last 4 checks. Thus, the Spouses Dungog informed Gothong Lines in a
letter dated 18 June 1998 that they would no longer push through with their offer to sell the remaining
lots. CHEIcS
On 6 July 1998, Gothong Lines filed a complaint for Specific Performance, Damages with Writ of
Preliminary Mandatory Injunction against the Spouses Dungog to enforce the Contract. Gothong Lines
faulted the Spouses Dungog for non-delivery of some of the parcels of land in breach of the Contract.
Gothong Lines alleged that while the total amount of P51,248,348.26 paid to the Spouses Dungog
corresponds to 102,496.69 square meters, the Spouses Dungog actually delivered to Gothong Lines only
100,613.69 square meters. Gothong Lines claimed that it paid an excess of P941,848.00 7 corresponding
to 1,883 square meters. To protect its interest, Gothong Lines ordered the bank to stop payment on the
remaining postdated checks. Gothong Lines asked the trial court to issue a writ of preliminary injunction
to restrain the Spouses Dungog from canceling the Contract and from preventing its representatives and
vehicles from passing through the properties subject of the Contract. Gothong Lines offered to post a
bond of P500,000.00 and consigned the P4,048,950.00 representing the balance of the purchase price.
Traversing Gothong Lines' allegations, the Spouses Dungog contended that it was Gothong Lines which
breached the Contract by stopping payment on the last 4 checks. The Spouses Dungog also charged
Gothong Lines with competing with them in acquiring one of the lots subject of the Contract. They
further countered that Gothong Lines violated a verbal agreement between them not to develop the
roads until after 30 June 1998, the last day for the Spouses Dungog to deliver and turn over the lots. The
Spouses Dungog opposed Gothong Lines' application for a writ of preliminary injunction on the ground
that Gothong Lines violated the terms of the Contract and the other contemporaneous agreements
between them.

Based on the pleadings and affidavits presented by the parties, the trial court granted on 14 August 1998
Gothong Lines' prayer for injunction. The dispositive portion of the Order reads:
WHEREFORE, in the light of the foregoing considerations, plaintiff's application
for the issuance of a writ of preliminary injunction is GRANTED. Consequently,
after the filing and approval of a bond in the amount of Three Hundred
Thousand Pesos (P300,000.00), let a writ of preliminary injunction issue,
enjoining defendants, their representatives, or anyone acting in their behalf; (a)
from canceling the contract to sell dated December 31, 1996; and (b) from
disallowing or preventing the entry and exit of plaintiff's vehicles and those of
its representatives through Lot 1031-F and other undelivered lots concerned. 8
Based on this Order, the trial court issued the Writ on 18 August 1998 which the sheriff served on the
same date.
Felipe assailed the Order and the Writ in a special civil action for certiorari before the Court of Appeals.
The appellate court, however, dismissed outright Felipe's petition. The appellate court also denied on 24
August 1999 Felipe's motion for reconsideration. Thus, Felipe filed the instant petition questioning the
propriety of the writ of preliminary injunction issued by the trial court.
The Rulings of the Trial Court and the Court of Appeals
In granting the Writ, the trial court stated
There is no dispute that plaintiff has already paid defendants the amount of
P51,248,348.26 out of the total consideration of P65,520,475.00. Plaintiff has
also deposited with the Office of the Clerk of Court the amount of
P4,048,950.00, leaving a balance of P10,223,176.74.
Plaintiff had already started the road development in the properties delivered
to it. In other words, it has already spent much to develop the properties which
form the bulk of the parcels of land subject of the contract.
Ingress to and egress from plaintiff's development activities lie on an
undelivered parcel of land. Through it pass the vehicles, equipment, supplies
and materials, as well as the workers, required by the project. The closure of
this passage has apparently stymied the development in the area.
About 78% of the properties are in the hands of plaintiff. Access to these
properties is under the control of defendants, the entrance being located in Lot
1031-F, one of the remaining undelivered lots. Since the entrance gate has been
closed by defendants, it strikes the mind of the court that Lot 1031-F and the
other undelivered lots have now, in a manner of speaking, imprisoned the
delivered properties.
It is not therefore hard to see that the closure of the entrance gate has worked
to the prejudice of plaintiff and will certainly jeopardize the development work
in the delivered properties. Elementary justice and the spirit of fair play thus
dictate that the status quo ante, which is the situation before the closure when
plaintiff's representatives were able to pass through Lot 1031-F, be restored.
Insofar as defendants threatened cancellation of the contract to sell, the Court
has seen that out of the total area of 131,040.95 square meters covered by the
contract, plaintiff had already paid for 102,496.69 square meters, and that it
had deposited P4,048,950.00 to pay for some of the undelivered parcels. It is
but fair that such a move be, in the meantime, disallowed. 9
In dismissing outright Felipe's petition for certiorari, prohibition and mandamus assailing the trial court's
Order and the Writ, the Court of Appeals stated
The petition should be dismissed outright, the petitioner has no standing here.
He may be the owner of the lot in question but he is not a party litigant in the
case a quo. His being a son of defendant spouse in the lower court does not give
him the capacity to sue. Of course, he is not without legal remedy to protect his
interest. 10
The Issue
In his Memorandum, Felipe narrows the inquiry to
MAY PETITIONER BE DEPRIVED OF HIS PROPERTY WITHOUT DUE PROCESS OF
LAW AND PAYMENT OF JUST COMPENSATION FOR THE BENEFIT OF PRIVATE
RESPONDENT? 11
Felipe laments that the dismissal of his petition resulted in the outright confiscation of his property for
the private use of Gothong Lines, without due process of law and just compensation. Felipe claims that in
dismissing his petition, the Court of Appeals effectively sustained the trial court's Order divesting him of
his rights over Lot 1031-F. CTcSIA
The question of whether Gothong Lines may demand the turn over of the parcels of land listed in Annex
"A" of the Contract is not our concern here. The issue in this petition is whether the Court of Appeals
erred in dismissing Felipe's petition.
The Court's Ruling
The petition is bereft of merit.
Dismissal by the Court of Appeals of Felipe's petition was proper.
Felipe committed a procedural blunder in filing a special civil action for certiorari to assail the Order and
the Writ. Felipe was not a party in Civil Case No. 5020-L. He could not, therefore, assail the writ of
preliminary injunction through a petition for certiorari before the Court of Appeals. As correctly pointed
out by the Court of Appeals, Felipe does not possess the requisite standing to file such suit.
In Ciudad Real v. Court of Appeals, 12 this Court ruled that there is grave abuse of discretion if the
appellate court recognizes the standing of a party, not a litigant in the trial court proceedings, to join a
petition for certiorari. The Court explained:
Worse was the ruling of the respondent appellate court sanctioning the
standing of Magdiwang Realty Corporation to join said petition for certiorari. As
the records show, Magdiwang filed a Motion for Intervention on July 18, 1989
invoking its alleged Memorandum of Agreement with Doa Juana Development
Corporation dated July 15, 1982. The trial court, however, denied this motion
and Magdiwang did not question the ruling in the appellate court. The ruling
thus, became final. After about two (2) years or on August 27, 1991, Magdiwang
again filed a Motion to Substitute and/or Join as Party/Plaintiff relying on the
same Memorandum of Agreement. The trial court similarly denied the motion,
and the denial also attained finality as Magdiwang did not further challenge its
correctness. Despite the finality of the order denying Magdiwang's intervention
way back in 1989, the respondent court in its Decision of August 20, 1992
recognized the standing of Magdiwang to assail in the appellate court the
Compromise Agreement. Again, this ruling constitutes grave abuse of discretion
for Magdiwang was not a party in interest in Civil Case No. Q-35393.
The wisdom of this ruling is all too apparent. If a person not a party to an action is allowed to file a
certiorari petition assailing an interlocutory order of the trial court, such as an injunctive order and writ,
proceedings will become unnecessarily complicated, expensive and interminable. Eventually, this will
defeat the policy of our remedial laws to secure party-litigants a speedy and inexpensive disposition of
every action.
Felipe could have simply intervened 13 in the trial court proceedings to enable him to protect or
preserve a right or interest which may be affected by such proceedings. A motion to intervene may be
filed at any time before rendition of judgment by the trial court. 14 The purpose of intervention is not to
obstruct or unnecessarily delay the placid operation of the machinery of trial. The purpose is merely to
afford one, not an original party but possessing a certain right or interest in the pending case, the
opportunity to appear and be joined so he could assert or protect such right or interest. 15 Indeed,
Felipe could have easily joined his parents as defendants in resisting the claim of Gothong Lines.
A resolution affirming the Court of Appeals' outright dismissal of Felipe's petition for these reasons
would have been sufficient. Nevertheless, we deem it best to address the propriety of the issuance by
the trial court of the writ of preliminary injunction before writing finis to this petition.
Issuance of writ of preliminary injunction was also proper.
Preliminary injunction is an order granted at any stage of an action, prior to the judgment or final order,
requiring a party, court, agency or person to perform or to refrain from performing a particular act or
acts. 16 A preliminary injunction, as the term itself suggests, is merely temporary, subject to the final
disposition of the principal action. Its purpose is to preserve the status quo of the matter subject of the
action to protect the rights of the plaintiff during the pendency of the suit. Otherwise, if no preliminary
injunction is issued, the defendant may, before final judgment, do the act which the plaintiff is seeking
the court to restrain. This will make ineffectual the final judgment that the court may afterwards render
in granting relief to the plaintiff. 17
The issuance of a writ of preliminary injunction rests entirely within the discretion of the court and is
generally not interfered with except in cases of manifest abuse. 18 The assessment and evaluation of
evidence in the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to
the trial court for its conclusive determination. 19
We find that there was adequate justification for the issuance of the assailed writ of preliminary
injunction. There is no dispute that the Spouses Dungog entered into the Contract with Gothong Lines
which included Lot 1031-F owned by Felipe. Felipe admitted that he authorized his parents to sell this
lot. He also admitted that his parents had delivered to Gothong Lines Lot 1031-F along with other parcels
of land. However, the Spouses Dungog threatened to cancel the Contract and to deny Gothong Lines
passage through Lot 1031-F allegedly due to non-payment of the subsequent installments.

In applying for the Writ, Gothong Lines sought to restrain in the meantime the Spouses Dungog from
canceling the Contract in order not to render the judgment ineffectual. Gothong Lines also sought to
preserve its right of way through Lot 1031-F to maintain access to the other parcels of land previously
delivered by the Spouses Dungog to Gothong Lines. cCHITA
A careful reading of the trial court's assailed Order discloses that the Writ enjoined the cancellation of
the Contract on the basis of Gothong Lines' substantial performance of the Contract. The trial court also
enjoined the closure of the entrance gate in Lot 1031-F to preserve the status quo ante.
Under Section 3, Rule 58 20 of the 1997 Rules on Civil Procedure, a preliminary injunction is proper when
the plaintiff appears entitled to the relief demanded in the complaint. The trial court found that Gothong
Lines had already paid P51,248,348.26 out of the total consideration of P65,520,475.00. Gothong Lines
also consigned with the court an additional P4,048,950.00 leaving a balance of P10,223,176.74. The trial
court likewise found that 78% of the properties were already in the possession of Gothong Lines.
Moreover, the status quo, which is the last actual peaceable uncontested status that preceded the
controversy, 21 was that Gothong Lines had access to the lots subject of the Contract through the
entrance gate in Lot 1031-F. That is why Gothong Lines commenced construction of its pier and the
development of the roads within the parcels of land covered by the Contract. The issuance of the Writ
would no doubt preserve the status quo between the Spouses Dungog and Gothong Lines that existed
prior to the filing of the case. We agree with the trial court that the status quo should be maintained
until the issue on the parties' respective rights and obligations under the Contract is determined after
the trial.
Clearly, in issuing the Writ, the trial court did not forthwith deprive Felipe of his ownership of Lot 1031-F.
Neither did the Writ have the effect of ousting Felipe from possession of the lot. The trial court did not
rule on the merits of the case so as to amount to a deprivation or confiscation of property without due
process of law or just compensation. There was no adjudication on the rightful possession or ownership
of the contested parcels of land subject of the Contract. The trial court issued the injunction only as a
preventive remedy to protect during the pendency of the action Gothong Lines' right to a final and
effective relief.
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
















SECOND DIVISION
[G.R. No. 131719. May 25, 2004.]
THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF
LABOR AND EMPLOYMENT, AND THE SECRETARY OF FOREIGN AFFAIRS,
OWWA ADMINISTRATOR, and POEA ADMINISTRATOR, petitioners, vs. THE
HON. COURT OF APPEALS and ASIAN RECRUITMENT COUNCIL PHILIPPINE
CHAPTER (ARCO-PHIL.), INC., representing its members: Worldcare Services
Internationale, Inc., Steadfast International Recruitment Corporation, Dragon
International Manpower Services Corporation, Verdant Manpower
Mobilization Corporation, Brent Overseas Personnel, Inc., ARL Manpower
Services, Inc., Dahlzhen International Services, Inc., Interworld Placement
Center, Inc., Lakas Tao Contract Services, Ltd. Co., and SSC
Multiservices, respondents.

D E C I S I O N
CALLEJO, SR., J p:
In this petition for review on certiorari, the Executive Secretary of the President of the Philippines, the
Secretary of Justice, the Secretary of Foreign Affairs, the Secretary of Labor and Employment, the POEA
Administrator and the OWWA Administrator, through the Office of the Solicitor General, assail the
Decision 1 of the Court of Appeals in CA-G.R. SP No. 38815 affirming the Order 2 of the Regional Trial
Court of Quezon City dated August 21, 1995 in Civil Case No. Q-95-24401, granting the plea of the
petitioners therein for a writ of preliminary injunction and of the writ of preliminary injunction issued by
the trial court on August 24, 1995.
The Antecedents
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995,
took effect on July 15, 1995. The Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipino Act of 1995 was, thereafter, published in the April 7, 1996 issue of the Manila Bulletin.
However, even before the law took effect, the Asian Recruitment Council Philippine Chapter, Inc. (ARCO-
Phil.) filed, on July 17, 1995, a petition for declaratory relief under Rule 63 of the Rules of Court with the
Regional Trial Court of Quezon City to declare as unconstitutional Section 2, paragraph (g), Section 6,
paragraphs (a) to (j), (l) and (m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of the law, with
a plea for the issuance of a temporary restraining order and/or writ of preliminary injunction enjoining
the respondents therein from enforcing the assailed provisions of the law.
In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was self-executory and that
no implementing rules were needed. It prayed that the court issue a temporary restraining order to
enjoin the enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment, Section 7 on penalties
for illegal recruitment, and Section 9 on venue of criminal actions for illegal recruitments, viz:
Viewed in the light of the foregoing discussions, there appears to be urgent an
imperative need for this Honorable Court to maintain the status quoby
enjoining the implementation or effectivity of the questioned provisions of RA
8042, by way of a restraining order otherwise, the member recruitment
agencies of the petitioner will suffer grave or irreparable damage or injury. With
the effectivity of RA 8042, a great majority of the duly licensed recruitment
agencies have stopped or suspended their operations for fear of being
prosecuted under the provisions of a law that are unjust and unconstitutional.
This Honorable Court may take judicial notice of the fact that processing of
deployment papers of overseas workers for the past weeks have come to a
standstill at the POEA and this has affected thousands of workers everyday just
because of the enactment of RA 8042. Indeed, this has far reaching effects not
only to survival of the overseas manpower supply industry and the active
participating recruitment agencies, the country's economy which has survived
mainly due to the dollar remittances of the overseas workers but more
importantly, to the poor and the needy who are in dire need of income-
generating jobs which can only be obtained from abroad. The loss or injury that
the recruitment agencies will suffer will then be immeasurable and irreparable.
As of now, even foreign employers have already reduced their manpower
requirements from the Philippines due to their knowledge that RA 8042
prejudiced and adversely affected the local recruitment agencies. 3
On August 1, 1995, the trial court issued a temporary restraining order effective for a period of only
twenty (20) days therefrom.
After the petitioners filed their comment on the petition, the ARCO-Phil. filed an amended petition, the
amendments consisting in the inclusion in the caption thereof eleven (11) other corporations which it
alleged were its members and which it represented in the suit, and a plea for a temporary restraining
order enjoining the respondents from enforcing Section 6 subsection (i), Section 6 subsection (k) and
paragraphs 15 and 16 thereof, Section 8, Section 10, paragraphs 1 and 2, and Sections 11 and 40 of Rep.
Act No. 8042.
The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to (m), Section 7(a) to
(b), and Section 10 paragraphs (1) and (2), quoted as follows:
(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL MIGRANT
WORKERS IS THE POSSESSION OF SKILLS. PURSUANT TO THIS AND AS SOON AS
PRACTICABLE, THE GOVERNMENT SHALL DEPLOY AND/OR ALLOW THE
DEPLOYMENT ONLY OF SKILLED FILIPINO WORKERS. 4
Sec. 2 subsection (i, 2nd par.)
Nonetheless, the deployment of Filipino overseas workers, whether land-based
or sea-based, by local service contractors and manning agents employing them
shall be encourages (sic). Appropriate incentives may be extended to them.
xxx xxx xxx
II. ILLEGAL RECRUITMENT
SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines: Provided, That any such non-licensee or non-
holder who, in any manner, offers or promises for a fee employment abroad to
two or more persons shall be deemed so engaged. It shall, likewise, include the
following acts, whether committed by any person, whether a non-licensee, non-
holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of Labor
and Employment, or to make a worker pay any amount greater than that
actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation
to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any
act of misrepresentation for the purpose of securing a license or authority
under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ any
worker who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and
Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies,
remittance of foreign exchange earnings, separation from jobs, departures and
such other matters or information as may be required by the Secretary of Labor
and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts
approved and verified by the Department of Labor and Employment from the
time of actual signing thereof by the parties up to and including the period of
the expiration of the same without the approval of the Department of Labor
and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an
officer or member of the Board of any corporation engaged in travel agency or
to be engaged directly or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations other than those authorized
under the Labor Code and its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as determined by the
Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group
of three (3) or more persons conspiring or confederating with one another. It is
deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.
xxx xxx xxx
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than
twelve (12) years and a fine of not less than two hundred thousand pesos
(P200,000.00) nor more than five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than five hundred
thousand pesos (P500,000.00) nor more than one million pesos (P1,000,000.00)
shall be imposed if illegal recruitment constitutes economic sabotage as defined
herein.
Provided, however, That the maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18) years of age or committed by a non-
licensee or non-holder of authority.
Sec. 8.
Prohibition on Officials and Employees. It shall be unlawful for any official or
employee of the Department of Labor and Employment, the Philippine
Overseas Employment Administration (POEA), or the Overseas Workers Welfare
Administration (OWWA), or the Department of Foreign Affairs, or other
government agencies involved in the implementation of this Act, or their
relatives within the fourth civil degree of consanguinity or affinity, to engage,
directly or indirectly, in the business of recruiting migrant workers as defined in
this Act. The penalties provided in the immediate preceding paragraph shall be
imposed upon them. (emphasis supplied)
xxx xxx xxx
Sec. 10, pars. 1 & 2.
Money Claims. Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This provision
shall be incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages.
xxx xxx xxx
SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. The
preliminary investigations of cases under this Act shall be terminated within a
period of thirty (30) calendar days from the date of their filing. Where the
preliminary investigation is conducted by a prosecution officer and a prima
facie case is established, the corresponding information shall be filed in court
within twenty-four (24) hours from the termination of the investigation. If the
preliminary investigation is conducted by a judge and a prima facie case is
found to exist, the corresponding information shall be filed by the proper
prosecution officer within forty-eight (48) hours from the date of receipt of the
records of the case.
The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate Section 1, Article III
of the Constitution. 5 According to the respondent, Section 6(g) and (i) discriminated against unskilled
workers and their families and, as such, violated the equal protection clause, as well asArticle II, Section
12 6 and Article XV, Sections 1 7 and 3(3) of the Constitution. 8 As the law encouraged the deployment of
skilled Filipino workers, only overseas skilled workers are granted rights. The respondent stressed that
unskilled workers also have the right to seek employment abroad. According to the respondent, the right
of unskilled workers to due process is violated because they are prevented from finding employment and
earning a living abroad. It cannot be argued that skilled workers are immune from abuses by employers,
while unskilled workers are merely prone to such abuses. It was pointed out that both skilled and
unskilled workers are subjected to abuses by foreign employers. Furthermore, the prohibition of the
deployment of unskilled workers abroad would only encourage fly-by-night illegal recruiters.
According to the respondent, the grant of incentives to service contractors and manning agencies to the
exclusion of all other licensed and authorized recruiters is an invalid classification. Licensed and
authorized recruiters are thus deprived of their right to property and due process and to the "equality of
the person." It is understandable for the law to prohibit illegal recruiters, but to discriminate against
licensed and registered recruiters is unconstitutional.
The respondent, likewise, alleged that Section 6, subsections (a) to (m) is unconstitutional because
licensed and authorized recruitment agencies are placed on equal footing with illegal recruiters. It
contended that while the Labor Code distinguished between recruiters who are holders of licenses and
non-holders thereof in the imposition of penalties, Rep. Act No. 8042 does not make any distinction. The
penalties in Section 7(a) and (b) being based on an invalid classification are, therefore, repugnant to the
equal protection clause, besides being excessive; hence, such penalties are violative of Section 19(1),
Article III of the Constitution. 9 It was also pointed out that the penalty for officers/officials/employees
of recruitment agencies who are found guilty of economic sabotage or large-scale illegal recruitment
under Rep. Act No. 8042 is life imprisonment. Since recruitment agencies usually operate with a
manpower of more than three persons, such agencies are forced to shut down, lest their officers and/or
employees be charged with large scale illegal recruitment or economic sabotage and sentenced to life
imprisonment. Thus, the penalty imposed by law, being disproportionate to the prohibited acts,
discourages the business of licensed and registered recruitment agencies.
The respondent also posited that Section 6(m) and paragraphs (15) and (16), Sections 8, 9 and 10,
paragraph 2 of the law violate Section 22, Article III of the Constitution 10 prohibiting ex-post facto laws
and bills of attainder. This is because the provisions presume that a licensed and registered recruitment
agency is guilty of illegal recruitment involving economic sabotage, upon a finding that it committed any
of the prohibited acts under the law. Furthermore, officials, employees and their relatives are presumed
guilty of illegal recruitment involving economic sabotage upon such finding that they committed any of
the said prohibited acts.
The respondent further argued that the 90-day period in Section 10, paragraph (1) within which a labor
arbiter should decide a money claim is relatively short, and could deprive licensed and registered
recruiters of their right to due process. The period within which the summons and the complaint would
be served on foreign employees and, thereafter, the filing of the answer to the complaint would take
more than 90 days. This would thereby shift on local licensed and authorized recruiters the burden of
proving the defense of foreign employers. Furthermore, the respondent asserted, Section 10, paragraph
2 of the law, which provides for the joint and several liability of the officers and employees, is a bill of
attainder and a violation of the right of the said corporate officers and employees to due process.
Considering that such corporate officers and employees act with prior approval of the board of directors
of such corporation, they should not be liable, jointly and severally, for such corporate acts.
The respondent asserted that the following provisions of the law are unconstitutional:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined
herein shall be filed with the Regional Trial Court of the province or city where
the offense was committed or where the offended party actually resides at the
time of the commission of the offense: Provided, That the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of other
courts: Provided, however, That the aforestated provisions shall also apply to
those criminal actions that have already been filed in court at the time of the
effectivity of this Act.
xxx xxx xxx
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
Sec. 40.
The departments and agencies charged with carrying out the provisions of this
Act shall, within ninety (90) days after the effectiviy of this Act, formulate the
necessary rules and regulations for its effective implementation.
According to the respondent, the said provisions violate Section 5(5). Article VIII of the
Constitution 11 because they impair the power of the Supreme Court to promulgate rules of procedure.
In their answer to the petition, the petitioners alleged, inter alia, that (a) the respondent has no cause of
action for a declaratory relief; (b) the petition was premature as the rules implementing Rep. Act No.
8042 not having been released as yet; (c) the assailed provisions do not violate any provisions of the
Constitution; and, (d) the law was approved by Congress in the exercise of the police power of the State.
In opposition to the respondent's plea for injunctive relief, the petitioners averred that:
As earlier shown, the amended petition for declaratory relief is devoid of merit
for failure of petitioner to demonstrate convincingly that the assailed law is
unconstitutional, apart from the defect and impropriety of the petition. One
who attacks a statute, alleging unconstitutionality must prove its invalidity
beyond reasonable doubt (Caleon v. Agus Development Corporation, 207 SCRA
748). All reasonable doubts should be resolved in favor of the constitutionality
of a statute (People v. Vera, 65 Phil. 56). This presumption of constitutionality is
based on the doctrine of separation of powers which enjoin upon each
department a becoming respect for the acts of the other departments (Garcia
vs. Executive Secretary, 204 SCRA 516 [1991]). Necessarily, the ancillary remedy
of a temporary restraining order and/or a writ of preliminary injunction prayed
for must fall. Besides, an act of legislature approved by the executive is
presumed to be within constitutional bounds (National Press Club
v. Commission on Elections, 207 SCRA 1). 12

After the respective counsels of the parties were heard on oral arguments, the trial court issued on
August 21, 1995, an order granting the petitioner's plea for a writ of preliminary injunction upon a bond
of P50,000. The petitioner posted the requisite bond and on August 24, 1995, the trial court issued a writ
of preliminary injunction enjoining the enforcement of the following provisions of Rep. Act No. 8042
pending the termination of the proceedings:
. . . Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m),
and pars. 15 & 16; Section 7, subsections (a) & (b); Section 8; Section 9; Section
10; pars. 1 & 2; Section 11; and Section 40 of Republic Act No. 8042, otherwise
known as the Migrant Workers and Overseas Filipinos Act of 1995. . . . 13
The petitioners filed a petition for certiorari with the Court of Appeals assailing the order and the writ of
preliminary injunction issued by the trial court on the following grounds:
1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of
its member-agencies to be protected by the injunctive relief and/or violation of
said rights by the enforcement of the assailed sections of R.A. 8042;
2. Respondent Judge fixed a P50,000 injunction bond which is grossly
inadequate to answer for the damage which petitioner-officials may sustain,
should respondent ARCO-PHIL. be finally adjudged as not being entitled
thereto. 14
The petitioners asserted that the respondent is not the real party-in-interest as petitioner in the trial
court. It is inconceivable how the respondent, a non-stock and non-profit corporation, could sustain
direct injury as a result of the enforcement of the law. They argued that if, at all, any damage would
result in the implementation of the law, it is the licensed and registered recruitment agencies and/or the
unskilled Filipino migrant workers discriminated against who would sustain the said injury or damage,
not the respondent. The respondent, as petitioner in the trial court, was burdened to adduce
preponderant evidence of such irreparable injury, but failed to do so. The petitioners further insisted
that the petition a quo was premature since the rules and regulations implementing the law had yet to
be promulgated when such petition was filed. Finally, the petitioners averred that the respondent failed
to establish the requisites for the issuance of a writ of preliminary injunction against the enforcement of
the law and the rules and regulations issued implementing the same.
On December 5, 1997, the appellate court came out with a four-page decision dismissing the petition
and affirming the assailed order and writ of preliminary injunction issued by the trial court. The appellate
court, likewise, denied the petitioners' motion for reconsideration of the said decision.
The petitioners now come to this Court in a petition for review on certiorari on the following grounds:
1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or
that of its member-agencies to be protected by the injunctive relief and/or
violation of said rights by the enforcement of the assailed sections of R.A. 8042;
2. The P50,000 injunction bond fixed by the court a quo and sustained by the
Court of Appeals is grossly inadequate to answer for the damage which
petitioners-officials may sustain, should private respondent ARCO-PHIL. be
finally adjudged as not being entitled thereto. 15
On February 16, 1998, this Court issued a temporary restraining order enjoining the respondents from
enforcing the assailed order and writ of preliminary injunction.
The Issues
The core issue in this case is whether or not the trial court committed grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary
injunction on a bond of only P50,000 and whether or not the appellate court erred in affirming the trial
court's order and the writ of preliminary injunction issued by it.
The petitioners contend that the respondent has no locus standi. It is a non-stock, non-profit
organization; hence, not the real party-in-interest as petitioner in the action. Although the respondent
filed the petition in the Regional Trial Court in behalf of licensed and registered recruitment agencies, it
failed to adduce in evidence a certified copy of its Articles of Incorporation and the resolutions of the
said members authorizing it to represent the said agencies in the proceedings. Neither is the suit of the
respondent a class suit so as to vest in it a personality to assail Rep. Act No. 8042; the respondent is
service-oriented while the recruitment agencies it purports to represent are profit-oriented. The
petitioners assert that the law is presumed constitutional and, as such, the respondent was burdened to
make a case strong enough to overcome such presumption and establish a clear right to injunctive relief.
The petitioners bewail the P50,000 bond fixed by the trial court for the issuance of a writ of preliminary
injunction and affirmed by the appellate court. They assert that the amount is grossly inadequate to
answer for any damages that the general public may suffer by reason of the non-enforcement of the
assailed provisions of the law. The trial court committed a grave abuse of its discretion in granting the
respondent's plea for injunctive relief, and the appellate court erred in affirming the order and the writ
of preliminary injunction issued by the trial court.
The respondent, for its part, asserts that it has duly established its locus standi and its right to injunctive
relief as gleaned from its pleadings and the appendages thereto. Under Section 5, Rule 58 of the Rules of
Court, it was incumbent on the petitioners, as respondents in the RTC, to show cause why no injunction
should issue. It avers that the injunction bond posted by the respondent was more than adequate to
answer for any injury or damage the petitioners may suffer, if any, by reason of the writ of preliminary
injunction issued by the RTC. In any event, the assailed provisions of Rep. Act No. 8042 exposed its
members to the immediate and irreparable damage of being deprived of their right to a livelihood
without due process, a property right protected under the Constitution.
The respondent contends that the commendable purpose of the law to eradicate illegal recruiters should
not be done at the expense and to the prejudice of licensed and authorized recruitment agencies. The
writ of preliminary injunction was necessitated by the great number of duly licensed recruitment
agencies that had stopped or suspended their business operations for fear that their officers and
employees would be indicted and prosecuted under the assailed oppressive penal provisions of the law,
and meted excessive penalties. The respondent, likewise, urges that the Court should take judicial notice
that the processing of deployment papers of overseas workers have come to a virtual standstill at the
POEA.
The Court's Ruling
The petition is meritorious.
The Respondent Has Locus Standi
To File the Petition in the RTC in
Representation of the Eleven
Licensed and Registered
Recruitment Agencies Impleaded
in the Amended Petition
The modern view is that an association has standing to complain of injuries to its members. This view
fuses the legal identity of an association with that of its members. 16 An association has standing to file
suit for its workers despite its lack of direct interest if its members are affected by the action. An
organization has standing to assert the concerns of its constituents. 17
In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on Elections, 18 we
held that standing jus tertii would be recognized only if it can be shown that the party suing has some
substantial relation to the third party, or that the right of the third party would be diluted unless the
party in court is allowed to espouse the third party's constitutional claims.
In this case, the respondent filed the petition for declaratory relief under Rule 64 of the Rules of Court
for and in behalf of its eleven (11) licensed and registered recruitment agencies which are its members,
and which approved separate resolutions expressly authorizing the respondent to file the said suit for
and in their behalf. We note that, under its Articles of Incorporation, the respondent was organized for
the purposes inter alia of promoting and supporting the growth and development of the manpower
recruitment industry, both in the local and international levels; providing, creating and exploring
employment opportunities for the exclusive benefit of its general membership; enhancing and
promoting the general welfare and protection of Filipino workers; and, to act as the representative of
any individual, company, entity or association on matters related to the manpower recruitment industry,
and to perform other acts and activities necessary to accomplish the purposes embodied therein. The
respondent is, thus, the appropriate party to assert the rights of its members, because it and its
members are in every practical sense identical. The respondent asserts that the assailed provisions
violate the constitutional rights of its members and the officers and employees thereof. The respondent
is but the medium through which its individual members seek to make more effective the expression of
their voices and the redress of their grievances. 19
However, the respondent has no locus standi to file the petition for and in behalf of unskilled workers.
We note that it even failed to implead any unskilled workers in its petition. Furthermore, in failing to
implead, as parties-petitioners, the eleven licensed and registered recruitment agencies it claimed to
represent, the respondent failed to comply with Section 2 of Rule 63 20 of the Rules of Court.
Nevertheless, since the eleven licensed and registered recruitment agencies for which the respondent
filed the suit are specifically named in the petition, the amended petition is deemed amended to avoid
multiplicity of suits. 21

The Assailed Order and Writ of
Preliminary Injunction Is Mooted
By Case Law
The respondent justified its plea for injunctive relief on the allegation in its amended petition that its
members are exposed to the immediate and irreparable danger of being deprived of their right to a
livelihood and other constitutional rights without due process, on its claim that a great number of duly
licensed recruitment agencies have stopped or suspended their operations for fear that (a) their officers
and employees would be prosecuted under the unjust and unconstitutional penal provisions of Rep. Act
No. 8042 and meted equally unjust and excessive penalties, including life imprisonment, for illegal
recruitment and large scale illegal recruitment without regard to whether the recruitment agencies
involved are licensed and/or authorized; and, (b) if the members of the respondent, which are licensed
and authorized, decide to continue with their businesses, they face the stigma and the curse of being
labeled "illegal recruiters." In granting the respondent's plea for a writ of preliminary injunction, the trial
court held, without stating the factual and legal basis therefor, that the enforcement of Rep. Act No.
8042, pendente lite, would cause grave and irreparable injury to the respondent until the case is decided
on its merits.
We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the Court had, in a catena
of cases, applied the penal provisions in Section 6, including paragraph (m) thereof, and the last two
paragraphs therein defining large scale illegal recruitment committed by officers and/or employees of
recruitment agencies by themselves and in connivance with private individuals, and imposed the
penalties provided in Section 7 thereof, including the penalty of life imprisonment. 22 The Informations
therein were filed after preliminary investigations as provided for in Section 11 of Rep. Act No. 8042 and
in venues as provided for in Section 9 of the said act. In People v. Chowdury, 23 we held that illegal
recruitment is a crime of economic sabotage and must be enforced.
In People v. Diaz, 24 we held that Rep. Act No. 8042 is but an amendment of the Labor Code of the
Philippines and is not an ex-post facto law because it is not applied retroactively. In JMM Promotion and
Management, Inc. v. Court of Appeals, 25 the issue of the extent of the police power of the State to
regulate a business, profession or calling vis--vis the equal protection clause and the non-impairment
clause of the Constitution were raised and we held, thus:
A profession, trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work and the
right to make a living because these rights are property rights, the arbitrary and
unwarranted deprivation of which normally constitutes an actionable wrong.
Nevertheless, no right is absolute, and the proper regulation of a profession,
calling, business or trade has always been upheld as a legitimate subject of a
valid exercise of the police power by the state particularly when their conduct
affects either the execution of legitimate governmental functions, the
preservation of the State, the public health and welfare and public morals.
According to the maxim, sic utere tuo ut alienum non laedas, it must of course
be within the legitimate range of legislative action to define the mode and
manner in which every one may so use his own property so as not to pose injury
to himself or others.
In any case, where the liberty curtailed affects at most the rights of property,
the permissible scope of regulatory measures is certainly much wider. To
pretend that licensing or accreditation requirements violates the due process
clause is to ignore the settled practice, under the mantle of the police power, of
regulating entry to the practice of various trades or professions. Professionals
leaving for abroad are required to pass rigid written and practical exams before
they are deemed fit to practice their trade. Seamen are required to take tests
determining their seamanship. Locally, the Professional Regulation Commission
has begun to require previously licensed doctors and other professionals to
furnish documentary proof that they had either re-trained or had undertaken
continuing education courses as a requirement for renewal of their licenses. It is
not claimed that these requirements pose an unwarranted deprivation of a
property right under the due process clause. So long as professionals and other
workers meet reasonable regulatory standards no such deprivation exists.
Finally, it is a futile gesture on the part of petitioners to invoke the non-
impairment clause of the Constitution to support their argument that the
government cannot enact the assailed regulatory measures because they
abridge the freedom to contract. In Philippine Association of Service Exporters,
Inc. vs. Drilon, we held that "[t]he non-impairment clause of the Constitution . . .
must yield to the loftier purposes targeted by the government." Equally
important, into every contract is read provisions of existing law, and always, a
reservation of the police power for so long as the agreement deals with a
subject impressed with the public welfare.
A last point. Petitioners suggest that the singling out of entertainers and
performing artists under the assailed department orders constitutes class
legislation which violates the equal protection clause of the Constitution. We do
not agree.
The equal protection clause is directed principally against undue favor and
individual or class privilege. It is not intended to prohibit legislation which is
limited to the object to which it is directed or by the territory in which it is to
operate. It does not require absolute equality, but merely that all persons be
treated alike under like conditions both as to privileges conferred and liabilities
imposed. We have held, time and again, that the equal protection clause of the
Constitution does not forbid classification for so long as such classification is
based on real and substantial differences having a reasonable relation to the
subject of the particular legislation. If classification is germane to the purpose of
the law, concerns all members of the class, and applies equally to present and
future conditions, the classification does not violate the equal protection
guarantee. 26
The validity of Section 6 of R.A. No. 8042 which provides that employees of recruitment agencies may be
criminally liable for illegal recruitment has been upheld in People v. Chowdury: 27
As stated in the first sentence of Section 6 of RA 8042, the persons who may be
held liable for illegal recruitment are the principals, accomplices and
accessories. An employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with his employer, if it is
shown that he actively and consciously participated in illegal recruitment. It has
been held that the existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally causes the
corporation to commit a crime. The corporation obviously acts, and can act,
only by and through its human agents, and it is their conduct which the law
must deter. The employee or agent of a corporation engaged in unlawful
business naturally aids and abets in the carrying on of such business and will be
prosecuted as principal if, with knowledge of the business, its purpose and
effect, he consciously contributes his efforts to its conduct and promotion,
however slight his contribution may be. . . . 28
By its rulings, the Court thereby affirmed the validity of the assailed penal and procedural provisions of
Rep. Act No. 8042, including the imposable penalties therefor. Until the Court, by final judgment,
declares that the said provisions are unconstitutional, the enforcement of the said provisions cannot be
enjoined.
The RTC Committed Grave Abuse
of Its Discretion Amounting to
Excess or Lack of Jurisdiction in
Issuing the Assailed Order and the
Writ of Preliminary Injunction
The matter of whether to issue a writ of preliminary injunction or not is addressed to the sound
discretion of the trial court. However, if the court commits grave abuse of its discretion in issuing the
said writ amounting to excess or lack of jurisdiction, the same may be nullified via a writ of certiorari and
prohibition.
In Social Security Commission v. Judge Bayona, 29 we ruled that a law is presumed constitutional until
otherwise declared by judicial interpretation. The suspension of the operation of the law is a matter of
extreme delicacy because it is an interference with the official acts not only of the duly elected
representatives of the people but also of the highest magistrate of the land.
In Younger v. Harris, Jr., 30 the Supreme Court of the United States emphasized, thus:
Federal injunctions against state criminal statutes, either in their entirety or
with respect to their separate and distinct prohibitions, are not to be granted as
a matter of course, even if such statutes are unconstitutional. No citizen or
member of the community is immune from prosecution, in good faith, for his
alleged criminal acts. The imminence of such a prosecution even though alleged
to be unauthorized and, hence, unlawful is not alone ground for relief in equity
which exerts its extraordinary powers only to prevent irreparable injury to the
plaintiff who seeks its aid. 752 Beal v.Missouri Pacific Railroad Corp., 312 U.S.
45, 49, 61 S.Ct. 418, 420, 85 L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:
"It does not appear from the record that petitioners have been threatened with
any injury other than that incidental to every criminal proceeding brought
lawfully and in good faith . . ." 319 U.S., at 164, 63 S.Ct., at 881. 31

The possible unconstitutionality of a statute, on its face, does not of itself justify an injunction against
good faith attempts to enforce it, unless there is a showing of bad faith, harassment, or any other
unusual circumstance that would call for equitable relief. 32 The "on its face" invalidation of statutes has
been described as "manifestly strong medicine," to be employed "sparingly and only as a last resort,"
and is generally disfavored. 33
To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed to be
unconstitutional, the party must establish that it will suffer irreparable harm in the absence of injunctive
relief and must demonstrate that it is likely to succeed on the merits, or that there are sufficiently serious
questions going to the merits and the balance of hardships tips decidedly in its favor. 34 The higher
standard reflects judicial deference toward "legislation or regulations developed through presumptively
reasoned democratic processes." Moreover, an injunction will alter, rather than maintain, thestatus quo,
or will provide the movant with substantially all the relief sought and that relief cannot be undone even
if the defendant prevails at a trial on the merits. 35 Considering that injunction is an exercise of equitable
relief and authority, in assessing whether to issue a preliminary injunction, the courts must sensitively
assess all the equities of the situation, including the public interest. 36 In litigations between
governmental and private parties, courts go much further both to give and withhold relief in furtherance
of public interest than they are accustomed to go when only private interests are involved. 37Before the
plaintiff may be entitled to injunction against future enforcement, he is burdened to show some
substantial hardship. 38
The fear or chilling-effect of the assailed penal provisions of the law on the members of the respondent
does not by itself justify prohibiting the State from enforcing them against those whom the State
believes in good faith to be punishable under the laws:
. . . Just as the incidental "chilling effect" of such statutes does not automatically
render them unconstitutional, so the chilling effect that admittedly can result
from the very existence of certain laws on the statute books does not in itself
justify prohibiting the State from carrying out the important and necessary task
of enforcing these laws against socially harmful conduct that the State believes
in good faith to be punishable under its laws and the Constitution. 39
It must be borne in mind that subject to constitutional limitations, Congress is empowered to define
what acts or omissions shall constitute a crime and to prescribe punishments therefor. 40 The power is
inherent in Congress and is part of the sovereign power of the State to maintain peace and order.
Whatever views may be entertained regarding the severity of punishment, whether one believes in its
efficiency or its futility, these are peculiarly questions of legislative policy. 41 The comparative gravity of
crimes and whether their consequences are more or less injurious are matters for the State and
Congress itself to determine. 42 Specification of penalties involves questions of legislative policy. 43
Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing
wholly passive conduct, defining crimes in vague or overbroad language and failing to grant fair warning
of illegal conduct. 44 Class legislation is such legislation which denies rights to one which are accorded to
others, or inflicts upon one individual a more severe penalty than is imposed upon another in like case
offending. 45 Bills of attainder are legislative acts which inflict punishment on individuals or members of
a particular group without a judicial trial. Essential to a bill of attainder are a specification of certain
individuals or a group of individuals, the imposition of a punishment, penal or otherwise, and the lack of
judicial trial. 46
Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their
relatives employed in government agencies charged with the enforcement of the law for illegal
recruitment and imposing life imprisonment for those who commit large scale illegal recruitment is not
offensive to the Constitution. The accused may be convicted of illegal recruitment and large scale illegal
recruitment only if, after trial, the prosecution is able to prove all the elements of the crime charged. 47
The possibility that the officers and employees of the recruitment agencies, which are members of the
respondent, and their relatives who are employed in the government agencies charged in the
enforcement of the law, would be indicted for illegal recruitment and, if convicted sentenced to life
imprisonment for large scale illegal recruitment, absent proof of irreparable injury, is not sufficient on
which to base the issuance of a writ of preliminary injunction to suspend the enforcement of the penal
provisions of Rep. Act No. 8042 and avert any indictments under the law. 48 The normal course of
criminal prosecutions cannot be blocked on the basis of allegations which amount to speculations about
the future. 49
There is no allegation in the amended petition or evidence adduced by the respondent that the officers
and/or employees of its members had been threatened with any indictments for violations of the penal
provisions of Rep. Act No. 8042. Neither is there any allegation therein that any of its members and/or
their officers and employees committed any of the acts enumerated in Section 6(a) to (m) of the law for
which they could be indicted. Neither did the respondent adduce any evidence in the RTC that any or all
of its members or a great number of other duly licensed and registered recruitment agencies had to stop
their business operations because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042.
The respondent merely speculated and surmised that licensed and registered recruitment agencies
would close shop and stop business operations because of the assailed penal provisions of the law. A
writ of preliminary injunction to enjoin the enforcement of penal laws cannot be based on such
conjectures or speculations. The Court cannot take judicial notice that the processing of deployment
papers of overseas workers have come to a virtual standstill at the POEA because of the assailed
provisions of Rep. Act No. 8042. The respondent must adduce evidence to prove its allegation, and the
petitioners accorded a chance to adduce controverting evidence.
The respondent even failed to adduce any evidence to prove irreparable injury because of the
enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of time
constraints, its members would have to defend foreign employees in cases before the Labor Arbiter is
based on speculations. Even if true, such inconvenience or difficulty is hardly irreparable injury.
The trial court even ignored the public interest involved in suspending the enforcement of Rep. Act No.
8042 vis--vis the eleven licensed and registered recruitment agencies represented by the respondent.
In People v. Gamboa, 50 we emphasized the primary aim of Rep. Act No. 8042:
Preliminarily, the proliferation of illegal job recruiters and syndicates preying on
innocent people anxious to obtain employment abroad is one of the primary
considerations that led to the enactment of The Migrant Workers and Overseas
Filipinos Act of 1995. Aimed at affording greater protection to overseas Filipino
workers, it is a significant improvement on existing laws in the recruitment and
placement of workers for overseas employment. Otherwise known as the
Magna Carta of OFWs, it broadened the concept of illegal recruitment under
the Labor Code and provided stiffer penalties thereto, especially those that
constitute economic sabotage, i.e., Illegal Recruitment in Large Scale and Illegal
Recruitment Committed by a Syndicate. 51
By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial court
frustrated, albeit temporarily, the prosecution of illegal recruiters and allowed them to continue
victimizing hapless and innocent people desiring to obtain employment abroad as overseas workers, and
blocked the attainment of the salutary policies 52 embedded in Rep. Act No. 8042. It bears stressing that
overseas workers, land-based and sea-based, had been remitting to the Philippines billions of dollars
which over the years had propped the economy.
In issuing the writ of preliminary injunction, the trial court considered paramount the interests of the
eleven licensed and registered recruitment agencies represented by the respondent, and capriciously
overturned the presumption of the constitutionality of the assailed provisions on the barefaced claim of
the respondent that the assailed provisions of Rep. Act No. 8042 are unconstitutional. The trial court
committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the
assailed order and writ of preliminary injunction. It is for this reason that the Court issued a temporary
restraining order enjoining the enforcement of the writ of preliminary injunction issued by the trial
court.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the appellate court
is REVERSED AND SET ASIDE. The Order of the Regional Trial Court dated August 21, 1995 in Civil Case
No. Q-95-24401 and the Writ of Preliminary Injunction issued by it in the said case on August 24, 1995
are NULLIFIED. No costs.
SO ORDERED.

















SECOND DIVISION
[G.R. No. 140058. August 1, 2002.]
MABAYO FARMS, INC., herein represented by its President MRS. RORAIMA
SILVA, petitioner, vs. HON. COURT OF APPEALS and ANTONIO
SANTOS, respondents.
Don P. Porciuncula for petitioner.
Oscar L. Karqan for private respondent.

SYNOPSIS
Petitioner bought the respective portions of the lawful possessors of the subject lot and entered into a
compromise settlement with six other persons occupying the property and then filed an application for
land registration which was decided by then Court of First Instance in petitioner's favor. Subsequently, a
group of occupants entered the land. Petitioner filed a complaint for injunction with damages, with a
prayer for a temporary restraining order (TRO), docketed as Civil Case No. 6695 with the RTC. The trial
court issued the TRO. Thereafter, the trial court issued a writ of preliminary injunction which was also
served upon respondent who was occupying a portion of the lot. Private respondent filed a special civil
action for certiorari with the Court of Appeals alleging among others that he was not a party to Civil Case
No. 6695 and that it was grave abuse of discretion for the trial court to enforce the injunctive writ
against him since it did not have jurisdiction over him. The appellate court decided in private
respondent's favor. Hence, the instant petition.
In affirming the decision of the Court of Appeals, the Supreme Court ruled that the persons specifically
enjoined in the order granting the writ of preliminary injunction were the defendants in Civil Case No.
6695 or persons acting in their stead. Petitioner admitted that private respondent was not a defendant
in the said civil case since at the institution thereof in 1997, he (private respondent) did not have a right
over any portion of petitioner's lot. Neither was he a trespasser then. Also, nothing in the records
indicate that private respondent was acting on behalf of any of the defendants. Taking all these into
consideration, the Court held that the writ of preliminary injunction thus cannot be made to apply to
private respondent. A preliminary injunction is not a cause of action in itself but merely a provisional
remedy, an adjunct to a main suit. Thus, a person who is not a party in the main suit, like private
respondent in the instant case, cannot be bound by an ancillary writ, such as the writ of preliminary
injunction issued against the defendants in Civil Case No. 6695. He cannot be affected by any proceeding
to which he is a stranger. cSIACD

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; CANNOT BIND A PERSON WHO
IS NOT A PARTY IN THE MAIN SUIT; CASE AT BAR. A preliminary injunction is an order granted at any
stage of an action prior to final judgment, requiring a person to refrain from a particular act. As an
ancillary or preventive remedy, a writ of preliminary injunction may therefore be resorted to by a party
to protect or preserve his rights and for no other purpose during the pendency of the principal action. Its
object is to preserve the status quo until the merits of the case can be heard. It is not a cause of action in
itself but merely a provisional remedy, an adjunct to a main suit. Thus, a person who is not a party in the
main suit, like private respondent in the instant case, cannot be bound by an ancillary writ, such as the
writ of preliminary injunction issued against the defendants in Civil Case No. 6695. He cannot be affected
by any proceeding to which he is a stranger.
2. ID.; ACTIONS; INTERVENTION; NOT COMPULSORY. Intervention in an action is neither compulsory
nor mandatory but only optional and permissive.
3. ID.; ID.; ID.; REQUISITES. [T]o warrant intervention, two requisites must concur: (a) the movant has
a legal interest in the matter in litigation, and (b) intervention must not unduly delay or prejudice the
adjudication of the rights of the parties nor should the claim of the intervenor be capable of being
properly decided in a separate proceeding. The interest, which entitles a person to intervene in a suit,
must involve the matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. AaHcIT

R E S O L U T I O N
QUISUMBING, J p:
This petition for review seeks to reverse the decision 1 promulgated on August 27, 1999, of the Court of
Appeals in CA-G.R. SP No. 51375. The appellate court enjoined the enforcement of the writ of
preliminary injunction dated April 14, 1998, issued by the Regional Trial Court of Balanga, Bataan, Branch
1, in Civil Case No. 6695 against private respondent, Antonio Santos. DCcSHE
The factual antecedents of this case are as follows: CADSHI
On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo Florida, Cornelio Pilipino
and Severino Vistan, lawful possessors of Lot 1379 of the Morong, Bataan Cadastre. Lot 1379 consists of
144 hectares. Domingo, Florida, Pilipino and Vistan through their forebears and by themselves had been
in open, notorious, and exclusive possession of portions of Lot 1379 since 1933 in the concept of owners.
The Bureau then directed them to confirm their titles over the property by filing the appropriate
applications for the portions of the property respectively occupied by them.
In October 1970, petitioner bought the respective portions of Domingo, Florida, Pilipino and Vistan,
totaling 69,932 square meters and entered into a compromise settlement with six other persons
occupying the property, whose applications had been rejected by the Bureau. Petitioner then filed an
application for land registration docketed as LRC Cad. Rec. No. N-209 with the then Court of First
Instance of Bataan, Branch 1. The application was contested by several oppositors, among them the
heirs of one Toribio Alejandro.
On December 20, 1991, the trial court decided the land registration case in petitioner's favor. The losing
parties appealed to the Court of Appeals, where the case was docketed as CA-G.R. CV No. 40452. On
March 14, 2000, the appellate court affirmed the lower court's decision. 2
In June 1997, a group of occupants entered the land, destroyed the fences and drove away livestock
owned by petitioner.
On October 9, 1997, petitioner filed a complaint for injunction with damages, with a prayer for a
temporary restraining order, docketed as Civil Case No. 6695, with the RTC of Balanga, Bataan. Named as
defendants were Juanito Infante, Domingo Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe,
and Richard Doe.
The trial court issued the temporary restraining order (TRO) and on January 16, 1998, the sheriff served
copies on the defendants. The sheriff accompanied petitioner's president to the property where they
found five (5) persons cultivating the land. The latter refused to give their names or receive copies of the
TRO. They claimed that they were only farm workers of a certain Antonio Santos who allegedly owned
the land. 3
On April 14, 1998, the trial court issued a writ of preliminary injunction restraining the defendants or
persons acting on their behalf from entering and cultivating the disputed property. The aforementioned
writ was also served upon respondent who was occupying a portion of Lot No. 1379. 4
On February 24, 1999, private respondent filed a special civil action for certiorari docketed as CA-G.R. SP
No. 51375 with the Court of Appeals. Private respondent averred that he only learned about the writ of
preliminary injunction on February 16, 1999, when he secured a copy of the order. He claimed that he
was an innocent purchaser for value of the property from Francisco, Armando, and Conchita, all
surnamed Alejandro and the injunction prevented him from using his property. He alleged that he was
not a party to Civil Case No. 6695 and that it was grave abuse of discretion for the trial court to enforce
the injunctive writ against him since it did not have jurisdiction over him.
On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in private respondent's favor,
thus:
WHEREFORE, premises considered the instant Petition is hereby GRANTED.
Public respondent is enjoined from imposing the questioned writ of preliminary
injunction dated April 14, 199[8] against petitioner [Santos].
SO ORDERED. 5
Hence, the instant petition, submitting the following issues for our consideration:
A. WHETHER [PRIVATE] RESPONDENT WAS DEPRIVED OF HIS CONSTITUTIONAL
RIGHT TO BE HEARD.
B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL PROCEDURE 6 IS
APPLICABLE IN THE ABOVE-ENTITLED CASE.
We find the lone issue to be: Is private respondent bound by the writ of preliminary injunction issued by
the trial court?
First, petitioner contends that the injunctive writ of April 14, 1998 was issued not only against all named
defendants in Civil Case No. 6695, but also against three unnamed "Does." It now argues that the "Does"
in the complaint are all those who violated its rights, including private respondent. Petitioner asks us to
note that the writ of injunction was served not only against the defendants in Civil Case No. 6695, but
also against other persons who were seen entering and cultivating petitioner's property, including
private respondent. Since the latter personally received the injunctive order on June 5, 1998, he was
already forewarned to intervene in Civil Case No. 6695 if he had any right or interest to protect in the
disputed property. This he failed to do. Since private respondent did not then take the opportunity to
present his side, he cannot now claim that he was denied due process when the writ was enforced
against him.
In his comment, private respondent counters that he was not legally bound nor required by law to file his
pleadings in Civil Case No. 6695 as he was not a party in said case. Likewise, he was not required to act
on or protest the injunctive writ in the aforementioned civil case. Private respondent avers that what
petitioner wants is to have a continuing writ in its favor, to include not only the defendants in Civil Case
No. 6695 but also all those who may subsequently intrude into the land dispute. Private respondent
submits that the court a quo committed no error in describing petitioner's posture as a violation of the
fundamental rights to notice and hearing.

We have minutely scrutinized the order granting the writ of preliminary injunction and are unable to say
that the writ applied to private respondent. The order merely stated "[L]et a writ of preliminary
injunction be issued enjoining and restraining the defendants or any person or persons acting in their
place or stead from further entering and cultivating the said land of the plaintiff subject matter of this
case until further order from the Court." 7 The persons specifically enjoined in the order were the
defendants in Civil Case No. 6695 or persons acting in their stead. Petitioner itself admitted that private
respondent was not a defendant in Civil Case No. 6695 since "at the institution of the case in 1997, he
(private respondent) did not have a right over any portion of petitioner's lot." 8 Neither was he a
trespasser then. 9 Also, nothing in the records indicate that private respondent was acting on behalf of
any of the defendants. Taking all these into consideration, we must hold that the writ of preliminary
injunction thus cannot be made to apply to private respondent.
A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring a
person to refrain from a particular act. 10 As an ancillary or preventive remedy, a writ of preliminary
injunction may therefore be resorted to by a party to protect or preserve his rights and for no other
purpose during the pendency of the principal action. 11 Its object is to preserve the status quo until the
merits of the case can be heard. 12 It is not a cause of action in itself but merely a provisional remedy, an
adjunct to a main suit. 13 Thus, a person who is not a party in the main suit, like private respondent in
the instant case, cannot be bound by an ancillary writ, such as the writ of preliminary injunction issued
against the defendants in Civil Case No. 6695. He cannot be affected by any proceeding to which he is a
stranger. 14
Second, petitioner contends that the Court of Appeals erred when it observed that petitioner should
have impleaded private respondent as defendant in Civil Case No. 6695 pursuant to Section 11, Rule 3 of
the 1997 Rules of Civil Procedure. 15 Instead, private respondent should have intervened in Civil Case
No. 6695 to protect his rights. Petitioner avers that at the time the injunctive writ was issued, it had
already rested its case and to require it to amend its complaint to include private respondent was too
late.
Private respondent counters that there was no reason why Section 11, Rule 3 of the 1997 Rules of Civil
Procedure should not be made to apply to Civil Case No. 6695. He argues that contrary to petitioner's
posture, his inclusion as a defendant in Civil Case No. 6695 is procedurally correct since no final
judgment had yet been rendered in said case. Moreover, he avers that petitioner cannot insist that
private respondent be vigilant in protecting his rights by intervening in Civil Case No. 6695.
We agree with private respondent. First, private respondent had no duty to intervene in the proceedings
in Civil Case No. 6695. Intervention in an action is neither compulsory nor mandatory but only optional
and permissive. 16 Second, to warrant intervention, two requisites must concur: (a) the movant has a
legal interest in the matter in litigation, 17 and (b) intervention must not unduly delay or prejudice the
adjudication of the rights of the parties 18 nor should the claim of the intervenor be capable of being
properly decided in a separate proceeding. 19 The interest, which entitles a person to intervene in a suit,
must involve the matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. 20 Civil Case No. 6695 was an
action for permanent injunction and damages. As a stranger to the case, private respondent had neither
legal interest in a permanent injunction nor an interest on the damages to be imposed, if any, in Civil
Case No. 6695. To allow him to intervene would have unnecessarily complicated and prolonged the case.
We agree with the Court of Appeals that to make the injunctive writ applicable against private
respondent, petitioner should have impleaded the latter as an additional defendant in Civil Case No.
6695. Petitioner's insistence that it had rested its case and hence was too late to include defendant finds
no support in Section 11. The rule categorically provides that "Parties may be dropped or added by order
of the court on motion of any party or on its own initiative at any stage of the action (stress supplied)
and on such terms as are just." 21 We find it inexplicable why petitioner pointedly resisted the advice of
the appellate court to implead private respondent as an additional defendant in Civil Case No. 6695.
WHEREFORE, the instant petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R.
SP No. 51375 AFFIRMED. No pronouncement as to costs. DACTSH
SO ORDERED.
EN BANC
[G.R. No. 136760. July 29, 2003.]
THE SENATE BLUE RIBBON COMMITTEE, represented by its Chairman,
SENATOR AQUILINO Q. PIMENTEL, JR., petitioner, vs. HON. JOSE B.
MAJADUCON, Presiding Judge of Branch 23, Regional Trial Court of General
Santos City, and ATTY. NILO J. FLAVIANO, respondents.
[G.R. No. 138378. July 29, 2003.]
AQUILINO Q. PIMENTEL, JR., petitioner, vs. THE HONORABLE JOSE S.
MAJADUCON, in his capacity as Presiding Judge of Branch 23, Regional Trial
Court, General Santos City, respondent.
Eddie U. Tamondong, Jose S. Songco, Abelardo de Jesus and Felipe R. Fragrante for petitioners.
Flaviano Canja Oclarit & Associates for Atty. N.J. Flaviano

SYNOPSIS
Before the Supreme Court are two consolidated petitions for certiorari docketed as G.R. No. 136760 and
G.R. No. 138378 assailing the resolutions of the respondent judge dismissing petitioner's motion to
dismiss the petition for prohibition, injunction with writ of preliminary injunction filed by private
respondent and convicting petitioner Senator Aquilino Q. Pimentel with indirect contempt.
In G.R. No. 136760, petitioners alleged that the respondent judge committed grave abuse of discretion
and/or acted without or in excess of jurisdiction when he enjoined the petitioners from proceeding with
the inquiry in P.S. 160 on the alleged anomaly in the purchase of Lot X, MR-1160-D, located in General
Santos City, by the AFP-RSBS, and enforcing its subpoenas to respondent Flaviano. According to
petitioner Committee, courts have no jurisdiction to restrain Congress from performing its
constitutionally vested function to conduct investigations in aid of legislation, following the principle of
separation of powers. On the other hand, respondent Flaviano contended that the trial court may
properly intervene into investigations by Congress pursuant to the power of judicial review vested in it
by the Constitution.
In G.R. No. 138378, petitioner Senator Aquilino Pimentel, Jr. contended that respondent judge erred in
finding him guilty of indirect contempt. According to Pimentel, when the petitioner Committee used the
phrase "gross ignorance of the rules of law and procedure," it did so without malice. Rather, it was only
to stress the unfamiliarity or disregard by the respondent judge of a basic rule of procedure, and to
buttress its arguments in support of its petition forcertiorari.
The Court held that the respondent judge's denial of petitioners' motion to dismiss the petition for
prohibition amounted to grave abuse of discretion. According to the Court, the principle of separation of
powers essentially means that legislation belongs to Congress, execution to the Executive, and
settlement of legal controversies to the Judiciary. When the Senate Blue Ribbon Committee served
subpoena on respondent Flaviano to appear and testify before it in connection with its investigation of
the alleged misuse and mismanagement of the AFP-RSBS, it did so pursuant to its authority to conduct
inquiries in aid of legislation. This is clearly provided in Article VI, Section 21 of the Constitution. Hence,
the Regional Trial Court of General Santos City, or any court for that matter, had no authority to prohibit
the Committee from requiring respondent to appear and testify before it. aDCIHE
The Court further held that petitioner Pimentel was not guilty of improper conduct which obstructs or
degrades the administration of justice. According to the Court, there was no showing that petitioner, as
representative of the Committee, used the phrase "gross ignorance of the rules of law and procedure" to
malign the trial court. Rather, it was used to express what he believed was a violation of the basic
principle of separation of powers.
Petitions granted.

SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; GRAVE ABUSE OF DISCRETION;
WHEN PRESENT. There is grave abuse of discretion when the respondent acts in a capricious,
whimsical, arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is
bereft of any factual and legal justification. In this case, the assailed resolution of respondent Judge
Majaducon was issued without legal basis.
2. ID.; ID.; CONTEMPT; INDIRECT CONTEMPT; PETITIONER IS NOT GUILTY THEREOF IN CASE AT BAR.
After deliberating on the parties' arguments, we find that petitioner Pimentel is not guilty of improper
conduct which obstructs or degrades the administration of justice. Verily, it does not appear that
Pimentel caused the publication in the Philippine Star of the fact of filing of the petition for certiorari by
the Committee and the reproduction of excerpts thereof. He had no right to choose which news articles
will see print in the newspaper. Rather, it is the publisher thereof which decides which news events will
be reported in the broadsheet. In doing so, it is allowed "the widest latitude of choice as to what items
should see the light of day so long as they are relevant to a matter of public interest," pursuant to its
right of press freedom.
3. ID.; ID.; ID.; STATEMENT THAT RESPONDENT WAS GROSSLY IGNORANT OF THE RULES OF LAW AND
PROCEDURE DOES NOT CONSTITUTE IMPROPER CONDUCT WHICH OBSTRUCTS OR DEGRADE THE
ADMINISTRATION OF JUSTICE IN CASE AT BAR. Finally, the statement that respondent Judge was
grossly ignorant of the rules of law and procedure does not constitute improper conduct that tends to
impede, obstruct or degrade the administration of justice. As correctly argued by petitioner, the phrase
"gross ignorance of the rules of law and procedure" is ordinarily found in administrative complaints and
is a necessary description to support a petition which seeks the annulment of an order of a judge
wherein basic legal principles are disregarded. In Spouses Bacar v. Judge De Guzman, Jr., it was held that
when the law is so elementary, not to know it or to act as if a judge does not know it, constitutes gross
ignorance of the law. In this case, there was no showing that petitioner Pimentel, as representative of
the Committee, used the phrase to malign the trial court. Rather, it was used to express what he
believed as a violation of the basic principle of separation of powers.
4. JUDICIAL ETHICS; JUDGES; CONTEMPT POWER; MUST BE EXERCISED ON THE PRESERVATIVE NOT
VINDICTIVE PRINCIPLE AND ON THE CORRECTIVE AND NOT RETALIATORY IDEA OF PUNISHMENT; CASE
AT BAR. In this connection, it bears stressing that the power to declare a person in contempt of court
must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory
idea of punishment. This was aptly expressed in the case of Nazareno v. Barnes: A judge, as a public
servant, should not be so thin-skinned or sensitive as to feel hurt or offended if a citizen expresses an
honest opinion about him which may not altogether be flattering to him. After all, what matters is that a
judge performs his duties in accordance with the dictates of his conscience and the light that God has
given him. A judge should never allow himself to be moved by pride, prejudice, passion, or pettiness in
the performance of his duties. He should always bear in mind that the power of the court to punish for
contempt should be exercised for purposes that are impersonal, because that power is intended as a
safeguard not for the judges as persons but for the functions that they exercise.
5. POLITICAL LAW; SEPARATION OF POWERS; APPLICATION OF THE PRINCIPLE; COURTS HAVE NO
AUTHORITY TO PROHIBIT THE SENATE OR THE HOUSE OF REPRESENTATIVES FROM CONDUCTING
INQUIRIES IN AID OF LEGISLATION. The principle of separation of powers essentially means that
legislation belongs to Congress, execution to the Executive, and settlement of legal controversies to the
Judiciary. Each is prevented from invading the domain of the others. When the Senate Blue Ribbon
Committee served subpoena on respondent Flaviano to appear and testify before it in connection with
its investigation of the alleged misuse and mismanagement of the AFP-RSBS funds, it did so pursuant to
its authority to conduct inquiries in aid of legislation. This is clearly provided in Article VI, Section 21 of
the Constitution, thus: The Senate or the House of Representatives or any of its respective committees
may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The
rights of persons appearing in or affected by such inquiries shall be respected. Hence, the Regional Trial
Court of General Santos City, or any court for that matter, had no authority to prohibit the Committee
from requiring respondent to appear and testify before it.
6. ID.; ID.; ID.; ID.; RULING IN BENGZON CASE (G.R. NO. 89914, 20 NOVEMBER 1991) NOT APPLICABLE TO
CASE AT BAR. The ruling inBengzon, cited by respondent, does not apply in this case. We agree with
petitioner Committee that the factual circumstances therein are different from those in the case at bar.
In Bengzon, no intended legislation was involved and the subject matter of the inquiry was more within
the province of the courts rather than of the legislature. More specifically, the investigation in the said
case was an offshoot of the privilege speech of then Senator Enrile, who urged the Senate to look into a
possible violation of the Anti-Graft and Corrupt Practices Act by the relatives of then President Corazon
Aquino, particularly Mr. Ricardo Lopa, in connection with the alleged sale of 36 to 39 corporations
belonging to Benjamin Romualdez. On the other hand, there was in this case a clear legislative purpose,
as stated in Senate Resolution No. 160, and the appropriate Senate Committee was directed to look into
the reported misuse and mismanagement of the AFP-RSBS funds, with the intention of enacting
appropriate legislation to protect the rights and interests of the officers and members of the Armed
Forces of the Philippines. Further, in Bengzon, the validity of the sale of Romualdez's corporations was
pending with the Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct its
investigation. In short, the issue had already been pre-empted by the court. In the instant case, the
complaint against respondent Flaviano regarding the anomaly in the sale of Lot X, MR-1160 was still
pending before the Office of the Ombudsman when the Committee served subpoena on him. In other
words, no court had acquired jurisdiction over the matter. Thus, there was as yet no encroachment by
the legislature into the exclusive jurisdiction of another branch of the government. Clearly, there was no
basis for the respondent Judge to apply the ruling in Bengzon. Hence, the denial of petitioner's motion to
dismiss the petition for prohibition amounted to grave abuse of discretion.

D E C I S I O N
YNARES-SANTIAGO, J p:
For resolution are two consolidated petitions: (a) G.R. No. 136760, for certiorari, prohibition, mandamus
and preliminary injunction, assailing the resolution dated November 11, 1998 of Judge Jose S.
Majaducon of the Regional Trial Court of General Santos City, Branch 23, which denied the Senate Blue
Ribbon Committee's motion to dismiss the petition for prohibition, injunction with writ of preliminary
injunction filed by private respondent Atty. Nilo J. Flaviano; and (b) G.R. No. 138378, for review of the
resolution dated April 15, 1999 of respondent Judge Majaducon declaring petitioner Senator Aquilino Q.
Pimentel, Jr. guilty of indirect contempt of court.
The antecedent facts are as follows:
G.R. No. 136760:
On August 28, 1998, Senator Blas F. Ople filed Senate Resolution No. 157 directing the Committee on
National Defense and Security to conduct an inquiry, in aid of legislation, into the charges of then
Defense Secretary Orlando Mercado that a group of active and retired military officers were organizing
a coup d 'etat to prevent the administration of then President Joseph Estrada from probing alleged fund
irregularities in the Armed Forces of the Philippines. 1
On the same date, Senator Vicente C. Sotto III also filed Resolution No. 160, "directing the appropriate
senate committee to conduct an inquiry, in aid of legislation, into the alleged mismanagement of the
funds and investment portfolio of the Armed Forces Retirement and Separation Benefits System (AFP-
RSBS) . . .." 2
The Senate President referred the two resolutions to the Committee on Accountability of Public Officers
and Investigations (Blue Ribbon Committee) and the Committee on National Defense and Security.
During the public hearings conducted by the Senate Blue Ribbon Committee (hereafter called the
Committee), it appeared that the AFP-RSBS purchased a lot in General Santos City, designated as Lot X,
MR-1160, for P10,500.00 per square meter from private respondent Atty. Nilo J. Flaviano. However, the
deed of sale filed with the Register of Deeds indicated that the purchase price of the lot was only
P3,000.00 per square meter.
The Committee thereafter caused the service of a subpoena to respondent Atty. Flaviano, directing him
to appear and testify before it. Respondent refused to appear at the hearing. Instead, he filed a petition
for prohibition and preliminary injunction with prayer for temporary restraining order with the Regional
Trial Court of General Santos City, Branch 23, which was docketed as SP Civil Case No. 496.
On October 21, 1998, the trial court issued a Temporary Restraining Order directing the Committee "to
CEASE and DESIST from proceeding with the inquiry in P.S. 160 particularly in General Santos City and/or
anywhere in Region XI or Manila on matters affecting the patenting/titling and sale of Lot X, MR-1160-D
to AFP-RSBS," and "from issuing subpoenas to witnesses from Region XI, particularly from General Santos
City, pending the hearing of the petition for prohibition and injunction." 3
On November 5, 1998, the Committee filed a motion to dismiss the petition on the grounds of (a) lack of
jurisdiction, and (b) failure to state a valid cause of action. It further argued that the issuance of the
Temporary Restraining Order was invalid for violating the rule against ex-parte issuance thereof; and that
the same was not enforceable beyond the territorial jurisdiction of the trial court.
On November 11, 1998, the trial court denied petitioner's motion to dismiss and granted the writ of
preliminary injunction, thus:
WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is DENIED, and the
WRIT OF PRELIMINARY INJUNCTION is hereby issued against respondent. It is
enjoined from enforcing its subpoenas to petitioner in Region XI to appear and
testify before it in any of its inquiry or investigation anywhere in the Philippines
regarding the acquisition by the AFP-RSBS of Lot X, MR-1160-D, located in
General Santos City. The bond of petitioner filed on October 21, 1998, for
P500,000.00 for the TRO also serves as his bond in this injunction.
SO ORDERED. 4
Hence, the instant petition for certiorari which was docketed as G.R. No. 136760, alleging that
respondent Judge Majaducon committed grave abuse of discretion and/or acted without or in excess of
jurisdiction when he:
I. DENIED PETITIONER'S MOTION TO DISMISS THE PETITION FOR PROHIBITION
AND PRELIMINARY INJUNCTION FILED BY PRIVATE RESPONDENT,
ATTY. NILO J. FLAVIANO, AGAINST THE PETITIONER IN SP. CIVIL CASE
NO. 496.
II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE FOR A PERIOD OF
TWENTY (20) DAYS AGAINST THE PETITIONER ON OCTOBER 21, 1998,
AND (2) A WRIT OF PRELIMINARY INJUNCTION ON NOVEMBER 11,
1998 ENJOINING THE PETITIONER FROM ENFORCING ITS
SUBPOENAS TO PRIVATE RESPONDENT IN REGION XI.
III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE RIBBON IN GRANTING
INJUNCTIVE RELIEF TO PRIVATE RESPONDENT.5
G.R. No. 138378:
On January 13, 1999, the newspaper, The Philippine Star published a news report on the filing by the
Committee with this Court of the petition for certiorari which was docketed as G.R. No. 136760. The
news report quoted portions of the petition filed by the Committee, alleging that Regional Trial Court
Judge Majaducon was guilty of gross ignorance of the rules and procedures when he issued the
temporary restraining order and the writ of preliminary injunction because, under the principle of
separation of powers, courts cannot interfere with the exercise by the legislature of its authority to
conduct investigations in aid of legislation. 6
Reacting to the aforesaid news report, respondent Judge Majaducon motu proprio initiated a charge for
indirect contempt of court against Senator Aquilino Q. Pimentel, Jr., news reporter Perseus Echeminada,
Philippine Star publisher Maximo Soliven, editor-in-chief Ramon J. Farolan, and executive editor Bobby
G. dela Cruz, which was docketed as Special Civil Case No. 496. Judge Majaducon averred that the news
report created in the minds of the reader the impression that he violated the separation of powers
clause of the Constitution and that he was guilty of gross ignorance of the rules and procedures.
After the respondents submitted their respective answers, a decision was rendered on April 15, 1999
finding petitioner Pimentel guilty of indirect contempt.
Hence, the instant petition based on the following grounds:
I. THE EXPRESSION "GROSS IGNORANCE OF THE RULES OF PROCEDURE" OR
"GROSS IGNORANCE OF THE LAW" IN REFERENCE TO THE
RESPONDENT'S EX-PARTE ISSUANCE OF INJUNCTIVE RELIEF IS NOT
PEJORATIVE AS TO CONSTITUTE A GROUND FOR INDIRECT
CONTEMPT.
II. THIS HONORABLE COURT ITSELF USES "GROSS IGNORANCE OF THE LAW"
AND OTHER EXPRESSIONS OF SIMILAR FORCEFUL IMPORT IN
DESCRIBING GROSS AND PALPABLE ERRORS OF JUDGES.
III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE PETITIONER, THE
RESPONDENT JUDGE HAS, IN EFFECT, PREEMPTED THIS HONORABLE
COURT IN RESOLVING THE ISSUES RAISED AGAINST HIM IN G.R. NO.
136760.
IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE RIBBON PETITION IN
G.R. NO. 136760, OR EXCERPTS THEREOF WAS A LEGITIMATE
EXERCISE OF FREEDOM OF EXPRESSION AND OF THE PRESS.
The two petitions, namely, G.R. No. 136760 and G.R. No. 138378, were ordered consolidated on
December 11, 2000.
The issues for resolution in these joint petitions are: (a) whether or not respondent Judge Jose
Majaducon committed grave abuse of discretion when he dismissed petitioner's motion to dismiss the
petition for prohibition and issued the writ of preliminary injunction; and (b) whether or not respondent
Judge erred in convicting petitioner Pimentel of indirect contempt of court.
On the first issue, petitioner Committee contends that courts have no jurisdiction to restrain Congress
from performing its constitutionally vested function to conduct investigations in aid of legislation,
following the principle of separation of powers. Moreover, the petition filed by respondent Flaviano
before the trial court failed to state a cause of action considering that the legislative inquiry did not deal
with the issuance of the patent and title to Lot X, MR-1160-D in the name of AFP-RSBS, which is well
within the court's jurisdiction, but with the anomaly in the purchase thereof, which falls squarely within
the ambit of Senate Resolutions Nos. 157 7 and 160. 8
On the other hand, respondent Flaviano contends that the trial court may properly intervene into
investigations by Congress pursuant to the power of judicial review vested in it by the Constitution. He
avers that he has a valid cause of action to file the petition for prohibition considering that the
Committee's investigation will delve into the validity of the patenting and titling of Lot X, MR-1160-D
which, as admitted by petitioner, falls within the competence of judicial courts. In fact, the validity of the
purchase by AFP-RSBS of the subject lot is already the subject of a pending action before the Regional
Trial Court of General Santos City and the Ombudsman of Mindanao. Finally, he cites the case
of Bengzon v. Senate Blue Ribbon Committee, 9and argues that preliminary injunction may issue in cases
pending before administrative bodies such as the Ombudsman or the Office of the Prosecutor as long as
the right to self-incrimination guaranteed by the Bill of Rights is in danger. Furthermore, an information
against him has been filed with the Sandiganbayan.
We find for petitioner. There is grave abuse of discretion when the respondent acts in a capricious,
whimsical, arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is
bereft of any factual and legal justification. 10 In this case, the assailed resolution of respondent Judge
Majaducon was issued without legal basis.
The principle of separation of powers essentially means that legislation belongs to Congress, execution
to the Executive, and settlement of legal controversies to the Judiciary. Each is prevented from invading
the domain of the others. 11 When the Senate Blue Ribbon Committee served subpoena on respondent
Flaviano to appear and testify before it in connection with its investigation of the alleged misuse and
mismanagement of the AFP-RSBS funds, it did so pursuant to its authority to conduct inquiries in aid of
legislation. This is clearly provided in Article VI, Section 21 of the Constitution, thus:

The Senate or the House of Representatives or any of its respective committees
may conduct inquiries in aid of legislation in accordance with its duly published
rules of procedure. The rights of persons appearing in or affected by such
inquiries shall be respected.
Hence, the Regional Trial Court of General Santos City, or any court for that matter, had no authority to
prohibit the Committee from requiring respondent to appear and testify before it.
The ruling in Bengzon, cited by respondent, does not apply in this case. We agree with petitioner
Committee that the factual circumstances therein are different from those in the case at bar. In Bengzon,
no intended legislation was involved and the subject matter of the inquiry was more within the province
of the courts rather than of the legislature. More specifically, the investigation in the said case was an
offshoot of the privilege speech of then Senator Enrile, who urged the Senate to look into a possible
violation of the Anti-Graft and Corrupt Practices Act by the relatives of then President Corazon Aquino,
particularly Mr. Ricardo Lopa, in connection with the alleged sale of 36 to 39 corporations belonging to
Benjamin Romualdez. On the other hand, there was in this case a clear legislative purpose, as stated in
Senate Resolution No. 160, and the appropriate Senate Committee was directed to look into the
reported misuse and mismanagement of the AFP-RSBS funds, with the intention of enacting appropriate
legislation to protect the rights and interests of the officers and members of the Armed Forces of the
Philippines. Further, in Bengzon, the validity of the sale of Romualdez's corporations was pending with
the Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct its investigation. In
short, the issue had already been pre-empted by the court.
In the instant case, the complaint against respondent Flaviano regarding the anomaly in the sale of Lot X,
MR-1160 was still pending before the Office of the Ombudsman when the Committee served subpoena
on him. In other words, no court had acquired jurisdiction over the matter. Thus, there was as yet no
encroachment by the legislature into the exclusive jurisdiction of another branch of the government.
Clearly, there was no basis for the respondent Judge to apply the ruling in Bengzon. Hence, the denial of
petitioner's motion to dismiss the petition for prohibition amounted to grave abuse of discretion.
In G.R. No. 138378, petitioner, Senator Aquilino Pimentel, Jr., contends that respondent judge erred in
finding him, as representative of the Committee, guilty of indirect contempt of court under Rule 71,
Section 3(d) of the 1997 Rules of Civil Procedure. According to Pimentel, the phrase "gross ignorance of
the rules of law and procedure," which the Committee used in the petition, is not depreciatory, but
merely a description of normal usage in petitions where the acts of lower courts are challenged before
higher judicial bodies. In fact, this Court often uses the phrase in its decisions to describe judges who
commit gross and palpable mistakes in their interpretation and application of the law. Petitioner further
maintains that when the Committee used the phrase, it did so without malice. Rather, it was only to
stress the unfamiliarity of or disregard by the respondent Judge of a basic rule of procedure, and to
buttress its arguments in support of its petition for certiorari.
Petitioner Pimentel also contends that he had no participation in the publication in the Philippine Star of
excerpts from the Committee's petition for certiorari. Even assuming arguendo that it was within his
control, he pointed out that he could not have prevented the editors and writers of the newspaper from
publishing the same, lest he violate their constitutional right of free expression. Indeed, the report by the
Philippine Star of the filing of the petition and the reproduction of its contents was a legitimate exercise
of press freedom.
Respondent Judge counters that Pimentel was guilty of indirect contempt of court, first for causing the
publication of the Committee's petition in the Philippine Star notwithstanding that the same was sub
judice, second,for making derogatory remarks in the petition itself which affected the honor and integrity
of the respondent judge and degraded the administration of justice; and third, for making it appear that
an administrative complaint was filed against respondent Judge for gross ignorance of the law. These, he
said, constituted malicious and false report which obstructed the administration of justice.
Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:
Section 3. Indirect contempt to be punished after charge and hearing. After a
charge in writing has been filed, and an opportunity given to the respondent to
comment thereon within such period as may be fixed by the court and to be
heard by himself or counsel, a person guilty of any of the following acts may be
punished for indirect contempt;
xxx xxx xxx
d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice; . . ..
After deliberating on the parties' arguments, we find that petitioner Pimentel is not guilty of improper
conduct which obstructs or degrades the administration of justice.
Verily, it does not appear that Pimentel caused the publication in the Philippine Star of the fact of filing
of the petition for certiorari by the Committee and the reproduction of excerpts thereof. He had no right
to choose which news articles will see print in the newspaper. Rather, it is the publisher thereof which
decides which news events will be reported in the broadsheet. In doing so, it is allowed "the widest
latitude of choice as to what items should see the light of day so long as they are relevant to a matter of
public interest," pursuant to its right of press freedom. 12
Respondent Judge's allegation that petitioner made it appear that an administrative complaint was filed
against him is without basis. From a careful perusal of the records, it appears that while the Committee
prayed for the imposition of administrative sanctions against respondent Judge Majaducon for gross
ignorance of the law, no formal administrative complaint was instituted separately from the petition for
certiorari.
Finally, the statement that respondent Judge was grossly ignorant of the rules of law and procedure does
not constitute improper conduct that tends to impede, obstruct or degrade the administration of justice.
As correctly argued by petitioner, the phrase "gross ignorance of the rules of law and procedure" is
ordinarily found in administrative complaints and is a necessary description to support a petition which
seeks the annulment of an order of a judge wherein basic legal principles are disregarded.
In Spouses Bacar v. Judge De Guzman, Jr. 13 it was held that when the law is so elementary, not to know
it or to act as if a judge does not know it, constitutes gross ignorance of the law. In this case, there was
no showing that petitioner Pimentel, as representative of the Committee, used the phrase to malign the
trial court. Rather, it was used to express what he believed as a violation of the basic principle of
separation of powers.
In this connection, it bears stressing that the power to declare a person in contempt of court must be
exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of
punishment. 14 This was aptly expressed in the case of Nazareno v. Barnes: 15
A judge, as a public servant, should not be so thin-skinned or sensitive as to feel
hurt or offended if a citizen expresses an honest opinion about him which may
not altogether be flattering to him. After all, what matters is that a judge
performs his duties in accordance with the dictates of his conscience and the
light that God has given him. A judge should never allow himself to be moved by
pride, prejudice, passion, or pettiness in the performance of his duties. He
should always bear in mind that the power of the court to punish for contempt
should be exercised for purposes that are impersonal, because that power is
intended as a safeguard not for the judges as persons but for the functions that
they exercise.
WHEREFORE, in view of the foregoing, the petitions docketed as G.R. Nos. 136760 and 138378 are
GRANTED. The resolution of the Regional Trial Court of General Santos City, Branch 23, in Special Civil
Case No. 496 dated November 11, 1998, which denied the Senate Blue Ribbon Committee's motion to
dismiss, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the trial court on
November 11, 1998 is DISSOLVED. The resolution dated April 15, 1999, which declared Senator Aquilino
Q. Pimentel, Jr. guilty of indirect contempt of court, is REVERSED and SET ASIDE. The petition for indirect
contempt is ordered DISMISSED. SCEDAI
SO ORDERED.



SECOND DIVISION
[G.R. No. 158540. July 8, 2004.]
SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. THE PHILIPPINE
CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE DEPARTMENT OF
TRADE & INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE, and
THE COMMISSIONER OF THE BUREAU OF CUSTOMS, respondents.

D E C I S I O N
TINGA, J p:
"Good fences make good neighbors," so observed Robert Frost, the archetype of traditional New
England detachment. The Frost ethos has been heeded by nations adjusting to the effects of the
liberalized global market. 1 The Philippines, for one, enacted Republic Act (Rep. Act) No. 8751 (on the
imposition of countervailing duties), Rep. Act No. 8752 (on the imposition of anti-dumping duties) and,
finally, Rep. Act No. 8800, also known as the Safeguard Measures Act ("SMA") 2 soon after it joined the
General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement. 3
The SMA provides the structure and mechanics for the imposition of emergency measures, including
tariffs, to protect domestic industries and producers from increased imports which inflict or could inflict
serious injury on them. 4 The wisdom of the policies behind the SMA, however, is not put into question
by the petition at bar. The questions submitted to the Court relate to the means and the procedures
ordained in the law to ensure that the determination of the imposition or non-imposition of a safeguard
measure is proper.
Antecedent Facts
Petitioner Southern Cross Cement Corporation ("Southern Cross") is a domestic corporation engaged in
the business of cement manufacturing, production, importation and exportation. Its principal
stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation, purportedly the largest
cement manufacturers in Japan. 5
Private respondent Philippine Cement Manufacturers Corporation 6 ("Philcemcor") is an association of
domestic cement manufacturers. It has eighteen (18) members, 7 per Record. While Philcemcor heralds
itself to be an association of domestic cement manufacturers, it appears that considerable equity
holdings, if not controlling interests in at least twelve (12) of its member-corporations, were acquired by
the three largest cement manufacturers in the world, namely Financiere Lafarge S.A. of France, Cemex
S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland (formerly Holderbank Financiere Glaris, Ltd., then
Holderfin B.V.). 8
On 22 May 2001, respondent Department of Trade and Industry ("DTI") accepted an application from
Philcemcor, alleging that the importation of gray Portland cement 9 in increased quantities has caused
declines in domestic production, capacity utilization, market share, sales and employment; as well as
caused depressed local prices. Accordingly, Philcemcor sought the imposition at first of provisional, then
later, definitive safeguard measures on the import of cement pursuant to the SMA. Philcemcor filed the
application in behalf of twelve (12) of its member-companies. 10
After preliminary investigation, the Bureau of Import Services of the DTI, determined that critical
circumstances existed justifying the imposition of provisional measures. 11 On 7 November 2001, the DTI
issued an Order, imposing a provisional measure equivalent to Twenty Pesos and Sixty Centavos (P20.60)
per forty (40) kilogram bag on all importations of gray Portland cement for a period not exceeding two
hundred (200) days from the date of issuance by the Bureau of Customs (BOC) of the
implementing Customs Memorandum Order. 12 The corresponding Customs Memorandum Order was
issued on 10 December 2001, to take effect that same day and to remain in force for two hundred (200)
days. 13
In the meantime, the Tariff Commission, on 19 November 2001, received a request from the DTI for a
formal investigation to determine whether or not to impose a definitive safeguard measure on imports
of gray Portland cement, pursuant to Section 9 of the SMA and its Implementing Rules and Regulations.
A notice of commencement of formal investigation was published in the newspapers on 21 November
2001. Individual notices were likewise sent to concerned parties, such as Philcemcor, various importers
and exporters, the Embassies of Indonesia, Japan and Taiwan, contractors/builders associations, industry
associations, cement workers' groups, consumer groups, non-government organizations and concerned
government agencies. 14 A preliminary conference was held on 27 November 2001, attended by several
concerned parties, including Southern Cross. 15 Subsequently, the Tariff Commission received several
position papers both in support and against Philcemcor's application. 16 The Tariff Commission also
visited the corporate offices and manufacturing facilities of each of the applicant companies, as well as
that of Southern Cross and two other cement importers. 17
On 13 March 2002, the Tariff Commission issued its Formal Investigation Report ("Report"). Among the
factors studied by the Tariff Commission in its Report were the market share of the domestic
industry, 18 production and sales, 19 capacity utilization, 20 financial performance and
profitability, 21 and return on sales. 22 The Tariff Commission arrived at the following conclusions:
1. The circumstances provided in Article XIX of GATT 1994 need not be
demonstrated since the product under consideration (gray Portland
cement) is not the subject of any Philippine obligation or tariff
concession under the WTO Agreement. Nonetheless, such inquiry is
governed by the national legislation (R.A. 8800) and the terms and
conditions of the Agreement on Safeguards.
2. The collective output of the twelve (12) applicant companies constitutes a
major proportion of the total domestic production of gray Portland
cement and blended Portland cement.
3. Locally produced gray Portland cement and blended Portland cement
(Pozzolan) are "like" to imported gray Portland cement.
4. Gray Portland cement is being imported into the Philippines in increased
quantities, both in absolute terms and relative to domestic
production, starting in 2000. The increase in volume of imports is
recent, sudden, sharp and significant.
5. The industry has not suffered and is not suffering significant overall
impairment in its condition, i.e., serious injury.
6. There is no threat of serious injury that is imminent from imports of gray
Portland cement.
7. Causation has become moot and academic in view of the negative
determination of the elements of serious injury and imminent threat
of serious injury. 23
Accordingly, the Tariff Commission made the following recommendation, to wit:
The elements of serious injury and imminent threat of serious injury not having
been established, it is hereby recommended that no definitive general
safeguard measure be imposed on the importation of gray Portland cement. 24
The DTI received the Report on 14 March 2002. After reviewing the report, then DTI Secretary Manuel
Roxas II ("DTI Secretary") disagreed with the conclusion of the Tariff Commission that there was no
serious injury to the local cement industry caused by the surge of imports. 25 In view of this
disagreement, the DTI requested an opinion from the Department of Justice ("DOJ") on the DTI
Secretary's scope of options in acting on the Commission's recommendations. Subsequently, then DOJ
Secretary Hernando Perez rendered an opinion stating that Section 13 of the SMA precluded a review by
the DTI Secretary of the Tariff Commission's negative finding, or finding that a definitive safeguard
measure should not be imposed. 26
On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the conclusions of the Tariff
Commission, the DTI Secretary noted the DTI's disagreement with the conclusions. However, he also
cited the DOJ Opinion advising the DTI that it was bound by the negative finding of the Tariff
Commission. Thus, he ruled as follows:
The DTI has no alternative but to abide by the [Tariff] Commission's
recommendations.
IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA 8800
which states:
"In the event of a negative final determination; or if the cash bond is
in excess of the definitive safeguard duty assessed, the Secretary
shall immediately issue, through the Secretary of Finance, a written
instruction to the Commissioner of Customs, authorizing the return
of the cash bond or the remainder thereof, as the case may be,
previously collected as provisional general safeguard measure within
ten (10) days from the date a final decision has been made;
Provided, that the government shall not be liable for any interest on
the amount to be returned. The Secretary shall not accept for
consideration another petition from the same industry, with respect
to the same imports of the product under consideration within one
(1) year after the date of rendering such a decision."
The DTI hereby issues the following:
The application for safeguard measures against the importation of
gray Portland cement filed by PHILCEMCOR (Case No. 02-2001) is
hereby denied. 27 (Emphasis in the original)
Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days later, it filed with the Court of
Appeals a Petition for Certiorari, Prohibition and Mandamus 28 seeking to set aside the DTI Decision, as
well as the Tariff Commission's Report. Philcemcor likewise applied for a Temporary Restraining
Order/Injunction to enjoin the DTI and the BOC from implementing the questioned Decision and Report.
It prayed that the Court of Appeals direct the DTI Secretary to disregard the Report and to render
judgment independently of the Report. Philcemcor argued that the DTI Secretary, vested as he is under
the law with the power of review, is not bound to adopt the recommendations of the Tariff Commission;
and, that the Report is void, as it is predicated on a flawed framework, inconsistent inferences and
erroneous methodology. 29

On 10 June 2002, Southern Cross filed its Comment. 30 It argued that the Court of Appeals had no
jurisdiction over Philcemcor's Petition, for it is on the Court of Tax Appeals ("CTA") that the SMA
conferred jurisdiction to review rulings of the Secretary in connection with the imposition of a safeguard
measure. It likewise argued that Philcemcor's resort to the special civil action of certiorari is improper,
considering that what Philcemcor sought to rectify is an error of judgment and not an error of
jurisdiction or grave abuse of discretion, and that a petition for review with the CTA was available as a
plain, speedy and adequate remedy. Finally, Southern Cross echoed the DOJ Opinion that Section 13 of
the SMA precludes a review by the DTI Secretary of a negative finding of the Tariff Commission.
After conducting a hearing on 19 June 2002 on Philcemcor's application for preliminary injunction, the
Court of Appeals' Twelfth Division 31 granted the writ sought in its Resolution dated 21 June
2002. 32 Seven days later, on 28 June 2002, the two-hundred (200)-day period for the imposition of the
provisional measure expired. Despite the lapse of the period, the BOC continued to impose the
provisional measure on all importations of Portland cement made by Southern Cross. The uninterrupted
assessment of the tariff, according to Southern Cross, worked to its detriment to the point that the
continued imposition would eventually lead to its closure. 33
Southern Cross timely filed a Motion for Reconsideration of the Resolution on 9 September 2002.
Alleging that Philcemcor was not entitled to provisional relief, Southern Cross likewise sought a
clarificatory order as to whether the grant of the writ of preliminary injunction could extend the earlier
imposition of the provisional measure beyond the two hundred (200)-day limit imposed by law. The
appeals court failed to take immediate action on Southern Cross' motion despite the four (4) motions for
early resolution the latter filed between September of 2002 and February of 2003. After six (6) months,
on 19 February 2003, the Court of Appeals directed Philcemcor to comment on Southern Cross's Motion
for Reconsideration. 34 After Philcemcor filed itsOpposition 35 on 13 March 2003, Southern Cross filed
another set of four (4) motions for early resolution.
Despite the efforts of Southern Cross, the Court of Appeals failed to directly resolve the Motion for
Reconsideration. Instead, on 5 June 2003, it rendered a Decision, 36 granting in part Philcemcor's
petition. The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged
grave abuse of discretion. It refused to annul the findings of the Tariff Commission, citing the rule that
factual findings of administrative agencies are binding upon the courts and its corollary, that courts
should not interfere in matters addressed to the sound discretion and coming under the special technical
knowledge and training of such agencies. 37 Nevertheless, it held that the DTI Secretary is not bound by
the factual findings of the Tariff Commission since such findings are merely recommendatory and they
fall within the ambit of the Secretary's discretionary review. It determined that the legislative intent is to
grant the DTI Secretary the power to make a final decision on the Tariff Commission's
recommendation. 38 The dispositive portion of theDecision reads:
WHEREFORE, based on the foregoing premises, petitioner's prayer to set aside
the findings of the Tariff Commission in its assailed Report dated March 13,
2002 is DENIED. On the other hand, the assailed April 5, 2002 Decision of the
Secretary of the Department of Trade and Industry is hereby SET ASIDE.
Consequently, the case is REMANDED to the public respondent Secretary of
Department of Trade and Industry for a final decision in accordance with RA
8800 and its Implementing Rules and Regulations.
SO ORDERED. 39
On 23 June 2003, Southern Cross filed the present petition, assailing the appellate court's Decision for
departing from the accepted and usual course of judicial proceedings, and not deciding the substantial
questions in accordance with law and jurisprudence. The petition argues in the main that the Court of
Appeals has no jurisdiction over Philcemcor's petition, the proper remedy being a petition for review
with the CTA conformably with the SMA, and; that the factual findings of the Tariff Commission on the
existence or non-existence conditions warranting the imposition of general safeguard measures are
binding upon the DTI Secretary.
The timely filing of Southern Cross's petition before this Court necessarily prevented the Court of
Appeals Decision from becoming final. 40 Yet on 25 June 2003, the DTI Secretary issued a new Decision,
ruling this time that in light of the appellate court's Decision there was no longer any legal impediment to
his deciding Philcemcor's application for definitive safeguard measures. 41 He made a determination
that, contrary to the findings of the Tariff Commission, the local cement industry had suffered serious
injury as a result of the import surges. 42 Accordingly, he imposed a definitive safeguard measure on the
importation of gray Portland cement, in the form of a definitive safeguard duty in the amount of
P20.60/40 kg. bag for three years on imported gray Portland Cement. 43
On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a Temporary
Restraining Order and/or A Writ of Preliminary Injunction" ("TRO Application"), seeking to enjoin the DTI
Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition before this Court.
Philcemcor filed an opposition, claiming, among others, that it is not this Court but the CTA that has
jurisdiction over the application under the law.
On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary's
25 June 2003 Decision which imposed the definite safeguard measure. Prescinding from this action,
Philcemcor filed with this Court a Manifestation and Motion to Dismiss in regard to Southern Cross's
petition, alleging that it deliberately and willfully resorted to forum-shopping. It points out that Southern
Cross's TRO Application seeks to enjoin the DTI Secretary's second decision, while its Petition before the
CTA prays for the annulment of the same decision. 44
Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor also argues that the CTA,
being a special court of limited jurisdiction, could only review the ruling of the DTI Secretary when a
safeguard measure is imposed, and that the factual findings of the Tariff Commission are not binding on
the DTI Secretary. 45
After giving due course to Southern Cross's Petition, the Court called the case for oral argument on 18
February 2004. 46 At the oral argument, attended by the counsel for Philcemcor and Southern Cross and
the Office of the Solicitor General, the Court simplified the issues in this wise: (i) whether theDecision of
the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the Court of
Appeals has jurisdiction, whether itsDecision is in accordance with law; and, (iii) whether a Temporary
Restraining Order is warranted. 47
During the oral arguments, counsel for Southern Cross manifested that due to the imposition of the
general safeguard measures, Southern Cross was forced to cease operations in the Philippines in
November of 2003. 48
Propriety of the Temporary Restraining Order
Before the merits of the Petition, a brief comment on Southern Cross's application for provisional relief.
It sought to enjoin the DTI Secretary from enforcing the definitive safeguard measure he imposed in his
25 June 2003 Decision. The Court did not grant the provisional relief for it would be tantamount to
enjoining the collection of taxes, a peremptory judicial act which is traditionally frowned upon, 49 unless
there is a clear statutory basis for it.50 In that regard, Section 218 of the Tax Reform Act of 1997
prohibits any court from granting an injunction to restrain the collection of any national internal revenue
tax, fee or charge imposed by the internal revenue code. 51 A similar philosophy is expressed by Section
29 of the SMA, which states that the filing of a petition for review before the CTA does not stop,
suspend, or otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of
other appropriate safeguard measures. 52 This evinces a clear legislative intent that the imposition of
safeguard measures, despite the availability of judicial review, should not be enjoined notwithstanding
any timely appeal of the imposition. cdasia
The Forum-Shopping Issue
In the same breath, we are not convinced that the allegation of forum-shopping has been duly proven, or
that sanction should befall upon Southern Cross and its counsel. The standard by Section 5, Rule 7 of the
1997 Rules of Civil Procedure in order that sanction may be had is that "the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping." 53 The standard implies a malicious
intent to subvert procedural rules, and such state of mind is not evident in this case.
The Jurisdictional Issue
On to the merits of the present petition.
In its assailed Decision, the Court of Appeals, after asserting only in brief that it had jurisdiction over
Philcemcor's Petition, discussed the issue of whether or not the DTI Secretary is bound to adopt the
negative recommendation of the Tariff Commission on the application for safeguard measure. The Court
of Appeals maintained that it had jurisdiction over the petition, as it alleged grave abuse of discretion on
the part of the DTI Secretary, thus:

A perusal of the instant petition reveals allegations of grave abuse of discretion
on the part of the DTI Secretary in rendering the assailed April 5, 2002 Decision
wherein it was ruled that he had no alternative but to abide by the findings of
the Commission on the matter of safeguard measures for the local cement
industry. Abuse of discretion is admittedly within the ambit of certiorari.
Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. It is alleged that, in the assailed
Decision, the DTI Secretary gravely abused his discretion in wantonly evading to
discharge his duty to render an independent determination or decision in
imposing a definitive safeguard measure. 54
We do not doubt that the Court of Appeals' certiorari powers extend to correcting grave abuse of
discretion on the part of an officer exercising judicial or quasi-judicial functions. 55 However, the special
civil action of certiorari is available only when there is no plain, speedy and adequate remedy in the
ordinary course of law. 56 Southern Cross relies on this limitation, stressing that Section 29 of the SMA is
a plain, speedy and adequate remedy in the ordinary course of law which Philcemcor did not avail of.
The Section reads:
Section 29. Judicial Review. Any interested party who is adversely affected by
the ruling of the Secretary in connection with the imposition of a safeguard
measure may file with the CTA, a petition for review of such ruling within thirty
(30) days from receipt thereof. Provided, however, that the filing of such
petition for review shall not in any way stop, suspend or otherwise toll the
imposition or collection of the appropriate tariff duties or the adoption of other
appropriate safeguard measures, as the case may be.
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same disposition
as in appeals in connection with adverse rulings on tax matters to the Court of
Appeals. 57 (Emphasis supplied)
It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review
the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. The Court has
long recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving
internal revenue and customs duties to such a specialized court. 58 By the very nature of its function, the
CTA is dedicated exclusively to the study and consideration of tax problems and has necessarily
developed an expertise on the subject. 59
At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a
case should be clearly conferred and should not be deemed to exist on mere
implication. 60 Concededly, Rep. Act No. 1125, the statute creating the CTA, does not extend to it the
power to review decisions of the DTI Secretary in connection with the imposition of safeguard
measures. 61 Of course, at that time which was before the advent of trade liberalization the notion of
safeguard measures or safety nets was not yet in vogue.
Undeniably, however, the SMA expanded the jurisdiction of the CTA by including review of the rulings of
the DTI Secretary in connection with the imposition of safeguard measures. However, Philcemcor and
the public respondents agree that the CTA has appellate jurisdiction over a decision of the DTI Secretary
imposing a safeguard measure, but not when his ruling is not to impose such measure.
In a related development, Rep. Act No. 9282, enacted on 30 March 2004, expressly vests unto the CTA
jurisdiction over "[d]ecisions of the Secretary of Trade and Industry, in case of nonagricultural product,
commodity or article . . . involving . . . safeguard measures under Republic Act No. 8800, where either
party may appeal the decision to impose or not to impose said duties." 62 Had Rep. Act No. 9282 already
been in force at the beginning of the incidents subject of this case, there would have been no need to
make any deeper inquiry as to the extent of the CTA's jurisdiction. But as Rep. Act No. 9282 cannot be
applied retroactively to the present case, the question of whether such jurisdiction extends to a decision
not to impose a safeguard measure will have to be settled principally on the basis of the SMA.
Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire jurisdiction over
the petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the
petition must be filed by an interested party adversely affected by the ruling; and (iii) such ruling must be
in connection with the imposition of a safeguard measure. The first two requisites are clearly present.
The third requisite deserves closer scrutiny.
Contrary to the stance of the public respondents and Philcemcor, in this case where the DTI Secretary
decides not to impose a safeguard measure, it is the CTA which has jurisdiction to review his decision.
The reasons are as follows:
First. Split jurisdiction is abhorred.
Essentially, respondents' position is that judicial review of the DTI Secretary's ruling is exercised by two
different courts, depending on whether or not it imposes a safeguard measure, and in either case the
court exercising jurisdiction does so to the exclusion of the other. Thus, if the DTI decision involves the
imposition of a safeguard measure it is the CTA which has appellate jurisdiction; otherwise, it is the Court
of Appeals. Such setup is as novel and unusual as it is cumbersome and unwise. Essentially, respondents
advocate that Section 29 of the SMA has established split appellate jurisdiction over rulings of the DTI
Secretary on the imposition of safeguard measure.
This interpretation cannot be favored, as the Court has consistently refused to sanction split
jurisdiction. 63 The power of the DTI Secretary to adopt or withhold a safeguard measure emanates from
the same statutory source, and it boggles the mind why the appeal modality would be such that one
appellate court is qualified if what is to be reviewed is a positive determination, and it is not if what is
appealed is a negative determination. In deciding whether or not to impose a safeguard measure,
provisional or general, the DTI Secretary would be evaluating only one body of facts and applying them
to one set of laws. The reviewing tribunal will be called upon to examine the same facts and the same
laws, whether or not the determination is positive or negative.
In short, if we were to rule for respondents we would be confirming the exercise by two judicial bodies
of jurisdiction over basically the same subject matter precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice. 64 The Court cannot accept that such was the
legislative motive especially considering that the law expressly confers on the CTA, the tribunal with the
specialized competence over tax and tariff matters, the role of judicial review without mention of any
other court that may exercise corollary or ancillary jurisdiction in relation to the SMA. The provision
refers to the Court of Appeals but only in regard to procedural rules and dispositions of appeals from the
CTA to the Court of Appeals. 65
The principle enunciated in Tejada v. Homestead Property Corporation 66 is applicable to the case at bar:
The Court agrees with the observation of the [that] when an administrative
agency or body is conferred quasi-judicial functions, all controversies relating to
the subject matter pertaining to its specialization are deemed to be included
within the jurisdiction of said administrative agency or body. Split jurisdiction is
not favored. 67
Second. The interpretation of the provisions of the SMA favors vesting untrammeled appellate
jurisdiction on the CTA.
A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from
reviewing a negative determination by the DTI Secretary nor conferred on the Court of Appeals such
review authority. Respondents note, on the other hand, that neither did the law expressly grant to the
CTA the power to review a negative determination. However, under the clear text of the law, the CTA is
vested with jurisdiction to review the ruling of the DTI Secretary "in connection with the imposition of a
safeguard measure." Had the law been couched instead to incorporate the phrase "the ruling imposing a
safeguard measure," then respondent's claim would have indisputable merit. Undoubtedly, the phrase
"in connection with" not only qualifies but clarifies the succeeding phrase "imposition of a safeguard
measure." As expounded later, the phrase also encompasses the opposite or converse ruling which is the
non-imposition of a safeguard measure.
In the American case of Shaw v. Delta Air Lines, Inc., 68 the United States Supreme Court, in interpreting
a key provision of the Employee Retirement Security Act of 1974, construed the phrase "relates to" in its
normal sense which is the same as "if it has connection with or reference to." 69 There is no serious
dispute that the phrase "in connection with" is synonymous to "relates to" or "reference to," and that all
three phrases are broadly expansive. This is affirmed not just by jurisprudential fiat, but also the
acquired connotative meaning of "in connection with" in common parlance. Consequently, with the use
of the phrase "in connection with," Section 29 allows the CTA to review not only the ruling imposing a
safeguard measure, but all other rulings related or have reference to the application for such measure.
Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in
Section 29 of the SMA. A literalist reading or linguistic survey may not satisfy. Even the US Supreme
Court in New York State Blue Cross Plans v. Travelers Ins. 70 conceded that the phrases "relate to" or "in
connection with" may be extended to the farthest stretch of indeterminacy for, universally, relations or
connections are infinite and stop nowhere. 71 Thus, in the case the US High Court, examining the same
phrase of the same provision of law involved in Shaw, resorted to looking at the statute and its
objectives as the alternative to an "uncritical literalism." 72 A similar inquiry into the other provisions of
the SMA is in order to determine the scope of review accorded therein to the CTA. 73

The authority to decide on the safeguard measure is vested in the DTI Secretary in the case of non-
agricultural products, and in the Secretary of the Department of Agriculture in the case of agricultural
products. 74 Section 29 is likewise explicit that only the rulings of the DTI Secretary or the Agriculture
Secretary may be reviewed by the CTA. 75 Thus, the acts of other bodies that were granted some powers
by the SMA, such as the Tariff Commission, are not subject to direct review by the CTA.
Under the SMA, the Department Secretary concerned is authorized to decide on several matters. Within
thirty (30) days from receipt of a petition seeking the imposition of a safeguard measure, or from the
date he made motu proprio initiation, the Secretary shall make a preliminary determination on whether
the increased imports of the product under consideration substantially cause or threaten to cause
serious injury to the domestic industry. 76 Such ruling is crucial since only upon the Secretary's positive
preliminary determination that a threat to the domestic industry exists shall the matter be referred to
the Tariff Commission for formal investigation, this time, to determine whether the general safeguard
measure should be imposed or not. 77 Pursuant to a positive preliminary determination, the Secretary
may also decide that the imposition of a provisional safeguard measure would be warranted under
Section 8 of the SMA. 78 The Secretary is also authorized to decide, after receipt of the report of the
Tariff Commission, whether or not to impose the general safeguard measure, and if in the affirmative,
what general safeguard measures should be applied. 79 Even after the general safeguard measure is
imposed, the Secretary is empowered to extend the safeguard measure, 80 or terminate, reduce or
modify his previous rulings on the general safeguard measure. 81
With the explicit grant of certain powers involving safeguard measures by the SMA on the DTI Secretary,
it follows that he is empowered to rule on several issues. These are the issues which arise in connection
with, or in relation to, the imposition of a safeguard measure. They may arise at different stages the
preliminary investigation stage, the post-formal investigation stage, or the post-safeguard measure stage
yet all these issues do become ripe for resolution because an initiatory action has been taken seeking
the imposition of a safeguard measure. It is the initiatory action for the imposition of a safeguard
measure that sets the wheels in motion, allowing the Secretary to make successive rulings, beginning
with the preliminary determination.
Clearly, therefore, the scope and reach of the phrase "in connection with," as intended by Congress,
pertain to all rulings of the DTI Secretary or Agriculture Secretary which arise from the time an
application or motu proprio initiation for the imposition of a safeguard measure is taken. Indeed, the
incidents which require resolution come to the fore only because there is an initial application or action
seeking the imposition of a safeguard measure. From the legislative standpoint, it was a matter of sense
and practicality to lump up the questions related to the initiatory application or action for safeguard
measure and to assign only one court and; that is the CTA to initially review all the rulings related to such
initiatory application or action. Both directions Congress put in place by employing the phrase "in
connection with" in the law.
Given the relative expanse of decisions subject to judicial review by the CTA under Section 29, we do not
doubt that a negative ruling refusing to impose a safeguard measure falls within the scope of its
jurisdiction. On a literal level, such negative ruling is "a ruling of the Secretary in connection with the
imposition of a safeguard measure," as it is one of the possible outcomes that may result from the initial
application or action for a safeguard measure. On a more critical level, the rulings of the DTI Secretary in
connection with a safeguard measure, however diverse the outcome may be, arise from the same grant
of jurisdiction on the DTI Secretary by the SMA. 82 The refusal by the DTI Secretary to grant a safeguard
measure involves the same grant of authority, the same statutory prescriptions, and the same degree of
discretion as the imposition by the DTI Secretary of a safeguard measure.
The position of the respondents is one of "uncritical literalism" 83 incongruent with the animus of the
law. Moreover, a fundamentalist approach to Section 29 is not warranted, considering the absurdity of
the consequences.
Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et Absurdum. 84
Even assuming arguendo that Section 29 has not expressly granted the CTA jurisdiction to review a
negative ruling of the DTI Secretary, the Court is precluded from favoring an interpretation that would
cause inconvenience and absurdity. 85 Adopting the respondents' position favoring the CTA's minimal
jurisdiction would unnecessarily lead to illogical and onerous results.
Indeed, it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing
a safeguard measure but not to those declining to impose the measure. Respondents might argue that
the right to relief from a negative ruling is not lost since the applicant could, as Philcemcor did, question
such ruling through a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure,
in lieu of an appeal to the CTA. Yet these two reliefs are of differing natures and gravamen. While an
appeal may be predicated on errors of fact or errors of law, a special civil action forcertiorariis grounded
on grave abuse of discretion or lack of or excess of jurisdiction on the part of the decider. For a special
civil action for certiorari to succeed, it is not enough that the questioned act of the respondent is wrong.
As the Court clarified in Sempio v. Court of Appeals:
A tribunal, board or officer acts without jurisdiction if it/he does not have the
legal power to determine the case. There is excess of jurisdiction where, being
clothed with the power to determine the case, the tribunal, board or officer
oversteps its/his authority as determined by law. And there is grave abuse of
discretion where the tribunal, board or officer acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of his judgment as to be said to be
equivalent to lack of jurisdiction. Certiorari is often resorted to in order to
correct errors of jurisdiction. Where the error is one of law or of fact, which is a
mistake of judgment, appeal is the remedy. 86
It is very conceivable that the DTI Secretary, after deliberate thought and careful evaluation of the
evidence, may either make a negative preliminary determination as he is so empowered under Section 7
of the SMA, or refuse to adopt the definitive safeguard measure under Section 13 of the same law.
Adopting the respondents' theory, this negative ruling is susceptible to reversal only through a special
civil action for certiorari, thus depriving the affected party the chance to elevate the ruling on appeal on
the rudimentary grounds of errors in fact or in law. Instead, and despite whatever indications that the
DTI Secretary acted with measure and within the bounds of his jurisdiction are, the aggrieved party will
be forced to resort to a gymnastic exercise, contorting the straight and narrow in an effort to
discombobulate the courts into believing that what was within was actually beyond and what was
studied and deliberate actually whimsical and capricious. What then would be the remedy of the party
aggrieved by a negative ruling that simply erred in interpreting the facts or the law? It certainly cannot
be the special civil action for certiorari, for as the Court held in Silverio v. Court of Appeals: "Certiorari is a
remedy narrow in its scope and inflexible in its character. It is not a general utility tool in the legal
workshop." 87
Fortunately, this theoretical quandary need not come to pass. Section 29 of the SMA is worded in such a
way that it places under the CTA's judicial review all rulings of the DTI Secretary, which are connected
with the imposition of a safeguard measure. This is sound and proper in light of the specialized
jurisdiction of the CTA over tax matters. In the same way that a question of whether to tax or not to tax
is properly a tax matter, so is the question of whether to impose or not to impose a definitive safeguard
measure.
On another note, the second paragraph of Section 29 similarly reveals the legislative intent that rulings
of the DTI Secretary over safeguard measures should first be reviewed by the CTA and not the Court of
Appeals. It reads:
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same disposition
as in appeals in connection with adverse rulings on tax matters to the Court of
Appeals.
This is the only passage in the SMA in which the Court of Appeals is mentioned. The express wish of
Congress is that the petition conform to the requirements and procedure under Rule 43 of the Rules of
Civil Procedure. Since Congress mandated that the form and procedure adopted be analogous to a
review of a CTA ruling by the Court of Appeals, the legislative contemplation could not have been that
the appeal be directly taken to the Court of Appeals.
Issue of Binding Effect of Tariff
Commission's Factual Determination
on DTI Secretary.
The next issue for resolution is whether the factual determination made by the Tariff Commission under
the SMA is binding on the DTI Secretary. Otherwise stated, the question is whether the DTI Secretary
may impose general safeguard measures in the absence of a positive final determination by the Tariff
Commission.

The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of the Tariff
Commission do not necessarily constitute a final decision. Section 13 details the procedure for the
adoption of a safeguard measure, as well as the steps to be taken in case there is a negative final
determination. The implication of the Court of Appeals' holding is that the DTI Secretary may adopt a
definitive safeguard measure, notwithstanding a negative determination made by the Tariff Commission.
Undoubtedly, Section 13 prescribes certain limitations and restrictions before general safeguard
measures may be imposed. However, the most fundamental restriction on the DTI Secretary's power in
that respect is contained in Section 5 of the SMA that there should first be a positive final
determination of the Tariff Commission which the Court of Appeals curiously all but ignored. Section 5
reads:
Sec. 5. Conditions for the Application of General Safeguard Measures. The
Secretary shall apply a general safeguard measure upon a positive final
determination of the [Tariff] Commission that a product is being imported into
the country in increased quantities, whether absolute or relative to the
domestic production, as to be a substantial cause of serious injury or threat
thereof to the domestic industry; however, in the case of non-agricultural
products, the Secretary shall first establish that the application of such
safeguard measures will be in the public interest. (emphasis supplied)
The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a
"positive final determination." This power lodged in the Tariff Commission, must be distinguished from
the power to impose the general safeguard measure which is properly vested on the DTI Secretary. 88
All in all, there are two condition precedents that must be satisfied before the DTI Secretary may impose
a general safeguard measure on grey Portland cement. First, there must be a positive final determination
by the Tariff Commission that a product is being imported into the country in increased quantities
(whether absolute or relative to domestic production), as to be a substantial cause of serious injury or
threat to the domestic industry. Second, in the case of non-agricultural products the Secretary must
establish that the application of such safeguard measures is in the public interest. 89 As Southern Cross
argues, Section 5 is quite clear-cut, and it is impossible to finagle a different conclusion even through
overarching methods of statutory construction. There is no safer nor better settled canon of
interpretation that when language is clear and unambiguous it must be held to mean what it plainly
expresses: 90 In the quotable words of an illustrious member of this Court, thus:
[I]f a statute is clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. The verba legisor plain
meaning rule rests on the valid presumption that the words employed by the
legislature in a statute correctly express its intent or will and preclude the court
from construing it differently. The legislature is presumed to know the meaning
of the words, to have used words advisedly, and to have expressed its intent by
the use of such words as are found in the statute. 91
Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA, 92 which interprets Section 5
of the law, likewise requires a positive final determination on the part of the Tariff Commission before
the application of the general safeguard measure.
The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI
Secretary. The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to
make a "positive final determination." This power, which belongs to the Tariff Commission, must be
distinguished from the power to impose general safeguard measure properly vested on the DTI
Secretary. The distinction is vital, as a "positive final determination" clearly antecedes, as a condition
precedent, the imposition of a general safeguard measure. At the same time, a positive final
determination does not necessarily result in the imposition of a general safeguard measure. Under
Section 5, notwithstanding the positive final determination of the Tariff Commission, the DTI Secretary is
tasked to decide whether or not that the application of the safeguard measures is in the public interest.
It is also clear from Section 5 of the SMA that the positive final determination to be undertaken by the
Tariff Commission does not entail a mere gathering of statistical data. In order to arrive at such
determination, it has to establish causal linkages from the statistics that it compiles and evaluates: after
finding there is an importation in increased quantities of the product in question, that such importation
is a substantial cause of serious threat or injury to the domestic industry.
The Court of Appeals relies heavily on the legislative record of a congressional debate during
deliberations on the SMA to assert a purported legislative intent that the findings of the Tariff
Commission do not bind the DTI Secretary. 93 Yet as explained earlier, the plain meaning of Section 5
emphasizes that only if the Tariff Commission renders a positive determination could the DTI Secretary
impose a safeguard measure. Resort to the congressional records to ascertain legislative intent is not
warranted if a statute is clear, plain and free from ambiguity. The legislature is presumed to know the
meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such
words as are found in the statute. 94
Indeed, the legislative record, if at all to be availed of, should be approached with extreme caution, as
legislative debates and proceedings are powerless to vary the terms of the statute when the meaning is
clear. 95 Our holding in Civil Liberties Union v. Executive Secretary 96 on the resort to deliberations of the
constitutional convention to interpret the Constitution is likewise appropriate in ascertaining statutory
intent:
While it is permissible in this jurisdiction to consult the debates and proceedings
of the constitutional convention in order to arrive at the reason and purpose of
the resulting Constitution, resort thereto may be had only when other guides
fail as said proceedings are powerless to vary the terms of the Constitution
when the meaning is clear. Debates in the constitutional convention "are of
value as showing the views of the individual members, and as indicating the
reasons for their votes, but they give us no light as to the views of the large
majority who did not talk . . . We think it safer to construe the constitution from
what appears upon its face." 97
Moreover, it is easy to selectively cite passages, sometimes out of their proper context, in order to assert
a misleading interpretation. The effect can be dangerous. Minority or solitary views, anecdotal
ruminations, or even the occasional crude witticisms, may improperly acquire the mantle of legislative
intent by the sole virtue of their publication in the authoritative congressional record. Hence, resort to
legislative deliberations is allowable when the statute is crafted in such a manner as to leave room for
doubt on the real intent of the legislature.
Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to impose a general
safeguard measure by preconditioning such imposition on a positive determination by the Tariff
Commission. Such legislative intent should be given full force and effect, as the executive power to
impose definitive safeguard measures is but a delegated power the power of taxation, by nature and
by command of the fundamental law, being a preserve of the legislature. 98 Section 28(2), Article VI of
the 1987 Constitution confirms the delegation of legislative power, yet ensures that the prerogative of
Congress to impose limitations and restrictions on the executive exercise of this power: DCcIaE
The Congress may, by law, authorize the President to fix within specified limits,
and subject to such limitations and restrictions as it may impose, tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development program of the
Government. 99
The safeguard measures which the DTI Secretary may impose under the SMA may take the following
variations, to wit: (a) an increase in, or imposition of any duty on the imported product; (b) a decrease in
or the imposition of a tariff-rate quota on the product; (c) a modification or imposition of any
quantitative restriction on the importation of the product into the Philippines; (d) one or more
appropriate adjustment measures, including the provision of trade adjustment assistance; and (e) any
combination of the above-described actions. Except for the provision of trade adjustment assistance, the
measures enumerated by the SMA are essentially imposts, which precisely are the subject of delegation
under Section 28(2), Article VI of the 1987 Constitution. 100
This delegation of the taxation power by the legislative to the executive is authorized by the Constitution
itself. 101 At the same time, the Constitution also grants the delegating authority (Congress) the right to
impose restrictions and limitations on the taxation power delegated to the President. 102 The
restrictions and limitations imposed by Congress take on the mantle of a constitutional command, which
the executive branch is obliged to observe.
The SMA empowered the DTI Secretary, as alter ego of the President, 103 to impose definitive general
safeguard measures, which basically are tariff imposts of the type spoken of in the Constitution.
However, the law did not grant him full, uninhibited discretion to impose such measures. The DTI
Secretary authority is derived from the SMA; it does not flow from any inherent executive power. Thus,
the limitations imposed by Section 5 are absolute, warranted as they are by a constitutional fiat. 104

Philcemcor cites our 1912 ruling in Lamb v. Phipps 105 to assert that the DTI Secretary, having the final
decision on the safeguard measure, has the power to evaluate the findings of the Tariff Commission and
make an independent judgment thereon. Given the constitutional and statutory limitations governing
the present case, the citation is misplaced. Lamb pertained to the discretion of the Insular Auditor of the
Philippine Islands, whom, as the Court recognized, "[t]he statutes of the United States require[d] . . . to
exercise his judgment upon the legality . . . [of] provisions of law and resolutions of Congress providing
for the payment of money, the means of procuring testimony upon which he may act." 106
Thus in Lamb, while the Court recognized the wide latitude of discretion that may have been vested on
the Insular Auditor, it also recognized that such latitude flowed from, and is consequently limited by,
statutory grant. However, in this case, the provision of the Constitution in point expressly recognizes the
authority of Congress to prescribe limitations in the case of tariffs, export/import quotas and other such
safeguard measures. Thus, the broad discretion granted to the Insular Auditor of the Philippine Islands
cannot be analogous to the discretion of the DTI Secretary which is circumscribed by Section 5 of the
SMA.
For that matter, Cario v. Commissioner on Human Rights, 107 likewise cited by Philcemcor, is also
inapplicable owing to the different statutory regimes prevailing over that case and the present petition.
In Cario, the Court ruled that the constitutional power of the Commission on Human Rights (CHR) to
investigate human rights' violations did not extend to adjudicating claims on the merits. 108 Philcemcor
claims that the functions of the Tariff Commission being "only investigatory," it could neither decide nor
adjudicate. 109
The applicable law governing the issue in Cario is Section 18, Article XIII of the Constitution, which
delineates the powers and functions of the CHR. The provision does not vest on the CHR the power to
adjudicate cases, but only to investigate all forms of human rights violations. 110 Yet, without modifying
the thorough disquisition of the Court in Cario on the general limitations on the investigatory power,
the precedent is inapplicable because of the difference in the involved statutory frameworks. The
Constitution does not repose binding effect on the results of the CHR's investigation. 111 On the other
hand, through Section 5 of the SMA and under the authority of Section 28(2), Article VI of the
Constitution, Congress did intend to bind the DTI Secretary to the determination made by the Tariff
Commission. 112 It is of no consequence that such determination results from the exercise of
investigatory powers by the Tariff Commission since Congress is well within its constitutional mandate to
limit the authority of the DTI Secretary to impose safeguard measures in the manner that it sees fit.
The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13 of the SMA's
Implementing Rules in support of the view that the DTI Secretary may decide independently of the
determination made by the Tariff Commission. Admittedly, there are certain infelicities in the language
of Section 13 and Rule 13. But reliance should not be placed on the textual imprecisions. Rather, Section
13 and Rule 13 must be viewed in light of the fundamental prescription imposed by Section 5. 113
Section 13 of the SMA lays down the procedure to be followed after the Tariff Commission renders its
report. The provision reads in full:
SEC. 13. Adoption of Definitive Measures. Upon its positive determination,
the Commission shall recommend to the Secretary an appropriate definitive
measure, in the form of:
(a) An increase in, or imposition of, any duty on the imported
product;
(b) A decrease in or the imposition of a tariff-rate quota (MAV) on
the product;
(c) A modification or imposition of any quantitative restriction on the
importation of the product into the Philippines;
(d) One or more appropriate adjustment measures, including the
provision of trade adjustment assistance;
(e) Any combination of actions described in subparagraphs (a) to (d).
The Commission may also recommend other actions, including the initiation of
international negotiations to address the underlying cause of the increase of
imports of the product, to alleviate the injury or threat thereof to the domestic
industry, and to facilitate positive adjustment to import competition.
The general safeguard measure shall be limited to the extent of redressing or
preventing the injury and to facilitate adjustment by the domestic industry from
the adverse effects directly attributed to the increased imports: Provided,
however, That when quantitative import restrictions are used, such measures
shall not reduce the quantity of imports below the average imports for the
three (3) preceding representative years, unless clear justification is given that a
different level is necessary to prevent or remedy a serious injury.
A general safeguard measure shall not be applied to a product originating from
a developing country if its share of total imports of the product is less than
three percent (3%): Provided, however, That developing countries with less than
three percent (3%) share collectively account for not more than nine percent
(9%) of the total imports.
The decision imposing a general safeguard measure, the duration of which is
more than one (1) year, shall be reviewed at regular intervals for purposes of
liberalizing or reducing its intensity. The industry benefiting from the
application of a general safeguard measure shall be required to show positive
adjustment within the allowable period. A general safeguard measure shall be
terminated where the benefiting industry fails to show any improvement, as
may be determined by the Secretary.
The Secretary shall issue a written instruction to the heads of the concerned
government agencies to implement the appropriate general safeguard measure
as determined by the Secretary within fifteen (15) days from receipt of the
report.
In the event of a negative final determination, or if the cash bond is in excess of
the definitive safeguard duty assessed, the Secretary shall immediately issue,
through the Secretary of Finance, a written instruction to the Commissioner of
Customs, authorizing the return of the cash bond or the remainder thereof, as
the case may be, previously collected as provisional general safeguard measure
within ten (10) days from the date a final decision has been made: Provided,
That the government shall not be liable for any interest on the amount to be
returned. The Secretary shall not accept for consideration another petition from
the same industry, with respect to the same imports of the product under
consideration within one (1) year after the date of rendering such a decision.
When the definitive safeguard measure is in the form of a tariff increase, such
increase shall not be subject or limited to the maximum levels of tariff as set
forth in Section 401(a) of the Tariff and Customs Code of the Philippines.
To better comprehend Section 13, note must be taken of the distinction between the investigatory and
recommendatory functions of the Tariff Commission under the SMA.
The word "determination," as used in the SMA, pertains to the factual findings on whether there are
increased imports into the country of the product under consideration, and on whether such increased
imports are a substantial cause of serious injury or threaten to substantially cause serious injury to the
domestic industry. 114 The SMA explicitly authorizes the DTI Secretary to make a preliminary
determination, 115 and the Tariff Commission to make the final determination. 116 The distinction is
fundamental, as these functions are not interchangeable. The Tariff Commission makes its determination
only after a formal investigation process, with such investigation initiated only if there is a positive
preliminary determination by the DTI Secretary underSection 7 of the SMA. 117 On the other hand, the
DTI Secretary may impose definitive safeguard measure only if there is a positive final determination
made by the Tariff Commission. 118
In contrast, a "recommendation" is a suggested remedial measure submitted by the Tariff Commission
under Section 13 after making a positive final determination in accordance with Section 5. The Tariff
Commission is not empowered to make a recommendation absent a positive final determination on its
part. 119 Under Section 13, the Tariff Commission is required to recommend to the [DTI] Secretary an
"appropriate definitive measure." 120 The Tariff Commission "may also recommend other actions,
including the initiation of international negotiations to address the underlying cause of the increase of
imports of the products, to alleviate the injury or threat thereof to the domestic industry and to facilitate
positive adjustment to import competition." 121
The recommendations of the Tariff Commission, as rendered under Section 13, are not obligatory on the
DTI Secretary. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by
the Tariff Commission. In fact, the SMA requires that the DTI Secretary establish that the application of
such safeguard measures is in the public interest, notwithstanding the Tariff Commission's
recommendation on the appropriate safeguard measure based on its positive final
determination. 122 The non-binding force of the Tariff Commission's recommendations is congruent
with the command of Section 28(2), Article VI of the 1987 Constitution that only the President may be
empowered by the Congress to impose appropriate tariff rates, import/export quotas and other similar
measures. 123 It is the DTI Secretary, as alter ego of the President, who under the SMA may impose such
safeguard measures subject to the limitations imposed therein. A contrary conclusion would in essence
unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff
measures. That is why the SMA empowers the DTI Secretary to adopt safeguard measures other than
those recommended by the Tariff Commission.

Unlike the recommendations of the Tariff Commission, its determination has a different effect on the DTI
Secretary. Only on the basis of a positive final determination made by the Tariff Commission under
Section 5 can the DTI Secretary impose a general safeguard measure. Clearly, then the DTI Secretary
is bound by the determination made by the Tariff Commission.
Some confusion may arise because the sixth paragraph of Section 13 124 uses the variant word
"determined" in a different context, as it contemplates "the appropriate general safeguard measure as
determined by the Secretary within fifteen (15) days from receipt of the report." Quite plainly, the word
"determined" in this context pertains to the DTI Secretary's power of choice of the appropriate safeguard
measure, as opposed to the Tariff Commission's power to determine the existence of conditions
necessary for the imposition of any safeguard measure. In relation to Section 5, such choice also relates
to the mandate of the DTI Secretary to establish that the application of safeguard measures is in the
public interest, also within the fifteen (15) day period. Nothing in Section 13 contradicts the instruction
in Section 5 that the DTI Secretary is allowed to impose the general safeguard measures only if there is a
positive determination made by the Tariff Commission.
Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned "Final Determination by the
Secretary." The assailed Decision and Philcemcor latch on this phraseology to imply that the factual
determination rendered by the Tariff Commission under Section 5 may be amended or reversed by the
DTI Secretary. Of course, implementing rules should conform, not clash, with the law that they seek to
implement, for a regulation which operates to create a rule out of harmony with the statute is a
nullity. 125 Yet imperfect draftsmanship aside, nothing in Rule 13.2 implies that the DTI Secretary can set
aside the determination made by the Tariff Commission under the aegis of Section 5. This can be seen by
examining the specific provisions of Rule 13.2, thus:
RULE 13.2. Final Determination by the Secretary
RULE 13.2.a. Within fifteen (15) calendar days from receipt of the Report of the
Commission, the Secretary shall make a decision, taking into consideration the
measures recommended by the Commission.
RULE 13.2.b. If the determination is affirmative, the Secretary shall issue, within
two (2) calendar days after making his decision, a written instruction to the
heads of the concerned government agencies to immediately implement the
appropriate general safeguard measure as determined by him. Provided,
however, that in the case of non-agricultural products, the Secretary shall first
establish that the imposition of the safeguard measure will be in the public
interest.
RULE 13.2.c. Within two (2) calendar days after making his decision, the
Secretary shall also order its publication in two (2) newspapers of general
circulation. He shall also furnish a copy of his Order to the petitioner and other
interested parties, whether affirmative or negative. (Emphasis supplied.)
Moreover, the DTI Secretary does not have the power to review the findings of the Tariff Commission for
it is not subordinate to the Department of Trade and Industry ("DTI"). It falls under the supervision, not
of the DTI nor of the Department of Finance (as mistakenly asserted by Southern Cross), 126 but of
the National Economic Development Authority, an independent planning agency of the government of
co-equal rank as the DTI. 127 As the supervision and control of a Department Secretary is limited to the
bureaus, offices, and agencies under him, 128 the DTI Secretary generally cannot exercise review
authority over actions of the Tariff Commission. Neither does the SMA specifically authorize the DTI
Secretary to alter, amend or modify in any way the determination made by the Tariff Commission. The
most that the DTI Secretary could do to express displeasure over the Tariff Commission's actions is to
ignore its recommendation, but not its determination.
The word "determination" as used in Rule 13.2 of the Implementing Rules is dissonant with the same
word as employed in the SMA, which in the latter case is undeviatingly in reference to the determination
made by the Tariff Commission. Beyond the resulting confusion, however, the divergent use in Rule 13.2
is explicable as the Rule textually pertains to the power of the DTI Secretary to review the
recommendations of the Tariff Commission, not the latter's determination. Indeed, an examination of
the specific provisions show that there is no real conflict to reconcile. Rule 13.2 respects the logical order
imposed by the SMA. The Rule does not remove the essential requirement under Section 5 that a
positive final determination be made by the Tariff Commission before a definitive safeguard measure
may be imposed by the DTI Secretary.
The assailed Decision characterizes the findings of the Tariff Commission as merely recommendatory and
points to the DTI Secretary as the authority who renders the final decision. 129 At the same time,
Philcemcor asserts that the Tariff Commission's functions are merely investigatory, and as such do not
include the power to decide or adjudicate. These contentions, viewed in the context of the fundamental
requisite set forth by Section 5, are untenable. They run counter to the statutory prescription that a
positive final determination made by the Tariff Commission should first be obtained before the definitive
safeguard measures may be laid down.
Was it anomalous for Congress to have provided for a system whereby the Tariff Commission may
preclude the DTI, an office of higher rank, from imposing a safeguard measure? Of course, this Court
does not inquire into the wisdom of the legislature but only charts the boundaries of powers and
functions set in its enactments. But then, it is not difficult to see the internal logic of this statutory
framework.
For one, as earlier stated, the DTI cannot exercise review powers over the Tariff Commission which is not
its subordinate office.
Moreover, the mechanism established by Congress establishes a measure of check and balance involving
two different governmental agencies with disparate specializations. The matter of safeguard measures is
of such national importance that a decision either to impose or not to impose then could have ruinous
effects on companies doing business in the Philippines. Thus, it is ideal to put in place a system which
affords all due deliberation and calls to fore various governmental agencies exercising their particular
specializations.
Finally, if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard
measure, it is because such safeguard measure is the exception, rather than the rule. The Philippines is
obliged to observe its obligations under the GATT, under whose framework trade liberalization, not
protectionism, is laid down. Verily, the GATT actually prescribes conditions before a member-country
may impose a safeguard measure. The pertinent portion of the GATT Agreement on Safeguards reads:
2. A Member may only apply a safeguard measure to a product only if that
member has determined, pursuant to the provisions set out below, that such
product is being imported into its territory in such increased quantities,
absolute or relative to domestic production, and under such conditions as to
cause or threaten to cause serious injury to the domestic industry that produces
like or directly competitive products. 130
3.(a) A Member may apply a safeguard measure only following an investigation
by the competent authorities of that Member pursuant to procedures
previously established and made public in consonance with Article X of the
GATT 1994. This investigation shall include reasonable public notice to all
interested parties and public hearings or other appropriate means in which
importers, exporters and other interested parties could present evidence and
their views, including the opportunity to respond to the presentations of other
parties and to submit their views, inter alia, as to whether or not the application
of a safeguard measure would be in the public interest. The competent
authorities shall publish a report setting forth their findings and reasoned
conclusions reached on all pertinent issues of fact and law. 131
The SMA was designed not to contradict the GATT, but to complement it. The two requisites laid down in
Section 5 for a positive final determination are the same conditions provided under the GATT Agreement
on Safeguards for the application of safeguard measures by a member country. Moreover, the
investigatory procedure laid down by the SMA conforms to the procedure required by the GATT
Agreement on Safeguards. Congress has chosen the Tariff Commission as the competent authority to
conduct such investigation. Southern Cross stresses that applying the provision of the GATT Agreement
on Safeguards, the Tariff Commission is clearly empowered to arrive at binding conclusions. 132 We
agree: binding on the DTI Secretary is the Tariff Commission's determinations on whether a product is
imported in increased quantities, absolute or relative to domestic production and whether any such
increase is a substantial cause of serious injury or threat thereof to the domestic industry. 133
Satisfied as we are with the proper statutory paradigm within which the SMA should be analyzed, the
flaws in the reasoning of the Court of Appeals and in the arguments of the respondents become
apparent. To better understand the dynamics of the procedure set up by the law leading to the
imposition of definitive safeguard measures, a brief step-by-step recount thereof is in order.
1. After the initiation of an action involving a general safeguard measure, 134 the DTI Secretary makes a
preliminary determination whether the increased imports of the product under consideration
substantially cause or threaten to substantially cause serious injury to the domestic industry, 135 and
whether the imposition of a provisional measure is warranted under Section 8 of the SMA. 136 If the
preliminary determination is negative, it is implied that no further action will be taken on the application.

2. When his preliminary determination is positive, the Secretary immediately transmits the records
covering the application to the Tariff Commission for immediate formal investigation. 137
3. The Tariff Commission conducts its formal investigation, keyed towards making a final determination.
In the process, it holds public hearings, providing interested parties the opportunity to present evidence
or otherwise be heard. 138 To repeat, Section 5 enumerates what the Tariff Commission is tasked to
determine: (a) whether a product is being imported into the country in increased quantities, irrespective
of whether the product is absolute or relative to the domestic production; and (b) whether the
importation in increased quantities is such that it causes serious injury or threat to the domestic
industry. 139The findings of the Tariff Commission as to these matters constitute the final
determination, which may be either positive or negative.
4. Under Section 13 of the SMA, if the Tariff Commission makes a positive determination, the Tariff
Commission "recommends to the [DTI] Secretary an appropriate definitive measure." The Tariff
Commission "may also recommend other actions, including the initiation of international negotiations to
address the underlying cause of the increase of imports of the products, to alleviate the injury or threat
thereof to the domestic industry, and to facilitate positive adjustment to import competition." 140
5. If the Tariff Commission makes a positive final determination, the DTI Secretary is then to decide,
within fifteen (15) days from receipt of the report, as to what appropriate safeguard measures should he
impose.
6. However, if the Tariff Commission makes a negative final determination, the DTI Secretary cannot
impose any definitive safeguard measure. Under Section 13, he is instructed instead to return whatever
cash bond was paid by the applicant upon the initiation of the action for safeguard measure.
The Effect of the Court's Decision
The Court of Appeals erred in remanding the case back to the DTI Secretary, with the instruction that the
DTI Secretary may impose a general safeguard measure even if there is no positive final determination
from the Tariff Commission. More crucially, the Court of Appeals could not have acquired jurisdiction
over Philcemcor's petition for certiorari in the first place, as Section 29 of the SMA properly vests
jurisdiction on the CTA. Consequently, the assailed Decision is an absolute nullity, and we declare it as
such.
What is the effect of the nullity of the assailed Decision on the 5 June 2003 Decision of the DTI Secretary
imposing the general safeguard measure? We have recognized that any initial judicial review of a DTI
ruling in connection with the imposition of a safeguard measure belongs to the CTA. At the same time,
the Court also recognizes the fundamental principle that a null and void judgment cannot produce any
legal effect. There is sufficient cause to establish that the 5 June 2003 Decision of the DTI Secretary
resulted from the assailed Court of Appeals Decision, even if the latter had not yet become final.
Conversely, it can be concluded that it was because of the putative imprimatur of the Court of
Appeals' Decision that the DTI Secretary issued his ruling imposing the safeguard measure. Since the 5
June 2003 Decision derives its legal effect from the void Decision of the Court of Appeals, this ruling of
the DTI Secretary is consequently void. The spring cannot rise higher than the source.
The DTI Secretary himself acknowledged that he drew stimulating force from the appellate
court's Decision for in his own 5 June 2003 Decision, he declared:
From the aforementioned ruling, the CA has remanded the case to the DTI
Secretary for a final decision. Thus, there is no legal impediment for the
Secretary to decide on the application. 141
The inescapable conclusion is that the DTI Secretary needed the assailed Decision of the Court of Appeals
to justify his rendering a second Decision. He explicitly invoked the Court of Appeals' Decision as basis for
rendering his 5 June 2003 ruling, and implicitly recognized that without such Decision he would not have
the authority to revoke his previous ruling and render a new, obverse ruling.
It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of the void Decision, it
being an attempt to carry out such null judgment. There is therefore no choice but to declare it void as
well, lest we sanction the perverse existence of a fruit from a non-existent tree. It does not even matter
what the disposition of the 25 June 2003 Decision was, its nullity would be warranted even if the DTI
Secretary chose to uphold his earlier ruling denying the application for safeguard measures.
It is also an unfortunate spectacle to behold the DTI Secretary, seeking to enforce a judicial decision
which is not yet final and actually pending review on appeal. Had it been a judge who attempted to
enforce a decision that is not yet final and executory, he or she would have readily been subjected to
sanction by this Court. The DTI Secretary may be beyond the ambit of administrative review by this
Court, but we are capacitated to allocate the boundaries set by the law of the land and to exact fealty to
the legal order, especially from the instrumentalities and officials of government.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is DECLARED NULL
AND VOID and SET ASIDE. The Decisionof the DTI Secretary dated 25 June 2003 is also DECLARED NULL
AND VOID and SET ASIDE. No Costs.
SO ORDERED.






SECOND DIVISION
[G.R. No. 118216. March 9, 2000.]
DELTAVENTURES RESOURCES, INC., petitioner, vs. HON. FERNANDO P.
CABATO, Presiding Judge Regional Trial Court, La Trinidad, Benguet, Branch
62; HON. GELACIO L. RIVERA, JR., Executive Labor Arbiter, NLRC-CAR, Baguio
City, ADAM P. VENTURA, Deputy-Sheriff, NLRC-CAR, Baguio City; ALEJANDRO
BERNARDINO, AUGUSTO GRANADOS, PILANDO TANGAY, NESTOR RABANG,
RAY DAYAP, MYRA BAYAONA, VIOLY LIBAO, AIDA LIBAO, JESUS GATCHO and
GREGORIO DULAY,respondents.
Oreta Suarez & Narvasa for petitioner.
The Solicitor General for public respondents.
E.L. Gayo & Associates for private respondent.

SYNOPSIS
On July 15, 1992, a decision was rendered by the National Labor Relations Commission in the NLRC case
entitled Alejandro, et al. vs. Green Mountain Farm, Roberto Ongpin and Almus Alabe. On May 19, 1994,
private respondents filed before the Commission a motion for the issuance of a writ of execution as
respondent's appeal to the Commission and the Supreme Court were respectively denied. On June 16,
1994, the Executive Labor Arbiter issued a writ of execution and the sheriff proceeded to enforce the
writ by garnishing certain personal properties to satisfy the monetary award, but proceeded to levy upon
a real property registered in the name of Roberto Ongpin due to inadequacy of the personal property.
On July 27, 1994, a month before the scheduled auction sale petitioner filed before the Commission a
third-party claim asserting ownership levied upon by the sheriff's notice of sale. Due to this claim, the
Executive Labor Arbiter issued an order suspending the auction sale until the merits of petitioner's claim
had been resolved. Inspite of the filing of the third party complaint, petitioner filed with the Regional
Trial Court of La Trinidad, Benguet a complaint for injunction and damages with prayer for the issuance
of a TRO. Private respondents-laborers moved for the dismissal of the complaint on the ground of the
court's lack of jurisdiction over the case. On November 7, 1994, after both parties had submitted their
respective briefs, respondent court rendered a decision dismissing the case for lack of jurisdiction.
Petitioner filed a motion for reconsideration, but the same was denied. Hence, this petition. DIETHS
The Supreme Court found the petition devoid of merit. The Court ruled that the complaint filed before
the trial court was for recovery of possession and injunction, but in essence it was an action challenging
the legality or propriety of the levy vis--vis the alias writ of execution, including the acts performed by
the Labor Arbiter and the Deputy Sheriff implementing the writ. The complaint was in effect a motion to
quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor
Arbiter, to wit, illegal dismissal and unfair labor practice. Considering the factual setting, it is then logical
to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter
beyond the jurisdiction of the regional trial courts. Thus, the Court found no grave abuse of discretion on
the part of respondent Judge in denying petitioner's motion for the issuance of an injunction against the
execution of the decision of the National Labor Relations Commission. Accordingly, the petition was
denied and the assailed orders of respondent judge were affirmed.

SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION OVER THE SUBJECT MATTER CONFERRED BY LAW
AND DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT. Basic as a hornbook principle,
jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in
the complaint which comprise a concise statement of the ultimate facts constituting the petitioner's
cause of action. Thus we have held that: "Jurisdiction over the subject-matter is determined upon the
allegations made in the complaint, irrespective of whether the plaintiff is entitled or not entitled to
recover upon the claim asserted therein a matter resolved only after and as a result of the trial."
2. ID.; ID.; JURISDICTION; COURTS HAVE NO JURISDICTION TO ACT ON LABOR CASES OR VARIOUS
INCIDENTS ARISING THEREFROM, INCLUDING THE EXECUTION OF DECISIONS, AWARDS OR ORDERS;
CASE AT BAR. Ostensibly the complaint before the trial court was for the recovery of possession and
injunction, but in essence it was an action challenging the legality or propriety of the levy vis-a-vis the
alias writ of execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff
implementing the writ. The complaint was in effect a motion to quash the writ of execution of a decision
rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and
Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that the subject
matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of
regional trial courts. Precedent abound confirming the rule that said courts have no jurisdiction to act on
labor cases or various incidents arising therefrom, including the execution of decisions, awards or orders.
Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official concerned
under the Department of Labor and Employment. To hold otherwise is to sanction split jurisdiction which
is obnoxious to the orderly administration of justice.
3. LABOR AND SOCIAL LEGISLATION; NATIONAL LABOR RELATIONS COMMISSION; REGIONAL TRIAL
COURT HAS NO JURISDICTION TO ISSUE RESTRAINING ORDER OR INJUNCTION TO ENJOIN THE
EXECUTION OF ANY DECISION THEREOF. It must be noted that the Labor Code in Article 254 explicitly
prohibits issuance of a temporary or permanent injunction or restraining order in any case involving or
growing out of labor disputes by any court or other entity (except as otherwise provided in Arts. 218 and
264). As correctly observed by court a quo, the main issue and the subject of the amended complaint for
injunction are questions interwoven with the execution of the Commission's decision. No doubt the
aforecited prohibition in Article 254 is applicable. Petitioner should have filed its third-party claim before
the Labor Arbiter, from whom the writ of execution originated, before instituting said civil case. The
NLRC's Manual on Execution of Judgment, issued pursuant to Article 218 of the Labor Code, provides the
mechanism for a third-party claimant to assert his claim over a property levied upon by the sheriff
pursuant to an order or decision of the Commission or of the Labor Arbiter. The power of the Labor
Arbiter to issue a writ of execution carries with it the power to inquire into the correctness of the
execution of his decision and to consider whatever supervening events might transpire during such
execution. Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding
the time-honored principle that a Regional Trial Court, being a co-equal body of the National Labor
Relations Commission, has no jurisdiction to issue any restraining order or injunction to enjoin the
execution of any decision of the latter.

D E C I S I O N
QUISUMBING, J p:
This special civil action for certiorari seeks to annul the Order dated November 7, 1994, 1 of respondent
Judge Fernando P. Cabato of the Regional Trial Court of La Trinidad, Benguet, Branch 62, in Civil Case No.
94-CV-0948, dismissing petitioner's amended third-party complaint, as well as the Order dated
December 14, 1994, 2 denying motion for reconsideration. dctai
On July 15, 1992, a Decision 3 was rendered by Executive Labor Arbiter Norma Olegario, National Labor
Relations Commission Regional Arbitration Board, Cordillera Autonomous Region (Commission), in
NLRC Case No. 01-08-0165-89 entitled "Alejandro Bernardino, et al. vs. Green Mountain Farm, Roberto
Ongpin and Almus Alabe," the dispositive portion of which reads as follows:
"WHEREFORE, judgment is hereby rendered declaring the respondents guilty of
Illegal Dismissal and Unfair Labor Practice and ordering them to pay the
complainants, in solidum, in the amounts herein below listed:
1. Violy Libao P131,368.07
2. Myra Bayaona 121,470.23
3. Gregorio Dulay 128,362.17
4. Jesus Gatcho 126,475.17
5. Alejandro Bernardino 110,158.20
6. Pilando Tangay 107,802.66
7. Aida Libao 129,967.34
8. Rey Dayap 123,289.21
9. Nestor Rabang 90,611.69
10. Augusto Granados 108,106.03
plus attorney's fees in the amount of P10,000.00.
Respondent Almus Alabe is also ordered to answer in exemplary damages in the
amount of P5,000.00 each to all the complainants.
xxx xxx xxx
SO ORDERED." 4
On May 19, 1994, complainants in the abovementioned labor case, filed before the Commission a
motion for the issuance of a writ of execution as respondent's appeal to the Commission and this
Court 5 were respectively denied.
On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned in view
of Labor Arbiter Olegario's transfer, issued a writ of execution 6 directing NLRC Deputy Sheriff Adam
Ventura to execute the judgment against respondents, Green Mountain Farm, Roberto Ongpin and
Almus Alabe. Sheriff Ventura then proceeded to enforce the writ by garnishing certain personal
properties of respondents. Finding that said judgment debtors do not have sufficient personal properties
to satisfy the monetary award, Sheriff Ventura proceeded to levy upon a real property covered by Tax
Declaration No. 9697, registered in the name of Roberto Ongpin, one of the respondents in the labor
case. Thereafter, Sheriff Ventura caused the publication on the July 17, 1994 edition of the Baguio
Midland Courier the date of the public auction of said real property. cdtai
On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed before the
Commission a third-party claim 7 asserting ownership over the property levied upon and subject of the
Sheriff's notice of sale. Labor Arbiter Rivera thus issued an order directing the suspension of the auction
sale until the merits of petitioner's claim has been resolved. 8

However, on August 16, 1994, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a
complaint for injunction and damages, with a prayer for the issuance of a temporary restraining order
against Sheriff Ventura, reiterating the same allegations it raised in the third party claim it filed with the
Commission. The petition was docketed as Civil Case No. 94-CV-0948, entitled "Deltaventures Resources,
Inc., petitioner vs. Adam P. Ventura, et al., defendants." The next day, August 17, 1994, respondent Judge
Cabato issued a temporary restraining order, enjoining respondents in the civil case before him to hold in
abeyance any action relative to the enforcement of the decision in the labor case. 9
Petitioner likewise filed on August 30, 1994, an amended complaint 10 to implead Labor Arbiter Rivera
and herein private respondent-laborers.
Further, on September 20, 1994, petitioner filed with the Commission a manifestation 11 questioning
the latter's authority to hear the case, the matter being within the jurisdiction of the regular courts. The
manifestation, however, was dismissed by Labor Arbiter Rivera on October 3, 1994. 12
Meanwhile, on September 20, 1994, private respondent-laborers, moved for the dismissal of the civil
case on the ground of the court's lack of jurisdiction.13 Petitioner filed its opposition to said motion on
October 4, 1994. 14
On November 7, 1994, after both parties had submitted their respective briefs, respondent court
rendered its assailed decision premised on the following grounds:
"First, this Court is of equal rank with the NLRC, hence, has no jurisdiction to
issue an injunction against the execution of the NLRC decision. . . . .
Second, the NLRC retains authority over all proceedings anent the execution of
its decision. This power carries with it the right to determine every question
which may be involved in the execution of its decision. . . . .
Third, Deltaventures Resources, Inc. should rely on and comply with the Rules
of the NLRC because it is the principal procedure to be followed, the Rules of
Court being merely suppletory in application, . . . .
Fourth, the invocation of estoppel by the plaintiffs is misplaced. . . . . [B]efore
the defendants have filed their formal answer to the amended complaint, they
moved to dismiss it for lack of jurisdiction.
Lastly, the plaintiff, having in the first place addressed to the jurisdiction of the
NLRC by filing with it a Third Party Claim may not at the same time pursue the
present amended Complaint under the forum shopping rule." 15
Their motion for reconsideration having been denied by respondent Judge, 16 petitioner promptly filed
this petition now before us.
In spite of the many errors assigned by petitioner, 17 we find that here the core issue is whether or not
the trial court may take cognizance of the complaint filed by petitioner and consequently provide the
injunctive relief sought. Such cognizance, in turn, would depend on whether the acts complained of are
related to, connected or interwoven with the cases falling under the exclusive jurisdiction of the Labor
Arbiter or of the NLRC.
Petitioner avers that court a quo erred in dismissing the third-party claim on the ground of lack of
jurisdiction. Further, it contends that the NLRC-CAR did not acquire jurisdiction over the claim for it did
not impugn the decision of the NLRC-CAR but merely questioned the propriety of the levy made by
Sheriff Ventura. In support of its claim, petitioner asserts that the instant case does not involve a labor
dispute, as no employer-employee relationship exists between the parties. Nor is the petitioner's case
related in any way to either parties' case before the NLRC-CAR hence, not within the jurisdiction of the
Commission.
Basic as a hornbook principle, jurisdiction over the subject matter of a case is conferred by law and
determined by the allegations in the complaint 18which comprise a concise statement of the ultimate
facts constituting the petitioner's cause of action. 19 Thus we have held that:
"Jurisdiction over the subject-matter is determined upon the allegations made
in the complaint, irrespective of whether the plaintiff is entitled or not entitled
to recover upon the claim asserted therein a matter resolved only after and
as a result of the trial." 20
Petitioner filed the third-party claim before the court a quo by reason of a writ of execution issued by the
NLRC-CAR Sheriff against a property to which it claims ownership. The writ was issued to enforce and
execute the commission's decision in NLRC Case No. 01-08-0165-89 (Illegal Dismissal and Unfair Labor
Practice) against Green Mountain Farm, Roberto Ongpin and Almus Alabe.
Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in
essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the
writ. The complaint was in effect a motion to quash the writ of execution of a decision rendered on a
case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor
Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the third
party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts.
Precedents abound confirming the rule that said courts have no jurisdiction to act on labor cases or
various incidents arising therefrom, including the execution of decisions, awards or
orders. 21 Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor official
concerned under the Department of Labor and Employment. To hold otherwise is to sanction split
jurisdiction which is obnoxious to the orderly administration of justice. 22
Petitioner failed to realize that by filing its third-party claim with the deputy sheriff, it submitted itself to
the jurisdiction of the Commission acting through the Labor Arbiter. It failed to perceive the fact that
what it is really controverting is the decision of the Labor Arbiter and not the act of the deputy sheriff in
executing said order issued as a consequence of said decision rendered. LLphil
Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is
terminated. 23 Whatever irregularities attended the issuance and execution of the alias writ of
execution should be referred to the same administrative tribunal which rendered the decision. 24 This is
because any court which issued a writ of execution has the inherent power, for the advancement of
justice, to correct errors of its ministerial officers and to control its own processes. 25
The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by
Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular courts.
Having established that jurisdiction over the case rests with the Commission, we find no grave abuse of
discretion on the part of respondent Judge Cabato in denying petitioner's motion for the issuance of an
injunction against the execution of the decision of the National Labor Relations Commission.
Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits issuance of a
temporary or permanent injunction or restraining order in any case involving or growing out of labor
disputes by any court or other entity (except as otherwise provided in Arts. 218 and 264). As correctly
observed by court a quo, the main issue and the subject of the amended complaint for injunction are
questions interwoven with the execution of the Commission's decision. No doubt the aforecited
prohibition in Article 254 is applicable.
Petitioner should have filed its third-party claim before the Labor Arbiter, from whom the writ of
execution originated, before instituting said civil case. The NLRC's Manual on Execution of
Judgment, 26 issued pursuant to Article 218 of the Labor Code, provides the mechanism for a third-party
claimant to assert his claim over a property levied upon by the sheriff pursuant to an order or decision of
the Commission or of the Labor Arbiter. The power of the Labor Arbiter to issue a writ of execution
carries with it the power to inquire into the correctness of the execution of his decision and to consider
whatever supervening events might transpire during such execution.
Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding the time-
honored principle that a Regional Trial Court, being a co-equal body of the National Labor Relations
Commission, has no jurisdiction to issue any restraining order or injunction to enjoin the execution of
any decision of the latter. 27
WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed Orders of respondent
Judge Fernando P. Cabato dated November 7, 1994 and December 14, 1994, respectively are AFFIRMED.
The records of this case are hereby REMANDED to the National Labor Relations Commission for further
proceedings.
Costs against petitioner.
SO ORDERED. Cdpr






















THIRD DIVISION
[G.R. No. 184778. October 2, 2009.]
BANGKO SENTRAL NG PILIPINAS MONETARY BOARD and CHUCHI
FONACIER, petitioners, vs. HON. NINA G. ANTONIO-VALENZUELA, in her
capacity as Regional Trial Court Judge of Manila, Branch 28; RURAL BANK OF
PARAAQUE, INC.; RURAL BANK OF SAN JOSE (BATANGAS), INC.; RURAL
BANK OF CARMEN (CEBU), INC.; PILIPINO RURAL BANK, INC.; PHILIPPINE
COUNTRYSIDE RURAL BANK, INC.; RURAL BANK OF CALATAGAN (BATANGAS),
INC. (now DYNAMIC RURAL BANK); RURAL BANK OF DARBCI, INC.; RURAL
BANK OF KANANGA (LEYTE), INC. (now FIRST INTERSTATE RURAL BANK);
RURAL BANK OF BISAYAS MINGLANILLA (now BANK OF EAST ASIA); and SAN
PABLO CITY DEVELOPMENT BANK, INC., respondents.

DECISION
VELASCO, JR., J p:
The Case
This is a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a Temporary
Restraining Order (TRO)/Writ of Preliminary Injunction, questioning the Decision dated September 30,
2008 1 of the Court of Appeals (CA) in CA-G.R. SP No. 103935. The CA Decision upheld the Order 2dated
June 4, 2008 of the Regional Trial Court (RTC), Branch 28 in Manila, issuing writs of preliminary injunction
in Civil Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08-
119250, 08-119251, and 08-119273, and the Order dated May 21, 2008 that consolidated the civil
cases. IcCEDA
The Facts
In September of 2007, the Supervision and Examination Department (SED) of the Bangko Sentral ng
Pilipinas (BSP) conducted examinations of the books of the following banks: Rural Bank of Paraaque,
Inc. (RBPI), Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank,
Inc., Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural
Bank), Rural Bank of Darbci, Inc., Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank),
Rural Bank de Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development Bank, Inc.
After the examinations, exit conferences were held with the officers or representatives of the banks
wherein the SED examiners provided them with copies of Lists of Findings/Exceptions containing the
deficiencies discovered during the examinations. These banks were then required to comment and to
undertake the remedial measures stated in these lists within 30 days from their receipt of the lists, which
remedial measures included the infusion of additional capital. Though the banks claimed that they made
the additional capital infusions, petitioner Chuchi Fonacier, officer-in-charge of the SED, sent separate
letters to the Board of Directors of each bank, informing them that the SED found that the banks failed
to carry out the required remedial measures. In response, the banks requested that they be given time
to obtain BSP approval to amend their Articles of Incorporation, that they have an opportunity to seek
investors. They requested as well that the basis for the capital infusion figures be disclosed, and noted
that none of them had received the Report of Examination (ROE) which finalizes the audit findings. They
also requested meetings with the BSP audit teams to reconcile audit figures. In response, Fonacier
reiterated the banks' failure to comply with the directive for additional capital infusions.
On May 12, 2008, the RBPI filed a complaint for nullification of the BSP ROE with application for a TRO
and writ of preliminary injunction before the RTC docketed as Civil Case No. 08-119243 against Fonacier,
the BSP, Amado M. Tetangco, Jr., Romulo L. Neri, Vicente B. Valdepenas, Jr., Raul A. Boncan, Juanita D.
Amatong, Alfredo C. Antonio, and Nelly F. Villafuerte. RBPI prayed that Fonacier, her subordinates,
agents, or any other person acting in her behalf be enjoined from submitting the ROE or any similar
report to the Monetary Board (MB), or if the ROE had already been submitted, the MB be enjoined from
acting on the basis of said ROE, on the allegation that the failure to furnish the bank with a copy of the
ROE violated its right to due process.
The Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc.,
Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc., Rural Bank of Darbci,
Inc., Rural Bank of Kananga (Leyte), Inc., and Rural Bank de Bisayas Minglanilla followed suit, filing
complaints with the RTC substantially similar to that of RBPI, including the reliefs prayed for, which were
raffled to different branches and docketed as Civil Cases Nos. 08-119244, 08-119245, 08-119246, 08-
119247, 08-119248, 08-119249, 08-119250, and 08-119251, respectively.
On May 13, 2008, the RTC denied the prayer for a TRO of Pilipino Rural Bank, Inc. The bank filed a motion
for reconsideration the next day.
On May 14, 2008, Fonacier and the BSP filed their opposition to the application for a TRO and writ of
preliminary injunction in Civil Case No. 08-119243 with the RTC. Respondent Judge Nina Antonio-
Valenzuela of Branch 28 granted RBPI's prayer for the issuance of a TRO. ATaDHC
The other banks separately filed motions for consolidation of their cases in Branch 28, which motions
were granted. Judge Valenzuela set the complaint of Rural Bank of San Jose (Batangas), Inc. for hearing
on May 15, 2008. Petitioners assailed the validity of the consolidation of the nine cases before the RTC,
alleging that the court had already prejudged the case by the earlier issuance of a TRO in Civil Case No.
08-119243, and moved for the inhibition of respondent judge. Petitioners filed a motion for
reconsideration regarding the consolidation of the subject cases.
On May 16, 2008, San Pablo City Development Bank, Inc. filed a similar complaint against the same
defendants with the RTC, and this was docketed as Civil Case No. 08-119273 that was later on
consolidated with Civil Case No. 08-119243. Petitioners filed an Urgent Motion to Lift/Dissolve the TRO
and an Opposition to the earlier motion for reconsideration of Pilipino Rural Bank, Inc.
On May 19, 2008, Judge Valenzuela issued an Order granting the prayer for the issuance of TROs for the
other seven cases consolidated with Civil Case No. 08-119243. On May 21, 2008, Judge Valenzuela issued
an Order denying petitioners' motion for reconsideration regarding the consolidation of cases in Branch
28. On May 22, 2008, Judge Valenzuela granted the urgent motion for reconsideration of Pilipino Rural
Bank, Inc. and issued a TRO similar to the ones earlier issued.
On May 26, 2008, petitioners filed a Motion to Dismiss against all the complaints (except that of the San
Pablo City Development Bank, Inc.), on the grounds that the complaints stated no cause of action and
that a condition precedent for filing the cases had not been complied with. On May 29, 2008, a hearing
was conducted on the application for a TRO and for a writ of preliminary injunction of San Pablo City
Development Bank, Inc.
The Ruling of the RTC
After the parties filed their respective memoranda, the RTC, on June 4, 2008, ruled that the banks were
entitled to the writs of preliminary injunction prayed for. It held that it had been the practice of the SED
to provide the ROEs to the banks before submission to the MB. It further held that as the banks are the
subjects of examinations, they are entitled to copies of the ROEs. The denial by petitioners of the banks'
requests for copies of the ROEs was held to be a denial of the banks' right to due process.
The dispositive portion of the RTC's order reads:
WHEREFORE, the Court rules as follows:
1)Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Rural Bank of Paranaque Inc. is directed to
post a bond executed to the defendants, in the amount of
P500,000.00 to the effect that the plaintiff will pay to the defendants
all damages which they may sustain by reason of the injunction if the
Court should finally decide that the plaintiff was not entitled thereto.
After posting of the bond and approval thereof, let a writ of
preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report.
2)Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Rural Bank of San Jose (Batangas), Inc. is
directed to post a bond executed to the defendants, in the amount
of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report. ESIcaC
3)Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Rural Bank of Carmen (Cebu), Inc. is directed
to post a bond executed to the defendants, in the amount of
P500,000.00 to the effect that the plaintiff will pay to the defendants
all damages which they may sustain by reason of the injunction if the
Court should finally decide that the plaintiff was not entitled thereto.
After posting of the bond and approval thereof, let a writ of
preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report.

4)Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Pilipino Rural Bank Inc. is directed to post a
bond executed to the defendants, in the amount of P500,000.00 to
the effect that the plaintiff will pay to the defendants all damages
which they may sustain by reason of the injunction if the Court
should finally decide that the plaintiff was not entitled thereto. After
posting of the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from
submitting the Report of Examination or any other similar report
prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on
Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted
to the Monetary Board, the latter and its members (i.e., defendants
Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of
said report.
5)Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Philippine Countryside Rural Bank Inc. is
directed to post a bond executed to the defendants, in the amount
of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report.
6)Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Dynamic Bank Inc. (Rural Bank of Calatagan)
is directed to post a bond executed to the defendants, in the amount
of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report.
7)Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Rural Bank of DARBCI, Inc. is directed to post
a bond executed to the defendants, in the amount of P500,000.00 to
the effect that the plaintiff will pay to the defendants all damages
which they may sustain by reason of the injunction if the Court
should finally decide that the plaintiff was not entitled thereto. After
posting of the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from
submitting the Report of Examination or any other similar report
prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on
Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted
to the Monetary Board, the latter and its members (i.e., defendants
Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of
said report. cIDHSC
8)Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Rural Bank of Kananga Inc. (First Intestate
Bank), is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report.
9)Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section 4(b) of the Revised
Rules of Court, plaintiff Banco Rural De Bisayas Minglanilla (Cebu)
Inc. (Bank of East Asia) is directed to post a bond executed to the
defendants, in the amount of P500,000.00 to the effect that the
plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide
that the plaintiff was not entitled thereto. After posting of the bond
and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection with
the examination conducted on the plaintiff, to the Monetary Board.
In case such a Report on Examination [sic] or any other similar report
prepared in connection with the examination conducted on the
plaintiff has been submitted to the Monetary Board, the latter and
its members (i.e., defendants Tetangco, Neri, Valdepenas, Boncan,
Amatong, Antonio, and Villafuerte) are enjoined and restrained from
acting on the basis of said report.
10)Re: Civil Case No. 08-119273. Pursuant to Rule 58, Section 4(b) of the
Revised Rules of Court, plaintiff San Pablo City Development Bank,
Inc. is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the
defendants all damages which they may sustain by reason of the
injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let
a writ of preliminary injunction be issued to enjoin and restrain the
defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination
conducted on the plaintiff, to the Monetary Board. In case such a
Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been
submitted to the Monetary Board, the latter and its members (i.e.,
defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio,
and Villafuerte) are enjoined and restrained from acting on the basis
of said report. 3
The Ruling of the CA
Petitioners then brought the matter to the CA via a petition for certiorari under Rule 65 claiming grave
abuse of discretion on the part of Judge Valenzuela when she issued the orders dated May 21, 2008 and
June 4, 2008.
The CA ruled that the RTC committed no grave abuse of discretion when it ordered the issuance of a writ
of preliminary injunction and when it ordered the consolidation of the 10 cases.
It held that petitioners should have first filed a motion for reconsideration of the assailed orders, and
failed to justify why they resorted to a special civil action of certiorari instead.
The CA also found that aside from the technical aspect, there was no grave abuse of discretion on the
part of the RTC, and if there was a mistake in the assessment of evidence by the trial court, that should
be characterized as an error of judgment, and should be correctable via appeal. HcACTE
The CA held that the principles of fairness and transparency dictate that the respondent banks are
entitled to copies of the ROE.
Regarding the consolidation of the 10 cases, the CA found that there was a similarity of facts, reliefs
sought, issues raised, defendants, and that plaintiffs and defendants were represented by the same sets
of counsels. It found that the joint trial of these cases would prejudice any substantial right of
petitioners.
Finding that no grave abuse of discretion attended the issuance of the orders by the RTC, the CA denied
the petition.
On November 24, 2008, a TRO was issued by this Court, restraining the CA, RTC, and respondents from
implementing and enforcing the CA Decision dated September 30, 2008 in CA-G.R. SP No. 103935. 4
By reason of the TRO issued by this Court, the SED was able to submit their ROEs to the MB. The MB then
prohibited the respondent banks from transacting business and placed them under receivership under
Section 53 of Republic Act No. (RA) 8791 5 and Sec. 30 of RA 7653 6 through MB Resolution No. 1616
dated December 9, 2008; Resolution Nos. 1637 and 1638 dated December 11, 2008; Resolution Nos.
1647, 1648, and 1649 dated December 12, 2008; Resolution Nos. 1652 and 1653 dated December 16,
2008; and Resolution Nos. 1692 and 1695 dated December 19, 2008, with the Philippine Deposit
Insurance Corporation as the appointed receiver.

Now we resolve the main petition.
Grounds in Support of Petition
I.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT
THE INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT VIOLATED
SECTION 25 OF THE NEW CENTRAL BANK ACT AND EFFECTIVELY
HANDCUFFED THE BANGKO SENTRAL FROM DISCHARGING ITS
FUNCTIONS TO THE GREAT AND IRREPARABLE DAMAGE OF THE
COUNTRY'S BANKING SYSTEM;
II.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
RESPONDENTS ARE ENTITLED TO BE FURNISHED COPIES OF THEIR
RESPECTIVE ROEs BEFORE THE SAME IS SUBMITTED TO THE
MONETARY BOARD IN VIEW OF THE PRINCIPLES OF FAIRNESS AND
TRANSPARENCY DESPITE LACK OF EXPRESS PROVISION IN THE NEW
CENTRAL BANK ACT REQUIRING BSP TO DO THE SAME;
III.THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DEPARTING FROM
WELL-ESTABLISHED PRECEPTS OF LAW AND JURISPRUDENCE:
A.THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED RESORT TO
PETITION FOR CERTIORARI UNDER RULE 65 INSTEAD OF
FIRST FILING A MOTION FOR RECONSIDERATION
B.RESPONDENT BANKS' ACT OF RESORTING IMMEDIATELY TO THE
COURT WAS PREMATURE SINCE IT WAS MADE IN UTTER
DISREGARD OF THE PRINCIPLE OF PRIMARY JURISDICTION
AND EXHAUSTION OF ADMINISTRATIVE REMEDY
C.THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION BY THE
REGIONAL TRIAL COURT WAS NOT ONLY IMPROPER BUT
AMOUNTED TO GRAVE ABUSE OF DISCRETION 7
Our Ruling
The petition is meritorious.
In Lim v. Court of Appeals it was stated:
The requisites for preliminary injunctive relief are: (a) the invasion of right
sought to be protected is material and substantial; (b) the right of the
complainant is clear and unmistakable; and (c) there is an urgent and
paramount necessity for the writ to prevent serious damage.
As such, a writ of preliminary injunction may be issued only upon clear showing
of an actual existing right to be protected during the pendency of the principal
action. The twin requirements of a valid injunction are the existence of a right
and its actual or threatened violations. Thus, to be entitled to an injunctive writ,
the right to be protected and the violation against that right must be shown. 8
These requirements are absent in the present case.
In granting the writs of preliminary injunction, the trial court held that the submission of the ROEs to the
MB before the respondent banks would violate the right to due process of said banks. cHDEaC
This is erroneous.
The respondent banks have failed to show that they are entitled to copies of the ROEs. They can point to
no provision of law, no section in the procedures of the BSP that shows that the BSP is required to give
them copies of the ROEs. Sec. 28 of RA 7653, or the New Central Bank Act, which governs examinations
of banking institutions, provides that the ROE shall be submitted to the MB; the bank examined is not
mentioned as a recipient of the ROE.
The respondent banks cannot claim a violation of their right to due process if they are not provided with
copies of the ROEs. The same ROEs are based on the lists of findings/exceptions containing the
deficiencies found by the SED examiners when they examined the books of the respondent banks. As
found by the RTC, these lists of findings/exceptions were furnished to the officers or representatives of
the respondent banks, and the respondent banks were required to comment and to undertake remedial
measures stated in said lists. Despite these instructions, respondent banks failed to comply with the
SED's directive.
Respondent banks are already aware of what is required of them by the BSP, and cannot claim violation
of their right to due process simply because they are not furnished with copies of the ROEs. Respondent
banks were held by the CA to be entitled to copies of the ROEs prior to or simultaneously with their
submission to the MB, on the principles of fairness and transparency. Further, the CA held that if the
contents of the ROEs are essentially the same as those of the lists of findings/exceptions provided to said
banks, there is no reason not to give copies of the ROEs to the banks. This is a flawed conclusion, since if
the banks are already aware of the contents of the ROEs, they cannot say that fairness and transparency
are not present. If sanctions are to be imposed upon the respondent banks, they are already well aware
of the reasons for the sanctions, having been informed via the lists of findings/exceptions, demolishing
that particular argument. The ROEs would then be superfluities to the respondent banks, and should not
be the basis for a writ of preliminary injunction. Also, the reliance of the RTC on Banco Filipino v.
Monetary Board 9 is misplaced. The petitioner in that case was held to be entitled to annexes of the
Supervision and Examination Sector's reports, as it already had a copy of the reports themselves. It was
not the subject of the case whether or not the petitioner was entitled to a copy of the reports. And the
ruling was made after the petitioner bank was ordered closed, and it was allowed to be supplied with
annexes of the reports in order to better prepare its defense. In this instance, at the time the respondent
banks requested copies of the ROEs, no action had yet been taken by the MB with regard to imposing
sanctions upon said banks.
The issuance by the RTC of writs of preliminary injunction is an unwarranted interference with the
powers of the MB. Secs. 29 and 30 of RA 7653 10 refer to the appointment of a conservator or a receiver
for a bank, which is a power of the MB for which they need the ROEs done by the supervising or
examining department. The writs of preliminary injunction issued by the trial court hinder the MB from
fulfilling its function under the law. The actions of the MB under Secs. 29 and 30 of RA 7653 "may not be
restrained or set aside by the court except on petition for certiorari on the ground that the action taken
was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of
jurisdiction". The writs of preliminary injunction order are precisely what cannot be done under the law
by preventing the MB from taking action under either Sec. 29 or Sec. 30 of RA 7653.
As to the third requirement, the respondent banks have shown no necessity for the writ of preliminary
injunction to prevent serious damage. The serious damage contemplated by the trial court was the
possibility of the imposition of sanctions upon respondent banks, even the sanction of closure. Under the
law, the sanction of closure could be imposed upon a bank by the BSP even without notice and hearing.
The apparent lack of procedural due process would not result in the invalidity of action by the MB. This
was the ruling in Central Bank of the Philippines v. Court of Appeals. 11 This "close now, hear later"
scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of the
bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders,
and the general public. The writ of preliminary injunction cannot, thus, prevent the MB from taking
action, by preventing the submission of the ROEs and worse, by preventing the MB from acting on such
ROEs. IaDcTC
The trial court required the MB to respect the respondent banks' right to due process by allowing the
respondent banks to view the ROEs and act upon them to forestall any sanctions the MB might impose.
Such procedure has no basis in law and does in fact violate the "close now, hear later" doctrine. We held
in Rural Bank of San Miguel, Inc. v. Monetary Board, Bangko Sentral ng Pilipinas:
It is well-settled that the closure of a bank may be considered as an exercise of
police power. The action of the MB on this matter is final and executory. Such
exercise may nonetheless be subject to judicial inquiry and can be set aside if
found to be in excess of jurisdiction or with such grave abuse of discretion as to
amount to lack or excess of jurisdiction. 12
The respondent banks cannot through seeking a writ of preliminary injunction by appealing to lack of
due process, in a roundabout manner prevent their closure by the MB. Their remedy, as stated, is a
subsequent one, which will determine whether the closure of the bank was attended by grave abuse of
discretion. Judicial review enters the picture only after the MB has taken action; it cannot prevent such
action by the MB. The threat of the imposition of sanctions, even that of closure, does not violate their
right to due process, and cannot be the basis for a writ of preliminary injunction.
The "close now, hear later" doctrine has already been justified as a measure for the protection of the
public interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits.
Unless adequate and determined efforts are taken by the government against distressed and
mismanaged banks, public faith in the banking system is certain to deteriorate to the prejudice of the
national economy itself, not to mention the losses suffered by the bank depositors, creditors, and
stockholders, who all deserve the protection of the government. 13
The respondent banks have failed to show their entitlement to the writ of preliminary injunction. It must
be emphasized that an application for injunctive relief is construed strictly against the pleader. 14 The
respondent banks cannot rely on a simple appeal to procedural due process to prove entitlement. The
requirements for the issuance of the writ have not been proved. No invasion of the rights of respondent
banks has been shown, nor is their right to copies of the ROEs clear and unmistakable. There is also no
necessity for the writ to prevent serious damage. Indeed the issuance of the writ of preliminary
injunction tramples upon the powers of the MB and prevents it from fulfilling its functions. There is no
right that the writ of preliminary injunction would protect in this particular case. In the absence of a clear
legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. 15 In the absence of
proof of a legal right and the injury sustained by the plaintiff, an order for the issuance of a writ of
preliminary injunction will be nullified. 16

Courts are hereby reminded to take greater care in issuing injunctive relief to litigants, that it would not
violate any law. The grant of a preliminary injunction in a case rests on the sound discretion of the court
with the caveat that it should be made with great caution. 17 Thus, the issuance of the writ of
preliminary injunction must have basis in and be in accordance with law. All told, while the grant or
denial of an injunction generally rests on the sound discretion of the lower court, this Court may and
should intervene in a clear case of abuse. 18
WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision dated September 30, 2008 in
CA-G.R. SP No. 103935 is herebyREVERSED. The assailed order and writ of preliminary injunction of
respondent Judge Valenzuela in Civil Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-
119247, 08-119248, 08-119249, 08-119250, 08-119251, and 08-119273 are hereby
declared NULL and VOID.
SO ORDERED.


SECOND DIVISION
[G.R. No. 66321. October 31, 1984.]
TRADERS ROYAL BANK, petitioner, vs. THE HON. INTERMEDIATE APPELLATE
COURT, HON. JESUS R. DE VEGA, as Presiding Judge of the Regional Trial
Court, Third Judicial Region, Branch IX, Malolos, Bulacan, LA TONDEA, INC.,
VICTORINO P. EVANGELISTA, in his capacity as Ex-Oficio Provincial Sheriff of
Bulacan, and/or any and all his DEPUTIES, respondents.
San Juan, Africa, Gonzales & San Agustin for petitioner.
San Jose, Enriquez & San Jose for respondent La Tondea Inc.

SYLLABUS
REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; INDEPENDENT VINDICATORY ACTION MAY BE
FILED BY THIRD PARTY WHOSE PROPERTY HAS BEEN WRONGFULLY LEVIED UPON BY ATTACHMENT.
Section 14, Rule 57 of the Rules of Court explicitly sets forth the remedy that may be availed of by a
person who claims to be the owner of property levied upon by attachment, viz: to lodge a third-party
claim with the sheriff and if the attaching creditor posts an indemnity bond in favor of the sheriff, to file
a separate and independent action to vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314).
2. ID.; ID.; INJUNCTION; COURTS MAY NOT INTERFERE WITH JUDGMENT OF ANOTHER COURT OF
COORDINATE AND CONCURRENT JURISDICTION BY INJUNCTION; RULE IS APPLICABLE ONLY WHERE NO
THIRD-PARTY CLAIMANT IS INVOLVED; PURPOSE OF THAT RULE. Generally, the rule that no court has
the power to interfere by injunction with the judgments or decrees of a concurrent or coordinate
jurisdiction having equal power to grant the injunctive relief sought by injunction, is applied in
cases where no third-party claimant is involved, in order to prevent one court from nullifying the
judgment or process of another court of the same rank or category, a power which devolves upon the
proper appellate court. The purpose of the rule is to avoid conflict of power between different courts of
coordinate jurisdiction and to bring about a harmonious and smooth functioning of their proceedings.
3. ID.; ID.; ATTACHMENT; INTERVENTION IN AN ATTACHMENT PROCEEDING; CUMULATIVE AND
SUPPLETORY TO THE RIGHT TO BRING AN INDEPENDENT SUIT. Intervention as a means of protecting
the third-party claimant's right in an attachment proceeding is not exclusive but cumulative and
suppletory to the right to bring an independent suit. The denial or dismissal of a third-party claim to
property levied upon cannot operate to bar a subsequent independent action by the claimant to
establish his right to the property even if he failed to appeal from the order denying his original third-
party claim.
D E C I S I O N
ESCOLIN, J p:
The issue posed for resolution in this petition involves the authority of a Regional Trial Court to issue, at
the instance of a third-party claimant, an injunction enjoining the sale of property previously levied upon
by the sheriff pursuant to a writ of attachment issued by another Regional Trial Court.
The antecedent facts, undisputed by the parties, are set forth in the decision of the respondent
Intermediate Appellate Court thus:
"Sometime on March 18, 1983 herein petitioner Traders Royal Bank instituted a
suit against the Remco Alcohol Distillery, Inc. (REMCO) before the Regional Trial
Court, Branch CX, Pasay City, in Civil Case No. 9894-P, for the recovery of the
sum of Two Million Three Hundred Eighty Two Thousand Two Hundred Fifty
Eight & 71/100 Pesos (P2,382,258.71) obtaining therein a writ of preliminary
attachment directed against the assets and properties of Remco Alcohol
Distillery, Inc.
"Pursuant to said writ of attachment issued in Civil Case No. 9894-P, Deputy
Sheriff Edilberto Santiago levied among others about 4,600 barrels of aged or
rectified alcohol found within the premises of said Remco Distillery Inc. A third
party claim was filed with the Deputy Sheriff by herein respondent La Tondea,
Inc. on April 1, 1982 claiming ownership over said attached property
(Complaint, p. 17, Rollo).
"On May 12, 1982, private respondent La Tondea, Inc. filed a complaint-in-
intervention in said Civil Case No, 9894, alleging among others, that 'it had
made advances to Remco Distillery Inc. which totalled P3M and which remains
outstanding as of date' and that the 'attached properties are owned by La
Tondea, Inc.' (Annex '3' to petitioner's Motion to Dismiss dated July 27, 1983
Annex "C" to the petition).
"Subsequently, private respondent La Tondea, Inc., without the foregoing
complaint-in-intervention having been passed upon by the Regional Trial Court,
Branch CX, (Pasay City), filed in Civil Case No. 9894-P a 'Motion to Withdraw'
dated October 8, 1983, praying that it be allowed to withdraw alcohol and
molasses from the Remco Distillery Plant (Annex 4 to Petitioner's Motion to
Dismiss Annex C, Petition) and which motion was granted per order of the
Pasay Court dated January 27, 1983, authorizing respondent La Tondea, Inc. to
withdraw alcohol and molasses from the Remco Distillery Plant at Calumpit,
Bulacan (Annex 'I' to Reply to Plaintiff's Opposition dated August 2, 1983
Annex E to the Petition).
"The foregoing order dated January 27, 1983 was however reconsidered by the
Pasay Court by virtue of its order dated February 18, 1983 (Annex A Petition,
p. 15) declaring that the alcohol 'which has not been withdrawn remains in the
ownership of defendant Remco Alcohol Distillery Corporation' and which order
likewise denied La Tondea's motion to intervene.
"A motion for reconsideration of the foregoing order of February 18, 1983 was
filed by respondent La Tondea, Inc., on March 8, 1983 reiterating its request
for leave to withdraw alcohol from the Remco Distillery Plant, and praying
further that the 'portion of the order dated February 18, 1983' declaring Remco
to be the owner of subject alcohol, 'be reconsidered and striken off said order'.
This motion has not been resolved (p. 4, Petition) up to July 18, 1983 when a
manifestation that it was withdrawing its motion for reconsideration was filed
by respondent La Tondea Inc.
"On July 19, 1983, private respondent La Tondea Inc. instituted before the
Regional Trial Court, Branch IX, Malolos, Bulacan presided over by Respondent
Judge, Civil Case No. 7003-M, in which it asserted its claim of ownership over
the properties attached in Civil Case No. 9894-P, and likewise prayed for the
issuance of a writ of Preliminary Mandatory and Prohibitory Injunction (Annex
B, id).
"A Motion to Dismiss and/or Opposition to the application for a writ of
Preliminary Injunction by herein respondent La Tondea Inc. was filed by
petitioner on July 27, 1983 (Annex C, p. 42, id.)
"This was followed by respondent La Tondea's opposition to petitioner's
Motion to Dismiss on August 1, 1983 (Annex D, p. 67, id.).
"A reply on the part of petitioner was made on the foregoing opposition on
August 3, 1983 (p. 92, id.).
"Hearings were held on respondent La Tondea's application for injunctive
relief and on petitioner's motion to dismiss on August 8, 19 & 23, 1983 (p. 5,
id.).
"Thereafter, the parties filed their respective memoranda (Annex F, p. 104;
Annex G, p. 113, Rollo).
"Subsequently, the questioned order dated September 28, 1983 was issued by
the respondent Judge declaring respondent La Tondea Inc. to be the owner of
the disputed alcohol, and granting the latter's application for injunctive relief
(Annex H-1, id.).
"On October 6, 1983, respondent Sheriff Victorino Evangelista issued on
Edilberto A. Santiago Deputy Sheriff of Pasay City the corresponding writ of
preliminary injunction (Annex N, p. 127, id.).
"This was followed by an order issued by the Pasay Court dated October 11,
1983 in Civil Case No, 9894-P requiring Deputy Sheriff Edilberto A. Santiago to
enforce the writ of preliminary attachment previously issued by said court, by
preventing respondent sheriff and respondent La Tondea, Inc. from
withdrawing or removing the disputed alcohol from the Remco ageing
warehouse at Calumpit, Bulacan, and requiring the aforenamed respondents to
explain and show cause why they should not be cited for contempt for
withdrawing or removing said attached alcohol belonging to Remco, from the
latter's ageing warehouse at Calumpit, Bulacan (Annex F, p. 141, Petition)."
Thereafter, petitioner Traders Royal Bank filed with the Intermediate Appellate Court a petition for
certiorari and prohibition, with application for a writ of preliminary injunction, to annul and set aside the
Order dated September 28, 1983 of the respondent Regional Trial Court of Malolos, Bulacan, Branch IX,
issued in Civil Case No. 7003-M; to dissolve the writ of preliminary injunction dated October 6, 1983
issued pursuant to said order; to prohibit respondent Judge from taking cognizance of and assuming
jurisdiction over Civil Case No. 7003-M; and to compel private respondent La Tondea, Inc., and Ex-Oficio
Provincial Sheriff of Bulacan to return the disputed alcohol to their original location at Remco's ageing
warehouse at Calumpit, Bulacan. LibLex
In its decision, the Intermediate Appellate Court dismissed the petition for lack of legal and factual basis,
holding that the respondent Judge did not abuse his discretion in issuing the Order of September 28,
1983 and the writ of preliminary injunction dated October 3, 1983, citing the decision in Detective and
Protective Bureau vs. Cloribel (26 SCRA 255). Petitioner moved for reconsideration, but the respondent
court denied the same in its resolution dated February 2, 1984.
Hence, this petition.
Petitioner contends that respondent Judge of the Regional Trial Court of Bulacan acted without
jurisdiction in entertaining Civil Case No. 7003-M, in authorizing the issuance of a writ of preliminary
mandatory and prohibitory injunction, which enjoined the sheriff of Pasay City from interferring with La
Tondea's right to enter and withdraw the barrels of alcohol and molasses from Remco's ageing
warehouse and from conducting the sale thereof, said merchandise having been previously levied upon
pursuant to the attachment writ issued by the Regional Trial Court of Pasay City in Civil Case No. 9894-P.
It is submitted that such order of the Bulacan Court constitutes undue and illegal interference with the
exercise by the Pasay Court of its coordinate and co-equal authority on matters properly brought before
it.

We find the petition devoid of merit.
There is no question that the action filed by private respondent La Tondea, Inc., as third-party claimant,
before the Regional Trial Court of Bulacan in Civil Case No. 7003-M wherein it claimed ownership over
the property levied upon by Pasay City Deputy Sheriff Edilberto Santiago is sanctioned by Section 14,
Rule 57 of the Rules of Court. Thus
"If property taken be claimed by any person other than the party against whom
attachment had been issued or his agent, and such person makes an affidavit of
his title thereto or right to the possession thereof, stating the grounds of such
right or title, and serves such affidavit upon the officer while the latter has
possession of the property, and a copy thereof upon the attaching creditor, the
officer shall not be bound to keep the property under the attachment, unless
the attaching creditor or his agent, on demand of said officer, secures him
against such claim by a bond in a sum not greater than the value of the property
attached. In case of disagreement as to such value, the same shall be decided
by the court issuing the writ of attachment. The officer shall not be liable for
damages, for the taking or keeping of such property, to any such third-party
claimant, unless such a claim is so made and the action upon the bond brought
within one hundred and twenty (120) days from the date of the filing of said
bond. But nothing herein contained shall prevent such third person from
vindicating his claim to the property by proper action. . . . "
The foregoing rule explicitly sets forth the remedy that may be availed of by a person who claims to be
the owner of property levied upon by attachment, viz: to lodge a third-party claim with the sheriff, and if
the attaching creditor posts an indemnity bond in favor of the sheriff, to file a separate and independent
action to vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314). And this precisely was the
remedy resorted to by private respondent La Tondea when it filed the vindicatory action before the
Bulacan Court. prcd
The case before us does not really present an issue of first impression. In Manila Herald Publishing Co.,
Inc. vs. Ramos, 1 this Court resolved a similar question in this wise:
"The objection that at once suggests itself to entertaining in Case No. 12263 the
motion to discharge the preliminary attachment levied in Case No. 11531 is that
by so doing one judge would interfere with another judge's actuations. The
objection is superficial and will not bear analysis.
"It has been seen that a separate action by the third party who claims to be the
owner of the property attached is appropriate. If this is so, it must be admitted
that the judge trying such action may render judgment ordering the sheriff of
whoever has in possession the attached property to deliver it to the plaintiff-
claimant or desist from seizing it. It follows further that the court may make an
interlocutory order, upon the filing of such bond as may be necessary, to
release the property pending final adjudication of the title. Jurisdiction over an
action includes jurisdiction over an interlocutory matter incidental to the cause
and deemed necessary to preserve the subject matter of the suit or protect the
parties' interests. This is self-evident.
xxx xxx xxx
"It is true of course that property in custody of the law can not be interfered
without the permission of the proper court, and property legally attached is
property in custodia legis. But for the reason just stated, this rule is confined to
cases where the property belongs to the defendant or one in which the
defendant has proprietary interest. When the sheriff acting beyond the bounds
of his office seizes a stranger's property, the rule does not apply and
interference with his custody is not interference with another court's order of
attachment.
"It may be argued that the third-party claim may be unfounded; but so may it
be meritorious, for that matter. Speculations are however beside the point. The
title is the very issue in the case for the recovery of property or the dissolution
of the attachment, and pending final decision, the court may enter any
interlocutory order calculated to preserve the property in litigation and protect
the parties' rights and interests."
Generally, the rule that no court has the power to interfere by injunction with the judgments or decrees
of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief sought by
injunction, is applied in cases where no third-party claimant is involved, in order to prevent one court
from nullifying the judgment or process of another court of the same rank or category, a power which
devolves upon the proper appellate court. 2 The purpose of the rule is to avoid conflict of power
between different courts of coordinate jurisdiction and to bring about a harmonious and smooth
functioning of their proceedings.
It is further argued that since private respondent La Tondea, Inc., had voluntarily submitted itself to the
jurisdiction of the Pasay Court by filing a motion to intervene in Civil Case No. 9894-P, the denial or
dismissal thereof constitutes a bar to the present action filed before the Bulacan Court.
We cannot sustain the petitioner's view. Suffice it to state that intervention as a means of protecting the
third-party claimant's right in an attachment proceeding is not exclusive but cumulative and suppletory
to the right to bring an independent suit. 3 The denial or dismissal of a third-party claim to property
levied upon cannot operate to bar a subsequent independent action by the claimant to establish his right
to the property even if he failed to appeal from the order denying his original third-party claim. 4
WHEREFORE, the instant petition is hereby dismissed and the decision of the Intermediate Appellate
Court in AC G.R. No. SP-01860 is affirmed, with costs against petitioner Traders Royal Bank.
SO ORDERED.




FIRST DIVISION
[G.R. No. 196171. December 10, 2012.]
RCBC CAPITAL CORPORATION, petitioner, vs. BANCO DE ORO UNIBANK,
INC., respondent.
[G.R. No. 199238. December 10, 2012.]
BANCO DE ORO UNIBANK, INC., petitioner, vs. COURT OF APPEALS and RCBC
CAPITAL CORPORATION, respondents.

DECISION
VILLARAMA, JR., J p:
Before the Court are two consolidated petitions separately filed by the parties in an arbitration case
administered by the International Chamber of Commerce-International Court of Arbitration (ICC-ICA)
pursuant to the arbitration clause in their contract.
The Case
In G.R. No. 196171, a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
RCBC Capital Corporation (RCBC) seeks to reverse the Court of Appeals (CA) Decision 1 dated December
23, 2010 in CA-G.R. SP No. 113525 which reversed and set aside the June 24, 2009 Order 2 of the
Regional Trial Court (RTC) of Makati City, Branch 148 in SP Proc. Case No. M-6046.
In G.R. No. 199238, a petition for certiorari under Rule 65, Banco De Oro Unibank, Inc. (BDO) assails the
Resolution 3 dated September 13, 2011 in CA-G.R. SP No. 120888 which denied BDO's application for the
issuance of a stay order and/or temporary restraining order (TRO)/preliminary injunction against the
implementation of the Writ of Execution 4 dated August 22, 2011 issued by the Makati City RTC, Branch
148 in SP Proc. Case No. M-6046.
Factual Antecedents
On May 24, 2000, RCBC entered into a Share Purchase Agreement 5 (SPA) with Equitable-PCI Bank, Inc.
(EPCIB), George L. Go and the individual shareholders 6 of Bankard, Inc. (Bankard) for the sale to RCBC of
226,460,000 shares (Subject Shares) of Bankard, constituting 67% of the latter's capital stock. After
completing payment of the contract price (P1,786,769,400), the corresponding deeds of sale over the
subject shares were executed in January 2001. ITcCaS
The dispute between the parties arose sometime in May 2003 when RCBC informed EPCIB and the other
selling shareholders of an overpayment of the subject shares, claiming there was an overstatement of
valuation of accounts amounting to P478 million and that the sellers violated their warranty under
Section 5 (g) of the SPA. 7
As no settlement was reached, RCBC commenced arbitration proceedings with the ICC-ICA in accordance
with Section 10 of the SPA which states:
Section 10.Arbitration.
Should there be any dispute arising between the parties relating to this
Agreement including the interpretation or performance hereof which cannot be
resolved by agreement of the parties within fifteen (15) days after written
notice by a party to another, such matter shall then be finally settled by
arbitration under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce in force as of the time of arbitration, by three
arbitrators appointed in accordance with such rules. The venue of arbitration
shall be in Makati City, Philippines and the arbitration proceedings shall be
conducted in the English language. Substantive aspects of the dispute shall be
settled by applying the laws of the Philippines. The decision of the arbitrators
shall be final and binding upon the parties hereto and the expenses of
arbitration (including without limitation the award of attorney's fees to the
prevailing party) shall be paid as the arbitrators shall determine. 8
In its Request for Arbitration 9 dated May 12, 2004, Claimant RCBC charged Bankard with deviating from
and contravening generally accepted accounting principles and practices, due to which the financial
statements of Bankard prior to the stock purchase were far from fair and accurate, and resulted in the
overpayment of P556 million. For this violation of sellers' representations and warranties under the SPA,
RCBC sought its rescission, as well as payment of actual damages in the amount of P573,132,110, legal
interest on the purchase price until actual restitution, moral damages and litigation and attorney's fees,
with alternative prayer for award of damages in the amount of at least P809,796,082 plus legal interest.
In their Answer, 10 EPCIB, Go and the other selling individual shareholders (Respondents) denied RCBC's
allegations contending that RCBC's claim is one for overpayment or price reduction under Section 5 (h) of
the SPA which is already time-barred, the remedy of rescission is unavailable, and even assuming that
rescission is permitted by the SPA, RCBC failed to file its claim within a reasonable time. They further
asserted that RCBC is not entitled to its alternative prayer for damages, being guilty of laches and failing
to set out the details of the breach as required under Section 7 of the SPA. A counterclaim for litigation
expenses and costs of arbitration in the amount of US$300,000, as well as moral and exemplary
damages, was likewise raised by the Respondents. ASTIED
RCBC submitted a Reply 11 to the aforesaid Answer.
Subsequently, the Arbitration Tribunal was constituted. Mr. Neil Kaplan was nominated by RCBC; Justice
Santiago M. Kapunan (a retired Member of this Court) was nominated by the Respondents; and Sir Ian
Barker was appointed by the ICC-ICA as Chairman.
On August 13, 2004, the ICC-ICA informed the parties that they are required to pay US$350,000 as
advance on costs pursuant to Article 30 (3) of the ICC Rules of Arbitration (ICC Rules). RCBC paid its share
of US$107,000, the balance remaining after deducting payments of US$2,500 and US$65,000 it made
earlier. Respondents' share of the advance on costs was thus fixed at US$175,000.
Respondents filed an Application for Separate Advances on Costs 12 dated September 17, 2004 under
Article 30 (2) of the ICC Rules, praying that the ICC fix separate advances on the cost of the parties'
respective claims and counterclaims, instead of directing them to share equally on the advance cost of
Claimant's (RCBC) claim. Respondents deemed this advance cost allocation to be proper, pointing out
that the total amount of RCBC's claim is substantially higher more than 40 times the total
amount of their counterclaims, and that it would be unfair to require them to share in the costs of
arbitrating what is essentially a price issue that is now time-barred under the SPA.
On September 20, 2004, the ICC-ICA informed Respondents that their application for separate advances
on costs was premature pending the execution of the Terms of Reference (TOR). 13 The TOR was settled
by the parties and signed by the Chairman and Members of the Arbitral Tribunal by October 11, 2004. On
December 3, 2004, 14 the ICC-ICA denied the application for separate advances on costs and invited
anew the Respondents to pay its share in the advance on costs. However, despite reminders from the
ICC-ICA, Respondents refused to pay their share in the advance cost fixed by the ICC-ICA. On December
16, 2004, the ICC-ICA informed the parties that if Respondents still failed to pay its share in the advance
cost, it would apply Article 30 (4) of the ICC Rules and request the Arbitration Tribunal to suspend its
work and set a new time limit, and if such requested deposit remains unpaid at the expiry thereof, the
counterclaims would be considered withdrawn. 15 ECDAcS
In a fax-letter dated January 4, 2005, the ICC-ICA invited RCBC to pay the said amount in substitution of
Respondents. It also granted an extension until January 17, 2005 within which to pay the balance of the
advance cost (US$175,000). RCBC replied that it was not willing to shoulder the share of Respondents in
the advance on costs but nevertheless requested for a clarification as to the effect of such refusal to
substitute for Respondents' share. 16
On March 10, 2005, the ICC-ICA instructed the Arbitration Tribunal to suspend its work and granted the
parties a final time-limit of 15 days to pay the balance of the advance on costs, failing which the claims
shall be considered withdrawn, without prejudice to their reintroduction at a later date in another
proceeding. The parties were advised that if any of them objects to the measure, it should make a
request in writing within such period. 17 For the same reason of non-receipt of the balance of the
advance cost, the ICC-ICA issued Procedural Order No. 3 for the adjournment of the substantive hearings
and granting the Respondents a two-month extension within which to submit their brief of evidence and
witnesses.
RCBC objected to the cancellation of hearings, pointing out that Respondents have been given ample
time and opportunity to submit their brief of evidence and prepare for the hearings and that their
request for postponement serves no other purpose but to delay the proceedings. It alleged that
Respondents' unjustified refusal to pay their share in the advance on costs warrants a ruling that they
have lost standing to participate in the proceedings. It thus prayed that Respondents be declared as in
default, the substantive hearings be conducted as originally scheduled, and RCBC be allowed to submit
rebuttal evidence and additional witness statements. 18
On December 15, 2005, the ICC-ICA notified the parties of its decision to increase the advances on costs
from US$350,000 to US$450,000 subject to later readjustments, and again invited the Respondents to
pay the US$100,000 increment within 30 days from notice. Respondents, however, refused to pay the
increment, insisting that RCBC should bear the cost of prosecuting its own claim and that compelling the
Respondents to fund such prosecution is inequitable. Respondents reiterated that it was willing to pay
the advance on costs for their counterclaim. 19 HTScEI
On December 27, 2005, the ICC-ICA advised that it was not possible to fix separate advances on costs as
explained in its December 3, 2004 letter, and again invited Respondents to pay their share in the
advance on costs. Respondents' response contained in the letter dated January 6, 2006 was still the
same: it was willing to pay only the separate advance on costs of their counterclaim. 20 In view of
Respondents' continuing refusal to pay its equal share in the advance on costs and increment, RCBC
wrote the ICC-ICA stating that the latter should compel the Respondents to pay as otherwise RCBC will
be prejudiced and the inaction of the ICC-ICA and the Arbitration Tribunal will detract from the
effectiveness of arbitration as a means of settling disputes. In accordance with Article 30 (4) of the ICC
Rules, RCBC reiterated its request to declare the Respondents as in default without any personality to
participate in the proceedings not only with respect to their counterclaims but also to the claim of
RCBC. 21
Chairman Ian Barker, in a letter dated January 25, 2006, stated in part:
xxx xxx xxx
2.The Tribunal has no power under the ICC Rules to order the Respondents
to pay the advance on costs sought by the ICC or to give the Claimant any
relief against the Respondents' refusal to pay. The ICC Rules differ from, for
example, the Rules of the LCIA (Article 24.3) which enables a party paying the
share of costs which the other party has refused to pay, to recover "that
amount as a debt immediately due from the defaulting party."
3.The only sanction under the ICC Rules is contained within Article 30 (4).
Where a request for an advance on costs has not been complied with, after
consultation with the Tribunal, the Secretary-General may direct the Tribunal
to suspend its work. After expiry of a time limit, all claims and counterclaims
are then considered as withdrawn. This provision cannot assist a Claimant
who is anxious to litigate its claim. Such a Claimant has to pay the sums
requested (including the Respondents' share) if it wishes the arbitration to
proceed.
4.It may be possible for a Claimant in the course of the arbitral hearing (or
whenever costs are being considered by the Tribunal) to make submissions
based on the failure of the Respondents to pay their share of the costs
advance. What relief, if any, would have to be then determined by the
Tribunal after having heard submissions from the Respondents. cSHIaA
5.I should be pleased if the Claimant will advise the Tribunal of its intention
in relation to the costs advance. If the costs are not paid, the arbitration
cannot proceed. 22 (Italics in the original; emphasis supplied)
RCBC paid the additional US$100,000 under the second assessment to avert suspension of the
Arbitration Tribunal's proceedings.
Upon the commencement of the hearings, the Arbitration Tribunal decided that hearings will be initially
confined to issues of liability (liability phase) while the substantial issues will be heard on a later
date (quantum phase).
Meanwhile, EPCIB's corporate name was officially changed to Banco De Oro (BDO)-EPCIB after its merger
with BDO was duly approved by the Securities and Exchange Commission. As such, BDO assumed all the
obligations and liabilities of EPCIB under the SPA.
On September 27, 2007, the Arbitration Tribunal rendered a Partial Award 23 (First Partial Award) in ICC-
ICA Case No. 13290/MS/JB/JEM, as follows:
15AWARD AND DIRECTIONS
15.1The Tribunal makes the following declarations by way of Partial Award:
(a)The Claimant's claim is not time-barred under the provisions of
this SPA.
(b)The Claimant is not estopped by its conduct or the equitable
doctrine of laches from pursuing its claim.
(c)As detailed in the Partial Award, the Claimant has established the
following breaches by the Respondents of clause 5(g) of
the SPA:
i)the assets, revenue and net worth of Bankard were
overstated by reason of its policy on and
recognition of Late Payment Fees;
ii)reported receivables were higher than their realisable
values by reason of the 'bucketing' method,
thus overstating Bankard's assets; and cDACST
iii)the relevant Bankard statements were inadequate and
misleading in that their disclosures caused
readers to be misinformed about Bankard's
accounting policies on revenue and
receivables.
(d)Subject to proof of loss the Claimant is entitled to damages for the
foregoing breaches.
(e)The Claimant is not entitled to rescission of the SPA.
(f)All other issues, including any issue relating to costs, will be dealt
with in a further or final award.
15.2A further Procedural Order will be necessary subsequent to the delivery of
this Partial Award to deal with the determination of quantum and in particular,
whether there should be an Expert appointed by the Tribunal under Article
20(4) of the ICC Rules to assist the Tribunal in this regard.
15.3This Award is delivered by a majority of the Tribunal (Sir Ian Barker and Mr.
Kaplan). Justice Kapunan is unable to agree with the majority's conclusion on
the claim of estoppel brought by the Respondents. 24 (Emphasis supplied)
On October 26, 2007, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No. M-6046) a
motion to confirm the First Partial Award, while Respondents filed a motion to vacate the same.
ICC-ICA by letter 25 dated October 12, 2007 increased the advance on costs from US$450,000 to
US$580,000. Under this third assessment, RCBC paid US$130,000 as its share on the increment.
Respondents declined to pay its adjudged total share of US$290,000 on account of its filing in the RTC of
a motion to vacate the First Partial Award. 26 The ICC-ICA then invited RCBC to substitute for
Respondents in paying the balance of US$130,000 by December 21, 2007. 27 RCBC complied with the
request, making its total payments in the amount of US$580,000. 28
While RCBC paid Respondents' share in the increment (US$130,000), it reiterated its plea that
Respondents be declared as in default and the counterclaims deemed as withdrawn. 29
Chairman Barker's letter dated December 18, 2007 states in part: aHECST
xxx xxx xxx
8.Contrary to the Complainant's view, the Tribunal has no jurisdiction to declare
that the Respondents have no right to participate in the proceedings
concerning the claim. Article 30(4) of the ICC Rules applies only to
any counterclaim of the Respondents.
9.The Tribunal interprets the Claimant's latest letter as an application by the
Claimant to the Tribunal for the issue of a partial award against the
Respondents in respect of their failure to pay their share of the
ICC's requests for advance on costs.
10.I should be grateful if the Claimant would confirm that this is the situation. If
so, the Claimant should propose a timetable for which written
submissions should be made by both parties. This is an application
which can be considered by the Tribunal on written
submissions. 30(Emphasis supplied)
RCBC, in a letter dated December 26, 2007, confirmed the Arbitration Tribunal's interpretation that it
was applying for a partial award against Respondents' failure to pay their share in the advance on
costs. 31
Meanwhile, on January 8, 2008, the Makati City RTC, Branch 148 issued an order in SP Proc. Case No. M-
6046 confirming the First Partial Award and denying Respondents' separate motions to vacate and to
suspend and inhibit Barker and Kaplan. Respondents' motion for reconsideration was likewise denied.
Respondents directly filed with this Court a petition for review on certiorari under Rule 45, docketed
as G.R. No. 182248 and entitled Equitable PCI Banking Corporation v. RCBC Capital Corporation. 32 In our
Decision dated December 18, 2008, we denied the petition and affirmed the RTC's ruling confirming the
First Partial Award.
On January 18, 2008, the Arbitration Tribunal set a timetable for the filing of submission by the parties
on whether it should issue a Second Partial Award in respect of the Respondents' refusal to pay an
advance on costs to the ICC-ICA.
In compliance, RCBC filed on February 7, 2008 an Application for Reimbursement of Advance on Costs
Paid, praying for the issuance of a partial award directing the Respondents to reimburse its payment in
the amount of US$290,000 representing Respondents' share in the Advance on Costs and to consider
Respondents' counterclaim for actual damages in the amount of US$300,000, and moral and exemplary
damages as withdrawn for their failure to pay their equal share in the advance on costs. RCBC invoked
the plain terms of Article 30 (2) and (3) to stress the liability of Respondents to share equally in paying
the advance on costs where the Arbitration Tribunal has fixed the same. 33 ICAcHE
Respondents, on the other hand, filed their Opposition 34 to the said application alleging that the
Arbitration Tribunal has lost its objectivity in an unnecessary litigation over the payment of Respondents'
share in the advance costs. They pointed out that RCBC's letter merely asked that Respondents be
declared as in default for their failure to pay advance costs but the Arbitration Tribunal, while denying
the request offered an alternative to RCBC: a Partial Award for Respondents' share in the advance costs
even if it was clear from the language of RCBC's December 11, 2007 letter that it had no intention of
litigating for the advance costs. Chairman Barker, after ruling earlier that it cannot grant RCBC's request
to declare the Respondents as having no right to participate in the proceedings concerning the claim,
interpreted RCBC's letter as an application for the Arbitration Tribunal to issue a partial award in respect
of such refusal of Respondents to pay their share in the advance on costs, and subsequently directed the
parties to make submissions on the matter. Aside from violating their right to due process and to be
heard by an impartial tribunal, Respondents also argued that in issuing the award for advance cost, the
Arbitration Tribunal decided an issue beyond the terms of the TOR.
Respondents also emphasized that the parties agreed on a two-part arbitration: the first part of the
Tribunal's proceedings would determine Respondents' liability, if any, for alleged violation of Section 5
(g) and (h) of the SPA; and the second part of the proceedings would determine the amounts owed by
one party to another as a consequence of a finding of liability or lack thereof. An award for
"reimbursement of advances for costs" clearly falls outside the scope of either proceedings. Neither can
the Tribunal justify such proceedings under Article 23 of the ICC Rules (Conservatory and Interim
Measures) because that provision does not contemplate an award for the reimbursement of advance on
costs in arbitration cases. Respondents further asserted that since the advances on costs have been paid
by the Claimant (RCBC), the main claim and counterclaim may both be heard by the Arbitration Tribunal.
In his letter dated March 13, 2008, Chairman Barker advised the parties, as follows:
1.The Tribunal acknowledges the Respondents' response to the Claimant's
application for a Partial Award, based on the Respondents' failure to
pay their share of the costs, as requested by the ICC. aESTAI
2.The Tribunal notes that neither party has referred to an article by Mat[t]hew
Secomb on this very subject which appears in the ICC Bulletin Vol.
14 No. 1 (Spring 2003). To assist both sides and to ensure that the
Tribunal does not consider material on which the parties have not
been given an opportunity to address, I attach a copy of this article,
which also contains reference to other scholarly works on the
subject.
3.The Tribunal will give each party seven days within which to submit further
written comments as a consequence of being alerted to the above
authorities. 35 (Additional emphasis supplied)
The parties complied by submitting their respective comments.
RCBC refuted Respondents' allegation of partiality on the part of Chairman Barker and reiterated the
prayer in its application for reimbursement of advance on costs paid to the ICC-ICA. RCBC
contended that based on Mr. Secomb's article, whether the "contractual" or "provisional measures"
approach is applied, the Arbitration Tribunal is vested with jurisdiction and authority to render an award
with respect to said reimbursement of advance cost paid by the non-defaulting party. 36
Respondents, on the other hand, maintained that RCBC's application for reimbursement of advance cost
has no basis under the ICC Rules. They contended that no manifest injustice can be inferred from an act
of a party paying for the share of the defaulting party as this scenario is allowed by the ICC Rules. Neither
can a partial award for advance cost be justified under the "contractual approach" since the matter of
costs for arbitration is between the ICC and the parties, not the Arbitration Tribunal and the parties. An
arbitration tribunal can issue decisions on costs only for those costs not fixed by the ICC. 37
Respondents reiterated their position that Article 30 (3) envisions a situation whereby a party would
refuse to pay its share on the advance on costs and provides a remedy therefor the other party "shall
be free to pay the whole of the advance on costs." Such party's reimbursement for payments of the
defaulting party's share depends on the final arbitral award where the party liable for costs would be
determined. This is the only remedy provided by the ICC Rules. 38
On May 28, 2008, the Arbitration Tribunal rendered the Second Partial Award, 39 as follows: DEHcTI
7AWARD
7.1Having read and considered the submissions of both parties, the Tribunal
AWARDS, DECLARES AND ORDERS as follows:
(a)The Respondents are forthwith to pay to the Claimant the sum of
US$290,000.
(b)The Respondents' counterclaim is to be considered as withdrawn.
(c)All other questions, including interest and costs, will be dealt with
in a subsequent award. 40
The above partial award was received by RCBC and Respondents on June 12, 2008.
On July 11, 2008, EPCIB filed a Motion to Vacate Second Partial Award 41 in the Makati City RTC, Branch
148 (SP Proc. Case No. M-6046). On July 10, 2008, RCBC filed in the same court a Motion to Confirm
Second Partial Award. 42
EPCIB raised the following grounds for vacating the Second Partial Award: (a) the award is voidab
initio having been rendered by the arbitrators who exceeded their power or acted without it; and (b) the
award was procured by undue means or issued with evident partiality or attended by misbehavior on the
part of the Tribunal which resulted in a material prejudice to the rights of the Respondents. EPCIB argued
that there is no express agreement either in the SPA or the ICC Rules for such right of reimbursement.
There is likewise no implied agreement because from the ICC Rules, the only inference is that the parties
agreed to await the dispositions on costs liability in the Final Award, not before.
On the ruling of the Arbitration Tribunal that Respondents' application for costs are not counterclaims,
EPCIB asserted that this is contrary to Philippine law as it is basic in our jurisdiction that counterclaims
for litigation expenses, moral and exemplary damages are proper counterclaims, which rule should be
recognized in view of Section 10 of the SPA which provides that "substantive aspects of the dispute shall
be settled by applying the laws of the Philippines." Finally, EPCIB takes issue with Chairman Barker's
interpretation of RCBC's December 11, 2007 letter as an application for a partial award for
reimbursement of the substituted payments. Such conduct of Chairman Barker is prejudicial and proves
his evident partiality in favor of RCBC. CSIHDA
RCBC filed its Opposition, 43 asserting that the Arbitration Tribunal had jurisdiction to consider
Respondents' counterclaim as withdrawn, the same having been abandoned by not presenting any
computation or substantiation by evidence, their only computation relates only to attorney's fees which
are simply cost of litigation properly brought at the conclusion of the arbitration. It also pointed out that
the Arbitration Tribunal was empowered by the parties' arbitral clause to determine the manner of
payment of expenses of arbitration, and that the Second Partial Award was based on authorities and
treatises on the mandatory and contractual nature of the obligation to pay advances on costs.
In its Reply, 44 EPCIB contended that RCBC had the option to agree to its proposal for separate advances
on costs but decided against it; RCBC's act of paying the balance of the advance cost in substitution of
EPCIB was for the purpose of having EPCIB defaulted and the latter's counterclaim withdrawn. Having
agreed to finance the arbitration until its completion, RCBC is not entitled to immediate reimbursement
of the amount it paid in substitution of EPCIB under an interim award, as its right to a partial or total
reimbursement will have to be determined under the final award. EPCIB asserted that the matter of
reimbursement of advance cost paid cannot be said to have properly arisen during arbitration. EPCIB
reiterated that Chairman Barker's interpretation of RCBC's December 11, 2007 letter as an application
for interim award for reimbursement is tantamount to a promise that the award will be issued in due
course.
After a further exchange of pleadings, and other motions seeking relief from the court in connection with
the arbitration proceedings (quantum phase), the Makati City RTC, Branch 148 issued the Order 45 dated
June 24, 2009 confirming the Second Partial Award and denying EPCIB's motion to vacate the same. Said
court held that since the parties agreed to submit any dispute under the SPA to arbitration and to be
bound by the ICC Rules, they are also bound to pay in equal shares the advance on costs as provided in
Article 30 (2) and (3). It noted that RCBC was forced to pay the share of EPCIB in substitution of the latter
to prevent a suspension of the arbitration proceedings, while EPCIB's non-payment seems more like a
scheme to delay such proceedings. On the Arbitration Tribunal's ruling on EPCIB's counterclaim, no error
was committed in considering it withdrawn for failure of EPCIB to quantify and substantiate it with
supporting evidence. As to EPCIB's claim for attorney's fees, the RTC agreed that these should be
brought only at the close of arbitration.
EPCIB moved to reconsider the June 24, 2009 Order and for the voluntary inhibition of the Presiding
Judge (Judge Oscar B. Pimentel) on the ground that EPCIB's new counsel represented another client in
another case before him in which said counsel assailed his conduct and had likewise sought his
inhibition. Both motions were denied in the Joint Order 46 dated March 23, 2010. cDHAaT
On April 14, 2010, EPCIB filed in the CA a petition for review 47 with application for TRO and/or writ of
preliminary injunction (CA-G.R. SP No. 113525) in accordance with Rule 19, Section 4 of the Special Rules
of Court on Alternative Dispute Resolution 48 (Special ADR Rules). EPCIB assailed the Makati City RTC,
Branch 148 in denying its motion to vacate the Second Partial Award despite (a) said award having been
rendered in excess of jurisdiction or power, and contrary to public policy; (b) the fact that it was issued
with evident partiality and serious misconduct; (c) the award deals with a dispute not contemplated
within the terms of submission to arbitration or beyond the scope of such submission, which therefore
ought to be vacated pursuant to Article 34 of the UNCITRAL Model Law; and (d) the Presiding Judge
having exhibited bias and prejudice against BDO and its counsel as confirmed by his pronouncements in
the Joint Order dated March 23, 2010 in which, instead of recusing himself, he imputed malice and
unethical conduct in the entry of appearance of Belo Gozon Elma Asuncion and Lucila Law Offices in SP
Proc. Case No. M-6046, which warrants his voluntary inhibition.
Meanwhile, on June 16, 2010, the Arbitration Tribunal issued the Final Award, 49 as follows:
15AWARD
15.1The Tribunal by a majority (Sir Ian Barker & Mr. Kaplan) awards, declares
and adjudges as follows:
(a)the Respondents are to pay damages to the Claimant for breach
of the sale and purchase agreement for Bankard shares in
the sum of P348,736,920.29.
(b)The Respondents are to pay to the Claimant the sum of
US$880,000 in respect of the costs of the arbitration as
fixed by the ICC Court.
(c)The Respondents are to pay to the Claimant the sum of
US$582,936.56 for the fees and expenses of Mr. Best.
(d)The Respondents are to pay to the Claimant their expenses of the
arbitration as follows: cDCIHT
Experts' fees P7,082,788.55
Costs of without prejudice meeting P22,571.45
Costs of arbitration hearings P553,420.66
Costs of transcription service P483,597.26

Total P8,144,377.62
===========
(e)The Respondents are to pay to the Claimant the sum of
P7,000,000 for party-and-party legal costs.
(f)The Counterclaims of the Respondents are all dismissed.
(g)All claims of the Claimant are dismissed, other than those referred
to above.
15.2Justice Kapunan does not agree with the majority of the members of the
Tribunal and has issued a dissenting opinion. He has refused to sign
this Award. 50
On July 1, 2010 BDO filed in the Makati City RTC a Petition to Vacate Final Award Ad
Cautelam, 51 docketed as SP Proc. Case No. M-6995, which was raffled to Branch 65.
On July 28, 2010, RCBC filed with the Makati City RTC, Branch 148 (SP Proc. Case No. M-6046) a Motion
to Confirm Final Award. 52 BDO filed its Opposition with Motion to Dismiss 53 on grounds that a Petition
to Vacate Final Award Ad Cautelam had already been filed in SP Proc. Case No. M-6995. BDO also
pointed out that RCBC did not file the required petition but instead filed a mere motion which did not go
through the process of raffling to a proper branch of the RTC of Makati City and the payment of the
required docket/filing fees. Even assuming that Branch 148 has jurisdiction over RCBC's motion to
confirm final award, BDO asserted that RCBC had filed before the Arbitration Tribunal an Application for
Correction and Interpretation of Award under Article 29 of the ICC Rules, which is irreconcilable with its
Motion to Confirm Final Award before said court. Hence, the Motion to Confirm Award was filed
precipitately. TICDSc
On August 18, 2010, RCBC filed an Omnibus Motion in SP Proc. Case No. M-6995 (Branch 65) praying for
the dismissal of BDO's Petition to Vacate Final Award or the transfer of the same to Branch 148 for
consolidation with SP Proc. Case No. M-6046. RCBC contended that BDO's filing of its petition with
another court is a blatant violation of the Special ADR Rules and is merely a subterfuge to commit forum-
shopping. BDO filed its Opposition to the Omnibus Motion. 54
On October 28, 2010, Branch 65 issued a Resolution 55 denying RCBC's omnibus motion and directing
the service of the petition to RCBC for the latter's filing of a comment thereon. RCBC's motion for
reconsideration was likewise denied in the said court's Order dated December 15, 2010. RCBC then filed
its Opposition to the Petition to Vacate Final Award Ad Cautelam.
Meanwhile, on November 10, 2010, Branch 148 (SP Proc. Case No. M-6046) issued an
Order 56 confirming the Final Award "subject to the correction/interpretation thereof by the Arbitral
Tribunal pursuant to the ICC Rules and the UNCITRAL Model Law," and denying BDO's Opposition with
Motion to Dismiss.
On December 30, 2010, George L. Go, in his personal capacity and as attorney-in-fact of the other listed
shareholders of Bankard, Inc. in the SPA (Individual Shareholders), filed a petition in the CA, CA-G.R. SP
No. 117451, seeking to set aside the above-cited November 10, 2010 Order and to enjoin Branch 148
from further proceeding in SP Proc. Case No. M-6046. By Decision 57 dated June 15, 2011, the CA
dismissed the said petition. Their motion for reconsideration of the said decision was likewise denied by
the CA in its Resolution 58 dated December 14, 2011.
On December 23, 2010, the CA rendered its Decision in CA-G.R. SP No. 113525, the dispositive portion of
which states:
WHEREFORE, premises considered, the following are hereby REVERSED and SET
ASIDE:
1.the Order dated June 24, 2009 issued in SP Proc. Case No. M-6046
by the Regional Trial Court of Makati City, Branch 148,
insofar as it denied the Motion to Vacate Second Partial
Award dated July 8, 2008 and granted the Motion to
Confirm Second Partial Award dated July 10, 2008; cACEaI
2.the Joint Order dated March 23, 2010 issued in SP Proc. Case No.
M-6046 by the Regional Trial Court of Makati City, Branch
148, insofar as it denied the Motion for Reconsideration
dated July 28, 2009 relative to the motions concerning
the Second Partial Award immediately mentioned above;
and
3.the Second Partial Award dated May 28, 2008 issued in
International Chamber of Commerce Court of Arbitration
Reference No. 13290/MS/JB/JEM.
SO ORDERED. 59
RCBC filed a motion for reconsideration but the CA denied the same in its Resolution 60 dated March 16,
2011. On April 6, 2011, it filed a petition for review on certiorari in this Court (G.R. No. 196171).
On February 25, 2011, Branch 65 rendered a Decision 61 in SP Proc. Case No. M-6995, as follows:
WHEREFORE, premises considered, the Final Award dated June 16, 2010 in ICC
Ref. No. 13290/MS/JB/JEM is hereby VACATED with cost against the
respondent.
SO ORDERED. 62
In SP Proc. Case No. M-6046, Branch 148 issued an Order 63 dated August 8, 2011 resolving the following
motions: (1) Motion for Reconsideration filed by BDO, Go and Individual Shareholders of the November
10, 2010 Order confirming the Final Award; (2) RCBC's Omnibus Motion to expunge the motion for
reconsideration filed by Go and Individual Shareholders, and for execution of the Final Award; (3) Motion
for Execution filed by RCBC against BDO; (4) BDO's Motion for Leave to File Supplement to the Motion
for Reconsideration; and (5) Motion for Inhibition filed by Go and Individual Shareholders. Said Order
decreed:
WHEREFORE, premises considered, it is hereby ORDERED, to wit: IcaEDC
1.Banco De Oro's Motion for Reconsideration, Motion for Leave to File
Supplement to Motion for Reconsideration, and Motion to Inhibit
areDENIED for lack of merit.
2.RCBC Capital's Motion to Expunge, Motion to Execute against Mr. George L.
Go and the Bankard Shareholders, and the Motion to Execute against Banco De
Oro are hereby GRANTED.
3.The damages awarded to RCBC Capital Corporation in the amount of
PhP348,736,920.29 is subject to an interest of 6% per annum reckoned from the
date of RCBC Capital's extra-judicial demand or from May 5, 2003 until the
confirmation of the Final Award. Likewise, this compounded amount is subject
to 12% interest per annum from the date of the confirmation of the Final Award
until its satisfaction. The costs of the arbitration amounting to US$880,000.00,
the fees and expenses of Mr. Best amounting to US$582,936.56, the Claimant's
expenses of the arbitration amounting to PhP8,144,377.62, and the party-and-
party legal costs amounting to PhP7,000,000.00 all ruled in favor of RCBC
Capital Corporation in the Final Award of the Arbitral Tribunal dated June 16,
2010 are subject to 12% legal interest per annum, also reckoned from the date
of the confirmation of the Final Award until its satisfaction.
4.Pursuant to Section 40 of R.A. No. 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004 in relation to Rule 39 of the Rules of Court, since
the Final Award have been confirmed, the same shall be enforced in the same
manner as final and executory decisions of the Regional Trial Court, let a writ of
execution be issued commanding the Sheriff to enforce this instant Order
confirming this Court's Order dated November 10, 2010 that judicially
confirmed the June 16, 2010 Final Award.
SO ORDERED. 64
Immediately thereafter, RCBC filed an Urgent Motion for Issuance of a Writ of Execution. 65 On August
22, 2011, after approving the execution bond, Branch 148 issued a Writ of Execution for the
implementation of the said court's "Order dated August 8, 2011 confirming the November 10, 2010
Order that judicially confirmed the June 16, 2010 Final Award . . . ." 66 aDcHIS
BDO then filed in the CA, a "Petition for Review (With Application for a Stay Order or Temporary
Restraining Order and/or Writ of Preliminary Injunction," docketed as CA-G.R. SP No. 120888. BDO
sought to reverse and set aside the Orders dated November 10, 2010 and August 8, 2011, and any writ
of execution issued pursuant thereto, as well as the Final Award dated June 16, 2010 issued by the
Arbitration Tribunal.
In its Urgent Omnibus Motion 67 to resolve the application for a stay order and/or TRO/writ of
preliminary injunction, and to quash the Writ of Execution dated August 22, 2011 and lift the Notices of
Garnishment dated August 22, 2011, BDO argued that the assailed orders of execution (Writ of Execution
and Notice of Garnishment) were issued with indecent haste and despite the non-compliance with the
procedures in Special ADR Rules of the November 10, 2010 Order confirming the Final Award. BDO was
not given sufficient time to respond to the demand for payment or to elect the method of satisfaction of
the judgment debt or the property to be levied upon. In any case, with the posting of a bond by BDO,
Branch 148 has no jurisdiction to implement the appealed orders as it would pre-empt the CA from
exercising its review under Rule 19 of the Special ADR Rules after BDO had perfected its appeal. BDO
stressed that the bond posted by RCBC was for a measly sum of P3,000,000.00 to cause execution
pending appeal of a monetary award that may reach P631,429,345.29. RCBC also failed to adduce
evidence of "good cause" or "good reason" to justify discretionary execution under Section 2 (a), Rule 39
of the Rules of Court.
BDO further contended that the writ of execution should be quashed for having been issued with grave
abuse of discretion amounting to lack or excess of jurisdiction as Branch 148 modified the Final Award at
the time of execution by imposing the payment of interests though none was provided therein nor in the
Order confirming the same.
During the pendency of CA-G.R. SP No. 120888, Branch 148 continued with execution proceedings and
on motion by RCBC designated/deputized additional sheriffs to replace Sheriff Flora who was supposedly
physically indisposed. 68 These court personnel went to the offices/branches of BDO attempting to serve
notices of garnishment and to levy the furniture, fixtures and equipment. EcAHDT
On September 12, 2011, BDO filed a Very Urgent Motion to Lift Levy and for Leave to Post Counter-
Bond 69 before Branch 148 praying for the lifting of the levy of BDO Private Bank, Inc. (BPBI) shares and
the cancellation of the execution sale thereof scheduled on September 15, 2011, which was set for
hearing on September 14, 2011. BDO claimed that the levy was invalid because it was served by the RTC
Sheriffs not to the authorized representatives of BPBI, as provided under Section 9 (b), Rule 39 in relation
to Section 7, Rule 57 of the Rules of Court stating that a notice of levy on shares of stock must be served
to the president or managing agent of the company which issued the shares. However, BDO was advised
by court staff that Judge Sarabia was on leave and the case could not be set for hearing.
In its Opposition to BDO's application for injunctive relief, RCBC prayed for its outright denial as BDO's
petition raises questions of fact and/or law which call for the CA to substitute its judgment with that of
the Arbitration Tribunal, in patent violation of applicable rules of procedure governing domestic
arbitration and beyond the appellate court's jurisdiction. RCBC asserted that BDO's application has
become moot and academic as the writ of execution was already implemented and/or enforced. It also
contended that BDO has no clear and unmistakable right to warrant injunctive relief because the issue of
jurisdiction was already ruled upon in CA-G.R. SP No. 117451 which dismissed the petition filed by Go
and the Individual Shareholders of Bankard questioning the authority of Branch 148 over RCBC's motion
to confirm the Final Award despite the earlier filing by BDO in another branch of the RTC (Branch 65) of a
petition to vacate the said award.
On September 13, 2011, BDO, to avert the sale of the BPBI shares scheduled on September 15, 2011 and
prevent further disruption in the operations of BDO and BPBI, paid under protest by tendering a
Manager's Check in the amount of P637,941,185.55, which was accepted by RCBC as full and complete
satisfaction of the writ of execution. BDO manifested before Branch 148 that such payment was made
without prejudice to its appeal before the CA. 70
On even date, the CA denied BDO's application for a stay order and/or TRO/preliminary injunction for
non-compliance with Rule 19.25 of the Special ADR Rules. The CA ruled that BDO failed to show the
existence of a clear right to be protected and that the acts sought to be enjoined violated any right.
Neither was BDO able to demonstrate that the injury to be suffered by it is irreparable or not susceptible
to mathematical computation.
BDO did not file a motion for reconsideration and directly filed with this Court a petition
for certiorari with urgent application for writ of preliminary mandatory injunction (G.R. No. 199238).
The Petitions
In G.R. No. 196171, RCBC set forth the following grounds for the reversal of the CA Decision dated
December 23, 2010:
I.
THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF
THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR IN VACATING
THE SECOND PARTIAL AWARD ON THE BASIS OF CHAIRMAN BARKER'S
ALLEGED PARTIALITY, WHICH IT CLAIMS IS INDICATIVE OF BIAS CONSIDERING
THAT THE ALLEGATIONS CONTAINED IN BDO/EPCIB'S PETITION FALL SHORT
OF THE JURISPRUDENTIAL REQUIREMENT THAT THE SAME BE SUPPORTED BY
CLEAR AND CONVINCING EVIDENCE. IaEHSD
II.
THE COURT OF APPEALS ACTED CONTRARY TO LAW AND PRIOR RULINGS OF
THIS HONORABLE COURT AND COMMITTED REVERSIBLE ERROR WHEN IT
REVERSED THE ARBITRAL TRIBUNAL'S FINDINGS OF FACT AND LAW IN THE
SECOND PARTIAL AWARD IN PATENT CONTRAVENTION OF THE SPECIAL ADR
RULES WHICH EXPRESSLY PROHIBITS THE COURTS, IN AN APPLICATION TO
VACATE AN ARBITRAL AWARD, FROM DISTURBING THE FINDINGS OF FACT
AND/OR INTERPRE[TA]TION OF LAW OF THE ARBITRAL TRIBUNAL. 71
BDO raises the following arguments in G.R. No. 199238:
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN PERFUNCTORILY
DENYING PETITIONER BDO'S APPLICATION FOR STAY ORDER, AND/OR
TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION DESPITE
THE EXISTENCE AND CONCURRENCE OF ALL THE ELEMENTS FOR THE
ISSUANCE OF SAID PROVISIONAL RELIEFS EICScD
A.PETITIONER BDO HAS CLEAR AND UNMISTAKABLE RIGHTS TO BE PROTECTED
BY THE ISSUANCE OF THE INJUNCTIVE RELIEF PRAYED FOR, WHICH,
HOWEVER, WERE DISREGARDED BY PUBLIC RESPONDENT WHEN IT
DENIED PETITIONER BDO'S PRAYER FOR ISSUANCE OF A STAY ORDER
AND/OR TRO
B.PETITIONER BDO'S RIGHT TO DUE PROCESS AND EQUAL PROTECTION OF THE
LAW WAS GROSSLY VIOLATED BY THE RTC-MAKATI CITY BRANCH
148, THE DEPUTIZED SHERIFFS AND RESPONDENT RCBC CAPITAL,
WHICH VIOLATION WAS AIDED BY PUBLIC RESPONDENT'S INACTION
ON AND EVENTUAL DENIAL OF THE PRAYER FOR STAY ORDER
AND/OR TRO
C.DUE TO THE ACTS AND ORDERS OF RTC BRANCH 148, PETITIONER BDO
SUFFERED IRREPARABLE DAMAGE AND INJURY, AND THERE WAS
DIRE AND URGENT NECESSITY FOR THE ISSUANCE OF THE
INJUNCTIVE RELIEF PRAYED FOR WHICH PUBLIC RESPONDENT
DENIED IN GRAVE ABUSE OF DISCRETION 72
Essentially, the issues to be resolved are: (1) whether there is legal ground to vacate the Second Partial
Award; and (2) whether BDO is entitled to injunctive relief in connection with the execution proceedings
in SP Proc. Case No. M-6046.
In their TOR, the parties agreed on the governing law and rules as follows:
Laws to be Applied
13The Tribunal shall determine the issues to be resolved in accordance with the
laws of the Republic of the Philippines.
Procedure to be Applied
14The proceedings before the Tribunal shall be governed by the ICC Rules of
Arbitration (1 January 1998) and the law currently applicable to
arbitration in the Republic of the Philippines. 73
As stated in the Partial Award dated September 27, 2007, although the parties provided in Section 10 of
the SPA that the arbitration shall be conducted under the ICC Rules, it was nevertheless arbitration
under Philippine law since the parties are both residents of this country. The provisions of Republic Act
No. 876 74 (RA 876), as amended by Republic Act No. 9285 75 (RA 9285) principally applied in the
arbitration between the herein parties. 76 aCSDIc
The pertinent provisions of R.A. 9285 provide:
SEC. 40.Confirmation of Award. The confirmation of a domestic arbitral
award shall be governed by Section 23 of R.A. 876.
A domestic arbitral award when confirmed shall be enforced in the same
manner as final and executory decisions of the Regional Trial Court.
The confirmation of a domestic award shall be made by the regional trial court
in accordance with the Rules of Procedure to be promulgated by the Supreme
Court.
xxx xxx xxx
SEC. 41.Vacation Award. A party to a domestic arbitration may question
the arbitral award with the appropriate regional trial court in accordance with
the rules of procedure to be promulgated by the Supreme Court only on those
grounds enumerated in Section 25 of Republic Act No. 876. Any other ground
raised against a domestic arbitral award shall be disregarded by the regional
trial court.
Rule 11.4 of the Special ADR Rules sets forth the grounds for vacating an arbitral award:
Rule 11.4.Grounds. (A) To vacate an arbitral award. The arbitral award
may be vacated on the following grounds:
a.The arbitral award was procured through corruption, fraud or other undue
means;
b.There was evident partiality or corruption in the arbitral tribunal or any of
its members;
c.The arbitral tribunal was guilty of misconduct or any form of misbehavior that
has materially prejudiced the rights of any party such as refusing to postpone a
hearing upon sufficient cause shown or to hear evidence pertinent and material
to the controversy;
d.One or more of the arbitrators was disqualified to act as such under the law
and willfully refrained from disclosing such disqualification; or cDEHIC
e.The arbitral tribunal exceeded its powers, or so imperfectly executed them,
such that a complete, final and definite award upon the subject matter
submitted to them was not made.
The award may also be vacated on any or all of the following grounds:
a.The arbitration agreement did not exist, or is invalid for any ground for the
revocation of a contract or is otherwise unenforceable; or
b.A party to arbitration is a minor or a person judicially declared to be
incompetent.
xxx xxx xxx
In deciding the petition to vacate the arbitral award, the court shall disregard
any other ground than those enumerated above. (Emphasis supplied)
Judicial Review
At the outset, it must be stated that a review brought to this Court under the Special ADR Rules is not a
matter of right. Rule 19.36 of said Rules specified the conditions for the exercise of this Court's
discretionary review of the CA's decision.
Rule 19.36.Review discretionary. A review by the Supreme Court is not a
matter of right, but of sound judicial discretion, which will be granted only
for serious and compelling reasons resulting in grave prejudice to the
aggrieved party. The following, while neither controlling nor fully measuring the
court's discretion, indicate the serious and compelling, and necessarily,
restrictive nature of the grounds that will warrant the exercise of the Supreme
Court's discretionary powers, when the Court of Appeals:
a.Failed to apply the applicable standard or test for judicial review prescribed
in these Special ADR Rules in arriving at its decision resulting in substantial
prejudice to the aggrieved party; acCETD
b.Erred in upholding a final order or decision despite the lack of jurisdiction of
the court that rendered such final order or decision;
c.Failed to apply any provision, principle, policy or rule contained in these
Special ADR Rules resulting in substantial prejudice to the aggrieved party; and
d.Committed an error so egregious and harmful to a party as to amount to an
undeniable excess of jurisdiction.
The mere fact that the petitioner disagrees with the Court of Appeals'
determination of questions of fact, of law or both questions of fact and law,
shall not warrant the exercise of the Supreme Court's discretionary power. The
error imputed to the Court of Appeals must be grounded upon any of the
above prescribed grounds for review or be closely analogous thereto.
A mere general allegation that the Court of Appeals has committed serious and
substantial error or that it has acted with grave abuse of discretion resulting in
substantial prejudice to the petitioner without indicating with specificity the
nature of such error or abuse of discretion and the serious prejudice suffered by
the petitioner on account thereof, shall constitute sufficient ground for the
Supreme Court to dismiss outright the petition. (Emphasis supplied)
The applicable standard for judicial review of arbitral awards in this jurisdiction is set forth in Rule 19.10
which states:
Rule 19.10.Rule on judicial review on arbitration in the Philippines. As a
general rule, the court can only vacate or set aside the decision of an arbitral
tribunal upon a clear showing that the award suffers from any of the infirmities
or grounds for vacating an arbitral award under Section 24 of Republic Act No.
876 or under Rule 34 of the Model Law in a domestic arbitration, or for setting
aside an award in an international arbitration under Article 34 of the Model
Law, or for such other grounds provided under these Special Rules.
xxx xxx xxx
The court shall not set aside or vacate the award of the arbitral tribunal merely
on the ground that the arbitral tribunal committed errors of fact, or of law, or of
fact and law, as the court cannot substitute its judgment for that of the arbitral
tribunal. (Emphasis supplied) DAaHET
The above rule embodied the stricter standard in deciding appeals from arbitral awards established by
jurisprudence. In the case of Asset Privatization Trust v. Court of Appeals, 77 this Court held:
As a rule, the award of an arbitrator cannot be set aside for mere errors of
judgment either as to the law or as to the facts. Courts are without power to
amend or overrule merely because of disagreement with matters of law or facts
determined by the arbitrators. They will not review the findings of law and fact
contained in an award, and will not undertake to substitute their judgment for
that of the arbitrators, since any other rule would make an award the
commencement, not the end, of litigation. Errors of law and fact, or an
erroneous decision of matters submitted to the judgment of the arbitrators, are
insufficient to invalidate an award fairly and honestly made. Judicial review of
an arbitration is, thus, more limited than judicial review of a trial. 78
Accordingly, we examine the merits of the petition before us solely on the statutory ground raised for
vacating the Second Partial Award: evident partiality, pursuant to Section 24 (b) of the Arbitration Law
(RA 876) and Rule 11.4 (b) of the Special ADR Rules.
Evident Partiality
Evident partiality is not defined in our arbitration laws. As one of the grounds for vacating an arbitral
award under the Federal Arbitration Act (FAA) in the United States (US), the term "encompasses both an
arbitrator's explicit bias toward one party and an arbitrator's inferred bias when an arbitrator fails to
disclose relevant information to the parties." 79
From a recent decision 80 of the Court of Appeals of Oregon, we quote a brief discussion of the common
meaning of evident partiality:
To determine the meaning of "evident partiality," we begin with the terms
themselves. The common meaning of "partiality" is "the inclination to favor
one side." Webster's Third New Int'l Dictionary 1646 (unabridged ed 2002); see
also id. (defining "partial" as "inclined to favor one party in a cause or one side
of a question more than the other: biased, predisposed" (formatting in
original)). "Inclination," in turn, means "a particular disposition of mind or
character: propensity, bent" or "a tendency to a particular aspect, state,
character, or action." Id. at 1143 (formatting in original); see also id. (defining
"inclined" as "having inclination, disposition, or tendency"). ECcTaS
The common meaning of "evident" is "capable of being perceived esp[ecially] by
sight: distinctly visible: being in evidence: discernable[;] . . . clear to the
understanding: obvious, manifest, apparent." Id. at 789 (formatting in
original); see also id. (stating that synonyms of "evident" include "apparent,
patent, manifest, plain, clear, distinct, obvious, [and] palpable" and that,
"[s]ince evident rather naturally suggests evidence, it may imply the existence
of signs and indications that must lead to an identification or inference"
(formatting in original)). (Emphasis supplied)
Evident partiality in its common definition thus implies "the existence of signs and indications that must
lead to an identification or inference" of partiality.81 Despite the increasing adoption of arbitration in
many jurisdictions, there seems to be no established standard for determining the existence of evident
partiality. In the US, evident partiality "continues to be the subject of somewhat conflicting and
inconsistent judicial interpretation when an arbitrator's failure to disclose prior dealings is at issue." 82
The first case to delineate the standard of evident partiality in arbitration proceedings
was Commonwealth Coatings Corp. v. Continental Casualty Co., et al. 83 decided by the US Supreme
Court in 1968. The Court therein addressed the issue of whether the requirement of impartiality applies
to an arbitration proceeding. The plurality opinion written by Justice Black laid down the rule that the
arbitrators must disclose to the parties "any dealings that might create an impression of possible
bias," 84 and that underlying such standard is "the premise that any tribunal permitted by law to try
cases and controversies not only must be unbiased but also must avoid even the appearance of
bias." 85 In a separate concurring opinion, Justice White joined by Justice Marshall, remarked that "[t]he
Court does not decide today that arbitrators are to be held to the standards of judicial decorum of Article
III judges, or indeed of any judges." 86 He opined that arbitrators should not automatically be
disqualified from an arbitration proceeding because of a business relationship where both parties are
aware of the relationship in advance, or where the parties are unaware of the circumstances but the
relationship is trivial. However, in the event that the arbitrator has a "substantial interest" in the
transaction at hand, such information must be disclosed. HSDIaC
Subsequent cases decided by the US Court of Appeals Circuit Courts adopted different approaches, given
the imprecise standard of evident partiality inCommonwealth Coatings.
In Morelite Construction Corp. v. New York District Council Carpenters Benefit Funds, 87 the Second
Circuit reversed the judgment of the district court and remanded with instructions to vacate the
arbitrator's award, holding that the existence of a father-son relationship between the arbitrator and the
president of appellee union provided strong evidence of partiality and was unfair to appellant
construction contractor. After examining prior decisions in the Circuit, the court concluded that
. . . we cannot countenance the promulgation of a standard for partiality as
insurmountable as "proof of actual bias" as the literal words ofSection
10 might suggest. Bias is always difficult, and indeed often impossible, to
"prove." Unless an arbitrator publicly announces his partiality, or is overheard in
a moment of private admission, it is difficult to imagine how "proof" would be
obtained. Such a standard, we fear, occasionally would require that we enforce
awards in situations that are clearly repugnant to our sense of fairness, yet do
not yield "proof" of anything.
If the standard of "appearance of bias" is too low for the invocation of Section
10, and "proof of actual bias" too high, with what are we left? Profoundly
aware of the competing forces that have already been discussed, we hold
that "evident partiality" within the meaning of 9 U.S.C. 10 will be found
where a reasonable person would have to conclude that an arbitrator was
partial to one party to the arbitration. . . . 88 (Emphasis supplied)
In Apperson v. Fleet Carrier Corporation, 89 the Sixth Circuit agreed with the Morelite court's analysis,
and accordingly held that to invalidate an arbitration award on the grounds of bias, the challenging party
must show that "a reasonable person would have to conclude that an arbitrator was partial" to the other
party to the arbitration.
This "myriad of judicial interpretations and approaches to evident partiality" resulted in a lack of a
uniform standard, leaving the courts "to examine evident partiality on a case-by-case basis." 90 The case
at bar does not present a non-disclosure issue but conduct allegedly showing an arbitrator's partiality to
one of the parties. TAHCEc
EPCIB/BDO, in moving to vacate the Second Partial Award claimed that the Arbitration Tribunal exceeded
its powers in deciding the issue of advance cost not contemplated in the TOR, and that Chairman Barker
acted with evident partiality in making such award. The RTC held that BDO failed to substantiate these
allegations. On appeal, the CA likewise found that the Arbitration Tribunal did not go beyond the
submission of the parties because the phrasing of the scope of the agreed issues in the TOR ("[t]he issues
to be determined by the Tribunal are those issues arising from the said Request for Arbitration, Answer
and Reply and such other issues as may properly arise during the arbitration") is broad enough to
accommodate a finding on the liability and the repercussions of BDO's failure to share in the advances on
costs. Section 10 of the SPA also gave the Arbitration Tribunal authority to decide how the costs should
be apportioned between them.
However, the CA found factual support in BDO's charge of partiality, thus:
On the issue on evident partiality, the rationale in the American case
of Commonwealth Coatings Corp. v. Continental Cas. Co. appears to be very
prudent. In Commonwealth, the United States Supreme Court reasoned that
courts "should . . . be even more scrupulous to safeguard the impartiality of
arbitrators than judges, since the former have completely free rein to decide
the law as well as the facts, and are not subject to appellate review" in general.
This taken into account, the Court applies the standard demanded of the
conduct of magistrates by analogy. After all, the ICC Rules require that an
arbitral tribunal should act fairly and impartially. Hence, an arbitrator's conduct
should be beyond reproach and suspicion. His acts should be free from the
appearances of impropriety.
An examination of the circumstances claimed to be illustrative of Chairman
Barker's partiality is indicative of bias. Although RCBC had repeatedly asked for
reimbursement and the withdrawal of BDO's counterclaims prior to Chairman
Barker's December 18, 2007 letter, it is baffling why it is only in the said letter
that RCBC's prayer was given a complexion of being an application for a
partial award. To the Court, the said letter signaled a preconceived course of
action that the relief prayed for by RCBC will be granted. HaTISE
That there was an action to be taken beforehand is confirmed by Chairman
Barker's furnishing the parties with a copy of the Secomb article. This article
ultimately favored RCBC by advancing its cause. Chairman Barker makes it
appear that he intended good to be done in doing so but due process dictates
the cold neutrality of impartiality. This means that "it is not enough . . . [that]
cases [be decided] without bias and favoritism. Nor is it sufficient that . . .
prepossessions [be rid of]. [A]ctuations should moreover inspire that belief."
These put into the equation, the furnishing of the Secomb article further
marred the trust reposed in Chairman Barker. The suspicion of his partiality on
the subject matter deepened. Specifically, his act established that he had pre-
formed opinions.
Chairman Barker's providing of copies of the said text is easily interpretable that
he had prejudged the matter before him. In any case, the Secomb article
tackled bases upon which the Second Partial Award was founded. The subject
article reflected in advance the disposition of the ICC arbitral tribunal. The
award can definitely be viewed as an affirmation that the bases in the Secomb
article were adopted earlier on. To the Court, actuations of arbitrators, like the
language of judges, "must be guarded and measured lest the best of intentions
be misconstrued."
xxx xxx xxx 91 (Emphasis supplied)
We affirm the foregoing findings and conclusion of the appellate court save for its reference to
the obiter in Commonwealth Coatings that arbitrators are held to the same standard of conduct imposed
on judges. Instead, the Court adopts the reasonable impression of partiality standard, which requires a
showing that a reasonable person would have to conclude that an arbitrator was partial to the other
party to the arbitration. Such interest or bias, moreover, "must be direct, definite and capable of
demonstration rather than remote, uncertain, or speculative." 92 When a claim of arbitrator's evident
partiality is made, "the court must ascertain from such record as is available whether the arbitrators'
conduct was so biased and prejudiced as to destroy fundamental fairness." 93 HICSTa
Applying the foregoing standard, we agree with the CA in finding that Chairman Barker's act of furnishing
the parties with copies of Matthew Secomb's article, considering the attendant circumstances, is
indicative of partiality such that a reasonable man would have to conclude that he was favoring the
Claimant, RCBC. Even before the issuance of the Second Partial Award for the reimbursement of advance
costs paid by RCBC, Chairman Barker exhibited strong inclination to grant such relief to RCBC,
notwithstanding his categorical ruling that the Arbitration Tribunal "has no power under the ICC Rules to
order the Respondents to pay the advance on costs sought by the ICC or to give the Claimant any relief
against the Respondents' refusal to pay."94 That Chairman Barker was predisposed to grant relief to
RCBC was shown by his act of interpreting RCBC's letter, which merely reiterated its plea to declare the
Respondents in default and consider all counterclaims withdrawn as what the ICC Rules provide
as an application to the Arbitration Tribunal to issue a partial award in respect of BDO's failure to share
in the advance costs. It must be noted that RCBC in said letter did not contemplate the issuance of a
partial order, despite Chairman Barker's previous letter which mentioned the possibility of granting relief
upon the parties making submissions to the Arbitration Tribunal. Expectedly, in compliance with
Chairman Barker's December 18, 2007 letter, RCBC formally applied for the issuance of a partial award
ordering BDO to pay its share in the advance costs.
Mr. Secomb's article, "Awards and Orders Dealing with the Advance on Costs in ICC Arbitration:
Theoretical Questions and Practical Problems" 95specifically dealt with the situation when one of the
parties to international commercial arbitration refuses to pay its share on the advance on costs. After a
brief discussion of the provisions of ICC Rules dealing with advance on costs, which did not provide for
issuance of a partial award to compel payment by the defaulting party, the author stated:
4.As we can see, the Rules have certain mechanisms to deal with defaulting
parties. Occasionally, however, parties have sought to use other methods to
tackle the problem of a party refusing to pay its part of the advance on costs.
These have included seeking an order or award from the arbitral tribunal
condemning the defaulting party to pay its share of the advance on costs.
Such applications are the subject of this article. 96 acSECT
By furnishing the parties with a copy of this article, Chairman Barker practically armed RCBC with
supporting legal arguments under the "contractual approach" discussed by Secomb. True enough, RCBC
in its Application for Reimbursement of Advance Costs Paid utilized said approach as it singularly focused
on Article 30 (3) 97 of the ICC Rules and fiercely argued that BDO was contractually bound to share in the
advance costs fixed by the ICC. 98 But whether under the "contractual approach" or "provisional
approach" (an application must be treated as an interim measure of protection under Article 23 [1]
rather than enforcement of a contractual obligation), both treated in the Secomb article, RCBC
succeeded in availing of a remedy which was not expressly allowed by the Rules but in practice has been
resorted to by parties in international commercial arbitration proceedings. It may also be mentioned that
the author, Matthew Secomb, is a member of the ICC Secretariat and the "Counsel in charge of the file",
as in fact he signed some early communications on behalf of the ICC Secretariat pertaining to the
advance costs fixed by the ICC. 99 This bolstered the impression that Chairman Barker was predisposed
to grant relief to RCBC by issuing a partial award.
Indeed, fairness dictates that Chairman Barker refrain from suggesting to or directing RCBC towards a
course of action to advance the latter's cause, by providing it with legal arguments contained in an article
written by a lawyer who serves at the ICC Secretariat and was involved or had participation insofar as
the actions or recommendations of the ICC in the case. Though done purportedly to assist both
parties, Chairman Barker's act clearly violated Article 15 of the ICC Rules declaring that "[i]n all cases, the
Arbitral Tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity
to present its case." Having pre-judged the matter in dispute, Chairman Barker had lost his objectivity in
the issuance of the Second Partial Award.
In fine, we hold that the CA did not err in concluding that the article ultimately favored RCBC as it
reflected in advance the disposition of the Arbitral Tribunal, as well as "signalled a preconceived course
of action that the relief prayed for by RCBC will be granted." This conclusion is further confirmed by the
Arbitral Tribunal's pronouncements in its Second Partial Award which not only adopted the "contractual
approach" but even cited Secomb's article along with other references, thus: CScaDH
6.1It appears to the Tribunal that the issue posed by this application is
essentially a contractual one. . . .
xxx xxx xxx
6.5Matthew Secomb, considered these points in the article in 14 ICC Bulletin
No. 1 (2003) which was sent to the parties. At Para. 19, the learned
author quoted from an ICC Tribunal (Case No. 11330) as follows:
"The Arbitral Tribunal concludes that the parties in
arbitrations conducted under the ICC Rules have a
mutually binding obligation to pay the advance on
costs as determined by the ICC Court, based on Article
30-3 ICC Rules which by reference forms part of
the parties' agreement to arbitration under such
Rules." 100
The Court, however, must clarify that the merits of the parties' arguments as to the propriety of the
issuance of the Second Partial Award are not in issue here. Courts are generally without power to amend
or overrule merely because of disagreement with matters of law or facts determined by the arbitrators.
They will not review the findings of law and fact contained in an award, and will not undertake to
substitute their judgment for that of the arbitrators. A contrary rule would make an arbitration award
the commencement, not the end, of litigation. 101 It is the finding of evident partiality which constitutes
legal ground for vacating the Second Partial Award and not the Arbitration Tribunal's application of the
ICC Rules adopting the "contractual approach" tackled in Secomb's article.
Alternative dispute resolution methods or ADRs like arbitration, mediation, negotiation and
conciliation are encouraged by this Court. By enabling parties to resolve their disputes amicably, they
provide solutions that are less time-consuming, less tedious, less confrontational, and more productive
of goodwill and lasting relationship. 102 Institutionalization of ADR was envisioned as "an important
means to achieve speedy and impartial justice and declog court dockets." 103 The most important
feature of arbitration, and indeed, the key to its success, is the public's confidence and trust in the
integrity of the process. 104 For this reason, the law authorizes vacating an arbitral award when there is
evident partiality in the arbitrators. aAcHCT
Injunction Against Execution
of Arbitral Award
Before an injunctive writ can be issued, it is essential that the following requisites are present: (1) there
must be a right inesse or the existence of a right to be protected; and (2) the act against which injunction
to be directed is a violation of such right. The onus probandi is on movant to show that there exists a
right to be protected, which is directly threatened by the act sought to be enjoined. Further, there must
be a showing that the invasion of the right is material and substantial and that there is an urgent and
paramount necessity for the writ to prevent a serious damage. 105
Rule 19.22 of the Special ADR Rules states:
Rule 19.22.Effect of appeal. The appeal shall not stay the award, judgment,
final order or resolution sought to be reviewed unless the Court of Appeals
directs otherwise upon such terms as it may deem just.
We find no reversible error or grave abuse of discretion in the CA's denial of the application for stay
order or TRO upon its finding that BDO failed to establish the existence of a clear legal right to enjoin
execution of the Final Award confirmed by the Makati City RTC, Branch 148, pending resolution of its
appeal. It would be premature to address on the merits the issues raised by BDO in the present petition
considering that the CA still has to decide on the validity of said court's orders confirming the Final
Award. But more important, since BDO had already paid P637,941,185.55 in manager's check, albeit
under protest, and which payment was accepted by RCBC as full and complete satisfaction of the writ of
execution, there is no more act to be enjoined.
Settled is the rule that injunctive reliefs are preservative remedies for the protection of substantive
rights and interests. Injunction is not a cause of action in itself, but merely a provisional remedy, an
adjunct to a main suit. When the act sought to be enjoined has become fait accompli, the prayer for
provisional remedy should be denied. 106
Thus, the Court ruled in Go v. Looyuko 107 that when the events sought to be prevented by injunction or
prohibition have already happened, nothing more could be enjoined or prohibited. Indeed, it is a
universal principle of law that an injunction will not issue to restrain the performance of an act already
done. This is so for the simple reason that nothing more can be done in reference thereto. A writ of
injunction becomes moot and academic after the act sought to be enjoined has already been
consummated. ADTCaI
WHEREFORE, premises considered, the petition in G.R. No. 199238 is DENIED. The Resolution dated
September 13, 2011 of the Court of Appeals in CA-G.R. SP No. 120888 is AFFIRMED.
The petition in G.R. No. 196171 is DENIED. The Decision dated December 23, 2010 of the Court of
Appeals in CA-G.R. SP No. 113525 is herebyAFFIRMED.
SO ORDERED.
































SECOND DIVISION
[G.R. No. 155108. April 27, 2005.]
REPUBLIC OF THE PHILIPPINES, Represented by Department of Public Works
and Highways (DPWH) under Secretary Simeon Datumanong and
Undersecretary Edmundo V. Mir, then Chairman Of Bid and Awards
Committee (BAC), Assistant Secretary Bashir D. Rasuman, BAC Vice-Chairman,
Director Oscar D. Abundo, BAC Member Director OIC-Director Antonio V.
Malano, Jr., BAC Member and Project Director Philip F. Menez, petitioner, vs.
EMILIANO R. NOLASCO, respondent.

D E C I S I O N
TINGA, J p:
An obiter dictum is a nonessential, welcome and sublime like a poem of love in a last will or unwanted
and asinine as in brickbats in a funeral oration. It is neither enforceable as a relief nor the source of a
judicially actionable claim. However, by reason of its non-binding nature, the pronouncement does not
generally constitute error of law or grave abuse of discretion, even if it proves revelatory of the
erroneous thinking on the part of the judge. It is chiefly for that reason that this petition is being denied,
albeit with all clarifications necessary to leave no doubt as to the status and legal effect of the
controvertibleOrder dated 6 September 2002 issued by Judge Juan C. Nabong, Jr. of the Regional Trial
Court (RTC) of Manila, Branch 32.
The root of the dispute is a public works project, the Agno River Flood Control Project ("Project"), the
undertaking of which has been unfortunately delayed due to the present petition. Funding for the
project was to be derived primarily through a loan from the Japan Bank for International Cooperation
(JBIC). A Bid and Awards Committee (BAC) was constituted by the Department of Public Works and
Highways (DPWH) for the purpose of conducting international competitive bidding for the procurement
of the contract for Package II the Guide Channel to Bayambang under Phase II of the Project. 1 Six (6)
pre-qualified contractors submitted their bids for the project, among them the present intervenors
Daewoo Engineering and Construction Co., Ltd. (Daewoo), and China International Water and Electric
Corp. (China International).
However, even before the BAC could come out with its recommendations, a legal challenge had already
been posed to preempt the awarding of the contract to Daewoo. On 19 February 2002, Emiliano R.
Nolasco, a self-identified taxpayer and newspaper publisher/editor-in-chief, 2 filed a Petition, seeking a
temporary restraining order and/or preliminary injunction, with the RTC of Manila, naming the DPWH
and the members of the BAC as respondents. He alleged having obtained copies of "Confidential Reports
from an Unnamed DPWH Consultant," which he attached to his petition. Nolasco argued that based on
the confidential reports it was apparent that Daewoo's bid was unacceptable and the putative award to
Daewoo, illegal, immoral, and prejudicial to the government and the Filipino taxpayers. Invoking his right
as a taxpayer, Nolasco prayed that the DPWH and BAC be restrained from awarding the contract to
Daewoo and Daewoo disqualified as a bidder. 3
The petition was raffled to the sala of Judge Nabong and docketed as Civil Case No. 02-102923. An ex-
parte hearing was conducted on the prayer for a temporary restraining order (TRO), with Nolasco alone
in attendance. Petitioner issued an Order dated 4 March 2002 directing the issuance of a TRO, enjoining
the DPWH and the BAC from awarding the contract to Daewoo "and that [Daewoo] be disqualified as
bidder and its bidders be rejected" from carrying out the Project. 4 The term of the TRO was for a period
of twenty (20) days.
Upon learning of the TRO, the DPWH and the BAC, through the Office of the Solicitor General (OSG), filed
a Motion to Dismiss Petition with Motion for Dissolution of Temporary Restraining Order Dated March 4,
2002. 5 While noting the impropriety of a twenty (20)-day TRO without prior notice or hearing, they
pointed out that Republic Act No. 8975 precisely prohibited the issuance by any court, save the Supreme
Court, of a TRO or preliminary injunction which restrains or prohibits the bidding for or awarding of a
contract/project of the national government. Accordingly, they prayed that the petition be dismissed
and the TRO dissolved.
This new motion was set for hearing on 21 March 2002, and thereupon the parties were afforded the
opportunity to argue their case. Then, on 27 March 2002, the RTC issued an order dismissing Nolasco's
petition. The dismissal of the petition was warranted, according to the RTC, as it was a suit against the
State, which had been sued without its consent. 6 The RTC also noted that Nolasco had not established
that he would sustain a direct injury should the contract be awarded to Daewoo, and that the general
interest which may have been possessed by Nolasco along with all members of the public would not
suffice. 7
Interestingly, on 2 April 2002, the OSG claims to have received a copy of an alleged order dated 22
March 2002 purportedly signed by Petitioner which denied the motion to dismiss, gave the petition due
course, and granted the preliminary injunction subject to the posting of an injunction bond in the
amount of Five Hundred Thousand Pesos (P500,000.00). 8 However, in a Certification signed by Loida P.
Moralejo, Officer-in-Charge of RTC Branch 32, it was attested that the signature in this order was
spurious, and affirmed instead the Order dated 22 March 2002 dismissing the petition. 9
In the meantime, the BAC issued Resolution No. MFCDP-RA-02 dated 1 April 2002. The BAC noted
therein that among the three lowest bidders were Daewoo and China International, and that based on
the bid amounts "as corrected," the bid of Daewoo was the lowest of the three, followed by China
International's. 10 As a result, the BAC resolved to recommend the award of the contract for the Project
to Daewoo. Then DPWH Secretary Simeon Datumanong approved the recommendation by affixing his
signature on the Resolution on the same day. 11 A copy of the Resolution and the Bid Evaluation Report
was furnished to JBIC for "review and concurrence." 12
For his part, Nolasco filed a motion for reconsideration dated 3 April 2002, seeking the reversal of
the Order dated 27 March 2002 dismissing his petition. Nolasco set this motion for reconsideration for
hearing on 18 April 2002, but none apparently ensued. 13 The OSG filed
itsOpposition/Comment/Manifestation dated 24 April 2002 wherein it prayed that it be allowed to adopt
its earlier motion to dismiss as its opposition to the motion for reconsideration. The RTC granted OSG's
prayer in an Order dated 13 May 2002. 14 In the same Order, the RTC likewise stated that "in the spirit of
comprehensive fairness, this Court must, and hereby, [set] the hearing on the reception of petitioner's
evidence on this Motion [for Reconsideration]" on 17 May 2002. 15
During the hearing of 17 May 2002, the OSG asked Judge Nabong to clarify his directive that a hearing be
had for the reception of Nolasco's evidence. Judge Nabong clarified that his bent was for petitioner to
present his evidence but no longer on the question of whether a TRO or injunction should be issued. The
RTC granted the OSG's prayer to submit a motion for reconsideration of this order, which the OSG did on
31 May 2002. 16 In the motion for reconsideration, the OSG argued that it was unnecessary to receive
Nolasco's evidence, considering that the dismissal of the petition was grounded on pure questions of
law. It also sought clarification of Judge Nabong's remarks during the 17 May 2002 hearing, which
seemed to imply that this new hearing would actually be on the merits of the petition.
This new OSG motion was submitted to the RTC during the hearing of 28 June 2002, wherein Petitioner
announced that the motion was to be resolved in due time. At the same time, the RTC allowed Nolasco
to adduce his evidence over the objections of the OSG. Nolasco presented a witness, Engineer Shohei
Ezaki, a DPWH consultant hired by JBIC who testified pursuant to a subpoena earlier issued by the court.
Ezaki testified as to the Evaluation Report and Result prepared by his consultant firm and which had
been earlier attached to Nolasco's petition. Nolasco also intimated its intention to present DPWH
Director Philip F. Meez as a witness on his behalf. In the hearing of 2 August 2002, the OSG manifested
that it would file motions opposing the presentation of witnesses by Nolasco and the issuance of
subpoenas requiring their testimony. In its order issued in open court on 2 August 2002, the RTC
deferred the further presentation of Nolasco's witnesses pending the filing of OSG's motions.
At that point, the proceedings thus far undertaken had been unorthodox. Then the course veered
sharply to the bizarre. Nolasco filed a motion dated 12 August 2002, seeking the rendition of a partial
judgment and dismissal of his own petition, based on the proceedings that had transpired during the
hearings held on 28 June and 2 August 2002. 17 In the motion, Nolasco reiterated his submission that
based on the evidence presented thus far, Daewoo should have been disqualified from bidding on the
project. While the prayer for the dismissal of the motion for reconsideration was anchored on the need
"to abbreviate the proceedings" so as to implement the projects, the motion nonetheless urged the
court, to issue a partial judgment and award the bid for the Project to China International. Nolasco
likewise filed a Formal Offer of Evidence dated 29 August 2002. The offered evidence included various
documents and the testimony of Nolasco and his witnesses previously heard by the court. Both
submissions of Nolasco were vigorously objected to by the OSG in pleadings filed to that effect. 18
Then, on 6 September 2002, the RTC issued the Order now assailed before this Court. It included a brief
discussion of the factual antecedents, as well as the 27 March 2002 Order dismissing the petition and the
various pleadings filed by the parties prior and subsequent to the dismissal of the petition. The last two
pages of the four (4)-page Order proceeded to dissect the testimonies and ultimate dispositions therein.
The last three paragraphs of the Orderand its fallo are replicated below in full:

In the hearing, however, on August 21, 2002, Atty. Abelardo M. Santos for
petitioner in open court, formally offered the testimony of Mr. Ezaki, although,
before the start of his testimony Atty. Santos Manifested: "Your Honor, the
purpose of the testimony of this witness is to show that they had made a
technical study of all the pre-qualified bidders referring to the Agno River Flood
Control Project, Phase II."
Eng'r Shohel Ezaki, hired by the Japan Bank for International Cooperation (JBIC)
through which the funding, granted by the Overseas Development Assistance
(ODA), is covered and flows through, and the DPWH and President, Philippines
Office, Nippon Koie Company, Ltd., (testifying under an issued subpoena duces
tecum ad testificandum) testified that the Evaluation Report and Result of their
consultant firm in association with the PKII and the Basic Team Inc., (doing
evaluation works for the DPWH) disqualified DAEWOO and ITALIAN THAI on
Packages 1 and 2, Phase II. Insofar, moreover, as regards Package 1, Phase II,
the bids submitted by TOA Corporation is the lowest evaluated responsive bid.
The second lowest evaluated responsive bid is that of China State Construction
Engineering. In open court, on August 2, 2002, Director Eng'r. Philip F. Menez,
Major Floor Control & Drainage Project-Project Management Office, Cluster II,
DPWH, confirmed the award to TOA Corporation, the evaluated responsive bid,
Package 1.
All told, and presently, and urgently, there is the need to implement the
PROJECTS in this petition so as not to affect the ODA funding, harnessed
through JBIC. More so, in addition, and a thoughtful consideration of pleadings
and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing,
respondent BAC has strayed from fairly applying the Bidding Laws, Guidelines,
Rules, and Regulations, and Bid Tender Documents and, as a matter of fairness,
and in the interest of justice, considering other bidders whose bids have been
evaluated by the Technical Working Group including the consultant, Nippon
Koie Company, Ltd., in association with the PKII and the Basic Team, Inc., to be
substantially responsive, the Honorable Simeon P. Datumanong must now
seriously consider and effect the award of Package 2, PHASE II, of the Agno River
Floor Control Project, as duly recommended by the Consultants and the
Technical Working Group, DPWH, to China International Water & Electric
Corporation being the lowest evaluated responsive bid.
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the
Petition is hereby DISMISSED.
SO ORDERED. (Emphasis supplied) 19
The OSG received a copy of the Order dated 6 September 2002 on 17 September 2002. It opted to file
a Petition for Review on Certiorari under Rule 45 with this Court, instead of resorting to a motion for
reconsideration, to avert unnecessary delay of the implementation of the Project which would result in
millions of pesos in damages. The OSG thus alleges that the petition raises pure questions of law,
thereby dispensing with recourse to the Court of Appeals. 20
The OSG also notes that in a letter to the DPWH dated 21 June 2002, JBIC, through Chief Representative
Mitsuru Taruki, let it be known that it had decided to hold in abeyance its concurrence to the project, as
"the issue [was] now under the jurisdiction of the appropriate Philippine courts and other relevant
organizations of the Philippine government," and that it would be prudent to wait "for the decisions of
the proper authorities before taking any action on the matter." 21 It is likewise worth noting at this
juncture that Nolasco had also filed a verified complaint against the Chairman and members of the BAC
with the Presidential Anti-Graft Commission, as well as another complaint with the National Economic
Development Authority and a complaint-letter with JBIC itself requesting that the bank reject the award
to Daewoo. 22
Since the filing of the present petition, both Daewoo and China International have since participated in
the case. Daewoo filed a Comment-in-Interventiondated 10 January 2003, which this Court treated as a
petition-In-intervention. 23 Upon order of this Court, China International filed a Comment-in-
Intervention dated 5 February 2003.
Petitioner imputes error to the RTC in taking notice of and resolving Nolasco's Motion to Issue Partial
Judgment and Motion to Dismiss Petition, which they characterize as a "trifle." Substantively, it asserts
that the RTC erred in directing the DPWH to perform an affirmative act even though the court had no
more jurisdiction over the petition, considering that the RTC never resolved the motion for
reconsideration filed by Nolasco. It also avers that Nolasco's original petition had been substantially
amended, without leave of court and without notice to the Petitioner, and that they had not been
afforded the opportunity to file an answer to the petition. Moreover, the RTC is alleged to have erred in
directing the award of the subject package to China International, a stranger to the case, without
ordering the inclusion of Daewoo as an indispensable party.
We can recast the legal question within the framework of whether the RTC committed a reversible error
in assailed Order dated 6 September 2002. It is a mark of the strangeness of this case that Petitioner
seeks the nullification of a dispositive order that affirms the very dismissal of the case they likewise seek.
However, given the circumstances, the dilemma of Petitioner is understandable. While the fallo of the
assailed Order is indeed favorable to them, the body thereof is a palpable source of mischief.
Petitioner assails only the Order of 6 September 2002. However, it behooves this Court to be more
comprehensive in approach, in part to elucidate on the proper steps that should be undertaken by lower
court judges when confronted with complaints or petitions affecting national government infrastructure
projects. Our review will necessarily entail an examination of the propriety of the procedure adopted by
the RTC in disposing of Nolasco's petition. It would be best for the Court to diagram the procedures
undertaken below like a grammar school teacher to illustrate the multiple errors attendant in this case.
From a chronological standpoint, the first matter for discussion would be Nolasco's Petition before the
RTC.
The caption of the Petition states that it is for "Issuance of a Temporary Restraining Order and/or
Preliminary Injunction." 24 In the Petition, Nolasco averred that he received a letter from a resident of
Bayambang, Pangasinan, regarding the latter's "observations on the Public Bidding" made on the Project;
that Nolasco contacted his sources at the DPWH and learned that the Project would be awarded to
Daewoo; that he obtained a Confidential Report from "an Unnamed DPWH Consultant" which allegedly
concluded that Daewoo's bid was unacceptable. From these premises, Nolasco argued that he was
entitled to the issuance of a temporary restraining order or preliminary injunction, as the award to the
contracts to Daewoo would probably cause injustice to him as a taxpayer. As prayer, Nolasco asked that
the respondents therein (herein Petitioner) be restrained from awarding the contracts to Daewoo and
that Daewoo be disqualified as a bidder and its bid rejected.
It would be difficult to ascertain the nature of Nolasco's action if the Court were obliged to rely alone on
the caption of his pleading. The caption describes the Petition as one for issuance of a temporary
restraining order and/or preliminary injunction; hence, implying that the action seeks only provisional
reliefs without the necessary anchor of a final relief. Moreover, the use of "Petition" in lieu of
"Complaint" seemingly implies that the action brought forth is the special civil action of prohibition
under Rule 65, yet this is not supported by the body of the pleading itself as it is bereft of the necessary
allegations of grave abuse of discretion or absence/excess of jurisdiction and the absence of any other
plain speedy and adequate remedy. 25
Nonetheless, the principle consistently adhered to in this jurisdiction is that it is not the caption but the
allegations in the complaint or other initiatory pleading which give meaning to the pleading and on the
basis of which such pleading may be legally characterized. 26 An examination of the "petition" reveals
that it should be considered as a complaint for injunction, with a prayer for the provisional relief of
temporary restraining order/preliminary injunction. After all, the Petition prayed that respondents
therein (Petitioner herein) be restrained from awarding the contracts to Daewoo, citing as basis thereof
its "unacceptability," as purportedly established by the evaluation report.
Nonetheless, the prayer for the issuance of a temporary restraining order or preliminary injunction
affecting the bidding or awarding of a national government contract or project, would have called for the
application of Republic Act No. 8975 and the corresponding denial of the prayer for provisional relief.
Still, the RTC instead issued a TRO in its Order dated 4 March 2002.
Republic Act No. 8975 definitively enjoins all courts, except the Supreme Court, from issuing any
temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity to restrain, prohibit or compel the
bidding or awarding of a contract or project of the national government, 27 precisely the situation that
obtains in this case with respect to the Agno River Project. The only exception would be if the matter is
of extreme urgency involving a constitutional issue, such that unless the temporary restraining order is
issued, grave injustice and irreparable injury will arise. 28 The TRO issued by the RTC failed to take into
consideration said law. Neither did it advert to any extreme urgency involving a constitutional issue, as
required by the statute. The law ordains that such TRO is void, 29 and the judge who issues such order
should suffer the penalty of suspension of at least sixty (60) days without pay. 30

Nevertheless, there is no need to belabor this point since the TRO no longer subsists. It appears that the
RTC subsequently realized the import of Republic Act No. 8975 as it cited the same in its 27 March
2002 Order dismissing the Petition:
Applying Republic Act No. 8975, most particularly Section 3 thereof,
and Administrative Circular No. 11-2000 issued on November 13, 2000 by the
Honorable Hilario G. Davide, Jr., Chief Justice, Supreme Court, all parties having
copies, the Petition at bench ought to be dismissed outrightly (sic). 31
However, it must be clarified that Republic Act No. 8975 does not ordinarily warrant the outright
dismissal of any complaint or petition before the lower courts seeking permanent injunctive relief from
the implementation of national government infrastructure projects. What is expressly prohibited by the
statute is the issuance of the provisional reliefs of temporary restraining orders, preliminary injunctions,
and preliminary mandatory injunctions. It does not preclude the lower courts from assuming jurisdiction
over complaints or petitions that seek as ultimate relief the nullification or implementation of a national
government infrastructure project. A statute such as Republic Act No. 8975 cannot diminish the
constitutionally mandated judicial power to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
government. 32 Section 3 of the law in fact mandates, thus:
If after due hearing the court finds that the award of the contract is null and
void, the court may, if appropriate under the circumstances, award the contract
to the qualified and winning bidder or order a rebidding of the same, without
prejudice to any liability that the guilty party may incur under existing laws.
Thus, when a court is called upon to rule on an initiatory pleading assailing any material aspect pertinent
to a national government infrastructure project, the court ordinarily may not dismiss the action based
solely on Republic Act No. 8975 but is merely enjoined from granting provisional reliefs. If no other
ground obtains to dismiss the action, the court should decide the case on the merits. As we recently held
in Opia v. NHA: 33
Unquestionably, the power to issue injunctive writs against the implementation
of any government infrastructure project is exclusively lodged with this Court,
pursuant to Section 3 of Rep. Act No. 8975. But while lower courts are
proscribed thereunder from issuing restraining orders and/or writs of
preliminary injunction to stop such projects, the proscription does not mean
that such courts are likewise bereft of authority to take cognizance of the
issue/issues raised in the principal action, as long as such action and the relief
sought are within their jurisdiction.
Accordingly, it was not proper for the RTC to cite Republic Act No. 8975 as basis for the dismissal of
Nolasco's petition since the statute does not bar the institution of an action that seeks to enjoin the
implementation of a national government project, but merely the issuance of provisional orders
enjoining the same. However, the RTC cited two other grounds for the dismissal of the case that
Nolasco's general interest as a taxpayer was not sufficient to establish any direct injury to him should the
Project be awarded to Daewoo; and that the petition was a suit against the State, which may not be sued
without its consent.
We shall defer for now a review of these two grounds cited by the RTC for the dismissal of Nolasco's
petition, and instead focus on the proper steps that should have been undertaken owing to the dismissal
of the case. Nolasco filed a motion for reconsideration or the dismissal of the case, a remedy available to
him since the 27 March 2002 Order is a final order that disposed of the case. 34 Petitioner responded
with an all-encompassingOpposition/Comment/Manifestation (Re: Petitioner's Motion for
Reconsideration). Both of these submissions were set for hearing before the RTC. The RTC could have
very well resolved the motion for reconsideration based on the pleadings submitted. Yet, in
its Order dated 13 May 2002, it declared:
However, be that as it may, in the spirit of comprehensive fairness, this Court
must, and hereby, sets the hearing on the Reception of Petitioner's evidence on
this Motion on May 17, 2002 at 9:00 A.M. 35
As far as determinable, there is no legal or jurisprudential standard of "comprehensive fairness," a
phrase that reeks of pomposity without admitting to any concrete meaning. Neither is there any
mandatory rule directing a court to conduct a hearing to receive evidence on a motion for
reconsideration.Nonetheless, a motion for reconsideration, as with all other motions which may not be
acted upon without prejudicing the rights of the adverse party, is required to be set for hearing by the
applicant, 36 and to be heard with due notice to all parties concerned. 37
It is certainly within acceptable bounds of discretion for the trial judge to require or allow the movant for
reconsideration to present evidence in support of the arguments in the motion, and in fact desirable if
such evidence should be necessarily appreciated for a fair and correct disposition of the motion for
reconsideration. Yet caution should be had. At this stage, the issues and evidence submitted for
appreciation and resolution of the trial court should be limited to the matters pertinent to the motion
for reconsideration. In this case, the RTC in hearing the motion for reconsideration, should have focused
on the issues of lack of standing on the part of Nolasco and non-suability of the State, as these were the
grounds on which dismissal of the petition was predicated. It would entail a fundamental
reconsideration of these two key concerns for Nolasco's motion to have been granted and the petition
readmitted.
Instead, the RTC, upon Nolasco's insistence, proceeded instead to hear the case on the merits. The RTC
allowed Nolasco's witness, Engineer Ezaki to testify as to the authenticity and veracity of the bid
evaluation report attached to Nolasco's petition, and to affirm the conclusion that Daewoo was not a
qualified bidder. 38 This unusual turn of events arouses suspicion. The RTC had earlier dismissed the
petition on legal grounds, yet it was now considering factual matters as basis for review on
reconsideration. The petitioner, through counsel, appears to have strenuously objected to this furtive
and dubious recourse by Nolasco, but to no avail.
Then, despite the fact that other witnesses of Nolasco were still scheduled to be heard, Nolasco filed
the Motion to Issue Partial Judgment and to Dismiss Petition. He expressly prayed that his very own
motion for reconsideration of the petition be dismissed. From this motion, it is difficult to ascertain why
exactly Nolasco wanted the RTC to deny his own motion for reconsideration and to affirm the dismissal
of his own petition, though there is the expressed concern "in order to abbreviate the proceedings in
view of the need to implement the subject projects of this petition the soonest possible time." 39 At the
same time, and in the same pleading, Nolasco still asserted that Daewoo was not qualified to be
awarded the project, and emphasizes that such contention was borne out by the evidence he had
presented thus far. Accordingly, he likewise prayed that partial judgment be rendered on the petition,
calling on the RTC to conclude that China International won the Project, it being the lowest evaluated
responsive bid. 40
It bears noting that at this stage, there were two pending motions before the RTC, both filed by Nolasco,
which had at issue whether or not his petition should be dismissed. The first was Nolasco's motion for
reconsideration praying for the reinstatement of his petition. The second was Nolasco's Motion for
Partial Judgment and to Dismiss Petition, praying for the dismissal of his petition. Palpably, Nolasco had
opted to hedge his chips on both red and black, which is not normally done for obvious reasons. Neither
did Nolasco, in his latter pleading, expressly withdraw his earlier motion for reconsideration, although his
subsequent prayer for the dismissal of his own earlier motion sufficiently evinced such intent.
This Motion for Partial Judgment and to Dismiss Petition is truly an odd duckling of a pleading, which
unfortunately did not blossom into a swan but from it instead emerged an even uglier duck the 6
September 2002 Order, which dismissed the petition yet intoned that DPWH Secretary Datumanong
"must now seriously consider and effect the award" of the project to China International.
There is no doubt that the assailed Order dated 6 September 2002 sought to resolve the Motion for
Partial Judgment and to Dismiss Petition. This is evident from the first sentence of the Order, which
states: "Before the Court is petitioner's Motion to Issue Partial Judgment and to Dismiss Petition filed on
August 16, 2002. . . ." No other pending motion, such as the motion for reconsideration, was adverted to
as being subject for resolution by the said Order.
Now, the Motion for Partial Judgment and to Dismiss Petition seeks reliefs A and B that China
International be awarded the project; and that the motion for reconsideration be dismissed. There is no
doubt that relief B was unequivocally granted by the trial court, with the following disposal:
WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the
Petition is hereby DISMISSED.
SO ORDERED. 41
But did the trial court grant relief A that China International be awarded the project?
All told, and presently, and urgently, there is the need to implement the
PROJECTS in this petition so as not to affect the ODA funding, harnessed
through JBIC. More so, in addition, and a thoughtful consideration of pleadings
and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing,
respondent BAC has strayed from fairly applying the Bidding Laws, Guidelines,
Rules, and Regulations, and Bid Tender Documents and, as a matter of fairness,
and in the interest of justice, considering other bidders whose bids have been
evaluated by the Technical Working Group including the consultant, Nippon
Koie Company, Ltd., In association with the PKII and the Basic Team, Inc., to be
substantially responsive, the Honorable Simeon P. Datumanong must now
seriously consider and effect the award of Package 2, PHASE II, of the Agno
River Floor Control Project, as duly recommended by the Consultants and the
Technical Working Group, DPWH, to China International Water & Electric
Corporation being the lowest evaluated responsive bid. 42 (emphasis supplied)

Contrast this with Nolasco's prayer on the same relief in his Motion for Partial Judgment and to Dismiss
Petition, thus:
WHEREFORE, in view of the foregoing premises, and in consideration of equity
and petitioner's moral obligation and in order to abbreviate the proceedings in
view of the need to implement the subject projects of this petition the soonest
possible time so an not to jeopardize the funding granted by the Overseas
Development Assistance (ODA) fund through the Japan Bank For International
Cooperation (JBIC), it is respectfully prayed unto this Honorable Court to issue
its partial judgment on the petition. An [sic] in view of the foregoing findings
that clear violation of bidding laws, rules and regulations, the respondents' Bid
Tender Documents, has been committed by the respondents members of the
BAC, and in fairness to the other bidder whose bids have been evaluated by the
Technical Working Group including the consultant, Nippon Koie Company, Ltd.,
in association with the PKIII and the Basic Team, Inc. to be substantially
responsive, the Bid of China International Water & Electric Corporation being
the lowest evaluated responsive bid must be awarded the project, package 2,
Phase II, of the Agno River Flood Control Projects as recommended by the
Consultants and the Technical Working Group of the respondents. The
respondent, Honorable Secretary Simeon Datumanong is hereby directed to take
steps to attain this end. 43 (Emphasis supplied)
Unmistakably though, the controverted portion of the Order, urging the DPWH Secretary "to consider"
awarding the Project to China International does not form part of the dispositive portion or fallo. What
should be deemed as the dispositive portion in this case is the final paragraph of the Resolution, which
reads: "WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the Petition is
hereby DISMISSED."
The Court recently explicated the contents of a proper dispositive portion in Velarde v. Social Justice
Society: 44
In a civil case as well as in a special civil action, the disposition should state
whether the complaint or petition is granted or denied, the specific relief
granted, and the costs. The following test of completeness may be applied.
First, the parties should know their rights and obligations. Second, they should
know how to execute the decision under alternative contingencies. Third, there
should be no need for further proceedings to dispose of the issues. Fourth, the
case should be terminated by according the proper relief. The "proper relief"
usually depends upon what the parties seek in their pleadings. It may declare
their rights and duties, command the performance of positive prestations, or
order them to abstain from specific acts. The disposition must also adjudicate
costs. 45
We have ruled before against recognizing statements in the body of a decision as part of the dispositive
portion. In Velarde, the respondents insisted that a statement by the trial court found on page ten (10)
of the fourteen (14)-page decision should be considered as part of the dispositive portion. The Court
disagreed, 46 and cited the precedent in Magdalena Estate, Inc. v. Hon. Caluag: 47
. . . The quoted finding of the lower court cannot supply deficiencies in the
dispositive portion. It is a mere opinion of the court and the rule is settled that
where there is a conflict between the dispositive part and the opinion, the
former must prevail over the latter on the theory that the dispositive portion is
the final order while the opinion is merely a statement ordering nothing. 48
In Contreras v. Felix, 49 the Court reasoned:
More to the point is another well-recognized doctrine, that the final judgment
as rendered is the judgment of the court irrespective of all seemingly contrary
statements in the decision. "A judgment must be distinguished from an opinion.
The latter is the informal expression of the views of the court and cannot prevail
against its final order or decision. While the two may be combined in one
instrument, the opinion forms no part of the judgment. So, . . . there is a
distinction between the findings and conclusions of a court and its Judgment.
While they may constitute its decision and amount to the rendition of a
judgment, they are not the judgment itself. They amount to nothing more than
an order for judgment, which must, of course, be distinguished from the
judgment." (1 Freeman on Judgments, p. 6.) At the root of the doctrine that the
premises must yield to the conclusion is perhaps, side by side with the needs of
writing finis to litigations, the recognition of the truth that "the trained intuition
of the judge continually leads him to right results for which he is puzzled to give
unimpeachable legal reasons." "It is an everyday experience of those who study
judicial decisions that the results are usually sound, whether the reasoning from
which the results purport to flow is sound or not." (The Theory of Judicial
Decision, Pound, 36 Harv. Law Review, pp. 9, 51.) It is not infrequent that the
grounds of a decision fail to reflect the exact views of the court, especially those
of concurring justices in a collegiate court. We often encounter in judicial
decisions, lapses, findings, loose statements and generalities which do not bear
on the issues or are apparently opposed to the otherwise sound and considered
result reached by the court as expressed in the dispositive part, so called, of the
decision. 50
Moreover, we are guided by the evident fact that the respondent-judge did not intend to make his
conclusions on who should be awarded the Project as part of the dispositive portion of his order. The
language deliberately employed in the order, "must now seriously consider and effect the award,"
indicates that the judge was hesitant to definitively grant the relief sought by Nolasco, which was that
the trial court award the bid to China International and direct Sec. Datumanong to take steps towards
this end. Instead, it stated that Sec. Datumanong "must now seriously consider and effect the award" to
China International. Undoubtedly, the word "must" is mandatory in character, but it is used in
conjunction with "consider". In short, the trial court noted that the DPWH Secretary "must think about"
effecting an award to China International.
Imagine if Nolasco had tried to judicially enforce this portion of the decision. Agents of the court would
be sent over to the DPWH offices to confront the DPWH Secretary. What else could they say but, "Sir,
have you seriously considered effecting the award to China International?" Of course, the DPWH
Secretary can reply, "Yes, but I decided to award the bid anyway to Daewoo," and such averment would
evince satisfactory compliance with the assailedOrder. After all, the Order did not require that the DPWH
award the bid to China International, only that the DPWH consider such a measure.
These premises considered, we cannot agree with Petitioner' characterization of this portion of
the Order as granting affirmative relief in favor of China International. 51 No such affirmative relief was
rendered in favor of China International, as such was not included as part of the fallo. Nor was there an
evident intent on the part of the judge to grant such affirmative relief, on account of the language he
employed, recommendatory in character as it ultimately was.
Still, if the Court were to construe this assailed portion of the Order as belonging to the dispository part,
such disposition, effectively concluding that China International and not DAEWOO should be awarded
the bid, would run contrary to law.
It must be remembered that Nolasco's prayer that the trial court award the bid to China International
utilized as legal basis the power of the trial courts to issue partial or separate judgments. Yet by any
objective standard, there is no merit in allowing for such a relief in this case. Section 5, Rule 36 of the
Rules of Civil Procedure, which governs separate judgments, states:
Sec. 5. Separate judgments. When more than one claim for relief is
presented in an action, the court, at any stage, upon a determination of the
issues material to a particular claim and all counterclaims arising out of the
transaction or occurrence which is the subject matter of the claim, may render
a separate judgment disposing of such claim. The judgment shall terminate the
action with respect to the claim so disposed of and the action shall proceed as
to the remaining claims. . . .
On paper, Nolasco's petition prays for two reliefs, that the petitioner be restrained from awarding the
Project to Daewoo, and that Daewoo be disqualified as a bidder and its bid be rejected. Yet these reliefs
are obviously intertwined for the allowance of one would necessarily lead to the grant of the other. The
multiple reliefs referred to in the provision refer to those sufficiently segregate from each other that the
allowance of one at a preliminary stage will not preclude litigation on the merits of the others.
More importantly, the rule is explicit that partial judgment with regards one of the reliefs is warranted
only after "a determination of the issues material to a particular claim and all counterclaims arising out
of the transaction or occurrence which is the subject matter of the claim." Herein, the partial judgment
was sought even before the respondents had the chance to file their answer to the petition. Moreover, it
was prayed for at a point when, at even such a preliminary stage, the claimant was actually somehow
able to already present evidence in support of his claim, but before the respondents had the chance to
rebut this claim or support countervailing evidence.
At bare minimum, the allowance of a partial judgment at this stage would constitute a denial of
constitutional due process. It would condemn before hearing, and render judgment before trial. 52 Had
indeed partial judgment been granted in the assailed Order, it would have been rendered before the
Petitioner were afforded the opportunity to rebut the evidence of Nolasco, or to present their own
countervailing evidence. While the allowance of partial judgments may expedite the litigation of claims,
it cannot be sanctioned at a stage when the trial judge has not had the opportunity to hear all sides to
the claim. In fact, it was highly imprudent for the respondent judge to have concluded, as he did in
his Order, that it was an admitted fact that the BAC had strayed from fairly applying the Bidding Laws,
Guidelines, Rules, and Regulations, and Bid Tender Documents, considering that the Petitioner had not
even filed an answer or been allowed the opportunity to present any evidence on its behalf.

And there is the fact that as of the moment the assailed Order was rendered, Nolasco's petition had
already been dismissed by the earlier Order dated 27 March 2002. In order that the prayer for partial
judgment could have been granted by the RTC, it would have been first necessary to reinstate Nolasco's
dismissed petition, such as by granting Nolasco's motion for reconsideration. The respondent judge
never reinstated the petition, which has stood dismissed since 27 March 2002. Thus, none of the reliefs
prayed for by Nolasco in his Petition, much less the prayer for partial judgment, could have ever been
granted by the respondent-judge.
Thus, the dispositive portion of the assailed Order correctly limited itself to the denial of Nolasco's
motion for reconsideration without allowing any other relief that Nolasco prayed for in his Motion for
Partial Judgment and to Dismiss Petition. Had the judge instead opted to grant partial judgment and
direct the award of the Project to China International, the Court would not hesitate to strike down such
award. Yet the judge did not act so unequivocally, and merely advised that the DPWH Secretary should
consider such an option. Perhaps the propriety of such advice can be appropriately questioned, in light
of our view that such conclusion was derived without allowing the DPWH or an injured party such as
Daewoo opportunity to be heard and to present their own evidence. Nonetheless, such advisory opinion
has no binding effect, especially if construed as directing the award of the Project to China International.
Accordingly, for that reason alone and with the necessary clarifications made, there is no reason to set
aside the assailed Order dated 6 September 2002, especially considering that its final disposition
dismissing Nolasco's motion for reconsideration is ultimately correct.
Nolasco's petition had been correctly dismissed by the RTC on two grounds: that Nolasco's general
interest as a taxpayer was not sufficient to establish any direct injury to him should the Project be
awarded to Daewoo; and that the petition was a suit against the State, which may not prosper without
its consent. Given that none of the parties are actually praying that Nolasco's motion for reconsideration
be granted or that Nolasco's petition be reinstated, we need not review in depth the rationale of the RTC
in dismissing Nolasco's petition. The mere invocation of standing as a tax payer does not mean that in
each and every instance where such a ground is invoked courts are left with no alternative except to
hear the parties, for the courts are vested with discretion whether or not a taxpayer's suit should be
entertained. 53 We likewise find no error on the part of the RTC when it cited as basis for the dismissal
of Nolasco's petition, our ruling in Bugnay Construction & Development Corp. v. Laron 54 that the
taxpayer-plaintiff must specifically prove that he has sufficient interest in preventing the illegal
expenditure of money raised by taxation, and that he will sustain a direct injury as a result of the
enforcement of the questioned statute or contract. 55
We also find no error on the part of the RTC in regarding Nolasco's petition as a suit against the State
without the latter's consent. An unincorporated government agency such as the DPWH is without any
separate juridical personality of its own and hence enjoys immunity from suit. 56 Even in the exercise of
proprietary functions incidental to its primarily governmental functions, an unincorporated agency still
cannot be sued without its consent. 57Moreover, it cannot be said that the DPWH was deemed to have
given its consent to be sued by entering into a contract, for at the time the petition was filed by Nolasco,
the DPWH had not yet entered into a contract with respect to the Project.
Surprisingly, and with no apparent benefit on its behalf, Petitioner imputes error on the part of the RTC
when the court, in the fallo of the assailed Order, directed the dismissal of the "Motion for
Reconsideration of the Petition," pointing out that such pleading was never filed by Nolasco, 58 and
accordingly prays "that the order dismissing the alleged Motion for Reconsideration of Petition be
declared null and void." 59 However, Nolasco did file a "Motion for Reconsideration" to the order
dismissing the petition, and in his Motion for Partial Judgment and to Dismiss Petition, Nolasco similarly
prays that "the Motion for Reconsideration of the Petition be dismissed." We have no doubt, infelicitous
wording aside, that the "Motion for Reconsideration of the Petition" adverted to in the fallo refers to
Nolasco's own motion for reconsideration, the denial of which Nolasco also prayed for in the Motion for
Partial Judgment and to Dismiss Petition that was the subject of the assailed Order. And as just
discussed, the denial of the Nolasco's motion for reconsideration was in order.
Notably, this Court has not engaged in a review of the award of the Project to Daewoo. Notwithstanding
the fact that the parties have prayed that the Court either effect the award of the Project to Daewoo or
direct the award to China International, the Court deems it improper to conduct a de novo factual finding
on which entity should be awarded the project. The Court is not a trier of facts, and it would be offensive
to established order and the hierarchy of courts for this Court to initiate such factual review. Had the RTC
conducted a valid trial on the merits, perhaps this Court could eventually review the lower court's
findings on the matter, but the RTC properly dismissed the case, and it would be unbecoming on the part
of this Court to suddenly engage in an initial trial on the merits on appellate review.
This is a stance not borne out of hesitance to tackle the issue, or avoid the sort of ruling that may satisfy
one party or the other as "definitive," but arrived at out of necessity to preserve the integrity of our civil
procedure, including the hierarchy of our courts and the limits of this Court's power of judicial review.
Precisely, the messy milieu presented before us occurred because the RTC and Nolasco compromised
our court processes to destructive ends, and it is this Court's function to reassert the rules, to restore
order, and not compound to the sloppiness by itself violating procedural order.
The executive department is acknowledged to have wide latitude to accept or reject a bid, or even after
an award has been made, to revoke such award. From these actions taken, the court will not generally
interfere with the exercise of discretion by the executive department, unless it is apparent that the
exercise of discretion is used to shield unfairness or injustice. 60 This policy of non-interference can
hardly be countermanded by reason of a claim anchored on an unofficial document such as the
"Confidential Reports from an Unnamed DPWH Consultant" presented by Nolasco, especially when the
probative value thereof has hardly been passed upon by a proper trier of facts.
More importantly, the Court, the parties, and the public at large are bound to respect the fact that
official acts of the Government, including those performed by governmental agencies such as the DPWH,
are clothed with the presumption of regularity in the performance of official duty. and cannot be
summarily, prematurely and capriciously set aside. 61 Such presumption is operative not only upon the
courts, but on all persons, especially on those who deal with the government on a frequent basis. There
is perhaps a more cynical attitude fostered within the popular culture, or even through anecdotal
traditions. Yet, such default pessimism is not embodied in our system of laws, which presumes that the
State and its elements act correctly unless otherwise proven. To infuse within our legal philosophy a
contrary, gloomy pessimism would assure that the State would bog down, wither and die.
Instead, our legal framework allows the pursuit of remedies against errors of the State or its components
available to those entitled by reason of damage or injury sustained. Such litigation involves
demonstration of legal capacity to sue or be sued, an exhaustive trial on the merits, and adjudication
that has basis in duly proven facts and law. No proper and viable legal challenge has emerged impugning
the award of the Project by DPWH to Daewoo, Nolasco'sPetition being woefully insufficient to that
purpose. It is tragic perhaps that the irresponsible actions of Judge Nabong, and their ultimate
embodiment in his obiter dictain the assailed Order, somehow fostered the illusion that there was a
serious legal cloud hovering over the award by DPWH to Daewoo. We rule that there is none, that the
RTC acted correctly in granting the Petitioner's motion to dismiss Nolasco's Petition and in denying the
subsequent motion for reconsideration to the dismissal. These are the only relevant matters properly
brought for judicial review and everything else is unnecessary verbiage.
For the same reason, we cannot allow the Petitioner's prayer for damages against Nolasco. The matter of
damages is one that has to be properly litigated before the triers of fact, and certainly has not been
passed upon by the RTC. Yet it does not necessarily follow that no liability arises from the filing of the
initiatory petition, or the facts succeeding thereto. It does not escape our attention that on 2 April 2002,
the OSG was served a spurious order purportedly giving due course to Nolasco's petition and granting
the sought-for preliminary injunction. This incident cannot pass without comment by this Court, which
cannot sanction the circulation of fake judicial orders, and should be duly investigated by the National
Bureau of Investigation for appropriate action.
Finally, it likewise appears that Judge Nabong, by issuing the temporary restraining order dated 4 March
2002, violated Section 6 of Republic Act No. 8975, which penalizes the judge who issues a temporary
restraining order enjoining the bidding or awarding of a contract or project of the national
government. 62 Yet to his credit, Judge Nabong recalled the TRO upon realizing his error, thus a
REPRIMAND should suffice under the circumstances.

WHEREFORE, premises considered, the Petition is DENIED. The assailed Order dated 6 September 2004 is
AFFIRMED, with the QUALIFICATION that last paragraph of the body of the Order, which states that the
DPWH Secretary "must now seriously consider and effect the award of Package 2, Phase II of the Agno
River Flood Control Project. . . " is OBITER DICTA and hence of no binding force.
The National Bureau of Investigation is hereby DIRECTED to investigate the circumstances surrounding
the alleged spurious order dated 22 March 2002 served on the Office of the Solicitor General and
determine possible criminal liabilities for the creation of such forged document.
Judge Juan Nabong is hereby REPRIMANDED for failure to observe Section 6 of Republic Act No. 8975,
and WARNED that a subsequent repetition of the same shall be dealt with more severely.
No costs.
SO ORDERED.











FIRST DIVISION
[G.R. No. 145328. March 23, 2006.]
EDUARDO F. HERNANDEZ, MA. ENCARNACION R. LEGASPI, JAIME BLANCO,
JR., ENRIQUE BELO, CARLOS VIAPLANA, CARL FURER, VIVENCIO TINIO,
MICHAEL BRIGGS, ROSA CARAM, FAUSTO PREYSLER, ROBERT KUA, GEORGE
LEE, GUILLERMO LUCHANGCO, PETER DEE, LUISA MARQUEZ, ANGELITA LILLES,
JUAN CARLOS, HOMER GO, AMADEO VALENZUELA, EMILIO CHING, ANTONIO
CHAN, MURLI SABNANI, MARCOS ROCES, RAYMUNDO FELICIANO, NORMA
GAFFUD, ALF HOLST, LOURDES P. ROQUE, MANUEL DY, RAUL FERNANDEZ,
VICTORIA TENGCO, CHI MO CHENG, BARANGAY DASMARIAS, AND HON.
FRANCISCO B. IBAY, petitioners, vs. NATIONAL POWER
CORPORATION, respondent.

D E C I S I O N
CHICO-NAZARIO, J p:
Although Presidential Decree No. 1818 prohibits any court from issuing injunctions in cases involving
infrastructure projects, the prohibition extends only to the issuance of injunctions or restraining orders
against administrative acts in controversies involving facts or the exercise of discretion in technical cases.
On issues clearly outside this dimension and involving questions of law, this Court declared that courts
could not be prevented from exercising their power to restrain or prohibit administrative acts. 1 In such
cases, let the hammer fall and let it fall hard.
With health risks linked to exposure to electromagnetic radiation as their battle cry, petitioners, all
residents of Dasmarias Village, are clamoring for the reversal of the decision 2 dated 3 May 2000 of
the Court of Appeals in CA-G.R. SP No. 57849 as well as the resolution dated 27 September 2000,
denying their motion for reconsideration.
The assailed decision 3 of the Court of Appeals reversed the order of the Regional Trial Court of Makati,
issuing a writ of preliminary injunction against respondent National Power Corporation (NAPOCOR) to
stay the latter from energizing and transmitting high voltage electric current through its cables erected
from Sucat, Paraaque to Araneta Ave., Quezon City.
But, first, the facts:
Sometime in 1996, NAPOCOR began the construction of 29 decagon-shaped steel poles or towers with a
height of 53.4 meters to support overhead high tension cables in connection with its 230 Kilovolt Sucat-
Araneta-Balintawak Power Transmission Project. Said transmission line passes through the Sergio
Osmea, Sr. Highway (South Superhighway), the perimeter of Fort Bonifacio, and Dasmarias Village
proximate to Tamarind Road, where petitioners' homes are.
Said project later proved to be petitioners' bane of existence.
Alarmed by the sight of the towering steel towers, petitioners scoured the internet on the possible
adverse effects that such a structure could cause to their health and well-being. Petitioners got hold of
published articles and studies linking the incidence of a fecund of illnesses to exposure to
electromagnetic fields. These illnesses range from cancer to leukemia.
Petitioners left no stones unturned to address their malady. They aired this growing concern to the
NAPOCOR, which conducted a series of meetings with them.
NAPOCOR received flak from Representative Francis Joseph G. Escudero, who in his Privilege Speech
dated 10 May 1999, denounced the cavalier manner with which NAPOCOR ignored safety and
consultation requirements in the questioned project.
Petitioners brought their woes to the attention of Rep. Arnulfo Fuentebella, Chairman of the House
Committee on Energy, wherein NAPOCOR was asked to shed light on the petitioners' problem. In a letter
dated 8 November 1999, NAPOCOR President Federico Puno stated that NAPOCOR was still in the
process of coming up with a "win-win" solution to the concerns of the Dasmarias Village and Forbes
Park residents. 4
In a letter dated 10 August 1999 addressed to Congressman Arnulfo P. Fuentebella, NAPOCOR's
President wrote:
We have discussed the matter with the Dasmarias and Forbes residents and
we have come up with four (4) options on how to address the problem, to
wit: IaTSED
Option Cost
Option 1: Transfer the line to Lawton Avenue P111.84 million
(proposal of Dasmarias/Forbes)
Option 2: Maintain 12 meters distance along P77.60 million
the village
Option 3: Construct an underground line P482.00 million
Option 4: Reroute along C-5 and South Luzon P1,018.83 million
Expressway (combination of overhead
and underground) 5
Negotiations between petitioners and the NAPOCOR reached an impass, with petitioners vying for
the relocation of the transmission lines to Fort Bonifacio on one hand, and the NAPOCOR insisting on a
12-meter easement widening, on the other. 6
Thus, petitioners, on 9 March 2000 filed a Complaint 7 for Damages with Prayer for the Issuance of a
Temporary Restraining Order and/or a Writ of Preliminary Injunction against NAPOCOR. Harping on the
hazardous effects of exposure to electromagnetic radiation to the health and safety to themselves and
their families, petitioners, through the instant case, sought what they had failed to achieve through
amicable means with NAPOCOR and prayed, inter alia, for damages and the relocation of the
transmission lines to Lawton Avenue, Fort Bonifacio.
On 13 March 2000, Judge Francisco B. Ibay issued an order 8 in Civil Case No. 00-352, which temporarily
restrained the respondent from energizing and transmitting high voltage electric current through the
said project. The pertinent portion of the said order reads:
Acting on the plaintiffs' "Urgent Omnibus Motion," it appearing that the subject
area will be energized by midnight tonight based on a report taken from
Representative Joker P. Arroyo by plaintiffs' counsel, so as not to render moot
and academic the instant case, as prayed for, defendant National Power
Corporation is ordered to maintain the status quo and/or be enjoined from
energizing and transmitting high voltage electric current through its cables for
forty eight (48) hours starting 4 o'clock in the afternoon today and ending 4
o'clock in the afternoon of 15 March 2000. 9
By order 10 of 15 March 2000, the trial court extended the restraining order for 18 more days.
NAPOCOR filed a Petition for Certiorari with Prayer for Temporary Restraining Order and Preliminary
Injunction with the Court of Appeals assailing the above order by the trial court. Alluding to Presidential
Decree No. 1818 (1981), "Prohibiting Courts from Issuing Restraining Orders or Preliminary Injunctions in
Cases Involving Infrastructure and Natural Resource Development Projects of, and Public Utilities
Operated by, the Government," particularly Sec. 1, NAPOCOR stalwartly sought the dismissal of the case
on the ground of lack jurisdiction. Presidential Decree No. 1818 provides:
Section 1.No Court in the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction or preliminary mandatory injunction in
any case, dispute, or controversy involving an infrastructure project, or a
mining, fishery, forest or other natural resource development project of the
government, or any public utility operated by the government, including among
other public utilities for transport of the goods or commodities, stevedoring and
arrastre contracts, to prohibit any person or persons, entity or government
official from proceeding with or continuing the execution or implementation of
any such project, or the operation of such public utility or pursuing any lawful
activity necessary for such execution, implementation or operation.
In the interregnum, by order dated 3 April 2000, the trial court ordered the issuance of a writ of
preliminary injunction against NAPOCOR. 11 The trial court articulated that an injunction was necessary
to stay respondent NAPOCOR's activation of its power lines due to the possible health risks posed to the
petitioners. Asserting its jurisdiction over the case, the trial court was of the view that Presidential
Decree No. 1818 and jurisprudence proscribing injunctions against infrastructure projects do not find
application in the case at bar because of the health risks involved.
The trial court, thus, enjoined the NAPOCOR from further preparing and installing high voltage cables to
the steel pylons erected near petitioners' homes and from energizing and transmitting high voltage
electric current through said cables while the case is pending final adjudication, upon posting of the
bond amounting to P5,000,000.00 executed to the effect that petitioners will pay all the damages the
NAPOCOR may sustain by reason of the injunction if the Court should finally decide that the petitioners
are not entitled thereto. 12
In light of the foregoing order of the trial court, the petition which NAPOCOR filed with the Court of
Appeals was later amended to include the prayer for the nullification and injunction of the Order dated 3
April 2000 of the trial court.
In the challenged decision of 3 May 2000, the Court of Appeals reversed the trial court's order, with the
following fallo: ECHSDc
WHEREFORE, premises considered, the instant petition for certiorari is hereby
GRANTED. The assailed orders of the respondent court, dated March 13, 2000
and April 3, 2000, are hereby REVERSED and SET ASIDE. 13
In the Court of Appeals' rationale, the proscription on injunctions against infrastructure projects of the
government is clearly mandated by the above-quoted Section 1 of Presidential Decree No. 1818, as
reiterated by the Supreme Court in its Circulars No. 2-91 and No. 13-93, dated 15 March 1991 and 5
March 1993, respectively.
As their motion for reconsideration was met with similar lack of success, petitioners, in a last attempt at
vindication, filed the present petition for review on the following arguments:
I.
TEMPORARY RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS WERE
PURPOSELY DESIGNED TO ADDRESS MATTERS OF EXTREME URGENCY WHERE
THERE IS PROBABILITY OF GRAVE INJUSTICE AND IRREPARABLE INJURY. 14
II.
THE RULE ON PRELIMINARY INJUNCTION MERELY REQUIRES THAT UNLESS
RESTRAINED, THE ACT COMPLAINED OF WILL PROBABLY WORK INJUSTICE TO
THE APPLICANT OR PROBABLY VIOLATE HIS RIGHTS AND TENDS TO RENDER THE
JUDGMENT INEFFECTUAL. 15 (Emphasis in the original.)

Fundamental to the resolution of the instant petition is the issue of whether or not the trial court may
issue a temporary restraining order and preliminary injunction to enjoin the construction and operation
of the 29 decagon-shaped steel poles or towers by the NAPOCOR, notwithstanding Presidential Decree
No. 1818.
Petitioners clutch on their stand that Presidential Decree No. 1818 could not be construed to apply to
cases of extreme urgency as in the present case when no less than the rights of the petitioners to health
and safety hangs on the balance.
We find the petition to be imbued with merit.
Presidential Decree No. 1818 was issued on 16 January 1981, prohibiting judges from issuing restraining
orders against government infrastructure projects. In part, the decree says, "No court in the Philippines
shall have jurisdiction to issue any restraining order, preliminary injunction or preliminary order,
preliminary mandatory injunction in any case, dispute or controversy involving an infrastructure project."
Realizing the importance of this decree, this Tribunal had issued different circulars to implement this
particular law.
Presidential Decree No. 1818 16 prohibits courts from issuing injunctions against government
infrastructure projects. In Garcia v. Burgos, 17 Presidential Decree No. 1818 was held to prohibit courts
from issuing an injunction against any infrastructure project in order not to disrupt or hamper the
pursuit of essential government projects or frustrate the economic development effort of the nation.
While its sole provision would appear to encompass all cases involving the implementation of projects
and contracts on infrastructure, natural resource development and public utilities, this rule, however, is
not absolute as there are actually instances when Presidential Decree No. 1818 should not find
application. In a spate of cases, this Court declared that although Presidential Decree No. 1818 prohibits
any court from issuing injunctions in cases involving infrastructure projects, the prohibition extends only
to the issuance of injunctions or restraining orders against administrative acts in controversies
involving facts or the exercise of discretion in technical cases. On issues clearly outside this dimension
and involving questions of law, this Court declared that courts could not be prevented from exercising
their power to restrain or prohibit administrative acts. 18
In the case at bar, petitioners sought the issuance of a preliminary injunction on the ground that the
NAPOCOR Project impinged on their right to health as enshrined in Article II, Section 15 of the 1987
Constitution, which provides:
Sec. 15.The State shall protect and promote the right to health of the people
and instill consciousness among them.
To boot, petitioners, moreover, harp on respondent's failure to conduct prior consultation with them, as
the community affected by the project, in stark violation of Section 27 of the Local Government Code
which provides: "no project or program shall be implemented by government authorities unless the
consultations mentioned are complied with, and prior approval of the Sanggunian concerned is
observed."
From the foregoing, whether there is a violation of petitioners' constitutionally protected right to health
and whether respondent NAPOCOR had indeed violated the Local Government Code provision on prior
consultation with the affected communities are veritable questions of law that invested the trial court
with jurisdiction to issue a TRO and subsequently, a preliminary injunction. As such, these questions of
law divest the case from the protective mantle of Presidential Decree No. 1818.
Moreover, the issuance by the trial court of a preliminary injunction finds legal support in Section 3 of
Rule 58 of the Rules of Court which provides:
Sec. 3.Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established: cECaHA
(a)That the applicant is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring the performance of an act or acts, either for
a limited period or perpetually;
(b)That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c)That a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or actsprobably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual. (3a) (Emphasis
supplied.)
The rule on preliminary injunction merely requires that unless restrained, the act complained of
will probably violate his rights and tend to render the judgment ineffectual.
Here, there is adequate evidence on record to justify the conclusion that the project of
NAPOCOR probably imperils the health and safety of the petitioners so as to justify the issuance by the
trial court of a writ of preliminary injunction.
Petitioners adduced in evidence copies of studies linking the incidence of illnesses such as cancer and
leukemia to exposure to electromagnetic fields. The records bear out, to boot, a copy of a brochure of
NAPOCOR regarding its Quezon Power Project from which will be supplying NAPOCOR with the power
which will pass through the towers subject of the controversy. The NAPOCOR brochure provides that
because of the danger concomitant with high voltage power, Philippine laws mandate that the power
lines should be located within safe distances from residences. And the Quezon Power Project mandates
an easement of 20 meters to the right and 20 meters to the left which falls short of the 12-meter
easement that NAPOCOR was proposing to petitioners.
Likewise on record, are copies of letters of NAPOCOR President Federico Puno to Rep. Arnulfo
Fuentebella, Chairman of the House Committee on Energy, stating updates on the negotiations being
undertaken by the NAPOCOR and the Dasmarias Village and Forbes Park residents. Also on file is the
Privilege Speech dated 10 May 1999 of Representative Francis Joseph G. Escudero, who denounced the
cavalier manner with which NAPOCOR ignored safety and consultation requirements in the questioned
project.
With a member of Congress denouncing the subject project of NAPOCOR because of the very same
health and safety ills that petitioners now hew to in this petition, and with documents on record to show
that NAPOCOR made representations to petitioners that they are looking into the possibility of
relocating the project, added to the fact that there had been series of negotiations and meetings
between petitioners and NAPOCOR as well as related agencies, there is ample indicia to suggest to the
mind of the court that the health concerns of the petitioners are, at the very least, far from imaginary.
Indeed, if there is no cause for concern, NAPOCOR would not have been stirred to come up with options
to address the woes of petitioners, nor would Congressman Escudero have fired away those strong
words of censure, assailing what to Congressman Escudero smacks of a "cavalier manner by which the
NAPOCOR has responded to earnest pleas for a review of its practice of installing massive pylons
supporting high tension cables in densely populated areas." 19
True, the issue of whether or not the transmission lines are safe is essentially evidentiary in nature, and
pertains to the very merits of the action below. In fact, petitioners recognize that the conclusiveness of
their life, health and safety concerns still needs to be proved in the main case below and they are
prepared to do so especially in the light of some studies cited by respondent that yield contrary results in
a disputed subject. Despite the parties' conflicting results of studies made on the issue,
the possibility that the exposure to electromagnetic radiation causes cancer and other disorders is still,
indeed, within the realm of scientific scale of probability.
Equally important, we take judicial notice that the area alluded to as location of the NAPOCOR project is
a fragile zone being proximate to local earthquake faults, particularly the Marikina fault, among other
zones. This is not to mention the risks of falling structures caused by killer tornadoes and super
typhoons, the Philippines, especially Central Luzon, being situated along the typhoon belt.
Moreover, the Local Government Code, requires conference with the affected communities of a
government project. NAPOCOR, palpably, made a shortcut to this requirement. In fact, there appears a
lack of exhaustive feasibility studies on NAPOCOR's part before making a go with the project on hand;
otherwise, it should have anticipated the legal labyrinth it is now caught in.
These are facts, which the trial court could not ignore, and form as sufficient basis to engender the cloud
of doubt that the NAPOCOR project could, indeed, endanger the lives of the petitioners. A preliminary
injunction is likewise justified prior to a final determination of the issues of whether or not NAPOCOR
ignored safety and consultation requirements in the questioned project. Indeed, the court
could, nay should, grant the writ of preliminary injunction if the purpose of the other party is to shield a
wrongdoing. A ruling to the contrary would amount to an erosion of judicial discretion.
After all, for a writ of preliminary injunction to be issued, the Rules do not require that the act
complained of be in violation of the rights of the applicant. Indeed, what the Rules require is that the act
complained of be probably in violation of the rights of the applicant. Under the Rules of Court,
probability is enough basis for injunction to issue as a provisional remedy, which is different from
injunction as a main action where one needs to establish absolute certainty as basis for a final and
permanent injunction. EADSIa

Pending the final determination of the trial court on the main case for damages, of whether or not the
NAPOCOR Project infringes on petitioners' substantive right to health and pending determination of the
question of whether there was non-observance of the prior-consultation proviso under the Local
Government Code, it is prudent to preserve the status quo. In Phil. Ports Authority v. Cipres Stevedoring
& Arrastre, Inc., 20 we held:
A preliminary injunction is an order granted at any stage of an action prior to
judgment of final order, requiring a party, court, agency, or person to refrain
from a particular act or acts. It is a preservative remedy to ensure the
protection of a party's substantive rights or interests pending the final judgment
in the principal action. A plea for an injunctive writ lies upon the existence of a
claimed emergency or extraordinary situation which should be avoided for
otherwise, the outcome of a litigation would be useless as far as the party
applying for the writ is concerned.
At times referred to as the "Strong Arm of Equity," we have consistently ruled
that there is no power the exercise of which is more delicate and which calls for
greater circumspection than the issuance of an injunction. It should only be
extended in cases of great injury where courts of law cannot afford an adequate
or commensurate remedy in damages; "in cases of extreme urgency; where the
right is very clear; where considerations of relative inconvenience bear strongly
in complainant's favor; where there is a willful and unlawful invasion of
plaintiff's right against his protest and remonstrance, the injury being a
continuing one, and where the effect of the mandatory injunction is rather to
reestablish and maintain a preexisting continuing relation between the parties,
recently and arbitrarily interrupted by the defendant, than to establish a new
relation." (Emphasis supplied.)
What is more, contrary to respondents' assertion, there is not a single syllable in the circulars issued by
this Court enjoining the observance of Presidential Decree No. 1818, which altogether and absolutely,
ties the hands of the courts from issuing a writ of preliminary injunction. What Circular 2-91 21 dated 15
March 1991 seeks to enjoin is the indiscriminate issuance of court injunctions. The same holds for
Circular 13-93 22 dated 5 March 1993 and Circular 68-94. 23 And, in Circular No. 7-99, judges are
enjoined to observe utmost caution, prudence and judiciousness in the issuance of temporary restraining
order and in the grant of writs of preliminary injunction to avoid any suspicion that its issuance or grant
was for consideration other than the strict merits of the case. 24
There is not a hint from the foregoing circulars suggesting an unbridled prohibition against the issuance
of temporary restraining orders or preliminary injunctions.
In sum, what Presidential Decree No. 1818 aims to avert is the untimely frustration of government
infrastructure projects, particularly by provisional remedies, to the detriment of the greater good by
disrupting the pursuit of essential government projects or frustrate the economic development effort of
the nation. Presidential Decree No. 1818, however, was not meant to be a blanket prohibition so as to
disregard the fundamental right to health, safety and well-being of a community guaranteed by the
fundamental law of the land. 25
Lest we be misconstrued, this decision does not undermine the purpose of the NAPOCOR project which
is aimed towards the common good of the people. But, is the promotion of the general welfare at
loggerheads with the preservation of the rule of law? We submit that it is not. 26
In the present case, the far-reaching irreversible effects to human safety should be the primordial
concerns over presumed economic benefits per se as alleged by the NAPOCOR.
Not too long ago, the Court, in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village
Association, Inc., 27 upheld the validity of the writ of preliminary injunction issued by the Court of
Appeals enjoining the implementation of the Metropolitan Manila Development Authority's proposed
action of opening of the Neptune Street to public vehicular traffic. We were categorical
Not infrequently, the government is tempted to take legal shortcuts to solve
urgent problems of the people. But even when government is armed with the
best of intention, we cannot allow it to run roughshod over the rule of law.
Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA
to open for public use a private road in a private subdivision. While we hold that
the general welfare should be promoted, we stress that it should not be
achieved at the expense of the rule of law. 28
In hindsight, if, after trial, it turns out that the health-related fears that petitioners cleave on to have
adequate confirmation in fact and in law, the questioned project of NAPOCOR then suffers from a
paucity of purpose, no matter how noble the purpose may be. For what use will modernization serve if it
proves to be a scourge on an individual's fundamental right, not just to health and safety, but, ostensibly,
to life preservation itself, in all of its desired quality?
WHEREFORE, the petition is GRANTED. The decision dated 3 May 2000 of the Court of Appeals in CA-G.R.
SP No. 57849 is REVERSED as well as the resolution dated 27 September 2000. The Order dated 3 April
2000 of the Regional Trial Court of Makati in Civil Case No. 00-352 is hereby REINSTATED. No
pronouncement as to costs
SO ORDERED. IAEcCa
FIRST DIVISION
[G.R. No. 176657. September 1, 2010.]
DEPARTMENT OF FOREIGN AFFAIRS and BANGKO SENTRAL NG
PILIPINAS, petitioners, vs. HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE
PRESIDING JUDGE OF BRANCH 71 OF THE REGIONAL TRIAL COURT IN PASIG
CITY and BCA INTERNATIONAL CORPORATION, respondents.

DECISION
LEONARDO-DE CASTRO, J p:
Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the Rules of Court with a
prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction filed by
petitioners Department of Foreign Affairs (DFA) and Bangko Sentral ng Pilipinas (BSP). Petitioners pray
that the Court declare as null and void the Order 1 dated February 14, 2007 of respondent Judge Franco
T. Falcon (Judge Falcon) in Civil Case No. 71079, which granted the application for preliminary injunction
filed by respondent BCA International Corporation (BCA). Likewise, petitioners seek to prevent
respondent Judge Falcon from implementing the corresponding Writ of Preliminary Injunction dated
February 23, 2007 2 issued pursuant to the aforesaid Order.
The facts of this case, as culled from the records, are as follows:
Being a member state of the International Civil Aviation Organization (ICAO), 3 the Philippines has to
comply with the commitments and standards set forth in ICAO Document No. 9303 4 which requires the
ICAO member states to issue machine readable travel documents (MRTDs) 5 by April 2010.
Thus, in line with the DFA's mandate to improve the passport and visa issuance system, as well as the
storage and retrieval of its related application records, and pursuant to our government's ICAO
commitments, the DFA secured the approval of the President of the Philippines, as Chairman of the
Board of the National Economic and Development Authority (NEDA), for the implementation of the
Machine Readable Passport and Visa Project (the MRP/V Project) under the Build-Operate-and-Transfer
(BOT) scheme, provided for by Republic Act No. 6957, as amended by Republic Act No. 7718 (the BOT
Law), and its Implementing Rules and Regulations (IRR). Thus, a Pre-qualification, Bids and Awards
Committee (PBAC) published an invitation to pre-qualify and bid for the supply of the needed machine
readable passports and visas, and conducted the public bidding for the MRP/V Project on January 10,
2000. Several bidders responded and BCA was among those that pre-qualified and submitted its
technical and financial proposals. On June 29, 2000, the PBAC found BCA's bid to be the sole complying
bid; hence, it permitted the DFA to engage in direct negotiations with BCA. On even date, the PBAC
recommended to the DFA Secretary the award of the MRP/V Project to BCA on a BOT
arrangement. DHTECc
In compliance with the Notice of Award dated September 29, 2000 and Section 11.3, Rule 11 of the IRR
of the BOT Law, 6 BCA incorporated a project company, the Philippine Passport Corporation (PPC) to
undertake and implement the MRP/V Project.
On February 8, 2001, a Build-Operate-Transfer Agreement 7 (BOT Agreement) between the DFA and PPC
was signed by DFA Acting Secretary Lauro L. Baja, Jr. and PPC President Bonifacio Sumbilla. Under the
BOT Agreement, the MRP/V Project was defined as follows:
Section 1.02.MRP/V Project refers to all the activities and services
undertaken in the fulfillment of the Machine Readable Passport and Visa Project
as defined in the Request for Proposals (RFP), a copy of which is hereto
attached as Annex A, including but not limited to project financing, systems
development, installation and maintenance in the Philippines and Foreign
Service Posts (FSPs), training of DFA personnel, provision of all project
consumables (related to the production of passports and visas, such as printer
supplies, etc.), scanning of application and citizenship documents, creation of
data bases, issuance of machine readable passports and visas, and site
preparation in the Central Facility and Regional Consular Offices (RCOs)
nationwide. 8
On April 5, 2002, former DFA Secretary Teofisto T. Guingona and Bonifacio Sumbilla, this time as BCA
President, signed an Amended BOT Agreement 9in order to reflect the change in the designation of the
parties and to harmonize Section 11.3 with Section 11.8 10 of the IRR of the BOT Law. The Amended BOT
Agreement was entered into by the DFA and BCA with the conformity of PPC.
The two BOT Agreements (the original version signed on February 8, 2001 and the amended version
signed April 5, 2002) contain substantially the same provisions except for seven additional paragraphs in
the whereas clauses and two new provisions Section 9.05 on Performance and Warranty Securities
and Section 20.15 on Miscellaneous Provisions. The two additional provisions are quoted below:
Section 9.05.The PPC has posted in favor of the DFA the performance security
required for Phase 1 of the MRP/V Project and shall be deemed, for all intents
and purposes, to be full compliance by BCA with the provisions of this Article
9. STcAIa
xxx xxx xxx
Section 20.15.It is clearly and expressly understood that BCA may assign, cede
and transfer all of its rights and obligations under this Amended BOT Agreement
to PPC, as fully as if PPC is the original signatory to this Amended BOT
Agreement, provided however that BCA shall nonetheless be jointly and
severally liable with PPC for the performance of all the obligations and liabilities
under this Amended BOT Agreement. 11
Also modified in the Amended BOT Agreement was the Project Completion date of the MRP/V Project
which set the completion of the implementation phase of the project within 18 to 23 months from the
date of effectivity of the Amended BOT Agreement as opposed to the previous period found in the
original BOT Agreement which set the completion within 18 to 23 months from receipt of the NTP
(Notice to Proceed) in accordance with the Project Master Plan.
On April 12, 2002, an Assignment Agreement 12 was executed by BCA and PPC, whereby BCA assigned
and ceded its rights, title, interest and benefits arising from the Amended BOT Agreement to PPC.
As set out in Article 8 of the original and the Amended BOT Agreement, the MRP/V Project was divided
into six phases:
Phase 1.Project Planning Phase The Project Proponent *BCA+ shall prepare
detailed plans and specifications in accordance with Annex A of this [Amended]
BOT Agreement within three (3) months from issuance of the NTP (Notice to
Proceed) [from the date of effectivity of this Amended BOT Agreement]. This
phase shall be considered complete upon the review, acceptance and approval
by the DFA of these plans and the resulting Master Plan, including the Master
Schedule, the business process specifications, the acceptance criteria, among
other plans.
xxx xxx xxx
The DFA must approve all detailed plans as a condition precedent to the
issuance of the CA [Certificate of Acceptance] for Phase 1.
Phase 2.Implementation of the MRP/V Project at the Central Facility
Within six (6) months from issuance of the CA for Phase 1, the PROJECT
PROPONENT [BCA] shall complete the implementation of the MRP/V Project in
the DFA Central Facility, and establish the network design between the DFA
Central Facility, the ten (10) RCOs [Regional Consular Offices] and the eighty
(80) FSPs [Foreign Service Posts]. ITEcAD
xxx xxx xxx
Phase 3.Implementation of the MRP/V Project at the Regional Consular
Offices This phase represents the replication of the systems as approved
from the Central Facility to the RCOs throughout the country, as identified in
the RFP [Request for Proposal]. The approved systems are those implemented,
evaluated, and finally approved by DFA as described in Phase 1. The Project
Proponent [BCA] will be permitted to begin site preparation and the scanning
and database building operations in all offices as soon as the plans are agreed
upon and accepted. This includes site preparation and database building
operations in these Phase-3 offices.
Within six (6) months from issuance of CA for Phase 2, the Project Proponent
[BCA] shall complete site preparation and implementation of the approved
systems in the ten (10) RCOs, including a fully functional network connection
between all equipment at the Central Facility and the RCOs.
Phase 4.Full Implementation, including all Foreign Service Posts Within
three (3) to eight (8) months from issuance of the CA for Phase-3, the Project
Proponent [BCA] shall complete all preparations and fully implement the
approved systems in the eighty (80) FSPs, including a fully functional network
connection between all equipment at the Central Facility and the FSPs. Upon
satisfactory completion of Phase 4, a CA shall be issued by the DFA.
Phase 5.In Service Phase Operation and maintenance of the complete
MRP/V Facility to provide machine readable passports and visas in all
designated locations around the world.
Phase 6.Transition/Turnover Transition/Turnover to the DFA of all
operations and equipment, to include an orderly transfer of ownership of all
hardware, application system software and its source code and/or licenses
(subject to Section 5.02 [H]), peripherals, leasehold improvements, physical and
computer security improvements, Automated Fingerprint Identification
Systems, and all other MRP/V facilities shall commence at least six (6) months
prior to the end of the [Amended] BOT Agreement. The transition will include
the training of DFA personnel who will be taking over the responsibilities of
system operation and maintenance from the Project Proponent [BCA]. The
Project Proponent [BCA] shall bear all costs related to this transfer. 13 (Words
in brackets appear in the Amended BOT Agreement)
To place matters in the proper perspective, it should be pointed out that both the DFA and BCA impute
breach of the Amended BOT Agreement against each other.
According to the DFA, delays in the completion of the phases permeated the MRP/V Project due to the
submission of deficient documents as well as intervening issues regarding BCA/PPC's supposed financial
incapacity to fully implement the project. cIADaC
On the other hand, BCA contends that the DFA failed to perform its reciprocal obligation to issue to BCA
a Certificate of Acceptance of Phase 1 within 14 working days of operation purportedly required by
Section 14.04 of the Amended BOT Agreement. BCA bewailed that it took almost three years for the DFA
to issue the said Certificate allegedly because every appointee to the position of DFA Secretary wanted
to review the award of the project to BCA. BCA further alleged that it was the DFA's refusal to approve
the location of the DFA Central Facility which prevented BCA from proceeding with Phase 2 of the MRP/V
Project.
Later, the DFA sought the opinion of the Department of Finance (DOF) and the Department of Justice
(DOJ) regarding the appropriate legal actions in connection with BCA's alleged delays in the completion
of the MRP/V Project. In a Letter dated February 21, 2005, 14 the DOJ opined that the DFA should issue a
final demand upon BCA to make good on its obligations, specifically on the warranties and
responsibilities regarding the necessary capitalization and the required financing to carry out the MRP/V
Project. The DOJ used as basis for said recommendation, the Letter dated April 19, 2004 15 of DOF
Secretary Juanita Amatong to then DFA Secretary Delia Albert stating, among others, that BCA may not
be able to infuse more capital into PPC to use for the completion of the MRP/V Project.
Thus, on February 22, 2005, DFA sent a letter 16 to BCA, through its project company PPC, invoking BCA's
financial warranty under Section 5.02 (A) of the Amended BOT Agreement. 17 The DFA required BCA to
submit (a) proof of adequate capitalization (i.e., full or substantial payment of stock subscriptions); (b) a
bank guarantee indicating the availability of a credit facility of P700 million; and (c) audited financial
statements for the years 2001 to 2004.
In reply to DFA's letter, BCA, through PPC, informed the former of its position that its financial capacity
was already passed upon during the prequalification process and that the Amended BOT Agreement did
not call for any additional financial requirements for the implementation of the MRP/V Project.
Nonetheless, BCA submitted its financial statements for the years 2001 and 2002 and requested for
additional time within which to comply with the other financial requirements which the DFA insisted
on. 18
According to the DFA, BCA's financial warranty is a continuing warranty which requires that it shall have
the necessary capitalization to finance the MRP/V Project in its entirety and not on a "per phase" basis as
BCA contends. Only upon sufficient proof of its financial capability to complete and implement the whole
project will the DFA's obligation to choose and approve the location of its Central Facility arise. The DFA
asserted that its approval of a Central Facility site was not ministerial and upon its review, BCA's
proposed site for the Central Facility was purportedly unacceptable in terms of security and facilities.
Moreover, the DFA allegedly received conflicting official letters and notices 19 from BCA and PPC
regarding the true ownership and control of PPC. The DFA implied that the disputes among the
shareholders of PPC and between PPC and BCA appeared to be part of the reason for the hampered
implementation of the MRP/V Project. HCaEAT
BCA, in turn, submitted various letters and documents to prove its financial capability to complete the
MRP/V Project. 20 However, the DFA claimed these documents were unsatisfactory or of dubious
authenticity. Then on August 1, 2005, BCA terminated its Assignment Agreement with PPC and notified
the DFA that it would directly implement the MRP/V Project. 21 BCA further claims that the termination
of the Assignment Agreement was upon the instance, or with the conformity, of the DFA, a claim which
the DFA disputed.
On December 9, 2005, the DFA sent a Notice of Termination 22 to BCA and PPC due to their alleged
failure to submit proof of financial capability to complete the entire MRP/V Project in accordance with
the financial warranty under Section 5.02 (A) of the Amended BOT Agreement. The Notice states:
After a careful evaluation and consideration of the matter, including the
reasons cited in your letters dated March 3, May 3, and June 20, 2005, and
upon the recommendation of the Office of the Solicitor General (OSG), the
Department is of the view that your continuing default in complying with the
requisite bank guarantee and/or credit facility, despite repeated notice and
demand, is legally unjustified.
In light of the foregoing considerations and upon the instruction of the
Secretary of Foreign Affairs, the Department hereby formally
TERMINATE(sic) the Subject Amended BOT Agreement dated 5 April
2005 (sic) 23 effective 09 December 2005. Further, and as a consequence of this
termination, the Department formally DEMAND (sic) that you pay within ten
(10) days from receipt hereof, liquidated damages equivalent to the
corresponding performance security bond that you had posted for the MRP/V
Project.
Please be guided accordingly.
On December 14, 2005, BCA sent a letter 24 to the DFA demanding that it immediately reconsider and
revoke its previous notice of termination, otherwise, BCA would be compelled to declare the DFA in
default pursuant to the Amended BOT Agreement. When the DFA failed to respond to said letter, BCA
issued its own Notice of Default dated December 22, 2005 25 against the DFA, stating that if the default
is not remedied within 90 days, BCA will be constrained to terminate the MRP/V Project and hold the
DFA liable for damages.
BCA's request for mutual discussion under Section 19.01 of the Amended BOT Agreement 26 was
purportedly ignored by the DFA and left the dispute unresolved through amicable means within 90 days.
Consequently, BCA filed its Request for Arbitration dated April 7, 2006 27 with the Philippine Dispute
Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the Amended BOT Agreement which
provides: cCaATD
Section 19.02.Failure to Settle Amicably If the Dispute cannot be settled
amicably within ninety (90) days by mutual discussion as contemplated under
Section 19.01 herein, the Dispute shall be settled with finality by an arbitrage
tribunal operating under International Law, hereinafter referred to as
the "Tribunal", under the UNCITRAL Arbitration Rules contained in Resolution
31/98 adopted by the United Nations General Assembly on December 15, 1976,
and entitled "Arbitration Rules on the United Nations Commission on the
International Trade Law".The DFA and the BCA undertake to abide by and
implement the arbitration award. The place of arbitration shall be Pasay City,
Philippines, or such other place as may mutually be agreed upon by both
parties. The arbitration proceeding shall be conducted in the English
language. 28
As alleged in BCA's Request for Arbitration, PDRCI is a non-stock, non-profit organization composed of
independent arbitrators who operate under its own Administrative Guidelines and Rules of Arbitration as
well as under the United Nations Commission on the International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration and other applicable laws and rules. According to BCA, PDRCI can
act as an arbitration center from whose pool of accredited arbitrators both the DFA and BCA may select
their own nominee to become a member of the arbitral tribunal which will render the arbitration award.
BCA's Request for Arbitration filed with the PDRCI sought the following reliefs:
1.A judgment nullifying and setting aside the Notice of Termination dated
December 9, 2005 of Respondent [DFA], including its demand to Claimant [BCA]
to pay liquidated damages equivalent to the corresponding performance
security bond posted by Claimant [BCA];
2.A judgment (a) confirming the Notice of Default dated December 22, 2005
issued by Claimant [BCA] to Respondent [DFA]; and (b) ordering Respondent
[DFA] to perform its obligation under the Amended BOT Agreement dated April
5, 2002 by approving the site of the Central Facility at the Star Mall Complex on
Shaw Boulevard, Mandaluyong City, within five days from receipt of the Arbitral
Award; and
3.A judgment ordering respondent [DFA] to pay damages to Claimant [BCA],
reasonably estimated at P50,000,000.00 as of this date, representing lost
business opportunities; financing fees, costs and commissions; travel expenses;
legal fees and expenses; and costs of arbitration, including the fees of the
arbitrator/s. 29 TAScID
PDRCI, through a letter dated April 26, 2006, 30 invited the DFA to submit its Answer to the Request for
Arbitration within 30 days from receipt of said letter and also requested both the DFA and BCA to
nominate their chosen arbitrator within the same period of time.
Initially, the DFA, through a letter dated May 22, 2006, 31 requested for an extension of time to file its
answer, "without prejudice to jurisdictional and other defenses and objections available to it under the
law." Subsequently, however, in a letter dated May 29, 2006, 32 the DFA declined the request for
arbitration before the PDRCI. While it expressed its willingness to resort to arbitration, the DFA pointed
out that under Section 19.02 of the Amended BOT Agreement, there is no mention of a specific body or
institution that was previously authorized by the parties to settle their dispute. The DFA further claimed
that the arbitration of the dispute should be had before an ad hoc arbitration body, and not before the
PDRCI which has as its accredited arbitrators, two of BCA's counsels of record. Likewise, the DFA insisted
that PPC, allegedly an indispensable party in the instant case, should also participate in the arbitration.
The DFA then sought the opinion of the DOJ on the Notice of Termination dated December 9, 2005 that
it sent to BCA with regard to the MRP/V Project.
In DOJ Opinion No. 35 (2006) dated May 31, 2006, 33 the DOJ concurred with the steps taken by the
DFA, stating that there was basis in law and in fact for the termination of the MRP/V Project. Moreover,
the DOJ recommended the immediate implementation of the project (presumably by a different
contractor) at the soonest possible time.
Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for the latter to provide the
former passports compliant with international standards. The BSP then solicited bids for the supply,
delivery, installation and commissioning of a system for the production of Electronic Passport Booklets or
e-Passports. 34
For BCA, the BSP's invitation to bid for the supply and purchase of e-Passports (the e-Passport Project)
would only further delay the arbitration it requested from the DFA. Moreover, this new e-Passport
Project by the BSP and the DFA would render BCA's remedies moot inasmuch as the e-Passport Project
would then be replacing the MRP/V Project which BCA was carrying out for the DFA. HTCDcS
Thus, BCA filed a Petition for Interim Relief 35 under Section 28 of the Alternative Dispute Resolution Act
of 2004 (R.A. No. 9285), 36 with the Regional Trial Court (RTC) of Pasig City, Branch 71, presided over by
respondent Judge Falcon. In that RTC petition, BCA prayed for the following:
WHEREFORE, BCA respectfully prays that this Honorable Court, before the
constitution of the arbitral tribunal in PDRCI Case No. 30-2006/BGF, grant
petitioner interim relief in the following manner:
(a)upon filing of this Petition, immediately issue an order temporarily
restraining Respondents [DFA and BSP], their agents, representatives,
awardees, suppliers and assigns (i) from awarding a new contract to implement
the Project, or any similar electronic passport or visa project; or (ii) if such
contract has been awarded, from implementing such Project or similar projects
until further orders from this Honorable Court;
(b)after notice and hearing, issue a writ of preliminary injunction ordering
Respondents [DFA and BSP], their agents, representatives, awardees, suppliers
and assigns to desist (i) from awarding a new contract to implement the Project
or any similar electronic passport or visa project; or (ii) if such contract has been
awarded, from implementing such Project or similar projects, and to maintain
the status quo ante pending the resolution on the merits of BCA's Request for
Arbitration; and
(c)render judgment affirming the interim relief granted to BCA until the dispute
between the parties shall have been resolved with finality.
BCA also prays for such other relief, just and equitable under the premises. 37
BCA alleged, in support for its application for a Temporary Restraining Order (TRO), that unless the DFA
and the BSP were immediately restrained, they would proceed to undertake the project together with a
third party to defeat the reliefs BCA sought in its Request for Arbitration, thus causing BCA to suffer
grave and irreparable injury from the loss of substantial investments in connection with the
implementation of the MRP/V Project.
Thereafter, the DFA filed an Opposition (to the Application for Temporary Restraining Order and/or Writ
of Preliminary Injunction) dated January 18, 2007, 38 alleging that BCA has no cause of action against it
as the contract between them is for machine readable passports and visas which is not the same as the
contract it has with the BSP for the supply of electronic passports. The DFA also pointed out that the
Filipino people and the government's international standing would suffer great damage if a TRO would
be issued to stop the e-Passport Project. The DFA mainly anchored its opposition on Republic Act No.
8975, which prohibits trial courts from issuing a TRO, preliminary injunction or mandatory injunction
against the bidding or awarding of a contract or project of the national government. ICHcTD
On January 23, 2007, after summarily hearing the parties' oral arguments on BCA's application for the
issuance of a TRO, the trial court ordered the issuance of a TRO restraining the DFA and the BSP, their
agents, representatives, awardees, suppliers and assigns from awarding a new contract to implement
the Project or any similar electronic passport or visa project, or if such contract has been awarded, from
implementing such or similar projects.39 The trial court also set for hearing BCA's application for
preliminary injunction.
Consequently, the DFA filed a Motion for Reconsideration 40 of the January 23, 2007 Order. The BSP, in
turn, also sought to lift the TRO and to dismiss the petition. In its Urgent Omnibus Motion dated
February 1, 2007, 41 the BSP asserted that BCA is not entitled to an injunction, as it does not have a clear
right which ought to be protected, and that the trial court has no jurisdiction to enjoin the
implementation of the e-Passport Project which, the BSP alleged, is a national government project under
Republic Act No. 8975.
In the hearings set for BCA's application for preliminary injunction, BCA presented as witnesses, Mr.
Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr. from the Independent Verification and
Validation Contractor commissioned by the DFA under the Amended BOT Agreement, and DFA Assistant
Secretary Domingo Lucenario, Jr. as adverse party witness.
The DFA and the BSP did not present any witness during the hearings for BCA's application for
preliminary injunction. According to the DFA and the BSP, the trial court did not have any jurisdiction
over the case considering that BCA did not pay the correct docket fees and that only the Supreme Court
could issue a TRO on the bidding for a national government project like the e-Passport Project pursuant
to the provisions of Republic Act No. 8975. Under Section 3 of Republic Act No. 8975, the RTC could only
issue a TRO against a national government project if it involves a matter of extreme urgency involving a
constitutional issue, such that unless a TRO is issued, grave injustice and irreparable injury will arise.
Thereafter, BCA filed an Omnibus Comment [on Opposition and Supplemental Opposition (To the
Application for Temporary Restraining Order and/or Writ of Preliminary Injunction)] and Opposition [to
Motion for Reconsideration (To the Temporary Restraining Order dated January 23, 2007)] and Urgent
Omnibus Motion [(i) To Lift Temporary Restraining Order; and (ii) To Dismiss the Petition] dated January
31, 2007. 42 The DFA and the BSP filed their separate Replies (to BCA's Omnibus Comment) dated
February 9, 2007 43 and February 13, 2007, 44 respectively.
On February 14, 2007, the trial court issued an Order granting BCA's application for preliminary
injunction, to wit:
WHEREFORE, in view of the above, the court resolves that it has jurisdiction
over the instant petition and to issue the provisional remedy prayed for, and
therefore, hereby GRANTS petitioner's [BCA's] application for preliminary
injunction. Accordingly, upon posting a bond in the amount of Ten Million Pesos
(P10,000,000.00), let a writ of preliminary injunction issue ordering respondents
[DFA and BSP], their agents, representatives, awardees, suppliers and assigns to
desist (i) from awarding a new contract to implement the project or any similar
electronic passport or visa project or (ii) if such contract has been awarded from
implementing such project or similar projects.
The motion to dismiss is denied for lack of merit. The motions for
reconsideration and to lift temporary restraining Order are now moot and
academic by reason of the expiration of the TRO. 45 CTAIHc
On February 16, 2007, BCA filed an Amended Petition, 46 wherein paragraphs 3.3 (b) and 4.3 were
modified to add language to the effect that unless petitioners were enjoined from awarding the e-
Passport Project, BCA would be deprived of its constitutionally-protected right to perform its contractual
obligations under the original and amended BOT Agreements without due process of law. Subsequently,
on February 26, 2007, the DFA and the BSP received the Writ of Preliminary Injunction dated February
23, 2007.
Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition for Certiorari 47 and prohibition
under Rule 65 of the Rules of Court with a prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction, imputing grave abuse of discretion on the trial court when it
granted interim relief to BCA and issued the assailed Order dated February 14, 2007 and the writ of
preliminary injunction dated February 23, 2007.
The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction dated March 5, 2007. 48
On March 12, 2007, the Court required BCA to file its comment on the said petition within ten days from
notice and granted the Office of the Solicitor General's urgent motion for issuance of a TRO and/or writ
of preliminary injunction, 49 thus:
After deliberating on the petition for certiorari and prohibition with temporary
restraining order and/or writ of preliminary injunction assailing the Order dated
14 February 2007 of the Regional Trial Court, Branch 71, Pasig City, in Civil Case
No. 71079, the Court, without necessarily giving due course thereto, resolves to
require respondents to COMMENT thereon (not to file a motion to dismiss)
within ten (10) days from notice.
The Court further resolves to GRANT the Office of the Solicitor General's urgent
motion for issuance of a temporary restraining order and/or writ of preliminary
injunction dated 05 March 2007 and ISSUE a TEMPORARY RESTRAINING
ORDER, as prayed for, enjoining respondents from implementing the assailed
Order dated 14 February 2007 and the Writ of Preliminary Injunction dated 23
February 2007, issued by respondent Judge Franco T. Falcon in Civil Case No.
71079 entitled BCA International Corporation vs. Department of Foreign Affairs
and Bangko Sentral ng Pilipinas, and from conducting further proceedings in
said case until further orders from this Court. TAcSaC
BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO, 50 to which the DFA and the BSP
filed their Reply dated August 14, 2007. 51
In a Resolution dated June 4, 2007, 52 the Court denied BCA's motion to lift TRO. BCA filed another
Urgent Omnibus Motion dated August 17, 2007, for the reconsideration of the Resolution dated June 4,
2007, praying that the TRO issued on March 12, 2007 be lifted and that the petition be denied.
In a Resolution dated September 10, 2007, 53 the Court denied BCA's Urgent Omnibus Motion and gave
due course to the instant petition. The parties were directed to file their respective memoranda within
30 days from notice of the Court's September 10, 2007 Resolution.
Petitioners DFA and BSP submit the following issues for our consideration:
ISSUES
I
WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE ISSUED THE
ASSAILED ORDER, WHICH EFFECTIVELY ENJOINED THE IMPLEMENTATION OF
THE E-PASSPORT PROJECT A NATIONAL GOVERNMENT PROJECT UNDER
REPUBLIC ACT NO. 8975.
II
WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN GRANTING
RESPONDENT BCA'S "INTERIM RELIEF" INASMUCH AS:
(I)RESPONDENT BCA HAS NOT ESTABLISHED A CLEAR RIGHT THAT
CAN BE PROTECTED BY AN INJUNCTION; AND
(II)RESPONDENT BCA HAS NOT SHOWN THAT IT WILL SUSTAIN
GRAVE AND IRREPARABLE INJURY THAT MUST BE
PROTECTED BY AN INJUNCTION. ON THE CONTRARY, IT IS
THE FILIPINO PEOPLE, WHO PETITIONERS PROTECT, THAT
WILL SUSTAIN SERIOUS AND SEVERE INJURY BY THE
INJUNCTION. 54
At the outset, we dispose of the procedural objections of BCA to the petition, to wit: (a) petitioners did
not follow the hierarchy of courts by filing their petition directly with this Court, without filing a motion
for reconsideration with the RTC and without filing a petition first with the Court of Appeals; (b) the
person who verified the petition for the DFA did not have personal knowledge of the facts of the case
and whose appointment to his position was highly irregular; and (c) the verification by the Assistant
Governor and General Counsel of the BSP of only selected paragraphs of the petition was with the
purported intent to mislead this Court. IDaCcS
Although the direct filing of petitions for certiorari with the Supreme Court is discouraged when litigants
may still resort to remedies with the lower courts, we have in the past overlooked the failure of a party
to strictly adhere to the hierarchy of courts on highly meritorious grounds. Most recently, we relaxed the
rule on court hierarchy in the case of Roque, Jr. v. Commission on Elections, 55 wherein we held:
The policy on the hierarchy of courts, which petitioners indeed failed to
observe, is not an iron-clad rule. For indeed the Court has full discretionary
power to take cognizance and assume jurisdiction of special civil actions
for certiorari and mandamus filed directly with it for exceptionally compelling
reasons or if warranted by the nature of the issues clearly and specifically
raised in the petition. 56 (Emphases ours.)
The Court deems it proper to adopt a similarly liberal attitude in the present case in consideration
of the transcendental importance of an issue raised herein. This is the first time that the Court is
confronted with the question of whether an information and communication technology project,
which does not conform to our traditional notion of the term "infrastructure," is covered by the
prohibition on the issuance of court injunctions found in Republic Act No. 8975, which is entitled
"An Act to Ensure the Expeditious Implementation and Completion of Government Infrastructure
Projects by Prohibiting Lower Courts from Issuing Temporary Restraining Orders, Preliminary
Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for Violations Thereof, and
for Other Purposes." Taking into account the current trend of computerization and modernization
of administrative and service systems of government offices, departments and agencies, the
resolution of this issue for the guidance of the bench and bar, as well as the general public, is both
timely and imperative.
Anent BCA's claim that Mr. Edsel T. Custodio (who verified the Petition on behalf of the DFA) did not
have personal knowledge of the facts of the case and was appointed to his position as Acting Secretary
under purportedly irregular circumstances, we find that BCA failed to sufficiently prove such allegations.
In any event, we have previously held that "[d]epending on the nature of the allegations in the petition,
the verification may be based either purely on personal knowledge, or entirely on authentic records, or
on both sources." 57 The alleged lack of personal knowledge of Mr. Custodio (which, as we already
stated, BCA failed to prove) would not necessarily render the verification defective for he could have
verified the petition purely on the basis of authentic records.
As for the assertion that the partial verification of Assistant Governor and General Counsel Juan de
Zuniga, Jr. was for the purpose of misleading this Court, BCA likewise failed to adduce evidence on this
point. Good faith is always presumed. Paragraph 3 of Mr. Zuniga's verification indicates that his partial
verification is due to the fact that he is verifying only the allegations in the petition peculiar to the BSP.
We see no reason to doubt that this is the true reason for his partial or selective verification. HACaSc
In sum, BCA failed to successfully rebut the presumption that the official acts (of Mr. Custodio and Mr.
Zuniga) were done in good faith and in the regular performance of official duty. 58 Even assuming the
verifications of the petition suffered from some defect, we have time and again ruled that "[t]he ends of
justice are better served when cases are determined on the merits after all parties are given full
opportunity to ventilate their causes and defenses rather than on technicality or some procedural
imperfections." 59 In other words, the Court may suspend or even disregard rules when the demands of
justice so require. 60
We now come to the substantive issues involved in this case.
On whether the trial court had jurisdiction
to issue a writ of preliminary injunction in
the present case
In their petition, the DFA and the BSP argue that respondent Judge Falcon gravely abused his discretion
amounting to lack or excess of jurisdiction when he issued the assailed orders, which effectively enjoined
the bidding and/or implementation of the e-Passport Project. According to petitioners, this violated the
clear prohibition under Republic Act No. 8975 regarding the issuance of TROs and preliminary injunctions
against national government projects, such as the e-Passport Project.
The prohibition invoked by petitioners is found in Section 3 of Republic Act No. 8975, which reads:
Section 3.Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. No court,
except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity, whether
public or private, acting under the government's direction, to restrain, prohibit
or compel the following acts:
(a)Acquisition, clearance and development of the right-of-way
and/or site or location of any national government
project;
(b)Bidding or awarding of contract/project of the national
government as defined under Section 2 hereof;
(c)Commencement, prosecution, execution, implementation,
operation of any such contract or project;
(d)Termination or rescission of any such contract/project; and
(e)The undertaking or authorization of any other lawful activity
necessary for such contract/project. cACHSE
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those
claiming to have rights through such bidders involving such contract/project.
This prohibition shall not apply when the matter is of extreme urgency involving
a constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The applicant shall file a bond, in
an amount to be fixed by the court, which bond shall accrue in favor of the
government if the court should finally decide that the applicant was not entitled
to the relief sought.
If after due hearing the court finds that the award of the contract is null and
void, the court may, if appropriate under the circumstances, award the contract
to the qualified and winning bidder or order a rebidding of the same, without
prejudice to any liability that the guilty party may incur under existing laws.
From the foregoing, it is indubitable that no court, aside from the Supreme Court, may enjoin a "national
government project" unless the matter is one of extreme urgency involving a constitutional issue such
that unless the act complained of is enjoined, grave injustice or irreparable injury would arise.
What then are the "national government projects" over which the lower courts are without jurisdiction
to issue the injunctive relief as mandated by Republic Act No. 8975?
Section 2 (a) of Republic Act No. 8975 provides:
Section 2.Definition of Terms.
(a)"National government projects" shall refer to all current and future national
government infrastructure, engineering works and service contracts, including
projects undertaken by government-owned and -controlled corporations, all
projects covered by Republic Act No. 6975, as amended by Republic Act No.
7718, otherwise known as the Build-Operate-and-Transfer Law, and other
related and necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation, construction,
completion, operation, maintenance, improvement, repair and rehabilitation,
regardless of the source of funding.
As petitioners themselves pointed out, there are three types of national government projects
enumerated in Section 2 (a), to wit:
(a)current and future national government infrastructure projects,
engineering works and service contracts, including projects
undertaken by government-owned and -controlled corporations;
(b)all projects covered by R.A. No. 6975, as amended by R.A. No. 7718, or the
Build-Operate-and-Transfer (BOT) Law; and
(c)other related and necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation,
construction, completion, operation, maintenance, improvement
repair and rehabilitation, regardless of the source of funding. EcHIAC
Under Section 2 (a) of the BOT Law as amended by Republic Act No. 7718, 61 private sector
infrastructure or development projects are those normally financed and operated by the public sector
but which will now be wholly or partly implemented by the private sector, including but not limited
to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation,
telecommunications, railroads and railways, transport systems, land reclamation projects, industrial
estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology networks and database
infrastructure, education and health facilities, sewerage, drainage, dredging, and other infrastructure
and development projects as may be authorized by the appropriate agency.
In contrast, Republic Act No. 9184, 62 also known as the Government Procurement Reform Act, defines
infrastructure projects in Section 5 (k) thereof in this manner:
(k)Infrastructure Projects include the construction, improvement,
rehabilitation, demolition, repair, restoration or maintenance of roads and
bridges, railways, airports, seaports, communication facilities, civil works
components of information technology projects, irrigation, flood control and
drainage, water supply, sanitation, sewerage and solid waste management
systems, shore protection, energy/power and electrification facilities, national
buildings, school buildings, hospital buildings and other related construction
projects of the government. (Emphasis supplied.)
In the present petition, the DFA and the BSP contend that the bidding for the supply, delivery,
installation and commissioning of a system for the production of Electronic Passport Booklets, is a
national government project within the definition of Section 2 of Republic Act No. 8975. Petitioners also
point to the Senate deliberations on Senate Bill No. 2038 63 (later Republic Act No. 8975) which allegedly
show the legislative's intent to expand the scope and definition of national government projects to cover
not only the infrastructure projects enumerated in Presidential Decree No. 1818, but also future projects
that may likewise be considered national government infrastructure projects, like the e-Passport Project,
to wit:
Senator Cayetano. . . . Mr. President, the present bill, the Senate Bill No. 2038,
is actually an improvement of P.D. No. 1818 and definitely not a repudiation of
what I have earlier said, as my good friend clearly stated. But this is really an
effort to improve both the scope and definition of the term "government
projects" and to ensure that lower court judges obey and observe this
prohibition on the issuance of TROs on infrastructure projects of the
government.
xxx xxx xxx
Senator Cayetano. That is why, Mr. President, I did try to explain why I would
accept the proposed amendment, meaning the totality of the repeal of P.D.
1818 which is not found in the original version of the bill, because of my earlier
explanation that the definition of the term 'government infrastructure project'
covers all of those enumerated in Section 1 of P.D. No. 1818. And the reason for
that, as we know, is we do not know what else could be considered government
infrastructure project in the next 10 or 20 years. ITcCSA
. . . So, using the Latin maxim of expression unius est exclusion alterius, which
means what is expressly mentioned is tantamount to an express exclusion of
the others, that is the reason we did not include particularly an enumeration of
certain activities of the government found in Section 1 of P.D. No. 1818.
Because to do that, it may be a good excuse for a brilliant lawyer to say 'Well,
you know, since it does not cover this particular activity, ergo, the Regional Trial
Court may issue TRO.
Using the foregoing discussions to establish that the intent of the framers of the law was to broaden the
scope and definition of national government projects and national infrastructure projects, the DFA and
the BSP submit that the said scope and definition had since evolved to include the e-Passport Project.
They assert that the concept of "infrastructure" must now refer to any and all elements that provide
support, framework, or structure for a given system or organization, including information technology,
such as the e-Passport Project.
Interestingly, petitioners represented to the trial court that the e-Passport Project is a BOT project but in
their petition with this Court, petitioners simply claim that the e-Passport Project is a national
government project under Section 2 of Republic Act No. 8975. This circumstance is significant, since
relying on the claim that the e-Passport Project is a BOT project, the trial court ruled in this wise:
The prohibition against issuance of TRO and/or writ of preliminary injunction
under RA 8975 applies only to national government infrastructure project
covered by the BOT Law, (RA 8975, Sec. 3[b] in relation to Sec. 2).
The national government projects covered under the BOT are enumerated
under Sec. 2 of RA 6957, as amended, otherwise known as the BOT Law.
Notably, it includes "information technology networks and database
infrastructure."
In relation to information technology projects, infrastructure projects refer to
the "civil works components" thereof. (R.A. No. 9184 [2003], Sec. 5[c]
{sic}). 64
Respondent BSP's request for bid, for the supply, delivery, installation and
commissioning of a system for the production of Electronic Passport Booklets
appears to be beyond the scope of the term "civil works." Respondents did not
present evidence to prove otherwise. 65 (Emphases ours.)
From the foregoing, it can be gleaned that the trial court accepted BCA's reasoning that, assuming the e-
Passport Project is a project under the BOT Law, Section 2 of the BOT Law must be read in conjunction
with Section 5 (c) of Republic Act No. 9184 or the Government Procurement Reform Act to the effect
that only the civil works component of information technology projects are to be considered
"infrastructure." Thus, only said civil works component of an information technology project cannot be
the subject of a TRO or writ of injunction issued by a lower court. ASTcEa
Although the Court finds that the trial court had jurisdiction to issue the writ of preliminary injunction,
we cannot uphold the theory of BCA and the trial court that the definition of the term "infrastructure
project" in Republic Act No. 9184 should be applied to the BOT Law.
Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein, including the term
"infrastructure project," with the following phrase: "For purposes of this Act, the following terms or
words and phrases shall mean or be understood as follows . . . ."
This Court has stated that the definition of a term in a statute is not conclusive as to the meaning of the
same term as used elsewhere. 66 This is evident when the legislative definition is expressly made for the
purposes of the statute containing such definition. 67
There is no legal or rational basis to apply the definition of the term "infrastructure project" in one
statute to another statute enacted years before and which already defined the types of projects it
covers. Rather, a reading of the two statutes involved will readily show that there is a legislative intent to
treat information technology projects differently under the BOT Law and the Government Procurement
Reform Act.
In the BOT Law as amended by Republic Act No. 7718, the national infrastructure and development
projects covered by said law are enumerated in Section 2 (a) as follows:
SEC. 2.Definition of Terms. The following terms used in this Act shall have
the meanings stated below:
(a)Private sector infrastructure or development projects The
general description of infrastructure or development projects
normally financed and operated by the public sector but which will
now be wholly or partly implemented by the private sector, including
but not limited to, power plants, highways, ports, airports, canals,
dams, hydropower projects, water supply, irrigation,
telecommunications, railroads and railways, transport systems, land
reclamation projects, industrial estates of townships, housing,
government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology
networks and database infrastructure, education and health
facilities, sewerage, drainage, dredging, and other infrastructure and
development projects as may be authorized by the appropriate
agency pursuant to this Act. Such projects shall be undertaken
through contractual arrangements as defined hereunder and such
other variations as may be approved by the President of the
Philippines. EHcaAI
For the construction stage of these infrastructure projects, the
project proponent may obtain financing from foreign and/or
domestic sources and/or engage the services of a foreign and/or
Filipino contractor: Provided, That, in case an infrastructure or a
development facility's operation requires a public utility franchise,
the facility operator must be a Filipino or if a corporation, it must be
duly registered with the Securities and Exchange Commission and
owned up to at least sixty percent (60%) by Filipinos: Provided,
further, That in the case of foreign contractors, Filipino labor shall be
employed or hired in the different phases of construction where
Filipino skills are available:Provided, finally, That projects which
would have difficulty in sourcing funds may be financed partly from
direct government appropriations and/or from Official Development
Assistance (ODA) of foreign governments or institutions not
exceeding fifty percent (50%) of the project cost, and the balance to
be provided by the project proponent. (Emphasis supplied.)
A similar provision appears in the Revised IRR of the BOT Law as amended, to wit:
SECTION 1.3.DEFINITION OF TERMS
For purposes of these Implementing Rules and Regulations, the terms and
phrases hereunder shall be understood as follows:
xxx xxx xxx
v.Private Sector Infrastructure or Development Projects The
general description of infrastructure or Development Projects
normally financed, and operated by the public sector but which will
now be wholly or partly financed, constructed and operated by the
private sector, including but not limited to, power plants, highways,
ports, airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroad and railways, transport
systems, land reclamation projects, industrial estates or townships,
housing, government buildings, tourism projects, public markets,
slaughterhouses, warehouses, solid waste management, information
technology networks and database infrastructure, education and
health facilities, sewerage, drainage, dredging, and other
infrastructure and development projects as may otherwise be
authorized by the appropriate Agency/LGU pursuant to the Act or
these Revised IRR. Such projects shall be undertaken through
Contractual Arrangements as defined herein, including such other
variations as may be approved by the President of the Philippines.
xxx xxx xxx
SECTION 2.2.ELIGIBLE TYPES OF PROJECTS
The Construction, rehabilitation, improvement, betterment, expansion,
modernization, operation, financing and maintenance of the following types of
projects which are normally financed and operated by the public sector which
will now be wholly or partly financed, constructed and operated by the private
sector, including other infrastructure and development projects as may be
authorized by the appropriate agencies, may be proposed under the provisions
of the Act and these Revised IRR, provided however that such projects have a
cost recovery component which covers at least 50% of the Project Cost, or as
determined by the Approving Body: 2005cdasia
xxx xxx xxx
h.Information technology (IT) and data base infrastructure, including
modernization of IT, geo-spatial resource mapping and cadastral
survey for resource accounting and planning. (Underscoring
supplied.)
Undeniably, under the BOT Law, wherein the projects are to be privately funded, the entire information
technology project, including the civil works component and the technological aspect thereof, is
considered an infrastructure or development project and treated similarly as traditional "infrastructure"
projects. All the rules applicable to traditional infrastructure projects are also applicable to information
technology projects. In fact, the MRP/V Project awarded to BCA under the BOT Law appears to include
both civil works (i.e., site preparation of the Central Facility, regional DFA offices and foreign service
posts) and non-civil works aspects (i.e., development, installation and maintenance in the Philippines and
foreign service posts of a computerized passport and visa issuance system, including creation of
databases, storage and retrieval systems, training of personnel and provision of consumables).
In contrast, under Republic Act No. 9184 or the Government Procurement Reform Act, which
contemplates projects to be funded by public funds, the term "infrastructure project" was limited to only
the "civil works component" of information technology projects. The non-civil works component of
information technology projects would be treated as an acquisition of goods or consulting services as the
case may be.
This limited definition of "infrastructure project" in relation to information technology projects under
Republic Act No. 9184 is significant since the IRR of Republic Act No. 9184 has some provisions that are
particular to infrastructure projects and other provisions that are applicable only to procurement of
goods or consulting services. 68
Implicitly, the civil works component of information technology projects are subject to the provisions on
infrastructure projects while the technological and other components would be covered by the
provisions on procurement of goods or consulting services as the circumstances may warrant.
When Congress adopted a limited definition of what is to be considered "infrastructure" in relation to
information technology projects under the Government Procurement Reform Act, legislators are
presumed to have taken into account previous laws concerning infrastructure projects (the BOT Law and
Republic Act No. 8975) and deliberately adopted the limited definition. We can further presume that
Congress had written into law a different treatment for information technology projects financed by
public funds vis-a-vis privately funded projects for a valid legislative purpose.
The idea that the definitions of terms found in the Government Procurement Reform Act were not
meant to be applied to projects under the BOT Law is further reinforced by the following provision in the
IRR of the Government Procurement Reform Act: ScCIaA
Section 1.Purpose and General Coverage
This Implementing Rules and Regulations (IRR) Part A, hereinafter called "IRR-
A," is promulgated pursuant to Section 75 of Republic Act No. 9184 (R.A. 9184),
otherwise known as the "Government Procurement Reform Act" (GPRA), for the
purpose of prescribing the necessary rules and regulations for the
modernization, standardization, and regulation of the procurement activities of
the government. This IRR-A shall cover all fully domestically-funded
procurement activities from procurement planning up to contract
implementation and termination, except for the following:
a)Acquisition of real property which shall be governed by Republic Act No. 8974
(R.A. 8974), entitled "An Act to Facilitate the Acquisition of Right-of-Way Site or
Location for National Government Infrastructure Projects and for Other
Purposes," and other applicable laws; and
b)Private sector infrastructure or development projects and other
procurement covered by Republic Act No. 7718 (R.A. 7718), entitled "An Act
Authorizing the Financing, Construction, Operation and Maintenance of
Infrastructure Projects by the Private Sector, and for Other Purposes," as
amended: Provided, however, That for the portions financed by the
Government, the provisions of this IRR-A shall apply.
The IRR-B for foreign-funded procurement activities shall be the subject of a
subsequent issuance. (Emphases supplied.)
The foregoing provision in the IRR can be taken as an administrative interpretation that the provisions of
Republic Act No. 9184 are inapplicable to a BOT project except only insofar as such portions of the BOT
project that are financed by the government.
Taking into account the different treatment of information technology projects under the BOT Law and
the Government Procurement Reform Act, petitioners' contention the trial court had no jurisdiction to
issue a writ of preliminary injunction in the instant case would have been correct if the e-Passport
Project was a project under the BOT Law as they represented to the trial court.
However, petitioners presented no proof that the e-Passport Project was a BOT project. On the contrary,
evidence adduced by both sides tended to show that the e-Passport Project was a procurement contract
under Republic Act No. 9184.
The BSP's on-line request for expression of interest and to bid for the e-Passport Project 69 from the BSP
website and the newspaper clipping 70 of the same request expressly stated that "[t]he two stage
bidding procedure under Section 30.4 of the Implementing Rules and Regulation (sic) Part-A of Republic
Act No. 9184 relative to the bidding and award of the contract shall apply." During the testimony of DFA
Assistant Secretary Domingo Lucenario, Jr. before the trial court, he admitted that the e-Passport Project
is a BSP procurement project and that it is the "BSP that will pay the suppliers." 71 In petitioners'
Manifestation dated July 29, 2008 72 and the Erratum 73 thereto, petitioners informed the Court that a
contract "for the supply of a complete package of systems design, technology, hardware, software, and
peripherals, maintenance and technical support, ecovers and datapage security laminates for the
centralized production and personalization of Machine Readable Electronic Passport" was awarded to
Francois Charles Oberthur Fiduciaire. In the Notice of Award dated July 2, 2008 74 attached to
petitioners' pleading, it was stated that the failure of the contractor/supplier to submit the required
performance bond would be sufficient ground for the imposition of administrative penalty under Section
69 of the IRR-A of Republic Act No. 9184. STcEaI
Being a government procurement contract under Republic Act No. 9184, only the civil works component
of the e-Passport Project would be considered an infrastructure project that may not be the subject of a
lower court-issued writ of injunction under Republic Act No. 8975.
Could the e-Passport Project be considered as "engineering works or a service contract" or as "related
and necessary activities" under Republic Act No. 8975 which may not be enjoined?
We hold in the negative. Under Republic Act No. 8975, a "service contract" refers to "infrastructure
contracts entered into by any department, office or agency of the national government with private
entities and nongovernment organizations for services related or incidental to the functions and
operations of the department, office or agency concerned." On the other hand, the phrase "other
related and necessary activities" obviously refers to activities related to a government infrastructure,
engineering works, service contract or project under the BOT Law. In other words, to be considered a
service contract or related activity, petitioners must show that the e-Passport Project is an infrastructure
project or necessarily related to an infrastructure project. This, petitioners failed to do for they saw fit
not to present any evidence on the details of the e-Passport Project before the trial court and this Court.
There is nothing on record to indicate that the e-Passport Project has a civil works component or is
necessarily related to an infrastructure project.
Indeed, the reference to Section 30.4 75 of the IRR of Republic Act No. 9184 (a provision specific to the
procurement of goods) in the BSP's request for interest and to bid confirms that the e-Passport Project is
a procurement of goods and not an infrastructure project. Thus, within the context of Republic Act No.
9184 which is the governing law for the e-Passport Project the said Project is not an
infrastructure project that is protected from lower court issued injunctions under Republic Act No. 8975,
which, to reiterate, has for its purpose the expeditious and efficient implementation and completion of
government infrastructure projects.
We note that under Section 28, Republic Act No. 9285 or the Alternative Dispute Resolution Act of
2004, 76 the grant of an interim measure of protection by the proper court before the constitution of an
arbitral tribunal is allowed:
Sec. 28.Grant of Interim Measure of Protection. (a) It is not incompatible
with an arbitration agreement for a party to request, before constitution of the
tribunal, from a Court an interim measure of protection and for the Court to
grant such measure. After constitution of the arbitral tribunal and during
arbitral proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitral tribunal or to the extent
that the arbitral tribunal has no power to act or is unable to act effectively, the
request may be made with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written communication of said
nomination and acceptance has been received by the party making the request.
(a)The following rules on interim or provisional relief shall be
observed:
(1)Any party may request that provisional relief be
granted against the adverse party. HICSaD
(2)Such relief may be granted:
(i)to prevent irreparable loss or injury;
(ii)to provide security for the performance of
any obligation;
(iii)to produce or preserve any evidence; or
(iv)to compel any other appropriate act or
omission.
(3)The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.
(4)Interim or provisional relief is requested by written
application transmitted by reasonable means to the Court
or arbitral tribunal as the case may be and the party
against whom the relief is sought, describing in
appropriate detail the precise relief, the party against
whom the relief is requested, the grounds for the relief,
and the evidence supporting the request.
(5)The order shall be binding upon the parties.
(6)Either party may apply with the Court for assistance in
implementing or enforcing an interim measure ordered
by an arbitral tribunal.
(7)A party who does not comply with the order shall be
liable for all damages resulting from noncompliance,
including all expenses and reasonable attorney's fees,
paid in obtaining the order's judicial enforcement.
Section 3 (h) of the same statute provides that the "Court" as referred to in Article 6 of the Model Law
shall mean a Regional Trial Court.
Republic Act No. 9285 is a general law applicable to all matters and controversies to be resolved through
alternative dispute resolution methods. This law allows a Regional Trial Court to grant interim or
provisional relief, including preliminary injunction, to parties in an arbitration case prior to the
constitution of the arbitral tribunal. This general statute, however, must give way to a special law
governing national government projects, Republic Act No. 8975 which prohibits courts, except the
Supreme Court, from issuing TROs and writs of preliminary injunction in cases involving national
government projects. DCcAIS
However, as discussed above, the prohibition in Republic Act No. 8975 is inoperative in this case, since
petitioners failed to prove that the e-Passport Project is national government project as defined therein.
Thus, the trial court had jurisdiction to issue a writ of preliminary injunction against the e-Passport
Project.
On whether the trial court's issuance of a
writ of injunction was proper
Given the above ruling that the trial court had jurisdiction to issue a writ of injunction and going to the
second issue raised by petitioners, we answer the question: Was the trial court's issuance of a writ of
injunction warranted under the circumstances of this case?
Petitioners' attack on the propriety of the trial court's issuance of a writ of injunction is two-pronged: (a)
BCA purportedly has no clear right to the injunctive relief sought; and (b) BCA will suffer no grave and
irreparable injury even if the injunctive relief were not granted.
To support their claim that BCA has no clear right to injunctive relief, petitioners mainly allege that the
MRP/V Project and the e-Passport Project are not the same project. Moreover, the MRP/V Project
purportedly involves a technology (the 2D optical bar code) that has been rendered obsolete by the
latest ICAO developments while the e-Passport Project will comply with the latest ICAO standards (the
contactless integrated circuit). Parenthetically, and not as a main argument, petitioners imply that BCA
has no clear contractual right under the Amended BOT Agreement since BCA had previously assigned all
its rights and obligations under the said Agreement to PPC.
BCA, on the other hand, claims that the Amended BOT Agreement also contemplated the supply and/or
delivery of e-Passports with the integrated circuit technology in the future and not only the machine
readable passport with the 2D optical bar code technology. Also, it is BCA's assertion that the integrated
circuit technology is only optional under the ICAO issuances. On the matter of its assignment of its rights
to PPC, BCA counters that it had already terminated (purportedly at DFA's request) the assignment
agreement in favor of PPC and that even assuming the termination was not valid, the Amended BOT
Agreement expressly stated that BCA shall remain solidarily liable with its assignee, PPC. ISCHET
Most of these factual allegations and counter-allegations already touch upon the merits of the main
controversy between the DFA and BCA, i.e., the validity and propriety of the termination of the Amended
BOT Agreement (the MRP/V Project) between the DFA and BCA. The Court deems it best to refrain from
ruling on these matters since they should be litigated in the appropriate arbitration or court proceedings
between or among the concerned parties.
One preliminary point, however, that must be settled here is whether BCA retains a right to seek relief
against the DFA under the Amended BOT Agreement in view of BCA's previous assignment of its rights to
PPC. Without preempting any factual finding that the appropriate court or arbitral tribunal on the matter
of the validity of the assignment agreement with PPC or its termination, we agree with BCA that it
remained a party to the Amended BOT Agreement, notwithstanding the execution of the assignment
agreement in favor of PPC, for it was stipulated in the Amended BOT Agreement that BCA would be
solidarily liable with its assignee. For convenient reference, we reproduce the relevant provision of the
Amended BOT Agreement here:
Section 20.15.It is clearly and expressly understood that BCA may assign, cede
and transfer all of its rights and obligations under this Amended BOT Agreement
to PPC [Philippine Passport Corporation], as fully as if PPC is the original
signatory to this Amended BOT Agreement,provided however that BCA shall
nonetheless be jointly and severally liable with PPC for the performance of all
the obligations and liabilities under this Amended BOT Agreement. (Emphasis
supplied.)
Furthermore, a review of the records shows that the DFA continued to address its correspondence
regarding the MRP/V Project to both BCA and PPC, even after the execution of the assignment
agreement. Indeed, the DFA's Notice of Termination dated December 9, 2005 was addressed to Mr.
Bonifacio Sumbilla as President of both BCA and PPC and referred to the Amended BOT Agreement
"executed between the Department of Foreign Affairs (DFA), on one hand, and the BCA International
Corporation and/or the Philippine Passport Corporation (BCA/PPC)." At the very least, the DFA is
estopped from questioning the personality of BCA to bring suit in relation to the Amended BOT
Agreement since the DFA continued to deal with both BCA and PPC even after the signing of the
assignment agreement. In any event, if the DFA truly believes that PPC is an indispensable party to the
action, the DFA may take necessary steps to implead PPC but this should not prejudice the right of BCA
to file suit or to seek relief for causes of action it may have against the DFA or the BSP, for undertaking
the e-Passport Project on behalf of the DFA.
With respect to petitioners' contention that BCA will suffer no grave and irreparable injury so as to justify
the grant of injunctive relief, the Court finds that this particular argument merits consideration. TAScID
The BOT Law as amended by Republic Act No. 7718, provides:
SEC. 7.Contract Termination. In the event that a project is revoked,
cancelled or terminated by the Government through no fault of the project
proponent or by mutual agreement, the Government shall compensate the
said project proponent for its actual expensesincurred in the project plus a
reasonable rate of return thereon not exceeding that stated in the contract as
of the date of such revocation, cancellation or termination: Provided, That the
interest of the Government in this instances shall be duly insured with the
Government Service Insurance System [GSIS] or any other insurance entity duly
accredited by the Office of the Insurance Commissioner: Provided, finally, That
the cost of the insurance coverage shall be included in the terms and conditions
of the bidding referred to above.
In the event that the government defaults on certain major obligations in the
contract and such failure is not remediable or if remediable shall remain
unremedied for an unreasonable length of time, the project
proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over
date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or proportionate
contract cost as defined in the contract. (Emphases supplied.)
In addition, the Amended BOT Agreement, which is the law between and among the parties to it,
pertinently provides:
Section 17.01.Default In case a party commits an act constituting an event
of default, the non-defaulting party may terminate this Amended BOT
Agreement by serving a written notice to the defaulting party specifying the
grounds for termination and giving the defaulting party a period of ninety (90)
days within which to rectify the default. If the default is not remedied within
this period to the satisfaction of the non-defaulting party, then the latter will
serve upon the former a written notice of termination indicating the effective
date of termination.
Section 17.02.Proponents Default If this Amended BOT Agreement
is terminated by reason of the BCA's default, the DFA shall have the following
options:
A.Allow the BCA's unpaid creditors who hold a lien on the MRP/V
Facility to foreclose on the MRP/V Facility. The right of
the BCA's unpaid creditors to foreclose on the MRP/V
Facility shall be valid for the duration of the effectivity of
this Amended BOT Agreement; or,
B.Allow the BCA's unpaid creditors who hold a lien on the MRP/V
Facility to designate a substitute BCA for the MRP/V
Project, provided the designated substitute BCA is
qualified under existing laws and acceptable to the DFA.
This substitute BCA shall hereinafter be referred to as the
"Substitute BCA." The Substitute BCA shall assume all the
BCA's rights and privileges, as well as the obligations,
duties and responsibilities hereunder; provided, however,
that the DFA shall at all times and its sole option, have the
right to invoke and exercise any other remedy which may
be available to the DFA under any applicable laws, rules
and/or regulations which may be in effect at any time and
from time to time. The DFA shall cooperate with the
creditors with a view to facilitating the choice of a
Substitute BCA, who shall take-over the operation,
maintenance and management of the MRP/V Project,
within three (3) months from the BCA's receipt of the
notice of termination from the DFA. The Substituted BCA
shall have all the rights and obligations of the previous
BCA as contained in this Amended BOT Agreement;
or TCAScE
C.Take-over the MRP/V Facility and assume all attendant liabilities
thereof.
D.In all cases of termination due to the default of the BCA, it shall
pay DFA liquidated damages equivalent to the applicable
the(sic) Performance Security.
Section 17.03.DFA's Default If this Amended BOT Agreement is terminated
by the BCA by reason of the DFA's Default, the DFA shall:
A.Be obligated to take over the MRP/V Facility on an "as is, where
is" basis, and shall forthwith assume attendant liabilities
thereof; and
B.Pay liquidated damages to the BCA equivalent to the following
amounts, which may be charged to the insurance
proceeds referred to in Article 12:
(1)In the event of termination prior to completion of the
implementation of the MRP/V
Project, damages shall be paid equivalent to
the value of completed implementation,
minus the aggregate amount of the attendant
liabilities assumed by the DFA, plus ten
percent (10%) thereof. The amount of such
compensation shall be determined as of the
date of the notice of termination and shall
become due and demandable ninety (90) days
after the date of this notice of termination.
Under this Amended BOT Agreement, the
term "Value of the Completed
Implementation" shall mean the aggregate of
all reasonable costs and expenses incurred by
the BCA in connection with, in relation to
and/or by reason of the MRP/V Project,
excluding all interest and capitalized interest,
as certified by a reputable and independent
accounting firm to be appointed by the BCA
and subject to the approval by the DFA, such
approval shall not be unreasonably withheld.
(2)In the event of termination after completion of
design, development, and installation of the
MRP/V Project, just compensation shall be
paid equivalent to the present value of the
net income which the BCA expects to earn or
realize during the unexpired or remaining
term of this Amended BOT Agreement using
the internal rate of return on equity (IRRe)
defined in the financial projections of the BCA
and agreed upon by the parties, which is
attached hereto and made as an integral part
of this Amended BOT Agreement as Schedule
"1". (Emphases supplied.) TASCEc
The validity of the DFA's termination of the Amended BOT Agreement and the determination of the
party or parties in default are issues properly threshed out in arbitration proceedings as provided for by
the agreement itself. However, even if we hypothetically accept BCA's contention that the DFA
terminated the Amended BOT Agreement without any default or wrongdoing on BCA's part, it is not
indubitable that BCA is entitled to injunctive relief.
The BOT Law expressly allows the government to terminate a BOT agreement, even without fault on the
part of the project proponent, subject to the payment of the actual expenses incurred by the proponent
plus a reasonable rate of return.
Under the BOT Law and the Amended BOT Agreement, in the event of default on the part of the
government (in this case, the DFA) or on the part of the proponent, the non-defaulting party is allowed
to terminate the agreement, again subject to proper compensation in the manner set forth in the
agreement.
Time and again, this Court has held that to be entitled to injunctive relief the party seeking such relief
must be able to show grave, irreparable injury that is not capable of compensation.
In Lopez v. Court of Appeals, 77 we held:
Generally, injunction is a preservative remedy for the protection of one's
substantive right or interest. It is not a cause of action in itself but merely a
provisional remedy, an adjunct to a main suit. It is resorted to only when there
is a pressing necessity to avoid injurious consequences which cannot be
remedied under any standard compensation. The application of the injunctive
writ rests upon the existence of an emergency or of a special reason before the
main case can be regularly heard. The essential conditions for granting such
temporary injunctive relief are that the complaint alleges facts which appear to
be sufficient to constitute a proper basis for injunction and that on the entire
showing from the contending parties, the injunction is reasonably necessary to
protect the legal rights of the plaintiff pending the litigation. Two requisites are
necessary if a preliminary injunction is to issue, namely, the existence of a right
to be protected and the facts against which the injunction is to be directed are
violative of said right. In particular, for a writ of preliminary injunction to issue,
the existence of the right and the violation must appear in the allegation of the
complaint and a preliminary injunction is proper only when the plaintiff
(private respondent herein) appears to be entitled to the relief demanded in
his complaint. (Emphases supplied.)
We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro Corporation, 78 where we likewise
opined: cEaCTS
Before a writ of preliminary injunction may be issued, there must be a clear
showing by the complaint that there exists a right to be protected and that the
acts against which the writ is to be directed are violative of the said right. It
must be shown that the invasion of the right sought to be protected is material
and substantial, that the right of complainant is clear and unmistakable and that
there is an urgent and paramount necessity for the writ to prevent serious
damage. Moreover, an injunctive remedy may only be resorted to when there
is a pressing necessity to avoid injurious consequences which cannot be
remedied under any standard compensation. (Emphasis supplied.)
As the Court explained previously in Philippine Airlines, Inc. v. National Labor Relations Commission: 79
An injury is considered irreparable if it is of such constant and frequent
recurrence that no fair and reasonable redress can be had therefor in a court of
law, or where there is no standard by which their amount can be measured
with reasonable accuracy, that is, it is not susceptible of mathematical
computation. It is considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself or the nature of
the right or property injured or when there exists no certain pecuniary
standard for the measurement of damages. (Emphases supplied.)
It is still contentious whether this is a case of termination by the DFA alone or both the DFA and BCA. The
DFA contends that BCA, by sending its own Notice of Default, likewise terminated or "abandoned" the
Amended BOT Agreement. Still, whether this is a termination by the DFA alone without fault on the part
of BCA or a termination due to default on the part of either party, the BOT Law and the Amended BOT
Agreement lay down the measure of compensation to be paid under the appropriate circumstances.
Significantly, in BCA's Request for Arbitration with the PDRCI, it prayed for, among others, "a judgment
ordering respondent [DFA] to pay damages to Claimant [BCA], reasonably estimated at P50,000,000.00
as of [the date of the Request for Arbitration], representing lost business opportunities; financing fees,
costs and commissions; travel expenses; legal fees and expenses; and costs of arbitration, including the
fees of the arbitrator/s." 80 All the purported damages that BCA claims to have suffered by virtue of the
DFA's termination of the Amended BOT Agreement are plainly determinable in pecuniary terms and can
be "reasonably estimated" according to BCA's own words.
Indeed, the right of BCA, a party which may or may not have been in default on its BOT contract, to have
the termination of its BOT contract reversed is not guaranteed by the BOT Law. Even assuming BCA's
innocence of any breach of contract, all the law provides is that BCA should be adequately compensated
for its losses in case of contract termination by the government. HAIDcE
There is one point that none of the parties has highlighted but is worthy of discussion. In seeking to
enjoin the government from awarding or implementing a machine readable passport project or any
similar electronic passport or visa project and praying for the maintenance of the status quo
ante pending the resolution on the merits of BCA's Request for Arbitration, BCA effectively seeks to
enjoin the termination of the Amended BOT Agreement for the MRP/V Project.
There is no doubt that the MRP/V Project is a project covered by the BOT Law and, in turn, considered a
"national government project" under Republic Act No. 8795. Under Section 3 (d) of that statute, trial
courts are prohibited from issuing a TRO or writ of preliminary injunction against the government to
restrain or prohibit the termination or rescission of any such national government project/contract.
The rationale for this provision is easy to understand. For if a project proponent that the government
believes to be in default is allowed to enjoin the termination of its contract on the ground that it is
contesting the validity of said termination, then the government will be unable to enter into a new
contract with any other party while the controversy is pending litigation. Obviously, a court's grant of
injunctive relief in such an instance is prejudicial to public interest since government would be
indefinitely hampered in its duty to provide vital public goods and services in order to preserve the
private proprietary rights of the project proponent. On the other hand, should it turn out that the project
proponent was not at fault, the BOT Law itself presupposes that the project proponent can be
adequately compensated for the termination of the contract. Although BCA did not specifically pray for
the trial court to enjoin the termination of the Amended BOT Agreement and thus, there is no direct
violation of Republic Act No. 8795, a grant of injunctive relief as prayed for by BCA will indirectly
contravene the same statute.
Verily, there is valid reason for the law to deny preliminary injunctive relief to those who seek to contest
the government's termination of a national government contract. The only circumstance under which a
court may grant injunctive relief is the existence of a matter of extreme urgency involving a
constitutional issue, such that unless a TRO or injunctive writ is issued, grave injustice and irreparable
injury will result.
Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer grave and irreparable
injury since the bidding out and award of the e-Passport Project would be tantamount to a violation of
its right against deprivation of property without due process of law under Article III, Section 1 of the
Constitution. We are unconvinced.
Article III, Section 1 of the Constitution provides "[n]o person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws." Ordinarily,
this constitutional provision has been applied to the exercise by the State of its sovereign powers such
as, its legislative power, 81 police power, 82 or its power of eminent domain. 83 TSADaI
In the instant case, the State action being assailed is the DFA's termination of the Amended BOT
Agreement with BCA. Although the said agreement involves a public service that the DFA is mandated to
provide and, therefore, is imbued with public interest, the relationship of DFA to BCA is primarily
contractual and their dispute involves the adjudication of contractual rights. The propriety of the DFA's
acts, in relation to the termination of the Amended BOT Agreement, should be gauged against the
provisions of the contract itself and the applicable statutes to such contract. These contractual and
statutory provisions outline what constitutes due process in the present case. In all, BCA failed to
demonstrate that there is a constitutional issue involved in this case, much less a constitutional issue of
extreme urgency.
As for the DFA's purported failure to appropriate sufficient amounts in its budget to pay for liquidated
damages to BCA, this argument does not support BCA's position that it will suffer grave and irreparable
injury if it is denied injunctive relief. The DFA's liability to BCA for damages is contingent on BCA proving
that it is entitled to such damages in the proper proceedings. The DFA has no obligation to set aside
funds to pay for liquidated damages, or any other kind of damages, to BCA until there is a final and
executory judgment in favor of BCA. It is illogical and impractical for the DFA to set aside a significant
portion of its budget for an event that may never happen when such idle funds should be spent on
providing necessary services to the populace. For if it turns out at the end of the arbitration proceedings
that it is BCA alone that is in default, it would be the one liable for liquidated damages to the DFA under
the terms of the Amended BOT Agreement.
With respect to BCA's allegation that the e-Passport Project is grossly disadvantageous to the Filipino
people since it is the government that will be spending for the project unlike the MRP/V Project which
would have been privately funded, the same is immaterial to the issue at hand. If it is true that the award
of the e-Passport Project is inimical to the public good or tainted with some anomaly, it is indeed a cause
for grave concern but it is a matter that must be investigated and litigated in the proper forum. It has no
bearing on the issue of whether BCA would suffer grave and irreparable injury such that it is entitled to
injunctive relief from the courts.
In all, we agree with petitioners DFA and BSP that the trial court's issuance of a writ of preliminary
injunction, despite the lack of sufficient legal justification for the same, is tantamount to grave abuse of
discretion.
To be very clear, the present decision touches only on the twin issues of (a) the jurisdiction of the trial
court to issue a writ of preliminary injunction as an interim relief under the factual milieu of this case;
and (b) the entitlement of BCA to injunctive relief. The merits of the DFA and BCA's dispute regarding the
termination of the Amended BOT Agreement must be threshed out in the proper arbitration
proceedings. The civil case pending before the trial court is purely for the grant of interim relief since the
main case is to be the subject of arbitration proceedings. STcaDI
BCA's petition for interim relief before the trial court is essentially a petition for a provisional remedy
(i.e., preliminary injunction) ancillary to its Request for Arbitration in PDRCI Case No. 30-2006/BGF. BCA
specifically prayed that the trial court grant it interim relief pending the constitution of the arbitral
tribunal in the said PDRCI case. Unfortunately, during the pendency of this case, PDRCI Case No. 30-
2006/BGF was dismissed by the PDRCI for lack of jurisdiction, in view of the lack of agreement between
the parties to arbitrate before the PDRCI. 84 In Philippine National Bank v. Ritratto Group, Inc., 85we
held:
A writ of preliminary injunction is an ancillary or preventive remedy that may
only be resorted to by a litigant to protect or preserve his rights or interests and
for no other purpose during the pendency of the principal action. The dismissal
of the principal action thus results in the denial of the prayer for the issuance
of the writ. . . . . (Emphasis supplied.)
In view of intervening circumstances, BCA can no longer be granted injunctive relief and the civil
case before the trial court should be accordingly dismissed. However, this is without prejudice to
the parties litigating the main controversy in arbitration proceedings, in accordance with the
provisions of the Amended BOT Agreement, which should proceed with dispatch.
It does not escape the attention of the Court that the delay in the submission of this controversy to
arbitration was caused by the ambiguity in Section 19.02 of the Amended BOT Agreement regarding the
proper body to which a dispute between the parties may be submitted and the failure of the parties to
agree on such an arbitral tribunal. However, this Court cannot allow this impasse to continue
indefinitely. The parties involved must sit down together in good faith and finally come to an
understanding regarding the constitution of an arbitral tribunal mutually acceptable to them.
WHEREFORE, the instant petition is hereby GRANTED. The assailed Order dated February 14, 2007 of the
Regional Trial Court of Pasig in Civil Case No. 71079 and the Writ of Preliminary Injunction dated
February 23, 2007 are REVERSED and SET ASIDE. Furthermore, Civil Case No. 71079 is
hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.












FIRST DIVISION
[G.R. No. 167057. April 11, 2012.]
NERWIN INDUSTRIES CORPORATION, petitioner, vs. PNOC-ENERGY
DEVELOPMENT CORPORATION, and ESTER R. GUERZON, Chairman, Bids and
Awards Committee, respondents.

DECISION
BERSAMIN, J p:
Republic Act No. 8975 1 expressly prohibits any court, except the Supreme Court, from issuing any
temporary restraining order (TRO), preliminary injunction, or preliminary mandatory injunction to
restrain, prohibit or compel the Government, or any of its subdivisions or officials, or any person or
entity, whether public or private, acting under the Government's direction, from: (a) acquiring, clearing,
and developing the right-of-way, site or location of any National Government project; (b) bidding or
awarding of a contract or project of the National Government; (c) commencing, prosecuting, executing,
implementing, or operating any such contract or project; (d) terminating or rescinding any such contract
or project; and (e) undertaking or authorizing any other lawful activity necessary for such contract or
project.
Accordingly, a Regional Trial Court (RTC) that ignores the statutory prohibition and issues a TRO or a writ
of preliminary injunction or preliminary mandatory injunction against a government contract or project
acts contrary to law.
Antecedents
The following antecedents are culled from the assailed decision of the Court of Appeals (CA)
promulgated on October 22, 2004, 2 viz.:
In 1999, the National Electrification Administration ("NEA") published an
invitation to pre-qualify and to bid for a contract, otherwise known as IPB No.
80, for the supply and delivery of about sixty thousand (60,000) pieces of
woodpoles and twenty thousand (20,000) pieces of crossarms needed in the
country's Rural Electrification Project. The said contract consisted of four (4)
components, namely: PIA, PIB and PIC or woodpoles and P3 or crossarms,
necessary for NEA's projected allocation for Luzon, Visayas and Mindanao. In
response to the said invitation, bidders, such as private respondent [Nerwin],
were required to submit their application for eligibility together with their
technical proposals. At the same time, they were informed that only those who
would pass the standard pre-qualification would be invited to submit their
financial bids.
Following a thorough review of the bidders' qualifications and eligibility, only
four (4) bidders, including private respondent [Nerwin], qualified to participate
in the bidding for the IPB-80 contract. Thereafter, the qualified bidders
submitted their financial bids where private respondent [Nerwin] emerged as
the lowest bidder for all schedules/components of the contract. NEA then
conducted a pre-award inspection of private respondent's [Nerwin's]
manufacturing plants and facilities, including its identified supplier in Malaysia,
to determine its capability to supply and deliver NEA's requirements.
In the Recommendation of Award for Schedules PIA, PIB, PIC and P3 IBP No.
80 [for the] Supply and Delivery of Woodpoles and Crossarmsdated October 4,
2000, NEA administrator Conrado M. Estrella III recommended to NEA's Board
of Directors the approval of award to private respondent [Nerwin] of all
schedules for IBP No. 80 on account of the following: aTEHCc
a.Nerwin is the lowest complying and responsive bidder;
b.The price difference for the four (4) schedules between the bid of
Nerwin Industries (lowest responsive and complying bidder) and the
second lowest bidder in the amount of $1.47 million for the poles
and $0.475 million for the crossarms, is deemed substantial and
extremely advantageous to the government. The price difference is
equivalent to 7,948 pcs. of poles and 20.967 pcs. of crossarms;
c.The price difference for the three (3) schedules between the bids
of Nerwin and the Tri-State Pole and Piling, Inc. approximately in the
amount of $2.36 million for the poles and $0.475 million for the
crossarms are equivalent to additional 12.872 pcs. of poles and
20.967 pcs. of crossarms; and
d.The bidder and manufacturer are capable of supplying the
woodpoles and specified in the bid documents and as based on the
pre-award inspection conducted.
However, on December 19, 2000, NEA's Board of Directors passed Resolution
No. 32 reducing by 50% the material requirements for IBP No. 80"given the time
limitations for the delivery of the materials, . . . , and with the loan closing date
of October 2001 fast approaching". In turn, it resolved to award the four (4)
schedules of IBP No. 80 at a reduced number to private respondent [Nerwin].
Private respondent [Nerwin] protested the said 50% reduction, alleging that the
same was a ploy to accommodate a losing bidder.
On the other hand, the losing bidders Tri State and Pacific Synnergy appeared to
have filed a complaint, citing alleged false or falsified documents submitted
during the pre-qualification stage which led to the award of the IBP-80 project
to private respondent [Nerwin].
Thus, finding a way to nullify the result of the previous bidding, NEA officials
sought the opinion of the Government Corporate Counsel who, among others,
upheld the eligibility and qualification of private respondent [Nerwin].
Dissatisfied, the said officials attempted to seek a revision of the earlier opinion
but the Government Corporate Counsel declared anew that there was no legal
impediment to prevent the award of IPB-80 contract to private respondent
[Nerwin]. Notwithstanding, NEA allegedly held negotiations with other bidders
relative to the IPB-80 contract, prompting private respondent [Nerwin] to file a
complaint for specific performance with prayer for the issuance of an
injunction, which injunctive application was granted by Branch 36 of RTC-Manila
in Civil Case No. 01102000. IaAHCE
In the interim, PNOC-Energy Development Corporation purporting to be under
the Department of Energy, issued Requisition No. FGJ 30904R1 or an invitation
to pre-qualify and to bid for wooden poles needed for its Samar Rural
Electrification Project ("O-ILAW project").
Upon learning of the issuance of Requisition No. FGJ 30904R1 for the O-ILAW Project, Nerwin filed a civil
action in the RTC in Manila, docketed as Civil Case No. 03106921 entitled Nerwin Industries Corporation
v. PNOC-Energy Development Corporation and Ester R. Guerzon, as Chairman, Bids and Awards
Committee, alleging that Requisition No. FGJ 30904R1 was an attempt to subject a portion of the items
covered by IPB No. 80 to another bidding; and praying that a TRO issue to enjoin respondents' proposed
bidding for the wooden poles.
Respondents sought the dismissal of Civil Case No. 03106921, stating that the complaint averred no
cause of action, violated the rule that government infrastructure projects were not to be subjected to
TROs, contravened the mandatory prohibition against non-forum shopping, and the corporate president
had no authority to sign and file the complaint. 3
On June 27, 2003, after Nerwin had filed its rejoinder to respondents' reply, the RTC granted a TRO in
Civil Case No. 03106921. 4 IDSEAH
On July 30, 2003, the RTC issued an order, 5 as follows:
WHEREFORE, for the foregoing considerations, an order is hereby issued by this
Court:
1.DENYING the motion to consolidate;
2.DENYING the urgent motion for reconsideration;
3.DISQUALIFYING Attys. Michael A. Medado, Datu Omar S. Sinsuat
and Mariano H. Paps from appearing as counsel for the
defendants;
4.DECLARING defendants in default;
5.GRANTING the motion for issuance of writ of preliminary
injunction.
Accordingly, let a writ of preliminary injunction issue enjoining the defendant
PNOC-EDC and its Chairman of Bids and Awards Committee Esther R. Guerzon
from continuing the holding of the subject bidding upon the plaintiffs filing of a
bond in the amount of P200,000.00 to answer for any damage or damages
which the defendants may suffer should it be finally adjudged that petitioner is
not entitled thereto, until final determination of the issue in this case by this
Court.
This order shall become effective only upon the posting of a bond by the
plaintiffs in the amount of P200,000.00.
Let a copy of this order be immediately served on the defendants and strict
compliance herein is enjoined. Furnish the Office of the Government Corporate
Counsel copy of this order.
SO ORDERED.
Respondents moved for the reconsideration of the order of July 30, 2003, and also to set aside the order
of default and to admit their answer to the complaint.
On January 13, 2004, the RTC denied respondents' motions for reconsideration, to set aside order of
default, and to admit answer. 6 ITSaHC
Thence, respondents commenced in the Court of Appeals (CA) a special civil action for certiorari (CA-G.R.
SP No. 83144), alleging that the RTC had thereby committed grave abuse of discretion amounting to lack
or excess of jurisdiction in holding that Nerwin had been entitled to the issuance of the writ of
preliminary injunction despite the express prohibition from the law and from the Supreme Court; in
issuing the TRO in blatant violation of the Rules of Court and established jurisprudence; in declaring
respondents in default; and in disqualifying respondents' counsel from representing them. 7
On October 22, 2004, the CA promulgated its decision, 8 to wit:
WHEREFORE, the petition is GRANTED. The assailed Orders dated July 30 and
December 29, 2003 are hereby ANNULED and SET ASIDE. Accordingly, Civil Case
No. 03106921, private respondent's complaint for issuance of temporary
restraining order/writ of preliminary injunction before Branch 37 of the
Regional Trial Court of Manila, is DISMISSED for lack of merit.
SO ORDERED.
Nerwin filed a motion for reconsideration, but the CA denied the motion on February 9, 2005. 9
Issues
Hence, Nerwin appeals, raising the following issues:
I.Whether or not the CA erred in dismissing the case on the basis of Rep. Act
8975 prohibiting the issuance of temporary restraining orders and
preliminary injunctions, except if issued by the Supreme Court, on
government projects.
II.Whether or not the CA erred in ordering the dismissal of the entire case on
the basis of Rep. Act 8975 which prohibits the issuance only of a
preliminary injunction but not injunction as a final remedy.
III.Whether or not the CA erred in dismissing the case considering that it is also
one for damages.
Ruling
The petition fails.
In its decision of October 22, 2004, the CA explained why it annulled and set aside the assailed orders of
the RTC issued on July 20, 2003 and December 29, 2003, and why it altogether dismissed Civil Case No.
03106921, as follows: DcSACE
It is beyond dispute that the crux of the instant case is the propriety of
respondent Judge's issuance of a preliminary injunction, or the earlier TRO, for
that matter.
Respondent Judge gravely abused his discretion in entertaining an application
for TRO/preliminary injunction, and worse, in issuing a preliminary injunction
through the assailed order enjoining petitioners' sought bidding for its O-ILAW
Project. The same is a palpable violation of RA 8975which was approved on
November 7, 2000, thus, already existing at the time respondent Judge issued
the assailed Orders dated July 20 and December 29, 2003.
Section 3 of RA 8975 states in no uncertain terms, thus:
Prohibition on the Issuance of temporary Restraining Order,
Preliminary Injunctions and Preliminary Mandatory Injunctions.
No court, except the Supreme Court, shall issue any temporary
restraining order, preliminary injunction or preliminary mandatory
injunction against the government, or any of its subdivisions,
officials, or any person or entity, whether public or private, acting
under the government's direction, to restrain, prohibit or compel the
following acts:
xxx xxx xxx
(b)Bidding or awarding of contract/project of the national
government as defined under Section 2 hereof; aSCHcA
xxx xxx xxx
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed
by bidders or those claiming to have rights through such bidders
involving such contract/project. This prohibition shall not apply when
the matter is of extreme urgency involving a constitutional issue,
such that unless a temporary restraining order is issued, grave
injustice and irreparable injury will arise. . . .
The said proscription is not entirely new. RA 8975 merely supersedes PD
1818 which earlier underscored the prohibition to courts from issuing
restraining orders or preliminary injunctions in cases involving infrastructure or
National Resources Development projects of, and public utilities operated by,
the government. This law was, in fact, earlier upheld to have such a mandatory
nature by the Supreme Court in an administrative case against a Judge.
Moreover, to bolster the significance of the said prohibition, the Supreme Court
had the same embodied in its Administrative Circular No. 11-2000which
reiterates the ban on issuance of TRO or writs of Preliminary Prohibitory or
Mandatory Injunction in cases involving Government Infrastructure Projects.
Pertinent is the ruling in National Housing Authority vs. Allarde "As regards the
definition of infrastructure projects, the Court stressed inRepublic of the Phil. vs.
Salvador Silverio and Big Bertha Construction: The term 'infrastructure projects'
means 'construction, improvement and rehabilitation of roads, and bridges,
railways, airports, seaports, communication facilities, irrigation, flood control
and drainage, water supply and sewerage systems, shore protection, power
facilities, national buildings, school buildings, hospital buildings and other
related construction projects that form part of the government capital
investment." SDaHEc
Thus, there is nothing from the law or jurisprudence, or even from the facts of
the case, that would justify respondent Judge's blatant disregard of a "simple,
comprehensible and unequivocal mandate (of PD 1818) prohibiting the issuance
of injunctive writs relative to government infrastructure projects." Respondent
Judge did not even endeavor, although expectedly, to show that the instant
case falls under the single exception where the said proscription may not
apply, i.e., when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice
and irreparable injury will arise.
Respondent Judge could not have legally declared petitioner in default because,
in the first place, he should not have given due course to private respondent's
complaint for injunction. Indubitably, the assailed orders were issued with grave
abuse of discretion amounting to lack or excess of jurisdiction.
Perforce, this Court no longer sees the need to resolve the other grounds
proffered by petitioners. 10
The CA's decision was absolutely correct. The RTC gravely abused its discretion, firstly, when it
entertained the complaint of Nerwin against respondents notwithstanding that Nerwin was thereby
contravening the express provisions of Section 3 and Section 4 of Republic Act No. 8975 for its seeking to
enjoin the bidding out by respondents of the O-ILAW Project; and, secondly, when it issued the TRO and
the writ of preliminary prohibitory injunction.
Section 3 and Section 4 of Republic Act No. 8975 provide:
Section 3.Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. No court,
except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity, whether
public or private, acting under the government's direction, to restrain, prohibit
or compel the following acts: SACEca
(a)Acquisition, clearance and development of the right-of-way and/or site or
location of any national government project;
(b)Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof;
(c)Commencement, prosecution, execution, implementation, operation of any
such contract or project;
(d)Termination or rescission of any such contract/project; and
(e)The undertaking or authorization of any other lawful activity necessary for
such contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including but not limited to cases filed by bidders or those
claiming to have rights through such bidders involving such contract/project.
This prohibition shall not apply when the matter is of extreme urgency involving
a constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The applicant shall file a bond, in
an amount to be fixed by the court, which bond shall accrue in favor of the
government if the court should finally decide that the applicant was not entitled
to the relief sought.
If after due hearing the court finds that the award of the contract is null and
void, the court may, if appropriate under the circumstances, award the contract
to the qualified and winning bidder or order a rebidding of the same, without
prejudice to any liability that the guilty party may incur under existing
laws. DHITCc
Section 4.Nullity of Writs and Orders. Any temporary restraining order,
preliminary injunction or preliminary mandatory injunction issued in violation
of Section 3 hereof is void and of no force and effect.
The text and tenor of the provisions being clear and unambiguous, nothing was left for the RTC to do
except to enforce them and to exact upon Nerwin obedience to them. The RTC could not have been
unaware of the prohibition under Republic Act No. 8975 considering that the Court had itself instructed
all judges and justices of the lower courts, through Administrative Circular No. 11-2000, to comply with
and respect the prohibition against the issuance of TROs or writs of preliminary prohibitory or
mandatory injunction involving contracts and projects of the Government.
It is of great relevance to mention at this juncture that Judge Vicente A. Hidalgo, the Presiding Judge of
Branch 37 of the RTC, the branch to which Civil Case No. 03106921 had been raffled, was in fact already
found administratively liable for gross misconduct and gross ignorance of the law as the result of his
issuance of the assailed TRO and writ of preliminary prohibitory injunction. The Court could only fine him
in the amount of P40,000.00 last August 6, 2008 in view of his intervening retirement from the service.
That sanction was meted on him in A.M. No. RTJ-08-2133 entitled Sinsuat v. Hidalgo, 11 where this Court
stated:
The Court finds that, indeed, respondent is liable for gross misconduct. As the
CA explained in its above-stated Decision in the petition forcertiorari,
respondent failed to heed the mandatory ban imposed by P.D. No. 1818 and
R.A. No. 8975 against a government infrastructure project, which the rural
electrification project certainly was. He thereby likewise obstinately disregarded
this Court's various circulars enjoining courts from issuing TROs and injunctions
against government infrastructure projects in line with the proscription under
R.A. No. 8975. Apropos are Gov. Garcia v. Hon. Burgos and National Housing
Authority v. Hon. Allarde wherein this Court stressed that P.D. No. 1818
expressly deprives courts of jurisdiction to issue injunctive writs against the
implementation or execution of a government infrastructure project. DAHEaT
Reiterating the prohibitory mandate of P.D. No. 1818, the Court in Atty. Caguioa
v. Judge Lavia faulted a judge for grave misconduct for issuing a TRO against a
government infrastructure project thus:
. . . It appears that respondent is either feigning a misunderstanding
of the law or openly manifesting a contumacious indifference
thereto. In any case, his disregard of the clear mandate of PD 1818,
as well as of the Supreme Court Circulars enjoining strict compliance
therewith, constitutes grave misconduct and conduct prejudicial to
the proper administration of justice. His claim that the said statute is
inapplicable to his January 21, 1997 Order extending the dubious
TRO is but a contrived subterfuge to evade administrative liability.
In resolving matters in litigation, judges should endeavor
assiduously to ascertain the facts and the applicable laws.
Moreover, they should exhibit more than just a cursory
acquaintance with statutes and procedural rules. Also, they are
expected to keep abreast of and be conversant with the rules and
the circulars which the Supreme Court has adopted and which
affect the disposition of cases before them.
Although judges have in their favor the presumption of regularity
and good faith in the performance of their judicial functions, a
blatant disregard of the clear and unmistakable terms of the law
obviates this presumption and renders them susceptible to
administrative sanctions. (Emphasis and underscoring
supplied) cSATDC
The pronouncements in Caguioa apply as well to respondent.
The questioned acts of respondent also constitute gross ignorance of the
law for being patently in disregard of simple, elementary and well-known rules
which judges are expected to know and apply properly.
IN FINE, respondent is guilty of gross misconduct and gross ignorance of the
law, which are serious charges under Section 8 of Rule 140 of the Rules of
Court. He having retired from the service, a fine in the amount of P40,000 is
imposed upon him, the maximum amount fixed under Section 11 of Rule 140 as
an alternative sanction to dismissal or suspension. 12
Even as the foregoing outcome has rendered any further treatment and discussion of Nerwin's other
submissions superfluous and unnecessary, the Court notes that the RTC did not properly appreciate the
real nature and true purpose of the injunctive remedy. This failing of the RTC presses the Court to use
this decision to reiterate the norms and parameters long standing jurisprudence has set to control the
issuance of TROs and writs of injunction, and to now insist on conformity to them by all litigants and
lower courts. Only thereby may the grave misconduct committed in Civil Case No. 03106921 be avoided.
A preliminary injunction is an order granted at any stage of an action or proceeding prior to the
judgment or final order, requiring a party or a court, agency or person, to refrain from a particular act or
acts. 13 It is an ancillary or preventive remedy resorted to by a litigant to protect or preserve his rights or
interests during the pendency of the case. As such, it is issued only when it is established that:
(a)The applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of
the act or acts complained of, or in requiring the performance of an
act or acts, either for a limited period or perpetually; or
(b)The commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to
the applicant; or aSTECA
(c)A party, court, agency or a person is doing, threatening, or is attempting to
do, or is procuring or suffering to be done, some act or acts probably
in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment
ineffectual. 14
The existence of a right to be protected by the injunctive relief is indispensable. In City Government of
Butuan v. Consolidated Broadcasting System (CBS), Inc., 15 the Court elaborated on this
requirement, viz.:
As with all equitable remedies, injunction must be issued only at the instance of
a party who possesses sufficient interest in or title to the right or the property
sought to be protected. It is proper only when the applicant appears to be
entitled to the relief demanded in the complaint, which must aver the existence
of the right and the violation of the right, or whose averments must in the
minimum constitute a prima facie showing of a right to the final relief sought.
Accordingly, the conditions for the issuance of the injunctive writ are: (a) that
the right to be protected exists prima facie; (b) that the act sought to be
enjoined is violative of that right; and (c) that there is an urgent and paramount
necessity for the writ to prevent serious damage.An injunction will not issue to
protect a right not in esse, or a right which is merely contingent and may
never arise; or to restrain an act which does not give rise to a cause of action;
or to prevent the perpetration of an act prohibited by statute. Indeed, a right,
to be protected by injunction, means a right clearly founded on or granted by
law or is enforceable as a matter of law. 16
Conclusive proof of the existence of the right to be protected is not demanded, however, for, as
the Court has held in Saulog v. Court of Appeals, 17 it is enough that:
. . . for the court to act, there must be an existing basis of facts affording a
present right which is directly threatened by an act sought to be enjoined.
And while a clear showing of the right claimed is necessary, its existence need
not be conclusively established. In fact, the evidence to be submitted to justify
preliminary injunction at the hearing thereon need not be conclusive or
complete but need only be a "sampling" intended merely to give the court an
idea of the justification for the preliminary injunction pending the decision of
the case on the merits. This should really be so since our concern here involves
only the propriety of the preliminary injunction and not the merits of the case
still pending with the trial court.
Thus, to be entitled to the writ of preliminary injunction, the private respondent
needs only to show that it has the ostensible right to the final relief prayed for
in its complaint . . . . 18
In this regard, the Rules of Court grants a broad latitude to the trial courts considering that conflicting
claims in an application for a provisional writ more often than not involve and require a factual
determination that is not the function of the appellate courts. 19 Nonetheless, the exercise of such
discretion must be sound, that is, the issuance of the writ, though discretionary, should be upon the
grounds and in the manner provided by law. 20 When that is done, the exercise of sound discretion by
the issuing court in injunctive matters must not be interfered with except when there is manifest
abuse. 21
Moreover, judges dealing with applications for the injunctive relief ought to be wary of improvidently or
unwarrantedly issuing TROs or writs of injunction that tend to dispose of the merits without or before
trial. Granting an application for the relief in disregard of that tendency is judicially impermissible, 22 for
it is never the function of a TRO or preliminary injunction to determine the merits of a case, 23 or to
decide controverted facts. 24 It is but a preventive remedy whose only mission is to prevent threatened
wrong, 25 further injury, 26 and irreparable harm 27 or injustice 28 until the rights of the parties can be
settled. Judges should thus look at such relief only as a means to protect the ability of their courts to
render a meaningful decision. 29 Foremost in their minds should be to guard against a change of
circumstances that will hamper or prevent the granting of proper reliefs after a trial on the merits. 30 It
is well worth remembering that the writ of preliminary injunction should issue only to prevent the
threatened continuous and irremediable injury to the applicant before the claim can be justly and
thoroughly studied and adjudicated. 31 DEcSaI
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petitioner to pay the
costs of suit.
The Court Administrator shall disseminate this decision to the lower courts for their guidance.
SO ORDERED.
















































SECOND DIVISION
[G.R. No. 156015. August 11, 2005.]
REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in
his capacity as former Chief of the Intelligence Service, Armed Forces of the
Philippines (ISAFP), and former Commanding General, Presidential Security
Group (PSG), and MAJ. DAVID B. DICIANO, in his capacity as an Officer of
ISAFP and former member of the PSG, petitioners, vs. HON. VICTORINO
EVANGELISTA, in his capacity as Presiding Judge, Regional Trial Court, Branch
223, Quezon City, and DANTE LEGASPI, represented by his attorney-in-fact,
Paul Gutierrez, respondents.
The Solicitor General for petitioners.
Adaza & Adaza for private respondent.
Rashid A. Saber for intervenor.

SYLLABUS
1.CIVIL LAW; AGENCY; REVOCATION; ELUCIDATED. Article 1868 of the Civil Code provides that by the
contract of agency, an agent binds himself to render some service or do something in representation or
on behalf of another, known as the principal, with the consent or authority of the latter. A contract of
agency is generally revocable as it is a personal contract of representation based on trust and confidence
reposed by the principal on his agent. As the power of the agent to act depends on the will and license of
the principal he represents, the power of the agent ceases when the will or permission is withdrawn by
the principal. Thus, generally, the agency may be revoked by the principal at will. However, an exception
to the revocability of a contract of agency is when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability is because the agency becomes part of
another obligation or agreement. It is not solely the rights of the principal but also that of the agent and
third persons which are affected. Hence, the law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.
2.REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DISCUSSED. A writ of
preliminary injunction is an ancillary or preventive remedy that is resorted to by a litigant to protect or
preserve his rights or interests and for no other purpose during the pendency of the principal action. It is
issued by the court to prevent threatened or continuous irremediable injury to the applicant before his
claim can be thoroughly studied and adjudicated. Its aim is to preserve the status quo ante until the
merits of the case can be heard fully, upon the applicant's showing of two important conditions, viz.: (1)
the right to be protected prima facie exists; and (2) the acts sought to be enjoined are violative of that
right. Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a writ of preliminary
injunction may be issued when it is established: (a) that the applicant is entitled to the relief demanded,
the whole or part of such relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited period or
perpetually; (b) that the commission, continuance or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or (c) that a party, court, agency or a
person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding,
and tending to render the judgment ineffectual. It is crystal clear that at the hearing for the issuance of a
writ of preliminary injunction, mere prima facie evidence is headed to establish the applicant's rights or
interests in the subject matter of the main action. It is not required that the applicant should conclusively
show that there was a violation of his rights as this issue will still be litigated in the main case. Thus, an
applicant for a writ is required only to show that he has an ostensible right to the final relief prayed for in
his complaint.
3.POLITICAL LAW; ADMINISTRATIVE LAW; JUDGES; PARTIALITY; NOT SUFFICIENTLY ESTABLISHED. We
have carefully examined the records and we find no sufficient basis to hold that respondent judge should
have recused himself from hearing the case. There is no discernible pattern of bias on the rulings of the
respondent judge. Bias and partiality can never be presumed. Bare allegations of partiality will not
suffice in an absence of a clear showing that will overcome the presumption that the judge dispensed
justice without fear or favor. It bears to stress again that a judge's appreciation or misappreciation of the
sufficiency of evidence adduced by the parties, or the correctness of a judge's orders or rulings on the
objections of counsels during the hearing, without proof of malice on the part of respondent judge, is
not sufficient to show bias or partiality. As we held in the case of Webb vs. People, the adverse and
erroneous rulings of a judge on the various motions of a party do not sufficiently prove bias and
prejudice to disqualify him. To be disqualifying, it must be shown that the bias and prejudice stemmed
from an extrajudicial source and result in an opinion on the merits on some basis other than what the
judge learned from his participation in the case. Opinions formed in the course of judicial proceedings,
although erroneous, as long as based on the evidence adduced, do not prove bias or prejudice. We also
emphasized that repeated rulings against a litigant, no matter how erroneously, vigorously and
consistently expressed, do not amount to bias and prejudice which can be a bases for the disqualification
of a judge.
D E C I S I O N
PUNO, J p:
The case at bar stems from a complaint for damages, with prayer for the issuance of a writ of preliminary
injunction, filed by private respondent Dante Legaspi, through his attorney-in-fact Paul Gutierrez, against
petitioners Gen. Jose M. Calimlim, Ciriaco Reyes and Maj. David Diciano before the Regional Trial Court
(RTC) of Quezon City. 1
The Complaint alleged that private respondent Legaspi is the owner of a land located in Bigte,
Norzagaray, Bulacan. In November 1999, petitioner Calimlim, representing the Republic of the
Philippines, and as then head of the Intelligence Service of the Armed Forces of the Philippines and the
Presidential Security Group, entered into a Memorandum of Agreement (MOA) with one Ciriaco Reyes.
The MOA granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan. Petitioner
Diciano signed the MOA as a witness. 2 It was further alleged that thereafter, Reyes, together with
petitioners, started, digging, tunneling and blasting works on the said land of Legaspi. The complaint also
alleged that petitioner Calimlim assigned about 80 military personnel to guard the area and encamp
thereon to intimidate Legaspi and other occupants of the area from going near the subject land.
On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his nephew,
private respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the
treasure hunting activities on Legaspi's land and to file charges against those who may enter it without
the latter's authority. 3 Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the
land.
On February 29, 2000, Gutierrez filed a case for damages and injunction against petitioners for illegally
entering Legaspi's land. He hired the legal services of Atty. Homobono Adaza. Their contract provided
that as legal fees, Atty. Adaza shall be entitled to 30% of Legaspi's share in whatever treasure may be
found in the land. In addition, Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee per court
hearing and defray all expenses for the cost of the litigation. 4 Upon the filing of the complaint, then
Executive Judge Perlita J. Tria Tirona issued a 72-hour temporary restraining order (TRO) against
petitioners.
The case 5 was subsequently raffled to the RTC of Quezon City, Branch 223, then presided by public
respondent Judge Victorino P. Evangelista. On March 2, 2000, respondent judge issued another 72-hour
TRO and a summary hearing for its extension was set on March 7, 2000.
On March 14, 2000, petitioners filed a Motion to Dismiss 6 contending: first, there is no real party-in-
interest as the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as
evidenced by a Deed of Revocation, 7 and, second, Gutierrez failed to establish that the alleged armed
men guarding the area were acting on orders of petitioners. On March 17, 2000, petitioners also filed a
Motion for Inhibition 8 of the respondent judge on the ground of alleged partiality in favor of private
respondent. SATDEI
On March 23, 2000, the trial court granted private respondent's application for a writ of preliminary
injunction on the following grounds: (1) the diggings and blastings appear to have been made on the
land of Legaspi, hence, there is an urgent need to maintain the status quo to prevent serious damage to
Legaspi's land; and, (2) the SPA granted to Gutierrez continues to be valid. 9 The trial court ordered thus:
WHEREFORE, in view of all the foregoing, the Court hereby resolves to GRANT
plaintiff's application for a writ of preliminary injunction. Upon plaintiff's filing
of an injunction bond in the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00), let a Writ of Preliminary Injunction issue enjoining the
defendants as well as their associates, agents or representatives from
continuing to occupy and encamp on the land of the plaintiff LEGASPI as well as
the vicinity thereof; from digging, tunneling and blasting the said land of
plaintiff LEGASPI; from removing whatever treasure may be found on the said
land; from preventing and threatening the plaintiffs and their representatives
from entering the said land and performing acts of ownership; from threatening
the plaintiffs and their representatives as well as plaintiffs' lawyer.
On even date, the trial court issued another Order 10 denying petitioners' motion to dismiss and
requiring petitioners to answer the complaint. On April 4, 2000, it likewise denied petitioners' motion for
inhibition. 11
On appeal, the Court of Appeals affirmed the decision of the trial court. 12
Hence this petition, with the following assigned errors:
I
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE
RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.
II
WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.
III
WHETHER RESPONDENT JUDGE OUGHT TO HAVE INHIBITED HIMSELF FROM
FURTHER PROCEEDING WITH THE CASE.
We find no merit in the petition.
On the first issue, petitioners claim that the special power of attorney of Gutierrez to represent Legaspi
has already been revoked by the latter. Private respondent Gutierrez, however, contends that the
unilateral revocation is invalid as his agency is coupled with interest.
We agree with private respondent. EHTIDA
Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render
some service or do something in representation or on behalf of another, known as the principal, with the
consent or authority of the latter. 13
A contract of agency is generally revocable as it is a personal contract of representation based on trust
and confidence reposed by the principal on his agent. As the power of the agent to act depends on the
will and license of the principal he represents, the power of the agent ceases when the will or permission
is withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will. 14
However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e.,
if a bilateral contract depends upon the agency.15 The reason for its irrevocability is because the agency
becomes part of another obligation or agreement. It is not solely the rights of the principal but also that
of the agent and third persons which are affected. Hence, the law provides that in such cases, the agency
cannot be revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate courts that the agency granted by
Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It is clear from the
records that Gutierrez was given by Legaspi, inter alia, the power to manage the treasure hunting
activities in the subject land; to file any case against anyone who enters the land without authority
from Legaspi; to engage the services of lawyers to carry out the agency; and, to dig for any treasure
within the land and enter into agreements relative thereto. It was likewise agreed upon that Gutierrez
shall be entitled to 40% of whatever treasure may be found in the land. Pursuant to this authority and
to protect Legaspi's land from the alleged illegal entry of petitioners, agent Gutierrez hired the services
of Atty. Adaza to prosecute the case for damages and injunction against petitioners. As payment for
legal services, Gutierrez agreed to assign to Atty. Adaza 30% of Legaspi's share in whatever treasure
may be recovered in the subject land. It is clear that the treasure that may be found in the land is the
subject matter of the agency; that under the SPA, Gutierrez can enter into contract for the legal services
of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of the
agency, i.e., in the treasures that may be found in the land. This bilateral contract depends on the agency
and thus renders it as one coupled with interest, irrevocable at the sole will of the principal
Legaspi. 16 When an agency is constituted as a clause in a bilateral contract, that is, when the agency is
inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal as the
agency shall now follow the condition of the bilateral agreement. 17 Consequently, the Deed of
Revocation executed by Legaspi has no effect. The authority of Gutierrez to file and continue with the
prosecution of the case at bar is unaffected.
On the second issue, we hold that the issuance of the writ of preliminary injunction is justified. A writ of
preliminary injunction is an ancilliary or preventive remedy that is resorted to by a litigant to protect or
preserve his rights or interests and for no other purpose during the pendency of the principal action. 18It
is issued by the court to prevent threatened or continuous irremediable injury to the applicant before his
claim can be thoroughly studied and adjudicated. 19 Its aim is to preserve the status quo ante until the
merits of the case can be heard fully, upon the applicant's showing of two important conditions, viz.: (1)
the right to be protected prima facie exists; and, (2) the acts sought to be enjoined are violative of that
right. 20

Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a writ of preliminary injunction may
be issued when it is established:
(a)that the applicant is entitled to the relief demanded, the whole or part of
such relief consists in restraining the commission or continuance of
the act or acts complained of, or in requiring the performance of an
act or acts, either for a limited period or perpetually;
(b)that the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to
the applicant; or
(c)that a party, court, agency or a person is doing, threatening, or is attempting
to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting
the subject of the action or proceeding, and tending to render the
judgment ineffectual. cHAaCE
It is crystal clear that at the hearing for the issuance of a writ of preliminary injunction, mere prima
facie evidence is needed to establish the applicant's rights or interests in the subject matter of the main
action. 21 It is not required that the applicant should conclusively show that there was a violation of his
rights as this issue will still be fully litigated in the main case. 22 Thus, an applicant for a writ is required
only to show that he has an ostensible right to the final relief prayed for in his complaint. 23
In the case at bar, we find that respondent judge had sufficient basis to issue the writ of preliminary
injunction. It was established, prima facie, that Legaspi has a right to peaceful possession of his
land, pendente lite. Legaspi had title to the subject land. It was likewise established that the diggings
were conducted by petitioners in the enclosed area of Legaspi's land. Whether the land fenced by
Gutierrez and claimed to be included in the land of Legaspi covered an area beyond that which is
included in the title of Legaspi is a factual issue still subject to litigation and proof by the parties in the
main case for damages. It was necessary for the trial court to issue the writ of preliminary injunction
during the pendency of the main case in order to preserve the rights and interests of private
respondents Legaspi and Gutierrez.
On the third issue, petitioners charge that the respondent judge lacked the neutrality of an impartial
judge. They fault the respondent judge for not giving credence to the testimony of their surveyor that
the diggings were conducted outside the land of Legaspi. They also claim that respondent judge's rulings
on objections raised by the parties were biased against them.
We have carefully examined the records and we find no sufficient basis to hold that respondent judge
should have recused himself from hearing the case. There is no discernible pattern of bias on the rulings
of the respondent judge. Bias and partiality can never be presumed. Bare allegations of partiality will not
suffice in an absence of a clear showing that will overcome the presumption that the judge dispensed
justice without fear or favor. 24 It bears to stress again that a judge's appreciation or misappreciation of
the sufficiency of evidence adduced by the parties, or the correctness of a judge's orders or rulings on
the objections of counsels during the hearing, without proof of malice on the part of respondent judge, is
not sufficient to show bias or partiality. As we held in the case of Webb vs. People, 25 the adverse and
erroneous rulings of a judge on the various motions of a party do not sufficiently prove bias and
prejudice to disqualify him. To be disqualifying, it must be shown that the bias and prejudice stemmed
from an extrajudicial source and result in an opinion on the merits on some basis other than what the
judge learned from his participation in the case. Opinions formed in the course of judicial proceedings,
although erroneous, as long as based on the evidence adduced, do not prove bias or prejudice. We also
emphasized that repeated rulings against a litigant, no matter how erroneously, vigorously and
consistently expressed, do not amount to bias and prejudice which can be a bases for the disqualification
of a judge.
Finally, the inhibition of respondent judge in hearing the case for damages has become moot and
academic in view of the latter's death during the pendency of the case. The main case for damages shall
now be heard and tried before another judge.
IN VIEW WHEREOF, the impugned Orders of the trial court in Civil Case No. Q-00-40115, dated March 23
and April 4, 2000, are AFFIRMED. The presiding judge of the Regional Trial Court of Quezon City to whom
Civil Case No. Q-00-40115 was assigned is directed to proceed with dispatch in hearing the main case for
damages. No pronouncement as to costs. CDAHaE
SO ORDERED.





























THIRD DIVISION
[G.R. No. 136114. January 22, 2004.]
LANDBANK OF THE PHILIPPINES, petitioner, vs. CONTINENTAL WATCHMAN
AGENCY INCORPORATED AND THE COURT OF APPEALS, respondents.

D E C I S I O N
SANDOVAL-GUTIERREZ, J p:
We have consistently held that there is no grave abuse of discretion in the issuance of a writ of
preliminary injunction where a party was not deprived of its day in court, as it was heard and had
exhaustively presented all its arguments and defenses. 1 Hence, when contending parties were both
given ample time and opportunity to present their respective evidence and arguments in support of their
opposing contentions, no grave abuse of discretion can be attributed to the trial court which issued the
writ of preliminary injunction, as it is given a generous latitude in this regard, pursuant to Section 4, Rule
58 of the 1997 Rules of Civil Procedure, as amended.
Assailed in this petition for certiorari under Rule 65 of the same Rules is the Decision 2 dated July 31,
1998 of the Court of Appeals in CA-G.R. SP No. 46890, entitled "Land Bank of the Philippines versus Judge
Vivencio S. Baclig and Continental Watchman Agency Incorporated," the dispositive portion of which
reads:
"WHEREFORE, premises considered, the petition is hereby denied due course
and the same DISMISSED. Let the original record of the case be remanded to
the court a quo immediately upon the finality hereof.
"SO ORDERED." 3
On September 28, 1996, Land Bank of the Philippines (LBP), herein petitioner, caused to be published in
the Philippine Daily Inquirer, a newspaper of general circulation, an "Invitation to Pre-Qualify," inviting
reputable security agencies to pre-qualify for security guard services in the different LBP offices,
properties and installations nationwide. Continental Watchmen Agency Incorporated (CWAI), herein
private respondent, and other security agencies responded to the invitation and participated in the
public bidding.
In the bidding proper held on June 10, 1997, all the pre-qualified security agencies, private respondent
included, submitted their individual sealed bid proposals to petitioner's Special Committee for the
Selection of Security Agencies (Bid Committee). Private respondent submitted a bid for three (3) areas,
namely, Area I, Area III, and Area V, all in Luzon.
After all the bids were opened and evaluated, it turned out that private respondent was the lowest
bidder for those three areas.
However, on June 18, 1997, the Bid Committee declared private respondent disqualified because (1) its
bid price was below the monthly salary of a guard prescribed by the Philippine Association of Detective
and Protective Agency Operators, Inc.; and (2) it violated petitioner's Bid Bulletin No. 1 requiring that the
bid price should include night differential pay for all the guards.
Private respondent asked for reconsideration but was denied by the Bid Committee.
Hence, on July 22, 1997, private respondent filed with the Regional Trial Court, Branch 17, Manila, a
petition for injunction and damages with a prayer for a preliminary mandatory injunction against
petitioner LBP, docketed as Civil Case No. 97-84264.
On August 1, 1997, after the hearing wherein both parties presented their respective evidence, the trial
court issued a temporary restraining order (TRO) effective for twenty (20) days. At the same time, the
trial court set for hearing private respondent's application for preliminary injunction. This incident was
heard on August 22, 1997. Thereafter, the trial court issued an Order directing the issuance of a writ of
preliminary injunction, thus: TCaAHI
"WHEREFORE, the petition for the issuance of a writ of preliminary injunction is
hereby granted. Upon the filing of a bond in the sum of Fifty Thousand Pesos
(P50,000.00), Philippine currency, and the approval thereof by the Court, let a
writ issue directing the defendant, its attorneys, representatives and other
persons assisting it, to cease and desist from awarding the contract for security
agencies for Area I, Area III and Area V in Luzon to any security agency, until
further orders from the Court.
"SO ORDERED." 4
Meanwhile, on August 27, 1997, petitioner filed its "Answer with Special and/or Affirmative Defenses
and Compulsory Counterclaim." 5
On September 2, 1997, a writ of preliminary injunction 6 was accordingly issued.
On January 12, 1998, the trial court issued an Order denying petitioner's motion for reconsideration of
its Order directing the issuance of a writ of preliminary injunction.
Consequently, on February 23, 1998, petitioner filed with respondent Court of Appeals a "Petition
for Certiorari and Prohibition with Preliminary Injunction and Temporary Restraining Order" under Rules
58 and 65 of the 1997 Rules of Civil Procedure, as amended, alleging that the two Orders of the trial
court dated August 22, 1997 and January 12, 1998 were issued without jurisdiction or with grave abuse
of discretion. 7
On July 31, 1999, the Court of Appeals issued its assailed Decision dismissing the petition, thus:
"WHEREFORE, premises considered, the petition is hereby denied due course
and the same DISMISSED. Let the original record of the case be remanded to
the court a quo immediately upon the finality hereof.
"SO ORDERED." 8
The Court of Appeals ratiocinated as follows:
"After a fine filtration of the record ('expediente') and a close look at the two
assailed orders, We agree with the private respondent that the respondent
court did not commit any grave abuse of discretion in issuing them. At this
juncture, it is well to state that the special civil action forcertiorari is a remedy
designed for the correction of errors of jurisdiction and not errors of judgment
(Ramnani vs. Court of Appeals, 221 SCRA 582). It will not even issue for simple
abuse of discretion (University of the Philippines vs. Civil Service Commission,
228 SCRA 207). Parenthetically, grave abuse of discretion implies such
capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction (Planters Products, Inc. vs. Court of Appeals, 193 SCRA 563), or in
other words, where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility and it must be so patent and gross
as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law (Bustamante
vs. Commission on Audit, 216 SCRA 134; Philippine Airlines, Inc.vs. Confesor, 231
SCRA 41). In the case at bench, the record does not show such kind of actuation
on the part of the respondent judge. As long as a court or quasi-judicial body
acts within its jurisdiction, any alleged errors committed in the exercise of its
jurisdiction will amount to nothing more than errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari (New
York Marine Managers, Inc. vs.Court of Appeal, 249 SCRA 416; Commissioner on
Internal Revenue vs. Court of Appeals, 257 SCRA 200).
"Furthermore, this being a petition for certiorari, factual matters are not proper
for consideration (Insular Bank of Asia and America vs. Court of Appeals, 228
SCRA 420; Navarro vs. Commission on Elections, 228 SCRA 596), for this Court
has to confine itself to the issue of whether or not the respondent court lacked
or exceeded its jurisdiction or committed grave abuse of discretion (San Pedro
vs. Court of Appeals, 253 SCRA 145) it cannot review conclusion of fact (Holy
Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358). Anyway, it should be
stated that the grant or denial of an injunction rests on the sound discretion of
the trial court (Technology Developers, Inc. vs. Court of Appeals, 193 SCRA
147; Avila vs.Tapucar, 201 SCRA 148) and the same will not be interfered
with by appellate courts except on a clear abuse of discretion (S & A Gaisano
Incorporated vs. Hidalgo, 19 SCRA 224), which situation appeared wanting in
the case at bench. We took note that the respondent court conducted hearings
before issuing a writ of preliminary injunction. More. The private respondent
was even required to put a bond to answer for possible damages which may
arise from the issuance of said writ of preliminary injunction. On this score, We
wish to advert to Supreme Court rulings that erroneous conclusions or errors of
judgment or of procedure, not relating to the court's jurisdiction or involving
grave abuse of discretion, are not reviewable by certiorari under Rule 65 of the
Rules of Court (Rodriguez vs. Court of Appeals, 245 SCRA 150; Commissioner on
Internal Revenue vs. Court of Appeals, supra; Santiago Land Development
Company vs. Court of Appeals, 258 SCRA 535). For, as already stated, such
errors are reviewable by timely appeal.
"Similarly, the special civil action of prohibition must be based on jurisdictional
grounds against the trial court's judgment (Vda. De Suan vs. Unson, 185 SCRA
437). It is designed to prevent the use of the strong arm of the law in an
oppressive or vindictive manner (Planas vs. Gil, 67 SCRA 62;Lopez vs. City Judge,
18 SCRA 616). To justify its issuance, there are certain requisites which must be
complied with (Guingona vs. City Fiscal of Manila, 137 SCRA 597), which
requisites the petitioner failed to comply. Also, said recourse is available only
when there is no appeal or any plain, speedy or adequate remedy in the
ordinary course of law (Pilar Development Corporation vs. Court of Appeal, 225
SCRA 549). Undeniably, appeal will be available in the case at bench." 9
Petitioner filed a motion for reconsideration but was denied by the Appellate Court in its Resolution
dated September 22, 1998.
Hence, the present petition for certiorari alleging:
"IT IS MOST RESPECTFULLY SUBMITTED THAT THE HONORABLE COURT OF
APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT PROMULGATED AND
ISSUED THE DECISION DATED JULY 31, 1998 AND RESOLUTION DATED
SEPTEMBER 22, 1998 UPHOLDING THE QUESTIONED ORDERS OF THE
RESPONDENT COURT IN CIVIL CASE NO. 97-84264 DATED AUGUST 22, 1997
AND JANUARY 12, 1998."10

Petitioner submits inter alia that the Court of Appeals, by dismissing its petition, in effect compelled it to
enter into a contract for security guard services with private respondent and as a result, Civil Case No.
97-84264 has been prematurely resolved.
Private respondent, on the other hand, counters that respondent Court of Appeals did not act with grave
abuse of discretion in affirming the Order of the trial court directing the issuance of the writ of
preliminary injunction. In the first place, the Order was issued after a hearing wherein the parties were
given the opportunity to present their respective evidence. Secondly, private respondent, being the
lowest bidder, has a clear right to an injunction. Lastly, whatever error the trial court may have
committed is only an error of judgment, not correctible by certiorari.
The petition must fail. EaCDAT
First, petitioner's remedy is an appeal to this Court from the Court of Appeals' Decision dated July 31,
1998 by way of a petition for review on certiorariunder Rule 45. Instead, it filed this petition
for certiorari under Rule 65 only on November 18, 1998 or forty three (43) days after it received the
Appellate Court's Decision denying its motion for reconsideration. Apparently, petitioner resorted
to certiorari because it failed to interpose an appeal seasonably. This, of course, is a procedural flaw.
Time and again we have reminded members of the bench and bar that the special civil action
of certiorari cannot be used as a substitute for a lost appeal. 11
Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the
interest of justice, has the discretion to treat a petition for certiorari as a petition for review
on certiorari under Rule 45, especially if filed within the reglementary period for filing a petition for
review. 12 In this case, however, we find no reason to justify a liberal application of the Rules.
Even assuming that the present petition is a proper remedy, still it is dismissible. Based on the evidence
presented by private respondent, the trial court found that all the requisites for the issuance of an
injunctive writ were present. 13 Although petitioner presented evidence to rebut private respondent's
assertions, those will be better assessed and considered in the trial proper. The assailed injunctive writ is
not a judgment on the merits of the case, contrary to the submission of petitioner, for a writ of
preliminary injunction is generally based solely on initial and incomplete evidence. The evidence
submitted during the hearing of the incident is not conclusive or complete for only a "sampling" is
needed to give the trial court an idea of the justification for the preliminary injunction pending the
decision of the case on the merits. 14 As such, the findings of fact and opinion of a court when issuing
the writ of preliminary injunction are interlocutory in nature and made before the trial on the merits is
commenced or terminated. Furthermore, it does not necessarily proceed that when a writ of preliminary
injunction is issued, a final injunction will follow, as erroneously argued by petitioner. There are vital
facts that have yet to be presented during the trial which may not be obtained or presented during the
hearing on the application for the injunctive writ. 15 Clearly, petitioner's contention that the trial court
and the Court of Appeals had already disposed of the main case lacks merit.
Also, the sole object of a preliminary injunction is to preserve the status quo until the merits of the case
can be heard. 16 Here, after evaluating the evidence presented by both contending parties, the trial
court held that justice would be better served if the status quo is preserved until the final determination
of the merits of the case. We find nothing whimsical, arbitrary, or capricious in such ruling.
Significantly, the rule is well-entrenched that the issuance of the writ of preliminary injunction rests
upon the sound discretion of the trial court. It bears reiterating that Section 4 of Rule 58 gives generous
latitude to the trial courts in this regard for the reason that conflicting claims in an application for a
provisional writ more often than not involve a factual determination which is not the function of the
appellate courts. Hence, the exercise of sound judicial discretion by the trial court in injunctive matters
must not be interfered with except when there is manifest abuse, 17 which is wanting in the present
case.
In sum, we find the petition bereft of merit. It is not the proper remedy and even if it is, no grave abuse
of discretion was committed by respondent Court of Appeals.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.










































THIRD DIVISION
[G.R. No. 175145. March 28, 2008.]
SPOUSES ALFREDO and SHIRLEY YAP, petitioners, vs. INTERNATIONAL
EXCHANGE BANK, 1 SHERIFF RENATO C. FLORA and/or OFFICE OF THE CLERK
OF COURT, REGIONAL TRIAL COURT, MAKATI CITY, respondents.

D E C I S I O N
CHICO-NAZARIO, J p:
Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which
seeks to set aside the Resolution 2 of the Court of Appeals in CA-G.R. SP No. 95074 dated 11 July 2006
which dismissed petitioner-spouses Alfredo and Shirley Yap's petition for certiorari which questioned the
Order 3 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and
dissolving the Writ of Preliminary Injunction dated 13 August 2001, and its Resolution 4 dated 9 October
2006 denying petitioners' Motion for Reconsideration.
The factual antecedents are as follows:
Respondent International Exchange Bank (iBank, for brevity) filed a collection suit with application for
the issuance of a writ of preliminary attachment against Alberto Looyuko and Jimmy T. Go in the RTC of
Makati. The case was raffled to Branch 150 and was docketed as Civil Case No. 98-791. On 7 October
1999, the trial court rendered a Decision in favor of respondent iBank and found Alberto Looyuko and
Jimmy T. Go liable, ordering them to pay the amount of ninety-six million pesos (P96,000,000.00), plus
penalty.
A Writ of Execution on the judgment against Mr. Looyuko was implemented. Thereafter, a Writ of
Execution was issued against Mr. Go for his part of the liability. Thereupon, respondent Renato C. Flora,
Sheriff of Branch 150 of the RTC of Makati City, issued a Notice of Sheriff's Sale on 12 May 2000 notifying
all the parties concerned, as well as the public in general, that the following real properties, among other
properties, covered by Transfer Certificates of Title (TCTs) No. PT-66751, No. PT-66749, No. 55469 and
No. 45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs
No. 4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, allegedly owned by Mr. Go will be
sold at public auction on 15 June 2000. 5 Said public auction did not push through
On 13 June 2000, petitioner-spouses Alfredo and Shirley Yap filed a Complaint for Injunction with Prayer
for Temporary Restraining Order and/or Preliminary Injunction with the RTC of Pasig City. The case was
docketed as Civil Case No. 67945 and was raffled to Branch 158 thereof. Petitioners sought to stop the
auction sale alleging that the properties covered by TCTs No. PT-66751, No. PT-66749, No. 55469 and No.
45229 of the Registry of Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs No.
4621 and No. 52987 of the Registry of Deeds of Mandaluyong City, are already owned by them by virtue
of Deeds of Absolute Sale 6 executed by Jimmy Go in their favor. They further alleged that respondent
sheriff disregarded their right over the properties despite their execution of an Affidavit of Adverse Claim
to prove their claim over the properties and the publication of a Notice to the Public warning that
various deeds had already been issued in their favor evidencing their right over the same.
A second Notice of Sheriff's Sale dated 30 June 2000 was issued by Sheriff Flora scheduling a public
auction on 24 July 2000 for the afore-mentioned properties. The public auction did not happen anew.
Thereafter, a third Notice of Sheriff's Sale dated 21 July 2000 scheduling a public auction on 22 August
2000 was issued.
On 21 August 2000, the RTC of Pasig City, Branch 158, issued an Order in Civil Case No. 67945 denying
petitioners' application for a writ of preliminary injunction. 7
As scheduled, the public auction took place on 22 August 2000 for which respondent sheriff issued a
Certificate of Sale stating that the subject properties had been sold at public auction in favor of
respondent iBank, subject to the third-party claims of petitioners. 8
Petitioners filed with the RTC of Pasig City the instant case for Annulment of Sheriff's Auction Sale
Proceedings and Certificate of Sale against iBank, the Clerk of Court and Ex-Officio Sheriff of RTC Makati
City, and Sheriff Flora. The case was docketed as Civil Case No. 68088 and was raffled to Branch 264. The
Complaint was amended to include a prayer for the issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction. 9
Engracio M. Escarias, Jr., Clerk of Court VII and Ex-Officio Sheriff of RTC Makati City, filed his Answer
while respondents iBank and Sheriff Flora filed an Omnibus Motion (Motion to Refer the Complaint to
the Office of the Clerk of Court for Raffle in the Presence of Adverse Party and Motion to Dismiss) dated
17 October 2000. 10
In an Order dated 20 February 2001, Hon. Leoncio M. Janolo, Jr. denied the Omnibus Motion for lack of
merit. 11 Respondents iBank and Sheriff Flora filed a Motion for Reconsideration dated 26 February
2001. 12
A hearing was held on the application for preliminary injunction. On 18 July 2001, an Order was issued by
Judge Janolo granting petitioners' application for issuance of a writ of preliminary injunction. The Order
reads:
WHEREFORE, premises considered, plaintiffs' application for issuance of a Writ
of Preliminary Injunction is GRANTED, and defendants and their representatives
are enjoined from proceeding further with the execution, including
consolidating title and taking possession thereof, against plaintiffs' real
properties covered by Transfer Certificates of Title Nos. PT-66751, PT-66749,
55469, 45229, 4621, 52987 and 36489.
The Writ of Preliminary Injunction shall be issued upon plaintiffs' posting of a
bond executed to defendant in the amount of Three Million Pesos
(P3,000,000.00) to the effect that plaintiffs will pay defendants all damages
which the latter may sustain by reason of the injunction if it be ultimately
decided that the injunction is unwarranted. 13
On 13 August 2001, upon posting a bond in the amount of three million pesos (P3,000,000.00), Judge
Janolo issued the Writ of Preliminary Injunction. 14
Respondents iBank and Sheriff Flora filed on 29 August 2001 a Motion for Reconsideration 15 of the
order granting the Writ of Preliminary Injunction which the trial court denied in an Order dated 21
November 2001. 16
With the denial of their Motion for Reconsideration, respondents iBank and Sheriff Flora filed with the
Court of Appeals a Petition for Certiorari,Prohibition and Mandamus with prayer for issuance of
Temporary Restraining Order and/or Preliminary Injunction 17 praying that it: (a) issue immediately a
temporary restraining order enjoining Judge Janolo from taking any action or conducting any further
proceeding on the case; (b) annul the Orders dated 18 July 2001 and 21 November 2001; and (c) order
the immediate dismissal of Civil Case No. 68088.
In its decision dated 18 July 2003, the Court of Appeals dismissed the Petition. 18 It explained that no
grave abuse of discretion was committed by Judge Janolo in promulgating the two Orders. It emphasized
that its ruling only pertains to the propriety or impropriety of the issuance of the preliminary injunction
and has no bearing on the main issues of the case which are still to be resolved on the merits. The Very
Urgent Motion for Reconsideration filed by respondents iBank and Sheriff Flora was denied for lack of
merit. 19
Respondents iBank and Sheriff Flora thereafter filed with this Court a Petition for Certiorari which we
dismissed. The Court's Resolution dated 7 March 2005 reads:
Considering the allegations, issues and arguments adduced in the petition
for certiorari, the Court Resolves to DISMISS the petition for being a wrong
remedy under the Rules and evidently used as a substitute for the lost remedy
of appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended.
Besides, even if treated as a petition under Rule 65 of the said Rules, the same
would be dismissed for failure to sufficiently show that the questioned
judgment is tainted with grave abuse of discretion. 20
Accordingly, an Entry of Judgment was issued by the Supreme Court certifying that the resolution
dismissing the case had become final and executory on 30 July 2005. 21
Subsequently, respondents iBank and Sheriff Flora filed with the RTC of Pasig City, Branch 264, an
Omnibus Motion (To Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January
2006 praying that their pending Motion for Reconsideration dated 26 February 2001 which seeks for the
dismissal of the case be resolved and/or the Writ of Preliminary Injunction previously issued be
dissolved. 22
On 9 February 2006, petitioners filed their Comment thereon with Motion to Cite in Contempt the
counsel 23 of respondents. They pray that the pending Motion for Reconsideration be denied for being
devoid of merit, and that the Motion to Dissolve Writ of Preliminary Injunction be also denied, it being a
clear defiance of the directive of the Supreme Court which ruled with finality that the injunction issued
by the trial court was providently issued and was not tainted with grave abuse of discretion. They further
ask that respondents' counsel be cited in contempt of court and be meted out the appropriate
penalty.24 Respondents filed a Reply dated 20 February 2006.
In a Manifestation dated 24 March 2006, respondents iBank and Sheriff Flora submitted an Affidavit of
Merit to emphasize their resolve and willingness, among other things, to file a counter-bond to cover
whatever damages petitioners may suffer should the trial court decide to dissolve the writ of preliminary
injunction. 25 Petitioners filed a Counter-Manifestation with Second Motion to Cite Respondents'
Counsel in Direct Contempt of Court 26 to which respondents filed an Opposition. 27 Petitioners filed a
Reply thereto. 28

In an Order 29 dated 29 April 2006, the trial court recalled and dissolved the Writ of Preliminary
Injunction dated 13 August 2001, and ordered respondents to post a counter-bond amounting to ten
million pesos. It directed the Branch Clerk of Court to issue a Writ Dissolving Preliminary Injunction upon
the filing and approval of the required counter-bond. The dispositive portion of the Order reads:
WHEREFORE, this Court's writ of preliminary injunction dated August 13, 2001 is
recalled and dissolved. Defendants are hereby ordered to post a counter-bond
amounting to ten million pesos (P10,000,000.00) to cover the damages plaintiffs
would incur should a favorable judgment be rendered them after trial on the
merits.
The Branch Clerk of Court is directed to issue a Writ Dissolving Preliminary
Injunction upon the filing and approval of defendants' counter-bond. 30
The trial court explained its ruling in this wise:
In our jurisdiction, the provisions of Rule 58 of the Revised Rules of Court allow
the issuance of preliminary injunction. This court granted plaintiffs' prayer
preliminary injunction in the Order dated July 18, 2001 and the corresponding
writ issued on August 13, 2001.
Defendants in this case, however, are not without remedy to pray for
dissolution of preliminary injunction already granted because it is only
interlocutory and not permanent in nature.
The provisions of Section 6, Rule 58 of the Revised Rules of Court allow
dissolution of the injunction granted provided there is affidavit of party or
persons enjoined; an opportunity to oppose by the other party; hearing on the
issue, and filing of a bond to be fixed by the court sufficient to compensate
damages applicant may suffer by dissolution thereby.
A preliminary injunction is merely a provisional remedy, an adjunct to the main
case subject to the latter's outcome. Its sole objective is to preserve the status
quo until the trial court hears fully the merits of the case. The status quo is the
last actual, peaceable and uncontested situation which precedes a controversy.
The status quo should be that existing at the time of the filing of the case. A
preliminary injunction should not establish new relations between the parties,
but merely maintain or re-establish the pre-existing relationship between them.
. . . .
When the complainant's right or title is doubtful or disputed, he does not have
a clear legal right and, therefore, the issuance of injunctive relief is not proper
and constitutes grave abuse of discretion. . . . . In the case at bar, plaintiffs' deed
of sale was purported to be not duly notarized. As such, the legal right of what
the plaintiffs claim is still doubtful and such legal right can only be threshed out
in a full blown trial where they can clearly establish the right over the disputed
properties.
Moreover, defendants are willing to post a counter bond which could cover up
to the damages in favor of plaintiffs in case the judgment turns out to be
adverse to them. Under the Rules of Civil Procedure, this is perfectly allowed
and the dissolution of the writ of injunction can accordingly be issued. In the
case of Lasala vs. Fernandez, the highest court has enunciated that "a court has
the power to recall or modify a writ of preliminary injunction previously issued
by it. The issuance or recall of a preliminary writ of injunction is an interlocutory
matter that remains at all times within the control of the court." (G.R. No. L-
16628, May 23, 1962). The defendants had shown that dissolution of the writ of
injunction is just and proper. It was duly shown that great and irreparable injury
would severely cause the defendants if the writ of injunction shall continue to
exist. 31
On 5 May 2006, petitioners filed a Petition for Certiorari before the Court of Appeals asking that the trial
court's Order dated 29 April 2006 be set aside. 32
During the pendency of the Petition for Certiorari, petitioners filed before the trial court a Very Urgent
Motion to Suspend Proceedings 33 to which respondents filed a Comment. 34
On 11 July 2006, the Court of Appeals resolved to dismiss outright the Petition for Certiorari for failure of
petitioners to file a motion for reconsideration of the Order dated 29 April 2006. 35 The Motion for
Reconsideration 36 filed by petitioners was denied. 37
After being granted an extension of thirty days within which to file a petition for certiorari, petitioners
filed the instant Petition on 14 December 2006. They made the following assignment of errors:
I
THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR.
GRAVELY ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION IN DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION DATED
13 AUGUST 2001.
1. DESPITE THE FACT THAT THE COURT OF APPEALS RESOLVED WITH FINALITY
THAT YOUR PETITIONERS WILL "SUFFER IRREPARABLE INJURY"
(C.A.'s emphasis) IF NO INJUNCTION IS ISSUED.
2. DESPITE THE FACT THAT THE HON. SUPREME COURT RULED WITH FINALITY
THAT THE COURT A QUO DID NOT ABUSE ITS JURISDICTION WHEN IT
ISSUED THE INJUNCTION DATED 13 AUGUST 2001, THUS,
SUSTAINING THE REGULARITY OF THE WRIT OF PRELIMINARY
INJUNCTION.
II
THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR.
GRAVELY ABUSED HIS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION BY FIXING THE PHP10,000,000.00 COUNTER-BOND DESPITE THE
FACT THAT THE IRREPARABLE DAMAGE TO PETITIONERS AS A RESULT OF
DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION IS INCAPABLE OF
PECUNIARY ESTIMATION OR COULD NOT BE QUANTIFIED.
III
THE HONORABLE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS
DISCRETION IN OUTRIGHTLY DISMISSING YOUR PETITIONERS PETITION FOR
CERTIORARI IN CA-GR SP NO. 95074, AS IT FAILED TO APPLY EXISTING
JURISPRUDENCE TO THE EFFECT THAT A MOTION FOR RECONSIDERATION MAY
BE DISPENSED WITH WHERE THE CONTROVERTED ACT IS PATENTLY ILLEGAL OR
WAS PERFORMED WITHOUT JURISDICTION OR IN EXCESS OF JURISDICTION AS
HELD IN HAMILTON VS. LEVY, (344 SCRA 821)
IV
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND GRAVELY ABUSED
ITS DISCRETION WHEN IT DENIED PETITIONERS' MOTION FOR
RECONSIDERATION CLEARLY POINTING OUT TO THE COURT THAT AS AN
EXCEPTION TO THE RULE, THE REQUIRED MOTION FOR RECONSIDERATION MAY
BE DISPENSED WITH.
At the outset, it must be said that the Writ of Preliminary Injunction dated 13 August 2001 issued by the
trial court has not yet been actually dissolved because respondents have not posted the required
counter-bond in the amount of P10,000,000.00. The dissolution thereof is primed on the filing of the
counter-bond.
Petitioners argue that the trial court abused its discretion when it ordered the dissolution of the Writ of
Preliminary Injunction, the propriety of its issuance having been affirmed by both the Court of Appeals
and the Supreme Court. There being an Order by this Court that the injunction issued by the trial court
was not tainted with grave abuse of discretion, the dissolution of said writ is a clear defiance of this
Court's directive.
Respondents, on the other hand, contend that the trial court has the authority and prerogative to set
aside the Writ of Preliminary Injunction. They add that since petitioners' Deed of Sale was not duly
notarized, the latter's application for preliminary injunction is devoid of factual and legal bases. They
assert that, not being public documents, the subject deeds of sale are nothing but spurious, if not
falsified, documents. They add that the continuance of the Writ of Preliminary Injunction would cause
them irreparable damage because it continues to incur damage not only for the nonpayment of the
judgment award (in Civil Case No. 98-791 before the RTC of Makati City, Br. 150), but also for
opportunity losses resulting from the continued denial of its right to consolidate title over the levied
properties.
There is no dispute that both the Court of Appeals and this Court have ruled that the issuance of the Writ
of Preliminary Injunction by the trial court was not tainted with grave abuse of discretion. Respondents
tried to undo the issuance of said writ but to no avail. The Resolution on the matter attained finality on
30 July 2005 and an entry of judgment was made.
This, notwithstanding, respondents filed with the RTC of Pasig City, Branch 264, an Omnibus Motion (To
Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January 2006 praying that
their Motion for Reconsideration dated 26 February 2001 of the trial court's denial of their Motion to
Dismiss which the trial court failed to resolve, be resolved and/or the Writ of Preliminary Injunction
previously issued be dissolved. With this Omnibus Motion, the trial court issued the Order dated 13
August 2001 recalling and dissolving the Writ of Preliminary Injunction conditioned on the filing of a
P10,000,000.00 counter-bond.
The question is: Under the circumstances obtaining in this case, may the trial court recall and dissolve
the preliminary injunction it issued despite the rulings of the Court of Appeals and by this Court that its
issuance was not tainted with grave abuse of discretion?
We hold that the trial court may still order the dissolution of the preliminary injunction it previously
issued. We do not agree with petitioners' argument that the trial court may no longer dissolve the
preliminary injunction because this Court previously ruled that its issuance was not tainted with grave
abuse of discretion.
The issuance of a preliminary injunction is different from its dissolution. Its issuance is governed by
Section 3, 38 Rule 58 of the 1997 Rules of Civil Procedure while the grounds for its dissolution are
contained in Section 6, Rule 58 of the 1997 Rules of Civil Procedure. As long as the party seeking the
dissolution of the preliminary injunction can prove the presence of any of the grounds for its dissolution,
same may be dissolved notwithstanding that this Court previously ruled that its issuance was not tainted
with grave abuse of discretion.

Section 6 of Rule 58 reads:
Section 6. Grounds for objection to, or for motion of dissolution of, injunction or
restraining order. The application for injunction or restraining order may be
denied, upon a showing of its insufficiency. The injunction or restraining order
may also be denied, or, if granted, may be dissolved, on other grounds upon
affidavits of the party or person enjoined, which may be opposed by the
applicant also by affidavits. It may further be denied, or, if granted, may be
dissolved, if it appears after hearing that although the applicant is entitled to
the injunction or restraining order, the issuance or continuance thereof, as the
case may be, would cause irreparable damage to the party or person enjoined
while the applicant can be fully compensated for such damages as he may
suffer, and the former files a bond in an amount fixed by the court conditioned
that he will pay all damages which the applicant may suffer by the denial or the
dissolution of the injunction or restraining order. If it appears that the extent of
the preliminary injunction or restraining order granted is too great, it may be
modified.
Under the afore-quoted section, a preliminary injunction may be dissolved if it appears after hearing that
although the applicant is entitled to the injunction or restraining order, the issuance or continuance
thereof, as the case may be, would cause irreparable damage to the party or person enjoined while the
applicant can be fully compensated for such damages as he may suffer, and the former files a bond in an
amount fixed by the court on condition that he will pay all damages which the applicant may suffer by
the denial or the dissolution of the injunction or restraining order. Two conditions must concur: first, the
court in the exercise of its discretion, finds that the continuance of the injunction would cause great
damage to the defendant, while the plaintiff can be fully compensated for such damages as he may
suffer; second, the defendant files a counter-bond. 39 The Order of the trial court dated 29 April 2006 is
based on this ground.
In the case at bar, the trial court, after hearing, found that respondents duly showed that they would
suffer great and irreparable injury if the injunction shall continue to exist. As to the second condition, the
trial court likewise found that respondents were willing to post a counter-bond which could cover the
damages that petitioners may suffer in case the judgment turns out to be adverse to them. The Order of
the trial court to recall and dissolve the preliminary injunction is subject to the filing and approval of the
counter-bond that it ordered. Failure to post the required counter-bond will necessarily lead to the non-
dissolution of the preliminary injunction. The Order of Dissolution cannot be implemented until and
unless the required counter-bond has been posted.
The well-known rule is that the matter of issuance of a writ of preliminary injunction is addressed to the
sound judicial discretion of the trial court, and its action shall not be disturbed on appeal unless it is
demonstrated that it acted without jurisdiction or in excess of jurisdiction or, otherwise, in grave abuse
of discretion. By the same token, the court that issued such a preliminary relief may recall or dissolve the
writ as the circumstances may warrant. 40 In the case on hand, the trial court issued the order of
dissolution on a ground provided for by the Rules of Court. The same being in accordance with the rules,
we find no reason to disturb the same.
Petitioners contend that the Court of Appeals erred and gravely abused its discretion when it dismissed
outright their Petition for Certiorari by failing to apply existing jurisprudence that a motion for
reconsideration may be dispensed with where the controverted act is patently illegal or was performed
without jurisdiction or in excess of jurisdiction. On the other hand, respondents urge the Court to deny
the Petition for Review, arguing that the Court of Appeals properly applied the general rule that the filing
of a motion for reconsideration is a condition sine qua non in order that certiorari will lie.
We find petitioners' contention to be untenable.
The rule is well settled that the filing of a motion for reconsideration is an indispensable condition to the
filing of a special civil action for certiorari. 41 It must be stressed that a petition for certiorari is an
extraordinary remedy and should be filed only as a last resort. The filing of a motion for reconsideration
is intended to afford the trial court an opportunity to correct any actual error attributed to it by way of
re-examination of the legal and factual issues. 42 By their failure to file a motion for reconsideration,
they deprived the trial court of the opportunity to rectify any error it committed, if there was any.
Moreover, a perusal of petitioners' petition for certiorari filed with the Court of Appeals shows that they
filed the same because there was no appeal, or any plain, speedy and adequate remedy in the course of
law except via a petition for certiorari. When same was dismissed by the Court of Appeals for failure to
file a motion for reconsideration of the trial court's Order, they argue that while the filing of a motion for
reconsideration is a sine qua non before a petition for certiorari is instituted, the same is not entirely
without exception like where the controverted act is patently illegal or was performed without
jurisdiction or in excess of jurisdiction. It was only when the Court of Appeals dismissed their Petition did
they argue that exceptions to the general rule should apply. Their invocation of the application of the
exceptions was belatedly made. The application of the exceptions should be raised in their Petition
for Certiorari and not when their Petition has already been dismissed. They must give their reasons and
explain fully why their case falls under any of the exceptions. This, petitioners failed to do.
Petitioners' argument that they filed the Petition for Certiorari without filing a motion for
reconsideration because there is no appeal, or any plain, speedy and adequate remedy in the course of
law except via a Petition for Certiorari does not convince. We have held that the "plain" and "adequate
remedy" referred to in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of the
assailed Order or Resolution. 43 The mere allegation that there is "no appeal, or any plain, speedy and
adequate remedy" is not one of the exceptions to the rule that a motion for reconsideration is a sine qua
nonbefore a petition for certiorari may be filed.
All told, we hold that the act of the trial court of issuing the Order dated 29 April 2006 was not patently
illegal or performed without or in excess of jurisdiction. The Court of Appeals was correct in dismissing
outright petitioners' Petition for Certiorari for failing to file a motion for reconsideration of the trial
court's Order.
Our pronouncements in this case are confined only to the issue of the dissolution of the preliminary
injunction and will not apply to the merits of the case.
WHEREFORE, all considered, the Petition is hereby DENIED. The Resolutions of the Court of Appeals in
CA-GR SP No. 95074 dated 11 July 2006 and 9 October 2006 are AFFIRMED. The Order dated 29 April
2006 of Branch 264 of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and
dissolving the Writ of Preliminary Injunction dated 13 August 2001 is AFFIRMED. Upon the posting by
respondents of the counter-bond required, the trial court is directed to issue the Writ Dissolving
Preliminary Injunction. No costs.
SO ORDERED.