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LIMITLESS POTENTIALS, INC., Petitioner, vs. HON.

COURT OF APPEALS

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 ₱60,000.00 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) ₱60,000.00 plus VAT upon the
signing of the contract, and (b) ₱120,000.00 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 to force 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 Complaint4against 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
₱1,000,000.00; (b) exemplary, temperate and nominal damages amounting to
₱300,000.00; (c) ₱300,000.00 as attorney’s fees; (d) ₱50,000.00 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 ₱10,000.00. 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 Decision9 on 28 April 2000, dismissing


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

WHEREFORE, the petition is hereby dismissed for lack of merit. The preliminary
injunction issued by this Court on 6 February 200010 (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 Order12 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 pleading13 specifying its claims, thus: (a)
attorney’s fees in the sum of ₱74, 375.00; and (b) moral damages for the tarnished
good will in the sum of ₱1,000,000.00.

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 Resolution16 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 200317 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.

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:

(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,35 citing 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.
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 ₱74,375.00 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 ₱74,375.00 as well as the moral
damages for the tarnished good will in the sum of ₱1,000,000.00 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


Certificate42 attached to the petitioner’s Petition for Review, which authorized Mr.
Baterna, President of herein petitioner LPI, to represent the latter in this case.
According to the Secretary’s Certificate, the Board of Directors of petitioner LPI, at a
special meeting held on 12 August 2004 at its office at No. 812 J.P. Rizal St., Makati
City, during which there was a quorum, the following resolutions were approved, to
wit:

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


authority of its President, Mr. Quirino B. Baterna, to represent the corporation in all
cases by and/or against the corporation vis-à-vis the Roman Catholic Archbishop of
Manila/Crisostomo Yalung, Roy Villasor/Digital Netwrok (sic) Communications and
Computers, Inc., and/or MacGraphics Carranz International Corporation, to file a
Petition for Review on Certiorari with the Supreme Court docketed as G.R. No.
164459 to assert/protect LPI’s rights and interests in connection with C.A.-G.R. No.
73463, entitled "Limitless Potentials, Inc., vs. Hon. Manuel Victorio, et al.," Honorable
Court of Appeals, Manila.

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 pendentia45 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.

NATIONAL ARTIST FOR LITERATURE VIRGILIO ALMARIO vs THE EXECUTIVE


SECRETARY

On April 27, 1972, former President Ferdinand E. Marcos issued Proclamation No.
10014 and, upon recommendation of the Board of Trustees of the Cultural Center of
the Philippines (CCP), created the category of Award and Decoration of National
Artist to be awarded to Filipinos who have made distinct contributions to arts and
letters. In the same issuance, Fernando Amorsolo was declared as the first National
Artist.

On May 15, 1973, Proclamation No. 11445 was issued. It amended Proclamation No.
1001 "by creating a National Artists Awards Committee" that would "administer the
conferment of the category of National Artist" upon deserving Filipino artists. The
Committee, composed of members of the Board of Trustees of the CCP, was tasked
to "draft the rules to guide its deliberations in the choice of National Artists, to the end
that those who have created a body of work in the arts and letters capable of
withstanding the test of time will be so recognized."

The authority of the National Artists Awards Committee to administer the conferment
of the National Artist Award was again reiterated in Presidential Decree No.
2086 issued on June 7, 1973.

On April 3, 1992, Republic Act No. 7356, otherwise known as the Law Creating the
National Commission for Culture and the Arts, was signed into law. It established the
National Commission for Culture and the Arts (NCCA) and gave it an extensive
mandate over the development, promotion and preservation of the Filipino national
culture and arts and the Filipino cultural heritage. The NCCA was tasked with the
following:
Sec. 8. The Commission. – A National Commission for Culture and Arts is hereby
created to formulate policies for the development of culture and arts; implement these
policies in coordination with affiliated cultural agencies; coordinate the implementation
of programs of these affiliated agencies; administer the National Endowment Fund for
Culture and Arts (NEFCA); encourage artistic creation within a climate of artistic
freedom; develop and promote the Filipino national culture and arts; and preserve
Filipino cultural heritage. The Commission shall be an independent agency. It shall
render an annual report of its activities and achievements to the President and to
Congress.

Among the specific mandates of the NCCA under Republic Act No. 7356 is to "extend
recognition of artistic achievement through awards, grants and services to artists and
cultural groups which contribute significantly to the Filipino’s cultural legacy." 7 In
connection with this mandate, the NCCA is vested with the power to "advise the
President on matters pertaining to culture and the arts, including the creation of a
special decoration or award, for persons who have significantly contributed to the
development and promotion of Philippine culture and arts."8

As both the CCP Board of Trustees and the NCCA have been mandated by law to
promote, develop and protect the Philippine national culture and the arts, and
authorized to give awards to deserving Filipino artists, the two bodies decided to team
up and jointly administer the National Artists Award.9 Thereafter, they reviewed the
guidelines for the nomination, selection and administration of the National Artists
Award. Pursuant to their respective powers to draft and promulgate rules, regulations
and measures to guide them in their deliberations in the choice of National Artists, the
CCP and NCCA adopted the following revised guidelines in September 200710:

4. ADMINISTRATION OF THE AWARD

4.1. The National Commission for Culture and the Arts (NCCA) shall
plan, organize and implement the Order of National Artists in
coordination with the Cultural Center of the Philippines (CCP).

4.2. It shall enlist the support and cooperation of private sector experts
from the various fields of art to ensure that the awards are
implemented in a successful and impartial manner.

4.3. The National Artist Award Secretariat shall commission art experts
to form a Special Research Group who shall verify information
submitted on nominees and provide essential data.

They shall be selected for their specialization and familiarity with the
works and accomplishments of nominated artists.

4.4. The Special Research Group shall be composed of ten (10) to


twenty (20) members who have expertise in one or more fields or
disciplines.

4.5. The National Artist Award Council of Experts shall be created


before or during the nomination period. It is tasked to screen nominees
and recommend to the NCCA and CCP Boards the candidates for the
Order of National Artists. It shall be composed of highly regarded peers,
scholars, (including cultural philosophers and historians),
academicians, researchers, art critics, and other knowledgeable
individuals. A wider age-range of experts who would have first-hand
knowledge of achievements of nominees shall be considered.

4.6. The selection of the members of the National Artist Award Council
of Experts shall be based on the following criteria:

(a) should have achieved authority, credibility and track record in his
field(s) of expertise;

(b) should have extensive knowledge in his field(s) and his views on
Philippine art and culture must be national in perspective;

(c) should be a recognized authority in the study or research of


Philippine art and culture;

(d) must be willing to devote sufficient time and effort to the work of the
Council;

(e) must be willing to sign a non-disclosure statement in order to


safeguard the confidentiality of the deliberations;

(f) must not have been convicted with finality of any crime by a court of
justice or dismissed for cause by any organization, whether public or
private.

4.7. The National Artist Award Council of Experts shall be composed of


a maximum of seven (7) members each of the seven (7)
areas/disciplines. The living National Artists will automatically become
members in addition to the forty-nine (49) selected members. These
members will constitute the first deliberation panel and will be invited to
evaluate the nominations and materials submitted by the Special
Research Group.

4.8. Any member of the Council of Experts who is nominated or related


to a nominee up to the fourth degree of consanguinity or affinity shall
inhibit himself/herself from the deliberation process. Likewise, any
member may decline to participate in the deliberation for any reason or
may be removed for just cause upon recommendation to the NCCA
Board by at least two thirds (2/3) of the members; in which case, the
National Artist Award Secretariat shall again select the replacements
for those who decline or resigned until the first deliberation panel is
completed.

4.9. The list of nominated members of the National Artist Award


Council of Experts shall be reviewed by the National Artist Award
Secretariat as needed, for purposes of adding new members or
replacements.

4.10. The members of the National Artist Award Council of Experts


shall serve for a fixed term of three (3) years.

5. CRITERIA FOR SELECTION

The Order of National Artists shall be given to:

5.1 Living artists who are Filipino citizens at the time of nomination, as
well as those who died after the establishment of the award in 1972 but
were Filipino citizens at the time of their death.

5.2 Artists who through the content and form of their works have
contributed in building a Filipino sense of nationhood.

5.3. Artists who have pioneered in a mode of creative expression or


style, thus, earning distinction and making an impact on succeeding
generations of artists.

5.4. Artists who have created a substantial and significant body of


works and/or consistently displayed excellence in the practice of their
art form thus enriching artistic expression or style.

5.5 Artists who enjoy broad acceptance through:

5.5.1. prestigious national and/or international recognition, such as the


Gawad CCP Para sa Sining, CCP Thirteen Artists Award and NCCA
Alab ng Haraya

5.5.2. critical acclaim and/or reviews of their works

5.5.3. respect and esteem from peers.

6. NOMINATION PROCEDURE

6.1. The National Artist Award Secretariat shall announce the opening
of nominations through media releases and letters to qualified
organizations.

6.2. Candidates may be nominated under one or more of the following


categories:

6.2.1. Dance – choreography, direction and/or performance.

6.2.2. Music – composition, direction, and/or performance.

6.2.3. Theater – direction, performance and/or production design.


6.2.4. Visual Arts – painting, sculpture, printmaking, photography,
installation art, mixed media works, illustration, comics/komiks, graphic
arts, performance art and/or imaging.

6.2.5. Literature – poetry, fiction (short story, novel and play);


non-fiction (essay, journalism, literary criticism and historical literature).

6.2.6. Film and Broadcast Arts – direction, writing, production design,


cinematography, editing, camera work, and/or performance.

6.2.7. Architecture, Design and Allied Arts – architecture design,


interior design, industrial arts design, landscape architecture and
fashion design.

6.3. Nominations for the Order of National Artists may be submitted by


government and non-government cultural organizations and
educational institutions, as well as private foundations and councils.

6.4. Members of the Special Research Group, as well as agencies


attached to the NCCA and CCP shall not submit nominations.

6.5. NCCA and CCP Board members and consultants and NCCA and
CCP officers and staff are automatically disqualified from being
nominated.

6.6. Nominations shall be accepted only when these are submitted in


writing and with proper supporting documentation, as follows:

6.6.1. A cover letter signed by the head or designated representative of


the nominating organization.

The cover letter shall be accompanied by a Board Resolution


approving the nominee concerned with the said resolution signed by
the organization President and duly certified by the Board Secretary.

6.6.2. A duly accomplished nomination form;

6.6.3. A detailed curriculum vitae of the nominee;

6.6.4. A list of the nominee’s significant works categorized according to


the criteria;

6.6.5. The latest photograph (color or black and white) of the nominee,
either 5" x 7" or 8" x 11";

6.6.6. Pertinent information materials on the nominee’s significant


works (on CDs, VCDs and DVDs);

6.6.7. Copies of published reviews;


6.6.8. Any other document that may be required.

6.7. Nominations received beyond the announced deadline for the


submission of nominations shall not be considered.

6.8. The National Artist Award Secretariat shall announce the opening
of nominations through media releases.

6.9. All inquiries and nominations shall be submitted to

The NATIONAL ARTIST AWARD SECRETARIAT

Office of the Artistic Director Cultural Center of the Philippines Roxas


Boulevard, 1300 Pasay City or The NATIONAL ARTIST AWARD
SECRETARIAT Office of the Deputy Executive Director National
Commission for Culture and the Arts 633 General Luna Street,
Intramuros, Manila

7. SCREENING AND SELECTION PROCESS

7.1. The National Artist Award Secretariat shall pre-screen the


nominees based on technical guideline items 5.1, 6.2, 6.3, 6.4, 6.5 and
6.6. The pre-screening shall not be based on the accomplishments and
merits of the nominee.

7.2. The Special Research Group shall accomplish its task within six (6)
months. The main objective is to verify the validity of the data, and
evaluate the quality, true value and significance of works according to
the criteria. It shall come up with the updated and comprehensive
profiles of nominees reflecting their most outstanding achievements.

7.3. The National Artist Award Secretariat will meet to review the list of
nominees for oversights. Consequently, deserving nominees shall be
added to the list.

7.4. The first deliberation panel (Council of Experts) shall be


intra-disciplinary. The panelists shall be grouped according to their
respective fields of expertise or disciplines to shortlist the nominees in
their disciplines or categories for presentation to the second
deliberation panel.

7.5. The second deliberation panel shall be composed of a different set


of experts from the first deliberation panel three (3) experts each of the
seven (7) areas/discipline and may include members from varying
backgrounds such as critics and academicians. The achievements of
each shortlisted nominee shall be presented by one designated
member of Council of Experts. Then panel deliberates and ranks the
shortlisted nominees according to the order of precedence following
the set criteria of the Order of National Artists. In extreme cases, the
Second Deliberation may add new names to the lists.
7.6. The second deliberation panel may recommend not to give award
in any category if no nominee is found deserving. The number of
awardees shall also depend on the availability of funds. All decisions
and recommendations shall be in writing.

7.7. The recommendations from the Second Deliberation Panel of the


National Artist Award Council of Experts shall then be presented to the
joint boards of NCCA and CCP for final selection. The presentors shall
prepare their presentation in writing together with an audio-visual
presentation or powerpoint presentation. Written
interpellations/opinions will be accepted from selected critics. The
review shall be based on the ranking done by the Second Deliberation.
The voting shall be across disciplines. The National Artists will be given
the option whether to vote on all categories or on his/her particular
discipline.

7.8. Proxy votes will not be allowed in the Selection Process.


Designation of permanent representatives of agencies should be made
at the outset to make them regular Board members of NCCA and thus,
may be allowed to cast votes.

7.9. The list of awardees shall be submitted to the President of the


Republic of the Philippines for confirmation, proclamation and
conferral.

8. PRESENTATION OF THE AWARDS

8.1. The Order of National Artists shall not be conferred more


frequently than every three (3) years.

8.2. The Order of National Artists shall be conferred by the President of


the Philippines on June 11 or any appropriate date in fitting
ceremonies to be organized by the National Artist Secretariat.

8.3. The medallion of the Order of National Artists and citation shall be
given to the honoree during the conferment ceremony. The cash award
of ₱100,000.00 in cheque shall be given immediately after the
ceremony or at another time and place as requested by the honoree.

8.4. A posthumous conferral consisting of the medallion and citation


shall be given to the family or legal heir/s of the honoree. The cash
award of ₱75,000.00 in cheque shall be given to the honoree’s legal
heir/s or a representative designated by the family immediately after
the ceremony or at another time and place as requested by the family.
(Emphases supplied.)

In 1996, the NCCA and the CCP created a National Artist Award Secretariat
composed of the NCCA Executive Director as Chairperson, the CCP President as
Vice-Chairperson, and the NCCA Deputy Executive Director, the CCP
Vice-President/Artistic Director, the NCCA National Artist Award Officer and the CCP
National Artist Award Officer as members. They also centralized with the NCCA all
financial resources and management for the administration of the National Artists
Award. They added another layer to the selection process to involve and allow the
participation of more members of the arts and culture sector of the Philippines in the
selection of who may be proclaimed a National Artist.

On September 19, 2003, Executive Order No. 236, s. 2003, entitled Establishing the
Honors Code of the Philippines to Create an Order of Precedence of Honors
Conferred and for Other Purposes, was issued. The National Artists Award was
renamed the Order of National Artists and raised to the level of a Cultural Order,
fourth in precedence among the orders and decorations that comprise the Honors of
the Philippines. Executive Order No. 236, s. 2003, recognizes the vital role of the
NCCA and the CCP in identifying Filipinos who have made distinct contributions to
arts and letters and states that the National Artist recognition is conferred "upon the
recommendation of the Cultural Center of the Philippines and the National
Commission for Culture and the Arts."12 Executive Order No. 236, s. 2003, further
created a Committee on Honors to "assist the President in evaluating nominations for
recipients of Honors,"13 including the Order of National Artists, and presidential
awards. The Committee on Honors has been allowed to "authorize relevant
department or government agencies to maintain Honors and/or Awards Committees
to process nominations for Honors and/or Presidential Awards."14 In this connection,
Section 2.4(A) of the Implementing Rules and Regulations15 of Executive Order No.
236, s. 2003, states:

2.4: Awards Committees

There shall be two types of awards committees: the Committee on Honors and the
various awards committees in the various units of the government service.

A. The Committee on Honors

The Committee on Honors serves as a National Awards Committee. It is composed of


the following:

The Executive Secretary, Chairman

The Secretary of Foreign Affairs, Vice-Chairman

Head, Presidential Management Staff, member

Presidential Assistant for Historical Affairs, member

Chief of Presidential Protocol, member

Chief of Protocol, DFA, member

All nominations from the various awards committees must be submitted to the
Committee on Honors via the Chancellery of Philippine Orders and State Decorations.
The Chancellery shall process nominations for the consideration of the Committee on
Honors. The Committee on Honors shall screen and recommend these nominations
to the President.

The Committee on Honors shall, as a general rule, serve as a screening committee to


ensure that nominations received from the various awards committees meet two tests:
that there has not been an abuse of discretion in making the nomination, and that the
nominee is in good standing. Should a nomination meet these criteria, a
recommendation to the President for conferment shall be made.

The President of the Philippines takes the recommendations of the Committee on


Honors in the highest consideration when making the final decision on the conferment
of awards. (Emphasis supplied.)

Executive Order No. 435, s. 2005, entitled Amending Section 5(IV) of Executive Order
No. 236 Entitled "Establishing the Honors Code of the Philippines to Create an Order
of Precedence of Honors Conferred and for Other Purposes" was subsequently
issued on June 8, 2005. It amended the wording of Executive Order No. 236, s. 2003,
on the Order of National Artists and clarified that the NCCA and the CCP "shall advise
the President on the conferment of the Order of National Artists."

Controversy Surrounding the 2009


Order of National Artists

Petitioners alleged that on January 30, 2007, a joint meeting of the NCCA Board of
Commissioners and the CCP Board of Trustees was held to discuss, among others,
the evaluation of the 2009 Order of National Artists and the convening of the National
Artist Award Secretariat. The nomination period was set for September 2007 to
December 31, 2007, which was later extended to February 28, 2008. The
pre-screening of nominations was held from January to March 2008.16

On April 3, 2009, the First Deliberation Panel met.17 A total of 87 nominees18 were
considered during the deliberation and a preliminary shortlist19 of 32 names was
compiled.

On April 23, 2009, the Second Deliberation Panel purportedly composed of an entirely
new set of Council of Experts met and shortlisted 13 out of the 32 names in the
preliminary shortlist.20 On May 6, 2009, the final deliberation was conducted by the
30-member Final Deliberation Panel comprised of the CCP Board of Trustees and the
NCCA Board of Commissioners and the living National Artists.21 From the 13 names
in the second shortlist, a final list of four names was agreed upon.22 The final list,
according to rank, follows:

Name Art Field/Category Number of Votes

Manuel Conde (+) Film and Broadcast Arts (Film) 26

Ramon Santos Music 19

Lazaro Francisco (+) Literature 15


Federico Aguilar-Alcuaz Visual Arts 15

On May 6, 2009, a letter, signed jointly by the Chairperson of the NCCA,


Undersecretary Vilma Labrador, and the President and Artistic Director of the CCP,
Mr. Nestor Jardin, was sent to the President.23 The letter stated, thus:

May 6, 2009

Her Excellency GLORIA MACAPAGAL-ARROYO


President of the Philippines
Malacañan Palace, Manila

Subject: 2009 Order of National Artist Awardees

Dear President Arroyo:

We are respectfully submitting a recommendation of the NCCA Board


of Trustees and CCP Board of Trustees for the Proclamation of the
following as 2009 Order of National Artists:

1. Mr. MANUEL CONDE+ (Posthumous) – Film and Broadcast Arts

2. Dr. RAMON SANTOS – Music

3. Mr. LAZARO FRANCISCO+ (Posthumous) – Literature

4. Mr. FEDERICO AGUILAR-ALCUAZ – Visual Arts

The above persons were identified by experts in the various fields of


arts and culture, including living National Artists. An intensive selection
process was observed following established practice. In the past,
awards were presented by the President at a Ceremony held at the
Malacañan Palace followed by a program called "Parangal" at the
Cultural Center of the Philippines. We also propose to continue with
past practice of celebrating the life and works of the four (4) Order of
National Artists through an exhibit that will open and a commemorative
publication that will be released on the day of the proclamation.

We respectfully suggest, subject to Her Excellency’s availability, that


the Proclamation be on June 11, 2009, if possible at the Malacañan
Palace.

Thank you for your kind attention.

Very respectfully yours,

(Sgd.)
VILMA L. LABRADOR
Chairman
National Commission for Culture and the Arts

(Sgd.)
NESTOR O. JARDIN
President and Artistic Director
Cultural Center of the Philippines24

According to respondents, the aforementioned letter was referred by the Office of the
President to the Committee on Honors. Meanwhile, the Office of the President
allegedly received nominations from various sectors, cultural groups and individuals
strongly endorsing private respondents Cecile Guidote-Alvarez, Carlo Magno Jose
Caparas, Francisco Mañosa and Jose Moreno. The Committee on Honors
purportedly processed these nominations and invited resource persons to validate the
qualifications and credentials of the nominees.25

The Committee on Honors thereafter submitted a memorandum to then President


Gloria Macapagal-Arroyo recommending the conferment of the Order of National
Artists on the four recommendees of the NCCA and the CCP Boards, as well as on
private respondents Guidote-Alvarez, Caparas, Mañosa and Moreno. Acting on this
recommendation, Proclamation No. 1823 declaring Manuel Conde a National Artist
was issued on June 30, 2009. Subsequently, on July 6, 2009, Proclamation Nos.
1824 to 1829 were issued declaring Lazaro Francisco, Federico AguilarAlcuaz and
private respondents Guidote-Alvarez, Caparas, Mañosa and Moreno, respectively, as
National Artists. This was subsequently announced to the public by then Executive
Secretary Eduardo Ermita on July 29, 2009.26

Convinced that, by law, it is the exclusive province of the NCCA Board of


Commissioners and the CCP Board of Trustees to select those who will be conferred
the Order of National Artists and to set the standard for entry into that select group,
petitioners instituted this petition for prohibition, certiorari and injunction (with prayer
for restraining order) praying that the Order of National Artists be conferred on Dr.
Santos and that the conferment of the Order of National Artists on respondents
Guidote-Alvarez, Caparas, Mañosa and Moreno be enjoined and declared to have
been rendered in grave abuse of discretion.27

In a Resolution28 dated August 25, 2009, the Court issued a status quo
order29 enjoining "public respondents" "from conferring the rank and title of the Order
of National Artists on private respondents; from releasing the cash awards that
accompany such conferment and recognition; and from holding the acknowledgment
ceremonies for recognition of the private respondents as National Artists."

What is the nature and scope of the power of the President to confer the Order of the
National Artists and how should it be exercised? This is the essential issue presented
in this case. It will determine whether the proclamation of respondents as National
Artists is valid. Preliminary procedural issues on the standing of the petitioners and
the propriety of the remedies taken,30 however, call for resolution as a prerequisite to
the discussion of the main question.

Contention of the Parties


A perusal of the pleadings submitted by the petitioners reveals that they are an
aggrupation of at least three groups, the National Artists, cultural workers and
academics, and the Concerned Artists of the Philippines (CAP). The National Artists
assert an "actual as well as legal interest in maintaining the reputation of the Order of
National Artists."31 In particular, they invoke their right to due process not to have the
honor they have been conferred with diminished by the irregular and questionable
conferment of the award on respondents Guidote-Alvarez, Caparas, Mañosa and
Moreno. For petitioners, this would adversely affect their right to live a meaningful life
as it detracts not only from their right to enjoy their honor as a fruit of their lifelong
labor but also from the respect of their peers.32

The cultural workers, academics and CAP claim to be Filipinos who are deeply
concerned with the preservation of the country’s rich cultural and artistic heritage. As
taxpayers, they are concerned about the use of public monies for illegal appointments
or spurious acts of discretion.33

All of the petitioners claim that former President Macapagal-Arroyo gravely abused
her discretion in disregarding the results of the rigorous screening and selection
process for the Order of National Artists and in substituting her own choice for those
of the Deliberation Panels. According to petitioners, the President’s discretion to
name National Artists is not absolute but limited. In particular, her discretion on the
matter cannot be exercised in the absence of or against the recommendation of the
NCCA and the CCP. In adding the names of respondents Caparas, Guidote-Alvarez,
Mañosa and Moreno while dropping Dr. Santos from the list of conferees, the
President’s own choices constituted the majority of the awardees in utter disregard of
the choices of the NCCA and the CCP and the arts and culture community which were
arrived at after a long and rigorous process of screening and deliberation. Moreover,
the name of Dr. Santos as National Artist for Music was deleted from the final list
submitted by the NCCA and the CCP Boards without clearly indicating the basis
thereof. For petitioners, the President’s discretion to name National Artists cannot be
exercised to defeat the recommendations made by the CCP and NCCA Boards after
a long and rigorous screening process and with the benefit of expertise and
experience. The addition of four names to the final list submitted by the Boards of the
CCP and the NCCA and the deletion of one name from the said list constituted a
substitution of judgment by the President and a unilateral reconsideration without
clear justification of the decision of the First, Second and Final Deliberation Panels
composed of experts.34

Petitioners further argue that the choice of respondent GuidoteAlvarez was illegal and
unethical because, as the then Executive Director of the NCCA and presidential
adviser on culture and arts, she was disqualified from even being
nominated.35 Moreover, such action on the part of the former President constituted
grave abuse of discretion as it gave preferential treatment to respondent
Guidote-Alvarez by naming the latter a National Artist despite her not having been
nominated and, thus, not subjected to the screening process provided by the rules for
selection to the Order of National Artists. Her inclusion in the list by the President
represented a clear and manifest favor given by the President in that she was
exempted from the process that all other artists have to undergo. According to
petitioners, it may be said that the President used a different procedure to qualify
respondent Guidote-Alvarez. This was clearly grave abuse of discretion for being
manifest and undue bias violative of the equal protection clause.36
Respondent Caparas refutes the contention of the petitioning National Artists and
insists that there could be no prejudice to the latter. They remain to be National Artists
and continue to receive the emoluments, benefits and other privileges pertaining to
them by virtue of that honor. On the other hand, all the other petitioners failed to show
any material and personal injury or harm caused to them by the conferment of the
Order of National Artists on respondents Guidote-Alvarez, Caparas, Mañosa and
Moreno. The rule on standing may not be relaxed in favor of the petitioners as no
question of constitutionality has been raised and no issue of transcendental
importance is involved.37

Respondent Caparas further argues that the remedies of prohibition and injunction
are improper as the act sought to be enjoined – the declaration of respondents
Guidote-Alvarez, Caparas, Mañosa and Moreno as National Artists – had already
been consummated. In particular, respondent Caparas was already proclaimed
National Artist through Proclamation No. 1827 issued on July 6, 2009.38

On the merits, respondent Caparas contends that no grave abuse of discretion


attended his proclamation as National Artist. The former President considered the
respective recommendations of the NCCA and the CCP Boards and of the Committee
on Honors in eventually declaring him (Caparas) as National Artist. The function of the
NCCA and the CCP Boards is simply to advise the President. The award of the Order
of National Artists is the exclusive prerogative of the President who is not bound in
any way by the recommendation of the NCCA and the CCP Boards. The
implementing rules and regulations or guidelines of the NCCA cannot restrict or limit
the exclusive power of the President to select the recipients of the Order of National
Artists.39

For her part, in a letter40 dated March 11, 2010, respondent Guidote-Alvarez
manifested that she was waiving her right to file her comment on the petition and
submitted herself to the Court’s discretion and wisdom.

Respondent Mañosa manifested that his creations speak for themselves as his
contribution to Filipino cultural heritage and his worthiness to receive the award.
Nonetheless, he expressed his conviction that the Order of National Artists is not a
right but a privilege that he would willingly relinquish should he be found not worthy of
it.41

Respondent Moreno did not file any pleading despite being given several
opportunities to do so. Hence, the Court dispensed with his pleadings.42

In a Resolution dated July 12, 2011, this Court gave due course to the petition and
required the parties to file their respective memoranda.43 Respondent Caparas filed
his memorandum on September 8, 2011,44 the CCP filed its memorandum on
September 19, 2011,45 respondent Mañosa on September 20, 2011,46 and the Office
of the Solicitor General filed a manifestation stating that it is adopting its comment as
its memorandum on September 21, 2011.47 Respondent Moreno failed to file a
Memorandum, hence, the Court resolved to dispense with the same.48Petitioners filed
their Memorandum on May 14, 2012.49

On the other hand, the original position of the Office of the Solicitor General (OSG)
was similar to that of respondent Caparas.50 In a subsequent
manifestation,51 however, the OSG stated that the current Board of Commissioners of
the NCCA agree with the petitioners that the President cannot honor as a National
Artist one who was not recommended by the joint Boards of the NCCA and the CCP.
The implementing rules and regulations of Executive Order No. 236, s. 2003,
recognized the binding character of the recommendation of the NCCA and the CCP
Boards and limited the authority of the Committee on Honors to the determination that
(1) there has been no grave abuse of discretion on the part of the NCCA and the CCP
Boards in making the nomination, and (2) the nominee is in good standing. Where a
nomination meets the said two criteria, a recommendation to the President to confer
the award shall be made.52

The OSG further argued that, while the President exercises control over the NCCA
and the CCP, the President has the duty to faithfully execute the laws, including the
NCCA-CCP guidelines for selection of National Artists and the implementing rules of
Executive Order No. 236, s. 2003. Moreover, the laws recognize the expertise of the
NCCA and the CCP in the arts and tasked them to screen and select the artists to be
conferred the Order of National Artists. Their mandate is clear and exclusive as no
other agency possesses such expertise.53

The OSG also assailed the former President’s choice of respondent Guidote-Alvarez
for being contrary to Republic Act No. 7356.54 Section 11 of the said law provides:

Sec. 11. Membership Restrictions. – During his/her term as member of the


Commission, a Commissioner shall not be eligible for any grant, or such other
financial aid from the Commission as an individual: Provided, however, That he/she
may compete for grants and awards on the same level as other artists one (1) year
after his/her term shall have expired.

The omission of the word "award" in the first portion of the above provision appears to
be unintentional as shown by the proviso which states that a member may compete
for grants and awards only one year after his or her term shall have expired. As such,
respondent Guidote-Alvarez is restricted and disqualified from being conferred the
2009 Order of National Artists.55

The Court’s Ruling

Standing of the Petitioners

Standing is the determination of whether a specific person is the proper party to bring
a matter to the court for adjudication.56 The gist of the question of standing is whether
a party alleges such personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the
court depends for illumination of difficult constitutional questions.57

The parties who assail the constitutionality or legality of a statute or an official act
must have a direct and personal interest. They must show not only that the law or any
governmental act is invalid, but also that they sustained or are in immediate danger of
sustaining some direct injury as a result of its enforcement, and not merely that they
suffer thereby in some indefinite way. They must show that they have been or are
about to be denied some right or privilege to which they are lawfully entitled or that
they are about to be subjected to some burdens or penalties by reason of the statute
or act complained of.58

In this case, we find that the petitioning National Artists will be denied some right or
privilege to which they are entitled as members of the Order of National Artists as a
result of the conferment of the award on respondents Guidote-Alvarez, Caparas,
Mañosa and Moreno. In particular, they will be denied the privilege of exclusive
membership in the Order of National Artists.

In accordance with Section 2(a)59 of Executive Order No. 236, s. 2003, the Order of
National Artists is "an exclusive association of honored individuals." To ensure the
exclusivity of the membership in the Order, a rigid nomination and screening process
has been established with different sets of renowned artists and respected art critics
invited to sit as the Council of Experts for the First and Second Deliberation Panels.
Moreover, all living National Artists are given a voice on who should be included in
their exclusive club as they automatically become members of the Final Deliberation
Panel that will vote on who should be included in the final list to be submitted to the
President for conferment of the Order of National Artists. To allow the untrammeled
discretion and authority of the President to confer the Order of National Artists without
regard to the stringent screening and rigorous selection process established by the
NCCA and the CCP will diminish, if not negate, the exclusive nature of the said Order.
It will unduly subject the selection and conferment of the Order of National Artists to
politics rather than to principles and procedures. It will subvert the transparent and
rigorous process and allow entry to the exclusive Order of National Artists through a
secret backdoor of lobbying, back channeling and political accommodation.

Among the other petitioners, Prof. Gemino Abad presents a unique valid personal and
substantial interest. Like respondents Caparas, Mañosa and Moreno, he was among
the 87 nominees for the 2009 Order of National Artists. Like respondent Moreno, he
made it to the preliminary shortlist. As he did not make it to the second shortlist, he
was not considered by the Final Deliberation Panel, more so by the former President.

It should be recalled too that respondent Guidote-Alvarez was disqualified to be


nominated for being the Executive Director of the NCCA at that time while
respondents Mañosa and Caparas did not make it to the preliminary shortlist and
respondent Moreno was not included in the second shortlist. Yet, the four of them
were treated differently and considered favorably when they were exempted from the
rigorous screening process of the NCCA and the CCP and conferred the Order of
National Artists. The Committee on Honors and the former President effectively
treated respondents Guidote-Alvarez, Caparas, Mañosa and Moreno as a preferred
class. The special treatment accorded to respondents Guidote-Alvarez, Caparas,
Mañosa and Moreno fails to pass rational scrutiny.60 No real and substantial
distinction between respondents and petitioner Abad has been shown that would
justify deviating from the laws, guidelines and established procedures, and placing
respondents in an exceptional position. The undue classification was not germane to
the purpose of the law. Instead, it contradicted the law and well-established guidelines,
rules and regulations meant to carry the law into effect. While petitioner Abad cannot
claim entitlement to the Order of National Artists,61 he is entitled to be given an equal
opportunity to vie for that honor. In view of the foregoing, there was a violation of
petitioner Abad’s right to equal protection, an interest that is substantial enough to
confer him standing in this case.
As regards the other concerned artists and academics as well as the CAP, their claim
of deep concern for the preservation of the country’s rich cultural and artistic heritage,
while laudable, falls short of the injury in fact requirement of standing. Their assertion
constitutes a generalized grievance shared in a substantially equal measure by all or
a large class of citizens.62 Nor can they take refuge in their status as taxpayers as the
case does not involve any illegal appropriation or taxation. A taxpayer’s suit is proper
only when there is an exercise of the spending or taxing power of the Congress.63

Nonetheless, as a reading of the petition shows that it has advanced an issue which
deserves the attention of this Court in view of its seriousness, novelty and weight as
precedent, it behooves the Court to relax the rules on standing and to resolve the
issue presented before it.64 Moreover, this issue is of paramount interest,65 which
further justifies a liberal stance on standing.

Propriety of the Remedies

The present action is a petition for prohibition, certiorari, injunction, restraining order
and all other legal, just and equitable reliefs.

It has been held that the remedies of prohibition and injunction are preventive and, as
such, cannot be availed of to restrain an act that is already fait accompli.66 Where the
act sought to be prohibited or enjoined has already been accomplished or
consummated, prohibition or injunction becomes moot.67

Nevertheless, even if the principal issue is already moot, this Court may still resolve
its merits for the future guidance of both bench and bar. Courts will decide a question
otherwise moot and academic if it is "capable of repetition, yet evading review."68

It is an opportune time for the Court to assert its role as republican schoolmaster,69 a
teacher in a vital national seminar.70 There are times when the controversy is of such
character that, to prevent its recurrence and to assure respect for constitutional
limitations, this Court must pass on the merits of a case.71 This is one such case.
More than being a teaching moment, this is not the first time that the Order of National
Artists was conferred in the manner that is being assailed in this case. 72 If not
addressed here and now, there is great probability that the central question involved
in this case will haunt us again in the future. Every President may invoke absolute
presidential prerogative and thrust upon us National Artists after his or her own heart,
in total disregard of the advise of the CCP and the NCCA and the voice of the
community of artists, resulting to repeated episodes of indignation and uproar from
the artists and the public.

Furthermore, if not corrected, such an act would give rise to mischief and dangerous
precedent whereby those in the corridors of power could avoid judicial intervention
and review by merely speedily and stealthily completing the commission of an
illegality.73

In any event, the present petition is also for certiorari and there is no procedural bar
for the Court to pass upon the question of whether the proclamations of respondents
Guidote-Alvarez, Caparas, Mañosa and Moreno as National Artists were attended by
grave abuse of presidential discretion.
Limits of the President’s Discretion

The respective powers of the CCP Board of Trustees and of the NCCA Board of
Commissioners with respect to the conferment of the Order of National Artists are
clear. They jointly administer the said award and, upon their recommendation or
advice, the President confers the Order of National Artists.

To "recommend" and to "advise" are synonymous. To "recommend" is "to advise or


counsel."74 To "advise" is "to give an opinion or counsel, or recommend a plan or
course of action; also to give notice. To encourage, inform or acquaint."75 "Advise"
imports that it is discretionary or optional with the person addressed whether he will
act on such advice or not.76 This has been clearly explained in Cojuangco, Jr. v. Atty.
Palma77:

The "power to recommend" includes the power to give "advice, exhortation or


indorsement, which is essentially persuasive in character, not binding upon the party
to whom it is made." (Emphasis supplied.)

Thus, in the matter of the conferment of the Order of National Artists, the President
may or may not adopt the recommendation or advice of the NCCA and the CCP
Boards. In other words, the advice of the NCCA and the CCP is subject to the
President’s discretion.

Nevertheless, the President’s discretion on the matter is not totally unfettered, nor the
role of the NCCA and the CCP Boards meaningless.

Discretion is not a free-spirited stallion that runs and roams wherever it pleases but is
reined in to keep it from straying. In its classic formulation, "discretion is not
unconfined and vagrant" but "canalized within banks that keep it from overflowing."78

The President’s power must be exercised in accordance with existing laws. Section
17, Article VII of the Constitution prescribes faithful execution of the laws by the
President:

Sec. 17. The President shall have control of all the executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied.)

The President’s discretion in the conferment of the Order of National Artists should be
exercised in accordance with the duty to faithfully execute the relevant laws. The
faithful execution clause is best construed as an obligation imposed on the President,
not a separate grant of power.79 It simply underscores the rule of law and, corollarily,
the cardinal principle that the President is not above the laws but is obliged to obey
and execute them.80 This is precisely why the law provides that "administrative or
executive acts, orders and regulations shall be valid only when they are not contrary
to the laws or the Constitution."81

In this connection, the powers granted to the NCCA and the CCP Boards in
connection with the conferment of the Order of National Artists by executive
issuances were institutionalized by two laws, namely, Presidential Decree No. 208
dated June 7, 1973 and Republic Act No. 7356. In particular, Proclamation No. 1144
dated May 15, 1973 constituted the CCP Board as the National Artists Awards
Committee and tasked it to "administer the conferment of the category of National
Artist" upon deserving Filipino artists with the mandate to "draft the rules to guide its
deliberations in the choice of National Artists":

Proclamation No. 1001 dated April 27, 1972, creating the Award and Decoration of
National Artist, is hereby amended by creating a National Artists Awards Committee,
hereinafter to administer the conferment of the category of National Artist upon those
deserving thereof. The Committee, which shall be composed of members of the
Board of Trustees of the Cultural Center of the Philippines, shall organize itself
immediately and shall draft the rules to guide its deliberations in the choice of National
Artists, to the end that those who have created a body of work in the arts and in letters
capable of withstanding the test of time will be so recognized. (Emphases supplied.)

The authority of the CCP Board of Trustees as National Artists Awards Committee
was reiterated in Presidential Decree No. 208 dated June 7, 1973.

The function of the CCP Board of Trustees as National Artists Awards Committee has
been recognized under Republic Act No. 7356:

Sec. 18. The National Cultural Agencies. – The [NCCA] shall coordinate with the
national cultural agencies including but not limited to the Cultural Center of the
Philippines, the Institute of Philippine Languages, the National Historical Institute, the
National Library, the National Museum, the Records Management and Archives Office.
However, they shall continue operating under their respective charters or as provided
by law where provisions therein are not inconsistent with the provisions of this Act.
They shall serve as the national repository and/or showcase, as the case may be, of
the best of Philippine culture and arts. For this purpose, these agencies shall submit
periodic reports, including recommendations to the [NCCA]. (Emphasis supplied.)

On the other hand, the NCCA has been given the following mandate in connection
with the conferment of cultural or arts awards:

Sec. 12. Mandate. – The Commission is hereby mandated to formulate and


implement policies and plans in accordance with the principles stated in Title 1 of this
Act.

(a) To encourage the continuing and balanced development of a pluralistic culture by


the people themselves, it shall:

xxxx

(4) extend recognition of artistic achievement through awards, grants and services to
artists and cultural groups which contribute significantly to the Filipino’s cultural
legacy;

xxxx

Sec. 13. Powers and Functions. – To carry out its mandate, the Commission shall
exercise the following powers and functions:
xxxx

(j) advise the President on matters pertaining to culture and the arts, including the
creation of a special decoration or award, for persons who have significantly
contributed to the development and promotion of Philippine culture and arts;

(k) promulgate rules, regulations and undertake any and all measures as may be
necessary to implement this Act. (Emphases supplied.)

By virtue of their respective statutory mandates in connection with the conferment of


the National Artist Award, the NCCA and the CCP decided to work together and jointly
administer the National Artist Award. They reviewed the guidelines for the nomination,
selection and administration of the National Artist Award, created a National Artist
Award Secretariat, centralized all financial resources and management for the
administration of the National Artist Award, and added another layer to the selection
process so that more members of the arts and culture sector of the Philippines may
be involved and participate in the selection of National Artists.

We have held that an administrative regulation adopted pursuant to law has the force
and effect of law.82 Thus, the rules, guidelines and policies regarding the Order of
National Artists jointly issued by the CCP Board of Trustees and the NCCA pursuant
to their respective statutory mandates have the force and effect of law. Until set aside,
they are binding upon executive and administrative agencies,83 including the
President himself/herself as chief executor of laws. In this connection, Section 2.5(A)
of the Implementing Rules and Regulations84 of Executive Order No. 236, s. 2003
provides:

2.5: General Guidelines for Awards Committees

A. National Orders of Cultural and Scientific Merit

The existing modalities of the NCCA for selecting recipients for the Order of National
Artists, and the Gawad sa Manlilikha ng Bayan, and of the NAST for selecting
recipients of the Order of National Scientists, shall remain in force. (Emphases
supplied.)

Section 2.4(A) of the same implementing rules further states:

2.4: Awards Committees

There shall be two types of awards committees: the Committee on Honors and the
various awards committees in the various units of the government service.

A. The Committee on Honors

The Committee on Honors serves as a National Awards Committee. It is composed of


the following:

The Executive Secretary, Chairman


The Secretary of Foreign Affairs, Vice-Chairman

Head, Presidential Management Staff, member

Presidential Assistant for Historical Affairs, member

Chief of Presidential Protocol, member

Chief of Protocol, DFA, member

All nominations from the various awards committees must be submitted to the
Committee on Honors via the Chancellery of Philippine Orders and State Decorations.
The Chancellery shall process nominations for the consideration of the Committee on
Honors. The Committee on Honors shall screen and recommend these nominations
to the President.

The Committee on Honors shall, as a general rule, serve as a screening committee to


ensure that nominations received from the various awards committees meet two tests:
that there has not been an abuse of discretion in making the nomination, and that the
nominee is in good standing. Should a nomination meet these criteria, a
recommendation to the President for conferment shall be made.

The President of the Philippines takes the recommendations of the Committee on


Honors in the highest consideration when making the final decision on the conferment
of awards. (Emphasis supplied.)

Pursuant to the above provision of the implementing rules of Executive Order No. 236,
s. 2003, the authority of the Committee on Honors is limited to determining whether
the nominations submitted by a particular awards committee, in this case, the joint
NCCA and CCP Boards, have been tainted by abuse of discretion, and whether the
nominees are in good standing. Should the nominations meet these two criteria, the
Committee on Honors shall make a recommendation to the President for conferment
of the Order of National Artists.

In view of the various stages of deliberation in the selection process and as a


consequence of his/her duty to faithfully enforce the relevant laws, the discretion of
the President in the matter of the Order of National Artists is confined to the names
submitted to him/her by the NCCA and the CCP Boards. This means that the
President could not have considered conferment of the Order of National Artists on
any person not considered and recommended by the NCCA and the CCP Boards.
That is the proper import of the provision of Executive Order No. 435, s. 2005, that the
NCCA and the CCP "shall advise the President on the conferment of the Order of
National Artists." Applying this to the instant case, the former President could not have
properly considered respondents Guidote-Alvarez, Caparas, Mañosa and Moreno, as
their names were not recommended by the NCCA and the CCP Boards. Otherwise,
not only will the stringent selection and meticulous screening process be rendered
futile, the respective mandates of the NCCA and the CCP Board of Trustees under
relevant laws to administer the conferment of Order of National Artists, draft the rules
and regulations to guide its deliberations, formulate and implement policies and plans,
and undertake any and all necessary measures in that regard will also become
meaningless.

Furthermore, with respect to respondent Guidote-Alvarez who was the Executive


Director of the NCCA at that time, the Guidelines expressly provides:

6.5 NCCA and CCP Board members and consultants and NCCA and CCP officers
and staff are automatically disqualified from being nominated.85

Respondent Guidote-Alvarez could not have even been nominated, hence, she was
not qualified to be considered and conferred the Order of National Artists at that time.
The President’s discretion on the matter does not extend to removing a legal
impediment or overriding a legal restriction.

From the foregoing, the advice or recommendation of the NCCA and the CCP Boards
as to the conferment of the Order of National Artists on Conde, Dr. Santos, Francisco
and Alcuaz was not binding on the former President but only discretionary or optional
for her whether or not to act on such advice or recommendation. Also, by virtue of the
power of control, the President had the authority to alter or modify or nullify or set
aside such recommendation or advice. It was well within the President’s power and
discretion to proclaim all, or some or even none of the recommendees of the CCP and
the NCCA Boards, without having to justify his or her action. Thus, the exclusion of
Santos did not constitute grave abuse of discretion on the part of the former
President.

The conferment of the Order of National Artists on respondents Guidote-Alvarez,


Caparas, Mañosa and Moreno was an entirely different matter.

There is grave abuse of discretion when an act is (1) done contrary to the Constitution,
the law or jurisprudence or (2) executed whimsically, capriciously or arbitrarily, out of
malice, ill will or personal bias.86

There was a violation of the equal protection clause of the Constitution87 when the
former President gave preferential treatment to respondents Guidote-Alvarez,
Caparas, Mañosa and Moreno.1âwphi1 The former President’s constitutional duty to
faithfully execute the laws and observe the rules, guidelines and policies of the NCCA
and the CCP as to the selection of the nominees for conferment of the Order of
National Artists proscribed her from having a free and uninhibited hand in the
conferment of the said award. The manifest disregard of the rules, guidelines and
processes of the NCCA and the CCP was an arbitrary act that unduly favored
respondents Guidote-Alvarez, Caparas, Mañosa and Moreno. The conferment of the
Order of National Artists on said respondents was therefore made with grave abuse of
discretion and should be set aside.

While the Court invalidates today the proclamation of respondents Guidote-Alvarez,


Caparas, Mañosa and Moreno as National Artists, such action should not be taken as
a pronouncement on whether they are worthy to be conferred that honor. Only the
President, upon the advise of the NCCA and the CCP Boards, may determine that.
The Court simply declares that, as the former President committed grave abuse of
discretion in issuing Proclamation Nos. 1826 to 1829 dated July 6, 2009, the said
proclamations are invalid. However, nothing in this Decision should be read as a
disqualification on the part of respondents Guidote-Alvarez, Caparas, Mañosa and
Moreno to be considered for the honor of National Artist in the future, subject to
compliance with the laws, rules and regulations governing said award.

WHEREFORE, the petition is hereby GRANTED in PART. Proclamation Nos. 1826 to


1829 dated July 6, 2009 proclaiming respondents Cecile Guidote-Alvarez, Carlo
Magno Jose Caparas, Francisco Mañosa, and Jose Moreno, respectively, as National
Artists are declared INVALID and

SET ASIDE for having been issued with grave abuse of discretion.

PEDRO LUKANG vs PAGBILAO DEVELOPMENT CORPORATION

The patriarch of the family, Arsenio Lukang (Arsenio), and Mercedes Dee (Mercedes)
lived as husband and wife in Calamba, Laguna, from 1922 to 1934 and begot three (3)
children, namely, Domingo, Rosalina and Olympia.

In 1935, he started cohabiting with Leoncia Martinez (Leoncia), with whom he had ten
(10) children, namely, Elpidio, Socorro, Manuel, Pedro, Teresita, Simeon, Eugenio,
Hilaria, Concepcion, and Carlos. During their cohabitation in Lucena, Quezon, they
acquired several real properties located in Pagbilao, Quezon, to wit:

(a) Transfer Certificate of Title (TCT) Nos. T-445474 with an area of 257,967 square
meters;

(b) TCT No. T-445485 with an area of 40,000 square meters;

(c) TCT No. T-445496 with an area of 5.0078 hectares; and

(d) TCT No. T-445507 consisting of 5.0803 hectares.

The said properties were then registered in the name of "ARSENIO LUKANG, married
to Mercedes Dee, 1/2 share and Leoncia Martinez, single, 1/2 share."

Arsenio and Leoncia later acquired four (4) more parcels of land covered by TCT No.
T-103094, TCT No. T- 101425, TCT No. T-125349, and TCT No. T-125348. It was
allegedly agreed that the said properties should be registered in the name of Simeon,
one of their children, in trust for the other heirs and should be owned in common by
their family.

When Arsenio died in 1976, his 13 children and Mercedes, executed the Extrajudicial
Settlement of Estate,8 in which they agreed to adjudicate and transfer among
themselves the rights, interest and ownership of the four (4) parcels of land covered
by TCT Nos. T-44547, T-44548, T-44549, and T-44550. There was, however, no
agreement to partition the properties as they remained common to all the heirs.

Years later, after the execution of the Extrajudicial Settlement of Estate, Mercedes,
together with her three (3) children, Rosalina, Domingo, and Olympia, executed
another document, denominated as Pagbabahaging Labas sa Hukuman Na May
Pagtalikod sa Karapatan,9 dated December 19, 1987, wherein the parties declared
that they were the only heirs of Arsenio and partitioned the half portion of the four (4)
parcels of land covered by TCT Nos. T-44547, T-44548, T-44549, and T-44550
among themselves, with Mercedes waiving her supposed share in favor of her three
(3) children.

In 1988, Simeon, alleging that the certificates of title of the properties covered by TCT
Nos. T-103094, T-101425, T-125349, and T-125348 were lost, filed a petition for the
issuance of the owner’s duplicate copy before the RTC, Branch 57, Lucena City. As a
result, new owner’s duplicate copies of the allegedly lost titles were issued in his favor.
Thereafter, Simeon, in a deed of donation, transferred the said properties in favor of
his children, Benedict, Heile and Madeleine. Consequently, TCT Nos. T-103094,
T-125348 and T-125349 were cancelled, and TCT No. T-241034 was issued in the
name of Benedict; TCT No. 241035 in the name of Heile; and TCT No. 241036 in the
name of Madeleine.10 Furthermore, Simeon purportedly executed the Bilihang
Lampasan and Pagbibilihang Lubusan, where he sold the land covered by TCT No.
101425 in favor of Mercedes, Rosalina, Leoncia, and Elpidio.

In the meantime, on February 15, 1989, Mercedes, through Rosalinda, filed the
Petition for the Issuance of the Owner’s Duplicate of TCT Nos. T-44547, T-44548,
T-44549 and T-4455011 before the RTC, Branch 58, Lucena City. The RTC, in its
Order,12 dated March 27, 1989, granted the petition and new titles were issued in
favor of Mercedes. Unknown to Leoncia, Rosalina caused the segregation of the
one-half portion of the said properties in her (Leoncia’s) favor and the division of the
remaining half among her and her siblings, Domingo and Olympia. Hence, TCT Nos.
T-44547, T-44548, T-44549, and T-44550 were cancelled and new titles were issued:
TCT Nos. T-247219,13 T-247221,14 T-247223,15 and T-24722516 in the names of
Rosalina, Domingo and Olympia, while TCT Nos.
T-247220,17 T-247222,18 T-247224,19 and T-24722620 were registered in the name of
Leoncia.

On September 26, 1990, Leoncia and her children, claiming that the titles of TCT Nos.
T-44547, T-44548, T-44549, and T-44550 were not lost but in her (Leoncia’s)
possession, filed a complaint21 for annulment of extrajudicial partition, affidavit of
segregation and annulment of the new certificates of title, which was docketed as Civil
Case No. 90-124. The said case was consolidated with Civil Case No. 89-79, a case
for recovery of four (4) owner’s duplicate copy of TCTs filed by Simeon against his
brother Pedro. The cases were raffled to RTC, Branch 53, Lucena City.

Subsequently, Leoncia, through Pedro, registered her adverse claim on February 3,


1989 on TCT Nos. T-241034, T-242429, TCT No. T-241036, T-241035, and
T-242427 as Entry No. 530545. He further caused the annotation of a notice of lis
pendens on TCT No. T-247221 as Entry No. 556192 on October 1, 1990, and on TCT
Nos. T-241034, T-242429, TCT No. T-241036, T-241035, and T-242427 as Entry No.
538916 on November 6, 1989.

In 1993, while Civil Case No. 89-79 and Civil Case No. 90-124 were still pending,
respondent Pagbilao Development Corporation (PDC) purchased from Simeon,
Mercedes and Rosalina the six (6) properties which were the subject of the two cases.
Thus, TCT Nos. T-241034, T-242429, T-241036, T-241035, T-247221, and T-242427
were cancelled and new titles, TCT Nos.
T-282100,22 T-282101,23 T-282102,24 T-282103,25 T-282104,26 and T-28210527 were
issued in favor of PDC. Accordingly, the annotations were carried over to PDC’s titles.

When Pedro and the other heirs learned of the sale of the subject properties to PDC,
they filed a motion to require Simeon and Rosalina to explain why they sold the
properties without permission from the RTC.28 On April 23, 2008, they also filed an
application for a writ of preliminary injunction with ex-parte prayer for temporary
restraining order (TRO).29 They alleged that they were in actual and physical
possession of the subject properties; and that PDC entered into the said premises,
destroyed some structures therein and started to construct improvements on the
properties without their consent.

In its Order, dated April 23, 2008, the RTC30 granted the issuance of the TRO
effective for a period of twenty (20) days.

On May 13, 2008, after due hearing, the RTC issued the Order31 granting the
application for writ of preliminary injunction by which it restrained PDC from wresting
possession of the subject properties and ordering the movant, Pedro, to file a bond.

PDC filed a motion for reconsideration but it was denied in the RTC Order, 32 dated
March 18, 2009.

On May 29, 2009, Pedro posted a bond in the amount of One Million Pesos
(₱1,000,000.000).33

PDC filed a petition for certiorari before the CA assailing the issuance of the writ of
preliminary injunction. The CA, in its Decision, dated October 21, 2010, granted the
petition and set aside the May 13, 2008 and March 18, 2009 Orders of the RTC. The
CA explained that Pedro’s right over the said properties was not clear as it was
contingent on the outcome or result of the cases pending before the RTC; that it was
not a present right but a contingent or future right which was not covered by injunction;
and that there was no paramount necessity because there would be no great and
irreparable injury. Moreover, PDC, as the registered owner of the said properties, had
the right to enjoy the same as provided under Articles 428 and 429 of the Civil Code.

Pedro filed a motion for reconsideration but it was denied in the CA Resolution, dated
January 19, 2011. Hence, this petition, anchored on the following

ISSUES

THE COURT OF APPEALS ERRED IN CONSISTENTLY TURNING AWAY FROM


THE ISSUE OF RESPONDENT PAGBILAO’S STATUS AS A TRANSFEREE
PENDENTE LITE WHEN THAT IS THE MAIN ISSUE IN THE FIRST PLACE

II
THE COURT OF APPEALS ERRED IN RULING THAT PAGBILAO AS
REGISTERED OWNER OF THE SUBJECT PROPERTIES HAVE THE RIGHT TO
ENJOY AND EXCLUDE OTHER PERSONS FROM THE ENJOYMENT THEREOF

III

THE COURT OF APPEALS ERRED IN RULING THAT THE TRIAL COURT


PRE-JUDGED THE MAIN CASE AND SHIFTED THE BURDEN OF PROOF ON THE
HEIRS OF SIMEON LUKANG

IV

THE COURT OF APPEALS ERRED IN RULING THAT NON-ISSUANCE OF THE


INJUNCTIVE RELIEF IS NOT OF PARAMOUNT NECESSITY NOR WILL IT CAUSE
GREAT AND IRREPARABLE INJURY TO PEDRO LUKANG

THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT


COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FIXING THE BOND.

Synthesized, the issues boil down to the question of whether or not the RTC
committed grave abuse of discretion when it issued the May 13, 2008 Order granting
the writ of preliminary injunction.

A writ of preliminary injunction is a provisional remedy which is adjunct to a main suit,


as well as a preservative remedy issued to maintain the status quo of the things
subject of the action or the relations between the parties during the pendency of the
suit.34 The purpose of injunction is to prevent threatened or continuous irremediable
injury to the parties before their claims can be thoroughly studied and educated. Its
sole aim is to preserve the status quo until the merits of the case are fully
heard.35 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:

(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.

Thus, a writ of preliminary injunction may be issued upon the concurrence of the
following essential requisites, to wit: (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.36 While a clear showing of the right is necessary, its existence need not be
conclusively established. Hence, to be entitled to the writ, it is sufficient that the
complainant shows that he has an ostensible right to the final relief prayed for in his
complaint.37

The well-entrenched rule is that the grant or denial of the writ of preliminary injunction
rests upon the sound discretion of the court. The trial court is given a wide latitude in
this regard. Thus, in the absence of a manifest abuse, such discretion must not be
interfered with.38 "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."39

In the present case, the Court finds the RTC grant of injunction to be in
order.1âwphi1 The pertinent parts of its order read:

It is to be emphasized that the deeds of sale between the vendors of the six parcels of
land and the Pagbilao Development Corporation were executed on June 1, 1993. The
Affidavit of Adverse Claim of Leoncia Martinez Vda. De Lukang and the Notice of Lis
Pendens of Pedro Lukang over the six properties were all inscribed on February 3,
1989.

There is no question, therefore, that when the Pagbilao Development Corporation


bought the properties from the vendors, it had full knowledge that there were
questions involving ownership of the parcels of land it bought.

Likewise there is no question that Pagbilao Development Corporation did not take any
step to have the annotation or encumbrance in each title cancelled. [Emphases
supplied]

The annotation of an adverse claim and notice of lis pendens over the subject
properties is a notice to third persons that there is a controversy over the ownership of
the land and serves to preserve and protect the right of the adverse claimants during
the pendency of the controversy.40 The principle of filing a notice of lis pendens is
based on public policy and necessity, the purpose of which is to keep the properties in
litigation within the power of the court until the litigation is terminated in order to
prevent the defeat of the judgment by subsequent alienation; and in order to bind a
purchaser, bona fide or otherwise, to the judgment that the court would subsequently
promulgate. It serves as an announcement to the whole world that a particular real
property is in litigation and as a warning that those who acquire an interest in the
property do so at their own risk -- they gamble on the result of the litigation over it.41

Here, it must be noted that the annotations of adverse claim and lis pendens have
been inscribed in the certificates of titles on the following dates February 3, 1989,
November 6, 1989 and October 1, 1990, more than three (3) years before PDC
bought the subject properties in 1993. It would have been different if the adverse
claims and lis pendens were not annotated in the titles. With PDC having been
officially aware of them, there can be no grave abuse of discretion that can be
attributed to the RTC for issuing the writ of preliminary injunction. There is no question
that when PDC purchased the property, the petitioner and other intervenors were in
actual possession of the property and their claims adverse to its
predecessors-in-interest were annotated in the very titles of the properties. In fact,
these annotations were carried over to PDC’s title. PDC cannot invoke its being the
registered owner to dispossess the present possessors for, precisely, when it brought
the properties, it was charged with the knowledge that the ownership and sale of the
subject properties by its predecessors-in-interest have been questioned by their
co-heirs. Inevitably, PDC is deemed to have obtained the properties subject to the
outcome of the litigation among the heirs of Arsenio.

During the hearing, Pedro and the other heirs were able to convince the RTC that they
had a right over the properties which should be protected while being litigated.
Convinced, the RTC made a preliminary determination that their right should be
protected by a writ of preliminary injunction. Their claimed ownership and actual
possession were then being violated by PDC which had started entering the premises
and preparing the property for the construction of a power plant for liquefied natural
gas. Unless legally stopped, such act would indeed cause irreparable damage to the
petitioner and other claimants. As claimed co-owners, the petitioner and the other
heirs have the right to remain in possession of the subject properties pendente lite.
The legal or practical remedy of PDC, who gambled its lot in purchasing the properties
despite the annotations, is to await the final outcome of the cases or to amicably settle
its problems with all the co-owners, co-heirs or claimants.

With regard to the issue of the injunctive bond, the Court has time and again ruled that
the posting of the bond is a condition sine qua non before a writ of preliminary
injunction may issue.42 Its purpose is to secure the person enjoined against any
damage that he may sustain in case the court should finally decide that the applicant
was not entitled thereto.43 The rule, does not mean, however, that the injunction
maybe disregarded since it becomes effective only after the bond is actually filed in
court.44 In fact, in the case of Consolidated Workers Union v. Court of Industrial
Relations,45 the Court declared that it was erroneous for the labor court not to require
the party to file a bond. Yet, the Court did not annul the writ of injunction but instead
ordered the said court to determine the appropriate amount of bond to be posted by
the party.

In fine, it is erroneous for the CA to rule that the RTC committed grave abuse of
discretion simply because it failed to fix the amount of the bond. This error caused "no
substantial prejudice" that would warrant the quashal of the writ of injunction. 46 As a
matter of fact, Pedro posted a bond in the amount of One Million Pesos
(₱1,000,000.00), the sufficiency or insufficiency of which was never questioned by
PDC before the RTC.

Hence, the Court will not discuss the sufficiency of the bond not only because the
issue was not raised before the RTC but also it involves a question of fact.

WHEREFORE, the petition is GRANTED. The assailed October 21, 2010 Decision
and the January 19, 2011 Resolution of the Court of Appeals in CA-G.R. SP No.
108809 are hereby REVERSED and SET ASIDE. The May 13, 2008 Order of the
Regional Trial Court, Branch 53, Lucena City, in Civil Case No. 89-79 and Civil Case
No. 90-124 ordering the issuance of a Writ of Preliminary Injunction, is hereby ordered
REINSTATED.

ISABELITA C. VINUYA vs THE HONORABLE EXECUTIVE SECRETARY

Petitioners filed a Motion for Reconsideration1 and a Supplemental Motion for


Reconsideration,2 praying that the Court reverse its decision of April 28, 2010, and
grant their petition for certiorari.

In their Motion for Reconsideration, petitioners argue that our constitutional and
jurisprudential histories have rejected the Court’s ruling that the foreign policy
prerogatives ofthe Executive Branch are unlimited; that under the relevant
jurisprudence and constitutional provisions, such prerogatives are proscribed by
international human rights and international conventions of which the Philippines is a
party; that the Court, in holding that the Chief Executive has the prerogative whether
to bring petitioners’ claims against Japan, has read the foreign policy powers of the
Office of the President in isolation from the rest of the constitutional protections that
expressly textualize international human rights; that the foreign policy prerogatives
are subject to obligations to promote international humanitarian law as incorporated
intothe laws of the land through the Incorporation Clause; that the Court must re-visit
its decisions in Yamashita v. Styer3 and Kuroda v. Jalandoni4 which have been noted
for their prescient articulation of the import of laws of humanity; that in said decision,
the Court ruled that the State was bound to observe the laws of war and humanity;
that in Yamashita, the Court expressly recognized rape as an international crime
under international humanitarian law, and in Jalandoni, the Court declared that even if
the Philippines had not acceded or signed the Hague Convention on Rules and
Regulations covering Land Warfare, the Rules and Regulations formed part of the law
of the nation by virtue of the Incorporation Clause; that such commitment to the laws
ofwar and humanity has been enshrined in Section 2, Article II of the 1987
Constitution, which provides "that the Philippines…adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy
of peace, equality, justice, freedom, cooperation, and amity with all nations."

The petitioners added that the statusand applicability of the generally accepted
principles of international law within the Philippine jurisdiction would be uncertain
without the Incorporation Clause, and that the clause implied that the general
international law forms part of Philippine law only insofar as they are expressly
adopted; that in its rulings in The Holy See, v. Rosario, Jr.5 and U.S. v. Guinto6 the
Court has said that international law is deemed part of the Philippine law as a
consequence of Statehood; that in Agustin v. Edu,7 the Court has declared that a
treaty, though not yet ratified by the Philippines, was part of the law of the land
through the Incorporation Clause; that by virtue of the Incorporation Clause, the
Philippines is bound to abide by the erga omnesobligations arising from the jus
cogensnorms embodied in the laws of war and humanity that include the principle of
the imprescriptibility of war crimes; that the crimes committed against petitioners are
proscribed under international human rights law as there were undeniable violations
of jus cogensnorms; that the need to punish crimes against the laws of humanity has
long become jus cogensnorms, and that international legal obligations prevail over
national legal norms; that the Court’s invocation of the political doctrine in the instant
case is misplaced; and that the Chief Executive has the constitutional duty to afford
redress and to give justice to the victims ofthe comfort women system in the
Philippines.8

Petitioners further argue that the Court has confused diplomatic protection with the
broader responsibility of states to protect the human rights of their citizens, especially
where the rights asserted are subject of erga omnesobligations and pertain to jus
cogensnorms; that the claims raised by petitioners are not simple private claims that
are the usual subject of diplomatic protection; that the crimes committed against
petitioners are shocking to the conscience of humanity; and that the atrocities
committed by the Japanese soldiers against petitionersare not subject to the statute of
limitations under international law.9

Petitioners pray that the Court reconsider its April 28, 2010 decision, and declare: (1)
that the rapes, sexual slavery, torture and other forms of sexual violence committed
against the Filipina comfort women are crimes against humanity and war crimes
under customary international law; (2) that the Philippines is not bound by the Treaty
of Peace with Japan, insofar as the waiver of the claims of the Filipina comfort women
against Japan is concerned; (3) that the Secretary of Foreign Affairs and the
Executive Secretary committed grave abuse of discretion in refusing to espouse the
claims of Filipina comfort women; and (4) that petitioners are entitled to the issuance
of a writ of preliminary injunction against the respondents.

Petitioners also pray that the Court order the Secretary of Foreign Affairs and the
Executive Secretary to espouse the claims of Filipina comfort women for an official
apology,legal compensation and other forms of reparation from Japan.10

In their Supplemental Motion for Reconsideration, petitioners stress that it was highly
improper for the April 28, 2010 decision to lift commentaries from at least three
sources without proper attribution – an article published in 2009 in the Yale Law
Journal of International Law; a book published by the Cambridge University Press in
2005; and an article published in 2006 in the Western ReserveJournal of International
Law – and make it appear that such commentaries supported its arguments for
dismissing the petition, when in truth the plagiarized sources even made a strong
case in favour of petitioners’ claims.11

In their Comment,12 respondents disagree withpetitioners, maintaining that aside from


the statements on plagiarism, the arguments raised by petitioners merely rehashed
those made in their June 7, 2005 Memorandum; that they already refuted such
arguments in their Memorandumof June 6, 2005 that the Court resolved through
itsApril 28, 2010 decision, specifically as follows:

1. The contentions pertaining tothe alleged plagiarism were then already lodged
withthe Committee on Ethics and Ethical Standards of the Court; hence, the matter of
alleged plagiarism should not be discussed or resolved herein.13

2. A writ of certioraridid not lie in the absence of grave abuse of discretion amounting
to lack or excess of jurisdiction. Hence, in view of the failureof petitioners to show any
arbitrary or despotic act on the part of respondents,the relief of the writ of
certiorariwas not warranted.14
3. Respondents hold that the Waiver Clause in the Treaty of Peace with Japan, being
valid, bound the Republic of the Philippines pursuant to the international law principle
of pacta sunt servanda.The validity of the Treaty of Peace was the result of the
ratification by two mutually consenting parties. Consequently, the obligations
embodied in the Treaty of Peace must be carried out in accordance with the common
and real intention of the parties at the time the treaty was concluded.15

4. Respondents assert that individuals did not have direct international remedies
against any State that violated their human rights except where such remedies are
provided by an international agreement. Herein, neither of the Treaty of Peace and
the Reparations Agreement,the relevant agreements affecting herein petitioners,
provided for the reparation of petitioners’ claims. Respondents aver that the formal
apology by the Government of Japan and the reparation the Government of Japan
has provided through the Asian Women’s Fund (AWF) are sufficient to recompense
petitioners on their claims, specifically:

a. About 700 million yen would be paid from the national treasury over the next 10
years as welfare and medical services;

b. Instead of paying the money directly to the former comfort women, the services
would be provided through organizations delegated by governmental bodies in the
recipient countries (i.e., the Philippines, the Republic of Korea,and Taiwan); and

c. Compensation would consist of assistance for nursing services (like home helpers),
housing, environmental development, medical expenses, and medical goods.16

Ruling

The Court DENIESthe Motion for Reconsiderationand Supplemental Motion for


Reconsideration for being devoid of merit.

1. Petitioners did not show that their resort was timely under the Rules of Court.

Petitioners did not show that their bringing ofthe special civil action for certiorariwas
timely, i.e., within the 60-day period provided in Section 4, Rule 65 of the Rules of
Court, to wit:

Section 4. When and where position filed. – The petition shall be filed not later than
sixty (60) daysfrom notice of judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion.

As the rule indicates, the 60-day period starts to run from the date petitioner receives
the assailed judgment, final order or resolution, or the denial of the motion for
reconsideration or new trial timely filed, whether such motion is required or not. To
establish the timeliness of the petition for certiorari, the date of receipt of the assailed
judgment, final order or resolution or the denial of the motion for reconsideration or
new trial must be stated in the petition;otherwise, the petition for certiorarimust be
dismissed. The importance of the dates cannot be understated, for such dates
determine the timeliness of the filing of the petition for certiorari. As the Court has
emphasized in Tambong v. R. Jorge Development Corporation:17

There are three essential dates that must be stated in a petition for certiorari brought
under Rule 65. First, the date when notice of the judgment or final order or resolution
was received; second, when a motion for new trial or reconsideration was filed; and
third, when notice of the denial thereof was received. Failure of petitioner to comply
with this requirement shall be sufficient ground for the dismissal of the petition.
Substantial compliance will not suffice in a matter involving strict observance with the
Rules. (Emphasis supplied)

The Court has further said in Santos v. Court of Appeals:18

The requirement of setting forth the three (3) dates in a petition for certiorari under
Rule 65 is for the purpose of determining its timeliness. Such a petition is required to
be filed not later than sixty (60) days from notice of the judgment, order or Resolution
sought to be assailed. Therefore, that the petition for certiorariwas filed forty-one (41)
days from receipt of the denial of the motion for reconsideration is hardly relevant. The
Court of Appeals was notin any position to determine when this period commenced to
run and whether the motion for reconsideration itself was filed on time since the
material dates were not stated. It should not be assumed that in no event would the
motion be filed later than fifteen (15) days. Technical rules of procedure are not
designed to frustrate the ends of justice. These are provided to effect the proper and
orderly disposition of cases and thus effectively prevent the clogging of court dockets.
Utter disregard of the Rules cannot justly be rationalized by harking on the policy
ofliberal construction.19

The petition for certioraricontains the following averments, viz:

82. Since 1998, petitioners and other victims of the "comfort women system,"
approached the Executive Department through the Department of Justice in order to
request for assistance to file a claim against the Japanese officials and military
officers who ordered the establishment of the "comfort women" stations in the
Philippines;

83. Officials of the Executive Department ignored their request and refused to file a
claim against the said Japanese officials and military officers;

84. Undaunted, the Petitioners in turnapproached the Department of Foreign Affairs,


Department of Justice and Office of the of the Solicitor General to file their claim
against the responsible Japanese officials and military officers, but their efforts were
similarly and carelessly disregarded;20

The petition thus mentions the year 1998 only as the time when petitioners
approached the Department ofJustice for assistance, but does not specifically state
when they received the denial of their request for assistance by the Executive
Department of the Government. This alone warranted the outright dismissal of the
petition.
Even assuming that petitioners received the notice of the denial of their request for
assistance in 1998, their filing of the petition only on March 8, 2004 was still way
beyond the 60-day period. Only the most compelling reasons could justify the Court’s
acts of disregarding and lifting the strictures of the rule on the period. As we pointed
out inMTM Garment Mfg. Inc. v. Court of Appeals:21

All these do not mean, however, that procedural rules are to be ignored or disdained
at will to suit the convenience of a party. Procedural law has its own rationale in the
orderly administration of justice, namely: to ensure the effective enforcement of
substantive rights by providing for a system that obviates arbitrariness, caprice,
despotism, or whimsicality in the settlement of disputes. Hence, it is a mistake to
suppose that substantive law and procedural law are contradictory to each other, or
as often suggested, that enforcement of procedural rules should never be permitted if
it would result in prejudice to the substantive rights of the litigants.

As we have repeatedly stressed, the right to file a special civil action of certiorariis
neither a natural right noran essential element of due process; a writ of certiorariis a
prerogative writ, never demandable as a matter of right, and never issued except in
the exercise of judicial discretion. Hence, he who seeks a writ of certiorarimust apply
for it only in the manner and strictly in accordance with the provisions of the law and
the Rules.

Herein petitioners have not shown any compelling reason for us to relax the rule and
the requirements under current jurisprudence. x x x. (Emphasis supplied)

2. Petitioners did not show that the assailed act was either judicial or quasi-judicial on
the part of respondents.

Petitioners were required to show in their petition for certiorarithat the assailed act
was either judicial or quasi-judicial in character. Section 1, Rule 65 of the Rules of
Courtrequires such showing, to wit:

Section 1. Petition for certiorari.—When any tribunal, board or officer exercising


judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any 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 annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order, or
resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto, and a sworn certification of nonforum shopping as provided in the
third paragraph of Section 3, Rule 46. However, petitioners did notmake such a
showing.

3. Petitioners were not entitled to the injunction.


The Court cannot grant petitioners’ prayer for the writ of preliminary mandatory
injunction. Preliminary injunction is merely a provisional remedy that is adjunct to the
main case, and is subject to the latter’s outcome. It is not a cause of action itself.22 It is
provisional because it constitutes a temporary measure availed of during the
pendency of the action; and it is ancillary because it is a mere incident in and is
dependent upon the result of the main action.23Following the dismissal of the petition
for certiorari, there is no more legal basis to issue the writ of injunction sought. As an
auxiliary remedy, the writ of preliminary mandatory injunction cannot be issued
independently of the principal action.24

In any event, a mandatory injunction requires the performance of a particular


act.1âwphi1 Hence, it is an extreme remedy,25to be granted only if the following
requisites are attendant, namely:

(a) The applicant has a clear and unmistakable right, that is, a right in esse;

(b) There is a material and substantial invasion of such right; and

(c) There is an urgent need for the writ to prevent irreparable injury to the applicant;
and no other ordinary, speedy, and adequate remedy exists to prevent the infliction of
irreparable injury.26

In Marquez v. The Presiding Judge (Hon. Ismael B. Sanchez), RTC Br. 58, Lucena
City,27 we expounded as follows:

It is basic that the issuance of a writ of preliminary injunction is addressed to the


sound discretion of the trial court, conditioned on the existence of a clear and positive
right of the applicant which should be protected. It is an extraordinary, peremptory
remedy available only on the grounds expressly provided by law, specifically Section
3, Rule 58 of the Rules of Court. Moreover, extreme caution must be observed in the
exercise of such discretion. It should be granted only when the court is fully satisfied
that the law permits it and the emergency demands it. 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. Where facts are not shown to bring the case within
these conditions, the relief of injunction should be refused.28

Here, the Constitution has entrusted to the Executive Department the conduct of
foreign relations for the Philippines. Whether or not to espouse petitioners' claim
against the Government of Japan is left to the exclusive determination and judgment
of the Executive Department. The Court cannot interfere with or question the wisdom
of the conduct of foreign relations by the Executive Department. Accordingly, we
cannot direct the Executive Department, either by writ of certiorari or injunction, to
conduct our foreign relations with Japan in a certain manner.

WHEREFORE, the Court DENIES the Motion for Reconsideration and Supplemental
Motion for Reconsideration for their lack of merit.

G.R. No. 160025 April 23, 2014


SANGGUNIANG PANLUNGSOD NG BAGUIO CITY, Petitioner,
vs.
JADEWELL PARKING SYSTEMS CORPORATION, Respondent.

Before this Court are nine (9) Petitions involving essentially the same parties - officials
of the City Government of Baguio and Jadewell Parking Systems Corporation
(Jadewell). The only party here that is neither an official of the City Government of
Baguio nor an officer of Jadewell is former Judge Fernando Vil Pamintuan.

The two principal parties executed a Memorandum of Agreement (MOA) on 26 June


2000, whereby the City of Baguio authorized Jadewell to regulate and collect parking
fees for on-street parking in the city, as well as to implement the installation of modern
parking meters.

The legal disputes embodied in the nine Petitions began when the Sangguniang
Panlungsod of Baguio City (Sanggunian) revoked the MOA through City Resolution
No. 037, Series of 2002 (Resolution 37), alleging substantial breach of the MOA on
the part of Jadewell. Then Mayor Alfredo Vergara vetoed the Resolution. The
Sanggunian Panlungsod overrode the veto through an unnumbered Resolution dated
17 April 2002. These twin Resolutions constitute what we call here as the first act of
Rescission1 of the MOA by the city officials of Baguio. Jadewell denied the breach and
commenced an action before the Regional Trial Court (RTC) of Baguio,2questioning
the validity of the MOA’s revocation and the Sanggunian’s capacity to pass a
resolution revoking the MOA.

There was a second act of rescission that the city officials of Baguio performed in
2006, the circumstances of which will be narrated later on.

While the main case was under litigation, and then under appeal, the parties filed
contempt charges against each other. Six of these cases are part of the consolidated
Petitions before us.

These nine highly-voluminous cases, however, all boil down essentially to just these
five sets of legal questions requiring resolution:

(a) The validity or invalidity and legal efficacy of Saggunian’s two distinct acts of
rescission of the MOA;

(b) The duty of a trial judge to dismiss a case assailing the validity of the MOA and the
city resolution approving it in view of the pendency of the various petitions before this
Court;

(c) the liability of : (i) respondent city officials of Baguio, for various counts of indirect
contempt of this court, (ii) some respondents, who are lawyers at the same time, for
acts that require the disciplinary action of disbarment, (iii) respondent Judge
Pamintuan, for taking cognizance of a civil case allegedly in defiance of this Court’s
authority;
(d) the validity of the administrative suspension of one of the respondents herein,
former Mayor Braulio Yaranon, by the Office of the President in relation to his acts of
non-recognition of the MOA; and

(e) the nullification of certain acts of officials of Baguio City directed against Jadewell
pursuant to their belief that the latter had no authority to continue implementing the
terms of the MOA.

THE ANTECEDENT FACTS

On 1 March 1999, Jadewell proposed the privatization3 of the administration of


on-street parking in Baguio City using Schlumberger’s DG4S Pay and Display Parking
Meter (hereinafter "DG4S P&D"), which it touted as "technologically advanced, up to
the level of more progressive countries and which would make the city as the first and
only city in the Philippines, if not in Asia, to have metered parking as an important part
of its traffic and parking system."4

Respondent Sanggunian acted favorably on the proposal.5 On 31 May 2000, it


passed Resolution No. 159, Series of 1999, authorizing the City Mayor of Baguio to
negotiate and enter into a Memorandum of Agreement with Jadewell for the
installation of its proposed DG4S parking technology.6

On 16 July 1999, the City Mayor of Baguio wrote to Jadewell, transmitting to it the
finalized draft of the MOA, with amendments emanating from his office. The City
Mayor informed Jadewell that the finalization of the MOA would be subject to the
appropriate action of the Sanggunian and the passage of an enabling ordinance.7

On 27 March 2000, respondent Sanggunian enacted City Ordinance No. 003, Series
of 2000 (Ordinance No. 003-2000) amending Ordinance No. 13, Series of 1983,
outlining the rules and policy on the privatization of the administration of on-street
parking in the city streets of Baguio.8 For this purpose, the City of Baguio authorized
the intervention of a private operator for the regulation, charging and collection of
parking fees and the installation of modern parking meters, among others.

On 10 April 2000, the City Legal Officer of Baguio City advised the City Mayor that the
project for the regulation of on-street parking and installation of parking meters was
not an infrastructure. Hence, the project was not covered by the
Build-Operate-Transfer Law9 and did not require publication of a notice for its
validity.10

Nevertheless, for the sake of transparency, the City Legal Officer recommended the
publication of the appropriate notice on the project and an invitation to bid. An
invitation to bid for the proposed regulation of on-street parking and installation of
parking meters on Baguio City’s streets was published in the Philippine Daily Inquirer
on 8, 9 and 10 May 2000. Four interested bidders submitted their proposals, but three
were disqualified. The bid of Jadewell was the only one not disqualified; hence, it was
awarded the project.11
On 26 June 2000, the MOA was finally executed between Jadewell and the City of
Baguio – through its then City Mayor, Mauricio G. Domogan – for the installation,
management and operation of the DG4S P&D parking meters.12

On 17 July 2000, the Sanggunian confirmed the MOA through its Resolution No.
205-2000.13

On 31 August 2000, the parties executed a supplemental MOA to include the


Ganza/Burnham parking space, owned by the Philippine Tourism Authority and
managed by the City of Baguio, in the project.14 This supplemental agreement was
neither confirmed nor ratified by the Sanggunian.

In September of 2000, Jadewell began to mobilize and take over the parking facilities
at the Ganza/Burnham Park area.15 Around this time, questions arose regarding the
compliance by Jadewell with the provisions of the MOA, notably on matters such as
obtaining the recommendation from the Department of Public Works and Highways
(DPWH) for the installation of the parking meters and the legality of the collection of
parking fees being done by its parking attendants prior to the installation of the
parking meters at Burnham Park.16

On 20 December 2000, Jadewell wrote then Vice-Mayor Daniel T. Fariñas to inform


him of the progress of the deputization by the Department of Transportation and
Communications–Land Transportation Office (DOTC-LTO) of parking attendants
required for the implementation of the MOA. Jadewell explained that they were still
working on the required deputization of Jadewell’s parking attendants. Nevertheless,
it claimed that its parking attendants were authorized to collect parking fees pending
the actual installation of the parking meters. It also claimed that the parking meters
had not yet been installed because the necessary civil works were yet to be
completed.17

Shortly thereafter, a case was filed by Edgar M. Avila, et al. with the RTC-Baguio City
(Branch 61), assailing Ordinance No. 003-2000 as unconstitutional and seeking to
restrain the City Government of Baguio from implementing the provisions of the MOA.
It further alleged that the City Government could not delegate the designation of pay
parking zones to Jadewell, that the parking attendants deployed by Jadewell were not
deputized, and that the questioned ordinance creates class legislation as the
designated taxi and jeepney stands were discriminatorily removed. The case was
docketed as Civil Case No. 4892-R.18 This was dismissed on motion by Jadewell
joined by the City Government of Baguio. The lower court declared that Ordinance No.
003-2000 is constitutional and that all acts emanating from it are deemed "reasonable
and non-discriminatory...having been enacted in accordance with the powers granted
to Baguio City by law."19 Complainants’ Motion for Reconsideration (MR) was denied.

On 24 August 2001, Edgar Avila, et al., filed a Rule 65 Petition for Certiorari,
Prohibition and Mandamus with the Supreme Court assailing the RTC’s dismissal of
their Complaint. The case was docketed as G.R. No. 149642. On 10 October 2001,
this Court issued a Resolution dismissing the petition of Avila, et al. for failure to state
in their petition the material dates when they received the appealed resolution and
order, and to append the original or certified true copies of the questioned resolution
and order subject of their petition.20 There was no resolution on the merits. The
Resolution became final and executory on 2 April 2002.21
A case was also filed by Nelia G. Cid against then Mayor Bernardo Vergara, et al.
when her vehicle was clamped, towed away, and impounded by Jadewell after the
latter found her car to be illegally parked. She refused to pay the corresponding fees
to Jadewell and as a result, the latter refused to release her vehicle.22 Cid filed a case
for replevin and questioned the validity of Ordinance No. 003-2000 and the MOA, as
well as the authority of Jadewell to clamp down/tow away vehicles whose owners
refuse to pay parking fees. The case was docketed as Civil Case No. 5165-R and was
assigned to Branch 7 of RTC-Baguio. On 24 May 2002, an Omnibus Order was
issued by this RTC that addressed several pending incidents related to the authority
of Jadewell to clamp down/tow away vehicles. The Omnibus Order upheld Jadewell’s
authority to retain the vehicle of petitioner Nelia G. Cid pending her payment of the
parking and towage fees to Jadewell, and held that the authority of Jadewell was
lawfully provided in Ordinance No. 003-2000 and the MOA. Also, the RTC-Baguio
took cognizance of the ruling by this Court in G.R. No. 149642 which, in its mistaken
view, upheld the validity of the questioned ordinance and the MOA.23

Ultimately, Jadewell was able to install no more than 14 parking meters in three (3)
areas of Baguio City: six (6) on Session Road, five (5) on Harrison Road and three (3)
on Lake Drive.24 At the time that these meters were installed, there were already
verbal complaints being raised against Jadewell by the Sanggunian for the following
alleged violations:

a. Failure to install parking meters for each parking space as specified in Section 3-F
of Ordinance No. 003-2000;25

b. Failure to install a convenient and technologically advanced parking device that is


solar-powered and can measure the time a vehicle stays in a parking slot;26

c. Failure to give the City of Baguio the latter's share of the collected parking fee;27

d. Failure to post a performance bond in the amount of ₱1 million after its previous
bond expired.28

The Sanggunian passed Resolution No. 395, Series of 2000, directing Jadewell to
comply with its obligations under the MOA for the installation of the necessary number
of parking meters.29

On 15 March 2001, Jadewell wrote to the City Mayor in response to the mentioned
Resolution, informing the said office that the former had started operation of the
off-street parking on 2 December 2000 and of the on-street parking on 15 December
2000.30 On 27 January 2001, Jadewell also wrote the City Treasurer that the former
had completed installation of the parking meters.31

In response to the letter of Jadewell, the City Treasurer demanded the remittance of
Baguio’s share of the parking fees collected by Jadewell since it started operations.
Jadewell responded by saying that it had complied with this obligation.32

On 19 February 2002, the Sanggunian passed Resolution 37,33 expressing its intent
to rescind the MOA with Jadewell. The said Resolution enumerated in the "Whereas"
clauses the alleged violations of Jadewell prompting it to rescind the MOA. It reads:
xxxx

WHEREAS, it now appears from verified facts that:

1. contrary to its commitment to install a technologically based P & D parking system,


at no cost to the City, including "such equipment and paraphernalia to meter the
length of usage of the affected parking spaces for purposes of payment of the parking
fees", Jadewell has installed only fourteen (14) parking meters (only 12 of which are
working) in only three (3) streets, and Jadewell does not intend to install anymore [sic];
instead it has resorted as a rule to an exceptional circumstance of manual collection
of parking fees by parking attendants who, despite express provisions of the
Ordinance, are not duly deputized by the DOTC-LTO. Despite assurances to the
Honorable City Mayor that Jadewell would stop collection of parking fees until the
parking meters have been duly installed, Jadewell continues to collect parking fees
manually by using undeputized parking attendants to do the collection;

2. contrary to its commitment to install a technologically based P & D parking system,


at no cost to the City, Jadewell has charged the cost of such and similar equipment as
direct costs, thus substantially eroding the share of the City in the parking fees;

3. contrary to its obligation to post a performance bond, Jadewell has not fully
complied, and when required to update its performance bond Jadewell refused to do
so rationalizing its non-compliance by the assertion that they are already performing
and therefore are no longer obligated to post a performance bond;

4. contrary to its obligation to remit the share of the City within the first ten (10) days of
the following month, Jadewell had initially resisted making payments to the City on the
pretext that the profits cannot be determined until after the end of the fiscal year and
initially failed to have their tickets pre-numbered and registered with the Office of the
City Treasurer;

5. contrary to its promise that the City would derive substantial revenue from the
on-street pay parking system, Jadewell has not paid a single centavo of the City share
in on-street parking operation; whatever Jadewell has remitted to the City are properly
chargeable against the share of the City in the MOA on off-street parking (the
Burnham Parking Area near Ganza), and it appears less than what the City is entitled
thereto; and

6. contrary to its representations that the P & D System which it proposed would
eliminate fraud in the collection of parking fees, Jadewell has perpetrated fraud on the
City by, according to the affidavit of its former bookkeeper, Mr. Adonis Cabungan,
doctoring the financial statements before the same are submitted to City authorities.34

WHEREAS, there has been no substantial improvement of the traffic situation in the
City even with the introduction of the P & D Parking System and thus it increasingly
appears that the system introduced by Jadewell is more for revenue raising than for
regulatory purposes. As a consequence the legal principle applies that the collection
of taxes cannot be let to any person. In other words, government cannot allow private
persons to collect public funds for themselves with the agreement that part thereof or
as it turned out in this case no part thereof is shared with the City;
WHEREAS, in its financial reports to the City showing substantial loses [sic] and in its
statement to other persons that it is losing money on the project, the kindest thing that
the City can do for Jadewell is to prevent Jadewell from incurring anymore [sic] loses.

NOW THEREFORE, on motion of Hon. Bautista, and Hon. Cariño, seconded by Hon.
Yaranon, Hon. Weygan and Hon. Tabora, be it RESOLVED, as it is hereby resolved,
to rescind the Memorandum of Agreement (MOA) executed between the City of
Baguio and Jadewell Parking System Corporation dated 26 June 2000 on the basis of
the foregoing premises and exercising its rights under Section 12 of the MOA on the
subject of On-Street Parking executed between the City of Baguio and Jadewell
Parking Systems Corporation dated 26 June 2000 and, more importantly, performing
its duty to protect and promote the general welfare of the people of Baguio City.

RESOLVED FURTHER, to direct the City Legal Officer to cause the proper notice of
rescission to Jadewell Parking Systems Corporation forthwith and to take all
appropriate steps to implement and enforce the intent of this Resolution.

RESOLVED FURTHERMORE, to inform all City officials and employees and all other
persons concerned to be guided accordingly.35

On 1 March 2002, the then City Mayor of Baguio, Bernardo M. Vergara, vetoed
Resolution 37, through a letter dated 1 March 2002 addressed to the Vice-Mayor, as
Presiding Officer of the Sanggunian, and its members. Mayor Vergara reasoned that it
was premature for the Sangguniang Panlungsod to rescind the MOA, because the
latter provides for a minimum period of five years before the right of rescission can be
exercised; and, that the right of Jadewell to due process was violated due to the lack
of opportunity to hear the latter’s side. The City Mayor proposed a re-negotiation of
the MOA with Jadewell as a solution to the problem.36

Meanwhile, on 13 March 2002, the DOTC–Cordillera Autonomous Region


(DOTC-CAR) issued a cease and desist order to Jadewell prohibiting it from clamping
down and/or towing away vehicles in Baguio City for violation of traffic rules and
regulations.37

On 17 April 2002, the Sanggunian resolved through a Resolution of the same date, to
override the veto of the City Mayor, worded thus:

NOW THEREFORE, the Sangguniang Panlungsod (City Council) in Regular Session


assembled, by twelve affirmative votes constituting more that [sic] a two-thirds vote of
all its Members, has resolved to override, as it hereby overrides, the veto of His Honor,
Mayor Bernardo M. Vergara, of City Resolution Numbered 037, Series of 2002,
entitled "Rescinding the Memorandum of Agreement (MOA) Executed Between the
City of Baguio and Jadewell Parking Systems Corporation Dated 26 June 2000."38

Also at this time, Braulio D. Yaranon, who was then a member of the Sanggunian,
requested a special audit from the Commission on Audit–Cordillera Autonomous
Region (COA-CAR) on the operations of Jadewell as regards the pay parking project
embodied in the MOA.
On 27 May 2002, Jadewell filed with the RTC of Baguio City a Rule 65 Petition for
Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Writ of
Preliminary Injunction, assailing the validity of Resolution No. 037-2002, which
rescinded the MOA between the Sangguniang Panlungsod and Jadewell.39 The case
was docketed as Civil Case No. 5285-R and was raffled off to RTC-Baguio (Branch
61).

On 8 October 2002, the RTC Br. 61 promulgated its Decision40 finding the
Sanggunian’s rescission of the MOA unlawful. The Sanggunian then filed an appeal
assailing the RTC’s decision with the Court of Appeals; the case was docketed as
CA-G.R. SP No. 74756.

Meanwhile, pending resolution of CA-G.R. SP No. 74756 before the CA, the
Sanggunian passed Resolution No. 089, Series of 2003. The resolution sought the
assistance of the DOTC-CAR specifically, for it to take immediate action against the
officers and personnel of Jadewell for defying the 13 March 2002 cease-and-desist
Order it issued prohibiting the latter from clamping down and/or towing away
vehicles.41 On 27 May 2003, City Mayor Vergara approved and signed Resolution No.
089-2003. In response, Jadewell filed a Petition for Indirect Contempt with the CA
against Mayor Vergara, the Sanggunian and other local government officers. The
case was docketed as CA-G.R. SP No. 77341. The original petition was followed by
three (3) supplemental petitions filed by Jadewell in the same case.

On 7 July 2003, the CA rendered a Decision42 in CA G.R. SP No. 74756, affirming the
assailed Decision of the trial court which declared as invalid the Sanggunian’s
rescission of the MOA. The Sanggunian filed a Motion For Reconsideration, but this
was denied by the CA through a Resolution dated 4 September 2003.43 Aggrieved by
the denial of their appeal, the Sanggunian filed a Rule 45 Petition for Review on
Certiorari with this Court, seeking to reverse and set aside the 7 July 2003 Decision
and its Resolution dated 04 September 2003 of the CA. The petition was docketed as
G.R. No. 160025, the first of the consolidated petitions herein.44

In CA-G.R. SP No. 77341, the CA dismissed in a Decision45 promulgated on 28 July


2004 the contempt petitions filed by Jadewell for lack of merit. The latter’s Motion For
Reconsideration was likewise denied by the CA.46Jadewell elevated the dismissal of
its contempt petitions to this Court on 8 December 2004 by filing a Rule 45 Petition for
Review on Certiorari. The case was docketed as G.R. No. 166094. This is not among
the consolidated petitions herein.

On 13 July 2003, the COA-CAR promulgated the requested Report.47 The Report’s
objective was to ascertain compliance by the contracting parties – the City of Baguio
and Jadewell – with Ordinance No. 003-2000 and the MOA. The COA-CAR Report
has 12 findings, essentially as follows:

1) The provisions of the MOA and its Supplement as regards the sharing of the fees
are contradicting, hence the share of the City Government cannot be determined;48

2) There was no proper segregation by area of the parking fees collected, hence the
proper share of Baguio City cannot be determined;49
3) The City Government did not strictly implement the collection of penalties arising
from the late remittances of Jadewell, hence additional revenues were not collected;50

4) The City Treasurer did not conduct an audit of the books and accounts of Jadewell,
thus the City Government’s share from parking fees cannot be ascertained;51

5) The use of the P&D parking meters were [sic] not maximized due to Jadewell’s
non-compliance with Ordinance No. 003-2000 and the MOA, resulting in the collection
of meager income from its use;52

6) The MOA does not specify the guidelines for determining the economic viability of
installing the parking meters and the period within which to install it [sic];53

7) The Supplemental MOA was not confirmed by the City Council of Baguio in
violation of R.A. No. 7160 (the Local Government Code);54

8) The coverage of the parking operations contained in Annex "A" of the MOA was not
confirmed by the City Council in violation of R.A. No. 7160;55

9) The City Government failed to ensure proper compliance by Jadewell with the MOA
provisions;56

10) The pay parking project was awarded to a bidder who did not have all the
qualifications as stated in the "Invitation to Bid" in violation of R.A. No. 7160 and Audit
Circular No. 92-386;57

11) The provisions on deputization in Ordinance No. 003-2000 and the MOA are
contrary to R.A. No. 4136 (the Land Transportation and Traffic Code), thus rendering
it invalid;58

12) The monthly minimum amount to be remitted to the City Government is doubtful
due to the discrepancy in the amounts collected and expenses for the year 1999
provided by the City Government to Jadewell as against the amount certified by the
Office of the City Architect and Parks Superintendent-Burnham Parks Office for the
City Government overseeing the Ganza-Burnham parking spaces.59

On 11 February 2004, after G.R. No. 160025 was filed and pending resolution by this
Court, the Sangguniang Panlungsod adopted Resolution No. 056, Series of 2004.
The said Resolution informs the general public that Jadewell had neither the authority
nor the police power to clamp, tow, or impound vehicles at any place in the City of
Baguio.60 Also, on the same date, the Sangguniang Panlungsod passed Resolution
No. 059, Series of 2004, in which it made a formal demand upon Jadewell to restore
to it possession of the Ganza Parking Area.61

With these developments, Jadewell filed directly with this Court its first indirect
contempt case against Bernardo M. Vergara (then City Mayor of Baguio), its
Vice-Mayor, and the entire City Council for enacting Resolution Nos. 056 & 059,
Series of 2004 pending resolution by this Court of G.R. 160025. The case was
docketed as G.R. No. 163052.
On 23 June 2004, this Court through its First Division, ordered G.R. No. 163052
consolidated with G.R. No. 160025.62

On 1 July 2004, then Baguio City Mayor Braulio D. Yaranon issued Executive Order
No. 001-04,63 the decretal portion of which reads:

NOW, THEREFORE, the undersigned City Mayor, pursuant to his authority to enforce
all laws and ordinances relative to the governance of the City, and to issue executive
orders for the faithful and appropriate enforcement and execution of such laws and
ordinances (Sec. 455 (b) (2) and (iii), R.A. 7160) hereby affirms and gives protection
to the right of the citizenry, particularly affected motor vehicle owners, operators, and
drivers, to refuse to submit to the enforcement of Ordinance 003-2000, by the
Jadewell Parking Systems Corporation, and further to refuse to pay public revenue in
the form of fees, charges, impositions, fines, and penalties provided for in the said
ordinance, to the said entity, such acts being patently illegal and prohibited by law;
this Executive Order shall be in force and effect until the City Council, as the
legislative arm of the City of Baguio, shall have adopted appropriate remedial or
corrective measures on the matters and concerns specified hereinabove.

On 8 July 2004, Mayor Yaranon issued a Memorandum64 to the City Director of the
Baguio City Police Department, directing the department to stop and prevent Jadewell
from clamping, towing, and impounding vehicles; to arrest and file criminal charges
against Jadewell personnel who would execute the proscribed acts specified in the
said Memorandum; and to confiscate the equipment used by Jadewell to clamp, tow,
or impound vehicles under the authority of the rescinded MOA.

On 12 July 2004, Jadewell filed its second Petition for indirect contempt again with
this Court, this time against Mayor Yaranon for having issued the above-cited Order
also for the same reasons given in its first contempt petition with this Court. The
Petition was docketed as G.R. No. 164107.

Furthermore, on 15 July 2004, Jadewell filed an administrative case against Mayor


Yaranon before the Office of the President (OP). Docketed as Case No. OP 04-G-294,
it sought the mayor’s suspension and removal from office. The case against Mayor
Yaranon was for his issuance of the following: (1) Executive Order No. 001-04 dated 1
July 2004; (2) the Memorandum dated 7 July 2004 limiting the pay parking business
of Jadewell to certain parts of Baguio City;; and (3) Memorandum dated 8 July 2004
directing the Baguio City Police Department to prevent Jadewell from apprehending,
towing and impounding vehicles. A supplemental petition filed by Jadewell on 19
January 2005, complaining of Executive Order No. 005-2004, which was issued on 15
October 2004, was also included in administrative case OP 04-G-294.

On the following day, 16 July 2004, Jadewell filed a Supplemental Petition with Motion
for Leave of this Court65 in the second contempt petition before this Court, G.R. No.
164107, alleging as a supplemental fact, Mayor Yaranon’s Memorandum of 08 July
2004.

On 15 October 2004, Mayor Yaranon issued Executive Order No. 005-2004.66 This
was a cease and desist order against Jadewell to prevent it from performing the
following acts: (1) charging and collecting from motorists, parking fees without their
consent;67 (2) seizing and detaining vehicles of motorists who refuse to pay parking
fees to Jadewell;68 and (3) using yellow-colored heavy wreckers or tow trucks bearing
the name "City of Baguio".69

In addition to Executive Order No. 005-2004, Mayor Yaranon issued Executive Order
No. 005-2004-A, which is essentially a rehash of Executive Order No. 005-2004.70

On 25 October 2004, Jadewell filed a third Petition with this Court, praying that Mayor
Yaranon be cited for contempt and that Executive Order No. 005-2004 be
nullified.71 This case was docketed as G.R. No. 165564. On 16 November 2004,
Jadewell filed a Supplemental Petition to this Petition alleging as a supplemental
ground the issuance of Executive Order No. 005-2004-A.72

On 20 December 2004, Mayor Yaranon issued Administrative Order No. 622, Series
of 2004, which declared that Jadewell exceeded its area of operations for the
administration of on-street parking and was thus required to show lawful cause why its
business permit should not be revoked. In response to this Order, Jadewell filed a
Second Supplemental Petition for contempt against Mayor Yaranon in G.R. No.
165564 on 25 January 2005.

On 10 January 2005, this Court through a Resolution73 ordered the consolidation of


G.R. No. 160025 with G.R. Nos. 163052, 164107, and 165564.

On 17 January 2005, this Court denied Jadewell’s petition in G.R. No. 166094 for
failure to show any reversible error on the part of the CA in dismissing its petition for
contempt in CA-G.R. SP No. 77341.74 Its Motion For Reconsideration was likewise
denied with finality.75

In the beginning of the year 2005, Jadewell attempted to renew its business permit
from the City of Baguio and tendered the fees required. However, the Office of the
City Mayor refused to renew the business permit and returned the amount
tendered.76 Because of these actions of Mayor Yaranon, Jadewell filed on 15 April
2005 its Third Supplemental Petition in G.R. No. 164107, which had been
consolidated with G.R. Nos. 160025, 163052, and 165564. Aside from its main prayer
to cite the mayor for contempt, Jadewell also prayed that Mayor Yaranon, a lawyer, be
disbarred.77 On 25 April 2005, this Court, through its Third Division, admitted the Third
Supplemental Petition of Jadewell.78

On 9 February 2005, this Court, in G.R. No. 160025, issued a Writ of preliminary
mandatory injunction ordering Mayor Yaranon to immediately reopen the streets and
premises occupied and/or operated by Jadewell. The Court also required Jadewell to
post a cash or surety bond in the amount of ₱100,000 within five days from receipt of
the order.79

The order, in part, reads:

Acting on the urgent motion dated January 26, 2005 of respondent Jadewell Parking
Systems Corporation for the issuance of a temporary mandatory/preventive order
and/or for writ of preliminary mandatory/prohibitory injunction pending appeal in G.R.
No. 160025, alleging that the effects of the acts of City Mayor Yaranon, unless stayed,
would also make effective what the petitioner Sangguniang Panglungsod ng Baguio
failed to obtain in the instant case, the net effect of which would not only be grave
damage and injury to the respondent but also to the City of Baguio, the Court further
Resolved:

(a) to ISSUE, the WRIT OF PRELIMINARY MANDATORY INJUNCTION prayed for,


effective immediately, commanding City Mayor Yaranon to immediately reopen the
streets and/or premises operated and/or occupied by the respondent and to let them
remain open, until further orders of this Court; and

(b) to require petitioner to POST a CASH BOND or a SURETY BOND from a


reputable bonding company of indubitable solvency in the amount of ONE HUNDRED
THOUSAND PESOS (₱100,000.00), with terms and conditions to be approved by the
Court, within five (5) days from notice, otherwise, the writ of preliminary mandatory
injunction herein issued shall AUTOMATICALLY be lifted.

NOW THEREFORE, You, [City Mayor Braulio D. Yaranon], your agents,


representatives and/or any person or persons acting upon your orders or in your place
or stead, are hereby DIRECTED to IMMEDIATELY REOPEN the streets and/or
premises operated and/or occupied by the respondents and to let the said streets and
premises remain OPEN, until further orders from this Court.

On 8 April 2005, Mayor Yaranon issued a Memorandum80 directing Col. Isagani Nerez,
Director of the Baguio City Police District, to create a special task force to stop
Jadewell from clamping, towing, and impounding vehicles in violation of parking rules
in Baguio City; to impound the wrecker/tow trucks used by Jadewell.

On 20 April 2005, this Court promulgated a Resolution in G.R. No. 160025, finding
Mayor Yaranon guilty of direct and indirect contempt. He was cited for direct contempt
when it was proven that he had submitted pleadings before this Court containing
falsehoods. Mayor Yaranon had stated in his Compliance that the streets were
opened for Jadewell to resume operations, but upon inspection these were found to
be closed.81 He was also cited for indirect contempt, for having continuously refused
to carry out the writ issued by this Court to reopen the streets so Jadewell could
resume operations.82 This Court likewise fined Mayor Yaranon the amount of ₱10,000,
which he paid. The Court further ordered the National Bureau of Investigation (NBI) to
immediately arrest and detain Mayor Yaranon pending his compliance with the 9
February 2005 writ of preliminary mandatory injunction issued by this Court, which
ordered the reopening of some streets so Jadewell could continue its operations.83

On 10 August 2005, Benedicto Balajadia, et al. filed Civil Case No. 6089-R against
Jadewell before the RTC–Baguio City. The case was subsequently raffled to Branch 3
of the RTC presided by Judge Fernando Vil Pamintuan.84 Balajadia, et al. sought to
nullify the MOA between Jadewell and the City Government of Baguio and its
enabling ordinance, Ordinance No. 003-2000. The complainants also prayed for the
issuance of a Temporary Restraining Order (TRO) and for a writ of preliminary
injunction against Jadewell.

On 19 April 2006, Judge Pamintuan issued an Order in Civil Case No. 6089-R
granting the prayer of complainants Balajadia et al. for the issuance of a Writ of
Preliminary Prohibitory Injunction. The injunction was meant to restrain Jadewell from
proceeding with the supervision and collection of parking, towing, and impounding
fees on the streets of Baguio City. Further, Judge Pamintuan ordered the holding in
abeyance of the implementation of City Ordinance No. 003-2000 and the MOA.85

On 27 April 2006, Jadewell filed with this Court a Rule 65 Petition for Certiorari,
Prohibition, and Mandamus against Judge Pamintuan86 for refusing to dismiss Civil
Case No. 6089-R. The case was docketed as G.R. No. 172215. On the same day,
Jadewell filed a Petition asking this Court to cite Judge Pamintuan for contempt. This
fourth contempt case, albeit primarily against a member of the judiciary, was docketed
as G.R. No. 172216.

On 19 June 2006, G.R. No. 172215 was ordered consolidated with G.R. Nos. 160025,
163052, 164107, and 165564.87

On 23 June 2006, Mayor Yaranon wrote Jadewell a letter demanding that it desist
from operating the pay parking system in Baguio City. Simultaneously, he wrote the
Sanggunian, requesting it to cancel Ordinance No. 003-2000, the enabling ordinance
for the MOA.

On 26 June 2006, Jadewell filed a Supplemental Petition88 in G.R. No. 172215


complaining of Judge Pamintuan’s issuance of the following Orders in Civil Case No.
6089-R: (a) Order dated 24 April 200689 directing the parties to file a pre-trial brief and
setting the pre-trial of the case; (b) Order dated 01 June 200690 informing Jadewell
that public respondent was not suspending the proceedings, because he believed he
was not covered by the writ issued by this Court; (c) Order dated 14 June
200691 upholding the writ he issued in the civil case despite his receipt of a copy of the
writ of preliminary injunction issued by this Court; and (d) Order dated 16 June
200692 directing Jadewell to comply with the writ of preliminary prohibitory injunction
under pain of direct contempt.

On the same day, 26 June 2006, the Office of the President (OP) rendered a Decision
in OP 04-G-294, the administrative case Jadewell had filed against Mayor Yaranon,
finding him guilty of grave misconduct, abuse of authority, and oppression. Mayor
Yaranon was meted out a penalty totalling 12 months suspension from office.93This
suspension was implemented by the Department of Interior and Local Government
(DILG). Aggrieved by his suspension, Mayor Yaranon filed his Motion For
Reconsideration, which was denied on 22 August 2006 by the OP.

On 29 June 2006, in response to Mayor Yaranon’s letters of 23 June 2006, Jadewell


filed before this Court yet another case for contempt – its fifth contempt case, and the
third one specifically against Mayor Yaranon. In addition to its prayer to cite the mayor
for contempt, Jadewell also prayed that Mayor Yaranon, a lawyer, be disbarred.94 The
case was docketed as G.R. No. 173043.

On 31 July 2006, G.R. No. 173043 was ordered consolidated with G.R. Nos. 160025,
163052, 164107, 165564, and 172215.95 On 27 September 2006, G.R. No. 172216
was consolidated with G.R. Nos. 160025, 163052, 164107, 165564.96

On 23 August 2006, while the consolidated cases were pending resolution before this
Court, the Sangguniang Panlungsod enacted Resolution No. 204, Series of 2006. The
Resolution directed the City Legal Officer to notify Jadewell of the Baguio City
Government’s intention to rescind the MOA, and to inform Jadewell to stop its
operations under the MOA 60 days after receipt of the Notice.97

On 28 August 2006, the legal counsel for Jadewell wrote to Baguio City Vice-Mayor
Bautista, Jr., informing him that the OP had denied the Motion for Reconsideration of
Mayor Yaranon assailing the OP resolution ordering the latter’s suspension as City
Mayor of Baguio City.98 The counsel for Jadewell likewise stated in his letter that they
were aware that the Sanggunian was planning to issue a resolution to repeal
Ordinance No. 003-2000 and rescind the MOA. The letter requested the Vice-Mayor
to veto the measure in light of the pending petitions with the Supreme Court. 99 The
said counsel likewise sent a similar letter to the Sanggunian, urging it to desist from
implementing the repeal of Ordinance No. 003-2000 and the rescission of the MOA
pending the resolution of the cases with the Supreme Court.100

On 13 September 2006, Mayor Yaranon appealed to the CA, in a case docketed as


CA G.R. CV SP No. 96116, praying for the lifting of the penalty of suspension meted
him in OP 04-G-294, but this appeal was denied. Mayor Yaranon moved for
reconsideration.101

On 22 September 2006, City Legal Officer Rabanes wrote a letter to Jadewell,


through its President, Mr. Rogelio Tan, informing Jadewell of Resolution No. 204,
Series of 2006, which rescinded the MOA, and ordering it to stop operations within 60
days from notice.102 This letter was received on the same day it was issued;103 hence,
the 60-day period lapsed on 22 November 2006. This notice, together with the
resolution, constitute the second act of rescission of the MOA by the city officials of
Baguio.

On 19 October 2006, Jadewell filed the sixth contempt case with this Court against
the acting City Mayor of Baguio, Reinaldo A. Bautista, Jr., and the members of the
Sanggunian, including City Legal Officer Melchor Carlos R. Rabanes, for the second
act of rescission of the MOA.104 The case was docketed as G.R. No. 174879.

On 9 October 2007, the CA dismissed Mayor Yaranon’s Petition in CA G.R. CV SP


No. 96116 on the ground that it had become moot and academic due to Mayor
Yaranon’s failure to be re-elected in the 17 May 2007 elections. Mayor Yaranon filed a
Motion for Reconsideration on 07 November 2007, but this was also denied by the CA
on 24 January 2008. Thus, on 17 March 2008, Mayor Yaranon filed a Rule 45 Petition
before this Court seeking to reverse and set aside the CA Decision and Resolution. It
was docketed as G.R. No. 181488.

On 12 November 2008, G.R. No. 181488 was ordered consolidated with the cases
already mentioned.105

THE ISSUES

1. On G.R. No. 160025 and on the


claim in G.R. No. 174879 that the second
act of rescission was a valid act of
rescission.
Whilst the issues are spread out among the nine cases, we have grouped these
according to what are common to the specific cases.

In our effort to simplify the issues and provide forms of relief to the parties that are not
purely academic, it is necessary to examine the operative effects that may result from
any resolution of this Court. Such examination may also help guide the parties in their
future actions, and perhaps the overly-litigated matters brought before us in the
consolidated petitions may finally be put to rest.

We note at the outset that on 22 November 2006, 60 days had lapsed from receipt of
the letter dated 22 September 2006, informing Jadewell of the decision of the City of
Baguio to rescind the MOA under Section 12 thereof. It may be recalled that Section
12 requires that notice of the intention to rescind be given 60 days prior to the
effectivity of the rescission. Jadewell has not questioned the legal efficacy of this
notice. It has brought this matter of a second rescission to the Court’s attention only
as a matter of contumacious behavior on the part of the respondents in G.R. No.
174879, in the same way that it brought various actions of the public respondents
before the Court in its other contempt petitions. Since the legal efficacy of the
rescission in 2006 has not been contested by Jadewell in any of the petitions before
us, we thus consider this notice of rescission to have taken legal effect and therefore,
at the latest, the MOA between the City of Baguio and Jadewell has ceased to legally
exist as of 22 November 2006.

Parenthetically, we note that while the validity of the second act of rescission
described in G.R. No. 174879 is not principally determinative of the respondents’
liability for indirect contempt therein, a conclusion that the second act of rescission
was undertaken competently and appropriately will to a certain degree impact our
appreciation of such possible liability. We will discuss this issue in our subsequent
discussion on the charges of contempt.

Inasmuch as there is no longer any existing MOA, no order of this Court can have the
effect of directing the City of Baguio to enforce any of the terms of the MOA, which
brings us to the matter of G.R. No. 160025. In whatever direction we rule on the
question of the validity of the first act of rescission, such ruling will only have the effect
of either providing Jadewell a basis to seek damages from the City of Baguio for the
wrongful termination of the MOA, should we find wrongful termination to have taken
place, or, deny Jadewell that right. The possible susceptibility of the City of Baguio
and its officials to an action for damages on a finding of wrongful termination is why
we do not consider G.R. No. 160025 as having been rendered moot by the lawful
rescission of the MOA on 22 November 2006. Thus, we will proceed to rule on the
issues in G.R. No. 160025.

The fallo of the RTC Decision upheld by the CA, which affirmance is the lis mota in
G.R. No. 160025, reads as follows:

WHEREFORE, judgment is rendered declaring both Sangguniang Panlungsod


Resolution No. 037, Series of 2002 and the April 17, 2002 Resolution overriding the
Mayor’s veto as NULL and VOID. The Writ of Preliminary Injunction earlier issued by
this Court is made PERMANENT, with costs against respondents.106
The RTC did not order the respondents therein to comply with the MOA. An order to
perform a contract is not necessarily subsumed in an order not to terminate the same.

Contrast this legal point with the fact that the prayer of Jadewell in its original petition
asked the RTC, in relevant part:

...that the writ of preliminary injunction be made permanent and the writs applied for
be issued against the respondents nullifying and voiding Resolution No. 037, series of
2002 and the resolution over-riding the veto … and instead, directing them to perform
what the memorandum of agreement requires them to do. (Emphasis supplied)107

This latter part, which is effectively a prayer for a permanent mandatory injunction
against respondents therein to perform the terms of the MOA, are not in the fallo of
the RTC decision. We consider therefore that the RTC deliberately withheld granting
the specific prayer to order Baguio City to perform the MOA. No motion to correct or
clarify the said fallo having been filed by Jadewell, the prayer to order the city officials
of Baguio to perform the MOA is hereby deemed abandoned.

We further note three things:

1. Jadewell has not questioned - in its Petition, Reply to Comment, and Memorandum
before this Court - the implication of the RTC and CA Decisions to the effect that the
Sanggunian had the authority to perform acts of contractual rescission on behalf of
the City of Baguio when both these courts ignored the issue raised by Jadewell in its
Petition before the RTC, and we therefore do not consider this to be a genuine issue
in this Petition before us;

2. While the Sangguniang Panlungsod has insinuated that there was fraud and
excess of authority on the part of the mayor in the execution108 of the MOA - because
the latter provided for a smaller sharing of "20 % from the gross profit of the operation
or 50% of the net profit whichever is higher" instead of the intended "20% of gross
receipts,"109- petitioners in G.R. No. 160025 conceded even at the RTC level that they
are not assailing the MOA for being defective but for having been breached in the
performance. We thus disregard all arguments in G.R. No. 160025 regarding the
validity of the execution of the MOA, for being a non-issue in this case;110

3. We also immediately set aside claims of Jadewell in its Petition before the RTC that
an alternative relief should be provided by the courts in the form of compensation for
terminated Build-Operate-Transfer (BOT) contracts under the BOT Law (Republic Act
No. 6957) as there is not the slightest basis on record that the administration of
on-street parking can be classified as an infrastructure contract, a basic element that
must be present for any contract to come within the terms of the BOT Law.

Having preliminarily screened out the non-issues in this case, we proceed to examine
the rulings of the courts a quo in G.R. 160025.

The CA affirmed the RTC Decision in toto, along the following points:

1. On the sole procedural issue. - The RTC was correct in treating the Petition as one
for permanent injunction with a prayer for a preliminary injunction, instead of treating it
by its formal title: "Petition for Certiorari, Prohibition and Mandamus with a Prayer for
a Writ of Preliminary Injunction." It was correct in holding that if the Petition had been
treated by its formal denomination, then it would have been dismissed for failing to
satisfy the requirement that the act sought to be nullified was rendered in a judicial or
quasi-judicial capacity by the respondents, but then this formal denomination could be
disregarded and the nature of the Petition should be determined by its allegations and
prayers. Since there was a prayer to permanently enjoin respondents from enforcing
the questioned resolutions, the RTC was correct in treating it as one for permanent
injunction.

2. On the substantive issues:

a. On the lack of due process afforded Jadewell. – The RTC was correct in ruling that
Jadewell was denied the right to be heard before the Sanggunian rescinded the MOA.
There is no evidence on record that the Sanggunian afforded Jadewell an opportunity
to present its side or refute the charges of the latter’s violation committed under the
MOA.111

b. On the authority of the RTC to consider the effect of Section 9 of the MOA112 when
Jadewell never raised the matter of Section 9 in any of its pleadings. – The RTC
correctly considered Jadewell’s letter dated 24 November 2001, addressed to the
Sanggunian and offered during the trial, which introduced the subject matter of the
five (5) year guarantee against rescission provided in Section 9 of the MOA. The CA
regarded the RTC’s consideration of said letter as judicious and added that even
without it, the MOA, and its provisions, form part of the case records.113

c. On the failure to observe the 60-day notice requirement. – The RTC correctly found
that the Sanggunian cannot validly and unilaterally rescind the MOA without
observing the provisions in Section 12 of the MOA requiring that a 60-day notice be
given before rescission can take place. To allow the Sanggunian to unilaterally
rescind the MOA without giving Jadewell an opportunity to present its side is to render
the right to rescission provided in the MOA legally vulnerable.114

d. On the lack of substantiveness of the alleged breach of performance of the MOA by


Jadewell. – The CA reviewed the records of the case and upheld the findings of the
RTC that the violations of Jadewell were not substantial to merit the consequence of
rescission under the MOA.115

We elucidate on the arguments of the parties, the RTC, and the CA.

In its Petition before the RTC, Jadewell argues that the rescission of the MOA was not
valid, on due process grounds, and also because there was no substantial breach on
its part to justify a rescission of the MOA.116 It also asserts that the Sanggunian had
no authority to rescind the MOA, because the latter was not a party thereto.117

Jadewell sought a writ of preliminary injunction to prevent the implementation of the


questioned Resolution, and prayed that after hearing, the preliminary injunction be
made permanent. It further prayed for the issuance of a writ of certiorari to nullify the
assailed Resolution; and for a mandatory injunction to compel the City Government to
perform the latter’s obligations under the MOA.118 Jadewell alternatively invoked the
provisions of Section 18 of the Implementing Rules and Regulations (IRR) of the BOT
Law,119 in the event the RTC would uphold the validity of the questioned Resolution.

The trial court ruled that the rescission violated the due process clause of the
Constitution and failed to meet the requirements for rescission under the Civil Code
and the MOA itself. In the Sanggunian’s Memorandum, on appeal before the CA, the
Sanggunian assigned three errors to the Decision of the trial court: (1) the RTC
ignored the evidence on record and the requirements of Rule 65 when it declared the
subject Resolution void; (2) Jadewell was not denied due process when the MOA was
rescinded; and (3) by ruling that the Sangguniang Panlungsod had no right of
rescission for the first 5 years of the MOA – an issue not raised in the pleadings – the
trial court improperly took up the cudgels for Jadewell in the case.120

As earlier stated, the CA upheld the RTC’s Decision in toto.

The Sanggunian filed its Motion for Reconsideration arguing that the CA had erred as
follows: (1) treating Jadewell’s petition as an original action for injunction; 121 (2) ruling
that Jadewell was deprived of due process122 when it rescinded the MOA; and (3)
finding that the MOA stipulated for a five-year minimum guarantee against
rescission.123This was denied, and this denial and the CA Decision are the subjects of
G. R. 160025.

2. G.R. No. 172215 – Certiorari,


Prohibition and Mandamus, filed by
Jadewell against Judge Pamintuan
for not dismissing Civil Case No. 6089-R

Jadewell directly filed the instant Rule 65 Petition for Certiorari before this Court to
nullify the denial by the trial court of its Motion to Dismiss and its Motion for
Reconsideration of the same order,124 and for ordering Jadewell to cease collecting
parking fees, and from towing and impounding vehicles on the streets of Baguio City.
It also seeks to nullify the proceedings in Civil Case No. 6089-R, invoking both res
judicata and litis pendentia.125 It contends that, since the issue on the validity of the
questioned city ordinance and the MOA was favorably ruled upon previously by RTC
Branches 7 and 61 of Baguio City in separate cases, Branch 3 of the same RTC
presided by Judge Pamintuan is bound by the rulings of the other branches.126 Litis
pendentia is being invoked in relation to the petitions already before this Court.

Mayor Yaranon is impleaded in this case on the basis of the order of Judge
Pamintuan to the city mayor to perform his duty to supervise the roads, streets and
park of Baguio City, in coordination with the police and the LTO during the validity of
the Writ of Injunction that Judge Pamintuan issued.127

The main issue to be resolved in Jadewell’s Petition for certiorari is whether Judge
Pamintuan’s rulings in Civil Case No. 6089-R violated the res judicata/litis pendentia
doctrines.

3. G.R. No. 181488 – The


Certiorari petition filed by Yaranon
seeking to reverse Resolutions dated
9 October 2008 and 24 January 2008
in CA-G.R. SP No. 96116 which
upheld the validity of his suspension
as City Mayor of Baguio.

Mayor Yaranon’s instant Petition before this Court raises the following issues: (1) that
his failed re-election bid was not a supervening event in the final determination by the
CA of whether he was guilty of grave misconduct, abuse of authority, and oppression;
and (2) that the CA should rule on the substantive validity of his suspension.

4. The Petitions for Contempt

a. G.R. No. 163052 – This is the first contempt petition filed by Jadewell directly with
this Court against City Mayor Vergara, the Vice Mayor, and the entire Sanggunian, for
enacting Resolution Nos. 056 & 059, Series of 2004. To recall, Resolution No. 056,
Series of 2004 informs the general public that Jadewell had neither the authority nor
the police power to clamp, tow or impound vehicles at any place in the City of
Baguio.128 In Resolution No. 059, Series of 2004, the City of Baguio made a formal
demand upon Jadewell to surrender the Ganza and Burnham Park Parking Areas
within thirty days. In the same Resolution, the City of Baguio also directed the City
Legal Officer to file the appropriate legal actions necessary to recover the said parking
areas and to ask for damages against Jadewell.129

The core issue to be resolved in this case is whether the Sanggunian Panlungsod is
guilty of indirect contempt for enacting the above resolutions, pending resolution of
G.R. No. 160025.

b. G.R. No. 164107 – This contempt petition was filed directly with this Court against
then Baguio City Mayor Braulio D. Yaranon after he issued Executive Order No.
001-04 announcing that, as City Mayor, he would give protection to motor vehicle
owners, operators, and drivers who would refuse to submit to the enforcement of
traffic rules by Jadewell such as by refusing to pay the parking fees or fines the latter
imposes.

Yaranon also issued a Memorandum dated 8 July 2004, ordering the arrest and filing
of criminal charges against Jadewell personnel who would clamp, tow, or impound
motor vehicles in defiance of Executive Order No. 001-04. This was followed by a
Memorandum on 8 April 2005 directing the Baguio City Police District to create a
special task force to prevent Jadewell from clamping, towing, and impounding
vehicles found to be in violation of the parking rules in Baguio City.

The issue to be resolved in this petition is whether Mayor Yaranon could be cited for
contempt for the above, pending resolution of the issue of the validity of the rescission
of the MOA in G.R. Nos. 160025 and 163052.

c. G.R. No. 165564 – Jadewell filed this third contempt petition against Mayor
Yaranon for issuing Executive Order No. 005-2004 dated 15 October 2004. The order
directs Jadewell to cease and desist from: (a) charging and collecting parking fees on
the streets of Baguio City without the consent of the City Government; 130 (b) seizing
and detaining vehicles of motorists who refuse to pay the parking fees to
Jadewell131 and (c) using yellow-colored tow trucks bearing the name "City of
Baguio".132 Jadewell’s petition also seeks to nullify Executive Order No. 005-2004.

On 16 November 2004, Jadewell filed a Supplemental Petition. The act complained of


this time was the issuance of Executive Order No. 005-2004-A which is a mere rehash
of Executive Order No. 005-2004.133 On 25 January 2005, Jadewell filed a Second
Supplemental Petition in connection with Mayor Yaranon’s issuance of Administrative
Order No. 622, Series of 2004. The said administrative order declared that Jadewell
exceeded its area of operations for the administration of on-street parking and it
required to show lawful cause why its business permit should not be revoked.

Like in the earlier contempt petitions, Jadewell alleges that these issuances by Mayor
Yaranon are contumacious because they were made while the main petition, G.R. No.
160025 questioning the rescission of the MOA by the Sanggunian, is still pending
resolution with this Court.

d. G.R. No. 172216 – On 27 April 2006, Jadewell filed a petition for contempt against
Judge Fernando Vil Pamintuan, Presiding Judge of RTC-Branch 3 of Baguio City, in
relation to Civil Case No. 6089-R pending before his sala.134 In the said civil case,
Judge Pamintuan issued an Order directing Jadewell to desist from the collection of
parking fees, from towing and impounding vehicles on the streets of Baguio City and
to hold in abeyance the implementation of City Ordinance 003-2000 and the MOA.
The validity of the Order of Judge Pamintuan is the subject of a Petition for Certiorari,
Prohibition, and Mandamus instituted by Jadewell in G.R. No. 172215.

The main issue to be resolved in this case is whether Judge Pamintuan should be
cited for indirect contempt by this Court for issuing the assailed Orders.

e. G.R. No. 173043 – On 29 June 2006, Jadewell filed yet another contempt case
against Mayor Yaranon. In addition to its prayer to cite him for contempt, Jadewell
also prays that Mayor Yaranon, as a lawyer, be disbarred.135Jadewell instituted this
fifth contempt case after it received a letter from Mayor Yaranon demanding that it
stop its business operations in Baguio City, at the same time directing the
Sangguniang Panlungsod to cancel Ordinance 003-2000.

The issue to be resolved in this case is whether Mayor Yaranon was guilty of indirect
contempt and professional misconduct for the above acts pending resolution of G.R.
Nos. 160025, 163052,164107, 165564 and 172215.136

f. G.R. No. 174879 - On 19 October 2006, Jadewell filed a contempt case against the
acting City Mayor of Baguio, Reinaldo A. Bautista, Jr., and the members of the
Sangguniang Panlungsod, including City Legal Officer Melchor Carlos R. Rabanes, in
connection with the second act of rescission.137 Jadewell also asks that the
respondents who are lawyers, namely: Rocky Thomas A. Balisong, Edilberto B.
Tenefrancia, Faustino A. Olowan, Federico J. Mandapat, Perlita L. Chan-Rondez, and
Jose M. Molintas, be disbarred.

These acts, in Jadewell’s view, are contumacious in light of the pending G.R. No.
160025 before this Court.
OUR RULINGS

1. On G.R. No. 160025

a. On the Treatment of
Jadewell’s Petition as one for
Permanent Injunction.

The CA sustained the position of the Sanggunian that certiorari could not prosper
because when the latter enacted Resolution 37, the Sanggunian was exercising its
legislative function and not its judicial or quasi-judicial function. The writ of certiorari
under Rule 65 requires: (a) that it is directed against a tribunal, a board or an officer
exercising judicial or quasi-judicial functions; (b) that such tribunal, board, or officer
has acted without or in excess of jurisdiction or with grave abuse of discretion; and (c)
that there is no appeal nor any plain, speedy and adequate remedy in the ordinary
course of law.138

The CA nevertheless proceeded to treat the Petition as an original action for


injunction, ruling in this wise:

xxxx

Although in the trial court, Jadewell filed said petition for Certiorari, Prohibition and
Mandamus under Rule 65, it is essentially one for Injunction under Rule 58. Said
petition’s form and substance satisfied all the requirements of a civil action for
Injunction, which is the proper remedy under the attendant circumstances.

The rules of procedure ought not to be applied in a very rigid technical sense, rules of
procedure are used only to help secure, not override substantial justice. If a technical
and rigid enforcement of the rules is made, their aim would be defeated.

Considering the clear and patent denial of due process committed by the Sanggunian
in precipitately rescinding the MOA and in the interest of substantial justice, WE deem
it more prudent to treat the petition filed below as an action for Injunction under Rule
58, which is well within the jurisdiction of the trial court. Consequently, the present
appeal shall be considered as an appeal from the permanent injunction ordered by
the trial court, which is properly appealable to this Court, as held in Casilan vs.
Ybaňez.139

xxxx

We sustain the ruling of the appellate court treating Jadewell’s original action for
certiorari as one for injunction based on the allegations in the latter’s pleadings.

In Ramon Jimenez, Jr. v. Juan Jose Jordana,140 the issue to be resolved was whether
the nature of the action was one for specific performance or for recovery of real
property. In determining that the case was one for the recovery of real property, the
Court characterized the suit on the basis of the allegations in the Complaint. We
restated the rule that the nature of an action is determined by the material averments
in the complaint and the character of the relief sought. In the recent case of Reyes v.
Alsons Development and Investment Corporation,141 we likewise ruled that the nature
of an action is determined by the allegations in the pleadings.

In Lee, Jr. v. Court of Appeals,142 the controversy to be resolved was whether the
appeal filed by the petitioner was one under Rule 65 or Rule 42. The determination of
the issue was crucial, because the appellate court had dismissed the appeal of the
petitioner, saying that the wrong mode of appeal had been used. The CA had ruled
that petitioner should have filed a certiorari petition under Rule 65 – instead of a
petition under Rule 42 – to appeal the assailed decision rendered by the RTC in the
exercise of its appellate jurisdiction.

We held:

Our perusal of the petition filed before the Court of Appeals clearly shows that it is a
petition for review under Rule 42, and not a special civil action for certiorari under
Rule 65. We note that in the Court of Appeals’ petition, under the heading "Nature of
the Petition," petitioner stated that it was a "petition for review on certiorari to set aside,
invalidate and reverse the Decision dated December 14, 2001 of public respondent
Judge Victor T. Llamas, Jr." Also, the reversal sought was premised on the ground
that the decision was issued in gross error. The statement under the heading "Nature
of the Petition" that the trial courts’ decisions were issued with grave abuse of
discretion amounting to lack of jurisdiction, and even the caption impleading the lower
courts, would not automatically bring the petition within the coverage of Rule 65. It is
hornbook doctrine that it is not the caption of the pleading but the allegations therein
that determine the nature of the action. (Emphasis supplied)

In the original action filed by Jadewell before the RTC of Baguio City, although the
action was clearly denominated as a Petition for Certiorari, Prohibition and Mandamus
against the Sangguniang Panlungsod, the allegations actually supported an action for
injunction under Rule 58 of the Revised Rules on Civil Procedure. As can be gleaned
from its allegations and especially in its prayers, Jadewell filed the case with the trial
court with the ultimate end of restraining the implementation of Resolution No. 037,
Series of 2002.

We agree with the CA when it ruled that Jadewell sought permanent injunction aside
from the auxiliary remedy of preliminary injunction, thus:

An action for injunction is a recognized remedy in this jurisdiction. It is a suit for the
purpose of enjoining the defendant, perpetually or for a particular time, from
committing or continuing to commit a specific act, or compelling the defendant to
continue performing a particular act. It has an independent existence. The action for
injunction is distinct from the ancillary remedy of preliminary injunction, which cannot
exist except only as part or an incident of an independent action or
proceeding.143 xxxx...

In Garcia v. Adeva,144 this Court had the opportunity to clarify that while injunction can
be a provisional remedy, it can also be a main case. The Court had to make this
preliminary distinction in order to find out whether the SEC had the jurisdiction to
prevent, on a permanent basis, the commission of certain acts by the respondents.
Thus, the necessity to make the distinction between injunction as a provisional
remedy and injunction as a main case. It found guidance from Garayblas v. Atienza,
Jr.,145 and quoting from the latter:

Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or


refrain from doing a certain act. It may be the main action or merely a provisional
remedy for and as an incident in the main action. The Court has distinguished the
main action for injunction from the provisional or ancillary remedy of preliminary
injunction, thus:

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

We, therefore, rule that the CA did not commit any error in treating Jadewell’s Petition
for Certiorari as an original action for injunction.

b. On the denial of due process.

The second issue in this Petition is the correctness of the CA’s ruling that Jadewell
was deprived of due process when the Sangguniang Panlungsod rescinded the MOA.
The findings of the CA are as follows:

In the instant case, evidence on record does not show that before the Sanggunian
passed the disputed Resolution it gave Jadewell an opportunity to present its side.
Neither did the Sanggunian convene an investigatory body to inquire into Jadewell’s
alleged violations nor at least invite Jadewell to a conference to discuss the alleged
violations, if only to give Jadewell the chance to refute any evidence gathered by it
against the latter. As it is, the Sanggunian arrogated upon itself the role of a
prosecutor, judge and executioner in rescinding the MOA, all in clear violation of
Jadewell’s constitutionally embedded right to due process.146

x x x.

Both courts held that Jadewell was denied due process. When the denial of due
process argument is raised, it is directed primarily against the exercise of
governmental authority that "deprives life, liberty and property" without observance
what is, in the circumstances, the applicable standards of "due process." It is not an
argument that is relevant in situations of contractual breach between two purely
private entities, nor is it available against the government when the latter is not
discharging a governmental function, but merely pursuing a purely commercial activity
in a proprietary capacity. In order to consider the due process argument, this Court
must first determine whether the MOA was entered into by the City of Baguio in a
governmental capacity, or in a purely proprietary capacity.
The regulation of on-street and off-street parking is a governmental function that can
be exercised by local governments. It is important to understand the objective of the
Baguio City Government in: (1) privatizing the administration of on-street and
off-street parking; and (2) its execution of a MOA with Jadewell. This can be gleaned
from the Explanatory Note and other provisions of the agreement, to wit:

The City of Baguio has earned the reputation of the CLEANEST AND GREENEST
HIGHLY URBANIZED CITY for the previous years. This has become possible due to
the collective effort of both the Citizens of Baguio and the City Government. However,
the increase in population, volume of vehicles and the absence of a regulatory
measure to address this concern gradually tainted what used to be a reputation we
were proud of.

The ever increasing problems, specifically those relevant to the Traffic situation is at
this point the biggest contributor to environmental degradation. Other Salient points
we must consider relevant to this matter are the problems on OBSTRUCTION AND
DOUBLE PARKING which are very rampant. We further add to these the problems on
DISORGANIZED PARKING, LACK OF DEPUTIZED AGENTS to monitor, supervise
and enforce traffic rules and regulations.

At this point in time, we feel the immediate need of focusing on these problems. There
is an urgent need to adopt measures that would alleviate these matters. This we
recommend that PARKING SPACES should be REGULATED in such a manner that it
would bring advantage both to the City Government and the Citizens of Baguio. We
further propose the collection of REGULATORY FEES that would be used in
maintaining our roads and to hire people that would de deputized to help ease the
problems as stated above.

Finally, we believe that our roads are beyond the Commerce of Man. To convert our
roads into PAY PARKING SPACES, would be violative of this principle. However to
REGULATE its use and its eventual effect would redound to the GENERAL
WELFARE will be an appreciated gesture to help preserve our image as the
CLEANEST AND GREENEST HIGHLY URBANIZED CITY.

xxxx

SECTION 4. Parking spaces. A parking place may be divided into parking spaces and
for the purposes of this Ordinance, each space or for a number of spaces as
determined by the private parking operator in consultation with the concerned Official
of the City of Baguio.

xxxx

SECTION 5. Prohibitions against parking outside the parking spaces. No spaces shall
park any motor vehicle on the sidewalk or cause or permit any motor vehicle to wait to
any road or length of road on which in any place in which or adjacent to or in close
proximity to which there is a parking place.

xxxx
SECTION 7. Payment of Prescribed Charges. (1) No person shall park any motor
vehicle in a parking place or parking space during the times specified in this
Ordinance without paying the prescribed charge for the required parking period; (2)
The prescribed charge payable in respect to the parking of a motor vehicle in a
parking space shall be paid by the insertion into the parking meter provided for that
parking space a coin/coins of Philippine Currency or by using cards in order to obtain
the payment ticket to evidence the payment of the prescribed charge; (3) The
payment ticket shall be displayed at a conspicuous part of a motor vehicle in a parking
place or parking space; (4) The payment ticket shall be valid to be used on any
parking space within the authorized period indicated in the payment ticket.

xxxx

SECTION 22. Rules. The Memorandum of Agreement (MOA) to be entered into by


the City Mayor shall be governed by this Ordinance.

From the above, the following are clear: (1) that the City of Baguio decided on the
privatization of the administration of parking for environmental and peace and safety
reasons, both of which are within its powers under Section 458(A)(5)(v) and (vi) of the
Local Government Code; and (2) that the terms of agreement between the City of
Baguio and Jadewell involve the delegation of governmental functions in terms of
regulating the designation and use of parking spaces as well as the collection of fees
for such use. These are indicators that any privatization contract pursuant to the
above Resolution takes the essential character of a franchise because what is being
privatized is a government-monopolized function.

It would thus be relevant to ask if there is a provision in the applicable laws or the
franchise (MOA) that grants the City of Baguio the right to revoke the latter either at
will, or upon the satisfaction of certain conditions, such that ordinary due process
protection can be considered to have been waived by the franchisee. We must
caution that when we refer to revocation at will here, we are referring to the revocation
of resolutory, not suspensive, obligations.147

We have looked closely at Resolution No. 003-2000 and the MOA and have
additionally reflected on the applicable provision under the Civil Code. We have come
to the conclusion that:

(a) There is only one provision that allows for unilateral revocation of the MOA, which
can be found in Section 9 thereof:

9. Minimum Guaranty – The FIRST PARTY guaranties (sic) a minimum period of five
(5) years against rescission; provided that after such period, the parties may agree to
increase to a reasonable rate the parking fees and the share of the city from the
parking fees collected as provided for in the guidelines, (Annex "B");

(b) This Section 9 requires that five years must have lapsed – presumably from the
date of execution of the MOA – before the unilateral right to revoke the MOA can be
exercised;
(c) Therefore, before the five year period has lapsed, the right to revoke the MOA
arises only under Article 1191 of the Civil Code, which reads:

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

From the above, it appears that in order to effect a valid revocation of the MOA prior to
the lapse of the 5-year period provided for in Section 9, the City of Baguio had to
approach the problem from one or both of two perspectives: one, negotiate the
termination of the MOA with Jadewell, or two, exercise its option under Article 1191 of
the Civil Code.

The first option, a negotiated pretermination of the contract, is an inherent right of


every party in a contract. This can be inferred from the freedom of the parties to
contract and modify their previous covenants provided it would not be contrary to law,
morals, good customs, public order or public policy.148 Despite the provision on the
minimum warranty against rescission stipulated in the MOA, the parties were not
constrained to mutually modify such restriction. The Sanggunian could have proposed
to Jadewell the possibility of lifting the warranty against rescission subject to the
condition that the latter will comply with its obligations under the MOA.

This scenario could have impressed upon Jadewell that its contractual relations with
the city government of Baguio were less than ideal. The suggested approach for the
Sanggunian could have been legally sound and practical. Obviously, this was not
done in this case; thus, Jadewell’s Complaint before the RTC of Baguio City.

The second option is the exercise of the unilateral right to rescind a bilateral contract
on the part of a party who believes that it has been injured by a breach substantial
enough to warrant revocation. Where one party allegedly failed to comply with his
obligations under a contract, the injured party may rescind the obligation if the other
does not perform or is not ready and willing to perform.149 We will examine the acts of
Baguio City in relation to what is allowed under Article 1191.

Rescission under Article 1191 takes place through either of two modes: (1) through an
extrajudicial declaration of rescission; or (2) upon the grant of a judicial decree of
rescission.

Extrajudicial declaration of rescission is recognized as a power which does not require


judicial intervention.150 If the rescission is not opposed, extrajudicial declaration of
rescission produces legal effect151 such that the injured party is already relieved from
performing the undertaking.152

However, the power of declaring extrajudicial rescission conferred upon the injured
party is regulated by the Civil Code. If the extrajudicial rescission is impugned by the
other party, it shall be subject to a judicial determination153where court action must be
taken, and the function of the court is to declare the rescission as having been
properly or improperly made, or to give a period within which the debtor must perform
the obligation alleged to be breached.154 A unilateral cancellation of a contract may be
questioned in courts by the affected party to determine whether or not cancellation is
warranted.155 Thus, in an extrajudicial decree of rescission, revocation cannot be
completely exercised solely on a party’s own judgment that the other has committed a
breach of the obligation156 but always subject to the right of the other party to judicially
impugn such decision.

It is important to contextualize that the agreement entered into by the City of Baguio
with Jadewell is the embodiment of a grant of franchise imbued with public interest
and is not merely an agreement between two private parties.

It is our view that the first act of rescission by the City of Baguio may be valid even if
there is a stipulation against it within the first five years of the MOA’s existence. Article
1191 of the New Civil Code provides a party the right to rescind the agreement and
clearly overrides any stipulation to the contrary. However, the grounds that would
serve as basis to the application of the said article must be clearly established.

In the exercise of this option under Article 1191, was it necessary for the City of
Baguio to provide Jadewell an opportunity to air its side on the matter before the
former implemented the rescission of the MOA? In the instant case, was Jadewell
deprived of procedural due process?

We answer in the negative. We disagree with the rulings of the RTC and the CA that
Jadewell was deprived of due process. In Taxicab Operators of Metro Manila v. The
Board of Transportation,157 we confronted the issue of whether the petitioners were
denied procedural due process when the respondent Board of Transportation issued
a circular ordering the phasing out of old vehicles to be used as taxicabs. In the said
case, the phase-out was embodied in a circular that was promulgated without holding
a public hearing or at least requiring those affected to submit their position papers on
the policy to be implemented. We held for the respondent Board, and ruled in this
wise:

Dispensing with a public hearing prior to the issuance of the Circulars is neither
violative of procedural due process. As held in Central Bank vs. Hon. Cloribel and
Banco Filipino, 44 SCRA 307 (1972):

Previous notice and hearing as elements of due process, are constitutionally required
for the protection of life or vested property rights, as well as of liberty, when its
limitation or loss takes place in consequence of a judicial or quasi-judicial proceeding,
generally dependent upon a past act or event which has to be established or
ascertained. It is not essential to the validity of general rules or regulations
promulgated to govern future conduct of a class or persons or enterprises, unless the
law provides otherwise.
In the instant case, the assailed act by the Sanggunian Panlungsod in rescinding the
MOA – be it first or second act of rescission – was clearly in the exercise of its
legislative or administrative functions and was not an exercise of a judicial or
quasi-judicial function. The Sanggunian Panlungsod does not possess any judicial or
quasi-judicial functions. The preamble of the MOA lends support to this view.
Evidently, the foremost reason why the agreement was entered into by the parties
was to provide order, given Baguio City’s parking problems in identified areas, as well
as to generate income.

The objectives of the Sanggunian Panlungsod, as well as its intention to rescind the
MOA; because it deems to no longer serve the interest of the City of Baguio, are
clearly an exercise of its legislative or administrative function. However, it is another
matter as to whether the City of Baguio was able to clearly establish the grounds as
basis for the exercise of its right to rescind.

c. On the allegation of Jadewell’s


substantial breach of the MOA.

The Baguio City government has repeatedly mentioned that Jadewell had so far
installed only 14 parking meters, with only 12 functioning. The COA-CAR Report
dated 13 July 2003 enumerated 12 findings,158 a majority of which indicates that
Jadewell was remiss in the fulfilment of its obligations under the MOA. While Finding
Nos. (1), (2), (3), (4), (5), (8) and (12) of the COA-CAR Report state that Jadewell
collected parking fees, Jadewell failed to properly remit the same. Finding No. (11) of
the COA-CAR Report states that Jadewell failed to have its parking attendants
deputized,159 a condition under the MOA that is also important to the overall objective
of the endeavor.

The MOA does not specifically provide for the exact number of parking meters to be
installed by Jadewell pursuant to the parties’ objective in regulating parking in the city.
Nevertheless, 100 parking spaces were allotted as mentioned in Annex A of the
MOA.160 The agreement also obligates Jadewell to have its parking attendants
deputized by the DOTC-LTO so that they shall have the authority to enforce traffic
rules and regulations in the regulated areas.161 To the Court’s mind, these are two of
the most important obligations that Jadewell had to comply with, considering the
nature and objective of the agreement it had entered into.

Despite the enumeration of the above-mentioned faults of Jadewell, we do not make a


categorical finding that there was substantial breach committed by Jadewell to justify
a unilateral rescission of the MOA. We find, however, that the RTC had not properly
received evidence that would allow it to determine the extent of the claimed violations
of the MOA. Had these violations by Jadewell been proven in a proper hearing, the
finding of a substantial breach of the MOA would have been a distinct probability.

Unfortunately, neither the RTC nor the CA provided a clear basis for their rulings on
the extent of the breach of the MOA by Jadewell. Save from reiterating the
Sanggunian’s litany of violations said to be committed by Jadewell, there was no
testimony on record to prove such facts and no indication as to whether the RTC or
CA dismissed them or took them at face value.
Whatever the extent of breach of contract that Jadewell may have committed – and
the enumeration of Jadewell’s alleged faults in Resolution 37 is quite extensive – the
City of Baguio was still duty-bound to establish the alleged breach.

Matters became complicated when the RTC and the CA lumped the issues on the due
process violation of Baguio City with Jadewell’s alleged substantial breaches under
the MOA, instead of making a clear finding on the existence and extent of such
breach. The facts and legal issues were thus muddled.

We find fault in the lower and appellate court’s lapse in examining the issue on
Jadewell’s alleged substantial breach. Evidence-taking had to be undertaken by these
courts before they could arrive at a judicial conclusion on the presence of substantial
breach.

We thus DENY the Petition of the Sanggunian Panlungsod in G.R. No. 160025 and
AFFIRM the questioned CA Decision. However, we reject the ruling made by the
appellate court that the violations of Jadewell under the MOA were not substantial.
We hold that there is no sufficient evidence on record to make such determination.

While Jadewell prays for damages against the public respondent, and while ordinarily
we could grant the same, the context of this case prevents us from giving any form of
recompense to Jadewell even if the rescission of the MOA did not follow the required
legal procedure. This is because it would be appalling to grant Jadewell any award of
damages, considering (1) it installed only 14 out of the apparently 100 contemplated
parking meters; (2) its employees, private citizens who did not possess any authority
from the LTO, were manually collecting parking fees from the public, and (3) it did not,
apparently properly remit any significant amount of money to the City of Baguio.
These three facts are uncontested, these omissions are offensive to the concept of
public service that the residents of Baguio were promised through Jadewell. From its
ambiguous responses extant in the records, it is clear that Jadewell does not appear
to be an investor who has lost in its investments in the Baguio City project. Thus, we
do not award any damages to Jadewell.

2. On G.R. Nos. 163052, 164107,


165564, 172216, 173043 and 174879
(The Contempt Petitions)

Section 3 of Rule 71 of the Revised Rules of Civil Procedure enumerates the acts
constituting indirect contempt, thus:

(a) Misbehavior of an officer of a court in the performance of his official duties or in his
official transactions;

(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a


court, including the act of a person who, after being dispossessed or ejected from any
real property by the judgment or process of any court of competent jurisdiction, enters
or attempts or induces another to enter into or upon such real property, for the
purpose of executing acts of ownership or possession, or in any manner disturbs the
possession given to the person adjudged to be entitled thereto;
(c) Any abuse of or any unlawful interference with the processes or proceedings of a
court not constituting direct contempt under Section 1 of this Rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or


degrade the administration of justice;

(e) Assuming to be an attorney or an officer of a court, and acting as such without


authority;

(f) Failure to obey a subpoena duly served;

(g) The rescue, or attempted rescue, of a person or property in the custody of an


officer by virtue of an order or process of a court held by him.

But nothing in this section shall be so construed as to prevent the court from issuing
process to bring the respondent into court, or from holding him in custody pending
such proceedings.

The rule alerts us to three possible situations, wherein, in the context of the facts of
these petitions, contumacious behaviour could have been committed by public
respondents. First, disobedience or resistance to a lawful order of this Court under
paragraph (b). Second, unlawful interference with the proceedings of this Court under
paragraph (c). Third, improper conduct tending, directly or indirectly, to impeded,
obstruct, or degrade the administration of justice by this Court under paragraph (d).

Jadewell, in G.R. Nos. 163052, 164107, 165564, 172216, 173043, and 174879,
bases its charges of indirect contempt against public respondents on a claim that any
action that tends to stop the implementation of the MOA is contumacious. Such
actions include desistance orders to desist against Jadewell itself, the second act of
unilateral rescission of the MOA; orders to other public officers to prevent Jadewell
from exercising its authority under the MOA; and the official encouragement for
motorists to resist attempts of Jadewell to collect parking fees or clamp/tow vehicles
that do not observe the parking regulations.

We find scant jurisprudence to guide us on this matter. The closest situation is that
presented in Southern Broadcasting Network v. Davao Light and Power,162 penned by
Justice Felix Makasiar. In that case, petitioner’s representative, Carmen Pacquing,
wrote a letter to President Marcos asking for his intervention so that her Motion for
Reconsideration (MR) of the resolution of this Court denying her Petition could be
favorably granted. Respondent Davao Light asked that petitioner Pacquing be cited
for contempt, arguing that her act in writing to the President asking him to intervene in
the case showed disrespect to and disregard for the authority of this Court as the final
arbiter of all cases. We found petitioner Pacquing guilty of contempt, thus:

x x x. WE hold that such actuation of herein petitioner’s representative only bespeaks


more of her contumacious attempt to trifle with the orderly administration of justice
because if she know that this Court will ultimately decide the case "regardless of the
President’s intervention," then she should have desisted from writing to the President.
In the light of the foregoing, there is no doubt that Mrs. Pacquing committed an
"improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice" (Section 3, par. [d] Rule 71, Rules of Court) and impair the
respect due to the courts of justice in general, and the Supreme Court, in particular.

In the above case, respondent Carmen Pacquing was clearly asking the President to
commit an improper act – to influence the Supreme Court – that obstructs the orderly
administration of justice, as the Court is constitutionally required to act independently
free from the promptings of the President. Pacquing clearly violated both Sections (c)
and (d) of Section 3, Rule 71.

No such similar situation occurred here. Public respondents never asked anyone to
employ pressure or influence on this Court for the former’s benefit.

Instead, the acts that have been allegedly committed by public respondents are acts
done pursuant to their belief that: (a) the MOA has been validly voided, and more
importantly, (b) that Jadewell’s personnel do not have the legal authority to perform
the governmental function of administering the regulation of on-street and off-street
parking, of towing or clamping vehicles that violate such regulation, and of collecting
parking fees from motorists.

It is important to note that the Court never gave a mandatory injunction that is
couched in a way that requires public respondents to fully comply with the terms of the
MOA. The writ of preliminary mandatory injunction (WPMI) issued on 9 February 2005
is directed to Mayor Yaranon only, and it directs him to perform only one specific act:
to reopen, and maintain open, the street and premises then being occupied and
operated by Jadewell.

Mayor Yaranon did not immediately comply with this WPMI. Thus, this Court fined him
₱10,000 on 20 April 2005, and ordered the NBI to arrest him if he further failed to
comply with the WPMI. Subsequently, Mayor Yaranon paid the fine, and there is
nothing on record to show that he has, since April of 2005, further defied this Court on
that score.

The Court did not issue a WPMI specifically ordering the parties to observe the terms
of the MOA. Thus, public respondents were not expressly prohibited to act on their
beliefs regarding the validity or invalidity of the MOA, or, the authority or lack of
authority of Jadewell personnel to perform governmental functions in the streets of
Baguio.

This is an important result, because to hold otherwise is to effectively grant one of the
parties a mandatory injunction even without an express resolution to this effect from
the Court. Without an express order, the pendency of a suit before the Supreme Court
is not a prima facie entitlement of provisional relief to either party.

Public respondents therefore were, at liberty to question and inform the public of their
belief regarding the lack of authority of Jadewell and its personnel to regulate public
parking in Baguio. They were certainly free to formally write Jadewell on their beliefs
and pass the corresponding resolutions to this effect. The mayor was also not under
legal compulsion to renew Jadewell’s business permit in view of his opinion that
Jadewell was exceeding its allowable area of operation, which Jadewell was not able
to fully disprove. This is especially true for two important reasons: (1) there is an
uncontested cease and desist order that was issued by the DOTC-CAR on 13 March
2002 which Jadewell defied well into 2005, and (2) public respondents are city
officials of Baguio who have the legal duty to ensure the laws are being followed,
including laws that define who may enforce regulations on public parking.

That Jadewell personnel do not have the legal authority to enforce regulations on
public parking is categorical from the Letter dated 1 February 2001 by the Regional
Director of the DOTC-CAR denying the request of Jadewell for the deputation of its
personnel.163

We therefore do not find any of the public respondents who were then officials of the
City of Baguio, liable for indirect contempt, and thereby dismiss G.R. Nos. 163052,
164107, 165564, 173043 and 174879. In G.R. 174879, we have already pronounced
that the Sanggunian was within its full right to perform the second act of rescission,
and thus, it is even with more reason, that its members and the City Legal Officer
cannot be held in contempt therefor. We deny the prayer in the petitions to disbar the
respondents therein who are lawyers.

We also do not find Judge Fernando Vil Pamintuan liable for contempt in G.R. No.
172216.

Jadewell wants this Court to cite Judge Pamintuan for contempt for issuing a writ of
preliminary prohibitory injunction ordering Jadewell to stop collecting parking fees; to
refrain from supervising the parking in Baguio City; as well as to hold in abeyance the
implementation of the MOA and its enabling ordinance.164

It was only on 5 June 2006 that this Court, in G.R. No. 172215, issued a Temporary
Restraining Order (TRO)165directing the trial court to discontinue the proceedings in
Civil Case No. 6089-R. Upon receipt by Judge Pamintuan of the TRO, he immediately
ordered the cancellation of the 29 June 2006 hearing.166

We do not consider the promulgation of the assailed writ of preliminary prohibitory


injunction against Jadewell as a defiance of our writ issued on 9 February 2005,
considering, it was directed against Mayor Yaranon only. We have held in Leonidas v.
Supnet that "a party cannot be held in indirect contempt for disobeying a court order
which is not addressed to him."167 We note that Judge Pamintuan observed deference
to the Orders of this Court when he immediately suspended the proceedings in Civil
Case No. 6089-R upon receipt of the TRO.

G.R. No. 172215

In this Petition for certiorari, prohibition, and mandamus under Rule 65 of the Rules of
Civil Procedure, Jadewell assails the Orders of RTC-Branch 3 (Baguio City) denying
its motion to dismiss and motion for reconsideration in Civil Case No. 6089-R.

We deny the petition of Jadewell in this case.


In Manuel Camacho v. Atty. Jovito Coresis, Jr.,168 we described the nature of special
civil action for certiorari under Rule 65, as follows:

A special civil action for certiorari under Rule 65 of the Rules of Court is an
extraordinary remedy for the correction of errors of jurisdiction. To invoke the Court’s
power of judicial review under this Rule, it must first be shown that respondent tribunal,
board or officer exercising judicial or quasi- judicial functions has indeed acted without
or in excess of its or his jurisdiction, and that there is no appeal, or any plain, speedy
and adequate remedy in the ordinary course of law. Conversely, absent a showing of
lack or excess of jurisdiction or grave abuse of discretion amounting to lack or excess
of jurisdiction, the acts of the respondents may not be subjected to our review under
Rule 65.

In Indiana Aerospace University v. Commission on Higher Education,169 this Court


ruled thus:

An order denying a motion to dismiss is interlocutory, and so the proper remedy in


such a case is to appeal after a decision has been rendered. A writ of certiorari is not
intended to correct every controversial interlocutory ruling; it is resorted to only to
correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to
lack of jurisdiction. Its function is limited to keeping an inferior court within its
jurisdiction and to relieve persons from arbitrary acts -- acts which courts or judges
have no power or authority in law to perform. It is not designed to correct erroneous
findings and conclusions made by the court.

In East Asia Traders, Inc. v. Republic of the Philippines, et al.,170 we decreed:

The petition for certiorari and prohibition filed by petitioner with the Court of Appeals is
not the proper remedy to assail the denial by the RTC of the motion to dismiss. The
Order of the RTC denying the motion to dismiss is merely interlocutory. An
interlocutory order does not terminate nor finally dispose of the case, but leaves
something to be done by the court before the case is finally decided on the merits. It is
always under the control of the court and may be modified or rescinded upon
sufficient grounds shown at any time before final judgment. This proceeds from the
court’s inherent power to control its process and orders so as to make them
conformable to law and justice. The only limitation is that the judge cannot act with
grave abuse of discretion, or that no injustice results thereby.

East Asia Trader also reiterated our ruling in Indiana Aerospace. Further, in Bonifacio
Construction Management Corporation v. Hon. Perlas Bernabe,171 we reiterated our
rulings in East Asia Traders and Indiana Aerospace. We had ruled in these earlier
cases that an order of the trial court denying a motion to dismiss is an interlocutory
order, and to use a writ of certiorari to assail it is improper.

The procedural policy in the cited cases was again referred to in Bernas v. Sovereign
Ventures, Inc.,172 highlighting the following:

Let it be stressed at this point the basic rule that when a motion to dismiss is denied
by the trial court, the remedy is not to file a petition for certiorari, but to appeal after a
decision has been rendered. (Emphasis supplied)
G.R. No. 181488

The question of law raised by petitioner Yaranon in this Petition for Review on
Certiorari is whether the CA correctly dismissed his appeal questioning the validity of
his suspension from office as City Mayor, on the ground that his suit had become
moot and academic due to his non-re-election to office. The CA cited Crespo v.
Provincial Board of Nueva Ecija173 as basis for the dismissal.

For his part, Mayor Yaranon contends that the appellate court should have ruled on
the validity of his suspension from office despite his failure to get re-elected as City
Mayor. He argues that he has the right to know whether his suspension was valid or
not and, in the event his suspension is declared invalid, Mayor Yaranon believes he is
entitled to the salaries and benefits accruing during the period he was suspended.

We deny the Petition of Mayor Yaranon.

The appeal of Mayor Yaranon has been rendered moot and academic. We hold that
the resolution of the issue raised herein would serve no practical purpose.

In Miriam College v. Court of Appeals,174 we ruled that a case becomes moot and
academic when there is no more actual controversy between the parties, or when no
useful purpose can be served in passing upon the merits. Further, courts will not
determine a moot question in which no practical relief can be granted.175

Mayor Yaranon has already served his suspension. We find no practical value in
remanding his case to the appellate court for the determination of the factual basis
and legal issues of his appeal pertaining to the validity of his suspension as then City
Mayor of Baguio City.

We have held in Nicart, Jr. v. Sandiganbayan (Third Division),176 that an issue


becomes moot when a petitioner is not entitled to substantial relief:

x x x [T]he propriety of the preventive suspension of petitioner effected through the


assailed Resolution of February 15, 2001 has become a moot issue, it appearing that
he has already served his suspension. An issue becomes moot and academic when it
ceases to present a justifiable controversy so that a determination thereof would be of
no practical use and value. In such cases, there is no actual substantial relief to which
petitioner would be entitled to and which would be negated by the dismissal of the
petition.

We cannot sustain Mayor Yaranon’s argument that his appeal should not have been
dismissed because, in the event that the finding of the Office of the President to
suspend him is reversed, he is still entitled to the salaries accruing during the period
he was suspended. We take note of the cases cited by Mayor Yaranon such as
Crespo v. Provincial Board of Nueva Ecija,177 Baquerfo v. Sanchez178 and Reyes v.
Cristi,179 among others. These cases involve substantial issues – such as denial of
due process and procedural irregularities – other than a mere claim for entitlement to
salaries. The factual background and the legal issues for resolution in the cases
mentioned are not similar to the case at bar.
In Triste v. Leyte State College Board of Trustees180 the Court elucidated on the
nature of the salary of a public official:

Mechem states that "(l)ike the requirement of an oath, the fact of the payment of a
salary and/or fees may aid in determining the nature of a position, but it is not
conclusive, for while a salary or fees are usually annexed to the office, it is not
necessarily so. As in the case of the oath, the salary or fees are mere incidents and
form no part of the office. Where a salary or fees are annexed, the office is often said
to be ‘coupled with an interest’; where neither is provided for it is a naked or honorary
office, and is supposed to be accepted merely for the public good." (Emphasis
supplied)

Given the circumstances of this case, we find that Mayor Yaranon’s claim for unpaid
salaries, in case of exoneration, does not constitute such substantial relief that would
justify the revival of his appeal. Even if we did sustain his Petition, we nevertheless
find that it has been mooted by our resolution in the main petition.

WHEREFORE, we hereby rule as follows:

a.) In G.R. No. 160025, the Petition of the Sangguniang Panlungsod of Baguio City is
DENIED. The CA Decision dated 7 July 2003 in CA G.R. SP No. 74756 is hereby
AFFIRMED with modification. There is not enough evidence on record to conclude
that Jadewell’s violations were sufficient to justify the unilateral cancellation of the
MOA by the Sangguniang Panlungsod of Baguio City; at the same time, neither the
RTC nor the CA provided a clear finding whether the breach of the MOA by Jadewell
was substantial. We affirm the CA as to the rest of its dispositions in its assailed
Decision. Nevertheless, no award of damages is hereby made in favour of Jadewell
and neither is there any pronouncement as to costs.

b.) G.R. Nos. 163052, 164107, 165564, 172216, 173043 and 174879, the Petitions of
Jadewell to cite Mayor Braulio D. Yaranon, Mayor Bernardo M. Vergara, Acting City
Mayor Reinaldo A. Bautista, Vice Mayor Betty Lourdes F. Tabanda, the members of
the Sangguniang Panlungsod of Baguio City namely: Elmer O. Datuin, Antonio R.
Tabora, Edilberto B. Tenefrancia, Federico J. Mandapat, Jr., Richard A. Carino,
Faustino A. Olowan, Rufino M. Panagan, Leonardo B. Yangot, Jr., Rocky Thomas A.
Balisong, Galo P. Weygan, Perlita L. Chan-Rondez, Jose M. Molintas, and Judge
Fernando Vil Pamintuan for indirect contempt and to disbar Sangguniang Panlungsod
members Rocky Thomas A. Balisong, Edilberto B. Tenefrancia, Faustino A. Olowan,
Federico J. Mandapat, Perlita L. Chan-Rondez, Jose M. Molintas, Melchor Carlos B.
Rabanes and Mayor Braulio D. Yaranon are all hereby DISMISSED for lack of merit.
No pronouncement as to costs.

c.) We DENY the Petition of Jadewell for lack of merit in G.R. No. 172215. We
likewise DENY its prayer for the issuance of a temporary restraining order and/or writ
of preliminary injunction for being moot and academic. No pronouncement as to costs.

d.) We DENY the Petition of Mayor Braulio D. Yaranon in G.R. No. 181488, for lack of
merit and AFFIRM the CA Decision CA-G.R. SP No. 96116. No pronouncement as to
costs.
SEMIRARA COAL CORPORATION vs HGL DEVELOPMENT CORPORATION

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,
19846 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.

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.

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.

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 x x x. 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.

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.

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:

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;

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.

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.

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.

CHINA BANKING CORPORATION vs BENJAMIN CO

Petitioner China Banking Corporation sold a lot located at St. Benedict Subdivision,
Sindalan, San Fernando, Pampanga, which was covered by Transfer Certificate of
Title (TCT) No. 450216-R to petitioner-spouses Joey and Mary Jeannie Castro (the
Castro spouses). It sold two other lots also located in the same place covered by TCT
Nos. 450212-R and 450213-R to petitioner-spouses Richard and Editha Nogoy (the
Nogoy spouses).

The lots of the Castro spouses and the Nogoy spouses are commonly bound on their
southeastern side by Lot No. 3783-E, which is covered by TCT No. 269758-R in the
name of respondent Benjamin Co (Co) and his siblings.

Co and his siblings entered into a joint venture with respondent Three Kings
Construction and Realty Corporation for the development of the Northwoods Estates,
a subdivision project covering Lot No. 3783-E and adjacent lots. For this purpose,
they contracted the services of respondent, Engineer Dale Olea.

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

On November 28, 2003, petitioners, through counsel, wrote respondents asking them
to stop constructing the wall, and remove all installed construction materials and
restore the former condition of Lot No. [3]783-E which they (petitioners) claimed to be
a road lot.1 They also claimed that the construction obstructed and closed the only
means of ingress and egress of the Nogoy spouses and their family, and at the same
time, caved in and impeded the ventilation and clearance due the Castro spouses’
residential house.2

Petitioners’ demand remained unheeded, prompting them to file before the Regional
Trial Court (RTC) of San Fernando, Pampanga a complaint,3 docketed as Civil Case
No. 12834, for injunction, restoration of road lot/right of way and damages with prayer
for temporary restraining order and/or writ of preliminary injunction.

Before respondents filed their Answer,4 petitioners filed an Amended


Complaint,5 alleging that the construction of the perimeter wall was almost
finished and thus modifying their prayer for a writ of preliminary injunction to a writ of
preliminary mandatory injunction, viz:

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

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


restraining the defendants from doing further construction of the perimeter wall on the
premises, and thereafter, a writ 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.

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

After hearing petitioners’ application for a writ of preliminary mandatory injunction,


Branch 44 of the San Fernando, Pampanga RTC denied the same, without prejudice
to its resolution after the trial of the case on the merits, in light of the following
considerations:

After a judicious evaluation of the evidence, the 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 that Subdivision Plan Psd-03-000577 of Lot 3783 from which
the other subdivision plans originates [sic] does not indicate lot 3783-E as a road lot.

Even the physical evidence reveals that lot 3783-E is not a road lot. The Court noticed
during the ocular inspection on February 14, 2004, that there is a PLDT box almost in
front of lot 3783-E. There is no visible pathway either in the form of a beaten path or
paved path on lot 3783-E. Visible to everyone including this court are wild plants,
grasses, and bushes of various kinds. Lot 3783-E could not have been a road lot
because Sps. Nogoy, one of the plaintiffs, even built a structure on lot 3783-E which
they used as a coffin factory.

Plaintiffs failed to prove that they will be prejudiced by the construction of the wall. The
ocular inspection showed that they will not lose access to their residences. As a
matter of fact, lot 3783-E is not being used as an access road to their residences and
there is an existing secondary road within St. Benedict Subdivision that serves as the
main access road to the highway. With respect to the blocking of ventilation and light
of the residence of the Sps. Castro, suffice it to state that they are not deprived of light
and ventilation. The perimeter wall of the defendants is situated on the left side of the
garage and its front entrance is still open and freely accessible.

This is indeed an issue of fact which should be ventilated in a full blown trial,
determinable through further presentation of evidence by the parties. x x x

xxxx

WHEREFORE, premises considered, plaintiffs’ application for the issuance of a writ of


preliminary mandatory injunction is denied without prejudice to its resolution after the
trial of the case on the merits.7 (Underscoring supplied)

Their Motion for Reconsideration8 having been denied, petitioners filed a petition for
certiorari9 before the Court of Appeals which dismissed the same10 and denied their
subsequent Motion for Reconsideration.11

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

I.

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


ACCORD WITH THE BASIC GOVERNING LAW (PRESIDENTIAL DECREE NO.
1529) AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.

II.

. . . PROMOTING THE LOWER 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.

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:

xxxx

Any owner subdividing a tract of registered land into lots shall file with the Chief of the
General Land Registration Office a subdivision plan of such land on which all
boundaries, streets and passageways, if any, shall be distinctly and accurately
delineated. If no streets or passageways are indicated or no alteration of the
perimeter of the land is made, and it appears that the land as subdivided does not
need of them and that the plan has been approved by the Chief of the General Land
Registration Office, or by the Director of Lands as provided in section fifty-eight of this
Act, the Register of Deeds may issue new certificates of title for any lot in accordance
with said subdivision plan. If there are streets and/or passageways, no new
certificates shall be issued until said plan has been approved by the Court of First
Instance of the province or city in which the land is situated. A petition for that purpose
shall be filed by the registered owner, and the court after notice and hearing, and after
considering the report of the Chief of the General Land Registration Office, may grant
the petition, subject to the condition, which shall be noted on the proper certificate,
that no portion of any street or passageway so delineated on the plan shall be closed
or otherwise disposed of by the registered owner without approval of the court first
had, or may render such judgment as justice and equity may require.20 (Underscoring
supplied by the petitioners)

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


provides:

SECTION 50. Subdivision and consolidation plans. – Any owner subdividing a tract of
registered land into lots which do not constitute a subdivision project as defined and
provided for under P.D. No. 957, shall file with the Commissioner of Land Registration
or with the Bureau of Lands a subdivision plan of such land on which all boundaries,
streets, passageways and waterways, if any, shall be distinctly and accurately
delineated.

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


Land Registration or the Bureau of Lands together with the approved technical
descriptions and the corresponding owner's duplicate certificate of title is presented
for registration, the Register of Deeds shall, without requiring further court approval of
said plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of Deeds shall
annotate on the new certificate of title covering the street, passageway or open space,
a memorandum to the effect that except by way of donation in favor of the national
government, province, city or municipality, no portion of any street, passageway,
waterway or open space so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without the approval of the Court of First Instance
of the province or city in which the land is situated. x x x22(Underscoring supplied by
petitioner)

The best evidence thus that Lot No. 3783-E is a road lot would be a memorandum to
that effect annotated on the certificate of title covering it. Petitioners presented TCT
No. 185702-R covering Lot No. 3783-E in the name of Sunny Acres Realty
Management Corporation which states that the registration is subject to "the
restrictions imposed by Section 44 of Act 496, as amended by Rep. Act No.
440."23 The annotation does not explicitly state, however, that Lot No. 3783-E is a
road lot.1awphi1.net

In any event, TCT No. 185702-R had been cancelled and in its stead was issued TCT
No. 247778-R24 which, in turn, was cancelled by TCT No. 269758-R25 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 appropriated26 gratuity
assuming that the lot in question was indeed one, TCT Nos. 247778-R and 269758-R
enjoy the presumption of regularity27and the legal requirements for the removal of the
memorandum annotated on TCT No. 185702-R are presumed to have been
followed.28

At all events, given the following factual observations of the trial court after conducting
an ocular inspection of Lot 3783-E, viz:

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

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

WHEREFORE, the petition is DENIED.

BANK OF THE PHILIPPINE ISLANDS, vs EDUARDO HONG, doing business


under the name and style "SUPER LINE PRINTING PRESS"

This petition for review on certiorari under Rule 45 assails the Decision1 dated
September 27, 2002 and Resolution2dated January 12, 2004 of the Court of Appeals
(CA) in CA-G.R. SP No. 64166.

On September 16, 1997, the EYCO Group of Companies ("EYCO") filed a petition for
suspension of payments and rehabilitation before the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 09-97-5764. A stay order was issued
on September 19, 1997 enjoining the disposition in any manner except in the ordinary
course of business and payment outside of legitimate business expenses during the
pendency of the proceedings, and suspending all actions, claims and proceedings
against EYCO until further orders from the SEC.3 On December 18, 1998, the hearing
panel approved the proposed rehabilitation plan prepared by EYCO despite the
recommendation of the management committee for the adoption of the rehabilitation
plan prepared and submitted by the steering committee of the Consortium of Creditor
Banks which appealed the order to the Commission.4 On September 14, 1999, the
SEC rendered its decision disapproving the petition for suspension of payments,
terminating EYCO’s proposed rehabilitation plan and ordering the dissolution and
liquidation of the petitioning corporation. The case was remanded to the hearing panel
for liquidation proceedings.5 On appeal by EYCO, (CA-G.R. SP No. 55208) the CA
upheld the SEC ruling. EYCO then filed a petition for certiorari before this Court,
docketed as G.R. No. 145977,which case was eventually dismissed under Resolution
dated May 3, 2005 upon joint manifestation and motion to dismiss filed by the parties.6
Said resolution had become final and executory on June 16, 2005.7

Sometime in November 2000 while the case was still pending with the CA, petitioner
Bank of the Philippine Islands (BPI), filed with the Office of the Clerk of Court,
Regional Trial Court of Valenzuela City, a petition for extra-judicial foreclosure of real
properties mortgaged to it by Eyco Properties, Inc. and Blue Star Mahogany, Inc.
Public auction of the mortgaged properties was scheduled on December 19, 2000.8

Claiming that the foreclosure proceedings initiated by petitioner was illegal,


respondent Eduardo Hong, an unsecured creditor of Nikon Industrial Corporation, one
of the companies of EYCO, filed an action for injunction and damages against the
petitioner in the same court (RTC of Valenzuela City). On its principal cause of action,
the complaint alleged that:
18. The ex-officio sheriff has no authority to sell the mortgaged properties. Upon his
appointment as liquidator, Edgardo Tarriela was empowered by the SEC to receive
and preserve all assets, and cause their valuation (SEC Rules on Corporate Recovery,
Rule VI, Section 6-4). Therefore, the SEC retains jurisdiction over the mortgaged
properties of EYCO Properties, Inc. To allow the ex-officio sheriff to take possession
of the mortgaged properties and sell the same in a foreclosure sale would be in
derogation of said jurisdiction.

19. All the assets of the EYCO Group should thus be surrendered for collation to the
liquidator and all claims against the EYCO Group should be filed with the liquidator in
the liquidation proceedings with the SEC. The SEC, at which the liquidation is pending,
has jurisdiction over the mortgaged properties to the exclusion of any other court.
Consequently, the ex-officio sheriff has absolutely no jurisdiction to issue the notice of
sheriff’s sale and to sell the mortgaged properties on 19 December 2000.

20. Moreover, the sale of the mortgaged properties on 19 December 2000 would give
undue preference to defendant FEBTC to the detriment of other creditors, particularly
plaintiff. This was specifically proscribed by the Supreme Court stating in the case of
Bank of the Philippine Islands v. Court of Appeals that whenever a distressed
corporation asks SEC for rehabilitation and suspension of payments, preferred
creditors may no longer assert such preference, but shall stand on equal footing with
other creditors. Consequently, foreclosure should be disallowed so as not to prejudice
other creditors or cause discrimination among them.9 (Emphasis supplied.)

After hearing, the trial court issued a temporary restraining order (TRO). Petitioner
filed a motion to dismiss10 arguing that by plaintiff’s own allegations in the complaint,
jurisdiction over the reliefs prayed for belongs to the SEC, and that plaintiff is actually
resorting to forum shopping since he has filed a claim with the SEC and the
designated Liquidator in the ongoing liquidation of the EYCO Group of Companies. In
his Opposition,11 plaintiff (respondent) asserted that the RTC has jurisdiction on the
issue of propriety and validity of the foreclosure by petitioner, in accordance with
Section 1, Rule 4 of the 1997 Rules of Civil Procedure, as amended, the suit being in
the nature of a real action.

On January 17, 2001, the trial court denied the motion to dismiss.12 Petitioner’s
motion for reconsideration was likewise denied.13 Petitioner challenged the validity of
the trial court’s ruling before the CA via a petition for certiorari under Rule 65.

The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It held that
questions relating to the validity or legality of the foreclosure proceedings, including
an action to enjoin the same, must necessarily be cognizable by the RTC,
notwithstanding that the SEC likewise possesses the power to issue injunction in all
cases in which it has jurisdiction as provided in Sec. 6 (a) of Presidential Decree (P.D.)
No. 902-A. Further, the CA stated that an action for foreclosure of mortgage and all
incidents relative thereto including its validity or invalidity is within the jurisdiction of
the RTC and is not among those cases over which the SEC exercises exclusive and
original jurisdiction under Sec. 5 of P.D. No. 902-A. Consequently, no grave abuse of
discretion was committed by the trial court in issuing the assailed orders.
With the CA’s denial of its motion for reconsideration, petitioner is now before this
Court raising the sole issue of whether the RTC can take cognizance of the injunction
suit despite the pendency of SEC Case No. 09-97-5764.

The petition has no merit.

Jurisdiction is defined as the power and authority of a court to hear and decide a
case.14 A court’s jurisdiction over the subject matter of the action is conferred only by
the Constitution or by statute.15 The nature of an action and the subject matter thereof,
as well as which court or agency of the government has jurisdiction over the same,
are determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs.16 And jurisdiction being a
matter of substantive law, the established rule is that the statute in force at the time of
the commencement of the action determines the jurisdiction of the court.17

Perusal of the complaint reveals that respondent does not ask the trial court to rule on
its interest or claim -- as an unsecured creditor of two companies under EYCO --
against the latter’s properties mortgaged to petitioner. The complaint principally seeks
to enjoin the foreclosure proceedings initiated by petitioner over those properties on
the ground that such properties are held in trust and placed under the jurisdiction of
the appointed Liquidator in SEC Case No. 09-97-5764. Thus, Civil Case No. 349-V-00
is one for injunction with prayer for damages.

An action for injunction is a suit which has for its purpose the enjoinment of the
defendant, perpetually or for a particular time, from the commission or continuance of
a specific act, or his compulsion to continue performance of a particular act. It has an
independent existence, and is distinct from the ancillary remedy of preliminary
injunction which cannot exist except only as a part or an incident of an independent
action or proceeding. In an action for injunction, the auxiliary remedy of preliminary
injunction, prohibitory or mandatory, may issue.18

As a rule, actions for injunction and damages lie within the jurisdiction of the RTC
pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980," as amended by Republic Act (R.A.) No. 7691.

Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:

(1) In all civil actions in which the subject of the litigations is incapable of pecuniary
estimation;

xxxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising x x x judicial or quasi-judicial functions;

xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds Three hundred thousand pesos (₱300,000.00) or, in such other
cases in Metro Manila, where the demand exclusive of the above-mentioned items
exceeds Four hundred thousand pesos (₱400,000.00). (Italics supplied.)

On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to "issue
preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in
which it has jurisdiction." Such cases in which the SEC exercises original and
exclusive jurisdiction are the following:

(a) Devices or schemes employed by or any acts, of the board of directors, business
associates, its officers or partnership, amounting to fraud and misrepresentation
which may be detrimental to the interest of the public and/or of the stockholder,
partners, members of associations or organizations registered with the Commission;

(b) Controversies arising out of intra-corporate or partnership relations, between and


among stockholders, members or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or association
and the state insofar as it concerns their individual franchise or right to exist as such
entity; and

(c) Controversies in the election or appointments of directors, trustees, officers or


managers of such corporations, partnerships or associations.19

Previously, under the Rules of Procedure on Corporate Recovery, the SEC upon
termination of cases involving petitions for suspension of payments or rehabilitation
may, motu proprio, or on motion by any interested party, or on the basis of the findings
and recommendation of the Management Committee that the continuance in business
of the debtor is no longer feasible or profitable, or no longer works to the best interest
of the stockholders, parties-litigants, creditors, or the general public, order the
dissolution of the debtor and the liquidation of its remaining assets appointing a
Liquidator for the purpose.20 The debtor’s properties are then deemed to have been
conveyed to the Liquidator in trust for the benefit of creditors, stockholders and other
persons in interest. This notwithstanding, any lien or preference to any property shall
be recognized by the Liquidator in favor of the security or lienholder, to the extent
allowed by law, in the implementation of the liquidation plan.21

However, R.A. No. 8799, which took effect on August 8, 2000, transferred to the
appropriate regional trial courts the SEC’s jurisdiction over those cases enumerated in
Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799 provides:

SEC. 5.2 The Commission’s jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, that the Supreme Court
in the exercise of its authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for final resolution
which should be resolved within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed. (Emphasis supplied.)

Upon the effectivity of R.A. No. 8799, SEC Case No. 09-97-5764 was no longer
pending.1âwphi1 The SEC finally disposed of said case when it rendered on
September 14, 1999 the decision disapproving the petition for suspension of
payments, terminating the proposed rehabilitation plan, and ordering the dissolution
and liquidation of the petitioning corporation. With the enactment of the new law,
jurisdiction over the liquidation proceedings ordered in SEC Case No. 09-97-5764
was transferred to the RTC branch designated by the Supreme Court to exercise
jurisdiction over cases formerly cognizable by the SEC. As this Court held in
Consuelo Metal Corporation v. Planters Development Bank22 :

The SEC assumed jurisdiction over CMC’s petition for suspension of payment and
issued a suspension order on 2 April 1996 after it found CMC’s petition to be sufficient
in form and substance. While CMC’s petition was still pending with the SEC as of 30
June 2000, it was finally disposed of on 29 November 2000 when the SEC issued its
Omnibus Order directing the dissolution of CMC and the transfer of the liquidation
proceedings before the appropriate trial court. The SEC finally disposed of CMC’s
petition for suspension of payment when it determined that CMC could no longer be
successfully rehabilitated.

However, the SEC’s jurisdiction does not extend to the liquidation of a corporation.
While the SEC has jurisdiction to order the dissolution of a corporation, jurisdiction
over the liquidation of the corporation now pertains to the appropriate regional trial
courts. This is the reason why the SEC, in its 29 November 2000 Omnibus Order,
directed that "the proceedings on and implementation of the order of liquidation be
commenced at the Regional Trial Court to which this case shall be transferred." This
is the correct procedure because the liquidation of a corporation requires the
settlement of claims for and against the corporation, which clearly falls under the
jurisdiction of the regular courts. The trial court is in the best position to convene all
the creditors of the corporation, ascertain their claims, and determine their
preferences.23 (Emphasis supplied.)

There is no showing in the records that SEC Case No. 09-97-5764 had been
transferred to the appropriate RTC designated as Special Commercial Court at the
time of the commencement of the injunction suit on December 18, 2000. Given the
urgency of the situation and the proximity of the scheduled public auction of the
mortgaged properties as per the Notice of Sheriff’s Sale, respondent was constrained
to seek relief from the same court having jurisdiction over the foreclosure proceedings
– RTC of Valenzuela City. Respondent thus filed Civil Case No. 349-V-00 in the RTC
of Valenzuela City on December 18, 2000 questioning the validity of and enjoining the
extrajudicial foreclosure initiated by petitioner. Pursuant to its original jurisdiction over
suits for injunction and damages, the RTC of Valenzuela City, Branch 75 properly
took cognizance of the injunction case filed by the respondent. No reversible error
was therefore committed by the CA when it ruled that the RTC of Valenzuela City,
Branch 75 had jurisdiction to hear and decide respondent’s complaint for injunction
and damages.

Lastly, it may be mentioned that while the Consortium of Creditor Banks had agreed
to end their opposition to the liquidation proceedings upon the execution of the
Agreement24 dated February 10, 2003, on the basis of which the parties moved for
the dismissal of G.R. No. 145977, it is to be noted that petitioner is not a party to the
said agreement. Thus, even assuming that the SEC retained jurisdiction over SEC
Case No. 09-97-5764, petitioner was not bound by the terms and conditions of the
Agreement relative to the foreclosure of those mortgaged properties belonging to
EYCO and/or other accommodation mortgagors.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated
September 27, 2002 and Resolution dated January 12, 2004 of the Court of Appeals
in CA-G.R. SP No. 64166 are AFFIRMED.

With costs against the petitioner.

SOFIA DEVESA vs CRISPIN ARBES

Plaintiff alleging that the defendant, acting as administrator of the estate of Gregoria
Arbes, deceased, had unlawfully taken possession of certain rice lands and cocoanut
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 extra judicial 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 an 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 his 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 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 wife, Gregoria Arbes, but by purchase, in
part prior to, and in part after his marriage with his 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 had the exclusive
possession thereof.

Defendant did not deny the execution of the partition agreement, and wholly failed to
proved that the land in question was or is a part of the estate of Gregoria Arbes,
deceased, or to establish 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 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 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 a 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 the interdicto 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; 31 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., 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
done," which can not be compensated in damages, and where there will be no
adequate remedy (3 Bosw., 607; 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 ofttimes 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 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 a
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 interdicto 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
therefore 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 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 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.

FAUSTO R. PREYSLER, JR., vs CA

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.

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.

Petitioner now comes before us claiming that the Court of Appeals:

… [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 6496 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
656.8Petitioner 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.

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 cases9 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.

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.

SPOUSES DAISY and SOCRATES M. AREVALO vs PLANTERS DEVELOPMENT


BANK

This is a Rule 45 Petition for Review, which seeks to reverse the Decision dated 24
March 20101 and Resolution dated 05 August 20102 of the Court of Appeals (CA) in
CA-G.R. SP No. 110806. The CA affirmed the trial court’s Decision not to grant
petitioners’ application for a writ of preliminary injunction.

As stated, this case involves the trial court’s refusal to issue a writ of preliminary
injunction in favor of petitioner Spouses Daisy and Socrates M. Arevalo (Spouses
Arevalo) based on their failure to comply with Section 2 of the Procedure in
Extra-Judicial or Judicial Foreclosure of Real Estate Mortgages (Procedure on
Foreclosure)3 issued by this Court. This procedure required them to pay twelve
percent (12%) per annum interest on the amount of the principal obligation, as stated
in the application for foreclosure sale, before an injunctive writ may issue against the
extra-judicial foreclosure of real estate mortgage.4

We deny the instant Petition for the following reasons: (1) the Petition is moot,
because the trial court has already dismissed the Complaint dated 07 April 2009 (the
First Complaint),5 upon which petitioners’ application for the provisional remedy of
preliminary injunction was based; and (2) petitioners are guilty of forum-shopping.

The conflict between the parties arose from a Loan Agreement6 petitioners executed
with respondent Planters Development Bank (Bank). Petitioners obtained from
respondent Bank a ₱ 2,100,000 loan secured by a mortgage on their property situated
in Muntinlupa. Due to their failure to pay the loaned amount, the Bank undertook to
extra-judicially foreclose the mortgage. The Clerk of Court issued a Notice of Sheriff’s
Sale and set the auction sale on 21 and 28 April 2009.7

Petitioners thereafter filed the First Complaint wherein they asked for the nullification
of interests, penalties and other charges, as well as for specific performance with an
application for a temporary restraining order (TRO) and writ of preliminary injunction
to enjoin the then impending auction sale of their Muntinlupa property. They alleged
that it was respondent Bank who breached its obligations under the loan agreement;
and that the auction sale was premature, arbitrary and confiscatory, as their inability
to pay the loan was caused and aggravated by the Bank’s illegal schemes.8

During the hearing of petitioners’ application for preliminary injunction, the trial court
ruled that, as a precondition for the issuance of the writ and pursuant to the Procedure
on Foreclosure, petitioners were directed to pay 12% per annum interest on the
principal obligation as stated in the application for foreclosure sale. Otherwise, the writ
shall not issue. 9 The trial court further ruled that the evidence in support of their
application was evidentiary in nature and should thus be presented during trial.10

Petitioner Spouses Arevalo sought to clarify the trial court’s Order,11 inquiring whether
they should be required to pay 12% per annum interest. They argue that the rule
requiring the payment of 12% interest as a condition for the issuance of an injunctive
writ against an impending foreclosure sale was applicable only when applicant alleges
that the interest rate is unconscionable.12 According to petitioners, nowhere in the
Complaint did they allege that the interest charges were unconscionable.13 Instead,
what they raised in the First Complaint as their principal cause of action was the
Bank’s deliberate withholding of loan releases on various pretexts and the propriety of
the acts of the Bank charging them with interests and penalties due to the delay
caused by the Bank itself.14 The trial court, however, affirmed its earlier ruling.15

Petitioners moved for reconsideration,16 but their motion was denied.17 Consequently,
they did not pay the required interest; thus, no writ of preliminary injunction was
issued in their favor.

Aggrieved, petitioner Spouses Arevalo filed a Rule 65 Petition18 with the CA to assail
the Orders of the trial court involving the non-issuance of the injunctive writ.19

Meanwhile, proceedings for the First Complaint ensued at the trial court. Acting on the
Motion to Dismiss filed by respondent Bank, the trial court granted the motion and
dismissed the First Complaint for lack of cause of action.20Petitioner Spouses Arevalo
then proceeded again to the CA to appeal21 the dismissal of the main case. The
record does not reveal the status of the case.

With regard to the Rule 65 Petition to the CA questioning the non-issuance of the writ,
respondent Bank filed its Comment22 thereon. Subsequently, the CA rendered the
present assailed Decision dated 24 March 2010, affirming the applicability of Section
2 of the Procedure on Foreclosure. It ruled that the trial court was correct in refusing to
issue the writ due to petitioners’ inexplicable failure and even stubborn refusal to pay
the accrued interest at 12% per annum.23 The CA held that the words used by
petitioners in their First Complaint, such as "manifestly unjust," "purely potestative
condition," "void ab initio," "clearly contravenes morals, good customs and public
policy," "whimsical," "capricious violation of the legal and inherent principles of
mutuality of contracts," "illegal, invalid, unilateral impositions"—all of which pertained
to interest imposed by the Bank—undeniably meant that petitioners were challenging
the interest for being unconscionable, while opting to use other words of similar
import.24

Petitioners moved for reconsideration, but the CA denied their motion.25

Aggrieved, they filed the instant Rule 45 Petition to assail the Decision of the CA
affirming the non-issuance of the injunctive writ.

There are thus two (2) cases arising from similar facts and circumstances; more
particularly, the instant Rule 45 Petition and the appeal of the dismissal of the main
case with the CA.26 It appears on record also that on 12 November 2010, petitioners
filed yet another Complaint dated 11 November 201027 (Second Complaint) with the
trial court. This time, they prayed for the nullification of the real estate mortgage, the
extra-judicial foreclosure sale, and the subsequent proceedings, with a prayer for
preliminary injunction and TRO.

With regard to the instant Rule 45 Petition, petitioners assail the Decision and
Resolution of the CA based on the following grounds:28 (1) they were deprived of the
opportunity to present evidence on their application for a writ of preliminary injunction;
and (2) the CA erred when it required them to pay 12% interest per annum based on
Section 2 of the Procedure on Foreclosure, when the core of their First Complaint was
not excessiveness of the interest but the Bank’s supposed breach of their obligations
in the loan agreement.29

Respondent Bank, on the other hand, countered as follows:30 (1) petitioner Spouses
Arevalo were not denied due process, since they were accorded several opportunities
to be heard on their application for the issuance of an injunctive writ; (2) the CA
correctly required petitioners to pay the interest; and (3) petitioner Spouses Arevalo
were guilty of forum-shopping when they filed their Second Complaint. For
forum-shopping, respondent Bank likewise moved to hold them in contempt,31
arguing that they had sought similar reliefs in their Second Complaint with the trial
court as in the present Petition.

Petitioners filed their Reply32 and Comment33 to the charges on contempt.

Based on the parties’ submissions, the following issues are presented for the
resolution of this Court:

1. Whether the requirement to pay 12% interest per annum before the issuance of an
injunctive writ to enjoin an impending foreclosure sale is applicable to the instant case;
and

2. Whether petitioner Spouses Arevalo are guilty of forum-shopping and should


consequently be punished for contempt.

RULING OF THE COURT


I. The issue of the applicability to this case of the requirement to pay 12% interest per
annum before the issuance of an injunctive writ to enjoin an impending foreclosure
sale is moot.

The Court rules that upon dismissal of the First Complaint by the trial court on 27
October 2009,34 the issue of whether the writ of injunction should issue has become
moot. Although both parties failed to raise this particular argument in their
submissions, we deny the instant Petition on this ground.

A case becomes moot and academic when there is no more actual controversy
between the parties or useful purpose that can be served in passing upon the
merits.35

There remains no actual controversy in the instant Petition because the First
Complaint has already been dismissed by the trial court. Upon its dismissal, the
question of the non-issuance of a writ of preliminary injunction necessarily died with it.

A writ of preliminary injunction is a provisional remedy. It is auxiliary to, an adjunct of,


and subject to the outcome of the main case.36 Thus, a writ of preliminary injunction is
deemed lifted upon dismissal of the main case, any appeal therefrom
notwithstanding,37 as this Court emphasized in Buyco v. Baraquia38 from which we
quote:

The writ is provisional because it constitutes a temporary measure availed of during


the pendency of the action and it is ancillary because it is a mere incident in and is
dependent upon the result of the main action.

It is well-settled that the sole object of a preliminary injunction, whether prohibitory or


mandatory, is to preserve the status quo until the merits of the case can be heard. It is
usually granted when it is made to appear that there is a substantial controversy
between the parties and one of them is committing an act or threatening the
immediate commission of an act that will cause irreparable injury or destroy the status
quo of the controversy before a full hearing can be had on the merits of the case.

xxx xxx xxx

The present case having been heard and found dismissible as it was in fact dismissed,
the writ of preliminary injunction is deemed lifted, its purpose as a provisional remedy
having been served, the appeal therefrom notwithstanding.

Unionbank v. Court of Appeals enlightens:

xxx a dismissal, discontinuance or non-suit of an action in which a restraining order or


temporary injunction has been granted operates as a dissolution of the restraining
order or temporary injunction," regardless of whether the period for filing a motion for
reconsideration of the order dismissing the case or appeal therefrom has expired. The
rationale therefor is that even in cases where an appeal is taken from a judgment
dismissing an action on the merits, the appeal does not suspend the judgment, hence
the general rule applies that a temporary injunction terminates automatically on the
dismissal of the action. (Emphases supplied.)39
There will be no practical value in resolving the question of the non-issuance of an
injunctive writ in this case. Setting aside the assailed Orders is manifestly pointless,
considering that the First Complaint itself has already been dismissed, and there is
nothing left to enjoin. The reversal of the assailed Orders would have a practical effect
only if the dismissal were set aside and the First Complaint reinstated.40 In this case,
however, petitioner Spouses Arevalo admitted to the impossibility of the reinstatement
of the First Complaint when they filed their Second Complaint.41

Even petitioners’ plea that this Court give due course to the Petition for a ruling on the
proper application of the Procedure on Foreclosure42 cannot compel us to resolve this
issue.

The Constitution provides that judicial power "includes the duty of the courts of justice
to settle actual controversies involving rights which are legally demandable and
enforceable."43 The exercise of judicial power requires an actual case calling for it.
The courts have no authority to pass upon issues through advisory opinions, or to
resolve hypothetical or feigned problems or friendly suits collusively arranged
between parties without real adverse interests.44 Furthermore, courts do not sit to
adjudicate mere academic questions to satisfy scholarly interest, however
intellectually challenging.45 As a condition precedent to the exercise of judicial power,
an actual controversy between litigants must first exist.46 An actual case or
controversy involves a conflict of legal rights, an assertion of opposite legal claims
susceptible of judicial resolution, as distinguished from a hypothetical or abstract
difference or dispute.47 There must be a contrariety of legal rights that can be
interpreted and enforced on the basis of existing law and jurisprudence.48

This Court cannot issue a mere advisory opinion in relation to the applicability of the
provisions of the Procedure on Foreclosure.

II. Petitioners are guilty of forum-shopping.

Petitioners have committed two distinct acts of forum-shopping,49 namely: (1)


petitioners willfully and deliberately went to different courts to avail themselves of
multiple judicial remedies founded on similar facts and raising substantially similar
reliefs, and (2) they did not comply with their undertaking to report the filing of the
Second Complaint within five days from its filing.

A. Petitioners filed multiple suits based on similar facts while seeking similar
reliefs—acts proscribed by the rules on forum-shopping.

We rule that petitioners were guilty of willful and deliberate forum-shopping when they
filed their Second Complaint with the trial court insofar as they undertook to obtain
similar reliefs as those sought in the instant Petition.

Respondent Bank argues that the rights asserted by petitioners, as well as the reliefs
petitioners seek in the instant Petition, are identical to those raised in their Second
Complaint.50

Petitioners, on the other hand, counter that the disparity between the two cases lies in
the issue to be resolved. More particularly, they allege that the issue in this Petition is
the summary application of the payment of 12% interest per annum as a precondition
for the issuance of a writ, as opposed to the issue in the Second Complaint involving
the validity of the real estate mortgage and compliance with the rules on the holding of
the extrajudicial foreclosure sale.51

Forum shopping is the act of litigants who repetitively avail themselves of multiple
judicial remedies in different fora, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and circumstances;
and raising substantially similar issues either pending in or already resolved adversely
by some other court; or for the purpose of increasing their chances of obtaining a
favorable decision, if not in one court, then in another.52 The rationale against
forum-shopping is that a party should not be allowed to pursue simultaneous
remedies in two different courts, for to do so would constitute abuse of court
processes which tends to degrade the administration of justice, wreaks havoc upon
orderly judicial procedure, and adds to the congestion of the heavily burdened
dockets of the courts.53

In Yu v. Lim,54 this Court enumerated the requisites of forum-shopping, as follows:

Forum-shopping exists when the elements of litis pendentia are present or where a
final judgment in one case will amount to res judicata in another. Litis pendentia
requires the concurrence of the following requisites: (1) identity of parties, or at least
such parties as those representing the same interests in both actions; (2) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and
(3) identity with respect to the two preceding particulars in the two cases, such that
any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case.55

What is essential in determining the existence of forum-shopping is the vexation


caused the courts and litigants by a party who asks different courts and/or
administrative agencies to rule on similar or related causes and/or grant the same or
substantially similar reliefs, in the process creating the possibility of conflicting
decisions being rendered upon the same issues.56

A comparison of the reliefs sought by petitioners in the instant Petition and in their
Second Complaint confirms that they are substantially similar on two points: (1)
revocation and cancellation of the Certificate of Sale and (2) permanent injunction on
any transfer and/or consolidation of title in favor of respondent Bank. These
similarities undoubtedly create the possibility of conflicting decisions from different
courts:

Instant Petition Second Complaint

WHEREFORE, it is most respectfully WHEREFORE, it is respectfully prayed of


prayed that immediately upon filing of this the Honorable Court that pending
petition, the same be given due course, consideration and hearing on the principal
and an order issue, ex parte: reliefs herein prayed for, a Temporary
Restraining order (TRO) and/or Writ of
(1) A Resolution be issued directing the Preliminary Injunction be issued
Ex-Officio Sheriff and his Assisting Sheriff immediately restraining and/or stopping the
to undo, cancel, revoke the Certificate of defendants Ex-Officio Sheriff Atty. Jerry R.
Sale they issued; Toledo and Deputy Sheriff Paulo Jose N.
Cusi from executing and issuing a final
(2) Enjoining the Register of Deeds of deed of sale in favor of the defendant bank
Paranaque (or any of her subordinates, and further ordering the defendant
agents, representatives and persons acting Registrar of Deeds of Paranaque City to
in their behalf to cease and desist from hold in abeyance the registration of the
allowing any transfer and/or consolidation final deed of sale and other documents of
of respondents banks title to the property in consolidation pending resolution of this
question and an order be issued directing Honorable Court. Plaintiffs pray for the
the Register of Deeds to undo, cancel and following additional reliefs:
revoke the registration of the Certificate of
Sale on November 13, 2009 and other 1. After hearing on the merits, the Real
proceedings had thereafter, the petition be Estate Mortgage be declared and
given due course and judgment be rescinded and/or null and void;
rendered as follows:
2. The Certificate of Sale [dated November
1. Making the injunction permanent. 4, 2009] issued by the defendant Sheriffs
and its subsequent registration on
2. Issuing a writ of mandatory injunction for November 13, 2009 with the Registry of
the respondent Ex-Officio Sheriff to undo, Deeds be declared null and void;
revoke and cancel the Certificate of Sale
issued and/or directing the Register of 3. After due hearing, the preliminary
Deeds to undo, revoke and cancel the injunction be declared permanent. x x x58
registration of the Certificate of Sale and/or (Emphases supplied.)
defer any consolidation of title in favor of
respondent bank pending final resolution of
this petition.

3. Reversing and setting aside the Decision


of the Court of Appeals dated March 24,
2010 and Resolution dated August 5,
2010.57(Emphasis supplied.)

As illustrated above, there is a clear violation of the rules on forum-shopping, as the


Court is being asked to grant substantially similar reliefs as those that may also be
granted by the trial court, in the process creating a possibility of conflicting decisions.

We emphasize that the grave evil sought to be avoided by the rule against
forum-shopping is the rendition by two competent tribunals of two separate and
contradictory decisions.59 To avoid any confusion, this Court adheres strictly to the
rules against forum shopping, and any violation of these rules results in the dismissal
of a case.60 The acts committed and described herein can possibly constitute direct
contempt.61

B. Petitioners did not report the filing of their Second Complaint within five (5) days, in
violation of their undertaking to do so.
Aside from the fact that petitioners sought substantially similar reliefs from different
courts, they likewise failed to disclose to this Court the filing of their Second Complaint
within five (5) days from its filing, in violation of their previous undertaking to do so. 62

Every litigant is required to notify the court of the filing or pendency of any other action
or such other proceeding involving the same or similar action or claim within five (5)
days of learning of that fact.63 Petitioners claim that it was merely due to inadvertence
that they failed to disclose the said filing within five (5) days, contrary to their
undertaking. 64 1âwphi1

This Court is not inclined to accept this self-serving explanation. We cannot disregard
the glaring fact that respondents had to call the attention of petitioners to the said
requirement before the latter admitted that they had indeed filed their Second
Complaint.

As previously established, petitioners have violated two (2) components of


forum-shopping, more particularly: (1) petitioners willfully and deliberately went to
different courts to avail themselves of multiple judicial remedies founded on similar
facts and raising substantially similar reliefs, an act which may be punishable as direct
contempt;65 and (2) they did not comply with their undertaking to report the filing of the
Second Complaint within five days from its filing. The latter action may also possibly
be construed as a separate count for indirect contempt.

While in a limited sense, petitioners have already been given the chance to rebut the
prayer to hold them in contempt, We hereby provide sufficient avenue for them to
explain themselves by requiring them to show cause, within fifteen (15) days, why
they should not be held in direct and indirect contempt of court.

WHEREFORE, the instant Petition for Review filed by Spouses Daisy Arevalo and
Socrates M. Arevalo is hereby DENIED. The Decision dated 24 March 2010 and
Resolution dated 05 August 2010 issued by the Court of Appeals in CA-G.R. SP No.
110806 are AFFIRMED.

Accordingly, petitioners are required to SHOW CAUSE, within fifteen (15) days from
receipt of this Decision, why they should not be held in contempt; more specifically: (a)
for direct contempt of court—for availing of multiple judicial remedies founded on
similar facts and raising substantially similar reliefs from different courts; and (b) for
indirect contempt of court—for not complying with their undertaking to report the filing
of the Second Complaint within five days from its filing.

MARCELO MANTILE vs ALEJANDRO CAJUCOM, ET AL.,

On June 22, 1908, the attorneys for the plaintiffs Marcelo Mantile, Sebastian Bancod,
Adriano Español, Gregorio Corpus, Claudio Angeles, Doroteo Dacuno, Fernando
Polintan, Maximino Fajardo, Catalino Rubio, Alejandro Caisip, Diego Santiago,
Eugenio Ronquillo, Raymundo Santiago, Simon de la Cruz, Anacleto de los Reyes,
Rafael Mendoza, Marcelino Fajardo, Tomas Marcelo, Inocencio Santiago, Eugenio
Angeles, Segundo Ramos, and Geronimo Rojas, filed a written complaint against
Alejandro Cajucom and Timoteo Cajucom wherein they prayed for the issuance of writ
of preliminary injunction to restrain the defendants from continuing to close the canal
or esterocalled 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 passage 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 3rd 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 court 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 plaintiff's 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 3rd 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 particular act.

The said writ prohibited the performance of any act that would obstruct, close, or
hinder the course of the water through the Piniping canal or creek, when it was
already obstructed and closed; and as the removal of the impediment or obstruction
was not ordered, the defendants were not obliged to perform any particular act, and
their inaction in leaving the canal closed does not constitute contempt of court, as they
did not violate any judicial prohibition.

The record shows that the prohibition was issued after the closing of the canal; hence,
if the defendants did not remove the obstruction, they disobeyed no order. In the
syllabus of decision No. 1697, Municipal council of Santa Rosa vs. Provincial Board of
La Laguna (3 Phil. Rep., 206), the rule was laid down that the commission of an act
already done can not be enjoined. To say that it could, would be nonsense.

THE MAIN ISSUE

On January 28, 1909, the plaintiffs filed an amended complaint, with the permission of
the court, wherein they alleged that certain of them named Maria Marcelo, Crisanto
Rubio, Alipio Español or Estañol, Marcelo Mantile, Adriano Español or Estañol,
Sebastian Bancod, Claudio Angeles, Diego Santiago, Raymundo Santiago, Anacleto
de los Reyes, Rafael Mendoza, Clemente Alivia, Marcelino Fajardo, and Segundo
Ramos had been, on or about June 1, 1908, and were at the time, the proprietors and
owners of rice lands situated in the barrio of Biga of the pueblo of Bongabon, and that
the other plaintiffs were planters and cultivators of some portions of the said islands;
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 afore-mentioned 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 said estero or creek, suffered losses and
damages in the following amounts: Maria Marcelo, P1,500; Crisanto Rubio, P250;
Alipio Español, P75; Marcelo Mantile, P2,500; Adriano Español, P75; Sebastian
Bancod, P400; Gregorio Corpus, P150; Claudio Angeles, P250; Doroteo Dacuno,
P250; Fernando Polintan, P250; Maximino Fajardo, P200; Catalino Rubio, P300;
Alejandro Caisip, P270; Diego Santiago, P800; Eugenio Ronquillo, P486; Raymundo
Santiago, P650; Simeon [Simon] de la Cruz, P480; Anacleto de los Reyes, P180;
Rafael Mendoza, P300; Marcelino Fajardo, P340; Tomas Marcelo, P270; Inocencio
Santiago, P375; Eugenio Angeles, P375; Geronimo Rojas, P135; Segundo Ramos,
P390, and Clemente Alivia, P219; and the complaint concluded by asking the court to
render judgment against the defendants, and, at the termination of the trial, to issue a
perpetual injunction enjoining them from closing the said estero or creek, or in any
manner obstructing the course of the water therein, and furthermore, to sentence
them to pay to the plaintiffs the losses and damages suffered by them, and the costs
of the suit.
On February 11, 1909, the defendants' counsel, answering the amended complaint,
made a general denial of each and all the allegations of the said complaint and
alleged, as a special defense, that the irrigation canal in question belonged to the
defendants; that the mouth of the said Paligui ng Buquid Puntang Piniping canal did
not previously exist and was opened only at the request of Marcelo Mantile; and that
the plaintiff's lands were provided with another irrigation ditch independent of the one
herein concerned. Said counsel therefore prayed that his clients be absolved from the
complaint, that the irrigation canal in question be declared to belong to the defendants,
and that the plaintiffs be sentenced to pay the costs.

On April 26, 1909, the case came up for hearing, testimony was adduced by both
parties and the court, after consideration of the evidence, rendered judgment on July
26,1909, enjoining the defendant Alejandro Cajucom from closing the Paligui ng
Buquid Puntang Piniping estero or creek, or in any manner obstructing the course of
the water running therein. the preliminary injunction issued against the defendant, his
agents and representatives, by the Hon. Judge Estanislao Yusay, was thus rendered
perpetual, and the said defendant was sentenced to pay the following sums, for
losses and damages; To Maria Marcelo, P196.50; Crisanto Rubio, P139.50; Alipio
Español, P75; Marcelo Mantile P800.25; Adriano Español, P75; Sebastian Bancod,
P142.50; Gregorio Corpus, P90.12; Claudio Angeles, P97.87; Doroteo Dacumo,
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 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 main issues 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 lands 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 two esteros 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 arising 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 the 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 plaintiff 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 findings 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.

JUAN G. FELICIANO, ET AL. Vs MARIANO ALIPIO, ET AL.,

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, 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 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.

PETRONILO J. BARAYUGA, PETITIONER, VS. ADVENTIST UNIVERSITY OF THE


PHILIPPINES,
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.

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.

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.

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.

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.

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:

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.

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.

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. xxx.

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, xxx.

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 providedin 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.
xxxx

Article IV
Officers

Section 1. Election of officers. - At their organization meeting, the


members of the Board of Trustees shall elect from among
themselves a 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]

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.

AUSTRALIAN PROFESSIONAL REALTY, INC., vs MUNICIPALITY OF PADRE


GARCIA BATANGAS PROVINCE

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.
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
(₱5,000,000.00) 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

On 17 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 ₱30,000,000, 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 ₱100,000. 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 applicant, 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.

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.8An 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 of Status 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

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 ₱30,000,000 in investments, ₱100,000
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.1âwphi1 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 are AFFIRMED. The Court
of Appeals is directed to proceed with dispatch to dispose of the case before it.

SPOUSES HUMBERTO P. DELOSSANTOS AND CARMENCITA M. DELOS


SANTOS, Petitioners,
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.

DECISION

BERSAMIN, J.:

A writ of preliminary injunction to enjoin an impending extrajudicial foreclosure sale is


issued only upon a clear showing of a violation of the mortgagor's unmistakable right.1

This appeal is taken by the petitioners to review and reverse the decision promulgated
on February 19, 2002,2whereby the Court of Appeals (CA) dismissed their petition for
certiorari that assailed the denial by the Regional Trial Court in Davao City (RTC) of
their application for the issuance of a writ of preliminary injunction to prevent the
extrajudicial foreclosure sale of their mortgaged asset initiated by their mortgagee,
respondent Metropolitan Bank and Trust Company (Metrobank).

Antecedents

From December 9, 1996 until March 20, 1998, the petitioners took out several loans
totaling P12,000,000.00 from Metrobank, Davao City Branch, the proceeds of which
they would use in constructing a hotel on their 305-square-meter parcel of land
located in Davao City and covered by Transfer Certificate of Title No. I-218079 of the
Registry of Deeds of Davao City. They executed various promissory notes covering
the loans, and constituted a mortgage over their parcel of land to secure the
performance of their obligation. The stipulated interest rates were 15.75% per annum
for the long term loans (maturing on December 9, 2006) and 22.204% per annum for
a short term loan of P4,400,000.00 (maturing on March 12, 1999).3 The interest rates
were fixed for the first year, subject to escalation or de-escalation in certain events
without advance notice to them. The loan agreements further stipulated that the entire
amount of the loans would become due and demandable upon default in the payment
of any installment, interest or other charges.4

On December 27, 1999, Metrobank sought the extrajudicial foreclosure of the real
estate mortgage5 after the petitioners defaulted in their installment payments. The
petitioners were notified of the foreclosure and of the forced sale being scheduled on
March 7, 2000. The notice of the sale stated that the total amount of the obligation
was P16,414,801.36 as of October 26, 1999.6

On April 4, 2000, prior to the scheduled foreclosure sale (i.e., the original date of
March 7, 2000 having been meanwhile reset to April 6, 2000), the petitioners filed in
the RTC a complaint (later amended) for damages, fixing of interest rate, and
application of excess payments (with prayer for a writ of preliminary injunction). They
alleged therein that Metrobank had no right to foreclose the mortgage because they
were not in default of their obligations; that Metrobank had imposed interest rates (i.e.,
15.75% per annum for two long-term loans and 22.204% per annum for the short term
loan) on three of their loans that were different from the rate of 14.75% per annum
agreed upon; that Metrobank had increased the interest rates on some of their loans
without any basis by invoking the escalation clause written in the loan agreement; that
they had paid P2,561,557.87 instead of only P1,802,867.00 based on the stipulated
interest rates, resulting in their excess payment of P758,690.87 as interest, which
should then be applied to their accrued obligation; that they had requested the
reduction of the escalated interest rates on several occasions because of its
damaging effect on their hotel business, but Metrobank had denied their request; and
that they were not yet in default because the long-term loans would become due and
demandable on December 9, 2006 yet and they had been paying interest on the
short-term loan in advance.

The complaint prayed that a writ of preliminary injunction to enjoin the scheduled
foreclosure sale be issued. They further prayed for a judgment making the injunction
permanent, and directing Metrobank, namely: (a) to apply the excess payment of
P758,690.87 to the accrued interest; (b) to pay P150,000.00 for the losses suffered in
their hotel business; (c) to fix the interest rates of the loans; and (d) to pay moral and
exemplary damages plus attorney’s fees.7

In its answer, Metrobank stated that the increase in the interest rates had been made
pursuant to the escalation clause stipulated in the loan agreements; and that not all of
the payments by the petitioners had been applied to the loans covered by the real
estate mortgage, because some had been applied to another loan of theirs amounting
to P500,000.00 that had not been secured by the mortgage.

In the meantime, the RTC issued a temporary restraining order to enjoin the
foreclosure sale.8 After hearing on notice, the RTC issued its order dated May 2,
2000,9 granting the petitioners’ application for a writ of preliminary injunction.
Metrobank moved for reconsideration.10 The petitioners did not file any opposition to
Metrobank’s motion for reconsideration; also, they did not attend the scheduled
hearing of the motion for reconsideration.

On May 19, 2000, the RTC granted Metrobank’s motion for reconsideration, holding in
part,11 as follows:

xxx In the motion at bench as well as at the hearing this morning defendant Metro
Bank pointed out that in all the promissory notes executed by the plaintiffs there is
typewritten inside a box immediately following the first paragraph the following:

"At the effective rate of 15.75% for the first year subject to upward/downward
adjustments for the next year thereafter."

Moreover, in the form of the same promissory notes, there is the additional stipulation
which reads:

"The rate of interest and/or bank charges herein-stipulated, during the term of this
Promissory Note, its extension, renewals or other modifications, may be increased,
decreased, or otherwise changed from time to time by the bank without advance
notice to me/us in the event of changes in the interest rates prescribed by law of the
Monetary Board of the Central Bank of the Philippines, in the rediscount rate of
member banks with the Central Bank of the Philippines, in the interest rates on
savings and time deposits, in the interest rates on the Bank’s borrowings, in the
reserve requirements, or in the overall costs of funding or money;"

There being no opposition to the motion despite receipt of a copy thereof by the
plaintiffs through counsel and finding merit to the motion for reconsideration, this
Court resolves to reconsider and set aside the Order of this Court dated May 2, 2000.

xxxx

SO ORDERED.

The petitioners sought the reconsideration of the order, for which the RTC required
the parties to submit their respective memoranda. In their memorandum, the
petitioners insisted that they had an excess payment sufficient to cover the amounts
due on the principal.

Nonetheless, on June 8, 2001, the RTC denied the petitioners’ motion for
reconsideration,12 to wit:

The record does not show that plaintiffs have updated their installment payments by
depositing the same with this Court, with the interest thereon at the rate they contend
to be the true and correct rate agreed upon by the parties.

Hence, even if their contention with respect to the rates of interest is true and correct,
they are in default just the same in the payment of their principal obligation.

WHEREFORE, the MOTION FOR RECONSIDERATION is denied.


Ruling of the CA

Aggrieved, the petitioners commenced a special civil action for certiorari in the CA,
ascribing grave abuse of discretion to the RTC when it issued the orders dated May
19, 2000 and June 8, 2001.

On February 19, 2002, the CA rendered the assailed decision dismissing the petition
for certiorari for lack of merit, and affirming the assailed orders,13 stating:

Petitioners aver that the respondent Court gravely abused its discretion in finding that
petitioners are in default in the payment of their obligation to the private respondent.

We disagree.

The Court below did not excessively exercise its judicial authority not only in setting
aside the May 2, 2000 Order, but also in denying petitioners’ motion for
reconsideration due to the faults attributable to them.

When private respondent Metrobank moved for the reconsideration of the Order of
May 2, 2000 which granted the issuance of the writ of preliminary injunction,
petitioners failed to oppose the same despite receipt of said motion for
reconsideration. The public respondent Court said –

"For resolution is the Motion for Reconsideration filed by the defendant Metropolitan
Bank and Trust Company, dated May 12, 2000, a copy of which was received by Atty.
Philip Pantojan for the plaintiffs on May 16, 2000. There is no opposition nor
appearance for the plaintiffs this morning at the scheduled hearing of said motion x x
x".

Corollarily, the issuance of the Order of June 8, 2001 was xxx based on petitioners’
being remiss in their obligation to update their installment payments.

The Supreme Court ruled in this wise:

To justify the issuance of the writ of certiorari, the abuse of discretion on the part of
the tribunal or officer must be grave, as when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility.

Petitioners likewise discussed at length the issue of whether or not the private
respondent has collected the right interest rate on the loans they obtained from the
private respondent, as well as the propriety of the application of escalated interest
rate which was applied to their loans by the latter. In the instant petition, questions of
fact are not generally permitted, the inquiry being limited essentially to whether the
public respondent acted without or in excess of its jurisdiction or with grave abuse of
discretion in issuing the questioned Orders, neither is the instant petition available to
correct mistakes in the judge’s findings and conclusions, nor to cure erroneous
conclusions of law and fact, if there be any.

Certiorari will issue only to correct errors of jurisdiction, not errors of procedure or
mistakes in the findings or conclusions of the lower court.
A review of facts and evidence is not the province of the extraordinary remedy of
certiorari.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Orders of the
respondent Court are AFFIRMED.

SO ORDERED.

The petitioners moved for reconsideration of the decision, but the CA denied the
motion for lack of merit on May 7, 2002.14

Hence, this appeal.

Issues

The petitioners pose the following issues, namely:

1. Whether or not the Presiding Judge in issuing the 08 June 2001 Order, finding the
petitioners in default of their obligation with the Bank, has committed grave abuse of
discretion amounting to excess or lack of jurisdiction as the same run counter against
the legal principle enunciated in the Almeda Case;

2. Assuming that the Presiding Judge did not excessively exercise his judicial
authority in the issuance of the assailed orders, notwithstanding their consistency with
the legal principle enunciated in the Almeda Case, whether or not the petitioners can
avail of the remedy under Rule 65, taking into consideration the sense of urgency
involved in the resolution of the issue raised;

3. Whether or not the Petition lodged before the Court of Appeals presented a
question of fact, and hence not within the province of the extraordinary remedy of
certiorari.15

The petitioners argue that the foreclosure of their mortgage was premature; that they
could not yet be considered in default under the ruling in Almeda v. Court of
Appeals,16 because the trial court was still to determine with certainty the exact
amount of their obligation to Metrobank; that they would likely prevail in their action
because Metrobank had altered the terms of the loan agreement by increasing the
interest rates without their prior assent; and that unless the foreclosure sale was
restrained their action would be rendered moot. They urge that despite finding no
grave abuse of discretion on the part of the RTC in denying their application for
preliminary injunction, the CA should have nonetheless issued a writ of certiorari
considering that they had no other plain and speedy remedy.

Metrobank counters that Almeda v. Court of Appeals was not applicable because that
ruling presupposed the existence of the following conditions, to wit: (a) the escalation
and de-escalation of the interest rate were subject to the agreement of the parties; (b)
the petitioners as obligors must have protested the highly escalated interest rates
prior to the application for foreclosure; (c) they must not be in default in their
obligations; (d) they must have tendered payment to Metrobank equivalent to the
principal and accrued interest calculated at the originally stipulated rate; and (e) upon
refusal of Metrobank to receive payment, they should have consigned the tendered
amount in court.17 It asserts that the petitioners’ loans, unlike the obligation involved in
Almeda v. Court of Appeals, had already matured prior to the filing of the case, and
that they had not tendered or consigned in court the amount of the principal and the
accrued interest at the rate they claimed to be the correct one.18

Based on the foregoing, the issues to be settled are, firstly, whether the petitioners
had a cause of action for the grant of the extraordinary writ of certiorari; and, secondly,
whether the petitioners were entitled to the writ of preliminary injunction in light of the
ruling in Almeda v. Court of Appeals.

Ruling

The appeal has no merit.

To begin with, the petitioners’ resort to the special civil action of certiorari to assail the
May 19, 2000 order of the RTC (reconsidering and setting aside its order dated May 2,
2000 issuing the temporary restraining order against Metrobank to stop the
foreclosure sale) was improper. They thereby apparently misapprehended the true
nature and function of a writ of certiorari. It is clear to us, therefore, that the CA justly
and properly dismissed their petition for the writ of certiorari.

We remind that the writ of certiorari – being a remedy narrow in scope and inflexible in
character, whose purpose is to keep an inferior court within the bounds of its
jurisdiction, or to prevent an inferior court from committing such grave abuse of
discretion amounting to excess of jurisdiction, or to relieve parties from arbitrary acts
of courts (i.e., acts that courts have no power or authority in law to perform) – is not a
general utility tool in the legal workshop,19and cannot be issued to correct every error
committed by a lower court.

In the common law, from which the remedy of certiorari evolved, the writ of certiorari
was issued out of Chancery, or the King’s Bench, commanding agents or officers of
the inferior courts to return the record of a cause pending before them, so as to give
the party more sure and speedy justice, for the writ would enable the superior court to
determine from an inspection of the record whether the inferior court’s judgment was
rendered without authority.20The errors were of such a nature that, if allowed to stand,
they would result in a substantial injury to the petitioner to whom no other remedy was
available.21 If the inferior court acted without authority, the record was then revised
and corrected in matters of law.22 The writ of certiorari was limited to cases in which
the inferior court was said to be exceeding its jurisdiction or was not proceeding
according to essential requirements of law and would lie only to review judicial or
quasi-judicial acts.23

The concept of the remedy of certiorari in our judicial system remains much the same
as it has been in the common law. In this jurisdiction, however, the exercise of the
power to issue the writ of certiorari is largely regulated by laying down the instances or
situations in the Rules of Court in which a superior court may issue the writ of
certiorari to an inferior court or officer. Section 1, Rule 65 of the Rules of Court
compellingly provides the requirements for that purpose, viz:
Section 1. Petition for certiorari. — When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any 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
annulling or modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto, and a sworn certification of non-forum shopping as provided in the
third paragraph of section 3, Rule 46.

(1a)

Pursuant to Section 1, supra, the petitioner must show that, one, the tribunal, board or
officer exercising judicial or quasi-judicial functions acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and, two, there is neither an appeal nor any plain, speedy and adequate
remedy in the ordinary course of law for the purpose of amending or nullifying the
proceeding.

Considering that the requisites must concurrently be attendant, the herein petitioners’
stance that a writ of certiorari should have been issued even if the CA found no
showing of grave abuse of discretion is absurd. The commission of grave abuse of
discretion was a fundamental requisite for the writ of certiorari to issue against the
RTC. Without their strong showing either of the RTC’s lack or excess of jurisdiction, or
of grave abuse of discretion by the RTC amounting to lack or excess of jurisdiction,
the writ of certiorari would not issue for being bereft of legal and factual bases. We
need to emphasize, too, that with certiorari being an extraordinary remedy, they must
strictly observe the rules laid down by law for granting the relief sought.24

The sole office of the writ of certiorari is the correction of errors of jurisdiction, which
includes the commission of grave abuse of discretion amounting to lack of jurisdiction.
In this regard, mere abuse of discretion is not enough to warrant the issuance of the
writ. The abuse of discretion must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, or that the respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to
lack of jurisdiction.

Secondly, the Court must find that the petitioners were not entitled to enjoin or prevent
the extrajudicial foreclosure of their mortgage by Metrobank. They were undeniably
already in default of their obligations the performance of which the mortgage had
precisely secured. Hence, Metrobank had the unassailable right to the foreclosure. In
contrast, their right to prevent the foreclosure did not exist. Hence, they could not be
validly granted the injunction they sought.
The foreclosure of a mortgage is but a necessary consequence of the non-payment of
an obligation secured by the mortgage. Where the parties have stipulated in their
agreement, mortgage contract and promissory note that the mortgagee is authorized
to foreclose the mortgage upon the mortgagor’s default, the mortgagee has a clear
right to the foreclosure in case of the mortgagor’s default. Thereby, the issuance of a
writ of preliminary injunction upon the application of the mortgagor will be improper. 25
Mindful that an injunction would be a limitation upon the freedom of action of
Metrobank, the RTC justifiably refused to grant the petitioners’ application for the writ
of preliminary injunction. We underscore that the writ could be granted only if the RTC
was fully satisfied that the law permitted it and the emergency demanded it.26 That,
needless to state, was not true herein.

In City Government of Butuan v. Consolidated Broadcasting System (CBS), Inc.,27 the


Court restated the nature and concept of a writ of preliminary injunction in the
following manner, to wit:

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, an agency, or a person
to refrain from a particular act or acts. It may also require the performance of a
particular act or acts, in which case it is known as a preliminary mandatory injunction.
Thus, a prohibitory injunction is one that commands a party to refrain from doing a
particular act, while a mandatory injunction commands the performance of some
positive act to correct a wrong in the past.1âwphi1

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. (Bold emphasis supplied)

Thirdly, the petitioners allege that: (a) Metrobank had increased the interest rates
without their assent and without any basis; and (b) they had an excess payment
sufficient to cover the amounts due. In support of their allegation, they submitted a
table of the interest payments, wherein they projected what they had actually paid to
Metrobank and contrasted the payments to what they claimed to have been the
correct amounts of interest, resulting in an excess payment of P605,557.81.

The petitioners fail to convince.

We consider to be unsubstantiated the petitioners’ claim of their lack of consent to the


escalation clauses. They did not adduce evidence to show that they did not assent to
the increases in the interest rates. The records reveal instead that they requested only
the reduction of the interest rate or the restructuring of their loans. 28 Moreover, the
mere averment that the excess payments were sufficient to cover their accrued
obligation computed on the basis of the stipulated interest rate cannot be readily
accepted. Their computation, as their memorandum submitted to the RTC would
explain,29 was too simplistic, for it factored only the principal due but not the accrued
interests and penalty charges that were also stipulated in the loan agreements.

It is relevant to observe in this connection that escalation clauses like those affecting
the petitioners were not void per se, and that an increase in the interest rate pursuant
to such clauses were not necessarily void. In Philippine National Bank v. Rocamora,30
the Court has said:

Escalation clauses are valid and do not contravene public policy. These clauses are
common in credit agreements as means of maintaining fiscal stability and retaining
the value of money on long-term contracts. To avoid any resulting one-sided situation
that escalation clauses may bring, we required in Banco Filipino the inclusion in the
parties’ agreement of a de-escalation clause that would authorize a reduction in the
interest rates corresponding to downward changes made by law or by the Monetary
Board.

The validity of escalation clauses notwithstanding, we cautioned that these clauses do


not give creditors the unbridled right to adjust interest rates unilaterally. As we said in
the same Banco Filipino case, any increase in the rate of interest made pursuant to an
escalation clause must be the result of an agreement between the parties. The minds
of all the parties must meet on the proposed modification as this modification affects
an important aspect of the agreement. There can be no contract in the true sense in
the absence of the element of an agreement, i.e., the parties’ mutual consent. Thus,
any change must be mutually agreed upon, otherwise, the change carries no binding
effect. A stipulation on the validity or compliance with the contract that is left solely to
the will of one of the parties is void; the stipulation goes against the principle of
mutuality of contract under Article 1308 of the Civil Code.

We reiterate that injunction will not protect contingent, abstract or future rights whose
existence is doubtful or disputed.31 Indeed, there must exist an actual right,32 because
injunction will not be issued to protect a right not in esse and which may never arise,
or to restrain an act which does not give rise to a cause of action. At any rate, an
application for injunctive relief is strictly construed against the pleader.33

Nor do we discern any substantial controversy that had any real bearing on
Metrobank’s right to foreclose the mortgage. The mere possibility that the RTC would
rule in the end in the petitioners’ favor by lowering the interest rates and directing the
application of the excess payments to the accrued principal and interest did not
diminish the fact that when Metrobank filed its application for extrajudicial foreclosure
they were already in default as to their obligations and that their short-term loan of
P4,400,000.00 had already matured. Under such circumstances, their application for
the writ of preliminary injunction could not but be viewed as a futile attempt to deter or
delay the forced sale of their property.

Lastly, citing the ruling in Almeda v. Court of Appeals, to the effect that the issuance of
a preliminary injunction pending the resolution of the issue on the correct interest rate
would be justified, the petitioners submit that they could be rightly considered in
default only after they had failed to settle the exact amount of their obligation as
determined by the trial court in the main case.

The petitioners’ reliance on the ruling in Almeda v. Court of Appeals was misplaced.

Although it is true that the ruling in Almeda v. Court of Appeals sustained the issuance
of the preliminary injunction pending the determination of the issue on the interest
rates, with the Court stating:

In the first place, because of the dispute regarding the interest rate increases, an
issue which was never settled on merit in the courts below, the exact amount of
petitioners’ obligations could not be determined. Thus, the foreclosure provisions of
P.D. 385 could be validly invoked by respondent bank only after settlement of the
question involving the interest rate on the loan, and only after the spouses refused to
meet their obligations following such determination.34 x x x.

Almeda v. Court of Appeals involved circumstances that were far from identical with
those obtaining herein. To start with, Almeda v. Court of Appeals involved the
mandatory foreclosure of a mortgage by a government financial institution pursuant to
Presidential Decree No. 38535 should the arrears reach 20% of the total outstanding
obligation. On the other hand, Metrobank is not a government financial institution.
Secondly, the petitioners in Almeda v. Court of Appeals were not yet in default at the
time they brought the action questioning the propriety of the interest rate increases,
hut the herein petitioners were already in default and the mortgage had already been
foreclosed when they assailed the interest rates in court. Thirdly, the Court found in
Almeda v. Court of Appeals that the increases in the interest rates had been made
without the prior assent of the borrowers, who had even consistently protested the
increases in the stipulated interest rate. In contrast, the Court cannot make the same
conclusion herein for lack of basis. Fourthly, the interest rates in Almeda v. Court of
Appeals were raised to such a very high level that the borrowers were practically
enslaved and their assets depleted, with the interest rate even reaching at one point a
high of 68% per annum. Here, however, the increases reached a high of only 31% per
annum, according to the petitioners themselves. Lastly, the Court in Almeda v. Court
of Appeals attributed good faith to the petitioners by their act of consigning in court the
amounts of what they believed to be their remaining obligation. No similar tender or
consignation of the amount claimed by the petitioners herein to be their correct
outstanding obligation was made by them.

In fine, the petitioners in Almeda v. Court o{Appeals had the existing right to a writ of
preliminary injunction pending the resolution of the main case, but the herein
petitioners did not. Stated otherwise, no writ of preliminary injunction to enjoin an
impending extrajudicial foreclosure sale should issue except upon a clear showing of
a violation of the mortgagors' unmistakable right to the injunction.

WHEREFORE, the Court UENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on February 19, 2002; and ORDERS the petitioners to pay the
costs of suit.

TML GASKET INDUSTRIES, INC., Petitioner, v. BPI FAMILY SAVINGS BANK,


INC., Respondents.
RESOLUTION

PEREZ, J.:

We are urged in this petition for review on certiorari to reverse and set aside the
Decision1 of the Court of Appeals in CA-G.R. SP No. 81932 which, in turn, reversed
the Orders,2 respectively dated 22 August 2003 and 27 November 2003, of the
Regional Trial Court (RTC), Branch 104, Parañaque City in Civil Case No. 02-0504.
The assailed Orders issued a writ of preliminary injunction in favor of petitioner TML
Gasket Industries, Inc. (TML), enjoining respondent BPI Family Savings Bank, Inc.'s
(BPI's) extra-judicial foreclosure of TMLs mortgaged properties, and denied TMLs
motion for reconsideration thereof.

The facts are not in dispute.

Sometime in September 1996, TML obtained a loan from the Bank of Southeast Asia,
Inc. (BSA), which TML can avail via a credit facility of P85,000,000.00. As security for
the loan, TML executed a real estate mortgage over commercial and industrial lots
located at Dr. A. Santos Avenue, Parañaque City covered by Transfer Certificate of
Title (TCT) Nos. 81278 and 81303 of the Registry of Deeds of Parañaque City. For
additional security, BSA required TML to execute a promissory note for each
availment from the credit facility.

On different dates from September 1996 to 31 July 1997, TML executed several
promissory notes (PN), which provided in pertinent part:cralawlibrary

Since time is of the essence hereof, TML is in default under this Note, without need for
notice, demand, presentment or any other act or deed in any of the following events: a)
TML fails to pay when due, totally or partially, the principal, interest and other charges
under this Note x x x.3?r?l1

During the period of the loan, BSA changed its corporate name to DBS Bank Phils.
(DBS), which eventually merged with BPI under the latters corporate name.

TML defaulted in the payment of its loan leading BPI to extra-judicially foreclose the
mortgaged properties. As of 25 June 2002, TMLs indebtedness to BPI amounted to
P71,877,930.56, excluding penalties, charges, attorneys fees and other expenses of
foreclosure.

On 24 October 2002, the Ex-Officio Sheriff of RTC, Parañaque City issued a Notice of
Extra-judicial Foreclosure Sale of the mortgaged properties.

Because of the imminent foreclosure sale of its mortgaged properties, TML, on 21


November 2002, filed a "Complaint for Declaratory Relief, Accounting, Declaration of
Nullity of Notice of Extra-Judicial Sale, Increased (sic) in Interest Rates, Penalty
Charges Plus, (sic) Damages, with Prayer for the Issuance of Temporary Restraining
Order (TRO) and/or Writ of Preliminary Injunction" against BPI and DBS before the
RTC, Branch 194, Parañaque City.
The complaint highlighted the following clause in the PNs signed by TML, to
wit:cralawlibrary

If changes in the conditions and/or circumstances occur which, directly or indirectly,


increase the overall costs of money to the Lender, such as but not limited to the
following: (i) any change in the laws or regulations, including any amendments,
modifications, interpretations, administrative implementation or repeal thereof
affecting the Lender or its business such as reserve or similar requirement, tax on
income, gross receipts, or the imposition of any levy, fees or other taxes; or (ii)
changes in the interest rate of forbearance of money whether in the prevailing market
rates or such other guiding or reference rates as may be adopted, determined and/or
authorized by the CB; (iii) extraordinary inflation or there is an increase of fifteen
percent (15%) in the consumer price index as announced by the CB or the National
Economic Development Authority reckoned from the date of the granting of the loan
or the credit line; or (iv) devaluation, revaluation, or depreciation in real value or
purchasing power of the Philippine Peso, that is, when there has been an adverse
change of at least fifteen percent (15%), in the CB Reference Exchange Rate for the
Philippine Peso to the US Dollar and/or such other foreign currencies adopted by the
Philippine Government or its instrumentalities or agencies, as forming part of its
international reserves, reckoned from the date of granting of the loan or credit line; (v)
any change in the reserve or similar requirements as a necessary consequence of
obtaining a unibanking license on the part of the Lender, then the Lender may, at its
sole option, correspondingly adjust the interest rate in all outstanding loans(s) and
other obligations under this Note/s and such other documents that may be thereafter
be executed. The adjustment in interest rate shall take effect three (3) days after
receipt by TML of the notice of adjustment.4?r?l1

TML asseverated that BSA made it understand that the stipulation meant that TMLs
loan would be subject to only a 16% interest rate per annum. TML alleged that
"despite the odds and difficulties it encountered, aggravated by the global economic
crisis, it tried hard to religiously pay its x x x obligation to BPI x x x." However, contrary
to their actual understanding, BSA "unreasonably, unconscionably and unilaterally"
imposed a 33% interest rate per annum, and ultimately, a penalty of 36% interest on
past due principal and corresponding interest thereon.

TML likewise pointed out that it had demanded an independent accounting and
liquidation of its loan account, which went unheeded. Ultimately, for TML, it cannot be
considered in default of an obligation with an undetermined and unascertained
amount. In that regard, TML argued that the intended foreclosure of TMLs mortgaged
properties is unwarranted for being illegal; thus, the foreclosure ought to be enjoined
to prevent TML from suffering grave and irreparable damage, especially since TMLs
office and factory are located at the mortgaged properties.

Refuting TMLs allegations, BPI maintained that the interest rates on TMLs loan
obligation were mutually and voluntarily agreed upon. On TMLs application for the
issuance of a writ of preliminary injunction, BPI countered that it has the absolute right
to foreclose the mortgage constituted over TMLs properties given that TML defaulted
on its loan obligation, which had already become due and demandable.

In an Order dated 20 June 2003, the trial court denied TMLs application for the
issuance of a preliminary injunction, ratiocinating thus:cralawlibrary
In resolving whether or not to grant the injunctive writ, this Court is guided by the
requisites thereof, as repeatedly (sic) enunciated by the Supreme Court, to wit: (1) the
invasion of a right is material and substantial; (2) the right of complainant is clear and
unmistakable; and (3) there is an urgent and paramount necessity for the writ to
prevent serious damage. x x x.

From the testimony of TMLs witness, Lyman Lozada, it was established that TML is
indeed indebted to BPI and has become delinquent in the payment of the loan
obligation; that TML is willing to let go off (sic) the collaterals, the properties subject
matter hereof, by way of dacion en pago. Apparently, the only concern of TML is the
fact that it will be ousted from the properties after the period of redemption shall have
lapsed.

The foregoing testimony of TML casts doubt on its right over the property. The
aforementioned requisites are not obtaining in favor of TML. Moreover, as held by the
Supreme Court, "where the complainants right or title is doubtful or disputed,
injunction is not proper. x x x.

Furthermore, TML has in its favor the right of redemption.5?r?l1

On motion for reconsideration, the trial court made a complete turn-around. It ordered
the issuance of the writ in favor of TML, subject to the posting of a bond in the amount
of P300,000.00, to wit:cralawlibrary

While it is admitted that TML has defaulted in the payment of its loan obligation, which
thus conferred upon BPI the right of foreclosure, the Court, after a contemplation of
the logical consequence of the denial of the injunctive writ, is convinced that great and
irreparable damages may be caused TML. As pointed out by TML, it might lead to an
absurd scenario of TML winning the case but losing its property in BPIs favor or in an
even worse scenario, in favor of third parties. This is because of the short period
within which TML could exercise its redemption right under the General Banking
Act.6?r?l1

BPI moved for reconsideration of the order. However, the trial court maintained its
ruling:cralawlibrary

Admittedly, TML has incurred in default in the payment of its obligation but the amount
has yet to be determined, the determination thereof being one of the provinces of the
instant complaint, and considering the brief redemption period under the General
Banking Act,the redemption is next to impossible. Thus, the injury to TML would be
very grave if not irreparable.7?r?l1

Posthaste, BPI filed a petition for certiorari under Rule 65 of the Rules of Court before
the Court of Appeals, seeking to annul and set aside the twin Orders of the trial court
respectively dated 22 August 2003 and 27 November 2003 which granted the writ of
preliminary injunction in favor of

TML and enjoined the foreclosure sale of the mortgaged properties.


The appellate court found grave abuse of discretion in the trial courts issuance of the
orders as demonstrated by the following:cralawlibrary

1. TML signed the PNs which stipulated that TML, as the Borrower, is
considered in default when it "fails to pay, when due, totally or partially,
the principal, interest and other charges
thereunder."???ñr?bl?š ??r†??l l?? l?br?rÿ

2. Consistent therewith, the Real Estate Mortgage signed by TML


provides that one of the effects of default of the mortgagor (TML)
includes the right of the mortgagee (BPI) to immediately foreclose the
mortgage, which foreclosure may be undertaken judicially or
extra-judicially, at the discretion of the mortgagee (BPI).

3. TML itself admitted in its complaint that it has failed to pay its
outstanding loan to BPI.

4. From all three points, BPI has the right to extra-judicially foreclose
the mortgaged properties.

5. TML did not demonstrate an actual existing right to be protected.

6. Corollary thereto, there is no threatened or actual violation of TMLs


doubtful right to the mortgaged
properties. ???ñr?bl?š ??r†??l l?? l?br?rÿ

The dispositive portion of the appellate courts decision reads, thus:cralawlibrary

WHEREFORE, the Petition is GRANTED. The twin Order(s), dated August 22, 2003
and November 27, 2003, of the Regional Trial Court of Parañaque City, Branch 164
(sic) in Civil Case No. 02-0504, are hereby REVERSED and SET ASIDE. Accordingly,
the writ of preliminary injunction granted in favor of TML is hereby LIFTED. 8?r?l1

TML filed a motion for reconsideration. While the resolution thereof was pending, TML
filed a Supplemental Motion for Reconsideration arguing that BPIs petition for
certiorari has become moot and academic because BPI had supposedly filed an
Amended Petition for Extra-judicial Foreclosure of Real Estate Mortgage under Act
No. 3135 before the trial court. For TML, that effectively changed the amount of its
obligation to BPI, which, in turn, rendered BPIs original petition for extra-judicial
foreclosure of mortgage moot and academic.

The appellate court denied the motions and affirmed its original decision:cralawlibrary

WHEREFORE, the instant motion for reconsideration and supplemental motion for
reconsideration are hereby DENIED. Accordingly, Our Decision, dated August 19,
2008, STANDS.9?r?l1

Hence, this petition for review on certiorari positing that the appellate court erred
when it reversed and set aside the twin Orders of the trial court and lifted the
injunctive writ.
We subscribe to the appellate courts ruling.

Section 3, Rule 58 of the Rules of Court lists the grounds for the issuance of a writ of
preliminary injunction:cralawlibrary

SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may


be granted when it is established:cralawlibrary

(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 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. ???ñr?bl?š ??r†??l l?? l?br?rÿ

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
requisites 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.10?r?l1

In this case, TML anchors its right to the mortgaged properties on its claim that it
cannot be considered in default of its loan obligation to BPI. Consequently, the
mortgaged properties cannot be foreclosed. TML claims it had been religiously paying
its loan; however, BPIs unilateral increase of the rate of interest to 33% prevented
TML from further paying the loan. Thus, for TML, while an accounting and liquidation
of the actual amount of its obligation to BPI remains undetermined, it cannot be
considered in default. Ultimately, TML avers that the threatened foreclosure and
auction sale of its mortgaged properties while its loan with BPI subsists is a violation
of its right.

We note that TML categorically admitted that it has an existing loan with BPI, secured
by a real estate mortgage and several promissory notes, and that it stopped paying for
one reason or another. On that point, we affirm the appellate courts
findings:cralawlibrary

It is settled rule of law that foreclosure is proper when the debtors are in default of the
payment of their obligation. On this note, it must be recalled that the promissory notes
executed by TML in favor of BPI states that the Borrower - in this case, TML is
considered in default when it fails to pay when due, totally or partially, the principal,
interest and other charges under the promissory note(s). In conjunction therewith, the
real estate mortgage executed by the parties stipulates, among others,
that:cralawlibrary

Sec. 6. Effects of Default by the Mortgagor. xxx

a) The MORTGAGEE shall have the right to immediately foreclose on this Mortgage
in accordance with Sec. 7, hereof;

xxx

Sec. 7. Foreclosure. Foreclosure shall, at the sole discretion of the MORTGAGEE, be


either judicial or extrajudicial, xxx xxx.

In its Complaint, TML admitted that it has not paid its obligation with BPI by reason of
the exorbitant rates of interest unilaterally imposed by the latter. However, regardless
of TMLs defenses, the fact that it has an outstanding obligation with BPI which it failed
to pay despite demand remains undisputed. Verily, TMLs failure to comply with the
terms and conditions of its credit agreement with BPI, as embodied in the real estate
mortgage and the promissory notes it issued in favor of the latter, entitles BPI to
extrajudicially foreclose the mortgaged properties.

xxx

To our mind, the grounds relied upon by the trial court, do not justify the issuance of a
writ of preliminary injunction in favor of TML. Under the factual setting of this case,
TML has no right to be protected from the impending foreclosure of its properties.
Certainly, the said foreclosure is authorized under the real estate mortgage and the
promissory notes voluntarily executed by TML in favor of BPI. Needless to say, BPIs
exercise of its right to foreclose the subject properties does not, in any way, constitute
a violation of TMLs property rights. On the contrary, the foreclosure of the mortgage is
to enforce the contractual obligation of BPI.11?r?l1

The issuance of a preliminary injunction rests entirely within the discretion of the court
taking cognizance of the case and is generally not interfered with except in cases of
manifest abuse. For the issuance of the writ of preliminary injunction to be proper, 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.12 In the
absence of a clear legal right, the issuance of a writ of injunction constitutes grave
abuse of discretion.

From the foregoing, it is apparent that the trial court committed grave abuse of
discretion when it revoked its previous order and subsequently issued a writ of
preliminary injunction simply on the following grounds: "(a) that TMLs mortgage debt
is unliquidated; (b) that TML stands to suffer great and irreparable damages if it wins
the case but, in the process, loses its mortgaged properties to BPI, or even worse, to
third parties; and, (c) that, considering, the brief redemption period under the General
Banking Act, TMLs chance to redeem its properties would be next to
impossible."???ñr?bl?š ??r†??l l?? l?br?rÿ
In Selegna Management and Development Corporation v. United Coconut Planters
Bank,13 we ruled that the debt is considered liquidated despite the alleged lack of
accounting:cralawlibrary

A debt is liquidated when the amount is known or is determinable by inspection of the


terms and conditions of the relevant promissory notes and related documentation.
Failure to furnish a debtor a detailed statement of account does not ipso facto result in
an unliquidated obligation.

Petitioners executed a Promissory Note, in which they stated that their principal
obligation was in the amount of P103,909,710.82, subject to an interest rate of 21.75
percent per annum.

Pursuant to the parties' Credit Agreement, petitioners likewise know that any delay in
the payment of the principal obligation will subject them to a penalty charge of one
percent per month, computed from the due date until the obligation is paid in full.

It is in fact clear from the agreement of the parties that when the payment is
accelerated due to an event of default, the penalty charge shall be based on the total
principal amount outstanding, to be computed from the date of acceleration until the
obligation is paid in full. Their Credit

Agreement even provides for the application of payments. It appears from the
agreements that the amount of total obligation is known or, at the very least,
determinable.

Moreover, when they made their partial payment, petitioners did not question the
principal, interest or penalties demanded from them. They only sought additional time
to update their interest payments or to negotiate a possible restructuring of their
account. Hence, there is no basis for their allegation that a statement of account was
necessary for them to know their obligation. We cannot impair respondent's right to
foreclose the properties on the basis of their unsubstantiated allegation of a violation
of due process.14?r?l1

Clearly, the possibility of irreparable damage without proof of actual existing right is no
ground for an injunction. Once again, our holding in Selegna is relevant and
sound:cralawlibrary

x x x Injunction is not designed to protect contingent or future rights. It is not proper


when the complainant's right is doubtful or disputed.

xxx

Petitioners do not have any clear right to be protected. As shown in our earlier
findings, they failed to substantiate their allegations that their right to due process had
been violated and the maturity of their obligation forestalled. Since they indisputably
failed to meet their obligations in spite of repeated demands, we hold that there is no
legal justification to enjoin respondent from enforcing its undeniable right to foreclose
the mortgaged properties.
In any case, petitioners will not be deprived outrightly of their property. Pursuant to
Section 47 of the General Banking Law of 2000, mortgagors who have judicially or
extrajudicially sold their real property for the full or partial payment of their obligation
have the right to redeem the property within one year after the sale. They can redeem
their real estate by paying the amount due, with interest rate specified, under the
mortgage deed; as well as all the costs and expenses incurred by the bank.15?r?l1

Lastly, as the Court of Appeals had done, we clarify that our disposition in this case
pertains only to the propriety of the trial courts Orders issuing a writ of preliminary
injunction in favor of TML to enjoin the foreclosure of TMLs mortgaged properties. We
do not dispose herein of the main case pending before the RTC, Branch 194,
Parañaque City docketed as Civil Case No. 02-0504.

All told, there is no reversible error in the appellate courts decision, reversing and
setting aside the Orders dated 22 August 2003 and 27 November 2003 of the trial
court and lifting the writ of preliminary injunction issued in favor of TML.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in


CA-G.R. SP No. 81932 is AFFIRMED. Costs against petitioner.

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
HON. RAMON S. CAGUIOA, Presiding Judge, Branch 74, Regional Trial Court,
Third Judicial Region, Olongapo City, META TRANS TRADING INTERNATIONAL
CORPORATION, and HUNDRED YOUNG SUBIC INTERNATIONAL,
INC., Respondents.

DECISION

BRION, J.:

We resolve in this petition for certiorari and prohibition 1 (the present petition) the
challenge to the August 11, 2005 and July 5, 2006 orders2 of respondent Judge
Ramon S. Caguioa, Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil
Case No. 102-0-05. The August 11, 2005 order granted the motion to intervene filed
by private respondents Metatrans Trading International Corporation and Hundred
Young Subic International, Inc., while the July 5, 2006 order denied the motion for
reconsideration and the motion to suspend the proceedings filed by the petitioner
Republic of the Philippines (Republic).

The Factual Antecedents

On March 14, 2005,3 Indigo Distribution Corporation and thirteen other petitioners
(collectively referred to as lower court petitioners) filed before the respondent judge a
petition for declaratory relief with prayer for temporary restraining order (TRO) and
preliminary mandatory injunction4 against the Honorable Secretary of Finance, et al.
The petition sought to nullify the implementation of Section 6 of Republic
Act (R.A.) No. 9334, otherwise known as "AN ACT INCREASING THE EXCISE TAX
RATES IMPOSED ON ALCOHOL AND TOBACCO PRODUCTS, AMENDING FOR
THE PURPOSE SECTIONS 131, 141, 142, 143, 144, 145 AND 288 OF THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED," as
unconstitutional. Section 6 of R.A. No. 9334, in part, reads:

SEC. 6. Section 131 of the National Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows:

SEC. 131. Payment of Excise Taxes on Imported Articles. –

(A) Persons Liable. – x x x.

xxxx

The provision of any special or general law to the contrary notwithstanding, the
importation of cigars and cigarettes, distilled spirits, fermented liquors and
wines into the Philippines, even if destined for tax and duty-free shops, shall be
subject to all applicable taxes, duties, charges, including excise taxes due
thereon. This shall apply to cigars and cigarettes, distilled spirits, fermented
liquors and wines brought directly into the duly chartered or legislated
freeports of the Subic Special Economic and Freeport Zone, created under
Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created
under Republic Act No. 7922; and the Zamboanga City Special Economic Zone,
created under Republic Act No. 7903, and such other freeports as may hereafter be
established or created by law: Provided, further, That importations of cigars and
cigarettes, distilled spirits, fermented liquors and wines made directly by a
government- owned and operated duty-free shop, like the Duty-Free Philippines
(DFP), shall be exempted from all applicable duties only[.] [emphasis ours; italics
supplied]

The lower court petitioners are importers and traders duly licensed to operate inside
the Subic Special Economic and Freeport Zone (SSEFZ).

By way of background, Congress enacted, in 1992, R.A. No. 7227, otherwise known
as "The BASES CONVERSION AND DEVELOPMENT ACT OF 1992," which
provided, among others, for the creation of the SSEFZ, as well as the Subic Bay
Metropolitan Authority (SBMA). Pursuant to this law, the SBMA granted the lower
court petitioners Certificates of Registration and Tax Exemption. The certificates
allowed them to engage in the business of import and export of general merchandise
(including alcohol and tobacco products) and uniformly granted them tax exemptions
for these importations.

On January 1, 2005, Congress passed R.A. No. 9334. Based on Section 6 of R.A. No.
9334, the SBMA issued a Memorandum on February 7, 2005 directing its various
departments to require importers in the SSEFZ to pay the applicable duties and taxes
on their importations of tobacco and alcohol products before these importations are
cleared and released from the freeport. The memorandum prompted the lower court
petitioners to bring before the RTC their petition for declaratory relief (Civil Case No.
102-0- 05). The petition included a prayer for the issuance of a writ of preliminary
injunction and/or a TRO to enjoin the Republic (acting through the SBMA) from
enforcing the challenged memorandum.
On May 4, 2005,5 the respondent judge granted the lower court petitioners’
application for preliminary injunction despite the Republic’s opposition, and on May 11,
2005, he issued the preliminary injunction.

The Republic filed before this Court a petition for certiorari and prohibition – docketed
in this Court as G.R. No. 168584 – to annul the respondent judge’s order and the
writ issued pursuant to this order. The petition asked for the issuance of a TRO and/or
a writ of preliminary injunction. By motion dated July 21, 2005 filed before the lower
court, the Republic asked the respondent judge to suspend the proceedings pending
the resolution of G.R. No. 168584.

On August 5, 2005, the private respondents (in the present petition now before us)
filed before the respondent judge motions for leave to intervene and to admit
complaints-in-intervention. They also asked in these motions that the respondent
judge extend to them the effects and benefits of his May 4, 2005 order, in the lower
court petitioners’ favor, and the subsequently issued May 11, 2005 writ of preliminary
mandatory injunction.

Without acting on the Republic’s motion to suspend the proceedings, the respondent
judge granted on August 11, 2005 the private respondents’ motions and
complaints-in-intervention. The respondent judge found the private respondents to be
similarly situated as the lower court petitioners; they stood, too, to be adversely
affected by the implementation of R.A. No. 9334.

The Republic moved to reconsider6 the respondent judge’s August 11, 2005 order,
arguing that it had been denied due process because it never received copies of the
private respondents’ motions and complaints-in-intervention.

On July 5, 2006, the respondent judge denied the Republic’s motion for
reconsideration and the previously filed motion to suspend the proceedings. The
respondent judge held that all of the parties in the case had been duly notified per the
records. To justify the denial of the motion to suspend the proceedings, the
respondent judge pointed to the absence of any restraining order in G.R. No. 168584.
The Republic responded to the respondent judge’s actions by filing the present
petition.

The Petition

The present petition charges that the respondent judge acted with manifest partiality
and with grave abuse of discretion when he issued his August 11, 2005 and July 5,
2006 orders. In particular, the Republic contends that the respondent judge violated
its right to due process when he peremptorily allowed the private respondents’
motions and complaints-in-intervention and proceeded with their hearing ex
parte despite the absence of any prior notice to it. The Republic maintains that it never
received any notice of hearing, nor any copy of the questioned motions and
complaints-in-intervention.7

Further, the Republic posits that the respondent judge abused his discretion when he
extended to the private respondents the benefits of the preliminary injunction earlier
issued to the lower court petitioners under the same ₱1,000,000.00 bond the lower
court petitioners posted. The Republic labels this action as a violation of Section 4,
Rule 58 of the Rules of Court, claiming at the same time that the bond is manifestly
disproportionate to the resulting damage the Republic stood to incur considering the
number of the original and the additional lower court petitioners.8

Finally, in support of its prayer for the issuance of a TRO and/or a writ of preliminary
injunction, the Republic stresses that the assailed orders continue to cause it
multi-million tax losses. It justifies its prayer for the respondent judge’s inhibition by
pointing to the latter’s act of continuously allowing parties to intervene despite the
absence of notice and to the inclusion of non-parties to the original case.

During the pendency of the present petition, the Court en banc partially granted the
Republic’s petition in G.R. No. 168584. By a Decision9 dated October 15, 2007, this
Court set aside and nullified the respondent judge’s order of May 4, 2005 and the
subsequent May 11, 2005 writ of preliminary injunction. On January 15, 2008, the
Court denied with finality the lower court petitioners’ motion for reconsideration.10

The Respondent’s Position

In their defense, the private respondents point to the procedural defects in the petition,
specifically: first, the petition was filed out of time, arguing that the Republic only had
53 remaining days to file the petition from notice of the denial of its motion for
reconsideration, maintaining that the 60-day period within which to file the petition is
counted from the notice of the denial of the August 11, 2005 order; second, the
petition did not comply with the rules on proof of filing and service; third, the Republic
failed to properly serve their counsel of record a copy of the petition; and fourth, the
Republic did not observe the hierarchy of courts in filing the instant petition.11

The private respondents further contend that the respondent judge correctly allowed
their complaints-in-intervention as the matter of intervention is addressed to the
courts’ discretion; as noted in the assailed orders, the records show that the notice of
hearing was addressed to all of the parties in the original case.12

Finally, on the Republic’s prayer for prohibition, the private respondents maintain that
prohibition is improper since this Court, in G.R. No. 168584, denied the Republic’s
prayer for a writ of prohibition, noting that the respondent judge had been suspended,
pending resolution of this petition.13

The Court’s Ruling

We resolve to PARTLY GRANT the petition.

Relaxation of procedural rules for compelling reasons

We disagree with the private respondents’ procedural objections.

First, we find that the present petition was filed within the reglementary period.
Contrary to the private respondents’ position, the 60- day period within which to file
the petition for certiorari is counted from the Republic’s receipt of the July 5, 2006
order denying the latter’s motion for reconsideration. Section 4, Rule 65 of the Rules
of Court is clear on this point – "In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the sixty (60) day period shall
be counted from notice of the denial of said motion."14 We find too that the
present petition complied with the rules on proof of filing and service of the petition.
Attached to the petition – in compliance with Sections 12 and 13, Rule 13 of the Rules
of Court – are the registry receipts and the affidavit of the person who filed and served
the petition by registered mail.

Second, while the principle of hierarchy of courts does indeed require that recourses
should be made to the lower courts before they are made to the higher courts, 15 this
principle is not an absolute rule and admits of exceptions under well-defined
circumstances. In several cases, we have allowed direct invocation of this Court’s
original jurisdiction to issue writs of certiorari on the ground of special and important
reasons clearly stated in the petition;16when dictated by public welfare and the
advancement of public policy; when demanded by the broader interest of justice;
when the challenged orders were patent nullities;17 or when analogous exceptional
and compelling circumstances called for and justified our immediate and direct
handling of the case.18

The Republic claims that the respondent judge violated and continues to violate its
right to due process by allowing the private respondents and several others to
intervene in the case sans notice to the Republic; by extending to them the benefit of
the original injunction without the requisite injunction bond applicable to them as
separate injunction applicants; and by continuing to suspend the Republic’s right to
collect excise taxes from the private respondents and from the lower court petitioners,
thus adversely affecting the government’s revenues. To our mind, the demonstrated
extent of the respondent judge’s actions and their effects constitute special and
compelling circumstances calling for our direct and immediate attention.

Lastly, under our rules of procedure,19 service of the petition on a party, when that
party is represented by a counsel of record, is a patent nullity and is not binding upon
the party wrongfully served.20 This rule, however, is a procedural standard that may
admit of exceptions when faced with compelling reasons of substantive justice
manifest in the petition and in the surrounding circumstances of the
case.21 Procedural rules can bow to substantive considerations through a liberal
construction aimed at promoting their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding.22

The Republic has consistently and repeatedly maintained that it never received a
copy of the motions and complaints-in-intervention, as evidenced by the certification
of the Docket Division of the Office of the Solicitor General (OSG); it learned of the
private respondents’ presence in this case only after it received copies of the assailed
orders, and it even had to inquire from the lower court for the private respondents’
addresses. Although their counsels did not formally receive any copy of the petition,
the private respondents themselves admitted that they received their copy of the
present petition. The records show that the Republic subsequently complied with the
rules on service when, after the private respondents’ comment, the Republic served
copies of its reply and memorandum to the respondents’ counsel of record.

Under these circumstances, we are satisfied with the Republic’s explanation on why it
failed to initially comply with the rule on service of the present petition; its subsequent
compliance with the rule after being informed of the presence of counsels of record
sufficiently warrants the rule’s relaxed application.23 The lack of a proper service –
unlike the situation when the Republic was simply confronted with already-admitted
complaints-in-intervention – did not result in any prejudice; the private respondents
themselves were actually served with, and duly received, their copies of the present
petition, allowing them to comment and to be heard on the petition.

The Republic was denied due process; the respondent judge issued the
assailed orders with grave abuse of discretion

Due process of law is a constitutionally guaranteed right reserved to every


litigant.1âwphi1 Even the Republic as a litigant is entitled to this constitutional right, in
the same manner and to the same extent that this right is guaranteed to private
litigants. The essence of due process is the opportunity to be heard, logically
preconditioned on prior notice, before judgment is rendered.24

A motion for intervention, like any other motion, has to comply with the mandatory
requirements of notice and hearing, as well as proof of its service,25 save only for
those that the courts can act upon without prejudice to the rights of the other
parties.26 A motion which fails to comply with these requirements is a worthless piece
of paper that cannot and should not be acted upon.27 The reason for this is plain: a
movant asks the court to take a specific course of action, often contrary to the interest
of the adverse party and which the latter must then be given the right and opportunity
to oppose.28 The notice of hearing to the adverse party thus directly services the
required due process as it affords the adverse party the opportunity to properly state
his agreement or opposition to the action that the movant asks for. 29 Consequently,
our procedural rules provide that a motion that does not afford the adverse party this
kind of opportunity should simply be disregarded.30

The notice requirement is even more mandatory when the movant asks for the
issuance of a preliminary injunction and/or a TRO. Under Section 5, Rule 58 of the
Rules of Court, no preliminary injunction shall be granted without a hearing and
without prior notice to the party sought to be enjoined. The prior notice under this
requirement is as important as the hearing, as no hearing can meaningfully take place,
with both parties present or represented, unless a prior notice of the hearing is given.

Additionally, in the same way that an original complaint must be served on the
defendant, a copy of the complaint-in-intervention must be served on the adverse
party with the requisite proof of service duly filed prior to any valid court action. Absent
these or any reason duly explained and accepted excusing strict compliance, the
court is without authority to act on such complaint; any action taken without the
required service contravenes the law and the rules, and violates the adverse party’s
basic and constitutional right to due process.

In the present case, records show that the OSG had never received – contrary to the
private respondents’ claim – a copy of the motions and
31
complaints-in-intervention. The Republic duly and fully manifested the irregularity
before the respondent judge.32 Thus, the mere statement in the assailed orders that
the parties were duly notified is insufficient on the face of the appropriate
manifestation made and the supporting proof that the Republic submitted. In these
lights, the motions and complaints-in-intervention cannot but be mere scraps of paper
that the respondent judge had no reason to consider; in admitting them despite the
absence of prior notice, the respondent judge denied the Republic of its right to due
process.

While we may agree with the private respondents’ claim that the matter of intervention
is addressed to the sound discretion of the court,33 what should not be forgotten is the
requirement that the exercise of discretion must in the first place be "sound." In other
words, the basic precepts of fair play and the protection of all interests involved must
always be considered in the exercise of discretion. Under the circumstances of the
present case, these considerations demand that the original parties to the action,
which include the Republic, must have been properly informed to give them a chance
to protect their interests. These interests include, among others, the protection of the
Republic’s revenue-generating authority that should have been insulated against
damage through the filing of a proper bond. Thus, even from this narrow view that
does not yet consider the element of fair play, the private respondents’ case must fail;
judicial discretion cannot override a party litigant’s right to due process.

All told, the respondent judge acted with grave abuse of discretion warranting the
issuance of the corrective writ of certiorari. Grave abuse of discretion arises when a
lower court or tribunal violates the Constitution or grossly disregards the law or
existing jurisprudence.34 The term refers to such capricious and whimsical exercise of
judgment equivalent to lack of jurisdiction, as when the act amounts to an evasion of a
positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law .35 The respondent judge so acted so that the orders he issued
should be declared void and of no effect.

Petition for prohibition and prayer for inhibition are denied for having been mooted by
subsequent events

On November 9, 2006, the Republic filed an administrative case against the


respondent judge for gross ignorance of the law, manifest partiality and conduct
prejudicial to the best interest of the service. The case, docketed as A.M. No.
RTJ-07-2063, is likewise related to Civil Case No. 102-0-05 that underlie the present
petition. By a decision dated June 26, 2009, and while this case was still pending, this
Court found the respondent judge guilty of gross ignorance of the law and conduct
prejudicial to the best interest of the service. The Court accordingly dismissed the
respondent judge from the service.

In light of these supervening events, the Court sees no reason to resolve the other
matters raised in this petition for being moot.

WHEREFORE, under these premises, we PARTIALLY GRANT the petition. We


GRANT the writ of certiorari and accordingly SET ASIDE the orders dated August 11,
2005 and July 5, 2006 of respondent Judge Ramon S. Caguioa in Civil Case No.
102-0-05 for being NULL and VOID. We DISMISS the prayer for writ of prohibition on
the ground of mootness. Costs against Metatrans Trading International Corporation
and Hundred Young Subic International, Inc.

SO ORDERED.