THIRD DIVISION

[G.R. NO. 166854 : December 6, 2006]

SEMIRARA COAL CORPORATION (now SEMIRARA MINING CORPORATION), Petitioner, v. HGL DEVELOPMENT
CORPORATION and HON. ANTONIO BANTOLO, Presiding Judge, Branch 13, Regional Trial Court, 6th Judicial
Region, Culasi, Antique,Respondents.

DECISION

QUISUMBING, J.:

Before us is a Petition for Review on Certiorari assailing the Decision1dated January 31, 2005, of the Court of
Appeals in CA G.R. CEB SP No. 00035 which affirmed the Resolution2 dated September 16, 2004 of the Regional
Trial Court of Culasi, Antique, Branch 13.

The facts are as follows:

Petitioner Semirara Mining Corporation is a grantee by the Department of Energy (DOE) of a Coal Operating
Contract under Presidential Decree No. 9723 over the entire Island of Semirara, Antique, which contains an area
of 5,500 hectares more or less.4

Private respondent HGL Development Corporation is a grantee of Forest Land Grazing Lease Agreement (FLGLA)
No. 184 by the then Ministry of Environment and Natural Resources,5 over 367 hectares of land located at the
barrios of Bobog and Pontod, Semirara, Caluya, Antique. The FLGLA No. 184 was issued on September 28,
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.
1
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;
2
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

3
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.

4
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.

5
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.21that 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.
6
The urgency and necessity for the issuance of a writ of mandatory injunction also cannot be denied, considering
that HGL stands to suffer material and substantial injury as a result of petitioner's continuous intrusion into the
subject property. Petitioner's continued occupation of the property not only results in the deprivation of HGL of
the use and possession of the subject property but likewise affects HGL's business operations. It must be noted
that petitioner occupied the property and prevented HGL from conducting its business way back in 1999 when
HGL still had the right to the use and possession of the property for another 10 years or until 2009. At the very
least, the failure of HGL to operate its cattle-grazing business is perceived as an inability by HGL to comply with
the demands of its customers and sows doubts in HGL's capacity to continue doing business. This damage to
HGL's business standing is irreparable injury because no fair and reasonable redress can be had by HGL insofar
as the damage to its goodwill and business reputation is concerned.

Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its order dated December 6,
2000. But as rightly held by the Court of Appeals, the alleged cancellation of FLGLA No. 184 through a unilateral
act of the DENR does not automatically render the FLGLA invalid since the unilateral cancellation is subject of a
separate case which is still pending before the Regional Trial Court of Caloocan City. Notably, said court has
issued a writ of preliminary injunction enjoining the DENR from enforcing its order of cancellation of FLGLA No.
184.

The Court of Appeals found that the construction of numerous buildings and blasting activities by petitioner
were done without the consent of HGL, but in blatant violation of its rights as the lessee of the subject property.
It was likewise found that these unauthorized activities effectively deprived HGL of its right to use the subject
property for cattle-grazing pursuant to the FLGLA. It cannot be denied that the continuance of petitioner's
possession during the pendency of the case for recovery of possession will not only be unfair but will undeniably
work injustice to HGL. It would also cause continuing damage and material injury to HGL. Thus, the Court of
Appeals correctly upheld the issuance of the writ of preliminary mandatory injunction in favor of HGL.

WHEREFORE, the instant petition is DENIED. The Decision dated January 31, 2005, of the Court of Appeals in CA
G.R. CEB SP No. 00035, which affirmed the Resolution dated September 16, 2004 of the Regional Trial Court of
Culasi, Antique, Branch 13, as well as the Writ of Preliminary Mandatory Injunction dated October 6, 2004 issued
pursuant to said Resolution, is AFFIRMED. The temporary restraining order issued by this Court is hereby lifted.
No pronouncement as to costs.

SO ORDERED.

Carpio, Carpio Morales, Tinga, And Velasco, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

CHINA BANKING CORPORATION, SPOUSES JOEY & G.R. No. 174569

MARY JEANNIE CASTRO and SPOUSES RICHARD &
EDITHA NOGOY, Present:
Petitioners,
QUISUMBING, J., Chairperson,
- versus -
CARPIO MORALES,
BENJAMIN CO, ENGR. DALE OLEA and THREE KINGS TINGA,
CONSTRUCTION & REALTY CORPORATION, VELASCO, JR., and
Respondents. BRION, JJ.

Promulgated:
September 17, 2008

x--------------------------------------------------x
7
DECISION

CARPIO MORALES, J.:

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

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

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

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

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

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

Before respondents filed their Answer,4 petitioners filed an Amended Complaint,5 alleging that the construction
of the perimeter wall was almost finished and thus modifying their prayer for a writ of preliminary injunction to
a writ of preliminary mandatory injunction, viz:

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

A. Before trial on the merits, a temporary restraining order be issued immediately restraining the defendants
from doing further construction of the perimeter wall on the premises, and thereafter, a writ
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
8
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

9
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
10
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.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

13 Phil. 273

CARSON, J.:
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 extrajudicial partition contract executed in the year 1887 by the heirs of Gregoria Arbes, plaintiff's
husband's first wife, and that ever since that date until the defendant took possession of this land, plaintiff and
her husband had continued in the quiet, peaceable, and exclusive possession thereof. The trial court,
apparently without giving the defendant 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

11
as they did exercise were exercised not only on their own behalf but on half of all the heirs of Gregoria Arbes.

Upon these pleadings the parties went to trial, and plaintiff introduced evidence tending to prove that the land
in question was originally the property of her husband, Vicente Sola, acquired by him, not from his first wife,
Gregoria Arbes, but by purchase, in part prior to, and in part after his marriage with 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 prove 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 or any part of the land in question, the plaintiff is entitled to be
replaced in possession.

We are of opinion, however, that the remedy by injunction sought by the plaintiff and allowed by the trial court
was not the proper remedy for the cause of action set out in the pleadings and established by the evidence, and
that, in accordance with the provisions of section 126 of the Code of Civil Procedure, the court should have
granted "relief consistent with the case made by the complaint and supported by the evidence and embraced
within the issue," and to that end should have required an amendment of the complaint by striking out the
prayer for an injunction and substituting therefor a prayer for judgment for possession of the land described in
the complaint, and upon the complaint thus amended, judgment should have been rendered in favor of the
plaintiff.

Both the parties to this action appear to have labored under a misapprehension as to the purpose, scope, and
limitations of the special remedy, known as an injunction, and defined in section 162 of the Code of Civil
Procedure. The records in many cases in this court disclose a considerable degree of doubt and uncertainty in
the minds of counsel as to the function of this remedy, and in some cases a wholly erroneous concept of the
purpose and object for which it is provided. This erroneous concept may, perhaps, be due to the fact that in the
Spanish version of the new Code of Civil Procedure, the term injunction is translated interdicto prohibitorio,
which may thus have, given rise to the impression that the remedy by injunction is similar in character to the
summary interdictal actions of the Spanish procedural law; but while the injunction resembles in many respects
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,

12
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. L, 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 III., 572; 49 Fed. Rep., 517; 37
id., 67; 34 id., 357; 129 Md., 464; 109 N. C., 21; 83 Wis., 426; 115 Mo., 613), which "will not be granted while the
rights between the parties are undetermined, except in extraordinary cases where material and irreparable
injury will be done," which can not be compensated in damages, and where there will be no adequate remedy (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 now 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 that the exercise of that
discretion is controlled by the accepted doctrines touching: the granting of injunctions in such cases; and we
may add that the records also disclose 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

13
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 not be necessary to add that the mere fact that an
administrator holds letters of appointment from some court, in nowise authorizes him to take possession of
property held by another under a claim of a right to possession until and unless he successfully establishes his
right to possession of such property in a proper proceeding in a competent court.

Ten days from the date of this decision let judgment be entered, reversing the judgment of the trial court and
dissolving the preliminary and permanent injunctions issued therein, without costs to either party in this
instance, and ten days thereafter let the record be returned to the court below where, upon the amendment of
the complaint along the lines therein indicated, judgment will be rendered in favor of the plaintiff tor 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.

Arellano, C.J., Torres and Johnson, JJ., concur.

Willard, J., concurs in the result.

G.R. No. 158141 July 11, 2006

FAUSTO R. PREYSLER, JR., petitioner,

vs.
COURT OF APPEALS and FAR EAST ENTERPRISES, INC., respondents.

DECISION

QUISUMBING, J.:

This petition for review assails the Decision1 dated January 20, 2003 and Resolution2 dated May 20, 2003 of the
Court of Appeals in CA-G.R. SP No. 52946. The Court of Appeals lifted the amended writ of preliminary injunction
dated December 29, 1998 issued by the Regional Trial Court, Branch 14 of Nasugbu, Batangas in Civil Case No.
345 and reinstated the original writ dated December 12, 1996.

The antecedent facts are as follows:

Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner Fausto Preysler, Jr. and his
wife owned lots therein and also two parcels of land adjacent to the subdivision. These two parcels were
bounded on the North and West by the China Sea and on the East and South by the subdivision. To gain access
to the two parcels petitioner has to pass through private respondent's subdivision. Petitioner offered P10,000
for the easement of right of way but private respondent refused it for being grossly inadequate. Private
respondent then barricaded the front gate of petitioner's property to prevent petitioner and his family from
using the subdivision roads to access said parcels.

14
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:

15
 … [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.
16
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.

SO ORDERED.

19 Phil. 563

[ G. R. No. 5734, August 17, 1911 ]

MARCELO MANTILE ET AL., PLAINTIFFS AND APPELLEES, VS. ALEJANDRO CAJUCOM ET AL., DEFENDANTS AND
APPELLANTS.

DECISION

TORRES, J.:
This is an appeal by the defendants from the judgment rendered in the matter of the principal issue, and in the
incidental one of contempt of court.

THE INCIDENTAL ISSUE OF CONTEMPT.

On June 22,1908, the attorneys for the plaintiffs Marcelo Mantile, Sebastian Bancod, Adriano Espafiol, Gregorio
Corpus, Claudio Angeles, Doroteo Dacuno, Fernando Polintan, Maximino Fajardo, Catalino Rubio, Alejandro
Caisip, Diego Santiago, Eugenio Ronquillo, Raymundo Santiago, Simon de la Cruz, Anacleto de los Reyes, Rafael
Mendoza, Marcelino Fajardo, Tomas Marcelo, Inocencio Santiago, Eugenio Angeles, Segundo Ramos, and
Geronimo Rojas, filed a written complaint against Alejandro Cajucom and Timoteo Cajucom wherein they
prayed for the issuance of a writ of preliminary injunction to restrain the defendants from continuing to close
the canal or estero called Paligui ng Buquid Puntang Piniping, in the barrio of Biga of the pueblo of Bongabon,
and through which the water ran that irrigated the sementeras, or rice fields of which the plaintiffs were the
owners, and from obstructing the course of such water, and furthermore that, after the hearing of the case, a
writ of perpetual injunction be issued against the said defendants, and that the latter be sentenced to pay to
17
each of the twenty-two.plaintiffs the amount of the losses and damages caused him, and the costs.

The plaintiffs having furnished bond, the court, by order of July 26, 1908, directed that preliminary injunction
issue against the said defendants, their agents and representatives, restraining them from performing any act
whatever that might tend to close or obstruct the canal or estero called Paligui ng Buquid Puntang Piniping, in
the barrio and pueblo before-mentioned, of the Province of Nueva Ecija, and to refrain from hindering the
passage of the water that flowed through the said canal. The defendants were notified of this writ and it was
served upon them on the 29th of the same month.

By a petition of July 6, 1908, counsel for the plaintiffs set forth under oath that, according to information he had
received, the defendants were continuing to obstruct and hinder the pasage of the water, in disobedience to
the judicial order, and prayed that the said defendants be notified to appear arid state their reasons, if any they
had, why they should not be punished for contempt of court for disobedience to the writ of preliminary
injunction issued. This petition was granted and the defendants having been notified, they alleged in writing, on
the 14th of the same month, that they had been notified on the 3d of July of the said writ by the sheriff of
Nueva Ecija and since then had complied with the Order of the court, but called attention to the fact that the
stream had been closed by two tenants of the defendant, Alejandro Cajucom, on the 1st of the preceding
month of July, since which date neither they, the defendants, nor any other person in their representation, had
done anything whatever to the stream' or ditch in question; wherefore they prayed that the two men who
closed the said stream be examined, and that, in view of such facts, the charge of contempt of court be
dismissed, and the plaintiffs be sentenced to pay the costs, and the, damages occasioned.

The court, after the witnesses summoned had been examined, decided, on August 20, 1908, that
the defendants had committed contempt of 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 oh the ground that the said bill of
exceptions had been improperly admitted, inasmuch as the order issued in connection with the
incidental question of contempt of court, could be reviewed only after the rendition of judgment on the main
issue, and not until then could the said incident of contempt be, by means of a bill of exceptions, submitted to
this court; therefore the records in the case were remanded to the court below, later to be transmitted to the
clerk of this court upon the filing of the main record with the bill of exceptions.

By the writ of preliminary injunction issued on June 26, 1908, the original of which is on file, page 7 of the main
record, the defendants Alejandro and Timoteo Cajucom, their attorneys, representatives and agents, were
enjoined from performing any act whatever that might tend to close and obstruct the canal, a branch, called
Paligui ng Buquid Puntang Piniping, of an estero situated in the barrio of Biga of the pueblo of Bongabon, Nueva
Ecija, and to cease to obstruct or hinder the course of the water that should flow through the said branch.

In the written complaint presented on June 22, 1908, it is averred that the said canal or estero was closed by
the representatives of the defendants, on the 1st of June of the year therein stated, and that since then the
water which it ordinarily carried had ceased to flow through it, the plaintiffs' lands thereby being deprived of
irrigation. So that when the writ of injunction was issued on the 26th of the said month, it was taken for
granted that the estero or canal in question was closed and that the water did not run through it, as occurred
prior to the said 1st of June; and counsel for the plaintiffs, in charging, by a writing of July 6, 1908, that
contempt of court was committed, stated that the defendants, according to the information he had, were
still obstructing and hindering the passage of the water, in disobedience of the writ of injunction.

The defendants having been notified to show cause why they should not be punished for contempt of court
and disobedience of the preliminary injunction issued by the court, answered that since the 3d of July, the
date when they were notified by the deputy sheriff, they had complied with the prohibitory order and had not
done anything whatever, by themselves or through others in their representation^ to the stream or ditch in
question, which was closed by two tenants of one of the defendants, Alejandro Cajucom, on June 1, 1908, as
acknowledged by said tenants.

The writ issued by the court contained no order.instructing the defendants to raise or remove the obstructions
that prevented the water from flowing through the said canal or ditch.

18
The canal was obstructed and closed on June 1st, and when the persons who closed it were notified on July 3
that they should abstain from performing any act whatever tending to obstruct and prevent the flow of
water, the canal or ditch still remained closed, and the record shows no proof that it was afterwards opened
to the passage of water, nor that, after the defendants had been notified of the injunction, they again closed
it. The fact that the latter failed to remove the obstruction they had placed in the said canal or estero for the
purpose of preventing the passage of the water, since they were not ordered so to do by the judicial writ, is
not sufficient to make them liable for contempt of court.

The act of the closing of the canal occurred prior to the issuance of the writ, and, since a thing that has already
been done can not be prohibited, by the mere fact of there not having been done what was not ordered in the
writ it can not be held that a judicial order was disobeyed and willfully disregarded.

Section 162 of the Code of Civil Procedure prescribes:

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

The record shows that the prohibition was issued after the closing of the canal; hence, if the defendants did not
remove the obstruction, there 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 Espanol or Estanol, Marcelo Mantile,
Adriano Espanol or Estanol, Sebastian Bancod, Claudio Angeles, Diego Santiago, Raymun do Santiago,
Anacletode los Reyes, Rafael Mendoza; Clemente Alivia, Marcelino Fajardo, and Segundo Ramos had been, on
or about June 1, 1908, and were at the time, the proprietors and owners of rice lands situated in the
barrio of Biga of the pueblo of Bongabon, and that the other plaintiffs were planters and cultivators of some
portions of the said lands; that (following the statement in the complaint as to the boundaries or adjacent lands
of each of their respective properties) the said Paligui ng Buquid Puntang Piniping estero or creek existed and
had always existed in the 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 Espanol, P75; Marcelo
Mantile,P2,500; Adriano Espanol, 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, P55O; 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

19
each and all the allegations of the said complaint arid alleged, as a special defense, that the irrigation canal in
question belonged to the defendants; that the mouth of the said Paligui ng Buquid Puntang Piniping canal
did not previously exist and was opened only at the request of Marcelo Mantile; and that the plaintiffs' lands
were provided with another irrigation ditch independent of the one herein concerned. Said counsel therefore
prayed that his clients be absolved from the complaint, that the irrigation canal in question be declared to
belong to the defendants, and that the plaintiffs be sentenced to pay the costs.

On April 26, 1909, the case came up for hearing, testimony was adduced by both parties and the court, after
consideration of the evidence, rendered judgment on July 26, 1909, enjoining the defendant
Alejandro Cajucom from closing the Paligui ng Buquid Puntang Piniping estero or creek, or in any manner
obstructing the course of the water running therein. The preliminary injunction issued against the defendant,
his agents and representatives, by the Hon. Judge Estanislao Yusay, was thus rendered perpetual, and the said
defendant was sentenced to pay the following sums, for losses and damages: To Maria Marcelo, P196.50;
Crisanto Rubio, P139.50; Alipio Espafiol, P75; Marcelo Mantile, P800.25; Adriano Espanol, P75; Sebastian
Bancod, P142.50; Gregorio Corpus, P90.12; Claudio Angeles, P97.87; Doroteo Dacuno, P90.37; Fernando
Polintan, P80.87; Maximino Fajardo, P75.37; Alejandro Caisip, P75; Catalino Rubio, P84; Diego Santiago,
P131.25; Eugenio Ronquillo, P181.25; Raymundo Santiago, P540; Simon de la Cruz, P135; Anacleto de los
Reyes, P90; Rafael Mendoza, P195; Marcelino Fajardo, P180; Geronimo Rojas, P90; Segundo Ramos, P210;
Clemente Alivia, P109.50, and to Tomas Marcelo, Inocencio Santiago, and Eugenio Angeles, tenants-on-shares
of Maria Marcelo, the sum of P196.50. Counsel for the defendant, Alejandro Cajucom, excepted to this
judgment and prayed for a new trial on the grounds that the said judgment was not sufficiently supported by
the weight of the evidence and was contrary to law. This motion was overruled by an order of September 2
and exception thereto was taken by the appellant who duly filed the proper bill of exceptions, which
was certified to and forwarded to the clerk of this court.

Counsel for the appellants having been authorized, by an order of February 12, 1910, to present the facts
relative to the charge of contempt of court, as an incident of the main issue, and upon his petition, the
Supreme Court ruled that the bill of exceptions relative to the matter of the contempt of court, together with
the evidence therewith submitted, should be held to be an integral part of the,said main issue with the bill of
exceptions thereto pertaining.

With regard to the main issue of this suit, the object of the plaintiffs is to obtain from the court an order
decreeing the former preliminary injunction to be perpetual. This claim, which is opposed by the defendants,
presupposes a right on the part of the plaintiffs to use and profit by the water that runs through the
Piniping estero or creek, to the benefit of their respective agricultural lands.

The law applicable to the present contention is found in articles 407 to 425 of the Civil Code, in the last of
which it is provided:

"In all that is not expressly determined by the provisions of this chapter, the special law of waters shall be
observed."

This law is that of August 3, 1866, which was extended ta the Philippine Islands by the royal decree of the 8th of
the same month and year and published with the Deereto 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
20
 not a party to this suit.

2. Whether the creek, estero, or ditch, named Paligui Puntang Piniping, is connected or united with
the Sapang Cabasan estero, and whether the said Puntang Piniping creek or canal crosses the lands of
defendants or those of the plaintiffs.

3. To ascertain at what point or place either of the said Cabasan or Piniping canals was closed; whether
the closure was made on the land of defendants or on that of the plaintiffs, and whether, on account
of such closure, the course of the water was completely obstructed and prevented from entering the
lands of the plaintiffs.

4. 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 rising from the Sibul Spring and entering into the Sapang Cabasan estero.

5. An investigation and report shall be made as to whether the Puntang Piniping canal or estero is of
recent formation and was excavated but a short time ago, or whether, by the signs observed on its
banks, it appears that it was opened many years ago, stating since when it has been opened.

6. Investigation and report shall be made as to whether the plaintiffs' lands receive irrigation water from
any spring, estero, or creek, other than those before mentioned, and, if so, their names and the
distances between them, and the latter shall be noted on the rough sketch drawn by the surveyors.

From the result obtained from these proceedings, and the rough sketch drawn by tjie experts, we shall easily
be able to arrive at a conclusion as to whether the defendants had or had not a right to cloae the Cabasan or
Puntang Piniping creek, thus depriving the plaintiffs' sementeras of the water flowing through it, or whether, on
the other hand, the plaintiffs had a right to the enjoyment and use of such water for the irrigation of their lands,
and whether, through the want of the same, they suffered losses and damages by fault of the said defendants.
For the foregoing reasons, justice demands, in our opinion, that we find that the defendants Alejandro and
Timoteo Cajucom did not commit any act whatever constituting contempt of a judicial order. The
order of August 20, 1908 is reversed. No special finding is made as to the costs of the incidental proceedings.

The judgment appealed from, of July 26, 1909, is set aside, and the record of the case shall be remanded, with a
certified copy of this decision, to the court below in order that the judge may proceed with a rehearing and
conduct the proceedings herein before 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.

Mapa, Johnson, Carson, and Moreland, JJ., concur.

[G.R. No. L-5656. March 24, 1954.]

JUAN G. FELICIANO, ET AL., Petitioners-Appellants, v. MARIANO ALIPIO, ET AL., Respondents-Appellees.

K. V. Faylona for Appellants.

Solicitor General Juan R. Liwag and Solicitor Felix V. Makasiar for Appellees.

SYLLABUS

ACTION FOR DECLARATORY RELIEF CONSIDERED AS ONE FOR PROHIBITION. — Although the petition filed
against public Officers is for declaratory relief, yet if it prays also for the issuance of a permanent injunction from
21
carrying out the provisions of a Department Circular on grounds of unconstitutionality, the same is equivalent to
an action for prohibition and the court should not dismiss the petition but should proceed with the case
considering the action as one for prohibition.

DECISION

JUGO, J.:

On September 21, 1951, the Director of Public Schools issued Circular No. 20, series of 1951, which reads as
follows:jgc:chanrobles.com.ph

"PUBLIC SCHOOL PUPILS AND STUDENTS MAY BE REQUIRED TO SALUTE THE FLAG"

To Division Superintendents:jgc:chanrobles.com.ph

"1. Quoted in the inclosure to this Circular for the information and guidance of school officials and teachers, is
Opinion No. 370, series of 1951, of the Honorable, the Secretary of Justice, ’regarding the power of the Director
of Public Schools to require all pupils and students in public schools to salute the flag, on pain of being barred
from admission to, or expelled from, such schools.’

"This Circular revokes Circular No. 33, series of 1948.

"(Sgd.) BENITO PANGILINAN

"Director of Public Schools"

The petitioners filed before the Court of First Instance of Tarlac a petition for declaratory relief and mandatory
injunction, praying that the above circular be declared null and void, and that preliminary injunction be issued
prohibiting the respondents Mariano Alipio and other teachers of the Malacampa Elementary School, and the
Director of Public Schools, from carrying out the provisions of said circular, and that, after trial, the preliminary
injunction be made permanent.

The Provincial Fiscal of Tarlac filed a motion to dismiss the petition on the ground that under section 2, Rule 66,
it was not a case in which a declaratory judgment could be rendered. The court dismissed the case. Hence, the
petitioners have appealed to this Court.

It is not necessary to decide whether the petition for declaratory judgment may be granted in this case, because
in the petition presented in the court below, in addition to the declaratory judgment, the petitioners prayed for
the issuance of a permanent injunction, which is equivalent to an action for prohibition against public officers,
and as such we consider it, without passing at this stage of the proceedings on the merits of said action.

In the present case, we cannot consider the question as to the constitutionality of the circular as this will be
decided after the regular hearing.

In view of the foregoing, the order of the court dismissing the petition is reversed, and the case returned to the
Court of First Instance of Tarlac for further proceedings as in an action for prohibition, without costs. So
ordered.
[G.R. No. 168008 : August 17, 2011]

PETRONILO J. BARAYUGA, PETITIONER, VS. ADVENTIST UNIVERSITY OF THE PHILIPPINES, THROUGH ITS
BOARD OF TRUSTEES, REPRESENTED BY ITS CHAIRMAN, NESTOR D. DAYSON, RESPONDENTS.

DECISION

BERSAMIN, J.:

22
The injunctive relief protects only a right in esse. Where the plaintiff does not demonstrate that he has an
existing right to be protected by injunction, his suit for injunction must be dismissed for lack of a cause of action.

The dispute centers on whether the removal of the petitioner as President of respondent Adventist University of
the Philippines (AUP) was valid, and whether his term in that office was five years, as he insists, or only two
years, as AUP insists.

We hereby review the decision promulgated on August 5, 2004,[1] by which the Court of Appeals (CA) nullified
and set aside the writ of preliminary injunction issued by the Regional Trial Court (RTC), Branch 21, in Imus,
Cavite to prevent AUP from removing the petitioner.

Antecedents

AUP, a non-stock and non-profit domestic educational institution incorporated under Philippine laws on March 3,
1932, was directly under the North Philippine Union Mission (NPUM) of the Southern Asia Pacific Division of the
Seventh Day Adventists. During the 3rd Quinquennial Session of the General Conference of Seventh Day
Adventists held from November 27, 2000 to December 1, 2000, the NPUM Executive Committee elected the
members of the Board of Trustees of AUP, including the Chairman and the Secretary. Respondent Nestor D.
Dayson was elected Chairman while the petitioner was chosen Secretary.

On January 23, 2001, almost two months following the conclusion of the 3rd Quinquennial Session, the Board of
Trustees appointed the petitioner President of AUP.[2] During his tenure, or from November 11 to November 13,
2002, a group from the NPUM conducted an external performance audit. The audit revealed the petitioner's
autocratic management style, like making major decisions without the approval or recommendation of the
proper committees, including the Finance Committee; and that he had himself done the canvassing and
purchasing of materials and made withdrawals and reimbursements for expenses without valid supporting
receipts and without the approval of the Finance Committee. The audit concluded that he had

committed serious violations of fundamental rules and procedure in the disbursement and use of funds.

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]

23
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

24
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.

25
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
26
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.

27
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

28
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.

29
After having voluntarily offered his refutations in the proceedings before the Board of Trustees, he should not
now be permitted to denounce the proceedings and to plead the denial of due process after the decision of the
Board of Trustees was adverse to him.

Nor can his urging that the proceedings were illegal for lack of prior notification be plausible in light of the fact
that he willingly participated therein without raising the objection of lack of notification. Thereby, he effectively
waived his right to object to the validity of the proceedings based on lack of due notice.[29]

5.
Conclusion

The removal of the petitioner as President of AUP, being made in accordance with the AUP Amended By-Laws,
was valid. With that, our going into the other issues becomes unnecessary. We conclude that the order of the
RTC granting his application for the writ of preliminary injunction was tainted with manifestly grave abuse of
discretion; that the CA correctly nullified and set aside the order; and that his claim for damages, being bereft of
factual and legal warrant, should be dismissed.

WHEREFORE, we DENY the petition for review on certiorari for lack of merit, and hereby DISMISS SEC Case No.
028-03 entitled Dr. Petronilo Barayuga v. Nelson D. Dayson, et al.

The petitioner shall pay the cost of suit.

SO ORDERED.

SECOND DIVISION

G. R. No. 183367 March 14, 2012

AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS GARCIA, and LYDIA MARCIANO, Petitioners,
vs.
MUNICIPALITY OF PADRE GARCIA BATANGAS PROVINCE, Respondent.

DECISION

SERENO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the Court of
Appeals (CA) Resolutions in CA-G.R. SP No. 102540 dated 26 March 20081 and 16 June 2008, which denied
petitioners’ Motion for the issuance of a status quo order and Motion for issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction.

Statement of the Facts and the Case

In 1993, fire razed to the ground the old public market of respondent Municipality of Padre Garcia, Batangas.
The municipal government, through its then Municipal Mayor Eugenio Gutierrez, invited petitioner Australian
Professional Realty, Inc. (APRI) to rebuild the public market and construct a shopping center.

On 19 January 1995, a Memorandum of Agreement (MOA)2 was executed between petitioner APRI and
respondent, represented by Mayor Gutierrez and the members of the Sangguniang Bayan. Under the MOA, APRI
undertook to construct a shopping complex in the 5,000-square-meter area. In return, APRI acquired the
exclusive right to operate, manage, and lease stall spaces for a period of 25 years.

In May 1995, Victor Reyes was elected as municipal mayor of respondent. On 6 February 2003, respondent,
through Mayor Reyes, initiated a Complaint for Declaration of Nullity of Memorandum of Agreement with
Damages before the Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial Region, Branch 87. The
Complaint was docketed as Civil Case No. 03-004.

30
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

31
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

32
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
33
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.

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

WE CONCUR:

[G.R. NO. 164548 : September 27, 2006]

PHILIPPINE NATIONAL BANK, Petitioner, v. RJ VENTURES REALTY & DEVELOPMENT CORPORATION and RAJAH
BROADCASTING NETWORK, INC., Respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review filed under Rule 45 of the Rules of Court assailing the 31 March 2004
Decision1 and the 8 July 2004 Resolution2 of the Court of Appeals in CA-G.R. SP No. 56119. The challenged
Decision disposed, thus:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED, the assailed Orders dated July 28,
1999 and October 26, 1999, respectively, [are] REVERSED AND SET ASIDE, and the preliminary injunction earlier
issued is reinstated. No cost.3

The assailed Resolution denied petitioner Philippine National Bank's (PNB's) Motion for Reconsideration dated 3
May 2004.

The Antecedents

As culled from the records, the facts show that on 26 February 1999, respondents RJ Ventures Realty &
Development Corporation (RJVRD) and Rajah Broasting Network, Inc. (RBN) filed a Complaint for Injunction with
Prayer for Issuance of Temporary Restraining Order and Writ of Preliminary Injunction4against petitioner PNB
and Juan S. Baun, Jr.5 with the Regional Trial Court (RTC), Branch 66 of Makati City, and docketed as Civil Case No.
99-452.

34
In its Complaint, respondents contended that on 13 June 1996, First Women's Credit Corporation (FWCC)
received an invitation to bid from PNB anent the sale of an 8,000 square meter property, located at Paseo de
Roxas corner Sen. Gil. Puyat Avenue, Makati City, and covered by Transfer Certificate of Title No. S-15223
(Buendia Property).6 On 10 July 1996, FWCC bid the amount of P455,000.00 per square meter or a total
of P3,640,000,000.00; and pursuant to PNB Rules and Regulations on the Acceptance and Evaluation of
Proposals, it deposited ten percent (10%) of the offered price or P364,000,000.00 with the PNB by way of two
checks, No. 418796 and No. 418797, in the amounts of P312,000,000.00 and P52,000,000.00, respectively.7 On
11 July 1996, FWCC submitted a revised offer increasing its bid by P5,000.00 per square meter or a total
additional amount of P40,000,000.00. In view of the increase, FWCC deposited with PNB an additional amount
of P4,000,000.00.8 On 17 July 1996, FWCC was awarded the Buendia Property.9 PNB's Notice of Award to FWCC
set a condition that within thirty (30) calendar days from receipt of the same, the successful offeror shall tender
payment of the balance of the purchase price in the form of a manager's or cashier's check.10 On 24 July 1996,
FWCC, invoking Section 7.211 of the PNB Rules requested PNB to finance the entire balance of the purchase
price.12 On 17 September 1996 and pending action on its loan application, FWCC assigned all its rights, claims,
interest, and title over the Buendia Property to RJVRD.13 The latter assumed the right to purchase the Buendia
Property and the obligations of FWCC to PNB on the balance of the bid price.

Respondents further posited that PNB initially refused to finance the entire balance of the purchase price except
to the extent of seventy-five percent (75%) thereof.14 However, PNB finally agreed to grant a loan to RJVRD
equivalent to eighty percent (80%) of the purchase price or for the amount of P2,944,000,000.00. The grant was
conditioned on the deposit by RJVRD with PNB of an additional ten percent (10%) of the purchase price to the
first ten percent (10%) downpayment which the former had paid. Otherwise stated, RJVRD was required to raise
an additional amount of P368,000,000.00.15Moreover, to allow RJVRD to raise the additional amount, PNB
proposed to lend RBN the required amount, the latter being an affiliate company of RJVRD, which amount will
be available for relending to RJVRD.16

Respondents described the said arrangement in this wise:

15.0 PNB shall extend a loan to RBN in the amount of P350,000,000.00 which in turn would be loaned to RJVRD.

15.1 The proceeds of the loan shall be used by RJVRD to partially pay the additional 10% or P368,000,000.00
deposit on the Property. PNB documents would however show that the loan was for the expansion of RBN.

15.2 Mr. Ramon P. Jacinto, the majority stockholder of RJVRD will pledge to PNB 70% of his shares of stock in
RBN and 40% of his shares of stock in FWCC.17

Moreover, in their Complaint a quo, respondents avowed that on 30 September 1996, following the payment by
RJVRD to PNB of the additional deposit of P368,000,000.00, the parties entered into a loan agreement wherein
PNB will finance the balance of the purchase price in the amount of P2,944,000,000.00 subject to
conditions, inter alia, that after the transfer of the Buendia Property in the name of RJVRD, the same shall be
mortgaged in favor of PNB. On even date, RJVRD and PNB executed a Loan Agreement.18 A Deed of Sale19 and a
Real Estate Mortgage,20 both dated 30 September 1996 were similarly executed between RJVRD and PNB over
the Buendia Property. The Loan Agreement included a two-way peso/dollar convertibility feature at the option
of RJVRD; hence, to avail of a lower interest rate, RJVRD converted its peso loan to US dollar based on a rate of
exchange of P26.23 to US$1.00, or for a total amount of US$112,237,895.54.

Respondents claimed that RJVRD undertook to engage foreign investors for the project. It entered into
negotiations with Hyundai Construction of South Korea which were eventually suspended. Its talks with Siemens
of Austria, and Property Investment and Development Management Corporation of Singapore
failed.21 Respondents interposed further that the Asian currency crisis on 11 July 1997 caused a depreciation of
the Philippine peso which correspondingly increased the obligation of RJVRD to PNB from P2,944,000,000.00
to P5,405,301,470.82 inclusive of interest.22 On 30 September 1997, in an effort to continue the project, RJVRD
entered into a joint venture agreement with Fil-Estate Management Incorporated for the development of the
Buendia Property. RBN secured another loan from PNB in the amount of P100,000,000.00, part of which was
used in paying the interest for the loan it had secured in favor of RJVRD. In addition, as and by way of security,
RBN assigned in favor of PNB, all its rights and interest over radio and television frequencies issued by the
National Telecommunications Commission, located in Tuguegarao, Baguio, Manila, Cebu, Bacolod, Iloilo,
including those in Cagayan de Oro (FM Stations), and Manila (AM Station and TV-UHF Station).23 On September
1997, RJVRD paid PNB the accrued interest on the loan amounting to P353,478,628.88. RBN also updated its first
35
account with PNB by paying about P41,000,00.00. In March 1998, RJVRD, RBN and PNB entered into discussions
on the restructuring of the loans. Respondents alleged that while discussions were ongoing, the accounts of
RJVRD and RBN became delinquent.24 PNB sent RJVRD, a notice,25 dated 2 June 1998, declaring their accounts
delinquent and demanding the settlement of the same.26

Respondents asserted that prior to 11 June 1998, in line with the continuing discussions between PNB and RBN
for the restructuring of the loan, PNB required the redenomination of RBN's loan as a condition for its
restructuring.27 On 11 June 1998, RBN sent a letter to PNB in agreement to the redenomination of the loan,
stating therein the agreed terms for the restructuring of the loan. RJVRD sent a letter to PNB agreeing to
redenominate its own loan based on PNB's initial proposal, which letter was returned to RJVRD for the reason
that, at that time, the proposals for the restructuring of the RJVRD loan component did not call for the
redenomination of the loan of RJVRD.28 On 24 June 1998, RBN sent a letter to PNB, confirming to redenominate
the loan under the terms stated in its letter of 11 June 1998.29 On 9 September 1998, respondents asseverated
that PNB made a call to RJVRD, asking the latter to redenominate its loans. On the same date, RJVRD sent PNB, a
letter in agreement to the redenomination.30 On 23 October 1998, the RJ Groups of Companies sent Mr.
Benjamin Palma Gil, president of PNB, a proposal for the settlement of respondents' accounts, including a
request for the restructuring of the loans.31

On 25 January 1999, PNB, through its counsel, sent RBN a demand letter, requiring the latter to settle their
outstanding account of P841,460,891.91.32 In a letter similarly dated 25 January 1999, PNB by counsel,
demanded from RJVRD the settlement of its total obligation of P5,405,301,470.82.33 On 28 January 1999, RBN
sent a letter to PNB's counsel, expressing its surprise to receive the demand letter despite their continuing
negotiations with PNB for the restructuring of its accounts.34 In its letter, RBN said that it was, in fact, required
by PNB to redenominate its dollar loans into pesos as an initial step for the restructuring of the account, and
which it has complied.35 On even date, RJVRD sent a letter to PNB's counsel emphasizing that it had not been
advised of any adverse development in their negotiation with PNB nor had it been informed of the
discontinuance of the negotiation. RJVRD sought for additional time to justify its proposal to PNB with the aim of
arriving at a friendly settlement.36

On 18 February 1999, PNB made a demand to RBN to turnover the possession and/or control of Broasting
Equipment Inventory located at No. 33, Dominican Hills, Baguio City.37 On 18 February 1999, RJVRD received a
Notice of Extrajudicial Sale, dated 1 February 1999 for the sale of the Buendia Property38 to be held on 2 March
1999 at the City Hall, Makati City.

Respondents manifested in their Complaint that when RJVRD, as assignee of FWCC purchased the Buendia
Property from PNB, the Philippine economy was progressive; that it was under this favorable economic scenario
that RJVRD agreed to the terms and conditions of the loan agreements; however, following the Asian economic
crisis of July 1997, and with the depreciation of the Philippine peso, the loan of RJVRD which was denominated
in US dollars rose from P2,944,000,000.00 (US$112,237,895.54) to P5,405,301,470.82.39 According to
respondents, from the original contract price of P3,680,000,000.00, RJVRD already made a payment
of P736,000,000.00, representing twenty-percent (20%) of the value of the Buendia Property
and P353,478,628.88, representing interest on the loan or a total of P1,089,478,628.88; and that PNB never
effectively lost control over the Buendia Property, considering that simultaneous with the execution of the Loan
Agreement between RJVRD and PNB, RJVRD executed a Real Estate Mortgage over the Buendia Property in
favor of PNB. Furthermore, respondents sought to find recourse under Article 1940 of the Civil Code. They
contended that the action on the part of PNB to foreclose the collaterals pledged or mortgaged by RJVRD and
RBN, including the extrajudicial sale of the Buendia Property on 2 March 1999 at the City Hall of Makati City, and
the planned take over of RBN's radio facilities in Baguio City would be, among others, premature.41

Finally, in support of its Application for the Issuance of a Temporary Restraining Order and a Writ of Preliminary
Injunction, respondents alleged that RJVRD and RNB would suffer great and irreparable injury by the
extrajudicial foreclosure of the property and the take over of RBN's radio facilities in Baguio, unless a Temporary
Restraining Order and/or Writ of Preliminary Injunction is issued enjoining defendants from implementing the
Notice of Extrajudicial Sale dated 1 February 1999, and enjoining PNB from taking possession and control of
RBN's radio facilities in Baguio City. Respondents maintained that the commission or continuance of the acts
complained of during the litigation or the non-performance thereof would work injustice to RJVRD and RBN.
They manifested their willingness to post a bond as the court a quo may fix in its discretion, to answer for
whatever damages PNB may sustain for the reason of the restraining order or injunction, if finally determined
that respondents are not entitled thereto.
36
Acting on respondent's prayer for the issuance of a Temporary Restraining Order, the RTC, issued an
Order42 dated 2 March 1999, denying the same. The RTC held that the evidence showed that respondents are in
default of payment of its loan from PNB, amounting to P5,405,301,470.82, including interests and penalties.
According to the RTC, the respondents failed to prove that they have a clear right to restrain the foreclosure of
the Buendia Property; whereas, it is PNB which has a clear right to the Buendia Property. The RTC opined that
the evidence failed to prove that respondents will suffer "irreparable injury" if the foreclosure of the Buendia
Property is not enjoined, for under the law, respondents have one (1) year from the date of the registration of
the sale with the Register of Deeds within which to redeem the Buendia Property; thus, respondents will have a
chance to recover the ownership thereof by way of redemption. Finally, the RTC ruled that the rule of equity is
on the side of PNB considering that the Buendia Property was formerly owned by PNB. The RTC denied the
application for Temporary Restraining Order for lack of merit, and held that the exposure of PNB in the
transaction amounted to P5,405,301,470.82, while the exposure of respondents is P1,089,478,628.00.43

On 2 March 1999, the Buendia Property was sold in a public auction conducted by Atty. Juan S. Buan, Notary
Public of Makati City.44 There being no other bidder, the Buendia Property was sold to PNB for the amount
of P2,800,000,000.00. On 3 May 1999, RBN received a Notice of Extrajudical Sale from PNB, specifying therein
that the property covered by Broating Equipment Inventory located at No. 33 Dominical Hills, Baguio City will be
sold for cash at public auction to the highest bidder on 10 May 1999, at the City Hall, Baguio City, pursuant to
the terms of the Deed of Chattel Mortage dated 19 June 1994 to satisfy the mortgage indebtedness
of P841,460,491.91.45

Following this development, on 4 May 1999, respondents filed an Urgent Application for the Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction.46 Respondents prayed that a Temporary
Restraining Order be issued enjoining PNB or any persons acting under its instructions from foreclosing on any
other collaterals pledged or mortgaged by respondents to PNB, particularly that which is subject of the Notice of
Extrajudicial Sale to be conducted by Notary Public Perlita Chan-Rondez in Baguio City on 10 May 1999. It was
likewise prayed that after due proceedings, a Writ of Preliminary Injunction be similarly issued.47

On 7 May 1999, the RTC issued an Order48 granting the Writ of Preliminary Injunction respondents' application
for the issuance of a Temporary Restraining Order (TRO), upon posting of a bond in the amount
of P1,000,000.00.

On 27 May 1999, the RTC issued an Order,49 granting the Writ of Preliminary Injunction, enjoining PNB from
foreclosing all collaterals pledged or mortgaged by respondents to PNB, in particular those described in Exhibits
A to L thereof, after the posting of a bond in the amount of P5,000,000.00.50 According to the court, the right of
PNB to foreclose the chattel mortgages is still challenged by the respondents and therefore, is not yet clearly
established. Hence, if PNB is allowed to foreclose the subject chattel mortgages, the determination of the right
of PNB to foreclose the subject properties will become moot and academic. Subsequently, on 28 May 1999, a
Writ of Preliminary Injunction was issued.

On 9 June 1999, PNB filed a Motion for Reconsideration51 of the Order of 27 May 1999. PNB averred, inter alia,
that RBN failed to produce any evidence to substantiate and support its claim that it is entitled to the Writ of
Preliminary Injunction in order to enjoin PNB from foreclosing on the subject chattels. According to PNB, it was
able to show that RBN failed without justifiable cause or reason to service the credit facilities extended to it.
PNB advanced the argument that RBN has no clear right in esse; therefore, it cannot seek relief from the court.
PNB claimed that they were able to prove irreparable damage to the bank if PNB will be enjoined from
foreclosing on the chattel mortgages. PNB maintained that proceeding with the auction sale of the subject
properties would lower the bank's "past due ratio" approximately by 2%; hence, with the decrease in the bank's
"past due ratio percentage," there would be no legal impediment to PNB's resumption to full lending operations
since the Bangko Sentral ng Pilipinas' recommendation for stoppage of grants of new loans is anchored on PNB's
current high "past due ratio." In support of its Motion for Reconsideration, PNB further theorized that
decreasing its "past due ratio" would improve investors' confidence; hence, substantially enhancing the viability
of PNB in its move to attain full privatization by the year 2000.

In its Opposition,52 respondents submitted that during the hearing of the application for a Writ of Preliminary
Injunction, the court expressed its position that it will not receive evidence relative to the merits of the case as
the same would pre-empt the resolution of the merits or dispose of the main case without trial; therefore, by
agreement of the parties, the principal issue was limited to whether RBN will suffer irreparable injury if the writ
of preliminary injunction is not issued. According to respondents, the damage to RBN's image, loss of
37
listenership, advertisers, staff and employees is unquantifiable in monetary terms. Irreparable damage would be
caused to RBN if PNB is allowed to foreclose its equipments. It would also disrupt, if not, paralyze, the
operations of RBN's stations. They further asserted that there is no reason to disturb the injunction issued by the
court absent a showing of manifest abuse.

On 28 July 1999, the RTC issued an Order53 granting PNB's Motion for Reconsideration. This was subsequently
rectified in the Order of 29 July 1999 as to the date of the Writ of Preliminary Injunction from May 28, 1998 to
May 28, 1999.54 In lifting the Writ of Preliminary Injunction of 28 May 1999, the RTC rationalized that the failure
of RBN to pay the three (3) credit facilities it obtained from defendant PNB was established; thus, RBN was
considered to have effectively "defaulted" on its loan obligation. In the same Order, the RTC concluded that RBN
made express admission of its delinquency in its Complaint. Moreover, the RTC held that the "cross-default
provision"55 embodied in the Loan Agreement between the parties establishes against the grant of the
injunction.

Respondents moved for a reconsideration of the 28 July 1999 Order, submitting that there was no reason to
disturb the preliminary injunction order as there was no showing of a manifest abuse by then Presiding Judge
Hon. Eriberto U. Rosario, in the issuance thereof. Respondents explicated, inter alia, that the sufficiency of their
application was already passed upon by the RTC through the Order dated 27 May 1999.

On 26 October 1999, the RTC issued an Order,56 denying respondents' Motion for Reconsideration for the lifting
of the Writ of Preliminary Injunction dated 28 May 1999.

Aggrieved, on 7 December 1999, respondents filed with the Court of Appeals a Petition for Certiorariunder Rule
65 of the Rules of Court assailing the Orders dated 28 July 1999 and 26 October 1999, imputing grave abuse of
discretion on the part of the RTC in dissolving the Writ of Preliminary Injunction earlier issued.

Before the appellate court, respondents argued that the sufficiency of their application for preliminary
injunction was already raised and passed upon by the RTC in the Injunction Order dated 27 May 1999; however,
PNB was not able to allege "other grounds" for the lifting thereof as mandated by Section 6 of Rule 58 of the
Rules of Court.57 Moreover, respondents asserted that on the issue of the purported delinquency, the RTC failed
to consider PNB's judicial admissions, whereby the rights of PNB should be those of a seller covered by the law
on Sales (Title VI, Book IV, Civil Code), and not those of a money-lender covered by the law on Loans (TitleXI,
Book IV, Civil Code); hence, PNB's rights as a seller are either to rescind the sale, retrieve the title to the property
transferred to the buyer, and exact payment of damages or to leave the property with the buyer, to exact
payment of the entire price with interest, and recover damages thereby suffered. According to the respondents,
the PNB as seller had recovered through foreclosure the Buendia Property. They alleged that: PNB had forfeited
in its favor as mortgagor, the payments already made by RJVRD and the interest thereon; PNB is in the process
of recovering as mortgagor and seller additional damages in the form of interests, penalties, charges, attorney's
fees, etc; and PNB is in the process of recovering as mortgagor, by way of the foreclosure of mortgage, other
realty and chattels of significant value. Respondents contended that there was no grave abuse of discretion in
the issuance of the Writ of Preliminary Injunction because the contemplated foreclosure of the other properties
will work injustice to RBN and would render ineffectual any judgment on the merits of the case ineffectual.

Anent the issue of whether respondents will suffer irreparable injury, respondents pleaded that although the
immediate effect of a Writ of Preliminary Injunction may be quantifiable in pesos, the effect on the respondents
is its viability that stands to be affected in the long-term. Respondents rationalized that the foreclosure of the
radio equipment will result in the stoppage of operations, and eventually, the loss of the image of the station.
These factors will cause the loss of its listenership and client confidence, which cannot be quantifiable in
monetary terms. Moreover, respondents set forth the contention that even as PNB suggested that after
foreclosure, the radio equipment would either be sold to improve PNB's liquidity or disposed by way of lease-
purchase agreement, there exists no assurance that RBN can repurchase the foreclosed collaterals.

The Ruling of the Court of Appeals

On 9 December 1999, the Court of Appeals issued a Resolution58 temporarily enjoining PNB from foreclosing any
collateral pledged or mortgaged by RJVRD and RBN, and from taking possession and control of the latter's radio
facilities in Baguio City, until further orders from the appellate court. In granting the same, the Court of Appeals
underscored that the purpose of the temporary injunctive relief is to preserve the status quo ante between the

38
parties, and so as not to render moot and academic the relief prayed for in the Petition. Accordingly, the Court
of Appeals set the hearing on the application for the issuance of a preliminary injunction on 11 January 2000.

On 10 January 2000, the PNB filed a Comment with the Court of Appeals, disputing the imputation of grave
abuse of discretion on the part of the RTC when it lifted the preliminary injunction. The PNB opposed
respondents' claim that there exists in their favor a right to be protected. According to PNB, the foreclosure of
the collaterals shall be effective upon the default of RBN, which default had been established as RBN was unable
to properly service the loan agreements without justifiable cause and despite due demand. Anent the issue on
the existence of irreparable injury, PNB challenged respondents' contention by arguing that there is, in fact, a
pecuniary standard by which RBN's damage can be measured per the testimony of RBN's witness that it will
suffer a loss of P1.2 Billion for the next ten (10) years. PNB further posited that there were no judicial admissions
on their part to the effect that RJVRD and RBN are not delinquent. In furtherance of its opposition, PNB averred
that it acted in two separate capacities as seller and lender. As a seller, PNB owned the Buendia Property and
offered it for sale to interested parties. PNB accepted the bid of RJVRD and the property was sold to the latter.
As a lender, PNB supplied the credit facility to RJVRD as the latter needed to borrow money to finance the
payment of the remaining balance. PNB insisted that these two transactions cannot be treated as one and the
same; hence, there is nothing that prevents it from acting as a seller and lender at the same time. In fine, PNB
maintained that RJVRD did not default on the payment of the purchase price for such was completely paid;
rather, it defaulted on the payment of the loan, on its principal, and interest.

On 4 February 2000, the Court of Appeals issued a Resolution,59 granting the Writ of Preliminary Injunction,
enjoining PNB and its agents from foreclosing the collaterals pledged and mortgaged by RJVRD and RBN and
from taking over possession and control of RBN radio facilities in Baguio City. The appellate court, held, viz:

The principal action in the petition at bar dwells on the controversy on whether or not the respondent court
committed grave abuse of discretion in issuing the order lifting and setting aside the injunctive relief earlier
issued in Civil Case No. 4592 (sic). If no preliminary injunction is issued in this case, pending resolution of such
main petition, respondent will proceed to foreclose the pledged or mortgaged collaterals. In that eventuality,
petitioners stand to sustain injury and irreparable damage, the loss of its properties, income[,] and clientele
listeners in the subject radio broasting station in Baguio City, even before the instant certiorari proceeding could
be resolved. To allow the impending foreclosure to proceed, at this point in time, will surely be violative of
petitioners' right to be heard and to due process. It is for this reason, for the preservation of the status
quo between the parties, pending decision of the main petition and in order not to render the same moot and
academic, We feel justified to grant the preliminary injunction prayed for.

IN VIEW OF ALL THE FOREGOING, pending final resolution of the petition at bar, let a Writ of Preliminary
Injunction be issued in this case enjoining the respondent PNB, its officers or agents from foreclosing the
collateral pledged and mortgaged by petitioners, RJ Ventures Realty & Development Corporation and Rajah
Broasting Network, Inc., from taking over possession and control of RBN radio facilities in Baguio City, upon the
posting of a P1,000,000.00 injunction bond.

Undeterred, PNB filed a Motion for Reconsideration praying that the Order of 4 February 2000 be set aside and
the Writ of Preliminary Injunction issued by the Court of Appeals be immediately lifted and dissolved.

Acting on the Motion, the Court of Appeals, rendered the assailed Decision dated 31 March 2004, denying the
same. In the same order, the appellate court, reversed and set aside the Orders dated 28 July 1999 and 26
October 1999 of the RTC; hence, effectively reinstating the Writ of Preliminary Injunction earlier issued on 28
May 1999. The Court of Appeals held that the RTC was not asked to make a definitive conclusion on the issue of
whether RBN was indeed guilty of default in paying its loan nor was it asked to resolve whether RBN committed
a breach against PNB which necessitated foreclosure. A determination of whether there was default or breach
can be only be reached after the principal action is set for trial on the merits after the parties are given
opportunity to present evidence in support of their respective claims.

The appellate court decreed, to wit:

It must be emphasized that a preliminary injunction may be granted at any stage of an action prior to final
judgment, requiring a person to refrain from a particular act. As the term itself suggests, it is merely temporary,
subject to the final disposition of the principal action. The justification for the preliminary injunction is urgency.
It is based on evidence tending to show that the action complained of must be stayed lest the movant suffer
39
irreparable injury or the final judgment granting the relief sought become ineffectual. Necessarily, that evidence
need only be a "sampling," as it were, and intended merely to give the court an idea of the justification for the
preliminary injunction pending the decision of the case on the merits. The evidence submitted at the hearing on
the motion for preliminary injunction is not conclusive of the principal action, which has yet to be decided.
(Olalia v. Hizon, 196 SCRA 665 [1991]).

Anent the issue of whether RBN would sustain "irreparable injury" should the chattel mortgage be foreclosed, it
bears repeating that the evidence to be submitted at the hearing on the motion for preliminary injunction need
not be conclusive and complete. On this score, We find petitioners to have sufficiently established the existence
of irreparable injury to justify, albeit provisionally, the restraint of the act complained against them.

We find that the potential injury demonstrated by the various testimonies presented by petitioners more than
satisfies the legal and jurisprudential requirements of "irreparable injury." There is no gainsaying in that the
foreclosure of the subject radio equipment[s] would inevitably result in stoppage of operations. This, in turn,
shall result to (sic) the station's tarnished image and consequent loss of public listenership. Loss of listenership
then leads to loss of confidence of the station's patrons and advertising clients that would cause serious
repercussions on its ability to sustain its operations. Undoubtedly, the loss of image and reputation by a radio
station are matters that are not quantifiable in terms of monetary value.

All told, We find the court a quo's lifting of the injunction earlier issued tainted with grave abuse of discretion
properly correctable by the special writ of certiorari .60

On 4 May 2004, PNB moved for the reconsideration thereon. On 8 July 2004, the Court of Appeals rendered a
Resolution, finding no justification to compel a modification or reversal of the 31 March 2004 Decision.

Hence, the instant Petition.

The Issues

PNB recites the following statement of the issues, viz:

WHETHER OR NOT THE PETITION FILED BY PNB INVOLVES QUESTIONS OF FACTS WHICH SHOULD BE A CAUSE
FOR ITS DISMISSAL;

II

WHETHER OR NOT THE DEFAULT BY RJVRD AND RBN IN THE PAYMENT OF THEIR RESPECTIVE LOAN
OBLIGATIONS TO PNB JUSTIFIES THE DENIAL OF THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION FOR
THE FORECLOSURE OF THE MORTGAGED PROPERTIES;

III

WHETHER OR NOT RBN'S ADMISSION OF ITS FAILURE TO SETTLE ITS LOAN OBLIGATION IN FULL GIVES PNB A
CLEAR RIGHT TO FORECLOSE THE MORTGAGE;

IV

WHETHER OR NOT [THE] RIGHT OF RJVRD AND RBN TO A WRIT OF INJUNCTION IS CLEAR, EXISTING[,] AND
UNMISTAKABLE; and

WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAD LEGAL BASIS IN REVERSING AND SETTING ASIDE
THE ORDER DATED JULY 28, 1999 AND OCTOBER 26, 1999 OF THE REGIONAL TRIAL COURT OF MAKATI, BRANCH
66, AND THEREBY ISSUING A WRIT OF CERTIOARI IN FAVOR OF RJVRD AND RBN.61

40
The Ruling of the Court

The pivotal issue in the instant Petition is whether the Court of Appeals correctly reinstated the Writ of
Preliminary Injunction dated 28 May 1999. Hence, the question is whether respondents RJVRD and RBN are
entitled to the Writ of Preliminary Injunction. It is for this reason that we shall address and concern
ourselves only with the assailed writ, but not with the merits of the case pending before the trial court. A
preliminary injunction is merely a provisional remedy, adjunct to the main case subject to the latter's
outcome.62 It is not a cause of action in itself.63

This Petition has no merit.

Foremost, we reiterate that the sole object of a preliminary injunction is to maintain the status quo until the
merits can be heard.64 A preliminary injunction65 is an order granted at any stage of an action prior to judgment
of final order, requiring a party, court, agency, or person to refrain from a particular act or acts. It is a
preservative remedy to ensure the protection of a party's substantive rights or interests pending the final
judgment in the principal action. A plea for an injunctive writ lies upon the existence of a claimed emergency or
extraordinary situation which should be avoided for otherwise, the outcome of a litigation would be useless as
far as the party applying for the writ is concerned.66

The grounds for the issuance of a Writ of Preliminary Injunction are prescribed in Section 3 of Rule 58 of the
Rules of Court. Thus:

SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is
established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the performance of
an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or nonperformance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject
of the action or proceeding, and tending to render the judgment ineffectual.

Otherwise stated, for a Writ of Preliminary Injunction to issue, the following requisites must be present, to wit:
(1) the existence of a clear and unmistakable right that must be protected, and (2) an urgent and paramount
necessity for the writ to prevent serious damage.67 Indubitably, this Court has likewise stressed that the very
foundation of the jurisdiction to issue a writ of injunction rests in the existence of a cause of action and in the
probability of irreparable injury, inadequacy of pecuniary compensation and the prevention of multiplicity of
suits.68 Sine dubio, the grant or denial of a writ of preliminary injunction in a pending case rests in the sound
discretion of the court taking cognizance of the case since the assessment and evaluation of evidence towards
that end involve findings of facts left to the said court for its conclusive determination.69 Hence, the exercise of
judicial discretion by a court in injunctive matters must not be interfered with except when there is grave abuse
of discretion.70 Grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious
and whimsical exercise of judgment that is equivalent to lack of jurisdiction, or where the power is exercised in
an arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law.71

We find the conclusions reached by the Court of Appeals to be in accord with law.

The Supreme Court is not a trier of facts.72 While this is perhaps one of our more emphatic doctrines, it admits
of certain exceptions, inter alia, when the findings of the Court of Appeals are contrary to those of the trial
court.73 In the case at bar, we apply the exception and proceed to make a determination of whether there is a
factual and legal bases for a Writ of Preliminary Injunction to issue.

First, respondents were able to establish a clear and unmistakable right to the possession of the subject
collaterals. Evidently, as owner of the subject collaterals that stand to be extrajudicially foreclosed, respondents
41
are entitled to the possession and protection thereof. RBN as the owner and operator of the subject radio
equipment and radio stations have a clear right over them. The instant case does not involve abstract rights, or a
future and contingent rights, but a right that is already in existence. To our minds, petitioner's claim that
respondents have lost their rights to the subject collaterals in the face of their admission of default is best
threshed out in a full-blown trial a quo where the merits of the case can be tried and determined. Significantly,
to give the trial court a fair idea of whether a justification for the issuance of the writ exists, only a "sampling" of
the evidence is needed, pending a decision on the merits of the case.74 Hence, the determination of
respondents' default and the legality of the defenses they adduced are matters appropriately subject of the trial
on the merits.

Second, there is an urgent and paramount necessity to prevent serious damage. Indeed, an injunctive remedy
may only be resorted to when there is a pressing necessity to avoid injurious consequences which cannot be
remedied under any standard compensation.75 PNB assails the existence of this ground by raising the argument
that there is, in actuality, a pecuniary standard by which RBN's damage can be measured, as evidenced by the
testimony of RBN's witness that it will suffer a loss of P1.2 Billion for the next ten (10) years.

To be sure, this court has declared that the term irreparable injury has a definite meaning in law. It does not
have reference to the amount of damages that may be caused but rather to the difficulty of measuring the
damages inflicted. If full compensation can be obtained by way of damages, equity will not apply the remedy of
injunction.76 The Court of Appeals declared that the evidence adduced by respondents more than satisfies the
legal and jurisprudential requirements of irreparable injury. It behooves this court to appreciate the unique
character of the collaterals that stand to be affected should the Writ of Preliminary Injunction be dissolved as
PNB would have it. The direct and inevitable result would be the stoppage of the operations of respondents'
radio stations, consequently, losing its listenership, and tarnishing the image that it has built over time. It does
not stretch one's imagination to see that the cost of a destroyed image is significantly the loss of its good name
and reputation. As aptly appreciated by the appellate court, the value of a radio station's image and reputation
are not quantifiable in terms of monetary value. This conclusion can be gleaned from the testimony of
respondents' witness, Jose E. Escaner, Jr., General Manager of RBN, thus:

Atty. Mendoza:

Q: Now, in your forty (40) years in the broast (sic) industry, have you had any personal experience in (sic) any
actual interruption in the operations of a radio station programming?cralaw library

Witness:

A: Yes, when I was handling the network of the then Ambassador Nanding Cojuanco within which the radio
stations were sequestered and sometime or the other it (sic) went off the air and immediately, we do not have
any revenues, so much so that we actually suffered two (2) to three (3) years.

Atty. Mendoza:

Q: And how long did it take for that station in Cebu that you mentioned to retain its listenership day? (sic)

Witness:

A: Well, honestly, until now its airtime, because of its image, status image (sic) which is the reputation of an AM
Station while they are still recouping other stations, the other reports came over (sic) and practically brought
their ratings down, so, until now they still have to recoup.

Atty. Mendoza:

Q: What radio station are you referring to?cralaw library

Witness:

A: DYRB.

Atty. Mendoza:
42
Q: What would be the consequence if the radio stations of RBN stops (sic) operation (sic)?cralaw library

Witness:

A: It will lose whatever image it has generated to this point and (sic) time, it will cost irreparable damage not
only to its operation but most of all (sic) its image as being built by RNB. Rajah Broasting Network and I doubt
very much if it will still be able to recoup to a very good result, what we are now generating.

Atty. Mendoza:

That is all for the witness, Your Honor.

COURT:

Alright (sic), cross.

Atty. dela Vega:

With the permission of the Honorable Court.

xxx

Atty. dela Vega:

Q: Based from (sic) your experienced (sic) as the person engaged in media practice Mr. Witness, with respect to
the possession, let us go to the heart of the matter as of this point and time.

COURT:

You shoot the question straight.

Atty. dela Vega:

Yes, Your Honor.

(continuing to (sic) the witness

Q Will it made a difference to the operations of a radio station and relation with the listeners and their clients if
technical equipments, in (sic) the technical equipments, the ownership over the sale are transferred to another
person?cralaw library

Witness:

A: If you take the equipment immediately that would mean stopping our operations. That would mean stopping
our day to day communication with our listenership. That they will be wondering, that will cost damage and (sic)
our image immediately. That will cost damage to our contracts right now without keeping with our clients.

Atty. dela Vega:

Q: Usually that person who owns that particular equipment will get the particular equipment. When you say get,
what do you mean by get Mr. Witness?cralaw library

Witness:

A: If for instance was what we are talking about right now, you are going to foreclose, ok, (sic), what will we
use?cralaw library

Atty. dela Vega:

43
Q: Assuming Mr. Witness, that the creditor of Rajah Broasting Network will not get, will not get the equipment,
will not get their account, will it adversely affect the operations of Rajah Broating?cralaw library

Witness:

A: Still it will.

Atty. dela vega:

Q: In what way?cralaw library

Witness:

A: Because that will have an effect now on our relation with our clientele. The image will be doubt (sic). The will
be doubt, there be vacillation in the planning of the media plans, vacillation in the buying of airtime.

Atty. dela Vega:

Q It will affect?cralaw library

Witness:

A: It will affect. The confidence is there.

Atty. dela Vega:

Q: It will affect?cralaw library

Witness:

A: We do not want our clientele to lose confidence.77

Evidently, there exists in the case at bar a pressing necessity to avoid injurious consequences to respondents
which cannot be remedied under any standard compensation. After a careful scrutiny of the attendant
circumstances, we do not find herein a reason for reversing the reinstatement by the Court of Appeals of the
Writ of Preliminary Injunction earlier issued.

The Fallo

WHEREFORE, the Petition is DENIED. The Decision dated 31 March 2004 and the Resolution dated 8 July 2004 of
the Court of Appeals in CA-G.R. SP No. 56119, reversing and setting aside the 28 July 1999 and 26 October 1999
Orders of the RTC, Branch 66 of Makati City in Civil Case No. 99-452, and reinstating the Writ of Preliminary
Injunction issued on 28 May 1999 are AFFIRMED. Costs against petitioners.

SO ORDERED.

THIRD DIVISION

G.R. No. 164459 April 24, 2007

LIMITLESS POTENTIALS, INC., Petitioner,

vs.
HON. COURT OF APPEALS, CRISOSTOMO YALUNG, and ATTY. ROY MANUEL VILLASOR, Respondents.

DECISION

CHICO-NAZARIO, J.:

44
Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul and set aside: (1) The Decision,1 dated 16 September 2003, of the Court of Appeals
in CA-G.R. SP No. 73463 entitled, Limitless Potentials, Inc. vs. Hon. Manuel D. Victorio, in his capacity as the
Presiding Judge of the Regional Trial Court of Makati City, Branch 141, Crisostomo Yalung, and Atty. Roy Manuel
Villasor, which dismissed herein petitioner’s Petition for Certiorari under Rule 65 of the 1997 Revised Rules of
Civil Procedure for lack of merit, and (2) The Resolution,2 dated 8 July 2004, of the appellate court in the same
case which denied petitioner’s Motion for Reconsideration because the issues and arguments raised therein had
already been passed upon and judiciously resolved in the Decision dated 16 September 2003.

The controversy of this case stemmed from the following facts:

On 12 October 1995, Digital Networks Communications and Computers, Inc. (Digital) and herein petitioner
Limitless Potentials, Inc. (LPI), a domestic corporation duly organized and existing under Philippine laws, entered
into a Billboard Advertisement Contract whereby petitioner was to construct one billboard advertisement for
Digital’s product for a period of one year, with an agreed rental of ₱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.

45
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.
46
 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?

47
 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,
48
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
49
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
50
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.

SO ORDERED.

MINITA V. CHICO-NAZARIO

G.R. No. 169802 June 8, 2007

OVERSEAS WORKERS WELFARE ADMINISTRATION, represented by Administrator Marianito D.

Roque,petitioner,
vs.
ATTY. CESAR L. CHAVEZ, OPHELIA N. ALMENARIO, ELVIRA ADOR, REYNALDO TAYAG, TORIBIO ROBLES, JR.,
ROSSANE BAHIA, RACQUEL LLAGAS-KUNTING, MA. STELLA A. DULCE, ROSSANA SIRAY, EDUARDO MENDOZA,
JR., PRISCILLA BARTOLO, ROSE VILLANUEVA, CHERRY MOLINA, MARY ROSE RAMOS, MA. MINERVA PAISO,
RODERIC DELOS REYES, RENATO DELA CRUZ, MARIVIC DIGMA, JESSIE BALLESTEROS, DONATO DAGDAG, MARK
TUMIBAY, CYNTHIA FRUEL, DEMETRIO SORIANO, MILAGROS GUEVARRA, ANGELITA LACSON, BERT BUQUID,

51
JUN SAMORANAS, TEODORO TUTAY, LEAH YOGYOG, MARIE CRUZ and CONCEPCION BRAGAS
REGALADO, respondents.

DECISION

CHICO-NAZARIO, J.:

The Case

Petitioner Overseas Workers Welfare Administration (OWWA), comes to this Court via the instant Petition for
Review on Certiorari under Rule 45 of the Rules of Court, assailing the 22 September 2005 Decision1 of the Court
of Appeals in CA-G.R. SP No. 87702, which affirmed the Order2 dated 30 September 2004, of the Regional Trial
Court (RTC), Pasay City, Branch 117, in Civil Case No. 04-0415-CFM. The RTC granted the issuance of a writ of
preliminary injunction restraining OWWA from implementing its new organizational structure.

Factual Antecedents

OWWA is a government agency tasked primarily to protect the interest and promote the welfare of overseas
Filipino workers (OFWs).3 OWWA traces its beginnings to 1 May 1977, when the Welfare and Training Fund for
Overseas Workers in the Department of Labor and Employment (DOLE) was created by virtue of Letter of
Instructions No. 537, with the main objective, inter alia, of providing social and welfare services to OFW,
including insurance coverage, social work, legal and placement assistance, cultural and remittances services, and
the like. On 1 May 1980, Presidential Decree No. 1694 was signed into law, formalizing the operations of a
comprehensive Welfare Fund (Welfund), as authorized and created under Letter of Instructions No. 537.
Presidential Decree No. 1694 further authorized that contributions to the Welfare and Training Fund collected
pursuant to Letter of Instructions No. 537 be transferred to the Welfund. On 16 January 1981, Presidential
Decree No. 1809 was promulgated, amending certain provisions of Presidential Decree No. 1694.4 Subsequently,
Executive Order No. 126 was passed which reorganized the Ministry of Labor and Employment. Executive Order
No. 126 also renamed the Welfare Fund as the OWWA.

From the records, it is undisputed that on 9 January 2004, as there was yet no formal OWWA structure duly
approved by the Department of Budget and Management (DBM) and the Civil Service Commission (CSC), the
OWWA Board of Trustees passed Resolution No. 001,5 Series of 2004, bearing the title "Approving the Structure
of the Overseas Workers Welfare Administration," and depicting the organizational structure and staffing
pattern of the OWWA, as approved by Patricia A. Sto. Tomas (Sto. Tomas), then Chair of the OWWA Board of
Trustees and then Secretary of the DOLE. According to Resolution No. 001, the structuring of the OWWA will
stabilize the internal organization and promote careerism among the employees. It will also ensure a more
efficient and effective delivery of programs and services to member-OFWs. Resolution No. 001 resolved, thus:

RESOLVED therefore, to approve as it is hereby approved, the OWWA Structure which is hereto attached and
made an integral part of this Resolution, comprising mainly of the approved organizational chart, functional
descriptions and staffing pattern, subject to the following:

a. There will be no displacement of existing regular employees;

b. There will be no temporary appointments; and

c. There will be no hiring of casuals, contractuals or consultants in the new structure.

RESOLVED further, that the OWWA Structure be immediately submitted for the appropriate actions of
competent authorities, particularly the DBM and CSC.6

On 24 March 2004, DBM Secretary Emilia T. Boncodin (Boncodin), approved the organizational structure and
staffing pattern of the OWWA.7 In her approval thereof, she stated that the total funding requirements for the
revised organizational structure shall be ₱107,546,379 for four hundred (400) positions. Moreover, DBM
Secretary Boncodin underscored that the funding shall come solely from the OWWA funds and that no
government funds shall be released for the implementation of the changes made.

52
On 31 May 2004, OWWA Administrator Virgilio R. Angelo (Angelo), issued Advisory No. 01,8 advising the officials
and employees of the OWWA that the DBM had recently approved OWWA’s organizational chart, functional
statements, and the staffing pattern. Advisory No. 01 also announced that a Placement Committee will be
created to evaluate and recommend placement of all regular/permanent incumbents of OWWA in the new
organizational chart and staffing pattern. All employees were asked to indicate in writing their interest or
preference in any of the approved plantilla item, especially for promotion to the Human Resources Management
Division, not later than 11 June 2004. Further, Advisory No. 01 emphasized that the OWWA Board of Trustees,
thru its Resolution No. 001, Series of 2004, had declared the policy that there will be no displacement of existing
regular/permanent employees. Qualified casual and contractual personnel may apply for any vacant item only
after all regular/permanent employees of OWWA had been placed.

Subsequently, on 3 June 2004, DOLE Secretary Sto. Tomas issued Administrative Order No. 171, Series of 2004,
creating a Placement Committee to evaluate qualifications of employees; and to recommend their appropriate
placement in the new organizational chart, functional statements and staffing pattern of the OWWA.
Administrative Order No. 171 was partially amended by Administrative Order No. 171-A, issued by DOLE Acting
Secretary Manuel G. Imson (Imson), authorizing the Placement Committee to recommend to the OWWA
Administrator their evaluations, which shall thereafter be endorsed to the DOLE Secretary for consideration.9

The Placement Committee was directed to comply with the pertinent CESB/CSC/DBM rules and regulations on
its recommended placement of all personnel of OWWA based on the following parameters, to wit10 :

1. There would be no diminution nor displacement of permanent/regular employees of OWWA.

2. Qualified casuals and contractual personnel may likewise be considered in the staffing pattern only
after ensuring that the regular(s)/permanent employees of OWWA have already been placed.

3. Decentralization of functions to bring OWWA services closer to the public shall be adopted. Thus,
priority in some promotions shall be given to those who opt to be assigned in the regional offices, aside
from performance.

4. Deployment in the overseas posts shall be made on rotation basis from both the frontline and the
administrative staff, based on performance.

5. Regular/permanent incumbents interested for promotion should indicate their interest in writing to
the Placement Committee: Attn: The Chairperson.

6. Those who may opt to retire should submit to the HRMD, their application for retirement, copy
furnished the Budget Division for budget allocation purposes.

The Placement Committee should complete its task not later than June 30, 2004.

On 8 June 2004, OWWA Administrator Angelo issued Advisory No. 02, inviting OWWA officials and employees to
an orientation on the new structure, functions and staffing pattern of the OWWA. Moreover, Advisory No. 02
required the holding of elections for the First and Second Level Representatives who will elect from among
themselves the regular official representatives and alternates in the Placement Committee deliberations. On 11
June 2004, Advisory No. 03 was issued, announcing the conduct of an election for representatives and alternates
representing the employees in the first [Salary Grades (SG) 1-9] and second level (SG 10-24), pursuant to
Administrative Order No. 171, dated 3 June 2004, as amended by Administrative Order No. 171-A.

On 18 June 2004, DOLE Acting Secretary Imson issued Administrative Order No. 186, Series of
2004,11 prescribing the guidelines on the placement of personnel in the new staffing pattern of the OWWA.

On 29 June 2004, herein respondents filed with the RTC, a Complaint for Annulment of the Organizational
Structure of the OWWA, as approved by OWWA Board Resolution No. 001, Series of 2004, with Prayer for the
Issuance of a Writ of Preliminary Injunction12 against herein petitioner OWWA and its Board of Trustees.13 The
case was docketed as Civil Case No. 04-0415-CFM.

In their Complaint, respondents alleged that the OWWA has around 24 consultants, 29 casual employees, 76
contractual workers, and 356 officers and employees, which number does not include the 85 contractual
53
employees in the Office of the Secretariat of the OWWA Medicare.14 Respondents posited that the approved
Organizational Structure and Staffing Pattern of the OWWA increases the number of regular plantilla positions
from 356 to 400; however, the increase of 42 positions will not absorb the aforementioned consultants and
casual and contractual workers. They further averred that the plantilla positions in the Central Office will be
reduced from 250 to 140, while the regional offices will have an increase of 164 positions. According to the
respondents, the resulting decrease in the number of employees in the Central Office will result in the
constructive dismissal of at least 110 employees. Meanwhile, the deployment of the regular central office
personnel to the regional offices will displace the said employees, as well as their families.

Respondents challenged the validity of the new organizational structure of the OWWA. In fine, they contended
that the same is null and void; hence, its implementation should be prohibited.

Respondents prayed for the issuance of a writ of preliminary injunction to restrain petitioners from: 1)
implementing its organizational structure as approved by the OWWA Board of Trustees in its Resolution dated 9
January 2004; and 2) advertising and proceeding with the recruitment and placement of new employees under
the new organizational structure.15

Further, respondents prayed that after trial on the merits, OWWA’s organizational structure be declared as
unconstitutional and contrary to law; and the OWWA Board of Trustees be declared as having acted contrary to
the Constitution and existing laws, and with grave abuse of discretion in approving Resolution No. 001, dated 9
January 2004.16

The Ruling of the RTC

On 30 September 2004, the RTC rendered an Order17 granting respondents’ prayer for a writ of preliminary
injunction upon the filing of a bond in the sum of ₱100,000.00. In the grant thereof, the RTC reasoned that any
move to reorganize the structure of the OWWA requires an amendatory law. It deemed Resolution No. 001 was
not merely a "formalization of the organizational structure and staffing pattern of the OWWA," but a disruption
of the existing organization which disturbs and displaces a number of regular employees, including consultants
and casual and contractual employees.

The RTC ratiocinated in this wise:

x x x All told, what is being done now at OWWA is a reorganization of its structure as originally conceived under
P.D. No. 1694 [Organization and Administration of the Welfare for Overseas Workers] and P.D. No. 1809
[Amending Certain Provisions of Presidential Decree 1694, Creating the "Welfare Fund for Overseas Workers"].
In the (sic) light of Section 11 of R.A. No. 6656 which provides that "the executive branch of the government
shall implement reorganization schemes within a specified period of time authorized by law", this court doubts
whether a reorganization of OWWA can be effected without an enabling law.

Further, defendants do not dispute the fact that while the mechanics of the reorganization is still being forged,
the DOLE already processed applications and eventually hired employees not from among the existing
employees of the OWWA. This appears to be in contravention of Section 4 of R.A. No. 6656 which provides:

"Sec. 4. Officers and employees holding permanent appointments shall be given preference for appointment to
the new positions in the approved staffing pattern comparable to their former position or in case there are not
enough comparable positions, to positions next lower in rank.

"No new employees shall be taken in until all permanent officers and employees have been appointed, including
temporary and casual employees who possess the necessary qualification requirements, among which is the
appropriate civil service eligibility for permanent appointment to positions in the approved staffing pattern, in
case there are still positions to be filled, unless such positions are policy-determining, primarily confidential or
highly technical in nature."

Furthermore, defendant’s (sic) do not dispute the fact that the Placement Committee was hastily constituted,
that its members were not educated of their task of job placement, that there was no real to goodness (sic)
personnel evaluation and, finally, the Chairman of the Committee was simply hand-picked by the DOLE
Secretary contrary to the explicit injunction of Section 8 of the Implementing Rules of R.A .No. 6656 that "the
members shall elect their Chairman."18
54
The RTC also cited the protection afforded by the Constitution to workers, specifically, officers or employees of
the Civil Service in ruling that the existing organization of the OWWA need not be disturbed in any way and no
single worker will be removed or displaced. Thus:

This court entertains no doubt that as workers, plaintiffs enjoy a right that is protected both by the Constitution
and statutes. Thus, "(n)o officer or employee of the civil service shall be removed or suspended except for cause
provided by law. "(Sec. 2, par. 3, Art. IX, Constitution). "No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws." (Sec. 1, Art. III;
ibid.). A person’s job is his property. In many cases, as in the Philippine setting, one’s job also means one’s life
and the lives of those who depended on him. Hence, it is a policy of the State to "free the people from poverty
through policies that provide adequate social services, promote full employment, a rising standard of living, and
an improved quality of life for all." (Sec. 8, Art. II, ibid.) Any act that, contrary to law, tends to deprive a worker
of his work, violates his rights.19

Finally, the RTC defended its jurisdiction over the controversy despite petitioner’s protestations that jurisdiction
over respondents’ complaint is lodged in the administrative agencies tasked to implement the new OWWA
structure. It ruled that the doctrine of primary jurisdiction is applicable only where the administrative agency
exercises its quasi-judicial or administrative function; but, where what is challenged is the constitutionality of a
rule or regulation issued by the administrative agency in the performance of its quasi-legislative functions,
regular courts have jurisdiction over the matter.20

Therefore, the RTC, in its Order, dated 30 September 2004, granted respondents’ prayer for a writ of preliminary
injunction, to wit:

WHEREFORE, upon plaintiff’s (sic) filing of a bond in the sum of ₱100,000.00, let a writ of preliminary injunction
issue in: 1) restraining the defendants from implementing the new organizational structure of OWWA approved
by the Board of Trustees on January 9, 2004 and 2) restraining the defendants from advertising and proceeding
with the recruitment and placement of new employees under the new organizational structure.21

Without filing a Motion for Reconsideration, petitioner, thru the Office of the Solicitor General (OSG),22 filed
with the Court of Appeals, a Petition for Certiorari and Prohibition with Prayer for Issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction under Rule 65 of the Rules of Court, assailing the RTC Order
of 30 September 2004.23

The Ruling of the Appellate Court

On 22 September 2005, the Court of Appeals rendered the assailed Decision, which dismissed the petition. It
affirmed the court a quo’s findings that respondents possess a clear and legal right to the immediate issuance of
the writ. It resolved that it was proper for the RTC to restrain, for the meantime, the implementation of
OWWA’s reorganization to prevent injury until after the main case is heard and decided.24 It found respondents’
allegations sufficient to prove the existence of a right that should be protected by a writ of preliminary
injunction. Thus:

Petitioner averred, too, that majority of the casuals, contractuals and consultants have been employed for more
than ten (10) years, if not twenty (20) years, and were not regularized simply due to lack of regular positions in
the plantilla or the freezing of recruitment thereto.

To be sure, private respondents have convincingly adduced evidence of specific acts to substantiate their claim
of impending injury and not merely allegations of facts and conclusions of law, but factual evidence of a clear
and unmistakable right of being displaced or dismissed by the planned reorganization. These allegations are
substantial enough to prove the right in esse. At best, the anxiety of being dismissed or displaced is not
premature, speculative and purely anticipatory, but based on real fear which shows a threatened or direct
injury[,] it appearing that the reorganization of the OWWA is already slowly being put into motion.

Apropos, having successfully established a direct and personal injury as a consequence of the new
reorganization[al] structure, it was only proper for the court a quo to grant the writ of preliminary injunction to
restrain, for the meantime, the implementation of the reorganization to prevent injury on respondents until
after the main case is heard and decided. Truly, as correctly observed by the trial court, private respondents
enjoy a right that is protected both by the Constitution and statutes. A person’s job is not only his property but
55
his very life. The constitutional protection of the right to life is not just a protection of the right to be alive or to
the security of one’s limb against physical harm. The right to life is also a right to a good life (Bernas, The
Constitution of the Republic of the Philippines, A Commentary, Volume I, First Edition, 1997) which includes the
right to earn a living or the right to a livelihood. A fortiori, the requisites for preliminary injunction to issue have
adequately been established: the existence of a clear and unmistakable right, and the acts violative of said right.

While the evidence to be submitted at the hearing on the motion for preliminary injunction need not be
conclusive and complete, We find that private respondents have adequately shown that they are in clear danger
of being irreparably injured unless the status quo is observed, in the meantime x x x.25

The appellate court was likewise of the opinion that the substantial issues raised before the court a quo anent
the validity of the organizational structure of the OWWA; the alleged lack of authority of the DBM to approve
the same including the alleged violation by the OWWA of relevant statutes; the lack of consultation prior to the
reorganization; and the supposed illegal constitution of the Placement Committee, are matters which the RTC is
behooved to resolve. In finding no error on the part of the RTC, the Court of Appeals said that without an
injunctive relief, any decision that may be rendered in the suit would already be ineffective, moot and
academic.26

Aggrieved, petitioner through the OSG,27 filed the instant petition.

In the instant petition, petitioner prays that the appealed Decision of the Court of Appeals be reversed and set
aside, and that Civil Case No. 04-0415-CFM before the RTC be dismissed for lack of merit.28

The Issue

The issue to be resolved is, whether the court a quo gravely abused its discretion in issuing the writ of
preliminary injunction. Stated otherwise, the issue is whether the Court of Appeals erred in affirming the RTC in
its grant of the assailed writ of preliminary injunction. Clearly, we are thus confined to the matter of the
propriety of the issuance of the writ of preliminary injunction by the trial court, and not to the merits of the case
which is still pending before the latter.

The Case for the Petitioner

First, in support of their petition, petitioner posits that the OWWA has already implemented the new
organizational structure as the advertisement, recruitment, and placement of OWWA employees have been
accomplished; and in the process, none of the respondents have been dismissed. Moreover, the act sought to
be prevented has long been consummated; hence, the remedy of injunction should no longer be entertained.

Second, petitioner adduces the proposition that the reorganization of the OWWA does not require an
amendatory law contrary to the holding of the court a quo. The OSG maintains that there was no previous
OWWA structure in the first place; and neither did Presidential Decree No. 169429 nor Presidential Decree No.
1809,30 provide for an organizational structure for the OWWA.

Third, petitioner disputes the existence of the rights of respondents to be protected by the preliminary
injunctive writ sought on the ground that the latter did not shown any legal right which needs the protection
thereof, nor did they show that any such right was violated to warrant the issuance of a preliminary injunction.
Petitioner asserts that respondents did not claim that they are the consultants or casual or contractual workers
who would allegedly be displaced; and neither did respondents show that there is only one right or cause of
action pertaining to all of them. Neither was there a violation of their rights because respondents have all been
given appointments in the new OWWA organizational structure.31

Finally, on respondents’ allegation that the reorganization of the OWWA will reassign permanent employees to
its regional offices, and consequently, displace them and their families, petitioner counters that an employee
may be reassigned from one organizational unit to another in the same agency, provided that such reassignment
shall not involve a reduction in rank, status or salary.32

The Case for the Respondents

56
Respondents argue that the petitioner railroaded and raced against time to implement the new OWWA
organizational structure. They claim that in the process, petitioner exhibited manifest bad faith and injustice.
What existed was a hasty reorganization and restructuring of the OWWA without adequate study and
consultation, which was thereafter submitted and immediately approved by the Board of Trustees. They insist
that the creation of an organizational structure of the OWWA would require a presidential fiat or a legislative
enactment pursuant to Republic Act No. 6656.33

Further, respondents maintain that their right in esse was established during the proceedings for the issuance of
the writ of preliminary injunction, as their complaint sufficiently showed the rights and interests of the parties.
They alleged that at no stage in the proceedings did petitioner question such rights. In fact, petitioner made a
waiver in open court to the effect that it was not presenting testimonial evidence. According to the respondents,
such an act was constitutive of an admission by petitioner of the existence of a right in esse in their favor.

The Ruling of the Court

Section 1, Rule 58 of the Rules of Court, defines a preliminary injunction as an order granted at any stage of an
action prior to the judgment or final order requiring a party or a court, an agency or a person to refrain from a
particular act or acts.34 Section 3, Rule 58 of the Rules of Court, enumerates the grounds for the issuance of a
writ of preliminary injunction as follows:

Sec. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted when it is
established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment ineffectual.

A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final
order.35 It persists until it is dissolved or until the termination of the action without the court issuing a final
injunction.36 To be entitled to an injunctive writ, petitioner must show, inter alia, the existence of a clear and
unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage.37 A writ of
preliminary injunction is generally based solely on initial and incomplete evidence.38 The evidence submitted
during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a
"sampling" is needed to give the trial court an idea of the justification for the preliminary injunction pending the
decision of the case on the merits.39 In fact, the evidence required to justify the issuance of a writ of preliminary
injunction in the hearing thereon need not be conclusive or complete.40 It must also be stressed that it does not
necessarily proceed that when a writ of preliminary injunction is issued, a final injunction will follow.41

Moreover, the grant or denial of a preliminary injunction is discretionary on the part of the trial court.42 Thus,
the rule is, the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of
the trial court, unless the court commits grave abuse of discretion.43 In Toyota Motor Phils. Corporation Workers’
Association (TMPCWA) v. Court of Appeals,44 this Court pronounced that grave abuse of discretion in the
issuance of writs of preliminary injunction implies a capricious and whimsical exercise of judgment that is
equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of
passion, prejudice or personal aversion amounting to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined, or to act at all in contemplation of law. It is clear that the assessment and evaluation
of evidence in the issuance of the writ of preliminary injunction involve findings of facts ordinarily left to the trial
court for its conclusive determination.45 The duty of the court taking cognizance of a prayer for a writ of
preliminary injunction is to determine whether the requisites necessary for the grant of an injunction are
present in the case before it.46 However, as earlier stated, if the court commits grave abuse of its discretion in
the issuance of the writ of preliminary injunction, such that the act amounts to excess or lack of jurisdiction, the
same may be nullified through a writ of certiorari or prohibition.
57
More significantly, a preliminary injunction is merely a provisional remedy, an adjunct to the main case subject
to the latter’s outcome, the sole objective of which is to preserve the status quo until the trial court hears fully
the merits of the case.47 The status quo should be that existing at the time of the filing of the case.48 The status
quo usually preserved by a preliminary injunction is the last actual, peaceable and uncontested status which
preceded the actual controversy.49 The status quo ante litem is, ineluctably, the state of affairs which is existing
at the time of the filing of the case. Indubitably, the trial court must not make use of its injunctive power to alter
such status.50

We hold that the RTC, in granting the assailed writ of preliminary injunction, committed grave abuse of
discretion amounting to lack of jurisdiction.

In the case at bar, the RTC did not maintain the status quo when it issued the writ of preliminary injunction.
Rather, it effectively restored the situation prior to the status quo, in effect, disposing the issue of the main case
without trial on the merits. What was preserved by the RTC was the state of affairs before the issuance of
Resolution No. 001, which approved the structure of the OWWA, and the subsequent administrative orders
pursuant to its passing. The RTC forgot that what is imperative in preliminary injunction cases is that the writ can
not be effectuated to establish new relations between the parties. Hence, we find herein an application of the
lessons that can be learned from Rualo v. Pitargue.51 In Rualo, this Court determined, among others, the
propriety of the writ of preliminary injunction which was issued restraining the Bureau of Internal Revenue from
further implementing its reorganization, and enforcing the orders52 pursuant thereto. This Court, in lifting the
therein assailed writ, underscored the legal proscription which states that courts should avoid issuing a writ of
preliminary injunction which would in effect dispose of the main case without trial.53 According to the Court in
Rualo, the trial court, in issuing the writ of preliminary injunction, did not maintain the status quo but restored
the situation before the status quo, that is, the situation before the issuance of the Revenue Travel Assignment
Orders.54 The Court further declared that what existed was an acceptance of therein respondents’ premise of
the illegality of the reorganization, and a prejudgment on the constitutionality of the assailed issuances.55 As in
Rualo, we find herein a similar case where the RTC admitted hook, line and sinker the mere allegations of
respondents that the reorganization as instituted was unlawful without the benefit of a full trial on the merits. It
also did not maintain the status quo but restored the landscape before the implementation of OWWA’s
reorganization. In thus issuing the writ of preliminary injunction, the substantive issues of the main case were
resolved by the trial court. What was done by the RTC was quite simply a disposition of the case without trial.
This is an error in law and an exercise of grave abuse of discretion. Furthermore, we find that the RTC similarly
prejudged the validity of the issuances released by the OWWA Board of Trustees, as well as the other
governmental bodies (i.e., DBM, DOLE), which approved the organizational structure and staffing pattern of the
OWWA. In Rualo, this Court asserted the presumption of regularity of the therein assailed government issuances.
In this case, we accentuate the same presumption.

Ineluctably, this Court is compelled to rule against the propriety of the grant of the assailed ancillary writ of
preliminary injunction on the material ground that the records do not support respondents’ entitlement thereto.

We do not find attendant the requisites for the issuance of a preliminary injunctive writ. This Court is not
convinced that respondents were able to show a clear and unmistakable legal right to warrant their entitlement
to the writ. A mere blanket allegation that they are all officers and employees of the OWWA without a showing
of how they stand to be directly injured by the implementation of its questioned organizational structure does
not suffice to prove a right in esse. As was aptly raised by the petitioner, respondents did not show that they
were dismissed due to the challenged reorganization. There was no showing that they are the employees who
are in grave danger of being displaced. Respondents were similarly wanting in proving that they are the
consultants and contractual and casual employees, who will allegedly suffer by reason of the re-organization.
This Court is consistently adamant in demanding that a clear and positive right especially calling for judicial
protection must be established.56 As has been reiterated, injunction is not a remedy to protect or enforce
contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or
to restrain an action which did not give rise to a cause of action.57 In contrast, the rights of OWWA are accorded
to it by law. The importance of the reorganization within the body and the benefits that will accrue thereto were
accentuated by the Board of Trustees in its Resolution No. 001. The aforesaid resolution declared, inter alia, that
the structuring of the OWWA will stabilize the internal organization and promote careerism among the
employees, as well as ensure a more efficient and effective delivery of programs and services to member-
OFWs’.58 However, we go further to opine that even the question of whether the OWWA requires an
amendatory law for its reorganization is one that should be best threshed out in the disposition of the merits of

58
the case. Indeed, the question as to the validity of the OWWA reorganization remains the subject in the main
case pending before the trial court. Its annulment is outside the realm of the instant Petition.

Assuming arguendo that respondents stand to be in danger of being transferred due to the reorganization,
under the law, any employee who questions the validity of his transfer should appeal to the CSC.59 Even then,
administrative remedies must be exhausted before resort to the regular courts can be had.

Finally, as aptly pointed out by the OSG, the acts sought to be prohibited had been accomplished. Injunction will
not lie where the acts sought to be enjoined have already been accomplished or consummated.60 The wheels of
OWWA’s reorganization started to run upon the approval by the Board of Trustees of its Resolution No. 001
entitled, "Approving the Structure of the Overseas Workers Welfare Administration." Subsequently, a series of
issuances which approved the organizational structure and staffing pattern of the agency was issued by the DBM,
the OWWA Administrator, and by the DOLE. Resolution No. 001 has already been implemented. Case law has it
that a writ of preliminary injunction will not issue if the act sought to be enjoined is a fait accompli.1avvphi1

A writ of preliminary injunction being an extraordinary event,61 one deemed as a strong arm of equity or a
transcendent remedy,62 it must be granted only in the face of actual and existing substantial rights. In the
absence of the same, and where facts are shown to be wanting in bringing the matter within the conditions for
its issuance, the ancillary writ must be struck down for having been rendered in grave abuse of discretion.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals, dated 22 September 2005 in CA-
G.R. SP No. 87702, is REVERSED and SET ASIDE. The Writ of Preliminary Injunction issued by the Regional Trial
Court pursuant to its Order, dated 30 September 2004, in Civil Case No. 04-0415-CFM is LIFTED and SET ASIDE.

SO ORDERED.

MINITA V. CHICO-NAZARIO

G.R. No. 139767 August 5, 2003

FELIPE SY DUNGOG, Petitioner,

vs.
COURT OF APPEALS, JUAN A. GATO, in his official capacity as RTC Sheriff, Lapu-Lapu City and CARLOS
GOTHONG LINES, INC., Respondents.

DECISION

CARPIO, J.:

The Case

This petition for review on certiorari1 assails the Decision2 dated 14 May 1999 of the Court of Appeals in CA-G.R.
SP No. 48788, as well as the Resolution dated 24 August 1999 denying the motion for reconsideration. The Court
of Appeals dismissed outright the petition for certiorari, prohibition and mandamus filed by petitioner Felipe Sy
Dungog ("Felipe") against respondents. The petition questioned the propriety of the Order3 dated 14 August
1998 ("Order") and the writ of preliminary injunction ("Writ") dated 18 August 1998 issued by the Regional Trial
Court of Cebu, Lapu-Lapu City, Branch 53 ("trial court") in Civil Case No. 5020-L.

The Antecedents

Tracing the roots of this controversy, Felipe alleges4 that he and his sister, Fortune, agreed to sell their lots in
Canjulao, Cebu, through their parents, Juan L. Dungog and Emma S. Dungog ("Spouses Dungog"). The Spouses
Dungog convinced other lot owners in Canjulao to sell their lots either directly to them or to Felipe and his sister.
On 31 December 1996, the Spouses Dungog entered into a Contract to Sell ("Contract") with private respondent
Carlos A. Gothong Lines, Inc. ("Gothong Lines") covering several lots in Canjulao. The lots which the Spouses
Dungog contracted to sell to Gothong Lines belonged to various individuals as listed in the Contract’s Annex
"A"5 which specified the corresponding approximate land areas of each lot. Among these was Lot 1031-F
registered in the name of Felipe and covered by Transfer Certificate of Title No. 10359 of the Register of Deeds
of Lapu-Lapu City. Under the Contract, Gothong Lines was to pay on installment basis the purchase price of
59
₱65,520,475.00 computed at ₱500 per square meter. Thus, Gothong Lines paid a down payment of
₱12,000,000.00. For the balance of ₱53,520,475.00,6 Gothong Lines issued 15 postdated checks of
₱3,568,031.00 each beginning on 31 January 1997 as payment for 15 equal monthly installments. Gothong Lines
made good all the checks, except the last 4 checks dated 30 December 1997, 31 January 1998, 28 February 1998
and 30 March 1998, which bounced due to Gothong Lines’ stop payment order.

Felipe alleges further that as of 31 December 1997, his parents had delivered 66 parcels of land to Gothong
Lines with a total area of 101,104.20 square meters valued at ₱50,552,100.00. Felipe also states that as of the
same date, Gothong Lines had paid ₱51,248,345.00 in encashed checks plus the initial down payment of
₱12,000,000.00. This left an overpayment of ₱696,245.00 in the hands of the Spouses Dungog. Felipe claims,
however, that despite Gothong Lines’ stop payment order of its last four checks, the Spouses Dungog still
delivered in February 1998, 8 parcels of land with a total land area of 11,590 square meters valued at
₱5,795,000.00. Among those delivered was Lot 1031-F. The Spouses Dungog demanded payment for these 8
parcels of land, but Gothong Lines refused to pay. The Spouses Dungog became frustrated with Gothong Lines’
complete silence on their demands for payment, as well as the earlier stop payment order on the last 4 checks.
Thus, the Spouses Dungog informed Gothong Lines in a letter dated 18 June 1998 that they would no longer
push through with their offer to sell the remaining lots.

On 6 July 1998, Gothong Lines filed a complaint for Specific Performance, Damages with Writ of Preliminary
Mandatory Injunction against the Spouses Dungog to enforce the Contract. Gothong Lines faulted the Spouses
Dungog for non-delivery of some of the parcels of land in breach of the Contract. Gothong Lines alleged that
while the total amount of ₱51,248,348.26 paid to the Spouses Dungog corresponds to 102,496.69 square meters,
the Spouses Dungog actually delivered to Gothong Lines only 100,613.69 square meters. Gothong Lines claimed
that it paid an excess of ₱941,848.007 corresponding to 1,883 square meters. To protect its interest, Gothong
Lines ordered the bank to stop payment on the remaining postdated checks. Gothong Lines asked the trial court
to issue a writ of preliminary injunction to restrain the Spouses Dungog from canceling the Contract and from
preventing its representatives and vehicles from passing through the properties subject of the Contract.
Gothong Lines offered to post a bond of ₱500,000.00 and consigned the ₱4,048,950.00 representing the balance
of the purchase price.

Traversing Gothong Lines’ allegations, the Spouses Dungog contended that it was Gothong Lines which breached
the Contract by stopping payment on the last 4 checks. The Spouses Dungog also charged Gothong Lines with
competing with them in acquiring one of the lots subject of the Contract. They further countered that Gothong
Lines violated a verbal agreement between them not to develop the roads until after 30 June 1998, the last day
for the Spouses Dungog to deliver and turn over the lots. The Spouses Dungog opposed Gothong Lines’
application for a writ of preliminary injunction on the ground that Gothong Lines violated the terms of the
Contract and the other contemporaneous agreements between them.

Based on the pleadings and affidavits presented by the parties, the trial court granted on 14 August 1998
Gothong Lines’ prayer for injunction. The dispositive portion of the Order reads:

WHEREFORE, in the light of the foregoing considerations, plaintiff’s application for the issuance of a writ of
preliminary injunction is GRANTED. Consequently, after the filing and approval of a bond in the amount of Three
Hundred Thousand Pesos (₱300,000.00), let a writ of preliminary injunction issue, enjoining defendants, their
representatives, or anyone acting in their behalf; (a) from canceling the contract to sell dated December 31,
1996; and (b) from disallowing or preventing the entry and exit of plaintiff’s vehicles and those of its
representatives through Lot 1031-F and other undelivered lots concerned.8

Based on this Order, the trial court issued the Writ on 18 August 1998 which the sheriff served on the same date.

Felipe assailed the Order and the Writ in a special civil action for certiorari before the Court of Appeals. The
appellate court, however, dismissed outright Felipe’s petition. The appellate court also denied on 24 August
1999 Felipe’s motion for reconsideration. Thus, Felipe filed the instant petition questioning the propriety of the
writ of preliminary injunction issued by the trial court.

The Rulings of the Trial Court and the Court of Appeals

In granting the Writ, the trial court stated -

60
There is no dispute that plaintiff has already paid defendants the amount of ₱51,248,348.26 out of the total
consideration of ₱65,520,475.00. Plaintiff has also deposited with the Office of the Clerk of Court the amount of
₱4,048,950.00, leaving a balance of ₱10,223,176.74.

Plaintiff had already started the road development in the properties delivered to it. In other words, it has
already spent much to develop the properties which form the bulk of the parcels of land subject of the contract.

Ingress to and egress from plaintiff’s development activities lie on an undelivered parcel of land. Through it pass
the vehicles, equipment, supplies and materials, as well as the workers, required by the project. The closure of
this passage has apparently stymied the development in the area.

About 78% of the properties are in the hands of plaintiff. Access to these properties is under the control of
defendants, the entrance being located in Lot 1031-F, one of the remaining undelivered lots. Since the entrance
gate has been closed by defendants, it strikes the mind of the court that Lot 1031-F and the other undelivered
lots have now, in a manner of speaking, imprisoned the delivered properties.

It is not therefore hard to see that the closure of the entrance gate has worked to the prejudice of plaintiff and
will certainly jeopardize the development work in the delivered properties. Elementary justice and the spirit of
fair play thus dictate that the status quo ante, which is the situation before the closure when plaintiff’s
representatives were able to pass through Lot 1031-F, be restored.

Insofar as defendants threatened cancellation of the contract to sell, the Court has seen that out of the total
area of 131,040.95 square meters covered by the contract, plaintiff had already paid for 102,496.69 square
meters, and that it had deposited ₱4,048,950.00 to pay for some of the undelivered parcels. It is but fair that
such a move be, in the meantime, disallowed.9

In dismissing outright Felipe’s petition for certiorari, prohibition and mandamus assailing the trial court’s Order
and the Writ, the Court of Appeals stated -

The petition should be dismissed outright, the petitioner has no standing here. He may be the owner of the lot
in question but he is not a party litigant in the case a quo. His being a son of defendant spouse in the lower court
does not give him the capacity to sue. Of course, he is not without legal remedy to protect his interest.10

The Issue

In his Memorandum, Felipe narrows the inquiry to -

MAY PETITIONER BE DEPRIVED OF HIS PROPERTY WITHOUT DUE PROCESS OF LAW AND PAYMENT OF JUST
COMPENSATION FOR THE BENEFIT OF PRIVATE RESPONDENT?11

Felipe laments that the dismissal of his petition resulted in the outright confiscation of his property for the
private use of Gothong Lines, without due process of law and just compensation. Felipe claims that in dismissing
his petition, the Court of Appeals effectively sustained the trial court’s Order divesting him of his rights over Lot
1031-F.

The question of whether Gothong Lines may demand the turn over of the parcels of land listed in Annex "A" of
the Contract is not our concern here. The issue in this petition is whether the Court of Appeals erred in
dismissing Felipe’s petition.

The Court’s Ruling

The petition is bereft of merit.

Dismissal by the Court of Appeals of

Felipe’s petition was proper.

Felipe committed a procedural blunder in filing a special civil action for certiorari to assail the Order and the Writ.
Felipe was not a party in Civil Case No. 5020-L. He could not, therefore, assail the writ of preliminary injunction

61
through a petition for certiorari before the Court of Appeals. As correctly pointed out by the Court of Appeals,
Felipe does not possess the requisite standing to file such suit.

In Ciudad Real v. Court of Appeals,12 this Court ruled that there is grave abuse of discretion if the appellate court
recognizes the standing of a party, not a litigant in the trial court proceedings, to join a petition for certiorari.
The Court explained:

Worse was the ruling of the respondent appellate court sanctioning the standing of Magdiwang Realty
Corporation to join said petition for certiorari. As the records show, Magdiwang filed a Motion for Intervention
on July 18, 1989 invoking its alleged Memorandum of Agreement with Doña Juana Development Corporation
dated July 15, 1982. The trial court, however, denied this motion and Magdiwang did not question the ruling in
the appellate court. The ruling thus, became final. After about two (2) years or on August 27, 1991, Magdiwang
again filed a Motion to Substitute and/or Join as Party/Plaintiff relying on the same Memorandum of Agreement.
The trial court similarly denied the motion, and the denial also attained finality as Magdiwang did not further
challenge its correctness. Despite the finality of the order denying Magdiwang’s intervention way back in 1989,
the respondent court in its Decision of August 20, 1992 recognized the standing of Magdiwang to assail in the
appellate court the Compromise Agreement. Again, this ruling constitutes grave abuse of discretion for
Magdiwang was not a party in interest in Civil Case No. Q-35393.

The wisdom of this ruling is all too apparent. If a person not a party to an action is allowed to file a certiorari
petition assailing an interlocutory order of the trial court, such as an injunctive order and writ, proceedings will
become unnecessarily complicated, expensive and interminable. Eventually, this will defeat the policy of our
remedial laws to secure party-litigants a speedy and inexpensive disposition of every action.

Felipe could have simply intervened13 in the trial court proceedings to enable him to protect or preserve a right
or interest which may be affected by such proceedings. A motion to intervene may be filed at any time before
rendition of judgment by the trial court.14 The purpose of intervention is not to obstruct or unnecessarily delay
the placid operation of the machinery of trial. The purpose is merely to afford one, not an original party but
possessing a certain right or interest in the pending case, the opportunity to appear and be joined so he could
assert or protect such right or interest.15 Indeed, Felipe could have easily joined his parents as defendants in
resisting the claim of Gothong Lines.

A resolution affirming the Court of Appeals’ outright dismissal of Felipe’s petition for these reasons would have
been sufficient. Nevertheless, we deem it best to address the propriety of the issuance by the trial court of the
writ of preliminary injunction before writing finis to this petition.

Issuance of writ of preliminary injunction

was also proper.

Preliminary injunction is an order granted at any stage of an action, prior to the judgment or final order,
requiring a party, court, agency or person to perform or to refrain from performing a particular act or acts. 16 A
preliminary injunction, as the term itself suggests, is merely temporary, subject to the final disposition of the
principal action. Its purpose is to preserve the status quo of the matter subject of the action to protect the rights
of the plaintiff during the pendency of the suit. Otherwise, if no preliminary injunction is issued, the defendant
may, before final judgment, do the act which the plaintiff is seeking the court to restrain. This will make
ineffectual the final judgment that the court may afterwards render in granting relief to the plaintiff.17

The issuance of a writ of preliminary injunction rests entirely within the discretion of the court and is generally
not interfered with except in cases of manifest abuse.18 The assessment and evaluation of evidence in the
issuance of the writ of preliminary injunction involve findings of facts ordinarily left to the trial court for its
conclusive determination.19

We find that there was adequate justification for the issuance of the assailed writ of preliminary injunction.
There is no dispute that the Spouses Dungog entered into the Contract with Gothong Lines which included Lot
1031-F owned by Felipe. Felipe admitted that he authorized his parents to sell this lot. He also admitted that his
parents had delivered to Gothong Lines Lot 1031-F along with other parcels of land. However, the Spouses
Dungog threatened to cancel the Contract and to deny Gothong Lines passage through Lot 1031-F allegedly due
to non-payment of the subsequent installments.1âwphi1

62
In applying for the Writ, Gothong Lines sought to restrain in the meantime the Spouses Dungog from canceling
the Contract in order not to render the judgment ineffectual. Gothong Lines also sought to preserve its right of
way through Lot 1031-F to maintain access to the other parcels of land previously delivered by the Spouses
Dungog to Gothong Lines.

A careful reading of the trial court’s assailed Order discloses that the Writ enjoined the cancelation of the
Contract on the basis of Gothong Lines’ substantial performance of the Contract. The trial court also enjoined
the closure of the entrance gate in Lot 1031-F to preserve the status quo ante.

Under Section 3, Rule 5820 of the 1997 Rules on Civil Procedure, a preliminary injunction is proper when the
plaintiff appears entitled to the relief demanded in the complaint. The trial court found that Gothong Lines had
already paid ₱51,248,348.26 out of the total consideration of ₱65,520,475.00. Gothong Lines also consigned
with the court an additional ₱4,048,950.00 leaving a balance of ₱10,223,176.74. The trial court likewise found
that 78% of the properties were already in the possession of Gothong Lines. Moreover, the status quo, which is
the last actual peaceable uncontested status that preceded the controversy,21 was that Gothong Lines had
access to the lots subject of the Contract through the entrance gate in Lot 1031-F. That is why Gothong Lines
commenced construction of its pier and the development of the roads within the parcels of land covered by the
Contract. The issuance of the Writ would no doubt preserve the status quo between the Spouses Dungog and
Gothong Lines that existed prior to the filing of the case. We agree with the trial court that the status quo should
be maintained until the issue on the parties’ respective rights and obligations under the Contract is determined
after the trial.

Clearly, in issuing the Writ, the trial court did not forthwith deprive Felipe of his ownership of Lot 1031-F.
Neither did the Writ have the effect of ousting Felipe from possession of the lot. The trial court did not rule on
the merits of the case so as to amount to a deprivation or confiscation of property without due process of law or
just compensation. There was no adjudication on the rightful possession or ownership of the contested parcels
of land subject of the Contract. The trial court issued the injunction only as a preventive remedy to protect
during the pendency of the action Gothong Lines’ right to a final and effective relief.

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ., concur.

G.R. No. 131719 May 25, 2004

THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF LABOR AND EMPLOYMENT, AND
THE SECRETARY OF FOREIGN AFFAIRS, OWWA PUNO, ADMINISTRATOR, and POEA
ADMINISTRATOR, petitioners,
vs.
THE HON. COURT OF APPEALS and ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER (ARCO-PHIL.), INC.,
representing its members: Worldcare Services Internationale, Inc., Steadfast
International Recruitment Corporation, Dragon International Manpower Services Corporation, Verdant
Manpower Mobilization Corporation, Brent Overseas Personnel, Inc., ARL Manpower Services, Inc., Dahlzhen
International Services, Inc., Interworld Placement Center, Inc., Lakas Tao Contract Services, Ltd. Co., and SSC
Multiservices, respondents.

DECISION

CALLEJO, SR., J.:

In this petition for review on certiorari, the Executive Secretary of the President of the Philippines, the Secretary
of Justice, the Secretary of Foreign Affairs, the Secretary of Labor and Employment, the POEA Administrator and
the OWWA Administrator, through the Office of the Solicitor General, assail the Decision1 of the Court of
Appeals in CA-G.R. SP No. 38815 affirming the Order2 of the Regional Trial Court of Quezon City dated August 21,
1995 in Civil Case No. Q-95-24401, granting the plea of the petitioners therein for a writ of preliminary
injunction and of the writ of preliminary injunction issued by the trial court on August 24, 1995.

63
The Antecedents

Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, took effect
on July 15, 1995. The Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipino
Act of 1995 was, thereafter, published in the April 7, 1996 issue of the Manila Bulletin. However, even before
the law took effect, the Asian Recruitment Council Philippine Chapter, Inc. (ARCO-Phil.) filed, on July 17, 1995, a
petition for declaratory relief under Rule 63 of the Rules of Court with the Regional Trial Court of Quezon City to
declare as unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j), (l) and (m), Section 7,
paragraphs (a) and (b), and Sections 9 and 10 of the law, with a plea for the issuance of a temporary restraining
order and/or writ of preliminary injunction enjoining the respondents therein from enforcing the assailed
provisions of the law.

In a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No. 8042 was self-executory and that no
implementing rules were needed. It prayed that the court issue a temporary restraining order to enjoin the
enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment, Section 7 on penalties for illegal
recruitment, and Section 9 on venue of criminal actions for illegal recruitments, viz:

Viewed in the light of the foregoing discussions, there appears to be urgent an imperative need for this
Honorable Court to maintain the status quo by enjoining the implementation or effectivity of the
questioned provisions of RA 8042, by way of a restraining order otherwise, the member recruitment
agencies of the petitioner will suffer grave or irreparable damage or injury. With the effectivity of RA
8042, a great majority of the duly licensed recruitment agencies have stopped or suspended their
operations for fear of being prosecuted under the provisions of a law that are unjust and
unconstitutional. This Honorable Court may take judicial notice of the fact that processing of
deployment papers of overseas workers for the past weeks have come to a standstill at the POEA and
this has affected thousands of workers everyday just because of the enactment of RA 8042. Indeed, this
has far reaching effects not only to survival of the overseas manpower supply industry and the active
participating recruitment agencies, the country’s economy which has survived mainly due to the dollar
remittances of the overseas workers but more importantly, to the poor and the needy who are in dire
need of income-generating jobs which can only be obtained from abroad. The loss or injury that the
recruitment agencies will suffer will then be immeasurable and irreparable. As of now, even foreign
employers have already reduced their manpower requirements from the Philippines due to their
knowledge that RA 8042 prejudiced and adversely affected the local recruitment agencies.3

On August 1, 1995, the trial court issued a temporary restraining order effective for a period of only twenty (20)
days therefrom.

After the petitioners filed their comment on the petition, the ARCO-Phil. filed an amended petition, the
amendments consisting in the inclusion in the caption thereof eleven (11) other corporations which it alleged
were its members and which it represented in the suit, and a plea for a temporary restraining order enjoining
the respondents from enforcing Section 6 subsection (i), Section 6 subsection (k) and paragraphs 15 and 16
thereof, Section 8, Section 10, paragraphs 1 and 2, and Sections 11 and 40 of Rep. Act No. 8042.

The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6 subsection (a) to (m), Section 7(a) to (b), and
Section 10 paragraphs (1) and (2), quoted as follows:

(g) THE STATE RECOGNIZES THAT THE ULTIMATE PROTECTION TO ALL MIGRANT WORKERS IS THE
POSSESSION OF SKILLS. PURSUANT TO THIS AND AS SOON AS PRACTICABLE, THE GOVERNMENT SHALL
DEPLOY AND/OR ALLOW THE DEPLOYMENT ONLY OF SKILLED FILIPINO WORKERS.4

Sec. 2 subsection (i, 2nd par.)

Nonetheless, the deployment of Filipino overseas workers, whether land-based or sea-based, by local
service contractors and manning agents employing them shall be encourages (sic). Appropriate
incentives may be extended to them.

II. ILLEGAL RECRUITMENT

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SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for profit or not, when undertaken
by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-
licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall, likewise, include the following acts, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a
worker pay any amount greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment
or employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;

(d) To induce or attempt to induce a worker already employed to quit his employment in order
to offer him another unless the transfer is designed to liberate a worker from oppressive terms
and conditions of employment;

(e) To influence or attempt to influence any person or entity not to employ any worker who has
not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or
by his duly authorized representative;

(h) To fail to submit reports on the status of employment, placement vacancies, remittance of
foreign exchange earnings, separation from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof by
the parties up to and including the period of the expiration of the same without the approval of
the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to become an officer or member
of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly
in the management of a travel agency;

(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor Code and its
implementing rules and regulations;

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker’s fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic sabotage.

65
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall be
liable.

SEC. 7. Penalties. –

(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less
than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than two
hundred thousand pesos (₱200,000.00) nor more than five hundred thousand pesos (₱500,000.00).

(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(₱500,000.00) nor more than one million pesos (₱1,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less
than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.

Sec. 8.

Prohibition on Officials and Employees. – It shall be unlawful for any official or employee of the
Department of Labor and Employment, the Philippine Overseas Employment Administration (POEA), or
the Overseas Workers Welfare Administration (OWWA), or the Department of Foreign Affairs, or other
government agencies involved in the implementation of this Act, or their relatives within the fourth civil
degree of consanguinity or affinity, to engage, directly or indirectly, in the business of recruiting migrant
workers as defined in this Act. The penalties provided in the immediate preceding paragraph shall be
imposed upon them. (underscoring supplied)

Sec. 10, pars. 1 & 2.

Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims
or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical
being, the corporate officers and directors and partners as the case may be, shall themselves be jointly
and solidarily liable with the corporation or partnership for the aforesaid claims and damages.

SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. – The preliminary investigations
of cases under this Act shall be terminated within a period of thirty (30) calendar days from the date of
their filing. Where the preliminary investigation is conducted by a prosecution officer and a prima facie
case is established, the corresponding information shall be filed in court within twenty-four (24) hours
from the termination of the investigation. If the preliminary investigation is conducted by a judge and a

66
 prima facie case is found to exist, the corresponding information shall be filed by the proper prosecution
officer within forty-eight (48) hours from the date of receipt of the records of the case.

The respondent averred that the aforequoted provisions of Rep. Act No. 8042 violate Section 1, Article III of the
Constitution.5 According to the respondent, Section 6(g) and (i) discriminated against unskilled workers and their
families and, as such, violated the equal protection clause, as well as Article II, Section 126 and Article XV,
Sections 17 and 3(3) of the Constitution.8 As the law encouraged the deployment of skilled Filipino workers, only
overseas skilled workers are granted rights. The respondent stressed that unskilled workers also have the right
to seek employment abroad. According to the respondent, the right of unskilled workers to due process is
violated because they are prevented from finding employment and earning a living abroad. It cannot be argued
that skilled workers are immune from abuses by employers, while unskilled workers are merely prone to such
abuses. It was pointed out that both skilled and unskilled workers are subjected to abuses by foreign employers.
Furthermore, the prohibition of the deployment of unskilled workers abroad would only encourage fly-by-night
illegal recruiters.

According to the respondent, the grant of incentives to service contractors and manning agencies to the
exclusion of all other licensed and authorized recruiters is an invalid classification. Licensed and authorized
recruiters are thus deprived of their right to property and due process and to the "equality of the person." It is
understandable for the law to prohibit illegal recruiters, but to discriminate against licensed and registered
recruiters is unconstitutional.

The respondent, likewise, alleged that Section 6, subsections (a) to (m) is unconstitutional because licensed and
authorized recruitment agencies are placed on equal footing with illegal recruiters. It contended that while the
Labor Code distinguished between recruiters who are holders of licenses and non-holders thereof in the
imposition of penalties, Rep. Act No. 8042 does not make any distinction. The penalties in Section 7(a) and (b)
being based on an invalid classification are, therefore, repugnant to the equal protection clause, besides being
excessive; hence, such penalties are violative of Section 19(1), Article III of the Constitution.9 It was also pointed
out that the penalty for officers/officials/employees of recruitment agencies who are found guilty of economic
sabotage or large-scale illegal recruitment under Rep. Act No. 8042 is life imprisonment. Since recruitment
agencies usually operate with a manpower of more than three persons, such agencies are forced to shut down,
lest their officers and/or employees be charged with large scale illegal recruitment or economic sabotage and
sentenced to life imprisonment. Thus, the penalty imposed by law, being disproportionate to the prohibited acts,
discourages the business of licensed and registered recruitment agencies.

The respondent also posited that Section 6(m) and paragraphs (15) and (16), Sections 8, 9 and 10, paragraph 2
of the law violate Section 22, Article III of the Constitution10 prohibiting ex-post facto laws and bills of attainder.
This is because the provisions presume that a licensed and registered recruitment agency is guilty of illegal
recruitment involving economic sabotage, upon a finding that it committed any of the prohibited acts under the
law. Furthermore, officials, employees and their relatives are presumed guilty of illegal recruitment involving
economic sabotage upon such finding that they committed any of the said prohibited acts.

The respondent further argued that the 90-day period in Section 10, paragraph (1) within which a labor arbiter
should decide a money claim is relatively short, and could deprive licensed and registered recruiters of their
right to due process. The period within which the summons and the complaint would be served on foreign
employees and, thereafter, the filing of the answer to the complaint would take more than 90 days. This would
thereby shift on local licensed and authorized recruiters the burden of proving the defense of foreign employers.
Furthermore, the respondent asserted, Section 10, paragraph 2 of the law, which provides for the joint and
several liability of the officers and employees, is a bill of attainder and a violation of the right of the said
corporate officers and employees to due process. Considering that such corporate officers and employees act
with prior approval of the board of directors of such corporation, they should not be liable, jointly and severally,
for such corporate acts.

The respondent asserted that the following provisions of the law are unconstitutional:

SEC. 9. Venue. – A criminal action arising from illegal recruitment as defined herein shall be filed with the
Regional Trial Court of the province or city where the offense was committed or where the offended
party actually resides at the time of the commission of the offense: Provided, That the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however,

67
 That the aforestated provisions shall also apply to those criminal actions that have already been filed in
court at the time of the effectivity of this Act.

SEC. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.

Sec. 40.

The departments and agencies charged with carrying out the provisions of this Act shall, within ninety
(90) days after the effectiviy of this Act, formulate the necessary rules and regulations for its effective
implementation.

According to the respondent, the said provisions violate Section 5(5), Article VIII of the Constitution11 because
they impair the power of the Supreme Court to promulgate rules of procedure.

In their answer to the petition, the petitioners alleged, inter alia, that (a) the respondent has no cause of action
for a declaratory relief; (b) the petition was premature as the rules implementing Rep. Act No. 8042 not having
been released as yet; (c) the assailed provisions do not violate any provisions of the Constitution; and, (d) the
law was approved by Congress in the exercise of the police power of the State. In opposition to the respondent’s
plea for injunctive relief, the petitioners averred that:

As earlier shown, the amended petition for declaratory relief is devoid of merit for failure of petitioner to
demonstrate convincingly that the assailed law is unconstitutional, apart from the defect and impropriety of the
petition. One who attacks a statute, alleging unconstitutionality must prove its invalidity beyond reasonable
doubt (Caleon v. Agus Development Corporation, 207 SCRA 748). All reasonable doubts should be resolved in
favor of the constitutionality of a statute (People v. Vera, 65 Phil. 56). This presumption of constitutionality is
based on the doctrine of separation of powers which enjoin upon each department a becoming respect for the
acts of the other departments (Garcia vs. Executive Secretary, 204 SCRA 516 [1991]). Necessarily, the ancillary
remedy of a temporary restraining order and/or a writ of preliminary injunction prayed for must fall. Besides, an
act of legislature approved by the executive is presumed to be within constitutional bounds (National Press Club
v. Commission on Elections, 207 SCRA 1).12

After the respective counsels of the parties were heard on oral arguments, the trial court issued on August 21,
1995, an order granting the petitioner’s plea for a writ of preliminary injunction upon a bond of ₱50,000. The
petitioner posted the requisite bond and on August 24, 1995, the trial court issued a writ of preliminary
injunction enjoining the enforcement of the following provisions of Rep. Act No. 8042 pending the termination
of the proceedings:

… Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m), and pars. 15 & 16; Section
7, subsections (a) & (b); Section 8; Section 9; Section 10; pars. 1 & 2; Section 11; and Section 40 of
Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995. …13

The petitioners filed a petition for certiorari with the Court of Appeals assailing the order and the writ of
preliminary injunction issued by the trial court on the following grounds:

1. Respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its member-agencies to
be protected by the injunctive relief and/or violation of said rights by the enforcement of the assailed
sections of R.A. 8042;

2. Respondent Judge fixed a ₱50,000 injunction bond which is grossly inadequate to answer for the
damage which petitioner-officials may sustain, should respondent ARCO-PHIL. be finally adjudged as not
being entitled thereto.14

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The petitioners asserted that the respondent is not the real party-in-interest as petitioner in the trial court. It is
inconceivable how the respondent, a non-stock and non-profit corporation, could sustain direct injury as a result
of the enforcement of the law. They argued that if, at all, any damage would result in the implementation of the
law, it is the licensed and registered recruitment agencies and/or the unskilled Filipino migrant workers
discriminated against who would sustain the said injury or damage, not the respondent. The respondent, as
petitioner in the trial court, was burdened to adduce preponderant evidence of such irreparable injury, but
failed to do so. The petitioners further insisted that the petition a quo was premature since the rules and
regulations implementing the law had yet to be promulgated when such petition was filed. Finally, the
petitioners averred that the respondent failed to establish the requisites for the issuance of a writ of preliminary
injunction against the enforcement of the law and the rules and regulations issued implementing the same.

On December 5, 1997, the appellate court came out with a four-page decision dismissing the petition and
affirming the assailed order and writ of preliminary injunction issued by the trial court. The appellate court,
likewise, denied the petitioners’ motion for reconsideration of the said decision.

The petitioners now come to this Court in a petition for review on certiorari on the following grounds:

1. Private respondent ARCO-PHIL. had utterly failed to show its clear right/s or that of its member-
agencies to be protected by the injunctive relief and/or violation of said rights by the enforcement of
the assailed sections of R.A. 8042;

2. The ₱50,000 injunction bond fixed by the court a quo and sustained by the Court of Appeals is grossly
inadequate to answer for the damage which petitioners-officials may sustain, should private respondent
ARCO-PHIL. be finally adjudged as not being entitled thereto.15

On February 16, 1998, this Court issued a temporary restraining order enjoining the respondents from enforcing
the assailed order and writ of preliminary injunction.

The Issues

The core issue in this case is whether or not the trial court committed grave abuse of its discretion amounting to
excess or lack of jurisdiction in issuing the assailed order and the writ of preliminary injunction on a bond of only
₱50,000 and whether or not the appellate court erred in affirming the trial court’s order and the writ of
preliminary injunction issued by it.

The petitioners contend that the respondent has no locus standi. It is a non-stock, non-profit organization;
hence, not the real party-in-interest as petitioner in the action. Although the respondent filed the petition in the
Regional Trial Court in behalf of licensed and registered recruitment agencies, it failed to adduce in evidence a
certified copy of its Articles of Incorporation and the resolutions of the said members authorizing it to represent
the said agencies in the proceedings. Neither is the suit of the respondent a class suit so as to vest in it a
personality to assail Rep. Act No. 8042; the respondent is service-oriented while the recruitment agencies it
purports to represent are profit-oriented. The petitioners assert that the law is presumed constitutional and, as
such, the respondent was burdened to make a case strong enough to overcome such presumption and establish
a clear right to injunctive relief.

The petitioners bewail the ₱50,000 bond fixed by the trial court for the issuance of a writ of preliminary
injunction and affirmed by the appellate court. They assert that the amount is grossly inadequate to answer for
any damages that the general public may suffer by reason of the non-enforcement of the assailed provisions of
the law. The trial court committed a grave abuse of its discretion in granting the respondent’s plea for injunctive
relief, and the appellate court erred in affirming the order and the writ of preliminary injunction issued by the
trial court.

The respondent, for its part, asserts that it has duly established its locus standi and its right to injunctive relief as
gleaned from its pleadings and the appendages thereto. Under Section 5, Rule 58 of the Rules of Court, it was
incumbent on the petitioners, as respondents in the RTC, to show cause why no injunction should issue. It avers
that the injunction bond posted by the respondent was more than adequate to answer for any injury or damage
the petitioners may suffer, if any, by reason of the writ of preliminary injunction issued by the RTC. In any event,
the assailed provisions of Rep. Act No. 8042 exposed its members to the immediate and irreparable damage of

69
being deprived of their right to a livelihood without due process, a property right protected under the
Constitution.

The respondent contends that the commendable purpose of the law to eradicate illegal recruiters should not be
done at the expense and to the prejudice of licensed and authorized recruitment agencies. The writ of
preliminary injunction was necessitated by the great number of duly licensed recruitment agencies that had
stopped or suspended their business operations for fear that their officers and employees would be indicted and
prosecuted under the assailed oppressive penal provisions of the law, and meted excessive penalties. The
respondent, likewise, urges that the Court should take judicial notice that the processing of deployment papers
of overseas workers have come to a virtual standstill at the POEA.

The Court’s Ruling

The petition is meritorious.

The Respondent Has Locus Standi

To File the Petition in the RTC in Representation of the Eleven Licensed and Registered Recruitment Agencies
Impleaded in the Amended Petition

The modern view is that an association has standing to complain of injuries to its members. This view fuses the
legal identity of an association with that of its members.16 An association has standing to file suit for its workers
despite its lack of direct interest if its members are affected by the action. An organization has standing to assert
the concerns of its constituents.17

In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on Elections,18 we held that
standing jus tertii would be recognized only if it can be shown that the party suing has some substantial relation
to the third party, or that the right of the third party would be diluted unless the party in court is allowed to
espouse the third party’s constitutional claims.

In this case, the respondent filed the petition for declaratory relief under Rule 64 of the Rules of Court for and in
behalf of its eleven (11) licensed and registered recruitment agencies which are its members, and which
approved separate resolutions expressly authorizing the respondent to file the said suit for and in their behalf.
We note that, under its Articles of Incorporation, the respondent was organized for the purposes inter alia of
promoting and supporting the growth and development of the manpower recruitment industry, both in the local
and international levels; providing, creating and exploring employment opportunities for the exclusive benefit of
its general membership; enhancing and promoting the general welfare and protection of Filipino workers; and,
to act as the representative of any individual, company, entity or association on matters related to the
manpower recruitment industry, and to perform other acts and activities necessary to accomplish the purposes
embodied therein. The respondent is, thus, the appropriate party to assert the rights of its members, because it
and its members are in every practical sense identical. The respondent asserts that the assailed provisions
violate the constitutional rights of its members and the officers and employees thereof. The respondent is but
the medium through which its individual members seek to make more effective the expression of their voices
and the redress of their grievances.19

However, the respondent has no locus standi to file the petition for and in behalf of unskilled workers. We note
that it even failed to implead any unskilled workers in its petition. Furthermore, in failing to implead, as parties-
petitioners, the eleven licensed and registered recruitment agencies it claimed to represent, the respondent
failed to comply with Section 2 of Rule 6320 of the Rules of Court. Nevertheless, since the eleven licensed and
registered recruitment agencies for which the respondent filed the suit are specifically named in the petition,
the amended petition is deemed amended to avoid multiplicity of suits.21

The Assailed Order and Writ of

Preliminary Injunction Is Mooted

By Case Law

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The respondent justified its plea for injunctive relief on the allegation in its amended petition that its members
are exposed to the immediate and irreparable danger of being deprived of their right to a livelihood and other
constitutional rights without due process, on its claim that a great number of duly licensed recruitment agencies
have stopped or suspended their operations for fear that (a) their officers and employees would be prosecuted
under the unjust and unconstitutional penal provisions of Rep. Act No. 8042 and meted equally unjust and
excessive penalties, including life imprisonment, for illegal recruitment and large scale illegal recruitment
without regard to whether the recruitment agencies involved are licensed and/or authorized; and, (b) if the
members of the respondent, which are licensed and authorized, decide to continue with their businesses, they
face the stigma and the curse of being labeled "illegal recruiters." In granting the respondent’s plea for a writ of
preliminary injunction, the trial court held, without stating the factual and legal basis therefor, that the
enforcement of Rep. Act No. 8042, pendente lite, would cause grave and irreparable injury to the respondent
until the case is decided on its merits.

We note, however, that since Rep. Act No. 8042 took effect on July 15, 1995, the Court had, in a catena of cases,
applied the penal provisions in Section 6, including paragraph (m) thereof, and the last two paragraphs therein
defining large scale illegal recruitment committed by officers and/or employees of recruitment agencies by
themselves and in connivance with private individuals, and imposed the penalties provided in Section 7 thereof,
including the penalty of life imprisonment.22 The Informations therein were filed after preliminary investigations
as provided for in Section 11 of Rep. Act No. 8042 and in venues as provided for in Section 9 of the said act.
In People v. Chowdury,23 we held that illegal recruitment is a crime of economic sabotage and must be enforced.

In People v. Diaz,24 we held that Rep. Act No. 8042 is but an amendment of the Labor Code of the Philippines and
is not an ex-post facto law because it is not applied retroactively. In JMM Promotion and Management, Inc. v.
Court of Appeals,25 the issue of the extent of the police power of the State to regulate a business, profession or
calling vis-à-vis the equal protection clause and the non-impairment clause of the Constitution were raised and
we held, thus:

A profession, trade or calling is a property right within the meaning of our constitutional guarantees.
One cannot be deprived of the right to work and the right to make a living because these rights are
property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable
wrong.

Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade
has always been upheld as a legitimate subject of a valid exercise of the police power by the state
particularly when their conduct affects either the execution of legitimate governmental functions, the
preservation of the State, the public health and welfare and public morals. According to the maxim, sic
utere tuo ut alienum non laedas, it must of course be within the legitimate range of legislative action to
define the mode and manner in which every one may so use his own property so as not to pose injury to
himself or others.

In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of
regulatory measures is certainly much wider. To pretend that licensing or accreditation requirements
violates the due process clause is to ignore the settled practice, under the mantle of the police power, of
regulating entry to the practice of various trades or professions. Professionals leaving for abroad are
required to pass rigid written and practical exams before they are deemed fit to practice their trade.
Seamen are required to take tests determining their seamanship. Locally, the Professional Regulation
Commission has begun to require previously licensed doctors and other professionals to furnish
documentary proof that they had either re-trained or had undertaken continuing education courses as a
requirement for renewal of their licenses. It is not claimed that these requirements pose an
unwarranted deprivation of a property right under the due process clause. So long as professionals and
other workers meet reasonable regulatory standards no such deprivation exists.

Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the
Constitution to support their argument that the government cannot enact the assailed regulatory
measures because they abridge the freedom to contract. In Philippine Association of Service Exporters,
Inc. vs. Drilon, we held that "[t]he non-impairment clause of the Constitution … must yield to the loftier
purposes targeted by the government." Equally important, into every contract is read provisions of
existing law, and always, a reservation of the police power for so long as the agreement deals with a
subject impressed with the public welfare.
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 A last point. Petitioners suggest that the singling out of entertainers and performing artists under the
assailed department orders constitutes class legislation which violates the equal protection clause of the
Constitution. We do not agree.

The equal protection clause is directed principally against undue favor and individual or class privilege. It
is not intended to prohibit legislation which is limited to the object to which it is directed or by the
territory in which it is to operate. It does not require absolute equality, but merely that all persons be
treated alike under like conditions both as to privileges conferred and liabilities imposed. We have held,
time and again, that the equal protection clause of the Constitution does not forbid classification for so
long as such classification is based on real and substantial differences having a reasonable relation to the
subject of the particular legislation. If classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future conditions, the classification does not
violate the equal protection guarantee.26

The validity of Section 6 of R.A. No. 8042 which provides that employees of recruitment agencies may be
criminally liable for illegal recruitment has been upheld in People v. Chowdury:27

As stated in the first sentence of Section 6 of RA 8042, the persons who may be held liable for illegal
recruitment are the principals, accomplices and accessories. An employee of a company or corporation
engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown
that he actively and consciously participated in illegal recruitment. It has been held that the existence of
the corporate entity does not shield from prosecution the corporate agent who knowingly and
intentionally causes the corporation to commit a crime. The corporation obviously acts, and can act,
only by and through its human agents, and it is their conduct which the law must deter. The employee
or agent of a corporation engaged in unlawful business naturally aids and abets in the carrying on of
such business and will be prosecuted as principal if, with knowledge of the business, its purpose and
effect, he consciously contributes his efforts to its conduct and promotion, however slight his
contribution may be. …28

By its rulings, the Court thereby affirmed the validity of the assailed penal and procedural provisions of Rep. Act
No. 8042, including the imposable penalties therefor. Until the Court, by final judgment, declares that the said
provisions are unconstitutional, the enforcement of the said provisions cannot be enjoined.

The RTC Committed Grave Abuse of Its Discretion Amounting to Excess or Lack of Jurisdiction in Issuing the
Assailed Order and the Writ of Preliminary Injunction

The matter of whether to issue a writ of preliminary injunction or not is addressed to the sound discretion of the
trial court. However, if the court commits grave abuse of its discretion in issuing the said writ amounting to
excess or lack of jurisdiction, the same may be nullified via a writ of certiorari and prohibition.

In Social Security Commission v. Judge Bayona,29 we ruled that a law is presumed constitutional until otherwise
declared by judicial interpretation. The suspension of the operation of the law is a matter of extreme delicacy
because it is an interference with the official acts not only of the duly elected representatives of the people but
also of the highest magistrate of the land.

In Younger v. Harris, Jr.,30 the Supreme Court of the United States emphasized, thus:

Federal injunctions against state criminal statutes, either in their entirety or with respect to their
separate and distinct prohibitions, are not to be granted as a matter of course, even if such statutes are
unconstitutional. No citizen or member of the community is immune from prosecution, in good faith, for
his alleged criminal acts. The imminence of such a prosecution even though alleged to be unauthorized
and, hence, unlawful is not alone ground for relief in equity which exerts its extraordinary powers only
to prevent irreparable injury to the plaintiff who seeks its aid. 752 Beal v. Missouri Pacific Railroad Corp.,
312 U.S. 45, 49, 61 S.Ct. 418, 420, 85 L.Ed. 577.

And similarly, in Douglas, supra, we made clear, after reaffirming this rule, that:

72
 "It does not appear from the record that petitioners have been threatened with any injury other than
that incidental to every criminal proceeding brought lawfully and in good faith …" 319 U.S., at 164, 63
S.Ct., at 881.31

The possible unconstitutionality of a statute, on its face, does not of itself justify an injunction against good faith
attempts to enforce it, unless there is a showing of bad faith, harassment, or any other unusual circumstance
that would call for equitable relief.32 The "on its face" invalidation of statutes has been described as "manifestly
strong medicine," to be employed "sparingly and only as a last resort," and is generally disfavored.33

To be entitled to a preliminary injunction to enjoin the enforcement of a law assailed to be unconstitutional, the
party must establish that it will suffer irreparable harm in the absence of injunctive relief and must demonstrate
that it is likely to succeed on the merits, or that there are sufficiently serious questions going to the merits and
the balance of hardships tips decidedly in its favor.34 The higher standard reflects judicial deference toward
"legislation or regulations developed through presumptively reasoned democratic processes." Moreover, an
injunction will alter, rather than maintain, the status quo, or will provide the movant with substantially all the
relief sought and that relief cannot be undone even if the defendant prevails at a trial on the
merits.35 Considering that injunction is an exercise of equitable relief and authority, in assessing whether to issue
a preliminary injunction, the courts must sensitively assess all the equities of the situation, including the public
interest.36 In litigations between governmental and private parties, courts go much further both to give and
withhold relief in furtherance of public interest than they are accustomed to go when only private interests are
involved.37 Before the plaintiff may be entitled to injunction against future enforcement, he is burdened to show
some substantial hardship.38

The fear or chilling-effect of the assailed penal provisions of the law on the members of the respondent does not
by itself justify prohibiting the State from enforcing them against those whom the State believes in good faith to
be punishable under the laws:

… Just as the incidental "chilling effect" of such statutes does not automatically render them
unconstitutional, so the chilling effect that admittedly can result from the very existence of certain laws
on the statute books does not in itself justify prohibiting the State from carrying out the important and
necessary task of enforcing these laws against socially harmful conduct that the State believes in good
faith to be punishable under its laws and the Constitution.39

It must be borne in mind that subject to constitutional limitations, Congress is empowered to define what acts
or omissions shall constitute a crime and to prescribe punishments therefor.40 The power is inherent in Congress
and is part of the sovereign power of the State to maintain peace and order. Whatever views may be
entertained regarding the severity of punishment, whether one believes in its efficiency or its futility, these are
peculiarly questions of legislative policy.41 The comparative gravity of crimes and whether their consequences
are more or less injurious are matters for the State and Congress itself to determine. 42 Specification of penalties
involves questions of legislative policy.43

Due process prohibits criminal stability from shifting the burden of proof to the accused, punishing wholly
passive conduct, defining crimes in vague or overbroad language and failing to grant fair warning of illegal
conduct.44 Class legislation is such legislation which denies rights to one which are accorded to others, or inflicts
upon one individual a more severe penalty than is imposed upon another in like case offending.45 Bills of
attainder are legislative acts which inflict punishment on individuals or members of a particular group without a
judicial trial. Essential to a bill of attainder are a specification of certain individuals or a group of individuals, the
imposition of a punishment, penal or otherwise, and the lack of judicial trial.46

Penalizing unlicensed and licensed recruitment agencies and their officers and employees and their relatives
employed in government agencies charged with the enforcement of the law for illegal recruitment and imposing
life imprisonment for those who commit large scale illegal recruitment is not offensive to the Constitution. The
accused may be convicted of illegal recruitment and large scale illegal recruitment only if, after trial, the
prosecution is able to prove all the elements of the crime charged.47

The possibility that the officers and employees of the recruitment agencies, which are members of the
respondent, and their relatives who are employed in the government agencies charged in the enforcement of
the law, would be indicted for illegal recruitment and, if convicted sentenced to life imprisonment for large scale
illegal recruitment, absent proof of irreparable injury, is not sufficient on which to base the issuance of a writ of
73
preliminary injunction to suspend the enforcement of the penal provisions of Rep. Act No. 8042 and avert any
indictments under the law.48The normal course of criminal prosecutions cannot be blocked on the basis of
allegations which amount to speculations about the future.49

There is no allegation in the amended petition or evidence adduced by the respondent that the officers and/or
employees of its members had been threatened with any indictments for violations of the penal provisions of
Rep. Act No. 8042. Neither is there any allegation therein that any of its members and/or their officers and
employees committed any of the acts enumerated in Section 6(a) to (m) of the law for which they could be
indicted. Neither did the respondent adduce any evidence in the RTC that any or all of its members or a great
number of other duly licensed and registered recruitment agencies had to stop their business operations
because of fear of indictments under Sections 6 and 7 of Rep. Act No. 8042. The respondent merely speculated
and surmised that licensed and registered recruitment agencies would close shop and stop business operations
because of the assailed penal provisions of the law. A writ of preliminary injunction to enjoin the enforcement of
penal laws cannot be based on such conjectures or speculations. The Court cannot take judicial notice that the
processing of deployment papers of overseas workers have come to a virtual standstill at the POEA because of
the assailed provisions of Rep. Act No. 8042. The respondent must adduce evidence to prove its allegation, and
the petitioners accorded a chance to adduce controverting evidence.

The respondent even failed to adduce any evidence to prove irreparable injury because of the enforcement of
Section 10(1)(2) of Rep. Act No. 8042. Its fear or apprehension that, because of time constraints, its members
would have to defend foreign employees in cases before the Labor Arbiter is based on speculations. Even if true,
such inconvenience or difficulty is hardly irreparable injury.

The trial court even ignored the public interest involved in suspending the enforcement of Rep. Act No. 8042 vis-
à-vis the eleven licensed and registered recruitment agencies represented by the respondent. In People v.
Gamboa,50we emphasized the primary aim of Rep. Act No. 8042:

Preliminarily, the proliferation of illegal job recruiters and syndicates preying on innocent people
anxious to obtain employment abroad is one of the primary considerations that led to the enactment
of The Migrant Workers and Overseas Filipinos Act of 1995. Aimed at affording greater protection to
overseas Filipino workers, it is a significant improvement on existing laws in the recruitment and
placement of workers for overseas employment. Otherwise known as the Magna Carta of OFWs, it
broadened the concept of illegal recruitment under the Labor Code and provided stiffer penalties
thereto, especially those that constitute economic sabotage, i.e., Illegal Recruitment in Large Scale and
Illegal Recruitment Committed by a Syndicate.51

By issuing the writ of preliminary injunction against the petitioners sans any evidence, the trial court frustrated,
albeit temporarily, the prosecution of illegal recruiters and allowed them to continue victimizing hapless and
innocent people desiring to obtain employment abroad as overseas workers, and blocked the attainment of the
salutary policies52 embedded in Rep. Act No. 8042. It bears stressing that overseas workers, land-based and sea-
based, had been remitting to the Philippines billions of dollars which over the years had propped the economy.

In issuing the writ of preliminary injunction, the trial court considered paramount the interests of the eleven
licensed and registered recruitment agencies represented by the respondent, and capriciously overturned the
presumption of the constitutionality of the assailed provisions on the barefaced claim of the respondent that the
assailed provisions of Rep. Act No. 8042 are unconstitutional. The trial court committed a grave abuse of its
discretion amounting to excess or lack of jurisdiction in issuing the assailed order and writ of preliminary
injunction. It is for this reason that the Court issued a temporary restraining order enjoining the enforcement of
the writ of preliminary injunction issued by the trial court.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed decision of the appellate court
is REVERSED AND SET ASIDE. The Order of the Regional Trial Court dated August 21, 1995 in Civil Case No. Q-95-
24401 and the Writ of Preliminary Injunction issued by it in the said case on August 24, 1995 are NULLIFIED. No
costs.

SO ORDERED.

G.R. No. 140058 August 1, 2002

74
MABAYO FARMS, INC., herein represented by its President MRS. RORAIMA SILVA, petitioner,
vs.
HON. COURT OF APPEALS and ANTONIO SANTOS, respondents.

RESOLUTION

QUISUMBING, J.:

This petition for review seeks to reverse the decision1 promulgated on August 27, 1999, of the Court of Appeals
in CA-G.R. SP No. 51375. The appellate court enjoined the enforcement of the writ of preliminary injunction
dated April 14, 1998, issued by the Regional Trial Court of Balanga, Bataan, Branch 1, in Civil Case No. 6695
against private respondent, Antonio Santos.

The factual antecedents of this case are as follows:

On August 22, 1969, the Bureau of Lands declared Francisco Domingo, Reynaldo Florida, Cornelio Pilipino and
Severino Vistan, lawful possessors of Lot 1379 of the Morong, Bataan Cadastre. Lot 1379 consists of 144
hectares. Domingo, Florida, Pilipino and Vistan through their forebears and by themselves had been in open,
notorious, and exclusive possession of portions of Lot 1379 since 1933 in the concept of owners. The Bureau
then directed them to confirm their titles over the property by filing the appropriate applications for the
portions of the property respectively occupied by them.1âwphi1.nêt

In October 1970, petitioner bought the respective portions of Domingo, Florida, Pilipino and Vistan, totaling
69,932 square meters and entered into a compromise settlement with six other persons occupying the property,
whose applications had been rejected by the Bureau. Petitioner then filed an application for land registration
docketed as LRC Cad. Rec. No. N-209 with the then Court of First Instance of Bataan, Branch 1. The application
was contested by several oppositors, among them the heirs of one Toribio Alejandro.

On December 20, 1991, the trial court decided the land registration case in petitioner’s favor. The losing parties
appealed to the Court of Appeals, where the case was docketed as CA-G.R. CV No. 40452. On March 14, 2000,
the appellate court affirmed the lower court’s decision.2

In June 1997, a group of occupants entered the land, destroyed the fences and drove away livestock owned by
petitioner.

On October 9, 1997, petitioner filed a complaint for injunction with damages, with a prayer for a temporary
restraining order, docketed as Civil Case No. 6695, with the RTC of Balanga, Bataan. Named as defendants were
Juanito Infante, Domingo Infante, Lito Mangalidan, Jaime Aquino, John Doe, Peter Doe, and Richard Doe.

The trial court issued the temporary restraining order (TRO) and on January 16, 1998, the sheriff served copies
on the defendants. The sheriff accompanied petitioner’s president to the property where they found five (5)
persons cultivating the land. The latter refused to give their names or receive copies of the TRO. They claimed
that they were only farm workers of a certain Antonio Santos who allegedly owned the land.3

On April 14, 1998, the trial court issued a writ of preliminary injunction restraining the defendants or persons
acting on their behalf from entering and cultivating the disputed property. The aforementioned writ was also
served upon respondent who was occupying a portion of Lot No. 1379.4

On February 24, 1999, private respondent filed a special civil action for certiorari docketed as CA-G.R. SP No.
51375 with the Court of Appeals. Private respondent averred that he only learned about the writ of preliminary
injunction on February 16, 1999, when he secured a copy of the order. He claimed that he was an innocent
purchaser for value of the property from Francisco, Armando, and Conchita, all surnamed Alejandro and the
injunction prevented him from using his property. He alleged that he was not a party to Civil Case No. 6695 and
that it was grave abuse of discretion for the trial court to enforce the injunctive writ against him since it did not
have jurisdiction over him.

On August 27, 1999, the appellate court decided CA-G.R. SP No. 51375 in private respondent’s favor, thus:

75
 WHEREFORE, premises considered the instant Petition is hereby GRANTED. Public respondent is
enjoined from imposing the questioned writ of preliminary injunction dated April 14, 199[8] against
petitioner [Santos].

SO ORDERED.5

Hence, the instant petition, submitting the following issues for our consideration:

A. WHETHER [PRIVATE] RESPONDENT WAS DEPRIVED OF HIS CONSTITUTIONAL RIGHT TO BE HEARD.

B. WHETHER RULE 3, SEC. 11 OF THE 1997 RULES OF CIVIL PROCEDURE6 IS APPLICABLE IN THE ABOVE-
ENTITLED CASE.

We find the lone issue to be: Is private respondent bound by the writ of preliminary injunction issued by the trial
court?

First, petitioner contends that the injunctive writ of April 14, 1998 was issued not only against all named
defendants in Civil Case No. 6695, but also against three unnamed "Does." It now argues that the "Does" in the
complaint are all those who violated its rights, including private respondent. Petitioner asks us to note that the
writ of injunction was served not only against the defendants in Civil Case No. 6695, but also against other
persons who were seen entering and cultivating petitioner’s property, including private respondent. Since the
latter personally received the injunctive order on June 5, 1998, he was already forewarned to intervene in Civil
Case No. 6695 if he had any right or interest to protect in the disputed property. This he failed to do. Since
private respondent did not then take the opportunity to present his side, he cannot now claim that he was
denied due process when the writ was enforced against him.

In his comment, private respondent counters that he was not legally bound nor required by law to file his
pleadings in Civil Case No. 6695 as he was not a party in said case. Likewise, he was not required to act on or
protest the injunctive writ in the aforementioned civil case. Private respondent avers that what petitioner wants
is to have a continuing writ in its favor, to include not only the defendants in Civil Case No. 6695 but also all
those who may subsequently intrude into the land dispute. Private respondent submits that the court a
quo committed no error in describing petitioner’s posture as a violation of the fundamental rights to notice and
hearing.

We have minutely scrutinized the order granting the writ of preliminary injunction and are unable to say that
the writ applied to private respondent. The order merely stated "[L]et a writ of preliminary injunction be issued
enjoining and restraining the defendants or any person or persons acting in their place or stead from further
entering and cultivating the said land of the plaintiff subject matter of this case until further order from the
Court."7 The persons specifically enjoined in the order were the defendants in Civil Case No. 6695 or persons
acting in their stead. Petitioner itself admitted that private respondent was not a defendant in Civil Case No.
6695 since "at the institution of the case in 1997, he (private respondent) did not have a right over any portion
of petitioner’s lot."8 Neither was he a trespasser then.9 Also, nothing in the records indicate that private
respondent was acting on behalf of any of the defendants. Taking all these into consideration, we must hold that
the writ of preliminary injunction thus cannot be made to apply to private respondent.

A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring a person
to refrain from a particular act.10 As an ancillary or preventive remedy, a writ of preliminary injunction may
therefore be resorted to by a party to protect or preserve his rights and for no other purpose during the
pendency of the principal action.11 Its object is to preserve the status quo until the merits of the case can be
heard.12 It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. 13 Thus, a
person who is not a party in the main suit, like private respondent in the instant case, cannot be bound by an
ancillary writ, such as the writ of preliminary injunction issued against the defendants in Civil Case No. 6695. He
cannot be affected by any proceeding to which he is a stranger.14

Second, petitioner contends that the Court of Appeals erred when it observed that petitioner should have
impleaded private respondent as defendant in Civil Case No. 6695 pursuant to Section 11, Rule 3 of the 1997
Rules of Civil Procedure.15 Instead, private respondent should have intervened in Civil Case No. 6695 to protect
his rights. Petitioner avers that at the time the injunctive writ was issued, it had already rested its case and to
require it to amend its complaint to include private respondent was too late.
76
Private respondent counters that there was no reason why Section 11, Rule 3 of the 1997 Rules of Civil
Procedure should not be made to apply to Civil Case No. 6695. He argues that contrary to petitioner’s posture,
his inclusion as a defendant in Civil Case No. 6695 is procedurally correct since no final judgment had yet been
rendered in said case. Moreover, he avers that petitioner cannot insist that private respondent be vigilant in
protecting his rights by intervening in Civil Case No. 6695.1âwphi1.nêt

We agree with private respondent. First, private respondent had no duty to intervene in the proceedings in Civil
Case No. 6695. Intervention in an action is neither compulsory nor mandatory but only optional and
permissive.16Second, to warrant intervention, two requisites must concur: (a) the movant has a legal interest in
the matter in litigation,17 and (b) intervention must not unduly delay or prejudice the adjudication of the rights
of the parties18 nor should the claim of the intervenor be capable of being properly decided in a separate
proceeding.19 The interest, which entitles a person to intervene in a suit, must involve the matter in litigation
and of such direct and immediate character that the intervenor will either gain or lose by the direct legal
operation and effect of the judgment.20 Civil Case No. 6695 was an action for permanent injunction and
damages. As a stranger to the case, private respondent had neither legal interest in a permanent injunction nor
an interest on the damages to be imposed, if any, in Civil Case No. 6695. To allow him to intervene would have
unnecessarily complicated and prolonged the case.

We agree with the Court of Appeals that to make the injunctive writ applicable against private respondent,
petitioner should have impleaded the latter as an additional defendant in Civil Case No. 6695. Petitioner’s
insistence that it had rested its case and hence was too late to include defendant finds no support in Section 11.
The rule categorically provides that "Parties may be dropped or added by order of the court on motion of any
party or on its own initiative at any stage of the action (stress supplied) and on such terms as are just."21 We find
it inexplicable why petitioner pointedly resisted the advice of the appellate court to implead private respondent
as an additional defendant in Civil Case No. 6695.

WHEREFORE, the instant petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No.
51375 AFFIRMED. No pronouncement as to costs.

SO ORDERED.

G.R. No. 136760 July 29, 2003

THE SENATE BLUE RIBBON COMMITTEE, represented by its Chairman, SENATOR AQUILINO Q. PIMENTEL,
JR., Petitioner,
vs.
HON. JOSE B. MAJADUCON, Presiding Judge of Branch 23, Regional Trial Court of General Santos City, and
ATTY. NILO J. FLAVIANO, Respondents.

x-----------------------x

G.R. No. 138378 July 29, 2003

AQUILINO Q. PIMENTEL, JR., Petitioner,

vs.
THE HONORABLE JOSE S. MAJADUCON, in his capacity as Presiding Judge of Branch 23, Regional Trial Court,
General Santos City, Respondent.

DECISION

YNARES-SANTIAGO, J.:

For resolution are two consolidated petitions: (a) G.R. No. 136760, for certiorari, prohibition, mandamus and
preliminary injunction, assailing the resolution dated November 11, 1998 of Judge Jose S. Majaducon of the
Regional Trial Court of General Santos City, Branch 23, which denied the Senate Blue Ribbon Committee’s
motion to dismiss the petition for prohibition, injunction with writ of preliminary injunction filed by private
respondent Atty. Nilo J. Flaviano; and (b) G.R. No. 138378, for review of the resolution dated April 15, 1999 of
respondent Judge Majaducon declaring petitioner Senator Aquilino Q. Pimentel, Jr. guilty of indirect contempt of
court.
77
The antecedent facts are as follows:

G.R. No. 136760:

On August 28, 1998, Senator Blas F. Ople filed Senate Resolution No. 157 directing the Committee on National
Defense and Security to conduct an inquiry, in aid of legislation, into the charges of then Defense Secretary
Orlando Mercado that a group of active and retired military officers were organizing a coup d’etat to prevent
the administration of then President Joseph Estrada from probing alleged fund irregularities in the Armed Forces
of the Philippines.1

On the same date, Senator Vicente C. Sotto III also filed Resolution No. 160, "directing the appropriate senate
committee to conduct an inquiry, in aid of legislation, into the alleged mismanagement of the funds and
investment portfolio of the Armed Forces Retirement and Separation Benefits System (AFP-RSBS) xxx." 2

The Senate President referred the two resolutions to the Committee on Accountability of Public Officers and
Investigations (Blue Ribbon Committee) and the Committee on National Defense and Security.

During the public hearings conducted by the Senate Blue Ribbon Committee (hereafter called the Committee), it
appeared that the AFP-RSBS purchased a lot in General Santos City, designated as Lot X, MR-1160, for
P10,500.00 per square meter from private respondent Atty. Nilo J. Flaviano. However, the deed of sale filed with
the Register of Deeds indicated that the purchase price of the lot was only P3,000.00 per square meter.

The Committee thereafter caused the service of a subpoena to respondent Atty. Flaviano, directing him to
appear and testify before it. Respondent refused to appear at the hearing. Instead, he filed a petition for
prohibition and preliminary injunction with prayer for temporary restraining order with the Regional Trial Court
of General Santos City, Branch 23, which was docketed as SP Civil Case No. 496.

On October 21, 1998, the trial court issued a Temporary Restraining Order directing the Committee "to CEASE
and DESIST from proceeding with the inquiry in P.S. 160 particularly in General Santos City and/or anywhere in
Region XI or Manila on matters affecting the patenting/titling and sale of Lot X, MR-1160-D to AFP-RSBS," and
"from issuing subpoenas to witnesses from Region XI, particularly from General Santos City, pending the hearing
of the petition for prohibition and injunction."3

On November 5, 1998, the Committee filed a motion to dismiss the petition on the grounds of (a) lack of
jurisdiction, and (b) failure to state a valid cause of action. It further argued that the issuance of the Temporary
Restraining Order was invalid for violating the rule against ex-parte issuance thereof; and that the same was not
enforceable beyond the territorial jurisdiction of the trial court.

On November 11, 1998, the trial court denied petitioner’s motion to dismiss and granted the writ of preliminary
injunction, thus:

WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is DENIED, and the WRIT OF PRELIMINARY
INJUNCTION is hereby issued against respondent. It is enjoined from enforcing its subpoenas to petitioner in
Region XI to appear and testify before it in any of its inquiry or investigation anywhere in the Philippines
regarding the acquisition by the AFP-RSBS of Lot X, MR-1160-D, located in General Santos City. The bond of
petitioner filed on October 21, 1998, for P500,000.00 for the TRO also serves as his bond in this injunction.

SO ORDERED.4

Hence, the instant petition for certiorari which was docketed as G.R. No. 136760, alleging that respondent Judge
Majaducon committed grave abuse of discretion and/or acted without or in excess of jurisdiction when he:

I. DENIED PETITIONER’S MOTION TO DISMISS THE PETITION FOR PROHIBITION AND PRELIMINARY
INJUNCTION FILED BY PRIVATE RESPONDENT, ATTY. NILO J. FLAVIANO, AGAINST THE PETITIONER IN SP.
CIVIL CASE NO. 496.

II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE FOR A PERIOD OF TWENTY (20) DAYS
AGAINST THE PETITIONER ON OCTOBER 21, 1998, AND (2) A WRIT OF PRELIMINARY INJUNCTION ON

78
 NOVEMBER 11, 1998 ENJOINING THE PETITIONER FROM ENFORCING ITS SUBPOENAS TO PRIVATE
RESPONENT IN REGION XI.

III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE RIBBON IN GRANTING INJUNCTIVE RELIEF TO
PRIVATE RESPONDENT.5

G.R. No. 138378:

On January 13, 1999, the newspaper, The Philippine Star published a news report on the filing by the Committee
with this Court of the petition for certiorari which was docketed as G.R. No. 136760. The news report quoted
portions of the petition filed by the Committee, alleging that Regional Trial Court Judge Majaducon was guilty of
gross ignorance of the rules and procedures when he issued the temporary restraining order and the writ of
preliminary injunction because, under the principle of separation of powers, courts cannot interfere with the
exercise by the legislature of its authority to conduct investigations in aid of legislation.6

Reacting to the aforesaid news report, respondent Judge Majaducon motu proprio initiated a charge for indirect
contempt of court against Senator Aquilino Q. Pimentel, Jr., news reporter Perseus Echeminada, Philippine Star
publisher Maximo Soliven, editor-in-chief Ramon J. Farolan, and executive editor Bobby G. dela Cruz, which was
docketed as Special Civil Case No. 496. Judge Majaducon averred that the news report created in the minds of
the reader the impression that he violated the separation of powers clause of the Constitution and that he was
guilty of gross ignorance of the rules and procedures.

After the respondents submitted their respective answers, a decision was rendered on April 15, 1999 finding
petitioner Pimentel guilty of indirect contempt.

Hence, the instant petition based on the following grounds:

I. THE EXPRESSION "GROSS IGNORANCE OF THE RULES OF PROCEDURE" OR "GROSS IGNORANCE OF THE
LAW" IN REFERENCE TO THE RESPONDENT’S EX-PARTE ISSUANCE OF INJUNCTIVE RELIEF IS NOT
PEJORATIVE AS TO CONSTITUTE A GROUND FOR INDIRECT CONTEMPT.

II. THIS HONORABLE COURT ITSELF USES "GROSS IGNORANCE OF THE LAW" AND OTHER EXPRESSIONS
OF SIMILAR FORCEFUL IMPORT IN DESCRIBING GROSS AND PALPABLE ERRORS OF JUDGES.

III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE PETITIONER, THE RESPONDENT JUDGE HAS, IN
EFFECT, PREEMPTED THIS HONORABLE COURT IN RESOLVING THE ISSUES RAISED AGAINST HIM IN G.R.
NO. 136760.

IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE RIBBON PETITION IN G.R. NO. 136760, OR
EXCERPTS THEREOF WAS A LEGITIMATE EXERCISE OF FREEDOM OF EXPRESSION AND OF THE PRESS.

The two petitions, namely, G.R. No. 136760 and G.R. No. 138378, were ordered consolidated on December 11,
2000.

The issues for resolution in these joint petitions are: (a) whether or not respondent Judge Jose Majaducon
committed grave abuse of discretion when he dismissed petitioner’s motion to dismiss the petition for
prohibition and issued the writ of preliminary injunction; and (b) whether or not respondent Judge erred in
convicting petitioner Pimentel of indirect contempt of court.

On the first issue, petitioner Committee contends that courts have no jurisdiction to restrain Congress from
performing its constitutionally vested function to conduct investigations in aid of legislation, following the
principle of separation of powers. Moreover, the petition filed by respondent Flaviano before the trial court
failed to state a cause of action considering that the legislative inquiry did not deal with the issuance of the
patent and title to Lot X, MR-1160-D in the name of AFP-RSBS, which is well within the court’s jurisdiction, but
with the anomaly in the purchase thereof, which falls squarely within the ambit of Senate Resolutions Nos.
1577 and 160.8

On the other hand, respondent Flaviano contends that the trial court may properly intervene into investigations
by Congress pursuant to the power of judicial review vested in it by the Constitution. He avers that he has a valid
79
cause of action to file the petition for prohibition considering that the Committee’s investigation will delve into
the validity of the patenting and titling of Lot X, MR-1160-D which, as admitted by petitioner, falls within the
competence of judicial courts. In fact, the validity of the purchase by AFP-RSBS of the subject lot is already the
subject of a pending action before the Regional Trial Court of General Santos City and the Ombudsman of
Mindanao. Finally, he cites the case of Bengzon v. Senate Blue Ribbon Committee,9 and argues that preliminary
injunction may issue in cases pending before administrative bodies such as the Ombudsman or the Office of the
Prosecutor as long as the right to self-incrimination guaranteed by the Bill of Rights is in danger. Furthermore, an
information against him has been filed with the Sandiganbayan.

We find for petitioner. There is grave abuse of discretion when the respondent acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of his judgment, as when the assailed order is bereft of any factual
and legal justification.10 In this case, the assailed resolution of respondent Judge Majaducon was issued without
legal basis.

The principle of separation of powers essentially means that legislation belongs to Congress, execution to the
Executive, and settlement of legal controversies to the Judiciary. Each is prevented from invading the domain of
the others.11 When the Senate Blue Ribbon Committee served subpoena on respondent Flaviano to appear and
testify before it in connection with its investigation of the alleged misuse and mismanagement of the AFP-RSBS
funds, it did so pursuant to its authority to conduct inquiries in aid of legislation. This is clearly provided in
Article VI, Section 21 of the Constitution, thus:

The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of
legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or
affected by such inquiries shall be respected.

Hence, the Regional Trial Court of General Santos City, or any court for that matter, had no authority to prohibit
the Committee from requiring respondent to appear and testify before it.

The ruling in Bengzon, cited by respondent, does not apply in this case. We agree with petitioner Committee
that the factual circumstances therein are different from those in the case at bar. In Bengzon, no intended
legislation was involved and the subject matter of the inquiry was more within the province of the courts rather
than of the legislature. More specifically, the investigation in the said case was an offshoot of the privilege
speech of then Senator Enrile, who urged the Senate to look into a possible violation of the Anti-Graft and
Corrupt Practices Act by the relatives of then President Corazon Aquino, particularly Mr. Ricardo Lopa, in
connection with the alleged sale of 36 to 39 corporations belonging to Benjamin Romualdez. On the other hand,
there was in this case a clear legislative purpose, as stated in Senate Resolution No. 160, and the appropriate
Senate Committee was directed to look into the reported misuse and mismanagement of the AFP-RSBS funds,
with the intention of enacting appropriate legislation to protect the rights and interests of the officers and
members of the Armed Forces of the Philippines. Further, in Bengzon, the validity of the sale of Romualdez’s
corporations was pending with the Sandiganbayan when the Senate Blue Ribbon Committee decided to conduct
its investigation. In short, the issue had already been pre-empted by the court.

In the instant case, the complaint against respondent Flaviano regarding the anomaly in the sale of Lot X, MR-
1160 was still pending before the Office of the Ombudsman when the Committee served subpoena on him. In
other words, no court had acquired jurisdiction over the matter. Thus, there was as yet no encroachment by the
legislature into the exclusive jurisdiction of another branch of the government. Clearly, there was no basis for
the respondent Judge to apply the ruling in Bengzon. Hence, the denial of petitioner’s motion to dismiss the
petition for prohibition amounted to grave abuse of discretion.

In G.R. No. 138378, petitioner, Senator Aquilino Pimentel, Jr., contends that respondent judge erred in finding
him, as representative of the Committee, guilty of indirect contempt of court under Rule 71, Section 3(d) of the
1997 Rules of Civil Procedure. According to Pimentel, the phrase "gross ignorance of the rules of law and
procedure," which the Committee used in the petition, is not depreciatory, but merely a description of normal
usage in petitions where the acts of lower courts are challenged before higher judicial bodies. In fact, this Court
often uses the phrase in its decisions to describe judges who commit gross and palpable mistakes in their
interpretation and application of the law. Petitioner further maintains that when the Committee used the
phrase, it did so without malice. Rather, it was only to stress the unfamiliarity of or disregard by the respondent
Judge of a basic rule of procedure, and to buttress its arguments in support of its petition for certiorari.

80
Petitioner Pimentel also contends that he had no participation in the publication in the Philippine Star of
excerpts from the Committee’s petition for certiorari. Even assuming arguendo that it was within his control, he
pointed out that he could not have prevented the editors and writers of the newspaper from publishing the
same, lest he violate their constitutional right of free expression. Indeed, the report by the Philippine Star of the
filing of the petition and the reproduction of its contents was a legitimate exercise of press freedom.

Respondent Judge counters that Pimentel was guilty of indirect contempt of court, first, for causing the
publication of the Committee’s petition in the Philippine Star notwithstanding that the same was sub
judice; second, for making derogatory remarks in the petition itself which affected the honor and integrity of the
respondent judge and degraded the administration of justice; and third, for making it appear that an
administrative complaint was filed against respondent Judge for gross ignorance of the law. These, he said,
constituted malicious and false report which obstructed the administration of justice.

Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:

Section 3. Indirect contempt to be punished after charge and hearing. – After a charge in writing has been filed,
and an opportunity given to the respondent to comment thereon within such period as may be fixed by the
court and to be heard by himself or counsel, a person guilty of any of the following acts may be punished for
indirect contempt:

xxx xxx xxx

d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of
justice; x x x.

After deliberating on the parties’ arguments, we find that petitioner Pimentel is not guilty of improper conduct
which obstructs or degrades the administration of justice.

Verily, it does not appear that Pimentel caused the publication in the Philippine Star of the fact of filing of the
petition for certiorari by the Committee and the reproduction of excerpts thereof. He had no right to choose
which news articles will see print in the newspaper. Rather, it is the publisher thereof which decides which news
events will be reported in the broadsheet. In doing so, it is allowed "the widest latitude of choice as to what
items should see the light of day so long as they are relevant to a matter of public interest," pursuant to its right
of press freedom.12

Respondent Judge’s allegation that petitioner made it appear that an administrative complaint was filed against
him is without basis.1âwphi1 From a careful perusal of the records, it appears that while the Committee prayed
for the imposition of administrative sanctions against respondent Judge Majaducon for gross ignorance of the
law, no formal administrative complaint was instituted separately from the petition for certiorari.

Finally, the statement that respondent Judge was grossly ignorant of the rules of law and procedure does not
constitute improper conduct that tends to impede, obstruct or degrade the administration of justice. As
correctly argued by petitioner, the phrase "gross ignorance of the rules of law and procedure" is ordinarily found
in administrative complaints and is a necessary description to support a petition which seeks the annulment of
an order of a judge wherein basic legal principles are disregarded.

In Spouses Bacar v. Judge De Guzman, Jr.,13 it was held that when the law is so elementary, not to know it or to
act as if a judge does not know it, constitutes gross ignorance of the law. In this case, there was no showing that
petitioner Pimentel, as representative of the Committee, used the phrase to malign the trial court. Rather, it was
used to express what he believed as a violation of the basic principle of separation of powers.

In this connection, it bears stressing that the power to declare a person in contempt of court must be exercised
on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment.14 This
was aptly expressed in the case of Nazareno v. Barnes:15

A judge, as a public servant, should not be so thin-skinned or sensitive as to feel hurt or offended if a citizen
expresses an honest opinion about him which may not altogether be flattering to him. After all, what matters is
that a judge performs his duties in accordance with the dictates of his conscience and the light that God has
given him. A judge should never allow himself to be moved by pride, prejudice, passion, or pettiness in the
81
performance of his duties. He should always bear in mind that the power of the court to punish for contempt
should be exercised for purposes that are impersonal, because that power is intended as a safeguard not for the
judges as persons but for the functions that they exercise.

WHEREFORE, in view of the foregoing, the petitions docketed as G.R. Nos. 136760 and 138378 are GRANTED.
The resolution of the Regional Trial Court of General Santos City, Branch 23, in Special Civil Case No. 496 dated
November 11, 1998, which denied the Senate Blue Ribbon Committee’s motion to dismiss, is REVERSED and SET
ASIDE. The Writ of Preliminary Injunction issued by the trial court on November 11, 1998 is DISSOLVED. The
resolution dated April 15, 1999, which declared Senator Aquilino Q. Pimentel, Jr. guilty of indirect contempt of
court, is REVERSED and SET ASIDE. The petition for indirect contempt is ordered DISMISSED.

SO ORDERED.

G.R. No. 158540 July 8, 2004

SOUTHERN CROSS CEMENT CORPORATION, petitioner,

vs.
THE PHILIPPINE CEMENT MANUFACTURERS CORP., THE SECRETARY OF THE DEPARTMENT OF TRADE &
INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE, and THE COMMISSIONER OF THE BUREAU OF
CUSTOMS, respondents.

DECISION

TINGA, J.:

"Good fences make good neighbors," so observed Robert Frost, the archetype of traditional New England
detachment. The Frost ethos has been heeded by nations adjusting to the effects of the liberalized global
market.1The Philippines, for one, enacted Republic Act (Rep. Act) No. 8751 (on the imposition of countervailing
duties), Rep. Act No. 8752 (on the imposition of anti-dumping duties) and, finally, Rep. Act No. 8800, also known
as the Safeguard Measures Act ("SMA")2 soon after it joined the General Agreement on Tariff and Trade (GATT)
and the World Trade Organization (WTO) Agreement.3

The SMA provides the structure and mechanics for the imposition of emergency measures, including tariffs, to
protect domestic industries and producers from increased imports which inflict or could inflict serious injury on
them.4 The wisdom of the policies behind the SMA, however, is not put into question by the petition at bar. The
questions submitted to the Court relate to the means and the procedures ordained in the law to ensure that the
determination of the imposition or non-imposition of a safeguard measure is proper.

Antecedent Facts

Petitioner Southern Cross Cement Corporation ("Southern Cross") is a domestic corporation engaged in the
business of cement manufacturing, production, importation and exportation. Its principal stockholders are
Taiheiyo Cement Corporation and Tokuyama Corporation, purportedly the largest cement manufacturers in
Japan.5

Private respondent Philippine Cement Manufacturers Corporation6 ("Philcemcor") is an association of domestic

cement manufacturers. It has eighteen (18) members,7 per Record. While Philcemcor heralds itself to be an
association of domestic cement manufacturers, it appears that considerable equity holdings, if not controlling
interests in at least twelve (12) of its member-corporations, were acquired by the three largest cement
manufacturers in the world, namely Financiere Lafarge S.A. of France, Cemex S.A. de C.V. of Mexico, and Holcim
Ltd. of Switzerland (formerly Holderbank Financiere Glaris, Ltd., then Holderfin B.V.).8

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On 22 May 2001, respondent Department of Trade and Industry ("DTI") accepted an application from
Philcemcor, alleging that the importation of gray Portland cement9 in increased quantities has caused declines in
domestic production, capacity utilization, market share, sales and employment; as well as caused depressed
local prices. Accordingly, Philcemcor sought the imposition at first of provisional, then later, definitive safeguard
measures on the import of cement pursuant to the SMA. Philcemcor filed the application in behalf of twelve (12)
of its member-companies.10

After preliminary investigation, the Bureau of Import Services of the DTI, determined that critical circumstances
existed justifying the imposition of provisional measures.11 On 7 November 2001, the DTI issued
an Order, imposing a provisional measure equivalent to Twenty Pesos and Sixty Centavos (P20.60) per forty (40)
kilogram bag on all importations of gray Portland cement for a period not exceeding two hundred (200) days
from the date of issuance by the Bureau of Customs (BOC) of the implementing Customs Memorandum
Order.12 The corresponding Customs Memorandum Order was issued on 10 December 2001, to take effect that
same day and to remain in force for two hundred (200) days.13

In the meantime, the Tariff Commission, on 19 November 2001, received a request from the DTI for a formal
investigation to determine whether or not to impose a definitive safeguard measure on imports of gray Portland
cement, pursuant to Section 9 of the SMA and its Implementing Rules and Regulations. A notice of
commencement of formal investigation was published in the newspapers on 21 November 2001. Individual
notices were likewise sent to concerned parties, such as Philcemcor, various importers and exporters, the
Embassies of Indonesia, Japan and Taiwan, contractors/builders associations, industry associations, cement
workers' groups, consumer groups, non-government organizations and concerned government agencies.14 A
preliminary conference was held on 27 November 2001, attended by several concerned parties, including
Southern Cross.15 Subsequently, the Tariff Commission received several position papers both in support and
against Philcemcor's application.16 The Tariff Commission also visited the corporate offices and manufacturing
facilities of each of the applicant companies, as well as that of Southern Cross and two other cement
importers.17

On 13 March 2002, the Tariff Commission issued its Formal Investigation Report ("Report"). Among the factors
studied by the Tariff Commission in its Report were the market share of the domestic industry,18 production and
sales,19 capacity utilization,20 financial performance and profitability,21 and return on sales.22 The Tariff
Commission arrived at the following conclusions:

1. The circumstances provided in Article XIX of GATT 1994 need not be demonstrated since the product
under consideration (gray Portland cement) is not the subject of any Philippine obligation or tariff
concession under the WTO Agreement. Nonetheless, such inquiry is governed by the national legislation
(R.A. 8800) and the terms and conditions of the Agreement on Safeguards.

2. The collective output of the twelve (12) applicant companies constitutes a major proportion of the
total domestic production of gray Portland cement and blended Portland cement.

3. Locally produced gray Portland cement and blended Portland cement (Pozzolan) are "like" to
imported gray Portland cement.

4. Gray Portland cement is being imported into the Philippines in increased quantities, both in absolute
terms and relative to domestic production, starting in 2000. The increase in volume of imports is recent,
sudden, sharp and significant.

5. The industry has not suffered and is not suffering significant overall impairment in its condition, i.e.,
serious injury.

6. There is no threat of serious injury that is imminent from imports of gray Portland cement.

7. Causation has become moot and academic in view of the negative determination of the elements of
serious injury and imminent threat of serious injury.23

Accordingly, the Tariff Commission made the following recommendation, to wit:

83
 The elements of serious injury and imminent threat of serious injury not having been established, it is
hereby recommended that no definitive general safeguard measure be imposed on the importation of
gray Portland cement.24

The DTI received the Report on 14 March 2002. After reviewing the report, then DTI Secretary Manuel Roxas II
("DTI Secretary") disagreed with the conclusion of the Tariff Commission that there was no serious injury to the
local cement industry caused by the surge of imports.25 In view of this disagreement, the DTI requested an
opinion from the Department of Justice ("DOJ") on the DTI Secretary's scope of options in acting on the
Commission's recommendations. Subsequently, then DOJ Secretary Hernando Perez rendered an opinion stating
that Section 13 of the SMA precluded a review by the DTI Secretary of the Tariff Commission's negative finding,
or finding that a definitive safeguard measure should not be imposed.26

On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the conclusions of the Tariff
Commission, the DTI Secretary noted the DTI's disagreement with the conclusions. However, he also cited the
DOJ Opinion advising the DTI that it was bound by the negative finding of the Tariff Commission. Thus, he ruled
as follows:

The DTI has no alternative but to abide by the [Tariff] Commission's recommendations.

IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA 8800 which states:

"In the event of a negative final determination; or if the cash bond is in excess of the definitive
safeguard duty assessed, the Secretary shall immediately issue, through the Secretary of
Finance, a written instruction to the Commissioner of Customs, authorizing the return of the
cash bond or the remainder thereof, as the case may be, previously collected as provisional
general safeguard measure within ten (10) days from the date a final decision has been made;
Provided, that the government shall not be liable for any interest on the amount to be
returned. The Secretary shall not accept for consideration another petition from the same
industry, with respect to the same imports of the product under consideration within one (1)
year after the date of rendering such a decision."

The DTI hereby issues the following:

The application for safeguard measures against the importation of gray Portland cement filed by
PHILCEMCOR (Case No. 02-2001) is hereby denied.27 (Emphasis in the original)

Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days later, it filed with the Court of Appeals
a Petition for Certiorari, Prohibition and Mandamus28 seeking to set aside the DTI Decision, as well as the Tariff
Commission's Report. Philcemcor likewise applied for a Temporary Restraining Order/Injunction to enjoin the
DTI and the BOC from implementing the questioned Decision and Report. It prayed that the Court of Appeals
direct the DTI Secretary to disregard the Report and to render judgment independently of the Report.
Philcemcor argued that the DTI Secretary, vested as he is under the law with the power of review, is not bound
to adopt the recommendations of the Tariff Commission; and, that the Report is void, as it is predicated on a
flawed framework, inconsistent inferences and erroneous methodology.29

On 10 June 2002, Southern Cross filed its Comment.30 It argued that the Court of Appeals had no jurisdiction over
Philcemcor's Petition, for it is on the Court of Tax Appeals ("CTA") that the SMA conferred jurisdiction to review
rulings of the Secretary in connection with the imposition of a safeguard measure. It likewise argued that
Philcemcor's resort to the special civil action of certiorari is improper, considering that what Philcemcor sought
to rectify is an error of judgment and not an error of jurisdiction or grave abuse of discretion, and that a petition
for review with the CTA was available as a plain, speedy and adequate remedy. Finally, Southern Cross echoed
the DOJ Opinion that Section 13 of the SMA precludes a review by the DTI Secretary of a negative finding of the
Tariff Commission.

After conducting a hearing on 19 June 2002 on Philcemcor's application for preliminary injunction, the Court of
Appeals' Twelfth Division31 granted the writ sought in its Resolution dated 21 June 2002.32 Seven days later, on
28 June 2002, the two-hundred (200)-day period for the imposition of the provisional measure expired. Despite
the lapse of the period, the BOC continued to impose the provisional measure on all importations of Portland

84
cement made by Southern Cross. The uninterrupted assessment of the tariff, according to Southern Cross,
worked to its detriment to the point that the continued imposition would eventually lead to its closure.33

Southern Cross timely filed a Motion for Reconsideration of the Resolution on 9 September 2002. Alleging that
Philcemcor was not entitled to provisional relief, Southern Cross likewise sought a clarificatory order as to
whether the grant of the writ of preliminary injunction could extend the earlier imposition of the provisional
measure beyond the two hundred (200)-day limit imposed by law. The appeals' court failed to take immediate
action on Southern Cross's motion despite the four (4) motions for early resolution the latter filed between
September of 2002 and February of 2003. After six (6) months, on 19 February 2003, the Court of Appeals
directed Philcemcor to comment on Southern Cross's Motion for Reconsideration.34 After Philcemcor filed
its Opposition35 on 13 March 2003, Southern Cross filed another set of four (4) motions for early resolution.

Despite the efforts of Southern Cross, the Court of Appeals failed to directly resolve the Motion for
Reconsideration. Instead, on 5 June 2003, it rendered a Decision,36 granting in part Philcemcor's petition. The
appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged grave abuse of
discretion. It refused to annul the findings of the Tariff Commission, citing the rule that factual findings of
administrative agencies are binding upon the courts and its corollary, that courts should not interfere in matters
addressed to the sound discretion and coming under the special technical knowledge and training of such
agencies.37 Nevertheless, it held that the DTI Secretary is not bound by the factual findings of the Tariff
Commission since such findings are merely recommendatory and they fall within the ambit of the Secretary's
discretionary review. It determined that the legislative intent is to grant the DTI Secretary the power to make a
final decision on the Tariff Commission's recommendation.38 The dispositive portion of the Decision reads:

WHEREFORE, based on the foregoing premises, petitioner's prayer to set aside the findings of the Tariff
Commission in its assailed Report dated March 13, 2002 is DENIED. On the other hand, the assailed April
5, 2002 Decision of the Secretary of the Department of Trade and Industry is hereby SET ASIDE.
Consequently, the case is REMANDED to the public respondent Secretary of Department of Trade and
Industry for a final decision in accordance with RA 8800 and its Implementing Rules and Regulations.

SO ORDERED.39

On 23 June 2003, Southern Cross filed the present petition, assailing the appellate court's Decision for departing
from the accepted and usual course of judicial proceedings, and not deciding the substantial questions in
accordance with law and jurisprudence. The petition argues in the main that the Court of Appeals has no
jurisdiction over Philcemcor's petition, the proper remedy being a petition for review with the CTA conformably
with the SMA, and; that the factual findings of the Tariff Commission on the existence or non-existence
conditions warranting the imposition of general safeguard measures are binding upon the DTI Secretary.

The timely filing of Southern Cross's petition before this Court necessarily prevented the Court of
Appeals Decisionfrom becoming final.40 Yet on 25 June 2003, the DTI Secretary issued a new Decision, ruling this
time that that in light of the appellate court's Decision there was no longer any legal impediment to his deciding
Philcemcor's application for definitive safeguard measures.41 He made a determination that, contrary to the
findings of the Tariff Commission, the local cement industry had suffered serious injury as a result of the import
surges.42 Accordingly, he imposed a definitive safeguard measure on the importation of gray Portland cement, in
the form of a definitive safeguard duty in the amount of P20.60/40 kg. bag for three years on imported gray
Portland Cement.43

On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a Temporary Restraining
Order and/or A Writ of Preliminary Injunction" ("TRO Application"), seeking to enjoin the DTI Secretary from
enforcing his Decision of 25 June 2003 in view of the pending petition before this Court. Philcemcor filed an
opposition, claiming, among others, that it is not this Court but the CTA that has jurisdiction over the application
under the law.

On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary's 25 June
2003 Decision which imposed the definite safeguard measure. Prescinding from this action, Philcemcor filed
with this Court a Manifestation and Motion to Dismiss in regard to Southern Cross's petition, alleging that it
deliberately and willfully resorted to forum-shopping. It points out that Southern Cross's TRO Application seeks
to enjoin the DTI Secretary's second decision, while its Petition before the CTA prays for the annulment of the
same decision.44
85
Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor also argues that the CTA, being a
special court of limited jurisdiction, could only review the ruling of the DTI Secretary when a safeguard measure
is imposed, and that the factual findings of the Tariff Commission are not binding on the DTI Secretary.45

After giving due course to Southern Cross's Petition, the Court called the case for oral argument on 18 February
2004.46 At the oral argument, attended by the counsel for Philcemcor and Southern Cross and the Office of the
Solicitor General, the Court simplified the issues in this wise: (i) whether the Decision of the DTI Secretary is
appealable to the CTA or the Court of Appeals; (ii) assuming that the Court of Appeals has jurisdiction, whether
its Decision is in accordance with law; and, (iii) whether a Temporary Restraining Order is warranted.47

During the oral arguments, counsel for Southern Cross manifested that due to the imposition of the general
safeguard measures, Southern Cross was forced to cease operations in the Philippines in November of 2003.48

Propriety of the Temporary Restraining Order

Before the merits of the Petition, a brief comment on Southern Cross's application for provisional relief. It
sought to enjoin the DTI Secretary from enforcing the definitive safeguard measure he imposed in his 25 June
2003 Decision. The Court did not grant the provisional relief for it would be tantamount to enjoining the
collection of taxes, a peremptory judicial act which is traditionally frowned upon,49 unless there is a clear
statutory basis for it.50 In that regard, Section 218 of the Tax Reform Act of 1997 prohibits any court from
granting an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by
the internal revenue code.51 A similar philosophy is expressed by Section 29 of the SMA, which states that the
filing of a petition for review before the CTA does not stop, suspend, or otherwise toll the imposition or
collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures.52 This
evinces a clear legislative intent that the imposition of safeguard measures, despite the availability of judicial
review, should not be enjoined notwithstanding any timely appeal of the imposition.

The Forum-Shopping Issue

In the same breath, we are not convinced that the allegation of forum-shopping has been duly proven, or that
sanction should befall upon Southern Cross and its counsel. The standard by Section 5, Rule 7 of the 1997 Rules
of Civil Procedure in order that sanction may be had is that "the acts of the party or his counsel clearly constitute
willful and deliberate forum shopping."53 The standard implies a malicious intent to subvert procedural rules,
and such state of mind is not evident in this case.

The Jurisdictional Issue

On to the merits of the present petition.

In its assailed Decision, the Court of Appeals, after asserting only in brief that it had jurisdiction over
Philcemcor's Petition, discussed the issue of whether or not the DTI Secretary is bound to adopt the negative
recommendation of the Tariff Commission on the application for safeguard measure. The Court of Appeals
maintained that it had jurisdiction over the petition, as it alleged grave abuse of discretion on the part of the DTI
Secretary, thus:

A perusal of the instant petition reveals allegations of grave abuse of discretion on the part of the DTI
Secretary in rendering the assailed April 5, 2002 Decision wherein it was ruled that he had no alternative
but to abide by the findings of the Commission on the matter of safeguard measures for the local
cement industry. Abuse of discretion is admittedly within the ambit of certiorari.

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction. It is alleged that, in the assailed Decision, the DTI Secretary gravely abused his
discretion in wantonly evading to discharge his duty to render an independent determination or
decision in imposing a definitive safeguard measure.54

We do not doubt that the Court of Appeals' certiorari powers extend to correcting grave abuse of discretion on
the part of an officer exercising judicial or quasi-judicial functions.55 However, the special civil action of certiorari
is available only when there is no plain, speedy and adequate remedy in the ordinary course of law.56 Southern

86
Cross relies on this limitation, stressing that Section 29 of the SMA is a plain, speedy and adequate remedy in the
ordinary course of law which Philcemcor did not avail of. The Section reads:

Section 29. Judicial Review. – Any interested party who is adversely affected by the ruling of the
Secretary in connection with the imposition of a safeguard measure may file with the CTA, a petition
for review of such ruling within thirty (30) days from receipt thereof. Provided, however, that the filing
of such petition for review shall not in any way stop, suspend or otherwise toll the imposition or
collection of the appropriate tariff duties or the adoption of other appropriate safeguard measures, as
the case may be.

The petition for review shall comply with the same requirements and shall follow the same rules of
procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings
on tax matters to the Court of Appeals.57 (Emphasis supplied)

It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review the
ruling of the DTI Secretary in connection with the imposition of a safeguard measure. The Court has long
recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving internal
revenue and customs duties to such a specialized court.58 By the very nature of its function, the CTA is dedicated
exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the
subject.59

At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a case
should be clearly conferred and should not be deemed to exist on mere implication.60 Concededly, Rep. Act No.
1125, the statute creating the CTA, does not extend to it the power to review decisions of the DTI Secretary in
connection with the imposition of safeguard measures.61 Of course, at that time which was before the advent of
trade liberalization the notion of safeguard measures or safety nets was not yet in vogue.

Undeniably, however, the SMA expanded the jurisdiction of the CTA by including review of the rulings of the DTI
Secretary in connection with the imposition of safeguard measures. However, Philcemcor and the public
respondents agree that the CTA has appellate jurisdiction over a decision of the DTI Secretary imposing a
safeguard measure, but not when his ruling is not to impose such measure.

In a related development, Rep. Act No. 9282, enacted on 30 March 2004, expressly vests unto the CTA
jurisdiction over "[d]ecisions of the Secretary of Trade and Industry, in case of nonagricultural product,
commodity or article xxx involving xxx safeguard measures under Republic Act No. 8800, where either party
may appeal the decision to impose or not to impose said duties."62 Had Rep. Act No. 9282 already been in force
at the beginning of the incidents subject of this case, there would have been no need to make any deeper
inquiry as to the extent of the CTA's jurisdiction. But as Rep. Act No. 9282 cannot be applied retroactively to the
present case, the question of whether such jurisdiction extends to a decision not to impose a safeguard measure
will have to be settled principally on the basis of the SMA.

Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire jurisdiction over the
petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the petition must be
filed by an interested party adversely affected by the ruling; and (iii) such ruling must be in connection with the
imposition of a safeguard measure. The first two requisites are clearly present. The third requisite deserves
closer scrutiny.

Contrary to the stance of the public respondents and Philcemcor, in this case where the DTI Secretary decides
not to impose a safeguard measure, it is the CTA which has jurisdiction to review his decision. The reasons are as
follows:

First. Split jurisdiction is abhorred.

Essentially, respondents' position is that judicial review of the DTI Secretary's ruling is exercised by two different
courts, depending on whether or not it imposes a safeguard measure, and in either case the court exercising
jurisdiction does so to the exclusion of the other. Thus, if the DTI decision involves the imposition of a safeguard
measure it is the CTA which has appellate jurisdiction; otherwise, it is the Court of Appeals. Such setup is as
novel and unusual as it is cumbersome and unwise. Essentially, respondents advocate that Section 29 of the

87
SMA has established split appellate jurisdiction over rulings of the DTI Secretary on the imposition of safeguard
measure.

This interpretation cannot be favored, as the Court has consistently refused to sanction split jurisdiction.63 The
power of the DTI Secretary to adopt or withhold a safeguard measure emanates from the same statutory source,
and it boggles the mind why the appeal modality would be such that one appellate court is qualified if what is to
be reviewed is a positive determination, and it is not if what is appealed is a negative determination. In deciding
whether or not to impose a safeguard measure, provisional or general, the DTI Secretary would be evaluating
only one body of facts and applying them to one set of laws. The reviewing tribunal will be called upon to
examine the same facts and the same laws, whether or not the determination is positive or negative.

In short, if we were to rule for respondents we would be confirming the exercise by two judicial bodies of
jurisdiction over basically the same subject matter¾precisely the split-jurisdiction situation which is anathema to
the orderly administration of justice.64 The Court cannot accept that such was the legislative motive especially
considering that the law expressly confers on the CTA, the tribunal with the specialized competence over tax
and tariff matters, the role of judicial review without mention of any other court that may exercise corollary or
ancillary jurisdiction in relation to the SMA. The provision refers to the Court of Appeals but only in regard to
procedural rules and dispositions of appeals from the CTA to the Court of Appeals.65

The principle enunciated in Tejada v. Homestead Property Corporation66 is applicable to the case at bar:

The Court agrees with the observation of the [that] when an administrative agency or body is conferred
quasi-judicial functions, all controversies relating to the subject matter pertaining to its specialization
are deemed to be included within the jurisdiction of said administrative agency or body. Split
jurisdiction is not favored.67

Second. The interpretation of the provisions of the SMA favors vesting untrammeled appellate jurisdiction on
the CTA.

A plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from reviewing a
negative determination by the DTI Secretary nor conferred on the Court of Appeals such review authority.
Respondents note, on the other hand, that neither did the law expressly grant to the CTA the power to review a
negative determination. However, under the clear text of the law, the CTA is vested with jurisdiction to review
the ruling of the DTI Secretary "in connection with the imposition of a safeguard measure." Had the law been
couched instead to incorporate the phrase "the ruling imposing a safeguard measure," then respondent's claim
would have indisputable merit. Undoubtedly, the phrase "in connection with" not only qualifies but clarifies the
succeeding phrase "imposition of a safeguard measure." As expounded later, the phrase also encompasses the
opposite or converse ruling which is the non-imposition of a safeguard measure.

In the American case of Shaw v. Delta Air Lines, Inc.,68 the United States Supreme Court, in interpreting a key
provision of the Employee Retirement Security Act of 1974, construed the phrase "relates to" in its normal sense
which is the same as "if it has connection with or reference to."69 There is no serious dispute that the phrase "in
connection with" is synonymous to "relates to" or "reference to," and that all three phrases are broadly
expansive. This is affirmed not just by jurisprudential fiat, but also the acquired connotative meaning of "in
connection with" in common parlance. Consequently, with the use of the phrase "in connection with," Section
29 allows the CTA to review not only the ruling imposing a safeguard measure, but all other rulings related or
have reference to the application for such measure.

Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in Section 29 of
the SMA. A literalist reading or linguistic survey may not satisfy. Even the US Supreme Court in New York State
Blue Cross Plans v. Travelers Ins.70 conceded that the phrases "relate to" or "in connection with" may be
extended to the farthest stretch of indeterminacy for, universally, relations or connections are infinite and stop
nowhere.71 Thus, in the case the US High Court, examining the same phrase of the same provision of law
involved in Shaw, resorted to looking at the statute and its objectives as the alternative to an "uncritical
literalism."72 A similar inquiry into the other provisions of the SMA is in order to determine the scope of review
accorded therein to the CTA.73

The authority to decide on the safeguard measure is vested in the DTI Secretary in the case of non-agricultural
products, and in the Secretary of the Department of Agriculture in the case of agricultural products.74 Section 29
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is likewise explicit that only the rulings of the DTI Secretary or the Agriculture Secretary may be reviewed by the
CTA.75 Thus, the acts of other bodies that were granted some powers by the SMA, such as the Tariff Commission,
are not subject to direct review by the CTA.

Under the SMA, the Department Secretary concerned is authorized to decide on several matters. Within thirty
(30) days from receipt of a petition seeking the imposition of a safeguard measure, or from the date he
made motu proprio initiation, the Secretary shall make a preliminary determination on whether the increased
imports of the product under consideration substantially cause or threaten to cause serious injury to the
domestic industry.76 Such ruling is crucial since only upon the Secretary's positive preliminary determination that
a threat to the domestic industry exists shall the matter be referred to the Tariff Commission for formal
investigation, this time, to determine whether the general safeguard measure should be imposed or
not.77 Pursuant to a positive preliminary determination, the Secretary may also decide that the imposition of a
provisional safeguard measure would be warranted under Section 8 of the SMA.78 The Secretary is also
authorized to decide, after receipt of the report of the Tariff Commission, whether or not to impose the general
safeguard measure, and if in the affirmative, what general safeguard measures should be applied.79 Even after
the general safeguard measure is imposed, the Secretary is empowered to extend the safeguard measure,80 or
terminate, reduce or modify his previous rulings on the general safeguard measure.81

With the explicit grant of certain powers involving safeguard measures by the SMA on the DTI Secretary, it
follows that he is empowered to rule on several issues. These are the issues which arise in connection with, or in
relation to, the imposition of a safeguard measure. They may arise at different stages – the preliminary
investigation stage, the post-formal investigation stage, or the post-safeguard measure stage – yet all these
issues do become ripe for resolution because an initiatory action has been taken seeking the imposition of a
safeguard measure. It is the initiatory action for the imposition of a safeguard measure that sets the wheels in
motion, allowing the Secretary to make successive rulings, beginning with the preliminary determination.

Clearly, therefore, the scope and reach of the phrase "in connection with," as intended by Congress, pertain to
all rulings of the DTI Secretary or Agriculture Secretary which arise from the time an application or motu
proprioinitiation for the imposition of a safeguard measure is taken. Indeed, the incidents which require
resolution come to the fore only because there is an initial application or action seeking the imposition of a
safeguard measure. From the legislative standpoint, it was a matter of sense and practicality to lump up the
questions related to the initiatory application or action for safeguard measure and to assign only one court and;
that is the CTA to initially review all the rulings related to such initiatory application or action. Both directions
Congress put in place by employing the phrase "in connection with" in the law.

Given the relative expanse of decisions subject to judicial review by the CTA under Section 29, we do not doubt
that a negative ruling refusing to impose a safeguard measure falls within the scope of its jurisdiction. On a
literal level, such negative ruling is "a ruling of the Secretary in connection with the imposition of a safeguard
measure," as it is one of the possible outcomes that may result from the initial application or action for a
safeguard measure. On a more critical level, the rulings of the DTI Secretary in connection with a safeguard
measure, however diverse the outcome may be, arise from the same grant of jurisdiction on the DTI Secretary
by the SMA.82 The refusal by the DTI Secretary to grant a safeguard measure involves the same grant of authority,
the same statutory prescriptions, and the same degree of discretion as the imposition by the DTI Secretary of a
safeguard measure.

The position of the respondents is one of "uncritical literalism"83 incongruent with the animus of the law.
Moreover, a fundamentalist approach to Section 29 is not warranted, considering the absurdity of the
consequences.

Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et Absurdum.84

Even assuming arguendo that Section 29 has not expressly granted the CTA jurisdiction to review a negative
ruling of the DTI Secretary, the Court is precluded from favoring an interpretation that would cause
inconvenience and absurdity.85 Adopting the respondents' position favoring the CTA's minimal jurisdiction would
unnecessarily lead to illogical and onerous results.

Indeed, it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing a
safeguard measure but not to those declining to impose the measure. Respondents might argue that the right to
relief from a negative ruling is not lost since the applicant could, as Philcemcor did, question such ruling through
89
a special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, in lieu of an appeal to the
CTA. Yet these two reliefs are of differing natures and gravamen. While an appeal may be predicated on errors
of fact or errors of law, a special civil action for certiorari is grounded on grave abuse of discretion or lack of or
excess of jurisdiction on the part of the decider. For a special civil action for certiorari to succeed, it is not
enough that the questioned act of the respondent is wrong. As the Court clarified in Sempio v. Court of Appeals:

A tribunal, board or officer acts without jurisdiction if it/he does not have the legal power to determine
the case. There is excess of jurisdiction where, being clothed with the power to determine the case, the
tribunal, board or officer oversteps its/his authority as determined by law. And there is grave abuse of
discretion where the tribunal, board or officer acts in a capricious, whimsical, arbitrary or despotic
manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction. Certiorari is
often resorted to in order to correct errors of jurisdiction. Where the error is one of law or of fact, which
is a mistake of judgment, appeal is the remedy.86

It is very conceivable that the DTI Secretary, after deliberate thought and careful evaluation of the evidence,
may either make a negative preliminary determination as he is so empowered under Section 7 of the SMA, or
refuse to adopt the definitive safeguard measure under Section 13 of the same law. Adopting the respondents'
theory, this negative ruling is susceptible to reversal only through a special civil action for certiorari, thus
depriving the affected party the chance to elevate the ruling on appeal on the rudimentary grounds of errors in
fact or in law. Instead, and despite whatever indications that the DTI Secretary acted with measure and within
the bounds of his jurisdiction are, the aggrieved party will be forced to resort to a gymnastic exercise, contorting
the straight and narrow in an effort to discombobulate the courts into believing that what was within was
actually beyond and what was studied and deliberate actually whimsical and capricious. What then would be the
remedy of the party aggrieved by a negative ruling that simply erred in interpreting the facts or the law? It
certainly cannot be the special civil action for certiorari, for as the Court held in Silverio v. Court of
Appeals: "Certiorari is a remedy narrow in its scope and inflexible in its character. It is not a general utility tool in
the legal workshop."87

Fortunately, this theoretical quandary need not come to pass. Section 29 of the SMA is worded in such a way
that it places under the CTA's judicial review all rulings of the DTI Secretary, which are connected with the
imposition of a safeguard measure. This is sound and proper in light of the specialized jurisdiction of the CTA
over tax matters. In the same way that a question of whether to tax or not to tax is properly a tax matter, so is
the question of whether to impose or not to impose a definitive safeguard measure.

On another note, the second paragraph of Section 29 similarly reveals the legislative intent that rulings of the
DTI Secretary over safeguard measures should first be reviewed by the CTA and not the Court of Appeals. It
reads:

The petition for review shall comply with the same requirements and shall follow the same rules of
procedure and shall be subject to the same disposition as in appeals in connection with adverse rulings
on tax matters to the Court of Appeals.

This is the only passage in the SMA in which the Court of Appeals is mentioned. The express wish of Congress is
that the petition conform to the requirements and procedure under Rule 43 of the Rules of Civil Procedure.
Since Congress mandated that the form and procedure adopted be analogous to a review of a CTA ruling by the
Court of Appeals, the legislative contemplation could not have been that the appeal be directly taken to the
Court of Appeals.

Issue of Binding Effect of Tariff

Commission's Factual Determination
on DTI Secretary.

The next issue for resolution is whether the factual determination made by the Tariff Commission under the
SMA is binding on the DTI Secretary. Otherwise stated, the question is whether the DTI Secretary may impose
general safeguard measures in the absence of a positive final determination by the Tariff Commission.

The Court of Appeals relied upon Section 13 of the SMA in ruling that the findings of the Tariff Commission do
not necessarily constitute a final decision. Section 13 details the procedure for the adoption of a safeguard
measure, as well as the steps to be taken in case there is a negative final determination. The implication of the
90
Court of Appeals' holding is that the DTI Secretary may adopt a definitive safeguard measure, notwithstanding a
negative determination made by the Tariff Commission.

Undoubtedly, Section 13 prescribes certain limitations and restrictions before general safeguard measures may
be imposed. However, the most fundamental restriction on the DTI Secretary's power in that respect is
contained in Section 5 of the SMA¾that there should first be a positive final determination of the Tariff
Commission¾which the Court of Appeals curiously all but ignored. Section 5 reads:

Sec. 5. Conditions for the Application of General Safeguard Measures. – The Secretary shall apply a
general safeguard measure upon a positive final determination of the [Tariff] Commission that a
product is being imported into the country in increased quantities, whether absolute or relative to the
domestic production, as to be a substantial cause of serious injury or threat thereof to the domestic
industry; however, in the case of non-agricultural products, the Secretary shall first establish that the
application of such safeguard measures will be in the public interest. (emphasis supplied)

The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a "positive
final determination." This power lodged in the Tariff Commission, must be distinguished from the power to
impose the general safeguard measure which is properly vested on the DTI Secretary.88

All in all, there are two condition precedents that must be satisfied before the DTI Secretary may impose a
general safeguard measure on grey Portland cement. First, there must be a positive final determination by the
Tariff Commission that a product is being imported into the country in increased quantities (whether absolute or
relative to domestic production), as to be a substantial cause of serious injury or threat to the domestic industry.
Second, in the case of non-agricultural products the Secretary must establish that the application of such
safeguard measures is in the public interest.89 As Southern Cross argues, Section 5 is quite clear-cut, and it is
impossible to finagle a different conclusion even through overarching methods of statutory construction. There
is no safer nor better settled canon of interpretation that when language is clear and unambiguous it must be
held to mean what it plainly expresses:90 In the quotable words of an illustrious member of this Court, thus:

[I]f a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied
without attempted interpretation. The verba legis or plain meaning rule rests on the valid presumption
that the words employed by the legislature in a statute correctly express its intent or will and preclude
the court from construing it differently. The legislature is presumed to know the meaning of the words,
to have used words advisedly, and to have expressed its intent by the use of such words as are found in
the statute.91

Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA,92 which interprets Section 5 of the law,
likewise requires a positive final determination on the part of the Tariff Commission before the application of
the general safeguard measure.

The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI Secretary. The
plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a "positive final
determination." This power, which belongs to the Tariff Commission, must be distinguished from the power to
impose general safeguard measure properly vested on the DTI Secretary. The distinction is vital, as a "positive
final determination" clearly antecedes, as a condition precedent, the imposition of a general safeguard measure.
At the same time, a positive final determination does not necessarily result in the imposition of a general
safeguard measure. Under Section 5, notwithstanding the positive final determination of the Tariff Commission,
the DTI Secretary is tasked to decide whether or not that the application of the safeguard measures is in the
public interest.

It is also clear from Section 5 of the SMA that the positive final determination to be undertaken by the Tariff
Commission does not entail a mere gathering of statistical data. In order to arrive at such determination, it has
to establish causal linkages from the statistics that it compiles and evaluates: after finding there is an
importation in increased quantities of the product in question, that such importation is a substantial cause of
serious threat or injury to the domestic industry.

The Court of Appeals relies heavily on the legislative record of a congressional debate during deliberations on
the SMA to assert a purported legislative intent that the findings of the Tariff Commission do not bind the DTI
Secretary.93 Yet as explained earlier, the plain meaning of Section 5 emphasizes that only if the Tariff
91
Commission renders a positive determination could the DTI Secretary impose a safeguard measure. Resort to
the congressional records to ascertain legislative intent is not warranted if a statute is clear, plain and free from
ambiguity. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to
have expressed its intent by the use of such words as are found in the statute.94

Indeed, the legislative record, if at all to be availed of, should be approached with extreme caution, as legislative
debates and proceedings are powerless to vary the terms of the statute when the meaning is clear.95 Our holding
in Civil Liberties Union v. Executive Secretary96 on the resort to deliberations of the constitutional convention to
interpret the Constitution is likewise appropriate in ascertaining statutory intent:

While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional
convention in order to arrive at the reason and purpose of the resulting Constitution, resort thereto may
be had only when other guides fail as said proceedings are powerless to vary the terms of the
Constitution when the meaning is clear. Debates in the constitutional convention "are of value as
showing the views of the individual members, and as indicating the reasons for their votes, but they give
us no light as to the views of the large majority who did not talk xxx. We think it safer to construe the
constitution from what appears upon its face."97

Moreover, it is easy to selectively cite passages, sometimes out of their proper context, in order to assert a
misleading interpretation. The effect can be dangerous. Minority or solitary views, anecdotal ruminations, or
even the occasional crude witticisms, may improperly acquire the mantle of legislative intent by the sole virtue
of their publication in the authoritative congressional record. Hence, resort to legislative deliberations is
allowable when the statute is crafted in such a manner as to leave room for doubt on the real intent of the
legislature.

Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to impose a general safeguard
measure by preconditioning such imposition on a positive determination by the Tariff Commission. Such
legislative intent should be given full force and effect, as the executive power to impose definitive safeguard
measures is but a delegated power¾the power of taxation, by nature and by command of the fundamental law,
being a preserve of the legislature.98 Section 28(2), Article VI of the 1987 Constitution confirms the delegation of
legislative power, yet ensures that the prerogative of Congress to impose limitations and restrictions on the
executive exercise of this power:

The Congress may, by law, authorize the President to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the framework of the national development program
of the Government.99

The safeguard measures which the DTI Secretary may impose under the SMA may take the following variations,
to wit: (a) an increase in, or imposition of any duty on the imported product; (b) a decrease in or the imposition
of a tariff-rate quota on the product; (c) a modification or imposition of any quantitative restriction on the
importation of the product into the Philippines; (d) one or more appropriate adjustment measures, including the
provision of trade adjustment assistance; and (e) any combination of the above-described actions. Except for the
provision of trade adjustment assistance, the measures enumerated by the SMA are essentially imposts, which
precisely are the subject of delegation under Section 28(2), Article VI of the 1987 Constitution.100

This delegation of the taxation power by the legislative to the executive is authorized by the Constitution
itself.101 At the same time, the Constitution also grants the delegating authority (Congress) the right to impose
restrictions and limitations on the taxation power delegated to the President.102 The restrictions and limitations
imposed by Congress take on the mantle of a constitutional command, which the executive branch is obliged to
observe.

The SMA empowered the DTI Secretary, as alter ego of the President,103 to impose definitive general safeguard
measures, which basically are tariff imposts of the type spoken of in the Constitution. However, the law did not
grant him full, uninhibited discretion to impose such measures. The DTI Secretary authority is derived from the
SMA; it does not flow from any inherent executive power. Thus, the limitations imposed by Section 5 are
absolute, warranted as they are by a constitutional fiat.104

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Philcemcor cites our 1912 ruling in Lamb v. Phipps105 to assert that the DTI Secretary, having the final decision on
the safeguard measure, has the power to evaluate the findings of the Tariff Commission and make an
independent judgment thereon. Given the constitutional and statutory limitations governing the present case,
the citation is misplaced. Lamb pertained to the discretion of the Insular Auditor of the Philippine Islands, whom,
as the Court recognized, "[t]he statutes of the United States require[d] xxx to exercise his judgment upon the
legality xxx [of] provisions of law and resolutions of Congress providing for the payment of money, the means of
procuring testimony upon which he may act."106

Thus in Lamb, while the Court recognized the wide latitude of discretion that may have been vested on the
Insular Auditor, it also recognized that such latitude flowed from, and is consequently limited by, statutory grant.
However, in this case, the provision of the Constitution in point expressly recognizes the authority of Congress to
prescribe limitations in the case of tariffs, export/import quotas and other such safeguard measures. Thus, the
broad discretion granted to the Insular Auditor of the Philippine Islands cannot be analogous to the discretion of
the DTI Secretary which is circumscribed by Section 5 of the SMA.

For that matter, Cariño v. Commissioner on Human Rights,107 likewise cited by Philcemcor, is also inapplicable
owing to the different statutory regimes prevailing over that case and the present petition. In Cariño, the Court
ruled that the constitutional power of the Commission on Human Rights (CHR) to investigate human rights'
violations did not extend to adjudicating claims on the merits.108 Philcemcor claims that the functions of the
Tariff Commission being "only investigatory," it could neither decide nor adjudicate.109

The applicable law governing the issue in Cariño is Section 18, Article XIII of the Constitution, which delineates
the powers and functions of the CHR. The provision does not vest on the CHR the power to adjudicate cases, but
only to investigate all forms of human rights violations.110 Yet, without modifying the thorough disquisition of
the Court in Cariño on the general limitations on the investigatory power, the precedent is inapplicable because
of the difference in the involved statutory frameworks. The Constitution does not repose binding effect on the
results of the CHR's investigation.111 On the other hand, through Section 5 of the SMA and under the authority of
Section 28(2), Article VI of the Constitution, Congress did intend to bind the DTI Secretary to the determination
made by the Tariff Commission.112 It is of no consequence that such determination results from the exercise of
investigatory powers by the Tariff Commission since Congress is well within its constitutional mandate to limit
the authority of the DTI Secretary to impose safeguard measures in the manner that it sees fit.

The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and Rule 13 of the SMA's Implementing
Rules in support of the view that the DTI Secretary may decide independently of the determination made by the
Tariff Commission. Admittedly, there are certain infelicities in the language of Section 13 and Rule 13. But
reliance should not be placed on the textual imprecisions. Rather, Section 13 and Rule 13 must be viewed in light
of the fundamental prescription imposed by Section 5. 113

Section 13 of the SMA lays down the procedure to be followed after the Tariff Commission renders its report.
The provision reads in full:

SEC. 13. Adoption of Definitive Measures. — Upon its positive determination, the Commission shall
recommend to the Secretary an appropriate definitive measure, in the form of:

(a) An increase in, or imposition of, any duty on the imported product;

(b) A decrease in or the imposition of a tariff-rate quota (MAV) on the product;

(c) A modification or imposition of any quantitative restriction on the importation of the product into
the Philippines;

(d) One or more appropriate adjustment measures, including the provision of trade adjustment
assistance;

(e) Any combination of actions described in subparagraphs (a) to (d).

The Commission may also recommend other actions, including the initiation of international
negotiations to address the underlying cause of the increase of imports of the product, to alleviate the

93
 injury or threat thereof to the domestic industry, and to facilitate positive adjustment to import
competition.

The general safeguard measure shall be limited to the extent of redressing or preventing the injury and
to facilitate adjustment by the domestic industry from the adverse effects directly attributed to the
increased imports: Provided, however, That when quantitative import restrictions are used, such
measures shall not reduce the quantity of imports below the average imports for the three (3) preceding
representative years, unless clear justification is given that a different level is necessary to prevent or
remedy a serious injury.

A general safeguard measure shall not be applied to a product originating from a developing country if
its share of total imports of the product is less than three percent (3%): Provided, however, That
developing countries with less than three percent (3%) share collectively account for not more than nine
percent (9%) of the total imports.

The decision imposing a general safeguard measure, the duration of which is more than one (1) year,
shall be reviewed at regular intervals for purposes of liberalizing or reducing its intensity. The industry
benefiting from the application of a general safeguard measure shall be required to show positive
adjustment within the allowable period. A general safeguard measure shall be terminated where the
benefiting industry fails to show any improvement, as may be determined by the Secretary.

The Secretary shall issue a written instruction to the heads of the concerned government agencies to
implement the appropriate general safeguard measure as determined by the Secretary within fifteen
(15) days from receipt of the report.

In the event of a negative final determination, or if the cash bond is in excess of the definitive safeguard
duty assessed, the Secretary shall immediately issue, through the Secretary of Finance, a written
instruction to the Commissioner of Customs, authorizing the return of the cash bond or the remainder
thereof, as the case may be, previously collected as provisional general safeguard measure within ten
(10) days from the date a final decision has been made: Provided, That the government shall not be
liable for any interest on the amount to be returned. The Secretary shall not accept for consideration
another petition from the same industry, with respect to the same imports of the product under
consideration within one (1) year after the date of rendering such a decision.

When the definitive safeguard measure is in the form of a tariff increase, such increase shall not be
subject or limited to the maximum levels of tariff as set forth in Section 401(a) of the Tariff and Customs
Code of the Philippines.

To better comprehend Section 13, note must be taken of the distinction between the investigatory and
recommendatory functions of the Tariff Commission under the SMA.

The word "determination," as used in the SMA, pertains to the factual findings on whether there are increased
imports into the country of the product under consideration, and on whether such increased imports are a
substantial cause of serious injury or threaten to substantially cause serious injury to the domestic
industry.114 The SMA explicitly authorizes the DTI Secretary to make a preliminary determination,115 and the
Tariff Commission to make the final determination.116 The distinction is fundamental, as these functions are not
interchangeable. The Tariff Commission makes its determination only after a formal investigation process, with
such investigation initiated only if there is a positive preliminary determination by the DTI Secretary under
Section 7 of the SMA.117 On the other hand, the DTI Secretary may impose definitive safeguard measure only if
there is a positive final determination made by the Tariff Commission.118

In contrast, a "recommendation" is a suggested remedial measure submitted by the Tariff Commission under
Section 13 after making a positive final determination in accordance with Section 5. The Tariff Commission is not
empowered to make a recommendation absent a positive final determination on its part.119 Under Section 13,
the Tariff Commission is required to recommend to the [DTI] Secretary an "appropriate definitive
measure."120 The Tariff Commission "may also recommend other actions, including the initiation of international
negotiations to address the underlying cause of the increase of imports of the products, to alleviate the injury or
threat thereof to the domestic industry and to facilitate positive adjustment to import competition."121

94
The recommendations of the Tariff Commission, as rendered under Section 13, are not obligatory on the DTI
Secretary. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by the Tariff
Commission. In fact, the SMA requires that the DTI Secretary establish that the application of such safeguard
measures is in the public interest, notwithstanding the Tariff Commission's recommendation on the appropriate
safeguard measure based on its positive final determination.122 The non-binding force of the Tariff Commission's
recommendations is congruent with the command of Section 28(2), Article VI of the 1987 Constitution that only
the President may be empowered by the Congress to impose appropriate tariff rates, import/export quotas and
other similar measures.123 It is the DTI Secretary, as alter ego of the President, who under the SMA may impose
such safeguard measures subject to the limitations imposed therein. A contrary conclusion would in essence
unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff measures. That is
why the SMA empowers the DTI Secretary to adopt safeguard measures other than those recommended by the
Tariff Commission.

Unlike the recommendations of the Tariff Commission, its determination has a different effect on the DTI
Secretary. Only on the basis of a positive final determination made by the Tariff Commission under Section 5 can
the DTI Secretary impose a general safeguard measure. Clearly, then the DTI Secretary is bound by
the determinationmade by the Tariff Commission.

Some confusion may arise because the sixth paragraph of Section 13124 uses the variant word "determined" in a
different context, as it contemplates "the appropriate general safeguard measure as determined by the
Secretary within fifteen (15) days from receipt of the report." Quite plainly, the word "determined" in this
context pertains to the DTI Secretary's power of choice of the appropriate safeguard measure, as opposed to the
Tariff Commission's power to determine the existence of conditions necessary for the imposition of any
safeguard measure. In relation to Section 5, such choice also relates to the mandate of the DTI Secretary to
establish that the application of safeguard measures is in the public interest, also within the fifteen (15) day
period. Nothing in Section 13 contradicts the instruction in Section 5 that the DTI Secretary is allowed to impose
the general safeguard measures only if there is a positive determination made by the Tariff Commission.

Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned "Final Determination by the
Secretary." The assailed Decision and Philcemcor latch on this phraseology to imply that the factual
determination rendered by the Tariff Commission under Section 5 may be amended or reversed by the DTI
Secretary. Of course, implementing rules should conform, not clash, with the law that they seek to implement,
for a regulation which operates to create a rule out of harmony with the statute is a nullity.125 Yet imperfect
draftsmanship aside, nothing in Rule 13.2 implies that the DTI Secretary can set aside the determination made
by the Tariff Commission under the aegis of Section 5. This can be seen by examining the specific provisions of
Rule 13.2, thus:

RULE 13.2. Final Determination by the Secretary

RULE 13.2.a. Within fifteen (15) calendar days from receipt of the Report of the Commission, the
Secretary shall make a decision, taking into consideration the measures recommended by the
Commission.

RULE 13.2.b. If the determination is affirmative, the Secretary shall issue, within two (2) calendar
days after making his decision, a written instruction to the heads of the concerned government
agencies to immediately implement the appropriate general safeguard measure as determined
by him. Provided, however, that in the case of non-agricultural products, the Secretary shall first
establish that the imposition of the safeguard measure will be in the public interest.

RULE 13.2.c. Within two (2) calendar days after making his decision, the Secretary shall also
order its publication in two (2) newspapers of general circulation. He shall also furnish a copy of
his Order to the petitioner and other interested parties, whether affirmative or negative.
(Emphasis supplied.)

Moreover, the DTI Secretary does not have the power to review the findings of the Tariff Commission for it is
not subordinate to the Department of Trade and Industry ("DTI"). It falls under the supervision, not of the DTI
nor of the Department of Finance (as mistakenly asserted by Southern Cross),126 but of the National Economic
Development Authority, an independent planning agency of the government of co-equal rank as the DTI.127 As
the supervision and control of a Department Secretary is limited to the bureaus, offices, and agencies under
95
him,128 the DTI Secretary generally cannot exercise review authority over actions of the Tariff Commission.
Neither does the SMA specifically authorize the DTI Secretary to alter, amend or modify in any way the
determination made by the Tariff Commission. The most that the DTI Secretary could do to express displeasure
over the Tariff Commission's actions is to ignore its recommendation, but not its determination.

The word "determination" as used in Rule 13.2 of the Implementing Rules is dissonant with the same word as
employed in the SMA, which in the latter case is undeviatingly in reference to the determination made by the
Tariff Commission. Beyond the resulting confusion, however, the divergent use in Rule 13.2 is explicable as the
Rule textually pertains to the power of the DTI Secretary to review the recommendations of the Tariff
Commission, not the latter's determination. Indeed, an examination of the specific provisions show that there is
no real conflict to reconcile. Rule 13.2 respects the logical order imposed by the SMA. The Rule does not remove
the essential requirement under Section 5 that a positive final determination be made by the Tariff Commission
before a definitive safeguard measure may be imposed by the DTI Secretary.

The assailed Decision characterizes the findings of the Tariff Commission as merely recommendatory and points
to the DTI Secretary as the authority who renders the final decision.129 At the same time, Philcemcor asserts that
the Tariff Commission's functions are merely investigatory, and as such do not include the power to decide or
adjudicate. These contentions, viewed in the context of the fundamental requisite set forth by Section 5, are
untenable. They run counter to the statutory prescription that a positive final determination made by the Tariff
Commission should first be obtained before the definitive safeguard measures may be laid down.

Was it anomalous for Congress to have provided for a system whereby the Tariff Commission may preclude the
DTI, an office of higher rank, from imposing a safeguard measure? Of course, this Court does not inquire into the
wisdom of the legislature but only charts the boundaries of powers and functions set in its enactments. But then,
it is not difficult to see the internal logic of this statutory framework.

For one, as earlier stated, the DTI cannot exercise review powers over the Tariff Commission which is not its
subordinate office.

Moreover, the mechanism established by Congress establishes a measure of check and balance involving two
different governmental agencies with disparate specializations. The matter of safeguard measures is of such
national importance that a decision either to impose or not to impose then could have ruinous effects on
companies doing business in the Philippines. Thus, it is ideal to put in place a system which affords all due
deliberation and calls to fore various governmental agencies exercising their particular specializations.

Finally, if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard measure, it is
because such safeguard measure is the exception, rather than the rule. The Philippines is obliged to observe its
obligations under the GATT, under whose framework trade liberalization, not protectionism, is laid down. Verily,
the GATT actually prescribes conditions before a member-country may impose a safeguard measure. The
pertinent portion of the GATT Agreement on Safeguards reads:

2. A Member may only apply a safeguard measure to a product only if that member has determined,
pursuant to the provisions set out below, that such product is being imported into its territory in such
increased quantities, absolute or relative to domestic production, and under such conditions as to cause
or threaten to cause serious injury to the domestic industry that produces like or directly competitive
products.130

3. (a) A Member may apply a safeguard measure only following an investigation by the competent
authorities of that Member pursuant to procedures previously established and made public in
consonance with Article X of the GATT 1994. This investigation shall include reasonable public notice to
all interested parties and public hearings or other appropriate means in which importers, exporters and
other interested parties could present evidence and their views, including the opportunity to respond to
the presentations of other parties and to submit their views, inter alia, as to whether or not the
application of a safeguard measure would be in the public interest. The competent authorities shall
publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of
fact and law.131

The SMA was designed not to contradict the GATT, but to complement it. The two requisites laid down in
Section 5 for a positive final determination are the same conditions provided under the GATT Agreement on
96
Safeguards for the application of safeguard measures by a member country. Moreover, the investigatory
procedure laid down by the SMA conforms to the procedure required by the GATT Agreement on Safeguards.
Congress has chosen the Tariff Commission as the competent authority to conduct such investigation. Southern
Cross stresses that applying the provision of the GATT Agreement on Safeguards, the Tariff Commission is clearly
empowered to arrive at binding conclusions.132 We agree: binding on the DTI Secretary is the Tariff Commission's
determinations on whether a product is imported in increased quantities, absolute or relative to domestic
production and whether any such increase is a substantial cause of serious injury or threat thereof to the
domestic industry.133

Satisfied as we are with the proper statutory paradigm within which the SMA should be analyzed, the flaws in
the reasoning of the Court of Appeals and in the arguments of the respondents become apparent. To better
understand the dynamics of the procedure set up by the law leading to the imposition of definitive safeguard
measures, a brief step-by-step recount thereof is in order.

1. After the initiation of an action involving a general safeguard measure,134 the DTI Secretary makes a
preliminary determination whether the increased imports of the product under consideration substantially
cause or threaten to substantially cause serious injury to the domestic industry,135 and whether the imposition of
a provisional measure is warranted under Section 8 of the SMA.136 If the preliminary determination is negative, it
is implied that no further action will be taken on the application.

2. When his preliminary determination is positive, the Secretary immediately transmits the records covering the
application to the Tariff Commission for immediate formal investigation.137

3. The Tariff Commission conducts its formal investigation, keyed towards making a final determination. In the
process, it holds public hearings, providing interested parties the opportunity to present evidence or otherwise
be heard.138 To repeat, Section 5 enumerates what the Tariff Commission is tasked to determine: (a) whether a
product is being imported into the country in increased quantities, irrespective of whether the product is
absolute or relative to the domestic production; and (b) whether the importation in increased quantities is such
that it causes serious injury or threat to the domestic industry.139 The findings of the Tariff Commission as to
these matters constitute the final determination, which may be either positive or negative.

4. Under Section 13 of the SMA, if the Tariff Commission makes a positive determination, the Tariff Commission
"recommends to the [DTI] Secretary an appropriate definitive measure." The Tariff Commission "may also
recommend other actions, including the initiation of international negotiations to address the underlying cause
of the increase of imports of the products, to alleviate the injury or threat thereof to the domestic industry, and
to facilitate positive adjustment to import competition."140

5. If the Tariff Commission makes a positive final determination, the DTI Secretary is then to decide, within
fifteen (15) days from receipt of the report, as to what appropriate safeguard measures should he impose.

6. However, if the Tariff Commission makes a negative final determination, the DTI Secretary cannot impose any
definitive safeguard measure. Under Section 13, he is instructed instead to return whatever cash bond was paid
by the applicant upon the initiation of the action for safeguard measure.

The Effect of the Court's Decision

The Court of Appeals erred in remanding the case back to the DTI Secretary, with the instruction that the DTI
Secretary may impose a general safeguard measure even if there is no positive final determination from the
Tariff Commission. More crucially, the Court of Appeals could not have acquired jurisdiction over Philcemcor's
petition for certiorari in the first place, as Section 29 of the SMA properly vests jurisdiction on the CTA.
Consequently, the assailed Decision is an absolute nullity, and we declare it as such.

What is the effect of the nullity of the assailed Decision on the 5 June 2003 Decision of the DTI Secretary
imposing the general safeguard measure? We have recognized that any initial judicial review of a DTI ruling in
connection with the imposition of a safeguard measure belongs to the CTA. At the same time, the Court also
recognizes the fundamental principle that a null and void judgment cannot produce any legal effect. There is
sufficient cause to establish that the 5 June 2003 Decision of the DTI Secretary resulted from the assailed Court
of Appeals Decision, even if the latter had not yet become final. Conversely, it can be concluded that it was
because of the putative imprimatur of the Court of Appeals' Decision that the DTI Secretary issued his ruling
97
imposing the safeguard measure. Since the 5 June 2003 Decision derives its legal effect from the void Decision of
the Court of Appeals, this ruling of the DTI Secretary is consequently void. The spring cannot rise higher than the
source.

The DTI Secretary himself acknowledged that he drew stimulating force from the appellate court's Decision for
in his own 5 June 2003 Decision, he declared:

From the aforementioned ruling, the CA has remanded the case to the DTI Secretary for a final decision.
Thus, there is no legal impediment for the Secretary to decide on the application.141

The inescapable conclusion is that the DTI Secretary needed the assailed Decision of the Court of Appeals to
justify his rendering a second Decision. He explicitly invoked the Court of Appeals' Decision as basis for rendering
his 5 June 2003 ruling, and implicitly recognized that without such Decision he would not have the authority to
revoke his previous ruling and render a new, obverse ruling.

It is clear then that the 25 June 2003 Decision of the DTI Secretary is a product of the void Decision, it being an
attempt to carry out such null judgment. There is therefore no choice but to declare it void as well, lest we
sanction the perverse existence of a fruit from a non-existent tree. It does not even matter what the disposition
of the 25 June 2003 Decision was, its nullity would be warranted even if the DTI Secretary chose to uphold his
earlier ruling denying the application for safeguard measures.

It is also an unfortunate spectacle to behold the DTI Secretary, seeking to enforce a judicial decision which is not
yet final and actually pending review on appeal. Had it been a judge who attempted to enforce a decision that is
not yet final and executory, he or she would have readily been subjected to sanction by this Court. The DTI
Secretary may be beyond the ambit of administrative review by this Court, but we are capacitated to allocate
the boundaries set by the law of the land and to exact fealty to the legal order, especially from the
instrumentalities and officials of government.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is DECLARED NULL AND
VOID and SET ASIDE. The Decision of the DTI Secretary dated 25 June 2003 is also DECLARED NULL AND VOID
and SET ASIDE. No Costs.

SO ORDERED.

G.R. No. 118216 March 9, 2000

DELTAVENTURES RESOURCES, INC., petitioner,

vs.
HON. FERNANDO P. CABATO, Presiding Judge Regional Trial Court, La Trinidad, Benguet, Branch 62; HON.
GELACIO L. RIVERA, JR., Executive Labor Arbiter, NLRC-CAR, Baguio City, ADAM P. VENTURA, Deputy-Sheriff,
NLRC-CAR, Baguio City; ALEJANDRO BERNARDINO, AUGUSTO GRANADOS, PILANDO TANGAY, NESTOR
RABANG, RAY DAYAP, MYRA BAYAONA, VIOLY LIBAO, AIDA LIBAO, JESUS GATCHO and GREGORIO
DULAY, respondents.

QUISUMBING, J.:

This special civil action for certiorari seeks to annual the Order dated November 7, 1994,1 of respondent Judge
Fernando P. Cabato of the Regional Trial Court of La Trinidad, Benguet, Branch 62, in Civil Case No. 94-CV-0948,
dismissing petitioner's amended third-party complaint, as well as the Order dated December 14, 1994,2 denying
motion for reconsideration.

On July 15, 1992, a Decision3 was rendered by Executive Labor Arbiter Norma Olegario, National Labor Relations
Commission — Regional Arbitration Board, Cordillera Autonomous Region (Commission), in NLRC Case No. 01-
08-0165-89 entitled "Alejandro Bernardino, et al, vs. Green Mountain Farm, Roberto Ongpin and Almus Alabe",
the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered declaring the respondents guilty of Illegal Dismissal and
Unfair Labor Practice and ordering them to pay the complainants, in solidum, in the amount herein
below listed:
98
 1. Violy Libao P131,368.07

2. Myra Bayaona 121,470.23

3. Gregorio Dulay 128,362.17

4. Jesus Gatcho 126,475.17

5. Alejandro Bernardino 110,158.20

6. Pilando Tangay 107,802.66

7. Aida Libao 129,967.34

8. Rey Dayap 123,289.21

9. Nestor Rabang 90,611.69

10. Augusto Granados 108,106.03

plus attorney's fees in the amount of P10.000.00.

Respondent Almus Alabe is also ordered to answer in exemplary damages in the amount of P5,00.00
each to all the complainants.

xxx xxx xxx

SO ORDERED. 4

On May 19, 1994, complainants in the abovementioned labor case filed before the Commission a motion for the
issuance of a writ of execution as respondent's appeal to the Commission and this Court5 were respectively
denied.

On June 16, 1994, Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned in view of
Labor Arbiter Olegario's transfer, issued a writ of execution6 directing NLRC Deputy Sheriff Adam Ventura to
execute the judgment against respondents, Green Mountain Farm, Roberto Ongpin and Almus Alabe Sheriff
Ventura then proceeded to enforce the writ by garnishing certain personal properties of respondents. Findings
that said judgment debtors do not have sufficient personal properties to satisfy the monetary award, Sheriff
Ventura proceeded to levy upon a real property covered by Tax Declaration No. 9697, registered in the name of
Roberto Ongpin, one of the respondents in the labor case. Thereafter, Sheriff Ventura caused the publication on
the July 17, 1994 edition of the Baguio Midland Courier the date of the public auction of said real property.

On July 27, 1994, a month before the scheduled auction sale, herein petitioner filed before the Commission a
third-party claim7 asserting ownership over the property levied upon and subject of the Sheriff notice of sale.
Labor Arbiter Rivera thus issued an order directing the suspension of the auction sale until the merits of
petitioner's claim has been resolved.8

However, on August 16, 1994, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a complaint
for injunction and damages, with a prayer for the issuance of a temporary retraining order against Sheriff
Ventura, reiterating the same allegations it raised in the third party claim it field with the Commission. The
petition was docketed as Civil Case No. 94-CV-0948, entitled "Deltaventures Resources, Inc., petitioner vs. Adam
P. Ventura, etal., defendants." The next day, August 17, 1994, respondent Judge Cabato issued a temporary
restraining order, enjoining respondents in the civil case before him to hold in abeyance any action relative to
the enforcement of the decision in the labor case.9

Petitioner likewise filed on August 30, 1994, an amended complaint10 to implead Labor arbiter Rivera and herein
private respondent-laborers.

99
Further, on September 20, 1994, petitioner, filed with the Commission a manifestation11 questioning the latter's
authority to hear the case, the matter being within the jurisdiction of the regular courts. The manifestation
however, was dismissed by Labor arbiter Rivera on October 3, 1994.12

Meanwhile, on September 20, 1994, private respondent-laborers, moved for the dismissal of the civil case on
the ground of the court's lack of jurisdiction.13 Petitioner filed its opposition to said motion on October 4, 1994.14

On November 7, 1994, after both parties had submitted their respective briefs, respondent court rendered its
assailed decision premised on the following grounds:

First, this Court is equal rank with the NLRC, hence, has no jurisdiction to issue an injunction against the
execution of the NLRC decision. . . .

Second, the NLRC retains authority over all proceedings anent the execution of its decision. This power
carries with it the right to determine every question which may be involved in the execution of its
decision. . . .

Third, Deltaventures Resources, Inc. should rely on and comply with the Rules of the NLRC because it is
the principal procedure to be followed, the Rules of Court being merely suppletory in application, . . .

Fourth, the invocation of estoppel by the plaintiffs is misplaced. . . . . [B]efore the defendants have filed
their formal answer to the amended complaint, they moved to dismiss it for lack of jurisdiction.

Lastly, the plaintiff, having in the first place addressed to the jurisdiction of the NLRC by filing with it a
Third Party Claim may not at the same time pursue the present amended Complaint under the forum
shopping rule.15

Their motion for reconsideration having been denied by respondent Judge, 16 petitioner promptly filed this
petition now before us.

In spite of the many errors assigned by petitioner,17 we find that here the core issue is whether or not the trial
court may take cognizance of the complaint filed by petitioner and consequently provide the injunction relief
sought. Such cognizance in turn, would depend on whether the acts complained of are related to, connected or
interwoven with the cases falling under the exclusive jurisdiction of the Labor arbiter or the NLRC.

Petitioner avers that court a quo erred in dismissing the third-party claim on the ground of lack of jurisdiction.
Further, it contends that the NLRC-CAR did not acquire jurisdiction over the claim for it did not impugn the
decision of the NLRC-CAR but merely questioned the propriety of the levy made by Sheriff Ventura. In support of
its claim, petitioner asserts that the instant case does not involve a labor dispute, as no-employer-employee
relationship exists between the parties. Nor is the petitioner's case related in any way to either parties' case
before the NLRC-CAR hence, not within the jurisdiction of the Commission.

Basic as a hornbook principle, jurisdiction over the subject matter of a case is conferred by law and determined
by the allegations in the complainant18 which comprise a concise statement of the ultimate facts constituting the
petitioner's cause of action.19 Thus we have held that:

Jurisdiction over the subject-matter is determined upon the allegations made in the complainant,
irrespective of whether the plaintiff is entitled or not entitled to recover upon the claim asserted therein
- a matter resolved only after and as a result of the trial. 20

Petitioner filed the third-party claim before the court a quo by reason of a writ of execution issued by the NLRC-
CAR Sheriff against a property to which it claims ownership. The writ was issued to enforce and execute the
commission's decision in NLRC Case No. 01-08-0165-89 (Illegal Dismissal and Unfair Labor Practice) against
Green Mountain Farm, Roberto Ongpin and Almus Alabe.

Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in essence
it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of execution, including the
acts performed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complainant was in
effect a motion to quash the writ of execution of a decision rendered on a case properly within the jurisdiction
100
of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor Practice. Considering the factual setting, it is then
logical to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter
beyond the jurisdiction of regional trial courts.

Precedents abound confirming the rule that said courts have no labor jurisdiction to act on labor cases or
various incidents arising therefrom, including the execution of decisions, awards or orders.21 Jurisdiction to try
and adjudicate such cases pertains exclusively to the proper labor official concerned under the Department of
Labor and Employment. To hold otherwise is to sanction split jurisdiction which is obnoxious to the orderly
administration of justice.22

Petitioner failed to realize that by filing its third-party claim with the deputy sheriff, it submitted itself to the
jurisdiction of the Commission acting through the Labor Arbiter.1âwphi1 It failed to perceive the fact that what
it is really controverting is the decision of the Labor arbiter and not the act of the deputy sheriff in executing said
order issued as a consequence of said decision rendered.

Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is
terminated.23Whatever irregularities attended the issuance and execution of the alias writ of execution should
be referred to the same administrative tribunal which rendered the decision.24 This is because any court which
issued a writ of execution has the inherent power, for the advancement of justice, to correct errors of its
ministerial officers and to control its own processes.25

The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by Articles 217,
218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over incidents arising from,
in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the
regular courts.

Having established that jurisdiction over the case rests with the Commission, we find no grave abuse of
discretion on the part of respondent Judge Cabato in denying petitioner's motion for the issuance of an
injunction against the execution of the decision of the National Labor Relations Commission.

Moreover, it must be noted that the Labor Code in Article 254 explicitly prohibits issuance of a temporary or
permanent injunction or restraining order in any case involving or growing out of labor disputes by any court or
other entity (except as otherwise provided in Arts. 218 and 264). As correctly observed by court a quo, the main
issue and the subject of the amended complaint for injunction are questions interwoven with the execution of
the Commission's decision. No doubt the aforecited prohibition in Article 254 is applicable.1âwphi1

Petitioner should have filed its third-party claim before the Labor Arbiter, from whom the writ of execution
originated, before instituting said civil case. The NLRC's Manual on Execution of Judgment,26 issued pursuant to
Article 218 of the Labor Code, provides the mechanism for a third-party claimant to assert his claim over a
property levied upon by the sheriff pursuant to an order or decision of the Commission or of the Labor Arbiter.
The power of the Labor Arbiter to issue a writ of execution carries with it the power to inquire into the
correctness of the execution of his decision and to consider whatever supervening events might transpire during
such execution.

Moreover, in denying petitioner's petition for injunction, the court a quo is merely upholding the time-honored
principle that a Regional Trial Court, being a co-equal body of the National Labor Relations Commission, has no
jurisdiction to issue any restraining order or injunction to enjoin the execution of any decision of the latter.27

WHEREFORE, the petition for certiorari and prohibition is DENIED. The assailed Orders of respondent Judge
Fernando P. Cabato dated November 7, 1994 and December 14, 1994, respectively are AFFIRMED. The records
of this case are hereby REMANDED to the National Labor Relations Commission for further
proceedings.1âwphi1.nêt

Costs against petitioner.

SO ORDERED.

G.R. No. 184778 October 2, 2009

101
BANGKO SENTRAL NG PILIPINAS MONETARY BOARD and CHUCHI FONACIER, Petitioners,
vs.
HON. NINA G. ANTONIO-VALENZUELA, in her capacity as Regional Trial Court Judge of Manila, Branch 28;
RURAL BANK OF PARAÑAQUE, INC.; RURAL BANK OF SAN JOSE (BATANGAS), INC.; RURAL BANK OF CARMEN
(CEBU), INC.; PILIPINO RURAL BANK, INC.; PHILIPPINE COUNTRYSIDE RURAL BANK, INC.; RURAL BANK OF
CALATAGAN (BATANGAS), INC. (now DYNAMIC RURAL BANK); RURAL BANK OF DARBCI, INC.; RURAL BANK OF
KANANGA (LEYTE), INC. (now FIRST INTERSTATE RURAL BANK); RURAL BANK OF BISAYAS MINGLANILLA (now
BANK OF EAST ASIA); and SAN PABLO CITY DEVELOPMENT BANK, INC., Respondents.

DECISION

VELASCO, JR., J.:

The Case

This is a Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of a Temporary Restraining
Order (TRO)/Writ of Preliminary Injunction, questioning the Decision dated September 30, 2008 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 103935. The CA Decision upheld the Order2 dated June 4, 2008 of the Regional
Trial Court (RTC), Branch 28 in Manila, issuing writs of preliminary injunction in Civil Case Nos. 08-119243, 08-
119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08-119250, 08-119251, and 08-119273, and
the Order dated May 21, 2008 that consolidated the civil cases.

The Facts

In September of 2007, the Supervision and Examination Department (SED) of the Bangko Sentral ng Pilipinas
(BSP) conducted examinations of the books of the following banks: Rural Bank of Parañaque, Inc. (RBPI), Rural
Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc., Philippine
Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc. (now Dynamic Rural Bank), Rural Bank of
Darbci, Inc., Rural Bank of Kananga (Leyte), Inc. (now First Interstate Rural Bank), Rural Bank de Bisayas
Minglanilla (now Bank of East Asia), and San Pablo City Development Bank, Inc.

After the examinations, exit conferences were held with the officers or representatives of the banks wherein the
SED examiners provided them with copies of Lists of Findings/Exceptions containing the deficiencies discovered
during the examinations. These banks were then required to comment and to undertake the remedial measures
stated in these lists within 30 days from their receipt of the lists, which remedial measures included the infusion
of additional capital. Though the banks claimed that they made the additional capital infusions, petitioner
Chuchi Fonacier, officer-in-charge of the SED, sent separate letters to the Board of Directors of each bank,
informing them that the SED found that the banks failed to carry out the required remedial measures. In
response, the banks requested that they be given time to obtain BSP approval to amend their Articles of
Incorporation, that they have an opportunity to seek investors. They requested as well that the basis for the
capital infusion figures be disclosed, and noted that none of them had received the Report of Examination (ROE)
which finalizes the audit findings. They also requested meetings with the BSP audit teams to reconcile audit
figures. In response, Fonacier reiterated the banks’ failure to comply with the directive for additional capital
infusions.

On May 12, 2008, the RBPI filed a complaint for nullification of the BSP ROE with application for a TRO and writ
of preliminary injunction before the RTC docketed as Civil Case No. 08-119243 against Fonacier, the BSP, Amado
M. Tetangco, Jr., Romulo L. Neri, Vicente B. Valdepenas, Jr., Raul A. Boncan, Juanita D. Amatong, Alfredo C.
Antonio, and Nelly F. Villafuerte. RBPI prayed that Fonacier, her subordinates, agents, or any other person acting
in her behalf be enjoined from submitting the ROE or any similar report to the Monetary Board (MB), or if the
ROE had already been submitted, the MB be enjoined from acting on the basis of said ROE, on the allegation
that the failure to furnish the bank with a copy of the ROE violated its right to due process.

The Rural Bank of San Jose (Batangas), Inc., Rural Bank of Carmen (Cebu), Inc., Pilipino Rural Bank, Inc.,
Philippine Countryside Rural Bank, Inc., Rural Bank of Calatagan (Batangas), Inc., Rural Bank of Darbci, Inc., Rural
Bank of Kananga (Leyte), Inc., and Rural Bank de Bisayas Minglanilla followed suit, filing complaints with the RTC
substantially similar to that of RBPI, including the reliefs prayed for, which were raffled to different branches and
docketed as Civil Cases Nos. 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249, 08-119250,
and 08-119251, respectively.
102
On May 13, 2008, the RTC denied the prayer for a TRO of Pilipino Rural Bank, Inc. The bank filed a motion for
reconsideration the next day.

On May 14, 2008, Fonacier and the BSP filed their opposition to the application for a TRO and writ of preliminary
injunction in Civil Case No. 08-119243 with the RTC. Respondent Judge Nina Antonio-Valenzuela of Branch 28
granted RBPI’s prayer for the issuance of a TRO.

The other banks separately filed motions for consolidation of their cases in Branch 28, which motions were
granted. Judge Valenzuela set the complaint of Rural Bank of San Jose (Batangas), Inc. for hearing on May 15,
2008. Petitioners assailed the validity of the consolidation of the nine cases before the RTC, alleging that the
court had already prejudged the case by the earlier issuance of a TRO in Civil Case No. 08-119243, and moved
for the inhibition of respondent judge. Petitioners filed a motion for reconsideration regarding the consolidation
of the subject cases.

On May 16, 2008, San Pablo City Development Bank, Inc. filed a similar complaint against the same defendants
with the RTC, and this was docketed as Civil Case No. 08-119273 that was later on consolidated with Civil Case
No. 08-119243. Petitioners filed an Urgent Motion to Lift/Dissolve the TRO and an Opposition to the earlier
motion for reconsideration of Pilipino Rural Bank, Inc.

On May 19, 2008, Judge Valenzuela issued an Order granting the prayer for the issuance of TROs for the other
seven cases consolidated with Civil Case No. 08-119243. On May 21, 2008, Judge Valenzuela issued an Order
denying petitioners’ motion for reconsideration regarding the consolidation of cases in Branch 28. On May 22,
2008, Judge Valenzuela granted the urgent motion for reconsideration of Pilipino Rural Bank, Inc. and issued a
TRO similar to the ones earlier issued.

On May 26, 2008, petitioners filed a Motion to Dismiss against all the complaints (except that of the San Pablo
City Development Bank, Inc.), on the grounds that the complaints stated no cause of action and that a condition
precedent for filing the cases had not been complied with. On May 29, 2008, a hearing was conducted on the
application for a TRO and for a writ of preliminary injunction of San Pablo City Development Bank, Inc.

The Ruling of the RTC

After the parties filed their respective memoranda, the RTC, on June 4, 2008, ruled that the banks were entitled
to the writs of preliminary injunction prayed for. It held that it had been the practice of the SED to provide the
ROEs to the banks before submission to the MB. It further held that as the banks are the subjects of
examinations, they are entitled to copies of the ROEs. The denial by petitioners of the banks’ requests for copies
of the ROEs was held to be a denial of the banks’ right to due process.

The dispositive portion of the RTC’s order reads:

WHEREFORE, the Court rules as follows:

1) Re: Civil Case No. 08-119243. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Rural Bank of Paranaque Inc. is directed to post a bond executed to the defendants, in the amount of
P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled
thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of Examination or any other similar
report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board.
In case such a Report on Examination [sic] or any other similar report prepared in connection with the
examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

2) Re: Civil Case No. 08-119244. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Rural Bank of San Jose (Batangas), Inc. is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they
may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be
103
issued to enjoin and restrain the defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter
and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of said report.

3) Re: Civil Case No. 08-119245. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Rural Bank of Carmen (Cebu), Inc. is directed to post a bond executed to the defendants, in the amount
of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled
thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of Examination or any other similar
report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board.
In case such a Report on Examination [sic] or any other similar report prepared in connection with the
examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

4) Re: Civil Case No. 08-119246. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Pilipino Rural Bank Inc. is directed to post a bond executed to the defendants, in the amount of
P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled
thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of Examination or any other similar
report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board.
In case such a Report on Examination [sic] or any other similar report prepared in connection with the
examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

5) Re: Civil Case No. 08-119247. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Philippine Countryside Rural Bank Inc. is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they
may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be
issued to enjoin and restrain the defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter
and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of said report.

6) Re: Civil Case No. 08-119248. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Dynamic Bank Inc. (Rural Bank of Calatagan) is directed to post a bond executed to the defendants, in
the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which
they may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be
issued to enjoin and restrain the defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter
and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of said report.

7) Re: Civil Case No. 08-119249. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Rural Bank of DARBCI, Inc. is directed to post a bond executed to the defendants, in the amount of
P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they may
sustain by reason of the injunction if the Court should finally decide that the plaintiff was not entitled
104
 thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be issued to
enjoin and restrain the defendants from submitting the Report of Examination or any other similar
report prepared in connection with the examination conducted on the plaintiff, to the Monetary Board.
In case such a Report on Examination [sic] or any other similar report prepared in connection with the
examination conducted on the plaintiff has been submitted to the Monetary Board, the latter and its
members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and Villafuerte) are
enjoined and restrained from acting on the basis of said report.

8) Re: Civil Case No. 08-119250. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Rural Bank of Kananga Inc. (First Intestate Bank), is directed to post a bond executed to the defendants,
in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages
which they may sustain by reason of the injunction if the Court should finally decide that the plaintiff
was not entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary
injunction be issued to enjoin and restrain the defendants from submitting the Report of Examination or
any other similar report prepared in connection with the examination conducted on the plaintiff, to the
Monetary Board. In case such a Report on Examination [sic] or any other similar report prepared in
connection with the examination conducted on the plaintiff has been submitted to the Monetary Board,
the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of said report.

9) Re: Civil Case No. 08-119251. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
Banco Rural De Bisayas Minglanilla (Cebu) Inc. (Bank of East Asia) is directed to post a bond executed to
the defendants, in the amount of P500,000.00 to the effect that the plaintiff will pay to the defendants
all damages which they may sustain by reason of the injunction if the Court should finally decide that
the plaintiff was not entitled thereto. After posting of the bond and approval thereof, let a writ of
preliminary injunction be issued to enjoin and restrain the defendants from submitting the Report of
Examination or any other similar report prepared in connection with the examination conducted on the
plaintiff, to the Monetary Board. In case such a Report on Examination [sic] or any other similar report
prepared in connection with the examination conducted on the plaintiff has been submitted to the
Monetary Board, the latter and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan,
Amatong, Antonio, and Villafuerte) are enjoined and restrained from acting on the basis of said report.

10) Re: Civil Case No. 08-119273. Pursuant to Rule 58, Section 4(b) of the Revised Rules of Court, plaintiff
San Pablo City Development Bank, Inc. is directed to post a bond executed to the defendants, in the
amount of P500,000.00 to the effect that the plaintiff will pay to the defendants all damages which they
may sustain by reason of the injunction if the Court should finally decide that the plaintiff was not
entitled thereto. After posting of the bond and approval thereof, let a writ of preliminary injunction be
issued to enjoin and restrain the defendants from submitting the Report of Examination or any other
similar report prepared in connection with the examination conducted on the plaintiff, to the Monetary
Board. In case such a Report on Examination [sic] or any other similar report prepared in connection
with the examination conducted on the plaintiff has been submitted to the Monetary Board, the latter
and its members (i.e. defendants Tetangco, Neri, Valdepenas, Boncan, Amatong, Antonio, and
Villafuerte) are enjoined and restrained from acting on the basis of said report.3

The Ruling of the CA

Petitioners then brought the matter to the CA via a petition for certiorari under Rule 65 claiming grave abuse of
discretion on the part of Judge Valenzuela when she issued the orders dated May 21, 2008 and June 4, 2008.

The CA ruled that the RTC committed no grave abuse of discretion when it ordered the issuance of a writ of
preliminary injunction and when it ordered the consolidation of the 10 cases.

It held that petitioners should have first filed a motion for reconsideration of the assailed orders, and failed to
justify why they resorted to a special civil action of certiorari instead.

The CA also found that aside from the technical aspect, there was no grave abuse of discretion on the part of the
RTC, and if there was a mistake in the assessment of evidence by the trial court, that should be characterized as
an error of judgment, and should be correctable via appeal.

105
The CA held that the principles of fairness and transparency dictate that the respondent banks are entitled to
copies of the ROE.

Regarding the consolidation of the 10 cases, the CA found that there was a similarity of facts, reliefs sought,
issues raised, defendants, and that plaintiffs and defendants were represented by the same sets of counsels. It
found that the joint trial of these cases would prejudice any substantial right of petitioners.

Finding that no grave abuse of discretion attended the issuance of the orders by the RTC, the CA denied the
petition.

On November 24, 2008, a TRO was issued by this Court, restraining the CA, RTC, and respondents from
implementing and enforcing the CA Decision dated September 30, 2008 in CA-G.R. SP No. 103935.4

By reason of the TRO issued by this Court, the SED was able to submit their ROEs to the MB. The MB then
prohibited the respondent banks from transacting business and placed them under receivership under Section
53 of Republic Act No. (RA) 87915 and Sec. 30 of RA

76536 through MB Resolution No. 1616 dated December 9, 2008; Resolution Nos. 1637 and 1638 dated
December 11, 2008; Resolution Nos. 1647, 1648, and 1649 dated December 12, 2008; Resolution Nos. 1652 and
1653 dated December 16, 2008; and Resolution Nos. 1692 and 1695 dated December 19, 2008, with the
Philippine Deposit Insurance Corporation as the appointed receiver.

Now we resolve the main petition.

Grounds in Support of Petition

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE INJUNCTION ISSUED BY THE
REGIONAL TRIAL COURT VIOLATED SECTION 25 OF THE NEW CENTRAL BANK ACT AND EFFECTIVELY
HANDCUFFED THE BANGKO SENTRAL FROM DISCHARGING ITS FUNCTIONS TO THE GREAT AND IRREPARABLE
DAMAGE OF THE COUNTRY’S BANKING SYSTEM;

II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENTS ARE ENTITLED TO BE
FURNISHED COPIES OF THEIR RESPECTIVE ROEs BEFORE THE SAME IS SUBMITTED TO THE MONETARY BOARD IN
VIEW OF THE PRINCIPLES OF FAIRNESS AND TRANSPARENCY DESPITE LACK OF EXPRESS PROVISION IN THE NEW
CENTRAL BANK ACT REQUIRING BSP TO DO THE SAME

III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DEPARTING FROM WELL-ESTABLISHED PRECEPTS
OF LAW AND JURISPRUDENCE

A. THE EXCEPTIONS CITED BY PETITIONER JUSTIFIED RESORT TO PETITION FOR CERTIORARI UNDER RULE
65 INSTEAD OF FIRST FILING A MOTION FOR RECONSIDERATION

B. RESPONDENT BANKS’ ACT OF RESORTING IMMEDIATELY TO THE COURT WAS PREMATURE SINCE IT
WAS MADE IN UTTER DISREGARD OF THE PRINCIPLE OF PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDY

C. THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION BY THE REGIONAL TRIAL COURT WAS NOT
ONLY IMPROPER BUT AMOUNTED TO GRAVE ABUSE OF DISCRETION7

Our Ruling

The petition is meritorious.

In Lim v. Court of Appeals it was stated:

The requisites for preliminary injunctive relief are: (a) the invasion of right sought to be protected is material
and substantial; (b) the right of the complainant is clear and unmistakable; and (c) there is an urgent and
paramount necessity for the writ to prevent serious damage.

106
As such, a writ of preliminary injunction may be issued only upon clear showing of an actual existing right to be
protected during the pendency of the principal action. The twin requirements of a valid injunction are the
existence of a right and its actual or threatened violations. Thus, to be entitled to an injunctive writ, the right to
be protected and the violation against that right must be shown.8

These requirements are absent in the present case.

In granting the writs of preliminary injunction, the trial court held that the submission of the ROEs to the MB
before the respondent banks would violate the right to due process of said banks.

This is erroneous.

The respondent banks have failed to show that they are entitled to copies of the ROEs. They can point to no
provision of law, no section in the procedures of the BSP that shows that the BSP is required to give them copies
of the ROEs. Sec. 28 of RA 7653, or the New Central Bank Act, which governs examinations of banking
institutions, provides that the ROE shall be submitted to the MB; the bank examined is not mentioned as a
recipient of the ROE.

The respondent banks cannot claim a violation of their right to due process if they are not provided with copies
of the ROEs. The same ROEs are based on the lists of findings/exceptions containing the deficiencies found by
the SED examiners when they examined the books of the respondent banks. As found by the RTC, these lists of
findings/exceptions were furnished to the officers or representatives of the respondent banks, and the
respondent banks were required to comment and to undertake remedial measures stated in said lists. Despite
these instructions, respondent banks failed to comply with the SED’s directive.

Respondent banks are already aware of what is required of them by the BSP, and cannot claim violation of their
right to due process simply because they are not furnished with copies of the ROEs. Respondent banks were
held by the CA to be entitled to copies of the ROEs prior to or simultaneously with their submission to the MB,
on the principles of fairness and transparency. Further, the CA held that if the contents of the ROEs are
essentially the same as those of the lists of findings/exceptions provided to said banks, there is no reason not to
give copies of the ROEs to the banks. This is a flawed conclusion, since if the banks are already aware of the
contents of the ROEs, they cannot say that fairness and transparency are not present. If sanctions are to be
imposed upon the respondent banks, they are already well aware of the reasons for the sanctions, having been
informed via the lists of findings/exceptions, demolishing that particular argument. The ROEs would then be
superfluities to the respondent banks, and should not be the basis for a writ of preliminary injunction. Also, the
reliance of the RTC on Banco Filipino v. Monetary Board9 is misplaced. The petitioner in that case was held to be
entitled to annexes of the Supervision and Examination Sector’s reports, as it already had a copy of the reports
themselves. It was not the subject of the case whether or not the petitioner was entitled to a copy of the reports.
And the ruling was made after the petitioner bank was ordered closed, and it was allowed to be supplied with
annexes of the reports in order to better prepare its defense. In this instance, at the time the respondent banks
requested copies of the ROEs, no action had yet been taken by the MB with regard to imposing sanctions upon
said banks.

The issuance by the RTC of writs of preliminary injunction is an unwarranted interference with the powers of the
MB. Secs. 29 and 30 of RA 765310 refer to the appointment of a conservator or a receiver for a bank, which is a
power of the MB for which they need the ROEs done by the supervising or examining department. The writs of
preliminary injunction issued by the trial court hinder the MB from fulfilling its function under the law. The
actions of the MB under Secs. 29 and 30 of RA 7653 "may not be restrained or set aside by the court except on
petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse
of discretion as to amount to lack or excess of jurisdiction." The writs of preliminary injunction order are
precisely what cannot be done under the law by preventing the MB from taking action under either Sec. 29 or
Sec. 30 of RA 7653.

As to the third requirement, the respondent banks have shown no necessity for the writ of preliminary
injunction to prevent serious damage. The serious damage contemplated by the trial court was the possibility of
the imposition of sanctions upon respondent banks, even the sanction of closure. Under the law, the sanction of
closure could be imposed upon a bank by the BSP even without notice and hearing. The apparent lack of
procedural due process would not result in the invalidity of action by the MB. This was the ruling in Central Bank
of the Philippines v. Court of Appeals.11 This "close now, hear later" scheme is grounded on practical and legal
107
considerations to prevent unwarranted dissipation of the bank’s assets and as a valid exercise of police power to
protect the depositors, creditors, stockholders, and the general public. The writ of preliminary injunction cannot,
thus, prevent the MB from taking action, by preventing the submission of the ROEs and worse, by preventing
the MB from acting on such ROEs.

The trial court required the MB to respect the respondent banks’ right to due process by allowing the
respondent banks to view the ROEs and act upon them to forestall any sanctions the MB might impose. Such
procedure has no basis in law and does in fact violate the "close now, hear later" doctrine. We held in Rural
Bank of San Miguel, Inc. v. Monetary Board, Bangko Sentral ng Pilipinas:

It is well-settled that the closure of a bank may be considered as an exercise of police power. The action of the
MB on this matter is final and executory. Such exercise may nonetheless be subject to judicial inquiry and can be
set aside if found to be in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction.12

The respondent banks cannot—through seeking a writ of preliminary injunction by appealing to lack of due
process, in a roundabout manner— prevent their closure by the MB. Their remedy, as stated, is a subsequent
one, which will determine whether the closure of the bank was attended by grave abuse of discretion. Judicial
review enters the picture only after the MB has taken action; it cannot prevent such action by the MB. The
threat of the imposition of sanctions, even that of closure, does not violate their right to due process, and
cannot be the basis for a writ of preliminary injunction.

The "close now, hear later" doctrine has already been justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits. Unless
adequate and determined efforts are taken by the government against distressed and mismanaged banks,
public faith in the banking system is certain to deteriorate to the prejudice of the national economy itself, not to
mention the losses suffered by the bank depositors, creditors, and stockholders, who all deserve the protection
of the government.13

The respondent banks have failed to show their entitlement to the writ of preliminary injunction. It must be
emphasized that an application for injunctive relief is construed strictly against the pleader.14 The respondent
banks cannot rely on a simple appeal to procedural due process to prove entitlement. The requirements for the
issuance of the writ have not been proved. No invasion of the rights of respondent banks has been shown, nor is
their right to copies of the ROEs clear and unmistakable. There is also no necessity for the writ to prevent
serious damage. Indeed the issuance of the writ of preliminary injunction tramples upon the powers of the MB
and prevents it from fulfilling its functions. There is no right that the writ of preliminary injunction would protect
in this particular case. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave
abuse of discretion.15 In the absence of proof of a legal right and the injury sustained by the plaintiff, an order
for the issuance of a writ of preliminary injunction will be nullified.16

Courts are hereby reminded to take greater care in issuing injunctive relief to litigants, that it would not violate
any law. The grant of a preliminary injunction in a case rests on the sound discretion of the court with the caveat
that it should be made with great caution.17 Thus, the issuance of the writ of preliminary injunction must have
basis in and be in accordance with law. All told, while the grant or denial of an injunction generally rests on the
sound discretion of the lower court, this Court may and should intervene in a clear case of abuse.18

WHEREFORE, the petition is hereby GRANTED. The assailed CA Decision dated September 30, 2008 in CA-G.R. SP
No. 103935 is hereby REVERSED. The assailed order and writ of preliminary injunction of respondent Judge
Valenzuela in Civil Case Nos. 08-119243, 08-119244, 08-119245, 08-119246, 08-119247, 08-119248, 08-119249,
08-119250, 08-119251, and 08-119273 are hereby declared NULL and VOID.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

G.R. No. L-66321 October 31 1984

TRADERS ROYAL BANK, petitioner,

vs.
108
THE HON INTERMEDIATE APPELATE COURT, HON., JESUS R. DE VEGA, AS PRESIDING JUDGE OF THE RETIONAL
TRIA COURT, THIRD JUDICIAL REGION, BRANCH IX, MALOLOS, Bulacan, LA TONDEÑA, INC., VICTORINO P.
EVANGELISTA IN HIS CAPACITY AS Ex-Officio Provincial Sheriff of Bulacan, and/or any and all his
deputies, respondents.

ESCOLIN, J.:ñé+.£ªwph!1

The issue posed for resolution in this petition involves the authority of a Regional Trial Court to issue, at the
instance of a third-party claimant, an injunction enjoining the sale of property previously levied upon by the
sheriff pursuant to a writ of attachment issued by another Regional Trial Court.

The antecedent facts, undisputed by the parties, are set forth in the decision of the respondent Intermediate
Appellate Court thus: têñ.£îhqwâ£

Sometime on March 18, 1983 herein petitioner Traders Royal Bank instituted a suit against the
Remco Alcohol Distillery, Inc. REMCO before the Regional Trial Court, Branch CX, Pasay City, in
Civil Case No. 9894-P, for the recovery of the sum of Two Million Three Hundred Eighty Two
Thousand Two Hundred Fifty Eight & 71/100 Pesos (P2,382,258.71) obtaining therein a writ of
pre attachment directed against the assets and properties of Remco Alcohol Distillery, Inc.

Pursuant to said writ of attachment issued in Civil Case No. 9894-P, Deputy Sheriff Edilberto
Santiago levied among others about 4,600 barrels of aged or rectified alcohol found within the
premises of said Remco Distillery Inc. A third party claim was filed with the Deputy Sheriff by
herein respondent La Tondeña, Inc. on April 1, 1982 claiming ownership over said attached
property (Complaint, p. 17, Rollo).

On May 12, 1982, private respondent La Tondeña, Inc. filed a complaint-in- intervention in said
Civil Case No. 9894, alleging among others, that 'it had made advances to Remco Distillery Inc.
which totalled P3M and which remains outstanding as of date' and that the 'attached properties
are owned by La Tondeña, Inc.' (Annex '3' to petitioner's Motion to Dismiss dated July 27, 1983
— Annex "C" to the petition).

Subsequently, private respondent La Tondeña, Inc., without the foregoing complaint-in-

intervention having been passed upon by the Regional Trial Court, Branch CX, (Pasay City), filed
in Civil Case No. 9894-P a "Motion to Withdraw" dated October 8, 1983, praying that it be
allowed to withdraw alcohol and molasses from the Remco Distillery Plant (Annex 4 to
Petitioner's Motion to Dismiss-Annex C, Petition) and which motion was granted per order of
the Pasay Court dated January 27, 1983, authorizing respondent La Tondeña, Inc. to withdraw
alcohol and molasses from the Remco Distillery Plant at Calumpit, Bulacan (Annex "I" to Reply to
Plaintiff's Opposition dated August 2, 1983 — Annex E to the Petition).

The foregoing order dated January 27, 1983 was however reconsidered by the Pasay Court by
virtue of its order dated February 18, 1983 (Annex A — Petition, p. 15) declaring that the alcohol
"which has not been withdrawn remains in the ownership of defendant Remco Alcohol Distillery
Corporation" and which order likewise denied La Tondeña's motion to intervene.

A motion for reconsideration of the foregoing order of February 18, 1983 was filed by
respondent La Tondeña, Inc., on March 8, 1983 reiterating its request for leave to withdraw
alcohol from the Remco Distillery Plant, and praying further that the "portion of the order dated
February 18, 1983" declaring Remco to be the owner of subject alcohol, "be reconsidered and
striken off said order". This motion has not been resolved (p. 4, Petition) up to July 18, 1983
when a manifestation that it was withdrawing its motion for reconsideration was filed by
respondent La Tondeña Inc.

On July 19, 1983, private respondent La Tondeña Inc. instituted before the Regional Trial Court,
Branch IX, Malolos, Bulacan presided over by Respondent Judge, Civil Case No. 7003-M, in which
it asserted its claim of ownership over the properties attached in Civil Case No. 9894-P, and
109
 likewise prayed for the issuance of a writ of Preliminary Mandatory and Prohibitory Injunction
(Annex B,id ).

A Motion to Dismiss and/or Opposition to the application for a writ of Preliminary Injunction by
herein respondent La Tondeña Inc. was filed by petitioner on July 27, 1983 (Annex C, p. 42, Id.)

This was followed by respondent La Tondeña's opposition to petitioner's Motion to Dismiss on

August 1, 1983 (Annex D, p. 67, Id.).

A reply on the part of petitioner was made on the foregoing opposition on August 3, 1983 (p.
92, Id.).

Hearings were held on respondent La Tondeña's application for injunctive relief and on
petitioner's motion to dismiss on August 8, 19 & 23, 1983 (p. 5, Id.).

Thereafter, the parties filed their respective memoranda (Annex F, p. 104; Annex G, p. 113,
Rollo).

Subsequently, the questioned order dated September 28, 1983 was issued by the respondent
Judge declaring respondent La Tondeña Inc. to be the owner of the disputed alcohol, and
granting the latter's application for injunctive relief (Annex H-1, Id.).

On October 6, 1983, respondent Sheriff Victorino Evangelista issued on Edilberto A. Santiago

Deputy Sheriff of Pasay City the corresponding writ of preliminary injunction (Annex N, p.
127, Id.).

This was followed by an order issued by the Pasay Court dated October 11, 1983 in Civil Case No.
9894-P requiring Deputy Sheriff Edilberto A. Santiago to enforce the writ of preliminary
attachment previously issued by said court, by preventing respondent sheriff and respondent La
Tondeña, Inc. from withdrawing or removing the disputed alcohol from the Remco ageing
warehouse at Calumpit, Bulacan, and requiring the aforenamed respondents to explain and
show cause why they should not be cited for contempt for withdrawing or removing said
attached alcohol belonging to Remco, from the latter's ageing warehouse at Calumpit, Bulacan
(Annex F, p. 141, Petition).

Thereafter, petitioner Traders Royal Bank filed with the Intermediate Appellate Court a petition for certiorari
and prohibition, with application for a writ of preliminary injunction, to annul and set aside the Order dated
September 28, 1983 of the respondent Regional Trial Court of Malolos, Bulacan, Branch IX, issued in Civil Case
No. 7003-M; to dissolve the writ of preliminary injunction dated October 6, 1983 issued pursuant to said order;
to prohibit respondent Judge from taking cognizance of and assuming jurisdiction over Civil Case No. 7003-M,
and to compel private respondent La Tondeña, Inc., and Ex- Oficio Provincial Sheriff of Bulacan to return the
disputed alcohol to their original location at Remco's ageing warehouse at Calumpit, Bulacan.

In its decision, the Intermediate Appellate Court dismissed the petition for lack of legal and factual basis, holding
that the respondent Judge did not abuse his discretion in issuing the Order of September 28, 1983 and the writ
of preliminary injunction dated October 3, 1983. citing the decision in Detective and Protective Bureau vs.
Cloribel (26 SCRA 255). Petitioner moved for reconsideration, but the respondent court denied the same in its
resolution dated February 2, 1984.

Hence, this petition.

Petitioner contends that respondent Judge of the Regional T- trial Court of Bulacan acted without jurisdiction in
entertaining Civil Case No. 7003-M, in authorizing the issuance of a writ of preliminary mandatory and
prohibitory injunction, which enjoined the sheriff of Pasay City from interferring with La Tondeña's right to enter
and withdraw the barrels of alcohol and molasses from Remco's ageing warehouse and from conducting the sale
thereof, said merchandise having been previously levied upon pursuant to the attachment writ issued by the
Regional Trial Court of Pasay City in Civil Case No. 9894-P. It is submitted that such order of the Bulacan Court
constitutes undue and illegal interference with the exercise by the Pasay Court of its coordinate and co-equal
authority on matters properly brought before it.
110
We find the petition devoid of merit.

There is no question that the action filed by private respondent La Tondeña, Inc., as third-party claimant, before
the Regional Trial Court of Bulacan in Civil Case No. 7003-M wherein it claimed ownership over the property
levied upon by Pasay City Deputy Sheriff Edilberto Santiago is sanctioned by Section 14, Rule 57 of the Rules of
Court. Thus — têñ.£îhqwâ£

If property taken be claimed by any person other than the party against whom attachment had
been issued or his agent, and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serves such affidavit upon the
officer while the latter has possession of the property, and a copy thereof upon the attaching
creditor, the officer shall not be bound to keep the property under the attachment, unless the
attaching creditor or his agent, on demand of said officer, secures aim against such claim by a
bond in a sum not greater than the value of the property attached. In case of disagreement as to
such value, the same shall be decided by the court issuing the writ of attachment. The officer
shall not be liable for damages, for the taking or keeping of such property, to any such third-
party claimant, unless such a claim is so made and the action upon the bond brought within one
hundred and twenty (120) days from the date of the filing of said bond. But nothing herein
contained shall prevent such third person from vindicating his claim to the property by proper
action ...

The foregoing rule explicitly sets forth the remedy that may be availed of by a person who claims to be the
owner of property levied upon by attachment, viz: to lodge a third- party claim with the sheriff, and if the
attaching creditor posts an indemnity bond in favor of the sheriff, to file a separate and independent action to
vindicate his claim (Abiera vs. Court of Appeals, 45 SCRA 314). And this precisely was the remedy resorted to by
private respondent La Tondeña when it filed the vindicatory action before the Bulacan Court.

The case before us does not really present an issue of first impression. In Manila Herald Publishing Co., Inc. vs.
Ramos, 1 this Court resolved a similar question in this wise: têñ.£îhqwâ£

The objection that at once suggests itself to entertaining in Case No. 12263 the motion to
discharge the preliminary attachment levied in Case No. 11531 is that by so doing one judge
would interfere with another judge's actuations. The objection is superficial and will not bear
analysis.

It has been seen that a separate action by the third party who claims to be the owner of the
property attached is appropriate. If this is so, it must be admitted that the judge trying such
action may render judgment ordering the sheriff of whoever has in possession the attached
property to deliver it to the plaintiff-claimant or desist from seizing it. It follows further that the
court may make an interlocutory order, upon the filing of such bond as may be necessary, to
release the property pending final adjudication of the title. Jurisdiction over an action includes
jurisdiction over an interlocutory matter incidental to the cause and deemed necessary to
preserve the subject matter of the suit or protect the parties' interests. This is self-evident.

xxx xxx xxx

It is true of course that property in custody of the law can not be interfered without the
permission of the proper court, and property legally attached is property in custodia legis. But
for the reason just stated, this rule is confined to cases where the property belongs to the
defendant or one in which the defendant has proprietary interest. When the sheriff acting
beyond the bounds of his office seizes a stranger's property, the rule does not apply and
interference with his custody is not interference with another court's order of attachment.

It may be argued that the third-party claim may be unfounded; but so may it be meritorious, for
that matter. Speculations are however beside the point. The title is the very issue in the case for
the recovery of property or the dissolution of the attachment, and pending final decision, the
court may enter any interlocutory order calculated to preserve the property in litigation and
protect the parties' rights and interests.

111
Generally, the rule that no court has the power to interfere by injunction with the judgments or decrees of a
concurrent or coordinate jurisdiction having equal power to grant the injunctive relief sought by injunction, is
applied in cases where no third-party claimant is involved, in order to prevent one court from nullifying the
judgment or process of another court of the same rank or category, a power which devolves upon the proper
appellate court . 2The purpose of the rule is to avoid conflict of power between different courts of coordinate
jurisdiction and to bring about a harmonious and smooth functioning of their proceedings.

It is further argued that since private respondent La Tondeña, Inc., had voluntarily submitted itself to the
jurisdiction of the Pasay Court by filing a motion to intervene in Civil Case No. 9894-P, the denial or dismissal
thereof constitutes a bar to the present action filed before the Bulacan Court.

We cannot sustain the petitioner's view. Suffice it to state that intervention as a means of protecting the third-
party claimant's right in an attachment proceeding is not exclusive but cumulative and suppletory to the right to
bring an independent suit. 3 The denial or dismissal of a third-party claim to property levied upon cannot
operate to bar a subsequent independent action by the claimant to establish his right to the property even if he
failed to appeal from the order denying his original third-party claim.4

WHEREFORE, the instant petition is hereby dismissed and the decision of the Intermediate Appellate Court in
AC-G.R. No. SP-01860 is affirmed, with costs against petitioner Traders Royal Bank.

SO ORDERED.1äwphï1.ñët

G.R. No. 155108. April 27, 2005

REPUBLIC OF THE PHILIPPINES, Represented by Department of Public Works and Highways (DPWH) under
Secretary Simeon Datumanong and Undersecretary Edmundo V. Mir, then Chairman Of Bid and Awards
Committee (BAC), Assistant Secretary Bashir D. Rasuman, BAC Vice-Chairman, Director Oscar D. Abundo, BAC
Member Director OIC-Director Antonio V. Malano, Jr., BAC Member and Project Director Philip F.
Menez, Petitioners,
vs.
EMILIANO R. NOLASCO, Respondent.

DECISION

TINGA, J.:

An obiter dictum is a nonessential, welcome and sublime like a poem of love in a last will or unwanted and
asinine as in brickbats in a funeral oration. It is neither enforceable as a relief nor the source of a judicially
actionable claim. However, by reason of its non-binding nature, the pronouncement does not generally
constitute error of law or grave abuse of discretion, even if it proves revelatory of the erroneous thinking on the
part of the judge. It is chiefly for that reason that this petition is being denied, albeit with all clarifications
necessary to leave no doubt as to the status and legal effect of the controvertible Order dated 6 September
2002 issued by Judge Juan C. Nabong, Jr. (Petitioner) of the Regional Trial Court (RTC) of Manila, Branch 32.

The root of the dispute is a public works project, the Agno River Flood Control Project ("Project"), the
undertaking of which has been unfortunately delayed due to the present petition. Funding for the project was to
be derived primarily through a loan from the Japan Bank for International Cooperation (JBIC). A Bid and Awards
Committee (BAC) was constituted by the Department of Public Works and Highways (DPWH) for the purpose of
conducting international competitive bidding for the procurement of the contract for Package II¾the Guide
Channel to Bayambang under Phase II of the Project.1 Six (6) pre-qualified contractors submitted their bids for
the project, among them the present intervenors Daewoo Engineering and Construction Co., Ltd. (Daewoo), and
China International Water and Electric Corp. (China International).

However, even before the BAC could come out with its recommendations, a legal challenge had already been
posed to preempt the awarding of the contract to Daewoo. On 19 February 2002, Emiliano R. Nolasco, a self-
identified taxpayer and newspaper publisher/editor-in-chief,2 filed a Petition, seeking a temporary restraining
order and/or preliminary injunction, with the RTC of Manila, naming the DPWH and the members of the BAC as
respondents. He alleged having obtained copies of "Confidential Reports from an Unnamed DPWH Consultant,"
which he attached to his petition. Nolasco argued that based on the confidential reports it was apparent that
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Daewoo’s bid was unacceptable and the putative award to Daewoo, illegal, immoral, and prejudicial to the
government and the Filipino taxpayers. Invoking his right as a taxpayer, Nolasco prayed that the DPWH and BAC
be restrained from awarding the contract to Daewoo and Daewoo disqualified as a bidder.3

The petition was raffled to the sala of Judge Nabong and docketed as Civil Case No. 02-102923. An ex-
partehearing was conducted on the prayer for a temporary restraining order (TRO), with Nolasco alone in
attendance. Petitioner issued an Order dated 4 March 2002 directing the issuance of a TRO, enjoining the DPWH
and the BAC from awarding the contract to Daewoo "and that [Daewoo] be disqualified as bidder and its bidders
be rejected" from carrying out the Project.4 The term of the TRO was for a period of twenty (20) days.

Upon learning of the TRO, the DPWH and the BAC, through the Office of the Solicitor General (OSG), filed
a Motion to Dismiss Petition with Motion for Dissolution of Temporary Restraining Order Dated March 4,
2002.5 While noting the impropriety of a twenty (20)-day TRO without prior notice or hearing, they pointed out
that Republic Act No. 8975 precisely prohibited the issuance by any court, save the Supreme Court, of a TRO or
preliminary injunction which restrains or prohibits the bidding for or awarding of a contract/project of the
national government. Accordingly, they prayed that the petition be dismissed and the TRO dissolved.

This new motion was set for hearing on 21 March 2002, and thereupon the parties were afforded the
opportunity to argue their case. Then, on 27 March 2002, the RTC issued an order dismissing Nolasco’s petition.
The dismissal of the petition was warranted, according to the RTC, as it was a suit against the State, which had
been sued without its consent.6 The RTC also noted that Nolasco had not established that he would sustain a
direct injury should the contract be awarded to Daewoo, and that the general interest which may have been
possessed by Nolasco along with all members of the public would not suffice.7

Interestingly, on 2 April 2002, the OSG claims to have received a copy of an alleged order dated 22 March 2002
purportedly signed by Judge Nabong which denied the motion to dismiss, gave the petition due course, and
granted the preliminary injunction subject to the posting of an injunction bond in the amount of Five Hundred
Thousand Pesos (₱500,000.00).8 However, in a Certification signed by Loida P. Moralejo, Officer-in-Charge of RTC
Branch 32, it was attested that the signature in this order was spurious, and affirmed instead the Order dated 22
March 2002 dismissing the petition.9

In the meantime, the BAC issued Resolution No. MFCDP-RA-02 dated 1 April 2002. The BAC noted therein that
among the three lowest bidders were Daewoo and China International, and that based on the bid amounts "as
corrected," the bid of Daewoo was the lowest of the three, followed by China International’s.10 As a result, the
BAC resolved to recommend the award of the contract for the Project to Daewoo. Then DPWH Secretary Simeon
Datumanong approved the recommendation by affixing his signature on the Resolution on the same day.11 A
copy of the Resolution and the Bid Evaluation Report was furnished to JBIC for "review and concurrence."12

For his part, Nolasco filed a motion for reconsideration dated 3 April 2002, seeking the reversal of
the Order dated 27 March 2002 dismissing his petition. Nolasco set this motion for reconsideration for hearing
on 18 April 2002, but none apparently ensued.13 The OSG filed its Opposition/Comment/Manifestation dated 24
April 2002 wherein it prayed that it be allowed to adopt its earlier motion to dismiss as its opposition to the
motion for reconsideration. The RTC granted OSG’s prayer in an Order dated 13 May 2002.14 In the same Order,
the RTC likewise stated that "in the spirit of comprehensive fairness, this Court must, and hereby, [set] the
hearing on the reception of petitioner’s evidence on this Motion [for Reconsideration]" on 17 May 2002.15

During the hearing of 17 May 2002, the OSG asked Judge Nabong to clarify his directive that a hearing be had for
the reception of Nolasco’s evidence. Judge Nabong clarified that his bent was for petitioner to present his
evidence but no longer on the question of whether a TRO or injunction should be issued. The RTC granted the
OSG’s prayer to submit a motion for reconsideration of this order, which the OSG did on 31 May 2002.16 In the
motion for reconsideration, the OSG argued that it was unnecessary to receive Nolasco’s evidence, considering
that the dismissal of the petition was grounded on pure questions of law. It also sought clarification of Judge
Nabong’s remarks during the 17 May 2002 hearing, which seemed to imply that this new hearing would actually
be on the merits of the petition.

This new OSG motion was submitted to the RTC during the hearing of 28 June 2002, wherein Petitioner
announced that the motion was to be resolved in due time. At the same time, the RTC allowed Nolasco to
adduce his evidence over the objections of the OSG. Nolasco presented a witness, Engineer Shohei Ezaki, a
DPWH consultant hired by JBIC who testified pursuant to a subpoena earlier issued by the court. Ezaki testified
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as to the Evaluation Report and Result prepared by his consultant firm and which had been earlier attached to
Nolasco’s petition. Nolasco also intimated its intention to present DPWH Director Philip F. Meñez as a witness
on his behalf. In the hearing of 2 August 2002, the OSG manifested that it would file motions opposing the
presentation of witnesses by Nolasco and the issuance of subpoenas requiring their testimony. In its order
issued in open court on 2 August 2002, the RTC deferred the further presentation of Nolasco’s witnesses
pending the filing of OSG’s motions.

At that point, the proceedings thus far undertaken had been unorthodox. Then the course veered sharply to the
bizarre. Nolasco filed a motion dated 12 August 2002, seeking the rendition of a partial judgment and dismissal
of his own petition, based on the proceedings that had transpired during the hearings held on 28 June and 2
August 2002.17 In the motion, Nolasco reiterated his submission that based on the evidence presented thus far,
Daewoo should have been disqualified from bidding on the project. While the prayer for the dismissal of the
motion for reconsideration was anchored on the need "to abbreviate the proceedings" so as to implement the
projects, the motion nonetheless urged the court, to issue a partial judgment and award the bid for the Project
to China International. Nolasco likewise filed a Formal Offer of Evidence dated 29 August 2002. The offered
evidence included various documents and the testimony of Nolasco and his witnesses previously heard by the
court. Both submissions of Nolasco were vigorously objected to by the OSG in pleadings filed to that effect.18

Then, on 6 September 2002, the RTC issued the Order now assailed before this Court. It included a brief
discussion of the factual antecedents, as well as the 27 March 2002 Order dismissing the petition and the
various pleadings filed by the parties prior and subsequent to the dismissal of the petition. The last two pages of
the four (4)-page Order proceeded to dissect the testimonies and ultimate dispositions therein. The last three
paragraphs of the Orderand its fallo are replicated below in full:

In the hearing, however, on August 21, 2002, Atty. Abelardo M. Santos for petitioner in open court, formally
offered the testimony of Mr. Ezaki, although, before the start of his testimony Atty. Santos Manifested: "Your
Honor, the purpose of the testimony of this witness is to show that they had made a technical study of all the
pre-qualified bidders referring to the Agno River Flood Control Project, Phase II."

Eng’r Shohel Ezaki, hired by the Japan Bank for International Cooperation (JBIC) through which the funding,
granted by the Overseas Development Assistance (ODA), is covered and flows through, and the DPWH and
President, Philippines Office, Nippon Koie Company, Ltd., (testifying under an issued subpoena duces tecum ad
testificandum) testified that the Evaluation Report and Result of their consultant firm in association with the PKII
and the Basic Team Inc., (doing evaluation works for the DPWH) disqualified DAEWOO and ITALIAN THAI on
Packages 1 and 2, Phase II. Insofar, moreover, as regards Package 1, Phase II, the bids submitted by TOA
Corporation is the lowest evaluated responsive bid. The second lowest evaluated responsive bid is that of China
State Construction Engineering. In open court, on August 2, 2002, Director Eng’r. Philip F. Menez, Major Floor
Control & Drainage Project-Project Management Office, Cluster II, DPWH, confirmed the award to TOA
Corporation, the evaluated responsive bid, Package 1.

All told, and presently, and urgently, there is the need to implement the PROJECTS in this petition so as not to
affect the ODA funding, harnessed through JBIC. More so, in addition, and a thoughtful consideration of
pleadings and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing, respondent BAC has
strayed from fairly applying the Bidding Laws, Guidelines, Rules, and Regulations, and Bid Tender Documents
and, as a matter of fairness, and in the interest of justice, considering other bidders whose bids have been
evaluated by the Technical Working Group including the consultant, Nippon Koie Company, Ltd., in association
with the PKII and the Basic Team, Inc., to be substantially responsive, the Honorable Simeon P. Datumanong
must now seriously consider and effect the award of Package 2, PHASE II, of the Agno River Floor Control
Project, as duly recommended by the Consultants and the Technical Working Group, DPWH, to China
International Water & Electric Corporation being the lowest evaluated responsive bid.

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the Petition is hereby DISMISSED.

SO ORDERED. (Emphasis supplied)19

The OSG received a copy of the Order dated 6 September 2002 on 17 September 2002. It opted to file a Petition
forReview on Certiorari under Rule 45 with this Court, instead of resorting to a motion for reconsideration, to
avert unnecessary delay of the implementation of the Project which would result in millions of pesos in damages.

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The OSG thus alleges that the petition raises pure questions of law, thereby dispensing with recourse to the
Court of Appeals.20

The OSG also notes that in a letter to the DPWH dated 21 June 2002, JBIC, through Chief Representative Mitsuru
Taruki, let it be known that it had decided to hold in abeyance its concurrence to the project, as "the issue [was]
now under the jurisdiction of the appropriate Philippine courts and other relevant organizations of the
Philippine government," and that it would be prudent to wait "for the decisions of the proper authorities before
taking any action on the matter."21 It is likewise worth noting at this juncture that Nolasco had also filed a
verified complaint against the Chairman and members of the BAC with the Presidential Anti-Graft Commission,
as well as another complaint with the National Economic Development Authority and a complaint-letter with
JBIC itself requesting that the bank reject the award to Daewoo.22

Since the filing of the present petition, both Daewoo and China International have since participated in the case.
Daewoo filed a Comment-in-Intervention dated 10 January 2003, which this Court treated as a petition-In-
intervention.23 Upon order of this Court, China International filed a Comment-in-Intervention dated 5 February
2003.

Petitioner imputes error to the RTC in taking notice of and resolving Nolasco’s Motion to Issue Partial Judgment
and Motion to Dismiss Petition, which they characterize as a "trifle." Substantively, it asserts that the RTC erred
in directing the DPWH to perform an affirmative act even though the court had no more jurisdiction over the
petition, considering that the RTC never resolved the motion for reconsideration filed by Nolasco. It also avers
that Nolasco’s original petition had been substantially amended, without leave of court and without notice to
the Petitioner, and that they had not been afforded the opportunity to file an answer to the petition. Moreover,
the RTC is alleged to have erred in directing the award of the subject package to China International, a stranger
to the case, without ordering the inclusion of Daewoo as an indispensable party.

We can recast the legal question within the framework of whether the RTC committed a reversible error in
assailed Order dated 6 September 2002. It is a mark of the strangeness of this case that Petitioner seeks the
nullification of a dispositive order that affirms the very dismissal of the case they likewise seek. However, given
the circumstances, the dilemma of Petitioner is understandable. While the fallo of the assailed Order is indeed
favorable to them, the body thereof is a palpable source of mischief.

The Petitioner assails only the Order of 6 September 2002. However, it behooves this Court to be more
comprehensive in approach, in part to elucidate on the proper steps that should be undertaken by lower court
judges when confronted with complaints or petitions affecting national government infrastructure projects. Our
review will necessarily entail an examination of the propriety of the procedure adopted by the RTC in disposing
of Nolasco’s petition. It would be best for the Court to diagram the procedures undertaken below like a
grammar school teacher to illustrate the multiple errors attendant in this case. From a chronological standpoint,
the first matter for discussion would be Nolasco’s Petition before the RTC.

The caption of the Petition states that it is for "Issuance of a Temporary Restraining Order and/or Preliminary
Injunction."24 In the Petition, Nolasco averred that he received a letter from a resident of Bayambang,
Pangasinan, regarding the latter’s "observations on the Public Bidding" made on the Project; that Nolasco
contacted his sources at the DPWH and learned that the Project would be awarded to Daewoo; that he obtained
a Confidential Report from "an Unnamed DPWH Consultant" which allegedly concluded that Daewoo’s bid was
unacceptable. From these premises, Nolasco argued that he was entitled to the issuance of a temporary
restraining order or preliminary injunction, as the award to the contracts to Daewoo would probably cause
injustice to him as a taxpayer. As prayer, Nolasco asked that the respondents therein (herein Petitioner) be
restrained from awarding the contracts to Daewoo and that Daewoo be disqualified as a bidder and its bid
rejected.

It would be difficult to ascertain the nature of Nolasco’s action if the Court were obliged to rely alone on the
caption of his pleading. The caption describes the Petition as one for issuance of a temporary restraining order
and/or preliminary injunction; hence, implying that the action seeks only provisional reliefs without the
necessary anchor of a final relief. Moreover, the use of "Petition" in lieu of "Complaint" seemingly implies that
the action brought forth is the special civil action of prohibition under Rule 65, yet this is not supported by the
body of the pleading itself as it is bereft of the necessary allegations of grave abuse of discretion or
absence/excess of jurisdiction and the absence of any other plain speedy and adequate remedy.25

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Nonetheless, the principle consistently adhered to in this jurisdiction is that it is not the caption but the
allegations in the complaint or other initiatory pleading which give meaning to the pleading and on the basis of
which such pleading may be legally characterized.26 An examination of the "petition" reveals that it should be
considered as a complaint for injunction, with a prayer for the provisional relief of temporary restraining
order/preliminary injunction. After all, the Petition prayed that respondents therein (Petitioner herein) be
restrained from awarding the contracts to Daewoo, citing as basis thereof its "unacceptability," as purportedly
established by the evaluation report.

Nonetheless, the prayer for the issuance of a temporary restraining order or preliminary injunction affecting the
bidding or awarding of a national government contract or project, would have called for the application of
Republic Act No. 8975 and the corresponding denial of the prayer for provisional relief. Still, the RTC instead
issued a TRO in its Order dated 4 March 2002.

Republic Act No. 8975 definitively enjoins all courts, except the Supreme Court, from issuing any temporary
restraining order, preliminary injunction, or preliminary mandatory injunction against the government, or any of
its subdivisions, officials or any person or entity to restrain, prohibit or compel the bidding or awarding of a
contract or project of the national government,27 precisely the situation that obtains in this case with respect to
the Agno River Project. The only exception would be if the matter is of extreme urgency involving a
constitutional issue, such that unless the temporary restraining order is issued, grave injustice and irreparable
injury will arise.28 The TRO issued by the RTC failed to take into consideration said law. Neither did it advert to
any extreme urgency involving a constitutional issue, as required by the statute. The law ordains that such TRO
is void,29 and the judge who issues such order should suffer the penalty of suspension of at least sixty (60) days
without pay.30

Nevertheless, there is no need to belabor this point since the TRO no longer subsists. It appears that the RTC
subsequently realized the import of Republic Act No. 8975 as it cited the same in its 27 March
2002 Orderdismissing the Petition:

Applying Republic Act No. 8975, most particularly Section 3 thereof, and Administrative Circular No. 11-2000
issued on November 13, 2000 by the Honorable Hilario G. Davide, Jr., Chief Justice, Supreme Court, all parties
having copies, the Petition at bench ought to be dismissed outrightly (sic).31

However, it must be clarified that Republic Act No. 8975 does not ordinarily warrant the outright dismissal of
any complaint or petition before the lower courts seeking permanent injunctive relief from the implementation
of national government infrastructure projects. What is expressly prohibited by the statute is the issuance of the
provisional reliefs of temporary restraining orders, preliminary injunctions, and preliminary mandatory
injunctions. It does not preclude the lower courts from assuming jurisdiction over complaints or petitions that
seek as ultimate relief the nullification or implementation of a national government infrastructure project. A
statute such as Republic Act No. 8975 cannot diminish the constitutionally mandated judicial power to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of government.32 Section 3 of the law in fact mandates, thus:

If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate
under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the
same, without prejudice to any liability that the guilty party may incur under existing laws.

Thus, when a court is called upon to rule on an initiatory pleading assailing any material aspect pertinent to a
national government infrastructure project, the court ordinarily may not dismiss the action based solely on
Republic Act No. 8975 but is merely enjoined from granting provisional reliefs. If no other ground obtains to
dismiss the action, the court should decide the case on the merits. As we recently held in Opiña v. NHA:33

Unquestionably, the power to issue injunctive writs against the implementation of any government
infrastructure project is exclusively lodged with this Court, pursuant to Section 3 of Rep. Act No. 8975. But while
lower courts are proscribed thereunder from issuing restraining orders and/or writs of preliminary injunction to
stop such projects, the proscription does not mean that such courts are likewise bereft of authority to take
cognizance of the issue/issues raised in the principal action, as long as such action and the relief sought are
within their jurisdiction.

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Accordingly, it was not proper for the RTC to cite Republic Act No. 8975 as basis for the dismissal of Nolasco’s
petition since the statute does not bar the institution of an action that seeks to enjoin the implementation of a
national government project, but merely the issuance of provisional orders enjoining the same. However, the
RTC cited two other grounds for the dismissal of the case–that Nolasco’s general interest as a taxpayer was not
sufficient to establish any direct injury to him should the Project be awarded to Daewoo; and that the petition
was a suit against the State, which may not be sued without its consent.

We shall defer for now a review of these two grounds cited by the RTC for the dismissal of Nolasco’s petition,
and instead focus on the proper steps that should have been undertaken owing to the dismissal of the case.
Nolasco filed a motion for reconsideration or the dismissal of the case, a remedy available to him since the 27
March 2002 Order is a final order that disposed of the case.34 Petitioner responded with an all-
encompassing Opposition/Comment/Mani-festation (Re: Petitioner’s Motion for Reconsideration). Both of these
submissions were set for hearing before the RTC. The RTC could have very well resolved the motion for
reconsideration based on the pleadings submitted. Yet, in its Order dated 13 May 2002, it declared:

However, be that as it may, in the spirit of comprehensive fairness, this Court must, and hereby, sets the hearing
on the Reception of Petitioner’s evidence on this Motion on May 17, 2002 at 9:00 A.M.35

As far as determinable, there is no legal or jurisprudential standard of "comprehensive fairness," a phrase that
reeks of pomposity without admitting to any concrete meaning. Neither is there any mandatory rule directing a
court to conduct a hearing to receive evidence on a motion for reconsideration. Nonetheless, a motion for
reconsideration, as with all other motions which may not be acted upon without prejudicing the rights of the
adverse party, is required to be set for hearing by the applicant,36 and to be heard with due notice to all parties
concerned.37

It is certainly within acceptable bounds of discretion for the trial judge to require or allow the movant for
reconsideration to present evidence in support of the arguments in the motion, and in fact desirable if such
evidence should be necessarily appreciated for a fair and correct disposition of the motion for reconsideration.
Yet caution should be had. At this stage, the issues and evidence submitted for appreciation and resolution of
the trial court should be limited to the matters pertinent to the motion for reconsideration. In this case, the RTC
in hearing the motion for reconsideration, should have focused on the issues of lack of standing on the part of
Nolasco and non-suability of the State, as these were the grounds on which dismissal of the petition was
predicated. It would entail a fundamental reconsideration of these two key concerns for Nolasco’s motion to
have been granted and the petition readmitted.

Instead, the RTC, upon Nolasco’s insistence, proceeded instead to hear the case on the merits. The RTC allowed
Nolasco’s witness, Engineer Ezaki to testify as to the authenticity and veracity of the bid evaluation report
attached to Nolasco’s petition, and to affirm the conclusion that Daewoo was not a qualified bidder.38 This
unusual turn of events arouses suspicion. The RTC had earlier dismissed the petition on legal grounds, yet it was
now considering factual matters as basis for review on reconsideration. The petitioner, through counsel, appears
to have strenuously objected to this furtive and dubious recourse by Nolasco, but to no avail.

Then, despite the fact that other witnesses of Nolasco were still scheduled to be heard, Nolasco filed the Motion
to Issue Partial Judgment and to Dismiss Petition. He expressly prayed that his very own motion for
reconsideration of the petition be dismissed. From this motion, it is difficult to ascertain why exactly Nolasco
wanted the RTC to deny his own motion for reconsideration and to affirm the dismissal of his own petition,
though there is the expressed concern "in order to abbreviate the proceedings in view of the need to implement
the subject projects of this petition the soonest possible time."39 At the same time, and in the same pleading,
Nolasco still asserted that Daewoo was not qualified to be awarded the project, and emphasizes that such
contention was borne out by the evidence he had presented thus far. Accordingly, he likewise prayed that
partial judgment be rendered on the petition, calling on the RTC to conclude that China International won the
Project, it being the lowest evaluated responsive bid.40

It bears noting that at this stage, there were two pending motions before the RTC, both filed by Nolasco, which
had at issue whether or not his petition should be dismissed. The first was Nolasco’s motion for reconsideration
praying for the reinstatement of his petition. The second was Nolasco’s Motion for Partial Judgment and to
Dismiss Petition, praying for the dismissal of his petition. Palpably, Nolasco had opted to hedge his chips on both
red and black, which is not normally done for obvious reasons. Neither did Nolasco, in his latter pleading,

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expressly withdraw his earlier motion for reconsideration, although his subsequent prayer for the dismissal of
his own earlier motion sufficiently evinced such intent.

This Motion for Partial Judgment and to Dismiss Petition is truly an odd duckling of a pleading, which
unfortunately did not blossom into a swan but from it instead emerged an even uglier duck–the 6 September
2002 Order, which dismissed the petition yet intoned that DPWH Secretary Datumanong "must now seriously
consider and effect the award" of the project to China International.

There is no doubt that the assailed Order dated 6 September 2002 sought to resolve the Motion for Partial
Judgment and to Dismiss Petition. This is evident from the first sentence of the Order, which states: "Before the
Court is petitioner’s Motion to Issue Partial Judgment and to Dismiss Petition filed on August 16, 2002…." No
other pending motion, such as the motion for reconsideration, was adverted to as being subject for resolution
by the said Order.

Now, the Motion for Partial Judgment and to Dismiss Petition seeks reliefs A and B – that China International be
awarded the project; and that the motion for reconsideration be dismissed. There is no doubt that relief B was
unequivocally granted by the trial court, with the following disposal:

WHEREFORE, in view of all the foregoing, the Motion for Reconsideration of the Petition is hereby DISMISSED.

SO ORDERED.41

But did the trial court grant relief A that China International be awarded the project?

All told, and presently, and urgently, there is the need to implement the PROJECTS in this petition so as not to
affect the ODA funding, harnessed through JBIC. More so, in addition, and a thoughtful consideration of
pleadings and argument, from the Formal Offer of Evidence ADMITTED, facts, hearing, respondent BAC has
strayed from fairly applying the Bidding Laws, Guidelines, Rules, and Regulations, and Bid Tender Documents
and, as a matter of fairness, and in the interest of justice, considering other bidders whose bids have been
evaluated by the Technical Working Group including the consultant, Nippon Koie Company, Ltd., In association
with the PKII and the Basic Team, Inc., to be substantially responsive, the Honorable Simeon P.
Datumanong must now seriously considerand effect the award of Package 2, PHASE II, of the Agno River Floor
Control Project, as duly recommended by the Consultants and the Technical Working Group, DPWH, to China
International Water & Electric Corporation being the lowest evaluated responsive bid.42 (emphasis supplied)

Contrast this with Nolasco’s prayer on the same relief in his Motion for Partial Judgment and to Dismiss Petition,
thus:

WHEREFORE, in view of the foregoing premises, and in consideration of equity and petitioner’s moral obligation
and in order to abbreviate the proceedings in view of the need to implement the subject projects of this petition
the soonest possible time so an not to jeopardize the funding granted by the Overseas Development Assistance
(ODA) fund through the Japan Bank For International Cooperation (JBIC), it is respectfully prayed unto this
Honorable Court to issue its partial judgment on the petition. An [sic] in view of the foregoing findings that clear
violation of bidding laws, rules and regulations, the respondents’ Bid Tender Documents, has been committed
by the respondents members of the BAC, and in fairness to the other bidder whose bids have been evaluated by
the Technical Working Group including the consultant, Nippon Koie Company, Ltd., in association with the PKIII
and the Basic Team, Inc. to be substantially responsive, the Bid of China International Water & Electric
Corporation being the lowest evaluated responsive bid must be awarded the project, package 2, Phase II, of the
Agno River Flood Control Projects as recommended by the Consultants and the Technical Working Group of
the respondents. The respondent, Honorable Secretary Simeon Datumanong is hereby directed to take steps
to attain this end.43 (Emphasis supplied)

Unmistakably though, the controverted portion of the Order, urging the DPWH Secretary "to consider" awarding
the Project to China International does not form part of the dispositive portion or fallo. What should be deemed
as the dispositive portion in this case is the final paragraph of the Resolution, which reads: "WHEREFORE, in view
of all the foregoing, the Motion for Reconsideration of the Petition is hereby DISMISSED."

The Court recently explicated the contents of a proper dispositive portion in Velarde v. Social Justice Society:44

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In a civil case as well as in a special civil action, the disposition should state whether the complaint or petition is
granted or denied, the specific relief granted, and the costs. The following test of completeness may be applied.
First, the parties should know their rights and obligations. Second, they should know how to execute the
decision under alternative contingencies. Third, there should be no need for further proceedings to dispose of
the issues. Fourth, the case should be terminated by according the proper relief. The "proper relief" usually
depends upon what the parties seek in their pleadings. It may declare their rights and duties, command the
performance of positive prestations, or order them to abstain from specific acts. The disposition must also
adjudicate costs.45

We have ruled before against recognizing statements in the body of a decision as part of the dispositive portion.
In Velarde, the respondents insisted that a statement by the trial court found on page ten (10) of the fourteen
(14)-page decision should be considered as part of the dispositive portion. The Court disagreed,46 and cited the
precedent in Magdalena Estate, Inc. v. Hon. Caluag:47

. . . The quoted finding of the lower court cannot supply deficiencies in the dispositive portion. It is a mere
opinion of the court and the rule is settled that where there is a conflict between the dispositive part and the
opinion, the former must prevail over the latter on the theory that the dispositive portion is the final order while
the opinion is merely a statement ordering nothing.48

In Contreras v. Felix,49 the Court reasoned:

More to the point is another well-recognized doctrine, that the final judgment as rendered is the judgment of
the court irrespective of all seemingly contrary statements in the decision. "A judgment must be distinguished
from an opinion. The latter is the informal expression of the views of the court and cannot prevail against its
final order or decision. While the two may be combined in one instrument, the opinion forms no part of the
judgment. So, . . . there is a distinction between the findings and conclusions of a court and its Judgment. While
they may constitute its decision and amount to the rendition of a judgment, they are not the judgment itself.
They amount to nothing more than an order for judgment, which must, of course, be distinguished from the
judgment." (1 Freeman on Judgments, p. 6.) At the root of the doctrine that the premises must yield to the
conclusion is perhaps, side by side with the needs of writing finis to litigations, the recognition of the truth that
"the trained intuition of the judge continually leads him to right results for which he is puzzled to give
unimpeachable legal reasons." "It is an everyday experience of those who study judicial decisions that the
results are usually sound, whether the reasoning from which the results purport to flow is sound or not." (The
Theory of Judicial Decision, Pound, 36 Harv. Law Review, pp. 9, 51.) It is not infrequent that the grounds of a
decision fail to reflect the exact views of the court, especially those of concurring justices in a collegiate court.
We often encounter in judicial decisions, lapses, findings, loose statements and generalities which do not bear
on the issues or are apparently opposed to the otherwise sound and considered result reached by the court as
expressed in the dispositive part, so called, of the decision.50

Moreover, we are guided by the evident fact that the respondent-judge did not intend to make his conclusions
on who should be awarded the Project as part of the dispositive portion of his order. The language deliberately
employed in the order, "must now seriously consider and effect the award," indicates that the judge was
hesitant to definitively grant the relief sought by Nolasco, which was that the trial court award the bid to China
International and direct Sec. Datumanong to take steps towards this end. Instead, it stated that Sec.
Datumanong "must now seriously consider and effect the award" to China International. Undoubtedly, the word
"must" is mandatory in character, but it is used in conjunction with "consider". In short, the trial court noted
that the DPWH Secretary "must think about" effecting an award to China International.

Imagine if Nolasco had tried to judicially enforce this portion of the decision. Agents of the court would be sent
over to the DPWH offices to confront the DPWH Secretary. What else could they say but, "Sir, have you seriously
considered effecting the award to China International?" Of course, the DPWH Secretary can reply, "Yes, but I
decided to award the bid anyway to Daewoo," and such averment would evince satisfactory compliance with
the assailed Order. After all, the Order did not require that the DPWH award the bid to China International, only
that the DPWH consider such a measure.

These premises considered, we cannot agree with Petitioner’ characterization of this portion of the Order as
granting affirmative relief in favor of China International.51 No such affirmative relief was rendered in favor of
China International, as such was not included as part of the fallo. Nor was there an evident intent on the part of

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the judge to grant such affirmative relief, on account of the language he employed, recommendatory in
character as it ultimately was.

Still, if the Court were to construe this assailed portion of the Order as belonging to the dispository part, such
disposition, effectively concluding that China International and not DAEWOO should be awarded the bid, would
run contrary to law.

It must be remembered that Nolasco’s prayer that the trial court award the bid to China International utilized as
legal basis the power of the trial courts to issue partial or separate judgments. Yet by any objective standard,
there is no merit in allowing for such a relief in this case. Section 5, Rule 36 of the Rules of Civil Procedure, which
governs separate judgments, states:

Sec. 5. Separate judgments. – When more than one claim for relief is presented in an action, the court, at any
stage, upon a determination of the issues material to a particular claim and all counterclaims arising out of the
transaction or occurrence which is the subject matter of the claim, may render a separate judgment disposing of
such claim. The judgment shall terminate the action with respect to the claim so disposed of and the action shall
proceed as to the remaining claims. . . .

On paper, Nolasco’s petition prays for two reliefs, that the petitioner be restrained from awarding the Project to
Daewoo, and that Daewoo be disqualified as a bidder and its bid be rejected. Yet these reliefs are obviously
intertwined for the allowance of one would necessarily lead to the grant of the other. The multiple reliefs
referred to in the provision refer to those sufficiently segregate from each other that the allowance of one at a
preliminary stage will not preclude litigation on the merits of the others.

More importantly, the rule is explicit that partial judgment with regards one of the reliefs is warranted only after
"a determination of the issues material to a particular claim and all counterclaims arising out of the transaction
or occurrence which is the subject matter of the claim." Herein, the partial judgment was sought even before
the respondents had the chance to file their answer to the petition. Moreover, it was prayed for at a point when,
at even such a preliminary stage, the claimant was actually somehow able to already present evidence in
support of his claim, but before the respondents had the chance to rebut this claim or support countervailing
evidence.

At bare minimum, the allowance of a partial judgment at this stage would constitute a denial of constitutional
due process. It would condemn before hearing, and render judgment before trial.52 Had indeed partial judgment
been granted in the assailed Order, it would have been rendered before the Petitioner were afforded the
opportunity to rebut the evidence of Nolasco, or to present their own countervailing evidence. While the
allowance of partial judgments may expedite the litigation of claims, it cannot be sanctioned at a stage when the
trial judge has not had the opportunity to hear all sides to the claim. In fact, it was highly imprudent for the
respondent judge to have concluded, as he did in his Order, that it was an admitted fact that the BAC had
strayed from fairly applying the Bidding Laws, Guidelines, Rules, and Regulations, and Bid Tender Documents,
considering that the Petitioner had not even filed an answer or been allowed the opportunity to present any
evidence on its behalf.

And there is the fact that as of the moment the assailed Order was rendered, Nolasco’s petition had already
been dismissed by the earlier Order dated 27 March 2002. In order that the prayer for partial judgment could
have been granted by the RTC, it would have been first necessary to reinstate Nolasco’s dismissed petition, such
as by granting Nolasco’s motion for reconsideration. The respondent judge never reinstated the petition, which
has stood dismissed since 27 March 2002. Thus, none of the reliefs prayed for by Nolasco in his Petition, much
less the prayer for partial judgment, could have ever been granted by the respondent-judge.

Thus, the dispositive portion of the assailed Order correctly limited itself to the denial of Nolasco’s motion for
reconsideration without allowing any other relief that Nolasco prayed for in his Motion for Partial Judgment and
to Dismiss Petition. Had the respondent judge instead opted to grant partial judgment and direct the award of
the Project to China International, the Court would not hesitate to strike down such award. Yet the respondent
judge did not act so unequivocally, and merely advised that the DPWH Secretary should consider such an option.
Perhaps the propriety of such advice can be appropriately questioned, in light of our view that such conclusion
was derived without allowing the DPWH or an injured party such as Daewoo opportunity to be heard and to
present their own evidence. Nonetheless, such advisory opinion has no binding effect, especially if construed as
directing the award of the Project to China International. Accordingly, for that reason alone and with the
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necessary clarifications made, there is no reason to set aside the assailed Order dated 6 September 2002,
especially considering that its final disposition dismissing Nolasco’s motion for reconsideration is ultimately
correct.

Nolasco’s petition had been correctly dismissed by the RTC on two grounds: that Nolasco’s general interest as a
taxpayer was not sufficient to establish any direct injury to him should the Project be awarded to Daewoo; and
that the petition was a suit against the State, which may not prosper without its consent. Given that none of the
parties are actually praying that Nolasco’s motion for reconsideration be granted or that Nolasco’s petition be
reinstated, we need not review in depth the rationale of the RTC in dismissing Nolasco’s petition. The mere
invocation of standing as a tax payer does not mean that in each and every instance where such a ground is
invoked courts are left with no alternative except to hear the parties, for the courts are vested with discretion
whether or not a taxpayer’s suit should be entertained.53 We likewise find no error on the part of the RTC when
it cited as basis for the dismissal of Nolasco’s petition, our ruling in Bugnay Construction & Development Corp. v.
Laron54 that the taxpayer-plaintiff must specifically prove that he has sufficient interest in preventing the illegal
expenditure of money raised by taxation, and that he will sustain a direct injury as a result of the enforcement of
the questioned statute or contract.55

We also find no error on the part of the RTC in regarding Nolasco’s petition as a suit against the State without
the latter’s consent. An unincorporated government agency such as the DPWH is without any separate juridical
personality of its own and hence enjoys immunity from suit.56 Even in the exercise of proprietary functions
incidental to its primarily governmental functions, an unincorporated agency still cannot be sued without its
consent.57Moreover, it cannot be said that the DPWH was deemed to have given its consent to be sued by
entering into a contract, for at the time the petition was filed by Nolasco, the DPWH had not yet entered into a
contract with respect to the Project.

Surprisingly, and with no apparent benefit on its behalf, Petitioner imputes error on the part of the RTC when
the court, in the fallo of the assailed Order, directed the dismissal of the "Motion for Reconsideration of the
Petition," pointing out that such pleading was never filed by Nolasco,58 and accordingly prays "that the order
dismissing the alleged Motion for Reconsideration of Petition be declared null and void."59 However, Nolasco did
file a "Motion for Reconsideration" to the order dismissing the petition, and in his Motion for Partial Judgment
and to Dismiss Petition, Nolasco similarly prays that "the Motion for Reconsideration of the Petition be
dismissed." We have no doubt, infelicitous wording aside, that the "Motion for Reconsideration of the Petition"
adverted to in the fallo refers to Nolasco’s own motion for reconsideration, the denial of which Nolasco also
prayed for in the Motion for Partial Judgment and to Dismiss Petition that was the subject of the assailed Order.
And as just discussed, the denial of the Nolasco’s motion for reconsideration was in order.

Notably, this Court has not engaged in a review of the award of the Project to Daewoo. Notwithstanding the fact
that the parties have prayed that the Court either effect the award of the Project to Daewoo or direct the award
to China International, the Court deems it improper to conduct a de novo factual finding on which entity should
be awarded the project. The Court is not a trier of facts, and it would be offensive to established order and the
hierarchy of courts for this Court to initiate such factual review. Had the RTC conducted a valid trial on the
merits, perhaps this Court could eventually review the lower court’s findings on the matter, but the RTC
properly dismissed the case, and it would be unbecoming on the part of this Court to suddenly engage in an
initial trial on the merits on appellate review.

This is a stance not borne out of hesitance to tackle the issue, or avoid the sort of ruling that may satisfy one
party or the other as "definitive," but arrived at out of necessity to preserve the integrity of our civil procedure,
including the hierarchy of our courts and the limits of this Court’s power of judicial review. Precisely, the messy
milieu presented before us occurred because the RTC and Nolasco compromised our court processes to
destructive ends, and it is this Court’s function to reassert the rules, to restore order, and not compound to the
sloppiness by itself violating procedural order.

The executive department is acknowledged to have wide latitude to accept or reject a bid, or even after an
award has been made, to revoke such award. From these actions taken, the court will not generally interfere
with the exercise of discretion by the executive department, unless it is apparent that the exercise of discretion
is used to shield unfairness or injustice.60 This policy of non-interference can hardly be countermanded by reason
of a claim anchored on an unofficial document such as the "Confidential Reports from an Unnamed DPWH
Consultant" presented by Nolasco, especially when the probative value thereof has hardly been passed upon by
a proper trier of facts.
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More importantly, the Court, the parties, and the public at large are bound to respect the fact that official acts
of the Government, including those performed by governmental agencies such as the DPWH, are clothed with
the presumption of regularity in the performance of official duty. and cannot be summarily, prematurely and
capriciously set aside.61 Such presumption is operative not only upon the courts, but on all persons, especially on
those who deal with the government on a frequent basis. There is perhaps a more cynical attitude fostered
within the popular culture, or even through anecdotal traditions. Yet, such default pessimism is not embodied in
our system of laws, which presumes that the State and its elements act correctly unless otherwise proven. To
infuse within our legal philosophy a contrary, gloomy pessimism would assure that the State would bog down,
wither and die.

Instead, our legal framework allows the pursuit of remedies against errors of the State or its components
available to those entitled by reason of damage or injury sustained. Such litigation involves demonstration of
legal capacity to sue or be sued, an exhaustive trial on the merits, and adjudication that has basis in duly proven
facts and law. No proper and viable legal challenge has emerged impugning the award of the Project by DPWH
to Daewoo, Nolasco’s Petition being woefully insufficient to that purpose. It is tragic perhaps that the
irresponsible actions of Judge Nabong, and their ultimate embodiment in his obiter dicta in the assailed Order,
somehow fostered the illusion that there was a serious legal cloud hovering over the award by DPWH to
Daewoo. We rule that there is none, that the RTC acted correctly in granting the Petitioner’s motion to dismiss
Nolasco’s Petition and in denying the subsequent motion for reconsideration to the dismissal. These are the only
relevant matters properly brought for judicial review and everything else is unnecessary verbiage.

For the same reason, we cannot allow the Petitioner’s prayer for damages against Nolasco. The matter of
damages is one that has to be properly litigated before the triers of fact, and certainly has not been passed upon
by the RTC. Yet it does not necessarily follow that no liability arises from the filing of the initiatory petition, or
the facts succeeding thereto. It does not escape our attention that on 2 April 2002, the OSG was served a
spurious order purportedly giving due course to Nolasco’s petition and granting the sought-for preliminary
injunction. This incident cannot pass without comment by this Court, which cannot sanction the circulation of
fake judicial orders, and should be duly investigated by the National Bureau of Investigation for appropriate
action.

Finally, it likewise appears that Judge Nabong, by issuing the temporary restraining order dated 4 March 2002,
violated Section 6 of Republic Act No. 8975, which penalizes the judge who issues a temporary restraining order
enjoining the bidding or awarding of a contract or project of the national government.62 Yet to his credit, Judge
Nabong recalled the TRO upon realizing his error, thus a REPRIMAND should suffice under the circumstances.

WHEREFORE, premises considered, the Petition is DENIED. The assailed Order dated 6 September 2004 is
AFFIRMED, with the QUALIFICATION that last paragraph of the body of the Order, which states that the DPWH
Secretary "must now seriously consider and effect the award of Package 2, Phase II of the Agno River Flood
Control Project…" is OBITER DICTA and hence of no binding force.

The National Bureau of Investigation is hereby DIRECTED to investigate the circumstances surrounding the
alleged spurious order dated 22 March 2002 served on the Office of the Solicitor General and determine
possible criminal liabilities for the creation of such forged document.

Judge Juan Nabong is hereby REPRIMANDED for failure to observe Section 6 of Republic Act No. 8975, and
WARNED that a subsequent repetition of the same shall be dealt with more severely.

No costs.

SO ORDERED.

G.R. No. 145328 March 23, 2006

EDUARDO F. HERNANDEZ, MA. ENCARBACION R. LEGASPI, JAIME BLANCO, JR., ENRIQUE BELO, CARLOS
VIAPLANA, CARL FURER, VIVENCIO TINIO, MICHAEL BRIGGS, ROSA CARAM, FAUSTO PREYSLER, ROBERT KUA,
GEORGE LEE, GUILLERMO LUCHANGCO, PETER DEE, LUISA MARQUEZ, ANGELITA LILLES, JUAN CARLOS,
HOMER GO, AMADEO VALENZUELA, EMILIO CHING, ANTONIO CHAN, MURLI SABNANI, MARCOS ROCES,
RAYMUNDO FELICIANO, NORMA GAFFUD, ALF HOLST, LOURDES P. ROQUE, MANUEL DY, RAUL FERNANDEZ,
VICTORIA TENGCO, CHI MO CHENG, BARANGAY DASMARIÑAS, and HON. FRANCISCO B. IBAY, petitioners
122
vs.
NATIONAL POWER CORPORATION, respondent

DECISION

CHICO-NAZARIO, J.:

Although Presidential Decree No. 1818 prohibits any court from issuing injunctions in cases involving
infrastructure projects, the prohibition extends only to the issuance of injunctions or restraining orders against
administrative acts in controversies involving facts or the exercise of discretion in technical cases. On issues
clearly outside this dimension and involving questions of law, this Court declared that courts could not be
prevented from exercising their power to restrain or prohibit administrative acts.1 In such cases, let the hammer
fall and let it fall hard.

With health risks linked to exposure to electromagnetic radiation as their battle cry, petitioners, all residents of
Dasmariñas Village, are clamoring for the reversal of the decision2 dated 3 May 2000 of the Court of Appeals in
CA-G.R. SP No. 57849 as well as the resolution dated 27 September 2000, denying their motion for
reconsideration.

The assailed decision3 of the Court of Appeals reversed the order of the Regional Trial Court of Makati, issuing a
writ of preliminary injunction against respondent National Power Corporation (NAPOCOR) to stay the latter from
energizing and transmitting high voltage electric current through its cables erected from Sucat, Parañaque to
Araneta Ave., Quezon City.

But, first, the facts:

Sometime in 1996, NAPOCOR began the construction of 29 decagon-shaped steel poles or towers with a height
of 53.4 meters to support overhead high tension cables in connection with its 230 Kilovolt Sucat-Araneta-
Balintawak Power Transmission Project. Said transmission line passes through the Sergio Osmeña, Sr. Highway
(South Superhighway), the perimeter of Fort Bonifacio, and Dasmariñas Village proximate to Tamarind Road,
where petitioners’ homes are.

Said project later proved to be petitioners’ bane of existence.

Alarmed by the sight of the towering steel towers, petitioners scoured the internet on the possible adverse
effects that such a structure could cause to their health and well-being. Petitioners got hold of published articles
and studies linking the incidence of a fecund of illnesses to exposure to electromagnetic fields. These illnesses
range from cancer to leukemia.

Petitioners left no stones unturned to address their malady. They aired this growing concern to the NAPOCOR,
which conducted a series of meetings with them.

NAPOCOR received flak from Representative Francis Joseph G. Escudero, who in his Privilege Speech dated 10
May 1999, denounced the cavalier manner with which Napocor ignored safety and consultation requirements in
the questioned project.

Petitioners brought their woes to the attention of Rep. Arnulfo Fuentebella, Chairman of the House Committee
on Energy, wherein NAPOCOR was asked to shed light on the petitioners’ problem. In a letter dated 8 November
1999, Napocor President Federico Puno stated that NAPOCOR was still in the process of coming up with a "win-
win" solution to the concerns of the Dasmariñas Village and Forbes Park residents.4

In a letter dated 10 August 1999 addressed to Congressman Arnulfo P. Fuentebella, NAPOCOR’s President
wrote:

We have discussed the matter with the Dasmariñas and Forbes residents and we have come up with four (4)
options on how to address the problem, to wit:

Option Cost

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 Option 1: Transfer the line to Lawton Avenue P 111.84 million
(proposal of Dasmariñas/Forbes)

Option 2: Maintain 12 meters distance along P 77.60 million the village

Option 3: Construct an underground line P 482.00 million

Option 4: Reroute along C-5 and South Luzon P 1,018.83 million

Expressway (combination of overhead and underground)5

Negotiations between petitioners and the NAPOCOR reached an impassé, with petitioners vying for the
relocation of the transmission lines to Fort Bonifacio on one hand, and the NAPOCOR insisting on a 12-meter
easement widening, on the other.6

Thus, petitioners, on 9 March 2000 filed a Complaint7 for Damages with Prayer for the Issuance of a Temporary
Restraining Order and/or a Writ of Preliminary Injunction against NAPOCOR. Harping on the hazardous effects of
exposure to electromagnetic radiation to the health and safety to themselves and their families, petitioners,
through the instant case, sought what they had failed to achieve through amicable means with NAPOCOR and
prayed, inter alia, for damages and the relocation of the transmission lines to Lawton Avenue, Fort Bonifacio.

On 13 March 2000, Judge Francisco B. Ibay issued an order8 in Civil Case No. 00-352, which temporarily
restrained the respondent from energizing and transmitting high voltage electric current through the said
project. The pertinent portion of the said order reads:

Acting on the plaintiffs’ "Urgent Omnibus Motion," it appearing that the subject area will be energized by
midnight tonight based on a report taken from Representative Joker P. Arroyo by plaintiffs’ counsel, so as not to
render moot and academic the instant case, as prayed for, defendant National Power Corporation is ordered to
maintain the status quo and/or be enjoined from energizing and transmitting high voltage electric current
through its cables for forty eight (48) hours starting 4 o’clock in the afternoon today and ending 4 o’clock in the
afternoon of 15 March 2000.9

By order10 of 15 March 2000, the trial court extended the restraining order for 18 more days.

NAPOCOR filed a Petition for Certiorari with Prayer for Temporary Restraining Order and Preliminary Injunction
with the Court of Appeals assailing the above order by the trial court. Alluding to Presidential Decree No. 1818
(1981),"Prohibiting Courts from Issuing Restraining Orders or Preliminary Injunctions in Cases Involving
Infrastructure and Natural Resource Development Projects of, and Public Utilities Operated by, the Government,"
particularly Sec. 1, NAPOCOR stalwartly sought the dismissal of the case on the ground of lack jurisdiction.
Presidential Decree No. 1818 provides:

Section 1. No Court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction
or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project, or a
mining, fishery, forest or other natural resource development project of the government, or any public utility
operated by the government, including among other public utilities for transport of the goods or commodities,
stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official from
proceeding with or continuing the execution or implementation of any such project, or the operation of such
public utility or pursuing any lawful activity necessary for such execution, implementation or operation.

In the interregnum, by order dated 3 April 2000, the trial court ordered the issuance of a writ of preliminary
injunction against NAPOCOR.11 The trial court articulated that an injunction was necessary to stay respondent
NAPOCOR’s activation of its power lines due to the possible health risks posed to the petitioners. Asserting its
jurisdiction over the case, the trial court was of the view that Presidential Decree No. 1818 and jurisprudence
proscribing injunctions against infrastructure projects do not find application in the case at bar because of the
health risks involved.

The trial court, thus, enjoined the NAPOCOR from further preparing and installing high voltage cables to the
steel pylons erected near petitioners’ homes and from energizing and transmitting high voltage electric current
through said cables while the case is pending final adjudication, upon posting of the bond amounting
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to P5,000,000.00 executed to the effect that petitioners will pay all the damages the NAPOCOR may sustain by
reason of the injunction if the Court should finally decide that the petitioners are not entitled thereto.12

In light of the foregoing order of the trial court, the petition which NAPOCOR filed with the Court of Appeals was
later amended to include the prayer for the nullification and injunction of the Order dated 3 April 2000 of the
trial court.

In the challenged decision of 3 May 2000, the Court of Appeals reversed the trial court’s order, with the
following fallo:

WHEREFORE, premises considered, the instant petition for certiorari is hereby GRANTED. The assailed orders of
the respondent court, dated March 13, 2000 and April 3, 2000, are hereby REVERSED and SET ASIDE.13

In the Court of Appeals’ rationale, the proscription on injunctions against infrastructure projects of the
government is clearly mandated by the above-quoted Section 1 of Presidential Decree No. 1818, as reiterated by
the Supreme Court in its Circulars No. 2-91 and No. 13-93, dated 15 March 1991 and 5 March 1993, respectively.

As their motion for reconsideration was met with similar lack of success, petitioners, in a last attempt at
vindication, filed the present petition for review on the following arguments:

I.

Temporary restraining orders and preliminary injunctions were purposely designed to address matters of
extreme urgency where there is probability of grave injustice and irreparable injury.14

II.

The rule on preliminary injunction merely requires that unless restrained, the act complained of will probably
work injustice to the applicant or probably violate his rights and tends to render the judgment
ineffectual.15 (Emphasis in the original.)

Fundamental to the resolution of the instant petition is the issue of whether or not the trial court may issue a
temporary restraining order and preliminary injunction to enjoin the construction and operation of the 29
decagon-shaped steel poles or towers by the NAPOCOR, notwithstanding Presidential Decree No. 1818.

Petitioners clutch on their stand that Presidential Decree No. 1818 could not be construed to apply to cases of
extreme urgency as in the present case when no less than the rights of the petitioners to health and safety
hangs on the balance.

We find the petition to be imbued with merit.

Presidential Decree No. 1818 was issued on 16 January 1981, prohibiting judges from issuing restraining orders
against government infrastructure projects. In part, the decree says, "No court in the Philippines shall have
jurisdiction to issue any restraining order, preliminary injunction or preliminary order, preliminary mandatory
injunction in any case, dispute or controversy involving an infrastructure project." Realizing the importance of
this decree, this Tribunal had issued different circulars to implement this particular law.

Presidential Decree No. 181816 prohibits courts from issuing injunctions against government infrastructure
projects. In Garcia v. Burgos,17 Presidential Decree No. 1818 was held to prohibit courts from issuing an
injunction against any infrastructure project in order not to disrupt or hamper the pursuit of essential
government projects or frustrate the economic development effort of the nation.

While its sole provision would appear to encompass all cases involving the implementation of projects and
contracts on infrastructure, natural resource development and public utilities, this rule, however, is not absolute
as there are actually instances when Presidential Decree No. 1818 should not find application. In a spate of cases,
this Court declared that although Presidential Decree No. 1818 prohibits any court from issuing injunctions in
cases involving infrastructure projects, the prohibition extends only to the issuance of injunctions or restraining
orders against administrative acts in controversies involving facts or the exercise of discretion in technical cases.

125
On issues clearly outside this dimension and involving questions of law, this Court declared that courts could not
be prevented from exercising their power to restrain or prohibit administrative acts.18

In the case at bar, petitioners sought the issuance of a preliminary injunction on the ground that the NAPOCOR
Project impinged on their right to health as enshrined in Article II, Section 15 of the 1987 Constitution, which
provides:

Sec. 15. The State shall protect and promote the right to health of the people and instill consciousness among
them.

To boot, petitioners, moreover, harp on respondent’s failure to conduct prior consultation with them, as the
community affected by the project, in stark violation of Section 27 of the Local Government Code which
provides: "no project or program shall be implemented by government authorities unless the consultations
mentioned are complied with, and prior approval of the Sanggunian concerned is observed."

From the foregoing, whether there is a violation of petitioners’ constitutionally protected right to health and
whether respondent NAPOCOR had indeed violated the Local Government Code provision on prior consultation
with the affected communities are veritable questions of law that invested the trial court with jurisdiction to
issue a TRO and subsequently, a preliminary injunction. As such, these questions of law divest the case from the
protective mantle of Presidential Decree No. 1818.

Moreover, the issuance by the trial court of a preliminary injunction finds legal support in Section 3 of Rule 58 of
the Rules of Court which provides:

Sec. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is
established:

(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. (3a) (Emphasis
supplied.)

The rule on preliminary injunction merely requires that unless restrained, the act complained of will probably
violate his rights and tend to render the judgment ineffectual.

Here, there is adequate evidence on record to justify the conclusion that the project of NAPOCOR probably
imperils the health and safety of the petitioners so as to justify the issuance by the trial court of a writ of
preliminary injunction.

Petitioners adduced in evidence copies of studies linking the incidence of illnesses such as cancer and leukemia
to exposure to electromagnetic fields. The records bear out, to boot, a copy of a brochure of NAPOCOR
regarding its Quezon Power Project from which will be supplying NAPOCOR with the power which will pass
through the towers subject of the controversy. The NAPOCOR brochure provides that because of the danger
concomitant with high voltage power, Philippine laws mandate that the power lines should be located within
safe distances from residences. And the Quezon Power Project mandates an easement of 20 meters to the right
and 20 meters to the left which falls short of the 12-meter easement that NAPOCOR was proposing to
petitioners.

Likewise on record, are copies of letters of Napocor President Federico Puno to Rep. Arnulfo Fuentebella,
Chairman of the House Committee on Energy, stating updates on the negotiations being undertaken by the
NAPOCOR and the Dasmariñas Village and Forbes Park residents. Also on file is the Privilege Speech dated 10

126
May 1999 of Representative Francis Joseph G. Escudero, who denounced the cavalier manner with which
Napocor ignored safety and consultation requirements in the questioned project.

With a member of Congress denouncing the subject project of NAPOCOR because of the very same health and
safety ills that petitioners now hew to in this petition, and with documents on record to show that NAPOCOR
made representations to petitioners that they are looking into the possibility of relocating the project, added to
the fact that there had been series of negotiations and meetings between petitioners and NAPOCOR as well as
related agencies, there is ample indicia to suggest to the mind of the court that the health concerns of the
petitioners are, at the very least, far from imaginary.

Indeed, if there is no cause for concern, NAPOCOR would not have been stirred to come up with options to
address the woes of petitioners, nor would Congressman Escudero have fired away those strong words of
censure, assailing what to Congressman Escudero smacks of a "cavalier manner by which the NAPOCOR has
responded to earnest pleas for a review of its practice of installing massive pylons supporting high tension cables
in densely populated areas."19

True, the issue of whether or not the transmission lines are safe is essentially evidentiary in nature, and pertains
to the very merits of the action below. In fact, petitioners recognize that the conclusiveness of their life, health
and safety concerns still needs to be proved in the main case below and they are prepared to do so especially in
the light of some studies cited by respondent that yield contrary results in a disputed subject. Despite the
parties’ conflicting results of studies made on the issue, the possibility that the exposure to electromagnetic
radiation causes cancer and other disorders is still, indeed, within the realm of scientific scale of probability.

Equally important, we take judicial notice that the area alluded to as location of the NAPOCOR project is a fragile
zone being proximate to local earthquake faults, particularly the Marikina fault, among other zones. This is not
to mention the risks of falling structures caused by killer tornadoes and super typhoons, the Philippines,
especially Central Luzon, being situated along the typhoon belt.

Moreover, the Local Government Code, requires conference with the affected communities of a government
project. NAPOCOR, palpably, made a shortcut to this requirement. In fact, there appears a lack of exhaustive
feasibility studies on NAPOCOR’s part before making a go with the project on hand; otherwise, it should have
anticipated the legal labyrinth it is now caught in.

These are facts, which the trial court could not ignore, and form as sufficient basis to engender the cloud of
doubt that the NAPOCOR project could, indeed, endanger the lives of the petitioners. A preliminary injunction is
likewise justified prior to a final determination of the issues of whether or not NAPOCOR ignored safety and
consultation requirements in the questioned project. Indeed, the court could, nay should, grant the writ of
preliminary injunction if the purpose of the other party is to shield a wrongdoing. A ruling to the contrary would
amount to an erosion of judicial discretion.

After all, for a writ of preliminary injunction to be issued, the Rules do not require that the act complained of be
in violation of the rights of the applicant. Indeed, what the Rules require is that the act complained of
be probably in violation of the rights of the applicant. Under the Rules of Court, probability is enough basis for
injunction to issue as a provisional remedy, which is different from injunction as a main action where one needs
to establish absolute certainty as basis for a final and permanent injunction.

Pending the final determination of the trial court on the main case for damages, of whether or not the
NAPOCOR Project infringes on petitioners’ substantive right to health and pending determination of the
question of whether there was non-observance of the prior-consultation proviso under the Local Government
Code, it is prudent to preserve the status quo. In Phil. Ports Authority v. Cipres Stevedoring & Arrastre, Inc.,20 we
held:

A preliminary injunction is an order granted at any stage of an action prior to judgment of final order, requiring a
party, court, agency, or person to refrain from a particular act or acts. It is a preservative remedy to ensure the
protection of a party’s substantive rights or interests pending the final judgment in the principal action. A plea
for an injunctive writ lies upon the existence of a claimed emergency or extraordinary situation which should be
avoided for otherwise, the outcome of a litigation would be useless as far as the party applying for the writ is
concerned.

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At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power the
exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction.
It should only be extended in cases of great injury where courts of law cannot afford an adequate or
commensurate remedy in damages; "in cases of extreme urgency; where the right is very clear; where
considerations of relative inconvenience bear strongly in complainant’s favor; where there is a willful and
unlawful invasion of plaintiff’s right against his protest and remonstrance, the injury being a continuing one, and
where the effect of the mandatory injunction is rather to reestablish and maintain a preexisting continuing
relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new
relation." (Emphasis supplied.)

What is more, contrary to respondents’ assertion, there is not a single syllable in the circulars issued by this
Court enjoining the observance of Presidential Decree No. 1818, which altogether and absolutely, ties the hands
of the courts from issuing a writ of preliminary injunction. What Circular 2-9121 dated 15 March 1991 seeks to
enjoin is the indiscriminate issuance of court injunctions. The same holds for Circular 13-9322 dated 5 March
1993 and Circular 68-94.23 And, in Circular No. 7-99, judges are enjoined to observe utmost caution, prudence
and judiciousness in the issuance of temporary restraining order and in the grant of writs of preliminary
injunction to avoid any suspicion that its issuance or grant was for consideration other than the strict merits of
the case.24

There is not a hint from the foregoing circulars suggesting an unbridled prohibition against the issuance of
temporary restraining orders or preliminary injunctions.

In sum, what Presidential Decree No. 1818 aims to avert is the untimely frustration of government infrastructure
projects, particularly by provisional remedies, to the detriment of the greater good by disrupting the pursuit of
essential government projects or frustrate the economic development effort of the nation. Presidential Decree
No. 1818, however, was not meant to be a blanket prohibition so as to disregard the fundamental right to health,
safety and well-being of a community guaranteed by the fundamental law of the land.25

Lest we be misconstrued, this decision does not undermine the purpose of the NAPOCOR project which is aimed
towards the common good of the people. But, is the promotion of the general welfare at loggerheads with the
preservation of the rule of law? We submit that it is not.26

In the present case, the far-reaching irreversible effects to human safety should be the primordial concerns over
presumed economic benefits per se as alleged by the NAPOCOR.

Not too long ago, the Court, in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village
Association, Inc.,27 upheld the validity of the writ of preliminary injunction issued by the Court of Appeals
enjoining the implementation of the Metropolitan Manila Development Authority’s proposed action of opening
of the Neptune Street to public vehicular traffic. We were categorical -

Not infrequently, the government is tempted to take legal shortcuts to solve urgent problems of the people. But
even when government is armed with the best of intention, we cannot allow it to run roughshod over the rule of
law. Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a
private road in a private subdivision. While we hold that the general welfare should be promoted, we stress that
it should not be achieved at the expense of the rule of law.28

In hindsight, if, after trial, it turns out that the health-related fears that petitioners cleave on to have adequate
confirmation in fact and in law, the questioned project of NAPOCOR then suffers from a paucity of purpose, no
matter how noble the purpose may be. For what use will modernization serve if it proves to be a scourge on an
individual’s fundamental right, not just to health and safety, but, ostensibly, to life preservation itself, in all of its
desired quality?

WHEREFORE, the petition is granted. The decision dated 3 May 2000 of the Court of Appeals in CA-G.R. SP No.
57849 is REVERSED as well as the resolution dated 27 September 2000. The Order dated 3 April 2000 of the
Regional Trial Court of Makati in Civil Case No. 00-352 is hereby REINSTATED. No pronouncement as to costs

SO ORDERED.

G.R. No. 167057 April 11, 2012

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NERWIN INDUSTRIES CORPORATION, Petitioner,
vs.
PNOC-ENERGY DEVELOPMENT CORPORATION, and ESTER R. GUERZON, Chairman, Bids and Awards
Committee, Respondents.

DECISION

BERSAMIN, J.:

Republic Act No. 89751 expressly prohibits any court, except the Supreme Court, from issuing any temporary
restraining order (TRO), preliminary injunction, or preliminary mandatory injunction to restrain, prohibit or
compel the Government, or any of its subdivisions or officials, or any person or entity, whether public or private,
acting under the Government’s direction, from: (a) acquiring, clearing, and developing the right-of-way, site or
location of any National Government project; (b) bidding or awarding of a contract or project of the National
Government; (c) commencing, prosecuting, executing, implementing, or operating any such contract or project;
(d) terminating or rescinding any such contract or project; and (e) undertaking or authorizing any other lawful
activity necessary for such contract or project.

Accordingly, a Regional Trial Court (RTC) that ignores the statutory prohibition and issues a TRO or a writ of
preliminary injunction or preliminary mandatory injunction against a government contract or project acts
contrary to law.

Antecedents

The following antecedents are culled from the assailed decision of the Court of Appeals (CA) promulgated on
October 22, 2004,2 viz:

In 1999, the National Electrification Administration ("NEA") published an invitation to pre-qualify and to bid for a
contract, otherwise known as IPB No. 80, for the supply and delivery of about sixty thousand (60,000) pieces of
woodpoles and twenty thousand (20,000) pieces of crossarms needed in the country’s Rural Electrification
Project. The said contract consisted of four (4) components, namely: PIA, PIB and PIC or woodpoles and P3 or
crossarms, necessary for NEA’s projected allocation for Luzon, Visayas and Mindanao. In response to the said
invitation, bidders, such as private respondent [Nerwin], were required to submit their application for eligibility
together with their technical proposals. At the same time, they were informed that only those who would pass
the standard pre-qualification would be invited to submit their financial bids.

Following a thorough review of the bidders’ qualifications and eligibility, only four (4) bidders, including private
respondent [Nerwin], qualified to participate in the bidding for the IPB-80 contract. Thereafter, the qualified
bidders submitted their financial bids where private respondent [Nerwin] emerged as the lowest bidder for all
schedules/components of the contract. NEA then conducted a pre-award inspection of private respondent’s
[Nerwin’s] manufacturing plants and facilities, including its identified supplier in Malaysia, to determine its
capability to supply and deliver NEA’s requirements.

In the Recommendation of Award for Schedules PIA, PIB, PIC and P3 - IBP No. 80 [for the] Supply and Delivery of
Woodpoles and Crossarms dated October 4, 2000, NEA administrator Conrado M. Estrella III recommended to
NEA’s Board of Directors the approval of award to private respondent [Nerwin] of all schedules for IBP No. 80 on
account of the following:

a. Nerwin is the lowest complying and responsive bidder;

b. The price difference for the four (4) schedules between the bid of Nerwin Industries (lowest
responsive and complying bidder) and the second lowest bidder in the amount of $1.47 million for the
poles and $0.475 million for the crossarms, is deemed substantial and extremely advantageous to the
government. The price difference is equivalent to 7,948 pcs. of poles and 20.967 pcs. of crossarms;

c. The price difference for the three (3) schedules between the bids of Nerwin and the Tri-State Pole and
Piling, Inc. approximately in the amount of $2.36 million for the poles and $0.475 million for the
crossarms are equivalent to additional 12.872 pcs. of poles and 20.967 pcs. of crossarms; and

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 d. The bidder and manufacturer are capable of supplying the woodpoles and specified in the bid
documents and as based on the pre-award inspection conducted.

However, on December 19, 2000, NEA’s Board of Directors passed Resolution No. 32 reducing by 50% the
material requirements for IBP No. 80 "given the time limitations for the delivery of the materials, xxx, and with
the loan closing date of October 2001 fast approaching". In turn, it resolved to award the four (4) schedules of
IBP No. 80 at a reduced number to private respondent [Nerwin]. Private respondent [Nerwin] protested the said
50% reduction, alleging that the same was a ploy to accommodate a losing bidder.

On the other hand, the losing bidders Tri State and Pacific Synnergy appeared to have filed a complaint, citing
alleged false or falsified documents submitted during the pre-qualification stage which led to the award of the
IBP-80 project to private respondent [Nerwin].

Thus, finding a way to nullify the result of the previous bidding, NEA officials sought the opinion of the
Government Corporate Counsel who, among others, upheld the eligibility and qualification of private
respondent [Nerwin]. Dissatisfied, the said officials attempted to seek a revision of the earlier opinion but the
Government Corporate Counsel declared anew that there was no legal impediment to prevent the award of IPB-
80 contract to private respondent [Nerwin]. Notwithstanding, NEA allegedly held negotiations with other
bidders relative to the IPB-80 contract, prompting private respondent [Nerwin] to file a complaint for specific
performance with prayer for the issuance of an injunction, which injunctive application was granted by Branch
36 of RTC-Manila in Civil Case No. 01102000.

In the interim, PNOC-Energy Development Corporation purporting to be under the Department of Energy, issued
Requisition No. FGJ 30904R1 or an invitation to pre-qualify and to bid for wooden poles needed for its Samar
Rural Electrification Project ("O-ILAW project").

Upon learning of the issuance of Requisition No. FGJ 30904R1 for the O-ILAW Project, Nerwin filed a civil action
in the RTC in Manila, docketed as Civil Case No. 03106921 entitled Nerwin Industries Corporation v. PNOC-
Energy Development Corporation and Ester R. Guerzon, as Chairman, Bids and Awards Committee, alleging that
Requisition No. FGJ 30904R1 was an attempt to subject a portion of the items covered by IPB No. 80 to another
bidding; and praying that a TRO issue to enjoin respondents’ proposed bidding for the wooden poles.

Respondents sought the dismissal of Civil Case No. 03106921, stating that the complaint averred no cause of
action, violated the rule that government infrastructure projects were not to be subjected to TROs, contravened
the mandatory prohibition against non-forum shopping, and the corporate president had no authority to sign
and file the complaint.3

On June 27, 2003, after Nerwin had filed its rejoinder to respondents’ reply, the RTC granted a TRO in Civil Case
No. 03106921.4

On July 30, 2003, the RTC issued an order,5 as follows:

WHEREFORE, for the foregoing considerations, an order is hereby issued by this Court:

1. DENYING the motion to consolidate;

2. DENYING the urgent motion for reconsideration;

3. DISQUALIFYING Attys. Michael A. Medado, Datu Omar S. Sinsuat and Mariano H. Paps from appearing
as counsel for the defendants;

4. DECLARING defendants in default;

5. GRANTING the motion for issuance of writ of preliminary injunction.

Accordingly, let a writ of preliminary injunction issue enjoining the defendant PNOC-EDC and its Chairman of
Bids and Awards Committee Esther R. Guerzon from continuing the holding of the subject bidding upon the
plaintiffs filing of a bond in the amount of ₱200,000.00 to answer for any damage or damages which the

130
defendants may suffer should it be finally adjudged that petitioner is not entitled thereto, until final
determination of the issue in this case by this Court.

This order shall become effective only upon the posting of a bond by the plaintiffs in the amount of ₱200,000.00.

Let a copy of this order be immediately served on the defendants and strict compliance herein is enjoined.
Furnish the Office of the Government Corporate Counsel copy of this order.

SO ORDERED.

Respondents moved for the reconsideration of the order of July 30, 2003, and also to set aside the order of
default and to admit their answer to the complaint.

On January 13, 2004, the RTC denied respondents’ motions for reconsideration, to set aside order of default,
and to admit answer.6

Thence, respondents commenced in the Court of Appeals (CA) a special civil action for certiorari (CA-GR SP No.
83144), alleging that the RTC had thereby committed grave abuse of discretion amounting to lack or excess of
jurisdiction in holding that Nerwin had been entitled to the issuance of the writ of preliminary injunction despite
the express prohibition from the law and from the Supreme Court; in issuing the TRO in blatant violation of the
Rules of Court and established jurisprudence; in declaring respondents in default; and in disqualifying
respondents’ counsel from representing them.7

On October 22, 2004, the CA promulgated its decision,8 to wit:

WHEREFORE, the petition is GRANTED. The assailed Orders dated July 30 and December 29, 2003 are hereby
ANNULED and SET ASIDE. Accordingly, Civil Case No. 03106921, private respondent’s complaint for issuance of
temporary restraining order/writ of preliminary injunction before Branch 37 of the Regional Trial Court of
Manila, is DISMISSED for lack of merit.

SO ORDERED.

Nerwin filed a motion for reconsideration, but the CA denied the motion on February 9, 2005.9

Issues

Hence, Nerwin appeals, raising the following issues:

I. Whether or not the CA erred in dismissing the case on the basis of Rep. Act 8975 prohibiting the
issuance of temporary restraining orders and preliminary injunctions, except if issued by the Supreme
Court, on government projects.

II. Whether or not the CA erred in ordering the dismissal of the entire case on the basis of Rep. Act 8975
which prohibits the issuance only of a preliminary injunction but not injunction as a final remedy.

III. Whether or not the CA erred in dismissing the case considering that it is also one for damages.

Ruling

The petition fails.

In its decision of October 22, 2004, the CA explained why it annulled and set aside the assailed orders of the RTC
issued on July 20, 2003 and December 29, 2003, and why it altogether dismissed Civil Case No. 03106921, as
follows:

It is beyond dispute that the crux of the instant case is the propriety of respondent Judge’s issuance of a
preliminary injunction, or the earlier TRO, for that matter.

131
Respondent Judge gravely abused his discretion in entertaining an application for TRO/preliminary injunction,
and worse, in issuing a preliminary injunction through the assailed order enjoining petitioners’ sought bidding
for its O-ILAW Project. The same is a palpable violation of RA 8975 which was approved on November 7, 2000,
thus, already existing at the time respondent Judge issued the assailed Orders dated July 20 and December 29,
2003.

Section 3 of RA 8975 states in no uncertain terms, thus:

Prohibition on the Issuance of temporary Restraining Order, Preliminary Injunctions and Preliminary Mandatory
Injunctions. – No court, except the Supreme Court, shall issue any temporary restraining order, preliminary
injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials, or
any person or entity, whether public or private, acting under the government’s direction, to restrain, prohibit or
compel the following acts:

xxx

(b) Bidding or awarding of contract/project of the national government as defined under Section 2
hereof;

xxx

This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not
limited to cases filed by bidders or those claiming to have rights through such bidders involving such
contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable
injury will arise. xxx

The said proscription is not entirely new. RA 8975 merely supersedes PD 1818 which earlier underscored the
prohibition to courts from issuing restraining orders or preliminary injunctions in cases involving infrastructure
or National Resources Development projects of, and public utilities operated by, the government. This law was,
in fact, earlier upheld to have such a mandatory nature by the Supreme Court in an administrative case against a
Judge.

Moreover, to bolster the significance of the said prohibition, the Supreme Court had the same embodied in its
Administrative Circular No. 11-2000 which reiterates the ban on issuance of TRO or writs of Preliminary
Prohibitory or Mandatory Injunction in cases involving Government Infrastructure Projects. Pertinent is the
ruling in National Housing Authority vs. Allarde "As regards the definition of infrastructure projects, the Court
stressed in Republic of the Phil. vs. Salvador Silverio and Big Bertha Construction: The term ‘infrastructure
projects’ means ‘construction, improvement and rehabilitation of roads, and bridges, railways, airports, seaports,
communication facilities, irrigation, flood control and drainage, water supply and sewerage systems, shore
protection, power facilities, national buildings, school buildings, hospital buildings and other related
construction projects that form part of the government capital investment."

Thus, there is nothing from the law or jurisprudence, or even from the facts of the case, that would justify
respondent Judge’s blatant disregard of a "simple, comprehensible and unequivocal mandate (of PD 1818)
prohibiting the issuance of injunctive writs relative to government infrastructure projects." Respondent Judge
did not even endeavor, although expectedly, to show that the instant case falls under the single exception
where the said proscription may not apply, i.e., when the matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise.

Respondent Judge could not have legally declared petitioner in default because, in the first place, he should not
have given due course to private respondent’s complaint for injunction. Indubitably, the assailed orders were
issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

Perforce, this Court no longer sees the need to resolve the other grounds proffered by petitioners.10

The CA’s decision was absolutely correct. The RTC gravely abused its discretion, firstly, when it entertained the
complaint of Nerwin against respondents notwithstanding that Nerwin was thereby contravening the express
provisions of Section 3 and Section 4 of Republic Act No. 8975 for its seeking to enjoin the bidding out by
132
respondents of the O-ILAW Project; and, secondly, when it issued the TRO and the writ of preliminary
prohibitory injunction.

Section 3 and Section 4 of Republic Act No. 8975 provide:

Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary
Mandatory Injunctions. – No court, except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions,
officials or any person or entity, whether public or private, acting under the government’s direction, to restrain,
prohibit or compel the following acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or location of any national
government project;

(b) Bidding or awarding of contract/project of the national government as defined under Section 2
hereof;

(c) Commencement, prosecution, execution, implementation, operation of any such contract or project;

(d) Termination or rescission of any such contract/project; and

(e) The undertaking or authorization of any other lawful activity necessary for such contract/project.

This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not
limited to cases filed by bidders or those claiming to have rights through such bidders involving such
contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond shall accrue in
favor of the government if the court should finally decide that the applicant was not entitled to the relief sought.

If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate
under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the
same, without prejudice to any liability that the guilty party may incur under existing laws.

Section 4. Nullity of Writs and Orders. - Any temporary restraining order, preliminary injunction or preliminary
mandatory injunction issued in violation of Section 3 hereof is void and of no force and effect.

The text and tenor of the provisions being clear and unambiguous, nothing was left for the RTC to do except to
enforce them and to exact upon Nerwin obedience to them. The RTC could not have been unaware of the
prohibition under Republic Act No. 8975 considering that the Court had itself instructed all judges and justices of
the lower courts, through Administrative Circular No. 11-2000, to comply with and respect the prohibition
against the issuance of TROs or writs of preliminary prohibitory or mandatory injunction involving contracts and
projects of the Government.

It is of great relevance to mention at this juncture that Judge Vicente A. Hidalgo, the Presiding Judge of Branch
37 of the RTC, the branch to which Civil Case No. 03106921 had been raffled, was in fact already found
administratively liable for gross misconduct and gross ignorance of the law as the result of his issuance of the
assailed TRO and writ of preliminary prohibitory injunction. The Court could only fine him in the amount of
₱40,000.00 last August 6, 2008 in view of his intervening retirement from the service. That sanction was meted
on him in A.M. No. RTJ-08-2133 entitled Sinsuat v. Hidalgo,11 where this Court stated:

The Court finds that, indeed, respondent is liable for gross misconduct. As the CA explained in its above-stated
Decision in the petition for certiorari, respondent failed to heed the mandatory ban imposed by P.D. No. 1818
and R.A. No. 8975 against a government infrastructure project, which the rural electrification project certainly
was. He thereby likewise obstinately disregarded this Court’s various circulars enjoining courts from issuing TROs
and injunctions against government infrastructure projects in line with the proscription under R.A. No.
8975. Apropos are Gov. Garcia v. Hon. Burgos and National Housing Authority v. Hon. Allarde wherein this Court
stressed that P.D. No. 1818 expressly deprives courts of jurisdiction to issue injunctive writs against the
implementation or execution of a government infrastructure project.
133
Reiterating the prohibitory mandate of P.D. No. 1818, the Court in Atty. Caguioa v. Judge Laviña faulted a judge
for grave misconduct for issuing a TRO against a government infrastructure project thus:

xxx It appears that respondent is either feigning a misunderstanding of the law or openly manifesting a
contumacious indifference thereto. In any case, his disregard of the clear mandate of PD 1818, as well as of the
Supreme Court Circulars enjoining strict compliance therewith, constitutes grave misconduct and conduct
prejudicial to the proper administration of justice. His claim that the said statute is inapplicable to his January 21,
1997 Order extending the dubious TRO is but a contrived subterfuge to evade administrative liability.

In resolving matters in litigation, judges should endeavor assiduously to ascertain the facts and the applicable
laws. Moreover, they should exhibit more than just a cursory acquaintance with statutes and procedural rules.
Also, they are expected to keep abreast of and be conversant with the rules and the circulars which the
Supreme Court has adopted and which affect the disposition of cases before them.

Although judges have in their favor the presumption of regularity and good faith in the performance of their
judicial functions, a blatant disregard of the clear and unmistakable terms of the law obviates this
presumption and renders them susceptible to administrative sanctions. (Emphasis and underscoring supplied)

The pronouncements in Caguioa apply as well to respondent.

The questioned acts of respondent also constitute gross ignorance of the law for being patently in disregard of
simple, elementary and well-known rules which judges are expected to know and apply properly.

IN FINE, respondent is guilty of gross misconduct and gross ignorance of the law, which are serious charges
under Section 8 of Rule 140 of the Rules of Court. He having retired from the service, a fine in the amount of
₱40,000 is imposed upon him, the maximum amount fixed under Section 11 of Rule 140 as an alternative
sanction to dismissal or suspension.12

Even as the foregoing outcome has rendered any further treatment and discussion of Nerwin’s other
submissions superfluous and unnecessary, the Court notes that the RTC did not properly appreciate the real
nature and true purpose of the injunctive remedy. This failing of the RTC presses the Court to use this decision
to reiterate the norms and parameters long standing jurisprudence has set to control the issuance of TROs and
writs of injunction, and to now insist on conformity to them by all litigants and lower courts. Only thereby may
the grave misconduct committed in Civil Case No. 03106921 be avoided.1âwphi1

A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or
final order, requiring a party or a court, agency or person, to refrain from a particular act or acts.13 It is an
ancillary or preventive remedy resorted to by a litigant to protect or preserve his rights or interests during the
pendency of the case. As such, it is issued only when it is established that:

(a) The applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually; or

(b) The commission, continuance or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or

(c) A party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment ineffectual.14

The existence of a right to be protected by the injunctive relief is indispensable. In City Government of Butuan v.
Consolidated Broadcasting System (CBS), Inc.,15 the Court elaborated on this requirement, viz:

As with all equitable remedies, injunction must be issued only at the instance of a party who possesses sufficient
interest in or title to the right or the property sought to be protected. It is proper only when the applicant
appears to be entitled to the relief demanded in the complaint, which must aver the existence of the right and
the violation of the right, or whose averments must in the minimum constitute a prima facie showing of a right
to the final relief sought. Accordingly, the conditions for the issuance of the injunctive writ are: (a) that the right
134
to be protected exists prima facie; (b) that the act sought to be enjoined is violative of that right; and (c) that
there is an urgent and paramount necessity for the writ to prevent serious damage. An injunction will not issue
to protect a right not in esse, or a right which is merely contingent and may never arise; or to restrain an act
which does not give rise to a cause of action; or to prevent the perpetration of an act prohibited by statute.
Indeed, a right, to be protected by injunction, means a right clearly founded on or granted by law or is
enforceable as a matter of law.16

Conclusive proof of the existence of the right to be protected is not demanded, however, for, as the Court has
held in Saulog v. Court of Appeals,17 it is enough that:

xxx for the court to act, there must be an existing basis of facts affording a present right which is directly
threatened by an act sought to be enjoined. And while a clear showing of the right claimed is necessary, its
existence need not be conclusively established. In fact, the evidence to be submitted to justify preliminary
injunction at the hearing thereon need not be conclusive or complete but need only be a "sampling" intended
merely to give the court an idea of the justification for the preliminary injunction pending the decision of the
case on the merits. This should really be so since our concern here involves only the propriety of the
preliminary injunction and not the merits of the case still pending with the trial court.

Thus, to be entitled to the writ of preliminary injunction, the private respondent needs only to show that it has
the ostensible right to the final relief prayed for in its complaint xxx.18

In this regard, the Rules of Court grants a broad latitude to the trial courts considering that conflicting claims in
an application for a provisional writ more often than not involve and require a factual determination that is not
the function of the appellate courts.19 Nonetheless, the exercise of such discretion must be sound, that is, the
issuance of the writ, though discretionary, should be upon the grounds and in the manner provided by
law.20 When that is done, the exercise of sound discretion by the issuing court in injunctive matters must not be
interfered with except when there is manifest abuse.21

Moreover, judges dealing with applications for the injunctive relief ought to be wary of improvidently or
unwarrantedly issuing TROs or writs of injunction that tend to dispose of the merits without or before trial.
Granting an application for the relief in disregard of that tendency is judicially impermissible,22 for it is never the
function of a TRO or preliminary injunction to determine the merits of a case,23 or to decide controverted
facts.24 It is but a preventive remedy whose only mission is to prevent threatened wrong,25 further injury,26 and
irreparable harm27 or injustice28 until the rights of the parties can be settled. Judges should thus look at such
relief only as a means to protect the ability of their courts to render a meaningful decision.29 Foremost in their
minds should be to guard against a change of circumstances that will hamper or prevent the granting of proper
reliefs after a trial on the merits.30 It is well worth remembering that the writ of preliminary injunction should
issue only to prevent the threatened continuous and irremediable injury to the applicant before the claim can be
justly and thoroughly studied and adjudicated.31

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals; and ORDERS petitioner to pay the costs of
suit.

The Court Administrator shall disseminate this decision to the lower courts for their guidance.

SO ORDERED.

LUCAS P. BERSAMIN

G.R. No. 156015. August 11, 2005

REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in his capacity as former Chief of
the Intelligence Service, Armed Forces of the Philippines (ISAFP), and former Commanding General,
Presidential Security Group (PSG), and MAJ. DAVID B. DICIANO, in his capacity as an Officer of ISAFP and
former member of the PSG, Petitioners,
vs.
HON. VICTORINO EVANGELISTA, in his capacity as Presiding Judge, Regional Trial Court, Branch 223, Quezon
City, and DANTE LEGASPI, represented by his attorney-in-fact, Paul Gutierrez, Respondent.

135
DECISION

PUNO, J.:

The case at bar stems from a complaint for damages, with prayer for the issuance of a writ of preliminary
injunction, filed by private respondent Dante Legaspi, through his attorney-in-fact Paul Gutierrez, against
petitioners Gen. Jose M. Calimlim, Ciriaco Reyes and Maj. David Diciano before the Regional Trial Court (RTC) of
Quezon City.1

The Complaint alleged that private respondent Legaspi is the owner of a land located in Bigte, Norzagaray,
Bulacan. In November 1999, petitioner Calimlim, representing the Republic of the Philippines, and as then head
of the Intelligence Service of the Armed Forces of the Philippines and the Presidential Security Group, entered
into a Memorandum of Agreement (MOA) with one Ciriaco Reyes. The MOA granted Reyes a permit to hunt for
treasure in a land in Bigte, Norzagaray, Bulacan. Petitioner Diciano signed the MOA as a witness.2 It was further
alleged that thereafter, Reyes, together with petitioners, started, digging, tunneling and blasting works on the
said land of Legaspi. The complaint also alleged that petitioner Calimlim assigned about 80 military personnel to
guard the area and encamp thereon to intimidate Legaspi and other occupants of the area from going near the
subject land.

On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his nephew, private
respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the treasure hunting
activities on Legaspi’s land and to file charges against those who may enter it without the latter’s
authority.3 Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the land.

On February 29, 2000, Gutierrez filed a case for damages and injunction against petitioners for illegally entering
Legaspi’s land. He hired the legal services of Atty. Homobono Adaza. Their contract provided that as legal fees,
Atty. Adaza shall be entitled to 30% of Legaspi’s share in whatever treasure may be found in the land. In addition,
Gutierrez agreed to pay Atty. Adaza ₱5,000.00 as appearance fee per court hearing and defray all expenses for
the cost of the litigation.4 Upon the filing of the complaint, then Executive Judge Perlita J. Tria Tirona issued a 72-
hour temporary restraining order (TRO) against petitioners.

The case5 was subsequently raffled to the RTC of Quezon City, Branch 223, then presided by public respondent
Judge Victorino P. Evangelista. On March 2, 2000, respondent judge issued another 72-hour TRO and a summary
hearing for its extension was set on March 7, 2000.

On March 14, 2000, petitioners filed a Motion to Dismiss6 contending: first, there is no real party-in-interest as
the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as evidenced by a Deed
of Revocation,7 and, second, Gutierrez failed to establish that the alleged armed men guarding the area were
acting on orders of petitioners. On March 17, 2000, petitioners also filed a Motion for Inhibition8 of the
respondent judge on the ground of alleged partiality in favor of private respondent.

On March 23, 2000, the trial court granted private respondent’s application for a writ of preliminary injunction
on the following grounds: (1) the diggings and blastings appear to have been made on the land of Legaspi, hence,
there is an urgent need to maintain the status quo to prevent serious damage to Legaspi’s land; and, (2) the SPA
granted to Gutierrez continues to be valid.9 The trial court ordered thus:

WHEREFORE, in view of all the foregoing, the Court hereby resolves to GRANT plaintiff’s application for a writ of
preliminary injunction. Upon plaintiff’s filing of an injunction bond in the amount of ONE HUNDRED THOUSAND
PESOS (₱100,000.00), let a Writ of Preliminary Injunction issue enjoining the defendants as well as their
associates, agents or representatives from continuing to occupy and encamp on the land of the plaintiff LEGASPI
as well as the vicinity thereof; from digging, tunneling and blasting the said land of plaintiff LEGASPI; from
removing whatever treasure may be found on the said land; from preventing and threatening the plaintiffs and
their representatives from entering the said land and performing acts of ownership; from threatening the
plaintiffs and their representatives as well as plaintiffs’ lawyer.

On even date, the trial court issued another Order10 denying petitioners’ motion to dismiss and requiring
petitioners to answer the complaint. On April 4, 2000, it likewise denied petitioners’ motion for inhibition.11

On appeal, the Court of Appeals affirmed the decision of the trial court.12
136
Hence this petition, with the following assigned errors:

WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE RESPONDENT GUTIERREZ HAS BEEN
EFFECTIVELY REVOKED BY LEGASPI.

II

WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.

III

WHETHER RESPONDENT JUDGE OUGHT TO HAVE INHIBITED HIMSELF FROM FURTHER PROCEEDING WITH THE
CASE.

We find no merit in the petition.

On the first issue, petitioners claim that the special power of attorney of Gutierrez to represent Legaspi has
already been revoked by the latter. Private respondent Gutierrez, however, contends that the unilateral
revocation is invalid as his agency is coupled with interest.

We agree with private respondent.

Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render some
service or do something in representation or on behalf of another, known as the principal, with the consent or
authority of the latter.13

A contract of agency is generally revocable as it is a personal contract of representation based on trust and
confidence reposed by the principal on his agent. As the power of the agent to act depends on the will and
license of the principal he represents, the power of the agent ceases when the will or permission is withdrawn
by the principal. Thus, generally, the agency may be revoked by the principal at will.14

However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e., if a
bilateral contract depends upon the agency.15 The reason for its irrevocability is because the agency becomes
part of another obligation or agreement. It is not solely the rights of the principal but also that of the agent and
third persons which are affected. Hence, the law provides that in such cases, the agency cannot be revoked at
the sole will of the principal.

In the case at bar, we agree with the finding of the trial and appellate courts that the agency granted by Legaspi
to Gutierrez is coupled with interest as a bilateral contract depends on it. It is clear from the records
that Gutierrez was given by Legaspi, inter alia, the power to manage the treasure hunting activities in the
subject land; to file any case against anyone who enters the land without authority from Legaspi; to engage
the services of lawyers to carry out the agency; and, to dig for any treasure within the land and enter into
agreements relative thereto. It was likewise agreed upon that Gutierrez shall be entitled to 40% of whatever
treasure may be found in the land. Pursuant to this authority and to protect Legaspi’s land from the alleged
illegal entry of petitioners, agent Gutierrez hired the services of Atty. Adaza to prosecute the case for damages
and injunction against petitioners. As payment for legal services, Gutierrez agreed to assign to Atty. Adaza 30%
of Legaspi’s share in whatever treasure may be recovered in the subject land. It is clear that the treasure that
may be found in the land is the subject matter of the agency; that under the SPA, Gutierrez can enter into
contract for the legal services of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject
matter of the agency, i.e., in the treasures that may be found in the land. This bilateral contract depends on the
agency and thus renders it as one coupled with interest, irrevocable at the sole will of the principal
Legaspi.16 When an agency is constituted as a clause in a bilateral contract, that is, when the agency is inserted in
another agreement, the agency ceases to be revocable at the pleasure of the principal as the agency shall now
follow the condition of the bilateral agreement.17Consequently, the Deed of Revocation executed by Legaspi has
no effect. The authority of Gutierrez to file and continue with the prosecution of the case at bar is unaffected.

137
On the second issue, we hold that the issuance of the writ of preliminary injunction is justified. A writ of
preliminary injunction is an ancilliary or preventive remedy that is resorted to by a litigant to protect or preserve
his rights or interests and for no other purpose during the pendency of the principal action.18 It is issued by the
court to prevent threatened or continuous irremediable injury to the applicant before his claim can be
thoroughly studied and adjudicated.19 Its aim is to preserve the status quo ante until the merits of the case can
be heard fully, upon the applicant’s showing of two important conditions, viz.: (1) the right to be
protected prima facie exists; and, (2) the acts sought to be enjoined are violative of that right.20

Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a writ of preliminary injunction may be
issued when it is established:

(a) that the applicant is entitled to the relief demanded, the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;

(b) that the commission, continuance or non-performance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or

(c) that a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject
of the action or proceeding, and tending to render the judgment ineffectual.

It is crystal clear that at the hearing for the issuance of a writ of preliminary injunction, mere prima
facie evidence is needed to establish the applicant’s rights or interests in the subject matter of the main
action.21 It is not required that the applicant should conclusively show that there was a violation of his rights as
this issue will still be fully litigated in the main case.22 Thus, an applicant for a writ is required only to show that
he has an ostensible right to the final relief prayed for in his complaint. 23

In the case at bar, we find that respondent judge had sufficient basis to issue the writ of preliminary injunction.
It was established, prima facie, that Legaspi has a right to peaceful possession of his land, pendente
lite. Legaspi had title to the subject land. It was likewise established that the diggings were conducted by
petitioners in the enclosed area of Legaspi’s land. Whether the land fenced by Gutierrez and claimed to be
included in the land of Legaspi covered an area beyond that which is included in the title of Legaspi is a factual
issue still subject to litigation and proof by the parties in the main case for damages. It was necessary for the
trial court to issue the writ of preliminary injunction during the pendency of the main case in order to preserve
the rights and interests of private respondents Legaspi and Gutierrez.

On the third issue, petitioners charge that the respondent judge lacked the neutrality of an impartial judge. They
fault the respondent judge for not giving credence to the testimony of their surveyor that the diggings were
conducted outside the land of Legaspi. They also claim that respondent judge’s rulings on objections raised by
the parties were biased against them.

We have carefully examined the records and we find no sufficient basis to hold that respondent judge should
have recused himself from hearing the case. There is no discernible pattern of bias on the rulings of the
respondent judge. Bias and partiality can never be presumed. Bare allegations of partiality will not suffice in an
absence of a clear showing that will overcome the presumption that the judge dispensed justice without fear or
favor.24 It bears to stress again that a judge’s appreciation or misappreciation of the sufficiency of evidence
adduced by the parties, or the correctness of a judge’s orders or rulings on the objections of counsels during the
hearing, without proof of malice on the part of respondent judge, is not sufficient to show bias or partiality. As
we held in the case of Webb vs. People,25 the adverse and erroneous rulings of a judge on the various motions
of a party do not sufficiently prove bias and prejudice to disqualify him. To be disqualifying, it must be shown
that the bias and prejudice stemmed from an extrajudicial source and result in an opinion on the merits on some
basis other than what the judge learned from his participation in the case. Opinions formed in the course of
judicial proceedings, although erroneous, as long as based on the evidence adduced, do not prove bias or
prejudice. We also emphasized that repeated rulings against a litigant, no matter how erroneously, vigorously
and consistently expressed, do not amount to bias and prejudice which can be a bases for the disqualification of
a judge.

138
Finally, the inhibition of respondent judge in hearing the case for damages has become moot and academic in
view of the latter’s death during the pendency of the case. The main case for damages shall now be heard and
tried before another judge.

IN VIEW WHEREOF, the impugned Orders of the trial court in Civil Case No. Q-00-40115, dated March 23 and
April 4, 2000, are AFFIRMED. The presiding judge of the Regional Trial Court of Quezon City to whom Civil Case
No. Q-00-40115 was assigned is directed to proceed with dispatch in hearing the main case for damages. No
pronouncement as to costs.

SO ORDERED.

Austria-Martinez, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

G.R. No. 136114 January 22, 2004

LANDBANK OF THE PHILIPPINES, Petitioner,

vs.
CONTINENTAL WATCHMAN AGENCY INCORPORATED AND THE COURT OF APPEALS, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

We have consistently held that there is no grave abuse of discretion in the issuance of a writ of preliminary
injunction where a party was not deprived of its day in court, as it was heard and had exhaustively presented all
its arguments and defenses.1 Hence, when contending parties were both given ample time and opportunity to
present their respective evidence and arguments in support of their opposing contentions, no grave abuse of
discretion can be attributed to the trial court which issued the writ of preliminary injunction, as it is given a
generous latitude in this regard, pursuant to Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended.

Assailed in this petition for certiorari under Rule 65 of the same Rules is the Decision2 dated July 31, 1998 of the
Court of Appeals in CA-G.R. SP No. 46890, entitled "Land Bank of the Philippines versus Judge Vivencio S. Baclig
and Continental Watchman Agency Incorporated," the dispositive portion of which reads:

"WHEREFORE, premises considered, the petition is hereby denied due course and the same DISMISSED. Let the
original record of the case be remanded to the court a quo immediately upon the finality hereof.

"SO ORDERED."3

On September 28, 1996, Land Bank of the Philippines (LBP), herein petitioner, caused to be published in the
Philippine Daily Inquirer, a newspaper of general circulation, an "Invitation to Pre-Qualify," inviting reputable
security agencies to pre-qualify for security guard services in the different LBP offices, properties and
installations nationwide. Continental Watchmen Agency Incorporated (CWAI), herein private respondent, and
other security agencies responded to the invitation and participated in the public bidding.

In the bidding proper held on June 10, 1997, all the pre-qualified security agencies, private respondent included,
submitted their individual sealed bid proposals to petitioner's Special Committee for the Selection of Security
Agencies (Bid Committee). Private respondent submitted a bid for three (3) areas, namely, Area I, Area III, and
Area V, all in Luzon.

After all the bids were opened and evaluated, it turned out that private respondent was the lowest bidder for
those three areas.

However, on June 18, 1997, the Bid Committee declared private respondent disqualified because (1) its bid price
was below the monthly salary of a guard prescribed by the Philippine Association of Detective and Protective
Agency Operators, Inc.; and (2) it violated petitioner's Bid Bulletin No. 1 requiring that the bid price should
include night differential pay for all the guards.

139
Private respondent asked for reconsideration but was denied by the Bid Committee.

Hence, on July 22, 1997, private respondent filed with the Regional Trial Court, Branch 17, Manila, a petition for
injunction and damages with a prayer for a preliminary mandatory injunction against petitioner LBP, docketed as
Civil Case No. 97-84264.

On August 1, 1997, after the hearing wherein both parties presented their respective evidence, the trial court
issued a temporary restraining order (TRO) effective for twenty (20) days. At the same time, the trial court set
for hearing private respondent's application for preliminary injunction. This incident was heard on August 22,
1997. Thereafter, the trial court issued an Order directing the issuance of a writ of preliminary injunction, thus:

"WHEREFORE, the petition for the issuance of a writ of preliminary injunction is hereby granted. Upon the filing
of a bond in the sum of Fifty Thousand Pesos (P50,000.00), Philippine currency, and the approval thereof by the
Court, let a writ issue directing the defendant, its attorneys, representatives and other persons assisting it, to
cease and desist from awarding the contract for security agencies for Area I, Area III and Area V in Luzon to any
security agency, until further orders from the Court.

"SO ORDERED."4

Meanwhile, on August 27, 1997, petitioner filed its "Answer with Special and/or Affirmative Defenses and
Compulsory Counterclaim."5

On September 2, 1997, a writ of preliminary injunction6 was accordingly issued.

On January 12, 1998, the trial court issued an Order denying petitioner's motion for reconsideration of its Order
directing the issuance of a writ of preliminary injunction.

Consequently, on February 23, 1998, petitioner filed with respondent Court of Appeals a "Petition for Certiorari
and Prohibition with Preliminary Injunction and Temporary Restraining Order" under Rules 58 and 65 of the
1997 Rules of Civil Procedure, as amended, alleging that the two Orders of the trial court dated August 22, 1997
and January 12, 1998 were issued without jurisdiction or with grave abuse of discretion.7

On July 31, 1999, the Court of Appeals issued its assailed Decision dismissing the petition, thus:

"WHEREFORE, premises considered, the petition is hereby denied due course and the same DISMISSED. Let the
original record of the case be remanded to the court a quo immediately upon the finality hereof.

"SO ORDERED."8

The Court of Appeals ratiocinated as follows:

"After a fine filtration of the record ('expediente') and a close look at the two assailed orders, We agree with the
private respondent that the respondent court did not commit any grave abuse of discretion in issuing them. At
this juncture, it is well to state that the special civil action for certiorari is a remedy designed for the correction
of errors of jurisdiction and not errors of judgment (Ramnani vs. Court of Appeals, 221 SCRA 582). It will not
even issue for simple abuse of discretion (University of the Philippines vs. Civil Service Commission, 228 SCRA
207). Parenthetically, grave abuse of discretion implies such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction (Planters Products, Inc. vs. Court of Appeals, 193 SCRA 563), or in other words,
where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility—and
it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law (Bustamante vs. Commission on Audit, 216 SCRA 134;
Philippine Airlines, Inc. vs. Confesor, 231 SCRA 41). In the case at bench, the record does not show such kind of
actuation on the part of the respondent judge. As long as a court or quasi-judicial body acts within its jurisdiction,
any alleged errors committed in the exercise of its jurisdiction will amount to nothing more than errors of
judgment which are reviewable by timely appeal and not by a special civil action of certiorari (New York Marine
Managers, Inc. vs. Court of Appeal, 249 SCRA 416; Commissioner on Internal Revenue vs. Court of Appeals, 257
SCRA 200).

140
"Furthermore, this being a petition for certiorari, factual matters are not proper for consideration (Insular Bank
of Asia and America vs. Court of Appeals, 228 SCRA 420; Navarro vs. Commission on Elections, 228 SCRA 596),
for this Court has to confine itself to the issue of whether of not the respondent court lacked or exceeded its
jurisdiction or committed grave abuse of discretion (San Pedro vs. Court of Appeals, 253 SCRA 145)—it cannot
review conclusion of fact (Holy Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358). Anyway, it should be
stated that the grant or denial of an injunction rests on the sound discretion of the trial court (Technology
Developers, Inc. vs. Court of Appeals, 193 SCRA 147; Avila vs. Tapucar, 201 SCRA 148)—and the same will not be
interfered with by appellate courts except on a clear abuse of discretion (S & A Gaisano Incorporated vs. Hidalgo,
19 SCRA 224), which situation appeared wanting in the case at bench. We took note that the respondent court
conducted hearings before issuing a writ of preliminary injunction. More. The private respondent was even
required to put a bond to answer for possible damages which may arise from the issuance of said writ of
preliminary injunction. On this score, We wish to advert to Supreme Court rulings that erroneous conclusions or
errors of judgment or of procedure, not relating to the court's jurisdiction or involving grave abuse of discretion,
are not reviewable by certiorari under Rule 65 of the Rules of Court (Rodriguez vs. Court of Appeals, 245 SCRA
150; Commissioner on Internal Revenue vs. Court of Appeals, supra; Santiago Land Development Company vs.
Court of Appeals, 258 SCRA 535). For, as already stated, such errors are reviewable by timely appeal.

"Similarly, the special civil action of prohibition must be based on jurisdictional grounds against the trial court's
judgment (Vda. De Suan vs. Unson, 185 SCRA 437). It is designed to prevent the use of the strong arm of the law
in an oppressive or vindictive manner (Planas vs. Gil, 67 SCRA 62; Lopez vs. City Judge, 18 SCRA 616). To justify
its issuance, there are certain requisites which must be complied with (Guingona vs. City Fiscal of Manila, 137
SCRA 597), which requisites the petitioner failed to comply. Also, said recourse is available only when there is no
appeal or any plain, speedy or adequate remedy in the ordinary course of law (Pilar Development Corporation vs.
Court of Appeal, 225 SCRA 549). Undeniably, appeal will be available in the case at bench."9

Petitioner filed a motion for reconsideration but was denied by the Appellate Court in its Resolution dated
September 22, 1998.

Hence, the present petition for certiorari alleging:

"IT IS MOST RESPECTFULLY SUBMITTED THAT THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION WHEN IT PROMULGATED AND ISSUED THE DECISION DATED JULY 31, 1998 AND RESOLUTION
DATED SEPTEMBER 22, 1998 UPHOLDING THE QUESTIONED ORDERS OF THE RESPONDENT COURT IN CIVIL CASE
NO. 97-84264 DATED AUGUST 22, 1997 AND JANUARY 12, 1998."10

Petitioner submits inter alia that the Court of Appeals, by dismissing its petition, in effect compelled it to enter
into a contract for security guard services with private respondent and as a result, Civil Case No. 97-84264 has
been prematurely resolved.

Private respondent, on the other hand, counters that respondent Court of Appeals did not act with grave abuse
of discretion in affirming the Order of the trial court directing the issuance of the writ of preliminary injunction.
In the first place, the Order was issued after a hearing wherein the parties were given the opportunity to present
their respective evidence. Secondly, private respondent, being the lowest bidder, has a clear right to an
injunction. Lastly, whatever error the trial court may have committed is only an error of judgment, not
correctible by certiorari.

The petition must fail.

First, petitioner's remedy is an appeal to this Court from the Court of Appeals' Decision dated July 31, 1998 by
way of a petition for review on certiorari under Rule 45. Instead, it filed this petition for certiorari under Rule 65
only on November 18, 1998 or forty three (43) days after it received the Appellate Court's Decision denying its
motion for reconsideration. Apparently, petitioner resorted to certiorari because it failed to interpose an appeal
seasonably. This, of course, is a procedural flaw. Time and again we have reminded members of the bench and
bar that the special civil action of certiorari cannot be used as a substitute for a lost appeal.11

Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the interest of
justice, has the discretion to treat a petition for certiorari as a petition for review on certiorari under Rule 45,
especially if filed within the reglementary period for filing a petition for review. 12 In this case, however, we find
no reason to justify a liberal application of the Rules.
141
Even assuming that the present petition is a proper remedy, still it is dismissible.1âwphi1 Based on the evidence
presented by private respondent, the trial court found that all the requisites for the issuance of an injunctive
writ were present.13Although petitioner presented evidence to rebut private respondent's assertions, those will
be better assessed and considered in the trial proper. The assailed injunctive writ is not a judgment on the
merits of the case, contrary to the submission of petitioner, for a writ of preliminary injunction is generally
based solely on initial and incomplete evidence. The evidence submitted during the hearing of the incident is not
conclusive or complete for only a "sampling" is needed to give the trial court an idea of the justification for the
preliminary injunction pending the decision of the case on the merits.14 As such, the findings of fact and opinion
of a court when issuing the writ of preliminary injunction are interlocutory in nature and made before the trial
on the merits is commenced or terminated. Furthermore, it does not necessarily proceed that when a writ of
preliminary injunction is issued, a final injunction will follow, as erroneously argued by petitioner. There are vital
facts that have yet to be presented during the trial which may not be obtained or presented during the hearing
on the application for the injunctive writ.15Clearly, petitioner's contention that the trial court and the Court of
Appeals had already disposed of the main case lacks merit.

Also, the sole object of a preliminary injunction is to preserve the status quo until the merits of the case can be
heard.16 Here, after evaluating the evidence presented by both contending parties, the trial court held that
justice would be better served if the status quo is preserved until the final determination of the merits of the
case. We find nothing whimsical, arbitrary, or capricious in such ruling.

Significantly, the rule is well-entrenched that the issuance of the writ of preliminary injunction rests upon the
sound discretion of the trial court. It bears reiterating that Section 4 of Rule 58 gives generous latitude to the
trial courts in this regard for the reason that conflicting claims in an application for a provisional writ more often
than not involve a factual determination which is not the function of the appellate courts. Hence, the exercise of
sound judicial discretion by the trial court in injunctive matters must not be interfered with except when there is
manifest abuse,17which is wanting in the present case.

In sum, we find the petition bereft of merit. It is not the proper remedy and even if it is, no grave abuse of
discretion was committed by respondent Court of Appeals.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

G.R. No. 175145 March 28, 2008

SPOUSES ALFREDO and SHIRLEY YAP, Petitioners,

vs.
INTERNATIONAL EXCHANGE BANK,1 SHERIFF RENATO C. FLORA and/or OFFICE OF THE CLERK OF COURT,
REGIONAL TRIAL COURT, MAKATI CITY, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks to
set aside the Resolution2 of the Court of Appeals in CA-G.R. SP No. 95074 dated 11 July 2006 which dismissed
petitioner-spouses Alfredo and Shirley Yap’s petition for certiorari which questioned the Order3 of Branch 264 of
the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and dissolving the Writ of Preliminary
Injunction dated 13 August 2001, and its Resolution4 dated 9 October 2006 denying petitioners’ Motion for
Reconsideration.

The factual antecedents are as follows:

Respondent International Exchange Bank (iBank, for brevity) filed a collection suit with application for the
issuance of a writ of preliminary attachment against Alberto Looyuko and Jimmy T. Go in the RTC of Makati. The
case was raffled to Branch 150 and was docketed as Civil Case No. 98-791. On 7 October 1999, the trial court
rendered a Decision in favor of respondent iBank and found Alberto Looyuko and Jimmy T. Go liable, ordering
them to pay the amount of ninety-six million pesos (₱96,000,000.00), plus penalty.
142
A Writ of Execution on the judgment against Mr. Looyuko was implemented. Thereafter, a Writ of Execution was
issued against Mr. Go for his part of the liability. Thereupon, respondent Renato C. Flora, Sheriff of Branch 150
of the RTC of Makati City, issued a Notice of Sheriff’s Sale on 12 May 2000 notifying all the parties concerned, as
well as the public in general, that the following real properties, among other properties, covered by Transfer
Certificates of Title (TCTs) No. PT-66751, No. PT-66749, No. 55469 and No. 45229 of the Registry of Deeds of
Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs No. 4621 and No. 52987 of the Registry of
Deeds of Mandaluyong City, allegedly owned by Mr. Go will be sold at public auction on 15 June 2000.5 Said
public auction did not push through.

On 13 June 2000, petitioner-spouses Alfredo and Shirley Yap filed a Complaint for Injunction with Prayer for
Temporary Restraining Order and/or Preliminary Injunction with the RTC of Pasig City. The case was docketed as
Civil Case No. 67945 and was raffled to Branch 158 thereof. Petitioners sought to stop the auction sale alleging
that the properties covered by TCTs No. PT-66751, No. PT-66749, No. 55469 and No. 45229 of the Registry of
Deeds of Pasig City, TCT No. 36489 of the Registry of Quezon City, and TCTs No. 4621 and No. 52987 of the
Registry of Deeds of Mandaluyong City, are already owned by them by virtue of Deeds of Absolute
Sale6 executed by Jimmy Go in their favor. They further alleged that respondent sheriff disregarded their right
over the properties despite their execution of an Affidavit of Adverse Claim to prove their claim over the
properties and the publication of a Notice to the Public warning that various deeds had already been issued in
their favor evidencing their right over the same.

A second Notice of Sheriff’s Sale dated 30 June 2000 was issued by Sheriff Flora scheduling a public auction on
24 July 2000 for the afore-mentioned properties. The public auction did not happen anew. Thereafter, a third
Notice of Sheriff’s Sale dated 21 July 2000 scheduling a public auction on 22 August 2000 was issued.

On 21 August 2000, the RTC of Pasig City, Branch 158, issued an Order in Civil Case No. 67945 denying
petitioners’ application for a writ of preliminary injunction.7

As scheduled, the public auction took place on 22 August 2000 for which respondent sheriff issued a Certificate
of Sale stating that the subject properties had been sold at public auction in favor of respondent iBank, subject
to the third-party claims of petitioners.8

Petitioners filed with the RTC of Pasig City the instant case for Annulment of Sheriff’s Auction Sale Proceedings
and Certificate of Sale against iBank, the Clerk of Court and Ex-Officio Sheriff of RTC Makati City, and Sheriff
Flora. The case was docketed as Civil Case No. 68088 and was raffled to Branch 264. The Complaint was
amended to include a prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction.9

Engracio M. Escariñas, Jr., Clerk of Court VII and Ex-Officio Sheriff of RTC Makati City, filed his Answer while
respondents iBank and Sheriff Flora filed an Omnibus Motion (Motion to Refer the Complaint to the Office of the
Clerk of Court for Raffle in the Presence of Adverse Party and Motion to Dismiss) dated 17 October 2000.10

In an Order dated 20 February 2001, Hon. Leoncio M. Janolo, Jr. denied the Omnibus Motion for lack of
merit.11Respondents iBank and Sheriff Flora filed a Motion for Reconsideration dated 26 February 2001.12

A hearing was held on the application for preliminary injunction. On 18 July 2001, an Order was issued by Judge
Janolo granting petitioners’ application for issuance of a writ of preliminary injunction. The Order reads:

WHEREFORE, premises considered, plaintiffs’ application for issuance of a Writ of Preliminary Injunction is
GRANTED, and defendants and their representatives are enjoined from proceeding further with the execution,
including consolidating title and taking possession thereof, against plaintiffs’ real properties covered by Transfer
Certificates of Title Nos. PT-66751, PT-66749, 55469, 45229, 4621, 52987 and 36489.

The Writ of Preliminary Injunction shall be issued upon plaintiffs’ posting of a bond executed to defendant in the
amount of Three Million Pesos (₱3,000,000.00) to the effect that plaintiffs will pay defendants all damages
which the latter may sustain by reason of the injunction if it be ultimately decided that the injunction is
unwarranted.13

On 13 August 2001, upon posting a bond in the amount of three million pesos (₱3,000,000.00), Judge Janolo
issued the Writ of Preliminary Injunction.14
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Respondents iBank and Sheriff Flora filed on 29 August 2001 a Motion for Reconsideration15 of the order
granting the Writ of Preliminary Injunction which the trial court denied in an Order dated 21 November 2001.16

With the denial of their Motion for Reconsideration, respondents iBank and Sheriff Flora filed with the Court of
Appeals a Petition for Certiorari, Prohibition and Mandamus with prayer for issuance of Temporary Restraining
Order and/or Preliminary Injunction17 praying that it: (a) issue immediately a temporary restraining order
enjoining Judge Janolo from taking any action or conducting any further proceeding on the case; (b) annul the
Orders dated 18 July 2001 and 21 November 2001; and (c) order the immediate dismissal of Civil Case No. 68088.

In its decision dated 18 July 2003, the Court of Appeals dismissed the Petition.18 It explained that no grave abuse
of discretion was committed by Judge Janolo in promulgating the two Orders. It emphasized that its ruling only
pertains to the propriety or impropriety of the issuance of the preliminary injunction and has no bearing on the
main issues of the case which are still to be resolved on the merits. The Very Urgent Motion for Reconsideration
filed by respondents iBank and Sheriff Flora was denied for lack of merit.19

Respondents iBank and Sheriff Flora thereafter filed with this Court a Petition for Certiorari which we dismissed.
The Court’s Resolution dated 7 March 2005 reads:

Considering the allegations, issues and arguments adduced in the petition for certiorari, the Court Resolves to
DISMISS the petition for being a wrong remedy under the Rules and evidently used as a substitute for the lost
remedy of appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended. Besides, even if treated as a
petition under Rule 65 of the said Rules, the same would be dismissed for failure to sufficiently show that the
questioned judgment is tainted with grave abuse of discretion.20

Accordingly, an Entry of Judgment was issued by the Supreme Court certifying that the resolution dismissing the
case had become final and executory on 30 July 2005.21

Subsequently, respondents iBank and Sheriff Flora filed with the RTC of Pasig City, Branch 264, an Omnibus
Motion (To Resolve Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January 2006 praying that
their pending Motion for Reconsideration dated 26 February 2001 which seeks for the dismissal of the case be
resolved and/or the Writ of Preliminary Injunction previously issued be dissolved.22

On 9 February 2006, petitioners filed their Comment thereon with Motion to Cite in Contempt the counsel23 of
respondents. They pray that the pending Motion for Reconsideration be denied for being devoid of merit, and
that the Motion to Dissolve Writ of Preliminary Injunction be also denied, it being a clear defiance of the
directive of the Supreme Court which ruled with finality that the injunction issued by the trial court was
providently issued and was not tainted with grave abuse of discretion. They further ask that respondents’
counsel be cited in contempt of court and be meted out the appropriate penalty.24 Respondents filed a Reply
dated 20 February 2006.

In a Manifestation dated 24 March 2006, respondents iBank and Sheriff Flora submitted an Affidavit of Merit to
emphasize their resolve and willingness, among other things, to file a counter-bond to cover whatever damages
petitioners may suffer should the trial court decide to dissolve the writ of preliminary injunction.25 Petitioners
filed a Counter-Manifestation with Second Motion to Cite Respondents’ Counsel in Direct Contempt of
Court26 to which respondents filed an Opposition.27 Petitioners filed a Reply thereto.28

In an Order29 dated 29 April 2006, the trial court recalled and dissolved the Writ of Preliminary Injunction dated
13 August 2001, and ordered respondents to post a counter-bond amounting to ten million pesos. It directed
the Branch Clerk of Court to issue a Writ Dissolving Preliminary Injunction upon the filing and approval of the
required counter-bond. The dispositive portion of the Order reads:

WHEREFORE, this Court’s writ of preliminary injunction dated August 13, 2001 is recalled and dissolved.
Defendants are hereby ordered to post a counter-bond amounting to ten million pesos (P10,000,000.00) to
cover the damages plaintiffs would incur should a favorable judgment be rendered them after trial on the merits.

The Branch Clerk of Court is directed to issue a Writ Dissolving Preliminary Injunction upon the filing and
approval of defendants’ counter-bond.30

The trial court explained its ruling in this wise:

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In our jurisdiction, the provisions of Rule 58 of the Revised Rules of Court allow the issuance of preliminary
injunction. This court granted plaintiffs’ prayer preliminary injunction in the Order dated July 18, 2001 and the
corresponding writ issued on August 13, 2001.

Defendants in this case, however, are not without remedy to pray for dissolution of preliminary injunction
already granted because it is only interlocutory and not permanent in nature.

The provisions of Section 6, Rule 58 of the Revised Rules of Court allow dissolution of the injunction granted
provided there is affidavit of party or persons enjoined; an opportunity to oppose by the other party; hearing on
the issue, and filing of a bond to be fixed by the court sufficient to compensate damages applicant may suffer by
dissolution thereby.

A preliminary injunction is merely a provisional remedy, an adjunct to the main case subject to the latter’s
outcome. Its sole objective is to preserve the status quo until the trial court hears fully the merits of the case.
The status quo is the last actual, peaceable and uncontested situation which precedes a controversy. The status
quo should be that existing at the time of the filing of the case. A preliminary injunction should not establish
new relations between the parties, but merely maintain or re-establish the pre-existing relationship between
them. x x x.

When the complainant’s right or title is doubtful or disputed, he does not have a clear legal right and, therefore,
the issuance of injunctive relief is not proper and constitutes grave abuse of discretion. x x x. In the case at bar,
plaintiffs’ deed of sale was purported to be not duly notarized. As such, the legal right of what the plaintiffs
claim is still doubtful and such legal right can only be threshed out in a full blown trial where they can clearly
establish the right over the disputed properties.

Moreover, defendants are willing to post a counter bond which could cover up to the damages in favor of
plaintiffs in case the judgment turns out to be adverse to them. Under the Rules of Civil Procedure, this is
perfectly allowed and the dissolution of the writ of injunction can accordingly be issued. In the case of Lasala vs.
Fernandez, the highest court has enunciated that "a court has the power to recall or modify a writ of preliminary
injunction previously issued by it. The issuance or recall of a preliminary writ of injunction is an interlocutory
matter that remains at all times within the control of the court." (G.R. No. L-16628, May 23, 1962). The
defendants had shown that dissolution of the writ of injunction is just and proper. It was duly shown that great
and irreparable injury would severely cause the defendants if the writ of injunction shall continue to exist.31

On 5 May 2006, petitioners filed a Petition for Certiorari before the Court of Appeals asking that the trial court’s
Order dated 29 April 2006 be set aside.32

During the pendency of the Petition for Certiorari, petitioners filed before the trial court a Very Urgent Motion
to Suspend Proceedings33 to which respondents filed a Comment.34

On 11 July 2006, the Court of Appeals resolved to dismiss outright the Petition for Certiorari for failure of
petitioners to file a motion for reconsideration of the Order dated 29 April 2006.35 The Motion for
Reconsideration36 filed by petitioners was denied.37

After being granted an extension of thirty days within which to file a petition for certiorari, petitioners filed the
instant Petition on 14 December 2006. They made the following assignment of errors:

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY ABUSED HIS DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION IN DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION
DATED 13 AUGUST 2001.

1. DESPITE THE FACT THAT THE COURT OF APPEALS RESOLVED WITH FINALITY THAT YOUR PERITIONERS
WILL "SUFFER IRREPARABLE INJURY" (C.A.’s emphasis) IF NO INJUNCTION IS ISSUED.

2. DESPITE THE FACT THAT THE HON. SUPREME COURT RULED WITH FINALITY THAT THE COURT A QUO
DID NOT ABUSE ITS JURISDICTION WHEN IT ISSUED THE INJUNCTION DATED 13 AUGUST 2001, THUS,
SUSTAINING THE REGULARITY OF THE WRIT OF PRELIMINARY INJUNCTION.
145
II

THE HONORABLE PUBLIC RESPONDENT JUDGE LEONCIO M. JANOLO, JR. GRAVELY ABUSED HIS DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION BY FIXING THE PHP10,000,000.00 COUNTER-BOND
DESPITE THE FACT THAT THE IRREPARABLE DAMAGE TO PETITIONERS AS A RESULT OF DISSOLVING THE WRIT OF
PRELIMINARY INJUNCTION IS INCAPABLE OF PECUNIARY ESTIMATION OR COULD NOT BE QUANTIFIED.

III

THE HONORABLE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN OUTRIGHTLY
DISMISSING YOUR PETITIONERS PETITION FOR CERTIORARI IN CA-GR SP NO. 95074, AS IT FAILED TO APPLY
EXISTING JURISPRUDENCE TO THE EFFECT THAT A MOTION FOR RECONSIDERATION MAY BE DISPENSED WITH
WHERE THE CONTROVERTED ACT IS PATENTLY ILLEGAL OR WAS PERFORMED WITHOUT JURISDICTION OR IN
EXCESS OF JURISDICTION AS HELD IN HAMILTON VS. LEVY, (344 SCRA 821)

IV

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED
PETITIONERS’ MOTION FOR RECONSIDERATION CLEARLY POINTING OUT TO THE COURT THAT AS AN EXCEPTION
TO THE RULE, THE REQUIRED MOTION FOR RECONSIDERATION MAY BE DISPENSED WITH.

At the outset, it must be said that the Writ of Preliminary Injunction dated 13 August 2001 issued by the trial
court has not yet been actually dissolved because respondents have not posted the required counter-bond in
the amount of ₱10,000,000.00. The dissolution thereof is primed on the filing of the counter-bond.

Petitioners argue that the trial court abused its discretion when it ordered the dissolution of the Writ of
Preliminary Injunction, the propriety of its issuance having been affirmed by both the Court of Appeals and the
Supreme Court. There being an Order by this Court that the injunction issued by the trial court was not tainted
with grave abuse of discretion, the dissolution of said writ is a clear defiance of this Court’s directive.

Respondents, on the other hand, contend that the trial court has the authority and prerogative to set aside the
Writ of Preliminary Injunction. They add that since petitioners’ Deed of Sale was not duly notarized, the latter’s
application for preliminary injunction is devoid of factual and legal bases. They assert that, not being public
documents, the subject deeds of sale are nothing but spurious, if not falsified, documents. They add that the
continuance of the Writ of Preliminary Injunction would cause them irreparable damage because it continues to
incur damage not only for the nonpayment of the judgment award (in Civil Case No. 98-791 before the RTC of
Makati City, Br. 150), but also for opportunity losses resulting from the continued denial of its right to
consolidate title over the levied properties.

There is no dispute that both the Court of Appeals and this Court have ruled that the issuance of the Writ of
Preliminary Injunction by the trial court was not tainted with grave abuse of discretion. Respondents tried to
undo the issuance of said writ but to no avail. The Resolution on the matter attained finality on 30 July 2005 and
an entry of judgment was made.

This, notwithstanding, respondents filed with the RTC of Pasig City, Branch 264, an Omnibus Motion (To Resolve
Motion to Dismiss Complaint and/or Dissolve Injunction) dated 31 January 2006 praying that their Motion for
Reconsideration dated 26 February 2001 of the trial court’s denial of their Motion to Dismiss which the trial
court failed to resolve, be resolved and/or the Writ of Preliminary Injunction previously issued be dissolved.
With this Omnibus Motion, the trial court issued the Order dated 13 August 2001 recalling and dissolving the
Writ of Preliminary Injunction conditioned on the filing of a ₱10,000,000.00 counter-bond.

The question is: Under the circumstances obtaining in this case, may the trial court recall and dissolve the
preliminary injunction it issued despite the rulings of the Court of Appeals and by this Court that its issuance was
not tainted with grave abuse of discretion?

We hold that the trial court may still order the dissolution of the preliminary injunction it previously
issued.1avvphi1 We do not agree with petitioners’ argument that the trial court may no longer dissolve the
preliminary injunction because this Court previously ruled that its issuance was not tainted with grave abuse of
discretion.
146
The issuance of a preliminary injunction is different from its dissolution. Its issuance is governed by Section
3,38Rule 58 of the 1997 Rules of Civil Procedure while the grounds for its dissolution are contained in Section 6,
Rule 58 of the 1997 Rules of Civil Procedure. As long as the party seeking the dissolution of the preliminary
injunction can prove the presence of any of the grounds for its dissolution, same may be dissolved
notwithstanding that this Court previously ruled that its issuance was not tainted with grave abuse of discretion.

Section 6 of Rule 58 reads:

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or restraining order. – The
application for injunction or restraining order may be denied, upon a showing of its insufficiency. The injunction
or restraining order may also be denied, or, if granted, may be dissolved, on other grounds upon affidavits of the
party or person enjoined, which may be opposed by the applicant also by affidavits. It may further be denied, or,
if granted, may be dissolved, if it appears after hearing that although the applicant is entitled to the injunction or
restraining order, the issuance or continuance thereof, as the case may be, would cause irreparable damage to
the party or person enjoined while the applicant can be fully compensated for such damages as he may suffer,
and the former files a bond in an amount fixed by the court conditioned that he will pay all damages which the
applicant may suffer by the denial or the dissolution of the injunction or restraining order. If it appears that the
extent of the preliminary injunction or restraining order granted is too great, it may be modified.

Under the afore-quoted section, a preliminary injunction may be dissolved if it appears after hearing that
although the applicant is entitled to the injunction or restraining order, the issuance or continuance thereof, as
the case may be, would cause irreparable damage to the party or person enjoined while the applicant can be
fully compensated for such damages as he may suffer, and the former files a bond in an amount fixed by the
court on condition that he will pay all damages which the applicant may suffer by the denial or the dissolution of
the injunction or restraining order. Two conditions must concur: first, the court in the exercise of its discretion,
finds that the continuance of the injunction would cause great damage to the defendant, while the plaintiff can
be fully compensated for such damages as he may suffer; second, the defendant files a counter-bond.39 The
Order of the trial court dated 29 April 2006 is based on this ground.

In the case at bar, the trial court, after hearing, found that respondents duly showed that they would suffer
great and irreparable injury if the injunction shall continue to exist. As to the second condition, the trial court
likewise found that respondents were willing to post a counter-bond which could cover the damages that
petitioners may suffer in case the judgment turns out to be adverse to them. The Order of the trial court to
recall and dissolve the preliminary injunction is subject to the filing and approval of the counter-bond that it
ordered. Failure to post the required counter-bond will necessarily lead to the non-dissolution of the preliminary
injunction. The Order of Dissolution cannot be implemented until and unless the required counter-bond has
been posted.

The well-known rule is that the matter of issuance of a writ of preliminary injunction is addressed to the sound
judicial discretion of the trial court, and its action shall not be disturbed on appeal unless it is demonstrated that
it acted without jurisdiction or in excess of jurisdiction or, otherwise, in grave abuse of discretion. By the same
token, the court that issued such a preliminary relief may recall or dissolve the writ as the circumstances may
warrant.40 In the case on hand, the trial court issued the order of dissolution on a ground provided for by the
Rules of Court. The same being in accordance with the rules, we find no reason to disturb the same.

Petitioners contend that the Court of Appeals erred and gravely abused its discretion when it dismissed outright
their Petition for Certiorari by failing to apply existing jurisprudence that a motion for reconsideration may be
dispensed with where the controverted act is patently illegal or was performed without jurisdiction or in excess
of jurisdiction. On the other hand, respondents urge the Court to deny the Petition for Review, arguing that the
Court of Appeals properly applied the general rule that the filing of a motion for reconsideration is a
condition sine qua non in order that certiorari will lie.

We find petitioners’ contention to be untenable.

The rule is well settled that the filing of a motion for reconsideration is an indispensable condition to the filing of
a special civil action for certiorari.41 It must be stressed that a petition for certiorari is an extraordinary remedy
and should be filed only as a last resort. The filing of a motion for reconsideration is intended to afford the trial
court an opportunity to correct any actual error attributed to it by way of re-examination of the legal and factual

147
issues.42 By their failure to file a motion for reconsideration, they deprived the trial court of the opportunity to
rectify any error it committed, if there was any.

Moreover, a perusal of petitioners’ petition for certiorari filed with the Court of Appeals shows that they filed
the same because there was no appeal, or any plain, speedy and adequate remedy in the course of law
except via a petition for certiorari. When same was dismissed by the Court of Appeals for failure to file a motion
for reconsideration of the trial court’s Order, they argue that while the filing of a motion for reconsideration is
a sine qua non before a petition for certiorari is instituted, the same is not entirely without exception like where
the controverted act is patently illegal or was performed without jurisdiction or in excess of jurisdiction. It was
only when the Court of Appeals dismissed their Petition did they argue that exceptions to the general rule
should apply. Their invocation of the application of the exceptions was belatedly made. The application of the
exceptions should be raised in their Petition for Certiorari and not when their Petition has already been
dismissed. They must give their reasons and explain fully why their case falls under any of the exceptions. This,
petitioners failed to do.

Petitioners’ argument that they filed the Petition for Certiorari without filing a motion for reconsideration
because there is no appeal, or any plain, speedy and adequate remedy in the course of law except via a Petition
for Certiorari does not convince. We have held that the "plain" and "adequate remedy" referred to in Section 1,
Rule 65 of the Rules of Court is a motion for reconsideration of the assailed Order or Resolution.43 The mere
allegation that there is "no appeal, or any plain, speedy and adequate remedy" is not one of the exceptions to
the rule that a motion for reconsideration is a sine qua non before a petition for certiorari may be filed.

All told, we hold that the act of the trial court of issuing the Order dated 29 April 2006 was not patently illegal or
performed without or in excess of jurisdiction. The Court of Appeals was correct in dismissing outright
petitioners’ Petition for Certiorari for failing to file a motion for reconsideration of the trial court’s Order.

Our pronouncements in this case are confined only to the issue of the dissolution of the preliminary injunction
and will not apply to the merits of the case.

WHEREFORE, all considered, the Petition is hereby DENIED. The Resolutions of the Court of Appeals in CA-GR SP
No. 95074 dated 11 July 2006 and 9 October 2006 are AFFIRMED. The Order dated 29 April 2006 of Branch 264
of the Regional Trial Court (RTC) of Pasig City in Civil Case No. 68088 recalling and dissolving the Writ of
Preliminary Injunction dated 13 August 2001 is AFFIRMED. Upon the posting by respondents of the counter-
bond required, the trial court is directed to issue the Writ Dissolving Preliminary Injunction. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO

RULE 59-RECEIVERSHIP

G.R. No. 6305 September 26, 1911

COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee,

vs.
ROMANA GAUZON and JUAN D. POMAR, defendants.
JUAN D. POMAR, receiver-appellant.

M. Fernandez Yamson, for appellant.

A. P. Seva, for appellee.

JOHNSON, J.:

The present appeal is made by the defendant Juan D. Pomar, as receiver, against the order of the Hon. Albert e.
McCabe, judge of the Province of Occidental Negros, disallowing certain items in the final account of the said
receiver.

148
It appears from the record that the defendant, Romana Gauzon, on the 10th day of September, 1904, executed
and delivered to the plaintiff (Compañia General de Tabacos de Filipinas) a mortgage upon an hacienda known
as "San Jose," in the municipality of San Carlos, in the Province of Occidental Negros. The said defendant
(Romana Gauzon) having failed to pay the said mortgage, the plaintiff (Compañia General de Tabacos de
Filipinas), on the 22d day September, 1905, commenced an action for the foreclosure of said mortgage, and
asked, in addition to the foreclosure of the mortgage, that a receiver be appointed to take change of the
property in question, pending the said action. On the same day (22nd of September, 1905) the Hon. Vicente
Jocson, after hearing the petition filed in said cause, appointed the said defendant, Juan D. Pomar, an employee
of the plaintiff, receiver of the property involved in said foreclosure proceedings. Said foreclosure proceedings
continued to a termination. The result of said proceedings may be found in two decisions of this court, the cases
of La Compañia General de Tabacos de Filipinas vs. Ganzon (13 Phil. Rep., 472) and La Compañia General de
Tabacos de Filipinas vs. Ganzon (13 Phil. Rep., 481). The facts relating to the foreclosure proceedings and the
judgment therein are not important in the present cause, further than to show the history of the transactions of
the receiver, the defendant, Juan D. Pomar.

After the termination of the receivership, the court required of the receiver (Juan D. Pomar) a report and an
accounting of his operations as receiver. It appears from the record that the lower court had a good deal of
trouble in securing a final report. The receiver apparently acted as though his only responsibility was to the
plaintiff (Compañia General de Tabacos de Filipinas); however, finally the lower court secured what appears to
be a final accounting by the receiver, upon the 9th or 10th day of August, 1909. The report of the receiver
contained many items.

After a careful consideration of the various items of the account of the receiver, Judge McCabe allowed the
following items of said account —

1. Care of cane before cutting P1,522.30

2. Cutting and grinding, according to report of

commissioners 8,565.97

3. Fuel 150.00

4. Expenses in Iloilo, according to receiver's Exhibit B 2,591.28

5. Storage 428.28

6. Insurance 428. 28

7. Selling commission 648. 28

8. Judgment for plaintiff in cause No. 249 9,187.80

9. Receiver's pay 1,000.00

Total 24,522.04

or about the first Tuesday of November, 1909, the sum of P7,883.76, a balance which he ought to have had in
his possession. From the order allowing said items only the defendant appealed to this court and made the
following assignments of error: .

I. The court erred in reducing to P8,565.97 the P22,944.73 spent by the receiver for cutting, hauling, and
manufacture of 8,005.58 piculs of sugar, for packing, transportation and storage thereof, and insurance
and selling commission thereon.

II. The court erred in not allowing the item of P147.86 paid out by the receiver as interest on money
borrowed to cover the first expenses of his receivership.

III. The court erred in not approving the disbursement made by the receiver of the P3,001.94 delivered
to theaparceros as their share of the crop.

149
 IV. The court erred in reducing to P1,000 the P4,860.87 which the receiver claimed as compensation for
his services.

V. The court erred in holding that the order appointing the receiver does not extend his powers beyond
those prescribed in section 175 of Act No. 190.

With reference to the first assignment of error, it will be noted that the receiver presented an account for
cutting, grinding, etc., of the sugar cane upon the hacienda, over which he had control as receiver, amounting to
P22,944.73. Judge McCabe refused to allow that amount for cutting and grinding, etc., of said sugar cane, upon
the ground that it was an unreasonable charge. The parties in the lower court agreed to the appointment of
three commissioners for the purpose of ascertaining the reasonable cost of cutting, grinding, etc., of the sugar
cane upon the said hacienda. The commissioners were duly appointed, the plaintiff selecting one, the defendant
another and the court selecting the third. In due time and after due deliberation, the commissioners etc., of the
said sugar cane per pico was P1.07. There were 8,005.58 picos of sugar cane, which calculated at the rate of per
pico for cutting, grinding, etc., would amount to P8,565.97, which amount the lower court allowed the receiver.
The commissioners appointed by the lower court were men who had experience in the cutting and grinding of
sugar cane. It was the duty of the receiver to harvest the sugar cane at least possible cost to the owners of the
crop. There is much proof in the record to indicate that the receiver did not harvest the crop of sugar cane as
expeditiously as he should have done. There is no proof in the record which shows that the amount estimated
by the said commissioner for the cutting, grinding, etc., of the sugar cane in question, was not a reasonable
amount for that expense. We find nothing in the record which justifies us in modifying the decision of the lower
court with reference to this first assignment of error.

With reference to the second assignment of error, it appears that the receiver attempted to charge P147.86, as
interest on money borrowed by him during his administration as receiver. There is no proof in the record which
shows that it was necessary for him to borrow money to properly conserve the interests of the owners and
creditors interested in the administration of the hacienda. The lower court correctly said, "a receiver has no
authority to borrow money unless the same is expressly given by the court." We would be inclined, however, to
allow this amount (P147.86) had the necessity been fully demonstrated for borrowing the money. In the
absence of authority expressly given and especially in the absence of proof of the absolute necessity for
incurring this item of expense, we refuse to modify the conclusions of the lower court with respect to this item.

With reference to the third assignment of error above noted, the receiver included in his account the item of
P3,001.94, being the amount, according to this statement, of money and effects delivered to "los aparceros de la
hacienda" during his administration. It is a well known custom among sugar growers in the Philippine Islands,
that the aparceros plant and cultivate sugar cane at their own expense, receiving one-half of the sugar produced
and delivering the other half to the owner land. It is also a well known custom that the owners of the land from
time to time advance money and effects to the aparceros, deducting the value of the same from the value of the
sugar after the same is harvested. In the present case it appears that the receiver delivered one-half of the sugar
to the aparceros without deducting the amount of money and effects advanced to them. If he, in fact, advanced
to the aparceros the said sum (P3,001.94) he should have deducted it from the amount due said aparceros, and
not have attempted to collect the same from the amount due the owner of the hacienda, prejudicing the owner
of the hacienda thereby. Here again the receiver exceeded his authority. Nevertheless we would be inclined to
allow this amount (P3,001.94) if it were a just charge against the administration of the hacienda. But, as was said
above, it is not a just charge against the owner of the hacienda. This amount should have been collected from
the aparceros. Judge McCabe committed no error in disallowing this item in the account of the receiver.

With reference to the fourth assignment of error above noted, it will be seen that the receiver included in his
account the sum of P4,860.87 as compensation for his administration as receiver. The lower court disallowed
that amount but did allow him the sum of P1,000 as his just compensation as receiver. The lower court, in the
appointment of the receiver, did not fix any sum for his compensation; neither is it customary for courts in
appointing receivers to fix their compensation in advance. Their compensation is a matter which is always left to
the sound discretion of the court, to be allowed from time to time. The receiver attempted to recover as his
compensation 15 per cent of the value of the sugar. The lower court found that the amount of P4,860. 87 was
an unreasonable amount to be allowed as compensation for the services of the receiver in the present case. The
court found that the receiver might have done all the work which he did do in the course of his administration as
receiver in one hundred days. The Code of Procedure in Civil Actions allows administrators of estates of
deceased persons the sum of P4 a day for the time actually employed in the administration of the estate. The
lower court, following this provision of the law, believing the present case to be somewhat analogous, allowed
150
the receiver P4 a day for his services. The lower court also allowed an additional amount, the basis of which
does not clearly appear in the record, making the total compensation of the receiver the sum of P1,000. Against
that order the owner of the hacienda did not appeal. Considering the negligent manner in which the receiver
administered the hacienda, as appears from the record, as well as his negligence in complying with the various
orders of the court with reference to rendering accounts, we are of the opinion that the sum of P1,000 is, in fact,
more than a just compensation for his services. In view, however, of the fact that the owner of the hacienda did
not appeal from the order of the court allowing said sum (P1,000) we approve the finding of the lower court.

With reference to the fifth assignment of error above noted, the appellant seems to believe that section 175 of
the Code of Procedure in Civil Actions gave him full power to administer the property placed under his control as
receiver as he might deem wise and necessary, without any intervention on the part of the court or of the
interested parties. The appellant evidently overlooked the phrase of said article which says: "The receiver shall
have, under the control of the court in which the action is pending, power, etc." The judge of the lower court in
his decision goes into detail at length and cites authorities extensively, for the purpose of showing the general
duties, powers and responsibilities of receivers, evidently for the purpose of instructing receivers in his district.
The receiver is generally defined to be "an indifferent person between the parties litigant, appointed by the
court and on behalf of all the parties, and not of the plaintiff or defendant only, to receive and hold the thing or
property in litigation, pending the suit (Booth vs. Clark, 17 How. (U. S.),322, 331), to receive the rents, issues or
profits of the land or thing in question (Both vs. Clark, supra), to receive the rents or other income, to hold
possession and control of the property which is the subject matter of the litigation, and to dispose of the same
or deliver it to such person or persons as may be directed by the court. (Wiswall vs. Kunz, 173 Ill., 110.)" The
reports of the decisions of the courts are filled with decisions supporting the above doctrine. The receiver is said
to be the arm and hand of the court—a part of the machinery of the court, by which the rights of parties are
protected. He is required not only to preserve the property, but to protect the rights of all of the parties
interested. If he is not versed in the law, he should secure legal advice, with the permission of the court and in
case of doubt should advise with the court and receive direction.

After a full consideration of the above assignments of error, in connection with the facts contained in the record,
we find no reason for changing or modifying the decision of the lower court, and the same is hereby affirmed,
with costs.

Torres, Mapa and Moreland, JJ., concur.

G.R. No. L-25729 November 24, 1926

THE BELGIAN CATHOLIC MISSIONARIES, INC., plaintiff-appellee,

vs.
MAGALLANES PRESS, INC., ET AL., defendants.
JOSE MARIA MEMIJE, appellant.

Antonio M. Opisso, Romualdez Hermanos and Luciano de la Rosa for appellant.

Cavanna, Aboitiz & Agan for appellee.

VILLA-REAL, J.:

This is an appeal by Jose Marie Memije from a judgment of the Court of First Instance of Manila the dispositive
part of which is as follows:

For all the foregoing, the court is of the opinion that the plaintiff has a right to the relief prayed for in its
complaint. Wherefore, judgment is rendered declaring that Exhibits C and D, that is, the mortgage deeds
in question in this proceeding, in so far as they prejudice the rights of the plaintiff, are null and void; that
the preliminary injunction issued in this case against the defendant Jose Ma. Memije is final and
absolute; and that the plaintiff recover the amount of the fire insurance policies of the defendant
"Magallanes Press, Inc.," which, or the representatives of which, is hereby ordered to endorse said
insurance policies to the plaintiff, with the costs of the proceedings against the defendants, with the
exception of J.P. Heilbronn Co., Inc. It is so ordered.
151
In support of his appeal, the appellant assigns the following supposed errors as committed by the lower court in
its judgment, to wit: (1) The court erred in overruling the demurrer filed by this defendant to the complaint in
this action; (2) the trial court erred in giving the plaintiff corporation possession of the property mortgaged to
this appellant without following the necessary proceedings or complying with the provisions of the law; (3) the
trial court erred in issuing the writ of preliminary injunction against the appellant and E. E. Elser, restraining the
former from receiving from the latter, or the latter from delivering to the former, the amount of the insurance
policies covering the property mortgaged to the appellant, which was damaged by the fire that occurred in the
establishment of the Magallanes Press, Inc; (4) the trial court erred in giving to the unnecessary intervention of
the Magallanes Press, Inc., in the execution of the deed Exhibit C an interpretation which is neither based upon
law nor upon the contract; (5) the trial court erred in ordering the suspension of the foreclosure of the
appellant's mortgage on the property of the Magallanes Press, Inc.; (6) the trial court erred, under the facts
proven in this case, in applying article 1297 of the Civil Code; (7) the trial court erred in finding in its decision
that the defendant Jose Ma. Memije should not have executed the documents Exhibits C and D without taking
into account the rights of the plaintiff corporation, The Belgian Catholic Missionaries, Inc; (8) the trial court erred
in declaring Exhibits C and D null and void in so far as they prejudice the rights of the plaintiff, over whose credit
that of the herein appellant is preferential; in declaring the writ of preliminary injunction issued against the
defendant Jose Ma. Memije final and absolute; in giving judgment for the plaintiff to recover the amount of the
fire insurance policies of the defendant the Magallanes Press, Inc; and (9) the trial court erred in not making any
pronouncement as to the counterclaim and cross-complaint of the defendant Jose Ma. Memije in this action,
nor taking the same into consideration and rendering judgment thereon in favor of said defendant.

The oral evidence has not been forwarded to this court so that we are compelled to base our opinion exclusively
upon the documentary evidence and the facts found and stated by the trial court in its judgment.

It appears that on December 1, 1921, the Magallanes Press, through its manager H. Camena, executed a
promissory note in favor of J. P. Heilbronn & Co., Inc., for the sum of P3,472.92, with interest at 10 per cent per
annum, payable at the rate of P250 a month, plus the interest earned on the unpaid balance, until the whole
amount of the indebtedness shall have been paid, the first payment to be made on January 1, 1922, with the
condition that upon the failure to pay any monthly installment or the interest earned on the unpaid balance, the
whole amount of the indebtedness shall become due, and the maker shall pay the payee an additional sum
equivalent to 15 per cent of the total balance, for attorney's fee and expenses of collection, forfeiting all right of
exemption.

On the same date, December 1, 1921, the said Magallanes Press, through its managers H. Camena, also
executed a promissory note in favor of J. P. Heilbronn & Co., Inc., for the sum of P10,715.77, with interest at 12
per cent per annum, payable at the rate of P500 a month, together with the interest earned on the unpaid
balance, until the whole amount of the indebtedness shall have been paid, the first payment to be made on
January 1, 1922, with the condition that upon the failure to pay any monthly installment or the interest earned
on the unpaid balance, the whole amount of the indebtedness shall become due, and the maker shall pay the
payee an additional sum equal to 15 per cent of the total balance for attorney's fee and expenses of collection,
forfeiting all right of exemption.

To secure the payment of said promissory notes which amounted to a total of P14,188.69, H. Camena, as
general manager of the Magallanes Press, executed a chattel mortgage on all of the printing machinery and its
accessories, belonging to the said Magallanes Press, in favor of J. P. Heilbronn & Co., Inc.

One June 19, 1922, the Magallanes Press Co., Inc., successor to the Magallanes Press, with all the latter's rights
and obligations, through its duly authorized president, E. F. Clemente, executed a chattel mortgage on the same
printing machinery ad its accessories in favor of the Belgian Catholic Missionaries Co., Inc., which the Magallanes
Press had mortgaged to J. P. Heilbronn & Co., Inc., to secure the payment of a loan of P30,500, with interest at
12 per cent per annum, which the said Magallanes Press & Co., Inc., had obtained from the Belgian Catholic
Missionaries Co., Inc., the duration of the mortgage loan being one year from the execution of the mortgage
deed.

In December, 1922 the appellant Jose Ma. Memije made a loan in the sum of P2,000 to E. F. Clemente which
was paid on account of the indebtedness of the Magallanes Press to J. P. Heilbronn & co., Inc., together with the
sum of P1,641 which A. F. Mendoza owed said E. F. Clemente.

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On the occasion of the issuance of the writ of attachment in civil cause No. 23818 of the Court of First Instance
of Manila, entitled Jose Ma. Cavanna vs. the Magallanes Press Co., Inc., the defendant Jose Ma. Memije, on
February 21, 1923, filed an intervention in said case.

All the promissory note executed by the Magallanes Press in favor of J. P. Heilbronn & Co., Inc., having been
overdue for non-payment of the installments as well as the respective chattel mortgage, the said J. P. Heilbronn
& Co., Inc., transferred all its mortgage credit against the Magallanes Press to Jose Ma. Memije in consideration
of the sum of P8,280.90, the balance of said mortgage credit.

On March 14, 1923, Enrique Clemente, as manager of the Megallane Press Co., Inc., executed a deed in favor of
Jose Ma. Memije by virtue of which the chattel mortgage which was given by the Magallanes Press in favor of J.
P. Heilbronn & Co., Inc., and transferred by the latter to Jose Ma. Memije, was made to cover an additional loan
of P5,895.79, which included the sum of P2,000 which said Jose Ma. Memije had advanced said Enrique
Clemente in December, 1922.

On April 21, 1923, a fire occurred in the building where the pointing machinery, its accessories and other
personal property of the Magallanes Press Co., Inc., were located and which were covered by said chattel
mortgages. Said property was insured, and the insurance policies covering it were endorsed to J. P. Heilbronn &
Co., Inc., upon the execution of the chattel mortgage thereon in favor of the latter. When J. P. Heilbronn & Co.,
Inc., transferred its mortgage credit to Jose Ma. Memije it, in turn, endorsed said insurance policies to him. The
insurance companies were disposed to pay the respective insurance policies, which amounted to P7,686.45, but
due to the issuance of the above-mentioned writ of preliminary injunction, payment could not be made.

Due to the filing of the complaint in the present case on May 9, 1923, and the issuance of the writ of preliminary
injunction on May 10th of the same year, Jose Ma. Memije was unable to collect the amount of the insurance
policies, and when he was summoned under the complaint on May 14, 1923, he made demand on the
Magallanes Press Co., Inc., for the payment of his mortgage credit on the same date the manager of said
corporation, E. F. Clemente, permitted the secretary of the said corporation to place the property covered by
the mortgage into the hands of the said Jose Ma. Memije in order that the same might be sold, but the sale
could not be consummated due to the issuance of the said writ of preliminary injunction.

The first question raised by the defendant and appellant has reference to the overruling of the demurrer filed by
him to complaint.

One of the grounds of said demurrer was that the complaint in this case did not allege facts sufficient to
constitute a cause of action against the said defendant, in that, notwithstanding the fact that the said complaint
was instituted to annul the document of transfer of the mortgage credit Exhibit C, it was not alleged in the said
complaint that the defendant Jose Ma. Memije had any intention to defraud the interests of the plaintiff
corporation, which was absolutely impossible due to the nature of the transaction and the preferential character
of the mortgage credit of J. P. Heilbronn & Co., Inc.

As to this paragraph of the complaint, the plaintiff company having known of the existence of a chattel
mortgage in favor of J. P. Heilbronn & Co., Inc., the latter, either as the first or as the second mortgage, had a
perfect right to transfer its mortgage credit, without the knowledge or consent of any other mortgagee,
inasmuch as whoever acquired it, would have exactly the same status as the transferor with the same rights and
obligations. The fact, therefore, that the Magallanes Press Co., Inc., had consented to the transfer of the
mortgage credit of J. P. Heilbronn & Co., Inc., to Jose Ma. Memije, does not constitute a fraud that an vitiate the
said transfer, inasmuch as the order of preference of the mortgages has not been altered, and its allegations
does not constitute a cause of action to annul the said transfer.

In regard to the allegation contained in the ninth paragraph of the complaint, it is very clear that the increase
made by Jose Ma. Memije in the mortgage credit acquired by him from J.P. Heilbronn & Co., Inc., and the
extension made by the Magallanes Press, Inc., of the mortgage to said additional credit without the knowledge
or consent of the plaintiff company, as second mortgagee, prejudices the credit of the latter, inasmuch as the
security for the payment of said credit was reduced as to it, and, therefore, constitute a fraud that vitiates the
contract of extension of the mortgage evidence by the deed Exhibit D, rendering it void.lawphil.net

The facts allege in paragraph 9 of the complaint are sufficient to constitute a cause of action of nullity, and the
lower court did nor err in overruling the demurrer filed by the defendant Jose Ma. Memije.
153
In regard to the second assignment of error, it appears that the defendant Jose Ma. Memije having attempted to
foreclose the mortgage, by which the mortgage credit acquired by him from J. P. Heilbronn & Co., Inc., was
secured, in order to recover not only the original credit but also the increase, the Belgian Catholic Missionaries
Co., Inc., filed a complaint, with a petition for a writ of preliminary injunction against the sheriff, in whose hands
the foreclosure of the mortgage was placed. The writ of preliminary injunction having been issued, upon the
filing of a bond in the sum of P15,000, and there being no person more interested in the conservation and
custody of the property covered by the mortgage than said plaintiff company, being the largest creditor, it
applied and obtained from the court the possession of the same.

Contrary to the contention of the appellant, this case is not one of replevin but simply a proceeding instituted by
the plaintiff for the deposit of the property in litigation, upon the filing of a bond, said plaintiff, acting as a
receiver by authority of the court, being the person most interested in the conservation and care of the same
(sec. 174, Act No. 190; 11 C. J., 726).

The lower court, therefore, did not err in authorizing the plaintiff company to take possession of the personal
property in litigation upon the filing of a bond sufficient to secure the conservation or value thereof.

The third assignment of error raises the question as to the preference of right between the plaintiff company
and the defendant over the mortgaged property and the amount of the insurance policies covering a part
thereof which was destroyed by fire.

As we have seen in the statement of the pertinent facts necessary for the clear and accurate solution of the
questions of law involved in the present appeal, the firm of J. P. Heilbronn & Co., Inc., had a mortgage credit
against the Magallanes Press for the sum of P14,186.69, secured by a first chattel mortgage. The plaintiff
company, the Belgian Catholic Missionaries Co., Inc., also had a mortgage credit for the amount of P30,500,
secured by a second mortgage on the same personal property. After this second mortgage had been executed,
the payment of the mortgage credit of J.P. Heilbronn & Co., Inc., became due, which credit had been reduced to
the sum of P8,280,90 through partial payments, and the herein defendant-appellant Jose Ma. Memije acquired
said mortgage credit and increased it by P5,895.59 of which increase P2,000 was a previous loan.

There is no question but that J. P. Heilbronn & Co., Inc., at the time of the transfer of this mortgage rights to Jose
Ma. Memije, had a preferential right over that of the Belgian Catholic Missionaries Co., Inc., for the remainder of
the amount of the mortgage credit, that is, P8,280.90. The plaintiff company had a preferential right to the rest
of the value of the mortgaged property after deducting the remaining mortgage credit of J. P. Heilbronn & Co.,
Inc.

The increase of P5,895.59 made by the defendant Jose Ma. Memije in favor of the Magallanes Press Co., Inc.,
and the extension of the mortgage thereto, are not only subordinate to the mortgage credit of the plaintiff
company, being subsequent in time and in registration, but said increase in the security is also void. The increase
of the mortgage security becomes a new mortgage in itself, inasmuch as the original mortgage did not contain
any stipulation in regard to the increase of the mortgage credit, and even if it did, said increase would take
effect only from the date of the increase. A mortgage that contains a stipulation in regard to future advances in
the credit will take effect only from the date the same are made and not from the date of the mortgage (11 C. J.,
448; 5 R. C. L., 420-421). In accordance with the provisions of section 5 of Act No. 1508, known as the Chattle
Mortgage Law, the parties to the original deeds swore that the same was mortgaged "to secure the obligations
specified therein and for no other purpose." Neither the increase in question, nor the extension of the mortgage
to secure the payment of the same is specified in the deed, consequently said extension is void. "Where the
statute provides that the parties to a chattel mortgage must make oath that the debt is a just debt, honestly due
and owing from the mortgagor to the mortgagee, it is obvious that a valid mortgage cannot be made to secure a
debt to be thereafter contacted." (11 C. J., 448.)

Briefly, therefore, we have the following:

(a) That Jose Ma. Memije has a preferential right to the value of the chattels mortgage and the amount
of the insurance policies up to the sum of P8,280.90;

(b) That the plaintiff corporation, the Belgian Catholic Missionaries Co., Inc., has a right to the remainder
of the value of said chattels and the insurance policies up to the amount of P30,500, after deducting the
preferential credit of Jose Ma. Memije;
154
 (c) That as to the increase of P5,895.59, the right of the defendant Jose Ma. Memije is that of an
ordinary creditor.

In regard to the damages claimed by the defendant in his counterclaim and which is the subject-matter of his
remaining assignments of error, said defendant has a right to interest at 12 per cent on the P8,280.90 the
amount of the mortgage credit acquired by him from J. P. Heilbronn & Co., Inc., from February 26, 1923, the
date of the acquisition until fully paid.

For the foregoing reasons, the judgment appealed from is revoked and it is ordered the another be entered
declaring all the mortgages overdue, and the mortgage credit of Jose Ma. Memije preferential over that of the
Belgian Catholic Missionaries Co., Inc., up to the amount of P8,280.90, with interest at the rate of 12 per cent
per annum from February 26, 1923, until fully paid; the mortgage credit of the Belgian Catholic Missionaries Co.,
Inc., for the sum of P30,500 with interest at the rate of 12 per cent per annum, from June 19, 1922, until fully
paid, plus the sum of P3,000 for attorney's fees, over the additional credit of Jose Ma. Memije for P5,895.59;
and ordering the foreclosure of the said mortgages by selling the mortgaged property at public auction, to the
proceeds of which shall be added the amount of the insurance policies and the above-mentioned credits in the
order of preference above established, without special pronouncement as to costs. So ordered.

Avanceña, C. J., Johnson, Street, Ostrand and Johns, JJ., concur.

G.R. No. L-2987 February 20, 1951

ERNEST BERG, plaintiff-appellant,

vs.
VALENTIN TEUS, defendant-appellee.

Alva J. Hill for appellant.

J. Perez Cardeñas for appellee.

TUAZON, J.:

This appeal is from an order of the Court of First Instance of Ilocos Sur dismissing the above-entitled action by
reason of Executive Order No. 25, as amended by Executive Order No. 32, on moratorium.

Ernest Berg brought the action against Valentin Teus to foreclose a real estate and chattel mortgage executed in
November, 1944, to secure six promissory notes of the aggregate value of P80,000 and payable on demand two
years after declaration of armistice between the United States and Japan. An amended or supplementary
complaint was later admitted against the defendant's objection. The complaints recited that by stipulations of
the parties, the mortgagor had undertaken, among other things, to insure and pay the taxes on the mortgaged
properties; not to alienate, sell, lease, encumber or in any manner dispose thereof; and to keep and maintain
the said properties in good order and repair; but that, it was alleged, he (defendant) had failed to keep taxes
fully paid; had made material alterations on the premises, and had sold and conveyed them to Central Azucarera
del Norte. It was further alleged that the mortgagor had agreed that should he fail to perform any of his
obligations as stipulated, "the mortgage shall be deemed to be automatically foreclosed and the mortgagee may
forthwith proceed to foreclose this mortgage either extrajudicially, even after the death of the mortgagor, in
pursuance of the provisions of Act No. 3135, as amended;" and on the basis of this agreement it was prayed that
the mortgage be declared automatically foreclosed and the plaintiff entitled to immediate possession of the
properties in question. In a separate motion Berg's attorney also asked for the appointment of a receiver.

Counsel for the defendant having moved for the dismissal of the complaint on the grounds that plaintiff's cause
of action had not accrued by reason of the executive orders herein before cited, and having opposed the motion
for receivership, Judge Zoilo Hilario entered an order holding that as to the collection of the six notes the suit
had been prematurely brought, but setting the cause for trial on the merits because, according to His Honor, the
reasons alleged in the motion to dismiss were not "indubitable" with reference to the appointment of a receiver
sought by the plaintiff. As we understand this order, its result was that the moratorium ought not to interfere
with the plaintiff's motion for appointment of receiver.

However that may be, the plaintiff subsequently filed a "complete complaint" in which the original complaint
and the amended or supplementary complaint were consolidated. This "complete complaint", which was
155
admitted without objection, apparently was supposed to have restored the case to its original status.
Consequently the attorney for the defendant filed a new motion to dismiss; the Judge Luis Ortega, who had
replaced Judge Hilario, ignoring the latter's order entered the order now on appeal by which the entire action
was quashed on the theory advanced in the motion to dismiss. The new order was silent on both the application
for receivership and the prayer that the plaintiff be adjudged authorized by the terms of the mortgage to
foreclose it extrajudicially and seize the properties.

Judge Ortega opined that Executive Orders Nos. 25 and 32 were still in force unaffected by Republic Act No. 342
as to debts contracted during the Japanese occupation. Plaintiff contended that those executive orders had
passed out of existence by the disappearance of the emergency contemplated thereby, and the contention is
reiterated in his instance. But from the view we take of the case, decision on this question can be deferred. For
the purpose of the present decision, we will assume that Executive Orders Nos. 25 and 32 are still in full force
and effect. This we do to pave the way for and hasten action on the petition to put the premises and chattels
involved in the hands of a receiver, petition which appears of urgent character. The constitutionality of
Executive Orders Nos. 25 and 32 and Republic Act No. 342 and allied issues can wait. These issues are delicate
and would require prolonged study and deliberation. Besides, there is a pending bill in Congress repealing those
executive orders and law.

In Medina vs. Santos (78 Phil., 464; 44 Off. Gaz., [No. 10] 3811), it was held that an action for the recovery of a
truck with prayer for payment of its value in case the truck was not returned, could proceed notwithstanding the
moratorium law. The court observed that the indemnity sought was a subsidiary liability and would not come
into being unless and until decision was rendered against the defendant for such payment.

In Moya vs. Barton (79 Phil., 14; 45 Off Gaz., [No. 1] 237), the court said that when the cause of action was in
part covered by the moratorium and in part not, it was not unjust to render judgment for the payment of the
entire obligation with the understanding that execution with respect to the amounts that had fallen due before
March 10, 1945, would be stayed.

In the case of Alejo vs. Gomez (83 Phil., 969), the court ruled that suit for unlawful detainer and rents in arrears
was not affected by the moratorium, the recovery of the unpaid rentals, it was said, being accessory to the main
action.

And, lastly, in Realty Investments Inc. et al. vs. Villanueva et al., (84 Phil., 842; 47. Off. Gaz., 1844), the court,
citing the above-mentioned cases decided that the court should go ahead with the trial of the action on the
merits without prejudice to the right of the defendant to arrest the execution should one for payment of money
be issued. In that case plaintiff, which had sold to the defendant a piece of land on installment basis, was
demanding payment of the installments still unpaid, (installments which the defendant claimed to have fully
settled with the Japanese alien property custodian) or, in default, restoration of the ownership and possession
of the property. In revoking the lower court's order of dismissal, we pointed out that the De Vencia vs. General,
(78 Phil., 780; 44 Off. Gaz., 4912), and Ma-ao Sugar Central Co., Inc. vs. Barrios, (79 Phil., 666; 45 Off. Gaz., 2444),
were distinguishable from Moya vs. Barton, Medina vs. Santos, and Alejo vs. Gomez, in that the suits in the first
two named cases had for their sole object the enforcement of a monetary obligation.

The case at bar falls within the relaxed rule of this court's later decisions. The alleged violations of the conditions
of the mortgage contract, if true, make it necessary if not imperative, for the protection of the interest of the
plaintiff, that the mortgaged properties be placed in the custody of the court. The fact that the appointment of a
receiver, as the defendant emphasizes, is an ancillary remedy is precisely one powerful reason why the case
should not be dismissed. Because receivership is an auxiliary remedy dismissal of the main action would
eliminate the only basis for the appointment or receiver and thus completely bar the door to any relief from
mischiefs.

Under the circumstances of the case, the least that should have been done, if that were feasible as a matter of
procedure, was to adopt the steps which Judge Hilario had proposed to do. Judge Hilario evidently saw the grave
injustice to the plaintiff and the irreparable injury to which his rights would be exposed if an indefinite
suspension of the entire proceeding were decreed.

In suspending the right of creditor to enforce his right the President and Congress had no idea of depriving him
of all means of preventing the destruction or alienation of the security for the debt, destruction which would

156
virtually write off, in some cases, the whole credit. If that were the intention, it is doubtful if the orders and the
law invoked could stand the test of constitutionality.

The order appealed from will therefore be reversed and the case remanded to the court below for further
proceeding according to the tenor of this decision. We leave the way open to the defendant to ask for the arrest
or stay of execution in the event of an adverse monetary judgment, and for the plaintiff to impugn anew, if
necessary, the constitutionality of Executive Orders Nos. 25 and 32 and Republic Act No. 342 and/or their being
still in force. Costs of this appeal will be charged against the appellee.

Moran, C. J., Paras, Feria, Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo and Bautista Angelo, JJ., concur.

G.R. No. 155408 February 13, 2008

JULIO A. VIVARES and MILA G. IGNALING, petitioners,

vs.
ENGR. JOSE J. REYES, respondent.

DECISION

VELASCO, JR., J.:

The Case

The kernel dispute in this petition under Rule 45 is the legality of the May 22, 2001 Resolution1 of the Camiguin
Regional Trial Court (RTC), Branch 28 in Civil Case No. 517, which placed the estate of Severino Reyes under
receivership. The Court of Appeals (CA) saw it differently in CA-G.R. SP No. 67492—its June 18, 2002
Decision2recalled the RTC directive on the appointment of the receiver, prompting Julio Vivares and Mila
Ignaling to file the petition at bar to convince the Court to reinstate the receivership.

The Facts

Severino Reyes was the father of respondent Jose Reyes and Torcuato Reyes. Upon the death of Severino,
respondent and Torcuato came upon their inheritance consisting of several properties. They had an oral
partition of the properties and separately appropriated to themselves said properties.

On May 12, 1992, Torcuato died with a last will and testament executed on January 3, 1992. In Reyes v. Court of
Appeals,3 we affirmed the November 29, 1995 CA Decision, admitting the will for probate.

Petitioner Vivares was the designated executor of Torcuato’s last will and testament, while petitioner Ignaling
was declared a lawful heir of Torcuato.

Believing that Torcuato did not receive his full share in the estate of Severino, petitioners instituted an action
for Partition and Recovery of Real Estate before the Camiguin RTC, Branch 28 entitled Julio A. Vivares, as
executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J. Reyes and docketed as
Civil Case No. 517. With the approval of the trial court, the parties agreed that properties from the estate of
Severino, which were already transferred in the names of respondent and Torcuato prior to the latter’s death on
May 12, 1992, shall be excluded from litigation. In short, what was being contested were the properties that
were still in the name of Severino.

On November 24, 1997, for the purpose of collating the common properties that were disputed, the trial court
directed the formation of a three-man commission with due representation from both parties, and the third
member, appointed by the trial court, shall act as chairperson. The disputed properties were then annotated
with notices of lis pendens upon the instance of petitioners.

On March 15, 2000, petitioners filed a Motion to Place Properties in Litigation under Receivership4 before the
trial court alleging that to their prejudice respondent had, without prior court approval and without petitioners’
knowledge, sold to third parties and transferred in his own name several common properties. Petitioners also
averred that respondent fraudulently antedated, prior to May 12, 1992, some conveyances and transfers to
make it appear that these were no longer part of the estate of Severino under litigation. They further claimed
157
that respondent was and is in possession of the common properties in the estate of Severino, and exclusively
enjoying the fruits and income of said properties and without rendering an accounting on them and turning over
the share pertaining to Torcuato. Thus, petitioners prayed to place the entire disputed estate of Severino under
receivership. They nominated a certain Lope Salantin to be appointed as receiver.

On March 23, 2000, respondent filed his Opposition to Place the Estate of Severino Reyes under
Receivership,5denying that he had fraudulently transferred any property of the estate of Severino and asserting
that any transfer in his name of said properties was a result of the oral partition between him and Torcuato that
enabled the latter as well to transfer several common properties in his own name.

On May 24, 2000, petitioners filed their Offer of Exhibits in support of their motion for receivership. On the
same date, the trial court issued an Order6 granting petitioners’ motion and appointed Salantin as receiver
conditioned on the filing of a PhP 50,000 bond. Respondent filed a motion for reconsideration, contending that
the appointment of a receiver was unduly precipitate considering that he was not represented by counsel and
thus was deprived of due process.

On August 4, 2000, the trial court allowed respondent to present his evidence to contest petitioners’ grounds for
the appointment of a receiver, and the trial court set the reception of respondent’s evidence for September 4,
2000. However, on August 24, 2000, respondent filed a motion for postponement of the September 4, 2000
scheduled hearing on the ground that he was in the United States as early as July 23, 2000 for medical
examination. On September 5, 2000, the trial court denied respondent’s motion for postponement and
reinstated its May 24, 2000 Order.

On September 19, 2000, respondent filed a Manifestation with Motion to Discharge Receiver, reiterating the
circumstances which prevented him from attending the September 4, 2000 hearing and praying for the
discharge of the receiver upon the filing of a counterbond in an amount to be fixed by the court in accordance
with Section 3, Rule 59 of the 1997 Revised Rules on Civil Procedure. On October 10, 2000, petitioners filed their
undated Opposition to Motion to Discharge Receiver.

Subsequently, respondent filed a Motion to Cancel Notice of Lis Pendens which was annotated on Tax
Declaration (TD) No. 112 covering Lot No. 33 allegedly belonging exclusively to him. Respondent asserted in the
motion that an adjacent property to Lot No. 33, particularly a portion of Lot No. 35, which is owned by a certain
Elena Unchuan, was erroneously included in Lot No. 33 and, consequently, was subjected to the notice of lis
pendens. Petitioners filed their Opposition to the Motion to Cancel Lis Pendens.

Consequently, on May 22, 2001, the trial court issued a Resolution, denying respondent’s motions to discharge
receiver and cancel the notice of lis pendens in TD No. 112. Respondent seasonably filed a partial motion for
reconsideration of the May 22, 2001 Resolution, attaching copies of deeds of sale executed by Torcuato covering
several common properties of the estate of Severino to prove that he and Torcuato had indeed made an oral
partition of the estate of their father, Severino, and thus allowing him and Torcuato to convey their respective
shares in the estate of Severino to third persons.

On October 19, 2001, the trial court heard respondent’s motion for partial reconsideration, and on the same
date issued an Order denying the motion for partial reconsideration on the ground that respondent failed to
raise new matters in the motion but merely reiterated the arguments raised in previous pleadings.

Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing the May 22, 2001 Resolution and
October 19, 2001 Order of the RTC.

The Ruling of the Court of Appeals

On June 18, 2002, the CA rendered the assailed Decision, sustaining respondent’s position and granted relief,
thus:

WHEREFORE, premises considered, the Petition is hereby GRANTED. The Resolution dated 22 May 2001
of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and set aside.
The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a
counterbond in the amount of P100,000.00. The notice of lis pendens in Tax Declaration 112, in so far as

158
 it covers the property of Elena Unchuan, is cancelled. Let this case be remanded to the court a quo for
further proceedings.7

In reversing the trial court, the CA reasoned that the court a quo failed to observe the well-settled rule that
allows the grant of the harsh judicial remedy of receivership only in extreme cases when there is an imperative
necessity for it. The CA thus held that it is proper that the appointed receiver be discharged on the filing of a
counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.

Moreover, the CA ratiocinated that respondent has adequately demonstrated that the appointment of the
receiver has no sufficient basis, and further held that the rights of petitioners over the properties in litigation are
doubly protected through the notices of lis pendens annotated on the titles of the subject properties. In fine, the
appellate court pointed out that the appointment of a receiver is a delicate one, requiring the exercise of
discretion, and not an absolute right of a party but subject to the attendant facts of each case. The CA found
that the trial court abused its discretion in appointing the receiver and in denying the cancellation of the notice
of lis pendens on TD No. 112, insofar as it pertains to the portion owned by Unchuan.

Aggrieved, petitioners in turn interposed a Motion for Reconsideration that was denied through the assailed
September 24, 2002 CA Resolution.

Thus, this petition for review on certiorari is before us, presenting the following issues for consideration:

WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS PRECLUDES THE APPOINTMENT OF
A RECEIVER WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN LITIGATION.

II

WHETHER OR NOT A DULY APPOINTED RECEIVER OF PROPERTIES IN LITIGATION SHOULD BE

DISCHARGED SIMPLY BECAUSE THE ADVERSE PARTY OFFERS TO POST A COUNTERBOND.

III

WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS PENDENS ANNOTATED ON TAX

DECLARATION NO. 112 IS CONTRARY TO LAW.8

The Court’s Ruling

The petition must be denied. Being closely related, we discuss the first and second issues together.

Receivership not justified

We sustain the CA ruling that the trial court acted arbitrarily in granting the petition for appointment of a
receiver as "there was no sufficient cause or reason to justify placing the disputed properties under
receivership."

First, petitioners asseverate that respondent alienated several common properties of Severino without court
approval and without their knowledge and consent. The fraudulent transfers, they claim, were antedated prior
to May 12, 1992, the date of Torcuato’s death, to make it appear that these properties no longer form part of
the assets of the estate under litigation in Civil Case No. 517.

Petitioners’ position is bereft of any factual mooring.

Petitioners miserably failed to adduce clear, convincing, and hard evidence to show the alleged fraud in the
transfers and the antedating of said transfers. The fact that the transfers were dated prior to the demise of
Torcuato on May 12, 1992 does not necessarily mean the transfers were attended by fraud. He who alleges
fraud has the burden to prove it.

159
Moreover, respondent has adduced documentary proof that Torcuato himself similarly conveyed several lots in
the estate of Severino based on the oral partition between the siblings. To lend credence to the transfers
executed by Torcuato but distrust to those made by respondent would be highly inequitable as correctly opined
by the court a quo.

Indeed, receivership is a harsh remedy to be granted only in extreme situations. As early as 1914, the Court
already enunciated the doctrinal pronouncement in Velasco & Co. v. Gochuico & Co. that courts must use
utmost circumspection in allowing receivership, thus:

The power to appoint a receiver is a delicate one and should be exercised with extreme caution and only
under circumstances requiring summary relief or where the court is satisfied that there is imminent
danger of loss, lest the injury thereby caused be far greater than the injury sought to be averted. The
court should consider the consequences to all of the parties and the power should not be exercised
when it is likely to produce irreparable injustice or injury to private rights or the facts demonstrate that
the appointment will injure the interests of others whose rights are entitled to as much consideration
from the court as those of the complainant.9

Petitioners cannot now impugn the oral partition entered into by Torcuato and respondent and hence cannot
also assail the transfers made by respondent of the lots which were subject of said agreement, considering that
Torcuato also sold properties based on said verbal arrangement. Indeed, the parties agreed that the civil action
does not encompass the properties covered by the oral partition. In this factual setting, petitioners cannot
convince the Court that the alleged fraudulent transfers of the lots made by respondent, which purportedly
form part of his share in Severino’s estate based on the partition, can provide a strong basis to grant the
receivership.

Second, petitioner is willing to post a counterbond in the amount to be fixed by the court based on Sec. 3, Rule
59 of the 1997 Rules of Civil Procedure, which reads:

Sec. 3. Denial of application or discharge of receiver.—The application may be denied, or the receiver
discharged, when the adverse party files a bond executed to the applicant, in an amount to be fixed by
the court, to the effect that such party will pay the applicant all damages he may suffer by reason of the
acts, omissions, or other matter specified in the application as ground for such appointment. The
receiver may also be discharged if it is shown that his appointment was obtained without sufficient
cause.

Anchored on this rule, the trial court should have dispensed with the services of the receiver, more so
considering that the alleged fraud put forward to justify the receivership was not at all established.

Petitioners advance the issue that the receivership should not be recalled simply because the adverse party
offers to post a counterbond. At the outset, we find that this issue was not raised before the CA and therefore
proscribed by the doctrine that an issue raised for the first time on appeal and not timely raised in the
proceedings in the lower court is barred by estoppel.10 Even if we entertain the issue, the contention is
nevertheless devoid of merit. The assailed CA decision supported the discharge of the receiver with several
reasons including the posting of the counterbond. While the CA made a statement that the trial court should
have discharged the appointed receiver on the basis of the proposed counterbond, such opinion does not jibe
with the import of Sec. 3, Rule 59. The rule states that the "application may be denied or the receiver
discharged." In statutory construction, the word "may" has always been construed as permissive. If the intent is
to make it mandatory or ministerial for the trial court to order the recall of the receiver upon the offer to post a
counterbond, then the court should have used the word "shall." Thus, the trial court has to consider the posting
of the counterbond in addition to other reasons presented by the offeror why the receivership has to be set
aside.

Third, since a notice of lis pendens has been annotated on the titles of the disputed properties, the rights of
petitioners are amply safeguarded and preserved since "there can be no risk of losing the property or any part of
it as a result of any conveyance of the land or any encumbrance that may be made thereon posterior to the
filing of the notice of lis pendens."11 Once the annotation is made, any subsequent conveyance of the lot by the
respondent would be subject to the outcome of the litigation since the fact that the properties are
under custodia legis is made known to all and sundry by operation of law. Hence, there is no need for a receiver
to look after the disputed properties.
160
On the issue of lis pendens, petitioners argue that the mere fact that a notice of lis pendens was annotated on
the titles of the disputed properties does not preclude the appointment of a receiver. It is true that the notice
alone will not preclude the transfer of the property pendente lite, for the title to be issued to the transferee will
merely carry the annotation that the lot is under litigation. Hence, the notice of lis pendens, by itself, may not be
the "most convenient and feasible means of preserving or administering the property in litigation." However,
the situation is different in the case at bar. A counterbond will also be posted by the respondent to answer for
all damages petitioners may suffer by reason of any transfer of the disputed properties in the future. As a matter
of fact, petitioners can also ask for the issuance of an injunctive writ to foreclose any transfer, mortgage, or
encumbrance on the disputed properties. These considerations, plus the finding that the appointment of the
receiver was without sufficient cause, have demonstrated the vulnerability of petitioners’ postulation.

Fourth, it is undisputed that respondent has actual possession over some of the disputed properties which are
entitled to protection. Between the possessor of a subject property and the party asserting contrary rights to
the properties, the former is accorded better rights. In litigation, except for exceptional and extreme cases, the
possessor ought not to be deprived of possession over subject property. Article 539 of the New Civil Code
provides that "every possessor has a right to be respected in his possession; and should he be disturbed therein
he shall be protected in or restored to said possession by the means established by the laws and the Rules of
Court." In Descallar v. Court of Appeals, we ruled that the appointment of a receiver is not proper where the
rights of the parties, one of whom is in possession of the property, are still to be determined by the trial court.12

In view of the foregoing reasons, we uphold the CA ruling that the grant of the receivership was without
sufficient justification nor strong basis.

Anent the third issue that the cancellation of the notice of lis pendens on TD No. 112 is irregular as Lot No. 33 is
one of the disputed properties in the partition case, petitioners’ position is correct.

The CA made a factual finding that the property of Unchuan was erroneously included in Lot No. 33, one of the
disputed properties in Civil Case No. 517. It then ruled that the annotation of lis pendens should be lifted.

This ruling is bereft of factual basis.

The determination whether the property of Unchuan is a part of Lot No. 33 and whether that portion really
belongs to Unchuan are matters to be determined by the trial court. Consequently, the notice of lis pendens on
TD No. 112 stays until the final ruling on said issues is made.

WHEREFORE, the petition is PARTLY GRANTED. The June 18, 2002 CA Decision in CA-G.R. SP No. 67492
is AFFIRMED with MODIFICATION insofar as it ordered the cancellation of the notice of lis pendens in TD No.
112. As thus modified, the appealed CA Decision should read as follows:

WHEREFORE, premises considered, the Petition is hereby PARTLY GRANTED. The Resolution dated 22
May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and
set aside. The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a
counterbond in the amount of PhP 100,000. The notice of lis pendens in TD No. 112, including the
portion allegedly belonging to Elena Unchuan, remains valid and effective. Let this case be remanded
to the court a quo for further proceedings in Civil Case No. 517.

No costs.

SO ORDERED.

G.R. No. 106473 July 12, 1993

ANTONIETTA O. DESCALLAR, petitioner,

vs.
THE HON. COURT OF APPEALS and CAMILO F. BORROMEO, respondents.

Gilberto C. Alfafara for petitioner.

Bernadito A. Florido for private respondent.

161
GRIÑO-AQUINO, J.:

Assailed in this petition for review on certiorari is the decision dated July 29, 1992 of the Court of Appeals in CA-
G.R. SP No. 27977, affirming the orders dated March 17, 1992 and April 27, 1992 of the trial court in Civil Case
No. MAN-1148, granting respondent's petition for receivership and denying petitioner's motion for
reconsideration thereof.

On August 9, 1991, respondent Camilo Borromeo, a realtor, filed against petitioner a civil complaint for the
recovery of three (3) parcels of land and the house built thereon in the possession of the petitioner and
registered in her name under Transfer Certificates of Title Nos. 24790, 24791 and 24792 of the Registry of Deeds
for the City of Mandaue. The case was docketed as Civil Case No. MAN-1148 of the Regional Trial Court, Branch
28, Mandaue City.

In his complaint, Borromeo alleged that he purchased the property on July 11, 1991 from Wilhelm Jambrich, an
Austrian national and former lover of the petitioner for many years until he deserted her in 1991 for the favors
of another woman. Based on the deed of sale which the Austrian made in his favor, Borromeo filed an action to
recover the ownership and possession of the house and lots from Descallar and asked for the issuance of new
transfer certificates of title in his name.

In her answer to the complaint, Descallar alleged that the property belongs to her as the registered owner
thereof; that Borromeo's vendor, Wilhelm Jambrich, is an Austrian, hence, not qualified to acquire or own real
property in the Philippines. He has no title, right or interest whatsoever in the property which he may transfer to
Borromeo.

On March 5, 1992, Borromeo asked the trial court to appoint a receiver for the property during the pendency of
the case. Despite the petitioner's opposition, Judge Mercedes Golo-Dadole granted the application for
receivership and appointed her clerk of court as receiver with a bond of P250,000.00.

Petitioner filed a motion for reconsideration of the court's order, but it was denied.

Petitioner sought relief in the Court of Appeals by a petition for certiorari (CA-G.R. SP No. 27977 "Antonietta O.
Descallar vs. Hon. Mercedes G. Dadole, as Judge, RTC of Mandaue City, Branch 28, and Camilo F. Borromeo").

On July 29, 1992, the Court of Appeals dismissed the petition for certiorari.

In due time, she appealed the Appellate Court's decision to this Court by a petition for certiorari under Rule 45
of the Rules of Court.

In a nutshell, the issue in this appeal is whether the trial court gravely abused its discretion in appointing a
receiver for real property registered in the name of the petitioner in order to transfer its possession from the
petitioner to the court-appointed receiver. The answer to that question is yes.

The Court is amazed that the trial court and the Court of Appeals appear to have given no importance to the fact
that the petitioner herein, besides being the actual possessor of the disputed property, is also the registered
owner thereof, as evidenced by TCTs Nos. 24790, 24791, and 24792 issued in her name by the Register of Deeds
of Mandaue City on December 3, 1987. Her title and possession cannot be defeated by mere verbal allegations
that although she appears in the deed of sale as vendee of the property, it was her Austrian lover, Jambrich,
who paid the price of the sale of the property (Sinoan vs. Soroñgan, 136 SCRA 407). Her Torrens certificates of
title are indefeasible or incontrovertible (Sec. 32, P.D. 1529).

Even if it were true that an impecunious former waitress, like Descallar, did not have the means to purchase the
property, and that it was her Austrian lover who provided her with the money to pay for it, that circumstance
did not make her any less the owner, since the sale was made to her, not to the open-handed alien who was,
and still is, disqualified under our laws to own real property in this country (Sec. 7, Art. XII, 1987 Constitution).
The deed of sale was duly registered in the Registry of Deeds and new titles were issued in her name. The source
of the purchase money is immaterial for there is no allegation, nor proof, that she bought the property as
trustee or dummy for the monied Austrian, and not for her own benefit and enjoyment.
162
There is no law which declares null and void a sale where the vendee to whom the title of the thing sold is
transferred or conveyed, paid the price with money obtained from a third person. If that were so, a bank would
be the owner of whatever is purchased with funds borrowed from it by the vendee. The holding of the trial court
and the Court of Appeals that Jambrich, notwithstanding his legal incapacity to acquire real property in the
Philippines, is the owner of the house and lot which his erstwhile mistress, Antonietta, purchased with money
she obtained from him, is a legal heresy.

In view of the above circumstances, we find the order of receivership tainted with grave abuse of discretion. The
appointment of a receiver is not proper where the rights of the parties (one of whom is in possession of the
property), are still to be determined by the trial court.

Relief by way of receivership is equitable in nature, and a court of equity will not ordinarily
appoint a receiver where the rights of the parties depend on the determination of adverse
claims of legal title to real property and one party is in possession. (Calo, et al. vs. Roldan, 76
Phil., 445).

Only when the property is in danger of being materially injured or lost, as by the prospective foreclosure of a
mortgage thereon for non-payment of the mortgage loans despite the considerable income derived from the
property, or if portions thereof are being occupied by third persons claiming adverse title thereto, may the
appointment of a receiver be justified (Motoomul vs. Arrieta, 8 SCRA 172).

In this case, there is no showing that grave or irremediable damage may result to respondent Borromeo unless a
receiver is appointed. The property in question is real property, hence, it is neither perishable or consummable.
Even though it is mortgaged to a third person, there is no evidence that payment of the mortgage obligation is
being neglected. In any event, the private respondent's rights and interests, may be adequately protected during
the pendency of the case by causing his adverse claim to be annotated on the petitioner's certificates of title.

Another flaw in the order of receivership is that the person whom the trial judge appointed as receiver is her
own clerk of court. This practice has been frowned upon by this Court:

The respondent judge committed grave abuse of discretion in connection with the appointment
of a receiver. . . . The instant case is similar to Paranete vs. Tan, 87 Phil. 678 (1950) so that what
was there said can well apply to the actuations of the respondent judge. . . . "We hold that the
respondent judge has acted in excess of his jurisdiction when he issued the order above
adverted to. That order, in effect, made the clerk of court a sort of a receiver charged with the
duty of receiving the proceeds of sale and the harvest of every year during the pendency of the
case with the disadvantage that the clerk of court has not filed any bond to guarantee the
faithful discharge of his duties as depositary; and considering that in actions involving title real
property, the appointment of a receiver cannot be entertained because its effect would be to
take the property out of the possession of the defendant, except in extreme cases when there is
clear proof of its necessity to save the plaintiff from grave and irremediable loss of damage, it is
evident that the action of the respondent judge is unwarranted and unfair to the defendants.
(Mendoza vs. Arellano, 36 Phil. 59; Agonoy vs. Ruiz, 11 Phil. 204; Aquino vs. Angeles David, 77
Phil. 1087; Ylarde vs. Enriquez, 78 Phil. 527; Arcega vs. Pecson, 44 Off. Gaz., [No. 12], 4884, 78
Phil. 743; De la Cruz vs. Guinto, 45 Off. Gaz. pp. 1309, 1311; 79 Phil. 304). (Abrigo vs. Kayanan,
121 SCRA 20).

During the pendency of this appeal, Judge Dadole rendered a decision in Civil Case No. MAN-1148 upholding
Borromeo's claim to Descallar's property, annulling the latter's TCTs Nos. 24790, 24791 and 24792 and ordering
the Register of Deeds of Mandaue City to issue new ones in the name of Borromeo. This circumstance does not
retroactively validate the receivership until the decision (presumably now pending appeal) shall have attained
finality.

WHEREFORE, finding grave abuse of discretion in the order of receiver which the respondent Court of Appeals
affirmed in its decision of July 29, 1992 in CA-G.R. SP No. 27977, the petition for certiorari is hereby GRANTED
and the decision of the appellate court, as well as the order dated March 17, 1992 of the Regional Trial Court of
Mandaue City, Branch 28, in Civil Case No. MAN-1148, are hereby ANNULLED and SET ASIDE. Costs against the
private respondent.

163
SO ORDERED.

Cruz, Bellosillo and Quiason, JJ., concur.

Davide, Jr., J., took no part.

G.R. No. 1278 August 1, 1903

EUGENIO BONAPLATA, petitioner,

vs.
BYRON S. AMBLER, judge of the Court of First Instance of Manila, and J. MCMICKING, clerk of the Court of
First Instance of Manila, respondents.

Augustus A. Montagne for petitioner.

Frederick Garfield Waite for respondents.

MCDONOUGH, J.:

This was a motion for judgment on the pleadings in a proceeding in which the plaintiff prays that a peremptory
order be issued by this court against Judge Ambler, commanding him, as judge of the Court of First Instance of
Manila, to immediately cause to be issued and subscribed a writ of execution for the enforcement of plaintiff's
judgment against Fulgencio Tan Tonco for the sum of 1,541 pesos, Mexican currency, which judgment was
recovered January 13, 1903, and against the defendant J. McMicking, as clerk of the said Court of First Instance
of Manila, commanding him to issue and subscribe a writ of execution, sealed with the seal of the Court of First
Instance of Manila, for the enforcement of plaintiff's said judgment.

The facts upon which this application is based are undisputed. The plaintiff, on January 13, 1903, recovered a
judgment in the Court of First Instance of Manila, in an action for debt against Fulgencio Tan Tonco, amounting
to 1,541 pesos, Mexican currency. No exceptions were taken or filed against said judgment, nor was a motion
for a new trial made; and the judgment is now in full force and effect.

After the rendition and entry of said judgment the plaintiff repeatedly requested the defendants above named
to duly issue a writ of execution to satisfy the judgment of the plaintiff against said Fulgencio Tan Tonco, which
request was refused. The defendants, by their attorney, state, as their reason for such refusal, that on the 18th
day of December, 1902, one Sergia Reyes instituted a suit against said Fulgencio Tan Tonco, in the Court of First
Instance of Manila, for an indebtedness amounting to the sum of $1,500, Mexican currency, and in the
complaint alleged that the said defendant was insolvent; that several creditors had sued him; that the assets of
his business consisted of real estate, contracts for buildings (many partly completed), equities in real estate, and
other property of the value of about $200,000, Mexican currency; that said property was in good condition and
that it was in the interest of creditors to retain the actual status of the business; that under proper management
the business could be conducted at a good and satisfactory profit, and pay a greater portion of said defendant's
creditors, if not all; that the management of the said business was in the hands of the defendant, who was
unable to give it necessary care and attention; that for various causes the business had been loosing money;
that the debts of the said defendant amounted to $250,000, Mexican currency; that the assets of the business
were then more than enough to pay the indebtedness, but if said business were managed by the said defendant
it will be dissipated and wasted, and therefore the plaintiff in that action prayed for the appointment of a
receiver to take charge of the said business and conduct the same subject to the order of the court.

The said Fulgencio Tan Tonco, personally and by his attorney, appeared in court, on the said 18th day of
December, 1902, and accepted service of the complaint in said cause, and thereafter and on the 19th day of
December, 1902, Antonio Torres was appointed receiver of the business, property, rights, and credits of said Tan
Tonco; and thereafter, having given a sufficient bond and of all the property of said Tan Tonco, and under the
direction of and pursuant to an order of said Byron S. Ambler, as judge of the Court of First Instance of Manila,
undertook to care for, run, manage, and operate said business the same as therefore run and operated by said
defendant, and to employ such persons and make such payments and disbursements as needed. It was further
ordered that the said defendant and other persons be restrained and enjoined from interfering with said
property; and the said Tan Tonco was and still continued to be enjoined from taking possession of or in any way
interfering with said property, and said J. McMicking, as such clerk, was and is restrained from issuing an
execution upon the said judgment of Tan Tonco.
164
As a general rule the appointment of a receiver is an equitable remedy, and before such remedy is resorted to,
except in certain prescribed cases hereinafter mentioned, the legal remedy must be exhausted. Courts of equity
do not encourage proceedings or actions which are not in conformity with the usual practice, which are
necessary and at the same time are calculated to swell costs and expenses. (Hart vs. Times, 3 Edwards, Chancery,
226; Congden vs. Lee, 3 Edwards, Chancery, 304.)

In the Congden case the plaintiff sought equitable relief in an action for debt after an execution had been
returned unsatisfied; but the plaintiff and the sheriff knew that the debtor had real estate which was subject to
levy and sale. The court held that it was the duty of the plaintiff to exhaust his legal remedy by selling the real
estate on the execution, and it not appearing that there would be a deficiency on the sale, the court had no
jurisdiction to appoint a receiver of the rents.

It may be that very special circumstances may exist, in a given case, involving great danger of loss, such as may
be caused by a debtor's nonresidence, which will justify the appointment of a receiver, but the case at bar is not
one of that character; the claim of the plaintiff, Sergia Reyes, amounted to only $1,500, Mexican currency,
whereas the property of Tan Tonco was valued at $200,000, Mexican currency, and it does not appear that there
were any judgments against him having priority to that of said plaintiff, or that the plaintiff's judgment could not
be collected in full. Under these conditions, the allegation in the complaint that the defendant, Tan Tonco, could
not give his business "necessary care and attention," that he was "losing money," and that if the business was to
be continued under his management it would be "dissipated and wasted," might be cause for applying for an
appointment of a committee, but it certainly is not good cause for turning over to a receiver $200,000 worth of
property in an action to recover a debt of $1,500. What was undertaken, in this action, amounts practically to a
bankruptcy proceeding — the placing by the court of the property of the defendant in the hands of a receiver
for the purpose, after paying costs, fees, and expenses, of disturbing that property among creditors.

Bankruptcy proceedings, however, are forbidden until a law shall be enacted for these Islands. (Sec. 524 of the
Code of Civil Procedure.)

The learned counsel for the defendants in this mandamus proceeding claims that section 174 of this Code makes
provision for the appointment of a receiver in this case.

That section authorizes the appointment of a receiver (1) in certain corporation cases; (2) where the plaintiff has
an interest in the property of fund which is the subject of the action, etc; (3) in an action to foreclose a
mortgage; (4) and, finally, whenever in other cases it shall appear to the court that the appointment of a
receiver is the most feasible means of preserving and administering the property which is the subject of the
litigation during the pendency of the action.

The subject of the action of the plaintiff Sergia Reyes was an indebtedness of $1,500 due to her by the
defendant, and the legitimate object was the collection of that debt. Until after judgment and execution, which
was not issued, the plaintiff could not have had interest in any property or fund of the defendant; nor until after
the return of the execution unsatisfied could she have had any interest in the preservation of the defendant's
property — property which was not the subject of the litigation. The plaintiff in this mandamus proceeding was
not a party to the action of Reyes vs. Tan Tonco, and he is not, therefore, bound by the order appointing a
receiver made therein.

It is not necessary in this proceeding to determine the further effect of that order, or to decide what its effect
may be on all those creditors who consented to the appointment of the receiver, who acquiesced in his control,
management, and disposition of the defendant's property, or on other persons who dealt with him as such
receiver.

This court simply decides that the plaintiff, Eugenio Bonaplata, is entitled to have an execution issue on his said
judgment. The motion for judgment on the pleadings is granted, and judgment for the plaintiff will be entered
accordingly, with costs against the respondents.

Arellano, C.J., Torres, Cooper, Willard, and Mapa, JJ., concur.

G.R. No. 125008 June 19, 1997

165
COMMODITIES STORAGE & ICE PLANT CORPORATION, SPOUSES VICTOR & JOHANNAH TRINIDAD, petitioners,
vs.
COURT OF APPEALS, JUSTICE PEDRO A.. RAMIREZ, CHAIRMAN and FAR EAST BANK & TRUST
COMPANY, respondents.

PUNO, J.:

In this petition for certiorari, petitioner seeks to annul and set aside the decision and resolution of the Court of
Appeals1 in CA-G.R. SP No. 36032 dismissing the complaint in Civil Case No. 94-72076 before the Regional Trial
Court, Branch 9, Manila.

The facts show that in 1990, petitioner spouses Victor and Johannah Trinidad obtained a loan of P31,000,000.00
from respondent Far East Bank & Trust Company to finance the purchase of the Sta. Maria Ice Plant & Cold
Storage in Sta. Maria, Bulacan. The loan was secured by a mortgage over the ice plant and the land on which the
ice plant stands. Petitioner spouses failed to pay their loan. The bank extrajudicially foreclosed the mortgage
and the ice plant was sold by public bidding on March 22, 1993. Respondent bank was the highest bidder. It
registered the certificate of sale on September 22, 1993 and later took possession of the property.

On November 22, 1993, petitioner spouses filed Civil Case No. 956-M-93 against respondent bank before the
Regional Trial Court, Malolos, Bulacan for reformation of the loan agreement, annulment of the foreclosure sale
and damages.2 The trial court dismissed the complaint for petitioners' failure to pay the docket fees. The
dismissal was without prejudice to refiling of the complaint.3

On October 28, 1994, petitioners filed Civil Case No. 94-72076 against respondent bank before the Regional Trial
Court, Branch 9, Manila for damages, accounting and fixing of redemption period.4 As a provisional remedy,
petitioners filed on November 16, 1994 an "Urgent Petition for Receivership." They alleged that respondent
bank took possession of the ice plant forcibly and without notice to them; that their occupation resulted in the
destruction of petitioners' financial and accounting records making it impossible for them to pay their
employees and creditors; the bank has failed to take care of the ice plant with due diligence such that the plant
has started emitting ammonia and other toxic refrigerant chemicals into the atmosphere and was posing a
hazard to the health of the people in the community; the spouses' attention had been called by several people
in the barangay who threatened to inform the Department of Environment and Natural Resources should they
fail to take action. Petitioners thus prayed for the appointment of a receiver to save the ice plant, conduct its
affairs and safeguard its records during the pendency of the case.5

Instead of an answer, respondent bank filed on November 25, 1994 a "Motion to Dismiss and Opposition to
Plaintiff's Petition for Receivership." It alleged that the complaint states no cause of action and that venue had
been improperly laid. It also alleged that petitioners failed to pay the proper docket fees and violated the rule on
forum-shopping.6

In an order dated December 13, 1994, the trial court granted the petition for receivership and appointed
petitioners' nominee, Ricardo Pesquera, as receiver. The order disposed as follows:

WHEREFORE, premises considered the Urgent Petition for Receivership is GRANTED and Mr.
Ricardo Pesquera to whose appointment no opposition was raised by the defendant and who is
an ice plant contractor, maintainer and installer is appointed receiver. Accordingly, upon the
filing and approval of the bond of TWO MILLION (P2,000,000.00) pesos which shall answer for all
damages defendant may sustain by reason of the receivership, said Ricardo Pesquera is
authorized to assume the powers of a receiver as well as the obligation as provided for in Rule
59 of the Rules of Court after taking his oath as such receiver.

SO ORDERED.7

Respondent bank assailed this order before the Court of Appeals on a petition for certiorari. On January 11, 1996,
the Court of Appeals annulled the order for receivership and dismissed petitioners' complaint for improper
venue and lack of cause of action. The dispositive portion of the decision reads:

166
 WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the assailed order dated
December 13, 1994 (Annex A, petition) is ANNULLED and SET ASIDE and respondent's complaint
in Civil Case No. 94-72076 in the respondent court (Annexes F, petition; 4, comment), is
DISMISSED. Costs against respondents except the court.

SO ORDERED.

Reconsideration was denied on May 23, 1996.8 Hence, this petition.

Section 1 of Rule 59 of the Revised Rules of Court provides that:

Sec. 1. When and by whom receiver appointed. — One or more receivers of the property, real or
personal, which is the subject of the action, may be appointed by the judge of the Court of First
Instance in which the action is pending, or by a Justice of the Court of Appeals or of the Supreme
Court, in the following cases:

(a) When the corporation has been dissolved, or is insolvent, or is in imminent danger of
insolvency, or has forfeited its corporate rights;

(b) When it appears from the complaint or answer, and such other proof as the judge may
require, that the party applying for the appointment of receiver has an interest in the property
or fund which is the subject of the action, and that such property or fund is in danger of being
lost, removed or materially injured unless a receiver be appointed to guard and preserve it;

(c) When it appears in an action by the mortgagee for the foreclosure of a mortgage that the
property is in danger of being wasted or materially injured, and that its value is probably
insufficient to discharge the mortgage debt, or that the parties have so stipulated in the contract
of mortgage;

(d) After judgment, to preserve the property during the pendency of the appeal, or to dispose of
it according to the judgment, or to aid execution when the execution has been returned
unsatisfied or the judgment debtor refuses to apply his property in satisfaction of the judgment,
or otherwise carry the judgment into effect;

(e) Whenever in other cases it appears that the appointment of a receiver is the most
convenient and feasible means of preserving, administering, or disposing of the property in
litigation.

A receiver of real or personal property, which is the subject of the action, may be appointed by the court
when it appears from the pleadings or such other proof as the judge may require, that the party
applying for such appointment has (1) an actual interest in it; and (2) that (a) such property is in danger
of being lost, removed or materially injured; or (b) whenever it appears to be the most convenient and
feasible means of preserving or administering the property in litigation.9

A receiver is a person appointed by the court in behalf of all the parties to the action for the purpose of
preserving and conserving the property in litigation and prevent its possible destruction or dissipation, if it were
left in the possession of any of the parties. 10 The appointment of a receiver is not a matter of absolute right. It
depends upon the sound discretion of the court 11 and is based on facts and circumstances of each particular
case. 12

Petitioners claim that the appointment of a receiver is justified under Section 1 (b) of Rule 59. They argue that
the ice plant which is the subject of the action was in danger of being lost, removed and materially injured
because of the following "imminent perils":

6.1 Danger to the lives, health and peace of mind of the inhabitants living near the Sta. Maria Ice
Plant;

167
 6.2 Drastic action or sanctions that could be brought against the plaintiff by affected third
persons, including workers who have claims against the plaintiff but could not be paid due to
the numbing manner by which the defendant took the Sta. Maria Ice Plant;

6.3 The rapid reduction of the Ice Plant into a scrap heap because of evident incompetence,
neglect and vandalism. 13

A petition for receivership under Section 1 (b) of Rule 59 requires that the property or fund which is the subject
of the action must be in danger of loss, removal or material injury which necessitates protection or preservation.
The guiding principle is the prevention of imminent danger to the property. If an action by its nature, does not
require such protection or reservation, said remedy cannot be applied for and granted. 14

In the instant case, we do not find the necessity for the appointment of a receiver. Petitioners have not
sufficiently shown that the Sta. Maria Ice Plant is in danger of disappearing or being wasted and reduced to a
"scrap heap." Neither have they proven that the property has been materially injured which necessitates its
protection and preservation. 15 In fact, at the hearing on respondent bank's motion to dismiss, respondent bank,
through counsel, manifested in open court that the leak in the ice plant had already been remedied and that no
other leakages had been reported since. 16 This statement has not been disputed by petitioners.

At the time the trial court issued the order for receivership of the property, the problem had been remedied and
there was no imminent danger of another leakage. Whatever danger there was to the community and the
environment had already been contained.

The "drastic sanctions" that may be brought against petitioners due to their inability to pay their employees and
creditors as a result of "the numbing manner by which [respondent bank] took the ice plant" does not concern
the ice plant itself. These claims are the personal liabilities of petitioners themselves. They do not constitute
"material injury" to the ice plant.

Moreover, the receiver appointed by the court appears to be a representative of petitioners. Respondent bank
alleges that it was not aware that petitioners nominated one Mr. Pesquera as receiver. 17 The general rule is that
neither party to a litigation should be appointed as receiver without the consent of the other because a receiver
should be a person indifferent to the parties and should be impartial and disinterested. 18 The receiver is not the
representative of any of the parties but of all of them to the end that their interests may be equally protected
with the least possible inconvenience and expense. 19

The power to appoint a receiver must be exercised with extreme caution. There must be a clear showing of
necessity therefor in order to save the plaintiff from grave and irremediable loss or damage. 20 It is only when
the circumstances so demand, either because there is imminent danger that the property sought to be placed in
the hands of a receiver be lost or because they run the risk of being impaired, endeavouring to avoid that the
injury thereby caused be greater than the one sought to be avoided. 21

The Court of Appeals correctly found that the trial court gravely abused its discretion in issuing the order for
receivership. The respondent court, however, went further and took cognizance of respondent bank's motion to
dismiss. And finding merit in the motion, it dismissed the complaint. Petitioners now claim that the respondent
court should have refrained from ruling on the motion to dismiss because the motion itself was not before it. 22

Again, we reject petitioners' contention. The motion to dismiss is anchored on improper venue, lack of cause of
action and forum-shopping. We agree with the respondent court that the question of venue relates to the
principal action and is prejudicial to the ancillary issue of receivership. Although the grounds for dismissal were
not specifically raised before the appellate court, the said court may consider the same since the petition for
receivership depends upon a determination thereof. 23

In their complaint, petitioners prayed for the following:

WHEREFORE, in view of the foregoing, it is respectfully prayed that after trial on the merits
judgment be rendered:

1. Ordering the Defendant to pay COMMODITIES actual and compensatory damages in the
amount of PESOS: TWO MILLION FIVE HUNDRED THOUSAND and 00/100 (P2,500,000.00);
168
 2 Ordering the Defendant to pay Plaintiffs moral damages in the amount of PESOS: TWO
MILLION and 00/100 (P2,000,000.00) to compensate the Plaintiffs for the anxiety and
besmirched reputation caused by the unjust actuations of the Defendant;

3. Ordering the Defendant to pay Plaintiffs nominal and exemplary damages in the amount of
PESOS: FIVE HUNDRED THOUSAND and 00/100 (P500,000.00) to deter the repetition of such
unjust and malicious actuations of the Defendant;

4. In order to restore the legal right of the Plaintiff COMMODITIES to redeem its foreclosed
property, a right which COMMODITIES has been unjustly deprived of by the malicious and bad
faith machinations of the Defendant, compelling the Defendant to produce the correct, lawful,
official and honest statements of account and application of payment. Concomitantly, ordering
the Defendant to accept the redemption of the foreclosed properties pursuant to Rule 39 of the
Revised Rules of Court in conjunction with Act 3135, within the prescribed period for
redemption, said period to commence from the date of receipt by the Plaintiff COMMODITIES of
the correct, lawful, official and honest statements of account and application of payments;

5. Ordering the Defendant to pay attorney's fees in the amount of PESOS: THREE HUNDRED
THOUSAND (P300,000.00); and costs of litigation.

Other reliefs and remedies just and equitable under the circumstances are likewise prayed for. 24

Petitioners pray for two remedies: damages and redemption. The prayer for damages is based on
respondent bank's forcible occupation of the ice plant and its malicious failure to furnish them their
statements of account and application of payments which prevented them from making a timely
redemption. 25 Petitioners also pray that respondent bank be compelled to furnish them said documents,
and upon receipt thereof, allow redemption of the property. They ultimately seek redemption of the
mortgaged property. This is explicit in paragraph 4 of their prayer.

An action to redeem by the mortgage debtor affects his title to the foreclosed property. If the action is
seasonably made, it seeks to erase from the title of the judgment or mortgage debtor the lien created by
registration of the mortgage and sale. 26 If not made seasonably, it may seek to recover ownership to the land
since the purchaser's inchoate title to the property becomes consolidated after expiration of the redemption
period. 27 Either way, redemption involves the title to the foreclosed property. It is a real action.

Section 2 of Rule 4 of the Revised Rules of Court provides:

Sec. 2. Venue in Courts of First Instance. — (a) Real actions. — Actions affecting title to, or for
recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real
property, shall be commenced and tried in the province where the property or any part thereof
lies. 28

Where the action affects title to the property, it should be instituted in the Regional Trial Court where
the property is situated. The Sta. Maria Ice Plant & Cold Storage is located in Sta. Maria, Bulacan. The
venue in Civil Case No. 94-72076 was therefore laid improperly.

Finally, there is no merit in petitioners' claim that the respondent bank is no longer the real party in interest
after selling the ice plant to a third person during the pendency of the case. Section 20 of Rule 3 of the Revised
Rules of Court provides that in a transfer of interest pending litigation, the action may be continued by or
against the original party, unless the court, upon motion, directs the transferee to be substituted in the action or
joined with the original party. The court has not ordered the substitution of respondent bank.

IN VIEW WHEREOF, the decision dated January 11, 1996 and resolution dated May 23, 1996 of the Court of
Appeals in CA-G.R. SP No. 36032 are affirmed. Costs against petitioners.

SO ORDERED.

G.R. No. L-2349 October 22, 1948

169
FRED M. HARDEN, petitioner,
vs.
THE DIRECTOR OF PRISONS, respondent.

Vicente J. Francisco for petitioner.

First Assistant Solicitor General Roberto A. Gianzon and Solicitor Felix V. Makasiar for respondent.
Claro M. Recto for the intervenor.

TUASON, J.:

The petitioner, Fred M. Harden, is being confined in prison for contempt of court by virtue of an order of the
following tenor:

It appearing that the defendant Fred M. Harden has not up to this date complied with the orders of this
court of October 7, 1947 and March 27, 1948;

As prayed for, the court orders the arrest of the defendant Fred M. Harden as well as his confinement at
the New Bilibid Prisons, Muntinlupa, Rizal, until he complies with the aforementioned orders.

The proceedings for contempt arose in a civil case between Mrs. Harden as plaintiff and the petitioner and
another person as defendants, commenced on July 12, 1941, and involving the administration of a conjugal
partnership, payment of alimony, and accounting. In that case, a receiver was appointed and a preliminary
injunction was issued restraining Fred M. Harden and his codefendant, Jose Salumbides, from transferring or
alienating, except for a valuable consideration and with the consent of the court first had and obtained, moneys,
shares of stock, and other properties and assets, real or personal, belonging to the aforesaid partnership, and
which might be found in the names of said defendants or either of them.

On various dates in 1946, Fred M. Harden transferred to the Hongkong & Shanghai Banking Corporation and the
Chartered Bank of India, Australia & China, both in Hongkong, over P1,000,000 in drafts or cash; to Virginia
Recreation Center, Long Beach, California, P20,196.80, and to an unknown person, P50,000.

On September 9, 1947, Mrs. Harden moved the court to order Harden to return all these amounts and to
redeposit them with the Manila branch of the Chartered Bank of India, Australia & China. On October 7, 1947,
Judge Peña granted the motion in an order worded as follows:

Wherefore, finding the motion of the plaintiff of September 9, 1947, to be well founded, for the purpose
of preserving the status quo and in order that the amounts above referred to may stand ready to answer
for any legitimate claims of the Government in the form of taxes, the aforementioned motion is hereby
ordered to return, within a period of 15 days from the receipt of a copy hereof, the amount of
P1,000,608.66 to the Philippines and to redeposit the same with the accounts of the Plaza Lunch at the
Manila Branch of the Chartered Bank of India, Australia and China, with the understanding that upon
failure to comply with this order he will be declared in contempt of court.

After a petition for certiorari was instituted by Harden in the Supreme Court and decided, and after various
motions were filed and heard, Judge Peña, on March 27, 1948, entered an order, which was a modification of
that of October 7, 1947, directing Harden "to deposit with the Manila Branch of the Chartered Bank of India,
Australia & China within five days from receipt of a copy of this order the money and drafts that he has actually
in Hongkong, without prejudice to passing upon later on the different amounts that the defendant has spent
according to his attorney, after he has submitted to the court an itemized account of those expenses.

In the same order there was this decree:

With respect to the plaintiff's motion filed on March 16, 1948 praying that Fred M. Harden be ordered
to deliver the certificate covering the 368,553 Balatoc Mining Company shares either to the Clerk of this
Court or to the receiver in this case for safekeeping after his compliance with the order of January 17,
1948, the Court, after considering the different pleadings filed, denies defendant's motion for extension
170
 of time to register the said certificate of stock, thereby maintaining its order of January 17, 1948. The
said defendant is further ordered, after the registration of the said certificate, to deposit the same with
the Manila Branch of the Chartered Bank of India, Australia and China.

The last part of the order was the culmination of another series of motions with their corresponding hearings.
The facts taken from the pleading were in brief as follows:

In a motion dated May 28, 1947, the receiver appointed in the main case prayed that the certificates of stock of
the conjugal partnership, among them 368,553 shares of the Balatoc Mining Co., alleged to be in the possession
of defendant Harden, be ordered turned over to him (receiver) so that he might have them registered in
pursuance of the provisions of Republic Act No. 62. On June 7, 1947, the court "authorized" Harden "to register
not later than June 30, 1947 the stock certificates in his possession, notifying the court afterwards of such action.

On July 28, 1947, Mrs. Harden complained that her husband failed to comply with the above order and prayed
that he be ordered to show cause why he should not be declared in contempt. On August 1, 1947, Harden filed a
perfunctory compliance, and in order dated August 2, 1947, he was required to "make a detailed report of the
stock certificates which have been duly registered in accordance with Republic Act No. 62." In his "compliance"
dated August 7, 1947, Harden stated that he had been granted an extension until December 31, 1947, within
which to register the Balatoc Mining Co. shares under Republic Act No. 62.

In a motion dated January 7, 1948, the receiver informed the court that, notwithstanding the expiration on
December 31, 1947, of Harden's extended time to comply with Republic Act No. 62, the records of the Balatoc
Mining Co. showed that the certificate had not been registered as of January 7, 1948; and upon his request, an
order dated January 17, 1948, was issued giving Harden "an extension until March 31, 1948 within which to
comply with the Order dated June 7, 1947."

In a motion dated March 15, 1948, Mrs. Harden prayed for the reasons therein stated, that defendant Harden
"be ordered to deliver the certificates covering the 368,553 Balatoc Mining Co. shares either to the Clerk of this
Court or to the Receiver herein for safekeeping, immediately after registering them pursuant to Republic Act No.
62." On March 24, 1948, Harden filed a motion stating that the registration of shares of stock under Republic Act
No. 62 had been extended until June 30, 1948, and prayed that he "be allowed to register the stock certificates
in question within such period as by law or regulations is or may be provided."

It was at this stage of the case that the present petitioner was committed to jail.

Broadly speaking, the grounds for relief by habeas corpus are only (1) deprivation of any fundamental or
constitutional rights, (2) lack of jurisdiction of the court to impose the sentence, or (3) excessive penalty.
(Santiago vs. Director of Prisons, 1 L-1083, Jan. 30, 1947, 44 Off. Gaz., 1231.)

The fact that the property is in a foreign country is said to deprive the court of jurisdiction, the remedy in such
case being, it is contended, ancillary receivership. We can not agree with this view.

While a court can not give its receiver authority to act in another state without the assistance of the courts
thereof (53 C. J., 390-391), yet it may act directly upon the parties before it with respect to property beyond the
territorial limits of its jurisdiction, and hold them in contempt if they resist the court's orders with reference to
its custody or disposition (Id. 118)

Whether the property was removed before or after the appointment of the receiver is likewise immaterial.

In Sercomb vs. Catlin, 21 N. E., 606-608, the Supreme Court of Illinois said:

It is true that the property attached is beyond the jurisdiction of the courts of this state, but the
appellant, who caused it to be attached, is in this state, and within the jurisdiction of its courts. If the
superior court had no power to reach the goods in Newton's hands, it had the power to reach appellant,
who sought to prevent its receiver from getting possession of the goods. It makes no difference that the
property was in a foreign jurisdiction.

The facts of that case as stated in the decision were as follows:

171
 On April 14, 1887, in the case of Ada S. Havens et al. vs. Caleb Clapp et al. then pending in said superior
court, the appellee was appointed receiver of all the property and effects, real and personal, of the
defendants therein, Caleb Clapp and Thomas Davies. Prior to that date Clapp and Davies had forwarded,
on consignment, to Elijah E. Newton, an auctioneer and commission merchant in Washington city, in the
District of Columbia, a lot of jewelry, watches and silverware, to be by him disposed of for their benefit.
So far as appears to the contrary, the goods so consigned were still in the possession of Newton at
Washington when the order was entered on April 7, 1887, for the commitment of appellant for
contempt. Within a week or 10 days after his appointment as receiver, appellee gave notice of such
appointment to Newton, and demanded a return of the goods. On May 18, 1887, the Meriden Britannia
Company, a corporation organized under the laws of the state of Connecticut, being a creditor of Clapp
and Davies, commenced an attachment suit against them for the amount of its claim in the Supreme
Court of the District of Columbia, and attached the goods in the hands of Newton.

The penalty complained of is neither cruel, unjust nor excessive. In Ex-parte Kemmler, 136 U. S., 436, the United
States Supreme Court said that "punishments are cruel when they involve torture or a lingering death, but the
punishment of death is not cruel, within the meaning of that word as used in the constitution. It implies there
something inhuman and barbarous, something more than the mere extinguishment of life.

The punishment meted out to the petitioner is not excessive. It is suitable and adapted to its objective; and it
accords with section 7, Rule 64, of the Rules of Court which provides that "when the contempt consists in the
omission to do an act which is yet in the power of the accused to perform, he may be imprisoned by order of a
superior court until he performs it.

If the term of imprisonment in this case is indefinite and might last through the natural life of the petitioner, yet
by the terms of the sentence the way is left open for him to avoid serving any part of it by complying with the
orders of the court, and in this manner put an end to his incarceration. In these circumstances, the judgment can
not be said to be excessive or unjust. (Davis vs. Murphy [1947] 188 P., 2nd, 229-231.) As stated in a more recent
case (De Wees [1948], 210 S.W., 2d, 145-147), "to order that one be imprisoned for an indefinite period in civil
contempt is purely a remedial measure. Its purpose is to coerce the contender to do an act within his or her
power to perform. He must have the means by which he may purge himself of the contempt." The latter
decision cites Stanley vs. South Jersey Realty Co., 83 N.J. Eq. 300, 90 A., 1042, 1043, in which the theory is
expressed in this language:

In a "civil contempt" the proceeding is remedial, it is a step in the case the object of which is to coerce
one party for the benefit of the other party to do or to refrain from doing some act specified in the order
of the court. Hence, if imprisonment be ordered, it is remedial in purpose and coercive in character, and
to that end must relate to something to be done by the defendant by the doing of which he many
discharge himself. As quaintly expressed, the imprisoned man "carries the keys to his prison in his own
pocket."

The failure of the order of commitment to state that the acts which the contemner fails to do are still in his
power to perform, does not void the order of imprisonment. Section 7 of Rule 64 does not require such finding
to appear in the order, unlike section 1219 of the Code of Civil Procedure of California on which the petitioner's
contention is rested. Petitioner is in error in saying that section 237 of the former Philippine Code of Civil
Procedure, from which section 7 of Rule 64, supra, has been copied, was of California origin. Former Justice
Fisher is authority for the statement that section 237 of Act No. 190 was borrowed from section 1456 of the
Ohio Code of Civil Procedure. (Fisher's Code of Civil Procedure, 3rd ed., p. 136.) The exact similarity in substance
though not in language between the two provisions is a confirmation of this statement.

At any rate, the order of commitment contains the alleged missing element if it is taken, as it should be taken, in
connection with the orders of October 7, 1947, and March 27, 1948, and with the charges for contempt. It
expressly gives non-compliance with the two last mentioned orders as the grounds for the warrant of
commitment, and thus by reference makes them part of it. The orders of October 7, 1947, and March 27, 1948,
in turn clearly specify the acts with the petitioner was commanded to fulfill. It is equally clear from these orders
that in the opinion of the court the petitioner is in a position to bring back to the Philippines from Hongkong part
of the cash and the Balatoc shares he had remitted to that colony.

Whether or not in truth the court's findings are supported by sufficient evidence is a different matter; it is a
matter of fact which can not be reviewed by habeas corpus.
172
In a long line of decisions, this Court has steadfastly held that habeas corpus does not lie to correct errors of fact
or law. (Slade Perkins vs. Director of Prisons, 58 Phil., 271; Quintos vs. Director of Prisons, 55 Phil., 304; Toronto
Felipe vs. Director of Prisons, 24 Phil., 121; Gutierrez Repide vs. Peterson, 3 Phil., 276; Santiago vs. Director of
Prisons, L-1083, 1 44 Off. Gaz., 1231; McMicking vs. Schields, 238 U.S. 99. 41 Phil., 971; Tinsley vs. Anderson, 43
Law. ed., 91.) When a court has jurisdiction of the offense charged and of the party who is so charged, its
judgment, order or decree is not subject to collateral attack by habeas corpus. the writ of habeas corpus can not
be made to perform the function of a writ of error; and this holds true even if the judgment, orders or decree
was erroneous, provided it is within the jurisdiction of the court which rendered such judgment or issued such
an order or decree. (Slade Perkins vs. Director of Prisons, supra; Santiago vs. Director of Prisons, supra.) So
whether the act charged has been committed or can still be performed is conclusively determined by the order
or judgment of the trial court in the proceeding wherein the petitioner for habeas corpus is adjudged in
contempt. (Ex-parte Fisher, 206 S.W. 2d. 1000.).

The petition is denied with costs.

Moran, C.J., Ozaeta, Paras, Feria, Pablo, Bengzon, Briones and Montemayor, JJ., concur.

G.R. No. L-1401 June 25, 1947

RODOLFO YLARDE, FLOR DE VIDA YLARDE, represented by Maria Cruz as guardian ad litem, and JULIA
YLARDE, petitioners,
vs.
JUAN ENRIQUEZ, Judge of First Instance of Nueva Ecija, BIENVENIDO SABADO, MAGDALENA SABADO and
APOLINARIO SABADO, respondents.

Azarias M. Padilla for petitioners.

V. M. Ruiz for respondents.

TUASON, J.:

This is a petition for certiorari to vacate an appointment of a receiver by order of the Court of First Instance of
Nueva Ecija. A preliminary injunction has been granted by us restraining the carrying out of the order. The
appointment would authorize the receiver to take possession of a parcel of land and to "preserve and
administer the crops or products thereon and to perform all acts necessary and incident thereto during the
pendency of this case."

None of the pleadings filed in the main case are before us, except a copy of a supplemental complaint, and the
reference to the pleadings in the proceeding at bar furnishes indefinite and scanty information on their contents.
However, the application for certiorari, the answer, and the various court orders relative to the appointment of
a receiver afford sufficient data to serve as basis for a decision.

It seems that Eugenia Ylarde was the legal or common law wife of one Simplicio Rosario, now deceased. It would
also seem that in his life time, during his marriage or cohabitation with Eugenia Ylarde, Rosario was granted a
free patent to a homestead measuring fifteen hectares. This is the land or it is a part of this land that is involved
in this litigation. According to the respondents' answer to the application for certiorari, in 1938, after Eugenia
Ylarde's legal or common-law husband died, "an extrajudicial partition (was) executed" by Eugenia Ylarde
"wherein she falsely declared under oath that she was the sole heiress of the estate in question." Following that
so-called extrajudicial partition a transfer certificate of title was issued in Eugenia Ylarde's name cancelling the
original document.

In September, 1945, Bienvenido Sabado, Magdalena Sabado and Apolinario Sabado, apparently Simplicio
Rosario's collateral relatives, brought the action against Eugenia Ylarde. The application for certiorari describes
the action as one "relating to the ownership of a piece of property." The respondents in this proceeding brand
this statement, in their answer, as incorrect, "the true fact being that the action refers (1) to the recovery of
land. . . ., and (2) for the recovery of damages in the amount of P50,000." It also appears that during the
pendency of the action or before — there is uncertainty in the allegations as to the time and the parties — two
or three other so-called extrajudicial partitions were made whereby a portion of three hectares out of the entire
tract was alloted to the Sabados. These partitions are repudiated and sought to be annulled as fraudulent in a
supplemental complaint filed by the respondents herein in the principal case.
173
On December 17, 1946, Eugenia Ylarde died, and she has been substituted as party defendant by Rodolfo Ylarde,
Flor de Vida Ylarde through a guardian ad litem, and Julia Ylarde. The record does not reveal the degree of
relationship between these new defendants and the deceased Eugenia Ylarde.

The Ylardes, petitioners herein and defendants in the main case, allege that they are and have been in the
possession of the part of the land which corresponded to them or to Eugenia Ylarde in the partition, while the
Sabados entered upon the possession of their share upon the signing of the settlements. The respondents' (the
Sabados') attorney denies in a strong and improper language that the petitioners are in "physical" possession of
the property in dispute. But from the use of the adjective "physical" we are to presume that the respondents
admit that the Ylardes enjoy some kind of possession, say, possession through representatives, croppers or
tenants. Be that as it may, from the very nature of the remedy of receivership which the Sabados applied for,
from their claim of P50,000 damages, and from their allegations we cannot avoid the conclusion that their
adversaries and their adversaries' predecessor-in-interest do have the possession. The opposite theory would be
an incongruity.

Upon these facts we shall proceed to state our opinion.

"The appointment of a receiver, because of its drastic nature and of its character as a special remedy under our
Code of Civil Procedure, is a power which should be exercised with great caution." (Philippine Motor Alcohol
Corp. and Palanca vs. Mapa, 64 Phil., 714.) "Where the effect of the appointment of a receiver is to take real
estate out of the possession of the defendant before the final adjudication of the rights of the parties, the
appointment should be made only in extreme cases and on a clear showing of necessity therefor in order to save
the plaintiff from grave and irremediable loss or damages." (Mendoza vs. Arellano and B. de Arellano, 36 Phil.,
59.) Of equal application is "the rule that a court should not, by means of a preliminary injunction, transfer
property in litigation from the possession of one party to another . . . where the legal title is in dispute and the
party having possession asserts ownership in himself." (Gordillo and Martinez vs. Del Rosario, 39 Phil., 829;
Evangelista vs. Pedreñas, 27 Phil., 648; Palafox vs. Madamba, 19 Phil., 444; Devesa vs. Arbes, 13 Phil., 273; 53
C.J., 26.) If, save in exceptional cases, a preliminary injunction is improper where real property is involved,
receivership is even more so because it is harsher, more drastic and more costly than an injunction. It has been
said that "of all the extraordinary remedies authorized by law, the appointment of a receiver is the most drastic
and far-reaching in its effect." (Delcambre vs.Murphy, 5 S.W. [2d], 789-791, cited as a footnote in 53 C.J., 20.)

No special circumstances are present which would take this case out of the rule enunciated in the foregoing
decisions.

Those decisions are rooted in a positive provision of the former Code of Civil Procedure which is now found in
section 1 (b), Rule 61, of the Rules of Court. According to this section it is necessary in granting the relief of
receivership that the "property or fund (be) in danger of being lost, removed or materially injured."

The land which is the subject matter of the suit here is not in any danger of disappearing or being wasted. There
is no pretense that it has any permanent improvements or fixtures which produce income, rents or profits to be
collected or preserved. At the most a bond with sufficient sureties would be adequate to protect the plaintiffs
from any possible injury consequent upon being deprived of the possession of the property.

The fact that there are harvested or standing crops to which the plaintiffs lay claim does not improve their
position. If anything, the existence of such crops adds to the inequity and injustice of the measure. Section 1 (b)
of Rule 61 requires that the party applying for the appointment of receiver should have "an interest in the
property which is the subject of the action. "We take this rule to envision actual, existing interest. Except for the
plaintiffs' alleged title to the land, (which, as we have pointed out, may not be taken away from the defendants),
the plaintiffs' relation to the products is that of complete strangers. These products are short-time crops which
have been planted and raise exclusively by the defendants personally or through others. They cost painstaking
care and diligent industry to raise and, it is said, have exacted an investment of P1,000 per hectare. There is no
partnership or anything of the sort formed between the plaintiffs and the defendants by contract or by
operation of law in their pretended ownership of the land, the plaintiffs have no title to a single onion or
cabbage planted on or harvested from it, or to any part of the proceeds of the crops, or to the management of
the enterprise. Their title to the crops is contingent upon their success in proving their asserted title to the soil,
which is still to be decided. And even if they should ultimately succeed in that, their rights to the products would
still be dependent upon many factors yet undetermined.

174
These observations bring to mind another well-recognized principle in matters of receivership which has been
overlooked. A receiver, it has been repeatedly held, should not be granted where the injury resulting therefrom
would probably be greater than the injury ensuing from leaving the possession of the property undisturbed. (53
C.J., 37.)

This doctrine fits into the case at bar. The court would place in the hands of a receiver to administer, crops to
plant and raise which, as we have seen, the defendants have spent considerable money and attention with the
plaintiffs contributing nothing beyond their allegation that they own the ground. The receivership would have
the defendants replaced in working or looking after the working of the land by a man who is said to live in
Manila and whose ability and experience in farming is, to say the least, has not been demonstrated. The court
has not apparently given thought to where the receiver, if he continued the planting and raising of onions and
other crops, would get the wherewithal. Would he sell the crops and use the money realized therefrom to
finance the enterprise? If that money be insufficient would he borrow — if he could? And the Court has not
made any provision — if indeed it would be practical to make such provision at this stage of the litigation —
regarding the distribution of profits — or losses which would be the more probable outcome of the intended
arrangement.

The allegations in the application for an appointment of a receiver reveals, in our opinion, additional reasons for
denying it. As we have said, we gather from these allegations that Eugenia Ylarde had been in possession of the
land and had been cultivating it and applying its products to her own use to the exclusion of the plaintiffs.
Judging by the amount of damages asked by the plaintiffs, that possession and the enjoyment of the products by
Eugenia Ylarde must have lasted a long time. If Eugenia Ylarde's possession was tolerated so long as to make
possible the accumulation of P50,000 damages, we see no special reason why the status quo should not be
maintained now that the cause, as we gather from the pleadings, has entered the trial stage.

It would seem that the application for receivership was motivated by Eugenia Ylarde's death; and the burden of
the application is that the present defendants are not Eugenia's lawful heirs, besides the plaintiffs' claim for
enormous damages. But receivership is not a legal or proper substitute for an appointment of a judicial
administrator or for a relief to secure the payment of damages. Other remedies are indicated to protect rights
based on these considerations. And the allegation that the present defendants are not entitled to succeed to
Eugenia Ylarde's rights and interest in the property in litigation is a matter with which the plaintiffs have little to
do. Juridically, it concerns Eugenia Ylarde's relatives, devisees or legatees alone. The plaintiffs have to rely on the
strength of their case and not on the weakness of their adversaries'. Procedurally, the way is open to the
plaintiffs to move for the appointment of an administrator of Eugenia Ylarde's estate, or to amend their
complaint by bringing in as defendants those who, according to them, have a better right to inherit from the
decedent. As a matter of fact, if the defendants' allegation in their application for certiorari is correct — that
they have been substituted for Eugenia Ylarde — the change must have been accomplished by an amendment
of the complaint by the plaintiffs themselves. If this be the case, the plaintiffs are assuming two inconsistent
positions which they are not allowed to do.

Other objections of legal, practical and equitable character might be adduced against the receivership in
question. What has been said is enough to show that the court's discretion, in our opinion, has not been
exercised in accordance with law and with established principles and practice. It has apparently not given a
careful and full consideration to all the facts of the case and the harmful and serious consequences of its order
in contrast to the possible less injurious effects on the plaintiffs of a decision to leave matters as they are.

The objection that the petitioners have a remedy by appeal is not well-taken. An appointment of a receiver is an
interlocutory matter; and an appeal from an order making such appointment can be interposed only after final
judgment is rendered. In this case on appeal would be of no avail to prevent the enforcement of the order
before damage which the petitioners seek to avoid had been done. (See II Comments on the Rules of Court By
Moran, p. 18, and cases cited.)

Upon the foregoing considerations, we hold that the court below abused its discretion in appointing a receiver.
The appointment is revoked, with costs against the respondents other than the respondent Judge.

Moran, C.J., Pablo, Perfecto, Hontiveros, and Padilla, JJ., concur.

G.R. No. L-3791 November 29, 1950

175
AGUSTINA PARANETE, PERINO VILLAR, PEDRO HERNANDEZ, COMEDES DALLATON, VALERIANO MILLANO,
FELISIANA NAVARRO, and EDUARDO B. OCAMPO, petitioners,
vs.
BIENVENIDO A. TAN, Judge, Court of First Instance of Rizal, Rizal City Branch, FELIX ALCARAS, FRUCTUOSA
VASQUEZ, MAXIMA VASQUEZ, NORBERTA VASQUEZ and THE PROVINCIAL SHERIFF OF RIZAL, respondents.

Emiliano M. Ocampo for petitioners.

Jose E. Morales for respondents Felix Alcaras, and Fructuosa, Maxima and Norberta, all surnamed Vasquez.

BAUTISTA ANGELO, J.:

This is a petition for a writ of prohibition wherein petitioner seeks to enjoin the respondent judge from
enforcing his order of March 4, 1950, on the ground that the same was issued in excess of his jurisdiction.

On January 16, 1950, Felix Alcaras, Fructuosa Vasquez Maxima Vasquez filed a case in the Court of First Instance
of Rizal for the recovery of five parcels of the land against Agustina Paranete and six other codefendants, (civil
case No. 1020 ). On January 28, 1950, plaintiffs filled a petition for a writ of preliminary injunction for the
purpose of ousting the defendants from the lands in litigation and of having themselves placed in possession
thereof. The petition was heard ex parte and as a result the respondent judge issued the writ of injunction
requested. On February 28, 1950, the defendants moved for the reconsideration of the order granting the writ,
to which plaintiff objected, and after due hearing, at which both parties appeared with their respective counsel,
the respondent judge reconsidered his order, but required the defendants to render an accounting of the
harvest for the year 1949, as well as all future harvests, and if the harvest had already been sold, to deposit the
proceeds of the sale with the clerk of court, allowing the plaintiff or their representative to be present during
each harvest. This order was issued on March 4, 1950. Defendants again filed a motion for the reconsideration
of this order, but it was denied, hence the petition under consideration.

The question to be determined is whether or not the respondent judge exceeded his jurisdiction in issuing his
order of March 4, 1950, under the terms and conditions set forth above.

We hold that the respondent judge has acted in excess jurisdiction when he issued the order above adverted to.
That order, in effect, made the clerk of court a sort of a receiver charged with the duty of receiving the proceeds
of sale and the harvest of every year during the pendency of the case with the disadvantage that the clerk of
court has not filed any bond to guarantee the faithful discharge of his duties as depositary; and considering that
in actions involving title to real property, the appointment of a receiver cannot be entertained because its effect
would be to take the property out of the possession of the defendant, except in extreme cases when there is
clear proof of its necessity to save the plaintiff from grave and irremediable loss or damage, it is evident that the
action of the respondent judge is unwarranted and unfair to the defendants. (Mendoza vs. Arellano vs. 36 Phil.,
59; Agonoy vs.Ruiz, 11 Phil., 204; Aquino vs. Angeles David, 77 Phil., 1087; Ylarde vs. Enriquez, 78 Phil., 527;
Arcega vs. Pecson, 44 Off. Gaz., (No. 12), 4884, 78 Phil., 743; De La Cruz vs. Guinto, 45 Off. Gaz., pp. 1309; 1311;
79 Phil., 304.) Moreover, we find that Agustina Paranete, one of the defendants, has been in possession of the
lands since 1943, in the exercise of her rights as owner, with her codefendants working for her exclusively as
tenants, and that during all these years said Agustina Paranete had made improvements thereon at her own
expense. These improvements were made without any contribution on the part of the plaintiffs. The question of
ownership is herein involved and both parties seem to have documentary evidence in support of their
respective claims, and to order the defendants to render an accounting of the harvest and to deposit the
proceeds in case of sale thereof during the pendency of the case would be to deprive them of their means of
livelihood before the case is decided on the merits. The situation obtaining is such that it does not warrant the
placing of the lands in the hands of a neutral person as is required when a receiver is appointed. To do so would
be unfair and would unnecessarily prejudice the defendants.

While the respondent judge claims in his order of March 25, 1950, that he acted as he did because of a verbal
agreement entered into between the lawyers of both parties, we do not consider it necessary to pass on this
point because the alleged agreement is controverted and nothing about it has been mentioned by the
respondent judge in his order under consideration.

Wherefore, petition is hereby granted. The court declares the order of the respondent judge of March 4, 1950
null and void and enjoins him from enforcing it as prayed for in the petition.

176
Paras, Feria, Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, and Jugo, JJ., concur.

G.R. No. 61508 March 17, 1999

Citibank, N.A. (Formerly First National City Bank), petitioner,

vs.
The Honorable Court of Appeals and Douglas F. Anama, respondents.

PURISIMA, J.:

At bar is a special civil action for certiorari with prayer for a temporary restraining order faulting the Court of
Appeals 1 with grave abuse of discretion for nullifying the lower court's order of seizure of mortgaged properties
subject of a case for sum of money and replevin.

The facts leading to the institution of the case are as follows:

In considering for a loan obtained from Citibank, N.A. (formerly First National City Bank), the defendant (private
respondent herein) Douglas Anama executed a promissory note, dated November 10, 1972, 2 to pay the plaintiff
bank the sum of P418,000.00 in sixty (60) equal successive monthly installments of P8,722.25, starting on the
10th day of December 1972 and on the 10th of every month thereafter. The said Promissory Note stipulated
further that:

(a) the loan is subject to interest at the rate of twelve percent (12%) per annum;

(b) the promissory note and the entire amount therein stated shall become
immediately due and payable without notice or demand upon —

(aa) default in the payment of any installment of principal or

interest at the time when the same is due;

(bb) the occurrence of any change in the condition and affairs of

the defendant, which in the opinion of the plaintiff shall
increase its credit risk;

(c) the defendant agrees to pay all costs, expenses, handling and insurance
charges incurred in the granting of the loan;

(d) in case the services of a lawyer is made necessary for collection, defendant
shall be liable for attorney's fees of at least ten percent (10%) of the total
amount due. 3

To secure payment of the loan, private respondent Anama also constituted a Chattel Mortgage of even date in
favor of petitioner, on various machineries and equipment located at No. 1302 Epifanio delos Santos Avenue,
Quezon City, under the following terms and conditions:

(a) The machineries and equipment subject of the mortgage, stand as security
for defendant's account.

(b) All replacement, substitutions, additions, increases and accretions to the

properties mortgaged shall also be subject to the mortgage.

(c) The defendant appoints the plaintiff as his attorney-in-fact with authority to
enter the premises of the defendant and take actual possession of the
mortgaged chattels without any court order, to sell said property to any party.

177
 (d) All expenses in carrying into effect the stipulations therein shall be for the
account of the defendant and shall form part of the amount of the obligation
secured by the mortgage.

(e) In case the plaintiff institutes proceedings for the foreclosure of the
mortgage, the plaintiff shall be entitled to the appointment of a receiver
without a bond.

(f) In case of default, the defendant shall be liable for attorney's fees and cost of
collection in the sum equal to twenty-five (25%) of the total amount of the
indebtedness outstanding and unpaid. 4

On November 25, 1974, for failure and refusal of the private respondent to pay the monthly installment due
under the said promissory note since January 1974, despite repeated demands, petitioner filed a verified
complaint against private respondent Anama for the collection of his unpaid balance of P405,820.52 on the said
promissory note, for the delivery and possession of the chattels covered by the Chattel Mortgage preparatory to
the foreclosure thereof as provided under Section 14 of the Chattel Mortgage Law, docketed as Civil Case No.
95991 before the then Court of First Instance of Manila.

On February 20, 1975, the defendant Anama submitted his Answer with Counterclaim, denying the material
averments of the complaint, and averring inter alia (1) that the remedy of replevin was improper and the writ of
seizure should be vacated; (2) that he signed the promissory note for P418,000.00 without receiving from
plaintiff Citibank any amount, and was even required to pay the first installment on the supposed loan in
December 1974; (3) that the understanding between him and the Citibank was for the latter to release to him
the entire loan applied for prior to and during the execution of his promissory note, but Citibank did not do so
and, instead, delayed the release of any amount on the loan even after the execution of the promissory note
thereby disrupting his timetable of plans and causing him damages; (4) that the amount released by Citibank to
him up to the present was not the amount stated in the promissory note, and his alleged default in paying the
installment on the loan was due to the delay in releasing the full amount of the loan as agreed upon; (5) that the
macheniries and equipment described in the chattel mortgage executed by him are really worth more than
P1,000,000.00 but he merely acceded to the valuation thereof by Citibank in said document because of the
latter's representation that the same was necessary to speed up the granting of the loan applied for by him; (6)
that the properties covered by said chattel mortgage are real properties installed in a more or less permanent
nature at his (defendant's) premises in Quezon City, as admitted by Citibank in said mortgage document; (7) that
the mortgage contract itself stipulated that the manner and procedure for affecting the sale or redemption of
the mortgage properties, if made extrajudicial, shall be governed by Act No. 1508 and other pertinent laws
which all pertain to real properties; and (8) that because of the filing of this complaint without valid grounds
therefor, he suffered damages and incurred attorney's fees; the defendant, now private respondent, averred.

On December 2, 1974, the trial court upon proof of default of the private respondent in the payment of the said
loan, issued an Order of Replevin over the macheneries and equipment covered by the Chattel Mortgage.

However, despite the issuance of the said order of seizure of subject chattels, actual delivery of possession
thereof to petitioner did not take place because negotiations for an amicable settlement between the parties
were encouraged by the trial court.

On March 24, 1975, a pre-trial conference was held and the lower court issued an order for joint management
by the petitioner and the private respondent of the latter's business for ten (10) days, after which the former
would appointed receiver for the said business.

On April 1, 1975, the petitioner took over private respondent's business as receiver. When further proposals to
settle the case amicably failed, the lower court proceeded to try the case on the merits.

On January 29, 1977, petitioner presented a Motion for the Issuance of an Alias Writ of Seizure, ordering the
sheriff to seize the properties involved and dispose of them in accordance with the Revised Rules of Court. The
lower court then gave private respondent five (5) days to oppose the said motion and on February 22, 1977, he
sent in his opposition thereto on the grounds: (1) that Citibank's P400,000 replevin bond to answer for damages
was grossly inadequate because the market value of the properties involved is P1,710,000 and their
replacement cost is P2,342,300.00 per the appraisal report of the Appraisal and Research Corp.; (2) that he was
178
never in default to justify the seizure; (3) that the Civil Case No. 18071 of the Court of First Instance,
entitled Hernandes vs. Anama, et al., which, according to Citibank, supposedly increased its credit risk in the
alleged obligation, had already been dismissed as against him and the case terminated with the dismissal of the
complaint against the remaining defendant, First National City Bank, by the Court in its orders of January 12,
1977 and February 7, 1977; (4) that his (defendant's) supposed obligations with Citibank were fully secured and
his mortgaged properties are more than sufficient to secure payment thereof; and (5) that the writ of seizure if
issued would stop his business operations and contracts and expose him to lawsuits from customers, and also
dislocate his employees and their families entirely dependent thereon for their livelihood.

On February 28, 1977, acting on the said Motion and private respondent's opposition, the trial court issued an
Order granting the Motion for Alias Writ of Seizure, ruling thus:

WHEREFORE, the motion for alias writ of seizure is hereby granted. At any rate, this Order gives
another opportunity for defendant and the intervenor who claims to be a part owner to file a
counterbond under Sec. 60 of Rules of Court. 5

Private respondent moved for reconsideration of the aforesaid order but the same was denied by the Resolution
of March 18, 1977, to wit:

In view of the foregoing, the motion for reconsideration is hereby denied.

At any rate, as already stated, the defendant has still a remedy available which is to file a bond
executed to the plaintiff in double the value of the properties as stated in the plaintiff's affidavit.
The Court at this instance therefore has no authority to stop or suspended the writ of seizure
already ordered. 6

Accordingly, by virtue of the Alias writ of Seizure, petitioner took possession of the mortgaged chattels of
private respondent. As a consequence, the sheriff seized subject properties, dismantled and removed them from
the premises where they were installed, delivered them to petitioner's possession on March 17, 18 and 19, 1977
and advertised them for sale at public auction scheduled on March 22, 1977.

On March 21, 1977, private respondent filed with the Court of Appeals a Petition for Certiorari and
Prohibition 7 with Injunction to set aside and annul the questioned resolution of the trial court on the ground
that they were issued "in excess of jurisdiction and with grave abuse of discretion" because of the "lack of
evidence and clear cut right to possession of First National City Bank (herein petitioner)" top the machineries
subject of the Chattel Mortgage.

On July 30, 1982, finding that the trial court acted with grave abuse of discretion amounting to excess of lack of
jurisdiction in issuing the assailed resolutions, the Court of Appeals granted petition, holding that the provision
of the Rules of Court on Replevin and Receivership have not been complied with, in that (1) there was no
Affidavit of Merit accompanying the Complaint for Replevin; (2) the bond posted by Citibank was insufficient;
and (3) there was non-compliance with the requirement of a receiver's bond and oath of office. The decretal
portion of the assailed decision of the Court of Appeals, reads:

WHEREFORE, the petition is granted. The questioned resolutions issues by the respondent judge
in Civil Case No. 95991, dated February 28, 1977 and March 18, 1977, together with the writs
and processes emanating or deriving therefrom, are hereby declare null and void ab initio.

The respondent ex-officio sheriff of Quezon City and the respondent First National City Bank are
hereby ordered to return all the machineries and equipment with their accessories seized,
dismantled and hauled, to their original and respective places and position in the shop flooring
of the petitioner's premises where these articles were, before they were dismounted, seized
and hauled at their own expense. The said respondents are further ordered to cause the repair
of the concrete foundations destroyed by them including the repair of the electrical wiring and
facilities affected during the seizure, dismanting and hauling.

The writ of preliminary injunction heretofore in effect is hereby made permanent. Costs against
the private respondents.

179
 SO ORDERED 8

Therefrom, Citibank came to this Court via its present petition for certiorari, ascribing grave abuse of discretion
to the Court of Appeals and assigning as errors, that:

THE RESPONDENT COURT ERRED IN PRACTICALLY AND IN EFFECT RENDERING JUDGMENT ON

THE MERITS AGAINST THE HEREIN PETITIONER BY ORDERING THE RETURN OF THE
MACHINERIES AND EQUIPMENT AND ITS ACCESSORIES TO THEIR ORIGINAL AND RESPECTIVE
PLACES AND POSITIONS.

II

THE RESPONDENT COURT ERRED IN FINDING THAT THE COMPLAINT OF THE PETITIONER DID
NOT COMPLY WITH THE PROVISIONS OF SEC. 2, RULE 60 OF THE RULES OF COURT.

III

THAT THE RESPONDENT COURT ERRED IN FINDING THAT THE BOND POSTED BY THE PETITIONER
IS QUESTIONABLE AND/OR INSUFFICIENT.

IV

THE RESPONDENT COURT ERRED IN FINDING THAT THE PETITIONER DID NOT COMPLY WITH THE
PROVISIONS OF SEC. 5, RULE 59 BY FAILING TO POST A RECEIVER'S BOND.

THE RESPONDENT ERRED IN FINDING THAT THE HON. JORGE R. COQUIA ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN DEALING WITH
THE SITUATION.

Anent the first assigned error, petitioner contends that the Court of Appeals, by nullifying the writ of
seizure issued below, in effect, rendered judgment on the merits and adjudged private respondent
Anama as the person lawfully entitled to the possession of the properties subject of the replevin suit. It
is theorized that the same cannot be done, as the case before the court below was yet at trial stage and
lower court still had to determine whether or not private respondent was in fact in default in the
payment of his obligation to petitioner Citibank, which default would warrant the seizure of subject
machineries and equipment.

The contention is untenable. A judgment is on the merits when it determines the rights and liabilities of
the parties on the basis of the disclosed facts, irrespective of formal technical or dilatory objections, and
it is not necessary that there should have been a trial. 9 The assailed decision of the Court of Appeals did
not make any adjudication on the rights and liabilities between Citibank and Douglas Anama. There was
no finding yet of the fact of default. The decision only ruled on the propriety of the issuance of the writ
of seizure by the trial court. As worded by the respondent court itself, "the main issues to be resolved
are whether there was lack or excess of jurisdiction, or grave abuse of discretion, in the issuance of the
orders in question, and there is no appeal nor any plain, speedy, and adequate remedy in the ordinary
course of law." 10

In resolving the issue posed by the petition, the Court of Appeals limited its disposition to a
determination of whether or not the assailed order of seizure was issued in accordance with law, that is,
whether the provisions of the Rules of Court on delivery of personal property or replevin as a provisional
remedy were followed. The Court of Appeals relied on Ruled 60 of the Rules of Court, which prescribed
the procedure for the recovery of possession of personal property, which Rule, provides:

180
 Sec. 2. Affidavit and Bond. — Upon applying or such order the plaintiff must show by his own
affidavit or that of some other person who personally knows the facts:

(a) That the plaintiff is the owner of the property claimed particularly describing
it, or is entitled to the possession thereof;

(b) That the property is wrongfully detained by the defendant, alleging the
cause of detention thereof according to his best of knowledge, information and
belief;

(c) That it has nor been taken for a tax assessment or fine pursuant to law, or
seized under an execution, or an attachment against the property of the plaintiff,
or is so seized, that is exempt from such seizure; and

(d) The actual value of the property.

The plaintiff must also give a bond, executed to the defendant in double of the value of the
property as stated in the affidavit aforementioned, for the property to the defendant of such
sum as he may recover from the plaintiff in the action.

The Court of Appeals did not pass upon the issue of who, as between Douglas Anama and Citibank, is entitled to
the possession of subject machineries, as asserted by the latter. When it ordered the restoration of the said
machineries to Douglas Anama (now the private respondent), it merely defendant to the possession of his
properties, since there was a finding that the issuance of the writ was not in accordance with the specific rules
of the Rules of Court.

II

In its second assignment of errors, petitioner theorizes that the Court of Appeals erred in finding that it
did not comply with Section 2, Rule 60 of the Rules of Court requiring the replevin plaintiff to attach an
affidavit of merit to the compliant.

Petitioner maintains that although there was no affidavit of merit accompanying its complaint, there was
nonetheless substantial compliance with the said rule as all that is required to be alleged in the affidavit of merit
was set forth in its verified complaint. Petitioner argues further that assuming arguendo that there was non-
compliance with the affidavit of merit requirement, such defense can no longer be availed of by private
respondent Anama as it was not alleged in his Answer and was only belatedly interposed in his Reply to the
Petitioner's Comment on the Petitioner for Certiorari before the Court of Appeals.

Petitioner is correct insofar as it contends that substantial compliance with the affidavit requirement may be
permissible. There is substantial compliance with the rule requiring that an affidavit of merit to support the
complaint for replevin if the complaint itself contains a statements of every fact required to be stated in the
affidavit of merit and the complaint is verified like an affidavit. On the matter of replevin, Justice Vicente
Francisco's Comment on the Rules of Court, states:

Although the better practice is to keep the affidavit and pleading separate, if plaintiff's pleading
contains a statement of every fact which the statute requires to be shown in the affidavits, and
the pleading is verified by affidavit covering every statement therein, this will be sufficient
without a separate affidavit; but in no event can the pleading supply the absence of the affidavit
unless all that the affidavit is required to contain is embodied in the pleading, and the pleading
is verified in the form required in the case of a separate affidavit. (77 CJS 65 cited in Francisco,
Rules of Court of the Philippines, Vol. IV-A, p. 383)

And similarly, in the case of an attachment which likewise requires an affidavit of merit, the Court held that the
absence of an affidavit of merit is not fatal where the petition itself, which is under oath, recites the
circumstances or facts constitutive of the grounds for the petition. 11

The facts that must be set forth in the affidavit of merit are (1) that plaintiff owns the property particularly
describing the same, or that he is entitled to its possession; (2) wrongful detention by defendants of said
181
property; (3) that the property is not taken by virtue of a tax assessment or fine pursuant to law or seized under
execution or attachment or, if it is so seized, that it is exempt from seizure; and the, (4) the actual value of the
property. 12

But, as correctly taken note of by the Court of Appeals, petitioner's complaint does not allege all the facts that
should be set forth in an affidavit of merit. Although the complaint alleges that petitioner is entitled to the
possession of subject properties by virtue of the chattel mortgage executed by the private respondent, upon the
latter's default on its obligation, and the defendant's alleged "wrongful detention" of the same, the said
complaint does not state that subject properties were not taken by virtue of a tax assessment or fine imposed
pursuant to law or seized under execution or attachment or, if they were so seized, that they are exempt from
such seizure.

Then too, petitioner stated the value of subject properties at a "probable value of P200,000.00, more or less".
Pertinent rules require that the affidavit of merit should state the actual value of the property subject of a
replevin suit and not just its probable value. Actual value (or actual market value) means "the price which an
article would command in the ordinary course of business, that is to say, when offered for sale by one willing to
sell, but not under compulsion to sell and purchased by another who is willing to buy, but under no obligation to
purchase it".13Petitioner alleged that the machineries and equipment involved are valued at P200,000.00 while
respondent denies the same, claiming that per the appraisal report, the market value of the said properties is
P1,710,000.00 and their replacement cost is P2,342,300.00. Petitioner's assertion is belied by the fact that upon
taking possession of the aforesaid properties, it insured the same for P610,593.74 and P450,000.00, separately.
It bears stressing that the actual value of the properties subject of a replevin is required to be in the affidavit
because such actual value will be the basis of the replevin bond required to be posted by the plaintiff. Therefore,
when the petitioner failed to declare the actual value of the machineries and equipment subject of the replevin
suit, there was non-compliance with Section 2, Rule 60 of the Revised Rules of Court.

It should be noted, however, that the private respondent interposed the defense of lack of affidavit of merit
only in his Reply to the Comment of Citibank on the Petition for Certiorari which respondent filed with the Court
of Appeals. Section 2, Rule 9 of the Revised Rules of Court, provides:

Sec. 2. Defenses and objections not pleaded deemed waived — Defenses and objections not
pleaded either in a motion to dismiss or in the answer are deemed waived; except the failure to
state a cause of action which may be alleged in later pleading, . . . .

This Rule has been revised and amended, as follows:

Sec. 1. Defenses and objection not pleaded. — Defenses and objections not pleaded in a motion
to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the subject matter, that there is
another action pending between the same parties for the same cause, or that the action is
barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

Thus, although respondent's defense of lack of affidavit of merit is meritorious, procedurally, such a defense is
no longer available for failure to plead the same in the Answer as required by the omnibus motion rule.

III

Petitioner also faults the Court of Appeals for finding that the bond posted by the petitioner is questionable
and/or insufficient. It is averred that, in compliance with Section 2, Rule 60 requiring the replevin plaintiff to
post a bond in double the value of the properties involved, it filed a bond in the amount P400,000.00 which is
twice the amount of P200,000.00 declared in its complaint.

The Court reiterates its findings on the second assignment of errors, particularly on the issue of the actual of
subject properties as against their probable value. Private respondent, at the onset, has put into issues the value
of the said properties. In the Special Defenses contained in his Answer, private respondent averred:

That while defendant admits that he executed a Chattel Mortgage in favor of plaintiff, he
vigorously denies that the machineries covered therein are worth P200,000.00. The fact is that
plaintiff knew fully well that said chattels are worth no less than P1,000,000.00, said defendant
182
 having acceded to said valuation upon plaintiff's representation that it would be necessary to
speed up the granting of the loan.

As here was a disagreement on the valuation of the properties in the first place, proper determination of the
value of the bond to be posted by the plaintiff cannot be sufficiently arrived at. Though the rules specifically
require that the needed bond be double the value of the properties, since plaintiff merely denominated a
probable value of P200,000.00 and failed to aver the properties' actual value, which is claimed to be much
greater than that declared by plaintiff, the amount of P400,000.00 would indeed be insufficient as found by the
Court of Appeals. The Rules of Court requires the plaintiff to "give a bond, executed to the defendant in double
the value of the property as stated in the affidavit
. . . ." Hence, the bond should be double the actual value of the properties involved. In this case, what was
posted was merely an amount which was double the probable value as declared by the plaintiff and, therefore,
inadequate should there be a finding that the actual value is actually far greater than P200,000.00. Since the
valuation made by the petitioner has been disputed by the respondent, the lower court should have determined
first the actual value of the properties. It was thus as error for the said court to approve the bond, which was
based merely on the probable value of the properties.

It should be noted that a replevin bond is intended to indemnify the defendant against any loss that he may
suffer by reason of its being compelled to surrender the possession of the disputed property pending trial of the
action. 14 The same may also be answerable for damages if any when judgment is rendered in favor of the
defendant or the party against whom a writ of replevin was issued and such judgment includes the return of the
property to him. 15 Thus, the requirement that the bond be double the actual value of the properties litigated
upon. Such is the case because the bond will answer for the actual loss to the plaintiff, which corresponds to the
value of the properties sought to be recovered and for damages, if any.

Petitioner also maintains that, assuming for the sake of argument that its replevin bond was grossly inadequate
or insufficient, the recourse of the respondent should be to post a counterbound or a redelivery bond as
provided under Section 5 of Rule 60.

Sec. 5 and 6, Rule 60 of the Rules of Court, read:

Sec. 5. Return of property. — If the defendant objects to the sufficient of the plaintiff's bond, or
of the surety or sureties thereon, he cannot require the return of the property as in this section
provided; but if he does not so object, he may, at any time before the delivery of the property to
the plaintiff, if such delivery be adjudge, and for the payment of such sum to him as may be
recovered against the defendant, and by serving a copy of such bond on the plaintiff or his
attorney.

Sec. 6. Disposition of property by officer. — If within five (5) days after the taking of the
property by the officer, the defendant does not object to the sufficiecy of the bond, or of the
surety or sureties thereon, or require the return of the property as provided in the last
preceding section; or if the defendant so objects, and the plaintiff's first or new bond is
approved; or if the defendant so require, and his bond is object to and found insufficient and he
does not forthwith file an approved bond, the property shall be delivered to the plaintiff, the
officer must return it to the defendant.

The Court held in a prior case 16 that the remedies provided under Section 5, Rule 60, are alternative remedies.
". . . If a defendant in a replevin action wishes to have the property taken by the sheriff restored to him, he
should, within five days from such taking, (1) post a counter-bond in double the value of said property, and (2)
serve plaintiff with a copy thereof, both requirements as well as compliance therewith within the five-day period
mentioned — being mandatory." 17 This course of action is available to the defendant for as long as he does not
object to the sufficiency of the plaintiff's bond.

Conformably, a defendant in a replevin suit may demand the return of possession of the property replevined by
filing a redelivery bond executed to the plaintiff in double the value of the property as stated in the plaintiff's
affidavit within the period specified in Section 5 and 6.

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Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond, or of the surety or sureties
thereon;" but if he does so, "he cannot require the return of the property" by posting a counter-bond pursuant
to Section 5 and 6. 18

In the case under consideration, the private respondent did not opt to cause redelivery of the properties
to him by filing a counter-bond precisely because he objected to the sufficiency of the bond posted by
plaintiff. Therefore, he need not file a counter-bond or redelivery bond. When such objection was not
given due course in the court below — when, instead of requiring the plaintiff to post a new bond, the
court approved the bond in the amount of P400,000.00, claimed by respondent to be insufficient, and
ordered the seizure of the properties — recourse to a petition for certiorari before the Court of Appeals
assailing such order is proper under the circumstances.

IV

As its fourth assignment of errors, petitioner contends that the Court of Appeals made an error of judgment in
finding that the petitioner did not comply with the provisions of Section 5, Rule 59 by failing to post a receiver's
bond. Petitioner contends that although it is in agreement with the Court of Appeals that a receiver's bond is
separate and distinct from a replevin bond, under the circumstances it was not required to file a receiver's bond
because it did not assume receivership over the properties. It is further argued that assuming that it did assume
receivership, the Chattel Mortgage expressly provides, that:

In case the MORTGAGEE institutes proceedings, judicially or otherwise, for the foreclosure of
this Chattel Mortgage, or to enforce any of its rights hereunder, the MORTGAGEE shall be
entitled as a matter of right to the appointment of a receiver, without bond, of the mortgaged
properties and of such properties, real or personal, claims and rights of the MORTGAGOR as
shall be necessary or proper to enable the said receiver to property control and dispose of the
mortgaged properties. 19

The order of the trial court dated March 24, 1975 provided, among others, that the properties shall be under
joint management for a period of ten days, after which period "the bank, by virtue of the stipulations under the
chattel mortgage, becomes the Receiver to perform all the obligations as such Receiver" and "in the event that
the bank decides not to take over the receivership, the joint management continues." 20

From the evidence on record, it is palpably clear that petitioner Citibank did, in fact, assume receivership. A
letter 21dated April 1, 1975 sent by petitioner to the private respondent, reads:

Anama Engineering Service Group

114 R. Lagmay Street

San Juan, Rizal

Attention: Mr. Douglas Anama

Gentlemen:

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 Pursuant to the Court order, we have decided to take over your machine shop as Receiver.

We are hereby appointing Mr. Artemio T. Gonzales as our representative.

Very truly yours,

FIRST
NATIONAL CITY
BANK

By:

P.R. REAL, JR.

Assistant
Manager

Petitioner cannot therefore deny that nine days after the trial court issued the order of receivership, it informed
he private respondent that it would, as it did, assume receivership.

The Court of Appeals found that the requirements of Section 5, Rule 59 on receivership were not complied with
by the petitioner, particularly the filing or posting of a bond and the taking of an oath.

It should be noted that under the old Rules of Court which was in effect at the time this case was still at trial
stage, a bond for the appointment of a receiver was not generally required of the applicant, except when the
application was ex parte. 22 Therefore, petitioner was not absolutely required to file a bond. Besides, as
stipulated in the chattel mortgage contract between the parties, petitioner, as the mortgagee, is entitled to the
appointment of a receiver without a bond.

However, the Court of Appeals was right in finding a defect in such assumption of receiver in that the
requirement of taking an oath has not been complied with Section 5, Rule 59, states:

Sec. 5. Oath and bond of receiver. — Before entering upon his duties, the receiver must be
sworn to perform them faithfully, and must file a bond, executed to such person and in such
sum as the court or judge may direct, to the effect that he will faithfully discharge the duties of
receiver in the action and obey the orders of the court therein.

Consequently, the trail court erred in allowing the petitioner to assume receivership over the machine shop of
private respondent without requiring the appointed receiver to take an oath.

In light of the foregoing, the answer to the fifth assignment of errors is in the negative. For erroneously issuing
the alias writ of seizure without inquiring into the sufficiency of the replevin bond and for allowing petitioner to
assume receivership without the requisite oath, the Court of Appeals aptly held that the trial court acted with
grave abuse of discretion in dealing with situation.

Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered immediately
to the plaintiff. 23 This is because a possessor has every right to respected in its possession and may not be
deprived of it without due process. 24

As enunciated by this Court in the case of Filinvest Credit Corporation vs. Court of Appeals, 25

The reason why the law does not allow the creditor to possess himself of the mortgaged
property with violence and against the will of the debtor is to be found in the fact that the
creditor's right of possession is conditioned upon the fact of default, and the existence of this
fact may naturally be the subject of controversy. The debtor, for instance, may claim in good
faith, and rightly or wrongly, that the debt is paid, or that for some other reason the alleged

185
 default is nonexistent. His possession in this situation is as fully entitled to protection as that of
any other person, and in the language of Article 446 of the Civil Code, he must be respected
therein. To allow the creditor to seized the property against the will of the debtor would make
the former to a certain extent both judge and executioner in his own cause — a thing which is
inadmissible in the absence of unequivocal agreement in the contract itself or express provision
to the effect in the statute.

WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No pronouncement as to costs.

SO ORDERED.

Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.

G.R. No. L-27019 March 4, 1927

CLEMENCIA GRAÑO, petitioner,

vs.
HONORABLE ISIDRO PAREDES, Judge of First Instance of Laguna, and
ESTANISLAO REYES, respondents.
SEBASTIANA MARTINEZ ET AL., intervenors.

Florencio Manalo for petitioner.

The respondent judge in his own behalf.
Camus, Delgado & Recto for the respondent Reyes.
S. C. Pamatmat for intervenors.

STREET, J.:

This is an application for a peremptory writ of mandamus to require the respondent judge to execute an order
made by himself on October 9, 1925, in the case of Martinez et al. vs. Graño et al., dissolving a receivership and
directing Estanislao, Reyes as receiver, to surrender the property in litigation to the parties in interest, which
order was affirmed, with slight modification, upon appeal to this court (G.R. No. 25437).1 The petitioner in the
present proceeding is Clemencia Graño and the respondent judge was named in the original petition as the sole
defendant. However, after the proceeding had been instituted, the complaint was amended for the purpose of
adding the name of Estanislao Reyes as codefendant with the respondent judge; and various parties in interest
bearing the surname of Martinez intervened in the same right as the plaintiff and asked for the same relief. The
cause is now before us upon amended petition, petition of intervention, and the answers of the respondents.

In opinion of this court, to which reference is made, we affirmed the judgment, declaring the receivership
dissolved and ordering the receiver to surrender the property to the persons in interest. However, near the end
of said opinion, the following paragraph is found:

The court, however, is of the opinion that if upon the prompt submission and examination of the
receiver's accounts, it should be found that he has actually paid out counts, it should be found that the
has actually paid out for the conservation and protection of the property which is the subject of the
receivership more than he has received by way of income, or should have received in the exercise or
reasonable diligence, such balance in his favor should be recognized as a lawful claim constituting a lien
on the property.

The declaration, in the foregoing paragraph, to the effect that any lawful balance in the receiver's favor should
be recognized as a lawful claim constituting a lien on the property has proved a stumbling-block to the court
below, owing to a misunderstanding of the meaning and effect of the word "lien", as there used. The
respondent Judge interprets the word "lien" as the equivalent of "right of retention," and he has accordingly
refused to proceed to the execution of the judgment out of deference to the order of this court as thus
interpreted. The result is that the receiver still remain entrenched in possession of the property pending the
proceedings incident to the accounting which was ordered by the court.

This is of course all wrong. The very essence of the question in dispute in the appeal referred to was this right of
retention; and after we had decided the appeal adversely to the receiver, an elaborate motion for
186
reconsideration was filed by him, insisting that we should recognize a right of retention in his favor until the
balance alleged to be due to him should be ascertained and paid. This petition was denied.

The error into which his Honor fell was no doubt due to the fact that "derecho de retention" is something used
as an equivalent in Spanish of the English word "lien;" and it also true a right of retention is sometimes, but not
always, an incident to the "lien" as understood in the common law. The word "lien" is of the same etymological
origin as the word "liable;" and in its broader sense "lien" expresses the liability of property for a certain legal
duty, or a right to resort to certain property in order to enforce the duty. In this sense "lien" includes every case
in which property is charged with the payment of a debt. The Spanish word "gravamen" therefore more nearly
translates the English word "lien" than any other term. It was in this sense that the word "lien" is used in our
opinion. A common-law lien on personal property usually retain possession until his lien is satisfied; but when
used with reference to a charge on real property, the word does not necessarily import a right of retention.

That the word was not intended to import the right of retention in the connection in which it is used in our
opinion, is quite apparent from the very nature of the issue determined. In this connection it must be
remembered that respondent Reyes was in possession as receiver, and he has no other right to occupy the
property than such as is derived from his receivership. When the receivership was abolished, as it was by the
order of October 9, 1925, affirmed upon appeal in this court, there could not be the slightest pretense for
supposing that the receiver could still remain in possession.

The writ of mandamus will be issued as prayed, requiring the respondent judge to oust the respondent
Estanislao Reyes and cause delivery of the property to be made to proper parties in interest. So ordered, with
costs against the respondent Reyes.

Johnson, Malcolm, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-49031 August 28, 1944

JOSE PLATON and ROMAN CASTILLO, petitioners,

vs.
HON. CLAUDIO SANDOVAL, in his capacity as Judge, Court of First Instance of Laguna, and INES
MAILOM,respondents.

Avelino & Yatco for petitioners.

Galo Al. Acuña and T. G. de Castro for respondents.

OZAETA, J.:

This is an original petition for certiorari and mandamus to annul an order issued by the respondent judge
whereby the receiver appointed in civil case No. 7385 of the Court of First Instance of La entitled "Ines
Mailom vs. Antonio Castillo and Roman Castillo," was discharge, and to compel the respondent judge to approve
the appeal of said from said order.

It appears that said civil case was instituted by Ines Mailom, one of the heirs of the deceased Servanda Mailom,
to annul the sale of certain parcels of land made by the spouses Roman Castillo and Servanda Mailom (previous
to the death of the latter) in favor of Antonio Castillo, a brother of Roman. After the death of Servanda Mailom,
her husband Roman Castillo was appointed administrator of the estate left by her. The herein petitioner Jose
Platon was appointed receiver of the property in litigation in said civil case No. 7385 at the instance of the
plaintiff (now respondent) Ines Mailom.

It was also Ines Mailom who, through her attorney, moved the court on November 11, 1942, to discharge the
receiver on the ground that there was no more necessity for the continuation of the receivership inasmuch as
the defendant Antonio Castillo had renounce his claim to said property in a stipulation of facts submitted to the
court on November 25,1940, and the heirs of the deceased Servanda Mailom, including the administrator
Roman Castillo, had submitted a project of partition in the intestate proceedings of the deceased Servanda
Mailom, case Mo. 3148 of said court which upon such allegations, which the court found to be true upon such
allegations, which the court found to be true, the respondent judge granted the motion, discharging the receiver
and ordering him to deliver the properties under receivership to the persons entitled to receive the same in
accordance with the project of partition aforementioned.
187
The receiver Jose Platon filed a motion to set aside said order on the grounds (1) that the had not been notified
of the motion upon which the same was issued; (2) that the case in which he was appointed receiver was still
pending decision by Judge Proceso Sebastian; (3) that in the event Antonio Castillo wins the case, the receiver
has to deliver to him the properties, thereby rendering the project of partition useless and of no value; and (4)
that irregularities were committed by Attorney Acuña for the plaintiff and the heirs of Sevanda Mailom
regarding the disposition of the properties in question after the approval of the project of partition. In a
memorandum submitted by the attorney for the receiver Jose Platon in support of said motion, said attorney
who also represents the defendant-administrator Roman Castillo, said that the latter joins the receiver in said
motion and makes it his own.

After hearing both parties upon said motion to set aside the order discharging the receiver, the respondent
judge reaffirmed his finding that there was no necessity for the continuation of the receivership and denied said
motion Thereupon the receiver filed a notice of appeal from said order and tendered a record on appeal which
the respondent judge disapproved on the ground that the order was interlocutory and not appealable.

With regard to the order discharging the receiver and terminating the receivership, we find no excess of
jurisdiction nor grave abuse of discretion on the part of the respondent judge. The property in litigation and
under receivership belongs to the intestate estate of the deceased Servanda Mailom, deceased wife of the
petitioner Roman Castillo. The defendant Antonino Castillo, who is not a heir of said deceased, does not claim
ownership of said property and has signed his conformity to the discharge of the receiver. And the heirs of said
deceased have agreed upon the partition of said property with the approval of the probate court. It seems clear,
therefore, that the declaration of the respondent judge that there was no longer any necessity for the
continuation of the receivership was well founded. In any event, it cannot be said that the respondent judge
exceeded his jurisdiction or abused his discretion in making such a finding. Furthermore, the receiver, being an
officer of the court and not the agent or representative of either party to the action, has no legal interest or
standing to question the court's determination that the necessity for the continuation of the receivership has
ceased to exist.

It is immaterial to decide now whether the receiver was entitled to be heard on the original motion to discharge
him, for the reason that he was actually heard in the premises when thru his attorney he filed a motion for
reconsideration.

With regard to the approval of the record on appeal, we agree with the respondent judge that the order sought
to be appealed from is interlocutory, and hence mandamus does not lie to compel him to approve and certify
the record on appeal. As a matter of fact, certiorari to annul an order and mandamus to approve an appeal from
said order are inconsistent remedies. The first is predicated on the theory that the second is unavailable. Having
decided to pass upon the petition for certiorari on the merits, we cannot consistently compel the approval of an
appeal from the same order which was the object of the certiorari proceeding.

The petition is denied and the orders assailed are affirmed, with costs against the petitioners.

Yulo, C.J., Moran, Horrilleno and Paras, JJ., concur.

G.R. No. 146313 October 31, 2006

FLORENCIO ORENDAIN, petitioner,

vs.
BF HOMES, INC., respondent.

DECISION

VELASCO, JR., J.:

188
Before us is a Petition for Review on Certiorari praying for the reversal of the August 18, 2000 Decision and
December 6, 2000 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 48263 entitled Florencio B.
Orendain v. Hon. Alfredo R. Enriquez, Presiding Judge of RTC-Br. 275, Las Piñas, and BF Homes, Inc., which
affirmed the December 4, 1996 and April 22, 1998 Orders of the Las Piñas RTC finding that said court, not SEC,
has jurisdiction over Civil Case No. LP-96-0022 for reconveyance of the lot covered by TCT No. T-36482 to
respondent BF Homes, Inc. (‘BF Homes’ for brevity).

BF Homes, Inc. is a domestic corporation operating under Philippine laws and organized primarily to develop and
sell residential lots and houses and other related realty business.1

Records show that respondent BF Homes had to avail itself of financial assistance from various sources to enable
it to buy properties and convert them into residential subdivisions. This resulted in its incurring liabilities
amounting to PhP 1,542,805,068.232 as of July 31, 1984. On the other hand, during its business operations, it
was able to acquire properties and assets worth PhP 2,482,843,358.81 as of July 31, 1984, which, if liquidated,
were more than enough to pay all its creditors.3

Despite its solvent status, respondent filed a Petition for Rehabilitation and for Declaration in a State of
Suspension of Payments under Section 4 of PD No. 1758 before the Securities and Exchange Commission (SEC)
because of the following:

(a) the predatory acts of the Central Bank of trying to take over Banco Filipino and hand it cheap to its
unidentified principal and its buyer financing facility with Banco Filipino has been suspended such that it
cannot now consummate its sales transactions necessary for it to generate cash to service and/or
liquidate its various maturing obligations;

(b) the libelous [circulars] made by the Central Bank to banks under its supervision that its deposit
accounts and other transactions with them were being examined such that the creditors of [BF Homes]
have [begun] insisting on full liquidation under pain of foreclosure of their notes x x x; and

(c) the [liquidation] of [BF Homes’] assets cannot be made in such a short time as demanded by its
creditors.4

In the said petition, respondent prayed that—in the meantime it was continuing its business operations—it be
afforded time to pay its aforesaid obligations, freed from various proceedings either judicially or extra-judicially
against its assets and properties. Also, respondent highlighted the importance of and prayed for a Rehabilitation
Receiver in the petition. Such receiver, according to respondent, was "imperative to oversee the management
and operations of [BF Homes] so that its business may not be paralyzed and the interest of the creditors may not
be prejudiced." It further argued that "rehabilitation [was] feasible and imperative because otherwise, in view of
the extent of its involvement in the shelter program of the government and in the nation’s home mortgage
insurance system, which has a secured coverage for at least P900 M of [BF Homes’] P1.5 B liabilities, not only
[the] creditors, [buyers, and stockholders] of the petitioner corporation may suffer but the public as well."5

In SEC Case No. 2693, the SEC subsequently issued its March 18, 1985 Order which stated:

WHEREFORE, in the interest of the parties-litigants, as well as the general public, and in order to prevent
[paralyzation] of business operation[s] of the B.F. Homes, Inc., a Management Committee is hereby
created composed of:

1. Atty. Florencio Orendain as Chairman

2. Representative of B. F. Homes, Inc. – member

3. Representative of Home Financing Commission – member

4. Two (2) representatives from the major creditors – members

xxxx

189
 Accordingly, with the creation of the Management Committee, all actions for claims against B.F. Homes,
Inc. pending before the court, tribunal, board or body are hereby deemed suspended.6

Thereafter, on February 2, 1988, the SEC ordered the appointment of a rehabilitation receiver, FBO
Management Networks, Inc., with petitioner Orendain as Chairman to prevent paralyzation of BF Homes’
business operations.7

On October 8, 1993, a Deed of Absolute Sale8 was executed by and between BF Homes—represented by
petitioner Orendain—as absolute and registered owner, and the Local Superior of the Franciscan Sisters of the
Immaculate Phils., Inc. (LSFSIPI) over a parcel of land situated at Barangay Pasong Papaya, BF International,
Municipality of Las Piñas, Metro Manila, covered by Transfer Certificate of Title No. T-36482.

The portion of land sold to LSFSIPI was 7,800 square meters, more or less, for Nineteen Million Five Hundred
Thousand Pesos (PhP 19,500,000.00).9

Meanwhile, on November 7, 1994, the SEC hearing panel released an Omnibus Order10 which admitted and
confirmed the Closing Report submitted by the receiver, petitioner Orendain. It further appointed a new
Committee of Receivers composed of the eleven (11) members of the Board of Directors of BF Homes with
Albert C. Aguirre as the Chairman of the Committee. Consequently, receiver Orendain was relieved of his duties
and responsibilities.

In its August 22, 1995 Order,11 the SEC denied BF Homes’ and the intervenor-derivative suitor Eduardo S.
Rodriguez’s motions for reconsideration of its November 7, 1994 Omnibus Order.

On January 23, 1996, BF Homes filed a Complaint before the Las Piñas RTC against LSFSIPI and petitioner
Orendain, in Civil Case No. LP-96-0022, for reconveyance of the property covered by TCT No. T-36482—alleging,
inter alia, that the LSFSIPI transacted with Orendain in his individual capacity and therefore, neither FBO
Management, Inc. nor Orendain had title to the property transferred. Moreover, BF Homes averred that the
selling price was grossly inadequate or insufficient amounting to fraud and conspiracy with the LSFSIPI. BF
Homes also stated that the total assessed value of the property was approximately PhP 802,330.00. Hence, it
prayed in the Complaint that LSFSIPI reconvey the disputed property or, if reconveyance was no longer feasible,
pay the present value of the property.12

On March 21, 1996, the LSFSIPI filed its Answer with Compulsory Counterclaim,13 stating, among others, that (1)
the Complaint stated no cause of action since there was a valid sale with sufficient consideration, and there was
no fraud; (2) it was barred by a prior judgment of a tribunal with sufficient jurisdiction over the matter, and BF
Homes was liable for forum shopping; and (3) BF Homes could not question its own acts by way of estoppel.

On June 14, 1996, Florencio B. Orendain filed a Motion to Dismiss stating that (1) the RTC had no jurisdiction
over the reconveyance suit; (2) the Complaint was barred by the finality of the November 7, 1994 Omnibus
Order of the SEC hearing panel; and (3) BF Homes, acting through its Committee of Receivers, had neither the
interest nor the personality to prosecute the said action, in the absence of SEC’s clear and actual authorization
for the institution of the said suit.14

On July 15, 1996, BF Homes filed its Opposition15 to petitioner’s Motion to Dismiss, alleging that the case was
within the exclusive jurisdiction of the RTC, not the SEC, considering that the case was an ordinary reconveyance
suit. Likewise, BF Homes alleged that the cause of action was not barred by the perceived finality of the SEC
November 7, 1994 Omnibus Order, and that the general powers of a receiver authorized BF Homes to institute
actions to recover the property.

On December 4, 1996, RTC Las Piñas, Branch 275 issued an Order denying the June 14, 1996 Motion to Dismiss
for lack of merit.16

However, on May 8, 1997, the SEC rendered its Order, as follows:

WHEREFORE, premises considered, the decision of the hearing panel denying the motion for
intervention of Mr. Eduardo Rodriguez is hereby AFFIRMED. The Commission hereby receives and notes
the Closing Report of the Management Network and the Joaquin Cunanan Audit Report for inclusion in
the records of the case without going into the merits and veracity of the contents thereof; the order to
190
 pay the attorney’s fees of Balgos and Perez is hereby SET ASIDE; the resolution of the issue on the
alleged payment of receiver’s fees of FBO Management Network is hereby deferred, and the order to
pay the additional fees of the receiver is hereby set aside until after the Commission en banc finally
clears and releases FBO Management Networks from its accountabilities in accordance with the policies
and orders of the Commission on the receivership.17

On December 27, 1997, petitioner Orendain filed his Motion for Reconsideration18 of the RTC December 4, 1996
Order. Consequently, BF Homes filed its January 17, 1997 Opposition19 to Orendain’s Motion for
Reconsideration; and on April 22, 1998, the RTC issued an Order denying the Motion for Reconsideration for lack
of merit and petitioner Orendain was directed to file his answer to the Complaint within ten (10) days from
receipt of the Order.20

Petitioner then filed his Answer Ex Abudante Ad Cautelam with Compulsory Counterclaims21 on May 29, 1998.

On July 13, 1998, petitioner filed before the CA a Petition for Certiorari and Prohibition with Prayer for the
Issuance of a Temporary Restraining Order and/or Bonded Writ of Preliminary Injunction22 which sought to
annul the RTC December 4, 1996 and April 22, 1998 Orders, denying petitioner’s Motion to Dismiss and Motion
for Reconsideration. Petitioner alleged that these motions were issued without jurisdiction or with grave abuse
of discretion amounting to lack or in excess of jurisdiction.

The Ruling of the Court of Appeals

In its August 18, 2000 Decision, the CA held that the action for reconveyance filed by BF Homes was within the
exclusive jurisdiction of the RTC. In the rehabilitation case, the LSFSIPI was not a party to the said case and did
not have any intra-corporate relation with petitioner at the time of the sale. The SEC could not acquire
jurisdiction over the Franciscan Sisters; while petitioner Orendain was sued in his individual capacity and not in
his official capacity as receiver.23

Moreover, the CA stated that at the time the assailed orders were issued, the subject SEC Order had not yet
attained finality; that there was no identity between the first and the second action with respect to the parties;
and that the SEC November 7, 1994 Omnibus Order relied on by Orendain was not a decision on the merits of BF
Homes’ Petition for Rehabilitation and for a Declaration in a State of Suspension of Payments under Sec. 4 of P.D.
No. 1758.

According to the CA:

Although this Court is not oblivious to the fact that the SEC en banc in a Decision dated May 8, 1997,
affirmed the denial of the intervention filed by Rodriguez, still the said order did not go into the merits
of the intervention but merely refused to give due recognition to the intervention as it was allegedly
"untimely." Therefore, the contention of petitioner that the principle of res judicata is applicable in the
case at bar does not hold water. 24

The CA ultimately rendered its judgment in this wise:

WHEREFORE, premises considered, the instant petition is DISMISSED for failure to clearly show grave
abuse of discretion and the assailed orders dated December 4, 1996 and April 22, 1998, are hereby
AFFIRMED in toto without costs to petitioner.25

Hence, this petition is before us.

The Court’s Ruling

Petitioner avers that the CA erred in holding that (1) the complaint a quo is a simple reconveyance suit and
hence, can be heard and tried by the court a quo; (2) res judicata is inapplicable to the complaint a quo; and (3)
the Committee of Receivers may institute an action against a former receiver without prior SEC approval.26

The petition is not meritorious.

Action for Reconvenyance in the RTC Does Not Involve Intra-Corporate Dispute
191
The issue central to this petition is: which has jurisdiction over the action for reconveyance—the RTC or SEC.

Petitioner Orendain argues that it is the SEC that has jurisdiction by virtue of Presidential Decree No. 902-A since
BF Homes’ suit was instituted against him as its former receiver. He also avers that BF Homes’ allegations were
nothing more than protestations against the former receiver who entered into a transaction during BF Homes’
regime of rehabilitation; and that the assailed transaction was consummated at the time the SEC had placed BF
Homes under rehabilitation. Therefore, according to petitioner, the SEC, which appointed the rehabilitation
receiver, has the sole power to decide the issue as to whether petitioner acted within the scope of the vested
authority.

Petitioner also claims that the resolution of the instant controversy depends on the ratification by the SEC of the
acts of its agent, the receiver. Also, he asserts that for the RTC to insist on hearing and deciding the case below is
to dislodge the appointing body from reviewing, ratifying, confirming, or overruling the acts of its appointee;
and such would constitute undue interference on the jurisdiction of the SEC by a court of equal jurisdiction.
Further, petitioner claims that the questions of whether the receiver of a company undergoing rehabilitation
acted within the scope of his authority, and whether a transaction consummated during the rehabilitation
proceedings is impermissible, are matters not within the province of a regular court acting on an ordinary
reconveyance suit. Petitioner avers that the undisputed fact is that at the time of the said transaction,
respondent was operating under rehabilitation whereby receivership places all matters arising from, incidental,
or connected with the implementation of said rehabilitation proceedings beyond the jurisdiction of regular
courts. In addition, petitioner avers that the property in question is one of the many properties which formed
part of a pool of assets placed under receivership and that he was the Chairman of the FBO Management, Inc.—
the SEC-appointed Rehabilitation Receiver at the time of the transaction.

WE hold OTHERWISE.

In Speed Distributing Corp. v. CA, we held that:

Jurisdiction over the subject matter is conferred by law. The nature of an action, as well as which court
or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the
plaintiff, irrespective of whether or not plaintiff is entitled to recover upon all or some of the claims
asserted therein. It cannot depend on the defenses set forth in the answer, in a motion to dismiss, or in
a motion for reconsideration by the defendant (citations omitted).27

In the case at bench, the BF Homes’ Complaint for reconveyance was filed on January 23, 1996 against LSFSIPI
and Florencio B. Orendain, in Civil Case No. LP-96-002.

In 1996, Section 5 of PD No. 902-A,28 which was approved on March 11, 1976, was still the law in force—
whereby the SEC still had original and exclusive jurisdiction to hear and decide cases involving:

b) controversies arising out of intra-corporate or partnership relations, between and among

stockholders, members, or associates; between any and/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.

Clearly, the controversy involves matters purely civil in character and is beyond the ambit of the limited
jurisdiction of the SEC. As held in Viray v. Court of Appeals, "[t]he better policy in determining which body has
jurisdiction over a case would be to consider not only [1] the status or relationship of the parties but also [2] the
nature of the question that is the subject of their controversy."29

More so, in Speed Distributing Corp., we held that:

The first element requires that the controversy must arise out of intra-corporate or partnership relations
between any or all of the parties and the corporation, partnership or association of which they are
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 franchises.
The second element requires that the dispute among the parties be intrinsically connected with the
192
 regulation of the corporation. If the nature of the controversy involves matters that are purely civil in
character, necessarily, the case does not involve an intra-corporate controversy. The determination of
whether a contract is simulated or not is an issue that could be resolved by applying pertinent provisions
of the Civil Code (citations omitted).30

However, Section 5 of PD No. 902-A does not apply in the instant case. The LSFSIPI is neither an officer nor a
stockholder of BF Homes, and this case does not involve intra-corporate proceedings. In addition, the seller,
petitioner Orendain, is being sued in his individual capacity for the unauthorized sale of the property in
controversy. Hence, we find no cogent reason to sustain petitioner’s manifestation that the resolution of the
instant controversy depends on the ratification by the SEC of the acts of its agent or the receiver because the act
of Orendain was allegedly not within the scope of his authority as receiver. Furthermore, the determination of
the validity of the sale to LSFSIPI will necessitate the application of the provisions of the Civil Code on obligations
and contracts, agency, and other pertinent provisions.

In addition, jurisdiction over the case for reconveyance is clearly vested in the RTC as provided in paragraph (2),
Section 19, B.P. Blg. 129, to wit:

Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive [and] original jurisdiction

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

(2) In all civil actions which involve the title to, or possession of, real property or any interest therein,
where the assessed value of the property involved exceeds Twenty Thousand pesos (P20,000.00) or for
civil actions in Metro Manila, where such value exceeds Fifty Thousand pesos (P50,000.00) x x x

Likewise, in DMRC Enterprises v. Este del Sol Mountain Reserve, Inc., the Court said:

Nowhere in said decree [PD 902-A] do we find even so much as an intimidation [sic] that absolute
jurisdiction and control is vested in the Securities and Exchange Commission in all matters affecting
corporations. To uphold the respondents’ arguments would remove without the legal imprimatur from
the regular courts all conflicts over matters involving or affecting corporations, regardless of the nature
of the transactions which give rise to such dispute. The courts would then be divested of jurisdiction not
by reason of the nature of the dispute submitted to them for adjudication, but solely for the reason that
the dispute involves a corporation. This cannot be done. To do so would not only be to encroach on the
legislative prerogative to grant and revoke jurisdiction of the courts but such a sweeping interpretation
may suffer constitutional infirmity. Neither can we reduce jurisdiction of the court by judicial fiat
( [citing] Article X, Section 1, The [1973] Constitution).31

Res Judicata Does Not Apply in the Action for Reconveyance

According to petitioner, dismissal of the complaint is proper based on res judicata. He alleged that on
September 28, 1994, he filed a Petition for Rehabilitation and for Declaration in a State of Suspension of
Payments docketed as SEC Case No. 2693; and that sometime in 1994, FBO Management Network, Inc.
submitted its Closing Report to the SEC. In said report, the receiver disclosed the conveyance of the property to
the LSFSIPI. It is the same transaction which BF Homes seeks to nullify in the complaint a quo.

We are not persuaded.

There are two (2) aspects to the doctrine of res judicata:

The first, known as "bar by prior judgment," is the effect of a judgment as a bar to the prosecution of a
second action upon the same claim, demand or cause of action. The second, known as "conclusiveness
of judgment," issues actually and directly resolved in a former suit cannot again be raised in any future
case between the same parties involving a different cause of action.32

A case is barred by prior judgment when the following requisites are present: "(1) the former judgment is final;
(2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an
order on the merits; and (4) there is—between the first and second actions—identity of parties, of subject
matter, and causes of action."33
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Petitioner asserts that bar by prior judgment exists since the May 8, 1997 Order of the SEC en banc had become
final which would effectively preclude the adjudication of Civil Case No. LP-96-0022.

We DISAGREE.

While the said SEC order denied the motion for intervention filed by intervenor Eduardo S. Rodriguez, it did not,
however, resolve the issues raised in the motion on the merits. A judgment is "on the merits when it amounts to
a legal declaration of the respective rights and duties of the parties based upon the disclosed facts (emphasis
supplied and citation omitted)."34 It is apparent that the SEC order in question merely acknowledged the Closing
Report for inclusion in the records of the case. It did not, however, pass upon the merits and veracity of the
report’s contents. As such, it cannot, in any wise, be considered as an adjudication of the rights and obligations
of the parties relating to the subject matter of the action.

Likewise, it appears that between the first and second actions, there was no identity of parties, of subject matter,
and of cause of action. Hence, res judicata does not apply in the instant case.

The second type of res judicata is "conclusiveness of judgment." In Francisco v. Co, this Court elucidated the
nature of this principle, thus:

"Conclusiveness of judgment" operates as a bar even if there is no identity as between the first and
second causes of judgment. Under the doctrine, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand, purpose, or subject matter of
the two actions is the same.

Evidently, "conclusiveness of judgment" may operate to bar the second case even if there is no identity
of causes of action. The judgment is conclusive in the second case, only as to those matters actually and
directly controverted and determined, and not as to matters merely involved therein.35

A perusal of the SEC case would show that reconveyance of the property in controversy was neither an issue nor
a relief sought by any party in the SEC proceedings. Evidently, the SEC November 7, 1994 Omnibus Order did not
mention any reconveyance of property.36

Eduardo S. Rodriguez, the intervenor in the SEC case, did not demand the reversion of the disputed property
precisely because the SEC has no jurisdiction over the action for reconveyance. Assuming, arguendo, that
intervenor Rodriguez raised the issue on the validity of petitioner’s acts in his capacity as receiver, still, the SEC
November 7, 1994 Omnibus Order did not delve into the merits of the intervention nor did the order give due
course to the intervention as it was untimely.

Thus, there is no "conclusiveness of judgment" as the reconveyance of the lot sold to LSFSIPI was not directly
decided or necessarily involved and adjudicated in the said SEC order.

Furthermore, petitioner argues that the Committee of Receivers should have sought prior clearance from the
SEC before instituting the action for reconveyance before the RTC, because it does not have the legal capacity to
sue. This is incorrect. One of the general powers of a receiver under Rule 59, Section 6 of the Rules of Court is
the power to bring and defend suits in such capacity.

Petitioner also contends that an action filed by a successor-receiver against him as predecessor-receiver is not
allowed under Rule 59, Section 6 without leave of court which appointed him; as Section 6 provides that "no
action may be filed by or against a receiver without leave of the court which appointed him." This is bereft of
merit.

The rule talks of the current receiver of the company and not the previous receiver like petitioner Orendain. The
reason behind Rule 59, Section 6, which requires leave of court for all suits by or against the present receiver, is
to forestall any undue interference with the receiver’s performance of duties through improvident suits.
Apparently, such situation cannot apply to Orendain who is no longer BF Homes’ receiver.

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Moreover, the instant petition has been rendered moot and academic by the passage of RA 8799 or The
Securities Regulation Code which took effect on August 8, 2000.37

Section 5.2 of RA 8799 transferred exclusive and original jurisdiction of the SEC over actions involving intra-
corporate controversies to the courts of general jurisdiction or the appropriate RTC. In the transition, all intra-
corporate cases pending in the SEC, which were not ripe for adjudication as of August 8, 2000, were turned over
to the RTC. Congress thereby recognized the expertise and competence of the RTC to take cognizance of and
resolve cases involving intra-corporate controversies. Thus, "whether or not the issue is intra-corporate, it is
now the [RTC] and no longer the SEC that takes cognizance of [and resolves cases involving intra-corporate
controversies]."38

Section 5.2 of RA 8799 explicitly provides:

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 the 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 payment/rehabilitation cases filed as of 30 June 2000 until finally
disposed (emphasis supplied).

Subsequently, on January 23, 2001, the Supreme Court issued Supplemental Administrative Circular No. 8-01
which ordered that effective March 1, 2000, "all SEC cases originally assigned or transmitted to the regular RTC
shall be transferred to the branches of the regular RTC specially designated to hear such cases in accordance
with AM No. 00-11-03-SC."

During the Bicameral Conference Committee’s discussions on the conflicting provisions of Senate Bill No. 1220
and House Bill No. 8015 on the "Amendments to the Securities, Regulations and Enforcement Act," former
Senator Raul S. Roco rendered his report, 39 as follows:

The first major departure is as regards the Security Exchange Commission. The Securities and Exchange
Commission has been authorized under this proposal to reorganize itself. As an administrative agency,
we strengthened it and at the same time we take away the quasi-judicial functions. The quasi-judicial
functions are now given back to the courts of general jurisdiction––the Regional Trial Court, except for
two categories of cases (emphasis supplied).

In case of corporate disputes, only those that are now submitted for final determination of the SEC will
remain with the SEC. So, all those cases, both memos of the plaintiff and defendant, that have been
submitted for resolution will continue. At the same time, cases involving rehabilitation, bankruptcy,
suspension of payments and receiverships that were filed before June 30, 2000 will continue with the
SEC. In other words, we are avoiding the possibility, upon approval of this bill, of people filing cases with
the SEC, in a manner of speaking, to select their court.

x x x It is only right now with this bill that we clarify the independent functions, not only in terms of
monetary polity, by giving it to the Monetary Board, but in matters of commerce and securities and
capital formation, by giving them to the [SEC], with sufficient powers to monitor and regulate capital
formation in the Philippines.

That is the first major departure x x x in terms of the powers and responsibilities of the [SEC]. In
registration of securities, exempt transactions [and exempt securities], these are very technical and
there are modifications x x x The registration and monitoring of securities are basically the same as the
old law.

Pre-need plans x x x remain with the SEC. Originally we wanted the SEC to concentrate on commerce,
corporations and the securities regulation, but pre-need plan[s] under the Senate report was really with
the SEC and under the House report, it was recommended to remain with the SEC without prejudice to a
subsequent law if we should decide to do so to have the pre-need plans transferred to the Office of the
Insurance Commissioner. x x x
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Thus, it is unequivocal that the jurisdiction to try and decide cases originally assigned to the SEC under Section 5
of PD 902-A has been transferred to the RTC. For clarity, we quote those cases under Section 5, PD 902-A, which
now fall within the RTC’s jurisdiction, as follows:

(a) Devices or schemes employed by or any acts of the board of directors, business associates, its
officers or partners, amounting to fraud and misrepresentation which may be detrimental to the
interest of the public and/or stockholders, partners, members of associations 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 and the State insofar as it concerns their individual franchise or right as such entity;

(c) Controversies in the election or appointment of directors, trustees, officers or managers of such
corporations, partnerships, or associations;

(d) Petitioners of corporations, partnerships or associations to be declared in the state of suspension of

payment in cases where the corporation, partnership or association possesses sufficient property to
cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where
the corporation, partnership or association has no sufficient assets to cover its liabilities but is under the
management of a rehabilitation receiver or management committee created pursuant to this Decree.

The remaining powers and functions of the SEC are enumerated in Section 5 of RA 8799, to wit:

Powers and Functions of the Commission. – [5.1] The Commission shall act with transparency and shall
have the powers and functions provided by this Code, Presidential Decree No. 902-A, the Corporation
Code, the Investment Houses Law, the Financing Company Act and other existing law[s]. Pursuant
thereto the Commission shall have, among others, the following powers and functions:

(a) Have jurisdiction and supervision over all corporations, partnerships or associations who are the
grantees of primary franchises and/or a license or permit issued by the Government;

(b) Formulate policies and recommendations on issues concerning the securities market, advise
Congress and other government agencies on all aspects of the securities marker and propose legislation
and amendments thereto;

(c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration
and licensing applications;

(d) Regulate, investigate and supervise the activities of persons to ensure compliance;

(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other
SROs;

(f) Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant
thereto;

(g) Prepare, approve, amend or repeal rules, regulations, and orders, and issue opinions and provide
guidance on and supervise compliance with such rules, regulations and orders;

(h) Enlist the aid and support of and/or deputize any and all enforcement agencies of the Government,
civil or military as well as any private institution, corporation, firm, associations or person in the
implementation of its powers and functions under this Code;

(i) Issue cease and desist orders to prevent fraud or injury to the investing public;

(j) Punish for contempt of the Commission, both direct and indirect, in accordance with the pertinent
provisions of and penalties prescribed by the Rules of Court;

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 (k) Compel the officers of any registered corporation or association to call meetings of stockholders or
members thereof under its supervision;

(l) Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission
and in appropriate cases, order the examination, search and seizure of all documents, papers, files and
records, tax returns, and books of accounts of any entity or person under investigation as may be
necessary for the proper disposition of the cases before it, subject to the provision of existing laws;

(m) Suspend, or revoke, after notice and hearing the franchise or certificate of registration of
corporations, partnerships or associations, upon any of the grounds provided by law; and

(n) Exercise such other powers as my be provided by law as well as those which may be implied from, or
which are necessary or incidental to the carrying out of, the express powers granted the Commission to
achieve the objectives and purposes of these laws.

Juxtaposing the jurisdiction of the RTC under RA 8799 and the powers that were retained by the SEC, it is clear
that the SEC retained its administrative, regulatory, and oversight powers over all corporations, partnerships,
and associations who are grantees of primary franchises, and/or a license or permit issued by the Government.
However, the Securities Regulations Code (SRC) is clear that when there is a controversy arising out of intra-
corporate relations, between and among stockholders, members or associates, and between, any, or all of them
and the corporation, it is the RTC, not SEC, which has jurisdiction over the case.

Thus, when the complaint involves "an active antagonistic assertion of a legal right on one side and a denial
thereof on the other concerning a real, and not a mere theoretical question or issue,"40 a cause of action
involving a delict or wrongful act or omission committed by a party in violation of the primary right of
another,41 or an actual controversy involving rights which are legally demandable or enforceable,42 the
jurisdiction over this complaint is lodged with the RTC but not the SEC.

The passage of RA 8799 has put to rest petitioner Orendain’s claim that it is the SEC and not the RTC that has
jurisdiction over Civil Case No. LP-96-0022. At present, the instant petition has nothing to stand on and perforce
must fail.

WHEREFORE, the August 18, 2000 Decision and December 6, 2000 Resolution of the Court of Appeals in CA-G.R.
SP No. 48263 is hereby AFFIRMED IN TOTO.

SO ORDERED.

Quisumbing, Chairperson, Carpio, Carpio Morales, and Tinga, JJ., concur.

G.R. No. 151925 February 6, 2003

CHAS REALTY AND DEVELOPMENT CORPORATION, petitioner,

vs.
HON. TOMAS B. TALAVERA, in his capacity as Presiding Judge of the Regional Trial Court of Cabanatuan City,
Branch 28, and ANGEL D. CONCEPCION, SR., respondents.

DECISION

VITUG, J.:

Petitioner Chas Realty and Development Corporation (CRDC) is a domestic corporation engaged in property
development and management. It is the owner and developer of a three-hectare shopping complex, also known
as the Megacenter Mall (Megacenter), in Cabanatuan City.

The construction of Megacenter commenced in January 1996, but by the time of its so-called "soft opening" in
July 1998, it was only partly completed due to lack of funds, said to have been brought about by construction
overages due to the massive devaluation of the peso during the economic crisis in 1997, low occupancy, and
rental arrearages of tenants. The opening of the upper ground floor and the second floor of the building

197
followed, respectively, in August 1998 and towards the end of 1998. Eventually, Megacenter opened its third
floor in 1999.l^vvphi1.net

Purportedly on account of factors beyond the control of CRDC, such as high interest rates on its loans, unpaid
rentals of tenants, low occupancy rate, sluggishness of the economy and the freezing of its bank account by its
main creditor, the Land Bank of the Philippines, CRDC encountered difficulty in paying its obligations as and
when they fell due and had to contend with collection suits and related cases.

On 04 June 2001, CRDC filed a petition for rehabilitation attaching thereto a proposed rehabilitation plan,
accompanied by a secretary’s certificate, consonantly with paragraph 2(k), Section 2, Rule 4, of the Interim Rules
of Procedure on Corporate Rehabilitation. CRDC claimed that it had sufficient assets and a workable
rehabilitation plan both of which showed that the continuance of its business was still feasible. It alleged that,
prior to the filing of the petition for rehabilitation, a special meeting of its stockholders was held on 18 April
2001 during which the majority of the outstanding capital stock of CRDC approved the resolution authorizing the
filing of a petition for rehabilitation.

On 08 June 2001, the Regional Trial Court, Branch 28, of Cabanatuan City, to which the petition was assigned,
issued an order staying all claims against CRDC and prohibited it from making any payment on its outstanding
obligations and selling, or otherwise disposing or encumbering, its property. Forthwith, the court appointed a
rehabilitation receiver.

On 20 July 2001, Angel D. Concepcion, Sr., herein private respondent, filed a complaint in intervention opposing
the appointment of CRDC’s nominee for the post of rehabilitation receiver. He belied CRDC’s factual allegations
and claimed that the predicament of the corporation was due to serious "mismanagement, fraud,
embezzlement, misappropriation and gross/evident violation of the fiduciary duties of CHAS officers."
Concepcion moved to dismiss and/or to deny the petition for rehabilitation on the ground that there was no
approval by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock which,
according to him, would be essential under paragraph 2(k), Section 2, Rule 4, of the Interim Rules on Corporate
Rehabilitation. Concepcion further asserted that the supposed approval of the directors of the filing of the
petition for rehabilitation was inaccurate considering that the membership of petitioner CRDC’s board of
directors was still then being contested and pending final resolution.

On 10 August 2001, CRDC submitted its opposition ex abundante cautelam contending that the complaint in
intervention was a prohibited pleading and that there was no need for it to secure the irrevocable consent and
approval of its stockholders representing at least two-thirds (2/3) of its outstanding capital stock because the
petition did not include in its plan for rehabilitation acts that would need any amendment of its articles of
incorporation and/or by-laws, increase or decrease in the authorized capital stock, issuance of bonded
indebtedness, or the like, where such two-thirds (2/3) vote would be required.

The trial court issued an order, dated 15 October 2001, the decretal portion of which was to the following
effect; viz:

"WHEREFORE, premises considered, in the absence of any showing that the petitioner has complied with the
certification required under Section 2, Rule 4(K) of the Interim Rules of Procedure on Corporate Rehabilitation,
the petitioner is hereby given a period of 15 days from receipt of a copy of this order to secure from its directors
and stockholders the desired certification and submit the same to this Court in accordance with the above-
mentioned provision of the Interim Rules of Procedure on Corporate Rehabilitation.

"With respect to the other oppositions to the petition for rehabilitation including the opposition to the
appointment of the rehabilitation receiver, opposition filed by the land bank and the EEI, Inc., the resolution of
the same is hereby held in abeyance till after the period given to the petitioner to comply with this order as it
may become moot and academic after the expiration of the period given to the petitioner."1

On 29 October 2001, CRDC filed before the Court of Appeals a petition for certiorari, with prayer for temporary
restraining order and/or preliminary injunction, which sought to have the 15th October 2001 order of the trial
court set aside.

The Court of Appeals rendered a decision on 18 January 2002 and held:

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"WHEREFORE, the foregoing premises considered, the petition for certiorari, with prayer for temporary
restraining order and/or writ of preliminary injunction, is DENIED for lack of merit."2

Hence, the instant petition on the following grounds:

"I

"Public respondent acted with grave abuse of discretion amounting to lack and/or excess of jurisdiction in
issuing the assailed order considering that:

"A. The petition for rehabilitation and the proposed rehabilitation plan do not require extraordinary
corporate actions.

"B. Since no extraordinary corporate actions are required or even contemplated as necessary and
desirable for the rehabilitation of CRDC, the requirements of the corporation code for the approval of
such actions cannot be complied with.

"C. The rehab rules and the corporation code do not allow or intend blind blanket approvals of
extraordinary corporate actions.

"D. To require 2/3 stockholders’ approval for corporate actions requiring only a majority violates the
right of the majority stockholders.

"II

"Public respondent acted with grave abuse of discretion amounting to lack and/or excess of jurisdiction in
requiring CRDC’s compliance with paragraph 2(k), Section 2, Rule 4 of the Rehab rules when CRDC already
complied therewith."3

Rule 4, Section 2(k), of the Interim Rules on Corporate Rehabilitation provides:

"Sec. 2. Contents of the Petition. – The petition filed by the debtor must be verified and must set forth with
sufficient particularity all the following material facts: (a) the name and business of the debtor; (b) the nature of
the business of the debtor; (c) the history of the debtor; (d) the cause of its inability to pay its debts; (e) all the
pending actions or proceedings known to the debtor and the courts or tribunals where they are pending; (f)
threats or demands to enforce claims or liens against the debtor; and (g) the manner by which the debtor may
be rehabilitated and how such rehabilitation may benefit the general body of creditors, employees, and
stockholders.

"The petitioner shall be accompanied by the following documents:

"x x x x x x x x x.

"k. A Certificate attesting, under oath, that (a) the filing of the petition has been duly authorized; and (b) the
directors and stockholders have irrevocably approved and/or consented to, in accordance with existing laws, all
actions or matters necessary and desirable to rehabilitate the debtor including, but not limited to, amendments
to the articles of incorporation and by-laws or articles of partnership; increase or decrease in the authorized
capital stock; issuance of bonded indebtedness; alienation, transfer, or encumbrance of assets of the debtor;
and modification of shareholders’ rights."4

Rule 4, Section 2(k), distinctly provides that, first, under letter (a), the filing of the petition has been duly
authorized; and, second, under letter (b), the directors and stockholders have irrevocably approved and/or
consented to, in accordance with existing laws, all actions or matters necessary and desirable to rehabilitate the
debtor including, but not limited to, amendments to the articles of incorporation and by-laws or articles of
partnership; increase or decrease in the authorized capital stock; issuance of bonded indebtedness, alienation,
transfer, or encumbrance of assets of the debtor; and modification of shareholder’s rights.

199
Observe that Rule 4, Section 2(k), prescribes the need for a certification; one, to state that the filing of the
petition has been duly authorized, and two, to confirm that the directors and stockholders have irrevocably
approved and/or consented to, in accordance with existing laws, all actions or matters necessary and desirable
to rehabilitate the corporate debtor, including, as and when called for, such extraordinary corporate actions as
may be marked out.1awphi1.nétThe phrase, "in accordance with existing laws," obviously would refer to that
which is, or to those that are, intended to be done by the corporation in the pursuit of its plan for rehabilitation.
Thus, if any extraordinary corporate action (mentioned in Rule 4, Section 2(k), of the Interim Rules on Corporate
Rehabilitation) are to be done under the proposed rehabilitation plan, the petitioner would be bound to make it
known that it has received the approval of a majority of the directors and the affirmative votes of stockholders
representing at least two-thirds (2/3) of the outstanding capital stock of the corporation. Where no such
extraordinary corporate acts (or one that under the law would call for a two-thirds (2/3) vote) are contemplated
to be done in carrying out the proposed rehabilitation plan, then the approval of stockholders would only be by
a majority, not necessarily a two-thirds (2/3), vote, as long as, of course, there is a quorum5 a fact which is not
here being disputed.

The trial court and appellate court, unfortunately, have taken an inaccurate understanding of the memorandum
to the Supreme Court of Justice Reynato S. Puno, the committee chair on the draft of the rules on corporate
rehabilitation, still then being proposed; the memorandum reads, in part, thusly:

"3. Rule 4. – Rehabilitation

"The following are the principal deviation from the SEC Rules:

"a) The proposed Rules now require, as an attachment to the petition, a Certificate attesting, among others, that
the governing body and owners of the petitioning debtor have approved and consented to whatever is
necessary or desirable (including but not limited to increasing or decreasing the authorized capital stock of the
company and modification of stockholders’ right) to rehabilitate the debtor (Sec. 2, par. (k), Rule 4). This is to
avoid a situation where a rehabilitation plan, after being developed for years, cannot be implemented because
of the refusal of shareholders to approve the arrangements necessary for its implementation."6

Nowhere in the aforequoted paragraph can it be inferred that an affirmative vote of stockholders representing
at least two-thirds (2/3) of the outstanding stock is invariably necessary for the filing of a petition for
rehabilitation regardless of the corporate action that the plan envisions. Just to the contrary, it only requires in
the filing of the petition that the corporate actions therein proposed have been duly approved or consented to
by the directors and stockholders "in consonance with existing laws." The requirement is designed to avoid a
situation where a rehabilitation plan, after being developed and judicially sanctioned, cannot ultimately be seen
through because of the refusal of directors or stockholders to cooperate in the full implementation of the plan.
In fine, a certification on the approval of stockholders is required but the question, whether such approval
should be by a majority or by a two-thirds (2/3) vote of the outstanding capital stock, would depend on the
existing law vis-à-vis the corporate act or acts proposed to be done in the rehabilitation of the distressed
corporation.

The rehabilitation plan7 submitted by petitioner merely consists of a repayment or re-structuring scheme of
CRDC’s bank loans to Land Bank of the Philippines and Equitable-PCI Bank and of leasing out most of the
available spaces in the Megacenter, including the completion of the construction of the fourth floor, to increase
rental revenues. None of the proposed corporate actions would require a vote of approval by the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock.

Relative to the contention that a motion for reconsideration is required prior to bringing up the petition
for certiorari (with the Court of Appeals), it should suffice to say that the filing of a motion for reconsideration
before availing of the remedy of certiorari is not always sine qua non such as when the issue raised is one purely
of law, or where the error is patent or the questions raised on certiorari are exactly the same as those already
squarely presented to and passed upon by the court a quo.8

WHEREFORE, the instant petition is GRANTED and the questioned decision of the Court of Appeals, dated 18
January 2002, and the order of the Regional Trial Court, Branch 28, Cabanatuan City, dated 15 October 2001, in
Civil Case No. 4036-AF, are REVERSED and SET ASIDE. The Regional Trial Court is directed to give due course to
the Petition for Rehabilitation and conduct with dispatch the necessary proceedings still required thereon. No
costs.
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SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

Rule 60-Replevin

G.R. No. 102998 July 5, 1996

BA FINANCE CORPORATION, petitioner,

vs.
HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.

VITUG, J.:p

The case at bar is a suit for replevin and damages. The petition for review on certiorari assails the decision of the
Court of Appeals1 in CA-G.R. CV No. 23605 affirming that of the Regional Trial Court of Manila, Branch
XX,2 which has disposed of its Civil Case No. 87-42270 in this wise:

WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is hereby dismissed
without prejudice, for failure to prosecute. Plaintiff having failed to show the liability of
defendant John Doe in the person of Roberto M. Reyes, the case against the latter should
likewise be dismissed. Moreover, plaintiff is hereby directed to return the vehicle seized by
virtue of the order of seizure issued by this Court with all its accessories to the said Roberto M.
Reyes.3

The decisions of both the appellate court and the court a quo are based on a like finding of the facts hereinafter
briefly narrated.

The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory note 4 binding
themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly installments commencing 01
July 1980. To secure payment, the Manahan spouses executed a deed of chattel mortgage5 over a motor vehicle,
a Ford Cortina 1.6 GL, with motor and serial number CUBFWE-801010. Carmasters later assigned6 the
promissory note and the chattel mortgage to petitioner BA Finance Corporation with the conformity of the
Manahans. When the latter failed to pay the due installments, petitioner sent demand letters. The demands not
having been heeded, petitioner, on 02 October 1987, filed a complaint for replevin with damages against the
spouses, as well as against a John Doe, praying for the recovery of the vehicle with an alternative prayer for the
payment of a sum of money should the vehicle not be returned. Upon petitioner's motion and the filing of a
bond in the amount of P169,161.00 the lower court issued a writ of replevin. The court, however, cautioned
petitioner that should summons be not served on the defendants within thirty (30) days from the writ's issuance,
the case would be dismissed to failure to prosecute.7 The warning was based on what the court perceived to be
the deplorable practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which they would
so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged chattels."8

The service of summons upon the spouses Manahan was caused to be served by petitioner at No. 35 Lantana St.,
Cubao, Quezon City. The original of the summons had the name and the signature of private respondent
Roberto M. Reyes indicating that he received, on 14 October 1987, a copy of the summons and the
complaint.9 Forthwith, petitioner, through its Legal Assistant, Danilo E. Solano, issued a certification to the effect
that it had received from Orson R. Santiago, the deputy sheriff of the Regional Trial Court of Manila, Branch 20,
the Ford Cortina seized from private respondent Roberto M. Reyes, the John Doe referred to in the
complaint, 10 in Sorsogon, Sorsogon. 11 On 20 October 1987, the lower court came out with an order of seizure.

Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an extension of
time within which to file his answer and/or a motion for intervention. The court granted the motion.

A few months later, or on 18 February 1988, the court issued an order which, in part, stated:

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 Perusal of the record shows that an order for the seizure of personal property was issued on
October 20, 1987 in pursuance to a previous order of the Court dated October 13, 1987.
However, to date, there is no showing that the principal defendants were served with summons
inspite of the lapse of four (4) months.

Considering, this is a replevin case and to forestall the evils that arise from this practice, plaintiff
failing to heed the Order dated October 13, 1987, particularly second paragraph thereof, the
above-entitled case is hereby ordered DISMISSED for failure to prosecute and further ordering
the plaintiff to return the property seized with all its accessories to defendant John Doe in the
person of Roberto M. Reyes.

SO ORDERED. 12

On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and without
pronouncement as to costs, before service of Summons and Answer, under Section 1, Rule 17, of the Rules of
Court." 13 It also sought in another motion the withdrawal of the replevin bond. In view of the earlier dismissal of
the case (for petitioner's failure to prosecute), the court, on 02 March 1988, merely noted the notice of
dismissal and denied the motion to withdraw the replevin bond considering that the writ of replevin had
meanwhile been implemented. 14

On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply with the
court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14 March 1988, a
motion for the reconsideration of the orders of 18 February 1988 and 02 March 1988 contending that: (a) the
dismissal of the case was tantamount to adjudication on the merits that thereby deprived it with the remedy to
enforce the promissory note, the chattel mortgage and the deed of assignment, under Section 3, Rule 117, of
the Rules of Court; (b) the order to return the vehicle to private respondent was a departure from jurisprudence
recognizing the right of the mortgagor to foreclose the property to respond to the unpaid obligation secured by
the chattel mortgage, and (c) there were no legal and factual bases for the court's view that the filing of the
replevin case was "characterized (by) evil practices." 15

On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly recalled the order
directing the return of the vehicle to private respondent, set aside the order dismissing the case, directed
petitioner "to cause the service of summons together with a copy of the complaint on the principal defendants
within five (5) days from receipt" 16 thereof at petitioner's expense, and ordered private respondent to answer
the complaint.

A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent in default. The
court granted the motion on that same day and declared private respondent "in default for his failure to file
the . . . answer within the reglementary period." 17 The court likewise granted petitioner's motion to set the
case for the presentation, ex parte, of evidence. Petitioner, thereupon, submitted the promissory note, the deed
of chattel mortgage, the deed of assignment, a statement of account in the name of Florencia Manahan and two
demand letters.

On 27 February 1989, the trial court rendered a decision dismissing the complaint against the Manahans for
failure of petitioner to prosecute the case against them. It also dismissed the case against private respondent for
failure of petitioner to show any legal basis for said respondent's liability. The court ratiocinated:

. . . . Roberto M. Reyes is merely ancillary debtor in this case. The defendant spouses Manahan
being the principal debtor(s) and as there is no showing that the latter has been brought before
the jurisdiction of this court, it must necessarily follow that the plaintiff has no cause of action
against said Roberto M. Reyes herein before referred to as defendant John Doe. Under the
circumstances, it is incumbent upon the plaintiff to return the seized vehicle unto the said
Roberto M. Reyes. 18

In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin aimed at the foreclosure of
the chattel is an action quasi in rem which does not necessitate the presence of the principal obligors as long as
the court does not render any personal judgment against them. This argument did not persuade the appellate
court, the latter holding that —

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 . . . . In action quasi in rem an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property,
such as proceedings having for their sole object the sale or disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy (Sandejas vs. Robles,
81 Phil. 421). In the case at bar, the court cannot render any judgment binding on the
defendants spouses for having allegedly violated the terms and conditions of the promissory
note and the contract of chattel mortgage on the ground that the court has no jurisdiction over
their persons no summons having been served on them. That judgment, it rendered, is void for
having denied the defendants spouses due process of law which contemplates notice and
opportunity to be heard before judgment is rendered, affecting one's person or property
(Macabingkil vs. Yatco, 26 SCRA 150, 157).

It is next contended by appellant that as between appellant, as mortgagee, and John Doe,
whose right to possession is dubious if not totally non-existent, it is the former which has the
superior right of possession.

We cannot agree.

It is an undisputed fact that the subject motor vehicle was taken from the possession of said
Roberto M. Reyes, a third person with respect to the contract of chattel mortgage between the
appellant and the defendants spouses Manahan.

The Civil Code expressly provides that every possessor has a right to be respected in his
possession (Art. 539, New Civil Code); that good faith is always presumed, and upon him who
alleges bad faith on the part of a possessor rests the burden of proof (Art. 527, ibid.); and that
the possession of movable property acquired in good faith is equivalent to a title; nevertheless,
one who has lost any movable or has been unlawfully deprived thereof, may recover it from the
person in possession of the same (Art. 559, ibid.). Thus, it has been held that a possessor in good
faith is entitled to be respected and protected in his possession as if he were the true owner
thereof until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et al.
vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did not err in
holding that the complaint does not state any cause of action against Roberto M. Reyes, and in
ordering the return of the subject chattel to him. 19

The appellate court, subsequently, denied petitioner's motion for reconsideration.

In the instant appeal, petitioner insists that a mortgagee can maintain an action for replevin against any
possessor of the object of a chattel mortgage even if the latter were not a party to the mortgage.

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either
to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff
by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency
of the action and hold it pendente lite. 20 The action is primarily possessory in nature and generally determines
nothing more than the right of possession. Replevin is so usually described as a mixed action, being partly in
rem and partly in personam — in rem insofar as the recovery of specific property is concerned, and in
personam as regards to damages involved. As an "action in rem," the gist of the replevin action is the right of the
plaintiff to obtain possession of specific personal property by reason of his being the owner or of his having a
special interest therein. 21 Consequently, the person in possession of the property sought to be replevied
is ordinary the proper and only necessary party defendant, and the plaintiff is not required to so join as
defendants other persons claiming a right on the property but not in possession thereof. Rule 60 of the Rules of
Court allows an application for the immediate possession of the property but the plaintiff must show that he has
a good legal basis, i.e., a clear title thereto, for seeking such interim possession.

Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the action
need only be maintained against him who so possesses the property. In rem actio est per quam rem nostram
quae ab alio possidetur petimus, et semper adversus eum est qui rem possidet. In Northern
Motors, Inc. vs. Herrera, 22 the Court has said:

203
 There can be no question that persons having a special right of property in the goods the
recovery of which is sought; such as a chattel mortgagee, may maintain an action for replevin
therefor. Where the mortgage authorizes the mortgagee to take possession of the property on
default, he may maintain an action to recover possession of the mortgaged chattels from the
mortgagor or from any person in whose hands he may find them. 23

In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact of the
mortgagor enabling such mortgagee to act for and in behalf of the owner. Accordingly, that the
defendant is not privy to the chattel mortgage should be inconsequential. By the fact that the object of
replevin is traced to his possession, one properly can be a defendant in an action for replevin. It is here
assumed that the plaintiffs right to possess the thing is not or cannot be disputed.

In case the right of possession on the part of the plaintiff, or his authority to claim such possession or that of his
principal, is put to great doubt (a contending party might contest the legal bases for plaintiffs cause of action or
an adverse and independent claim of ownership or right of possession is raised by that party), it could become
essential to have other persons involved and accordingly impleaded for a complete determination and
resolution of the controversy. For instance, in Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No.
103301, 08 December 1995, this Court ruled.

While, in its present petition for review on certiorari, Servicewide has raised a number of points,
the crucial issue still remains, however, to be whether or not an action filed by the mortgagee
for replevin to effect a foreclosure of the property covered by the chattel mortgage would
require that the mortgagor be so impleaded as an indispensable party thereto.

Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of
personal property, to apply for a writ of replevin if it can be shown that he is the owner of the
property claimed . . . or is entitled to the possession thereof.' The plaintiff need not be the
owner so long as he is able to specify his right to the possession of the property and his legal
basis therefor. The question then, insofar as the matter finds relation to the instant case, is
whether or not the plaintiff (herein petitioner) who has predicated his right on being the
mortgagee of a chattel mortgage should implead the mortgagor in his complaint that seeks to
recover possession of the encumbered property in order to effect its foreclosure.

The answer has to be in the affirmative. In a suit for replevin, a clear right of possession must be
established. A foreclosure under a chattel mortgage may properly be commenced only once
there is default on the part of the mortgagor of his obligation secured by the mortgage. The
replevin in the instant case has been sought to pave the way for the foreclosure of the object
covered by the chattel mortgage. The conditions essential for that foreclosure would be to show,
firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These
requirements must be established since the validity of the plaintiffs exercise of the right of
foreclosure are inevitably dependent thereon. It would thus seem, considering particularly an
adverse and independent claim of ownership by private respondent that the lower court acted
improvidently when it granted the dismissal of the complaint against Dollente, albeit on
petitioner's (then plaintiff) plea, on the ground that the "non-service of summons upon Ernesto
Dollente (would) only delay the determination of the merits of the case, to the prejudice of the
parties." In Imson v. Court of Appeals, we have explained:

. . . . An indispensable party is one whose interest will be affected by the court's

action in the litigation, and without whom no final determination of the case
can be had. The party's interest in the subject matter of the suit and in the relief
sought are so inextricably intertwined with the other parties' that his legal
presence as a party to the proceeding is an absolute necessity. In his absence
there cannot be a resolution of the dispute of the parties before the court which
is effective, complete, or equitable.

Conversely, a party is not indispensable to the suit if his interest in the

controversy or subject matter is distinct and divisible from the interest of the
other parties and will not necessarily be prejudiced by a judgment which does
complete justice to the parties in court. He is not indispensable if his presence
204
 would merely permit complete relief between him and those already parties to
the action or will simply avoid multiple litigation.

Without the presence of indispensable parties to a suit or proceeding, a judgment of a court

cannot attain real finality. (Footnotes omitted.)

A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to the possession of the property unless and
until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's
right of possession is conditioned upon the actual fact of default which itself may be controverted, the inclusion
of other parties like the debtor or the mortgagor himself, may be required in order to allow a full and conclusive
determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of
the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that,
among other things, can properly uphold the right to replevy the property. The burden to establish a valid
justification for that action lies with the plaintiff. An adverse possessor, who is not the mortgagor, cannot just be
deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because
the mortgagee brings up an action for replevin.

The appellate court, accordingly, acted well in arriving at its now questioned judgment.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED No costs.

SO ORDERED.

G.R. No. 110048 November 19, 1999

SERVICEWIDE SPECIALISTS, INC., petitioner,

vs.
COURT OF APPEALS, HILDA TEE, & ALBERTO M. VILLAFRANCA, respondents.

PURISIMA, J.:

This is a petition for review on certiorari under Rule 45 of Decision of the Court of Appeals 1 in CA-G.R. CV No.
19571, affirming the judgment of the Regional Trial Court of Manila, Branch XX, dismissing Civil Case No. 84-
25763 for replevin and damages.

The litigation involves a motor vehicle, a Colt Galant, 4-door Sedan automobile, with Motor No. 2E-08927, Serial
No. A112A-5297, Model No. 1976.

The appellate court culled the facts that matter as follows: 2

On May 14, 1976, Leticia L. Laus of Quezon City purchased on credit a Colt Galant . . . from
Fortune Motors (Phils.) Corporation. On the same date, she executed a promissory note for the
amount of P56,028.00, inclusive of interest at 12% per annum, payable within a period of 48
months starting August, 1976 at a monthly installment of P1,167.25 due and demandable on the
17th day of each month (Exhibit "A", pp. 144, Orig. Records,). It was agreed upon, among others,
that in case of default in the payment of any installment the total principal sum, together with
the interest, shall become immediately due and payable (Exhibit "A"; p. 144, Orig. Records). As a
security for the promissory note, a chattel mortgage was constituted over the said motor vehicle
(Exhibit "B", ibid.), with a deed of assignment incorporated therein such that the credit and
mortgage rights were assigned by Fortune Motors Corp. in favor of Filinvest Credit Corporation
with the consent of the mortgagor-debtor Leticia Laus (Exhibits "B-1" and "B-2", p. 147, ibid.).
The vehicle was then registered in the name of Leticia L. Laus with the chattel mortgage
annotated on said certificate. (Exhibit "H"; p. 154, ibid.)

On September 25, 1978, Filinvest Credit Corporation in turn assigned the credit in favor of
Servicewide Specialists, Inc. (Servicewide, for brevity) transferring unto the latter all its rights

205
 under the promissory note and the chattel mortgage (Exhibit "B-3", p. 149, ibid.) with the
corresponding notice of assignment sent to the registered car owner (Exhibit "C"; p. 150, ibid.).

On April 18, 1977, Leticia Laus failed to pay the monthly installments for that month. The
installments for the succeeding 17 months were not likewise fully paid, hence on September 25,
1978, pursuant to the provisions of the promissory note, Servicewide demanded payment of the
entire outstanding balance of P46,775.24 inclusive of interests (Exhibits "D" and "E"; pp. 151-
152, ibid.). Despite said formal demand, Leticia Laus failed to pay all the monthly installments
due until July 18, 1980.

On July 25, 1984, Servicewide sent a statement of account to Leticia Laus and demanded
payment of the amount of P86,613.32 representing the outstanding balance plus interests up to
July 25, 1985, attorney's fees, liquidated damages, estimated repossession expense, and
bonding fee (Exhibit "F"; p. 153, ibid.)

As a result of the failure of Leticia Laus to settle her obligation, or at least to surrender
possession of the motor vehicle for the purpose of foreclosure, Servicewide instituted a
complaint for replevin, impleading Hilda Tee and John Dee in whose custody the vehicle was
believed to be at the time of the filing of the suit.

In its complaint, plaintiff alleged that it had superior lien over the mortgaged vehicle; that it is
lawfully entitled to the possession of the same together with all its accessories and equipments;
(sic) that Hilda Tee was wrongfully detaining the motor vehicle for the purpose of defeating its
mortgage lien; and that a sufficient bond had been filed in court. (Complaint with Annexes, pp.
1-13, ibid.). On July 30, 1984, the court approved the replevin bond (p. 20, ibid.)

On August 1, 1984, Alberto Villafranca filed a third party claim contending that he is the
absolute owner of the subject motor vehicle duly evidenced by the Bureau of Land
Transportation's Certificate of Registration issued in his name on June 22, 1984; that he
acquired the said mother vehicle from a certain Remedios D. Yang under a Deed of Sale dated
May 16, 1984; that he acquired the same free from all lien and emcumbrances; and that on July
30, 1984, the said automobile was taken from his residence by Deputy Sheriff Bernardo Bernabe
pursuant to the seizure order issued by the court a quo.

Upon motion of the plaintiff below, Alberto Villafranca was substituted as defendant. Summons
was served upon him. (pp. 55-56, ibid).

On March 20, 1985, Alberto Villafranca moved for the dismissal of the complaint on the ground
that there is another action pending between the same parties before the Regional Trial Court
of Makati, Branch 140, docketed as Civil Case No. 8310, involving the seizure of subject motor
vehicle and the indemnity bond posted by Servicewide (Motion to Dismiss with Annexes; pp. 57-
110, ibid.) On March 28, 1985, the court granted the aforesaid motion (p. 122, ibid.), but
subsequently the order of dismissal was reconsidered and set aside (pp. 135-136, ibid.). For
failure to file his Answer as required by the court a quo, Alberto Villafranca was declared in
default and plaintiff's evidence was received ex parte.

On December 27, 1985, the lower court rendered a decision dismissing the complaint for
insufficiency of evidence. Its motion for reconsideration of said decision having been denied, . . . .

In its appeal to the Court of Appeals, petitioner theorized that a suit for replevin aimed at the foreclosure of a
chattel is an action quasi in rem, and does not require the inclusion of the principal obligor in the Complaint.
However, the appellate court affirmed the decision of the lower Court; ratiocinating, thus:

A cursory reading, however, of the Promissory Note dated May 14, 1976 in favor of Fortune
Motors (Phils.) Corp. in the sum of P56,028.00 (Annex "A" of Complaint, p. 7, Original Records)
and the Chattel Mortgage of the same date (Annex "B" of Complaint; pp. 8-9, ibid.) will disclose
that the maker and mortgagor respectively are one and the same person: Leticia Laus. In fact,
plaintiff-appellant admits in paragraphs (sic) nos. 2 and 3 of its Complaint that the aforesaid
public documents (Annexes "A" and "B" thereof) were executed by Leticia Laus, who, for
206
 reasons not explained, was never impleaded. In the case under consideration, plaintiff-
appellant's main case is for judicial foreclosure of the chattel mortgage against Hilda Tee and
John Doe who was later substituted by appellee Alberto Villafranca. But as there is no privity of
contract, not even a causal link, between plaintiff-appellant Servicewide Specialists, Inc. and
defendant-appellee Alberto Villafranca, the court a quo committed no reversible error when it
dismissed the case for insufficiency of evidence against Hilda Tee and Alberto Villafranca since
the evidence adduced pointed to Leticia Laus as the party liable for the obligation sued upon (p.
2, RTC Decision). 3

Petitioner presented a Motion for Reconsideration but in its Resolution 4 of May 10, 1993, the Court of Appeals
denied the same, taking notice of another case "pending between the same parties . . . relating to the very
chattel mortgage of the motor vehicle in litigation."

Hence, the present petition for review on certiorari under Rule 45. Essentially, the sole issue here is: Whether or
not a case for replevin may be pursued against the defendant, Alberto Villafranca, without impleading the
absconding debtor-mortgagor?

Rule 60 of the Revised Rules of Court requires that an applicant for replevin must show that he "is the owner of
the property claimed, particularly describing it, or is entitled to the possession thereof." 5 Where the right of the
plaintiff to the possession of the specified property is so conceded or evident, the action need only be
maintained against him who so possesses the property. In rem action est per quam rem nostram quae ab alio
possidetur petimus, et semper adversus eum est qui rem possidet. 6

Citing Northern Motors, Inc. vs. Herrera, 7 the Court said in the case of BA Finance (which is of similar import
with the present case):

There can be no question that persons having a special right of property in the goods the
recovery of which is sought, such as a chattel mortgagee, may maintain an action for replevin
therefor. Where the mortgage authorizes the mortgagee to take possession of the property on
default, he may maintain an action to recover possession of the mortgaged chattels from the
mortgagor or from any person in whose hands he may find them. 8

Thus, in default of the mortgagor, the mortgagee is thereby constituted as attorney-in-fact of the mortgagor,
enabling such mortgagee to act for and in behalf of the owner. That the defendant is not privy to the chattel
mortgage should be inconsequential. By the fact that the object of replevin is traced to his possession, one
properly can be a defendant in an action for replevin. It is here assumed that the plaintiff's right to possess the
thing is not or cannot be disputed. 9 (Emphasis supplied)

However, in case the right of possession on the part of the plaintiff, or his authority to claim such possession or
that of his principal, is put to great doubt (a contending party may contest the legal bases for plaintiffs cause of
action or an adverse and independent claim of ownership or right of possession may be raised by that party), it
could become essential to have other persons involved and impleaded for a complete determination and
resolution of the controversy. 10 In the case under scrutiny, it is not disputed that there is an adverse and
independent claim of ownership by the respondent as evinced by the existence of a pending case before the
Court of Appeals involving subject motor vehicle between the same parties herein. 11 Its resolution is a factual
matter, the province of which properly lies in the lower Court and not in the Supreme Court, in the guise of a
petition for review on certiorari. For it is basic that under Rule 45, this Court only entertains questions of law,
and rare are the exceptions and the present case does not appear to be one of them.

In a suit for replevin, a clear right of possession must be established. (Emphasis supplied) A foreclosure under a
chattel mortgage may properly be commenced only once there is default on the part of the mortgagor of his
obligation secured by the mortgage. The replevin in this case has been resorted to in order to pave the way for
the foreclosure of what is covered by the chattel mortgage. The conditions essential for such foreclosure would
be to show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These
requirements must be shown because the validity of the plaintiffs exercise of the right of foreclosure is
inevitably dependent thereon. 12

Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself may be
controverted, the inclusion of other parties, like the debtor or the mortgagor himself, may be required in order
207
to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in order to effect
the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the
chattel mortgage that, among other things, can properly uphold the right to replevy the property. The burden to
establish a valid justification for such action lies with the plaintiff. An adverse possessor, who is not the
mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage
contract, simply because the mortgagee brings up an action for replevin. 13

Leticia Laus, being an indispensable party, should have been impleaded in the complaint for replevin and
damages. An indispensable party is one whose interest will be affected by the court's action in the litigation, and
without whom no final determination of the case can be had. The party's interest in the subject matter of the
suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a
party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of the dispute of
the parties before the Court which is effective, complete, or equitable.

Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct
and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which
does complete justice to the parties in Court. He is not indispensable if his presence would merely complete
relief between him and those already parties to the action or will simply avoid multiple litigation. 14 Without the
presence of indispensable parties to a suit or proceeding, a judgment of a Court cannot attain real finality. 15

That petitioner could not locate the mortgagor, Leticia Laus, is no excuse for resorting to a procedural short-cut.
It could have properly availed of substituted service of summons under the Revised Rules of Court. 16 If it
deemed such a mode to be unavailing, it could have proceeded in accordance with Section 14 of the same
Rule. 17 Indeed, petitioner had other proper remedies, it could have resorted to but failed to avail of. For
instance, it could have properly impleaded the mortgagor. Such failure is fatal to petitioner's cause.

With the foregoing disquisition and conclusion, the other issues raised by petitioner need not be passed upon.

WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals in CA-G.R. CV No. 19571 AFFIRMED.
No pronouncement as to costs.

SO ORDERED.

G.R. No. 61508 March 17, 1999

Citibank, N.A. (Formerly First National City Bank), petitioner,

vs.
The Honorable Court of Appeals and Douglas F. Anama, respondents.

(supra)

G.R. No. 93540 December 13, 1999

FULGENCIO S. FACTORAN, JR., Secretary, Department of Environment and Natural Resources, VICENTE A.
ROBLES and NESTOR GAPUZAN, petitioners,
vs.
COURT OF APPEALS (Third Division), Hon. BENIGNO T. DAYAW, as, Judge, Regional Trial Court of Quezon City,
Branch 80, JESUS SY and LILY FRANCISCO UY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision and Resolution of the Court of Appeals dated
March 30, 1990 and May 18, 1990, respectively, dismissing petitioners' charge that Honorable Benigno T. Dayaw,
Presiding Judge of Branch 80 of the Regional Trial Court (RTC) of Quezon City, committed grave abuse of
discretion in ordering them to deliver to private respondents the six-wheeler truck and its cargo, some 4,000
board feet of narra lumber which were confiscated by the Department of Environment and Natural Resources
(DENR) and forfeited in favor of the government. 1
208
The antecedent facts:

On August 9, 1988, two (2) police officers of the Marikina Police Station, Sub-Station III, intercepted a six-
wheeler truck, with Plate No. NJT-881, carrying 4,000 board feet of narra lumber as it was cruising along the
Marcos Highway. They apprehended the truck driver, private respondent Jesus Sy, and brought the truck and its
cargo to the Personnel Investigation Committee/Special Actions and Investigation Division (PIC/SAID) of the
DENR Office in Quezon City. There, petitioner Atty. Vecente Robies of the PIC/SAID investigated them, and
discovered the following discrepancies in the documentaion of the narra lumber: 2

a. What were declared in the documents (Certificate of Timber Origin, Auxiliary Invoices and
various Certifications) were narra flitches, while the cargo of the truck consisted of narra
lumber;

b. As appearing in the documents, the Plate Numbers of the truck supposed to carry the forest
products bear the numbers BAX-404, PEC-492 OR NSN-267, while the Plate Number of the truck
apprehended is NVT-881;

c. Considering that the cargo is lumber, the transport should have been accompanied by a
Certificate of Lumber Origin, scale sheet of said lumber and not by a Certificate of Timber Origin,
which merely covers only transport of logs and flitches;

d. The log Sale Purchase Agreement presented is between DSM Golden Cup International as the
seller and Bonamy Enterprises as the buyer/consignee and not with Lily Francisco Lumber and
Hardware. 3

which are in violation of Bureau of Forestry Development (BFD) Circular No. 10. The said BFD Circular requires
possession or transportation of lumber to be supported by the following documents: (1) Certificate of Lumber
Origin (CLO) which shall be issued only be the District Forester, or in his absence, the Assistant District Forester;
(2) Sales Invoice; (3) Delivery Receipt; and (4) Tally Sheets. 4 Such omission is punishable under Sec. 68 of
Presidential Decree (P.D.) No. 705 otherwise known as the Revised Forestry Code. 5 Thus, petitioner Atty. Robles
issued a temporary seizure order and seizure receipt for the narra lumber and the six-wheeler truck. 6

On January 20, 1989, petitioner Fulgencio S. Factoran, then Secretary of Environment and Natural Resources
(hereinafter referred to as petitioner Secretary) issued an order for the confiscation of the narra lumber and the
six- wheeler truck. 7

Private respondents neither asked for reconsideration of nor appealed, the said order to the Office of the
President. Consequently, the confiscated narra lumber and six-wheeler truck were forfeited in favor of the
government. They were subsequently advertised to be sold at public auction on March 20, 1989. 8

On March 17, 1989, private respondents filed a complaint with prayer for the issuance of writs of replevin and
preliminary injunction and/or temporary restraining order for the recovery of the confiscated lumber and six-
wheeler truck, and to enjoin the planned auction sale of the subject narra lumber, respectively. 9 Said complaint
was docketed as Civil Case No. Q-89-2045 and raffled to Branch 80 of the RTC of Quezon City.

On the same day, the trial court issued an Order directing petitioners to desist from proceeding with the
planned auction sale and setting the hearing for the issuance of the writ of preliminary injunction on March 27,
1989. 10

On March 20, 1989, the scheduled date of the auction sale, private respondents filed an Ex-Parte Motion for
Release and Return of Goods and Documents (Replevin) supported by an Affidavit for Issuance of Writ of
Replevin and Preliminary Injunction and a Replevin Bond in the amount of P180,000.00. 11 The trial court
granted the writ of replevin on the same day and directed the petitioners "to deliver the . . . [n]arra lumber,
original documents and truck with plate no. NJT 881 to the custody of the plaintiffs and/or their
representative . . . .12

On March 22, 1989, the trial court issued a writ of seizure. However, petitioners refused to comply
therewith. 13David G. Brodett, Sheriff of Branch 80 of the RTC of Quezon City (hereinafter referred to as the
Sheriff) reported that petitioners prevented him from removing the subject properties from the DENR
209
Compound and transferring them to the Mobil Unit Compound of the Quezon City Police Force. To avoid any
unwarranted confrontation between them, he just agreed to a constructive possession of the properties in
question. 14

In the afternoon of the same day, petitioners filed a Manifestation stating their intention to file a counterbond
under Rule 60 of the Rules of Court to stay the execution of the writ of seizure and to post a cash bond in the
amount of P180,000.00. But the trial court did not oblige petitioners for they failed to serve a copy of the
Manifestation on private respondents. Petitioners then immediately made the required service and tendered
the cash counterbond in the amount of P180,000.00, but it was refused, petitioners' Manifestation having
already been set for hearing on March 30, 1989. 15

On March 27, 1989, petitioners made another attempt to post a counterbond which was, however, denied for
the same reason. 16

On the same day, private respondents filed a motion to declare petitioners in contempt for disobeying the writ
of seizure. 17 The trial court gave petitioners twenty-four (24) hours to answer the motion. Hearing thereon was
scheduled on March 30, 1989.

However, on March 29, 1989, petitioners filed with the Court of Appeals a Petition for Certiorari, Prohibition
and/or Mandamus to annul the Orders of the trial court dated March 20, 1989 and March 27, 1989. 18

On March 30, 1989, the Court of Appeals granted petitioners temporary relief in the form of a temporary
restraining order (TRO).

On September 11, 1989, the Court of Appeals converted the TRO into a writ of preliminary injunction upon filing
by petitioners of a bond in the amount of P180,000.00. 19

However, on March 30, 1990, the Court of Appeals lifted the writ of preliminary injunction and dismissed the
petition. It declared that as the complaint for replevin filed by private respondents complied with the
requirements of an affidavit and bond under Secs. 1 and 2 of Rule 60 of the Revised Rules of court, issuance of
the writ of replevin was mandatory. 20

As for the contempt charges against petitioners, the Court of Appeals believed the same were sufficiently based
on a written charge by private respondents and the report submitted by the Sheriff. 21

On April 25, 1990, petitioners filed a motion for reconsideration of the foregoing decision. However, that motion
was denied by the Court of Appeals in its Resolution dated May 18, 1990. 22

Hence this petition.

On the one hand, petitioners contend, thus:

(1) Confiscated lumber cannot be subject of replevin. 23

(2) Petitioners not compelled to criminally prosecute private respondents but

may opt only to confiscate lumber. 24

(3) Private respondent charged criminally in court. 25 and

(4) Writ of Replevin issued in contravention of PD #605. 26

On the other hand, private respondents argue that:

(1) The respondent Judge had jurisdiction to take cognizance of the complaint
for recovery of personal property and, therefore, had jurisdiction to issue the
necessary orders in connection therewith. 27

210
 (2) The issuance of the order for the delivery of personal property upon
application, affidavit and filing of replevin bond by the plaintiff is mandatory and
not discretionary, hence, no abuse of discretion can be committed by the trial
court in the issuance thereof.28

(3) The Order of March 20, 1989 was in accordance with Section 4, Rule 60 of
the Rules of Court and is, therefore, valid. 29

(4) The private respondents have not been proven to have violated Section 68 of
the Revised Forestry Code. 30

(5) The petitioners do not have the authority to keep private respondents'
property for an indefinite period, more so, to dispose of the same without
notice and hearing or without due process. 31

(6) Contrary to the allegation of petitioners, no formal investigation was

conducted by the PIC with respect to the subject lumber in this
case. 32

(7) The alleged Order dated January 20, 1989 of the petitioner Secretary
Fulgencio Factoran, Jr. of the DENR is not valid and does not make the issuance
of the order of replevin illegal. 33 and

(8) The subject properties were not in custody of the law and may be
replevied. 34

At the outset we observe that herein respondents never appealed the confiscation order of petitioner Secretary
to the Office of the President as provided for in Sec. 8 of P.D. No. 705 which reads:

All actions and decisions of the Director are subject to review, motu propio or upon appeal of
any person aggrieved thereby, by the Department Head whose decision shall be final and
executory after the lapse of thirty (30) days from receipt by the aggrieved party of said decision
unless appealed to the President . . . . The decision of the Department Head may not be
reviewed by the courts except through a special civil action for certiorari and prohibition.

The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity and
convenience, should not entertain suits unless the available administrative remedies have first been
resorted to and the proper authorities have been given an appropriate opportunity to act and correct
their alleged errors, if any, committed in the administrative forum. 35 As to the application of this
doctrine in cases involving violations of P.D. No. 705, our ruling in Paat v. Court of Appeals, is apropos:

Moreover, it is important to point out that the enforcement of forestry laws, rules and
regulations and the protection, development and management of forest lands fall within the
primary and special responsibilities of the Department of Environment and Natural Resources.
By the very nature of its function, the DENR should be given a free hand unperturbed by judicial
intrusion to determine a controversy which is well within its jurisdiction. The assumption by the
trial court, therefore, of the replevin suit filed by the private respondents constitutes an
encroachment into the domain of the administrative agency's prerogative. The doctrine of
primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a
controversy the jurisdiction over which is initially lodged with an administrative body of special
competence. In Felipe Ismael, Jr. and Co. vs. Deputy Executive Secretary, which was reiterated in
the recent case of Concerned Officials of MWSS vs. Vasquez, this Court held:

Thus, while the administration grapples with the complex and multifarious
problems caused by unbridled exploitation of these resources, the judiciary will
stand clear. A long line of cases establish the basic rule that the courts will not
interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies. 36
211
However, petitioners did not file a motion to dismiss based on the ground of non-exhaustion of administrative
remedies. Thus, it is deemed waived. 37

Nonetheless, the petition is impressed with merit.

First. A writ of replevin does not just issue as a matter of course upon the applicant's filing of a bond and
affidavit, as the Court of Appeals has wrongly put it. The mere filing of an affidavit, sans allegations therein that
satisfy the requirements of Sec. 2, Rule 60 of the Revised Rules of Court, cannot justify the issuance of a writ of
replevin. Said provision reads:

Affidavit and bond. — Upon applying for such order the plaintiff must show by his own affidavit
or that of some other person who personally knows the facts:

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or entitled
to the possession thereof;

(b) That the property is wrongfully detained by the defendant, alleging the cause of detention
thereof to his best knowledge, information, and belief;

(c) That it has not been taken for a tax assessment or fine pursuant to law, or seized under an
execution, or an attachment against the property of the plaintiff, or, if so seized, that it is
exempt from such seizure; and

(d) The actual value of the property.

xxx xxx xxx

Wrongful detention by the defendant of the properties sought in an action for replevin must be satisfactorily
established. If only a mechanistic averment thereof is offered, the writ should not be issued.

In the case at bar, the subject narra lumber and six-wheeler truck were confiscated by petitioner Secretary
pursuant to Section 68-A of P.D. No. 705, as amended by Executive Order (E.O.) No. 277, to wit:

Sec. 68-A. Administrative Authority of the Department Head or His Duly Authorized
Representative to Order Confiscation. — In all cases of violations of this Code or other forest
laws, rules and regulations, the Department Head or his duly authorized representative, may
order the confiscation of any forest products illegally cut, gathered, removed, or possessed or
abandoned, and all conveyances used either by land, water, or air in the commission of the
offense and to dispose of the same in accordance with pertinent laws, regulations or policies on
the matter. 38

As the petitioner Secretary's administrative authority to confiscate is clearly provided by law, the taking
of the subject properties is not wrongful and does not warrant the issuance of a writ of replevin prayed
for by private respondents.

Second. Issuance of the confiscation order by petitioner Secretary was a valid exercise of his power under Sec.
68-A of P.D. No. 705. By virtue of said order, the narra lumber and six-wheeler truck of private respondents were
held in custodia legis and hence, beyond the reach of replevin.

Property lawfully taken by virtue of legal process is deemed to be in custodia legis. 39 When a thing is in official
custody of a judicial or executive officer in pursuance of his execution of a legal writ, replevin will not lie to
recover it. 40 Otherwise, there would be interference with the possession before the function of law had been
performed as to the process under which the property was taken. 41 So basic is this doctrine that it found
inclusion in the 1997 amendments introduced to the Rules of Civil Procedure. Thus, Sec. 2(c), Rule 60 of the
1997 Rules of Civil Procedure provides that:

Affidavit and bond. — Upon applying for such order the plaintiff must show by his own affidavit
or that of some other person who personally knows the facts:

212
 xxx xxx xxx

(c) That the property has not been distrained or taken for a tax assessment or fine pursuant to
law, or seized under a writ of execution, or preliminary attachment or otherwise placed under
custodia legis, or if so seized, that it is exempt from such seizure or custody; . . .

xxx xxx xxx. 42

Third. Petitioner Secretary's authority to confiscate forest products under Sec. 68-A of P.D. No. 705 is distinct
from and independent of the confiscation of forest products in a criminal action provided for in Section 68 of P.D.
No. 705. Thus, in Paat, we held that:

. . . precisely because of the need to make forestry laws "more responsive to present situations
and realities" and in view of the "urgency to conserve the remaining resources of the country,"
that the government opted to add Section 68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal proceedings. . . . . The preamble of EO 277
that added Section 68-A to PD 705- is most revealing:

WHEREAS, there is an urgency to conserve the remaining forest resources of the

country for the benefit and welfare of the present and future generations of
Filipinos;

WHEREAS, our forest resources may be effectively conserved and protected

through the vigilant enforcement and implementation of our forestry laws, rules
and regulations;

WHEREAS, the implementation of our forestry laws suffers from technical

difficulties, due to certain inadequacies in the Penal provisions of the Revised
Forestry Code of the Philippines; and

WHEREAS, to overcome this [sic] difficulties, there is a need to penalize certain

acts more responsive to present situations and realities;

It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate,
not only "conveyances" but forest products as well. On the other hand, confiscation of forest
products by the "court" in a criminal action has long been provided for in Section 68. If as
private respondents insist, the power of confiscation cannot be exercised except only through
the court under Section 68, then Section 68-A would have no purpose at all. Simply put, Section
68-A would not have provided any solution to the problem perceived in EO 277, . . . . 43

Sec. 68-A was added precisely to supplant the inadequacies and supplement criminal enforcement of
forestry laws.

Fourth. Sec. 80 of P.D. No. 705 which requires delivery of the seized forest products within six (6) hours from the
time of the seizure to the appropriate official designated by law to conduct preliminary investigations applies
only to criminal prosecutions provided for in Sec. 68, and not to administrative confiscation provided for in
Section 68-A.

Sec. 80 of P.D. No. 705 provides:

Sec. 80. Arrest; Institution of criminal actions. — A forest officer or employee of the Bureau shall
arrest even without a warrant any person who has committed or is committing in his presence
any of the offenses defined in this Chapter. He shall also seize and confiscate, in favor of the
Government, the tools and equipment used in committing the offense, and the forest products
cut, gathered or taken by the offender in the process of committing the offense. The arresting
officer or employee shall thereafter deliver within six (6) hours from the time of arrest and
seizure, the offender and the confiscated forest products, tools and equipment to, and file the
proper complaint with, the appropriate official designated by law to conduct preliminary
investigations and file informations in court.
213
 xxx xxx xxx

The title of Sec. 80 — "Arrest; Institution of Criminal Actions" — bespeaks this intendment of the law.
The fact, too, that Secs. 68 and 80 were co-existing prior to the introduction of Sec. 68-A, proves that
Sec. 80 applies to the criminal prosecutions subject of Sec. 68 and not to the administrative confiscation
subject of Sec. 68-A. Sec. 68-A, therefore, should not be interpreted in relation to Sec. 80 as to require
that criminal charges be filed with and seized forest products be immediately delivered to, the fiscal in
case of administrative confiscation, for this renders nugatory the purpose sought to be achieved thereby.
Statutes should always be construed in the light of the object to be achieved and the evil or mischief to
be suppressed, and they should be given such interpretation as will advance the object, suppress the
mischief, and secure the benefits intended. 44

Fifth. Nothing in the records supports private respondents' allegation that their right to due process was violated
as no investigation was conducted prior to the confiscation of their properties.

On the contrary, by private respondents' own admission, private respondent Sy who drove the six-wheeler truck
was properly investigated by petitioner Atty. Robles at the PIC/SAID Office of the DENR. Thereafter, private
respondent Sy and his witnesses were given full opportunity to explain the deficiencies in the
documents. 45 Private respondents categorically stated that they made a "continuous and almost daily follow-up
and plea . . . with the PIC for the return of the truck and lumber . . . ." 46 Finally in a letter dated December 30,
1989, private respondent Lily Francisco Uy requested petitioner Secretary for "immediate resolution and release
of the impounded narra sawn lumber." 47

Undoubtedly, private respondents were afforded an opportunity to be heard before the order of confiscation
was issued. There was no formal or trial type hearing but the same is not, in all instances, essential in
administrative proceedings. It is settled that due process is satisfied when the parties are afforded fair and
reasonable opportunity to explain their side of the controversy or an opportunity to move for a reconsideration
of the action or ruling complained of. 48

Moreover, respondents claim that the order of confiscation was antedated and not the product of the
investigation supposedly conducted by the PIC of the DENR. However, they proffer no proof to support that
allegation. On the other hand, there is the legal presumption that official duty has been regularly performed.
The presumption of regularity in the performance of official duties is even particularly strong with respect to
administrative agencies like the DENR which are vested with quasi-judicial powers in enforcing the laws affecting
their respective fields of activity, the proper regulation of which requires of them such technical mastery of all
relevant conditions obtaining in the nation. 49

Finally. The writ of seizure and the writ of replevin were issued by the trial court in grave abuse of its discretion.
Thus, disobedience thereto cannot constitute indirect contempt of court which presupposes that the court
order thereby violated was valid and legal. Without a lawful order having been issued, no contempt of court
could be committed. 50

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals dated March 30,
1990 and its Resolution dated May 18, 1990 in CA-G.R. SP No. 17194 are hereby SET ASIDE and REVERSED.
Respondent Presiding Judge Benigno T. Dayaw, of the Regional Trial Court of Quezon City, is PERMANENTLY
ENJOINED from enforcing the Orders dated March 20, 1989 and March 22, 1989 in Civil Case No. Q-89-2045, or
if said orders have already been enforced, the said respondent Judge is directed to render judgment of
forfeiture on the replevin bond filed by private respondents. Finally, the said respondent Judge is PERMANENTLY
ENJOINED from further acting on the Motion for Contempt filed by private respondents against the petitioners.

Costs against private respondents.

SO ORDERED.

G.R. No. 137705 August 22, 2000

SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,

vs.
PCI LEASING AND FINANCE, INC., respondent.
214
DECISION

PANGANIBAN, J.:

After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable,
a party is estopped from subsequently claiming otherwise. Hence, such property is a proper subject of a writ of
replevin obtained by the other contracting party.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision1 of the Court of Appeals
(CA)2in CA-GR SP No. 47332 and its February 26, 1999 Resolution3 denying reconsideration. The decretal portion
of the CA Decision reads as follows:

"WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31,
1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction issued on June 15,
1998 is hereby LIFTED."4

In its February 18, 1998 Order,5 the Regional Trial Court (RTC) of Quezon City (Branch 218)6 issued a Writ of
Seizure.7 The March 18, 1998 Resolution8 denied petitioners’ Motion for Special Protective Order, praying that
the deputy sheriff be enjoined "from seizing immobilized or other real properties in (petitioners’) factory in
Cainta, Rizal and to return to their original place whatever immobilized machineries or equipments he may have
removed."9

The Facts

The undisputed facts are summarized by the Court of Appeals as follows:10

"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing" for short) filed with the RTC-QC a
complaint for [a] sum of money (Annex ‘E’), with an application for a writ of replevin docketed as Civil Case No.
Q-98-33500.

"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin
(Annex ‘B’) directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days
and upon the payment of the necessary expenses.

"On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioner’s factory, seized one
machinery with [the] word that he [would] return for the other machineries.

"On March 25, 1998, petitioners filed a motion for special protective order (Annex ‘C’), invoking the power of
the court to control the conduct of its officers and amend and control its processes, praying for a directive for
the sheriff to defer enforcement of the writ of replevin.

"This motion was opposed by PCI Leasing (Annex ‘F’), on the ground that the properties [were] still personal and
therefore still subject to seizure and a writ of replevin.

"In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in
Article 415 of the Civil Code, the parties’ agreement to the contrary notwithstanding. They argued that to give
effect to the agreement would be prejudicial to innocent third parties. They further stated that PCI Leasing [was]
estopped from treating these machineries as personal because the contracts in which the alleged agreement
[were] embodied [were] totally sham and farcical.

"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining
properties. He was able to take two more, but was prevented by the workers from taking the rest.

"On April 7, 1998, they went to [the CA] via an original action for certiorari."

Ruling of the Court of Appeals

215
Citing the Agreement of the parties, the appellate court held that the subject machines were personal property,
and that they had only been leased, not owned, by petitioners. It also ruled that the "words of the contract are
clear and leave no doubt upon the true intention of the contracting parties." Observing that Petitioner
Goquiolay was an experienced businessman who was "not unfamiliar with the ways of the trade," it ruled that
he "should have realized the import of the document he signed." The CA further held:

"Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below,
since the merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire
upon the existence of a grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and
Resolution. The issues raised herein are proper subjects of a full-blown trial, necessitating presentation of
evidence by both parties. The contract is being enforced by one, and [its] validity is attacked by the other – a
matter x x x which respondent court is in the best position to determine."

Hence, this Petition.11

The Issues

In their Memorandum, petitioners submit the following issues for our consideration:

"A. Whether or not the machineries purchased and imported by SERG’S became real property by virtue of
immobilization.

B. Whether or not the contract between the parties is a loan or a lease."12

In the main, the Court will resolve whether the said machines are personal, not immovable, property which may
be a proper subject of a writ of replevin. As a preliminary matter, the Court will also address briefly the
procedural points raised by respondent.

The Court’s Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or
Rule 65 of the Rules of Court. It further alleges that the Petition erroneously impleaded Judge Hilario Laqui as
respondent.

There is no question that the present recourse is under Rule 45. This conclusion finds support in the very title of
the Petition, which is "Petition for Review on Certiorari."13

While Judge Laqui should not have been impleaded as a respondent,14 substantial justice requires that such
lapse by itself should not warrant the dismissal of the present Petition. In this light, the Court deems it proper to
remove, motu proprio, the name of Judge Laqui from the caption of the present case.

Main Issue: Nature of the Subject Machinery

Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued
by the RTC, because they were in fact real property. Serious policy considerations, they argue, militate against a
contrary characterization.

Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property
only.15Section 3 thereof reads:

"SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and
the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and
requiring the sheriff forthwith to take such property into his custody."

216
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

"ART. 415. The following are immovable property:

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry
or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works;

xxx xxx x x x"

In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the
factory built on their own land. Indisputably, they were essential and principal elements of their chocolate-
making industry. Hence, although each of them was movable or personal property on its own, all of them have
become "immobilized by destination because they are essential and principal elements in the industry."16 In that
sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to
Article 415 (5) of the Civil Code.17

Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper
subjects of the Writ of Seizure.

The Court has held that contracting parties may validly stipulate that a real property be considered as
personal.18After agreeing to such stipulation, they are consequently estopped from claiming otherwise. Under
the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact
found therein.

Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to treat a house as a personal
property because it had been made the subject of a chattel mortgage. The Court ruled:

"x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to
convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be
allowed to make an inconsistent stand by claiming otherwise."

Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills20 also held that the
machinery used in a factory and essential to the industry, as in the present case, was a proper subject of a writ
of replevin because it was treated as personal property in a contract. Pertinent portions of the Court’s ruling are
reproduced hereunder:

"x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as
personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery,
which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is estopped from denying the existence of the
chattel mortgage."

In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as
personal property. Specifically, Section 12.1 of the Agreement reads as follows:21

"12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or
embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to
what is permanent."

Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal
property. Under the circumstances, they are proper subjects of the Writ of Seizure.

217
It should be stressed, however, that our holding -- that the machines should be deemed personal property
pursuant to the Lease Agreement – is good only insofar as the contracting parties are concerned.22 Hence, while
the parties are bound by the Agreement, third persons acting in good faith are not affected by its stipulation
characterizing the subject machinery as personal.23 In any event, there is no showing that any specific third party
would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.24 Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their Petition that
the Agreement suffers from "intrinsic ambiguity which places in serious doubt the intention of the parties and
the validity of the lease agreement itself."25 In their Reply to respondent’s Comment, they further allege that the
Agreement is invalid.26

These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil action
pending before the RTC. A resolution of these questions, therefore, is effectively a resolution of the merits of the
case. Hence, they should be threshed out in the trial, not in the proceedings involving the issuance of the Writ of
Seizure.

Indeed, in La Tondeña Distillers v. CA,27 the Court explained that the policy under Rule 60 was that questions
involving title to the subject property – questions which petitioners are now raising -- should be determined in
the trial. In that case, the Court noted that the remedy of defendants under Rule 60 was either to post a
counter-bond or to question the sufficiency of the plaintiff’s bond. They were not allowed, however, to invoke
the title to the subject property. The Court ruled:

"In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of
seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor, as in
proceedings on preliminary attachment or injunction, and thereby put at issue the matter of the title or right of
possession over the specific chattel being replevied, the policy apparently being that said matter should be
ventilated and determined only at the trial on the merits."28

Besides, these questions require a determination of facts and a presentation of evidence, both of which have no
place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45.29

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on record
shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent. Accordingly, it must be presumed valid and binding as the
law between the parties.

Makati Leasing and Finance Corporation30 is also instructive on this point. In that case, the Deed of Chattel
Mortgage, which characterized the subject machinery as personal property, was also assailed because
respondent had allegedly been required "to sign a printed form of chattel mortgage which was in a blank form
at the time of signing." The Court rejected the argument and relied on the Deed, ruling as follows:

"x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio,
but can only be a ground for rendering said contract voidable, or annullable pursuant to Article 1390 of the new
Civil Code, by a proper action in court. There is nothing on record to show that the mortgage has been annulled.
Neither is it disclosed that steps were taken to nullify the same. x x x"

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that "if the Court allows these machineries to be seized, then its workers would be out of
work and thrown into the streets."31 They also allege that the seizure would nullify all efforts to rehabilitate the
corporation.

Petitioners’ arguments do not preclude the implementation of the Writ.1âwphi1 As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true, should not be
218
blamed on this Court, but on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule
60, which allows the filing of a counter-bond. The provision states:

"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicant’s bond, or of the
surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so
object, he may, at any time before the delivery of the property to the applicant, require the return thereof, by
filing with the court where the action is pending a bond executed to the applicant, in double the value of the
property as stated in the applicant’s affidavit for the delivery thereof to the applicant, if such delivery be
adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by
serving a copy bond on the applicant."

WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against
petitioners.

SO ORDERED.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

G.R. No. 131283 October 7, 1999

OSCAR C. FERNANDEZ and NENITA P. FERNANDEZ, petitioners,

vs.
THE INTERNATIONAL CORPORATE BANK, now UNION BANK OF THE PHILIPPINES; and PREMIERE INSURANCE &
SURETY CORP., respondents.

PANGANIBAN, J.:

A writ of replevin issued by the Metropolitan Trial Court of Pasay City may be served and enforced anywhere in
the Philippines. Moreover, the jurisdiction of a court is determined by the amount of the claim alleged in the
complaint, not by the value of the chattel seized in ancillary proceedings.

The Case

Spouses Oscar C. Fernandez and Nenita P. Fernandez challenge, via the instant Petition for Review
on Certiorari 1under Rule 45 of the Rules of Court, the September 4, 1997 Decision 2 and the November 14, 1997
Resolution, 3both issued by the Court of Appeals 4 in CA-GR SP No. 44409.

The assailed Decision dismissed petitioners' suit for certiorari and prohibition praying for the redelivery of the
vehicle seized from them and for the declaration of nullity of the Writ of Replevin, which had been issued by
Judge Estelita M. Paas 5 of the Metropolitan Trial Court of Pasay City, 6 and all Other subsequent thereto. The
challenged Resolution, on the other hand, denied reconsideration.

The Facts

In its assailed Decision, the Court of Appeals summarized the facts as follows:

. . . [O]n or about October 26, 1993, [petitioners] purchased a Nissan Sentra Sedan through a
financing scheme of the private respondent, the International Corporate Bank, now Union Bank
of the Philippines, and the chattel mortgage was executed in favor of the financing institution on
November 10, 1993. As borne out by the Disclosure Statement in the credit transaction, the
cash purchase price was P492,000.00, minus the downpayment of P147,500.00, leaving the
amount of P344,[5]00.00 to be financed. The total amount to be paid for 48 monthly
installments would amount to P553,944.00.1âwphi1.nêt

Petitioner added that due to the respondent bank's "greedy desire" to unjustly enrich itself at
the expense of the petitioners, the former filed an unfounded complaint for a sum of money
with replevin (Case No. 983-96) before the Metropolitan Trial Court, Branch 44, Pasay City.

219
Considering that the principal amount involved was P553,944.00, petitioners filed an Answer
mentioning in the special and affirmative defenses a Motion to Dismiss, for lack of jurisdiction,
but this was denied on February 10, 1997 and was received on February 20, 1997. A Motion for
Reconsideration was then submitted on April 2, 1997.

Aside from that, petitioners contested the venue considering that the principal office of the
respondent bank [was] in Makati, while their residence [was] in Quezon City.

The Motion for Reconsideration was denied on May 9, 1997 and received by them on May 29,
1997.

When the respondent bank filed its complaint with prayer for the issuance of a Writ of Replevin
on November 28, 1997, the monthly installments were almost fully paid; [they] would have
been fully paid on November 26, 1997. Furthermore, the car's mileage at the time of illegal
seizure was only 28,464 kilometers. They could not have been considered in default at the time
the complaint was filed, considering that: (a) they attempted many times to pay the bank their
installments for the months of August, September, October, 1996, and up to the time of the
filing of the case, they ha[d] not received any statement of delinquency as mandated by R.A. No.
3165, otherwise known as the Truth in Lending Act.

If at all, petitioners added, the baseless filing of the case was deliberately done to enrich the
bank at the expense of the petitioners which [was] tantamount to simple robbery. They even
tried consigning the P69,168.00 through a Manager's Check dated January 7, 1997 for the
months of August to February, 1997, or beyond the four months installment in advance but
were similarly refused by the court for no valid reason.

Their petition for the outright dismissal of the complaint, as well as the lifting of the Writ of
Replevin was denied even if the amount of P553,344.00 representing the value of the chattel
was beyond the jurisdiction of the court.

To be precise, the February 10, 1997 Order (Rollo, p. 17) states:

For consideration before this court is the Urgent Motion to Re-deliver the
Chattel and the Motion to Dismiss by way of Special and Affirmative Defenses
the following:

that this Honorable Court has no jurisdiction to try the case and to issue the
Writ of Replevin, for the reason that the plaintiffs office is in Makati and
defendant's residence is in Quezon City and that the amount involved is
P553,344.00 which is beyond the jurisdiction of this Honorable Court.

xxx xxx xxx

This Court has carefully reviewed the records of this case as well as the Sheriff's
Return which [show] that the subject value covered by the Writ of Replevin was
seized on January 7, 1997 by the branch sheriff of this court and thereafter
turned over to the plaintiff in this case.

Under the Rules of Court, the defendant has a period of 5 days from January 7,
1997 to post a re-delivery bond, in order to secure the return of the subject
vehicle and to post a counter bond double the amount of the chattel.

In this respect, defendants failed to exercise his right.

As to the question of jurisdiction the complaint [shows] that the amount

plaintiff seeks to recover is P190,635.00, which is well within the jurisdiction of
this Honorable Court. Likewise the attached Promissory Note in the Complaint
also contains stipulation as to the venue agreed upon by the parties in case an
action is filed in court, in which case this court has jurisdiction.
220
 WHEREFORE, finding the Motion to Re-deliver chattel filed by the defendant to
be untenable, the same is hereby denied for lack of merit.

The Motion to Dismiss on ground of lack of jurisdiction is likewise denied for

being unmeritorious.

SO ORDERED. 7

Ruling of the Court of Appeals

The Court of Appeals ruled that the Metropolitan Trial Court (MTC) of Pasay City had jurisdiction over civil cases
in which the amount of the demand did not exceed P200,000 exclusive of interest, damages and attorney's fees.
The basic claim in the present case was P190,635.90; hence, the MTC had jurisdiction.

The appellate court further held that the objection to the impropriety of the venue should have been raised in a
motion to dismiss before the filing of a responsive pleading. The said issue, however, was raised for the first
time only in petitioners' Answer.

Lastly, the Court of Appeals agreed with the MTC that the Writ of Replevin could be validly executed anywhere
in Metro Manila because Section 27, Chapter III of B.P. 129, authorized the establishment of the Metropolitan
Trial Court of Metro Manila with eighty-two (82) branches. Therefore, any branch — in this case, Branch 44
which was stationed in Pasay — could issue writs and processes that could validly be served and executed
anywhere within Metro Manila.

Aggrieved, petitioners now seek the reversal of the foregoing rulings through this recourse. 8

Issues

In their Memorandum, petitioners present the following issues:

1. The jurisdiction of the Metropolitan Trial Court of Pasay City is strictly limited within the
confines of the boundary limits of Pasay City, B.P. 129, Sec. 28.

2. The Metropolitan Trial Court's jurisdiction is limited to not more than two hundred thousand
pesos.

3. Assuming that the Metropolitan Trial Court of Pasay City has jurisdiction to try and decide the
case and to issue the ancillary writ of replevin, the Court of Appeals grievously erred in
sanctioning the order of [the] Metropolitan Trial Court of Pasay City in denying Petitioners[']
Motion for Redelivery of the vehicle which was filed within five days after such seizure, which in
essence [was] an outright departure from the express provision of the law and the settled
jurisprudence on the matter.

4. The bank's Memorandum dated July 5, 1999 should be stricken off and ordered expunged
from the records for being fatally defective in form and substance. No Annexes to said
Memorandum were attached to petitioners' copy, thereby making said memorandum fatally
defective because the annexes [were] integral part[s] of the memorandum itself. Up to this late
date, respondent Premiere Insurance and Surety Corporation has not submitted its
memorandum and may now therefore be deemed to have admitted the entire text of the
Petition to be true, valid and binding against it.

To resolve this case, this Court shall dispose of the following questions: (1) May the Writ of Replevin issued by
the MTC of Pasay City be enforced outside the city? (2) Did the MTC have jurisdiction over the Complaint? (3)
Were petitioners entitled to the redelivery of the subject vehicle?

This Court's Ruling

The Petition has no merit.

221
 First Issue: Territorial Enforcement

of the Writ of Replevin

Petitioners argue that the Writ of Replevin issued by the Metropolitan Trial Court of Pasay could be enforced
only within the confines of Pasay City. In support, they cite Section 28 of Batas Pambansa (BP) 129, which states:

Sec. 28. Other Metropolitan Trial Courts. — The Supreme Court shall constitute Metropolitan
Trial Courts in such other metropolitan areas as may be established by law whose territorial
jurisdiction shall be co-extensive with the cities and municipalities comprising the metropolitan
area.

Every Metropolitan Trial Judge shall be appointed to a metropolitan area which shall be his
permanent station and his appointment shall state the branch of the court and the seat thereof
to which he shall be originally assigned. A Metropolitan Trial Judge may be assigned by the
Supreme Court to any branch within said metropolitan area as the interest of justice may
require, and such assignment shall not be deemed an assignment to another station within the
meaning of this section. 9

We are not convinced. Under the Resolution of the Supreme Court en banc dated January 11, 1983, providing
for the interim rules and guidelines relative to the implementation of BP 129, a writ of replevin like the one
issued in the present case may be served anywhere in the Philippines. Specifically, the said Resolution states:

3. Writs and processes. —

(a) Writs of certiorari, prohibition, mandamus, quo, warranto, habeas corpus and injunction
issued by a regional trial court may be enforced in any part of the region.

(b) All other processes, whether issued by a regional trial court or a metropolitan trial court,
municipal trial court or municipal circuit trial court may be served anywhere in the Philippines,
and, in the last three cases, without a certification by the judge of the regional trial court. 10

Thus, the Writ of Replevin issued by Judge Paas, which obviously does not fall under item "a" of the above-cited
Rule, may be validly enforced anywhere in the Philippines. Petitioners confused the jurisdiction of a court to
hear and decide a case on the one hand with, on the other, its power to issue writs and processes pursuant to
and in the exercise of said jurisdiction. Applying the said Rule, Malaloan v. Court of Appeals 11 reiterated the
foregoing distinction between the jurisdiction of the trial court and the administrative area in which it could
enforce its orders and processes pursuant to the jurisdiction conferred on it:

We feel that the foregoing provision is too clear to be further belabored or enmeshed in
unwarranted polemics. The rule enumerates the writs and processes which, even if issued by a
regional trial court, are enforceable only within its judicial region. In contrast, it unqualifiedly
provides that all other writs and processes, regardless of which court issued the same, shall be
enforceable anywhere in the Philippines. No legal provision, statutory or reglementary,
expressly or impliedly provides a jurisdictional or territorial limit [to] its area of enforceability.
On the contrary, the above-quoted provision of the interim Rules expressly authorizes its
enforcement anywhere in the country, since it is not among the processes specified in
paragraph (a) and there is no distinction or exception made regarding the processes
contemplated in paragraph (b).

Objection to Venue

Too Late

Petitioners object to the filing of the Complaint in Pasay City, pointing out that their residence is in Quezon City,
while private respondent's principal place of business is in Makati. Again, we are not persuaded. Under the Rules
of Court before the 1997 amendments, 12 an objection to an improper venue must be made before a responsive
pleading is filed. Otherwise, it will be deemed waived. In Diaz v. Adiong, 13 the Court explained such requirement
in this wise:
222
 . . . Indeed, the laying of venue is procedural rather than substantive, relating as it does to
jurisdiction of the court over the person rather than the subject matter. Venue relates to trial
and not to jurisdiction.

Finally, Sec. 1 of Rule 16 provides that objections to improper venue must be made in a motion
to dismiss before any responsive pleading is filed. Responsive pleadings are those which seek
affirmative relief and set up defenses. Consequently, having already submitted his person to the
jurisdiction of the trial court, petitioner may no longer object to the venue which, although
mandatory in the instant case, is nevertheless waivable. As such, improper venue must be
seasonably raised, otherwise, it may be deemed waived. 14

In the present case, petitioners' objection to the venue of the case was raised for the first time in the Answer
itself. Not having been raised on time, their objection is therefore deemed waived.

In any event, petitioners had agreed to a stipulation in the Promissory Note that a suit arising from their
transaction may be filed in the proper court anywhere in Metro Manila, at the sole option of respondent
bank. 15 Necessarily, Pasay City is deemed included in the said stipulation.

Second Issue:

MTC's Jurisdiction Over the Complaint

Petitioners argue that the value of the property seized is in excess of P200,000 and thus outside the jurisdiction
of the Metropolitan Trial Court. This argument has no legal and factual basis. The fundamental claim in the main
action against petitioners, as shown in respondent bank's Complaint, is the collection of the sum of P190,635.90,
an amount that is clearly within the jurisdiction of the MTC. Although the value of the vehicle seized pursuant to
the Writ of Replevin may have exceeded P200,000, that fact does not deprive the trial court of its jurisdiction
over the case. After all, the vehicle was merely the subject of a chattel mortgage that had been used to secure
petitioners' loan. In any case, private respondents are entitled only to the amount owed them. Under Section 14
of the Chattel Mortgage Law, the proceeds of the sale of the mortgaged property shall be used primarily to pay
the costs of the sale, the obligation that has been secured and other subsequent obligations; and the balance
will be turned over to the mortgagors, herein petitioners.

Third Issue:

Redelivery of Subject Vehicle

Petitioners assail the MTC's refusal to release the seized vehicle despite a Manager's Check in the amount of
P69,168 they issued for the redelivery of the vehicle within five days from its seizure.

This argument is devoid of merit. As observed by the trial court, petitioners failed to comply with the requisites
for the redelivery of the vehicle seized:

Under the Rules of Court, the defendant has a period of 5 days from January 7, 1997 to post a
re-delivery bond, in order to secure the return of the subject vehicle and to post a counter bond
double the amount of the chattel.

In this respect[,] defendants failed to exercise his right. 16

Indeed, a careful perusal of the records shows that petitioners failed to comply with the requirements
prescribed by Rule 60 of the Rules of Court in effect at the time: 17

Sec. 5. Return of Property. — If the defendant objects to the sufficiency of the plaintiff's bond, or
of the surety or sureties thereon, he cannot require the return of the property as in this section
provided; but if he does not so object, he may, at any time before the delivery of the property to
the plaintiff, require the return thereof, by filing with the clerk or judge of the court a bond
executed to the plaintiff, in double the value of the property as stated in the plaintiff's affidavit,
for the delivery of the property to the plaintiff, if such delivery be adjudged, and for the

223
 payment of such sum to him as may be recovered against the defendant, and by serving a copy
of such bond on the plaintiff or his attorney.

Sec. 6. Disposition of property by officer. — If within five (5) days after the taking of the property
by the officer, the defendant does not object to the sufficiency of the bond, or of the surety or
sureties thereon; or require the return of the property as provided in the last preceding section;
or if the defendant so objects, and the plaintiff's first or new bond is approved; or if the
defendant so requires, and his bond is objected to and found insufficient and he does not
forthwith file an approved bond, the property shall be delivered to the plaintiff. If for any reason
the property is not delivered to the plaintiff, the officer must return it to the defendant.

In their Petition for Review, petitioners plainly admit that they issued a check for only P69,168 for the purpose
of covering the advance payments plus the redelivery bond. Clearly, that amount was insufficient to cover even
just the required redelivery bond alone, which should be in an amount double that of the chattel. Hence, the
MTC's refusal to grant petitioners' Motion for redelivery was correct, and the Court of Appeals did not err in
upholding it.1âwphi1.nêt

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

Melo, Vitug and Gonzaga-Reyes, JJ., concur.

G.R. No. 127261 September 7, 2001

VISAYAN SURETY & INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, SPOUSES JUN BARTOLOME+ and SUSAN BARTOLOME and DOMINADOR
V. IBAJAN+, respondents.

PARDO, J.:

The Case

The case is a petition to review and set aside a decision1 of the Court of Appeals affirming that of the Regional
Trial Court, Biñan, Laguna, Branch 24, holding the surety liable to the intervenor in lieu of the principal on a
replevin bond.

The Facts

The facts, as found by the Court of Appeals,2 are as follows:

On February 2, 1993, the spouses Danilo Ibajan and Mila Ambe Ibajan filed with the Regional Trial Court, Laguna,
Biñan a complaint against spouses Jun and Susan Bartolome, for replevin to recover from them the possession
of an Isuzu jeepney, with damages. Plaintiffs Ibajan alleged that they were the owners of an Isuzu jeepney which
was forcibly and unlawfully taken by defendants Jun and Susan Bartolome on December 8, 1992, while parked at
their residence.

On February 8, 1993, plaintiffs filed a replevin bond through petitioner Visayan Surety & Insurance Corporation.
The contract of surety provided thus:

"WHEREFORE, we, sps. Danilo Ibajan and Mila Ibajan and the VISAYAN SURETY & INSURANCE CORP., of
Cebu, Cebu, with branch office at Manila, jointly and severally bind ourselves in the sum of Three
Hundred Thousand Pesos (P300,000.00) for the return of the property to the defendant, if the return
thereof be adjudged, and for the payment to the defendant of such sum as he/she may recover from
the plaintiff in the action."3

224
On February 8, 1993, the trial court granted issuance of a writ of replevin directing the sheriff to take the Isuzu
jeepney into his custody. Consequently, on February 22, 1993, Sheriff Arnel Magat seized the subject vehicle and
turned over the same to plaintiff spouses Ibajan.4

On February 15, 1993, the spouses Bartolome filed with the trial court a motion to quash the writ of replevin
and to order the return of the jeepney to them.

On May 3, 1993, Dominador V. Ibajan, father of plaintiff Danilo Ibajan, filed with the trial court a motion for
leave of court to intervene, stating that he has a right superior to the plaintiffs over the ownership and
possession of the subject vehicle.

On June 1, 1993, the trial court granted the motion to intervene.

On August 8, 1993, the trial court issued an order granting the motion to quash the writ of replevin and ordering
plaintiff Mila Ibajan to return the subject jeepney to the intervenor Dominador Ibajan.5

On August 31, 1993, the trial court ordered the issuance of a writ of replevin directing the sheriff to take into his
custody the subject motor vehicle and to deliver the same to the intervenor who was the registered owner.6

On September 1, 1993, the trial court issued a writ of replevin in favor of intervenor Dominador Ibajan but it was
returned unsatisfied.

On March 7, 1994, intervenor Dominador Ibajan filed with the trial court a motion/application for judgment
against plaintiffs’ bond.

On June 6, 1994, the trial court rendered judgement the dispositive portion of which reads:

"WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered in favor of
Dominador Ibajan and against Mila Ibajan and the Visayan Surety and Insurance Corporation ordering
them to pay the former jointly and severally the value of the subject jeepney in the amount of
P150,000.00 and such other damages as may be proved by Dominador Ibajan plus costs."7

On June 28, 1994, Visayan Surety and Insurance Corporation and Mila Ibajan filed with the trial court their
respective motions for reconsideration.

On August 16, 1994, the trial court denied both motions.

On November 24, 1995, Visayan Surety and Insurance Corporation (hereafter Visayan Surety) appealed the
decision to the Court of Appeals.8

On August 30, 1996, the Court of Appeals promulgated its decision affirming the judgment of the trial court. 9 On
September 19, 1996, petitioner filed a motion for reconsideration.10 On December 2, 1996, the Court of Appeals
denied the motion for reconsideration for lack of merit.11

Hence, this petition.12

The Issue

The issue in this case is whether the surety is liable to an intervenor on a replevin bond posted by petitioner in
favor of respondents.13

Respondent Dominador Ibajan asserts that as intervenor, he assumed the personality of the original defendants
in relation to the plaintiffs’ bond for the issuance of a writ of replevin.

Petitioner Visayan Surety contends that it is not liable to the intervenor, Dominador Ibajan, because the
intervention of the intervenor makes him a party to the suit, but not a beneficiary to the plaintiffs’ bond. The
intervenor was not a party to the contract of surety, hence, he was not bound by the contract.

225
The Court’s Ruling

The petition is meritorious.

An intervenor is a person, not originally impleaded in a proceeding, who has legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof.14

May an intervenor be considered a party to a contract of surety which he did not sign and which was executed
by plaintiffs and defendants?

It is a basic principle in law that contracts can bind only the parties who had entered into it; it cannot favor or
prejudice a third person.15 Contracts take effect between the parties, their assigns, and heirs, except in cases
where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation
or by provision of law.16

A contract of surety is an agreement where a party called the surety guarantees the performance by another
party called the principal or obligor of an obligation or undertaking in favor of a third person called the
obligee.17Specifically, suretyship is a contractual relation resulting from an agreement whereby one person, the
surety, engages to be answerable for the debt, default or miscarriage of another, known as the principal.18

The obligation of a surety cannot be extended by implication beyond its specified limits.19 "When a surety
executes a bond, it does not guarantee that the plaintiff’s cause of action is meritorious, and that it will be
responsible for all the costs that may be adjudicated against its principal in case the action fails. The extent of a
surety’s liability is determined only by the clause of the contract of suretyship."20 A contract of surety is not
presumed; it cannot extend to more than what is stipulated.21

Since the obligation of the surety cannot be extended by implication, it follows that the surety cannot be held
liable to the intervenor when the relationship and obligation of the surety is limited to the defendants specified
in the contract of surety.

WHEREFORE, the Court REVERSES and sets aside the decision of the Court of Appeals in CA-G. R. CV No. 49094.
The Court rules that petitioner Visayan Surety & Insurance Corporation is not liable under the replevin bond to
the intervenor, respondent Dominador V. Ibajan.1âwphi1.nêt

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

Rule 61-Support Pendente Lite

G.R. No. L-43794 August 9, 1935

LUIS FRANCISCO, petitioner,

vs.
FRANCISCO ZANDUETA, Judge of First Instance of Manila, and
EUGENIO LEOPOLDO FRANCISCO, represented by his natural mother and curator ad litem,
ROSARIO GOMEZ, respondents.

Vicente J. Francisco for petitioner.

J.E. Blanco for respondents.

GODDARD, J.:

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This is an original petition for the writ of certiorari whereby the petitioner, Luis Francisco, seeks to procure the
abrogation of an order of the respondent judge, dated May 2, 1935, granting the respondent, Eugenio Leopoldo
Francisco, a monthly pension of P30 pendente lite.

It appears that the respondent, Eugenio Leopoldo Francisco, aged two years, through his natural mother and
guardian ad litem, Rosario Gomez, instituted an action for support against the herein petitioner in the Court of
First Instance of the City of Manila, case No. 47238. In that case it is alleged that the therein plaintiff is the
acknowledged son of Luis Francisco and as such is entitled to support. The petitioner, as defendant in that case,
answered by a general denial of each and every material allegation contained in the complaint and as a special
defense alleged that he never acknowledged and could not have acknowledged that he never acknowledged
and could not have acknowledged the plaintiff as his son; that he was not present at the baptism of the plaintiff
and that he was married at the time it is alleged that the plaintiff was born.

Notwithstanding this denial of paternity the respondent judge issued the order of May 2, 1935. On May 11, 1935,
petitioner moved for the reconsideration of that order on the ground that it was issued in excess of jurisdiction
in view of the fact that the civil status of the plaintiff was placed in issue by the pleadings; that the plaintiff has
no right to monthly support from the defendant until his status as a child of the latter is finally determined in his
favor and that as the guardian ad litem of the plaintiff admits his lack of means to defray even the ordinary
expenses of existence it would be impossible for the defendant to recover whatever amount he may have
advanced to plaintiff as supportpendente lite, should it finally be decided that he is not the father of the plaintiff.

The respondent judge, the Honorable Francisco Zandueta, denied that motion, hence the institution of this
special proceeding.

This court called upon the respondents to answer the petition. They filed a joint answer and alleged, in
substance, that case No. 47238 was set for trial the 29th of April, 1935, and that the attorney for the defendant
in that case filed a motion on April 22, 1935, in which he prayed that the trial be transferred; that the hearing on
this motion was set for April 27, 1935; that the attorney for the minor filed a motion, on the day set for the
hearing of the motion to transfer, in which he prayed that said minor be granted the sum of P30 per month by
way of support, pendente lite; that the guardian ad litem opposed the motion to transfer the trial and that after
discussion the attorney of the herein petitioner in order to secure a transfer agreed that his client would pay the
minor a pension of P30 per month during the pendency of that case, No. 47238. The answer of the respondents
is supported by the affidavits of the respondent judge and two deputy clerks of the Court of First Instance of
Manila.

In petitioner's reply to respondent's answer, made under oath by the attorney for the petitioner, in case No.
47238 and in this proceeding, it is alleged that the statements in paragraph for of said answer and those in the
affidavit, Exhibits A and B, as to the agreement of said attorney to the payment of P30 as monthly support, are
absolutely false.

In order to arrive at a proper solution of this case it is not necessary to consider the dispute as to whether or not
the attorney for the herein petitioner really agreed that his client should pay P30 per month by way of support
to the plaintiff, pendente lite.

In the case of Yangco vs. Rohde (1 Phil., 404) the petitioner Yangco filed in this court a petition for a writ of
prohibition, alleging that a complaint had been filed, before the respondent judge, by Victorina Obin against the
petitioner praying that she be granted a divorce, a monthly allowance for alimony and attorney's fees during the
pendency of the suit; that the said judge ordered the petitioner to pay the plaintiff a monthly allowance of two
hundred fifty Mexican pesos; that the plaintiff in the said action owns no property and that the respondent
judge acted in excess of his jurisdiction in attempting to oblige the petitioner to pay Victorina Obin said
allowance.

In that case this court, speaking through Chief Justice Arellano, said:

In the present case the action for the support or alimony is brought by a woman who alleges that she is
a wife; therefore it is necessary for her to prove possession of the civil status of a spouse — that is, a
marriage, without which one has no right to the title of husband or wife, . . . .

227
 This evidence being lacking, and the civil status of marriage being in litigation, it is evident that nothing
can be taken for granted upon the point in issue. There is no law or reason which authorizes the
granting of alimony to a person who claims to be a spouse in the same manner as to a person who
conclusively establishes by legal proof that he or she is such a spouse, and sues for divorce or separation.
In this case the legal evidence raises a presumption of law; in the former there is no presumption, there
is nothing but a mere allegation — a fact in issue — and a simple fact in issue must not be confounded
with an established right recognized by a final judgment or based upon a legal presumption. The civil
status of marriage being denied, and this civil status, from which the right to support is derived, being in
issue, it is difficult to see how any effect can be given to such a claim until an authoritative declaration
has been made as to the existence of the cause. It is evident that there is of necessity a substantial
difference between the capacity of a person after the rendition of a final judgment in which that person
is declared to be in possession of the status of marriage and his capacity prior to such time when
nothing exists other than his suit or claim to be declared in possession of such status of marriage . . . .

Under article 143 of the Civil Code the following are bound to support each other: (1) Husband and wife, (2)
legitimate ascendants and descendants, (3) parents and acknowledged natural children and the legitimate
descendants of the latter, (4) parents and illegitimate children not having the legal status of natural children and
(5) brothers and sisters. In all these cases it is a civil status or a juridical relation which is the basis of the action
for support, the civil status of marriage or that of relationship.

Paraphrasing the language used in the decision in the Yangco case it may be said that in the present case the
action for support is brought by a minor, through his guardian ad litem, who alleges that he is the son of the
petitioner; therefore it is necessary for him to prove his civil status as such son. His alleged civil status being in
litigation, it is evident that nothing can be taken for granted upon the point in issue. There is no law or reason
which authorizes the granting of support to a person who claims to be a son in the same manner as to a person
who establishes by legal proof that he is such son. In the latter case the legal evidence raises a presumption of
law, while in the former there is no presumption, there is nothing but a mere allegation, a fact in issue, and a
simple fact in issue must not be confounded with an established right recognized by a final judgment. The civil
status of sonship being denied and this civil status, from which the right to support is derived, being in issue, it is
apparent that no effect can be given to such a claim until an authoritative declaration has been made as to the
existence of the cause. It is also evident that there is a substantial difference between the capacity of a person
after the rendition of a final judgment in which that person is declared to be in possession of the status of a son
and his capacity prior to such time when nothing exists other than his suit or claim to be declared in possession
of such a status.

The Civil Code grants the right of support to a son. This status not appearing by a final judgment, the respondent
judge was without jurisdiction to order the petitioner, as defendant in case No. 47238, to pay the plaintiff the
sum of P30, or any other amount as monthly support, pendente lite.

In view of the lack of jurisdiction of the respondent judge to grant the plaintiff support, pendente lite, it is
evident that the attorney of the defendant in case No. 47283 could not by his alleged consent to the granting of
such support give the trial judge jurisdiction to adjudicate such a claim against his client.

It is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction in a matter
which is excluded by the laws of the land. In such a case the question is not whether a competent court
has obtained jurisdiction of a party triable before it, but whether the court itself is competent under any
circumstances to adjudicate a claim against the defendant. And where there is want of jurisdiction of
the subject-matter, a judgment is void as to all persons, and consent of parties can never impart to it the
vitality which a valid judgment derives from the sovereign state, the court being constituted, by express
provision of law, as its agent to pronounce its decrees in controversies between its people. (7 R.C.L.,
1039.)

The writ prayed for is granted and the order of the respondent judge of May 2, 1935, ordering the herein
petitioner as defendant in case No. 47238 to pay the plaintiff in that case the sum of P30 monthly, as
support, pendente lite, is hereby declared null and void, without costs.

Avanceña, C.J., Villa-Real, Abad Santos, Hull, Imperial, Diaz, and Recto, JJ., concur.

G.R. No. L-996 October 13, 1902

228
LUIS R. YANGCO,Petitioner, vs. WILLIAM J. ROHDE, judge of the Court of First Instance of Manila,Respondent.

Francisco Ortigas, for petitioner.

Fred. G. Waite, for respondent.

ARELLANO, C.J.: chanrobles virtual law library

The petitioner, Luis R. Yangco, filed in this court a petition for a writ of prohibition, alleging that before Judge
William J. Rohde, of the Court of First Instance of the city of Manila, a complaint had been filed by Victorina Obin
against the petitioner praying that she be declared the lawful wife of the said Yangco, and that she be granted a
divorce, an allowance for alimony, and attorney's fees during the pendency of the suit; that the demurrer filed
by the petitioner was overruled by the said judge, said ruling being in part as follows: "I am of the opinion that
the marriage alleged in the complaint is valid under the laws in force, although the question is not clear nor
without doubt. The facts alleged in the complaint compel me to resolve the doubt in favor of the plaintiff;" and
that the petitioner, in answer to the complaint, denied the principal allegation of fact therein, to wit, the mutual
agreement to be husband and wife alleged by the plaintiff to have been entered into before witnesses; that
while the case was in this condition the plaintiff filed a motion for a monthly allowance as alimony, costs, and
attorney's fees; that on the 22nd of July last the said judge ordered the petitioner to pay the plaintiff, in advance,
a monthly allowance of 250 Mexican pesos from and after the 11th of March last past, and to pay on the 1st day
of August following all accrued allowances, in addition to the allowance for the said month, amounting to the
sum of 1,500 pesos; that the plaintiff in the said action owns no property, and the judge not having required
from her any security, it is certain that the petitioner, defendant in the said action below, should judgment be
rendered in his favor, would be unable to recover such sums as the judge might compel him to disburse; that
against the ruling of the court he had no right of appeal or any plain, speedy, or adequate remedy; therefore he
prays the court to render judgment declaring the Hon. William J. Rohde, judge of the Court of First Instance of
Manila, has acted in excess of his jurisdiction in attempting to oblige petitioner to pay to the said Victorina Obin
the said allowance, and to direct that a writ of prohibition issue to the said William J. Rohde prohibiting him
from attempting to compel petitioner to pay the said amount.chanrobles virtual law library

Against this petition the attorney for the respondent, William J. Rohde, filed a demurrer and motion to dismiss
upon the following grounds: (1) That this court is without jurisdiction over the subject-matter of the action; (2)
that the petition does not state facts sufficient to constitute a cause of action. It is to be observed that in the
oral argument and brief filed no denial was made, but on the contrary the fact alleged by the petitioner was
affirmed in that the ruling on the demurrer in the Court of First Instance the respondent had expressed his
opinion that "the question (as to the alleged marriage) is not clear nor free from doubt."chanrobles virtual law
library

Nevertheless, he says, "this being so, the said Victorina Obin acquired a right to all conjugal rights, and in
particular to the allowance of alimony pendente lite." And upon this supposition he cited articles of the Civil
Code as to rights enjoyed by a married woman by virtue of the marriage, and those which she may further
exercise by reason of divorce pending litigation and those granted to her finally in case of a favorable
judgment.chanrobles virtual law library

The entire theory developed by the demurrer now before us may be expressed in the following terms: The
respondents judge had jurisdiction to try the divorce case and its incidents, among others that of alimony; in an
interlocutory ruling he held that the alleged matrimony existed, although it appeared to him to be a matter not
clear or free from doubt; in another interlocutory order, notwithstanding the fact that the existence of the
marriage is not clear or free from doubt, he directed the allowance of alimony pendente lite in favor of the
plaintiff; against this interlocutory order no appeal lies on behalf of the alleged husband who is to pay this
allowance; this alleged husband must pay it without any guaranty of recovery in the event that the proof should
established a contrary condition of affairs to that assumed to be correct, notwithstanding the fact that the
question is not clear or free from doubt; and as the judge is not devoid of jurisdiction, and as no appeal lies
against an interlocutory order, that such an opinion, such an interlocutory order so rendered, although
erroneous and causing irreparable damage, can not be reviewed by any other court during the course of the
trial.chanrobles virtual law library

Such a theory was not possible in these Islands under its former Law of Civil Procedure, nor is it possible now
under the present Code of Civil Procedure. Under article 1591 of the old Code any person believing himself
entitled to that provisional alimony or support was required to file with the complaint documents proving
229
conclusively the title by virtue of which the same was sued for. If the title was based upon a right created by law,
it was necessary to present the documents establishing the bond of relationship between the plaintiff and
defendant or the circumstances which gave a right to the alimony, such evidence to be completed by the
testimony of witnesses if necessary. The judge, under article 1592, could not admit the complaint unless the
documents referred to in the preceding article were submitted. It is evident from this that under the provisions
of the law then in force a suit for alimony could not prosper upon the mere opinion of the judge expressed, not
in a final judgment causing status, but in an interlocutory order which has no other purpose than to facilitate the
continuance of the trial. This, apart from the fact that under the former procedural law ever interlocutory order
not merely of practice was appealable, and consequently the case of one finding himself prejudiced by an order
capable of causing him irreparable damage, such as that of paying an allowance without security or possibility of
recovery, could never arise under that system of legislation.chanrobles virtual law library

The necessity of founding the action for support or alimony on a title, and a title supported by documentary
evidence, is a consequence of the precepts of article 143 of the Civil Code cited by the respondent judge himself.
In this article the right to support is granted (1) to spouses inter se; (2) to legitimate descendants and
ascendants inter se; (3) to parents and certain legitimated and acknowledged natural children; (4) to other
illegitimate children, and (5) to brothers and sisters. In all these cases in is a civil status or a juridical relation
which is the basis of the action for support - the civil status of marriage or that of relationship.chanrobles virtual
law library

In the present case the action for the support or alimony is brought by a woman who alleges that she is a wife;
therefore it is necessary for her to prove possession of the civil status of a spouse - that is, a marriage, without
which one has no right to the title to husband or wife. Marriages celebrated before the adoption of the Civil
Code must be proven by the means established by the former laws (art. 53). "Marriages celebrated before the
operation of the Code," says Q. Mucius Scaevola, "must be proven by the canonical certificate." (Vol. 2, p. 137.)
"Before the Council of Trent," says Manresa, "no absolute provision of law required the parish priests to make
entries in their books with regard to the birth, marriage, or death of their parishioners ... . The council required
the parish priests to open books in which to record baptisms, marriages, and deaths ... The State, the attention
of which was called for the first time to the importance of the records established by the provisions of the
council, gave evidence of its interest by issuing the royal order of March 21, 1794, according to which the
prelates of the Kingdom were directed to require the evidence referred to be kept exclusively in the churches."
(Commentaries, vol. 1, p. 262.)chanrobles virtual law library

This evidence being lacking, and the civil status of marriage being in litigation, it is evident that nothing can be
taken for granted upon the point in issue. There is no law or reason which authorizes the granting of alimony to
a person who claims to be a spouse in the same manner as to a person who conclusively establishes by legal
proof that he or she is such spouse, and sues for divorce or separation. In this case the legal evidence raises a
presumption of law; in the former there is no presumption, there is nothing but a mere allegation - a fact in
issue - and a simple fact in issue must not be confounded with an established right recognized by a final
judgment or based upon a legal presumption. The civil status of marriage being denied, and this civil status,
from which the right to support is derived, being issue, it is difficult to see how any effect can be given to such a
claim until an authoritative declaration has been made as to the existence of the cause. It is evident that there is
of necessity a substantial difference between the capacity of a person after the rendition of a final judgment in
which that person is declared to be in possession of the status of marriage and his capacity prior to such time
when nothing exists other than his suit or claim to be declared in possession of such status of marriage. Any
other view would render useless all the legal effects which flow from the authority of res adjudicata.chanrobles
virtual law library

Nor can such a theory be sustained under the Code of Civil Procedure now in force. It is true that an
interlocutory order such as that rendered by the respondent judge in the present case is not appealable during
the course of the trial, but only after a final judgment has been rendered therein; but it is none the less true that
it can not be the intention of the law, when prohibiting an appeal against interlocutory orders, to give executory
force to all kinds of interlocutory orders which the judge may see fit to make in the course of a trial, and still less
when the effect would be to cause irreparable damage, such as that alleged by the petitioner in the present case,
by reason of the insolvency of the person in whose favor the granting of alimony has been ordered, and which
allegation has not been objected to or denied by the respondent. It is indeed a wise rule of procedure which
refuses to permit the interruption of a trial by means of incidental appeals; but, if the judge incidentally in the
course of a trial proceeds without or in excess of his jurisdiction, this rule which prohibits an appeal does not

230
leave the party aggrieved without remedy. The same Code of Civil Procedure establishes several means by which
such excess may be prevented.chanrobles virtual law library

In this case the remedy of prohibition is invoked. (Art. 516 in relation with 226.) This remedy must be based
upon a lack of jurisdiction or an excess in the exercise of jurisdiction in order that the judge may be prohibited
from continuing the proceedings. This remedy having been established by the Code of Civil Procedure now in
force, it is not allowable to apply the theories and principles concerning the lack of jurisdiction or an excess in its
exercise which prevailed in the law of these Islands prior to the promulgation of that Code. We must of necessity
apply the theories and principles which prevail in the law which has established the remedy, or the authorities
which, in the American law, establish the doctrine upon the subject, and more especially the views prevailing in
the State of California, whose Code of Procedure is strictly in accord with the Code in these Islands as to the
remedy in question, with respect to which it may be said that the California Code is its true legal
precedent.chanrobles virtual law library

To this end and as an illustration of the case as to the propriety of the remedy by prohibition, we may cite a
decision of the supreme court of California of July 9, 1890 (Havemeyer & Co., petitioners, vs. the Superior Court,
Judge Wallace, respondent.)chanrobles virtual law library

This was a case of quo warranto brought by the attorney-general of the State against a California corporation,
the American Sugar Refinery Company, for the cancellation of its charter, and in which case judgment was
rendered on the 8th of January, 1890; an incident having arisen as to the appointment of a receiver to take
charge of the property of the company pending the taking of an appeal or to proceed to distribute the same
according to law in case an appeal should not be taken, inasmuch as the corporation had been dissolved and its
corporate rights forfeited, the judge made an order appointing a receiver. The receiver attempted to take
possession of the sugar refinery, which he found in the possession of Messrs. Havemeyer & Co, who claimed to
have purchased it in the month of March, 1889, and asserted that since that time they had been in full and
complete possession as absolute owners in their own exclusive right. After several other incidental proceedings
the judge made an order directing the sheriff to put the receiver in possession of the locus in quo. Havemeyer &
Co. then applied to the supreme court for a writ of prohibition, which was issued. "The question now remains,"
says the court in its decision, "whether the superior court had jurisdiction to make an order appointing the
receiver and ordering him to take from the possession of the petitioners certain property, the petitioners not
having been a party to the quo warranto proceedings and alleging a right of their own to the said
property."chanrobles virtual law library

In disposing of this question the court holds that the judge was without jurisdiction to make this order, and
continues: "We now come to the question as to the remedy. Prohibition arrests the proceedings of an inferior
judicial tribunal or officer when such proceedings are without or in excess of the jurisdiction of such tribunal or
officer, and the writ issues in all cases where there is not a plain, speedy, and adequate remedy in the ordinary
course of the law. We have shown that the superior court in appointing a receiver exceeded its jurisdiction, and
there is no question that the petitioners are seriously injured by the enforcement of the order. If then they have
no plain, speedy and adequate remedy in the ordinary course of law, they are clearly entitled to the benefit of
the writ of prohibition to arrest the proceedings under the void order." The court, to fortify its decision, takes up
and discusses various objections, such as the following: (1) That the petitioners might have bowed to the
authority of the receiver, giving him possession, and then obtained leave from the court to sue him in
ejectment; (2) that the order appointing the receiver was appealable, and that, therefore, the remedy for
prohibition would not lie; (3) that before availing themselves of this remedy petitioners should show that an
objection to the order in question had been overruled. With respect to the first point the court says: "It is true
petitioners might have done this, but the remedy would have been neither speedy nor adequate. They had the
right not merely to get their property back after along and expensive litigation - they had a right to keep it. The
wrong with which they were threatened when they applied for the writ and when the writ issued was the
deprivation of the possession and the use of their property. To give the property up in the hope of being allowed
by the superior court to sue for it and to recover it after years of litigation was neither an adequate nor speedy
remedy. It would be as reasonable to say that an injunction should never issue to restrain a threatened injury
because the injured party may always have his action for damages." As to the second point the court states:
"There must not only be a right of appeal but the appeal must furnish an adequate remedy in order to prevent
the issuance of the writ. A number of cases have been decided in this court in which writs of prohibition have
been refused because there was a right of appeal, but in all of those cases the appeal afforded a complete and
adequate remedy for the threatened excess of jurisdiction."chanrobles virtual law library

231
With respect to the third point the court says that "the following propositions applicable to the case are fully
supported by the decision in the case of the Mayor of London vs. Cox, L.R., H.L., 278-280: (1) If a want of
jurisdiction is apparent on the face of the proceedings in the lower court, no plea or preliminary objection is
necessary before suing out the writ of prohibition. (2) If the proceeding in the lower court is not on its face
without the jurisdiction of such court, but is so in fact by reason of the existence of some matter not disclosed,
such matter ought to be averred in some proper form in order to make the want of jurisdiction appear. (3) But
this is not essential to the jurisdiction of the superior court to grant prohibition. It is only laches which may or
may not be excused, according to circumstances.

Accordingly, we find that frequently a failure to plead in the lower court was excused for the reason that it
appeared that the plea would have been rejected if made.

By judgment of the 12th of December, 1891, the same supreme court in a similar proceeding against the
superior court of San Francisco, Judge Wallace used the following language:

Prohibition lies in all cases where there have been proceedings "without or in excess" of jurisdiction, and there
"is not a plain, speedy, and adequate remedy in the ordinary course of law." Jurisdiction is usually defined as
"the power to hear and determine;" but, of course, it is difficult to express in abstract terms a statement of the
distinction between error in exercising jurisdiction and jurisdiction itself that can be readily applied to all cases
as they may arise. The law endeavors to fix definitely everything that can in its nature be so fixed, so as to leave
as little as possible to the judgment or caprice of those who administer it. But as many future events can not, in
the nature of things, be foreseen and provided for, it follows necessarily that much must be left to the discretion
of courts and other tribunals.

This doctrine was applied to the procedure of the judge who had taken action upon a void information
presented by a grand jury which by reason of its defective organization was not regarded as a legally existing
body, and the court decided "that the jury not being a legal body and the so-called indictment being void, the
court below was without jurisdiction to try the accused upon such an indictment, hence the attempted action of
the court was without and in excess of its jurisdiction." As to whether the petitioner had any other prompt,
speedy, and adequate remedy in the ordinary course of law, the court said:

If there be such remedy, it must be by appeal. But it would be a difficult proposition to maintain that a
defendant in a criminal case, forced through all the stages of a trial for felony without any indictment against
him, or, which is the same thing in effect, upon a void indictment, would have a plain, speedy, and adequate
remedy, because, after conviction and judgment, and perhaps after suffering the ignominy of imprisonment in
the state prison, he could have the illegal proceeding reversed on appeal. ... We are of opinion, therefore, that
there is no jurisdiction in the respondent to proceed with the trial of petitioner; that the latter has no "plain,
speedy, and adequate remedy in the ordinary course of law," and that prohibition is the proper remedy.

Mr. Justice Garmette added:

The case of Quimbo Appo vs. People, 20 N.Y., 542, received an exhaustive consideration from the court of that
State, and, after referring to many authorities upon the question as to when the writ of prohibition should issue,
it said: "These cases prove that the writ lies to prevent the exercise of any unauthorized power in a cause or
proceeding of which the subordinate tribunal has jurisdiction, no less than when the entire cause is without the
jurisdiction." And again: "This shows that the writ was never governed by any narrow, technical rules, but was
resorted to as a convenient mode of exercising a wholesome control over inferior tribunals. The scope of this
remedy ought not, I think, to be abridged, as it is far better to prevent the exercise of unauthorized power that
to be driven to the necessity of correcting the error after it is committed."

In its decision of December 8, 1890, the same supreme court in a proceeding similar to that now before us,
instituted, by J.M. McDowell against Aaron Bell, judge of the superior court of Shasta County, upon the ground
that this judge in an incidental proceeding similar to that which now occupies our attention directed that certain
property claimed by a third person be subjected to the satisfaction of a judgment rendered against the grantee,
held as follows:

In this the respondent exceeded his jurisdiction and the jurisdiction of his court. His only power in the premises
was to make an order authorizing the judgment creditor to institute an action in the proper court against the
parties claiming the property for the recovery of the property and the subjection of the same to the satisfaction
232
of the debt, and forbidding a transfer of the property until such action could be commenced and prosecuted to
judgment.

This indicates what is meant by an act without or in excess of jurisdiction in accordance with the principles upon
which article 226 of the present Code of Civil Procedure is based.chanrobles virtual law library

The court below had jurisdiction to try the divorce suit, but he was without jurisdiction to grant alimony when
the right to claim alimony had not accrued in accordance with the provisions of the Civil Code. This Code only
grants the rights to alimony to a wife. This status not appearing by a final judgment, the court is without
jurisdiction to make any order in the matter. Thereforemandamus is the proper remedy upon the facts
related.chanrobles virtual law library

It is not necessary to decide at this time if an exception could be made with respect to a case in which the fact of
the marriage is admitted of record by the defendant. In the case before us this fact was denied. The motion and
demurrer are overruled and the defendant is authorized to answer the complaint within twenty days from this
date.chanrobles virtual law library

Torres, Willard, and Ladd, JJ., concur.

Smith and Mapa, JJ., did not sit in this case.

G.R. No. L-2942 December 29, 1949

SILVESTRA COQUIA and LUIS CARANDANG, petitioners,

vs.
RODOLFO BALTAZAR Judge of the Court of First Instance of Leyte, and GASPARA, FRANCISCA, DIONISIO,
ALFREDO, and SALVADOR, all surnamed COQUIA, assisted by their mother, MARIA DALORI, as guardian ad
litem, respondents.

Astilla, De Veyra, Aldaba and Zosa for petitioners.

Jacinto R. Bohol and Pedro B. Talbo for respondents.

OZAETA, J.:

Respondents Gaspara, Francisca, Dionisio, Alfredo, and Salvador Coquia, assisted by their mother and
guardian ad litem Maria Dalori, filed an action in the Court of the First Instance of Leyte against the spouses
Silvestra Coquia and Luis Carandang to recover the possession as owner of four parcels of land, of which three
belong pro indiviso to Alfredo Coquia and his sister, the petitioner Silvestra Coquia, now a deceased, upon the
allegation that they are acknowledged natural children and the sole heirs of the latter. The petitioners
(defendants below) in their answer denied that the respondents are acknowledged natural children of the
deceased Alfredo Coquia.

Pending the trial of the case said respondents (plaintiff's below) filed a petition for alimony pendente lite which
Judge Edmundo S. Piccio granted in the sum of P200 a month (subsequently reduced to P100 a month),
"considering the legal and equitable rights of said plaintiffs in the land question in which they have interests and
their actual destitute situation while the defendants are possessed of considerable real properties," the judge
said.

The respondent judge, Honorable Rodolfo Baltazar, a denied petitioners' motion for reconsideration, holding
that the order of Judge Piccio for alimony pendente lite was well founded; and, on February 26, 1949, ordered
the issuance of a writ of execution against the herein petitioners to collect the sum of P400 corresponding to
four months of unpaid alimony.

We find the present petition for certiorari to annul the above mentioned orders to be well founded.

Rule 63 of the Rules of the Court, which authorizes the granting of alimony pendente lite" at the commencement
of the proper action, or at any time afterwards but prior to the final judgment," is not applicable to this case.
233
The action commenced before the respondent judge was not for support but for the recovery of the ownership
and possession of real property. Manifestly such an action is not "the proper action" contemplated by said rule
The mere fact that the plaintiffs have legal and equitable rights in the property they seek to recover (Q. E. D. )
does not authorize the court to compel the defendants to support the plaintiffs pending the determination of
the suit.

Moreover, the petitioners, who are sister and brother-in law, respectively, of the deceased Alfredo Coquia, are
not bound to support the alleged natural children of the latter. Under the article 143 of the Civil Code only the
following are bound to support each other: (1) husband and wife: (2) legitimate ascendants and descendants:
and (3) parents and acknowledged natural children, and the legitimate descendants of the latter.

Even in an action for divorce and alimony, it has been held that the court has no jurisdiction to grant
alimonypendente lite where the answer to the complaint alleging marriage and praying for divorce denies the
fact of marriage, because the right of a wife to support depends upon her status as such, and where the
existence of such status is put in issue by the pleading, it cannot be presumed to exist for the purpose of
granting alimony. (Yangco vs. Rohde, 1 Phil., 404.)lawphi1.net

The petition is granted and the orders complained of are hereby set aside, without any finding as to costs in
view of the fact that the individual respondents are litigating as paupers.

Moran, C.J., Paras, Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes and Torres, JJ., concur.

G.R. No. L-29959 December 3, 1929

AURELIA DADIVAS DE VILLANUEVA, plaintiff-appellant,

vs.
RAFAEL VILLANUEVA, defendant-appellee.

Harvey and O'Brien for appellant.

Jose G. Generoso for appellee.

STREET, J.:

This action was instituted on May 27, 1927, in the Court of First Instance of the City of Manila by Aurelia Dadivas
de Villanueva against her husband, Rafael Villanueva, for the purpose of obtaining separate maintenance and
custody of the two younger minor children, Guillermo and Sergio Villanueva, as well as a proper allowance for
professional legal services rendered by the plaintiff's attorneys in this action, as well as costs. Upon hearing the
cause the trial court absolved the defendant from the complaint and abrogated a prior order of the court for
maintenance pendente lite, with costs against the plaintiff. From this judgment the plaintiff appealed.

The plaintiff, Aurelia Dadivas de Villanueva, was married to the defendant, Rafael Villanueva, on July 16, 1905, in
the City of Manila, where the pair have since resided. To them have been born three children, namely, Antonio,
Guillermo, and Sergio, who were, at the time of the trial of this case in the lower court, aged respectively 18, 10
and 9 years. The grounds on which separate maintenance is sought infidelity and cruelty. With respect to the
first of these charges the proof shows that during the period of about ten years prior to the institution of the
action, the defendant was guilty of repeated acts of infidelity with four different women, and even after the
action was begun, he is shown to have had illicit relations with still another, an incident which is incorporated in
the case by means of the amended complaint. Thought at all times protesting against these irregularities in her
husband's conduct, the plaintiff appears to have exhibited forbearance; and she long continued in marital
relations with him with a view to keeping the family intact as well as with hope of retrieving him from his erring
course. In the end, however, the incorrigible nature of the defendant in his relations with other women, coupled
with a lack of consideration and even brutality towards the plaintiff, caused her to withdraw from the domestic
hearth and to establish a separate abode for herself and two younger children. This final separation occurred on
April 20, 1927, about one month before the present action was begun.

234
The proof with respect to the charge of cruelty shows that the defendant has not infrequently treated the
plaintiff roughly and that he has at times directed abusive words to her and challenged her to carry her troubles
into court. The proof in support of this charge does not in our opinion establish a case for separate maintenance,
without relation to the graver charge of conjugal infidelity; and if the case depended, for its solution, upon
cruelty alone, the case could doubtless be affirmed, in conformity with the doctrine stated in Arroyo vs. Vazquez
de Arroyo (42 Phil. 54), where the charges of cruelty were found to be unproved or insufficient. In that case,
however, we were able to record the fact that neither of the spouses had at any time been guilty of conjugal
infidelity, and that neither had, so far as the proof showed, even given just cause to the other to suspect illicit
relations with any person. In the case before us repeated acts of conjugal infidelity on the part of the husband
are proved, and he appears to be a recurrent, if not an incurable offender against the sanctity of the marriage
tie. This give the wife an undeniable right to relief.

The law is not so unreasonable as to require a wife to live in marital relations with a husband whose incurable
propensity towards other women makes common habitation with him unbearable. Deeply rooted instincts of
human nature sanction the separation in such case, and the law is not so unreasonable as to require as
acquiescence on the part of the injured party which is beyond the capacity of nature. In order to entitle a wife to
maintain a separate home and to require separate maintenance from her husband it is not necessary that the
husband should bring a concubine into the marital domicile. Perverse and illicit relations with women outside of
the marital establishment are enough. As was said by Justice Moreland in Goitia vs. Campos Rueda (35 Phil., 252,
262), a husband cannot, by his own wrongful acts, relieve himself from the duty to support his wife imposed by
law; and where a husband by wrongful, illegal, and unbearable conduct, drives his wife from the domicile fixed
by him, he cannot take advantage of her departure to abrogate the law applicable to the marital relations and
repudiate his duties thereunder.

In her complaint the plaintiff asks for an allowance of P750 per month, but we are of the opinion that the sum of
P500 per month will suffice, this being in addition to the use which she makes for living quarters of a modest
property belonging to the conjugal estate. During their marital life the spouses have acquired real estate which,
at the time of the trial, was assessed at more than P85,000, and which at the same time was reasonably valued
at more than P125,000. In addition to this the defendant appears to be now earning a substantial salary in
commercial activities. The plaintiff is also entitled to an allowance for attorney's fees which we fix at P1,000 for
services rendered in the trial court and the same amount for services rendered in this court. It appears that the
two younger children are now living with the plaintiff, and her right to their custody will not be disturbed. While
this litigation was pending in the lower court the defendant was required to pay the amount of P500 per month
for maintenance of the plaintiff, under an interlocutory order of June 15, 1927. But these payments ceased
when the appealed decision was promulgated on or about the end of March, 1928. The plaintiff in this case is
therefore entitled to judgment at the rate of P500 per month beginning April 1, 1928, until judgment shall be
promulgated in this case, and from that date the defendant will be required to pay P500 per month for
maintenance as already suggested. The plaintiff will also be awarded the sum of P720 in satisfaction of the
amount paid out for the transcript necessary to this appeal.

The judgment is therefore reversed, and it is ordered that the plaintiff have and recover of the defendant the
sum of P2,000 for attorney's fees, the sum of P720 for expenses of procuring transcript, and the sum of P500 per
month, beginning April 1, 1928, until the promulgation of this decision, after which the date the defendant is
ordered to pay to the plaintiff by way of maintenance, on or before the 10th day of each month, the sum of
P500. So ordered, with costs against appellee.

Malcolm, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.

G.R. No. L-5153 December 10, 1951

GLICERIO MANGOMA, petitioner,

vs.
HON. HIGINIO MACADAEG, as Judge of the Court of First Instance of Manila, Branch X, and CANDELARIA
BAUTISTA, respondents.

Nicodemus L. Dasig for petitioner.

Ricardo D. Galano for respondents.

235
BAUTISTA ANGELO, J.:

This is a petition for certiorari with preliminary injunction to declare null and void an order of the Court of First
Instance of Manila dated September 28, 1951, ordering petitioner to give support pendente lite to his wife and
daughter in the amount of P750 a month beginning January 17, 1951 up to the termination of the case of
separation of property pending between them.

Respondent Candelaria Bautista filed an action against petitioner seeking the separation of the property of the
spouses and the consequent dissolution and liquidation of their conjugal partnership. Months thereafter, prior
to the trial on the merits, respondent prayed the court that pending the determination of the case, she and her
daughter Leticia be given support pendente lite in the amount of P1,000 a month and that petitioner be ordered
to act accordingly. Her motion is based on the following ground: On August 30, 1945, while their marriage was
still subsisting, petitioner contracted another marriage with one Luceria Bernardo; in January, 1946, petitioner
abandoned respondent and two minor daughters and went to live with his second wife; while the bigamy case
against petitioner was under investigation by the City Fiscal of Manila, petitioner refused to give any support to
respondent and her children for their maintenance; petitioner and respondent, through their joint effort and
industry, acquired considerable property which, added to the earnings of petitioner from his various kinds of
business, yields a net income of at least P5,000 a month; petitioner owes them in arrears by way of support a
total of P6,000 from January 17, 1951.

Petitioner objected to the motion pendente lite on the following grounds: Respondent abandoned the conjugal
home to live with an American soldier, a fact admitted by her when she testified in the city fiscals office of
Manila in the investigation of the charge of bigamy filed by her against petitioner; respondent committed
adultery with said American soldier from October to December 1945, and lived with him from January to August
1946; later in 1947, respondent also lived with one Celestino Fernandez up to October 1949; having committed
adultery, respondent, therefore, is not entitled to support; their child Leticia who is under the custody of
respondent should be turned over to petitioner to free her from the influence of her mother who is living under
immoral circumstances; their other two children, Glicerio Jr. and Mercedes, are at present under the custody of
petitioner and are properly taken care of and educated; petitioner has no other occupation except that of a real
estate broker and as such cannot earn more than P20 a month, which is barely sufficient to support and
maintain the two children under his care; due to repeated civil and criminal cases filed against him by
respondent, petitioner had to close his titles factory. thereby incurring a loss of P5,000, as well as his machine
shop, incurring amounting to P30,000; at present petitioner is heavily indebted to several banks and because of
the lis pendens annotated on his certificate of title upon respondent's request, he is placed in a position where
he could not pay his obligation due to his inability to negotiate with said properties. Wherefore, petitioner
prayed that the motion for support pendente lite be denied.

On August 18, 1951, respondent judge authorized his deputy clerk to receive the evidence on the motion for
supportpendente lite, and accordingly several trials were held before said deputy clerk for that purpose, but
before petitioner has had a chance to present his evidence on his special defenses, respondent judge issued on
September 28, 1951, an order granting the motion and ordering petitioner to give support pendente lite to his
wife and daughter Leticia in the amount of P750 a month beginning January 15, 1951 up to the termination of
the case, and to pay the accrued payments within five days from notice. Hence this petition
for certiorari.lawphil.net

In the case of Sanchez vs. Zulueta, 68 Phil., 110 wherein the Court a quo, without acceding to the petition of the
husband that he be given an opportunity to adduce evidence in support of his defense, favorably acted upon the
petition for support pendente lite of the wife and ordered the husband to pay his wife and child a monthly
allowance of P50 pendente lite, this Court, in revoking the order, which was sustained by the Court of Appeals,
said:

We are of the opinion that the Court of Appeals erred in not allowing the defendant to present his
evidence for the purpose of determining whether it is sufficient prima facie to overcome the application.
Adultery on the part of the wife is a valid defense against an action for support (Quintana vs. Lerma, 24
Phil., 285). Consequently, as to the child, it is also a defense that it is the fruit of such adulterous
relations, for in that case, it would not be the child of the defendant and, hence, would not be entitled
236
 to support as such. But as this defense should be established, and not merely alleged, it would be
unavailing if proof thereof is not permitted. It is not of course necessary to go fully into the merits of the
case, it being which it may deem sufficient to enable it to justly resolve the application, one way or the
other, in view of the merely provisional character of the resolution to be entered." (Sanchez vs. Zulueta,
68 Phil., 112.)

The facts of this case show that petitioner has not also been given an opportunity to adduce evidence in support
of the defense he has set up against the motion for support pendente lite. It appears that the respondent judge
commissioned his deputy clerk to receive evidence the parties may desire to present on said motion, but that
after respondent had presented her evidence and before the deputy clerk and been able to complete the
hearing, respondent judge issued the order subject of these proceedings without giving petitioner an
opportunity to present his evidence. It is true several trials were held before the deputy clerk of court, but there
is nothing to show that petitioner has resorted to dilatory tactics as to justify that action on the motion be taken
without receiving his evidence. The affidavit submitted by counsel for petitioner, which stands uncontradicted,
shows that said counsel asked for postponement of the hearing only one and that he failed to appear on the
date set for the continuation of the hearing due to a misunderstanding. At any rate, the court is not persuaded
from a consideration of the pleadings that there has been a deliberate attempt on the part of the petitioner, or
his counsel, to delay the proceedings, and, therefore, before action is taken on the matter, an opportunity
should be given him to be heard, considering the serious nature of his special defense. In line with the ruling of
this Court in the Sanchez case, supra, there is no other alternative than to remand this case to the lower court in
order that immediate steps may be taken relative to the reception of the evidence of petitioner in support of his
opposition.

Wherefore, the order appealed from dated September 28, 1951, is hereby set aside, without special
pronouncement as to costs.

After this decision had become final, the preliminary injunction issued will be dissolved.

Paras, C.J., Feria, Pablo, Bengzon, Padilla, Tuason, Reyes and Jugo, JJ., concur.

G.R. No. L-31897 June 30, 1972

LUIS T. RAMOS, petitioner,

vs.
HONORABLE COURT OF APPEALS, FELISA LAGOS, for herself and in behalf of minors FERNANDO LAGOS and
LORRAINE LAGOS, respondents.

Ceferino Inciong for petitioner.

Jerry P. Rebutoc for private respondents.

CONCEPCION, C.J.:p

This is an original action for certiorari to annul an order of the Court of Appeals.

It appears that, assisted by their mother, Felisa Lagos, the minors Fernando and Lorraine Lagos filed, with the
Court of First Instance of Batangas, a complaint against Luis T. Ramos, the petitioner herein, for support and
damages, alleging that she bore said children, born on August 27, 1963 and June 21, 1965, respectively, in
consequence of illicit relations with said Ramos, who had failed and refused to support said minors,
notwithstanding repeated demands, and despite the fact that he has, as a municipal mayor, the means therefor,
which she does not have. Ramos having denied the main allegations of the complaint and set up a counterclaim
for damages, the case proceeded to trial, after which, on December 18, 1967, said court rendered judgment for
the plaintiffs, sentencing Ramos to pay each of said minors the sum of P75.00 monthly, in addition to the
aggregate sum of "P2,075.00 representing the support in arrears for the elder child, that is, from July 17, 1964,
when defendant stopped giving him the support, up to the filing of the complaint on September 3, 1965," and
"the support in arrears in the amount of P180.00 for the younger child, or from June 21, 1965, when she was

237
born, up to September 3, 1965, when the complaint for support was filed," apart from "the sum of P500.00
representing attorney's fees and costs of suit suffered by the plaintiffs."

Ramos having appealed to the Court of Appeals, plaintiffs-appellees moved therein for support pendente lite. In
a reasoned and signed resolution dated November 21, 1969, Ramos was ordered by the Court of Appeals to
deposit with its Clerk the sum of P4,727.50 — representing one-half of the amount due under the appealed
decision to the aforesaid plaintiffs — "within 15 days from notice, otherwise he will be cited for contempt. Once
the amount is deposited, the Clerk of this Court is directed to deliver the same to plaintiff-appellee Felisa Lagos."
A reconsideration having been denied, Ramos commenced the present action, alleging that the Court of Appeals
had abused its discretion in issuing the aforementioned resolution: (a) "there having been neither a recognition
of paternity by the petitioner nor its establishment by final judgment"; (b) his motion for reconsideration having
been denied without an oral argument requested by him; (c) the Court of Appeals having granted the minors the
sum of P4,727.50, despite the fact that their mother had merely requested "a monthly support of P75.00 for
each child;" (d) said Court having denied petitioner's request for "a 10-day abeyance in the implementation of
the resolution" granting supportpendente lite; (e) the trial court having denied the motion therein filed by the
plaintiffs-appellees for supportpendente lite; and (f) the Court of Appeals not having required Felisa Lagos to file
a bond, despite the fact that she had offered to put one.

Upon the filing of the petition herein and approval of the requisite bond, We issued a writ of preliminary
injunction restraining the enforcement of the contested resolution of the Court of Appeals.

The first ground invoked by the petitioner is predicated upon Yangco vs. Rohde1 which is not in point,
alimonypendente lite having been granted in that case without any evidence, on the status of the plaintiff as
alleged wife of the defendant, who had denied such allegation, unlike the case at bar in which said evidence was
introduced and found to be sufficient, although the trial court's decision is still pending appeal. Francisco vs.
Zandueta.2 — on which petitioner, likewise, relies merely reiterated the stand taken in the Yangco case, on the
impropriety of granting alimony pendente lite on the basis of the bare allegations of the complaint, which are
disputed by the defendant. It, however, pointed out the "substantial difference between the capacity of a
person after the rendition of a final judgment in which that person is declared to be in possession of the status
of a son and his capacity prior to such time when nothing exists other than his suit or claim to be declared in
possession of such a status." In Sanchez vs. Zulueta3 — in which the defendant had been compelled to pay a
monthly allowance pendente lite to his wife, the plaintiff, and her child, after denying him the opportunity,
requested by him, to introduce evidence in support of his defense to the effect that the child had been the
product of her adulterous relations with another man, after she had abandoned the conjugal dwelling — this
Court went farther and said:

We are of the opinion that the Court of Appeals erred in not allowing the defendant to present his evidence for
the purpose of determining whether it is sufficient prima facie to overcome the application. Adultery on the part
of the wife is a valid defense against an action for support (Quintana vs. Lerma, 24 Phil., 285). Consequently, as
to the child, it is also a defense that it is the fruit of such adulterous relations, for in that case, it would not be
the child of the defendant and, hence would not be entitled to support as such. But as this defense should be
established, and not merely alleged, it would be unavailing if proof thereof is not permitted. It is not of course
necessary to go fully into merits of the case, it being sufficient that the court ascertain the kind of amount of
evidence which it may deem sufficient to enable it to justly resolve the application, one way or take other, in view
of the merely provisional character of take resolution to be entered.4

In the subsequent case of Garcia vs. Court of Appeals,5 this Court reversed an order of the Court of Appeals
annulling an order of the trial court granting alimony during the pendency of an appeal from the latter's decision
sentencing the defendant therein and petitioner in the Court of Appeals to acknowledge a natural child.
Speaking through then Chief Justice Bengzon, the Court used the following language:

The appellate tribunal held that the Cavite court had no jurisdiction to issue the questioned
order because the relationship of paternity between petitioner and his alleged natural father
had not yet been established by final judgment. Petitioner, on the other hand, claims that
support pendente lite being in the nature of a temporary relief, final judgment as to the
relationship of the natural father and child is not essential. Arguing his point, he cites
propositions from some decisions of this Court; that only prima facie evidence indicative of such
family relation is necessary; that even an authoritative declaration would be sufficient and

238
 that the obligation to support begins after one is compelled to acknowledge by decree of the
Court.

We think the petitioner's contention accords with reason and authority.

Although the law gives the right of support to acknowledged natural children, and although
Laureano Garcia has not yet been actually acknowledged because the decision has not yet
become executory, still as the confirmation of the order of recognition may be said to relate back
to the date of the original decision, it lies within the discretion of the trial court to direct the
father to give support pending the appeal. Indeed, there may be instance where, in view of the
poverty of the child, it would be a travesty of justice to refuse him support until the decision of
the judge is sustained on appeal. There being at least prima facie evidence of the child's right to
support, the Cavite court acted within its power and discretion.6

As above indicated, not only had evidence on the alleged relation between the minors and Ramos been
introduced in the case at bar. Judgment had, moreover, been rendered finding that said relation had been duly
established, although an appeal from said judgment was and is still pending in the Court of Appeals. Indeed, the
Rules of Court clearly authorizes the granting of support pendente lite, even prior to the rendition of judgment
by the trial court. Sections 1 and 5 of Rule 61 provide:

SEC. 1. Application. — The plaintiff, at the commencement of the proper action, or at any time
afterwards but prior to final judgment, may file an application for support pendente lite, stating
the grounds for the claim and the financial conditions of both parties, and shall be accompanied
by affidavits, depositions or other authentic documents in support thereof.

xxx xxx xxx

SEC. 5. Order. — The court shall determine provisionally the pertinent facts, and shall render
such order as equity and justice may require, having due regard to the necessities of the
applicant, the means of the adverse party, the probable outcome of the case, and such other
circumstances as may aid in the proper elucidation of the question involved. If the application is
granted, the court shall fix the amount of money to be provisionally paid, and the terms of
payment. ... .7

It goes without saying that if, before the rendition of judgment, the trial court may "provisionally" grant
alimonypendente lite, with more reason may an appellate court exercise a similar authority, after a full dress
trial and a decision of the trial court on the merits finding that the claim of filiation and support has been
adequately proven — in the case at bar, beyond doubt — even if such decision were still pending appeal taken
by the party adjudged to be bound to give such support.

Needless to say, the refusal of the trial court to grant, said alimony pendente lite did not and cannot deprive the
appellate court of said authority, or even dent the wisdom of the action taken by the latter, considering that the
former did not give any plausible reason for its aforementioned refusal and that the same may have, in fact,
been due to the appeal taken by the defendant, whose record on appeal had already been approved.

Neither did the failure of the Court of Appeals to hear petitioner herein on oral argument before denying his
motion for reconsideration or to grant him "a 10-day abeyance in the implementation" of said resolution
constitute a grave abuse of discretion, for petitioner is not entitled as a matter of right to said oral argument,
which was discretionary for said appellate court, as was its authority to grant or deny the aforementioned
period of ten (10) days. Furthermore, petitioner has not shown that he could have adduced substantial reasons
to warrant a reversal of the contested resolution had this period been granted or said oral argument taken place.

Again, the grant to the minors — who had merely asked "a monthly support of P75.00 for each child," or
P150.00 a month for both, and, through their mother, had offered to file a bond — of the aggregate sum of
P4,727.50, without requiring a bond therefor, did not constitute a grave abuse of discretion amounting to excess
of jurisdiction, in the light of the circumstances surrounding the case. Indeed, as stated in the appealed decision
of the trial court:

239
 From the evidence presented in this case, the Court does not entertain a doubt that plaintiff and
defendant had illicit relationship and that the two children, namely, Fernando and Lorraine,
both surnamed Lagos, are the result of this illicit relationship. It will be remembered that
although defendant denied having written any letter to plaintiff, yet when the letters Exhibits
"C" to "L", were shown to him the defendant admitted that the writings in said letters are
similar to his. Moreover, if the defendant's allegation that Exhibits "C" to "L" were not written by
him, he could easily hire a handwriting expert to prove that those letters are not his handwriting.
The fact that he did not present a handwriting expert, to prove his contention that the letters
exhibited are not his, only goes to show that he is not really serious in disproving plaintiff's
claims. In fact, it is not improbable that he did not take the trouble of presenting a handwriting
expert because he is afraid that the handwriting expert if presented would only tell the truth,
that is, that those letters are really defendant's own handwriting. Secondly, the Court cannot
believe the evidence presented by the defendant to the effect that it was defendant's legal wife
who recommended the employment of the plaintiff in Manila sometime in 1962 or 1963,
because according to the evidence of the plaintiff, which has not been rebutted by
defendant, the latter and his legal wife were then separated. In fact, from the letters Exhibits "F",
"H" and "J" it appears that it was the defendant who had been promising the plaintiff a job and
he visits her in Dakota (Exhibit "L"). Thirdly, the defendant has not adduced an iota of evidence
to explain why plaintiff would demand from him the support of her children. Neither has
defendant presented evidence to explain why the father of the plaintiff had testified against him
when according to the defendant he and the father of the plaintiff were good friends.Finally,
there seems to be no valid reason why the plaintiff would choose a Mayor, who under ordinary
circumstances is difficult to fight with, in his own municipality. The fact, therefore, that the
defendant is named in the instant complaint as the father of plaintiff's two children only
indicates that plaintiff is merely stating the truth.

The evidence adduced by plaintiff, more particularly the letters Exhibits "C" to "L", corroborate
the testimony of plaintiff that she was constrained to have amorous relationship with defendant
after she lost herself to him. Specifically, in defendant's letter Exhibit "F", he fixed the hour and
place of their rendezvous for Manila, when said letter states "Darling, mahal na mahal kita kaya
pag ako ay iyong kalilimutan ay hindi ko malalaman ang aking gagawin." Defendant's letter of
July 30, 1962 Exhibit "L", clearly reveals that he often saw Felisa at Dakota St., Manila, when he
asked in said letter for understanding in not seeing her everyday. In short, the evidence
presented, clearly shows that there was an amorous relationship between plaintiff and
defendant, the latter being a married man, and that the two children were conceived and born
at the time of this relationship. These two children possess the status of illegitimate children
other than natural, who are entitled to support and other successional rights as granted in the
Civil Code (Article 287, New Civil Code). As such illegitimate children, defendant has the
obligation to support them.8

Then, too, the sum of P4,727.50, stated in the resolution complained of, represented merely one-half (½) of the
aggregate amount due under the decision of the trial court, as of the date of the contested resolution of the
Court of Appeals, and the reasons therein adduced by petitioner herein, as well as those given by him in this
petition and memorandum herein are basically weak, feeble and insubstantial.

Besides, the relief which may be given to a party depends, not so much upon the prayer in his motion, as upon
the allegations thereof and the pertinent facts.9 In the present case, it is not disputed that one of the plaintiffs
was born on August 27, 1963 and the other on June 21, 1965. On the date of the contested resolution, 10 they
were, therefore, 6 and 4 years of age, respectively. The minors are now, therefore, around 9 and 7 years old,
respectively, or of school age. In addition thereto, they have been litigating since September 5, 1965, or almost
seven (7) years, and the decision in their favor is still pending appeal. Paraphrasing Garcia v. Court of
Appeals, 11 the circumstances obtaining in the present case suggest that this is an instance where, in view of the
poverty of herein private respondents, "it would be a travesty of justice" to refuse them support until the
decision of the trial judge "is sustained on appeal."

All these factors considered, We do not feel that the Court of Appeals has gravely abused its discretion or
exceeded its jurisdiction in acting as it did.

240
WHEREFORE, the petition herein should be, as it is hereby, dismissed, and the writ prayed for denied, with costs
against herein petitioner, Luis T. Ramos. The writ of preliminary injunction issued on May 20, 1970 is hereby set
aside. It is so ordered.

Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ.,
concur.

G.R. No. 125041 June 30, 2006

MA. BELEN B. MANGONON, for and in behalf of her minor children REBECCA ANGELA DELGADO and REGINA
ISABEL DELGADO. Petitioner,
vs.
HON. COURT OF APPEALS, HON. JUDGE JOSEFINA GUEVARA-SALONGA, Presiding Judge, RTC-Makati, Branch
149, FEDERICO C. DELGADO and FRANCISCO C. DELGADO, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals dated 20 March
1996, affirming the Order, dated 12 September 19952 of the Regional Trial Court (RTC), Branch 149, Makati,
granting support pendente lite to Rebecca Angela (Rica) and Regina Isabel (Rina), both surnamed Delgado.

The generative facts leading to the filing of the present petition are as follows:

On 17 March 1994, petitioner Ma. Belen B. Mangonon filed, in behalf of her then minor children Rica and Rina, a
Petition for Declaration of Legitimacy and Support, with application for support pendente lite with the RTC
Makati.3In said petition, it was alleged that on 16 February 1975, petitioner and respondent Federico Delgado
were civilly married by then City Court Judge Eleuterio Agudo in Legaspi City, Albay. At that time, petitioner was
only 21 years old while respondent Federico was only 19 years old. As the marriage was solemnized without the
required consent per Article 85 of the New Civil Code,4 it was annulled on 11 August 1975 by the Quezon City
Juvenile and Domestic Relations Court.5

On 25 March 1976, or within seven months after the annulment of their marriage, petitioner gave birth to twins
Rica and Rina. According to petitioner, she, with the assistance of her second husband Danny Mangonon, raised
her twin daughters as private respondents had totally abandoned them. At the time of the institution of the
petition, Rica and Rina were about to enter college in the United States of America (USA) where petitioner,
together with her daughters and second husband, had moved to and finally settled in. Rica was admitted to the
University of Massachusetts (Amherst) while Rina was accepted by the Long Island University and Western New
England College. Despite their admissions to said universities, Rica and Rina were, however, financially incapable
of pursuing collegiate education because of the following:

i) The average annual cost for college education in the US is about US$22,000/year, broken down as
follows:

Tuition Fees US$13,000.00

Room & Board 5,000.00

Books 1,000.00

Yearly Transportation &

Meal Allowance 3,000.00

Total US$ 22,000.00

or a total of US$44,000.00, more or less, for both Rica and Rina

241
 ii) Additionally, Rica and Rina need general maintenance support each in the amount of US$3,000.00 per
year or a total of US$6,000 per year.

iii) Unfortunately, petitioner’s monthly income from her 2 jobs is merely US$1,200 after taxes which she
can hardly give general support to Rica and Rina, much less their required college educational support.

iv) Neither can petitioner’s present husband be compelled to share in the general support and college
education of Rica and Rina since he has his own son with petitioner and own daughter (also in college)
to attend to.

v) Worse, Rica and Rina’s petitions for Federal Student Aid have been rejected by the U.S. Department
of Education.6

Petitioner likewise averred that demands7 were made upon Federico and the latter’s father, Francisco,8 for
general support and for the payment of the required college education of Rica and Rina. The twin sisters even
exerted efforts to work out a settlement concerning these matters with respondent Federico and respondent
Francisco, the latter being generally known to be financially well-off.9 These demands, however, remained
unheeded. Considering the impending deadline for admission to college and the opening of classes, petitioner
and her then minor children had no choice but to file the petition before the trial court.

Petitioner also alleged that Rica and Rina are her legitimate daughters by respondent Federico since the twin
sisters were born within seven months from the date of the annulment of her marriage to respondent Federico.
However, as respondent Federico failed to sign the birth certificates of Rica and Rina, it was imperative that
their status as legitimate children of respondent Federico, and as granddaughters of respondent Francisco, be
judicially declared pursuant to Article 173 of the Family Code.10

As legitimate children and grandchildren, Rica and Rina are entitled to general and educational support under
Articles 17411 and 195(b)12 in relation to Articles 194(1 and 2)13 and 199(c)14 of the Family Code. Petitioner
alleged that under these provisions, in case of default on the part of the parents, the obligation to provide
support falls upon the grandparents of the children; thus, respondent Federico, or in his default, respondent
Francisco should be ordered to provide general and educational support for Rica and Rina in the amount of
US$50,000.00, more or less, per year.

Petitioner also claimed that she was constrained to seek support pendente lite from private respondents - who
are millionaires with extensive assets both here and abroad - in view of the imminent opening of classes, the
possibility of a protracted litigation, and Rica and Rina’s lack of financial means to pursue their college education
in the USA.

In his Answer,15 respondent Francisco stated that as the birth certificates of Rica and Rina do not bear the
signature of respondent Federico, it is essential that their legitimacy be first established as "there is no basis to
claim support until a final and executory judicial declaration has been made as to the civil status of the
children."16 Whatever good deeds he may have done to Rica and Rina, according to respondent Francisco, was
founded on pure acts of Christian charity. He, likewise, averred that the order of liability for support under
Article 199 of the Family Code is not concurrent such that the obligation must be borne by those more closely
related to the recipient. In this case, he maintained that responsibility should rest on the shoulders of petitioner
and her second husband, the latter having voluntarily assumed the duties and responsibilities of a natural father.
Even assuming that he is responsible for support, respondent Francisco contends that he could not be made to
answer beyond what petitioner and the father could afford.

On 24 May 1994, petitioner filed a Motion to Declare Defendant (respondent herein) Federico in Default.17 This
was favorably acted upon by the trial court in the Order dated 16 June 1994.18

On 5 August 1994, respondent Federico filed a Motion to Lift Order of Default alleging that the summons and a
copy of the petition were not served in his correct address.19 Attached thereto was his Answer20 where he
claimed that petitioner had no cause of action against him. According to him, he left for abroad and stayed there
for a long time "[w]ithin the first one hundred twenty (120) days of the three hundred days immediately
preceding March 25, 1976" and that he only came to know about the birth of Rica and Rina when the twins
introduced themselves to him seventeen years later. In order not to antagonize the two, respondent Federico
claimed he did not tell them that he could not be their father. Even assuming that Rica and Rina are, indeed, his
242
daughters, he alleged that he could not give them the support they were demanding as he was only
making P40,000.00 a month.

Finding sufficient ground in the motion filed by respondent Federico, the trial court lifted its Order dated 16
June 1994 and admitted his Answer.21

In the meantime, on 25 April 1994, petitioner filed an Urgent Motion to Set Application for Support Pendente
Lite for Hearing because Rica and Rina both badly needed immediate financial resources for their
education.22 This Motion was opposed by respondent Francisco.23 After both parties submitted supplemental
pleadings to bolster their respective positions, the trial court resolved the motion in an Order dated 12
September 1995 in this wise:

WHEREFORE, in the light of the foregoing considerations, respondents are hereby directed to provide a monthly
support (pendente lite) of P5,000.00 each or a total of P10,000.00 for the education of Rebecca Angela and
Regina Isabel Delgado to be delivered within the first five days of each month without need of demand.24

Unsatisfied with the Order of the trial court, petitioner brought the case to the Court of Appeals via Petition for
Certiorari. The Court of Appeals affirmed the holding of the trial court and disposed the petition in the following
manner:

WHEREFORE, the petition for certiorari is hereby DISMISSED and the Order of the lower court dated September
12, 1995 is hereby AFFIRMED.25

Petitioner’s Motion for Reconsideration was denied through the Resolution of the Court of Appeals dated 16
May 1996.26

Petitioner is now before this Court claiming that the Decision of the Court of Appeals was tainted with the
following errors:

RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENT JUDGE DID NOT COMMIT GRAVE
ABUSE OF DISCRETION IN FIXING THE AMOUNT OF MONTHLY SUPPORT PENDENTE LITE GRANTED TO
PETITIONER’S CHILDREN AT A MEASLEY P5,000.00 PER CHILD.

I.

RESPONDENT COURT IGNORED EVIDENCE ON RECORD OF THE FINANCIAL INCAPACITY OF RICA AND RINA’S
PARENTS IN DEFAULT OF WHOM THE OBLIGATION TO GIVE SUPPORT DEVOLVES ON THE GRANDFATHER.

II.

IT BEING ESTABLISHED THAT THE PERSON OBLIGED TO GIVE SUPPORT – GRANDFATHER DON PACO – IS
UNDOUBTEDLY CAPABLE OF GIVING THE AMOUNT DEMANDED, RESPONDENT COURT ERRED IN NOT HOLDING
THAT RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION IN FIXING AN AMOUNT OF SUPPORT
PENDENTE LITE THAT IS OBVIOUSLY INADEQUATE TO SUPPORT THE EDUCATIONAL REQUIREMENTS OF THE
RECIPIENTS.27

At the time of the filing of the present Petition, it is alleged that Rica had already entered Rutgers University in
New Jersey with a budget of US$12,500.00 for academic year 1994-1995. She was able to obtain a tuition fee
grant of US$1,190.00 and a Federal Stafford loan from the US government in the amount of US$2,615.00. 28 In
order to defray the remaining balance of Rica’s education for said school year, petitioner claims that she had to
secure a loan under the Federal Direct Student Loan Program.

Meanwhile, Rina entered CW Post, Long Island University, where she was expected to spend US$20,000.00 for
the school year 1994-1995. She was given a financial grant of US$6,000.00, federal work study assistance of
US$2,000.00, and a Federal Stafford loan of US$2,625.00.29 Again, petitioner obtained a loan to cover the
remainder of Rina’s school budget for the year.

Petitioner concedes that under the law, the obligation to furnish support to Rica and Rina should be first
imposed upon their parents. She contends, however, that the records of this case demonstrate her as well as
243
respondent Federico’s inability to give the support needed for Rica and Rina’s college education. Consequently,
the obligation to provide support devolves upon respondent Francisco being the grandfather of Rica and Rina.

Petitioner also maintains that as respondent Francisco has the financial resources to help defray the cost of Rica
and Rina’s schooling, the Court of Appeals then erred in sustaining the trial court’s Order directing respondent
Federico to pay Rica and Rina the amount of award P5,000.00 each as monthly support pendente lite.

On the other hand, respondent Francisco argues that the trial court correctly declared that petitioner and
respondent Federico should be the ones to provide the support needed by their twin daughters pursuant to
Article 199 of the Family Code. He also maintains that aside from the financial package availed of by Rica and
Rina in the form of state tuition aid grant, work study program and federal student loan program, petitioner
herself was eligible for, and had availed herself of, the federal parent loan program based on her income and
properties in the USA. He, likewise, insists that assuming he could be held liable for support, he has the option to
fulfill the obligation either by paying the support or receiving and maintaining in the dwelling here in the
Philippines the person claiming support.30 As an additional point to be considered by this Court, he posits the
argument that because petitioner and her twin daughters are now US citizens, they cannot invoke the Family
Code provisions on support as "[l]aws relating to family rights and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though living abroad."31

Respondent Federico, for his part, continues to deny having sired Rica and Rina by reiterating the grounds he
had previously raised before the trial court. Like his father, respondent Federico argues that assuming he is
indeed the father of the twin sisters, he has the option under the law as to how he would provide support. Lastly,
he assents with the declaration of the trial court and the Court of Appeals that the parents of a child should
primarily bear the burden of providing support to their offspring.

The petition is meritorious.

As a preliminary matter, we deem it necessary to briefly discuss the essence of support pendente lite. The
pertinent portion of the Rules of Court on the matter provides:

Rule 61
SUPPORT ‘PENDENTE LITE’

SECTION 1. Application.- At the commencement of the proper action or proceeding, or at any time prior to the
judgment or final order, a verified application for support pendente lite may be filed by any party stating the
grounds for the claim and the financial conditions of both parties, and accompanied by affidavits, depositions or
other authentic documents in support thereof.

xxxx

SEC. 4. Order.- The court shall determine provisionally the pertinent facts, and shall render such orders as justice
and equity may require, having due regard to the probable outcome of the case and such other circumstances as
may aid in the proper resolution of the question involved. If the application is granted, the court shall fix the
amount of money to be provisionally paid or such other forms of support as should be provided, taking into
account the necessities of the applicant and the resources or means of the adverse party, and the terms of
payment or mode for providing the support. If the application is denied, the principal case shall be tried and
decided as early as possible.

Under this provision, a court may temporarily grant support pendente lite prior to the rendition of judgment or
final order. Because of its provisional nature, a court does not need to delve fully into the merits of the case
before it can settle an application for this relief. All that a court is tasked to do is determine the kind and amount
of evidence which may suffice to enable it to justly resolve the application. It is enough that the facts be
established by affidavits or other documentary evidence appearing in the record.32lavvphi1.net

After the hearings conducted on this matter as well as the evidence presented, we find that petitioner was able
to establish, by prima facie proof, the filiation of her twin daughters to private respondents and the twins’
entitlement to support pendente lite. In the words of the trial court –

244
By and large, the status of the twins as children of Federico cannot be denied. They had maintained constant
communication with their grandfather Francisco. As a matter of fact, respondent Francisco admitted having
wrote several letters to Rica and Rina (Exhs. A, B, C, D, E, F, G, G-1 to G-30). In the said letters, particularly at the
bottom thereof, respondent Francisco wrote the names of Rica and Rina Delgado. He therefore was very well
aware that they bear the surname Delgado. Likewise, he referred to himself in his letters as either "Lolo Paco" or
"Daddy Paco." In his letter of October 13, 1989 (Exh. G-21), he said "as the grandfather, am extending a financial
help of US$1,000.00." On top of this, respondent Federico even gave the twins a treat to Hongkong during their
visit to the Philippines. Indeed, respondents, by their actuations, have shown beyond doubt that the twins are
the children of Federico.33

Having addressed the issue of the propriety of the trial court’s grant of support pendente lite in favor of Rica and
Rina, the next question is who should be made liable for said award.

The pertinent provision of the Family Code on this subject states:

ART. 199. Whenever two or more persons are obliged to give support, the liability shall devolve upon the
following persons in the order herein provided:

(1) The spouse;

(2) The descendants in the nearest degree;

(3) The ascendants in the nearest degree; and

(4) The brothers and sisters.

An eminent author on the subject explains that the obligation to give support rests principally on those more
closely related to the recipient. However, the more remote relatives may be held to shoulder the responsibility
should the claimant prove that those who are called upon to provide support do not have the means to do so.34

In this case, both the trial court and the Court of Appeals held respondent Federico liable to provide monthly
support pendente lite in the total amount of P10,000.00 by taking into consideration his supposed income
of P30,000.00 to P40,000.00 per month. We are, however, unconvinced as to the veracity of this ground relied
upon by the trial court and the Court of Appeals.

It is a basic procedural edict that questions of fact cannot be the proper subject of a petition for review under
Rule 45 of the 1997 Rules of Civil Procedure. The rule finds a more stringent application where the Court of
Appeals upholds the findings of fact of the trial court; in such a situation, this Court, as the final arbiter, is
generally bound to adopt the facts as determined by the appellate and the lower courts. This rule, however, is
not ironclad as it admits of the following recognized exceptions: "(1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible;
(3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5)
when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when
the findings are contrary to that of the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the
Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion."35 The case at bar falls within the seventh and eleventh
exceptions.

The trial court gave full credence to respondent Federico’s allegation in his Answer36 and his testimony37 as to
the amount of his income. We have, however, reviewed the records of this case and found them bereft of
evidence to support his assertions regarding his employment and his earning. Notably, he was even required by
petitioner’s counsel to present to the court his income tax return and yet the records of this case do not bear a
copy of said document.38 This, to our mind, severely undermines the truthfulness of respondent Federico’s
assertion with respect to his financial status and capacity to provide support to Rica and Rina.

245
In addition, respondent Francisco himself stated in the witness stand that as far as he knew, his son, respondent
Federico did not own anything –

"Atty. Lopez:

I have here another letter under the letter head of Mr. & Mrs. Dany Mangonon, dated October 19, 1991
addressed to Mr. Francisco Delgado signed by "sincerely, Danny Mangonon, can you remember."

xxxx

WITNESS:

A: I do remember this letter because it really irritated me so much that I threw it away in a waste basket. It is a
very demanding letter, that is what I do not like at all.

ATTY. LOPEZ:

Q: It is stated in this letter that "I am making this request to you and not to your son, Rico, for reasons we both
are aware of." Do you know what reason that is?

A: Yes. The reason is that my son do not have fix employment and do not have fix salary and income and they
want to depend on the lolo.

x x x xlavvphi1.net

Q: Would you have any knowledge if Federico owns a house and lot?

A: Not that I know. I do not think he has anything.

Q: How about a car?

A: Well, his car is owned by my company.39

Respondent Federico himself admitted in court that he had no property of his own, thus:

Q: You also mentioned that you are staying at Mayflower Building and you further earlier testified that this
building belongs to Citadel Corporation. Do you confirm that?

A: Yes, sir.

Q: What car are you driving, Mr. Witness?

A: I am driving a lancer, sir.

Q: What car, that registered in the name of the corporation?

A: In the corporation, sir.

Q: What corporation is that?

A: Citadel Commercial, Inc., sir.

Q: What properties, if any, are registered in your name, do you have any properties, Mr. Witness?

A: None, sir."40 (Emphasis supplied.)

Meanwhile, respondent Francisco asserts that petitioner possessed the capacity to give support to her twin
daughters as she has gainful employment in the USA. He even went as far as to state that petitioner’s income
246
abroad, when converted to Philippine peso, was much higher than that received by a trial court judge here in
the Philippines. In addition, he claims that as she qualified for the federal parent loan program, she could very
well support the college studies of her daughters.

We are unconvinced. Respondent Francisco’s assertion that petitioner had the means to support her daughters’
education is belied by the fact that petitioner was even forced by her financial status in the USA to secure the
loan from the federal government. If petitioner were really making enough money abroad, she certainly would
not have felt the need to apply for said loan. The fact that petitioner was compelled to take out a loan is enough
indication that she did not have enough money to enable her to send her daughters to college by herself.
Moreover, even Rica and Rina themselves were forced by the circumstances they found themselves in to secure
loans under their names so as not to delay their entrance to college.

There being prima facie evidence showing that petitioner and respondent Federico are the parents of Rica and
Rina, petitioner and respondent Federico are primarily charged to support their children’s college education. In
view however of their incapacities, the obligation to furnish said support should be borne by respondent
Francisco. Under Article 199 of the Family Code, respondent Francisco, as the next immediate relative of Rica
and Rina, is tasked to give support to his granddaughters in default of their parents. It bears stressing that
respondent Francisco is the majority stockholder and Chairman of the Board of Directors of Citadel Commercial,
Incorporated, which owns and manages twelve gasoline stations, substantial real estate, and is engaged in
shipping, brokerage and freight forwarding. He is also the majority stockholder and Chairman of the Board of
Directors of Citadel Shipping which does business with Hyundai of Korea. Apart from these, he also owns the
Citadel Corporation which, in turn, owns real properties in different parts of the country. He is likewise the
Chairman of the Board of Directors of Isla Communication Co. and he owns shares of stocks of Citadel Holdings.
In addition, he owns real properties here and abroad.41 It having been established that respondent Francisco has
the financial means to support his granddaughters’ education, he, in lieu of petitioner and respondent Federico,
should be held liable for support pendente lite.

Anent respondent Francisco and Federico’s claim that they have the option under the law as to how they could
perform their obligation to support Rica and Rina, respondent Francisco insists that Rica and Rina should move
here to the Philippines to study in any of the local universities. After all, the quality of education here, according
to him, is at par with that offered in the USA. The applicable provision of the Family Code on this subject
provides:

Art. 204. The person obliged to give support shall have the option to fulfill the obligation either by paying the
allowance fixed, or by receiving and maintaining in the family dwelling the person who has a right to receive
support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto.

Under the abovecited provision, the obligor is given the choice as to how he could dispense his obligation to give
support. Thus, he may give the determined amount of support to the claimant or he may allow the latter to stay
in the family dwelling. The second option cannot be availed of in case there are circumstances, legal or moral,
which should be considered.

In this case, this Court believes that respondent Francisco could not avail himself of the second option. From the
records, we gleaned that prior to the commencement of this action, the relationship between respondent
Francisco, on one hand, and petitioner and her twin daughters, on the other, was indeed quite pleasant. The
correspondences exchanged among them expressed profound feelings of thoughtfulness and concern for one
another’s well-being. The photographs presented by petitioner as part of her exhibits presented a seemingly
typical family celebrating kinship. All of these, however, are now things of the past. With the filing of this case,
and the allegations hurled at one another by the parties, the relationships among the parties had certainly been
affected. Particularly difficult for Rica and Rina must be the fact that those who they had considered and claimed
as family denied having any familial relationship with them. Given all these, we could not see Rica and Rina
moving back here in the Philippines in the company of those who have disowned them.

Finally, as to the amount of support pendente lite, we take our bearings from the provision of the law mandating
the amount of support to be proportionate to the resources or means of the giver and to the necessities of the
recipient.42 Guided by this principle, we hold respondent Francisco liable for half of the amount of school
expenses incurred by Rica and Rina as support pendente lite. As established by petitioner, respondent Francisco
has the financial resources to pay this amount given his various business endeavors.

247
Considering, however, that the twin sisters may have already been done with their education by the time of the
promulgation of this decision, we deem it proper to award support pendente lite in arrears43 to be computed
from the time they entered college until they had finished their respective studies.

The issue of the applicability of Article 15 of the Civil Code on petitioner and her twin daughters raised by
respondent Francisco is best left for the resolution of the trial court. After all, in case it would be resolved that
Rica and Rina are not entitled to support pendente lite, the court shall then order the return of the amounts
already paid with legal interest from the dates of actual payment.44

WHEREFORE, premises considered, this Petition is PARTIALLY GRANTED. The Decision of the Court of Appeals
dated 20 March 1996 and Resolution dated 16 May 1996 affirming the Order dated 12 September 1995 of the
Regional Trial Court, Branch 149, Makati, fixing the amount of support pendente lite to P5,000.00 for Rebecca
Angela and Regina Isabel, are hereby MODIFIED in that respondent Francisco Delgado is hereby held liable for
support pendente lite in the amount to be determined by the trial court pursuant to this Decision. Let the
records of this case be remanded to the trial court for the determination of the proper amount of support
pendente lite for Rebecca Angela and Regina Isabel as well as the arrearages due them in accordance with this
Decision within ten (10) days from receipt hereof. Concomitantly, the trial court is directed to proceed with the
trial of the main case and the immediate resolution of the same with deliberate dispatch. The RTC Judge, Branch
149, Makati, is further directed to submit a report of his compliance with the directive regarding the support
pendente lite within ten (10) days from compliance thereof.

SO ORDERED.

MINITA V. CHICO-NAZARIO

G.R. No. 33795 September 4, 1931

ALEIDA SAAVEDRA, plaintiff-appellant,

vs.
CEFERINO YBAÑEZ ESTRADA, defendant-appellee.

Gullas, Lopez and Tuaño for appellant.

No appearance for appellee.

STREET, J.:

This action was instituted in the Court of First Instance of Cebu by Aleida Saavedra against her husband, Ceferino
Ybañez Estrada. The purpose of the complaint is to secure a judgment for maintenance for the plaintiff and her
children from the defendant, who is her husband, and to obtain an order requiring him to pay such maintenance
not only in the future but for a period in the past, beginning in 1920, during which the defendant has
contributed nothing for the support of his family. The petitory part of the complaint asks for other incidental
relief consisting of an accounting, and a writ of injunction to prohibit the defendant, his attorneys, agents and
representatives from selling, mortgaging, or in any manner transferring the property pertaining to the conjugal
partnership, without express authorization from the court.

Upon hearing the cause the trial court entered an order requiring the defendant to pay the plaintiff the sum of
P200 per month beginning September, 1929, the date of the filing of this action, and ending with the month of
March 30, 1930, when this decision was promulgated, after which he required the defendant to pay, in future
installments, a monthly stipend of P200, and further to reimburse the plaintiff in the amount of P2,000 for
attorneys' fees, and the costs of the action. From this judgment the plaintiff appealed.

The parties in this case are husband and wife, who were married in January, 1904, in Dumaguete, Oriental
Negros. As a result of their marriage nine children have been born, three of whom are dead and six living. Two
of the living children are already of age, namely, Manuela and Gabriela. The other four are still minors, living
with their mother. In the course of their marriage a large amount of land has been acquired, consisting of over
400 hectares of land, which property was at the time of the institution of this action stocked with several
hundred head of cattle, — all property of the conjugal partnership.

248
The married life of the spouses appears not to have been happy, owing to the loose morals and violent
disposition of the defendant and his frequent and persistent mistreatment of his wife. In order to escape from
his abuse, the plaintiff was compelled in 1914 to take refuge with all her children in the house of a neighbor.
Upon promise upon the part of the husband to mend his ways, marital life was resumed towards the end of the
same year. Four years later, while the plaintiff was enceinte with her ninth child, the defendant treated her with
personal violence, and she was compelled to remove herself from contact with him by obtaining
accommodations for herself and all her children in the San Jose asylum in Cebu. She there remained for some
time under the care of the sisters of charity, giving birth to her last child. Finally, about September, 1920, the
plaintiff was forced to present a civil action seeking an order requiring the defendant to supply maintenance for
herself and children, but in 1926 the defendant prevailed upon her to dismiss said action upon his promise to
supply her needs. This promise was not kept; and for more than a decade this woman has struggled alone
maintaining her family as best she could by obtaining credit from strangers and sacrificing paraphernal property
of her own.

Worst of all, from a marital point of view, the defendant has been in the habit of using the servant women
around his place as mistress, and he has a child by a woman who was his servant in years past. At the time this
case was tried, he was in illicit relations with another servant. This course of conduct has made cohabitation
between the plaintiff and defendant a moral impossibility.

The first error assigned by the appellant is directed to the failure of his Honor, the trial judge, to allow the
amount of P330 per month for the plaintiff's expenses, from the date of filing of the complaint, in taking care of
herself and the four children who are dependent upon her. As already stated, only P200 per month was allowed
for these expenses, and we are of the opinion that the estimate of the trial court was too conservative. The
plaintiff specified in detail the items deemed absolutely necessary to defray her expenses, and these items are,
in our opinion, within the bounds of strict economy. There is nothing claimed for luxuries or extravagances, such
as automobile hire, salary of chauffeur, telephone rent, and the like. The ages of the 10 to 16 or 17 years, that is
to say, they were then arriving at the age when expenses for schooling, clothing, and other necessary items are
beginning to make themselves felt in the family. On the other hand, the value of the community property is
considerable, consisting of a large hacienda with many thousand coconut trees in bearing and several hundred
head of cattle and carabao, worth all together around P100,000. We think that the allowance of the full amount
claimed, or P330 per month, since the institution of this action, as well as for the future, is a proper allowance,
and the judgment will be modified accordingly.

The second error is directed to the failure of the lower court to award judgment for past due maintenance
accruing under a preliminary order in case No. 3335, effective September, 1920, and running until the present
action was instituted. In this connection it appears that an order for maintenance pendente lite was entered by
the trial court in that case, and nothing has ever been paid upon said account. Nevertheless, it appears that, on
May 21, 1926, the herein plaintiff, also plaintiff in case No. 3335, cause said action to be dismissed, in reliance
upon the defendant's promises. The dismissal of the said case necessarily had the effect of abrogating the order
for maintenancependente lite, and placed the plaintiff in a position where she is unable to enforce that order.
An order pendente liteis in its very nature contingent, and the dismissal of the action had the effect of
abrogating the order.

It appears, however, that as a result of the failure of the defendant to pay said maintenance under the order
referred to, the present plaintiff has been compelled to incur debts for the maintenance of herself and family,
and to pay these debts, so far as they have been paid, she has been compelled to sacrifice valuable paraphernal
property under authority granted by the court. The amount which the plaintiff has been compelled to disburse
in this way, and the value of the paraphernal property sacrificed, or obligations incurred, have not been proved;
and while it is obvious that the defendant is under an obligation to reimburse the plaintiff for these outlays and
sacrifices, we are not in a position to give her relief as to such items, under the prayer of the present complaint.
But the order hereinafter made for the affirmance of the judgment in this respect will be made without
prejudice to her right hereafter, by independent action, or in the ultimate liquidation of the conjugal estate, to
be reimbursed as to the matters mentioned.

The third error is directed to the failure of the court to concede to the plaintiff an accounting of the income
received by the defendant from the property of the conjugal partnership; and she seeks judgment for her share
therein. We are unable to see the necessity for such an accounting, as it will be more appropriate in the
liquidation of the conjugal estate.

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The fourth assignment of the appellant is directed to the supposed error of the trial court in refusing to grant to
the plaintiff an injunction to restrain him and his agents from alienating the conjugal property without the
permission of the court. The proof undoubtedly shows a situation where the plaintiff and her children are in
danger of being embarrassed or defrauded by possible future acts of the defendant in alienating the conjugal
property, unless some step is taken to protect their interest. The majority of the court, however, are of the
opinion that the proper method to accomplish this is for the plaintiff to cause to be noted upon the registry of
property, as she is hereby authorized to do, the fact that the conjugal property is subject to the rights of the
plaintiff to future maintenance at the rate of P330 per month, payable out of said property or its proceeds
(Baello vs. Villanueva and Villanueva, 54 Phil., 213); and although the record before us does not contain a
description of the property sufficient to make the proper order here, the trial court will be directed to make the
proper order for the annotation of this lien, upon proof, if necessary, to be submitted by the plaintiff.

It being understood, therefore, first, that the amount of maintenance accruing to the plaintiff from the date of
the institution of this action is at the rate of P330 per month, amounting to P7,920, to the date of the
promulgation of this decision, which amount the defendant is directed to pay to the plaintiff; secondly, that
from and after this date she is entitled to recover the sum of P330 per month, which the defendant is ordered to
pay into court on or before the 10th day of each month, beginning October, 1931; thirdly, that the plaintiff is
entitled to have the encumbrance indicated in this right to maintenance inscribed on the registry of property;
and, fourthly, that this judgment is without prejudice to the right of the plaintiff to be reimbursed for any
amount, or amounts, which she may have expended from the proceeds of her paraphernal property, or for
which she may have become indebted upon account of the necessary maintenance for herself and children prior
to the bringing of this action, the judgment appealed from, as thus modified, is affirmed. So ordered, with the
costs against the appellee.

Avanceña, C.J., Johnson, Malcolm, Villamor, Romualdez, Villa-Real, and Imperial, JJ., concur.

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