G.R. No.

199324 January 7, 2013

EXECUTIVE SECRETARY, SECRETARY OF FINANCE, COMMISSIONER OF CUSTOMS,
DISTRICT COLLECTOR OF CUSTOMS, Port of Aparri, Cagayan, DISTRICT COLLECTOR
OF CUSTOMS, Port of San Fernando, La Union, and HEAD OF THE LAND
TRANSFORTATION OFFICE, Petitioners,
vs.
FORERUNNER MULTI RESOURCES, INC., Respondent.
D E C I S I O N
CARPIO, J .:
The Case
We review
1
a ruling
2
of the Court of Appeals enjoining the government from enforcing,
litispendentia, a ban on the importation of used motor vehicles.
The Facts
Executive Order No. 156 (EO 156)
3
, issued by President Gloria Macapagal-Arroyo (President
Arroyo) on 12 December 2002, imposes a partial ban on the importation of used motor
vehicles.
4
The ban is part of several measures EO 156 adopts to "accelerate the sound
development of the motor vehicle industry in the Philippines."
5
In Executive Secretary v.
Southwing Heavy Industries, Inc. and two related petitions
6
(collectively, Southwing), we found
EO 156 a valid executive issuance enforceable throughout the Philippine customs territory,
except in the Subic Special Economic and Freeport Zone in Zambales (Subic Freeport) by virtue
of its status as a "separate customs territory" under Republic Act No. 7227.
7

Respondent Forerunner Multi Resources, Inc. (respondent), a corporation engaged in the
importation of used motor vehicles via the ports of Aparri, Cagayan and San Fernando, La Union,
sued the government in the Regional Trial Court of Aparri, Cagayan (trial court) to declare invalid
EO 156, impleading petitioner public officials as respondents.
8
Respondent attacked EO 156 for
(1) having been issued by President Arroyo ultra vires; (2) trenching the Due Process and Equal
Protection Clauses of the Constitution; and (3) having been superseded by Executive Order No.
418 (EO 418),
9
issued by President Arroyo on 4 April 2005, modifying the tariff rates of imported
used motor vehicles. Respondent sought a preliminary injunctive writ to enjoin, litispendentia, the
enforcement of EO 156.
The Ruling of the Trial Court
Acting on respondents application for preliminary injunctive remedy, the trial court granted relief,
initially by issuing a temporary restraining order followed by a writ of preliminary injunction
granted in its Order of 27 November 2008.
10
On petitioners motion, however, the trial court
reconsidered its Order and lifted the injunctive writ on 7 July 2010. The trial court grounded its
ruling on Southwing which it considered as negating any "clear and unmistakable legal right" on
the part of respondent to receive the "protection of a writ of preliminary injunction."
11

Respondent elevated the case to the Court of Appeals in a certiorari petition.
The Ruling of the Court of Appeals
The Court of Appeals granted certiorari, set aside the trial courts Order of 7 July 2010 and
reinstated its Order of 27 November 2008. In the appellate courts estimation, the trial court
committed grave abuse of discretion in lifting the preliminary injunctive writ it earlier issued. The
appellate court held that the implementation of EO 156 "would put petitioner in a financial
crisis."
12
As authority, the appellate court invoked by analogy this Courts ruling in Filipino Metals
Corporation v. Secretary of the Department of Trade and Industry.
13

Petitioners are now before this Court charging the Court of Appeals with having committed an
error of law in reinstating the preliminary injunctive writ for respondent. They argue that
Southwing controls the case, precluding the Court of Appeals from recognizing a clear legal right
of respondent to import used motor vehicles.
Respondent counters that the doctrinal import of Southwing was weakened by the subsequent
issuance of EO 418, allegedly repealing EO 156. Respondent invokes our minute Resolution of
15 November 2010 denying the petition in G.R. No. 187475 (Executive Secretary v. Feniz
[CEZA] International, Inc.) as judicial confirmation of the supposed repeal.
As prayed for by petitioners, we issued a temporary restraining order on 16 January 2012 against
the Court of Appeals ruling.
The Issue
The question is whether the Court of Appeals erred in granting preliminary injunctive relief to
respondent to enjoin enforcement of EO 156.
The Courts Ruling
We hold that it was error for the Court of Appeals to grant preliminary injunctive relief to
respondent. We set aside the Court of Appeals ruling and reinstate the trial courts Order of 7
July 2010.
Respondent Without Clear Legal Right to
Import Used Motor Vehicles
It is a deeply ingrained doctrine in Philippine remedial law that a preliminary injunctive writ under
Rule 58
14
issues only upon a showing of the applicants "clear legal right"
15
being violated or
under threat of violation by the defendant.
16
"Clear legal right," within the meaning of Rule 58,
contemplates a right "clearly founded in or granted by law."
17
Any hint of doubt or dispute on the
asserted legal right precludes the grant of preliminary injunctive relief.
18
For suits attacking the
validity of laws or issuances with the force and effect of law, as here, the applicant for preliminary
injunctive relief bears the added burden of overcoming the presumption of validity inhering in
such laws or issuances.
19
These procedural barriers to the issuance of a preliminary injunctive
writ are rooted on the equitable nature of such relief, preserving the status quo while, at the same
time, restricting the course of action of the defendants even before adverse judgment is rendered
against them.
Respondent sought preliminary injunctive relief as ancillary to its principal cause of action to
invalidate EO 156. Respondents attack on EO 156, however, comes on the heels of Southwing
where we passed upon and found EO 156 legally sound, albeit overextended in application. We
found EO 156 a valid police power measure addressing an "urgent national concern":
There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable
exercise of police power. The deterioration of the local motor manufacturing firms due to the
influx of imported used motor vehicles is an urgent national concern that needs to be swiftly
addressed by the President. In the exercise of delegated police power, the executive can
therefore validly proscribe the importation of these vehicles. x x x
20

The narrow ambit of this review precludes us from passing upon the merits of the constitutional
and administrative issues respondent raised to attack EO 156. Nevertheless, we have no
hesitation in holding that whatever legal right respondent may possess vis vis the operation of
EO 156, we find such legal right to be doubtful by force of the Southwing precedent. Until
reversed or modified by this Court, Southwing makes conclusive the presumption of EO 156s
validity. Our holding is bolstered by respondents failure to remove its case from the confines of
such ruling.
In arriving at a contrary conclusion, the Court of Appeals dwelt on the "grave and irremediable"
financial losses respondent was poised to sustain as a result of EO 156s enforcement, finding
such prejudice "inequitable."
21
No doubt, by importing used motor vehicles in contravention of the
ban under EO 156, respondent risked sustaining losses. Such risk, however, was self-imposed.
Having miscalculated its chances, respondent cannot look to courts for injunctive relief against
self-inflicted losses which are in the nature of damnumabsqueinjuria. Injunction will not issue on
the mere possibility that a litigant will sustain damage, without proof of a clear legal right entitling
the litigant to protection.
22

Nor does our ruling in Filipino Metals furnish doctrinal support for respondent.1wphi 1 We sustained the
trial courts issuance of a preliminary injunctive writ in that case to enjoin the enforcement of
Republic Act No. 8800 (RA 8800) delegating to a cabinet member the power to adopt measures
to address prejudicial importations in contravention of relevant international agreements. We
grounded our ruling on the fact that the petitioners, which principally argued that RA 8800
violates Article VI, Section 28(2) of the Constitution (limiting Congress delegation of the power to
fix trade quotas to the President), "have established a strong case for the unconstitutionality of
RA 8800."
23
In short, the petitioners in Filipino Metals discharged the burden of overcoming the
presumption of validity accorded to RA 8800, warranting the issuance of a preliminary injunctive
writ in their favor. Southwing forecloses a similar finding for respondent.
Lastly, we find no merit in respondents submission that EO 418 repealed EO 156, removing the
legal bar to its importation of used motor vehicles. The question of whether EO 418 repealed EO
156 was already settled in our Resolution dated 22 August 2006 denying reconsideration of our
ruling in Southwing. The respondents in those cases, importers of used motor vehicles via the
Subic Freeport, had espoused the theory presently advanced by respondent. We rejected the
proffered construction of the two issuances:
The subsequent issuance of E.O. No. 418 increasing the import duties on used motor vehicles
did not alter the policy of the executive department to prohibit the importation of said vehicle. x xx
There is nothing in the text of E.O. No. 418 which expressly repeals E.O. No. 156. The
Congress, or the Office of the President in this case, is presumed to know the existing laws, such
that whenever it intends to repeal a particular or specific provision of law, it does so expressly.
The failure to add a specific repealing clause indicates that the intent was not to repeal previous
administrative issuances. x xx
E.O. No. 156 is very explicit in its prohibition on the importation of used motor vehicles. On the
other hand, E.O. No. 418 merely modifies the tariff and nomenclature rates of import duty on
used motor vehicles. Nothing therein expressly revokes the importation ban. (Italicization
supplied)
Contrary to respondent's claim, our minute Resolution dated 15 November 2010 denying the
petition in Feniz did not have the effect of modifying much less reversing our holding in
Southwing. The petition in Feniz sought a review of the ruling of the trial court striking down
Section 2 of EO 418. The trial court found such provision, which imposed additional specific duty
of P500,000 on each imported used motor vehicle, void for having been issued by President
Arroyo ultra vires. Neither the validity of EO 156 nor the alleged repeal by EO 418 of EO 156 was
the lismota in Feniz.
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 27 June 2011 and
the Resolution dated 14 November 2011 of the Court of Appeals. The Order dated 7 July 201 0
of the Regional Trial Court of Aparri, Cagayan, Branch 10, is REINSTATED. The temporary
restraining order issued on 16 January 2012 is made PERMANENT.
SO ORDERED.
AUSTRALIAN PROFESSIONAL
REALTY, INC., JESUS GARCIA,
and LYDIA MARCIANO,
Petitioners,



- versus -



MUNICIPALITY OF PADRE
GARCIA BATANGAS PROVINCE,
Respondent.

G. R. No. 183367


Present:

CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.


Promulgated:

March 14, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

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 2008
[1]
and 16 June 2008, which denied
petitioners Motion for the issuance of a status quo order and Motion for
issuance of a temporary restraining order (TRO) and/or writ of preliminary
injunction.

Statement of the Facts and the Case
In 1993, fire razed to the ground the old public market of respondent
Municipality of Padre Garcia, Batangas. The municipal government, through its
then Municipal Mayor Eugenio Gutierrez, invited petitioner Australian
Professional Realty, Inc. (APRI) to rebuild the public market and construct a
shopping center.
On 19 January 1995, a Memorandum of Agreement (MOA)
[2]
was
executed between petitioner APRI and respondent, represented by Mayor
Gutierrez and the members of the Sangguniang Bayan. Under the MOA, APRI
undertook to construct a shopping complex in the 5,000-square-meter area. In
return, APRI acquired the exclusive right to operate, manage, and lease stall
spaces for a period of 25 years.
In May 1995, Victor Reyes was elected as municipal mayor of
respondent. On 6 February 2003, respondent, through Mayor Reyes, initiated a
Complaint for Declaration of Nullity of Memorandum of Agreement with
Damages before the Regional Trial Court (RTC) of Rosario, Batangas, Fourth
Judicial Region, Branch 87. The Complaint was docketed as Civil Case No. 03-
004.
On 12 February 2003, the RTC issued summons to petitioners, requiring
them to file their Answer to the Complaint. However, the summons was
returned unserved, as petitioners were no longer holding office in the given
address.
On 2 April 2003, a Motion for Leave of Court to Effect Service by
Publication was filed by respondent before the RTC and subsequently granted
by the trial court.
On 24 November 2003, the RTC issued an Order declaring petitioners in
default and allowing respondent to present evidence ex parte.
On 6 October 2004, a Decision was rendered by the RTC, which, after
narrating the testimonial evidence for respondent, stated:
After the completion of the testimony of Victor M. Reyes, counsel for
the petitioner manifested that he will file the formal offer of evidence in
writing.
On July 19, 2004, counsel for the petitioner filed before this Court his
Formal Offer of Documentary Exhibits consisting of Exhibits A to H,
inclusive of submarkings.
On August 18, 2004 an order was issued by the Court admitting all the
exhibits formally offered by the petitioner thru counsel and this case was
ordered submitted for resolution of the Court.
There is no opposition in the instant petition.
WHEREFORE, in view thereof, and finding the petition to be
sufficient in form and substance, it being supported by sufficient evidence,
judgement (sic) is hereby rendered in favor of the plaintiff as against the
respondents as follows:
(a) The Memorandum of Agreement is hereby declared null and void for
being contrary to law and public policy, particularly R.A. 6957 and
R.A. 7718;
(b) The respondents are hereby ordered to pay the amount of FIVE
MILLION PESOS (5,000,000.00) in favor of the plaintiff for
damages caused to the latter;
(c) The structures found within the unfinished PADRE GARCIA
SHOPPING CENTER are hereby declared forfeited in favor of the
Municipality of Padre Garcia.
SO ORDERED.
[3]


There having been no timely appeal made, respondent filed a Motion for
Execution of Judgment, which was granted by the RTC. A Writ of Execution
was thus issued on 15 July 2005.
After learning of the adverse judgment, petitioners filed a Petition for
Relief from Judgment dated 18 July 2005. This Petition was denied by the RTC
in an Order dated 15 June 2006. In another Order dated 14 February 2008, the
trial court denied the Motion for Reconsideration.
Petitioners later filed before the CA a Petition for Certiorari and
Prohibition dated 28 February 2008, docketed as CA-G.R. SP No. 102540. On 7
March 2008, petitioners filed before the CA a Motion for the Issuance of Status
Quo Order and Motion for Issuance of Temporary Restraining Order and/or
Writ of Preliminary Injunction.
[4]
The motion prayed for an order to restrain the
RTC from further proceeding and issuing any further Order, Resolution, Writ
of Execution, and any other court processes
[5]
in the case before it.
On 26 March 2008, the CA issued a Resolution denying the said motion,
stating thus:
After a careful evaluation of petitioners Motion for Issuance of Status
Quo Order and Motion for Issuance of Temporary Restraining Order and/or
Writ of Preliminary Injunction, We find that the matter is not of extreme
urgency and that there is no clear and irreparable injury that would be suffered
by the petitioners if the prayer for the issuance of a Status Quo Order,
Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction is
not granted. In Ong Ching Kian Chuan v. Court of Appeals, it was held that, to
be entitled to injunctive relief, the petitioner must show, inter alia, the
existence of a clear and unmistakable right and an urgent and paramount
necessity for the writ to prevent serious damage.
WHEREFORE, petitioners prayer for the issuance of a Status Quo
Order, Temporary Restraining Order and/or Writ of Preliminary Injunction is
hereby DENIED for lack of merit.
[6]

On 17 June 2008, the CA denied the Motion for Reconsideration of the
26 March 2008 Resolution, stating that the mere preservation of the status
quo is not sufficient to justify the issuance of an injunction.
On 8 July 2008, petitioners filed the instant Petition for Review on
Certiorari dated 6 July 2008.
Petitioners claim that the amount of APRIs 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 formers 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 RTCs 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 respondents 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 Courts Ruling
The Petition is denied for failure to show any grave abuse of discretion on
the part of the CA.
Procedural I ssue: 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.
[8]
An
order granting or denying an application for preliminary injunction is
interlocutory in nature and, hence, not appealable.
[9]
Instead, the proper remedy
is to file a Petition for Certiorari and/or Prohibition under Rule 65.
[10]

While the Court may dismiss a petition outright for being an improper
remedy, it may in certain instances proceed to review the substance of the
petition.
[11]
Thus, this Court will treat this Petition as if it were filed under Rule
65.
Substantive I ssue: 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 complainants right or title is doubtful or
disputed, injunction is not proper.
[24]

The general rule is that after a judgment has gained finality, it becomes
the ministerial duty of the court to order its execution. No court should interfere,
by injunction or otherwise, to restrain such execution.
[25]
The rule, however,
admits of exceptions, such as the following: (1) when facts and circumstances
later transpire that would render execution inequitable or unjust; or (2) when
there is a change in the situation of the parties that may warrant an injunctive
relief.
[26]
In this case, after the finality of the RTC Decision, there were no
supervening events or changes in the situation of the parties that would entail
the injunction of the Writ of Execution.
No irreparable injury
Damages are irreparable where there is no standard by which their
amount can be measured with reasonable accuracy.
[27]
In this case, petitioners
have alleged that the loss of the public market entails costs of about
30,000,000 in investments, 100,000 monthly revenue in rentals, and amounts
as yet unquantified but not unquantifiable in terms of the alleged loss of jobs
of APRIs employees and potential suits that may be filed by the leaseholders of
the public market for breach of contract. Clearly, the injuries alleged by
petitioners are capable of pecuniary estimation. Any loss petitioners may suffer
is easily subject to mathematical computation and, if proven, is fully
compensable by damages. Thus, a preliminary injunction is not
warranted.
[28]
With respect to the allegations of loss of employment and
potential suits, these are speculative at best, with no proof adduced to
substantiate them.
The foregoing considered, the CA did not commit grave abuse of
discretion in denying the Motion for Injunction. In any case, petitioners may
still seek recourse in their pending Petition before the Court of Appeals.
WHEREFORE, the Petition is DENIED. The Court of Appeals
Resolutions dated 26 March 2008 and 16 June 2008 in CA-G.R. SP No. 102540
are AFFIRMED. The Court of Appeals is directed to proceed with dispatch to
dispose of the case before it.


SO ORDERED.

THE INCORPORATORS OF
MINDANAO INSTITUTE INC.
and THE BOARD OF
TRUSTEES OF MINDANAO
INSTITUTE INC., represented by
ENGR. VICTORIOSO D.
UDARBE,
Petitioners,


- versus -


THE UNITED CHURCH OF
CHRIST IN THE PHILIPPINES,
acting through AGUSAN
DISTRICT CONFERENCE
UNITED CHURCH OF CHRIST
IN THE PHILIPPINES,
represented by REV. RODOLFO
BASLOT,


G.R. No. 171765

Present:

VELASCO, JR., J., Chairperson,
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.


Respondent.






Promulgated:

March 21, 2012


X ----------------------------------------------------------------------------------- X

D E C I S I O N

MENDOZA, J .:

Assailed in this petition for review on certiorari under Rule 45 of the
Rules of Court are the September 30, 2005 Decision
[1]
and the March 1, 2006
Resolution
[2]
of the Court of Appeals (CA), in CA-G.R. SP No. 79156, which
dissolved the Writ of Preliminary Injunction
[3]
dated July 9, 2003 issued by the
Regional Trial Court of Cabadbaran, Agusan del Norte, Branch 34 (RTC).

The Factual and Procedural Antecedents

On April 29, 2003, Gregorio D. Calo, Zoilito L. Cepeda, Victorioso D.
Udarbe, Tita B. Udarbe, Edgar B. Palarca, Louie Libarios, Anna Mae Pelegrino,
Cirilia A. Sanchez, Anita V. Carloto and Eduardo Andit, the incorporators of
Mindanao Institute Inc. (MI Incorporators), represented by Engineer Victorioso
D. Udarbe (Engr. Udarbe),
[4]
filed a Petition for Declaratory Relief with Prayer
for a Temporary Restraining Order (TRO) and Preliminary Injunction
[5]
against
the United Church of Christ in the Philippines(UCCP), acting through the
Agusan District Conference of the United Church of Christ in the Philippines
and represented by Reverend Rodolfo Baslot (Rev. Baslot), before the RTC,
which was docketed as Special Civil Action Case No. 03-02. The incorporators
prayed that Mindanao Institute, Inc. (MI) be declared the sole owner of the
assets and properties of MI and to prevent the impending takeover by UCCP of
MIs properties. They averred that UCCP was unlawfully claiming ownership
of MIs properties.

On June 5, 2003, UCCP filed its Answer with Counterclaim,
[6]
asserting
its ownership of MIs properties based on certain documents.
[7]
It claimed that
the question of ownership in this case was a settled issue and required no further
discourse because they constitute a majority of the Board of Trustees and,
therefore, in complete control thereof x x x.
[8]

On June 10, 2003, the RTC issued a TRO
[9]
against UCCP reasoning out
that MI would suffer grave and irreparable damages if the ownership and
possession of its assets and properties would be transferred to UCCP. The RTC
disposed:

WHEREFORE, it appearing that petitioners will suffer grave
injustice and irreparable injury, let a temporary restraining order
against respondents be issued restraining respondents, their
representatives, attorneys, agents or any other person acting in their
behalf from seizing control and management of the assets and
properties of Mindanao Institute.

IT IS ORDERED.
[10]


Meanwhile, UCCP received copies of MIs Amended Articles of
Incorporation
[11]
(2003 Amended AOI) which was adopted by the MI
Incorporators on May 9, 2003 and approved by the Securities and Exchange
Commission (SEC) on May 26, 2003.

On June 11, 2003, UCCP, represented by Rev. Baslot, and MI,
represented by its President Dr. Edgardo R. Batitang (Dr.Batitang), lodged a
Complaint for Declaration of Nullity of the 2003 Amended Articles of
Incorporation and By-Laws of Mindanao Institute with Prayer for the Issuance
of Temporary Restraining Order and Preliminary Injunction and/or
Damages
[12]
before the RTC, which was docketed as Civil Case No. 09-
2003. UCCP and MI asserted that the Amendment of MIs Articles of
Incorporation effected by signatories in a reckless and hasty fashion was
accomplished without the required majority vote in clear violation of Section
16
[13]
of Corporation Code.
[14]
Of the ten (10) signatures appearing in the 2003
Amended AOI constituting 2/3 of the Board of Trustees of MI, five (5) were
affixed by mere representatives who were not duly authorized to vote. Further,
UCCP and MI, as represented by Dr.Batitang, stressed that the procedure in the
acceptance of corporate members as embodied in the Amended By-Laws
contains discriminatory provisions, wherein certain members maybe subjected
to confirmation and acceptance or rejection, but aimed specifically at members
to be nominated by UCCP.

On June 17, 2003, the signatories moved to dismiss
[15]
the complaint for
declaration of nullity of the 2003 Amended AOI. They contended that the SEC,
in approving the amendments to the Articles of Incorporation and By-Laws, was
exercising its quasi-judicial function and, therefore, a co-equal body of the
RTC. Thus, the RTC could not grant any of the reliefs prayed for by UCCP.

At the scheduled joint hearing of Special Civil Action Case No. 03-02
and Civil Case No. 09-2003 to determine the propriety of the issuance of a writ
of preliminary injunction, the Law Office of Bernabe, Doyon, Bringas and
Partners entered its appearance
[16]
as collaborating counsel for UCCP.
Incidentally, Atty. Roy Doyon (Atty. Doyon), the son of Executive Judge
Orlando F. Doyon (Judge Doyon), was one of the partners in the said law firm.
This prompted Atty. Nelbert T. Poculan, UCCPs lead counsel, to move for the
inhibition of Judge Doyon from the case. On the other hand, Atty. Rolando F.
Carlota, MI Incorporators counsel, expressed no objection to the continued
participation of Judge Doyon in the proceedings of the case despite the said
development.

Subsequently, Judge Doyon proceeded with the joint hearing. Thereafter,
the RTC granted the MI incorporators prayer for preliminary injunction against
UCCP in its Omnibus Order
[17]
dated July 4, 2003, the decretal portion of which
states:

WHEREFORE, the prayer for issuance of a Temporary
Restraining Order in Civil Case No. 09-2003 is hereby denied with
finality.

As prayed for in Special Civil Case No. 03-02, let a Writ of
Preliminary Injunction be issued, restraining, prohibiting, and
enjoining respondents, UNITED CHURCH OF CHRIST IN THE
PHILIPPINES (UCCP) acting thru AGUSAN DISTRICT CONFERENCE
(ADC-UCCP), represented by Rev. Rodolfo Baslot, their agents,
representatives, attorneys, and any other persons acting for and in their
behalf from taking over, seizing control, managing, or administering
MINDANAO INSTITUTE and preventing plaintiffs in discharging their
functions and duties in the management, control and administration of
the school, its premises and assets, upon plaintiffs putting up a bond in
the amount of200,000.00 duly approved by the Court, which bond
shall be executed in favour of the defendants to answer for whatever
damages they may sustain by reason of or arising from the issuance of
the writ in the event that the Court will finally rule that the plaintiffs
are not entitled thereto.

IT IS SO ORDERED.

In issuing the preliminary injunction against UCCP, the RTC explained:

The prayer for the issuance of a Temporary Restraining Order,
hereinafter known as TRO, in Civil Case No. 09-2003, is anchored on
the assumption that the Amended Articles of Incorporation and
Amended By-Laws of Mindanao Institute adopted on May 26, 2003, is
null and void for being ultra vires. However, at this stage of the
proceedings where the action of the Court is generally based on initial
and incomplete evidence, the Court cannot just precipitately rule that
the amendments were ultra vires acts of the respondents.

It should be stressed that the questioned Amended Articles of
Incorporation and By-Laws is duly approved by the Securities and
Exchange Commission, hereinafter referred to as SEC. As such, there
being no evidence thus far presented to the contrary, the presumption
is that the official duty of the SEC has been regularly performed.


Thus, the actuations of respondents in Civil Case No. 09-2003
based on those documents are presumptively valid unless declared void
by this Court after a full-blown trial. In other words, plaintiffs at this
stage, have not shown the existence of a clear legal right which has been
violated warranting the issuance of a TRO, because before a TRO or
injunction is issued, it is essential that there must be a right in esse or
the existence of a right to be protected and that the act against which
the injunction is issued is a violation of such right.

On the other hand, plaintiffs in Special Civil Case No. 03-02
have shown that they have the legal right in the management and
administration of Mindanao Institute because their actuations are
based in an Amended Articles of Incorporation and By-Laws duly
approved by the SEC. The allegation that it was approved by the SEC in
record time cannot be taken as evidence that per se the approval was
against any law, rule or regulation.

It is precisely for this reason that the Court issued a TRO
because from the amendments, plaintiffs in Special Civil Case No. 03-
02 and respondents in Civil Case No. 09-2003 have clear legal rights
over the management and administration of Mindanao Institute and
that the acts of plaintiffs in Civil Case No. 09-2003 and respondents in
Special Civil Case No. 03-02 are in violation of those rights. Pending
determination, therefore, of the principal action in Special Civil Case
No. 03-02, the Court is inclined to issue a preliminary injunction to
protect and preserve the rights of plaintiffs.
[18]


UCCP moved for a reconsideration but the same was denied by the RTC
in its Resolution
[19]
dated August 15, 2003.

In its Omnibus Order
[20]
dated August 20, 2003, Judge Doyon inhibited
himself from the cases citing the fact that his sons law firm entered its
appearance as collaborating counsel for UCCP.

Disappointed with the unfavorable ruling, UCCP and MI, as represented
by Dr.Batitang, sought relief with the CA via a petition for certiorari under
Rule 65 of the Rules of Court alleging grave abuse of discretion on the part of
the RTC in issuing the assailed order.

The CA granted the petition in its September 30, 2005 Decision,
the fallo of which reads:

WHEREFORE, above premises considered, the instant Petition
is GRANTED. The writ of preliminary injunction issued against the
United Church of Christ in the Philippines (UCCP) in Special Civil Case
No. 02-03 is hereby DISSOLVED. No pronouncement as to costs.

SO ORDERED.
[21]


The CA reasoned, among others, that the petition for certiorari (Civil
Case No. 09-2003) having been jointly filed by UCCP and MI, as represented
by Dr.Batitang, was adequate evidence to support the conclusion that MI did not
require any injunctive relief from UCCP. The CA also stated that in actions for
declaratory relief, the court was only called upon to determine the parties rights
and obligations. Citing Republic v. Court of Appeals,
[22]
it reasoned out that the
RTC could not issue injunction in an action for declaratory relief in as much as
the right of the MI incorporators had not yet been violated. Moreover, it stated
that the subsequent inhibition of Judge Doyon in the cases was pursuant to the
rules on compulsory disqualification of a judge under Rule 3.12(d) of the Code
of Judicial Conduct.
[23]


The MI incorporators, represented by Engr. Udarbe, moved for
reconsideration but the motion was denied by the CA in its Resolution
dated March 1, 2006.

Hence, this petition.


THE ISSUES

I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS,
SPECIAL TWENTY THIRD DIVISION, IN AN ORIGINAL ACTION
FOR CERTIORARI UNDER RULE 65 ERRED IN CONSIDERING
AND RULING ON FACTUAL ISSUES NOT YET HEARD AND TRIED
IN THE COURT OF ORIGIN AND BASED ITS DECISION THEREON.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS,
SPECIAL TWENTY THIRD DIVISION ERRED IN ITS
APPLICATION OF RULE 3.12(D) OF THE CODE OF JUDICIAL
ETHICS UNDER THE FACTS AND CIRCUMSTANCES
SURROUNDING THIS CASE.
[24]


In their Memorandum,
[25]
the petitioners argue that the CA went beyond
the province of a writ of certiorari by resolving factual questions, which should
appropriately be threshed out in the trial. On the inhibition, they pointed out that
it was solely the law partner of Judge Doyons son, Atty. J. Ma. James L.
Bringas (Atty. Bringas), who personally entered his appearance as collaborating
counsel, and not the law firm. Furthermore, they claim that Atty. Doyon, Judge
Doyons son, was neither present in court on the day Atty. Bringas entered his
appearance nor was he present in any of the previous hearings of the subject
cases. Hence, petitioners claim that Rule 3.12(d) of the Code of Judicial
Conduct
[26]
is not applicable in this case because Atty. Doyon never represented
any party in any of the subject cases being heard by Judge Doyon.




In its Memorandum,
[27]
respondent claims that the petition for review
on certiorari filed by the petitioners was not properly verified as to authorize
Engr. Udarbe to file the same - a fatal procedural infirmity. Further, it points out
that petitioners are raising questions of fact in their petition not cognizable by
this Court.

THE COURTS RULING

The petition lacks merit.

The Court is called upon to resolve the issue of whether or not the CA
erred in dissolving the writ of preliminary injunction issued against UCCP. The
writ of preliminary injunction enjoined UCCP from taking control and
management of MI and preventing petitioners from discharging their functions
in its management. Thus, the Court shall confine itself only with the concerned
writ and not the merits of the cases, which are still pending with the RTC. A
preliminary injunction, being a preservative remedy for the protection of
substantive rights or interests, is not a cause of action in itself but merely a
provisional remedy, an adjunct to a main suit.
[28]


A preliminary injunction is defined under Section 1, Rule 58 of the Rules
of Court, as follows:

Section 1. Preliminary injunction defined; classes. 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 a person to refrain from a particular act or acts. x xx




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.
[29]
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.
[30]


Significantly, Section 3, Rule 58 of the Rules of Court, enumerates the
grounds for the issuance of a writ of preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A
preliminary injunction may be granted when it is established:

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

(b) That the commission, continuance or 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.

Based on the foregoing provision, the Court in St. James College of
Paraaque v. Equitable PCI Bank
[31]
ruled that the following requisites must be
proved before a writ of preliminary injunction will issue:

(1) The applicant must have a clear and unmistakable right to be
protected, that is, a right in esse;


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

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

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


It bears stressing that to be entitled to an injunctive writ, the right to be
protected and the violation against that right must be shown. 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.
[33]
When the complainants 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.
[34]


In the present case, the records fail to reveal any clear and unmistakable
right on the part of petitioners. They posit that they are suing in behalf of MIs
interestsbypreventing UCCP from unlawfully wresting control of MIs
properties. Their claimed derivative interest, however, has been disputed by
UCCP in both its Answer with Counterclaim in Special Civil Action Case No.
03-02 and its Complaint in Civil Case No. 09-2003, wherein MI itself,
represented by Dr.Batitang himself, is its co-petitioner. Evidently, the
conflicting claims of the parties regarding the issue of ownership over MIs
property create the impression that the petitioners derivative right, used as basis
for the issuance of the preliminary injunction, is far from clear. Petitioners
claimed right is still indefinite, at least until it is properly threshed out in a trial,
negating the presence of a right inesse that requires the protection of an
injunctive writ. Verily, petitioners cannot lay claim to a clear and positive right
based on the 2003 Amended AOI, the provisions of which are strongly disputed
and alleged to be invalidly obtained.

As regards the issue of Judge Doyons disqualification to sit as judge in
the subject cases, the Court agrees with the CA. The pertinent rule on the
mandatory disqualification of judicial officers is laid down in Rule 137 of the
Rules of Court. Section 1 thereof provides:

SECTION 1. Disqualification of judges. No judge or judicial
officer shall sit in any case in which he, or his wife or child, is pecuniary
interested as heir, legatee, creditor or otherwise, or in which he
is related to either party within the sixth degree of consanguinity or
affinity, or to counsel within the fourth degree, computed according to
the rules of the civil law, or in which he has been executor,
administrator, guardian, trustee or counsel, or which he has presided in
any inferior court when his ruling or decision is the subject of review,
without the written consent of all parties in interest, signed by them
and entered upon the record. [Underscoring supplied]

x xx.

Moreover, Rule 3.12 of Canon 3 of the Code of Judicial Conduct, which
took effect from October 20 1989 until May 31, 2004, the applicable rule then,
reads as follows:
A judge should take no part in a proceeding where the judges
impartiality might reasonably be questioned. These cases include,
among others, proceedings where:
x xx
(d) the judge is related by consanguinity or affinity to a party litigant
within the sixth degree or to counsel within the fourth degree.
[Underscoring supplied]

The prohibitions under the afore-quoted provisions of the Rules are clear.
The disqualification is mandatory and gives the judicial officer concerned no
discretion but to inhibit himself from trying or sitting in a case. The rationale,
therefore, is to preserve the people's faith and confidence in the judiciary's
fairness and objectivity.
[35]


While the Court finds it ludicrous that it was the counsel of UCCP, Atty.
Poculan, who sought the inhibition of Judge Doyon, considering that the law
firm of the latters son is his collaborating counsel, still the mandatory
prohibition applies. Judge Doyon should have immediately inhibited himself
from the case upon learning of the entry of appearance of his sons law firm.
Where the disqualifying fact is indubitable and the parties to the case make no
waiver of such disqualification, as in the case at bench, Section 1, Rule 137 of
the Rules of Court forthwith completely strips the judge of authority to
proceed.
[36]


WHEREFORE, the petition is DENIED. The assailed September 30,
2005 Decision and March 1, 2006 Resolution of the Court of Appeals, in CA-
G.R. SP No. 79156, are hereby AFFIRMED.

SO ORDERED.


HILIPPINE NATIONAL BANK,
Petitioner,


-versus-


CASTALLOY TECHNOLOGY
CORPORATION, ALLIED
INDUSTRIAL CORPORATION,
ALINSU STEEL FOUNDRY
CORPORATION, GLORIA C. NGO
and TOMAS C. NGO, JR.,
Respondents.
G.R. No. 178367

Present:

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

Promulgated:

March 19, 2012
x----------------------------------------------------------------------------------------x

DECISION

REYES, J .:

Before us is a petition for review on certiorari under Rule 45 of the Rules
of Court, which seeks to annul and set aside the Decision
[1]
dated February 28,
2007 and Resolution
[2]
dated May 24, 2007 of the Court of Appeals (CA) in
CA-G.R. SP No. 02056, affirming the Regional Trial Court (RTC), Branch 56
of Mandaue Citys issuance of a writ of preliminary injunction in Civil Case
No. MAN-5081.

The Factual Antecedents

On August 26, 1996, respondent Castalloy Technology Corporation
(Castalloy) was granted by petitioner Philippine National Bank (PNB) a credit
line in the amount ofP4,000,000.00, later increased to P45,000,000.00 on
October 15, 1996. Pursuant to said credit line, Castalloy borrowed from PNB
the following amounts, covered by three separate promissory notes executed by
Castalloy in favor of PNB, to wit: (1) Promissory Note (PN) No. 404/96 dated
August 29, 1996, in the amount of US$190,910.00, (2) PN No. 451/96 dated
September 24, 1996, in the amount of US$381,650.26, and (3) PN No. 473/96
dated October 8, 1996 in the amount of US$495,426.83. While the promissory
notes indicate the amounts thereof in US dollars, the net proceeds of the loan
were released in Philippine currency, in the following amounts:
(1) P4,992,442.00 for PN No. 404/96, (2) P9,985,000.00 for PN No. 451/96,
and (3) P12,980,487.10 for PN No. 473/96.

To secure payment of the loans obtained by Castalloy, respondents Alinsu
Steel Foundry Corporation (Alinsu) and Allied Industrial Corporation (Allied)
constituted in favor of PNB a real estate mortgage over four parcels of land
covered by the following land titles, all issued by the Register of Deeds of
Mandaue City: Transfer Certificate of Title (TCT) No. 8516, TCT No. 1676,
TCT No. 30722, and TCT No. 30721. To further secure the loan, respondents
Gloria C. Ngo (Gloria) and Tomas C. Ngo, Jr.
[3]
(Tomas) executed a joint and
solidary agreement in favor of PNB.

In addition to the three aforementioned promissory notes, PNB claimed
that Castalloy had executed two other promissory notes with the following
details: (1) PN No. 539/96 dated November 27, 1996, in the amount
of P3,000,000.00, and (2) PN No. 365-9701DL-037 dated January 29, 1997 in
the amount of P2,000,000.00. These two loans were denied by Castalloy, which
argued that the signature of Gloria in the two notes was forged, and that the
proceeds thereof were not deposited to the corporations bank account.

After Castalloy defaulted in the payment of its obligations under the
promissory notes, PNB filed a petition for extrajudicial foreclosure of real estate
mortgage against Castalloy, Allied and Alinsu.

In the meantime, a complaint
[4]
for determination of correct obligation
and injunction with application for writ of preliminary injunction/temporary
restraining order was filed with the RTC by Castalloy, Allied, Alinsu, Gloria
and Tomas against PNB and Sheriff Julbert E. Opada, arguing, among other
matters, that:

13. Because of the disagreements brought about by the allegations of
this complaint, that [respondent] Castalloy never borrowed the amount of
[P]5,000,000.00 and that the dollar loans of [respondent] Castalloy
Technology Corp. were already converted by [petitioner] into pesos at the time
of their release and should not be converted again by [petitioner] into pesos at
the rate of [P]56.20 to $1.00 x xx.

14. There is a need for judicial a determination as to how much is the
real obligation of [respondent] Castalloy Technology Corp. to
[petitioner]. Converting the dollar loans of said [respondent] at the rate of
[P]56.20 to $1.00 and adding interest, the [petitioner] claims that on the
dollar loan, the total obligation of [respondent] Castalloy Technology Corp. is
[P]88,642,207.64 while on the peso loan, [petitioner] claims that the
obligation of [respondent] Castalloy Technology Corp. is [P]9,644,994.44
or a total of [P]98,287,101.94;

15. On the other hand, because what were released to [respondent]
Castalloy Technology Corp. at the time of the execution of the promissory
notes were pesos and not dollars and [respondents] deny that Castalloy
Technology Corp. borrowed [P]5,000,000.00 from [petitioner], the
[respondents] claim that what is owing to [petitioner] is the amount of
[P]41,037,189.86.
[5]
(Emphasis supplied)


In their application for preliminary injunction/temporary restraining
order, the respondents claimed that the sale at the public auction of the
mortgaged properties had to be held in abeyance pending judicial determination
of the correct amount of Castalloys obligation to PNB.

In its opposition to the application for injunction, PNB argued that the
parties dispute on the loans computation was not a valid ground to restrain the
mortgages foreclosure.

The Order of the RTC

On April 27, 2006, the RTC, issued an Order
[6]
granting the respondents
application for a writ of preliminary injunction, subject to the posting of a bond
in the amount ofP5,000,000.00. The Court held that the difference in the
outstanding loan amounts being claimed by the parties was extremely
extensive such that if a foreclosure would be allowed at this point in time, the
same would probably result in irreparable injury
[7]
to the herein respondents.

PNB filed a motion for reconsideration, but the same was denied for lack
of merit in an Order
[8]
dated May 31, 2006. Unsatisfied, PNB questioned the
RTCs orders before the CA through a petition for certiorari under Rule 65 of
the Rules of Court.

The Ruling of the CA

On February 28, 2007, the CA rendered its decision
[9]
denying the
petition, finding no grave abuse of discretion on the part of the RTC. The
decisions dispositive portion then reads:

WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered by us DENYING the petition filed in this case
and AFFIRMING the assailed Orders dated April 27, 2006 and May 31,
2006, respectively, issued by the respondent judge of the RTC, Branch 56,
in Mandaue City in Civil Case No. MAN-5081.

SO ORDERED.
[10]



Citing the case of Sps. Almeda v. CA,
[11]
the CA ruled that when the exact
amount of the loan obligation has not yet been determined, the bank cannot
arbitrarily invoke its right of collection through extrajudicial foreclosure
proceedings.
[12]


PNBs motion for reconsideration was denied by the CA via its
resolution
[13]
dated May 24, 2007.

Hence, the present petition.

The Issue

The issue for this Courts determination is: Whether or not the CA erred
in finding no grave abuse of discretion on the part of the RTC when it granted
the respondents application for the issuance of a writ of preliminary injunction.

This Courts Ruling

The petition is meritorious.

The grounds for the issuance of a preliminary injunction are enumerated
in Section 3, Rule 58 of the Rules of Court, which reads:

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.


In a line of cases, this Court has explained this rule and emphasized that a
writ of preliminary injunction is issued to preserve the status quo ante, upon the
applicants showing of two important requisite conditions, namely: (1) the right
to be protected exists prima facie, and (2) the acts sought to be enjoined are
violative of that right. It must be proven that the violation sought to be
prevented would cause an irreparable injustice.
[14]


In the instant case, the respondents admit that to secure the loan
obligations of Castalloy, Alinsu and Allied constituted a real estate mortgage on
their properties in favor of PNB. The respondents also do not dispute that they
were unable to fully settle their loan obligation to the mortgagee-bank. There is
an unpaid obligation to PNB, even granting that we disregard the disputed
promissory notes dated November 27, 2006 and January 29, 2007, or consider
the variance in the parties respective formula for the loans computation. This
failure to pay has given PNB, as the mortgagee, the clear right to foreclose the
mortgage constituted to secure the loan. Foreclosure is but a necessary
consequence of non-payment of mortgage indebtedness. In a real estate
mortgage, when the principal obligation is not paid when due, the mortgagee
has the right to foreclose the mortgage and to have the property seized and sold
with the view of applying the proceeds to the payment of the
obligation.
[15]
Availment of said remedy cannot be deemed violative of the
mortgagors right over the mortgaged properties. The respondents, as
mortgagors, should be mindful of the effects and implications of a mortgage on
their rights over the properties given as collaterals, especially when the loan
secured thereby remains unpaid. In China Banking Corporation v.
CA,
[16]
where the lower court also issued an order to enjoin a foreclosure sale,
we explained:

On the last issue, we find that the issuance of the writ of injunction by
the trial court unjustified. A writ of preliminary injunction, as an ancillary or
preventive remedy, may only be resorted to by a litigant to protect or preserve
his rights or interests and for no other purpose during the pendency of the
principal action. But before a writ of preliminary injunction may be
issued, there must be a clear showing by the complaint that there exists a
right to be protected and that the acts against which the writ is to be
directed are violative of the said right. In the case at bench, we fail to see
any reason why the foreclosure of the mortgages should be enjoined. On the
face of the clear admission by private respondents that they were unable
to settle their obligations which were secured by the mortgages,
petitioners have a clear right to foreclose the mortgages which is a remedy
provided by law.
[17]
(Emphasis supplied and citations omitted)


The ruling in Almeda
[18]
cited by the CA in its decision is inapplicable in
this case, considering that in Almeda, the debtors were found to have made a
valid consignation of what they, in good faith and in compliance with the loan
documents, honestly believed to be the real amount of their
indebtedness. Furthermore, the mortgagee in said case appeared to have
unilaterally increased the loans interest rates to amounts that were excessive
and unconscionable, without valid and reasonable standards upon which the
increases were based.

Further to this, the Courts intent to depart from the broad application of
the Almeda ruling to foreclosure proceedings is clear from its issuance on
February 20, 2007 of anEn Banc Resolution in A.M. No. 99-10-05-0, Re:
Procedure in Extrajudicial or Judicial Foreclosure of Real Estate
Mortgages. The resolution embodies the additional guidelines intended to aid
courts in foreclosure proceedings, specifically limiting the instances, and citing
the conditions, when a writ against foreclosure of a mortgage may be issued, to
wit:

(1) No temporary restraining order or writ of
preliminary injunction against the extrajudicial foreclosure of real estate
mortgage shall be issued on the allegation that the loan secured by the
mortgage has been paid or is not delinquent unless the application is verified
and supported by evidence of payment.

(2) No temporary restraining order or writ of
preliminary injunction against the extrajudicial foreclosure of real estate
mortgage shall be issued on the allegation that the interest on the loan is
unconscionable, unless the debtor pays the mortgagee at least twelve percent
per annum interest on the principal obligation as stated in the application for
foreclosure sale, which shall be updated monthly while the case is pending.

(3) Where a writ of preliminary injunction has been issued against
a foreclosure of mortgage, the disposition of the case shall be speedily
resolved. To this end, the court concerned shall submit to the Supreme Court,
through the Office of the Court Administrator, quarterly reports on the
progress of the cases involving ten million pesos and above.

(4) All requirements and restrictions prescribed for the issuance of a
temporary restraining order/writ of preliminary injunction, such as the posting
of a bond, which shall be equal to the amount of the outstanding debt, and the
time limitation for its effectivity, shall apply as well to a status quo order.


From these guidelines, it is evident that a disagreement between the
parties as to the amount of the secured loan that remains unpaid shall not, by
itself, warrant the issuance of an injunctive writ to enjoin foreclosure. The
guidelines speak of strict exceptions and conditions. Even an allegation of
unconscionable interest being imposed on the loan by the mortgagee shall no
longer suffice to support an injunction. Furthermore, if under this resolution a
debtor can no longer seek an injunctive writ by the unsubstantiated claim of full
payment, there is even more reason for a court not to issue an injunctive writ
when the debtors or mortgagors readily admit default in the payment of the
secured loan, as in this case.

As regards to the element of irreparable injury which was determined by
the trial court in view of the difference of P57,249,912.08 in the parties
respective computations, this Court finds the same insufficient to support the
requirement of injury in the issuance of an injunctive writs. An injury is
considered irreparable if it is of such constant and frequent recurrence that no
fair or reasonable redress can be had therefor in a court of law, or where there is
no standard by which their amount can be measured with reasonable accuracy,
that is, it is not susceptible of mathematical computation.
[19]
The provisional
remedy of preliminary injunction may only be resorted to when there is a
pressing necessity to avoid injurious consequences which cannot be remedied
under any standard of compensation.
[20]


The injury being feared by the herein respondents is not of such
nature. Ultimately, the amount to which the mortgagee-bank shall be entitled
will be determined by the disposition of the trial court in the main issue of the
case. We have explained in Equitable PCI Bank, Inc. v. OJ-Mark Trading,
Inc.
[21]
that all is not lost for defaulting mortgagors whose properties were
foreclosed by creditors-mortgagees. The respondents will not be deprived
outrightly of their property, given the right of redemption granted to them under
the law. Moreover, in extrajudicial foreclosures, mortgagors have the right to
receive any surplus in the selling price. Thus, if the mortgagee is retaining more
of the proceeds of the sale than he is entitled to, this fact alone will not affect
the validity of the sale but will give the mortgagor a cause of action to recover
such surplus.
[22]


Lastly, the issues being linked to the parties differing loan computations,
which difference was found by the trial court as likely to cause the irreparable
injury to the respondents, can only be reasonably determined after a trial on the
merits. These issues include the effect of the loan proceeds release in US
dollars and the existence, authenticity or validity of the two promissory notes
disputed by the respondents. In Searth Commodities Corporation v. Court of
Appeals,
[23]
we held:

The prevailing rule is that courts should avoid issuing a writ of
preliminary injunction which would in effect dispose of the main case
without trial. (Rivas v. Securities and Exchange Commission, 190 SCRA 295
[1990]; Government Service and Insurance System v. Florendo, 178 SCRA 76
[1989]; and Ortigas& Co. Ltd. Partnership v. Court of Appeals, 162 SCRA
165 [1988]) In the case at bar, if the lower court issued the desired writ to
enjoin the sale of the properties premised on the aforementioned justification
of the petitioners, the issuance of the writ would be a virtual acceptance of
their claim that the foreclosure sale is null and void. (See Ortigas and Co.,
Ltd. Partnership v. Court of Appeals, supra). There would in effect be a
prejudgment of the main case and a reversal of the rule on the burden of
proof since it would assume the proposition which the petitioners are
inceptively bound to prove.
[24]
(Emphasis supplied)


Given these circumstances, we reverse the CAs ruling that the trial court
did not commit grave abuse of discretion when it issued the subject writ of
preliminary injunction, considering that said writ was issued in the absence of
sufficient factual and legal justifications, even contrary to law and established
jurisprudence.

WHEREFORE, premises considered, the petition is
hereby GRANTED. The Decision dated February 28, 2007 and Resolution
dated May 24, 2007 of the Court of Appeals in CA-G.R. SP No. 02056 are
hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered
declaring null and void the Regional Trial Court, Branch 56 of Mandaue Citys
Orders dated April 27, 2006 and May 31, 2006, and the Writ of Preliminary
Injunction issued pursuant thereto, in Civil Case No. MAN-5081.



SO ORDERED.


G.R. No. 170038 July 11, 2012
CHINA BANKING CORPORATION, Petitioner,
vs.
SPS. HARRY CIRIACO and ESTHER CIRIACO, Respondents.
D E C I S I O N
BRION, J .:
We resolve the petition for review on certiorari
1
filed by China Banking Corporation (petitioner) to
challenge the April 15, 2005 decision
2
and the October 10, 2005 resolution
3
of the Court of
Appeals (CA) in CA-G.R. SP No. 64349. The CA decision denied the petitioners petition
for certiorari for lack of merit. The CA resolution denied the petitioners subsequent motion for
reconsideration.
FACTUAL BACKGROUND
On March 11, 1996, Spouses Harry and Esther Ciriaco (respondents) obtained a P1,500,000.00
loan
4
from the petitioner, secured by a real estate mortgage
5
over their 526-square meter land in
La Trinidad, Benguet, covered by Transfer Certificate of Title (TCT) No. T-21710.
6

When the respondents defaulted in the payment of their loan, the petitioner extrajudicially
foreclosed
7
the mortgaged property and sold it at public auction where the petitioner emerged as
the highest bidder. The Sheriff executed a Certificate of Sale
8
in the petitioners favor on March
11, 1998. The Register of Deeds annotated the Certificate of Sale on TCT No. T-21710 on March
24, 1998.
9

On March 23, 1999, a day before the expiration of the redemption period, the respondents filed a
complaint with the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch 8, for Injunction to
enjoin the consolidation of title in the petitioners favor, assailing the redemption price of the
foreclosed property.
10

On July 26, 1999, the RTC dismissed the complaint for being moot due to the consolidation of
title in the petitioners favor on March 31, 1999, "without prejudice to the filing of an appropriate
action."
11

On August 17, 1999, the respondents filed a complaint with the RTC of La Trinidad, Benguet,
Branch 63, for Cancellation of Consolidation of Ownership over a Real Property, Specific
Performance, and Damages.
12
They again questioned the redemption price of the foreclosed
property.
On September 23, 1999, the petitioner filed its Answer with Compulsory Counterclaim, denying
the allegations of the respondents complaint.
13

On March 16, 2000, the respondents filed an Omnibus Motion for Leave to Amend Complaint
and to Admit Attached Amended Complaint as well as Motion for Hearing on the Issuance of a
Writ of Preliminary Injunction and/or Temporary Restraining Order (TRO), with a notice of
hearing on the omnibus motion scheduled on March 22, 2000.
14
The respondents sought to
amend the complaint to allege further that fraud attended the consolidation of title in the
petitioners favor and to include a prayer for the issuance of a writ of preliminary injunction and/or
TRO to enjoin the petitioner from disposing of the foreclosed property or taking possession
thereof.
At the March 22, 2000 hearing, the RTC gave the petitioner ten (10) days within which to file its
comment to the respondents omnibus motion, and set the hearing on the omnibus motion on
April 24, 2000.
15

The petitioner subsequently filed its Opposition to the omnibus motion,
16
arguing that the
respondents further allegation of fraud changes the theory of the case which is not allowed, and
that the respondents failed to show that they have a clear right in esse that should be protected
by an injunctive relief.
At the April 24, 2000 hearing on the omnibus motion, the RTC gave the respondents ten (10)
days to file their comment to the petitioners opposition, and gave the petitioner ten (10) days to
file its reply to the respondents comment.
17
The respondents did not file a reply to the petitioners
opposition.
THE RTCs RULING
In its August 1, 2000 order, the RTC admitted the amended complaint and directed the petitioner
to file an answer. It noted that the 1997 Rules of Civil Procedure relaxed the rule on amendments
to pleadings, subject only to the limitation that they are not dilatory. It also granted the
respondents application for the issuance of a writ of preliminary injunction and/or TRO, since the
respondents were entitled to prove their claim of fraud, and their claim that the interests and
penalty charges imposed by the bank had no factual basis.
18

The RTC denied
19
the petitioners subsequent motion for reconsideration.
20
On August 24, 2000,
the RTC issued a writ of preliminary injunction, restraining the petitioner from disposing of the
foreclosed property or taking possession thereof.
21

The petitioner then filed a Rule 65 petition for certiorari with the CA, arguing that the RTC gravely
abused its discretion in precipitately granting the respondents application for the issuance of a
writ of preliminary injunction without any hearing.
22

THE CAs RULING
In its April 15, 2005 decision, the CA denied the petition. It found that the RTC did not commit
any grave abuse of discretion since it gave the parties ample opportunity to present their
respective positions on the propriety of an injunctive writ during the hearings on March 22, 2000
and
April 24, 2000, and that the petitioner was also heard on its motion for reconsideration of the
August 1, 2000 order.
23

When the CA denied
24
the petitioners motion for reconsideration,
25
the latter filed the present
petition.
26

THE PETITION
The petitioner argues that the RTC granted the respondents application for the issuance of a writ
of preliminary injunction and/or TRO, despite the lack of a hearing thereon; the RTC conducted
hearings on the respondents omnibus motion only, not on the respondents application for the
issuance of a writ of preliminary injunction and/or TRO, which has not yet been set for hearing.
THE CASE FOR THE RESPONDENTS
The respondents submit that the RTC gave the petitioner ample opportunity to be heard on his
opposition to the respondents application for the issuance of a writ of preliminary injunction
and/or TRO at the March 22, 2000 and April 24, 2000 hearings, and on the petitioners motion for
reconsideration of the August 1, 2000 order.
THE ISSUE
The core issue boils down to whether the CA erred in finding that the RTC did not commit any
grave abuse of discretion in granting the respondents application for the issuance of a writ of
preliminary injunction and/or TRO.
OUR RULING
We find merit in the petition.
A preliminary injunction is an order granted at any stage of an action prior to the judgment or final
order requiring a party or a court, agency or a person to refrain from a particular act or acts.
27
It is
the "strong arm of equity,"
28
an extraordinary peremptory remedy that must be used with extreme
caution,
29
affecting as it does the respective rights of the parties.
30

Sections 3 and 5, Rule 58 of the 1997 Rules of Civil Procedure on preliminary injunction,
pertinent to this case, provide the requirements for the issuance of a writ of preliminary injunction
or a TRO:
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.
SEC. 5. Preliminary injunction not granted without notice; exception. - No preliminary injunction
shall be granted without hearing and prior notice to the party or persons sought to be enjoined. If
it shall appear from facts shown by affidavits or by the verified application that great or
irreparable injury would result to the applicant before the matter can be heard on notice, the court
to which the application for preliminary injunction was made, may issue ex parte a temporary
restraining order to be effective only for a period of twenty (20) days from service on the party or
person sought to be enjoined, except as herein provided. Within the twenty-day period, the court
must order said party or person to show cause at a specified time and place, why the injunction
should not be granted. The court shall also determine, within the same period, whether or not the
preliminary injunction shall be granted, and accordingly issue the corresponding order.
However, subject to the provisions of the preceding sections, if the matter is of extreme urgency
and the applicant will suffer grave injustice and irreparable injury, the executive judge of a
multiple-sala court or the presiding judge of a single-sala court may issue ex parte a temporary
restraining order effective for only seventy-two (72) hours from issuance but shall immediately
comply with the provisions of the next preceding section as to service of summons and the
documents to be served therewith. Thereafter, within the aforesaid seventy-two (72) hours, the
judge before whom the case is pending shall conduct a summary hearing to determine whether
the temporary restraining order shall be extended until the application for preliminary injunction
can be heard. In no case shall the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours provided herein.
31

From the provisions, it appears clearly that before a writ of preliminary injunction may be issued,
a clear showing must be made that there exists a right to be protected and that the acts against
which the writ is to be directed are violative of an established right.
32
The holding of a hearing,
where both parties can introduce evidence and present their side, is also required before the
courts may issue a TRO or an injunctive writ.
33

Generally, an RTC's decision to grant or to deny injunctive relief will not be set aside on appeal,
unless the trial court abused its discretion. In granting or denying injunctive relief, a court abuses
its discretion when it lacks jurisdiction; fails to consider and make a record of the factors relevant
to its determination; relies on clearly erroneous factual findings; considers clearly irrelevant or
improper factors; clearly gives too much weight to one factor; relies on erroneous conclusions of
law or equity; or misapplies its factual or legal conclusions.
34

In this case, we find that the RTC abbreviated the proceedings and precipitately granted the
respondents application for injunctive relief. The RTC did not conduct a hearing for reception of
a "sampling" of the parties respective evidence to give it an idea of the justification for its
issuance pending the decision of the case on the merits.
35
It failed to make any factual finding to
support the issuance of the writ of preliminary injunction since it did not conduct any hearing on
the application for the issuance of the writ of preliminary injunction or TRO. The RTC conducted
the March 22, 2000 and April 24, 2000 hearings on the respondents omnibus motion only
whether to admit the amended complaint and whether to hold a hearing on the respondents
application for a writ of preliminary injunction.1wphi 1
In fact, a perusal of the August 1, 2000 order shows that the RTC granted the respondents
application for a writ of preliminary injunction based only on the respondents unsubstantiated
allegations, thus:
Going now to the application for a writ of preliminary injunction and/or temporary restraining
order, the plaintiffs aver that a writ should issue forbidding the defendant bank from taking
possession of the subject property and disposing of the same beyond recovery by them tending
to make any favorable judgment in their favor ineffective.
The Complaint alleges that had defendant bank not committed fraud, plaintiffs could have
redeemed the property subject matter hereof. Furthermore, considering that the redemption price
of the property foreclosed appears to have been bloated, thereby making it difficult for plaintiffs to
redeem their property, to deny the application would in effect be condoning the act of the
defendant bank in imposing interests and penalty charges which plaintiffs claim as not having
been agreed upon by them.
In view of the foregoing, plaintiffs are entitled to prove their claim of fraud and their claim that the
interests and penalty charges imposed by the bank have no factual basis.
36

Clearly, the respondents right to injunctive relief has not been clearly and unmistakably
demonstrated. The respondents have not presented evidence, testimonial or documentary, other
than the bare allegations contained in their pleadings, to support their claim of fraud that brings
about the irreparable injury sought to be avoided by their application for injunctive relief. Thus,
the RTCs grant of the writ of preliminary injunction in favor of the respondents, despite the lack
of any evidence of a clear and unmistakable right on their part, constitutes grave abuse of
discretion amounting to lack of jurisdiction.
Every court should remember that an injunction is a limitation upon the freedom of the
defendants action and should not be granted lightly or precipitately. It should be granted only
when the court is fully satisfied that the law permits it and the emergency demands it;
37
no power
exists whose exercise is more delicate, which requires greater caution and deliberation, or is
more dangerous in a doubtful case, that the issuance of an injunction.
38

WHEREFORE, the petition is GRANTED. The April 15, 2005 decision and the October 10, 2005
resolution of the Court of Appeals in CA-G.R. SP No. 64349 are REVERSED and SER ASIDE.
The August 1, 2000 and March 7, 2001 orders of the Regional Trial Court of La Trinidad,
Benguet, Branch 63 are MODIFIED. The Writ of Preliminary Injunction issued in Civil Case No.
99-CV-1395 is declared VOID and is therefore SET ASIDE.
Costs against the respondents.
SO ORDERED.
G.R. No. 153852 October 24, 2012
SPOUSES HUMBERTO P. DELOSSANTOS AND CARMENCITA M. DELOS
SANTOS, Petitioners,
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.
D E C I S I O N
BERSAMIN, J .:
A writ of preliminary injunction to enjoin an impending extrajudicial foreclosure sale is issued only
upon a clear showing of a violation of the mortgagor's unmistakable right.
1

This appeal is taken by the petitioners to review and reverse the decision promulgated on
February 19, 2002,
2
whereby the Court of Appeals (CA) dismissed their petition for certiorari that
assailed the denial by the Regional Trial Court in Davao City (RTC) of their application for the
issuance of a writ of preliminary injunction to prevent the extrajudicial foreclosure sale of their
mortgaged asset initiated by their mortgagee, respondent Metropolitan Bank and Trust Company
(Metrobank).
Antecedents
From December 9, 1996 until March 20, 1998, the petitioners took out several loans totaling
P12,000,000.00 from Metrobank, Davao City Branch, the proceeds of which they would use in
constructing a hotel on their 305-square-meter parcel of land located in Davao City and covered
by Transfer Certificate of Title No. I-218079 of the Registry of Deeds of Davao City. They
executed various promissory notes covering the loans, and constituted a mortgage over their
parcel of land to secure the performance of their obligation. The stipulated interest rates were
15.75% per annum for the long term loans (maturing on December 9, 2006) and 22.204% per
annum for a short term loan of P4,400,000.00 (maturing on March 12, 1999).
3
The interest rates
were fixed for the first year, subject to escalation or de-escalation in certain events without
advance notice to them. The loan agreements further stipulated that the entire amount of the
loans would become due and demandable upon default in the payment of any installment,
interest or other charges.
4

On December 27, 1999, Metrobank sought the extrajudicial foreclosure of the real estate
mortgage
5
after the petitioners defaulted in their installment payments. The petitioners were
notified of the foreclosure and of the forced sale being scheduled on March 7, 2000. The notice
of the sale stated that the total amount of the obligation was P16,414,801.36 as of October 26,
1999.
6

On April 4, 2000, prior to the scheduled foreclosure sale (i.e., the original date of March 7, 2000
having been meanwhile reset to April 6, 2000), the petitioners filed in the RTC a complaint (later
amended) for damages, fixing of interest rate, and application of excess payments (with prayer
for a writ of preliminary injunction). They alleged therein that Metrobank had no right to foreclose
the mortgage because they were not in default of their obligations; that Metrobank had imposed
interest rates (i.e., 15.75% per annum for two long-term loans and 22.204% per annum for the
short term loan) on three of their loans that were different from the rate of 14.75% per annum
agreed upon; that Metrobank had increased the interest rates on some of their loans without any
basis by invoking the escalation clause written in the loan agreement; that they had paid
P2,561,557.87 instead of only P1,802,867.00 based on the stipulated interest rates, resulting in
their excess payment of P758,690.87 as interest, which should then be applied to their accrued
obligation; that they had requested the reduction of the escalated interest rates on several
occasions because of its damaging effect on their hotel business, but Metrobank had denied their
request; and that they were not yet in default because the long-term loans would become due
and demandable on December 9, 2006 yet and they had been paying interest on the short-term
loan in advance.
The complaint prayed that a writ of preliminary injunction to enjoin the scheduled foreclosure sale
be issued. They further prayed for a judgment making the injunction permanent, and directing
Metrobank, namely: (a) to apply the excess payment of P758,690.87 to the accrued interest; (b)
to pay P150,000.00 for the losses suffered in their hotel business; (c) to fix the interest rates of
the loans; and (d) to pay moral and exemplary damages plus attorneys fees.
7

In its answer, Metrobank stated that the increase in the interest rates had been made pursuant to
the escalation clause stipulated in the loan agreements; and that not all of the payments by the
petitioners had been applied to the loans covered by the real estate mortgage, because some
had been applied to another loan of theirs amounting to P500,000.00 that had not been secured
by the mortgage.
In the meantime, the RTC issued a temporary restraining order to enjoin the foreclosure
sale.
8
After hearing on notice, the RTC issued its order dated May 2, 2000,
9
granting the
petitioners application for a writ of preliminary injunction.
Metrobank moved for reconsideration.
10
The petitioners did not file any opposition to Metrobanks
motion for reconsideration; also, they did not attend the scheduled hearing of the motion for
reconsideration.
On May 19, 2000, the RTC granted Metrobanks motion for reconsideration, holding in part,
11
as
follows:
xxx In the motion at bench as well as at the hearing this morning defendant Metro Bank pointed
out that in all the promissory notes executed by the plaintiffs there is typewritten inside a box
immediately following the first paragraph the following:
"At the effective rate of 15.75% for the first year subject to upward/downward adjustments for the
next year thereafter."
Moreover, in the form of the same promissory notes, there is the additional stipulation which
reads:
"The rate of interest and/or bank charges herein-stipulated, during the term of this Promissory
Note, its extension, renewals or other modifications, may be increased, decreased, or otherwise
changed from time to time by the bank without advance notice to me/us in the event of changes
in the interest rates prescribed by law of the Monetary Board of the Central Bank of the
Philippines, in the rediscount rate of member banks with the Central Bank of the Philippines, in
the interest rates on savings and time deposits, in the interest rates on the Banks borrowings, in
the reserve requirements, or in the overall costs of funding or money;"
There being no opposition to the motion despite receipt of a copy thereof by the plaintiffs through
counsel and finding merit to the motion for reconsideration, this Court resolves to reconsider and
set aside the Order of this Court dated May 2, 2000.
x xxx
SO ORDERED.
The petitioners sought the reconsideration of the order, for which the RTC required the parties to
submit their respective memoranda. In their memorandum, the petitioners insisted that they had
an excess payment sufficient to cover the amounts due on the principal.
Nonetheless, on June 8, 2001, the RTC denied the petitioners motion for reconsideration,
12
to
wit:
The record does not show that plaintiffs have updated their installment payments by depositing
the same with this Court, with the interest thereon at the rate they contend to be the true and
correct rate agreed upon by the parties.
Hence, even if their contention with respect to the rates of interest is true and correct, they are in
default just the same in the payment of their principal obligation.
WHEREFORE, the MOTION FOR RECONSIDERATION is denied.
Ruling of the CA
Aggrieved, the petitioners commenced a special civil action for certiorari in the CA, ascribing
grave abuse of discretion to the RTC when it issued the orders dated May 19, 2000 and June 8,
2001.
On February 19, 2002, the CA rendered the assailed decision dismissing the petition for certiorari
for lack of merit, and affirming the assailed orders,
13
stating:
Petitioners aver that the respondent Court gravely abused its discretion in finding that petitioners
are in default in the payment of their obligation to the private respondent.
We disagree.
The Court below did not excessively exercise its judicial authority not only in setting aside the
May 2, 2000 Order, but also in denying petitioners motion for reconsideration due to the faults
attributable to them.
When private respondent Metrobank moved for the reconsideration of the Order of May 2, 2000
which granted the issuance of the writ of preliminary injunction, petitioners failed to oppose the
same despite receipt of said motion for reconsideration. The public respondent Court said
"For resolution is the Motion for Reconsideration filed by the defendant Metropolitan Bank and
Trust Company, dated May 12, 2000, a copy of which was received by Atty. Philip Pantojan for
the plaintiffs on May 16, 2000. There is no opposition nor appearance for the plaintiffs this
morning at the scheduled hearing of said motion x xx".
Corollarily, the issuance of the Order of June 8, 2001 was xxx based on petitioners being remiss
in their obligation to update their installment payments.
The Supreme Court ruled in this wise:
To justify the issuance of the writ of certiorari, the abuse of discretion on the part of the tribunal or
officer must be grave, as when the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility.
Petitioners likewise discussed at length the issue of whether or not the private respondent has
collected the right interest rate on the loans they obtained from the private respondent, as well as
the propriety of the application of escalated interest rate which was applied to their loans by the
latter. In the instant petition, questions of fact are not generally permitted, the inquiry being
limited essentially to whether the public respondent acted without or in excess of its jurisdiction or
with grave abuse of discretion in issuing the questioned Orders, neither is the instant petition
available to correct mistakes in the judges findings and conclusions, nor to cure erroneous
conclusions of law and fact, if there be any.
Certiorari will issue only to correct errors of jurisdiction, not errors of procedure or mistakes in the
findings or conclusions of the lower court.
A review of facts and evidence is not the province of the extraordinary remedy of certiorari.
WHEREFORE, the petition is DENIED for lack of merit. The assailed Orders of the respondent
Court are AFFIRMED.
SO ORDERED.
The petitioners moved for reconsideration of the decision, but the CA denied the motion for lack
of merit on May 7, 2002.
14

Hence, this appeal.
Issues
The petitioners pose the following issues, namely:
1. Whether or not the Presiding Judge in issuing the 08 June 2001 Order, finding the
petitioners in default of their obligation with the Bank, has committed grave abuse of
discretion amounting to excess or lack of jurisdiction as the same run counter against the
legal principle enunciated in the Almeda Case;
2. Assuming that the Presiding Judge did not excessively exercise his judicial authority in
the issuance of the assailed orders, notwithstanding their consistency with the legal
principle enunciated in the Almeda Case, whether or not the petitioners can avail of the
remedy under Rule 65, taking into consideration the sense of urgency involved in the
resolution of the issue raised;
3. Whether or not the Petition lodged before the Court of Appeals presented a question of
fact, and hence not within the province of the extraordinary remedy of certiorari.
15

The petitioners argue that the foreclosure of their mortgage was premature; that they could not
yet be considered in default under the ruling in Almeda v. Court of Appeals,
16
because the trial
court was still to determine with certainty the exact amount of their obligation to Metrobank; that
they would likely prevail in their action because Metrobank had altered the terms of the loan
agreement by increasing the interest rates without their prior assent; and that unless the
foreclosure sale was restrained their action would be rendered moot. They urge that despite
finding no grave abuse of discretion on the part of the RTC in denying their application for
preliminary injunction, the CA should have nonetheless issued a writ of certiorari considering that
they had no other plain and speedy remedy.
Metrobank counters that Almeda v. Court of Appeals was not applicable because that ruling
presupposed the existence of the following conditions, to wit: (a) the escalation and de-escalation
of the interest rate were subject to the agreement of the parties; (b) the petitioners as obligors
must have protested the highly escalated interest rates prior to the application for foreclosure; (c)
they must not be in default in their obligations; (d) they must have tendered payment to
Metrobank equivalent to the principal and accrued interest calculated at the originally stipulated
rate; and (e) upon refusal of Metrobank to receive payment, they should have consigned the
tendered amount in court.
17
It asserts that the petitioners loans, unlike the obligation involved in
Almeda v. Court of Appeals, had already matured prior to the filing of the case, and that they had
not tendered or consigned in court the amount of the principal and the accrued interest at the
rate they claimed to be the correct one.
18

Based on the foregoing, the issues to be settled are, firstly, whether the petitioners had a cause
of action for the grant of the extraordinary writ of certiorari; and, secondly, whether the petitioners
were entitled to the writ of preliminary injunction in light of the ruling in Almeda v. Court of
Appeals.
Ruling
The appeal has no merit.
To begin with, the petitioners resort to the special civil action of certiorari to assail the May 19,
2000 order of the RTC (reconsidering and setting aside its order dated May 2, 2000 issuing the
temporary restraining order against Metrobank to stop the foreclosure sale) was improper. They
thereby apparently misapprehended the true nature and function of a writ of certiorari. It is clear
to us, therefore, that the CA justly and properly dismissed their petition for the writ of certiorari.
We remind that the writ of certiorari being a remedy narrow in scope and inflexible in character,
whose purpose is to keep an inferior court within the bounds of its jurisdiction, or to prevent an
inferior court from committing such grave abuse of discretion amounting to excess of jurisdiction,
or to relieve parties from arbitrary acts of courts (i.e., acts that courts have no power or authority
in law to perform) is not a general utility tool in the legal workshop,
19
and cannot be issued to
correct every error committed by a lower court.
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued
out of Chancery, or the Kings Bench, commanding agents or officers of the inferior courts to
return the record of a cause pending before them, so as to give the party more sure and speedy
justice, for the writ would enable the superior court to determine from an inspection of the record
whether the inferior courts judgment was rendered without authority.
20
The errors were of such a
nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom
no other remedy was available.
21
If the inferior court acted without authority, the record was then
revised and corrected in matters of law.
22
The writ of certiorari was limited to cases in which the
inferior court was said to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or quasi-judicial acts.
23

The concept of the remedy of certiorari in our judicial system remains much the same as it has
been in the common law. In this jurisdiction, however, the exercise of the power to issue the writ
of certiorari is largely regulated by laying down the instances or situations in the Rules of Court in
which a superior court may issue the writ of certiorari to an inferior court or officer. Section 1,
Rule 65 of the Rules of Court compellingly provides the requirements for that purpose, viz:
Section 1.Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file
a verified petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule
46.
(1a)
Pursuant to Section 1, supra, the petitioner must show that, one, the tribunal, board or officer
exercising judicial or quasi-judicial functions acted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and, two, there is neither an
appeal nor any plain, speedy and adequate remedy in the ordinary course of law for the purpose
of amending or nullifying the proceeding.
Considering that the requisites must concurrently be attendant, the herein petitioners stance that
a writ of certiorari should have been issued even if the CA found no showing of grave abuse of
discretion is absurd. The commission of grave abuse of discretion was a fundamental requisite
for the writ of certiorari to issue against the RTC. Without their strong showing either of the RTCs
lack or excess of jurisdiction, or of grave abuse of discretion by the RTC amounting to lack or
excess of jurisdiction, the writ of certiorari would not issue for being bereft of legal and factual
bases. We need to emphasize, too, that with certiorari being an extraordinary remedy, they must
strictly observe the rules laid down by law for granting the relief sought.
24

The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the
commission of grave abuse of discretion amounting to lack of jurisdiction. In this regard, mere
abuse of discretion is not enough to warrant the issuance of the writ. The abuse of discretion
must be grave, which means either that the judicial or quasi-judicial power was exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent
judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined
or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of
jurisdiction.
Secondly, the Court must find that the petitioners were not entitled to enjoin or prevent the
extrajudicial foreclosure of their mortgage by Metrobank. They were undeniably already in default
of their obligations the performance of which the mortgage had precisely secured. Hence,
Metrobank had the unassailable right to the foreclosure. In contrast, their right to prevent the
foreclosure did not exist. Hence, they could not be validly granted the injunction they sought.
The foreclosure of a mortgage is but a necessary consequence of the non-payment of an
obligation secured by the mortgage. Where the parties have stipulated in their agreement,
mortgage contract and promissory note that the mortgagee is authorized to foreclose the
mortgage upon the mortgagors default, the mortgagee has a clear right to the foreclosure in
case of the mortgagors default. Thereby, the issuance of a writ of preliminary injunction upon the
application of the mortgagor will be improper.
25
Mindful that an injunction would be a limitation
upon the freedom of action of Metrobank, the RTC justifiably refused to grant the petitioners
application for the writ of preliminary injunction. We underscore that the writ could be granted
only if the RTC was fully satisfied that the law permitted it and the emergency demanded
it.
26
That, needless to state, was not true herein.
In City Government of Butuan v. Consolidated Broadcasting System (CBS), Inc.,
27
the Court
restated the nature and concept of a writ of preliminary injunction in the following manner, to wit:
A preliminary injunction is an order granted at any stage of an action or proceeding prior to the
judgment or final order requiring a party or a court, an agency, or a person to refrain from a
particular act or acts. It may also require the performance of a particular act or acts, in which
case it is known as a preliminary mandatory injunction. Thus, a prohibitory injunction is one that
commands a party to refrain from doing a particular act, while a mandatory injunction commands
the performance of some positive act to correct a wrong in the past.1wphi1
As with all equitable remedies, injunction must be issued only at the instance of a party who
possesses sufficient interest in or title to the right or the property sought to be protected. It is
proper only when the applicant appears to be entitled to the relief demanded in the complaint,
which must aver the existence of the right and the violation of the right, or whose averments must
in the minimum constitute a prima facie showing of a right to the final relief sought. Accordingly,
the conditions for the issuance of the injunctive writ are: (a) that the right to be protected exists
prima facie; (b) that the act sought to be enjoined is violative of that right; and (c) that there is an
urgent and paramount necessity for the writ to prevent serious damage. An injunction will not
issue to protect a right not in esse, or a right which is merely contingent and may never arise; or
to restrain an act which does not give rise to a cause of action; or to prevent the perpetration of
an act prohibited by statute. Indeed, a right, to be protected by injunction, means a right clearly
founded on or granted by law or is enforceable as a matter of law. (Bold emphasis supplied)
Thirdly, the petitioners allege that: (a) Metrobank had increased the interest rates without their
assent and without any basis; and (b) they had an excess payment sufficient to cover the
amounts due. In support of their allegation, they submitted a table of the interest payments,
wherein they projected what they had actually paid to Metrobank and contrasted the payments to
what they claimed to have been the correct amounts of interest, resulting in an excess payment
of P605,557.81.
The petitioners fail to convince.
We consider to be unsubstantiated the petitioners claim of their lack of consent to the escalation
clauses. They did not adduce evidence to show that they did not assent to the increases in the
interest rates. The records reveal instead that they requested only the reduction of the interest
rate or the restructuring of their loans.
28
Moreover, the mere averment that the excess payments
were sufficient to cover their accrued obligation computed on the basis of the stipulated interest
rate cannot be readily accepted. Their computation, as their memorandum submitted to the RTC
would explain,
29
was too simplistic, for it factored only the principal due but not the accrued
interests and penalty charges that were also stipulated in the loan agreements.
It is relevant to observe in this connection that escalation clauses like those affecting the
petitioners were not void per se, and that an increase in the interest rate pursuant to such
clauses were not necessarily void. In Philippine National Bank v. Rocamora,
30
the Court has said:
Escalation clauses are valid and do not contravene public policy. These clauses are common in
credit agreements as means of maintaining fiscal stability and retaining the value of money on
long-term contracts. To avoid any resulting one-sided situation that escalation clauses may bring,
we required in Banco Filipino the inclusion in the parties agreement of a de-escalation clause
that would authorize a reduction in the interest rates corresponding to downward changes made
by law or by the Monetary Board.
The validity of escalation clauses notwithstanding, we cautioned that these clauses do not give
creditors the unbridled right to adjust interest rates unilaterally. As we said in the same Banco
Filipino case, any increase in the rate of interest made pursuant to an escalation clause must be
the result of an agreement between the parties. The minds of all the parties must meet on the
proposed modification as this modification affects an important aspect of the agreement. There
can be no contract in the true sense in the absence of the element of an agreement, i.e., the
parties mutual consent. Thus, any change must be mutually agreed upon, otherwise, the change
carries no binding effect. A stipulation on the validity or compliance with the contract that is left
solely to the will of one of the parties is void; the stipulation goes against the principle of mutuality
of contract under Article 1308 of the Civil Code.
We reiterate that injunction will not protect contingent, abstract or future rights whose existence is
doubtful or disputed.
31
Indeed, there must exist an actual right,
32
because injunction will not be
issued to protect a right not in esse and which may never arise, or to restrain an act which does
not give rise to a cause of action. At any rate, an application for injunctive relief is strictly
construed against the pleader.
33

Nor do we discern any substantial controversy that had any real bearing on Metrobanks right to
foreclose the mortgage. The mere possibility that the RTC would rule in the end in the petitioners
favor by lowering the interest rates and directing the application of the excess payments to the
accrued principal and interest did not diminish the fact that when Metrobank filed its application
for extrajudicial foreclosure they were already in default as to their obligations and that their
short-term loan of P4,400,000.00 had already matured. Under such circumstances, their
application for the writ of preliminary injunction could not but be viewed as a futile attempt to
deter or delay the forced sale of their property.
Lastly, citing the ruling in Almeda v. Court of Appeals, to the effect that the issuance of a
preliminary injunction pending the resolution of the issue on the correct interest rate would be
justified, the petitioners submit that they could be rightly considered in default only after they had
failed to settle the exact amount of their obligation as determined by the trial court in the main
case.
The petitioners reliance on the ruling in Almeda v. Court of Appeals was misplaced.
Although it is true that the ruling in Almeda v. Court of Appeals sustained the issuance of the
preliminary injunction pending the determination of the issue on the interest rates, with the Court
stating:
In the first place, because of the dispute regarding the interest rate increases, an issue which
was never settled on merit in the courts below, the exact amount of petitioners obligations could
not be determined. Thus, the foreclosure provisions of P.D. 385 could be validly invoked by
respondent bank only after settlement of the question involving the interest rate on the loan, and
only after the spouses refused to meet their obligations following such determination.
34
x xx.
Almeda v. Court of Appeals involved circumstances that were far from identical with those
obtaining herein. To start with, Almeda v. Court of Appeals involved the mandatory foreclosure of
a mortgage by a government financial institution pursuant to Presidential Decree No.
385
35
should the arrears reach 20% of the total outstanding obligation. On the other hand,
Metrobank is not a government financial institution. Secondly, the petitioners in Almeda v. Court
of Appeals were not yet in default at the time they brought the action questioning the propriety of
the interest rate increases, hut the herein petitioners were already in default and the mortgage
had already been foreclosed when they assailed the interest rates in court. Thirdly, the Court
found in Almeda v. Court of Appeals that the increases in the interest rates had been made
without the prior assent of the borrowers, who had even consistently protested the increases in
the stipulated interest rate. In contrast, the Court cannot make the same conclusion herein for
lack of basis. Fourthly, the interest rates in Almeda v. Court of Appeals were raised to such a
very high level that the borrowers were practically enslaved and their assets depleted, with the
interest rate even reaching at one point a high of 68% per annum. Here, however, the increases
reached a high of only 31% per annum, according to the petitioners themselves. Lastly, the Court
in Almeda v. Court of Appeals attributed good faith to the petitioners by their act of consigning in
court the amounts of what they believed to be their remaining obligation. No similar tender or
consignation of the amount claimed by the petitioners herein to be their correct outstanding
obligation was made by them.
In fine, the petitioners in Almeda v. Court o{Appeals had the existing right to a writ of preliminary
injunction pending the resolution of the main case, but the herein petitioners did not. Stated
otherwise, no writ of preliminary injunction to enjoin an impending extrajudicial foreclosure sale
should issue except upon a clear showing of a violation of the mortgagors' unmistakable right to
the injunction.
WHEREFORE, the Court UENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on February 19, 2002; and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.
[G.R. NO. 150280 : April 26, 2006]
UNIVERSITY OF THE EAST, Petitioner, v. MARIBETH ANG
WONG,Respondent.
R E S O L U T I O N
CORONA, J.:
This is a Petition for Review of the May 31, 2001 decision
1
of the
Court of Appeals finding no grave abuse of discretion on the part
of the Regional Trial Court (RTC), Branch 3, Manila
2
in issuing the
writ of preliminary injunction
3
in civil case no. 99-95981.
4

The facts follow.
The parties entered into several contracts whereby respondent
leased from petitioner University of the East (UE) various canteen
spaces within UE's campuses. The contracts subject of this case
provided for their expiration on December 31, 1999.
In December 1998, a meeting was held to discuss reports on
contaminated food sold in respondent's canteens. According to
respondent, however, petitioner verbally assured her that the
contracts would be renewed. Hence, she spent P700,000 for the
renovation of the canteens.
5
Petitioner, on the other hand, denied
this. The minutes
6
of the meeting were presented to prove that
no such assurance was given. Besides, the renovation had been
commenced in August 1998, months before the meeting.
7

On September 30, October 26 and November 29 of
1999,
8
respondent was notified in writing that the lease contracts
would not be renewed.
On December 22, 1999, respondent filed with the Manila RTC an
urgent petition for mandatory injunction with damages
9
alleging
that the non-renewal of the lease contracts would result in
irreparable injury to her.
On January 17, 2000, a writ of preliminary injunction was issued
after respondent posted a bond for P50,000.
10
Petitioner's motion
for reconsideration was denied.
11

In a petition for certiorari before the Court of Appeals,
12
petitioner
imputed grave abuse of discretion amounting to lack of
jurisdiction on the part of the trial court when it issued the writ of
preliminary injunction without showing that the requisites for its
issuance had been met.
On May 31, 2001, the Court of Appeals dismissed the petition.
The issuance of a preliminary injunction rests entirely within the
discretion of the court taking cognizance of the case and is
generally not interfered with except in cases of manifest abuse.
No manifest abuse has been shown on the part of respondent
Judge de Castro, when he in fact granted preliminary injunction
to serve the purpose for which it was created, which was to
preserve status quo.
13

Hence, this recourse.
Petitioner argued that to be entitled to the equitable relief of
preliminary injunction respondent must indubitably show a clear
and positive right to injunctive relief; otherwise the preventive aid
of equity by preliminary injunction cannot be
invoked.
14
Respondent's action was based on alleged verbal
assurances that the contracts would be renewed which was,
however, controverted by documentary evidence showing that no
such commitment was made.
In her comment,
15
respondent stressed that, having leased the
canteen spaces for nine years, she had a right to renew the
contracts. Otherwise, serious damage in the form of lost
investments and lost opportunities for income would result.
On September 30, 2002, petitioner manifested
16
that the case
had become moot and academic since the extension of the lease
prayed for by respondent had already lapsed.
Attached was an order dated July 24, 2002 of the trial court.
17
It
read:
At today's hearing, the Court apprised both parties thru counsels
that the relief sought for in the partition has lapsed. In short, the
2-year extension of the lease prayed for by [respondent] has
transpired.rbl rl l lbrr
WHEREFORE, due to the aforesaid supervening event, the petition
is now moot and academic. Accordingly, the writ of preliminary
injunction previously issued is LIFTED and this petition is hereby
DISMISSED. xxx
[Respondent] is, however, instructed to comply with the Order
dated July 11, 2002 on its rental arrearages to [petitioner.]
[Respondent] is also directed to pay the accruing rentals from
December 31, 2001 until she vacates the premises.
An earlier order of the trial court dated July 11, 2002
18
read:
xxx [Respondent] has not paid the rentals for more than 2 years.
The injunction issued herein was for [respondent] to continue to
occupy the leased premises. However, this is not an excuse to
forego the rentals. [Petitioner] states that rentals have
accumulated to P12,605,469.20 as of December 31, 2001.
x xx
WHEREFORE, xxx [respondent] is directed to pay [petitioner] the
sum ofP12,605,469.20 plus the accrued rentals thereafter from
(December 31, 2001).
19

The main issue before us is the propriety of the writ of
preliminary injunction issued by the trial court.
The lease contracts all expired on December 31, 1999.
Respondent sought to renew the same for another two years,
from December 31, 1999 to December 31, 2001. The Manila RTC
issued a writ of preliminary injunction to maintain the
status quo pending the determination of whether the lease
contracts should be renewed or not. Therefore, on December 31,
2001, the date which marked the end of the two-year extension
being sought, the writ lost its usefulness.
In fact, there is no evidence that petitioner ever agreed to the
two-year extension being sought by respondent. Taken together
with the trial court's finding that respondent herein was not
paying her rentals, it appears that respondent was holding on to
the leased spaces within the UE campuses only by virtue of the
trial court's writ of preliminary injunction and not because of any
express or implied meeting of the minds on the renewal of the
lease. It taxes our sense of fairness to know that respondent was
apparently using the judicial process to circumvent her obligation
to pay the rentals due from her. Her ejectment and the collection
of all arrearages from her are therefore in order, if these have not
been effected yet.
WHEREFORE, the petition is hereby GRANTED.
PHILIPPINE ECONOMIC ZONE
AUTHORITY, represented herein
by DIRECTOR GENERAL LILIA
B. DE LIMA,
Petitioner,

- versus -

JOSEPH JUDE CARANTES,
ROSE CARANTES, and all the
other HEIRS OF MAXIMINO
CARANTES,
Respondents.
G.R. No. 181274

Present:

CARPIO
MORALES, J., Chairperson,
BRION,
BERSAMIN,
ABAD,

and
VILLARAMA, JR., JJ.


Promulgated:
June 23, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J .:
This petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, seeks to reverse and set aside the
Decision
[1]
dated October 26, 2007 of the Court of Appeals (CA) in CA-G.R.
CV No. 73230. The Court of Appeals had affirmed the Order
[2]
dated October
2, 2001 of the Regional Trial Court (RTC), Branch 5, Baguio City in Civil Case
No. 4339-R, granting the respondents Petition
[3]
for injunction.
The facts are gathered from the records of the case.
Respondents Joseph Jude Carantes, Rose Carantes and the heirs of
MaximinoCarantes are in possession of a 30,368-square meter parcel of land
located in LoakanRoad,Baguio City. On June 20, 1997, they obtained Certificate
of Ancestral Land Claim (CALC) No. CAR-CALC-022
[4]
over the land from the
Department of Environment and Natural Resources (DENR). On the strength of
said CALC, respondents secured a building permit
[5]
and a fencing permit
[6]
from
the Building Official of Baguio City, Teodoro G. Barrozo. Before long, they
fenced the premises and began constructing a residential building thereon.
Soon, respondents received a letter
[7]
dated February 9, 1999 from Digna
D. Torres, the Zone Administrator of the Philippine Economic Zone Authority
(PEZA), informing them that the house they built had overlapped PEZAs
territorial boundary. Torres advised respondents to demolish the same within
sixty (60) days from notice. Otherwise, PEZA would undertake its demolition at
respondents expense.
Without answering PEZAs letter, respondents filed a petition for
injunction, with prayer for the issuance of a temporary restraining order (TRO)
and writ of preliminary injunction before the RTC of Baguio City. By
Order
[8]
dated April 8, 1999, the RTC of Baguio City issued a TRO, which
enjoined PEZA to cease and desist from threatening respondents with the
demolition of their house before respondents prayer for a writ of preliminary
injunction can be heard. On September 19, 2001, the RTC likewise issued an
Order,
[9]
which directed the parties to maintain the status quo pending resolution
of the case.
On October 2, 2001, the RTC granted respondents petition and ordered
the issuance of a writ of injunction against PEZA, thus:
WHEREFORE, the petition is herein GRANTED and a writ of
injunction is hereby issued enjoining the respondents, their agents,
representatives or anybody acting in their behalf from dispossessing, notifying
or disturbing in any [manner] the peaceful possession and occupation of the
land by the petitioners.
SO ORDERED.
[10]

The trial court ruled that respondents are entitled to possess, occupy and
cultivate the subject lots on the basis of their CALC. The court a quo explained
that by the very definition of an ancestral land under Republic Act (R.A.) No.
8371
[11]
or the Indigenous Peoples Rights Act of 1997, said lots have been
segregated from lands of the public domain. As such, the rights of respondents
to the land are already vested in them and cannot be disturbed by Proclamation
No. 1825,
[12]
which included said land within the export processing zone of
Baguio City.
On appeal, the CA affirmed the RTC ruling. In the assailed Decision
dated October 26, 2007, the appellate court echoed the trial courts declaration
that the subject lots have been set aside from the lands of the public domain.
On February 1, 2008, the Office of the Solicitor General (OSG), as
counsel for petitioner PEZA, filed a Motion to Admit
[13]
petition, with the
present Petition
[14]
attached. Petitioner challenges the CA decision on two (2)
issues:
I.
WHETHER OR NOT IT IS THE PETITIONER OR THE CITY ENGINEER
OF BAGUIO CITY WHO HAS THE LEGAL AUTHORITY
TO ISSUE BUILDING AND FENCING PERMITS FOR
CONSTRUCTIONS WITHIN THE PEZA-BCEZ.
II.
WHETHER OR NOT RESPONDENTS CALC IS SUFFICIENT TO
DISREGARD THE PROVISIONS OF THE NATIONAL BUILDING CODE
OF THE PHILIPPINES.
[15]

Amplified, the issue for our determination is whether petitioner can
require respondents to demolish the structures they had built within the territory
of PEZA-BCEZ (Baguio City Economic Zone).
The OSG, at the outset, explains the delay in appealing the CA
decision. It attributes the delay to the inadvertence of Senior State Solicitor
Rodolfo Geronimo M. Pineda, the temporarily-designated officer-in-charge
(OIC) of Division XV, who took over the case when State Solicitor Maricar
S.A. Prudon-Sison went on maternity leave. Pineda allegedly merely noted
receipt of the CA decision without noticing that it was adverse to PEZA. The
OSG adds that the sparse complement of three (3) lawyers left at the time could
not tackle at once the horde of cases assigned to the division.
On substantive grounds, petitioner claims exclusive authority to issue
building and fencing permits within ecozones under Section 6
[16]
of Presidential
Decree (P.D.) No. 1716,
[17]
amending P.D. No. 66.
[18]
Alongside, petitioner
asserts concurrent authority to require owners of structures without said permits
to remove or demolish such structures under Section 14 (i)
[19]
of R.A. No.
7916.
[20]

For their part, respondents rely on CAR-CALC-022 for their right to
fence the lots and build a house thereon. They insist that the function of issuing
building and fencing permits, even within the Baguio City Economic Zone,
pertains to the Office of the City Mayor and the Building Official of Baguio
City, respectively. Respondents likewise assail the petition for being filed late,
stressing that it was filed only after almost three (3) months from petitioners
receipt of the CA decision.
We grant the petition.
It is settled that an appeal must be perfected within the reglementary
period provided by law; otherwise, the decision becomes final and
executory.
[21]
Before the Supreme Court, a petition for review on certiorari
under Rule 45 of the 1997 Rules of Civil Procedure, as amended, must be filed
within fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or of the denial of the petitioners motion for new trial or
reconsideration filed in due time after notice of the judgment. Even then,
review is not a matter of right, but of sound judicial discretion, and may be
granted only when there are special and important reasons therefor.
In the case at bar, the Docket Division of the OSG received a copy of the
CA decision on November 7, 2007. It was not until February 1, 2008 or almost
three (3) months however, that the OSG, for petitioner, filed a petition for
review on certiorari with this Court. The OSG pleads for understanding
considering the scarcity of its lawyers and the inadvertence of the temporarily-
designated OIC of Division XV in overlooking that the CA decision was
adverse to PEZA.
While the Court realizes the OSGs difficulty in having only three (3)
lawyers working full time on its cases, the OSG could have easily asked for an
extension of time within which to file the petition. More importantly, as the
government agency tasked to represent the government in litigations, the OSG
should perform its duty with promptness and utmost diligence.
However, upon careful consideration of the merits of this case, the Court
is inclined to overlook this procedural lapse in the interest of substantial
justice. Although a party is bound by the acts of its counsel, including the
latters mistakes and negligence, a departure from this rule is warranted where
such mistake or neglect would result in serious injustice to the client. Indeed,
procedural rules may be relaxed for persuasive reasons to relieve a litigant of an
injustice not commensurate with his failure to comply with the prescribed
procedure.
[22]
More so, when to allow the assailed decision to go unchecked
would set a precedent that will sanction a violation of substantive law. Such is
the situation in this case.
Injunction is a judicial writ, process or proceeding whereby a party is
directed either to do a particular act, in which case it is called a mandatory
injunction or to refrain from doing a particular act, in which case it is called a
prohibitory injunction. As a main action, injunction seeks to permanently
enjoin the defendant through a final injunction issued by the court and contained
in the judgment. Section 9, Rule 58 of the 1997 Rules of Civil Procedure, as
amended, provides,
SEC. 9. When final injunction granted. If after the trial of the action it
appears that the applicant is entitled to have the act or acts complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or continuance
of the act or acts or confirming the preliminary mandatory injunction.
Two (2) requisites must concur for injunction to issue: (1) there must be a
right to be protected and (2) the acts against which the injunction is to be
directed are violative of said right.
[23]
Particularly, in actions involving realty,
preliminary injunction will lie only after the plaintiff has fully established his
title or right thereto by a proper action for the purpose. To authorize a
temporary injunction, the complainant must make out at least a prima
facie showing of a right to the final relief. Preliminary injunction will not issue
to protect a right not in esse.
[24]
These principles are equally relevant to actions
seeking permanent injunction.
At the onset, we must stress that petitioner does not pose an adverse claim
over the subject land. Neither does petitioner dispute that respondents hold
building and fencing permits over the lots. For petitioner, the question that
must be answered is whether respondents may build structures within the
Baguio City Economic Zone on the basis of their CAR-CALC-022, and the
building and fencing permits issued by the City Building Official.
We rule in the negative.
In the parallel case of Philippine Economic Zone Authority (PEZA) v.
Borreta,
[25]
BenedictoCarantes invoked CAR-CALC-022, the same CALC
invoked by respondents in this case, to put up structures in the land subject of
said case. The Court, speaking through Justice Angelina Sandoval-Gutierrez,
refused to recall the writ of demolition issued by the trial court therein. We held
that Carantes is a mere applicant for the issuance of a certificate of ownership of
an ancestral land who has yet to acquire a vested right as owner thereof so as to
exclude the land from the areas under PEZA. We perceive no good reason to
depart from this ruling as we find respondents herein to be similarly situated.
As holders of a CALC, respondents possess no greater rights than those
enumerated in Par. 1, Section 2, Article VII of DENR Department
Administrative Order (DAO) No. 02, Series of 1993:
SECTION 2. Rights and Responsibilities of Ancestral Land Claimants

1. Rights
1. The right to peacefully occupy and cultivate the land, and
utilize the natural resources therein, subject to existing laws,
rules and regulations applicable thereto;
2. The right of the heirs to succeed to the claims subject to
existing rules and regulations;
3. The right to exclude from the claim any other person who does
not belong to the family or clan; and
4. The right to utilize trees and other forest products inside the
ancestral land subject to these rules as well as customary laws.
(Emphasis supplied.)
Respondents being holders of a mere CALC, their right to possess the
subject land is limited to occupation in relation to cultivation. Unlike No.
1,
[26]
Par. 1, Section 1, Article VII of the same DENR DAO, which expressly
allows ancestral domain claimants to reside peacefully within the domain,
nothing in Section 2 grants ancestral land claimants a similar right, much less
the right to build permanent structures on ancestral lands an act of ownership
that pertains to one (1) who has a recognized right by virtue of a Certificate of
Ancestral Land Title. On this score alone, respondents action for injunction
must fail.
Yet, even if respondents had established ownership of the land, they
cannot simply put up fences or build structures thereon without complying with
applicable laws, rules and regulations. In particular, Section 301 of P.D. No.
1096, otherwise known as the National Building Code of the
Philippines mandates:
SECTION 301. Building Permits
No person, firm or corporation, including any agency or
instrumentality of the government shall erect, construct, alter, repair, move,
convert or demolish any building or structure or cause the same to be done
without first obtaining a building permit therefor from the Building Official
assigned in the place where the subject building is located or the building
work is to be done.
Supplementary to a building permit, a fencing permit must also be
secured from the Building Official concerned before fences may be installed in
the premises.
In the present case, petitioner refuses to honor the building and fencing
permits issued by the City Building Official to respondents. Petitioner PEZA
maintains that the function of administering and enforcing the provisions of
P.D. No. 1096 within the areas owned and administered by it, pertains to
PEZA. Hence, it is PEZA, and not the local Building Official of Baguio City,
which may properly issue building and fencing permits within PEZA.
On this point, Section 205 of P.D. No. 1096 is pertinent:
SECTION 205. Building Officials
Except as otherwise provided herein, the Building Official shall be
responsible for carrying out the provisions of this Code in the field as well as
the enforcement of orders and decisions made pursuant thereto.
Due to the exigencies of the service, the Secretary may designate
incumbent Public Works District Engineers, City Engineers and Municipal
Engineers to act as Building Officials in their respective areas of jurisdiction.
The designation made by the Secretary under this Section shall
continue until regular positions of Building Official are provided or unless
sooner terminated for causes provided by law or decree.
The position of Building Official is a regular item in the organizational
structure of the local government. Only in case of urgent necessity may the
Secretary of Public Works designate the incumbent District Engineer,
Municipal Engineer or City Engineer, as the case may be. This was the
applicable law even for areas covered by the Export Processing Zone Authority
(EPZA) until P.D. No. 1716 was enacted on August 21, 1980.
P.D. No. 1716 further amended P.D. No. 66,
[27]
the law creating the
EPZA, by creating the PEZA. Section 11 of R.A. No. 7916 provides that the
existing EPZA created under P.D. No. 66 shall evolve into and be referred to as
the PEZA in accordance with the guidelines and regulations set forth in an
executive order issued for the purpose.
Thus, on October 30, 1995, Executive Order No. 282
[28]
was
enacted. Under Section 1 thereof, all the powers, functions and responsibilities
of EPZA under P.D. No. 66, as amended, insofar as they are not inconsistent
with the powers, functions and responsibilities of the PEZA, under R.A. No.
7916, shall be assumed and exercised by PEZA.
Among such powers is the administration and enforcement of
the National Building Code of the Philippines in all zones and areas owned or
administered by EPZA, as expressly provided in Section 6 of P.D. No. 1716:
SEC. 6. The administration and enforcement of the provisions of
Presidential Decree No. 1096, otherwise known as the National Building Code
of the Philippines in all zones and areas owned or administered by the
Authority shall be vested in the Administrator or his duly authorized
representative. He shall appoint such EPZA qualified personnel as may
be necessary to act as Building Officials who shall be charged with the
duty of issuing Building Permits in the different zones. All fees and dues
collected by the Building Officials under the National Building Code shall
accrue to the Authority. (Emphasis supplied.)
This function, which has not been repealed and does not appear to be
inconsistent with any of the powers and functions of PEZA under R.A. No.
7916, subsists. Complimentary thereto, Section 14 (i) of R.A. No. 7916 states:
SEC. 14. Powers and Functions of the Director General. -
The director general shall be the overall [coordinator] of the policies, plans
and programs of the ECOZONES. As such, he shall provide overall
supervision over and general direction to the development and operations of
these ECOZONES. He shall determine the structure and the staffing pattern
and personnel complement of the PEZA and establish regional offices, when
necessary, subject to the approval of the PEZA Board.
In addition, he shall have the following specific powers and
responsibilities:
xxxx
(i) To require owners of houses, buildings or other structures
constructed without the necessary permit whether constructed on public or
private lands, to remove or demolish such houses, buildings, structures within
sixty (60) days after notice and upon failure of such owner to remove or
demolish such house, building or structure within said period, the director
general or his authorized representative may summarily cause its removal or
demolition at the expense of the owner, any existing law, decree, executive
order and other issuances or part thereof to the contrary notwithstanding;
(Emphasis supplied.)
By specific provision of law, it is PEZA, through its building officials,
which has authority to issue building permits for the construction of structures
within the areas owned or administered by it, whether on public or private
lands. Corollary to this, PEZA, through its director general may require owners
of structures built without said permit to remove such structures within sixty
(60) days. Otherwise, PEZA may summarily remove them at the expense of the
owner of the houses, buildings or structures.
As regards the issuance of fencing permits on ancestral lands, particularly
within Baguio City and the rest of the Cordilleras, DENR-Circular No. 03-90
(Rules on the Acceptance, Identification, Evaluation, and Delineation of
Ancestral Land Claims by the Special Task Force Created by the Virtue of
DENR Special Order Nos. 31 and 31-A both Series of 1990) prescribes in
Section 12:
SEC. 12. The Regional Land Management Services or the CENROs,
through their respective Provincial Environment and Natural Resources
Officer (PENRO), shall prepare and submit to the Special Task Force a report
on each and every application surveyed and delineated. Thereafter, the Special
Task Force after evaluating the reports, shall endorse valid ancestral land
claims to the Secretary through the Indigenous Community Affairs Division,
Special Concerns Office for the issuance of a Certificate of Ancestral Land
Claim. As soon as ancestral land claim is found to be valid and in meritorious
cases, the Special Task Force may recommend to the City/Municipal
Mayors Office the issuance of a fencing permit to the applicant over
areas actually occupied at the time of filing. (Emphasis supplied.)
This is the general rule. Considering, however, that in this case, a fencing
permit is issued complementary to a building permit and that within the
premises of PEZA, it is the Authority that may properly issue a building permit,
it is only fitting that fencing permits be issued by the Authority.
From the foregoing disquisition, it clearly appears that respondents
likewise failed to satisfy the second requisite in order that an injunction may
issue: that the acts against which the injunction is to be directed, are violative of
said right. PEZA acted well within its functions when it demanded the
demolition of the structures which respondents had put up without first securing
building and fencing permits from the Authority.
WHEREFORE, the Petition is GRANTED. The Decision
dated October 26, 2007 of the Court of Appeals in CA-G.R. CV No. 73230
affirming the Order datedOctober 2, 2001 of the court a quo in Civil Case No.
4339-R is REVERSED and SET ASIDE. Respondents are
hereby DIRECTED to demolish the residential building they had built within
the premises of PEZA within sixty (60) days from notice.
No costs.
SO ORDERED.
DEPARTMENT OF FOREIGN
AFFAIRS and BANGKO
SENTRAL NG PILIPINAS,
Petitioners,


- versus -


HON. FRANCO T. FALCON, IN
HIS CAPACITY AS THE
PRESIDING JUDGE OF BRANCH
71 OF THE REGIONAL TRIAL
COURT IN PASIG CITY and BCA
INTERNATIONAL
CORPORATION,
Respondents.
G.R. No. 176657


Present:

CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.


Promulgated:


September 1, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


LEONARDO-DE CASTRO, J .:


Before the Court is a Petition for Certiorari and prohibition under Rule
65 of the Rules of Court with a prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction filed by petitioners
Department of Foreign Affairs (DFA) and BangkoSentral ng Pilipinas
(BSP). Petitioners pray that the Court declare as null and void the Order
[1]
dated
February 14, 2007 of respondent Judge Franco T. Falcon (Judge Falcon) in Civil
Case No. 71079, which granted the application for preliminary injunction filed
by respondent BCA International Corporation (BCA). Likewise, petitioners
seek to prevent respondent Judge Falcon from implementing the corresponding
Writ of Preliminary Injunction dated February 23, 2007
[2]
issued pursuant to the
aforesaid Order.

The facts of this case, as culled from the records, are as follows:

Being a member state of the International Civil Aviation Organization
(ICAO),
[3]
the Philippines has to comply with the commitments and standards
set forth in ICAO Document No. 9303
[4]
which requires the ICAO member
states to issue machine readable travel documents (MRTDs)
[5]
by April 2010.

Thus, in line with the DFAs mandate to improve the passport and visa
issuance system, as well as the storage and retrieval of its related application
records, and pursuant to our governments ICAO commitments, the DFA
secured the approval of the President of the Philippines, as Chairman of the
Board of the National Economic and Development Authority (NEDA), for the
implementation of the Machine Readable Passport and Visa Project (the MRP/V
Project) under the Build-Operate-and-Transfer (BOT) scheme, provided for by
Republic Act No. 6957, as amended by Republic Act No. 7718 (the BOT Law),
and its Implementing Rules and Regulations (IRR). Thus, a Pre-qualification,
Bids and Awards Committee (PBAC) published an invitation to pre-qualify and
bid for the supply of the needed machine readable passports and visas, and
conducted the public bidding for the MRP/V Project on January 10,
2000. Several bidders responded and BCA was among those that pre-qualified
and submitted its technical and financial proposals. On June 29, 2000, the
PBAC found BCAs bid to be the sole complying bid; hence, it permitted the
DFA to engage in direct negotiations with BCA. On even date, the PBAC
recommended to the DFA Secretary the award of the MRP/V Project to BCA on
a BOT arrangement.

In compliance with the Notice of Award dated September 29, 2000 and
Section 11.3, Rule 11 of the IRR of the BOT Law,
[6]
BCA incorporated a
project company, the Philippine Passport Corporation (PPC) to undertake and
implement the MRP/V Project.

On February 8, 2001, a Build-Operate-Transfer Agreement
[7]
(BOT
Agreement) between the DFA and PPC was signed by DFA Acting Secretary
Lauro L. Baja, Jr. and PPC President BonifacioSumbilla. Under the BOT
Agreement, the MRP/V Project was defined as follows:

Section 1.02 MRP/V Project refers to all the activities and services
undertaken in the fulfillment of the Machine Readable Passport and Visa
Project as defined in the Request for Proposals (RFP), a copy of which is
hereto attached as Annex A, including but not limited to project financing,
systems development, installation and maintenance in the Philippines and
Foreign Service Posts (FSPs), training of DFA personnel, provision of all
project consumables (related to the production of passports and visas, such as
printer supplies, etc.), scanning of application and citizenship documents,
creation of data bases, issuance of machine readable passports and visas, and
site preparation in the Central Facility and Regional Consular Offices (RCOs)
nationwide.
[8]



On April 5, 2002, former DFA Secretary Teofisto T. Guingona and
BonifacioSumbilla, this time as BCA President, signed an Amended BOT
Agreement
[9]
in order to reflect the change in the designation of the parties and
to harmonize Section 11.3 with Section 11.8
[10]
of the IRR of the BOT
Law. The Amended BOT Agreement was entered into by the DFA and BCA
with the conformity of PPC.

The two BOT Agreements (the original version signed on February 8,
2001 and the amended version signed April 5, 2002) contain substantially the
same provisions except for seven additional paragraphs in the whereas clauses
and two new provisions Section 9.05 on Performance and Warranty Securities
and Section 20.15 on Miscellaneous Provisions. The two additional provisions
are quoted below:

Section 9.05. The PPC has posted in favor of the DFA the
performance security required for Phase 1 of the MRP/V Project and shall be
deemed, for all intents and purposes, to be full compliance by BCA with the
provisions of this Article 9.

x xxx

Section 20.15 It is clearly and expressly understood that BCA may
assign, cede and transfer all of its rights and obligations under this Amended
BOT Agreement to PPC, as fully as if PPC is the original signatory to this
Amended BOT Agreement, provided however that BCA shall nonetheless be
jointly and severally liable with PPC for the performance of all the obligations
and liabilities under this Amended BOT Agreement.
[11]



Also modified in the Amended BOT Agreement was the Project
Completion date of the MRP/V Project which set the completion of the
implementation phase of the project within 18 to 23 months from the date of
effectivity of the Amended BOT Agreement as opposed to the previous period
found in the original BOT Agreement which set the completion within 18 to 23
months from receipt of the NTP (Notice to Proceed) in accordance with the
Project Master Plan.

On April 12, 2002, an Assignment Agreement
[12]
was executed by BCA
and PPC, whereby BCA assigned and ceded its rights, title, interest and benefits
arising from the Amended BOT Agreement to PPC.

As set out in Article 8 of the original and the Amended BOT Agreement,
the MRP/V Project was divided into six phases:

Phase 1. Project Planning Phase The Project Proponent [BCA]
shall prepare detailed plans and specifications in accordance with Annex A of
this [Amended] BOT Agreement within three (3) months from issuance of the
NTP (Notice to Proceed) [from the date of effectivity of this Amended BOT
Agreement]. This phase shall be considered complete upon the review,
acceptance and approval by the DFA of these plans and the resulting Master
Plan, including the Master Schedule, the business process specifications, the
acceptance criteria, among other plans.

x xxx

The DFA must approve all detailed plans as a condition precedent to
the issuance of the CA [Certificate of Acceptance] for Phase 1.

Phase 2. Implementation of the MRP/V Project at the Central
Facility Within six (6) months from issuance of the CA for Phase 1, the
PROJECT PROPONENT [BCA] shall complete the implementation of the
MRP/V Project in the DFA Central Facility, and establish the network design
between the DFA Central Facility, the ten (10) RCOs [Regional Consular
Offices] and the eighty (80) FSPs [Foreign Service Posts].

x xxx

Phase 3. Implementation of the MRP/V Project at the Regional
Consular Offices This phase represents the replication of the systems as
approved from the Central Facility to the RCOs throughout the country, as
identified in the RFP [Request for Proposal]. The approved systems are those
implemented, evaluated, and finally approved by DFA as described in Phase
1. The Project Proponent [BCA] will be permitted to begin site preparation
and the scanning and database building operations in all offices as soon as the
plans are agreed upon and accepted. This includes site preparation and
database building operations in these Phase-3 offices.

Within six (6) months from issuance of CA for Phase 2, the Project
Proponent [BCA] shall complete site preparation and implementation of the
approved systems in the ten (10) RCOs, including a fully functional network
connection between all equipment at the Central Facility and the RCOs.

Phase 4. Full Implementation, including all Foreign Service
Posts Within three (3) to eight (8) months from issuance of the CA for
Phase-3, the Project Proponent [BCA] shall complete all preparations and
fully implement the approved systems in the eighty (80) FSPs, including a
fully functional network connection between all equipment at the Central
Facility and the FSPs. Upon satisfactory completion of Phase 4, a CA shall be
issued by the DFA.

Phase 5. In Service Phase Operation and maintenance of the
complete MRP/V Facility to provide machine readable passports and visas in
all designated locations around the world.

Phase 6. Transition/Turnover Transition/Turnover to the DFA of
all operations and equipment, to include an orderly transfer of ownership of all
hardware, application system software and its source code and/or licenses
(subject to Section 5.02 [H]), peripherals, leasehold improvements, physical
and computer security improvements, Automated Fingerprint Identification
Systems, and all other MRP/V facilities shall commence at least six (6)
months prior to the end of the [Amended] BOT Agreement. The transition
will include the training of DFA personnel who will be taking over the
responsibilities of system operation and maintenance from the Project
Proponent [BCA]. The Project Proponent [BCA] shall bear all costs related to
this transfer.
[13]
(Words in brackets appear in the Amended BOT Agreement)


To place matters in the proper perspective, it should be pointed out that
both the DFA and BCA impute breach of the Amended BOT Agreement against
each other.

According to the DFA, delays in the completion of the phases permeated
the MRP/V Project due to the submission of deficient documents as well as
intervening issues regarding BCA/PPCs supposed financial incapacity to fully
implement the project.

On the other hand, BCA contends that the DFA failed to perform its
reciprocal obligation to issue to BCA a Certificate of Acceptance of Phase 1
within 14 working days of operation purportedly required by Section 14.04 of
the Amended BOT Agreement. BCA bewailed that it took almost three years
for the DFA to issue the said Certificate allegedly because every appointee to
the position of DFA Secretary wanted to review the award of the project to
BCA. BCA further alleged that it was the DFAs refusal to approve the location
of the DFA Central Facility which prevented BCA from proceeding with Phase
2 of the MRP/V Project.

Later, the DFA sought the opinion of the Department of Finance (DOF)
and the Department of Justice (DOJ) regarding the appropriate legal actions in
connection with BCAs alleged delays in the completion of the MRP/V
Project. In a Letter dated February 21, 2005,
[14]
the DOJ opined that the DFA
should issue a final demand upon BCA to make good on its obligations,
specifically on the warranties and responsibilities regarding the necessary
capitalization and the required financing to carry out the MRP/V Project. The
DOJ used as basis for said recommendation, the Letter dated April 19,
2004
[15]
of DOF Secretary Juanita Amatong to then DFA Secretary Delia Albert
stating, among others, that BCA may not be able to infuse more capital into
PPC to use for the completion of the MRP/V Project.

Thus, on February 22, 2005, DFA sent a letter
[16]
to BCA, through its
project company PPC, invoking BCAs financial warranty under Section
5.02(A) of the Amended BOT Agreement.
[17]
The DFA required BCA to
submit (a) proof of adequate capitalization (i.e., full or substantial payment of
stock subscriptions); (b) a bank guarantee indicating the availability of a credit
facility of P700 million; and (c) audited financial statements for the years 2001
to 2004.

In reply to DFAs letter, BCA, through PPC, informed the former of its
position that its financial capacity was already passed upon during the
prequalification process and that the Amended BOT Agreement did not call for
any additional financial requirements for the implementation of the MRP/V
Project. Nonetheless, BCA submitted its financial statements for the years 2001
and 2002 and requested for additional time within which to comply with the
other financial requirements which the DFA insisted on.
[18]


According to the DFA, BCAs financial warranty is a continuing
warranty which requires that it shall have the necessary capitalization to finance
the MRP/V Project in its entirety and not on a per phase basis as BCA
contends. Only upon sufficient proof of its financial capability to complete and
implement the whole project will the DFAs obligation to choose and approve
the location of its Central Facility arise. The DFA asserted that its approval of a
Central Facility site was not ministerial and upon its review, BCAs proposed
site for the Central Facility was purportedly unacceptable in terms of security
and facilities. Moreover, the DFA allegedly received conflicting official letters
and notices
[19]
from BCA and PPC regarding the true ownership and control of
PPC. The DFA implied that the disputes among the shareholders of PPC and
between PPC and BCA appeared to be part of the reason for the hampered
implementation of the MRP/V Project.

BCA, in turn, submitted various letters and documents to prove its
financial capability to complete the MRP/V Project.
[20]
However, the DFA
claimed these documents were unsatisfactory or of dubious authenticity. Then
on August 1, 2005, BCA terminated its Assignment Agreement with PPC and
notified the DFA that it would directly implement the MRP/V Project.
[21]
BCA
further claims that the termination of the Assignment Agreement was upon the
instance, or with the conformity, of the DFA, a claim which the DFA disputed.

On December 9, 2005, the DFA sent a Notice of Termination
[22]
to BCA
and PPC due to their alleged failure to submit proof of financial capability to
complete the entire MRP/V Project in accordance with the financial warranty
under Section 5.02(A) of the Amended BOT Agreement. The Notice states:

After a careful evaluation and consideration of the matter, including
the reasons cited in your letters dated March 3, May 3, and June 20, 2005, and
upon the recommendation of the Office of the Solicitor General (OSG), the
Department is of the view that your continuing default in complying with the
requisite bank guarantee and/or credit facility, despite repeated notice and
demand, is legally unjustified.

In light of the foregoing considerations and upon the instruction of the
Secretary of Foreign Affairs, the Department hereby formally TERMINATE
(sic) the Subject Amended BOT Agreement dated 5 April 2005
(sic)
[23]
effective 09 December 2005. Further, and as a consequence of this
termination, the Department formally DEMAND (sic) that you pay within ten
(10) days from receipt hereof, liquidated damages equivalent to the
corresponding performance security bond that you had posted for the MRP/V
Project.

Please be guided accordingly.


On December 14, 2005, BCA sent a letter
[24]
to the DFA demanding that
it immediately reconsider and revoke its previous notice of termination,
otherwise, BCA would be compelled to declare the DFA in default pursuant to
the Amended BOT Agreement. When the DFA failed to respond to said letter,
BCA issued its own Notice of Default dated December 22, 2005
[25]
against the
DFA, stating that if the default is not remedied within 90 days, BCA will be
constrained to terminate the MRP/V Project and hold the DFA liable for
damages.

BCAs request for mutual discussion under Section 19.01 of the
Amended BOT Agreement
[26]
was purportedly ignored by the DFA and left the
dispute unresolved through amicable means within 90 days. Consequently,
BCA filed its Request for Arbitration dated April 7, 2006
[27]
with the Philippine
Dispute Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the
Amended BOT Agreement which provides:

Section 19.02 Failure to Settle Amicably If the Dispute cannot be
settled amicably within ninety (90) days by mutual discussion as contemplated
under Section 19.01 herein, the Dispute shall be settled with finality by an
arbitrage tribunal operating under International Law, hereinafter referred to as
the Tribunal, under the UNCITRAL Arbitration Rules contained in
Resolution 31/98 adopted by the United Nations General Assembly on
December 15, 1976, and entitled Arbitration Rules on the United Nations
Commission on the International Trade Law. The DFA and the BCA
undertake to abide by and implement the arbitration award. The place of
arbitration shall be Pasay City, Philippines, or such other place as may
mutually be agreed upon by both parties. The arbitration proceeding shall be
conducted in the English language.
[28]



As alleged in BCAs Request for Arbitration, PDRCI is a non-stock, non-
profit organization composed of independent arbitrators who operate under its
own Administrative Guidelines and Rules of Arbitration as well as under the
United Nations Commission on the International Trade Law (UNCITRAL)
Model Law on International Commercial Arbitration and other applicable laws
and rules. According to BCA, PDRCI can act as an arbitration center from
whose pool of accredited arbitrators both the DFA and BCA may select their
own nominee to become a member of the arbitral tribunal which will render the
arbitration award.

BCAs Request for Arbitration filed with the PDRCI sought the following
reliefs:

1. A judgment nullifying and setting aside the Notice of
Termination dated December 9, 2005 of Respondent [DFA], including its
demand to Claimant [BCA] to pay liquidated damages equivalent to the
corresponding performance security bond posted by Claimant [BCA];

2. A judgment (a) confirming the Notice of Default dated
December 22, 2005 issued by Claimant [BCA] to Respondent [DFA]; and (b)
ordering Respondent [DFA] to perform its obligation under the Amended
BOT Agreement dated April 5, 2002 by approving the site of the Central
Facility at the Star Mall Complex on Shaw Boulevard, Mandaluyong City,
within five days from receipt of the Arbitral Award; and

3. A judgment ordering respondent [DFA] to pay damages to
Claimant [BCA], reasonably estimated at P50,000,000.00 as of this date,
representing lost business opportunities; financing fees, costs and
commissions; travel expenses; legal fees and expenses; and costs of
arbitration, including the fees of the arbitrator/s.
[29]



PDRCI, through a letter dated April 26, 2006,
[30]
invited the DFA to
submit its Answer to the Request for Arbitration within 30 days from receipt of
said letter and also requested both the DFA and BCA to nominate their chosen
arbitrator within the same period of time.

Initially, the DFA, through a letter dated May 22, 2006,
[31]
requested for
an extension of time to file its answer, without prejudice to jurisdictional and
other defenses and objections available to it under the law. Subsequently,
however, in a letter dated May 29, 2006,
[32]
the DFA declined the request for
arbitration before the PDRCI. While it expressed its willingness to resort to
arbitration, the DFA pointed out that under Section 19.02 of the Amended BOT
Agreement, there is no mention of a specific body or institution that was
previously authorized by the parties to settle their dispute. The DFA further
claimed that the arbitration of the dispute should be had before an ad
hocarbitration body, and not before the PDRCI which has as its accredited
arbitrators, two of BCAs counsels of record. Likewise, the DFA insisted that
PPC, allegedly an indispensable party in the instant case, should also participate
in the arbitration.

The DFA then sought the opinion of the DOJ on the Notice of
Termination dated December 9, 2005 that it sent to BCA with regard to the
MRP/V Project.

In DOJ Opinion No. 35 (2006) dated May 31, 2006,
[33]
the DOJ concurred
with the steps taken by the DFA, stating that there was basis in law and in fact
for the termination of the MRP/V Project. Moreover, the DOJ recommended
the immediate implementation of the project (presumably by a different
contractor) at the soonest possible time.

Thereafter, the DFA and the BSP entered into a Memorandum of
Agreement for the latter to provide the former passports compliant with
international standards. The BSP then solicited bids for the supply, delivery,
installation and commissioning of a system for the production of Electronic
Passport Booklets or e-Passports.
[34]


For BCA, the BSPs invitation to bid for the supply and purchase of e-
Passports (the e-Passport Project) would only further delay the arbitration it
requested from the DFA. Moreover, this new e-Passport Project by the BSP
and the DFA would render BCAs remedies moot inasmuch as the e-Passport
Project would then be replacing the MRP/V Project which BCA was carrying
out for the DFA.

Thus, BCA filed a Petition for Interim Relief
[35]
under Section 28 of the
Alternative Dispute Resolution Act of 2004 (R.A. No. 9285),
[36]
with the
Regional Trial Court (RTC) of Pasig City, Branch 71, presided over by
respondent Judge Falcon. In that RTC petition, BCA prayed for the following:

WHEREFORE, BCA respectfully prays that this Honorable Court,
before the constitution of the arbitral tribunal in PDRCI Case No. 30-
2006/BGF, grant petitioner interim relief in the following manner:

(a) upon filing of this Petition, immediately issue an order
temporarily restraining Respondents [DFA and BSP], their agents,
representatives, awardees, suppliers and assigns (i) from awarding a new
contract to implement the Project, or any similar electronic passport or visa
project; or (ii) if such contract has been awarded, from implementing such
Project or similar projects until further orders from this Honorable Court;

(b) after notice and hearing, issue a writ of preliminary injunction
ordering Respondents [DFA and BSP], their agents, representatives, awardees,
suppliers and assigns to desist (i) from awarding a new contract to implement
the Project or any similar electronic passport or visa project; or (ii) if such
contract has been awarded, from implementing such Project or similar
projects, and to maintain the status quo ante pending the resolution on the
merits of BCAs Request for Arbitration; and

(c) render judgment affirming the interim relief granted to BCA
until the dispute between the parties shall have been resolved with finality.

BCA also prays for such other relief, just and equitable under the
premises.
[37]



BCA alleged, in support for its application for a Temporary Restraining
Order (TRO), that unless the DFA and the BSP were immediately restrained,
they would proceed to undertake the project together with a third party to defeat
the reliefs BCA sought in its Request for Arbitration, thus causing BCA to
suffer grave and irreparable injury from the loss of substantial investments in
connection with the implementation of the MRP/V Project.

Thereafter, the DFA filed an Opposition (to the Application for
Temporary Restraining Order and/or Writ of Preliminary Injunction) dated
January 18, 2007,
[38]
alleging that BCA has no cause of action against it as the
contract between them is for machine readable passports and visas which is not
the same as the contract it has with the BSP for the supply of electronic
passports. The DFA also pointed out that the Filipino people and the
governments international standing would suffer great damage if a TRO would
be issued to stop the e-Passport Project. The DFA mainly anchored its
opposition on Republic Act No. 8975, which prohibits trial courts from issuing
a TRO, preliminary injunction or mandatory injunction against the bidding or
awarding of a contract or project of the national government.

On January 23, 2007, after summarily hearing the parties oral arguments
on BCAs application for the issuance of a TRO, the trial court ordered the
issuance of a TRO restraining the DFA and the BSP, their agents,
representatives, awardees, suppliers and assigns from awarding a new contract
to implement the Project or any similar electronic passport or visa project, or if
such contract has been awarded, from implementing such or similar
projects.
[39]
The trial court also set for hearing BCAs application for
preliminary injunction.

Consequently, the DFA filed a Motion for Reconsideration
[40]
of the
January 23, 2007 Order. The BSP, in turn, also sought to lift the TRO and to
dismiss the petition. In its Urgent Omnibus Motion dated February 1,
2007,
[41]
the BSP asserted that BCA is not entitled to an injunction, as it does
not have a clear right which ought to be protected, and that the trial court has no
jurisdiction to enjoin the implementation of the e-Passport Project which, the
BSP alleged, is a national government project under Republic Act No. 8975.

In the hearings set for BCAs application for preliminary injunction, BCA
presented as witnesses, Mr. BonifacioSumbilla, its President, Mr.
CelestinoMercader, Jr. from the Independent Verification and Validation
Contractor commissioned by the DFA under the Amended BOT Agreement,
and DFA Assistant Secretary Domingo Lucenario, Jr. as adverse party witness.

The DFA and the BSP did not present any witness during the hearings for
BCAs application for preliminary injunction. According to the DFA and the
BSP, the trial court did not have any jurisdiction over the case considering that
BCA did not pay the correct docket fees and that only the Supreme Court could
issue a TRO on the bidding for a national government project like the e-
Passport Project pursuant to the provisions of Republic Act No. 8975. Under
Section 3 of Republic Act No. 8975, the RTC could only issue a TRO against a
national government project if it involves a matter of extreme urgency involving
a constitutional issue, such that unless a TRO is issued, grave injustice and
irreparable injury will arise.

Thereafter, BCA filed an Omnibus Comment [on Opposition and
Supplemental Opposition (To the Application for Temporary Restraining Order
and/or Writ of Preliminary Injunction)] and Opposition [to Motion for
Reconsideration (To the Temporary Restraining Order dated January 23, 2007)]
and Urgent Omnibus Motion [(i) To Lift Temporary Restraining Order; and (ii)
To Dismiss the Petition] dated January 31, 2007.
[42]
The DFA and the BSP filed
their separate Replies (to BCAs Omnibus Comment) dated February 9,
2007
[43]
and February 13, 2007,
[44]
respectively.

On February 14, 2007, the trial court issued an Order granting BCAs
application for preliminary injunction, to wit:

WHEREFORE, in view of the above, the court resolves that it has
jurisdiction over the instant petition and to issue the provisional remedy
prayed for, and therefore, hereby GRANTS petitioners [BCAs] application
for preliminary injunction. Accordingly, upon posting a bond in the amount of
Ten Million Pesos (P10,000,000.00), let a writ of preliminary injunction issue
ordering respondents [DFA and BSP], their agents, representatives, awardees,
suppliers and assigns to desist (i) from awarding a new contract to implement
the project or any similar electronic passport or visa project or (ii) if such
contract has been awarded from implementing such project or similar projects.

The motion to dismiss is denied for lack of merit. The motions for
reconsideration and to lift temporary restraining Order are now moot and
academic by reason of the expiration of the TRO.
[45]



On February 16, 2007, BCA filed an Amended Petition,
[46]
wherein
paragraphs 3.3(b) and 4.3 were modified to add language to the effect that
unless petitioners were enjoined from awarding the e-Passport Project, BCA
would be deprived of its constitutionally-protected right to perform its
contractual obligations under the original and amended BOT Agreements
without due process of law. Subsequently, on February 26, 2007, the DFA and
the BSP received the Writ of Preliminary Injunction dated February 23, 2007.

Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition
for Certiorari
[47]
and prohibition under Rule 65 of the Rules of Court with a
prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction, imputing grave abuse of discretion on the trial court
when it granted interim relief to BCA and issued the assailed Order dated
February 14, 2007 and the writ of preliminary injunction dated February 23,
2007.

The DFA and the BSP later filed an Urgent Motion for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction dated
March 5, 2007.
[48]


On March 12, 2007, the Court required BCA to file its comment on the
said petition within ten days from notice and granted the Office of the Solicitor
Generals urgent motion for issuance of a TRO and/or writ of preliminary
injunction,
[49]
thus:

After deliberating on the petition for certiorari and prohibition with
temporary restraining order and/or writ of preliminary injunction assailing the
Order dated 14 February 2007 of the Regional Trial Court, Branch 71, Pasig
City, in Civil Case No. 71079, the Court, without necessarily giving due
course thereto, resolves to require respondents to COMMENT thereon (not to
file a motion to dismiss) within ten (10) days from notice.

The Court further resolves to GRANT the Office of the Solicitor
Generals urgent motion for issuance of a temporary restraining order and/or
writ of preliminary injunction dated 05 March 2007
and I SSUE a TEMPORARY RESTRAI NI NG ORDER, as prayed for,
enjoining respondents from implementing the assailed Order dated 14
February 2007 and the Writ of Preliminary Injunction dated 23 February 2007,
issued by respondent Judge Franco T. Falcon in Civil Case No. 71079
entitled BCA International Corporation vs. Department of Foreign Affairs and
BangkoSentral ng Pilipinas, and from conducting further proceedings in said
case until further orders from this Court.


BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift
TRO,
[50]
to which the DFA and the BSP filed their Reply dated August 14,
2007.
[51]


In a Resolution dated June 4, 2007,
[52]
the Court denied BCAs motion to
lift TRO. BCA filed another Urgent Omnibus Motion dated August 17, 2007,
for the reconsideration of the Resolution dated June 4, 2007, praying that the
TRO issued on March 12, 2007 be lifted and that the petition be denied.

In a Resolution dated September 10, 2007,
[53]
the Court denied BCAs
Urgent Omnibus Motion and gave due course to the instant petition. The parties
were directed to file their respective memoranda within 30 days from notice of
the Courts September 10, 2007 Resolution.

Petitioners DFA and BSP submit the following issues for our
consideration:

ISSUES

I

WHETHER OR NOT THE RESPONDENT JUDGE GRAVELY ABUSED
HIS DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN HE ISSUED THE ASSAILED ORDER, WHICH
EFFECTIVELY ENJOINED THE IMPLEMENTATION OF THE E-
PASSPORT PROJECT -- A NATIONAL GOVERNMENT PROJECT
UNDER REPUBLIC ACT NO. 8975.

II

WHETHER OR NOT THE RESPONDENT JUDGE ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN GRANTING RESPONDENT BCAS INTERIM
RELIEF INASMUCH AS:

(I) RESPONDENT BCA HAS NOT ESTABLISHED A
CLEAR RIGHT THAT CAN BE PROTECTED BY
AN INJUNCTION; AND

(II) RESPONDENT BCA HAS NOT SHOWN THAT IT
WILL SUSTAIN GRAVE AND IRREPARABLE
INJURY THAT MUST BE PROTECTED BY AN
INJUNCTION. ON THE CONTRARY, IT IS THE
FILIPINO PEOPLE, WHO PETITIONERS PROTECT,
THAT WILL SUSTAIN SERIOUS AND SEVERE
INJURY BY THE INJUNCTION.
[54]



At the outset, we dispose of the procedural objections of BCA to the
petition, to wit: (a) petitioners did not follow the hierarchy of courts by filing
their petition directly with this Court, without filing a motion for
reconsideration with the RTC and without filing a petition first with the Court
of Appeals; (b) the person who verified the petition for the DFA did not have
personal knowledge of the facts of the case and whose appointment to his
position was highly irregular; and (c) the verification by the Assistant Governor
and General Counsel of the BSP of only selected paragraphs of the petition was
with the purported intent to mislead this Court.

Although the direct filing of petitions for certiorari with the Supreme
Court is discouraged when litigants may still resort to remedies with the lower
courts, we have in the past overlooked the failure of a party to strictly adhere to
the hierarchy of courts on highly meritorious grounds. Most recently, we
relaxed the rule on court hierarchy in the case of Roque, Jr. v. Commission on
Elections,
[55]
wherein we held:

The policy on the hierarchy of courts, which petitioners indeed failed to
observe, is not an iron-clad rule. For indeed the Court has full discretionary
power to take cognizance and assume jurisdiction of special civil actions
for certiorari and mandamus filed directly with it for exceptionally
compelling reasons or if warranted by the nature of the issues clearly and
specifically raised in the petition.
[56]
(Emphases ours.)


The Court deems it proper to adopt a similarly liberal attitude in the present case
in consideration of the transcendental importance of an issue raised herein. This
is the first time that the Court is confronted with the question of whether an
information and communication technology project, which does not conform to
our traditional notion of the term infrastructure, is covered by the prohibition
on the issuance of court injunctions found in Republic Act No. 8975, which is
entitled An Act to Ensure the Expeditious Implementation and Completion of
Government Infrastructure Projects by Prohibiting Lower Courts from Issuing
Temporary Restraining Orders, Preliminary Injunctions or Preliminary
Mandatory Injunctions, Providing Penalties for Violations Thereof, and for
Other Purposes. Taking into account the current trend of computerization and
modernization of administrative and service systems of government offices,
departments and agencies, the resolution of this issue for the guidance of the
bench and bar, as well as the general public, is both timely and imperative.

Anent BCAs claim that Mr. Edsel T. Custodio (who verified the Petition
on behalf of the DFA) did not have personal knowledge of the facts of the case
and was appointed to his position as Acting Secretary under purportedly
irregular circumstances, we find that BCA failed to sufficiently prove such
allegations. In any event, we have previously held that [d]epending on the
nature of the allegations in the petition, the verification may be based either
purely on personal knowledge, or entirely on authentic records, or on both
sources.
[57]
The alleged lack of personal knowledge of Mr. Custodio (which,
as we already stated, BCA failed to prove) would not necessarily render the
verification defective for he could have verified the petition purely on the basis
of authentic records.

As for the assertion that the partial verification of Assistant Governor and
General Counsel Juan de Zuniga, Jr. was for the purpose of misleading this
Court, BCA likewise failed to adduce evidence on this point. Good faith is
always presumed. Paragraph 3 of Mr. Zunigas verification indicates that his
partial verification is due to the fact that he is verifying only the allegations in
the petition peculiar to the BSP. We see no reason to doubt that this is the true
reason for his partial or selective verification.

In sum, BCA failed to successfully rebut the presumption that the official
acts (of Mr. Custodio and Mr. Zuniga) were done in good faith and in the
regular performance of official duty.
[58]
Even assuming the verifications of the
petition suffered from some defect, we have time and again ruled that [t]he
ends of justice are better served when cases are determined on the merits
after all parties are given full opportunity to ventilate their causes and defenses
rather than on technicality or some procedural imperfections.
[59]
In other
words, the Court may suspend or even disregard rules when the demands of
justice so require.
[60]


We now come to the substantive issues involved in this case.

On whether the trial court had jurisdiction to
issue a writ of preliminary injunction in the
present case

In their petition, the DFA and the BSP argue that respondent Judge
Falcon gravely abused his discretion amounting to lack or excess of jurisdiction
when he issued the assailed orders, which effectively enjoined the bidding
and/or implementation of the e-Passport Project. According to petitioners, this
violated the clear prohibition under Republic Act No. 8975 regarding the
issuance of TROs and preliminary injunctions against national government
projects, such as the e-Passport Project.

The prohibition invoked by petitioners is found in Section 3 of Republic
Act No. 8975, which reads:

Section 3. Prohibition on the Issuance of Temporary Restraining
Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions.
No court, except the Supreme Court, shall issue any temporary restraining
order, preliminary injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity,
whether public or private, acting under the governments 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.


From the foregoing, it is indubitable that no court, aside from the
Supreme Court, may enjoin a national government project unless the matter is
one of extreme urgency involving a constitutional issue such that unless the act
complained of is enjoined, grave injustice or irreparable injury would arise.

What then are the national government projects over which the lower
courts are without jurisdiction to issue the injunctive relief as mandated by
Republic Act No. 8975?

Section 2(a) of Republic Act No. 8975 provides:

Section 2. Definition of Terms.

(a) National government projects shall refer to all current and future
national government infrastructure, engineering works and service contracts,
including projects undertaken by government-owned and -controlled
corporations, all projects covered by Republic Act No. 6975, as amended by
Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer
Law, and other related and necessary activities, such as site acquisition, supply
and/or installation of equipment and materials, implementation, construction,
completion, operation, maintenance, improvement, repair and rehabilitation,
regardless of the source of funding.


As petitioners themselves pointed out, there are three types of national
government projects enumerated in Section 2(a), to wit:

(a) current and future national government infrastructure projects,
engineering works and service contracts, including projects
undertaken by government-owned and controlled corporations;

(b) all projects covered by R.A. No. 6975, as amended by R.A. No.
7718, or the Build-Operate-and-Transfer ( BOT) Law; and

(c) other related and necessary activities, such as site acquisition,
supply and/or installation of equipment and materials, implementation,
construction, completion, operation, maintenance, improvement repair
and rehabilitation, regardless of the source of funding.


Under Section 2(a) of the BOT Law as amended by Republic Act No.
7718,
[61]
private sector infrastructure or development projects are those
normally financed and operated by the public sector but which will now be
wholly or partly implemented by the private sector, including but not
limited to, power plants, highways, ports, airports, canals, dams, hydropower
projects, water supply, irrigation, telecommunications, railroads and railways,
transport systems, land reclamation projects, industrial estates or townships,
housing, government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology networks and
database infrastructure, education and health facilities, sewerage, drainage,
dredging, and other infrastructure and development projects as may be
authorized by the appropriate agency.

In contrast, Republic Act No. 9184,
[62]
also known as the Government
Procurement Reform Act, defines infrastructure projects in Section 5(k) thereof
in this manner:

(k) Infrastructure Projects - include the construction, improvement,
rehabilitation, demolition, repair, restoration or maintenance of roads and
bridges, railways, airports, seaports, communication facilities, civil works
components of information technology projects, irrigation, flood control
and drainage, water supply, sanitation, sewerage and solid waste management
systems, shore protection, energy/power and electrification facilities, national
buildings, school buildings, hospital buildings and other related construction
projects of the government. (Emphasis supplied.)


In the present petition, the DFA and the BSP contend that the bidding for
the supply, delivery, installation and commissioning of a system for the
production of Electronic Passport Booklets, is a national government project
within the definition of Section 2 of Republic Act No. 8975. Petitioners also
point to the Senate deliberations on Senate Bill No. 2038
[63]
(later Republic Act
No. 8975) which allegedly show the legislatives intent to expand the scope and
definition of national government projects to cover not only the infrastructure
projects enumerated in Presidential Decree No. 1818, but also future projects
that may likewise be considered national government infrastructure projects,
like the e-Passport Project, to wit:

Senator Cayetano. x xx Mr. President, the present bill, the Senate Bill No.
2038, is actually an improvement of P.D. No. 1818 and definitely not a
repudiation of what I have earlier said, as my good friend clearly stated. But
this is really an effort to improve both the scope and definition of the term
government projects and to ensure that lower court judges obey and observe
this prohibition on the issuance of TROs on infrastructure projects of the
government.

x xxx

Senator Cayetano. That is why, Mr. President, I did try to explain why I
would accept the proposed amendment, meaning the totality of the repeal of
P.D. 1818 which is not found in the original version of the bill, because of my
earlier explanation that the definition of the term government infrastructure
project covers all of those enumerated in Section 1 of P.D. No. 1818. And the
reason for that, as we know, is we do not know what else could be considered
government infrastructure project in the next 10 or 20 years.

x xx So, using the Latin maxim of expression uniusest exclusion alterius,
which means what is expressly mentioned is tantamount to an express
exclusion of the others, that is the reason we did not include particularly an
enumeration of certain activities of the government found in Section 1 of P.D.
No. 1818. Because to do that, it may be a good excuse for a brilliant lawyer to
say Well, you know, since it does not cover this particular activity, ergo, the
Regional Trial Court may issue TRO.


Using the foregoing discussions to establish that the intent of the framers
of the law was to broaden the scope and definition of national government
projects and national infrastructure projects, the DFA and the BSP submit that
the said scope and definition had since evolved to include the e-Passport
Project. They assert that the concept of infrastructure must now refer to any
and all elements that provide support, framework, or structure for a given
system or organization, including information technology, such as the e-
Passport Project.

Interestingly, petitioners represented to the trial court that the e-Passport
Project is a BOT project but in their petition with this Court, petitioners simply
claim that the e-Passport Project is a national government project under Section
2 of Republic Act No. 8975. This circumstance is significant, since relying on
the claim that the e-Passport Project is a BOT project, the trial court ruled in this
wise:

The prohibition against issuance of TRO and/or writ of preliminary
injunction under RA 8975 applies only to national government
infrastructure project covered by the BOT Law, (RA 8975, Sec 3[b] in
relation to Sec. 2).

The national government projects covered under the BOT are
enumerated under Sec. 2 of RA6957, as amended, otherwise known as the
BOT Law. Notably, it includes information technology networks and
database infrastructure.

In relation to information technology projects, infrastructure
projects refer to the civil works components thereof. (R.A. No. 9184
[2003], Sec. 5[c]{sic}).
[64]


Respondent BSPs request for bid, for the supply, delivery, installation
and commissioning of a system for the production of Electronic Passport
Booklets appears to be beyond the scope of the term civil works.
Respondents did not present evidence to prove otherwise.
[65]
(Emphases ours.)


From the foregoing, it can be gleaned that the trial court accepted BCAs
reasoning that, assuming the e-Passport Project is a project under the BOT Law,
Section 2 of the BOT Law must be read in conjunction with Section 5(c) of
Republic Act No. 9184 or the Government Procurement Reform Act to the
effect that only the civil works component of information technology projects
are to be considered infrastructure. Thus, only said civil works component of
an information technology project cannot be the subject of a TRO or writ of
injunction issued by a lower court.

Although the Court finds that the trial court had jurisdiction to issue the
writ of preliminary injunction, we cannot uphold the theory of BCA and the trial
court that the definition of the term infrastructure project in Republic Act No.
9184 should be applied to the BOT Law.

Section 5 of Republic Act No. 9184 prefaces the definition of the terms
therein, including the term infrastructure project, with the following
phrase: For purposes of this Act, the following terms or words and phrases
shall mean or be understood as follows x xx.

This Court has stated that the definition of a term in a statute is not
conclusive as to the meaning of the same term as used elsewhere.
[66]
This is
evident when the legislative definition is expressly made for the purposes of the
statute containing such definition.
[67]


There is no legal or rational basis to apply the definition of the term
infrastructure project in one statute to another statute enacted years before and
which already defined the types of projects it covers. Rather, a reading of the
two statutes involved will readily show that there is a legislative intent to treat
information technology projects differently under the BOT Law and the
Government Procurement Reform Act.

In the BOT Law as amended by Republic Act No. 7718, the national
infrastructure and development projects covered by said law are enumerated in
Section 2(a) as follows:

SEC. 2. Definition of Terms. - The following terms used in this Act
shall have the meanings stated below:

(a) Private sector infrastructure or development
projects - The general description of infrastructure or
development projects normally financed and operated by the
public sector but which will now be wholly or partly
implemented by the private sector, including but not limited to,
power plants, highways, ports, airports, canals, dams,
hydropower projects, water supply, irrigation,
telecommunications, railroads and railways, transport systems,
land reclamation projects, industrial estates of townships,
housing, government buildings, tourism projects, markets,
slaughterhouses, warehouses, solid waste
management, information technology networks and
database infrastructure, education and health facilities,
sewerage, drainage, dredging, and other infrastructure and
development projects as may be authorized by the appropriate
agency pursuant to this Act. Such projects shall be undertaken
through contractual arrangements as defined hereunder and
such other variations as may be approved by the President of
the Philippines.

For the construction stage of these infrastructure
projects, the project proponent may obtain financing from
foreign and/or domestic sources and/or engage the services of a
foreign and/or Filipino contractor: Provided, That, in case an
infrastructure or a development facility's operation requires a
public utility franchise, the facility operator must be a Filipino
or if a corporation, it must be duly registered with the Securities
and Exchange Commission and owned up to at least sixty
percent (60%) by Filipinos: Provided, further, That in the case
of foreign contractors, Filipino labor shall be employed or hired
in the different phases of construction where Filipino skills are
available: Provided, finally, That projects which would have
difficulty in sourcing funds may be financed partly from direct
government appropriations and/or from Official Development
Assistance (ODA) of foreign governments or institutions not
exceeding fifty percent (50%) of the project cost, and the
balance to be provided by the project proponent. (Emphasis
supplied.)


A similar provision appears in the Revised IRR of the BOT Law as
amended, to wit:

SECTION 1.3 - DEFINITION OF TERMS

For purposes of these Implementing Rules and Regulations, the terms and
phrases hereunder shall be understood as follows:

x xxx

v. Private Sector Infrastructure or Development
Projects - The general description of infrastructure or
Development Projects normally financed, and operated by the
public sector but which will now be wholly or partly financed,
constructed and operated by the private sector, including but
not limited to, power plants, highways, ports, airports, canals,
dams, hydropower projects, water supply, irrigation,
telecommunications, railroad and railways, transport systems,
land reclamation projects, industrial estates or townships,
housing, government buildings, tourism projects, public
markets, slaughterhouses, warehouses, solid waste
management, information technology networks and database
infrastructure, education and health facilities, sewerage,
drainage, dredging, and other infrastructure and development
projects as may otherwise be authorized by the appropriate
Agency/LGU pursuant to the Act or these Revised IRR. Such
projects shall be undertaken through Contractual Arrangements
as defined herein, including such other variations as may be
approved by the President of the Philippines.

x xxx

SECTION 2.2 - ELIGIBLE TYPES OF PROJECTS

The Construction, rehabilitation, improvement, betterment, expansion,
modernization, operation, financing and maintenance of the following types of
projects which are normally financed and operated by the public sector which
will now be wholly or partly financed, constructed and operated by the private
sector, including other infrastructure and development projects as may be
authorized by the appropriate agencies, may be proposed under the provisions
of the Act and these Revised IRR, provided however that such projects have a
cost recovery component which covers at least 50% of the Project Cost, or as
determined by the Approving Body:

x xxx

h. Information technology (IT) and data base
infrastructure, including modernization of IT, geo-spatial
resource mapping and cadastral survey for resource accounting
and planning. (Underscoring supplied.)


Undeniably, under the BOT Law, wherein the projects are to be privately
funded, the entire information technology project, including the civil works
component and the technological aspect thereof, is considered an infrastructure
or development project and treated similarly as traditional infrastructure
projects. All the rules applicable to traditional infrastructure projects are also
applicable to information technology projects. In fact, the MRP/V Project
awarded to BCA under the BOT Law appears to include both civil works
(i.e., site preparation of the Central Facility, regional DFA offices and foreign
service posts) and non-civil works aspects (i.e., development, installation and
maintenance in the Philippines and foreign service posts of a computerized
passport and visa issuance system, including creation of databases, storage and
retrieval systems, training of personnel and provision of consumables).

In contrast, under Republic Act No. 9184 or the Government Procurement
Reform Act, which contemplates projects to be funded by public funds, the term
infrastructure project was limited to only the civil works component of
information technology projects. The non-civil works component of
information technology projects would be treated as an acquisition of goods or
consulting services as the case may be.

This limited definition of infrastructure project in relation to
information technology projects under Republic Act No. 9184 is significant
since the IRR of Republic Act No. 9184 has some provisions that are particular
to infrastructure projects and other provisions that are applicable only to
procurement of goods or consulting services.
[68]


Implicitly, the civil works component of information technology projects
are subject to the provisions on infrastructure projects while the technological
and other components would be covered by the provisions on procurement of
goods or consulting services as the circumstances may warrant.

When Congress adopted a limited definition of what is to be considered
infrastructure in relation to information technology projects under the
Government Procurement Reform Act, legislators are presumed to have taken
into account previous laws concerning infrastructure projects (the BOT Law and
Republic Act No. 8975) and deliberately adopted the limited definition. We can
further presume that Congress had written into law a different treatment for
information technology projects financed by public funds vis-a-vis privately
funded projects for a valid legislative purpose.

The idea that the definitions of terms found in the Government
Procurement Reform Act were not meant to be applied to projects under the
BOT Law is further reinforced by the following provision in the IRR of the
Government Procurement Reform Act:

Section 1. Purpose and General Coverage

This Implementing Rules and Regulations (IRR) Part A, hereinafter called
IRR-A, is promulgated pursuant to Section 75 of Republic Act No. 9184
(R.A. 9184), otherwise known as the Government Procurement Reform Act
(GPRA), for the purpose of prescribing the necessary rules and regulations for
the modernization, standardization, and regulation of the procurement
activities of the government.This IRR-A shall cover all fully domestically-
funded procurement activities from procurement planning up to contract
implementation and termination, except for the following:

a) Acquisition of real property which shall be governed by Republic Act No.
8974 (R.A. 8974), entitled An Act to Facilitate the Acquisition of Right-of-
Way Site or Location for National Government Infrastructure Projects and for
Other Purposes, and other applicable laws; and

b) Private sector infrastructure or development projects and other
procurement covered by Republic Act No. 7718 (R.A. 7718), entitled An
Act Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private Sector, and for
Other Purposes, as amended: Provided, however, That for the portions
financed by the Government, the provisions of this IRR-A shall apply.

The IRR-B for foreign-funded procurement activities shall be the subject of a
subsequent issuance. (Emphases supplied.)


The foregoing provision in the IRR can be taken as an administrative
interpretation that the provisions of Republic Act No. 9184 are inapplicable to a
BOT project except only insofar as such portions of the BOT project that are
financed by the government.

Taking into account the different treatment of information technology
projects under the BOT Law and the Government Procurement Reform Act,
petitioners contention the trial court had no jurisdiction to issue a writ of
preliminary injunction in the instant case would have been correct if the e-
Passport Project was a project under the BOT Law as they represented to the
trial court.

However, petitioners presented no proof that the e-Passport Project was a
BOT project. On the contrary, evidence adduced by both sides tended to show
that the e-Passport Project was a procurement contract under Republic Act No.
9184.

The BSPs on-line request for expression of interest and to bid for the e-
Passport Project
[69]
from the BSP website and the newspaper clipping
[70]
of the
same request expressly stated that [t]he two stage bidding procedure under
Section 30.4 of the Implementing Rules and Regulation (sic) Part-A of Republic
Act No. 9184 relative to the bidding and award of the contract shall
apply. During the testimony of DFA Assistant Secretary Domingo Lucenario,
Jr. before the trial court, he admitted that the e-Passport Project is a BSP
procurement project and that it is the BSP that will pay the suppliers.
[71]
In
petitioners Manifestation dated July 29, 2008
[72]
and the Erratum
[73]
thereto,
petitioners informed the Court that a contract for the supply of a complete
package of systems design, technology, hardware, software, and peripherals,
maintenance and technical support, ecovers and datapage security laminates for
the centralized production and personalization of Machine Readable Electronic
Passport was awarded to Francois Charles OberthurFiduciaire. In the Notice
of Award dated July 2, 2008
[74]
attached to petitioners pleading, it was stated
that the failure of the contractor/supplier to submit the required performance
bond would be sufficient ground for the imposition of administrative penalty
under Section 69 of the IRR-A of Republic Act No. 9184.

Being a government procurement contract under Republic Act No. 9184,
only the civil works component of the e-Passport Project would be considered
an infrastructure project that may not be the subject of a lower court-issued writ
of injunction under Republic Act No. 8975.

Could the e-Passport Project be considered as engineering works or a
service contract or as related and necessary activities under Republic Act
No. 8975 which may not be enjoined?

We hold in the negative. Under Republic Act No. 8975, a service
contract refers to infrastructure contracts entered into by any department,
office or agency of the national government with private entities and
nongovernment organizations for services related or incidental to the functions
and operations of the department, office or agency concerned. On the other
hand, the phrase other related and necessary activities obviously refers to
activities related to a government infrastructure, engineering works, service
contract or project under the BOT Law. In other words, to be considered a
service contract or related activity, petitioners must show that the e-Passport
Project is an infrastructure project or necessarily related to an infrastructure
project. This, petitioners failed to do for they saw fit not to present any
evidence on the details of the e-Passport Project before the trial court and this
Court. There is nothing on record to indicate that the e-Passport Project has a
civil works component or is necessarily related to an infrastructure project.

Indeed, the reference to Section 30.4
[75]
of the IRR of Republic Act No.
9184 (a provision specific to the procurement of goods) in the BSPs request for
interest and to bid confirms that the e-Passport Project is a procurement of
goods and not an infrastructure project. Thus, within the context of Republic
Act No. 9184 which is the governing law for the e-Passport Project the said
Project is not an infrastructure project that is protected from lower court issued
injunctions under Republic Act No. 8975, which, to reiterate, has for its purpose
the expeditious and efficient implementation and completion of government
infrastructure projects.

We note that under Section 28, Republic Act No. 9285 or the Alternative
Dispute Resolution Act of 2004,
[76]
the grant of an interim measure of protection
by the proper court before the constitution of an arbitral tribunal is allowed:

Sec. 28. Grant of Interim Measure of Protection. (a) It is not
incompatible with an arbitration agreement for a party to request, before
constitution of the tribunal, from a Court an interim measure of protection and
for the Court to grant such measure. After constitution of the arbitral tribunal
and during arbitral proceedings, a request for an interim measure of protection,
or modification thereof, may be made with the arbitral tribunal or to the extent
that the arbitral tribunal has no power to act or is unable to act effectively, the
request may be made with the Court. The arbitral tribunal is deemed
constituted when the sole arbitrator or the third arbitrator, who has been
nominated, has accepted the nomination and written communication of said
nomination and acceptance has been received by the party making the request.

(a) The following rules on interim or provisional relief shall be
observed:

(1) Any party may request that provisional relief be
granted against the adverse party.

(2) Such relief may be granted:

(i) to prevent irreparable loss or injury;

(ii) to provide security for the performance
of any obligation;

(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or
omission.

(3) The order granting provisional relief may be
conditioned upon the provision of security or any act or
omission specified in the order.

(4) Interim or provisional relief is requested by
written application transmitted by reasonable means to the
Court or arbitral tribunal as the case may be and the party
against whom the relief is sought, describing in appropriate
detail the precise relief, the party against whom the relief is
requested, the grounds for the relief, and the evidence
supporting the request.

(5) The order shall be binding upon the parties.

(6) Either party may apply with the Court for
assistance in implementing or enforcing an interim measure
ordered by an arbitral tribunal.

(7) A party who does not comply with the order
shall be liable for all damages resulting from noncompliance,
including all expenses and reasonable attorneys fees, paid in
obtaining the orders judicial enforcement.


Section 3(h) of the same statute provides that the "Court" as referred to in
Article 6 of the Model Law shall mean a Regional Trial Court.

Republic Act No. 9285 is a general law applicable to all matters and
controversies to be resolved through alternative dispute resolution methods.
This law allows a Regional Trial Court to grant interim or provisional relief,
including preliminary injunction, to parties in an arbitration case prior to the
constitution of the arbitral tribunal. This general statute, however, must give
way to a special law governing national government projects, Republic Act No.
8975 which prohibits courts, except the Supreme Court, from issuing TROs and
writs of preliminary injunction in cases involving national government projects.

However, as discussed above, the prohibition in Republic Act No. 8975 is
inoperative in this case, since petitioners failed to prove that the e-Passport
Project is national government project as defined therein. Thus, the trial court
had jurisdiction to issue a writ of preliminary injunction against the e-Passport
Project.

On whether the trial courts issuance of a writ
of injunction was proper


Given the above ruling that the trial court had jurisdiction to issue a writ
of injunction and going to the second issue raised by petitioners, we answer the
question: Was the trial courts issuance of a writ of injunction warranted under
the circumstances of this case?

Petitioners attack on the propriety of the trial courts issuance of a writ
of injunction is two-pronged: (a) BCA purportedly has no clear right to the
injunctive relief sought; and (b) BCA will suffer no grave and irreparable injury
even if the injunctive relief were not granted.

To support their claim that BCA has no clear right to injunctive relief,
petitioners mainly allege that the MRP/V Project and the e-Passport Project are
not the same project. Moreover, the MRP/V Project purportedly involves a
technology (the 2D optical bar code) that has been rendered obsolete by the
latest ICAO developments while the e-Passport Project will comply with the
latest ICAO standards (the contactless integrated circuit). Parenthetically, and
not as a main argument, petitioners imply that BCA has no clear contractual
right under the Amended BOT Agreement since BCA had previously assigned
all its rights and obligations under the said Agreement to PPC.

BCA, on the other hand, claims that the Amended BOT Agreement also
contemplated the supply and/or delivery of e-Passports with the integrated
circuit technology in the future and not only the machine readable passport with
the 2D optical bar code technology. Also, it is BCAs assertion that the
integrated circuit technology is only optional under the ICAO issuances. On the
matter of its assignment of its rights to PPC, BCA counters that it had already
terminated (purportedly at DFAs request) the assignment agreement in favor of
PPC and that even assuming the termination was not valid, the Amended BOT
Agreement expressly stated that BCA shall remain solidarily liable with its
assignee, PPC.

Most of these factual allegations and counter-allegations already touch
upon the merits of the main controversy between the DFA and BCA, i.e., the
validity and propriety of the termination of the Amended BOT Agreement (the
MRP/V Project) between the DFA and BCA. The Court deems it best to refrain
from ruling on these matters since they should be litigated in the appropriate
arbitration or court proceedings between or among the concerned parties.

One preliminary point, however, that must be settled here is whether
BCA retains a right to seek relief against the DFA under the Amended BOT
Agreement in view of BCAs previous assignment of its rights to PPC. Without
preempting any factual finding that the appropriate court or arbitral tribunal on
the matter of the validity of the assignment agreement with PPC or its
termination, we agree with BCA that it remained a party to the Amended BOT
Agreement, notwithstanding the execution of the assignment agreement in favor
of PPC, for it was stipulated in the Amended BOT Agreement that BCA would
be solidarily liable with its assignee. For convenient reference, we reproduce
the relevant provision of the Amended BOT Agreement here:

Section 20.15. It is clearly and expressly understood that BCA may
assign, cede and transfer all of its rights and obligations under this Amended
BOT Agreement to PPC [Philippine Passport Corporation], as fully as if PPC
is the original signatory to this Amended BOT Agreement, provided however
that BCA shall nonetheless be jointly and severally liable with PPC for
the performance of all the obligations and liabilities under this Amended
BOT Agreement. (Emphasis supplied.)


Furthermore, a review of the records shows that the DFA continued to
address its correspondence regarding the MRP/V Project to both BCA and PPC,
even after the execution of the assignment agreement. Indeed, the DFAs Notice
of Termination dated December 9, 2005 was addressed to Mr.
BonifacioSumbilla as President of both BCA and PPC and referred to the
Amended BOT Agreement executed between the Department of Foreign
Affairs (DFA), on one hand, and the BCA International Corporation and/or the
Philippine Passport Corporation (BCA/PPC). At the very least, the DFA is
estopped from questioning the personality of BCA to bring suit in relation to the
Amended BOT Agreement since the DFA continued to deal with both BCA and
PPC even after the signing of the assignment agreement. In any event, if the
DFA truly believes that PPC is an indispensable party to the action, the DFA
may take necessary steps to implead PPC but this should not prejudice the right
of BCA to file suit or to seek relief for causes of action it may have against the
DFA or the BSP, for undertaking the e-Passport Project on behalf of the DFA.

With respect to petitioners contention that BCA will suffer no grave and
irreparable injury so as to justify the grant of injunctive relief, the Court finds
that this particular argument merits consideration.

The BOT Law as amended by Republic Act No. 7718, provides:

SEC. 7. Contract Termination. - In the event that a project is
revoked, cancelled or terminated by the Government through no fault of
the project proponent or by mutual agreement, the Government
shall compensate the said project proponent for its actual
expenses incurred in the project plus a reasonable rate of return thereon not
exceeding that stated in the contract as of the date of such revocation,
cancellation or termination: Provided, That the interest of the Government in
this instances shall be duly insured with the Government Service Insurance
System [GSIS] or any other insurance entity duly accredited by the Office of
the Insurance Commissioner: Provided, finally, That the cost of the insurance
coverage shall be included in the terms and conditions of the bidding referred
to above.

In the event that the government defaults on certain major
obligations in the contract and such failure is not remediable or if remediable
shall remain unremedied for an unreasonable length of time, the project
proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over
date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract. (Emphases
supplied.)


In addition, the Amended BOT Agreement, which is the law between and
among the parties to it, pertinently provides:

Section 17.01 Default In case a party commits an act constituting
an event of default, the non-defaulting party may terminate this Amended
BOT Agreement by serving a written notice to the defaulting party specifying
the grounds for termination and giving the defaulting party a period of ninety
(90) days within which to rectify the default. If the default is not remedied
within this period to the satisfaction of the non-defaulting party, then the latter
will serve upon the former a written notice of termination indicating the
effective date of termination.

Section 17.02 Proponents Default If this Amended BOT Agreement
is terminated by reason of the BCAs default, the DFA shall have the
following options:

A. Allow the BCAs unpaid creditors who hold a
lien on the MRP/V Facility to foreclose on the MRP/V
Facility. The right of the BCAs unpaid creditors to
foreclose on the MRP/V Facility shall be valid for the
duration of the effectivity of this Amended BOT
Agreement; or,

B. Allow the BCAs unpaid creditors who hold a lien
on the MRP/V Facility to designate a substitute
BCA for the MRP/V Project, provided the designated
substitute BCA is qualified under existing laws and
acceptable to the DFA. This substitute BCA shall
hereinafter be referred to as the Substitute BCA. The
Substitute BCA shall assume all the BCAs rights and
privileges, as well as the obligations, duties and
responsibilities hereunder; provided, however, that the
DFA shall at all times and its sole option, have the right
to invoke and exercise any other remedy which may be
available to the DFA under any applicable laws, rules
and/or regulations which may be in effect at any time
and from time to time. The DFA shall cooperate with
the creditors with a view to facilitating the choice of a
Substitute BCA, who shall take-over the operation,
maintenance and management of the MRP/V Project,
within three (3) months from the BCAs receipt of the
notice of termination from the DFA. The Substituted
BCA shall have all the rights and obligations of the
previous BCA as contained in this Amended BOT
Agreement; or

C. Take-over the MRP/V Facility and assume all
attendant liabilities thereof.

D. In all cases of termination due to the default of the
BCA, it shall pay DFA liquidated damages equivalent
to the applicable the (sic) Performance Security.

Section 17.03 DFAs Default If this Amended BOT Agreement is
terminated by the BCA by reason of the DFAs Default, the DFA shall:

A. Be obligated to take over the MRP/V Facility on an
as is, where is basis, and shall forthwith assume
attendant liabilities thereof; and

B. Pay liquidated damages to the BCA equivalent to the
following amounts, which may be charged to the
insurance proceeds referred to in Article 12:

(1) In the event of termination prior to
completion of the implementation of the
MRP/V Project, damages shall be paid
equivalent to the value of completed
implementation, minus the aggregate amount
of the attendant liabilities assumed by the
DFA, plus ten percent (10%) thereof. The
amount of such compensation shall be
determined as of the date of the notice of
termination and shall become due and
demandable ninety (90) days after the date of
this notice of termination. Under this Amended
BOT Agreement, the term Value of the
Completed Implementation shall mean the
aggregate of all reasonable costs and expenses
incurred by the BCA in connection with, in
relation to and/or by reason of the MRP/V
Project, excluding all interest and capitalized
interest, as certified by a reputable and
independent accounting firm to be appointed by
the BCA and subject to the approval by the
DFA, such approval shall not be unreasonably
withheld.

(2) In the event of termination after completion
of design, development, and installation of the
MRP/V Project, just compensation shall be
paid equivalent to the present value of the net
income which the BCA expects to earn or
realize during the unexpired or remaining
term of this Amended BOT Agreement using
the internal rate of return on equity (IRRe)
defined in the financial projections of the BCA
and agreed upon by the parties, which is
attached hereto and made as an integral part of
this Amended BOT Agreement as Schedule 1.
(Emphases supplied.)


The validity of the DFAs termination of the Amended BOT Agreement
and the determination of the party or parties in default are issues properly
threshed out in arbitration proceedings as provided for by the agreement
itself. However, even if we hypothetically accept BCAs contention that the
DFA terminated the Amended BOT Agreement without any default or
wrongdoing on BCAs part, it is not indubitable that BCA is entitled to
injunctive relief.

The BOT Law expressly allows the government to terminate a BOT
agreement, even without fault on the part of the project proponent, subject to the
payment of the actual expenses incurred by the proponent plus a reasonable rate
of return.

Under the BOT Law and the Amended BOT Agreement, in the event of
default on the part of the government (in this case, the DFA) or on the part of
the proponent, the non-defaulting party is allowed to terminate the agreement,
again subject to proper compensation in the manner set forth in the agreement.

Time and again, this Court has held that to be entitled to injunctive relief
the party seeking such relief must be able to show grave, irreparable injury that
is not capable of compensation.

In Lopez v. Court of Appeals,
[77]
we held:

Generally, injunction is a preservative remedy for the protection of
one's substantive right or interest. It is not a cause of action in itself
but merely a provisional remedy, an adjunct to a main suit. It is resorted to
only when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation. The
application of the injunctive writ rests upon the existence of an emergency or
of a special reason before the main case can be regularly heard. The essential
conditions for granting such temporary injunctive relief are that the complaint
alleges facts which appear to be sufficient to constitute a proper basis for
injunction and that on the entire showing from the contending parties, the
injunction is reasonably necessary to protect the legal rights of the plaintiff
pending the litigation. Two requisites are necessary if a preliminary injunction
is to issue, namely, the existence of a right to be protected and the facts against
which the injunction is to be directed are violative of said right. In particular,
for a writ of preliminary injunction to issue, the existence of the right and the
violation must appear in the allegation of the complaint and a preliminary
injunction is proper only when the plaintiff (private respondent herein)
appears to be entitled to the relief demanded in his complaint. (Emphases
supplied.)


We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro
Corporation,
[78]
where we likewise opined:

Before a writ of preliminary injunction may be issued, there must be a
clear showing by the complaint that there exists a right to be protected and that
the acts against which the writ is to be directed are violative of the said right.
It must be shown that the invasion of the right sought to be protected is
material and substantial, that the right of complainant is clear and
unmistakable and that there is an urgent and paramount necessity for the writ
to prevent serious damage. Moreover, an injunctive remedy may only be
resorted to when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard
compensation. (Emphasis supplied.)


As the Court explained previously in Philippine Airlines, Inc. v. National
Labor Relations Commission
[79]
:

An injury is considered irreparable if it is of such constant and frequent
recurrence that no fair and reasonable redress can be had therefor in a court of
law, or where there is no standard by which their amount can be
measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation. It is considered irreparable injury when it
cannot be adequately compensated in damages due to the nature of the
injury itself or the nature of the right or property injured or when there
exists no certain pecuniary standard for the measurement of
damages. (Emphases supplied.)


It is still contentious whether this is a case of termination by the DFA
alone or both the DFA and BCA. The DFA contends that BCA, by sending its
own Notice of Default, likewise terminated or abandoned the Amended BOT
Agreement. Still, whether this is a termination by the DFA alone without fault
on the part of BCA or a termination due to default on the part of either party, the
BOT Law and the Amended BOT Agreement lay down the measure of
compensation to be paid under the appropriate circumstances.

Significantly, in BCAs Request for Arbitration with the PDRCI, it
prayed for, among others, a judgment ordering respondent [DFA] to pay
damages to Claimant [BCA], reasonably estimated at P50,000,000.00 as of [the
date of the Request for Arbitration], representing lost business opportunities;
financing fees, costs and commissions; travel expenses; legal fees and expenses;
and costs of arbitration, including the fees of the arbitrator/s.
[80]
All the
purported damages that BCA claims to have suffered by virtue of the DFAs
termination of the Amended BOT Agreement are plainly determinable in
pecuniary terms and can be reasonably estimated according to BCAs own
words.

Indeed, the right of BCA, a party which may or may not have been in
default on its BOT contract, to have the termination of its BOT contract
reversed is not guaranteed by the BOT Law. Even assuming BCAs innocence
of any breach of contract, all the law provides is that BCA should be adequately
compensated for its losses in case of contract termination by the government.

There is one point that none of the parties has highlighted but is worthy
of discussion. In seeking to enjoin the government from awarding or
implementing a machine readable passport project or any similar electronic
passport or visa project and praying for the maintenance of the status quo
ante pending the resolution on the merits of BCAs Request for Arbitration,
BCA effectively seeks to enjoin the termination of the Amended BOT
Agreement for the MRP/V Project.

There is no doubt that the MRP/V Project is a project covered by the BOT
Law and, in turn, considered a national government project under Republic
Act No. 8795. Under Section 3(d) of that statute, trial courts are prohibited from
issuing a TRO or writ of preliminary injunction against the government to
restrain or prohibit the termination or rescission of any such national
government project/contract.

The rationale for this provision is easy to understand. For if a project
proponent that the government believes to be in default is allowed to enjoin
the termination of its contract on the ground that it is contesting the validity of
said termination, then the government will be unable to enter into a new
contract with any other party while the controversy is pending
litigation. Obviously, a courts grant of injunctive relief in such an instance is
prejudicial to public interest since government would be indefinitely hampered
in its duty to provide vital public goods and services in order to preserve the
private proprietary rights of the project proponent. On the other hand, should it
turn out that the project proponent was not at fault, the BOT Law itself
presupposes that the project proponent can be adequately compensated for the
termination of the contract. Although BCA did not specifically pray for the trial
court to enjoin the termination of the Amended BOT Agreement and thus, there
is no direct violation of Republic Act No. 8795, a grant of injunctive relief as
prayed for by BCA will indirectly contravene the same statute.

Verily, there is valid reason for the law to deny preliminary injunctive
relief to those who seek to contest the governments termination of a national
government contract. The only circumstance under which a court may grant
injunctive relief is the existence of a matter of extreme urgency involving a
constitutional issue, such that unless a TRO or injunctive writ is issued, grave
injustice and irreparable injury will result.

Now, BCA likewise claims that unless it is granted injunctive relief, it
would suffer grave and irreparable injury since the bidding out and award of the
e-Passport Project would be tantamount to a violation of its right against
deprivation of property without due process of law under Article III, Section 1
of the Constitution. We are unconvinced.

Article III, Section 1 of the Constitution provides [n]o person shall be
deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws. Ordinarily, this
constitutional provision has been applied to the exercise by the State of its
sovereign powers such as, its legislative power,
[81]
police power,
[82]
or its power
of eminent domain.
[83]


In the instant case, the State action being assailed is the DFAs
termination of the Amended BOT Agreement with BCA. Although the said
agreement involves a public service that the DFA is mandated to provide and,
therefore, is imbued with public interest, the relationship of DFA to BCA is
primarily contractual and their dispute involves the adjudication of contractual
rights. The propriety of the DFAs acts, in relation to the termination of the
Amended BOT Agreement, should be gauged against the provisions of the
contract itself and the applicable statutes to such contract. These contractual and
statutory provisions outline what constitutes due process in the present case. In
all, BCA failed to demonstrate that there is a constitutional issue involved in
this case, much less a constitutional issue of extreme urgency.

As for the DFAs purported failure to appropriate sufficient amounts in its
budget to pay for liquidated damages to BCA, this argument does not support
BCAs position that it will suffer grave and irreparable injury if it is denied
injunctive relief. The DFAs liability to BCA for damages is contingent on
BCA proving that it is entitled to such damages in the proper proceedings. The
DFA has no obligation to set aside funds to pay for liquidated damages, or any
other kind of damages, to BCA until there is a final and executory judgment in
favor of BCA. It is illogical and impractical for the DFA to set aside a
significant portion of its budget for an event that may never happen when such
idle funds should be spent on providing necessary services to the populace. For
if it turns out at the end of the arbitration proceedings that it is BCA alone that
is in default, it would be the one liable for liquidated damages to the DFA under
the terms of the Amended BOT Agreement.

With respect to BCAs allegation that the e-Passport Project is grossly
disadvantageous to the Filipino people since it is the government that will be
spending for the project unlike the MRP/V Project which would have been
privately funded, the same is immaterial to the issue at hand. If it is true that the
award of the e-Passport Project is inimical to the public good or tainted with
some anomaly, it is indeed a cause for grave concern but it is a matter that must
be investigated and litigated in the proper forum. It has no bearing on the issue
of whether BCA would suffer grave and irreparable injury such that it is entitled
to injunctive relief from the courts.

In all, we agree with petitioners DFA and BSP that the trial courts
issuance of a writ of preliminary injunction, despite the lack of sufficient legal
justification for the same, is tantamount to grave abuse of discretion.

To be very clear, the present decision touches only on the twin issues of
(a) the jurisdiction of the trial court to issue a writ of preliminary injunction as
an interim relief under the factual milieu of this case; and (b) the entitlement of
BCA to injunctive relief. The merits of the DFA and BCAs dispute regarding
the termination of the Amended BOT Agreement must be threshed out in the
proper arbitration proceedings. The civil case pending before the trial court is
purely for the grant of interim relief since the main case is to be the subject of
arbitration proceedings.

BCAs petition for interim relief before the trial court is essentially a
petition for a provisional remedy (i.e., preliminary injunction) ancillary to its
Request for Arbitration in PDRCI Case No. 30-2006/BGF. BCA specifically
prayed that the trial court grant it interim relief pending the constitution of the
arbitral tribunal in the said PDRCI case. Unfortunately, during the pendency of
this case, PDRCI Case No. 30-2006/BGF was dismissed by the PDRCI for lack
of jurisdiction, in view of the lack of agreement between the parties to arbitrate
before the PDRCI.
[84]
In Philippine National Bank v. Ritratto Group,
Inc.,
[85]
we held:

A writ of preliminary injunction is an ancillary or preventive remedy that may
only be resorted to by a litigant to protect or preserve his rights or interests and
for no other purpose during the pendency of the principal action. The
dismissal of the principal action thus results in the denial of the prayer for
the issuance of the writ. x xx. (Emphasis supplied.)


In view of intervening circumstances, BCA can no longer be granted injunctive
relief and the civil case before the trial court should be accordingly
dismissed. However, this is without prejudice to the parties litigating the main
controversy in arbitration proceedings, in accordance with the provisions of the
Amended BOT Agreement, which should proceed with dispatch.

It does not escape the attention of the Court that the delay in the
submission of this controversy to arbitration was caused by the ambiguity in
Section 19.02 of the Amended BOT Agreement regarding the proper body to
which a dispute between the parties may be submitted and the failure of the
parties to agree on such an arbitral tribunal. However, this Court cannot allow
this impasse to continue indefinitely. The parties involved must sit down
together in good faith and finally come to an understanding regarding the
constitution of an arbitral tribunal mutually acceptable to them.

WHEREFORE, the instant petition is hereby GRANTED. The assailed
Order dated February 14, 2007 of the Regional Trial Court of Pasig in Civil
Case No. 71079 and the Writ of Preliminary Injunction dated February 23, 2007
are REVERSED and SET ASIDE. Furthermore, Civil Case No. 71079 is
hereby DISMISSED.

No pronouncement as to costs.




SO ORDERED.

CHATEAU DE BAIE
CONDOMINIUM
CORPORATION,
Petitioner,


- versus -



SPS. RAYMOND and
MA. ROSARIO MORENO,
Respondents.


G.R. No. 186271

Present:


*
CARPIO MORALES,

J.,Chairperson,

**
BRION, Acting Chairperson,
BERSAMIN,
***
ABAD,
VILLARAMA, JR. and
SERENO, JJ.

Promulgated:

February 23, 2011

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

D E C I S I O N

BRION, J .:

Before us is the petition for review on certiorari with prayer for a
temporary restraining order filed by Chateau de Baie Condominium
Corporation (petitioner) challenging the decision
[1]
of the Court of Appeals
(CA) that dismissed its petition for certiorari, prohibition and mandamus. The
petition, the CA ruled upon, questioned the ruling
[2]
of the Regional Trial Court
(RTC), Branch 258, Paraaque City, that denied the petitioners motion to
dismiss the complaint filed by respondent spouses Raymond and Ma. Rosario
Moreno.
This case is the second of two related cases submitted to us involving the
condominium unit of Ma. Rosario Moreno. We had decided the first case
Oscar S. Salvacion v. Chateau de Baie Condominium Corporation, G.R. No.
178549
[3]
and our ruling has attained finality.

The Facts

Mrs. Moreno is the registered owner of a penthouse unit and two parking
slots in Chateau de Baie Condominium (Chateau Condominium) in Roxas
Boulevard, Manila. These properties are covered by Condominium Certificates
of Title (CCT) Nos. 4153, 4154, and 4155 (Moreno properties). As a registered
owner in Chateau Condominium, Mrs. Moreno is a member/stockholder of the
condominium corporation.

Mrs. Moreno obtained a loan of P16,600,000.00 from Oscar Salvacion,
and she mortgaged the Moreno properties as security; the mortgage was
annotated on the CCTs.

Under Section 20 of Republic Act (R.A.) No. 4726 (the Condominium
Act),
[4]
when a unit owner fails to pay the association dues, the condominium
corporation can enforce a lien on the condominium unit by selling the unit in an
extrajudicial foreclosure sale.
On November 23, 2001, the petitioner caused the annotation of a Notice
of Assessment on the CCTs of the Moreno properties for unpaid association
dues amounting toP323,870.85. It also sent a demand letter to
the Moreno spouses who offered to settle their obligation, but the petitioner
declined the offer.

Subsequently, to enforce its lien, the president of the petitioner wrote the
Clerk of Court/Ex-Officio Sheriff of Paraaque City for the extrajudicial public
auction sale of theMoreno properties. The extrajudicial sale was scheduled
on February 10, 2005.
[5]


The first case - the Salvacion Case (Civil Case No. 05-0061;
CA-G.R. SP No.
90339;







and G.R. No. 178549)

To stop the extrajudicial sale, Salvacion, as mortgagee, filed, on February
3, 2005, a petition for certiorari and prohibition with prayer for the issuance of
a temporary restraining order and/or writ of preliminary injunction before the
RTC, Branch 196, Paraaque City. The case was docketed as Civil Case No.
05-0061.
[6]
The petition sought to prohibit the scheduled extrajudicial sale for
lack of a special power to sell from the registered owner as mandated by Act
No. 3135,
[7]
and to declare the lien to be excessive.

On February 9, 2005, the RTC dismissed Salvacions petition and denied
the injunctive relief for lack of merit. The extrajudicial sale proceeded as
scheduled, and theMoreno properties were sold to the petitioner, the lone
bidder, for P1,328,967.12. The RTC denied Salvacions motion for
reconsideration.

Salvacion went to the CA via a petition for certiorari and prohibition
(CA-G.R. SP No. 90339) and, among others, submitted the issue of whether the
RTC erred in finding Section 5, Article 4 of the By-Laws of the petitioner as
blanket authority to institute an extrajudicial foreclosure, contrary to Section 20
of R.A. No. 4726 and Section 1 of Act No. 3135.

On February 27, 2007, the CAs Third Division ruled that Act No. 3135
covers only real estate mortgages and is intended merely to regulate the
extrajudicial sale of mortgaged properties. It held that R.A. No. 4726 is the
applicable law because it is a special law that exclusively applies to
condominiums. Thus, the CA upheld the validity of the extrajudicial sale.
[8]
It
ruled that R.A. No. 4726 does not require a special authority from the
condominium owner before a condominium corporation can initiate a
foreclosure proceeding. It additionally observed that Section 5 of the By-Laws
of the petitioner provides that it has the authority to avail of the remedies
provided by law, whether judicial or extrajudicial, to collect unpaid dues and
other charges against a condominium owner. The CAs Third Division also
denied Salvacions motion for reconsideration.
[9]


Salvacion appealed to this Court through a petition for review
on certiorari.
[10]
The Courts Third Division denied the petition for technical
infirmities and for failing to show that the CA committed any reversible error.
An entry of judgment was made on January 24, 2008.
[11]


The present case the Moreno Case
(Civil Case No. 05-0183 and CA-G.R. SP No. 93217)

While the Salvacion case was pending before the CA, the Moreno
spouses filed before the RTC, Paraaque City, a complaint for intra-corporate
dispute against the petitioner
[12]
to question how it calculated the dues assessed
against them, and to ask an accounting of the association dues. They asked for
damages and the annulment of the foreclosure proceedings, and prayed for the
issuance of a writ of preliminary injunction. The case was raffled to Branch 258
and was docketed as Civil Case No. 05-0183.

The petitioner moved to dismiss the complaint on the ground of lack of
jurisdiction, alleging that since the complaint was against the owner/developer
of a condominium whose condominium project was registered with and licensed
by the Housing and Land Use Regulatory Board (HLURB), the HLURB has the
exclusive jurisdiction.

In an order dated October 15, 2005,
[13]
the RTC denied the motion to
dismiss because it was a prohibited pleading under the Interim Rules of
Procedure Governing Intra-Corporate Controversies.
[14]
It likewise ordered the
motion to dismiss expunged from the records, and declared the petitioner in
default for failing to answer within the reglementary period. The RTC denied
the petitioners motion for reconsideration in its order of January 20, 2006.
[15]


The petitioner went to the CA via a petition for certiorari, prohibition and
mandamus under Rule 65 of the Rules of Court. It alleged grave abuse of
discretion on the part of the RTC for not dismissing the Moreno spouses
complaint because (1) the Moreno spouses are guilty of forum shopping, (2)
of litispendencia, and (3) the appeal pending before the CA (CA-G.R. SP No.
90339 [SPL CV No. 05-0061]).

The CAs First Division denied the petition in its decision of August 29,
2008.
[16]
It found no grave abuse of discretion on the part of the RTC because
the complaint involved an intra-corporate dispute. It ruled:

Since the instant civil case involves an intra-corporate controversy, it
is the RTC which has jurisdiction over the same pursuant to R.A. 8799
otherwise known as the Securities Regulation Code and Section 9 of the
Interim Rules. The public respondent indeed correctly applied the provisions
of the Interim Rules. And under Section 8(1), Rule 1 thereof, it is expressly
stated that a Motion to Dismiss is a prohibited pleading. Thus, the motion to
dismiss on the ground of lack of jurisdiction filed by petitioner must
necessarily be denied and expunged from the record. Petitioner should have
instead averred its defense of lack of jurisdiction and even the issue of forum
shopping in its Answer. Section 6, par. (4), Rule 2 of the Interim Rules,
explicitly provides that in the Answer, the defendant can state the defenses,
including the grounds for a motion to dismiss under the Rules of Court.

Considering that the motion to dismiss filed by private respondent is a
prohibited pleading, hence, it did not toll the running of the period for filing an
Answer, the public respondent properly declared the petitioner in default for
its failure to file its Answer within fifteen (15) days from its receipt of
summons.
[17]


The CAs First Division also denied the petitioners motion for
reconsideration;
[18]
hence, this appeal by way of a Rule 45 petition.

The Issue

The petitioner submits this sole issue for our consideration:

WITH DUE RESPECT, THE COURT OF APPEALS ERRED IN
NOT DISMISSING THE COMPLAINT IN VIEW OF THE DECISION
RENDERED BY ANOTHER DIVISION OF THE COURT OF APPEALS IN
CA-G.R. SP. NO. 90339 ENTITLED OSCAR S. SALVACION VS. ATTY.
CLEMENTE E. BOLOY, IN HIS CAPACITY AS EX-OFFICIO SHERIFF,
OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL COURT,
PARAAQUE CITY, BRANCH 196 AND CHATEAU DE BAIE
CONDOMINIUM CORPORATION SUSTAINING THE VALIDITY OF THE
[EXTRAJUDICIAL] PUBLIC AUCTION OF THE CONDOMINIUM UNIT
AND PARKING SLOTS OWNED BY RESPONDENT
MA. ROSARIO MORENO, WHICH DECISION BECAME FINAL AND
EXECUTORY ON JANUARY 24, 2008.
[19]


The Courts Ruling

We deny the petition for lack of merit. The CA did not err when it
did not dismiss the Moreno spouses complaint despite the full completion of
the extrajudicial sale.

The case before the RTC involved an intra-corporate dispute
the Moreno spouses were asking for an accounting of the association dues and
were questioning the manner the petitioner calculated the dues assessed against
them. These issues are alien to the first case that was initiated by Salvacion a
third party to the petitioner-Moreno relationship to stop the extrajudicial sale
on the basis of the lack of the requirements for a valid foreclosure sale.
Although the extrajudicial sale of the Moreno properties to the petitioner has
been fully effected and the Salvacion petition has been dismissed with finality,
the completion of the sale does not bar the Moreno spouses from questioning
the amount of the unpaid dues that gave rise to the foreclosure and to the
subsequent sale of their properties. The propriety and legality of the sale of the
condominium unit and the parking spaces questioned by Salvacion are different
from the propriety and legality of the unpaid assessment dues that
the Moreno spouses are questioning in the present case.

The facts of this case are similar to the facts in WackWack Condominium
Corporation, et al. v. Court of Appeals, et al.,
[20]
where we held that the dispute
as to the validity of the assessments is purely an intra-corporate matter between
WackWack Condominium Corporation and its stockholder, Bayot, and is, thus,
within the exclusive original jurisdiction of the Securities and Exchange
Commission (SEC).
[21]
We ruled in that case that since the extrajudicial sale
was authorized by WackWack Condominium Corporations by-laws and was
the result of the nonpayment of the assessments, the legality of the foreclosure
was necessarily an issue within the exclusive original jurisdiction of the
SEC. We added that:

Just because the property has already been sold extrajudicially does not
mean that the questioned assessments have now become legal and valid or that
they have become immaterial. In fact, the validity of the foreclosure depends
on the legality of the assessments and the issue must be determined by the
SEC if only to insure that the private respondent was not deprived of her
property without having been heard. If there were no valid assessments, then
there was no lien on the property, and if there was no lien, what was there to
foreclose? Thus, SEC Case No. 2675 has not become moot and academic and
the SEC retains its jurisdiction to hear and decide the case despite the
extrajudicial sale.
[22]


Based on the foregoing, we affirm the decision of the CAs First Division
dismissing the petitioners petition. The way is now clear for the RTC to
continue its proceedings on the Moreno case.

WHEREFORE, premises considered, we DENY the petition for review
on certiorari and AFFIRM the Decision, dated August 29, 2008, and the
Resolution, datedFebruary 5, 2009, of the Court of Appeals in CA-G.R. SP No.
93217. The Regional Trial Court, Branch 258, Paraaque City is directed to
continue its proceedings in Civil Case No. 05-0183. Costs against the
petitioner.

SO ORDERED.
G.R. No. 78490 November 23, 1992
WACK WACK CONDOMINIUM CORPORATION, WELBILT CONSTRUCTION
CORPORATION and EUGENIO JUAN GONZALES, petitioners,
vs.
TEH CORT OF APPEALS, HON. JUANITO ALMOSA, JR., in his capacity as Securities and
Exchange Commission Hearing Officer, and JOSEFINA M. BAYOT, respondents.

CAMPOS, JR. J .:
This is a Petition for Review on certiorari questioning the two Resolutions * of the Court of
Appeals affirming the orders of respondent Securities and Exchange Commission (SEC) Hearing
Officer denying petitioner's Motion to Dismiss SEC Case No. 2675. ** Briefly, the undisputed
facts are as follows:
Private respondent Josefina Bayot (Bayot, for brevity) bought and fully paid for a condominium
unit in the WackWack Building. Petitioner Welbilt Construction Corporation (Welbilt, for brevity) is
the developer of said condominium building, while the petitioner WackWack Condominium
Corporation (WackWack, for brevity) owns the common areas of said building and is the
manager of the condominium project. Petitioner Eugenio Gonzales is the President of both
Welbilt and WackWack and, with Welbilt, holds the controlling interests in WackWack. Bayot,
having fully paid for her unit, was issued Condominium Certificate of Title 727, and such became
a stockholder of WackWack. Sometime in July, 1984, the latter issued an undated Statement of
Account in Bayot's name listing specified assessments against her and her unit, most of which
assessments were assailed by her as unreasonable, arbitrary and/or unauthorized in their
contract of sale. The total amount of said assessments was P112,367.72. On July 17, 1984,
WackWack filed with the Sheriff of Pasig, a petition for extrajudicial sale of Bayot's unit to answer
for the outstanding assessments which had remained unpaid. The required notices and
publication were made, the sale being set for August 24, 1984. On August 23, 1984, Bayot,
through counsel, filed a petition before the SEC for Injunction and Damages with a prayer for a
preliminary injunction to restrain the sheriff of Pasig from going on with the sale. On that same
date, and on motion of private respondent, the SEC Hearing Officer issued a temporary
restraining order addressed to the said Sheriff.
On September 10, 1984, petitioners herein filed a petition for mandamus before the Regional
Trial Court (RTC) of Pasig to compel Pasig Sheriff to go on with the extrajudicial sale. On
October 5, 1984, said court issued an order to the effect that since the 20-day period of the
restraining order had already lapsed, the "same may now be disregarded and the extrajudicial
foreclosure given due course". Bayot was completely unaware of the petition formandamus and
the consequent order of the RTC because she was not made a party thereto and thus received
no notice thereof.
In the meantime, hearing on the preliminary injunction were going on, with several postponement
granted at the instance of herein petitioners. On October 23, 1984, when Bayot finished
presentation of her evidence and both parties were present before the SEC, counsel for
petitioner herein again asked for postponement on the ground that there main witness, petitioner
Eugenio Gonzales, was abroad. After granting the postponement, the hearing officer reset the
hearing for November 16, 1984 at 9:30 o'clock in the morning. At that hearing of October 23,
1984, counsel for petitioners said nothing about the petition for mandamus although it had
already been granted, and the writ issued, on October 5, 1984. At this stage, the SEC Hearing
Officer and Bayot still had no knowledge of said mandamus.
Sometime after this last hearing, counsel for private respondent received a second notice of
extrajudicial foreclosure, and immediately filed a motion with the SEC for another order to
restrain the Pasig Sheriff from proceeding with the extrajudicial sale. Notice of said motion was
sent to petitioner with the statement that a restraining order would be issued immediately upon
receipt of said notice by said petitioner, which date fell on November 15,1984.
On November 16, 1984, at 9:30 o'clock in the morning, the date set for the next SEC hearing,
counsel for petitioner did not appear but instead sent a motion for postponement on the ground
that their witness, petitioner Eugenio Gonzalez, was still abroad. Over the strong objection of
private respondents's counsel, postponement was granted on the condition that this would be the
last. Hearing was reset for December 3, 1984. At 10:00 o'clock of the same day (November 16),
in spite of the Pasig Sheriff's receipt of the second restraining order, the extrajudicial sale took
place with the petitioners as the highest bidders.
On December 3, 1984, petitioners filed with the SEC a Motion to Dismiss SEC Case No. 2675 on
the ground that the same had become moot and academic because of the foreclosure sale and
that the SEC lacked jurisdiction. On March 22, 1985, the SEC denied the Motion to Dismiss and,
after their Motion for Reconsideration was also denied, the petitioner filed a Petition
for certiorari with the Intermediate Appellate Court (now the Court of Appeals).
Through two Resolutions, dated May 13, 1987 and November 25, 1986, the Court of Appeals
upheld the SEC's denial of petitioners' Motion to Dismiss SEC Case No. 2675. Now, this Petition
for Review on certiorari. In the meantime, Bayot died, her counsel withdrew and new counsel has
entered appearance on behalf of her heirs.
The main issues before Us are whether the extrajudicial sale of the condominium unit in question
has rendered moot and academic SEC Case No. 2675, and whether the foreclosure proceedings
is within the SEC jurisdiction.
The dispute before the SEC arose due to the assessments which the petitioner made against
Bayot's unit and which the latter refused to pay on the ground that they were unreasonable,
arbitrary and/or unauthorized by their contract of sale. Under the Condominium Act
1
and by-
laws
2
of the WackWack, assessments upon a condominium constitute a lien on such condominium
and may be enforced by judicial or extrajudicial foreclosure. The said Act and by-laws were made part
of the contract of sale between the parties. When Bayot refused to pay said assessments, the
petitioner sought to enforce the lien on Bayot's condominium by extrajudical foreclosure. It was at this
point that Bayot brought the matter before the SEC which issued the two restraining orders under the
circumstances previously described. The SEC has so far been prevented from deciding the issue of
the validity of the assessments due to the extrajudical sale of the unit in question. And the dispute
was aggravated and the proceedings became protracted because of the various legal
proceedings/motions which the parties subsequently resorted to in order to resolve their dispute.
We agree with the Court of Appeals and the SEC that the dispute as to the validity of the
assessments is purely an intra-corporate matter between WackWack and its stockholder, Bayot,
and is thus within the exclusive original jurisdiction of the SEC.
3
And since the extrajudicial sale
was authorized by WackWack's by-laws and was the result of the non-payment of said assessment,
the legality of such foreclosure is necessarily an issue also within the exclusive original jurisdiction of
the SEC, contrary to petitioner's contention that the SEC has no jurisdiction over such foreclosure it
being an action quasi-in-rem. Just because the property has already been sold extrajudicially does
not mean that the questioned assessment have now become legal and valid or that they have
become immaterial. In fact, the validity of the foreclosure depends on the legality of the assessments
and the issue must determined by the SEC if only to insure that the private respondent was not
deprived of her property without having been heard. If there were no valid assessments, then there
was no lein on the property, and if there was no lien, what was there to foreclosure? Thus, SEC Case
No. 2675 has not become moot and academic and the SEC retains its jurisdiction to hear and decide
the case despite the extrajudicial sale.
The private respondents assails the validity of the foreclosure on the ground that it was in
violation of the second restraining order issued by the SEC. On the other hand, petitioners claim
that the second restraining order was beyond the authority of the SEC to issue, and this
contention was upheld by the Court of Appeals. We do not agree with the Court of Appeals. Said
Court based its opinion on the following provisions:
8. Preliminary injunction not granted without notice; issuance of restraining order.
No Preliminary injunction shall be granted without notice to the defendant. If it
shall appear from the facts shown by the affidavit or by the verified complaint that
great or irreparable injury would result to the applicant before the matter can be
heard on notice, the Court to which the application for preliminary injunction was
made, may issue a restraining order to be effective only for a period of twenty
days from date of its issuance. Within the said twenty-day period, the court must
cause an order to be served on the defendant, requiring him to show cause, at a
specified time and place, why the injunction should not be granted, and
determine within the same period whether or not the preliminary injunction shall
be granted and shall accordingly issue the corresponding order. In the event that
the application for preliminary injunction is denied, the restraining order is
deemed automatically vacated.
xxxxxxxxx
4

The above provisions is silent as to a second restraining order. However, the reason behind the
law is to prevent the preliminary injunction from becoming an instrument of injustice, when it is
issued without a hearing and is allowed to continue for an indefinite period. Only in case of
probable irreparable injury to the petitioner may such a restraint without hearing be granted, and
only for a period of twenty days, at which time it automatically terminates. Thus, this Court has
previously held that under the above provision, a temporary restraining order cannot exists
indefinitely.
5
On the other hand, the circumstances of the present case are unusual. To repeat, due
to postponements at the instance of WackWack, it was only on October 23, 1984 that counsel for the
private respondent was able to finish presenting his evidence in support of the preliminary injunction.
On said date, when petitioners were supposed to present their evidence in opposition to the
preliminarry injunction, their counsel again asked for postponement alleging that their main witness
was in the United States. It should be remembered that at that time, petitioners' counsel said nothing
about the mandamuswhich it had obtained previously, i.e., on October 5, 1984. Both the SEC and the
private respondent's counsel were completely unaware of said mandamus, and were thus led to
believe that the petitioner were willing to go on with the hearings and to present their evidence in
opposition to the preliminary injunction. To top it all, at the hearing on November 16, 1984, the same
day of the extrajudicial sale, counsel for petitioners, without personally appearing before the SEC sent
a motion for another postponement on the ground that their witness was still abroad. All these
circumstances strongly suggest a premediated plan to effect the extrajudicial sale with the least
possible opportunity on the part of Bayot to stop it by legal means.
It is not surprising therefore that Bayot, taken aback by the second notice of foreclosure, had no
choice but to ask the SEC for a second restraining order. Notice of the motion for such order
reached petitioners on November 15, 1984, a day before the date set for the extrajudicial sale on
November 16, 1984. In this connection, petitioners claim that the 3-day notice required by law for
motions was not complied with and that such lack of notice rendered the second restraining order
ineffective. Under the circumstances, We believe that the petitioners, by their own objectionable
conduct, had forfeited any right they may have had with respect to the 3-day notice requirement.
On the other hand, the Sheriff, despite having received the restraining order, went ahead with the
sale perhaps feeling secure in his position because of the order of the RTC giving due course
to the extrajudicial sale. Parenthetically, We should point out that this Court has previously held
that a court has no power to interfere with a judgment or order of another co-equal court as this
may lead to confusion and may seriously hinder the administration of justice.
6
And as far as its
judicial functions are concerned, the SEC is a co-equal body with the Regional Trial Court. Thus, the
Pasig RTC should not have entertained the petition for mandamus.
Lastly, this Court cannot allow one of the parties in a case to use the provisions of law and
jurisprudence on the matter to shield him from the effects of his objectionable acts intended to
deceive the other party and deprive the latter of his day in court. We therefore hold that under the
peculiar circumstances of this case, the second restraining order issued by the SEC Hearing
Officer on November 15, 1984 was valid and effective.
WHEREFORE, the SEC order denying the Motion to Dismiss SEC Case No. 2675 entitled
"Josefina Bayot vs. WackWack Condominium Corporation, Welbilt Construction Corporation and
Eugenio Juan Gonzales", is AFFIRMED, and the case is remanded to the SEC for further
proceedings.
SO ORDERED.
G.R. No. 103638 April 14, 1994
FIRST INTRAMUROS BF CONDOMINIUM CORPORATION and MAXY ABAD, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NANCY DINGAYAN
QUIMPO, respondents.
Balgos& Perez for petitioners.
Nancy J. Dingayan-Quimpo for and in her own behalf.
R E S O L U T I O N

VITUG, J .:
This Petition for Certiorari, with prayer for the issuance of a writ of preliminary injunction, seeks to
have the resolution, dated 24 September 1991, of the National Labor Relations Commission,
which has affirmed the decision of 20 June 1990 of Labor Arbiter Manuel P. Asuncion, reversed
and set aside.
On 01 February 1980, private respondent Nancy DingayanQuimpo was employed by First
Intramuros BF Condominium Corporation to be its Assistant Building Administrator for Finance
and Administration. She, thereafter, received various promotions with corresponding increases in
salary; in 1984, as senior Assistant Building Administrator; in 1985, as Building Administrator;
and in 1986, as General Manager. In 1987, she was yet given another salary increase by
petitioner corporation's president.
On 29 November 1988, private respondent received her 13th month pay based on her basic
salary. She protested on the ground that it had been the company's policy to include other fringe
benefits in the computation of the 13th month pay. Later, her salary was reverted to P8,107.50,
the amount she was receiving in November 1987, on the excuse that the increase she was
granted by the firm's president in December 1986 was not confirmed by the Board of Directors.
Private respondent filed a complaint for underpayment, withholding of salary and diminution of
her 13th month pay.
In a decision, dated 20 June 1990, Labor Arbiter Manuel P. Asuncion ruled:
WHEREFORE, the respondents are hereby ordered to pay the complainant;
1.) The full amount of her salary at P22,311.24 per month, from December 1988,
with legal interest;
2.) 13th month pay for 1987 in the amount of P6,200.00;
3.) Moral and exemplary damages in the amount of P250,000.00
The respondents must, also, pay the equivalent of 10% percent of the benefits
awarded as attorney's fee.
SO ORDERED.
1

Petitioners appealed the Labor Arbiter's decision to the National Labor Relations Commission.
On 24 September 1991, respondent commission issued the first questioned resolution, thus:
WHEREFORE, premises considered, the appealed Decision is hereby Affirmed
and the appeal dismissed for lack of merit.
SO ORDERED.
2

Petitioners filed a motion for reconsideration. On 27 December 1991, the second questioned
resolution was issued, thus:
WHEREFORE, in view thereof, the Commission's resolution in dispute must
stand, and the Motion for Reconsideration is hereby dismissed for lack of merit.
No further motion of similar nature shall be entertained.
SO ORDERED.
3

On 07 February 1992, a petition for certiorari, dated 27 January 1992, was filed with this court,
asserting that
1. THE PUBLIC RESPONDENT ACTED WITHOUT OR BEYOND
ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
WHEN IT SUSTAINED THE DECISION OF THE LABOR
ARBITER THAT THE INCREASES IN THE SALARY OF THE
PRIVATE RESPONDENT WERE VALID;
2. THE PUBLIC RESPONDENT ACTED WITHOUT OR BEYOND
ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
WHEN IT SUSTAINED PAYMENT TO THE PRIVATE
RESPONDENT OF MORAL DAMAGES; AND
3. THE PUBLIC RESPONDENT ACTED WITHOUT OR BEYOND
ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION
WHEN IT SUSTAINED PAYMENT OF THE PRIVATE
RESPONDENT OF ATTORNEY'S FEES.
4

Petitioners likewise prayed for the issuance of a temporary restraining order. In its resolution,
dated 02 March 1992, this Court issued a temporary restraining order and required petitioners to
post a cash or surety bond to be effective during the pendency of the case and until the judgment
thereon is fully executed.
5
The temporary restraining order was later lifted in our resolution of 22
July 1992, on account of petitioners' failure to post another bond pursuant to our interim resolution of
18 May 1992.
6
On 23 September 1992, this Court resolved to give due course to the petition, and it
required the parties to submit their respective memoranda.
On 15 February 1994, a "Joint Motion to Render Decision Based on the
Compromise Agreement," was filed with this Court, hereunder reproduced in full:
JOINT MOTION
TO RENDER DECISION BASED ON THE
COMPROMISE AGREEMENT
COMES NOW both Petitioner, FIRST INTRAMUROS BF CONDOMINIUM
CORP. and PRIVATE RESPONDENT NANCY J. DINGAYAN-QUIMPO, in their
own behalf, and unto this Honorable Supreme Court, most respectfully manifest:
That, on 29 January 1994, both parties entered into a Compromise Agreement
for the amicable settlement of the instant case;
That, the said Compromise Agreement is herein-below reproduced, to wit:
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This AGREEMENT entered into by and between FIRST INTRAMUROS BF
CONDOMINIUM CORP. and NANCY J. DINGAYAN-QUIMPO, herein-referred to
below as the FIRST PARTY and SECOND PARTY, respectively, this 28th day of
January, 1994.
WITNESSETH:
That, the SECOND PARTY has filed two (2) labor cases against the FIRST
PARTY, to wit:
1. NANCY J. DINGAYAN-QUIMPO versus FIBFCC NLRC Case
No. 00-12-05209-88 G.R. No. 103638 For: Withholding of wages
and underpayment of 13th month pay
2. NANCY J. DINGAYAN-QUIMPO versus FIBFCC NLRC Case
No. 03-01229-89/CA 000266 G.R. No. 108830 For: Illegal
Suspension and Illegal Dismissal
which cases are now pending before the Supreme Court;
That, the above cases were decided by the NLRC in favor of the SECOND
PARTY;
That, both parties have decided to settle the above cases amicably by way of the
following manner of settlement:
a). That, the FIRST PARTY shall pay the SECOND PARTY the total amount of
ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) under the
following program of payment:
1) 1st payment February 1, 1994 P300,000.00
2) 2nd payment March 1, 1994 P300,000.00
3) 3rd payment April 1, 1994 P150,000.00
4) 4th payment May 1, 1994 P150,000.00
5) 5th payment June 1, 1994 P150,000.00
6) 6th payment July 1, 1994 P150,000.00

Total P1,200,000.00
That, the above shall constitute FULL settlement of the claim against the FIRST
PARTY by the SECOND PARTY for backwages, separation pay, damages and
attorney's fees.
That, both parties hereby waive any and all claims in the present or in the future,
whether civil, criminal or otherwise, that may arise from any and all incidents
involving the above cases.
SIGNED this 29th day of January 1994 in Kalookan City, Metro Manila,
Philippines.
FIRST PARTY SECOND PARTY
FIRST INTRAMUROS BF
CONDOMINIUM CORP.
(Sgd.)
Represented by: ATTY. NANCY J. DINGAYAN-QUIMPO Complainant
(Sgd.)
ENRIQUE M. ZALAMEA
Chairman of the Board
and President
(Sgd.)
RODRIGO GATMAITAN, JR.
Treasurer
That, both parties have decided to terminate the above case to the best interest
of all by executing the above-quoted Compromise Agreement which is hereto
attached as Annex "A";
That, the above Compromise Agreement is not contrary to law, moral and public
policy;
WHEREFORE, in view of the foregoing, it is most respectfully prayed that the
Compromise Agreement entered into by and between FIRST INTRAMUROS BF
CONDOMINIUM CORP. and NANCY J. DINGAYAN-QUIMPO be adopted by this
Honorable Supreme Court as Its Decision on the above-entitled case.
Kalookan City for Manila, 28 January 1994.
(Sgd.)
FIRST INTRAMUROS BF NANCY J. DINGAYAN-QUIMPO
CONDOMINIUM CORP. Private Respondent
Petitioner
Represented by:
(Sgd.)
ENRIQUE M. ZALAMEA
Chairman of the Board
and President
(Sgd.)
RODRIGO GATMAITAN, JR.
Treasurer
The law not merely authorizes, but even encourages, the amicable settlement of disputes
between parties (Art. 2029, Civil Code), and it does not limit such compromise to cases about to
be filed but also to cases already pending in court.
WHEREFORE, finding the compromise agreement not to be contrary to law, morals, good
customs, public order and public policy, the Court hereby APPROVES the same, and it ENJOINS
the parties thereto to faithfully comply with the covenants, terms and conditions thereof. This
resolution is immediately executory. No costs.
SO ORDERED.
EQUITABLE PCI BANK, INC.,
Petitioner,



- versus -
G.R. No. 165950

Present:

CARPIO MORALES, J.,
Chairperson,
BRION,
BERSAMIN,
ABAD,

and
VILLARAMA, JR., JJ.

OJ-MARK TRADING, INC.
and SPOUSES OSCAR AND
EVANGELINE MARTINEZ,
Respondents.

Promulgated:

August 11, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

VILLARAMA, JR., J .:
Before us is a petition for review on certiorari filed by petitioner under
Rule 45 of the 1997 Rules of Civil Procedure, as amended, praying for the
reversal of the Decision
[1]
dated October 29, 2004 of the Court of Appeals (CA)
in CA-G.R. SP No. 77703, which denied its petition for certiorari assailing the
trial courts orders granting respondents application for a writ of preliminary
injunction.
The factual antecedents:
Respondent-spouses Oscar and Evangeline Martinez obtained loans from
petitioner Equitable PCI Bank, Inc. in the aggregate amount of Four Million
Forty-Eight Thousand Eight Hundred Pesos (P4,048,800.00). As security for the
said amount, a Real Estate Mortgage (REM) was executed over a condominium
unit in San Miguel Court, Valle Verde 5, Pasig City, Metro Manila where the
spouses are residing. Respondent Oscar Martinez signed the REM both as
principal debtor and as President of the registered owner and third-party
mortgagor, respondent OJ-Mark Trading, Inc. The REM was annotated on
Condominium Certificate of Title No. PT-21363 of the Registry of Deeds
ofPasig City.
[2]

Respondent-spouses defaulted in the payment of their outstanding loan
obligation, which as of October 31, 2002 stood at P4,918,160.03.
[3]
In a letter
dated May 15, 2002, they offered to settle their indebtedness with the
assignment to the Bank of a commercial lot of corresponding value and also
requested for recomputation at a lower interest rate and condonation of
penalties.
[4]
While petitioners officers held a meeting with respondent Oscar
Martinez, the latter however failed to submit the required documents such as
certificates of title and tax declarations so that the bank can evaluate his
proposal to pay the mortgage debt via dacion en pago.
[5]
Consequently,
petitioner initiated the extrajudicial foreclosure of the real estate mortgage by
filing an ex parte petition before the Office of the Executive Judge, Regional
Trial Court (RTC) of Pasig City.
[6]

On January 23, 2003, respondents filed Civil Case No. 69294 for
Temporary Restraining Order (TRO), Injunction and Annulment of
Extrajudicial Foreclosure Sale in the RTC of Pasig City. On January 27, 2003,
the trial court granted a TRO effective for twenty (20) days.
In their Complaint With Application for Temporary Restraining
Order,
[7]
respondents sought to enjoin the impending foreclosure sale alleging
that the same was hasty, premature, unreasonable and unwarranted, and also
claiming defects in the execution of the REM. Respondents imputed bad faith
on the part of petitioner who did not officially inform them of the denial or
disapproval of their proposal to settle the loan obligation by dacion via
assignment of a commercial property. Respondents maintained that aside from
the REM being illegally notarized, incomplete and unenforceable, the obligation
subject thereof had been extinguished by the dacion proposal considering that
the value of the property offered was more than sufficient to pay for the
mortgage debt. It was further averred that the subject property is being used and
occupied by respondent-spouses as a family home.
In his Order dated February 17, 2003, Judge Mariano M. Singzon, Jr.
granted the application for a writ of preliminary injunction.
[8]
Petitioner filed a
motion for reconsideration which was denied under the Order dated April 21,
2003.
[9]

Petitioner questioned the issuance of preliminary injunction before the
CA arguing that the respondents are not entitled to injunctive relief after having
admitted that they were unable to settle their loan obligations. By Decision
dated October 29, 2004, the appellate court sustained the assailed orders,
holding that:
...respondent spouses have sufficiently shown that they have a right over
the condominium unit which is subject of the mortgage. This proprietary right
over the condominium is what they are trying to protect when they applied for
preliminary injunction. As respondent spouses have alleged in their
complaint, the issuance of notice of foreclosure sale is at most premature as
there are still several factual issues that need to be resolved before a
foreclosure can be effected. Such already constitute the ostensible right which
respondent spouses possess in order for the foreclosure sale to be temporarily
enjoined.
[10]

Hence, this petition raising the following grounds:
I
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR IN HOLDING THAT THE TRIAL COURT DID
NOT COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION IN ISSUING THE ASSAILED WRIT OF
PRELIMINARY INJUNCTION
II
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR IN HOLDING THAT INDIVIDUAL
RESPONDENTS SPS. MARTINEZ HAVE PROPRIETARY RIGHT OVER
THE MORTGAGED CONDOMINIUM UNIT
III
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR IN HOLDING THAT SUCH PURPORTED
PROPRIETARY RIGHT OF RESPONDENTS
SPS.MARTINEZ DESERVES THE PROTECTIVE MANTLE OF A WRIT
OF PRELIMINARY INJUNCTION DESPITE THEIR CLEAR AND
UNEQUIVOCAL ADMISSION OF THE OUTSTANDING LOANS AND
THEIR DELINQUENCY
IV
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
THERE ARE STILL SEVERAL FACTUAL ISSUES TO BE RESOLVED IN
A FULL-BLOWN TRIAL BEFORE PETITIONER EPCIB COULD
EXERCISE ITS STATUTORY AND EQUITABLE RIGHT TO
FORECLOSE
[11]

The sole issue to be resolved is whether or not the respondents have
shown a clear legal right to enjoin the foreclosure and public auction of the
third-party mortgagors property while the case for annulment of REM on said
property is being tried.
Petitioner argued that the appellate courts conclusion that respondents
possess proprietary right over the mortgaged property subject of foreclosure is
utterly baseless, for the following reasons: first, while the condominium unit is
supposedly a family home, it is admittedly owned by respondent corporation
and not by the conjugal partnership or absolute community of respondent-
spouses; and second, even assuming that OJ-Mark Trading, Inc. is a family
corporation, respondents stance contravenes the established rule that properties
registered in the name of the corporation are owned by it as an entity separate
and distinct from its members or stockholders.
[12]

As to the alleged proposal of respondent Oscar Martinez to assign
commercial lots by dacion en pago to settle their loan obligations, petitioner
pointed out that the properties offered for dacion are not owned, and much less
to be owned by him, but purportedly owned by another corporation (developer),
the president of which supposedly owes him a sum of money. Respondent
Oscar Martinez likewise admitted during the hearings before the trial court his
unpaid loan with petitioner. Moreover, with the filing of a petition for
extrajudicial foreclosure of the real estate mortgage by petitioner, it serves more
than a formal rejection of respondents dacion en pago offer.
[13]

On their part, the respondents contended that the petition raises factual
issues not proper in an appeal by certiorari under Rule 45. They asserted that
the trial court correctly found sufficient legal basis to grant the writ of
preliminary injunction after conducting a summary hearing in which both
parties actively participated and submitted oral and documentary
evidence. Such evidence adduced by respondents, as well as the Affidavit
dated January 24, 2003 of Atty. Oscar Martinez (adopted in the February 7,
2003hearing) fully supported their application and hence the trial court did not
act precipitately or arbitrarily in granting injunctive relief.
[14]

Respondents argued that they appear to be entitled to the relief demanded
by their Complaint because petitioner was in bad faith when it proceeded to
foreclose while there was still a pending written proposal to pay. They stand to
lose a prime property, and thus made a serious and sincere offer by way
of dacion en pago. To show good faith and as required by petitioner to continue
the negotiations for dacion, respondent Atty. Oscar Martinez even
paid P100,000.00 in October 2002, which petitioner accepted. But petitioner
maliciously, fraudulently and hastily proceeded to foreclose the renovated
mortgaged property, apparently motivated by its discovery after re-appraisal
that the floor area of the townhouse and number of its rooms had doubled (from
180.750 sq. m. with three [3] bedrooms, it is now 350 sq. m. with six [6]
bedrooms). Respondents contended that as creditor, it was petitioners duty not
to sit on respondents dacion offer and should have informed them in writing
that said offer is rejected. By hanging on the dacion talks, petitioner thus
prevented the respondents repayment of the loan, in malicious haste to acquire
the condominium unit as asset.
[15]

Respondents further claimed that the extrajudicial foreclosure will cause
grave injustice and irreparable injury to respondent-spouses and their four (4)
young children because their family home, in which they were residing since
1997, at least insofar as the unencumbered area in excess of 180.750 sq. m., is
exempt from forced sale or execution under Article 155 of the Family
Code. Petitioner, on the other hand, will not suffer any loss if the foreclosure
will not proceed.
[16]

With respect to the commercial lots offered in dacion, respondents fault
the petitioner in deliberately ignoring the fact that the Blue Mountains
Subdivision located atAntipolo City was already approved by the Land
Registration Authority; although the subdivided lots have already been applied,
the individual titles had not yet been issued. It was therefore impossible for
respondents to deliver these titles to petitioner by October 21, 2002 considering
the normal time it takes to secure land titles. Respondents deplored the sudden
filing of the petition for extrajudicial foreclosure, which was unfair as the
negotiations had already reached the stage when petitioner scheduled an ocular
inspection for the appraisal of the lots. However, for unknown reasons,
petitioner did not push through with the inspection.
[17]

We grant the petition.
Section 3, Rule 58 of the Rules of Court provides that:
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.
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.
[18]
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.
[19]

The issuance of a preliminary injunction rests entirely within the
discretion of the court taking cognizance of the case and is generally not
interfered with except in cases of manifest abuse.
[20]
For the issuance of the writ
of preliminary injunction to be proper, it must be shown that the invasion of the
right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable and that there is an urgent and paramount
necessity for the writ to prevent serious damage. In the absence of a clear legal
right, the issuance of a writ of injunction constitutes grave abuse of
discretion.
[21]

The possibility of irreparable damage without proof of actual existing
right is no ground for an injunction.
[22]
Hence, it is not sufficient for the
respondents to simply harp on the serious damage they stand to suffer if the
foreclosure sale is not stayed. They must establish such clear and unmistakable
right to the injunction. In Duvaz Corporation v. Export and Industry
Bank,
[23]
we emphasized that it is necessary for the petitioner to establish in the
main case its rights on an alleged dacion en pago agreement before those rights
can be deemed actual and existing, which would justify the injunctive
writ. Thus:
In Almeida v. Court of Appeals, the Court stressed how important it is
for the applicant for an injunctive writ to establish his right thereto by
competent evidence:
Thus, the petitioner, as plaintiff, was burdened to adduce
testimonial and/or documentary evidence to establish her right to
the injunctive writs. It must be stressed that injunction is not
designed to protect contingent or future rights, and, as such, the
possibility of irreparable damage without proof of actual
existing right is no ground for an injunction. A clear and
positive right especially calling for judicial protection must be
established. 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. There must
be an existence of an actual right. Hence, where the plaintiffs
right or title is doubtful or disputed, injunction is not proper.
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. The possibility of
irreparable damage without proof of an actual existing right would
not justify injunctive relief in his favor.
x x x x x x x x x
x xx. In the absence of a clear legal right, the issuance of
the injunctive writ constitutes grave abuse of discretion. As
the Court had the occasion to state in Olalia v. Hizon,196 SCRA
665 (1991):
It has been consistently held that there is no power the
exercise of which is more delicate, which requires greater caution,
deliberation and sound discretion, or more dangerous in a doubtful
case, than the issuance of an injunction. It is the strong arm of
equity that should never be extended unless to cases of great
injury, where courts of law cannot afford an adequate or
commensurate remedy in damages.
Every court should remember that an injunction is a
limitation upon the freedom of action of the defendant and should
not be granted lightly or precipitately. It should be granted only
when the court is fully satisfied that the law permits it and the
emergency demands it.
We are in full accord with the CA when it struck down, for having been
issued with grave abuse of discretion, the RTCs Order of September 25,
2002, granting petitioners prayer for a writ of preliminary injunction during
the pendency of the main case, Civil Case No. 02-1029. The reason therefor is
that the right sought to be protected by the petitioner in this case through the
writ of preliminary injunction is merely contingent and not in esse. It bears
stressing that the existing written contract between petitioner and
respondent was admittedly one of loan restructuring; there is no mention
whatsoever or even a slightest reference in that written contract to a
supposed agreement of dacion en pago. In fine, it is still necessary for
petitioner to establish in the main case its rights on the alleged dacion en
pago before those rights become in esse or actual and existing. Only then
can the injunctive writ be properly issued. It cannot be the other way
around. Otherwise, it will be like putting the cart before the
horse.
[24]
[EMPHASIS SUPPLIED.]
In the case at bar, respondents failed to show that they have a right to be
protected and that the acts against which the writ is to be directed are violative of
the said right. On the face of their clear admission that they were unable to settle
their obligations which were secured by the mortgage, petitioner has a clear right to
foreclose the mortgage.
[25]
Foreclosure is but a necessary consequence of non-
payment of a mortgage indebtedness.
[26]
In a real estate mortgage when the
principal obligation is not paid when due, the mortgagee has the right to foreclose
the mortgage and to have the property seized and sold with the view of applying
the proceeds to the payment of the obligation.
[27]

This Court has denied the application for a Writ of Preliminary Injunction
that would enjoin an extrajudicial foreclosure of a mortgage, and declared that
foreclosure is proper when the debtors are in default of the payment of their
obligation. Where the parties stipulated in their credit agreements, mortgage
contracts and promissory notes that the mortgagee is authorized to foreclose the
mortgaged properties in case of default by the mortgagors, the mortgagee has a
clear right to foreclosure in case of default, making the issuance of a Writ of
Preliminary Injunction improper.
[28]
In these cases, unsubstantiated allegations
of denial of due process and prematurity of a loan are not sufficient to defeat the
mortgagees unmistakable right to an extrajudicial foreclosure.
[29]

We cannot agree with respondents position that petitioners act of
initiating extrajudicial foreclosure proceeding while they negotiated for
a dacion en pago was illegal and done in bad faith. As respondent-spouses
themselves admitted, they failed to comply with the documentary requirements
imposed by the petitioner for proper evaluation of their proposal. In any event,
petitioner had found the subdivision lots offered for dacion as unacceptable,
not only because the lots were not owned by respondents as in fact, the lots
were not yet titled but also for the reason that respondent Oscar Martinezs
claimed right therein was doubtful or inchoate, and hence not in esse.
Requests by debtors-mortgagors for extensions to pay and proposals for
restructuring of the loans, without acceptance by the creditor-mortgagee, remain
as that. Without more, those proposals neither novated the parties mortgage
contract nor suspended its execution.
[30]
In the same vein, negotiations for
settlement of the mortgage debt bydacion en pago do not extinguish the same
nor forestall the creditor-mortgagees exercise of its right to foreclose as
provided in the mortgage contract.
As we held in Tecnogas Philippines Manufacturing Corporation v.
Philippine National Bank
[31]
--
Dacion en pago is a special mode of payment whereby the debtor offers
another thing to the creditor who accepts it as equivalent of payment of an
outstanding obligation. The undertaking is really one of sale, that is, the
creditor is really buying the thing or property of the debtor, payment for which
is to be charged against the debtors debt. As such, the essential elements of a
contract of sale, namely, consent, object certain, and cause or consideration
must be present. It is only when the thing offered as an equivalent is accepted
by the creditor that novation takes place, thereby, totally extinguishing the
debt.
On the first issue, the Court of Appeals did not err in ruling that
Tecnogas has no clear legal right to an injunctive relief because its
proposal to pay by way of dacion en pago did not extinguish its
obligation. Undeniably, Tecnogas proposal to pay by way of dacion en
pago was not accepted by PNB. Thus, the unaccepted proposal neither
novates the parties mortgage contract nor suspends its execution as there
was no meeting of the minds between the parties on whether the loan will
be extinguished by way of dacion en pago. Necessarily, upon Tecnogas
default in its obligations, the foreclosure of the REM becomes a matter of right
on the part of PNB, for such is the purpose of requiring security for the
loans. [EMPHASIS SUPPLIED.]
Respondent-spouses alleged proprietary right in the mortgaged
condominium unit appears to be based merely on respondents averment that
respondent OJ-Mark Trading, Inc. is a family corporation. However, there is
neither allegation nor evidence to show prima facie that such purported right,
whether as majority stockholder or creditor, was superior to that of petitioner as
creditor-mortgagee. The rule requires that in order for a preliminary injunction
to issue, the application should clearly allege facts and circumstances showing
the existence of the requisites. It must be emphasized that an application for
injunctive relief is construed strictly against the pleader.
[32]

We note that the claim of exemption under Art. 153 of the Family Code,
thereby raising issue on the mortgaged condominium unit being a family home
and not corporate property, is entirely inconsistent with the clear contractual
agreement of the REM.
[33]
Assuming arguendo that the mortgaged
condominium unit constitutes respondents family home, the same will not
exempt it from foreclosure as Article 155 (3) of the same Code allows the
execution or forced sale of a family home for debts secured by mortgages on
the premises before or after such constitution. Respondents thus failed to show
an ostensible right that needs protection of the injunctive writ. Clearly, the
appellate court seriously erred in sustaining the trial courts orders granting
respondents application for preliminary injunction.
Anent the grave and irreparable injury which respondents alleged they
will suffer if no preliminary injunction is issued, this Court has previously
declared that all is not lost for defaulting mortgagors whose properties were
foreclosed by creditors-mortgagees, viz:
In any case, petitioners will not be deprived outrightly of their
property. Pursuant to Section 47 of the General Banking Law of 2000,
mortgagors who have judicially or extrajudicially sold their real property for
the full or partial payment of their obligation have the right to redeem the
property within one year after the sale. They can redeem their real estate by
paying the amount due, with interest rate specified, under the mortgage deed;
as well as all the costs and expenses incurred by the bank.
Moreover, in extrajudicial foreclosures, petitioners have the right to
receive any surplus in the selling price. This right was recognized in Sulit v.
CA, in which the Court held that if the mortgagee is retaining more of the
proceeds of the sale than he is entitled to, this fact alone will not affect the
validity of the sale but simply gives the mortgagor a cause of action to recover
such surplus.
[34]

WHEREFORE, the petition is GRANTED. The Decision
dated October 29, 2004 of the Court of Appeals in CA-G.R. SP No. 77703 is
hereby REVERSED and SET ASIDE. Respondents application for a writ of
preliminary injunction is DENIED.
No costs.
SO ORDERED.
G.R. No. 186271 February 23, 2011
CHATEAU DE BAIE CONDOMINIUM CORPORATION, Petitioner,
vs.
SPS. RAYMOND and MA.ROSARIO MORENO, Respondents.
D E C I S I O N
BRION, J .:
Before us is the petition for review on certiorari with prayer for a temporary restraining order filed
by Chateau de Baie Condominium Corporation (petitioner) challenging the decision
1
of the Court
of Appeals (CA) that dismissed its petition for certiorari, prohibition and mandamus. The petition,
the CA ruled upon, questioned the ruling
2
of the Regional Trial Court (RTC), Branch 258,
ParaaqueCity, that denied the petitioners motion to dismiss the complaint filed by respondent
spouses Raymond and Ma. Rosario Moreno.
This case is the second of two related cases submitted to us involving the condominium unit of
Ma. Rosario Moreno. We had decided the first case Oscar S. Salvacion v. Chateau de Baie
Condominium Corporation, G.R. No. 178549
3
and our ruling has attained finality.
The Facts
Mrs. Moreno is the registered owner of a penthouse unit and two parking slots in Chateau de
Baie Condominium (Chateau Condominium) in Roxas Boulevard, Manila. These properties are
covered by Condominium Certificates of Title (CCT) Nos. 4153, 4154, and 4155 (Moreno
properties). As a registered owner in Chateau Condominium, Mrs. Moreno is a
member/stockholder of the condominium corporation.
Mrs. Moreno obtained a loan of P16,600,000.00 from Oscar Salvacion, and she mortgaged the
Moreno properties as security; the mortgage was annotated on the CCTs.
Under Section 20 of Republic Act (R.A.) No. 4726 (the Condominium Act),
4
when a unit owner
fails to pay the association dues, the condominium corporation can enforce a lien on the
condominium unit by selling the unit in an extrajudicial foreclosure sale.
On November 23, 2001, the petitioner caused the annotation of a Notice of Assessment on the
CCTs of the Moreno properties for unpaid association dues amounting to P323,870.85. It also
sent a demand letter to the Moreno spouses who offered to settle their obligation, but the
petitioner declined the offer.
Subsequently, to enforce its lien, the president of the petitioner wrote the Clerk of Court/Ex-
Officio Sheriff of Paraaque City for the extrajudicial public auction sale of the Moreno properties.
The extrajudicial sale was scheduled on February 10, 2005.
5

The first case - the Salvacion Case (Civil Case No. 05-0061;
CA-G.R. SP No. 90339; and G.R. No. 178549)
To stop the extrajudicial sale, Salvacion, as mortgagee, filed, on February 3, 2005, a petition
for certiorari and prohibition with prayer for the issuance of a temporary restraining order and/or
writ of preliminary injunction before the RTC, Branch 196, Paraaque City. The case was
docketed as Civil Case No. 05-0061.
6
The petition sought to prohibit the scheduled extrajudicial
sale for lack of a special power to sell from the registered owner as mandated by Act No.
3135,
7
and to declare the lien to be excessive.
On February 9, 2005, the RTC dismissed Salvacions petition and denied the injunctive relief for
lack of merit. The extrajudicial sale proceeded as scheduled, and the Moreno properties were
sold to the petitioner, the lone bidder, for P1,328,967.12. The RTC denied Salvacions motion for
reconsideration.
Salvacion went to the CA via a petition for certiorari and prohibition (CA-G.R. SP No. 90339) and,
among others, submitted the issue of whether the RTC erred in finding Section 5, Article 4 of the
By-Laws of the petitioner as blanket authority to institute an extrajudicial foreclosure, contrary to
Section 20 of R.A. No. 4726 and Section 1 of Act No. 3135.
On February 27, 2007, the CAs Third Division ruled that Act No. 3135 covers only real estate
mortgages and is intended merely to regulate the extrajudicial sale of mortgaged properties. It
held that R.A. No. 4726 is the applicable law because it is a special law that exclusively applies
to condominiums. Thus, the CA upheld the validity of the extrajudicial sale.
8
It ruled that R.A. No.
4726 does not require a special authority from the condominium owner before a condominium
corporation can initiate a foreclosure proceeding. It additionally observed that Section 5 of the
By-Laws of the petitioner provides that it has the authority to avail of the remedies provided by
law, whether judicial or extrajudicial, to collect unpaid dues and other charges against a
condominium owner. The CAs Third Division also denied Salvacions motion for
reconsideration.
9

Salvacion appealed to this Court through a petition for review on certiorari.
10
The Courts Third
Division denied the petition for technical infirmities and for failing to show that the CA committed
any reversible error. An entry of judgment was made on January 24, 2008.
11

The present case the Moreno Case
(Civil Case No. 05-0183 and CA-G.R. SP No. 93217)
While the Salvacion case was pending before the CA, the Moreno spouses filed before the RTC,
Paraaque City, a complaint for intra-corporate dispute against the petitioner
12
to question how it
calculated the dues assessed against them, and to ask an accounting of the association dues.
They asked for damages and the annulment of the foreclosure proceedings, and prayed for the
issuance of a writ of preliminary injunction. The case was raffled to Branch 258 and was
docketed as Civil Case No. 05-0183.
The petitioner moved to dismiss the complaint on the ground of lack of jurisdiction, alleging that
since the complaint was against the owner/developer of a condominium whose condominium
project was registered with and licensed by the Housing and Land Use Regulatory Board
(HLURB), the HLURB has the exclusive jurisdiction.
In an order dated October 15, 2005,
13
the RTC denied the motion to dismiss because it was a
prohibited pleading under the Interim Rules of Procedure Governing Intra-Corporate
Controversies.
14
It likewise ordered the motion to dismiss expunged from the records, and
declared the petitioner in default for failing to answer within the reglementary period. The RTC
denied the petitioners motion for reconsideration in its order of January 20, 2006.
15

The petitioner went to the CA via a petition for certiorari, prohibition and mandamus under Rule
65 of the Rules of Court. It alleged grave abuse of discretion on the part of the RTC for not
dismissing the Moreno spouses complaint because (1) the Moreno spouses are guilty of forum
shopping, (2) of litispendencia, and (3) the appeal pending before the CA (CA-G.R. SP No.
90339 [SPL CV No. 05-0061]).
The CAs First Division denied the petition in its decision of August 29, 2008.
16
It found no grave
abuse of discretion on the part of the RTC because the complaint involved an intra-corporate
dispute. It ruled:
Since the instant civil case involves an intra-corporate controversy, it is the RTC which has
jurisdiction over the same pursuant to R.A. 8799 otherwise known as the Securities Regulation
Code and Section 9 of the Interim Rules. The public respondent indeed correctly applied the
provisions of the Interim Rules. And under Section 8(1), Rule 1 thereof, it is expressly stated that
a Motion to Dismiss is a prohibited pleading. Thus, the motion to dismiss on the ground of lack of
jurisdiction filed by petitioner must necessarily be denied and expunged from the record.
Petitioner should have instead averred its defense of lack of jurisdiction and even the issue of
forum shopping in its Answer. Section 6, par. (4), Rule 2 of the Interim Rules, explicitly provides
that in the Answer, the defendant can state the defenses, including the grounds for a motion to
dismiss under the Rules of Court.
Considering that the motion to dismiss filed by private respondent is a prohibited pleading,
hence, it did not toll the running of the period for filing an Answer, the public respondent properly
declared the petitioner in default for its failure to file its Answer within fifteen (15) days from its
receipt of summons.
17

The CAs First Division also denied the petitioners motion for reconsideration;
18
hence, this
appeal by way of a Rule 45 petition.
The Issue
The petitioner submits this sole issue for our consideration:
WITH DUE RESPECT, THE COURT OF APPEALS ERRED IN NOT DISMISSING THE
COMPLAINT IN VIEW OF THE DECISION RENDERED BY ANOTHER DIVISION OF THE
COURT OF APPEALS IN CA-G.R. SP. NO. 90339 ENTITLED OSCAR S. SALVACION VS.
ATTY. CLEMENTE E. BOLOY, IN HIS CAPACITY AS EX-OFFICIO SHERIFF, OFFICE OF THE
CLERK OF COURT, REGIONAL TRIAL COURT, PARAAQUE CITY, BRANCH 196 AND
CHATEAU DE BAIE CONDOMINIUM CORPORATION SUSTAINING THE VALIDITY OF THE
[EXTRAJUDICIAL] PUBLIC AUCTION OF THE CONDOMINIUM UNIT AND PARKING SLOTS
OWNED BY RESPONDENT MA. ROSARIO MORENO, WHICH DECISION BECAME FINAL
AND EXECUTORY ON JANUARY 24, 2008.
19

The Courts Ruling
We deny the petition for lack of merit. The CA did not err when it did not dismiss the Moreno
spouses complaint despite the full completion of the extrajudicial sale.
The case before the RTC involved an intra-corporate dispute the Moreno spouses were asking
for an accounting of the association dues and were questioning the manner the petitioner
calculated the dues assessed against them. These issues are alien to the first case that was
initiated by Salvacion a third party to the petitioner-Moreno relationship to stop the
extrajudicial sale on the basis of the lack of the requirements for a valid foreclosure sale.
Although the extrajudicial sale of the Moreno properties to the petitioner has been fully effected
and the Salvacion petition has been dismissed with finality, the completion of the sale does not
bar the Moreno spouses from questioning the amount of the unpaid dues that gave rise to the
foreclosure and to the subsequent sale of their properties. The propriety and legality of the sale
of the condominium unit and the parking spaces questioned by Salvacion are different from the
propriety and legality of the unpaid assessment dues that the Moreno spouses are questioning in
the present case.1avvphi 1
The facts of this case are similar to the facts in WackWack Condominium Corporation, et al. v.
Court of Appeals, et al.,
20
where we held that the dispute as to the validity of the assessments is
purely an intra-corporate matter between WackWack Condominium Corporation and its
stockholder, Bayot, and is, thus, within the exclusive original jurisdiction of the Securities and
Exchange Commission (SEC).
21
We ruled in that case that since the extrajudicial sale was
authorized by WackWack Condominium Corporations by-laws and was the result of the
nonpayment of the assessments, the legality of the foreclosure was necessarily an issue within
the exclusive original jurisdiction of the SEC. We added that:
Just because the property has already been sold extrajudicially does not mean that the
questioned assessments have now become legal and valid or that they have become
immaterial. In fact, the validity of the foreclosure depends on the legality of the assessments and
the issue must be determined by the SEC if only to insure that the private respondent was not
deprived of her property without having been heard. If there were no valid assessments, then
there was no lien on the property, and if there was no lien, what was there to foreclose? Thus,
SEC Case No. 2675 has not become moot and academic and the SEC retains its jurisdiction to
hear and decide the case despite the extrajudicial sale.
22

Based on the foregoing, we affirm the decision of the CAs First Division dismissing the
petitioners petition. The way is now clear for the RTC to continue its proceedings on the Moreno
case.
WHEREFORE, premises considered, we DENY the petition for review
on certiorari and AFFIRM the Decision, dated August 29, 2008, and the Resolution, dated
February 5, 2009, of the Court of Appeals in CA-G.R. SP No. 93217. The Regional Trial Court,
Branch 258, Paraaque City is directed to continue its proceedings in Civil Case No. 05-0183.
Costs against the petitioner.
SO ORDERED.