Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. Nos. 65957-58 July 5, 1994

ELEAZAR V. ADLAWAN and ELENA S. ADLAWAN, petitioners, vs. Hon. Judge RAMON AM. TORRES, as Presiding Judge of Branch 6, Regional Trial Court Cebu City, ABOITIZ & COMPANY, INC. and THE PROVINCIAL SHERIFFS OF CEBU, DAVAO, RIZAL and METRO MANILA, Respectively, respondents. Pablo P. Garcia for petitioners. Isaias P. Dicdican and Sylva G. Aguirre-Paderanga for Aboitiz & Co., Inc.

QUIASON, J.: This is a petitioner for certiorari and mandamus with preliminary injunction or restraining order to nullify: (1) the Order dated September 14, 1983 of respondent Judge Ramon Am. Torres of the Regional Trial Court, Branch 6, Cebu City, in Civil Case No. CEB-1185 and the Order dated September 26, 1983 of Judge Emilio A. Jacinto of Branch 23 of the same court in Civil Case No. CEB-1186, which granted the motion for the issuance of writs of preliminary attachment for the seizure of the property of petitioners by respondent Provincial Sheriffs; and (2) the Order dated December 12, 1983 of respondent Judge Ramon Am. Torres in the consolidated cases, Civil Case No. CEB-1185 and Civil Case No. CEB-1186. I In a complaint dated April 24, 1982 filed with the Court of First Instance of Cebu, now Regional Trial Court, (Civil Case No. R-21761), respondent Aboitiz and Company, Inc. (Aboitiz) sought to collect from petitioners a sum of money representing payments for: (1) the unpaid amortizations of a loan; (2) technical and managerial services rendered; and (3) the unpaid installments of the equipment provided by respondent Aboitiz to petitioners (Rollo, p. 37). Acting on the ex parte application for attachment, the Executive Judge of the Court of First Instance of Cebu, issued on May 14, 1982, an order directing the issuance of the writ of preliminary attachment against the property of petitioners upon the filing by respondent Aboitiz of an attachment bond. Subsequently, the case was raffled to Branch 11 of the Court of First Instance of Cebu, which issued a writ of attachment addressed to the Provincial Sheriffs of Cebu and the City Sheriff of Davao City. It was

the Sheriff of Davao City who enforced the writ of attachment, resulting in the seizure of heavy construction equipment, motor vehicle spare parts, and other personal property with the aggregate value of P15,000,000.00. The said court also granted the motion of respondent Aboitiz to take possession and custody of the attached property of petitioners and ordered the Provincial Sheriff of Davao to deliver the property to respondent Aboitiz. Petitioners moved for a bill of particulars and to set aside the ex parte writ of attachment. Finding merit in the motion to set aside the writ, Branch 11 ordered on July 6, 1982 the lifting of the writ and, consequently, the discharge of the property levied upon. Respondent Aboitiz filed an urgent ex parte motion, praying for the stay of the July 6, 1982 Order for a period of 15 days for it to be able to appeal the order. The motion was favorably acted upon. However, on July 13, 1982, respondent Aboitiz filed a notice of dismissal of its complaint in accordance with Section 1, Rule 17 of the Revised Rules of Court. Consequently, Branch 11 issued an order confirming the notice of dismissal, emphasizing that all orders of the court issued prior to the filing of said notice of dismissal had been rendered functus oficio, and considering all pending incidents in the case as moot and academic. Petitioner Eleazar Adlawan filed a motion praying that the July 6, 1982 Order be implemented and enforced. On December 20, however, Branch 11 denied the motion on account of the filing by respondent Aboitiz before Branch 16 of the Court of First Instance of Cebu in Lapu-lapu City of an action for delivery of personal property (Civil Case No. 619-L), and the filing by petitioner Eleazar Adlawan before Branch 10 of the same court of an action for damages in connection with the seizure of his property under the writ of attachment. In the replevin suit, Branch 16 ordered the seizure and delivery of the property described in the complaint. Said property were later delivered by the provincial sheriff to respondent Aboitiz. Alleging that while his office was situated in Cebu City, Adlawan was a resident of Minglanilla, and therefore, the Lapu-lapu City court should not entertain the action for replevin. Petitioner Eleazar Adlawan filed an omnibus motion praying for the reconsideration and dissolution of the writ of seizure, the retrieval of the property seized, and the dismissal of the complaint. He also averred that the property seized were in custodia legis by virtue of the writ of attachment issued by Branch 11. His omnibus motion was denied. Subsequently, he filed a motion for reconsideration which was not granted. The denial of his omnibus motion led petitioner Eleazar Adlawan to file a petition for certiorari and mandamus in the Supreme Court (G.R. No. 63225). The Third Division of this Court ruled on April 3, 1990 that since attachment is an ancillary remedy, the withdrawal of the complaint left it with no leg to stand on. Thus, the Court disposed of the case as follows: WHEREFORE, in view of the foregoing, this Court rules that the attached properties left in the custody of private respondent Aboitiz and Company, Inc. be returned to petitioner Eleazar V. Adlawan without prejudice to the outcome of the cases filed by both parties (Rollo, p. 324). Respondent Aboitiz filed a motion for reconsideration of the decision, contending that the replevin case was distinct and separate from the case where the writ of attachment was issued. It argued that the writ of replevin, therefore, remained in force as the Third Division of the Supreme Court had not found it illegal. The motion was, however, denied with finality in the Resolution of July 11, 1990. Undaunted, respondent Aboitiz filed a second motion for reconsideration with a prayer that the dispositive portion of the decision be clarified. It asserted that because the writ of preliminary attachment was different from the writ of replevin, we should rule that the property subject of the latter writ should remain in custodia legis of the court issuing the said writ.

In the Resolution dated September 10, 1990, the Third Division stated that "the properties to be returned to petitioner are only those held by private respondent (Aboitiz) by virtue of the writ of attachment which has been declared non-existent." Accordingly, the dispositive portion of the April 3, 1990 decision of the Third Division of this Court was modified to read as follows: WHEREFORE, in view of the foregoing, this Court rules that the properties in the custody of the private respondent Aboitiz & Company by virtue of the writ of attachment issued in Civil Case No. R-21761 be returned to the petitioner, but properties in the custody of the private respondent by virtue of the writ of replevin issued in Civil Case No. 619-L be continued in custodia legis of said court pending litigation therein. The Decision in G.R. No. 63225 having become final and executory, entry of judgment was made on November 15, 1990. This should have terminated the controversy between petitioners and respondent Aboitiz insofar as the Supreme Court was concerned, but that was not to be. On September 9, 1983 respondent Aboitiz filed against petitioners two complaints for collection of sums of money with prayers for the issuance of writs of attachment in the Regional Trail Court, Branch 23, Cebu City, docketed as Civil Cases Nos. CEB-1185 and CEB-1186. The complaint in Civil Case No. CEB-1185 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Tago Diversion Works for the Tago River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totaled P13,430,259.14. Paragraph 16 of the complaint states: 16. That, in view of the enormous liabilities which the defendants have with the plaintiff, defendants executed a real estate mortgage covering eleven (11) parcels of land in favor of Philippine Commercial and Industrial Bank (PCIB) to secure a P1,000,000.00 loan with said bank and was able to remove, conceal and dispose of their properties, obviously to defraud the plaintiff, . . . (Rollo, pp. 65-66). The complaint in Civil Case No. CEB-1186 alleged that petitioner Eleazar Adlawan (defendant therein) was awarded a contract for the construction of the Lasang River Irrigation Project by the National Irrigation Administration and that respondent Aboitiz (plaintiff therein) loaned him money and equipment, which indebtedness as of June 30, 1983 totalled P5,370,672.08. Paragraph 15 of the complaint is similarly worded as paragraph 16 of the complaint in Civil Case No. CEB-1185. Civil Case No. CEB-1185 was raffled to the Regional Trial Court, Branch 6, presided by respondent Judge Ramon Am. Torres. On September 14, 1983, respondent Judge ordered the issuance of a writ of attachment upon respondent Aboitiz' filing of a bond of P5,000,000.00. Similarly, in Civil Case No. CEB1186, which was raffled to Branch 23, presiding Judge Emilio A. Jacinto ordered the issuance of a writ of attachment upon the filing of a bond of P2,500,000.00. Accordingly, in Civil Case No. CEB-1185, the Acting Provincial Sheriff of Cebu issued separate writs dated September 26, 1983 addressed to the Sheriffs of Cebu, Davao and Metro Manila. No writ of preliminary attachment was, however, issued in Civil Case No. CEB-1186. Petitioners then filed in Civil Cases Nos. CEB-1185 and CEB-1186 urgent motions to hold in abeyance the enforcement of the writs of attachments. They alleged in the main that since their property had been previously attached and said attachment was being questioned before the Supreme Court in G.R. No. 63225, the filing of the two cases, as well as the issuance of the writs of attachment, constituted undue interference with the processes of this court in the then pending petition involving the same property. Upon motion of respondent Aboitiz, Branch 23 issued on October 13, 1983, an order directing the transfer to Branch 6 of Civil Case No. CEB-1186 for consolidation with Civil Case No. CEB-1185. Meanwhile, in its comment on petitioners' motion to withhold the enforcement of the writs of attachment, respondent Aboitiz alleged that the voluntary dismissal of Civil Case No. R-21761 under Section 1, Rule 17 of the Revised Rules of Court was without prejudice to the institution of another action based on the

same subject matter. It averred that the issuance of the writ of attachment was justified because petitioners were intending to defraud respondent Aboitiz by mortgaging 11 parcels of land to the Philippine Commercial and Industrial Bank (PCIB) in consideration of the loan of P1,100,000.00, thereby making PCIB a preferred creditor to the prejudice of respondent Aboitiz, which had an exposure amounting to P13,430,259.14. Petitioners then filed a rejoinder to said comment, contending that since the property subject of the writ of attachment have earlier been attached or replevied, the same property were under custodia legis and therefore could not be the subject of other writs of attachment. On December 12, 1983, respondent Judge issued an order finding no merit in petitioners' motion for reconsideration and directing the sheriffs of Cebu, Davao and Metro Manila "to proceed with the enforcement and implementation of the writs of preliminary attachment." Respondent Judge ruled that the writs of attachment were issued on the basis of the supporting affidavits alleging that petitioner had removed or disposed of their property with intent to defraud respondent Aboitiz (Rollo, pp. 109-113). On December 15, petitioners filed an ex parte motion praying: (1) that the December 12, 1983 Order be set for hearing; (2) that they be given 15 days within which to either file a motion for reconsideration or elevate the matter to this Court or the then Intermediate Appellate Court; and (3) that within the same 15day period the implementation or enforcement of the writs of attachment be held in abeyance. On the same day, respondent Judge issued an order holding in abeyance the enforcement of the writs of preliminary attachment in order to afford petitioners an opportunity to seek their other remedies (Rollo, p. 116). On December 27, petitioners filed the instant petition for certiorari and mandamus. They alleged that respondent Judge gravely abused his discretion in ordering the issuance of the writs of preliminary attachment inasmuch as the real estate mortgage executed by them in favor of PCIB did not constitute fraudulent removal, concealment or disposition of property. They argued that granting the mortgage constituted removal or disposition of property, it was not per se a ground for attachment lacking proof of intent to defraud the creditors of the defendant. Petitioners contended that in Civil Case No. 21761, Branch 11 had ruled that the loan for which the mortgage was executed was contracted in good faith, as it was necessary for them to continue their business operations even after respondent Aboitiz had stopped giving them financial aid. Petitioners also contended that respondent Judge exceeded his jurisdiction when he issued the Order of December 12, 1983, without first hearing the parties on the motion for attachment and the motion to dissolve the attachment. Moreover, they argued that respondent Judge gravely abused his discretion in proceeding with the case, notwithstanding that his attention had been called with regard to the pendency of G.R. No. 63225 in this Court. As prayed for by petitioners, we issued a temporary restraining order on January 6, 1984 "enjoining the respondents from enforcing or implementing the writs of preliminary attachment against the property of petitioners, all dated September 26, 1983 and issued in Civil Cases Nos. CEB 1185 and 1186" (Rollo, p. 118). II The resolution of this case centers on the issue of the legality of the writ of attachment issued by respondent Judge in the consolidated cases for collection of sums of money.

The affidavit submitted by respondent Aboitiz in support of its prayer for the writ of attachment does not meet the requirements of Rule 57 of the Revised Rules of Court regarding the allegations on impending fraudulent removal, concealment and disposition of defendant's property. As held in Carpio v. Macadaeg, 9 SCRA 552 (1963), to justify a preliminary attachment, the removal or disposal must have been made with intent to defraud defendant's creditors. Proof of fraud is mandated by paragraphs (d) and (e) of Section 1, Rule 57 of the Revised Rules of Court on the grounds upon which attachment may issue. Thus, the factual basis on defendant's intent to defraud must be clearly alleged in the affidavit in support of the prayer for the writ of attachment if not so specifically alleged in the verified complaint. The affidavit submitted by respondent Aboitiz states:

REPUBLIC OF THE PHILIPPINES CITY OF CEBU ...............) S.S. I, ROMAN S. RONQUILLO, of legal age, married and a resident of Cebu City, after being sworn in accordance with law, hereby depose and say: That I am the Vice-President of the plaintiff corporation in the above-entitled case; That a sufficient cause of action exists against the defendants named therein because the said defendants are indebted to the plaintiffs in the amount of P13,430,259.14 exclusive of interests thereon and damages claimed; That the defendants have removed or disposed of their properties with intent to defraud the plaintiff, their creditor, because on May 27, 1982 they executed a real estate mortgage in favor of Philippine Commercial and Industrial Bank (PCIB) covering eleven (11) of their fifteen (15) parcels of land in Cebu to secure a P1,000,000.00 loan with the same bank; That this action is one of those specifically mentioned in Section 1, Rule 57 of the Rules of Court, whereby a writ preliminary attachment may lawfully issue because the action therein is one against parties who have removed or disposed of their properties with intent to defraud their creditor, plaintiff herein; That there is no sufficient security for the claims sought to be enforced by the present action; That the total amount due to the plaintiff in the above-entitled case is P13,430,259.14, excluding interests and claim for damages and is as much the sum for which an order of attachment is herein sought to be granted; above all legal counter-claims on the part of the defendants. IN VIEW WHEREOF, I hereunto set my hand this 24th day of August 1983 at Cebu City, Philippines.

(Sgd.) RAMON S. RONQUILLO Affiant (Rollo, pp. 171-172)

It is evident from said affidavit that the prayer for attachment rests on the mortgage by petitioners of 11 parcels of land in Cebu, which encumbrance respondent Aboitiz considered as fraudulent concealment of property to its prejudice. We find, however, that there is no factual allegation which may constitute as a valid basis for the contention that the mortgage was in fraud of respondent Aboitiz. As this Court said in Jardine-Manila Finance, Inc. v. Court of Appeals, 171 SCRA 636 (1989), "[T]he general rule is that the affidavit is the foundation of the writ, and if none be filed or one be filed which wholly fails to set out some facts required by law to be stated therein, there is no jurisdiction and the proceedings are null and void." Bare allegation that an encumbrance of a property is in fraud of the creditor does not suffice. Factual bases for such conclusion must be clearly averred. The execution of a mortgage in favor of another creditor is not conceived by the Rules as one of the means of fraudulently disposing of one's property. By mortgaging a piece of property, a debtor merely subjects it to a lien but ownership thereof is not parted with. Furthermore, the inability to pay one's creditors is not necessarily synonymous with fraudulent intent not to honor an obligation (Insular Bank of Asia & America, Inc. v. Court of Appeals, 190 SCRA 629 [1990]). Consequently, when petitioners filed a motion for the reconsideration of the order directing the issuance of the writ of attachment, respondent Judge should have considered it as a motion for the discharge of the attachment and should have conducted a hearing or required submission of counter-affidavits from the petitioners, if only to gather facts in support of the allegation of fraud (Jopillo, Jr. v. Court of Appeals, 167 SCRA 247 [1988]). This is what Section 13 of Rule 57 mandates. This procedure should be followed because, as the Court has time and again said, attachment is a harsh, extraordinary and summary remedy and the rules governing its issuance must be construed strictly against the applicant. Verily, a writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules (D.P. Lub Oil Marketing Center, Inc. v. Nicolas, 191 SCRA 423 [1990]). The judge before whom the application is made exercises full discretion in considering the supporting evidence proffered by the applicant. One overriding consideration is that a writ of attachment is substantially a writ of execution except that it emanates at the beginning, instead of at the termination of the suit (Santos v. Aquino, Jr., 205 SCRA 127 [1992]; Tay Chun Suy v. Court of Appeals, 212 SCRA 713 [1992]). We need not discuss the issue of whether or not Civil Cases Nos. CEB-1185 and CEB-1186 constituted undue interference with the proceedings in G.R. No. 63225 in view of the entry of judgment in the latter case. WHEREFORE, the petition is GRANTED and the Temporary Restraining Order issued on January 6, 1984 is made PERMANENT. Respondent Judge or whoever is the presiding judge of the Regional Trial Court, Branch 6, Cebu City, is DIRECTED to PROCEED with the resolution of Civil Cases Nos. CEB1185 and CEB-1186 with deliberate dispatch. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-35951 August 31, 1977

PIONEER INSURANCE & SURETY CORP. AND HADJI ESMAYATEN LUCMAN, petitionersappellants, vs. THE HON. AGAPITO HONTANOSAS, JUDGE OF THE COURT OF FIRST INSTANCE OF CEBU, BRANCH XI AND THE SPOUSES BEN UY RODRIGUEZ, respondents-appellees.

Eriberto D. Ignacio for appellant. Francisco E.F. Remotigue & Hilario G. Davide, Jr. for private respondent.

GUERRERO, J: We reverse the decision of the Court of Appeals 1 promulgated, on October 30, 1972 in CA-G.R. No. 00951-R entitled "Pioneer Insurance & Surety Corp., et al., petitioners, vs. Hon Judge Agapito Hontanosas, et al., respondents," which decision had denied for lack of merit the petition filed therein for certiorari. prohibition and/or mandamus with preliminary injunction seeking to nullify the order of default of February 29, 1972 and the decision of March 9, 1972 in Civil Case No. R-12069, entitled "Ben Rodriguez, et al. vs. Allied Overseas Commercial Co., et al." issued by the respondent Presiding Judge of the Court of First Instance of Cebu. The case commenced on October 12, 1970 when Allied Overseas Commercial Co., Ltd., a foreign corporation domiciled in Hongkong, filed in the Court of First Instance of Manila a complaint against the respondent-appellee Ben Uy Rodriguez for the collection of a sum of money arising out of a transaction between them in the amount of P450,533.00, the agreed peso equivalent of the HK$418,279.60 balance unpaid. Plaintiff therein having prayed for the issuance of a writ of preliminary attachment, the game was granted by the Court against Rodriguez upon the filing by said plaintiff of a bond in the amount of P450,000.00, which petitioner-appellant Pioneer Insurance & Surety Corp. duly posted. The corresponding levy in attachment was made by annotation on the properties of Rodriguez which consisted of 4 pieces of lots; notices of garnishment on different Cebu banks turned out negative, while personal properties found at the Rodriguez residence, although attached, were, however, not removed therefrom. A motion to dismiss the complaint was thereupon filed by Rodriguez, followed by an application for damages against the bond, praying that he be permitted to present evidence of damages he sustained by reason of the wrongful attachment, and to enforce said claim against the surety on its bond, alleging further that otherwise his claim against the bond will forever be barred as said claim cannot be the subject of an independent civil action under Sec. 20, Rule 57 of the Rules of Court. The court iii its order of December 22, 1970 dismissed the complaint on the ground of improper venue since defendant Rodriguez was a resident of Cebu, and lifted the writ of preliminary attachment setting. the hearing on the claim for damages against the bond on January 14, 1971. With the intention of filing a separate civil action in the Court t T of Firs instance of Cebu, respondentappellee Rodriguez withdrew his claim for damages against Pioneer Insurance and Surety Corp., which motion for withdrawal was granted by the Court Thereafter, the respondents-appellees Rodriguez spouses filed a complaint for damages on February 15, 1971 against Pioneer Insurance & Surety Corp. and Allied Overseas (the Hongkong-based corporation), docketed as Civil Case No. R-12069, Court of First Instance of Cebu presided by respondent judge lion Agapito Hontanosas, the complaint praying that Rodriguez be declared as not in any manner indebted to the defendant Allied Overseas Commercial Co. and that Pioneer Insurance & Surety Corp. be held liable for damages, attorneys foes and expenses of litigation by reason of the and malicious attachment issued by the Manila Court. Defendant Pioneer Insurance and Surety Corp. filed its manner to the complaint (Civil Case No. R-12069) alleging affirmative and special defenses. With respect to the other defendant Allied Overseas Commercial Co., summons was (coursed thru the Philippine Consulate General in Honkong which turned it down as it had no authority to serve the process under the Rules of Court. On April 27, 1971, defendant Pioneer Insurance & Surety Corp. filed a motion for a preliminary hearing of its affirmative defenses of lack of cause of action and bar by prior judgment and/or abandonment, which

are grounds for a motion to dismiss. This was denied by the respondent Judge in his Order dated May 15, 1971, so also was the motion for reconsideration per its Order of June 2, 1971. On May 5, 1971, the case was called for pre-trial. Plaintiffs with counsel attended; defendant Pioneer Insurance & Surety Corp. thru counsel was present The other defendant, Allied Overseas Commercial Co was not yet summoned, hence absent. The parties manifested failure to settle the case amicably, thus the Court set the trial of the case on the merits for June 11, 1971. A petition for certiorari and prohibition was then filed by Pioneer Insurance and Surety Corp. on August 3, 1971 in the Court of Appeals, CA-G.R. No. 00369-R (Record on Appeal, p. 133) with prayer to enjoin a hearing scheduled on August 7, 1971, alleging that respondent Judge committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in lending the motion for preliminary hearing. The Court of Appeals In its Resolution dated August 7, 1971 distributed this petition for certiorari. Record on Appeal, pp. 133-137) An amended complaint was now submitted to ad admitted by the Court on August 14, 1971 by impleading left petitioner-appellant Hadji Esmayaten Lucman as additional, defendant., making allegations tending show confabulation between the new defendant, and the foreign-based corporation to collect a nonexisting debt. To the amended complaint, Pioneer Insurance & Surety Corp filed its answer. Lucman having been impleaded as assignee defendant Allied Overseas Commercial filed a motion to dismiss on the ground of auter action pendant, that is an action pending in the Court of First Instance of Rizal, Civil Case No. 14351 between the same parties with the same allegation and defences of counterclaims. On November 25, 1971, respondent Judge denied the motion to dismiss, whereupon Lucman filed his answer to the amended complaint. Upon an ex parte motion of Rodriguez, the Court declared Lucman in default in its Order of January 10, 1972 and thereafter promulgated a decision dated January 28, 1972 against Lucman only, ordering him to pay damage,- in the amount of P150,000.00; declaring that Rodriguez was no in any manner indebted to Lucman or to Allied Overseas Commercial Co and that the Metropolitan Bank & Trust Co. (Cebu Branch) Check No. CB2169 (xerox copy marked Exhibit M issued iv Rodriguez to pay the indebtedness was a forgery. Lucman moved on February 11, 1972 to set aside the order of default and to admit the answer earlier filed by him to the amended complaint. On February 21. 1972, respondent Judge set aside the order of default against Lucman including the decision against him, the dispositive portion of which order reads as follows: WHEREFORE, the Order of Default dated January 10, 1972 as well as the decision (Re: Hadji Esmayaten Lucman) dated January 28, 1972, are hereby reconsidered and set aside. Let the hearing of this case on the merits be scheduled as previously set for February 28, 1972 at 8:30 o'clock in the morning. The parties thru their respective counsels are to be immediately notified of this order. The Clerk of Court is directed to notify defendant Hadji Esmayaten Lucman thru counsel Atty. Eriberto D. Ignacio At Rm. 414, Madrigal Bldg., Escolta, Manila by telegram. SO ORDERED. Cebu City, Philippines, February 21, 1972. (SGD.) AGAPITO HONTANOSAS

JUDGE (Record on Appeal, pp. 297-298) Forthwith, the clerk of court sent the telegram notices in the following wise: YOUR MOTION SET ASIDE ORDER, DEFAULT AND DECLARE PROCEEDINGS NULL AND VOID RE CIVIL CASE BEN RODGIGUEZ ET AL VERSUS HADJI ESMAYATEN LUCMAN GRANTED STOP PRETRIAL SHALL PROCEED AS PREVIOUSLY SCHEDULED FEBRARY 28 1972 MORNING (Record on Appeal, p. 298) Counsel for the petitioners received the telegram notices on February 21, 1972; and on February 23, 1972 counsel filed an urgent motion for postponement of the pre-trial, claiming that he was not aware of any such pre-trial having been previously set for February 28, 1972 in the morning, as indeed no such pre-trial can as yet be set as the issues with respect to the amended complaint are not yet fully joined since plaintiffs have not answered the compulsory conterclaims separately set up by the defendants in said summons to theforeign corporations Allied Overseas Commercial Co. Ltd. of Hongkong, nor have plaintiffs asked that said foreign corporation be dropped from the amended complaint; that counsel has a hearing in Manila of a criminal case which is of intransferable character, and prayed that the pre-trial be set at some other date in March preferably either March 22 or 23, 1972 at 9:00 a.m. which were the only free dates for the month of March 1972 in the calendar of the counsel. (Record on Appeal, pp. 301-303) Apparently, the above urgent motion for postponement although sent through registered airmail special delivery and received by the Dispatching Section of the Post Office of Cebu on February 28, 1972 (Resolution, Court of Appeals, Recrod on Appeal, pp. 365-366) was not received by the Court for on February 28, 1972 when the case was called, an order was issued by the Court postponing the pre-trial of the case to March 20, 1972 in ivew of the absence of the defendants and counsel notwithstanding notices of hearing and telegrams sent to them, on the condition that should defendants be found that as to plaintiffs will be allowed to present their evidence and the defendants will be declared in default for failure to appear at the pre-trial. (Record on Appeal, pp. 304-305) Upon verification from the radio Communications of the Philippines that the telegrams mentioned above were delivered and received by the addresses on February 21, 1972, the Court on February 29, 1972 declared the defendants in default and allowed the plaintiffs to present their evidence in support of their complaint before the Clerk of Court. (Record on Appeal, pp. 306-307). The evidence was thereupon presented and on March 9, 1977 the respondent Judge promulgated his Decision declaring that the plaintiff Rodriguez is not in any manner indebted to defendant Lucman or to Allied Overseas Commercial Co., declaring the personal check of the plaintiff to be a forgery; that the attachment of the properties of plaintiff in the Manila case was wrongfu; amd malicious, and ordering defendant Pioneer Insurance and Surety Co. to pay P350,000.00 as moral damages, P50,000.00 as exemplary damages and P50,000.00 for expenses of litigation in Manila. Defendant Lucman was also ordered to pay plaintiffs the sum of P50,000,00 as exemplary damages and P30,000.00 as attorney's fees. Within 30 days reglementary period to perfect the appeal, defendants Pioneer Insurance & Surety Corp. and Hadji Esmayaten Lucman filed the Notice of Appeal and the Original record on Appeal, the latter ordered corrected and amended but finally approved by the Court on July 31, 1972. Meanwhile, petitioner's filed on April 4, 1972 before the Court of Appeals a petition for certiorari, prohibition and/or mandamus with preliminary injunction CA-G.R. No. 00951-R) seeking to nullify the order of default of February 29, 1972 and the Decision of March 9, 1972 of respondent Judge, to command said Judge to elevate the records of the case for review and to prohibit him from enforcing his decision and from taking further action in the case, No. 12069.

On April 13, 1972, the Court of Appeals promulgated its resolution dismissing the petition aforestated and ruled among others as follows: Furthermore, petitioners instant remedy is not proper because of their own admission that appeal is available from the decision of respondent Judge (Discussion, pp. 12-13 of their Petition). This is shown by the handwriting at the upper right hand corner of Annex R (Decision) when they received the decision on March 25, 1972 and the period to appeal will expire on April 24, 1972. We are not, therefore, convinced that the remedy of appeal is inadequate, considering that whatever errors respondent Judge might have committed can be assigned as specific errors on appeal. It has been consistently held that certiorari is not available where the remedy of appeal is present . (Record on Appeal, p. 373) On a motion for reconsideration, the Court of Appeals reconsidered the resolution cited above, and issued another resolution dated July 25, 1972 giving due course to the petition and required the respondents to answer the petition (not a motion to dismiss), and among others, stated, to wit: Upon this fact alone, we believe as petitioners contend that although appeal is available, such remedy is not sufficiently speedy and adequate to cure the defects in the proceedings therein or to remedy the disadvantageous position of Petitioners because, since they were deprived of raising any issue or defense that they have in the respondent court by reason of the order of default, they cannot raise said issues or defenses for the first time on appeal. (Rollo, P. 98) The petition having been given due course, the respondents herein answered the same, and on October 30, 1972, the Court of Appeals rendered its Decision denying the petition for lack of merit, and held among others, thus Finally we are not also convinced that the remedy of appeal is inadequate under the circumstances obtaining in the principal cue Whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in their appeal. This Court can review any all such errors of fact and law in the appeal. (Rollo, p. 138) Petitioners filed a motion for reconsideration which was denied, hence this appeal by certiorari from the decision of the Court of Appeals and is now before Us being assailed and faulted on three principal issues: 1. the illegality of th order of the default and the decision arising therefrom; 2. the inadequacy of the remedy of appeal; and 3. the lack of jurisdiction of the Court in the principal case. The petitioner's main thrust in this legal attack is directed to the other dated February 29, 1972 declaring defendants (now the petitioners) in default at the second pre-trial hearing and allowing the plaintiffs (the present private respondents) to present evidence ex parte before the Clerk of Court, which evidence uncotradicted and unrebutted was lifted almost en toto as the basis of the decision granting damages so enormous and so huge in amount as to exceed the bounds of reason and fairness. The procedure for the pre-trial of a case is laid down by Rule 20, Revised Rules of court, which provides, to wit: Sec. 1. Pre-trial mandatory. In any action, after the last pleading has been filed, the ourt shall direct the parties and their attorneys to appear before it for a conference to consider':

(a) The possibility of an amicable settlement or of a submission to arbitration; (b) The simplification of the issues; (c) The necessity or desirability of amendments to the pleadings; (d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid unnecessary proofs; (e) The limitation of the number of witnesses; (f) The advisability of a preliminary reference of isues to a commissioner, (g) Such other matters as may aid in the prompt disposition of the action. Sec. 2. Failure to appear at pre-trial conference. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. Sec. 3. Allows the ocurt to render judgment on the pleading or summary judgment as justice require. Sec. 4 directs that a reocrd of the pre-trial results be made; and Sec. 5 requires the court to prepare a pre-trial calendar of cases for consideration as above provided, and that upon the submission of the last pleading in a particular case, it shall be the duty of the clerk of court to place case in the pre-trial calendar. Unquestionably, the present Rules make pre-trial mandatory. And the reason for making pre-trial mandatory is that pre-trial conferences bring the parteis together, thus making possible an amicable settlement or doing away with at least the non-essentials of a case from the beginning. (Borja vs. Roxas, 73 Phil. 647). Philippine jurisprudence has laid down the legal doctrine that while it is true that it is mandatory for the parties and their attorneys to appear before the trial court for a pre-trial conference to to consider inter alia the possibility of an amicable settlement, the rule wa sby no means intended as an implacable bludgeon but as a tool to assist the trial court in the orderly and expeditious conduct of trial. The rule is addressed to the sound discretion of the trial court (Rice and Corn Administration vs. Ong Ante, et. al., G.R. No. L-30558, Oct. 4, 1971). Both client and counsel must appear at the pre-trial. this is mandatory. Failure of the client to appear is a ground for dismissal. (American Ins. Co. vs. Republic 1967D Phil. 63; Home Ins. Co. vs. United States Lines Co., 1967D Phil. 401, cited in Saulog vs. Custombuilt Manufacturing Corp. No. L-29612, Nov. 15, 1968; Taroma v. Sayo, L-37296, Oct. 30, 1975 (67 SCRA 508). In the case of Insurance Co. of the North America vs. Republic, et. al., G.R. No.L-26794, Nov. 15, 1967, 21 SCRA 887, the Supreme Court, speaking thru Justice Bengzon, held that Sec. 1, Rule 20 of the Rules requries the court to hold a pre-trial before the case is heard and since in this case, a pre-trial has already been had, the fact that an amended complaint was later filed, did not necessitate another pre-trial. it would have been impractical, useless and time-consuming to call another pre-trial. Under the rules of pleading and practice, the answer ordinarily is the last pleading, but when the defendant's answer contrains a counterclaim, plaintiff's answer to it is the last pleading. When the defendant's answer has a cross-claim, the answer or the cross-defendant to it sit he last pleading. Where the plaintiff's answer to a counterclaim contains a counterclaim constains a counter-claim agains the opposing party or a cross-claim against a co-defendant, the answer of the opposing party to the counterclaim or the answer of the co-defendant to the cross-claim is the last pleading. And where the

plaintiff files a reply alleging facts in denial or avoidance of new matter by way of defense in the answer, such reply constitutes the last pleading. (Francisco, the Revised Rules of Court, Vo. II, pp. 2-3). The above citations and authorites are the ground rules upon which the conflictings claims of the opposing partie's may be resolved and decided. First, the legality of the order of default dated February 29, 1971 and the decision dated March 9, 1972. there is spread out in the Record on Appeal, pp. 92-93 that on May 5, 1971, a pre-trial. was conducted by the court between the plaintiff Ben Uy Rodriguez spouses and the defendant Pioneer Insurance & Surety Corp. The record or results of said pre-trial is found in the ordr of the court dated May 5, 1971, which states: When this case was called for pre-trial today, the plaintiffs and their counsel, Atty. Hilario Davide Jr. appeared. On the other hand, the defendant Pioneer Insurance & Surety Corp. represented by its counsel, Atty. Amando Ignacio also appeared. When asked by the court if there is any possibility of settling this case amicably, the counsel for the defendant answered in the negative. Both counsels agreed that the only issue to the resolved bu the Court is whether the bonding company is laible or not, and if so, how much? Atty. Hilario Davide, Jr. caused the markings of the following exhibit. Exhibit "A-pre-trial", the finanacial report of Ben Rodriguez as of December 31, 1969; and Exhibit "B-pre-trial", the affidavit of handwriting expert Perfecto Espina, and thereafter he reserved his right to mark additinal exhibits during the trial on the merits. The counsel for the defendant also reserved his right to object to the Exhibits of the plaintiffs and mark his exhibits during the trial on the merits of the case. Both counsels are given ten (10) days from today within which to file their simulatteneous memoranda or authorities in support of the motion for preliminary hearing and its objection thereto. and thereafter his incident will be resolved by the Court. Following agreement of the partiesm, the trial on the the merits of this case is set for June 11, 1971 at 8:30 o'clock in the moring. The parties thru their respective counsels are notified in open court of this order. SO ORDERED. Cebu City, Philippines, May 5, 1971. SGD.) AGAPITO HONTANOSAS JUDGE (Record on Appeal, p. 93) The defendant Pioneer Insurance & Surety Corp. having complied with the order of the Court to appear and attend this pre-trial, and had manifested its opposition to settling the case amicably, said party may no longer be compelled to attend a second pre-trial hearing, and neither may it be punished by the court

by its orde declaring said defendant as in default. The mandatory character of a pre-trial nad the serious consequences confronting the parties in the event that each party fails to attend the same must impose a strict application of the Rule such that where we find no authority for the the Court to call another pre-trial hearing, as in fact there is none in said Rule, the conclusion is inescapable that the respondent Judge committed a grave and serious abuse of discretion and acted in excess of jurisdiction in declaring defedant Pioneer Insurance & Surety Corp. "as in default" for failure to attend the second pre-trial called by the Judge on February 29, 1972. In other words, there is nothing in the Rules that empowers or has called a first pre-trial duly attended by tha prties, and lacking such authority, the court perforce lack the autority to declare a failure to prosecute on the part of the plaintiff for failing to attend such second pretrial; it also lack the authority to declare the defendant "as in default" by reason of the latter's failure to be present at the said second pre-trial. It serves no purpose for the court to call again another pre-trial where the parties had previously agreed to disagree, where the issues had been joined and where the court itself had been satisfied that a hearing on the merits is the next step to conduct as int he instant case where the court, after the pre-trial on May 5, 1971, set he trial of the case on its merits for June 11, 1971. Indeed, a second pre-trial is impractical, useless and time-consuming. We have not lost sight of the fact that when the first pre-trial was called and conducted, the party litigants were the Ben Uy Rodriguez spouses as plaintiffs, while Pioneer Insurance & Surety Corp. and Allied Overseas Commercial Co. (although not yet summoned) were the defendants, whereas at the time the second pre-trial was called, the original complaint had been amended to implead Hadji Esmayaten Lucman as additional defendant. The amendment of the complaint to implead Lucman did not, however, alter the impracticability, the uselessness and the absence of authority to call a second pretrial hearing since the amended complaint merely impleaded Lucman as the assignee of the original defendant Allied Overseas Commercial Co. and no additional cause of action was alleged; the prayer was the same and the amount of damages sought was the same as that in the original complaint. Second, the prematureness of the pre-trial called on February 28, 1972, assuming that there was need to have another pre-trial. The records (Record on Appeal, p. 293) show that the notice of the clerk of court setting the case for pre-trial on February 28, 1972 was issued and dated February 7, 1972. As of this date, February 7,1972, the complaint had been amended on August 27, 1971 by impleading the defendant Hadji Esmayaten Lucman who filed his answer on December 24, 1971, interposing therein a compulsory counterclaim. (Record on Appeal, pp. 239-240). Before this date of February 7, 1972, the court had already promulgated the Decision dated January 28, 1972 as against Lucman only. Likewise, as of February 7, 1972, defendant Pioneer Insurance & Surety Corp. had also filed its answer to the amended complaint, interposing too a compulsory counterclaim. But as of February 7, 1972, the plaintiffs have not yet filed their answer to the compulsory counterclaims of the defendants (which is necessarily the last pleading to be filed in order that the case is ready and ripe for the pre-trial). It was only on February 22, 1972 that plaintiffs made their reply to the answer, and their answer to the compulsory, counterclaim of defendant Lucman 'Record on Appeal, pp. 299- 301). The records do not disclose any reply of the plaintiffs to the answer of Pioneer Insurance & Surety Corp., nor any answer to the compulsory counterclaim of the Corp. The above state of the case as far as the pleadings are concerned clearly and manifestly show that the case was not yet ready for pre-trial, that it was as yet premature because the last pleading had not yet been filed by the plaintiffs. Even the state of the pleadings as of February 21, 1972 when the telegrams were sent notifying the parties of the pre-trial for February 28, 1972 reveals the prematureness of calendaring the case pre-trial. As of February 21, 1972, the complaint was already amended to implead Lucman who submitted his answer with compulsory counterclaim. but plaintiffs had not yet filed their reply and their answer to the counterclaim, because the records indicate that the plaintiffs' answer to the counterclaim, because the records indicate that the plaintiffs' answer to the counterclaim is dated February 22, 1972. (Record on

Appeal, pp. 299-301). And to the compulsory counterclaim of defendant Pioneer Insurance & Surety Corp., plaintiffs made no answer whatsoever. Third, the notices given by the clerk of court thru telegrams on February 21, 1972 notifying the parties of the pre-trial on February 28, 1972 were insufficient, in law and jurisprudence. We have careffully noted the telegraphic notices sent by the clerk of court and we find this omission which is fatal to the respondents' cause: no telegram was sent to the defendant Pioneer Insurance & Surety Corp. The telegram was sent to the counsel of this defendant, but none to the defendant itself. The Court had directed the clerk of court to send notice by telegram to the parties for the February 28 pre-trial. The clerk did send the telegram to Atty. Eriberto Ignacio, counsel for Pioneer Insurance & Surety Corp., but omitted and failed to send telegram to the party itself, the corporation, as required strictly by law. Notice to the counsel is not enough. We reiterate that this failure is a jurisdictional defect. Reading the order of the court dated february 29, it appears in black and white (Record on Appeal, pp. 306-307, Annex W, Rollo, p. 194) that only two telegraphic messages were sent by the clerk of court, thus (1) the message addressed to Atty. Eriberto Ignacio delivered to the given address at 3:45 P.M. the same day it was filed but the signature of he recipient was unreadable; (2) the other message addressed to Hadji Esmayaten Lucman per RCPI San Juan also delivered on the same day, February 21, 1972 and personally 4eceived by the addressee himself. This was the offficial advice received by the Court from the Radio Communications of the Philippines thru which the telegrams were wired. This is also confirmed by the Order of the Court dated April 11, 1972 denying the defendant's Urgent Motion for Reconsideration. The other states. Per advice from the Radio Communications of the Philippines, Inc. these two messages were received by the addressees, Atty. Eriberto Ignacio and Hadji Esmayaten Lucman on the same day it was filed, that is on February 21, 1972. (Record on Appeal, p. 357) Decidedly, there was no telegram sent to party defendant Pioneer Insurance & Surety Corp., informing it of the February 28 pre-trial hearng. The reason for requiring the presence of the party who must be notified is explained in the case of Home Insurance Co. vs. United Lines Co. (L-25593, November 15, 1967, 21 SCRA 863), where the Court, speaking thru Justice Bengzon, said that: A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. This shows the purpose of the Rules to compel the parties to appear personally before the court to reach, if possible, a compromise. Accordingly the court is given the discretion to dismiss the case should plaintiff not appear at the pre-trial. Fourth, the denial of the motion for postponement was a grave abuse of discretion. We grant the court the discretion to postpone any hearing, pre-trial or on the merits of the case, but the exercise of discretion must be based on reasonable grounds. The motion (Record on Appeal, pp. 301-303) had alleged grounds which are meritorious and not frivolous nor intended for delay, which are 1. no formal order of the court scheduling the February 28 pre-trial had been received; 2. pre-trial cannot be had as yet be set as the issues are not yet fully joined; 3. counsel has a hearing previously set in Manila in a criminal case which was of an intransferable character. We are also concede that counsel may not presume nor take for granted that his motion for postponement and the proposed setting to March 22 or 23, 1972 will be granted by the court but where the court had actually postponed the hearing on February 28, 1972 due to the absence of the defendants and their counsel, and scheduled the pre-trial to March 20, 1972 at 8:30 o'clock in the morning (Record on Appeal, pp. 304-306), we find no reason nor fairness in the court's

order of February 29, 1972 finding defendants as in default since the pre-trial was moved to a later date in March as prayed in the motion. The motion for postponement was received on February 28, 1972 at the Cebu Post Office, as shown in the postmarks on the envelope (photographed on p. 322, record on Appeal) but was not immediately delivered to the court although the envelope bore the words, "registered Air Mail/Special Delivery with Return Card." If the letter containing the moton was not yet delivered to the Court the next day, February 29, 1972 when the court made the order declaring defendants in default, this was clearly a postal neglect and omission to perform its duty, not attributable to defendants, The Court, in the exercise of wise discretion, could have restored their standing in court and given them an even chance to face their opponents. For refusing to set aside said order of default and the decision, we hold the Court of Appeals in reversible error therefor. The respondent Court of Appeals has ignored established rulings of the Supreme Court in Pineda vs. Court of Appeals, 67 SCRA 228, that a party may not be declared in default for future to attend the pre-trial where only his counsel was notified of the pre-trial schedule; in Sta. Maria, Jr. vs. Court of Appeals, 45 SCRA 596 that a pre-trial is unnecessary where the case could not be settled and that the fact that an amended complaint was later filed with leave of court did not, undue the circumstances, necessitate another pre-trial; and in Pineda vs. Court of Appeals, 67 SCRA 288 that Courys should be liberal in setting asiode default judgment. At this juncture, it is necessary to emphasize once more the pronouncement of this Court speaking through Justice Teehankee in Taroma vs. sayo, 67 SCRA 509, pp. 512-513, that: For the guidelines of the bench and bar, therefore, the Court in reaffirminf the ruling that notice of pre-trial must be served separately upon the party and his counsel of record, retates that while service of such notice to party may be made directly to the party, it is best that the trial courts uniformly serve such notice to party through or care of his counsel of the obligation of notifying the party of the date, time and palce of the pre-trial conference and assuring that the party either appear thereat or deliver to counsel a written authority to represent the party with power to compromise the case, with the warning that a party who fails to do so may be non-suited or declared in default. The second point at issue is whether the remedy of ordinary appeal in the case is palin, speedy and adequate such that the writ of certiorari will not lie. We have adverted to previously that the Court of Appeals in its extended Resolution dated July 25, 1972 ruled that although appeal was available, such remedy is not sufficiently speedy and adequate to cure the defects in the proceedings therein or to remedy the disadvantageous position of petitioners because, since they were deprived of raising any issue or defense that they have in the respondent court by reason of the order of default, they cannot raise said issue or defense for the first time on appeal. Yet, on October 30, 1972, the Court in its decision held that the remedy of appeal is not inadequate in that whatever errors respondent Judge might have committed in his order or judgment may be assigned as specific errors in their appeal before said tribunal, and that it can review any errors of fact and of law in the appeal. This conflicting stand of the Court of Appeals issuing from the same case is as difficult to resolve as it is to reconcile them. We have but to rule on them. hold one to be correct and dislodge the other as an error. On general principles, the writ of certiorari will lie where there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. The existence of an appeal is a bar to writ of certiorari where such appeal is in itself a sufficient and adequate remedy, in that it will promptly relieve the petitioner from the injurious effects of the order or judgment complained of. (Silvestre v. Torres, 57 Philippines 885, 890; Pachoco v. Tumangday L-14500, May 25, 1960; Lopez et al. v. Alvendia, et al. L20697, Dec. 24, 1964). Courts ordinarily do not deny the writ if the result would be to deprive a party of his substantial rights and leave him without remedy, and in those instances wherein the lower court has acted without jurisdiction over the subject matter, or where the order or judgment complained of is a

patent nullity, courts have gone even as far as to disregard completely the question of petitioner's fault, the reason being, undoubtedly, that acts performed with absolute want of jurisdiction over the subject matter are void ab initio and cannot be validated by consent, express or implied, of the parties. (Moran, Comments on the Rules of Court, Vol. 3, 1970 ed., pp. 169-170). There are numerous cases where the Supreme Court has granted the writ notwithstanding the existence of an appeal. Thus, the Supreme Court to avoid future litigations, passed upon a petition for certiorari though the proper remedy was appeal. Writs have been granted despite the existence of the remedy of appeal where public welfare and the advancement of public policy so dictate, the broader interests of justice so require, or where the orders complained of were found to be completely null and void, or that the appeal was not considered the appropriate remedy. (Fernando v. Varquez, No. L-26417, Jan. 30, 1970) As to what is an adequate remedy, it has been defined as "a remedy which is equally beneficial, speedy and sufficient, not merely a remedy which at some time in the future will bring about a revival of the judgment of the lower court complained of in the certiorari proceeding, but a remedy which will promptly relieve the petitioner from the injurious effects of that judgment and the acts of the inferior court or tribunal." (Silvestre v. Torres, 57 Phil. 885, 11 CJ., p. 113) Now to the case at bar, We find here a number of special facts and circumstances which addresses themselves to the wise discretion of this court with such force to induce Us to grant the writ in order to prevent a total or partial failure of justice, to redress or prevent the wrong done. We are satisfied that petitioners are cornered into a desperate position where they have been ordered to pay damages over and above the amount of the bond posted for the attachment of private respondents' properties as ordered by the decision of the court based on evidence presented ex parte by reason of the order of default, and more than that, plaintiff Rodriguez is relieved from civil liability on an inexplicable and unprecedented finding that the plaintiffs' check was a forgery, (when the check exhibited was only a xerox copy of the original, which original was in the records of the case filed in the court of First instance of Rizal, Civil Case No. 14499 entitled "Hadji Esmayaten Lucman vs. Benjamin Rodriguez, et al.," (Record on Appeal, pp. 49-55). Again, the conflicting notices as to the hearing ordered, pre-trial in one and on the merits in the other, is not the doing of the petitioners of their standing in court was in effect a failure of justice. Petitioners can no longer present their evidence to rebut the claim of damages, or reduce the unconscionable and excessive damages or question the release of plaintiff's debt, for the same may not be submitted nor raised for the first time on appeal. We, therefore, hold that the Court of Appeals erred in holding that the appeal is adequate. The court erred in ignoring the doctrine laid down in Omico v. Villegas, 63 SCRA 285, that appeal is not an adequate remedy where party is illegally declared in default. Petitioners assail the jurisdiction of the court of First Instance of Cebu in Civil Case No. 12069-R filed by the Rodriguez spouses, seeking damages for the alleged malicious and unlawful is2suance of the writ of preliminary attachment against the latter's properties granted by the Court of First Instance of Manila upon the posting of a security bond in the amount of P450,000.00 given by the petitioner Pioneer Insurance & Surety Corp. The petitioners contend that under See. 20, Rule 57 of the Revised Rules of Court, the claim for damages against a bond in an alleged wrongful attachment can only be prosecuted in the same court where the bond was filed and the attachment issued. Rule 57, Sec. 20 of the Revised Rules of Court provides, to wit: Claim for damages on account of illegal attachment. If the judgment on the action be in favor of the party against whom attachment was issued, he may recover, upon the bond given or deposit made by the attaching creditor, any damages resulting from the attachment. Such damages may be awarded only upon application and after proper hearing, and shall be included in the final judgment. The application must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts shaking his right if damages and the amount thereof.

xxx xxx xxx On the other hand, the private respondents argue that the above rule is not applicable to the case at bar, citing Moran, Vol. Rules of Court, 1963 pp. 51-52, to wit: ... the rule that a claim for damages arising from the issuance of a wit of attachment, injunction, receivership and replevin should be presented in the same action is not applicable where the principal case has been dismissed for lack of Jurisdiction and no claim for damages could therefore have beer presented in said case. The position of the petitioners is correct. The ruling in the case of Santos vs. Court of Appeals, et al., 95 Phil. 360 advanced by respondents to support their stand, is not controlling here, or We find that no claim for damages against the surety bond in support of a preliminary. attachment was ever presented or filed. The latest decisions of this Court in Ty Tion et al., vs. Marsman & Co., et al., L-17229, July 31, 1962, 5 SCRA 761 reiterating the rulings in Del Rosario vs. Nava, 50 O.G. 4189; Estioco vs. Hamada, L- 11079, May 21, 1958; Neva Espa;a vs. Montelibano, 58 Phil, 807; Tan Suyco vs. Javier, 21 Phil. 82; Raymundo vs. Carpio, 33 Phil. 894; Santos v. Moir,36 Phil. 350; lay down the proper and pertinent rule that the claim for damages against a bond in an aleged wrongful attachment can only be prosecuted in the same court where the bond was filed and the attachment issued. Moreover, the records show that private respondent Rodriguez filed an Application for Damages Against Bond dated December 3, 1970 (Record on Appeal, pp. 77-81) praying that Wherefore, it is respectfully prayed that in the event the motion to dismiss and the motion to discharge attachment were granted, the defendant be allowed to present evidence to prove damages sustained by him by reason of the attachment against the Pioneer Insurance & Surety Corp. in a hearing that may be conducted for the purpose with due notice to the plaintiff and the surety, and that after due notice and hearing judgment be rendered against the Pioneer Insurance and Surety Corp. for such amount of damages as may be proved and established for defendant. The defendant further prays for such other reliefs and remedies consistent with law, justice and equity. Cebu City, December 3, 1970. ESTANISLAO FERNANDEZ JOSE D. PALMA Attorney for Defendant The Court of First Instance of Manila in its order dated Dcember 22, 1970, after dismissing the complaint and lifting the writ of preliminary attachment, ordered that the hearing of the application for damages against the bond be set aside on January 14, 1971 at 8:30 a.m. (Record on Appeal, pp. 82-86) In other words, defendant Rodriguez sought that judgment be rendered against the surety for such amount of damages as may be proved or established by him, and was granted by the court the opportunity to prove damages against the bond of the surety company. He even cited the very provision of the Revised Rules of Court, Rule 57, Sec. 20 to justify his application, and the cases supporting his application, for otherwise his claim will forever be barred. In effect, at this point in time, defendant Rodriguez waived the lack of jurisdiction on his person, be seeking an affirmative relief from the court, which he cannot now complain before this Court. Thus, Francisco, in his Revised Rules of Court, Vol. 1, p. 130 citing 21 C.J.S. writes that:

Objections to lack of jurisdiction of the person, and other objections to jurisdiction not based on the contention that there is an absolute want of jurisdiction of the subject matter, are waived by invoking the court's jurisdiction, as by a counterclaim, consent, or voluntary submission, to jurisdiction, or conduct amounting to a general appearance. In Soriano v. Palacio, 12 SCRA 557, this Court held that even if jurisdiction was not originally acquired by the Court over the defendant due to allegedly defective services of summons, still when the latter filed a motion for reconsideration of the judgment by default, he is considered to have submitted to said court's jurisdiction. We agree with the petitioners that the Court of Appeals erred in not dismissing the complaint with respect to the petitioner Pioneer Insurance & Surety Corp., over which respondent-appellee Judge had not acquired jurisdiction pursuant to Sec. 20, Rule 57 of the Revised Rules of the Court. IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is reversed and another one is entered declaring the order of default dated February 29, 1972 and the decision rendered by the respondent Judge on March 9, 1972 null and void, holding that the Court of First Instance of Cebu lacks jurisdiction to hear and determine the claim for damages arising from the alleged wrongful attachment issued by the Court of First Instance of Manila and ordering the dismissal of that case (Civil Case No. 12069 of the Court of First Instance of Cebu), as well as the pending of the judgment herein annuled in the Court of Appeals which has been rendered moot. Petition granted. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 82568 May 31, 1988

HON. ALFREDO R.A. BENGZON, in his capacity as Secretary of Health, HON. CATALINA C. SANCHEZ, in her capacity as the Director of Food and Drugs of the NATIONAL DRUG COMMITTEE of the Department of Health, petitioners, vs. COURT OF APPEALS and BOIE-TAKEDA CHEMICALS, INC., respondents. The Solicitor General for petitioners. Herrera, Laurel, De los Reyes, Roxas and Teehankee Law Offices for respondents.

GRIO-AQUINO, J.: The petitioner filed on April 5, 1988 a petition for review on certiorari of the writ of preliminary injunction that was issued on March 3, 1988 by the Court of Appeals (Tenth Division) in CA-G.R. No. 13859 entitled, "BOIE-TAKEDA CHEMICALS INC., Petitioner versus DEPARTMENT OF HEALTH, HON. ALFREDO R.A. BENGZON, in his capacity as Secretary of Health, et al., Respondents."

enjoining respondents and all persons acting under them from enforcing and/or giving effect to Regulation No. 1 dated 1 April 1987 (Annex "B," Petition), Regulation No. 1-A dated 10 April 1987 (Annex "C") and to the order dated 1 February 1988 (Annex "Q") and from conducting further proceedings, which shall issue upon petitioners bond for P250,000.00 executed to the respondents to the effect that petitioner will pay such damages as they may sustain and prove by reason of the writ if it should finally be decided that petitioner is not entitled thereto. The petitioners pray that the said writ of preliminary injunction be annulled and set aside and that its enforcement be temporarily restrained during the pendency of this case. Respondent Boie-Takeda Chemicals, Inc. (hereafter referred to as "BOIE-TAKEDA" for brevity) filed a motion to dismiss the petition, and an opposition to the application for a writ of preliminary injunction. Treating the motion to dismiss and opposition as the respondents' comment or answer to the petition, We decided to immediately resolve the merits of the petition. Under Republic Act No. 3720 of June 22,1963, the petitioner Secretary of Health is charged with the duty and vested with authority "to insure safe and good quality supply of drugs and to regulate the production, sale, and traffic for the same to protect the health of the people." (Sec. 2) To implement this policy, the Government shall: (a) Establish standards and quality measures for food, drug, and cosmetic. (b) Adopt measures to insure pure and safe supply of food, drug, and cosmetic in the country. As amended by Executive Order No. 175 dated May 22, 1987, the statute now empowers the Department of Health to: (a) Establish standards and quality measures for foods, drugs and devices and cosmetics. (b) Adopt measures to ensure pure and safe supply of foods and cosmetics, and pure, safe, efficacious and good quality drugs and devices in the country. (c) Adopt measures to ensure the rational use of drugs and devices, such as, but not limited to, banning, recalling or withdrawing from the market drugs and devices which are not registered unsafe, inefficacious or of doubtful therapeutic value, the adoption of an official National Drug Formulary, and the use of generic names in the labelling of drugs. (d) Strengthen the Bureau of Food and Drugs. Respondent Boie-Takeda is a Philippine corporation which is engaged in the manufacture, distribution, and sale of drugs, among them "Danzen" a tablet which contains serra-peptase, an OPE (oral antiinflammatory proteolytic enzymes) which it has been licensed to manufacture and sell in the Philippines since 1970. This drug is also being sold in other countries such as Japan and in the Federal Republic of Germany. However, it is not sold in the United States. Based on a decision dated May 30,1985 of the U.S. Food and Drug (FDA) Commissioner, and affirmed by the U.S. Court of Appeals on April 1, 1986, which determined that "oral anti-inflammatory proteolytic enzymes (OPE) which are labelled for use in controlling edema and inflammation associated with surgical, obstetrical, or dental procedures or accidental trauma to any part of the body or infections or allergic manifestations, have not been shown to be effective for such uses," the petitioner Catalina C. Sanchez, as Director of the Bureau of Food and Drugs, with the approval of petitioner Alfredo R.A.

Bengzon, as Secretary of Health, "in the interest of consumer protection," issued on April 1, 1987 BFAD Regulation No. 1 s. 1987, ordering that: l. The registration of all pharmaceutical preparations containing anti-inflammatory proteolytic enzymes, as listed in ANNEXES "A," "A-1," "A-2" and "B," "B-l" and "B-2" hereof are herby ordered recalled, which means that these drugs should no longer be marketed in the Philippines. 2. For the orderly phasing out of stocks which have been distributed to outlets prior to the issuance of this Order, all stocks should have been recalled and withdrawn by the manufacturer and distributor by October 30, 1987. (Annex "A" of Petition.) After a week, as an addendum to BFAD Regulation No. 1, the petitioners issued BFAD Regulation No. 1A s. 1987 dated April 10, 1987, including in the list of banned pharmaceutical preparations Boie-Takeda's Danzen tablet, 5 mg. with serratio-peptidase 10,000 U. (Annex B, Petition.) Boie-Takeda filed with the Secretary of Health a request for reconsideration of BFAD Regulation No. 1-A on the grounds that: l. Serrapeptase was never registered in the United States and as a consequence, data related to this enzyme was not part of the review made by the US FDA. 2. Since there has been no hearing called in connection with oral proteolytic enzymes by the Bureau of Food and Drugs, the Philippine regulatory authority, there has been no opportunity to submit data relating to serra-peptase. 3. Voluminous data on Serrapeptase has, on 20 April 1987, been submitted to the BFAD, including what might be considered carefully designed double-blind studies of serrapeptase against placebo, studies demonstrating intestinal absorption of serrapeptase by measureable quantities of the enzymia in lymph, arterial blood and venous blood, by radio-immunoassay techniques. 4. In addition, a considerable number of additional clinical studies showing clinical effectiveness of serrapeptase in various conditions, done in West Germany, France, Italy and other countries, are available and can be submitted to the BFAD. 5. Serrapeptase is registered and approved drug in some 20 countries, including the ASEAN nations, and most recently in the Federal Republic of Germany. 6. There is evidence that serrapeptase has demonstrable effectiveness not only as an anti-inflammatory drug, which was the indication for which oral proteolytic enzymes were registered in the United States, but also as a mucolytic and as an agent that enhances penetration of antibiotics and other chemotherapeutic agents into the sites of pathology. Documentation regarding these uses has been submitted to the BFAD and additional material can be supplied if necessary. 7. Additional studies are still being conducted in various parts of the world, the results of which, we anticipate, will further augment the evidence demonstrating the effectivity and uses of serrapeptase." (Annex Code. Petition.) After a 15-minute hearing before the members of the Technical Advisory Committee on Registration of Products (TACORP), Director Sanchez of the Bureau of Food and Drugs denied Boie-Takeda's request for reconsideration (Annex E). Boie-Takeda appealed to the Secretary of Health (Annex F) who referred the appeal to the National Drug Committee (NDC) which granted the appellant a 20-minute hearing where it submitted voluminous

documentation proving the efficacy and safety of its product (Annex M), but to no avail. On February 1, 1988 Secretary Bengzon informed Boie-Takeda that the National Drug Committee confirmed the recall and cancellation of registration of "Danzen" tablets and directed the company "to discontinue marketing the said product effective as of receipt of this notice." (Annex N). Alleging that the cancellation of the registration of its product was done without due process of law, BoieTakeda filed in the Court of Appeals a petition for certiorari and prohibition with preliminary injunction (CAG.R. SP No. 13859 entitled, "Boie-Takeda Chemicals Inc. versus Department of Health, Hon. Alfredo R.A. Bengzon, et al.") praying, among other reliefs, that a writ of preliminary injunction be issued to restrain the Secretary of Health from enforcing BFAD Regulation No. 1-A pending the determination of the case. Upon receipt of the petition, the Court of Appeals issued a temporary restraining order and set the hearing of the application for preliminary injunction on February 22, 1988. After oral arguments at the hearing, the parties submitted their respective memoranda. On March 3, 1988, the Court of Appeals granted the writ prayed for (Annex A, p. 98, Rollo). This resolution of the Court of Appeals was elevated to Us by the Secretary of Health on a petition for certiorari and prohibition with preliminary injunction alleging grave abuse of discretion in issuing the same. As the issuance of a writ of preliminary injunction is an exercise of the Court's sound discretion, the only point of inquiry in the petition before Us is whether the Court of Appeals committed a grave abuse of discretion in issuing the writ. The matter of whether the respondent herein, Boie-Takeda (petitioner in the Appellate Court) was denied due process of law in the proceedings before the administrative bodies, namely, the Secretary of Health, the Bureau of Food and Drugs (BFAD), the National Drug Committee (NDC), and the Technical Advisory Committee on Registration of Products (TACORP), is not for Us to determine as it is still pending adjudication in CA-G.R. SP No. 13859. A writ of preliminary injunction, as an ancillary or preventive remedy may only be resorted to by a litigant for the preservation or protection of his rights or interests, and for no other purpose, during the pendency of the principal action (Calo vs. Roldan, 76 Phil. 425). Here, the writ was issued to protect and preserve the right or license of the private respondent BoieTakeda to market its product "Danzen" in the Philippines, which it has been doing since 1970 or for the past 17 years. Hence the object of the writ is to preserve the status quo, or the last actual peaceable uncontested status which preceded the pending controversy (Rodulfa vs. Alfonso, 76 Phil. 225) which, as correctly noted by the Court of Appeals, "is the status before the withdrawal order" was issued. The status quo before the ban or withdrawal order was issued, was that Boie-Takeda's product, "Danzen" tablets, was registered and being sold in the Philippines under proper license from the Bureau of Food and Drugs. That status quo is what the writ of preliminary injunction seeks to preserve pending a final determination of the merits of Boie-Takeda's petition in CA-G.R. SP No. 13859. Significantly, the writ was granted after a hearing where both parties were given an opportunity to present their arguments which they amplified with memoranda. (Said hearing SCRA 796).<re||an1w> As a general rule, this Court should refrain, in certiorari proceedings, from interfering with the lower court's exercise of its discretion in issuing a writ of preliminary injunction except in cases of manifest abuse (Rodulfa vs. Alfonso, 76 Phil. 225; Agno River Gold Dredging Co. vs. De Leon, 61 Phil. 190; Detective & Protective Bureau, Inc. vs. Cloribel, 26 SCRA 255). We rule, therefore, that respondent Court of Appeals did not commit a grave abuse of discretion in issuing a writ of preliminary injunction ordering the petitioners to desist from enforcing and implementing the withdrawal order (BFAD Regulation No. 1-A dated April 10, 1988) at least while the aggrieved party's petition for judicial review of the administrative proceedings is still pending determination by that Court.

WHEREFORE, the petition for certiorari and prohibition is denied. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-53772 October 4, 1990

ZOSIMO RIVAS and NORDY P. DIPLOMA, petitioners, vs. SECURITIES AND EXCHANGE COMMISSION, EZEKIEL F. TOEG ORLANDO C. DULAY, MIGUEL S. ARAMBULO, JR., RODOLFO H. DULAY, RODRIGO C. REYES, EMIGDIO S. TANJUATCO, JR., JACOB (JAMES) ISAAC and TEODORO BUNDANG respondents. Lolita A. Quisumbing and Antonio Rodriguez Bautista Law Offices for petitioners. Tanjuatco, Oreta Tanjuatco & Factoran for respondents.

PADILLA, J.: This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction and/or restraining order, to annul and set aside the order of the Securities and Exchange Commission (SEC) en banc, dated 21 April 1980, in SEC Case AC No. 025, lifting the writ of preliminary injunction previously issued by SEC Hearing Officer Antonio R. Manabat in SEC Case No. 1719. The antecedents are as follows: On 26 March 1979, petitioners filed with the Securities and Exchange Commission (SEC), a petition 1 for nullification of transfer of shares and of directors' election, with prayer for the issuance of a writ of preliminary injunction, docketed therein as SEC Case No. 1719. The petition alleged inter alia that sometime in November 1976, petitioner Nordy Diploma endorsed WOODWORKS, INC. stock certificate Nos. 151 (229 shares), 152 (281 shares), 154 (75 shares), 155 (150 shares), 156 (270 shares) and 157 (150 shares), covering a total of 1,155 shares, and deposited these certificates in Safety Deposit Box No. 243 maintained jointly under his name and that of private respondent Ezekiel P. Toeg at the Associated Citizens Bank branch on T.M. Kalaw Street, Ermita, Manila. The petition further alleged that petitioner Diploma entrusted the duplicate key to the deposit box to respondent Toeg his close business associate, friend, confidant and client for ten (10) solid years since 1968 with the instruction for Toeg to have access to his box should anything happen to him, since he (Diploma) was frequently traveling here and abroad; that sometime in November 1978, petitioner

Diploma discovered, soon after he returned from a 2-month sojourn abroad, that the stock certificates were in Toeg's possession and upon inquiry with the depository bank, petitioner Diploma learned that on 16 August 1978, Toeg opened the safety deposit box; that upon learning of Toeg's faithless act of opening the safety deposit box and stealing Diploma's share certificates therein, which were endorsed in blank, Diploma confronted, and later negotiated with Toeg and some of the other respondents, who were either Toeg's transferees or nominees, but to no avail; that on 13 February 1979, Diploma charged Toeg with theft in the Office of the City Fiscal of Manila, docketed therein as I.S. No. 79-2740; that in his counter affidavit, Toeg took the position that Diploma had sold his 1,155 shares way back in February 1978 to Toeg, Jacob (James) Isaac and Teodoro Bundang; that sometime in the early part of February 1979, they (petitioners) received a secretary's certificate issued by respondent Emigdio S. Tanjuatco, Jr., certifying to the election of directors 2 and officers 3 at a supposed stockholders' meeting and that the directors' meeting held on 22 January 1979 was absolutely illegal, null and void for absence of notice to stockholders of record, especially to the petitioners. On 27 March 1979, SEC Hearing Officer, Antonio R. Manabat issued a restraining order 4 "enjoining respondents, their nominees, transferees, agents, representatives or any person acting in their behalf, whether singly or collectively, from voting the shares which were derived from stock certificate Nos. 151, 152, 154, 155, 156 and 157 at the annual stockholders' meeting to be held on 29 March 1979, or at any subsequent meeting of the stockholders of Woodworks, Inc. and, further enjoining said respondents from exercising any of the powers, privileges, and functions of directors and officers of Woodworks, Inc. in so far as they derived their authority from the supposed stockholders' meeting held last 22 January 1979, until further orders from the Commission" and set the application for the issuance of a writ of preliminary injunction on 30 March 1979, at 9:00 o'clock in the morning. In due time, the private respondents filed their answer 5 to the petition. On 31 May 1979, after the hearing on the application for the issuance of a writ of preliminary injunction, the Hearing Officer issued an order 6 the dispositive portion of which reads as follows: WHEREFORE, let the writ of preliminary injunction be issued as prayed for by the petitioners upon filing of a bond and executed by them in favor of the respondents, in the amount of not less than P100,000.00, by a surety acceptable to the Commission, the condition of such bond being that the petitioners shall pay to the respondents all damages which the latter may sustain by reason of the issuance of the injunction should the Commission finally decide, in the course of the hearing of this case, that the petitioners are not entitled thereto; further, respondents are hereby enjoined from voting the contested shares in the annual stockholders' meeting of the corporation and in any subsequent meetings thereafter, or from disposing of such shares in any manner, furthermore, the respondents are hereby likewise enjoined from representing themselves as duly elected officers or members of the board of directors of Woodworks, Inc. until after the final resolution and disposition of the principal issue. It is understood that the hold-over board are not precluded or prohibited from executing corporate acts in accordance with the by-laws of the corporation and to discharge their ordinary duties to protect the interest of the company, save the reorganization of the corporate structure. Payments in the ordinary course of the business to meet the normal obligations shall be made. And, with reference to the contracts of the corporation with Triad Marketing Corporation, Equatorial Lumber Products Co., Ltd. and Supra Marketing Corporation, the same shall be honored and fulfilled in accordance with the pertinent terms and conditions thereof in due time. SO ORDERED. The private respondents moved for reconsideration, but the same was denied by the Hearing Officer in his order 7dated 23 July 1979, reasoning out that

. . ., petitioners have established that respondent Toeg "acquired" the 1,155 shares not through a sale made to him by petitioner Diploma or by any legitimate transfer of ownership thereof. Stated differently, petitioners have demonstrated that respondent Toeg stole the aforesaid shares. The verdict of the City Fiscal of Manila rendered in the criminal case (I.S. No. 79-4740) filed by petitioner Diploma against respondents Exekiel (sic) Toeg, Teodoro Bundang and Jacob (James) Isaac, involving the same shares in controversy, ascribed to the existence of a prima facie case of theft against said respondents and, as a result of which, an information, docketed as Criminal Case No. 46459, was filed before the Court of First Instance of Manila (See petitioners' Ex-Parte Manifestation). The fact that the City Fiscal of Manila believed that there exist a prima facie case of theft precludes any stigma of doubt as to the right of petitioners to the injunctive relief. On 20 August 1979, private respondents appealed the order of the Hearing Officer dated 31 May 1979 to the SECen banc. On 13 September 1979, while their appeal was pending with the SEC en banc, private respondents filed with this Court a petition for certiorari and prohibition, with prayer for the issuance of a restraining order, to annul and set aside the orders of the Hearing Officer dated 31 May 1979 and 23 July 1979 and to enjoin the therein respondents (now petitioners) from continuing with the proceedings in SEC Case No. 1719, docketed herein as G.R. No. 51435. On 9 November 1979, the Court dismissed the petition for lack of merit. Thereafter, the private respondents filed with the SEC en banc a Manifestation and Motion 8 dated 31 March 1980, calling its attention to a letter-directive 9 dated 19 March 1980 of the Minister of Justice, then Hon. Ricardo C. Puno, which reversed the findings of the City Fiscal of Manila in I.S. No. 79-4740, entitled "Diploma vs. Toeg, et al." and directed the fiscal to move for the dismissal of the criminal case for theft against therein respondents (also herein respondents) for lack of prima facie evidence. Private respondents prayed that the incident pending before the Commission en banc be resolved immediately with the lifting of the preliminary injunction earlier issued by the Hearing Officer. After the petitioners had filed their comment 10 on the aforesaid manifestation and motion, the SEC en bancissued on 21 April 1980 an order 11 the pertinent and dispositive portion of which reads as follows: Reading the appealed Order, the decisive factor in the issuance of the writ of injunction apparently was the resolution of the City Fiscal of Manila in I.S. No. 79-4740 finding prima facie case of theft against respondents therein, the same herein appellants Ezekiel F. Toeg, Teodoro Bundang and Jacob (James) Isaac. This finding, however, was lately reversed by the Minister of Justice in his letter-directive to the City Fiscal of Manila (See Annex 1, appellants' Marine station and Motion). This being the case, the appealed Order should be reversed, the very foundation upon which the writ of preliminary injunction was issued had ceased to exist. WHEREFORE, the appealed Order is hereby reversed and, accordingly, the writ of preliminary injunction is hereby lifted and dissolved. Respondents-appellants may now proceed to perform their functions as officers elected on January 22, 1979 elections. Let the records of the case be remanded to the Hearing Officer for trial on the merits. SO ORDERED. Hence, petitioners interposed the present petition, claiming that respondent SEC en banc acted without jurisdiction and with grave abuse of discretion in issuing the questioned order (21 April 1980), and that there is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law other than this present petition.

Petitioners contend that the SEC acted without jurisdiction and with grave abuse of discretion in issuing the questioned order because: (a) it reversed a previous ruling of this Court in G.R. No. L-51435, and violated the law of the case which had already been established; (b) it effectively transferred more than 40% ownership of a corporation engaged in exploiting Philippine natural resources from a Filipino to a disqualified alien; (c) it effectively pre-judged the case on the merits, disturbed the status quo and placed private respondents in an undue advantage over the petitioners; (d) it was based on evidence not adduced before the SEC but on evidence adduced before the Manila City Fiscal and on considerations of proof appropriate for a criminal case and not for an administrative litigation; and (e) it legitimized a special stockholders' meeting for the election of corporate directors despite the absence of notice to all stockholders as required by the corporate by-laws. The petitioners' contention that the dismissal by this Court of the private respondents' earlier petition for certiorariin G.R. No. 51435 questioning the orders of the SEC hearing officer in SEC Case No. 1719, dated 31 May 1979 and 23 July 1979, constitutes the "law of the case" which precluded the SEC en banc from ruling again on the same issue of whether petitioners were entitled to a writ of preliminary injunction, is untenable. "Law of the case' has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established, as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts of which such decision was predicated continue to be facts of the case before the court." 12 In this connection, it is well to recall that in G.R. No. 51435, the petitioners therein, who are now the private respondents in this case, contended that the SEC, thru its hearing officer, acted without jurisdiction or with grave abuse of discretion in issuing the disputed orders on the ground that the petition in SEC Case No. 1719, although denominated as a Petition for Nullification of Transfer of Shares and of Directors' Election was in reality an action for quo warranto which is not cognizable by the Supreme Court or by the Court of First Instance (now Regional Trial Court). The Court, however, simply dismissed the petition for lack of merit in a minute resolution of 9 November 1979 without explaining the reasons on which it was predicated. It may be stated that in dismissing the petition, the Court merely resolved the point in issue, i.e., the regularity of the issuance of the questioned orders and held that the same were issued with jurisdiction and without grave abuse of discretion. It should be emphasized however that the Court in dismissing the petition did not make any ruling on the merits of the petition as to establish a controlling legal rule which had to be subsequently followed by the parties in the same case. Hence, no "law of the case" may be said to have been laid down in G.R. No. 51432. In Jarantilla vs. Court of Appeals, 13 the facts were as follows: The petitioner therein Edgar Jarantilla was charged before the City Court of Iloilo for serious physical injuries thru reckless imprudence in Criminal Case No. 47207. Petitioner was acquitted in said criminal case "on reasonable doubt". Subsequently, the therein private respondent Jose Kuan Sing filed a separate civil action for damages against the petitioner with the Court of First Instance of Iloilo, Branch IV, docketed therein as Civil Case No. 9976. Acting upon the petitioner's motion to dismiss, the courta quo denied the motion. Thereafter, petitioner filed in this Court a petition for certiorari, prohibition andmandamus, assailing the trial court's order denying his motion to dismiss, docketed herein as G.R. No. 40992. The Court dismissed the petition for lack of merit in a resolution of 23 July 1975, and denied the motion for reconsideration for the same reason in a resolution dated 28 October 1975. After trial, the court below rendered judgment in favor of the private respondent. On appeal, the Court of Appeals affirmed the decision of the lower court except as to the award of moral damages which it reduced from P25,000.00 to P18,000.00. A motion for reconsideration was denied by the Court of Appeals. Hence, petitioner filed a petition for review on certiorari with this Court docketed herein as G.R. No. 80194.

Petitioner raised a collateral issue by faulting the respondent Court of Appeals for refusing to resolve an assignment of error in his appeal therein, said respondent court holding that the main issue had been passed upon by this Court in G.R. No. L-40992. It was petitioner's position that the aforementioned two (2) resolutions of the Court in said case, the first dismissing the petition and the second denying the motion for reconsideration, did not constitute the "law of the case" which would control the subsequent proceedings in the controversy. Inresolving this collateral issue, this Court held: The "doctrine of the law of the case" has no application at the aforesaid posture of the proceedings when the two resolutions were handed down. While it may be true that G.R. No. L-40992 may have involved some of the issues which were thereafter submitted for resolution on the merits by the two lower courts, the proceedings involved there was for certiorari, prohibition and mandamus assailing an interlocutory order of the court a quo, specifically, its order denying therein defendant's motion to dismiss. This court, without rendering a specific opinion or explanation as to the legal and factual bases on which its two resolutions were predicated, simply dismissed the special civil action for lack of merit. It may very well be that such resolution was premised on the fact that the Court, at that stage and on the basis of the facts then presented, did not consider that the denial order of the court a quowas tainted with grave abuse of discretion. To repeat, no rationale for such resolutions having been expounded on the merits of that action, no law of the case may be said to have been laid down in G.R. No. L-40992 to justify the respondent court's refusal to consider petitioner's claim that his former acquittal barred the separate action. The herein petitioners also contend that the issuance of the questioned SEC en banc resolution constitutes a pre-judgment of the case because the private respondents may "now proceed to perform their functions as officers" although their election or appointment is still in issue and that it disturbed the status quo. The contention is untenable. The SEC en banc did not pre-judge the case when it issued the questioned order. On the contrary, it was the Hearing Officer in SEC Case No. 1719 who had pre-judged the case when he issued the writ of preliminary injunction. For, in issuing the said writ, the Hearing Officer assumed as true the allegations contained in the petitioner's petition, and, in effect, disposed of the main case without trial, thereby shifting the burden of proof to the private respondents. In Ortigas & Company Limited Partnership vs. Court of appeals, 14 this Court held: In general, courts should avoid issuing a writ of preliminary injunction which in effect disposes of the main case without trial. This is precisely the effect of the writ of preliminary mandatory injunction issued by the respondent appellate court. Having granted through a writ of preliminary mandatory injunction the main prayer of the complaint, there is practically nothing left for the trial court to try except the plaintiffs' claim for damages. Again, in Government Service Insurance System vs. Hon. Alfredo C. Florendo, etc., et al., 15 the Court held: . . . Equally pertinent is the rule that courts should avoid issuing a writ of preliminary injunction which, in effect, would dispose of the main case without trial (or would result in) 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 petitioner is inceptively duty bound to prove . . . The issuance of the SEC en banc questioned order did not also disturb the status quo, which is the last actual peaceable uncontested status quo which preceded the controversy. 16 The status quo before the petitioners filed their petition for nullification of transfer of shares and of directors' election was that Ezekiel Toeg, Teodoro Bundang and Jacob Isaac were in possession of the stock certificates in dispute endorsed in blank by petitionerNordy Diploma; that a stockholders' meeting had been held electing the directors of Woodworks, Inc.; and that a directors' meeting had been held electing the officers of the Id corporation. The sole object of a preliminary injunction is to preserve the status quo until the

merits of the main case can be heard. 17 In issuing the writ of preliminary injunction, the Hearing Officer in SEC Case No. 1719 did not maintain the status quo but restored the corporate situation preceding the status quo, i.e., the corporate situation before the stockholders' meeting held on 22 January 1979. The lifting by the SEC en banc of the writ of preliminary injunction merely restored the status quo. The other issues raised by the petitioners are the main issues in SEC Case No. 1719; hence, the same should be resolved in said case. WHEREFORE, the present petition is DISMISSED. SO ORDERED. Melencio-Herrera (Chairman), Sarmiento and Regalado, JJ., concur. Paras, J., is on leave.

EN BANC [G.R. No. 69863-65 : December 10, 1990.] 192 SCRA 183 LINO BROCKA, BENJAMIN CERVANTES, COSME GARCIA, RODOLFO SANTOS, VALENTINO SALIPSIP, RICARDO VEGA, ERIC MARIANO, JOSE EMMANUEL OYALES, RONNIE MATTA, ALFREDO VIAJE, RUBEN EUGENIO, REYNALDO ORTIZ, ORLANDO ORTIZ, NOEL REYES, EDUARDO IMPERIAL, NESTOR SARMIENTO, FRANCO PALISOC, VIRGILIO DE GUZMAN, ALBERTO REYES, JESSIE PINILI, ROMULO AUGUIS, DOMINADOR RESURRECION III, RONNIE LAYGO, ROSAURO ROQUE, CLARENCE SORIANO, OCTAVO DEPAWA, CARLITO LA TORRE, SEVERNO ILANO, JR., DOMINGO CAJIPE, ALAN ALEGRE, RAMON MARTINEZ, MA. GILDA HERNANDEZ, EDNA P. VILLANUEVA, DOLLY S. CANU, MELQUIADES C. ATIENZA, ELIGIO P. VERA CRUZ, ROGER C. BAGAN, ABUNDIO M. CALISTE, Petitioners, vs. JUAN PONCE ENRILE, MAJ. GENERAL FIDEL V. RAMOS, BRIG. GENERAL PEDRO BALBANERO, COL. ABAD, COL. DAWIS, SERGIO APOSTOL, P/LT, RODOLFO M. GARCIA and JUDGE RICARDO TENSUAN, Respondents.

DECISION

MEDIALDEA, J.:

This petition was originally filed on February 13, 1985 to secure the release of petitioners on habeas corpus and to permanently enjoin the City Fiscal of Quezon City from investigating charges of "Inciting to Sedition" against petitioners Lino Brocka, Benjamin Cervantes, Cosme Garcia and Rodolfo Santos, (hereafter Brocka, et al.). On learning that the corresponding informations for this offense has been filed by the City Fiscal against them on February 11, 1985, a supplemental petition was filed on February 19, 1985 (p. 51, Rollo) to implead the Presiding Judge, 1 and to enjoin the prosecution of Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 (p. 349, Rollo) and the issuance of warrants for their arrests, including their arraignment. Since then President Ferdinand E. Marcos had ordered the provisional release of Brocka, et al., the issue on habeas corpus has become moot and academic (p. 396, Rollo). We shall thus focus on the question of whether or not the prosecution of the criminal cases for Inciting to Sedition may lawfully be enjoined.:-cralaw Petitioners were arrested on January 28, 1985 by elements of the Northern Police District following the forcible and violent dispersal of a demonstration held in sympathy with the jeepney strike called by the Alliance of Concerned Transport Organization (ACTO). Thereafter, they were charged with Illegal Assembly in Criminal Cases Nos. 37783, 37787 and 37788 with Branch 108, Regional Trial Court, NCJR, Quezon City. 2 Except for Brocka, et al. who were charged as leaders of the offense of Illegal Assembly and for whom no bail was recommended, the other petitioners were released on bail of P3,000.00 each. Brocka, et al.'s provisional release was ordered only upon an urgent petition for bail for which daily hearings from February 1-7, 1985 were held. However, despite service of the order of release on February 9, 1985, Brocka, et al. remained in detention, respondents having invoked a Preventive Detention Action (PDA) allegedly issued against them on January 28, 1985 (p. 6, Rollo). Neither the original, duplicate original nor certified true copy of the PDA was ever shown to them (p. 367, Rollo). Brocka, et al. were subsequently charged on February 11, 1985 with Inciting to Sedition, docketed as Criminal Cases Nos. Q-38023, Q-38024 and Q-38025 (p. 349, Rollo), without prior notice to their counsel (p. 7, Rollo). The original informations filed recommended no bail (p. 349, Rollo). The circumstances surrounding the hasty filing of this second offense are cited by Brocka, et al. (quoting from a separate petition filed on their behalf in G.R. Nos. 69848-50 entitled "Sedfrey A. Ordoez vs. Col. Julian Arzaga, et al."), as follows: "x x x "6. The sham' character of the inquest examination concocted by all respondents is starkly bizarre when we consider that as early as 10:30 A.M. today, February 11, 1985, Benjamin Cervantes was able to contact undersigned petitioner by phone informing counsel that said Benjamin Cervantes and the 4 other persons who are the subjects of this petition will be brought before the Quezon City Fiscal at 2:30 for undisclosed reasons: subsequently, another phone call was received by petitioning counsel informing him that the appearance of Benjamin Cervantes et al. was to be at 2:00 P.M. When petitioning counsel arrived in the office of Assistant City Fiscal Arturo Tugonon, the complainants' affidavits had not yet been received by any of the panel of three assistant city fiscals, although the five persons under detention were already in the office of said assistant fiscal as early as 2:00 P.M. It was only at 3:00 when a representative of the military arrived bringing with him alleged statements of complainants against Lino Broka (sic) et al. for alleged inciting to sedition, whereupon undersigned counsel asked respondent Colonel Agapito Abad 'who ordered the detained persons to be brought to the office of Assistant Fiscal Arturo Tugonon since there were no charges on file;' and said Colonel Agapito Abad said aloud: 'I only received a telephone call from Colonel Arzaga about 11:00 A.M. to bring the detained persons today I am only the custodian.' At 3:15, petitioning counsel inquired from the Records Custodian when the charges against Lino Broka (sic) had been officially received and he was informed that the said charges were never coursed through the Records Office.

"7. Under the facts narrated above, respondents have conspired to use the strong arm of the law and hatched the nefarious scheme to deprive Lino Broka (sic) et al. the right to bail because the utterances allegedly constituting inciting to sedition under Article 142 of the Revised Penal Code are, except for varying nuances, almost verbatim the same utterances which are the subject of Criminal Cases No. 37783, 37787 and 37788 and for which said detained persons are entitled to be released on bail as a matter of constitutional right. Among the utterances allegedly made by the accused and which the respondents claimed to be violative of Article 142 of the Revised Penal Code are: 'Makiisa sa mga drivers, "Makiisa sa aming layunin, "Digmaang bayan ang sagot sa kahirapan,' Itigil ang pakikialam ng imperyalismo sa Pilipinas,' 'Rollback ng presyo ng langis sa 95 Centavos.' (See Annex B) "8. That when petitioning counsel and other members of the defense panel requested that they be given 7 days within which said counsel may confer with their clients the detained persons named above, the panel of assistant fiscals demanded that said detained persons should sign a 'waiver' of their rights under Article 125 of the Revised Penal Code as a condition for the grant of said request, which is a harassing requirement considering that Lino Broka (sic) et al. were already under the detention, albeit illegally, and they could not have waived the right under Rule 125 which they did not enjoy at the time the ruling was made by the panel of assistant city fiscals." (pp. 4-6, Rollo in G.R. 69848-50). They were released provisionally on February 14, 1985, on orders of then President F. E. Marcos. The circumstances of their release are narrated in Our resolution dated January 26, 1985, as quoted in the Solicitor General's Manifestation as follows: "G.R. Nos. 69848-50 (Sedfrey A. Ordoez, Petitioner, vs. Col. Julian Arzaga, et al., Respondents). Petitioner Sedfrey A. Ordoez filed this petition for habeas corpus in behalf of Lino Brocka, Benjamin Cervantes, Cosme Garcia, Alexander Luzano, and Rodolfo Santos, who were all detained under a Preventive Detention Action (PDA) issued by then President Ferdinand E. Marcos on January 28, 1985. They were charged in three separate informations of the crime of illegal assembly under Art. 146, paragraph 3 of the Revised Penal Code, as amended by PD 1834. On February 7, 1985, the Honorable Miriam Defensor Santiago, Regional Trial Judge of Quezon City, issued a resolution in the above criminal cases, directing the release of the five accused on bail of P6,000.00 for each of them, and from which resolution the respondent fiscals took no appeal. Immediately thereafter, the accused filed their respective bail bonds. This notwithstanding, they continued to be held in detention by order of the respondent colonels; and on February 11, 1985, these same accused were 'reinvestigated,' this time on charges of 'inciting to sedition' ** under Art. 142 of the Revised Penal Code, following which corresponding cases were filed. The respondents complied with Our resolution requiring them, inter alia, to make a RETURN of the writ of habeas corpus. In their RETURN, it appeared that all the accused had already been released, four of them on February 15, 1985 and one February 8, 1985. The petitioner, nevertheless, argued that the petition has not become moot and academic because the accused continue to be in the custody of the law under an invalid charge of inciting to sedition." (p. 395, Rollo). Hence, this petition. Brocka, et al. contend that respondents' manifest bad faith and/or harassment are sufficient bases for enjoining their criminal prosecution, aside from the fact that the second offense of inciting to sedition is illegal, since it is premised on one and the same act of attending and participating in the ACTO jeepney strike. They maintain that while there may be a complex crime from a single act (Art. 48, RTC), the law does not allow the splitting of a single act into two offenses and filing two informations therefor, further, that they will be placed in double jeopardy. The primary issue here is the legality of enjoining the criminal prosecution of a case, since the two other issues raised by Brocka, et al. are matters of defense against the sedition charge. We rule in favor of Brocka, et al. and enjoin their criminal prosecution for the second offense of inciting to sedition.

Indeed, the general rule is that criminal prosecution may not be restrained or stayed by injunction, preliminary or final. There are however exceptions, among which are: "a. To afford adequate protection to the constitutional rights of the accused (Hernandez vs. Albano, et al., L-19272, January 25, 1967, 19 SCRA 95); "b. When necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions (Dimayuga, et al. vs. Fernandez, 43 Phil. 304; Hernandez vs. Albano, supra; Fortun vs. Labang, et al., L-38383, May 27, 1981, 104 SCRA 607); "c. When there is a pre-judicial question which is sub judice (De Leon vs. Mabanag, 70 Phil. 202); "d. When the acts of the officer are without or in excess of authority (Planas vs. Gil, 67 Phil. 62); "e. Where the prosecution is under an invalid law, ordinance or regulation (Young vs. Rafferty, 33 Phil. 556; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 389); "f. When double jeopardy is clearly apparent (Sangalang vs. People and Avendia, 109 Phil. 1140); "g. Where the court has no jurisdiction over the offense (Lopez vs. City Judge, L-25795, October 29, 1966, 18 SCRA 616); "h. Where it is a case of persecution rather than prosecution (Rustia vs. Ocampo, CA-G.R. No. 4760, March 25, 1960); "i. Where the charges are manifestly false and motivated by the lust for vengeance (Recto vs. Castelo, 18 L.J. [1953], cited in Raoa vs. Alvendia, CA-G.R. No. 30720-R, October 8, 1962; Cf, Guingona, et al vs. City Fiscal, L-60033, April 4, 1984, 128 SCRA 577); and "j. When there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied (Salonga vs. Pao, et al., L-59524, February 18, 1985, 134 SCRA 438). "7. Preliminary injunction has been issued by the Supreme Court to prevent the threatened unlawful arrest of petitioners (Rodriguez vs. Castelo, L-6374, August 1, 1958)." (cited in Regalado, Remedial Law Compendium, p. 188, 1988 Ed.) In the petition before Us, Brocka, et al. have cited the circumstances to show that the criminal proceedings had become a case of persecution, having been undertaken by state officials in bad faith.: nad Respondents, on the other hand, had invoked a PDA in refusing Brocka, et al.'s release from detention (before their release on orders of then Pres. Marcos). This PDA was, however, issued on January 28, 1985, but was invoked only on February 9, 1985 (upon receipt of the trial court's order of release). Under the guidelines issued, PDAs shall be invoked within 24 hours (in Metro Manila) or 48 hours (outside Metro Manila). (Ilagan v. Enrile, G.R. No. 70748, October 28, 1985, 139 SCRA 349). Noteworthy also is Brocka, et al.'s claim that, despite subpoenas for its production, the prosecution merely presented a purported xerox copy of the invoked PDA (par. 4, Counter-Rejoinder, p. 367, Rollo). The foregoing circumstances were not disputed by the Solicitor General's office. In fact they found petitioner's plight "deplorable" (par. 51, Manifestation, p. 396, Rollo). The hasty filing of the second offense, premised on a spurious and inoperational PDA, certainly betrays respondent's bad faith and malicious intent to pursue criminal charges against Brocka, et al.

We have expressed Our view in the Ilagan case that "individuals against whom PDAs have been issued should be furnished with the original, and the duplicate original, and a certified true copy issued by the official having official custody of the PDA, at the time of the apprehension" (supra, p. 369). We do not begrudge the zeal that may characterize a public official's prosecution of criminal offenders. We, however, believe that this should not be a license to run roughshod over a citizen's basic constitutional lights, such as due process, or manipulate the law to suit dictatorial tendencies. We are impelled to point out a citizen's helplessness against the awesome powers of a dictatorship. Thus, while We agree with the Solicitor General's observation and/or manifestation that Brocka, et al. should have filed a motion to quash the information, We, however, believe that such a course of action would have been a futile move, considering the circumstances then prevailing. Thus, the tenacious invocation of a spurious and inoperational PDA and the sham and hasty preliminary investigation were clear signals that the prosecutors intended to keep Brocka, et al. in detention until the second offense of "Inciting to Sedition" could be facilitated and justified without need of issuing a warrant of arrest anew. As a matter of fact the corresponding informations for this second offense were hastily filed on February 11, 1985, or two days after Brocka, et al.'s release from detention was ordered by the trial judge on February 9, 1985. Constitutional rights must be upheld at all costs, for this gesture is the true sign of democracy. These may not be set aside to satisfy perceived illusory visions of national grandeur.: nad In the case of J. Salonga v. Cruz Pao, We point out: "Infinitely more important than conventional adherence to general rules of criminal procedure is respect for the citizen's right to be free not only from arbitrary arrest and punishment but also from unwarranted and vexatious prosecution . . ." (G.R. No. L-59524, February 18, 1985, 134 SCRA 438-at p. 448). We, therefore, rule that where there is manifest bad faith that accompanies the filing of criminal charges, as in the instant case where Brocka, et al. were barred from enjoying provisional release until such time that charges were filed, and where a sham preliminary investigation was hastily conducted, charges that are filed as a result should lawfully be enjoined. ACCORDINGLY, the petition is hereby GRANTED. The trial court is PERMANENTLY ENJOINED from proceeding in any manner with the cases subject of the petition. No costs. SO ORDERED. Fernan C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento, Grio-Aquino and Regalado, JJ., concur. Feliciano, J., is on leave.

Republic of the Philippines

SUPREME COURT Manila SECOND DIVISION G.R. No. L-57586 October 8, 1986 AQUILINO RIVERA, ISAMU AKASAKO and FUJIYAMA HOTEL & RESTAURANT, INC., Petitioners, vs. THE HON. ALFREDO C. FLORENDO, as Judge of the Court of First Instance of Manila (Branch XXXVI), LOURDES JUREIDINI and MILAGROS TSUCHIYA, Respondents.

PARAS, J.: chanrobles virtual law library This is a petition for certiorari and prohibition with preliminary injunction seeking the annulment of the following Orders of the then Court of First Instance of Manila, Branch XXXVI: (a) Order dated June 5, 1981 directing the issuance of a writ of preliminary mandatory injunction requiring petitioners Fujiyama Hotel & Restaurant, Inc., Isamu Akasako and Aquilino Rivera to allow respondents Lourdes Jureidini and Milagros Tsuchiya to manage the corporate property upon filing of a bond in the amount of P30,000.00 (Rollo, pp. 43-57) and (b) Order dated July 24, 1981 denying petitioners' motion for reconsideration and motion to dismiss for lack of jurisdiction but increasing the bond to P120,000.00 (Rollo, p. 81).chanroblesvirtualawlibrary chanrobles virtual law library Petitioner corporation was organized and register under Philippine laws with a capital stock of P1,000,000.00 divided into 10,000 shares of P100.00 par value each by the herein petitioner Rivera and four (4) other incorporators. Sometime thereafter petitioner Rivera increased his subscription from the original 1,250 to a total of 4899 shares (Rollo, p. 4).chanroblesvirtualawlibrary chanrobles virtual law library Subsequently, Isamu Akasako, a Japanese national and co-petitioner who is allegedly the real owner of the shares of stock in the name of petitioner Aquilino Rivera, sold 2550 shares of the same to private respondent Milagros Tsuchiya for a consideration of P440,000.00 with the assurance that Milagros Tsuchiya will be made the President and Lourdes Jureidini a director after the purchase. Aquilino Rivera who was in Japan also assured private respondents by overseas call that he will sign the stock certificates because Isamu Akasako is the real owner. However, after the sale was consummated and the consideration was paid with a receipt of payment therefor shown, Aquilino Rivera refused to make the indorsement unless he is also paid. (Rollo, pp. 51-52).chanroblesvirtualawlibrary chanrobles virtual law library It also appears that the other incorporators sold their shares to both respondent Jureidini and Tsuchiya such that both respondents became the owners of a total of 3300 shares or the majority out of 5,649 outstanding subscribed shares of the corporation (Rollo, pp. 4-5), and that there was no dispute as to the legality of the transfer of the stock certificate Exhibits "B-1" to "B-4" to Jureidini, all of which bear the signatures of the president and the secretary as required by the Corporation Law with the proper indorsements of the respective owners appearing thereon. Exhibits "B-1" to "B-4" are specifically indorsed to her while Exhibits "B-2" and "B-3" are indorsed in blank. Aquilino Rivera admitted the genuineness of an the signatures of the officers of the corporation and of an the indorsee therein. (Order dated June 5, 1981, Civil Case No. 13273, Rollo, pp. 51-53).chanroblesvirtualawlibrary chanrobles virtual law library Nonetheless, private respondents attempted several times to register their stock certificates with the corporation but the latter refused to register the same. (Ibid., Rollo, pp. 54-55). Thus, private respondents filed a special civil action for mandamus and damages with preliminary mandatory injunction and/or receivership naming herein petitioners as respondents, docketed as Special Civil Action No. 13273, "Lourdes Jureidini, et al. v. Fujiyama Hotel et al." of the Court of First Instance of Manila, Branch

XXXVI presided by respondent Judge. Petitioners' counsel Atty. Marcelino A. Bueno, upon receipt of the summons and a copy of the aforesaid petition, filed an answer thereto with denials, special and affirmative defenses and counterclaim. Thereafter, a hearing was held on the application for preliminary mandatory injunction and/or receivership, after which respondent Judge issued an order for a writ of preliminary mandatory injunction authorizing respondent Jureidini and Tsuchiya to manage the corporation's hotel and restaurant, upon the filing of a bond in the amount of P30,000.00. Then through another counsel Atty. Eriberto D. Ignacio in collaboration with their counsel of record, Atty. Marcelino A. Bueno, petitioners (respondents therein) filed a motion to dismiss the petition on the ground that respondent Judge has no jurisdiction to entertain the case, while through Atty. Bueno, they filed a motion for reconsideration of the Order granting the issuance of a writ of mandatory preliminary injunction. Private respondents filed their opposition to both motions and on July 24, 1981, respondent Judge issued an Order denying both the motion for reconsideration and the motion to dismiss the petition but increased the amount of the bond from P30,000.00 to P120,000.00 to sufficiently protect the interests of herein petitioners. (Rollo, p. 81).chanroblesvirtualawlibrary chanrobles virtual law library Hence, this petition.chanroblesvirtualawlibrary chanrobles virtual law library After filing the petition, Atty. Eriberto D. Ignacio withdrew as counsel for petitioners on August 6, 1981. Such withdrawal was confirmed by petitioner Isamu Akasako (Rollo, p. 83). On August 10, 1981 the appearance of Isaca & Espiritu Law Offices as counsel in substitution of former counsel Attys. Marcelino A. Bueno and Eriberto D. Ignacio was received by this Court. (Rollo, p. 84); all of which were noted in the resolution of the First Division of this Court dated August 17, 1981. (Rollo, p. 160).chanroblesvirtualawlibrary chanrobles virtual law library The new counsel filed a Manifestation and Motion praying that the therein attached Supplement and certified copies of the questioned orders and writs be admitted and considered as part of petitioners' original petition for certiorari and Prohibition with Preliminary injunction. (Rollo, pp. 85-131). On August 14, 1981 petitioners filed an Urgent Motion for Restraining Order and Other Provisional Injunctive Reliefs (Rollo, pp. 154-159). In the same resolution of August 17, 1981, after deliberating on the petition and supplemental to the petition, the Court Resolved: (a) to require the respondents to comment thereon (not to file a motion to dismiss within ten (10) days from notice and (b) upon petitioners' filing of an injunction bond in the amount of P30,000.00 to issue a Writ of Preliminary Injunction enjoining respondents from enforcing the writ of preliminary mandatory injunction dated June 23, 1981 issued in Civil Case No. 132673. (Rollo, p. 160). Said bond was filed on August 20, 1981 (Rollo, p. 161) and accordingly, a writ of preliminary injunction was issued by this Court on August 21, 1981 (Rollo, pp. 172173).chanroblesvirtualawlibrary chanrobles virtual law library Subsequently, petitioners filed a manifestation and urgent motion on August 28, 1981 praying that private respondent Lourdes Jureidini and her counsel Atty. Arthur Canlas be declared in contempt of court for the former's alleged defiant refusal: (a) to acknowledge receipt of the Writ of Preliminary Injunction of August 21, 1981 and (b) to comply with the said writ issued by this Court. (Rollo, pp. 174180).chanroblesvirtualawlibrary chanrobles virtual law library Comment thereon was filed by private respondents through counsel (Rollo, pp. 185-199) in compliance with the resolution of the First Division dated August 17, 1981 (Rollo, p. 160), praying for the immediate lifting of the preliminary injunction. Said comment of private respondents was noted in the resolution of October 5, 1981 (Rollo, p. 200) which also required respondents to comment on the supplement to the petition.chanroblesvirtualawlibrary chanrobles virtual law library On October 2, 1981, comment on the manifestation and urgent motion to declare Jureidini and her counsel in contempt of court was filed by counsel for private respondent (Reno, pp. 201-214) in compliance with the resolution of September 14, 1981 (Rollo, p. 181).chanroblesvirtualawlibrary chanrobles virtual law library

In the resolution of October 26, 1981 (Reno, p. 215) the Court Resolved to require petitioners to file a reply to aforesaid comment. (Rollo, p. 215).chanroblesvirtualawlibrary chanrobles virtual law library Meanwhile, supplemental comment on the supplement to the petition was filed by private respondents on October 14, 1981 (Rollo, pp. 216-222) reiterating their stand that it is the ordinary court and not the Securities and Exchange Commission (SEC) that has jurisdiction to entertain the case as the controversies did not arise from the intra-corporate relationship among the parties.chanroblesvirtualawlibrary chanrobles virtual law library On October 21, 1981, petitioner filed: (a) motion for leave to file reply to comment of respondents on the petition and supplemental petition required in the resolution of August 17, 1981 (Rollo, pp. 223-224) and (b) the attached Reply (Rollo, pp. 225-241). On November 25, 1981, petitioners filed their Reply to respondents' Comment on petitioners' manifestation and urgent motion to declare them in contempt. (Rollo, pp. 246-257).chanroblesvirtualawlibrary chanrobles virtual law library On December 7, 1981 Atty. Bobby P. Yuseco entered his appearance as collaborating counsel for petitioners (Rollo, p. 258) and filed an urgent petition for early resolution of petitioners' motion to hold private respondents in contempt and for issuance of Order clarifying Writ of Injunction dated August 21, 1981. (Rollo, pp. 259-261).chanroblesvirtualawlibrary chanrobles virtual law library In the resolution of January 18, 1982, this case and all pending incidents were set for hearing on February 3, 1982. (Rollo, p. 268).chanroblesvirtualawlibrary chanrobles virtual law library On February 1, 1982, Lesaca and Espiritu Law Offices filed a Manifestation and Motion for Leave to withdraw as counsel for petitioners. (Rollo, pp. 274-275).chanroblesvirtualawlibrary chanrobles virtual law library When this case was called for hearing on February 3, 1982, counsel for both parties appeared and argued their causes and both were required by the Court within an unextendible period of ten (10) days to file their respective memoranda in support of their positions on an pending incidents of the case at bar while the hearing on the contempt proceedings was reset for February 10, 1982 where the personal appearance of private respondent Lourdes Jureidini through her counsel was required. (Rollo, p. 279).chanroblesvirtualawlibrary chanrobles virtual law library On February 9, 1982, counsel for private respondent Jureidini filed an Urgent Motion and Manifestation that he was informed by his client that she is physically exhausted and is beset with hypertension and praying that she be excused from appearing at the hearing set for February 10, 1982, that the hearing be cancelled and the contempt incident be considered submitted for decision on the basis of pleadings previously filed. (Rollo, pp. 280-282).chanroblesvirtualawlibrary chanrobles virtual law library On the same date, February 9, 1982, counsel for petitioners filed his Memorandum in support of his oral argument at the hearing of February 3, 1982, (Rollo, pp. 283-287) while a supplement thereto was filed on February 12, 1982. (Rollo, pp. 291-294).chanroblesvirtualawlibrary chanrobles virtual law library At the hearing of February 10, 1982, private respondent Lourdes Jureidini and her counsel failed to appear. Accordingly the Court Resolved: (a) to IMPOSE on said counsel Atty. Canlas a fine of P200.00 or to suffer imprisonment if said fine is not paid; (b) to RESET the hearing on the contempt incidents on March 3, 1982 and (c) to REQUIRE the presence of Atty. Canlas and respondent Lourdes Jureidini and of complainants Attys. Bibiano P. Lasaca, Rodolfo A. Espiritu and Renato T. Paqui. (Resolution of February 10, 1982, Rollo, p. 290).chanroblesvirtualawlibrary chanrobles virtual law library On February 15, 1982, private respondents file their memorandum in compliance with the resolution of this Court of February 3, 1982 while petitioners on February 25, 1982 filed their reply thereto.chanroblesvirtualawlibrary chanrobles virtual law library

At the hearing of March 3, 1982, both counsel as well as private respondent Lourdes Jureidini, Attys. Bibiano P. Lesaca, Rodolfo A. Espiritu and Renato R. Paguio appeared. Atty. Canlas, Lourdes Jureidini, Atty. Lesaca and a representative of the petitioners were interpellated by the Court. Thereafter, the incident was declared submitted for resolution. (Resolution of March 3, 1982, Rollo, p. 316).chanroblesvirtualawlibrary chanrobles virtual law library On March 5, 1982, counsel for private respondents filed his compliance with the resolution of February 10, 1982 enclosing a check payable to this Court in the amount of P200.00 in payment of the fine imposed with motion for reconsideration explaining why he should not be declared in contempt and praying that the aforesaid resolution of February 10, 1982 be set aside, (Rollo, pp. 312-314). However, in the resolution of March 10, 1982, (Rollo, p. 317) the Court acting on the compliance of Atty. Arthur Canlas with motion for reconsideration, denied the motion and required the Chief of the Docket Division to return to Atty. Canlas the check in the amount of P200.00 it being an out of town check, and Atty. Canlas to pay the fine in cash, and to show cause why he should not be disciplinary dealt with or held in contempt for wilful delay in paying the fine by mail through an out of town check contrary to his manifestation at the hearing that he had promptly paid the fine, both within forty eight hours from notice.chanroblesvirtualawlibrary chanrobles virtual law library Meanwhile, counsel for petitioners filed on April 6, 1982 an Urgent Petition for Permission to Implement Injunction Writ issued on August 21, 1981 (Rollo, pp. 323-325) which was granted in the resolution of May 26, 1982 (Rollo, p. 313). In the same resolution the Court ordered Lourdes Jureidini and Milagros Tsuchiya to strictly and immediately comply with the Court's aforesaid writ of preliminary injunction; indicated that it would resolve the pending incident for contempt against private respondent Lourdes Jureidini when the Court decides the case on the merits; and gave the parties thirty (30) days from notice within which to submit simultaneously their respective memoranda on the merits of the case.chanroblesvirtualawlibrary chanrobles virtual law library On May 31, 1982, counsel for private respondent Atty. Canlas filed in compliance with the resolution of March 10, 1982, his explanation and manifestation why he should not be disciplinarily dealt with and held in contempt of Court (Rollo, pp. 316-318). In the resolution of June 2, 1982, the Court Resolved to set aside and lift the Order of Atty. Canlas' arrest and commitment it had issued on March 31, 1982 but found the explanation and manifestation of Atty. Canlas dated May 29, 1982 unsatisfactory. In view thereof, he was reprimanded for negligence and undue delay in complying with the Court's resolution. (Rollo, p. 319).chanroblesvirtualawlibrary chanrobles virtual law library On June 18, 1982, counsel for petitioners allegedly for purposes of clarification as to the laws involved in the matter of contempt of Lourdes Jureidini, filed a pleading entitled "Re Incident of Contempt against Lourdes Jureidini." (Rollo, pp. 320-326) which was noted by the Court in the resolution of July 7, 1982. (Rollo, p. 328).chanroblesvirtualawlibrary chanrobles virtual law library Counsel for private respondents manifested (Rollo, p. 329), on July 12, 1982 that they are adopting the memorandum submitted in the preliminary injunction incident as their memorandum in the main case. Said manifestation was noted in the resolution of July 26, 1982. (Rollo, p. 331). Counsel for petitioners manifested (Rollo, p. 333) that they are adopting their memorandum in support of argument last February 3, 1982 as their combined memoranda on the merits of the case. Said manifestation was noted in the resolution of September 15, 1982. (Rollo, p. 334). In the resolution of November 29, 1982, this case was transferred to the Second Division. (Rollo, p. 336).chanroblesvirtualawlibrary chanrobles virtual law library In their petition and supplemental petition, petitioners raised the following issues: I chanrobles virtual law library THE RESPONDENT COURT OF FIRST INSTANCE HAS NO JURISDICTION OVER THE PETITION FOR mandamus AND RECEIVERSHIP "AS WELL AS IN PLACING THE CORPORATE ASSETS

UNDER PROVISIONAL RECEIVERSHIP IN THE GUISE OF A WRIT OF PRELIMINARY MANDATORY INJUNCTION.chanroblesvirtualawlibrary chanrobles virtual law library II chanrobles virtual law library EVEN FALSELY ASSUMING THAT THE RESPONDENT COURT HAD JURISDICTION, THE PRIVATE RESPONDENTS' PRINCIPAL ACTION OF mandamus IS AN IMPROPER COURSE OF ACTION.chanroblesvirtualawlibrary chanrobles virtual law library III chanrobles virtual law library ASSUMING ARGUENDO THAT WHAT THE RESPONDENT COURT FOUND IS TRUE, NAMELY THAT PRIVATE RESPONDENTS "ARE OUTSIDERS" AND "NOT YET STOCKHOLDERS," THUS, HAVING NO PERSONALLY AT ALL, THEN PROVISIONAL RECEIVERSHIP, ALBEIT CLOTHED AS A "WRIT OF PRELIMINARY MANDATORY INJUNCTION" WAS ILLEGALLY ISSUED DE HORS ITS JURISDICTION.chanroblesvirtualawlibrary chanrobles virtual law library IV chanrobles virtual law library ASSUMING ARGUENDO THAT THE RESPONDENT COURT HAD JURISDICTION OVER BOTH THE PETITION FOR mandamus AS WELL AS THE PROVISIONAL RECEIVERSHIP STILL THE RESPONDENT COURT ACTED IN EXCESS OF ITS JURISDICTION OR IN GRAVE ABUSE OF ITS DISCRETION TO GRANT RECEIVERSHIP OVER THE MANAGEMENT OF THE CORPORATE BUSINESS AND ASSETS WHICH NEVER WAS NOR IS A SUBJECT MATTER OF LITIGATION.chanroblesvirtualawlibrary chanrobles virtual law library V chanrobles virtual law library EVEN GRANTING FOR THE SAKE OF AGRGUMENT THAT THE RESPONDENT COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF THE CASE; NONETHELESS IT WAS IN GRAVE ABUSE OF ITS DISCRETION TO UNILATERALLY GRANT TO A "PARTY-IN-LITIGATION," THE PRIVATE RESPONDENTS HEREIN, THE MANAGEMENT OF THE CORPORATE BUSINESS. (Petition and Supplemental Petition; Rollo, pp. 2-18; 88-131). I chanrobles virtual law library The crucial issue in this case is whether it is the regular court or the Securities and Exchange Commission that has jurisdiction over the present controversy.chanroblesvirtualawlibrary chanrobles virtual law library Presidential Decree No. 902-A provides: Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving chanrobles virtual law library (a) ...chanroblesvirtualawlibrary chanrobles virtual law library (b) Controversies arising out of intra-corporate or partnership relations and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively and between such corporations,

partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity. It has already been settled that an intracorporate controversy would call for the jurisdiction of the Securities and Exchange Commission. (Philippine School of Business Administration v. Lanao, 127 SCRA 781, February 24, 1984). On the other hand, an intra-corporate controversy has been defined as "one which arises between a stockholder and the corporate. There is no distinction, qualification, nor any exemption whatsoever." (Philex Mining Corporation v. Reyes, 118 SCRA 605, November 19, 1982). This Court has also ruled that cases of private respondents who are not shareholders of the corporation, cannot be a "controversy arising out of intracorporate or partnership relations between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association, of which they are stockholders, members or associates, respectively." (Sunset View Condominium Corporation v. Campos, Jr., 104 SCRA 303, April 27, 1981).chanroblesvirtualawlibrary chanrobles virtual law library Under Batas Pambansa Blg. 68 otherwise known as "The Corporation Code of the Philippines," shares of stock are transferred as follows: SEC. 63. Certificate of stock and transfer of shares. - The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in- fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the book of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred.chanroblesvirtualawlibrary chanrobles virtual law library xxx xxx xxx As confirmed by this Court, "shares of stock may be transferred by delivery to the transferee of the certificate properly indorsed. 'Title may be vested in the transferee by delivery of the certificate with a written assignment or indorsement thereof ' (18 C.J. S. 928). There should be compliance with the mode of transfer prescribed by law (18 C.J.S. 930)' " (Nava v. Peers Marketing Corp. 74 SCRA 65, 69, Nov. 25, 1976) chanrobles virtual law library As the bone of contention in this case, is the refusal of petitioner Rivera to indorse the shares of stock in question and the refusal of the Corporation to register private respondents' shares in its books, there is merit in the findings of the lower court that the present controversy is not an intracorporate controversy; private respondents are not yet stockholders; they are only seeking to be registered as stockholders because of an alleged sale of shares of stock to them. Therefore, as the petition is filed by outsiders not yet members of the corporation, jurisdiction properly belongs to the regular courts.chanroblesvirtualawlibrary chanrobles virtual law library II chanrobles virtual law library On the other hand, there is merit in petitioners' contention that private respondents' principal action of mandamus is an improper course of action.chanroblesvirtualawlibrary chanrobles virtual law library It is evident that mandamus wig not lie in the instant case where the shares of stock in question are not even indorsed by the registered owner Rivera who is specifically resisting the registration thereof in the books of the corporation. Under the above ruling, even the shares of stock which were purchased by private respondents from the other incorporators cannot also be the subject of mandamus on the strength of mere indorsement of the supposed owners of said shares in the absence of express instructions from

them. The rights of the parties will have to be threshed out in an ordinary action.chanroblesvirtualawlibrary chanrobles virtual law library III-V chanrobles virtual law library Petitioners insist that what was issued was a provisional receivership, while private respondents maintain that the trial court issued a Writ of Preliminary Mandatory Injunction. Be that as it may, it appears obvious that from the abovementioned rulings of this Court, petitioners' contention that respondent Judge in the issuance thereof committed acts of grave abuse of discretion, is well taken.chanroblesvirtualawlibrary chanrobles virtual law library In the Order dated June 5, 1981, in Civil Case No. 132673, the basis of aforesaid Writ was as follows: Finally, the Court, after assessing the evidence, finds that the issuance of a preliminary mandatory injunction is proper. Respondents Isamu Akasako and Aquilino Rivera, thru their simulated relationship, have succeeded for two years since 1979 to deprive the petitioners to participate in the profit and management of the corporation of which they are the majority stockholders considering that the stocks certificates appearing in the name of Aquilino Rivera (Exh. "8") is 55% to 75% of the total stocks of the corporation by Isamu Akasako would only prolong the injustice committed against the petitioners and the damages they would suffer would be irreparable. The Court is aware that preliminary mandatory injunction is the exception rather than the rule, but according to the Code Commission, in its report on page 98, "the writ of preliminary mandatory injunction is called for by the fact that there are at present prolonged litigation between owner and usurper and the former is deprived of his possession even when he has an immediate right thereto." In the instant case, the right of the petitioners is clear and unmistakable on the law and the facts and there exists an urgent and paramount necessity for the issuing of the writ in order to prevent extreme or rather serious damage which ensues from withholding it. (43 C.J.S. 413) chanrobles virtual law library WHEREFORE, in view of the foregoing circumstances, let a writ of preliminary mandatory injunction issue requiring respondents to allow petitioners to manage the corporate property known as the Fujiyama Hotel & Restauarant, Inc. upon petitioners' filing of a bond in the amount of P30,000.00. A mandatory injunction is granted only on a showing (a) that the invasion of the right is material and substantial; (b) the right of complainant is clear and unmistakable; and (c) there is an urgent and permanent necessity for the writ to prevent serious damage. (Pelejo v. Court of Appeals, 117 SCRA 668, Oct. 18, 1982).chanroblesvirtualawlibrary chanrobles virtual law library A mandatory injunction which commands the performance of some specific act is regarded as of a more serious nature than a mere prohibitive injunction, the latter being intended generally to maintain the status quo only. While our courts, being both of law and equity, have jurisdiction to issue a mandatory writ, it has always been held that its issuance would be justified only in clear cases; that it is generally improper to issue it before final hearing because it tends to do more than maintain the status quo; that it should be issued only where there is a willful and unlawful invasion of plaintiff's right and that the latter's case is one free from doubt and dispute. (National Marketing v. Cloribel, 22 SCRA 1038, March 13, 1968).chanroblesvirtualawlibrary chanrobles virtual law library Respondent court in the instant case violated the fundamental rule of injunctions that a mandatory injunction will not issue in favor of a party whose rights are not clear and free of doubt or as yet undetermined. (Namarco v. Cloribel, 22 SCRA 1038-1039, March 13, 1968). It will be recalled that the disputed shares of stock were purchased not from the registered owner but from a Japanese national who allegedly was the real owner thereof. It was also alleged that the registered owner was only a dummy of Akasako. it is also true that the trial court has already made findings to that effect at the hearing for the issuance of the Order of June 5, 1981. Nonetheless, these are contentious issues that should properly be ventilated at the trial on the merits. As correctly stated in petitioners' motion for

reconsideration, the Order of the trial court is in effect a judgment on the merits, declaring expressly or impliedly that petitioners are stockholders of the Corporation at the hearing of only the incident for the issuance of a Writ of Preliminary Injunction. On the other hand if the Order amounts to a judgment on the merits, the lower court should first rule on what private respondents seek, the registration of their shareholdings in the books of the corporation and the issuance of new stock certificates. It is only thereafter that the subsequent act of management may be ordered and the period of finality of such a judgment should be in accordance with the Rules of Court, giving the respondents the right to an appeal or review and not be immediately executory as the Writ of Preliminary Mandatory Injunction would infer. (Rollo, p. 65).chanroblesvirtualawlibrary chanrobles virtual law library Another fundamental rule which appears to have been violated in the case at bar is that no advantage may be given to one to the prejudice of the other, a court should not by means of a preliminary injunction transfer the property in litigation from the possession of one party to another where the legal title is in dispute and the party having possession asserts ownership thereto. (Rodulfo v. Alonso, 76 Phil. 225), February 28, 1946). Similarly, the primary purpose of an injunction is to preserve the status quo, that is the last actual peaceable uncontested status which preceded the controversy. In the instant case, petitioner Rivera is the registered majority and controlling stockholder of the corporation before the ensuing events transpired. By the issuance of the Writ in question he appears to have been deprived of his rights as stockholder thereof apart from his status as Chairman of the Board and President of the corporation, with Akasako as the Manager of the two restaurants in this case; the same being the last uncontested status which preceded the controversy. (Rollo, p. 127).chanroblesvirtualawlibrary chanrobles virtual law library On the contempt incident involving private respondent Lourdes Jureidini, a Manifestation and Urgent Motion was filed by petitioners to declare her in contempt of Court for allegedly refusing to acknowledge receipt of the Writ of Preliminary Injunction issued by this Court and for allegedly refusing to comply therewith. Attributed to her were the following statements: "I will not obey that ... Yes, I am higher than the Supreme Court ... I will obey only what my lawyer tells me." chanrobles virtual law library In her explanation however, filed through her counsel she denied having uttered the statements alluded to her, the truth of the matter being that she was alone in the restaurant when this Court's process server, accompanied by petitioners' lawyers, approached her and demanded that she vacate the premises and surrender the management of the Restaurant. Fazed by the unusual display of lawyers she requested that she be given time to confer with her counsel Said request allegedly precipitated the remark from Petitioners' counsel that neither respondent herself, nor her counsel can be higher than the Supreme Court and that any conference seeking to clarify the effect of the Writ of Preliminary Injunction would be futile. (Rollo, pp. 174-175).chanroblesvirtualawlibrary chanrobles virtual law library It was likewise explained that respondent Jureidini did not sign and acknowledge receipt of the Writ because it was not addressed to her but to the lower court and to her counsel.chanroblesvirtualawlibrary chanrobles virtual law library Respondent's counsel says that the incident was concocted and devised by the petitioners and their counsel to serve no salutary purpose but to scare and harass respondent Jureidini. He also stated that "it is equally improper, at least in practice, for lawyers to accompany officers of the Court in serving or otherwise executing processes of said court as to create a seeming suspicion to the public that lawyers are not involved only professionally in the case they handle but signify their personal interests as well." (Rollo, pp. 208-209).chanroblesvirtualawlibrary chanrobles virtual law library When this contempt incident was heard on March 3, 1982, Atty. Arthur A. Canlas, counsel for private respondent Lourdes Jureidini, Jureidini herself, Atty. Bibiano P. Lesaca a representative of the petitioners were interpellated by the Court. Thereafter, the incident was declared submitted for resolution. (Resolution of March 3, 1982; Rollo, p. 316).chanroblesvirtualawlibrary chanrobles virtual law library

Thereafter, counsel for petitioner filed a pleading "The Incident of Contempt of Lourdes Jureidini" in the form of a summation of the incident and reiteration of petitioners' charges of contempt.chanroblesvirtualawlibrary chanrobles virtual law library Counsel for petitioner invokes the provisions of: Section 3, Rule 71 on Indirect Contempt and par. (b) thereof, on Disobedience of or Resistance to a Lawful Writ, Process, Order, Judgement or Command of a Court; or Injunction granted by a Court or Judge ... ; (2) Section 6, Rule 71 regarding punishment or penalty thereof and (3) Section 5, Rule 135, par. (e) to compel obedience to its judgments, orders and processes, and to the lawful orders of a judge out of Court, in a case pending therein.chanroblesvirtualawlibrary chanrobles virtual law library On the incident itself, petitioners' counsel stressed that present when the writ was served were attorneys for petitioners Bibiano P. Lesaca, and Renato P. Paguio in the company of petitioners Isamu Akasako, Akasako's assistants Furnio, Fujihara and Isamu Tajewakai and this Court's process server, before whose presence the alleged contemptuous acts were committed.chanroblesvirtualawlibrary chanrobles virtual law library Counsel for petitioners also reminded the Court that the first summons of the Court were answered only by counsel for private respondent Jureidini while the latter feigned sickness without a medical certificate. The hearing for the contempt charge was reset but neither counsel for private respondent nor the latter appeared for which non-appearance Atty. Canlas was fined P200.00 for contempt when finally both counsel and client appeared on the third day, the hearing was set.chanroblesvirtualawlibrary chanrobles virtual law library At that hearing, counsel for petitioners narrated that Attys. Lesaca and Paguio and two Japanese nationals testified in unison that Lourdes Jureidini not only disregarded the writ but distinctly uttered the complained of statements.chanroblesvirtualawlibrary chanrobles virtual law library Petitioners' counsel laid emphasis on the fact that Lourdes Jureidini is a graduate of nursing, who speaks in straight polished English, capable of understanding the Writ of Mandatory Injunction of the Respondent Court served on petitioners by herself and a Deputy Sheriff of Manila, but incredibly unable to understand the Writ issued by the Supreme Court. She was assessed as "overbearing to the point of insolence" and capable of uttering "I am higher than the Supreme Court." chanrobles virtual law library There is no question that disobedience or resistance to a lawful writ, process, order, judgment or command of a court, or injunction granted by a court or judge, more particularly in this case, the Supreme Court, constitutes Indirect Contempt punishable under Rule 71 of the Rules of Court. (Rule 71, Section 3(b) and Section 6).chanroblesvirtualawlibrary chanrobles virtual law library It has been held that contempt of court is a defiance of the authority, justice or dignity of the court, such conduct as tends to bring the authority and administration of the law into disrespect or to interfere with or prejudice parties litigant or their witnesses during litigation. It is defined as a disobedience to the court by setting up an opposition to its authority justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders but such conduct as tends to bring the authority of the court and the administration of law into disrepute or in some manner to impede the due administration of justice (Halili v. Court of Industrial Relations, 136 SCRA 135, April 30, 1985).chanroblesvirtualawlibrary chanrobles virtual law library However, it is also well settled that "the power to punish for contempt of court should be exercised on the preservative and not on the vindictive principle. Only occasionally should the court invoke its inherent power in order to retain that respect without which the administration of justice must falter or fail." (Villavicencio v. Lukban, 39 Phil. 778 [1919]; Gamboa v. Teodoro, et al., 91 Phil. 274 [1952]; Sulit v. Tiangco, 115 SCRA 207 [1982]; Lipata v. Tutaan, 124 SCRA 880 [1983]). "Only in cases of clear and contumacious refusal to obey should the power be exercised. A bona fidemisunderstanding of the terms

of the order or of the procedural rules should not immediately cause the institution of contempt proceedings." "Such power 'being drastic and extra-ordinary in its nature ... should not be resorted to ... unless necessary in the interest of justice.' " (Gamboa v. Teodoro, et al., supra).chanroblesvirtualawlibrary chanrobles virtual law library In the case at bar, although private respondent Jureidini did not immediately comply with the Writ of Injunction issued by this Court, it appears reasonable on her part to request that she be allowed to confer with her lawyer first before she makes any move of her own. It is likewise reasonable for counsel for private respondent to request that he be given time to file a motion for clarification with the Supreme Court.chanroblesvirtualawlibrary chanrobles virtual law library It will also be noted that the testimonies produced at the hearing to establish the fact that she had uttered the alleged contemptuous statements alluded to her were those of Attys. Lesaca and Paguio and two Japanese nationals, a one-sided version for the petitioners.chanroblesvirtualawlibrary chanrobles virtual law library It appears to Us that the version of counsel for private respondent is more in accord with human experience: Jureidini who was alone in the Restaurant was fazed by the unusual display of might and by the presence of lawyers demanding that she vacate premises and surrender the management of the Restaurant (Rollo, p. 204), this is more believable than the version of counsel for petitioners who summed her up as a person "overbearing to the point of insolence" and capable of uttering" I am higher than the Supreme Court." It would therefore be more reasonable to believe that what she uttered in that situation where she felt threatened, was more in self-defense and not an open defiance of the Supreme Court.chanroblesvirtualawlibrary chanrobles virtual law library Jureidini cannot also be faulted for finding it difficult to understand the writ issued against her by the Supreme Court as she believed that not only have she and her correspondent the legal right to manage the restaurant but the equitable right as well, having been placed in possession of the corporate property only after posting a bond of P120,000.00. (Rollo, pp. 197-198).chanroblesvirtualawlibrary chanrobles virtual law library In connection with this incident, Jureidini through her counsel filed her comment on October 2, 1981 (Rollo, p. 201) contrary to the allegation of petitioners' counsel that it was only Atty. Canlas who filed his comment.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE, the assailed orders of respondent Judge are SET ASIDE; the complaint (special civil action for mandamus with damages, etc.) should ordinarily be dismissed without prejudice to the filing of the proper action; but as all parties are already duly represented, We hereby consider the case as an ordinary civil action for specific performance, and the case is therefore remanded to the lower court for trial on the merits; the charge of contempt against respondent Jureidini is DISMISSED but the order of Our Court restraining respondent from taking over the management of the restaurant remains until after this case is decided.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED. Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.

FIRST DIVISION [ G.R. No. 102998. July 5, 1996 BA FINANCE CORPORATION, petitioner v. HON. COURT OF APPEALS and ROBERTO M. REYES, Respondent. DECISION VITUG, J.: The case at bar is a suit for replevin and damages. The petition for review on certiorari assails the decision of the Court of Appeals 1 in CA- G.R. CV No. 23605 affirming that of the Regional Trial Court of Manila, Branch XX, 2 which has disposed of its Civil Case No. 87-42270 in this wise: "WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is hereby dismissed without prejudice, for failure to prosecute. Plaintiff having failed to show the liability of defendant John Doe in the person of Roberto M. Reyes, the case against the latter should likewise be dismissed. Moreover, plaintiff is hereby directed to return the vehicle seized by virtue of the order of seizure issued by this Court with all its accessories to the said Roberto M. Reyes." 3 The decisions of both the appellate court and the court a quo are based on a like finding of the facts hereinafter briefly narrated. The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory note 4 binding themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly installments commencing 01 July 1980. To secure payment, the Manahan spouses executed a deed of chattel mortgage 5 over a motor vehicle, a Ford Cortina 1.6 GL, with motor and serial number CUBFWE-801010. Carmasters later assigned 6 the promissory note and the chattel mortgage to petitioner BA Finance Corporation with the conformity of the Manahans. When the latter failed to pay the due installments, petitioner sent demand letters. The demands not having been heeded, Petitioner, on 02 October 1987, filed a complaint for replevin with damages against the spouses, as well as against a John Doe, praying for the recovery of the vehicle with an alternative prayer for the payment of a sum of money should the vehicle not be returned. Upon petitioner's motion and the filing of a bond in the amount of P169,161.00,

the lower court issued a writ of replevin. The court, however, cautioned petitioner that should summons be not served on the defendants within thirty (30) days from the writ's issuance, the case would be dismissed for failure to prosecute. 7 The warning was based on what the court perceived to be the deplorable practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which they would so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged chattels." 8 The service of summons upon the spouses Manahan was caused to be served by petitioner at No. 35 Lantana St., Cubao, Quezon City. The original of the summons had the name and the signature of private respondent Roberto M. Reyes indicating that he received, on 14 October 1987, a copy of the summons and the complaint. 9 Forthwith, Petitioner, through its Legal Assistant, Danilo E. Solano, issued a certification to the effect that it had received from Orson R. Santiago, the deputy sheriff of the Regional Trial Court of Manila, Branch 20, the Ford Cortina seized from private respondent Roberto M. Reyes, the John Doe referred to in the complaint, 10 in Sorsogon, Sorsogon. 11 On 20 October 1987, the lower court came out with an order of seizure. Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an extension of time within which to file his answer and/or a motion for intervention. The court granted the motion. A few months later, or on 18 February 1988, the court issued an order which, in part, stated: "Perusal of the record shows that an order for the seizure of personal property was issued on October 20, 1987 in pursuance to a previous order of the Court dated October 13, 1987. However, to date, there is no showing that the principal defendants were served with summons inspite of the lapse of four (4) months. "Considering, this is a replevin case and to forestall the evils that arise from this practice, plaintiff failing to heed the Order dated October 13, 1987, particularly second paragraph thereof, the above-entitled case is hereby ordered DISMISSED for failure to prosecute and further ordering the plaintiff to return the property seized with all its accessories to defendant John Doe in the person of Roberto M. Reyes. "SO ORDERED." 12 On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and without pronouncement as to costs, before service of Summons and Answer, under Section 1, Rule 17, of the Rules of Court." 13 It also sought in another motion the withdrawal of the replevin bond. In view of the earlier dismissal of the case (for petitioner's failure to prosecute), the court, on 02 March 1988, merely noted the notice of dismissal and denied the motion to withdraw the replevin bond considering that the writ of replevin had meanwhile been implemented. 14 On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply with the court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14 March 1988, a motion for the reconsideration of the orders of 18 February 1988 and 02 March 1988 contending that: (a) the dismissal of the case was tantamount to adjudication on the merits that thereby deprived it with the remedy to enforce the promissory note, the chattel mortgage and the deed of assignment, under Section 3, Rule 117, of the Rules of Court; (b) the order to return the vehicle to private respondent was a departure from jurisprudence recognizing the right of the mortgagor to foreclose the property to respond to the unpaid obligation secured by the chattel mortgage, and (c) there were no legal and factual bases for the court's view that the filing of the replevin case was "characterized (by) evil practices." 15 On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly recalled the order directing the return of the vehicle to private respondent, set aside the order dismissing the case, directed petitioner "to cause the service of summons together with a copy of the complaint on the principal defendants within five (5) days from receipt"16 thereof at petitioner's expense, and ordered private respondent to answer the complaint.

A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent in default. The court granted the motion on that same day and declared private respondent "in default for his failure to file the x x x answer within the reglementary period." 17 The court likewise granted petitioner's motion to set the case for the presentation, ex parte, of evidence. Petitioner, thereupon, submitted the promissory note, the deed of chattel mortgage, the deed of assignment, a statement of account in the name of Florencia Manahan and two demand letters. On 27 February 1989, the trial court rendered a decision dismissing the complaint against the Manahans for failure of petitioner to prosecute the case against them. It also dismissed the case against private respondent for failure of petitioner to show any legal basis for said respondent's liability. The court ratiocinated: "x x x. Roberto M. Reyes is merely ancillary debtor in this case. The defendant spouses Manahan being the principal debtor(s) and as there is no showing that the latter has been brought before the jurisdiction of this court, it must necessarily follow that the plaintiff has no cause of action against said Roberto M. Reyes herein before referred to as defendant John Doe. Under the circumstances, it is incumbent upon the plaintiff to return the seized vehicle unto the said Roberto M. Reyes." 18 In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin aimed at the foreclosure of the chattel is an action quasi in rem which does not necessitate the presence of the principal obligors as long as the court does not render any personal judgment against them. This argument did not persuade the appellate court, the latter holding that"x x x. In action quasi in rem an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property, such as proceedings having for their sole object the sale or disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy (Sandejas vs. Robles, 81 Phil. 421). In the case at bar, the court cannot render any judgment binding on the defendants spouses for having allegedly violated the terms and conditions of the promissory note and the contract of chattel mortgage on the ground that the court has no jurisdiction over their persons, no summons having been served on them. That judgment, if rendered, is void for having denied the defendants spouses due process of law which contemplates notice and opportunity to be heard before judgment is rendered, affecting one's person or property (Macabingkil vs. Yatco, 26 SCRA 150, 157). "It is next contended by appellant that as between appellant, as mortgagee, and John Doe, whose right to possession is dubious if not totally non-existent, it is the former which has the superior right of possession. "We cannot agree. "It is an undisputed fact that the subject motor vehicle was taken from the possession of said Roberto M. Reyes, a third person with respect to the contract of chattel mortgage between the appellant and the defendants spouses Manahan. "The Civil Code expressly provides that every possessor has a right to be respected in his possession (Art. 539, New Civil Code); that good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof (Art. 527, ibid.); and that the possession of movable property acquired in good faith is equivalent to a title; nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same (Art. 559, ibid.). Thus, it has been held that a possessor in good faith is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise (Chus Hai v. Kapunan, 104 Phil. 110; Yu, et al. v. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did not err in holding that the complaint does not state any cause of action against Roberto M. Reyes, and in ordering the return of the subject chattel to him." 19

The appellate court, subsequently, denied petitioner's motion for reconsideration. In the instant appeal, petitioner insists that a mortgagee can maintain an action for replevin against any possessor of the object of a chattel mortgage even if the latter were not a party to the mortgage. Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold itpendente lite. 20 The action is primarily possessory in nature and generally determines nothing more than the right of possession. Replevin is so usually described as a mixed action, being partly in rem and partly in personam-in rem insofar as the recovery of specific property is concerned, and in personam as regards to damages involved. As an "action in rem," the gist of the replevin action is the right of the plaintiff to obtain possession of specific personal property by reason of his being the owner or of his having a special interest therein. 21 Consequently, the person in possession of the property sought to be replevied is ordinarily the proper and only necessary party defendant, and the plaintiff is not required to so join as defendants other persons claiming a right on the property but not in possession thereof. Rule 60 of the Rules of Court allows an application for the immediate possession of the property but the plaintiff must show that he has a good legal basis, i.e., a clear title thereto, for seeking such interim possession. Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the action need only be maintained against him who so possesses the property. In rem actio est per quam rem nostram quae ab alio possidetur petimus, et semper adversus eum est qui rem possidet. In Northern Motors, Inc. vs. Herrera, 22 the Court has said: "There can be no question that persons having a special right of property in the goods the recovery of which is sought, such as a chattel mortgagee, may maintain an action for replevin therefor. Where the mortgage authorizes the mortgagee to take possession of the property on default, he may maintain an action to recover possession of the mortgaged chattels from the mortgagor or from any person in whose hands he may find them." 23 In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact of the mortgagor enabling such mortgagee to act for and in behalf of the owner. Accordingly, that the defendant is not privy to the chattel mortgage should be inconsequential. By the fact that the object of replevin is traced to his possession, one properly can be a defendant in an action for replevin. It is here assumed that the plaintiff's right to possess the thing is not or cannot be disputed. In case the right of possession on the part of the plaintiff, or his authority to claim such possession or that of his principal, is put to great doubt (a contending party might contest the legal bases for plaintiff's cause of action or an adverse and independent claim of ownership or right of possession is raised by that party), it could become essential to have other persons involved and accordingly impleaded for a complete determination and resolution of the controversy. For instance, in Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No. 103301, 08 December 1995, this Court ruled: "While, in its present petition for review on certiorari, Servicewide has raised a number of points, the crucial issue still remains, however, to be whether or not an action filed by the mortgagee for replevin to effect a foreclosure of the property covered by the chattel mortgage would require that the mortgagor be so impleaded as an indispensable party thereto. "Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of possession of personal property, to apply for a writ of replevin if it can be shown that he is `the owner of the property claimed x x x or is entitled to the possessionthereof. The plaintiff need not be the owner so long as he is able to specify his right to the possession of the property and his legal basis therefor. The question then, insofar as the matter finds relation to the instant case, is whether or not the plaintiff (herein petitioner) who has

predicated his right on being the mortgagee of a chattel mortgage should implead the mortgagor in his complaint that seeks to recover possession of the encumbered property in order to effect its foreclosure. "The answer has to be in the affirmative. In a suit for replevin, a clear right of possession must be established. A foreclosure under a chattel mortgage may properly be commenced only once there is default on the part of the mortgagor of his obligation secured by the mortgage. The replevin in the instant case has been sought to pave the way for the foreclosure of the object covered by the chattel mortgage. The conditions essential for that foreclosure would be to show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These requirements must be established since the validity of the plaintiff's exercise of the right of foreclosure are inevitably dependent thereon. It would thus seem, considering particularly an adverse and independent claim of ownership by private respondent, that the lower court acted improvidently when it granted the dismissal of the complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground that the non-service of summons upon Ernesto Dollente (would) only delay the determination of the merits of the case, to the prejudice of the parties' In Imson v. Court of Appeals, we have explained: "x x x. An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable. `Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court. He is not indispensable if his presence would merely permit complete relief between him and those already parties to the action or will simply avoid multiple litigation.' "Without the presence of indispensable parties to a suit or proceeding, a judgment of a court cannot attain real finality." (Footnotes omitted.) A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession of the property unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself may be controverted, the inclusion of other parties, like the debtor or the mortgagor himself, may be required in order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property. The burden to establish a valid justification for that action lies with the plaintiff. An adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action for replevin. The appellate court, accordingly, acted well in arriving at its now questioned judgment. WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No costs. SO ORDERED. Padilla, Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur.

EN BANC G.R. No. L-43794 August 9, 1935

LUIS FRANCISCO, Petitioner, vs. FRANCISCO ZANDUETA, Judge of First Instance of Manila, and EUGENIO LEOPOLDO FRANCISCO, represented by his natural mother and curator ad litem, ROSARIO GOMEZ, Respondents. GODDARD, J.: chanrobles virtual law library This is an original petition for the writ of certiorari whereby the petitioner, Luis Francisco, seeks to procure the abrogation of an order of the respondent judge, dated May 2, 1935, granting the respondent, Eugenio Leopoldo Francisco, a monthly pension of P30 pendente lite.chanroblesvirtualawlibrary chanrobles virtual law library It appears that the respondent, Eugenio Leopoldo Francisco, aged two years, through his natural mother and guardian ad litem, Rosario Gomez, instituted an action for support against the herein petitioner in the Court of First Instance of the City of Manila, case No. 47238. In that case it is alleged that the therein plaintiff is the acknowledged son of Luis Francisco and as such is entitled to support. The petitioner, as

defendant in that case, answered by a general denial of each and every material allegation contained in the complaint and as a special defense alleged that he never acknowledged and could not have acknowledged that he never acknowledged and could not have acknowledged the plaintiff as his son; that he was not present at the baptism of the plaintiff and that he was married at the time it is alleged that the plaintiff was born.chanroblesvirtualawlibrary chanrobles virtual law library Notwithstanding this denial of paternity the respondent judge issued the order of May 2, 1935. On May 11, 1935, petitioner moved for the reconsideration of that order on the ground that it was issued in excess of jurisdiction in view of the fact that the civil status of the plaintiff was placed in issue by the pleadings; that the plaintiff has no right to monthly support from the defendant until his status as a child of the latter is finally determined in his favor and that as the guardian ad litem of the plaintiff admits his lack of means to defray even the ordinary expenses of existence it would be impossible for the defendant to recover whatever amount he may have advanced to plaintiff as support pendente lite, should it finally be decided that he is not the father of the plaintiff.chanroblesvirtualawlibrary chanrobles virtual law library The respondent judge, the Honorable Francisco Zandueta, denied that motion, hence the institution of this special proceeding.chanroblesvirtualawlibrary chanrobles virtual law library This court called upon the respondents to answer the petition. They filed a joint answer and alleged, in substance, that case No. 47238 was set for trial the 29th of April, 1935, and that the attorney for the defendant in that case filed a motion on April 22, 1935, in which he prayed that the trial be transferred; that the hearing on this motion was set for April 27, 1935; that the attorney for the minor filed a motion, on the day set for the hearing of the motion to transfer, in which he prayed that said minor be granted the sum of P30 per month by way of support, pendente lite; that the guardian ad litem opposed the motion to transfer the trial and that after discussion the attorney of the herein petitioner in order to secure a transfer agreed that his client would pay the minor a pension of P30 per month during the pendency of that case, No. 47238. The answer of the respondents is supported by the affidavits of the respondent judge and two deputy clerks of the Court of First Instance of Manila.chanroblesvirtualawlibrary chanrobles virtual law library In petitioner's reply to respondent's answer, made under oath by the attorney for the petitioner, in case No. 47238 and in this proceeding, it is alleged that the statements in paragraph for of said answer and those in the affidavit, Exhibits A and B, as to the agreement of said attorney to the payment of P30 as monthly support, are absolutely false.chanroblesvirtualawlibrary chanrobles virtual law library In order to arrive at a proper solution of this case it is not necessary to consider the dispute as to whether or not the attorney for the herein petitioner really agreed that his client should pay P30 per month by way of support to the plaintiff,pendente lite.chanroblesvirtualawlibrary chanrobles virtual law library In the case of Yangco vs. Rohde (1 Phil., 404) the petitioner Yangco filed in this court a petition for a writ of prohibition, alleging that a complaint had been filed, before the respondent judge, by Victorina Obin against the petitioner praying that she be granted a divorce, a monthly allowance for alimony and attorney's fees during the pendency of the suit; that the said judge ordered the petitioner to pay the plaintiff a monthly allowance of two hundred fifty Mexican pesos; that the plaintiff in the said action owns no property and that the respondent judge acted in excess of his jurisdiction in attempting to oblige the petitioner to pay Victorina Obin said allowance.chanroblesvirtualawlibrary chanrobles virtual law library In that case this court, speaking through Chief Justice Arellano, said: In the present case the action for the support or alimony is brought by a woman who alleges that she is a wife; therefore it is necessary for her to prove possession of the civil status of a spouse - that is, a marriage, without which one has no right to the title of husband or wife, . . . .chanroblesvirtualawlibrary chanrobles virtual law library

This evidence being lacking, and the civil status of marriage being in litigation, it is evident that nothing can be taken for granted upon the point in issue. There is no law or reason which authorizes the granting of alimony to a person who claims to be a spouse in the same manner as to a person who conclusively establishes by legal proof that he or she is such a spouse, and sues for divorce or separation. In this case the legal evidence raises a presumption of law; in the former there is no presumption, there is nothing but a mere allegation - a fact in issue - and a simple fact in issue must not be confounded with an established right recognized by a final judgment or based upon a legal presumption. The civil status of marriage being denied, and this civil status, from which the right to support is derived, being in issue, it is difficult to see how any effect can be given to such a claim until an authoritative declaration has been made as to the existence of the cause. It is evident that there is of necessity a substantial difference between the capacity of a person after the rendition of a final judgment in which that person is declared to be in possession of the status of marriage and his capacity prior to such time when nothing exists other than his suit or claim to be declared in possession of such status of marriage . . . . Under article 143 of the Civil Code the following are bound to support each other: (1) Husband and wife, (2) legitimate ascendants and descendants, (3) parents and acknowledged natural children and the legitimate descendants of the latter, (4) parents and illegitimate children not having the legal status of natural children and (5) brothers and sisters. In all these cases it is a civil status or a juridical relation which is the basis of the action for support, the civil status of marriage or that of relationship.chanroblesvirtualawlibrary chanrobles virtual law library Paraphrasing the language used in the decision in the Yangco case it may be said that in the present case the action for support is brought by a minor, through his guardian ad litem, who alleges that he is the son of the petitioner; therefore it is necessary for him to prove his civil status as such son. His alleged civil status being in litigation, it is evident that nothing can be taken for granted upon the point in issue. There is no law or reason which authorizes the granting of support to a person who claims to be a son in the same manner as to a person who establishes by legal proof that he is such son. In the latter case the legal evidence raises a presumption of law, while in the former there is no presumption, there is nothing but a mere allegation, a fact in issue, and a simple fact in issue must not be confounded with an established right recognized by a final judgment. The civil status of sonship being denied and this civil status, from which the right to support is derived, being in issue, it is apparent that no effect can be given to such a claim until an authoritative declaration has been made as to the existence of the cause. It is also evident that there is a substantial difference between the capacity of a person after the rendition of a final judgment in which that person is declared to be in possession of the status of a son and his capacity prior to such time when nothing exists other than his suit or claim to be declared in possession of such a status.chanroblesvirtualawlibrary chanrobles virtual law library The Civil Code grants the right of support to a son. This status not appearing by a final judgment, the respondent judge was without jurisdiction to order the petitioner, as defendant in case No. 47238, to pay the plaintiff the sum of P30, or any other amount as monthly support, pendente lite.chanroblesvirtualawlibrary chanrobles virtual law library In view of the lack of jurisdiction of the respondent judge to grant the plaintiff support, pendente lite, it is evident that the attorney of the defendant in case No. 47283 could not by his alleged consent to the granting of such support give the trial judge jurisdiction to adjudicate such a claim against his client. It is a universal rule of law that parties cannot, by consent, give a court, as such, jurisdiction in a matter which is excluded by the laws of the land. In such a case the question is not whether a competent court has obtained jurisdiction of a party triable before it, but whether the court itself is competent under any circumstances to adjudicate a claim against the defendant. And where there is want of jurisdiction of the subject-matter, a judgment is void as to all persons, and consent of parties can never impart to it the vitality which a valid judgment derives from the sovereign state, the court being constituted, by express provision of law, as its agent to pronounce its decrees in controversies between its people. (7 R.C.L., 1039.)

The writ prayed for is granted and the order of the respondent judge of May 2, 1935, ordering the herein petitioner as defendant in case No. 47238 to pay the plaintiff in that case the sum of P30 monthly, as support, pendente lite, is hereby declared null and void, without costs. Avancea, C.J., Villa-Real, Abad Santos, Hull, Imperial, Diaz, and Recto, JJ., concur.

Separate Opinions VICKERS, J., concurring: chanrobles virtual law library I concur in the result. I wish to state, however, that I do not agree with the rule laid down in the case of Yangco vs. Rohde (1 Phil., 404). I think that a correct statement of the law is to be found in the dissenting opinion of Justice Cooper. According to the doctrine of that case, if the defendant denies in his answer the fact of marriage, the court exceeds its jurisdiction in granting alimony pendente lite. This puts it within the power of the defendant to prevent the plaintiff from recovering alimony pendente lite in any case, notwithstanding the fact that the plaintiff may present at the hearing of her petition conclusive evidence of the existence of the marriage.chanroblesvirtualawlibrary chanrobles virtual law library In the case at bar it does not appear that the mother of the child presented any evidence to sustain her petition for support pendente lite, although the trial judge stated in his order of May 2, 1935 that he found the petition to be well founded (bien fundada). Respondents now claim that said order was based upon an agreement of defendant's attorney to the effect that if the trial of the case was transferred defendant would pay P30 a month for the support of the child during the pendency of the action. In my opinion we have no right to take into consideration the affidavits presented in this court by the respondents for the purpose of showing that the order for the payment of the support pendente lite was based on an agreement of defendant's attorney and not on the reasons stated in the order in question; and since the plaintiff did not attempt to prove that he was entitled to support pendente lite, the action of the respondent judge in ordering the payment of support under those circumstances was arbitrary and a manifest abuse of his discretion, for which the right of appeal is not an adequate remedy. Malcolm and Butte, JJ., dissent.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-48219 February 28, 1979 MANUEL J. C. REYES, Petitioner, vs. HON. LEONOR INES-LUCIANO, as Judge of the Juvenile & Domestic Relations Court, Quezon City, COURT OF APPEALS and CELIA ILUSTREREYES, Respondents.

FERNANDEZ, J.: This is a petition for certiorari to review the decision of the Court of Appeals in CA-G.R. No. 06928SP entitled "Manuel J. C. Reyes, petitioner, versus, The Hon. Leonor Ines-Luciano as Judge of the Juvenile & Domestic Relations Court (Quezon City) and Celia Ilustre-Reyes, Respondents", dismissing the petition to annul the order of the respondent Judge directing the petitioner to give support pendente lite to his wife, Celia Ilustre-Reyes, private respondent herein, in the amount of P40,000.00 a month. 1 chanrobles virtual law library The private petitioner, Celia Ilustre-Reyes, filed in the Juvenile and Domestic Relations Court of Quezon City a complaint dated June 3, 1976 against her husband, Manuel J. C. Reyes, for legal separation on the ground that the defendant had attempted to kill plaintiff. The pertinent allegations of the complaint are: 6.8 On March 10, 1976, defendant went to V. Ilustre and attacked plaintiff. He pummeled her with fist blows that floored her, then held her head and, with intent to kill, bumped it several times against the cement floor. When she ran upstairs to her father for protection, he pushed her at the stairway of 13 flights and she fell sliding to the ground floor. Determined to finish her off, he again gave her a strong swing at her abdomen which floored her half unconscious. Were it not for plaintiff's father, he would have succeeded killing her; chanrobles virtual law library 6.9. On May 26, 1976, although on May 11 previous she ceased holding office with defendant at Bel-Air Apartments elsewhere adverted to, she went thereto to get her overnight bag. Upon seeing her, defendant yelled at her to get out of the office. When he did not mind him, he suddenly doused her with a glass of grape juice, kicked her several times that landed at her back and nape, and was going to hit her with a steel tray as her driver, Ricardo Mancera, came due to her screams for help. For fear of further injury and for life, she rushed to Precinct 5 at united Nations Avenue, Manila Metropolitan Police, for assistance and protection; 2 chanrobles virtual law library The plaintiff asked for support pendente lite for her and her three children. The defendant, petitioner herein, opposed the application for support pendente lite on the ground that his wife had committed adultery with her physician.chanroblesvirtualawlibrary chanrobles virtual law library The application for support pendente lite was set for hearing and submitted for resolution on the basis of the pleadings and the documents attached thereto by the parties.chanroblesvirtualawlibrary chanrobles virtual law library

The respondent Judge issued an order dated March 15, 1977 granting plaintiff's prayer for alimony pendente lite in the amount of P5,000.00 a month commencing from June 1976. 3 chanrobles virtual law library The petitioner filed a motion for reconsideration reiterating that his wife is not entitled to support during the pendency of the case, and, alleging that even if she entitled, the amount awarded was excessive. The respondent Judge reduced the amount from P5,000.00 to P44,00.00 a month in an order dated June 17, 1977. 4 chanrobles virtual law library Manuel J. C. Reyes filed a petition for certiorari in the Court of Appeals dated July 25, 1977 asking that the order granting support pendente lite to private respondent. Celia Ilustre-Reyes, be annulled on the ground that the respondent Judge, Leonor Ines-Luciano, had committed a grave abuse of discretion or that said order be modified inasmuch as the amount awarded as support pendente lite is excessive.chanroblesvirtualawlibrary chanrobles virtual law library The Court of Appeals dismissed the petition because: Considering the plight of the wife during the pendency of the case for legal separation and that the husband appears to be financially capable of giving the support, We believe that the petitioner has not presented a clear case of grave abuse of discretion on the part of the respondent in issuing the questioned orders. We see no compelling reason to give it due course. 5 chanrobles virtual law library The petitioner contends that the Court of Appeal committed the following error: THE HON. COURT OF APPEALS GRIEVOUSLY ERRED IN A MANNER AMOUNTING IT CAN ERROR OF LAW AND A DEPARTURE FROM THE ACCEPTED NORMS LAID DOWN BY THIS HON. COURT IN THE CASES WE SHALL LATER ON DISCUSS, IN REFUSING TO GIVE DUE COURSE TO THE ORIGINAL PETITION FOR certiorari HEREIN AGAINST RESPONDENTS-APPELLEES, AND IN AFFIRMING THE ORDERS FOR SUPPORT PENDENTE LITE ANNEXES "F" AND "H" OF THIS PETITION WHEN HELD THAT RESPONDENT-APPELLEE JUDGE DID NOT COMMIT ANY ABUSE OF DISCRETION IN ISSUING SAID ORDERS, FOR THE REASONS THAT: chanrobles virtual law library A. IN ACTIONS FOR LEGAL SEPARATION THE WIFE IS ENTITLED TO SUPPORT FROM THE HUSBAND DESPITE THE FACT THAT A CASE FOR ADULTERY HAD BEEN FILED BY THE HUSBAND AGAINST HER; AND chanrobles virtual law library B. IN DETERMINING THE AMOUNT OF SUPPORT PENDENTE LITE, IT IS ENOUGH THAT THE COURT ASCERTAIN THE KIND AND AMOUNT OF EVIDENCE EVEN BY AFFIDAVITS ONLY OR OTHER DOCUMENTARY EVIDENCE APPEARING IN THE RECORDS. 6 chanrobles virtual law library It is true that the adultery of the wife is a defense in an action for support however, the alleged adultery of wife must be established by competent evidence. The allegation that the wife has committed adultery will not bar her from the right receive support pendente lite. Adultery is a good defense and if properly proved and sustained wig defeat the action. 7 chanrobles virtual law library In the instant case, at the hearing of the application for support pendente lite before the Juvenile and Domestic Relations Court presided by the respondent Judge, Hon. Leonor Ines-Luciano the petitioner did not present any evidence to prove the allegation that his wife, private respondent Celia Ilustre-Reyes, had committed adultery with any person.chanroblesvirtualawlibrary chanrobles virtual law library The petitioner has still the opportunity to adduce evidence on the alleged adultery of his wife when the action for legal separation is heard on the merits before the Juvenile and Domestic Relations Court of Quezon City. It is to be noted however, that as pointed out by the respondents in their comment, the

"private respondent was not asking support to be taken from petitioner's personal funds or wherewithal, but from the conjugal property-which, was her documentary evidence ...". 8It is, therefore, doubtful whether adultery will affect her right to alimony pendente lite. In Quintana vs. Lerma, 9the action for support was based on the obligation of the husband to support his wife.chanroblesvirtualawlibrary chanrobles virtual law library The contention of the petitioner that the order of the respondent Judge granting the private respondent support pendente lite in the amount of P4,000.00 a month is not supported by the allegations of the complaint for legal separation and by competent evidence has no merit.chanroblesvirtualawlibrary chanrobles virtual law library The complaint or legal separation contains allegations showing that on at least two occasions the defendant, petitioner herein, had made attempts to kill the private respondent. Thus it is alleged that on March 10, 1976, the defendant attacked plaintiff, pummeled her with fist blows that floored her, held her head and with intent to kill, bumped it several times against the cement floor and when she ran upstairs to her father for protection, the petitioner pushed her at the stairway of thirteen (13) flights and she fell sliding to the ground floor and defendant gave her a strong swing at her abdomen which floored her half unconscious and were it not for plaintiff's father, defendant would have succeeded in killing her. 10 It is also alleged that on May 26, 1976, the defendant doused Celia Ilustre-Reyes with a glass of grape juice, kicked her several times at her back and nape and was going to hit her with a steel tray if it were not for her driver who came due to her creams for help." 11 chanrobles virtual law library In fixing the amount of monthly support pendente lite of P4,000,00, the respondent judge did not act capriciously and whimsically. When she originally fixed the amount of P5,000.00 a month, the respondent Judge considered the following: On record for plaintiff's cause are the following: that she and defendant were married on January 18, 1958; that she is presently unemployed and without funds, thus, she is being supported by her father with whom she resides: that defendant had been maltreating her and Cried to kill her; that all their conjugal properties are in the possession of defendant who is also president, Manager and Treasurer of their corporation namely: chanrobles virtual law library 1. Standard Mineral Products, which was incorporated on February 9, 1959: presently with paid-in capital of P295,670.00; assets and liabilities of P757,108.52; Retained Earnings of P85,654.61: and majority stockholder is defendant; chanrobles virtual law library 2. Development and Technology Consultant Inc. incorporated on July 12, 1971, with paid-in capital of P200,000.00; Assets and liabilities of P831,669.34; defendant owns 99% of the stocks; and last Retained Earnings is P98,879.84.chanroblesvirtualawlibrary chanrobles virtual law library 3. The Contra-Prop Marine Philippines, Inc. which was incorporated on October 3, 1975, with paid-in capital of P100,000 defendant owns 99% of the stocks.chanroblesvirtualawlibrary chanrobles virtual law library To secure some of the of said Agreement of Counter-Guaranty Mortgage with Real Estate, and Real Estate Mortgage were undertaken by plaintiff of their properties outside of other accommodations; and that she needs of P5,000.00 a month for her support in accordance with their station in life. 12 chanrobles virtual law library The amount of support pendente lite was reduced to P4,000.00 inasmuch as the children are in the custody of the petitioner and are being supported by him.chanroblesvirtualawlibrary chanrobles virtual law library

It is thus seen that the respondent judge acted with due deliberation before fixing the amount of support pendente lite in the amount of P4,000.00 a month.chanroblesvirtualawlibrary chanrobles virtual law library In determining the amount to be awarded as support pendente lite it is not necessary to go fully into the merits of the case, it being sufficient that the court ascertain the kind and amount of evidence which it may deem sufficient to enable it to justly resolve the application, one way or the other, in view of the merely provisional character of the resolution to be entered. Mere affidavits may satisfy the court to pass upon the application for support pendente lite. 13It is enough the the facts be established by affidavits or other documentary evidence appearing in the record. 14 chanrobles virtual law library The private respondent has submitted documents showing that the corporations controlled by the petitioner have entered into multi-million contracts in projects of the Ministry of Public Highways.chanroblesvirtualawlibrary chanrobles virtual law library Considering the high cost of living due to inflation and the financial ability of the petitioner as shown by the documents of record, We find that the amount of P4,000.00 a month granted by the respondent Judge as alimony pendente lite to the private respondent is not excessive. There is no showing that the respondent Judge has committed a grave abuse of discretion in granting said support.chanroblesvirtualawlibrary chanrobles virtual law library In a resolution dated July 31, 1978, this Court issued a temporary restraining order effective immediately against the enforcement of the lower court's order giving support pendente lite to private respondent in the sum of P4,000.00 monthly commencing June 1976 and in lieu thereof to allow such support only to the extent of P1,000.00 a month. 15 chanrobles virtual law library Later the petitioner was required to pay the support at the rate of P1,000.00 a month which had accumulated since June 1976 within ten (10) days from notice of the resolution: 16 chanrobles virtual law library The private respondent acknowledged on November 20, 1978 having received from the petitioner, through his counsel a check in the amount of P30,000.00 as payment of support for the period from June 1976 to November 1978 or thirty (30) months at P1,000.00 a month in compliance with the resolution of this Court dated October 9, 1978.chanroblesvirtualawlibrary chanrobles virtual law library In view of the foregoing, the support of P4,000.00 should be made to commence or, March 1, 1979.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE, the petition for certiorari is hereby denied and the decision of the Council of Appeals sought to be reviewed is affirmed with the modification that the support pendente lite at the rate of Four Thousand Pesos (P4.000.00) a month should commence from March 1, 1979 without pronouncement as to costs.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED. Teehankee (Chairman), Makasiar, Guerrero, De Castro and Melencio-Herrera, JJ., concur