#7

JULIO A. VIVARES and                        G.R. No. 155408MILA G. IGNALING,                             Petitioners,                                                                 Present:                                                                                                    QUISUMBING, J., Chairperson,                   - versus -                                 CARPIO,                                                                 CARPIO MORALES,                                                                 TINGA, and                                                                 VELASCO, JR., JJ.                              ENGR. JOSE J. REYES,                       Promulgated:                             Respondent.                                                                                 February 13, 2008   x-----------------------------------------------------------------------------------------x

 

D E C I S I O N

 

VELASCO, JR., J.:                                           

The Case 

The kernel dispute in this petition under Rule 45 is the legality of the May 22, 2001 Resolution[1] of the Camiguin Regional Trial Court (RTC), Branch 28 in Civil Case No. 517, which placed the estate of Severino Reyes under receivership.  The Court of Appeals (CA) saw it differently in CA-G.R. SP No. 67492—its June 18, 2002 Decision[2]recalled the RTC directive on the appointment of the receiver, prompting Julio Vivares and Mila Ignaling to file the petition at bar to convince the Court to reinstate the receivership.

 The Facts

 Severino Reyes was the father of respondent Jose Reyes and Torcuato

Reyes.  Upon the death of Severino, respondent and Torcuato came upon their inheritance consisting of several properties.  They had an oral partition of the properties and separately appropriated to themselves said properties.

 On May 12, 1992, Torcuato died with a last will and testament executed on

January 3, 1992.  In Reyes v. Court of Appeals,[3] we affirmed the November 29, 1995 CA Decision, admitting the will for probate. 

 Petitioner Vivares was the designated executor of Torcuato’s last will and

testament, while petitioner Ignaling was declared a lawful heir of Torcuato. Believing that Torcuato did not receive his full share in the estate of

Severino, petitioners instituted an action for Partition and Recovery of Real Estate before the Camiguin RTC, Branch 28 entitled Julio A. Vivares, as executor of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J. Reyes and docketed as Civil Case No. 517.  With the approval of the trial court, the parties agreed that properties from the estate of Severino, which were already transferred in the names of respondent and Torcuato prior to the latter’s death on May 12, 1992, shall be excluded from litigation.  In short, what was being contested were the properties that were still in the name of Severino.

 On November 24, 1997, for the purpose of collating the common properties

that were disputed, the trial court directed the formation of a three-man commission with due representation from both parties, and the third member, appointed by the trial court, shall act as chairperson.  The disputed properties were then annotated with notices of lis pendens upon the instance of petitioners.

 On March 15, 2000, petitioners filed a Motion to Place Properties in

Litigation under Receivership[4] before the trial court alleging that to their prejudice respondent had, without prior court approval and without petitioners’ knowledge, sold to third parties and transferred in his own name several common properties. Petitioners also averred that respondent fraudulently antedated, prior to May 12, 1992, some conveyances and transfers to make it appear that these were no longer part of the estate of Severino under litigation.  They further claimed that respondent was and is in possession of the common properties in the estate of Severino, and exclusively enjoying the fruits and income of said properties and without rendering an accounting on them and turning over the share pertaining to Torcuato.  Thus, petitioners prayed to place the entire disputed estate of Severino

under receivership.  They nominated a certain Lope Salantin to be appointed as receiver.

 On March 23, 2000, respondent filed his Opposition to Place the Estate of

Severino Reyes under Receivership,[5] denying that he had fraudulently transferred any property of the estate of Severino and asserting that any transfer in his name of said properties was a result of the oral partition between him and Torcuato that enabled the latter as well to transfer several common properties in his own name.

 On May 24, 2000, petitioners filed their Offer of Exhibits in support of their

motion for receivership.  On the same date, the trial court issued an Order[6] granting petitioners’ motion and appointed Salantin as receiver conditioned on the filing of a PhP 50,000 bond.  Respondent filed a motion for reconsideration, contending that the appointment of a receiver was unduly precipitate considering that he was not represented by counsel and thus was deprived of due process.

 On August 4, 2000, the trial court allowed respondent to present his

evidence to contest petitioners’ grounds for the appointment of a receiver, and the trial court set the reception of respondent’s evidence for September 4, 2000.  However, on August 24, 2000, respondent filed a motion for postponement of the September 4, 2000 scheduled hearing on the ground that he was in the United States as early as July 23, 2000 for medical examination.  On September 5, 2000, the trial court denied respondent’s motion for postponement and reinstated its May 24, 2000 Order.

 On September 19, 2000, respondent filed a Manifestation with Motion to

Discharge Receiver, reiterating the circumstances which prevented him from attending the September 4, 2000 hearing and praying for the discharge of the receiver upon the filing of a counterbond in an amount to be fixed by the court in accordance with Section 3, Rule 59 of the 1997 Revised Rules on Civil Procedure.  On October 10, 2000, petitioners filed their undated Opposition to Motion to Discharge Receiver.

 Subsequently, respondent filed a Motion to Cancel Notice of Lis

Pendens which was annotated on Tax Declaration (TD) No. 112 covering Lot No. 33 allegedly belonging exclusively to him.  Respondent asserted in the motion that

an adjacent property to Lot No. 33, particularly a portion of Lot No. 35, which is owned by a certain Elena Unchuan, was erroneously included in Lot No. 33 and, consequently, was subjected to the notice of lis pendens.  Petitioners filed their Opposition to the Motion to Cancel Lis Pendens.

 Consequently, on May 22, 2001, the trial court issued a Resolution, denying

respondent’s motions to discharge receiver and cancel the notice of lis pendens in TD No. 112.  Respondent seasonably filed a partial motion for reconsideration of the May 22, 2001 Resolution, attaching copies of deeds of sale executed by Torcuato covering several common properties of the estate of Severino to prove that he and Torcuato had indeed made an oral partition of the estate of their father, Severino, and thus allowing him and Torcuato to convey their respective shares in the estate of Severino to third persons. 

 On October 19, 2001, the trial court heard respondent’s motion for partial

reconsideration, and on the same date issued an Order denying the motion for partial reconsideration on the ground that respondent failed to raise new matters in the motion but merely reiterated the arguments raised in previous pleadings.

 Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing

the May 22, 2001 Resolution and October 19, 2001 Order of the RTC. 

The Ruling of the Court of Appeals On June 18, 2002, the CA rendered the assailed Decision, sustaining

respondent’s position and granted relief, thus: 

WHEREFORE, premises considered, the Petition is hereby GRANTED.  The Resolution dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and set aside.  The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a counterbond in the amount of P100,000.00.  The notice of lis pendens in Tax Declaration 112, in so far as it covers the property of Elena Unchuan, is cancelled.  Let this case be remanded to the court a quo for further proceedings.[7]

 

 In reversing the trial court, the CA reasoned that the court a quo failed to

observe the well-settled rule that allows the grant of the harsh judicial remedy of receivership only in extreme cases when there is an imperative necessity for it.  The CA thus held that it is proper that the appointed receiver be discharged on the filing of a counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules on Civil Procedure. 

 Moreover, the CA ratiocinated that respondent has adequately demonstrated

that the appointment of the receiver has no sufficient basis, and further held that the rights of petitioners over the properties in litigation are doubly protected through the notices of lis pendens annotated on the titles of the subject properties.  In fine, the appellate court pointed out that the appointment of a receiver is a delicate one, requiring the exercise of discretion, and not an absolute right of a party but subject to the attendant facts of each case.  The CA found that the trial court abused its discretion in appointing the receiver and in denying the cancellation of the notice of lis pendens on TD No. 112, insofar as it pertains to the portion owned by Unchuan.

 Aggrieved, petitioners in turn interposed a Motion for Reconsideration that

was denied through the assailed September 24, 2002 CA Resolution.  Thus, this petition for review on certiorari is before us, presenting the

following issues for consideration:  I

 WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS PENDENS PRECLUDES THE APPOINTMENT OF A RECEIVER WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN LITIGATION. 

II WHETHER OR NOT A DULY APPOINTED RECEIVER OF PROPERTIES IN LITIGATION SHOULD BE DISCHARGED SIMPLY BECAUSE THE ADVERSE PARTY OFFERS TO POST A COUNTERBOND.

   

III WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS PENDENS ANNOTATED ON TAX DECLARATION NO. 112 IS CONTRARY TO LAW.[8]

  

The Court’s Ruling The petition must be denied.  Being closely related, we discuss the first and

second issues together.  

Receivership not justified  

          We sustain the CA ruling that the trial court acted arbitrarily in granting the petition for appointment of a receiver as “there was no sufficient cause or reason to justify placing the disputed properties under receivership.”           First, petitioners asseverate that respondent alienated several common properties of Severino without court approval and without their knowledge and consent.  The fraudulent transfers, they claim, were antedated prior to May 12, 1992, the date of Torcuato’s death, to make it appear that these properties no longer form part of the assets of the estate under litigation in Civil Case No. 517.           Petitioners’ position is bereft of any factual mooring.           Petitioners miserably failed to adduce clear, convincing, and hard evidence to show the alleged fraud in the transfers and the antedating of said transfers.  The fact that the transfers were dated prior to the demise of Torcuato on May 12, 1992 does not necessarily mean the transfers were attended by fraud.  He who alleges fraud has the burden to prove it.          Moreover, respondent has adduced documentary proof that Torcuato himself similarly conveyed several lots in the estate of Severino based on the oral partition

between the siblings.  To lend credence to the transfers executed by Torcuato but distrust to those made by respondent would be highly inequitable as correctly opined by the court a quo.           Indeed, receivership is a harsh remedy to be granted only in extreme situations.  As early as 1914, the Court already enunciated the doctrinal pronouncement in Velasco & Co. v. Gochuico & Co. that courts must use utmost circumspection in allowing receivership, thus: 

 The power to appoint a receiver is a delicate one and should be exercised with extreme caution and only under circumstances requiring summary relief or where the court is satisfied that there is imminent danger of loss, lest the injury thereby caused be far greater than the injury sought to be averted.  The court should consider the consequences to all of the parties and the power should not be exercised when it is likely to produce irreparable injustice or injury to private rights or the facts demonstrate that the appointment will injure the interests of others whose rights are entitled to as much consideration from the court as those of the complainant.[9]

  

            Petitioners cannot now impugn the oral partition entered into by Torcuato and respondent and hence cannot also assail the transfers made by respondent of the lots which were subject of said agreement, considering that Torcuato also sold properties based on said verbal arrangement.  Indeed, the parties agreed that the civil action does not encompass the properties covered by the oral partition.  In this factual setting, petitioners cannot convince the Court that the alleged fraudulent transfers of the lots made by respondent, which purportedly form part of his share in Severino’s estate based on the partition, can provide a strong basis to grant the receivership.                   Second, petitioner is willing to post a counterbond in the amount to be fixed by the court based on Sec. 3, Rule 59 of the 1997 Rules of Civil Procedure, which reads:

Sec. 3. Denial of application or discharge of receiver.—The application may be denied, or the receiver discharged, when the adverse party files a bond executed to the applicant, in an amount to be fixed by the court, to the effect that such party will pay the applicant all damages

he may suffer by reason of the acts, omissions, or other matter specified in the application as ground for such appointment.  The receiver may also be discharged if it is shown that his appointment was obtained without sufficient cause.

  Anchored on this rule, the trial court should have dispensed with the services

of the receiver, more so considering that the alleged fraud put forward to justify the receivership was not at all established.

 Petitioners advance the issue that the receivership should not be recalled

simply because the adverse party offers to post a counterbond.  At the outset, we find that this issue was not raised before the CA and therefore proscribed by the doctrine that an issue raised for the first time on appeal and not timely raised in the proceedings in the lower court is barred by estoppel.[10]  Even if we entertain the issue, the contention is nevertheless devoid of merit.  The assailed CA decision supported the discharge of the receiver with several reasons including the posting of the counterbond.  While the CA made a statement that the trial court should have discharged the appointed receiver on the basis of the proposed counterbond, such opinion does not jibe with the import of Sec. 3, Rule 59.  The rule states that the “application may be denied or the receiver discharged.”  In statutory construction, the word “may” has always been construed as permissive.  If the intent is to make it mandatory or ministerial for the trial court to order the recall of the receiver upon the offer to post a counterbond, then the court should have used the word “shall.”  Thus, the trial court has to consider the posting of the counterbond in addition to other reasons presented by the offeror why the receivership has to be set aside.

           Third, since a notice of lis pendens has been annotated on the titles of the disputed properties, the rights of petitioners are amply safeguarded and preserved since “there can be no risk of losing the property or any part of it as a result of any conveyance of the land or any encumbrance that may be made thereon posterior to the filing of the notice of lis pendens.”[11]  Once the annotation is made, any subsequent conveyance of the lot by the respondent would be subject to the outcome of the litigation since the fact that the properties are under custodia

legis is made known to all and sundry by operation of law.  Hence, there is no need for a receiver to look after the disputed properties.

           On the issue of lis pendens, petitioners argue that the mere fact that a notice of lis pendens was annotated on the titles of the disputed properties does not preclude the appointment of a receiver.  It is true that the notice alone will not preclude the transfer of the property pendente lite, for the title to be issued to the transferee will merely carry the annotation that the lot is under litigation.  Hence, the notice of lis pendens, by itself, may not be the “most convenient and feasible means of preserving or administering the property in litigation.”  However, the situation is different in the case at bar.  A counterbond will also be posted by the respondent to answer for all damages petitioners may suffer by reason of any transfer of the disputed properties in the future.  As a matter of fact, petitioners can also ask for the issuance of an injunctive writ to foreclose any transfer, mortgage, or encumbrance on the disputed properties.  These considerations, plus the finding that the appointment of the receiver was without sufficient cause, have demonstrated the vulnerability of petitioners’ postulation.   

Fourth, it is undisputed that respondent has actual possession over some of the disputed properties which are entitled to protection.  Between the possessor of a subject property and the party asserting contrary rights to the properties, the former is accorded better rights.  In litigation, except for exceptional and extreme cases, the possessor ought not to be deprived of possession over subject property.  Article 539 of the New Civil Code provides that “every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court.”  In Descallar v. Court of Appeals, we ruled that the appointment of a receiver is not proper where the rights of the parties, one of whom is in possession of the property, are still to be determined by the trial court.[12]

 In view of the foregoing reasons, we uphold the CA ruling that the grant of

the receivership was without sufficient justification nor strong basis. 

          Anent the third issue that the cancellation of the notice of lis pendens on TD No. 112 is irregular as Lot No. 33 is one of the disputed properties in the partition case, petitioners’ position is correct.                   The CA made a factual finding that the property of Unchuan was erroneously included in Lot No. 33, one of the disputed properties in Civil Case No. 517.  It then ruled that the annotation of lis pendens should be lifted.           This ruling is bereft of factual basis.           The determination whether the property of Unchuan is a part of Lot No. 33 and whether that portion really belongs to Unchuan are matters to be determined by the trial court.  Consequently, the notice of lis pendens on TD No. 112 stays until the final ruling on said issues is made. 

WHEREFORE, the petition is PARTLY GRANTED.  The June 18, 2002 CA Decision in CA-G.R. SP No. 67492 is AFFIRMED with MODIFICATION insofar as it ordered the cancellation of the notice of lis pendens in TD No. 112.  As thus modified, the appealed CA Decision should read as follows:

  WHEREFORE, premises considered, the Petition is

hereby PARTLY GRANTED.  The Resolution dated 22 May 2001 of the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby reversed and set aside.  The court-appointed receiver, Lope Salantin, is discharged upon the posting by petitioner of a counterbond in the amount of PhP 100,000.  The notice of lis pendens in TD No. 112, including the portion allegedly belonging to Elena Unchuan, remains valid and effective.  Let this case be remanded to the court a quo for further proceedings in Civil Case No. 517.  No costs.

           SO ORDERED.

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JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C. BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA CRUZ, EDITHA C. DY, FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA

A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and NELSON A. LOYOLA,

                                    Petitioners,

- versus -

FIL-ESTATE LAND, INC.,

FIL ESTATE ECOCENTRUM CORPORATION, LA PAZHOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY AGENCY,

ENRIQUE RIVILLA,

MICHAEL E. JETHMAL

and MICHAEL ALUNAN,

                                 Respondents.

G.R. No. 152272

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

FIL-ESTATE LAND, INC.,

FIL ESTATE ECOCENTRUM CORPORATION, LA PAZHOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and MICHAEL ALUNAN,

                                    Petitioners,

- versus -

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C. BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA CRUZ, EDITHA C. DY, FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA

A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and NELSON A. LOYOLA,

                                 Respondents.

G. R. No. 152397

Present:

VELASCO, JR., J., Chairperson,

PERALTA,

ABAD,

MENDOZA, and

PERLAS-BERNABE, JJ.

Promulgated:

       March 5, 2012

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

DECISION 

MENDOZA, J.:

 Before the Court are two (2) consolidated petitions assailing the July 31,

2001 Decision[1] and February 21, 2002 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 60543, which annulled and set aside the March 3, 1999 Order[3] of the Regional Trial Court, Branch 25, Biñan, Laguna (RTC), granting the application for the issuance of a writ of preliminary injunction, and upheld the June 16, 2000 Omnibus Order[4] denying the motion to dismiss.

 The Facts:

 On January 20, 1999, Juana Complex I Homeowners Association,

Inc. (JCHA), together with individual residents of Juana Complex I and other neighboring subdivisions(collectively referred as JCHA, et. al.), instituted a complaint[5] for damages, in its own behalf and as a class suit representing the regular commuters and motorists of Juana Complex I and neighboring subdivisions who were deprived of the use of La Paz Road, against Fil-Estate Land, Inc. (Fil-Estate), Fil-estate Ecocentrum Corporation (FEEC), La Paz Housing & Development Corporation (La Paz), and Warbird Security Agency and their respective officers (collectively referred as Fil-Estate, et al.).

 The complaint alleged that JCHA, et al. were regular commuters and

motorists who constantly travelled towards the direction of Manila and Calamba;

that they used the entry and exit toll gates of South Luzon Expressway (SLEX) by passing through right-of-way public road known as La Paz Road; that they had been using La Paz Road for more than ten (10) years; that in August 1998, Fil-estate excavated, broke and deliberately ruined La Paz Road that led to SLEX so JCHA, et al. would not be able to pass through the said road; that La Paz Road was restored by the residents to make it passable but Fil-estate excavated the road again; that JCHA reported the matter to the Municipal Government and the Office of the Municipal Engineer but the latter failed to repair the road to make it passable and safe to motorists and pedestrians; that the act of Fil-estate in excavating La Paz Road caused damage, prejudice, inconvenience, annoyance, and loss of precious hours to them, to the commuters and motorists because traffic was re-routed to narrow streets that caused terrible traffic congestion and hazard; and that its permanent closure would not only prejudice their right to free and unhampered use of the property but would also cause great damage and irreparable injury.

 Accordingly, JCHA, et al. also prayed for the immediate issuance of a

Temporary Restraining Order (TRO) or a writ of preliminary injunction (WPI) to enjoin Fil-Estate, et al. from stopping and intimidating them in their use of  La Paz Road.

 On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a

period of twenty (20) days, to stop preventing, coercing, intimidating or harassing the commuters and motorists from using the La Paz Road. [6]

 Subsequently, the RTC conducted several hearings to determine the

propriety of the issuance of a WPI.  On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss [7]  arguing

that the complaint failed to state a cause of action and that it was improperly filed as a class suit. On March 5, 1999, JCHA, et al. filed their comment[8] on the motion to dismiss to which respondents filed a reply.[9]  

 On March 3, 1999, the RTC issued an Order [10] granting the WPI and

required JCHA, et al. to post a bond. 

On March 19, 1999, Fil-Estate, et al. filed a motion for reconsideration[11] arguing, among others, that JCHA, et al. failed to satisfy the requirements for the issuance of a WPI. On March 23, 1999, JCHA, et al. filed their opposition to the motion.[12]

 The RTC then issued its June 16, 2000 Omnibus Order, denying both the

motion to dismiss and the motion for reconsideration filed by Fil-Estate, et al. Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition

before the CA to annul (1) the Order dated March 3, 1999 and (2) the Omnibus Order dated June 16, 2000. They contended that the complaint failed to state a cause of action and that it was improperly filed as a class suit. With regard to the issuance of the WPI, the defendants averred that JCHA, et al. failed to show that they had a clear and unmistakable right to the use of La Paz Road; and further claimed that La Paz Road was a torrens registered private road and there was neither a voluntary nor legal easement constituted over it.[13]

 On July 31, 2001, the CA rendered the decision partially granting the

petition, the dispositive portion of which reads: 

WHEREFORE, the petition is hereby partially GRANTED. The Order dated March 3, 1999 granting the writ of preliminary injunction is hereby ANNULLED and SET ASIDE but the portion of the Omnibus Order dated June 16, 2000 denying the motion to dismiss is upheld.

 SO ORDERED.[14]

  The CA ruled that the complaint sufficiently stated a cause of action when

JCHA, et al. alleged in their complaint that they had been using La Paz Road for more than ten (10) years and that their right was violated when Fil-Estate closed and excavated the road. It sustained the RTC ruling that the complaint was properly filed as a class suit as it was shown that the case was of common interest and that the individuals sought to be represented were so numerous that it was impractical to include all of them as parties. The CA, however, annulled the WPI for failure of JCHA, et al. to prove their clear and present right over  La Paz Road. The CA ordered the remand of the case to the RTC for a full-blown trial on the merits.

 Hence, these petitions for review. In G.R. No. 152272, JCHA, et al. come to this Court, raising the following

issues:

(A) THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A

FULL-BLOWN TRIAL ON THE MERITS IS REQUIRED TO DETERMINE THE NATURE OF THE LA PAZ ROAD, HAD DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION.

 (B)

 THE HONORABLE COURT OF APPEALS, IN HOLDING THAT

THE PETITIONERS FAILED TO SATISFY THE REQUIREMENTS FOR THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION, HAD DECIDED NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT.[15]

  

In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition on the following issues:

 I.

 The Court of Appeals’ declaration that respondents’ Complaint states a cause of action is contrary to existing law and jurisprudence. 

II. The Court of Appeals’ pronouncement that respondents’ complaint was properly filed as a class suit is contrary to existing law and jurisprudence.

 III.

 The Court of Appeals’ conclusion that full blown trial on the merits is required to determine the nature of the La Paz Road is contrary to existing laws and jurisprudence.[16]

JCHA, et al. concur with the CA that the complaint sufficiently stated a cause of action. They, however, disagree with the CA’s pronouncement that a full-blown trial on the merits was necessary. They claim that during the hearing on the application of the writ of injunction, they had sufficiently proven that La Paz Road

was a public road and that commuters and motorists of their neighboring villages had used this road as their means of access to the San Agustin Church, Colegio De San Agustin and to SLEX in going to Metro Manila and to Southern Tagalog particularly during the rush hours when traffic at Carmona Entry/Exit and Susana Heights Entry/Exit was at its worst.

 JCHA, et al. argue that La Paz Road has attained the status and character of

a public road or burdened by an apparent easement of public right of way. They point out thatLa Paz Road is the widest road in the neighborhood used by motorists in going to Halang Road and in entering the SLEX-Halang toll gate and that there is no other road as wide as La Paz Road existing in the vicinity. For residents of San Pedro, Laguna, the shortest, convenient and safe route towards SLEX Halang is along Rosario Avenue joining La Paz Road.

 Finally, JCHA, et al. argue that the CA erred when it voided the WPI

because the public nature of La Paz Road had been sufficiently proven and, as residents of San Pedro and Biñan, Laguna, their right to use La Paz Road is undeniable.

 In their Memorandum,[17] Fil-Estate, et al. explain that La Paz Road is

included in the parcels of land covered by Transfer Certificates of Title (TCT) Nos. T-120008, T-90321 and T-90607, all registered in the name of La Paz. The purpose of constructing La Paz Road was to provide a passageway for La Paz to its intended projects to the south, one of which was the Juana Complex I. When Juana Complex I was completed, La Paz donated the open spaces, drainage, canal, and lighting facilities inside the Juana Complex I to the Municipality of Biñan. The streets within the subdivisions were then converted to public roads and were opened for use of the general public. The La Paz Road, not being part of the Juana Complex I, was excluded from the donation. Subsequently, La Paz became a shareholder of FEEC, a consortium formed to develop several real properties in Biñan, Laguna, known as Ecocentrum Project. In exchange for shares of stock, La Paz contributed some of its real properties to the Municipality of Biñan, including the properties constituting La Paz Road, to form part of the Ecocentrum Project. 

Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper since JCHA, et al. failed to prove that they have a clear right over La Paz Road. Fil-Estate, et al. assert that JCHA, et al. failed to prove the existence of a right of way or a right to pass over La Paz Road and that the closure of the said road constituted an injury to such right. According to them, La Paz Road is a

torrens registered private road and there is neither a voluntary nor legal easement constituted over it. They claim that La Paz Road is a private property registered under the name of La Paz and the beneficial ownership thereof was transferred to FEEC when La Paz joined the consortium for the Ecocentrum Project.

 Fil-Estate, et al., however, insist that the complaint did not sufficiently

contain the ultimate facts to show a cause of action. They aver the bare allegation that one is entitled to something is an allegation of a conclusion which adds nothing to the pleading.

 They likewise argue that the complaint was improperly filed as a class suit

for it failed to show that JCHA, et al. and the commuters and motorists they are representing have a well-defined community of interest over La Paz Road. They claim that the excavation of La Paz Road would not necessarily give rise to a common right or cause of  action for JCHA, et al. against them since each of them has a separate and distinct purpose and each may be affected differently than the others.  

The Court’s Ruling 

          The issues for the Court’s resolution are: (1) whether or not the complaint states a cause of action; (2) whether the complaint has been properly filed as a class suit; and (2) whether or not a WPI is warranted. 

Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by which a party violates the right of another. A complaint states a cause of action when it contains three (3) essential elements of a cause of action, namely:

 (1)     the legal right of the plaintiff,(2)     the correlative obligation of the defendant, and(3)     the act or omission of the defendant in violation of said legal right.[18]

 The question of whether the complaint states a cause of action is determined

by its averments regarding the acts committed by the defendant.[19]  Thus, it must contain a concise statement of the ultimate or essential facts constituting the plaintiff’s cause of action.[20]  To be taken into account are only the material allegations in the complaint; extraneous facts and circumstances or other matters aliunde are not considered.[21]  

 The test of sufficiency of facts alleged in the complaint as constituting a

cause of action is whether or not admitting the facts alleged, the court could render

a valid verdict in accordance with the prayer of said complaint. [22] Stated differently, if the allegations in the complaint furnish sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless of the defense that may be asserted by the defendant.[23]

 In the present case, the Court finds the allegations in the complaint sufficient

to establish a cause of action. First, JCHA, et al.’s averments in the complaint show a demandable right over La Paz Road. These are: (1) their right to use the road on the basis of their allegation that they had been using the road for more than 10 years; and (2) an easement of a right of way has been constituted over the said roads. There is no other road as wide as La Paz Road existing in the vicinity and it is the shortest, convenient and safe route towards SLEX Halang that the commuters and motorists may use. Second, there is an alleged violation of such right committed by Fil-Estate, et al. when they excavated the road and prevented the commuters and motorists from using the same. Third, JCHA, et al. consequently suffered injury and that a valid judgment could have been rendered in accordance with the relief sought therein. 

 With respect to the issue that the case was improperly instituted as a class

suit, the Court finds the opposition without merit.Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:

Sec. 12. Class suit. – When the subject matter of the controversy is one of common or general interest to many persons so numerous that it is impracticable to join all as parties, a number of them which the court finds to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue or defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual interest. 

 The necessary elements for the maintenance of a class suit are:  1) the

subject matter of controversy is one of common or general interest to many persons; 2) the parties affected are so numerous that it is impracticable to bring them all to court; and 3) the parties bringing the class suit are sufficiently numerous or representative of the class and can fully protect the interests of all concerned.[24] 

 In this case, the suit is clearly one that benefits all commuters and motorists

who use La Paz Road. As succinctly stated by the CA:

 The subject matter of the instant case, i.e., the closure and

excavation of the La Paz Road, is initially shown to be of common or general interest to many persons. The records reveal that numerous individuals have filed manifestations with the lower court, conveying their intention to join private respondents in the suit and claiming that they are similarly situated with private respondents for they were also prejudiced by the acts of petitioners in closing and excavating the La Paz Road. Moreover, the individuals sought to be represented by private respondents in the suit are so numerous that it is impracticable to join them all as parties and be named individually as plaintiffs in the complaint. These individuals claim to be residents of various barangays in Biñan, Laguna and other barangays in San Pedro, Laguna. Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules

of Court lays down the rules for the issuance thereof. Thus:    

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

 (b)       That the commission, continuance or non-performance of

the act or acts complained of during the litigation would probably work injustice to the applicant; or

  (c)        That a party, court, or agency or a person is doing,

threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.  

 A writ of preliminary injunction is available to prevent a threatened or continuous

irremediable injury to parties before their claims can be thoroughly studied and adjudicated.[25]  The requisites for its issuance are: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.[26] For the writ to issue, the right sought to be protected must be a present right, a legal right which must be shown to be clear and

positive.[27] This means that the persons applying for the writ must show that they have an ostensible right to the final relief prayed for in their complaint.[28]

 In the case at bench, JCHA, et al. failed to establish a prima facie proof of

violation of their right to justify the issuance of a WPI. Their right to the use of La Paz Road is disputable since they have no clear legal right therein. As correctly ruled by the CA:

 Here, contrary to the ruling of respondent Judge, private

respondents failed to prove as yet that they have a clear and unmistakable right over the La Paz Road – which was sought to be protected by the injunctive writ. They merely anchor their purported right over the La Paz Road on the bare allegation that they have been using the same as public road right-of-way for more than ten years. A mere allegation does not meet the standard of proof that would warrant the issuance of the injunctive writ. Failure to establish the existence of a clear right which should be judicially protected through the writ of injunction is a sufficient ground for denying the injunction.

 Consequently, the case should be further heard by the RTC so that the parties can

fully prove their respective positions on the issues. 

Due process considerations dictate that the assailed injunctive writ is not a judgment on the merits but merely an order for the grant of a provisional and ancillary remedy to preserve the status quo until the merits of the case can be heard. The hearing on the application for issuance of a writ of preliminary injunction is separate and distinct from the trial on the merits of the main case. [29] The evidence submitted during the hearing of the incident is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits.[30] There are vital facts that have yet to be presented during the trial which may not be obtained or presented during the hearing on the application for the injunctive writ.[31] Moreover, the quantum of evidence required for one is different from that for the other.[32]

 WHEREFORE, the petitions are DENIED. Accordingly, the July 31,

2001 Decision and February 21, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60543 are AFFIRMED.

 

SO ORDERED.

#9

NATIONAL ASSOCIATION OF ELECTRICIY CONSUMERS FOR REFORMS, INC. (NASECORE), represented by PETRONILO ILAGAN; FEDERATION OF VILLAGE ASSOCIATIONS (FOVA), represented by SIEFRIEDO VELOSO; and FEDERATION OF LAS PIÑAS VILLAGE (FOLVA), represented by BONIFACIO DAZO,

Petitioners,

               - versus -

ENERGY REGULATORY COMMISSION (ERC) and MANILA ELECTRIC COMPANY, INC. (MERALCO),

Respondents.

G. R. No. 190795

Present:

CARPIO, J.,

       Chairperson,

 *LEONARDO-DE CASTRO,

BRION,

PEREZ, and

SERENO, JJ.

Promulgated:

July 6, 2011

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

D E C I S I O N

SERENO, J.:

The Energy Regulatory Commission (ERC), created under the Electric Power Industry Reform Act of 2001(EPIRA),[1] used   to  apply   the  Return  on  Rate  Base (RORB) method to determine the proper amount a distribution utility (DU) may charge for the services it provides. The RORB scheme had been the method for computing allowable electricity charges in the Philippines for decades, before the onset of the EPIRA. Section 43(f) of the EPIRA allows the ERC to shift from the RORB methodology to alternative forms of internationally accepted rate-setting methodology,   subject   to  multiple   conditions.[2] The   ERC,   through   a   series   of resolutions, adopted the Performance-Based Regulation (PBR) method to set the allowable rates DUs may charge their customers.[3] Meralco, a DU, applied for an increase of its distribution rate under the PBR scheme docketed as ERC Case No. 2009-057  RC   (MAP2010 case)  on  7  August  2009.  Petitioners  NASECORE,  FOLVA, FOVA, and Engineer Robert F. Mallillin (Mallillin) all filed their own Petitions for Intervention to oppose the application of Meralco.[4]

At   the   initial   hearing,   on   6  October   2009,   the   following   entered   their appearances: (1) Meralco, (2) Mallillin, and (3) FOVA. Petitioners NASECORE and FOLVA failed to appear despite due notice.[5]

Meralco presented its first witness on 13 November 2009. At the date of hearing, FOLVA failed to appear despite due notice.[6] Likewise, on 19 November 2009,   the   continuation   of  Meralco’s   presentation   of   its   witness,   petitioners NASECORE, FOVA, and FOLVA all failed to appear despite due notice.[7] NASECORE had sent a letter requesting that it be excused from the said hearing, but reserved its right to cross-examine the witness presented by Meralco. The latter objected to this request by virtue of the ERC’s Rules of Practice and Procedure. ERC ruled that the absence of NASECORE and FOVA was deemed a waiver of their right to cross-examine Meralco’s first witness.[8]

 At the 26 November 2009 hearing, NASECORE and FOLVA again failed to attend the hearing despite due notice. Upon motion by Meralco, ERC declared that  NASECORE  had  waived   its   right   to   cross-examine   the   second  witness  of Meralco for failure to attend the said hearing. ERC then gave Meralco five (5) days from said date of hearing within which to file its Formal Offer of Evidence. FOVA and all   the other   Intervenors  were,   likewise,  given ten (10)  days  from receipt thereof to file their comments thereon and fifteen (15) days from said date of hearing to file their position papers or Memoranda.[9]

On  1  December   2009,  Meralco   filed   its   Formal  Offer   of   Evidence  with compliance. On 7 December 2009, it was directed by ERC to submit additional documents to facilitate the evaluation of its application. 

Petitioner NASECORE claims that it was only on 8 December 2009, that it received  Meralco’s   Formal  Offer   of   Evidence,   together  with   a   copy  of   the   7 December 2009 ERC Order. Thus, it believes that it has until 18 December 2009 to file its comment thereon.

On   10   December   2009,   Petitioner   NASECORE   filed   with   ERC   a Manifestation with Motion dated 9 December 2009 requesting that the ERC direct applicant Meralco to furnish intervenor NASECORE all the items in ERC’s directive/Order dated 7 December  2009; to furnish Intervenor NASECORE a copy of the Records of  the Proceedings of the hearings held on 19 and 26 November  2009;  and  to  grant   the  same  intervenor  fifteen  (15)  days,   from receipt   of   applicant’s   compliance   with   the   ERC’s   Order   dated   7 

December  2009, within which to file its comment to applicant’s Formal Offer of Evidence.

On   14  December   2009,[10] Meralco’s   application   in   the  MAP2010 case was approved   by   ERC. Petitioner   NASECORE   protests   this   claiming   approval   as premature,   that   there were still four  days  before the expiration of   the period given to it to file its opposition to the formal offer of evidence of Meralco, and before petitioner  NASECORE received  its  copy of   the documents  Meralco was required to additionally submit in the 7 December 2009 ERC Order.

A   day   after   the   aforementioned   Decision,   or   on   15   December   2009, petitioner   NASECORE   allegedly   received   the   additional   documents   Meralco submitted in compliance with the ERC’s 7 December 2009 Order.

Malillin   filed   his   Motion   for   Reconsideration   (MR)   before   the   ERC.[11]  Instead   of   filing   their   own  motions   for   reconsideration,   petitioners   came directly to this Court via a Petition for Certiorari under Rule 65 of the Rules of Court with an Urgent Prayer for the Issuance of a Temporary Restraining Order (TRO) or Status Quo Order.

Allegations in the Instant Petition; Meralco’s and ERC’s Comments

Petitioners’   main   assertion   is   that   the   ERC   Decision   approving   the MAP2010 application of Meralco is null and void for having been issued in violation of  their  right  to due process of   law.[12] They further ask this  Court  to stay the execution of the aforementioned Decision for being void, to wit:

As already shown earlier, the assailed ERC Decision is a patent nullity due to lack of due process of law. Thus, being a void decision, it can not (sic) be the source of any right   on   the   part   of  MERALCO   to   collect   additional   charges   from   their   customers. Invariably, the 4.3 million customers of MERALCO has (sic) no obligation whatsoever to pay additional distribution charges to MERALCO. To implement such void ERC decision, is plainly oppressive, confiscatory, and unjust.[13]

 

On 26 January 2010,  Meralco filed  its  Comment  to the  instant  Petition. Meralco contends that the said Petition should be denied due course or dismissed for the following reasons:

1.     Petitioners have availed of an improper remedy;[14]

2.     Petitioners have failed to observe the proper hierarchy of courts;[15]

3.     Petitioners   were   amply   afforded   the   right   to   participate   in   the proceedings and have thus been afforded sufficient opportunity to be heard;[16] and

4.     Meralco has already voluntarily suspended the implementation of the approved MAP2010 rates rendering the issues raised in this Petition moot.[17]

Meralco furthermore opposes petitioners’ prayer for the issuance of a TRO or Status quo order. It argues that petitioners failed to present an “urgent and paramount   necessity”   for   the   issuance   of   the  writ   considering   that  Meralco already   voluntarily   suspended   the   implementation   of   the   assailed   Decision pending resolution of Mallillin’s MR. In fact, on 1 February 2010, ERC issued an Order suspending the implementation of the 14 December 2009 Decision pending the resolution of Mallillin’s MR.

On 27 August 2010, ERC filed its Comment. The ERC argued that a Petition for Certiorari under Rule 65 is not the proper remedy in the case at bar; that there was no denial  of  petitioners’   right  to procedural  due process;  and that   its  10 March 2010 order has rendered the instant petition moot. In this Order, the ERC granted   the  MR  of  Mallillin   and   directed   the   implementation   of   the   therein reflected revised distribution rates.

New Allegations in the Reply and Meralco’s Comment Thereon

On 8 April 2010, petitioners filed their Reply to Meralco’s Comment. In their Reply, petitioners, for the first time, put forward the following arguments:

(1)       Meralco, from 2003-2008, has been earning more than the 12% rate of recovery considered by law as just and reasonable.

Petitioners   newly   argue   that   the   ERC   erred   in   approving   Meralco’s application for increasing its charges in spite of the validation by the Commission on Audit (COA), through a report, of a computation showing Meralco’s income as exceeding the 12% mandated by law. Petitioners conclude thus:

In view of the COA Audit Report (x x x), the position of the herein petitioners were  validated, i.e., that Meralco’s rate increase  of P0.0865/KWh granted in 2003 was not   only   unnecessary   but   also   unreasonable,   hence  MERALCO   should  not   only   be ordered to roll back its rate but also to refund its excess revenues to consumers.

(2)       Questionable rate-setting methodology adopted by ERC.

According to petitioners, this Court ordered the ERC to consider the 2003 increase it granted to Meralco as provisional until it has taken action on the COA Audit Report but that ERC disregarded this order because of its adamant position that the PBR rate fixing methodology is the “be-all-and-end-all” of its rate fixing function while sacrificing the interests of millions of consumers.[18]

          They   argue   that   it   is   not   the   validity   of   the   rate   setting  methodology employed but the reasonableness of the rates to be applied that ought to be the controlling factor in determining the rates that a public utility should be allowed to implement.[19]

Thus, the ERC should not limit itself with the use of the PBR method if it would result in unreasonable rates. Rather, the ERC should have the authority to employ any method so long as the result was reasonable to both consumer and investor.   In   effect,   petitioners   are   asking   this   court   to   adopt   the   end   result doctrine,  which was pronounced by the U.S.  Supreme Court  in National Power Commission v. Hope Natural Gas Co.[20] and cited  in   the concurring  opinion  of former Chief Justice Fred Ruiz Castro in Republic v. Medina.[21]

Petitioners contend that the use of the PBR method results in disadvantage to the public, viz:

In   fine,  MERALCO   succeeded   in  wangling   from   the   ERC   through   an   internationally accepted rate-setting methodology (i.e, Performance Based Rate [PBR]) a rate that will not only guarantee that its operations shall  remain viable but a rate that will  give it astronomical profits at the expense of the consuming public whom it  is obligated to serve.

 

A table showing that the common stockholders of Meralco, for the last 21 years, had earned 424% on their actual investment, per year, was also presented by  petitioners.  Petitioners  conclude  that   these numbers  negate  any argument that Meralco needs a rate increase, irrespective of any under rate methodology applied.[22]

The Issue of the Validity of the PBR was not

Squarely Raised in this Petition; the Sole Issue

is the Denial of Due Process

We have ruled that “issues not previously ventilated cannot be raised for the  first  time  on   appeal,  much   less  when  first   proposed   in   the   reply   to   the comment on the petition for review.”[23] To allow petitioners to blindside Meralco with such newly raised issues violates the latter’s due process rights.  Having been raised   for   the   first   time,   this   Court   cannot   rule   on   the   issues   regarding   the unreasonableness of Meralco’s rates and the validity of the choice of the PBR method. If petitioners wanted to include these issues for resolution, the proper procedure was for them to ask this Court to allow them to amend their Petition for the inclusion of the aforementioned issues. Thus, we rule that the sole issue for resolution in this case is whether or not petitioners’ right to due process of law was violated when the ERC issued its Order before the expiration of the period granted to petitioners to file their comment.

There Has Been No Denial of Due Process, at

most only an Irregularity in the Precipitate

Issuance of the Assailed Decision, which

Irregularity ERC has Sought to Remedy

In Cooperative Devt. Authority v. Dolefil Agrarian Reform Beneficiaries Coop., Inc. et al.,[24] it  was  held   that   the   appellate   court   violated   the   therein petitioners’ right to be heard when it rendered judgment against them without allowing them to file their comment or opposition.

In the case at bar, petitioners were required to file their comment on the formal offer of evidence of Meralco. However, the ERC rendered its Decision prior to the lapse of the period granted to petitioners. According to petitioners, ERC’s failure to accord them a reasonable opportunity to present their oppositions or comments on the application of Meralco clearly denied them due process of law. The ERC committed grave abuse of  discretion when  it  deprived them of  their opportunity to be heard. 

This prompted Petitioners to file the present Petition on 20 January 2010.

This Court is of the Opinion that considering the facts in this case, including all the events that occurred both prior to and subsequent to the issuance of the 14 December 2010 Decision, the ERC did not deprive petitioners of their right to be heard.

Petitioners claim that that they were not given a chance to submit their evidence or memorandum in support  of  their  position that Meralco had been charging rates that were beyond the 12% reasonable rate of return established in jurisprudence.[25]  The records show, however, that they had been given notice to attend all the hearings conducted by the ERC, but that they voluntarily failed to appear in or attend those hearings.

Furthermore, after the issuance of the assailed Order, Mallillin filed an MR before petitioners filed their Petition in this Court. On 25 January 2010, the ERC issued an Order directing Petitioners NASECORE, FOLVA, and FOVA to file their respective comments on Mallillin’s  MR. Petitioners were given a period of ten days from receipt of the order, to file their comments. The ERC also scheduled the hearing on the said MR on 5 February 2010.

On 26 January 2010, Meralco filed a Manifestation and Motion wherein it expressed   its   decision   to   voluntarily   suspend   the   implementation   of   the   14 December 2009 Decision pending the ERC’s resolution of Mallillin’s MR.

Instead of filing their comments, petitioners NASECORE and FOVA, through separate letters respectively dated 28 January 2010 and 31 January 2010, sought to excuse themselves from participating in the proceedings before the ERC on the ground that they have already filed the present Petition.

On   1   February   2010,   the   ERC   issued   an   Order   suspending   the implementation of the herein questioned 14 December 2010 Decision pending the resolution of the MR.

During   the   5   February   2010   hearing,   only  Meralco   appeared.   Neither petitioners nor Mallillin participated in the proceedings.

On 10 March 2010, ERC issued an Order granting the MR with modification, the dispositive portion of which reads:

WHEREFORE,   the   foregoing   premises   considered,   the   “Motion   for Reconsideration”   filed   by   Engr.   Robert   F.   Mallillin   is   hereby   GRANTED   WITH MODIFICATION.  Accordingly,  MERALCO  is  hereby  directed   to   implement   the  revised distribution   rates,   excluding   all   rate   distortions,   as   shown   in   the   foregoing   table. Consequently, the Order dated February 1, 2010 issued by the Commission granting the deferment of the implementation of the Decision dated December 14, 2009 pending final resolution of Engr. Mallillin’s motions is hereby LIFTED.

 

SO ORDERED.[26]

         

Where opportunity to be heard either through oral arguments or through pleadings is granted, there is no denial of due process. It must not be overlooked that prior to the issuance of the assailed Decision, petitioners were given several opportunities   to   attend   the   hearings   and   to   present   all   their   pleadings   and 

evidence in the MAP2010 case. Petitioners voluntarily failed to appear in most of those hearings.  

Although it is true that the ERC erred in prematurely issuing its Decision, its subsequent act of ordering petitioners to file their comments on Mallillin’s MR cured this defect. We have held that any defect in the observance of due process requirements is cured by the filing of a MR.[27] Thus, denial of due process cannot be invoked by a party who has had the opportunity to be heard on his MR.[28] Even though petitioners never filed a MR, the fact that they were still given notice of Mallillin’s filing of a MR and the opportunity to file their comments thereto makes immaterial  ERC’s  failure to admit  their  comment  in the MAP2010 case.  After all, petitioners’ allegations in their unfiled comment could have still, easily and just as effectively, been raised in the MAP2010 case by incorporating the arguments in the comment to be filed in the MR case. It must be remembered that the standard of due process impressed upon administrative tribunals allows a certain degree of latitude as long as fairness is not ignored.[29]

The opportunity granted by the ERC of, technically, allowing petitioners to finally   be   able   to   file   their   comment   in   the   case,   resolves   the   procedural irregularity previously inflicted upon petitioners.

We   find   that   there   has   been   no   denial   of   due   process   and   that   any irregularity in the premature issuance of the assailed Decision has been remedied by the ERC through its Order which gave petitioners the right to participate in the hearing of the MR filed by Mallillin.  

Petitioners have Chosen the Wrong Remedy and the Wrong Forum; the Real Motive for Bringing Petition was to Obtain an indefinite TRO, this the Court cannot Countenance

Section 1, Rule 23 of the ERC’S Rules of Procedure expressly provides for the remedy of filing a motion for reconsideration, viz:

A party adversely affected by a final order, resolution, or decision of the Commission rendered in an adjudicative proceeding may, within fifteen (15) days from receipt of a copy thereof, file a motion for reconsideration. In its motion, the movant may also request   for   reopening   of   the   proceeding   for   the   purpose   of   taking   additional 

evidence in accordance with Section 17 of Rule 18. No more than one motion for reconsideration by each party shall be entertained.

Rule 65 of the Rules of Civil Procedure provides that a petition for certiorari may  be filed  when “there   is  no  appeal,  nor  any  plain,   speedy,  and adequate remedy   in   the   ordinary   course   of   law”. The   “plain”   and   “adequate   remedy” referred to in Rule 65 is a motion for reconsideration of the assailed decision.[30] Thus, it is a well-settled rule that the filing of a motion for reconsideration is a condition sine qua non before   the   filing   of   a   special   civil   action   for   certiorari.[31] The purpose of this rule is to give the lower court the opportunity to correct itself.[32] However, this requirement is not an ironclad rule. The prior filing of a motion for reconsideration may be dispensed with if petitioners are able to show a concrete, compelling, and valid reason for doing so.[33] The Court may brush aside the procedural barrier and take cognizance of the petition if it raises an issue of paramount importance and constitutional significance.[34] Thus:

True, we had, on certain occasions, entertained direct recourse to this Court as an exception to the rule on hierarchy of courts. In those exceptional cases, however, we   recognized  an  exception  because   it  was  dictated  by  public  welfare  and   the advancement of public policy, or demanded by the broader interest of justice, or the orders   complained   of   were   found   to   be   patent   nullities,   or   the   appeal   was considered as clearly an inappropriate remedy.[35]

Petitioners claim that they did not file any motion for reconsideration with the ERC “in order to prevent the imminent miscarriage of justice, that the issue involves the principles of social justice, that the Decision sought to be set aside  is a patent nullity  and that the need for relief  therefore  is  extremely urgent”[36]; because they believe that the same would be a futile exercise considering that the ERC had blatantly disregarded the Supreme Court directive to consider the last increase of Meralco as provisional until ERC has taken action on the COA Audit Report;[37] and   because   “an   appeal   would   be   slow,   inadequate,   and insufficient.”[38]

They also claim that the direct resort to the Supreme Court resorted to by them is in order “to timely prevent a grave injustice to the 4.3 million customers of Meralco who stand to suffer by reason of a patently void decision by ERC which would   result   in   additional   monthly   billing   of   at   least   half   a   billion   pesos”;[39] because “time is of the essence”; and because “transcendental constitutional issues” are involved in this case.[40] 

Petitioners further argue that their decision to go directly to this Court is justified “because of   the number  of  consumers  affected by  the said  Decision; because the amount involved in the controversy is so huge (P605.25 million [plus 12% VAT] additional billing per month); because it is violative of the provisions of EPIRA; because it is contrary to the constitutional provisions on social justice, and because it is in utter disregard of the COA Audit Report”.[41]

We do not uphold petitioners’ arguments on this matter.

In Cervantes v. CA,[42]  this Court ruled:

It must be emphasized that a writ of certiorari is a prerogative writ, never demandable as a matter of right, never issued except in the exercise of judicial discretion. Hence, he who seeks a writ of certiorari must apply for it only in the manner and strictly in accordance with the provisions of the law and the Rules. Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not.   To   dispense   with   the   requirement   of   filing   a   motion   for   reconsideration, petitioner must show a concrete, compelling, and valid reason for doing so, which petitioner failed to do. Thus, the Court of Appeals correctly dismissed the petition.

The general statements used by Petitioner to excuse their direct recourse to this Court are not the “concrete, compelling, and valid reasons” required by jurisprudence  to   justify   their   failure   to  comply  with   the  mandated  procedural requirements.   In   addition   to   this,   the  “urgency”  of   the   resolution  of  matters raised by petitioners is negated, by the fact that rates approved by the ERC, in the exercise of its rate-fixing powers, are in a sense, inherently only provisional.

Furthermore, this Court finds that the real motive behind the filing of the present   Petition   is   to   obtain   an   indefinite   TRO   and   this,   the   Court   cannot countenance.   Section  9,  Rule  58  of   the  Rules  of  Court  provides   the   rules   for permanent injunctions, to wit:

Sec. 9. When final injunction granted.

If after the trial of the action it appears that the applicant is entitled to have the act or acts   complained  of  permanently  enjoined,   the   court   shall   grant   a  final   injunction perpetually   restraining   the   party   or   person   enjoined   from   the   commission   or continuance of the act or acts or confirming the preliminary mandatory injunction.

Petitioners assert that this Court should issue a TRO because of the huge amount that would unduly burden the consumers with the continued application 

of the MAP2010rates. According to petitioners, “if not stayed, the present financial hardships of 4.3 million MERALCO customers due to the global financial meltdown and the recent calamities in the country will surely further worsen.” Petitioners also claim that there is an extreme urgency to secure a TRO, considering that the assailed Decision is immediately executory.

The purpose of a TRO is to prevent a threatened wrong and to protect the property or rights involved from further injury, until the issues can be determined after a hearing on the merits.[43] Under Section 5, Rule 58 of the 1997 Rules of Civil Procedure,   a   TRO  may  be   issued  only   if   it   appears   from  the   facts   shown  by affidavits or by a verified application that great or  irreparable  injury would be incurred by an applicant before the writ of preliminary injunction could be heard.

If   such   irreparable   injury   would   result   from   the   non-issuance   of   the requested  writ  or   if   the  “extreme urgency”   referred   to  by  petitioners   indeed exists, then they should have been more vigilant in protecting their rights. As they have all been duly notified of the proceedings in the ERC case, they should have appeared before the ERC and participated in the trials.

We find that petitioners erred in thinking that the non-issuance of the TRO they   requested  would   put   consumers   in   danger   of   suffering   an   “irreparable injury”.   But   this   asserted   injury   can   be   repaired,   because,   had   petitioners participated in the proceedings before the ERC and the latter had found merit in their   appeal,   the   undue   increase   in   electric   bills   shall   be   refunded   to   the consumers.

All   the   other   issues   raised   by   petitioners   in   connection   with   the MAP2010 case are factual in nature and should be raised before the ERC not before this Court. Allegations and issues in connection with the rate increases under ERC Case No. 2008-018- RC and ERC Case No. 2008-004-RC, including the question of whether Meralco improperly exceeded the 12% maximum rate of return provided by law, are more properly to be disposed of in another pending case, G.R. No. 191150.[44]

Before finally disposing of this case, we deem it proper to warn the ERC that it cannot give a deadline to parties before it that it will  not respect. Even though   the  ERC,  as  an  administrative  agency,   is  not  bound  by   the   rigidity  of certain procedural requirements, it is still bound by law and practice to observe 

the fundamental and essential requirements of due process in justiciable cases presented before it.

WHEREFORE, the instant petition is hereby DISMISSED.

          SO ORDERED.

#10

ATTY. TOMAS ONG CABILI,                                  Complainant,

              - versus -

JUDGE RASAD G. BALINDONG, Acting Presiding Judge, RTC, Branch 8, Marawi City,

Respondent.

A.M. No. RTJ-10-2225(formerly A.M. OCA I.P.I. No. 09-3182-RTJ)

    Present:

      CORONA, C.J.,

      CARPIO,

      VELASCO, JR.,

      LEONARDO-DE CASTRO,

      BRION,

           PERALTA,

      BERSAMIN,

      DEL CASTILLO,

      ABAD,

      VILLARAMA, JR.,

      PEREZ,

      MENDOZA,

           SERENO,* and

REYES,** JJ.

     Promulgated:

        September 6, 2011

 

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

 

 

 

D E C I S I O NPER CURIAM:

 

We   resolve   the   administrative   complaint against   respondent   Acting Presiding Judge Rasad G. Balindong of the Regional Trial Court (RTC) of Marawi City, Branch 8, forGross Ignorance of the Law, Grave Abuse of Authority, Abuse of Discretion, and/or Grave Misconduct Prejudicial to the Interest of the Judicial Service.[1]

 

The Factual Antecedents

 

The antecedent facts, gathered from the records, are summarized below.

 

Civil Case No. 06-2954[2] is an action for damages in Branch 6 of the Iligan City RTC against   the  Mindanao   State   University   (MSU), et al., arising   from   a vehicular accident that caused the death of Jesus Ledesma and physical injuries to several others.

 

On November 29, 1997, the Iligan City RTC rendered a Decision, holding the MSU liable for damages amounting to P2,726,189.90. The Court of Appeals (CA) 

affirmed the Iligan City RTC decision and the CA decision subsequently lapsed to finality. On January 19, 2009, Entry of Judgment was made.[3] 

 

On March 10,  2009,  the  Iligan City RTC  issued a writ  of  execution.[4] The MSU, however, failed to comply with the writ; thus, on March 24, 2009, Sheriff Gerard Peter Gaje served a Notice of Garnishment on the MSU’s depository bank, the Land Bank of the Philippines (LBP), Marawi City Branch.[5]

 

The Office of the Solicitor General opposed the motion for execution, albeit belatedly, in behalf of MSU.[6] The Iligan City RTC denied the opposition in itsMarch 31, 2009 Order. The MSU responded to the denial by filing on April 1, 2009 a petition with the Marawi City RTC, for prohibition and mandamus with an application for the issuance of a temporary restraining order (TRO) and/or preliminary injunction against the LBP and Sheriff Gaje.[7] The petition of MSU was raffled to the RTC, Marawi City, Branch 8, presided by respondent Judge.

 

The respondent Judge set the hearing for the application for the issuance of a TRO on April 8, 2009.[8] After this hearing, the respondent Judge issued a TRO restraining Sheriff Gaje from garnishing P2,726,189.90 from MSU’s LBP-Marawi City Branch account.[9]

 

On April   17,   2009,   the   respondent   Judge   conducted   a   hearing   on   the application for  the  issuance of  a  writ  of  preliminary   injunction.  Thereafter,  he required MSU to file a memorandum in support of its application for the issuance of a writ of preliminary injunction.[10]  On April  21, 2009, Sheriff Gaje moved to dismiss the case on the ground of lack of jurisdiction.[11] The respondent Judge thereafter granted the motion and dismissed the case.[12]

 

On May 8, 2009, complainant Atty. Tomas Ong Cabili, counsel of the private plaintiffs in Civil Case No. 06-2954, filed the complaint charging the respondent 

Judge  withGross Ignorance of the Law, Grave Abuse of Authority, Abuse of Discretion, and/or Grave Misconduct Prejudicial to the Interest of the Judicial Service for interfering with the order of a co-equal court, Branch 6 of the Iligan City RTC, by issuing the TRO to enjoin Sheriff Gaje from garnishing P2,726,189.90 from MSU’s LBP-Marawi City Branch account.[13]

 

The respondent Judge denied that he interfered with the order of Branch 6 of   the   Iligan   City   RTC.[14] He   explained   that   he  merely   gave   the   parties   the opportunity   to   be   heard   and   eventually   dismissed   the   petition   for   lack   of jurisdiction.[15]

 

In its December 3, 2009 Report, the Office of the Court Administrator (OCA) found the respondent Judge guilty of gross ignorance of the law for violating the elementary rule of non-interference with the proceedings of a court of co-equal jurisdiction.[16] It recommended a fine of P40,000.00, noting that this is the respondent Judge’s second offense.[17]

 

The Court resolved to re-docket the complaint as a regular administrative matter and to require the parties to manifest whether they were willing to submit the case for resolution on the basis of the pleadings/records on file.[18]

 

          Atty. Tomas Ong Cabili complied through his manifestation of April 19, 2010,[19] stating   that  he   learned   from reliable   sources   that   the   respondent   Judge   is “basically   a   good   Judge,”   and   “an   admonition   will   probably suffice  as  reminder  to  respondent  not  to  repeat  the  same  mistake   in   the future.”[20] The respondent Judge filed his manifestation on September 28, 2010.[21]

The Court’s Ruling

The Court finds the OCA’s recommendation well-taken.

 

          The doctrine of judicial stability or non-interference in the regular orders or judgments of a co-equal court is an elementary principle in the administration of justice:[22] no court  can  interfere by  injunction with the  judgments or orders of another court of concurrent jurisdiction having   the  power   to  grant   the   relief sought by the injunction.[23] The rationale for the rule is founded on the concept of jurisdiction: a court that acquires jurisdiction over the case and renders judgment therein has jurisdiction over its judgment, to the exclusion of all other coordinate courts, for its execution and over all its incidents, and to control, in furtherance of justice, the conduct of ministerial officers acting in connection with this judgment.[24]

 

Thus, we have repeatedly held that a case where an execution order has been  issued  is   considered  as still pending,   so   that  all   the  proceedings  on  the execution   are   still   proceedings   in   the   suit.[25] A   court  which   issued   a  writ   of execution has   the   inherent  power,   for   the  advancement  of   justice,   to  correct errors   of   its  ministerial   officers   and   to   control   its   own   processes.[26] To   hold otherwise would be to divide the  jurisdiction of  the appropriate forum in the resolution of incidents arising in execution proceedings. Splitting of jurisdiction is obnoxious to the orderly administration of justice.[27]

 

Jurisprudence shows that a violation of this rule warrants the imposition of administrative sanctions.

 

In Aquino, Sr. v. Valenciano,[28]  the   judge   committed   grave   abuse   of discretion   for   issuing   a   TRO   that interfered with or frustrated the implementation of an order of another court of co-equal  jurisdiction. In Yau v. The Manila Banking Corporation,[29] the  Court  held   that undue interference by one in the proceedings and processes of another is prohibited by law.

 

In Coronado v. Rojas,[30] the judge was found liable for gross ignorance of the  law when he proceeded to enjoin the final  and executory decision of  the Housing   and   Land   Use   Regulatory   Board   (HLURB)   on   the   pretext   that   the temporary   injunction  and   the  writ   of   injunction  he   issued  were  not  directed against   the   HLURB’s   writ   of   execution,   but   only   against   the  manner   of   its execution. The Court noted that the judge “cannot feign ignorance that the effect of the injunctive writ was to freeze the enforcement of the writ of execution, thus frustrating the lawful order of the HLURB, a co-equal body.”[31]

 

In Heirs of Simeon Piedad v. Estrera,[32]  the Court penalized two judges for issuing a TRO against the execution of a demolition order issued by another co-equal court. The Court stressed that “when the respondents-judges acted on the application for the issuance of a TRO, they were aware that they were acting on matters pertaining to a co-equal court, namely, Branch 9 of the Cebu City RTC, which was already exercising jurisdiction over the subject matter in Civil Case No. 435-T. Nonetheless, respondent-judges still opted to interfere with the order of a co-equal and coordinate court of concurrent jurisdiction, in blatant disregard of the doctrine of judicial stability, a well-established axiom in adjective law.” [33]

 

To be sure, the law and the rules are not unaware that an issuing court may violate   the   law  in   issuing  a  writ  of  execution and have  recognized  that   there should be a remedy against this violation. The remedy, however, is not the resort to another co-equal body but to a higher court with authority to nullify the action of the issuing court. This is precisely the judicial power that the 1987 Constitution, under Article VIII, Section 1, paragraph 2,[34] speaks of and which this Court has operationalized   through a  petition  forcertiorari, under  Rule  65 of   the Rules  of Court.[35]

 

In the present case, the respondent Judge clearly ignored the principle of judicial   stability   by   issuing   a   TRO   to   temporarily   restrain[36] Sheriff  Gaje   from enforcing the writ of execution issued by a co-equal court, Branch 6 of the Iligan 

City  RTC,  and from pursuing  the garnishment  of   the amount of P2,726,189.90 from MSU’s account with the LBP, Marawi City Branch. The respondent Judge was aware that he was acting on matters pertaining to the execution phase of a final decision   of   a   co-equal   and   coordinate   court   since   he   even   quoted   MSU’s allegations in his April 8, 2009 Order.[37]

 

The respondent Judge should have refrained from acting on the petition because Branch 6 of the Iligan City RTC retains jurisdiction to rule on any question on the enforcement of the writ of execution. Section 16, Rule 39 of the Rules of Court   (terceria),   cited   in   the   course   of   the   Court’s   deliberations, finds   no application to this  case since this  provision applies  to  claims made by a  third person, other than the judgment obligor or his agent;[38] a third-party claimant of a property under execution may file a claim with another court[39] which, in the exercise of its own jurisdiction, may issue a temporary restraining order. In this case, the petition for injunction before the respondent Judge was filed by MSU itself, the judgment obligor.   If   Sheriff   Gaje   committed   any   irregularity   or exceeded his authority in the enforcement of the writ, the proper recourse for MSU was to file a motion with, or an application for relief from, the same court which issued the decision, not from any other court,[40] or to elevate the matter to the CA on a petition for certiorari.[41]  In this case, MSU filed the proper motion with the Iligan City RTC (the issuing court), but, upon denial, proceeded to seek recourse through another co-equal court presided over by the respondent Judge.

 

It   is   not   a   viable   legal   position   to   claim   that   a   TRO   against   a  writ   of execution is issued against an erring sheriff, not against the issuing Judge. A TRO enjoining the enforceability  of  a writ  addresses the writ   itself,  not merely the executing sheriff. The duty of a sheriff in enforcing writs is ministerial and not discretionary.[42] As already mentioned above, the appropriate action is to assail the   implementation  of   the  writ  before   the   issuing  court   in  whose  behalf   the sheriff   acts,   and,   upon   failure,   to   seek   redress   through   a   higher   judicial body.  Significantly, MSU did file its opposition  before the issuing court — Iligan City RTC — which denied this opposition.

 

That the respondent Judge subsequently rectified his error by eventually dismissing the petition before him for lack of jurisdiction is not a defense that the respondent Judge can use.[43]  His lack of familiarity with the rules in interfering with the acts of a co-equal court undermines public confidence in the judiciary through his  demonstrated  incompetence.   In   this  case,  he  impressed upon the Iligan public that the kind of interference he exhibited can be done, even if only temporarily, i.e., that an official act of the Iligan City RTC can be thwarted by going to the Marawi City RTC although they are co-equal courts. That the complaining lawyer,  Atty.  Tomas Ong Cabili,   subsequently   reversed course  and manifested that   the   respondent   Judge   is   “basically   a   good   Judge,”[44] and   should  only  be reprimanded, cannot affect the respondent Judge’s liability.  This liability and the commensurate penalty do not depend on the complainant’s personal opinion but on the facts he alleged and proved, and on the applicable law and jurisprudence. 

 

When the law is sufficiently basic, a judge owes it to his office to know and to simply apply it. Anything less would be constitutive of gross ignorance of the law.[45]

 

          Under A.M. No. 01-8-10-SC or the Amendment to Rule 140 of the Rules of Court Re: Discipline of Justices and Judges, gross ignorance of the law is a serious charge,   punishable   by   a   fine   of   more   than P20,000.00,   but   not exceeding P40,000.00, suspension from office without salary and other benefits for more than three (3) but not exceeding six (6) months, or dismissal from the service. Considering the attendant circumstances of this case, the Court — after prolonged  deliberations  — holds   that   a  fine  of P30,000.00   is   the   appropriate penalty. This imposition is an act of leniency as we can, if we so hold, rule for the maximum   fine   of P40,000.00   or   for   suspension   since   this   is   the   respondent Judge’s second offense.

 

          WHEREFORE,  premises considered, respondent Judge Rasad G. Balindong, Acting   Presiding   Judge,   Regional   Trial   Court,   Branch   8,   Marawi   City,   is hereby FOUND GUILTY of Gross Ignorance of the Law and FINED in the amount 

of P30,000.00, with a stern WARNING that a repetition of the same will be dealt with more severely.

 

          SO ORDERED.

#11

SPOUSES DEMOCRITO

and OLIVIA LAGO,

                               Complainants,

- versus -

JUDGE GODOFREDO B. ABUL, JR., Regional Trial Court, Branch 43, Gingoog City,

A.M. No. RTJ-10-2255

(Formerly OCA I.P.I. No. 10-3335-RTJ)

Present:

CARPIO, J., Chairperson,

PERALTA,

ABAD,

MENDOZA, and

REYES, JJ.

                                   Respondent. Promulgated:

      February 8, 2012 

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

RESOLUTION 

MENDOZA, J.:

 

          Subject of this disposition is the motion for reconsideration of the Court’s January 17, 2011 Decision, filed by respondent Judge Godofredo B. Abul, Jr. (Judge Abul), Presiding Judge, Regional Trial Court, Branch 4, Butuan City, finding him guilty of gross ignorance of the law and imposing upon him a fine in the amount of P25,000.00. 

 Disciplinary action was meted on him for (1) assuming jurisdiction over

Civil Case No. 2009-905 without the mandated raffle and notification and service of summons to the adverse party and issuing a temporary restraining order (TRO); (2) setting the case for summary hearing beyond the 72-hour required by the law in order to determine whether the TRO could be extended; and (3) issuing a writ of preliminary injunction without prior notice to the complainants and without hearing.

           Judge Abul stresses that contrary to the allegations of the complainants, the Clerk of Court conducted a raffle of the case in question. In support thereof, he attached the Letter[1] dated July 3, 2009 of Atty. Rhodora N. Restituto, Clerk of Court VI, RTC, Misamis Oriental, to prove that the case was indeed raffled on June 9, 2009 to RTC, Branch 43, Gingoog City. He explained that he issued the 72-hour TRO pursuant to the 2nd paragraph of Section 5, Rule 58 of the Rules in order to avoid injustice and irreparable damage on the part of the plaintiff.  He pointed out, however, that the 72-hour TRO was issued only on July 7,

2009 because he was not physically present in the RTC, Branch 43, from July 2, 2009 to July 6, 2009.

 Judge Abul admits not conducting a summary hearing before the expiration

of the 72 hours from the issuance of the ex parte TRO to determine whether it could be extended to twenty (20) days. He, however, explained that the holding of the summary hearing within 72 hours from the issuance of the TRO was simply not possible and was scheduled only on July 14, 2009 because the law office of the plaintiff’s counsel was 144 kilometers away from Gingoog City and under that situation, the service of the notice could only be made on the following day, July 8, 2009. Hence, it would be impractical to set the hearing on July 8, 2009. In addition, on July 9, 10 and 13, 2009, he was conducting hearings in his permanent station,  RTC, Branch 4, Butuan City.

 As to the charge that he failed to cause the service of summons on the

complainants and that no hearing was conducted prior to the issuance of the writ of preliminary injunction, Judge Abul belies the same by submitting   (1) a certified true copy of the Sheriff’s Return of Service[2] dated July 9, 2009 stating that he actually served the summons on the complainants on July 8, 2009 together with the copy of the 72-hour TRO; and (2) a certified machine copy of the summons[3] bearing the signature of complainant Democrito Lago that he personally received the same.

 Judge Abul likewise attached to his motion for reconsideration a certified

true copy of the Order[4] dated July 29, 2009 and the Transcript of Stenographic Notes[5] to show that he conducted a hearing on July 21 and 29, 2009 and that the parties had a lengthy argument during the hearing and thereafter agreed to submit the application for the issuance of the writ of preliminary injunction for resolution.

 The Court finds merit in the motion for reconsideration. With respect to the issues regarding the raffle, the lack of notice and hearing

prior to the issuance of the writ of preliminary injunction, the Court is satisfied with the explanation of Judge Abul as it is substantiated by the official records on file.

            

             As to the issue on the delay in conducting the summary hearing for purposes of extending the 72-hour TRO, the Court finds the reasons advanced by Judge Abul to be well-taken. Section 5, Rule 58 of the Rules permits the executive judge to issue a TRO ex parte, effective for 72 hours, in case of extreme urgency to avoid grave injustice and irreparable injury. Then, after the lapse of the 72 hours, the Presiding Judge to whom the case was raffled shall then conduct a summary hearing to determine whether the TRO can be extended for another period.               Under the circumstances, Judge Abul should not be penalized for failing to conduct the required summary hearing within 72 hours from the issuance of the original TRO. Though the Rules require the presiding judge to conduct a summary hearing before the expiration of the 72 hours, it could not, however, be complied with because of the remoteness and inaccessibility of the trial court from the parties’ addresses. The importance of notice to all parties concerned is so basic that it could not be dispensed with. The trial court cannot proceed with the summary hearing without giving all parties the opportunity to be heard. 

It is a settled doctrine that judges are not administratively responsible for what they may do in the exercise of their judicial functions when acting within their legal powers and jurisdiction.[6]  Not every error or mistake that a judge commits in the performance of his duties renders him liable, unless he is shown to have acted in bad faith or with deliberate intent to do an injustice. [7] To hold otherwise would be to render judicial office untenable, for no one called upon to try the facts or interpret the law in the process of administering justice can be infallible in his judgment.[8]

   To constitute gross ignorance of the law, it is not enough that the subject

decision, order or actuation of the respondent judge in the performance of his official duties is contrary to existing law and jurisprudence but, most importantly, he must be moved by bad faith, fraud, dishonesty or corruption.[9]

           In this case, complainants failed to show that Judge Abul was motivated by bad faith, ill will or malicious motive when he granted the TRO and preliminary injunction. Complainants did not adduce any proof to show that impropriety and bias attended the actions of the respondent judge.

 WHEREFORE, the motion for reconsideration is GRANTED. The

Decision dated January 17, 2011 is SET ASIDE. The administrative complaint filed against Judge Godofredo B. Abul, Jr. is DISMISSED.

 SO ORDERED.

#12

AUSTRALIAN PROFESSIONAL REALTY, INC., JESUS GARCIA, and LYDIA MARCIANO,                          Petitioners,

               - versus -

MUNICIPALITY OF PADRE GARCIA BATANGAS PROVINCE,                          Respondent.

G. R. No. 183367

Present:

CARPIO, J., Chairperson,  BRION,PEREZ,SERENO, andREYES, JJ.

Promulgated:

March 14, 2012

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

D E C I S I O N SERENO, J.: 

          This is a Petition for Review on Certiorari under Rule 45 of the Rules

of  Court, seeking to annul the Court of Appeals (CA) Resolutions in CA-G.R. SP

No. 102540 dated 26 March 2008[1] and 16 June 2008, which denied petitioners’

Motion for the issuance of a status quo order and Motion for issuance of a

temporary restraining order (TRO) and/or writ of preliminary injunction.

 

Statement of the Facts and the Case

          In 1993, fire razed to the ground the old public market of respondent

Municipality of Padre Garcia, Batangas. The municipal government, through its

then Municipal Mayor Eugenio Gutierrez, invited petitioner Australian

Professional Realty, Inc. (APRI) to rebuild the public market and construct a

shopping center.

On 19 January 1995, a Memorandum of Agreement (MOA)[2] was executed

between petitioner APRI and respondent, represented by Mayor Gutierrez and the

members of the Sangguniang Bayan. Under the MOA, APRI undertook to

construct a shopping complex in the 5,000-square-meter area. In return, APRI

acquired the exclusive right to operate, manage, and lease stall spaces for a period

of 25 years.

In May 1995, Victor Reyes was elected as municipal mayor of respondent.

On 6 February 2003, respondent, through Mayor Reyes, initiated a Complaint for

Declaration of Nullity of Memorandum of Agreement with Damages before the

Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial Region, Branch

87. The Complaint was docketed as Civil Case No. 03-004.

On 12 February 2003, the RTC issued summons to petitioners, requiring

them to file their Answer to the Complaint. However, the summons was returned

unserved, as petitioners were no longer holding office in the given address.

On 2 April 2003, a Motion for Leave of Court to Effect Service by

Publication was filed by respondent before the RTC and subsequently granted by

the trial court.

On 24 November 2003, the RTC issued an Order declaring petitioners in

default and allowing respondent to present evidence ex parte.

On 6 October 2004, a Decision was rendered by the RTC, which, after

narrating the testimonial evidence for respondent, stated:

After the completion of the testimony of Victor M. Reyes, counsel for the petitioner manifested that he will file the formal offer of evidence in writing.

On July 19, 2004, counsel for the petitioner filed before this Court his Formal Offer of Documentary Exhibits consisting of Exhibits “A” to “H”, inclusive of submarkings.

On August 18, 2004 an order was issued by the Court admitting all the exhibits formally offered by the petitioner thru counsel and this case was ordered submitted for resolution of the Court.

There is no opposition in the instant petition.

WHEREFORE, in view thereof, and finding the petition to be sufficient in form and substance, it being supported by sufficient evidence, judgement (sic) is hereby rendered in favor of the plaintiff as against the respondents as follows:  

(a)                The Memorandum of Agreement is hereby declared null and void for being contrary to law and public policy, particularly R.A. 6957 and R.A. 7718;

(b)               The respondents are hereby ordered to pay the amount of FIVE MILLION PESOS (₱5,000,000.00) in favor of the plaintiff for damages caused to the latter;

(c)                The structures found within the unfinished PADRE GARCIA SHOPPING CENTER are hereby declared forfeited in favor of the Municipality of Padre Garcia.

SO ORDERED.[3]

 

There having been no timely appeal made, respondent filed a Motion for

Execution of Judgment, which was granted by the RTC. A Writ of Execution was

thus issued on 15 July 2005.  

After learning of the adverse judgment, petitioners filed a Petition for Relief

from Judgment dated 18 July 2005. This Petition was denied by the RTC in an

Order dated 15 June 2006. In another Order dated 14 February 2008, the trial court

denied the Motion for Reconsideration.

Petitioners later filed before the CA a Petition for Certiorari and Prohibition

dated 28 February 2008, docketed as CA-G.R. SP No. 102540. On 7 March 2008,

petitioners filed before the CA a Motion for the Issuance of Status Quo Order and

Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary

Injunction.[4] The motion prayed for an order to restrain the RTC from “further

proceeding and issuing any further Order, Resolution, Writ of Execution, and any

other court processes”[5] in the case before it.

On 26 March 2008, the CA issued a Resolution denying the said motion,

stating thus:

After a careful evaluation of petitioners’ Motion for Issuance of Status Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction, We find that the matter is not of extreme urgency and that there is no clear and irreparable injury that would be suffered by the petitioners if the prayer for the issuance of a Status Quo Order, Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction is not granted. In Ong Ching Kian Chuan v. Court of Appeals, it was held that, to be entitled to injunctive relief, the petitioner must show, inter alia, the existence of a clear and unmistakable right and an urgent and paramount necessity for the writ to prevent serious damage.

WHEREFORE, petitioners’ prayer for the issuance of a Status Quo Order, Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby DENIED for lack of merit.[6]

On 17 June 2008, the CA denied the Motion for Reconsideration of the 26

March 2008 Resolution, stating that the mere preservation of the status quo is not

sufficient to justify the issuance of an injunction.

On 8 July 2008, petitioners filed the instant Petition for Review on Certiorari

dated 6 July 2008.  

          Petitioners claim that the amount of APRI’s investment in the Padre Garcia

Shopping Center is estimated at ₱30,000,000, the entirety of which the RTC

declared forfeited to respondent without just compensation. At the time of the

filing of the Petition, APRI had 47 existing tenants and lessees and was deriving an

average monthly rental income of ₱100,000. The Decision of the RTC was

allegedly arrived at without first obtaining jurisdiction over the persons of

petitioners. The execution of the allegedly void judgment of the RTC during the

pendency of the Petition before the CA would probably work injustice to the

applicant, as the execution would result in an arbitrary declaration of nullity of the

MOA without due process of law.

          Petitioners further allege that respondent did not exercise reasonable

diligence in inquiring into the former’s address in the case before the RTC. The

Process Server Return, with respect to the unserved summons, did not indicate the

impossibility of a service of summons within a reasonable time, the efforts exerted

to locate APRI, or any inquiry as to the whereabouts of the said petitioner. 

          On 6 August 2008, this Court required respondent to file its Comment. On

13 February 2009, the Comment was filed, alleging among others that despite the

RTC’s issuance of a Writ of Execution, respondent did not move to implement the

said writ out of administrative comity and fair play. Even if the writ were

implemented, petitioners failed to state in categorical terms the serious injury they

would sustain.

          Respondent further argues that it is now in possession of the contracts that

the lessees of the Padre Garcia Shopping Center executed with APRI. Thus, there

are “actions [that militate] against the preservation of the present state of

things,”[7] as sought to be achieved with the issuance of a status quo order.

          On 2 June 2009, petitioners filed their Reply to respondent’s Comment.

          On 3 March 2010, this Court issued a Resolution requiring the parties to

inform the Court of the present status of CA-G.R. SP No. 102540. On 15 April

2010, respondent manifested that after the parties filed their respective

Memoranda, the CA considered the case submitted for decision. On 12 May 2010,

petitioners filed their Compliance, stating that the appellate court, per its

Resolution dated 7 August 2008, held in abeyance the resolution of CA-G.R. SP

No. 102540, pending resolution of the instant Petition.

The Court’s Ruling

          The Petition is denied for failure to show any grave abuse of discretion on

the part of the CA.

Procedural Issue: Propriety of a Petition for Review under Rule 45

          Before proceeding to the substantive issues raised, we note that petitioners

resorted to an improper remedy before this Court. They filed a Petition for Review

on Certiorari under Rule 45 of the Rules of Court to question the denial of their

Motion for the issuance of an injunctive relief.

          Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be

taken from an interlocutory order. An interlocutory order is one that does not

dispose of the case completely but leaves something to be decided upon.[8] An

order granting or denying an application for preliminary injunction is interlocutory

in nature and, hence, not appealable.[9] Instead, the proper remedy is to file a

Petition for Certiorari and/or Prohibition under Rule 65.[10]

          While the Court may dismiss a petition outright for being an improper

remedy, it may in certain instances proceed to review the substance of the petition.[11] Thus, this Court will treat this Petition as if it were filed under Rule 65.

Substantive Issue: Grave abuse of discretion on the part of the CA

          The issue that must be resolved by this Court is whether the CA committed

grave abuse of discretion in denying petitioners’ Motion for the Issuance of Status

Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ

of Preliminary Injunction (Motion for Injunction).

A writ of preliminary injunction and a TRO are injunctive reliefs and

preservative remedies for the protection of substantive rights and interests.[12] An

application for the issuance of a writ of preliminary injunction and/or TRO may be

granted upon the filing of a verified application showing facts entitling the

applicant to the relief demanded.

Essential to granting the injunctive relief is the existence of an urgent

necessity for the writ in order to prevent serious damage. A TRO issues only if the

matter is of such extreme urgency that grave injustice and irreparable injury would

arise unless it is issued immediately.[13] Under Section 5, Rule 58 of the Rule of

Court,[14] a TRO may be issued only if it appears from the facts shown by affidavits

or by the verified application that great or irreparable injury would be inflicted on

the applicant before the writ of preliminary injunction could be heard.

Thus, to be entitled to the injunctive writ, petitioners must show that (1)

there exists a clear and unmistakable right to be protected; (2) this right is directly

threatened by an act sought to be enjoined; (3) the invasion of the right is material

and substantial; and (4) there is an urgent and paramount necessity for the writ to

prevent serious and irreparable damage.[15]

The grant or denial of a writ of preliminary injunction in a pending case rests

on the sound discretion of the court taking cognizance of the case, since the

assessment and evaluation of evidence towards that end involves findings of fact

left to the said court for its conclusive determination.[16] Hence, the exercise of

judicial discretion by a court in injunctive matters must not be interfered with,

except when there is grave abuse of discretion.[17]

Grave abuse of discretion in the issuance of writs of preliminary injunction

implies a capricious and whimsical exercise of judgment equivalent to lack of

jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason

of passion, prejudice or personal aversion amounting to an evasion of positive duty

or to a virtual refusal to perform the duty enjoined or to act at all in contemplation

of law.[18] The burden is thus on petitioner to show in his application that there is

meritorious ground for the issuance of a TRO in his favor.[19]

In this case, no grave abuse of discretion can be imputed to the CA. It did

not exercise judgment in a capricious and whimsical manner or exercise power in

an arbitrary or despotic manner.

 

 

No clear legal right

A clear legal right means one clearly founded in or granted by law or is

enforceable as a matter of law.[20] In the absence of a clear legal right, the issuance

of the writ constitutes grave abuse of discretion.[21] The possibility of irreparable

damage without proof of an actual existing right is not a ground for injunction.[22]

A perusal of the Motion for Injunction and its accompanying Affidavit filed

before the CA shows that petitioners rely on their alleged right to the full and

faithful execution of the MOA. However, while the enforcement of the Writ of

Execution, which would nullify the implementation of the MOA, is manifestly

prejudicial to petitioners’ interests, they have failed to establish in their Petition

that they possess a clear legal right that merits the issuance of a writ of preliminary

injunction. Their rights under the MOA have already been declared inferior or

inexistent in relation to respondent in the RTC case, under a judgment that has

become final and executory.[23] At the very least, their rights under the MOA are

precisely disputed by respondent. Hence, there can be no “clear and unmistakable”

right in favor of petitioners to warrant the issuance of a writ of injunction. Where

the complainant’s right or title is doubtful or disputed, injunction is not proper.[24]

The general rule is that after a judgment has gained finality, it becomes the

ministerial duty of the court to order its execution. No court should interfere, by

injunction or otherwise, to restrain such execution.[25] The rule, however, admits of

exceptions, such as the following: (1) when facts and circumstances later transpire

that would render execution inequitable or unjust; or (2) when there is a change in

the situation of the parties that may warrant an injunctive relief. [26] In this case,

after the finality of the RTC Decision, there were no supervening events or

changes in the situation of the parties that would entail the injunction of the Writ of

Execution.

No irreparable injury

Damages are irreparable where there is no standard by which their amount

can be measured with reasonable accuracy.[27] In this case, petitioners have alleged

that the loss of the public market entails costs of about ₱30,000,000 in investments,

₱100,000 monthly revenue in rentals, and amounts as yet unquantified – but not

unquantifiable – in terms of the alleged loss of jobs of APRI’s employees and

potential suits that may be filed by the leaseholders of the public market for breach

of contract. Clearly, the injuries alleged by petitioners are capable of pecuniary

estimation. Any loss petitioners may suffer is easily subject to mathematical

computation and, if proven, is fully compensable by damages. Thus, a preliminary

injunction is not warranted.[28] With respect to the allegations of loss of

employment and potential suits, these are speculative at best, with no proof

adduced to substantiate them.

The foregoing considered, the CA did not commit grave abuse of discretion

in denying the Motion for Injunction. In any case, petitioners may still seek

recourse in their pending Petition before the Court of Appeals.

          WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions

dated 26 March 2008 and 16 June 2008 in CA-G.R. SP No. 102540

are AFFIRMED. The Court of Appeals is directed to proceed with dispatch to

dispose of the case before it.

 

 

SO ORDERED.

#13

PHILIPPINE NATIONAL BANK,                                        Petitioner,

                       -versus-

CASTALLOY TECHNOLOGY CORPORATION, ALLIED INDUSTRIAL CORPORATION, ALINSU STEEL FOUNDRY CORPORATION, GLORIA C. NGO and TOMAS C. NGO, JR.,                                        Respondents.

G.R. No. 178367

Present:

CARPIO, J.,         Chairperson,BRION,PEREZ,SERENO, andREYES, JJ.

Promulgated:

March 19, 2012

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

DECISION 

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

The Factual Antecedents 

          On August 26, 1996, respondent Castalloy Technology Corporation (Castalloy) was granted by petitioner Philippine National Bank (PNB) a credit line in the amount ofP4,000,000.00, later increased to P45,000,000.00 on October 15, 1996.  Pursuant to said credit line, Castalloy borrowed from PNB the following amounts, covered by three separate promissory notes executed by Castalloy in

favor of PNB, to wit: (1) Promissory Note (PN) No. 404/96 dated August 29, 1996, in the amount of US$190,910.00, (2) PN No. 451/96 dated September 24, 1996, in the amount of US$381,650.26, and (3) PN No. 473/96 dated October 8, 1996 in the amount of US$495,426.83.  While the promissory notes indicate the amounts thereof in US dollars, the net proceeds of the loan were released in Philippine currency, in the following amounts: (1) P4,992,442.00 for PN No. 404/96, (2) P9,985,000.00 for PN No. 451/96, and (3) P12,980,487.10 for PN No. 473/96.           To secure payment of the loans obtained by Castalloy, respondents Alinsu Steel Foundry Corporation (Alinsu) and Allied Industrial Corporation (Allied) constituted in favor of PNB a real estate mortgage over four parcels of land covered by the following land titles, all issued by the Register of Deeds of Mandaue City: Transfer Certificate of Title (TCT) No. 8516, TCT No. 1676, TCT No. 30722, and TCT No. 30721.  To further secure the loan, respondents Gloria C. Ngo (Gloria) and Tomas C. Ngo, Jr.[3] (Tomas) executed a joint and solidary agreement in favor of PNB.           In addition to the three aforementioned promissory notes, PNB claimed that Castalloy had executed two other promissory notes with the following details: (1) PN No. 539/96 dated November 27, 1996, in the amount of P3,000,000.00, and (2) PN No. 365-9701DL-037 dated January 29, 1997 in the amount of P2,000,000.00.  These two loans were denied by Castalloy, which argued that the signature of Gloria in the two notes was forged, and that the proceeds thereof were not deposited to the corporation’s bank account.           After Castalloy defaulted in the payment of its obligations under the promissory notes, PNB filed a petition for extrajudicial foreclosure of real estate mortgage against Castalloy, Allied and Alinsu.           In the meantime, a complaint[4] for determination of correct obligation and injunction with application for writ of preliminary injunction/temporary restraining order was filed with the RTC by Castalloy, Allied, Alinsu, Gloria and Tomas against PNB and Sheriff Julbert E. Opada, arguing, among other matters, that: 

13.  Because of the disagreements brought about by the allegations of this complaint, that [respondent] Castalloy never borrowed

the amount of [P]5,000,000.00 and that the dollar loans of [respondent] Castalloy Technology Corp. were already converted by [petitioner] into pesos at the time of their release and should not be converted again by [petitioner] into pesos at the rate of [P]56.20 to $1.00 x x x.

 14.  There is a need for judicial a determination as to how much is

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

 15.  On the other hand, because what were released to

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

  

          In their application for preliminary injunction/temporary restraining order, the respondents claimed that the sale at the public auction of the mortgaged properties had to be held in abeyance pending judicial determination of the correct amount of Castalloy’s obligation to PNB.           In its opposition to the application for injunction, PNB argued that the parties’ dispute on the loan’s computation was not a valid ground to restrain the mortgage’s foreclosure. 

The Order of the RTC 

          On April 27, 2006, the RTC, issued an Order[6] granting the respondents’ application for a writ of preliminary injunction, subject to the posting of a bond in the amount ofP5,000,000.00.  The Court held that the difference in the outstanding loan amounts being claimed by the parties was “extremely extensive such that if a

foreclosure would be allowed at this point in time, the same would probably result in irreparable injury”[7] to the herein respondents.           PNB filed a motion for reconsideration, but the same was denied for lack of merit in an Order[8] dated May 31, 2006.  Unsatisfied, PNB questioned the RTC’s orders before the CA through a petition for certiorari under Rule 65 of the Rules of Court. 

The Ruling of the CA 

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

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

 SO ORDERED.[10]

  

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

 PNB’s motion for reconsideration was denied by the CA via its

resolution[13] dated May 24, 2007. 

          Hence, the present petition. 

The Issue 

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

This Court’s Ruling 

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

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

 (a)                That the applicant is entitled to the relief demanded, and

the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

 (b)               That the commission, continuance or non-performance of

the act or acts complained of during the litigation would probably work injustice to the applicant; or

 (c)                That a party, court, agency or a person is doing,

threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.

  

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

 

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

 On the last issue, we find that the issuance of the writ of

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

  

The ruling in Almeda[18] cited by the CA in its decision is inapplicable in this case, considering that in Almeda, the debtors were found to have made a valid consignation of what they, in good faith and in compliance with the loan

documents, honestly believed to be the real amount of their indebtedness.  Furthermore, the mortgagee in said case appeared to have unilaterally increased the loan’s interest rates to amounts that were excessive and unconscionable, without valid and reasonable standards upon which the increases were based.

 Further to this, the Court’s intent to depart from the broad application of

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

 (1) No temporary restraining order or writ of

preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the loan secured by the mortgage has been paid or is not delinquent unless the application is verified and supported by evidence of payment.

 (2) No temporary restraining order or writ of

preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the interest on the loan is unconscionable, unless the debtor pays the mortgagee at least twelve percent per annum interest on the principal obligation as stated in the application for foreclosure sale, which shall be updated monthly while the case is pending.

 (3) Where a writ of preliminary injunction has been issued against

a foreclosure of mortgage, the disposition of the case shall be speedily resolved.  To this end, the court concerned shall submit to the Supreme Court, through the Office of the Court Administrator, quarterly reports on the progress of the cases involving ten million pesos and above.

 (4) All requirements and restrictions prescribed for the issuance of

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

  

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

 As regards to the element of irreparable injury which was determined by the

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

 The injury being feared by the herein respondents is not of such

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

 

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

 The prevailing rule is that courts should avoid issuing a writ

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

  

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

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

           SO ORDERED.

#14

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

Petitioners,

- versus -

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

Respondent.

G.R. No.  171765

Present:

VELASCO, JR., J., Chairperson,

PERALTA,

ABAD,

MENDOZA, and

PERLAS-BERNABE, JJ.

Promulgated:

       March 21, 2012                                                                                                                                               

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

D E C I S I O N MENDOZA, J.:

 Assailed in this petition for review on certiorari under Rule 45 of the Rules

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

 The Factual and Procedural Antecedents

 On April 29, 2003, Gregorio D. Calo, Zoilito L. Cepeda, Victorioso D.

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

properties of MI and to prevent the impending takeover by UCCP of MI’s properties. They averred that UCCP was unlawfully claiming ownership of MI’s properties.

 On June 5, 2003, UCCP filed its Answer with Counterclaim,[6] asserting its

ownership of MI’s properties based on certain documents.[7] It claimed that the question of ownership in this case was a settled issue and required no further discourse because “they constitute a majority of the Board of Trustees and, therefore, in complete control thereof x x x.”[8]

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

 WHEREFORE, it appearing that petitioners will

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

 IT IS ORDERED.[10]

 Meanwhile, UCCP received copies of MI’s Amended Articles of

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

 On June 11, 2003, UCCP, represented by Rev. Baslot, and MI, represented

by its President Dr. Edgardo R. Batitang (Dr. Batitang), lodged a Complaint for Declaration of Nullity of the 2003 Amended Articles of Incorporation and By-Laws of Mindanao Institute with Prayer for the Issuance of Temporary Restraining Order and Preliminary Injunction and/or Damages[12] before the RTC, which was docketed as Civil Case No. 09-2003.  UCCP and MI asserted that the Amendment of MI’s Articles of Incorporation effected by signatories in a reckless and hasty fashion was accomplished without the required majority vote in clear violation of Section 16[13] of Corporation Code.[14] Of the ten (10) signatures appearing in

the 2003 Amended AOI constituting 2/3 of the Board of Trustees of MI, five (5) were affixed by mere representatives who were not duly authorized to vote. Further, UCCP and MI, as represented by Dr. Batitang, stressed that the procedure in the acceptance of corporate members as embodied in the Amended By-Laws contains discriminatory provisions, wherein certain members maybe subjected to confirmation and acceptance or rejection, but aimed specifically at members to be nominated by UCCP.

 On June 17, 2003, the signatories moved to dismiss[15] the complaint for

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

 At the scheduled joint hearing of Special Civil Action Case No. 03-02 and

Civil Case No. 09-2003 to determine the propriety of the issuance of a writ of preliminary injunction, the Law Office of Bernabe, Doyon, Bringas and Partners entered its appearance[16] as collaborating counsel for UCCP. Incidentally, Atty. Roy Doyon (Atty. Doyon), the son of Executive Judge Orlando F. Doyon (Judge Doyon), was one of the partners in the said law firm. This prompted Atty. Nelbert T. Poculan, UCCP’s lead counsel, to move for the inhibition of Judge Doyon from the case. On the other hand, Atty. Rolando F. Carlota, MI Incorporators’ counsel, expressed no objection to the continued participation of Judge Doyon in the proceedings of the case despite the said development. 

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

 WHEREFORE, the prayer for issuance of a

Temporary Restraining Order in Civil Case No. 09-2003 is hereby denied with finality.

 As prayed for in Special Civil Case No. 03-02, let a

Writ of Preliminary Injunction be issued, restraining, prohibiting, and enjoining respondents, UNITED

CHURCH OF CHRIST IN THE PHILIPPINES (UCCP) acting thru AGUSAN DISTRICT CONFERENCE (ADC-UCCP), represented by Rev. Rodolfo Baslot, their agents, representatives, attorneys, and any other persons acting for and in their behalf from taking over, seizing control, managing, or administering MINDANAO INSTITUTE and preventing plaintiffs in discharging their functions and duties in the management, control and administration of the school, its premises and assets, upon plaintiffs putting up a bond in the amount of ₱200,000.00 duly approved by the Court, which bond shall be executed in favour of the defendants to answer for whatever damages they may sustain by reason of or arising from the issuance of the writ in the event that the Court will finally rule that the plaintiffs are not entitled thereto.

 IT IS SO ORDERED.

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

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

 It should be stressed that the questioned Amended

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

  

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

 On the other hand, plaintiffs in Special Civil Case

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

 It is precisely for this reason that the Court issued a

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

 UCCP moved for a reconsideration but the same was denied by the RTC in

its Resolution[19] dated August 15, 2003. 

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

 Disappointed with the unfavorable ruling, UCCP and MI, as represented by

Dr. Batitang, sought relief with the CA via a petition for certiorari under Rule 65 of the Rules of Court alleging grave abuse of discretion on the part of the RTC in issuing the assailed order.   

 

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

 

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

 SO ORDERED.[21]

 The CA reasoned, among others, that the petition for certiorari (Civil Case

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

 

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

Hence, this petition.  

THE ISSUES I

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

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

 In their Memorandum,[25] the petitioners argue that the CA went beyond the

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

 

   In its Memorandum,[27] respondent claims that the petition for review

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

 THE COURT’S RULING

 The petition lacks merit. The Court is called upon to resolve the issue of whether or not the CA erred

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

 A preliminary injunction is defined under Section 1, Rule 58 of the Rules of

Court, as follows: 

Section 1. Preliminary injunction defined; classes. — A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts. x x x

    

A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and protect certain rights and interests during the pendency of an action.[29]The objective of a writ of preliminary injunction is to preserve the status quo until the merits of the case can be fully heard.  Status quo is the last actual, peaceable and uncontested situation which precedes a controversy.[30]

 Significantly, Section 3, Rule 58 of the Rules of Court, enumerates the

grounds for the issuance of a writ of preliminary injunction:SEC. 3.  Grounds for issuance of preliminary

injunction. — A preliminary injunction may be granted when it is established:

 (a)    That the applicant is entitled to the relief

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

 

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

 

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

 Based on the foregoing provision, the Court in St. James College of

Parañaque v. Equitable PCI Bank[31] ruled that the following requisites must be proved before a writ of preliminary injunction will issue:

 (1) The applicant must have a clear and unmistakable right to be protected, that is, a right in   esse ;  (2) There is a material and substantial invasion of such right;

 (3) There is an urgent need for the writ to prevent irreparable injury to the applicant; and (4) No other ordinary, speedy, and adequate remedy exists to prevent the infliction of irreparable injury.[32] [Underscoring supplied]  It bears stressing that to be entitled to an injunctive writ, the right to be

protected and the violation against that right must be shown.  A writ of preliminary injunction may be issued only upon clear showing of an actual existing right to be protected during the pendency of the principal action.[33] When the complainant’s right or title is doubtful or disputed, he does not have a clear legal right and, therefore, the issuance of injunctive relief is not proper.[34]

 In the present case, the records fail to reveal any clear and unmistakable

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

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

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

x x x.         

Moreover, Rule 3.12 of Canon 3 of the Code of Judicial Conduct, which took effect from October 20 1989 until May 31, 2004, the applicable rule then, reads as follows:

A judge should take no part in a proceeding where the judge’s impartiality might reasonably be questioned.  These cases include, among others, proceedings where:

x x x

(d)     the judge is related by consanguinity or affinity to a party litigant within the sixth degree or to counsel within the fourth degree. [Underscoring supplied]

 The prohibitions under the afore-quoted provisions of the Rules are clear.

The disqualification is mandatory and gives the judicial officer concerned no discretion but to inhibit himself from trying or sitting in a case. The rationale, therefore, is to preserve the people's faith and confidence in the judiciary's fairness and objectivity.[35]

 While the Court finds it ludicrous that it was the counsel of UCCP, Atty.

Poculan, who sought the inhibition of Judge Doyon, considering that the law firm of the latter’s son is his collaborating counsel, still the mandatory prohibition

applies. Judge Doyon should have immediately inhibited himself from the case upon learning of the entry of appearance of his son’s law firm. Where the disqualifying fact is indubitable and the parties to the case make no waiver of such disqualification, as in the case at bench, Section 1, Rule 137 of the Rules of Court forthwith completely strips the judge of authority to proceed.[36]

 WHEREFORE, the petition is DENIED. The assailed September 30,

2005 Decision and March 1, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No. 79156, are hereby AFFIRMED.

 SO ORDERED