Sei sulla pagina 1di 113

THIRD DIVISION

[G.R. No. 141853. February 7, 2001]

TERESITA V. IDOLOR, petitioner, vs. HON. COURT OF APPEALS, SPS. GUMERSINDO DE GUZMAN and ILUMINADA DE GUZMAN and HON. PRUDENCIO CASTILLO, JR., Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 220, Quezon City, respondents.

GONZAGA-REYES, J.:

D E C I S I O N

This is a petition for review on certiorari filed by petitioner Teresita Idolor which seeks to set aside the decision [1] of the respondent Court of Appeals which reversed the Order [2] of the Regional Trial Court of Quezon City [3] granting Idolors prayer for the issuance of a writ of preliminary injunction and the resolution denying petitioners motion for reconsideration. [4]

On March 21, 1994, to secure a loan of P520,000.00, petitioner Teresita Idolor executed in favor of private respondent Gumersindo De Guzman a Deed of Real Estate Mortgage with right of extra-judicial foreclosure upon failure to redeem the mortgage on or before September 20, 1994. The object of said mortgage is a 200-square meter property with improvements located at 66 Ilocos Sur Street, Barangay Ramon Magsaysay, Quezon City covered by TCT No.

25659.

On September 21, 1996, private respondent Iluminada de Guzman, wife of Gumersindo de Guzman, filed a complaint against petitioner Idolor before the Office of the Barangay Captain of Barangay Ramon Magsaysay, Quezon City, which resulted in a Kasunduang Pag-aayos which agreement is quoted in full [5] :

Kami, ang (mga) may sumbong at (mga) ipinagsusumbong sa usaping binabanggit sa itaas, ay nagkakasundo sa pamamagitan nito na ayusin ang aming alitan gaya ng sumusunod:

Na ako si Teresita V. Idolor of legal age ay nakahiram ng halagang P520,000.00 noong September 20, 1994.

Na ang nasabing halaga ay may nakasanlang titulo ng lupa (TCT No. 25659) under Registry receipt 3420 dated July 15, 1996.

1

Na ako si Teresita V. Idolor ay humihingi ng 90 days palugit (grace period) to settle the said amount.

Failure to settle the above account on or before December 21, 1996, I agree to execute a deed of sale with the agreement to repurchase without interest within one year.

Total amount of P1,233,288.23 inclusive of interest earned.

At nangangako kami na tutupad na tunay at matapat sa mga katakdaan ng pag- aayos na inilahad sa itaas.

Petitioner failed to comply with her undertaking; thus private respondent Gumersindo filed a motion for execution before the Office of the Barangay captain who subsequently issued a certification to file action.

On March 21, 1997, respondent Gumersindo De Guzman filed an extra judicial foreclosure of the real estate mortgage pursuant to the parties agreement set forth in the real estate mortgage dated March 21, 1994.

On May 23, 1997, the mortgaged property was sold in a public auction to respondent Gumersindo, as the highest bidder and consequently, the Sheriffs Certificate of Sale was registered with the Registry of Deeds of Quezon City on June 23, 1997.

On June 25, 1998, petitioner filed with the Regional Trial Court of Quezon City, Branch 220, a complaint for annulment of Sheriffs Certificate of Sale with prayer for the issuance of a temporary restraining order (TRO) and a writ of preliminary injunction against private respondents, Deputy Sheriffs Marino Cachero and Rodolfo Lescano and the Registry of Deeds of Quezon City alleging among others alleged irregularity and lack of notice in the extra-judicial foreclosure proceedings subject of the real estate mortgage. In the meantime, a temporary restraining order was issued by the trial court.

On July 28, 1998, the trial court issued a writ of preliminary injunction enjoining private respondents, the Deputy Sheriffs and the Registry of Deeds of Quezon City from causing the issuance of a final deed of sale and consolidation of ownership of the subject property in favor of the De Guzman spouses. The trial court denied the motion for reconsideration filed by the de Guzman spouses.

Spouses de Guzman filed with the respondent Court of Appeals a petition for certiorari seeking annulment of the trial courts order dated July 28, 1998 which granted the issuance of a preliminary injunction.

On September 28, 1999, the respondent court granted the petition and annulled the assailed writ of preliminary injunction. Teresita Idolor filed her

2

motion for reconsideration which was denied in a resolution dated February 4,

2000.

Hence this petition for review on certiorari filed by petitioner Teresita V. Idolor. The issues raised by petitioner are: whether or not the respondent Court of Appeals erred in ruling (I) that petitioner has no more proprietary right to the issuance of the writ of injunction, (2) that the Kasunduang Pag-aayos did not ipso facto result in novation of the real estate mortgage, (3) that the Kasunduang Pag-aayos is merely a promissory note of petitioner to private respondent spouses; and (4) that the questioned writ of preliminary injunction was issued with grave abuse of discretion.

The core issue in this petition is whether or not the respondent Court erred in finding that the trial court committed grave abuse of discretion in enjoining the private and public respondents from causing the issuance of a final deed of sale and consolidation of ownership of the subject parcel of land in favor of private respondents.

Petitioner claims that her proprietary right over the subject parcel of land was not yet lost since her right to redeem the subject land for a period of one year had neither lapsed nor run as the sheriffs certificate of sale was null and void; that petitioner and the general public have not been validly notified of the auction sale conducted by respondent sheriffs; that the newspaper utilized in the publication of the notice of sale was not a newspaper of general circulation.

We do not agree.

Injunction is a preservative remedy aimed at protecting substantive rights and interests. [6] Before an injunction can be issued, it is essential that the following requisites be present: 1) there must be a right in esse or the existence of a right to be protected; 2) the act against which the injunction is to be directed is a violation of such right. [7] Hence the existence of a right violated, is a prerequisite to the granting of an injunction. Injunction is not designed to protect contingent or future rights. Failure to establish either the existence of a clear and positive right which should be judicially protected through the writ of injunction or that the defendant has committed or has attempted to commit any act which has endangered or tends to endanger the existence of said right, is a sufficient ground for denying the injunction. [8] The controlling reason for the existence of the judicial power to issue the writ is that the court may thereby prevent a threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly investigated and advisedly adjudicated. [9] It is to be

resorted to only when there

consequences which cannot be remedied under any standard of compensation. [10]

In the instant case, we agree with the respondent Court that petitioner has no more proprietary right to speak of over the foreclosed property to entitle her

is a pressing necessity to avoid injurious

3

to the issuance of a writ of injunction. It appears that the mortgaged property was sold in a public auction to private respondent Gumersindo on May 23, 1997 and the sheriffs certificate of sale was registered with the Registry of Deeds of Quezon City on June 23, 1997. Petitioner had one year from the registration of the sheriffs sale to redeem the property but she failed to exercise her right on or before June 23, 1998, thus spouses de Guzman are now entitled to a conveyance and possession of the foreclosed property. When petitioner filed her complaint for annulment of sheriffs sale against private respondents with prayer for the issuance of a writ of preliminary injunction on June 25, 1998, she failed to show sufficient interest or title in the property sought to be protected as her right of redemption had already expired on June 23, 1998, i.e. two (2) days before the filing of the complaint. It is always a ground for denying injunction that the party seeking it has insufficient title or interest to sustain it, and no claim to the ultimate relief sought - in other words, that she shows no equity. [11] The possibility of irreparable damage without proof of actual existing right is not a ground for an injunction. [12]

Petitioners allegation regarding the invalidity of the sheriffs sale dwells on the merits of the case; We cannot rule on the same considering that the matter should be resolved during the trial on the merits.

Petitioner next contends that the execution of the Kasunduang Pag-aayos dated September 21, 1996 between her and spouses de Guzman before the Office of the Lupon Tagapamayapa showed the express and unequivocal intention of the parties to novate or modify the real estate mortgage; that a comparison of the real estate mortgage dated March 21, 1994 and the Kasunduang Pag-aayos dated September 21, 1996 revealed the irreconciliable incompatibility between them, i.e., that under the first agreement, the amount due was five hundred twenty thousand (P520,000) pesos only payable by petitioner within six (6) months, after which it shall earn interest at the legal rate per annum and non-payment of which within the stipulated period, private respondents have the right to extra-judicially foreclose the real estate mortgage while under the second agreement, the amount due was one million two hundred thirty three thousand two hundred eighty eight and 23/100 (P1,233,288.23) inclusive of interest, payable within 90 days and in case of non payment of the same on or before December 21, 1996, petitioner should execute a deed of sale with right to repurchase within one year without interest; that the second agreement Kasunduang Pag-aayos was a valid new contract as it was duly executed by the parties and it changed the principal conditions of petitioners original obligations. Petitioner insists that the Kasunduang Pag-aayos was not a mere promissory note contrary to respondent courts conclusion since it was entered by the parties before the Lupon Tagapamayapa which has the effect of a final judgment. [13]

We are not persuaded.

4

Novation is the extinguishment of an obligation by the substitution or change

of the obligation by a subsequent one which terminates it, either by changing its objects or principal conditions, or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. [14] Under the law, novation is never presumed. The parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. [15] Accordingly,

it was held that no novation of a contract had occurred when the new agreement

entered into between the parties was intended to give life to the old one. [16]

A review of the Kasunduang Pag-aayos which is quoted earlier does not support petitioners contention that it novated the real estate mortgage since the will to novate did not appear by express agreement of the parties nor the old and the new contracts were incompatible in all points. In fact, petitioner expressly recognized in the Kasunduan the existence and the validity of the old obligation where she acknowledged her long overdue account since September 20, 1994 which was secured by a real estate mortgage and asked for a ninety (90) days grace period to settle her obligation on or before December 21, 1996 and that upon failure to do so, she will execute a deed of sale with a right to repurchase without interest within one year in favor of private respondents. Where the parties to the new obligation expressly recognize the continuing existence and validity of the old one, where, in other words, the parties expressly negated the lapsing of the old obligation, there can be no novation. [17] We find no cogent reason to disagree with the respondent courts pronouncement as follows:

In the present case, there exists no such express abrogation of the original undertaking. The agreement adverted to (Annex 2 of Comment, p.75 Rollo) executed by the parties on September 21, 1996 merely gave life to the March 21, 1994 mortgage contract which was then more than two years overdue.Respondent acknowledged therein her total indebtedness in the sum of P1,233,288.23 including the interests due on the unpaid mortgage loan which

amount she promised to liquidate within ninety (90) days or until December 21, 1996, failing which she also agreed to execute in favor of the mortgagee a deed of sale of the mortgaged property for the same amount without interest. Evidently, it was executed to facilitate easy compliance by respondent mortgagor with her mortgage obligation. It (the September 21, 1996 agreement)

is not incompatible and can stand together with the mortgage contract of March

21, 1994.

A compromise agreement clarifying the total sum owned by a buyer with the

view that he would find it easier to comply with his obligations under the Contract to Sell does not novate said Contract to Sell (Rillo v. Court of

Appeals, 274 SCRA 461 [1997]).

Respondent correctly argues that the compromise agreement has the force and effect of a final judgment. That precisely is the reason why petitioner resorted to

5

the foreclosure of the mortgage on March 27, 1997, after her failure to comply with her obligation which expired on December 21, 1996.

Reliance by private respondent upon Section 417 of the New Local Government Code of 1991, which requires the lapse of six (6) months before the amicable settlement may be enforced, is misplaced. The instant case deals with extra judicial foreclosure governed by ACT No. 3135 as amended.

Notably, the provision in the Kasunduang Pag-aayos regarding the execution of a deed of sale with right to repurchase within one year would have the same effect as the extra-judicial foreclosure of the real estate mortgage wherein petitioner was given one year from the registration of the sheriffs sale in the Registry of property to redeem the property, i.e., failure to exercise the right of redemption would entitle the purchaser to possession of the property. It is not proper to consider an obligation novated by unimportant modifications which do not alter its essence. [18] It bears stress that the period to pay the total amount of petitioners indebtedness inclusive of interest amounted to P1,233,288.23 expired on December 21, 1996 and petitioner failed to execute a deed of sale with right to repurchase on the said date up to the time private respondents filed their petition for extra-judicial foreclosure of real estate mortgage. The failure of petitioner to comply with her undertaking in the kasunduan to settle her obligation effectively delayed private respondents right to extra-judicially foreclose the real estate mortgage which right accrued as far back as 1994. Thus, petitioner has not shown that she is entitled to the equitable relief of injunction.

WHEREFORE, the petition is DENIED. The decision of the respondent Court of Appeals dated September 28, 1999 is hereby AFFIRMED.

SO ORDERED.

6

SECOND DIVISION

[A.M. No. MTJ-00-1250. February 28, 2001]

RIMEO S. GUSTILO, complainant, vs. HON. RICARDO S. REAL, SR., Presiding Judge, 2nd Municipal Circuit Trial Court of Victorias- Manapla, Negros Occidental, respondent.

QUISUMBING, J.:

R E S O L U T I O N

In a verified complaint [1] dated June 15, 1997, Rimeo S. Gustilo charged respondent Judge Ricardo S. Real, Sr., of the Municipal Circuit Trial Court of Victorias-Manapla, Negros Occidental with gross misconduct, gross incompetence, gross ignorance of the law, and violation of the Anti-Graft and Corrupt Practices Act relative to Civil Case No. 703-M entitled Weddy C. Libo-on v. Rimeo S. Gustilo, et al. for recounting of ballots of Precinct Nos. 27 and 27-A, Barangay Punta Mesa, Manapla, Negros Occidental.

Complainant avers that he was a candidate for punong barangay of Barangay Punta Mesa, Manapla, Negros Occidental in the May 12, 1997 elections. His lone opponent was Weddy C. Libo-on, then the incumbent punong barangay and the representative of the Association of Barangay Captains (ABC) to the Sangguniang Bayan of Manapla and the Sangguniang Panlalawigan of Negros Occidental. Both complainant and Libo-on garnered eight hundred nineteen (819) votes during the elections, resulting in a tie. The breaking of the tie by the Board of Canvassers was in complainants favor and he was proclaimed duly elected punong barangay of Punta Mesa, Manapla. [2]

On May 20, 1997, his opponent filed an election protest case, docketed as Civil Case No. 703-M, before the MCTC of Victorias-Manapla, Negros Occidental. Libo-on sought the recounting of ballots in two precincts, preliminary prohibitory injunction, and damages.

On May 21, 1997, respondent ordered the issuance of summons to the parties and set the hearing on June 6, 1997. [3]

On May 27, 1997, however, Libo-on filed a motion to advance the hearing to May 29 and 30, 1997.

7

The next day, respondent granted Libo-ons motion. The hearing was advanced to May 29 and 30, 1997 cancelling the hearing for June 6, 1997. [4] Complainant avers that he was not furnished a copy of this Order dated May 28, 1997.

On May 29, 1997, respondent judge issued a temporary restraining order (TRO) and annulled the proclamation of complainant as the duly elected punong barangay of Punta Mesa, Manapla. [5] Complainant declares that no copy of this Order dated May 29, 1997 was served on him. That same day, however, he was able to secure copies of the orders of respondent dated May 28 and May 29, 1997 from the COMELEC Registrar of Manapla, Negros Occidental and the Department of Interior and Local Government (DILG). Moreover, it was only in the afternoon of May 29, 1997 that complainant received a copy of Libo-ons petition in Civil Case No. 703-M and respondents Order dated May 21, 1997.

as punong

barangay. [6] That same day, he also filed a petition for certiorari before the

Regional Trial Court of Silay City, Negros Occidental, Branch 69 docketed as Special Civil Action No. 1936-69.

On June 5, 1997, the RTC lifted the TRO issued by respondent and declared as null and void the order nullifying complainants proclamation as duly elected punong barangay. [7]

Believing that respondent could not decide Civil Case No. 703-M impartially, complainant moved for his inhibition.

On June 11, 1997, respondent denied complainants motion for inhibition and after hearing Libo-ons motion for permanent injunction, issued a second TRO to maintain the status quo between the contending parties. [8]

Complainant argues that by issuing the second TRO, respondent reversed the order of the RTC of Silay City dated June 5, 1997. He also claims that by preventing him from assuming office, he was excluded by the DILG from participating in the election of the Liga ng Mga Barangay on June 14, 1997.

On

May

30,

1997,

complainant

took

his

oath

of

office

In his Comment, respondent denied the allegations. He claimed that when

Libo-on filed his motion to advance the hearing of the prayer for injunction on May 27, 1997 in Civil Case No. 703-M, complainant was served a copy by registered mail as shown by the registry receipts attached to said motion. Considering the urgency of the matter and since there was substantial compliance with due process, he issued the Order of May 28, 1997 which cancelled the hearing set for June 6, 1997 and advanced it to May 29 and 30,

1997.

Respondent claims that on May 29, 1997, Libo-on and his counsel appeared but complainant did not, despite due notice. The hearing then proceeded, with Libo-on presenting his evidence. As a result, he issued the TRO prayed for and

8

annulled complainants proclamation. Respondent admits that the Order of May 29, 1997, particularly the annulment of complainants proclamation, was outside the jurisdiction of his court. But since the COMELEC ignored Libo-ons petition for correction of erroneous tabulation and Libo-on had no other remedy under the law, he was constrained to annul complainants proclamation, which from the very beginning was illegal. He justified his action by our rulings in Bince, Jr. v. COMELEC, 312 Phil. 316 (1995) and Tatlonghari v. COMELEC, 199 SCRA 849 (1991), which held that a faulty tabulation cannot be the basis of a valid proclamation.

Respondent also faults the RTC of Silay City for issuing the Order dated June 5, 1997, which lifted the TRO he issued and declared void his nullification of complainants proclamation. Respondent contends that complainant should first have exhausted all remedies in his court before resorting to the special civil action for certiorari with the RTC. The latter court, in turn, should have dismissed the action for certiorari for failure to exhaust judicial remedies.

With respect to his Order of June 11, 1997, respondent explains that it was never meant to reverse the Order of the RTC of Silay City dated June 5, 1997. He points out that both parties in Civil Case No. 703-M were present during the hearing after due notice. After receiving their evidence, he found that unless a TRO was issued, Libo-on would suffer a grave injustice and irreparable injury. He submits that absent fraud, dishonesty, or corruption, his acts, even if erroneous, are not the subject of disciplinary action.

In its evaluation and recommendation report dated November 29, 1999, the Office of the Court Administrator (OCA) found that respondents errors were not honest mistakes in the performance of his duties. Rather, his actions showed a bias in favor of Libo-on and evinced a pattern to prevent the complainant from assuming office as the duly elected punong barangay despite his having been proclaimed as such by the Board of Canvassers. The OCA recommends that respondent be fined P20,000.00 and warned that a repetition of similar acts in the future will be dealt with more severely.

Supreme Court Administrative Circular No. 20-95 provides:

2. The application for a TRO shall be acted upon only after all parties are heard in a summary hearing conducted within twenty-four (24) hours after the records are transmitted to the branch selected by raffle. The records shall be transmitted immediately after raffle (Emphasis supplied).

x x x

4. With the exception of the provisions which necessarily involve multiple-sala stations, these rules shall apply to single-sala stations especially with regard to immediate notice to all parties of all applications for TRO.

9

The foregoing clearly show that whenever an application for a TRO is filed, the court may act on the application only after all parties have been notified and heard in a summary hearing. In other words, a summary hearing may not be dispensed with. [9] In the instant case, respondent admits that he issued the injunctive writ sought on May 29, 1997 after receiving the applicants evidence ex parte. His failure to abide by Administrative Circular No. 20-95 in issuing the first TRO is grave abuse of authority, misconduct, and conduct prejudicial to the proper administration of justice.

Worse, he compounded the infraction by annulling complainants proclamation as the duly elected punong barangay of Punta Mesa, Manapla and prohibiting him from assuming office. Respondent admits that his court was not vested with the power or jurisdiction to annul the proclamation, but seeks to justify his action on the ground that the proclamation was void ab initio. In so doing, respondent wantonly usurped a power exclusively vested by law in the COMELEC. [10] A judge is expected to know the jurisdictional boundaries of courts and quasi-judicial bodies like the COMELEC as mapped out by the Constitution and statutes and to act only within said limits. A judge who wantonly arrogates unto himself the authority and power vested in other agencies not only acts in oppressive disregard of the basic requirements of due process, but also creates chaos and contributes to confusion in the administration of justice. Respondent, in transgressing the jurisdictional demarcation lines between his court and the COMELEC, clearly failed to realize the position that his court occupies in the interrelation and operation of the countrys justice system. He displayed a marked ignorance of basic laws and principles. Rule 3.01 of the Code of Judicial Conduct provides that a judge shall be faithful to the law and maintain professional competence. By annulling complainants proclamation as the duly elected punong barangay, despite being aware of the fact that his court had no power to do so, not only is respondent guilty of grave abuse of authority, he also manifests unfaithfulness to a basic legal rule as well as injudicious conduct.

Moreover, in willfully nullifying complainants proclamation despite his courts want of authority, respondent knowingly issued an unjust order.

Note that the RTC of Silay City corrected respondents errors by declaring null and void his Order dated May 29, 1997. Nonetheless, he compounded his previous errors of judgment by proceeding to hear Libo-ons motion for permanent injunction and issuing a second TRO on June 11, 1997 on the ground that extreme urgency and grave injustice and irreparable injury will arise if no injunctive remedy were granted. Respondent insists that his act did not reverse the Order of the RTC in Special Civil Action No. 1936-69, since the second TRO he issued satisfied the notice and hearing requirements of Circular No. 20-95.

Before an injunctive writ can be issued, it is essential that the following requisites be present: (1) there must be a right in esse or the existence of a right to be protected; and (2) the act against which injunction to be directed is a

10

violation of such right. [11] The onus probandi is on movant to show that there exists a right to be protected, which is directly threatened by the act sought to be enjoined. Further, there must be a showing that the invasion of the right is

material and substantial and that there is an urgent and paramount necessity for the writ to prevent a serious damage. [12] In this case, complainant had been duly proclaimed as the winning candidate for punong barangay. He had taken his oath

of office. Unless his election was annulled, he was entitled to all the rights of said

office. We do not see how the complainants exercise of such rights would cause an irreparable injury or violate the right of the losing candidate so as to justify the issuance of a temporary restraining order to maintain the status quo. We see no reason to disagree with the finding of the OCA that the evident purpose of the second TRO was to prevent complainant from participating in the election of the Liga ng mga Barangay. Respondent must be held liable for violating Rule

3.02 of the Code of Judicial Conduct which provides that, In every case, a judge

shall endeavor diligently to ascertain the facts and the applicable law unswayed

by partisan interests, public opinion, or fear of criticism.

In a similar case, a judge was fined P5,000.00 for failure to observe the requirements of Administrative Circular No. 20-95 when he issued a TRO enjoining a duly proclaimed barangay captain from participating in the elections of officers of the ABC of Taft, Eastern Samar. [13] Note, however, that in the

instant case, the respondents infractions are not limited to the mere issuance of

a restraining order without conducting the summary conference required by

Administrative Circular No. 20-95. He also annulled the proclamation of the complainant knowing very well that he had no such authority. When his first restraining order was set aside and nullification of complainants proclamation was declared null and void by the RTC of Silay City, a superior court, he again issued a TRO, which showed his partiality to complainants political rival. Respondent is thus guilty of violating Rules 3.01 and 3.02 of the Code of Judicial Conduct; knowingly rendering an unjust order; gross ignorance of the law or procedure; as well as bias and partiality. All of the foregoing are serious charges under Rule 140, Section 3 of the Rules of Court. We agree with the sanction recommended by the OCA, finding it to be in accord with Rule 140, Section 10 (A) of the Rules of Court.

WHEREFORE, this COURT finds respondent judge GUILTY of violating Rules

3.01 and 3.02 of the Code of Judicial Conduct, knowingly rendering an unjust

order, gross ignorance of the law and procedure, and bias and partiality. Accordingly, a fine of Twenty Thousand Pesos (P20,000.00) is hereby imposed upon respondent with a STERN WARNING that a repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.

11

CHAEL J. LAGROSAS, tioner,

SECOND DIVISION

. No. 168637

- versus -

sent:

ISTOL-MYERS SQUIBB (PHIL.),

SUMBING, J., Chairperson, PIO MORALES,

./MEAD

HARD SMYTH as General Manager ASCO, JR., and

JOHNSON

PHIL., GA,

FERDIE

SARFATI,

as Medical

BRION, JJ.

es Director,

pondents.

-

- - -

- - -

- - -

- - - -

- - - -

- - - - -

ISTOL-MYERS SQUIBB (PHIL.), ./MEAD JOHNSON PHIL., tioner,

- versus -

. No. 170684

URT OF APPEALS and MICHAEL J. mulgated:

GROSAS,

 

pondents.

 

tember 12, 2008

- - - - -

- - - -

- - - - -

- - - - -

 

x- -

- -x

-

- - - -

- -

- - -

- - - -

- -

- - -

- -

- -

- - - - -

 

DECISION

 

QUISUMBING, J.:

 
 

Before

this

Court

are

two

consolidated

petitions. The

first

petition,

docketed as G.R. No. 168637, filed by Michael

Decision [1] dated January 28, 2005 and the Resolution [2] dated June 23, 2005 of

the Court of Appeals in CA-G.R. SP No. 83885. The second petition, docketed

as G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson

J. Lagrosas, assails

the

12

Phil., assails the Resolutions [3] dated August 12, 2005 and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885.

The facts are undisputed.

Michael J. Lagrosas was employed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. from January 6, 1997 until March 23, 2000 as Territory Manager in its Medical Sales Force Division. [4]

On February 4, 2000, Ma. Dulcinea S. Lim, also a Territory Manager and Lagrosas former girlfriend, attended a district meeting of territory managers at McDonalds Alabang Town Center. After the meeting, she dined out with her friends. She left her car at McDonalds and rode with Cesar R. Menquito, Jr. When they returned to McDonalds, Lim saw Lagrosas car parked beside her car. Lim told Menquito not to stop his car but Lagrosas followed them and slammed Menquitos car thrice. Menquito and Lim alighted from the car. Lagrosas approached them and hit Menquito with a metal steering wheel lock. When Lim tried to intervene, Lagrosas accidentally hit her head.

Upon learning of the incident, Bristol-Myers required Lagrosas to explain in writing why he should not be dismissed for assaulting a co-employee outside of business hours. While the offense is not covered by the Code of Discipline for Territory Managers, the Code states that other infractions not provided for herein shall be penalized in the most appropriate manner at the discretion of management. [5] In his memo, Lagrosas admitted that he accidentally hit Lim when she tried to intervene. He explained that he did not intend to hit her as shown by the fact that he never left the hospital until he was assured that she was all right. [6]

In the disciplinary hearing that followed, it was established that Lagrosas and Lim had physical confrontations prior to the incident. But Lagrosas denied saying that he might not be able to control himself and hurt Lim and her boyfriend if he sees them together.

13

On March 23, 2000, Bristol-Myers dismissed Lagrosas effective

immediately. [7] Lagrosas then filed a complaint [8] for illegal dismissal, non-

payment of vacation and sick leave benefits, 13 th month pay, attorneys fees,

damages and fair market value of his Team Share Stock Option Grant.

On February 28, 2002, Labor Arbiter Renaldo O. Hernandez rendered a

Decision [9] in NLRC NCR Case No. 00-03-02821-99,declaring the dismissal

illegal. He noted that while Lagrosas committed a misconduct, it was not

connected with his work. The incident occurred outside of company premises and

office hours. He also observed that the misconduct was not directed against a co-

employee who just happened to be accidentally hit in the process. Nevertheless,

Labor Arbiter Hernandez imposed a penalty of three months suspension or

forfeiture of pay to remind Lagrosas not to be carried away by the mindless

dictates of his passion. Thus, the Arbiter ruled:

WHEREFORE, premises considered, judgment is hereby [rendered] finding that respondent company illegally dismissed complainant thus, ORDERING it:

1) [t]o reinstate him to his former position without loss of seniority rights, privileges and benefits and to pay him full backwages reckoned from [the] date of his illegal dismissal on 23 March 2000 including the monetary value of his vacation/sick leave of 16 days per year reckoned from July 1, 2000 until actually reinstated, less three (3) months salary as penalty for his infraction;

2) to pay him the monetary equivalent of his accrued and unused combined sick/vacation leaves as of June 30, 2000 of 16 days x 3 years and 4 months 10 days x P545.45 = P23,636.16 and the present fair market value of his Team Share stock option grant for eight hundred (800) BMS common shares of stock listed in the New York Stock Exchange which vested in complainant as of 01 July 1997, provisionally computed as 90% (800 shares x US$40.00 per share x P43.20/US$ = P1,244,160.00).

3) to

amount.

pay him Attorneys fee of

10%

on the entire computable

All other claims of complainant are dismissed for lack of merit.

SO ORDERED. [10]

14

On appeal, the National Labor Relations Commission (NLRC) set aside the

Decision of Labor Arbiter Hernandez in its Decision [11] dated September 24,

2002. It held that Lagrosas was validly dismissed for serious misconduct in

hitting his co-employee and another person with a metal steering wheel lock. The

gravity and seriousness of his misconduct is clear from the fact that he

deliberately waited for Lim and Menquito to return to McDonalds. The NLRC also

ruled that the misconduct was committed in connection with his duty as Territory

Manager since it occurred immediately after the district meeting of territory

managers.

Lagrosas moved for reconsideration. On May 7, 2003, the NLRC issued a

Resolution [12] reversing its earlier ruling. It ratiocinated that the incident was not

work-related since it occurred only after the district meeting of territory

managers. It emphasized that for a serious misconduct to merit dismissal, it

must be connected with the employees work. The dispositive portion of the

Resolution states:

WHEREFORE, premises considered, We find this time no reason to alter the Labor Arbiters Decision of February 28, 2002 and hereby affirm the same in toto. We vacate our previous Decision of September 24, 2002.

SO ORDERED. [13]

Bristol-Myers filed a motion for reconsideration which the NLRC denied in

an Order dated February 4, 2004 in NLRC NCR Case No. 00-03-02821-99 (NLRC

NCR CA No. 031646-02). [14] Later, Labor Arbiter Hernandez issued a writ of

execution. [15] Notices of garnishment were then served upon the Philippine British

Assurance Co., Inc. for the supersedeas bond posted by Bristol-Myers and the

Bank of the Philippine Islands for the balance of the judgment award. [16]

Bristol-Myers moved to quash the writ of execution contending that it

timely filed a petition for certiorari with the Court of Appeals. The appellate court

gave due course to Bristol-Myers petition and issued a temporary restraining

order (TRO) [17] enjoining the enforcement of the writ of execution and notices of

garnishment. Upon the expiration of the TRO, the appellate court issued a writ of

preliminary injunction dated September 17, 2004. [18]

15

Bristol-Myers then moved to discharge and release the TRO cash bond. It

argued that since it has posted an injunction cash bond, the TRO cash bond

should be legally discharged and released.

On January 28, 2005, the appellate court rendered the following Decision:

WHEREFORE, the petition is GRANTED. The Resolution of May 7, 2003 and the Order of February 4, 2004 in NLRC NCR Case No. [00-03- 02821-99] (NLRC NCR CA No. [031646-02]), are REVERSED and SET ASIDE. The public respondent NLRCs Decision dated September 24, 2002 which reversed the Labor Arbiters decision and in effect sustained the legality of the private respondents termination and the dismissal of his claim for the fair market value of the [Team Share] stock option grant is REINSTATEDand AFFIRMED, with MODIFICATION that the petitioner shall pay the private respondent the monetary equivalent of his accrued and unused combined sick/vacation leave plus ten (10%) percent thereof, as attorneys fees. The injunction bond and the TRO bond previously posted by the petitioner are DISCHARGED.

SO ORDERED. [19]

The appellate court considered the misconduct as having been committed

in connection with Lagrosas duty as Territory Manager since it occurred

immediately after the district meeting of territory managers. It also held that the

gravity and seriousness of the misconduct cannot be denied. Lagrosas employed

such a degree of violence that caused damage not only to Menquitos car but also

physical injuries to Lim and Menquito.

Lagrosas filed a motion for reconsideration which the appellate court

denied.

In the meantime, Bristol-Myers moved to release the TRO cash bond and

injunction cash bond in view of the Decision dated January 28, 2005. On August

12, 2005, the appellate court denied the motion as premature since the decision

is not yet final and executory due to Lagrosas appeal to this Court. [20]

Bristol-Myers filed a motion for reconsideration. On October 28, 2005, the

appellate court resolved:

16

WHEREFORE, the

petitioners Motion

[f]or

Reconsideration dated September 6, 2005 is PARTIALLY GRANTED and the Resolution of August 12, 2005 is RECONSIDERED and SET ASIDE. The temporary restraining order cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000.00) which was posted by the petitioners on July 19, 2004 is ordered DISCHARGED and RELEASED to the petitioners.

SO ORDERED. [21]

The appellate court held that upon the expiration of the TRO, the cash

bond intended for it also expired. Thus, the discharge and release of the cash

bond for the expired TRO is proper. But the appellate court disallowed the

discharge of the injunction cash bond since the writ of preliminary injunction was

issued pendente lite. Since there is a pending appeal with the Supreme Court,

the Decision dated January 28, 2005 is not yet final and executory.

Hence, the instant petitions.

In G.R. No. 168637, Lagrosas assigns the following errors:

I.

THE HONORABLE COURT OF APPEALS IN DECLARING THAT THE TERMINATION OF EMPLOYMENT OF THE PETITIONER-APPELLANT WAS LEGAL HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF REVIEW AND/OR SUPERVISION.

II.

THE HONORABLE COURT OF APPEALS IN IMPOSING THE PENALTY OF DISMISSAL, BEING A PENALTY TOO HARSH IN THIS CASE, DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF REVIEW AND/OR SUPERVISION. [22]

In G.R. No. 170684, Bristol-Myers raises the following issue:

17

[WHETHER OR NOT THE HONORABLE] COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISALLOWING THE RELEASE AND DISCHARGE OF PETITIONERS INJUNCTION BOND. [23]

Simply put, the basic issues in the instant petitions are: (1) Did the Court

of Appeals err in finding the dismissal of Lagrosas legal? and (2) Did the Court of

Appeals err in disallowing the discharge and release of the injunction cash bond?

On the first issue, serious misconduct as a valid cause for the dismissal of

an employee is defined simply as improper or wrong conduct. It is a

transgression of some established and definite rule of action, a forbidden act, a

dereliction of duty, willful in character, and implies wrongful intent and not mere

error of judgment. To be serious within the meaning and intendment of the law,

the misconduct must be of such grave and aggravated character and not merely

trivial or unimportant. However serious such misconduct, it must, nevertheless,

be in connection with the employees work to constitute just cause for his

separation. The act complained of must be related to the performance of the

employees duties such as would show him to be unfit to continue working for the

employer. [24]

Thus, for misconduct or improper behavior to be a just cause for dismissal,

it (a) must be serious; (b) must relate to the performance of the employees

duties; and (c) must show that the employee has become unfit to continue

working for the employer. [25]

Tested against the foregoing standards, it is clear that Lagrosas was not

guilty of serious misconduct. It may be that the injury sustained by Lim was

serious since it rendered her unconscious and caused her to suffer cerebral

contusion that necessitated hospitalization for several days. But we fail to see

how such misconduct could be characterized as work-related and reflective of

Lagrosas unfitness to continue working for Bristol-Myers.

Although we have recognized that fighting within company premises may

constitute serious misconduct, we have also held that not every fight within

18

company premises in which an employee is involved would automatically warrant dismissal from service. [26] More so, in this case where the incident occurred outside of company premises and office hours and not intentionally directed against a co-employee, as hereafter explained.

First, the incident occurred outside of company premises and after office hours since the district meeting of territory managers which Lim attended at McDonalds had long been finished. McDonalds may be considered an extension of Bristol-Myers office and any business conducted therein as within office hours, but the moment the district meeting was concluded, that ceased too. When Lim dined with her friends, it was no longer part of the district meeting and considered official time. Thus, when Lagrosas assaulted Lim and Menquito upon their return, it was no longer within company premises and during office hours. Second, Bristol-Myers itself admitted that Lagrosas intended to hit Menquito only. In the Memorandum [27] dated March 23, 2000, it was stated that You got out from your car holding an umbrella steering wheel lock and proceeded to hit Mr. Menquito. Dulce tried to intervene, but you accidentally hit her on the head, knocking her unconscious. [28] Indeed, the misconduct was not directed against a co-employee who unfortunately got hit in the process. Third, Lagrosas was not performing official work at the time of the incident.He was not even a participant in the district meeting. Hence, we fail to see how his action could have reflected his unfitness to continue working for Bristol-Myers.

In light of Bristol-Myers failure to adduce substantial evidence to prove that Lagrosas was guilty of serious misconduct, it cannot use this ground to justify his dismissal. Thus, the dismissal of Lagrosas employment was without factual and legal basis.

On the second issue, it is settled that the purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. Its sole aim is to preserve the status quo until the merits of the case can be heard fully. [29]

19

A preliminary injunction may be granted only when, among other things, the applicant, not explicitly exempted, files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued. [30]

The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction, and the bond is usually conditioned accordingly. [31]

In this case, the Court of Appeals issued the writ of preliminary injunction to enjoin the implementation of the writ of execution and notices of garnishment pending final resolution of this case or unless the [w]rit is sooner lifted by the Court. [32]

By its Decision dated January 28, 2005, the appellate court disposed of the case by granting Bristol-Myers petition and reinstating the Decision dated September 24, 2002 of the NLRC which dismissed the complaint for dismissal. It also ordered the discharge of the TRO cash bond and injunction cash bond. Thus, both conditions of the writ of preliminary injunction were satisfied.

Notably, the appellate court ruled that Lagrosas had no right to the monetary awards granted by the labor arbiter and the NLRC, and that the implementation of the writ of execution and notices of garnishment was properly enjoined. This in effect amounted to a finding that Lagrosas did not sustain any damage by reason of the injunction. To reiterate, the injunction bond is intended to protect Lagrosas against loss or damage by reason of the injunction only. Contrary to Lagrosas claim, it is not a security for the judgment award by the labor arbiter. [33]

20

Considering the foregoing, we hold that the appellate court erred in disallowing the discharge and release of the injunction cash bond.

WHEREFORE, the two consolidated petitions are GRANTED. In G.R. No. 168637, filed by Michael J. Lagrosas, the Decision dated January 28, 2005, and the Resolution dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The Resolution dated May 7, 2003, and the Order dated February 4, 2004 of the NLRC in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA No. 031646-02) are REINSTATED and hereby AFFIRMED.

In G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil., the Resolutions dated August 12, 2005and October 28, 2005 of the Court of Appeals in CA-G.R. SP No. 83885 are REVERSED. The injunction cash bond in the amount of SIX HUNDRED THOUSAND PESOS (P600,000) which was posted by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. on September 17, 2004 is hereby ordered DISCHARGED and RELEASED to it.

No pronouncement as to costs.

SO ORDERED.

21

SECOND DIVISION

SON JENOSA and his son NIO LO JENOSA, SOCORRO TO and her son PATRICK TO, CYNTHIA APALISOK and daughter CYNDY

. No. 172138

ent:

PIO, J., Chairperson,

LISOK, EDUARDO VARGASand HURA,

x - -

x

son CLINT EDUARD VARGAS, NELIA DURO and her NONELL GREGORY DURO, tioners,

ALTA,

D, and

DOZA, JJ.

rsus -

. FR. JOSE RENE C. ARIARTE, O.S.A., in his acity as the incumbent Principal e High School Department of the ersity of San Agustin, and UNIVERSITY OF SAN STIN, herein represented by its mbent President REV. FR. NUEL G. VERGARA, O.S.A., pondents.

mulgated:

tember 8, 2010

- -

- -

-

-

- -

-

- -

- -

-

- -

-

- -

-

- -

-

-

- -

- -

-

-

- -

D E C I S I O N

CARPIO, J.:

The Case

- -

- -

- -

- -

-

-

- -

- -

-

-

This is a petition for review [1] of the 16 June 2005 Decision [2] and 22 March

2006 [3] Resolution of the Court of Appeals in CA-G.R. SP No. 78894. In its 16

22

June 2005 Decision, the Court of Appeals granted the petition of respondents University of San Augustin (University), represented by its incumbent President Rev. Fr. Manuel G. Vergara, O.S.A. (University President), and Rev. Fr. Jose Rene C. Delariarte, O.S.A. (Principal), in his capacity as the incumbent Principal of the High School Department of the University (respondents) and ordered the dismissal of Civil Case Nos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter. In its 22 March 2006 Resolution, the Court of Appeals denied the motion for reconsideration of petitioners Nelson Jenosa and his son Nio Carlo Jenosa, Socorro Canto and her son Patrick Canto, Cynthia Apalisok and her daughter Cyndy Apalisok, Eduardo Vargas and his son Clint Eduard Vargas, and Nelia Duro and her son Nonell Gregory Duro (petitioners).

The Facts

On 22 November 2002, some students of the University, among them petitioners Nio Carlo Jenosa, Patrick Canto, Cyndy Apalisok, Clint Eduard Vargas, and Nonell Gregory Duro (petitioner students), were caught engaging in hazing outside the school premises.The hazing incident was entered into the blotter of the Iloilo City Police. [4]

Thereafter, dialogues and consultations were conducted among the school authorities, the apprehended students and their parents.During the 28 November 2002 meeting, the parties agreed that, instead of the possibility of being charged and found guilty of hazing, the students who participated in the hazing incident as initiators, including petitioner students, would just transfer to another school, while those who participated as neophytes would be suspended for one month. The parents of the apprehended students, including petitioners, affixed their signatures to the minutes of the meeting to signify their conformity. [5] In

23

view of the agreement, the University did not anymore convene the Committee

on Student Discipline (COSD) to investigate the hazing incident.

On 5 December 2002, the parents of petitioner students (petitioner parents) sent

a letter to the University President urging him not to implement the 28

November 2002 agreement. [6] According to petitioner parents, the Principal,

without convening the COSD, decided to order the immediate transfer of

petitioner students.

On 10 December 2002, petitioner parents also wrote a letter to Mrs. Ida B.

Endonila, School Division Superintendent, Department of Education (DepEd),

Iloilo City, seeking her intervention and prayed that petitioner students be

allowed to take the home study program instead of transferring to another

school. [7] The DepEd asked the University to comment on the letter. [8] The

University replied and attached the minutes of the 28 November 2002 meeting. [9]

On 3 January 2003, petitioners filed a complaint for injunction and damages

with the Regional Trial Court, Branch 29, Iloilo City (trial court) docketed as Civil

Case No. 03-27460. [10] Petitioners assailed the Principals decision to order the

immediate transfer of petitioner students as a violation of their right to due

process because the COSD was not convened.

On 5 February 2003, the trial court issued a writ of preliminary injunction and

directed respondents to admit petitioner students during the pendency of the

case. [11] The 5 February 2003 Order reads:

WHEREFORE, let [a] Writ of Preliminary Mandatory Injunction issue. The defendants are hereby directed to allow the plaintiffs minor children to attend their classes during the pendency of this case, without prejudice to any disciplinary proceeding to which any or all of them may be liable.

24

SO ORDERED. [12]

Respondents filed a motion for reconsideration and asked for the dissolution of the writ. The trial court denied respondents motion.Respondents complied but with reservations.

On 25 March 2003, respondents filed a motion to dismiss. Respondents alleged that the trial court had no jurisdiction over the subject matter of the case and that petitioners were guilty of forum shopping. On 19 May 2003, the trial court denied respondents motion. Respondents filed a motion for reconsideration.

On 21 April 2003, petitioners wrote the DepEd and asked that it direct the University to release the report cards and other credentials of petitioner students. [13] On 8 May 2003, the DepEd sent a letter to the University advising it to release petitioner students report cards and other credentials if there was no valid reason to withhold the same. [14] On 14 May 2003, the DepEd sent another letter to the University to follow-up petitioners request. [15] On 20 May 2003, the University replied that it could not release petitioner students report cards due to their pending disciplinary case with the COSD. [16]

On 28 May 2003, petitioners filed another complaint for mandatory injunction praying for the release of petitioner students report cards and other credentials docketed as Civil Case No. 03-27646. [17]

The trial court consolidated the two cases. [18]

On 17 June 2003, the trial court issued a writ of preliminary injunction and directed the University to release petitioner students report cards and other

25

credentials. [19] Respondents filed a motion for reconsideration. Respondents alleged that they could not comply with the writ because of the on-going disciplinary case against petitioner students.

On 26 June 2003, the COSD met with petitioners for a preliminary conference on the hazing incident. On 7 July 2003, the University, through the COSD, issued its report finding petitioner students guilty of hazing. The COSD also recommended the exclusion of petitioner students from its rolls effective 28 November 2002.

On 14 July 2003, the trial court issued an Order denying both motions for reconsideration. [20]

On 1 September 2003, respondents filed a special civil action for certiorari with the Court of Appeals. Respondents insisted that the trial court had no jurisdiction over the subject matter of Civil Case Nos. 03-27460 and 03-27646. Respondents also alleged that petitioners were guilty of forum shopping.

The Ruling of the Court of Appeals

In its 16 June 2005 Decision, the Court of Appeals granted respondents petition and ordered the trial court to dismiss Civil CaseNos. 03-27460 and 03-27646 for lack of jurisdiction over the subject matter because of petitioners failure to exhaust administrative remedies or for being premature. According to the Court of Appeals, petitioners should have waited for the action of the DepEd or of the University President before resorting to judicial action. The Court of Appeals held:

26

From the foregoing, it is clear that the court a quo committed grave [abuse] of discretion amounting to LACK OF JURISDICTION in INTERFERING, pre-maturely, with the exclusive and inherent authority of educational institutions to discipline.

In directing herein petitioners [respondents in this case] to re-admit herein private respondents [petitioners in this case] and eventually, to release the report cards and other school credentials, prior to the action of the President of USA and of the recommendation of the COSD, the court a quo is guilty of improper judicial intrusion by encroaching into the exclusive prerogative of educational institutions. [21]

Petitioners filed a motion for reconsideration. [22] In its 22 March 2006 Resolution,

the Court of Appeals denied petitioners motion for lack of merit.

The Issues

Petitioners raise the following issues:

1. Was the Court of Appeals correct in holding that Branch 29 of the Regional

Trial Court of Iloilo City in Civil Case Nos. 03-27460 and 03-27646 did not

acquire jurisdiction over the subject matter of this case for failure of petitioners

to exhaust administrative remedies?

2. Was the recommendation/report/order of the Committee on Student Discipline

dated 7 July 2003 valid, and did it justify the order of exclusion of petitioner

students retroactive to 28 November 2002? [23]

The Ruling of the Court

The petition has no merit.

Discipline in education is specifically mandated by the 1987 Constitution which

provides that all educational institutions shall teach the rights and duties of

citizenship, strengthen ethical and spiritual values, develop moral character and

27

personal discipline. [24] Schools and school administrators have the authority to

maintain school discipline [25] and the right to impose appropriate and reasonable

disciplinary measures. [26] On the other hand, students have the duty and the

responsibility to promote and maintain the peace and tranquility of the school by

observing the rules of discipline. [27]

In this case, we rule that the Principal had the authority to order the immediate

transfer of petitioner students because of the 28 November 2002

agreement. [28] Petitioner parents affixed their signatures to the minutes of the 28

November 2002 meeting and signified their conformity to transfer their children

to another school. Petitioners Socorro Canto and Nelia Duro even wrote a letter

to inform the University that they would transfer their children to another school

and requested for the pertinent papers needed for the transfer. [29] In turn, the

University did not anymore convene the COSD. The University agreed that it

would no longer conduct disciplinary proceedings and instead issue the transfer

credentials of petitioner students. Then petitioners reneged on their agreement

without any justifiable reason. Since petitioners present complaint is one for

injunction, and injunction is the strong arm of equity, petitioners must come to

court with clean hands. In University of the Philippines v. Hon. Catungal, Jr., [30] a

case involving student misconduct, this Court ruled:

Since injunction is the strong arm of equity, he who must apply for it must come with equity or with clean hands. This is so because among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity. It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue. [31]

28

Here, petitioners, having reneged on their agreement without any justifiable reason, come to court with unclean hands. This Court may deny a litigant relief if his conduct has been inequitable, unfair and dishonest as to the controversy in issue.

Since petitioners have come to court with inequitable and unfair conduct, we deny them relief. We uphold the validity of the 28 November 2002 agreement and rule that the Principal had the authority to order the immediate transfer of petitioner students based on the 28 November 2002 agreement.

WHEREFORE, we DENY the petition. We AFFIRM the 16 June 2005 Decision and the 22 March 2006 Resolution of the Court of Appeals.

SO ORDERED.

29

G.R. No. 179665

FIRST DIVISION

April 3, 2013

SOLID BUILDERS, INC. and MEDINA FOODS INDUSTRIES, INC., Petitioners, vs. CHINA BANKING CORPORATION, Respondent.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This petition for review on certiorari 1 assails the Decision 2 dated April 16, 2007 and the Resolution 3 dated September 18, 2007 of the Court of Appeals in CA- G.R. SP No. 81968.

During the period from September 4, 1992 to March 27, 1996, China Banking Corporation (CBC) granted several loans to Solid Builders, Inc. (SBI), which amounted to ₱139,999,234.34, exclusive of interests and other charges. To secure the loans, Medina Foods Industries, Inc. (MFII) executed in CBC’s favor several surety agreements and contracts of real estate mortgage over parcels of land in the Loyola Grand Villas in Quezon City and New Cubao Central in Cainta, Rizal. 4

Subsequently, SBI proposed to CBC a scheme through which SBI would sell the mortgaged properties and share the proceeds with CBC on a 50-50 basis until such time that the whole obligation would be fully paid. SBI also proposed that there be partial releases of the certificates of title of the mortgaged properties without the burden of updating interests on all loans. 5

In a letter dated March 20, 2000 addressed to CBC, SBI requested the restructuring of its loans, a reduction of interests and penalties and the implementation of a dacion en pago of the New Cubao Central property. 6

The letter reads:

March 20, 2000

CHINA BANKING CORPORATION Dasmarinas cor. Juan Luna Sts. Binondo, Manila

30

Attn: Mr. George Yap Account Officer

Dear Mr. Yap,

This is to refer to our meeting held at your office last March 10, 2000.

In this regard, please allow us to call your attention on the following important matters we have discussed:

1. With respect to the penalties, we are requesting for a reduction in the rates as we find it onerous considering the big amount of our loan (₱218,540,648.00). The interest together with the penalties that you are imposing is similar to the ones being charged by private lending institutions, i.e., 4.5%/month total.

2. As I had discussed with you regarding Dacion en Pago, which you categorically stated that it could be a possibility, we are considering putting our New Cubao Central (NCC) on Dacion and restructuring our loan with regards to our Loyola Grand Villas.

Considering that you had stated that our restructuring had not been finalized, we find it timely to raise these urgent matters and possibly agree on a realistic and workable scheme that we can incorporate on our final agreement.

Thank you and we strongly hope for your prompt consideration on our request.

Very truly yours,

V. BENITO R. SOLIVEN (Sgd.) President 7

In response, CBC sent SBI a letter dated April 17, 2000 stating that the loans had been completely restructured effective March 1, 1999 in the amount of ₱218,540,646.00. On the aspect of interests and charges, CBC suggested the updating of the obligation to avoid paying interests and charges. 8 The relevant portion of the letter dated April 17, 2000 reads:

First of all, to clarify, the loan’s restructuring has been finalized and completed on 3/01/99 with the booking of the Restructured loan of ₱218,540,646. Only two Amendments of Real Estate Mortgages remain to be registered to date. Certain documents that we requested from your company since last year, that could facilitate this amendment have not yet been forwarded to us until now. Nevertheless, this does not change the fact that the restructuring of the loan has been done with and finalized.

31

This in turn is with regards to statement[s] no. 1 & 2 of your letter, referring to the interest rates and penalties. As per our records, the rates are actually the prevailing bank interest rates. In addition, penalty charges are imposed in the event of non-payment. To avoid experiencing having to pay more due to the penalty charges, updating of obligations is necessary. Thus, we advise updating of your obligations to avoid penalty charges. However, should you be able to update both interest and penalty through a "one-time" payment, we shall present your request to Senior Management for possible reduction in penalty charges.

Concerning statement no. 3 containing your request for the possible Dacion en Pago of your NCC properties, as was discussed already in the meeting, it is a concern that has to be discussed with Senior Management and approved by the Executive Committee before we can commit to you on the matter. We suggest that your company, Solid Builders, exhaust all possibilities to sell the NCC properties yourselves because, being a real estate company, Solid has better ways and means of selling the properties. 9

This was followed by another communication from CBC to SBI reiterating, among others, that the loan has been restructured effective March 1, 1999 upon issuance by SBI of promissory notes in favor of CBC. The relevant portion of that letter dated May 19, 2000 reads:

Again, in response to your query with regards the issue of the loans restructuring, to reiterate, the loan restructuring has been finalized and completed on 3/01/99 with the booking of the Restructured loan of ₱231,716,646. The Restructured Loan was effective ever since the new Promissory Note was signed on the said date.

The interest rates for the loans are actually rates booked since the new Promissory Notes were effective.1âwphi1 Any move of changing it or "re-pricing" the interest is only possible every 90 days from the booking date, which represents the interest amortization payment dates. No change or "re-pricing" in interest rates is possible since interest payment/obligations have not yet been paid.

With regards to the possible Dacion en Pago of your NCC properties, as was discussed already in the meeting, it is a concern that has to be discussed with Senior Management and approved by the Executive Committee before we can commit to you on the matter. We suggest that your company, Solid Builders, exhaust all possibilities to sell the NCC properties yourselves because, being a real estate company, Solid has better ways and means of selling the properties. 10

32

Subsequently, in a letter dated September 18, 2000, CBC demanded SBI to settle its outstanding account within ten days from receipt thereof. The letter dated September 18, 2000 reads:

September 18, 2000

SOLID BUILDERS, INC. V.V. Soliven Bldg., I EDSA, San Juan, Metro Manila

1âwphi1

 

PN NUMBER

O/S BALANCE

E DATE

TEREST

MK-TS-342924 PHP 89,700,000.00 01/2004

/13/1999

MK-TS-342931

19,350,000.00 01/2004

/05/1999

MK-TS-342948

35,888,000.00 01/2004 -----------

MK-TS-342955

6,870,000.00 01/2004 -----------

MK-TS-342962

5,533,646.00 01/2004 /26/1999

MK-TS-342979

21,950,000.00 01/2004 -----------

MK-TS-342986

3,505,000.00 01/2004 /09/1999

MK-TS-342993

19,455,000.00 01/2004 -----------

MK-TS-343002 4,168,000.00 01/2004 -----------

MK-TS-343026

12,121,000.00 01/2004 -----------

 

PH₱218,540,646.00

==============

Greetings!

We refer again to the balances of the abovementioned Promissory Notes amounting to PH₱218,540,646.00 excluding interest, penalties and other charges signed by you jointly and severally in our favor, which remains unpaid up to this date despite repeated demands for payment.

In view of the strict regulations of Bangko Sentral ng Pilipinas on past due accounts, we regret that we cannot hold these accounts further in abeyance. Accordingly, we are reiterating our request that arrangements to have these

33

accounts settled within ten (10) days from receipt hereof, otherwise, we shall be constrained to refer the matter to our lawyers for collection.

We enclose a Statement of Account as of September 30, 2000 for your reference and guidance.

Very truly yours,

MERCEDES E. GERMAN (Sgd.) Manager

Loans & Discounts Department H.O. 11

On October 5, 2000, claiming that the interests, penalties and charges imposed by CBC were iniquitous and unconscionable and to enjoin CBC from initiating foreclosure proceedings, SBI and MFII filed a Complaint "To Compel Execution of Contract and for Performance and Damages, With Prayer for Writ of Preliminary Injunction and Ex-Parte Temporary Restraining Order" in the Regional Trial Court (RTC) of Pasig City. The case was docketed as Civil Case No. 68105 and assigned to Branch 264. 12

In support of their application for the issuance of writ of preliminary injunction, SBI and MFII alleged:

IV. APPLICATION FOR PRELIMINARY INJUNCTION WITH EX- PARTE TEMPORARY RESTRAINING ORDER

A. GROUNDS FOR PRELIMINARY INJUNCTION

1. That SBI and MFII are entitled to the reliefs demanded, among which is

enjoining/restraining the commission of the acts complained of, the continuance of which will work injustice to the plaintiffs; that such acts are in violation of the rights of plaintiffs and, if not enjoined/restrained, will render the judgment sought herein ineffectual.

2. That under the circumstances, it is necessary to require, through preliminary

injunction, CBC to refrain from immediately enforcing its letters dated April 17, 2000 and May 19, 2000 and September 18, 2000 during the pendency of this complaint, and

3. That SBI and MFII submit that they are exempt from filing of a bond

considering that the letters dated April 17, 2000, May 19, 2000 and September 18, 2000 are a patent nullity, and in the event they are not, they are willing to

34

post such bond this Honorable Court may determine and under the conditions required by Section 4, Rule 58. 13

In its Answer and Opposition to the issuance of the writ of preliminary injunction, CBC alleged that to implement the agreed restructuring of the loan, SBI executed ten promissory notes stipulating that the interest rate shall be at 18.5% per annum. For its part, MFII executed third party real estate mortgage over its properties in favor of CBC to secure the payment of SBI’s restructured loan. As SBI was delinquent in the payment of the principal as well as the interest thereon, CBC demanded settlement of SBI’s account. 14

After hearing the parties, the trial court issued an Order dated December 14, 2000 granting the application of SBI and MFII for the issuance of a writ of preliminary injunction. The trial court held that SBI and MFII were able to sufficiently comply with the requisites for the issuance of an injunctive writ:

It is well-settled that to be entitled to an injunctive writ, a party must show that:

(1) the invasion of right sought to be protected is material and substantial; (2) the right of complainant is clear and unmistakable; and, (3) there is an urgent and paramount necessity for the writ to prevent serious damage.

The Court opines that the above-mentioned requisites have been sufficiently shown by plaintiffs in this case, accordingly, a writ of preliminary injunction is in order.

The three subject letters, particularly the letter dated September 18, 2000, indicate that the promissory notes executed by Benito Soliven as President of plaintiff SBI amounted to ₱218,540,646.00, excluding interest, penalties and other charges remained unpaid, and demand that the account be settled within ten days, else defendant bank shall refer the latter to its lawyers for collection.

The message in the letter is clear: If the account is not settled within the grace period, defendant bank will resort to foreclosure of mortgage on the subject properties.

The actual or imminent damage to plaintiffs is likewise clear. Considering the number of parcels of land and area involved, if these are foreclosed by defendant bank, plaintiffs’ properties and source of income will be effectively diminished, possibly to the point of closure.

The only issue remaining is whether or not plaintiffs have the right to ask for an injunctive writ in order to prevent defendant bank from taking over their properties.

35

Plaintiffs argued that the interest and penalties charged them in the subject letters and attached statements of account increased during a seven-month period to an amount they described as "onerous", "usurious" ad "greedy".

They likewise asserted that there were on-going talks between officers of the corporations involved to treat or restructure the contracts to a dacion en pago, as there was a proposed plan of action by representatives of plaintiffs during the meetings.

Defendant, on the other hand, sought to explain the increase in the interest as contained in the promissory notes which were voluntarily and willingly signed by Soliven, therefore, binding on plaintiffs and that the proposed plan of action is merely an oral contract still in the negotiation stage and not binding.

The condition on the interest payments as contained in the promissory notes are as follows:

"Interest for the first quarter shall be @ 18.5% P.A. Thereafter, it shall be payable quarterly in arrears based on three months average rate."

In its Memorandum, defendant bank tried to show that the questioned increase in the interests was merely in compliance with the above condition. To this Court, the explanation is insufficient. A more detailed rationalization is required to convince the court of the fairness of the increase in interests and penalties.

However, the coming explanation may probably be heard only during trial on the merits, and by then this pending incident or the entire case, may already be moot and academic if the injunctive writ is not issued. 15

The dispositive portion of the trial court’s Order dated December 14, 2000 reads:

WHEREFORE, premises considered, the application for issuance of writ of preliminary injunction is GRANTED.

Defendant CHINA BANKING CORPORATION, its representatives, agents and all persons working in its behalf are hereby enjoined from enforcing the contents of its letters to plaintiffs dated April 17, 2000, May 19, 2000 and September 18, 2000, particularly the bank’s legal department or other counsel commencing collection proceedings against plaintiffs in the amount stated in the letters and statements of account.

The Writ of Preliminary Injunction shall be issued upon plaintiffs’ posting of a bond executed to defendant in the amount of Two Million Pesos (₱2,000,000.00) to the effect [that] the plaintiffs will pay defendant all damages which the latter

36

may sustain by reason of the injunction if it be ultimately decided that the injunction is unwarranted. 16

CBC sought reconsideration but the trial court denied it in an Order 17 dated December 10, 2001.

Subsequently, CBC filed a "Motion to Dissolve Injunction Order" but this was denied in an Order 18 dated November 10, 2003. The trial court ruled that the motion was in the nature of a mere belated second motion for reconsideration of the Order dated December 14, 2000. It also declared that CBC failed to substantiate its prayer for the dissolution of the injunctive writ.

Aggrieved, CBC filed a Petition for Certiorari docketed as CA-G.R. SP No. 81968 in the Court of Appeals where it claimed that the Orders dated December 14, 2000 (granting the application of petitioners SBI and MFII for the issuance of writ of preliminary injunction), December 10, 2001 (denying reconsideration of the order dated December 14, 2000), and November 10, 2003 (denying the CBC’s motion to dissolve injunction order) were all issued with grave abuse of discretion amounting to lack of jurisdiction. 19

In a Decision dated April 16, 2007, the Court of Appeals found that, on its face, the trial court’s Order dated December 14, 2000 granting the application of SBI and MFII for the issuance of a writ of preliminary injunction had no basis as there were no findings of fact or law which would indicate the existence of any of the requisites for the grant of an injunctive writ. It appeared to the Court of Appeals that, in ordering the issuance of a writ of injunction, the trial court simply relied on the imposition by CBC of the interest rates to the loans obtained by SBI and MFII. According to the Court of Appeals, however, the records do not reveal a clear and unmistakable right on the part of SBI and MFII that would entitle them to the protection of a writ of preliminary injunction. Thus, the Court of Appeals granted the petition of CBC, set aside the Orders dated December 14, 2000, December 10, 2001, and November 10, 2003 and dissolved the injunctive writ issued by the RTC of Pasig City. 20

SBI and MFII filed a motion for reconsideration but it was denied by the Court of Appeals in a Resolution dated September 18, 2007.

Hence, this petition.

SBI and MFII assert that the Decision dated April 16, 2007 of the Court of Appeals is legally infirm as its conclusions are contrary to the judicial admissions of CBC. They allege that, in its Answer, CBC admitted paragraphs 25 and 26 of the Complaint regarding the interests and charges amounting to ₱35,093,980.14 and ₱80,614,525.15, respectively, which constituted more than 50% of the total

37

obligation of ₱334,249,151.29 as of February 15, 2000. For SBI and MFII, CBC’s admission of paragraphs 25 and 26 of the Complaint is an admission that the interest rate imposed by CBC is usurious, exorbitant and confiscatory. Thus,

when the Court of Appeals granted the petition of CBC and ordered the lifting of the writ of preliminary injunction it effectively disposed of the main case, Civil Case No. 68105, without trial on the merits and rendered moot and academic as

it enabled CBC to foreclose on the mortgages despite the usurious, exorbitant

and confiscatory interest rates. 21

SBI and MFII also claim that the Court of Appeals either overlooked or disregarded undisputed and admitted facts which, if properly considered, would have called for the maintenance and preservation of the preliminary injunction issued by the trial court. They argue that the Court of Appeals did not even consider Article 1229 of the Civil Code which provides:

Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if

it is iniquitous or unconscionable.

For SBI and MFII, the failure of the Court of Appeals to take into account Article 1229 of the Civil Code and its act of lifting the preliminary injunction "would definitely pave the way for CBC’s unbridled imposition of illegal rates of interest and immediate foreclosure" of the properties of SBI and MFII "without the benefit of a full blown trial." 22

For its part, CBC assails the petition contending that it is not allowed under Rule 45 of the Rules of Court because it simply raises issues of fact and not issues of law. CBC further asserts that the Decision of the Court of Appeals is an exercise of sound judicial discretion as it is in accord with the law and the applicable provisions of this Court. 23

The petition fails.

This Court has recently reiterated the general principles in issuing a writ of preliminary injunction in Palm Tree Estates, Inc. v. Philippine National Bank 24 :

A preliminary injunction is an order granted at any stage of an action prior to

judgment of final order, requiring a party, court, agency, or person to refrain from a particular act or acts. It is a preservative remedy to ensure the protection of a party’s substantive rights or interests pending the final judgment in the principal action. A plea for an injunctive writ lies upon the existence of a claimed emergency or extraordinary situation which should be avoided for otherwise, the

38

outcome of a litigation would be useless as far as the party applying for the writ

is concerned.

At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power the exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction. It should only be extended in cases of great injury where courts of law cannot afford an adequate or commensurate remedy in damages; "in cases of extreme urgency; where the right is very clear; where considerations of relative inconvenience bear strongly in complainant’s favor; where there is a willful and unlawful invasion of plaintiff’s right against his protest and remonstrance, the injury being a continuing one, and where the effect of the mandatory injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted by the defendant, than to establish a new relation."

A writ of preliminary injunction is an extraordinary event which must be granted

only in the face of actual and existing substantial rights. The duty of the court taking cognizance of a prayer for a writ of preliminary injunction is to determine whether the requisites necessary for the grant of an injunction are present in the case before it. 25 In this connection, 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 injury. 26

Here, SBI and MFII basically claim a right to have their mortgaged properties shielded from foreclosure by CBC on the ground that the interest rate and penalty charges imposed by CBC on the loans availed of by SBI are iniquitous and unconscionable. In particular, SBI and MFII assert:

There is therefore an urgent necessity for the issuance of a writ of preliminary injunction or at least a status quo [order], otherwise, respondent bank will definitely foreclose petitioners’ properties without awaiting the trial of the main case on the merits, with said usurious and confiscatory rates of interest as basis. 27

and

There is therefore no legal justification for the Honorable Court of Appeals to lift/dissolve the injunction issued by the trial court, otherwise, respondent bank on the basis of this illegal imposition of interest can already foreclose the properties of petitioners and render the whole case (sans trial on the merits) moot and academic. 28

39

On this matter, the Order dated December 14, 2000 of the trial court enumerates as the first argument raised by SBI and MFII in support of their application for the issuance of a writ of preliminary injunction:

1. Their rights basically are for the protection of their properties put up as collateral for the loans extended by defendant bank to them. 29

As debtor-mortgagors, however, SBI and MFII do not have a right to prevent the creditor-mortgagee CBC from foreclosing on the mortgaged properties simply on the basis of alleged "usurious, exorbitant and confiscatory rate of interest." 30 First, assuming that the interest rate agreed upon by the parties is usurious, the nullity of the stipulation of usurious interest does not affect the lender’s right to recover the principal loan, nor affect the other terms thereof. 31 Thus, in a usurious loan with mortgage, the right to foreclose the mortgage subsists, and this right can be exercised by the creditor upon failure by the debtor to pay the debt due. 32

Second, even the Order dated December 14, 2000 of the trial court, which granted the application for the issuance of a writ of preliminary injunction, recognizes that the parties still have to be heard on the alleged lack of "fairness of the increase in interests and penalties" during the trial on the merits. 33 Thus, the basis of the right claimed by SBI and MFII remains to be controversial or disputable as there is still a need to determine whether or not, upon consideration of the various circumstances surrounding the agreement of the parties, the interest rates and penalty charges are unconscionable. Therefore, such claimed right cannot be considered clear, actual and subsisting. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. 34

The Order dated December 10, 2001 also shows the reasoning of the trial court which betrays that its grant of the application of SBI and MFII for the issuance of a writ of preliminary injunction was not based on a clear legal right. Said the trial court:

It was likewise shown that plaintiffs SBI and MFII had the clear right and urgency to ask for injunction because of the issue of validity of the increase in the amount of the loan obligation. 35 (Emphasis supplied.)

At most, the above finding of the trial court that the validity of the increase in the amount of the loan obligation is in issue simply amounted to a finding that the rights of SBI and MFII vis-à-vis that of CBC are disputed and debatable. In such a case where the complainant-movant’s right is doubtful or disputed, the issuance of an injunctive writ is not proper. 36

40

Even assuming that SBI and MFII are correct in claiming their supposed right, it nonetheless disintegrates in the face of the ten promissory notes in the total amount of ₱218,540,648.00, exclusive of interest and penalties, issued by SBI in favor of CBC on March 1, 1999 which until now remain unpaid despite the maturity of the said notes on March 1, 2004 and CBC’s repeated demands for payment. 37 Foreclosure is but a necessary consequence of nonpayment of mortgage indebtedness. 38 As this Court held in Equitable PCI Bank, Inc. v. OJ- Mark Trading, Inc. 39 :

Where the parties stipulated in their credit agreements, mortgage contracts and promissory notes that the mortgagee is authorized to foreclose the mortgaged properties in case of default by the mortgagors, the mortgagee has a clear right to foreclosure in case of default, making the issuance of a Writ of Preliminary Injunction improper. x x x. (Citation omitted.)

In addition, the default of SBI and MFII to pay the mortgage indebtedness disqualifies them from availing of the equitable relief that is the injunctive writ. In particular, SBI and MFII have stated in their Complaint that they have made various requests to CBC for restructuring of the loan. 40 The trial court’s Order dated December 14, 2000 also found that SBI wrote several letters to CBC "requesting, among others, for a reduction of interests and penalties and restructuring of the loan." 41 A debtor’s various and constant requests for deferment of payment and restructuring of loan, without actually paying the amount due, are clear indications that said debtor was unable to settle his obligation. 42 SBI’s default or failure to settle its obligation is a breach of contractual obligation which tainted its hands and disqualified it from availing of the equitable remedy of preliminary injunction.

As SBI is not entitled to the issuance of a writ of preliminary injunction, so is MFII. The accessory follows the principal. The accessory obligation of MFII as accommodation mortgagor and surety is tied to SBI’s principal obligation to CBC and arises only in the event of SBI’s default.

Thus, MFII’s interest in the issuance of the writ of preliminary injunction is necessarily prejudiced by SBI’s wrongful conduct and breach of contract.

Even Article 1229 of the Civil Code, which SBI and MFII invoke, works against them. Under that provision, the equitable reduction of the penalty stipulated by the parties in their contract will be based on a finding by the court that such penalty is iniquitous or unconscionable. Here, the trial court has not yet made a ruling as to whether the penalty agreed upon by CBC with SBI and MFII is unconscionable. Such finding will be made by the trial court only after it has heard both parties and weighed their respective evidence in light of all relevant

41

circumstances. Hence, for SBI and MFII to claim any right or benefit under that provision at this point is premature.

As no clear right that warrants the extraordinary protection of an injunctive writ has been shown by SBI and MFII to exist in their favor, the first requirement for the grant of a preliminary injunction has not been satisfied. In the absence of any requisite, and where facts are shown to be wanting in bringing the matter within the conditions for its issuance, the ancillary writ of injunction must be struck down for having been rendered in grave abuse of discretion. 43 Thus, the Court of Appeals did not err when it granted the petition for certiorari of CBC and ordered the dissolution of the writ of preliminary injunction issued by the trial court.

Neither has there been a showing of irreparable injury. 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. 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. 44

In the first place, any injury that SBI and MFII may suffer in case of foreclosure of the mortgaged properties will be purely monetary and compensable by an appropriate judgment in a proper case against CBC. Moreover, where there is a valid cause to foreclose on the mortgages, it cannot be correctly claimed that the irreparable damage sought to be prevented by the application for preliminary injunction is the loss of the mortgaged properties to auction sale. 45 The alleged entitlement of SBI and MFII to the "protection of their properties put up as collateral for the loans" they procured from CBC is not the kind of irreparable injury contemplated by law. Foreclosure of mortgaged property is not an irreparable damage that will merit for the debtor-mortgagor the extraordinary provisional remedy of preliminary injunction. As this Court stated in Philippine National Bank v. Castalloy Technology Corporation 46 :

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. (Citation omitted.)

42

The En Banc Resolution in A.M. No. 99-10-05-0, Re: Procedure in Extrajudicial or Judicial Foreclosure of Real Estate Mortgages, further stacks the odds against SBI and MFII. Issued on February 20, 2007, or some two months before the Court of Appeals promulgated its decision in this case, 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. 47

The guidelines speak of strict exceptions and conditions. 48 To reverse the decision of the Court of Appeals and reinstate the writ of preliminary injunction issued by the trial court will be to allow SBI and MFII to circumvent the guidelines and conditions provided by the En Banc Resolution in A.M. No. 99-10-05-0 dated February 20, 2007 and prevent CBC from foreclosing on the mortgaged properties based simply on the allegation that the interest on the loan is unconscionable. This Court will not permit such a situation. What cannot be done directly cannot be done indirectly. 49

All told, the relevant circumstances in this case show that there was failure to satisfy the requisites for the issuance of a writ of preliminary injunction. The injunctive writ issued by the trial court should therefore be lifted and dissolved. That was how the Court of Appeals decided. That is how it should be.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.

43

G.R. No. 172909

SECOND DIVISION

March 5, 2014

SPOUSES SILVESTRE O. PLAZA AND ELENA Y. PLAZA, Petitioners, vs. GUILLERMO LUSTIVA, ELEODORA VDA. DE MARTINEZ AND VICKY SAYSON GOLOSENO, Respondents.

D E C I S I O N

BRION, J.:

Through a petition for review on certiorari, 1 filed under Rule 45 of the Rules of Court, the petitioners, spouses Silvestre O. Plaza and Elena Y. Plaza, seek the reversal of the decision 2 dated October 24, 2005 and the Resolution 3 dated April 6, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 59859.

THE FACTS

On August 28, 1997, the CA 4 ruled that among the Plaza siblings, namely:

Aureliano, Emiliana, Vidal, Marciano, and Barbara, Barbara was the owner of the subject agricultural land. The decision became final and executory and Barbara's successors, respondents Guillermo Lustiva, Eleodora Vda. de Martinez and Vicky Sayson Goloseno, have continued occupying the property.

On September 14, 1999, Vidal’s son and daughter-in-law, the petitioners, filed a Complaint for Injunction, Damages, Attorney’s Fees with Prayer for the Issuance of the Writ of Preliminary Injunction and/or Temporary Restraining Order against the respondents and the City Government of Butuan. They prayed that the respondents be enjoined from unlawfully and illegally threatening to take possession of the subject property. According to the petitioners, they acquired the land from Virginia Tuazon in 1997; Tuazon was the sole bidder and winner in a tax delinquency sale conducted by the City of Butuan on December 27, 1996.

In their answer, the respondents pointed out that they were never delinquent in paying the land taxes and were in fact not aware that their property had been offered for public auction. Moreover, Tuazon, being a government employee, was disqualified to bid in the public auction, as stated in Section 89 of the Local Government Code of 1991. 5 As Tuazon’s participation in the sale was void, she could have not transferred ownership to the petitioners. Equally important, the petitioners merely falsified the property tax declaration by inserting the name of

44

the petitioners’ father, making him appear as a co-owner of the auctioned land. Armed with the falsified tax declaration, the petitioners, as heirs of their father, fraudulently redeemed the land from Tuazon. Nonetheless, there was nothing to redeem as the land was not sold. For these irregularities, the petitioners had no right to the Writ of Preliminary Injunction and/or Temporary Restraining Order prayed for against them.

THE RTC’S RULING

In its December 14, 1999 order, 6 the Regional Trial Court (RTC) of Butuan City, Branch 5, reconsidered its earlier order, 7 denied the prayer for a Writ of Preliminary Injunction, and ordered that the possession and occupation of the land be returned to the respondents. The RTC found that the auction sale was tainted with irregularity as the bidder was a government employee disqualified in accordance with Section 89 of the Local Government Code of 1991. The petitioners are not buyers in good faith either. On the contrary, they were in bad faith for having falsified the tax declaration they redeemed the property with.

THE CA’S RULING

Through a petition for review on certiorari under Rule 65, the petitioners challenged the RTC’s order before the CA.

While the petition for review on certiorari was pending before the CA, the petitioners filed an action for specific performance 8 against the City Government of Butuan. According to the petitioners, they acquired possession and ownership over the auctioned property when they redeemed it from Tuazon. The City Government of Butuan must therefore issue them a certificate of sale. 9

In its October 24, 2005 decision, 10 the CA affirmed the RTC’s ruling, found the petitioners guilty of forum shopping, dismissed the case, and referred the case to the Court and to the Integrated Bar of the Philippines for investigation and institution of the appropriate administrative action. 11 The CA, after legal analysis, similarly concluded that for being disqualified to bid under Section 89 of the Local Government Code of 1991, Tuazon never obtained ownership over the property; much less transmit any proprietary rights to the petitioners. Clearly, the petitioners failed to establish any clear and unmistakable right enforceable by the injunctive relief.

On April 6, 2006, the CA rejected the petitioners’ motion for reconsideration.

THE PARTIES’ ARGUMENTS

45

The petitioners filed the present petition for review on certiorari with this Court to challenge the CA rulings. The petitioners maintain that they did not falsify the tax declaration in acquiring the auctioned property. Moreover, assuming that Tuazon, the sole bidder, was indeed disqualified from participating in the public auction, Section 181 12 of the Local Government Code of 1991 finds application. Applying the law, it is as if there was no bidder, for which the City Government of Butuan was to be considered the purchaser of the land in auction. Therefore, when the petitioners bought the land, they bought it directly from the purchaser - City Government of Butuan - and not from Tuazon, as redeemers.

Also, the respondents may not question the validity of the public auction for failing to deposit with the court the amount required by Section 267 13 of the Local Government Code of 1991.

Finally, the petitioners argue that they did not commit forum shopping, as the reliefs prayed for in the present case and in the specific performance case are not the same. In the present case, they merely impleaded the City Government of Butuan as a nominal party to pay for the value of the land only if possession of the land was awarded to the respondents. On the other hand, the complaint for specific performance prayed that the City Government of Butuan execute the necessary certificate of sale and other relevant documents pertaining to the auction.

The respondents, for their part, reiterate the lower courts’ findings that there could have been no legal redemption in favor of the petitioners as the highest bidder was disqualified from bidding. Moreover, the CA correctly applied the law in finding the petitioners guilty of forum shopping. Most importantly, the grant of preliminary injunction lies in the sound discretion of the court and the petitioners failed to show proof that they are entitled to it.

Meanwhile, on August 8, 2013, the RTC dismissed the main action and ordered the petitioners to pay the respondents attorney’s fees and litigation expenses. 14

THE COURT’S RULING

We resolve to deny the petition for lack of merit.

The petitioners may not raise factual issues

The petitioners maintain that they did not falsify the tax declaration they reimbursed the property with. According to them, the document already existed in 1987, way before they acquired the land in 1997. Contrary likewise to the lower courts’ finding, they did not purchase the land from Tuazon as

46

redemptioners; they directly bought the property from the City Government of Butuan.

These factual contests are not appropriate for a petition for review on certiorari under Rule 45. The Court is not a trier of facts. 15 The Court will not revisit, re- examine, and re-evaluate the evidence and the factual conclusions arrived at by the lower courts. 16 In the absence of compelling reasons, the Court will not disturb the rule that factual findings of the lower tribunals are final and binding on this Court. 17

Sections 181 and 267 of the Local Government Code of 1991 are inapplicable; these provisions do not apply to the present case

The petitioners may not invoke Section 181 18 of the Local Government Code of 1991 to validate their alleged title. The law authorizes the local government unit to purchase the auctioned property only in instances where "there is no bidder" or "the highest bid is xxx insufficient." A disqualified bidder is not among the authorized grounds. The local government also never undertook steps to purchase the property under Section 181 of the Local Government Code of 1991, presumably because it knew the invoked provision does not apply.

Neither can the Court agree with the petitioners’ stance that the respondents’ defense — the petitioners’ defective title — must fail for want of deposit to the court the amount required by Section 267 of the Local Government Code. The provision states:

Section 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action assailing the validity or any sale at public auction of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the real property was sold, together with interest of two percent (2%) per month from the date of sale to the time of the institution of the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be returned to the depositor if the action fails.

Neither shall any court declare a sale at public auction invalid by reason or irregularities or informalities in the proceedings unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been impaired. [underscores ours; italics supplied]

A simple reading of the title readily reveals that the provision relates to actions for annulment of tax sales. The section likewise makes use of terms "entertain" and "institution" to mean that the deposit requirement applies only to initiatory actions assailing the validity of tax sales. The intent of the provision to limit the

47

deposit requirement to actions for annulment of tax sales led to the Court’s ruling in National Housing Authority v. Iloilo City, et al. 19 that the deposit requirement is jurisdictional a condition necessary for the court to entertain the action:

As is apparent from a reading of the foregoing provision, a deposit equivalent to the amount of the sale at public auction plus two percent (2%) interest per month from the date of the sale to the time the court action is instituted is a condition a "prerequisite," to borrow the term used by the acknowledged father of the Local Government Code which must be satisfied before the court can entertain any action assailing the validity of the public auction sale. The law, in plain and unequivocal language, prevents the court from entertaining a suit unless a deposit is made. xxx. Otherwise stated, the deposit is a jurisdictional requirement the nonpayment of which warrants the failure of the action.

x x x x

Clearly, the deposit precondition is an ingenious legal device to guarantee the satisfaction of the tax delinquency, with the local government unit keeping the payment on the bid price no matter the final outcome of the suit to nullify the tax sale. 20

The Court would later reiterate the jurisdictional nature of the deposit in Wong v. City of Iloilo, 21 and pronounce:

In this regard, National Housing Authority v. Iloilo City holds that the deposit required under Section 267 of the Local Government Code is a jurisdictional requirement, the nonpayment of which warrants the dismissal of the action. Because petitioners in this case did not make such deposit, the RTC never acquired jurisdiction over the complaints. 22

These rulings clearly render inapplicable the petitioners’ insistence that the respondents should have made a deposit to the court. The suit filed by the petitioners was an action for injunction and damages; the issue of nullity of the auction was raised by the respondents themselves merely as a defense and in no way converted the action to an action for annulment of a tax sale.

The petitioners failed to show clear and unmistakable rights to be protected by the writ; the present action has been rendered moot and academic by the dismissal of the main action

48

As the lower courts correctly found, Tuazon had no ownership to confer to the petitioners despite the latter’s reimbursement of Tuazon’s purchase expenses. Because they were never owners of the property, the petitioners failed to establish entitlement to the writ of preliminary injunction. "[T]o 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. 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." 23

Likewise, upon the dismissal of the main case by the RTC on August 8, 2013, the question of issuance of the writ of preliminary injunction has become moot and academic. In Arevalo v. Planters Development Bank, 24 the Court ruled that a case becomes moot and academic when there is no more issue between the parties or object that can be served in deciding the merits of the case. Upon the dismissal of the main action, the question of the non-issuance of a writ of preliminary injunction automatically died with it. A writ of preliminary injunction is a provisional remedy; it is auxiliary, an adjunct of, and subject to the determination of the main action. It is deemed lifted upon the dismissal of the main case, any appeal therefrom notwithstanding. 25

The petitioners are guilty of forum shopping

We agree with the CA that the petitioners committed forum shopping when they filed the specific performance case despite the pendency of the present case before the CA. In the recent case of Heirs of Marcelo Sotto, etc., et al. v. Matilde S. Palicte, 26 the Court laid down the three ways forum shopping may be committed: 1) through litis pendentia filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet; 2) through res judicata filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved; and 3) splitting of causes of action filing multiple cases based on the same cause of action but with different prayers the ground to dismiss being either litis pendentia or res judicata. "The requisites of litis pendentia are: (a) the identity of parties, or at least such as representing the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other." 27

49

Noticeable among these three types of forum shopping is the identity of the cause of action in the different cases filed. Cause of action is "the act or omission by which a party violates the right of another." 28

The cause of action in the present case (and the main case) is the petitioners’ claim of ownership of the land when they bought it, either from the City Government of Butuan or from Tuazon. This ownership is the petitioners’ basis in enjoining the respondents from dispossessing them of the property. On the other hand, the specific performance case prayed that the City Government of Butuan be ordered to issue the petitioners the certificate of sale grounded on the petitioners’ ownership of the land when they had bought it, either from the City Government of Butuan or from Tuazon. While it may appear that the main relief prayed for in the present injunction case is different from what was prayed for in the specific performance case, the cause of action which serves as the basis for the reliefs remains the same — the petitioners’ alleged ownership of the property after its purchase in a public auction.

Thus, the petitioners' subsequent filing of the specific performance action is forum shopping of the third kind-splitting causes of action or filing multiple cases based on the same cause of action, but with different prayers. As the Court has held in the past, "there is still forum shopping even if the reliefs prayed for in the two cases are different, so long as both cases raise substantially the same issues." 29

Similarly, the CA correctly found that the petitioners and their counsel were guilty of forum shopping based on litis pendentia. Not only were the parties in both cases the same insofar as the City Government of Butuan is concerned, there was also identity of rights asserted and identity of facts alleged. The cause of action in the specific performance case had already been ruled upon in the present case, although it was still pending appeal before the CA. Likewise, the prayer sought in the specific performance case-for the City Government ofButuan to execute a deed of sale in favor of the petitioners - had been indirectly ruled upon in the present case when the R TC declared that no certificate of sale could be issued because there had been no valid sale.

WHEREFORE, premises considered, the Court DENIES the petition for review on certiorari.1âwphi1 The decision dated October 24, 2005 and the resolution dated April 6, 2006 of the Court of Appeals in CA-G.R. SP No. 59859 are hereby AFFIRMED.

SO ORDERED.

50

G.R. No. 176702

November 13, 2013

OFFICE OF THE OMBUDSMAN, Petitioner, vs. MARCELINO A. DECHAVEZ, Respondent.

D E C I S I O N

BRION, J.:

The petitioner, Office of the Ombudsman (Ombudsman), seeks in this Rule 45 petition for review on certiorari 1 the reversal of the Court of Appeals (CA s) decision 2 and resolution 3 reversing the Ombudsman’s rulings 4 that dismissed respondent Marcelino A. Dechavez (Dechavez) from the service for dishonesty.

THE FACTS

The attendant facts are not complicated and, in fact, involve the oft-repeated scenario in the public service workplace -a complaint by subordinate employees against their superior officer for misconduct in office. In a twist of fortune (or misfortune), an accident triggered the whole train of events that led to the present case.

Dechavez was the president of the Negros State College of Agriculture (NSCA) from 2001 until his retirement on April 9, 2006. On May 5, 2002, a Sunday, Dechavez and his wife, Amelia M. Dechavez (Mrs. Dechavez), used the college service Suzuki Vitara to go to Pontevedra, Negros Occidental. Dechavez drove the vehicle himself. On their way back to the NSCA, they figured in a vehicular accident in Himamaylan City, resulting in minor injuries to the occupants and damage to the vehicle.

To support his claim for insurance, Dechavez executed an affidavit 5 before the Government Service Insurance System (GSIS). The GSIS subsequently granted Dechavez's claims amounting to ₱308,000.00, while the NSCA shouldered ₱71,000.00 as its share in the vehicle's depreciation expense. The GSIS released ₱6,000.00 for Mrs. Dechavez's third-party liability claim for bodily injuries.

On November 11 2002, twenty (20) faculty and staff members of the NSCA (complainants) asked the Commission on Audit (COA) to conduct an audit

51

investigation of NSCA’s expenditures in the May 5, 2002 vehicular accident. The COA dismissed the complaint for lack of merit.

The complainants then sought recourse with the Ombudsman, Visayas, through a verified complaint 7 charging Dechavez with Dishonesty under Section 46(b)(l), Chapter 6, Tile I of the Administrative Code of 1987. 8

THE OMBUDSMAN S RULING

The Ombudsman dismissed Dechavez from the service with all accessory penalties after finding him guilty. 9 The Ombudsman ruled that the complainants sufficiently established their allegations, while Dechavez's defenses had been successfully rebutted. The motion for reconsideration that Dechavez filed was subsequently denied. 10

THE CA’S RULING

The CA examined the same pieces of evidence that the Ombudsman considered and reversed the Ombudsman s findings. 11

In complete contrast with the Ombudsman's rulings, the CA found that the complainants failed to sufficiently show that Dechavez had deliberately lied in his May 10, 2002 affidavit. Dechavez sufficiently proved that he went on an official trip, based on the reasons outlined below and its reading of the evidence:

First, there was nothing wrong if Dechavez worked on a Sunday; he must, in fact, be commended for his dedication.

Second, the Ombudsman should have accorded greater belief on the NSCA drivers positive assertion that they were not available to drive for Mr. and Mrs. Dechavez (as they had serviced other faculty members at that time), as against the NSCA security guards allegation that these drivers were available then (because they allegedly saw the drivers within the college premises on that Sunday); speculations on the nature of the trip should not arise simply because Dechavez personally drove the vehicle.

Third, the certifications of Mr. Larry Parroco (Pontevedra Sanggunian Bayan Member) and Mr. Cornelio Geanga (Chair of the Education Committee and Head Teacher of the M.H. Del Pilar Elementary School) should have persuaded the Ombudsman that the affiants are public officials who would not lightly issue a certification or falsely execute affidavits as they know the implications and consequences of any falsity.

52

Fourth, and lastly the two lists of teaching instructors had been prepared by the same person, and if the second list had indeed been questionable, Mr. Pablito Cuizon (NSCA s Chairman for Instructions) would have not attached the second list to his affidavit.

On February 7, 2007, the CA denied 12 the motion for reconsideration filed by the Ombudsman.

THE PARTIES ARGUMENTS

The Ombudsman argues that the guilt of Dechavez has been proven by substantial evidence -the quantum of evidence required in administrative proceedings. It likewise invokes its findings and posits that because they are supported by substantial evidence, they deserve great weight and must be accorded full respect and credit.

Dechavez counters that the present petition raises factual issues that are improper for a petition for review on certiorari under Rule 45. He adds that the present case has been mooted by his retirement from the service on April 9, 2006, and should properly be dismissed.

THE COURT’S RULING

The Court finds the petition meritorious.

The CA’s factual findings are conclusive exceptions

The rule that the Court will not disturb the CA' s findings of fact is not an absolute rule that admits of no exceptions. 13 A notable exception is the presence of conflict of findings of fact between or among the tribunals' rulings on questions of fact. The case before us squarely falls under this exception as the tribunals below made two critical conflicting factual findings. We are thus compelled to undertake our own factual examination of the evidence presented.

This Court cannot be any clearer in laying down the rule on the quaritum of evidence to support an administrative ruling: In administrative cases, substantial evidence is required to support any findings. Substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. The requirement is satisfied where there is reasonable ground to believe that the petitioner is guilty of the act or omission complained of, even if the evidence might not be overwhelming." 14

Our own examination of the records tells us that the Ombudsman's findings and appreciation of the presented evidence are more in accord with reason and

53

common experience so that it successfully proved, by the required quantum of evidence, Dechavez's dishonesty, at the same time that we find the respondent's reading of the evidence to be stretched to the point of breaking, as our analysis below shows.

We start with our agreement with the CA's view that the Ombudsman's finding that Dechavez was not on official business on May 5, 2002 because it was a Sunday (a non-working day) -by itself, is not sufficient basis for the conclusion that Dechavez's business on that day was not official. We, nevertheless, examined the other surrounding facts and are convinced that the spouses Dechavez's trip was a personal one; thus, Dechavez had been dishonest when he made the claim that he went on official business. The dishonesty, of course, did not arise simply from the nature of the trip, but from the claim for insurance that brought the spouses a substantial sum. First, Dechavez alleged that the trip was urgent, and there were no drivers available; hence, he drove the vehicle himself. He added that the fact that the trip ticket was accomplished on May 5, 2002, a Sunday, and that it was typewritten, are not material as he was not prohibited from driving the car himself.

We do not agree with Dechavez's claim about the immateriality of the trip ticket; it was presented as evidence and, as such, carries implications far beyond what Dechavez claims. The fact alone that the ticket, for a trip that was allegedly urgent, was typewritten already speaks volumes about the integrity of this piece of evidence. We agree with the Ombudsman, based on common experience and probability, that had the trip really been urgent and had the trip ticket been accomplished on the date of the trip, May 5, 2002, it would have been handwritten. The trip ticket, however, was typewritten, indicating that it had been prepared ahead of time, or thereafter, not on that Sunday immediately before leaving on an urgent trip. In fact, if it had been prepared ahead of time, then the trip could not have been urgent as there was advance planning involved.

In other words, if the trip ticket had been prepared ahead of time, the trip should have been scheduled ahead of time, and necessary arrangements should have been made for the availability of a driver. Therefore, it was unlikely that Dechavez would have known that no driver would be available for him on the date of the trip.

On another note, if the trip ticket had been prepared after the trip, the Ombudsman was correct in observing that Dechavez had no authority to drive the vehicle in the absence of the requisite trip ticket. 15 Worse, if it had been prepared after the trip after an accident had intervened, then there had been a. conscious attempt to sanitize the incidents of the trip. It is at this point where

54

the claim for insurance becomes material; the trip ticket removed all questions about the regularity and official character of the trip.

After examining the testimonies, too, we lean in favor of the view that there were available drivers on May 5, 2002, contrary to what Dechavez claimed. As between the assertion of the security guards that they had seen available drivers on the day of the trip, and the drivers' denial (and assertion that they had serviced other faculty members at that time), the settled evidentiary rule is that as between a positive and categorical testimony which has a ring of truth, on one hand, and a bare denial, on the other, the former is generally held to prevail. 16 Furthermore, while Dechavez insists that the allegations of the drivers were corroborated by the teachers they had driven for, the attestations of these teachers remained to be hearsay: Dechavez failed to present their attestations in evidence.

Dechavez additionally argues that the way the trip ticket was accomplished bears no significance in these circumstances, insisting further that it is of no moment that he drove the vehicle himself, as he was not prohibited from doing so. Read in isolation, the Court might just have found these positions convincing. Read with the other attendant circumstances, however, the argument becomes shaky.

If Dechavez thought that there was nothing wrong in driving the vehicle himself, why would he indicate that the reason he drove the vehicle himself was that there were no available drivers, and that it was urgent? Finally, if indeed it was true that Dechavez used to perform his extension service or confer with the NSCA's linkages during weekends, how come the trip became urgent and the driver had not been assigned beforehand?

Second. We cannot give weight to the certification of Mr. Parroco that Dechavez used to visit the Pontevedra District to coordinate with his office, and that Dechavez also visited his office on May 5, 2002. We likewise disregard the statement of Mr. Geanga that Dechavez appeared before his office on May 5, 2002. The certifications of these two witnesses were submitted only in October 2004 or two (2) years after the case was filed with the Ombudsman. The time lag alone already renders the certifications suspect and this inconsistency has not been satisfactorily explained. The late use of the certifications also deprived the complainants of the opportunity to refute them and the Ombudsman the chance to examine the affiants. As the Ombudsman observed, too, it is hard to believe that all four (4) of them -Mr. and Mrs. Dechavez, Mr. Parroco, and Mr. Geanga - happened to agree to work on a Sunday, a non-working day; this story simply stretches matters beyond the point of believability in the absence of supporting proof that this kind of arrangement has been usual among them.

55

Finally we find that Mrs. Dechavez was not on official business on May 5, 2002; in fact, she was not teaching at that time. We note in this regard that the parties presented two (2) conflicting instructor's summer teaching loads for 2002: the first one, dated April 1, 2002, which did not include Mrs. Dechavez, while the other, an undated one, included Mrs. Dechavez's name. Curiously, the same person who prepared both documents, Mr. Cuizon, failed to explain why there were two (2) versions of the same document. Considering the highly irregular and undated nature of the list that contained the name of Mrs. Dechavez, we again concur with the Ombudsman's reading that while we can presume that the undated list had been prepared before the start of the summer classes, we can also presume that the other list had been prepared subsequently to conveniently suit the defense of the respondent. 17

Likewise, Ms. Fe Ulpiana, a teacher at the NSCA, whose name appears in the second document, attested that she had never been assigned to register and assess the students' school fees, contrary to what appeared thereon. We find it worth mentioning that Dechavez's witness, Mr. Cuizon, despite being subpoenaed by the Ombudsman, failed to furnish the Schedule of Classes for Summer 2002 and the Actual Teaching Load for Summer 2002. 18 Dechavez also failed to provide the Ombudsman with the subpoenaed daily time record (DTR) of Mrs. Dechavez for summer 2002 as the DTR supposedly could not be located.

All told, too many gaps simply existed in Dechavez's tale and supporting evidence for his case to be convincing.

Retirement from the service during the pendency of an administrative case does not render the case moot and academic

As early as 1975, we have upheld the rule that the jurisdiction that was Ours at the time of the filing of the administrative complaint was not lost by the mere fact that the respondent public official had ceased to be in office during the pendency of his case. The Court retains its jurisdiction either to pronounce the respondent official innocent of the charges or declare him guilty thereof. A contrary rule would be fraught with injustices and pregnant with dreadful and dangerous implications." 19

Arguably, the cited case above is not applicable as it involved a judge who retired four (4) days after a charge of grave misconduct, gross dishonesty and serious inefficiency was filed against him.1âwphi1 The wisdom of citing this authority in the present case can be found, however, in its ruling that: "If innocent, respondent official merits vindication of his name and integrity as he leaves the government which he served well and faithfully; if guilty, he deserves

56

to receive the corresponding censure and a penalty proper and imposable under the situation." 20

Recently, we emphasized that in a case that a public official's cessation from service does not render moot an administrative case that was filed prior to the official's resignation. In the 2011 case of Office of the Ombudsman v. Andutan Jr. 21 we reiterated the doctrine and laid down the line of cases supporting this principle when we ruled:

To recall, we have held in the past that a public official's resignation does not render moot an administrative case that was filed prior to the official's resignation. In Pagano v. Nazarro, Jr., we held that:

In Office of the Court Administrator v. Juan [A.M. No. P-03-1726, 22 July 2004, 434 SCRA 654, 658], this Court categorically ruled that the precipitate resignation of a government employee charged with an offense punishable by dismissal from the service does not render moot the administrative case against him. Resignation is not a way out to evade administrative liability when facing administrative sanction. The resignation of a public servant does not preclude the finding of any administrative liability to which he or she shall still be answerable-[Baquerfo v. Sanchez A.M. No. P-05-1974, 6 April 2005, 455 SCRA 13, 19-20]. [Italics supplied, citation omitted]

Likewise, in Baquerfo v. Sanchez 22 we held:

Cessation from office of respondent by resignation or retirement neither warrants the dismissal of the administrative complaint filed against him while he was still in the service nor does it render said administrative case moot and academic. The jurisdiction that was this Court's at the time of the filing of the administrative complaint was not lost by the mere fact that the respondent public official had ceased in office during the pendency of his case. Respondent's resignation does not preclude the finding of any administrative liability to which he shall still be answerable. [Emphases ours; citations omitted]

Thus, from the strictly legal point of view and as we have held in a long line of cases, jurisdiction, once it attaches, cannot be defeated by the acts of the respondent save only where death intervenes and the action does not survive.

WHEREFORE, under these premises we hereby GRANT the petition for review on certiorari Accordingly we REVERSE AND SET ASIDE the decision dated March 31, 2006 and the resolution dated February 7, 2007 of the Court of Appeals in CA-G.R. SP. No. 00673 and REINSTATE the decision dated October 29 2004 and the order dated April 6 2005 of the Office of the Ombudsman.

Costs against respondent Marcelino A. Dechavez.

SO ORDERED.

57

SECOND DIVISION

G.R. No. 193809, March 23, 2015

SATURNINO NOVECIO, GAVINO NOVECIO, ANASTACIO GOLEZ, ABUNDIO SOMBILON, BERTING RODRIGUEZ, MELITON CATALAN, Petitioners, v. HON. RODRIGO F. LIM, JR., AS CHAIRMAN, HON. LEONCIA R. DIMAGIBA AS PONENTE AND AS MEMBER AND HON. ANGELITA A. GACUTAN AS MEMBER, FORMER TWENTY-THIRD DIVISION, COURT OF APPEALS, MINDANAO STATION, HON. JUDGE BENJAMIN ESTRADA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 9, RTC, MALAYBALAY, BUKIDNON, MARIA CARMEN J. TUAZON, REP. BY HER ATTORNEY-IN-FACT, LOPE DUROTAN, Respondents.

VERGELIO ROSALES, LUIS TEQUILIO, GREGORIO PANANGIN, JOSEPH RODRIQUEZ, EDDIE RODRIGUEZ, Petitioners, v. HON. RODRIGO F. LIM, JR., AS CHAIRMAN, HON. LEONCIA R. DIMAGIBA AS PONENTE AND AS MEMBER DESIGNATED AS ACTING CHAIRPERSON, PER SPECIAL ORDER NO. 1955 DATED MARCH 23, 2015. DESIGNATED AS ACTING MEMBER VICE ASSOCIATE JUSTICE ANTONIO T. CARPIO, PER SPECIAL ORDER NO. 1956 DATED MARCH 23, 2015. AND HON. ANGELITA A. GACUTAN AS MEMBER, FORMER TWENTY-THIRD DIVISION, COURT OF APPEALS, MINDANAO STATION, HON. JUDGE BENJAMIN ESTRADA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 9, RTC, MALAYBALAY, BUKIDNON, MANUEL V. NIETO, REP. BY HIS ATTORNEY-IN-FACT, LOPE DUROTAN, Respondent.

D E C I S I O N

BRION, J.:

We resolve the petition for certiorari 1 filed under Rule 65 of the Rules of Court with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. The petition assails the resolutions 2 dated January 28, 2010 and July 16, 2010 of the Court of Appeals (CA) in CA-G.R.SP No. 02863.

The assailed resolutions denied the petitioners' prayer for the issuance of a preliminary injunction pending resolution of the Petition for Review filed in the CA. The subject of the Petition for Review was the consolidated decision of the Regional Trial Court (RTC), Branch 9, Malaybalay, Bukidnon, which reversed the decision of the Municipal Trial Court (MTC) of Quezon, Bukidnon. The MTC dismissed the forcible entry cases filed by the respondents against the

58

petitioners.

On October 18, 2010, this Court issued a Temporary Restraining Order (TRO) enjoining the RTC from executing its consolidated decision. 3

The Factual Antecedents

Respondents Maria Carmen J. Tuazon and Manuel V. Nieto, represented by their attorney-in-fact, Lope Durotan (the respondents), filed complaints 4 for forcible entry with damages against petitioners Saturnino Novecio, Gavino Novecio, Anastacio Golez, et al. (the petitioners). 5

The respondents alleged that on February 15, 2004, the petitioners, by force, intimidation, threat, strategy and stealth, unlawfully squatted and took possession of several portions of land with an area of eight (8) hectares, described as Project No. 9, Block 1, LC Map No. 777. The petitioners allegedly planted crops, erected makeshift shelters, and continue to plant and /or improve the shelters as of the filing of the complaints for forcible entry, all without the consent and/or against the will of the respondents.

The petitioners, on the other hand, contended that they have already been in possession of the land for more than two years when the complaints were filed. They maintained that they have planted the land with corn, durian, coconut,

mango, jackfruit, rambutan, etc. for their livelihood. They also alleged that they were harassed by some men armed with shotguns and pistols on February 12,

2004. 6

The petitioners further maintained that Manuel V. Nieto, father of Maria Carmen J. Tuazon, had previous landholding in the area but the same was covered by the Comprehensive Agrarian Reform Program (CARP) and so it was subdivided in favor of the tenants. 7

The MTC's Ruling

The MTC ruled in favor the petitioners. 8

The MTC found that the respondents anchored their alleged prior possession on the fact that they have applied title for the land as shown by a certification authorizing land survey. 9 Other than this, the respondents had no evidence of their actual and physical possession of the land. The MTC also found that they were not even residents of the place and never personally appeared in court during trial.

The petitioners, on the other hand, claimed their prior possession on the fact that

59

their livelihood as fisher folks and farmers require them to live by the riverbank where the land is located. The petitioners also asserted that they have been occupying the land for more than two (2) years when the complaints were filed. The MTC held that the certification issued by the barangay captain that the petitioners are residents of the place is a very strong evidence of their prior physical possession. 10

The MTC concluded: "[a]s between a resident and a non-resident the likelihood is that the resident has the prior physical possession because of his accessibility to the area." 11

The dispositive portion of the MTC decision reads:

WHEREFORE, by preponderance of evidence showing defendants' prior physical possession of the land and the filing of the complaint beyond the one-year period[,] judgment is rendered in favor of the defendants DISMISSING the cases. 12

The respondents appealed the MTC decision to the RTC.

The RTC's Ruling

The RTC reversed the MTC decision. 13

The RTC held that the MTC ignored some pieces of evidence, warranting the reversal of the decision.

The RTC ruled that the MTC should have given credence to the certification issued by the Department of Environment and Natural Resources - Community Environment and Natural Resources Office (DENR-CENRO) showing that the land in litigation is the subject of an application for title and claim by the respondents. The RTC also took judicial notice of the request for authority to conduct a survey over the subject property, which provides that "the parcel of land herein treated was an unsurveyed land and Manuel V. Nieto was the identified occupant and tiller of the land." 14

In view of these, the RTC ruled that the respondents were the actual occupants of the property in litigation long before the petitioners had taken possession of the same property. The RTC ordered the petitioners' ejectment.

The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered and finding the appeal to be with merit, the assailed Consolidated Decision dated November 7, 2005 of the Municipal Trial

60

Court of Quezon, Bukidnon is hereby reversed and set aside, finding in favor of plaintiff-appellants, ordering the ejectment of all defendants-appellees and "John Does" in both cases and for them to turn over peaceful possession/occupancy of the landholding in litigation. No pronouncement as to costs. 15

The Proceedings before the CA

The petitioners filed on April 30, 2009 a Petition for Review 16 with the CA - Mindanao Station, assailing the judgment of the RTC.

As the respondents sought the execution of the RTC judgment, the petitioners filed on May 14, 2010 an Extremely Urgent Application for Writ of Preliminary Injunction and Immediate Issuance of Temporary Restraining Order. 17

On July 13, 2009, the CA issued a TRO effective for sixty (60) days. Meanwhile, the CA directed the parties to submit their memoranda and position papers.

On January 28, 2010, the CA issued the first assailed resolution denying the petitioners' application for preliminary injunction. 18 The CA, without necessarily resolving the petition on the merits, held that the petitioners were not entitled to the relief demanded under Rule 58 of the Rules of Court. The petitioners' Motion for Reconsideration was denied on July 16, 2010.

The Petition

The petitioners impute grave abuse of discretion on the CA in denying their prayer for injunction pending resolution of the Petition for Review.

The petitioners argue that the CA denied their prayer for preliminary injunction despite the pressing need for it to prevent grave and irreparable injury to them. They emphasize that the records clearly show that they were the prior possessors of the subject lot. In fact, the lot has been their home and source of livelihood for several years prior to the institution of the forcible entry cases.

The respondents filed their comment 19 on December 3, 2010. They argue that grave abuse of discretion means such capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. Mere abuse of discretion, according to the respondents, is not enough. The respondents maintain that the petitioners are not entitled to the injunctive relief since they have not established a clear legal right for its issuance.

This Court, acting on the petitioners' prayer, issued a TRO on October 18, 2010, enjoining the RTC from executing its decision. The TRO remains effective until this day.

61

Finally, it appears that the CA has yet to issue a decision on the Petition for Review. 20

The Issue

The sole issue is whether or not the CA acted with grave abuse of discretion, amounting to lack or excess of jurisdiction, when it denied the petitioners' prayer for preliminary injunction.

The Court's Ruling

We find the petition meritorious.

We note at the outset that the petition merely assails the interlocutory orders of the CA. Thus, the remedy of certiorari under Rule 65 is appropriate as the assailed resolutions are not appealable and there is no plain, speedy or adequate remedy in the ordinary course of law. 21

Our decision in this case is without prejudice to the Petition for Review pending in the CA. Our judgment is limited to the resolutions of the C A denying the prayer for the issuance of a preliminary injunction.

Subject to this clarification, we find that the CA committed grave abuse of discretion when it denied the injunctive relief prayed for by the petitioners.

There is grave abuse of discretion when an act is (1) done contrary to the Constitution, the law or jurisprudence or (2) executed whimsically, capriciously or arbitrarily, out of malice, ill will or personal bias. 22

We quote the assailed CA resolutions. The January 28, 2010 Resolution states:

Without necessarily resolving the instant petition on the merits, We find [the] petitioners not entitled to the relief demanded under Rule 58 of the Revised Rules of Procedure. Thus, [the] petitioners' application for the issuance of [a] Writ of Preliminary Injunction is hereby DENIED.

The July 16, 2010 Resolution reads:

Upon careful evaluation of [the] petitioners' Motion, We find no cogent and compelling reasons to warrant reversal of Our Resolution. The arguments raised by [the] petitioners were mere reiteration and already considered and passed upon by this Court in denying [the] petitioners' application for issuance of the Writ of Preliminary Injunction.

62

A review of the records, however, shows that the CA ignored relevant facts that

would have justified the issuance of a preliminary injunction. Contrary to

established jurisprudence, the CA also denied the prayer for preliminary injunction without giving the factual and legal bases for such denial.

Section 3, Rule 58 of the Rules of Court provides that a preliminary injunction may be granted when the following have been established:

i. That the applicant is entitled to the relief demanded, and the whole or part of such relief consist 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;

ii. 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

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

A preliminary injunction is proper when the plaintiff appears to be clearly entitled

to the relief sought and has substantial interest in the right sought to be defended. As this Court has previously ruled, "while the existence of the right

need not be conclusively established, it must be clear." 23

A writ of preliminary injunction is generally based solely on initial or incomplete

evidence. Such evidence need only be a sampling intended merely to give the court an evidence of justification for a preliminary injunction pending the decision on the merits of the case, and is not conclusive of the principal action which has yet to be decided. 24

In a prayer for preliminary injunction, the plaintiff is not required to submit conclusive and complete evidence. He is only required to show that he has an ostensible right to the final relief prayed for in his complaint. 25

In this case, the petitioners have adequately shown their entitlement to a preliminary injunction. First, the relief demanded consists in restraining the execution of the RTC decision ordering their ejectment from the disputed land. Second, their ejectment from the land from which they derive their source of

63

livelihood would work injustice to the petitioners. Finally, the execution of the RTC decision is probably in violation of the rights of the petitioners, tending to render the MTC judgment dismissing the forcible entry cases ineffectual.

Moreover, the court in granting or dismissing an application for a writ of preliminary injunction based on the pleadings of the parties and their respective evidence must state in its order the findings and conclusions based on the evidence and the law. This is to enable the appellate court to determine whether the trial court committed grave abuse of its discretion amounting to excess or

lack of jurisdiction in resolving, one way or the other, the plea for injunctive

relief. 26

Thus, we do not understand why the CA denied the prayer for preliminary injunction without citing any legal or factual basis for the denial. The CA resolution provides: "[We] find [the] petitioners not entitled to the relief demanded under Rule 58 of the Revised Rules of Civil Procedure."

Neither does the resolution denying the petitioners' Motion for Reconsideration contain any factual and legal bases for the denial. It only provides that "[u]pon careful evaluation of the petitioners' Motion, We find no cogent and compelling reasons to warrant reversal of Our Resolution."

We therefore have no idea why and how the CA came to the conclusion that the petitioners are not entitled to the injunctive relief. Hence, we are forced to go beyond the function of a certiorari under Rule 65 and examine the factual findings of the MTC and the RTC.

The MTC found that the petitioners have been in actual and physical possession

of the land for more than two (2) years prior to the institution of the complaints for forcible entry. 27 The MTC also found that the respondents were not even sure how the petitioners entered the land. In their complaints, they alleged that petitioners entered the land by means of "force, intimidation, threat, stealth and strategy," a shotgun allegation which shows that respondents' lack knowledge of how the petitioners entered the disputed property.

We quote the MTC decision with approval, viz:

xxx Force, intimidation[,] and threat usually connote actual knowledge of

dispossession. One cannot force, intimidate or threaten another who is not around. In stealth and strategy[,] the actual entry is usually done without the knowledge of the plaintiff. If they are not sure how [the] defendants entered the land[,] the likelihood is that they also do not know when [the] defendants] entered the land. The court is apt to believe that [the] defendants have been in possession of the land for more than 2 years. And under Rule 70[,] the action of

64

forcible entry must be filed within one year from dispossession. The filing of these cases was beyond the one-year period. 28

The RTC, on the other hand, relied on a mere request for authority to conduct a land survey, allegedly showing that respondent Manuel V. Nieto was the occupant and tiller of the land.

However, this document does not prove prior possession of the subject land. It only points to the fact that there was an application for a land title in the name of

one of the respondents, which application was not even shown to have been

granted. This document merely authorized the survey of the land; the declaration

regarding possession was just incidental to the application for land survey.

Between the clear findings of the MTC, which conducted the trial of the forcible entry cases, and the RTC acting as an appellate court, which relied on documentary evidence but without sufficiently explaining how such evidence would prove prior possession, we are inclined to give weight to the MTC's ruling.

This Court has held:

xxx The Court generally recognizes the profundity of conclusions and findings of

facts reached by the trial court and hence sustains them on appeal except for strong and cogent reasons inasmuch as the trial court is in a better position to examine real evidence and observe the demeanor of witnesses in a case. No clear specific contrary evidence was cited by the respondent appellate court to justify the reversal of the lower court's findings. Thus, in this case, between the factual findings of the trial court and the appellate court, those of the trial court must prevail over that of the latter. 29

Under this factual backdrop, we conclude that the CA committed grave abuse of discretion when it denied the prayer for preliminary injunction without explanation and justification.

We ought to remember that the grant of preliminary injunction would have only

been provisional and would not be conclusively determinative of the principal action. The issuance of the writ would have served its purpose, i.e., to preserve

the status quo or to prevent future wrongs in order to preserve and protect the

interests of the petitioners during the pendency of the action. 30

WHEREFORE, in view of the foregoing, we GRANT the writ of certiorari and

accordingly SET ASIDE the resolutions of the Court of Appeals dated January

28, 2010 and July 16, 2010 for grave abuse of discretion.

SO ORDERED.

65

EN BANC

G.R. No. 205875, June 30, 2015

LIBERTY BROADCASTING NETWORK, INC., NOW KNOWN AS WI-TRIBE TELECOMS, INC., Petitioner, v. ATLOCOM WIRELESS SYSTEM, INC., Respondent.

[G.R. No. 208916]

NATIONAL TELECOMMUNICATIONS COMMISSION, Petitioner, v. ATLOCOM WIRELESS SYSTEM, INC., Respondent.

D E C I S I O N

VILLARAMA, JR., J.:

The consolidated petitions before us assail the Decision 1 dated June 29, 2012 and Resolution 2 dated February 18, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 119868. The CA reversed and set aside the Orders 3 dated December 9, 2010 and March 21, 2011 of the Regional Trial Court (RTC) of Quezon City, Branch 95 denying the application for a writ of prohibitory or mandatory injunction in Civil Case No. Q-09-65566.

Antecedent Facts

Atlocom Wireless System, Inc. (Atlocom) is a grantee of a legislative franchise under Republic Act (R.A.) No. 8605. 4 On October 8, 2003, the National Telecommunications Commission (NTC) issued an Order 5 in NTC Case No. 98-158 relative to the application of Atlocom for a Certificate of Public Convenience (CPC), as follows:chanRoblesvirtualLawlibrary WHEREFORE, it appearing that applicant is financially and technically capable of undertaking the proposed project and that the operation thereof will promote the interest of the people in Metro Manila, in a proper and suitable manner, the Commission hereby grants to herein applicant ATLOCOM WIRELESS SYSTEM, INC. a Provisional Authority (PA) to install, operate and maintain a Multi-Point Multi-Channel Distribution System [MMDS] in METRO MANILA, subject to the assignment of frequency by the Frequency Management Division of this Commission and to the following -

x x x x 6

CONDITIONS

66

As stated in the above order, the PA shall be valid for a period of eighteen (18) months, or until April 8, 2005. In a letter 7 dated April 5, 2004, Atlocom thru its counsel requested for "an extension of time of the allocation of the above- enumerated frequencies and for the period for the construction and installation of the radio stations in the condition no. 2 of the Order." Earlier, Atlocom filed an Application for Permit to Import 8 the necessary equipment. Atlocom followed up its application for extension of PA through a letter 9 dated June 2, 2005 addressed to Deputy Commissioner Jorge V. Sarmiento. Subsequently, Atlocom filed a Motion for Extension of Provisional Authority 10 in NTC Case No. 98-158 on March 3, 2005.

On August 23, 2005, NTC issued Memorandum Circular No. (MC) 06-08- 2005 11 re-allocating the following bands for broadband wireless access for fixed, nomadic and mobile networks:

450 - 470 Mhz

1900-1910 MHz

1980-1990 MHz

2400-2483 MHz

2500-2700 MHz

3400-3600 MHz

5150-5350 MHz

5470-5850 MHz

10150-10650 MHz

On December 23, 2008, NTC denied Atlocom's motion for extension of PA, citing the re-allocation of MMDS frequencies for Broadband Wireless Access in accordance with MC 06-08-2005 and the unavailability of other alternative frequencies. 12 chanrobleslaw

On September 8, 2009, Atlocom filed in the RTC a Petition 13 to enjoin the implementation of MC 06-08-2005 and reinstate the frequencies of Atlocom. It was further prayed that after hearing the court render judgment declaring the said issuance as null and void because NTC unlawfully deprived Atlocom of the right to its assigned frequencies without notice and hearing. The case was docketed as Civil Case No. Q-09-65566.

Liberty Broadcasting Network, Inc. (LBNI), also a grantee of a legislative franchise (R.A. No. 1553, as amended by R.A. No. 4154) for radio and television broadcasting, as well as radio stations for international and domestic communications of all types and services, and holder of a Certificate of Public Convenience and Necessity (CPCN) to operate a radio communications network, was allowed to intervene in the case, joining the defendant NTC in opposing Atlocom's claims. Pursuant to MC 06-08-2005, frequency bands 2535-2545 MHz

67

and 2565-2595 MHz were re-allocated and assigned to LBNI, which covered the 2572-2596 MHz being claimed by Atlocom as allegedly assigned to it.

Per Certification 14 dated October 22, 2003 issued by Alvin N. Blanco, Chief, Broadcast Services Division of NTC, the following frequencies were "identified" for Atlocom's MMDS (Metro Manila) system:chanRoblesvirtualLawlibrary C3 2572 - 2578 Mhz D3 2578 - 2584 Mhz C4 2584 - 2590 Mhz D4 2590 - 2596 Mhz On December 9, 2010, the RTC, after due hearing, issued an Order denying Atlocom's application for a writ of preliminary prohibitory or mandatory injunction. Atlocom filed a motion for reconsideration but it was likewise denied by the RTC under Order dated March 21, 2011.

In a petition for certiorari filed before the CA, Atlocom questioned the validity of the aforesaid orders of the RTC.

In its Resolution 15 dated August 12, 2011, the CA denied Atlocom's prayer for the issuance of a writ of preliminary prohibitory injunction and its alternative prayer for a provisional mandatory injunction.

However, in its Decision dated June 29, 2012, the CA ruled in favor of Atlocom and reversed the RTC's denial of application for preliminary injunction. The fallo of the decision reads:chanRoblesvirtualLawlibrary WHEREFORE, premises considered, the petition is GRANTED. The assailed Orders dated December 9, 2010 and March 21, 2011 of the Regional Trial Court (RTC) of Quezon City, Branch 95 are hereby REVERSED and SET ASIDE. The plea for the issuance of a Preliminary Prohibitory Injunction is GRANTED. Let therefore a writ of preliminary prohibitory injunction issue enjoining Respondent NTC from implementing Memorandum Circular No. 06-08-2005, insofar as the frequencies ranging from 2572-2596 Mhz are concerned and for its Co- Respondent LBNI from using the said frequencies during the pendency of Civil Case No. Q-09-65566 pending before Branch 95 of the Regional Trial Court of Quezon City upon the posting of a bond in the amount of Php 200,000.00 to answer for all damages which they may sustain by reason of the injunction if the RTC should finally decide that petitioner is not entitled thereto. The alternative plea for a writ of Preliminary Mandatory Injunction is DENIED.

SO ORDERED. 16 LBNI filed a Motion for Reconsideration with Ad Cautelam Offer to File Counter- Bond and Addendum to Motion for Reconsideration with Ad Cautelam Offer to File Counter-Bond. NTC also filed a Motion for Reconsideration and Supplemental Motion for Reconsideration. The CA denied these motions.

68

LBNI filed its petition (G.R. No. 205875) in this Court on April 22, 2013. Acting on LBNI's motion for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, we issued a TRO enjoining the implementation of the writ of preliminary injunction issued by the CA, conditioned upon LBNI's posting of a cash bond in the sum of P300,000.00.

On April 18, 2013, NTC filed its separate petition (G.R. No. 208916) for review from the same CA Decision and Resolution. We ordered the consolidation of the two cases as they arose from the same factual setting, involve the same parties and raise identical issues.

Issues

The main issues to be resolved are: (1) whether Atlocom complied with the requisites for issuance of a writ of preliminary injunction; and (2) whether LBNI's motion to file counter-bond was correctly denied by the CA.

Specifically, LBNI asserts that the CA erred: (1) in finding that the NTC did not observe due process when it issued MC 06-08-2005 and basing such conclusion on a mistaken notion that the grant of PA is tantamount to a frequency assignment; (2) in failing to recognize that Atlocom has not sufficiently established its claim that it had been assigned the 2572-2596 frequency bands by the NTC; (3) in granting the provisional injunctive writ that in effect pre- judged the civil case pending in the RTC; and (4) in denying LBNI's motion to file counter-bond on the basis of a technical conclusion it is not qualified to make in the first place.

NTC faults the CA in finding that Atlocom's right to due process was violated because it was not notified of the hearing prior to the issuance of MC 06-08- 2005, and concluding that Atlocom has a clear and unmistakable property right over the 2572-2596 frequency range.

Our Ruling

The petitions are meritorious.

A preliminary injunction is defined as "[a]n order granted at any stage of an

action prior to the judgment or final order, requiring a party or a court, agency or

a person to refrain from a particular actor acts." 17 It may be a prohibitory

injunction, which requires a party to refrain from doing a particular act, or a mandatory injunction, which commands a party to perform a positive act to correct a wrong in the past. 18 It is a provisional remedy that a party may resort to in order to preserve and protect certain rights and interests during the

69

pendency of an action. 19 chanrobleslaw

Section 3, Rule 58 of the Rules of Court provides:chanRoblesvirtualLawlibrary SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is established:ChanRoblesVirtualawlibrary

(a) That the applicant is entitled to the relief demanded, and the whole or part of

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

(b) That the commission, continuance or nonperformance of the act or acts

complained of during the litigation would probably work injustice to the

applicant; or

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

to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.chanroblesvirtuallawlibrary 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. 20 chanrobleslaw

The grant or denial of a writ of preliminary injunction is discretionary upon the trial court because the assessment and evaluation of evidence towards that end involve findings of fact left to the said court for its conclusive determination. For this reason, the grant or denial of a writ of preliminary injunction shall not be disturbed unless it was issued with grave abuse of discretion amounting to lack or in excess of jurisdiction. 21 chanrobleslaw

In denying Atlocom's application for a writ of preliminary injunction, the RTC held that Atlocom failed to demonstrate a clear and unmistakable legal right thereto, as evidence showed Atlocom has no more right to be protected considering that its PA had already expired and its application for extension was subsequently denied by the NTC. As to the claim of violation of right to due process, the RTC found that prior to the issuance of MC 06-08-2005, NTC published a notice of public hearing in The Manila Times, a newspaper of general circulation, and at the said hearing the participants were given opportunity to be heard through oral arguments and submission of position papers. Atlocom's alternative plea for a writ of mandatory injunction was likewise denied. According to the RTC, ordering

70

the NTC to reinstate Atlocom's frequencies would create an impression that the court had pre-judged the main case by nullifying MC 06-08-2005 as prayed for by Atlocom in its petition.

However, the CA rendered a contrary ruling. The CA underscored the fact that NTC failed to act upon Atlocom's motion for extension for more than three years, and concluded that because of NTC's inordinate delay or refusal to renew the PA granted to Atlocom, the latter was deprived of its right to use the frequencies "granted to it by" the PA. The CA thus held:chanRoblesvirtualLawlibrary In deciding whether to grant an injunction, a court must consider established principles of equity and all the circumstances of the test for issuing an injunction is whether the facts show a necessity for the intervention of equity in order to protect rights cognizable in equity. Here, there are factual and legal justification for issuance of the writ of injunction. To reiterate to the point of being pedantic, petitioner's right to its frequencies is covered by a provisional authority. The provisional authority was withdrawn by MC No. 06-08-2005 without the Respondent NTC acting on petitioner's plea for previous extensions. The propriety for the issuance of MC No. 06-08-2005 is placed in issue on the ground of fairness. Petitioner as the rightful grantee thereof has the right, in the meantime, to enjoin its implementation.

We are not unaware of Our Resolution promulgated on August 12, 2011 denying petitioner's plea for the ancillary remedy of both prohibitory and/or mandatory injunction. Indeed, as of said date, the denial of petitioner's prayer is appropriate. We have now the complete facts of the case and, as the legal consequence of Our declaration that the RTC committed grave abuse of discretion in issuing the assailed orders, We consider it proper to enjoin the Respondent NTC from implementing Memorandum Circular No. 06-08-2005, but insofar as the frequencies ranging from 2572-2596 Mhz are involved and for its Co-Respondent LBNI from using the aforestated frequencies. This is not to preempt the RTC of whatever judgment it may thereafter issue with respect to the merits of the case before it but is issued in order to maintain the status quo in view of petitioner's claim of a breach of due process and a continuing violation of its right over the aforestated frequencies. 22 The CA explained that since it is only through a frequency that Atlocom can provide adequate broadcast service to the public, the withdrawal of frequency assignment without observance of due process defeats its legislative grant and reduces Atlocom to a mere repository of transmitters and equipment devoid of any purpose or value. It cited the following provisions of R.A. No.

8605:chanRoblesvirtualLawlibrary

SEC. 3. Prior Approval of the National Telecommunications Commission. - The grantee shall secure from the National Telecommunications Commission, hereinafter referred to as the Commission, the appropriate permits and licenses for the construction and operation of its stations, transmitters or facilities and

71

shall not use any frequency in the radio and television spectrum without having been authorized by the Commission. The Commission, however, shall not unreasonably withhold or delay the grant of any such authority.

x x x x

SEC. 6. Right of Government. x x x

The radio spectrum is a finite resource that is a part of the national patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be withdrawn anytime, after due process. (Italics supplied) On the withdrawal of the frequencies previously identified for Atlocom, the CA

insisted that NTC did not observe due process, viz.:chanRoblesvirtualLawlibrary

x x x While it is true that there was a publication of a Notice of Public Hearing on

June 21, 2005 before the issuance of Memorandum Circular No. 06-08-2005 on August 23, 2005, the fact is, the publication or notice was a general one and was not meant to dispose of petitioner's previous requests for an extension of its provisional authority and/or application for permit to purchase equipment. The order which dealt with these requests was the Order dated December 23, 2008, which was issued almost four (4) years after the filing of the first request on April 5, 2004 and almost three (3) years from the issuance of Memorandum Circular No. 06-08-2005. Withal and subject to whatever proof it may submit to the RTC regarding the delay, the Respondent NTC should have first acted on petitioner's requests for extension before setting for public hearing the re-allocation of the

frequencies. 23 We do not concur with the CA in holding that NTC's inaction or delay on Atlocom's application for extension of PA had violated the latter's right to due process because it resulted in depriving Atlocom of the use of frequencies which were re-allocated through the issuance of MC 06-08-2005. Such declaration rather conveys an inaccurate picture of the regulatory process for public broadcasting and telecommunications services.

Under existing laws and regulations, it is clear that a frequency assignment is not automatically included in the PA granted by the NTC to an applicant for a CPC. Thus, the Order dated October 8, 2003 expressly provided that the PA granted to Atlocom, valid for 18 months, is subject to several conditions, foremost of which is the assignment of frequency by the Frequency Management Division (FMD).

While Atlocom presented a Certification 24 dated October 22, 2003 issued by Alvin N. Blanco, Chief of NTC's Broadcast Division, stating that certain frequencies were "identified" for Atlocom's MMDS (Metro Manila) covering 2572-2596 frequency bands, there is no document evidencing that these frequencies were actually assigned to Atlocom by the FMD. There is likewise nothing in the records to suggest that NTC "unreasonably" withheld or delayed authority to use such

72

frequencies identified for Atlocom.

Atlocom blamed NTC's three-year delay in resolving the motion for extension of PA for its inability to use the frequencies identified for its MMDS, as these were eventually re-allocated in 2005 under MC 06-08-2005. But as Atlocom was fully aware, Section 6 of R.A. No. 8605 provides that the Government may at anytime withdraw the frequency after due process. Records showed that a notice was duly published and a public hearing was actually conducted on July 12, 2005 by NTC on the proposed Memo Circular: Frequency Band Allocations for Broadcast Wireless Access. Said event was attended by representatives of the different broadcasting and telecommunication companies, including Atlocom. 25 The position papers and feedback submitted by various companies in connection with the proposed memorandum circular on wireless broadband access were all presented as evidence in the RTC. 26 We have held that the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side. 27 The requirements of due process were thus satisfied by the NTC in the re-allocation of frequency.

Contrary to the CA's pronouncement, the re-allocation of frequency cannot be conditioned on resolution of any pending request for extension of PA previously granted. Even entities with unexpired PA cannot claim a vested right on a specific frequency assignment. This proceeds from the nature of its franchise which is not solely for commercial purposes but one imbued with public interest. As earlier quoted, Atlocom's franchise (R.A. No. 8605) declared the use of radio spectrum as a mere privilege conferred upon the grantee by the State that may be withdrawn anytime provided that due process is observed. It further emphasized that the radio spectrum is a finite resource and its use and distribution should be aligned with existing laws and policies.

R.A. No. 7925 likewise recognizes the vital role of telecommunications to national development and security and provides that the radio frequency shall be managed and directed to serve the public interest. Being a limited resource, the law mandates a periodic review of frequency allocation. SEC. 4. Declaration of National Policy. - Telecommunications is essential to the economic development, integrity and security of the Philippines, and as such shall be developed and administered as to safeguard, enrich and strengthen the economic, cultural, social and political fabric of the Philippines. The growth and development of telecommunications services shall be pursued in accordance with the following policies:ChanRoblesVirtualawlibrary

x x x x

c) The radio frequency spectrum is a scarce public resource that shall be administered in the public interest and in accordance with international

73

agreements and conventions to which the Philippines is a party and granted to the best qualified. The government shall allocate the spectrum to service providers who will use it efficiently and effectively to meet public demand for telecommunications service and may avail of new and cost effective technologies in the use of methods for its utilization;

x x x x

SEC. 15. Radio Frequency Spectrum. - The radio frequency spectrum allocation and assignment shall be subject to periodic review. The use thereof shall be subject to reasonable spectrum user fees. Where demand for specific frequencies exceed availability, the Commission shall hold open tenders for the same and ensure wider access to this limited resource.chanroblesvirtuallawlibrary As a grantee of PA, Atlocom can only invoke the condition in MC 06-08-2005 that "[t]he transfer of previously authorized persons or entities operating radio stations within the above listed radio frequency bands shall be governed by Rule 603 of MC 3-3-96." 28 Said rule states:chanRoblesvirtualLawlibrary 603. TRANSFER OF AFFECTED AUTHORIZED RADIO FREQUENCY USER

a. The commission shall allocate available radio frequencies for assignment to

those affected by the reallocation as a result of the review of the radio spectrum pursuant to Rule 601.

b. The cost of the transfer to new radio frequencies of affected authorized users

shall be borne by the new assignees to the radio frequency channel/band where the radio frequencies of the previously authorized users fall within.

c. When the transfer to a new set of radio frequencies would require additional

radio links, the cost of these links shall also be taken into consideration.

d. The manner and the cost of the transfer shall be negotiated in good faith

between the affected authorized users and the assignees within 90 days from receipt of notice of relocation.

e. The Commission shall extend all the necessary assistance to all affected

authorized users and shall mandate settlement if the parties fail to come to an agreement within 90 days from receipt of notice of relocation or when warranted under the circumstances.

f. Other means/mode of transmission comparable in quality to the existing facility shall be taken into consideration in the negotiation for the transfer.

g. Transfer of radio frequency assignment shall only take effect upon activation

74

of service by relocated party using its newly assigned or relocated frequency as agreed or mandated.chanroblesvirtuallawlibrary Considering that Atlocom has not even launched its MMDS network nor constructed radio stations, it is doubtful whether Atlocom can exercise the foregoing rights of an affected frequency user. Neither can Atlocom attribute its non-operational state to the delayed action on its motion for extension of PA. Among the conditions of its PA is the commencement of the construction and

installation of its station within six months from issuance of the order granting it

the provisional authority and its complete three months thereafter. Perusal of the

motion for extension reveals that Atlocom at the time was still in the process of identifying and finalizing arrangements with its potential investors for the

establishment of a nationwide MMDS network coverage.

Based on its evaluation, the NTC found that: (1) Atlocom filed an application for Permit to Purchase MMDS transmitter on February 9, 2005, but no permit of any kind was issued to it; (2) In the clarificatory hearing held on September 4, 2006, concerns were raised regarding reports of foreign equity on Atlocom's capital structure and status of band allocated for MMDS within the 2.5-2.7 Ghz band; and (3) On June 21, 2008, Atlocom is requesting for an allocation of a Digital Terrestrial TV frequency (Ch 14-20 & Ch 21-51) in replacement for their MMDS frequency, but the NTC thru FMD denied such request because the proposed frequency band for DTT service is not yet approved/allocated. With the re- allocation of MMDS frequency bands for the Broadband Wireless Access under MC 06-8-2005, and the aforesaid findings, the NTC en banc decided not to grant the extension sought by Atlocom.

A right to be protected by injunction, means a right clearly founded on or granted by law or is enforceable as a matter of law. 29 An injunction is not a

remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse, and which may never arise, or to restrain an

act which does not give rise to a cause of action. 30 chanrobleslaw

From the evidence on record, no clear, actual and existing right to the subject frequencies or to the extension of PA had been shown by Atlocom. Accordingly, no grave abuse of discretion was committed by the RTC in denying Atlocom's

application for a writ of preliminary injunction to restrain the implementation of

MC 06-08-2005 insofar as the use of the reallocated frequencies claimed by

Atlocom. The CA thus seriously erred in reversing the RTC and holding that Atlocom was entitled to injunctive relief due to alleged violation of its right by the NTC.

A writ of preliminary injunction being an extraordinary event, one deemed as a strong arm of equity or a transcendent remedy, it must be granted only in the face of actual and existing substantial rights. In the absence of the same, and

75

where facts are shown to be wanting in bringing the matter within the conditions for its issuance, the ancillary writ must be struck down for having been rendered in grave abuse of discretion. 31 chanrobleslaw

Pursuant to Section 6, 32 Rule 58 of the 1997 Rules of Civil Procedure, a preliminary injunction may be dissolved if it appears after hearing that although the applicant is entitled to the injunction or restraining order, the issuance or continuance thereof, as the case may be, would cause irreparable damage to the party or person enjoined while the applicant can be fully compensated for such damages as he may suffer, and the former files a bond in an amount fixed by the court on condition that he will pay all damages which the applicant may suffer by the denial or the dissolution of the injunction or restraining order. Two conditions must concur: first, the court, in the exercise of its discretion, finds that the continuance of the injunction would cause great damage to the defendant, while the plaintiff can be fully compensated for such damages as he may suffer; second, the defendant files a counterbond. 33 chanrobleslaw

In denying LBNI's offer to file counterbond, the CA relied on the Affidavit 34 executed by Rene Rosales, Atlocom's technical consultant, to refute the earlier Affidavit 35 submitted by LBNI, which was executed by its Director for Network Engineering, Edwin C. Mabitazan. Mabitazan stated that the injunction issued by the CA will result in reducing LBNI's usable bandwidth from 40 Mhz to only 15 Mhz, which is inadequate to serve LBNI's thousands of subscribers. Mabitazan's opinion should have been given more weight in view of his intimate knowledge of LBNI's operations and technical requirements. Moreover, it should be stressed that LBNI's business projections were based on its existing technical capability which stands to be greatly diminished once the frequency bands re- assigned to it will be reduced as a result of the CA's injunction order. The possibility of irreparable damage is indeed present, not only in terms of financial losses -the total investment by LBNI has already reached billions of pesos - but on the reputation of LBNI as a new player in the telecommunications industry for reliability and dependability of its services. In contrast, whatever damage Atlocom stands to suffer should the injunction be dissolved, can be fully compensated considering that it has not constructed stations nor launched any network service. No single document was submitted by Atlocom to show it had actually complied with the conditions of its PA and invested in the establishment of MMDS network, which never materialized.

In gross abuse of discretion, the CA brushed aside evidence presented by LBNI in support of its offer to file counter-bond, stating that these were submitted only after the appellate court had rendered its decision granting Atlocom's prayer for preliminary injunction. The CA failed to consider the fact that it was Atlocom which misled the courts and the NTC in claiming that the subject frequencies had been assigned to it. The matter was raised by NTC and LBNI only in their motions

76

for reconsideration because it was only at that time when their inquiry from FMD disclosed that said office had not actually granted a frequency assignment to Atlocom. Thus, NTC in its Supplemental Motion for Reconsideration, submitted a

Certification 36 dated August 2, 2012 issued by the FMD Chief, Pricilla F. Demition, together with attached documents, setting forth the same facts relative to Atlocom's non-operational state. Atlocom countered that said evidence was just an afterthought because the absence of frequency assignment was not mentioned by Engr. Demition when she testified before the RTC on January 14,