#7

JULIO A. VIVARES and

MILA G. IGNALING,
Petitioners,

G.R. No. 155408

Present:

- versus -

ENGR. JOSE J. REYES,

Respondent.

QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:

February 13, 2008

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case
The kernel dispute in this petition under Rule 45 is the legality of the May
22, 2001 Resolution[1] of the Camiguin Regional Trial Court (RTC), Branch 28 in
Civil Case No. 517, which placed the estate of Severino Reyes under
receivership. The Court of Appeals (CA) saw it differently in CA-G.R. SP No.
67492its June 18, 2002 Decision[2]recalled the RTC directive on the appointment
of the receiver, prompting Julio Vivares and Mila Ignaling to file the petition at bar
to convince the Court to reinstate the receivership.
The Facts
Severino Reyes was the father of respondent Jose Reyes and Torcuato
Reyes. Upon the death of Severino, respondent and Torcuato came upon their
inheritance consisting of several properties. They had an oral partition of the
properties and separately appropriated to themselves said properties.

On May 12, 1992, Torcuato died with a last will and testament executed on
January 3, 1992. In Reyes v. Court of Appeals,[3] we affirmed the November 29,
1995 CA Decision, admitting the will for probate.
Petitioner Vivares was the designated executor of Torcuatos last will and
testament, while petitioner Ignaling was declared a lawful heir of Torcuato.
Believing that Torcuato did not receive his full share in the estate of
Severino, petitioners instituted an action for Partition and Recovery of Real
Estate before the Camiguin RTC, Branch 28 entitled Julio A. Vivares, as executor
of the estate of Torcuato J. Reyes and Mila R. Ignaling, as heir v. Engr. Jose J.
Reyes and docketed as Civil Case No. 517. With the approval of the trial court, the
parties agreed that properties from the estate of Severino, which were already
transferred in the names of respondent and Torcuato prior to the latters death on
May 12, 1992, shall be excluded from litigation. In short, what was being
contested were the properties that were still in the name of Severino.
On November 24, 1997, for the purpose of collating the common properties
that were disputed, the trial court directed the formation of a three-man
commission with due representation from both parties, and the third member,
appointed by the trial court, shall act as chairperson. The disputed properties were
then annotated with notices of lis pendens upon the instance of petitioners.
On March 15, 2000, petitioners filed a Motion to Place Properties in
Litigation under Receivership[4] before the trial court alleging that to their prejudice
respondent had, without prior court approval and without petitioners knowledge,
sold to third parties and transferred in his own name several common properties.
Petitioners also averred that respondent fraudulently antedated, prior to May 12,
1992, some conveyances and transfers to make it appear that these were no longer
part of the estate of Severino under litigation. They further claimed that
respondent was and is in possession of the common properties in the estate of
Severino, and exclusively enjoying the fruits and income of said properties and
without rendering an accounting on them and turning over the share pertaining to
Torcuato. Thus, petitioners prayed to place the entire disputed estate of Severino

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

receiver.
On March 23, 2000, respondent filed his Opposition to Place the Estate of
Severino Reyes under Receivership,[5] denying that he had fraudulently transferred
any property of the estate of Severino and asserting that any transfer in his name of
said properties was a result of the oral partition between him and Torcuato that
enabled the latter as well to transfer several common properties in his own name.
On May 24, 2000, petitioners filed their Offer of Exhibits in support of their
motion for receivership. On the same date, the trial court issued an
Order[6] granting petitioners motion and appointed Salantin as receiver conditioned
on the filing of a PhP 50,000 bond. Respondent filed a motion for reconsideration,
contending that the appointment of a receiver was unduly precipitate considering
that he was not represented by counsel and thus was deprived of due process.
On August 4, 2000, the trial court allowed respondent to present his
evidence to contest petitioners grounds for the appointment of a receiver, and the
trial court set the reception of respondents evidence for September 4,
2000. However, on August 24, 2000, respondent filed a motion for postponement
of the September 4, 2000 scheduled hearing on the ground that he was in
the United States as early as July 23, 2000 for medical examination. On
September 5, 2000, the trial court denied respondents motion for postponement
and reinstated its May 24, 2000 Order.
On September 19, 2000, respondent filed a Manifestation with Motion to
Discharge Receiver, reiterating the circumstances which prevented him from
attending the September 4, 2000 hearing and praying for the discharge of the
receiver upon the filing of a counterbond in an amount to be fixed by the court in
accordance with Section 3, Rule 59 of the 1997 Revised Rules on Civil
Procedure. On October 10, 2000, petitioners filed their undated Opposition to
Motion to Discharge Receiver.
Subsequently, respondent filed a Motion to Cancel Notice of Lis
Pendens which was annotated on Tax Declaration (TD) No. 112 covering Lot No.
33 allegedly belonging exclusively to him. Respondent asserted in the motion that

an adjacent property to Lot No. 33, particularly a portion of Lot No. 35, which is
owned by a certain Elena Unchuan, was erroneously included in Lot No. 33 and,
consequently, was subjected to the notice of lis pendens. Petitioners filed their
Opposition to the Motion to Cancel Lis Pendens.
Consequently, on May 22, 2001, the trial court issued a Resolution, denying
respondents motions to discharge receiver and cancel the notice of lis pendens in
TD No. 112. Respondent seasonably filed a partial motion for reconsideration of
the May 22, 2001 Resolution, attaching copies of deeds of sale executed by
Torcuato covering several common properties of the estate of Severino to prove
that he and Torcuato had indeed made an oral partition of the estate of their father,
Severino, and thus allowing him and Torcuato to convey their respective shares in
the estate of Severino to third persons.
On October 19, 2001, the trial court heard respondents motion for partial
reconsideration, and on the same date issued an Order denying the motion for
partial reconsideration on the ground that respondent failed to raise new matters in
the motion but merely reiterated the arguments raised in previous pleadings.
Aggrieved, respondent filed a Petition for Certiorari before the CA, assailing
the May 22, 2001 Resolution and October 19, 2001 Order of the RTC.
The Ruling of the Court of Appeals
On June 18, 2002, the CA rendered the assailed Decision, sustaining
respondents position and granted relief, thus:
WHEREFORE, premises considered, the Petition is
hereby GRANTED. The Resolution dated 22 May 2001 of the Regional
Trial Court of Camiguin, Branch 28 in Civil Case No. 517 is hereby
reversed and set aside. The court-appointed receiver, Lope Salantin, is
discharged upon the posting by petitioner of a counterbond in the amount
of P100,000.00. The notice of lis pendens in Tax Declaration 112, in so
far as it covers the property of Elena Unchuan, is cancelled. Let this
case be remanded to the court a quo for further proceedings.[7]

In reversing the trial court, the CA reasoned that the court a quo failed to
observe the well-settled rule that allows the grant of the harsh judicial remedy of
receivership only in extreme cases when there is an imperative necessity for
it. The CA thus held that it is proper that the appointed receiver be discharged on
the filing of a counterbond pursuant to Sec. 3, Rule 59 of the 1997 Revised Rules
on Civil Procedure.
Moreover, the CA ratiocinated that respondent has adequately demonstrated
that the appointment of the receiver has no sufficient basis, and further held that
the rights of petitioners over the properties in litigation are doubly protected
through the notices of lis pendens annotated on the titles of the subject
properties. In fine, the appellate court pointed out that the appointment of a
receiver is a delicate one, requiring the exercise of discretion, and not an absolute
right of a party but subject to the attendant facts of each case. The CA found that
the trial court abused its discretion in appointing the receiver and in denying the
cancellation of the notice of lis pendens on TD No. 112, insofar as it pertains to the
portion owned by Unchuan.
Aggrieved, petitioners in turn interposed a Motion for Reconsideration that
was denied through the assailed September 24, 2002 CA Resolution.
Thus, this petition for review on certiorari is before us, presenting the
following issues for consideration:
I

WHETHER OR NOT THE ANNOTATION OF A NOTICE OF LIS

PENDENS PRECLUDES THE APPOINTMENT OF A RECEIVER
WHEN THERE IS A NEED TO SAFEGUARD THE PROPERTIES IN
LITIGATION.
II

WHETHER OR NOT A DULY APPOINTED RECEIVER OF

PROPERTIES IN LITIGATION SHOULD BE DISCHARGED SIMPLY
BECAUSE THE ADVERSE PARTY OFFERS TO POST A
COUNTERBOND.

III

WHETHER OR NOT THE CANCELLATION OF A NOTICE OF LIS

PENDENS ANNOTATED ON TAX DECLARATION NO. 112 IS
CONTRARY TO LAW.[8]

The Courts Ruling

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

between the siblings. To lend credence to the transfers executed by Torcuato but
distrust to those made by respondent would be highly inequitable as correctly
opined by the court a quo.
Indeed, receivership is a harsh remedy to be granted only in extreme
situations. As early as 1914, the Court already enunciated the doctrinal
pronouncement in Velasco & Co. v. Gochuico & Co. that courts must use utmost
circumspection in allowing receivership, thus:
The power to appoint a receiver is a delicate one and should be
exercised with extreme caution and only under circumstances requiring
summary relief or where the court is satisfied that there is imminent
danger of loss, lest the injury thereby caused be far greater than the
injury sought to be averted. The court should consider the consequences
to all of the parties and the power should not be exercised when it is
likely to produce irreparable injustice or injury to private rights or the
facts demonstrate that the appointment will injure the interests of others
whose rights are entitled to as much consideration from the court as
those of the complainant.[9]

Petitioners cannot now impugn the oral partition entered into by Torcuato
and respondent and hence cannot also assail the transfers made by respondent of
the lots which were subject of said agreement, considering that Torcuato also sold
properties based on said verbal arrangement. Indeed, the parties agreed that the
civil action does not encompass the properties covered by the oral partition. In this
factual setting, petitioners cannot convince the Court that the alleged fraudulent
transfers of the lots made by respondent, which purportedly form part of his share
in Severinos estate based on the partition, can provide a strong basis to grant the
receivership.
Second, petitioner is willing to post a counterbond in the amount to be fixed
by the court based on Sec. 3, Rule 59 of the 1997 Rules of Civil Procedure, which
reads:
Sec. 3. Denial of application or discharge of receiver.The
application may be denied, or the receiver discharged, when the adverse
party files a bond executed to the applicant, in an amount to be fixed by
the court, to the effect that such party will pay the applicant all damages

he may suffer by reason of the acts, omissions, or other matter specified

in the application as ground for such appointment. The receiver may
also be discharged if it is shown that his appointment was obtained
without sufficient cause.

Anchored on this rule, the trial court should have dispensed with the services
of the receiver, more so considering that the alleged fraud put forward to justify the
receivership was not at all established.
Petitioners advance the issue that the receivership should not be recalled
simply because the adverse party offers to post a counterbond. At the outset, we
find that this issue was not raised before the CA and therefore proscribed by the
doctrine that an issue raised for the first time on appeal and not timely raised in the
proceedings in the lower court is barred by estoppel. [10] Even if we entertain the
issue, the contention is nevertheless devoid of merit. The assailed CA decision
supported the discharge of the receiver with several reasons including the posting
of the counterbond. While the CA made a statement that the trial court should
have discharged the appointed receiver on the basis of the proposed counterbond,
such opinion does not jibe with the import of Sec. 3, Rule 59. The rule states that
the application may be denied or the receiver discharged. In statutory
construction, the word may has always been construed as permissive. If the
intent is to make it mandatory or ministerial for the trial court to order the recall of
the receiver upon the offer to post a counterbond, then the court should have used
the word shall. Thus, the trial court has to consider the posting of the
counterbond in addition to other reasons presented by the offeror why the
receivership has to be set aside.
Third, since a notice of lis pendens has been annotated on the titles of the
disputed properties, the rights of petitioners are amply safeguarded and preserved
since there can be no risk of losing the property or any part of it as a result of any
conveyance of the land or any encumbrance that may be made thereon posterior to
the filing of the notice of lis pendens.[11] Once the annotation is made, any
subsequent conveyance of the lot by the respondent would be subject to the
outcome of the litigation since the fact that the properties are under custodia

legis is made known to all and sundry by operation of law. Hence, there is no need
for a receiver to look after the disputed properties.
On the issue of lis pendens, petitioners argue that the mere fact that a notice
of lis pendens was annotated on the titles of the disputed properties does not
preclude the appointment of a receiver. It is true that the notice alone will not
preclude the transfer of the property pendente lite, for the title to be issued to the
transferee will merely carry the annotation that the lot is under litigation. Hence,
the notice of lis pendens, by itself, may not be the most convenient and feasible
means of preserving or administering the property in litigation. However, the
situation is different in the case at bar. A counterbond will also be posted by the
respondent to answer for all damages petitioners may suffer by reason of any
transfer of the disputed properties in the future. As a matter of fact, petitioners can
also ask for the issuance of an injunctive writ to foreclose any transfer, mortgage,
or encumbrance on the disputed properties. These considerations, plus the finding
that the appointment of the receiver was without sufficient cause, have
demonstrated the vulnerability of petitioners postulation.
Fourth, it is undisputed that respondent has actual possession over some of
the disputed properties which are entitled to protection. Between the possessor of
a subject property and the party asserting contrary rights to the properties, the
former is accorded better rights. In litigation, except for exceptional and extreme
cases, the possessor ought not to be deprived of possession over subject
property. Article 539 of the New Civil Code provides that every possessor has a
right to be respected in his possession; and should he be disturbed therein he shall
be protected in or restored to said possession by the means established by the laws
and the Rules of Court. In Descallar v. Court of Appeals, we ruled that the
appointment of a receiver is not proper where the rights of the parties, one of
whom is in possession of the property, are still to be determined by the trial court.
[12]

In view of the foregoing reasons, we uphold the CA ruling that the grant of
the receivership was without sufficient justification nor strong basis.

Anent the third issue that the cancellation of the notice of lis pendens on TD
No. 112 is irregular as Lot No. 33 is one of the disputed properties in the partition
case, petitioners position is correct.
The CA made a factual finding that the property of Unchuan was
erroneously included in Lot No. 33, one of the disputed properties in Civil Case
No. 517. It then ruled that the annotation of lis pendens should be lifted.
This ruling is bereft of factual basis.
The determination whether the property of Unchuan is a part of Lot No. 33
and whether that portion really belongs to Unchuan are matters to be determined
by the trial court. Consequently, the notice of lis pendens on TD No. 112 stays
until the final ruling on said issues is made.
WHEREFORE, the petition is PARTLY GRANTED. The June 18, 2002
CA
Decision
in
CA-G.R.
SP
No.
67492
is AFFIRMED with MODIFICATION insofar as it ordered the cancellation of
the notice of lis pendens in TD No. 112. As thus modified, the appealed CA
Decision should read as follows:
WHEREFORE, premises considered, the Petition is
hereby PARTLY GRANTED. The Resolution dated 22 May 2001 of
the Regional Trial Court of Camiguin, Branch 28 in Civil Case No. 517
is hereby reversed and set aside. The court-appointed receiver, Lope
Salantin, is discharged upon the posting by petitioner of a counterbond in
the amount of PhP 100,000. The notice of lis pendens in TD No. 112,
including the portion allegedly belonging to Elena Unchuan, remains
valid and effective. Let this case be remanded to the court a quo for
further proceedings in Civil Case No. 517.

No costs.
SO ORDERED.

#8

JUANA COMPLEX I
HOMEOWNERS ASSOCIATION,
INC., ANDRES C. BAUTISTA,
BRIGIDO DIMACULANGAN,
DOLORES P. PRADO, IMELDA
DE LA CRUZ, EDITHA C. DY,
FLORENCIA M. MERCADO,
LEOVINO C. DATARIO, AIDA
A. ABAYON, NAPOLEON M.
DIMAANO, ROSITA G. ESTIGOY
and NELSON A.
LOYOLA,
Petitioners,

- versus -

FIL-ESTATE LAND, INC.,

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

G.R. No. 152272

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

G. R. No. 152397

Petitioners,
Present:
- versus JUANA COMPLEX I
HOMEOWNERS ASSOCIATION,
INC., ANDRES C. BAUTISTA,
BRIGIDO DIMACULANGAN,
DOLORES P. PRADO, IMELDA
DE LA CRUZ, EDITHA C. DY,
FLORENCIA M.
MERCADO, LEOVINO C.
DATARIO, AIDA
A. ABAYON, NAPOLEON M.
DIMAANO, ROSITA G. ESTIGOY
and NELSON A. LOYOLA,
Respondents.

VELASCO, JR., J., Chairperson,

PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:
March 5, 2012

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

DECISION
MENDOZA, J.:
Before the Court are two (2) consolidated petitions assailing the July 31,
2001 Decision[1] and February 21, 2002 Resolution[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 60543, which annulled and set aside the March
3, 1999 Order[3] of the Regional Trial Court, Branch 25, Bian,
Laguna (RTC), granting the application for the issuance of a writ of preliminary
injunction, and upheld the June 16, 2000 Omnibus Order [4] denying the motion to
dismiss.
The Facts:
On January 20, 1999, Juana Complex I Homeowners Association,
Inc. (JCHA), together with individual residents of Juana Complex I and other
neighboring subdivisions(collectively referred as JCHA, et. al.), instituted a
complaint[5] for damages, in its own behalf and as a class suit representing the

regular commuters and motorists of Juana Complex I and neighboring subdivisions

who were deprived of the use of La Paz Road, against Fil-Estate Land, Inc. (FilEstate), Fil-estate Ecocentrum Corporation (FEEC), La Paz Housing &
Development Corporation (La Paz), and Warbird Security Agency and their
respective officers (collectively referred as Fil-Estate, et al.).
The complaint alleged that JCHA, et al. were regular commuters and
motorists who constantly travelled towards the direction of Manila and Calamba;
that they used the entry and exit toll gates of South Luzon Expressway (SLEX) by
passing through right-of-way public road known as La Paz Road; that they had
been using La Paz Road for more than ten (10) years; that in August 1998, Filestate excavated, broke and deliberately ruined La Paz Road that led to SLEX so
JCHA, et al. would not be able to pass through the said road; that La Paz Road was
restored by the residents to make it passable but Fil-estate excavated the road
again; that JCHA reported the matter to the Municipal Government and the Office
of the Municipal Engineer but the latter failed to repair the road to make it passable
and safe to motorists and pedestrians; that the act of Fil-estate in excavating La Paz
Road caused damage, prejudice, inconvenience, annoyance, and loss of precious
hours to them, to the commuters and motorists because traffic was re-routed to
narrow streets that caused terrible traffic congestion and hazard; and that its
permanent closure would not only prejudice their right to free and unhampered use
of the property but would also cause great damage and irreparable injury.
Accordingly, JCHA, et al. also prayed for the immediate issuance of a
Temporary Restraining Order (TRO) or a writ of preliminary injunction (WPI) to
enjoin Fil-Estate, et al. from stopping and intimidating them in their use of La Paz
Road.
On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a
period of twenty (20) days, to stop preventing, coercing, intimidating or harassing
the commuters and motorists from using the La Paz Road. [6]
Subsequently, the RTC conducted several hearings to determine the
propriety of the issuance of a WPI.
On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss [7] arguing
that the complaint failed to state a cause of action and that it was improperly filed
as a class suit. On March 5, 1999, JCHA, et al. filed their comment[8] on the motion
to dismiss to which respondents filed a reply.[9]

On March 3, 1999, the RTC issued an Order [10] granting the WPI and
required JCHA, et al. to post a bond.
On March 19, 1999, Fil-Estate, et al. filed a motion for
reconsideration[11] arguing, among others, that JCHA, et al. failed to satisfy the
requirements for the issuance of a WPI. On March 23, 1999, JCHA, et al. filed
their opposition to the motion.[12]
The RTC then issued its June 16, 2000 Omnibus Order, denying both the
motion to dismiss and the motion for reconsideration filed by Fil-Estate, et al.
Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition
before the CA to annul (1) the Order dated March 3, 1999 and (2) the Omnibus
Order dated June 16, 2000. They contended that the complaint failed to state a
cause of action and that it was improperly filed as a class suit. With regard to the
issuance of the WPI, the defendants averred that JCHA, et al. failed to show that
they had a clear and unmistakable right to the use of La Paz Road; and further
claimed that La Paz Road was a torrens registered private road and there was
neither a voluntary nor legal easement constituted over it.[13]
On July 31, 2001, the CA rendered the decision partially granting the
petition, the dispositive portion of which reads:
WHEREFORE, the petition is hereby partially GRANTED. The
Order dated March 3, 1999 granting the writ of preliminary injunction is
hereby ANNULLED and SET ASIDE but the portion of the Omnibus Order
dated June 16, 2000 denying the motion to dismiss is upheld.
SO ORDERED.[14]

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

The CA ordered the remand of the case to the RTC for a full-blown trial on the
merits.
Hence, these petitions for review.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the following
issues:
(A)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A
FULL-BLOWN TRIAL ON THE MERITS IS REQUIRED TO
DETERMINE THE NATURE OF THE LA PAZ ROAD, HAD DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION.
(B)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT
THE PETITIONERS FAILED TO SATISFY THE REQUIREMENTS FOR
THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION, HAD
DECIDED NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT.[15]

In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition
on the following issues:
I.
The Court of Appeals declaration that respondents Complaint
states a cause of action is contrary to existing law and
jurisprudence.
II.
The Court of Appeals pronouncement that respondents
complaint was properly filed as a class suit is contrary to existing
law and jurisprudence.
III.

The Court of Appeals conclusion that full blown trial on the

merits is required to determine the nature of the La Paz Road is
contrary to existing laws and jurisprudence.[16]
JCHA, et al. concur with the CA that the complaint sufficiently stated a
cause of action. They, however, disagree with the CAs pronouncement that a fullblown trial on the merits was necessary. They claim that during the hearing on the
application of the writ of injunction, they had sufficiently proven that La Paz Road
was a public road and that commuters and motorists of their neighboring villages
had used this road as their means of access to the San Agustin Church, Colegio De
San Agustin and to SLEX in going to Metro Manila and to Southern Tagalog
particularly during the rush hours when traffic at Carmona Entry/Exit and Susana
Heights Entry/Exit was at its worst.
JCHA, et al. argue that La Paz Road has attained the status and character of
a public road or burdened by an apparent easement of public right of way. They
point out thatLa Paz Road is the widest road in the neighborhood used by motorists
in going to Halang Road and in entering the SLEX-Halang toll gate and that there
is no other road as wide as La Paz Road existing in the vicinity. For residents of
San Pedro, Laguna, the shortest, convenient and safe route towards SLEX Halang
is along Rosario Avenue joining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the WPI
because the public nature of La Paz Road had been sufficiently proven and, as
residents of San Pedro and Bian, Laguna, their right to use La Paz Road is
undeniable.
In their Memorandum,[17] Fil-Estate, et al. explain that La Paz Road is
included in the parcels of land covered by Transfer Certificates of Title (TCT) Nos.
T-120008, T-90321 and T-90607, all registered in the name of La Paz. The purpose
of constructing La Paz Road was to provide a passageway for La Paz to its
intended projects to the south, one of which was the Juana Complex I. When Juana
Complex I was completed, La Paz donated the open spaces, drainage, canal, and
lighting facilities inside the Juana Complex I to the Municipality of Bian. The
streets within the subdivisions were then converted to public roads and were
opened for use of the general public. The La Paz Road, not being part of the Juana
Complex I, was excluded from the donation. Subsequently, La Paz became a
shareholder of FEEC, a consortium formed to develop several real properties in
Bian, Laguna, known as Ecocentrum Project. In exchange for shares of stock, La

Paz contributed some of its real properties to the Municipality of Bian, including
the properties constituting La Paz Road, to form part of the Ecocentrum Project.
Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper
since JCHA, et al. failed to prove that they have a clear right over La Paz Road.
Fil-Estate, et al. assert that JCHA, et al. failed to prove the existence of a right of
way or a right to pass over La Paz Road and that the closure of the said road
constituted an injury to such right. According to them, La Paz Road is a torrens
registered private road and there is neither a voluntary nor legal easement
constituted over it. They claim that La Paz Road is a private property registered
under the name of La Paz and the beneficial ownership thereof was transferred to
FEEC when La Paz joined the consortium for the Ecocentrum Project.
Fil-Estate, et al., however, insist that the complaint did not sufficiently
contain the ultimate facts to show a cause of action. They aver the bare allegation
that one is entitled to something is an allegation of a conclusion which adds
nothing to the pleading.
They likewise argue that the complaint was improperly filed as a class suit
for it failed to show that JCHA, et al. and the commuters and motorists they are
representing have a well-defined community of interest over La Paz Road. They claim
that the excavation of La Paz Road would not necessarily give rise to a common right or
cause of action for JCHA, et al. against them since each of them has a separate and
distinct purpose and each may be affected differently than the others.
The Courts Ruling
The issues for the Courts resolution are: (1) whether or not the complaint
states a cause of action; (2) whether the complaint has been properly filed as a
class suit; and (2) whether or not a WPI is warranted.
Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or
omission by which a party violates the right of another. A complaint states a cause
of action when it contains three (3) essential elements of a cause of action, namely:
(1)
(2)
(3)

the legal right of the plaintiff,

the correlative obligation of the defendant, and
the act or omission of the defendant in violation of said legal right.[18]

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

by its averments regarding the acts committed by the defendant. [19] Thus, it must
contain a concise statement of the ultimate or essential facts constituting the
plaintiffs cause of action.[20] To be taken into account are only the material
allegations in the complaint; extraneous facts and circumstances or other
matters aliunde are not considered.[21]
The test of sufficiency of facts alleged in the complaint as constituting a
cause of action is whether or not admitting the facts alleged, the court could render
a valid verdict in accordance with the prayer of said complaint. [22] Stated
differently, if the allegations in the complaint furnish sufficient basis by which the
complaint can be maintained, the same should not be dismissed regardless of the
defense that may be asserted by the defendant.[23]
In the present case, the Court finds the allegations in the complaint sufficient
to establish a cause of action. First, JCHA, et al.s averments in the complaint
show a demandable right over La Paz Road. These are: (1) their right to use the
road on the basis of their allegation that they had been using the road for more than
10 years; and (2) an easement of a right of way has been constituted over the said
roads. There is no other road as wide as La Paz Road existing in the vicinity and it
is the shortest, convenient and safe route towards SLEX Halang that the
commuters and motorists may use. Second, there is an alleged violation of such
right committed by Fil-Estate, et al. when they excavated the road and prevented
the commuters and motorists from using the same. Third, JCHA, et al.
consequently suffered injury and that a valid judgment could have been rendered in
accordance with the relief sought therein.
With respect to the issue that the case was improperly instituted as a class
suit, the Court finds the opposition without merit.
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. When the subject matter of the controversy is
one of common or general interest to many persons so numerous that it is
impracticable to join all as parties, a number of them which the court
finds to be sufficiently numerous and representative as to fully protect the
interests of all concerned may sue or defend for the benefit of all. Any
party in interest shall have the right to intervene to protect his individual
interest.

The necessary elements for the maintenance of a class suit are: 1) the
subject matter of controversy is one of common or general interest to many
persons; 2) the parties affected are so numerous that it is impracticable to bring
them all to court; and 3) the parties bringing the class suit are sufficiently
numerous or representative of the class and can fully protect the interests of all
concerned.[24]
In this case, the suit is clearly one that benefits all commuters and motorists
who use La Paz Road. As succinctly stated by the CA:
The subject matter of the instant case, i.e., the closure and
excavation of the La Paz Road, is initially shown to be of common or
general interest to many persons. The records reveal that numerous
individuals have filed manifestations with the lower court, conveying their
intention to join private respondents in the suit and claiming that they are
similarly situated with private respondents for they were also prejudiced
by the acts of petitioners in closing and excavating the La Paz Road.
Moreover, the individuals sought to be represented by private respondents
in the suit are so numerous that it is impracticable to join them all as
parties and be named individually as plaintiffs in the complaint. These
individuals claim to be residents of various barangays in Bian, Laguna
and other barangays in San Pedro, Laguna.

Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules
of Court lays down the rules for the issuance thereof. Thus:
(a)
That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission or
continuance of the acts complained of, or in the performance of an act or
acts, either for a limited period or perpetually;
(b)
That the commission, continuance or non-performance of
the act or acts complained of during the litigation would probably work
injustice to the applicant; or
(c)
That a party, court, or agency or a person is doing,
threatening, or attempting to do, or is procuring or suffering to be done,
some act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.

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

irremediable injury to parties before their claims can be thoroughly studied and
adjudicated.[25] The requisites for its issuance are: (1) the existence of a clear and
unmistakable right that must be protected; and (2) an urgent and paramount necessity for
the writ to prevent serious damage.[26] For the writ to issue, the right sought to be
protected must be a present right, a legal right which must be shown to be clear and
positive.[27] This means that the persons applying for the writ must show that they
have an ostensible right to the final relief prayed for in their complaint.[28]
In the case at bench, JCHA, et al. failed to establish a prima facie proof of
violation of their right to justify the issuance of a WPI. Their right to the use of La Paz
Road is disputable since they have no clear legal right therein. As correctly ruled by the
CA:
Here, contrary to the ruling of respondent Judge, private respondents
failed to prove as yet that they have a clear and unmistakable right over the La
Paz Road which was sought to be protected by the injunctive writ. They merely
anchor their purported right over the La Paz Road on the bare allegation that
they have been using the same as public road right-of-way for more than ten
years. A mere allegation does not meet the standard of proof that would warrant
the issuance of the injunctive writ. Failure to establish the existence of a clear
right which should be judicially protected through the writ of injunction is a
sufficient ground for denying the injunction.

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

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

2001 Decision and February 21, 2002 Resolution of the Court of Appeals in CAG.R. SP No. 60543 are AFFIRMED.
SO ORDERED.

#9

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

G. R. No. 190795

Petitioners,

Present:
- versus CARPIO, J.,
Chairperson,

LEONARDO-DE

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

BRION,
PEREZ, and
SERENO, JJ.

Respondents.
Promulgated:

July 6, 2011

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

DECISION

SERENO, J.:

The Energy Regulatory Commission (ERC), created under

the Electric Power Industry Reform Act of 2001(EPIRA),[1] used to
apply the Return on Rate Base (RORB) method to determine the
proper amount a distribution utility (DU) may charge for the
services it provides. The RORB scheme had been the method for
computing allowable electricity charges in the Philippines for
decades, before the onset of the EPIRA. Section 43(f) of the EPIRA
allows the ERC to shift from the RORB methodology to alternative
forms of internationally accepted rate-setting methodology,
subject to multiple conditions. [2] The ERC, through a series of

resolutions, adopted the Performance-Based Regulation (PBR)

method to set the allowable rates DUs may charge their
customers.[3] Meralco, a DU, applied for an increase of its
distribution rate under the PBR scheme docketed as ERC Case No.
2009-057 RC (MAP2010 case) on 7 August 2009. Petitioners
NASECORE, FOLVA, FOVA, and Engineer Robert F. Mallillin
(Mallillin) all filed their own Petitions for Intervention to oppose
the application of Meralco.[4]
At the initial hearing, on 6 October 2009, the following
entered their appearances: (1) Meralco, (2) Mallillin, and (3) FOVA.
Petitioners NASECORE and FOLVA failed to appear despite due
notice.[5]
Meralco presented its first witness on 13 November 2009. At
the date of hearing, FOLVA failed to appear despite due notice.
[6]
Likewise, on 19 November 2009, the continuation of Meralcos
presentation of its witness, petitioners NASECORE, FOVA, and
FOLVA all failed to appear despite due notice. [7] NASECORE had
sent a letter requesting that it be excused from the said hearing,
but reserved its right to cross-examine the witness presented by
Meralco. The latter objected to this request by virtue of the ERCs
Rules of Practice and Procedure. ERC ruled that the absence of
NASECORE and FOVA was deemed a waiver of their right to crossexamine Meralcos first witness.[8]
At the 26 November 2009 hearing, NASECORE and FOLVA
again failed to attend the hearing despite due notice. Upon
motion by Meralco, ERC declared that NASECORE had waived its
right to cross-examine the second witness of Meralco for failure to
attend the said hearing. ERC then gave Meralco five (5) days from
said date of hearing within which to file its Formal Offer of
Evidence. FOVA and all the other Intervenors were, likewise, given
ten (10) days from receipt thereof to file their comments thereon
and fifteen (15) days from said date of hearing to file their
position papers or Memoranda.[9]
On 1 December 2009, Meralco filed its Formal Offer of
Evidence with compliance. On 7 December 2009, it was directed

by ERC to submit additional documents to facilitate the evaluation

of its application.
Petitioner NASECORE claims that it was only on 8 December
2009, that it received Meralcos Formal Offer of Evidence,
together with a copy of the 7 December 2009 ERC Order. Thus, it
believes that it has until 18 December 2009 to file its comment
thereon.
On 10 December 2009, Petitioner NASECORE filed with
ERC a Manifestation with Motion dated 9 December 2009
requesting that the ERC direct applicant Meralco to furnish
intervenor NASECORE all the items in ERCs directive/Order
dated 7 December 2009; to furnish Intervenor NASECORE a
copy of the Records of the Proceedings of the hearings held on
19 and 26 November 2009; and to grant the same intervenor
fifteen (15) days, from receipt of applicants compliance with
the ERCs Order dated 7 December 2009, within which to file
its comment to applicants Formal Offer of Evidence.
On 14 December 2009,[10] Meralcos application in the
MAP2010 case was approved by ERC. Petitioner NASECORE protests
this claiming approval as premature, that there were still four
days before the expiration of the period given to it to file its
opposition to the formal offer of evidence of Meralco, and before
petitioner NASECORE received its copy of the documents Meralco
was required to additionally submit in the 7 December 2009 ERC
Order.
A day after the aforementioned Decision, or on 15 December
2009, petitioner NASECORE allegedly received the additional
documents Meralco submitted in compliance with the ERCs 7
December 2009 Order.
Malillin filed his Motion for Reconsideration (MR) before the
ERC.
Instead of filing their own motions for reconsideration,
petitioners came directly to this Court via a Petition for Certiorari
[11]

under Rule 65 of the Rules of Court with an Urgent Prayer for the
Issuance of a Temporary Restraining Order (TRO) or Status Quo
Order.
Allegations in the Instant
Petition; Meralcos and
ERCs Comments
Petitioners main assertion is that the ERC Decision
approving the MAP2010 application of Meralco is null and void for
having been issued in violation of their right to due process of law.
[12]
They further ask this Court to stay the execution of the
aforementioned Decision for being void, to wit:
As already shown earlier, the assailed ERC Decision is a patent
nullity due to lack of due process of law. Thus, being a void decision, it
can not (sic) be the source of any right on the part of MERALCO to
collect additional charges from their customers. Invariably, the 4.3
million customers of MERALCO has (sic) no obligation whatsoever to
pay additional distribution charges to MERALCO. To implement such
void ERC decision, is plainly oppressive, confiscatory, and unjust. [13]

On 26 January 2010, Meralco filed its Comment to the instant

Petition. Meralco contends that the said Petition should be denied
due course or dismissed for the following reasons:
1. Petitioners have availed of an improper remedy; [14]
2. Petitioners have failed to observe the proper hierarchy of
courts;[15]
3. Petitioners were amply afforded the right to participate in
the proceedings and have thus been afforded sufficient
opportunity to be heard;[16] and
4. Meralco has already voluntarily suspended the
implementation of the approved MAP2010 rates rendering
the issues raised in this Petition moot. [17]

Meralco furthermore opposes petitioners prayer for the

issuance of a TRO or Status quo order. It argues that petitioners
failed to present an urgent and paramount necessity for the
issuance of the writ considering that Meralco already voluntarily
suspended the implementation of the assailed Decision pending
resolution of Mallillins MR. In fact, on 1 February 2010, ERC issued
an Order suspending the implementation of the 14 December
2009 Decision pending the resolution of Mallillins MR.
On 27 August 2010, ERC filed its Comment. The ERC argued
that a Petition for Certiorari under Rule 65 is not the proper
remedy in the case at bar; that there was no denial of petitioners
right to procedural due process; and that its 10 March 2010 order
has rendered the instant petition moot. In this Order, the ERC
granted the MR of Mallillin and directed the implementation of the
therein reflected revised distribution rates.
New Allegations in the Reply
and
Meralcos
Comment
Thereon
On 8 April 2010, petitioners filed their Reply to Meralcos
Comment. In their Reply, petitioners, for the first time, put
forward the following arguments:
(1)

Meralco, from 2003-2008, has been earning more than

the 12% rate of recovery considered by law as just and
reasonable.

Petitioners newly argue that the ERC erred in approving

Meralcos application for increasing its charges in spite of the
validation by the Commission on Audit (COA), through a report, of
a computation showing Meralcos income as exceeding the 12%
mandated by law. Petitioners conclude thus:
In view of the COA Audit Report (x x x), the position of the herein
petitioners were validated, i.e., that Meralcos rate increase of
P0.0865/KWh granted in 2003 was not only unnecessary but also
unreasonable, hence MERALCO should not only be ordered to roll back
its rate but also to refund its excess revenues to consumers.

(2)

Questionable rate-setting methodology adopted by ERC.

According to petitioners, this Court ordered the ERC to

consider the 2003 increase it granted to Meralco as provisional
until it has taken action on the COA Audit Report but that ERC
disregarded this order because of its adamant position that the
PBR rate fixing methodology is the be-all-and-end-all of its rate
fixing function while sacrificing the interests of millions of
consumers.[18]
They argue that it is not the validity of the rate setting
methodology employed but the reasonableness of the rates to be
applied that ought to be the controlling factor in determining the
rates that a public utility should be allowed to implement. [19]
Thus, the ERC should not limit itself with the use of the PBR
method if it would result in unreasonable rates. Rather, the ERC
should have the authority to employ any method so long as the
result was reasonable to both consumer and investor. In effect,
petitioners are asking this court to adopt the end result doctrine,
which was pronounced by the U.S. Supreme Court in National
Power Commission v. Hope Natural Gas Co.[20] and cited in the
concurring opinion of former Chief Justice Fred Ruiz Castro
in Republic v. Medina.[21]
Petitioners contend that the use of the PBR method results in
disadvantage to the public, viz:
In fine, MERALCO succeeded in wangling from the ERC through an
internationally accepted rate-setting methodology (i.e, Performance
Based Rate [PBR]) a rate that will not only guarantee that its
operations shall remain viable but a rate that will give it astronomical
profits at the expense of the consuming public whom it is obligated to
serve.

A table showing that the common stockholders of Meralco,

for the last 21 years, had earned 424% on their actual
investment, per year, was also presented by petitioners.
Petitioners conclude that these numbers negate any argument

that Meralco needs a rate increase, irrespective of any under rate

methodology applied.[22]
The Issue of the Validity of the PBR
was not Squarely Raised in this
Petition; the Sole Issue is the Denial
of Due Process

We have ruled that issues not previously ventilated cannot

be raised for the first time on appeal, much less when first
proposed in the reply to the comment on the petition for
review.[23] To allow petitioners to blindside Meralco with such
newly raised issues violates the latters due process
rights. Having been raised for the first time, this Court cannot
rule on the issues regarding the unreasonableness of Meralcos
rates and the validity of the choice of the PBR method. If
petitioners wanted to include these issues for resolution, the
proper procedure was for them to ask this Court to allow them to
amend their Petition for the inclusion of the aforementioned
issues. Thus, we rule that the sole issue for resolution in this case
is whether or not petitioners right to due process of law was
violated when the ERC issued its Order before the expiration of
the period granted to petitioners to file their comment.
There Has Been No Denial of Due
Process, at most only an Irregularity
in the Precipitate Issuance of the

Assailed Decision, which Irregularity

ERC has Sought to Remedy
In Cooperative Devt. Authority v. Dolefil Agrarian Reform
Beneficiaries Coop., Inc. et al., [24] it was held that the appellate
court violated the therein petitioners right to be heard when it
rendered judgment against them without allowing them to file
their comment or opposition.
In the case at bar, petitioners were required to file their
comment on the formal offer of evidence of Meralco. However,
the ERC rendered its Decision prior to the lapse of the period
granted to petitioners. According to petitioners, ERCs failure to
accord them a reasonable opportunity to present their oppositions
or comments on the application of Meralco clearly denied them
due process of law. The ERC committed grave abuse of discretion
when it deprived them of their opportunity to be heard.
This prompted Petitioners to file the present Petition on 20
January 2010.
This Court is of the Opinion that considering the facts in this
case, including all the events that occurred both prior to and
subsequent to the issuance of the 14 December 2010 Decision,
the ERC did not deprive petitioners of their right to be heard.
Petitioners claim that that they were not given a chance to
submit their evidence or memorandum in support of their position
that Meralco had been charging rates that were beyond the 12%
reasonable rate of return established in jurisprudence. [25] The
records show, however, that they had been given notice to attend
all the hearings conducted by the ERC, but that they voluntarily
failed to appear in or attend those hearings.

Furthermore, after the issuance of the assailed Order,

Mallillin filed an MR before petitioners filed their Petition in this
Court. On 25 January 2010, the ERC issued an Order directing
Petitioners NASECORE, FOLVA, and FOVA to file their respective
comments on Mallillins MR. Petitioners were given a period of ten
days from receipt of the order, to file their comments. The ERC
also scheduled the hearing on the said MR on 5 February 2010.
On 26 January 2010, Meralco filed a Manifestation and
Motion wherein it expressed its decision to voluntarily suspend
the implementation of the 14 December 2009 Decision pending
the ERCs resolution of Mallillins MR.
Instead of filing their comments, petitioners NASECORE and
FOVA, through separate letters respectively dated 28 January
2010 and 31 January 2010, sought to excuse themselves from
participating in the proceedings before the ERC on the ground
that they have already filed the present Petition.
On 1 February 2010, the ERC issued an Order suspending the
implementation of the herein questioned 14 December 2010
Decision pending the resolution of the MR.
During the 5 February 2010 hearing, only Meralco appeared.
Neither petitioners nor Mallillin participated in the proceedings.
On 10 March 2010, ERC issued an Order granting the MR
with modification, the dispositive portion of which reads:
WHEREFORE, the foregoing premises considered, the Motion for
Reconsideration filed by Engr. Robert F. Mallillin is hereby GRANTED
WITH MODIFICATION. Accordingly, MERALCO is hereby directed to
implement the revised distribution rates, excluding all rate distortions,
as shown in the foregoing table. Consequently, the Order dated
February 1, 2010 issued by the Commission granting the deferment of

the implementation of the Decision dated December 14, 2009 pending

final resolution of Engr. Mallillins motions is hereby LIFTED.

SO ORDERED.[26]

Where opportunity to be heard either through oral

arguments or through pleadings is granted, there is no denial of
due process. It must not be overlooked that prior to the issuance
of the assailed Decision, petitioners were given several
opportunities to attend the hearings and to present all their
pleadings and evidence in the MAP2010 case. Petitioners voluntarily
failed to appear in most of those hearings.
Although it is true that the ERC erred in prematurely issuing
its Decision, its subsequent act of ordering petitioners to file their
comments on Mallillins MR cured this defect. We have held that
any defect in the observance of due process requirements is
cured by the filing of a MR. [27] Thus, denial of due process cannot
be invoked by a party who has had the opportunity to be heard on
his MR.[28] Even though petitioners never filed a MR, the fact that
they were still given notice of Mallillins filing of a MR and the
opportunity to file their comments thereto makes immaterial
ERCs failure to admit their comment in the MAP2010 case. After all,
petitioners allegations in their unfiled comment could have still,
easily and just as effectively, been raised in the MAP 2010 case by
incorporating the arguments in the comment to be filed in the MR
case. It must be remembered that the standard of due process
impressed upon administrative tribunals allows a certain degree
of latitude as long as fairness is not ignored. [29]
The opportunity granted by the ERC of, technically, allowing
petitioners to finally be able to file their comment in the case,
resolves the procedural irregularity previously inflicted upon
petitioners.
We find that there has been no denial of due process and
that any irregularity in the premature issuance of the assailed

Decision has been remedied by the ERC through its Order which
gave petitioners the right to participate in the hearing of the MR
filed by Mallillin.
Petitioners have Chosen the Wrong
Remedy and the Wrong Forum; the
Real Motive for Bringing Petition
was to Obtain an indefinite TRO, this
the Court cannot Countenance
Section 1, Rule 23 of the ERCS Rules of Procedure expressly
provides for the remedy of filing a motion for reconsideration, viz:
A party adversely affected by a final order, resolution, or decision of
the Commission rendered in an adjudicative proceeding may, within
fifteen (15) days from receipt of a copy thereof, file a motion for
reconsideration. In its motion, the movant may also request for
reopening of the proceeding for the purpose of taking additional
evidence in accordance with Section 17 of Rule 18. No more than
one motion for reconsideration by each party shall be entertained.

Rule 65 of the Rules of Civil Procedure provides that a

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

because it was dictated by public welfare and the advancement of

public policy, or demanded by the broader interest of justice, or the
orders complained of were found to be patent nullities, or the
appeal was considered as clearly an inappropriate remedy. [35]

Petitioners claim that they did not file any motion for
reconsideration with the ERC in order to prevent the imminent
miscarriage of justice, that the issue involves the principles of
social justice, that the Decision sought to be set aside is a patent
nullity and that the need for relief therefore is extremely
urgent[36]; because they believe that the same would be a futile
exercise considering that the ERC had blatantly disregarded the
Supreme Court directive to consider the last increase of Meralco
as provisional until ERC has taken action on the COA Audit Report;
[37]
and because an appeal would be slow, inadequate, and
insufficient.[38]
They also claim that the direct resort to the Supreme Court
resorted to by them is in order to timely prevent a grave injustice
to the 4.3 million customers of Meralco who stand to suffer by
reason of a patently void decision by ERC which would result in
additional monthly billing of at least half a billion pesos;
[39]
because
time
is
of
the
essence;
and
because
transcendental constitutional issues are involved in this case. [40]
Petitioners further argue that their decision to go directly to
this Court is justified because of the number of consumers
affected by the said Decision; because the amount involved in the
controversy is so huge (P605.25 million [plus 12% VAT] additional
billing per month); because it is violative of the provisions of
EPIRA; because it is contrary to the constitutional provisions on
social justice, and because it is in utter disregard of the COA Audit
Report.[41]
We do not uphold petitioners arguments on this matter.
In Cervantes v. CA,[42] this Court ruled:
It must be emphasized that a writ of certiorari is a prerogative writ,
never demandable as a matter of right, never issued except in the
exercise of judicial discretion. Hence, he who seeks a writ of certiorari

must apply for it only in the manner and strictly in accordance with
the provisions of the law and the Rules. Petitioner may not arrogate
to himself the determination of whether a motion for reconsideration
is necessary or not. To dispense with the requirement of filing a
motion for reconsideration, petitioner must show a concrete,
compelling, and valid reason for doing so, which petitioner failed to
do. Thus, the Court of Appeals correctly dismissed the petition.

The general statements used by Petitioner to excuse their

direct recourse to this Court are not the concrete, compelling,
and valid reasons required by jurisprudence to justify their failure
to comply with the mandated procedural requirements. In
addition to this, the urgency of the resolution of matters raised
by petitioners is negated, by the fact that rates approved by the
ERC, in the exercise of its rate-fixing powers, are in a sense,
inherently only provisional.
Furthermore, this Court finds that the real motive behind the
filing of the present Petition is to obtain an indefinite TRO and
this, the Court cannot countenance. Section 9, Rule 58 of the
Rules of Court provides the rules for permanent injunctions, to
wit:
Sec. 9. When final injunction granted.
If after the trial of the action it appears that the applicant is entitled
to have the act or acts complained of permanently enjoined, the
court shall grant a final injunction perpetually restraining the party or
person enjoined from the commission or continuance of the act or
acts or confirming the preliminary mandatory injunction.

Petitioners assert that this Court should issue a TRO because

of the huge amount that would unduly burden the consumers with
the continued application of the MAP 2010rates. According to
petitioners, if not stayed, the present financial hardships of 4.3
million MERALCO customers due to the global financial meltdown
and the recent calamities in the country will surely further
worsen. Petitioners also claim that there is an extreme urgency
to secure a TRO, considering that the assailed Decision is
immediately executory.

The purpose of a TRO is to prevent a threatened wrong and

to protect the property or rights involved from further injury, until
the issues can be determined after a hearing on the merits.
[43]
Under Section 5, Rule 58 of the 1997 Rules of Civil Procedure, a
TRO may be issued only if it appears from the facts shown by
affidavits or by a verified application that great or irreparable
injury would be incurred by an applicant before the writ of
preliminary injunction could be heard.
If such irreparable injury would result from the non-issuance
of the requested writ or if the extreme urgency referred to by
petitioners indeed exists, then they should have been more
vigilant in protecting their rights. As they have all been duly
notified of the proceedings in the ERC case, they should have
appeared before the ERC and participated in the trials.
We find that petitioners erred in thinking that the nonissuance of the TRO they requested would put consumers in
danger of suffering an irreparable injury. But this asserted injury
can be repaired, because, had petitioners participated in the
proceedings before the ERC and the latter had found merit in their
appeal, the undue increase in electric bills shall be refunded to
the consumers.
All the other issues raised by petitioners in connection with
the MAP2010 case are factual in nature and should be raised before
the ERC not before this Court. Allegations and issues in
connection with the rate increases under ERC Case No. 2008-018RC and ERC Case No. 2008-004-RC, including the question of
whether Meralco improperly exceeded the 12% maximum rate of
return provided by law, are more properly to be disposed of in
another pending case, G.R. No. 191150.[44]
Before finally disposing of this case, we deem it proper to
warn the ERC that it cannot give a deadline to parties before it
that it will not respect. Even though the ERC, as an administrative
agency, is not bound by the rigidity of certain procedural
requirements, it is still bound by law and practice to observe the

fundamental and essential requirements of due process in

justiciable cases presented before it.
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.

#10

ATTY. TOMAS ONG CABILI,

Complai
nant,

A.M. No. RTJ-10-2225

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

Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,

- versus -

PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,* and
JUDGE RASAD G.
BALINDONG, Acting
Presiding Judge, RTC,
Branch 8, Marawi City,
Respond

REYES,** JJ.

Promulgated:

ent.

September 6, 2011

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

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

The Factual Antecedents

The antecedent facts, gathered from the records, are

summarized below.

Civil Case No. 06-2954[2] is an action for damages in Branch

6 of the Iligan City RTC against the Mindanao State University
(MSU), et al., arising from a vehicular accident that caused the
death of Jesus Ledesma and physical injuries to several others.

On November 29, 1997, the Iligan City RTC rendered a

Decision, holding the MSU liable for damages amounting
to P2,726,189.90. The Court of Appeals (CA) affirmed the Iligan
City RTC decision and the CA decision subsequently lapsed to
finality. On January 19, 2009, Entry of Judgment was made. [3]

On March 10, 2009, the Iligan City RTC issued a writ of

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

The Office of the Solicitor General opposed the motion

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

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

On April 17, 2009, the respondent Judge conducted a hearing

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

On May 8, 2009, complainant Atty. Tomas Ong Cabili, counsel

of the private plaintiffs in Civil Case No. 06-2954, filed the
complaint charging the respondent Judge withGross Ignorance of
the Law, Grave Abuse of Authority, Abuse of Discretion, and/or
Grave Misconduct Prejudicial to the Interest of the Judicial
Service for interfering with the order of a co-equal court, Branch 6
of the Iligan City RTC, by issuing the TRO to enjoin Sheriff Gaje
from garnishing P2,726,189.90 from MSUs LBP-Marawi City
Branch account.[13]

The respondent Judge denied that he interfered with the

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

In its December 3, 2009 Report, the Office of the Court

Administrator (OCA) found the respondent Judge guilty of gross
ignorance of the law for violating the elementary rule of noninterference with the proceedings of a court of co-equal
jurisdiction.[16] It recommended a fine of P40,000.00, noting
that this is the respondent Judges second offense.[17]

The Court resolved to re-docket the complaint as a regular

administrative matter and to require the parties to manifest
whether they were willing to submit the case for resolution on the
basis of the pleadings/records on file.[18]

Atty. Tomas Ong Cabili complied through his manifestation

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

The Courts Ruling

The Court finds the OCAs recommendation welltaken.

The doctrine of judicial stability or non-interference in the

regular orders or judgments of a co-equal court is an elementary
principle in the administration of justice: [22] no court can interfere
by injunction with the judgments or orders of another court of
concurrent jurisdiction having the power to grant the relief

sought by the injunction.[23] The rationale for the rule is founded

on the concept of jurisdiction: a court that acquires jurisdiction
over the case and renders judgment therein has jurisdiction over
its judgment, to the exclusion of all other coordinate courts,
for its execution and over all its incidents, and to control,
in furtherance of justice, the conduct of ministerial
officers acting in connection with this judgment.[24]

Thus, we have repeatedly held that a case where an

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

Jurisprudence shows that a violation of this rule warrants the

imposition of administrative sanctions.

In Aquino, Sr. v. Valenciano,[28] the judge committed grave

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

In Coronado v. Rojas,[30] the judge was found liable for gross

ignorance of the law when he proceeded to enjoin the final and

executory decision of the Housing and Land Use Regulatory Board

(HLURB) on the pretext that the temporary injunction and the writ
of injunction he issued were not directed against the HLURBs writ
of execution, but only against the manner of its execution. The
Court noted that the judge cannot feign ignorance that the
effect of the injunctive writ was to freeze the enforcement
of the writ of execution, thus frustrating the lawful order
of the HLURB, a co-equal body.[31]

In Heirs of Simeon Piedad v. Estrera, [32] the Court penalized

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

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

In the present case, the respondent Judge clearly ignored the

principle of judicial stability by issuing a TRO to temporarily
restrain[36] Sheriff Gaje from enforcing the writ of execution issued
by a co-equal court, Branch 6 of the Iligan City RTC, and from
pursuing the garnishment of the amount of P2,726,189.90 from
MSUs account with the LBP, Marawi City Branch. The respondent
Judge was aware that he was acting on matters pertaining to the
execution phase of a final decision of a co-equal and coordinate
court since he even quoted MSUs allegations in his April 8, 2009
Order.[37]

The respondent Judge should have refrained from acting on

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

It is not a viable legal position to claim that a TRO against a

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

That the respondent Judge subsequently rectified his error by

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

When the law is sufficiently basic, a judge owes it to his

office to know and to simply apply it. Anything less would be
constitutive of gross ignorance of the law. [45]

Under A.M. No. 01-8-10-SC or the Amendment to Rule 140

of the Rules of Court Re: Discipline of Justices and Judges, gross
ignorance of the law is a serious charge, punishable by a fine of
more than P20,000.00, but not exceeding P40,000.00, suspension
from office without salary and other benefits for more than three
(3) but not exceeding six (6) months, or dismissal from the
service. Considering the attendant circumstances of this case, the
Court after prolonged deliberations holds that a fine
of P30,000.00 is the appropriate penalty. This imposition is an act
of leniency as we can, if we so hold, rule for the maximum fine
of P40,000.00 or for suspension since this is the respondent
Judges second offense.

WHEREFORE, premises considered, respondent Judge

Rasad G. Balindong, Acting Presiding Judge, Regional Trial Court,
Branch 8, Marawi City, is hereby FOUND GUILTY of Gross
Ignorance of the Law and FINED in the amount of P30,000.00,
with a stern WARNING that a repetition of the same will be dealt
with more severely.

SO ORDERED.

#11

SPOUSES DEMOCRITO

A.M. No. RTJ-10-2255

and OLIVIA

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

LAGO,
Complainants,

Present:

CARPIO, J., Chairperson,

PERALTA,
ABAD,
- versus -

MENDOZA, and
REYES, JJ.

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

Promulgated:

Respondent.

February 8, 2012

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

RESOLUTION
MENDOZA, J.:
Subject of this disposition is the motion for reconsideration of the Courts
January 17, 2011 Decision, filed by respondent Judge Godofredo B. Abul,
Jr. (Judge Abul), Presiding Judge, Regional Trial Court, Branch 4, Butuan City,

finding him guilty of gross ignorance of the law and imposing upon him a fine in
the amount of P25,000.00.
Disciplinary action was meted on him for (1) assuming jurisdiction over
Civil Case No. 2009-905 without the mandated raffle and notification and service
of summons to the adverse party and issuing a temporary restraining order (TRO);
(2) setting the case for summary hearing beyond the 72-hour required by the law in
order to determine whether the TRO could be extended; and (3) issuing a writ of
preliminary injunction without prior notice to the complainants and without
hearing.
Judge Abul stresses that contrary to the allegations of the complainants, the
Clerk of Court conducted a raffle of the case in question. In support thereof, he
attached the Letter[1] dated July 3, 2009 of Atty. Rhodora N. Restituto, Clerk of
Court VI, RTC, Misamis Oriental, to prove that the case was indeed raffled on June
9, 2009 to RTC, Branch 43, Gingoog City. He explained that he issued the 72-hour
TRO pursuant to the 2nd paragraph of Section 5, Rule 58 of the Rules in order to
avoid injustice and irreparable damage on the part of the plaintiff. He pointed out,
however, that the 72-hour TRO was issued only on July 7, 2009 because he was
not physically present in the RTC, Branch 43, from July 2, 2009 to July 6, 2009.
Judge Abul admits not conducting a summary hearing before the expiration
of the 72 hours from the issuance of the ex parte TRO to determine whether it
could be extended to twenty (20) days. He, however, explained that the holding of
the summary hearing within 72 hours from the issuance of the TRO was simply not
possible and was scheduled only on July 14, 2009 because the law office of the
plaintiffs counsel was 144 kilometers away from Gingoog City and under that
situation, the service of the notice could only be made on the following day, July 8,
2009. Hence, it would be impractical to set the hearing on July 8, 2009. In
addition, on July 9, 10 and 13, 2009, he was conducting hearings in his permanent
station, RTC, Branch 4, Butuan City.
As to the charge that he failed to cause the service of summons on the
complainants and that no hearing was conducted prior to the issuance of the writ of
preliminary injunction, Judge Abul belies the same by submitting (1) a certified
true copy of the Sheriffs Return of Service [2] dated July 9, 2009 stating that he
actually served the summons on the complainants on July 8, 2009 together with the

copy of the 72-hour TRO; and (2) a certified machine copy of the
summons[3] bearing the signature of complainant Democrito Lago that he
personally received the same.
Judge Abul likewise attached to his motion for reconsideration a certified
true copy of the Order [4] dated July 29, 2009 and the Transcript of Stenographic
Notes[5] to show that he conducted a hearing on July 21 and 29, 2009 and that the
parties had a lengthy argument during the hearing and thereafter agreed to submit
the application for the issuance of the writ of preliminary injunction for resolution.
The Court finds merit in the motion for reconsideration.
With respect to the issues regarding the raffle, the lack of notice and hearing
prior to the issuance of the writ of preliminary injunction, the Court is satisfied
with the explanation of Judge Abul as it is substantiated by the official records on
file.

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

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

To constitute gross ignorance of the law, it is not enough that the subject
decision, order or actuation of the respondent judge in the performance of his
official duties is contrary to existing law and jurisprudence but, most importantly,
he must be moved by bad faith, fraud, dishonesty or corruption.[9]
In this case, complainants failed to show that Judge Abul was motivated by
bad faith, ill will or malicious motive when he granted the TRO and preliminary
injunction. Complainants did not adduce any proof to show that impropriety and
bias attended the actions of the respondent judge.
WHEREFORE, the motion for reconsideration is GRANTED. The
Decision dated January 17, 2011 is SET ASIDE. The administrative complaint
filed against Judge Godofredo B. Abul, Jr. is DISMISSED.
SO ORDERED.

#12

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

G. R. No. 183367
Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

- versus -

MUNICIPALITY
OF
PADRE
GARCIA BATANGAS PROVINCE,
Respondent.

Promulgated:
March 14, 2012

x--------------------------------------------------x
DECISION
SERENO, J.:

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

of Court, seeking to annul the Court of Appeals (CA) Resolutions in CA-G.R. SP
No. 102540 dated 26 March 2008[1] and 16 June 2008, which denied petitioners
Motion for the issuance of a status quo order and Motion for issuance of a
temporary restraining order (TRO) and/or writ of preliminary injunction.

Statement of the Facts and the Case

In 1993, fire razed to the ground the old public market of respondent
Municipality of Padre Garcia, Batangas. The municipal government, through its

then Municipal Mayor Eugenio Gutierrez, invited petitioner Australian

Professional Realty, Inc. (APRI) to rebuild the public market and construct a
shopping center.
On 19 January 1995, a Memorandum of Agreement (MOA) [2] was executed
between petitioner APRI and respondent, represented by Mayor Gutierrez and the
members of the Sangguniang Bayan. Under the MOA, APRI undertook to
construct a shopping complex in the 5,000-square-meter area. In return, APRI
acquired the exclusive right to operate, manage, and lease stall spaces for a period
of 25 years.
In May 1995, Victor Reyes was elected as municipal mayor of respondent.
On 6 February 2003, respondent, through Mayor Reyes, initiated a Complaint for
Declaration of Nullity of Memorandum of Agreement with Damages before the
Regional Trial Court (RTC) of Rosario, Batangas, Fourth Judicial Region, Branch
87. The Complaint was docketed as Civil Case No. 03-004.
On 12 February 2003, the RTC issued summons to petitioners, requiring
them to file their Answer to the Complaint. However, the summons was returned
unserved, as petitioners were no longer holding office in the given address.
On 2 April 2003, a Motion for Leave of Court to Effect Service by
Publication was filed by respondent before the RTC and subsequently granted by
the trial court.
On 24 November 2003, the RTC issued an Order declaring petitioners in
default and allowing respondent to present evidence ex parte.
On 6 October 2004, a Decision was rendered by the RTC, which, after
narrating the testimonial evidence for respondent, stated:

After the completion of the testimony of Victor M. Reyes, counsel for the
petitioner manifested that he will file the formal offer of evidence in writing.
On July 19, 2004, counsel for the petitioner filed before this Court his
Formal Offer of Documentary Exhibits consisting of Exhibits A to H,
inclusive of submarkings.
On August 18, 2004 an order was issued by the Court admitting all the
exhibits formally offered by the petitioner thru counsel and this case was ordered
submitted for resolution of the Court.
There is no opposition in the instant petition.
WHEREFORE, in view thereof, and finding the petition to be sufficient in
form and substance, it being supported by sufficient evidence, judgement (sic) is
hereby rendered in favor of the plaintiff as against the respondents as follows:
(a)

The Memorandum of Agreement is hereby declared null and void for

being contrary to law and public policy, particularly R.A. 6957 and R.A.
7718;

(b)

The respondents are hereby ordered to pay the amount of FIVE

MILLION PESOS (5,000,000.00) in favor of the plaintiff for damages
caused to the latter;

(c)

The structures found within the unfinished PADRE GARCIA

SHOPPING CENTER are hereby declared forfeited in favor of the
Municipality of Padre Garcia.
SO ORDERED.[3]

There having been no timely appeal made, respondent filed a Motion for
Execution of Judgment, which was granted by the RTC. A Writ of Execution was
thus issued on 15 July 2005.
After learning of the adverse judgment, petitioners filed a Petition for Relief
from Judgment dated 18 July 2005. This Petition was denied by the RTC in an
Order dated 15 June 2006. In another Order dated 14 February 2008, the trial court
denied the Motion for Reconsideration.
Petitioners later filed before the CA a Petition for Certiorari and Prohibition
dated 28 February 2008, docketed as CA-G.R. SP No. 102540. On 7 March 2008,
petitioners filed before the CA a Motion for the Issuance of Status Quo Order and

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

Injunction.[4] The motion prayed for an order to restrain the RTC from further
proceeding and issuing any further Order, Resolution, Writ of Execution, and any
other court processes[5] in the case before it.
On 26 March 2008, the CA issued a Resolution denying the said motion,
stating thus:
After a careful evaluation of petitioners Motion for Issuance of Status
Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ
of Preliminary Injunction, We find that the matter is not of extreme urgency and
that there is no clear and irreparable injury that would be suffered by the
petitioners if the prayer for the issuance of a Status Quo Order, Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction is not granted. In
Ong Ching Kian Chuan v. Court of Appeals, it was held that, to be entitled to
injunctive relief, the petitioner must show, inter alia, the existence of a clear and
unmistakable right and an urgent and paramount necessity for the writ to prevent
serious damage.
WHEREFORE, petitioners prayer for the issuance of a Status Quo Order,
Temporary Restraining Order and/or Writ of Preliminary Injunction is hereby
DENIED for lack of merit.[6]

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

March 2008 Resolution, stating that the mere preservation of the status quo is not
sufficient to justify the issuance of an injunction.
On 8 July 2008, petitioners filed the instant Petition for Review on Certiorari
dated 6 July 2008.
Petitioners claim that the amount of APRIs investment in the Padre Garcia
Shopping Center is estimated at 30,000,000, the entirety of which the RTC
declared forfeited to respondent without just compensation. At the time of the
filing of the Petition, APRI had 47 existing tenants and lessees and was deriving an
average monthly rental income of 100,000. The Decision of the RTC was

allegedly arrived at without first obtaining jurisdiction over the persons of

petitioners. The execution of the allegedly void judgment of the RTC during the
pendency of the Petition before the CA would probably work injustice to the
applicant, as the execution would result in an arbitrary declaration of nullity of the
MOA without due process of law.
Petitioners further allege that respondent did not exercise reasonable
diligence in inquiring into the formers address in the case before the RTC. The
Process Server Return, with respect to the unserved summons, did not indicate the
impossibility of a service of summons within a reasonable time, the efforts exerted
to locate APRI, or any inquiry as to the whereabouts of the said petitioner.
On 6 August 2008, this Court required respondent to file its Comment. On
13 February 2009, the Comment was filed, alleging among others that despite the
RTCs issuance of a Writ of Execution, respondent did not move to implement the
said writ out of administrative comity and fair play. Even if the writ were
implemented, petitioners failed to state in categorical terms the serious injury they
would sustain.
Respondent further argues that it is now in possession of the contracts that
the lessees of the Padre Garcia Shopping Center executed with APRI. Thus, there
are actions [that militate] against the preservation of the present state of
things,[7] as sought to be achieved with the issuance of a status quo order.
On 2 June 2009, petitioners filed their Reply to respondents Comment.
On 3 March 2010, this Court issued a Resolution requiring the parties to
inform the Court of the present status of CA-G.R. SP No. 102540. On 15 April
2010, respondent manifested that after the parties filed their respective
Memoranda, the CA considered the case submitted for decision. On 12 May 2010,

petitioners filed their Compliance, stating that the appellate court, per its
Resolution dated 7 August 2008, held in abeyance the resolution of CA-G.R. SP
No. 102540, pending resolution of the instant Petition.
The Courts Ruling
The Petition is denied for failure to show any grave abuse of discretion on
the part of the CA.
Procedural Issue: Propriety of a
Petition for Review under Rule 45
Before proceeding to the substantive issues raised, we note that petitioners
resorted to an improper remedy before this Court. They filed a Petition for Review
on Certiorari under Rule 45 of the Rules of Court to question the denial of their
Motion for the issuance of an injunctive relief.
Under Section 1 (c) of Rule 41 of the Rules of Court, no appeal may be
taken from an interlocutory order. An interlocutory order is one that does not
dispose of the case completely but leaves something to be decided upon. [8] An
order granting or denying an application for preliminary injunction is interlocutory
in nature and, hence, not appealable.[9] Instead, the proper remedy is to file a
Petition for Certiorari and/or Prohibition under Rule 65.[10]
While the Court may dismiss a petition outright for being an improper
remedy, it may in certain instances proceed to review the substance of the petition.
[11]
Thus, this Court will treat this Petition as if it were filed under Rule 65.
Substantive Issue: Grave abuse of
discretion on the part of the CA

The issue that must be resolved by this Court is whether the CA committed
grave abuse of discretion in denying petitioners Motion for the Issuance of Status
Quo Order and Motion for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction (Motion for Injunction).
A writ of preliminary injunction and a TRO are injunctive reliefs and
preservative remedies for the protection of substantive rights and interests. [12] An
application for the issuance of a writ of preliminary injunction and/or TRO may be
granted upon the filing of a verified application showing facts entitling the
applicant to the relief demanded.
Essential to granting the injunctive relief is the existence of an urgent
necessity for the writ in order to prevent serious damage. A TRO issues only if the
matter is of such extreme urgency that grave injustice and irreparable injury would
arise unless it is issued immediately.[13] Under Section 5, Rule 58 of the Rule of
Court,[14] a TRO may be issued only if it appears from the facts shown by affidavits
or by the verified application that great or irreparable injury would be inflicted on
the applicant before the writ of preliminary injunction could be heard.
Thus, to be entitled to the injunctive writ, petitioners must show that (1)
there exists a clear and unmistakable right to be protected; (2) this right is directly
threatened by an act sought to be enjoined; (3) the invasion of the right is material
and substantial; and (4) there is an urgent and paramount necessity for the writ to
prevent serious and irreparable damage.[15]
The grant or denial of a writ of preliminary injunction in a pending case rests
on the sound discretion of the court taking cognizance of the case, since the
assessment and evaluation of evidence towards that end involves findings of fact
left to the said court for its conclusive determination. [16] Hence, the exercise of

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

except when there is grave abuse of discretion.[17]
Grave abuse of discretion in the issuance of writs of preliminary injunction
implies a capricious and whimsical exercise of judgment equivalent to lack of
jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason
of passion, prejudice or personal aversion amounting to an evasion of positive duty
or to a virtual refusal to perform the duty enjoined or to act at all in contemplation
of law.[18] The burden is thus on petitioner to show in his application that there is
meritorious ground for the issuance of a TRO in his favor.[19]
In this case, no grave abuse of discretion can be imputed to the CA. It did
not exercise judgment in a capricious and whimsical manner or exercise power in
an arbitrary or despotic manner.

No clear legal right

A clear legal right means one clearly founded in or granted by law or is
enforceable as a matter of law.[20] In the absence of a clear legal right, the issuance
of the writ constitutes grave abuse of discretion.[21] The possibility of irreparable
damage without proof of an actual existing right is not a ground for injunction.[22]
A perusal of the Motion for Injunction and its accompanying Affidavit filed
before the CA shows that petitioners rely on their alleged right to the full and
faithful execution of the MOA. However, while the enforcement of the Writ of
Execution, which would nullify the implementation of the MOA, is manifestly

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

that they possess a clear legal right that merits the issuance of a writ of preliminary
injunction. Their rights under the MOA have already been declared inferior or
inexistent in relation to respondent in the RTC case, under a judgment that has
become final and executory.[23] At the very least, their rights under the MOA are
precisely disputed by respondent. Hence, there can be no clear and unmistakable
right in favor of petitioners to warrant the issuance of a writ of injunction. Where
the complainants right or title is doubtful or disputed, injunction is not proper.[24]
The general rule is that after a judgment has gained finality, it becomes the
ministerial duty of the court to order its execution. No court should interfere, by
injunction or otherwise, to restrain such execution. [25] The rule, however, admits of
exceptions, such as the following: (1) when facts and circumstances later transpire
that would render execution inequitable or unjust; or (2) when there is a change in
the situation of the parties that may warrant an injunctive relief. [26] In this case,
after the finality of the RTC Decision, there were no supervening events or changes
in the situation of the parties that would entail the injunction of the Writ of
Execution.

No irreparable injury
Damages are irreparable where there is no standard by which their amount
can be measured with reasonable accuracy.[27] In this case, petitioners have alleged
that the loss of the public market entails costs of about 30,000,000 in investments,
100,000 monthly revenue in rentals, and amounts as yet unquantified but not
unquantifiable in terms of the alleged loss of jobs of APRIs employees and
potential suits that may be filed by the leaseholders of the public market for breach
of contract. Clearly, the injuries alleged by petitioners are capable of pecuniary
estimation. Any loss petitioners may suffer is easily subject to mathematical
computation and, if proven, is fully compensable by damages. Thus, a preliminary

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

employment and potential suits, these are speculative at best, with no proof
adduced to substantiate them.
The foregoing considered, the CA did not commit grave abuse of discretion
in denying the Motion for Injunction. In any case, petitioners may still seek
recourse in their pending Petition before the Court of Appeals.
WHEREFORE, the Petition is DENIED. The Court of Appeals Resolutions
dated 26 March 2008 and 16 June 2008 in CA-G.R. SP No. 102540
are AFFIRMED. The Court of Appeals is directed to proceed with dispatch to
dispose of the case before it.

SO ORDERED.

#13

PHILIPPINE NATIONAL BANK,

Petitioner,

G.R. No. 178367

Present:

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

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
March 19, 2012

x----------------------------------------------------------------------------------------x
DECISION
REYES, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court, which seeks to annul and set aside the Decision[1] dated February 28, 2007
and Resolution[2] dated May 24, 2007 of the Court of Appeals (CA) in CA-G.R. SP
No. 02056, affirming the Regional Trial Court (RTC), Branch 56 of Mandaue
Citys issuance of a writ of preliminary injunction in Civil Case No. MAN-5081.
The Factual Antecedents
On August 26, 1996, respondent Castalloy Technology Corporation
(Castalloy) was granted by petitioner Philippine National Bank (PNB) a credit line
in the amount ofP4,000,000.00, later increased to P45,000,000.00 on October 15,
1996. Pursuant to said credit line, Castalloy borrowed from PNB the following
amounts, covered by three separate promissory notes executed by Castalloy in
favor of PNB, to wit: (1) Promissory Note (PN) No. 404/96 dated August 29, 1996,
in the amount of US$190,910.00, (2) PN No. 451/96 dated September 24, 1996, in
the amount of US$381,650.26, and (3) PN No. 473/96 dated October 8, 1996 in the

amount of US$495,426.83. While the promissory notes indicate the amounts

thereof in US dollars, the net proceeds of the loan were released in Philippine
currency, in the following amounts: (1) P4,992,442.00 for PN No. 404/96,
(2) P9,985,000.00 for PN No. 451/96, and (3) P12,980,487.10 for PN No. 473/96.
To secure payment of the loans obtained by Castalloy, respondents Alinsu
Steel Foundry Corporation (Alinsu) and Allied Industrial Corporation (Allied)
constituted in favor of PNB a real estate mortgage over four parcels of land
covered by the following land titles, all issued by the Register of Deeds of
Mandaue City: Transfer Certificate of Title (TCT) No. 8516, TCT No. 1676, TCT
No. 30722, and TCT No. 30721. To further secure the loan, respondents Gloria C.
Ngo (Gloria) and Tomas C. Ngo, Jr.[3] (Tomas) executed a joint and solidary
agreement in favor of PNB.
In addition to the three aforementioned promissory notes, PNB claimed that
Castalloy had executed two other promissory notes with the following details: (1)
PN No. 539/96 dated November 27, 1996, in the amount of P3,000,000.00, and (2)
PN No. 365-9701DL-037 dated January 29, 1997 in the amount
of P2,000,000.00. These two loans were denied by Castalloy, which argued that
the signature of Gloria in the two notes was forged, and that the proceeds thereof
were not deposited to the corporations bank account.
After Castalloy defaulted in the payment of its obligations under the
promissory notes, PNB filed a petition for extrajudicial foreclosure of real estate
mortgage against Castalloy, Allied and Alinsu.
In the meantime, a complaint[4] for determination of correct obligation and
injunction with application for writ of preliminary injunction/temporary restraining
order was filed with the RTC by Castalloy, Allied, Alinsu, Gloria and Tomas
against PNB and Sheriff Julbert E. Opada, arguing, among other matters, that:
13. Because of the disagreements brought about by the
allegations of this complaint, that [respondent] Castalloy never borrowed
the amount of [P]5,000,000.00 and that the dollar loans of [respondent]
Castalloy Technology Corp. were already converted by [petitioner] into

pesos at the time of their release and should not be converted again by
[petitioner] into pesos at the rate of [P]56.20 to $1.00 x x x.
14. There is a need for judicial a determination as to how much is
the real obligation of [respondent] Castalloy Technology Corp. to
[petitioner]. Converting the dollar loans of said [respondent] at the rate
of [P]56.20 to $1.00 and adding interest, the [petitioner] claims that on
the dollar loan, the total obligation of [respondent] Castalloy Technology
Corp. is [P]88,642,207.64 while on the peso loan, [petitioner]
claims that the obligation of [respondent] Castalloy Technology
Corp. is [P]9,644,994.44 or a total of [P]98,287,101.94;
15. On the other hand, because what were released to
[respondent] Castalloy Technology Corp. at the time of the execution of
the promissory notes were pesos and not dollars and [respondents] deny
that Castalloy Technology Corp. borrowed [P]5,000,000.00 from
[petitioner], the [respondents] claim that what is owing to [petitioner]
is the amount of [P]41,037,189.86.[5] (Emphasis supplied)

In their application for preliminary injunction/temporary restraining order,

the respondents claimed that the sale at the public auction of the mortgaged
properties had to be held in abeyance pending judicial determination of the correct
amount of Castalloys obligation to PNB.
In its opposition to the application for injunction, PNB argued that the
parties dispute on the loans computation was not a valid ground to restrain the
mortgages foreclosure.
The Order of the RTC
On April 27, 2006, the RTC, issued an Order[6] granting the respondents
application for a writ of preliminary injunction, subject to the posting of a bond in
the amount ofP5,000,000.00. The Court held that the difference in the outstanding
loan amounts being claimed by the parties was extremely extensive such that if a
foreclosure would be allowed at this point in time, the same would probably result
in irreparable injury[7] to the herein respondents.

PNB filed a motion for reconsideration, but the same was denied for lack of
merit in an Order[8] dated May 31, 2006. Unsatisfied, PNB questioned the RTCs
orders before the CA through a petition for certiorari under Rule 65 of the Rules of
Court.
The Ruling of the CA
On February 28, 2007, the CA rendered its decision [9] denying the petition,
finding no grave abuse of discretion on the part of the RTC. The decisions
dispositive portion then reads:
WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered by us DENYING the petition filed in this case
and AFFIRMING the assailed Orders dated April 27, 2006 and May 31,
2006, respectively, issued by the respondent judge of the RTC, Branch
56, in Mandaue City in Civil Case No. MAN-5081.
SO ORDERED.[10]

Citing the case of Sps. Almeda v. CA,[11] the CA ruled that when the exact
amount of the loan obligation has not yet been determined, the bank cannot
arbitrarily invoke its right of collection through extrajudicial foreclosure
proceedings.[12]
PNBs motion for reconsideration was denied by the CA via its
resolution[13] dated May 24, 2007.
Hence, the present petition.
The Issue
The issue for this Courts determination is: Whether or not the CA erred in
finding no grave abuse of discretion on the part of the RTC when it granted the
respondents application for the issuance of a writ of preliminary injunction.
This Courts Ruling

The petition is meritorious.

The grounds for the issuance of a preliminary injunction are enumerated in
Section 3, Rule 58 of the Rules of Court, which reads:
Sec. 3. Grounds for issuance of preliminary injunction. A
preliminary injunction may be granted when it is established:
(a)
That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;
(b)
That the commission, continuance or non-performance of
the act or acts complained of during the litigation would probably work
injustice to the applicant; or
(c)
That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to render
the judgment ineffectual.

In a line of cases, this Court has explained this rule and emphasized that a
writ of preliminary injunction is issued to preserve the status quo ante, upon the
applicants showing of two important requisite conditions, namely: (1) the right to
be protected exists prima facie, and (2) the acts sought to be enjoined are violative
of that right. It must be proven that the violation sought to be prevented would
cause an irreparable injustice.[14]
In the instant case, the respondents admit that to secure the loan obligations
of Castalloy, Alinsu and Allied constituted a real estate mortgage on their
properties in favor of PNB. The respondents also do not dispute that they were
unable to fully settle their loan obligation to the mortgagee-bank. There is an
unpaid obligation to PNB, even granting that we disregard the disputed promissory
notes dated November 27, 2006 and January 29, 2007, or consider the variance in

the parties respective formula for the loans computation. This failure to pay has
given PNB, as the mortgagee, the clear right to foreclose the mortgage constituted
to secure the loan. Foreclosure is but a necessary consequence of non-payment of
mortgage indebtedness. In a real estate mortgage, when the principal obligation is
not paid when due, the mortgagee has the right to foreclose the mortgage and to
have the property seized and sold with the view of applying the proceeds to the
payment of the obligation.[15] Availment of said remedy cannot be deemed
violative of the mortgagors right over the mortgaged properties. The respondents,
as mortgagors, should be mindful of the effects and implications of a mortgage on
their rights over the properties given as collaterals, especially when the loan
secured thereby remains unpaid. In China Banking Corporation v. CA,[16] where
the lower court also issued an order to enjoin a foreclosure sale, we explained:
On the last issue, we find that the issuance of the writ of
injunction by the trial court unjustified. A writ of preliminary injunction,
as an ancillary or preventive remedy, may only be resorted to by a
litigant to protect or preserve his rights or interests and for no other
purpose during the pendency of the principal action. But before a writ
of preliminary injunction may be issued, there must be a clear
showing by the complaint that there exists a right to be protected
and that the acts against which the writ is to be directed are violative
of the said right. In the case at bench, we fail to see any reason why the
foreclosure of the mortgages should be enjoined. On the face of the
clear admission by private respondents that they were unable to
settle their obligations which were secured by the mortgages,
petitioners have a clear right to foreclose the mortgages which is a
remedy provided by law.[17] (Emphasis supplied and citations omitted)

The ruling in Almeda[18] cited by the CA in its decision is inapplicable in this

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

Further to this, the Courts intent to depart from the broad application of
the Almeda ruling to foreclosure proceedings is clear from its issuance on February
20, 2007 of anEn Banc Resolution in A.M. No. 99-10-05-0, Re: Procedure in
Extrajudicial or Judicial Foreclosure of Real Estate Mortgages. The
resolution embodies the additional guidelines intended to aid courts in foreclosure
proceedings, specifically limiting the instances, and citing the conditions, when a
writ against foreclosure of a mortgage may be issued, to wit:
(1) No temporary restraining order
or
writ
of
preliminary injunction against the extrajudicial foreclosure of real estate
mortgage shall be issued on the allegation that the loan secured by the
mortgage has been paid or is not delinquent unless the application is
verified and supported by evidence of payment.
(2) No temporary restraining order
or
writ
of
preliminary injunction against the extrajudicial foreclosure of real estate
mortgage shall be issued on the allegation that the interest on the loan is
unconscionable, unless the debtor pays the mortgagee at least twelve
percent per annum interest on the principal obligation as stated in the
application for foreclosure sale, which shall be updated monthly while
the case is pending.
(3) Where a writ of preliminary injunction has been issued against
a foreclosure of mortgage, the disposition of the case shall be speedily
resolved. To this end, the court concerned shall submit to the Supreme
Court, through the Office of the Court Administrator, quarterly reports
on the progress of the cases involving ten million pesos and above.
(4) All requirements and restrictions prescribed for the issuance of
a temporary restraining order/writ of preliminary injunction, such as the
posting of a bond, which shall be equal to the amount of the outstanding
debt, and the time limitation for its effectivity, shall apply as well to
a status quo order.

From these guidelines, it is evident that a disagreement between the parties

as to the amount of the secured loan that remains unpaid shall not, by itself,
warrant the issuance of an injunctive writ to enjoin foreclosure. The guidelines
speak of strict exceptions and conditions. Even an allegation of unconscionable

interest being imposed on the loan by the mortgagee shall no longer suffice to
support an injunction. Furthermore, if under this resolution a debtor can no longer
seek an injunctive writ by the unsubstantiated claim of full payment, there is even
more reason for a court not to issue an injunctive writ when the debtors or
mortgagors readily admit default in the payment of the secured loan, as in this
case.
As regards to the element of irreparable injury which was determined by the
trial court in view of the difference of P57,249,912.08 in the parties respective
computations, this Court finds the same insufficient to support the requirement of
injury in the issuance of an injunctive writs. An injury is considered irreparable if
it is of such constant and frequent recurrence that no fair or reasonable redress can
be had therefor in a court of law, or where there is no standard by which their
amount can be measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation.[19] The provisional remedy of preliminary injunction
may only be resorted to when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard of compensation.[20]
The injury being feared by the herein respondents is not of such
nature. Ultimately, the amount to which the mortgagee-bank shall be entitled will
be determined by the disposition of the trial court in the main issue of the case. We
have explained in Equitable PCI Bank, Inc. v. OJ-Mark Trading, Inc. [21] that all is
not lost for defaulting mortgagors whose properties were foreclosed by creditorsmortgagees. The respondents will not be deprived outrightly of their property,
given the right of redemption granted to them under the law. Moreover, in
extrajudicial foreclosures, mortgagors have the right to receive any surplus in the
selling price. Thus, if the mortgagee is retaining more of the proceeds of the sale
than he is entitled to, this fact alone will not affect the validity of the sale but will
give the mortgagor a cause of action to recover such surplus.[22]
Lastly, the issues being linked to the parties differing loan computations,
which difference was found by the trial court as likely to cause the irreparable
injury to the respondents, can only be reasonably determined after a trial on the
merits. These issues include the effect of the loan proceeds release in US dollars
and the existence, authenticity or validity of the two promissory notes disputed by

the respondents. In Searth Commodities Corporation v. Court of Appeals,[23] we

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

Given these circumstances, we reverse the CAs ruling that the trial court did
not commit grave abuse of discretion when it issued the subject writ of preliminary
injunction, considering that said writ was issued in the absence of sufficient factual
and legal justifications, even contrary to law and established jurisprudence.
WHEREFORE,
premises
considered,
the
petition
is
hereby GRANTED. The Decision dated February 28, 2007 and Resolution dated
May 24, 2007 of the Court of Appeals in CA-G.R. SP No. 02056 are
hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered
declaring null and void the Regional Trial Court, Branch 56 of Mandaue Citys
Orders dated April 27, 2006 and May 31, 2006, and the Writ of Preliminary
Injunction issued pursuant thereto, in Civil Case No. MAN-5081.

SO ORDERED.

#14

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

G.R. No. 171765

Present:

VELASCO, JR., J., Chairperson,

PERALTA,
ABAD,

THE UNITED CHURCH OF

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

MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:

March 21, 2012

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

DECISION
MENDOZA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules
of Court are the September 30, 2005 Decision [1] and the March 1, 2006
Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No. 79156, which
dissolved the Writ of Preliminary Injunction[3] dated July 9, 2003 issued by the
Regional Trial Court of Cabadbaran, Agusan del Norte, Branch 34 (RTC).
The Factual and Procedural Antecedents
On April 29, 2003, Gregorio D. Calo, Zoilito L. Cepeda, Victorioso D.
Udarbe, Tita B. Udarbe, Edgar B. Palarca, Louie Libarios, Anna Mae Pelegrino,
Cirilia A. Sanchez, Anita V. Carloto and Eduardo Andit, the incorporators of
Mindanao Institute Inc. (MI Incorporators), represented by Engineer Victorioso D.
Udarbe (Engr. Udarbe),[4] filed a Petition for Declaratory Relief with Prayer for a
Temporary Restraining Order (TRO) and Preliminary Injunction[5] against
the United Church of Christ in the Philippines(UCCP), acting through the Agusan
District Conference of the United Church of Christ in the Philippines and
represented by Reverend Rodolfo Baslot (Rev. Baslot), before the RTC, which was
docketed as Special Civil Action Case No. 03-02. The incorporators prayed that
Mindanao Institute, Inc. (MI) be declared the sole owner of the assets and
properties of MI and to prevent the impending takeover by UCCP of MIs
properties. They averred that UCCP was unlawfully claiming ownership of MIs
properties.

On June 5, 2003, UCCP filed its Answer with Counterclaim,[6] asserting its
ownership of MIs properties based on certain documents.[7] It claimed that the
question of ownership in this case was a settled issue and required no further
discourse because they constitute a majority of the Board of Trustees and,
therefore, in complete control thereof x x x.[8]
On June 10, 2003, the RTC issued a TRO [9] against UCCP reasoning out that
MI would suffer grave and irreparable damages if the ownership and possession of
its assets and properties would be transferred to UCCP. The RTC disposed:
WHEREFORE, it appearing that petitioners will suffer grave
injustice and irreparable injury, let a temporary restraining order
against respondents be issued restraining respondents, their
representatives, attorneys, agents or any other person acting in
their behalf from seizing control and management of the assets
and properties of Mindanao Institute.
IT IS ORDERED.[10]

Meanwhile, UCCP received copies of MIs Amended Articles of

Incorporation[11] (2003 Amended AOI) which was adopted by the MI Incorporators
on May 9, 2003 and approved by the Securities and Exchange
Commission (SEC) on May 26, 2003.
On June 11, 2003, UCCP, represented by Rev. Baslot, and MI, represented
by its President Dr. Edgardo R. Batitang (Dr. Batitang), lodged a Complaint for
Declaration of Nullity of the 2003 Amended Articles of Incorporation and ByLaws of Mindanao Institute with Prayer for the Issuance of Temporary Restraining
Order and Preliminary Injunction and/or Damages[12] before the RTC, which was
docketed as Civil Case No. 09-2003. UCCP and MI asserted that the Amendment
of MIs Articles of Incorporation effected by signatories in a reckless and hasty
fashion was accomplished without the required majority vote in clear violation of
Section 16[13] of Corporation Code.[14] Of the ten (10) signatures appearing in
the 2003 Amended AOI constituting 2/3 of the Board of Trustees of MI, five (5)
were affixed by mere representatives who were not duly authorized to vote.
Further, UCCP and MI, as represented by Dr. Batitang, stressed that the procedure
in the acceptance of corporate members as embodied in the Amended By-Laws
contains discriminatory provisions, wherein certain members maybe subjected to

confirmation and acceptance or rejection, but aimed specifically at members to be

nominated by UCCP.
On June 17, 2003, the signatories moved to dismiss[15] the complaint for
declaration of nullity of the 2003 Amended AOI. They contended that the SEC, in
approving the amendments to the Articles of Incorporation and By-Laws, was
exercising its quasi-judicial function and, therefore, a co-equal body of the RTC.
Thus, the RTC could not grant any of the reliefs prayed for by UCCP.
At the scheduled joint hearing of Special Civil Action Case No. 03-02 and
Civil Case No. 09-2003 to determine the propriety of the issuance of a writ of
preliminary injunction, the Law Office of Bernabe, Doyon, Bringas and Partners
entered its appearance[16] as collaborating counsel for UCCP. Incidentally, Atty.
Roy Doyon (Atty. Doyon), the son of Executive Judge Orlando F. Doyon (Judge
Doyon), was one of the partners in the said law firm. This prompted Atty. Nelbert
T. Poculan, UCCPs lead counsel, to move for the inhibition of Judge Doyon from
the case. On the other hand, Atty. Rolando F. Carlota, MI Incorporators counsel,
expressed no objection to the continued participation of Judge Doyon in the
proceedings of the case despite the said development.
Subsequently, Judge Doyon proceeded with the joint hearing. Thereafter, the
RTC granted the MI incorporators prayer for preliminary injunction against UCCP
in its Omnibus Order[17] dated July 4, 2003, the decretal portion of which states:
WHEREFORE, the prayer for issuance of a Temporary
Restraining Order in Civil Case No. 09-2003 is hereby denied with
finality.
As prayed for in Special Civil Case No. 03-02, let a Writ of
Preliminary Injunction be issued, restraining, prohibiting, and
enjoining respondents, UNITED CHURCH OF CHRIST IN THE
PHILIPPINES (UCCP) acting thru AGUSAN DISTRICT
CONFERENCE (ADC-UCCP), represented by Rev. Rodolfo Baslot,
their agents, representatives, attorneys, and any other persons
acting for and in their behalf from taking over, seizing control,
managing, or administering MINDANAO INSTITUTE and
preventing plaintiffs in discharging their functions and duties in
the management, control and administration of the school, its

premises and assets, upon plaintiffs putting up a bond in the

amount of 200,000.00 duly approved by the Court, which bond
shall be executed in favour of the defendants to answer for
whatever damages they may sustain by reason of or arising from
the issuance of the writ in the event that the Court will finally rule
that the plaintiffs are not entitled thereto.
IT IS SO ORDERED.

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

The prayer for the issuance of a Temporary Restraining
Order, hereinafter known as TRO, in Civil Case No. 09-2003, is
anchored on the assumption that the Amended Articles of
Incorporation and Amended By-Laws of Mindanao Institute
adopted on May 26, 2003, is null and void for being ultra vires.
However, at this stage of the proceedings where the action of the
Court is generally based on initial and incomplete evidence, the
Court cannot just precipitately rule that the amendments were
ultra vires acts of the respondents.
It should be stressed that the questioned Amended Articles
of Incorporation and By-Laws is duly approved by the Securities
and Exchange Commission, hereinafter referred to as SEC. As
such, there being no evidence thus far presented to the contrary,
the presumption is that the official duty of the SEC has been
regularly performed.
Thus, the actuations of respondents in Civil Case No. 092003 based on those documents are presumptively valid unless
declared void by this Court after a full-blown trial. In other words,
plaintiffs at this stage, have not shown the existence of a clear
legal right which has been violated warranting the issuance of a
TRO, because before a TRO or injunction is issued, it is essential
that there must be a right in esse or the existence of a right to be
protected and that the act against which the injunction is issued is
a violation of such right.
On the other hand, plaintiffs in Special Civil Case No. 03-02
have shown that they have the legal right in the management and

administration of Mindanao Institute because their actuations are

based in an Amended Articles of Incorporation and By-Laws duly
approved by the SEC. The allegation that it was approved by the
SEC in record time cannot be taken as evidence that per se the
approval was against any law, rule or regulation.
It is precisely for this reason that the Court issued a TRO
because from the amendments, plaintiffs in Special Civil Case No.
03-02 and respondents in Civil Case No. 09-2003 have clear legal
rights over the management and administration of Mindanao
Institute and that the acts of plaintiffs in Civil Case No. 09-2003
and respondents in Special Civil Case No. 03-02 are in violation of
those rights. Pending determination, therefore, of the principal
action in Special Civil Case No. 03-02, the Court is inclined to
issue a preliminary injunction to protect and preserve the rights of
plaintiffs.[18]

UCCP moved for a reconsideration but the same was denied by the RTC in
its Resolution[19] dated August 15, 2003.
In its Omnibus Order[20] dated August 20, 2003, Judge Doyon inhibited
himself from the cases citing the fact that his sons law firm entered its appearance
as collaborating counsel for UCCP.
Disappointed with the unfavorable ruling, UCCP and MI, as represented by
Dr. Batitang, sought relief with the CA via a petition for certiorari under Rule 65
of the Rules of Court alleging grave abuse of discretion on the part of the RTC in
issuing the assailed order.

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

WHEREFORE, above premises considered, the instant

Petition is GRANTED. The writ of preliminary injunction issued
against the United Church of Christ in the Philippines (UCCP) in

Special Civil Case No. 02-03

pronouncement as to costs.

is

hereby DISSOLVED. No

SO ORDERED.[21]

The CA reasoned, among others, that the petition for certiorari (Civil Case
No. 09-2003) having been jointly filed by UCCP and MI, as represented by Dr.
Batitang, was adequate evidence to support the conclusion that MI did not require
any injunctive relief from UCCP. The CA also stated that in actions for declaratory
relief, the court was only called upon to determine the parties rights and
obligations. Citing Republic v. Court of Appeals,[22] it reasoned out that the RTC
could not issue injunction in an action for declaratory relief in as much as the right
of the MI incorporators had not yet been violated. Moreover, it stated that the
subsequent inhibition of Judge Doyon in the cases was pursuant to the rules on
compulsory disqualification of a judge under Rule 3.12(d) of the Code of Judicial
Conduct.[23]
The MI incorporators, represented by Engr. Udarbe, moved for
reconsideration but the motion was denied by the CA in its Resolution dated March
1, 2006.
Hence, this petition.

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

APPLICATION OF RULE 3.12(D) OF THE CODE OF JUDICIAL

ETHICS UNDER THE FACTS AND CIRCUMSTANCES
SURROUNDING THIS CASE.[24]

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

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

on certiorari filed by the petitioners was not properly verified as to authorize Engr.
Udarbe to file the same - a fatal procedural infirmity. Further, it points out that
petitioners are raising questions of fact in their petition not cognizable by this
Court.
THE COURTS RULING
The petition lacks merit.
The Court is called upon to resolve the issue of whether or not the CA erred
in dissolving the writ of preliminary injunction issued against UCCP. The writ of
preliminary injunction enjoined UCCP from taking control and management of MI
and preventing petitioners from discharging their functions in its management.
Thus, the Court shall confine itself only with the concerned writ and not the merits
of the cases, which are still pending with the RTC. A preliminary injunction,
being a preservative remedy for the protection of substantive rights or interests, is

not a cause of action in itself but merely a provisional remedy, an adjunct to a main
suit.[28]
A preliminary injunction is defined under Section 1, Rule 58 of the Rules of
Court, as follows:
Section 1. Preliminary injunction defined; classes. A
preliminary injunction is an order granted at any stage of an
action or proceeding prior to the judgment or final order,
requiring a party or a court, agency or a person to refrain from a
particular act or acts. x x x

A preliminary injunction is a provisional remedy that a party may resort to in

order to preserve and protect certain rights and interests during the pendency of an
action.[29]The objective of a writ of preliminary injunction is to preserve the status
quo until the merits of the case can be fully heard. Status quo is the last actual,
peaceable and uncontested situation which precedes a controversy.[30]
Significantly, Section 3, Rule 58 of the Rules of Court, enumerates the
grounds for the issuance of a writ of preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction.
A preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded,
and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited
period or perpetually;
(b) That the commission, continuance or non-performance
of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or suffering to
be done, some act or acts probably in violation of the rights of the

applicant respecting the subject of the action or proceeding, and

tending to render the judgment ineffectual.

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

Paraaque v. Equitable PCI Bank[31] ruled that the following requisites must be
proved before a writ of preliminary injunction will issue:
(1) The applicant must have a clear and unmistakable right to be
protected, that is, a right in esse;
(2) There is a material and substantial invasion of such right;
(3) There is an urgent need for the writ to prevent irreparable injury to
the applicant; and
(4) No other ordinary, speedy, and adequate remedy exists to prevent
the infliction of irreparable injury.[32] [Underscoring supplied]

It bears stressing that to be entitled to an injunctive writ, the right to be

protected and the violation against that right must be shown. A writ of preliminary
injunction may be issued only upon clear showing of an actual existing right to be
protected during the pendency of the principal action. [33] When the complainants
right or title is doubtful or disputed, he does not have a clear legal right and,
therefore, the issuance of injunctive relief is not proper.[34]
In the present case, the records fail to reveal any clear and unmistakable
right on the part of petitioners. They posit that they are suing in behalf of MIs
interests bypreventing UCCP from unlawfully wresting control of MIs properties.
Their claimed derivative interest, however, has been disputed by UCCP in both its
Answer with Counterclaim in Special Civil Action Case No. 03-02 and its
Complaint in Civil Case No. 09-2003, wherein MI itself, represented by Dr.
Batitang himself, is its co-petitioner. Evidently, the conflicting claims of the parties
regarding the issue of ownership over MIs property create the impression that the
petitioners derivative right, used as basis for the issuance of the preliminary
injunction, is far from clear. Petitioners claimed right is still indefinite, at least until

it is properly threshed out in a trial, negating the presence of a right in esse that
requires the protection of an injunctive writ. Verily, petitioners cannot lay claim to
a clear and positive right based on the 2003 Amended AOI, the provisions of which
are strongly disputed and alleged to be invalidly obtained.
As regards the issue of Judge Doyons disqualification to sit as judge in the
subject cases, the Court agrees with the CA. The pertinent rule on the mandatory
disqualification of judicial officers is laid down in Rule 137 of the Rules of Court.
Section 1 thereof provides:
SECTION 1. Disqualification of judges. No judge or
judicial officer shall sit in any case in which he, or his wife or
child, is pecuniary interested as heir, legatee, creditor or
otherwise, or in which he is related to either party within the sixth
degree of consanguinity or affinity, or to counsel within the fourth
degree, computed according to the rules of the civil law, or in
which he has been executor, administrator, guardian, trustee or
counsel, or which he has presided in any inferior court when his
ruling or decision is the subject of review, without the written
consent of all parties in interest, signed by them and entered upon
the record. [Underscoring supplied]
x x x.

Moreover, Rule 3.12 of Canon 3 of the Code of Judicial Conduct, which

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

The prohibitions under the afore-quoted provisions of the Rules are clear.
The disqualification is mandatory and gives the judicial officer concerned no
discretion but to inhibit himself from trying or sitting in a case. The rationale,
therefore, is to preserve the people's faith and confidence in the judiciary's fairness
and objectivity.[35]
While the Court finds it ludicrous that it was the counsel of UCCP, Atty.
Poculan, who sought the inhibition of Judge Doyon, considering that the law firm
of the latters son is his collaborating counsel, still the mandatory prohibition
applies. Judge Doyon should have immediately inhibited himself from the case
upon learning of the entry of appearance of his sons law firm. Where the
disqualifying fact is indubitable and the parties to the case make no waiver of such
disqualification, as in the case at bench, Section 1, Rule 137 of the Rules of Court
forthwith completely strips the judge of authority to proceed.[36]
WHEREFORE, the petition is DENIED. The assailed September 30,
2005 Decision and March 1, 2006 Resolution of the Court of Appeals, in CA-G.R.
SP No. 79156, are hereby AFFIRMED.
SO ORDERED