Prosperity Credit vs. CA

SECOND DIVISION
G.R. No. 114170 January 15, 1999

PROSPERITY CREDIT RESOURCES, INC., petitioner,
vs.
COURT OF APPEALS and METROPOLITAN FABRICS, INC., respondents.
MENDOZA, J.:
For review in this case is a decision 1 of the Sixth Division of the Court of Appeals in CA GR. 28684-SP
dated November 26, 1993 setting aside a writ of preliminary mandatory injunction issued by the Regional
Trial Court of Quezon City (Branch 95).
On August 3, 1984, petitioner Prosperity Credit Resources, Inc. gave a loan to private respondent
Metropolitan Fabrics, Inc. 2 To secure the payment of the loan, private respondent mortgaged to petitioner
seven parcels of land located at 685 Tandang Sora Avenue, Bo. Banlat, Quezonn City. 3 The lots comprise
a commercial compound with Tandang Sora Avenue as the nearest public road.
By October 27, 1987, private respondent's loan amounted to P10.5 million. 4 As private respondent
defaulted in the payment of the loan, petitioner foreclosed the mortgage and, in the ensuing public
bidding, became the highest bidder and purchaser of the seven (7) lots subject of the mortgage.
Later, private respondent negotiated with petitioner for the redemption of three lots covered by TCT Nos.
317705, 317706, and 317707, 5 all located on the southern and middle portions of the compound. As the
reacquisition of these three lots by private respondent would leave the remaining four lots on the
northwestern side without access to Tandang Sora Avenue, petitioner acceded to private respondent's
request on the condition that petitioner be given a right of way on the existing private road which forms
part of the area to be redeemed by private respondent. The parties' agreement was embodied in a
Memorandum of Undertaking, dated September 18, 1987, the full text of which reads: 6
MEMORANDUM OF UNDERTAKING
KNOW ALL MEN THESE PRESENTS:
That METROPOLITAN FABRICS, INC. is the registered owner of that certain land covered by
Transfer Certificate of Title No. 317709, more particularly described as follows:
A parcel of land (Lot 11 (Existing Road) of the consolidation-subdn. plan
(LRC) Pes-27706, approved as a non-subdn. project, being a portion of the
consolidation of Lots 373-E, (LRC) Psd-16383; 377-B, Fls-2163-D; 377-C-1,
2, 3, & 4 (LRC) Psd-5025; 377-C-5-A, & B, (LRC) Psd-9474; 384-A & 387-B1, (LRC) Psd-254813; 388-A & C, Psd-30663; 388-B-1, 2, 3, 4 & 5, Psd54827; 389-A-1, 2 & 3, 389-B-l (LRC) Psd-10087; and 389-B-2-C, (LRC) Psd18842; LRC (GLRO) Rec. No. 5975) situated in the Bo. of Banlat, Quezon City,
Metro Manila, Is. of Luzon . . . . . . containing of an area of FIVE THOUSAND
THREE HUNDRED SIXTY SEVEN (5,367) SQUARE METERS, more or less.
That the above-described lot, being an existing private road, will remain open to ingress and
egress for whatever kind of passage in favor of PROSPERITY FINANCIAL RESOURCES, INC.
or its successors-in-interest, the mortgagee of Lots 1, 4, 5, 6, 7, 8 and 9 of the
consolidation-subdivision plan, Pcs-27706 of Transfer Certificates of Title Nos. 317699,
317702, 317703, 317704, 317705, 317706 & 317707, respectively, in the name of
METROPOLITAN FABRICS, INC.
DONE this Sep. 18, 1987 in the city of Manila.
On November 7, 1991, petitioner filed an injunctive suit in the Regional Trial Court of Quezon City (Branch
95). Petitioner alleged that, in violation of the terms of the Memorandum of Agreement, private
respondent refused to allow petitioner to make excavations on one side of the access road for the
installation of water pipes; that it banned entry of petitioner's trucks and those of its tenants between
11:30 A.M. to 1:00 P.M. and 10:00 P.M. to 7:00 A.M.; and that it subjected the vehicles to unnecessary
searches. Petitioner sought the issuance of a writ of preliminary mandatory injunction requiring private
respondent "to allow [petitioner] to proceed with the MWSS installation project over the road lot in
question, to allow [petitioner's] and [its] tenants' delivery trucks and other vehicles access to the same at
any time and without undergoing unnecessary searches, and to otherwise recognize [petitioner's] right of
way over the said lot." 7 Petitioner prayed that, after trial, the writ be made final.
On December 21, 1991, private respondent filed an answer with counterclaim, alleging that petitioner's
right to undertake excavations on the access road was not provided for in the Memorandum of
Undertaking. 8 As counterclaim, private respondent alleged that it was petitioner which caused damage to
private respondent's tenants by undertaking, without its consent, construction works on the access road
which raised its level to about a meter and caused serious flooding of the nearby buildings whenever it
rained; 9 and that, as a result, its tenants demanded compensation for damage to their merchandise and
equipment occasioned by the flooding. Private respondent prayed for P2.1 million as counterclaim. 10
The trial court required the parties to submit position papers in connection with petitioner's prayer for a
preliminary mandatory injunction. 11 After the parties had done so, the trial court granted, on February 14,
1992, petitioner's prayer for a preliminary writ, conditioned upon the filing by petitioner of a bond in the
amount of P500,000.00. The trial court said in part:
. . . [T]he court finds that to deny plaintiff's application for a preliminary mandatory
injunction writ would be to disregard its right of way in respect of the road lot in question, a
right clearly set forth in defendant's memorandum of undertaking of September 18, 1987;
indeed, no cogent reason appears to warrant treating the terms "for whatever kind of
passage" contained therein as nothing more than a useless, meaningless redundancy . . . .
ACCORDINGLY, plaintiff's subject application is hereby granted and the Court hereby directs
that upon the filing and approval of the corresponding injunction bond in the sum of
P500,000.00, . . . . let corresponding preliminary mandatory injunction writ be issued
directing defendant to allow plaintiff to proceed with its MWSS installation project over the
road lot in question, to allow plaintiff's and its tenant's delivery trucks and other vehicles
access to the same at any time and without undergoing unnecessary searches, and to
otherwise recognize plaintiff's right of way over the said road lot, pending the termination of
this litigation and/or unless a contrary order is issued by this Court . . . . 12
On March 2, 1992, the trial court issued the writ upon filing of the required bond by petitioner. 13 Private
respondent filed a motion for reconsideration of the orders granting injunction which the trial court
denied. 14 However, it increased the injunction bond to P2.1 million. 15
Private respondent filed a petition for certiorari and prohibition with the Court of Appeals to annul the
aforesaid orders, dated February 14, 1992 and March 2, 1992, of the trial court. On November 26, 1994,
the appellate court granted the petition and set aside the questioned orders after finding that the trial
court had acted with grave abuse of discretion in issuing them. 16 Its motion for reconsideration having
been denied on February 28, 1994, petitioner filed the present petition for review on certiorari alleging
that: 17
1. THE COURT OF APPEALS GRAVELY ERRED WHEN IT EXERCISED CERTIORARI POWERS TO
REVERSE AN ERROR OF JUDGMENT COMMIT'I'ED BY THE REGIONAL TRIAI COURT, UPON
FINDING THAT THE LOWER COURT "MISUNDERSTOOD" THE RIGHT OF HEREIN PETITIONER
PROSPERITY OVER THE ROAD LOT IN QUESTION.
2. THE COURT OF APPEALS GROSSLY ERRED WHEN IT APPLIED THE DOCTRINE ENUNCIATED
IN RIVAS V. SEC (190 SCRA 295) DESPITE THE DIVERSITY IN FACTUAL SETTING OF THE
INSTANT CASE VIS-A-VIS THAT OBTAINING IN THE CITED CASE.
3. THE COURT OF APPEALS GRAVELY ERRED WHEN IT DECIDED THE MERITS OF THE MAIN
CASE IN A CERTIORARI PROCEEDING PRACTICALLY RENDERING ACADEMIC THE HEARING
PROPER YET TO BE CONDUCTED BY THE REGIONAL TRIAL COURT.
4. THE COURT OF APPEALS GRAVELY ERRED WHEN IT MADE FINDINGS OF FACTS ON THE
BASIS OF THE REPRESENTATION AND RECITAL OF FACTS MADE IN THE MFI PETITION AND
PROCEEDED TO INTERPRET THE MEMORANDUM OF UNDERTAKING WITHOUT CONSIDERING
FACTS AND CIRCUMSTANCES SURROUNDING ITS EXECUTION WHICH WERE YET TO BE
ESTABLISHED 1N A FULL BLOWN TRIAL.
The assignment of errors raises a single question: whether, in issuing a writ of preliminary mandatory
injunction ordering private respondent to allow petitioner to undertake excavations along the access road
for the purpose of installing water pipes, the Regional Trial Court gravely abused its discretion.
As held in Pelejo v. Court of Appeals, 18 to justify the issuance of the writ of preliminary mandatory
injunction the following must be shown: (1) that the complainant has a clear legal right; (2) that his right
has been violated and the invasion is material and substantial; and (3) that there is an urgent and
permanent necessity for the writ to prevent serious damage.
The right of the complainant must be clear and unmistakable because, unlike an ordinary preliminary
injunction, the writ of preliminary mandatory injunction requires the performance of a particular act or
acts 19 and thus tends to do more than maintain the status quo. 20 In the case at bar, petitioner anchors its
alleged right to the preliminary mandatory injunction on the Memorandum of Undertaking, dated
September 18, 1987, which provides that:
[T]he above-described lot, being an existing private road, will remain open to ingress
and egress for whatever kind of passage in favor of PROSPERITY FINANCIAL
RESOURCES, INC. or its successors-in-interest.
There is no question as to the meaning of the terms "ingress" and "egress.'' They give petitioner the right
to use the private road as a means of entry into and exit from its property on the northwestern side of the
compound. The question concerns the meaning of the phrase "for whatever kind of passage." The trial
court read this phrase to mean that petitioner had the right to make excavations on the side of the access
road in order to install a network of water pipes. The word "passage" does not, however, "clearly and
unmistakably" convey a meaning that includes a right to install water pipes on the access road. The
ordinary meaning of the word, as defined in Webster's Dictionary, is that it is "the act or action of passing:
movement or transference from one place or point to another." 21Its legal meaning is not different. It
means, according to Black's Law Dictionary, the "act of passing; transit; transition." 22 To achieve a
meaning such as that which petitioner proposes requires the consideration of evidence showing the
parties' intention in using the word which can only be done during trial on the merits. Until such time,
petitioner cannot claim to have a "clear and unmistakable" right justifying the issuance of a writ of
preliminary mandatory injunction in this case. Thus, the trial court should have observed caution and
denied petitioner's application for the preliminary writ.
Petitioner contends that resort should be made to facts surrounding the execution of the Memorandum of
Undertaking which, according to it, shows the intention of the parties to give petitioner the right to install
water pipes along the side of the access road. 23 It cites Rule 130 11 24 of the 1964 Rules of Court, which
provides:
Sec. 11. Interpretation according to circumstances. For the proper construction of an
instrument, the circumstances under which it was made, including the situation of the
subject thereof and of the parties to it, may be shown, so that the judge may be placed in
the position of those whose language he is to interpret.
That is precisely what we are saying. The recourse petitioner proposes must await the presentation of the
parties' evidence during trial and the determination of their intention must be made by the trial court, not
by this Court. Petitioner cannot circumvent the process by asking this Court to determine the facts
surrounding the execution of their agreement. Indeed, for us to undertake such inquiry would be to
expand the scope of the present review and intrude into the domain of the trial court. Petitioner will have
ample opportunity to substantiate its allegations on this point during the trial of the case. Rule 130 11,
which petitioner invokes, is actually a rule for interpretation of documentary evidence formally offered at
the trial. It does not apply to preliminary proceedings concerning the issuance of ancillary remedies.
Anent petitioner's contention that the writ of certiorari does not lie because the error sought to be
corrected is an error of judgment, suffice it to say that the lower court acted with grave abuse of
discretion in issuing the writ of preliminary mandatory injunction despite the doubt on petitioner's right to
it.
WHEREFORE, the decision of the Court of Appeals, dated November 26, 1993, and its resolution, dated
February 28, 1994, are hereby AFFIRMED.1wphi1.nt
SO ORDERED.

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SECOND DIVISION

G.R. No. 114170 January 15, 1999

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