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G.R. No.

181643 November 17, 2010

MICHELLE I. PINEDA, Petitioner,


vs.
COURT OF APPEALS (Former Ninth Division) and the DEPARTMENT OF EDUCATION,
represented by Assistant Secretary CAMILO MIGUEL M. MONTESA, Respondents.

DECISION

MENDOZA, J.:

This is a petition for certiorari under Rule 65 filed by petitioner Michelle I. Pineda (Pineda) seeking to
annul and set aside the June 15, 2007 Decision of the Court of Appeals1 (CA), which reversed the
March 14, 2005 Order of the Regional Trial Court, Branch 153, Pasig City (RTC) directing the
issuance of a Writ of Preliminary Mandatory Injunction enjoining respondent Department of
Education (DepEd) from enforcing its decision to cancel a 5-year lease of the school canteen.

It appears from the records that on May 14, 2004, Pineda entered into a Memorandum of
Agreement (May-MOA)2with Lakandula High School (LHS) represented by its principal, Dr. Alice B.
Blas (Dr. Blas), for a five-year lease of the school canteen with a monthly rental of ₱20,000.00 and
an additional ₱4,000.00 monthly for the school’s feeding program as well as medicines for the
school clinic. Thereafter, Pineda renovated the canteen and equipped it with new utensils, tables,
chairs, and electric fans.3

On August 5, 2004, the faculty and personnel of LHS sent a letter to the Division School
Superintendent, Dr. Ma. Luisa Quiñones (Dr. Quiñones), questioning the validity of the May-
MOA.4 Dr. Blas sent a letter-reply on September 17, 2004 and an exchange of correspondence
followed.5 Meanwhile, on August 14, 2004, Pineda and Dr. Blas executed another MOA (August-
MOA)6superseding the May-MOA. This time, the August-MOA followed the standard form under
Department Order No. 95, Series of 19987 or the "Revised Implementing Guidelines for the Turnover
of School Canteens to Teachers Cooperatives."

In this regard, on October 20, 2004, Assistant Schools Division Superintendent Isabelita M.
Santos (Ms. Santos)and Administrative Officer Vicente N. Macarubbo (Mr. Macarubbo) wrote a letter
to Dr. Quiñones relaying their observations on the controversy and recommending that their findings
"be submitted to the DepEd - Central Office for its final word on the matter."8 Ms. Santos and Mr.
Macarubbo were of the view that Dr. Blas did not violate any rule in executing the August-MOA.
They even found the lease to Pineda beneficial to the school. Thus, Dr. Quiñones wrote the DepEd
seeking its decision on the matter.

On February 11, 2005, respondent DepEd, through Undersecretary Jose Luis Martin C.
Gascon (Usec. Gascon),declared the August-MOA "null and void ab initio" and ordered it
"cancelled." Pineda was also ordered to "cease and desist" from further managing and operating the
canteen. DepEd made clear that the management and operation of the canteen should revert to the
Home Economics Department of the School.9 This prompted Pineda to file a petition for certiorari
with prayer for temporary restraining order (TRO) and/or writ of preliminary injunction before the
RTC.

On March 14, 2005, the RTC ordered the issuance of a Writ of Preliminary Mandatory Injunction
enjoining the enforcement of Usec. Gascon’s decision.10 DepEd, represented by Usec. Gascon, Dr.
Quiñones and Ms. Olympiada Camilo (Ms. Camilo), who succeeded Dr. Blas as School Principal,
sought the dismissal of Pineda’s petition before the RTC on the ground that the latter failed to state a
cause of action. On June 7, 2005, the trial court denied its motion.11 For said reason, DepEd, this
time represented by Assistant Secretary Camilo Miguel M. Montesa (Asec. Montesa), filed a petition
for certiorari before the CA seeking to set aside the March 14, 2005 and June 7, 2005 orders of the
RTC.

The CA affirmed the June 7, 2005 order of the RTC denying DepEd’s motion to dismiss but reversed
its March 14, 2005 order granting the issuance of the Writ of Preliminary Mandatory Injunction.
According to the CA, DepEd’s order cancelling the August-MOA had already been partially
implemented as Pineda herself recognized such fact in her amended petition before the RTC. In
effect, this was the status quo. In addition, the CA held that Pineda appeared to have no clear or
unmistakable right to be protected since the MOA that granted her the right to operate the school
canteen was, in fact, invalidated by the DepEd for not being sanctioned by its existing rules and
regulations. Finally, the CA also held that there was no pressing necessity to avoid injurious
consequences which would warrant the issuance of the injunctive writ as the purported damage to
Pineda, if she would not able to operate the canteen, was readily quantifiable.12

Hence, Pineda filed this petition for certiorari relying on the following

GROUNDS:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN
INSTEAD OF DISMISSING THE PETITION FILED BY RESPONDENT DEPARTMENT OF
EDUCATION THROUGH ASSISTANT SECRETARY CAMILO MIGUEL M. MONTESA, IT
GAVE DUE COURSE TO IT, NOTWITHSTANDING THE GLARING FACT THAT IT WAS
NOT A PARTY AT ALL IN SCA NO. 2797, HENCE, WITH NO LOCUS STANDI.

II

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT DID
NOT DISMISS OUTRIGHT THE PETITION SINCE NO MOTION FOR RECONSIDERATION
WAS FILED FROM THE ORDERS DATED MARCH 14, 2005, GRANTING THE WRIT OF
INJUNCTION IN FAVOR OF HEREIN PETITIONER AND THE ORDER DATED JUNE 7,
2005, DENYING RESPONDENTS’ (USEC JOSE LUIS MARTIN C. GASCON, SUPT. MA.
LUISA QUINONES AND OLYMPIADA CAMILO) MOTION TO DISMISS, IN MANIFEST
VIOLATION OF SECTION 4, RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE.

III

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT
DISSOLVED THE WRIT OF INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT
BRANCH 153, PASIG CITY, IN SCA NO. 2797, THEREBY UNJUSTIFIABLY
INTERFERING WITH THE LOWER COURT’S DISCRETION IN ISSUING THE WRIT OF
INJUNCTION IN FAVOR OF HEREIN PETITIONER WHO HAS A CLEAR AND
UNMISTAKABLE LEGAL RIGHT TO BE AFFORDED THIS REMEDY AND CONSIDERING
THAT RESPONDENTS DID NOT FILE A MOTION TO DISSOLVE BOND WITH THE
TRIAL COURT OR AT LEAST FILED AFFIDAVITS IN SUPPORT OF THEIR
OPPOSITION.13
On November 18, 2009, after the parties had filed their respective pleadings, the Court gave due
course to the petition and ordered the parties to submit their respective memoranda.14

On the first ground, Pineda argues that the CA gravely abused its discretion in entertaining the
petition for certiorari of DepEd considering that Asec. Montesa was not the proper party to file the
petition. She adds that, even assuming that DepEd had the locus standi to file said petition before
the CA, Asec. Montesa was not duly authorized to do so.

The Court cannot accommodate the view of Pineda.

In her petition for certiorari before the RTC, Pineda impleaded Usec. Gascon, Dr. Quiñones and Ms.
Camilo in their official capacities as Undersecretary of DepEd, Division Superintendent and Principal
of Lakandula High School, respectively. Although the petition mentioned that Usec. Gascon was
merely a nominal party, it stated therein that Dr. Quiñones and Ms. Camilo were being sued for
"having been tasked to immediately carry out" his order of February 11, 2005. The Court is of the
view that DepEd was the proper party and Usec. Gascon, Dr. Quiñones and Ms. Camilo were just its
representatives. Thus, they were sued in their official capacities.

A review of Usec. Gascon’s order discloses that the cancellation of Pineda’s August-MOA was
pursuant to DepEd’s existing guidelines on the turn over of school canteens to teachers’
cooperatives, laid out in Department Order No. 95, series of 1998. He was simply applying a DepEd
policy when he ordered the August-MOA cancelled. So, what was actually being assailed by Pineda
in her petition before the RTC was the implementation of DepEd’s existing guidelines with the
nullification of the August-MOA entered into by Dr. Blas, then principal of LHS.15 As Asec. Montesa
merely took over the functions of Usec. Gascon, he is certainly authorized to institute the petition
before the CA in order to advance and pursue the policies of his office – DepEd. Applying Rule 3,
Section 2 of the Revised Rules of Court, DepEd is the real party in interest for it will surely be
affected, favorably or unfavorably, by the final resolution of the case before the RTC.

Thus, it would be absurd not to recognize the legal standing of Asec. Montesa, as representative of
DepEd, but consider Dr. Quiñones and Ms. Camilo as the proper parties when they were merely
tasked to implement a directive emanating from a superior official (Asec. Montesa) of the DepEd.

On the second ground, Pineda questions DepEd’s failure to move for reconsideration before going to
the CA on certiorari.

The general rule is that a motion for reconsideration is a condition sine qua non before a petition for
certiorari may lie, its purpose being to grant an opportunity for the court a quo to correct any error
attributed to it by a re-examination of the legal and factual circumstances of the case.16 There are,
however, recognized exceptions permitting a resort to the special civil action for certiorari without
first filing a motion for reconsideration. In the case of Domdom v. Sandiganbayan,17 it was written:

The rule is, however, circumscribed by well-defined exceptions, such as where the order is a patent
nullity because the court a quo had no jurisdiction; where the questions raised in the certiorari
proceeding have been duly raised and passed upon by the lower court, or are the same as those
raised and passed upon in the lower court; where there is an urgent necessity for the resolution of
the question, and any further delay would prejudice the interests of the Government or of the
petitioner, or the subject matter of the action is perishable; where, under the circumstances, a motion
for reconsideration would be useless; where the petitioner was deprived of due process and there is
extreme urgency for relief; where, in a criminal case, relief from an order of arrest is urgent and the
grant of such relief by the trial court is improbable; where the proceedings in the lower court are a
nullity for lack of due process; where the proceedings were ex parte or in which the petitioner had no
opportunity to object; and where the issue raised is one purely of law or where public interest is
involved.18 (underscoring supplied)

As previously discussed, the present case concerns the implementation or application of a DepEd
policy which had been enjoined by the RTC. Certainly, there is an urgent necessity for the resolution
of the question and any further delay would prejudice the interest of the government. Moreover, the
subject matter of the case involves the operation of the canteen of a public secondary school. This is
of public interest for it affects the welfare of the students, thus, justifying the relaxation of the settled
rule.

Still on the second ground, Pineda points out that the March 14, 2005 Order of the RTC was
received by the DepEd on March 16, 2005 and the latter filed its petition before the CA on June 28,
2005, which was beyond the sixty (60)-day reglementary period. Going over DepEd’s petition before
the CA, it appears that DepEd reckoned the 60-day period from June 28, 2005, the date of its receipt
of the June 7, 2005 Order of the RTC. Pineda’s Comment and Memorandum, however, did not raise
this procedural lapse as an issue. Instead, Pineda put forth her own arguments in support of the two
RTC orders.

The rule in pleadings and practice is that that no new issue in a case can be raised in a pleading
which by due diligence could have been raised in previous pleadings.19 Thus, it is too late in the day
for Pineda to question the procedural lapse.

At any rate, the Court finds no cogent reason for the reversal and setting aside by the CA of the writ
of preliminary mandatory injunction issued by the RTC. The very writ of preliminary injunction set
aside by the CA could no longer lie for the acts sought to be enjoined had already been
accomplished or consummated.20 The DepEd already prohibited Pineda from operating the school
canteen. As correctly ruled by the CA in its questioned decision, since Pineda had ceased the
operation of the school canteen since 2005, the RTC’s preliminary writ should be set aside as there
was nothing more to enjoin. The Court agrees with the CA when it explained:

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. Its sole objective is to preserve
the status quo until the merits of the case can be heard fully.

Status quo is defined as the last actual, peaceful, and uncontested status that precedes the actual
controversy, that which is existing at the time of the filing of the case. Indubitably, the trial court must
not make use of its injunctive relief to alter such status.

In the case at bench, the Decision of Undersecretary Gascon dated February 11, 2005, ordering
Pineda to cease and desist from operating and managing the school canteen and to revert the
management thereof to the Home Economics Department and to the Principal, has already been
partially implemented. This is evident from the allegations of Pineda in her amended petition, to wit:

"Earlier, in the dawn of same date, 22 February 2004 (should be 2005), the guards of Lakandula
High School, taking strict orders from respondents Mrs. Camilo and Dr. Quiñones who immediately
executed the assailed illegal decision from the respondent undersecretary, prevented the canteen
workers from entering the school and the delivery of softdrinks such as Pop Cola to the petitioner.
On the same date, more canteens sprouted, in addition to those found in the H.E. and dressmaking
rooms, operated by the teachers, under the guise that they were doing service to the students in the
meantime that the canteen was closed. x x x."21
Finally, while the grant or denial of a preliminary injunction is discretionary on the part of the trial
court, grave abuse of discretion is committed when it does not maintain the status quo which is the
last actual, peaceable and uncontested status which preceded the actual controversy. If there is
such a commission, it is correctible through a writ of certiorari.22 In this case, the status quo ante
litem or the state of affairs existing at the time of the filing of the case was that Pineda was already
prohibited from operating the school canteen. For said reason, the trial court cannot make use of its
injunctive power to change said status.23

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 190122 January 10, 2011

SPOUSES ISAGANI and DIOSDADA CASTRO, Petitioners,


vs.
SPOUSES REGINO SE and VIOLETA DELA CRUZ, SPOUSES EDUARDO and CHARITO
PEREZ and MARCELINO TOLENTINO, Respondents.

DECISION

CARPIO MORALES, J.,

For the Court’s consideration is the propriety of the issuance of a writ of preliminary mandatory
injunction in favor of respondent Spouses Regino Se and Violeta dela Cruz (Spouses dela Cruz).

Respondent Spouses Eduardo and Charito Perez (Spouses Perez) obtained a ₱250,000 loan from
Spouses Isagani and Diosdada Castro (petitioners) on November 15, 1996, to secure which they
executed a real estate mortgage in petitioners’ favor covering an unregistered 417 square meter
parcel of land, located in San Isidro, Hagonoy, Bulacan, covered by Tax Declaration (TD) No. 01844
(the property).

Respondent Spouses Perez having failed to settle their loan, petitioners extrajudicially foreclosed the
mortgage and, as the highest bidder at the public auction, bought the property on February 4, 1999.
It turned out that before the foreclosure or sometime in 1997 respondent Spouses Perez, contrary to
a provision of the real estate mortgage, sold the property to respondent Spouses dela Cruz who had
in fact caused the cancellation of TD No. 01844 by TD No. 01892 in their name on August 15, 1997.

Petitioners thus filed on April 8, 1999 a complaint against herein two sets of respondent Spouses, for
annulment of Deed of Sale and TD No. 018921 and damages before the Malolos Regional Trial
Court (RTC). Respondent Marcelino Tolentino, Municipal Assessor of Hagonoy, Bulacan was
impleaded as defendant. The complaint was raffled to Branch 7 of the RTC.

By respondent Spouses dela Cruz’s allegation, before buying the property, they inspected it and
found no improvements thereon that would put them on guard against the integrity of the TD of the
sellers-Spouses Perez which TD, contrary to petitioners’ claim, bore no annotation of the mortgage.
They had in fact constructed a house on the property in the course of which they were approached
by petitioners who informed them of an existing mortgage thereover, but as petitioners did not
present any document to prove it, they paid no heed to the information.

During the pendency of petitioners’ complaint against respondents spouses, petitioners filed an ex-
parte motion before Branch 16 of the RTC for the issuance of a writ of possession over the property
by virtue of the foreclosure of the mortgage of the sale to them of the property. 2 Petitioners’ motion
was granted and a writ of possession dated August 2, 2001 was issued and enforced against
respondent Spouses dela Cruz who were evicted from the property.

On December 7, 2002, petitioners amended, with leave of court, their complaint, alleging that, inter
alia, respondent Spouses Perez failed to redeem the mortgage within the reglementary period.

In their Answer to the Amended Complaint, respondent Spouses dela Cruz prayed for the issuance
of a writ of preliminary mandatory injunction to restore them to physical possession of the property,
which prayer Branch 7 of the RTC granted by Order of October 29, 2004 in this wise:
. . . It is not disputed that the Sps. Isagani Castro and Diosdada Castro, herein plaintiffs, were placed
in possession of the subject property by virtue of a writ of possession issued by Branch 16 of the
Court. This writ of possession commanded the sheriff to require the spouses Eduardo Perez and
Charito Lopez and all persons claiming rights under them to vacate subject property and surrender
possession thereof to spouses Castro. At that time, the Spouses Regino Se and Violeta dela Cruz
were in possession of the property as owners thereof, having already purchased the same from the
Sps. Castro. Their evidence of ownership is Tax Declaration No. 01892 of the Office of the Municipal
Assessor of Hagonoy, Bulacan, the property being still an unregistered property. They were not
claiming rights under the spouses Perez. They were and still are the owners in their own right.
Hence, the writ of possession issued was improperly implemented and under Art. 539 of the Civil
Code, they must be restored to said possession by the means established by the laws and the Rules
of Court. The writ of preliminary mandatory injunction prayed for is undeniably one of the means
established by the laws and the Rules of Court. 3(underscoring supplied)

Petitioners’ motion for reconsideration of the trial court’s Order of October 29, 2004 was denied by
Order of March 5, 2007, hence, they filed a petition for certiorari before the Court of Appeals. Finding
no grave abuse of discretion in the issuance of the Order, the appellate court denied petitioners’
petition, by Decision of September 14, 2009.4

Hence, the present petition.

The trial court anchored its assailed Order granting the writ of preliminary mandatory injunction on
Article 539 of the Civil Code. The Article reads:

Art. 539. 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.

xxxx

Undoubtedly, respondent Spouses dela Cruz actually took possession of the property before the real
estate mortgage covering it was foreclosed, and had in fact cancelled the TD in Spouses Perez’
name and had one issued in their name. It appears, however, that petitioners did not inform
Branch 16, RTC of the previous sale of the property to third parties, herein respondent Spouses dela
Cruz, and the latter’s actual possession thereof.

For an injunctive writ to issue, a clear showing of extreme urgency to prevent irreparable injury and
a clear and unmistakable right to it must be proven by the party seeking it. The primary objective of a
preliminary injunction, whether prohibitory or mandatory, is to preserve the status quo until the merits
of the case can be heard.5

[T]he rule is well-entrenched that the issuance of the writ of preliminary injunction rests upon the
sound discretion of the trial court. It bears reiterating that Section 4 of Rule 58 gives generous
latitude to the trial courts in this regard for the reason that conflicting claims in an application for a
provisional writ more often than not involve a factual determination which is not the function of
appellate courts. Hence, the exercise of sound judicial discretion by the trial court in injunctive
matters must not be interfered with except when there is manifest abuse, which is wanting in the
present case.6 (emphasis and underscoring supplied) 1avv phi1

Indeed, the rule is well-entrenched that for grave abuse of discretion to exist as a valid ground for
the nullification of an injunctive writ, there must be a capricious and whimsical exercise of judgment,
equivalent to lack or excess of jurisdiction. Or the power must be exercised in an arbitrary manner by
reason of passion or personal hostility, and it must be patent and gross as to amount to an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by law. 7

Recall that respondent Spouses dela Cruz had long before the foreclosure of the mortgage or
sometime in 1997 bought and took possession of the property, and had in fact cancelled the seller-
respondent Spouses Perez’ TD and had one issued in their name. By petitioners’ seeking ex parte
the issuance to them on February 1999 of a writ of possession over the property, which was granted
and the writ enforced against respondent Spouses de la Cruz, they disturbed the status quo ante
litem. The trial court did not thus commit grave abuse of discretion when it issued the writ of
preliminary mandatory injunction in favor of Spouses de la Cruz.

For the enforcement of the writ of possession against respondent Spouses dela Cruz, who did not
take part in the foreclosure proceedings, would amount to taking of real property without the benefit
of a proper judicial intervention. The procedural shortcut which petitioners is impermissible. Even
Article 433 of the Civil Code instructs that "Actual possession under claim of ownership raises
disputable presumption of ownership. The true owner must resort to judicial process for the recovery
of the property." The contemplated judicial process is not through an ex-parte petition as what
petitioners availed of, but a process wherein a third party, Spouses de la Cruz herein, is given an
opportunity to be heard.8

The jurisdictional foundation for the issuance of a writ of injunction rests not only in the existence of
a cause of action and in the probability of irreparable injury, among other considerations, but also in
the prevention of multiplicity of suits.

Since petitioners failed to show that the appellate court erred in upholding the trial court’s exercise of
its discretion in issuing the writ of preliminary mandatory injunction, the challenged Decision stands.

Parenthetically, the issuance of the challenged writ does not render petitioners’ case closed.
Whether there existed a conspiracy between both sets of respondent spouses to defraud petitioners
can be only be determined after the principal action is tried on the merits during which the parties are
afforded the opportunity to present evidence in support of their respective claims.9

WHEREFORE, the petition is DENIED.

SO ORDERED.
G.R. No. 138081 March 30, 2000

THE BUREAU OF CUSTOMS (BOC) and THE ECONOMIC INTELLIGENCE AND


INVESTIGATION BUREAU (EIIB), petitioners,
vs.
NELSON OGARIO and MARK MONTELIBANO, respondents.

MENDOZA, J.:

The question for decision in this case is whether the Regional Trial Court has jurisdiction to enjoin
forfeiture proceedings in the Bureau of Customs. In accordance with what is now settled law, we
hold it does not.

The facts are as follows: On December 9, 1998, Felipe A. Bartolome, District Collector of Customs of
Cebu, issued a Warrant of Seizure and Detention1 of 25,000 bags of rice, bearing the name of
SNOWMAN, Milled in Palawan" shipped on board the M/V "Alberto", which was then docketed at
Pier 6 in Cebu City. The warrant was issued on the basis of the report of the Economic Intelligence
and Investigation Bureau (EIIB), Region VII that the rice had been illegally imported. The report
stated that the rice was landed in Palawan by a foreign vessel and then placed in sacks marked
"SNOWMAN," Milled in Palawan." It was then shipped to Cebu City on board the vessel M/V
"Alberto." Forfeiture proceedings were started in the customs office in Cebu, docketed as Cebu
Seizure Identification Case No. 17-98.

On December 10, 1998, respondent Mark Montelibano, the consignee of the sacks of rice, and his
buyer, respondent Elson Ogario, filed a complaint for injunction (Civil Case No. CEB-23077) in the
Regional Trial Court of Cebu City, alleging:

4.) That upon arrival of the herein-mentioned sacks of rice at the PIER 5 of Cebu City,
Philippines on the 7th day of December 1998 all of the defendants rushed to the port with
long arms commanding the plaintiff's laborer[s] to stopped [sic] the unloading of the same
from the vessel named M/V Alberto. The defendants alleged that the herein-mentioned rice
were [sic] smuggled from abroad without even proof that the same were [sic] purchased from
a particularly country.

5.) By the mere suspicion of the defendants that the goods were smuggled from abroad, they
immediately put on hold the release of the goods from the ship and at the same time they
jointly barred unloading and loading activities of the plaintiffs' laborers of the herein-
mentioned rice.

6.) The plaintiffs then presented all the pertinent and necessary documents to all of the
defendants but the latter refused to believe that the same is from Palawan because their
minds are closed due to some reason or another Civil [while] the plaintiffs believed that the
same is merely an act of harassment. The documents are as follows:

A.) Certification from the National Food Authority that the same is from Palawan. This
is hereto attached Annex A.

B) Bill of Lading issued by ANMA PHILIPPINES Shipping Company. This is hereto


attached as Annex B.

7.) The acts of the defendants in stopping he loading and unloading activities of the plaintiff's
laborers [have] no basis in law and in fact; thus, unlawful and illegal. A mere suspicious
which is not coupled with any proof or evidence to that effect is [a] matter which the law
prohibits.

8.) That for more than three days and despite the repeated plea of the plaintiffs that their
goods should be released to them and the defendants should stop from barring the
unloading and loading activities, the latter blindly refused [to] heed the same.

9.) That the acts of all of the defendants which are greatly unlawful and erroneous would
caused [sic] irreparable damage, injury, and grave injustices to the plaintiffs.

10.) That by way of example or correction for the public good and to deter the defendants
from doing the same acts to other businessmen, defendants should be held liable for
exemplary damages in amount of not less than One Hundred Thousand Pesos
(P100,000.00).

11.) That the plaintiffs are entitled to the relief prayed in this complaint and the whole or part
of such reliefs consists in restraining perpetually the defendants from holding the herein-
mentioned twenty-five thousand sacks of rice. That defendants should be restrained
perpetually from barring the unloading and loading activities of the plaintiffs' laborers.

12.) That allowing the defendants to continue their unlawful acts would work grave injustice
to the plaintiffs. Unless a preliminary injunction be granted ex-parte, grave and irreparable
injury and damage would result to the plaintiffs before the latter can be heard on notice.

13.) That if the defendants be not restrained perpetually from their unlawful acts, the herein-
mentioned rice will deteriorate and turn into dusts [sic] if not properly disposed.1âw phi1.nêt

14.) That a Warrant of Seizure and detention issued by the Collector of Custom[s] dated
December 9, 1998 be quashed because the defendants' act of seizing and detaining the
herein-mentioned sacks of rice are illegal. The continuing act of detaining the herein-
mentioned sacks of rice will led to the deterioration of the same. That no public auction sale
of the same should be conducted by the Bureau of Custom[s] or any government agenc[y].

15.) That plaintiffs are ready and willing to file a bond executed to the defendants in an
amount to be fixed by this Honorable Court to the effect that plaintiffs will pay to the
defendants all damages which they may sustain by reason of the injunction if this Honorable
Court should finally decide that the plaintiffs are not entitled thereto.

PRAYER

WHEREFORE, Premised on the foregoing, it is most respectfully prayed before this Honorable Court
that a restraining order or temporary injunction be immediately issued prohibiting the defendants
from holding plaintiffs' above-mentioned goods. That it is further prayed that a restraining order or
temporary injunction be issued prohibiting the defendants from barring the unloading and loading
activities of the plaintiffs' laborers. Further, the plaintiffs prayed that the warrant of seizure and
detention issued by the Collector of Custom[s] dated December 9, 1998 be quashed and no public
auction sale of the same should be conducted by any government agency or authority.

It is further prayed that after due hearing, judgment be rendered:

1.) Making the restraining order and/or preliminary injunction permanent.


2.) Ordering the defendants jointly to pay exemplary or corrective damages to the plaintiff[s]
in the amount of One Hundred Thousand Pesos (P100,000.00)

Such other relief which are just and demandable under the circumstances are also prayed for.2

In separate motions, petitioners Bureau of Customs (BOC), Port of Cebu3 and the EIIB, as well as the
Philippine Navy and Coast Guard, sought the dismissal of the complaint on the ground that the RTC
had no jurisdiction, but their motions were denied. In its resolution, dated January 11, 1999, the RTC
said:

The Warrant of Seizure and Detention issued by the Bureau of Customs cannot divest this
court of jurisdiction since its issuance is without legal basis as it was anchored merely on
suspicion that the items in question were imported or smuggled. It is very clear that the
defendants are bereft of any evidence to prove that the goods were indeed imported or
smuggled, that is why the plaintiffs have very vigorously protested against the seizure of
cargoes by the defendants. In fact, as revealed by defendants' counsel, the Warrant of
Seizure and Detention was issued merely to shift the burden of proof to the shippers or
owners of the goods to prove that the bags of rice were not imported or smuggled. However,
the court feels this is unfair because the settled rule is that he who alleges must prove the
same. Besides, at this time when our economy is not good, it would be a [dis]service to the
nation to use the strong arm of the law to make things hard or difficult for the businessmen.4

The 25,000 bags of rice were ordered returned to respondents upon the posting by them of an
P8,000,000.00 bond.

Petitioners BOC and EIIB moved for a reconsideration, but their motion was denied by the RTC in its
order dated January 25, 1999.5 In the same order, the RTC also increased the amount of
respondents' bond to P22,500,000.00. On certiorari to the Court of Appeals, the resolution and order
of the RTC were sustained.6

Accordingly, on April 26, 1999, upon motion of respondents, the RTC ordered the sheriff to place in
respondents' possession the 25,000 bags of rice.

Meanwhile, in the forfeiture proceedings before the Collector of Customs of Cebu (Cebu Seizure
Identification Case No. 17-98), a decision was rendered, the dispositive portion of which reads:

WHEREFORE, by virtue of the authority vested in me by law, it is hereby ordered and


decreed that the vessel M/V "Alberto"; the 25,000 bags of rice brand "Snowman"; and the
two (2) trucks bearing Plate Nos. GCC 844 and GHZ 388 are all FORFEITED in favor of the
government to be disposed of in the manner prescribed by law while the seven (7) trucks
bearing Plate Nos. GFX 557; GFX 247; TPV 726; GBY 874; GVE 989; and GDF 548 are
RELEASED in favor of their respective owners upon proper identification and compliance
with pertinent laws, rules and regulations.

Since this decision involves the release of some of the articles subject matter of herein case
which is considered adverse to the government, the same is hereby elevated to the
Commissioner of Customs for automatic review pursuant to Republic Act 7651. 7

The District Collector of Customs found "strong reliable, and convincing evidence" that the 25,000
bags of rice were smuggled. Said evidence consisted of certifications by the Philippine Coast Guard,
the Philippine Ports Authority, and the Arrastre Stevedoring Office in Palawan that M/V "Alberto" had
never docked in Palawan since November, 1998; a certification by Officer-in-Charge Elenita Ganelo
of the National Food Authority (NFA) Palawan that her signature in NFA Grains Permit Control No.
00986, attesting that the 25,000 bags of rice originated from Palawan, was forged; and the result of
the laboratory analysis of a sample of the subject rice by the International Rice Research Institute
(IRRI) stating that the sample "does not compare with any of our IRRI released varieties."

Respondent Montelibano did not take part in the proceedings before the District Collector of
Customs despite due notice sent to his counsel because he refused to recognize the validity of the
forfeiture proceedings.8

On April 30, 1999, petitioners filed the present petition for review on certiorari of the decision of the
Court of Appeals, dated April 15, 1999, upholding the resolution of the RTC denying petitioners'
motions to dismiss. They contend that:

I. SINCE THE REGIONAL TRIAL COURT OF CEBU CITY DOES NOT HAVE
JURISDICTION OVER THE SUBJECT MATTER OF THE INSTANT CONTROVERSY, AND
THE BUREAU OF CUSTOMS HAD ALREADY EXERCISED EXCLUSIVE ORIGINAL
JURISDICTION OVER THE SAME, THE COURT OF APPEALS SERIOUSLY ERRED IN
SUSTAINING THE EXERCISE BY THE TRIAL JUDGE OF JURISDICTION OVER THE
CASE BELOW AND IN AFFIRMING THE TRIAL JUDGE'S RESOLUTION DATED
JANUARY 11, 1999 AND ORDER DATED JANUARY 25, 1999 IN CIVIL CASE NO. CEB-
23077.

II. SINCE RESPONDENTS HAVE NOT EXHAUSTED ALL THE ADMINISTRATIVE


REMEDIES PROVIDED FOR BY LAW, THE COURT OF APPEALS SERIOUSLY ERRED IN
UPHOLDING THE TRIAL JUDGE'S DENIALS OF PETITIONERS' SEPARATE MOTIONS
TO DISMISS AND MOTIONS FOR RECONSIDERATION.9

In Jao v. Court of Appeals, 10 this Court, reiterating its ruling in a long line of cases, said:

There is no question that Regional Trial Courts are devoid of any competence to pass upon
the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of
Customs and to enjoin or otherwise interfere with these proceedings. The Collector of
Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and
determine all questions touching on the seizure and forfeiture of dutiable goods. The
Regional Trial Courts are precluded from assuming cognizance over such matters even
through petitions of certiorari, prohibition or mandamus.

It is likewise well-settled that the provisions of the Tariff and Customs Code and that of
Republic Act No. 1125, as amended, otherwise known as "An Act Creating the Court of Tax
Appeals," specify the proper fora and procedure for the ventilation of any legal objections or
issues raised concerning these proceedings. Thus, actions of the Collector of Customs are
appealable to the Commissioner of Customs, whose decision, in turn, is subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals and from there to the Court of
Appeals.

The rule that Regional Trial Courts have no review powers over such proceedings is
anchored upon the policy of placing no unnecessary hindrance on the government's drive,
not only to prevent smuggling and other frauds upon Customs, but more importantly, to
render effective and efficient the collection of import and export duties due the State, which
enables the government to carry out the functions it has been instituted to perform.
Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we
have said that such act does not deprive the Bureau of Customs of jurisdiction thereon.

Respondents cite the statement of the Court of Appeals that regular courts still retain jurisdiction
"where, as in this case, for lack of probable cause, there is serious doubt as to the propriety of
placing the articles under Customs jurisdiction through seizure/forfeiture proceedings" 11 They
overlook the fact, however, that under the law, the question of whether probable cause exists for the
seizure of the subject sacks of rice is not for the Regional Trial Court to determine. The customs
authorities do not have to prove to the satisfaction of the court that the articles on board a vessel
were imported from abroad or are intended to be shipped abroad before they may exercise the
power to effect customs' searches, seizures, or arrests provided by law and continue with the
administrative hearings. 12 As the Court held in Ponce Enrile v. Vinuya: 13

The governmental agency concerned, the Bureau of Customs, is vested with exclusive
authority. Even if it be assumed that in the exercise of such exclusive competence a taint of
1âw phi 1

illegality may be correctly imputed, the most that can be said is that under certain
circumstances the grave abuse of discretion conferred may oust it of such jurisdiction. It
does not mean however that correspondingly a court of first instance is vested with
competence when clearly in the light of the above decisions the law has not seen fit to do so.
The proceeding before the Collector of Customs is not final. An appeal lies to the
Commissioner of Customs and thereafter to the Court of Tax Appeals. It may even reach this
Court through the appropriate petition for review. The proper ventilation of the legal issues
raised is thus indicated. Certainly a court of first instance is not therein included. It is devoid
of jurisdiction.

It is noteworthy that because of the indiscriminate issuance of writs of injunction, the Supreme Court
issued on June 25, 1999 Administrative Circular No. 07-99 to all judges of lower courts entitled
EXERCISE OF UTMOST CAUTION, PRUDENCE, AND JUDICIOUSNESS IN ISSUANCE OF
TEMPORARY RESTRAINING ORDERS AND WRITS OF PRELIMINARY INJUNCTION. The
circular states in part:

Finally, judges should never forget what the Court categorically declared in Mison v.
Natividad (213 SCRA 734, 742 [1992]) that "[b]y express provision of law, amply supported
by well-settled jurisprudence, the Collector of Customs has exclusive jurisdiction over seizure
and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or
stifle or put it to naught.

The Office of the Court Administrator shall see to it that this circular is immediately
disseminated and shall monitor implementation thereof. 1âwphi1.nêt

STRICT OBSERVANCE AND COMPLIANCE of this Circular is hereby enjoined.

WHEREFORE, the temporary restraining order issued on May 17, 1999 is hereby made permanent.
The decision, dated April 15, 1999, of the Court of Appeals is REVERSED and Civil Case No. CEB-
23077 in the Regional Trial Court, Branch 5, Cebu City is DISMISSED.

SO ORDERED.
ADMINISTRATIVE CIRCULAR NO. 07-99 June 25, 1999

TO: ALL JUDGES OF LOWER COURTS

RE: EXERCISE OF UTMOST CAUTION, PRUDENCE, AND


JUDICIOUSNESS IN ISSUANCE OF TEMPORARY
RESTRAINING ORDERS AND WRITS OF PRELIMINARY
INJUNCTIONS

Despite well-entrenched jurisprudence and circulars regarding exercise of


judiciousness and care in the issuance of temporary restraining orders (TRO)
or grant of writs of preliminary injunction, reports or complaints on abuses
committed by trial judges in connection therewith persist. Some even
intimated that irregularities, including corruption, might have influenced the
issuance of the TRO or the writ of preliminary injunction.

No less than the President of the Philippines has requested this Court to issue
a circular reminding judges to respect P.D. No. 1818, which prohibits the
issuance of TROs in cases involving implementation of government
infrastructure projects. The Office of the President has likewise brought to the
attention of this Court orders of judges releasing imported articles under
seizure and forfeiture proceedings by the Bureau of Customs.

Judges are thus enjoined to observe utmost caution, prudence and


judiciousness in the issuance of TRO and in the grant of writs of preliminary
injunction to avoid any suspicion that its issuance or grant was for
considerations other than the strict merits of the case.

Judges should bear in mind that in Garcia v. Burgos (291 SCRA 546, 571-572
[1998]), this Court explicitly stated:
Sec. 1 of PD 1818 distinctly provides that "[n]o court in the Philippines shall have
jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory
injunction in any case, dispute, or controversy involving an infrastructure project . . . of
the government, . . . to prohibit any person or persons, entity or government official from
proceeding with, or continuing the execution or implementation of any such project . . . or
pursuing any lawful activity necessary for such execution, implementation or operation."
At the risk of being repetitious, we stress that the foregoing statutory provision expressly
deprives courts of jurisdiction to issue injunctive writs against the implementation or
execution of an infrastructure project.

Their attention is further invited to Circular No. 68-94, issued on 3 November


1994 by the OCA OIC Deputy Court Administrator Reynaldo L. Suarez, on the
subject "Strict Observance of Section 1 of P.D. 1818 Envisioned by Circular
No. 13-93 dated March 5, 1993, and Circular No. 20-92 dated March 24,
1992.

Finally, judges should never forget what the Court categorically declared
in Mison v. Natividad (213 SCRA 734, 742 [1992] that "[b]y express provision
of law, amply supported by well-settled jurisprudence, the Collector of
Customs has exclusive jurisdiction over seizure and forfeiture proceedings,
and regular courts cannot interfere with his exercise thereof or stifle or put it to
naught."

The Office of the Court Administrator shall see to it that this circular is
immediately disseminated and shall monitor implementation thereof.

STRICT OBSERVANCE AND COMPLIANCE of this Circular is hereby


enjoined.

25 June 1999.

(Sgd.) HILARIO G. DAVIDE, JR.


Chief Justice
REPUBLIC ACT NO. 8975 November 7, 2000

AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION OF


GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS FROM
ISSUING TEMPORARY RESTRANING ORDERS. PRELIMINARY INJUNCTIONS OR
PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING PENALTIES FOR VIOLATIONS
THEREOF, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines Congress assembled:

Section 1. Declaration of Policy. - Article XII, Section 6 of the Constitution states that the use of
property bears a social function, and all economic agents shall contribute to the common good.
Towards this end, the State shall ensure the expeditious and efficient implementation and
completion of government infrastructure projects to avoid unnecessary increase in construction,
maintenance and/or repair costs and to immediately enjoy the social and economic benefits
therefrom.

Section 2. Definition of Terms. –

(a) National government projects" shall refer to all current and future national government
infrastructure, engineering works and service contracts, including projects undertaken by
government-owned and –controlled corporations, all projects covered by Republic Act No.
6957, as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-
Transfer Law, and other related and necessary activities such as site acquisition, supply
and/or installation of equipment and materials, implementation, construction, completion,
operation, maintenance, improvement, repair and rehabilitation, regardless of the source of
funding.

(b) "Service contracts" shall refer to infrastructure contracts entered into by any department,
office or agency of the national government with private entities and non-government
organizations for services related or incidental to the functions and operations of the
department, office or agency concerned.

Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Mandatory


Injunctions. – No court, except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the government, or any of its
subdivisions, officials or any person or entity, whether public or private acting under the government
direction, to restrain, prohibit or compel the following acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or location of any
national government project;

(b) Bidding or awarding of contract/ project of the national government as defined under
Section 2 hereof;

(c) Commencement prosecution, execution, implementation, operation of any such contract


or project;
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(d) Termination or rescission of any such contract/project; and

(e) The undertaking or authorization of any other lawful activity necessary for such
contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a private party,
including but not limited to cases filed by bidders or those claiming to have rights through such
bidders involving such contract/project. This prohibition shall not apply when the matter is of extreme
urgency involving a constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The applicant shall file a bond, in an amount to be
fixed by the court, which bond shall accrue in favor of the government if the court should finally
decide that the applicant was not entitled to the relief sought.

In after due hearing the court finds that the award of the contract is null and void, the court may, if
appropriate under the circumstances, award the contract to the qualified and winning bidder or order
a rebidding of the same, without prejudice to any liability that the guilty party may incur under
existing laws.

Section 4. Nullity of Writs and Orders. – Any temporary restraining order, preliminary injunction or
preliminary mandatory injunction issued in violation of Section 3 hereof is void and of no force and
effect.

Section 5. Designation of Regional Trial Courts. - The Supreme Court may designate regional trial
courts to act as commissioners with the sole function of receiving facts of the case involving
acquisition clearance and development of right-of-way for government infrastructure projects. The
designated regional trial court shall within thirty (30) days from the date of receipt of the referral,
forwards its findings of facts to the Supreme Court for appropriate action.

Section 6. Penal Sanction. – In addition to any civil and criminal liabilities he or she may incur under
existing laws, any judge who shall issue a temporary restraining order, preliminary injunction or
preliminary mandatory injunction in violation of Section 3 hereof, shall suffer the penalty of
suspension of at least sixty (60) days without pay.

Section 7. Issuance of Permits. – Upon payment in cash of the necessary fees levied under
Republic Act No. 7160, as amended, otherwise known as the Local Government Code of 1991, the
governor of the province or mayor of a highly-urbanized city shall immediately issue the necessary
permit to extract sand, gravel and other quarry resources needed in government projects. The
issuance of said permit shall consider environmental laws, land use ordinances and the pertinent
provisions of the Local Government Code relating to environment.

Section 8. Separability Clause. - If any provision of this Act is declared unconstitutional or invalid,
other parts or provisions hereof not affected thereby shall continue to be of full force and effect.

Section 9. Repealing Clause. - All laws, decrees, including Presidential Decree No. 605, 1818 and
Republic Act No. 7160, as amended, orders, rules and regulations or parts thereof inconsistent with
this Act are hereby repealed or amended accordingly.

Section 10. Effectivity Clause. – This Act shall take effect fifteen (15) days following its publication in
at least two (2) newspapers of general circulation.

Approved: November 7, 2000


G.R. No. 181721

WATERCRAFT VENTURE CORPORATION, represented by its Vice-President, ROSARIO E.


RANOA,Petitioners,
vs.
ALFRED RAYMOND WOLFE, Respondent.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and
set aside the Court of Appeals (CA) Resolution1 dated January 24, 2008 denying the motion for
reconsideration of its Decision2dated September 27, 2007 in CA-G.R. SP No. 97804.

The facts are as follows:

Petitioner Watercraft Venture Corporation (Watercraft) is engaged in the business of building,


repairing, storing and maintaining yachts, boats and other pleasure crafts at the Subic Bay Freeport
Zone, Subic, Zambales. In connection with its operations and maintenance of boat storage facilities,
it charges a boat storage fee of Two Hundred Seventy-Two US Dollars (US$272.00) per month with
interest of 4% per month for unpaid charges.

Sometime in June 1997, Watercraft hired respondent Alfred Raymond Wolfe (Wolfe), a British
national and resident of Subic Bay Freeport Zone, Zambales, as its Shipyard Manager.

During his empolyment, Wolfe stored the sailboat, Knotty Gull, within Watercraft's boat storage
facilities, but never paid for the storage fees.

On March 7, 2002, Watercraft terminated the employment of Wolfe.

Sometime in June 2002, Wolfe pulled out his sailboat from Watercraft's storage facilities after signing
a Boat Pull-Out Clearance dated June 29, 2002 where he allegedly acknowledged the outstanding
obligation of Sixteen Thousand Three Hundred and Twenty-Four and 82/100 US Dollars
(US$16,324.82) representing unpaid boat storage fees for the period of June 1997 to June 2002.
Despite repeated demands, he failed to pay the said amount.

Thus, on July 7, 2005, Watercraft filed against Wolfe a Complaint for Collection of Sum of Money
with Damages with an Application for the Issuance of a Writ of Preliminary Attachment. The case
was docketed as Civil Case No. 4534-MN, and raffled to Branch 1703 of the Regional Trial Court
(RTC) of Malabon City.

In his Answer, Wolfe claimed he was hired as Service and Repair Manager, instead of Shipyard
Manager. He denied owing Watercraft the amount of US$16,324.82 representing storage fees for
the sailboat. He explained that the sailboat was purchased in February 1998 as part of an
agreement between him and Watercraft's then General Manager, Barry Bailey, and its President,
Ricky Sandoval, for it to be repaired and used as training or fill-in project for the staff, and to be sold
later on. He added that pursuant to a central Listing Agreement for the sale of the sailboat, he was
appointed as agent, placed in possession thereof and entitled to a ten percent (10%) sales
commission. He insisted that nowhere in the agreement was there a stipulation that berthing and
storage fees will be charged during the entire time that the sailboat was in Watercraft's dockyard.
Thus, he claimed to have been surprised when he received five (5) invoices billing him for the said
fees two (2) months after his services were terminated. He pointed out that the complaint was an
offshoot of an illegal dismissal case he filed against Watercraft which had been decided in his favor
by the Labor Arbiter.

Meanwhile, finding Watercraft's ex-parte application for writ of preliminary attachment sufficient in
form and in substance pursuant to Section 1 of Rule 57 of the Rules of Court, the RTC granted the
same in the Order dated July 15, 2005, thus:

WHEREFORE, let a Writ of Preliminary Attachment be issued accordingly in favor of the plaintiff,
Watercraft Ventures Corporation conditioned upon the filing of attachment bond in the amount of
Three Million Two Hundred Thirty-One Thousand Five Hundred and Eighty-Nine and 25/100 Pesos
(Php3,231,589.25) and the said writ be served simultaneously with the summons, copies of the
complaint, application for attachment, applicant's affidavit and bond, and this Order upon the
defendant.

SO ORDERED.4

Pursuant to the Order dated July 15, 2005, the Writ of Attachment dated August 3, 2005 and the
Notice of Attachment dated August 5, 2005 were issued, and Wolfe's two vehicles, a gray Mercedes
Benz with plate number XGJ 819 and a maroon Toyota Corolla with plate number TFW 110, were
levied upon.

On August 12, 2005, Wolfe's accounts at the Bank of the Philippine Islands were also garnished.

By virtue of the Notice of Attachment and Levy dated September 5, 2005, a white Dodge pick-up
truck with plate number XXL 111 was also levied upon. However, a certain Jeremy Simpson filed a
Motion for Leave of Court to Intervene, claiming that he is the owner of the truck as shown by a duly-
notarized Deed of Sale executed on August 4, 2005, the Certificate of Registration No. 3628665-1
and the Official Receipt No. 271839105.

On November 8, 2005, Wolfe filed a Motion to Discharge the Writ of Attachment, arguing that
Watercraft failed to show the existence of fraud and that the mere failure to pay or perform an
obligation does not amount to fraud. He also claimed that he is not a flight risk for the following
reasons: (1) contrary to the claim that his Special Working Visa expired in April 2005, his Special
Subic Working Visa and Alien Certificate of Registration are valid until April 25, 2007 and May 11,
2006, respectively; (2) he and his family have been residing in the Philippines since 1997; (3) he is
an existing stockholder and officer of Wolfe Marine Corporation which is registered with the
Securities and Exchange Commission, and a consultant of "Sudeco/Ayala" projects in Subic, a
member of the Multipartite Committee for the new port development in Subic, and the Subic
Chamber of Commerce; and (4) he intends to finish prosecuting his pending labor case against
Watercraft. On even date, Watercraft also filed a Motion for Preliminary Hearing of its affirmative
defenses of forum shopping, litis pendentia, and laches.

In an Order dated March 20, 2006, the RTC denied Wolfe's Motion to Discharge Writ of Attachment
and Motion for Preliminary Hearing for lack of merit.

Wolfe filed a motion for reconsideration, but the RTC also denied it for lack of merit in an Order
dated November 10, 2006. Aggrieved, Wolfe filed a petition for certiorari before the CA.

The CA granted Wolfe's petition in a Decision dated September 27, 2007, the dispositive portion of
which reads:
WHEREFORE, the Order dated March 20, 2006 and the Order dated November 10, 2006 of
respondent Judge are hereby ANNULLED and SET ASIDE. Accordingly, the Writ of Attachment
issued on August 3, 2005, the Notice of Attachment dated August 5, 2005 and the Notice of
Attachment and Levy dated September 5, 2005 are hereby also declared NULL and VOID, and
private respondent is DIRECTED to return to their owners the vehicles that were attached pursuant
to the Writ.

SO ORDERED.5

The CA ruled that the act of issuing the writ of preliminary attachment ex-parte constitutes grave
abuse of discretion on the part of the RTC, thus:

x x x In Cosiquien [v. Court of Appeals], the Supreme Court held that:

"Where a judge issues a fatally defective writ of preliminary attachment based on an affidavit which
failed to allege the requisites prescribed for the issuance of the writ of preliminary attachment,
renders the writ of preliminary attachment issued against the property of the defendant fatally
defective. The judge issuing it is deemed to have acted in excess of jurisdiction. In fact, the defect
cannot even be cured by amendment. Since the attachment is a harsh and rigorous remedy which
exposed the debtor to humiliation and annoyance, the rule authorizing its issuance must be strictly
construed in favor of defendant. It is the duty of the court before issuing the writ to ensure that all the
requisites of the law have been complied with. Otherwise, a judge acquires no jurisdiction to issue
the writ." (emphasis supplied)

In the instant case, the Affidavit of Merit executed by Rosario E. Rañoa, Watercraft's Vice-President,
failed to show fraudulent intent on the part of Wolfe to defraud the company. It merely enumerated
the circumstances tending to show the alleged possibility of Wolfe's flight from the country. And upon
Wolfe's filing of the Motion to Discharge the Writ, what the respondent Judge should have done was
to determine, through a hearing, whether the allegations of fraud were true. As further held in
Cosiquien:

"When a judge issues a writ of preliminary attachment ex-parte, it is incumbent on him, upon proper
challenge of his order to determine whether or not the same was improvidently issued. If the party
against whom the writ is prayed for squarely controverts the allegation of fraud, it is incumbent on
the applicant to prove his allegation. The burden of proving that there indeed was fraud lies with the
party making such allegation. This finds support in Section 1, Rule 131 Rules of Court. In this
jurisdiction, fraud is never presumed." (Emphasis supplied) As correctly noted by Wolfe, although
Sec. 1 of Rule 57 allows a party to invoke fraud as a ground for the issuance of a writ of attachment,
the Rules require that in all averments of fraud, the circumstances constituting fraud must be stated
with particularity, pursuant to Rule 8, Section 5. The Complaint merely stated, in paragraph 23
thereof that "For failing to pay the use [of] facilities and services – in the form of boat storage fees,
the Defendant is clearly guilty of fraud which entitles the Plaintiff to a Writ of Preliminary Attachment
upon the property of the Defendant as security for the satisfaction of any judgment herein." This
allegation does not constitute fraud as contemplated by law, fraud being the "generic term
embracing all multifarious means which human ingenuity can devise, and which are resorted to by
one individual to secure an advantage over another by false suggestions or by suppression of truth
and includes all surprise, trick, cunning, dissembling and any unfair way by which another is
cheated." In this instance, Wolfe's mere failure to pay the boat storage fees does not necessarily
amount to fraud, absent any showing that such failure was due to [insidious] machinations and intent
on his part to defraud Watercraft of the amount due it.
As to the allegation that Wolfe is a flight risk, thereby warranting the issuance of the writ, the same
lacks merit. The mere fact that Wolfe is a British national does not automatically mean that he would
leave the country at will. As Wolfe avers, he and his family had been staying in the Philippines since
1997, with his daughters studying at a local school. He also claims to be an existing stockholder and
officer of Wolfe Marine Corporation, a SEC-registered corporation, as well as a consultant of projects
in the Subic Area, a member of the Multipartite Committee for the new port development in Subic,
and a member of the Subic Chamber of Commerce. More importantly, Wolfe has a pending labor
case against Watercraft – a fact which the company glaringly failed to mention in its complaint –
which Wolfe claims to want to prosecute until its very end. The said circumstances, as well as the
existence of said labor case where Wolfe stands not only to be vindicated for his alleged illegal
dismissal, but also to receive recompense, should have convinced the trial court that Wolfe would
not want to leave the country at will just because a suit for the collection of the alleged unpaid boat
storage fees has been filed against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead automatically to
the conclusion that he would leave the country. It is worth noting that all visas issued by the
government to foreigners staying in the Philippines have expiration periods. These visas, however,
may be renewed, subject to the requirements of the law. In Wolfe's case, he indeed renewed his
visa, as shown by Special Working Visa No. 05-WV-0124P issued by the Subic Bay Metropolitan
Authority Visa Processing Office on April 25, 2005, and with validity of two (2) years therefrom.
Moreover, his Alien Certificate of Registration was valid up to May 11, 2006.

Based on the foregoing, it is therefore clear that the writ was improvidently issued. It is well to
emphasize that "[T]he rules on the issuance of a writ of attachment must be construed strictly
against the applicants. This stringency is required because the remedy of attachment is harsh,
extraordinary and summary in nature. If all the requisites for the granting of the writ are not present,
then the court which issues it acts in excess of its jurisdiction. Thus, in this case, Watercraft failed to
meet all the requisites for the issuance of the writ. Thus, in granting the same, respondent Judge
acted with grave abuse of discretion.6

In a Resolution dated January 24, 2008, the CA denied Watercraft's motion for reconsideration of its
Decision, there being no new or significant issues raised in the motion.

Dissatisfied with the CA Decision and Resolution, Watercraft filed this petition for review on
certiorari, raising these two issues:

I.

WHETHER THE EX-PARTE ISSUANCE OF THE PRELIMINARY ATTACHMENT BY THE TRIAL


COURT IN FAVOR OF THE PETITIONER IS VALID.

II.

WHETHER THE ALLEGATIONS IN THE AFFIDAVIT OF MERIT CONCERNING FRAUD ARE


SUFFICIENT TO WARRANT THE ISSUANCE OF A PRELIMINARY WRIT OF ATTACHMENT BY
THE

TRIAL COURT IN FAVOR OF THE PETITIONER.7

Watercraft argues that the CA erred in holding that the RTC committed grave abuse of discretion in
issuing the writ of preliminary attachment, and in finding that the affidavit of merit only enumerated
circumstances tending to show the possibility of Wolfe's flight from the country, but failed to show
fraudulent intent on his part mpany.

Stressing that its application for such writ was anchored on two (2) grounds under Section 1,8 Rule
57, Watercraft insists that, contrary to the CA ruling, its affidavit of merit sufficiently averred with
particularity the circumstances constituting fraud as a common element of said grounds.

Watercraft points out that its affidavit of merit shows that from 1997, soon after Wolfe's employment
as Shipyard Manager, up to 2002, when his employment was terminated, or for a period of five (5)
years, not once did he pay the cost for the use of the company's boat storage facilities, despite
knowledge of obligation and obvious ability to pay by reason of his position.

Watercraft adds that its affidavit clearly stated that Wolfe, in an attempt to avoid settling of his
outstanding obligations to the company, signed a Boat Pull-Out Clearance where he merely
acknowledged but did not pay Sixteen Thousand Three Hundred and Twenty-Four and 82/100 US
Dollars (US$16,324.82) representing unpaid boat storage fees for the period commencing June
1997 to June 2002. It avers that the execution of such clearance enabled Wolfe to pull out his boat
from the company storage facilities without payment of storage fees.

Watercraft also faults the CA in finding no merit in its allegation that Wolfe is a flight risk. It avers that
he was supposed to stay and work in the country for a limited period, and will eventually leave; that
despite the fact that his wife and children reside in the country, he can still leave with them anytime;
and that his work in the country will not prevent him from leaving, thereby defeating the purpose of
the action, especially since he had denied responsibility for his outstanding obligations. It submits
that the CA overlooked paragraph 28 of its Complaint which alleged that "[i]n support of the
foregoing allegations and the prayer for the issuance of a Writ of Preliminary Attachment in the
instant case, the Plaintiff has attached hereto the Affidavit of the Vice-President of the Plaintiff, MS.
ROSARIO E. RAÑOA x x x."9

Watercraft asserts that it has sufficiently complied with the only requisites for the issuance of the writ
of preliminary attachment under Section 3, Rule 57 of the Rules of Court, i.e., affidavit of merit and
bond of the applicant. It posits that contrary to the CA ruling, there is no requirement that evidence
must first be offered before a court can grant such writ on the basis of Section 1 (d) of Rule 57, and
that the rules only require an affidavit showing that the case is one of those mentioned in Section 1,
Rule 57. It notes that although a party is entitled to oppose an application for the issuance of the writ
or to move for the discharge thereof by controverting the allegations of fraud, such rule does not
apply when the same allegations constituting fraud are the very facts disputed in the main action, as
in this case.

Watercraft also points out the inconsistent stance of Wolfe with regard to the ownership and
possession of the sailboat. Contrary to Wolfe's Answer that the purchase of the sailboat was made
pursuant to a three (3)-way partnership agreement between him and its General Manager and
Executive Vice-President, Barry Bailey, and its President, Ricky Sandoval, Watercraft claims that he
made a complete turnaround and exhibited acts of soleownership by signing the Boat Pull-Out
Clearance in order to retrieve the sailboat. It argues that common sense and logic would dictate that
he should have invoked the existence of the partnership to answer the demand for payment of the
storage fees.

Watercraft contends that in order to pre-empt whatever action it may decide to take with respect to
the sailboat in relation to his liabilities, Wolfe accomplished in no time the clearance that paved the
way for its removal from the company's premises without paying his outstanding obligations. It
claims that such act reveals a fraudulent intent to use the company storage facilities without
payment of storage fees, and constitutes unjust enrichment.

The petition lacks merit.

A writ of preliminary attachment is defined as a provisional remedy issued upon order of the court
where an action is pending to be levied upon the property or properties of the defendant therein, the
same to be held thereafter by the sheriff as security for the satisfaction of whatever judgment that
might be secured in the said action by the attaching creditor against the defendant.10 However, it
should be resorted to only when necessary and as a last remedy because it exposes the debtor to
humiliation and annoyance.11 It must be granted only on concrete and specific grounds and not
merely on general averments quoting the words of the rules.12 Since attachment is harsh,
extraordinary, and summary in nature,13 the rules on the application of a writ of attachment must be
strictly construed in favor of the defendant. the court14 in which the action is pending. Such bond
executed to the adverse party in the amount fixed by the court is subject to the conditions that the
applicant will pay: (1) all costs which may be adjudged to the adverse party; and (2) all damages
which such party may sustain by reason of the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto.15 As to the requisite affidavit of merit, Section 3,16 Rule 57of the
Rules of Court states that an order of attachment shall be granted only when it appears in the
affidavit of the applicant, or of some other person who personally knows the facts:

1. that a sufficient cause of action exists;

2. that the case is one of those mentioned in Section 117 hereof;

3. that there is no other sufficient security for the claim sought to be enforced by the action;
and

4. that the amount due to the applicant, or the value of the property the possession of which
he is entitled to recover, is as much as the sum for which the order is granted above all legal
counterclaims.

The mere filing of an affidavit reciting the facts required by Section 3, Rule 57, however, is
not enough to compel the judge to grant the writ of preliminary attachment. Whether or not
the affidavit sufficiently established facts therein stated is a question to be determined by the
court in the exercise of its discretion.18"The sufficiency or insufficiency of an affidavit depends
upon the amount of credit given it by the judge, and its acceptance or rejection, upon his
sound discretion."19 Thus, in reviewing the conflicting findings of the CA and the RTC on the
pivotal issue of whether or not Watercraft's affidavit of merit sufficiently established facts
which constitute as grounds upon which attachment may be issued under Section 1 (a)20 and
(d),21 Rule 57, the Court will examine the Affidavit of Preliminary Attachment22 of Rosario E.
Rañoa, its Vice-President, which reiterated the following allegations in its complaint to
substantiate the application for a writ of preliminary attachment:

xxxx

4. Sometime in June 1997, the Defendant was hired as Watercraft's Shipyard Manager.

5. Soon thereafter, the Defendant placed his sailboat, the Knotty Gull, within the boat storage
facilities of Watercraft for purposes of storage and safekeeping.
6. Despite having been employed by Watercraft, the Defendant was not exempted from
paying Watercraft boat storage fees for the use of the said storage facilities.

7. By virtue of his then position and employment with Watercraft, the Defendant was very
much knowledgeable of the foregoing fact.

8. All throughout his employment with Watercraft, the Defendant used the boat storage
facilities of Watercraft for his Knotty Gull.

9. However, all throughout the said period of his employment, the Defendant never paid the
boat storage fees in favor of the Plaintiff.

10. The Defendant's contract of employment with Watercraft was terminated on 07 March
2002.

11. [Sometime] thereafter, that is, in or about June 2002, the Defendant pulled out the Knotty
Gull from the boat storage facilities of Watercraft.

12. Instead of settling in full his outstanding obligations concerning unpaid storage fees
before pulling our the Knotty Gull, the Defendant signed a Boat Pull-Out Clearance dated 29
June 2002 wherein he merely acknowledged the then outstanding balance of Sixteen
Thousand Three Hundred and Twenty-four and 82/100 US Dollars (US$16,324.82),
representing unpaid boat storage fees for the period commencing June 1997 to June 2002,
that he owed Watercraft.

13. By reason of Defendant's mere accomplishment of the said Boat Pull-Out Clearance with
acknowledgment of his outstanding obligation to Watercraft in unpaid boat storage fees, Mr.
Franz Urbanek, then the Shipyard Manager who replaced the Defendant, contrary to
company policy, rules and regulations, permitted the latter to physically pull out his boat from
the storage facilities of the Plaintiff without paying any portion of his outstanding obligation in
storage fees.

14. Several demands were then made upon the Defendant for him to settle his outstanding
obligations to the Plaintiff in unpaid storage fees but the same went unheeded.

15. As of 02 April 2005, the outstanding obligation of the Defendant to the Plaintiff in unpaid
boat storage fees stands at Three Million Two Hundred Thirty-One Thousand Five Hundred
and Eighty-Nine and 25/100 Pesos (Php 3,231,589.25) inclusive of interest charges.

16. For failing to pay for the use [of] facilities and services—in the form of boat storage
facilities—duly enjoyed by him and for failing and refusing to fulfill his promise to pay for the
said boat storage fees, the Defendant is clearly guilty of fraud which entitles the Plaintiff to a
Writ of Preliminary Attachment upon the property of the Defendant as security for the
satisfaction of any judgment in its favor in accordance with the provisions of Paragraph (d),
Section 1, Rule 57 of the Rules of Court.

17. The instant case clearly falls under the said provision of law.

18. Furthermore, lawful factual and legal grounds exist which show that the Defendant may
have departed or is about to depart the country to defraud his creditors thus rendering it
imperative that a Writ of Preliminary Attachment be issued in favor of the Plaintiff in the
instant case.
19. The possibility of flight on the part of the Defendant is heightened by the existence of the
following circumstances:

a. The Special Working Visa issued in favor of the Defendant expired in April 2005;

b. The Defendant is a British national who may easily leave the country at will;

c. The Defendant has no real properties and visible, permanent business or


employment in the Philippines; and

e. The house last known to have been occupied by the Defendant is merely being
rented by him.

20. All told, the Defendant is a very serious flight risk which fact will certainly render for
naught the capacity of the Plaintiff to recover in the instant case.23

After a careful perusal of the foregoing allegations, the Court agrees with the CA that Watercraft
failed to state with particularity the circumstances constituting fraud, as required by Section 5,24 Rule
8 of the Rules of Court, and that Wolfe's mere failure to pay the boat storage fees does not
necessarily amount to fraud, absent any showing that such failure was due to insidious machinations
and intent on his part to defraud Watercraft of the amount due it.

In Liberty Insurance Corporation v. Court of Appeals,25 the Court explained that to constitute a
ground for attachment in Section 1(d), Rule 57 of the Rules of Court, it must be shown that the
debtor in contracting the debt or incurring the obligation intended to defraud the creditor. A debt is
fraudulently contracted if at the time of contracting it, the debtor has a preconceived plan or intention
not to pay. "The fraud must relate to the execution of the agreement and must have been the reason
which induced the other party into giving consent which he would not have otherwise given."26

Fraudulent intent is not a physical entity, but a condition of the mind beyond the reach of the senses,
usually kept secret, very unlikely to be confessed, and therefore, can only be proved by unguarded
expressions, conduct and circumstances.27 Thus, the applicant for a writ of preliminary attachment
must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent
cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his
obligation.28 The particulars of such circumstances necessarily include the time, persons, places and
specific acts of fraud committed.29 An affidavit which does not contain concrete and specific grounds
is inadequate to sustain the issuance of such writ. In fact, mere general averments render the writ
defective and the court that ordered its issuance acted with grave abuse of discretion amounting to
excess of jurisdiction.30

In this case, Watercraft's Affidavit of Preliminary Attachment does not contain specific allegations of
other factual circumstances to show that Wolfe, at the time of contracting the obligation, had a
preconceived plan or intention not to pay. Neither can it be inferred from such affidavit the particulars
of why he was guilty of fraud in the performance of such obligation. To be specific, Watercraft's
following allegation is unsupported by any particular averment of circumstances that will show why
or how such inference or conclusion was arrived at, to wit: "16. For failing to pay for the use [of]
facilities and services - in the form of boat storage facilities – duly enjoyed by him and for failing and
refusing to fulfill his promise to pay for the said boat storage fees, the Defendant is clearly guilty of
fraud x x x."31 It is not an allegation of essential facts constituting Watercraft's causes of action, but a
mere conclusion of law.
With respect to Section 1 (a),32 Rule 57, the other ground invoked by Watercraft for the issuance of
the writ of preliminary attachment, the Court finds no compelling reason to depart from the CA's
exhaustive ruling to the effect that such writ is unnecessary because Wolfe is not a flight risk, thus:

As to the allegation that Wolfe is a flight risk, thereby warranting the issuance of the writ, the same
lacks merit. The mere fact that Wolfe is a British national does not automatically mean that he would
leave the country at will. As Wolfe avers, he and his family had been staying in the Philippines since
1997, with his daughters studying at a local school. He also claims to be an existing stockholder and
officer of Wolfe Marine Corporation, a SEC-registered corporation, as well as a consultant of projects
in the Subic Area, a member of the Multipartite Committee for the new port development in Subic,
and a member of the Subic Chamber of Commerce. More importantly, Wolfe has a pending labor
case against Watercraft – a fact which the company glaringly failed to mention in its complaint –
which Wolfe claims to want to prosecute until its very end. The said circumstances, as well as the
existence of said labor case where Wolfe stands not only to be vindicated for his alleged illegal
dismissal, but also to receive recompense, should have convinced the trial court that Wolfe would
not want to leave the country at will just because a suit for the collection of the alleged unpaid boat
storage fees has been filed against him by Watercraft.

Neither should the fact that Wolfe's Special Working Visa expired in April 2005 lead automatically to
the conclusion that he would leave the country. It is worth noting that all visas issued by the
1âw phi 1

government to

foreigner staying in the Philippines have expiration periods. These visas, however, may be renewed,
subject to the requirements of the law. In Wolfe's case, he indeed renewed his visa, as shown by
Special Working Visa No. 05-WV-0124P issued by the Subic Bay Metropolitan Authority Visa
Processing Office on April 25, 2005, and with validity of two (2) years therefrom. Moreover, his Alien
Certificate of Registration was valid up to May 11, 2006.33

Meanwhile, Watercraft's reliance on Chuidian v. Sandiganbayan34 is misplaced. It is well settled that:

x x x when the preliminary attachment is issued upon a ground which is at the same time the
applicant's cause of action; e.g., "an action for money or property embezzled or fraudulently
misapplied or converted to his own use by a public officer, or an officer of a corporation, or an
attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty," or "an action against a party who has
been guilty of fraud in contracting the debt or incurring the obligation upon which the action is
brought," the defendant is not allowed to file a motion to dissolve the attachment under Section 13 of
Rule 57 by offering to show the falsity of the factual averments in the plaintiff's application and
affidavits on which the writ was based – and consequently that the writ based thereon had been
improperly or irregularly issued – the reason being that the hearing on such a motion for dissolution
of the writ would be tantamount to a trial of the merits of the action. In other words, the merits of the
action would be ventilated at a mere hearing of a motion, instead of at the regular trial.35

Be that as it may, the foregoing rule is not applicable in this case because when Wolfe filed a motion
to dissolve the writ of preliminary attachment, he did not offer to show the falsity of the factual
averments in Watercraft's application and affidavit on which the writ was based. Instead, he sought
the discharge of the writ on the ground that Watercraft failed to particularly allege any circumstance
amounting to fraud. No trial on the merits of the action at a mere hearing of such motion will be had
since only the sufficiency of the factual averments in the application and affidavit of merit will be
examined in order to find out whether or not Wolfe was guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof.
Furthermore, the other ground upon which the writ of preliminary attachment was issued by the RTC
is not at the same time the applicant's cause of action. Assuming arguendo that the RTC was correct
in issuing such writ on the ground that Watercraft's complaint involves an action for the recovery of a
specified amount of money or damages against a party, like Wolfe, who is about to depart from the
Philippines with intent to defraud his creditors, the Court stresses that the circumstances36 cited in
support thereof are merely allegations in support of its application for such writ.37 Such
circumstances, however, are neither the core of Watercraft's complaint for collection of sum of
money and damages, nor one of its three (3) causes of action therein.38

All told, the CA correctly ruled that Watercraft failed to meet one of the requisites for the issuance of
a writ of preliminary attachment, i.e., that the case is one of those mentioned in Section 1 of Rule 57,
and that the RTC gravely abused its discretion in improvidently issuing such writ. Watercraft failed to
particularly state in its affidavit of merit the circumstances constituting intent to defraud creditors on
the part of Wolfe in contracting or in the performance of his purported obligation to pay boat storage
fees, as well as to establish that he is a flight risk. Indeed, if all the requisites for granting such writ
are not present, then the court which issues it acts in excess of its jurisdiction.39

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated
September 27, 2007 and its Resolution dated January 24, 2008 in CA-G.R. SP No. 97804, are
AFFIRMED.

SO ORDERED.
G.R. No. 157163 June 25, 2014

BANK OF THE PHILIPPINE ISLANDS, Petitioner,


vs.
HON. JUDGE AGAPITO L. HONTANOSAS, JR., REGIONAL TRIAL COURT, BRANCH 16, CEBU
CITY, SILVERIO BORBON, SPOUSES XERXES AND ERLINDA FACULTAD, AND XM
FACULTAD & DEVELOPMENT CORPORATION, Respondents.

DECISION

BERSAMIN, J.:

Injunction should not issue except upon a clear showing that the applicant has a right in esse to be
protected, and that the acts sought to be enjoined are violative of such right. A preliminary injunction
should not determine the merits of a case, or decide controverted facts, for, being a preventive
remedy, it only seeks to prevent threatened wrong, further injury, and irreparable harm or injustice
until the rights of the parties can be settled.

The Case

Under review at the instance of the defendant, now the petitioner herein, is the decision promulgated
on July 9, 2002,1 whereby the Court of Appeals (CA) upheld the order issuedon July 5, 2001 in Civil
Case No. CEB-26468 entitled Spouses Silverio & Zosima Borbon, et al. v. Bank of the Philippine
Islandsby the Regional Trial Court (RTC), Branch 16, in Cebu City, presided by Hon. Judge Agapito
L. Hontanosas, Jr.

Antecedents

On May 22, 2001, respondents Spouses Silverio and Zosima Borbon, Spouses Xerxes and Erlinda
Facultad,and XM Facultad and Development Corporation commenced Civil Case No. CEB-26468 to
seek the declaration of the nullity of the promissory notes,real estate and chattel mortgages and
continuing surety agreement they had executed in favor of the petitioner. They further sought
damages and attorney’s fees, and applied for a temporary restraining order (TRO) orwrit of
preliminary injunction to prevent the petitioner from foreclosing on the mortgages against their
properties.

The complaintalleged that the respondents had obtained a loan from the petitioner, and had
executed promissory notes binding themselves, jointly and severally, to pay the sum borrowed; that
as security for the payment of the loan, they had constituted real estate mortgages on several
parcels of land in favor of the petitioner; and that they had been made to sign a continuing surety
agreement and a chattel mortgage on their Mitsubishi Pajero.

It appears that the respondents’obligation to the petitioner had reached ₱17,983,191.49, but they
had only been able to pay ₱13 Million because they had been adversely affected by the economic
turmoil in Asia in 1997. The petitioner required them to issue postdated checks to cover the loan
under threat of foreclosing on the mortgages. Thus, the complaint sought a TRO or a writ of
preliminary injunction to stay the threatened foreclosure.

On June 6, 2001, the petitioner filed its answer with affirmative defenses and counterclaim, as well
as its oppositionto the issuance of the writ of preliminary injunction, contending that the foreclosure
of the mortgages was within itslegal right to do.2
Also on June 6, 2001 the petitioner filed a motion to dismiss reiterating its affirmative defenses, to
wit:

I) THAT THE COMPLAINT SHOULD BE DISMISSED BECAUSE VENUE IS


IMPROPERLYLAID. (RULE 16, SECITON 1, PARAGRAPH (C);

II) THAT THE COURT HAS NOTACQUIRED JURISDICTION OVER THE SUBJECT
MATTER OFTHE CLAIM BECAUSE THE PROPER LEGAL FEES HAS NOT BEEN PAID IN
ACCORDANCE WITH RULE 14, OF THE RULES OF COURT AND CIRCULAR NO. 7 OF
THE SUPREME COURT, SERIES OF 1988;

III) THAT ZOSIMA BORBON’S COMPLAINT SHOULD BE DISMISSED BECAUSE


PLAINTIFF ZOSIMA BORBON HAS NO LEGAL PERSONALITY TO SUE BEING
DECEASED, SPOUSE OF PLAINTIFF SILVERIO BORBON. (RULE 16, SECTION 1(d);

IV) THAT THE ESTATE OF ZOSIMA BORBON BEING AN INDISPENSABLE PARTY, THE
COMPLAINT SHOULD BE AMENDED TO INCLUDE THE ESTATE OF ZOSIMA BORBON.
(RULE 16, SECTION 1(j);

V) THAT THE COMPLAINT OFPLAINTIFF XM FACULTAD AND DEVELOPMENT


CORPORATION, SHOULD BE DISMISSED BECAUSE THERE IS NO BOARD
RESOLUTION AUTHORIZING THE FILING OF THIS CASE. [RULE 16, SECTION 1 (d)];

VI) THAT THE PLEADING ASSERTING THE CLAIM STATES NO CAUSE OF ACTION.3

On July 5, 2001, the RTC denied the petitioner’s motion to dismissfor being unmeritorious,4 but
granted the respondents’ application for preliminary injunction,5 to wit:

WHEREFORE, premises considered, the application for preliminary injunction is GRANTED. Upon
filing by the plaintiffapplicants of a bond in the amount of ₱2,000,000 in favor of defendant to the
effect that applicants will pay to adverse party all damages which it may sustain by reason of the
injunction, let a writ of preliminary injunction be issued directing the defendant and its agents or
representatives, to cease and desist from commencing foreclosure and sale proceedings of the
mortgaged properties; from taking possession of the Mitsubishi Pajero subject of the chattel
mortgage; and from using the questioned post-dated checks as evidence for the filing of complaint
against plaintiffs Facultad for violation of Batas Pambansa Blg. 22, while the present case is pending
litigation.

This writ of preliminary injunction shall continue until further orders from the Court.

Notify the parties of this Order.

SO ORDERED.6

The RTC later denied the petitioner’s motion for reconsideration through its order7 of August 22,
2001.

Ruling of the CA

Dissatisfied, the petitioner assailed the orders of the RTC by petition for certiorariin the CA,
submitting the lone issue of:
WHETHER OR NOT THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT ISSUED AN ORDER DENYING THE MOTION TO DISMISS AND GRANTING THE WRIT
OF PRELIMINARY MANDATORY INJUNCTION.

On July 9, 2002, however, the CArendered the adverse decision under review, to wit:

WHEREFORE, premises considered, the assailed order of the Regional Trial Court (RTC) of Cebu
City, Branch 16 dated July 5, 2001 and August 22, 2001 are hereby AFFIRMED. Let the original
records of this case be remanded immediately to the court a quo for further proceedings. SO
ORDERED.8

The CA held that the petitioner’s averment of non-payment of the proper docket fee by the
respondents asthe plaintiffs in Civil Case No. CEB-26468 was not substantiated; that even if the
correct docket fee was not in fact paid, the strict application of the rule thereon could be mitigated in
the interest of justice;9 and that Civil Case No. CEB-26468, being a personal action, was properly
filed in Cebu City where respondent XM Facultad and Development Corporation’s principal office
was located.10

The CA further held that ZosimaBorbon’s death rendered respondent Silverio Borbon, her surviving
spouse, the successor to her estate; that although there was a valid transfer of interest pending the
litigation, the dismissal of the complaintwould not be in order because it was permissible under the
rules to continue the action in the name of the original party;11 and that the RTC did not commit grave
abuse of discretion in issuing the writ of preliminary injunction because it thereby only applied the
pertinent law and jurisprudence.12

The CA denied the petitioner’s motion for reconsiderationthrough its resolution of February 12,
2003.13

Issues

Hence, this appeal, with the petitioner positing as follows:

1. Whether or not Civil Case No. CEB-26468 should be dismissed for (a) non-payment of the
correct amount of docket fee; and (b) improper venue;14

2. Whether or not the issuance of the writ of preliminary injunction against the petitioner, its
agents and representatives, was in order.

Ruling of the Court

The appeal is partly meritorious.

1. Civil Case No. CEB-26468 was a personal action; hence, venue was properly laid

The CA and the RTC held that Civil Case No. CEB-26468, being for the declaration of the nullity of a
contract of loan and its accompanying continuing surety agreement, and the real estate and chattel
mortgages, was a personal action; hence, its filing in Cebu City, the place of business of one of the
plaintiffs, was correct under Section 2, Rule 4 of the Rules of Court.

The petitioner contends, however, that Civil Case No. CEB-26468 was a real action that should be
commenced and tried in the proper court having jurisdiction over the area wherein the real property
involved, or a portion thereof, was situated; and thatconsequently the filing and docket fees for the
complaintshould be based on the value of the property as stated in the certificate of sale attached
thereto.

We sustain the lower courts’ holdings.

The determinants of whether an action is of a real or a personal nature have been fixed by the Rules
of Courtand relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real
action is one that affects title to or possession of real property, or an interest therein. Such action is
to be commenced and tried in the proper court having jurisdiction over the area wherein the real
property involved, ora portion thereof, is situated, which explains why the action is also referred to as
a localaction. In contrast, the Rules of Courtdeclares all other actionsas personal actions.15 Such
actions may include those brought for the recovery of personal property, or for the enforcement of
some contract or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property.16 The venue of a personal action isthe place where
the plaintiff or any of the principal plaintiffs resides,or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant where he may be found, at the
election of the plaintiff,17 for which reason the action is considered a transitory one.

The complaintin Civil Case No. CEB-26468 pertinently alleged as follows:18

xxxx

3.1 Plaintiffs signed blank pre-printed forms of promissory note no. 501253-000, continuing
surety agreement, real estate mortgages, chattel mortgage which violates the principle of
mutuality of contracts. These contracts are in the nature of contracts of adhesion with
provisions favouring defendant bank and plaintiffs had nothing to do except to sign the unjust
stipulations which should be declared as NULL AND VOID. These contracts do not reflect
the real agreement of the parties and the stipulations are tilted infavor of defendant bank.

3.2 Moreover, these real estate mortgages, chattel mortgages and continuing surety
agreement are securing specific amounts of obligation and upon the payment of
₱13,000,000 to defendant bank, automatically, these became functus de oficioand should be
released immediately without the encumbrance.

3.3 As the chattel mortgage involving the Mitsubishi Pajero secured only ₱600,000.00, upon
liquidation of more than ₱800,000.00 principal payment, the same became null and void, and
defendant bank should be ordered to cancel the mortgage and to be directed not to take any
appropriate action to take possession.

3.4 In addition, Penbank Checks Nos. 11237 to 11242 with amounts of ₱200,000.00 each
and BPI Check Nos. 019098 & 019099 with amounts of ₱400,000.00 each, issued against
the will of plaintiffs Facultad and without any consideration, should be declared null and void.
Defendant bank should be directed not to deposit the samefor collection with the drawee
bank.

xxxx

3.6 Furthermore, the total obligation of plaintiffs is void and baseless because it is based on
illegal impositions of exorbitant interest and excessive charges. Interest was converted into
principal which in turn earns interest. These illegal impositions are considered by law and
jurisprudence as null and void. These excessive interest and charges should be applied to
the principal unless there isapplication, defendant bank is enriching itself at the expense of
plaintiffs. x x x x

Based on the aforequoted allegations of the complaintin Civil Case No. CEB-26468, the respondents
seek the nullification of the promissory notes, continuing surety agreement, checks and mortgage
agreements for being executed against their will and vitiated by irregularities, not the recovery of the
possession or title to the properties burdened by the mortgages. There was no allegation that the
possession of the properties under the mortgages had already been transferred to the petitioner in
the meantime. Applying the determinants, Civil Case No. CEB-26468 was unquestionably a personal
action, for, as ruled in Chua v. Total Office Products and Services (Topros),Inc.:19

Well-settled is the rule that an action to annul a contract of loan and its accessory real estate
mortgageis a personal action. In a personal action, the plaintiff seeks the recovery of personal
property, the enforcement of a contractor the recovery of damages. In contrast, in a real action, the
plaintiff seeks the recovery of real property, or, as indicated in Section 2 (a), Rule 4 of the then Rules
of Court, a real action is an action affecting title to real property or for the recovery of possession, or
for partition or condemnation of, or foreclosure of mortgage on, real property.

In the Pascual case, relied upon by petitioner, the contract of sale of the fishpond was assailed as
fictitious for lack of consideration. We held that there being no contract to begin with, there is nothing
to annul. Hence, we deemed the action for annulment of the said fictitious contract therein as one
constituting a real action for the recovery of the fishpond subject thereof.

We cannot, however, apply the foregoing doctrine to the instant case. Note that in Pascual, title to
and possession of the subject fishpond had already passed to the vendee. There was, therefore, a
need to recover the said fishpond. But in the instant case, ownership of the parcels of land subject of
the questioned real estatemortgage was never transferred to petitioner, but remained with TOPROS.
Thus, no real action for the recovery of real property is involved. This being the case, TOPROS’
action for annulment of the contracts of loan and real estate mortgage remains a personal action.

xxxx

The Court of Appeals finds that Hernandez v. Rural Bank of Lucena, Inc.provides the proper
precedent in this case. In Hernandez, appellants contended that the action of the Hernandez
spouses for the cancellation of the mortgage on their lots was a real action affecting title to real
property, which should have been filed in the place where the mortgaged lots were situated. Rule 4,
Section 2 (a), of the then Rules of Court, was applied, to wit:

SEC. 2. Venue in Courts of First Instance. – (a) Real actions. – Actions affecting title to, or for
recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real
property, shall be commenced and tried in the province where the property or any part thereof lies.

The Court pointed out in the Hernandezcase that with respect to mortgage, the rule on real actions
only mentions an action for foreclosure of a real estate mortgage. It does not include an action for
the cancellation of a real estate mortgage. Exclusio unios est inclusio alterius. The latter thus falls
under the catch-all provision on personal actions under paragraph (b) of the above-cited section, to
wit:

SEC. 2 (b) Personal actions. – All other actions may be commenced and tried where the defendant
or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs
resides, at the election of the plaintiff.
In the same vein, the action for annulment of a real estate mortgage in the present case must fall
under Section 2 of Rule 4, to wit:

SEC. 2. Venue of personal actions. – All other actions may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, orwhere the defendant or any of the principal
defendants resides, or in the case of a nonresident defendant where he may be found, at the
election of the plaintiff.

Thus, Pasig City, where the parties reside, is the proper venue of the action to nullify the subject
loan and real estate mortgage contracts. The Court of Appeals committed no reversible error in
upholding the orders of the Regional Trial Court denying petitioner’s motion to dismiss the case on
the ground of improper venue.

Being a personal action, therefore, Civil Case No. CEB-26468 was properly brought in the RTC in
Cebu City, where respondent XM Facultad and Development Corporation, a principal plaintiff, had its
address.

Upon the same consideration, the petitioner’s contention that the filing and docket fees for the
complaintshould be based on the assessed values of the mortgaged real properties due to Civil
Case No. CEB-26468 being a real action cannot be upheld for lack of factual and legal bases.

2. Respondents were not entitled to the writ of preliminary injunction

In their application for the issuance of the writ of preliminary injunction, the respondents averred that
the nullity of the loan and mortgage agreements entitled them to the relief of enjoining the petitioner
from: (a) foreclosing the real estateand chattel mortgages; (b)taking possession, by replevin, of the
Mitsubishi Pajero; and (c) depositing the postdated checks; that respondents Spouses Facultad
would suffer injustice and irreparable injury should the petitioner foreclose the mortgages and file
criminal complaints for violation of Batas Pambansa Blg.22 against them; and that such threatened
acts, if done, would render ineffectual the judgment of the trial court.20 They prayed that the petitioner
be enjoined from doing acts that would disturb their material possession of the mortgaged
properties, manifesting their willingness to post a bond for the issuance of the writ of preliminary
injunction.21

As mentioned, the RTC issued the writ of preliminary injunction on July 16, 2001 based on the
foregoing allegations of the respondents’ application,22 and the CA upheld the issuance in its assailed
July 9, 2002 decision.23

The petitioner submits that the issuance of the writ of preliminary injunction constituted a violation of
Administrative Circular (AC) No. 07-99 dated June 25, 1999, and thus subjected respondent Judge
to administrative sanction;24that injunction could not issue to enjoin the prosecution of the criminal
offenses because such prosecution was imbued with public interest;25 and that the petitioner, as the
mortgagee, could not be prohibited from exercising its legal right to foreclose the mortgages
because foreclosure of the mortgages was its proper remedy under the law.26

AC No. 07-99 was issued as a guideline for lower court judges in the issuance of TROs and writs of
preliminary injunctions to prevent the implementation of infrastructure projects, or the seizure and
forfeiture proceedings by the Bureau of Customs, viz:

ADMINISTRATIVE CIRCULAR NO. 07-99 June 25, 1999


TO: ALL JUDGES OF LOWER COURTS RE: EXERCISE OF UTMOST CAUTION, PRUDENCE,
AND JUDICIOUSNESS IN ISSUANCE OF TEMPORARY RESTRAINING ORDERS AND WRITS
OF PRELIMINARY INJUNCTIONS

Despite well-entrenched jurisprudence and circulars regarding exercise of judiciousness and care in
the issuance of temporary restraining orders (TRO) or grant of writs ofpreliminary injunction, reports
or complaints on abuses committed by trial judges in connection therewith persist. Some even
intimated thatirregularities, including corruption, might have influenced the issuance ofthe TRO or
the writ of preliminary injunction.

No less than the President of the Philippines has requested this Court to issue a circular reminding
judges to respect P.D. No. 1818, which prohibits the issuance of TROs in cases involving
implementation of government infrastructure projects. The Office of the President has likewise
brought to the attention of this Court orders of judges releasing imported articles under seizure and
forfeiture proceedings by the Bureau of Customs.

Judges are thus enjoined to observe utmost caution, prudence and judiciousness in the issuance of
TRO and in the grant of writs of preliminary injunction to avoid any suspicion that its issuance or
grant was for considerations other than the strict merits of the case.

Judges should bear in mind that in Garcia v. Burgos(291 SCRA 546, 571-572 [1998]), this Court
explicitly stated:

Sec. 1 of PD 1818 distinctly provides that "[n]o court in the Philippines shall have jurisdiction to issue
any restraining order, preliminary injunction, or preliminary mandatory injunction in any case,
dispute, orcontroversy involvingan infrastructure project . . . of the government, . . . to prohibit any
person or persons, entity or government official from proceeding with, or continuing the execution or
implementation of any such project . . . or pursuing any lawful activity necessary for such execution,
implementation or operation." At the risk of being repetitious, we stress that the foregoing statutory
provision expressly deprives courts of jurisdiction to issue injunctive writs against the implementation
or execution of an infrastructure project.

Their attention is further invited to Circular No. 68-94, issued on 3 November 1994 by the OCA OIC
Deputy Court Administrator Reynaldo L. Suarez, on the subject "Strict Observance of Section 1 of
P.D. 1818 Envisioned by Circular No. 13-93 dated March 5, 1993, and Circular No. 20-92 dated
March 24, 1992.

Finally, judges should never forget what the Court categorically declared in Mison v. Natividad(213
SCRA 734, 742 [1992] that "[b]y express provision of law, amply supported by well-settled
jurisprudence, the Collector of Customs has exclusive jurisdiction over seizure and forfeiture
proceedings, and regular courts cannot interfere with his exercise thereof or stifleor put it to naught."

The Office of the Court Administrator shall see to it that this circular is immediately disseminated and
shall monitor implementation thereof.

STRICT OBSERVANCE AND COMPLIANCE of this Circular is hereby enjoined.

AC No. 07-99 was irrelevant herein, however, because Civil Case No. CEB-26468 did not involve
the implementation of infrastructure projects, or the seizure and forfeiture proceedings by the Bureau
of Customs. Consequently, the petitioner’s urging that respondent Judge be held administratively
liable for violating AC No. 07-99 was misplaced.
However, the RTC’s issuance of the writ of preliminary injunction to enjoin the petitioner from
proceeding withthe foreclosure of the mortgages was plainly erroneous and unwarranted.

A preliminary injunction is an order granted at any stage of an action prior to the judgment or final
order requiring a party or a court, agency or a person to refrain from a particular act or acts.27 It is the
"strong arm of equity," an extraordinary peremptory remedy that must be used with extreme caution,
affecting as it does the respective rights of the parties.28 The requirements for the issuance of a writ
of preliminary injunction or TRO are enumerated in Section 3, Rule 58 of the Rules of Court, to wit:

Section 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, eitherfor 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 City Government of Butuan v. Consolidated Broadcasting System (CBS), Inc.,29 the Court restated
the nature and concept of a writ of preliminary injunction, as follows:

A preliminary injunction is an order granted at any stage of an action or proceeding prior to the
judgment orfinal order requiring a party or a court, an agency, or a person to refrain from a particular
act or acts. It may also require the performance of a particular act or acts, in which case it is known
as a preliminary mandatory injunction. Thus, a prohibitory injunction is one that commands a party to
refrain from doing a particular act, while a mandatory injunction commands the performance of some
positive act to correct a wrong in the past.

As with all equitable remedies, injunction must be issued only at the instance of a party who
possesses sufficient interest in or title to the right or the property sought to be protected. It is proper
only when the applicant appears to be entitled to the relief demanded in the complaint, which must
aver the existence of the right and the violation of the right, or whose averments must in the
minimum constitute a prima facieshowing of a right to the final relief sought. Accordingly, the
conditions for the issuance of the injunctive writ are: (a) that the right to be protected exists prima
facie; (b) that the act sought to be enjoined is violative of that right; and (c) that there is an urgent
and paramount necessity for the writ to prevent serious damage. An injunction will not issue to
protect a right not in esse, or a right which is merely contingent and may never arise; or to restrain
an act which does not give rise to a cause of action; or to prevent the perpetration of an act
prohibited bystatute. Indeed, a right, to be protected by injunction, means a right clearly founded on
or granted by law or is enforceable as a matter of law. (Bold emphasis supplied)

Under the circumstances averred in the complaintin Civil Case No. CEB-26468, the issuance ofthe
writ of preliminary injunction upon the application of the respondents was improper. They had
admittedly constituted the real estate and chattel mortgages to secure the performance of their loan
obligation to the petitioner, and, as such, they were fully aware of the consequences on their rights in
the properties given as collaterals should the loan secured be unpaid. The foreclosure of the
mortgages would be the remedy provided by law for the mortgagee to exact payment.30 In fact, they
did not dispute the petitioner’sallegations that they had not fully paid their obligation, and that Civil
Case No. CEB-26468 was precisely brought by them in order to stave off the impending foreclosure
of the mortgages based on their claim that they had been compelled to sign pre-printed standard
bank loan forms and mortgage agreements.

It is true that the trial courts are given generous latitude to act on applications for the injunctive writ
for the reason that conflicting claims in an application for the writ more often than not involve a
factual determination that is not the function of the appellate courts;31 and that the exercise of sound
discretion by the issuing courts in injunctive matters ought not to be interfered with exceptwhen there
is manifest abuse.32 Nonetheless, the exercise of such discretion must be sound, that is, the
issuance of the writ, though discretionary, should be upon the grounds and in the manner provided
by law.33 Judges should always bear in mind that the writ of preliminary injunction is issued uponthe
satisfaction of two 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. According toSaulog v. Court of
Appeals,34 the applicant must have a sufficient interest or right to be protected, but it is enough that:-

x x x for the court to act, there must be an existing basis of facts affording a present right which is
directly threatened by an act sought to be enjoined. And while a clear showing ofthe right claimed is
necessary, its existence need not be conclusively established. In fact, the evidence to be submitted
to justify preliminary injunction at the hearing thereon need not be conclusive or complete but need
only be a "sampling" intended merely to give the court an idea of the justification for the preliminary
injunction pending the decision of the case on the merits. This should really be so since our concern
here involves only the propriety of the preliminary injunction and not the merits of the case still
pending with the trial court.

Thus, to be entitled to the writ ofpreliminary injunction, the private respondent needs only to show
that it has the ostensible right to the final relief prayed for in its complaint x x x.

It is also basic that the power to issue a writ of injunction is to be exercised only where the reason
and necessity therefor are clearly established, and only in cases reasonably free from doubt.35 For,
truly, a preliminary injunction should not determine the merits of a case,36 or decide controverted
facts.37 As a preventive remedy, injunction only seeks to prevent threatened wrong,38 further
injury,39 and irreparable harm40 or injustice41 until the rights of the parties can be settled. As an
1âwphi1

ancillary and preventive remedy, it may be resorted to by a party to protect or preserve his rights
during the pendency of the principal action, and for no other purpose.42 Such relief will accordingly
protect the ability of the court to render a meaningful decision;43 it will further serve to guard against a
change of circumstances that will hamper orprevent the granting of proper relief after a trial on the
merits.44 Verily, its essential function is to preserve the status quo between the parties until the merits
of the case can be heard.45

Moreover, the applicant must prove that the violation sought to be prevented would cause an
irreparable injustice.46But the respondents failed to establish the irreparable injury they would suffer
should the writ of preliminary injunction not be issued. Theyprincipally feared the loss of their
possession and ownership of the mortgaged properties, and faced the possibility of a criminal
prosecution for the post-dated checks they issued. But such fear of potential loss ofpossession and
ownership, or facing a criminal prosecution did not constitute the requisite irreparable injury that
could have warranted the issuance of the writ of injunction. "An injury is considered irreparable,"
according to Philippine National Bank v. Castalloy Technology Corporation,47

x x x if it is of such constant and frequent recurrence that no fair or reasonable redress can be had
therefor ina court of law, or where there is no standard by which their amount canbe measured with
reasonable accuracy, that is, it is not susceptible of mathematical computation. The provisional
remedy of preliminary injunction may only be resorted to when there is a pressing necessity to avoid
injurious consequences which cannot be remedied under any standard of compensation.

The injury being fearedby 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. OJMark Trading,
Inc.that all is not lost for defaulting mortgagors whose properties were foreclosed by creditors-
mortgagees. The respondents will not be deprived outrightly of their property, given the right of
redemption granted to them under the law. Moreover, in extrajudicial foreclosures, mortgagors have
the right toreceive 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.

As a general rule, the courts will not issue writs of prohibition or injunction – whether preliminary or
final – in order to enjoin or restrain any criminal prosecution.48 But there are extreme cases in which
exceptions to the general rule have been recognized, including: (1) when the injunction is necessary
to afford adequate protection to the constitutional rights of the accused; (2) when it is necessary for
the orderly administration of justice or to avoid oppression or multiplicity of actions; (3) when there is
a prejudicial question that is sub judice; (4) when the acts of the officer are without or in excess of
authority; (5) when the prosecution is under an invalid law, ordinance or regulation; (6) when double
jeopardy is clearly apparent; (7) when the court has no jurisdiction over the offense; (8) when it is a
case of persecution rather than prosecution; (9) when the charges are manifestly false and
motivated by the lust for vengeance; and (10) when there is clearly no prima faciecase against the
accused and a motion to quash on that ground has been denied.49 However, the respondents did not
sufficiently show that Civil Case No. CEB-26468 came under any of the foregoing exceptions.
Hence, the issuance by the RTC of the writ of preliminary injunction to enjoin the petitioner from
instituting criminal complaints for violation of BP No. 22 against the respondents was unwarranted.

Every court should remember that an injunction should not be granted lightly or precipitately
because it isa limitation upon the freedom of the defendant's action. It should be granted only when
the court is fully satisfied that the law permits it and the emergency demands it,50 for no power exists
whose exercise is more delicate, which requires greater caution and deliberation, or is more
dangerous in a doubtful case, than the issuance of an injunction.51

In view of the foregoing, the CA grossly erred in not declaring that the RTC committed grave abuse
of discretion in granting the application of the respondents as the plaintiffs in Civil Case No. CEB-
26468. The RTC apparently disregarded the aforecited well-known norms and guidelines governing
the issuance of the writ of injunction. Thereby, the RTC acted capriciously and arbitrarily. Grave
abuse of discretion means either that the judicial or quasi-judicial power was exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent judge,
tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or quasi-judicial
powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction.52

WHEREFORE, the Court PARTIALLY GRANTS the petition for review on certiorari; MODIFIES the
decision promulgated on July 9, 2002 by annulling and setting aside the writ of preliminary injunction
in Civil Case No. CEB-26468 issued by the Regional Trial Court, Branch 16, in Cebu City for being
devoid of factual and legal bases; ORDERS the Regional Trial Court, Branch 16, in Cebu City to
proceed with dispatch in Civil Case No. CEB-26468; and DIRECTS the respondents to pay the costs
of suit.

SO ORDERED