RP vs CA : 128010 : February 28, 2000 : J. Mendoza : Second Division

SECOND DIVISION

[G.R. No. 128010. February 28, 2000]

REPUBLIC OF THE PHILIPPINES and HON. JEREMIAS DOLINO, in his capacity as Regional Executive Director, Department of Environment and Natural Resources (DENR) Region VII Office, petitioners, vs. HON. COURT OF APPEALS, HON. ISAIAS P. DICDICAN, in his capacity as Presiding Judge, Branch 11, RTC, Cebu City, and EMRO INTERNATIONAL, INC., respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for review on certiorari of the decision[1] of the Court of Appeals, dated January 28, 1997, which in effect sustained the order, dated October 16, 1995, of the Regional Trial Court, Branch 11, Cebu City, the dispositive portion of which reads: Acctmis

WHEREFORE, in view of the foregoing premises, let a writ of preliminary prohibitory injunction issue restraining, prohibiting or preventing the respondent and all those who may be acting in his behalf from cancelling and/or revoking, or threatening to cancel and/or revoke, or causing the cancellation and/or revocation of, the Foreshore Lease Contract between the petitioner and the Republic of the Philippines over the foreshore land located in Ibo, Lapu-Lapu City, subject to the petitioner’s posting of an injunction bond in the sum of ten thousand pesos (P10,000.00).[2]

The facts are as follows:

On March 23, 1994, private respondent EMRO International, Inc. (EMRO), represented by Emilio M.R. Osmeña, entered into a Foreshore Lease Contract with petitioner Republic of the Philippines, represented by Department of Environment and Natural Resource (DENR) - Region VII Executive Director Jeremias Dolino. The pertinent provisions of the contract state:

W I T N E S S E T H

FIRST - That the PARTY OF THE FIRST PART, for and in consideration of the rents, covenants and conditions hereinafter contained, to be paid, kept and performed by the PARTY OF THE SECOND PART, has demised, leased and let, and does hereby demise, lease and let unto said PARTY OF THE SECOND PART, the land, together with the appurtenances thereunto of right belonging, lying and being in the barrio of Ibo, Municipality of Lapu-Lapu City, Province of Cebu, Philippines, being a part of the public domain, the property of the said Republic of the Philippines and more particularly described on page 7 of this contract, and Survey Plan No, FLC-072226-125. Misact

SECOND. -- TO HAVE AND TO HOLD the said described premises unto the said PARTY OF THE SECOND PART for the full term of twenty five (25) years, from and including the First day of April 1994, at a yearly rental of SIXTY THOUSAND NINE HUNDRED THREE and 50/100 (P60,903.50) Philippine Currency, to be paid annually in advance on or before the FIRST day of APRIL of each and every year, during the life of this lease, at the Community Environment and Natural Resources Office (CENRO) which lease may be renewed for another period of twenty five (25) years at the option of the PARTY OF THE FIRST PART, and if the circumstances of the case would so warrant. All rents payable to the PARTY OF THE FIRST PART, under this lease shall draw interest at the rate of four per centum (4%) per annum from and after the date they become due as provided herein.

. . . .

SEVENTH. - That the said PARTY OF THE SECOND PART, shall not sublet the whole or any part of the premises herein described, or the improvements therein, assign this lease, or encumber ANY rights thereunder, without permission, in writing of the Regional Executive Director, DENR-7, Banilad, Mandaue City first had and obtained.

. . . .

TENTH. - It is further covenanted and agreed that for a breach of any of the covenants herein by the said PARTY OF THE SECOND PART save these covenants for breach of which special provision is made, the PARTY OF THE FIRST PART may elect to declare this agreement rescinded and void and, after having given thirty (30) days notice in writing to the said PARTY OF THE SECOND PART, may enter and take possession of the said premises and all improvements actually existing thereon, and the said PARTY OF THE SECOND PART hereby covenants and agreed to give up the possession thereof.[3]

Five months later, on August 25, 1994, EMRO entered into a Memorandum of Agreement with Alta Resource Group, Inc. (ALTA) for the purpose of leasing to the latter, at a minimum guaranteed rent of $100,000.00, "certain premises and existing facilities, rights, services and privileges on and in connection with the [former’s] marina." The contract states in part:

ARTICLE I

PREMISES

The LESSOR does hereby lease unto the LESSEE certain premises and existing facilities, rights, services and privileges on and in connection with the marina, and more particularly hereinafter set forth:

a.......Exclusive use of the berthing space in the marina of the LESSOR for the vessels of the LESSEE intended to be used for the latter’s floating hotel/casino operations. The said berthing space have been set forth and shown in the sketch plan marked as Exhibit "A" which is attached hereto and made an integral part hereof.

b.......The full and free right of ingress to and egress from the premises referred to above for the LESSEE, its employees, agents, passengers, customers, guests, patrons, invitees, its or their suppliers of materials or furnishers of services, equipment, vehicles, machinery and other property for all purposes contemplated by this agreement

c.......The use by the LESSEE, its employees, customers, guest, patrons, invitees, suppliers and other licenses, without charge of a designated vehicular parking space within the premises of the marina consisting of approximately TWO THOUSAND SIX HUNDRED (2,600) square meters. Sdjad

. . . .

ARTICLE V

IMPROVEMENTS

The LESSEE, at its own cost and expense, may construct or install in the premises any structures or improvements, including dredging or deepening of piles, construction of mooring dolphins, widening the construction of causeways within the marina premises, equipment and storage tank, on the surface or underground, that it shall determine to be necessary for upgrading of existing facilities or use in connection with its floating hotel/casino operations; provided, however, that the LESSOR shall have the right to inspect the plans and specifications of any such structures and improvements prior to construction or installation thereof and to refuse to permit such construction or installation if the external appearance thereof does not meet LESSOR’s reasonable requirements for substantial conformity of appearance of structures in the marina, or if the type of construction or installation or the location thereof does not meet the LESSOR’s reasonable requirements for safe use of the marina and other appurtenances by others authorized to do so and provided, finally, any and all immovable structures or improvements introduced by the LESSEE, its successors or assigns on the premises in question shall ipso facto belong to or pertain to the LESSOR upon the expiration of the term of this agreement.

No restrictions shall be placed upon LESSEE as to the architect, builders or contractors who may be employed by it in connection with the construction, installation, alteration, modification, repair or maintenance of any such structures or improvements, and the lessor shall provide free ingress to and egress from the said spaces for all persons, materials or things connected with the construction, installation, alteration, modification, repair or maintenance thereof.

ARTICLE VI

UTILITIES

The LESSEE shall, at its own cost and expense, be responsible for the installation of water, electricity, communications and such other utilities that may be needed for the LESSEE’s floating hotel/casino operations. In connection therewith, the LESSEE shall, likewise, be responsible for all necessary excavations, construction, materials, operation and maintenance of and for all mains, pipes, conduits, cables, wiring, sewers and other equipment required to so provide such services in a manner adequate to supply LESSEE’s need therefor under conditions from time to time prevailing.

The LESSEE shall also be responsible for payment of the use of said utilities in the premises or in connection with its hotel/casino operations.[4]

On September 18, 1995, the Regional Technical Director for LMS DENR (Region VII), Estanislao Z. Galano, sent a memorandum to the Regional Technical Director for EMPAS DENR (Region VII), calling attention to certain alleged violations by EMRO of its Foreshore Lease Agreement with the government. The memorandum reads: Sppedsc

MEMORANDUM

FOR:......THE REGIONAL TECHNICAL DIRECTOR FOR EMPAS DENR, Region 7, Banilad, Mandaue City

FROM: ......THE REGIONAL TECHNICAL DIRECTOR FOR LMS DENR, Region 7, Banilad, Mandaue City

SUBJECT: APPLICATION FOR ECC OF ATLAS RESOURCE GROUP, INC. FOR A FLOATING HOTEL/CASINO WITHIN THE CEBU YACHT (MARINA).

In response to your Memorandum dated September 15, 1995, on the above subject, based on both ATLAS (sic) project description, which is a component of its ECC application, and the Environmental Impact Study (EIS) of EMRO International, Inc., submitted with its ECC application for the MARINA, the following are reported:

(1)......The MARINA is composed of a 49,000 sq. m. wet docking area and a 6,517 sq. m. vehicle parking and drydocking space, or a total of 55,519 sq. m. In between the 2 parcels and exclusive of the MARINA is a 10 m. public easement (see attached sketch plans);

(2)......About 2,600 sq. m. portion of the 6,517 vehicle parking and drydocking space has been sub-leased by EMRO to ATLAS (sic), but this space can not be exactly pinpointed within it.

(3)......A berthing space has been sub-leased by EMRO to ATLAS (sic) for a floating hotel/casino inside the berthing space of the wet docking area of the MARINA, including ingress to and egress from it, which can be anywhere within it, since this space and the access to and from it can not specifically be configurated or defined.

(4)......The vehicle parking and drydocking space of the MARINA appears entirely within the Mactan Export Processing Zone (MEPZ);

(5)......The wet docking area of the MARINA encroaches within EMRO’s Foreshore Lease Contract, while the 10 m. public easement strip to which EMRO has been committed to exclude (see attached EMRO letter) now appears to have been appropriated for use in the MARINA (see attached perspective view).

(6)......The area of the Foreshore Lease Contract overlapping MARINA’s wet docking area is about 14,000 sq.m., while its remaining seaward portion is about 35,000 sq.m.

(7)......Since EMRO’s sub-leased premises for the floating hotel/casino, including its ingress and egress, within the MARINA’s wet docking area overlaps with the foreshore lease, it constitutes a violation of the lease contract since a sublease tenured by a contract qualifies as a prohibition because, as stated in the lease contract, the lessee "shall not sublet the whole or in part (sic) of the premises or the improvements therein, assign this lease or encumber any single rights thereunder, without permission..." from the DENR.

(8)......Since the sub-leased premises extends outside the foreshore lease, although within the MARINA, EMRO, since it does not have any other lease with the DENR at Ibo, Lapu-Lapu City, appears to have appropriated for itself and leased a portion of the public domain without the benefit of a lease from the State.

Supplementary to the foregoing evaluation/observations and since a portion of the MEPZ appears to have been sub-leased, it is recommended that inquiry be made (as part of the evaluation of the ECC application) with the Department of Trade and Industry (DTI) or the MEPZ, which has authority over the MEPZ, whether the sub-lease has been allowed.

For record and information.

(Sgd.) ESTANISLAO Z. GALANO[5]

Having obtained a copy of the confidential memorandum, EMRO filed on September 25, 1995 a "Petition for Declaratory Relief, Injunction, Damages with Prayer for Writ of Preliminary Injunction and/or Restraining Order" in the Regional Trial Court, Cebu City, which case was docketed as Civil Case No. CEB-17879 and later assigned to respondent Judge Isaias Dicdican. Calrsc

On October 16, 1995, the court, after hearing, issued a writ of preliminary injunction on the ground that "the act of the [government] of setting the stage for the cancellation or revocation of [EMRO’s] Foreshore Lease Contract through the sinister strategem of making it appear that [EMRO] violated the terms and conditions of the said contract when actually such is not the real fact is undoubtedly violative of [EMRO’s] right in esse." It ruled that EMRO had a right to the continuous and peaceful use and enjoyment of the foreshore land for a period of 25 years as stipulated in its contract with the government.

Petitioner assailed the order in a special civil action for certiorari in the Court of Appeals, but its petition was denied. Hence this petition, raising as ultimate question the propriety of the writ of preliminary injunction issued by the trial court.

The petition is meritorious.

Preliminary injunction is a provisional remedy intended to provide protection to parties for the preservation of their rights or interests during the pendency of the principal action. Conversely, if an action, by its nature, does not require such protection or preservation, the remedy is unavailing and the relief sought cannot be granted.[6]

In this case, EMRO sought the issuance of a writ of preliminary injunction in connection with a petition for declaratory relief wherein the court is asked "to determine any question of construction or validity arising under the instrument or statute and for a determination of [the party’s] rights and duties thereunder."[7] Indeed, beyond the adjudication of legal rights which are the subject of controversy between the parties, the court cannot issue in such cases an order of injunction, execution or similar reliefs,[8] for the simple reason that no right of petitioner has yet been violated.

Put in another way, a party cannot act, then ask the courts to declare that its action was not a violation of its agreement with another person and, at the same time, seek to enjoin the other party from revoking or cancelling their agreement. In this case, EMRO’s doubts and fears cannot give rise to a cause of action to prevent the mere possibility that its lease contract with the government will be cancelled or revoked. Sccalr

It appears, however, that what EMRO sought to do was to prohibit the government from cancelling or revoking its Foreshore Lease Agreement on the theory that, in leasing to ALTA certain premises and facilities in its marina, EMRO did not commit a breach of its undertaking not to assign the lease or "sublet the whole or any part of the premises or improvements" covered by its Foreshore Lease Agreement. In its petition in the trial court, EMRO alleged:

(d) that sometime in August 1995, the respondent issued and sent a memorandum to Ms. May Gonzales, Head Executive Assistant of the DENR, stating that the petitioner intends to sublease to the Alta Resources Group, Inc. portions of the foreshore land covered by its Lease Contract with the DENR as docking side of the Philippine Dream, a floating hotel with casino on board; (e) that the respondent’s statement in his memo that petitioner intends to sublease portions of the foreshore land or area covered by its Foreshore Lease Contract is false, baseless, arbitrary, malicious and is intended to harass and intimidate the petitioner considering that, under the Lease Contract, it is stipulated therein that it shall not sublet any part of the leased premises without the prior written permission of the Regional Executive Director of the DENR and that a violation thereof is a ground for the rescission of the Lease Contract or forfeiture of all improvements on the foreshore land; (f) that a review of the Memorandum of Agreement between the petitioner and the Alta Resources Group, Inc. shows that nowhere therein is the land subject of the Foreshore Lease Contract or any portion thereof ever subleased as the agreement is limited to a lease of a berthing space for the vessels of Alta Resources Group, Inc. which is offshore and not part of the foreshore area, ingress and egress from the premises for the employees and customers of Alta Resources Group, Inc. and parking spaces within the property leased by the petitioner from the MEPZ which is not part of the area covered by the Foreshore Lease Contract; that the petitioner, through its legal counsel, sought from the respondent a clarification of his statement in his memo to the Head Executive Assistant of the DENR and demanded that he retract his statement in order to conform to the real essence of the agreement between the petitioner and the Alta Resources Group, Inc. but the respondent, instead of clarifying or retracting his statement, made a further false and malicious statement saying that the petitioner is not only intending to sublease the area covered by the Foreshore Lease Contract but had actually leased a portion thereof without his prior written permission; (h) that as a result of the said false and malicious statements or conclusion of the respondent, a cloud of doubt has been cast over the petitioner’s real and contractual property right as lessee of the foreshore land in Ibo, Lapu-Lapu City, thereby exposing it to an imminent danger of loss as the respondent has concluded that the petitioner has violated the terms of its Foreshore Lease Contract; (i) that the respondent, with malice and in bad faith, is evidently setting the stage for the unwarranted cancellation, rescission and/or revocation of the petitioner’s Foreshore Lease Contract on the basis of his unfounded and malicious conclusion that it has violated the said contract; (j) that apparently the respondent did the said acts to spite Mr. Emilio M.R. Osmeña, President of the petitioner, whom he suspects of supporting moves for the assignment of a new Regional Executive director for DENR Region 7, as he made various statements in the media that Mr. Emilio M.R. Osmeña was behind the request of government officials of the Province of Cebu for the assignment of a new Regional Executive Director for DENR Region 7; (k) that unless the respondent is enjoined and prohibited from proceeding with his threatened cancellation or revocation of the petitioner’s Lease Contract grave and irreparable damage and injury will be suffered by the petitioner; (l) that the petitioner is entitled to the relief demanded and the whole or part of such relief consists in restraining the respondent from commencing and/or continuing with the threatened cancellation and/or revocation of the petitioner’s Lease Contract; (m) that the commission and continuance by the respondent of the threatened cancellation and/or revocation of the petitioner’s Foreshore Lease Contract would make the declaratory judgment that may be rendered in this case ineffectual unless a writ of preliminary injunction is issued; and (n) that the petitioner is willing and able to put a bond executed to the respondent to pay the latter damages which he may sustain by reason of the injunction should the court finally decide that the petitioner is not entitled thereto.[9] Calrspped

It would thus appear that the petition filed by EMRO is actually a petition for prohibition, not for declaratory relief, except that, as a petition for prohibition, it suffers from the vice of prematurity. There had not even been an investigation of the acts reported in the memorandum of Director Estanislao Z. Galano when the petition was filed in the court, much less a finding that EMRO violated its Foreshore Lease Agreement with the government. In the similar case of Allied Broadcasting Center v. Republic,[10] a petition was filed seeking to declare P.D. No. 576-A (Decree Regulating The Ownership And Operation of Radio And Television Stations And For Other Purposes) unconstitutional. It was alleged that petitioner therein had been granted a legislative franchise to construct, maintain, and operate radio broadcasting stations in the Philippines; that it was able to construct and operate 10 radio stations; that it had been able to provide adequate public service; that P.D. No. 576-A was subsequently issued, limiting the number of radio or television stations that a person or corporation could operate in any city or municipality and the number of television channels one could have in the entire country; and that as a result of the decree, petitioner’s franchises and permits had been considered revoked and petitioner was left with only three radio stations to operate. In dismissing the petition, this Court held:

In the instant petition, petitioner does not seek to prohibit any proceeding being conducted by public respondent which adversely affects its interest. Petitioner does not claim that it has a pending application for a broadcast license which is about to be denied under Presidential Decree No. 576-A. Apparently, what petitioner seeks to prohibit is the possible denial of an application it may make to operate radio or television stations on the basis of the restrictions imposed by Presidential Decree No. 576-A. Obviously, the petition is premature.[11]

The same can be said of this petition. We cannot see how petitioners could have committed a violation of EMRO’s rights by the mere issuance of a confidential memorandum alleging violations of the Foreshore Lease Agreement. Nor is there any threat to such rights sufficient to warrant the issuance of the writ of preliminary injunction. As petitioners correctly argue, the government has not even commenced an official inquiry on the alleged violations of the Foreshore Lease Agreement by EMRO. It has yet to make any declaration that the Memorandum of Agreement between EMRO and ALTA constitutes a breach of EMRO’s contract with the government. If at all, the memorandum of Regional Technical Director Galano would only give rise to a formal investigation of the reported violations by EMRO, which certainly petitioners cannot be enjoined from undertaking.

Indeed, EMRO admits in its rejoinder[12] that the challenged order does not prohibit petitioners from conducting any investigation of violations of the Foreshore Lease Agreement. This stance merely affirms the conclusion that the trial court’s issuance of the writ was groundless or, at the very least, premature because if it was issued to prevent the actual cancellation of the foreshore lease contract, then the trial court a quo jumped the gun, as it were, on petitioners who had not even commenced any formal investigation of the controversy.

In any event, the proper time for the issuance of the writ is after EMRO receives the 30-day notice to vacate the premises and surrender possession of the land and the improvements thereon, as can be inferred from paragraph 10 of the Foreshore Lease Contract. It is only at this time that there exists a real threat to EMRO’s rights under the contract. To rule otherwise would be clearly anticipatory.

II.

Petitioners also question the writ of preliminary injunction on the ground that it was issued in violation of §1 of P.D. No. 605, which provides: Scedp

No court of the Philippines shall have jurisdiction to issue any restraining order or preliminary injunction in any case involving or growing out of the issuance, approval or disapproval, revocation or suspension of or any action whatsoever by the proper administrative official or body on concessions, licenses, permits, patents, or public grants of any kind in connection with the disposition, exploitation, utilization, exploration and/or development of the natural resources of the Philippines.

The trial court rejected petitioners’ contention on the ground that the issue "is not the legality of the execution of the Foreshore Lease Contract but rather the propriety and legality of the [government’s] threatened act of infringing or nullifying the rights of [EMRO] under the contract by way of causing its cancellation or revocation on account of alleged violation of the terms thereof. . . ." The court cited the ruling in Datiles and Company v. Sucaldito,[13] where it was stated:

[The] prohibition dictated by PD No. 605 . . . pertains to the issuance by courts of injunctions or restraining orders against administrative acts on controversies which involve facts or exercise of discretion in technical cases, because to allow courts to judge these matters could disturb the smooth functioning of the administrative machinery. But on issues definitely outside of this dimension and involving questions of law, courts are not prevented by PD No. 605 from exercising their power to restrain or prohibit administrative acts.

At this stage, there is really no need to determine whether §1 of P.D. No. 605 applies. This provision covers situations where a definite act has been undertaken or is being performed by administrative officials. As already stated, the issuance of an injunctive order in this case is premature.

WHEREFORE, the decision of the Court of Appeals is REVERSED, and the writ of preliminary injunction issued by the trial court is hereby DISSOLVED.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, and De Leon, Jr., JJ., concur.

Buena, J., on leave. Edpsc

[1] Per Justice Godardo A. Jacinto and concurred in by Justices Salome A. Montoya and Demetrio G. Demetria.

[6] 3 Manuel V. Moran, Comments on the Rules of Court 80 (1997)

[9] As quoted in the order, dated October 16, 1995, of the trial court.