Republic of the
SUPREME
COURT
SECOND DIVISION
|
PHILIPPINE
LEISURE AND RETIREMENT AUTHORITY (formerly Philippine Retirement Authority), Petitioner, - versus - THE
HONORABLE COURT OF APPEALS, THE HONORABLE REGIONAL TRIAL COURT, BRANCH 57,
and PHILIPPINE RETIREMENT AUTHORITY ASSOCIATION (PRAMA), Respondents. |
|
G.R. No. 156303 Present: SANDOVAL-GUTIERREZ,* CARPIO,
Acting Chairperson CARPIO
MORALES, TINGA,
and VELASCO,
JR., JJ. Promulgated: |
x-----------------------------------------------------------------------------------------x
D E C I S I O N
VELASCO, JR., J.:
Petitioner
Philippine Leisure and Retirement Authority (PLRA), formerly Philippine
Retirement Authority, is a government-owned and controlled corporation created
by Executive Order No. 1037, entitled Creating
the Philippine
Sometime
in 1989, 12 principal retirees of PLRA organized and registered with the
Securities and Exchange Commission (SEC) the Philippine Retirement Authority
Members Association, Inc. (PRAMAI). In
1994, Atty. Ramon M. Collado, a principal retiree of PLRA, registered with the
SEC another association, the P.R.A. Members Association Foundation, Inc. (PRAMA).
PRAMAI was one of the incorporators of PRAMA. Atty. Collado, then a consultant
of PLRA for Special Projects and Investments, envisioned PRAMA as a
non-governmental foundation to assist PLRA in implementing the PLRA’s programs.
Initially,
PRAMA held its office in the office of PLRA and shared its accounting and other
office systems. Subsequently, on
After its
incorporation, PRAMA executed several Memoranda of Agreement (MOAs) with PLRA’s
short-listed banks to promote the banks’ services among PRAMA members who were PLRA’s
principal retirees. In the MOAs, the banks agreed to pay PRAMA a marketing fee
of one-half (½) of 1% of the total outstanding balance of the principal
retirees’ deposits in the listed banks.
In late
December 1995, PLRA issued a resolution[1]
requiring PLRA principal retirees to become PRAMA members. The resolution
provided that PLRA would collect the annual membership fee of PhP 2,000. When
PRAMA transferred offices, PLRA remitted to PRAMA the membership fees it
collected in the amounts of PhP 114,000 for 1997, PhP 472,000 for 1998, PhP 858,000
for 1998, and PhP 1,444,000 for 2000,[2] all
duly acknowledged and receipted by PRAMA.
Meanwhile,
on
Subsequently,
on March 31, 2000, after collecting PRAMA’s annual membership fees since 1996,
PLRA sent PRAMA a letter[5] to
the effect that it would continue to collect PRAMA’s membership fees for a five
percent service fee based on total collections effective January 2000, in
accordance with Section 44 of the Government Accounting and Auditing Manual,
Vol. 1 and Administrative Order No. 197. PRAMA objected.
Thereafter,
in its August 2000 issue of PRAMA Updates,
Volume VI, Number 2, Special Health Care Issue, under the editorial column
entitled Notes from the President and
What is PLRA up to?,[6]
some derogatory allegations and pejorative remarks were leveled against
PLRA. PLRA promptly complained and
communicated its objections to PRAMA.
In a meeting
on
On
When
Gamaru went to the PLRA office to reconcile records, she complained she was not
given all the records. PLRA denied her
allegations in a letter dated
On
Earlier,
on
PRAMA
also said that the discrepancies reflected in the records were increasing and
had been unreported for years; hence, it informed PLRA of its resolution authorizing
Atty. Collado to conduct an investigation on what seemed were anomalies and to
take legal action.
Exchanges
of letters between PRAMA and PLRA ensued.
Meanwhile,
on November 8, 2000, PRAMA asked PLRA for an updated list of investor
retiree-members with their addresses and nationality to offer them insurance
development services, e.g., comprehensive Philam health care, memorial plans,
Philamlife and Golden Village finance management, etc.[11] PLRA explained PRAMA’s request could not be
acted upon since it did not have these data.
PRLA
accused PRAMA of sowing seeds of discontent and suspicion among PLRA’s
principal retirees, and of breach of the MOA. PLRA referred the rescission of the
MOA to the OGCC. The OGCC opined that PLRA through its Board of Trustees could unilaterally
rescind the MOA because PRAMA violated the MOA. Consequently, in a meeting on
On
The RTC
granted preliminary injunction
After
the hearings on the preliminary injunction, the RTC through its
The April
30, 2001 Order disposed:
WHEREFORE, upon
posting a bond in the amount of PHP One (1) Million (P1,000,000.00), the same
to be approved by the Court, let a writ of preliminary mandatory injunction
issue compelling the defendant to reinstate the MOA and for the defendant to
faithfully comply with the remittance of all monies due the plaintiff.
SO ORDERED.
Aggrieved,
PLRA assailed the
On
WHEREFORE, the
petition is DENIED. The Order, dated
The appellate
court said that the RTC did not commit grave abuse of discretion in granting
the preliminary mandatory injunction as the injunction fulfilled all
requirements and was well supported by sufficient evidence.
On
On
On
On May
8, 2002, PLRA filed a Manifestation informing the RTC that the reinstatement of
the MOA and of Atty. Collado as consultant of PLRA was already included in the
agenda of the next board meeting of the PLRA trustees, and that PLRA had already
sent appropriate letters to the banks.
On
Above premises
considered, this Court hereby GRANTS the Motion of the plaintiff [in] toto and
reinstate the Order dated
WHEREFORE,
defendant through its Board of Trustees and General Manager and Chief Executive
Officer is ordered to do the following:
1. Reinstate the Memorandum of Agreement (MOA)
that was terminated on
2. Reinstate Mr. Ramon M. Collado as the
Consultant of PRA for Special Projects and Investments;
3. Pay to PRAMA Foundation Inc. the one half
percent (0.5%) of the commission received by PRA from the accredited banks
since January 2001 up to today, representing the one half percent (0.5%) of the
total deposit of the retiree-members; and
4. Give necessary
instruction to the depositary banks, namely:
Equitable PCI Bank, Solid Bank (now Metropolitan Bank and Trust
Company), Bank of Commerce, and Chinatrust that from now on, to pay PRAMA
Foundation Inc. the fee of one half percent (0.5%) per annum of the total
average daily balance of funds deposited by foreign retirees under the program
of PRA with the banks to be paid monthly.
Defendant’s
failure to comply with this Order upon receipt hereof shall be construed by the
Court as deliberate disobedience to its processes and shall be cited for
contempt. Defendant is therefore ordered
to report to the Court on its compliance of this Order specifically the proof
of the reinstatement of the MOA, proof of payment to PRAMA Foundation, Inc. and
give necessary instruction to the depositary banks to pay PRAMA Foundation,
Inc. the fee of one half percent (0.5%) per annum monthly, and the
reinstatement of Mr. Ramon Collado as the Consultant of PRA for Special
Projects and Investment on the next day from receipt of this Order.
SO ORDERED.
The
following day, OIC Erlina P. Lozada filed a Motion with Manifestation.[20]
On
WHEREFORE,
pursuant to the Order of the Court dated 14 February 2002 as clarified in the
Order dated 13 June 2002 and noting the Manifestation of the plaintiff with its
attachments and the more than considerable lapse of time from the date of
issuance of the original Order, the non-compliance of which is in utter
disregard of this Court’s Authority, the Court hereby cites in CONTEMPT
Philippine Retirement Authority and the following officers, namely, MANUEL A.
ROXAS III, RICHARD S. GORDON, ANDREA DOMINGO, RAFAEL B. BUENAVENTURA, and
ERLINA P. LOZADA, as Officer-in-Charge, and particularly ATTY. VERNETTE UMALI-PACO
and hereby orders said officers detained until they comply with the Order of
this Court.
SO ORDERED.[22]
On June
24, 2002, the RTC issued an Order giving due course to PLRA’s Notice of Appeal
and allowing its officers to post PhP 20,000 bail, while at the same time
finding PLRA, its Board of Trustees, and officers guilty anew of Indirect
Contempt for which they were each fined PhP 30,000.
Both
appeals assailing the
On
October 27, 2006, PRAMA filed an Ex-Parte Urgent Motion for the
Immediate Issuance of a Writ of Preliminary Mandatory Injunction[23]
before the RTC which was granted through the November 8, 2006 Order,[24] and
an Alias Writ of Preliminary Mandatory Injunction[25]
was issued on November 9, 2006. This
prompted PLRA to file before this Court on November 13, 2006 an Urgent Motion
for Issuance of a Temporary Restraining Order (TRO) and/or Injunction[26]
which we granted through our November 15, 2006 Resolution[27]
with the corresponding TRO[28]
promptly issued.
PRAMA,
however, filed before the RTC on
WHEREFORE,
premises considered, the Court hereby orders all of Philippine Retirement
Authority’s depositary banks namely Land Bank of the Philippines, Equitable PCI
Bank, and Development Bank of the Philippines not to allow any withdrawals from
defendant’s corresponding various accounts, and further orders all the
accredited banks, namely: Allied Bank,
Bank of Commerce, East West Bank, Equitable PCIBank, Export Bank, PS Bank,
RCBC, Union Bank, Bank of China, KEB (Korean Bank), Maybank, Robinson’s Bank,
RCBC Savings Bank, Security Bank, and Tong Yang Bank to refrain from remitting
to PRA the management fees until PRA has faithfully complied with the Alias
Writ of Preliminary Mandatory Injunction date[d] November 9, 2006 in accordance
with this Court’s Orders of February 14, 2002 as clarified in the Order of June
13, 2002.
SO ORDERED.
Through a Manifestation and Motion dated
The
Issues
In this
Petition for Review on Certiorari under Rule 45, PLRA raises the following
issues:
I
WHETHER OR NOT THE DECISION OF THE TRIAL
COURT, AS AFFIRMED BY THE COURT OF APPEALS, IS IN ACCORD WITH LAW AND OBTAINING
JURISPRUDENCE
II
WHETHER THE MANDATORY INJUNCTION ISSUED
MAY INCLUDE RELIEFS NOT STATED OR PRAYED FOR IN THE COMPLAINT ITSELF OR EVEN
TAKEN UP DURING THE HEARING CONDUCTED FOR THE PURPOSE.[30]
In
gist, the issues are: (1) Was the preliminary mandatory injunction issued in
accordance with law?; and (2) May the Court include reliefs not prayed for?
The
Court’s Ruling
The
petition is meritorious.
Petitioner argues that the preliminary
mandatory injunction affirmed by the CA was not in accord with law and
jurisprudence as courts cannot compel a party to execute and/or renew a contract.
Petitioner posits that the power to do so is in the full discretion of the
Board of the corporation and the court cannot substitute its judgment to those of
petitioner’s officers and directors. Also, petitioner avers that the MOA may be
unilaterally rescinded. Petitioner contends that the preliminary mandatory
injunctive writ was issued with grave abuse of discretion, and that PRAMA had
not shown that it would be irreparably injured if the writ was not issued, a
legal requirement for the issuance of the writ.
Petitioner asserts that even if the requisites were present, the writ
was issued with grave abuse of discretion since the Orders dated
Judicial determination of unilateral rescission
Prefatorily, we find that petitioner
is mistaken to say that the courts cannot interfere with the decision of a
corporation’s officers and Board of Trustees, nor can a party not be allowed to
unilaterally rescind an agreement. The right to rescind
is provided for in Article 1191 of the Civil Code, which states:
ART.
1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon him.
The injured
party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case.
He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.
The court shall
decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
Thus, even if a provision
providing for a right to rescind is not in the agreement, a party may still
rescind a contract should one obligor fail to comply with its obligations.
While PLRA may have the right to
rescind the MOA, treat the contract as cancelled, and communicate the
rescission to PRAMA, the cancellation of the MOA is still
subject to judicial scrutiny, should the cancellation be contested and brought
to court. In University of the Philippines v. De Los Angeles, this Court
stressed and explained, thus:
[T]he party who deems the contract
violated may consider it resolved or rescinded, and act accordingly, without
previous court action, but it proceeds
at its own risk. For it is
only the final judgment of the corresponding court that will and finally settle
whether the action taken was or was not correct in law. But the law definitely does not require that
the contracting party who believes itself injured must first file suit and wait
for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the party, injured by the other’s
breach will have to passively sit and watch its damages accumulate during the
pendency of the suit until the final judgment of rescission is rendered when
the law itself requires that he should exercise due diligence to minimize its
own damages (Civil Code, Article 2203).[31] (Emphasis supplied.)
In the instant case, PRAMA judicially
questioned the unilateral rescission by PLRA, and the trial court still has to determine
whether the unilateral rescission was justified. PLRA is wrong to say that the
courts may not interfere with its decision to rescind in the exercise of its
management prerogatives.
Requisites for issuance of a mandatory
injunctive writ
Now, as to the regularity and
propriety in the issuance of the writ of preliminary mandatory injunction, Sec.
3, Rule 58 of the 1997 Revised Rules of Civil Procedure provides that the
issuance of a writ of preliminary injunction may be granted if the following requisites
are met:
(1)
The applicant
must have a clear and unmistakable right, that is a right in esse;
(2)
There is a
material and substantial invasion of such right; and
(3)
There is an
urgent need for the writ to prevent irreparable injury to the applicant; and no
other ordinary, speedy, and adequate remedy exists to prevent the infliction of
irreparable injury.
In numerous instances and recently in
Marquez v. The Presiding Judge (Hon. Ismael B. Sanchez), RTC Br. 58, Lucena
City,[32] we explained
that the writ of preliminary injunction is issued to prevent
threatened or continuous irremediable injury to some of the parties before
their claims can be thoroughly studied and adjudicated. Its sole aim is to preserve the status quo
until the merits of the case can be heard fully. Thus, it will be issued only upon a showing
of a clear and unmistakable right that is violated. Moreover, an urgent necessity for its issuance
must be shown by the applicant.
We held in Marquez:
It is basic that the issuance of a writ of preliminary
injunction is addressed to the sound discretion of the trial court, conditioned
on the existence of a clear and positive right of the applicant which should be
protected. It is an extraordinary,
peremptory remedy available only on the grounds expressly provided by law,
specifically Section 3, Rule 58 of the Rules of Court. Moreover, extreme caution must be observed in
the exercise of such discretion. It
should be granted only when the court is fully satisfied that the law permits
it and the emergency demands it. The
very foundation of the jurisdiction to issue a writ of injunction rests in the
existence of a cause of action and in the probability of irreparable injury,
inadequacy of pecuniary compensation, and the prevention of multiplicity of
suits. Where facts are not shown to
bring the case within these conditions, the relief of injunction should be
refused.
The trial court while having sound
discretion on its issuance must still satisfy the strict requirements of the
law. We have consistently held that the
exercise of sound judicial discretion by the lower court in injunctive matters
should not be interfered with except in cases of manifest abuse.[33]
PRAMA failed to show a right in
esse to be protected
In the instant case, our review of
the records shows that the trial court gravely abused its discretion in issuing
the assailed preliminary mandatory injunction.
First, the
requirement of a clear and unmistakable right, a right in esse that must
be protected, is not met. PRAMA alleges
in its complaint that the unilateral rescission of the subject MOA would well
nigh paralyze its operations as the payment of the membership fees of its member-retirees
would not be collected. The records show, however, that the parties had only
verbally agreed on the manner of collection before 1996, when mandatory
membership of PLRA principal retirees to PRAMA was imposed. Even as early as
1996, PLRA started collecting the membership dues. The MOA was executed only on
Second, the
Orders of February 14, 2002 and June 13, 2002, clarifying the assailed April
30, 2001 Order, manifestly showed the trial court abused its discretion when it
ordered: (1) the reinstatement of Atty. Collado as consultant to PLRA; (2) the
payment to PRAMA of 0.5% commissions allegedly received by PLRA from its
short-listed banks; and (3) instructions to said banks to remit the said 0.5%
commission to PRAMA.
While only the April 30, 2001 Order
granting the preliminary mandatory injunction is the principal subject of this
petition, we cannot ignore the Orders of February 14, 2002 and June 13, 2002
which are mere clarificatory orders of the assailed April 30, 2001 Order. Indeed, the two orders expanded the
preliminary mandatory injunction granted to PRAMA.
The reinstatement of Atty. Collado is
not the subject of the MOA. Atty. Collado has been appointed PLRA pro bono
consultant since 1994. He held that
position on the confidence of PLRA Officers and Board of Trustees. Thus, the officers and board have the
management prerogative to terminate him for whatever business reasons they may
have. In this instance, the Court cannot
interfere with a management decision of the board to terminate him. It cannot
be the subject of an injunctive writ.
Further, PRAMA cannot order PLRA to
remit the 0.5% commissions it allegedly received from short-listed banks. The 0.5% of the total outstanding balance of
the principal retirees’ deposits with the PLRA’s short-listed banks is paid to
PRAMA as marketing fee which is the subject of a separate MOA between PRAMA and
the banks concerned. PLRA is not privy
to this MOA. If the banks refuse to pay
PRAMA the marketing fees starting 2001, PLRA cannot be forced to do so. The MOA
between PRAMA and the banks has nothing to do with the MOA between PLRA and
PRAMA.
Similarly, the trial court cannot
order PLRA to give instructions to its short-listed banks to continue remitting
to PRAMA the 0.5% commission. It has no legal foundation. PLRA, not privy to the MOA between PRAMA and
the banks, cannot interfere with the contractual relation and obligations of PRAMA
and the banks. In short, the MOA between
PRAMA and the banks does not concern PLRA.
Third, the
banks are not impleaded in Civil Case No. 01-112. We note the carefully worded directives in
the Orders of February 14, 2002 and June 13, 2002, commanding PLRA to remit the
0.5% commission and to give instructions to the short-listed banks. The trial court cannot order the banks
directly, as the latter have not been impleaded in the civil case.
Fourth, the April
30, 2001 Order of the trial court to remit the monies due to PRAMA was not only
vague, but also resolved one of the main issues of the case precluded in a
preliminary injunctive writ. While this was clarified by the trial court in its
later Orders of February 14, 2002 and June 13, 2002, still the assailed April
30, 2001 Order was the one affirmed by the CA.
The CA erred on this because the order to remit all the monies due to
PRAMA was a subject of the main case. What
precipitated the case before the trial court was the issue of the alleged non-remittance
by PLRA of the membership dues it allegedly collected for PRAMA. The merits of this issue still have to be heard
and resolved. It cannot be the subject
of a preliminary mandatory injunction which is only an ancillary remedy.
The purpose of the ancillary relief
is to keep things as they peaceably are while the court passes upon the merits.
Where a preliminary prohibitory or mandatory injunction will result in a
premature resolution of the case, or will grant the principal objective of the
parties before merits can be passed upon, the prayer for the relief should be
properly denied.[34] Allowing
PRAMA to receive all monies remitted to it through a preliminary mandatory
injunction would result in PRAMA obtaining what it prayed for without trial on
its merits. The premature resolution of a major issue of the main case before the
merits can be passed upon compels us to reject such grant and strike down the
assailed
Given the foregoing review, we so
hold that the CA committed reversible error in upholding the assailed April 30,
2001 Order of the trial court, which gravely abused its discretion in granting said
preliminary mandatory injunction.
WHEREFORE, the
petition is GRANTED, and the January
31, 2002 Decision and November 17, 2002 Resolution of the CA in CA-G.R. SP No.
65479 are hereby REVERSED and SET ASIDE. Likewise, the April 30, 2001 Order of the Makati
City RTC, Branch 57, and the clarificatory Orders of February 14, 2002 and June
13, 2002, are REVERSED and SET ASIDE. Let the trial court resolve with dispatch
Civil Case No. 01-112. No pronouncement
as to costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate
Justice
WE
CONCUR:
ANGELINA SANDOVAL-GUTIERREZ
Associate
Justice
ANTONIO
T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
Acting Chairperson
Associate
Justice
I
attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
Pursuant to Section 13,
Article VIII of the Constitution, and the Division Acting Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Acting
Chief Justice
[1] Rollo, pp. 146-147.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29] Dated November 13, 2006, Annex “B” of the November 28, 2006 Manifestation and Motion of the PLRA in an additional folder to the rollo.
[30] Rollo, p. 40.
[31] No.
L-28602, September 29, 1970, 35 SCRA 102, 107.
[32]
G.R. No. 141849,
[33]
Id.; citing Searth Commodities Corporation v. Court of Appeals, G.R. No.
64220, March 31, 1992, 207 SCRA 622; Government Service Insurance System v.
Florendo, G.R. No. 48603, September 29, 1989, 178 SCRA 76; Detective and
Protective Bureau, Inc. v. Cloribel, G.R. No. L-23428,
[34] Cf. 42 Am Jur 2d, Injunctions, § 13.