SECOND DIVISION
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STRADCOM
CORPORATION,
Petitioner, - versus - HONORABLE HILARIO L. LAQUI as Acting
Presiding Judge of the Regional Trial Court of Quezon City, Branch 97 and
DTECH MANAGEMENT, INC., Respondents. |
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G.R. No. 172712 Present: CARPIO, J., Chairperson, BRION, PEREZ, SERENO, and REYES, JJ. Promulgated: March
21, 2012 |
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D E C I S I O N
PEREZ, J.:
Assailed
in this petition for review on certiorari
filed pursuant to Rule 45 of the 1997
Rules of Civil Procedure is the Decision dated 8 May 2006[1]
rendered by the Fourteenth Division of the Court of Appeals (CA) in CA-G.R. SP
No. 87233, dismissing for lack of merit the petition for certiorari and prohibition filed by petitioner Stradcom Corporation
(STRADCOM)
which sought the nullification of the Resolutions dated 3 March 2004 and 16
August 2004 in turn issued in Civil Case No. Q03-49859 by public respondent,
the Hon. Hilario Laqui, as Acting Presiding Judge of the Regional Trial Court (RTC), Branch 97, Quezon City.[2]
On 19 June 2003, respondent DTech
Management Incorporated (DTECH), filed a complaint for
injunction, with prayer for Issuance of a Preliminary Injunction and Temporary Restraining
Order against the Land Transportation Office (LTO), represented by
Assistant Secretary Robert T. Lastimoso.
Docketed as Civil Case No. Q03-49859 before the RTC,[3]
the complaint alleged that, in May 2001, DTECH submitted to the LTO a proposal
to remedy problems relating to Compulsory Third Party Liability (CTPL)
insurance of motor vehicles, specifically the proliferation of fake or
duplicate CTPL insurance policies or Certificates of Cover (COC)
which resulted in non-payment of claims thereon and loss of government
revenues. To determine the viability of the proposal which entailed the computerization
of all CTPL insurance transactions, the LTO conducted consultations with the
Insurance Commission (IC), the Insurance and Surety
Association of the Philippines, Inc. (ISAP) and DTECH. An acceptable information technology (IT)
solution denominated as the COC Authentication System (COCAS) was eventually
approved whereby COCs issued by insurance companies would undergo
authentication and verification by IT service providers chosen by ISAP. Through its own selection and bidding
process, ISAP hired DTECH to undertake the COC verification process while SQL
Wizard, Inc. (SQL) likewise engaged to handle the COC authentication process.[4]
DTECH
further averred that, on 1 July 2002, a Memorandum of Understanding (MOU)
was executed by the LTO, IC and ISAP which affirmed, among other matters,
DTECHs accreditation and qualification as an entity that could effectively
and efficiently provide the required IT services in the verification end of the
COCAS. Consistent with the MOU, the
LTO, IC, ISAP and DTECH also executed a Memorandum of Agreement (MOA)
on the same date, specifying the terms and conditions of DTECHs engagement as
the sole IT service provider for the verification of COC for a term of five
(5) years commencing on July 24, 2002 until July 24, 2007. Under the MOA, verification was defined as
the act of having an authenticated COC validated through the process of the
on-line verification via the internet, SMS and other present day information
technology and telecommunications applications. For each and every verification, DTECH was
allowed to charge a fee of P20.00, exclusive of VAT, payable by the
insurance company concerned within thirty (30) days from receipt of the billing
therefor. After purportedly investing
millions of pesos and exerting diligent effort to comply with its obligations
under the MOA, DTECH maintained that, without any burden on public coffers, its
initial operations yielded dramatic improvements and huge benefits to the
government and the public.[5]
Despite
the foregoing factual antecedents, however, DTECH claimed that, on 17 January
2003, LTO wrote ISAP, suggesting the termination of DTECHs services in view of
its supposed failure to interconnect with the LTO IT Motor Vehicle Registration
System (LTO IT MVRS) owned and operated by STRADCOM under a Build
Operate and Own (BOO) contract with the Department of Transportation and
Communication (DOTC)/LTO. LTO further
issued a Memorandum Circular directing that all COCs must be registered and
verified under the LTO IT MVRS and that only COCs thus authenticated and
verified would be thereafter accepted.
The strict implementation of the foregoing directive was required in the
10 March 2003 Memorandum Circular issued by LTO, in blatant disregard of the
meetings conducted by the parties to discuss the recall and/or postponement of
the implementation thereof. Although the
implementation of the directive was briefly suspended, the LTO went on to issue
yet another Memorandum Circular on 28 April 2003, instructing all its officials
and employees to accept COCs that have been verified and authenticated
on-line, real time either by [STRADCOMs] CTPL COC Authentication Facility or
ISAP-[SQL]-[DTECH]. On 26 May
2003, the LTO notified the IC, ISAP and DTECH of its termination of the 1 July
2002 MOA, in view of the latters failure to integrate the COCAS with the
existing workflow of the LTO and its offices nationwide.[6]
DTECH
maintained that LTOs termination of its services and cancellation of the COCAS
is violative of its contractual rights, the law as well as principles of
fairness and due process. Since it was
never a part of the parties agreement, DTECHs alleged failure to interconnect
with LTO MVRS is neither a valid ground for the termination of its services nor
a reason to give undue advantage to STRADCOM.
Emphasizing its considerable investments in the setting up the IT
infrastructure required nationwide for the COCAS as well as its hiring of
hundreds of personnel, installation of facilities and entry into service contracts
required by the endeavor, DTECH argued that the pre-termination of the
five-year term for which it was designated the sole IT provider for the
verification of COCs and/or the performance of its functions by another private
IT service would not only cause injustice and irreparable damage but would also
engender confusion in the insurance industry and to the general public.[7]
Over the opposition interposed by the LTO, the
RTC issued the 25 June 2003 order granting DTECHs application for the issuance
of a temporary restraining order (TRO) against the termination of the
implementation of the parties 1 July 2002 MOA.[8] Contending that the complaint was fatally
defective and failed to state a cause of action, LTO filed an urgent motion to
dismiss dated 8 July 2003, with opposition to DTECHs application for a writ of
preliminary injunction for lack of showing of a right in esse and the resultant
irreparable injury from the act complained against.[9] On 1 August 2003, the RTC issued two (2) resolutions,
denying LTOs motion to dismiss[10]
and granting DTECHs application for a writ of preliminary injunction which was
deemed necessary pending the determination of the validity of the MOAs
termination at the trial of the case on the merits.[11] Upon DTECHs posting of the bond which was
fixed at P1,500,000.00, the RTC went on to issue the corresponding writ
of preliminary prohibitory injunction dated 4 August 2003, restraining LTO from
implementing the termination of the MOA.[12]
On 6 August
2003, STRADCOM filed a motion for leave to admit its answer-in-intervention,
manifesting its legal interest in the matter in litigation and its intent to
unite with LTO in resisting the complaint.
In its attached answer-in-intervention, STRADCOM averred that, on 26
March 1998, it executed with the DOTC a BOO Agreement for the implementation of
infrastructure facilities in accordance with Republic Act (R.A.) No. 6957, as
amended by R.A. 7718. Having been
authorized to design, construct and operate the IT system for the DOTC/ LTO,
STRADCOM argued that the 1 July 2002 MOU and MOA breached the BOO Agreement
which included the verification of COCs granted to DTECH without the requisite
public bidding. With the latters
failure to comply with its contractual undertakings despite repeated warnings,
STRADCOM claimed that LTO validly terminated the MOA on 26 May 2003 and
effectively mooted DTECHs cause of action for injunction. STRADCOM likewise called attention to the
prohibition against the issuance of a TRO and/or preliminary injunction against
national infrastructure[13] projects
like those Covered by R.A. Nos. 6957[14]
and 7718.[15]
On 21 August
2003, LTO moved for the reconsideration of the RTCs 1 August 2003 Resolution.[16] With the admission of its
answer-in-intervention, STRADCOM, in turn, filed its 15 October 2003 motion for
the dissolution of the preliminary injunction issued in the case.[17] On 3 March 2004, the RTC issued a resolution,
denying the motions filed by LTO and STRADCOM upon the following findings and
conclusions: (a) the pleadings so far filed required factual issues which can only
be determined after trial of the case on the merits; (b) as LTOs agents
insofar as the COCAS is concerned, the IC and ISAP are not indispensable
parties to the case; (c) in the absence of government capital investment
thereon, the COCAS do not come within the purview of the prohibition against
injunctive orders and writs under R.A. 8975; (d) there is no adequate showing
that the verification of the COCs is included in the BOO Agreement between DOTC/LTO
and STRADCOM which even participated in the bidding ISAP conducted for the
COCAS; and, (e) DTECH was able to demonstrate that the damage it would suffer
as a consequence of the pre-termination of the MOA went beyond monetary injury.[18] STRADCOMs motion for reconsideration of the
foregoing resolution was denied for lack of merit in the RTCs Resolution dated
16 August 2004.[19]
Aggrieved,
STRADCOM filed the Rule 65 petition for certiorari
and prohibition which, docketed before the CA as CA-G.R. SP No. 87233, was
dismissed for lack of merit in the herein assailed Decision dated 8 May
2006. In affirming the RTCs Resolutions
dated 3 March 2004 and 16 August 2004, the CAs then Fourteenth Division ruled
that the writ of preliminary prohibitory injunction issued a quo was directed against the pre-termination of the 1 July 2002
MOA and not STRADCOMs BOO Agreement with the LTO. Finding that the scope of the BOO Agreement
had yet to be threshed out in the trial of the case on the merits, the CA
discounted the grave abuse of discretion STRADCOM imputed against the RTC
which, in issuing the injunctive writ, was found to be exercising a
discretionary act outside the ambit of a writ of prohibition. Absent showing of manifest abuse, the CA
desisted from interfering with the RTCs exercise of its discretion in issuing
the injunctive writ as it involved determination of factual issues which is not
the function of appellate courts.[20]
Unfazed, STRADCOM filed the petition
at bench, urging the reversal of the CAs 8 May 2006 Decision on the following
grounds:
A.
THE HONORABLE APPELLATE COURT SERIOUSLY ERRED IN
SUSTAINING RESPONDENT JUDGE HILARIO L. LAQUIS PATENT GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN RULING THAT THE COCAS SUBJECT
OF THE MEMORANDUM OF AGREEMENT IS NOT A GOVERNMENT INFRASTRUCTURE PROJECT
WITHIN THE CONTEMPLATION OF THE LAW PARTICULARLY COVERED BY THE BAN ON COURTS
FROM ISSUING TRO/PRELIMINARY INJUNCTION CONTEMPLATED BY P.D. 1818 AS AMENDED BY
R.A. 8975 AND ADMINISTRATIVE CIRCULAR NO. 07-99 DATED JUNE 25, 1999, BY NOT
TAKING INTO ACCOUNT THE BUILD-OWN-AND-OPERATE AGREEMENT EXECUTED BETWEEN THE
REPUBLIC OF THE PHILIPPINES THROUGH THE DEPARTMENT OF TRANSPORTATION AND
COMMUNICATION (DOTC/LTO) AND PETITIONER STRADCOM CORPORATION COVERED BY R.A.
6957, AS AMENDED BY R.A. 7718.
B.
THE HONORABLE APPELLATE COURT GRIEVOUSLY ERRED IN
SUSTAINING RESPONDENT JUDGE HILARIO L. LAQUIS OBVIOUS GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN RULING THAT
PETITIONER STRADCOM IS IN ESTOPPEL FOR HAVING PARTICIPATED IN THE BIDDING
CONDUCTED BY ISAP FOR THE PURPOSE OF CHOOSING THE INFORMATION TECHNOLOGY (IT)
SERVICE PROVIDER FOR THE COCAS WHICH IS IN VIOLATION OF THE BOO AGREEMENT.
C.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
AFFIRMING RESPONDENT JUDGE HILARIO L. LAQUIS PATENT GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN ISSUING A WRIT OF PRELIMINARY
INJUNCTION AGAINST AN ACCOMPLISHED ACT, AN ACT IN CLEAR VIOLATION OF THE RULE
ON FAIT ACOMPLI.
D.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
AFFIRMING RESPONDENT JUDGE HILARIO L. LAQUIS GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED WRIT OF
INJUNCTION DESPITE CLEAR AND SERIOUS VIOLATIONS OF RESPONDENT DTECH WHO COME TO
COURT OF EQUITY WITH UNCLEAN HANDS.[21]
We
find the denial of STRADCOMs petition in order.
Where
a case has become moot and academic, there is no more justiceable controversy,
so that a declaration thereon would be of no practical value.[22] A case becomes moot and academic when, by virtue of
supervening events,[23] there is no more actual controversy between the parties
and no useful purpose can be served in passing upon the merits.[24] Since they are constituted to pass upon
substantial rights, courts of justice will not consider questions where no
actual interests are involved.[25] As a rule, courts decline jurisdiction over
such cases or dismiss them on the ground of mootness.[26]
Our perusal of the record shows that STRADCOMs petition
assailing the CAs decision which upheld the validity of the writ of
preliminary injunction issued by the RTC had been rendered moot and
academic. It is beyond dispute, after
all, that DTECH commenced its main action for injunction for no other purpose
than to restrain the LTO from putting into effect its termination of the 1 July
2002 MOA and, with it, DTECHs services as sole IT provider of the verification
aspect of the COCAS. In its 6 June 2003
complaint, DTECH specifically sought the following reliefs:
WHEREFORE,
it is most respectfully prayed that:
(a)
immediately upon
receipt of this complaint, a temporary restraining order be issued restraining
[LTO] and all other agencies, parties or persons acting for and in his behalf
and under its authority from terminating and/or otherwise giving effect and
implementing the termination of the [MOA] dated July 01, 2002 and the COCAS
and/or the services of [DTECH] as IT service provider of the verification
aspect of the COC Authentication System; allowing any other IT service provider
or party to perform the function of [DTECH] as the sole IT service provider for
the verification of Certificates of Cover of motor vehicles for registration
and in any way disrupting the function of [DTECH] as such, either directly or
indirectly, by terminating the MOA and/or rendering the rights of the parties
emanating therefrom to become ineffective, moot and academic;
(b)
after due notice and
hearing, a writ of preliminary injunction be issued in the same tenor as that
of the temporary restraining order herein prayed for; and
(c)
thereafter, making the
injunction permanent within the period of effectivity of the [MOA] by and
among the LTO, IC, ISAP and [DTECH] dated July 01, 2002.[27]
(underscoring supplied)
As
may be gleaned from the MOA, however, the engagement of DTECH as exclusive IT
service provider for the verification aspect of the COCAS was only for a
limited period of five years. In
specifying the term of the agreement, Section 2 of the MOA provides that,
(t)he engagement of [DTECH] by ISAP as the sole IT service provider for the
verification of COCs shall be five (5) years commencing on July 24, 2002 until
July 24, 2007, renewable for the same period of time under such terms and
conditions mutually acceptable, subject to the provisions of sections 7[28]
and 8[29]
hereof.[30] Having been prompted by LTOs supposed
wrongful pre-termination of the MOA on 26 May 2003, it cannot, therefore, be gainsaid that DTECHs
cause of action for injunction had been mooted by the supervening expiration of the term agreed upon by the parties.
Considering
that DTECHs main case has been already mooted, it stands to reason that the
issue of the validity of the writ of preliminary injunction issued by the RTC
had likewise been mooted. Indeed, a
preliminary injunction is a provisional remedy, an adjunct to the main case
subject to the latter's outcome.[31] It is resorted to by a litigant for the
preservation or protection of his rights or interest and for no other purpose
during the pendency of the principal action.[32] Under the above-discussed factual milieu, we
find no more reason to determine whether or not the RTCs grant of the writ of
preliminary injunction sought by DTECH amounted to grave abuse of discretion.
While
courts should abstain from expressing its opinion where no legal relief is
needed or called for,[33]
we are well aware of the fact that the moot and academic principle is not a
magical formula that should automatically dissuade courts from resolving a
case. Accordingly, it has been held that
a court will decide a case, otherwise moot and academic, if it finds that: (a) there is a grave violation of the
Constitution; (b) the situation is of exceptional character and paramount
public interest is involved; (c) the constitutional issue raised requires
formulation of controlling principles to guide the bench, the bar, and the
public; and (d) the case is capable of repetition yet evading review.[34] None of these exceptions is, however, present
in this case.
WHEREFORE, premises considered, the
petition is DENIED for having been
rendered moot and academic.
SO ORDERED.
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JOSE
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WE
CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION MARIA LOURDES
P. A. SERENO
Associate
Justice Associate Justice
BIENVENIDO L. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the
above Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second
Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.
RENATO C. CORONA
Chief Justice
[1] Penned by Associate Justice
Rosalinda Asuncion-Vicente and concurred in by Associate Justices Edgardo P.
Cruz and Sesinando E. Villon.
[2] CA
rollo, CA-G.R. SP No. 87233, 8 May 2006
Decision, pp 486-502.
[3] Records, Vol. I, Civil Case No.
Q03-49859, DTECHs 6 June 2003 Complaint, pp. 1-32.
[4]
[5]
[6]
[7]
[8] RTCs
25 June 2003 Order, id. at 84.
[9] LTOs 8 July 2003 Urgent Motion to
Dismiss, id. at 87-100.
[10] RTCs 1 August 2003 Resolution, id.
at 121-123.
[11] RTCs
1 August 2003 Resolution, id. at 124-125.
[12] RTCs
4 August 2003 Writ of Preliminary Prohibitory Injunction, id. at 150-151.
[13] STRADCOMs
6 August 2003 Answer-In-Intervention, id. at 154-162.
[14] An Act Authorizing the Financing,
Construction, Operation and Maintenance of Infrastructure Projects by the
Private Sector, and for Other Purposes.
[15] An Act Amending Certain Sections of Republic
Act No. 6957, Entitled An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure Projects by the Private Sector, and
for Other Purposes.
[16] Records,
Vol. I, Civil Case No. Q03-49859,
LTOs 19 August 2003 Motion for Reconsideration, pp. 200-214.
[17] STRADCOMs
15 October 2003 Motion to Dissolve Writ of Preliminary Injunction, id. at
255-261.
[18] RTCs
3 March 2004 Resolution, id. at 308-315.
[19] RTCs
16 August 2004 Resolution, id. at 367-369.
[20] CA rollo, CA-G.R. SP No. 87233, 8 May 2006 Decision, pp. 486-502.
[21] Rollo,
p. 11.
[22] Paloma
v. Court of Appeals, 461 Phil. 269, 276 (2003).
[23] Vilando
v. House of Representative Electoral Tribunal, G.R. Nos. 192147 & 192149, 23 August 2011.
[24] Samson
v. Caterpillar, Inc., G.R. No. 169882, 12
September 2007, 533 SCRA 88, 96.
[25] Huibonhoa v.
[26]
[27] Records,
Vol. I, Civil Case No. Q03-49859,
pp. 29-30
[28] On
the Responsibilities of [the] IC
[29] On
the Pre-Termination of [the] Agreement
[30] Records,
Vol. I, Civil Case No. Q03-49859,
p. 49
[31] Bustamante
v. Court of Appeals, 430 Phil.
797, 808 (2002).
[32]
[33] Korea
Exchange Bank v. Hon. Rogelio C. Gonzales, G.R. No. 139460, 31 March 2006, 486 SCRA 166, 176.
[34]