Australian Professional Realty, Inc. v. Padre Garcia

G.R. No. 183367 (March 14, 2012)

Australian Professional Realty denied injunctive relief; agreement void per courts, highlighting legal standards.

Facts:

In 1993, a fire destroyed the old public market of the Municipality of Padre Garcia, Batangas. Following this incident, the municipal government, led by then Mayor Eugenio Gutierrez, entered into a Memorandum of Agreement (MOA) with Australian Professional Realty, Inc. (APRI) on January 19, 1995. Under this MOA, APRI was tasked with constructing a shopping complex on a 5,000-square-meter lot, in exchange for exclusive rights to operate, manage, and lease stall spaces for a period of 25 years.

In May 1995, Victor Reyes was elected as the new municipal mayor. On February 6, 2003, Reyes initiated a legal action against APRI, seeking a declaration of nullity of the MOA, claiming it was contrary to law and public policy, specifically citing Republic Act Nos. 6957 and 7718. The case was filed in the Regional Trial Court (RTC) of Rosario, Batangas, and was assigned Civil Case No. 03-004.

The RTC issued summons to the petitioners, but it was returned unserved as they had vacated the address provided. Subsequently, the RTC allowed service by publication. On November 24, 2003, the RTC declared the petitioners in default and permitted the respondent to present evidence ex parte. On October 6, 2004, the RTC ruled in favor of the Municipality, declaring the MOA null and void, ordering the petitioners to pay damages of PHP 5,000,000, and forfeiting the structures of the shopping center to the Municipality.

After the judgment became final, the Municipality filed a Motion for Execution, which was granted. The petitioners then filed a Petition for Relief from Judgment, which was denied. They subsequently filed a Petition for Certiorari and Prohibition before the Court of Appeals (CA), which included a motion for a status quo order and a temporary restraining order (TRO) to prevent further proceedings in the RTC.

On March 26, 2008, the CA denied the motion for injunctive relief, stating that there was no clear and irreparable injury that would be suffered by the petitioners. The CA reiterated this denial on June 16, 2008, leading to the petitioners filing a Petition for Review on Certiorari before the Supreme Court.

Legal Issues:

  1. Whether the CA committed grave abuse of discretion in denying the petitioners' motion for the issuance of a status quo order and a temporary restraining order (TRO).
  2. Whether the petitioners had a clear legal right that warranted the issuance of an injunction.

Arguments:

Petitioners' Arguments:

  • The petitioners contended that the RTC's judgment, which declared the MOA null and void, was rendered without proper jurisdiction over their persons, as they were not properly served with summons.
  • They argued that the execution of the RTC's judgment would result in significant injustice, as it would nullify their investment of approximately PHP 30,000,000 in the shopping center without just compensation.
  • The petitioners claimed that the CA failed to recognize the urgency of their situation and the potential for irreparable harm.

Respondent's Arguments:

  • The Municipality argued that the petitioners did not demonstrate a clear legal right that warranted injunctive relief, as their rights under the MOA had already been declared non-existent by the RTC.
  • The respondent maintained that the injuries claimed by the petitioners were quantifiable and could be compensated through damages, thus negating the need for a TRO or injunction.
  • The Municipality also pointed out that it had not moved to execute the writ out of administrative comity, indicating that the situation was not as urgent as claimed by the petitioners.

Court's Decision and Legal Reasoning:

The Supreme Court denied the petitioners' appeal, affirming the CA's resolutions. The Court found that the petitioners had not shown any grave abuse of discretion on the part of the CA. It emphasized that the denial of a motion for a preliminary injunction is an interlocutory order and not appealable under Rule 41 of the Rules of Court.

The Court further elaborated on the requirements for granting injunctive relief, stating that the petitioners needed to demonstrate:

  1. A clear and unmistakable right to be protected.
  2. A direct threat to that right by the act sought to be enjoined.
  3. A material and substantial invasion of that right.
  4. An urgent necessity for the writ to prevent serious and irreparable damage.

The Court concluded that the petitioners failed to establish a clear legal right, as their rights under the MOA had been declared void by the RTC. Additionally, the alleged damages were deemed quantifiable and compensable, thus not warranting injunctive relief.

Significant Legal Principles Established:

  • The issuance of a preliminary injunction requires the existence of a clear legal right and the demonstration of irreparable injury.
  • An interlocutory order, such as the denial of a motion for a preliminary injunction, is not appealable under Rule 41.
  • The finality of a judgment imposes a ministerial duty on the court to execute it, barring exceptional circumstances.