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CA-G.R. SP NO. 93221


[ CA-G.R. SP NO. 93221, July 27, 2006 ]




The respondent Broadchem Corporation (or hereafter Broadchem) sued the petitioner Novartis Healthcare Philippines, Inc. (or Novaphil), Novartis Animal Vaccines, Inc. (or NAVI) and the Bureau of Animal Industry (or BAI) principally for damages and injunctive relief before the Regional Trial Court of Makati City (or RTC).  This was docketed as Civil Case No. 03-1333 and raffled to Branch 57 presided by the respondent Hon. Reinato Quilala.

This petition is an offshoot of said case in the course of which the Order dated January 9, 2006 was issued denying Novaphil’s Motion to Dissolve the Writ of Preliminary Injunction.  Asserting that this was issued with grave abuse of discretion, Novaphil asks that this be nullified and set aside.

Broadchem is a corporation engaged in the business of marketing and distributing various drugs and vaccines, including animal vaccines. Broadchem had entered into a Distribution Agreement with Grand Laboratories, Inc. (or GLI) for the distribution here in the Philippines of certain vaccines that it produced.  This agreement was to run for three (3) years from October 11, 1993 to October 1996,  Broadchem however continued to be the exclusive distributor of GLI’s vaccine even after October 1996.

In 2002 NAVI acquired GLI and it became one of its divisions, and so in the distribution of the vaccines Boadchem dealt and placed its orders with NAVI.  But in its letter dated June 26, 2002 NAVI informed Broadchem of its decision to terminate the Distribution Agreement effective January 1, 2003. Broadchem protested the unilateral termination and demanded for compensation the sum of P250,000,000.00 or approximately US$5,000,000.00 as damages, but which NAVI refused to heed.

On December 11, 2002 NAVI refused to fill in Broadchem’s order.  NAVI also appointed Novaphil as the exclusive distributor of its vaccines in the Philippines.  NAVI further sought the cancellation of the certificates of registration issued by the BAI for its products which are in the name of Broadchem and requested for their registration in the name of Novaphil.  This prompted Broadchem to file the said suit for damages and to enjoin the BAI from canceling the certificates of registration in its name, Broadchem prayed for the issuance of temporary restraining order and/or preliminary injunction.

After conducting a hearing, Hon. Quilala granted the prayer of Broadchem for the issuance of writ of injunction on December 30, 2003:
WHEREFORE, without necessarily touching on the merits of the case and upon plaintiff’s filing of a bond in the amount of Php 500,000.00 duly approved by this Court, let a writ of preliminary injunction issue enjoining the defendants, their agents, successors and assigns from causing the registration with defendant BAI of the NAVI animal vaccines in the name of NOVAPHI(L).

SO ORDERED. (p. 93, rollo)
Novaphil filed a motion for its reconsideration.  In addition, it filed a Motion to Dismiss the complaint on the ground that it failed to state a cause of action.  Hon. Quilala however denied these motions on September 16, 2004 stating:
WHEREFORE, the afore-stated motions are hereby DENIED for lack of merit.  The defendant Novaphil is hereby given ten (10) days to file answer.

SO ORDERED. (p. 205, rollo)
Novaphil thereafter filed its Answer Ad Cautelam, while Broadchem filed its Reply.

Alleging that Broadchem ceased to have any right for a writ of injunction effective October 2005 as the Distribution Agreement which was the basis for the injunction became ineffective as of October 11, 2005, Novaphil filed an Urgent Motion to Dissolve Injunction on October 18, 2005.  But like its previous motions, Hon. Quilala struck it down on January 9, 2006 providing that:
Acting on the URGENT MOTION (To Dissolve Injunction) filed by defendant “Novaphil” dated October 17, 2005, together with the OPPOSITION interposed thereto by the plaintiff dated November 25, 2005, as well as the REPLY, etc. filed by defendant Novaphil dated December 21, 2005, and well considering the arguments advanced by the parties, the Court finds the plaintiff’s Opposition to be impressed with merit, the Court therefore, has no recourse but to DENY the said motion.

SO ORDERED. (p. 40, rollo)
As recourse against the said set back, Novaphil has come before this Court via this Petition for Certiorari theorizing that:
Novaphil posits that Broadchem’s contractual right has already expired on October 2005.  Accordingly, the writ of injunction issued on December 30, 2003 should also be deemed as having become ineffective since there is no longer any contract to speak of.

It frequently happens that, pending suits for injunctive relief changes take place in the conditions which give rise to the litigation, and the question is thus presented whether the suit should stand or fall upon the facts as they existed at the time it was brought, so as to exclude all consideration of subsequent changes or abandonment of the acts complained of.  Generally speaking, it is the condition of the things at the time of the hearing of the suit which is material, and which furnishes the basis for relief.  The court is not only authorized, but it is the duty to determine not merely whether the plaintiff was entitled to an injunction at the time he began the suit but whether the facts as they appear at the time of the hearing warrant such relief, and it may refuse to grant an injunction where since the commencement of the suit, conditions have so changed as to render an injunction useless and of no effect if granted.  Injunctive relief will generally be refused where, before the final hearing, the plaintiff loses his interest in or title to the subject matter sought to be restrained has been made lawful by the statute or ordinance.  This does not mean, however, that the court should deny injunctive relief in every case of material changes in conditions or abandonment of the acts complained of, for circumstances may still exist which, in the face of the situation, would justify the issuance of injunction as a matter of sound judicial discretion (Lizares vs. Kintanar, G. R. No. 33868-76, October 18, 1990, 190 SCRA 585).

Broadchem is correct that the issuance of the injunctive relief in this case, was not solely predicated on the existence of the distributorship agreement but was also based on the equally important fact that Broadchem has a litigiable point and was about to suffer grave and irreparable injury by NAVI’s unilateral termination of the contract. Hence a writ of injunction was issued to preserve the status quo of the things subject of the action and/or the relation between the parties, in order to protect the right of Broadchem during the pendency of the suit.  Because, otherwise or if no preliminary injunction were issued, NAVI may before final judgment do or continue the doing of the act which the Broadchem asks the court to restrain, and thus make ineffectual the final judgment rendered afterwards granting the relief it sought.

The writ of preliminary injunction is issued precisely to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied or adjudicated.  Denial of the application for the writ may make the complaint of the respondents moot and academic.  Furthermore, it would render ineffectual a final judgment in their favor.  Such situation cannot be countenanced (Los Baños Rural Bank vs. Africa, G. R. No. 143994, July 11, 2002, 384 SCRA 535).  There is thus no basis to sustain the contention that the writ of injunction ceased to be effective as of October 2005 because the Distribution Agreement had already expired.  This is not an infrangible fact being precisely a highly contended issue.  Hon. Quilala cannot therefore be considered as having been whimsical in denying Novaphil’s Motion to Dissolve Injunction.

In fine, the grant or denial of a writ of preliminary injunction in a pending case rests in the sound discretion of the court taking cognizance of the case (Bustamante vs. Court of Appeals, G. R. No. 126371, April 17, 2002, 381 SCRA 171).  In this case, Hon. Quilala found sufficient basis to conclude that the issuance of a writ of preliminary injunction in favor of Broadchem was necessary and proper.  Novaphil on the other hand failed to show that Hon. Quilala acted without or in excess of jurisdiction, meaning having been clothed with power to determine the case, he overstepped his authority as determined by law, or that he committed grave abuse of his discretion or acted in a capricious, whimsical, arbitrary or despotic manner in the exercise of his discretion as to be equivalent to lack of jurisdiction (Rivera vs. Palattao, G. R. No. 157824, January 17, 2005, 448 SCRA 623).

Besides, We have consistently held that there is no grave abuse of discretion in the issuance of a writ of preliminary injunction where a party was not deprived of its day in court, as it was heard and had exhaustively presented all its arguments and defenses.  When the contending parties are both given ample opportunity to present their respective evidence and arguments in support of their opposing contentions, as in this case, no grave abuse of discretion can be attributed to the trial court which issued the writ of preliminary injunction, as it is given a generous latitude in this regard pursuant to Section 4, Rule 58 of the Rules of Civil Procedure, as amended.    (Land Bank of the Philippines vs. Continental Watchman Agency, Inc., G. R. No. 136114, January 22, 2004,  420 SCRA 624).  As no grave abuse of discretion, as the term is understood, can thus be attributed in the assailed Order -



Guariña III and Romilla-Lontok, JJ., concur.

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