328 Phil. 308
HERMOSISIMA, JR., J.
"x x x on April 4, 1992 at around 11:00 o'clock in the morning, x x x Daniel Villanueva and Mel Dimat, representing themselves to be representatives/officers and/or agents of Filipinas Textile Mills, Inc., with the aid of several other individuals brandishing armalites, hand guns and other weapons, forced their way in the compound, and with the use of violence, threats, force and intimidation, drove away the security guards and employees and took over the actual and physical possession thereof and took control over the buildings, machineries, equipment and other improvements found therein and looted the premises;Understandably, private respondent prayed in that urgent motion that a TRO be issued by the SEC enjoining petitioners from "assuming and performing the functions of Directors/Officers of the Corporation, and from acting for and on behalf of FTMI x x x and further acts of dispossession."[10]
x x x That respondents should be stop (sic) and restrained from further using false pretenses, unauthorized acts and misrepresentations and further acts of dispossession, all inimical and prejudicial to the interest of x x x the Corporation, otherwise, irreparable damage will be further sustained due to the illegal and unlawful acts of the respondents."[9]
"x x x this Hearing Panel was not indubitably shown by the herein parties that their individual claims of being the majority group is without any shred of doubt. The onus probandi vital on this matter certainly rests on the parties and the appreciation of the Hearing Panel during the hearing of the injunctive relief is that there is no sufficient evidence to sway us to a favorable ruling. While the parties succeeded in showing us that they are stockholders of record of the corporation, the requisite quantum of proof to show the composition/member of the majority block is deficient for us to sanction and grant favorably the ancillary remedy prayed for, sans prejudice for a more thorough disclosure of facts and evidence appurtenant thereto on the trial on the merits."[20]It did not, however, forget to address the matter of the validity of the TRO issued by the hearing panel on May 14, 1992, coming as it does on the heels of an earlier TRO issued by SEC SICD Hearing Officer Macario Mallari on November 22, 1991. On this issue, the hearing panel ruled that:
"x x x on the x x x opposition to the issuance of the present Temporary Restraining Order (TRO), the propriety of the issuance thereof, and the motion to lift TRO, this Hearing Panel finds no credit in the contention x x x.Nonetheless, the hearing panel concluded that the issue regarding the validity of the TRO dated May 14, 1992 is rendered moot and academic by what the panel considered as the ultimately appropriate remedy to the situation confronting it: receivership.
In the perusal of the first Temporary Restraining Order of 22 November 1991, then issued and penned solely by Hearing Officer Macario Mallari x x x the same was issued to enjoin the x x x Special Stockholders' Meeting on 23 November 1991.
In the present TRO by the Hearing Panel, the respondents (petitioners herein) were restrained from acting and representing themselves as directors of Filipinas Textile Mills and by virtue of their use of force, intimidation, violence and guns in taking over the premises of the corporation after the annual Stockholders' meeting was held and after the election of a new set of directors, which has remained unrebutted by the respondents (petitioners herein). There is neither a factual and or (sic) legal similarity between the two events that resulted in the issuance of the first and second TRO."[21]
"A fortiori, persuaded as we are by the attendant facts, the supervening (sic) event of an extra-judicial foreclosure over the corporation's properties, and the patent rift and strained relationships of the parties, constrained us to hold that the proper and equitable remedy under the premises lies not with the provisional remedy of injunction, but in the appointment, motu propio, of a committee to act as 'Receiver,' pursuant to PD 902-A, as amended by PD 1799.Dissatisfied with the aforecited ruling of the hearing panel, petitioners filed with the SEC en banc a petition for certiorari assailing the TRO, dated May 14, 1992, on the ground that it was issued without prior notice and hearing and without the requisite posting of the appropriate bond therefor as well as the order, dated June 2, 1992, which allowed the perpetuation of the effects of the aforementioned TRO if only because the question of its validity has been mooted by the appointment in the same order of June 2, 1992 of a committee of receivers for the corporation. The petition for certiorari was docketed as SEC-EB No. 313.
The Receiver herein appointed (sic) shall be tasked to preserve the assets of the corporation for and in relation to its creditors, majority stockholders and other stockholders, the affected general public, to deter further prejudice and injury, pendente lite; it appearing that the corporation has ceased its operations in 1985, the eminent danger of dissipation, loss or wastage or destruction of its corporate assets before the controversy/matters at hand can be fully resolved, is a valid and legitimate apprehension shared presently by both the petitioners and respondents herein.
In furtherance to and as a direct consequence of the appointment of a Receiver by this Hearing Panel, both petitioner (private respondent herein) and respondents (petitioners herein) being stockholders of record, are required under the law not only to relate with, aid and cooperate with the receiver in the performance of his duties, but, likewise, to desist and refrain from actively pursuing the affairs of the corporation, dispossession or alienation of corporate assets, paying off claims and indebtedness of the corporation, as well as to account for all corporation proprieties (sic) which are in the name of the corporation and the precise location thereof.
It is not amiss to point out at this juncture, and we are aware of the opinion and so hold, that by the appointment of a Receiver justice is better served, the rights of parties fully protected, and foremost, that this Forum is ever so cautious in the imposition and granting of the provisional remedy of injunction and interfering needlessly with the substantive rights of the parties.xxx xxx xxx
Accordingly, pursuant to PD 902-A, as amended by P.D. No. 17999, Atty. Ruben Ladia is hereby appointed as Chairman of the Committee, Atty. Teresita Siao and Atty. Julito Bajan, as members thereof, all of the Securities and Exchange Commission, who shall have the following functions, duties and responsibilities, viz.:
1. To take custody of, and control over all the existing assets and properties in the name of Filipinas Textile Mills, Inc.;
2. To evaluate the existing assets, liabilities, earnings and operations of subject corporation;
3. To determine the best way to salvage and protect the interest of the investors and creditors and the corporation;
4. To report to this Commission (sic) on all of the above within sixty (60) days from issuance hereof, and be responsible to this Commission for the implementation of all necessary orders, and/or directives of this Forum relative to and in connection with their functions and responsibilities x x x."[22]
"x x x Filipinas Textile Mills, Inc., seemingly without any property or assets to speak of, is virtually bankrupt. The receivership committee x x could not, perforce, carry out its assigned task, powers, functions, duties and responsibilities x x x and is therefore left with no alternative but to recommend that the said committee be dissolved And, in view of the failure of the company to operate as a going concern since 1985, or more than seven (7) years now, coupled with the in-fighting of the stockholders, it is finally recommended that Section 22 of the Corporation Code, particularly, 'if a corporation has commenced the transaction of its business but subsequently becomes continuously inoperative for a period of at least five (5) years, the same shall be a ground for the suspension or revocation of its corporate franchise or certificate of incorporation,' be enforced and or applied by the Honorable Hearing Panel."[24]In the same order, the hearing panel appointed Atty. Rene Punzalan as liquidator for purposes of winding up the affairs of the corporation prior to dissolution. Parenthetically, the hearing panel also ruled that the issue of who are the legitimate directors and/or officers of FTMI has been rendered moot by the fact that the corporation has been inoperative since 1985 and has no more assets to speak of, making it a paper corporation in the context of the law; to resolve such an issue thus will no longer serve any effective purpose.
"x x x the questioned orders do not show such grave abuse of discretion as to warrant the grant of this petition.On June 15, 1993, petitioners brought their cause to the respondent Court of Appeals via a petition for review[27] of the order dated May 24, 1993 issued by the SEC en banc, the TRO dated May 14, 1992 issued by the SEC SICD hearing panel, and the order dated June 2, 1992 issued by the same panel which in effect perpetrated the effects of the questioned TRO because the issue of the validity of that TRO was mooted by the constitution of a committee of receivers for FTMI.
Bedrock is the rule that 'certiorari is an extraordinary remedy available only in extraordinary cases where the court acted without jurisdiction or with grave abuse of discretion x x x. As a matter of fact, even an abuse of discretion is sufficient by itself to justify the issuance of a writ of certiorari. For that purpose, the abuse of discretion must be grave and patent, and it must be shown that the discretion was exercised arbitrarily or despotically' x x x.xxx xxx xxx
It appears from the above orders that the hearing panel had a basis in rendering their order as they rightfully considered the attendant circumstances of the case, the evidence presented and the best interest of the corporation."[26]
"x x x It is not true as petitioners contend that the SEC merely made a 'simplified ruling.' x x x. Had they considered the Order consisting of four (4) pages, single space in its entirety, they should have no misapprehension as to the ultimate facts, the applicable law and the significance attached to them by the SEC. The Order embodied in chronology the Orders of May 14 and June 2, 1992 rendered by the by (sic) Hearing Panel, the reason and basis why the Panel issued those orders, the pleadings filed and the contentions presented by the contending parties, the proceedings had and actions taken in connection therewith, and the resolution arrived at by the SEC en banc. Those embodiments provided sufficient foundation for the SEC en banc to hold that its Hearing Panel had sound basis for issuing the Orders of May 14 and June 2, 1992. x x x.In disposing of the main issue pertaining to the validity of the TRO issued by the SEC SICD hearing panel on May 14, 1992, respondent court, upholding the actions of the SEC en banc and the SEC SICD hearing panel, ruled that:
The Order under review contains the salient facts, the law and applicable doctrines. It is needless for the SEC to repeat those embodiments again and again after they have been summarized at length. And, evidently, the SEC conformed to, and agreed with, as well as adopted the findings and conclusions of its Hearing Panel, which is not censurable. To borrow the apt words of Mr. Justice Barredo, in Vda. de Enriquez vs. Court of First Instance, 47 SCRA 354, 367, the SEC's Order is in 'substantial compliance' or substantially complied with the constitutional and statutory requirements. x x x"[28]
"x x x the members of the Hearing Panel did right in issuing the Orders of May 14 and June 2, 1992, and did not violate the due process clause concerning prior notice and hearing. The TRO is interlocutory in its nature and it is by law effective only for twenty (20) days. It remains at all times within the control of the SEC. The Hearing Panel in the very order of May 14, 1992, set the petition for issuance of a writ of preliminary injunction for hearing. The SEC, in upholding the Panel's Orders, must have in mind the protection of the interests of the contending parties and that of the firm which has not been operating for about eight (8) years, thus it is imperative to place the firm under receivership to protect and preserve the interest of the corporation which is in a state of bankruptcy, and to place its remaining assets under the possession, management and control of the corporate assets under the SEC's control, rather than leaving them under the dictates of the contending parties, what with the events that transpired on April 4, 1992 at the corporate premises which preceded private respondent's prayer for an extraordinary remedy. Unquestionably, the SEC's resolution is the best remedial measure, as clearly circumscribed under the Hearing Panel's Orders of May 14 and June 2, 1992, all well worth and meant to maintain the status quo to meet an extreme urgent necessity for the preservation of the corporate properties which, in its ultimate, is for the best interest of both the petitioners and private respondent and the incorporators."[29]Petitioners take exception to the decision of respondent Court of Appeals and seek from us a definitive ruling as to the validity of the TRO dated May 14, 1992 which was issued only after an earlier TRO dated November 22, 1991 in the same case. In particular, they ascribe to respondent Appellate Court the following assignment of errors:
Peremptorily, we find the first assigned error to be utterly devoid of merit. We have cited the refutation by respondent Appellate Court of petitioners' postulate that the assailed resolution of the SEC en banc is constitutionally infirm for failure to state clearly and distinctly the facts and the law on which they are based, which legal posture we find to be satisfactorily in accordance with the applicable law and jurisprudence on the matter."I
THE QUESTIONED ORDER DATED 24 MAY 1993 DENYING PETITIONERS' PETITION FOR CERTIORARI IS VOID FOR ITS FAILURE TO CLEARLY AND DISTINCTLY STATE THE FACTS AND THE LAW ON WHICH IT IS BASED.II
THE RESPONDENT SECURITIES AND EXCHANGE COMMISSION GRAVELY ABUSED ITS DISCRETION, DECIDED QUESTIONS OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS OR SANCTIONED SUCH DEPARTURE BY ITS HEARING PANEL WHEN IT ISSUED THE QUESTIONED ORDER DATED 24 MAY 1993 (ANNEX "A") CONSIDERING THAT:
A. THE ORDER DATED 14 MAY 1992 ISSUED BY THE HEARING PANEL IN SEC CASE NO. 4110 IS ACTUALLY A WRIT OF PRELIMINARY MANDATORY INJUNCTION WHICH WAS ISSUED WITHOUT PRIOR NOTICE AND HEARING, WITHOUT THE REQUISITE POSTING OF A BOND AND WHICH WAS ILLEGALLY USED TO TRANSFER POSSESSION OF PROPERTY FROM ONE PARTY TO ANOTHER;
B. THE LACK OF PRIOR NOTICE AND HEARING AND THE FAILURE OF THE PRIVATE RESPONDENT TO POST A BOND PRIOR TO THE ISSUANCE OF THE ORDER DATED 14 MAY 1992 ARE MANDATORY REQUIREMENTS THE ABSENCE OF WHICH RENDERED THE ORDER DATED 14 MAY 1992 NULL AND VOID; AND
C. THE HEARING PANEL CLEARLY ACTED IN EXCESS OF ITS JURISDICTION IN ALLOWING THE PERPETUATION OF THE EFFECTS OF THE ORDER DATED 14 MAY 1992 WHICH PREMATURELY OUSTED THE PETITIONERS FROM ACTING AS THE OFFICERS OF THE CORPORATION WHICH WAS THE CONDITION AT THE TIME THE ORDER OF 14 MAY 1992 WAS ISSUED."[30]
"We agree x x x with the petitioners' contention that the Order of the hearing panel dated May 14, 1992 x x x is actually a writ preliminary mandatory injunction and not merely a temporary restraining order. Since the Order required the petitioners to deliver possession of the properties of the Corporation to private respondent and to evacuate, vacate, restore, turn-over and surrender peacefully the actual physical possession of the property in question, including all buildings, machinery, equipment and all improvements found thereon to the private respondents, it is clear that the Order was in effect a writ of preliminary mandatory injunction.Indeed, the assailed TRO, dated May 14, 1992, is in fact a writ of preliminary mandatory injunction.
We therefore submit that the Order dated May 14, 1992 was issued with grave abuse of discretion since properties in dispute were transferred before the issue of ownership was finally adjudicated. Thus, in Government Service and Insurance System v. Florendo, 178 SCRA 76 (1989), it was held:'A temporary restraining order is generally granted without notice to the opposite party, and is intended only as a restraint on him until the propriety of granting a temporary injunction can be determined, and it goes no further than to preserve the status quo until that determination (The Revised Rules of Court in the Philippines, Vol. IV-A by Vicente J. Francisco, 1971, pp. 184-185). Its purpose is merely to suspend proceedings until there may be an opportunity to inquire whether any injunction should be granted, and it is not intended to operate as an injunction pendente lite, and should not in effect determine the issues involved before the parties can have their day in court, or give an advantage to either party by proceeding in the acquisition or alteration of the property the right to which is disputed while the hands of the other party are tied.The rule is predicated on the proposition that the ownership as well as the possession of the (properties) in dispute are the main issue and that the relief was prayed for before the issue had been decided on the merits. The philosophy of the rule seems to be that before the issue is determined in the light of the evidence presented, justice and equity demand that the parties be maintained in their status quo so that no advantage may be given to one to the prejudice of the other, and so it was ruled that unless there is a clear pronouncement regarding ownership and possession of the land, or unless the lands is covered by a torrens title pointing to one of the parties as the undisputed owner, a writ of preliminary injunction should not issue to take the (properties) out of possession of one party to place it in the hand of another (The Revised Rules of Court of the Philippines, Vol. IV-A, by Vicente J. Francisco, 1971, p. 226, citing Villadores v. Encarnacion, 95 Phil. 913) x x x'xxx xxx xxx
And since the legal title of the questioned properties is in dispute, with GSIS (the one in possession) asserting ownership in itself, with more reasons that the writ of injunction should not have issued. In the earlier case of Rodulfo v. Alfonso, etc., et al., 76 Phil 225, We held:
The rule that a court should not, by any means of a preliminary injunction, transfer property in litigation from the possession of one party to another, is more particularly applicable where the legal title is in dispute and the party having possession asserts ownership in himself (Gordillo and Martinez v. Del Rosario, 39 Phil. 829).
We likewise agree with the petitioners that since the Order of May 14, 1992 was, in effect, a writ of preliminary mandatory injunction, the same should have been issued only after hearing and after private respondent was required to post a bond in accordance with Section 4, Rule 58 of the Rules of Court. Thus in Teotico v. Agda, Sr., 197 SCRA 675 (1991), the Supreme Court held:
The respondent Judge did not stop there. As complained by Teotico, on 16 December 1988 the former issued an Order where in although he denied the motion for the reconsideration of his 8 September 1988 Order denying the motion for contempt, he ordered Teotico to immediately reinstate Agda from (sic) his previous position as Fiber Regional Administrator, FIDA Region I, with full backwages and allowances mandated by law. This, in effect, amounted to a mandatory injunction, issued without a hearing and in violation of Section 5 of Rule 58 of the Rules of Court (Italics supplied)."[31]