DETECTIVE & PROTECTIVE BUREAU, INC., PETITIONER, VS. THE HONORABLE GAUDENCIO CLORIBEL, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH VI, COURT OF FIRST INSTANCE OF MANILA, AND FA…

Detective and Protective Bureau versus Cloribel

The Case

This is a petition for certiorari with a prayer for a preliminary injunction, brought by Detective and Protective Bureau, Incorporated against Judge Gaudencio Cloribel of the Court of First Instance of Manila and against Fausto Alberto. The corporation complains that the judge gravely abused his discretion when he admitted a counter-bond and dissolved the writ of preliminary injunction he had earlier issued, a writ that restrained Alberto from acting as managing director. The case matters because it gathers into one decision the working rules on preliminary injunctions: when a motion to dissolve must be verified, whether an injunction granted after hearing may still be dissolved, and why a party who skips a motion for reconsideration cannot go straight to the Supreme Court.

Procedural History

Detective and Protective Bureau filed a complaint for accounting, with preliminary injunction and receivership, against Fausto Alberto in the Court of First Instance of Manila. Judge Cloribel set the prayer for ancillary relief for hearing and required memoranda. He then granted the writ of preliminary injunction, conditioned on a bond of 5,000 pesos. After the corporation filed its bond, Alberto moved to admit a counter-bond to lift the injunction. Over the corporation's opposition, the judge admitted the counter-bond and set aside the writ. The corporation went directly to the Supreme Court by petition for certiorari, asking that the order lifting the writ be declared null and void. The Supreme Court gave due course to the petition but did not issue a preliminary injunction.

Facts

Detective and Protective Bureau, Incorporated alleged that Fausto Alberto had been its managing director from 1952 until January 1964. In June 1963, he allegedly seized the corporation's assets, books, records, vouchers, and receipts from the accountant-cashier, concealed them, and refused to let any member of the corporation examine them. On January 14, 1964, the stockholders removed him as managing director and elected Jose de la Rosa in his place. Alberto allegedly refused to vacate his office and to deliver the assets and books, and continued to perform unauthorized acts for the corporation. He had also failed to render an accounting of his administration from 1952.

The corporation prayed for a preliminary injunction restraining Alberto from exercising the functions of managing director and from disposing of corporate funds, for the appointment of a receiver, and for an accounting after judgment. Judge Cloribel heard the prayer and, on June 18, 1964, granted the writ conditioned on a bond of 5,000 pesos. The corporation filed the bond, but while it was pending approval Alberto moved to admit a counter-bond to lift the injunction. On August 5, 1964, the judge admitted the counter-bond and set aside the writ.

Alberto disputed the corporation's account. He claimed that Jose de la Rosa could not be elected managing director because he owned no stock in the corporation, and that he himself held the controlling interest, having invested 57,727.29 pesos against the 4,000 pesos invested by another director, Jose Barredo.

Issues

• Whether or not the order of August 5, 1964, admitting the counter-bond and setting aside the writ of preliminary injunction, was issued contrary to law and with grave abuse of discretion.
• Whether or not the motion to dissolve the writ had to be verified and supported by affidavits under Section 6 of Rule 58.
• Whether or not a preliminary injunction granted after hearing may be dissolved by the trial court.
• Whether or not the petition for certiorari may be entertained when the petitioner went directly to the Supreme Court without first filing a motion for reconsideration in the trial court.

Applicable Provisions

Section 6 of Rule 58 of the Rules of Court, as discussed in the decision, provides:

The injunction may be refused, or, if granted ex parte, may be dissolved.

The Court reads this clause as not placing beyond the court's reach the dissolution of an injunction granted after hearing.

Section 30 of the Corporation Law provides:

Every director must own in his own right at least one share of the capital stock of the stock corporation of which he is a director, which stock shall stand in his name on the books of the corporation.

This bears on whether Jose de la Rosa could validly sit as a director, and therefore as managing director, of the corporation.

Article V, Section 3 of the By-Laws of the Corporation provides:

The manager shall be elected by the Board of Directors from among its members.

This confirms that one who is not a director cannot be managing director.

Article IV, Section 1 of the By-Laws provides:

Directors shall serve until the election and qualification of their duly qualified successor.

This supports Alberto's claim that he could not be compelled to vacate in favor of an unqualified successor.

Ruling

On the first issue, the Court found no grave abuse of discretion. A preliminary injunction is an interlocutory order, always under the control of the court before final judgment, and the trial court has wide latitude under Section 7 of Rule 58 to modify or dissolve it as justice may require. The exercise of sound judicial discretion in injunctive matters should not be interfered with except in cases of manifest abuse, and none was shown.

On the second issue, the Court held that whether the motion to dissolve must be verified depends on the ground on which it rests. If the application is based on the insufficiency of the complaint, the motion need not be verified. If it is based on the ground that the injunction would cause great damage to the defendant while the plaintiff can be fully compensated, the motion should be verified. Because the motion did not appear in the record, the Court could not determine its grounds and relied on the judge's order that the filing of the counter-bond was in accordance with law.

On the third issue, the Court held that an injunction granted after hearing may still be dissolved. It quoted its earlier ruling in Caluya versus Ramos:

Although said section prescribes the grounds for objecting to, or for moving, the dissolution of, a preliminary injunction prior to its issuance or after its granting ex parte, it does not thereby outlaw a dissolution if the injunction has been issued after a hearing. This is to be so, because a writ of preliminary injunction is an interlocutory order which is always under the control of the court before final judgment.

On the fourth issue, the Court held that the petition must be denied because the corporation went directly to the Supreme Court without giving the trial judge a chance to correct his error, if any, through a motion for reconsideration. None of the recognized exceptions applied: a squarely raised question of jurisdiction, a patent nullity, or a deprivation of due process.

Doctrine

A preliminary injunction is an interlocutory order, always under the control of the trial court before final judgment, and the court may modify or dissolve it as justice may require. The dissolution of an injunction granted after hearing is not barred by Section 6 of Rule 58, and any irregularity in that regard is cured not by certiorari but by appeal. Whether a motion to dissolve must be verified depends on its ground: insufficiency of the complaint requires no verification, while a claim of great damage to the defendant with full compensation to the plaintiff does. A party must first seek reconsideration in the trial court before resorting to certiorari, save in the recognized exceptions.

Disposition

The petition for certiorari with preliminary injunction was dismissed, with costs against the petitioner.

Remember This

Memorize this line: a preliminary injunction is an interlocutory order always under the control of the court before final judgment, so its dissolution is a matter of judicial discretion reviewable only for manifest abuse. Examiners use this case for the verification rule under Section 6 of Rule 58 and for the requirement of a prior motion for reconsideration before certiorari.