AUDI AG, PETITIONER, VS. HON. JULES A. MEJIA, IN HIS CAPACITY AS EXECUTIVE JUDGE OF THE REGIONAL TRIAL COURT, ALAMINOS CITY; AUTO PROMINENCE CORPORATION; AND PROTON PILIPINAS CO…

Audi versus Mejia

The Case

This is a special civil action for certiorari brought by Audi AG, a non-resident foreign corporation organized under the laws of the Federal Republic of Germany, against Executive Judge Jules A. Mejia of the Regional Trial Court of Alaminos City, together with Auto Prominence Corporation and Proton Pilipinas Corporation. Audi asks the Supreme Court to nullify the trial judge's order granting a twenty-day temporary restraining order in a complaint for specific performance and injunction filed by the two Philippine corporations. The case matters far less for the injunction itself than for what it teaches about the discipline of procedure: the indispensable motion for reconsideration, the hierarchy of courts, and the refusal of the Court to let a litigant decide for itself which procedural rules it will obey.

Procedural History

Auto Prominence Corporation and Proton Pilipinas Corporation filed their complaint for specific performance and injunction, with an application for a temporary restraining order and preliminary injunction, before the Regional Trial Court of Alaminos City. Executive Judge Mejia issued an order directing that summons and the complaint be served on Audi through extra-territorial service and setting the application for hearing. After a hearing at which the plaintiffs presented two witnesses, the Executive Judge issued the assailed order granting a twenty-day temporary restraining order, enjoining Audi from terminating the contracts and directing it to maintain the status quo ante. The raffle of the case was set for a later date.

Audi then filed an urgent motion for voluntary inhibition of the Executive Judge, which was denied. Audi went directly to the Supreme Court by petition for certiorari, later supplemented to challenge the denial of the inhibition motion. The Court of Appeals was never resorted to. The Supreme Court dismissed the petition.

Facts

Audi AG manufactures Audi brand cars and is not licensed to do business in the Philippines. On the first of August, 1996, Audi appointed Proton as its sole assembler and distributor of Audi cars in the Philippines under an Assembly Agreement and a Distributorship Agreement. Proton alleged that it was induced to open, promote, develop, and sell Audi cars upon representations that it would be the exclusive assembler and distributor, and local parts manufacturer for export, for twelve months and thereafter for an indefinite period once the network was established.

Relying on those representations, Proton claimed it borrowed money to build an assembly plant, bought tools and equipment, spent for showrooms and offices, and paid license fees and other expenses. It later turned out, according to the complaint, that Audi did not include the Philippines in its ASEAN Assembly Strategy program, which covered only Malaysia, thus frustrating Proton's preparations. Proton further alleged that Audi, in evident bad faith, negotiated the transfer of the distributorship to a third party, and then terminated both agreements by a letter dated the twenty-seventh of September, 2004, for reasons Proton considered unjustified.

Hence the complaint, the extra-territorial service of summons, the hearing, and the twenty-day restraining order that Audi sought to annul before the Supreme Court.

Issues

• Whether or not the petition for certiorari may be entertained despite the absence of a motion for reconsideration of the assailed order before the trial court.
• Whether or not the petition may be filed directly with the Supreme Court notwithstanding the hierarchy of courts.

Applicable Provisions

Section 1 of Rule 65 of the 1997 Rules of Civil Procedure, as amended, provides:

Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

The underscored condition, that there be no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law, is precisely what a prior motion for reconsideration satisfies, and its absence is fatal to Audi's petition.

Ruling

On the first issue, the Court held that a motion for reconsideration is an indispensable condition before an aggrieved party may resort to the special civil action for certiorari. Audi should have first asked the trial court to reconsider, because certiorari lies only when there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. The Court rejected Audi's claim that a motion was unnecessary because its petition raised a question of law and the assailed order was a patent nullity. A petitioner may not arrogate unto itself the determination of whether a motion for reconsideration is necessary or not. The motion serves a purpose: it affords the erring court an opportunity to rectify its own error without the intervention of a higher court, and it obviates an improvident and unnecessary recourse to appellate proceedings. Audi showed no sufficient justification for the omission.

On the second issue, the Court held that Audi ignored the rule on hierarchy of courts. The Court of Appeals and the Supreme Court have original concurrent jurisdiction over petitions for certiorari, and the hierarchy of courts determines the venue. The rule exists to prevent inordinate demands upon the Court's time and attention, which are better devoted to matters within its exclusive jurisdiction, and to prevent further overcrowding of its docket. Audi should have filed its petition with the Court of Appeals. While the rule may be relaxed for special and important reasons clearly and specifically set out in the petition, Audi failed to discharge that burden. The Court closed with a reminder that procedural rules are not to be disdained as mere technicalities, may not be ignored to suit the convenience of a party, and are well served by conscientious observance, for adjective law ensures the effective enforcement of substantive rights through the orderly and speedy administration of justice.

Doctrine

First, a motion for reconsideration is an indispensable condition before filing a petition for certiorari under Rule 65, because the remedy is available only when there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law. The petitioner cannot decide for itself that the motion is unnecessary.

Second, the hierarchy of courts must be observed: a petition for certiorari should be filed with the Court of Appeals, not directly with the Supreme Court, absent special and important reasons clearly and specifically set out in the petition.

Third, procedural rules are not mere technicalities; they may not be ignored to suit the convenience of a party, and liberal construction cannot be used as a guise to defeat their purpose.

Disposition

The petition was dismissed, with costs against Audi AG, and the assailed orders of the trial court were left standing.

Remember This

Memorize the line that a petitioner may not arrogate unto itself the determination of whether a motion for reconsideration is necessary or not. Examiners use this case to test the requisites of certiorari under Rule 65 and the hierarchy of courts, often by asking whether a party may leap straight to the Supreme Court on a claim of patent nullity.