SPOUSES ALFREDO and SHIRLEY YAP, Petitioners, vs. INTERNATIONAL EXCHANGE BANK, SHERIFF RENATO C. FLORA and/or OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL COURT, MAKATI CITY, Re…

Yap versus International Exchange Bank

The Case

This is a petition for review on certiorari brought by spouses Alfredo and Shirley Yap against International Exchange Bank, Sheriff Renato Flora, and the Office of the Clerk of Court of the Regional Trial Court of Makati City. The spouses ask the Supreme Court to set aside the resolutions of the Court of Appeals which dismissed their petition for certiorari and denied their motion for reconsideration. The controversy turns on a single, practical question of provisional remedies: may a trial court recall and dissolve a writ of preliminary injunction that it had earlier issued, even after the Court of Appeals and the Supreme Court have both ruled that the issuance of that writ was not tainted with grave abuse of discretion? The case matters because it draws a clean line between the issuance of an injunction and its dissolution, and because it restates the settled rule that a motion for reconsideration is indispensable before a petition for certiorari may be filed.

Procedural History

The story begins with a collection suit filed by International Exchange Bank against Alberto Looyuko and Jimmy Go before the Regional Trial Court of Makati, Branch 150. Judgment was rendered in favor of the bank, ordering the defendants to pay ninety-six million pesos plus penalty. A writ of execution was issued against Go, and Sheriff Flora issued notices of sheriff's sale covering several real properties registered in Pasig City, Quezon City, and Mandaluyong City.

To stop the auction, the Yap spouses filed a complaint for injunction before the Regional Trial Court of Pasig City, Branch 158, docketed as Civil Case No. 67945. That court denied their application for a writ of preliminary injunction. The auction then proceeded on 22 August 2000, and a certificate of sale was issued in favor of the bank, subject to the third-party claims of the spouses.

The spouses then filed the present action for annulment of the sheriff's auction sale and certificate of sale before the Regional Trial Court of Pasig City, Branch 264, docketed as Civil Case No. 68088. Judge Leoncio Janolo, Jr. granted their application for a writ of preliminary injunction, conditioned on a bond of three million pesos, and the writ was issued on 13 August 2001. The bank and the sheriff filed a motion for reconsideration, which was denied. They then went up to the Court of Appeals on certiorari, prohibition, and mandamus. The Court of Appeals dismissed the petition, holding that no grave abuse of discretion attended the issuance of the injunction, and denied reconsideration. The bank and the sheriff then filed a petition for certiorari with the Supreme Court, which was dismissed as a wrong remedy and for failure to show grave abuse of discretion. An entry of judgment certified that the dismissal became final and executory on 30 July 2005.

Later, the bank and the sheriff filed an omnibus motion before Branch 264 asking that the pending motion for reconsideration be resolved and that the writ of preliminary injunction be dissolved. On 29 April 2006, the trial court recalled and dissolved the writ, ordering the respondents to post a counter-bond of ten million pesos. The spouses filed a petition for certiorari before the Court of Appeals, which dismissed it outright for failure to file a motion for reconsideration of the order of 29 April 2006. Reconsideration was denied. The spouses then filed the present petition for review on certiorari before the Supreme Court.

Facts

International Exchange Bank obtained a judgment for ninety-six million pesos plus penalty against Alberto Looyuko and Jimmy Go. To satisfy the judgment against Go, Sheriff Flora levied on several real properties and scheduled a public auction. The Yap spouses claimed that they already owned these properties by virtue of deeds of absolute sale executed in their favor by Jimmy Go, and they filed an affidavit of adverse claim and published a notice to the public warning of their claim.

After the first scheduled auction did not push through, and after the Regional Trial Court of Pasig City, Branch 158 denied their application for injunction, the auction proceeded on 22 August 2000. The properties were sold to the bank, subject to the spouses' third-party claims. The spouses then sued to annul the auction and the certificate of sale, and in that action Branch 264 granted them a writ of preliminary injunction upon a bond of three million pesos.

The bank and the sheriff challenged the injunction all the way to the Supreme Court, but both the Court of Appeals and the Supreme Court upheld its issuance as not tainted with grave abuse of discretion. Undeterred, the bank and the sheriff moved before Branch 264 to dissolve the writ. The trial court found that the spouses' deed of sale was not duly notarized, so their legal right remained doubtful, and that the bank and the sheriff would suffer great and irreparable injury if the injunction continued. It therefore recalled and dissolved the writ, conditioned on the posting of a counter-bond of ten million pesos.

Issues

• Whether or not the trial court may recall and dissolve the writ of preliminary injunction it previously issued, despite the final rulings of the Court of Appeals and the Supreme Court that its issuance was not tainted with grave abuse of discretion.
• Whether or not the trial court gravely abused its discretion in fixing the counter-bond at ten million pesos.
• Whether or not the Court of Appeals erred in dismissing outright the spouses' petition for certiorari for failure to file a motion for reconsideration of the order of 29 April 2006.

Applicable Provisions

Section 6 of Rule 58 of the 1997 Rules of Civil Procedure provides:

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or restraining order. The application for injunction or restraining order may be denied, upon a showing of its insufficiency. The injunction or restraining order may also be denied, or, if granted, may be dissolved, on other grounds upon affidavits of the party or person enjoined, which may be opposed by the applicant also by affidavits. It may further be denied, or, if granted, may be dissolved, if it appears after hearing that although the applicant is entitled to the injunction or restraining order, the issuance or continuance thereof, as the case may be, would cause irreparable damage to the party or person enjoined while the applicant can be fully compensated for such damages as he may suffer, and the former files a bond in an amount fixed by the court conditioned that he will pay all damages which the applicant may suffer by the denial or the dissolution of the injunction or restraining order. If it appears that the extent of the preliminary injunction or restraining order granted is too great, it may be modified.

This provision supplies the grounds for dissolving an injunction, and the Court holds that dissolution may be ordered so long as any of these grounds is shown, independently of the earlier ruling upholding the issuance.

Ruling

On the first issue, the Court holds that the trial court may still order the dissolution of the preliminary injunction it previously issued. The issuance of an injunction is different from its dissolution. Issuance is governed by Section 3 of Rule 58, while the grounds for dissolution are found in Section 6 of Rule 58. As long as the party seeking dissolution can prove the presence of any of the grounds, the injunction may be dissolved notwithstanding the earlier ruling that its issuance was not tainted with grave abuse of discretion. The Court explains that two conditions must concur: first, the court, in the exercise of its discretion, finds that the continuance of the injunction would cause great damage to the defendant while the plaintiff can be fully compensated for such damages; second, the defendant files a counter-bond. Both conditions were present here, since the trial court found after hearing that the bank and the sheriff would suffer great and irreparable injury, and that they were willing to post a counter-bond. The Court stresses that the dissolution is conditioned on the filing and approval of the counter-bond, and that failure to post it will necessarily lead to the non-dissolution of the injunction.

On the second issue, the Court finds no reason to disturb the trial court's order, since it was issued on a ground provided for by the Rules of Court. The matter of issuance and dissolution of a writ of preliminary injunction is addressed to the sound judicial discretion of the trial court, and its action will not be disturbed absent a showing that it acted without or in excess of jurisdiction or with grave abuse of discretion.

On the third issue, the Court holds that the Court of Appeals correctly dismissed the petition for certiorari. The filing of a motion for reconsideration is an indispensable condition to the filing of a special civil action for certiorari. It affords the trial court an opportunity to correct any actual error attributed to it. The spouses deprived the trial court of that opportunity. Their invocation of the exceptions, such as where the controverted act is patently illegal or was performed without jurisdiction, came too late, having been raised only after their petition had already been dismissed.

Doctrine

The issuance of a preliminary injunction is distinct from its dissolution. The issuance is governed by Section 3 of Rule 58, while the grounds for dissolution are found in Section 6 of Rule 58. A party may seek dissolution of a preliminary injunction even after the Supreme Court has ruled that its issuance was not tainted with grave abuse of discretion, provided the party can prove any of the grounds for dissolution under Section 6 of Rule 58. Two conditions must concur for dissolution on the ground of irreparable damage: the court must find, in the exercise of its discretion, that the continuance of the injunction would cause great damage to the defendant while the plaintiff can be fully compensated, and the defendant must file a counter-bond in an amount fixed by the court. The dissolution takes effect only upon the filing and approval of the counter-bond. Finally, the filing of a motion for reconsideration is an indispensable condition to the filing of a special civil action for certiorari, and the exceptions to this rule must be raised in the petition itself, not belatedly after dismissal.

Disposition

The Supreme Court denied the petition and affirmed the resolutions of the Court of Appeals, leaving the trial court's order of dissolution in place, subject to the filing and approval of the ten million peso counter-bond.

Remember This

The single line worth memorizing is that the issuance of a preliminary injunction is different from its dissolution, and the trial court may dissolve the writ on any ground under Section 6 of Rule 58 even after the Supreme Court has upheld its issuance. Examiners like to use this case on provisional remedies, particularly the two conditions for dissolution upon a counter-bond, and on the indispensable requirement of a motion for reconsideration before certiorari.