G.R. No. 67195. May 29, 1989
HEIRS OF EUGENIA V. ROXAS, INC., BENIGNA V. ROXAS, JULITA N. ROXAS, VICTORIA R. VALLARTA, JUANITA ROXAS, AND MARGARITA R. TIOSECO, PETITIONERS, VS. INTERMEDIATE APPELLATE COURT,…
CORTES, J.:
These consolidated cases relate to various incidents in the long
running dispute between the heirs of Eufrocino and
Eugenia Roxas regarding the operation of a restaurant
within the Hidden Valley Springs Resort in Calauan,
Laguna.
All of the instant petitions filed by the petitioners arise from
the the same factual antecedents and are bound by
petitioners’ singular intent of enjoining private respondents from operating
the restaurant at the Hidden Valley Springs Resort. It must be clear, however, that the issue as
to who has the legal right to operate the subject restaurant is not for this
Court to decide in these petitions, for such issue is the crux of the appeal
pending before the Court of Appeals. For
the present, the Court is only called upon to determine whether or not grave
abuse of discretion as would vitiate the jurisdiction of the public respondents
and would warrant the annulment of their assailed resolutions and/or orders,
was committed.
FACTS OF THE CASE
Petitioner corporation, Heirs of Eugenia V. Roxas,
Inc. (hereinafter referred to as HEVR), was incorporated on December 4, 1962 by
the late Eufrocino Roxas
and his seven children (Pedro, Benigna, Julita, Antonio, Ramon, Victoria and Eriberto),
with the primary purpose of owning and developing the properties of Eufrocino Roxas and the estate of
his late wife, Dona Eugenia V. Roxas, located in the
Province of Laguna. Petitioners Benigna V. Roxas, Julita N. Roxas, Victoria R.
Vallarta, Juanita Roxas and Margarita R. Tioseco are some of the surviving heirs of Eufrocino and Eugenia Roxas.
In 1971, its articles of incorporation were amended to include
the operation of a resort among its purposes.
In early 1972, it opened to the public the Hidden Valley Springs Resort,
situated in Calauan, Laguna.
Eufrocino Roxas
was Chairman of the Board of Directors and President of HEVR until the time of his death on August 28, 1979.
One of his sons, Eriberto, a director, was
manager of the resort until his death in 1980.
He also succeeded his father as President upon the latter’s demise.
Private respondents are the heirs of Eriberto
Roxas: Rebecca
Boyer-Roxas, his wife; Guillermo Luis and Maria Pilar, his children; and Judith Roxas,
his daughter-in-law.
Eriberto Roxas
and his family had been exclusively operating the restaurant and liquor
concession at the resort under an “Agreement” dated May 27, 1975
executed between Eufrocino Roxas,
as President of HEVR, and Eriberto Roxas, in his behalf and that of his family.
When Eriberto Roxas
was taken ill a few months before his death, Guillermo Roxas
took it upon himself to take over all the corporate duties and assume the
authority of his father pertaining to the resort.
After Eriberto Roxas‘
death on December 4, 1980,
private respondents continued
the operations of the restaurant and liquor concession. In 1981, they incorporated under the name
“Hidden Valley Agri-Business and Restaurant,
Inc.” (hereinafter referred to as HVABR), and
through this entity they continued to carry
on the concession.
The HEVR held a stockholders‘ and Board
of Directors’ meeting on January 31,
1981, elected members of the Board and appointed officers of the
corporation. The Board then set up a management committee and commenced
an inquiry into the financial status of the resort, requiring Guillermo Roxas to submit documents relative to its earnings and
expenditures. Steps were subsequently
taken to restrict private respondents’ previously unlimited access to the
corporate funds. Not surprisingly,
private respondents were defiant.
In the Board meeting of July
30, 1981, the treasurer of HEVR reported that the income of the
resort could not satisfy its payroll requirements and loan amortizations. It appeared that the resort’s financial
difficulty was due to the fact that the biggest profit center, the restaurant
therein, was not managed and operated by HEVR itself and that the concession
fee paid by private respondents was not even enough to pay for the interest and
amortizations on the loan secured by HEVR to upgrade the restaurant and kitchen
facilities. It was suggested that HEVR
should take over the operation of the restaurant. Hence, the Board of Directors adopted
Resolution No. 3-81 authorizing the President to notify HVABR of its intent to
take over the operation of the restaurant, and in the event the latter refuses
or fails to peaceably vacate the premises within thirty (30) days from notice,
to close the resort for an indefinite period of time to prevent further losses
to the corporation, and finally to order a financial, legal and management
audit of the operations of the resort [Rollo, G.R.
No. 67195, p. 99.] The President then sent a letter dated August 13, 1981 to private respondents informing
them of the above resolution, and asking them to vacate the restaurant premises
and to turn over possession thereof to HEVR.
Private respondents consequently filed on September 18, 1981 an action for injunction with
a prayer for preliminary injunction and/or restraining order against HEVR and
the other petitioners, including Rafael J. Roxas, in
the Regional Trial Court (RTC) of San Pablo,
Laguna, docketed as Civil Case No. SP-1920, to prevent the
closure of the resort and the unilateral termination by HEVR of the concession
agreement.
The petitioners, in their answer, prayed for the dismissal of the complaint, the
declaration of the nullity of the concession agreement, and for an order
requiring private respondents to vacate and surrender the restaurant premises.
In the meantime, HVABR filed with the Bureau of Tourism Services
of the Ministry of Tourism (MOT) a petition to increase the food and beverage prices at the resort restaurant. HEVR, being the holder of a license to operate the resort, contested this
petition by impugning the authority of HVABR to file the petition and to
continue operating the restaurant.
Pending resolution of HVABR’s petition in the MOT, the RTC, on June 13, 1983, dismissed private
respondents’ complaint. The concession
agreement between Eriberto and Eufrocino
Roxas was declared null and void for being ultra vires since it was
neither authorized nor ratified by the Board of HEVR, and for being violative of the doctrine of corporate opportunity as
embodied in Section 34 of the Corporation Code.[1]
The trial court also upheld Resolution No. 3-81 as a valid and reasonable exercise of corporate power by the
Board of Directors of HEVR [Id. at pp. 88-113.]
With the decision of the trial court to support them, HEVR
immediately caused the temporary closure of the resort.
Private respondents, on
the other hand, appealed to the Intermediate Appellate Court (IAC) on June 27,
1983 (AC-G.R. CV No. 00764), and in an “Urgent Omnibus Motion”[2] prayed for the issuance of a writ of
preliminary injunction to prohibit petitioners from closing the resort [Id.
at pp. 114-126.]
On July 22, 1983, the IAC
granted a temporary restraining order (TRO) which not only directed petitioners
to refrain from further commission of “acts
that will tend to interfere, impede, frustrate and obstruct the operation by
plaintiffs-appellants [private respondents herein] of the restaurant and liquor
concession at the Hidden Valley Springs Resort,” but also “to undo
such acts” if already done [Id. at p. 131.]
Immediately thereafter, petitioners
filed a Comment to the appellants’ “Urgent Omnibus Motion”, praying
for the lifting of the TRO [Id. at pp. 134-143.]
Meanwhile, the MOT
promulgated on July 28, 1983 its resolution dismissing HVABR’s petition, finding inter alia that HVABR was operating the restaurant and
liquor facilities of the resort without the requisite MOT license. The dispositive
portion of the resolution provides in part:
WHEREFORE, in view of the foregoing considerations, we hereby
resolved to:
* * *
2. The Heirs of Eugenia V. Roxas,
Inc. (HEVR) is hereby ORDERED TO TAKE OVER IMMEDIATELY the active management and operation of the RESTAURANT and WINE outlets of
the Hidden Valley Springs Resort from the Hidden Valley Agri–Business & Restaurant, Inc. (HVABR).
3. The Hidden Valley Agri-Business
& Restaurant Inc. (HVABR) and/or any person claiming under it the
management and operation of the RESTAURANT and WINE outlets of the Hidden
Valley Springs Resort, Inc. is hereby ORDERED to CEASE and DESIST from and to TURN
OVER IMMEDIATELY to the Heirs of Eugenia V. Roxas,
Inc. (HEVR), the MANAGEMENT and OPERATION of the RESTAURANT and WINE outlets of
the Hidden Valley Springs Resort;
4. The Director of the Bureau of Tourism
Services is hereby ORDERED NOT TO ISSUE in
favor of the Hidden Valley Agri-Business Inc. (HVABR)
a Provisional Authority to operate the restaurant outlet of the Hidden Valley
Springs Resort;
* * *
9. Considering that the rightful owner/operator
of the Hidden Valley Springs Resort, the Heirs of Eugenia V. Roxas, Inc. (HEVR), has been deprived of its right to
operate and/or manage the restaurant and wine outlets of the resort for a
considerable length of time already and the added fact that the present
operator of said outlets of the resort has been operating the same illegally for quite a long period of
time already notwithstanding the
mandate of the
Rules of this Ministry
that only licensed operators may operate the same, to immediately stop such illegal
act, this Resolution is hereby declared IMMEDIATELY EXECUTORY.
SO
ORDERED.
[Id.
at pp. 153-155.]
Private respondents filed a Manifestation (actually a motion for
reconsideration) seeking to hold in abeyance the execution of the
aforementioned judgment. However, the
MOT subsequently issued its Order dated August
3, 1983 reiterating its findings and emphasizing the final and executory nature of its directive [Id.
at pp. 202-205.]
Petitioners then filed on
August 31, 1983 with
the IAC a Manifestation inviting the attention of the appellate court to the
above MOT resolution and Order [Id.
at pp. 199-201.]
In the following month, petitioners filed a
motion to dismiss the appeal and an application for a writ of preliminary injunction alleging that private respondents had no
right to operate the restaurant per the August 3, 1983 MOT Order, and that in
fact they had ceased operating the same since September 8, 1983, thereby
rendering the appealed injunction case moot and academic [Id.
at pp. 206-212.]
However, on October 3,
1983, the IAC promulgated a resolution whereby petitioners were
enjoined from disturbing the status quo or from doing acts that tend to
frustrate, impede, obstruct, disturb or interfere with the operation by private
respondents of the restaurant and liquor concession. The IAC opined:
Since, the complaint filed by the plaintiffs-appellants was for the
purpose of seeking to enjoin and restrain the defendant-appellees
from closing the subject resort, the issue is thus the object of the appeal
which is perfected and now pending before us.
To allow defendants-appellees to close
the resort in question would thus amount to execution of the decision pending
appeal, and,
“Execution pending appeal, being an exception to the general rule that execution may
issue only after the decision in any case has become executory,
may issue only upon allegation and proof of the existence of a special reason therefor.” (De la Rea v. Subido, G.R. No. L-26082, March 1, 1968, 22 SCRA 953)
The decision in the main case was rendered on June 13, 1983 and plaintiffs-appellants filed
their Notice of Appeal on June 18,
1983. The appeal was given
due course on July 6, 1983
and is now before this Court. No special
reason is cited for immediate execution pending appeal nor is such execution
pending appeal properly applied for. [Id. at p. 78.]
Then Associate Appellate Justice Bidin[3]
dissented, stressing the failure of private respondents to establish a clear
right to continue operating the restaurant in view of the dismissal of their
action in the lower court and the MOT resolution of July 28, 1983.
Petitioners filed a motion for reconsideration with the IAC on October 13, 1983.
On November 3, 1983,
the MOT denied private respondents’ motion for reconsideration [Id. at pp. 277-300.] Thus, petitioners once again filed a
Manifestation dated November 5, 1983
with the IAC, informing it of this
denial [Id. at pp. 275-276.]
On November 17, 1983, petitioners filed another Manifestation and
Motion with the IAC, bringing to said court’s attention an October 27, 1983
decision of the Bureau of Domestic Trade rendered in C.A.D. Case No. 343,
wherein the Bureau found that HVABR was operating
the restaurant in violation of the Retail Trade Nationalization Law (Republic
Act No. 1180, as amended) because one of its stockholders, Rebecca Boyer-Roxas, was a foreigner actually participating in the operation and management of the
restaurant [Id. at pp. 301-303.]
This notwithstanding, the IAC promulgated its April 4, 1984
resolution denying petitioners’s motion for
reconsideration and motion to dismiss the appeal, with Justice Bidin dissenting once again [Id. at pp.
82-87.] Aggrieved by the IAC resolutions, petitioners, with the exception of
Rafael J. Roxas, brought a petition for certiorari,
prohibition and mandamus with preliminary injunction in this Court
docketed as G.R. No. 67195.
On May 16, 1984,
the Court issued a temporary restraining order to stop the IAC from enforcing
and/or carrying out the resolutions dated October 3, 1983 and April 4, 1984 and its writ of preliminary injunction [Id.
at pp. 350-351.]
On September 2, 1985, HEVR entered into a contract of lease with
Valley Resort Corporation, whereby the latter leased the Hidden Valley Springs
Resort, with all the equipment, vehicles, facilities and structures used in the
resort operation, including the subject restaurant premises, for a term of ten
(10) years. After the contract was
approved by the MOT on September 4,
1985, an MOT license to operate the Hidden Valley Springs Resort
was issued to Valley Resort Corporation effective until July 31, 1987
[Rollo, G.R.
No. 78618, pp. 92-104.]
On the other hand, during the pendency
of G.R. No. 67195, respondent Guillermo Roxas, doing
business under the name and style “MJB Food and Services” (hereinafter
referred to as MJBFS), obtained on March 23, 1987 a license dated March 3, 1987
from the Department of Tourism (DOT) to
operate the restaurant at the Hidden Valley Springs Resort as a “Class
A-De Luxe” restaurant [Id. at p.
110.] Various letters were sent by HEVR to the DOT contesting the issuance of
the license alleging, inter alia, that Guillermo Roxas
was not authorized to possess and operate the restaurant [Id.
at pp. 105-121.]
No response was heard from the DOT until the Secretary of Tourism
sent a letter to HEVR dated June 1,
1987 refusing to reconsider the issuance of the license to
MJBFS. Hence, HEVR filed the herein
second petition docketed as G.R. No. 78618, on June 11, 1987, seeking the nullification of the license
issued to MJBFS.
A temporary restraining order was issued by the Court on June 22, 1987. The order restrained the Secretary of Tourism
from “allowing respondent Guillermo Roxas from
utilizing the license in question to operate the restaurant inside the Hidden
Valley Springs Resort and in the restaurant building/premises owned by
petitioner, and from further granting license to said respondent Roxas under any business name he may use to apply therefor” [Id. at pp. 124-125.]
Prior to the filing of the second petition, a mayor’s permit to
engage in the restaurant business was issued by Hon. Jaime Gasapos,
the Officer-in-Charge (OIC) of Calauan, Laguna, to Guillermo Roxas/MJBFS
on March 30, 1987, despite
protests by HEVR. Thus, HEVR filed a complaint for injunction on April 6, 1987 in the Regional Trial
Court (RTC) of Calamba, Laguna, docketed as Civil
Case No. 1086-87-C, against the OIC
and Guillermo Roxas to enjoin Guillermo Roxas from utilizing the mayor’s permit in order to operate
the resort restaurant. In its Order
dated April 29, 1987, the
trial court denied HEVR’s prayer for the issuance of
a writ of preliminary injunction. HEVR’s subsequent motion for reconsideration was likewise
denied.
Consequently, HEVR filed a third petition in this Court, docketed
as G.R. Nos. 78619-78620, assailing the RTC Orders in Civil Case No. 1086-87-C.
The Court issued a temporary restraining order on June 23, 1987 restraining respondent
Guillermo Roxas and/or MJBFS from utilizing the
Mayor’s permit to operate the subject restaurant [Rollo,
G.R. Nos. 78619-78620, pp. 183-184.]
Incidentally, on March
31, 1987 a motion to declare Guillermo Roxas in contempt of court in G.R. No. 67195 was filed by
petitioners therein, on the ground that he violated the Court’s temporary
restraining order dated May 16, 1984
when he obtained the DOT license
to operate the resort restaurant [Rollo, G.R. No.
67195, pp. 510-525.]
On June 22, 1987,
G.R. Nos. 78619-78620 were ordered consolidated with G.R. No. 67195 [Rollo, G.R. Nos. 78619-78620, p. 182.] On July 27, 1987, G.R. No. 78618 was
ordered consolidated with G.R. No. 61795 and G.R. Nos. 78619-78620 [Rollo, G.R. No. 78618, p. 157.]
G.R. No. 67195
In this petition for certiorari, prohibition and mandamus
with preliminary injunction, petitioners pray for the nullification of the October 3, 1983 and the April 4, 1984 Resolutions of the IAC.
The issues raised in this petition may be paraphrased as follows:
I. Whether
or not Respondent IAC gravely abused its discretion tantamount to lack of or
excess of jurisdiction in granting the writ of preliminary injunction; and
II. Whether
or not Respondent IAC gravely abused its discretion tantamount to lack of or
excess of jurisdiction in denying the petitioner’s Motion to Dismiss the
Appeal.
I
At times referred to as the “Strong Arm of Equity,” the
writ of preliminary injunction, whether prohibitory or mandatory, is sought for
the protection of the rights of a party before the
final determination of his
rights vis-a-vis others’
in a pending case before the court. It will issue only upon
a showing that there exists a clear and present right to be protected and that
the facts upon which the writ is to be directed are violative
of said right [Angela Estate Inc., et al. v. CFI of Negros
Occidental, et al., G.R. No. L-27084, July 31, 1968, 24 SCRA 500; Locsin v. Climaco, G.R. No. L-27319, January 31, 1969, 26 SCRA 816; Buayan Cattle Co., Inc. v. Quintillan,
G.R. No. L-26970, March 19, 1984,
128 SCRA 276.] It cannot be over-emphasized that the mere prayer for the
preservation of the status quo pending
the appellate court’s adjudication of the issues is not sufficient to warrant
the issuance of this writ. “The
possibility of irreparable damage, without proof of violation of an
actually existing right, is no ground
for an injunction, being a mere damnum absque
injuria” [Bacolod-Murcia Milling Co., Inc., et al. v. Capitol
Subdivision, Inc., et al., G.R.
No. L-25887, July 26, 1966, 17 SCRA 731,
737.]
With these principles in mind, and after a careful consideration
of the undisputed facts and the arguments of the parties, the Court finds that
the IAC acted without or in excess of jurisdiction and/or with grave abuse of discretion amounting to lack or excess
of jurisdiction in issuing the writ of
preliminary injunction.
Private respondents failed to establish a clear and present right
to continue operating the restaurant and liquor concession at the resort
considering that they, who were then incorporated and doing business under
HVABR, had NO license or authorization from the MOT to operate the
restaurant and liquor concession in the resort.
Without a license private respondents cannot
legally continue to operate the restaurant, therefore they cannot claim a right
which could be protected by a writ of preliminary injunction.
Petitioners invited the attention of the IAC to the July 28, 1983
MOT Resolution finding that HVABR lacked the requisite license to operate the
restaurant and liquor facilities in the resort, and the August 3, 1983 MOT
Order directing HVABR to desist from operating the restaurant and to effect its closure [See Petitioners’
Manifestation, Rollo, G.R. No. 67195, pp. 199-201.]
The IAC nevertheless promulgated its October
3, 1983 Resolution granting private respondents’ prayer for a writ
of preliminary injunction.
Subsequently, petitioners brought to the attention of the IAC the
MOT resolution denying HVABR’s motion for
reconsideration as well as the Bureau of Domestic Trade decision finding that HVABR’s restaurant business violated the Retail Trade Nationalization
Law [See Petitioners’
Manifestation and Motions, Id. at pp. 275-276; 301-304.] Once again, the IAC denied
petitioners’ motions in its April 4,
1984 Resolution.
Contrary to the IAC’s opinion, the July
28, 1983 MOT Resolution was not based on the trial court’s conclusion that the
disputed concession agreement was invalid.
As correctly pointed out by the petitioners, the MOT Resolution and
Order were based on the undisputed fact that HVABR was operating the restaurant and liquor facilities of the resort
without the requisite license.
More importantly, the IAC ignored the basic implication of these
circumstances – that HVABR’s unlicensed restaurant
business was in gross violation of the Rules of the MOT and tantamount to a
criminal offense punishable under Sec. 19 (b) and (c) of PD 1463[4].
In fact, the MOT, in its August
3, 1983 Order denying private respondent’s manifestation (motion
for reconsideration), opined that:
.
. . to
grant the prayer contained in the Manifestation (actually motion) under
consideration would sweep away the barrier erected by the law against
unlicensed operators of tourism-oriented establishment [sic]. Indeed, even by the greatest violence of
construction of our powers and extravagant exercise of our discretion, we
cannot, without being prodigal in our actuation, grant the said prayer of the movant; which could be dangerous influence with respect to
subsequent cases that may come before us for resolution.
Again, to grant the prayer contained in the Manifestation under
consideration would amount to a condonnation
[sic] of the illegal act that has been and still is, being committed by the
management of the HIDDEN VALLEY AGRI-BUSINESS & RESTAURANT, INC. (HVABR)
and thus give a premium to a violation of the law. Precisely, we declared our
resolution “IMMEDIATELY EXECUTORY” so as
to put an immediate stop to its
illegal act. Movant is thus plainly in error in claiming that “the
same is not yet final and executory“. [Id.
at p. 204.]
Consequently, the Court is compelled to declare null and void the
writ issued by the IAC which allowed private respondents to continue their
operation of the restaurant and liquor concession despite absence of the
requisite MOT license permitting them to do so, thereby sanctioning their illegal
operation [See Suarez v. Reyes, G.R. No. L-19828, February 28, 1963, 7 SCRA 461; Utleg v. Arca, G.R. No. L-25026, August 31, 1971, 40 SCRA 597.]
II
Petitioners allege that the aforementioned MOT resolutions as
well as the decision of the Bureau of Domestic Trade which declared private
respondents’ restaurant business violative of the
Retail Trade Nationalization Law, rendered the main
issue in the injunction case on appeal before the IAC moot and academic.
The above contention springs from an erroneous analysis of the
issues and must be rejected.
A case is considered moot and academic when a determination is
sought on a matter which, when rendered, cannot have any practical effect on the existing controversy, or where no
practical relief can be granted [Meralco Workers
Union v. Yatco, G.R. No. L-19785, January 30, 1967, 19 SCRA 177; Bongat v. BLR, G.R. No.
L-41039, April 30, 1985, 136 SCRA 225.]
The issue in the injunction case, which is now raised on appeal
before the IAC, hinges on a determination of the contractual relationship
between the petitioners and private respondents as heirs of Eufrocino
and Eugenia Roxas vis-a-vis the operation and management of the
restaurant and liquor concession in the resort.
Its resolution rests on a judicial declaration of the validity or
nullity of the disputed concession agreement between the parties. This issue is unaffected by the fact that
private respondents have no license to operate the restaurant, or that the
participation of Rebecca Boyer-Roxas in HVABR’s activities was violative
of the Retail Trade Nationalization Law, for the rights between the parties
remain largely unsettled.
G.R. No. 78618
In this petition
for prohibition with preliminary injunction, petitioner HEVR seeks to nullify
MJBFS’ license to operate the
restaurant in the Hidden Valley Springs Resort and to prohibit the DOT from
issuing any other license to respondent Guillermo Roxas.
The function of the writ
of prohibition is to prevent the doing of some act which is about to be
done. It is not intended to provide a
remedy for acts already accomplished [Cabanero v.
Torres, 61 Phil. 522 (1935); Agustin, et al. v. de la Fuente,
84 Phil. 515 (1949); Navarro v. Lardizabal, G.R. No. L-25361, September 28, 1968, 25 SCRA 370.]
As a license to operate
the restaurant had already been issued to private respondents, a writ of
prohibition cannot issue.
Nevertheless, it does not
mean that no other affirmative relief may be given to petitioner if found to be
deserving. For
it is not the title or caption of a pleading, but the substance and averments
thereof that is controlling; so that, in the interest of justice, although a
petition is styled “Prohibition”, it may be considered a petition for certiorari if the facts alleged make out a case for
the issuance of the latter writ [Cajefe, et al. v.
Fernandez, et al., 109 Phil. 743 (1960); See also Concepcion v. Vera, et al., 67 Phil. 122 (1939); Tambunting de Tengco v. San Jose,
et al., 97 Phil. 491 (1955).]
The Court will treat the
instant petition as if it were a special civil action for certiorari.
It is a recognized principle that courts of justice will generally not interfere in
executive and administrative matters which are addressed to the sound discretion
of government agencies, such as, the grant of licenses, permits, leases, or the
approval, rejection or revocation of applications therefor
[Manuel v. Villena, G.R. No. L-28218,
February 27,
1971, 37 SCRA 745.] However, there
is a limit to the deference accorded by the courts to the actions of such
agencies. Jurisprudence is replete with
cases wherein the Supreme Court expounded on the exception to the general rule.[5]
In laying down the guidelines for the review of decisions of
administrative agencies in the exercise of their quasi-judicial powers, the
Supreme Court, in the oft-cited case of Pajo, et al. v. Ago, et
al., 108 Phil. 905 (1960), stated that:
In general, courts have no supervising
power over the proceedings and actions of the administrative departments of the
government. This is generally true with respect to acts involving the
exercise of judgment or discretion,
and findings of fact. Findings of fact
by an administrative board or officials, following a hearing, are binding upon
the courts and will not be disturbed except where the board or official has
gone beyond his statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and
without regard to his duty or with grave abuse of discretion. And we have repeatedly held that there is
grave abuse of discretion justifying the issuance of the writ of certiorari
only when there is capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction . . . as where the power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice, or personal
hostility amounting to an evasion of positive duty, or to a virtual refusal to
perform the duty enjoined, or to act at all in contemplation of law . . . . [Id.
at pp. 915-916.]
This standard has been unequivocally embraced in the 1987
Constitution, which affirms the power of the judiciary to determine whether or
not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
government. [Article VIII, Sec. 1, par.
2.]
In the instant case, petitioner contends that public respondents
acted with grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the contested restaurant license despite the failure of
Guillermo Roxas and/or MJBFS to satisfy the
conditions mandated by the “Rules and Regulations governing the Business
and Operations of All Resorts in the Philippines,” such as, the submission
of a contract of lease or written permit from the petitioner as resort and
restaurant owner allowing MJBFS to operate the subject restaurant. Petitioner further contends that pursuant to
Section 21, Chapter IV of the rules and
regulations on resorts[6], Valley Resort Corporation as lessee and holder of the license
to operate the resort
must be deemed licensed to operate the subject restaurant [Rollo, G.R. No. 78615, pp. 11-14.]
Public respondents, on the
other hand, argue that no
grave abuse of discretion was
committed by them because under the “Rules and Regulations
Governing the Business and Operation of all Restaurants in the
Philippines”, MJBFS was not required
to submit a contract of lease or written permit from petitioner, the restaurant
owner, allowing the former to operate the latter’s restaurant. Moreover, they contend that the issuance of
the license in favor of MJBFS was predicated on the favorable recommendation of
a DOT Team of Inspectors[7]
that evaluated MJBFS’ application and inspected the premises of the subject
restaurant in accordance with Section 8, Chapter IV of the rules and
regulations on restaurants. Public
respondents likewise contend that Section 21, Chapter IV of the rules and regulations on resorts was inapplicable
because Valley Resort Corporation does not “own and operate” the
subject restaurant, therefore it
cannot be deemed licensed to operate the same by virtue of its resort license alone. And
inasmuch as no previous license had been issued to petitioner or Valley Resort
Corporation to operate the subject restaurant, and in fact no party was
operating the restaurant pending the approval of the application of Guillermo Roxas and/or MJBFS, no grave abuse of discretion attended
the issuance of a restaurant license in
favor of the latter [Id. at pp. 248-258.]
The Court, after a careful
study of the various pleadings submitted by the parties, and the DOT
rules and regulations governing the operation of restaurants and resorts in the
country, holds that public respondents acted arbitrarily and capriciously and, therefore, with grave abuse of
discretion amounting to lack or excess of jurisdiction in the issuance of the restaurant license in favor of MJBFS.
Although the premises public
respondents’ arguments cannot be disputed, the conclusion drawn therefrom is misplaced
in view of the fact that public
respondents undeniably had knowledge prior to the issuance of the license to Guillermo Roxas
and/or MJBFS that the subject restaurant was owned by petitioner and presently
leased to Valley Resort Corporation, and that Guillermo Roxas and/or MJBFS’ right to possess
and operate the restaurant was the subject of a pending litigation.
As far back as 1983, the MOT records show that the department was
aware of the controversy between petitioner and Guillermo Roxas,
et al., who were then doing business under the name HVABR, regarding the
restaurant and liquor concession at the resort.
In fact, the MOT resolutions promulgated on July 28, 1983 and November 3, 1983 in MOT Appealed Case #83-1
precisely addressed petitioner’s charge impugning the alleged right of
Guillermo Roxas, et al. to operate its resort
restaurant, the subject restaurant in this case. The judgment rendered by the RTC in Civil
Case No. SP-1920 finding that
Guillermo Roxas, et al. had no contractual right to
operate the restaurant and liquor concession in the resort was noted by the department in that MOT case. Moreover, the Director of the Bureau of
Tourism Services was ordered not to issue in favor of HVABR a provisional
authority to operate the subject restaurant on the finding that it had no
contractual right to manage and/or operate the same [See MOT Resolution
and MOT Order promulgated on July 28, 1983 and August 3, 1983, respectively, in MOT Appealed Case No. 83-1, Rollo, G.R. No. 67195, pp. 144-155, 202-205; MOT Resolution
on the Motion for Reconsideration promulgated on November 3, 1983, Id. at pp. 277-300.]
On September 4, 1985, the
MOT, after appropriate proceedings, duly approved the ten-year contract of lease between petitioner and Valley
Resort Corporation, whereby the latter, as LESSEE, was granted not only the exclusive right to possess, enjoy and
use the Hidden Valley Springs resort, and all its equipment, vehicles,
facilities and structures, including the
subject restaurant, but also “the right and privilege to make use
of the license and registration rights of the LESSOR over the resort . . . and,
in addition, the LESSEE shall have the exclusive right, during the period that
the lease is in full force and
effect, to make use of the tradename and tradestyle ‘HIDDEN VALLEY SPRINGS RESORT’. . . [Rollo, G.R. No. 78618, p. 95.] Subsequently, Valley Resort
Corporation was issued a license to operate the Hidden Valley Springs resort by
the MOT effective until July 31, 1987. Incidentally, in that same contract was
included a provision regarding the civil cases between petitioner and Guillermo
Roxas, et al., pending before the IAC and Supreme
Court concerning the rights of the parties to operate the subject restaurant
covered by the lease, to the
effect that petitioner warranted that it would continue to pursue with vigor
the pending cases and other cases relative thereto, and that for the duration
in which Valley Resort Corporation would be unable to utilize the restaurant,
rental payment would be reduced by 50% [Id. at
pp. 96-97.]
Then, even prior to the release of MJBFS’ license to operate the
restaurant on March 26, 1987, the DOT received petitioner’s letter dated March
9, 1987 opposing the issuance of that license and reminded the DOT that, inter alia, the issue of
whether or not Guillermo Roxas, et al., had the right
to operate petitioner’s restaurant was still pending resolution before the
courts and that the subject restaurant was covered by the MOT-approved contract
of lease between petitioner and Valley Resort Corporation. Petitioner reiterated its grounds for
opposition in its letters dated March 27,
1987, April 28, 1987 and May 28, 1987
to public respondent Secretary.
Public respondents make much of the fact that petitioner’s
letters objecting to the application for a MJBFS restaurant Iicense
were not under oath as required under Section 17 of Chapter IV of the rules and
regulations on restaurants.[8]
The Court holds that this defect was not fatal to the cause of petitioner for the
simple reason that the essential facts upon which petitioner’s opposition was
based were readily apparent from DOT registration and licensing department
records.
Moreover, by virtue of the approval by the MOT of the
above-mentioned contract of lease and the subsequent issuance of a resort
license in favor of Valley Resort Corporation, the department had acknowledged
the right of Valley Resort Corporation to operate the resort business and to
possess, use and enjoy all the resort facilities, including the subject
restaurant, which under department records has always been considered a facility of the Hidden Valley
Springs Resort and a part of the resort business [Rollo,
G. R. No. 67195, p. 152; Rollo, G.R.
No. 78618, pp. 93-103.] Under the above circumstances, the party entitled to a
DOT license to operate the subject restaurant is either Valley Resort
Corporation, as lessee, or any other party clearly authorized by petitioner, as
restaurant owner, to possess and use the same.
In fine, the Court holds that it was an arbitrary and capricious
exercise of discretion on the part of public respondents to have issued, and
thereafter to have refused to revoke, the restaurant license in favor of
Guillermo Roxas and/or MJBFS knowing that: (1) the latter was not the owner of the
restaurant for which the license was sought; (2) the latter’s right to possess
the same was being disputed by no less than petitioner as restaurant owner;
and, (3) the subject restaurant was already leased to Valley Resort Corporation
pursuant to a contract of lease approved by the department.
Public respondents’ action, which contravenes the acceptable
standards of justice and reason, is indicative of grave abuse of discretion
amounting to lack or excess of jurisdiction.
G.R. Nos. 78619-78620
Petitioner HEVR prays for the nullification of the RTC Orders of April 29, 1987 and May 8, 1987 denying its prayer for the
issuance of a writ of preliminary injunction against Guillermo Roxas, enjoining the latter from using and enjoying the
mayor’s permit to operate the restaurant of the Hidden Valley Springs
Resort. Petitioner alleges grave abuse
of discretion amounting to lack of jurisdiction on the part of respondent
judge, on the main premise that his Orders allowed private respondent to
operate the subject restaurant in violation of the restraining order issued by
this Court on May 16, 1984
in G.R. No. 67195.
The denial of petitioner’s prayer for the issuance of the writ was predicated on the failure of
petitioner to establish a present and clear right to operate the subject restaurant, since the issue as to who
among the parties had a better right to operate the restaurant is still being
litigated in the IAC [RTC Order of April 29, 1987; Rollo,
G.R. No. 78619-78620, pp. 29-31.] Furthermore, the denial was held not to be in
violation of the Supreme Court’s restraining order issued in G.R. No. 67195,
since such order neither expressly prohibited Guillermo Roxas
from operating the restaurant nor gave the petitioner a right to operate the
restaurant [RTC Order of May 8, 1987,
Id. at pp. 32-34.]
The Court does not find merit in the instant petition.
Whether or not a writ of injunction will issue lies exclusively
within the discretion of respondent judge, and this Court will not interfere
with the exercise of respondent
judge’s discretion unless there is a showing of grave abuse [North Negros Sugar Co. v. Hidalgo, 63 Phil. 664 (1936); Rodulfa v. Alfonsol, 76 Phil. 225
(1946); Yaptinchay v. Torres, G.R. No. L-26462, June 9, 1969, 28 SCRA 489.]
In the instant case,
there is no indication that respondent judge acted with manifest abuse of his
discretion in denying the issuance of the writ that would compel this Court to
set aside his orders. Firstly,
petitioner herein failed to establish a clear and present right justifying the
issuance of a writ of preliminary injunction considering that its right to
operate the subject restaurant to the exclusion of private respondent is still
under litigation in AC-G.R. CV No. 00764.
Secondly, at the inception of the action below, private respondent was a
holder of a DOT license and a mayor’s permit to operate the restaurant
which were regular on their face.
The Court’s conclusion is
not necessarily in conflict with that in G.R. No. 67195. Although both cases involve the issuance of a
writ of preliminary injunction, in G.R. No. 67195 the Court declared that the
writ of preliminary injunction cannot issue to protect the illegal restaurant
business of private respondents in view of the fact that the latter was not
then licensed by the MOT to operate the subject restaurant. The Court did not in any way attempt to
resolve the issue of who among the parties had the right to operate the subject
restaurant.
Furthermore, this Court
finds that the assailed RTC Orders did not violate its May 16,
1984 restraining
order enjoining the IAC from enforcing and carrying out the October
3, 1984 and April 4,
1984 resolutions and
its writ of preliminary injunction.
Petitioner claims that the implication of this restraining order
was to prohibit private respondent from operating the subject restaurant and to
affirm the right of petitioner to operate the restaurant, pending resolution of
G.R. No. 67195.
This contention is unsound.
The October 3, 1984
and April 4, 1984 IAC
resolutions and its writ of preliminary injunction responded to private
respondents’ prayer to enjoin petitioner from closing the restaurant,
disturbing the status quo and frustrating, impeding,
obstructing, disturbing or interfering with private respondent’s right to
operate the restaurant and liquor concession.
Consequently, this Court’s restraining order had the effect of
staying the writ of preliminary injunction and permitting petitioner to close
the resort over and above the protests of private respondent. It did not ipso facto
create and affirm a right on the part of petitioner to operate the restaurant.
In addition, considering the thrust of the above holding, it is
appropriate at this point to declare petitioner’s motion to cite private
respondent in contempt filed in G.R. No. 67195, charging as contumacious the
act of private respondent in applying for a restaurant license with the DOT
under the business name MJBFS (in order to operate the subject resort restaurant as MJB Restaurant), without merit.
“Well-settled is the
rule that an act to be considered contemptuous must be clearly contrary or
prohibited by the order of the Court. ‘A
person cannot, for disobedience, be punished for contempt unless the act which
is forbidden or required to be done
is clearly and exactly defined,
so that there can be no reasonable doubt or uncertainty as to what specific act
or thing is forbidden or required'” [Cua v. Lecaros, G.R. No. 71909, May 24, 1988, citing Anglo-Fil Trading Corporation v. Lazaro,
G. R. No. L-54958, September
2, 1983, 124 SCRA 494, 525.] Once again it must be noted that this Court’s restraining order of May 16,
1984 was addressed
to the IAC and had the effect of staying the writ of preliminary injunction
issued by the latter. The only clear import of the restraining order was to allow petitioner as resort
owner to close the resort.
It did not prohibit private respondent from applying for a restaurant
license with the DOT.
However, the Court, in
upholding the assailed orders of respondent judge herein, does not in any way
purport to declare that private respondent has a clear and established right to
operate the subject restaurant, and that he can, in fact, operate the same to
the exclusion of the petitioner. It must
be stressed that the issue of who among the parties has the right to operate the restaurant is still
pending resolution before the Court of Appeals in the Civil Case AC-G.R. CV No.
00764.
WHEREFORE, the Court rules:
(1) In G.R. No. 67195, the
October 3, 1983 Resolution of the IAC is SET ASIDE. The April 4, 1984 Resolution of the IAC is
AFFIRMED insofar as it denies petitioners’ motion to dismiss the appeal; but REVERSED insofar as it denies
petitioners’ motion for reconsideration of the October 3, 1983 Resolution
seeking to set aside the writ of preliminary injuction
issued by the IAC.
In view of the Court’s decision in G.R. Nos. 78619–78620,
the motion to cite Guillermo Roxas in contempt of
court is DENIED.
The temporary restraining order issued by this Court on May 16,
1984, whereby the IAC was restrained from enforcing and/or carrying out its
resolutions dated October 3, 1983 and April 4, 1984, and its writ of
preliminary injuction, shall remain in force and
effect pending the resolution of Civil Case AC-G.R. CV No. 00764.
(2) The petition in G.R.
No. 78618 is GRANTED. The license to
operate the subject restaurant in the Hidden Valley Springs Resort issued by
the DOT in favor of MJB Food and Services (or Guillermo Roxas)
is NULLIFIED.
The temporary restraining order issued by this Court on June 22, 1987, whereby public
respondents were restrained from further granting a similar license to
respondent Guillermo Roxas under any business name he
may use to apply therefor, shall remain in force and effect pending the
final resolution of Civil Case AC-G.R. CV No. 00764.
(3) The petition for certiorari
and prohibition in G.R. Nos. 78619-78620 is DISMISSED for lack of merit.
The temporary restraining order issued by this Court on June 23, 1987 is hereby SET ASIDE.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., and Feliciano, JJ., concur.
Bidin, J., no part.
[1]
Sec. 34. Disloyalty of
a director. — Where a director, by virtue of his office, acquires for
himself a business opportunity which should belong to the corporation, thereby
obtaining profits to the prejudice of such corporation, he must
account to the latter for all such profits
by refunding the same, unless his act has been ratified by a vote of the
stockholders, owning or representing at least two-thirds (2/3) of the
outstanding capital stock. This
provision shall be applicable,
notwithstanding the fact that the director risked his own funds in the venture.
[2]
The “Urgent Omnibus Motion” was originally docketed as AC-G.R. No.
SP-01026, but was subsequently consolidated with the appealed case AC-G.R. CV
No. 00764.
[3]
Presently, Associate Justice of the Supreme Court.
[4]
Sec 19. Penalties. –
* * *
(b) Violation by a Non-Holder of
Authority. – Any person who is not a
holder of a license, accreditation, permit or any other authority from the
department who shall violate or cause another to violate any of the provisions
of this Decree or the rules and regulations or circulars promulgated by the
department shall, upon conviction of a competent court, suffer the penalty of
imprisonment of not less than one (1) year nor more than six (6) years or a
fine of not less than Four Thousand Pesos (P4,000.00) nor more than Twenty
Thousand Pesos (P20,000.00), or both, at the discretion of the court.
(c) Penalty imposed upon Officers
of Juridical Persons. – If the offender
is a corporation, partnership, firm or association, the penalty shall be
imposed upon the officer or officers who have been responsible for the
violation.
* * *
[5]
See Espinosa v. Makalintal, 79 Phil.
134 (1947); Antiquera v. Baluyot,
91 Phil. 213 (1952); Ganitano v. Sec. of
Agriculture and Natural Resources, G.R. No. L-21167, March 31, 1966, 16 SCRA 543; Villegas v. Auditor General, G.R. No.
L-21352, November 29, 1966, 18 SCRA 877; Lacuesta v.
Melencio-Herrera, G.R. No. 33646, January 28, 1975,
62 SCRA 115; Lianga Bay Logging Co., Inc. v.
Lopez Enage, G.R. No. L-30637, July 16, 1987, 152 SCRA 80.
[6]
Sec. 21. Registration and
licensing of other services
offered by a resort. – The
registration and licensing of the resort shall include automatically all
facilities and services in the resort, provided that such facilities and
services are owned and operated by the resort itself.
[7]
It must be noted that the DOT Team of Inspectors merely evaluates the condition
of the restaurant and its immediate premises for the purpose of determining the
classification and accreditation.
[8]
Section 17. Objection to Application
for Registration and Licensing of Premises. Any person may file a written objection to
the issuance of a certificate of registration and license to an applicant. The objection shall state the facts upon
which it is based and shall be sworn to before a person authorized to
administer oath.