Facts:

The case involved Audi AG as the petitioner and Hon. Jules A. Mejia, in his capacity as Executive Judge of the Regional Trial Court (RTC) of Alaminos City, Auto Prominence Corporation, and Proton Pilipinas Corporation as the respondents. Audi AG, a foreign corporation organized under German law and not licensed to do business in the Philippines, was engaged in car manufacturing. The respondents, Auto Prominence Corporation and Proton Pilipinas Corporation, were duly organized corporations under Philippine law involved in the assembly, distribution, and servicing of motor vehicles and were based in Alaminos City, Pangasinan.

On March 21, 2005, the respondents filed a complaint for specific performance and injunction, along with an application for a temporary restraining order (TRO) against Audi AG, noted as Civil Case No. A-3010. The complaint highlighted an agreement wherein Proton was appointed as the sole assembler and distributor of Audi cars in the Philippines. The responden

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Facts:

Background of the Case

• The case stemmed from a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure (as amended), filed by Audi AG, a non-resident foreign company engaged in manufacturing "Audi" brand cars and organized under German law.
• Respondents include:
• Hon. Jules A. Mejia, acting in his capacity as Executive Judge of the Regional Trial Court (RTC), Alaminos City.
• Auto Prominence Corporation and Proton Pilipinas Corporation, both Philippine corporations engaged in the assembling, distribution, and marketing of motor vehicles.
• The petition alleges grave abuse of discretion on the part of Executive Judge Mejia in issuing particular orders in Civil Case No. A-3010, which involved a dispute over assembly and distributorship agreements for Audi cars.

The Underlying Dispute and Chronology

• In a complaint filed on March 21, 2005, respondents sought specific performance and injunctive relief, alleging that:
• In 1996, Audi AG had appointed Proton as its sole assembler and distributor of Audi cars in the Philippines through respective Assembly and Distributorship Agreements.
• Proton, relying on representations made by petitioner Audi AG, invested in setting up an assembly plant, bought tools and equipment, and incurred expenses for showrooms and license fees.
• Subsequently, it was discovered that the Philippines was not included in Audi AG’s ASEAN Assembly Strategy, but only Malaysia, thereby thwarting the respondents’ preparations.
• The assembly and distributorship agreements were allegedly terminated by Audi AG by a letter dated September 27, 2004, which the respondents regarded as unjustified and executed in bad faith.
• In response, RTC Executive Judge Mejia:
• Issued an order directing that summons and a copy of the complaint be served on Audi AG through extra-territorial service.
• Set the hearing for the application for a temporary restraining order (TRO) on March 29, 2005.
• During the hearing on March 29, 2005:
• Respondents presented two witnesses.
• The Judge issued an Order granting a TRO effective for twenty (20) days, enjoining Audi AG from terminating the contracts and directing the parties to maintain the status quo ante.
• Following further developments:
• The raffle of the case was scheduled for April 8, 2005.
• Audi AG subsequently filed an Urgent Motion for Voluntary Inhibition against Judge Mejia, which was denied on July 6, 2005.
• A supplemental petition was filed challenging the July 6, 2005 Order, alleging that the TRO Order was issued in a capricious, arbitrary, and whimsical manner, constituting grave abuse of discretion.

Allegations Raised in the Petition

• Audi AG contended that the TRO Order:
• Violates the second paragraph of Section 5, Rule 58 of the 1997 Rules of Civil Procedure (as amended).
• Was issued even before Civil Case No. A-3010 was raffled to a ponente.
• In response, respondents argued that:
• The petition failed to comply with the prescriptive requirement of filing a motion for reconsideration before seeking certiorari.
• The petition was filed in violation of the doctrine on the hierarchy of courts by bypassing the Court of Appeals.
• The certification against forum shopping was improperly executed.
• The issues raised had become moot and academic.

Issue:

Compliance with Procedural Requirements

• Whether Audi AG had complied with the prerequisite of filing a motion for reconsideration with the trial court before resorting to the special civil action for certiorari.
• Whether the district court’s TRO Order was exceptionally null for failing to observe the necessary procedural step, rendering the petition a vehicle to bypass an available ordinary remedy.

Observance of the Doctrine on the Hierarchy of Courts

• Whether Audi AG properly filed its petition by directly approaching the Supreme Court instead of filing with the Court of Appeals as prescribed by the hierarchy of courts.
• Whether the petition could be justified as an exception to established rules due to the urgent nature of the issue raised.

Validity and Merits of the TRO Order

• The issue of whether the TRO Order, which enjoined the termination of contracts and required the maintenance of the status quo ante, was issued in a manner that amounted to grave abuse of discretion.
• Whether the alleged arbitrary issuance of the TRO Order, and its subsequent extension without correct procedural recourse, undermined the existing contractual rights between the parties.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)