G.R. No. 110776 - Maranaw Hotel and Resort Corp. vs. National Labor Relations Commission

On August 1, 1969, respondent Jose M.F. Belo, the grantee of a legislative franchise under Republic Act No. 2957 (as amended), filed a verified petition for an injunction with preliminary relief in the Court of First Instance of Capiz (Civil Case No. V-3192).
Belo asserted that he had, since July 1961, established and operated an automatic telephone system in Roxas City at a substantial cost and with considerable infrastructure (410 telephones, etc.), as confirmed by an order of the Public Service Commission dated June 26, 1961.

Belo contended that the Bureau of Telecommunications, through its regional officials—Director or Officer-in-Charge Leon Cervantes (Regional Superintendent of Region IV, Iloilo City) and Chief Operator Vivencio Alagbay (Roxas City)—was unlawfully initiating the construction of another local telephone system in Roxas City.
He claimed that such an act would result in direct competition and effectively prejudice his existing system and franchise rights; moreover, the new system was being built without prior inquiry as to the need and without negotiating for the use of his facilities.

On the same day the petition was filed, Judge Jose A. Aligaen of the Court of First Instance of Capiz issued a writ of preliminary injunction, subject to the posting of a bond by Belo, restraining the petitioned officials from constructing the competing system.
Subsequent motions were filed:

Belo moved to hold Vivencio Alagbay (and later, by amendment, the Director and Senior Telecommunications Officer) in contempt for continuing the work despite the injunction.
Alagbay filed an opposition to the contempt motion, maintaining his role was limited to that of an employee and attributing the work to International Telegraph and Telephone Philippines, Inc. (ITT).
A joint motion for the dissolution of the writ of injunction was also filed by the lower court respondents, with an offer to post a counterbond of P20,000.

The Solicitor General, representing the Bureau of Telecommunications, filed an answer on August 27, 1969, denying Belo’s allegations and advanced several defenses:

The trial court lacked jurisdiction since the suit was against the Government without its consent.
The court did not have territorial jurisdiction over the Director whose official residence was outside Capiz.
The Bureau of Telecommunications was empowered under the Revised Administrative Code (Section 1930) to operate a nationwide network without a legislative franchise and was authorized to expand its system.
The project involved an agreement with ITT for expanded services, including telephone and data processing, which were not covered by Belo’s system.
Moreover, Belo’s franchise was not exclusive, and his facilities were insufficient given the population served.

Belo, on September 11, 1969, moved for reconsideration of the court’s order holding Alagbay and his helpers in contempt, seeking imposition of penalties.
Both Belo and Alagbay later filed motions for reconsideration which were denied by the trial court on October 1, 1969; simultaneously, the motion to dismiss Belo’s petition was also denied and a pre-trial was set.

On October 27, 1969, petitioners (Cervantes and Alagbay) sought a writ of certiorari and prohibition with a preliminary injunction, challenging and seeking to annul the various orders of the Court of First Instance of Capiz.
Their contention was fourfold:

The suit was essentially against the Government, which could not be sued without its consent.
The lower court lacked jurisdiction over officials residing or stationed outside Capiz.
The lower court acted with grave abuse of discretion by issuing the writ ex parte despite Belo’s claim of no cause of action.
The filing of a counterbond should have led to the dissolution of the writ of preliminary injunction.

The petitioners emphasized that the Bureau of Telecommunications is a Government agency created under Executive Order No. 94 (1947) with a mandate to provide national telecommunications service; its actions were argued to be within the scope of government functions.

Whether the suit filed by Belo should be considered a suit against the State, given that the petitioners are government officials acting in their official capacities.
Whether executing a writ of preliminary injunction against state officers infringes the State’s immunity from suit without its consent.

Whether the trial court had jurisdiction to issue a writ of preliminary injunction against petitioners whose offices/residences (Manila and Iloilo City) lie outside the territorial boundaries of Capiz, despite the alleged acts occurring in Roxas City.

Whether the issuance of the writ of preliminary injunction was proper and not an abuse of discretion, considering Belo’s demonstrated legal right and the irreparable injury he claimed might result from the unauthorized competition.
Whether the counterbond offered by the petitioners warranted the dissolution of the injunction.

Whether the Bureau of Telecommunications acted within its statutory and executive order-granted powers when it initiated the construction of a new local telephone system in an area where a franchise had already been granted to Belo.
Whether the requirement for negotiation with an existing operator was violated.