G.R. No. 199324 - Executive Secretary vs. Forerunner Multi Resources, Inc.

Issued by President Gloria Macapagal-Arroyo on 12 December 2002, EO 156 imposed a partial ban on the importation of used motor vehicles.
The ban aimed to accelerate the sound development of the local motor vehicle industry in the Philippines.
Exceptions to the ban included personal vehicles of returning residents or immigrants, diplomatic vehicles, trucks, buses, and special purpose vehicles (Sections 3.1.1 to 3.1.5).

Legal Precedent – Executive Secretary v. Southwing Heavy Industries, Inc. (Southwing)

The Supreme Court found EO 156 valid and enforceable throughout the Philippine customs territory, except in the Subic Special Economic and Freeport Zone (Subic Freeport), which is a separate customs territory under Republic Act No. 7227.
EO 156 was deemed a valid exercise of police power addressing an “urgent national concern” to protect the local motor manufacturing industry from deterioration caused by the influx of imported used vehicles.

Respondent Forerunner Multi Resources, Inc., engaged in the importation of used motor vehicles through the ports of Aparri, Cagayan and San Fernando, La Union, filed suit in the Regional Trial Court of Aparri, Cagayan.
It challenged EO 156 on several grounds:

Issuance of EO 156 was ultra vires (beyond the powers) of President Arroyo.
EO 156 violated the Due Process and Equal Protection Clauses of the Constitution.
EO 156 was superseded (repealed) by Executive Order No. 418 (EO 418), dated 4 April 2005, which modified tariff rates for imported used motor vehicles.

Respondent sought a preliminary injunction to enjoin enforcement of EO 156 during pendency of the case (litis pendentia).

Initially granted a temporary restraining order (TRO) and preliminary injunction enjoining EO 156 on 27 November 2008.
Upon the motion of petitioners (government officials), the trial court reconsidered and lifted the preliminary injunction by Order dated 7 July 2010.
The trial court’s lifting of injunction was grounded on the Southwing ruling, finding respondent lacked “clear and unmistakable legal right” to obtain the injunction.

Respondent petitioned for certiorari to the CA, which granted the petition, set aside the trial court’s 7 July 2010 Order, and reinstated the preliminary injunction issued on 27 November 2008.
The CA held that the trial court gravely abused its discretion in lifting the injunction and ruled EO 156’s enforcement would cause respondent grave financial crisis.
CA relied by analogy on Filipino Metals Corporation v. Secretary of the Department of Trade and Industry regarding the grant of preliminary injunction.

Petitioners challenged the CA’s reinstatement of the preliminary injunction, citing Southwing’s control which negates respondent’s legal right to import used motor vehicles.
Respondent argued EO 156’s validity was undermined by EO 418, which allegedly repealed EO 156, and invoked a prior Supreme Court Resolution denying a petition as confirmation of repeal.

The Supreme Court issued a temporary restraining order on 16 January 2012 against the CA’s ruling that reinstated the injunction.

Whether the Court of Appeals erred in granting preliminary injunctive relief to the respondent to enjoin the enforcement of Executive Order No. 156.