G.R. No. 88705 - Joy Mart Consolidated Corp. vs. Court of Appeals

Joy Mart owned a property located at Carriedo Street, Sta. Cruz, Manila (site of Isetann Department Store) along with three adjoining parcels, totaling 1,611 sq.m., including the leased site of the Presidente Hotel.
In 1978–79, as the government planned the Light Rail Transit (LRT) system to serve commuters between Baclaran and Balintawak Monument, Joy Mart’s property was identified as necessary for the LRT project and possibly subject to expropriation if negotiations failed.
As a gesture of cooperation, Joy Mart agreed to sell its property and relinquish its leasehold rights on the adjacent lots, provided that it would be granted the first option to redevelop the entire consolidated block surrounding the LRT Carriedo station.

On September 8, 1982, while negotiations with LRTA were still underway, LRTA entered into a contract with the Philippine General Hospital Foundation Inc. (PGH Foundation), giving the latter the right to develop areas adjacent to the LRT stations and sublease these areas.
On February 22, 1983, Joy Mart conveyed its property and waived its leasehold rights in favor of the government through a Deed of Absolute Sale. This deed included a stipulation that Joy Mart would have the first option to redevelop the consolidated block, notwithstanding the compensation received for the property.
As partial compliance with this first option, the PGH Foundation subleased the LRT Carriedo station area (covering the consolidated block) to Joy Mart for the construction of a multi-storey, first-class building.

Joy Mart submitted its redevelopment plans to LRTA for constructing an eight-storey building. However, LRTA limited the proposed building area to 1,141.20 square meters, reserving part of the block for the LRT station and public open space.
Despite Joy Mart’s reminder of the contractual provision for the first option, LRTA assured Joy Mart that the provision would be respected if any area became available for redevelopment.
On August 30, 1984, an Addendum to the Sublease Agreement increased the area allocated to Joy Mart and imposed an additional “goodwill” payment of P3.0 Million, leading Joy Mart to proceed with its construction project by borrowing P50.0 Million.

On November 28, 1986, LRTA entered into a Commercial Stalls Concession Contract with Phoenix Omega Development and Management Corporation (“Phoenix”), awarding commercial spaces within various LRT stations, including areas adjacent to Joy Mart’s property.
In the third quarter of 1987, Joy Mart discovered that construction activities were commencing within the consolidated block, seemingly in contravention of its first option right.
On August 21, 1987, Joy Mart filed a complaint for specific performance of contract and damages, and requested a writ of preliminary injunction against LRTA and Phoenix to restrain further construction and subleasing activities.

On September 25, 1987, the trial court, presided over by Judge Artemon D. Luna, issued a writ of preliminary injunction directing Phoenix to cease construction adjacent to the leased property, pending further order, upon posting of a bond by Joy Mart.
Phoenix sought appellate relief by filing a petition for certiorari and prohibition (CA-G.R. SP No. 12998) in the Court of Appeals, requesting the immediate lifting of the injunction and, ultimately, its annulment.
While the appellate petition was pending, on May 30, 1988, LRTA and Phoenix jointly petitioned the trial court to dissolve the issued writ, alleging that its continuance caused them significant financial losses, and offered a counterbond to cover potential damages.
The trial court dissolved the writ on July 6, 1988, reasoning that the prolonged injunction would cause irreparable harm to the defendants, and held that Joy Mart’s potential claim for damages (still unproven) could be fully compensated.
Joy Mart opposed the petition for dissolution by filing a motion for reconsideration, which was denied on August 9, 1988.
On August 17, 1988, the Court of Appeals (Sixteenth Division) dismissed Phoenix’s certiorari petition as moot, and on September 14, 1989, Joy Mart again sought relief from the CA to reinstate the injunction and declare Phoenix in contempt for allegedly defying a temporary restraining order.
Ultimately, the CA Ninth Division dismissed Joy Mart’s petition, setting the stage for the higher court review.

The core matter raised for review was whether a trial court had the authority to dissolve a writ of preliminary injunction that had already been elevated to the Court of Appeals for review, and whether the acts of the trial court and the subsequent forum-shopping by Phoenix and LRTA undermined the appellate jurisdiction.

Whether the trial court retained jurisdiction to dissolve the writ of preliminary injunction after the matter had been raised to the Court of Appeals for review.
Whether Phoenix engaged in forum-shopping by simultaneously pursuing relief in the trial court and the Court of Appeals.
Whether the trial court’s action in dissolving the injunction interfered with the appellate court’s jurisdiction, thereby constituting an abuse of discretion amounting to excess of jurisdiction.
Whether Phoenix should be held in contempt for allegedly disregarding the temporary restraining order issued by the Court of Appeals.