G.R. No. 224131-32 - SM Investments Corp. vs. Mac Graphics Carranz International Corp.

The case involves consolidated petitions filed by SM Investments Corporation (SMIC) and Prime Metroestate, Inc. (PMI) challenging the decisions of the Regional Trial Court (RTC) and the Court of Appeals (CA).
Respondent Mac Graphics Carranz International Corporation (Mac Graphics) is engaged in advertising via outdoor billboards and had entered into a 20‑year lease contract with Pilipinas Makro, Inc. (Makro) for the use of billboard sites in Quezon City (Makro-Cubao) and Makati City (Makro-Makati).
SMIC is connected to Makro—holding a 10% direct stake and indirectly through Rappel Holdings, Inc. which owns 50%—and PMI is the renamed Makro following a corporate name change.

A term of twenty (20) years with a clause allowing renewal upon mutually acceptable terms.
Specific commencement and expiration dates for the two lots (from January 15, 2007, to January 14, 2027).
Obligations for Mac Graphics to secure necessary permits and comprehensive “All-Risk” insurance (with stipulated minimum coverages and third‑party liability) prior to or on the commencement dates.
A 90‑day “remedy period” provided to Mac Graphics for cure in case of any default, aside from the provisions regarding rental fees.
Provisions allowing the lessor (Makro) to pre‑terminate the lease contract immediately if Mac Graphics fails to secure the required permits and licenses.

Mac Graphics began operating and advertising on the leased properties shortly after the commencement of the lease.
In 2007 and thereafter, disputes arose regarding compliance with the contractual obligations:

Mac Graphics allegedly failed to secure the necessary Metro Manila Development Authority (MMDA) permits and obtain comprehensive property insurance with the stipulated third‑party liability cover.
Makro contended that non‑compliance of these conditions, coupled with the lapse of the 90‑day cure period, justified its pre‑termination of the lease by sending a termination letter dated October 6, 2008.

Mac Graphics objected to the termination and argued that its non‑compliance was justifiable due to the prevailing circumstances (e.g., the impact of typhoon Milenyo) and the existence of a remedy period.
Following further disputes, SMIC and Makro (later PMI after the corporate name change) took actions that included removing Mac Graphics’ established advertising installations and preventing its access to the leased premises.

Mac Graphics filed a Complaint for a Temporary Restraining Order and a Writ of Preliminary Mandatory Injunction (WPMI) seeking:

Restoration of possession of the billboard structures for continued use under the lease.
Injunctive relief to prevent further dispossession and mitigate continued damage to its business reputation and contractual interests.

The RTC, after hearing evidence from witnesses and reviewing documentary submissions, granted the WPMI on April 22, 2013, holding that:

There was an apparent breach of the lease terms by Makro in pre‑terminating the contract without giving Mac Graphics an opportunity to cure.
Mac Graphics demonstrated that it suffered irreparable injury in terms of loss of potential profits and the soiling of its reputation.

Subsequent motions for reconsideration by SMIC and Makro/PMI were denied by the RTC and later by the CA, which affirmed the RTC’s orders but without making an explicit categorical finding on the existence of a clear performance right by Mac Graphics.

Mac Graphics asserted that despite its admitted non‑compliance with certain permits and insurance obligations, the conditions rendered compliance almost impossible given external factors (e.g., the typhoon) and the contractual cure period.
Makro/PMI argued that Mac Graphics’ failure to timely secure the permits and to obtain fully compliant insurance justified the termination under the lease.
SMIC maintained that, although not a direct party to the lease contract, it had benefited from Makro/PMI’s decision to pre‑terminate, as evidenced by changes in branding and the substitution of the existing advertisements.
The parties further contended over whether the injuries suffered by Mac Graphics were irreparable (and thus warranting injunctive relief) versus being entirely quantifiable and compensable in damages.

Whether the CA erred in affirming the RTC’s orders on the ground that the factual determination in applications for a provisional writ is not subject to appellate review.
Whether the CA erred in granting the injunctive relief despite an alleged absence of:

A right in esse (i.e., a clear and established legal right) for Mac Graphics warranting such protection;
Sufficient evidence of a material and substantial violation of Mac Graphics’ rights; and
Proof of grave and irreparable damage that could not be remedied by monetary compensation.

Whether the injunctive relief was improperly granted given that PMI had sold the leased properties to a third party (Super Shopping Market, Inc.) prior to the RTC’s issuance of the WPMI, effectively rendering the compelled performance impracticable.

Whether the CA’s general conclusions in its Decision—without addressing SMIC’s specific arguments—amounted to a departure from the normal course of judicial proceedings, thereby warranting supervisory intervention.
Whether the CA’s characterization and resolution of the substantive issues concerning the rights and obligations of Mac Graphics, especially regarding its entitlement to injunctive relief against SMIC (which was not a direct party to the lease), were in accord with law and established jurisprudence.

The central issue in the consolidated petitions is the propriety and validity of the issuance of the writ of preliminary mandatory injunction (WPMI) by the RTC, which hinges on whether Mac Graphics had demonstrated a clear, unmistakable (in esse) right to enforce the lease contract despite the pre‑termination by Makro/PMI.