Title
Bases Conversion and Development Authority vs. Uy
Case
G.R. No. 144062
Decision Date
Nov 2, 2006
BCDA challenged RTC’s jurisdiction over injunction case due to RA 7227; SC upheld CA, ruling permanent injunctions permissible.
construction agreement
permanent injunction
termination of agreement

Case Summary (G.R. No. 144062)

Factual Background

On March 13, 1992, R.A. 7227 was enacted to accelerate the sound and balanced conversion of the Clark and Subic military reservations and their extension into alternative productive uses, and to raise funds by the sale of portions of Metro Manila military camps. To implement the law for Fort Bonifacio, Executive Order (E.O.) No. 40 was issued in 1992, and 96 hectares were set aside for the Heritage Park Project.

To carry out the project and related fund-generating undertakings, BCDA entered into a Memorandum of Agreement (MOA) with the Public Estates Authority (PEA), designating the latter as Project Manager. On September 9, 1994, BCDA, PEA, and the Philippine National Bank (PNB) executed a Pool Formation Trust Agreement (PFTA), creating a pool of assets to finance the project. After public bidding, on November 20, 1996, PEA entered into a Landscaping and Construction Agreement (LCA) with Uy. Later, on August 5, 1997, the parties forged a negotiated Construction Agreement.

Uy received a Notice to Proceed on December 3, 1996, and mobilized within fourteen days and commenced landscaping and construction. Under the LCA, Uy had 450 calendar days from the start, reckoned from receipt of the notice to proceed. Uy’s scope included constructing three vertical structures referred to as the Terrasoleum structures, as well as landscaping. Other contractors were separately engaged: Makati Development Corporation (MDC) for horizontal site development, and Romago Electric, Inc. (REI) for electrification.

The parties presented conflicting accounts of the project’s progress. However, it was undisputed that there were delays in the landscaping and construction under the LCA, and that PEA granted several extension requests. Uy claimed the delays were justified because portions of the project were delivered piecemeal and could not be fully worked on until the other contractors completed their assigned work. Petitioners insisted that Uy was in delay due to “slippage” beyond tolerable levels and that Uy stopped working and pulled out equipment sometime in October 1999.

On November 29, 1999, PEA served Uy a Letter of Termination terminating the LCA. Uy responded by filing Civil Case No. 99-0425 for Injunction and Damages before the Paranaque Regional Trial Court (RTC), Branch 260, against PEA, BCDA, and private petitioners. On December 14, 1999, the RTC Executive Judge Helen Bautista-Ricafort issued a 72-hour Temporary Restraining Order (TRO) enjoining petitioners from excluding Uy from his contractual obligations. On December 17, 1999, after preliminary hearing, the RTC extended the TRO for seventeen days.

Appellate Challenge and Suspension of Proceedings

On December 27, 1999, petitioners who were not joined by PEA filed a Joint Petition for Certiorari and Prohibition before the Court of Appeals. They assailed the RTC’s jurisdiction to hear the injunction case and the propriety of the TRO in view of Section 21 of R.A. 7227, which they interpreted as prohibiting lower courts from issuing TROs or injunctions against BCDA projects and as vesting exclusive authority in the Supreme Court for injunctive relief. They also invoked P.D. 1818 and R.A. No. 8975, laws which they argued prohibit courts from issuing TROs and preliminary injunctions in infrastructure-related government projects.

On December 28, 1999, the RTC issued an order suspending proceedings pending the appellate resolution of the certiorari petition.

Ruling of the Court of Appeals

On July 31, 2000, the Court of Appeals dismissed petitioners’ Joint Petition for Certiorari and Prohibition. It held that the TRO had become functus officio, rendering the challenge moot and academic. Still, the Court of Appeals reasoned that the RTC did not commit grave abuse of discretion in issuing the TRO. It further held that prohibition was not the proper remedy and noted that if petitioners intended to stop proceedings based on alleged manifest bias, they should have filed a motion for inhibition in the trial court. In effect, the Court of Appeals affirmed that the RTC had jurisdiction over the injunction case and the power to issue the TRO.

Issues Raised in the Supreme Court

Petitioners then filed a Joint Petition for Review on Certiorari under Rule 45, raising questions of law on the RTC’s jurisdiction. Their core position was that Section 21 of R.A. 7227 barred the RTC from hearing an injunction case and from issuing injunctive relief against BCDA projects, and that the available relief, if any, was limited to damages rather than injunction.

Respondent Uy opposed on both procedural and substantive grounds. Substantively, he also treated the RTC’s authority to issue injunctive relief as foreclosed by Section 21 of R.A. 7227, and by analogous prohibitions contained in P.D. 1818 and R.A. No. 8975.

Preliminary Issues: Procedural Objections

Respondent Uy invoked three procedural matters to support dismissal of the petition. First, he argued that petitioners’ failure to file a motion for reconsideration from the Court of Appeals decision prevented review. Second, he contended that the verification and certification against forum shopping were defective because only Ramon P. Ereneta signed and no BCDA board resolution was shown authorizing him. Third, he argued there was no proper joinder of parties because BCDA allegedly lacked legal standing to invoke Section 21 of R.A. 7227.

The Court rejected the contention that a motion for reconsideration was required. It held that under Rule 45, a party may file a verified petition raising only questions of law, and that the rule’s text does not impose a motion for reconsideration as a condition precedent. The Court distinguished Rule 65 certiorari, where such a prerequisite applies, from Rule 45, which is a petition for review.

On the signature issue, the Court held that substantial compliance controlled. It relied on the rule that dismissal on purely technical grounds is disfavored. The Court stated that under jurisprudence, the certification against forum shopping may be signed by at least one principal party, and it held that the presence of Ramon P. Ereneta as a principal party and the later submission of a Letter of Authority supported relaxation of the technical defect. The Court also emphasized that the case involved only questions of law and that substantial rights were not shown to have been prejudiced.

On joinder and locus standi, the Court held that respondent Uy could not attack petitioners’ standing after petitioners were impleaded in the trial court case. It further stated that the defense based on Section 21 of R.A. 7227 had already been raised in the trial court and was addressed in the appellate certiorari proceedings.

Main Issue: Jurisdiction to Hear and Grant Permanent Injunctions

The Court framed the core issue as whether the RTC had jurisdiction over Civil Case No. 99-0425 to permanently restrain petitioners from terminating or rescinding the LCA.

Petitioners argued that the RTC lacked authority under Section 21 of R.A. 7227 to issue a 20-day TRO and lacked power to try and decide Uy’s action for injunction to prevent termination of the LCA. The Court noted that petitioners’ contention raised a novel question: whether statutory prohibitions against injunctive relief against BCDA projects extended to permanent injunctions issued after adjudication on the merits, rather than to temporary or preliminary relief.

Construction of the Prohibitive Statutes

The Court examined petitioners’ statutory bases. It first focused on Section 21 of R.A. 7227, which provides that implementation of the conversion projects is urgent and necessary and shall not be restrained or enjoined except by an order issued by the Supreme Court.

It then considered Section 1 of P.D. 1818, which stated that no court has jurisdiction to issue restraining orders, preliminary injunctions, or preliminary mandatory injunctions in cases involving specified government infrastructure or natural resource development projects and related activities necessary to execute, implement, or operate such projects.

Finally, the Court reviewed Section 3 of R.A. 8975, which prohibited courts, except the Supreme Court, from issuing TROs and preliminary injunctions against the government or entities acting under government direction, including for acts covering acquisition and clearance, bidding and awarding, commencement and execution, termination or rescission of the contract or project, and other lawful activity necessary for such contract or project. The Court noted the statute’s emergency exception for extreme urgency involving a constitutional issue, and also noted that the statute contains mechanisms such as bond requirements and consequences if the contract award is null and void.

The Court held that these provisions trench on the judicial power and must therefore be strictly construed. From their text, the Court ruled that the statutory prohibitions covered temporary or preliminary restraining orders or writs, and did not explicitly prohibit decisions on the merits granting permanent injunctions. The Court thus rejected the broad construction urged by petitioners.

RTC Jurisdiction Over the Injunction Case

With the statutory construction in

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