Case Summary (A.M. No. 01-1-04-SC-PHILJA)
Petitioner, Respondents and Relief Sought
JPV, a partnership authorized to operate a PETC in Iloilo City, filed Civil Case No. 03-27648 seeking injunctive relief to prevent the City from acting on a pending application by another PETC operator (Grahar). The City answered and opposed injunctive relief, arguing the injunction would create a monopoly, would bar the Mayor’s discretionary power to issue business permits, and that JPV had not shown an existing right in esse warranting injunctive protection. The petitioner brought a petition for certiorari to challenge the Regional Trial Court’s interlocutory orders granting and then sustaining the preliminary injunction.
Key Dates and Regulatory Background
Relevant administrative issuances and procedural dates in the record include: DOTC Department Order No. 2002-31 (authorizing and rationalizing PETC lane authorizations, initially setting one PETC lane per 15,000 registered vehicles); an April 10, 2003 amendment by DOTC Department Order No. 2003-24 (reducing the vehicle requirement per PETC lane from 15,000 to 12,000); and a later DOTC issuance, Department Order No. 2003-51 (October 13, 2003), nullifying certain sections of Department Order No. 2002-31. Procedural events include Grahar’s motion to intervene (filed June 18, 2003), the RTC’s order allowing intervention and simultaneously issuing a writ of preliminary injunction (June 24, 2003), the RTC’s denial of the City’s motion for reconsideration (August 15, 2003), and the City’s resort to certiorari to the Supreme Court (petition filed November 5, 2003).
Factual Summary Relevant to the Injunction
JPV was authorized to operate four PETC lanes, with an asserted lane capacity of 15,000 vehicles per lane (total 60,000 vehicles). At the time JPV filed its complaint, there were 53,647 registered motor vehicles in Iloilo City. JPV asserted that its capacity sufficed to serve the entire city under DOTC Department Order No. 2002-31 and therefore sought to enjoin the City from issuing permits to additional PETCs. Grahar, which had a pending application to operate a PETC, challenged JPV’s claim of sufficiency in light of DOTC’s subsequent amendment reducing the per‑lane vehicle threshold.
Trial Court Orders Challenged
On June 24, 2003 the RTC (Branch 29) issued an order granting JPV’s application for a writ of preliminary prohibitory injunction, enjoining the City, its agents or representatives from issuing a mayor’s permit to operate a PETC in Iloilo City; that injunction was made subject to dissolution upon DOTC authorization of another PETC and required JPV to post an injunction bond of Php100,000. The City sought reconsideration. On August 15, 2003 the RTC denied the motion for reconsideration, relying on DOTC Department Order No. 2002-31 and concluding that even with the amendment reducing vehicle requirements, existing LTO and JPV capacities were sufficient and additional PETCs would cause unhealthy competition and degrade service levels.
Issues Presented to the Supreme Court
The City’s certiorari petition contended that the RTC: (1) committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing an order that effectively restrained the Mayor’s discretionary power to grant business permits; (2) erred in treating DOTC Department Order No. 2002-31 as a basis for issuing a writ of preliminary injunction in favor of JPV against the City; and (3) committed grave abuse in denying the motion for reconsideration. JPV opposed the petition, maintaining that it had established the capability to serve Iloilo City’s vehicle population.
Applicable Law and Standards
Applicable constitutional authority is the 1987 Philippine Constitution (governing judicial review and the exercise of municipal functions). Procedurally, Section 3, Rule 58 of the Rules of Court sets the standards for issuance of a writ of preliminary injunction: (a) the applicant must be entitled to the relief demanded where the relief consists in restraining or requiring acts; or (b) the commission, continuance or non-performance during litigation would probably work injustice to the applicant; or (c) a party is doing or threatening acts in violation of the applicant’s rights tending to render judgment ineffectual. The Court also applied established appellate standards on preliminary injunctions — that such writs must preserve rights pending final adjudication, must not prejudge the merits, and must not decide controverted facts — citing relevant jurisprudence.
Legal Character and Purpose of a Preliminary Injunction
The Supreme Court restated that a preliminary injunction is a preservative and preventive interim remedy intended to protect the parties’ rights until final adjudication and to prevent irreparable injury or circumstances that would render the eventual judgment ineffective. It is an adjunct to the main action and should be granted only when there is a pressing necessity and when the circumstances satisfy the Rules of Court criteria. Importantly, the injunctive remedy must not substitute for a trial on the merits or resolve disputed factual issues that should be determined only after full hearing.
Court’s Analysis: Prejudgment and Violation of Right to Be Heard
The Court found the RTC’s grant of preliminary injunctive relief indefensible because it effectively prejudged the merits of the main case at an early stage. By enjoining the Mayor from issuing permits based on JPV’s asserted capacity, the RTC assumed the proposition JPV was bound to prove at trial — that its existing capacity sufficed to serve the entire motor vehicle population and that authorizing another PETC would necessarily produce ruinous competition or degraded service. The Supreme Court emphasized that interlocutory injunctions must not determine controverted facts or dispose of the main case without trial.
...continue readingCase Syllabus (A.M. No. 01-1-04-SC-PHILJA)
Case Caption and Decision Source
- Reported at 775 Phil. 21, First Division, G.R. No. 160399, December 09, 2015, with the decision authored by Justice Bersamin.
- Petition for certiorari challenging orders of the Regional Trial Court (RTC), Branch 29, Iloilo City, dated June 24, 2003 and August 15, 2003, in Civil Case No. 03-27648.
- Relief sought: annulment of the RTC orders that issued and sustained a writ of preliminary prohibitory injunction in favor of respondent JPV.
Parties and Roles
- Petitioner: The City of Iloilo, represented by Hon. Mayor Jerry P. Treaas.
- Respondents: Hon. Judge Rene B. Honrado, Presiding Judge, RTC Branch 29, Iloilo City; and JPV Motor Vehicle Emission Testing & Car Care Center, Co., represented by Jim P. Velez.
- Intervenor: Grahar Emission Testing Center (sought leave to intervene on June 18, 2003; intervention allowed June 24, 2003).
Nature of the Case and Primary Relief Sought
- Underlying civil action (Civil Case No. 03-27648) filed by JPV seeking injunctive relief to prevent the City of Iloilo from acting on a pending application for another Private Emission Testing Center (PETC) in Iloilo City.
- Main relief in the suit was to enjoin the petitioner City Mayor and his agents from issuing a mayor’s/business permit to operate additional PETCs within Iloilo City.
Relevant Administrative Orders and Regulatory Framework
- DOTC Department Order No. 2002-31 (subject: “AUTHORIZATION OF PRIVATE EMISSION TESTING CENTERS”):
- Item No. 2 provided the basis for authorization: one (1) PETC lane shall be authorized for every 15,000 registered vehicles in an LTO Registering District, to avoid “cut throat” or “ruinous” competition and degradation of service.
- DOTC Department Order No. 2003-24 (dated April 10, 2003):
- Amended certain sections of DO 2002-31 to reduce the required vehicle capacity per PETC lane from 15,000 vehicles to 12,000 vehicles.
- DOTC Department Order No. 2003-51 (dated October 13, 2003):
- Declared: “AN ORDER NULLIFYING SECTIONS 2 AND 3 OF DEPARTMENT ORDER NO. 2002-31,” thereby nullifying the quota-based sections of DO 2002-31 and amending prior inconsistent issuances.
- Office of the Solicitor General opinion (dated 10 July 2003) advising that policy considerations favor open competition and recommending elimination of the vehicle quota per PETC lane.
Factual Background and Capacities Alleged
- JPV was a partnership authorized to operate a PETC in Iloilo City.
- JPV claimed a capacity of four lanes, with each lane capable of servicing 15,000 motor vehicles, yielding a total capacity of 60,000 motor vehicles.
- At the time JPV filed the complaint, Iloilo City had 53,647 registered motor vehicles.
- JPV’s position: its existing capacity was sufficient to serve Iloilo City under DOTC DO No. 2002-31, hence no additional PETC was necessary.
- Grahar (seeking to operate a PETC) maintained that the subsequent DOTC amendment (DO No. 2003-24) reduced per-lane vehicle requirements, thereby affecting JPV’s claimed sufficiency.
RTC Proceedings and Orders (Assailed Orders)
- June 24, 2003 RTC order:
- Granted JPV’s application for a writ of preliminary prohibitory injunction.
- Ordered the City of Iloilo, its agents or anyone acting on its behalf, to refrain and desist from issuing a Mayor’s Permit to operate a PETC in Iloilo City.
- Conditioned dissolution of the injunction upon DOTC authorizing another or additional PETC in Iloilo City.
- Directed JPV to post an injunction bond of Php 100,000.00 in favor of the defendant (the City).
- June 24, 2003: RTC allowed Grahar’s intervention the same day it issued the injunction.
- Petitioner moved for reconsideration and for dissolution of the injunction.
- August 15, 2003 RTC order (denying motion for reconsideration):
- Reiterated that the writ of injunction was issued to give effect to DOTC DO No. 2002-31 (dated August 20, 2002).
- Noted that the amendment reducing the vehicle requirement per lane from 15,000 to 12,000 “does not in anyway require for an additional PETC to operate” because: (a) LTO operated two-lane testing facilities capable of serving 24,000 vehicles, and (b) JPV’s four lanes could accommodate 72,000 vehicles — together exceeding the 53,647 registered vehicles.
- Concluded that allowing an additional PETC would result in unhealthy competition contrary to the policy of DO No. 2002-31; therefore, motion for reconsideration denied and the June 24 order stood.
Positions and Arguments of Parties
- Petitioner (City of Iloilo):
- Argued that issuance of the injunction would result in JPV’s monopoly of PETC operations in Iloilo City.
- Contended that the writ improperly prevented the Mayor from exercising discretionary power to issue or deny business permits, absent a showing of abuse of that discretion.
- Asserted that JPV failed to establish the existence of a right in esse that would justify injunctive protection.
- After August 2003, invoked DOTC DO No. 2003-51 as further support for open competition and elimination of lane quotas; cited OSG opinion favoring elimination of the quota.
- JPV (respondent-plaintiff in RTC):
- Asserted it had established capability to serve the entire motor vehicle population of Iloilo City pursuant to DO No. 2002-31, thereby justifying injunctive relief to prevent issuance of a permit to another