Title
Joy Mart Consolidated Corp. vs. Court of Appeals
Case
G.R. No. 88705
Decision Date
Jun 11, 1992
Joy Mart sued LRTA and Phoenix for breaching its first option to redevelop LRT Carriedo station, alleging forum-shopping and contempt. SC ruled in favor of Joy Mart, reinstating the injunction and addressing jurisdictional and procedural violations.
joy mart consolidated corp
court of appeals
jurisdiction
A

Case Summary (G.R. No. 88705)

Factual Background

Joy Mart Consolidated Corporation owned the Isetann Department Store property on Carriedo Street and held leasehold interests in adjoining parcels within the area later denominated the consolidated block of the LRT Carriedo station. The government planned the Light Rail Transit system and required certain properties for expropriation or acquisition. Joy Mart consented to convey its property to the government in 1983 under a Deed of Absolute Sale to the Light Rail Transit Authority with an express undertaking that Joy Mart would be given the first option to redevelop the consolidated block. The Philippine General Hospital Foundation Inc. obtained development rights from LRTA and subleased the consolidated block to Joy Mart as a partial compliance with Joy Mart’s asserted first option. Joy Mart invested in and constructed an eight-storey building and incurred significant debt in reliance on the understanding that it would retain a first option to any redevelopment area within the consolidated block.

Dispute and Contractual Developments

In November 1986, LRTA entered into a Commercial Stalls Concession Contract with Phoenix Omega Development and Management Corporation, awarding commercial spaces within the LRT terminals and stations, including the consolidated block. Construction by Phoenix commenced in the third quarter of 1987. Joy Mart protested the award and asserted its first option. Negotiations and assurances from LRTA did not yield Joy Mart the relief it sought.

Trial Court Complaint and Provisional Relief

On August 21, 1987, Joy Mart filed a complaint in the Regional Trial Court of Manila, Branch XXXII (Civil Case No. 87-41731), for specific performance and damages, and sought a writ of preliminary injunction to enjoin LRTA and Phoenix from continuing construction and activities in the consolidated block. After hearing and memoranda, the trial court issued a writ of preliminary injunction in late September 1987, commanding Phoenix to cease construction adjacent to the leased premises upon Joy Mart’s posting of a P10,000 bond.

Petition for Certiorari to the Court of Appeals by Phoenix

Phoenix filed a petition for certiorari and prohibition in the Court of Appeals (CA-G.R. SP No. 12998), seeking immediate dissolution of the trial court’s writ of preliminary injunction and to prohibit the trial judge from taking further cognizance of the case or to remand it to another branch. The Court of Appeals, Sixteenth Division, gave due course to the petition but did not initially issue a restraining order against the trial court.

Trial Court Proceedings While Certiorari Was Pending

While the certiorari petition in the Court of Appeals remained pending, LRTA and Phoenix filed a joint petition in the trial court to dissolve the writ of preliminary injunction and offered to post a counterbond. They alleged continuing damages from nonuse of the commercial stalls and urged that Joy Mart’s potential damages could be fully compensated. The trial court set pre-trial and scheduling conferences and ultimately heard the joint petition to dissolve the injunction.

Dissolution of the Injunction by the Trial Court

Following hearing on June 17, 1988, the trial court dissolved the writ of preliminary injunction on July 6, 1988, concluding that continuation of the injunction would cause great damage to the respondents while Joy Mart’s damages could be fully compensated. Joy Mart moved for reconsideration and the trial court denied the motion on August 9, 1988, citing Section 6, Rule 58, Rules of Court and precedent permitting dissolution where the continuance causes great damage to defendants while the plaintiff can be fully compensated.

Court of Appeals Actions and Contempt Proceedings

Upon learning of the trial court’s dissolution order, the Court of Appeals, Sixteenth Division dismissed Phoenix’s petition in CA-G.R. SP No. 12998 on August 17, 1988, deeming the petition moot and academic. Joy Mart then filed a petition for certiorari with preliminary injunction in the Court of Appeals, Ninth Division (CA-G.R. SP No. 15618), seeking to restrain the trial court from proceeding and to enjoin Phoenix from subleasing and occupying the stalls. The Ninth Division issued a temporary restraining order prohibiting enforcement of the trial court’s dissolution orders and set a hearing. Despite receipt of the TRO, Phoenix continued construction and allowed occupancy, prompting Joy Mart to seek contempt proceedings. After hearing, the Court of Appeals, Ninth Division, dismissed Joy Mart’s petition on February 28, 1989.

Issues on Appeal to the Supreme Court

Joy Mart brought the case to this Court and alleged that the Court of Appeals erred in: (1) failing to find that the trial court lost jurisdiction to dissolve the writ of preliminary injunction after the writ had been elevated to the Court of Appeals; (2) failing to find that Phoenix engaged in forum-shopping; and (3) failing to find Phoenix in contempt of court and to issue a writ of preliminary mandatory injunction. The dispositive legal question was whether the trial court retained authority to dissolve a writ of preliminary injunction that was pending review by the Court of Appeals.

Supreme Court Ruling on Jurisdiction and Forum-Shopping

The Court held that once Phoenix and LRTA elevated the matter to the Court of Appeals in CA-G.R. SP No. 12998 seeking annulment of the trial court’s writ of preliminary injunction, the trial court lost jurisdiction to take action on the writ that would interfere with the appellate court’s determination. The trial court erred by entertaining the joint petition to dissolve the injunction while the appellate review was pending. By seeking dissolution in the trial court after having invoked appellate review, Phoenix and LRTA engaged in forum-shopping. The trial judge’s grant of the dissolution constituted grave abuse of discretion amounting to excess of jurisdiction and was disrespectful of the appellate process. The Court relied on the appellate court’s power under B.P. Blg. 129, Sec. 9, par. 3 to try cases, receive evidence, and resolve factual issues, and on the principle articulated in Prudential Bank vs. Castro, 142 SCRA 223, that a trial judge must refrain from actions intended to render pending appellate review moot.

Supreme Court Reasoning on the Court of Appeals’ Conduct

The Court also criticized the Court of Appeals, Sixteenth Division, for dismissing CA-G.R. SP No. 12998 as moot when the trial court had proceeded to dissolve the writ. The Court concluded that the Sixteenth Division’s dismissal was correct in result but must have rested on the correct ground of forum-shopping under Rule 17, Interim Rules and Guidelines, Rules of Court, rather than mootness. The Court further found that the Court of Appeals, Ninth Division, erred in dismissing Joy Mart’s petition on February 28, 1989, and exhibited grave abuse of discretion in not addressing the contempt claim concerning Phoenix’s alleged violation of the TRO.

Disposition and Relief

The petition for review was granted. The Court annulled and set aside the Court of Appeals, Ninth Division’s decision dated February 28, 1989, and reinstated the preliminary wri

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