Case Summary (G.R. No. 164459)
Petitioner and Respondents
• Petitioner LPI sought to recover damages on an injunction bond posted by private respondents, who secured a preliminary injunction enjoining the MeTC from hearing LPI’s third-party complaint.
• Respondents contended that (a) the injunction did not restrain LPI; (b) malice or bad faith must be shown; (c) costs and attorney’s fees are not covered; and (d) LPI’s petition should be dismissed for defective non-forum-shopping certification.
Key Dates
• 12 October 1995: Billboard Advertisement Contract executed between LPI and Digital.
• 18 April 1997: Digital files complaint (MeTC Makati) for return of P120,000 deposit.
• 18 June 1997: LPI files third-party complaint against RCAM, private respondents, and Macgraphics.
• 25 August & 10 October 1997: MeTC denies motions to dismiss third-party complaint.
• 9 December 1997: Private respondents file certiorari with RTC of Makati.
• 6 February 1998: RTC grants preliminary injunction upon P10,000 bond.
• 28 April 2000: RTC dismisses private respondents’ certiorari; dissolves injunction.
• 3 April & 6 August 2002: RTC denies LPI’s motion for judgment on bond and its reconsideration.
• 16 September 2003: Court of Appeals dismisses LPI’s certiorari petition and, on 8 July 2004, denies reconsideration.
• 24 April 2007: Supreme Court resolves Petition for Review on Certiorari.
Applicable Law
• 1987 Philippine Constitution (cases decided post-1990)
• Rule 45 (1997 Revised Rules of Civil Procedure) for Supreme Court review
• Rule 58, Section 4(b) (1997 Rules) on preliminary injunction and bond
• Rule 57, Section 20 on claims for damages against bonds
• Rule 7, Section 5 on certification against forum shopping
Factual Background
LPI contracted with Digital to erect a billboard for P60,000 monthly (plus VAT), with a three-month deposit: P60,000 on signing and P120,000 upon completion. After unknown persons destroyed the billboard, Digital sued LPI for the return of the two-month deposit. LPI filed a third-party complaint alleging private respondents and Macgraphics induced RCAM to destroy the billboard and sought P1,000,000 moral damages, P300,000 exemplary damages, attorney’s fees, litigation expenses, and costs.
Procedural History
• MeTC denied private respondents’ motions to dismiss the third-party complaint.
• Private respondents secured a preliminary injunction from the RTC enjoining the MeTC upon LPI’s posting of a P10,000 bond.
• RTC later dissolved the injunction, dismissed the certiorari petition, and denied LPI’s motion for judgment against the bond.
• Court of Appeals dismissed LPI’s certiorari petition for lack of merit and denied reconsideration.
• Supreme Court granted review under Rule 45.
Issues Presented
- Whether malice or bad faith is a condition precedent to recovery on an injunction bond.
- Whether attorney’s fees, litigation costs, and delay damages fall within the coverage of the injunction bond.
- Whether LPI failed mandatory certification on non-forum shopping.
Nature and Purpose of Preliminary Injunction and Bond
A preliminary injunction is a provisional remedy to preserve the status quo ante litem motam. Under Rule 58, Section 4(b), an injunction requires a bond conditioned to pay all damages sustained by the enjoined party if the injunction is ultimately dissolved. The bond secures the enjoined party against wrongful restraint. Section 20, Rule 57, similarly governs claims for damages against such bonds.
Liability on the Injunction Bond
• Malice or lack of good faith in obtaining the injunction is not an element of recovery. The dissolution of the injunction, even if it was obtained in good faith, constitutes a determination that it was wrongfully granted, thereby giving rise to a cause of action on the bond (Aquino v. Socorro; Pacis v. COMELEC).
Coverage of the Injunction Bond
• The bond answers for “all damages” sustained by reason of the injunction if the applicant was not entitled to it (Rule 58, Sec. 4[b]).
• This includes costs, reasonable counsel fees, and expenses incurred due to the injunction. The bond does not, however, relieve the injunction seeker of independent liability.
Actual Damages and Sufficiency of Evidence
Although L
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Facts of the Case
- On 12 October 1995, Digital Networks Communications and Computers, Inc. (Digital) and Limitless Potentials, Inc. (LPI) entered into a one-year Billboard Advertisement Contract for ₱60,000.00/month plus VAT.
- Digital was to make a three-month deposit: ₱60,000.00 plus VAT at signing and ₱120,000.00 plus VAT upon billboard completion, which it did.
- The erected billboard was destroyed by unknown persons, terminating the contract and prompting Digital to demand return of two months’ deposit.
- LPI refused, alleging force majeure and directing any cause of action against responsible third parties.
- On 18 April 1997, Digital sued LPI in the Makati MeTC (Civil Case No. 55170) for return of deposits plus attorney’s fees.
- On 18 June 1997, LPI filed a Third-Party Complaint against Macgraphics Carranz International Corporation, Bishop Crisostomo Yalung, and Atty. Roy Manuel Villasor, claiming they maliciously destroyed and prevented reconstruction of the billboard.
Procedural History
- MeTC denied private respondents’ Motion to Dismiss Third-Party Complaint (25 August 1997) and Amended Third-Party Complaint (10 October 1997).
- Private respondents filed a Petition for Certiorari with the RTC of Makati on 9 December 1997, securing a preliminary injunction on 6 February 1998 enjoining MeTC from hearing the Third-Party Complaint upon posting of a ₱10,000.00 bond.
- RTC dissolved the injunction and dismissed the certiorari petition on 28 April 2000; a motion for reconsideration was denied on 26 June 2000.
- LPI filed Motion for Judgment Against the Bond, claiming attorney’s fees and moral damages; RTC denied it on 3 April 2002 and again on 6 August 2002.
- LPI sought certiorari relief before the Court of Appeals (CA) under Rule 65; CA initially dismissed the petition for lack of proof of authorization, then reinstated it on 24 January 2003, and finally dismissed it for