G.R. No. 204452 - Metro Rail Transit Development Corp. vs. Trackworks Rail Transit Advertising, Vending and Promotions, Inc.

Case Summary (G.R. No. 204452)

Factual Background

The factual matrix arose from a BLT Agreement dated August 8, 1997 between the Department of Transportation and Communication and Metro Rail Transit Corporation Limited for Phase 1 of the MRT-3. Pursuant thereto, DOTC, MRT and MRTDC granted MRTDC rights to develop and lease airspace and obtain advertising income from EDSA MRT-3 stations. On October 27, 1998, MRTDC engaged Trackworks by a five-year Contract for Advertising Services granting Trackworks broad advertising duties and imposing annual minimum guaranties and percentage remittances to MRTDC. The parties extended their contract by an Agreement to Renew on March 11, 2005 to a ten-year term ending December 31, 2015 with increased financial obligations for Trackworks.

Default, Demand and Termination

Trackworks defaulted on its payment obligations and, as of February 28, 2009, MRTDC demanded payment of P276,978,072.42. The parties’ contract provided a cure period of thirty calendar days after written notice and allowed termination upon failure to cure. MRTDC repeatedly demanded payment and, after Trackworks’ continued default, served a Notice of Termination on September 1, 2009.

Proceedings in the RTC of Pasig City

On November 23, 2009, Trackworks filed a complaint with application for TRO and/or writ of preliminary injunction in RTC, Pasig City (Civil Case No. 77291-PSG) seeking to enjoin MRTDC from terminating the contract and from acts that would render the case moot pending arbitration. On January 4, 2010, RTC, Pasig denied injunctive relief but ordered the parties to submit to arbitration and stayed its proceedings pending the arbitral award. Trackworks’ subsequent motions for injunctive relief and motions for reconsideration in RTC, Pasig were denied through March and May 2010.

Proceedings in the RTC of Makati City

On April 28, 2010, Trackworks filed a Petition for Certiorari, Prohibition and Mandamus under Rule 65 in RTC, Makati City (Civil Case No. 10-414) seeking injunctive relief to restrain MRTDC and media agents and to prohibit DOTC officials from issuing permits relevant to advertising rights. RTC, Makati initially granted a TRO and later, after transfers, Branch 65 issued an Omnibus Order dated October 22, 2010 denying MRTDC’s motion to dismiss and thereafter, by Order dated December 20, 2010, denied MRTDC’s motion for reconsideration. Branch 65 ultimately promulgated a Decision on June 14, 2012 granting Trackworks’ petition and rendering permanent injunctive reliefs that conflicted with prior RTC, Pasig orders.

Proceedings in the Court of Appeals

MRTDC filed a petition for certiorari before the Court of Appeals (CA-G.R. SP No. 118447) assailing the October 22, 2010 Omnibus Order and December 20, 2010 Order of RTC, Makati Branch 65. On July 30, 2012 the CA granted MRTDC’s petition, annulled and set aside those Makati orders, and dismissed Civil Case No. 10-414 on the ground that RTC, Makati violated the doctrine of judicial stability and that litis pendentia barred the Makati action in favor of the earlier Pasig action. On Trackworks’ motion for reconsideration, however, the CA on November 9, 2012 reversed its July 30 decision and dismissed MRTDC’s petition as moot in view of the Makati RTC’s June 14, 2012 Decision, concluding that the remedy of ordinary appeal had become available.

Arbitral Award and Execution

Meanwhile, the Philippine Dispute Resolution Center, Inc. issued a Final Arbitral Award on January 15, 2013 in favor of MRTDC. The award was confirmed by RTC, Pasig in Resolutions dated March 14 and June 7, 2013 in Civil Case No. 72291, and a writ of execution issued on June 13, 2013 to enforce the final award against Trackworks.

Issue Presented

The Supreme Court posed the single issue whether the Petition for Certiorari filed by MRTDC before the CA had been rendered moot by reason of the June 14, 2012 Decision of RTC, Makati Branch 65.

Contentions of MRTDC

MRTDC contended that the June 14, 2012 Makati decision was not final and executory because it timely filed a Motion for Reconsideration under Section 2, Rule 36 and thus the ordinary remedy of appeal was not yet available when the CA rendered its July 30, 2012 decision. MRTDC asserted that it properly sought relief by certiorari under Rule 65 to challenge the Makati RTC orders issued without jurisdiction for interfering with orders of the co-equal RTC, Pasig, and that those Makati orders were null and void.

Contentions of Trackworks

Trackworks argued that the June 14, 2012 Decision rendered the CA’s July 30, 2012 Decision functus officio and that certiorari under Rule 65 is barred once an ordinary appeal becomes available. Trackworks maintained that the Makati decision conferred reliefs that would be nullified should the CA grant MRTDC’s petition and that the proper remedy against the Makati decision was by ordinary appeal.

The Supreme Court’s Ruling

The Supreme Court found the petition meritorious. It held that, although certiorari does not ordinarily lie as a substitute for appeal, exceptions exist where the orders complained of are completely null and void or where public welfare and the broader interests of justice require. The Court concluded that the Makati RTC violated the doctrine of judicial stability by entertaining and granting Trackworks’ Rule 65 petition despite an earlier pending action in RTC, Pasig that concerned the same parties and subject matter. Accordingly, the Court ruled that RTC, Makati Branch 65 had no jurisdiction over Civil Case No. 10-414 and that its proceedings, including the June 14, 2012 Decision and its October 22 and December 20, 2010 orders, were void for lack of jurisdiction.

Legal Basis and Reasoning

The Court recited Section 1, Rule 65 and its requisites for certiorari: that the challenged tribunal acts without or in excess of jurisdiction or with grave abuse of discretion, and that no plain, speed

Case Syllabus (G.R. No. 204452)

Parties and Procedural Posture

Metro Rail Transit Development Corporation was the Petitioner before the Court challenging orders of the Regional Trial Court of Makati City, Branch 65, and the Court of Appeals resolution dismissing its certiorari petition.
Trackworks Rail Transit Advertising, Vending and Promotions, Inc. was the Respondent and the movant in the principal actions in the RTC of Pasig and the RTC of Makati.
The petition before the Supreme Court assailed the Court of Appeals’ November 9, 2012 Resolution that dismissed MRTDC’s certiorari under Rule 65 after the CA had initially granted the petition in its July 30, 2012 Decision.
The dispositive relief sought in this petition was the annulment of the Makati RTC’s June 14, 2012 Decision and other orders and the reversal of the CA’s November 9, 2012 Resolution.

Key Factual Allegations

The Department of Transportation and Communication entered into a Build-Lease-and-Transfer Agreement that led to contracts granting MRTDC advertising and airspace development rights over MRT-3 stations.
On October 27, 1998, MRTDC and Trackworks executed a five-year Contract for Advertising Services that required Trackworks to pay annual percentage shares or a minimum guaranty with specified amounts for each year.
The parties renewed the contract on March 11, 2005 to extend its effectivity to December 31, 2015 and materially increased the financial obligations for years six to fifteen.
Trackworks defaulted on its payment obligations and owed MRTDC PHP 276,978,072.42 as of February 28, 2009, prompting MRTDC to issue a Notice of Termination on September 1, 2009 under the contract’s thirty-day cure provision.
Trackworks filed Civil Case No. 77291-PSG before the RTC of Pasig seeking injunctive relief and arbitration, which the RTC of Pasig denied in its January 4, 2010 Order and ordered submission to arbitration while staying its proceedings.
Trackworks later filed a Petition for Certiorari, Prohibition and Mandamus under Rule 65 before the RTC of Makati City, which ultimately issued orders granting injunctive relief and a June 14, 2012 Decision in Civil Case No. 10-414.

Contract Terms

The advertising contract obligated Trackworks to undertake comprehensive advertising services and to pay either a percentage share of gross revenues or a fixed minimum annual guaranty.
The contract’s Section XIII PRE-TERMINATION afforded the non-defaulting party the right to terminate after a thirty-calendar-day cure period following written notice of default.
The March 11, 2005 renewal extended contractual obligations through December 31, 2015 and increased the minimum guaranty for later contract years.

Procedural History

Trackworks filed its suit in the RTC of Pasig on November 23, 2009, which ordered arbitration and denied injunctive relief on January 4, 2010.
Trackworks filed a certiorari petition in the RTC of Makati on April 28, 2010, which led to the Makati RTC’s October 22, 2010 Omnibus Order and December 20, 2010 Order granting preliminary injunctive relief and the June 14, 2012 Decision making the injunction permanent.
MRTDC filed a Petition for Certiorari before the Court of Appeals, which on July 30, 2012 granted the petition and annulled Makati RTC’s orders but on reconsideration reversed itself in its November 9, 2012 Resolution and dismissed the certiorari as moot.
MRTDC filed this Rule 45 Petit