Title
Urbanes, Jr. vs. Court of Appeals
Case
G.R. No. 117964
Decision Date
Mar 28, 2001
A security agency disputes bidding irregularities in a contract with SSS, leading to legal battles over injunctions, jurisdictional issues, and a Supreme Court remand.
security agency
government institution
contract
A

Case Summary (G.R. No. 117964)

Parties and Setting

CATALINA had previously been awarded an SSS security services contract through a public bidding in 1987, covering July 1, 1988 to June 30, 1989. The contract was later extended on a month-to-month basis until another public bidding held on August 16, 1990. In that later bidding, CATALINA participated but the contract was awarded to Bolinao Security and Investigation Services. CATALINA then filed an action before the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-91-7798, to enjoin the award based on claimed irregularities in the bidding.

Factual Background: Prior Disputes and Compromise

During the pendency of Civil Case No. Q-91-7798, the trial court issued a writ of preliminary injunction restraining the SSS from awarding the security contract to Bolinao. The SSS sought relief through certiorari, docketed as CA-G.R. SP No. 26633, but the petition was dismissed due to procedural defects, including failure to attach certified true copies of the assailed trial court orders and failure to state certain material data. After denial of a motion for reconsideration, the SSS filed a second petition for certiorari, which the Court of Appeals dismissed by decision dated October 30, 1992.

While the matter remained in that procedural setting, CATALINA and the SSS later forged a compromise agreement, after which the trial court rendered a decision approving it. Under the compromise agreement, the parties mutually withdrew claims for damages; the SSS agreed to conduct a new public bidding with CATALINA already considered a qualified participant; and CATALINA would continue providing security services to the SSS in the meantime until a new public bidding was actually conducted and a valid award was made.

New Bidding and Award to Jaguar; Initiation of the Present Action

In compliance, the SSS conducted a new public bidding and treated CATALINA as a qualified participant. The Social Security Commission awarded the contract to Jaguar Security and Investigation Services, Inc. (JAGUAR). On May 12, 1994, a security services contract was executed between the Social Security Commission and JAGUAR. The next day, a formal notice was sent to CATALINA to turn over the security services to JAGUAR.

CATALINA believed there was fraud and arbitrariness in the evaluation of the bids. It therefore filed an action for damages and injunction, with an application for a temporary restraining order, before the Regional Trial Court of Quezon City, seeking (1) to prevent, restrain, and enjoin the SSS from terminating CATALINA’s services, and (2) to annul the award in favor of JAGUAR. CATALINA also prayed for penal and exemplary damages. On May 13, 1994, the trial court granted the temporary restraining order. After hearing, it granted a preliminary injunction, requiring a bond of P100,000.00, and enjoined the SSS, the Purchase and Bidding Committee officials, and those acting for them from terminating CATALINA’s services and from proceeding with the award of the security contract to JAGUAR or any other party until the propriety of permanent injunction could be determined.

On June 1, 1994, the trial court issued a writ of preliminary injunction enforcing similar restraints. On June 14, 1994, the SSS and the Purchase and Bidding Committee members filed a certiorari petition before the Court of Appeals, docketed as CA-G.R. SP No. 34345, seeking a writ of preliminary injunction and/or a temporary restraining order to enjoin enforcement of the trial court’s orders and writ. They also prayed that petitioner be restrained from proceeding with Civil Case No. Q-94-20557. Their grounds included alleged disregard of evidence that the bidding was legal and fair; disregard of the presumption of regularity; SSS’s alleged right to reject any or all bids; the absence of a clear legal right and of irreparable injury; the claim that the injunction enjoined an award already a fait accompli; and assertions that the injunction orders were issued under questionable circumstances and effectively disposed of the main case on imagined facts.

Court of Appeals Intervention and Disposition

On June 22, 1994, the Court of Appeals issued a temporary restraining order enjoining the trial court from enforcing the questioned orders and its writ of preliminary injunction. On July 22, 1994, the Court of Appeals granted the petition for certiorari, annulled the trial court’s orders and set them aside, and ordered dismissal of Civil Case No. Q-94-20557. CATALINA moved for reconsideration, but the Court of Appeals denied it in a resolution dated November 11, 1994.

Issues Raised in the Petition for Review

Petitioner sought review before the Supreme Court, assigning as errors that the Court of Appeals: (1) exceeded its jurisdiction in ordering dismissal of the main case; (2) exceeded its jurisdiction by reviewing findings of the lower court, when its task should have been limited to determining whether the trial court abused its discretion or exceeded its jurisdiction in issuing the preliminary injunction; and (3) erred in failing to find that petitioner presented prima facie evidence of irregularities justifying issuance of the preliminary injunction.

At the center of the Supreme Court’s resolution was the question whether, in certiorari proceedings assailing an interlocutory order such as a writ of preliminary injunction, the Court of Appeals could review alleged errors of judgment, reverse factual findings, and dismiss the main damages and injunction case pending trial.

Legal Basis and Reasoning: Nature of Injunction and Limits of Certiorari

The Court emphasized the distinction between an action for injunction and the ancillary remedy of preliminary injunction. Under Rule 58 of the Rules of Court, a preliminary injunction was characterized as an order granted prior to judgment requiring a party to refrain from specific acts. Permanent injunction, by contrast, required a final determination after trial that the applicant was entitled to have the act permanently enjoined. Because the auxiliary remedy of preliminary injunction is provisional and exists only as an incident of an independent action, it should not be confused with the final merits of the case.

The Court further underscored that a writ of preliminary injunction is generally based on initial and incomplete evidence. The evidence presented during the hearing is not conclusive; it functions as a “sampling” to guide the trial court in preserving the status quo until the merits may be heard. Findings made at that stage are interlocutory. The trial court still needed to conduct substantial proceedings before the principal controversy could be finally resolved. Even if preliminary injunctive relief is granted, a final injunction does not necessarily follow.

Applied to the case, the Court held that the Court of Appeals exceeded its authority when it dismissed the main action for damages and injunction after evaluating incomplete evidence presented during the hearing for the preliminary injunction. The Court of Appeals did not confine itself to determining whether the trial court committed grave abuse of discretion that amounted to lack or excess of jurisdiction. It instead used certiorari as a vehicle to finally determine a main case that was still awaiting trial. The Court also noted that the Court of Appeals delved into the facts and merits of the main case, contrary to the settled rule that certiorari cannot be used to correct erroneous conclusions of fact or law.

The Supreme Court reasoned that in disposing of the petition for certiorari by dismissing the main case, the Court of Appeals necessarily ruled on errors in judgment and on factual matters reviewable only through appeal, since questions of fact were outside certiorari’s scope. The Court cited a corollary doctrine from Chua v. Court of Appeals, where the Court held that an appellate court’s authority in certiorari should be confined to whether the trial court committed grave abuse of discretion in issuing the order questioned, and not whether the trial court committed a mistake in deciding the case on the merits. By analogy, the Court ruled that the Court of Appeals similarly went beyond its proper jurisdiction by deciding the main damages and injunction case despite the fact that what was elevated to it concerned the propriety of the ancillary preliminary injunction.

Application to the Merits: No Grave Abuse in Issuance of the Preliminary Injunction

The Court declared that the trial court did not act diametrically contrary to legal principles. It found that the issuance of the preliminary injunction was supported by sufficient evidence adduced during the preliminary hearing. The trial court’s evaluation of the parties’ evidence led it to preserve the status quo while the main action was being resolved.

The Court identified the trial court’s reasons for granting the writ. First, it pointed to the compromise agreement in Civil Case No. Q-91-7798, which established that CATALINA would continue providing security services to the SSS until a new public bidding would be conducted and a valid award would be made, thereby providing a clear and unmistakable right. Second, it held that the invasion of petitioner’s right was material and substantial because the SSS attempted to oust CATALINA by awarding the contract to JAGUAR despite petitioner’s protests that the bidding process was anomalous. Third, it recognized urgent necessity to prevent serious damage to CATALINA while the main case remained pending.

Although private respondents presented evidence to counter petitioner’s allegations, the Court held that such matters should be assessed in the trial proper. The Court also clarified that the assailed injunctive writ was not a judgment on the merits of the case.

The Supreme Court then addressed the Court of Appeals’ finding of grave abuse of discretion. It reiterated that grave abuse of discretion in the issuance of writs implies a capricious

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