Bacolod City Water District vs. Labayen

A temporary restraining order issued by a regional trial court has a non-extendible life of twenty days, and the failure of the court to fix a period for the restraint does not convert it into a preliminary injunction; the twenty-day period is deemed incorporated in the order by operation of law. A final judgment rendered without the defendant having filed an answer, without joinder of issues, without pre-trial, and without trial on the merits constitutes a denial of due process.

Petitioner Bacolod City Water District (BACIWA) is a water district established pursuant to Presidential Decree No. 198 as a government-owned and controlled corporation with original charter, engaged in providing safe and potable water to Bacolod City. Public respondent City of Bacolod is a municipal corporation created by Commonwealth Act No. 326, otherwise known as the Charter of Bacolod. The dispute arose from BACIWA's proposed water rate increases, which the City opposed on the ground that these were imposed without the public hearing required under Letter of Instructions No. 700 and Presidential Decree No. 1479.

Petitioner Bacolod City Water District (BACIWA) is a water district established pursuant to Presidential Decree No. 198 as a government-owned and controlled corporation with original charter, engaged in providing safe and potable water to Bacolod City. Public respondent City of Bacolod is a municipal corporation created by Commonwealth Act No. 326, otherwise known as the Charter of Bacolod.

On March 26, 1999, respondent City filed a case for Injunction With a Prayer for Temporary Restraining Order And/Or Preliminary Mandatory Injunction against petitioner. The petition stated that on January 15, 1999, BACIWA published in the Visayan Daily Star, a local paper of general circulation, a Schedule of Automatic Water Rates Adjustments for the years 1999, 2000 and 2001. The rates were supposed to take effect seven days after its posting in the local papers or on January 22, 1999. The increase was aborted after petitioner unilaterally suspended the January 22, 1999 scheduled implementation. On March 15, 1999, however, petitioner announced that the rate hike would be implemented on April 1, 1999. Respondent City opposed, alleging that the proposed water rates would violate due process as they were to be imposed without the public hearing required under Letter of Instructions No. 700 and Presidential Decree No. 1479.

On March 30, 1999, the court a quo issued an Order summoning the parties to attend the preliminary hearing for the issuance of a temporary restraining order or preliminary mandatory injunction. On April 8, 1999, it required the parties to simultaneously submit their respective memoranda on whether it had jurisdiction over the case and whether a public hearing was conducted regarding the proposed increase in water rates. Petitioner filed its Position Paper dated April 15, 1999, attaching documents evidencing the conduct of extensive and lengthy public hearings in fifty-eight of the sixty-one barangays of Bacolod City. It opined that original jurisdiction over cases on rate review is vested in the Local Water Utilities Administration (LWUA), with appellate jurisdiction vested in the National Water Resources Board (NWRB), whose decisions shall be appealable to the Office of the President. On May 5, 1999, petitioner also filed a Motion to Dismiss.

On June 17, 1999, respondent City filed a Motion to Set for Hearing its application for a temporary restraining order or preliminary mandatory injunction, alleging that petitioner had already effected the water rates increase and collection, causing irreparable injury to the public. Petitioner opposed the Motion. On July 20, 1999, respondent City filed its Reply to Opposition and reiterated that the application for the issuance of a temporary restraining order or preliminary mandatory injunction be heard. On the same date, petitioner filed a Manifestation and Motion stating that the hearing may no longer be necessary as the respective positions of both parties have already been presented and amplified in their pleadings and memoranda. On July 22, 1999, respondent trial court issued an Order stating that there was no more need to hear the case on the merits as both parties have already submitted their position papers and documents to prove their respective allegations. On July 23, 1999, petitioner filed its Reply to respondent City's Opposition to the Motion to Dismiss reiterating that petitioner failed to exhaust administrative remedies provided by law, hence the petition should be dismissed.

After a hiatus of nearly seven months, on February 18, 2000, respondent City filed an Urgent Motion for the Issuance of Temporary Restraining Order And/Or Writ of Preliminary Injunction praying that the case be set for hearing on February 24, 2000. On the same date requested, respondent court heard respondent's application for temporary restraining order and issued an Order commanding petitioner to stop, desist and refrain from implementing the proposed water rates for the year 2000 which were then supposed to take effect on March 1, 2000. On March 7, 2000, petitioner filed an Urgent Motion for Reconsideration and Dissolution of the Temporary Restraining Order. Respondent court issued on March 10, 2000 an Order directing respondent City to file an Opposition. In its Opposition, respondent City contended that the temporary restraining order issued was not infirmed with procedural and substantive defects, and that respondent court has jurisdiction over the case since the sole question of the lack of public hearing does not require the special knowledge or expertise of an administrative agency, hence the doctrine of primary jurisdiction does not apply.

Respondent court continued with the proceedings by receiving the evidence of petitioner in support of its Motion for Reconsideration and Dissolution of Temporary Restraining Order. On April 6, 2000, respondent court issued an Order finding petitioner's Urgent Motion moot and academic considering petitioner's compliance with the temporary restraining order. Four days after, in an Order dated April 10, 2000, it denied petitioner's Motion to Dismiss for lack of merit. On April 19, 2000, respondent City filed a Manifestation praying that respondent trial court issue a writ of preliminary injunction against petitioner, stating that a Temporary Restraining Order was issued which expired before the parties were able to finish the presentation of their respective witnesses and evidences, and that while awaiting the decision, several complaints had reached the petitioner that the respondents had already reflected in the water billings for the month of April the new water rates for the year 2000. Petitioner filed a Motion for Reconsideration of the Order denying its Motion to Dismiss, which respondent City opposed on June 1, 2000.

Respondent court did not act upon petitioner's Motion for Reconsideration until respondent City filed an Ex Parte Motion for Speedy Resolution of the case on October 6, 2000, praying that the case be resolved before the year 2000 ends in order to prevent the implementation of the water rates increase for the year 2001 which was to be imposed allegedly without the benefit of a public hearing. On December 21, 2000, respondent court issued the assailed Decision granting the final injunction which allegedly confirmed the previous preliminary injunction. Petitioner filed its Motion for Reconsideration on January 11, 2001, asserting, among others, that the case was not yet ripe for decision when the court granted the final injunction, the petitioner having had no opportunity to file its answer, avail of the mandatory pre-trial conference, and have the case tried on the merits. Respondent court denied the Motion for Reconsideration for lack of merit in an Order dated January 24, 2001.

Petitioner then filed a special civil action for certiorari under Rule 65 in the Court of Appeals, alleging that public respondent judge acted without or in excess of jurisdiction and/or with grave and patent abuse of discretion amounting to lack or excess of jurisdiction when she issued the final injunction in disregard of petitioner's basic right to due process. The Court of Appeals dismissed the petition for review on certiorari, ruling that the Order of public respondent dated February 24, 2000, though termed by BACIWA as a temporary restraining order, was in fact a preliminary injunction, as the period of the restraint was not limited and the increased water rates must not be effected until final disposition of the main case.

• Characterization of the February 24, 2000 Order: Petitioner argued that the Court of Appeals gravely erred in insisting that the February 24, 2000 Order was a preliminary injunction when the records clearly and indubitably show that it was a temporary restraining order (TRO).
• Prematurity of the Decision: Petitioner argued that respondent court acted without or in excess of jurisdiction and/or with grave abuse of discretion for arbitrarily and capriciously rendering a Decision purporting to issue a final injunction and confirming its alleged preliminary injunction, despite the fact that no preliminary injunction had been issued, the lower court did not resolve petitioner's Motion for Reconsideration of the Order denying its Motion to Dismiss, petitioner had not yet filed its Answer, there was still no joinder of issues, the mandatory pre-trial conference was not yet conducted, and there was no trial on the merits for the main case.
• Denial of Due Process: Petitioner argued that by dismissing the petition for certiorari, the Court of Appeals effectively prevented petitioner from fully ventilating its case in the main action due to the irregular and confused proceedings conducted by the respondent court.

• Nature of the Order: Respondent City contended that the temporary restraining order issued was not infirmed with procedural and substantive defects.
• Jurisdiction: Respondent City averred that respondent court has jurisdiction over the case since the sole question of the lack of public hearing does not require the special knowledge or expertise of an administrative agency and may be resolved by respondent court, hence the doctrine of primary jurisdiction does not apply.
• Characterization of the Order as Preliminary Injunction: Respondent City and respondent trial court insisted, after petitioner expressed its vehement objection, that the questioned Order was a preliminary injunction to justify the validity of the assailed Decision.

• Characterization of the Order: Whether the Order dated February 24, 2000 issued by the trial court was a temporary restraining order or a preliminary injunction.
• Prematurity of the Decision: Whether the assailed Decision dated December 21, 2000 granting a final injunction was premature and issued in violation of petitioner's right to due process, considering that no answer had been filed, no joinder of issues had occurred, no pre-trial conference had been conducted, and no trial on the merits had been held.

• Characterization of the Order: The February 24, 2000 Order was a temporary restraining order, not a preliminary injunction. The trial court and both parties consistently referred to it as a temporary restraining order in their succeeding orders and pleadings, and the failure to state a period for the restraint did not convert it into a preliminary injunction.
• Prematurity of the Decision: Yes, the assailed Decision was premature. The short circuiting of the procedural process denied the petitioner due process of law, as it was not able to allege its defenses in an answer and prove them in a hearing.

• Characterization of the Order: The Court quoted the pertinent parts of the questioned Order, which referred to the directive as a "temporary restraining order" and cited Administrative Circular No. 6, Paragraph 4 and sub-paragraph 15 and The Interim Rules and Guidelines set forth by the Rules of Court. The trial court consistently referred to it as a temporary restraining order in its succeeding Orders dated March 10, 2000 and April 6, 2000. The parties also referred to the assailed Order as a temporary restraining order in their succeeding pleadings. It was only in the respondent court's assailed Decision that the Order was referred to as a preliminary injunction. The Court noted that an injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act, and may be the main action or merely a provisional remedy. A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order, and persists until it is dissolved or until the termination of the action without the court issuing a final injunction. A restraining order, on the other hand, is issued to preserve the status quo until the hearing of the application for preliminary injunction. Under Rule 58 of the Rules of Court, a judge may issue a temporary restraining order with a limited life of twenty days from date of issue. If before the expiration of the twenty-day period the application for preliminary injunction is denied, the temporary restraining order would be deemed automatically vacated. If no action is taken by the judge on the application for preliminary injunction within the said twenty days, the temporary restraining order would automatically expire on the 20th day by the sheer force of law, no judicial declaration to that effect being necessary. The rule against the non-extendibility of the twenty-day limited period of effectivity of a temporary restraining order is absolute if issued by a regional trial court. The failure of respondent court to fix a period for the ordered restraint did not lend the temporary restraining order a breath of semi-permanence which can only be characteristic of a preliminary injunction. The twenty-day period provided by the Rules of Court should be deemed incorporated in the Order where there is an omission to do so.
• Prematurity of the Decision: The Court held that even if the issued Order was assumed to be a preliminary injunction, petitioner was correct in contending that the assailed Decision was premature. The records revealed that respondent court did not resolve petitioner's Motion for Reconsideration of the Order denying its Motion to Dismiss before it issued the assailed Decision. Consequently, there was no answer filed by petitioner, no joinder of issues, no mandatory pre-trial conference, and no trial on the merits, yet a Decision was handed down by the respondent trial court. The short circuiting of the procedural process denied the petitioner due process of law. The convoluted procedure allowed by the respondent trial court and the pleadings filed by the parties which are not models of clarity certainly created confusion, but this confusion should not be seized as a reason to deny a party the constitutional right to due process. Over and above every desideratum in litigation is fairness, and all doubts should be resolved in favor of fairness.

• Temporary Restraining Order vs. Preliminary Injunction — A temporary restraining order is issued to preserve the status quo until the hearing of the application for preliminary injunction, which cannot be issued ex parte. Under Rule 58 of the Rules of Court, a judge may issue a temporary restraining order with a limited life of twenty days from date of issue. If before the expiration of the twenty-day period the application for preliminary injunction is denied, the temporary restraining order would be deemed automatically vacated. If no action is taken by the judge on the application for preliminary injunction within the said twenty days, the temporary restraining order would automatically expire on the 20th day by the sheer force of law, no judicial declaration to that effect being necessary. The rule against the non-extendibility of the twenty-day limited period of effectivity of a temporary restraining order is absolute if issued by a regional trial court. The failure of the court to fix a period for the ordered restraint does not convert the temporary restraining order into a preliminary injunction; the twenty-day period provided by the Rules of Court should be deemed incorporated in the Order where there is an omission to do so.
• Due Process in Civil Proceedings — A final judgment rendered without the defendant having filed an answer, without joinder of issues, without pre-trial, and without trial on the merits constitutes a denial of due process. The short circuiting of the procedural process denies a party the constitutional right to due process, as the party is not able to allege its defenses in an answer and prove them in a hearing. Over and above every desideratum in litigation is fairness, and all doubts should be resolved in favor of fairness.

• "The rule against the non-extendibility of the twenty (20)-day limited period of effectivity of a temporary restraining order is absolute if issued by a regional trial court. The failure of respondent court to fix a period for the ordered restraint did not lend the temporary restraining order a breath of semi-permanence which can only be characteristic of a preliminary injunction. The twenty (20)-day period provided by the Rules of Court should be deemed incorporated in the Order where there is an omission to do so." — This passage articulates the core rule that a TRO issued by an RTC has a fixed, non-extendible twenty-day life, and that the court's omission to state a period does not convert it into a preliminary injunction.
• "The short circuiting of the procedural process denied the petitioner due process of law. It was not able to allege its defenses in an answer and prove them in a hearing. The convoluted procedure allowed by the respondent trial court and the pleadings filed by the parties which are not models of clarity certainly created confusion. But this confusion should not be seized as a reason to deny a party the constitutional right to due process. Over and above every desideratum in litigation is fairness. All doubts should be resolved in favor of fairness." — This passage states the due process rationale for reversing the trial court's premature decision, emphasizing that procedural shortcuts cannot be used to deny a party its constitutional right to be heard.

• Urbanes, Jr. vs. Court of Appeals, G.R. No. 117964, March 28, 2001, 355 SCRA 537 — Cited for the proposition that the main action for injunction seeks a judgment embodying a final injunction which is distinct from, and should not be confused with, the provisional remedy of preliminary injunction, the sole object of which is to preserve the status quo until the merits can be heard.
• Miriam College Foundation, Inc. vs. Court of Appeals, G.R. No. 127930, December 15, 2000, 348 SCRA 265 — Cited for the rule that a preliminary injunction persists until it is dissolved or until the termination of the action without the court issuing a final injunction, and for the rule on the automatic expiration of a temporary restraining order.

• Rule 58, Section 1, Rules of Court — Defines preliminary injunction as an order granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts, and may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory injunction.
• Rule 58, Section 5, Rules of Court — Provides that no preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined, and that a court may issue ex parte a temporary restraining order to be effective only for a period of twenty days from service on the party or person sought to be enjoined. Within the said twenty-day period, the court must order said party or person to show cause at a specified time and place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order. In the event that the application for preliminary injunction is denied or not resolved within the said period, the temporary restraining order is deemed automatically vacated. The effectivity of a temporary restraining order is not extendible without need of any judicial declaration to that effect and no court shall have authority to extend or renew the same on the same ground for which it was issued. However, if issued by the Court of Appeals or a member thereof, the temporary restraining order shall be effective for sixty days from service on the party or person sought to be enjoined.
• Presidential Decree No. 198 — The statute pursuant to which petitioner BACIWA was established as a water district, a government-owned and controlled corporation with original charter.
• Commonwealth Act No. 326 — The Charter of Bacolod, pursuant to which respondent City of Bacolod was created as a municipal corporation.
• Letter of Instructions No. 700 — Providing Measures to Continue and Regulate Increases in Water Rates, issued on June 1, 1978, cited by respondent City as requiring public hearing before water rate increases.
• Presidential Decree No. 1479 — Further Amending P.D. No. 198, Otherwise Known as the Provincial Water Utilities Act of 1973, As Amended by P.D. No. 768, cited by respondent City as requiring public hearing before water rate increases.

Austria-Martinez, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concurred.