Filipino Metals Corporation vs. Secretary of the Department of Trade and Industry

A preliminary injunction may be issued to restrain the enforcement of a law when the petitioner assailing the statute has made out a case of unconstitutionality strong enough to overcome the presumption of validity, in addition to showing a clear legal right to the remedy sought.

Petitioners are manufacturers of steel products such as reinforcing bars and steel sections. Their principal raw materials are steel billets, which are sourced partly from domestic producers and partly from overseas suppliers. Domestic suppliers provide only about 15% of the country's total requirements, and their products, made from scrap containing impurities, are of inferior quality compared to imported billets made from virgin-ore materials. Consequently, petitioners are compelled to import the bulk of their raw materials. On July 17, 2000, Republic Act No. 8800 was enacted, codifying the provisions of the GATT and the WTO Agreement on Safeguards to authorize the application of safeguard measures if increased imports cause or threaten serious injury to domestic producers of like or directly competitive products.

• Nature of the Action: Petitioners filed a petition for declaratory relief and/or certiorari and prohibition before the Regional Trial Court of Valenzuela City to declare Republic Act No. 8800 unconstitutional.
• The Safeguard Measures Act: Republic Act No. 8800 authorizes the application of safeguard measures, such as tariff increases or quantitative restrictions on imports, upon a finding that increased imports cause or threaten serious injury to the domestic industry.
• The RTC Order: The RTC judge withheld a ruling on the validity of R.A. 8800 but found a strong case against its constitutionality sufficient to justify preliminary injunctive relief. A writ of preliminary injunction was issued, restraining respondents from enforcing R.A. 8800 and its Implementing Rules and Regulations, upon petitioners' posting of a P10,000,000.00 bond.
• The Appellate Reversal: Respondents filed a petition for certiorari with the Court of Appeals. The appellate court concluded that the RTC judge committed grave abuse of discretion in issuing the writ. It reasoned that questions on the constitutionality of a law do not necessarily entitle a movant to an injunction, and that the RTC acted with undue haste by disregarding the well-settled presumption of validity enjoyed by laws. Furthermore, the appellate court found that petitioners' projected loss in business was not the clear legal right contemplated by the rules for injunctive relief.

• Unconstitutionality of R.A. 8800: Petitioners maintained that R.A. 8800 violates Article VI, Section 28(2) of the Constitution because it authorizes Congress to delegate the power to impose tariff rates, import and export quotas, and other duties to persons other than the President.
• Violation of WTO Agreements: Petitioners argued that R.A. 8800 impairs Philippine treaty obligations under the WTO Agreement on Safeguards.
• Entitlement to Injunction: Petitioners contended that they had made out a case of unconstitutionality strong enough to overcome the presumption of constitutionality, sufficient to entitle them to a writ of preliminary injunction.
• Forum-Shopping: Petitioners alleged that respondents engaged in forum-shopping by filing multiple petitions with the Court of Appeals.

• Presumption of Constitutionality: Respondents insisted that the Court of Appeals correctly ruled that R.A. 8800 enjoys the presumption of constitutionality and that the RTC disregarded this presumption.
• Valid Delegation of Power: Respondents argued that the enactment of R.A. 8800 constitutes a valid delegation of legislative power.
• Procedural Bar on WTO Issue: Respondents claimed it was improper for petitioners to raise the issue of the alleged violation of the WTO Agreement on Safeguards because it was not raised before the Court of Appeals.
• Absence of Irreparable Injury: Respondents alleged that the supposed injury to be sustained by petitioners is neither grave nor irreparable, and thus not a clear legal right entitled to protection.
• Denial of Forum-Shopping: Respondents denied that they engaged in forum-shopping.

• Issuance of Preliminary Injunction: Whether the Court of Appeals erred in reversing the trial court order enjoining respondents from enforcing R.A. 8800.
• Nature of Safeguard Measures: Whether safeguard measures under R.A. 8800 are in the nature of taxes that cannot be enjoined per se.
• Injunction Pending Constitutional Challenge: Whether a law must first be declared unconstitutional before a preliminary injunction against its enforcement may be granted.

• Issuance of Preliminary Injunction: The Court of Appeals erred in reversing the trial court order. Petitioners established a strong case for the unconstitutionality of R.A. 8800 sufficient for the grant of a preliminary injunction. Petitioners demonstrated a clear right threatened by the questioned safeguard measures, as any increase in tariffs or quantitative restriction on imports would force them to close down their businesses and lay off employees.
• Nature of Safeguard Measures: Safeguard measures are not in the nature of taxes whose collection cannot per se be enjoined. The primary purpose of safeguard measures is to provide protection to domestic industry threatened by import surges, not to generate revenue for the government. Furthermore, safeguard measures usually take the form of a simple quantitative restriction on imports rather than a tariff increase. Enjoining the enforcement of safeguard measures would not necessarily drain the national coffer, unlike suspending the collection of internal revenue taxes.
• Injunction Pending Constitutional Challenge: A law need not be declared unconstitutional first before a preliminary injunction against its enforcement may be granted. The presumption of validity enjoyed by laws is not absolute in the context of provisional remedies. When a petitioner assailing a statute has made out a case of unconstitutionality strong enough to overcome the presumption of validity, in addition to showing a clear legal right, a writ of preliminary injunction should issue. To require a prior declaration of unconstitutionality would render the writ of injunction superfluous, as the law would have already ceased to exist.

• Preliminary Injunction against a Statute — When the petitioner assailing a statute has made out a case of unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of validity, in addition to a showing of a clear legal right to the remedy sought, the court should issue a writ of preliminary injunction. A law need not be declared unconstitutional first before a preliminary injunction against its enforcement may be granted.
• Requisites for Preliminary Injunction — Only two requisites are necessary for a preliminary injunction to issue: (1) the existence of a right to be protected; and (2) the facts, against which the injunction is to be directed, violate said right. The existence of the right need not be conclusively established; an ostensible right to the final relief prayed for is sufficient.
• Safeguard Measures Distinguished from Taxes — Safeguard measures are not taxes in the sense of being the lifeblood of the national economy. Their primary purpose is to protect domestic industry from import surges, not to generate revenue, and they often take the form of quantitative restrictions rather than tariff increases. Thus, their enforcement is not absolutely protected from judicial injunction unlike the collection of internal revenue taxes.

• "When the petitioner assailing a statute has made out a case of unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of validity, in addition to a showing of a clear legal right to the remedy sought, the court should issue a writ of preliminary injunction."
• "Obviously, a law need not be declared unconstitutional first before a preliminary injunction against its enforcement may be granted. Needless to stress, the moment a law is nullified for being unconstitutional, it ceases to exist. Thus, a writ of injunction would then become superfluous."
• "Clearly, safeguard measures are not in the nature of taxes, in the sense of being the lifeblood of the national economy, such that their enforcement cannot per se be enjoined."

• Southern Cross Cement Corporation v. Philippine Cement Manufacturers Corporation, G.R. No. 158540, 8 July 2004 — Distinguished. The intimation in this case that the imposition of safeguard measures should not be enjoined as that would be tantamount to enjoining the collection of taxes was merely obiter dictum.
• Churchill and Tait v. Rafferty, 32 Phil. 580 (1915) — Followed. Established the principle that judicial control over the collection of taxes is rejected, as taxes must be collected promptly.
• Valley Trading Co., Inc. v. CFI of Isabela, 171 SCRA 501 (1989) — Followed. Ruled that when a petitioner assailing a statute makes out a case of unconstitutionality strong enough to overcome the presumption of validity, plus a showing of a clear legal right, a preliminary injunction should issue.
• Board of Optometry v. Colet, 260 SCRA 88 (1996) — Cited. Supported the principle that a law need not be declared unconstitutional first before a preliminary injunction against its enforcement may be granted.

• Article VI, Section 28(2), 1987 Constitution — Authorizes Congress to delegate to the President the power to fix within specified limits tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts. Petitioners argued R.A. 8800 violated this provision by delegating such power to persons other than the President.
• Rule 58, Section 3, Revised Rules of Court — Enumerates the grounds justifying the issuance of a preliminary injunction. Applied to determine whether petitioners were entitled to injunctive relief.
• Republic Act No. 8800, Section 5 — Prescribes the conditions for the application of general safeguard measures, requiring a positive final determination that increased imports are a substantial cause of serious injury or threat thereof to the domestic industry.
• Republic Act No. 8800, Section 8 — Provides the forms of safeguard measures, which may include tariff increases or quantitative restrictions on imports. Cited to demonstrate that safeguard measures are not always revenue-generating tariff increases.

Hilario G. Davide, Jr., Consuelo Ynares-Santiago, Antonio T. Carpio, Adolfo S. Azcuna