Garcia vs. Burgos

Courts have no jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project of the government, and any such writ issued in violation of Presidential Decree No. 1818 is void for having been issued with grave abuse of discretion and without jurisdiction. A reclamation project of the government, such as the Cebu South Reclamation Project, is an infrastructure project as contemplated under PD 1818, and the President's approval of the reclamation project is distinct from the approval of the reclamation contract itself.

The petitioners were government officials and entities — the Governor of Cebu, the Province of Cebu, the Mayor of Cebu City, the City of Cebu, the City Administrator, the City Planning and Development Officer, the Metro Cebu Development Project Office, the Regional Director of the Department of Public Works and Highways (DPWH) Region VII, the Regional Director of the National Economic and Development Board (NEDA) Region VII, and the Land Bank of the Philippines — involved in implementing the Cebu South Reclamation Project, a four billion peso project of the Government of the Republic of the Philippines funded by a loan from the Government of Japan through the Overseas Economic Cooperation Fund (OECF). The project was part of the Third Phase of the Metro Cebu Development Projects (MCDP III), approved by the President and the NEDA, and certified as a government project by the Department of Foreign Affairs. The private respondent, Malayan Integrated Industries Corporation, claimed prior contractual rights over the same reclamation area based on contracts dating back to 1977 with the Province of Cebu and the City of Cebu, and a right of first refusal allegedly granted by a Presidential Memorandum dated August 13, 1979. Presidential Decree No. 1818 prohibits courts from issuing injunctions against infrastructure projects to avoid disrupting the pursuit of essential government projects.

The Cebu South Reclamation Project was a four billion peso project of the Government of the Republic of the Philippines, funded by a loan from the Government of Japan through the Overseas Economic Cooperation Fund (OECF), made possible by an Exchange of Notes between the two governments. The project was an integral part of the Third Phase of the Metro Cebu Development Projects (MCDP III), approved by President Fidel V. Ramos as a project of the national government, approved by the NEDA through Resolution No. 1, Series of 1995, and certified as a government project by the Department of Foreign Affairs. Loan agreements were executed between the OECF and the Land Bank of the Philippines, with the City of Cebu designated as the project's implementing agency. On September 11, 1995, the City of Cebu, the DPWH, and the Metro Cebu Development Project Office executed the Implementing Arrangement for Metro Cebu Development Project Phase III.

On January 19, 1996, private respondent Malayan Integrated Industries Corporation filed a case for Specific Performance, Declaration of Nullity, Damages and Injunction against the petitioners before the Regional Trial Court of Cebu City, docketed as Civil Case No. CEB-18292. Malayan claimed prior contractual rights over the reclamation area based on a Contract of Reclamation and Development dated October 31, 1977 with the Province of Cebu, a Second Supplemental Contract dated October 7, 1978, and various confirmatory agreements, as well as a right of first refusal allegedly granted by Presidential Memorandum dated August 13, 1979. Malayan filed the case when the petitioners issued an invitation to bidders for the Cebu South Reclamation Project, which Malayan claimed violated its preemptive rights or right of first refusal to prosecute the project.

During the summary hearing on the application for a temporary restraining order, the petitioners questioned the court's jurisdiction, citing Section 1 of Presidential Decree No. 1818, which prohibits courts from issuing injunctive writs in cases involving government infrastructure projects. They also cited Supreme Court Administrative Circulars Nos. 13-93 and 68-94, which reiterated the prohibition. Despite these objections, respondent judge issued a temporary restraining order on February 5, 1996, and subsequently denied petitioners' Omnibus Motion on February 22, 1996, in an Order that petitioners claimed practically decided the case on the merits. Respondent judge then voluntarily inhibited himself on February 26, 1996, but reversed this decision on March 12, 1996, and on March 18, 1996, granted the writ of preliminary injunction prayed for by Malayan, enjoining the petitioners from implementing the Memorandum of Agreement dated September 11, 1995, except the construction of the Cebu South Coastal Road, and all other agreements concerning the Cebu South Reclamation Project.

• Lack of Jurisdiction under PD 1818: Petitioners argued that respondent judge had no jurisdiction to issue any TRO or writ of preliminary injunction against the implementation of a government infrastructure project, citing Section 1 of Presidential Decree No. 1818 and Supreme Court Administrative Circulars Nos. 13-93 and 68-94, which prohibit courts from issuing such writs in cases involving government infrastructure projects.

• Grave Abuse of Discretion in Issuing the Orders: Petitioners contended that respondent judge gravely abused his discretion in issuing the Orders dated February 22, 1996 and March 18, 1996, which had the effect of practically deciding the case on the merits, and in granting the writ of preliminary injunction when Malayan had no clear and unmistakable right to be protected.

• Improper Reconsideration of Voluntary Inhibition: Petitioners argued that respondent judge gravely abused his discretion in reconsidering his earlier Order of voluntary inhibition dated February 26, 1996, as the flimsy reasons proffered were insufficient to justify the reversal, and a presumption arises, by reason of the judge's prior order of disqualification, of the existence of the factual reason for such disqualification.

• Failure to Dismiss the Complaint: Petitioners maintained that respondent judge gravely abused his discretion in not dismissing the complaint outright, as Malayan's alleged cause of action was admittedly premature, a mere expectancy, or otherwise barred by prescription and/or laches.

• Project Not an Infrastructure Project: Private respondent claimed that the Cebu South Reclamation Project is not an infrastructure project, and therefore PD 1818 does not apply.

• Lack of Presidential Approval: Private respondent contended that the injunctive writ may still validly issue because petitioners had not sufficiently shown that (1) the City of Cebu has a contract with the Public Estates Authority (PEA) to undertake the project under P.D. 3-A, (2) the PEA has favorably endorsed the project for approval by the President pursuant to Executive Order No. 525, and (3) the President has approved the project pursuant to P.D. 525.

• Vested Right of First Refusal: Private respondent argued that PD 1818 cannot be invoked to stop the issuance of a preliminary injunction because the acts of petitioners were tantamount to a violation of its vested rights, specifically its right of first refusal to undertake the project, which arose from the Presidential Memorandum dated August 13, 1979.

• Omnibus Motion a Mere Scrap of Paper: Private respondent insisted that petitioners' Omnibus Motion dated February 14, 1996 was a mere scrap of paper, as it contained a notice of hearing addressed only to the clerk of court with no proof of service to the opposing counsel.

• No Motion for Reconsideration: Private respondent alleged that the petition should be dismissed on the ground that petitioners did not file a motion for reconsideration.

• Validity of the Preliminary Injunction: Whether respondent judge gravely abused his discretion in issuing the Orders dated February 22, 1996 and March 18, 1996, in violation of Presidential Decree No. 1818 and Supreme Court Administrative Circulars Nos. 13-93 and 68-94.

• Effect of the Orders on the Merits: Whether the Orders dated February 22, 1996 and March 18, 1996 had the effect of practically deciding the case on the merits.

• Clear and Unmistakable Right: Whether respondent judge acted with grave abuse of discretion in granting the writ of preliminary injunction when the applicant had no clear and unmistakable right to be protected.

• Failure to Dismiss the Complaint: Whether respondent judge gravely abused his discretion in not dismissing the complaint outright, the alleged cause of action being admittedly premature, a mere expectancy, or barred by prescription and/or laches.

• Reconsideration of Voluntary Inhibition: Whether respondent judge gravely abused his discretion in issuing the Order dated March 12, 1996, reconsidering his earlier Order of voluntary inhibition.

• Omnibus Motion as a Scrap of Paper: Whether the omnibus motion to dismiss filed below by petitioners was a mere scrap of paper.

• Necessity of Motion for Reconsideration: Whether a motion for reconsideration was necessary before the filing of the present petition.

• Validity of the Preliminary Injunction: Yes. The writ of preliminary injunction was void for being issued with grave abuse of discretion and without jurisdiction, as Section 1 of PD 1818 expressly deprives courts of jurisdiction to issue injunctive writs against the implementation or execution of an infrastructure project.

• Effect of the Orders on the Merits: Yes. The Order dated February 22, 1996 practically decided the case on the merits by ruling that Malayan had valid, existing and enforceable contracts of reclamation approved by the President, that petitioners' reclamation project did not have the approval of the President, and that petitioners were violating Malayan's contracts — precisely the issues in the main case for specific performance.

• Clear and Unmistakable Right: No. Malayan had no clear and unmistakable right to be protected by the injunctive writ, as it had no validly approved and effective reclamation contract covering the Cebu South Reclamation Project, and its alleged right of first refusal could not bar another proponent from submitting a bid or proposal.

• Failure to Dismiss the Complaint: Yes. Respondent judge gravely abused his discretion in not dismissing the complaint outright, as the alleged cause of action was premature and a mere expectancy.

• Reconsideration of Voluntary Inhibition: Yes. Respondent judge gravely abused his discretion in reconsidering his voluntary inhibition, as the flimsy reasons proffered were insufficient to justify reversal of his previous voluntary inhibition.

• Omnibus Motion as a Scrap of Paper: No. The Omnibus Motion was not a mere scrap of paper, as it was filed pursuant to the trial court's own order to show cause and raised a jurisdictional question that the court could have ruled on even motu proprio.

• Necessity of Motion for Reconsideration: No. A Motion for Reconsideration with Cautionary Notice was actually filed by petitioners within the prescribed period, although it was denied by the trial court.

• Validity of the Preliminary Injunction: Section 1 of PD 1818 distinctly provides that no court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project of the government. The assailed March 18, 1996 Order specifically enjoined petitioners from implementing their Memorandum of Agreement dated September 11, 1995, which pertains to the implementation of the Metro Cebu Development Project, Phase III, a major component of which is the Cebu South Reclamation Project. The issuance of the writ of preliminary injunction evidently constituted a blatant violation of PD 1818, and the assailed Order was therefore void for being issued with grave abuse of discretion and without jurisdiction. The Court also held that reclamation is an infrastructure project, citing the earlier case of Malayan Integrated Industries Corporation vs. Court of Appeals, which unequivocally held that the reclamation of foreshore and submerged land for the purpose of developing the reclaimed area into an industrial and trading center is an infrastructure project as contemplated under PD 1818.

• Effect of the Orders on the Merits: The Order dated February 22, 1996 practically ruled that Malayan had valid, existing and enforceable contracts of reclamation approved by the President of the Philippines; that petitioners' reclamation project did not have the approval of the President; and that petitioners were violating Malayan's contracts. These were precisely the issues in the main case for specific performance. In so ruling, respondent judge practically considered evidence which were non-existent in favor of Malayan and suppressed the evidence presented by petitioners.

• Clear and Unmistakable Right: The Court found that Malayan and the government had not entered into any validly approved and effective reclamation contract covering the Cebu South Reclamation Project. The Contract of Reclamation dated October 31, 1977 was never approved by the President. The Confirmatory Agreement dated January 4, 1980 merely showed that the City of Cebu engaged Malayan to undertake and prepare the detailed and integrated development plan on land use, including feasibility studies. The Presidential Memorandum dated August 13, 1979, which mentioned a right of first refusal, must be construed in harmony with PD 1818 and PD 1594, which prescribe the policies, guidelines, rules and regulations for government infrastructure contracts. The memorandum could not be construed as a law authorizing a repeal of PD 1818 and PD 1594, as laws are repealed only by subsequent ones, and implied repeals are not favored. The memorandum was merely an expression of an executive directive to subordinates, not a legislative enactment. Section 4 of PD 1594 requires that construction projects shall generally be undertaken by contract after competitive public bidding. The conduct of public bidding is not violative of Malayan's alleged vested right, as the claimed right of first refusal cannot bar another proponent from submitting a bid or proposal. Under Section 4 of PD 1594 and Executive Order No. 380, negotiated infrastructure contracts with costs beyond the specified ceiling must be approved by the President, and since the project cost was over four billion pesos, the President's approval was required.

• Failure to Dismiss the Complaint: The Court held that respondent judge gravely abused his discretion in not dismissing the complaint outright, as the alleged cause of action was admittedly premature and a mere expectancy.

• Reconsideration of Voluntary Inhibition: The Court found merit in petitioners' contention that respondent judge gravely abused his discretion in reversing his voluntary inhibition. Judge Burgos inhibited himself on the basis of Osmeña's allegation of prejudgment, and in reversing his voluntary inhibition, he nebulously branded Osmeña's allegations as "so bare and empty." His claim that he was misled by Osmeña's threat of an administrative case was obviously a mere afterthought. The Court cited the principle that a judge may not rescind his action and reassume jurisdiction where good cause exists for the disqualification, and that because a presumption arises, by reason of the judge's prior order of disqualification, of the existence of the factual reason for such disqualification, the record should clearly reveal the facts upon which the revocation is made. The Court emphasized that a judge must preserve the trust and faith reposed in him by the parties as an impartial and objective administrator of justice, and when he exhibits actions that give rise to perceptions of bias, he has no choice but to inhibit himself voluntarily.

• Omnibus Motion as a Scrap of Paper: The Court rejected private respondent's contention that the Omnibus Motion was a mere scrap of paper. The Omnibus Motion was filed pursuant to the trial court's own order to show cause why the injunction should not issue, and it actually partook of a brief or memorandum showing the trial court's lack of jurisdiction to issue the preliminary injunction. The Omnibus Motion raised a very important matter which the court itself could have ruled on, even motu proprio, considering that a jurisdictional question may be raised at any time, even for the first time on appeal.

• Necessity of Motion for Reconsideration: The Court held that private respondent's allegation was negated by the simple fact that a Motion for Reconsideration with Cautionary Notice, although denied by the trial court, was actually filed by petitioners within the prescribed period.

• Prohibition against Injunctions on Government Infrastructure Projects (PD 1818) — Section 1 of Presidential Decree No. 1818 provides that no court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project of the government, to prohibit any person or entity from proceeding with, or continuing the execution or implementation of any such project, or pursuing any lawful activity necessary for such execution, implementation or operation. The Court applied this doctrine in holding that the writ of preliminary injunction issued by respondent judge against the Cebu South Reclamation Project was void for being issued with grave abuse of discretion and without jurisdiction.

• Reclamation as an Infrastructure Project — The reclamation of foreshore and submerged land along the coast for the purpose of developing the reclaimed area into an industrial and trading center with a modern harbor and port facilities for both domestic and international commerce is an infrastructure project as contemplated under PD 1818. The Court applied this doctrine in rejecting private respondent's claim that the Cebu South Reclamation Project was not an infrastructure project, noting that Malayan was a principal party in the earlier case that established this principle.

• Distinction between Approval of the Reclamation Project and the Reclamation Contract — The President's approval of a reclamation project is distinct from the approval of the reclamation contract itself. The Court applied this doctrine in holding that while the President approved the Cebu South Reclamation Project in principle on August 13, 1979, Malayan's Contract of Reclamation dated October 31, 1977 was never approved by the President, and therefore no validly approved and effective reclamation contract existed.

• Implied Repeals Not Favored — Laws are repealed only by subsequent ones, whether expressly or impliedly, and implied repeals are not favored. The Court applied this doctrine in holding that the Presidential Memorandum dated August 13, 1979, which mentioned a right of first refusal, could not be construed as a law authorizing a repeal of PD 1818 and PD 1594, as there was no express repeal and no convincing and unambiguous demonstration of repugnancy and inconsistency.

• Competitive Public Bidding for Government Contracts — Section 4 of PD 1594 requires that construction projects shall generally be undertaken by contract after competitive public bidding, and negotiated contracts are allowed only in exceptional cases. The Court applied this doctrine in holding that the conduct of public bidding for the Cebu South Reclamation Project was lawful and laudable, and that Malayan's alleged right of first refusal could not bar another proponent from submitting a bid or proposal.

• Requirements for Issuance of Preliminary Injunction — Before a writ of preliminary injunction may be issued, there must be a clear showing, by the complaint, that there exists a right to be protected, and that the acts against which the writ is to be directed are violative of the said right. The Court applied this doctrine in holding that respondent judge gravely abused his discretion in issuing the writ of preliminary injunction, as Malayan had no clear and unmistakable right to be protected.

• Voluntary Inhibition of a Judge — A judge may not rescind his action and reassume jurisdiction where good cause exists for the disqualification, and because a presumption arises, by reason of the judge's prior order of disqualification, of the existence of the factual reason for such disqualification, the record should clearly reveal the facts upon which the revocation is made. The Court applied this doctrine in holding that respondent judge gravely abused his discretion in reconsidering his voluntary inhibition, as the flimsy reasons proffered were insufficient to justify the reversal.

• "Sec. 1 of PD 1818 distinctly provides that '[n]o court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project . . . of the government, . . . to prohibit any person or persons, entity or government official from proceeding with, or continuing the execution or implementation of any such project, . . . or pursuing any lawful activity necessary for such execution, implementation or operation.'" — This passage states the controlling statutory provision that deprived the trial court of jurisdiction to issue the injunctive writ, forming the basis of the Court's ruling that the assailed Order was void.

• "The issuance of said writ of preliminary injunction evidently constitutes a blatant violation of PD 1818. The assailed Order is therefore void for being issued with grave abuse of discretion and without jurisdiction. On this ground alone, the Court may already grant the petition." — This passage articulates the ratio decidendi of the case, establishing that violation of PD 1818 alone is sufficient ground to grant the petition.

• "In the award of government contracts, the law requires a competitive public bidding. This is reasonable because '[a] competitive public bidding aims to protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts.'" — This passage explains the policy rationale behind the requirement of competitive public bidding under PD 1594, which the Court used to reject Malayan's claim of a vested right of first refusal.

• "It has been consistently held that there is no power the exercise of which is more delicate, which, requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages." — This passage, quoted from Olalia vs. Hizon, serves as an admonition to judges on the proper exercise of the injunctive power, emphasizing that injunctions should be granted only when the law permits and the emergency demands.

• Malayan Integrated Industries Corporation vs. Court of Appeals, 234 SCRA 640, September 4, 1992 — Controlling precedent cited by the Court to establish that reclamation of foreshore and submerged land for the purpose of developing the reclaimed area into an industrial and trading center is an infrastructure project as contemplated under PD 1818. The Court noted that private respondent was a principal party in that case and should have known this ruling.

• Republic of the Philippines vs. Salvador Silverio and Big Bertha Construction, G.R. No. 108869, May 6, 1997 — Cited to support the proposition that the statutory provision of PD 1818 expressly deprives courts of jurisdiction to issue injunctive writs against the implementation or execution of an infrastructure project.

• Frivaldo vs. Commission on Election, 257 SCRA 727, June 28, 1996 — Cited to support the rule that implied repeals are not favored and must be convincingly and unambiguously demonstrated.

• National Food Authority vs. Court of Appeals, 253 SCRA 470, February 9, 1996 — Cited for the proposition that competitive public bidding aims to protect the public interest by giving the public the best possible advantages through open competition and prevents anomalies in the execution of public contracts.

• China Banking Corporation vs. Court of Appeals, 265 SCRA 327, December 5, 1996 — Cited for the rule that before a writ of preliminary injunction may be issued, there must be a clear showing, by the complaint, that there exists a right to be protected, and that the acts against which the writ is to be directed are violative of the said right.

• Bautista vs. Rebueno, 81 SCRA 535, February 22, 1978 — Cited for the principle that a judge should conduct a careful self-examination when circumstances appear that will induce doubt on his honest actuations and probity, and the better course is to disqualify himself.

• De Leon vs. Court of Appeals, 245 SCRA 166, June 19, 1995 — Cited for the rule that a jurisdictional question may be raised at any time, even for the first time on appeal.

• Olalia vs. Hizon, 196 SCRA 665, May 6, 1991 — Cited for the admonition that there is no power the exercise of which is more delicate, requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction.

• Section 1, Presidential Decree No. 1818 — The provision that no court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project of the government. The Court applied this provision in holding that the writ of preliminary injunction issued by respondent judge was void.

• Section 4, Presidential Decree No. 1594 — The provision requiring that construction projects shall generally be undertaken by contract after competitive public bidding, with negotiated contracts allowed only in exceptional cases subject to approval. The Court applied this provision in holding that the conduct of public bidding for the Cebu South Reclamation Project was lawful and that Malayan's alleged right of first refusal could not bar another proponent from submitting a bid.

• Section 1, Executive Order No. 525 — The provision making the Public Estates Authority primarily responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government, and requiring that all reclamation projects be approved by the President upon recommendation of the PEA. The Court considered this provision in the context of the distinction between approval of the reclamation project and the reclamation contract.

• Executive Order No. 380 — The provision requiring the President's approval of negotiated infrastructure contracts, the cost of which, for the Department of Transportation and Communications, amounts to P100 million and, for other departments and government corporations, P50 million. The Court applied this provision in holding that since the project cost of the Cebu South Reclamation Project was over four billion pesos, the President's approval was required for any negotiated contract.

• Section 3, Rule 58, Rules of Court — The provision enumerating the grounds for the issuance of a preliminary injunction. The Court noted that although private respondent alleged these grounds, respondent judge had the duty to take judicial notice of PD 1818 and PD 1594.

• Section 1, Rule 129, Rules of Court — The provision on judicial notice, which the Court cited in holding that respondent judge had the duty to take judicial notice of PD 1818 and PD 1594.

• Article 7, Civil Code — The provision that laws are repealed only by subsequent ones, and that repeal may be express or implied. The Court applied this provision in holding that the Presidential Memorandum dated August 13, 1979 could not be construed as a law authorizing a repeal of PD 1818 and PD 1594.

• Supreme Court Administrative Circular No. 13-93 — The circular prohibiting all judges of all courts from issuing TROs and/or writs of preliminary injunction against the implementation of government infrastructure projects, pursuant to PD 1818. The Court noted that respondent judge violated this circular.

• Supreme Court Administrative Circular No. 68-94 — The circular reiterating the prohibition in Circular No. 13-93 for strict compliance, noting reports that some courts were still issuing TROs and preliminary injunctions in cases involving government infrastructure projects in violation of Section 1 of PD 1818. The Court noted that respondent judge violated this circular.

Davide, Jr., Bellosillo, Vitug, and Quisumbing, JJ., concurred.