NAWASA vs. Reyes

A Court of First Instance may issue a writ of preliminary injunction only within the territorial boundaries of its province or district, and a party claiming preference for locally manufactured products under Republic Act No. 912 must strictly comply with the statutory requirement of securing certification from the Director of Public Works as to the availability, practicability, usability, and durability of its products before any right thereunder may be invoked.

The National Waterworks & Sewerage Authority (NAWASA) is a government corporation tasked with waterworks and sewerage operations, with offices in Manila. C & C Commercial Corporation is a manufacturer of asbestos cement pressure pipes and sought to participate in NAWASA's public biddings. Republic Act No. 912 grants preferential rights to locally manufactured products in government projects, but only upon certification by the Director of Public Works as to the "availability, practicability, usability and durability" of such products. Administrative Order No. 66, issued by the President on June 26, 1967, disqualifies any person or entity with pending tax or customs cases from participating in public biddings or contracts with the Government.

On December 12, 1967, the National Waterworks & Sewerage Authority (NAWASA) published an advertisement calling for bids for the supply of steel pipes of 30-inch and 24-inch diameters, intended for the Interim Program of Development of the Distribution System of the Manila and Suburbs Waterworks. The advertisement specifically and exclusively called for steel pipes, excluding asbestos cement pressure pipes.

C & C Commercial Corporation, a manufacturer of asbestos cement pressure pipes, believed the call for bids was prejudicial to its interest. It filed a complaint against NAWASA in the Court of First Instance of Rizal, alleging that it was a qualified bidder in any government bidding; that its locally manufactured asbestos cement pipes were far less expensive than any other type locally manufactured; that they were available, proven, tested, durable, and served as well as steel pipes in waterworks distribution systems; and that the exclusion of asbestos cement pressure pipes from the NAWASA advertisement violated Republic Act No. 912. C & C prayed for a writ of preliminary injunction to enjoin NAWASA from opening the bids, and after trial, for judgment ordering NAWASA permanently to desist from the bidding, to call a new bidding including C & C's products, and to pay damages and attorney's fees.

NAWASA, together with the International Pipe Industries Corporation which had been granted leave to intervene, opposed the application. They contended that the complaint stated no cause of action because C & C had not alleged compliance with Republic Act No. 912's requirement of certification from the Director of Public Works; that C & C was disqualified from government bidding under Administrative Order No. 66 due to tremendous tax liabilities; that C & C's plant could not produce pipes in the sizes called for, its largest being only 12 inches in diameter; that C & C had ceased to be a manufacturer, having leased its plant to D. B. Canicosa & Sons for three years starting November 20, 1967; that the CFI of Rizal lacked territorial jurisdiction because NAWASA's offices and the bidding were in Manila; and that the injunction would prejudice public interest by delaying waterworks projects. Notwithstanding these objections, the respondent judge issued the order complained of on January 18, 1968, enjoining NAWASA from proceeding with the bidding.

NAWASA filed the present original action for certiorari and prohibition. The Supreme Court required respondents to answer and set the case for hearing on February 14, 1968. NAWASA was directed to submit the lease contract over C & C's factory, and C & C was directed to submit the required certification from the Bureau of Public Works. NAWASA complied, but C & C never submitted the certification.

• Territorial Jurisdiction: Petitioner argued that the CFI of Rizal lacked jurisdiction to issue the injunctive writ against NAWASA, since NAWASA's offices and the bidding to be enjoined were in Manila, outside the territorial jurisdiction of the CFI of Rizal.
• No Cause of Action: Petitioner maintained that the complaint in the lower court failed to state a cause of action because C & C had not alleged or shown compliance with Republic Act No. 912's requirement of securing certification from the Director of Public Works as to the "availability, practicability, usability and durability" of its products.
• Disqualification of Bidder: Petitioner argued that C & C was disqualified from participating in public biddings under Administrative Order No. 66, dated June 26, 1967, because C & C and its President had tremendous tax liabilities with the Government and several cases had been filed in court against it.
• Cessation of Manufacturing: Petitioner contended that C & C had ceased to be a manufacturer of asbestos cement pressure pipes, having leased its plant and machineries to D. B. Canicosa & Sons for three years starting November 20, 1967, and that its plant could not produce pipes in the sizes called for, the largest being only 12 inches in diameter.
• Public Interest: Petitioner argued that issuance of the injunction would prejudice public interest, as delay in the completion of the waterworks projects would cause water shortage and public inconvenience.

• Violation of Republic Act No. 912: Respondent claimed that NAWASA's call for bids exclusively for steel pipes, excluding asbestos cement pressure pipes, violated Republic Act No. 912, which grants preferential right to locally manufactured products.
• Constitutionality of Administrative Order No. 66: Respondent assailed the constitutionality of Administrative Order No. 66, without providing any reason for the challenge.
• Qualification as Bidder: Respondent alleged that it was a qualified bidder in any government bidding and that its asbestos cement pipes were cheaper, available, durable, and usable for waterworks distribution systems.

• Territorial Jurisdiction: Whether a Court of First Instance may issue a writ of preliminary injunction that will be enforced outside the territorial boundaries of its province or district.
• Cause of Action under Republic Act No. 912: Whether the complaint states a cause of action given the private respondent's failure to allege or secure the certification from the Director of Public Works required by Republic Act No. 912.
• Disqualification under Administrative Order No. 66: Whether the private respondent is disqualified from participating in public biddings under Administrative Order No. 66, and whether its constitutionality may be collaterally attacked.

• Territorial Jurisdiction: No. The CFI of Rizal had no jurisdiction to issue a writ of preliminary injunction enforceable outside its territorial boundaries, since NAWASA's offices and the bidding were in Manila, outside Rizal's province or district.
• Cause of Action under Republic Act No. 912: No. The complaint failed to state a cause of action because C & C never alleged or produced the certification from the Director of Public Works required by Republic Act No. 912 as a condition precedent to claiming preference for locally manufactured products.
• Disqualification under Administrative Order No. 66: Yes. C & C was disqualified from public bidding under Administrative Order No. 66 due to pending tax cases, and its constitutionality could not be collaterally attacked.

• Territorial Jurisdiction: The power of a court to issue an injunction is a matter of legislative enactment, but the manner of its exercise is prescribed by the Rules of Court. Section 44 of the Judiciary Act, as amended, provides that Courts of First Instance shall have power to issue writs of injunction "in their respective provinces and districts." This provision should not be confused with Section 2, Rule 58 of the Revised Rules of Court, which governs who may grant a preliminary injunction; the territorial limitation is supplied by the Judiciary Act. The preliminary injunction that may be granted by a CFI is, in its application, co-extensive with the territorial boundaries of the province or district in which the court sits. Since NAWASA's offices and the bidding were in Manila, outside the territorial limits of the CFI of Rizal's province or district, the writ was null and void for want of jurisdiction.

• Cause of Action under Republic Act No. 912: Statutes granting advantages to private persons have in many instances created special privileges or monopolies and have been viewed with suspicion and strictly construed. Rights that exist only by virtue of such statutes come into being only after strict compliance with all conditions found in those statutes. Republic Act No. 912 grants preference to locally produced products only upon certification of availability, practicability, usability, and durability by the Director of Public Works. That certification must be existing and effective before any right arising therefrom may be claimed to have been violated. C & C's complaint contained no allegation that it possessed the required certification, and it never produced the certification despite being directed to do so by the Supreme Court. This failure was fatal to its cause of action and established that it was not entitled to the benefits of Republic Act No. 912.

• Disqualification under Administrative Order No. 66: Administrative Order No. 66, issued by the President on June 26, 1967, disqualifies any person, natural or juridical, with pending cases with the Bureau of Internal Revenue or Bureau of Customs, or criminal or civil cases involving non-payment of tax, duty, or undertaking with the Government, from participating in public bidding or any contract with the Government. C & C had tremendous tax liabilities and several cases had been filed in court against it. C & C assailed the constitutionality of the order without giving any reason. Under the well-settled rule that the constitutionality of a law or executive order may not be collaterally attacked, and that such issuances are deemed valid unless declared null and void by a competent court, the challenge was without merit.

• Territorial Limitation on Injunctive Power of Courts of First Instance — Under Section 44 of the Judiciary Act, as amended, a CFI's power to issue writs of injunction is limited to its respective province or district. The writ is co-extensive with the territorial boundaries of the province or district in which the court sits. A CFI may not issue an injunction enforceable outside its territorial jurisdiction; any such writ is null and void for want of jurisdiction.
• Strict Construction of Statutory Preferences — Statutes granting advantages to private persons that create special privileges or monopolies are viewed with suspicion and strictly construed. Rights existing only by virtue of such statutes come into being only after strict compliance with all conditions found therein. Applied to Republic Act No. 912, the preference for locally manufactured products arises only upon certification by the Director of Public Works as to availability, practicability, usability, and durability; without such certification, no right under the statute may be claimed.
• No Collateral Attack on Constitutionality of Laws or Executive Orders — The constitutionality of a law or executive order may not be collaterally attacked; such issuances are deemed valid unless declared null and void by a competent court. A party assailing constitutionality must provide reasons and pursue a direct challenge, not raise it as a defense in a collateral proceeding.

• "The preliminary injunction that may be granted by a court of first instance under Sec. 2 is, in its application, co-extensive with the territorial boundaries of the province or district in which the said court sits." — This passage articulates the controlling rule on the territorial limitation of a CFI's injunctive power, the ratio decidendi on the jurisdictional issue.
• "Rights which exist only by virtue of such statutes come into being only after strict compliance with all the conditions found in those statutes." — This formulation of the strict compliance doctrine for statutory privileges is the basis for denying C & C's claim under Republic Act No. 912 and is frequently cited in subsequent jurisprudence on statutory construction.
• "Notwithstanding the clear nationalities policy of the law aforementioned, We cannot, by any mistaken sympathy towards herein appellee, recognize the existence of its right under the law alleged to have been violated which the C & C Commercial Corporation has miserably failed to prove in this case." — This passage underscores the Court's refusal to relax statutory requirements despite policy considerations, reinforcing the strict compliance doctrine.

• Cudiamat vs. Torres, L-24225, Feb. 22, 1968 — Controlling precedent directly relied upon for the proposition that a CFI may not issue a writ of preliminary injunction enforceable outside its territorial boundaries.
• C & C Commercial Corporation vs. NAWASA, L-27275, Nov. 18, 1967 — Prior case involving the same parties, where the Court had already ruled on the requirement of certification under Republic Act No. 912; the pronouncement was applied with equal force in the present case.
• Acosta vs. Alvendia, L-14598, Oct. 31, 1960 — Cited as supporting authority for the rule that a CFI's injunctive power is co-extensive with the territorial boundaries of its province or district.
• Alhambra Cigar & Cigarette Manufacturing Co., Inc. vs. National Administrator of Regional Office No. 2, L-20491, Aug. 31, 1965 — Cited as supporting authority for the same territorial limitation rule.
• People vs. Mencias, L-19633, Nov. 28, 1966 — Cited as supporting authority for the same territorial limitation rule.
• Manila Railroad Co. vs. Attorney General, 20 Phil. 523 — Cited for the principle that the power of a court to issue an injunction is a matter of legislative enactment.

• Section 44, Judiciary Act (as amended) — Provides that CFIs shall have power to issue writs of injunction, mandamus, certiorari, prohibition, quo warranto, and habeas corpus "in their respective provinces and districts." Applied to hold that the CFI of Rizal lacked jurisdiction to enjoin acts occurring in Manila.
• Section 2, Rule 58, Revised Rules of Court — Governs who may grant a preliminary injunction. Distinguished from the Judiciary Act's territorial limitation; it addresses the authority of the judge to issue the writ, not the territorial reach of the writ.
• Republic Act No. 912 — Grants preference to locally manufactured products in government projects, conditioned on certification by the Director of Public Works as to availability, practicability, usability, and durability. Applied to deny C & C's claim for lack of the required certification.
• Administrative Order No. 66 (June 26, 1967) — Disqualifies any person or entity with pending tax, customs, or criminal/civil cases involving non-payment of tax, duty, or undertaking with the Government from participating in public bidding or contracts with the Government. Applied to disqualify C & C, whose constitutionality challenge was rejected as a collateral attack.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, and Fernando, JJ., concurred.