Ortigas & Company Limited Partnership vs. Court of Appeals

The grant or refusal of a writ of preliminary injunction rests in the sound discretion of the court under the circumstances and facts of the particular case, and cannot be sought as a matter of right. A court does not commit grave abuse of discretion in denying a preliminary mandatory injunction where the writ would effectively dispose of the main case without trial and would sanction inequity.

Ortigas & Company Limited Partnership (Ortigas) is the lessor of units in the Greenhills Shopping Center, while Spouses Dalton B. King and Cecilia F. King (King spouses) are lessees of Gondola Unit No. 8. The lease agreement contained a clause stating that electric and water bills were for the account of Ortigas, which Ortigas later alleged contained a typographical error. The dispute centers on whether the Kings must pay for electricity consumption or whether Ortigas must continue to subsidize it under the terms of the lease agreement.

Ortigas & Company Limited Partnership (Ortigas), through its Greenhills Shopping Center (GSC) Manager Manuel Lozano, Jr., leased Gondola Unit No. 8 at the Greenhills Shopping Center to Wellington Syquiatco under a letter agreement dated October 28, 1983, for a period of ten years at a monthly rental of P1,500.00 starting December 1, 1983, with gradual yearly increases. The unit was used to operate a snack counter known as "Pied Piper." On May 10, 1984, Syquiatco, with Ortigas' approval, subleased the unit to the King spouses, who occupied the premises effective May 15, 1984. Later, Syquiatco sold his leasehold rights and obligations over the unit to the Kings for P97,000.00, a transfer approved by Ortigas on September 18, 1984.

In August 1985, Ortigas dismissed its GSC Manager and conducted an audit of his performance. Ortigas discovered that the letter-lease agreements signed by the GSC Manager, allegedly without proper authority, uniformly included a clause providing that "Electric and water bins shall be for our (i.e. Ortigas) account." Ortigas also discovered that the GSC Manager owned one Gondola unit (Unit No. 1). Ortigas' new manager, Jose Lim III, met with the Gondola lessees in March 1986 and proposed to correct the inequities in the lease agreements by installing individual electric meters and requiring lessees to pay for their own utility costs. A new contract was submitted to the lessees, but the Kings did not sign it.

The electricity bills for May and June 1986 amounted to P3,480.02 (including cost of meter installation) and P2,456.53, respectively, which Ortigas attempted to collect from the Kings. In a letter dated July 28, 1986, the Kings protested the bill, citing paragraph No. 6 of the letter contract of October 28, 1983, which provided that electric and water bills were for the account of Ortigas. The subsequent electricity bills for July, August, September, and October amounted to P2,069.06, P2,097.74, P2,018.10, and P2,051.58, respectively, which, including the unpaid bills for May and June, totaled P14,174.03. When the Kings refused to pay, Ortigas disconnected the electricity supply to their unit.

The Kings filed a complaint on January 16, 1987, with the Regional Trial Court of Pasig, Metro Manila, Branch 152, for specific performance and damages, with a prayer for a writ of preliminary mandatory injunction to compel restoration of electric power. Ortigas opposed the application, alleging a typographical error in Paragraph No. 6 of the letter agreement—the omission of the letter "y" from the word "our"—and that the Kings were consuming electricity at a monthly average of P2,362.17 while paying only P1,500.00 monthly rental, forcing Ortigas to subsidize their occupancy by more than P800 per month. Ortigas further alleged that granting the writ would allow the Kings to unjustly enrich themselves at Ortigas' expense. After hearing oral arguments and considering the pleadings, the trial court denied the application on March 19, 1987. The Kings then filed a petition with the Court of Appeals, which issued its questioned decision on June 30, 1987, annulling the trial court's order and issuing the writ of preliminary mandatory injunction upon the filing of a P15,000.00 bond.

• Grave Abuse of Discretion: Ortigas argued that the trial court did not commit grave abuse of discretion in denying the application for preliminary mandatory injunction, as the writ is not a matter of right but rests in the sound discretion of the court.
• Unjust Enrichment: Ortigas maintained that the Kings were enriching themselves at Ortigas' expense, as the electricity consumed per month was way above the monthly rentals paid, and the writ should not be used to sanction inequity.
• Contract Defenses: Ortigas alleged that the contract contained a typographical error, that there was obvious mistake and collusion, and that the contract was not approved by the principal of the signatory for the lessor—defenses that must eventually be considered by the trial court on the merits.

N/A — The decision does not recount the Kings' specific arguments before the Supreme Court beyond their position that the trial court's denial should be annulled and the writ issued.

• Grave Abuse of Discretion: Whether the trial court committed grave abuse of discretion in denying the Kings' application for a writ of preliminary mandatory injunction.

• Grave Abuse of Discretion: No. The trial court did not commit grave abuse of discretion in denying the application for preliminary mandatory injunction, as the grant or refusal of such writ rests in the sound discretion of the court, and the writ should not be used to sanction inequity.

• Grave Abuse of Discretion: The writ of preliminary injunction, in general, cannot be sought as a matter of right; its grant or refusal rests in the sound discretion of the court under the circumstances and facts of the particular case. The writ is the "strong arm of equity" and should not be used to sanction inequity. Ortigas was able to show that the electricity consumed per month by the King spouses was way above the amount of the monthly rentals they were paying, thereby in effect making Ortigas subsidize their business in the leased premises. This obviously inequitable situation, by which the Kings enriched themselves at Ortigas' expense, cannot be ignored. The case is not a simple case of a contracting party having made a bad bargain who must be made to abide by it, because Ortigas raised defenses of obvious mistake, collusion, and non-approval of the contract by the principal, which must eventually be considered by the trial court in deciding the merits. Furthermore, courts should generally avoid issuing a writ of preliminary injunction that in effect disposes of the main case without trial. The writ of preliminary mandatory injunction issued by the Court of Appeals had precisely this effect—having granted the main prayer of the complaint, there was practically nothing left for the trial court to try except the claim for damages.

• Preliminary Injunction as Discretionary Remedy — The writ of preliminary injunction cannot be sought as a matter of right; its grant or refusal rests in the sound discretion of the court under the circumstances and facts of the particular case. The Court applied this doctrine in affirming the trial court's denial of the writ, finding no grave abuse of discretion.
• Injunction as the "Strong Arm of Equity" — The writ of preliminary injunction should not be used to sanction inequity. The Court applied this principle in finding that the Kings' refusal to pay electricity bills while consuming amounts far exceeding their monthly rentals constituted an inequitable situation that the writ should not protect.
• Avoidance of Injunctions That Dispose of the Main Case — Courts should generally avoid issuing a writ of preliminary injunction that in effect disposes of the main case without trial. The Court applied this doctrine in reversing the Court of Appeals, noting that the mandatory injunction granted the main prayer of the complaint, leaving nothing for the trial court to try except damages.

• "The writ of preliminary injunction, in general, cannot be sought as a matter of right, but its grant or refusal rests in the sound discretion of the court under the circumstances and the facts of the particular case. The writ is the 'strong arm of equity' and therefore should not be used to sanction inequity." — This passage articulates the controlling standard for the issuance of preliminary injunctions and the equitable limitation on the remedy.
• "In general, courts should avoid issuing a writ of preliminary injunction which in effect disposes of the main case without trial. This is precisely the effect of the writ of preliminary mandatory injunction issued by the respondent appellate court. Having granted through a writ of preliminary mandatory injunction the main prayer of the complaint, there is practically nothing left for the trial court to try except the plaintiffs' claim for damages." — This passage states the rationale for reversing the Court of Appeals, emphasizing the principle against injunctions that effectively decide the merits of the case.

N/A — The decision does not cite any prior jurisprudence.

N/A — The decision does not cite any specific constitutional provisions, statutes, or procedural rules.

Melencio-Herrera, Paras, and Sarmiento, JJ., concurred. Padilla, J., took no part.

N/A — There were no dissenting opinions noted in the decision.