Sumifru vs. Cereño

A writ of preliminary injunction will not issue where the applicant fails to establish a clear and unmistakable right to the relief sought, where the alleged injury is compensable by damages rather than irreparable, and where the underlying contracts have already expired, making the preservation of the status quo impossible and continuation of the contractual relationship unavailable without mutual consent.

Sumifru (Philippines) Corporation, the surviving entity of a June 2008 merger involving Davao Fruits Corporation (DFC), engaged in the production and export of Cavendish bananas. DFC (now Sumifru) entered into multiple growership agreements with spouses Danilo and Cerina Cereño covering the latter's titled lands totaling 56,901 square meters located in Tamayong, Calinan District, Davao City. These agreements included a Production and Purchase Agreement (PPA) valid from July 1999 to July 2009 and three Growers Exclusive Production and Sales Agreements (GEPASAs) valid from 2000 to 2015, under which the spouses agreed to sell exclusively to Sumifru all bananas produced from the contracted areas conforming to specified quality standards.

• Sumifru is a domestic corporation engaged in the production and export of Cavendish bananas, with principal office at Km. 20, Tibungco, Davao City, and is the surviving corporation from a merger made effective in June 2008 involving Davao Fruits Corporation (DFC).
• DFC (now Sumifru) entered into several growership agreements with respondents spouses Danilo and Cerina Cereño covering the latter's titled lands with a total area of 56,901 square meters located in Tamayong, Calinan District, Davao City.
• The agreements consisted of: (1) a Production and Purchase Agreement (PPA) dated 29 November 1999, effective 22 July 1999 to 21 July 2009, covering 9,176 sq. m.; and (2) three Growers Exclusive Production and Sales Agreements (GEPASAs): dated 10 January 2002 (effective 15 August 2000 to 14 August 2015, covering 13,925 sq. m.), dated 7 January 2002 (effective 15 November 2000 to 14 November 2015, covering 13,800 sq. m.), and dated 9 December 2002 (effective 23 December 2000 to 22 December 2015, covering 20,000 sq. m.).
• Under these agreements, the spouses Cereño undertook to sell and deliver exclusively to Sumifru all bananas produced from the contracted areas conforming to volume and quality specifications defined by the agreements.
• In February 2007, the spouses Cereño allegedly violated the agreements by harvesting bananas without Sumifru's consent, packing them in boxes not provided by Sumifru, and selling them to buyers other than Sumifru.
• Sumifru made several demands for compliance, which the spouses refused.
• On 4 August 2010, Sumifru filed a Complaint for Injunction and Specific Performance with Application for Writ of Preliminary Injunction and Temporary Restraining Order before the RTC, seeking to restrain the spouses from harvesting without consent, packing in non-Sumifru boxes, selling to other buyers, and committing other violations, and praying for mandatory compliance.
• During the 24 August 2010 hearing, the parties agreed to file position papers.
• On 29 September 2010, the spouses Cereño filed their Answer claiming they had already terminated the agreements due to Sumifru's gross violations and serious breach.
• In its Motion for Reconsideration filed on 19 October 2010 before the RTC, Sumifru admitted that "the GEPASAs will expire in 2015 or in five (5) years' time."

• Sumifru argued that the CA erred in holding that its right to preliminary injunction was put in serious doubt by respondents' claim of extrajudicial termination of the growership contracts, asserting that no legal basis existed for such termination.
• Sumifru contended that the CA gravely erred in finding that granting the injunction would dispose of the main case, arguing that the object was merely to preserve the status quo ante.
• Sumifru claimed that respondents' continuing violation of their exclusive contract would cause grave and irreparable damage.
• Sumifru asserted that the grave and irreparable damage caused by respondents could not be compensated under any standard compensation.

• The spouses Cereño claimed in their Answer that their contractual obligations under the PPA and GEPASAs were no longer in force because they had already terminated the agreements due to Sumifru's gross violations and serious breach thereof.
• By disputing the existence and validity of the contracts, respondents challenged Sumifru's assertion of a clear and unmistakable right necessary for injunctive relief.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether Sumifru established a clear and unmistakable right ("right in esse") to warrant the issuance of a writ of preliminary injunction.
  • Whether Sumifru demonstrated the existence of irreparable injury necessary for injunctive relief.
  • Whether the issuance of the writ would effectively dispose of the main case.
  • Whether the status quo could still be preserved given the expiration of the underlying contracts in 2015.

• Procedural: N/A
• Substantive:
  • Clear and Unmistakable Right: The Court ruled that Sumifru failed to establish a clear and unmistakable right necessary for injunctive relief. While it is not required that the right be conclusively established, the applicant must at least tentatively show that the right exists and is not vitiated by substantial challenge. Here, the spouses Cereño consistently disputed Sumifru's rights by claiming the agreements were already terminated. Citing Australian Professional Realty, Inc., the Court held that no clear right exists when the alleged rights under the contract are disputed by the respondent.
  • Irreparable Injury: The Court found no irreparable injury. Injury is irreparable only where there is no standard by which its amount can be measured with reasonable accuracy. Sumifru alleged cash advances and farm inputs amounting to Php 720,189.81, which is capable of pecuniary estimation and fully compensable by damages. Allegations of potential suits and damage to reputation were deemed speculative.
  • Effect on Main Case: The Court agreed with the CA and RTC that granting the injunction would effectively dispose of the main case by compelling the spouses to comply with the contracts, leaving only damages to be determined.
  • Status Quo and Expired Contracts: The Court noted that Sumifru admitted in its Motion for Reconsideration that the GEPASAs would expire in 2015. Under the principle that admissions in pleadings are conclusive, the Court held that the status quo could no longer be enforced. Citing Thunder Security and Investigation Agency v. National Food Authority, the Court ruled that no court can compel a party to continue an admittedly expired contract through a writ of preliminary injunction, as contracts can only be renewed by mutual consent.

• Requisites for Preliminary Injunction — Before a writ of preliminary injunction (whether mandatory or prohibitory) will issue, the following must be proved: (1) the applicant must have a clear and unmistakable right to be protected (right in esse); (2) there is a material and substantial invasion of such right; (3) there is an urgent need for the writ to prevent irreparable injury; and (4) no other ordinary, speedy, and adequate remedy exists. The Court applied this four-pronged test and found Sumifru lacking in the first and third requisites.
• Right in Esse — An injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in existence and which may never arise. When the complainant's right is doubtful or disputed, he does not have a clear legal right and injunction is not proper. The Court applied this to bar Sumifru's application because the respondents disputed the validity of the contracts.
• Irreparable Injury — Injury is considered irreparable where there is no standard by which its amount can be measured with reasonable accuracy. The Court held that monetary claims capable of pecuniary estimation do not constitute irreparable injury.
• Status Quo Ante — A preliminary injunction aims to preserve the status quo, defined as the last actual, peaceable, and uncontested status which preceded the actual controversy, or that existing at the time of the filing of the case. The Court found that the status quo could no longer be preserved because the contracts had expired.
• Judicial Admissions — An admission made in the pleadings cannot be controverted by the party making such admission and is conclusive as to such party. The Court used Sumifru's admission that the contracts expired in 2015 to defeat its claim for injunctive relief.
• Expired Contracts and Injunction — No court can compel a party to agree to a continuation of an admittedly expired contract through the instrumentality of a writ of preliminary injunction since a contract can be renewed, revived, or extended only by mutual consent of the parties.

• "A writ of preliminary injunction, being an extraordinary event, one deemed as a strong arm of equity or a transcendent remedy, must be granted only in the face of injury to actual and existing substantial rights."
• "An injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse, and which may never arise, or to restrain an act which does not give rise to a cause of action."
• "When the complainant's right is doubtful or disputed, he does not have a clear legal right and, therefore, injunction is not proper."
• "Injury is irreparable where there is no standard by which its amount can be measured with reasonable accuracy."
• "No court can compel a party to agree to a continuation of an admittedly expired contract through the instrumentality of a writ of preliminary injunction since a contract can be renewed, revived, or extended only by mutual consent of the parties."

• Australian Professional Realty, Inc. v. Municipality of Padre Garcia, Batangas Province — Cited for the principle that there can be no clear and unmistakable right to warrant the issuance of a writ of injunction when the alleged rights under the contract are disputed by the respondent.
• Thunder Security and Investigation Agency v. National Food Authority — Cited for the rule that a petitioner cannot lay claim to an actual, clear, and positive right as to entitle it to the issuance of a writ of preliminary injunction based on an expired service contract, and that no court can compel continuation of an expired contract through injunction.
• Liberty Broadcasting Network, Inc. v. Atlocom Wireless System, Inc. — Cited for the requisites of preliminary injunction and the characterization of the writ as an extraordinary remedy.
• Constantino v. Heirs of Constantino — Cited for the rule that admissions in pleadings are conclusive and cannot be controverted by the party making them.
• Social Security Commission v. Bayona — Cited for the definition of irreparable injury.
• Overseas Workers Welfare Administration v. Atty. Chavez — Cited for the nature of preliminary injunction as a provisional remedy to preserve the status quo.

• Section 1, Rule 58 of the Rules of Court — Defines preliminary injunction as an order granted at any stage of an action prior to judgment requiring a party to refrain from or perform particular acts.
• Section 3, Rule 58 of the Rules of Court — Provides the grounds for issuance of preliminary injunction: (a) applicant is entitled to relief consisting in restraining commission/continuance of acts or requiring performance of acts; (b) commission/continuance/non-performance would work injustice; (c) party is doing/threatening/attempting to do acts violating applicant's rights and tending to render judgment ineffectual.
• Rule 45 of the Rules of Court — Cited as the mode of review (petition for review) used by Sumifru to assail the CA decision.
• Rule 65 of the Rules of Court — Cited as the mode of review (petition for certiorari) used by Sumifru before the CA to assail the RTC orders.