Rubio v. Reyes
REITERATIONFacts
The Antecedents: Miguel Perez Rubio (petitioner) sold shares of stock in Hacienda Benito, Inc. to Robert O. Phillips and Sons, Inc. (Phillips Corp.) for P5,500,000.00, payable in installments. The sale agreement stipulated that the shares would not be transferred until the installment due within sixty days was paid in full, and that the sellers had the right to rescind the agreement or enforce it should Phillips Corp. fail to pay the P1,200,000.00 installment and secure the remaining payments with a letter of credit or bond. A subsequent agreement deferred an overdue installment to August 31, 1964, with the individual Phillips spouses jointly and severally guaranteeing all installments. Phillips Corp. and the Phillips spouses later negotiated to sell their shares in Hacienda Benito, Inc. to Alfonso T. Yuchengco. The Perez Rubios notified Phillips and Yuchengco of their outstanding obligations and their right to collect the unpaid balance of P4,250,000.00. Negotiations between Phillips and Perez Rubio were cancelled due to non-compliance with payment conditions. Procedural History: On March 30, 1965, Phillips Corp. and the Phillips spouses filed Civil Case No. 8632 against Miguel Perez Rubio in the Court of First Instance (CFI) of Rizal, seeking a writ of preliminary injunction to prevent Perez Rubio from interfering with the sale to Yuchengco and from enforcing his claim for the unpaid balance. The CFI judge issued an ex-parte writ of preliminary injunction on April 1, 1965. Perez Rubio's motion to dissolve this injunction was denied on May 6, 1965. Perez Rubio filed an answer with a counterclaim for the unpaid balance. Subsequently, Perez Rubio filed a petition for certiorari with the Supreme Court, assailing the CFI judge's cognizance of Civil Case No. 8632 and the issuance of the ex-parte injunction as grave abuse of discretion. He later filed supplemental petitions impleading Manufacturer's Bank and Trust Company (Bank), Victoria Valley Development Corporation (VVDC), and Hacienda Benito, Inc. (Hacienda) as additional respondents, alleging a conspiracy to defraud him by foreclosing Hacienda's properties and transferring them to VVDC, thereby rendering his claim uncollectible. The Supreme Court issued its own writ of preliminary injunction on July 26, 1965, restraining proceedings in Civil Case No. 8632 and the sale of Hacienda's shares or assets. The Petition: Petitioner Miguel Perez Rubio sought a writ of certiorari to annul the ex-parte writ of preliminary injunction issued by the respondent judge in Civil Case No. 8632 and the order denying his motion to dissolve it, alleging grave abuse of discretion. Through supplemental petitions, he sought to implead additional parties and to nullify subsequent transactions, including a foreclosure proceeding (Civil Case No. 8766) and a conveyance of Hacienda's properties to the Bank and then to VVDC, alleging these were part of a scheme to defraud him and render his claim for P4,250,000.00 uncollectible. He prayed for the annulment of the injunction, the declaration of his vendor's lien, permission to collect the unpaid balance, and other reliefs, including writs of attachment and contempt against certain individuals.
Issue(s)
Whether the respondent judge committed a grave abuse of discretion in issuing an ex-parte writ of preliminary injunction restraining the petitioner from enforcing his right to collect an admitted debt. Whether the subsequent foreclosure proceedings, compromise agreement, and sale of Hacienda's properties constituted a fraudulent scheme to place said properties beyond the petitioner's reach, thereby warranting annulment or other relief in a certiorari proceeding. Whether the petitioner has a valid vendor's lien over the shares of stock sold to respondents Phillips.
Ruling
1. The ex-parte writ of preliminary injunction issued by the respondent judge in Civil Case No. 8632 is declared null and void and set aside. The writ of preliminary injunction issued by the Supreme Court in this case, enjoining its enforcement, is made final. The order of the respondent judge denying petitioner's motion to set aside the writ is reversed. 2. The writ of certiorari is denied insofar as it seeks to annul the judicial proceedings in Civil Case No. 8766 (foreclosure proceedings), without prejudice to petitioner's right to seek relief in said case or in a separate action. The Supreme Court's writ of preliminary injunction in this case shall remain in effect for thirty days from finality of the decision. 3. Petitions for contempt against the Bank and other parties are denied. The prayer for a writ of preliminary mandatory injunction against the Bank to turn over Hacienda's properties and the prayer for a writ of preliminary attachment are also denied. 4. All counterclaims against the petitioner are dismissed, without prejudice to their litigation in Civil Case No. 8632 or another appropriate action.
Ratio Decidendi
On Issue 1: The Supreme Court held that the ex-parte writ of preliminary injunction issued by the respondent judge was unjust and improvident. It restrained a creditor (Perez Rubio) from enforcing his undenied right to collect a substantial sum of P4,250,000.00, representing the unpaid balance of the purchase price of his shares in Hacienda. The Court found this to be rank injustice, as the debtor corporation and its guarantors did not deny the indebtedness but attempted to sell the shares without making reasonable provision for payment. The issuance of such an injunction without hearing the party concerned and without legal justification constituted a grave abuse of discretion. On Issue 2: The Court denied the petition for certiorari insofar as it sought to annul the foreclosure proceedings in Civil Case No. 8766. It reasoned that certiorari proceedings are limited to questions of jurisdiction and grave abuse of discretion, and cannot resolve disputed questions of fact that require the reception of evidence. Allegations of conspiracy, fraud, inadequacy of consideration, and the existence of a vendor's lien are factual matters that must be litigated in an ordinary trial court, such as in Civil Case No. 8632 or Civil Case No. 8766 itself. While the Court acknowledged that the respondents' actions placed the petitioner's right to collect in jeopardy, it found that the annulment of the foreclosure proceedings was not the proper remedy in a certiorari action. On Issue 3: The Court implicitly addressed the petitioner's claim of a vendor's lien by denying the certiorari petition concerning the foreclosure proceedings and directing the petitioner to pursue his claims in the appropriate trial court. The Court stated that it could not decide, based solely on pleadings and documents, whether the petitioner had a vendor's lien on the properties conveyed by Hacienda to the Bank, or whether such lien was superior to the rights acquired by the Bank. These were factual issues requiring evidence and were thus outside the scope of a certiorari proceeding. The Court did, however, acknowledge that the petitioner was entitled to a measure of protection while pursuing his rights.
Main Doctrine
The Supreme Court reiterated that a writ of certiorari under Rule 65 of the Rules of Court is confined to the determination of whether the respondent court acted without or in excess of its jurisdiction or with grave abuse of discretion. It is not a remedy for errors of judgment or for the correction of factual findings. The Court found that the preliminary injunction issued ex-parte by the respondent judge was improvident as it restrained a creditor from enforcing his undenied right to collect a substantial debt, constituting rank injustice. Furthermore, the Court emphasized that complex factual issues, such as allegations of conspiracy, fraud, and the adequacy of consideration in property transactions, cannot be resolved in a certiorari proceeding but require an ordinary trial where evidence can be fully presented and appreciated.