Reyes v. Court of Appeals
REITERATIONFacts
The Antecedents: Sun Insurance Office, Ltd. (Sun) appointed Luis A. Reyes as General Agent, who in turn appointed his son, Tomas T. Reyes, as attorney-in-fact. Tomas Reyes mortgaged properties to United Coconut Planters Bank (UPCB) to secure a loan. LAR Agency incurred an accountability to Sun, which Tomas Reyes assumed. A compromise agreement was reached, and Tomas Reyes executed a second mortgage on one property in favor of Sun. Sun paid UCPB the remaining balance of the Reyes mortgage, claiming subrogation. Sun filed for extrajudicial foreclosure, alleging default. A restraining order was issued, followed by another application for foreclosure. The properties were sold at public auction to Sun as the sole bidder. Sun filed for a writ of possession, which was granted. A writ of possession was issued to dispossess Tomas T. Reyes. Sheriffs, with military personnel, threatened to eject the Reyes family. Tomas T. Reyes filed an urgent motion to withhold implementation of the writ of possession, which was extended. Tomas T. Reyes then filed a petition for Annulment of Deed of Assignment and Extrajudicial Sale of Real Properties and Damages with Application for Writ of Preliminary Injunction, and an urgent motion for a restraining order. A restraining order was issued, followed by a writ of preliminary injunction. Sun filed a petition for certiorari and mandamus, praying for the annulment of the injunction orders. The Court of Appeals dismissed Sun's petition, holding that Sun, as a foreign corporation, could not bid in the extrajudicial foreclosure sale. Subsequently, Sun filed another petition for extrajudicial foreclosure. Tomas Reyes applied for and obtained a temporary restraining order, followed by a writ of preliminary injunction enjoining the auction sale. A motion for reconsideration was denied. Tomas Reyes then filed another petition for certiorari and prohibition before the Court of Appeals. Procedural History: The Court of Appeals, in the second petition for certiorari and prohibition, applied the rule on res judicata. It held that Tomas Reyes, having previously sought a preliminary injunction on the ground that an alien corporation could not bid for private land, could not avail himself of another writ of preliminary injunction on different grounds. The CA further held that the issue of the validity of the deed of mortgage, deed of assignment, and compromise agreement could have been raised during the hearing for the first injunction, and the order for its issuance was in effect a judgment by consent on the constitutional issue. The CA set aside the lower court's orders and restrained further proceedings, except to dismiss the case. The Petition: Tomas T. Reyes filed the instant petition, arguing that res judicata does not apply because the second application for preliminary injunction was based on a different set of facts and raised distinct issues. He contended that the first injunction pertained to the validity of the sale to a foreign corporation, while the second addressed the infirmities of the mortgage, assignment, and compromise agreements, arising from a new foreclosure proceeding initiated by Sun after being disqualified from bidding.
Issue(s)
Whether the principle of res judicata bars a second application for a writ of preliminary injunction when the second application seeks to enjoin a distinct act from that enjoined in the first application. Whether the grounds for the second application for preliminary injunction could have been raised in the first application, considering the distinct nature of the acts sought to be enjoined.
Ruling
The Supreme Court granted the petition, reversed and set aside the decision of the Court of Appeals, and directed the Regional Trial Court to hear and decide the case with deliberate dispatch. The temporary restraining order issued in the instant case was made permanent.
Ratio Decidendi
On the applicability of res judicata to a second application for preliminary injunction: The Court held that a second application for injunction, which rests in the sound discretion of the court, will ordinarily be denied if based on facts known at the time of the first application. However, this rule is not absolute and is not based on the principle of res judicata. The principle of res judicata requires a former final judgment on the merits, which does not obtain in a proceeding for a writ of preliminary injunction, as it is merely an ancillary remedy providing provisional relief. The Court clarified that the rule against renewing a motion for injunction applies only when the second application is to operate on the same act sought to be enjoined in the first application, and cannot be invoked where relief is asked against a different act. In this case, the first injunction was against the implementation of the writ of possession consequent to the invalidity of the sale to a disqualified foreign corporation, while the second was against a new foreclosure proceeding instituted by Sun after it was prohibited from bidding. Therefore, the two writs were directed against distinct acts, making res judicata inapplicable. On whether the grounds for the second application could have been raised in the first: The Court found that the alleged nullity of the deed of mortgage, deed of assignment, and compromise agreement, raised in the second application, could not have been ventilated in the controversy over the issuance of the writ of possession. The first incident involved the implementation of a writ of possession, which was part of the executory process consequent to a concluded extrajudicial foreclosure proceeding and sale. The issue was confined to Sun's capacity to own and hold real properties. The issues on the nullity of the documents, however, had to be taken up in a proper proceeding specifically instituted for that purpose, which was Civil Case No. MAN-287. The Court noted that the alleged legal infirmities were sufficiently averred in the amended complaint in that case and that petitioner had not abandoned his theory of nullity during the hearing for the first injunction.
Main Doctrine
A second application for a writ of preliminary injunction, while ordinarily denied if based on facts known at the time of the first application, is permissible when it seeks to enjoin a distinct act from that enjoined in the first application, even if the grounds for the second application existed during the first. The principle of res judicata does not apply to interlocutory reliefs like preliminary injunctions, as it requires a final judgment on the merits.