Jao & Company, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Jao & Company, Inc. was declared in default by the Regional Trial Court (RTC) of Manila, Branch 51, for non-appearance during a hearing on the merits. Evidence was presented ex-parte by the private respondent, Top Service, Inc. Subsequently, the RTC rendered a decision ordering Jao & Company to pay Top Service P150,920.00 for agreed rentals with interest, attorney's fees, and costs. Procedural History: Jao & Company filed a motion for reconsideration and/or to set aside the decision, which was denied. A restraining order against an auction sale of levied barges was issued and later lifted. On January 15, 1990, Jao & Company filed a petition for certiorari with the Court of Appeals (CA) questioning the RTC's jurisdiction. The CA issued a temporary restraining order (TRO) on January 16, 1990, but the auction sale allegedly took place on January 15, 1990. The barges were sold to third parties. The CA denied Jao & Company's motion for a writ of preliminary injunction, holding that the case had become moot and academic because the properties were sold to third parties and the RTC decision had become final and executory due to failure to appeal. After the CA denied its motion for reconsideration, Jao & Company filed the instant petition for certiorari and mandamus with the Supreme Court. The Petition: Jao & Company sought to nullify the CA Resolutions dated March 13, 1990, and April 25, 1990, and to declare the auction sale void for grave abuse of discretion and/or lack of jurisdiction. Petitioner argued that it was not properly declared in default and not notified of the order and decision, and that the CA erred in considering the case moot and academic.
Issue(s)
Whether the Court of Appeals gravely abused its discretion in refusing to issue a writ of preliminary injunction. Whether the decision of the trial court, promulgated on May 26, 1989, had become final and executory.
Ruling
The petition is dismissed. The Supreme Court found that the Court of Appeals did not act with grave abuse of discretion and/or lack of jurisdiction.
Ratio Decidendi
On the issue of whether the Court of Appeals gravely abused its discretion in refusing to issue a writ of preliminary injunction: The Court reiterated that the grant or denial of a preliminary injunction rests upon the sound discretion of the court, requiring careful and circumspect evaluation to prevent denial of procedural due process and irreparable prejudice. The sole object of a preliminary injunction is to preserve the status quo until the merits of the case can be heard. In this case, the CA promptly issued a TRO after the application was filed. However, the auction sale had already occurred the day before the TRO was issued, rendering the TRO ineffective in preventing the act complained of. Even if the CA had been inclined to issue the writ, it would have been functus officio because a preventive writ cannot restore the status ante bellum, especially when the properties were already in the possession of third parties. The CA correctly noted that allegations of fraud regarding the auction sale and subsequent sales to third parties involved factual issues requiring a trial on the merits, which could not be decided solely on pleadings. On the issue of whether the decision of the trial court had become final and executory: The Court held that under ordinary circumstances, the proper remedy for a party wrongly declared in default is either to appeal the judgment by default or to file a petition for relief from judgment, not a petition for certiorari. A default judgment is an adjudication on the merits and is therefore appealable. Since appeal was the proper remedy, certiorari would not lie. The Court acknowledged the factual dispute regarding whether petitioner received notice of the default order and decision, noting that it is not in a position to settle such factual issues. However, the Court pointed out that petitioner's subsequent filing of a motion for reconsideration after receiving the decision cured any defect in notice, if any existed. Upon denial of this motion, petitioner should have appealed the decision. Instead, it opted for the incorrect remedy of certiorari.
Main Doctrine
A petition for certiorari will not lie to assail a default order or judgment when the proper remedy is an appeal, especially when the party declared in default subsequently files a motion for reconsideration, thereby curing any defect in notice and voluntarily submitting to the trial court's jurisdiction.