Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=28758:g-r-no-l-27829-august-19,-1988-phil-virginia-tobacco-administration-v-walfrido-de-los-angeles&amp;catid=1240&amp;Itemid=566
Timestamp: 2019-04-18 18:20:10+00:00

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PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, Petitioner, v. HON. WALFRIDO DE LOS ANGELES, Judge of the Court of First Instance of Rizal, Branch IV (Quezon City) and TIMOTEO A. SEVILLA, doing business under the name and style of PHILIPPINE ASSOCIATED RESOURCES and PRUDENTIAL BANK AND TRUST COMPANY, Respondents.
Lorenzo F. Miravite for respondent Timoteo Sevilla.
Ferrer & Rañada Law Office for respondent Prudential Bank & Trust Co.
1.	MERCANTILE LAW; LETTERS OF CREDIT; IRREVOCABLE LETTER OF CREDIT CANNOT BE CANCELLED WITHOUT EXPRESS PERMISSION OF BENEFICIARY. — An irrevocable letter of credit cannot during its lifetime be cancelled or modified without the express permission of the beneficiary (Miranda and Garrovilla, Principles of Money Credit and Banking, Revised Edition, p. 291).
2.	REMEDIAL LAW; CIVIL PROCEDURE; MOTIONS IN GENERAL; REQUIREMENTS; MOTION WITHOUT REQUIRED 3-DAY NOTICE IS WORTHLESS. — Section 4 of Rule 15 of the Revised Rules of Court requires that notice of a motion be served by the applicant to all parties concerned at least three days before the hearing thereof; Section 5 of the same Rule which provides that the notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion; and Section 6 of the same Rule which requires proof of service of the notice thereof, except when the Court is satisfied that the rights of the adverse party or parties are not affected, (Sunga v. Lacson, L-26055, April 29, 1968, 23 SCRA 393) A motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Revised Rules of Court is considered a worthless piece of paper which the Clerk has no right to receive and the respondent court a quo has no authority to act thereon. (Vda. de A. Zarias v. Maddela, 38 SCRA 35; Cledera v. Sarmiento, 39 SCRA 552; and Sacdalan v. Bautista, 56 SCRA 175).
3.	ID.; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; NOT GRANTED WITHOUT NOTICE; EXCEPTION. — Section 5 of Rule 58 requires notice to the defendant before a preliminary injunction is granted unless it shall appear from facts shown by affidavits or by the verified complaint that great or irreparable injury would result to the applicant before the matter can be heard on notice.
4.	ID.; ID.; ID.; ID.; IRREPARABLE INJURY AS REASON FOR ISSUANCE OF PRELIMINARY MANDATORY INJUNCTION, DEFINED. — Injury is considered irreparable if it is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law (Allundorff v. Abrahanson, 38 Phil. 585) or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation (SSC v. Bayona, Et Al., L-13555, May 30, 1962).
5.	ID.; ID.; ID.; ID.; HEARING IS ESSENTIAL TO LEGALITY OF ISSUANCE OF PRELIMINARY INJUNCTION. — Once the, application is filed with the Judge, the latter must cause an Order to be served on the defendant, requiring him to show cause at a given time and place why the injunction should not be granted. The hearing is essential to the legality of the issuance of a preliminary injunction. It is an abuse of discretion on the part of the court to issue an injunction without hearing the parties and receiving evidence thereon (Associated Watchmen and Security Union, Et. Al. v. United States Lines, Et Al., 101 Phil. 895).
6.	ID.; ID.; ID.; PRELIMINARY MANDATORY INJUNCTION; FACTS REQUIRED TO BE SHOWN BEFORE ISSUANCE OF WRIT. — The discretionary power of the trial court to issue a preliminary mandatory injunction is not absolute as the issuance of the writ is the exception rather than the rule. The party applying for it must show a clear legal right the violation of which is so recent as to make its vindication an urgent one (Police Commission v. Bello, 37 SCRA 230). It is granted only on a showing that (a) the invasion of the right is material and substantial; (b) the right of the complainant is clear and unmistakable; and (c) there is an urgent and permanent necessity for the writ to prevent serious damages (Pelejo v. Court of Appeals, 117 SCRA 665).
7.	ID.; ID.; ID.; ID.; INSTANCES WHEN PRELIMINARY MANDATORY INJUNCTIONS MAY BE ISSUED PRIOR TO FINAL HEARING. — It has always been said that it is improper to issue a writ of preliminary mandatory injunction prior to the final hearing except in cases of extreme urgency, where the right of petitioner to the writ is very clear; where considerations of relative inconvenience bear strongly in complainant’s favor; where there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance, the injury being a contributing one, and there the effect of the mandatory injunctions is rather to re-establish and maintain a pre-existing continuing relation between the parties, recantly and arbitrarily interrupted by the defendant, than to establish a new relation (Alvaro v. Zapata, 118 SCRA 722; Lemi v. Valencia, February 28, 1963, 7 SCRA 469; Com. of Customs v. Cloribel, L-20266, January 31, 1967, 19 SCRA 234).
8.	ID.; ID.; ID.; ID.; PRELIMINARY MANDATORY INJUNCTION BASED ON UNESTABLISHED ASSUMPTIONS IS VOID. — In the case at bar there appears no urgency for the issuance of the writs of preliminary mandatory injunctions in the Orders of July 17, 1967 and November 3, 1967; much less was there a clear legal right of respondent Sevilla that has been violated by petitioner. Indeed, it was an abuse of discretion on the part of respondent Judge to order the dissolution of the letter of credit on the basis of assumptions that cannot be established except by a hearing on the merits nor was there a showing that R.A. 4155 applies retroactively to respondent in this case, modifying his importation exportation contract with petitioner.
9.	ID.; ID.; ID.; ID.; PRELIMINARY MANDATORY INJUNCTION IS IMPROPER IF IT DISPOSES OF ISSUE IN CONTROVERSY. — There is merit in petitioner’s contention that the question of exclusiveness of the award is an issue raised by the pleadings and therefore a matter of controversy, hence a preliminary mandatory injunction directing petitioner to issue respondent Sevilla a certificate of authority to import Virginia leaf tobacco and at the same time restraining petitioner from issuing a similar certificate of authority to others is premature and improper.
10.	ID.; ID.; ID.; ID.; ID.; SOLE SUBJECT OF WRIT IS TO PRESERVE STATUS QUO UNTIL MERIT OF CASE IS HEARD. — The sole object of a preliminary injunction is to preserve the status quo until the merit can be heard. It is the last actual peaceable uncontested status which precedes the pending controversy (Rodulfo v. Alfonso, L-144, 76 Phil. 225), in the instant case, before the Case No. Q-10351 was filed in the Court of First Instance of Rizal. Consequently, instead of operating to preserve the status quo until the parties’ rights can be fairly and fully investigated and determined (De los Reyes v. Elepano, Et Al., 93 Phil. 239), the Orders of July 17, 1966 and March 3, 1967 serve to disturb the status quo.
11.	ID.; ID.; ID.; FILING OF INSUFFICIENT BOND DOES NOT DISSOLVE UNCONDITIONALLY AN INJUNCTION. — The filing of an insufficient or defective bond does not dissolve absolutely and unconditionally an injunction. The remedy in a proper case is to order party to file a sufficient bond (Municipality of La Trinidad v. CFI of Baguio-Benguet, Br. I, 123 SCRA 81).
"IN VIEW OF THE FOREGOING, the petition under consideration is granted, as follows: (a) the defendant PVTA is hereby ordered to issue the corresponding certificate of Authority to the plaintiff, allowing him to export the remaining balance of his tobacco quota at the current world market price and to make the corresponding import of American high-grade tobacco; (b) the defendant PVTA is hereby restrained from issuing any Certificate of Authority to export or import to any persons and/or entities while the right of the plaintiff to the balance of his quota remains valid, effective and in force; and (c) defendant PVTA is hereby enjoined from opening public bidding to sell its Virginia leaf tobacco during the effectivity of its contract with the plaintiff.
The contract entered into between the petitioner and respondent Sevilla was for the importation of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of 2.53 million kilos of PVTA and 5.1 million kilos of farmer’s and or PVTA at P3.00 a kilo. (Annex "A," p. 55 and Annex "B," Rollo, p. 59) In accordance with their contract respondent Sevilla purchased from petitioner and actually exported 2,101.470 kilos of tobacco, paying the PVTA the sum of P2,482,938.50 and leaving a balance of P3,713,908.91. Before respondent Sevilla could import the counterpart blending Virginia tobacco, amounting to 525,560 kilos, Republic Act No. 4155 was passed and took effect on June 20, 1964, authorizing the PVTA to grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best price available.
Thus, on September 14, 1965 subject contract which was already amended on December 14, 1963 because of the prevailing export or world market price under which respondent will be exporting at a loss, (Complaint, Rollo, p. 3) was further amended to grant respondent the privileges under aforesaid law, subject to the following conditions: (1) that on the 2,101.470 kilos already purchased, and exported, the purchase price of about P3.00 a kilo was maintained; (2) that the unpaid balance of P3,713,908.91 was to be liquidated by paying PVTA the sum of P4.00 for every kilo of imported Virginia blending tobacco and, (3) that respondent Sevilla would open an irrevocable letter of credit No. 6232 with the Prudential Bank and Trust Co. in favor of the PVTA to secure the payment of said balance, drawable upon the release from the Bureau of Customs of the imported Virginia blending tobacco.
While respondent was trying to negotiate the reduction of the procurement cost of the 2,101.479 kilos of PVTA tobacco already exported which attempt was denied by petitioner and also by the Office of the President, petitioner prepared two drafts to be drawn against said letter of credit for amounts which have already become due and demandable. Respondent then filed a complaint for damages with preliminary injunction against the petitioner in the amount of P5,000,000.00. Petitioner filed an answer with counterclaim, admitting the execution of the contract. It alleged however that respondent violated the terms thereof by causing the issuance of the preliminary injunction to prevent the former from drawing from the letter of credit for amounts due and payable and thus caused petitioner additional damage of 6% per annum.
Respondent Sevilla filed an answer to the supplemental petition (Rollo, pp. 216-221) and so did respondent bank (Rollo, p. 225). Thereafter, all the parties filed their respective memoranda (Memo for Petitioners, Rollo, pp. 230-244; for Resp. Bank, pp. 246-247; and for Respondents, Rollo, pp. 252-257). Petitioners filed a rejoinder (rollo, pp. 259-262) and respondent Sevilla filed an Amended Reply Memorandum (Rollo, pp. 266-274). Thereafter the case was submitted for decision in September, 1968 (Rollo, p. 264).
2.	Respondent Judge likewise acted without or in excess of jurisdiction or with grave abuse of discretion when he issued the Order of November 3, 1967 which has exceeded the proper scope and function of a Writ of Preliminary Injunction which is to preserve the status quo and cannot therefore assume without hearing on the merits, that the award granted to respondent is exclusive; that the action is for specific performance and that the contract is still in force; that the conditions of the contract have already been complied with to entitle the party to the issuance of the corresponding Certificate of Authority to import American high grade tobacco; that the contract is still existing; that the parties have already agreed that the balance of the quota of respondent will be sold at current world market price and that petitioner has been overpaid.
3.	The alleged damages suffered and to be suffered by respondent Sevilla are not irreparable, thus lacking in one essential prerequisite to be established before a Writ of Preliminary Injunction may be issued. The alleged damages to be suffered are loss of expected profits which can be measured and therefore reparable.
4.	Petitioner will suffer greater damages than those alleged by respondent if the injunction is not dissolved. Petitioner stands to lose warehousing storage and servicing fees amounting to P4,704.236.00 yearly or P392,019.66 monthly, not to mention the loss of opportunity to take advantage of any beneficial change in the price of tobacco.
In issuing the Order of July 17, 1967, respondent Judge violated the irrevocability of the letter of credit issued by respondent Bank in favor of petitioner. An irrevocable letter of credit cannot during its lifetime be cancelled or modified without the express permission of the beneficiary (Miranda and Garrovilla, Principles of Money Credit and Banking, Revised Edition, p. 291). Consequently, if the finding after the trial on the merits is that respondent Sevilla has an unpaid balance due the petitioner, such unpaid obligation would be unsecured.
In the issuance of the aforesaid Order, respondent Judge likewise violated: Section 4 of Rule 15 of the Revised Rules of Court which requires that notice of a motion be served by the applicant to all parties concerned at least three days before the hearing thereof; Section 5 of the same Rule which provides that the notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion; and Section 6 of the same Rule which requires proof of service of the notice thereof, except when the Court is satisfied that the rights of the adverse party or parties are not affected, (Sunga v. Lacson, L-26055, April 29, 1968, 23 SCRA 393) A motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Revised Rules of Court is considered a worthless piece of paper which the Clerk has no right to receive and the respondent court a quo has no authority to act thereon. (Vda. de A. Zarias v. Maddela, 38 SCRA 35; Cledera v. Sarmiento, 39 SCRA 552; and Sacdalan v. Bautista, 56 SCRA 175). The three-day notice required by law in the filing of a motion is intended not for the movant’s benefit but to avoid surprises upon the opposite party and to give the latter time to study and meet the arguments of the motion. (J.M. Tuason and Co., Inc. v. Magdangal, L-15539, 4 SCRA 84).
More specifically, Section 5 of Rule 58 requires notice to the defendant before a preliminary injunction is granted unless it shall appear from facts shown by affidavits or by the verified complaint that great or irreparable injury would result to the applicant before the matter can be heard on notice. Once the, application is filed with the Judge, the latter must cause an Order to be served on the defendant, requiring him to show cause at a given time and place why the injunction should not be granted. The hearing is essential to the legality of the issuance of a preliminary injunction. It is an abuse of discretion on the part of the court to issue an injunction without hearing the parties and receiving evidence thereon (Associated Watchmen and Security Union, Et. Al. v. United States Lines, Et Al., 101 Phil. 896).
In the case at bar there appears no urgency for the issuance of the writs of preliminary mandatory injunctions in the Orders of July 17, 1967 and November 3, 1967; much less was there a clear legal right of respondent Sevilla that has been violated by petitioner. Indeed, it was an abuse of discretion on the part of respondent Judge to order the dissolution of the letter of credit on the basis of assumptions that cannot be established except by a hearing on the merits nor was there a showing that R.A. 4155 applies retroactively to respondent in this case, modifying his importation exportation contract with petitioner. Furthermore, a writ of preliminary injunction’s enjoining any withdrawal from Letter of Credit 6232 would have been sufficient to protect the rights of respondent Sevilla should the finding be that he has no more unpaid obligations to petitioner.
Similarly, there is merit in petitioner’s contention that the question of exclusiveness of the award is an issue raised by the pleadings and therefore a matter of controversy, hence a preliminary mandatory injunction directing petitioner to issue respondent Sevilla a certificate of authority to import Virginia leaf tobacco and at the same time restraining petitioner from issuing a similar certificate of authority to others is premature and improper.
The sole object of a preliminary injunction is to preserve the status quo until the merit can be heard. It is the last actual peaceable uncontested status which precedes the pending controversy (Rodulfo v. Alfonso, L-144, 76 Phil. 225), in the instant case, before the Case No. Q-10351 was filed in the Court of First Instance of Rizal. Consequently, instead of operating to preserve the status quo until the parties’ rights can be fairly and fully investigated and determined (De los Reyes v. Elepano, Et Al., 93 Phil. 239), the Orders of July 17, 1966 and March 3, 1967 serve to disturb the status quo.
Injury is considered irreparable if it is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law (Allundorff v. Abrahanson, 38 Phil. 585) or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation (SSC v. Bayona, Et Al., L-13555, May 30, 1962).
Any alleged damage suffered or might possibly be suffered by respondent Sevilla refers to expected profits and claimed by him in this complaint as damages in the amount of FIVE Million Pesos (P5,000,000.00), a damage that can be measured, susceptible of mathematical computation, not irreparable, nor do they necessitate the issuance of the Order of November 3, 1967.
Conversely, there is truth in petitioner’s claim that it will suffer greater damage than that suffered by respondent Sevilla if the Order of November 3, 1967 is not annulled. Petitioner’s stock if not made available to other parties will require warehouse storage and servicing fees in the amount of P4,704,236.00 yearly or more than P9,000,000.00 in two years time.
PREMISES CONSIDERED, the petition is given due course and the assailed Orders of July 17, 1967 and November 3, 1967 and March 16, 1968 are ANNULLED and SET ASIDE; and the preliminary injunctions issued by this Court should continue until the termination of Case No. Q-10351 on the merits.
Melencio-Herrera (Chairperson) and Padilla, JJ., concur.
Sarmiento, J., no part; related to the respondent within the sixth degree of affinity.

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