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THIRD DIVISION

G.R. No. 159245 August 31, 2006

GV DIVERSIFIED INTERNATIONAL, incorporated, Petitioner,
vs.
COURT OF APPEALS, CITY OF CAGAYAN DE ORO, and MAYOR VICENTE Y. EMANO, Respondents.

D E C I S I O N

QUISUMBING, J.:

This special civil action for certiorari seeks to annul the Decision, ¹ dated January 7, 2003, of the Court of Appeals in CA-G.R. SP No. 72302. The said Decision set aside the Writ of Preliminary Injunction ² issued on July 12, 2002 by the Regional Trial Court of Cagayan de Oro City, Branch 41, in Civil Case No. 2002-175.

The pertinent facts are as follows:

On March 18, 1998, respondent City of Cagayan de Oro, through its then Mayor, Pablo P. Magtajas, entered into a Build and Transfer Contract ³ with petitioner GV Diversified International, Inc. Under the said contract, petitioner undertook to design, finance, and construct the City’s South Diversion Road and PCDG Cargo Bridge Project for P635,999,929.79 payable in US dollars at the exchange rate of P37.50 to a dollar.

Pursuant to the contract and upon petitioner’s request, ⁴ the City released P23,000,000 to cover the expenses for topographic surveys, feasibility studies, design development and preliminary engineering.

However, before petitioner could continue with the implementation of the contract, respondent Vicente Y. Emano, was declared winner in the election for mayor during the May 1998 elections. Mayor Emano created a special committee to investigate the alleged irregular release of the amount of P23,000,000 to petitioner. The special committee found the contract grossly disadvantageous to the government.

Thus, in December 2000, an amended Build and Transfer Contract was forged between petitioner and the City. The amendment retained the project cost of P635,999,929.79 less the initial payment of P23,000,000, but made it payable in Philippine pesos instead of US dollars.

Meanwhile, petitioner assigned all its rights, obligations, and interests in the original and amended contracts in favor of White Horse Trading Development and Construction (White Horse, for brevity) for a consideration of P25,000,000. The City accordingly passed an ordinance confirming the said assignment. Thereafter, the City sent a notice to White Horse to commence work.

While work on the project was underway, White Horse failed to comply with the cash consideration as agreed upon under the deed of assignment. Hence, petitioner rescinded the assignment with due notice to the City.

However, Mayor Emano refused to recognize the same and instead, rescinded the amended contract between petitioner and the City. Forthwith, the City caused the publication of invitation to licensed contractors to pre-qualify and bid for the same project.

Claiming that the rescission of the amended contract was unlawful, petitioner filed with the Regional Trial Court of Cagayan de Oro City a Complaint for specific performance, injunction and damages against the City. In its complaint, petitioner prayed that a temporary restraining order be immediately issued against the commission of the acts complained of, including the opening of the sealed bids for the project.

On June 25, 2002, Branch 20 of the RTC of Cagayan de Oro City issued the temporary restraining order. The hearing on the application for preliminary injunction was set on June 28, 2002.

Prior to the hearing on the application for preliminary injunction, the City filed a Motion to Dismiss the application for TRO and/or preliminary injunction and to quash the TRO already issued. The City alleged that under Presidential Decree No. 1818, the RTC had no jurisdiction to issue a TRO. It also lamented the lack of notice and hearing before the issuance of the questioned TRO.

On July 4, 2002, the presiding judge voluntarily inhibited himself and the case was re-raffled to Branch 41 of the RTC. In a Resolution dated July 9, 2002, the RTC denied the motion to dismiss the application for TRO and/or preliminary injunction and to quash the TRO already issued.

On July 12, 2002, the RTC released an Order for the issuance of a Writ of Preliminary Injunction. We quote the decretal part of the Order:

WHEREFORE, to maintain the status quo, let [a] Writ of Preliminary Injunction be issued, upon filing of the bond by the plaintiffs as required by the Rules of Court in the sum of ONE MILLION PESOS (P1,000,000.00). Directing the defendants, from the commission of the acts complained of and for opening the sealed bids for the South Diversion Road and PCDG Cargo Bridge Project on July 17, 2002 or any other dates, under the defendants’ "Invitation to Prequalify and to Bid" and other or further documents issued in relation thereto and to desist from performing any further act that may in one way or the other contravene the tenor of this Order.

SO ORDERED. ⁵

The City timely filed an Urgent Omnibus Motion for Reconsideration. ⁶ However, the RTC denied it for lack of merit.

Aggrieved, the City filed with the Court of Appeals on August 19, 2002 a petition for certiorari and prohibition with application for TRO and/or preliminary injunction seeking to set aside the said RTC Order dated July 12, 2002.

In its Resolution ⁷ of August 27, 2002, the Court of Appeals issued a TRO and set the hearing for the issuance of a writ of preliminary injunction on September 10, 2002.

After hearing both parties, the Court of Appeals rendered a Decision on January 7, 2003 lifting the writ of preliminary injunction issued by the RTC. The dispositive part of its Decision reads:

WHEREFORE, the petition is GRANTED. The injunctive writ issued pursuant to the July 12, 2002 order of respondent judge is hereby LIFTED and SET ASIDE.

SO ORDERED. ⁸

Not satisfied with the said Decision, petitioner filed a Motion for Reconsideration, which the appellate court denied for lack of merit in its Resolution of May 15, 2003.

Hence, the instant special civil action for certiorari raising as sole issue:

Whether the City may be stopped by preliminary prohibitory injunction from awarding through public bidding the completion of the South Diversion Road and PCDG Cargo Bridge Project. ⁹

Stated otherwise, the issue is whether the Court of Appeals committed grave abuse of discretion in lifting the preliminary injunction issued by the RTC?

Petitioner contends that the amended contract is the law between the parties, but the City unilaterally rescinded the same without observing the stipulated procedure for termination. Petitioner avers that the questioned writ of preliminary injunction was sought and issued in connection with a legal question.

Relying on our rulings in Malaga v. Penachos, Jr., ¹⁰ Genaro R. Reyes Construction, Inc. v. Court of Appeals, ¹¹ and Philippine Ports Authority v. Court of Appeals, ¹² petitioner takes exception to the application of P.D. No. 1818. First, it points out that what P.D. No. 1818 proscribes is the issuance of preliminary injunction delaying an infrastructure project of the government. Petitioner claims the preliminary injunction issued by the RTC precisely allowed continuation of work on the project.

Second, petitioner claims P.D. No. 1818 does not apply when the implementation of the project has started, as is allegedly the case herein. Third, petitioner avers P.D. No. 1818 is inapplicable as there was, allegedly, grave abuse of discretion on the part of the government authority being enjoined.

However, respondents City and its mayor counter that petitioners should have filed a petition for review under Rule 45 on pure questions of law. At any rate, they maintain that the Court of Appeals correctly ruled, based on Republic Act No. 8975, ¹³ that the RTC committed grave abuse of discretion when it issued the TRO and writ of preliminary injunction, which staved off the completion of the South Diversion Road and PCDG Cargo Bridge Project.

Respondents stress that the opening of the sealed bids should not be enjoined as it is an essential legal requirement before a contract may be awarded. They also emphasize that petitioner, having assigned all its rights and interests in favor of White Horse, has lost standing to claim any injury arising from the City’s rescission of the amended contract.

Further, respondents point out that when the Court of Appeals lifted the writ of preliminary injunction issued by the RTC, the City accordingly proceeded with the opening of the sealed bids. In fact, the winning bidder, UKC Builders, Inc., had already resumed the implementation of the project. Thus, respondents allege, the present petition is now moot.

We find the petition without merit.

P.D. No. 1818 ¹⁴ provides:

SECTION 1. No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure project, or a mining, fishery, forest or other natural resource development project of the government, or any public utility operated by the government, including among others public utilities for the transport of the goods or commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official from proceeding with, or continuing the execution or implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or operation.

The rationale behind the aforesaid prohibition, as expressed in the second whereas clause of P.D. No. 1818, is to avoid disruption of essential government projects in areas of activity critical to the country’s economic development efforts. It states:

x x x x

WHEREAS, it is in the public interest to adopt a similar prohibition against the issuance of such restraining orders or injunctions in other areas of activity equally critical to the economic development effort of the nation, in order not to disrupt or hamper the pursuit of essential government projects;

x x x x

To boost the cited policy, Congress enacted Rep. Act No. 8975, ¹⁵ which effectively superseded ¹⁶ P.D. No. 1818. The twin objectives of Rep. Act No. 8975 are: (1) to avoid unnecessary increase in construction costs; and (2) to allow the public to enjoy soonest the benefits of the project. Thus:

SECTION 1. Declaration of Policy. – Article XII, Section 6 of the Constitution states that the use of property bears a social function, and all economic agents shall contribute to the common good. Towards this end, the State shall ensure the expeditious and efficient implementation and completion of government infrastructure projects to avoid unnecessary increase in construction, maintenance and/or repair costs and to immediately enjoy the social and economic benefits therefrom.

Rep. Act No. 8975 delineated more clearly the coverage of the prohibition. Quoted below are its relevant provisions:

SEC. 2. Definition of Terms. –

(a) "National government projects" shall refer to all current and future national government infrastructure, engineering works and service contracts, including projects undertaken by government-owned and controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law, and other related and necessary activities, such as site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement, repair and rehabilitation, regardless of the source of funding. (Emphasis supplied.)

x x x x

SEC. 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions. –No court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the government’s direction, to restrain, prohibit or compel the following acts:

x x x x

(b) Bidding or awarding of contract/project of the national government as defined under Section 2 hereof;

x x x x

SEC. 4. Nullity of Writs and Orders.–Any temporary restraining order, preliminary injunction or preliminary mandatory injunction issued in violation of Section 3 hereof is void and of no force and effect.

x x x x

Based on the aforequoted provisions, a preliminary injunction issued by any court, other than the Supreme Court, for the purpose of restraining the bidding or awarding of a national government project, is void.

In this case, the preliminary injunction issued by the RTC sought to restrain the City of Cagayan de Oro from opening the sealed bids for the South Diversion Road and PCDG Cargo Bridge Project. The said venture, which is covered by the Build-Operate-and-Transfer Law, is clearly a national government project within the meaning of Rep. Act No. 8975. Therefore, the subject writ of preliminary injunction is, by operation of law, void and of no force and effect.

Consequently, the Court of Appeals, in lifting the preliminary injunction issued by the RTC, did not commit grave abuse of discretion. On the contrary, the Court of Appeals in fact served the purpose of Rep. Act No. 8975. The lifting of the subject preliminary injunction paved the way for the opening of the sealed bids pursuant to the City’s invitation to qualified bidders. As a result, the implementation of the aforesaid infrastructure project continued without any undue and costly delay, as expressly mandated by Rep. Act No. 8975.

A contrary ruling would only slow down government development efforts to the detriment of the general public and cause the government to unnecessarily incur increased construction costs. This, we cannot allow without running afoul of the clear mandate of the law.

WHEREFORE, the petition is DISMISSED. The Decision, dated January 7, 2003, of the Court of Appeals in CA-G.R. SP No. 72302, is AFFIRMED.

Costs against petitioner.

SO ORDERED.

LEONARDO A. QUISUMBING
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice
CONCHITA CARPIO MORALES Associate Justice	DANTE O. TINGA Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes

¹ Rollo, pp. 24-38. Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Eliezer R. Delos Santos, and Regalado E. Maambong concurring.

² Id. at 227.

³ Id. at 83-97.

⁴ Id. at 98.

⁵ Id. at 225-226.

⁶ Id. at 228-240.

⁷ Id. at 289-291.

⁸ Id. at 38.

⁹ Id. at 8.

¹⁰ G.R. No. 86695, September 3, 1992, 213 SCRA 516.

¹¹ G.R. No. 108718, July 14, 1994, 234 SCRA 116.

¹² G.R. Nos. 115786-87, February 5, 1996, 253 SCRA 212.

¹³ Erroneously written as "Rep. Act No. 8795."

¹⁴ Prohibiting Courts from Issuing Restraining Orders or Preliminary Injunctions in Cases Involving Infrastructure and Natural Resource Development Projects of, and Public Utilities Operated by the Government. Took effect January 16, 1981.

¹⁵ An Act to Ensure the Expeditious Implementation and Completion of Government Infrastructure Projects by Prohibiting Lower Courts from Issuing Temporary Restraining Orders, Preliminary Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for Violations Thereof, and for Other Purposes. Took effect November 26, 2000.

¹⁶ Bangus Fry Fisherfolk v. Lanzanas, G.R. No. 131442, July 10, 2003, 405 SCRA 530, 537-538.

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