G.R. No.

215764 July 6, 2015

RICHARD K. TOM, Petitioner,

vs.

SAMUEL N. RODRIGUEZ, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Resolutions of the Court of
Appeals (CA) dated May 16, 20142 and November 5, 2014,3 in CA-G.R. SP No. 06075,
which denied the prayer for issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction sought for by petitioner Richard K. Tom (Tom) in his
petition for certiorari filed before the CA.

The Facts

Golden Dragon International Terminals, Inc. (GDITI) is the exclusive Shore Reception
Facility (SRF) Service Provider of the Philippine Ports Authority (PPA) tasked to collect,
treat, and dispose of all ship-generated oil wastes in all bases and private ports under
the PPA’s jurisdiction.4

Records show that sometime in December 2008, Fidel Cu (Cu) sold viaDeed of
Conditional Sale his 17,237 shares of stock in GDITI to Virgilio S. Ramos (Ramos) and
Cirilo C. Basalo, Jr. (Basalo).5 When the latter failed to pay the purchase price, Cu
sold 15,233 of the same shares through a Deed of Sale in favor of Edgar D. Lim (Lim),
Eddie C. Ong (Ong), and Arnold Gunnacao (Gunnacao), who also did not pay the
consideration therefor.6

On September 11, 2009, the following were elected as officers of GDITI: Lim as
President and Chairman of the Board, Basalo as Vice President for Visayas and
Mindanao, Ong as Treasurer and Vice President for Luzon, and Gunnacao as Director,
among others.7 However, a group8 led by Ramos composed of individuals who were
not elected as officers of GDITI – which included Tom – forcibly took over the GDITI
offices and performed the functions of its officers. This prompted GDITI, through its
duly-elected Chairman and President, Lim, to file an action for injunction and
damages against Ramos, et al., before the Regional Trial Court of Manila, Branch 46
(RTC-Manila), docketed as Civil Case No. 09-122149 (injunction case).9 Pending the
injunction case, Cu resold his shares of stock in GDITI to Basalo for a consideration of
60,000,000.00, as evidenced by an Agreement10 dated April 30, 2010 (April 30,2010
Agreement). Under the said agreement, Cu sold not only his remaining 1,997 shares of
stock in GDITI, but also the shares of stock subject of the previously-executed Deed of
Conditional Sale in favor of Ramos, as well as the Deed of Sale in favor of Lim, Ong,
and Gunnacao, where the respective considerations were not paid.11 As such, Cu
intervened in the injunction case claiming that, as an unpaid seller, he was still the
legal owner of the shares of stock subject of the previous contracts he entered into
with Ramos, Lim, Ong, and Gunnacao.12 In an Order13 dated October 11, 2010, the
RTC-Manila granted Cu’s application for Preliminary Mandatory and Preliminary
Prohibitory Injunctions, and thereafter issued corresponding writs therefor on October
20, 2010,14 which, inter alia, directed the original parties (plaintiff Lim and those
acting under his authority, and defendants Ramos, et al.) to cease and desist from
performing or causing the performance of any and all acts of management and control

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over GDITI, and to give Cu, as intervenor, the authority to put in order GDITI’s
business operations.15

In view of his successful intervention in the injunction case, Cu executed a Special

Power of Attorney16 (SPA) dated October 18, 2010 in favor of Cezar O. Mancao II
(Mancao) constituting the latter as his duly authorized representative to exercise the
powers granted to him in the October 11, 2010 Order, and to perform all acts of
management and control over GDITI. Thereafter, Cu and Basalo entered into an
Addendum to Agreement17 (Addendum) setting forth the terms of payment of the sale
of the shares of stock subject of the April 30, 2010 Agreement.

However, in a letter18 dated September 5, 2011 addressed to Mancao, Basalo, and the
Board of Directors of GDITI filed before the RTC-Manila, Cu expressly revoked the
authority that he had previously granted to Mancao and Basalo under the SPA and
other related documents, effectively reinstating the power to control and manage the
affairs of GDITI unto himself.19 Thus, Mancao and Basalo filed the present Complaint
for Specific Performance with Prayer for the Issuance of a Temporary Restraining
Order (TRO) and a Writ of Preliminary Injunction20 against Cu, Tom, and several John
and Jane Does before the Regional Trial Court of Nabunturan, Compostela Valley,
Branch 3 (RTC-Nabunturan), docketed as Civil Case No. 1043 (specific performance
case). The complaint impleaded Tom on the allegation that Cu had authorized him to
exercise control and management over GDITI and, on the strength thereof, had made
representations before the PPA that enabled him to enter the ports in a certain region,
to the exclusion of the other agents of GDITI.21 Thus, the complaint prayed that: (a) a
TRO be issued ex parte enjoining Cu, Tom and all persons acting for and under Cu’s
authority from exercising control and management over GDITI and/or interfering with
Mancao and Basalo’s affairs; (b) after hearing, a writ of preliminary injunction be
issued; and (c) judgment be rendered ordering Cu to faithfully comply with his
obligations under the agreements he executed with them.22

Thereafter, herein respondent Samuel N. Rodriguez (Rodriguez) filed a Complaint-in-

Intervention,23 alleging that in a Memorandum of Agreement24 (MOA) dated May 2,
2012, Basalo authorized him to take over, manage, and control the operations of
GDITI in the Luzon area, and, in such regard, effectively revoked whatever powers
Basalo had previously given to Mancao. In the said MOA, Basalo and Rodriguez agreed
to divide between them the monthly net profit of GDITI equally. However, as Basalo
purportedly refused to honor the terms and conditions of the MOA despite demand,25
Rodriguez sought to intervene in the specific performance case to compel Basalo to
faithfully comply with his undertaking. Likewise, Rodriquez prayed for the issuance of
a writ of preliminary injunction directing Basalo, his agents, deputies, and successors,
and all other persons acting for and on his behalf, to honor his obligations under the
MOA by: (a) giving the management and control of GDITI in the Luzon area to
Rodriguez; (b) allocating the power to administer and manage the Visayas and
Mindanao regions of GDITI to Rodriguez in the concept of a partner; (c) granting to
Rodriguez the right to provide the manpower services for the operations of GDITI; and
(d) giving to Rodriguez his share in the net proceeds of GDITI. Finally, he prayed that
after trial, such injunction be made permanent.26

Basalo failed to present any evidence to contradict Rodriguez’s allegations, despite

having been given the opportunity to do so.27

The RTC-Nabunturan Ruling

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In an Order28 dated November 13, 2013, the RTC-Nabunturan granted Rodriguez’s
application for the issuance of a writ of preliminary mandatory injunction, conditioned
on the filing of a bond in the amount of 1,000,000.00. It found credence in the MOA
executed between him and Basalo which remained uncontroverted.29 Accordingly, the
RTC-Nabunturan ordered Basalo to: (a) place the management and control of GDITI in
Luzon to Rodriguez as representative of Basalo; (b)allocate the power to administer
and manage the Visayas and Mindanao regions of GDITI to Rodriguez in the concept of
a partner of Basalo; (c) allow Rodriguez to provide the manpower services for the
operations of GDITI; and (d) give to Rodriguez his share in the monthly net proceeds
from GDITI’s operations, subject to the rules of the corporation on fees relative to the
management contracts.30

The original parties, plaintiffs Basalo and Mancao, and defendant Tom, separately filed
motions for reconsideration thereof, which were denied in an Order31 dated December
11, 2013. Aggrieved, Tom elevated the matter before the CA via petition for certiorari
with prayer for the issuance of a TRO and/or writ of preliminary injunction,32
docketed as CA-G.R. SP No. 06075, seeking to nullify the November 13, 2013 and
December 11, 2013 Orders of the RTC-Nabunturan in the specific performance
case.33

The CA Ruling

In a Resolution34 dated May 16, 2014, the CA, without touching upon the merits of
the case, denied Tom’s prayer for the issuance of a TRO and/or writ of preliminary
injunction, finding no extreme urgency on the matter raised by Tom, and that no clear
and irreparable injury would be suffered if the injunctive writ was not granted.35

Dissatisfied, Tom filed a motion for reconsideration,36 but was denied in a

Resolution37 dated November 5, 2014; hence, this petition.

The Issue Before the Court

The issue for the Court’s resolution is whether or not the CA committed grave abuse of
discretion in denying Tom’s prayer for the issuance of a TRO and/or writ of
preliminary injunction.

The Court's Ruling

The petition is meritorious.

At the outset, it is observed that Tom has erroneously invoked the Court’s appellate
jurisdiction under Rule 45 of the Rules of Court in assailing the CA’s Resolutions
denying his prayer for injunctive relief. Considering that the assailed CA Resolutions
merely disposed of Tom’s prayer for the issuance of a TRO and/or writ of preliminary
injunction – hence, interlocutory orders – the proper remedy should have been to file a
petition for certiorari, not a petition for review,38 before this Court. On this score,
therefore, the instant petition would have been dismissible outright.

However, in accordance with the liberal spirit pervading the Rules of Court and in the
interest of substantial justice, as justified by the merits of the petition, which was

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filed39 within the 60-day reglementary period under Rule 65 of the Rules of Court,
and alleged that the CA "departed from the accepted and usual course of judicial
proceedings,"40 the Court deems it proper to treat Tom’s petition for review on
certiorari as a petition for certiorari41 and, thus, proceeds to determine whether the
CA gravely abused its discretion in denying Tom’s prayer for the issuance of a TRO
and/or writ of preliminary injunction.

As traditionally described, grave abuse of discretion refers to capricious or whimsical

exercise of judgment as is equivalent to lack of jurisdiction.1âwphi1 In Yu v. Reyes-
Carpio,42 the Court explained that:

The term "grave abuse of discretion" has a specific meaning. An act of a court or
tribunal can only be considered as with grave abuse of discretion when such act is
done in a "capricious or whimsical exercise of judgment as is equivalent to lack of
jurisdiction." The abuse of discretion must be so patent and gross as to amount to an
"evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or
to act at all in contemplation of law, as where the power is exercised in an arbitrary
and despotic manner by reason of passion and hostility." Furthermore, the use of a
petition for certiorari is restricted only to "truly extraordinary cases wherein the act of
the lower court or quasi-judicial body is wholly void."43

As the existence of grave abuse of discretion in this case relates to the propriety of
issuing a TRO and/or writ of preliminary injunction, which, by nature, are injunctive
reliefs and preservative remedies for the protection of substantive rights and interests,
it is important to lay down the issuance’s requisites, namely: (1) there exists a clear
and unmistakable right to be protected; (2) this right is directly threatened by an act
sought to be enjoined; (3) the invasion of the right is material and substantial; and (4)
there is an urgent and paramount necessity for the writ to prevent serious and
irreparable damage.44 Case law holds that the issuance of an injunctive writ rests
upon the sound discretion of the court that took cognizance of the case; as such, the
exercise of judicial discretion by a court in injunctive matters must not be interfered
with, except when there is grave abuse of discretion.45

Keeping the foregoing in mind, the Court finds that the CA committed grave abuse of
discretion amounting to lack or excess of jurisdiction in denying Tom’s prayer for the
issuance ofa TRO and/or writ of preliminary injunction. The issuance of an injunctive
writ is warranted to enjoin the RTC-Nabunturan from implementing its November 13,
2013 and December 11, 2013 Orders in the specific performance case placing the
management and control of GDITI to Rodriguez, among other directives. This
pronouncement follows the well-entrenched rule that a corporation exercises its
powers through its board of directors and/or its duly authorized officers and agents,
except in instances where the Corporation Code requires stockholders’ approval for
certain specific acts.46 As statutorily provided for in Section 23 of Batas Pambansa
Bilang 68,47 otherwise known as "The Corporation Code of the Philippines":

SEC. 23. The board of directors or trustees. – Unless otherwise provided in this Code,
the corporate powers of all corporations formed under this Code shall be exercised, all
business conducted and all property of such corporations controlled and held by the
board of directors or trustees to be elected from among the holders of stocks, or where
there is no stock, from among the members of the corporation, who shall hold office
for one (1) year until their successors are elected and qualified.

Every director must own at least one (1) share of the capital stock of the corporation of
which he is a director, which share shall stand in his name on the books of the
corporation. Any director who ceases to be the owner of at least one (1) share of the

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capital stock of the corporation of which he is a director shall thereby cease to be a
director. Trustees of non-stock corporations must be members thereof. A majority of
the directors or trustees of all corporations organized under this Code must be
residents of the Philippines. (Emphasis and underscoring supplied) Accordingly, it
cannot be doubted that the management and control of GDITI, being a stock
corporation, are vested in its duly elected Board of Directors, the body that: (1)
exercises all powers provided for under the Corporation Code; (2) conducts all
business of the corporation; and (3) controls and holds all property of the corporation.
Its members have been characterized as trustees or directors clothed with a fiduciary
character.48

Thus, by denying Tom's prayer for the issuance of a TRO and/or writ of preliminary
injunction, the CA effectively affirmed the RTC's Order placing the management and
control of GDITI to Rodriguez, a mere intervenor, on the basis of a MOA between the
latter and Basalo, in violation of the foregoing provision of the Corporation Code. In so
doing, the CA committed grave abuse of discretion amounting to lack or excess of
jurisdiction, which is correctible by certiorari.

As a final point, it is apt to clarify that Tom has legal standing to seek the issuance of
an injunctive writ, considering that he is the original party-defendant in the specific
performance case pending before the RTC-Nabunturan from which this petition arose,
and in which Rodriguez merely intervened. It likewise appears from the records49 that
pending these proceedings, Tom has been elected as a member of the current Board of
Directors of GDITI, hence, the injunctive writ must issue in line with the above-
disquisition, without prejudice to the resolution on the merits of the specific
performance case pending before the RTC-Nabunturan of which the the instant
petition is but a mere incident.

WHEREFORE, the petition is GRANTED. The Resolutions dated May 16, 2014 and
November 5, 2014 of the Court of Appeals in CA-G.R. SP No. 06075 are hereby
NULLIFIED and SET ASIDE. Accordingly, let a Writ of Preliminary Injunction be
ISSUED against respondent Samuel N. Rodriguez, his agents, and all persons acting
under his authority to refrain and desist from further exercising any powers of
management and control over Golden Dragon International Terminals, Inc.

SO ORDERED.

ESTELA M. PERLAS-BERNABE

Associate Justice

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