G.R. No. L-49529. March 31, 1989.
VALLEY TRADING CO., INC., petitioner, vs. COURT OF FIRST INSTANCE OF ISABELA, BRANCH II; DR. CARLOS UY (in his capacity as Mayor of Cauayan, Isabela); MOISES BALMACEDA (in his capacity as Municipal Treasurer of Cauayan, Isabela); and SANGGUNIANG BAYAN of Cauayan, Isabela, respondents.

FACTS

Petitioner Valley Trading Co., Inc. filed a complaint with the Court of First Instance of Isabela seeking to declare null a provision of a municipal ordinance of Cauayan, Isabela, which imposed a graduated tax on retailers and wholesalers. The petitioner argued the tax was effectively a prohibited percentage tax on sales under the Local Tax Code. It also prayed for a refund of taxes paid and for a writ of preliminary injunction to enjoin further tax collection during the pendency of the case.
The trial court, after a pre-trial conference, issued an order denying the prayer for a preliminary injunction, citing the principle that the collection of taxes cannot be enjoined. Petitioner moved for reconsideration, contending that a hearing on the merits was mandatory before such denial, invoking Section 7, Rule 58 of the Rules of Court. The trial court denied the motion, prompting this petition for certiorari.

ISSUE

Whether the trial court committed grave abuse of discretion in denying the application for a writ of preliminary injunction without conducting a prior hearing on the merits.

RULING

The Supreme Court ruled that the trial court did not commit grave abuse of discretion. The legal logic is anchored on the procedural rules governing injunctions and the substantive principles of tax collection. Petitioner’s reliance on Section 7, Rule 58 is misplaced. That section merely enumerates the court’s possible actions after a hearing; it does not mandate that a hearing is an absolute prerequisite for denial. Under Section 6 of the same Rule, a court may refuse an injunction outright based on the insufficiency of the complaint as apparent from the pleadings, or on the basis of submitted affidavits, without a formal hearing.
The Court emphasized that a hearing is required primarily when there is a prima facie showing entitling the movant to the writ, to comply with the prohibition against ex parte issuances. Here, no such showing existed. The trial court could reasonably determine from the pleadings and the respondents’ answer—which cited a supporting ruling from the Acting Secretary of Finance—that the petitioner failed to establish a clear and positive right deserving of protection via an extraordinary writ. Furthermore, taxes are the lifeblood of government, and injunctions against their collection are looked upon with disfavor. Granting the injunction based solely on the claim of patent nullity would have amounted to a prejudgment of the main case, improperly reversing the presumption of validity that all ordinances enjoy and the petitioner’s burden of proof. The petition was dismissed.