G.R. No. 80908 & 80909 May 24, 1989
EMERITO M. RAMOS, SR., ET AL., petitioners, vs. COURT OF APPEALS, GOVERNMENT SERVICE INSURANCE SYSTEM, ET AL., respondents.

FACTS

Petitioners filed a complaint for specific performance and damages against GSIS and the Commercial Bank of Manila (COMBANK) before the Regional Trial Court of Makati. They alleged that based on a 1980 agreement, they retained a proprietary interest in COMBANK, and thus its sale required their consent. They sought to enjoin GSIS from selling COMBANK to the First National Bank of Boston (FNBB) and a group represented by Edgardo Tordesillas. The trial court issued a writ of preliminary injunction upon a P5-million bond.
Respondents FNBB and Tordesillas, and later GSIS and COMBANK, filed separate petitions for certiorari with the Court of Appeals to nullify the injunction. These were docketed as CA-G.R. SP Nos. 12859 and 12903, raffled to the Eleventh and Seventh Divisions, respectively. The Seventh Division issued a temporary restraining order against the trial court’s writ. The cases were consolidated before the Seventh Division, which subsequently granted the petitions and permanently enjoined the trial court from enforcing its preliminary injunction. Petitioners elevated the matter to the Supreme Court via a petition erroneously labeled under Rule 45 but treated as a special civil action for certiorari under Rule 65.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in granting the writ of certiorari and issuing a permanent injunction against the trial court’s preliminary injunction.

RULING

The Supreme Court ruled that the Court of Appeals did not commit grave abuse of discretion. The legal logic is anchored on the nature of a preliminary injunction and the petitioners’ failure to establish a clear legal right warranting such extraordinary relief. A preliminary injunction is a preservative remedy requiring the applicant to prove a clear and unmistakable right that is violated. The Court found petitioners’ claim of a proprietary interest in COMBANK, derived from a 1980 agreement involving a different corporate entity (Overseas Bank of Manila), to be speculative and unsubstantiated.
The 1980 agreement contained no stipulation granting petitioners a right of first refusal or veto power over a future sale of COMBANK. Their claim was a contingent interest, dependent on the success of a claim for damages against GSIS for alleged breaches of the old agreement. This contingent claim did not constitute the clear legal right necessary to justify an injunction that would restrain a major financial transaction of clear public interest. The appellate court correctly held that the trial court’s issuance of the preliminary injunction was tainted with grave abuse of discretion, as it was based on a misapprehension of petitioners’ nebulous rights. Therefore, the Court of Appeals acted within its jurisdiction in correcting this error via certiorari.