THIRD DIVISION
G.R. Nos. 236577 and 236597, August 15, 2018
PHILIPPINE CHARITY SWEEPSTAKES OFFICE, Petitioner, v. HON. MAXIMO M. DE LEON, PRESIDING JUDGE OF THE MAKATI CITY REGIONAL TRIAL COURT, BRANCH 143, AND PHILIPPINE GAMING AND MANAGEMENT CORPORATION, Respondents.
D E C I S I O N
LEONEN, J.:
Absent the showing of an existing right to be protected, a party's application for an injunctive relief must necessarily be denied.
This is a Petition for Certiorari1 under Rule 65 of the 1997 Rules of Civil Procedure, praying that the August 3, 20172 and November 7, 20173 Resolutions and the August 10, 2017 Writ of Preliminary Injunction4 of the Regional Trial Court be reversed and set aside.5 The Regional Trial Court granted the Philippine Gaming and Management Corporation's application for injunctive relief.6
Petitioner Philippine Charity Sweepstakes Office likewise prays for the issuance of a status quo ante order or a Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin the Philippine Gaming and Management Corporation and Presiding Judge Maximo M. De Leon (Judge De Leon): (1) "from committing or performing any acts pursuant to the Assailed Resolution and Writ and/or barring or preventing [the Philippine Charity Sweepstakes Office] from bidding the [Nationwide On-line Lottery System] project and/or from proceeding with any procurement activities to procure online lottery equipment;"7 and (2) "from doing anything that will adversely affect, impede, obstruct, and/or prevent the smooth conduct of the bidding for the [Nationwide On-line Lottery System] project."8
This case arose from the Equipment Lease Agreement9 executed on January 25, 1995 by the Philippine Charity Sweepstakes Office and the Philippine Gaming and Management Corporation. The Equipment Lease Agreement provided that the Philippine Charity Sweepstakes Office, as lessee, will lease the lottery equipment and accessories of the Philippine Gaming and Management Corporation, as lessor, for the operation of its online lottery in Luzon. The term of the Equipment Lease Agreement was eight (8) years or until 2003.10
On November 14, 1997, the Philippine Charity Sweepstakes Office and the Philippine Gaming and Management Corporation amended the Equipment Lease Agreement "to reduce the original number of required terminals from 2,000 to 1,250 terminals."11 Several cases were filed in court causing the 8-year term of the Equipment Lease Agreement to commence in 1999. With the 4-year delay, the Equipment Lease Agreement would end in 2007.12
On December 29, 2004, the Philippine Charity Sweepstakes Office and the Philippine Gaming and Management Corporation executed another lease agreement, amending the Equipment Lease Agreement.13 One of the provisions in the Amendments to Equipment Lease Agreement14 was on the extension of the lease duration to another eight (8) years or until 2015.15 Paragraph 3 of the Amendments to Equipment Lease Agreement provides:
In 2011, the Equipment Lease Agreement was investigated by the Philippine Senate Blue Ribbon Committee.17 The investigation was conducted due to an alleged "lapse in financial judgment"18 when the Philippine Charity Sweepstakes Office rented lottery machines for US$148,000,000.00, instead of purchasing them for US$25,000,000.00.19 After investigation, the Philippine Senate Blue Ribbon Committee recommended that the Philippine Charity Sweepstakes Office proceed with the renegotiation of the rental fee "to ensure that the basis for the fees is commensurate to the cost of the subject of the lease and that the amount thereof is not unduly burdensome to the public."20 The Philippine Senate Blue Ribbon Committee also recommended that the renegotiations should be pursued not only with the Philippine Gaming and Management Corporation but also with the Pacific Online Systems Corporation (Pacific Online), the on-line lottery operator for Visayas and Mindanao.21
- Paragraph 3 of the [Equipment Lease Agreement] is hereby amended by extending the lease term for a period of eight (8) years commencing 23 August 2007; provided that, all of the upgraded/replacement equipment shall be ready for commercial operation no later than 23 August 2007; and provided further that, every two (2) years thereafter until the end of the term of this Agreement, as required by mutual agreement of the parties, the LESSOR guarantees the periodic upgrading of all equipment at no additional cost on the part of the LESSEE.16 (Emphasis in the original)
3. The parties hereby agree that the exclusivity issue and all matters arising related to or consequential therefrom, shall be resolved through an arbitration proceeding using [International Chamber of Commerce] Rules by a three[-]member Arbitral Tribunal in Manila;In accordance with the Interim Settlement, a Request for Arbitration41 was filed by the Philippine Gaming and Management Corporation on March 13, 2014 before the International Chamber of Commerce, International Court of Arbitration. The Philippine Gaming and Management Corporation raised the issue of whether it has "the exclusiv[e] right to supply online lottery equipment to [the Philippine Charity Sweepstakes Office] in Luzon."42 The Philippine Charity Sweepstakes Office filed its Answer.43 Thereafter, preliminary hearings were conducted.44
4. The parties further agree to archive in the meantime the two contempt cases, docketed as SCA 12-520 (sic) and 12-1011 now pending before the Makati City RTC until the parties shall proceed to arbitration[.]40
II. STATUS QUOPursuant to the Interim Settlement, and the Supplemental and Status Quo Agreement, the Philippine Charity Sweepstakes Office and its Board and Officials filed on January 20, 2016 two (2) motions to dismiss: (1) a Manifestation with Motion to Dismiss48 before the Court of Appeals; and (2) a Consolidated Motion to Revive and to Dismiss Cases Based on Status Quo Agreement49 before Branch 143, Regional Trial Court, Makati City.50 They sought to dismiss the Petition for Certiorari against Judge Baybay docketed as CA-G.R. SP No. 128259 pending before the Court of Appeals51 and the Indirect Contempt cases docketed as SCA Case Nos. 12-530 and 12-1011 pending before the Makati City Regional Trial Court.52
- The parties shall dismiss all pending judicial and civil actions between them but shall continue with the arbitration proceedings until resolved with finality, for the purpose of determining territorial exclusivity. [The Philippine Gaming and Management Corporation] shall no longer claim any damages from the [Philippine Charity Sweepstakes Office], Board and officials in said arbitration proceedings, without prejudice to the claim for performance, if warranted.
- Except as otherwise provided, upon the execution of this Agreement, the parties agree to maintain the status quo existing as provided in the Interim Settlement for a period of three years from 22 August 2015.47 (Emphasis in the original)
WHEREFORE, premises considered, pending the conclusion of the trial of the instant cases and the arbitration proceedings before the Arbitral Tribunal, petitioner's application for the issuance of a writ of preliminary injunction is GRANTED, subject to the posting of an injunction bond in the amount of TWENTY[-]FIVE MILLION PESOS (Php 25,000,000.00). Upon posting of the said bond, let a writ of preliminary injunction issue, ENJOINING respondent Philippine Charity Sweepstakes Office (PCSO) as represented by its board of directors not to proceed with its public bidding process BUT INSOFAR as Luzon territory only is concerned.The Philippine Charity Sweepstakes Office filed a Motion for Reconsideration,73 which was denied by the Regional Trial Court in its November 7, 2017 Resolution.74
Furthermore, this Resolution is without prejudice to any ruling of the Honorable Supreme Court in connection with the pending application for Temporary Restraining Order]/Prohibitory Injunction filed by [the Philippine Charity Sweepstakes Office].
Meanwhile, it is understood that this Injunction will only cover the area of Luzon territory and will not cover Visayas and Mindanao territories.
Let these cases remain in the archive pursuant to May 10, 2016 Resolution.
SO ORDERED.72 (Emphasis in the original)
Petitioner argues that respondent Judge De Leon should have denied or deferred action on respondent Philippine Gaming and Management Corporation's application for Temporary Restraining Order/Writ of Preliminary Injunction considering that the latter already instituted a similar application before the International Chamber of Commerce, International Court of Arbitration. In granting the application, respondent Judge De Leon violated Section 28(l) of the International Chamber of Commerce Rules and Rule 5.15 of the Special Rules of Court on Alternative Dispute Resolution. Petitioner also notes that the Philippine Gaming and Management Corporation's application was filed without a verified petition, in violation of Rule 5.5 of the Supreme Court Administrative Matter No. 07-11-08 or the Special Rules of Court on Alternative Dispute Resolution.78
- Judge De Leon gravely abused his discretion amounting to lack or excess of jurisdiction when he issued the assailed injunctive writ because it is an interference to the arbitral panel's jurisdiction in [International Chamber of Commerce] Case 20105CYK pending before the [International Chamber of Commerce] International Court of Arbitration.
- . . . when he assumed jurisdiction over the application for relief.
- . . . when he ruled that [the Philippine Gaming and Management Corporation] has a right that must be protected pursuant to Section 2 of the Interim Settlement.
- . . . when he relied on the pendency of the arbitral proceeding as basis in granting the injunctive relief application.
- . . . when he ruled that [the Philippine Gaming and Management Corporation]'s action in immediately applying for [Temporary Restraining Order]/Injunctive relief is an indicia that it has a right to be violated.
- . . . in finding that [the Philippine Gaming and Management Corporation] will suffer grave and irreparable injury if [the Philippine Charity Sweepstakes Office] pursues the [Nationwide On-line Lottery System] bidding and that no extreme urgency exists.77
[I]f the [Nationwide On-line Lottery System] project is awarded to a winning bidder following the opening of bids on 27 July 2017, a 10-month period is still necessary to conduct a test-run to ensure that the lottery system is workable and acceptable to [the Philippine Charity Sweepstakes Office] by the time [the Philippine Gaming and Management Corporation]'s extended [Equipment Lease Agreement] expires in August 2018.88Finally, petitioner alleges that respondent Judge De Leon violated its freedom to contract. By issuing the Writ of Preliminary Injunction, "the [Regional Trial Court] has practically, without authority, extended already [the Philippine Gaming and Management Corporation's Equipment Lease Agreement] beyond 22 August 2018."89 It will have to adjust its timetables for the procurement of the Nationwide On-line Lottery System and will need another 10 months for the test run. As a result, it will be forced to extend the unfavorable lease agreement with respondent Philippine Gaming and Management Corporation until the procurement of a new provider.90
Petitioner also notifies this Court that on October 20, 2017, respondent Philippine Gaming and Management Corporation filed a Motion to Dismiss97 in the indirect contempt cases it filed against petitioner in SCA Nos. 12-530 and 12-1011 before the Regional Trial Court.98 After the Regional Trial Court denied respondent Philippine Gaming and Management Corporation's motion to dismiss, the latter moved for reconsideration, which is currently pending resolution.99XII.DISPOSITIVE PART365.Having considered all of the evidence and submissions placed before it, and for the reasons set out above, the Tribunal hereby FINALLY DECIDES and DETERMINES as follows:(a)The Claimant does not have an exclusive contractual right to supply an online lottery system for Luzon in the Republic of the Philippines and the Claimant's case is therefore dismissed in its entirety;(b)The Claimant shall pay all of the Respondent's reasonable costs and expenses in the arbitration, which amount to Php 53,592,202.09;(c)The Claimant shall bear its own costs and expenses m the arbitration;(d)The Claimant shall bear the costs of the arbitration including the fees and expenses of the Arbitral Tribunal and the administrative fees of the [International Chamber of Commerce] fixed by the [International Chamber of Commerce] Court in the amount of US$ 850,000. The Claimant shall also pay US$ 200,000 to the Respondent as reimbursement for the share of the advance on costs that was paid by the Respondent; and(e)All other claims, counterclaims and requests for relief are hereby dismissed.96
2.57 Notably, [the Philippine Gaming and Management Corporation] has shown that it has clear legal rights to be protected based on the: (a) Writ of Preliminary Injunction dated September 5, 2012, (b) the Interim Settlement dated December 11, 2013, and (c) the pending arbitration proceedings, and that the [Philippine Charity Sweepstakes Office] is threatening to commit acts in violation of [the Philippine Gaming and Management Corporation]'s clear legal rights by publicly announcing its intention to conduct a public bidding for the "FIVE (5) YEARS LEASE OF THE NATIONWIDE ONLINE LOTTERY SYSTEM (NOLS)." Unless the public bidding for the [Nationwide On-line Lottery System] or any related conducted shall be enjoined by this Honorable Court, [the Philippine Gaming and Management Corporation] will suffer grave and irreparable damage and injury in the form of sever business and financial losses as a consequence of the complained acts. If the bidding is held and a new contract is awarded to parties other than [the Philippine Gaming and Management Corporation], [the Philippine Gaming and Management Corporation] will be divested of its clear rights, and shall suffer losses which are impossible to compute with accuracy due to the price nature of lottery operation, unpredictability of market forces, and such other factors affecting profitability.105 (Emphasis in the original)Respondent Philippine Gaming and Management Corporation prays that this Court dismiss the petition considering that petitioner failed to comply with the requirements for the issuance of a status quo ante order, temporary restraining order, or a writ of preliminary injunction.106
Corollarily, the court is not executing the decision but only recognizing the decision of the Arbitral Tribunal. It should be noted that the parties had agreed to bring the issue on exclusivity of contract before the Arbitral Tribunal. Thus, to the mind of this court, the parties are bound by the Arbitral Court's action/decision not only because that is what is provided by Art. 35(6) of [International Chamber of Commerce] Rules of Arbitration but also because they themselves agreed to submit themselves to the jurisdiction of the Arbitration Court to determine the exclusivity issue save in the cases where there is violation of the parties' rights to due process (both procedural and substantive) which is not obtaining in this case. Records reveal that the parties were given their day in court to present their respective evidence. Nothing in the decision could that the Arbitral Tribunal has respective rights or abused its discretion warranting the denial of the motion for confirmation or to vacate the decision. Suffice it to state that the court can do nothing except to recognize the decision as the same is not contrary to law, morals, public policy and public order.Petitioner seeks clarification from this Court if it is now allowed to proceed with the Nationwide On-line Lottery System's bidding considering that the Regional Trial Court already confirmed the Arbitral Award and prays for the issuance of a resolution in answer to their query.111
WHEREFORE, in view of all the foregoing, the Arbitral Award dated February 20, 2018, being not contrary to law or against morals, good customs, public order or public policy, is hereby CONFIRMED.
SO ORDERED.110 (Emphasis in the original)
3. TERMOn November 14, 1997, the Equipment Lease Agreement was amended to extend the term until 2007:
This lease shall have a term of eight (8) years, commencing on the date of commercial operation by the LESSEE of all the Equipment included in the first delivery pursuant to the Delivery Schedule.112 (Emphasis supplied)
WHEREAS, under the existing Equipment Lease Agreement dated 25 January 1995 as amended on 14 November 1997 . . ., LESSOR has contractual exclusivity in providing the central computer system for the Luzon on-line lottery project until 2007 and the complete proprietary rights to the central computer system's hardware and software.113 (Emphasis supplied)On December 29, 2004, the Equipment Lease Agreement was further amended. The parties executed the Amendments to Equipment Lease Agreement, which extended the term of the lease to another eight (8) years-from August 23, 2007 to August 22, 2015:
3. Paragraph 3 of the [Equipment Lease Agreement] is hereby amended by extending the lease term for a period of eight (8) years commencing 23 August 2007; provided that, all of the upgraded/replacement equipment shall be ready for commercial operation no later than 23 August 2007; and provided further that, every two (2) years thereafter until the end of the term of this Agreement, as required by mutual agreement of the parties, the LESSOR guarantees the periodic upgrading of all equipment at no additional cost on the part of the LESSEE.114 (Emphasis supplied)It was during the effectivity of the Amendments to Equipment Lease Agreement that petitioner "allowed (Pacific Online] to supply a number of lottery equipment for its Luzon operation."115
I. TERMSince the extended Equipment Lease Agreement between petitioner and respondent Philippine Gaming and Management Corporation was about to expire in August 2018, petitioner started preparing for the bidding of the Nationwide On-line Lottery System, which would have a term of five (5) years-from August 2018 to August 2023. Claiming that it is "the exclusive supplier/lessor of lottery equipment for Luzon,"119 respondent Philippine Gaming and Management Corporation applied for a temporary restraining order and a writ of preliminary injunction on July 11, 2017. It sought to enjoin petitioner from further proceeding with the bidding process.
The Term of the [Equipment Lease Agreement] is hereby extended beginning 22 August 2015 until 21 August 2018.118 (Emphasis and underscoring in the original)
A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring a person to refrain from a particular act. As an ancillary or preventive remedy, a writ of preliminary injunction may therefore be resorted to by a party to protect or preserve his rights and for no other purpose during the pendency of the principal action.122 (Emphasis supplied, citations omitted)The issuance of a Writ of Preliminary Injunction is governed by Rule 58, Section 3 of the 1997 Rules of Civil Procedure:
Section 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it is established:In Department of Public Works and Highways (DPWH) v. City Advertising Ventures Corporation,123 this Court held that "[f]or a writ of preliminary injunction to be issued, the applicant must show, by prima facie evidence, an existing right before trial, a material and substantial invasion of this right, and that a writ of preliminary injunction is necessary to prevent irreparable injury."124(a)That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring performance of an act or acts, either for a limited period or perpetually;(b)That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or(c)That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.
Very truly yours, |
(SGD) |
WILFREDO V. LAPITAN |
Division Clerk of Court |
Endnotes:
1Rollo, pp. 3-58.
2 Id. at 59-67. The Resolution, docketed as Civil Case Nos. 12-530 and 12-1011, was penned by Presiding Judge Maximo M. De Leon of Branch 143, Regional Trial Court, Makati City.
3 Id. at 68-75. The Resolution, docketed as Civil Case Nos. 12-530 and 12-1011, was penned by Presiding Judge Maximo M. De Leon of Branch 143, Regional Trial Court, Makati City.
4 Id. at 76-77.
5 Id. at 50.
6 Id. at 67.
7 Id. at 49.
8 Id.
9 Id. at p. 109-120.
10 Id. at 109-111.
11 Id. at 144, Senate Blue Ribbon Committee Report No. 95.
12 Id.
13 Id. at p. 5, Petition for Certiorari, 60, Regional Trial Court Resolution dated August 3, 2017 in Civil Case No. 12-530 and 12-1011, and 121, Amendments to Equipment Lease Agreement.
14 Id. at 121-125.
15 Id. at p. 5, Petition for Certiorari, 60, Regional Trial Court Resolution dated August 3, 2017 in Civil Case No. 12-530 and 12-1011, and 123, Amendments to Equipment Lease Agreement.
16 Id. at 123, Amendments to Equipment Lease Agreement.
17 Id. at 7, Petition for Certiorari.
18 Id. at 136, Senate Blue Ribbon Committee Report No. 95.
19 Id.
20 Id. at 154.
21 Id. at 141-142 and 154.
22 Id. at 8, Petition for Certiorari.
23 Id.
24 Id.
25 Id. at 160-176.
26 Id. at 177-184.
27 Id. at 8, Petition for Certiorari.
28 Id. at 185-189.
29 Id. at 189.
30 Id. at 9, Petition for Certiorari.
31 Id. at 190-198.
32 Id. at 192-194.
33 Id. at 9, Petition for Certiorari.
34 Id. at 199-204.
35 Id. at 204.
36 Id. at 205-262.
37 Id. at 205.
38 Id. at 219-230.
39 Id. at 263-265.
40 Id. at 264.
41 Id. at 274-294.
42 Id. at 10, Petition for Review.
43 Id. at 295-327.
44 Id. at 10, Petition for Review.
45 Id. at 328-332.
46 Id. at 330.
47 Id.
48 Id. at 337-339.
49 Id. at 353-355.
50 Id. at 11, Petition for Certiorari.
51 Id. at 338, Manifestation with Motion to Dismiss.
52 Id. at 354, Consolidated Motion 10 Revive and to Dismiss Cases Based on Status Quo Agreement.
53 Id. at 356-361.
54 Id. at 358.
55 Id. at 363-366. The Resolution, docketed as CA-G.R. SP Nos. 128259 and 141474, was penned by Associate Justice Maria Elisa Sempio-Diy and concurred in by Associate Justices Ramon M. Bato, Jr. and Manuel M. Barrios of the Twelfth Division, Court of Appeals, Manila.
56 Id. at 365-366.
57 Id. at 367-368.
58 Id. at 369-373.
59 Id. at 370-371.
60 Id. at 387-392. The Resolution, docketed as CA-G.R. SP No. 123259, was penned by Associate Justice Maria Elisa Sempio-Diy and concurred in by Associate Justices Ramon M. Bato, Jr. and Manuel M. Barrios of the Twelfth Division, Court of Appeals, Manila.
61 Id. at 392.
62 Id. at 393-416.
63 Id. at 409.
64 Id. at 12 and 15.
65 Id. at 13.
66 Id. at 439-451.
67 Id. at 14.
68 Id. at 527-531.
69 Id. at 531.
70 Id. at 59-67.
71 Id. at 76-77.
72 Id. at 67, Regional Trial Court Resolution dated August 3, 2017.
73 Id. at 78-108.
74 Id. at 68-75.
75 Id. at 3-58.
76 Id. at 3.
77 Id. at 16-17.
78 Id. at 17-21.
79 Id. at 21-24.
80 Id. at 23.
81 Id. at 24.
82 Id. at 24-31.
83 Id. at 31-35.
84 Id. at 36.
85 Id. at 37.
86 Id. at 37-38.
87 Id. at 38.
88 Id. at 39.
89 Id. at 40.
90 Id. at 39-44.
91 Id. at 49.
92 Id.
93 Id. at 544-545.
94 Id. at 546-553.
95 Id. at 554-596.
96 Id. at 595.
97 Id. at 597-599.
98 Id. at 548, the Philippine Charity Sweepstakes Office's Manifestation with Extremely Urgent Motion for Early Resolution.
99 Id.
100 Id. at 549.
101 Id. at 603-628.
102 Id. at 604-624.
103 Id. at 606.
104 Id. at 608.
105 Id. at 624.
106 Id. at 624-.626.
107 Id. at 632-638.
108 Id. at 639-643.
109 Id. at 633-634.
110 Id. at 643, Regional Trial Court Resolution dated May 25, 2018.
111 Id. at 634.
112 Id. at 111.
113 Id. at 122, Amendments to the Equipment Lease Agreement.
114 Id. at 123.
115 Id. at 8.
116 Id. at 572-572-A, ICC International Court of Arbitration Final Award.
117 Id. at 268, Supplemental and Status Quo Agreement.
118 Id.
119 Id. at 439, the Philippine Gaming and Management Corporation's Application for Temporary Restraining Order and Preliminary Injunction.
120First Global Realty and Development Corporation v. San Agustin, 427 Phil. 593, 601 (2002) [Per J. Panganiban, Third Division], citing Republic of the Philippines v. Silerio, 338 Phil. 784, 791-792 (1997) [Per J. Romero, Second Division].
121 435 Phil. 112 (2002) [Per J. Quisumbing, Second Division].
122 Id. at 118.
123 G.R. No. 132944, November 9, 2016 [Per J. Leonen, Second Division].
124 Id. at 1.