G.R. No. 119769 September 18, 1996
BERNARDO RAYMOND T. SAULOG, et al. and DAGUPAN BUS CO., INC. and SAULOG TRANSIT, INC., petitioners, vs. THE COURT OF APPEALS and GAMMA HOLDINGS CORP., respondents.

FACTS

Private respondent Gamma Holdings Corporation filed a complaint for specific performance against the individual Saulog stockholders and their two bus companies. Gamma alleged that after extensive negotiations, the parties executed a document titled “Terms of DBC-STI Sale,” which outlined an agreement for Gamma to purchase all stocks of the bus companies. The document was signed by representatives of both parties. Gamma claimed that five individual petitioners later refused to comply, prompting the lawsuit. Fearing the petitioners would sell the stocks or assets to third parties, Gamma prayed for and was granted a writ of preliminary injunction by the Regional Trial Court to preserve the status quo during litigation.
The petitioners contested the injunction, arguing the “Terms of DBC-STI Sale” was merely a preliminary document that did not constitute a perfected contract of sale. They asserted it lacked essential elements like a definite price and was unenforceable under the Statute of Frauds. The Court of Appeals sustained the trial court’s issuance of the writ. Petitioners elevated the case to the Supreme Court via a petition for review.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s order granting the writ of preliminary injunction.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic centers on the purpose and requisites for issuing a preliminary injunction. The Court clarified that a preliminary injunction is a preservative remedy to prevent threatened or continuous acts that would render a future judgment ineffectual. Its issuance does not require a prior final determination of the merits of the main case.
The trial court’s finding of a prima facie right warranting protection was justified. The existence of the signed “Terms of DBC-STI Sale” created a sufficient basis to believe Gamma had a right that needed safeguarding pending the resolution of the specific performance case. The petitioners’ defenses regarding the document’s enforceability, the Statute of Frauds, and the absence of a definite price are evidentiary matters that pertain to the main action’s merits. These substantive issues require a full trial for adjudication and are not proper for resolution in the summary proceeding for an injunction. The injunction was properly issued to prevent the alleged dissipation of the very subject matter of the litigation, thereby ensuring that a potential judgment in Gamma’s favor would not be rendered nugatory. The Supreme Court directed the trial court to proceed with the trial on the merits.