G.R. No. 117661 July 15, 1996
DANIEL VILLANUEVA, TERRY VILLANUEVA-YU, SUSAN VILLANUEVA, EDEN VILLANUEVA, and FRANKIE VILLANUEVA, petitioners, vs. HON. COURT OF APPEALS and BERNARDINO VILLANUEVA, respondents.

FACTS

A dispute over the control of Filipinas Textile Mills, Inc. (FTMI) arose between two family factions. Private respondent Bernardino Villanueva, claiming to be the legitimate President, filed an injunction suit with the Securities and Exchange Commission (SEC) to stop petitioners from holding a special stockholders’ meeting on November 23, 1991. The SEC Hearing Panel issued a Temporary Restraining Order (TRO) which lapsed on December 12, 1991. With no preliminary injunction issued, petitioners proceeded to hold a meeting on January 10, 1992, electing themselves as directors/officers. Bernardino’s group held a separate annual meeting on January 25, 1992, electing their own board, and filed the corresponding General Information Sheet with the SEC.
Subsequently, Bernardino filed a supplemental petition and an urgent motion alleging that on April 4, 1992, petitioners, armed with weapons, forcibly took over the FTMI factory in Cainta, Rizal. He prayed for a TRO and preliminary injunction to stop petitioners from acting as FTMI officers and from controlling the premises. Without conducting a hearing, the SEC Hearing Panel issued a TRO on May 14, 1992, directing petitioners to vacate the factory and restore possession to Bernardino, which order was immediately implemented.

ISSUE

Whether the Securities and Exchange Commission Hearing Panel acted with grave abuse of discretion in issuing the Temporary Restraining Order dated May 14, 1992, without a prior hearing and based solely on the allegations in the urgent motion.

RULING

Yes. The Supreme Court ruled that the SEC Hearing Panel committed grave abuse of discretion. The legal logic is anchored on the fundamental requirement of due process and the specific rules governing injunctive relief. A Temporary Restraining Order may be issued ex parte only if it appears from the facts shown by affidavits or the verified petition that great or irreparable injury would result to the applicant before the matter can be heard on notice. However, the Court found that the urgent motion of May 4, 1992, which alleged the violent takeover, was not even verified. It was a mere reiterative motion that incorporated by reference the allegations of an earlier supplemental petition.
Crucially, the issuance violated the SEC’s own Revised Rules of Procedure, which mandated that a writ of preliminary injunction could only be granted after hearing. The TRO in question, while labeled as such, functionally operated as a preliminary injunction because it commanded a definitive act—the surrender of the factory premises—and was immediately enforced. By issuing this coercive order without affording petitioners the opportunity to be heard and to contest the factual allegations, the SEC Panel deprived them of due process. The Court emphasized that the power to issue injunctive relief must be exercised with caution and always within the bounds of law and procedure. The precipitate issuance, based on an unverified motion and without a hearing, constituted a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction.