G.R. No. 212143, August 28, 2019
Philippine Charity Sweepstakes Office (PCSO), Chairman of the Board Margarita P. Juico, Members of the Board Ma. Aleta L. Tolentino, Mabel V. Mamba, Francisco G. Joaquin III and Betty B. Nantes, and General Manager Jose Ferdinand M. Rojas II, Petitioners vs. TMA Group of Companies Pty Ltd. (Now Known as TMA Australia Pty Ltd.) and TMA Group Philippines, Inc., Respondents

FACTS

On December 4, 2009, the Philippine Charity Sweepstakes Office (PCSO) and TMA Group of Companies Pty Ltd. (TMA Australia) executed a Contractual Joint Venture Agreement (CJVA). The purpose of the joint venture was to establish and operate the first thermal coating plant in the Philippines for the production and marketing of thermal-coated paper and related products, primarily for export, with a term of fifty (50) years. TMA committed to invest approximately P4.4 billion, while PCSO committed to source all its thermal paper and consumables requirements for its gaming activities from the joint venture for fifty years. Profit sharing was set at 80% for TMA and 20% for PCSO. TMA Australia organized TMA Group Philippines, Inc. (TMA Philippines) as its local subsidiary to implement the project.
On August 20, 2010, the PCSO Board issued Resolution No. A-00024 suspending the implementation of the CJVA pending a review by the Office of the Government Corporate Counsel (OGCC). The PCSO General Manager requested the review, suspecting the agreement was a supply contract disguised as a joint venture. On April 4, 2011, the OGCC issued Opinion No. 079, series of 2011, declaring the CJVA null and void. The OGCC opined that the joint venture’s purpose was beyond PCSO’s primary mandate to hold charity sweepstakes and lotteries. It also found that PCSO’s contribution—a promise to purchase supplies—did not constitute a valid asset contribution under the JV Guidelines and that the agreement was a relatively simulated contract, essentially a supply contract masquerading as a joint venture to avoid public bidding under Republic Act No. 9184.
On April 8, 2011, TMA filed a Complaint for Specific Performance and Injunction (Civil Case No. 11-310) with the Regional Trial Court (RTC) of Makati City, seeking to compel PCSO to implement the CJVA. The RTC, Branch 59, granted TMA’s application for a Temporary Restraining Order and later issued Writs of Preliminary Mandatory and Prohibitory Injunction, ordering PCSO to lift the suspension and cease acts leading to the CJVA’s cancellation. PCSO’s motion to quash the writs was denied. PCSO filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 132655), which was dismissed. PCSO’s subsequent motions for reconsideration were also denied.
Separately, PCSO filed a Motion to Dismiss the main complaint before the RTC, arguing the court lacked jurisdiction because the CJVA was a void contract. The RTC denied this motion. PCSO filed another Petition for Certiorari with the CA (CA-G.R. SP No. 137528), which was also dismissed. The CA held that the issue of the contract’s validity was a prejudicial question that should be resolved in the main proceedings, not via a motion to dismiss.
Later, the case was re-raffled to RTC Branch 66. PCSO filed an Urgent Motion to Resolve the application for a writ of preliminary injunction, arguing that the injunction had become functus officio because the main case was still pending. The RTC denied the motion. PCSO filed a Petition for Certiorari (G.R. No. 236888) with the Supreme Court, challenging this denial.
The Supreme Court consolidated the three petitions: G.R. No. 212143 (challenging the CA’s dismissal of the certiorari petition against the preliminary injunction), G.R. No. 225457 (challenging the CA’s dismissal of the certiorari petition against the denial of the motion to dismiss), and G.R. No. 236888 (challenging the RTC’s denial of the motion to resolve the injunction).

ISSUE

The primary issue is whether the Regional Trial Court committed grave abuse of discretion in issuing and maintaining the Writs of Preliminary Mandatory and Prohibitory Injunction, thereby compelling PCSO to perform under a Contractual Joint Venture Agreement that had been declared null and void by the Office of the Government Corporate Counsel.

RULING

The Supreme Court granted the petitions. The Court ruled that the RTC committed grave abuse of discretion in issuing the Writs of Preliminary Injunction. A writ of preliminary injunction is an extraordinary remedy to preserve the status quo and prevent irreparable injury. For a writ of mandatory injunction to issue, the claimant must prove a clear and unmistakable right to the act demanded. The Court found that TMA failed to establish such a clear right. The OGCC Opinion, which declared the CJVA null and void, created a serious doubt about the validity of TMA’s rights under the agreement. The OGCC opined that the CJVA was ultra vires (beyond PCSO’s corporate powers), that PCSO’s contribution was invalid, and that the contract was a simulated transaction to circumvent public bidding laws. Given this substantial doubt regarding the contract’s validity, TMA’s right to specific performance was not clear and unmistakable. Therefore, the RTC should not have issued the preliminary mandatory injunction to enforce the agreement.
Furthermore, the Court emphasized that a preliminary injunction should not be used to pre-judge the main case or deliver the entirety of the relief sought. By ordering PCSO to implement the CJVA through the injunction, the RTC effectively decided the main action for specific performance prematurely. The Supreme Court made permanent the temporary restraining order it had earlier issued, effectively nullifying the RTC’s orders granting the preliminary injunctions. The case was remanded to the RTC for further proceedings on the main action for specific performance, where the issue of the CJVA’s validity should be thoroughly resolved.