G.R. No. 135074 January 29, 1999
REPUBLIC TELECOMMUNICATIONS HOLDINGS, INC., represented by A2 TELECOMMUNICATIONS INTERNATIONAL HOLDING CO. PTE. LTD., and BEAUTY FORTUNE INVESTMENTS LTD., HON. ROSITA R. GUERRERO, HON. MANOLITO S. SOLLER, and HON. PAULINO Q. GALLEGOS in their capacity as members of the Securities, Investigation and Clearing Department of the Securities and Exchange Commission, petitioners, vs. COURT OF APPEALS, JOSE L. SANTIAGO, MARILYN E. SANTIAGO, JAMES B. LINDENBERG, CAESAR U. QUERUBIN, HYUNG SHIK KIM, INHO LEE, PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION and PHILIPPINE WIRELESS, INC., respondents.

FACTS

Petitioner Republic Telecommunications Holdings, Inc. (Retelcom) filed a derivative suit with the Securities, Investigation and Clearing Department (SICD) of the Securities and Exchange Commission (SEC) seeking the nullification of certain board resolutions (Nos. 98-13, 98-14, and 98-15) and praying for a temporary restraining order (TRO) and/or writ of preliminary injunction. The SICD granted a 72-hour TRO, later extended for 17 days, and subsequently issued a writ of preliminary injunction. Private respondents filed petitions for certiorari before the SEC En Banc seeking to dissolve the injunction and dismiss the SICD petition, but these were dismissed. Private respondents then elevated the matter to the Court of Appeals via a Petition for Review, which also prayed for a TRO to restrain the enforcement of the SICD’s writ. After a hearing, the Court of Appeals issued the assailed Resolution dated August 27, 1998. Petitioner Retelcom filed the instant Petition for Certiorari and Prohibition before the Supreme Court, arguing that the Court of Appeals committed grave abuse of discretion in issuing its resolution, primarily because the TRO had no basis and would alter, not preserve, the status quo.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in issuing its Resolution dated August 27, 1998, which effectively granted a temporary restraining order against the writ of preliminary injunction issued by the SICD.

RULING

Yes, the Supreme Court granted the petition, set aside the Resolution of the Court of Appeals, and directed the SICD to resolve the main case with dispatch. The Court held that the temporary restraining order issued by the Court of Appeals had no basis. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, and uncontested status preceding the controversy. The SEC En Banc had found that the SICD’s writ was issued precisely to preserve the status quo before the case was filed—that is, prior to the finalization of negotiations and agreements with Qualcomm. This finding was not questioned by private respondents in their petition before the Court of Appeals. By issuing its resolution, the Court of Appeals would allow private respondents to implement the assailed board resolutions and sign the agreements, thereby disturbing, not preserving, the status quo ante. Furthermore, private respondents failed to show a clear positive right warranting the TRO. In contrast, petitioner Retelcom established a prima facie case of bad faith in the negotiations, justifying the SICD’s injunctive relief to prevent irreparable damage and to ensure that a favorable judgment would not be rendered moot. The Supreme Court affirmed the validity of the SEC En Banc’s resolution supporting the writ of preliminary injunction.