GR 140940; (July, 2006) (Digest)
G.R. No. 140940 . July 21, 2006.
GOTESCO PROPERTIES, INC., petitioner, vs. TERESITA REYES, respondent.
FACTS
Gotesco Properties, Inc. filed a complaint for specific performance and damages against the Carpios concerning a contract to sell parcels of land. Gotesco issued a check for over P24 million as a down payment. The Carpios allegedly failed to clear the property of tenants. Gotesco later amended its complaint to implead Teresita Reyes and UCPB, alleging the check was deposited in a UCPB account under “Isabel Carpio” and then transferred to an account under Teresita’s name. Gotesco sought a preliminary injunction to freeze the funds.
During proceedings, Gotesco and the Carpios filed a joint motion to dismiss based on a compromise, with the Carpios disclaiming any interest in the bank accounts. The trial court initially issued a writ of preliminary injunction freezing Teresita’s account. Subsequently, the trial court dismissed the case against the Carpios but, in the same order, lifted the injunction and directed UCPB to release the funds in Teresita’s account to Gotesco, contingent on Gotesco posting a bond.
ISSUE
Did the trial court commit grave abuse of discretion in lifting the preliminary injunction and ordering the release of the funds from Teresita Reyes’s bank account to Gotesco?
RULING
Yes. The Court of Appeals correctly annulled the trial court’s order. A writ of preliminary injunction is an interlocutory remedy intended to preserve the status quo ante litem and prevent irreparable injury pending final adjudication of the merits. Its purpose is not to transfer possession or control of a disputed property or fund to a party who did not have such possession at the case’s inception. Here, the money was deposited in an account under Teresita Reyes’s name. By ordering the release of these funds to Gotesco, the trial court effectively altered the status quo and adjudicated the ownership of the deposit prematurely, before a full trial on the merits could determine the rightful claimant. The posting of a bond by Gotesco was an insufficient safeguard, as it does not equate to the security of the actual cash deposit. The proper course was to maintain the funds in custodia legis, preserving them in the bank account under the court’s control until a final determination of ownership. The trial court’s order constituted grave abuse of discretion, as it prejudged the case and violated the essential, preservative nature of a preliminary injunction.