G.R. No. 165849, 170185, 170186, 171066, 176650; December 10, 2007
Gilbert G. Guy, et al., Petitioners, vs. The Court of Appeals, Northern Islands Co., Incorporated, et al., Respondents.

FACTS

The consolidated cases originated from a family dispute over the ownership and control of 20,160 shares of Northern Islands Co., Inc., a family corporation. The shares, originally held by Lincoln Continental Development Co., Inc. (a holding company created in trust for the daughters), were represented by stock certificates endorsed in blank and delivered to the mother, Simny Guy. Due to concerns over son Gilbert Guy’s unauthorized disposal of corporate assets, Simny surrendered the certificates to a corporate officer, leading to the shares being registered in the names of her daughters. This allowed the daughters to assume management roles, electing Simny as President and ousting Gilbert from control. Lincoln Continental and Gilbert subsequently filed a complaint for annulment of the share transfer and sought injunctive relief to restore management to Gilbert.
During proceedings, the trial court granted a motion for inhibition and re-raffled the case. It later issued a Temporary Restraining Order (TRO) directing the restoration of shares to Gilbert and set hearings for a preliminary injunction. Respondents challenged the trial court’s orders via a petition for certiorari in the Court of Appeals, which issued its own TRO to halt the trial court’s proceedings. The trial court, however, proceeded with the injunction hearings despite the appellate court’s TRO, prompting supplemental petitions. The Court of Appeals eventually granted the petitions, annulling the trial court’s orders for having been issued with grave abuse of discretion.

ISSUE

The core issue is whether the Court of Appeals correctly annulled the trial court’s orders for grave abuse of discretion, particularly in proceeding with the case despite the appellate court’s TRO.

RULING

The Supreme Court affirmed the Court of Appeals’ decision. The trial court committed grave abuse of discretion when it proceeded with the hearing and issuance of the writ of preliminary injunction despite the Court of Appeals’ TRO enjoining it from doing so. A TRO issued by a superior court is a legal command that must be respected; defiance of such an order constitutes a clear disregard of the judicial hierarchy and the injunctive power of the appellate court. The trial court’s actions effectively nullified the appellate court’s authority to review the propriety of its earlier orders.
Furthermore, the Supreme Court found the trial court’s grant of the preliminary mandatory injunction improper. A mandatory injunction, which commands the performance of an act, is granted only in clear cases of right, where the complainant’s right is indisputable and the invasion is material and substantial. The ownership of the shares was hotly contested, rooted in complex intra-family arrangements and allegations of unauthorized transfers. Thus, Gilbert and Lincoln Continental failed to establish a clear and unmistakable right to the shares or to corporate control, making the issuance of the writ a patent error. The trial court’s precipitate actions warranted correction by certiorari.