GR 171336; (October, 2007) (Digest)
G.R. No. 171336 October 4, 2007
POLYSTYRENE MANUFACTURING COMPANY, INC., petitioner, vs. PRIVATIZATION AND MANAGEMENT OFFICE, respondent.
FACTS
Petitioner Polystyrene Manufacturing Company, Inc. (PMCI) obtained a loan guaranteed by the Development Bank of the Philippines (DBP), secured by a mortgage on its plant. Following a fire, DBP collected insurance proceeds but found them insufficient to cover PMCI’s obligations. DBP initiated extrajudicial foreclosure under Presidential Decree No. 385. PMCI filed a suit for injunction in the Regional Trial Court (RTC), claiming its obligation had been overpaid. The RTC issued a preliminary injunction. DBP’s certiorari petition to the Court of Appeals (CA) led to the injunction being set aside. PMCI appealed to the Supreme Court in G.R. No. 77631.
In its 1999 Decision, the Supreme Court annulled the CA’s ruling and directed the RTC to conduct a new hearing specifically in accordance with the procedure under P.D. No. 385 to determine the propriety of a preliminary injunction, before proceeding to trial. The case was archived during the appeal. After the decision became final, DBP (whose interests were later assumed by the Privatization and Management Office or PMO) moved to dismiss the case for failure to prosecute. The RTC denied the dismissal but reinstated the case and proceeded to pre-trial and trial on the merits without first conducting the mandated P.D. No. 385 hearing.
ISSUE
Whether the trial court committed reversible error by proceeding to trial on the merits without first conducting the hearing mandated by the Supreme Court’s final and executory Decision in G.R. No. 77631.
RULING
Yes. The Supreme Court reversed the CA and remanded the case to the trial court for compliance. The Court’s 1999 Decision in G.R. No. 77631 was a final judgment that specifically directed the RTC to conduct a hearing under Section 2 of P.D. No. 385 as a precondition to determining the propriety of injunctive relief. This directive was not a mere suggestion but a binding order that defined the subsequent course of proceedings. By proceeding directly to pre-trial and trial without first holding this required hearing, the RTC effectively ignored a mandatory procedural step established by the Supreme Court’s final ruling.
The legal logic is grounded in the doctrine of immutability of final judgments and the hierarchical nature of judicial directives. A final decision of the Supreme Court constitutes the law of the case and is binding on all inferior courts. The trial court had no discretion to deviate from or modify this clear directive. Its duty was purely ministerial: to execute the order by holding the specified hearing. Its failure to do so was a patent disregard of a lawful order, which not only warranted reversal but could also subject the presiding judge to administrative sanction. Jurisdiction over the subject matter is conferred by law, and the trial court could not unilaterally alter the procedural path laid down by the Supreme Court’s final judgment.