G.R. Nos. 236577 and 236597, August 15, 2018
PHILIPPINE CHARITY SWEEPSTAKES OFFICE, PETITIONER, VS. HON. MAXIMO M. DE LEON, PRESIDING JUDGE OF THE MAKATI CITY REGIONAL TRIAL COURT, BRANCH 143, AND PHILIPPINE GAMING AND MANAGEMENT CORPORATION, RESPONDENTS.

FACTS

The Philippine Charity Sweepstakes Office (PCSO) and Philippine Gaming and Management Corporation (PGMC) entered into an Equipment Lease Agreement (ELA) in 1995 for online lottery equipment in Luzon. The original term was eight years, but amendments extended it to 2015. In 2011, a Senate Blue Ribbon Committee investigation recommended renegotiating the rental fees. When PGMC declined to reduce its rates, PCSO allowed another provider, Pacific Online, to supply equipment for Luzon operations. PGMC filed a Petition for Indirect Contempt with a prayer for a Writ of Preliminary Injunction before the Regional Trial Court (RTC), arguing PCSO violated its exclusive rights under the ELA. The RTC granted the injunction. Concurrently, the parties submitted their dispute to arbitration. The ICC International Court of Arbitration eventually issued a Final Award, which was confirmed by the RTC, declaring the ELA terminated and dismissing all claims and counterclaims.
Despite the final arbitral award terminating the ELA, PGMC filed a new Application for a Temporary Restraining Order and Preliminary Injunction in 2017 to stop PCSO’s public bidding for a new Nationwide On-line Lottery System (NOLS) project. PGMC claimed a right of first refusal and a continuing right under the terminated ELA. The RTC granted the application, issuing a Writ of Preliminary Injunction that enjoined PCSO from proceeding with the NOLS bidding. PCSO filed the present Petition for Certiorari, assailing the RTC’s orders for having been issued with grave abuse of discretion.

ISSUE

Whether the Regional Trial Court committed grave abuse of discretion in granting PGMC’s application for a Writ of Preliminary Injunction to enjoin PCSO’s NOLS bidding.

RULING

Yes, the RTC committed grave abuse of discretion. The Supreme Court granted the Petition for Certiorari and nullified the assailed RTC orders and the Writ of Preliminary Injunction. The legal logic is anchored on the essential requirement for injunctive relief: the existence of a clear and unmistakable right to be protected. A preliminary injunction is a preservative remedy meant to protect existing rights pending litigation. For it to issue, the applicant must prove a right in esse that is entitled to protection.
In this case, PGMC failed to establish any such existing right. The source of any purported right was the ELA. However, the ICC arbitral tribunal’s Final Award, which had attained finality after being confirmed by the RTC, expressly declared the ELA terminated and dismissed all claims of the parties. This arbitral award extinguished any contractual rights PGMC might have claimed under the ELA, including any alleged right of first refusal or continuing leasehold right. With the contract terminated by final award, PGMC no longer possessed a clear legal right that could be protected by an injunction. The RTC’s act of issuing the injunction, despite the conclusive termination of the very agreement from which PGMC’s rights were supposed to spring, was a capricious and whimsical exercise of judgment amounting to grave abuse of discretion. The injunction effectively restored a dead contract, violating the finality of the arbitral award and causing irreparable injury to PCSO’s governmental function of conducting a public bidding for a vital public service project.