GR 44126; (February, 1977) (Digest)
G.R. No. L-44126. February 28, 1977.
MANILA ADJUSTERS & SURVEYORS COMPANY, petitioner, vs. Hon. JUAN BOCAR of the Court of First Instance of Manila, NG YEK KIONG and ERNESTO COKAI, respondents.
FACTS
Petitioner Manila Adjusters & Surveyors Company entered into a contract of sale of fertilizer with Ilocos Sur Facoma, represented by its President Mariano Pintor. To guarantee Facoma’s performance, a letter of credit for P1 million was opened in petitioner’s favor with the Insular Bank of Asia and America. To secure this letter of credit, Pintor arranged with private respondents Ng Yek Kiong and Ernesto Cokai, who bound their properties to the Bank. The arrangement was such that if Facoma defaulted, the P1 million would be forfeited, and Ng and Cokai would answer to the Bank with their properties.
Upon Facoma’s alleged default, petitioner proceeded to claim the proceeds of the letter of credit. In response, private respondents Ng and Cokai filed a complaint with a motion for a preliminary injunction in the Court of First Instance of Manila. They alleged that their agreement to bind their properties to the Bank was procured through Pintor’s fraudulent representations. The respondent judge granted the writ, enjoining the Bank from honoring the letter of credit and petitioner from collecting its proceeds.
ISSUE
Whether the respondent judge acted with grave abuse of discretion in issuing the writ of preliminary injunction to enjoin the petitioner from proceeding against the letter of credit.
RULING
Yes, the issuance of the writ constituted grave abuse of discretion. The legal logic is anchored on the independence of contractual relationships and the requirements for injunctive relief. The complaint revealed no contractual or legal relationship between the petitioner and the private respondents. Petitioner’s contract was solely with Facoma, secured by the letter of credit from the Bank. The separate agreement, allegedly tainted by Pintor’s fraud, was between Facoma/Pintor and the private respondents, who bound themselves to the Bank. No allegation linked petitioner to Pintor’s purported fraud.
Consequently, the complaint failed to state a cause of action against the petitioner. A preliminary injunction under Rules 58 is proper only when the plaintiff is entitled to the relief demanded. Since private respondents’ rights, if any, arose from a separate transaction to which petitioner was not a party, they had no legal basis to enjoin petitioner’s independent right to the letter of credit’s proceeds. Similarly, absent any allegation that the Bank participated in or knew of the fraud, there was no ground to enjoin the Bank from honoring its independent obligation under the letter of credit. The writ was therefore issued without legal foundation. The Supreme Court granted the petition, set aside the order, and dissolved the injunction.