G.R. No. L-4036 April 13, 1951
CHESTER R. CLARKE, petitioner, vs. PHILIPPINE READY MIX CONCRETE CO., INC.; MOISES C. ANGELES, in his capacity as acting secretary of Philippine Ready Mix Concrete Co., Inc., and AGUSTIN P. MONTESA, in his capacity as Judge of the Court of First Instance of Manila, respondents.

FACTS

Petitioner Chester R. Clarke subscribed to 475,000 shares of stock in respondent Philippine Ready Mix Concrete Co., Inc., with a total par value of P475,000, of which he had paid P124,000. The company’s Board of Directors passed a resolution declaring all unpaid subscriptions due and payable, and further declaring that shares not fully paid would be considered delinquent and sold at public auction. To prevent the sale of his shares and to have them declared fully paid, Clarke filed a complaint (Civil Case No. 11814) in the Court of First Instance of Manila. He alleged that the respondent company was indebted to Clarke Halawa Rock Co., Ltd., a Hawaiian corporation, in the amount of P346,632.98 for machinery and shipping expenses, that this debt had been assigned to him, and that compensation had taken place, extinguishing his obligation to pay the balance of his subscription. He sought a writ of preliminary injunction to stop the auction. The trial court granted the writ after a hearing and upon Clarke posting a bond. However, about an hour later, upon an ex parte motion by the respondent company and the filing of a counter-bond, the respondent Judge dissolved the injunction. Clarke’s motion for reconsideration was denied. Subsequently, the respondent company sold Clarke’s shares at auction to itself. Clarke then filed this petition for certiorari, alleging the respondent Judge acted with grave abuse of discretion in dissolving the injunction ex parte and that he had no plain, speedy, and adequate remedy.

ISSUE

1. May a writ of preliminary injunction granted after a hearing be dissolved upon an ex parte application by the defendant?
2. May such a writ, where the injunctive relief is the principal remedy sought, be dissolved ex parte without a trial on the merits?

RULING

The Supreme Court DENIED the petition for certiorari.
1. On the first issue, the Court ruled that a writ of preliminary injunction, being an interlocutory order, remains under the control of the court before final judgment. Citing prior cases (Caluya vs. Ramos, Cine Ligaya vs. CFI of Laguna, Jaramillo vs. Jacinto, Su Chu and Limpangco vs. Nepomucemo), the Court held that a court may dissolve an injunction previously issued, even if done without prior notice or hearing to the adverse party. Such failure is a mere irregularity that does not affect the court’s jurisdiction. Any error committed in the dissolution is correctible by appeal, not by certiorari.
2. On the second issue, the Court noted that where the injunction is the principal relief demanded (as it was here, to permanently stop the sale and declare the shares paid), it should be granted only upon a clear establishment of the right sought to be protected and that the acts complained of violate that right. The Court found it was not in a position to determine the trial court’s reasons for dissolution but suggested it was likely not convinced of the existence of Clarke’s claimed right. The evidence for the alleged assignment of the debt from the Hawaiian corporation to Clarke was deemed insufficient, resting only on a cablegram instructing a demand for payment. The Court concluded that the trial court’s action did not constitute a lack or excess of jurisdiction or grave abuse of discretion. The proper remedy for any error was appeal.