G.R. No. L-48304 September 11, 1985
PHILIPPINE PORTS AUTHORITY, petitioner, vs. HON. RAFAEL L. MENDOZA, in his capacity as Presiding Judge of the Court of First Instance of Cebu, Branch VI, et al., respondents.

FACTS

The Philippine Ports Authority (PPA) petitioned for certiorari and prohibition against the respondent judge and eighteen private arrastre operators. The PPA assailed the judge’s order issuing a writ of preliminary injunction in Civil Case No. R-16289. The injunction prohibited the PPA from enforcing its policy of integrating arrastre and stevedoring operations at the Port of Cebu and directed the PPA to allow the private respondents to operate individually. The PPA’s integration policy, aimed at curbing the disarray and “cabo system” prevalent before martial law, sought to consolidate multiple operators into a single entity, United South Dockhandlers, Inc. (USDI), for efficiency and security.
The respondent judge justified the injunction by preliminarily finding that P.D. No. 857 did not authorize a compulsory merger as a condition for a permit and that the PPA’s power to provide services was not exclusionary. The judge later allowed two additional arrastre services to intervene and enjoy the injunction’s benefits without a hearing. The private respondents had initially joined USDI under the integration policy but later seceded, applying for separate permits due to alleged unmet commitments from USDI’s controlling interests, framing the core dispute as between the operators and USDI’s management, not the PPA’s policy itself.

ISSUE

Whether the respondent judge committed a grave abuse of discretion in issuing the writ of preliminary injunction against the PPA’s integration policy.

RULING

Yes, the Supreme Court found grave abuse of discretion. The issuance of a preliminary injunction is discretionary, but such discretion must be exercised soundly and cannot be used to defeat the law’s objectives. The PPA, under its charter (P.D. No. 857), possesses the regulatory authority to supervise and control arrastre operations, which includes implementing an integration policy to rectify pre-martial law port disarray characterized by violence and theft. The status quo preceding the controversy was a period where the private respondents operated under the integrated framework of USDI, not as independent permit holders. The injunction did not preserve this actual status quo but reverted to the burdensome, pre-integration multiplicity of operators.
Furthermore, by allowing additional intervenors without a hearing, the judge effectively arrogated the PPA’s exclusive power to determine qualified operators. The Court held that the judge’s orders, which would permit up to twenty individual operators alongside USDI, directly undermined the PPA’s lawful policy and regulatory mandate. Consequently, the orders were reversed and set aside, and the Court’s temporary restraining order was made permanent, thereby upholding the PPA’s authority to enforce its integration policy in the Port of Cebu.