G.R. No. L-60036, January 27, 1987
INVESTMENTS, INC., petitioner, vs. COURT OF APPEALS, TOBACCO INDUSTRIES OF THE PHILIPPINES, INC., and THE SHERIFF OF THE CITY OF MANILA, respondents.

FACTS

The case originated from an action for annulment of a chattel mortgage filed by petitioner Investments, Inc. against respondent Tobacco Industries of the Philippines, Inc. (TIP). The Court of Appeals initially issued a preliminary injunction against the foreclosure sale of the mortgaged cigarette-making machines upon petitioner’s posting of a bond. This injunction was later lifted but subsequently reinstated on September 24, 1979, after petitioner increased the bond to P650,000. The Court of Appeals, in its Resolution of December 12, 1979, explicitly stated the injunction would remain effective “until final judgment shall have been rendered in Civil Case No. 116617.” However, due to a clerical error, the entry of judgment reflected an earlier resolution dismissing the petition, omitting the subsequent reinstatement of the injunction. The trial court later rendered a decision on December 19, 1980, dismissing petitioner’s complaint. TIP then moved for execution pending appeal and to lift the injunction. Relying on the erroneous entry of judgment, the Court of Appeals declared the case terminated, leading TIP to proceed with the auction sale on August 24, 1981.

ISSUE

Whether the preliminary injunction issued by the Court of Appeals, which was to subsist “until final judgment shall have been rendered,” terminated upon the trial court’s rendition of a judgment on the merits, notwithstanding the perfection of an appeal therefrom.

RULING

The Supreme Court ruled against the petitioner and upheld the validity of the auction sale. The legal logic centers on the interpretation of the term “final judgment” as used in the Court of Appeals’ injunction order. The Court clarified that in legal parlance, a “final judgment” or “final order” is one that finally disposes of a case, leaving nothing more for the court to do regarding its merits. This is distinct from a judgment that becomes “final and executory,” which occurs after the lapse of the appeal period or upon affirmation by a higher court. The parties’ agreement, as reflected in the appellate court’s resolution, stipulated that the injunction would last only until a “final judgment” was rendered in the main case. The trial court’s decision of December 19, 1980, which dismissed the complaint, constituted precisely such a final judgment because it conclusively adjudicated the rights of the parties. Consequently, the injunction automatically ceased to be effective upon the issuance of that final judgment, regardless of the petitioner’s subsequent appeal. The Court found no indication the parties intended a different, special meaning for the term. Therefore, TIP’s act of proceeding with the foreclosure sale after the trial court’s final judgment was valid, and the Court of Appeals did not err in refusing to annul it. The petition was dismissed.