FIRST DIVISION

[G.R. No. 168639. January 29, 2007.]

ALDERITO Z. YUJUICO, BONIFACIO C. SUMBILLA, and DOLNEY S.

SUMBILLA , petitioners, vs . CEZAR T. QUIAMBAO, JOSE M. MAGNO III,
MA. CHRISTINA F. FERREROS, ANTHONY K. QUIAMBAO, SIMPLICIO
T. QUIAMBAO, JR., ERIC C. PILAPIL, ALBERT M. RASALAN, and
REGIONAL TRIAL COURT, BRANCH 48, URDANETA CITY , respondents.

DECISION

SANDOVAL-GUTIERREZ , J : p

Before us for resolution is the Petition for Review on Certiorari 1 challenging the
Decision dated March 31, 2005 rendered by the Court of Appeals in CA-G.R. SP No.
87785, as well as its Resolution dated June 29, 2006.
The facts are:
Strategic Alliance Development Corporation (STRADEC) is a domestic
corporation engaged in the business of providing nancial and investment advisory
services and investing in projects through consortium or joint venture information. 2
From its inception, STRADEC's principal place of business was located at the 24th
Floor, One Magni cent Mile-Citra Building, San Miguel Avenue, Ortigas Center, Pasig
City. On July 27, 1998, the Securities and Exchange Commission (SEC) approved the
amendment of STRADEC's Articles of Incorporation authorizing the change of its
principal office from Pasig City to Bayambang, Pangasinan. 3
On March 1, 2004, STRADEC held its annual stockholders' meeting in its Pasig
City o ce as indicated in the notices sent to the stockholders. 4 At the said meeting,
the following were elected members of the Board of Directors: Alderito Z. Yujuico,
Bonifacio C. Sumbilla, Dolney S. Sumbilla (petitioners herein ), Cesar T. Quiambao,
Jose M. Magno III and Ma. Christina Ferreros (respondents herein ). Petitioners
Alderito Yujuico was elected Chairman and President, while Bonifacio Sumbilla was
elected Treasurer. All of them then discharged the duties of their office.
After ve (5) months , or on August 16, 2004, respondents led with the
Regional Trial Court (RTC), San Carlos City, Pangasinan a Complaint against STRADEC
(represented by herein petitioners as members of its Board of Directors), docketed as
Civil Case No. SCC-2874 and ra ed off to Branch 56. The complaint prays that: (1) the
March 1, 2004 election be nulli ed on the ground of improper venue , pursuant to
Section 51 of the Corporation Code; (2) all ensuing transactions conducted by the
elected directors be likewise nulli ed; and (3) a special stockholders' meeting be held
anew.
Subsequently, respondents led an Amended Complaint dated September 2,
2004 further praying for the issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction to enjoin petitioners from discharging their functions as
directors and o cers of STRADEC. On September 22, 2004, they led a Supplemental
Complaint praying that the court (1) direct Export Industry Bank, Cezar T. Quiambao
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 and Bonifacio G. Sumbilla to surrender to them the original and reconstituted Stock and
Transfer Book and other corporate documents of STRADEC; and (2) nullify the
reconstituted Stock and Transfer Book and all transactions of the corporation. Both
pleadings were admitted by the trial court. TDCAHE

As the controversy involves an intra-corporate dispute, the trial court, on October

4, 2004, issued an Order transferring Civil Case No. SCC-2874 to RTC, Branch 48,
Urdaneta City, being a designated Special Commercial Court. 5 The case was then re-
docketed as Civil (SEC) Case No. U-14.
Since Branch 48 of RTC, Urdaneta City had no presiding judge then, Judge
Meliton G. Emuslan acted as pairing judge of that branch to take cognizance of the
cases therein until the appointment and assumption to duty of a regular judge. 6
On November 2, 2004, petitioners led their Answer with Counterclaim 7 in Civil
(SEC) Case No. U-14. They prayed for the dismissal of the complaint on the following
grounds, among others: (a) the complaint does not state a cause of action ; (b) the
action is barred by prescription for it was led beyond the 15-day prescriptive
period provided by Section 2, Rule 6 of the Interim Rules and Procedure Governing
Intra-Corporate Controversies under Republic Act (R.A.) No. 8799; (c) respondents'
prayer that a special stockholders' meeting be held in Bayambang, Pangasinan "is
premature pending the establishment of a principal o ce of STRADEC in said
municipality;" and (d) respondents waived their right to object to the venue as they
attended and participated in the said March 1, 2004 meeting and election without any
protest . " 8 Petitioners likewise opposed the application for a writ of preliminary
injunction as respondents have no right that was violated, hence, are not entitled to be
protected by law. They further prayed for damages by way of counterclaim.
Meanwhile, Judge Aurelio R. Ralar, Jr. was appointed presiding judge of RTC,
Branch 48, Urdaneta City. Signi cantly, on November 9, 2004, he took his oath of
office before Associate Justice Diosdado M. Peralta of the Sandiganbayan, and on
November 12, 2004, he assumed his duties . 9 Subsequently, or on November 25,
2004 , pairing Judge Meliton Emuslan still issued an Order 1 0 granting respondents'
application for preliminary injunction ordering (1) the holding of a special
stockholders' meeting of STRADEC on December 10, 2004 "in the principal
o ce of the corporation in Bayambang, Pangasinan;" and (2) the turn-over by
petitioner Bonifacio Sumbilla to the court of the duplicate key of the safety
deposit box in Export Industry Bank, Shaw Boulevard, Pasig City where the
original Stock and Transfer Book of STRADEC was deposited . The pertinent
portions of the Order read:
ORDER

This resolves the application of plaintiffs for the issuance of writ of

preliminary prohibitory injunction.

During the hearing on the application for Temporary Restraining

Order/Injunction on October 20, 2004, plaintiffs presented as witnesses: Cezar T.
Quiambao, Jose M. Magno III and Eric Gene Pilapil who testi ed in support of the
material averments of the plaintiffs in their Amended Complaint and
Supplemental Complaint. Speci cally, plaintiff Quiambao testi ed, among other
things, on the fact of the unlawful denial by defendant Yujuico of his request for
the holding of a special stockholders' meeting, the location of the principal place
of o ce of the corporation, the deposit by him and defendant Sumbilla of the
Stock and Transfer Book of the corporation in the Export Industry Bank in Pasig
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 City, the illegal and unjusti ed reconstitution of said stock and transfer book, and
the damages which he and the corporation sustained as a result of defendants'
unlawful acts including the unauthorized sale of corporate shares of stock.

Plaintiff Magno III testi ed that he did not attend the Annual Stockholders'
meeting held last March 1, 2004 and that he did not authorize anybody to appear
for and in his behalf.

Lastly, witness Pilapil testi ed on the principal place of business of

defendant corporation, the holding of the Annual Stockholders' Meeting in a place
outside the principal place of business of the corporation, and the fact that two
(2) other stockholders, namely, Jose Magno III and Angel Umali were neither
present nor represented in said meeting, contrary to what was alleged in
defendants' Answer with Counterclaim (see par. 50, Answer with Counterclaim).

xxx xxx xxx

After a careful evaluation of the records and all the pleadings extant in this
case as well as the testimonies of the witnesses for the plaintiffs, this court is
inclined to grant the plaintiffs' application for the writs of preliminary prohibitory
injunction in order to restrain the defendants from acting as o cers of the
corporation and committing further acts inimical to the corporation and to the rest
of the stockholders thereof. It is also evident from the pleadings that defendants
would not yield to the demand of plaintiffs for the maintenance of the status quo
until after the resolution of the merits of the instant controversy.

xxx xxx xxx

The effect of the issuance of this Order would create a hiatus in the action
of the board of directors of STRADEC, pending the determination of the merits of
the case and after trial on the merits.

It would thus be for the best interest of the corporation as well as its
stockholders that an election be undertaken of the members of the board and
o cers pursuant to STRADEC'S Articles of the corporation (sic) and the
Corporation Code of the Philippines, under the supervision of the court.
This is to avoid discontinuity of the operations of the corporation, which
may result to its damage and prejudice.
WHEREFORE, premises considered, let the Writ of Preliminary Injunction
issue, upon posting of the requisite bond in the amount of Five Hundred
Thousand Pesos (P500,000.00) to answer for whatever damages that the
defendants would suffer on account of the issuance of the injunction writ,
restraining defendants from acting as o cers of the Corporation and committing
further acts inimical to the corporation.

It is likewise ordered that a special stockholders' meeting in the principal

place of o ce of the corporation in Bayambang, Pangasinan on
December 10, 2004 be held. The Branch Clerk of this court shall attend the said
meeting to observe the proceedings and report his observations to this court. For
this purpose, the defendant Bonifacio Sumbilla is ordered to surrender to the
court, not later than December 3, 2004, the duplicate key given to him by Export
Industry Bank, Shaw Blvd., Pasig City, of the safety deposit box where he and
plaintiff Cezar T. Quiambao deposited the Original Stock and Transfer Book of
STRADEC which shall be the basis in the determination of the corporate
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 stockholding during the meeting scheduled on the above-mentioned date.
SO ORDERED.

In compliance with the above Order, the court sheriff (and respondent Cezar
Quiambao, as claimed by petitioners) caused the opening of the safety deposit box of
STRADEC in the Export Industry Bank, Shaw Boulevard Branch, Pasig City and took
custody of its contents.
On December 10, 2004, petitioners, claiming that a motion for reconsideration is
a prohibited pleading under Section 8 (3), Rule 1 of the Interim Rules of Procedure
Governing Intra-Corporate Controversies under R.A. No. 8799, led with the Court of
Appeals a Petition for Certiorari with Prayer for the Issuance of a TRO and/or
Preliminary Injunction, 1 1 assailing Judge Emuslan's November 25, 2004 Order. The
petition was docketed as CA-G.R. SP No. 87785. In the proceedings before the
appellate court, petitioners raised the following issues:
A. Only the SEC, not the RTC, has jurisdiction to order the holding of a
special stockholders' meeting involving an intra-corporate controversy;
B. Judge Meliton Emuslan had no authority to issue the assailed Order
dated November 25, 2004 as Judge Aurelio Ralar, Jr. was already the presiding
judge of RTC, Branch 48, Urdaneta City; 1 2 and
C. Assuming Judge Emuslan had authority to issue the assailed Order,
he nonetheless acted with grave abuse of discretion amounting to lack or excess
of jurisdiction.

Meanwhile, on the same day (December 10), as directed in the November 25,
2004 Order of Judge Emuslan, a special stockholders' meeting of STRADEC was held in
Bayambang, Pangasinan wherein a new set of directors were elected for the term
2004-2005, namely: Cezar T. Quiambao, Anthony K. Quiambao, and Simplicio T.
Quiambao, Jr. Immediately thereafter, the new directors elected the following o cers:
Cezar T. Quiambao as Chairman and President; Eric C. Pilapil as Corporate Secretary;
Anthony K. Quiambao as Corporate Treasurer; and Albert M. Rasalan as Assistant
Corporate Secretary. TSADaI

On March 31, 2005, the Court of Appeals rendered a Decision 1 3 in CA-G.R. SP No.
87785, dismissing the Petition for Certiorari. It upheld the jurisdiction of the RTC over
the controversy and sustained the validity of Judge Emuslan's Order of November 25,
2004. Petitioners' motion for reconsideration was denied in a Resolution dated June 29,
2005. 1 4
Hence, the instant Petition for Review on Certiorari.
FIRST , petitioners contend that the Court of Appeals erred in ruling that the RTC
has the power to call a special stockholders' meeting involving an intra-corporate
controversy. They maintain that it is only the SEC that may do so to be held under its
supervision.
The respondents, in their comment, counter that the appellate court correctly
ruled that the power to hear and decide controversies involving intra-corporate
disputes, as well as to act on matters incidental and necessary thereto , have
been transferred from the SEC to the RTCs designated as Special Commercial Courts.
It would be the height of absurdity, they argue, to require the ling of a separate case
with the SEC for the sole purpose of asking the said agency to order the holding of a
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 special stockholders' meeting where there is already a pending case involving the same
matter before the proper court.
We agree with respondents.
An intra-corporate controversy is one which "pertains to any of the following
relationships: (1) between the corporation, partnership or association and the public;
(2) between the corporation, partnership or association and the State in so far as its
franchise, permit or license to operate is concerned; (3) between the corporation,
partnership or association and its stockholders, partners, members or o cers; and (4)
among the stockholders, partners or associates themselves ." 1 5 There is thus
no dispute that respondents' complaint in Civil (SEC) Case No. U-14 before the RTC,
Branch 48, Urdaneta City involves an intra-corporate controversy, the contending
parties being stockholders and officers of a corporation.
Originally, Section 5 of Presidential Decree (P.D.) No. 902-A bestowed the SEC
original and exclusive jurisdiction over cases involving the following:
(a) Devices or schemes employed by, or any act of, the board of
directors, business associates, its o cers or partners, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or of
the stockholders, partners, or members of associations registered with the
Commission;

(b) Controversies arising out of intra-corporate or partnership

relations, between and among stockholders, members or associates;
between any or all of them and the corporation , partnership or association
and the State insofar as it concerns their individual franchise or right as such
entity;
(c) Controversies in the election or appointment of directors ,
trustees, officers or managers of such corporations , partnership or
associations;
(d) Petitioners of corporations, partnerships or associations to be
declared in the state of suspension of payment in cases where the corporation,
partnership or association possesses su cient property to cover all its debts but
foresees the impossibility of meeting them when they fall due or in cases where
the corporation, partnership or association has no su cient assets to cover its
liabilities but is under the management of a rehabilitation receiver or
management committee created pursuant to this Decree. 1 6 (Underscoring
supplied)

Upon the enactment of R.A. No. 8799, otherwise known as "The Securities
Regulation Code" which took effect on August 8, 2000, 1 7 the jurisdiction of the SEC
over intra-corporate controversies and other cases enumerated in Section 5 of P.D. No.
902-A has been transferred to the courts of general jurisdiction, or the appropriate
RTC. Section 5.2 of R.A. No. 8799 provides:
5.2. The Commission's jurisdiction over all cases enumerated in
Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts
of general jurisdiction or the appropriate Regional Trial Court , Provided,
That the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over these cases.
The Commission shall retain jurisdiction over pending cases involving intra-
corporate disputes submitted for nal resolution which should be resolved within
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 one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases led as of
30 June 2000 until finally disposed. (Underscoring supplied)

Pursuant to R.A. No. 8799, the Court issued a Resolution dated November 21,
2000 in A.M. No. 00-11-03-SC designating certain branches of the RTC to try and
decide cases enumerated in Section 5 of P.D. No. 902-A. Branch 48 of RTC, Urdaneta
City, the court a quo, is among those designated as a Special Commercial Court. On
March 13, 2001, the Court approved the Interim Rules of Procedure Governing Intra-
Corporate Controversies under R.A. No. 8799 which took effect on April 1, 2001. 1 8
Sections 1 and 2, Rule 6 of the said Rules provide:
SEC. 1. Cases covered. — The provisions of this rule shall apply to
election contests in stock and non-stock corporations.
SEC. 2. De nition. — An election contest refers to any controversy
or dispute involving title or claim to any elective o ce in a stock or non-stock
corporation, the validation of proxies, the manner and validity of elections ,
and the qualifications of candidates, including the proclamation of winners, to the
o ce of director, trustee or other o cer directly elected by the stockholders in a
close corporation or by members of a non-stock corporation where the articles of
incorporation or by-laws so provide. (Underscoring supplied)

In Morato v. Court of Appeals , 1 9 we held that pursuant to R.A. No. 8799 and the
Interim Rules of Procedure Governing Intra-Corporate Controversies, "among the
powers and functions of the SEC which were transferred to the RTC include the
following: (a) jurisdiction and supervision over all corporations, partnerships or
associations which are the grantees of primary franchises and/or a license or permit
issued by the Government; (b) the approval, rejection, suspension, revocation or
requirement for registration statements, and registration and licensing applications; (c)
the regulation, investigation, or supervision of the activities of persons to ensure
compliance; (d) the supervision, monitoring, suspension or take over the activities of
exchanges, clearing agencies, and other SROs; (e) the imposition of sanctions for the
violation of laws and the rules, regulations and orders issued pursuant thereto; (f) the
issuance of cease-and-desist orders to prevent fraud or injury to the investing public;
( g ) the compulsion of the o cers of any registered corporation or
association to call meetings of stockholders or members thereof under its
supervision ; and (h) the exercise of such other powers as may be provided by law as
well as those which may be implied from, or which are necessary or
incidental to the carrying out of, the express powers granted the Commission
to achieve the objectives and purposes of these laws ."
Clearly, the RTC has the power to hear and decide the intra-corporate controversy
of the parties herein. Concomitant to said power is the authority to issue orders
necessary or incidental to the carrying out of the powers expressly granted
to it . Thus, the RTC may, in appropriate cases , order the holding of a special meeting
of stockholders or members of a corporation involving an intra-corporate dispute
under its supervision.
SECOND , petitioners assert that Judge Emuslan did not have the authority to
issue the assailed Order of November 25, 2004 upon the appointment and assumption
on "November 2, 2004" (should be November 12 ) by Judge Aurelio R. Ralar, Jr. as the
regular presiding judge of RTC, Branch 48, Urdaneta City.

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 Signi cantly, respondents never refuted petitioners' assertion . The Court
of Appeals, for its part, dismissed petitioners' allegation by merely ruling that "this is
the rst time they are raising this issue — which is much too late in the day. In any event,
one cannot question the authority of the court when it does not suit him and accepts
such authority when it favors him." 2 0 The ruling suggests that petitioners are barred by
laches and/or estoppel from raising that issue. The appellate court likewise denied
petitioners' motion to set the case for oral arguments.
The Court of Appeals should have resolved the issue of whether Judge Emuslan
had the authority to issue the assailed Order, a jurisdictional question crucial to the
resolution of the petition. It is elementary that a jurisdictional controversy may be
raised at any time. 2 1
Indeed, as early as November 12, 2004 , Judge Aurelio Ralar, Jr. assumed his
duties as presiding judge of RTC, Branch 48, Urdaneta City. Evidently, Judge Emuslan's
authority, as pairing judge of Branch 48, to act on Civil (SEC) Case No. U-14
automatically ceased on that date . Therefore, he no longer had the authority to
issue the Order of November 25, 2004, or thirteen (13) days after Judge Ralar, Jr. had
assumed o ce. This is clear from this Court's Circular No. 19-98 dated February 18,
1998 which mandates:
TO : ALL JUDGES OF THE REGIONAL TRIAL COURTS, METROPOLITAN
TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL
COURTS, AND MUNICIPAL CIRCUIT TRIAL COURTS
SUBJECT : EXPANDED AUTHORITY OF PAIRING COURTS
In the interest of e cient administration of justice, the authority of the
pairing judge under Circular No. 7 dated September 23, 1974 (Pairing System for
Multiple Sala Stations) to act on incidental or interlocutory matters and those
urgent matters requiring immediate action on cases pertaining to the paired court
shall henceforth be expanded to include all other matters. Thus, whenever a
vacancy occurs by reason of resignation, dismissal, suspension, retirement, death,
or prolonged absence of the presiding judge in a multi-sala station, the judge of
the paired court shall take cognizance of all cases thereat as acting
judge therein UNTIL the APPOINTMENT and ASSUMPTION TO DUTY OF
THE REGULAR JUDGE or the designation of an acting presiding judge or the
return of the regular incumbent judge, or until further orders from this Court.
For this purpose, the provisions of Circular No. 7, dated September 23,
1974, inconsistent with this Circular are hereby amended.
xxx xxx xxx (Underscoring supplied)

Thus, although the RTC, Branch 48, Urdaneta City is clothed with power to take
cognizance of Civil (SEC) Case No. U-14, the exercise of such power is entirely a
different matter. Verily, in Tolentino v. Leviste , 2 2 this Court, speaking through Justice
(now Chief Justice) Reynato S. Puno, held:
. . . . Jurisdiction is not the same as the exercise of jurisdiction . As
distinguished from the exercise of jurisdiction, jurisdiction is the authority to
decide a cause, not the decision rendered therein. Where there is jurisdiction over
the person and the subject matter, the decision on all other questions arising in
the case is but an exercise of the jurisdiction . . . . . (Underscoring supplied)

There are instances where a judge may commit errors. He may issue an order
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 without authority. And if clothed with power, he may exercise it in excess of his
authority or with grave abuse of discretion amounting to lack or excess of
jurisdiction. Any of these acts may be struck down as a nullity through a petition for
certiorari, 2 3 as what petitioners did before the Court of Appeals. It bears stressing that
any act or order rendered by a judge without authority , such as the questioned
November 25, 2004 Order, is no order at all. It is void. As such, it cannot be the source
of any right nor the creator of any obligation. All acts performed pursuant to it and all
claims emanating from it have no legal force and effect. 2 4
THIRD , petitioners further contend that even if Judge Emuslan had the authority
to issue the challenged Order, still he issued it with grave abuse of discretion
amounting to lack or excess of jurisdiction. They lament that the Order effectively
disposed of the merits of the main case [Civil (SEC) Case No. U-14].
Unfortunately, despite the signi cance of this issue, the Court of Appeals totally
ignored it by failing to render a ruling thereon. Respondents, for their part, merely aver
that Judge Emuslan "only had the best interest of STRADEC in mind" when he issued the
questioned Order. 2 5
We find for petitioners.
The duty of the court taking cognizance of an application for a writ of preliminary
injunction is to determine whether the requisites necessary for the grant of such writ
are present. The requisites for the issuance of a writ of preliminary injunction are: (1)
the applicant for such writ must show that he has a clear and unmistakable right
that must be protected; and (2) there exists an urgent and paramount necessity for
the writ to prevent serious damage. 2 6
In this case, Judge Emuslan's November 25, 2004 Order, quoted earlier, is hazy
and too unsubstantial to justify the issuance of a writ of preliminary injunction. The
Order does not contain speci c ndings of fact and conclusion of law showing that the
requirements for the grant of the injunctive writ are present. It merely mentions the
names of witnesses presented by respondents during the hearing on the application for
the issuance of the writ, but there is no speci c and substantial narration of the
witnesses' testimonies to establish the existence of a clear and unmistakable
right on their part that must be protected, as well as the serious damage or
irreparable loss that they would suffer if the writ is not granted . It does not
also disclose the speci c evidence formally offered by the applicants. Obviously, the
basis of the judge's conclusion is too uncertain. Thus, in issuing the questioned
November 25, 2004 Order granting a writ of preliminary injunction, he committed grave
abuse of discretion. In Manila International Airport Authority v. Court of Appeals , 2 7 we
held:
In the instant case, however, the trial court's order of January 20, 1993 was,
on its face, bereft of basis for the issuance of a writ of preliminary injunction.
There were no ndings of fact or law in the assailed order indicating that any of
the elements essential for the grant of a preliminary injunction existed. The trial
court alluded to hearings during which the parties marked their respective exhibits
and the trial court heard the oral arguments of opposing counsels. However, it
cannot be ascertained what evidence was formally offered and presented by the
parties and given weight and credence by the trial court. The basis for the trial
court's conclusion that K Services was entitled to a writ of preliminary injunction
is unclear.
In its order of August 5, 1993, the trial court stated that it issued the
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 injunction to prevent irreparable loss that might be caused to K Services. Once
more, however, the trial court neglected to mention what right in esse of K
Services, if any, was in danger of being violated and required the protection of a
preliminary injunction.
xxx xxx xxx.

. . . the possibility of irreparable damage without proof of actual existing

right is not a ground for an injunction (Heirs of Asuncion v. Gervacio, Jr ., 304
SCRA 322 [1999]). Where the complainant's right is doubtful or disputed,
injunction is not proper. Absent a clear legal right, the issuance of the injunctive
relief constitutes grave abuse of discretion (Id.). 2 8

Furthermore, Judge Emuslan's November 25, 2004 Order goes against the
concept and objective of a writ of preliminary injunction. A writ of preliminary injunction
is a provisional remedy, an adjunct to a main suit. It is also a preservative remedy,
issued to preserve the status quo of the things subject of the action or the relations
between the parties during the pendency of the suit. In Selegna Management and
Development Corporation v. United Coconut Planters Bank, 2 9 we held:
. . . . Injunction is not designed to protect contingent or future
rights. It is not proper when the complainant's right is doubtful or
disputed .
. . ., courts should avoid issuing this writ which in effect disposes
of the main case without trial (F. Regalado, Remedial Law Compendium, Vol.
I, 639 (7th revised ed., 1999). . . . . (Underscoring supplied)

In the same case of Manila International Airport Authority v. Court of Appeals , 3 0

we urged the courts to exercise extreme caution in issuing the writ, thus:
. . . . We remind trial courts that while generally the grant of a writ of
preliminary injunction rests on the sound discretion of the court taking
cognizance of the case, extreme caution must be observed in the exercise
of such discretion . The discretion of the court a quo to grant an injunctive writ
must be exercised based on the grounds and in the manner provided by law.
Thus, the Court declared in Garcia v. Burgos:
It has been consistently held that there is no power the
exercise of which is more delicate, which requires greater caution,
deliberation and sound discretion, or more dangerous in a
doubtful case, than the issuance of an injunction. It is the strong
arm of equity that should never be extended unless to cases of
great injury, where courts of law cannot afford an adequate or
commensurate remedy in damages.
Every court should remember that an injunction is a
limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately . It should be granted
only when the court is fully satis ed that the law permits it and the
emergency demands it [citations omitted]. (Underscoring supplied)

To repeat, the purpose of the writ of preliminary injunction is to preserve the

status quo until the court could hear the merits of the case. 3 1 The status quo is the last
actual peaceable uncontested status that preceded the controversy 3 2 which, in the
instant case, is the holding of the annual stockholders' meeting on March 1, 2004 and
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 the ensuing election of the directors and o cers of STRADEC. But instead of
preserving the status quo, Judge Emuslan's Order messed it up when, in compliance
therewith, a special stockholders' meeting was held anew and a new set of directors
and o cers of STRADEC was elected. That effectively resolved respondents' principal
action without even a full-blown trial on the merits since the Order impliedly ruled that
the March 1, 2004 annual stockholders' meeting and election are void. Verily, the
issuance of the questioned Order violates the established principle that courts should
avoid granting a writ of preliminary injunction that would in effect dispose of the main
case without trial. 3 3
Equally important is the fact that the Order was issued even though respondents'
right to an injunctive relief is doubtful or has been vehemently disputed. We note that
petitioners, in their answer with counterclaim, raised serious and valid defenses, among
which is that the action is premature since the principal o ce of STRADEC in
Bayambang, Pangasinan is yet to be established , as authorized by the SEC. 3 4
Obviously, pending the establishment of a principal o ce in Bayambang, Pangasinan,
all the stockholders' meetings of STRADEC have been properly held in their principal
office in Pasig City.
Another weighty defense raised by petitioners is that the action has prescribed.
One of the reliefs sought by respondents in the complaint is the nulli cation of the
election of the Board of Directors and corporate o cers held during the March 1, 2004
annual stockholders' meeting on the ground of improper venue, in violation of the
Corporation Code. Hence, the action involves an election contest, falling squarely under
the Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No.
8799. Sections 1 and 2, Rule 6 of the Interim Rules provide:
SEC. 1. Cases covered. — The provisions of this rule shall apply to
election contests in stock and non-stock corporations. TESDcA

SEC. 2. Definition. — An election contest refers to any controversy

or dispute involving title or claim to any elective o ce in a stock or non-stock
corporation, the validation of proxies, the manner and validity of elections , and
the quali cations of candidates, including the proclamation of winners, to the
o ce of director, trustee or other o cer directly elected by the stockholders in a
close corporation or by members of a non-stock corporation where the articles of
incorporation or by-laws so provide. (Underscoring supplied)

It is important to note that the Court of Appeals itself ruled that respondents'
action before the RTC, Branch 48, Urdaneta City is an election contest, thus:
Likewise, as clearly provided in Section 1, Rule 1 of the Interim Rules of
Procedure Governing Intra-Corporate Controversies under R.A. No. 8799, among
the intra-corporate controversies transferred to the special courts are:
xxx xxx xxx
(3) Controversies in the election or appointment of
directors , trustees, officers , or managers of corporation, partnerships or
associations;
xxx xxx xxx
Undoubtedly, therefore, the instant case is an intra-corporate controversy
among the stockholders themselves relative to the election of directors or
o cers of STRADEC , speci cally between respondents . . . on one hand and
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 petitioners . . . on the other. . . . . If there is still any doubt that the Special
Corporate Court can call for a stockholders' meeting, Rule 6 (citing
Sections 1 and 2) of the Interim Rules completely puts to rest said
issue .
xxx xxx xxx
Clearly, therefore, said Rule empowers the special corporate
courts to decide election cases . . . . 3 5 (Underscoring supplied)

As pointed out by petitioners in their answer with counterclaim, under Section 3,

Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate Controversies under
R.A. No. 8799, an election contest must be " led within 15 days from the date of the
election." 3 6 It was only on August 16, 2004 that respondents instituted an action
questioning the validity of the March 1, 2004 stockholders' election, clearly beyond the
15-day prescriptive period.
In sum, Judge Emuslan, in granting the writ of preliminary injunction, acted with
grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, we GRANT the instant petition and reverse the assailed Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 87785.
The Order dated November 25, 2004 of Judge Meliton G. Emuslan, RTC, Branch
48, Urdaneta City in Civil (SEC) Case No. U-14 and the special stockholders' meeting
and election held on December 10, 2004 in Bayambang, Pangasinan are SET ASIDE.
The last actual peaceable uncontested status of the parties prior to the ling by
respondents herein of Civil (SEC) Case No. U-14 is RESTORED.
This case is REMANDED to the RTC, Branch 48, Urdaneta City for further
proceedings with dispatch. aCTcDH

SO ORDERED.
Puno, C.J., Corona, Azcuna and Garcia, JJ., concur.

Footnotes

1. Filed under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

2. Petitioners' Memorandum, Rollo, p. 532.

3. Id., p. 533.
4. Annex "C," Petition, Id., p. 108.

5. Pursuant to Supreme Court Resolution dated November 21, 2000 in A.M. No. 00-11-03-
SC, "Resolution Designating Certain Branches of Regional Trial Courts to Try and Decide
Cases Formerly Cognizable by the Securities and Exchange Commission;" Supreme
Court Administrative Circular No. 08-2001, promulgated January 23, 2001, "Transfer to
Designated Regional Trial Courts of SEC Cases Enumerated in Section 5, P.D. No. 902-
A".
6. Pursuant to Supreme Court Circular No. 19-98 dated February 18, 1998.

7. Annex "L," Petition, Rollo, pp. 139-163.

8. Id., pp. 151-153.

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 9. Certification dated January 10, 2005, issued by Bernadette E. Palting, Clerk of Court,
Regional Trial Court, Urdaneta City; Records of the Office of the Court Administrator.

10. Rollo, pp. 166-168.

11. Filed under Rule 65 of the 1997 Rules of Civil Procedure, as amended.

12. This issue was resolved by the Court of Appeals in its Resolution denying petitioners'
motion for reconsideration of its Decision.
13. Annex "A," Petition, Rollo, pp. 81-94.

14. Annex "B," id., pp. 95-107.

15. Embassy Farms, Inc. v. Court of Appeals, G.R. No. 80682, August 13, 1990, 188 SCRA
492, citing Union Glass and Container Corp. v. SEC, 126 SCRA 31 (1983); DMRC
Enterprises v. Este Del Sol Mountain Reserve, Inc., 132 SCRA 293 (1984); Rivera v.
Florendo, 144 SCRA 643 (1986); Abeijo v. De la Cruz, 149 SCRA 654 (1987).
16. Section 5, PD 902-A. See also Section 1, Rule 1 of the Interim Rules of Procedure
Governing Intra-Corporate Controversies under R.A. No. 8799.
17. See Morato v. Court of Appeals, G.R. No. 141510, August 13, 2004, 436 SCRA 438, 456.

18. Speed Distributing Corp. v. Court of Appeals, G.R. No. 149351, March 17, 2004, 425
SCRA 691.
19. Supra, p. 457.
20. Assailed Resolution dated June 29, 2005, Rollo, pp. 106-107.
21. Manila International Airport Authority v. Court of Appeals, G.R. No. 118249, February 14,
2003, 397 SCRA 348, 358, citing Garcia v. Burgos, 291 SCRA 546 (1998).

22. G.R. No. 156118, November 19, 2004, 443 SCRA 274. See also Ching v. Court of
Appeals, G.R. No. 124642, February 23, 2004, 423 SCRA 356.
23. Section 1, Rule 65, 1997 Rules of Civil Procedure, as amended.

24. Arcelona v. Court of Appeals, G.R. No. 102900, October 2, 1997, 280 SCRA 20, citing
Leonor v. Court of Appeals, 256 SCRA 69, 82 (1996).
25. Respondents' Memorandum, Rollo, p. 739.
26. Manila International Airport Authority v. Court of Appeals, supra, citing Ong Ching Kian
Chuan v. Court of Appeals, 363 SCRA 145 (2001).
27. Id.
28. Supra, pp. 360, 363.
29. G.R. No. 165662, May 3, 2006, 489 SCRA 125, 144-145.
30. Supra, cited in Selegna Management and Development Corporation v. United Coconut
Planters Bank, id., p. 145.
31. Mirasol v. Department of Public Works and Highways, G.R. No. 158793, June 8, 2006,
490 SCRA 318.
32. Searth Commodities Corp. v. Court of Appeals, G.R. No. 64220, March 31, 1992, 207
SCRA 622, citing Rivas v. Securities and Exchange Commission, 190 SCRA 295 (1990);
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 Bengzon v. Court of Appeals, 161 SCRA 745 (1988); Rodulfa v. Alonso, 76 Phil. 225
(1946).

33. Central Bank of the Philippines v. Court of Appeals, G.R. Nos. 88353 and 92943, May 8,
1992, 208 SCRA 652, 684; Searth Commodities Corp. v. Court of Appeals, id., 629-630,
citing Rivas v. Securities and Exchange Commission, id.; Government Service Insurance
System v. Florendo, 178 SCRA 76 (1989); Ortigas & Co. Ltd. Partnership v. Court of
Appeals, 162 SCRA 165 (1988). HTECDc

34. Petitioners' Answer with Counterclaim, Rollo, pp. 151-152.

35. Assailed Resolution dated June 29, 2005, Rollo, pp. 98-101.
36. Rollo, pp. 150-151.

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