Philippine Supreme Court Resolutions > Year 2007 > June 2007 Resolutions > [G.R. No. 147191 : June 06, 2007] SPOUSES MANUEL & LUISA TAN LEE, RENWICK WAN-EN LEE, AND JANSSEN THADDEUS LEE VS. HON. COURT OF APPEALS AND CHINA BANKING CORPORATION :

Quoted hereunder, for your information is a resolution of the Third Division of this Court dated 06 June 2007:

G.R. No. 147191 (Spouses Manuel & Luisa Tan Lee, Renwick Wan-en Lee, and Janssen Thaddeus Lee vs. Hon. Court of Appeals and China Banking Corporation)


This resolves the Motion for Partial Reconsideration dated 12 April 2007 filed by private respondent China Banking Corporation. The Motion seeks the deletion of the portion of our 20 March 2007 Resolution directing the Regional Trial Court of Misamis Oriental to resume hearings on the application for preliminary injunction, on the ground that the trial court can no longer entertain an application for preliminary injunction seeking to enjoin an act that had been accomplished or consummated. We refer respondent to the following portion of our 27 July 2006 Decision:

In Verzosa v. Court of Appeals [359 Phil. 425], the petitioner Wilfredo Verzosa sought to have the property mortgaged by respondent Fe Uson foreclosed. Respondent Uson filed an amended complaint for annulment of mortgage with prayer for the issuance of a writ of preliminary injunction. Five days later, the foreclosure sale proceeded and the property was sold to respondent Verzosa as the highest bidder. Upon Uson's application for a preliminary injunction embodied in a second amended complaint, the trial court issued an order directing the subsequent buyer of the property to cease and desist from entering, making constructions, and performing any act of possession or ownership upon the land in question. Petitioner assailed the order as it allegedly giants an injunction to restrain consummated acts. This Court, speaking through then Associate Justice Artemio Panganiban (now Chief Justice), held:

Where the acts have been performed prior to the filing of the injunction suit, the general rule is that the consummated acts can no longer be restrained by injunction. However, "where the acts are performed after the injunction suit is brought, a defendant may not as [a matter] of right proceed to perform the acts sought to be restrained and then be heard to assert in the suit that injunction will not lie because he has performed these acts before final hearing has been had, but after the beginning of the action. A defendant thus acts at his peril." It has been held that "[t]he general rule of law is that, where a defendant completes, after the beginning of an action, the act thereby sought to be restrained, and before the issue of any final order or decree, the court has the power to, and may, compel, by a mandatory injunction, the restoration of the former condition of things and thereby prevent the giving of an advantage by reason of the wrongful act And where a defendant does an act thus sought to be restrained, he proceeds at his peril, and the court in which the action is pending may compel a restoration of the former status or grant to the plaintiff such relief as may be proper."

In this case, an action was brought to enjoin Petitioner Verzosa from proceeding with the mortgage sale, yet he proceeded to do so while the action was still pending. Such conduct is reprehensible. "If one in the face of a pending suit for injunction, does the thing sought to be enjoined, he cannot thus outwit equity and the court, but must restore the status quo. x x x Even where an injunction has not been issued, if the suit is one for injunction, the defendant, if he does the thing sought to be enjoined does so at his peril. Hence, in proceeding with the mortgage sale and subsequently selling the property to Pilar Martinez, Petitioner Verzosa was acting at his peril. (Emphases supplied.)

Furthermore, notwithstanding the stand of both parties, the fact remains that the Decision of the Court of Appeals annulling the grant of preliminary injunction in favor of petitioners has not yet become final on 14 December 2000. In fact, such Decision has not yet become final and executory even on the very date of this Decision, in view of petitioners' appeal with us under Rule 45 of the 1997 Rules of Civil Procedure. The preliminary injunction, therefore, issued by the trial court remains valid until the Decision of the Court of Appeals annulling the same attains finality, and violation thereof constitutes indirect contempt which, however, requires either a formal charge or a verified petition.

The willful disobedience of an injunction order may constitute a criminal, as well as a civil, contempt. However, it has been held that the violation of an injunction is not direct criminal contempt within the contemplation of a statute pertaining to conduct summarily punishable as direct criminal contempt. Such violation is an indirect contempt where it does not occur in the immediate presence of the court or so close as to interrupt or disturb court proceedings.

An injunction or restraining order which is not void must be obeyed while it remains in full force and effect, and has not been overturned, that is, in general, until the injunction or restraining order has been set aside, vacated, or modified by the court which granted it, or until the order or decree awarding it has been reversed on appeal or error. The injunction must be obeyed irrespective of the ultimate validity of the order, and no matter how unreasonable and unjust the injunction may be in its terms. Defendant cannot avoid compliance with the commands, or excuse his violation, of the injunction by simply moving to dissolve it, or by the pendency of a motion to modify it. The fact that an injunction or restraining order has been dissolved or terminated, or has expired, does not necessarily protect a person in a proceeding against him for a violation of the injunction or order while it was in force, as by acts between granting of the injunction and its termination, at least where the proceeding is one to punish for a criminal contempt.

Respondent CBC seemed so eager and anxious to render moot the petition for cancellation of real estate mortgage contract, taking advantage for that matter of a perceived gap between a preliminary injunction and a TRO to proceed with the contested public auction. Their actuations emulate those of the respondent in the case of National Power Corporation v. Province of Lanao del Sur (264 SCRA 271 [1996]), where we held:

The fact that the telegraphic temporary restraining order issued by this Court was received by the respondent governor of Lanao del Sur at 2:30 p.m. and by respondent provincial treasurer at 3:00 p.m. of January 22, 1991, or an hour and a half, respectively, after the registration of the sale with the Register of Deeds of the province, and several hours after the close of the auction sale, is of no moment. Ordinarily, this Court would have been overjoyed to hear about said Register of Deeds (or any government functionary for that matter) moving with blinding speed, except that in this case, it is more than patent that such precipitate action was prompted not in the least by respondent's anticipation that this Court was about to act on petitioner's application for a writ of preliminary injunction and/or temporary restraining order. The respondents' all too obvious attempt at rendering nugatory and inutile any injunctive relief this Court may grant is useless and brings them only rebuke and condemnation. Clearly, legally and equitably rooted in and proceeding from the foregoing discussion is the ineluctable conclusion that the auction sale and registration of subject properties are totally bereft of any legal basis and therefore null and void, and cannot vest title over the said real properties nor over the hydroelectric power plant complex built upon them, in favor of respondent province.

Courts, however, have a limited inherent power to void acts done in violation of an injunction. Transfers in violation of an injunction are invalid as to the person seeking the injunction or those claiming under that person, and may be set aside if attacked in a proper manner.

However, because an injunction operates in personam, an act done in violation of an injunction is not a nullity as to third persons. If an injunction prohibits the defendant from transferring property, but the defendant transfers the property to an innocent third person, the transferee obtains good title and the injunction does not affect the transferee's right.

Based on the foregoing, we have two possible courses of action: (1) if the subject property has not been alienated to a third person, to declare the auction sale on 14 December 2000 as void; or (2) if the subject property has been alienated to a third person not a party to this petition, to enjoin acts similar to those enjoined in Verzosa, depending on the status of the main case and of the subject property. Since we are, as of the moment, unaware of such developments, it is sufficient to say for the meantime that the issue regarding the validity of the preliminary injunction issued by the trial court has not yet become moot.

WHEREFORE, the Motion for Partial Reconsideration dated 12 April 2007 is DENIED WITH FINALITY.

SO ORDERED.