Facts

• Silverio Borbon, Spouses Xerxes and Erlinda Facultad, and XM Facultad & Development Corporation (collectively, the borrowers — respondents) borrowed from Bank of the Philippine Islands (BPI) (petitioner), executing promissory notes binding themselves jointly and severally to repay, real estate mortgages on several parcels of land, a continuing surety agreement, and a chattel mortgage on a Mitsubishi Pajero. (Antecedents, ¶2–3)
• The debt reached ₱17,983,191.49, of which the borrowers paid ₱13 million, having "been adversely affected by the economic turmoil in Asia in 1997." BPI then "required them to issue postdated checks to cover the loan under threat of foreclosing on the mortgages." (Antecedents, ¶4)
• On May 22, 2001 the borrowers (then plaintiffs) commenced Civil Case No. CEB-26468 in the RTC of Cebu City, Branch 16, presided by Judge Agapito L. Hontanosas, Jr., seeking the declaration of nullity of the promissory notes, mortgages and surety agreement, damages and attorney's fees, and a TRO or preliminary injunction against the threatened foreclosure. (Antecedents, ¶2)
• On June 6, 2001 BPI answered and moved to dismiss on six grounds, among them improper venue, non-payment of the correct docket fees, and that Zosima Borbon, being deceased, had no legal personality to sue. (Antecedents, ¶5–6)
• On July 5, 2001 Judge Hontanosas denied the motion to dismiss and issued the writ, ordering BPI to desist from commencing foreclosure and sale proceedings, from taking possession of the Mitsubishi Pajero, and "from using the questioned post-dated checks as evidence for the filing of complaint against plaintiffs Facultad for violation of Batas Pambansa Blg. 22§, while the present case is pending litigation." Note what was enjoined — not a pending prosecution, but the filing of a complaint-affidavit itself. Reconsideration was denied August 22, 2001.
• BPI brought certiorari under Rule 65 to the Court of Appeals on the ground of grave abuse of discretion. The docket number of that petition is not stated in the decision.
• On July 9, 2002 the Court of Appeals, through Justice Eugenio S. Labitoria with Justices Teodoro P. Regino and Juan Q. Enriquez, Jr. concurring, affirmed the RTC orders and sustained the writ. Reconsideration was denied February 12, 2003. (Footnote 1)
• BPI elevated the matter by Rule 45, docketed G.R. No. 157163.
• On June 25, 2014 the First Division, through Justice Lucas P. Bersamin, partially granted the petition: it annulled the writ but sustained the lower courts on venue and docket fees.

Issue

1. Whether Civil Case No. CEB-26468 should be dismissed for non-payment of the correct docket fee and for improper venue.
2. Whether the writ of preliminary injunction§ against BPI (petitioner), its agents and representatives, was in order — the branch that matters for this topic, since one thing the writ forbade was the filing of a BP 22 complaint, the right that Section 1, Rule 110§ gives any injured party to set a criminal action in motion.

Ruling

WHEREFORE, the Court PARTIALLY GRANTS the petition for review on certiorari; MODIFIES the decision promulgated on July 9, 2002 by annulling and setting aside the writ of preliminary injunction in Civil Case No. CEB-26468 issued by the Regional Trial Court, Branch 16, in Cebu City for being devoid of factual and legal bases; ORDERS the Regional Trial Court, Branch 16, in Cebu City to proceed with dispatch in Civil Case No. CEB-26468; and DIRECTS the respondents to pay the costs of suit.

SO ORDERED.

Ratio

• A right in esse is the threshold, and the borrowers (respondents) never established one: an injunction "will not issue to protect a right not in esse, or a right which is merely contingent and may never arise." The borrowers had "admittedly constituted the real estate and chattel mortgages to secure the performance of their loan obligation," so they "were fully aware of the consequences on their rights in the properties given as collaterals should the loan secured be unpaid."
• The decisive failure was irreparable injury. The borrowers (respondents) "failed to establish the irreparable injury they would suffer." They feared losing the mortgaged properties and "faced the possibility of a criminal prosecution for the post-dated checks they issued" — but "such fear of potential loss of possession and ownership, or facing a criminal prosecution did not constitute the requisite irreparable injury." A right of redemption and a right to any surplus at the foreclosure sale remained to them.
• An injunction may not prejudge the merits. "[A] preliminary injunction should not determine the merits of a case, or decide controverted facts." As a preventive remedy it "only seeks to prevent threatened wrong, further injury, and irreparable harm or injustice until the rights of the parties can be settled," its "essential function" being "to preserve the status quo between the parties until the merits of the case can be heard."
• Only then the general rule on criminal prosecutions. "As a general rule, the courts will not issue writs of prohibition or injunction – whether preliminary or final – in order to enjoin or restrain any criminal prosecution."
• The Court then set out the ten recognised exceptions:
  1. Where the injunction is necessary to afford adequate protection to the constitutional rights of the accused.
  2. Where necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions.
  3. Where there is a prejudicial question that is sub judice.
  4. Where the acts of the officer are without or in excess of authority.
  5. Where the prosecution is under an invalid law, ordinance or regulation.
  6. Where double jeopardy is clearly apparent.
  7. Where the court has no jurisdiction over the offence.
  8. Where it is a case of persecution rather than prosecution.
  9. Where the charges are manifestly false and motivated by the lust for vengeance.
  10. Where there is clearly no prima facie case and a motion to quash on that ground has been denied.
• The borrowers (respondents) established none of them, so "the issuance by the RTC of the writ of preliminary injunction to enjoin the petitioner [BPI] from instituting criminal complaints for violation of BP No. 22 against the respondents [the borrowers] was unwarranted."
• The closing move is grave abuse of discretion. "[T]he CA grossly erred in not declaring that the RTC committed grave abuse of discretion in granting the application of the respondents as the plaintiffs in Civil Case No. CEB-26468." The RTC "disregarded the aforecited well-known norms and guidelines governing the issuance of the writ" and so "acted capriciously and arbitrarily."
• The connection to Section 1, Rule 110§ is the digest's, not the decision's. The Court reached its result through injunction doctrine and never names Rule 110§, the People of the Philippines, or the prosecution's executive character. Section 1 supplies the right the writ suppressed — a party's ability to file a complaint with the prosecutor — which is why the case sits in this cluster; do not attribute that framing to the ponencia.*

Doctrine

• Requisites of a preliminary injunction, in the Court's own three-part form: "(a) that the right to be protected exists prima facie; (b) that the act sought to be enjoined is violative of that right; and (c) that there is an urgent and paramount necessity for the writ to prevent serious damage."
• A right in esse — a right that already exists, not one still being claimed — is indispensable. An injunction "will not issue to protect a right not in esse, or a right which is merely contingent and may never arise."
• Irreparable injury must be proved, and it means injury "of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law, or where there is no standard by which their amount can be measured with reasonable accuracy."
• The writ may not decide the merits. Its "essential function is to preserve the status quo," not to resolve controverted facts.
• Judicial non-interference with criminal prosecutions, with ten exceptions (above), which the applicant must bring the case within.
• A personal action is one that does not affect title to or possession of real property. A suit to nullify a loan contract, its surety agreement and its mortgages is personal, so venue lies where any principal plaintiff or defendant resides, at the plaintiff's election.

• Note precisely what was enjoined here — not a pending prosecution but the institution of one, which is why the case belongs to the "how criminal actions are instituted" cluster rather than to the injunction cases generally.
• This decision does not say the things it is usually cited for. The familiar propositions — that prosecution is an executive function under the prosecutor's sole discretion, that crimes are prosecuted in the name of the People under Section 2, Rule 110§, that the civil action in BP 22 is deemed impliedly instituted with the criminal case, and that "the gravamen of BP 22 is the mere act of issuing a bouncing check," a malum prohibitum (an act punished whether or not the doer meant any wrong) — are sound law from other cases, and worth knowing. But none of them appears in this ponencia, which never uses the words executive, prosecutorial, or People of the Philippines. Cite them to their own authorities, not to BPI v. Hontanosas.
• The general rule was not the ratio. The Court annulled the writ for want of a right in esse and of irreparable injury; the ten exceptions came in only to dispose of the BP 22 branch. A recitation that leads with judicial non-interference has the reasoning in the wrong order.

Full Digest — Recitation Format

Gist

Facts

1. Silverio Borbon, Spouses Xerxes and Erlinda Facultad, and XM Facultad & Development Corporation (collectively, the borrowers — respondents) obtained a loan from Bank of the Philippine Islands (BPI) (petitioner) and executed promissory notes binding themselves jointly and severally to repay it, real estate mortgages over several parcels of land, a continuing surety agreement, and a chattel mortgage over a Mitsubishi Pajero.
2. The obligation of the borrowers (respondents) to BPI (petitioner) reached ₱17,983,191.49, of which they paid ₱13 million, having been adversely affected by the economic turmoil in Asia in 1997. BPI then required them to issue postdated checks to cover the loan under threat of foreclosing on the mortgages.
3. On May 22, 2001, the borrowers — as plaintiffs — commenced Civil Case No. CEB-26468 before the Regional Trial Court (RTC) of Cebu City, Branch 16, presided over by Judge Agapito L. Hontanosas, Jr. (public respondent), seeking the declaration of nullity of the promissory notes, the real estate and chattel mortgages and the continuing surety agreement, plus damages and attorney's fees, and applying for a temporary restraining order or writ of preliminary injunction to prevent BPI (petitioner) from foreclosing on the mortgages. They alleged that they had signed blank pre-printed forms in violation of the principle of mutuality of contracts.
4. On June 6, 2001, BPI (petitioner) filed its answer with affirmative defenses and counterclaim, its opposition to the injunction, and a motion to dismiss on six grounds — improper venue; non-payment of the proper legal fees; the lack of legal personality of Zosima Borbon, who was deceased; the non-joinder of her estate as an indispensable party; the absence of a board resolution authorising XM Facultad & Development Corporation to sue; and failure to state a cause of action.
5. On July 5, 2001, Judge Hontanosas (public respondent) denied the motion to dismiss and granted the application for a writ of preliminary injunction, directing BPI (petitioner) to cease and desist from commencing foreclosure and sale proceedings on the mortgaged properties, from taking possession of the Mitsubishi Pajero, and from using the questioned post-dated checks as evidence for the filing of a complaint against the Facultads for violation of Batas Pambansa Bilang 22 (the Bouncing Checks Law), while the civil case was pending. Reconsideration was denied on August 22, 2001. The dates of issue, presentment and dishonor of the checks are not stated in the decision; no BP 22 complaint was ever filed.
6. BPI (petitioner) assailed those orders by petition for certiorari before the Court of Appeals (CA) on the ground of grave abuse of discretion. The docket number of the CA petition is not stated in the decision.
7. On July 9, 2002, the CA — in a Decision penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Teodoro P. Regino and Juan Q. Enriquez, Jr. — affirmed the RTC orders, holding that the docket-fee objection was unsubstantiated and that Civil Case No. CEB-26468, being a personal action, was properly filed in Cebu City where XM Facultad & Development Corporation's principal office was located. Reconsideration was denied on February 12, 2003.
8. BPI (petitioner) elevated the matter to the Supreme Court by Petition for Review on Certiorari under Rule 45, docketed as G.R. No. 157163.
9. On June 25, 2014, the Supreme Court (First Division), through Associate Justice Lucas P. Bersamin, partially granted the petition: it annulled and set aside the writ of preliminary injunction, but sustained the lower courts on venue and the docket fee, and ordered the RTC to proceed with dispatch in Civil Case No. CEB-26468.

Arguments of the Parties

• BPI (petitioner) argued that Civil Case No. CEB-26468 was a real action that had to be commenced where the real property was situated, so venue in Cebu City was improper and the filing and docket fees should have been computed on the value of the property stated in the certificate of sale.
• BPI argued that the writ of preliminary injunction was not in order, foreclosure of the mortgages being "within its legal right to do."
• Below, BPI added that Zosima Borbon, being deceased, had no legal personality to sue; that her estate was an indispensable party that had to be impleaded; that XM Facultad & Development Corporation had no board resolution authorising the suit; and that the complaint stated no cause of action.

• The borrowers (respondents) alleged they had "signed blank pre-printed forms" of the promissory note, continuing surety agreement, and real estate and chattel mortgages, "which violates the principle of mutuality of contracts"; that these were contracts of adhesion whose stipulations were "tilted in favor of defendant bank"; and that the documents "do not reflect the real agreement of the parties."
• They argued that the securities were "securing specific amounts of obligation and upon the payment of ₱13,000,000 to defendant bank, automatically, these became functus de oficio and should be released immediately without the encumbrance."
• They sought the injunction to stave off the threatened foreclosure, fearing the loss of possession and ownership of the mortgaged properties and the possibility of a criminal prosecution on the postdated checks.

• The borrowers (respondents) "did not dispute" BPI's allegation that they had not fully paid their obligation, or that Civil Case No. CEB-26468 "was precisely brought by them in order to stave off the impending foreclosure of the mortgages."
• The decision records no formal stipulation of facts or joint admission beyond that.

Issue

• Whether the Regional Trial Court of Cebu City, Branch 16, committed a reversible error and acted with grave abuse of discretion in issuing a writ of preliminary injunction enjoining Bank of the Philippine Islands (petitioner) from instituting criminal complaints for violation of Batas Pambansa Bilang 22 against the borrowers (respondents) — the right that Rule 110§ of the Rules of Court gives an injured party to set a criminal action in motion.

• Whether Civil Case No. CEB-26468 should be dismissed for non-payment of the correct amount of docket fee and for improper venue. The Court answered NO on both, which is why the case ends in a partial grant rather than an outright win for BPI (petitioner).

1. What are the requisites for validly issuing a writ of preliminary injunction, and what is its proper scope?
2. What are the ten extreme and well-defined exceptions under Philippine jurisprudence where courts may enjoin or restrain a criminal prosecution or its institution?
3. Did the borrowers (respondents) sufficiently establish that Civil Case No. CEB-26468 fell under any of the recognized exceptions to warrant restraining BPI (petitioner) from filing BP 22 complaints?

Ruling

• OVERALL: PARTIAL GRANT. "The appeal is partly meritorious." BPI (petitioner) won on the injunction and lost on venue and docket fees; the civil case was sent back to trial, and the borrowers (respondents) were ordered to pay costs.
• MAIN ISSUE: YES. The Regional Trial Court of Cebu City, Branch 16, committed a reversible error, and its issuance of the writ of preliminary injunction to enjoin BPI (petitioner) from filing criminal complaints for violation of BP 22 against the borrowers (respondents) was unwarranted. The Court annulled the whole writ — the foreclosure and Mitsubishi Pajero branches with it — because the borrowers showed neither a right in esse nor irreparable injury.
• THE OTHER ISSUE: NO, the civil case is not dismissed. Civil Case No. CEB-26468 "was a personal action; hence, venue was properly laid" in Cebu City, and the docket-fee attack failed with it.
• SECONDARY ISSUE 1: An injunction should not issue except upon a clear showing that the applicant has a right in esse to be protected, and that the acts sought to be enjoined are violative of such right. A preliminary injunction should not determine the merits of a case or decide controverted facts, for, being a preventive remedy, it only seeks to prevent threatened wrong, further injury, and irreparable harm or injustice until the rights of the parties can be settled.
• SECONDARY ISSUE 2: The ten recognized exceptions where an injunction may issue to restrain criminal prosecution are:
  1. when the injunction is necessary to afford adequate protection to the constitutional rights of the accused;
  2. when it is necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions;
  3. when there is a prejudicial question that is sub judice;
  4. when the acts of the officer are without or in excess of authority;
  5. when the prosecution is under an invalid law, ordinance or regulation;
  6. when double jeopardy is clearly apparent;
  7. when the court has no jurisdiction over the offense;
  8. when it is a case of persecution rather than prosecution;
  9. when the charges are manifestly false and motivated by the lust for vengeance; and
  10. when there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied.
• SECONDARY ISSUE 3: NO. The borrowers (respondents) did not sufficiently show that Civil Case No. CEB-26468 came under any of the foregoing exceptions.
• VERBATIM DISPOSITIVE PORTION — the fallo, the final paragraph that actually disposes of the case: "WHEREFORE, the Court PARTIALLY GRANTS the petition for review on certiorari; MODIFIES the decision promulgated on July 9, 2002 by annulling and setting aside the writ of preliminary injunction in Civil Case No. CEB-26468 issued by the Regional Trial Court, Branch 16, in Cebu City for being devoid of factual and legal bases; ORDERS the Regional Trial Court, Branch 16, in Cebu City to proceed with dispatch in Civil Case No. CEB-26468; and DIRECTS the respondents to pay the costs of suit. SO ORDERED."
• Do not quote "Hence, the issuance by the RTC of the writ … was unwarranted" as the dispositive portion. That sentence closes the discussion of the tenth exception; it is not the fallo, and on its own it reads as though BPI (petitioner) won outright.

Ratio

1. Venue first, and BPI (petitioner) loses it: a real action affects title to or possession of real property; the Rules declare all others personal. A suit to nullify a loan, a surety agreement and the mortgages securing them "was a personal action; hence, venue was properly laid" in Cebu City, where XM Facultad & Development Corporation had its principal office. The docket-fee objection, which depended on the action being real, fell with it.
2. Prerequisite of a right in esse: a preliminary injunction is an extraordinary, preventive remedy. "Injunction should not issue except upon a clear showing that the applicant has a right in esse to be protected, and that the acts sought to be enjoined are violative of such right." It "will not issue to protect a right not in esse, or a right which is merely contingent and may never arise." The borrowers (respondents) had admittedly constituted the mortgages and were "fully aware of the consequences" of default.
3. Failure to prove irreparable injury — the step that decided the case: the borrowers "failed to establish the irreparable injury they would suffer should the writ of preliminary injunction not be issued." Fear of losing possession and ownership, or of "facing a criminal prosecution[,] did not constitute the requisite irreparable injury," since a right of redemption and a right to any surplus at the sale remained.
4. Prohibition against prejudging merits: "a preliminary injunction should not determine the merits of a case, or decide controverted facts." Its "essential function is to preserve the status quo between the parties until the merits of the case can be heard."
5. The general rule of non-interference, reached last: "as a general rule, the courts will not issue writs of prohibition or injunction – whether preliminary or final – in order to enjoin or restrain any criminal prosecution."
6. Failure to establish an exception: ten "extreme cases" are recognised, and the borrowers (respondents) "did not sufficiently show that Civil Case No. CEB-26468 came under any of the foregoing exceptions." "Hence, the issuance by the RTC of the writ of preliminary injunction to enjoin the petitioner [BPI] from instituting criminal complaints for violation of BP No. 22 against the respondents [the borrowers] was unwarranted."
7. Grave abuse of discretion: "the CA grossly erred in not declaring that the RTC committed grave abuse of discretion." The RTC had "disregarded the aforecited well-known norms and guidelines" and "acted capriciously and arbitrarily" — grave abuse of discretion meaning an exercise of judicial power "in an arbitrary or despotic manner by reason of passion or personal hostility," or an evasion of a positive duty.

Doctrine

1. The Principle of Judicial Non-Interference: as a general rule courts will not issue writs of prohibition or injunction, preliminary or final, to enjoin or restrain any criminal prosecution. That is the whole of what this decision says on the point. The further propositions usually recited with it — that prosecution is an executive function under the prosecutor's sole discretion, and that judicial policy strictly dictates non-interference with that prerogative — are correct law drawn from other cases, and are not in this ponencia. Cite them to their own authorities.
2. Requisites of a Writ of Preliminary Injunction, in this decision's own three-part form: (a) that the right to be protected exists prima facie; (b) that the act sought to be enjoined is violative of that right; and (c) that there is an urgent and paramount necessity for the writ to prevent serious damage. Two further limits sit alongside them: an injunction will not protect a right not in esse or one merely contingent, and it must not decide the merits or resolve controverted facts. 2a. Irreparable injury: the applicant must prove that the violation sought to be prevented would cause an irreparable injustice — injury "of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law," or not "susceptible of mathematical computation." The prospect of foreclosure, or of facing a criminal prosecution, is not such an injury.
3. The Ten Extreme Exceptions to Non-Interference: The Court verbatim codified the ten exceptions where injunctions may restrain criminal prosecutions:
   • (1) when the injunction is necessary to afford adequate protection to the constitutional rights of the accused;
   • (2) when it is necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions;
   • (3) when there is a prejudicial question that is sub judice;
   • (4) when the acts of the officer are without or in excess of authority;
   • (5) when the prosecution is under an invalid law, ordinance or regulation;
   • (6) when double jeopardy is clearly apparent;
   • (7) when the court has no jurisdiction over the offense;
   • (8) when it is a case of persecution rather than prosecution;
   • (9) when the charges are manifestly false and motivated by the lust for vengeance; and
   • (10) when there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied.

1. Strict Construction of Exceptions: the ten exceptions are "extreme cases," and the applicant must show the case comes within one. An injunction "should be granted only when the court is fully satisfied that the law permits it and the emergency demands it, for no power exists whose exercise is more delicate, which requires greater caution and deliberation, or is more dangerous in a doubtful case."
2. BP 22 and Separate Collection Suits: the filing of a separate civil case is not a ground under any of the ten exceptions to enjoin a BP 22 prosecution — the borrowers (respondents) here tried exactly that and failed. The supporting propositions often recited with this point — that under Rule 111§, Section 1(b) the civil action is deemed impliedly instituted with the BP 22 case with no reservation allowed, and that a collection suit raises no prejudicial question (a civil issue that must be settled first because it decides guilt) because "the gravamen of BP 22 is the mere act of issuing a bouncing check," a malum prohibitum (an act punished whether or not the doer meant any wrong) — are sound law but come from other decisions, not this one. This ponencia does not discuss Rule 111§, prejudicial question, or the gravamen of BP 22 at all.

• Under Section 1, Rule 110§, criminal actions are instituted either (a) by filing the complaint with the proper officer for preliminary investigation (for offenses requiring PI under Rule 112, Section 1), or (b) by filing the complaint or information directly with the Municipal Trial Courts, or the complaint with the prosecutor.
• In BPI v. Hontanosas the Court protected that mechanism: by holding that courts cannot enjoin a party from filing a complaint-affidavit with the prosecutor's office, it safeguarded the right to set a criminal action in motion.
• A court order blocking the filing of a criminal complaint — the RTC's writ here — freezes the institution of criminal actions under Rule 110§, Section 1. That this amounts to an encroachment on executive power is the digest's own reading; the decision does not put it that way.

Separate Opinions

• None. The decision carries no separate concurring or dissenting opinion. Bersamin, J. wrote for the First Division, with Sereno, C.J., Leonardo-De Castro, Villarama, Jr. and Reyes, JJ. concurring.