[G.R. NO. 145742.

July 14, 2005] ports as well as cargo handling services that would be turned over by bidding, or as may be authorized upon consideration of paragraph 2
petitioner to the private sector. Section 2 of said administrative order hereof.14
THE PHILIPPINE PORTS AUTHORITY, represented by its states:
GENERAL MANAGER JUAN O. PENA, Petitioners, v. CIPRES Following the expiration of its contract for cargo handling,
STEVEDORING & ARRASTRE, INC., Respondents. Section 2. 'Statement of Policies respondent was able to continue with its business by virtue of hold-
over permits given by petitioner. The first of these permits expired
DECISION As a general rule, cargo handling services in all government ports on 17 January 200015 and the last was valid only until 18 April
shall be awarded through the system of public bidding, except in the 2000.16 While respondent's second hold-over permit was still in
following cases: effect, petitioner, through its General Manager Juan O. Peña,
CHICO-NAZARIO, J.:
issued PPA AO No. 03-200017 dated 15 February 2000 which
amended by substitution PPA AO No. 03-90. PPA AO No. 03-2000
This is a Petition for Review on Certiorari of the Decision1 of the 2.1 Cargo handling contractors in ports with existing or expired
expressly provides that all contract for cargo handling services of
Court of Appeals in CA-G.R. SP No. 59553 entitled, "Cipres contracts whose performance is satisfactory shall be granted renewal
of their contracts. more than three (3) years shall be awarded through public bidding.
Stevedoring and Arrastre, Inc. (CISAI) v. The Honorable Alvin L. With respect to cargo handling permits for a period of three (3) years
Tan in his capacity as Presiding Judge, Regional Trial Court (RTC), and less in ports where the average yearly cargo throughout for the
Br. 44, Dumaguete City, Philippine Ports Authority (PPA), Juan 2.2 Cargo handling operators issued one-year permits and have last five (5) years did not surpass 30,000 metric tons and where the
Peña2 & Benjamin Cecilio." Said decision declared as null and already been in operation for at least six (6) months prior to the operations are mainly manual, the same shall be awarded through
void the Order dated 31 May 20003 of Judge Tan and directed the effectivity of this Order shall be audited, and if found satisfactory, comparative evaluation.
court a quo to issue a writ of preliminary injunction enjoining awarded contracts.
petitioner "from conducting the scheduled public bidding of cargo
Pursuant to PPA AO No. 03-2000, petitioner set the deadline for the
handling operations in the port of Dumaguete City" until the 2.3 Cargo handling services in ports with low cargo volume and submission of the technical and financial bids for the port of
termination of the main case. where handling operations are primarily manual.7 Dumaguete City at 12:00 noon of 05 July 2000; the opening of the
technical bids on 05 July 2000 at 1:00 p.m.; and the dropping of the
The facts follow. On 29 May 1996, a Memorandum of Understanding (MOU) 8 was financial bids on 28 July 2000 at 1:00 p.m. Contending that this
entered into among the National Union of Portworkers of the action on the part of petitioner was in derogation of its vested right
Petitioner PPA is a government entity created by virtue of Philippines/Trade Union Congress of the Philippines,9 the over the operation of cargo handling enterprise in Dumaguete City,
Presidential Decree (P.D.) No. 857 and is tasked to implement an Department of Transportation and Communications,10 the PPA,11 the respondent initiated an action for specific performance, injunction
integrated program for the planning, development, financing, and Department of Labor and Employment (DOLE),12 and the Philippine with application for preliminary mandatory injunction and
operation of ports and port districts in the country.4 Chamber of Arrastre and Stevedoring Operators (PCASO) 13 relative temporary restraining order before the RTC of Dumaguete
to the nationwide protests then being conducted by port workers. City.18 This civil action was filed on 31 March 2000 and was raffled
Respondent CISAI is a domestic corporation primarily engaged in Among the items agreed upon by the parties to the MOU were: off to Branch 44 of said court wherein it was docketed as Civil Case
stevedoring, arrastre, and porterage business, including cargo No. 12688.
handling and hauling services, in the province of Negros Oriental 3. The DOTC Secretary shall immediately create a tripartite
and in the cities of Dumaguete and Bais. Since the commencement oversight committee to review, assess and evaluate current and Respondent alleged in its complaint that PPA AO No. 03-90
of its corporate existence in 1976, respondent had been granted future issuances pertaining to Cargo Handling contracts, explicitly provides that cargo handling contractors with existing or
permits of varied durations to operate the cargo handling operations portworkers' contracts with employers, and the like. The oversight expired contracts but were able to obtain a "satisfactory"
in Dumaguete City. In 1991, petitioner awarded an eight-year committee shall be composed of equal representatives from the performance rating were entitled to a renewal of their respective
contract5 to respondent allowing the latter to pursue its business portworkers, the cargo handling operators and the government cargo handling contracts with petitioner; thus, as respondent was
endeavor in the port of Dumaguete City. This contract expired on 31 including the PPA and the DOTC Undersecretary who shall act as given a rating of "very satisfactory" 19 in 1998, it follows that its
December 1998. Chairman. cargo handling agreement should have been renewed after its
expiration. Respondent likewise claimed that the approval and
At about the time respondent was awarded an eight-year contract in 4. Henceforth, all expiring Cargo Handling contracts shall be implementation of PPA AO No. 03-2000 was plainly arbitrary as
1991 or, on 12 June 1990, PPA Administrative Order No. 03-90 reviewed by the oversight committee referred to in paragraph 3 said administrative order was:
(PPA AO No. 03-90) dated 14 May 1990 took effect.6 This above for recommendation to the PPA Board of Directors as to
administrative order contained the guidelines and procedures in the whether the same shall be terminated and subjected to public 19.1 Obviously unfair to plaintiff and port operators affected
selection and award of cargo handling contracts in all government because it is an afterthought. It came about after PCASO20 wrote a
letter dated 04 February 2000 demanding for the renewal of the behalves, are hereby ordered to cease and desist from further 7. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS
contract of the members with a rating of Satisfactory' conducting the scheduled public bidding and awards on April 7, VIOLATIVE OF DUE PROCESS.
2000, and April 10, 2000, respectively within twenty (20) days from
19.2 Obviously prejudicial to the right to renew the contract vested receipt hereof'24 8. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS
upon plaintiff (respondent herein) by virtue of Administrative Order UNSUPPORTED BY THE FACTS OF THIS CASE.28
No. 03-90 which was in force and effect during the period of Petitioner thereafter filed a manifestation with urgent motion for
contractual relations between defendant PPA and plaintiff. reconsideration25 to the aforesaid order of the trial court. Petitioner In its 31 May 2000 Order, the trial court set aside the injunctive writ
argued that the court a quo did not have the requisite jurisdiction to it previously issued "to give way to the pronouncements of P.D. No.
19.3 Obviously repugnant to the Memorandum of Understanding issue the assailed temporary restraining order; that respondent was 1818" as the "function of the PPA is vested with public interest." 29
dated May 29, 1996, which has the force of law between the estopped from seeking refuge from the court as it had already
contracting parties. expressed its intention to join the bidding process involving the
It was thereafter the turn of respondent to file its motion for
operation of the cargo handling operations in the port of Dumaguete
reconsideration30 of the Order of the trial court but the court a
19.4 Obviously designed to justify non-compliance of a legal City; that respondent failed to exhaust administrative remedies by quo stood firm on its Order setting aside the injunctive writ it
obligation created under Administrative Order No. 03-90. not seeking relief from petitioner prior to initiating this action before issued.31 From this adverse ruling, respondent filed a Petition
the court; and that it was in the best interest of the public if the
for Certiorari under Rule 65 before the Court of Appeals. In said
bidding process proceeds as scheduled because of the "internal
19.5 A scheme to accommodate political pressures. petition, respondent maintained that P.D. No. 1818 did not cover the
squabbling" taking place within respondent corporation which could
restraining order and preliminary injunction formerly issued by the
affect the quality of its service. This motion was denied in the order
19.6 Arbitrary because it did not treat all port operators alike. For RTC, Branch 44, Dumaguete City. According to respondent, as there
of the court a quo dated 24 April 2000.26 was no assurance that the would-be winner of the bidding process
instance the Asian Terminals, Inc., the operator of South Harbor,
possessed the capacity to operate the cargo handling services in
had a negotiated Contract.21 Petitioner seasonably sought the reconsideration27 of the trial court's Dumaguete City, there would have been a cessation of the cargo
order of 24 April 2000 this time arguing that: handling operations in the port of said city following the expiration
In addition, respondent stated in its complaint that in the event the of respondent's second hold-over permit. This, respondent insisted,
bidding would take place as scheduled, a substantial number of 1. PRESIDENTIAL DECREE NO. 1818 PROHIBITS COURTS was not the situation contemplated by P.D. No. 1818 which was
workers in the port of Dumaguete City faced the risk of FROM ISSUING THE INJUNCTIVE WRIT IN ANY CASE, precisely issued to ensure that essential government projects such as
displacement. Moreover, the possibility existed that the contract for DISPUTE OR CONTROVERSY INVOLVING STEVEDORING stevedoring and arrastre services would not be disrupted by the
cargo handling in Dumaguete City would be awarded to an AND ARRASTRE CONTRACTS. issuance of a temporary restraining order. In this case, the
incompetent and inexperienced participant in the bidding process restraining order and injunction issued by the trial court ensured the
unlike respondent which had already invested substantial capital in continuity of the cargo handling operations in Dumaguete City.
2. THE ORDER DATED APRIL 24, 2000 ADJUDICATES THE
its operations in the port of said city. To further support its claim for Respondent further argued that as what is involved in this case is
MERITS OF THE COMPLAINT EVEN BEFORE THE PARTIES
a preliminary mandatory injunction, respondent alleged that a fellow petitioner's failure to comply with its obligation under PPA AO No.
ARE HEARD.
PCASO member, Vitas Port Arrastre Service Corporation, operating 03-90 and the validity of PPA AO No. 03-2000, petitioner could not
at Pier 18, Vitas, Tondo, Manila, successfully obtained a writ of invoke P.D. No. 1818 which should only apply to matters involving
preliminary injunction from the RTC, Branch 46, Manila. 22 3. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000
VIOLATES THE LAW IN CONTRACT MAKING. the exercise of discretion by administrative agencies.32

Immediately after the filing of respondent's complaint, the RTC, Respondent likewise claimed that the pre-qualification phase of the
Branch 44 of Dumaguete City, issued an order23 granting 4. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS
bidding procedure was attended by the following irregularities:
respondent's prayer for a temporary restraining order. The BEYOND THE JURISDICTION OF THE HONORABLE COURT.
dispositive portion of the order reads:
5. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS 1. Respondents (petitioner herein), then defendants (in Civil Case
No. 12688), set October 15, 1999 as the deadline for the submission
WHEREFORE, premises considered, and considering the urgent AGAINST PUBLIC INTEREST.
of the pre-qualification documents of prospective bidders. However,
nature of the plaintiff's complaint, that serious and irreparable they pre-qualified DUMAGUETE KING PORTS & ILOILO
damage or injury would be suffered by the plaintiff unless said acts 6. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS QUEEN PORTS INC. (DUKIQ), which incidentally tried to
of the defendants complained of, is restrained; said defendants VIOLATION OF THE 1997 RULES ON CIVIL PROCEDURE. intervene in this case, on April 3, 1999, which was not a juridical
Philippine Ports Authority, Manila, Juan O. Peña, Benjamin entity as of said date. It should be pointed out that it was only
Cecilio, their agents, representatives or persons acting in their
registered with the Securities and Exchange Commission (SEC) on 1. Subject to the posting of an injunction bond by herein petitioner in SECTION 1. No court in the Philippines shall have jurisdiction to
April 4, (2000)' This means that DUKIQ became only (sic) a the amount to be determined by the court a quo, respondent Court is issue any restraining order, preliminary injunction, or preliminary
juridical entity only three days before the scheduled dropping of the directed to ISSUE a Writ of Preliminary Injunction; mandatory injunction in any case, dispute, or controversy involving
bids on April 7, 2000 and seven (7) days before the supposed an infrastructure project, or a mining, fishery, forest or other natural
opening of the bids on April 10, 2000. This is certainly irregular and 2. Respondent Philippine Ports Authority to (DESIST) from resource development project of the government, or any public
only bolsters petitioner's (respondent herein) apprehensions that conducting the scheduled public bidding of cargo handling utility operated by the government, including among others public
there exists a preferred bidder. Moreover, DUKIQ was only issued a operations in the port of Dumaguete City, effective until and after utilities for the transport of the goods or commodities, stevedoring
Mayor's Permit on April 18, 2000' This is not also in accordance the case a quo shall have been finally decided.34 and arrastre contracts, to prohibit any person or persons, entity or
with the rules of the bidding. government official from proceeding with, or continuing the
execution or implementation of any such project, or the operation of
Petitioner is now before us seeking the reversal of the
2. The composition of the Pre-qualification, Bids, Awards such public utility, or pursuing any lawful activity necessary for
aforementioned decision of the appellate court on the following
Committee (PBAC) as composed by the respondents is not in such execution, implementation or operation.
grounds:
conformity with AO 03-90.
IT WAS GRAVE ERROR FOR RESPONDENT COURT OF On the other hand, the pertinent portion of Rep. Act No. 8975 states:
3. PPA Administrative Orders 03-90 - and 03-2000' emanated from APPEALS [SECOND DIVISION] TO ISSUE ITS QUESTIONED
the same PPA Board Resolution No. 912. It should be pointed out DECISION CONSIDERING THAT: SEC. 3. Prohibition on the Issuance of Temporary Restraining
that AO 03-2000 was issued arbitrarily for the purpose of evading Orders, Preliminary Injunctions and Preliminary Mandatory
the contractual obligation of respondents to renew the contracts of (i) P.D. NO. 1818, LATER AMENDED BY R.A. 8975 AND Injunctions. 'No court, except the Supreme Court, shall issue any
those cargo handling operators which obtained a satisfactory REITERATED IN ADMINISTRATIVE CIRCULAR NO. 11.2000 temporary restraining order, preliminary injunction or preliminary
performance rating from the PPA. In other words, the most glaring mandatory injunction against the government, or any of its
OF THIS HONORABLE COURT, BANS THE ISSUANCE OF
irregularity committed by respondents here is the issuance of AO subdivision, officials or any person or entity, whether public or
WRITS OF PRELIMINARY PROHIBITORY INJUNCTIONS IN
03-2000, which is diametrically opposed to and inconsistent with private, acting under the government's direction, to restrain, prohibit
CASES INVOLVING GOVERNMENT INFRASTRUCTURE
AO 03-90 and PPA Board Resolution 912. This is not to mention or compel the following acts:
PROJECTS AND SERVICE CONTRACTS, WHICH INCLUDES
that said AO 03-2000 will also deprive cargo handling operators in (SIC) ARRASTRE AND STEVEDORING CONTRACTS.
general, and CISAI, in particular, of their proprietary rights. 33 (b) Bidding or awarding of contract/project of the national
government as defined under Section 2 hereof; . . . 37
(ii) CISAI HAS NO CLEAR LEGAL RIGHT TO AN
Further, respondent insisted that on the basis of the clear language of
INJUNCTIVE WRIT. IT ACQUIRED NO VESTED RIGHTS TO
PPA AO No. 03-90, it was entitled to the renewal of its cargo ARRASTRE AND STEVEDORING OPERATIONS AT THE Concededly, P.D. No. 1818 which was the law in force at the time of
handling agreement as it was able to earn a "very satisfactory" PORT OF DUMAGUETE CITY AS ITS HOLD-OVER the institution of this case, applies to the operation of arrastre and
performance rating. The implementation, therefore, of PPA AO No. stevedoring contracts such as the one subject of the present case.
CAPACITY COULD BE REVOKED AT ANY GIVEN TIME.
03-2000 transgressed the constitutional guarantee against non- Notably, the Court of Appeals' ruling was based solely on the
impairment of contract and ignored respondent's vested right to the perceived irregularities which occurred during the pre-qualification
renewal of its cargo handling pact. (iii) CISAI CANNOT COMPEL PPA TO RENEW ITS
CONTRACT FOR CARGO HANDLING SERVICES.35 phase of the bidding process. The veracity of these claimed
irregularities, however, are best left for the consideration of the trial
Relying on respondent's allegation as regards the purported court which has yet to rule on the merits, if there be any, of the main
irregularities which occurred during the pre-qualification part of the In our resolution of 12 November 2003, we granted petitioner's case.
bidding process, the Court of Appeals nullified the 31 May 2000 prayer for a temporary restraining order.36
Order of the trial court. The decretal portion of the appellate court's More than this, as the issue presented before us is whether the
decision, now assailed before us, states: Petitioner insists that the decision of the Court of Appeals failed to appellate court erred in issuing the writ of preliminary injunction, we
take into consideration the unequivocal language of Republic Act hew to the general principles on this subject.
WHEREFORE, premises considered the petition is GRANTED; No. 8975 which amended P.D. No. 1818.
and the assailed 31 May 2000 Order of the respondent Judge is A preliminary injunction is an order granted at any stage of an action
hereby declared NULL and VOID. In lieu of the same, the Court The main provision of P.D. No. 1818 provides: prior to judgment of final order, requiring a party, court, agency, or
orders: person to refrain from a particular act or acts.38 It is a preservative
remedy to ensure the protection of a party's substantive rights or
interests pending the final judgment in the principal action. A plea constitutional precept that "no law impairing obligations of contracts the scope of their authority, the situation at the case at bar does not
for an injunctive writ lies upon the existence of a claimed emergency shall be passed."45 fall within this exception.
or extraordinary situation which should be avoided for otherwise,
the outcome of a litigation would be useless as far as the party We agree with petitioner and hold that respondent was not able to As for respondent's claim that PPA AO No. 03-2000 violated the
applying for the writ is concerned. establish its claimed right over the renewal of its cargo handling constitutional provision of non-impairment of contract, suffice it to
agreement with the former. state here that all contracts are "subject to the overriding demands,
At times referred to as the "Strong Arm of Equity," 39 we have needs, and interests of the greater number as the State may
consistently ruled that there is no power the exercise of which is To begin with, stevedoring services are imbued with public interest determine in the legitimate exercise of its police power." 52
more delicate and which calls for greater circumspection than the and subject to the state's police power as we have declared in Anglo-
issuance of an injunction.40 It should only be extended in cases of Fil Trading Corporation v. Lazaro,46 to wit: Finally, it is settled that the sole object of a preliminary injunction,
great injury where courts of law cannot afford an adequate or may it be prohibitory or mandatory, is to preserve the status
commensurate remedy in damages;41 "in cases of extreme urgency; quo until the merits of the case can be heard and the final judgment
The Manila South Harbor is public property owned by the State. The
where the right is very clear; where considerations of relative operations of this premiere port of the country, including rendered.53 The status quo is the last actual peaceable uncontested
inconvenience bear strongly in complainant's favor; where there is a stevedoring work, are affected with public interest. Stevedoring status which preceded the controversy.
willful and unlawful invasion of plaintiff's right against his protest
services are subject to regulation and control for the public good and
and remonstrance, the injury being a continuing one, and where the
in the interest of general welfare.47 In the case at bar, respondent sought the issuance of a writ for
effect of the mandatory injunction is rather to reestablish and
preliminary injunction in order to prevent the "cessation of cargo
maintain a preexisting continuing relation between the parties,
As "police power is so far-reaching in scope, that it has become handling services in the port of Dumaguete City to the detriment and
recently and arbitrarily interrupted by the defendant, than to prejudice of the public, shipper, consignees and port
establish a new relation."42 almost impossible to limit its sweep,"48 whatever proprietary right
that respondent may have acquired must necessarily give way to a workers."54 However, the factual backdrop of this case establishes
valid exercise of police power, thus:49 that respondent's eight-year contract for cargo handling was already
For the writ to issue, two requisites must be present, namely, the terminated and its continued operation in the port of Dumaguete
existence of the right to be protected, and that the facts against City was merely by virtue of a second hold-over permit granted by
which the injunction is to be directed are violative of said right. 43 It 4. In the interplay between such a fundamental right and police
power, especially so where the assailed governmental action deals petitioner through a letter dated 27 December 1999, 55 the pertinent
is necessary that one must show an unquestionable right over the portion of which reads:
premises.44 with the use of one's property, the latter is accorded much leeway.
That is settled law'50
This HOP56 extension shall be valid from January 18, 2000 up to
Petitioner maintains that respondent's claim of vested rights or April 18, 2000, unless sooner withdrawn or cancelled or upon the
proprietary rights over the cargo handling services at the port of In connection with the foregoing, we likewise find no arbitrariness
award of the cargo handling contract thru public bidding.57
Dumaguete City is baseless. It insists that the contract for cargo nor irregularity on the part of petitioner as far as PPA AO No. 03-
handling operations it formerly had with respondent did not amount 2000 is concerned. It is worthwhile to remind respondent that
petitioner was created for the purpose of, among other things, By its nature, the hold-over permit was merely temporary in nature
to a property right; instead, it should be considered as a mere
promoting the growth of regional port bodies. In furtherance of this and may be revoked by petitioner at anytime. As we declared in the
privilege which can be recalled by the granting authority at anytime
objective, petitioner is empowered, after consultation with relevant case of Anglo-Fil Trading Corporation,58 hold-over permits are
when public welfare so requires. merely temporary and subject to the policy and guidelines as may be
government agencies, to make port regulations particularly to make
rules or regulation for the planning, development, construction, implemented by petitioner. The temporary nature of the hold-over
On the other hand, respondent anchors its application for permit should have served as adequate notice to respondent that, at
maintenance, control, supervision and management of any port or
preliminary injunction on its alleged vested right over the cargo any time, its authority to remain within the premises of the port of
port district in the country.51 With this mandate, the decision to bid
handling services in the port of Dumaguete City pursuant to PPA Dumaguete City may be terminated. Unlike the contract for cargo
out the cargo holding services in the ports around the country is
AO No. 03-90. It insists that under this administrative order, properly within the province and discretion of petitioner which we handling services previously entered into by petitioner and
petitioner was bound to renew their cargo handling services cannot simply set aside absent grave abuse of discretion on its part. respondent, whose terms and conditions were agreed upon by the
agreement as it was able to meet and, in fact, was able to surpass the parties herein and which clearly provided for a specific period of
The discretion to carry out this policy necessarily required prior
"satisfactory" performance rating requirement contained therein. effectivity as well as a stipulation regarding the notice of violation,
study and evaluation and this task is best left to the judgment of
Further, respondent posits the argument that PPA AO No. 03-2000 the hold-over permit was unilaterally granted by petitioner pursuant
petitioner. While there have been occasions when we have brushed
was formulated by petitioner as a device by which it could avoid its to its authority under the law.
aside actions on the part of administrative agencies for being beyond
obligation under the superseded administrative order. Respondent,
therefore, concludes that PPA AO No. 03-2000 contravenes the
Based on the foregoing, it is clear that at the time of the institution of
this suit, respondent no longer possessed any contract for its
continued operation in Dumaguete City and its stay in the port of
said city was by virtue of a mere permit extended by petitioner
revocable at anytime by the latter. Obviously, the writ of preliminary
injunction issued by the Court of Appeals granted respondent the
authority to maintain its cargo handling services despite the absence
of a valid cargo handling agreement between respondent and
petitioner. For this reason, we hold that the Court of Appeals erred
in ordering the court a quo to issue the writ of preliminary injunction
in favor of respondent.

WHEREFORE, premises considered, the present petition is

SO ORDERED.