Republic of the Philippines COURT OF APPEALS Padre Faura, Manila

HARBOUR CENTRE PORT TERMINAL, INC., Plaintiff, -versusCivil Case No. 11-623

HOME GUARANTY CORPORATION, Defendant. x-----------------------------------------------------x

PLAINTIFFS MEMORANDUM (Re : HCPTI Petition for Certiorari )

Plaintiff HCPTI, by counsel, to this Honorable Court, respectfully states that: Prefatory Statement

SUMMARY OF HCPTIS GROUND FOR ISSUANCE OF PRELIMINARY INJUNCTION AND TEMPORARY RESTRAINING ORDER

1. On July 1, 2011, petitioner filed a Complaint with prayer for the issuance of temporary restraining order and writ of preliminary prohibitory injunction against private respondents. 2. On July 11, 2011 petitioner file an Extremely Urgent Motion to Admit Amended Complaint with prayer to set for the hearing the issuance of temporary restraining order/writ of preliminary injunction. 3. Petitioner/Plaintiff repleads and incorporates by reference the foregoing statements In support of its application for a temporary restraining order and writ of preliminary injunction pursuant to Rule 58 of the 1997 Rules of Civil Procedure. 4. There is no question that respondent/defendant HGCs actions obstruct, impede and hinder the complete enjoyment of petitioner/plaintiff HCPTIs right to use and enjoy the Subject Property which is integral to its entire port operations. 5. As above-stated, defendant HGC has illegally terminated the Contract of Usufruct and threatens to prevent plaintiff HCPTI from lawfully utilizing the Subject Property to the detriment of its port operations. Soon, defendant HGC shall start implementing measures aimed at totally preventing plaintiff HCPTI from further using the Subject Property. 6. Thus, Petitioner/Plaintiff is entitled to the relief prayed for and the whole or part of such relief consists in the issuance of a temporary restraining order and a writ of preliminary injunction to enjoin respondent/defendant from performing further acts of cancelling, revoking or terminating the contract of usufruct between HCPTI and SMAP/PDB or otherwise enforcing and implementing its decision to cancel or revoke said contract. 7. Petitioner/Plaintiff has a right to prevent the termination/cancellation of the contract of usufruct insofar as it impairs its right to act as the exclusive port operator of the Harbour Centre Port Terminal located inside the Manila Harbour Centre. 8. In issuing the notice of cancellation of the contract of usufruct between HCPTI and SMAP/PDB SBMA, respondent/defendant is doing and/or is threatening to perform an act in violation of the rights of the plaintiff/petitioner provided for in the contract of usufruct that will result in great and irreparable damage and injury to plaintiff. In that, Petitioner/Plaintiff will lose its right to be the exclusive port operator of the Harbour Centre Port Terminal located inside the Manila Harbour Centre. In the process, petitioner/plaintiff: Will be deprived of its propertyin the form of investments-without due process since respondent/defendant declared the cancellation of the contract of usufruct without hearing and without due notice; Will be forced to commit breach /or default with other locators who use the berthing space of Manila Harbor Center to unload

cargos, and said locators are engaged in the business affecting public interest such as flour mills, oil depot and bulk terminals; and will not be able to recover its costs for rehabilitating/upgrading/repairing and improving the subject property. will lose the trust and confidence and goodwill it has established with its client both foreign and local for the last eight years; will impede economic and maritime activities wherein foreign and local vessels will be dislocated once port operations are suspended.

9. Accordingly, if not enjoined from continuing with its illegal acts, defendant HGC will create, as it has created and continues to create, herein enumerated grave and irreparable injury to plaintiff HCPTI and plaintiff HCPTI will stand to suffer continuing material and substantial invasion of its rights and substantial business losses in the amount of at least Php 100,000,000.00 per year. 10. In view of the grave and irreparable injury that defendant HGCs illegal acts will cause plaintiff HCPTI and its clients, the issuance of a Temporary Restraining Order (TRO) and a Writ of Preliminary Injunction against defendant HGC are imperative. 11. Private respondent HGC filed its Answer dated July 18, 2011.

12. However, on September 16, 2011, public respondent issued an Order denying petitioners application for writ of preliminary injunction, the dispositive portion of which provides: Based on the evidence adduced by the parties, the Court finds that the plaintiff failed to satisfy the existence of a clear legal right which ought to be protected by an injunctive relief. Plaintiff alleged that the problem arose when defendant sent a demand letter for the accounting of plaintiffs revenue from 8 September 2003 to 31 December 2010 and the remittance of the amount due pursuant to the Contract of Usufruct. Eventually defendant sent another letter demanding that plaintiff vacate and surrender the possession of the subject property within ten (10) days. It is plaintiffs contention that it has a clear legal right for this Court to enjoin defendant from committing further acts cancelling, revoking or terminating the contract of usufruct. A perusal of the letters revealed that no specific act was mentioned by defendant but only the notice to rescind the contract and that if plaintiff will not vacate within ten (10) days, it shall constrain Home Guaranty Corporation to take appropriate legal action. Obviously, these demand letters were sent prior to taking appropriate legal actions, as specifically mentioned. From the

testimonial evidence, manifestations in court and pleadings, plaintiff never denied that it failed to pay 5% of its revenue from 2003 up to the present contrary to the express stipulation of the Contract of Usufruct. Thus, plaintiff has failed to establish a clear legal right so as to entitle it to a writ sought to be issued to enjoin defendant from taking legal actions. As stressed in numerous jurisprudence, a court of law cannot enjoin an act when the applicant has not shown a clear right to be protected. In the case of Equitable PCI Bank v. OJ-Mark Trading Inc., et al. (G.R. No. 165950, August 11, 2010), the Supreme Court held: In the case at bar, respondents failed to show that they have a right to be protected and that the acts which the writ is to be directed are violative of the said right. On the face of their clear admission that they were unable to settle their obligations which were secured by the mortgage, petitioner has a clear right to foreclose the mortgage. x x x Without delving into the merits of this case, and only for the purpose of the application for a writ of preliminary injunction, this Court believes that plaintiff failed to establish sufficient ground to warrant the issuance of the relief prayed for. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. Where the complainants right or title is doubtful or disputed, injunction is not proper (Spouses Rafael Y. Arcega, et al. vs. CA and RCBC, G.R. No. 122206, July 7, 1997). Although the damage or injury may be irreparable if no injunction is to issue, plaintiffapplicant nevertheless has the burden of proving its clear legal right and that defendants threat to take appropriate legal action is a violation of said right. Absent such clear and unmistakable right, this Court cannot step in to issue an injunction although provisional. (Underscoring supplied.) 13. On October 14, 2011, petitioner filed its Motion for Reconsideration on the Order dated September 16, 2011. 14. On February 14, 2012, petitioner received an Order dated January 31, 2012 denying petitioners Motion for Reconsideration, the dispositive portion of which reads: WHEREFORE, plaintiffs Motion for Reconsideration is DENIED for lack of merit. GROUNDS FOR THE DENIAL

On September 16, 2011, public respondent issued an Order denying petitioners application for writ of preliminary injunction, the dispositive portion of which provides: Based on the evidence adduced by the parties, the Court finds that the plaintiff failed to satisfy the existence of a clear legal right which ought to be protected by an injunctive relief. Plaintiff alleged that the problem arose when defendant sent a demand letter for the accounting of plaintiffs revenue from 8 September 2003 to 31 December 2010 and the remittance of the amount due pursuant to the Contract of Usufruct. Eventually defendant sent another letter demanding that plaintiff vacate and surrender the possession of the subject property within ten (10) days. It is plaintiffs contention that it has a clear legal right for this Court to enjoin defendant from committing further acts cancelling, revoking or terminating the contract of usufruct. A perusal of the letters revealed that no specific act was mentioned by defendant but only the notice to rescind the contract and that if plaintiff will not vacate within ten (10) days, it shall constrain Home Guaranty Corporation to take appropriate legal action. Obviously, these demand letters were sent prior to taking appropriate legal actions, as specifically mentioned. From the testimonial evidence, manifestations in court and pleadings, plaintiff never denied that it failed to pay 5% of its revenue from 2003 up to the present contrary to the express stipulation of the Contract of Usufruct. Thus, plaintiff has failed to establish a clear legal right so as to entitle it to a writ sought to be issued to enjoin defendant from taking legal actions. As stressed in numerous jurisprudence, a court of law cannot enjoin an act when the applicant has not shown a clear right to be protected. In the case of Equitable PCI Bank v. OJ-Mark Trading Inc., et al. (G.R. No. 165950, August 11, 2010), the Supreme Court held: In the case at bar, respondents failed to show that they have a right to be protected and that the acts which the writ is to be directed are violative of the said right. On the face of their clear admission that they were unable to settle their obligations which were secured by the mortgage, petitioner has a clear right to foreclose the mortgage. x x x Without delving into the merits of this case, and only for the purpose of the application for a writ of preliminary injunction, this Court believes that plaintiff failed to establish sufficient ground to warrant the issuance of the relief prayed for. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. Where the complainants right or title is doubtful or disputed, injunction is not proper (Spouses Rafael Y. Arcega, et al. vs. CA and RCBC, G.R. No. 122206, July 7, 1997). Although the damage or injury may be irreparable if no

injunction is to issue, plaintiff-applicant nevertheless has the burden of proving its clear legal right and that defendants threat to take appropriate legal action is a violation of said right. Absent such clear and unmistakable right, this Court cannot step in to issue an injunction although provisional. (Underscoring supplied.)

5. On October 14, 2011, petitioner filed its Motion for Reconsideration on the Order dated September 16, 2011. 6. On February 14, 2012, petitioner received an Order dated January 31, 2012 denying petitioners Motion for Reconsideration, the dispositive portion of which reads:

WHEREFORE, plaintiffs Motion for Reconsideration is DENIED for lack of merit.

ARGUMENTS AND DISCUSSIONS The public respondent commited grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the assailed orders which denied petitioners application for the issuance of a writ of preliminary injunction seeking to enjoin private respondent from canceling, revoking or terminating the contract of usufruct between the former and the Smokey Mountain Asset Pool (SMAP) In its Order dated September 16, 2011, public respondent denied petitioner HCPTIs application for a writ of preliminary injunction, the dispositive portion of which reads: Based on the evidence adduced by the parties, the Court finds that the plaintiff failed to satisfy the existence of a clear legal right which ought to be protected by an injunctive relief. Plaintiff alleged that the problem arose when defendant sent a demand letter for the accounting of plaintiffs revenue from 8 September 2003 to 31

December 2010 and the remittance of the amount due pursuant to the Contract of Usufruct. Eventually defendant sent another letter demanding that plaintiff vacate and surrender the possession of the subject property within ten (10) days. It is plaintiffs contention that it has a clear legal right for this Court to enjoin defendant from committing further acts cancelling, revoking or terminating the contract of usufruct. A perusal of the letters revealed that no specific act was mentioned by defendant but only the notice to rescind the contract and that if plaintiff will not vacate within ten (10) days, it shall constrain Home Guaranty Corporation to take appropriate legal action. Obviously, these demand letters were sent prior to taking appropriate legal actions, as specifically mentioned. From the testimonial evidence, manifestations in court and pleadings, plaintiff never denied that it failed to pay 5% of its revenue from 2003 up to the present contrary to the express stipulation of the Contract of Usufruct. Thus, plaintiff has failed to establish a clear legal right so as to entitle it to a writ sought to be issued to enjoin defendant from taking legal actions. As stressed in numerous jurisprudence, a court of law cannot enjoin an act when the applicant has not shown a clear right to be protected. In the case of Equitable PCI Bank v. OJ-Mark Trading Inc., et al. (G.R. No. 165950, August 11, 2010), the Supreme Court held: In the case at bar, respondents failed to show that they have a right to be protected and that the acts which the writ is to be directed are violative of the said right. On the face of their clear admission that they were unable to settle their obligations which were secured by the mortgage, petitioner has a clear right to foreclose the mortgage. x x x Without delving into the merits of this case, and only for the purpose of the application for a writ of preliminary injunction, this Court believes that plaintiff failed to establish sufficient ground to warrant the issuance of the relief prayed for. In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. Where the complainants right or title is doubtful or disputed, injunction is not proper (Spouses Rafael Y. Arcega, et al. vs. CA and RCBC, G.R. No. 122206, July 7, 1997). Although the damage or injury may be irreparable if no injunction is to issue, plaintiff-applicant nevertheless has the burden of proving its clear legal right and that defendants threat to take appropriate legal action is a violation of said right. Absent such clear and unmistakable right, this Court cannot step in to issue an injunction although provisional. (Underscoring supplied.) The public respondent committed grave abuse of discretion amounting to lack or excess of jurisdiction when it failed to

appreciate that the petitioner HCPTI has a clear legal right. 28. Contrary to the public respondents conclusion, petitioner clearly established its rights over the subject property. It was clearly established that petitoiners rights are anchored on the Contract of Usufruct between it and PDB, acting in its capacity as the Trustee of Smokey Mountain Asset Pool (SMAP). The terms and conditions of the contract of usufruct clearly enunciated HCPTIs right to enjoy, exclusive right to use and occupy the property. 29. Article 562 of the New Civil Code provides: Art. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it of the law otherwise provides. 30. Undoubtedly, the right to enjoy stated in the above quoted provision is a real right given to HCPTI, which necessarily includes the right to possess, exclusive right to use and occupy. It bears stressing that a contract of usufruct is a nominate contract and being so, has its exclusive rules or provisions that govern them particularly as to its manner of extinguishment. A contract of usufruct can only be extinguished by grounds enumerated in Article 603 of the New Civil Code. 31. Article 603 of the New Civil Code provides for the modes of extinguishing usufruct. ART. 603. Usufruct is extinguished: (1) By the death of the usufructuary, unless a contrary intention clearly appears; (2) By expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct; (3) (4) (5) (6) By merger of the usufruct and ownership in the same person; By renunciation of the usufructuary; By the total loss of the thing in usufruct; By the termination of the right of the person constituting the

usufruct; (7) By prescription.

32. None of the aforesaid grounds was cited by the respondent to justify the revocation of the contract of usufruct. The public respondent committed grave abuse of discretion amounting to lack or excess of jurisdiction when it failed to appreciate that the violation of petitioners rights is material and substantial. 33. Unmistakably, by acting to cancel and revoke the contract of usufruct, HCPTIs right has been violated by private respondent HGC. Actual attempt and threat to cancel, revoke of rescind the contract of usufruct thru respondent HGCs demand letters is clear violation of HPCTIs right to enjoy the subject property. Section 3, Rule 58, of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. (Emphasis supplied) 34. Respondent HGC has absolutely no right to cancel, revoke or rescind the Contract of Usufruct and its threatened actions, unless restrained or enjoined, will cause irreparable

damage not only to the rights and interests of petitioner HCPTI but also to the rights and interests of the SMAP and the locators of the Manila Harbour Centre. 35. It should again be emphasized that respondent is not a party to the contract of usufruct. The assailed ruling failed to consider this circumstance. Thus, respondent HGC, not being a party or the real party in-interest in the Contract of Usufruct, cannot cancel, revoke, rescind said contract nor consider the same to have no force and effect, and then demand that petitioner HCPTI cease and desist from representing to any person or entity the continued existence of any right in its favor resulting therefrom. 36. Petitioner HCPTI continues to suffer from the unsettled state of affairs because it cannot pursue its plans and programs and make projections for expansion unless the above issue is settled. Petitioner HCPTI is financially burdened by respondents unilateral act, notwithstanding that it has no right to rescind or revoke the subject contract under the law. 37. In Sps. Abelardo & Conchita Lopez, and Sps. Antonio & Conchita Manansala vs. Court of Appeals and Roberto Vallarta (G.R. No. 110929, January 20, 2000), the
Supreme Court eloquently declared:

Generally, injunction is a preservative remedy for the protection of one's substantive right or interest. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. It is resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard compensation. The application of the injunctive writ rests upon the existence of an emergency or of a special reason before the main case can be regularly heard. The essential conditions for granting such temporary injunctive relief are that the complaint alleges facts which appear to be sufficient to constitute a proper basis for injunction and that on the entire showing from the contending parties, the injunction is reasonably necessary to protect the legal rights of the plaintiff pending the litigation. Two requisites are necessary if a preliminary injunction is to issue, namely, the existence of a right to be protected and the facts against which the injunction is to be directed are violative of said right. In particular,

for a writ of preliminary injunction to issue, the existence of the right and the violation must appear in the allegation of the complaint and a preliminary injunction is proper only when the plaintiff (private respondent herein) appears to be entitled to the relief demanded in his complaint.The public respondent committed grave abuse of discretion amounting to lack or excess of jurisdiction when it failed to appreciate that there is an urgent and permanent necessity to prevent grave and irreparable damage. 38. Indeed, there is a pressing necessity for issuance of injunctive relief to avoid injurious consequences on HCPTIs right to enjoy the property pursuant to the contract of usufruct. It is clear from the foregoing settled jurisprudence that the contract of usufruct can only be extinguished based on grounds enumerated under Article 603 of the New Civil Code. 39. It bears stressing that this Honorable Court impliedly recognized that petitioner HCPTI will suffer grave and irreparable damage. xxx Although the damage or injury may be irreparable if no injunction is to issue, plaintiff-applicant nevertheless has the burden of proving its clear legal right and that defendants threat to take appropriate legal action is a violation of said right. Absent such clear and unmistakable right, this Court cannot step in to issue an injunction although provisional. (Emphasis supplied) xxx 40. Indubitably, petitioner HCPTI as stated in its complaint will suffer grave and irreparable damage because its name and goodwill will suffer, not to mention that it will also adversely affect the interest of SMAP and the locators of Manila Harbour Centre. 41. When the elements are present, a writ of preliminary injunction may be issued. In BPI vs. Sps. Santiago, (G.R. No. 169116, March 28, 2007), it was declared that: An injunction is a preservative remedy for the protection of ones substantive right or interest; it is not a cause of action by itself but merely a provisional remedy, an adjunct to the main suit. The purpose of injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and educated. Its sole aim is to preserve the status quo until the merits of the case is heard fully. The issuance of the writ of preliminary injunction as an ancillary or preventive remedy to secure the rights of a party in a pending case is entirely within the discretion of the court taking cognizance of the case, the only limitation being that the discretion should be exercised based upon the grounds and in a manner provided by law. Before a writ of preliminary injunction may be issued, the following requisites must be complied with: (1) a right in esse or a clear or unmistakable

right to be protected; (2) violation of that right; and (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage. (Emphasis supplied) 42. Respondents HGCs notice of cancellation of the contract of usufruct between HCPTI and SMAP or PDB will cause: a. Violation and impairment of SMAP/PDBs undertaking to petitioner under the Contract of Usufruct as it demands the latter to vacate immediately the premises, to the latters great damage and prejudice; b. Deprivation of petitioner of its propertyin the form of investments-without due process since respondent/defendant declared the cancellation of the contract of usufruct without hearing and without notice; c. Default of petitioner to its clients and other locators which use the berthing space of Manila Harbor Center to unload cargos, and said locators are engaged in the business affecting public interest such as cement manufacturers, power producers and bulk terminals; and d. Irreparable injury to petitioner as it would not be able to service the needs of its regular clients and lose them in the process. As a consequence, HCPTI will not only lose its current market share and standing, but will also lose future business. 43. Assuming that the onerous obligation in the contract of usufruct was not remitted by HPCTI, the non-remittance is not a ground to cancel, revoke or rescind the contract of usufruct. As previously stated in the complaint, the grant of the usufruct was founded on the special relationship between the parties. This is the principal consideration of the Contract of Usufruct. 44. It is basic that a contract of usufruct is generally gratuitous, with the usufructuary obligated merely to preserve the form and substance of the thing given in usufruct. Compared to a contract of lease, a contract of usufruct generally requires no consideration. Notwithstanding the agreement of the parties in the particular Contract of Usufruct that the grantor is entitled to 5% share in the gross revenues of the usufructuary particular to the Subject Property net of real estate taxes, this gratuitous characteristic of a usufruct must still be taken into account. In this regard, it is respectfully submitted that the ruling in Equitable PCI Bank v. OJ-Mark Trading, Inc., cited in the assailed Order dated September 26, 2011 is not applicable. The subject therein is a contract of loan. What is involved in this case is a contract of usufruct and not a contract of loan.

45. Thus, although the Contract of Usufruct stipulates for a 5% share of HGC in the gross revenues of petitioner HCPTI, the same is not the principal consideration of the grant of the usufruct. Had the SMAP intended the remittance of the 5% share in gross revenues as the principal consideration of the grant of usufruct, the grantor should have expressly stated that in the Contract of Usufruct and imposed the non-compliance with said stipulation as an express ground for its termination. 46. Rather, the Contract of Usufruct only provides the following grounds for its termination: 5. The parties hereby agree to allow HCPTI to use the PROPERTY as herein described, PROVIDED, that in case of pre-termination of this Contract of Usufruct for any good and avoidable reason of public interest, or for any of the grounds for termination provided under Article 603 of the Civil Code of the Philippines, no liability of any kind shall be incurred by the SMAP or its successor in interest. 47. In view of the foregoing, the non-payment of the onerous obligation provided in the contract of usufruct does not dilute petitioners HPCTIs clear and unmistakable right as extensively discussed above.

PRAYER WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court of Appeals that the instant PETITON FOR CERTIORARI be GRANTED. Other reliefs just and equitable under the premises are likewise prayed for. Quezon City for City of Manila, June 3, 2013.

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