FACTS:

The case involves a petition for certiorari and prohibition challenging the orders of the respondent Judge Ramon S. Caguioa, Regional Trial Court (RTC) of Olongapo City, Branch 74, in a civil case. The lower court petitioners, Indigo Distribution Corporation and others, filed a petition for declaratory relief seeking to nullify the implementation of a law that increased the excise tax rates on alcohol and tobacco products, as unconstitutional. They argued that the law subjected their importations into a special economic and freeport zone to all applicable taxes, duties, and charges despite their tax exemption certificates granted by the authorities. The lower court granted their application for a preliminary injunction.

The Republic of the Philippines, through the authority in charge, filed a petition to annul the lower court's order and writ of preliminary injunction. The Republic also asked the lower court to suspend the proceedings pending the resolution of the Supreme Court case. Meanwhile, the private respondents filed motions to intervene and admit complaints-in-intervention, claiming that they were similarly situated and would be affected by the implementation of the law. The lower court judge granted their motions and complaints-in-intervention. The Republic moved for reconsideration, alleging that it was denied due process as it never received copies of the private respondents' motions and complaints-in-intervention. The lower court denied the Republic's motion for reconsideration and motion to suspend the proceedings.

The Republic filed a petition claiming that the judge acted with manifest partiality and grave abuse of discretion. It argued that the judge violated its right to due process by allowing the private respondents' motions and complaints-in-intervention without prior notice. The Republic also claimed that it never received any notice or copies of the motions and complaints-in-intervention. Furthermore, the Republic alleged that the judge abused his discretion by extending the benefits of a preliminary injunction to the private respondents using the same bond posted by the lower court petitioners. The Republic requested the judge's inhibition and the issuance of a TRO and/or a writ of preliminary injunction. During the pendency of the petition, the Court partially granted the Republic's earlier petition and nullified the judge's previous orders. The private respondents argued procedural defects in the petition and contended that the judge correctly allowed their complaints-in-intervention. Finally, they argued that prohibition was improper since the Court had previously denied the Republic's request for a writ of prohibition and the judge had been suspended pending resolution of the present petition.

ISSUES:

1. Whether the present petition was filed within the reglementary period and complied with the rules on proof of filing and service of the petition.

2. Whether the principle of hierarchy of courts applies in this case or if there are exceptional circumstances justifying direct invocation of the Supreme Court's jurisdiction.

3. Whether the respondent judge violated the Republic's right to due process by allowing intervention without notice, extending the benefit of injunction without an injunction bond, and suspending the Republic's right to collect excise taxes.

4. Whether or not the movant complied with the notice requirement in filing the motions and complaints-in-intervention.

5. Whether or not the respondent judge acted with grave abuse of discretion in admitting the motions and complaints-in-intervention without prior notice.

6. Whether or not the exercise of discretion by the respondent judge was "sound" in considering the intervention.

7. Whether or not the respondent judge violated the due process rights of the Republic by admitting the motions and complaints-in-intervention without prior notice.

8. Whether or not the respondent judge should be held liable for gross ignorance of the law and conduct prejudicial to the best interest of the service.

RULING:

1. The present petition was filed within the reglementary period and complied with the rules on proof of filing and service of the petition.

2. The principle of hierarchy of courts does not apply in this case due to exceptional circumstances, such as special and important reasons stated in the petition, public welfare, advancement of public policy, broader interest of justice, patent nullities of challenged orders, and exceptional and compelling circumstances.

3. The respondent judge violated the Republic's right to due process by allowing intervention without notice, extending the benefit of injunction without an injunction bond, and suspending the Republic's right to collect excise taxes.

4. The movant failed to comply with the notice requirement in filing the motions and complaints-in-intervention.

5. The respondent judge acted with grave abuse of discretion in admitting the motions and complaints-in-intervention without prior notice.

6. The exercise of discretion by the respondent judge was not "sound" as it violated the basic precepts of fair play and protection of all interests involved.

7. The respondent judge violated the due process rights of the Republic by admitting the motions and complaints-in-intervention without prior notice.

8. The respondent judge should be held liable for gross ignorance of the law and conduct prejudicial to the best interest of the service.

PRINCIPLES:

• Procedural rules can be relaxed for compelling reasons in order to promote the objective of securing a just, speedy, and inexpensive disposition of every action and proceeding.

• Due process of law is a constitutional right reserved to every litigant, including the Republic.

• A motion for intervention must comply with the requirements of notice and hearing, as well as proof of service, in order to afford the adverse party the opportunity to oppose the motion and to uphold due process.

• The notice requirement is mandatory in motions and complaints-in-intervention in order to afford the adverse party the opportunity to state agreement or opposition and to protect their due process rights.

• No preliminary injunction shall be granted without a hearing and without prior notice to the party sought to be enjoined.

• Both an original complaint and a complaint-in-intervention must be served on the adverse party with proof of service duly filed before any valid court action can be taken.

• Judicial discretion must be exercised in accordance with the basic precepts of fair play and the protection of all interests involved.

• Grave abuse of discretion arises when a lower court or tribunal violates the Constitution or grossly disregards the law or existing jurisprudence.