FIRST
DIVISION
|
SPOUSES MANUEL & LUISA TAN LEE,
RENWICK WARREN LEE and JANSSEN THADDEUS LEE,
Petitioners, - versus
- HON. COURT OF APPEALS and CHINA
BANKING CORPORATION , Respondents. |
|
G.R. No. 147191 Present: PANGANIBAN, C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO,
SR., and CHICO-NAZARIO,
JJ. Promulgated: July 27, 2006 |
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CHICO-NAZARIO, J.:
This is a
Petition for Review on Certiorari
under Rule 45 of the Rules of Court, with prayer for the issuance of a
Temporary Restraining Order (TRO) or a Preliminary Injunction against the
Decision[1]
of the Court of Appeals promulgated on 24 October 2000 and its Resolution[2]
dated 19 February 2001, which nullified and set aside the Orders dated 25 March
1999 and 11 May 1999 of Hon. Francisco L. Calingin, Presiding Judge of Branch
22, Regional Trial Court (RTC), Misamis Oriental. In said Orders, Judge Calingin issued a Writ
of Preliminary Injunction against respondent China Banking Corporation (CBC)
from conducting and proceeding with the extrajudicial foreclosure and public
auction sale of the subject mortgaged properties.
The facts as
found by the Court of Appeals are as follows:
In 1992, CBC granted the spouses Lee
credit facilities in the amount of P5 Million. For this facility, private respondents
constituted on
Against the secured credit accommodation,
the spouses Lee initially borrowed P5 Million, the loan covered by promissory
note (P/N) #TLS-20 that was to mature [i]n February 1997. While paying their amortization obligation
under this note, the spouses Lee were able to secure as they did secure
additional loans drawn against the usable/available portion of the credit
facility.
Subsequently, to finance a building
construction project, the spouses Lee’s original credit facility was increased
to P20 Million. To secure the increased facility and all loan
availments/drawings made or to be made against such facility, the REM over the
Borja property was correspondingly amended.
The “Amendment to Real Estate Mortgage” (Annex “B-1”, Petition), was
signed by private respondents and Renwick Warren’s wife, Marivic.
Against this facility as increased, CBC,
as participant of the Land Bank of the Philippine[s] (LBP)-administered Countryside
Loan Fund (CLF) agreed to grant the spouses Lee, via bridge financing, a P20 Million loan to be sourced from
its (CBC’s) availment under the CLC program.
In a letter-notice of June 16, 1997, CBC-Borja Branch manager Ronaldo Uy
informed Manuel Lee of the approval by the Bank’s Executive committee of his
term loan in the amount of P20 Million to be funded out of the LBP-CLF,
subject, inter alia, to the following
terms/conditions:
“E. Against Real Estate Mortgage
(REM) on the three parcels of land described under TCT
Manuel Lee handwrote his conformity to the
conditions aforestated on the letter-notice itself.
On September 22, 1997, Manuel Lee and CBC
formalized the P20 Million loan by executing a “LOAN AGREEMENT” (Annex “G”, Petition), which thus paved the way for
the release of the funds under the LBP-CLF to the former. Under the terms of this agreement, the loan
of P20 Million shall be secured by a real estate mortgage over the Borja
property. The series of replacements
and/or conversion of the promissory notes vis-a-vis
the P20 Million drawn down led to the execution of P/N #TLS-228 for P17,260,000.00
and P/N #TLS-229 for P2,740,000.00 (Annex “C”, Petition).
Meanwhile, [i]n January 1995, the spouses
Lee executed in favor of the Bank REM over the Lumbia property as security for
a P2 Million credit facility (Annex “I”, Petition). They would later execute the “Amendment to
the Real Estate Mortgage” (Annex “I-1”) over the land [“described under TCT No.
T-23215”] to secure an increased credit facility. From this facility, the spouses Lee obtained
a loan of P5 Million as evidenced, after renewal or restructuring, by
P/N BDS-2021 and P/N BDS-2125 dated P2.5 Million each (Annex
“D”, Petition).
Subsequent events show the spouses Lee
defaulting, starting November 1997, on their monthly amortization payments
under the two (2) separate secured facilities.
Consequently, and owing to the acceleration clause embodied in the
covering promissory notes, CBC, thru its Mr. Uy, sent the spouses Lee a letter
dated
In a letter of
On P24,833,333.34,
or face extra-judicial foreclosure of mortgages (Annex “M”, Petition). Answering, Mr. Lee, in his letter of
Towards the end of 1998, CBC sent a fourth
demand letter dated
Unbeknownst to CBC while it was earnestly
demanding payment, the spouses Lee, joined by their sons, filed on P5 Million under P/N #TLS-20 which had already been
paid. Docketed as Civil Case No. 98-765,
the complaint was raffled to Branch 22 of the Court presided by the respondent
judge.
In reaction to what it presently describes
as a “con job done on it by the private
respondent,” CBC set in motion the deferred extrajudicial foreclosure
proceedings and scheduled, per Notice of Auction Sale by Notary Public Virgilio
Cabanlet dated January 18, 1999 (Annex “Q”, Petition), the auction sale of the
Borja and the Lumbia properties on February 15, 1999. Thereupon, the Lees filed an Ex parte motion for injunctive relief,
alleging that the foreclosure, if not restrained, will cause irreparable injury
to them and would prejudice their rights before the trial court.
On February 12, 1999, the respondent judge
issued a temporary restraining order (TRO) enjoining CBC, et al., from
proceeding with the scheduled auction and set hearing dates on the application
for preliminary injunction. Due to this
development, CBC reset the foreclosure sale to
In the hearing on the issuance of the
injunction, Manuel Lee in essence testified that he and the rest of his family
signed the “Amendment to Real Estate
Mortgage” (Annex “B-1”, supra) in blank, thinking that it covered the
Lumbia property. He also alleged that
the only obligation, represented by P/N #TLS-20 for P5 Million, secured
by the mortgage on the Borja Property dated February 11, 1992 (Annex “B”,
supra), had already been paid. On this
premise, he added, there was hardly any necessity to amend the said mortgage
document.
CBC, for its part, adduced testimonial
evidence to traverse the Lees’ claim respecting the signing of aforementioned
deed in blank and about the alleged settlement of their loan. It also presented documentary evidence inter alia consisting of the demand
letters adverted to earlier, the fifty-five (55) promissory notes the spouses Lee
had executed in the Bank’s favor, the
After the conclusion of the
On
“Based
on plaintiffs evidence presented and because of another purported extra
judicial foreclosure on March 29, 1999, which this Court finds to be an utter
disregard of the proceeding which is still ongoing and there being bad faith on
the part of the defendants in pursuing the same. . . this Court finds enough
reason for the issuance of the writ of preliminary injunction . . . so as . . .
to prevent any irreparable damages or injuries to plaintiffs, and likewise to
prevent the claim of plaintiffs which is still to be investigated, heard and
adjudicated, from becoming moot and academic.”
On
On
On
On
WHEREFORE, the instant petition is hereby
GRANTED. Accordingly, the assailed
orders of the respondent judge dated
On
Respondent
CBC, nonetheless, proceeded with the conduct of the public auction sale on
Hence, this petition where petitioners bring before this Court the
following assignment of errors:
1. THAT THE PUBLIC
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RENDERING THE DECISION DATED
OCTOBER 24, 2000 WHEN IT BASED THE ALLEGATIONS OF FACTS ENTIRELY FROM [THE]
“STATEMENT OF FACTS PROPOUNDED BY THE PUBLIC RESPONDENT CBC IN ITS PETITION FOR
CERTIORARI IN CA-G.R. SP NO. 53789 WHICH ARE NOT THE FACTS ESTABLISHED OR
PROVEN IN THE HEARING FOR THE PURPOSE OF DETERMINING THE PROPRIETY OF THE
ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT ON MARCH
25, 1999 AND RE-AFFIRMED ON MAY 11, 1999 IN CIVIL CASE NO. 98-765.
2. THAT, PUBLIC RESPONDENT
COURT OF APPEALS GRAVELY ERRED IN FINDING THAT GRAVE ABUSE OF DISCRETION WAS
COMMITTED BY THE TRIAL COURT WHEN IT MEASURED AND DETERMINED THE ACTUATIONS OF
THE SAID COURT BASED UPON THE FACTS NOT PRESENTED AND ESTABLISHED, AS YET IN
THE TRIAL COURT, THE FACT BEING THAT, TRIAL ON THE MERIT IN CIVIL CASE NO.
98-765 HAS NOT YET STARTED BEFORE THE SAID COURT.
3. THAT, THE PUBLIC
RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT NULLIFIED AND SET ASIDE THE
4. THAT, THE PUBLIC RESPONDENT
COURT OF APPEALS GRAVELY ERRED IN NULLIFYING THE
5, THAT, THE ALLEGED AUCTION
SALE CONDUCTED BY PRIVATE RESPONDENT THRU ITS AGENT NOTARY PUBLIC, ATTY.
VIRGILIO CABANLET ON THE REAL ESTATE PROPERTIES OF PETITIONERS SUBJECT TO THE
WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT IN CIVIL CASE NO.
98-765 ON
6. THAT, THE PUBLIC
RESPONDENT ERRED IN TAKING JURISDICTION OVER THE PETITION FOR CERTIORARI FILED
BY PRIVATE RESPONDENT IN CA-G.R. SP. NO. 53789 AFTER IT FOUND THE PETITION TO
HAVE BEEN FILED OUT OF TIME.[5]
Since respondent CBC alleges
that the issue as to the propriety of a Writ of Preliminary Injunction is mooted
by the sale of the subject properties at public auction, it is but proper to
resolve this issue first.
Petitioners claim that the
alleged auction sale conducted on 14 December 2000 was illegally conducted for
two reasons: (1) the alleged public auction sale was not conducted in
accordance with the Resolution of this Court in Administrative Matter No.
99-10-05-0 issued on 14 December 1999; and (2) the Court of Appeals issued a
TRO dated 12 December 2000 restraining and enjoining CBC and its agent, notary
public Virgilio J. Cabanlet, from selling the subject property on 14 December
2000.[6]
In Administrative Matter No.
99-10-05-0, this Court laid down the procedure for an extra-judicial
foreclosure of a mortgage. The same
provides in part that:
[N]o auction sale shall be
held unless there are at least two (2) participating bidders, otherwise the
sale shall be postponed to another date.
If on the new date set for the sale there shall not be at least two (2)
bidders, the sale shall then proceed.
The names of the bidders shall be reported by the sheriff or the notary
public who conducted the sale to the Clerk of Court before the issuance of the
certificate of sale.
Petitioners claim Cabanlet
never made any report to the Clerk of Court of Executive Judge of the RTC of
Cagayan de Oro City on the fact of the presence of at least two bidders present
in the auction sale of
As further proof of the
irregularity of the conduct of the P32,400,000.00,[8]
while in the P48,900,000.00.[9]
According to respondent CBC,
there was no discrepancy as petitioners had mortgaged two properties - the
Borja property and the Lumbia property – which were covered by different Transfer
Certificates of Title. It explained that
in the same public auction, the Borja property was sold for P32,400,000.00
per the Certificate of Sale mentioned above, while the Lumbia property was, in
turn, sold for P16,500,000.00 as evidenced by another Cerificate of Sale.[10] Hence, the total amount of P48,900,000.00
was stated as the proceeds of the auction sale.[11]
On the claim that
Administrative Matter No. 99-10-05-0 had not been complied with, respondent CBC
points to the fact that the Certificates of Sale contain a Certification
executed by Clerk of Court Atty. Beverly S. Beja and Executive Judge Noli T.
Catli affiriming compliance with the above-cited administrative matter, viz:
THIS IS TO CERTIFY that the
foregoing foreclosure was done in accordance with Administrative Order No.
99-10-05-0 of the Supreme Court dated
(SGD.) ATTY. BEVERLY
S. BEJA
Clerk of Court
Approved:
(SGD.) NOLI T. CATLI
Executive
Judge[12]
Respondent CBC claims that the
presumptions that official duty has been regularly performed and that the law
has been obeyed find application herein.
Thus, it maintains that there is no necessity for the pertinent
Certificate of Sale or the Certification issued by the Clerk of Court to state
with particularity that at least two bidders were present at the public auction
held on
On this point, it bears to
emphasize that the requirement under Administrative Matter No. 99-10-05-0 was
for the sheriff or the notary public to report the names of the bidders to the Clerk
of Court before the issuance of the
Certificate of Sale. Such
requirement cannot be expanded to include a statement in the Certificate of
Sale mentioning the names of the bidders or even the fact that at least two
bidders were present. The presumption of
regularity in the performance of official duties furthermore gives petitioners
the burden to prove the irregularities they allege attended the proceedings in
the public auction of the subject properties.
This bare assertions will not suffice to overturn such presumption, and
hence, petitioners’ first ground for the nullity of the
We now go to the alleged
illegal holding of the auction sale on
The Court of Appeals issued
on
Pending resolution of
private respondents’ Motion for Reconsideration relative to this Court’s
decision of October 24, 2000, and it being alleged in the same Motion that petitioner
has scheduled the auction sale of the properties subject hereof to December 14,
2000, a temporary restraining order is hereby issued enjoining petitioner and
those acting for and in its behalf or under its supervision, direction and
control from proceeding with the scheduled auction sale on December 14, 2000 or
at any other date until further orders from this court.
Meanwhile, petitioner is
hereby required, within ten (10) days from notice hereof, to file its comment
to respondents’ aforementioned Motion for Reconsideration and their subsequent
URGENT MOTION FOR ORAL ARGUMENT ON MOTION FOR RECONSIDERATION.[14]
Petitioners claim that the
TRO issued on
Respondent
CBC maintains that Cabanlet is not their counsel of record in the instant
action, and therefore service to him cannot be considered as service on the
bank. Petitioners, however, claim that,
as a general rule, “whatever is sufficient to put a prudent person on inquiry
amounts to notice, provided that inquiry would lead to the discovery of the
requisite fact by the exercise of diligence and understanding.”[16] Petitioners further claim that Cabanlet is
the locally retained lawyer of respondent CBC for its Cagayan de Oro City
branches.[17]
Respondent
CBC has not denied actual knowledge on the part of its officers regarding the
TRO, stubbornly parrying all of petitioners’ allegations with their argument
that Cabanlet is not their counsel of record in the instant action.
In
general, one cannot be punished for violating an injunction or an order for an
injunction unless it is shown that such injunction or order was served on him
personally or that he had notice of the issuance or making of such injunction
or order. Where, however, a party has
actual notice of an injunction, clearly informing him from what he must
abstain, he is bound by the injunction from that time, and will be punished for
a violation thereof, even though it may not have served, or may have been
served on him defectively.[18]
It
is altogether immaterial how defendant acquires information of the existence of
the injunction; when once he has been apprised of the fact he is legally bound
to desist from what he is restrained and inhibited from doing. Persons who are parties to a proceeding for
an injunction only by representation, and are not served personally with notice
of the injunction, may be found guilty of contempt for violating the injunction
where it is shown that they must have known of the injunction and its contents.[19]
In
Verzosa v. Court of Appeals,[20]
petitioner Wilfredo Verzosa sought to have the property mortgaged by respondent
Fe Uson foreclosed. Respondent Uson
filed an amended[21]
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
grants 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 the 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 not 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.”[22] (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
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.[25]
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.[26] 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.[27]
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,[28]
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 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 respondents’ 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
ineludible 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. [29]
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.[30]
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.
As stated
above, it was on
Section
4, Rule 65 of the 1997 Rules of Civil Procedure originally provides:
SEC. 4. Where petition filed. – The petition may be filed not later than
sixty (60) days from notice of the judgment, order or resolution sought to be
assailed in the Supreme Court or, if it relates to the acts or omissions of a
lower court or of a corporation, board, officer or person, in the Regional
Trial Court exercising jurisdiction over the territorial area as defined by the
Supreme Court. It may also be filed in
the Court of Appeals whether or not the same is in aid of its appellate
jurisdiction, x x x.
On
Petitioners claim that such
reinstatement of the petition constitutes a reversible error on the part of the
Court of Appeals, as the latter had allegedly lost jurisdiction to entertain a
petition questioning the
Petitioners’ claim is devoid
of merit.
As regards the
As regards the
Section 4, Rule 65 was, in
fact, amended and is now worded according to how respondent CBC perceived it to
be:
SEC. 4. When and where petition filed. – The
petition shall be filed not later than sixty (60) days from notice of the
judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the sixty (60) day period shall be counted from notice of the
denial of said motion.
Following, therefore, the
mandate contained in Section 6, Rule 1 of the 1997 Rules of Civil Procedure,[38]
we have held that, when the higher consideration of justice so demands,
technical rules may be relaxed to stay the dismissal of an appeal or like
recourse on mere technicalities. This
ideal becomes all the more imperative when non-compliance is not intended for
delay.[39]
Having brushed aside all the
collateral issues in this petition, we finally go into the merits of
petitioners’ claim that the Regional Trial Court had not gravely abused its
discretion in granting a writ of preliminary injunction in favor of
petitioners. As intimated by
respondents, such determination involves an analysis of the Order alleged to be
a product of grave abuse of discretion.[40] Such Order provides in full the following:
This is a verified complaint for specific
performance and cancellation of real estate mortgage contract with damages
filed by plaintiffs over parcels of land covered by Transfer Certificate of
Titles Nos. T-56322, T-52273, T-56321, and T-23215. Before filing their answer defendants filed
an extrajudicial foreclosure of the above-described properties, and
consequently for the auction sale of the properties by a Notary Public, which
was scheduled on
Based on plaintiffs’ evidence already
presented and because of another purported extrajudicial foreclosure on March
29, 1999, which this Court finds to be an utter disregard of the proceeding
which is still ongoing and there being bad faith on the part of defendants in
pursuing the same despite pendency of this case, this Court finds enough reason
for the issuance of the writ of preliminary injunction prayed for so as to
preserve the status quo, to prevent any irreparable damages or injuries to
plaintiffs, and likewise to prevent the claim of plaintiffs which is still to
be investigated, heard and adjudicated, from becoming moot and academic.
WHEREFORE, let a writ of preliminary injunction be
issued forthwith in this case, ordering defendants herein China Banking
Corporation, Romualdo I. Uy, and Bernardo T. Moradas, and Notary Public
Virgilio J. Cabanlet or any of their representative, agent, or person acting on
their behalf, to cease and desist from conducting and proceeding with the
extrajudicial foreclosure and public auction sale on March 29, 1999 on the
mortgaged properties described and mentioned in the notice of auction sale by
Notary Public Virgilio J. Cabanlet, dated March 4, 1999. This writ of preliminary injunction shall
continue to be enforced until the final determination of the main issue of this
case or until further orders from this Court and upon filing of the bond by
plaintiffs as provided for in the rules in the amount of ONE MILLION PESOS (P1,000,000.00)[41]
In brief,
the Court of Appeals nullified the above order on the ground of grave abuse of
discretion, sustaining respondent CBC’s claim that there was an absence of
legal basis or requisites to justify the issuance of the writ of preliminary
injunction, and that Judge Calingin issued the writ despite the admitted
defaults incurred by the spouses Lee in the payment of their loans juxtaposed
with the validity and continued effectivity of the mortgages on the Borja and
Lumbia properties. The Court of Appeals further
ruled:
Private respondents’ posture that they were duped into
signing in blank what turned out to be the amendment to the original real
estate mortgage (Annex “B-1”) over the Borja property thinking that the
document covered the smaller Lumbia property may be given plausibility if all
of them are unlettered, which they do no[t] appear to be. Significantly, private respondents, along
with respondent Renwick Warren’s wife, Marivic, signed Annex “B-1.” It should be noted, however, that the Lumbia
property is registered in the name of the spouses Lee only. The fact, however, that Janssen Thaddeus and
Renwick Warren both signed Annex “B-1,” when only the spouses Lee’s signature
thereon is necessary if the intention was to mortgage the Lumbia lot, shatters
their posture about being duped.
With the view We take of this case, private
respondents are latching their case on this proposition: that they had settled
all their accountabilities with the Bank, and, therefore, allowing the latter
to foreclose on the mortgage heretofore constituted to secure their loans would
cause them irreparable injury.
We are not the least persuaded. Based on the entire showing from both sides
during the hearing for injunction, respondents Manuel Lee and Luisa Lee have
not paid their overdue loans and other availments granted them under the credit
facilities in question to warrant the cancellation of the mortgages put up to
secure the credit accommodations. On the
other hand, petitioner has clearly established its status as unpaid
mortgagor-creditor entitled to foreclose the mortgages, a remedy provided by
law (Caltex vs. IAC, 176 SCRA 741), and the mortgage contract itself. In short, the minimum legal requisites for a
preliminary injunction to issue have not been satisfied. The assailed issuance, therefore, by the
respondent judge of the writ of injunction is unjustified.
Contrary to what the respondent judge wrote, there was
no urgent necessity to issue the writ to protect the rights and interest of
private respondents over either the Borja or the Lumbia property during the
pendency of Civil Case No. 98-765.
Assuming for argument that private respondents’ rights over said
property need legal protection, an annotation of lis pendens would, as
petitioner pointed out below, have been an adequate protection. And besides, they could participate in the
foreclosure sale and get their properties unencumbered by paying the
obligations that they admit in the first place owing.
Significantly, respondent judge issued the writ of
injunction on the finding that petitioner acted in bad faith in scheduling a
foreclosure sale “despite [the] pendency of this case.” We view the perceived bad faith of the
petitioner to be of little moment. For, the
bona fides of the author of the act against which the injunction is
directed is not, in the strict legal viewpoint, a recognized requisite to
justify the issuance of an injunction.[42]
Petitioners
assail the Court of Appeals Decision primarily on the ground that it based its
findings of facts on evidence not formally offered and submitted to the trial
court during the hearing on the propriety of the issuance of the Writ of
Preliminary Injunction.[43]
Respondent
CBC counters that, although it was allowed to begin presentation of its
evidence before the trial court, it was not given by said court with the
opportunity to conclude its presentation and to formally rest its case. Respondent CBC was still in the middle of
presenting its evidence when the trial court issued the questioned
Petitioner
maintains that it was respondent CBC’s fault why they were not able to finish
presenting their evidence, quoting the trial court’s Order denying respondent
CBC’s motion for reconsideration:
Moreover, the preliminary injunction in question was
issued after due hearing, wherein the parties are given a chance to present
evidence in support of their respective case.
In that hearing, it was very apparent that defendants employed
tactics which have delayed the proceedings in order that the Temporary
Restraining Order (TRO) earlier issued by the Court, which has a lifetime of
only twenty (20) days, will expire and so that they could proceed again with
the extrajudicial foreclosure and sale at public auction of the properties
involved in this case, thinking that the Court cannot issue a second TRO during
the pendency of the hearing of the application for a preliminary injunction.
Defendants,
during the hearing, presented voluminous documents which are no longer relevant
to the issue which was the propriety for issuance of a preliminary injunction
but which dealt mostly on matters involved in the main case. In the meantime, after the expiration of the
TRO, defendants filed again a Petition for Extrajudicial Foreclosure and
scheduled the
We find
that there was, indeed, grave abuse of discretion on the part of Judge
Calingin. While we agree with
petitioners that “the assessment and evaluation of evidence in the issuance of
the writ of preliminary injunction involves findings of facts ordinarily left
to the trial court for conclusive determination,”[46]
and that the Court of Appeals had been in error when it sought to determine the
facts based on evidence not presented or offered in evidence in the trial
court, we would still find grave abuse of discretion on the part of the trial
court even if the facts contested by petitioners are determined in their favor.
Section 5, Rule 58 of the 1997 Rules on Civil Procedure provides:
Sec.5. Preliminary
injunction not granted without notice; exception. – No preliminary injunction shall be granted without hearing and prior
notice to the party or person sought to be enjoined. If it shall appear from facts shown by
affidavits or by the verified application that great or irreparable injury
would result to the applicant before the matter can be heard on notice, the
court to which the application for preliminary injunction was made, may issue ex parte a temporary restraining order
to be effective only for a period of twenty (20) days from service on the party
or person sought to be enjoined, except as herein provided. Within
the said twenty-day period, the court must order said party or person to show
cause, at a specified time and place, why the injunction should not be granted,
determine within the same period whether or not the preliminary injunction
shall be granted, and accordingly issue the corresponding order. (Emphases supplied.)
The trial
court failed to comply with the above provision when it failed to let respondent
CBC finish its presentation of its evidence proving why injunction should not
be granted.
Hearings
on the application for preliminary injunction were held on
On
the hearing held on
As early as
Section 5, Rule 135 of the 1997 Rules
of Civil Procedure provides:
Sec. 5. Inherent powers of courts. – Every court
shall have the power: x x x (b) to enforce order in proceedings before it, or
before a person or persons empowered to conduct a judicial investigation under
its authority; x x x (d) to control, in furtherance of justice, the conduct of
its ministerial officers, and of all other persons in any manner connected with
a case before it, in every manner appertaining thereto; x x x
By means of
its inherent powers stated in the above provision, the trial court should have
forced respondent CBC, under pain of contempt, to finish presenting its
evidence within the scheduled hearings, and to focus only on the most important
evidence. It should have proceeded with
marathon hearings if necessary, which would seldom be the case because of its
power to limit the same in accordance with the summary nature of such
proceeding. But the trial court cannot
issue a writ of preliminary injunction based solely on plaintiff’s evidence, as
was expressly stated in the Order itself.[47] The trial court cannot, without gravely
abusing its discretion, issue such writ prior to the termination of the
presentation of evidence by the party against whom the injunction shall be
issued. The order to show cause (why the
injunction should not be granted) stated in Section 5, Rule 58, is precisely
directed on such party, and not on the party asking for the injunction, and
therefore it was an error for the trial court to have given priority to
petitioners’ presentation of evidence.
WHEREFORE, the Decision and Resolution, dated
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
Chief Justice
Chairperson
Associate Justice Associate
Justice
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ROMEO J.
CALLEJO, SR. Associate Justice |
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Pursuant to Article VIII,
Section 13 of the Constitution, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
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ARTEMIO V.
PANGANIBAN Chief Justice |
[1] CA-G.R. SP No. 53789. Penned by Associate Justice (now Supreme
Court Associate Justice) Cancio C. Garcia with Associate Justices Romeo A.
Brawner and Andres B. Reyes, Jr., concurring.
CA rollo, pp. 307-322.
[2] CA rollo, p. 416.
[3] Rollo, pp. 47-53.
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] CA rollo, p. 356.
[15]
[16] Security First National Bank v. Sartori, 34 Cal App 2d 408, 93 P2d 863.
[17] Rollo, p. 426.
[18] 43A C.J.S. , Injunctions, Sec. 288.
[19]
[20] 359 Phil. 425 (1998).
[21] The original complaint filed earlier was dismissed on the ground that it was not properly verified.
[22] Verzosa
v. Court of Appeals, supra note 18 at 438-439.
[23] “SEC.3. Indirect contempt to be punished after charge and hearing. – After a charge in writing has been filed, and an opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to be heard by himself or counsel, a person guilty of any of the following acts may be punished for indirect contempt:
x x x x
(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the act of a person who, after being dispossessed or ejected from any real property by the judgment or process of any court of competent jurisdiction, enters or attempts or induces another to enter into or upon such real property, for the purpose of executing acts of ownership or possession, or in any manner disturbs the possession given to the person adjudged to be entitled thereto; x x x” (Rules of Court, Rule 71.)
[24] “SEC. 4. How proceedings commenced. – Proceedings for indirect contempt may be initiated motu proprio by the court against which the contempt was committed by an order or any other formal charge requiring the respondent to show cause why he should not be punished for contempt.
In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out of or are related to the principal action pending in the court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and decided separately, unless the court in its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision.” (Rules of Court, Rule 71.)
[25] 43A C.J.S., Injunctions, Sec. 285.
[26]
[27]
[28] 264 SCRA 271 (1996).
[29] 42 Am Jur 2d, Sec. 317.
[30]
[31] CA rollo, p. 253.
[32]
[33] Rollo, p. 428.
[34] Section 1, Rule 22: “SEC. 1. How to compute time. – In computing any period of time prescribed or allowed by these Rules, or by order of the court, or by any applicable statute, the day of the act or event from which the designated period of time begins to run is to be excluded and the date of performance included. If the last day of the period, as thus computed, falls on a Saturday, Sunday, or a legal holiday in the place where the court sits, the time shall not run until the next working day.”
[35] CA rollo, pp. 205-212.
[36]
[37] Section 3. “x x x The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed.” (Rules of Court, Rule 41.)
[38] Section 6, Rule 1: “SEC. 6. Construction. – These Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action or proceeding.”
[39] Soriano
v. Court of Appeals, G.R. No. 100525,
[40] Rollo, pp. 56-57.
[41]
[42]
[43]
[44]
[45] CA rollo, p. 51.
[46] Lopez
v. Court of Appeals, G.R. No. 110929,
[47] Based on plaintiffs’
evidence already presented and because of another purported extrajudicial
foreclosure on March 29, 1999, which this Court finds to be an utter disregard
of the proceeding which is still ongoing and there being bad faith on the part
of defendants in pursuing the same despite pendency of this case, this Court
finds enough reason for the issuance of the writ of preliminary injunction
prayed for so as to preserve the status quo, to prevent any irreparable damages
or injuries to plaintiffs, and likewise to prevent the claim of plaintiffs
which is still to be investigated, heard and adjudicated, from becoming moot
and academic. (CA rollo, p. 43.)