Republic of the
SUPREME COURT
Manila
SECOND DIVISION
ISABEL JAEL
MARQUEZ, G.R. No. 141849
CELIA M. IDEA, LUISITA M.
ECLAVEA, MELVIRA M.
VILLASANTE,
RUEL MARQUEZ, Present:
ZAIDA M. SARACENA, and
ELOISA M.
PENAMORA, QUISUMBING, J., Chairperson,
Petitioners, CARPIO,
CARPIO
MORALES,
-
versus - TINGA,
and
VELASCO,
JR., JJ.
THE PRESIDING JUDGE (HON.
ISMAEL B. SANCHEZ), RTC
EXECUTIVE JUDGE OF RTCs
of
BANK OF THE
(DBP); and THE PROVINCIAL
SHERIFF OF QUEZON PROVINCE, February
13, 2007
Respondents.
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D E C I S I
O N
VELASCO, JR., J.:
The Case
Before
us is a Petition for Review on Certiorari[1]
under Rule 45 of the Rules of Court, assailing the November 5, 1998 Decision[2]
of the Court of Appeals (CA) in CA-G.R. SP No. 29904, which affirmed the
October 29, 1992 and December 23, 1992 Orders of the Lucena City Regional
Trial Court (RTC) Branch 58; and its January 31, 2000
Resolution[3]
denying Marquez’s Motion for Reconsideration.
It raises the core issue of the propriety of the denial by respondent former
Lucena City RTC Presiding Judge Ludivico C. Lopez of Marquez’s prayer for a
writ of preliminary injunction in Civil Case No. 92-150 entitled Marcial M. Marquez v. The Development Bank
of the Philippines and the Provincial Sheriff of Quezon Province for Damages,
Cancellation of Mortgage and Certiorari with Prayer for Issuance of a Writ of
Preliminary Injunction and/or Restraining Order.
The Facts
Marcial
M. Marquez was an incorporator and officer of Lucena Entrepreneur and
Agri-Industrial Development Corporation (LEAD), which was incorporated on
To
carry out its objectives, LEAD needed capital for the construction of a fishing
vessel and the procurement of the required equipment and other
accessories. It applied for a loan with
respondent DBP, which, on
Moreover,
DBP required that the principals, including Marquez, be held jointly and
severally liable with borrower-corporation DEAL.[6] To secure the loan, some of the principals of
LEAD, namely, Mr. and Mrs. Venuso Bibit and Mr. and Mrs. Eduardo Murallon,
entered into a Real Estate Mortgage (REM) of two (2) properties with DBP, particularly
those covered by TCT Nos. T-136995 and T-140765 with areas of 6,859 square
meters and 7,222 square meters, respectively.[7]
To
protect itself from manipulated and/or overpriced contract, the construction of
the fishing vessel and the procurement and installation of the equipment and
other accessories were subjected to DBP’s local competitive bidding in
consonance with its standing policies.[8] Consequently, Trigon Engineering and
Shipbuilding Corporation (Trigon), based in
However,
there were some problems encountered in the implementation of the loan. First, some scheduled releases of the loan
were withheld by DBP as the capitalization or equity ratio of the principals of
LEAD was not complied with. Second,
there were defects in the construction of the fishing vessel which required
compliance by Trigon before any subsequent releases of the loan could be made. These contretemps delayed the construction of
the fishing vessel for over two (2) years, yet the fishing vessel was only
77.14% complete by then. Third, the
delay aggravated the situation for the boat construction was overtaken by
increases in costs of materials and machinery.
Thus, the project could not be completed at the original cost stipulated
in the boat construction contract.
After
threshing out the problem through a tripartite conference between LEAD, Trigon,
and DBP, it was agreed that LEAD would get the fishing vessel at its present state
and LEAD would complete the construction and installation of the equipment and
accessories, for which DBP would grant LEAD an additional loan of PhP 714,600.00.[12] The additional loan was granted on
Meanwhile,
shortly after the additional loan was fully released to LEAD, on
Subsequently,
on the nights of
For
having defaulted on its contractual obligations, on
On
Marquez,
however, on
On
On
Subsequently,
on
The Ruling
of the Court of Appeals
However,
the certificate of sale was not issued as Marquez was granted a TRO[24]
by the CA through a Petition for Certiorari[25]
under Rule 65 of the Rules of Court, where he assailed the Orders denying the
issuance of a preliminary injunction.
After DBP filed its Comment[26]
on
The
appellate court held that P.D. 385 applied in the instant case and found
neither manifest abuse committed by the trial court nor any grave abuse of
discretion amounting to lack or excess of jurisdiction in denying the issuance
of the injunctive writ.
Unfortunately,
Marcial M. Marquez died on
The Issues
In the
instant petition for review filed by the heirs of Marcial M. Marquez, the
crucial issue to be dealt with in this petition is whether the trial court's
refusal to grant an injunction against the threatened extra-judicial
foreclosure sale by DBP constitutes grave abuse of judicial discretion
amounting to lack or excess of jurisdiction.
In
support of the instant petition, petitioners raise the issues of applicability
of P.D. 385, denial of due process, and the extent of the loan covered by the
REM constituted on petitioners’ realty under TCT No. T-24506.
However,
the petition lacks merit.
Requisites for issuance of
injunctive writ
The
writ of preliminary injunction is issued to
prevent threatened or continuous
irremediable injury to some of the parties before their claims can be
thoroughly studied and adjudicated. Its
sole aim is to preserve the status quo until the merits of the case can
be heard fully. Thus, it will be issued
only upon a showing of a clear and unmistakable right that is violated. Moreover, an urgent necessity for its
issuance must be shown by the applicant.[32]
Under Section 3, Rule 58 of the 1997 Revised Rules of Civil Procedure, the
issuance of a writ of preliminary injunction may be granted if the following
grounds are established, thus:
(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 act or 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,
agency or a person is doing, threatening, or is 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.
Prescinding
from the provisions mentioned above, we have consistently held that the
requisites of preliminary injunction whether mandatory or prohibitory are the
following:
(1)
the applicant must have a clear and unmistakable
right, that is a right in esse;
(2)
there is a material and substantial invasion of
such right;
(3)
there is an urgent need for the writ to prevent
irreparable injury to the applicant; and
(4)
no other ordinary, speedy, and adequate remedy
exists to prevent the infliction of irreparable injury.[33]
Requisites for injunctive writ
not present
We have
reviewed the records and the pleadings of the parties and found that, as
contended by respondent DBP, Marquez and petitioners failed to establish the
essential requisites for the issuance of a writ of preliminary injunction. Hence, the trial court did not commit any
manifest abuse nor gravely abused its discretion amounting to excess or lack of
jurisdiction in denying the writ of preliminary injunction as well as Marquez’s
Motion for Reconsideration.
Issuance of injunctive writ on
sound discretion of the trial court
It is
basic that the issuance of a writ of preliminary injunction is addressed to the
sound discretion of the trial court, conditioned on the existence of a clear
and positive right of the applicant which should be protected. It is an extraordinary, peremptory remedy
available only on the grounds expressly provided by law, specifically Section
3, Rule 58 of the Rules of Court.[34] Moreover, extreme caution must be observed in
the exercise of such discretion.[35] It should be granted only when the court is
fully satisfied that the law permits it and the emergency demands it.[36] The very foundation of the jurisdiction to
issue a writ of injunction rests in the existence of a cause of action and in
the probability of irreparable injury, inadequacy of pecuniary compensation,
and the prevention of multiplicity of suits. Where facts are not shown to bring the case
within these conditions, the relief of injunction should be refused.[37]
In the
instant case, both the trial court and the appellate court found that Marquez
was not entitled to the injunctive writ.
Verily, the trial court has exercised its sound discretion in denying
the writ. The exercise of sound judicial
discretion by the lower court in injunctive matters should not be interfered
with except in cases of manifest abuse.[38] Indeed, a scrutiny of the records fails to
show any manifest abuse committed by respondent Presiding Judge.
Main Issue: Applicability of P.D. 385
P.D. 385 is clearly applicable in the
instant case. The trial and appellate courts’ primary basis for denying the
injunction sought by Marquez was P.D. 385, which makes it
mandatory for government financial institutions x x x to foreclose the collaterals and/or securities for any loan, credit, accommodation and/or guarantees granted by them whenever their arrearages on such account, including accrued interest and other charges, amount to at least twenty percent (20%) of the total outstanding obligations, including interests and other charges, as appearing in the books of account and/or related records of the financial institution concerned.[39]
Pursuant to the aforesaid law:
Sec. 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages had been paid after the filing of foreclosure proceedings x x x (emphasis supplied).
A close
examination of the attendant factual milieu of the instant case shows that it
is an undisputed fact that LEAD loaned from DBP PhP 2.105 million and PhP 714,600.00. It is also undisputed that the spouses
Marquez were constituted jointly and severally liable in their personal
capacity with LEAD as regards the loan obligation. And, for the additional loan of PhP 714,600.00,
the Marquez spouses entered into a second mortgage (REM) of their property
covered by TCT No. T-24506. As of
Petitioners rely on Filipinas
Marble Corporation (FMC)
v. Court of Appeals[40] to
bolster their position that the trial court committed manifest abuse and
gravely abused its discretion in denying the issuance of the prayed for
injunctive writ.
We are not convinced.
The FMC case is not on all
fours with the instant case. FMC had a $5
million loan with DBP conditioned on its entering into a three (3)-year
management contract with Bancom Systems Control, Inc. (Bancom), whose key
officers shall be appointed only with DBP's approval and made directly
responsible to DBP. In a complaint for annulment
of the deeds of mortgage and deed of assignment in favor of DBP, FMC averred
failure of consideration as regards the execution of the deeds and that DBP and
Bancom mismanaged and misspent the loan.
We ruled that we cannot make any
conclusions on whether DBP and Bancom actually misappropriated and misspent the
$5 Million loan as this should properly be litigated in the main action; thus, pending
the outcome of such litigation, P.D. 396 cannot automatically be applied for if
it is really proven that respondent DBP was responsible for the
misappropriation of the loan, even if only in part, then the foreclosure of the
petitioners' properties under the provisions of P.D. 385 to satisfy the whole
amount of the loan would be a gross mistake and would unduly prejudice FMC. It is only after trial on the merits can the
true amount of the loan which was applied wisely or not, for the benefit of the
petitioner, be determined. And consequently,
the foreclosure proceedings under P.D. 385 will have to await the determination
of the trial on the merits. Thus, since the issue of misappropriation of the
proceeds of the loan was still being litigated, the liability of FMC for the
loan which was the basis of the mortgage being foreclosed was not yet settled;
hence, the Court granted an injunction against the foreclosure sale.
In the instant case, the factual
antecedents of FMC could hardly find parallelism with the factual milieu of
LEAD. While it is true that DBP released
most of the 2.105 million loan to Trigon, nonetheless, it was LEAD which dealt
and entered the contract with Trigon and the boat-building contract duly signed
by LEAD principal, Bibit. Moreover,
while petitioners questioned the outstanding amount of the mortgage loan,
nevertheless, given the undisputed loans extended to LEAD and the 14% per annum
interest stipulated in the loan contracts, the outstanding amount could hardly
be contested given the undisputed delinquency of LEAD. Besides, unlike in FMC, the instant
case does not involve the issues of a management contract and misappropriation
of the proceeds of the loan.
It is our ruling in FMC that:
P.D. 385 was never meant to protect officials of government lending institutions who take over the management of a borrower corporation, lead that corporation to bankruptcy through mismanagement or misappropriation of its funds, and who, after ruining it, use the mandatory provisions of the decree to avoid the consequences of their misdeeds.
The designated officers of the government financing institution cannot simply walk away and then state that since the loans were obtained in the corporation’s name, then P.D. 385 must be peremptorily applied and that there is no way the borrower corporation can prevent the automatic foreclosure of the mortgage on its properties once the arrearages reach twenty percent (20%) of the total obligation no matter who was responsible.[41]
This
ruling could hardly find application in the instant case. Thus, we now hold that P.D. 385, proscribing
the issuance of an injunctive writ, applies.
More so, during the hearing for the issuance of the injunctive writ, Marquez
and petitioners had not shown that 20% of the arrearages of the mortgage loan
had been duly paid.
Petitioners failed to show a
right in esse to be protected
We uphold
the trial court and CA in their finding that Marquez had not shown a right in esse to be protected. Indeed, the applicant’s right must be clear
or unmistakable, that is, that the right is actual, clear and positive
especially calling for judicial protection.[42] Thus, an injunction will not issue to protect
a right not in esse and which
may never arise or to restrain an act which does not give rise to a cause of
action.
While
not preempting the disposition of the main case, a close review of the records
at hand would show that the loan and the REM seem to be above scrutiny. Respondent DBP had shown documentary evidence
of how the assailed transactions transpired, and how and why Marquez and other
LEAD principals signed and agreed to be solidarily liable for LEAD’s loans as
well as their voluntary mortgage of their properties to secure said loans.
We need
to stress that the original loan was granted in 1977 while the additional loan
was granted in 1981. Marquez signed as
solidarily liable for both loans but constituted a REM of his property (TCT No.
T-24506), on second mortgage, only for the additional loan. It cannot be gainsaid by the foregoing facts
that there was bad faith or malice in DBP’s part in granting the loan, much
less were there circumstances shown that Marquez and the other LEAD principals
were compelled to enter into said contracts.
Indeed, the acknowledgements in front of a notary public of the loan and
REM contracts show the dealings between the parties to be apparently at arms
length. Be that as it may, if indeed
there were defects and lack of consideration in the contracts, Marquez was in
delay in pursuing an action to defend his rights until the time that the
foreclosure sale was already well nigh imminent.
Application for injunctive
relief construed strictly
The
allegations in Marquez’s complaint did not clearly make out his entitlement to
the injunctive relief prayed for. The
rule requires that in order for a writ of preliminary injunction to issue, the
application should clearly allege facts and circumstances showing the existence
of the requisites.[43] It must be emphasized that an application for
injunctive relief is construed strictly against the pleader.[44] As previously discussed, the trial court and
the CA were not convinced, based on the pleadings and the evidence presented in
the hearing for the issuance of the injunctive writ, that petitioners demonstrated
a strong basis for the grant of the injunctive writ. The allegations of the complaint on the
defense that the agreement was that of a partnership is at war with the loan
and mortgage documents they signed.
Apparently, in resolving the prayer for injunction, the courts a quo relied more on these
documents than the bare averments of petitioners on the alleged partnership.
Second Issue: No Denial of Due Process
We find
no denial of due process as alleged by petitioners. They contend that Marquez was denied his day
in court as regards the hearing for the issuance of the injunctive writ on
Due
process is served when the parties are given the opportunity to be heard for
the court to consider every piece of evidence presented in their favor.[46] In the instant case, Marquez was present at
the
Third Issue: Mortgage of Family Home
The
issue of the property being a family home and not a corporate property veers
away from the clear contractual agreement of the REM. Undeniably, the subject REM was a second
mortgage as Marquez already mortgaged his property (TCT No. T-24506) to another
bank. Besides, it bears stressing that
the Marquez spouses were solidarily liable with LEAD for the loans. Thus, respondent DBP could have even gone
after the other properties of the Marquez couple given such solidary liability
for the outstanding loan with DBP. DBP
has reasonably and properly exercised its right to have the property covered by
TCT No. T-24506 subjected to an extra-judicial foreclosure sale.
WHEREFORE, we DENY this petition for lack of merit
and AFFIRM the assailed CA Decision
and Resolution.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate
Justice
WE CONCUR:
LEONARDO A.
QUISUMBING
Associate Justice
Chairperson
ANTONIO T.
CARPIO CONCHITA
CARPIO MORALES
Associate
Justice
Associate Justice
DANTE O. TINGA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
C E R T I F
I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, pp. 8-15.
[2]
[3]
[4] Records, pp. 39-41.
[5]
[6]
[7]
[8]
[9]
[12]
[13]
[14]
CA rollo, pp. 30-31.
[15]
Records, pp. 1-6; see
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
CA rollo, p. 99; see
[24]
[25]
[26]
[27] Supra note 2.
[28] CA rollo, pp. 139-142.
[29]
[30]
[31]