THIRD
DIVISION
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EQUITABLE
PCI BANK, INC., Petitioner, - versus - |
G.R. No. 165950 Present: CARPIO MORALES, J., Chairperson, BRION, BERSAMIN, ABAD,* and VILLARAMA, JR., JJ. |
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OJ-MARK
TRADING, INC. and SPOUSES OSCAR AND
EVANGELINE Respondents. |
Promulgated: August 11, 2010 |
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DECISION
VILLARAMA,
JR., J.:
Before us is a petition for review on certiorari
filed by petitioner under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, praying for the reversal of the Decision[1]
dated October 29, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 77703,
which denied its petition for certiorari assailing the trial court’s orders
granting respondents’ application for a writ of preliminary injunction.
The factual antecedents:
Respondent-spouses Oscar and
Evangeline Martinez obtained loans from petitioner Equitable PCI Bank, Inc. in
the aggregate amount of Four Million Forty-Eight Thousand Eight Hundred Pesos (P4,048,800.00).
As security for the said amount, a Real Estate Mortgage (REM) was executed over
a condominium unit in
Respondent-spouses defaulted in the
payment of their outstanding loan obligation, which as of P4,918,160.03.[3] In a letter dated
On
In their Complaint With Application for
Temporary Restraining Order,[7]
respondents sought to enjoin the impending foreclosure sale alleging that the
same was hasty, premature, unreasonable and unwarranted, and also claiming
defects in the execution of the REM. Respondents
imputed bad faith on the part of petitioner who did not officially inform them
of the denial or disapproval of their proposal to settle the loan obligation by
“dacion via assignment of a
commercial property.” Respondents
maintained that aside from the REM being illegally notarized, incomplete and
unenforceable, the obligation subject thereof had been extinguished by the dacion proposal considering that the
value of the property offered was more than sufficient to pay for the mortgage
debt. It was further averred that the subject property is being used and
occupied by respondent-spouses as a family home.
In his Order dated
Petitioner questioned the issuance of
preliminary injunction before the CA arguing that the respondents are not
entitled to injunctive relief after having admitted that they were unable to
settle their loan obligations. By
Decision dated
...respondent
spouses have sufficiently shown that they have a right over the condominium
unit which is subject of the mortgage. This proprietary right over the
condominium is what they are trying to protect when they applied for
preliminary injunction. As respondent spouses
have alleged in their complaint, the issuance of notice of foreclosure sale is
at most premature as there are still several factual issues that need to be
resolved before a foreclosure can be effected.
Such already constitute the ostensible right which respondent spouses
possess in order for the foreclosure sale to be temporarily enjoined.[10]
Hence, this petition raising the
following grounds:
I
THE
HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN HOLDING THAT
THE TRIAL COURT DID NOT COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN ISSUING THE ASSAILED WRIT OF PRELIMINARY INJUNCTION
II
THE
HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN HOLDING THAT
INDIVIDUAL RESPONDENTS SPS.
III
THE
HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN HOLDING THAT
SUCH PURPORTED PROPRIETARY RIGHT OF RESPONDENTS SPS.
IV
THE
HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE ARE STILL SEVERAL
FACTUAL ISSUES TO BE RESOLVED IN A FULL-BLOWN TRIAL BEFORE PETITIONER EPCIB
COULD EXERCISE ITS STATUTORY AND EQUITABLE RIGHT TO FORECLOSE[11]
The sole issue to be resolved is
whether or not the respondents have shown a clear legal right to enjoin the
foreclosure and public auction of the third-party mortgagor’s property while
the case for annulment of REM on said property is being tried.
Petitioner argued that the appellate
court’s conclusion that respondents possess proprietary right over the
mortgaged property subject of foreclosure is utterly baseless, for the
following reasons: first, while the condominium
unit is supposedly a family home, it is admittedly owned by respondent
corporation and not by the conjugal partnership or absolute community of
respondent-spouses; and second, even assuming that OJ-Mark
Trading, Inc. is a family corporation, respondents’ stance contravenes the
established rule that properties registered in the name of the corporation are
owned by it as an entity separate and distinct from its members or
stockholders.[12]
As to the alleged proposal of
respondent Oscar Martinez to assign commercial lots by dacion en pago to settle their loan obligations, petitioner pointed
out that the properties offered for dacion
are not owned, and much less to be owned by him, but purportedly owned by
another corporation (developer), the president of which supposedly owes him a
sum of money. Respondent Oscar Martinez
likewise admitted during the hearings before the trial court his unpaid loan
with petitioner. Moreover, with the
filing of a petition for extrajudicial foreclosure of the real estate mortgage
by petitioner, it serves more than a formal rejection of respondents’ dacion en pago offer.[13]
On their part, the respondents contended
that the petition raises factual issues not proper in an appeal by certiorari
under Rule 45. They asserted that
the trial court correctly found sufficient legal basis to grant the writ of
preliminary injunction after conducting a summary hearing in which both parties
actively participated and submitted oral and documentary evidence. Such evidence adduced by respondents, as well
as the Affidavit dated
Respondents argued that they appear to
be entitled to the relief demanded by their Complaint “because petitioner was
in bad faith when it proceeded to foreclose while there was still a pending
written proposal to pay.” They stand to lose a prime property, and thus made a
serious and sincere offer by way of dacion
en pago. To show good faith and as required by petitioner to continue the
negotiations for dacion, respondent
Atty. Oscar Martinez even paid P100,000.00 in October 2002, which
petitioner accepted. But petitioner
maliciously, fraudulently and hastily proceeded to foreclose the renovated
mortgaged property, apparently motivated by its discovery after re-appraisal
that the floor area of the townhouse and number of its rooms had doubled (from
180.750 sq. m. with three [3] bedrooms, it is now 350 sq. m. with six [6] bedrooms). Respondents contended that as creditor, it
was petitioner’s duty not to sit on respondents’ dacion offer and should have informed them in writing that said
offer is rejected. By hanging on the dacion talks, petitioner thus prevented
the respondents’ repayment of the loan, in malicious haste to acquire the
condominium unit as asset.[15]
Respondents further claimed that the
extrajudicial foreclosure will cause grave injustice and irreparable injury to
respondent-spouses and their four (4) young children because their family home,
in which they were residing since 1997, at least insofar as the unencumbered
area in excess of 180.750 sq. m., is exempt from forced sale or execution under
Article 155 of the Family Code.
Petitioner, on the other hand, will not suffer any loss if the
foreclosure will not proceed.[16]
With respect to the commercial lots
offered in dacion, respondents fault
the petitioner in deliberately ignoring the fact that the Blue Mountains
Subdivision located at
We grant the petition.
Section
3, Rule 58 of the Rules of Court provides that:
SEC. 3. Grounds
for issuance of preliminary injunction.—A preliminary injunction may be
granted when it is established:
(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.
As such, a writ of preliminary injunction may be issued only
upon clear showing of an actual existing right to be protected during the
pendency of the principal action. The
twin requirements of a valid injunction are the existence of a right and its
actual or threatened violations. Thus,
to be entitled to an injunctive writ, the right to be protected and the
violation against that right must be shown.[18] A writ of preliminary injunction may be
issued only upon clear showing of an actual existing right to be protected
during the pendency of the principal action.[19]
The
issuance of a preliminary injunction rests entirely within the discretion of
the court taking cognizance of the case and is generally not interfered with
except in cases of manifest abuse.[20] For the issuance
of the writ of preliminary injunction to be proper, it must be shown that the
invasion of the right sought to be protected is material and substantial, that
the right of complainant is clear and unmistakable and that there is an urgent
and paramount necessity for the writ to prevent serious damage. In the absence of a clear legal right, the
issuance of a writ of injunction constitutes grave abuse of discretion.[21]
The possibility of irreparable damage
without proof of actual existing right is no ground for an injunction.[22] Hence, it is not sufficient for the
respondents to simply harp on the serious damage they stand to suffer if the
foreclosure sale is not stayed. They must establish such clear and unmistakable
right to the injunction. In Duvaz Corporation v. Export and Industry
Bank,[23]
we emphasized that it is necessary for the petitioner to establish in the main
case its rights on an alleged dacion en
pago agreement before those rights can be deemed actual and existing, which
would justify the injunctive writ. Thus:
In Almeida v. Court of Appeals, the Court stressed how important it is
for the applicant for an injunctive writ to establish his right thereto by
competent evidence:
Thus, the petitioner, as plaintiff, was burdened to adduce
testimonial and/or documentary evidence to establish her right to the
injunctive writs. It must be stressed that injunction is not designed to
protect contingent or future rights, and, as such, the possibility of irreparable damage without proof of actual existing
right is no ground for an injunction. A clear and
positive right especially calling for judicial protection must be established.
Injunction is not a remedy to protect or enforce contingent, abstract, or
future rights; it will not issue to protect a right not in esse
and which may never arise, or to restrain an action which did not give rise to
a cause of action. There must be
an existence of an actual right. Hence, where the plaintiff’s right or title is
doubtful or disputed, injunction is not proper.
An injunctive remedy may only be resorted to when there is a
pressing necessity to avoid injurious consequences which cannot be remedied
under any standard compensation. The
possibility of irreparable damage without proof of an actual existing right
would not justify injunctive relief in his favor.
x
x x x x x x x x
x x x. In the absence of a
clear legal right, the issuance of the injunctive writ constitutes grave abuse
of discretion. As the Court had the occasion to state in Olalia v.
Hizon, 196 SCRA 665 (1991):
It has been consistently held that there is no power the exercise
of which is more delicate, which requires greater caution, deliberation and
sound discretion, or more dangerous in a doubtful case, than the issuance of an
injunction. It is the strong arm of equity that should never be extended
unless to cases of great injury, where courts of law cannot afford an adequate
or commensurate remedy in damages.
Every court should remember that an injunction is a limitation
upon the freedom of action of the defendant and should not be granted lightly
or precipitately. It should be granted only when the court is
fully satisfied that the law permits it and the emergency demands it….
We are in full accord with the CA
when it struck down, for having been issued with grave abuse of discretion, the
RTC’s Order of
In the case at bar, respondents failed to show that they
have a right to be protected and that the acts against 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.[25] Foreclosure is but a necessary consequence of
non-payment of a mortgage indebtedness.[26]
In a real estate mortgage when the principal obligation
is not paid when due, the mortgagee has the right to foreclose the mortgage and
to have the property seized and sold with the view of applying the proceeds to
the payment of the obligation.[27]
This Court has denied the application for a Writ of
Preliminary Injunction that would enjoin an extrajudicial foreclosure of a
mortgage, and declared that foreclosure is proper when the debtors are in
default of the payment of their obligation.
Where the parties stipulated in their credit agreements, mortgage
contracts and promissory notes that the mortgagee is authorized to foreclose
the mortgaged properties in case of default by the mortgagors, the mortgagee
has a clear right to foreclosure in case of default, making the issuance of a
Writ of Preliminary Injunction improper.[28] In these cases, unsubstantiated allegations
of denial of due process and prematurity of a loan are not sufficient to defeat
the mortgagee’s unmistakable right to an extrajudicial foreclosure.[29]
We
cannot agree with respondents’ position that petitioner’s act of initiating
extrajudicial foreclosure proceeding while they negotiated for a dacion en pago was illegal and done in
bad faith. As respondent-spouses themselves
admitted, they failed to comply with the documentary requirements imposed by
the petitioner for proper evaluation of their proposal. In any event, petitioner had found the
subdivision lots offered for dacion as unacceptable, not only because the lots
were not owned by respondents – as in fact,
the lots were not yet titled – but also
for the reason that respondent Oscar
Martinez’s claimed right therein was doubtful or inchoate, and hence not in esse.
Requests
by debtors-mortgagors for extensions to pay and proposals for restructuring of
the loans, without acceptance by the creditor-mortgagee, remain as that. Without more, those proposals neither novated
the parties’ mortgage contract nor suspended its execution.[30]
In the same vein, negotiations for settlement of the mortgage debt by dacion en pago do not extinguish the
same nor forestall the creditor-mortgagee’s exercise of its right to foreclose as
provided in the mortgage contract.
As
we held in Tecnogas Philippines
Manufacturing Corporation v. Philippine National Bank[31]
--
Dacion en
pago is a special mode of payment
whereby the debtor offers another thing to the creditor who accepts it as
equivalent of payment of an outstanding obligation. The undertaking is really one of sale, that
is, the creditor is really buying the thing or property of the debtor, payment
for which is to be charged against the debtor’s debt. As such, the essential elements of a contract
of sale, namely, consent, object certain, and cause or consideration must be
present. It is only when the thing
offered as an equivalent is accepted by the creditor that novation takes place,
thereby, totally extinguishing the debt.
On the first issue, the Court of Appeals did not err in ruling
that Tecnogas has no clear legal right to an injunctive relief because its
proposal to pay by way of dacion en pago did not extinguish its obligation. Undeniably, Tecnogas’ proposal to pay
by way of dacion en pago was not accepted by PNB. Thus, the unaccepted proposal neither novates the parties’ mortgage contract
nor suspends its execution as there was no meeting of the minds between the
parties on whether the loan will be extinguished by way of dacion en pago. Necessarily, upon Tecnogas’ default in
its obligations, the foreclosure of the REM becomes a matter of right on the
part of PNB, for such is the purpose of requiring security for the loans. [emphasis supplied.]
Respondent-spouses’
alleged “proprietary right” in the mortgaged condominium unit appears to be
based merely on respondents’ averment that respondent OJ-Mark Trading, Inc. is
a family corporation. However, there is
neither allegation nor evidence to show prima
facie that such purported right, whether as majority stockholder or
creditor, was superior to that of petitioner as creditor-mortgagee. The rule requires that in order for a
preliminary injunction to issue, the application should clearly allege facts
and circumstances showing the existence of the requisites. It must be emphasized that an application for
injunctive relief is construed strictly against the pleader.[32]
We
note that the claim of exemption under Art. 153 of the Family Code, thereby
raising issue on the mortgaged condominium unit being a family home and not
corporate property, is entirely inconsistent with the clear contractual
agreement of the REM.[33] Assuming arguendo that the mortgaged
condominium unit constitutes respondents’ family home, the same will not exempt
it from foreclosure as Article 155 (3) of the same Code allows the
execution or forced sale of a family home “for debts secured by mortgages on
the premises before or after such constitution.” Respondents thus failed to show an ostensible right that needs protection
of the injunctive writ. Clearly, the
appellate court seriously erred in sustaining the trial court’s orders granting
respondents’ application for preliminary injunction.
Anent
the grave and irreparable injury which respondents alleged they will suffer if
no preliminary injunction is issued, this Court has previously declared that
all is not lost for defaulting mortgagors whose properties were foreclosed by
creditors-mortgagees, viz:
In any case, petitioners will not be
deprived outrightly of their property.
Pursuant to Section 47 of the General Banking Law of 2000, mortgagors
who have judicially or extrajudicially sold their real property for the full or
partial payment of their obligation have the right to redeem the property
within one year after the sale. They can
redeem their real estate by paying the amount due, with interest rate
specified, under the mortgage deed; as well as all the costs and expenses
incurred by the bank.
Moreover, in extrajudicial
foreclosures, petitioners have the right to receive any surplus in the selling
price. This right was recognized in Sulit v. CA, in which the Court held
that “if the mortgagee is retaining more of the proceeds of the sale than he is
entitled to, this fact alone will not affect the validity of the sale but
simply gives the mortgagor a cause of action to recover such surplus.[34]
WHEREFORE, the petition is GRANTED. The Decision dated
No costs.
SO ORDERED.
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MARTIN S. VILLARAMA, JR. Associate Justice |
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WE
CONCUR: CONCHITA CARPIO MORALES Associate Justice Chairperson |
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ARTURO D. BRION Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
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ROBERTO A. ABAD Associate
Justice |
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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.
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CONCHITA CARPIO MORALES Associate
Justice Chairperson, Third Division |
C
E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the 1987 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.
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RENATO C. CORONA Chief Justice |
* Designated additional member per Special
Order No. 843 dated
[1] Rollo, pp. 102-111. Penned by
Associate Justice Monina Arevalo-Zenarosa and concurred in by Associate Justice
(now Presiding Justice) Andres B. Reyes, Jr. and Associate Justice Rosmari D.
Carandang.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18] Borromeo
v. Court of Appeals, G.R. No. 169846, March 28, 2008, 550 SCRA 269,
280-281, citing Lim v.
Court of Appeals, G.R. No. 134617, February 13, 2006, 482 SCRA 326, 331.
[19] Lim v. Court of Appeals, supra.
[20] Reyes
v. Court of Appeals, G.R. No. 129750, December 21, 1999, 321 SCRA 368, 374,
citing Saulog v. Court of Appeals, G.R. No. 119769, September 18, 1996, 262
SCRA 51, 59 and Inter-Asia Services Corp.
(International) v. Court of Appeals, G.R.
No. 106427, October 21, 1996, 263 SCRA 408, 415.
[21] Suico
Industrial Corporation v. CA, 361 Phil. 160, 169 (1999); Sps. Arcega v. CA, 341 Phil. 166, 171 (1997),
citing Syndicated Media Access Corp. v.
CA, G.R. No. 106982, March 11,
1993, 219 SCRA 794, 797 and Vinzons-Chato v. Natividad, G.R. No. 113843,
[22] Sps. Arcega v. CA, supra.
[23] G.R. No. 163011,
[24]
[25] Equitable
PCI Bank, Inc. v. Fernandez, G.R. No. 163117, December 18, 2009, 608 SCRA
433, 441, citing China Banking
Corporation v. Court of Appeals, G.R. No. 121158, December 5, 1996, 265
SCRA 327, 343.
[26] Producers
Bank of the Philippines v. Court of Appeals, G.R. No. 111584, September 17,
2001, 365 SCRA 326, 335.
[27] Equitable
PCI Bank v. Fernandez, supra note 25, citing Union Bank of the Philippines v. Court of Appeals, 370 Phil. 837 (1999).
[28] Borromeo
v. Court of Appeals, supra note 18 at 284, citing Bank of
the Philippine Islands v. Court of Appeals, G.R. No. 142731, June 8, 2006,
490 SCRA 168; Selegna Management and Development Corporation v. United Coconut
Planters Bank, G.R. No. 165662, May 3, 2006, 489 SCRA 125, 138; Lim v. Court of Appeals, supra; and PNB v. Ritratto Group, Inc.,
414 Phil. 494, 507-508 (2001).
[29] Selegna
Management and Development Corporation v. United Coconut Planters Bank, supra at 127.
[30] Lim v.
Court of Appeals, supra note 18.
[31] G.R. No. 161004,
[32] Marquez
v. Presiding Judge (Hon. Ismael B. Sanchez), RTC Br. 58, Lucena City, G.R.
No. 141849, February 13, 2007, 515 SCRA 577, 594, citing Sales
v. Securities and Exchange Commission, G.R. No. 54330, January 13, 1989,
169 SCRA 109, 127 and 43 C.J.S. 867.
[33] See Marquez v. The Presiding Judge, (Hon. Ismael
B. Sanchez), RTC Br. 58,
[34] Selegna
Management and Development Corporation v. United Coconut Planters Bank, supra
note 28 at 146, citing Republic Act No. 8791, approved on May 23, 2000; J.
Feria and M.C. Noche, Civil Procedure Annotated, Vol. 2, 577 (2001); and Sulit
v. Court of Appeals, 335 Phil. 914, 931 (1997).