G.G.
SPORTSWEAR G.R. No. 184434
MANUFACTURING CORP.
and NARESH K. GIDWANI,
Petitioners, Present:
Carpio, J., Chairperson,
- versus - Brion,
Del Castillo,
Abad, and
Perez, JJ.
BANCO
DE ORO UNIBANK, INC.,
PHILIPPINE
INVESTMENT ONE
(SPV-AMC),
INC. and THE OFFICE
OF
THE CLERK OF COURT AND
EX OFFICIO SHERIFF OF THE
REGIONAL
TRIAL COURT OF
MAKATI
CITY, BRANCH 133, as
represented
by ATTY. ENGRACIO Promulgated:
M. ESCASINAS,
JR.,
Respondents. February 8, 2010
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ABAD, J.:
This case is concerned with the need to issue a temporary
restraining order (TRO) or writ of preliminary injunction, enjoining a bank’s
foreclosure of the mortgages that secure the plaintiffs’ loans upon a claim
that the bank had already sold the loan receivables to a Special Purpose
Vehicle entity.
The Facts and the Case
On April 22, 1994 petitioners G.G. Sportswear Manufacturing
Corp. (G.G. Sportswear) and Naresh Gidwani mortgaged a lot in Aranda, Makati,
and a house and lot in Bel-Air Village, also in Makati, to Equitable-PCI Bank,
now the respondent Banco de Oro Unibank, Inc. (BDO), to secure a P20,357,000.00
loan to G.G. Sportswear. On April 25,
1996, to secure an additional P11,643,000.00 loan that BDO gave G.G.
Sportswear, the parties amended the real estate mortgages to include such loan. Petitioner G.G. Sportswear was unable to pay
its loans.
On March 15, 2005 respondent
BDO told G.G. Sportswear in a letter[1]
that the bank transferred on that date its “past due loan obligation with the
bank,” totaling US$12,257,581.31 as of December 31, 2004, to Philippine
Investment One (SPV-AMC), Inc. (PIO), “including all interest, fees, charges,
penalties, and securities/collaterals, if any.”
This was followed by BDO Certification[2]
dated April 21, 2005 that it “has assigned, conveyed, transferred and
sold” to PIO, “on a without recourse basis, all its rights, title, benefits
and interest to the Loan Receivables” of G.G. Sportswear.
Subsequently, however, respondent BDO applied with the Ex Officio Sheriff of
On July 16, 2007,
two days before the rescheduled auction of the Bel-Air property, petitioners G.G.
Sportswear and Gidwani filed an action with the Regional Trial Court (RTC) of
In its answer,[5]
respondent BDO denied transferring petitioner G.G. Sportswear’s loan receivables to PIO, stating that the April 21, 2005 Certification
it issued was a mere “general certification” that did not specify which of
several loan receivables were sold to PIO.
BDO in fact transferred to Philippine Asset Investment, which entity was
subsequently taken over by respondent PIO, only P290,820.00 out of G.G.
Sportswear’s total loan.[6]
BDO attached Certifications[7]
from itself and from PIO to the effect that the credits secured by the Aranda and
Bel-Air properties had not been transferred to PIO. The latter filed an answer of the same tenor.[8]
On August 7, 2007
the RTC issued an order,[9]
denying petitioners G.G. Sportswear and Gidwani’s applications for TRO and
preliminary injunction. They filed a motion
for reconsideration and a motion to inhibit the presiding judge,[10]
but on October 11, 2007 the RTC denied both motions.[11] This prompted G.G. Sportswear and Gidwani to
file a special civil action of certiorari with the Court of
Appeals (CA) in CA-G.R. SP 101799, assailing the RTC orders mainly based on the
proposition that respondent BDO had lost its right to foreclose the mortgages
when it assigned its rights to PIO.
On June 26, 2008 the CA rendered judgment,[12] dismissing
the petition for lack of merit. It
denied on August 29, 2008 petitioners G.G. Sportswear and Gidwani’s subsequent
motion for reconsideration,[13]
prompting them to file the present petition for review.
Issue Presented
The only issue presented in this case is whether or not the CA
erred in finding that the RTC did not gravely abuse its discretion when it
denied petitioners G.G. Sportswear and Gidwani’s application for TRO and
preliminary injunction despite the bank’s apparent assignment of its credit to
another entity.
The Court’s Ruling
Petitioners G.G. Sportswear and Gidwani point out that BDO’s
March 15, 2005 letter and its April 21, 2005 certification show that the bank
already transferred to PIO all its rights to the loan receivables of G.G. Sportswear.
Thus, BDO lost its right to foreclose
the mortgages on the properties that secured the unpaid loans, thus, entitling petitioners
to an order enjoining the foreclosures.
Further, petitioners claim that BDO bloated G.G. Sportswear’s outstanding
obligation such that it was being made to pay more through the foreclosure than
was actually due.
The test for issuing a TRO or an injunction is whether the
facts show a need for equity to intervene in order to protect perceived rights
in equity.[14] In general, a higher court will not set aside
the trial court’s grant or denial of an application for preliminary injunction
unless it gravely abused its discretion as when it lacks jurisdiction over the
action, ignores relevant considerations that stick out of the parties’
pleadings, sees the facts with a blurred lens, ignores what is relevant, draws
illogical conclusions, or simply acts in random fashion.
Injunction may be issued only when the plaintiff appears to
be entitled to the main relief he asks in his complaint.[15] This means that the plaintiff’s allegations
should show clearly that he has a cause of action. This means that he enjoys some right and that
the defendant has violated it.[16] And, where the defendant is heard on the
application for injunction, the trial court must consider, too, the weight of
his opposition.
If one were to go by respondent BDO’s March 15, 2005 letter
to petitioner G.G. Sportswear and its April 21, 2005 certification, the bank
appears to have already assigned all the loan receivables of G.G. Sportswear to
respondent PIO. Logically, BDO no longer
had the right to foreclose on the mortgages that secured the loans. But, judging by its answer to the complaint, BDO
wanted that corrected. For it claimed
that it actually assigned just a measly portion of its loan receivables to
respondent PIO.
Did the allegations of the parties and the documents they
attached to their pleadings give ample justification for the issuance of a TRO
or preliminary injunction order to stop the foreclosure sale of the Bel-Air property? Two considerations militate against it:
First. The mortgaged properties were
due for foreclosure. Admittedly,
petitioner G.G. Sportswear had defaulted on the loans secured by the subject
mortgages. Petitioners had, therefore,
no right to complain about losing their properties to foreclosure.
Second. The issue of which party owns
the loan receivables and, consequently, had the right to foreclose the
mortgages is essentially an issue between BDO and PIO. This issue is the concern of petitioners G.G.
Sportswear and Gidwani but only to the extent that they are entitled to ensure
that the proceeds of the foreclosure sale were paid to the right party.
As it happens, however, this is not even a genuine issue. Respondent PIO, which had been impleaded in
the case, did not contest BDO’s ownership of the loan receivables and its right
to foreclose the mortgages. It would,
therefore, make no sense to insist that PIO be the one to foreclose when it denounces
such right. Besides, the real estate
mortgages presented for foreclosure remained in BDO’s name. No document has been presented superseding
it.
For the above reasons, it cannot be said that petitioners G.G.
Sportswear and Gidwani have established a right to the main relief they want,
namely, the arrest of the foreclosure sale of their mortgaged properties after
they had admitted not paying their loans.
As for their claim that BDO had bloated G.G. Sportswear’s outstanding
obligation, the remedy if this turns out to be true is to direct BDO to return
the excess proceeds with damages as the circumstances may warrant.
What is more, the provisional remedy of preliminary
injunction may only be resorted to when there is a pressing necessity to avoid
injurious consequences which cannot be remedied under any standard of
compensation.[17] Here, since there is a valid cause to
foreclose on the mortgages, petitioners G.G. Sportswear and Gidwani cannot
claim that the irreparable damage they wanted to prevent by their application
for preliminary injunction is the loss of their properties to auction
sale. Their real injury, if it turns out
that the right to foreclose belongs to PIO rather than to BDO, is payment of
the proceeds of the auction sale to the wrong party rather than to their
creditor. But this kind of injury is
purely monetary and is compensable by an appropriate judgment against BDO. It is not in any sense an irreparable
injury.
Under the circumstances, the Court must
concur with the CA’s finding that the RTC did not act with grave abuse of discretion
in denying petitioners’ application for TRO and preliminary injunction order.
ACCORDINGLY, the Court DENIES
the petition and entirely AFFIRMS the June 26, 2008 decision and August
29, 2008 resolution of the Court of Appeals in CA-G.R. SP 101799.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE
CONCUR:
ANTONIO T. CARPIO
Associate Justice
ARTURO D. BRION MARIANO C.
DEL CASTILLO
Associate Justice Associate Justice
JOSE P. PEREZ
Associate Justice
ATTESTATION
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.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
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, p. 542.
[2]
[3]
[4] Entitled “G.G. Sportswear Manufacturing Corporation and Naresh K. Gidwani v. Banco de Oro-EPCI, Inc. (formerly Equitable-PCIBank), Philippine Investments One (SPV-AMC), Inc., and Office of the Clerk of Court and Ex Officio Sheriff of the RTC of Makati City, represented by Atty. Engracio M. Escasinas, Jr.”
[5] Rollo, pp. 601-619.
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] Almeida v. Court of Appeals, 489 Phil. 648, 663 (2005).
[15] Toyota Motor Philippines Corporation v. Court of Appeals, G.R. No. 102881, December 7, 1992, 216 SCRA 236, 251.
[16] Los Baños Rural Bank, Inc. v.
[17]