G.R. No. 148606 - Limbauan vs. Acosta

On July 15, 1999, Caneland Sugar Corporation (petitioner) filed a complaint with the Regional Trial Court (RTC) of Silay City, Branch 40, docketed as Civil Case No. 2067-40.
The complaint was for damages, injunction, and nullity of mortgage against the Land Bank of the Philippines (respondent) and Sheriff Eric B. de Vera.
Petitioner prayed for the issuance of a temporary restraining order (TRO) enjoining the foreclosure sale of its property, declaration of nullity of any foreclosure sale, declaration of nullity of the mortgage covering the property (TCT No. T-11292), and award of damages.

On July 21, 1999, RTC issued an Order holding in abeyance the auction sale set on July 23, 1999, as agreed by the parties.
Despite this, a foreclosure sale was scheduled on October 15, 1999.
By Order dated October 14, 1999, the RTC held the October 15 sale in abeyance but rescheduled it to November 15, 1999, citing the mandatory foreclosure provisions under P.D. No. 385, which requires government financial institutions to foreclose loans with arrearages of at least 20%.
The RTC authorized Land Bank and the Sheriff to proceed with the extrajudicial foreclosure on November 15, 1999.

Petitioner filed a Motion for Reconsideration of the RTC Order, which was denied on November 8, 1999.
Petitioner filed a Petition for Certiorari and Prohibition with Injunction before the Court of Appeals (CA) docketed as CA-G.R. SP No. 56137.
The CA, in a Decision dated March 22, 2000, denied the petition for lack of merit, finding no grave abuse of discretion by the RTC.
Petitioner’s motion for reconsideration to the CA was likewise denied on April 17, 2000.
Petitioner then elevated the case to the Supreme Court via a Petition for Review on Certiorari under Rule 45.

Petitioner alleged that RTC’s authorization of foreclosure amounted to a prejudgment of the case and argued inapplicability of P.D. No. 385 because management and control of the operations had been virtually taken over by respondent.
Respondent maintained that P.D. No. 385 prohibits injunctive orders against government financial institutions in such foreclosure actions; that the CA correctly found no grave abuse of discretion; that the RTC Order dealt only with the injunctive relief and not mortgage validity; and that the foreclosure sale has been consummated.

Records show the foreclosure sale sought to be enjoined was already carried out by the Sheriff.
A Certificate of Sale dated June 26, 2000, was issued to respondent.
Hence, the case concerning injunctive relief had become moot and academic regarding the foreclosure sale.

Whether the Court of Appeals erred in finding that the RTC did not commit grave abuse of discretion in refusing to enjoin the extrajudicial foreclosure sale of petitioner’s property.

Whether the foreclosure sale, having already been conducted and a Certificate of Sale issued, rendered the petition for injunctive relief moot and academic.

Whether P.D. No. 385, mandating foreclosure by government financial institutions and prohibiting injunctions thereon, applies in this case despite petitioner’s allegations of wrongful management takeover.

Whether the RTC’s authorization of the foreclosure sale amounts to prejudgment of the underlying mortgage and loan validity issues.