Case Summary (G.R. No. 202206)
RTC Proceedings and Orders
After petitioner sought injunctive relief, the RTC initially issued an order on July 21, 1999 holding an auction sale in abeyance (the sale originally set for July 23, 1999). Despite that order, subsequent scheduling placed a foreclosure sale on October 15, 1999; the RTC issued an October 14, 1999 order holding that sale in abeyance but then re-scheduled and authorized an extrajudicial foreclosure sale for November 15, 1999. The RTC’s authorization expressly relied on P.D. No. 385, citing its mandatory foreclosure directive and the prohibition against injunctive relief against government financial institutions complying with the decree. Petitioner’s motion for reconsideration of the RTC order was denied on November 8, 1999.
Court of Appeals Proceedings
Petitioner filed a petition for certiorari and prohibition with injunctive relief in the Court of Appeals (CA), which was docketed as CA‑G.R. SP No. 56137. The CA, by decision dated March 22, 2000, denied due course and dismissed the petition for lack of merit, concluding that the RTC did not commit grave abuse of discretion in authorizing the foreclosure sale. Petitioner’s motion for reconsideration in the CA was denied by resolution dated April 17, 2000.
Issue Presented to the Supreme Court
The principal legal issue brought to the Supreme Court was whether the CA erred in finding that the RTC did not commit grave abuse of discretion in refusing to enjoin the extrajudicial foreclosure of petitioner’s mortgaged properties.
Threshold Disposition — Fait Accompli and Mootness
The Supreme Court denied the petition for review on the sole procedural ground that the act petitioner sought to enjoin had already been consummated: the foreclosure sale was carried out and a Certificate of Sale dated June 26, 2000 had been issued to Landbank. The Court invoked the doctrine against issuing injunctive relief where the acts sought to be enjoined have become fait accompli, noting that there was no longer any actual case or controversy with respect to the RTC’s refusal to enjoin the sale and that deciding the propriety of that refusal would serve no practical purpose.
Decision to Address the Merits Despite Mootness
Although the petition was dismissed on the ground of mootness with respect to injunctive relief, the Court expressly decided the substantive issue as well for the guidance of bench and bar, invoking the exception for questions “capable of repetition, yet evading review.”
Petitioner’s Substantive Contentions and the Court’s Findings
Petitioner did not deny liability on the loan obligation but contended that the promissory notes were silent on whether they were covered by the Mortgage Trust Indenture and Mortgage Participation affecting TCT No. T-11292; petitioner also alleged respondent had effectively taken over management and control (implying respondent’s conduct caused petitioner’s financial difficulties). The Court characterized petitioner’s denials as “negative pregnants” — denials that nonetheless imply admission of substantial facts — and found such vague allegations insufficient to establish a prima facie right to the injunctive relief sought. The Court reiterated the well-settled rule that injunctive relief, particularly preliminary injunctions, require at least a prima facie showing of a right to the final relief.
Application of P.D. No. 385
The Court emphasized the mandatory foreclosure regime established by P.D. No. 385: Section 1 mandates foreclosure by government financial institutions when arrearages (including interest and charges) amount to at least twenty percent of the total outstanding obligation; Section 2 prohibits the issuance of restraining orders or injunctions against a government financial institution in any foreclosure undertaken pursuant to Section 1, except under narrow circumstances (after due hearing and proof that 20% of outstanding arrearages had been paid after foreclosure proceedings). The RTC’s reliance on P.D. No. 385 was thus an appropriate ground for authorizing the foreclosure sale.
Distinguishing Filipinas Marble and Related Precedent
Petitioner sought refuge in the Court’s earlier decision in Filipinas Marble Corporation, which had enjoined foreclosure where the Development Bank of the Philippines (DBP) had allegedly taken over management, mismanaged the corporation, and misappropriated loan proceeds, with prima facie findings supporting such mismanagement. The Supreme Court distinguished Filipinas Marble: unlike that case, petitioner here did not deny its loan liability and offered only conclusory allegations of respondent’s takeover and wrongdoing; there were no prima facie findings of mismanagement or misappropriation that would justify invoking the exceptional protection recognized in Filipinas Marble. Accordingly, petitioner’s complaints about respondent’s conduct were matters to be determined at trial, not bases for preliminary injunction.
On Allegations of Prejudgment by the Trial Court
Petitioner argued that the RTC’s authorization of the foreclosure constituted prejudgment on the vali
...continue readingCase Syllabus (G.R. No. 202206)
Procedural History
- Petition for review on certiorari under Rule 45 filed with the Supreme Court from the Court of Appeals' denial of certiorari and prohibition with injunction.
- Case originated as a complaint for damages, injunction, and nullity of mortgage filed on July 15, 1999 with the Regional Trial Court (RTC) of Silay City, Branch 40, docketed as Civil Case No. 2067-40.
- RTC issued an Order on July 21, 1999 holding in abeyance an auction sale scheduled for July 23, 1999.
- Foreclosure sale later scheduled for October 15, 1999; by RTC Order dated October 14, 1999 the sale was held in abeyance but re-scheduled for November 15, 1999 and authorized to proceed.
- Petitioner’s Motion for Reconsideration of the RTC’s October 14, 1999 Order was denied per RTC Order dated November 8, 1999.
- Petitioner elevated the matter to the Court of Appeals by filing a Petition for Certiorari and Prohibition with Injunction, docketed as CA-G.R. SP No. 56137.
- The Court of Appeals, in a Decision dated March 22, 2000, denied due course and dismissed the petition for lack of merit; petitioner’s motion for reconsideration was denied by CA Resolution dated April 17, 2000.
- Upon denial by the CA, petitioner sought relief from the Supreme Court by the present petition; Supreme Court promulgated its decision on September 12, 2007 (559 Phil. 462, G.R. No. 142896).
Facts
- Petitioner: Caneland Sugar Corporation.
- Respondents: Hon. Reynaldo M. Alon, Land Bank of the Philippines (Land Bank), and Sheriff Eric B. De Vera.
- Underlying dispute: foreclosure and extrajudicial sale of petitioner’s property covered by Transfer Certificate of Title No. T-11292, assertedly subject to a mortgage in favor of Land Bank.
- Petitioner does not dispute the existence of its loan obligation to respondent, but contests whether certain promissory notes were covered by the Mortgage Trust Indenture and Mortgage Participation on the property (asserting promissory notes are silent on this point).
- Petitioner impliedly alleged that management and control of its operations had been virtually taken over by respondent prior to a lease to Sunnix, Inc., implying respondent’s management caused petitioner’s financial difficulties.
- Records show the foreclosure sale was carried out by the Sheriff and a Certificate of Sale dated June 26, 2000 was issued to respondent.
Reliefs Sought by Petitioner in RTC (Civil Case No. 2067-40)
- Issuance of a temporary restraining order enjoining respondent and the Sheriff from proceeding with the auction sale of petitioner’s property.
- Declaration of nullity of any foreclosure sale to be held.
- Declaration of nullity of the mortgage constituted over petitioner’s property covered by TCT No. T-11292 in favor of respondent.
- Award of damages.
Trial Court Orders and Actions
- RTC, Branch 40, Silay City: Order dated July 21, 1999 held sale scheduled July 23, 1999 in abeyance as agreed by the parties.
- RTC Order dated October 14, 1999 held October 15, 1999 sale in abeyance, but re-scheduled and authorized extrajudicial foreclosure sale on November 15, 1999, citing P.D. No. 385 and its mandatory foreclosure and prohibition against injunctive orders against government financial institutions in compliance with that decree.
- RTC denied petitioner’s Motion for Reconsideration by Order dated November 8, 1999.
Court of Appeals Proceedings
- Petitioner filed CA-G.R. SP No. 56137 (Petition for Certiorari and Prohibition with Injunction).
- Court of Appeals Decision dated March 22, 2000 denied due course and dismissed the petition, finding that the RTC did not commit grave abuse of discretion.
- Petitioner’s motion for reconsideration was denied by CA Resolution dated April 17, 2000.
Issues Presented (as framed in the record)
- Whether the Court of Appeals erred in finding that the RTC did not commit grave abuse of discretion in not enjoining the extrajudicial foreclosure of petitioner’s properties.
- Subsidiary contentions: whether the RTC’s authorization of foreclosure amounted to a prejudgment that respondent had a valid mortgage; whether P.D. No. 385 applied given petitioner’s allegation that respondent had virtually taken over management and control of its operations.
Petitioner’s Arguments
- The RTC’s act of authorizing foreclosure amounted to a prejudgment of the case because it effectively ruled that respondent had a valid mortgage in its favor.
- P.D. No. 385 should not be applicable because, at the time of the lease to Sunnix, Inc., respondent had virtually taken over management and control of petitioner’s operations—a circumstance petitioner implies rendered P.D. No. 385 inapplicable (invoking the rationale in Filipinas Marble Corporation).
Respondents’ Arguments
- P.D. No. 385 prohibits issuance of injunctive orders against government financial institutions when they act in compliance with its mandatory foreclosure provisions.
- The Court of Appeals did not commit grave abuse of discretion.
- The RTC Order dealt only with the propriety of injunctive relief and not the validity of the mortgage.
- The issue of injunctive relief has been rendered moot and academic by the actual foreclosure sale and issuance of a Certificate of Sale.
Principal Legal Provision Invoked: Presidential Decree No. 385
- P.D. No. 385 is entitled "Requiring Government Financial Institutions to Foreclose Mandatorily All Loans with Arrearages,