Searth Commodities Corp. vs. Court of Appeals

G.R. No. 64220. March 31, 1992.

Main Topic – Rule 58.

FACTS

Searth borrowed from Development Bank of the Philippines (DBP) amounting to P370,000 to finance its tomato plantation in La Union. In 1974, Searth failed to pay its agricultural loan which resulted to the foreclosure of the real estate and chattel mortgage executed. Title to the foreclosed properties were thereafter consolidated in the name of DBP. In 1980, DBP advertised to sell some of its acquired assets, including the subject residential properties previously owned by petitioners Camacho, Castro and Taroja. Petitioners filed for annulment of real estate mortgages and foreclosure sale and the issuance of a writ of preliminary injunction to enjoin the sale of the residential properties.

The Trial Court issued an order restraining the bidding of the individual properties of the petitioners. After the expiration of the restraining order the petitioners moved for its extension.

The case was transferred to Judge Josue Bellosillo, who issued an order dissolving the restraining order and denying the motion for its extension. The Court cited P.D. No. 385 which states that “no restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution.” The petitioners claimed that Judge Bellosillo gravely abused his discretion in denying their prayer for the issuance of a preliminary injunction because P.D. No. 385 is not applicable to them.

ISSUE

(1) Whether or not we the issuance of a writ of injunction stopping the sale of three residential properties must be granted. 

(2 ) Whether or not P.D. No. 385 is applicable to the instant case.

RULING

(1) As a general rule, the grant or denial of an injunction rests on the sound discretion of the lower court in the exercise of which this Court will not intervene except in a clear case of abuse. For the petitioners to be entitled to the injunctive writ, they must show that there exists a right to be protected and that the facts against which injunction is directed are violative of said right. For several years, petitioners did not question the validity of the real estate mortgages and foreclosure sale. It was only in 1980 or six years after the foreclosure sale that they filed a case for annulment of real estate mortgage and foreclosure sale. The petitioners failed to show that they have an existing right to be protected. The petitioners cannot cite nor assert equity since by their own inaction they have forfeited the right to invoke such remedy.

The object of the writ is to preserve the status quo, which is the last actual peaceable uncontested status that preceded the pending controversy. The last actual peaceable uncontested status that preceded the controversy is that DBP is the owner of the properties in dispute, the petitioners having failed to redeem them and DBP having consolidated its title thereto. As owner of these properties, DBP has every right to dispose of them. The issuance of the writ would no doubt upset, not preserve, the status quo.
(2) No. The prohibition found in P.D. No. 385 against the issuance of injunctions by lower courts, unless certain conditions are met, applies only to foreclosure proceedings initiated by government financial institutions like the DBP. The sale by the DBP of its acquired assets cannot anymore be viewed as a satisfaction of the petitioners’ unpaid loan but as an exercise of DBP’s right of ownership over these properties. The sale by the DBP of its acquired assets cannot anymore be viewed as a satisfaction of the petitioners’ unpaid loan but as an exercise of DBP’s right of ownership over these properties.

DOCTRINE

• Generally, the grant or denial of an injunction rests on the sound discretion of the lower court.
• The object of the writ is to preserve the status quo which is the last actual peaceable uncontested status that preceded the pending controversy.

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