G.R. No. 121251 June 26, 1998
PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS and ROMEO BARILEA, respondents.

FACTS

Private respondent Romeo Barilea filed a complaint for damages with a prayer for a temporary restraining order and writ of preliminary injunction against petitioner Philippine National Bank (PNB) and the Provincial Sheriff of Negros Occidental. Barilea alleged he obtained sugar crop loans from PNB, secured by a mortgage on his land. He contended that PNB, acting with malice and bad faith, filed a petition for the extrajudicial sale of the mortgaged property even though one of his loans had not yet matured. The sale was scheduled for November 18, 1991. Barilea sought damages for the alleged premature foreclosure, claiming he suffered actual expenses, mental anguish, and public humiliation. PNB filed a motion to dismiss, arguing the foreclosure was valid due to past due accounts and that the prayer for injunctive relief was rendered moot by the holding of the auction sale on November 7, 1991. The trial court dismissed the case for being moot and academic. The Court of Appeals reversed the dismissal and remanded the case, ruling that the foreclosure sale did not render the principal action for damages moot.

ISSUE

Whether a complaint for damages arising from an alleged premature foreclosure of mortgage should be dismissed on the ground that the foreclosure sought to be enjoined is already a fait accompli.

RULING

No. The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the dismissal of the complaint by the trial court was not valid. A complaint states a cause of action if it alleges facts sufficient to show a plaintiff has suffered a legally recognized injury for which the defendant may be liable and for which there is a legal remedy. Barilea’s complaint sufficiently alleged a cause of action for damages based on the allegedly malicious and premature filing of the foreclosure petition. The injunctive reliefs (temporary restraining order and writ of preliminary injunction) are merely provisional remedies adjunct to the main suit. The fact that the act sought to be enjoined (the foreclosure sale) had been completed only meant the prayer for that provisional remedy should be denied, but it did not extinguish the principal action for damages. The case was not moot and academic because an actual controversy remained regarding Barilea’s entitlement to damages. The trial court must proceed to hear and adjudicate the substantive rights of the parties on the merits of the damage claim. The validity of the foreclosure and the propriety of the damage claim are factual issues to be determined by the trial court.