G.R. No. 144755 ; June 8, 2005
SPOUSES ELISEO F. ESTARES and ROSENDA P. ESTARES, petitioners, vs. COURT OF APPEALS, HON. DAMASO HERRERA as Presiding Judge of the RTC, Branch 24, Biñan, Laguna, PROMINENT LENDING & CREDIT CORPORATION, PROVINCIAL SHERIFF OF LAGUNA and Sheriff IV ARNEL G. MAGAT, respondents.

FACTS

Petitioners Spouses Estares obtained a loan from respondent Prominent Lending & Credit Corporation (PLCC), secured by a real estate mortgage. They later filed a complaint for damages and injunction, alleging the loan documents were falsified as they signed blank forms and that the stipulated 3.5% monthly interest differed from an agreed 18% per annum. They sought to nullify the documents and enjoin an extrajudicial foreclosure sale. The trial court initially issued a temporary restraining order but, after a hearing on the application for a writ of preliminary injunction, denied it. The court found the spouses failed to establish a clear right to the injunction, noting their own testimony showed they used the loan proceeds, received statements without protest, and only sought a payment extension upon demand.
Petitioners filed a petition for certiorari with the Court of Appeals, challenging the trial court’s denial of injunctive relief. During the pendency of the petition and with no injunction in effect, the sheriff proceeded with the auction sale, with PLCC as the highest bidder. The Court of Appeals subsequently dismissed the petition, upholding the trial court’s discretion and noting the spouses failed to prove the requisites for a preliminary injunction. The spouses elevated the case to the Supreme Court via a petition for certiorari and prohibition.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in affirming the trial court’s denial of the application for a writ of preliminary injunction.

RULING

The Supreme Court denied the petition, finding no grave abuse of discretion. The legal logic rests on the nature and purpose of a preliminary injunction, which is a preservative remedy requiring the applicant to prove a clear and unmistakable right to be protected. The Court emphasized that a preliminary injunction is not a remedy to determine the merits of the case but to prevent threatened acts pending litigation. The trial court’s finding that the Spouses Estares failed to establish such a clear right was based on substantial evidence, including Rosenda Estares’s own admissions regarding their use of the loan and failure to timely contest its terms.
The Court further ruled that the subsequent conduct of the foreclosure sale did not render the case moot, as the validity of that sale was intrinsically linked to the main action for nullity of the mortgage. However, the denial of the preliminary injunction was proper because the petitioners did not demonstrate an urgent necessity for the writ to prevent serious injustice. The trial court’s exercise of discretion was not whimsical or capricious but was grounded on the evidence presented during the hearing. Therefore, the Court of Appeals correctly found no grave abuse of discretion in the trial court’s orders.