GR 147191; (March, 2007) (Digest)
G.R. No. 147191 . March 20, 2007
SPOUSES MANUEL & LUISA TAN LEE, RENWICK WARREN LEE and JANSSEN THADDEUS LEE, Petitioners, vs. HON. COURT OF APPEALS and CHINA BANKING CORPORATION, Respondents.
FACTS
Petitioners, the Spouses Lee, obtained a loan from respondent China Banking Corporation (CBC) secured by a real estate mortgage. Upon alleged default, CBC initiated extrajudicial foreclosure proceedings. The Lees filed a civil case and secured a temporary restraining order (TRO) from the Regional Trial Court (RTC), which later issued a Writ of Preliminary Injunction enjoining the foreclosure sale. The RTC issued this writ despite not having concluded the hearings on the application for injunction, specifically before CBC could finish presenting its evidence against the injunction.
The Court of Appeals nullified the RTC’s orders issuing the injunction, finding grave abuse of discretion. The Supreme Court, in its Decision dated July 27, 2006, affirmed the Court of Appeals. The Supreme Court held that the trial court violated Section 5, Rule 58 of the Rules of Court by issuing the injunction without first allowing CBC to complete its presentation of evidence showing why the injunction should not be granted. Petitioners filed a Motion for Reconsideration.
ISSUE
Whether the Supreme Court should reverse its finding of grave abuse of discretion by the trial court and reinstate the Writ of Preliminary Injunction.
RULING
The Motion for Reconsideration is denied, but the Court’s prior Decision is modified. The Supreme Court maintained its finding that the trial court committed grave abuse of discretion. The issuance of a preliminary injunction without first conducting a hearing where the party sought to be enjoined is allowed to present evidence contravenes the explicit mandate of Section 5, Rule 58. The rule requires the court to hear the party against whom the injunction is sought. Here, the RTC prematurely issued the writ based solely on the petitioners’ evidence, even as CBC’s counsel actively sought to continue hearings before the scheduled auction date. The trial court failed to utilize its inherent powers to control proceedings and compel the completion of evidence within the available hearing dates.
However, the Court agreed with petitioners that they should not be penalized for the trial court’s procedural error. The petitioners did not cause the termination of hearings; they merely moved to cite CBC for contempt. Thus, they should not be deprived of the right to seek an injunction if merited. Consequently, the Supreme Court ordered the RTC to resume and conclude the hearings on the injunction application in strict compliance with procedural rules. The RTC was given twelve days from the finality of the Resolution to resume hearings and another twelve days to terminate them, after which it must issue a new order granting or denying the injunction.