GR 157535; (February, 2005) (Digest)
G.R. No. 157535 ; February 11, 2005
PHILIPPINE NATIONAL BANK, petitioner, vs. FELINO M. TIMBOL and EMMANUELA R. LAGUARDIA, respondents.
FACTS
Petitioner Philippine National Bank (PNB) extended credit facilities to Karrich Holdings Limited and Karrich Auto Exchange, owned by respondent Felino Timbol, secured by three Real Estate Mortgages (REMs) executed by Timbol and his wife, respondent Emmanuela Laguardia, covering nine properties. Upon the borrowers’ default, PNB sent a demand letter and subsequently initiated extrajudicial foreclosure proceedings through a notary public, culminating in a public auction where PNB emerged as the highest bidder.
More than three months before the expiration of the redemption period, respondents filed a complaint for annulment of the mortgage, foreclosure, and auction sale, with an application for a writ of preliminary injunction. They alleged irregularities in the foreclosure, claiming Timbol signed blank REM forms and that PNB deliberately bloated the obligation. The Regional Trial Court granted the injunction. PNB’s Petition for Certiorari before the Court of Appeals was dismissed, prompting this review.
ISSUE
Did the Regional Trial Court commit grave abuse of discretion in granting the writ of preliminary injunction?
RULING
Yes. The Supreme Court reversed the Court of Appeals and nullified the injunction order. A writ of preliminary injunction is a preservative remedy requiring a clear and unmistakable right to be protected. Respondents failed to establish such a right. Their claim of signing blank mortgage forms was unsupported by evidence and contradicted by Timbol’s prior written admission of the debt. The allegation of bloated obligation was belied by the loan documents and Timbol’s own letter acknowledging an outstanding obligation of approximately Thirty-Three Million Pesos.
Furthermore, the claimed irregularity—that the foreclosure was conducted by a notary public instead of a sheriff—was unfounded. The parties contractually agreed to this mode in the REMs, and Supreme Court Administrative Order No. 3, which designates sheriffs for foreclosures, applies only to judicial foreclosures, not extrajudicial ones. Since the foreclosure was regular and respondents’ purported rights were unsubstantiated, the trial court’s issuance of the injunction, based on mere allegations, constituted grave abuse of discretion. The injunction improperly restrained the enforcement of a lawful foreclosure sale.