G.R. No. 184081 June 19, 2009
Global Holiday Ownership Corporation, Petitioner, vs. Metropolitan Bank & Trust Company, Respondent.

FACTS

Petitioner Global Holiday Ownership Corporation (Global) obtained several loans from respondent Metropolitan Bank & Trust Company (Metrobank) secured by a real estate mortgage over a condominium unit. After Global defaulted, the parties executed a Debt Settlement Agreement on November 15, 2001, detailing a schedule of payment. Global again defaulted. Despite demands, Global failed to pay. On May 22, 2006, Metrobank requested the Clerk of Court to cause the extrajudicial foreclosure sale of the mortgaged property, scheduled for July 10, 2006. On July 6, 2006, Global filed a complaint for annulment of extrajudicial foreclosure proceedings with an application for a temporary restraining order (TRO) and/or writ of preliminary injunction. The Regional Trial Court (RTC) granted a TRO and later issued a writ of preliminary injunction. Metrobank filed a petition for certiorari before the Court of Appeals, arguing Global had no legal right to injunctive relief as it admitted default and the mortgage allowed foreclosure upon default. Metrobank contended personal notice of the foreclosure was not required by Act No. 3135, only publication and posting, and that Global had waived personal notice in the Debt Settlement Agreement. Global averred that after a default, Metrobank informed it on May 30, 2003, that its account was being considered for transfer to a Special Purpose Vehicle (SPV) under the SPV Act, and Global signified its conformity on July 4, 2003. Global claimed the interest rate was unilaterally imposed, violating mutuality of contract, and that it had not waived its right to be notified of the foreclosure. The Court of Appeals granted Metrobank’s petition, annulled the RTC orders, and directed the dissolution of the writ, finding Global had no legal right to an injunction, personal notice was not required, and the RTC’s orders constituted a premature disposition on the merits. Global’s motion for reconsideration was denied.

ISSUE

1. Whether Metrobank’s failure to serve personal notice upon Global of the foreclosure proceedings renders the same null and void.
2. Whether the trial court properly issued a writ of injunction to prevent Metrobank from proceeding with the scheduled auction sale.

RULING

The Supreme Court granted the petition. On the first issue, the Court held that paragraph 14 of the real estate mortgage contract required all correspondence relative to the mortgage, including any extrajudicial demand or foreclosure notice, to be sent to Global’s given address. This stipulation for personal notice is valid and binding. The Debt Settlement Agreement’s clause “without need of demand” referred to the payment of principal and interest, not to the notice of foreclosure. The requirement of personal notice in the contract is an additional stipulation not contrary to law, morals, good customs, public order, or public policy. The Court distinguished cases cited by Metrobank, noting they involved situations where the mortgage contracts did not contain a stipulation for personal notice. Since the contract required personal notice and there was a factual dispute over whether such notice was given (with Global denying receipt of the Certification from the Makati Central Post Office cited by Metrobank), the foreclosure proceedings could be considered defective, giving Global a clear legal right to seek injunctive relief to prevent the auction.
On the second issue, the Court found the trial court did not commit grave abuse of discretion in issuing the writ of preliminary injunction. A writ of preliminary injunction is a preservative remedy to protect the plaintiff’s rights during the pendency of the main action. For its issuance, the applicant must show a clear and unmistakable right to be protected and that the act sought to be enjoined is violative of that right. Global’s right stemmed from the contractual stipulation for personal notice. The trial court’s finding that Global was not personally notified, based on the evidence before it, provided a factual basis for the injunction. The Court of Appeals erred in annulling the RTC’s orders, as the RTC acted within its jurisdiction in determining that Global established a prima facie right warranting injunctive relief. The existence of a purported Certification was a factual matter best resolved in the main case, not in the certiorari proceeding. The orders granting the injunction did not constitute a premature judgment on the merits but were merely provisional. The Supreme Court reversed the Court of Appeals Decision and Resolution and reinstated the RTC orders granting the writ of preliminary injunction.