G.R. No. 184434 , February 8, 2010
G.G. SPORTSWEAR MANUFACTURING CORP. and NARESH K. GIDWANI, Petitioners, vs. BANCO DE ORO UNIBANK, INC., PHILIPPINE INVESTMENT ONE (SPV-AMC), INC. and THE OFFICE OF THE CLERK OF COURT AND EX OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF MAKATI CITY, BRANCH 133, as represented by ATTY. ENGRACIO M. ESCASINAS, JR., Respondents.

FACTS

Petitioners G.G. Sportswear Manufacturing Corp. and Naresh K. Gidwani mortgaged properties in Aranda and Bel-Air, Makati, to Equitable-PCI Bank (now respondent Banco de Oro Unibank, Inc. or BDO) to secure loans totaling ₱32,000,000.00. Petitioner G.G. Sportswear defaulted on the loans. On March 15, 2005, BDO informed G.G. Sportswear that it had transferred its “past due loan obligation” to respondent Philippine Investment One (SPV-AMC), Inc. (PIO), followed by a BDO Certification dated April 21, 2005, stating it had assigned and sold the loan receivables to PIO. Subsequently, however, BDO applied for the foreclosure of the mortgaged properties. The Aranda property was auctioned to BDO on June 21, 2007. Two days before the scheduled auction of the Bel-Air property, petitioners filed an action in the RTC of Makati to annul the foreclosure, hold BDO in indirect contempt, award damages, and enjoin further foreclosure via a TRO and preliminary injunction, alleging BDO lost the right to foreclose upon transferring the loan receivables to PIO. In its answer, BDO denied transferring the specific loan receivables, claiming only ₱290,820.00 was transferred and that the credits secured by the subject properties were not transferred, supported by certifications from both BDO and PIO. The RTC denied the applications for TRO and preliminary injunction, which denial was affirmed by the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in finding that the Regional Trial Court did not gravely abuse its discretion when it denied petitioners’ application for a TRO and preliminary injunction despite the bank’s apparent assignment of its credit to another entity.

RULING

The Supreme Court denied the petition and affirmed the CA decision. The Court ruled that the RTC did not gravely abuse its discretion in denying the TRO and preliminary injunction. The test for issuing such provisional relief is whether the plaintiff is entitled to the main relief sought, meaning the complaint must clearly show a cause of action—a right enjoyed by the plaintiff that was violated by the defendant. While BDO’s 2005 letter and certification suggested an assignment of all loan receivables to PIO, BDO’s answer and supporting certifications claimed only a minimal portion was transferred and the specific credits secured by the mortgages were not. Two key considerations militated against injunction: First, petitioners admitted defaulting on the loans, so they had no right to complain about the foreclosure. Second, the issue of which party owned the loan receivables and had the right to foreclose was essentially between BDO and PIO; PIO, impleaded in the case, did not contest BDO’s ownership or right to foreclose, and the mortgages remained in BDO’s name. Thus, petitioners failed to establish a clear right to stop the foreclosure. Furthermore, a preliminary injunction requires a pressing necessity to avoid injurious consequences that cannot be remedied by compensation. Here, any injury from paying auction proceeds to the wrong party (BDO instead of PIO) was monetary and compensable, not irreparable. Therefore, no grave abuse of discretion attended the RTC’s denial.