GR 64220; (March, 1992) (Digest)
G.R. No. 64220 March 31, 1992
SEARTH COMMODITIES CORPORATION, ARACELI CAMACHO, PROSPERO CASTRO and MANUEL TARROJA, petitioners, vs. COURT OF APPEALS and DEVELOPMENT BANK OF THE PHILIPPINES, respondents.
FACTS
On May 17, 1972, petitioner Searth Commodities Corporation borrowed P370,000 from respondent Development Bank of the Philippines (DBP). The loan was secured by a 60-hectare agricultural land, farm machinery, and three residential properties owned by individual petitioners Araceli Camacho, Prospero Castro, and Manuel Tarroja. In 1972, floods and typhoons destroyed the plantation, and Presidential Decree No. 27 led farmers to occupy the agricultural land. Due to Searth’s loan default, DBP foreclosed the mortgages in 1974. The petitioners did not redeem the properties, and titles were consolidated in DBP’s name. On October 27, 1980, DBP advertised the sale of the residential properties. On October 30, 1980, petitioners filed Civil Case No. 39128 for annulment of the mortgages and foreclosure sale, and prayed for a preliminary injunction to stop the sale. The trial court initially issued a restraining order but later dissolved it, citing P.D. No. 385, which restricts injunctions against government financial institutions in foreclosure cases. The Court of Appeals upheld the trial court’s denial of the injunction, stating P.D. No. 385 applied and that petitioners had an adequate remedy by registering a notice of lis pendens.
ISSUE
Whether the Court of Appeals erred in upholding the denial of the petitioners’ prayer for a preliminary injunction to enjoin the sale of the residential properties by DBP.
RULING
The Supreme Court dismissed the petition and lifted the temporary restraining order. The Court held that the grant or denial of an injunction rests on the sound discretion of the lower court, and intervention is warranted only in case of grave abuse. For an injunction to issue, petitioners must show a right to be protected and that the acts complained of violate that right. The Court found that the foreclosure occurred in 1974, petitioners failed to redeem the properties, and DBP had consolidated its titles. The last peaceable status was DBP’s ownership of the properties. Issuing an injunction would prejudge the main case and upset, not preserve, the status quo. The Court agreed with the Court of Appeals that petitioners had an adequate remedy by registering a notice of lis pendens to bind any prospective buyer to the outcome of the main case. The Court, however, did not sustain the lower courts’ application of P.D. No. 385, as the decree applies to foreclosure proceedings, not to the subsequent sale of assets already owned by DBP. Nevertheless, the injunction was still not warranted for the reasons stated.