GR 85817; (August, 1993) (Digest)
G.R. No. 85817 August 23, 1993
Case Parties:
PILAR DEVELOPMENT CORPORATION, petitioner,
vs.
THE COURT OF APPEALS, THE EXECUTIVE JUDGE OF THE REGIONAL TRIAL COURT OF PAMPANGA, sitting at San Fernando, Pampanga, CLERK OF COURT and Ex-Officio Sheriff of the REGIONAL TRIAL COURT of Pampanga, DEPUTY SHERIFF EFREN R. CANEVEL, BANCO FILIPINO SAVINGS & MORTGAGE BANK, CARLOTA P. VALENZUELA and SYCIP, SALAZAR, FELICIANO & HERNANDEZ, respondents.
FACTS
1. Petitioner Pilar Development Corporation obtained a loan from respondent Banco Filipino Savings and Mortgage Bank (BF), secured by a real estate mortgage on parcels of land in San Fernando, Pampanga.
2. On January 25, 1985, the Monetary Board (MB) found BF insolvent, ordered it to cease operations, and placed it under a receiver. In March 1985, the MB appointed respondent Carlota P. Valenzuela as liquidator, having decided BF could no longer be rehabilitated.
3. The majority stockholders of BF filed a petition with the Supreme Court (G.R. No. 70054) challenging the MB resolutions. On August 29, 1985, the Supreme Court issued a Resolution restraining respondent Valenzuela from conducting “further acts of liquidation” of BF.
4. On May 21, 1986, BF, through the liquidator, requested the Ex-Officio Sheriff to extrajudicially foreclose the mortgaged properties due to petitioner’s loan default. On July 17, 1986, the Sheriff issued a notice of extrajudicial sale scheduled for July 18, 1986.
5. Petitioner filed a petition for prohibition with the Court of Appeals, seeking to nullify the notice of sale and enjoin the foreclosure. Petitioner argued that respondent Valenzuela had no authority to act as liquidator because the Supreme Court’s restraining order in G.R. No. 70054 had revoked her authority, rendering the foreclosure proceedings null and void.
6. The Court of Appeals issued a temporary restraining order but later denied the petition and lifted the order in its Decision dated June 2, 1988, and denied reconsideration on November 14, 1988.
7. Petitioner appealed to the Supreme Court via certiorari, claiming the Court of Appeals erred in holding that the liquidator’s foreclosure authority was not covered by the Supreme Court’s restraining order and that prohibition would not lie against the respondents.
ISSUE
Whether the Court of Appeals committed reversible error in denying the petition for prohibition, specifically in ruling that:
1. The liquidator’s act of ordering the foreclosure of the mortgaged property was not covered by the Supreme Court’s restraining order against “further acts of liquidation” in G.R. No. 70054; and
2. The special civil action of prohibition was not the proper remedy to enjoin the respondents Judge and Ex-Officio Sheriff from proceeding with the foreclosure sale.
RULING
The Supreme Court DENIED the petition, affirming the Court of Appeals’ decision.
1. On the Scope of the Restraining Order: The Supreme Court held that its Resolution in G.R. No. 70054, which restrained “further acts of liquidation,” did not interfere with the liquidator’s authority under Section 29 of R.A. No. 265 (as amended) to gather and preserve the assets of BF, including the collection of receivables and foreclosure of mortgages securing loans. The Court clarified that the restraining order was directed against acts prejudicial to BF, while the foreclosure acts were beneficial to BF as they aimed to collect a receivable. Therefore, the foreclosure was not an act in connection with or in furtherance of liquidation covered by the restraining order.
2. On the Propriety of the Remedy of Prohibition: The Supreme Court ruled that the petition for prohibition was improper. Prohibition is available only when there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. Petitioner should have first called the respondent Judge’s attention to the acts of the Ex-Officio Sheriff instead of directly resorting to the Court of Appeals. Moreover, the petition did not clearly establish how the respondent Judge was implicated beyond being the presiding judge of the court where the Sheriff served.
With the legal basis for petitioner’s action removed, the petition for prohibition to enjoin the foreclosure sale collapsed. Costs were imposed against petitioner.