G.R. No. L-26494. August 31, 1970.
SONIO PALANCA, PRIMO PALANCA, CARLOS PALANCA, DEHE PALANCA, QUINTIN GARCIA, PABLO PALANCA, BARTOLOME PALANCA, CHU TIONG, ADRIANO GALEOS, LUISA PALANCA and ALFREDO SEVILLE, Petitioners, v. HON. VICENTE CUSI, JR., in his capacity as Judge of the Court of First Instance of Davao, MANUFACTURERS BANK AND TRUST COMPANY and SANCHO CANOY, Respondents.

FACTS

Petitioners, mostly officers and/or stockholders of Davao Ricorn, Inc., executed a special power of attorney appointing Marcelino E. Calinawan, Jr., the corporation’s Chairman and President, as their attorney-in-fact. The power authorized Calinawan to mortgage specific parcels of their registered lands to secure loans obtained by him personally or on behalf of Davao Ricorn, Inc. from the Manufacturers Bank and Trust Company. Pursuant to this authority, Calinawan executed two real estate mortgages in favor of the Bank on May 28, 1964, and June 3, 1964, securing loans for Davao Ricorn, Inc. The mortgages contained provisions authorizing the Bank to extrajudicially foreclose the properties and appointing the Bank as attorney-in-fact to take possession and sell the properties upon default. On April 7, 1965, the Bank petitioned for the extrajudicial foreclosure of the mortgages due to an alleged indebtedness. On June 15, 1965, petitioners filed a civil case (No. 4716) seeking to have a period fixed for payment, a declaration that the obligation was not yet due, and to restrain the foreclosure. The court issued a preliminary injunction. Petitioners later amended their complaint, alleging the mortgages were null and void as Calinawan exceeded his authority by waiving the right of redemption and appointing the Bank as attorney-in-fact, and that they were merely guarantors entitled to excussion. The Bank moved to dissolve the injunction. After a hearing on the merits, the respondent Judge issued an order on August 3, 1966, dissolving the preliminary injunction. Petitioners’ motion for reconsideration was denied. Subsequently, on August 31, 1966, the respondent Judge rendered a decision on the merits dismissing petitioners’ complaint but recognizing their right of redemption. Petitioners then filed this original action for certiorari to annul the orders dissolving the injunction, claiming grave abuse of discretion.

ISSUE

Whether the respondent Judge committed a grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order dated August 3, 1966, dissolving the writ of preliminary injunction.

RULING

No. The Supreme Court held that the dissolution of the writ of preliminary injunction was not attended by a grave abuse of discretion. The Court noted that the respondent Judge’s subsequent decision on the merits, which was not under review, contained findings that amply justified the dissolution. These findings included: (1) the deeds of mortgage were valid and binding as they were executed within the scope of the special power of attorney; (2) the stipulations in the mortgages, including those on foreclosure, were valid and not contrary to law, morals, or public policy; (3) petitioners were not mere personal guarantors but mortgagors who assumed a real obligation, and the right of excussion was not available; and (4) petitioners’ claims of being mere guarantors were unworthy of credence due to inconsistencies with the mortgage deeds and their conduct. The Court found that the tenor of the order dissolving the injunction indicated the judge had these justifications in mind. Therefore, the petition was dismissed and the preliminary injunction issued by the Supreme Court was set aside.