G.R. No. L-31384. June 29, 1979.
Commodity Financing Co., Inc., et al. vs. Jose B. Jimenez, etc., et al.

FACTS

Commodity Financing Co., Inc. (COFICO) obtained a loan from Banco Filipino Savings and Mortgage Bank, secured by a real estate mortgage. Upon COFICO’s failure to pay the loan at maturity, Banco Filipino initiated extrajudicial foreclosure. Prior to the scheduled auction, the majority stockholders of COFICO (the Ramos family) requested a postponement, citing a separate voting trust agreement involving the same property with the Central Bank for the rehabilitation of Overseas Bank of Manila and pointing to pending Supreme Court cases related to their other corporations. Banco Filipino declined to suspend the sale without substantial payment.
Two days before the foreclosure sale, COFICO and the Ramos family filed a complaint in the Court of First Instance of Manila to annul the mortgage contract, alleging it contained illegal and immoral stipulations, and sought a preliminary injunction to enjoin the sale. The respondent judge granted a 72-hour temporary restraining order (TRO). After hearings, the court denied the application for a preliminary injunction and lifted the TRO, finding the complaint insufficient to justify injunctive relief. The petitioners’ subsequent motions for reconsideration were denied.

ISSUE

Whether the respondent judge acted with grave abuse of discretion amounting to lack or excess of jurisdiction in denying the application for a writ of preliminary injunction and in lifting the temporary restraining order.

RULING

No, the respondent judge did not commit grave abuse of discretion. The Supreme Court held that the issuance of a preliminary injunction is a discretionary power of the court, requiring a clear showing by the applicant of a right to be protected that is clear and unmistakable. The petitioners failed to meet this burden. Their complaint sought annulment of the mortgage based on vague allegations of illegal covenants without specifying what these were, thereby failing to establish a prima facie case for the drastic relief of injunction.
The legal logic is grounded in the principle that a preliminary injunction is an extraordinary remedy to preserve the status quo pending litigation on the merits, and it should only be granted when the plaintiff’s right is clear and the facts are unmistakable. The respondent judge correctly found the petitioners’ claim of a “superior right” stemming from the separate voting trust agreement with the Central Bank to be unsubstantiated, as that agreement did not nullify the prior and valid real estate mortgage in favor of Banco Filipino. The judge’s orders were based on a careful evaluation of the pleadings and evidence, including the petitioners’ failure to post the required injunction bond. The Supreme Court found no capricious, arbitrary, or whimsical exercise of judgment that would constitute grave abuse of discretion warranting correction by certiorari. The denial of the injunction was a proper exercise of judicial discretion.