G.R. No. L-31384. June 29, 1979
COMMODITY FINANCING CO., INC., EMERITO M. RAMOS, SUSANA B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA RAMOS DE LA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO LEDESMA, VICT…
SANTOS, J.:
In this petition for certiorari,
with a prayer for the issuance of a writ of preliminary injunction filed on December 23, 1969, the petitioners seek to annul and set aside the
orders of the respondent Judge, now Associate Justice of the Court of Appeals, dated November 17, December 13 and
December 20, 1969, all issued in Civil Case No. 75831 of the Court of First
Instance of Manila.
On December 23, 1969,
this Court required the respondents to answer the petition, and as prayed for
by the petitioner, issued a temporary restraining order, enjoining the
respondent Judge from enforcing and/or implementing his questioned orders,
issued in Civil Case No. 75831, entitled Commodity Financing Co., Inc., et al.,
plaintiffs, vs. Banco Filipino Savings and Mortgage Bank, et al.,
defendants” of the Court of First Instance of Manila, Branch VI and from
further proceeding with the case, and the respondents Banco Filipino Savings and Mortgage Bank (BANCO
FILIPINO, for short), the
Central Bank of the Philippines
(CENTRAL BANK, for short) and
Sheriff of Manila, from proceeding with the foreclosure and sale of the
properties covered by the deed of real estate mortgage executed by petitioner
Commodity Financing Co., Inc. (COFICO, for short), in favor of
respondent BANCO FILIPINO, dated
June 1, 1967.[1]
Thereafter, the
respondent BANCO FILIPINO and
CENTRAL BANK filed their answers
to the petition on January 6, 1970 and January 8, 1970, respectively.[2]
After the petitioners, as
well as the respondent BANCO FILIPINO submitted their memoranda in lieu of oral argument,[3] this case was considered submitted for
decision on August 25, 1970.[4]
The factual and
procedural antecedents which gave rise to this case, are as follows. On June 1, 1967, the Board of Directors of
the COFICO passed a resolution,[5] authorizing its President, Alfredo R. de la
Merced to obtain a loan from BANCO FILIPINO in an amount not exceeding ONE
MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00) for the account of the corporation.
Pursuant to and in
accordance with the said resolution, Mr. Alfredo R. de la Merced, as President
of COFICO, obtained from BANCO FILIPINO on June 21, 1967, a loan in the amount
of ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00), payable on or before
June 21, 1969.[6] The loan is secured by a real estate
mortgage[7] over a parcel of land registered in
accordance with the Land Registration Act in the name of COFICO and covered by
TCT No. 80260.[8]
As COFICO failed to pay
the loan upon its maturity, BANCO FILIPINO foreclosed the mortgage
extrajudicially under Act No. 3135, as amended, and the Sheriff of Manila
scheduled the public auction sale of the land covered by the real estate
mortgage executed by COFICO in favor of BANCO FILIPINO on February 28, 1969.[9]
On February 7, 1969,
Atty. Feliciano C. Tumale, counsel of Mr. Emerito M. Ramos and his family, who
are the majority stockholders of COFICO, sent a letter to BANCO FILIPINO,[10] informing the latter that the property
mortgaged to it by COFICO has also been conveyed to the CENTRAL BANK as consideration
for a voting trust agreement[11] for the rehabilitation of the Overseas Bank
of Manila (OBM); that on August 10, 1968, a suit[12] was filed with the Supreme Court to compel
the CENTRAL BANK to comply with its obligations under the voting trust agreement; that on January 25, 1969, another
case[13] was filed with the Supreme Court to stop the
foreclosure directed by the Philippine National Bank (PNB) against properties
mortgaged by Philippine Film Industries, Inc. and Xavierville Estate, Inc.,
which are corporations also owned and controlled by the Ramoses; and that in
both cases the Supreme Court issued a temporary restraining order[14] enjoining the maintenance of the status quo. Accordingly, the said counsel requested a
postponement of the extrajudicial auction sale scheduled by the Sheriff of
Manila on February 28, 1969, for at least 120 days, as by that time, the OBM
case would have been decided by the Supreme Court.
This was followed by
another letter of Atty. Tumale, dated February 11, 1969,[15] formally offering as consideration
for the cancellation and/or withdrawal of the petition for extrajudicial
auction sale of the property mortgaged by COFICO: (1) the payment on or before February 26,
1969 of accrued interest from December 24, 1967 to February 7, 1969; (2) the
payment of advance interest from February 8, 1969 up to May 7, 1969; and (3)
extension of the loan or renewal of the note for one year or up to February 7,
1970, on condition that quarterly advance interest will be paid on August 7,
1969, November 7,
1969 and February 7, 1970. The
payment of quarterly advance interest was further amplified in the letter of
Atty. Tumale dated February 13, 1969.[16]
In his letter, dated February 17, 1969,[17]
Mr. Delfin Dimaguiba, Vice-President of BANCO FILIPINO informed Atty. Tumale
that as a policy, the bank suspends a scheduled sale only if 50% of the
outstanding principal is paid and all interest due updated and if no
remittance was made before February 28, 1969, the directive for the sale shall
remain in full force and effect.
On February 26, 1969, or
two days before the scheduled public auction sale, COFICO and Emerito M. Ramos,
Susana B. Ramos, Emerito B. Ramos, Jr., Josefa Ramos de la Rama, Horacio
de la Rama, Antonio B. Ramos, Filomena Ramos Ledesma, Rodolfo Ledesma, Victoria
Ramos Tanjuatco, and Teofilo T. Tanjuatco, III (hereinafter referred to simply
as RAMOS FAMILY), as majority stockholders of COFICO, filed with the Court of
First Instance of Manila, presided by respondent judge, a complaint with
preliminary injunction[18]
against BANCO FILIPINO, CENTRAL BANK, and the Sheriff of Manila, for the
annulment of the real estate mortgage contract executed by COFICO in favor of
BANCO FILIPINO, alleging inter alia, that the said contract is a
nullity and void ab initio as it contains covenants and stipulations which are illegal, immoral and are
otherwise contrary to customs and public policy, and to enjoin the extrajudicial
foreclosure sale of the mortgaged property on February 28, 1969 by the Sheriff
of Manila, docketed therein as Civil Case No. 75831.
In due time, the
defendants BANCO FILIPINO and CENTRAL BANK, filed their respective answers,[19] and after the usual admission and denials,
interposed affirmative and special defenses.
The defendant BANCO FILIPINO set up a counterclaim.
Pending hearing of the
application for the issuance of writ of preliminary injunction, the trial court
issued a temporary restraining order on February 26, 1969, and set the hearing
for the issuance of the writ on March 29, 1969.[20]
On April 25, 1969, the
defendant BANCO FILIPINO filed a Manifestation,[21] alleging therein “that the existence of
the restraining order dated February 26, 1969 is working irreparable prejudice
to the defendant” and accordingly prays “that plaintiff be required
to post a bond in favor of the defendant in the sum of at least half a million
pesos.” Acting upon the said manifestation, the trial court issued on
April 26, 1969, an order[22] requiring the plaintiffs “to post a
bond of P100,000.00 to answer for whatever damages the defendants might sustain
because of the issuance of the restraining order.” In compliance with the
order of the trial court, the plaintiffs posted and filed on May 5, 1969, the
said bond of P100,000.00.[23]
After the hearing on the
issuance of a writ of preliminary injunction, the trial court issued on
November 17, 1969 an order[24] granting the issuance of the writ and
required the plaintiffs to file a bond of P1,200,000.00, the dispositive
portion of which reads:
“WHEREFORE, upon the filing of a bond in the amount of
P1,200,000.00 approved by the Court, executed in favor of defendant-bank to
answer for any damages that the latter may suffer by reason of the issuance of
the same if it be finally determined that plaintiffs are not entitled
thereto, let a writ of preliminary injunction be issued enjoining and
restraining the defendant-bank, their agents, and/or other persons acting for
and in their behalf from proceeding with the auction sale on February 28,
1969, until further orders from this Court.”
On December 8, 1969, the
defendant BANCO FILIPINO filed with the trial court, a motion[25] to lift the writ of preliminary injunction,
for failure of the plaintiffs to file the bond in the amount of
P1,200,000.00. The plaintiffs opposed
the said motion,[26] after which, the trial court issued on
December 13, 1969 an order[27] giving the plaintiffs twenty (20) days from
said date within which to file the bond, and should they fail to do so the
order of November 17, 1969 will be set aside and the restraining order lifted.
On December 19, 1969, the
plaintiffs moved to reconsider and to reduce the amount of the bond to
P600,000.00;[28] however, the same was denied by the court a
quo in
its order dated December 20, 1969.[29]
Hence, the plaintiffs, as
herein petitioners, interposed the present recourse against respondent Judge
and the defendants, as respondents, formulating the following issues for
resolution by this Court:
“I. Whether or not in issuing the Order, x x x, requiring the herein
petitioners to post a bond in the amount of P1.2 million in support of the writ
of preliminary injunction, and the Order, x x x, requiring petitioners to post said bond within a period of
20 days and the Order of said respondent Judge, x x x, denying petitioners’ motion for reconsideration as well as
the urgent motion for reduction of the bond, the respondent Judge acted with
grave abuse of discretion amounting to lack of jurisdiction considering that
the said amount of P1.2 million is unconscionable because the injunction bond
is merely for the purpose of answering for damages which may be sustained by respondent BANCO FILIPINO by the issuance thereof, if it be later on
adjudged that petitioners who obtained the same are not entitled thereto, and
the said damages can only take the form of interest (Art. 2209, New Civil Code)
which is very much less than P1.2 million);
“II. Whether
an agreement wherein the debtor is required to maintain an alleged ‘retention
or compensating deposit’ which is very substantial part of the proceeds of
said loan with the creditor together with the deduction from the proceeds of
said loan of interest in advance, both of which reduce the amount actually
received by the debtor as proceeds of the loan to only about 75% of the note
executed should be considered null and void ab initio on the ground that the
same is merely a device to disguise a usurious transaction under Article 1957
of our New Civil Code;
“III. Whether or not the foreclosure by respondent BANCO FILIPINO of the property of
petitioners, which property was likewise conveyed by petitioners to respondent CENTRAL BANK pursuant to a
Voting Trust Agreement and hence involved in G.R. No. L-29352 and G.R. No. L-30088, is a violation of the restraining orders issued by the Honorable Supreme court in said cases.”
The principal issue to be resolved in this case is whether or not
the respondent Judge acted with grave abuse of discretion amounting to lack of jurisdiction in requiring the
petitioners to post a bond in the amount of P1,200,000.00 in order that
a writ of preliminary injunction be issued.
1. Under
Section 4, Rule 59 of the Rules
of Court,[30] the posting of a bond is a condition sine
qua non in order that
the writ of preliminary injunction may issue,[31] the purpose of the bond being to secure the
defendant against whatever damages he may suffer as a result or by reason of the injunction if the same should be declared as wrongfully
issued. However, the amount of the bond
to be posted is addressed to the sound discretion of the trial court which
should not be interferred with except in case of grave abuse.
In the case at bar, the petitioners claim that respondent Judge
acted with grave abuse of discretion in requiring them in his order of November
17, 1969 to post a bond of
P1,200,000.00 allegedly because the said amount which is equal to the amount of
the loan is unconscionable and unreasonable.
This is untenable. As held in Alhambra
Cigar and Cigarette Manufacturing Company, Inc. vs. The National (sic)
Administrator* of
Regional Office No. 2, Department of
Labor, et al.,[32] “The term ‘excess of jurisdiction’
signifies that the court, board or officer has jurisdiction over a case but
oversteps such jurisdiction while exercising the same. By ‘grave abuse of discretion’ is meant such
capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction. Not every error in
a proceeding, or every erroneous conclusion of law or fact is an act in excess
of jurisdiction or an abuse of discretion.” Thus, in Maritime Company
of the Philippines, et al. vs. Paredes, et al.,[33] We held that “grave abuse of discretion”, as a ground for the issuance of certiorari,
“implies such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction x x
x or, in other words, where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it must be so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law.” This means that
“errors of jurisdiction” may be corrected by certiorari, while
“errors of judgment” may be reviewed by appeal.34 In short,
the prerogative writ of certiorari does not lie to correct every
controversial interlocutory ruling. It
may only be availed of to correct a grave abuse of discretion, that is, a
capricious, arbitrary, or whimsical exercise of judgment equivalent to lack of
jurisdiction.35 It is confined to questions of
jurisdiction. Its function is to keep an
inferior court within its jurisdiction and to relieve persons from arbitrary
acts, which courts or judges have no power or authority in law to perform. It is not designed to correct procedural
errors or court’s erroneous findings and conclusions.36
The petitioners herein do
not claim – and they cannot claim – that in issuing the questioned orders
the respondent Judge was motivated by passion and personal hostility, or that
he acted in a despotic or arbitrary manner.
On the contrary, the amount of the bond required by the respondent Judge
is reasonable and is justified by the facts and circumstances obtaining in the
case at bar. As pointed out by
respondent BANCO FILIPINO, under the promissory note37 the petitioner COFICO obligated itself to pay a
12% interest per annum or P144,000.00 per year.
As of the end of the year 1969, the petitioners already owe the
respondent BANCO FILIPINO the amount of P210,536.88 in the form of interests
alone, and the case below has not even reached the trial stage. Considering the time involved and the amount
in the form of interests that has to be paid by the petitioner before instant
case is finally terminated, the trial court was justified in requiring the
petitioners to post an injunction bond in the amount of P1,200,000.00.38 At any
rate, if there is any error committed by the respondent Judge, it is at most,
an error of judgment, and errors of judgment are not correctible by certiorari.39
We, therefore, hold that
respondent Judge did not act with grave abuse of discretion in issuing his
order of November 17, 1969, requiring the petitioners to file an injunction
bond in the amount of P1,200,000.00 as well as in issuing his orders of
December 13 and 20, 1969, denying the petitioners’ motion for reconsideration.
2.
Anent the contention of petitioners that the
contract between COFICO and the BANCO FILIPINO is usurious, it would suffice to
state that the same is a matter of evidence which should be resolved by the
court a quo after the trial of the case on the merits. The Supreme Court is not a trier of facts.
3. Finally,
the petitioners maintain that the foreclosure of the mortgage by the respondent
BANCO FILIPINO is in violation of the restraining orders issued by this Court in G.R. No. L-2935240 and G.R.
No. L-30088.41 Again, We find this contention of the petitioners equally devoid of merit. In the first place, petitioner COFICO and
respondent BANCO FILIPINO are not parties to the said case. Besides, the restraining order issued by this
Court in case G.R. No. L-29352 is directed against the CENTRAL BANK, enjoining
the latter from implementing the resolution adopted by its Monetary Board directing the liquidation of
the Overseas Bank of Manila, while the restraining order issued in case G.R. No. L-30088 is directed against
the CENTRAL BANK, the PNB, the Provincial Sheriff of Malolos, Bulacan and the
Sheriff of Quezon City, enjoining them from proceeding with the extra-judicial
foreclosures and auction sales scheduled on January 28 and February 19, 1969 of the proper ties mortgaged by the
petitioners to the PNB, respondent therein. Moreover, the only parties to the Loan
Agreement and the Real Estate Mortgage in the case at bar are petitioner COFICO
and respondent BANCO FILIPINO. The RAMOS
FAMILY is not a party to the aforesaid agreements. The property mortgaged to respondent BANCO
FILIPINO is owned by the mortgagor, petitioner COFICO, which has a personality
separate and distinct from its stockholders.
It cannot, therefore, be said that the foreclosure of the real estate
mortgage in the present case is in violation
of the restraining orders issued by this Court in aforesaid cases G.R. No.
L-29352 and G.R. No. L-30088. In this
connection, it may not be amiss to state that in a real estate mortgage when
the principal obligation is not paid when due, the mortgagee has the right to
foreclose the mortgage and to have the property seized and sold with a view to
applying the proceeds to the payment of the principal obligation.
IN VIEW OF ALL THE FOREGOING, the instant petition
should be, as it is hereby DISMISSED, and the restraining order heretofore
issued is LIFTED and SET
ASIDE. This decision is immediately executory.
Costs against the petitioners.
SO ORDERED.
Barredo, (Chairman), Antonio, Aquino, Concepcion, Jr., and Abad Santos, JJ., concur.
[1]
Rollo, pp. 0132-0134.
[2]
Id., pp. 0140, 0192.
[3]
Id., pp. 384, 410.
[4]
Id., p. 418.
[5]
Id., p. 45, Annex “C”.
[6]
Id., p. 40, Petition, Annex “A-1”; Id., p. 175,
Annex “8”, Anser, Central Bank; Id., pp. 242-244,
Annexes “A” to “C”, Rejoinder, Banco Filipino.
[7]
Id., p. 41, Annex “B”, Petition; Id., p. 176,
Annex “9”, Answer, Central Bank
[8]
Id., p. 184, Annex “10-A”, Answer Central Bank.
[9]
Id., p. 28; Id., p. 187, Annex “11-C”, Answer, Central
Bank.
[10]
Id., p. 88, Annex “I”, Petition.
[11]
Id., p. 47, Annex “D”, Petition.
[12]
G.R. No. L-29352, entitled
“Emerito M. Ramos, Susana B. Ramos, Emerito B. Ramos, Jr., Josefa Ramos de
la Rama, Horacio de la Rama, Antonio B. Ramos, Filomena Ramos Ledesma, Rodolfo
Ramos, Victoria Ramos Tanjuatco, and Teofilo Tanjuatco, petitioners, vs.
Central Bank of the Philippines, respondent”, decided October 4, 1971; 41 SCRA 565.
[13]
G.R. No. L-30088, entitled
“Emerito M. Ramos, Susana B. Ramos, Emerito B. Ramos, Jr., Josefa Ramos de
la Rama, Horacio de la Rama, Antonio B. Ramos, Filomena Ramos Ledesma, Rodolfo
Ledesma, Victoria Ramos Tanjuatco, Teofilo Tanjuatco, E. M. Ramos &
Company, Inc., Philippine American Film Industries Inc., and Xavierville
Estate, Inc., versus Central
Bank of the Philippines, Philippine National Bank, Provincial Sheriff of
Bulacan, and Sheriff of Quezon City”.
Still pending submission of compromise agreement.
[14]
Id., pp. 70, 86, Annexes “F”
and “H”, Petition.
[15]
Id., p. 90, Annex “J”, Petition.
[16]
Id., p. 92, Annex “K”, Petition.
[17]
Id., p. 95, Annex “M”, Petition.
[18]
Id., p. 25, Annex “A”, Petiton.
[19]
Id., pp. 96, 107, Annex “B” and “C” petition.
[20]
Id., p. 114, Annex “D”, Petition.
[21]
Id., p. 115, Annex “E”, Petition.
[22]
Id., p. 116, Annex “F”, Petition.
[23]
Id., p. 117, Annex “G”, Petition.
[24]
Id., p. 119, Annex
“H”, Petiton.
[25]
Id., p. 120, Annex “I”, Petition.
[26]
Id., p. 122, Annex “J”, Petition.
[27]
Id., p. 125, Annex “K”, Petition.
[28]
Id., p. 126, Annex
“L”, Petition’
[29]
Id., p. 130, Annex “M”, Petition.
[30]
“Sec. 4. Verified complaint and bond for
preliminary injunction. – A preliminary injunction may be granted only
when:
(a)
The complaint in the action is verified, and show facts entitling the plaintiff to the relief demanded; and
(b)
The plaintiff files with the clerk or judge of the court in which the
action is a bond executed to the party enjoined, in an amount to be fixed by the court, to the effect that the plaintiff
will pay to such all damages which
he may sustain by reason of the
injunction if the court should finally decide that that the plaintiff was not
entitled thereto.”
[31]
Siva, et al. vs. Reyes, et al.
83 Phil. 416; Villarosa vs. Teodoro, 109 Phil. 24.
* Should be Regional Administrator.
[32]
L-20491, August 31, 1965, 14
SCRA 1019, 1026.
[33]
L-24811, March 3,1967, 19 SCRA 569, 578-580,
citing Abad Santos vs. Province
of Tarlac, 38 OG 830; and Alafriz vs. Nable, et al., 72 Phil. 279.
34 Nocon vs. Geronimo, et al. 101 phil. 735.
35 Arcaya, et al. vs. Teleron, etc., et al. L-37446, May 31, 1974,
57 SCRA 363, 367, citing Lingad v.
Macadaeg, 63 OG 6395.
36 Carandang vs. Cabatuando, L-25384, Oct. 26, 1973, 53 SCRA 383, 390, citing cases.
37 Annex “A-1”, p. 40.
38 Rollo,
Answer of respondent Banco Filipino, p. 198.
The accrued interests at this writing is more than
P1,200,000.00.
39 Demaronsing vs. Judge Tandayag, L-27057, Aug. 21, 1974, 58 SCRA
484, 488.
40 Supra, note 12.
41 Supra, note 13.