G.R. No. 121251. June 26, 1998
PHILIPPINE NATIONAL BANK, PETITIONER, VS. COURT OF APPEALS AND ROMEO BARILEA, RESPONDENTS.
BELLOSILLO, J . :
foreclosure of mortgage, with prayer for a writ of preliminary
injunction, be dismissed on the ground that the foreclosure sought to be
enjoined is already a fait accompli?
On 12 November 1991 private respondent Romeo Barilea filed a
complaint for damages with the Regional Trial Court of Negros Occidental
with a prayer for the issuance of a temporary restraining order and
writ of preliminary injunction against petitioner Philippine National
Bank (PNB) and the Provincial Sheriff of Negros Occidental.
The complaint alleged that: defendant Barilea (private respondent
herein) obtained sugar crop loans with petitioner at its Victoria
Branch to finance his sugarcane plantation in Sagay, Negros Occidental;
he was granted a crop loan of P208,300.00 and, thereafter, another loan
of P40,000.00 which would fall due on 31 August 1991 and 31 August 1992,
respectively; the crop loans were secured by a mortgage on Barilea’s
parcel of land with an area of 2,804 square meters and covered by
Transfer Certificate of Title No. T-12217 of the Register of Deeds of
Cadiz City. Private respondent also alleged that on 29 September 1991,
while he was harvesting and cutting canes for the purpose of milling the
same, petitioner filed a petition for the sale of the mortgaged
property under Act No. 3135 as amended with the Provincial Sheriff of
Negros Occidental, and that, consequently, on 7 October 1991 the latter
issued a Notice of Extrajudicial Sale by public auction of private
respondent’s property on 18 November 1991.
The complaint further stated that in October 1991 private
respondent had partially harvested and milled his sugarcane at a sugar
central after which quedans were prepared; that when private respondent
was about to withdraw the quedans, he was informed that they were taken
by petitioner. Private respondent contended that in filing the petition
for the sale of the mortgaged property with the provincial sheriff,
petitioner acted with malice and bad faith in order to embarrass him;
that the petition was premature because the crop loans had not yet
fallen due; and, that because of petitioner’s malicious acts in filing
the petition, private respondent suffered sleepless nights, mental
torture, anxiety, public humiliation and public ridicule, thus entitling
him to moral and exemplary damages in addition to the actual expenses
incurred for which petitioner should be ordered to pay. Private
respondent also prayed for the issuance of a temporary restraining order
and writ of preliminary injunction to enjoin petitioner and the
Provincial Sheriff from conducting the sale by public auction scheduled
on 18 November 1991.[1]
Instead of filing an answer to the complaint, petitioner filed on 17 January 1991 a motion to dismiss[2]
alleging that: petitioner had not acted maliciously and prematurely in
filing the petition for foreclosure of mortgage; private respondent was
granted four (4) loan accomodations by petitioner three (3) of which had
already fallen due; because of the past due accounts of private
respondent petitioner had the right to institute foreclosure
proceedings; and, the other reliefs prayed for by private respondent,
i.e., issuance of a restraining order and writ of preliminary
injunction, had been rendered moot and academic by the holding of the
auction sale on 7 November 1991.
On 18 February 1992 private respondent filed an amended complaint
increasing the amounts prayed for as moral damages and attorney’s fees.
On 10 March 1992 the trial court issued an order dismissing the
case for being moot and academic because the sale sought to be enjoined
had already been conducted on 7 November 1991.[3] The motion for reconsideration by private respondent was denied.
Private respondent appealed the order of dismissal to the Court of Appeals. In its decision[4]
of 28 June 1995, the Court of Appeals set aside the order dismissing
the case. The appellate court found that the complaint of private
respondent sought the payment of moral and exemplary damages on the
ground that petitioner was actuated with malice and bad faith in filing
the petition with the sheriff for the sale of the mortgaged property
even if the crop loan of P40,000.00 had not yet matured. It also ruled
that the issuance of a temporary restraining order and a writ of
preliminary injunction was only a provisional remedy, and consequently,
the foreclosure sale on 7 November 1991 did not render the case moot
since the principal action for payment of damages still had to be
litigated. The Court of Appeals remanded the case back to the trial
court for proper proceedings.
Hence this petition alleging that the Court of Appeals
erroneously failed to hold that (a) the dismissal of the case by the
trial court was justified after it had become moot and academic with the
foreclosure sale; (b) denial of the ancillary remedy of temporary
restraining order was proper; and, (c) the foreclosure of the mortgage
was valid in view of the contract between the parties and conformably
with the mandatory requirements of PD No. 385.
The principal issue to be resolved is whether the complaint for
damages based on the foreclosure of mortgage should now be dismissed in
view of the foreclosure sale. The other issues raised by petitioner,
i.e., whether the foreclosure sale was valid, and whether the claim of
private respondent for damages was proper, are factual matters well
within the domain of the trial court – and not of this Court.
The petition must fail. The Court of Appeals was correct in
ruling that the dismissal of the complaint of private respondent by the
trial court was not valid.
In a motion to dismiss on the ground that the complaint states no
cause of action, the question to be resolved by the trial court is
whether the facts alleged in the complaint are sufficient to constitute a
cause of action and not whether the allegations of fact are true as the
latter are hypothetically admitted.[5]
Hence, a complaint sufficiently states a cause of action when the
following questions are answered in the affirmative: (a) Does the
complaint show the plaintiff has suffered an injury? (b) Is it an injury
which the law recognizes as a wrong and for which it provides a remedy?
(c) Is the defendant liable for the alleged wrong done? and, (d) If the
defendant is liable, is there a legal remedy for such injury?[6]
Applying these criteria to the complaint of private respondent,
the same alleged facts are sufficient to state a cause of action for
damages. The complaint alleged that private respondent suffered actual
expenses, moral anxiety and public humiliation, among others, as a
result of the alleged premature and malicious filing of the petition for
foreclosure of mortgage over private respondent’s property; hence, the
prayer for damages and attorney’s fees.
In its motion to dismiss, petitioner’s allegation that private
respondent had no basis to claim for damages amounted to failure to
state a cause of action. Since the allegations in the complaint furnish
sufficient basis by which the complaint can be maintained, the same
should not have been dismissed regardless of the defense that may be
raised by petitioner as defendant before the trial court.[7]
In the instant case, aside from the principal action for damages,
private respondent sought the issuance of a temporary restraining order
and writ of preliminary injunction to enjoin the foreclosure sale in
order to prevent an alleged irreparable injury to private respondent. It
is settled that these injunctive reliefs are preservative remedies for
the protection of substantive rights and interests. Injunction is not a
cause of action in itself but merely a provisional remedy, an adjunct to
a main suit. When the act sought to be enjoined had become fait accompli,
only the prayer for provisional remedy should be denied. However, the
trial court should still proceed with the determination of the principal
action so that an adjudication of the rights of the parties can be had.
It was grave error for the trial court to dismiss the case simply
because the basis for the issuance of the writ of injunction is no
longer existent and thus moot and academic. A case becomes moot and
academic when there is no more actual controversy between the parties[8] or no useful purpose can be served in passing upon the merits.[9]
The foregoing circumstances do not obtain in the instant case. The
holding of the extrajudicial sale did not in any way render the case
moot and academic. As found by the Court of Appeals, there still
remained for the resolution of the trial court the issue of whether
private respondent is entitled to damages prayed for as a result of
petitioner’s act in filing a petition to foreclose the mortgage. Whether
the filing of the petition for foreclosure was proper and whether
private respondent suffered damages resulting from petitioner’s acts are
still unanswered questions which have to be determined and passed upon
by the trial court after hearing the evidence of both parties in
accordance with due process.
It is a rule of universal application that courts of justice are
constituted to adjudicate substantive rights. While courts should
consider public policy and necessity in putting an end to litigations
speedily they must nevertheless harmonize such necessity with the
fundamental right of litigants to an opportunity to be heard.[10]
WHEREFORE, the Petition is DENIED. The decision
of the Court of Appeals dated 28 June 1995 is AFFIRMED. The records of
this case are remanded to the trial court with a directive to proceed
and dispose of this case expeditiously.
SO ORDERED.
Davide Jr., (Chairman), Vitug, Panganiban, and Quisumbing, JJ., concur.
[1] Records, pp. 1-5.
[2] Id., pp. 28-30.
[3] Id., p. 58.
[4] Penned by Justice
Bernardo Ll. Salas and concurred in by Justices Jaime M. Lantin and Ma.
Alicia Austria-Martinez; Rollo, pp. 21-29.
[5] Pinero v. Enriquez, 81 Phil 774 [1949].
[6] Francisco, Vicente,
The Revised Rules of Court, 1973 Ed., Vol. I p. 940, citing
Sutherland’s Code Pleading, Practice and Forms, p. 167.
[7] Navoa v. Court of Appeals, G.R. No. 59255, 29 December 1995, 251 SCRA 545.
[8] Ozaeta v. Oil Industry Commission, No. L-34574-79, 30 June 1980, 98 SCRA 417.
[9] Philsugin v. Aspem, No. L-34081, 19 August 1982, 115 SCRA 835.
[10] Aguilar v. Court of Appeals, G.R. No. 114282, 28 November 1995, 250 SCRA 371.