RENE KNECHT, PETITIONER, VS. THE COURT OF APPEALS, DEVELOPMENT BANK OF THE PHILIPPINES, LUZ RUBIO, ELIZABETH KEON, UNITED COCONUT PLANTERS BANK, DBP GOVERNOR RECIO GARCIA, ET AL…

This is a petition for review on certiorari under Rule 45
of the Revised Rules of Court to annul and set aside the Decision dated October
28, 1980 of the Court of Appeals in CA-G.R. No. SP-09227 entitled “RENE
KNECHT, petitioner versus HON. TOMAS R. LEONIDAS, as Judge CFI of Manila,
Branch XXXVIII, ET AL., respondents” and the Resolution dated January 21,1981
of the same court, denying petitioner’s motion for reconsideration. In said case, the Court of Appeals upheld
the trial court’s Order dated March 26,
1979, denying petitioner’s prayer for the issuance of a writ of preliminary
injunction in Civil Case No. 113873.

The facts as found by the
Court of Appeals are as follows:

“xxx [O]n December 5, 1969, petitioner Rene Knecht and
respondent Levy R. Garcia bought a parcel of land located at No. 1314 A. Mabini
St., Ermita, Manila, including an eleven-storey building known as the
“Tower Hotel” and other improvements standing on the lot, which was
then mortgaged to respondent Development Bank of the Philippines, hereinafter
to be referred to as DBP. The buyers
assumed the mortgage and the DBP approved the assumption. From December 5, 1969 to August 20, 1973,
petitioner did not pay the amortizations to the DBP supposedly for just causes,
among which was his inability to take possession and management of the Hotel.

xxx [O]n August 21,
1973, a decision based upon a compromise agreement was rendered in Civil Case
No. 89501 of the Court of First Instance of Manila, Branch XIV, which enabled
petitioner to regain possession and management of the Hotel. Petitioner claims that in February, 1977, he
executed a deed of trust, supposedly antedated November 15, 1976, in favor of
respondent Elizabeth Keon, assigning to said respondent 50% interest, in the
equity of petitioner in the Tower Hotel, and constituting petitioner as mere
trustee in the management of the
Hotel.

In April, 1977, petitioner opened a savings account with the
respondent United Coconut Planters Bank, hereinafter to be referred to as UCPB,
in the name of the Tower Hotel, and included respondent Elizabeth Keon’s name
as one of those with the right to withdraw monies therefrom. On May 4, 1977, petitioner claims that
respondent Elizabeth Keen took over the management of the Hotel.

On August 18, 1977, DBP foreclosed the mortgage over the disputed
property. The property was sold at
public auction pursuant to Art (sic) 3135, as amended by Art (sic) 4114, with
the DBP as the highest bidder for the sum of P6,292,300.00. On August 22, 1977, a certificate of sale
was issued by the Ex-oficio Sheriff of Manila in favor of the DBP, and same was
registered on September 5, 1977
with the Registry of Deeds. The DBP
leased the Hotel to respondent Luz Rubio” (Rollo, pp. 24-25).

On February 17, 1978, petitioner filed with the trial court an
action for the nullification of the foreclosure sale with preliminary
injunction (Civil Case No. 113873). In
his prayer for the issuance of a writ of preliminary injunction, petitioner
asked the trial court, among other reliefs, to stop the running of the one-year
redemption period and to restore to him the possession and management of the
Tower Hotel and all its equipment and facilities.

On September 2, 1978, the one-year period expired without the
petitioner exercising said right and without the trial court issuing a writ of
preliminary injunction to restrain the running of the redemption period.

On March 26, 1979, the trial court issued two separate
orders. The first order reads as
follows:

“The resolution of the question as to whether or not this
court is empowered to suspend the period of redemption of the foreclosed
property in dispute is withheld until after the trial since the same
necessitates the presentation of special facts and circumstances for consideration
of the court” (Annex “2”; Rollo, p. 213).

The second order reads as follows:

“The right to the disputed property not having been clearly
established in favor of the plaintiff, the petition for the issuance of a
preliminary mandatory injunction to restore the possession and management of
the disputed property in his favor is hereby denied” (Annex “3”;
Rollo, p. 214).

On May 26, 1979, petitioner filed with the Court of Appeals a
petition for certiorari with preliminary mandatory injunction, alleging
that the trial court in issuing the two aforementioned orders had “decided
a novel question of substance not in accordance with law and with the
applicable decisions of the appellate court and departed from the accepted and
usual course of judicial proceeding thereby causing petitioner irreparable injury and leaving him without remedy
except to file this petition” (Rollo, p. 281).

On October 28, 1980, the
Court of Appeals rendered its decision, the dispositive portion of which reads
as follows:

“WHEREFORE, the petition should be, as it is hereby dismissed,
with costs against petitioner. The
restraining order issued by this Court is hereby dissolved” (Rollo, p.
30).

In a resolution dated January 21, 1981, the Court of Appeals
denied petitioner’s motion for reconsideration (Rollo, p. 32).

Hence, this petition.

Pending the resolution of
the petition, respondent DBP advertised in the Philippine Star the sale through
sealed bidding of the Tower Hotel (Rollo, p. 185).

On February 20, 1989, we directed the parties to maintain the status
quo and enjoined the respondent DBP from selling the Tower Hotel and its
fixtures to a third party without prior approval of the Court pending
resolution of the petition for review
on its merits. This Court further
resolved to require petitioner to post a cash bond or surety bond from a reputable company of indubitable solvency in the
amount of P1,000,000.00 within ten (10) days from receipt hereof (Rollo, p.
202). On March 17, 1989, petitioner
posted the required bond (Rollo, p. 229).

Petitioner contends that the Court of Appeals erred in sustaining
the trial court’s order which denied the prayer for a writ of preliminary
mandatory injunction (Rollo, p. 13).

For petitioner to be entitled to the injunctive writ, he must
show that there exists a right to be protected and that the facts against which
the injunction is directed are violative of said right (Searth Commodities
Corporation v. Court of Appeals, 207 SCRA 622 [1992]).

Petitioner does not deny that since December 5, 1969, he has
failed to pay the amortizations on the loan granted to him by DBP. He justifies his non-payment of the
amortizations by raising “just causes,” among which were his detention by the military and the
non-restructuring of his loan by respondent DBP (Rollo, p. 16). These so-called “just causes” are
within the competence of the court to determine in the main case for the
nullification of the foreclosure sale. The validity of the same may be proven at the trial of the case.

As stated earlier, because of petitioner’s failure to pay his
amortizations due respondent DBP, the latter foreclosed the Tower Hotel on
August 18, 1977 after several postponements were granted to petitioner. On September 5, 1977, a Sheriff’s Certificate
of Sale in favor of DBP was registered. It was only on February 17, 1978 when petitioner filed a complaint for
the nullification of the foreclosure sale.

The object of the writ of injunction is to preserve the status
quo, which is the last actual peaceable uncontested status that preceded the
pending controversy (Rodulfa v. Alfonso, 76 Phil. 225 [1946]).

The status quo before petitioner filed his complaint for
nullification of foreclosure sale was that respondent DBP was in possession of
the Tower Hotel. Thus, it cannot be
said that petitioner Knecht was in
actual, peaceful and uncontested possession of the Tower Hotel at the time he
filed his complaint with the trial court.

Moreover, it is a settled rule in this jurisdiction that a writ a
preliminary mandatory injunction is not proper where its purpose is to take
property out of one’s possession and place the same in the hands of another
without a prima facie showing of the title of the latter
(Navarro v. Court of Appeals, 205 SCRA 429 [1992]).

It is worth noting that petitioner has registered a notice of lis
pendens over the disputed property with the Registry of Deeds of Manila (Rollo, p. 278), which notice will
bind any prospective buyer to the outcome of the civil case pending before the
trial court. With said precautionary
notice, petitioner is adequately protected of whatever rights he may still have
over the Tower Hotel.

WHEREFORE, the petition is DENIED and the decision of the
Court of Appeals is AFFIRMED. The
restraining order issued by this Court is LIFTED.

SO ORDERED.

Cruz, (Chairman) and
Davide, Jr., JJ., concur.

Bellosillo, J., on leave.