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BANK OF PHILIPPINE ISLANDS v. JUDGE AGAPITO L. ANOSAS

FACTS:

Spouses Silverio and Zosima Borbon, Spouses Xerxes and Erlinda Facultad, and XM Facultad and Development Corporation filed Civil Case No. CEB-26468 against Bank of the Philippine Islands (BPI) seeking the nullity of promissory notes, real estate and chattel mortgages, and a surety agreement executed in favor of BPI. The respondents alleged that they obtained a loan from BPI and executed the mentioned documents as security. They claimed that they were unable to pay the full amount due to economic turmoil and that BPI forced them to issue postdated checks under threat of foreclosure. The RTC denied BPI's motion to dismiss and granted the respondents' application for preliminary injunction, which BPI appealed to the CA. The CA affirmed the RTC's order and the decision is under review.

The case, Civil Case No. CEB-26468, involves a personal action filed for the declaration of nullity of a loan contract and its accompanying agreements, including real estate and chattel mortgages. The respondent, XM Facultad and Development Corporation, alleged that the contracts were contracts of adhesion with provisions favoring the defendant bank. The complaint also sought the nullification of certain checks and the cancellation of a chattel mortgage. The petitioner argued for dismissal due to non-payment of correct docket fees and improper venue. The CA and RTC ruled that it was a personal action with proper venue in Cebu City. The CA upheld the issuance of a writ of preliminary injunction, and the petitioner appealed.

In this case, the petitioner sought the annulment of contracts of loan and real estate mortgage, claiming they were simulated, fraudulent, and invalid due to the respondent's lack of title to the burdened properties. The petitioner alleged that possession had not been transferred to them. The respondent argued that the action was a real action affecting title to real property, which should be filed in the province where the properties were located. The Court of Appeals, however, ruled it was a personal action and should be filed where the parties resided, which was Pasig City.

ISSUES:

  1. Whether the action for cancellation of the mortgage on the lots is a real action or a personal action, and consequently, whether the proper venue for the action is in the place where the mortgaged lots are situated or where the parties reside.

  2. Whether the respondents were entitled to the writ of preliminary injunction.

  3. Whether the court had jurisdiction to issue the writ of preliminary injunction in Civil Case No. CEB-26468.

  4. Whether the issuance of the writ of preliminary injunction was proper.

  5. Whether the private respondents have the ostensible right to the final relief prayed for in their complaint.

  6. Whether the respondents have established the irreparable injury that would warrant the issuance of the writ of preliminary injunction.

  7. Whether the issuance of a writ of preliminary injunction to enjoin the petitioner from instituting criminal complaints against the respondents for violation of BP No. 22 was warranted.

  8. Whether the Regional Trial Court (RTC) committed grave abuse of discretion in granting the application of the respondents for the writ of preliminary injunction.

RULING:

  1. The action for cancellation of the mortgage on the lots is a personal action and therefore, the proper venue is where the parties reside. The Court emphasized that the rule on real actions only mentions an action for foreclosure of a real estate mortgage and does not include an action for cancellation of a real estate mortgage. Therefore, the catch-all provision on personal actions applies, allowing the action to be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or, in the case of a non-resident defendant, where he may be found, at the election of the plaintiff. In this case, Pasig City, where the parties reside, is the proper venue for the action to nullify the mortgage contracts.

  2. The respondents were not entitled to the writ of preliminary injunction. The Court held that the issuance of the writ was a violation of Administrative Circular No. 07-99, which enjoins judges to exercise utmost caution, prudence, and judiciousness in the issuance of temporary restraining orders and writs of preliminary injunctions. It also emphasized that injunction cannot issue to enjoin the prosecution of criminal offenses because such prosecution is imbued with public interest. Additionally, as the mortgagee, the petitioner had the legal right to foreclose the mortgages, and therefore, could not be prohibited from exercising such right.

  3. The court did not have jurisdiction to issue the writ of preliminary injunction. Section 1 of PD 1818 expressly deprives courts of jurisdiction to issue injunctive writs against the implementation or execution of an infrastructure project. AC No. 07-99 is also irrelevant as the case did not involve the implementation of infrastructure projects or seizure and forfeiture proceedings by the Bureau of Customs.

  4. The issuance of the writ of preliminary injunction was improper. A preliminary injunction is an extraordinary peremptory remedy that must be used with extreme caution. The requirements for the issuance of a writ of preliminary injunction are enumerated in Section 3, Rule 58 of the Rules of Court. Under the circumstances, the issuance of the writ of preliminary injunction was unwarranted and erroneous.

  5. The private respondents only need to show that they have the ostensible right to the final relief sought in their complaint in order to be entitled to the writ of preliminary injunction.

  6. The respondents failed to establish the irreparable injury they would suffer if the injunction is not issued, as the loss of possession and ownership of the mortgaged properties and the possibility of criminal prosecution do not constitute the requisite irreparable injury.

  7. No, the issuance of the writ of preliminary injunction to enjoin the petitioner from instituting criminal complaints against the respondents for violation of BP No. 22 was unwarranted. The Court held that the respondents had not shown that their case fell within any of the recognized exceptions that would justify the restraint or prohibition of a criminal prosecution. The Regional Trial Court (RTC) did not sufficiently justify the issuance of the injunction.

  8. Yes, the RTC committed grave abuse of discretion in granting the application of the respondents for the writ of preliminary injunction. The Court found that the RTC had disregarded the well-established norms and guidelines governing the issuance of injunctions. The RTC acted capriciously and arbitrarily, thereby evading its duty and acting in a manner equivalent to lack of jurisdiction.

PRINCIPLES:

  • The rule on real actions in the Rules of Court only mentions an action for foreclosure of a real estate mortgage and does not include an action for cancellation of a real estate mortgage. Therefore, the latter falls under the catch-all provision on personal actions.

  • The proper venue for actions affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property is where the property or any part thereof lies.

  • The proper venue for personal actions is where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or where a non-resident defendant may be found at the election of the plaintiff.

  • Judges are reminded to exercise utmost caution, prudence, and judiciousness in the issuance of temporary restraining orders and writs of preliminary injunctions to avoid any suspicion that its issuance or grant was for considerations other than the strict merits of the case.

  • Courts are deprived of jurisdiction to issue injunctive writs against the implementation or execution of an infrastructure project under Section 1 of PD 1818.

  • The Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or put it to naught.

  • A preliminary injunction is an extraordinary peremptory remedy that must be used with extreme caution, affecting the respective rights of the parties.

  • The requirements for the issuance of a writ of preliminary injunction are: (a) the applicant is entitled to the relief demanded; (b) the act complained of would probably work injustice to the applicant; and (c) the act complained of is probably in violation of the rights of the applicant and tending to render the judgment ineffectual.

  • Injunction may only be issued at the instance of a party with sufficient interest in or title to the right or property sought to be protected.

  • Injunction will not issue to protect a right not in esse or a right which is merely contingent and may never arise, or to restrain an act which does not give rise to a cause of action, or to prevent the perpetration of an act prohibited by statute.

  • The issuance of a writ of preliminary injunction should be upon grounds and in the manner provided by law.

  • The right to be protected must exist prima facie and the acts sought to be enjoined must be violative of that right for a court to issue a preliminary injunction.

  • The exercise of discretion in issuing the writ of preliminary injunction must be sound and based on the existence of a present right directly threatened by the act sought to be enjoined.

  • The power to issue a writ of injunction is to be exercised only when the reason and necessity therefor are clearly established, and only in cases reasonably free from doubt.

  • A preliminary injunction seeks to prevent threatened wrong, further injury, and irreparable harm or injustice until the rights of the parties can be settled.

  • The applicant for a preliminary injunction must prove that the violation sought to be prevented would cause an irreparable injustice, which is an injury that cannot be remedied under any standard of compensation.

  • The right of redemption is granted to mortgagors whose properties were foreclosed, and they also have the right to receive any surplus in the selling price of the property.

  • In extreme cases, exceptions to the general rule of not issuing injunctions to restrain criminal prosecutions may be made.

  • The general rule is that an injunction should not be granted to enjoin or restrain any criminal prosecution, except in extreme cases where recognized exceptions apply.

  • An injunction should be granted only when the court is fully satisfied that the law permits it and the emergency demands it. It is a delicate power that requires caution, deliberation, and should not be granted lightly or precipitately.

  • Grave abuse of discretion exists when the judicial or quasi-judicial power is exercised in an arbitrary or despotic manner, or when the judge, tribunal, or board evades a positive duty or acts capriciously or whimsically as to be equivalent to lack of jurisdiction.