Commodity Financing Co. v. Jimenez
REITERATIONFacts
The Antecedents: Commodity Financing Co., Inc. (COFICO) obtained a loan of P1,200,000.00 from Banco Filipino Savings and Mortgage Bank (BANCO FILIPINO), secured by a real estate mortgage over a parcel of land owned by COFICO. COFICO failed to pay the loan upon maturity. Procedural History: BANCO FILIPINO initiated extrajudicial foreclosure proceedings. COFICO and its majority stockholders (RAMOS FAMILY) filed a complaint with the Court of First Instance (CFI) of Manila, seeking annulment of the mortgage contract and an injunction against the foreclosure sale. The CFI issued a temporary restraining order, later granting a writ of preliminary injunction upon the posting of a P100,000.00 bond. Subsequently, the CFI issued an order granting the writ of preliminary injunction upon the posting of a P1,200,000.00 bond. The CFI denied a motion to lift the injunction and a motion to reconsider and reduce the bond amount. The Petition: Petitioners (COFICO and RAMOS FAMILY) filed a petition for certiorari with the Supreme Court, seeking to annul the orders of the respondent Judge, alleging grave abuse of discretion in requiring the P1,200,000.00 injunction bond, claiming the contract was usurious, and asserting that the foreclosure violated prior restraining orders from the Supreme Court in related cases.
Issue(s)
Whether 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 P1.2 million for the writ of preliminary injunction. Whether the loan agreement between COFICO and BANCO FILIPINO is null and void ab initio due to alleged usurious stipulations (retention or compensating deposit and advance interest). Whether the foreclosure by BANCO FILIPINO violates Supreme Court restraining orders in G.R. No. L-29352 and G.R. No. L-30088.
Ruling
The petition is dismissed. The restraining order previously issued is lifted and set aside. The decision is immediately executory.
Ratio Decidendi
On the issue of grave abuse of discretion in requiring the injunction bond: The Court held that the posting of a bond is a condition sine qua non for the issuance of a preliminary injunction, and its amount is addressed to the sound discretion of the trial court. The petitioners failed to demonstrate that the respondent Judge acted with grave abuse of discretion, which implies a capricious, arbitrary, or whimsical exercise of judgment equivalent to lack of jurisdiction. The amount of P1,200,000.00 was justified considering the principal loan amount and the accrued interests, which were substantial. Any error committed by the respondent Judge was at most an error of judgment, which is not correctible by certiorari. On the issue of usury: The Court stated that the contention regarding the usurious nature of the contract is a matter of evidence that should be resolved by the trial court after a full trial on the merits. The Supreme Court is not a trier of facts and cannot pass upon such claims at this stage. On the issue of violation of restraining orders: The Court found this contention to be without merit. Firstly, COFICO and BANCO FILIPINO were not parties to the cases (G.R. No. L-29352 and G.R. No. L-30088) in which the restraining orders were issued. Secondly, the restraining orders were directed against the Central Bank and other entities, not against BANCO FILIPINO in relation to the mortgage foreclosure in the present case. The property mortgaged was owned by COFICO, a distinct legal entity from its stockholders, and the loan and mortgage were solely between COFICO and BANCO FILIPINO. The right to foreclose arises when the principal obligation is not paid when due.
Main Doctrine
The amount of an injunction bond is addressed to the sound discretion of the trial court, and its determination will not be interfered with except in cases of grave abuse of discretion, which implies a capricious, arbitrary, or whimsical exercise of judgment equivalent to lack of jurisdiction. Errors of judgment are not correctible by certiorari.