Pilar Development Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Pilar Development Corporation (PDC) obtained a loan from Banco Filipino Savings & Mortgage Bank (BF) amounting to P8,944,650.00, secured by a real estate mortgage on various parcels of land in San Fernando, Pampanga. In January 1985, the Monetary Board (MB) ordered BF to cease operations due to insolvency and appointed Carlota P. Valenzuela as liquidator. Subsequently, the majority stockholders of BF filed a petition with the Supreme Court (G.R. No. 70054) challenging the MB's resolutions. Procedural History: On August 29, 1985, the Supreme Court issued a Resolution in G.R. No. 70054, restraining the liquidator from conducting further acts of liquidation. Despite this, on May 21, 1986, BF, through its liquidator, requested the Ex-Officio Sheriff to extrajudicially foreclose the mortgaged properties due to PDC's default. A notice of extrajudicial sale was issued on July 17, 1986, scheduling the auction for July 18, 1986. PDC then filed a petition for prohibition with the Court of Appeals to nullify the sale. The Petition: PDC sought a writ of prohibition from the Court of Appeals, arguing that the liquidator's authority was revoked by the Supreme Court's restraining order, rendering the foreclosure proceedings void. The Court of Appeals denied the petition and lifted the temporary restraining order. PDC now appeals by certiorari under Rule 45, contending that the Court of Appeals erred in holding that the restraining order did not cover the foreclosure authority and that prohibition was not the proper remedy against the Sheriff and Executive Judge.
Issue(s)
Whether the Supreme Court's restraining order against "further acts of liquidation" prohibited the liquidator from initiating extrajudicial foreclosure proceedings. Whether prohibition was the proper remedy against the respondent Judge and Ex-Officio Sheriff, and whether the petitioner exhausted all other available remedies before seeking prohibition.
Ruling
The petition is DENIED with costs against petitioners. SO ORDERED.
Ratio Decidendi
On the issue of the restraining order: The Supreme Court clarified that its Resolution in G.R. No. 70054, which restrained respondents from conducting "further acts of liquidation" of BF, did not interfere with the liquidator's authority to gather and preserve the assets of BF. This authority, derived from Section 29 of R.A. No. 265, as amended, includes the collection of receivables and the foreclosure of mortgages to collateralize loans. The Court emphasized that the restraining order was directed against acts prejudicial to BF, whereas the foreclosure proceedings were beneficial to BF by preserving its assets. Therefore, the acts sought to be enjoined were not acts in furtherance of liquidation, and petitioner had no cause of action to prohibit the foreclosure sale. The Court found that the liquidator's actions were within her mandate to preserve assets, which is distinct from the act of liquidation itself. On the propriety of the petition for prohibition: The Court found the propriety of the petition for prohibition highly doubtful. It noted that petitioner directly approached the Court of Appeals for injunctive relief immediately after the notice of extrajudicial sale was issued. The special civil action of prohibition is available only when there is no other plain, speedy, and adequate remedy in the ordinary course of law, as provided by Section 2, Rule 65 of the Revised Rules of Court. Petitioners should have first brought the matter to the attention of the respondent Judge. Furthermore, the petition was unclear as to how the respondent Judge, beyond his role as presiding judge of the court where the Ex-Officio Sheriff was Clerk of Court, was impleaded as a party-respondent in relation to the foreclosure sale.
Main Doctrine
A restraining order against "further acts of liquidation" does not prohibit a liquidator from gathering and preserving assets, including foreclosing mortgages to collect on loans, as such acts are beneficial to the bank and not part of the liquidation process itself.