Casent Realty v. Premiere Bank
REITERATIONFacts
The Antecedents: Casent Realty & Development Corporation (Casent Realty) obtained a commercial loan from Premiere Development Bank (Premiere Bank) secured by a real estate mortgage. Casent Realty made partial principal payments and obtained additional loans, also secured by the same mortgage. Premiere Bank later sent demand letters for the outstanding loans. Casent Realty proposed a dacion en pago settlement and sought a reconciliation of its loan obligations. Premiere Bank found the proposed property settlement unacceptable and threatened foreclosure, while agreeing to a reconciliation of the outstanding balance. Procedural History: Premiere Bank initiated extrajudicial foreclosure proceedings, leading Casent Realty to file a complaint for injunction and damages with the Regional Trial Court (RTC). The RTC issued a temporary restraining order and later a preliminary injunction, ruling that foreclosure was premature due to uncertainty in the unpaid obligation amount. During pre-trial, the parties disagreed on the computation of the debt. The RTC suggested an independent auditor, to which both parties initially agreed. However, Casent Realty filed a motion for clarification, seeking to limit the auditor's role to a historical review of payments and their application, not a determination of the merits. The RTC denied this motion but allowed Casent Realty to proceed to pre-trial without the auditor. Premiere Bank's motion for reconsideration was also denied. Premiere Bank then filed a petition for certiorari with the Court of Appeals (CA), arguing grave abuse of discretion by the RTC. The CA granted the petition, ruling that Casent Realty had agreed to the engagement of independent auditors. Casent Realty's motion for reconsideration of the CA's decision was denied. The Petition: Casent Realty filed a Petition for Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. Casent Realty argued that the CA erred in giving due course to Premiere Bank's petition for certiorari, as the issue of agreement on an independent auditor was a question of fact. It also contended that the RTC did not gravely abuse its discretion and that the CA erred in ruling that Premiere Bank executed the necessary written consent to refer issues to a commissioner. Casent Realty seeks the reversal of the CA's decision and the reinstatement of the RTC's order allowing it to proceed to pre-trial without utilizing an independent auditor.
Issue(s)
Whether the Court of Appeals erred in giving due course to Premiere Bank's petition for certiorari, considering the issue of agreement to an independent auditor is a question of fact. Whether the Regional Trial Court gravely abused its discretion in granting Casent Realty the option to proceed to pre-trial without availing of the independent auditor. Whether the Court of Appeals erred in ruling that Premiere Bank executed the written consent required by Section 1, Rule 32 of the 1997 Rules of Civil Procedure to refer issues to a commissioner.
Ruling
The Supreme Court granted the petition, reversed and set aside the decision and resolution of the Court of Appeals, and reinstated the July 21, 2003 order of the Regional Trial Court permitting the petitioner to choose to proceed with pre-trial without utilizing an independent auditor, and the September 1, 2003 order denying respondent's motion for reconsideration.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in giving due course to Premiere Bank's petition for certiorari: The Supreme Court held that mere errors of law are not correctible via petition for certiorari under Rule 65. The grant of such a petition requires grave abuse of discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion exists where an act is performed with a capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The abuse must be patent and gross, amounting to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. The Court found that the records were arid as to acts of the Regional Trial Court constituting grave abuse of discretion, thus the Court of Appeals erred in granting Premiere Bank's Rule 65 petition. On the issue of whether the Regional Trial Court gravely abused its discretion in granting Casent Realty the option to proceed to pre-trial without availing of the independent auditor: The Supreme Court noted that while Casent Realty's motion for clarification contained a prayer for general relief, the motion did not question the propriety of appointing an independent auditor but merely sought to clarify its functions. The Court found that the July 21, 2003 order of the Regional Trial Court, which allowed Casent Realty to proceed with pre-trial without utilizing the independent auditor, was consistent with the limited scope of Casent Realty's motion. The RTC correctly recognized that it could not compel parties to agree to a settlement or accept the assistance of an independent auditor if they did not wish to do so. Therefore, the RTC did not commit grave abuse of discretion. On the issue of whether the Court of Appeals erred in ruling that Premiere Bank executed the written consent required by Section 1, Rule 32 of the 1997 Rules of Civil Procedure to refer issues to a commissioner: The Supreme Court found that the Court of Appeals erred in its application of Rule 32. While the RTC suggested the engagement of an independent auditor, Casent Realty's motion for clarification specifically sought to limit the auditor's role. The RTC's subsequent order allowing Casent Realty to proceed without the auditor was a recognition of the parties' differing views on the scope and necessity of the auditor's involvement. The CA's conclusion that Casent Realty had agreed to the engagement was an overreach, as the core of Casent Realty's motion was the clarification of the auditor's functions, not an unqualified agreement to their appointment. The CA's reversal of the RTC's order, which gave Casent Realty an option, was therefore an unwarranted interference.
Main Doctrine
Mere errors of law are not correctible via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. The grant of a Rule 65 petition for certiorari requires grave abuse of discretion amounting to lack or excess of jurisdiction, which exists where an act is performed with a capricious or whimsical exercise of judgment equivalent to lack of jurisdiction.