Bank of the Philippine Islands v. La Suerte Trading & Industrial Corporation
REITERATIONFacts
The Antecedents: La Suerte Trading and Industrial Corporation (La Suerte) is the registered owner of five parcels of land in Cabanatuan City. In 1994, Ricardo Joson allegedly mortgaged these properties to Far East Bank and Trust Company (FEBTC) without authorization from La Suerte's Board of Directors. La Suerte discovered this mortgage in 2001 when it received a notice of extra-judicial sale. Consequently, La Suerte filed a complaint against FEBTC, its successor-in-interest Bank of the Philippine Islands (BPI), and the sheriff, seeking to nullify the mortgage and enjoin the sale. Procedural History: The Regional Trial Court (RTC) initially issued a temporary restraining order (TRO) enjoining the sale. BPI filed a motion to dismiss, which the RTC considered along with La Suerte's prayer for a preliminary injunction. Despite BPI's contention that no hearing on the preliminary injunction was conducted, the RTC issued a writ of preliminary injunction in favor of La Suerte. BPI's motion for reconsideration was denied. BPI then elevated the matter to the Court of Appeals via a petition for certiorari, arguing a violation of due process. The Court of Appeals dismissed BPI's petition, holding that the RTC had heard the parties and that BPI failed to sufficiently prove its claim of no hearing. BPI's subsequent motion for reconsideration, which included stenographic notes, was also denied. The Petition: BPI filed the instant petition for review under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision and resolution. BPI argues that the Court of Appeals erred in dismissing its petition by holding that BPI was given an opportunity to be heard and present evidence, when in fact it was denied due process. BPI further contends that the Court of Appeals erred in granting the injunction based solely on allegations in the complaint and despite the denial of due process to BPI. Lastly, BPI claims the Court of Appeals erred in finding that La Suerte would suffer damages, asserting that it was BPI that was prejudiced by the halted auction sale. The core issue presented is whether the RTC conducted a hearing on La Suerte's prayer for a preliminary injunction.
Issue(s)
Whether the Court of Appeals erred in dismissing BPI's petition for certiorari by holding that BPI was given the opportunity to be heard and present evidence regarding the prayer for injunction, when BPI claims it was denied due process. Whether the Court of Appeals erred in holding that La Suerte was entitled to the injunction based solely on the allegations in the complaint, notwithstanding the alleged denial of due process to BPI. Whether the Court of Appeals erred in finding that La Suerte would be damaged by the foreclosure when it was BPI that was allegedly damaged by the failure of the auction sale to proceed.
Ruling
The Supreme Court granted the petition, reversed and set aside the assailed Decision and Resolution of the Court of Appeals.
Ratio Decidendi
On the issue of whether a hearing was conducted for the preliminary injunction: The Court reiterated that questions of fact are generally beyond the scope of a petition for review under Rule 45, but an exception exists when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. The Court found that while the CA initially ruled that a hearing was held, BPI subsequently presented stenographic notes of the September 4, 2001 hearing which indubitably showed that the scheduled hearing did not push through due to the pendency of the motion to dismiss. The Court emphasized that a prior hearing before the issuance of a writ of preliminary injunction is absolutely required by law and jurisprudence. Therefore, the CA erred in not invalidating the writ issued without such a hearing. On the issue of due process and entitlement to injunction: The Court held that the issuance of a writ of preliminary injunction requires strict observance of procedural due process, which includes a hearing where the applicant must show a right to the relief sought and the adverse party must be given an opportunity to be heard. Since the RTC failed to conduct a proper hearing on the preliminary injunction, the issuance of the writ violated BPI's right to due process. Consequently, La Suerte could not be considered entitled to the injunction based solely on its pleadings when the procedural requirements were not met. On the issue of damages: The Court noted that the core issue was the procedural infirmity in the issuance of the injunction. While BPI argued that it was prejudiced by the failed auction sale, the Court's primary concern was the violation of due process in granting the injunction. The reversal of the CA's decision was based on the lack of a proper hearing, rendering the subsequent arguments about damages secondary to the procedural defect.
Main Doctrine
A writ of preliminary injunction cannot be issued without a prior hearing where the parties are given an opportunity to present their evidence, and failure to conduct such a hearing constitutes a violation of due process.