Delos Santos v. Metropolitan Bank
REITERATIONFacts
The Antecedents: Spouses Humberto and Carmencita Delos Santos obtained several loans from Metropolitan Bank and Trust Company (Metrobank), totaling P12,000,000.00, to construct a hotel on their property in Davao City. These loans were secured by a real estate mortgage over the said property. The loan agreements stipulated various interest rates, including a short-term loan with a rate of 22.204% per annum, and longer-term loans with rates of 15.75% per annum. The agreements also contained escalation clauses allowing for adjustments in interest rates without advance notice and stipulated that the entire loan amount would become due and demandable upon default in payment. Metrobank initiated extrajudicial foreclosure proceedings on December 27, 1999, after the petitioners defaulted on their installment payments, scheduling the sale for March 7, 2000. Procedural History: On April 4, 2000, prior to the rescheduled foreclosure sale, the petitioners filed a complaint in the Regional Trial Court (RTC) of Davao City, seeking damages, fixation of interest rates, and the application of alleged excess payments, along with a prayer for a writ of preliminary injunction to stop the foreclosure. The RTC initially issued a temporary restraining order and subsequently granted the writ of preliminary injunction. However, upon Metrobank's motion for reconsideration, and noting the petitioners' failure to oppose or appear at the hearing, the RTC reconsidered and set aside its earlier order on May 19, 2000. The RTC later denied the petitioners' motion for reconsideration on June 8, 2001, finding them to be in default. Aggrieved, the petitioners filed a special civil action for certiorari with the Court of Appeals (CA), assailing the RTC's orders. On February 19, 2002, the CA dismissed the petition for lack of merit and affirmed the RTC's orders. The CA subsequently denied the petitioners' motion for reconsideration on May 7, 2002. The Petition: The petitioners seek review of the CA's decision through a petition for review on certiorari, arguing that the RTC committed grave abuse of discretion in finding them in default and in denying their application for a preliminary injunction. They contend that their situation is analogous to the case of Almeda v. Court of Appeals, where an injunction was granted pending the determination of disputed interest rates. They also argue that the CA should have issued a writ of certiorari despite finding no grave abuse of discretion, given the urgency of their situation. The petitioners claim they had an excess payment sufficient to cover their obligations and that Metrobank improperly increased interest rates without their consent. Metrobank counters that the Almeda case is inapplicable due to factual differences, including the petitioners' actual default and failure to tender or consign payment of the disputed amounts. The core of the petition before this Court is whether the CA erred in affirming the RTC's denial of the preliminary injunction and in dismissing the petition for certiorari.
Issue(s)
Whether the Court of Appeals erred in dismissing the petition for certiorari despite the alleged urgency of the foreclosure. Whether the Petitioners were entitled to a writ of preliminary injunction to enjoin the foreclosure based on the Almeda v. Court of Appeals ruling.
Ruling
The appeal is denied. The decision of the Court of Appeals is affirmed. The petitioners are ordered to pay the costs of suit.
Ratio Decidendi
On Issue 1: The Supreme Court emphasized that certiorari is a remedy narrow in scope and inflexible in character, designed solely to correct errors of jurisdiction or grave abuse of discretion. It is not a 'general utility tool' to correct every error committed by a lower court. The Petitioners' argument that certiorari should have been issued even without a showing of grave abuse of discretion due to 'urgency' is legally absurd. A showing of grave abuse of discretion—meaning an act performed in a capricious, whimsical, or despotic manner—is a fundamental and concurrent requisite for the writ. Because the RTC acted within its authority in assessing the evidence of default and the validity of the contract terms, the CA correctly found no jurisdictional error to warrant the extraordinary writ. On Issue 2: The Court ruled that the Petitioners were not entitled to a WPI because they failed to establish a 'right in esse.' Injunction cannot protect contingent or disputed rights; there must be a clear violation of an existing legal right. Since the Petitioners were undeniably in default on the principal amount of their short-term loan, Metrobank acquired the unassailable right to foreclose as a consequence of that breach. The Court distinguished this case from Almeda v. Court of Appeals (G.R. No. 113412), noting that in Almeda, the mortgagee was a government financial institution subject to Presidential Decree No. 385, the borrowers had consistently protested the rates, and critically, the borrowers had consigned the undisputed amount in court. Here, the Petitioners made no such tender or consignation, and their claim of 'excess payment' was unsubstantiated by evidence beyond simplistic calculations that ignored stipulated interests and penalties. Therefore, the right to foreclose remained valid despite the pending litigation on the interest rate levels.
Main Doctrine
A writ of preliminary injunction to enjoin an impending extrajudicial foreclosure sale is issued only upon a clear showing of a violation of the mortgagor's unmistakable right. The writ of certiorari is not a general utility tool and is only issued to correct errors of jurisdiction, not errors of procedure or mistakes in the findings or conclusions of the lower court. Default in payment of obligations secured by a mortgage gives the mortgagee an unassailable right to foreclose.