Arevalo v. Planters Development Bank
REITERATIONFacts
The Antecedents: Spouses Daisy and Socrates M. Arevalo (Spouses Arevalo) obtained a ₱2,100,000 loan from Planters Development Bank (Bank), secured by a mortgage on their property. Due to non-payment, the Bank initiated extra-judicial foreclosure proceedings, setting an auction sale. Spouses Arevalo filed a Complaint (First Complaint) seeking the nullification of interests, penalties, and charges, and an injunction against the foreclosure sale, alleging the Bank breached its obligations and the sale was premature and confiscatory due to the Bank's alleged illegal schemes. Procedural History: During the hearing for the preliminary injunction, the trial court required Spouses Arevalo to pay 12% per annum interest on the principal obligation as a precondition, pursuant to the Court's Procedure in Extra-Judicial or Judicial Foreclosure of Real Estate Mortgages (Procedure on Foreclosure). Spouses Arevalo argued this requirement was only for unconscionable interest claims, which they did not allege. The trial court affirmed its ruling, and upon Spouses Arevalo's failure to pay the interest, denied the writ. Subsequently, the trial court dismissed the First Complaint for lack of cause of action. Spouses Arevalo appealed the dismissal and also filed a Rule 65 Petition with the Court of Appeals (CA) assailing the denial of the injunctive writ. The CA affirmed the trial court's decision, holding that Spouses Arevalo's allegations regarding interest, though couched in different terms, indicated a challenge to the interest as unconscionable, thus making Section 2 of the Procedure on Foreclosure applicable. Spouses Arevalo then filed the instant Rule 45 Petition with the Supreme Court. The Petition: Spouses Arevalo sought to reverse the CA's decision, arguing they were deprived of evidence presentation and that the CA erred in requiring 12% interest payment when their core complaint was the Bank's breach of obligations, not the excessiveness of interest. The Bank countered that Spouses Arevalo were not denied due process, the CA correctly required interest payment, and that Spouses Arevalo were guilty of forum-shopping by filing a subsequent complaint (Second Complaint) with the trial court seeking similar reliefs.
Issue(s)
Whether the requirement to pay 12% interest per annum before the issuance of an injunctive writ to enjoin an impending foreclosure sale is applicable to the instant case. Whether petitioner Spouses Arevalo are guilty of forum-shopping and should consequently be punished for contempt.
Ruling
The Supreme Court denied the Petition for Review. It affirmed the Court of Appeals' Decision and Resolution. The Court ruled that the issue of the applicability of the 12% interest requirement was moot and academic due to the dismissal of the First Complaint. It also found Spouses Arevalo guilty of forum-shopping and required them to show cause why they should not be held in contempt of court.
Ratio Decidendi
On the mootness of the 12% interest requirement: The Court held that the issue regarding the issuance of a writ of preliminary injunction became moot and academic upon the dismissal of the First Complaint by the trial court. A writ of preliminary injunction is a provisional remedy, auxiliary to the main case, and its purpose ceases upon the dismissal of the main action. The Court cited jurisprudence stating that a dismissal of an action operates as a dissolution of any injunction granted, regardless of any pending appeal. Therefore, there was no longer an actual controversy to be resolved concerning the non-issuance of the writ, as there was nothing left to enjoin. The Court emphasized that judicial power is vested to settle actual controversies, not hypothetical or academic questions. On forum-shopping: The Court found Spouses Arevalo guilty of forum-shopping for two reasons. Firstly, they filed multiple judicial remedies in different fora based on similar facts and seeking substantially similar reliefs. The Court compared the reliefs sought in the instant Petition and the Second Complaint, noting the identity in prayers for the cancellation of the Certificate of Sale and permanent injunction against the transfer of title. This similarity creates the possibility of conflicting decisions. Secondly, Spouses Arevalo failed to report the filing of their Second Complaint within five days, as required by their undertaking. The Court rejected their explanation of inadvertence, highlighting that the Bank had to bring this to their attention. The Court noted that such acts could constitute direct and indirect contempt of court.
Main Doctrine
A petition assailing the denial of a writ of preliminary injunction becomes moot and academic upon the dismissal of the main case from which the application for the writ arose, as the purpose of the provisional remedy ceases to exist. Furthermore, filing multiple suits with substantially similar reliefs in different fora constitutes forum-shopping, which may be punishable by contempt.