In G.R. No. 220686, entitled Icon Development Corporation v. National Life Insurance Company of the Philippines, the Supreme Court ended a 9-year old litigation. In a Decision rendered on 9 March 2020, Supreme Court denied the petition for review filed by Icon Development Corporation, and affirmed the Decision and Resolution of the Court of Appeals, which reversed and set aside the rulings of the trial court.
The case is simple enough. For failure of Icon to pay its loan obligations, National Life filed foreclosure proceedings. However, Icon was able to secure a temporary restraining order, followed by a writ of preliminary injunction, from the regional trial court. National Life elevated the orders of the trial court to the Court of Appeals, which reversed the trial court. Still Icon petitioned the Supreme Court for review of the Court of Appeals decision.
In its petition with the Supreme Court, Icon argued that because National Life was under conservatorship, the task of filing for foreclosure belongs not to its board of directors, but to the conservator. Also, because of Icon’s claim that it had already fully paid its loan obligations as it even made an overpayment, National Life will be unjustly enriched if it were allowed to foreclose the mortgage properties, and because of the extinguishment of its loan obligations, the Supreme Court guidelines on foreclosure proceedings no long applied.
In its Decision, the Supreme Court ruled in favor of National Life, rejecting all of Icon’s arguments. In the first place, the Supreme Court held that conservatorship of an insurance company does not in any way diminish the function of the board of directors, and the juridical personality of the insurance company continues; thus, there is no doubt that its board of directors could validly authorize the foreclosure even without prior approval of the conservator. In the second place, the Supreme Court found that Icon did not present a single piece of evidence of its alleged overpayment or even proof of payment of the obligation; hence, it cannot claim that National Life is unjustly enriched at Icon’s expense if the foreclosure is allowed. Finally, the Supreme Court ruled that the trial court committed grave abuse of discretion by its violations of the guidelines governing the issuance of temporary restraining orders and writs of preliminary injunction, holding that:
…it is crystal clear that a WPI (writ of preliminary injunction) or TRO (temporary restraining order) cannot be issued against extrajudicial foreclosure of real estate mortgage on mere allegation that the debt secured by the mortgage has been paid or is not delinquent unless the debtor presents an evidence of payment. Even an allegation of unconscionable interest being imposed on the loan by the mortgagee shall no longer be a ground to apply for WPI. In addition, the rule prohibits the issuance of TRO or WPI unless the debtor pays the mortgagee at least 12% per annum interest on the principal obligation as stated in the application for foreclosure sale which shall be updated monthly while the case is pending. Likewise, it is mandated that all requirements and restrictions prescribed for the issuance of a TRO and WPI, such as the posting of a bond, which shall be equal to the amount of the outstanding debt, and the limitation for its effectivity, shall apply.
… Evidently, the RTC’s Order enjoining the foreclosure proceedings is a patent circumvention of the guidelines in A.M. No. 99-10-05-0.
The Law Firm represented National Life from the trial court all the way up to the Supreme Court.