Facts:

The case at hand involves the Bank of the Philippine Islands (formerly known as Far East Bank and Trust Company) as the Petitioner against the Court of Appeals and Jimmy T. Go as Respondents. The events leading to this case began when the Petitioner granted eight loans to Noah's Arc Merchandising, a single proprietorship owned by Albert T. Looyuko, which was secured by a real estate mortgage over a parcel of land covered by Transfer Certificate of Title No. 160277, jointly registered under Looyuko and Go's names. Following a default in obligations by Noah's Ark, the Petitioner scheduled an extrajudicial foreclosure auction for April 14, 1998. However, prior to this date, on April 8, 1998, Jimmy T. Go filed a complaint for damages, accompanied by a prayer for the issuance of a temporary restraining order (TRO) and a preliminary injunction to prevent the auction from occurring. Subsequently, on April 14, the trial court issued a TRO, which was later extended on April 1

...

Facts:

Loan Transactions and Mortgage Security

• Petitioner, then known as Far East Bank and Trust Company (now Bank of the Philippine Islands), granted a total of eight (8) loans to Noah’s Arc Merchandising (Noah’s Ark).
• The loans were evidenced by identical promissory notes signed by Mr. Albert T. Looyuko (owner of Noah’s Ark), private respondent Jimmy T. Go, and one Wilson Go.
• All eight notes secured a real estate mortgage over a parcel of land covered by Transfer Certificate of Title No. 160277, registered in the names of Mr. Looyuko and the private respondent.
• Upon alleging default by Noah’s Ark, petitioner extrajudicially foreclosed on the mortgage, triggering subsequent legal actions.

Issuance of Temporary Restraining Order (TRO) and Preliminary Injunction

• Private respondent, in reaction to the scheduled auction sale set on April 14, 1998, filed a complaint for damages with a prayer for the issuance of a TRO and/or a writ of preliminary injunction to halt the foreclosure sale.
• Judge Urbano C. Victorio, Sr. issued a TRO on April 14, 1998 and set the preliminary injunction for hearing later the same day.
• An order dated April 15, 1998 extended the TRO for an additional fifteen days, cumulatively totaling twenty days.
• A subsequent order on May 7, 1998 granted a preliminary injunction effective upon the posting of a bond of P200,000.00, thereby enjoining the foreclosure and auction sale pending further proceedings.

Subsequent Motions and Lower Court Proceedings

• Petitioner moved for reconsideration of the preliminary injunction on the grounds that the extrajudicial foreclosure was premature with respect to four of the promissory notes; this motion was denied in an order dated July 30, 1998.
• Thereafter, petitioner filed a petition for certiorari with the Court of Appeals seeking annulment of the May 7, 1998 and July 30, 1998 orders, and requested to proceed with the foreclosure auction of the subject property.
• The Court of Appeals, in its decision dated August 26, 1999, partially denied petitioner’s petition, addressing issues of default, the sufficiency of demand, the propriety of the injunction, and the adequacy of the posted bond.
• Petitioner subsequently filed a motion for reconsideration before the Court of Appeals, which was again denied on April 3, 2000.

Underlying Financial and Contractual Disputes

• Petitioner raised the issue of whether Noah’s Ark was in default, particularly noting that no prior legal demand had been made before proceeding with foreclosure.
• Private respondent argued that only four of the eight promissory notes were due and maintained that his right to due process required a legal demand before foreclosure.
• The Court reviewed relevant caselaw (e.g., Rose Packing Co., Inc. v. Court of Appeals and Namarco v. Federation of United Namarco Distributors, Inc.) noting that default normally arises when a demand is made, except where the parties have expressly waived this requirement.
• Examination of the promissory notes revealed an express waiver of demand by the co-signors, including the private respondent, along with an acceleration clause allowing the lender to demand payment immediately upon default.
• An additional dispute involved the alleged application of withheld lease payments by petitioner (as acknowledged in a letter dated May 19, 1998) to Noah’s Ark’s outstanding obligations, which petitioner argued constituted a waiver or novation — a point that the Court ultimately rejected by distinguishing legal compensation from novation.

Procedural Irregularities in the Issuance of the TRO

• The TRO issued by Judge Victorio was scrutinized for its computation of the twenty-day period by excluding Saturdays, Sundays, and legal holidays.
• Although Rule 58 of the Rules of Civil Procedure limits a TRO’s duration to twenty days from notice, the proper method of computing this period was contested in light of Section 1, Rule 22 of the Rules of Court.
• The lower court’s method of excluding non-working days beyond the singular exclusion applicable when the last day lands on a non-working day was found to exceed its authority.

Issue:

Whether private respondent was entitled to the issuance of the temporary restraining order and the subsequent writ of preliminary injunction to enjoin the foreclosure and public auction sale of the mortgaged property.

• Whether the rights of private respondent, having signed the promissory notes and waived the requirement of demand, warranted injunctive relief.
• Whether the issuance of the TRO and preliminary injunction violated the substantive and procedural rules, notably regarding the computation of the time period for the TRO.

Whether the sufficiency of the bond posted (initially set at P200,000.00) adequately protected petitioner against potential damages arising from the injunction.

• Whether the bond amount was grossly insufficient given the potential damages, including filing fees, publication fees, and loss of income from the foreclosure sale.
• Whether a higher bond (e.g., P5,000,000.00, as later suggested) was more appropriate to ensure compensation in the event of wrongful injunction issuance.

• Whether the issues regarding default and the necessity of demand in foreclosing the mortgage, particularly in light of the express waiver contained in the promissory notes, were properly evaluated by the court.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)