G.R. No. 168746 - Equitable PCI Bank, Inc. vs. Apurillo

YKS Realty Development, Inc. (YKS) was a client of Philippine Commercial International Bank (PCIB) and Equitable Banking Corporation (EBC), predecessors of Equitable PCI Bank, Inc. (petitioner).
PCIB and EBC granted YKS various loans and credit facilities secured by real estate mortgages on properties in Tacloban City.

YKS obtained a credit line secured by mortgages on two properties (TCT Nos. T-22461 and T-22460) initially worth ₱4,000,000 but amended to ₱53,000,000.
YKS alleged that EBC forced its officers to sign blank surety agreements, allegedly incurring liabilities for ₱85,000,000.
EBC partially released ₱10,400,000 from the credit line via various promissory notes by June 29, 1998.
On March 12, 2001, EBC demanded payment of outstanding obligations, which YKS failed to settle.
On May 23, 2001, EBC filed an extrajudicial foreclosure petition before RTC Tacloban, docketed as EJF No. 1399, for ₱10,400,000 plus interests and charges.
Sheriff’s Notice of Extrajudicial Sale was issued, setting auction on June 29, 2001.

On August 13, 1997, YKS obtained a loan from PCIB for US$2,500,000, evidenced by PN No. 095/97-344, which was converted to peso (~₱65,000,000) at P26 = 1 USD.
The PCIB loan was secured by mortgages on multiple YKS properties (various TCT numbers).
A subsequent promissory note dated December 24, 1998 (PN No. 366-00756-98) reflected an obligation of ₱140,967,120.36, maturing on December 17, 2004.
On the same day, PCIB credited ₱103,240,277.90 as proceeds and debited $2,633,680.55 as payment on the original dollar loan.
On January 23, 2001, PCIB demanded YKS to pay ₱162,295,233.54 (excluding interests, penalties, and charges) and warned of possible foreclosure.
YKS protested the principal amount and requested a detailed breakdown but PCIB did not comply.

On May 23, 2001, PCIB filed a petition for extrajudicial foreclosure for the mortgaged properties before the RTC Executive Judge in Tacloban.
Sheriff Luis G. Copuaco issued a Notice of Extrajudicial Foreclosure Sale dated May 25, 2001, with auction set on June 29, 2001.
On June 19, 2001, YKS filed a complaint before the RTC for declaratory relief, annulment/nullity of foreclosure, injunctions, damages, and other reliefs, docketed as Civil Case No. 2001-06-93.
YKS challenged the two petitions for sale as defective for failing to correctly specify the claims, inclusion of unapproved penalties, and questioned the validity and maturity of the promissory notes.
YKS argued that the EBC credit line was ₱53,000,000 but only ₱10,400,000 was availed, making foreclosure of all properties unjust.
YKS claimed PN No. 366-00756-98 was null, void, or overstated, and that the maturity date was December 17, 2004, making the debt non-demandable at the time of petition.
YKS further alleged forged surety agreements and discrepancies between the amounts claimed and the promissory notes.
YKS prayed for a temporary restraining order (TRO) and preliminary injunction to enjoin foreclosure and sale pending resolution of the case.

RTC issued a TRO on June 27, 2001, enjoining foreclosure pending hearing.
On December 3, 2001, after submissions and hearing, RTC granted a writ of preliminary injunction, directing respondents to maintain the status quo and refrain from any foreclosure acts until further order.
RTC found injustice in foreclosing properties for only part of the credit line and noted maturity date issues on promissory notes.
The RTC denied petitioner’s motion for reconsideration on May 20, 2004, reiterating ambiguities and discrepancies in loan amounts and documents.

Petitioner filed a petition for certiorari before the CA to nullify the RTC injunction resolutions, alleging grave abuse of discretion and absence of clear and convincing right by YKS.
On June 27, 2005, CA denied the petition for lack of merit, ordered the RTC to proceed with the trial, and maintained the preliminary injunction in force pending final resolution.

Petitioner assailed the CA’s affirmation of the writ of preliminary injunction, arguing:

YKS defended the injunction and urged the Court to affirm the RTC and CA findings.

Whether the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing a writ of preliminary injunction enjoining petitioner from conducting foreclosure and sale of YKS’ mortgaged properties pending trial on the main action.