Case Summary (G.R. No. 157163)
Key Dates and Proceedings
• May 22, 2001 – Respondents filed Civil Case No. CEB-26468 seeking nullification of loan and security agreements and prayed for a TRO/preliminary injunction to halt threatened foreclosure.
• June 6, 2001 – BPI filed its answer with affirmative defenses and a motion to dismiss for improper venue, insufficient fees, lack of capacity or indispensable parties, and failure to state a cause of action.
• July 5, 2001 – RTC Branch 16 denied the motion to dismiss but granted the writ of preliminary injunction upon respondents’ posting of a ₱2 million bond.
• August 22, 2001 – RTC denied BPI’s motion for reconsideration of the injunction order.
• July 9, 2002 – Court of Appeals affirmed both RTC orders.
• June 25, 2014 – Supreme Court decision under the 1987 Constitution
Applicable Law
• 1987 Philippine Constitution (case decided post-1990)
• Rule 4, Rules of Court – Distinction between real and personal actions; venue for personal actions
• Rule 58, Rules of Court – Grounds and procedure for temporary restraining orders and preliminary injunctions
• Batas Pambansa Blg. 22 – Check bouncing offenses
• Administrative Circular No. 07-99 – Guidelines on injunctive relief (inapplicable here)
Procedural Posture and Issues
• BPI’s appeal questions:
- Whether Civil Case No. CEB-26468 should have been dismissed for non-payment of proper docket fees and improper venue.
- Whether the writ of preliminary injunction enjoining BPI from foreclosing, repossessing collateral, and filing criminal charges was proper.
Personal Versus Real Action and Venue
• Respondents sought annulment of contract and security agreements, not recovery of possession or title to the mortgaged properties.
• Rule 4 distinguishes real actions (affecting title or possession of real property) from personal actions (all other actions).
• Annulment of a mortgage contract is a personal action (Hernandez v. Rural Bank of Lucena).
• Venue for a personal action lies where any plaintiff or principal defendant resides or may be found.
• Because XM Facultad & Development Corporation maintained its principal office in Cebu City, venue there was proper.
• The Supreme Court affirmed that BPI’s venue and docket-fee objections lacked merit.
Standards for Preliminary Injunction
• A preliminary injunction may issue only if:
(a) The applicant is prima facie entitled to the relief demanded;
(b) The act sought to be enjoined violates that right; and
(c) Without the injunction, the applicant would probably suffer irreparable damage or injustice that cannot be remedied by damages.
• Such writs are extraordinary remedies, preserving status quo and preventing threatened wrong during litigation.
• Administrative Circular No. 07-99 (prohibiting injunctions against infrastructure or customs forfeiture) did not apply because this case involved private foreclosure.
Supreme Court’s Ruling on Injunction
• Respondents knowingly secured their loan with real estate and chattel mortgage
Case Syllabus (G.R. No. 157163)
Supreme Court Decision and Guiding Principles on Injunction
- Injunctions issue only upon clear showing of a right in esse and that the acts sought to be enjoined violate that right.
- Preliminary injunctions are preventive remedies that must not determine case merits or decide controverted facts.
- Such relief seeks to prevent threatened wrongs, further injury, irreparable harm, or injustice pending final resolution.
Factual Background and Nature of Dispute
- Respondents borrowed funds from the Bank of the Philippine Islands and executed promissory notes, real estate and chattel mortgages, and a continuing surety agreement.
- Total obligation reached ₱17,983,191.49; respondents paid only ₱13,000,000 due to the 1997 Asian economic crisis.
- Bank threatened foreclosure and required postdated checks as security.
- Respondents filed Civil Case No. CEB-26468 seeking nullity of the loan and security documents, damages, attorney’s fees, and injunctive relief.
Procedural History in the Regional Trial Court
- May 22, 2001: Complaint filed and application for TRO or preliminary injunction to enjoin foreclosure, repossession of Mitsubishi Pajero, and criminal prosecution under BP 22.
- June 6, 2001: Bank’s answer with affirmative defenses, counterclaim, opposition to injunction, and motion to dismiss for improper venue, unpaid docket fees, lack of legal personality or indispensable parties, no board resolution, and failure to state a cause of action.
- July 5, 2001: RTC denied motion to dismiss and granted preliminary injunction upon posting of ₱2,000,000 bond, enjoining foreclosure, repossession, and use of p