Title
Equitable PCI Bank, Inc. vs. Apurillo
Case
G.R. No. 168746
Decision Date
Nov 5, 2009
YKS contested foreclosure by EBC and PCIB over disputed loan amounts, alleging discrepancies and premature demands. RTC granted injunction to halt foreclosure, upheld by higher courts to prevent irreparable harm pending resolution.

Case Summary (G.R. No. 168746)

Overview of Credit and Mortgage Transactions Between Parties

YKS Realty Development, Inc. was a client of PCIB and EBC, which later merged to form EPCIB. Both banks extended credit facilities to YKS secured by real estate mortgages over properties in Tacloban City. Under its transactions with EBC, YKS obtained a credit line initially amounting to PHP 4,000,000, which escalated to PHP 53,000,000 through amendments. The credit line was secured by mortgages on two properties identified by TCT Nos. 22460 and 22461.

Simultaneously, YKS secured from PCIB a dollar-denominated loan of US$2,500,000, which was converted and released in pesos—approximately PHP 65,000,000—also secured by mortgages over various properties identified by several TCT numbers.

Extrajudicial Foreclosure Proceedings Initiated by EPCIB

EBC (predecessor bank) filed an extrajudicial petition for sale of the mortgaged properties securing the credit line, targeting an outstanding obligation amounting to PHP 10,400,000 (partial availment out of PHP 53,000,000). Similarly, PCIB filed its own extrajudicial petition to foreclose mortgaged properties to satisfy a loan obligation pegged by PCIB at over PHP 162 million.

The extrajudicial sales were scheduled to be held on June 29, 2001, with the notices of sale duly issued by the sheriffs of the RTC Tacloban City branches.

YKS’s Complaint and Plea for Injunctive Relief

In response, YKS filed a complaint for declaratory relief, annulment or nullity of foreclosure, injunction, damages, and related remedies. YKS alleged defects in the petitions for sale, including the failure to specify correct loan amounts, inclusion of unauthorized penalties, and invalidity of promissory notes used as bases for the foreclosures. It asserted that the outstanding debt under one credit line was only PHP 10,400,000 but the entire mortgaged properties (covering PHP 53,000,000 line) were being foreclosed, which was inequitable.

Regarding the PCIB loan, YKS argued that the promissory note relied upon for foreclosure matured only in 2004 and was thus not demandable when the petition was filed in 2001. YKS also raised allegations of inducement to sign blank surety agreements subsequently filled in to increase loan amounts.

Consequently, YKS requested the court to declare the petitions for sale invalid and to issue a temporary restraining order (TRO) and preliminary injunction to enjoin foreclosure proceedings pending the resolution of the main case.

RTC’s Issuance of TRO and Preliminary Injunction

The RTC issued a TRO on June 27, 2001, and subsequently, after hearings and submissions of position papers by both parties, granted YKS’s application for a writ of preliminary injunction on December 3, 2001. This injunction restrained EPCIB and its agents from proceeding with foreclosure sales, executing certificates of sale, payments of taxes related to sales, and any acts disturbing the status quo ante.

In its resolution, the RTC emphasized that foreclosing two properties mortgaged for a PHP 53 million credit line to satisfy only PHP 10.4 million was inequitable. On the PCIB loan, the trial court noted the maturity date stipulated in the promissory note was December 17, 2004, so the debt was not yet due. The RTC also highlighted significant discrepancies between amounts claimed in promissory notes, credit memos, and demand letters, underscoring the need for trial to ascertain the correct indebtedness.

Denial of Motion for Reconsideration by the RTC

EPCIB's motion for reconsideration was denied on May 20, 2004, with the RTC affirming its findings of ambiguity and discrepancies in the loan amounts, and affirming the necessity to resolve these issues in trial before any foreclosure should proceed.

Court of Appeals’ Affirmation of RTC Order

EPCIB elevated the matter to the CA via a petition for certiorari under Rule 65 seeking to annul the RTC’s orders. EPCIB argued the injunctive relief was wrongly granted since YKS was a delinquent debtor and that the foreclosure was a legitimate exercise of EPCIB’s rights to satisfy outstanding obligations. It claimed no grave and irreparable injury was shown by YKS and argued the right to injunction was not sufficiently clear.

The CA, however, denied the petition on June 27, 2005, upholding the RTC’s issuance of the writ of preliminary injunction and affirming that the preliminary injunction shall remain effective pending trial on the merits.

Legal Principles on Preliminary Injunction Applied

The Supreme Court underscored that preliminary injunctions under Section 3, Rule 58, Rules of Court, require (a) the existence of an actual or threatened violation of an established right; (b) urgency to prevent injustice; and (c) that the act enjoined tends to render the judgment ineffective.

The issuance of a preliminary injunction involves the trial court's sound discretion and will be disturbed only if there is a grave abuse amounting to lack or excess of jurisdiction—meaning a capricious or arbitrary exercise of power.

Certiorari under Rule 65 only lies for correcting errors of jurisdiction or grave abuse of discretion, not to re-examine factual issues or legal findings.

Supreme Court’s Ruling on the Discretion Exercised by the RTC

The Supreme Court agreed with the CA and RTC that no grave abuse of discretion occurred. The right of YKS to its mortgaged properties was clear, pending determination of the exact amount and validity of th

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster—building context before diving into full texts.

About Privacy Terms