Case Summary (G.R. No. 179230)
Promissory Notes and Default Provisions
Lim executed several promissory notes with specific provisions regarding defaults, including cross-default clauses indicating that failure to pay any amount under one loan could trigger the acceleration of all obligations. This allowed the respondent to declare the entirety of Lim's outstanding loans immediately due and payable upon his default on any one note.
Foreclosure Actions and Legal Proceedings
After Lim defaulted on his first promissory note, the respondent issued a final demand letter on July 27, 1998, which prompted them to apply for extrajudicial foreclosure in September 1999. Lim subsequently filed a complaint for injunction on October 15, 1998, to prevent the foreclosure proceedings. He argued that the bank's action constituted bad faith and an abuse of rights, claiming that the acceleration of his loan was unjust, especially considering the prevailing economic conditions.
Lower Court and Court of Appeals Decisions
The Regional Trial Court (RTC) issued a Temporary Restraining Order in favor of Lim, later converting it into a preliminary injunction. The RTC found potential legal issues with the loan's acceleration provisions and expressed concern over the risk of irreparable harm to Lim. However, upon appeal, the Court of Appeals reversed this decision, stating that Lim did not have a clear entitlement to the injunctive relief sought.
Requirements for Issuance of Preliminary Injunction
The Supreme Court underscored that for a preliminary injunction to be granted, the applicant must demonstrate a "right in esse," or a clear right that needs protection. The petitioner admitted to the execution of the promissory notes and acknowledged his default, which meant that the respondent's actions fell within the contractual provisions established in the notes. Therefore, Lim’s claims of bad faith and abuse of rights did not suffice to prove a clear righ
...continue readingCase Syllabus (G.R. No. 179230)
Case Overview
- The case involves Eugene L. Lim (petitioner) and BPI Agricultural Development Bank (respondent).
- The respondent granted a revolving credit line of P7,000,000 to petitioner and his wife, Constancia, leading to the execution of multiple promissory notes.
- This case was decided by the First Division of the Supreme Court on March 09, 2010.
Promissory Notes and Loans
- Petitioner executed two significant promissory notes:
- Promissory Note No. 1000045-08 dated January 9, 1998 for P2,000,000, maturing on July 8, 1998.
- Promissory Note No. 1000045-09 dated April 8, 1998 for P5,000,000, maturing on October 5, 1998.
- Additionally, petitioner and his wife executed:
- Promissory Note No. 6000201-00 for P3,294,117.63 on September 4, 1997, maturing on August 19, 1999.
- Promissory Note No. 6000191-00 for P2,000,000 dated February 19, 1997, maturing on February 19, 2002.
Cross-Default Provision
- The first three promissory notes included a cross-default clause, stipulating:
- Failure to pay any obligation would make the entire amount due and payable immediately without notice.
- A late payment charge of 2% per month on overdue amounts would apply.
- The fourth promissory note contained a similar provision.
Default and Demand for Payment
- Petitioner defaulted on the first promissory note and had an overdraft of P16,000