Case Summary (G.R. No. 114170)
Overview of the Case
The case arose from a loan agreement between the petitioner, Prosperity Credit Resources, Inc., and the private respondent, Metropolitan Fabrics, Inc., wherein the latter mortgaged seven parcels of land to secure a loan amounting to P10.5 million. Following a default in the loan payment, the petitioner foreclosed on the mortgage and subsequently acquired the property through public bidding.
Background of the Dispute
On September 18, 1987, the parties entered into a Memorandum of Undertaking that allowed the private respondent to redeem three of the mortgaged lots while granting the petitioner a right of way over a private road necessary for accessing their remaining property. Subsequent disputes related to the access and use of this road prompted the petitioner to seek a writ of preliminary mandatory injunction based on alleged violations of this agreement.
Injunctive Proceedings
Petitioner filed an injunctive suit in the Regional Trial Court in November 1991, alleging that the private respondent obstructed its access to the road and refused permission for necessary construction work for water pipe installation. The trial court initially granted a preliminary injunction, contingent on petitioner posting a bond, allowing access to the road for the proposed work.
Court of Appeals Ruling
The private respondent contested the trial court's decision by filing for certiorari with the Court of Appeals. The appellate court found that the lower court had overstepped by issuing the injunction, as it had failed to properly interpret the terms of the Memorandum of Undertaking. It determined that the petitioner did not have a clear legal right to the excavations needed for the installation of water pipes.
Legal Standards for Preliminary Mandatory Injunctions
According to the jurisprudence set forth in Pelejo v. Court of Appeals, to justify the issuance of a writ of preliminary mandatory injunction, the petitioner must establish a clear legal right that has been violated, material and substantial invasion of that right, and the urgent necessity of the writ to prevent serious damage. The appellate court held that the right claimed by the petitioner was not “clear and unmistakable,” as the term “passage” in the memorandum did not clearly encompass installation rights.
Analysis of the Memorandum of Undertaking
The trial court interpreted the terms of the Memorandum of Undertaking as granting the petitioner extensive rights to use the road for the installation of utilities. However, the Court of Appeals noted that such an interpretation required a comprehensive evaluation of the mutual intent of the parties, which could only be determined duri
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Case Background
- This case involves a review of the decision made by the Sixth Division of the Court of Appeals in CA GR. 28684-SP, dated November 26, 1993.
- The appellate court set aside a writ of preliminary mandatory injunction that was previously issued by the Regional Trial Court of Quezon City (Branch 95).
- The dispute arose from a loan agreement between the petitioner, Prosperity Credit Resources, Inc., and the private respondent, Metropolitan Fabrics, Inc., secured by a mortgage over seven parcels of land.
Loan Agreement and Mortgage
- On August 3, 1984, Prosperity Credit Resources, Inc. extended a loan to Metropolitan Fabrics, Inc., which amounted to P10.5 million by October 27, 1987.
- To secure the loan, Metropolitan Fabrics, Inc. mortgaged seven parcels of land located at 685 Tandang Sora Avenue, Bo. Banlat, Quezon City.
- Following default on the loan payments, Prosperity Credit Resources foreclosed on the mortgage and became the highest bidder for the properties during public bidding.
Negotiation for Lot Redemption
- Metropolitan Fabrics, Inc. sought to redeem three of the mortgaged lots, specifically those covered by Transfer Certificate of Title Nos. 317705, 317706, and 317707.
- This redemption would leave four remaining lots without access to Tandang Sora Avenue, prompting negotiations between the parties.
- The agreement reached included a right of way for Prosperity Credit Resources over the existing private road, which was formalized in a Memorandum of Undertaking dated September 18, 1987.
Memorandum of Undertaking
- The Memorandum of Undertaking stipulates that the existing private road would remain open for ingress and egress for Prosperity Credit Resources and its successors.
- The document explicitly outlines the property description and the rights granted to Prosperit