GR 134617; (February, 2006) (Digest)
G.R. No. 134617 ; February 13, 2006
SPS. LUIS K.S. LIM and CHUA SIAM, EVARISTO LIM and FEDERAL MEDICAL & PHARMACEUTICALS, INC., Petitioners, vs. THE COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS and LEVY DUKA, Respondents.
FACTS
Petitioners, the spouses Luis K.S. Lim and Chua Siam and Evaristo Lim, principal stockholders of Federal Medical & Pharmaceuticals, Inc., obtained loans from respondent Bank of the Philippine Islands (BPI) amounting to ₱11,000,000.00, secured by a real estate mortgage over the spouses’ property. Petitioners defaulted on their obligation, which ballooned to ₱18,865,509.00. After BPI’s demand for payment, petitioners submitted two settlement proposals. BPI rejected these and filed a petition for the extrajudicial foreclosure of the mortgage.
To prevent the foreclosure sale scheduled for December 9, 1997, petitioners filed a complaint for Damages and Injunction with the Regional Trial Court (RTC) of Manila, praying for a writ of preliminary injunction. The RTC initially issued a temporary restraining order but, after a hearing, denied the application for a preliminary injunction and lifted the TRO. The RTC ruled that petitioners failed to establish a clear legal right to the injunction, as they did not deny the loan’s maturity and default, and their mere proposals did not novate or suspend the mortgage contract.
ISSUE
Whether the Court of Appeals erred in upholding the RTC’s denial of the application for a writ of preliminary injunction.
RULING
The Supreme Court denied the petition, affirming the Court of Appeals’ decision. The legal logic is anchored on the stringent requirements for issuing a writ of preliminary injunction. A preliminary injunction is a preservative remedy, not a cause of action itself, and its issuance depends on the claimant’s ability to demonstrate a clear and unmistakable right that is being violated. The twin requisites are the existence of a right in esse and an actual or threatened violation of that right.
Petitioners failed to satisfy these requisites. They did not contest the maturity of their loan obligation or their default. Their evidence consisted solely of unaccepted proposals for restructuring or settlement sent to BPI. Under contract law, such proposals, without acceptance by the creditor, do not constitute a binding agreement that novates the original mortgage contract or suspends the bank’s right to foreclose. Consequently, BPI’s right to extrajudicially foreclose the mortgage, as stipulated in the contract, remained intact and enforceable. Since petitioners could not show a clear legal right to suspend the foreclosure, they were not entitled to the equitable relief of injunction. The lower courts committed no reversible error in their rulings.