G.R. No. 243999, March 18, 2021
Sps. Lito and Lydia Tumon, Petitioners, vs. Radiowealth Finance Company, Inc., Respondent.

FACTS

Petitioners Sps. Lito and Lydia Tumon obtained a loan from respondent Radiowealth Finance Company, Inc. (Radiowealth) for P2,811,456.00, secured by a real estate mortgage on their property. They alleged they received only P1,500,000.00 after deductions for a processing fee and interest. They claimed the effective monthly interest rate was 87%, which they argued was unconscionable, and that Radiowealth violated the Truth in Lending Act by not furnishing required documents. After suffering business losses, petitioners defaulted on their monthly amortizations starting October 2015. In March 2016, Radiowealth initiated extrajudicial foreclosure proceedings. Petitioners filed a Complaint for Nullification of Mortgage Documents, Promissory Note, and Damages (the Main Case) and applied for a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction (WPI) to stop the foreclosure. The RTC granted a TRO but later denied the application for a WPI, reasoning that Radiowealth’s right to foreclose was clear and that determining the unconscionability of the interest was a matter for the main case. The RTC also denied petitioners’ motion for reconsideration. Petitioners filed a Rule 65 petition for certiorari with the Court of Appeals (CA), which dismissed it, ruling the RTC did not commit grave abuse of discretion. The CA found petitioners failed to prove a clear right to be protected or that they would suffer irreparable injury, and that issuing a WPI would effectively dispose of the main case. Petitioners then filed this Rule 45 Petition, arguing the RTC violated A.M. No. 99-10-05-0 by not determining their willingness and capacity to pay at least 12% per annum interest on the principal obligation, a condition for issuing a WPI based on an allegation of unconscionable interest.

ISSUE

Whether the Court of Appeals committed reversible error in ruling that the Regional Trial Court did not commit grave abuse of discretion in denying petitioners’ application for a writ of preliminary injunction.

RULING

The Supreme Court DENIED the petition for lack of merit and AFFIRMED the assailed CA Decision and Resolution. The Court held that the CA correctly found no grave abuse of discretion in the RTC’s denial of the WPI. The requisites for issuing a WPI under Rule 58 of the Rules of Court are: (1) a clear and unmistakable right to be protected, and (2) an urgent and paramount necessity to prevent serious damage. In the context of foreclosure, A.M. No. 99-10-05-0 adds that no TRO or WPI shall be issued on the allegation of unconscionable interest unless the debtor pays the mortgagee at least twelve percent (12%) per annum interest on the principal obligation stated in the foreclosure application. The Court found petitioners failed to establish a clear right to be protected. Their right to question the interest rate as unconscionable is a matter for trial in the main case, and issuing a WPI would prejudge that issue. Furthermore, petitioners did not comply with the condition under A.M. No. 99-10-05-0 of paying or offering to pay at least 12% per annum interest on the principal obligation. Their claim of willingness and capacity to pay was not substantiated by evidence presented to the RTC during the hearing on the WPI application. The RTC’s denial was thus a proper exercise of judicial discretion, not amounting to grave abuse.