G.R. No. L-21807 May 29, 1967
JOSE C. ZULUETA, petitioner, vs. HON. ANDRES REYES, Judge, Court of First Instance of Rizal, GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and PROVINCIAL SHERIFF OF RIZAL, respondents.

FACTS

Petitioner Jose C. Zulueta obtained five real estate loans from respondent GSIS totaling P3,117,000, secured by four mortgage contracts on his properties, the Antonio Subdivision in Pasig, Rizal, and the Antonio Apartments in Manila. The mortgage contracts contained conditions that failure to pay any amortization or interest would make the entire obligation due and payable, allowing GSIS to foreclose judicially or extra-judicially. A specific condition required all proceeds from sales of houses and lots in the Antonio Subdivision to be assigned to GSIS. Petitioner received releases for the first four loans and a partial release (P960,439.46) of the fifth loan (P1,398,000); GSIS asserts the balance was released to petitioner’s contractor per a board resolution. From October 17, 1958, GSIS repeatedly demanded payment of arrearages and remittance of sales proceeds, which petitioner failed to comply with. On March 19, 1962, GSIS filed a petition for extra-judicial foreclosure. To forestall this, petitioner filed a complaint for damages with preliminary injunction (Civil Case No. 7071), alleging that a portion of his loan was not released to him, that GSIS failed to provide a proper accounting, and that no valid demand was made, thus he could not be in default. The trial court issued a temporary restraining order and later directed a joint accounting. The parties submitted a joint manifestation where GSIS presented a statement of accounts showing total arrearages of P1,371,088.15 as of December 31, 1962. Petitioner contested certain charges in this statement, including interest on partial releases, arrears on the disputed portion of the fifth loan, and fire insurance premiums. The trial court subsequently denied petitioner’s application for a preliminary injunction and allowed the foreclosure to proceed. Petitioner then filed this petition for certiorari, prohibition, and injunction.

ISSUE

Whether the respondent judge acted with grave abuse of discretion in denying the petitioner’s application for a preliminary injunction to restrain the extra-judicial foreclosure of the mortgages.

RULING

The Supreme Court dismissed the petition and dissolved the preliminary injunction. The Court held that the respondent judge did not commit grave abuse of discretion. The right of GSIS to foreclose extra-judicially was unassailable because petitioner’s failure to pay amortizations and to remit sales proceeds as agreed constituted a breach of the mortgage conditions, which accelerated the entire indebtedness. The Court found no real, genuine, and substantial controversy regarding the amounts due, as petitioner’s arrears were substantiated by repeated demands and his own partial payment. Petitioner’s defenses, including the dispute over a portion of the fifth loan and the charges for insurance premiums, were deemed insufficient to bar foreclosure, as the mortgage contracts provided that default on any obligation allowed foreclosure. The issuance of a restraining order would unjustly delay GSIS’s statutory remedy of extra-judicial foreclosure under Act No. 3135 , as amended.