6/28/2015

G.R.No.165662

TodayisSunday,June28,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.165662May3,2006
SELEGNAMANAGEMENTANDDEVELOPMENTCORPORATIONandSpousesEDGARDOandZENAIDA
ANGELES,Petitioners,
vs.
UNITEDCOCONUTPLANTERSBANK,*Respondent.
DECISION
PANGANIBAN,CJ:
A writ of preliminary injunction is issued to prevent an extrajudicial foreclosure, only upon a clear showing of a
violation of the mortgagors unmistakable right. Unsubstantiated allegations of denial of due process and
prematurity of a loan are not sufficient to defeat the mortgagees unmistakable right to an extrajudicial
foreclosure.
TheCase
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the May 4, 2004 Amended
Decision2 and the October 12, 2004 Resolution3 of the Court of Appeals (CA) in CAGR SP No. 70966. The
challengedAmendedDecisiondisposedthus:
"WHEREFORE,theMotionforReconsiderationisGRANTED.TheJuly18,2003DecisionisherebyREVERSED
and SET ASIDE and another one entered GRANTING the petition and REVERSING and SETTING ASIDE the
March15,2002OrderoftheRegionalTrialCourt,Branch58,MakatiCityinCivilCaseNo.991061."4
TheassailedResolutiondeniedreconsideration.
TheFacts
OnSeptember19,1995,PetitionersSelegnaManagementandDevelopmentCorporationandSpousesEdgardo
andZenaidaAngelesweregrantedacreditfacilityintheamountofP70millionbyRespondentUnitedCoconut
PlantersBank(UCPB).Assecurityforthiscreditfacility,petitionersexecutedrealestatemortgagesoverseveral
parcels of land located in the cities of Muntinlupa, Las Pias, Antipolo and Quezon and over several
condominium units in Makati. Petitioners were likewise required to execute a promissory note in favor of
respondent every time they availed of the credit facility. As required in these notes, they paid the interest in
monthlyamortizations.
ThepartiesstipulatedintheirCreditAgreementdatedSeptember19,1995,5thatfailuretopay"anyavailmentof
the accommodation or interest, or any sum due" shall constitute an event of default,6 which shall consequently
allowrespondentbankto"declare[asimmediatelydueandpayable]alloutstandingavailments
oftheaccommodationtogetherwithaccruedinterestandanyothersumpayable."7
In need of further business capital, petitioners obtained from UCPB an increase in their credit facility.8 For this
purpose,theyexecutedaPromissoryNoteforP103,909,710.82,whichwastomatureonMarch26,1999.9Inthe
samenote,theyagreedtoaninterestrateof21.75percentperannum,payablebymonthlyamortizations.
OnDecember21,1998,respondentsentpetitionersademandletter,wordedasfollows:
"Gentlemen:
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

1/11

6/28/2015

G.R.No.165662

"Withreferencetoyourloanwithprincipaloutstandingbalanceof[P103,909,710.82],itappearsfromtherecords
ofUnitedCoconutPlantersBankthatyoufailedtopayinterestamortizationsamountingto[P14,959,525.10]on
thePromissoryNoteonitsduedate,30May1998.
"xxxxxxxxx
"Accordingly,formaldemandisherebymadeuponyoutopayyouroutstandingobligationsinthetotalamountof
P14,959,525.10, which includes unpaid interest and penalties as of 21 December 1998 due on the promissory
note,eight(8)daysfromdatehereof."10
RespondentdecidedtoinvoketheaccelerationprovisionintheirCreditAgreement.Accordingly,throughcounsel,
itrelayeditsmovetopetitionersonJanuary25,1999inaletter,whichwequote:
"Gentlemen:
"xxxxxxxxx
"It appears from the record of [UCPB] that you failed to pay the monthly interest due on said
obligation since May 30, 1998 as well as the penalty charges due thereon. Despite repeated
demands,yourefusedandcontinuetorefusetopaythesame.UndertheCreditAgreements/Letter
Agreements you executed, failure to pay when due any installments of the loan or interest or any
sumduethereunder,isaneventofdefault.
"Consequently, we hereby inform you that our client has declared your principal obligation in the
amount of [P103,909,710.82], interest and sums payable under the Credit Agreement/Letter
Agreement/PromissoryNotetobeimmediatelydueandpayable.
"Accordingly,formaldemandisherebymadeuponyoutopleasepaywithinfive(5)daysfromdate
hereof or up to January 29, 1999 the principal amount of [P103,909,710.82], with the interest,
penalty and other charges due thereon, which as of January 25, 1999 amounts to
[P17,351,478.55]."11
RespondentsentanotherletterofdemandonMarch4,1999.Itcontainedafinaldemandonpetitioners"tosettle
in full [petitioners] said past due obligation to [UCPB] within five (5) days from [petitioners] receipt of [the]
letter."12
In response, petitioners paid respondent the amount of P10,199,473.96 as partial payment of the accrued
interests.13 Apparently unsatisfied, UCPB applied for extrajudicial foreclosure of petitioners mortgaged
properties.
WhenpetitionersreceivedtheNoticeofExtraJudicialForeclosureSaleonMay18,1999,theyrequestedUCPB
to give them a period of sixty (60) days to update their accrued interest charges and to restructure or, in the
alternative,tonegotiateforatakeoutoftheiraccount.14
OnMay25,1999,theBankdeniedpetitionersrequestinthesewords:
"ThisistoreplytoyourletterdatedMay20,1999,whichconfirmstherequestyoumadethepreviousdaywhen
youpaidusavisit.
"Asearlieradvised,youraccounthasbeenreferredtoexternalcounselforappropriatelegalaction.Demandhas
alsobeenmadeforthefullsettlementofyouraccount.
"WeregretthattheBankisunabletograntyourrequestunlessadefiniteofferismadeforsettlement."15
In order to forestall the extrajudicial foreclosure scheduled for May 31, 1999, petitioners filed a Complaint16
(docketedasCivilCaseNo.991061)for"Damages,AnnulmentofInterest,PenaltyIncreaseandAccountingwith
PrayerforTemporaryRestrainingOrder/PreliminaryInjunction."Allsubsequentproceedingsinthetrialcourtand
intheCAinvolvedonlytheproprietyofissuingaTROandawritofpreliminaryinjunction.
JudgeJosefinaG.Salonga,17thenexecutivejudgeoftheRegionalTrialCourt(RTC)ofMakatiCity,deniedthe
Urgent Exparte Motion for Immediate Issuance of a Temporary Restraining Order (TRO), filed by petitioners.
JudgeSalongadeniedtheirmotiononthegroundthatnogreatorirreparableinjurywouldbeinflictedonthemif
thepartieswouldfirstbeheard.18Unsatisfied,petitionersfiledanExParteMotionforReconsideration,byreason
ofwhichthecasewaseventuallyraffledtoBranch148,presidedbyJudgeOscarB.Pimentel.19
Afterduehearing,JudgePimentelissuedanOrderdatedMay31,1999,grantinga20dayTROonthescheduled
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

2/11

6/28/2015

G.R.No.165662

foreclosure of the Antipolo properties, on the ground that the Notice of Foreclosure had indicated an inexistent
auctionvenue.20To resolve that issue, respondent filed a Manifestation21 that it would withdraw all its notices
relative to the foreclosure of the mortgaged properties, and that it would repost or republish a new set of
notices.Accordingly,inanOrderdatedSeptember6,1999,22JudgePimenteldeniedpetitionersapplicationfora
TROforhavingbeenrenderedmootbyrespondentsManifestation.23
Subsequently,respondentfilednewapplicationsforforeclosureinthecitieswherethemortgagedpropertieswere
located.Undaunted, petitioners filed another Motion for the Issuance of a TRO/Injunction and a Supplementary
MotionfortheIssuanceofTRO/InjunctionwithMotiontoClarifyOrderofSeptember6,1999.24
On October 27, 1999, Judge Pimentel issued an Order25 granting a 20day TRO in favor of petitioners. After
several hearings, he issued his November 26, 1999 Order,26 granting their prayer for a writ of preliminary
injunctionontheforeclosures,butonlyforaperiodoftwenty(20)days.TheOrderstates:
"Admitted by defendant witness is the fact that in all the notices of foreclosure sale of the properties of the
plaintiffs x x x it is stated in each notice that the property will be sold at public auction to satisfy the mortgage
indebtednessofplaintiffswhichasofAugust31,1999amountstoP131,854,773.98.
"xxxxxxxxx
"As the court sees it, this is the problem that should be addressed by the defendant in this case and in the
meantime,thenoticeofforeclosuresaleshouldbeheldinabeyanceuntilsuchtimeasthesemattersareclarified
andclearedbythedefendantsxxxShouldthedefendantbeabletoremedythesituationthiscourtwillhaveno
morealternativebuttoallowthedefendanttoproceedtoitsintendedaction.
"xxxxxxxxx
"WHEREFORE,premisesconsidered,andfindingcompellingreasonatthispointintimetogranttheapplication
forpreliminaryinjunction,thesameisherebygranteduponpostingofapreliminaryinjunctionbondintheamount
ofP3,500,000.00dulyapprovedbythecourt,letawritofpreliminaryinjunctionbeissued."27
ThecorrespondingWritofPreliminaryInjunction28wasissuedonNovember29,1999.
Respondent moved for reconsideration. On the other hand, petitioners filed a Motion to Clarify Order of
November26,1999.ConcedingthattheNovember26Orderhadgrantedaninjunctionduringthependencyof
thecase,respondentcontendedthattheinjunctivewritmerelyrestraineditforaperiodof20(twenty)days.
OnDecember29,2000,JudgePimentelissuedanOrder29grantingrespondentsMotionforReconsiderationand
clarifyinghisNovember26,1999Orderinthismanner:
"There may have been an error in the Writ of Preliminary Injunction issued dated November 29, 1999 as the
same[appearedtobeactually]anextensionoftheTROissuedbythisCourtdated27October1999foranother
20daysperiod.Plaintiffsseekstoenjoindefendantsforanindefiniteperiodpendingtrialofthecase.
"Be that as it may, the Court actually did not have any intention of restraining the defendants from foreclosing
plaintiff[s]propertyforanindefiniteperiodandduringtheentireproceedingofthecasexxx.
"xxxxxxxxx
"Whatthe[c]ourtwantedthedefendantstodowastomerelymodifythenoticeof[the]auctionsaleinorderthat
theamountofP131,854,773.98xxxwouldnotappeartobethevalueofeachpropertybeingsoldonauction.xx
x.30
"WHEREFORE,premisesconsideredandafterfindingmeritontheargumentsraisedbyhereindefendantstobe
impressedwithmerit,andhavingstatedintheOrderdated26November1999thatnootheralternativerecourse
isavailablethantoallowthedefendantstoproceedwiththeirintendedaction,theCourtherebyrules:
"1.]Togiveduecoursetodefendant[]smotionforreconsideration,asthesameisherebyGRANTED,however,
withreservationthatthisOrdershalltakeeffectuponafterits[]finality[.]"31
Consequently, respondent proceeded with the foreclosure sale of some of the mortgaged properties. On the
otherhand,petitionersfiledan"[O]mnibus[M]otion[forReconsideration]andto[S]pecifythe[A]pplicationofthe
P92 [M]illion [R]ealized from the [F]oreclosure [S]ale x x x."32 Before this Omnibus Motion could be resolved,
JudgePimentelinhibitedhimselffromhearingthecase.33

http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

3/11

6/28/2015

G.R.No.165662

ThecasewasthenreraffledtoBranch58oftheRTCofMakatiCity,presidedbyJudgeEscolasticoU.Cruz.34
The proceedings before him were, however, all nullified by the Supreme Court in its En Banc Resolution dated
September18,2001.35Hewaseventuallydismissedfromservice.36
The case was reraffled to the pairing judge of Branch 58, Winlove M. Dumayas. On March 15, 2002, Judge
Dumayas granted petitioners Omnibus Motion for Reconsideration and Specification of the Foreclosure
Proceeds,asfollows:
"WHEREFORE, premises considered, the Motion to Reconsider the Order dated December 29, 2000 is hereby
grantedandtheOrderofNovember26,1999grantingthepreliminaryinjunctionisreinstatedsubjecthoweverto
theconditionthatallpropertiesofplaintiffswhichwereextrajudiciallyforeclosedthoughpublicbiddingaresubject
to an accounting. [A]nd for this purpose defendant bank is hereby given fifteen (15) days from notice hereof to
renderanaccountingontheproceedsrealizedfromtheforeclosureofplaintiffsmortgagedpropertieslocatedin
Antipolo,Makati,MuntinlupaandLasPias."37
TheaggrievedrespondentfiledbeforetheCourtofAppealsaPetitionforCertiorari,seekingthenullificationofthe
RTCOrderdatedMarch15,2002,onthegroundthatitwasissuedwithgraveabuseofdiscretion.38
TheSpecialFifteenthDivision,speakingthroughJusticeRebeccadeGuiaSalvador,affirmedtherulingofJudge
Dumayas.It held that petitioners had a clear right to an injunction, based on the fact that respondent had kept
theminthedarkastohowandwhytheirprincipalobligationhadballoonedtoalmostP132million.TheCAheld
thatrespondentsrefusaltogivethemadetailedaccountinghadpreventedthedeterminationofthematurityof
theobligationandprecludedthepossibilityofaforeclosureofthemortgagedproperties.Moreover,theirpayment
ofP10millionhadtheeffectofupdating,andtherebyavertingthematurityof,theoutstandingobligation.39
Respondent filed a Motion for Reconsideration, which was granted by a Special Division of Five of the Former
SpecialFifteenthDivision.
RulingoftheCourtofAppeals
CitingChinaBankingCorporationv.CourtofAppeals,40theappellatecourtheldinitsAmendedDecision41that
the foreclosure proceedings should not be enjoined in the light of the clear failure of petitioners to meet their
obligationsuponmaturity.42
Also citing Zulueta v. Reyes,43 the CA, through Justice Jose Catral Mendoza, went on to say that a pending
questiononaccountingdidnotwarrantaninjunctionontheforeclosure.
Parenthetically, the CA added that petitioners were not without recourse or protection. Further, it noted their
pending action for annulment of interest, damages and accounting. It likewise said that they could protect
themselvesbycausingtheannotationoflispendensonthetitlesofthemortgagedorforeclosedproperties.
In his Separate Concurring Opinion,44 Justice Magdangal M. de Leon added that a prior accounting was not
essentialtoextrajudicialforeclosure.HecitedAbacaCorporationv.Garcia,45whichhadruledthatActNo.3135
didnotrequiremortgagedpropertiestobesoldbylotorbyonlyasmuchaswouldcoverjusttheobligation.Thus,
heconcludedthatarequestforaccountingforthepurposeofdeterminingwhethertheproceedsoftheauction
wouldsufficetocovertheindebtednesswouldnotjustifyaninjunctionontheforeclosure.
PetitionersfiledaMotionforReconsiderationdatedMay31,2004,whichtheappellatecourtdenied.46
Hence,thisPetition.47
Issues
Petitionersraisethefollowingissuesforourconsideration:
palign="center">"I
"WhetherornottheHonorableCourtofAppealsdeniedthepetitionersofdueprocess.
"II
"Whether or not the Honorable Court of Appeals supported its Amended Decision by invoking
jurisprudencenotapplicableandcompletelyidenticalwiththeinstantcase.
"III
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

4/11

6/28/2015

G.R.No.165662

"WhetherornottheHonorableCourtofAppealsfailedtoestablishitsfindingthatRTCJudgeWinlove
Dumayashasactedwithgraveabuseofdiscretion."48
The resolution of this case hinges on two issues: 1) whether petitioners are in default and 2) whether there is
basis for preliminarily enjoining the extrajudicial foreclosure. The other issues raised will be dealt with in the
resolutionofthesetwomainquestions.
TheCourtsRuling
ThePetitionhasnomerit.
FirstIssue:
Default
The resolution of the present controversy necessarily begins with a determination of respondents right to
foreclosethemortgagedpropertiesextrajudicially.
It is a settled rule of law that foreclosure is proper when the debtors are in default of the payment of their
obligation.Infact,thepartiesstipulatedintheircreditagreements,mortgagecontractsandpromissorynotesthat
respondentwasauthorizedtoforecloseonthemortgages,incaseofadefaultbypetitioners.Thatthisauthority
wasgrantedisnotdisputed.
Morasolvendi,ordebtorsdefault,isdefinedasadelay49inthefulfillmentofanobligation,byreasonofacause
imputable to the debtor.50 There are three requisites necessary for a finding of default. First, the obligation is
demandableandliquidatedsecond,thedebtordelaysperformancethird,thecreditorjudiciallyorextrajudicially
requiresthedebtorsperformance.51
MortgagorsDefaultofMonthlyInterestAmortizations
Inthepresentcase,thePromissoryNoteexecutedonMarch29,1998,expresslystatesthatpetitionershadan
obligationtopaymonthlyinterestontheprincipalobligation.Fromrespondentsdemandletter,52 it is clear and
undisputedbypetitionersthattheyfailedtomeetthosemonthlypaymentssinceMay30,1998.Theirnonpayment
isdefinedasan"eventofdefault"inthepartiesCreditAgreement,whichwequote:
"Section8.01.EventsofDefault.EachofthefollowingeventsandoccurrencesshallconstituteanEventofDefault
ofthisAGREEMENT:
"1.The CLIENT shall fail to pay, when due, any availment of the Accommodation or interest, or any other sum
duethereunderinaccordancewiththetermsthereof
1 a v v p h il.n e t

"xxxxxxxxx"
"Section8.02.ConsequencesofDefault.(a)IfanEventofDefaultshalloccurandbecontinuing,theBankmay:
"1. By written notice to the CLIENT, declare all outstanding availments of the Accommodation together with
accruedinterestandanyothersumpayablehereundertobeimmediatelydueandpayablewithoutpresentment,
demandornoticeofanykind,otherthanthenoticespecificallyrequiredbythisSection,allofwhichareexpressly
waivedbytheCLIENT[.]"53
Consideringthatthecontractisthelawbetweentheparties,54respondentisjustifiedininvokingtheacceleration
clausedeclaringtheentireobligationimmediatelydueandpayable.55Thatclauseobligedpetitionerstopaythe
entireloanonJanuary29,1999,thedatefixedbyrespondent.56
PetitionersfailuretopayonthatdatesetintoeffectArticleIXoftheRealEstateMortgage,57wordedthus:
"If,atanytime,aneventofdefaultasdefinedinthecreditagreements,promissorynotesandotherrelatedloan
documentsreferredtoinparagraph5ofARTICLEIhereof(sic),ortheMORTGAGORand/orDEBTORshallfail
orrefusetopaytheSECUREDOBLIGATIONS,oranyoftheamortizationofsuchindebtednesswhendue,orto
comply any (sic) of the conditions and stipulations herein agreed, x x x then all the obligations of the
MORTGAGOR secured by this MORTGAGE and all the amortizations thereof shall immediately become due,
payable and defaulted and the MORTGAGEE may immediately foreclose this MORTGAGE judicially in
accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended, and
PresidentialDecreeNo.385.Forthepurposeofextrajudicialforeclosure,theMORTGAGORherebyappointsthe
MORTGAGEEhis/her/itsattorneyinfacttosellthepropertymortgagedunderActNo.3135,asamended,tosign
all documents and perform any act requisite and necessary to accomplish said purpose and to appoint its
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

5/11

6/28/2015

G.R.No.165662

substitutesassuchattorneyinfactwiththesamepowersasabovespecified.xxx[.]"58
TheforegoingdiscussionsatisfactorilyshowsthatUCPBhadeveryrighttoapplyforextrajudicialforeclosureon
thebasisofpetitionersundisputedandcontinuingdefault.
PetitionersDebtConsideredLiquidatedDespitetheAlleged
LackofAccounting
Petitionersdonotevenattempttodenytheaforementionedmatters.Theyassert,though,thattheyhavearight
toadetailedaccountingbeforetheycanbedeclaredindefault.As regards the three requisites of default, they
say that the first requisite liquidated debt is absent. Continuing with foreclosure on the basis of an
unliquidatedobligationallegedlyviolatestheirrighttodueprocess.Theyalsomaintainthattheirpartialpayment
ofP10millionavertedthematurityoftheirobligation.59
On the other hand, respondent asserts that questions regarding the running balance of the obligation of
petitioners are not valid reasons for restraining the foreclosure. Nevertheless, it maintains that it has furnished
themadetailedmonthlystatementofaccount.
Adebtisliquidatedwhentheamountisknownorisdeterminablebyinspectionofthetermsandconditionsofthe
relevant promissory notes and related documentation.60 Failure to furnish a debtor a detailed statement of
accountdoesnotipsofactoresultinanunliquidatedobligation.
PetitionersexecutedaPromissoryNote,inwhichtheystatedthattheirprincipalobligationwasintheamountof
P103,909,710.82, subject to an interest rate of 21.75 percent per annum.61 Pursuant to the parties Credit
Agreement,petitionerslikewiseknowthatanydelayinthepaymentoftheprincipalobligationwillsubjectthemto
apenaltychargeofonepercentpermonth,computedfromtheduedateuntiltheobligationispaidinfull.62
It is in fact clear from the agreement of the parties that when the payment is accelerated due to an event of
default, the penalty charge shall be based on the total principal amount outstanding, to be computed from the
dateofaccelerationuntiltheobligationispaidinfull.63TheirCreditAgreementevenprovidesfortheapplication
ofpayments.64Itappearsfromtheagreementsthattheamountoftotalobligationisknownor,attheveryleast,
determinable.
Moreover,whentheymadetheirpartialpayment,petitionersdidnotquestiontheprincipal,interestorpenalties
demanded from them. They only sought additional time to update their interest payments or to negotiate a
possiblerestructuringoftheiraccount.65Hence,thereisnobasisfortheirallegationthatastatementofaccount
wasnecessaryforthemtoknowtheirobligation.Wecannotimpairrespondentsrighttoforeclosetheproperties
onthebasisoftheirunsubstantiatedallegationofaviolationofdueprocess.
In Spouses Estares v. CA,66 we did not find any justification to grant a preliminary injunction, even when the
mortgagors were disputing the amount being sought from them. We held in that case that "[u]pon the
nonpayment of the loan, which was secured by the mortgage, the mortgaged property is properly subject to a
foreclosuresale."67
ComparedwithEstares,thedenialofinjunctivereliefinthiscaseisevenmoreimperative,becausethepresent
petitioners do not even assail the amounts due from them. Neither do they contend that a detailed accounting
wouldshowthattheyarenotindefault.Apendingquestionregardingthedueamountwasnotasufficientreason
toenjointheforeclosureinEstares.Hence,withmorereasonshouldinjunctionbedeniedintheinstantcase,in
whichthereisnodisputeastotheoutstandingobligationofpetitioners.
At any rate, whether respondent furnished them a detailed statement of account is a question of fact that this
Courtneednotandwillnotresolveinthisinstance.AsheldinZuluetav.Reyes,68inwhichtherewasnogenuine
controversyastotheamountsdueanddemandable,theforeclosureshouldnotberestrainedbytheunnecessary
questionofaccounting.
MaturityoftheLoanNotAvertedbyPartialCompliancewithRespondentsDemand
Petitioners allege that their partial payment of P10 million on March 25, 1999, had the effect of forestalling the
maturityoftheloan69hencetheforeclosureproceedingsarepremature.70Wedisagree.
Tobesure,theirpartialpaymentdidnotextinguishtheobligation.The Civil Code states that a debt is not paid
"unless the thing x x x in which the obligation consists has been completely delivered x x x."71Besides, a late
partialpaymentcouldnothavepossiblyforestalledalongexpiredmaturitydate.
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

6/11

6/28/2015

G.R.No.165662

Theonlypossiblelegalrelevanceofthepartialpaymentwastoevidencethemortgageesamenabilitytogranting
themortgagoragraceperiod.Becausethepartialpaymentwouldconstituteawaiverofthemortgageesvested
right to foreclose, the grant of a grace period cannot be casually assumed72 the banks agreement must be
clearlyshown.Withoutadoubt,noexpressagreementwasenteredintobytheparties.Petitionersonlyassumed
that their partial payment had satisfied respondents demand and obtained for them more time to update their
account.73
Petitioners are mistaken. When creditors receive partial payment, they are not ipso facto deemed to have
abandonedtheirpriordemandforfullpayment.Article1235oftheCivilCodeprovides:
"When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing
anyprotestorobjection,theobligationisdeemedfullycompliedwith."
Thus,toimplythatcreditorsacceptpartialpaymentascompleteperformanceoftheirobligation,theiracceptance
must be made under circumstances that indicate their intention to consider the performance complete and to
renouncetheirclaimarisingfromthedefect.74
There are no circumstances that would indicate a renunciation of the right of respondent to foreclose the
mortgagedpropertiesextrajudicially,onthebasisofpetitionerscontinuingdefault.Onthecontrary,itassertedits
right by filing an application for extrajudicial foreclosure after receiving the partial payment. Clearly, it did not
intendtogivepetitionersmoretimetomeettheirobligation.
Parenthetically,respondentcannotbereprovedforacceptingtheirpartialpayment.WhileArticle1248oftheCivil
Code states that creditors cannot be compelled to accept partial payments, it does not prohibit them from
acceptingsuchpayments.
SecondIssue:
EnjoiningtheExtrajudicialForeclosure
A writ of preliminary injunction is a provisional remedy that may be resorted to by litigants, only to protect or
preservetheirrightsorinterestsduringthependencyoftheprincipalaction.Toauthorizeatemporaryinjunction,
theplaintiffmustshow,atleastprimafacie,arighttothefinalrelief.75Moreover,itmustshowthattheinvasionof
therightsoughttobeprotectedismaterialandsubstantial,andthatthereisanurgentandparamountnecessity
forthewrittopreventseriousdamage.76
In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion.
Injunction is not designed to protect contingent or future rights. It is not proper when the complainants right is
doubtfulordisputed.77
Asageneralrule,courtsshouldavoidissuingthiswrit,whichineffectdisposesofthemaincasewithouttrial.78In
ManilaInternationalAirportAuthorityv.CA,79weurgedcourtstoexercisecautioninissuingthewrit,asfollows:
"xxx.Weremindtrialcourtsthatwhilegenerallythegrantofawritofpreliminaryinjunctionrestsonthesound
discretionofthecourttakingcognizanceofthecase,extremecautionmustbeobservedintheexerciseofsuch
discretion.Thediscretionofthecourtaquotograntaninjunctivewritmustbeexercisedbasedonthegrounds
andinthemannerprovidedbylaw.Thus,theCourtdeclaredinGarciav.Burgos:
Ithasbeenconsistentlyheldthatthereisnopowertheexerciseofwhichismoredelicate,whichrequiresgreater
caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an
injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where
courtsoflawcannotaffordanadequateorcommensurateremedyindamages.
Everycourtshouldrememberthataninjunctionisalimitationuponthefreedomofactionofthedefendantand
shouldnotbegrantedlightlyorprecipitately.Itshouldbegrantedonlywhenthecourtisfullysatisfiedthatthelaw
permitsitandtheemergencydemandsit."80(Citationsomitted)
Petitionersdonothaveanyclearrighttobeprotected.Asshowninourearlierfindings,theyfailedtosubstantiate
theirallegationsthattheirrighttodueprocesshadbeenviolatedandthematurityoftheirobligationforestalled.
Sincetheyindisputablyfailedtomeettheirobligationsinspiteofrepeateddemands,weholdthatthereisnolegal
justificationtoenjoinrespondentfromenforcingitsundeniablerighttoforeclosethemortgagedproperties.
In any case, petitioners will not be deprived outrightly of their property. Pursuant to Section 47 of the General
Banking Law of 2000,81 mortgagors who have judicially or extrajudicially sold their real property for the full or
partialpaymentoftheirobligationhavetherighttoredeemthepropertywithinoneyearafterthesale.Theycan
redeemtheirrealestatebypayingtheamountdue,withinterestratespecified,underthemortgagedeedaswell
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

7/11

6/28/2015

G.R.No.165662

asallthecostsandexpensesincurredbythebank.82
Moreover,inextrajudicialforeclosures,petitionershavetherighttoreceiveanysurplusinthesellingprice.This
right was recognized in Sulit v. CA,83 in which the Court held that "if the mortgagee is retaining more of the
proceedsofthesalethanheisentitledto,thisfactalonewillnotaffectthevalidityofthesalebutsimplygivesthe
mortgagoracauseofactiontorecoversuchsurplus."84
Petitionersfailedtodemonstratetheprejudicetheywouldprobablysufferbyreasonoftheforeclosure.Also,itis
clear that they would be adequately protected by law. Hence, we find no legal basis to reverse the assailed
AmendedDecisionoftheCAdatedMay4,2004.
WHEREFORE, the Petition is DENIED and the assailed Amended Decision and Resolution AFFIRMED. Costs
againstpetitioners.
SOORDERED.
ARTEMIOV.PANGANIBAN
ChiefJustice
Chairman,FirstDivision
WECONCUR:
CONSUELOYNARESSANTIAGO
AssociateJustice

MA.ALICIAAUSTRIAMARTINEZ
AsscociateJustice

ROMEOJ.CALLEJO,SR.
AssociateJustice

MINITAV.CHICONAZARIO
AsscociateJustice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision were
reachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.
ARTEMIOV.PANGANIBAN
ChiefJustice

Footnotes
* The Court of Appeals is impleaded as respondent in the Petition for Review, but is presently excluded

pursuanttoSec.4(a)ofRule45oftheRulesofCourt.
1Rollo,pp.833.
2Id.at3551.FormerSpecialFifteenthDivision(SpecialDivisionofFive).PennedbyJusticeJoseCatral

Mendoza,withtheconcurrenceofJusticesMarinaL.Buzon(Divisionchairperson)andFernandaL.Peralta
(member). Justice Magdangal M. de Leon (member) concurred in a Separate Opinion, while Justice
RebeccadeGuiaSalvador(member)dissented.
3Id.at5354.
4AssailedAmendedCADecision,p.7rollo,p.41.
5Rollo,pp.263268.
6Id.at266.
7Id.at267.
8AmendmentofMortgagedatedDecember19,1996id.at285.
9PromissoryNoteexecutedonMarch29,1998id.at290.
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

8/11

6/28/2015

G.R.No.165662

10LetterdatedDecember21,1998id.at292.
11LetterdatedJanuary25,1999id.at293294.
12LetterdatedMarch4,1999id.at295.
13SeeletterdatedMay20,1999id.at296.
14Id.
15LetterdatedMay25,1999id.at297.
16Rollo,pp.8290.
17NowCAassociatejustice.
18CADecisiondatedJuly18,2003,pp.23rollo,pp.5758.
19Id.at3id.at58.
20Id.
21Rollo,pp.246248.
22Id.at9195.
23Id.
24CADecisiondatedJuly18,2003,p.5rollo,p.60.
25Rollo,pp.96100.
26Id.at101104.
27Id.at103104.
28Id.at253.
29Id.at105117.
30OrderdatedDecember29,2000,p.8rollo,p.112.
31Id.at13id.at117.
32CADecisiondatedJuly18,2003,p.11rollo,p.66.
33Id.at12id.at67.
34Id.
35Dr.Aldayv.JudgeCruz,Jr.,426Phil.385,February4,2002.
36Id.
37CADecisiondatedJuly18,2003,p.13rollo,p.68.
38Id.at14id.at69.
39Id.at17id.at72.
40333Phil.158,December5,1996.
41JusticedeGuiaSalvadordissentedandstoodbyheroriginalruling.
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

9/11

6/28/2015

G.R.No.165662

42AssailedAmendedCADecision,p.5rollo,p.39.
43126Phil.625,May29,1967.
44Rollo,pp.4347.
45272SCRA475,May14,1997.
46Rollo,pp.4851.
47 This case was deemed submitted for decision on October 24, 2005, upon the Courts receipt of

respondents Memorandum, signed by Attys. Hector L. Hofilea and Miguelito V. Ocampo of Ocampo &
Ocampo.PetitionersMemorandum,signedbyAtty.AlexM.GanitanoofLopez&Rempillo,wasreceivedby
thisCourtonOctober17,2005.
48PetitionersMemorandum,p.16rollo,p.204.Originalinuppercase.
49CivilCode,Art.1169.Thoseobligedtodeliverortodosomethingincurdelayfromthetimetheobligee

judiciallyorextrajudiciallydemandsfromthemthefulfillmentoftheirobligation.
50A.Tolentino,CommentariesandJurisprudenceontheCivilCodeofthePhilippines,Vol.IV,101(1987).
51Id.at102.
52Rollo,p.292.
53CreditAgreementdatedSeptember19,1995,Art.VIIIid.at266267.
54CivilCode,Art.1159.
55Rollo,pp.293294.
56Id.at294.
57Id.at270.
58Id.Italicssupplied.
59PetitionersMemorandum,pp.1619rollo,pp.204207.
60PacificMills,Inc.,v.CA,206SCRA317,February17,1992(citingBarengv.CA,107Phil.641,April25,

1960InsuranceCompanyofNorthAmericav.Republic,127Phil.635,August30,1967).
61Rollo,p.290.
62CreditAgreementdatedSeptember19,1995,Art.II,Sec.2.04id.at263.
63Id.
64Id.at264.
65Id.at296.
66459SCRA604,June8,2005.
67Id.at619,perAustriaMartinez,J.
68Supranote43.
69PetitionersMemorandum,pp.1617rollo,pp.204205.
70Id.at19id.at207.
71CivilCode,Art.1233.
http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

10/11

6/28/2015

G.R.No.165662

72 Pacific Mills, Inc., v. CA, supra note 60 Andres v. Crown Life Insurance Company, 102 Phil. 919,

January28,1958.
73PetitionerSelegnasMay20,1999lettertoUCPBexpressesitsassumption:"Sincewedidnotreceive

anyotheradvicefromyou,wehaveassumedthereafter,thatyouwillgiveustimetoupdateouraccounts."
Rollo,p.296.
74A.Tolentino,supranote50at278.
75Ortigas&Company,LimitedPartnershipv.Ruiz,148SCRA326,March9,1987.
76Sps.Arcegav.CA,341Phil.166,July7,1997.
77Id.
78F.Regalado,RemedialLawCompendium,vol.I,639(7threviseded.,1999).
79445Phil.369,February14,2003.
80Id.at383384,perCarpio,J.
81RepublicActNo.8791,approvedonMay23,2000.
82J.FeriaandM.C.Noche,CivilProcedureAnnotated,Vol.II,577(2001).
83335Phil.914,February17,1997.
84Id.at931,perRegalado,J.
TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html

11/11