Selegna v. UCPB

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http://www.lawphil.net/judjuris/juri2006/may2006/gr_165662_2006.html 1/11

TodayisSunday,June28,2015

RepublicofthePhilippinesSUPREMECOURT

Manila

FIRSTDIVISION

G.R.No.165662May3,2006

SELEGNAMANAGEMENTANDDEVELOPMENTCORPORATIONandSpousesEDGARDOandZENAIDAANGELES,Petitioners,vs.UNITEDCOCONUTPLANTERSBANK,*Respondent.

DECISION

PANGANIBAN,CJ:

Awritofpreliminary injunction is issued topreventanextrajudicial foreclosure,onlyuponaclearshowingofaviolation of the mortgagors unmistakable right. Unsubstantiated allegations of denial of due process andprematurity of a loan are not sufficient to defeat the mortgagees unmistakable right to an extrajudicialforeclosure.

TheCase

Before us is aPetition forReview1 underRule 45 of theRules ofCourt, assailing theMay 4, 2004AmendedDecision2 and theOctober 12, 2004 Resolution3 of the Court of Appeals (CA) in CAGR SPNo. 70966. ThechallengedAmendedDecisiondisposedthus:

"WHEREFORE,theMotionforReconsiderationisGRANTED.TheJuly18,2003DecisionisherebyREVERSEDandSETASIDE and another one enteredGRANTING the petition andREVERSINGandSETTINGASIDE theMarch15,2002OrderoftheRegionalTrialCourt,Branch58,MakatiCityinCivilCaseNo.991061."4

TheassailedResolutiondeniedreconsideration.

TheFacts

OnSeptember19,1995,PetitionersSelegnaManagementandDevelopmentCorporationandSpousesEdgardoandZenaidaAngelesweregrantedacredit facility in theamountofP70millionbyRespondentUnitedCoconutPlantersBank(UCPB).Assecurityforthiscreditfacility,petitionersexecutedrealestatemortgagesoverseveralparcels of land located in the cities of Muntinlupa, Las Pias, Antipolo and Quezon and over severalcondominium units in Makati. Petitioners were likewise required to execute a promissory note in favor ofrespondent every time they availed of the credit facility. As required in these notes, they paid the interest inmonthlyamortizations.

ThepartiesstipulatedintheirCreditAgreementdatedSeptember19,1995,5thatfailuretopay"anyavailmentoftheaccommodationor interest,oranysumdue"shallconstituteaneventofdefault,6whichshall consequentlyallowrespondentbankto"declare[asimmediatelydueandpayable]alloutstandingavailments

oftheaccommodationtogetherwithaccruedinterestandanyothersumpayable."7

Inneedof furtherbusinesscapital,petitionersobtained fromUCPBan increase in theircredit facility.8 For thispurpose,theyexecutedaPromissoryNoteforP103,909,710.82,whichwastomatureonMarch26,1999.9Inthesamenote,theyagreedtoaninterestrateof21.75percentperannum,payablebymonthlyamortizations.

OnDecember21,1998,respondentsentpetitionersademandletter,wordedasfollows:

"Gentlemen:

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"Withreferencetoyourloanwithprincipaloutstandingbalanceof[P103,909,710.82],itappearsfromtherecordsofUnitedCoconutPlantersBankthatyoufailedtopay interestamortizationsamountingto[P14,959,525.10]onthePromissoryNoteonitsduedate,30May1998.

"xxxxxxxxx

"Accordingly,formaldemandisherebymadeuponyoutopayyouroutstandingobligationsinthetotalamountofP14,959,525.10,which includesunpaid interestandpenaltiesasof21December1998dueon thepromissorynote,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 saidobligation since May 30, 1998 as well as the penalty charges due thereon. Despite repeateddemands,yourefusedandcontinuetorefusetopaythesame.UndertheCreditAgreements/LetterAgreements youexecuted, failure to paywhendueany installmentsof the loanor interest or anysumduethereunder,isaneventofdefault.

"Consequently, we hereby inform you that our client has declared your principal obligation in theamount of [P103,909,710.82], interest and sums payable under the Credit Agreement/LetterAgreement/PromissoryNotetobeimmediatelydueandpayable.

"Accordingly,formaldemandisherebymadeuponyoutopleasepaywithinfive(5)daysfromdatehereof 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"tosettlein 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 accruedinterests.13 Apparently unsatisfied, UCPB applied for extrajudicial foreclosure of petitioners mortgagedproperties.

WhenpetitionersreceivedtheNoticeofExtraJudicialForeclosureSaleonMay18,1999,theyrequestedUCPBtogive themaperiodof sixty (60) days toupdate their accrued interest charges and to restructureor, in thealternative,tonegotiateforatakeoutoftheiraccount.14

OnMay25,1999,theBankdeniedpetitionersrequestinthesewords:

"ThisistoreplytoyourletterdatedMay20,1999,whichconfirmstherequestyoumadethepreviousdaywhenyoupaidusavisit.

"Asearlieradvised,youraccounthasbeenreferredtoexternalcounselforappropriatelegalaction.Demandhasalsobeenmadeforthefullsettlementofyouraccount.

"WeregretthattheBankisunabletograntyourrequestunlessadefiniteofferismadeforsettlement."15

In order to forestall the extrajudicial foreclosure scheduled for May 31, 1999, petitioners filed a Complaint16(docketedasCivilCaseNo.991061)for"Damages,AnnulmentofInterest,PenaltyIncreaseandAccountingwithPrayerforTemporaryRestrainingOrder/PreliminaryInjunction."AllsubsequentproceedingsinthetrialcourtandintheCAinvolvedonlytheproprietyofissuingaTROandawritofpreliminaryinjunction.

JudgeJosefinaG.Salonga,17thenexecutivejudgeoftheRegionalTrialCourt(RTC)ofMakatiCity,deniedtheUrgent ExparteMotion for Immediate Issuance of a TemporaryRestrainingOrder (TRO), filed by petitioners.JudgeSalongadeniedtheirmotiononthegroundthatnogreatorirreparableinjurywouldbeinflictedonthemifthepartieswouldfirstbeheard.18Unsatisfied,petitionersfiledanExParteMotionforReconsideration,byreasonofwhichthecasewaseventuallyraffledtoBranch148,presidedbyJudgeOscarB.Pimentel.19

Afterduehearing,JudgePimentelissuedanOrderdatedMay31,1999,grantinga20dayTROonthescheduled

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foreclosureof theAntipoloproperties,on theground that theNoticeofForeclosurehad indicatedan inexistentauctionvenue.20To resolve that issue, respondent filedaManifestation21 that itwouldwithdrawall its noticesrelative to the foreclosure of the mortgaged properties, and that it would repost or republish a new set ofnotices.Accordingly,inanOrderdatedSeptember6,1999,22JudgePimenteldeniedpetitionersapplicationforaTROforhavingbeenrenderedmootbyrespondentsManifestation.23

Subsequently,respondentfilednewapplicationsforforeclosureinthecitieswherethemortgagedpropertieswerelocated.Undaunted,petitioners filedanotherMotion for the IssuanceofaTRO/InjunctionandaSupplementaryMotionfortheIssuanceofTRO/InjunctionwithMotiontoClarifyOrderofSeptember6,1999.24

OnOctober 27, 1999, JudgePimentel issued anOrder25 granting a 20day TRO in favor of petitioners. Afterseveral hearings, he issued his November 26, 1999 Order,26 granting their prayer for a writ of preliminaryinjunctionontheforeclosures,butonlyforaperiodoftwenty(20)days.TheOrderstates:

"Admitted by defendant witness is the fact that in all the notices of foreclosure sale of the properties of theplaintiffs x x x it is stated ineachnotice that thepropertywill besoldatpublicauction tosatisfy themortgageindebtednessofplaintiffswhichasofAugust31,1999amountstoP131,854,773.98.

"xxxxxxxxx

"As the court sees it, this is the problem that should be addressed by the defendant in this case and in themeantime,thenoticeofforeclosuresaleshouldbeheldinabeyanceuntilsuchtimeasthesemattersareclarifiedandclearedbythedefendantsxxxShouldthedefendantbeabletoremedythesituationthiscourtwillhavenomorealternativebuttoallowthedefendanttoproceedtoitsintendedaction.

"xxxxxxxxx

"WHEREFORE,premisesconsidered,andfindingcompellingreasonatthispointintimetogranttheapplicationforpreliminaryinjunction,thesameisherebygranteduponpostingofapreliminaryinjunctionbondintheamountofP3,500,000.00dulyapprovedbythecourt,letawritofpreliminaryinjunctionbeissued."27

ThecorrespondingWritofPreliminaryInjunction28wasissuedonNovember29,1999.

Respondent moved for reconsideration. On the other hand, petitioners filed a Motion to Clarify Order ofNovember26,1999.Concedingthat theNovember26Orderhadgrantedan injunctionduringthependencyofthecase,respondentcontendedthattheinjunctivewritmerelyrestraineditforaperiodof20(twenty)days.

OnDecember29,2000,JudgePimentelissuedanOrder29grantingrespondentsMotionforReconsiderationandclarifyinghisNovember26,1999Orderinthismanner:

"Theremay have been an error in theWrit of Preliminary Injunction issued datedNovember 29, 1999 as thesame[appearedtobeactually]anextensionoftheTROissuedbythisCourtdated27October1999foranother20daysperiod.Plaintiffsseekstoenjoindefendantsforanindefiniteperiodpendingtrialofthecase.

"Be thatas itmay, theCourtactuallydidnothaveany intentionof restraining thedefendants from foreclosingplaintiff[s]propertyforanindefiniteperiodandduringtheentireproceedingofthecasexxx.

"xxxxxxxxx

"Whatthe[c]ourtwantedthedefendantstodowastomerelymodifythenoticeof[the]auctionsaleinorderthattheamountofP131,854,773.98xxxwouldnotappeartobethevalueofeachpropertybeingsoldonauction.xxx.30

"WHEREFORE,premisesconsideredandafterfindingmeritontheargumentsraisedbyhereindefendantstobeimpressedwithmerit,andhavingstatedintheOrderdated26November1999thatnootheralternativerecourseisavailablethantoallowthedefendantstoproceedwiththeirintendedaction,theCourtherebyrules:

"1.]Togiveduecoursetodefendant[]smotionforreconsideration,asthesameisherebyGRANTED,however,withreservationthatthisOrdershalltakeeffectuponafterits[]finality[.]"31

Consequently, respondent proceeded with the foreclosure sale of some of the mortgaged properties. On theotherhand,petitionersfiledan"[O]mnibus[M]otion[forReconsideration]andto[S]pecifythe[A]pplicationoftheP92 [M]illion [R]ealized from the [F]oreclosure [S]ale x x x."32 Before this OmnibusMotion could be resolved,JudgePimentelinhibitedhimselffromhearingthecase.33

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ThecasewasthenreraffledtoBranch58oftheRTCofMakatiCity,presidedbyJudgeEscolasticoU.Cruz.34Theproceedingsbeforehimwere,however,allnullifiedby theSupremeCourt in itsEnBancResolutiondatedSeptember18,2001.35Hewaseventuallydismissedfromservice.36

The casewas reraffled to the pairing judge of Branch 58,WinloveM.Dumayas.OnMarch 15, 2002, JudgeDumayas granted petitioners Omnibus Motion for Reconsideration and Specification of the ForeclosureProceeds,asfollows:

"WHEREFORE,premisesconsidered, theMotion toReconsider theOrderdatedDecember29,2000 isherebygrantedandtheOrderofNovember26,1999grantingthepreliminaryinjunctionisreinstatedsubjecthowevertotheconditionthatallpropertiesofplaintiffswhichwereextrajudiciallyforeclosedthoughpublicbiddingaresubjecttoanaccounting. [A]nd for thispurposedefendantbank isherebygiven fifteen(15)days fromnoticehereof torenderanaccountingontheproceedsrealizedfromtheforeclosureofplaintiffsmortgagedpropertieslocatedinAntipolo,Makati,MuntinlupaandLasPias."37

TheaggrievedrespondentfiledbeforetheCourtofAppealsaPetitionforCertiorari,seekingthenullificationoftheRTCOrderdatedMarch15,2002,onthegroundthatitwasissuedwithgraveabuseofdiscretion.38

TheSpecialFifteenthDivision,speakingthroughJusticeRebeccadeGuiaSalvador,affirmedtherulingofJudgeDumayas.Itheld thatpetitionershadaclear right toan injunction,basedon the fact that respondenthadkepttheminthedarkastohowandwhytheirprincipalobligationhadballoonedtoalmostP132million.TheCAheldthatrespondentsrefusal togivethemadetailedaccountinghadpreventedthedeterminationof thematurityoftheobligationandprecludedthepossibilityofaforeclosureofthemortgagedproperties.Moreover,theirpaymentofP10millionhadtheeffectofupdating,andtherebyavertingthematurityof,theoutstandingobligation.39

Respondent filedaMotion forReconsideration,whichwasgrantedbyaSpecialDivisionofFiveof theFormerSpecialFifteenthDivision.

RulingoftheCourtofAppeals

CitingChinaBankingCorporationv.CourtofAppeals,40theappellatecourtheldinitsAmendedDecision41thatthe foreclosure proceedings should not be enjoined in the light of the clear failure of petitioners tomeet theirobligationsuponmaturity.42

Also citing Zulueta v. Reyes,43 the CA, through Justice Jose CatralMendoza, went on to say that a pendingquestiononaccountingdidnotwarrantaninjunctionontheforeclosure.

Parenthetically, the CA added that petitioners were not without recourse or protection. Further, it noted theirpending action for annulment of interest, damages and accounting. It likewise said that they could protectthemselvesbycausingtheannotationoflispendensonthetitlesofthemortgagedorforeclosedproperties.

In his Separate ConcurringOpinion,44 JusticeMagdangalM. de Leon added that a prior accounting was notessentialtoextrajudicialforeclosure.HecitedAbacaCorporationv.Garcia,45whichhadruledthatActNo.3135didnotrequiremortgagedpropertiestobesoldbylotorbyonlyasmuchaswouldcoverjusttheobligation.Thus,heconcludedthatarequestforaccountingforthepurposeofdeterminingwhethertheproceedsoftheauctionwouldsufficetocovertheindebtednesswouldnotjustifyaninjunctionontheforeclosure.

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 invokingjurisprudencenotapplicableandcompletelyidenticalwiththeinstantcase.

"III

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"WhetherornottheHonorableCourtofAppealsfailedtoestablishitsfindingthatRTCJudgeWinloveDumayashasactedwithgraveabuseofdiscretion."48

The resolutionof thiscasehingeson two issues:1)whetherpetitionersare indefaultand2)whether there isbasis for preliminarily enjoining the extrajudicial foreclosure. The other issues raised will be dealt with in theresolutionofthesetwomainquestions.

TheCourtsRuling

ThePetitionhasnomerit.

FirstIssue:

Default

The resolution of the present controversy necessarily begins with a determination of respondents right toforeclosethemortgagedpropertiesextrajudicially.

It is a settled rule of law that foreclosure is proper when the debtors are in default of the payment of theirobligation.Infact,thepartiesstipulatedintheircreditagreements,mortgagecontractsandpromissorynotesthatrespondentwasauthorizedtoforecloseonthemortgages,incaseofadefaultbypetitioners.Thatthisauthoritywasgrantedisnotdisputed.

Morasolvendi,ordebtorsdefault,isdefinedasadelay49inthefulfillmentofanobligation,byreasonofacauseimputable to thedebtor.50 There are three requisites necessary for a finding of default. First, the obligation isdemandableandliquidatedsecond,thedebtordelaysperformancethird,thecreditorjudiciallyorextrajudiciallyrequiresthedebtorsperformance.51

MortgagorsDefaultofMonthlyInterestAmortizations

Inthepresentcase,thePromissoryNoteexecutedonMarch29,1998,expresslystatesthatpetitionershadanobligationtopaymonthly interestontheprincipalobligation.Fromrespondentsdemandletter,52 it isclearandundisputedbypetitionersthattheyfailedtomeetthosemonthlypaymentssinceMay30,1998.Theirnonpaymentisdefinedasan"eventofdefault"inthepartiesCreditAgreement,whichwequote:

"Section8.01.EventsofDefault.EachofthefollowingeventsandoccurrencesshallconstituteanEventofDefaultofthisAGREEMENT:

"1.TheCLIENTshall fail topay,whendue,anyavailmentof theAccommodationor interest,oranyothersumduethereunderinaccordancewiththetermsthereof1 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 withaccruedinterestandanyothersumpayablehereundertobeimmediatelydueandpayablewithoutpresentment,demandornoticeofanykind,otherthanthenoticespecificallyrequiredbythisSection,allofwhichareexpresslywaivedbytheCLIENT[.]"53

Consideringthatthecontractisthelawbetweentheparties,54respondentisjustifiedininvokingtheaccelerationclausedeclaringtheentireobligationimmediatelydueandpayable.55ThatclauseobligedpetitionerstopaytheentireloanonJanuary29,1999,thedatefixedbyrespondent.56

PetitionersfailuretopayonthatdatesetintoeffectArticleIXoftheRealEstateMortgage,57wordedthus:

"If,atanytime,aneventofdefaultasdefinedinthecreditagreements,promissorynotesandotherrelatedloandocumentsreferredtoinparagraph5ofARTICLEIhereof(sic),ortheMORTGAGORand/orDEBTORshallfailorrefusetopaytheSECUREDOBLIGATIONS,oranyoftheamortizationofsuchindebtednesswhendue,ortocomply any (sic) of the conditions and stipulations herein agreed, x x x then all the obligations of theMORTGAGOR 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 inaccordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended, andPresidentialDecreeNo.385.Forthepurposeofextrajudicialforeclosure,theMORTGAGORherebyappointstheMORTGAGEEhis/her/itsattorneyinfacttosellthepropertymortgagedunderActNo.3135,asamended,tosignall documents and perform any act requisite and necessary to accomplish said purpose and to appoint its

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substitutesassuchattorneyinfactwiththesamepowersasabovespecified.xxx[.]"58

TheforegoingdiscussionsatisfactorilyshowsthatUCPBhadeveryrighttoapplyforextrajudicial foreclosureonthebasisofpetitionersundisputedandcontinuingdefault.

PetitionersDebtConsideredLiquidatedDespitetheAlleged

LackofAccounting

Petitionersdonotevenattempttodenytheaforementionedmatters.Theyassert,though,thattheyhavearighttoadetailedaccountingbefore theycanbedeclared indefault.As regards the three requisitesofdefault, theysay that the first requisite liquidated debt is absent. Continuing with foreclosure on the basis of anunliquidatedobligationallegedlyviolatestheirrighttodueprocess.TheyalsomaintainthattheirpartialpaymentofP10millionavertedthematurityoftheirobligation.59

On the other hand, respondent asserts that questions regarding the running balance of the obligation ofpetitionersarenot valid reasons for restraining the foreclosure.Nevertheless, itmaintains that it has furnishedthemadetailedmonthlystatementofaccount.

Adebtisliquidatedwhentheamountisknownorisdeterminablebyinspectionofthetermsandconditionsoftherelevant promissory notes and related documentation.60 Failure to furnish a debtor a detailed statement ofaccountdoesnotipsofactoresultinanunliquidatedobligation.

PetitionersexecutedaPromissoryNote, inwhichtheystatedthattheirprincipalobligationwasintheamountofP103,909,710.82, subject to an interest rate of 21.75 percent per annum.61 Pursuant to the parties CreditAgreement,petitionerslikewiseknowthatanydelayinthepaymentoftheprincipalobligationwillsubjectthemtoapenaltychargeofonepercentpermonth,computedfromtheduedateuntiltheobligationispaidinfull.62

It is in fact clear from the agreement of the parties thatwhen the payment is accelerated due to an event ofdefault, thepenalty chargeshall bebasedon the totalprincipalamountoutstanding, tobecomputed from thedateofaccelerationuntiltheobligationispaidinfull.63TheirCreditAgreementevenprovidesfortheapplicationofpayments.64Itappearsfromtheagreementsthattheamountoftotalobligationisknownor,attheveryleast,determinable.

Moreover,whentheymadetheirpartialpayment,petitionersdidnotquestiontheprincipal, interestorpenaltiesdemanded from them. They only sought additional time to update their interest payments or to negotiate apossiblerestructuringoftheiraccount.65Hence,thereisnobasisfortheirallegationthatastatementofaccountwasnecessaryforthemtoknowtheirobligation.Wecannotimpairrespondentsrighttoforeclosethepropertiesonthebasisoftheirunsubstantiatedallegationofaviolationofdueprocess.

InSpousesEstares v.CA,66 we did not find any justification to grant a preliminary injunction, even when themortgagors were disputing the amount being sought from them. We held in that case that "[u]pon thenonpaymentof the loan,whichwassecuredby themortgage, themortgagedproperty isproperly subject toaforeclosuresale."67

ComparedwithEstares,thedenialof injunctiverelief inthiscaseisevenmoreimperative,becausethepresentpetitionersdonotevenassail theamountsdue from them.Neitherdo theycontend thatadetailedaccountingwouldshowthattheyarenotindefault.ApendingquestionregardingthedueamountwasnotasufficientreasontoenjointheforeclosureinEstares.Hence,withmorereasonshouldinjunctionbedeniedintheinstantcase,inwhichthereisnodisputeastotheoutstandingobligationofpetitioners.

At any rate,whether respondent furnished themadetailed statement of account is a questionof fact that thisCourtneednotandwillnotresolveinthisinstance.AsheldinZuluetav.Reyes,68inwhichtherewasnogenuinecontroversyastotheamountsdueanddemandable,theforeclosureshouldnotberestrainedbytheunnecessaryquestionofaccounting.

MaturityoftheLoanNotAvertedbyPartialCompliancewithRespondentsDemand

Petitionersallege that theirpartialpaymentofP10milliononMarch25,1999,had theeffectof forestalling thematurityoftheloan69hencetheforeclosureproceedingsarepremature.70Wedisagree.

Tobesure, theirpartialpaymentdidnotextinguishtheobligation.TheCivilCodestates thatadebt isnotpaid"unless the thingxxx inwhich theobligationconsistshasbeencompletelydeliveredxxx."71Besides, a latepartialpaymentcouldnothavepossiblyforestalledalongexpiredmaturitydate.

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Theonlypossiblelegalrelevanceofthepartialpaymentwastoevidencethemortgageesamenabilitytograntingthemortgagoragraceperiod.Becausethepartialpaymentwouldconstituteawaiverofthemortgageesvestedright to foreclose, the grant of a grace period cannot be casually assumed72 the banks agreement must beclearlyshown.Withoutadoubt,noexpressagreementwasenteredintobytheparties.Petitionersonlyassumedthat their partial paymenthadsatisfied respondentsdemandandobtained for themmore time toupdate theiraccount.73

Petitioners are mistaken. When creditors receive partial payment, they are not ipso facto deemed to haveabandonedtheirpriordemandforfullpayment.Article1235oftheCivilCodeprovides:

"When theobligeeaccepts theperformance,knowing its incompletenessor irregularity,andwithoutexpressinganyprotestorobjection,theobligationisdeemedfullycompliedwith."

Thus,toimplythatcreditorsacceptpartialpaymentascompleteperformanceoftheirobligation,theiracceptancemust bemade under circumstances that indicate their intention to consider the performance complete and torenouncetheirclaimarisingfromthedefect.74

There are no circumstances that would indicate a renunciation of the right of respondent to foreclose themortgagedpropertiesextrajudicially,onthebasisofpetitionerscontinuingdefault.Onthecontrary,itasserteditsright by filing an application for extrajudicial foreclosure after receiving the partial payment. Clearly, it did notintendtogivepetitionersmoretimetomeettheirobligation.

Parenthetically,respondentcannotbereprovedforacceptingtheirpartialpayment.WhileArticle1248oftheCivilCode states that creditors cannot be compelled to accept partial payments, it does not prohibit them fromacceptingsuchpayments.

SecondIssue:

EnjoiningtheExtrajudicialForeclosure

Awrit of preliminary injunction is a provisional remedy thatmay be resorted to by litigants, only to protect orpreservetheirrightsorinterestsduringthependencyoftheprincipalaction.Toauthorizeatemporaryinjunction,theplaintiffmustshow,atleastprimafacie,arighttothefinalrelief.75Moreover,itmustshowthattheinvasionoftherightsoughttobeprotectedismaterialandsubstantial,andthatthereisanurgentandparamountnecessityforthewrittopreventseriousdamage.76

In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion.Injunction isnotdesigned toprotectcontingentor future rights. It isnotproperwhen thecomplainants right isdoubtfulordisputed.77

Asageneralrule,courtsshouldavoidissuingthiswrit,whichineffectdisposesofthemaincasewithouttrial.78InManilaInternationalAirportAuthorityv.CA,79weurgedcourtstoexercisecautioninissuingthewrit,asfollows:

"xxx.Weremindtrialcourtsthatwhilegenerallythegrantofawritofpreliminaryinjunctionrestsonthesounddiscretionofthecourttakingcognizanceofthecase,extremecautionmustbeobservedintheexerciseofsuchdiscretion.Thediscretionofthecourtaquotograntaninjunctivewritmustbeexercisedbasedonthegroundsandinthemannerprovidedbylaw.Thus,theCourtdeclaredinGarciav.Burgos:

Ithasbeenconsistentlyheldthatthereisnopowertheexerciseofwhichismoredelicate,whichrequiresgreatercaution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of aninjunction. It is the strong armof equity that should never be extended unless to cases of great injury,wherecourtsoflawcannotaffordanadequateorcommensurateremedyindamages.

Everycourtshouldrememberthataninjunctionisalimitationuponthefreedomofactionofthedefendantandshouldnotbegrantedlightlyorprecipitately.Itshouldbegrantedonlywhenthecourtisfullysatisfiedthatthelawpermitsitandtheemergencydemandsit."80(Citationsomitted)

Petitionersdonothaveanyclearrighttobeprotected.Asshowninourearlierfindings,theyfailedtosubstantiatetheirallegationsthattheirrighttodueprocesshadbeenviolatedandthematurityoftheirobligationforestalled.Sincetheyindisputablyfailedtomeettheirobligationsinspiteofrepeateddemands,weholdthatthereisnolegaljustificationtoenjoinrespondentfromenforcingitsundeniablerighttoforeclosethemortgagedproperties.

In any case, petitionerswill not bedeprivedoutrightly of their property.Pursuant toSection47of theGeneralBankingLawof2000,81mortgagorswho have judicially or extrajudicially sold their real property for the full orpartialpaymentoftheirobligationhavetherighttoredeemthepropertywithinoneyearafterthesale.Theycanredeemtheirrealestatebypayingtheamountdue,withinterestratespecified,underthemortgagedeedaswell

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asallthecostsandexpensesincurredbythebank.82

Moreover, inextrajudicial foreclosures,petitionershavetherighttoreceiveanysurplusinthesellingprice.Thisright was recognized in Sulit v. CA,83 in which the Court held that "if themortgagee is retainingmore of theproceedsofthesalethanheisentitledto,thisfactalonewillnotaffectthevalidityofthesalebutsimplygivesthemortgagoracauseofactiontorecoversuchsurplus."84

Petitionersfailedtodemonstratetheprejudicetheywouldprobablysufferbyreasonoftheforeclosure.Also,it isclear that they would be adequately protected by law. Hence, we find no legal basis to reverse the assailedAmendedDecisionoftheCAdatedMay4,2004.

WHEREFORE, the Petition is DENIED and the assailed Amended Decision and Resolution AFFIRMED. Costsagainstpetitioners.

SOORDERED.

ARTEMIOV.PANGANIBANChiefJusticeChairman,FirstDivision

WECONCUR:

CONSUELOYNARESSANTIAGOAssociateJustice

MA.ALICIAAUSTRIAMARTINEZAsscociateJustice

ROMEOJ.CALLEJO,SR.AssociateJustice

MINITAV.CHICONAZARIOAsscociateJustice

CERTIFICATION

Pursuant toSection13,ArticleVIIIof theConstitution, Icertify that theconclusions in theaboveDecisionwerereachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

ARTEMIOV.PANGANIBANChiefJustice

Footnotes

* TheCourt ofAppeals is impleadedas respondent in thePetition forReview, but is presently excludedpursuanttoSec.4(a)ofRule45oftheRulesofCourt.

1Rollo,pp.833.

2Id.at3551.FormerSpecialFifteenthDivision(SpecialDivisionofFive).PennedbyJusticeJoseCatralMendoza,withtheconcurrenceofJusticesMarinaL.Buzon(Divisionchairperson)andFernandaL.Peralta(member). Justice Magdangal M. de Leon (member) concurred in a Separate Opinion, while JusticeRebeccadeGuiaSalvador(member)dissented.

3Id.at5354.

4AssailedAmendedCADecision,p.7rollo,p.41.

5Rollo,pp.263268.

6Id.at266.

7Id.at267.

8AmendmentofMortgagedatedDecember19,1996id.at285.

9PromissoryNoteexecutedonMarch29,1998id.at290.

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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.


33Id.at12id.at67.

34Id.

35Dr.Aldayv.JudgeCruz,Jr.,426Phil.385,February4,2002.

36Id.


38Id.at14id.at69.

39Id.at17id.at72.

40333Phil.158,December5,1996.

41JusticedeGuiaSalvadordissentedandstoodbyheroriginalruling.

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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 ofrespondentsMemorandum, signed byAttys.Hector L.Hofilea andMiguelitoV.Ocampo ofOcampo&Ocampo.PetitionersMemorandum,signedbyAtty.AlexM.GanitanoofLopez&Rempillo,wasreceivedbythisCourtonOctober17,2005.

48PetitionersMemorandum,p.16rollo,p.204.Originalinuppercase.

49CivilCode,Art.1169.Thoseobligedtodeliverortodosomethingincurdelayfromthetimetheobligeejudiciallyorextrajudiciallydemandsfromthemthefulfillmentoftheirobligation.

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.

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72 Pacific Mills, Inc., v. CA, supra note 60 Andres v. Crown Life Insurance Company, 102 Phil. 919,January28,1958.

73PetitionerSelegnasMay20,1999 letter toUCPBexpresses itsassumption:"Sincewedidnotreceiveanyotheradvicefromyou,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.

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Selegna v. UCPB