Selegna Management v. United Coconut Planters Bank
REITERATIONFacts
The Antecedents: Petitioners Selegna Management and Development Corporation and Spouses Edgardo and Zenaida Angeles obtained a credit facility of P70 million from Respondent United Coconut Planters Bank (UCPB), secured by real estate mortgages. They executed promissory notes with monthly interest payments. The Credit Agreement stipulated that failure to pay any availment or interest would constitute an event of default, allowing the bank to declare all outstanding availments immediately due and payable. Petitioners obtained an increase in their credit facility, executing a Promissory Note for P103,909,710.82 maturing on March 26, 1999, with a 21.75 percent annual interest rate payable monthly. On December 21, 1998, UCPB sent a demand letter for unpaid interest amounting to P14,959,525.10. On January 25, 1999, UCPB declared the principal obligation of P103,909,710.82, plus interest and charges, immediately due and payable, demanding payment within five days. A subsequent demand letter was sent on March 4, 1999. Petitioners made a partial payment of P10,199,473.96. UCPB then applied for extrajudicial foreclosure. Upon receiving the Notice of Extra Judicial Foreclosure Sale on May 18, 1999, petitioners requested a 60-day period to update accrued interest or restructure the account, which UCPB denied on May 25, 1999. Procedural History: To forestall the foreclosure, petitioners filed a Complaint for Damages, Annulment of Interest, Penalty Increase and Accounting with Prayer for TRO/Preliminary Injunction. The RTC, through different judges, issued various orders regarding the TRO and preliminary injunction. Initially, the Urgent Ex-parte Motion for TRO was denied. A 20-day TRO was granted due to an inexistent auction venue, which was later mooted by UCPB's withdrawal of notices. Subsequently, a 20-day TRO was granted, followed by a preliminary injunction for 20 days, based on issues with the foreclosure sale notices. UCPB moved for reconsideration, arguing the injunction was only for 20 days. The RTC, in an Order dated December 29, 2000, clarified that the intention was not to restrain foreclosure indefinitely but to modify the notice of sale. Consequently, UCPB proceeded with the foreclosure of some properties. The case was re-raffled, and the RTC, on March 15, 2002, granted petitioners' motion for reconsideration, reinstating the preliminary injunction subject to an accounting of foreclosure proceeds. UCPB filed a Petition for Certiorari with the Court of Appeals (CA), alleging grave abuse of discretion. The CA initially affirmed the RTC but, upon reconsideration, reversed its decision, holding that foreclosure should not be enjoined due to petitioners' failure to meet obligations and that a pending accounting question did not warrant an injunction. The CA denied petitioners' motion for reconsideration, leading to the present petition. The Petition: Petitioners seek to reverse the CA's Amended Decision and Resolution, arguing denial of due process, inapplicable jurisprudence cited by the CA, and grave abuse of discretion by the RTC judge.
Issue(s)
Whether the Court of Appeals denied the petitioners of due process. Whether the Court of Appeals supported its Amended Decision by invoking jurisprudence not applicable and completely identical with the instant case; and whether petitioners were in default of their obligations. Whether the Court of Appeals failed to establish its finding that RTC Judge Winlove Dumayas has acted with grave abuse of discretion; and whether the maturity of the loan was averted by partial compliance. Whether there is a basis for preliminarily enjoining the extrajudicial foreclosure; and whether the debt was liquidated.
Ruling
The Petition is DENIED. The assailed Amended Decision and Resolution of the Court of Appeals are AFFIRMED.
Ratio Decidendi
On the issue of liquidated debt and due process: The Court ruled that the debt was liquidated. A debt is considered liquidated when the amount is known or determinable from the terms of the promissory notes and related documentation. Petitioners executed a Promissory Note stating the principal obligation and the interest rate. The Credit Agreement also specified penalty charges for delayed payments and the application of payments. Therefore, the amount of the total obligation was known or determinable. The Court rejected the argument that a detailed statement of account was necessary for petitioners to know their obligation, noting that they did not question the principal, interest, or penalties when making a partial payment. The allegation of a violation of due process due to an unliquidated obligation was unsubstantiated and insufficient to impair the respondent's right to foreclose. On the issue of default: The Court held that petitioners were in default. The Promissory Note explicitly stated their obligation to pay monthly interest. Petitioners failed to meet these monthly payments since May 30, 1998, which constituted an "event of default" as defined in the Credit Agreement. This agreement allowed the bank to declare all outstanding availments, including accrued interest and other sums payable, immediately due and payable upon written notice. The Court found that UCPB was justified in invoking the acceleration clause due to petitioners' undisputed and continuing default. The subsequent execution of the Real Estate Mortgage further empowered the mortgagee to foreclose judicially or extrajudicially upon such default. On the issue of maturity of the loan not being averted by partial compliance: The Court disagreed with petitioners' assertion that their partial payment of P10 million averted the loan's maturity. It stated that a debt is not paid unless the thing in which the obligation consists has been completely delivered. A late partial payment could not forestall a long-expired maturity date. The Court clarified that receiving partial payment does not automatically mean the creditor has abandoned their prior demand for full payment, especially when there are no circumstances indicating an intention to consider the performance complete and to renounce the claim arising from the default. The bank's subsequent application for extrajudicial foreclosure demonstrated its intent to enforce its right, not to grant more time. On the issue of enjoining the extrajudicial foreclosure: The Court reiterated that a writ of preliminary injunction is a provisional remedy to protect or preserve rights, requiring at least a prima facie showing of a right to final relief and an urgent necessity to prevent serious damage. In the absence of a clear legal right, issuing an injunction constitutes grave abuse of discretion. The Court found that petitioners failed to substantiate their allegations of due process violations and that their obligation was not yet due. Since they indisputably failed to meet their obligations despite demands, there was no legal justification to enjoin respondent from enforcing its right to foreclose. The Court also noted that petitioners would not be outrightly deprived of their property, as they have the right to redeem the property within one year after the sale and to receive any surplus in the selling price.
Main Doctrine
A writ of preliminary injunction to prevent an extrajudicial foreclosure will only be issued upon a clear showing of a violation of the mortgagor's unmistakable right. Unsubstantiated allegations of denial of due process and prematurity of a loan are insufficient to defeat the mortgagee's right to extrajudicial foreclosure.