G.R. No. 179665. April 3, 2013.
A writ of preliminary injunction is an extraordinary event which must be granted only in the face of actual and existing substantial rights. A writ of preliminary injunction is issued to preserve the status quo ante, upon the applicant’s showing of two important requisite conditions, namely: (1) the right to be protected exists prima facie, and (2) the acts sought to be enjoined are violative of that right. It must be proven that the violation sought to be prevented would cause an irreparable injury.
China Banking granted several loans to Solid Builders, Inc. (SBI), which amounted to P139,999,234.34, exclusive of interests and other charges. To secure the loans, Medina Foods Industries, Inc. (MFII) executed in CBC’s favor several surety agreements and contracts of real estate mortgage over parcels of land.
SBI and MFII have made various requests to CBC for restructuring of the loan, reduction of interests and penalties. In response, CBC explained that the increase in the interest were voluntarily and willingly signed by the parties.
Claiming that the interests, penalties and charges imposed by CBC were iniquitous and unconscionable and to enjoin CBC from initiating foreclosure proceedings, SBI and MFII filed a Complaint “To Compel Execution of Contract and for Performance and Damages, With Prayer for Writ of Preliminary Injunction and Ex-Parte Temporary Restraining Order”
The RTC granted the application of SBI and MFII for the issuance of a writ of preliminary injunction. The trial court held that SBI and MFII were able to sufficiently comply with the requisites for the issuance of an injunctive writ.
The CA ruled that the issuance of a writ of preliminary injunction had no basis and the trial court simply relied on the imposition by CBC of the interest rates to the loans obtained by SBI and MFII.
Whether or not plaintiffs have the right to ask for an injunctive writ in order to prevent defendant bank from taking over their properties.
NO. First, there is NO clear right that warrants the extraordinary protection of an injunctive writ has been shown by SBI and MFII to exist in their favor, the first requirement for the grant of a preliminary injunction has not been satisfied.
SBI and MFII do not have a right to prevent the creditor-mortgagee CBC from foreclosing on the mortgaged properties simply on the basis of alleged “usurious, exorbitant and confiscatory rate of interest.” In a usurious loan with mortgage, the right to foreclose the mortgage subsists, and this right can be exercised by the creditor upon failure by the debtor to pay the debt due.
In addition, the default of SBI and MFII to pay the mortgage indebtedness disqualifies them from availing of the equitable relief that is the injunctive writ. SBI’s default or failure to settle its obligation is a breach of contractual obligation which tainted its hands and disqualified it from availing of the equitable remedy of preliminary injunction. As SBI is not entitled to the issuance of a writ of preliminary injunction, so is MFII. The accessory follows the principal. The accessory obligation of MFII as accommodation mortgagor and surety is tied to SBI’s principal obligation to CBC and arises only in the event of SBI’s default. Thus, MFII’s interest in the issuance of the writ of preliminary injunction is necessarily prejudiced by SBI’s wrongful conduct and breach of contract.
Neither has there been a showing of irreparable injury. An injury is considered irreparable if it is of such constant and frequent recurrence that no fair or reasonable redress can be had therefor in a court of law, or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation. The provisional remedy of preliminary injunction may only be resorted to when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard of compensation.