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Republic of the Philippines SUPREME COURT Manila !RST D!"!S!#$ G.R. No. 153852 October 24, 2012

SPOUSES HUMBERTO P. DELOSS NTOS ND C RMENC!T M. DELOS S NTOS, Petitioners, %s& METROPOL!T N B N" ND TRUST COMP N#, Respondent& D'(!S!#$ BERS M!N, J.: ) *rit of preliminary in+unction to en+oin an impendin, e-tra+udicial foreclosure sale is issued only upon a clear sho*in, of a %iolation of the mort,a,or.s unmista/able ri,ht& 1 This appeal is ta/en by the petitioners to re%ie* and re%erse the decision promul,ated on ebruary 10, 2002, 2*hereby the (ourt of )ppeals 1()2 dismissed their petition for certiorari that assailed the denial by the Re,ional Trial (ourt in Da%ao (ity 1RT(2 of their application for the issuance of a *rit of preliminary in+unction to pre%ent the e-tra+udicial foreclosure sale of their mort,a,ed asset initiated by their mort,a,ee, respondent Metropolitan 3an/ and Trust (ompany 1Metroban/2& )ntecedents rom December 0, 1004 until March 20, 1005, the petitioners too/ out se%eral loans totalin, P12,000,000&00 from Metroban/, Da%ao (ity 3ranch, the proceeds of *hich they *ould use in constructin, a hotel on their 3067s8uare7meter parcel of land located in Da%ao (ity and co%ered by Transfer (ertificate of Title $o& !7215070 of the Re,istry of Deeds of Da%ao (ity& They e-ecuted %arious promissory notes co%erin, the loans, and constituted a mort,a,e o%er their parcel of land to secure the performance of their obli,ation& The stipulated interest rates *ere 16&769 per annum for the lon, term loans 1maturin, on December 0, 20042 and 22&20:9 per annum for a short term loan of P:,:00,000&00 1maturin, on March 12, 10002& 3 The interest rates *ere fi-ed for the first year, sub+ect to escalation or de7escalation in certain e%ents *ithout ad%ance notice to them& The loan a,reements further stipulated that the entire amount of the loans *ould become due and demandable upon default in the payment of any installment, interest or other char,es&: #n December 27, 1000, Metroban/ sou,ht the e-tra+udicial foreclosure of the real estate mort,a,e 6 after the petitioners defaulted in their installment payments& The petitioners *ere notified of the foreclosure and of the forced sale bein, scheduled on March 7, 2000& The notice of the sale stated that the total amount of the obli,ation *as P14,:1:,501&34 as of #ctober 24, 1000& 4 #n )pril :, 2000, prior to the scheduled foreclosure sale 1i&e&, the ori,inal date of March 7, 2000 ha%in, been mean*hile reset to )pril 4, 20002, the petitioners filed in the RT( a complaint 1later amended2 for dama,es, fi-in, of interest rate, and application of e-cess payments 1*ith prayer for a *rit of preliminary in+unction2& They alle,ed therein that Metroban/ had no ri,ht to foreclose the mort,a,e because they *ere not in default of their obli,ations; that Metroban/ had imposed interest rates 1i&e&, 16&769 per

annum for t*o lon,7term loans and 22&20:9 per annum for the short term loan2 on three of their loans that *ere different from the rate of 1:&769 per annum a,reed upon; that Metroban/ had increased the interest rates on some of their loans *ithout any basis by in%o/in, the escalation clause *ritten in the loan a,reement; that they had paid P2,641,667&57 instead of only P1,502,547&00 based on the stipulated interest rates, resultin, in their e-cess payment of P765,400&57 as interest, *hich should then be applied to their accrued obli,ation; that they had re8uested the reduction of the escalated interest rates on se%eral occasions because of its dama,in, effect on their hotel business, but Metroban/ had denied their re8uest; and that they *ere not yet in default because the lon,7term loans *ould become due and demandable on December 0, 2004 yet and they had been payin, interest on the short7term loan in ad%ance& The complaint prayed that a *rit of preliminary in+unction to en+oin the scheduled foreclosure sale be issued& They further prayed for a +ud,ment ma/in, the in+unction permanent, and directin, Metroban/, namely< 1a2 to apply the e-cess payment of P765,400&57 to the accrued interest; 1b2 to pay P160,000&00 for the losses suffered in their hotel business; 1c2 to fi- the interest rates of the loans; and 1d2 to pay moral and e-emplary dama,es plus attorney=s fees& 7 !n its ans*er, Metroban/ stated that the increase in the interest rates had been made pursuant to the escalation clause stipulated in the loan a,reements; and that not all of the payments by the petitioners had been applied to the loans co%ered by the real estate mort,a,e, because some had been applied to another loan of theirs amountin, to P600,000&00 that had not been secured by the mort,a,e& !n the meantime, the RT( issued a temporary restrainin, order to en+oin the foreclosure sale& 5 )fter hearin, on notice, the RT( issued its order dated May 2, 2000, 0 ,rantin, the petitioners= application for a *rit of preliminary in+unction& Metroban/ mo%ed for reconsideration&10 The petitioners did not file any opposition to Metroban/=s motion for reconsideration; also, they did not attend the scheduled hearin, of the motion for reconsideration& #n May 10, 2000, the RT( ,ranted Metroban/=s motion for reconsideration, holdin, in part, 11 as follo*s< --- !n the motion at bench as *ell as at the hearin, this mornin, defendant Metro 3an/ pointed out that in all the promissory notes e-ecuted by the plaintiffs there is type*ritten inside a bo- immediately follo*in, the first para,raph the follo*in,< >)t the effecti%e rate of 16&769 for the first year sub+ect to up*ard?do*n*ard ad+ustments for the ne-t year thereafter&> Moreo%er, in the form of the same promissory notes, there is the additional stipulation *hich reads< >The rate of interest and?or ban/ char,es herein7stipulated, durin, the term of this Promissory $ote, its e-tension, rene*als or other modifications, may be increased, decreased, or other*ise chan,ed from time to time by the ban/ *ithout ad%ance notice to me?us in the e%ent of chan,es in the interest rates prescribed by la* of the Monetary 3oard of the (entral 3an/ of the Philippines, in the rediscount rate of member ban/s *ith the (entral 3an/ of the Philippines, in the interest rates on sa%in,s and time deposits, in the interest rates on the 3an/=s borro*in,s, in the reser%e re8uirements, or in the o%erall costs of fundin, or money;> There bein, no opposition to the motion despite receipt of a copy thereof by the plaintiffs throu,h counsel and findin, merit to the motion for reconsideration, this (ourt resol%es to reconsider and set aside the #rder of this (ourt dated May 2, 2000& ---S# #RD'R'D& The petitioners sou,ht the reconsideration of the order, for *hich the RT( re8uired the parties to submit their respecti%e memoranda& !n their memorandum, the petitioners insisted that they had an e-cess payment sufficient to co%er the amounts due

on the principal& $onetheless, on @une 5, 2001, the RT( denied the petitioners= motion for reconsideration, 12 to *it< The record does not sho* that plaintiffs ha%e updated their installment payments by depositin, the same *ith this (ourt, *ith the interest thereon at the rate they contend to be the true and correct rate a,reed upon by the parties& Aence, e%en if their contention *ith respect to the rates of interest is true and correct, they are in default +ust the same in the payment of their principal obli,ation& BA'R' #R', the M#T!#$ #R R'(#$S!D'R)T!#$ is denied& Rulin, of the () ),,rie%ed, the petitioners commenced a special ci%il action for certiorari in the (), ascribin, ,ra%e abuse of discretion to the RT( *hen it issued the orders dated May 10, 2000 and @une 5, 2001& #n ebruary 10, 2002, the () rendered the assailed decision dismissin, the petition for certiorari for lac/ of merit, and affirmin, the assailed orders,13 statin,< Petitioners a%er that the respondent (ourt ,ra%ely abused its discretion in findin, that petitioners are in default in the payment of their obli,ation to the pri%ate respondent& Be disa,ree& The (ourt belo* did not e-cessi%ely e-ercise its +udicial authority not only in settin, aside the May 2, 2000 #rder, but also in denyin, petitioners= motion for reconsideration due to the faults attributable to them& Bhen pri%ate respondent Metroban/ mo%ed for the reconsideration of the #rder of May 2, 2000 *hich ,ranted the issuance of the *rit of preliminary in+unction, petitioners failed to oppose the same despite receipt of said motion for reconsideration& The public respondent (ourt said C > or resolution is the Motion for Reconsideration filed by the defendant Metropolitan 3an/ and Trust (ompany, dated May 12, 2000, a copy of *hich *as recei%ed by )tty& Philip Panto+an for the plaintiffs on May 14, 2000& There is no opposition nor appearance for the plaintiffs this mornin, at the scheduled hearin, of said motion - - ->& (orollarily, the issuance of the #rder of @une 5, 2001 *as --- based on petitioners= bein, remiss in their obli,ation to update their installment payments& The Supreme (ourt ruled in this *ise< To +ustify the issuance of the *rit of certiorari, the abuse of discretion on the part of the tribunal or officer must be ,ra%e, as *hen the po*er is e-ercised in an arbitrary or despotic manner by reason of passion or personal hostility& Petitioners li/e*ise discussed at len,th the issue of *hether or not the pri%ate respondent has collected the ri,ht interest rate on the loans they obtained from the pri%ate respondent, as *ell as the propriety of the application of escalated interest rate *hich *as applied to their loans by the latter& !n the instant petition, 8uestions of fact are not ,enerally permitted, the in8uiry bein, limited essentially to *hether the public respondent acted *ithout or in e-cess of its +urisdiction or *ith ,ra%e abuse of discretion in issuin, the 8uestioned #rders, neither is the instant petition a%ailable to correct mista/es in the +ud,e=s findin,s and

conclusions, nor to cure erroneous conclusions of la* and fact, if there be any& (ertiorari *ill issue only to correct errors of +urisdiction, not errors of procedure or mista/es in the findin,s or conclusions of the lo*er court& ) re%ie* of facts and e%idence is not the pro%ince of the e-traordinary remedy of certiorari& BA'R' #R', the petition is D'$!'D for lac/ of merit& The assailed #rders of the respondent (ourt are ) S# #RD'R'D& The petitioners mo%ed for reconsideration of the decision, but the () denied the motion for lac/ of merit on May 7, 2002& 1: Aence, this appeal& !ssues The petitioners pose the follo*in, issues, namely< 1& Bhether or not the Presidin, @ud,e in issuin, the 05 @une 2001 #rder, findin, the petitioners in default of their obli,ation *ith the 3an/, has committed ,ra%e abuse of discretion amountin, to e-cess or lac/ of +urisdiction as the same run counter a,ainst the le,al principle enunciated in the )lmeda (ase; 2& )ssumin, that the Presidin, @ud,e did not e-cessi%ely e-ercise his +udicial authority in the issuance of the assailed orders, not*ithstandin, their consistency *ith the le,al principle enunciated in the )lmeda (ase, *hether or not the petitioners can a%ail of the remedy under Rule 46, ta/in, into consideration the sense of ur,ency in%ol%ed in the resolution of the issue raised; 3& Bhether or not the Petition lod,ed before the (ourt of )ppeals presented a 8uestion of fact, and hence not *ithin the pro%ince of the e-traordinary remedy of certiorari& 16 The petitioners ar,ue that the foreclosure of their mort,a,e *as premature; that they could not yet be considered in default under the rulin, in )lmeda %& (ourt of )ppeals,14 because the trial court *as still to determine *ith certainty the e-act amount of their obli,ation to Metroban/; that they *ould li/ely pre%ail in their action because Metroban/ had altered the terms of the loan a,reement by increasin, the interest rates *ithout their prior assent; and that unless the foreclosure sale *as restrained their action *ould be rendered moot& They ur,e that despite findin, no ,ra%e abuse of discretion on the part of the RT( in denyin, their application for preliminary in+unction, the () should ha%e nonetheless issued a *rit of certiorari considerin, that they had no other plain and speedy remedy& Metroban/ counters that )lmeda %& (ourt of )ppeals *as not applicable because that rulin, presupposed the e-istence of the follo*in, conditions, to *it< 1a2 the escalation and de7escalation of the interest rate *ere sub+ect to the a,reement of the parties; 1b2 the petitioners as obli,ors must ha%e protested the hi,hly escalated interest rates prior to the application for foreclosure; 1c2 they must not be in default in their obli,ations; 1d2 they must ha%e tendered payment to Metroban/ e8ui%alent to the principal and accrued interest calculated at the ori,inally stipulated rate; and 1e2 upon refusal of Metroban/ to recei%e payment, they should ha%e consi,ned the tendered amount in court&17 !t asserts that the petitioners= loans, unli/e the obli,ation in%ol%ed in )lmeda %& (ourt of )ppeals, had already matured prior to the filin, of the case, and that they had not tendered or consi,ned in court the amount of the principal and the accrued interest at the rate they claimed to be the correct one& 15 3ased on the fore,oin,, the issues to be settled are, firstly, *hether the petitioners had a cause of action for the ,rant of the e-traordinary *rit of certiorari; and, secondly, *hether the petitioners *ere entitled to the *rit of preliminary in+unction in li,ht of !RM'D&

the rulin, in )lmeda %& (ourt of )ppeals& Rulin, The appeal has no merit& To be,in *ith, the petitioners= resort to the special ci%il action of certiorari to assail the May 10, 2000 order of the RT( 1reconsiderin, and settin, aside its order dated May 2, 2000 issuin, the temporary restrainin, order a,ainst Metroban/ to stop the foreclosure sale2 *as improper& They thereby apparently misapprehended the true nature and function of a *rit of certiorari& !t is clear to us, therefore, that the () +ustly and properly dismissed their petition for the *rit of certiorari& Be remind that the *rit of certiorari C bein, a remedy narro* in scope and infle-ible in character, *hose purpose is to /eep an inferior court *ithin the bounds of its +urisdiction, or to pre%ent an inferior court from committin, such ,ra%e abuse of discretion amountin, to e-cess of +urisdiction, or to relie%e parties from arbitrary acts of courts 1i&e&, acts that courts ha%e no po*er or authority in la* to perform2 C is not a ,eneral utility tool in the le,al *or/shop, 10and cannot be issued to correct e%ery error committed by a lo*er court& !n the common la*, from *hich the remedy of certiorari e%ol%ed, the *rit of certiorari *as issued out of (hancery, or the Din,=s 3ench, commandin, a,ents or officers of the inferior courts to return the record of a cause pendin, before them, so as to ,i%e the party more sure and speedy +ustice, for the *rit *ould enable the superior court to determine from an inspection of the record *hether the inferior court=s +ud,ment *as rendered *ithout authority& 20The errors *ere of such a nature that, if allo*ed to stand, they *ould result in a substantial in+ury to the petitioner to *hom no other remedy *as a%ailable& 21 !f the inferior court acted *ithout authority, the record *as then re%ised and corrected in matters of la*& 22 The *rit of certiorari *as limited to cases in *hich the inferior court *as said to be e-ceedin, its +urisdiction or *as not proceedin, accordin, to essential re8uirements of la* and *ould lie only to re%ie* +udicial or 8uasi7+udicial acts&23 The concept of the remedy of certiorari in our +udicial system remains much the same as it has been in the common la*& !n this +urisdiction, ho*e%er, the e-ercise of the po*er to issue the *rit of certiorari is lar,ely re,ulated by layin, do*n the instances or situations in the Rules of (ourt in *hich a superior court may issue the *rit of certiorari to an inferior court or officer& Section 1, Rule 46 of the Rules of (ourt compellin,ly pro%ides the re8uirements for that purpose, %iE< Section 1& Petition for certiorari& F Bhen any tribunal, board or officer e-ercisin, +udicial or 8uasi7+udicial functions has acted *ithout or in e-cess of its or his +urisdiction, or *ith ,ra%e abuse of discretion amountin, to lac/ or e-cess of +urisdiction, and there is no appeal, or any plain, speedy, and ade8uate remedy in the ordinary course of la*, a person a,,rie%ed thereby may file a %erified petition in the proper court, alle,in, the facts *ith certainty and prayin, that +ud,ment be rendered annullin, or modifyin, the proceedin,s of such tribunal, board or officer, and ,rantin, such incidental reliefs as la* and +ustice may re8uire& The petition shall be accompanied by a certified true copy of the +ud,ment, order or resolution sub+ect thereof, copies of all pleadin,s and documents rele%ant and pertinent thereto, and a s*orn certification of non7forum shoppin, as pro%ided in the third para,raph of section 3, Rule :4& 11a2 Pursuant to Section 1, supra, the petitioner must sho* that, one, the tribunal, board or officer e-ercisin, +udicial or 8uasi7+udicial functions acted *ithout or in e-cess of +urisdiction or *ith ,ra%e abuse of discretion amountin, to lac/ or e-cess of +urisdiction, and, t*o, there is neither an appeal nor any plain, speedy and ade8uate remedy in the ordinary course of la* for the purpose of amendin, or nullifyin, the proceedin,& (onsiderin, that the re8uisites must concurrently be attendant, the herein petitioners= stance that a *rit of certiorari should ha%e been issued e%en if the () found no sho*in, of ,ra%e abuse of discretion is absurd& The commission of ,ra%e abuse of

discretion *as a fundamental re8uisite for the *rit of certiorari to issue a,ainst the RT(& Bithout their stron, sho*in, either of the RT(=s lac/ or e-cess of +urisdiction, or of ,ra%e abuse of discretion by the RT( amountin, to lac/ or e-cess of +urisdiction, the *rit of certiorari *ould not issue for bein, bereft of le,al and factual bases& Be need to emphasiEe, too, that *ith certiorari bein, an e-traordinary remedy, they must strictly obser%e the rules laid do*n by la* for ,rantin, the relief sou,ht& 2: The sole office of the *rit of certiorari is the correction of errors of +urisdiction, *hich includes the commission of ,ra%e abuse of discretion amountin, to lac/ of +urisdiction& !n this re,ard, mere abuse of discretion is not enou,h to *arrant the issuance of the *rit& The abuse of discretion must be ,ra%e, *hich means either that the +udicial or 8uasi7+udicial po*er *as e-ercised in an arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent +ud,e, tribunal or board e%aded a positi%e duty, or %irtually refused to perform the duty en+oined or to act in contemplation of la*, such as *hen such +ud,e, tribunal or board e-ercisin, +udicial or 8uasi7+udicial po*ers acted in a capricious or *himsical manner as to be e8ui%alent to lac/ of +urisdiction& Secondly, the (ourt must find that the petitioners *ere not entitled to en+oin or pre%ent the e-tra+udicial foreclosure of their mort,a,e by Metroban/& They *ere undeniably already in default of their obli,ations the performance of *hich the mort,a,e had precisely secured& Aence, Metroban/ had the unassailable ri,ht to the foreclosure& !n contrast, their ri,ht to pre%ent the foreclosure did not e-ist& Aence, they could not be %alidly ,ranted the in+unction they sou,ht& The foreclosure of a mort,a,e is but a necessary conse8uence of the non7payment of an obli,ation secured by the mort,a,e& Bhere the parties ha%e stipulated in their a,reement, mort,a,e contract and promissory note that the mort,a,ee is authoriEed to foreclose the mort,a,e upon the mort,a,or=s default, the mort,a,ee has a clear ri,ht to the foreclosure in case of the mort,a,or=s default& Thereby, the issuance of a *rit of preliminary in+unction upon the application of the mort,a,or *ill be improper&26 Mindful that an in+unction *ould be a limitation upon the freedom of action of Metroban/, the RT( +ustifiably refused to ,rant the petitioners= application for the *rit of preliminary in+unction& Be underscore that the *rit could be ,ranted only if the RT( *as fully satisfied that the la* permitted it and the emer,ency demanded it& 24 That, needless to state, *as not true herein& !n (ity Go%ernment of 3utuan %& (onsolidated 3roadcastin, System 1(3S2, !nc&, 27 the (ourt restated the nature and concept of a *rit of preliminary in+unction in the follo*in, manner, to *it< ) preliminary in+unction is an order ,ranted at any sta,e of an action or proceedin, prior to the +ud,ment or final order re8uirin, a party or a court, an a,ency, or a person to refrain from a particular act or acts& !t may also re8uire the performance of a particular act or acts, in *hich case it is /no*n as a preliminary mandatory in+unction& Thus, a prohibitory in+unction is one that commands a party to refrain from doin, a particular act, *hile a mandatory in+unction commands the performance of some positi%e act to correct a *ron, in the past&
1wphi1

)s *ith all e8uitable remedies, in+unction must be issued only at the instance of a party *ho possesses sufficient interest in or title to the ri,ht or the property sou,ht to be protected& !t is proper only *hen the applicant appears to be entitled to the relief demanded in the complaint, *hich must a%er the e-istence of the ri,ht and the %iolation of the ri,ht, or *hose a%erments must in the minimum constitute a prima facie sho*in, of a ri,ht to the final relief sou,ht& )ccordin,ly, the conditions for the issuance of the in+uncti%e *rit are< 1a2 that the ri,ht to be protected e-ists prima facie; 1b2 that the act sou,ht to be en+oined is %iolati%e of that ri,ht; and 1c2 that there is an ur,ent and paramount necessity for the *rit to pre%ent serious dama,e& )n in+unction *ill not issue to protect a ri,ht not in esse, or a ri,ht *hich is merely contin,ent and may ne%er arise; or to restrain an act *hich does not ,i%e rise to a cause of action; or to pre%ent the perpetration of an act prohibited by statute& !ndeed, a ri,ht, to be protected by in+unction, means a ri,ht clearly founded on or ,ranted by la* or is enforceable as a matter of la*& 13old emphasis supplied2 Thirdly, the petitioners alle,e that< 1a2 Metroban/ had increased the interest rates *ithout their assent and *ithout any basis; and 1b2 they had an e-cess payment sufficient to co%er the amounts due& !n support of their alle,ation, they submitted a table of the interest payments, *herein they pro+ected *hat they had actually paid to Metroban/ and contrasted the payments to *hat they claimed to ha%e been the correct amounts of interest, resultin, in an e-cess payment of P406,667&51&

The petitioners fail to con%ince& Be consider to be unsubstantiated the petitioners= claim of their lac/ of consent to the escalation clauses& They did not adduce e%idence to sho* that they did not assent to the increases in the interest rates& The records re%eal instead that they re8uested only the reduction of the interest rate or the restructurin, of their loans& 25 Moreo%er, the mere a%erment that the e-cess payments *ere sufficient to co%er their accrued obli,ation computed on the basis of the stipulated interest rate cannot be readily accepted& Their computation, as their memorandum submitted to the RT( *ould e-plain, 20 *as too simplistic, for it factored only the principal due but not the accrued interests and penalty char,es that *ere also stipulated in the loan a,reements& !t is rele%ant to obser%e in this connection that escalation clauses li/e those affectin, the petitioners *ere not %oid per se, and that an increase in the interest rate pursuant to such clauses *ere not necessarily %oid& !n Philippine $ational 3an/ %& Rocamora,30 the (ourt has said< 'scalation clauses are %alid and do not contra%ene public policy& These clauses are common in credit a,reements as means of maintainin, fiscal stability and retainin, the %alue of money on lon,7term contracts& To a%oid any resultin, one7sided situation that escalation clauses may brin,, *e re8uired in 3anco ilipino the inclusion in the parties= a,reement of a de7escalation clause that *ould authoriEe a reduction in the interest rates correspondin, to do*n*ard chan,es made by la* or by the Monetary 3oard& The %alidity of escalation clauses not*ithstandin,, *e cautioned that these clauses do not ,i%e creditors the unbridled ri,ht to ad+ust interest rates unilaterally& )s *e said in the same 3anco ilipino case, any increase in the rate of interest made pursuant to an escalation clause must be the result of an a,reement bet*een the parties& The minds of all the parties must meet on the proposed modification as this modification affects an important aspect of the a,reement& There can be no contract in the true sense in the absence of the element of an a,reement, i&e&, the parties= mutual consent& Thus, any chan,e must be mutually a,reed upon, other*ise, the chan,e carries no bindin, effect& ) stipulation on the %alidity or compliance *ith the contract that is left solely to the *ill of one of the parties is %oid; the stipulation ,oes a,ainst the principle of mutuality of contract under )rticle 1305 of the (i%il (ode& Be reiterate that in+unction *ill not protect contin,ent, abstract or future ri,hts *hose e-istence is doubtful or disputed& 31 !ndeed, there must e-ist an actual ri,ht, 32 because in+unction *ill not be issued to protect a ri,ht not in esse and *hich may ne%er arise, or to restrain an act *hich does not ,i%e rise to a cause of action& )t any rate, an application for in+uncti%e relief is strictly construed a,ainst the pleader&33 $or do *e discern any substantial contro%ersy that had any real bearin, on Metroban/=s ri,ht to foreclose the mort,a,e& The mere possibility that the RT( *ould rule in the end in the petitioners= fa%or by lo*erin, the interest rates and directin, the application of the e-cess payments to the accrued principal and interest did not diminish the fact that *hen Metroban/ filed its application for e-tra+udicial foreclosure they *ere already in default as to their obli,ations and that their short7term loan of P:,:00,000&00 had already matured& Hnder such circumstances, their application for the *rit of preliminary in+unction could not but be %ie*ed as a futile attempt to deter or delay the forced sale of their property& Iastly, citin, the rulin, in )lmeda %& (ourt of )ppeals, to the effect that the issuance of a preliminary in+unction pendin, the resolution of the issue on the correct interest rate *ould be +ustified, the petitioners submit that they could be ri,htly considered in default only after they had failed to settle the e-act amount of their obli,ation as determined by the trial court in the main case& The petitioners= reliance on the rulin, in )lmeda %& (ourt of )ppeals *as misplaced& )lthou,h it is true that the rulin, in )lmeda %& (ourt of )ppeals sustained the issuance of the preliminary in+unction pendin, the determination of the issue on the interest rates, *ith the (ourt statin,< !n the first place, because of the dispute re,ardin, the interest rate increases, an issue *hich *as ne%er settled on merit in the

courts belo*, the e-act amount of petitioners= obli,ations could not be determined& Thus, the foreclosure pro%isions of P&D& 356 could be %alidly in%o/ed by respondent ban/ only after settlement of the 8uestion in%ol%in, the interest rate on the loan, and only after the spouses refused to meet their obli,ations follo*in, such determination& 3: - - -& )lmeda %& (ourt of )ppeals in%ol%ed circumstances that *ere far from identical *ith those obtainin, herein& To start *ith, )lmeda %& (ourt of )ppeals in%ol%ed the mandatory foreclosure of a mort,a,e by a ,o%ernment financial institution pursuant to Presidential Decree $o& 35636 should the arrears reach 209 of the total outstandin, obli,ation& #n the other hand, Metroban/ is not a ,o%ernment financial institution& Secondly, the petitioners in )lmeda %& (ourt of )ppeals *ere not yet in default at the time they brou,ht the action 8uestionin, the propriety of the interest rate increases, hut the herein petitioners *ere already in default and the mort,a,e had already been foreclosed *hen they assailed the interest rates in court& Thirdly, the (ourt found in )lmeda %& (ourt of )ppeals that the increases in the interest rates had been made *ithout the prior assent of the borro*ers, *ho had e%en consistently protested the increases in the stipulated interest rate& !n contrast, the (ourt cannot ma/e the same conclusion herein for lac/ of basis& ourthly, the interest rates in )lmeda %& (ourt of )ppeals *ere raised to such a %ery hi,h le%el that the borro*ers *ere practically ensla%ed and their assets depleted, *ith the interest rate e%en reachin, at one point a hi,h of 459 per annum& Aere, ho*e%er, the increases reached a hi,h of only 319 per annum, accordin, to the petitioners themsel%es& Iastly, the (ourt in )lmeda %& (ourt of )ppeals attributed ,ood faith to the petitioners by their act of consi,nin, in court the amounts of *hat they belie%ed to be their remainin, obli,ation& $o similar tender or consi,nation of the amount claimed by the petitioners herein to be their correct outstandin, obli,ation *as made by them& !n fine, the petitioners in )lmeda %& (ourt oJ)ppeals had the e-istin, ri,ht to a *rit of preliminary in+unction pendin, the resolution of the main case, but the herein petitioners did not& Stated other*ise, no *rit of preliminary in+unction to en+oin an impendin, e-tra+udicial foreclosure sale should issue e-cept upon a clear sho*in, of a %iolation of the mort,a,ors. unmista/able ri,ht to the in+unction& BA'R' #R', the (ourt H'$!'S the petition for re%ie* on certiorari; ) and #RD'RS the petitioners to pay the costs of suit& S# #RD'R'D& LUC S P. BERS M!N )ssociate @ustice B' (#$(HR< M R! LOURDES P. . SERENO (hief @ustice TERES!T $. LEON RDO%DE C STRO )ssociate @ustice B!EN&EN!DO L. RE#ES )ssociate @ustice ('RT! !()T!#$ M RT!N S. &!LL R M , $R. )ssociate @ustice !RMS the decision promul,ated on ebruary 10, 2002;

Pursuant to Section 13, )rticle "!!! of the (onstitution, ! certify that the conclusions in the abo%e Decision had been reached in consultation before the case *as assi,ned to the *riter of the opinion of the (ourt.s Di%ision& M R! LOURDES P. . SERENO (hief @ustice

'oot(ote) Sele,na Mana,ement and De%elopment (orporation %& Hnited (oconut Planters 3an/, G&R& $o& 146442, May 3, 2004,:50 S(R) 126, 127&
1

Rollo, pp& :37:5; penned by )ssociate @ustice 'u,enio S& Iabitoria 1retired2, *ith )ssociate @ustice Teodoro P& Re,ino 1retired2 and )ssociate @ustice Rebecca de Guia7Sal%ador concurrin,&
2 3

Rollo, p& 100& Records, pp& 3376: Rollo, pp& 1:471:5& Records, p& 110& Rollo, pp& 077105& Records, p& 126& Rollo, p& 110& !d& at 111711: !d& at 1217122& !d& at 03& !d& at :37:5& !d& at 45740& !d& at 20721& G&R& $o& 113:12, )pril 17, 1004, 264 S(R) 202& Rollo, pp& 17:7176 !d& at 17:7176 'stares %& (ourt of )ppeals, G&R& $o& 1::766, @une 5, 2006, :60 S(R) 40:, 4207421&

10

11

12

13

1:

16

14

17

15

10

(ushman %& (ommissioners= (ourt of 3lount (ounty, :0 So& 311, 312, 140 )la& 227 110002; '- parte Aennies, 3: So&2d 22, 23, 33 )la& )pp& 377 110:52; Sch*ander %& eeney=s Del& Super&, 20 )&2d 340, 371 110:22&
20 21

Borcester Gas Ii,ht (o& %& (ommissioners of Boodland Bater Dist& in To*n of )uburn, :0 $&'&2d ::7, ::5,

31: Mass& 40 110:32&

22

Toulouse %& 3oard of Konin, )d+ustment, 57 )&2d 470, 473, 1:7 Me& 357 110622& Greater Miami De%elopment (orp& %& Pender, 10: So& 547, 545, 1:2 la& 300 110:02&

23

Serrano %& Galant Maritime Ser%ices, !nc&, G&R& $o& 161533, )u,ust 7, 2003, :05 S(R) 623, 624; Manila Midto*n Aotels L Iand (orp& %& $IR(, G& R& $o& 115307, March 27, 1005, 255 S(R) 260, 246&
2: 26

'8uitable P(! 3an/, !nc& %& #@7Mar/ Tradin,, !nc&, G&R& $o& 146060, )u,ust 11, 2010, 425 S(R) 70, 01702& (hina 3an/in, (orporation %& (iriaco, G&R& $o& 170035, @uly 11, 2012& G&R& $o& 167316, December 1, 2010, 434 S(R) 320, 3347337& Records, pp& 1117112 and 341& !d& at 3617367 G&R& $o& 14:6:0, September 15, 2000, 400 S(R) 306, :047:07&

24

27

25

20

30

3oncodin %& $ational Po*er (orporation 'mployees (onsolidated Hnion 1$'(H2, G&R& $o& 142714, September 27, 2004, 603 S(R) 411, 423&
31

Du%aE (orporation %& '-port and !ndustry 3an/, G&R& $o& 143011, @une 7, 2007, 623 S(R) :06, :137:1:; citin, )lmeida %& (ourt of )ppeals, G&R& $o& 16012:, @anuary 17, 2006, ::5 S(R) 451&
32

St& @ames (olle,e of ParaMa8ue %& '8uitable P(! 3an/, G&R& $o& 170::1, )u,ust 0, 2010, 427 S(R) 325, 360&
33 3:

Supra note 14, at 32:&

Re8uirin, Go%ernment inancial !nstitutions to oreclose Mandatorily )ll Ioans *ith )rreara,es, includin, !nterest and (har,es amountin, to at least T*enty Percent 12092 of the Total #utstandin, #bli,ation&
36

The Ia*phil Pro+ect 7 )rellano Ia* oundation