[G.R No. 147865.June 18, 2001]
PHIL. COMPAK BOARDS INC vs. CA et al.
hereunder, for your information, is a resolution of this Court dated JUN 18 2001.
G.R. No. 147865(Philippine
Compak Boards, Inc. vs. Court of Appeals and Bank of Philippine Islands.)
This is a petition for
review on certiorari of the decision, dated February 1, 2001, of the Court of
Appeals which reversed the orders of the Regional Trial Court, Branch 15,
Ozamiz City, granting petitioner's application for the issuance of a writ of
preliminary injunction, and the appeals court's resolution, dated March 9,
2001, denying petitioner's motion for reconsideration.
It appears that on June
20, 1996, respondent Bank of Philippine Islands (BPI) granted petitioner a one
year "revolving promissory note line" (RPNL) for
import letter of credit/trust receipt bills purchase line of P2,000,000.00,
and an import letter of credit in the amount of £1,019,500.00 for the purchase
of an equipment from Great Britain. In 1997, the RPNL was renewed for another
year at a reduced amount of P14,000,000.00 due on June 20, 1998. In
September 1997, petitioner opened a letter of credit for US $100,000.00 which
was due on December 22, 1998. The loan was secured by another real estate
mortgage involving a property in Ozamiz City and covered by O.C.T. No. P-996.
When the RPNL of P14,000,000.00 expired on June 20, 1998, respondent BPI
did not renew the same in view of the failure of one of the sureties, Eugene
Lim, to pay an overdraft. Under its agreement, BPI reserved the right to
modify, suspend or cancel the aforesaid credit as may be warranted by its
evaluation of the latest financial statement and/or changing market conditions.
On July 27, 1998, when the
promissory note of P14,000,000.00 drawn against the RPNL fell due, respondent
BPI demanded payment of the same, but petitioner failed to pay the amount.
Hence, on September 15, 1998, respondent BPI filed before the Regional Trial Courts
of Ozamiz City and Pagadian City an application for the extrajudicial
foreclosure of the mortgaged property in Ozamiz City which is covered by O.C.T.
On October 7, 1998,
petitioner filed before RTC Branch 15 a complaint for damages with prayer for a
temporary restraining order and a writ of preliminary injunction to enjoin the
foreclosure proceedings being undertaken by the ex-officio sheriffs of the
Regional Trial Courts of Ozamiz City and Pagadian City. Petitioner claimed that
on June 19, 1996, respondent BPI approved its application for a commercial
letter of credit in the amount of £1,019,500.00 (equivalent of
at the exchange rate of P41.00 per British Pound) for the purchase of an
equipment from Great Britain. To
secure the loan, a real estate mortgage involving a parcel of land located in
Pagadian City and covered by T.C.T. No. T-14-234 was executed in favor of
respondent BPI. However, petitioner alleged, respondent BPI reduced the
approved credit line from P41,799,500.00 to P18,000,000.00
without its knowledge and consent, thereby resulting in a shortage of more than
P23,000,000.00 which petitioner was forced to raise from other sources
in order to secure the release of the equipment.
Without any notice or
hearing, the trial court issued on October 14, 1998 a temporary restraining
order enjoining the sheriffs from proceeding with the foreclosure proceedings.
Then, after hearing, it issued a writ of preliminary injunction, the
dispositive portion of whose order, dated December 5, 1999, reads:
WHEREFORE, as the problem
presented requires judicious considerations, vis-a-vis, the prevailing economic
conditions, and considering that great and irreparable damage shall be
sustained by the plaintiff in the meantime, let a writ of preliminary
injunction issue to maintain status quo upon bond of P200,000.00, unless
On February 7, 2000, the
trial court denied the motion for reconsideration of respondent BPI. However,
on certiorari, the Court of Appeals set aside the orders of RTC Branch 15.
Hence, this petition with
prayer for temporary restraining order or preliminary injunction. Petitioner
contends that respondent BPI acted in a wanton and arbitrary manner when it
reduced the credit line from P41,799,500.00 to P18,000,000.00, resulting in
business losses to it (petitioner) and that the foreclosure of its mortgage
would damage and undermine its credit
The petition has no merit.
RTC Branch 15 issued the writ on the ground that petitioner's credit standing
with suppliers and dealers as well as with the entire business community would
be seriously damaged and undermined if its property was foreclosed. However, as
the Court of Appeals noted, the "right to a good credit standing" cannot
be affected by the foreclosure of the mortgaged property. If at all, what can
affect petitioner's credit standing in the
business circle is its failure to comply with its obligations as they fall
The writ of preliminary
injunction is issued to prevent threaten or continuous irremediable injury to
parties before their claims can thoroughly studied and adjudicated. Its sole
objective is to preserve the status quo until the merits of the case can be
heard fully. It is issued upon proof of (1) the existence of a right to be
protected and (2) a which are violative of said right. But it is not designed
to protect contingent or future rights (Heirs of Joaquin Asuncion vs. Gervacio,
Jr., 304 SCRA 322 (1999)).
In this case, there is no
question that petitioner is indebted respondent BPI to which a real estate
mortgage on the subject property was constituted in favor of respondent BPI. It
appears that petitioner defaulted in the payment of the loan for which reason
respondent BPI seeks the extrajudicial foreclosure of the mortgage. If
petitioner's credit standing suffers as a result of the foreclosure of the
mortgage, the same cannot be helped as this is the necessary consequence of a
WHEREFORE, the petition is DENIED for lack of showing that the
Court of Appeals committed any reversible error.
Very truly yours,
(Sgd.) TOMASITA B. MAGAY-DRIS
Clerk of Court