Flimsy excuse

This is a case involving a writ of injunction. As a rule this writ is granted when it is established that its applicant is entitled to the relief demanded which may consist of restraining the commission or continuance of the act or acts complained of. In this case, the applicant is not entitled to the relief but since the case took more than 29 years to be finally resolved, it is as if the injunction has been granted also. This is the case of the spouses Gino and Gina.

In 1980, after a long negotiation, Gino was able to obtain the release of a P600,000 loan from a private financing and development company (PDCP) to fund his business. The loan was secured by a real estate mortgage of four parcels of land registered in the name of Gino and his wife Gina.

Gino however defaulted in his loan payments so that by 1984, it had ballooned to P1,077,515.58. So on November 23, 1984, PDCP initiated extra-judicial foreclosure proceedings on the mortgaged properties.

To enjoin the foreclosure and collect damages against PDCP, Gino and Gina, joined by another entity to which one of the lands was assigned (PFI), sued PDCP in the Regional Trial Court (RTC) for injunction and recovery of actual, moral and exemplary damages. They anchored their cause of action on the alleged delay in the release of the loan triggering a series of events causing Gino’s business to flounder.

In answer PDCP insisted on their right to collect by foreclosing the mortgaged property which it claimed was validly executed.

Initially the RTC issued a temporary restraining order halting the foreclosure proceedings. But on April 27, 1994, it dismissed the complaint for lack of merit finding that PDCP released the loan on time and rejecting the claim for damages.

The spouses and PFI appealed the decision to the Court of Appeals (CA). But on December 23, 2003 the CA affirmed the RTC ruling. On March 20, 2004, the spouses and PFI sought reconsideration of said decision. They insisted that they are entitled to the writ of injunction because the loan agreement was not valid since PDCP delayed the release of the loan. Were they correct?

No. For the writ to issue here, forever barring PDCP from collecting on the loan security, they must prove the nullity of the mortgage contract. As an accessory contract, the mortgage agreement derives its validity from the principal contract of loan. The claim of delay in the release of the loan proceeds concerns the implementation of the loan contract not its validity. Besides, the delay covered the negotiation stage of the loan agreement as it took PDCP sometime to approve Gino’s loan application. Lastly any delay by PDCP in releasing the loan was cured when Gino accepted the loan proceeds. Thus, not only did the spouses and PFI fail to prove their entitlement to the injunctive relief, they also conjured a flimsy excuse to forestall PDCP’s collection of the loan (Spouses Ibasco et. al vs. Private Development Corporation of the Philippines, et. al. G.R.162473, October 12, 2009). On a flimsy excuse, the collection of a loan was forestalled for 29 years.

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