G.R.No.

173036:September26,2012
AGOORICEMILLCORPORATION(representedbyitsPresident,KamBiakY.Chan,Jr.),
Petitioner,v.LANDBANKOFTHEPHILIPPINES,Respondent.
DECISION
BRION,J.:
Beforeusisapetitionforreviewoncertiorari1 andtheresolution3 oftheCourtofAppeals.TheCA
affirmedthedecision4 oftheRegionalTrialCourt(RTC)whichdeniedthecomplaintforinjunctiontiled
byAgooRiceMillCorporation(ARMC)againsttheLandBankofthePhilippines(LBP).TheCAdenied
thepetitioner'ssubsequentmotionforreconsideration.
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FACTS:
FromOctober1993toOctober1996,5 theARMCobtainedfromtheLBPaTermLoanamountingtoa
totalofP15,000,000.00,6 evidencedbypromissorynotes.TheseloansweresecuredbyaRealandChattel
MortgageovertheARMCsfour(4)commerciallots,includingtheirimprovements,anditsricemill
machineriesandgenerator.7
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ARMCmadeseveralpartialpaymentstocovertheloansinterests, 9 butfounditdifficulttofullysettleits
loanobligationsontimeduetothecompanysfinancialliquidityproblems.
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Inaletter12 throughitsPresidentMr.KamBiakY.Chan,Jr.,requestedtheLBPforanextensionoftimeto
payitsobligations;heaskedforaperiodendingonFebruary28,1997.
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TheLBP,throughaletter13 remindedARMCofitscommitmenttopayonFebruary28,1997.
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OnFebruary27,1997,stillforeseeingitsinabilitytopayitsobligationsontherequesteddate,theARMC
wrotetheLBPfortherenewalofitsloans.14TheLBPallegedlyrepliedwiththeadvicetohavetheloans
restructuredinsteadofrenewed.15
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Accordingly,inaletter,16ARMCrequestedtheLBPtorestructureitsloan.
TheLBPdeferredtheARMCsproposalandadvisedittofirstsecureawaiverofitspenaltychargespriorto
theloansrestructuring.18
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Inaletter19 theLBPinformedtheARMCthatthebanksDomesticBankingLoanCommitteehasagreedto
requireanadditionalcollateralfromtheARMC,otherwisetheLBPwouldbeforcedtopursuelegalaction.
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Inanotherletter20 theLBPinformedARMCthatitsexistingcollateralwasshortofP3,400,000.00,based
onitsoutstandingP15,000,000.00loan,andreiteratedthatARMCneededtoofferadditionalcollateraland
tosubmitthenecessarydocuments;ARMCwasgivenuptoNovember14,1997tocomply,butthiswas
extendedtoNovember25,1997.21 ARMCrespondedbyaskingforareappraisalofitsproperties,butthe
LBPdeniedtherequest,insistingthatthevaluationmadebyitsPropertyAssessorswasfairand
reasonable.22
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TheLBPwrotetotheARMCregardingthelattersfailuretocomplywiththeLBPsrequiredofferofan
additionalcollateralortopayitsdueobligations.TheLBPinformedtheARMCthatnoncompliancewould
resultinthereferralofthemattertothebanksLegalOfficeforappropriateaction.23
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Initsapplicationforextrajudicialforeclosure,27 theLBPalleged,amongothers,that:(1)despiterepeated
demands,theARMCfailedtopayitsoverdueobligations.
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TheextrajudicialforeclosurewassetforAugust26,1998atnineoclockinthemorning.28

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ComplaintforInjunction
OnAugust24,1998,ARMC,throughitsPresident,filedwiththeRTC,Branch30,SanFernandoCity,La
Union,acomplaintforinjunctionwithapplicationforawritofpreliminaryinjunctionandtemporary
restrainingorder,andforrecoveryofdamages.29
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ARMCmainlyallegedthatLBPsproposedextrajudicialforeclosureshouldbeenjoinedforbeing
premature,improperandinviolationofARMCscontractualandpropertyrightssincenegotiationsforthe

restructuringofitsloanswerestillongoing.
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TemporaryRestrainingOrderandWritofPreliminaryInjunction
OnSeptember8,1998,theRTCorderedtheproceedingssuspendedinviewofthepartiesmanifestationto
havethecaseamicablysettled.33 Thecontemplatedsettlement,however,failed.Thus,theRTCproceeded
withthehearingontheissuanceofthewritofpreliminaryinjunction.34
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Inanorder35 datedMarch18,1999,JudgeAdolfoAlagar,RTC,Branch30,SanFernandoCity,LaUnion,
issuedawritofpreliminaryinjunctionupontheARMCsfilingofabondofP4,000,000.00.
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TheRTCsRuling
InadecisiondatedAugust5,2004,theRTCfoundnomeritintheARMCscomplaintforinjunction.
TheRTCdeniedtheARMCscomplaintonthegroundthatinjunctioncannotissueagainsttheexerciseofa
validright,therightofthecreditormortgageetoforecloseonthemortgagewherethedebtormortgagorhas
defaultedinthepaymentofitsobligations.
TheRTClikewiseruledthattheLBPsforeclosurewasnotmerelyanexerciseofitsright,butalsothe
performanceofitslegalobligationunderPresidentialDecreeNo.(P.D.)385.
TheARMCmovedtoreconsidertheRTCsdecision,butthetrialcourtdeniedthemotion.37 TheARMC
filedanoticeofappealtotheCA.38
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InitsappealtotheCA,theARMCinsistedthattherestructuringofitsloanwasstillundernegotiation
whentheLBPfileditsapplicationforextrajudicialforeclosureandcontendedthattheLBPwasinbadfaith
andguiltyofpromissoryestoppelwhenitledtheARMCtobelievethatitwouldrestructureitsloans,yet
refusedtohavethemortgagedpropertiesreappraisedbyanindependentappraiser.
TheARMCfurthercontendedthatthechargesimposedbytheLBPwereunwarrantedandthatthe
stipulatedinterestonthepromissorynoteswasexcessiveandunconscionableandshouldbevoided.
OnMay12,2005,theSheriffoftheRTCofSanFernandoCity,LaUnionissuedaNoticeofExtrajudicial
Salethatsettheauctionsaleofthemortgagedproperties.39
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TheARMCsoughttoenjointheforeclosuresalebyfilingwiththeCAanapplicationfortheissuanceofa
writofpreliminaryinjunctionandtemporaryrestrainingorder,whichtheCAdeniedinaresolution. 40
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TheLBPemergedasthewinningbidderintheauctionsale.41

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TheCAsRuling
Inadecision42 theCAfoundnomeritintheARMCsappeal.TheCAaffirmedtheRTCinrulingthat,
underP.D.385,aninjunction,whetherpermanentortemporary,couldnotbeissuedtoenjointhe
foreclosureproceedingsinstitutedbytheLBP.
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TheCAlikewisefoundthattheLBPdidnotapprove,orevenpromisedtoapprove,theARMCsproposed
loanrestructuring.
TheCAdidnotalsofindtheLBPinbadfaithforrefusingtohavetheARMCsmortgagedproperties
reappraisedbyanindependentappraiser;theLBPslowvaluationonthereappraisedpropertieswouldeven
bemorebeneficialtoARMCincaseofredemption.
NeitherdidtheCAfindthestipulatedinterestratesonthepromissorynotesandtheimposedpenalty
chargesexcessive,unconscionableandunwarranted.
TheCAdeniedthemotionforreconsiderationthattheARMCsubsequentlyfiled,pavingthewayforthe
presentpetitionforreviewoncertiorari.
ISSUE:WONARMCisentitledtoaninjunctiveremedy.

HELD:Thecourtruledinnegative.
"Injunctionisajudicialwrit,processorproceedingwherebyapartyisorderedtodoorrefrainfromdoinga
certainact.Itmaybethemainactionormerelyaprovisionalremedyforandasanincidentinthemain
action."45 Foraninjunctiontoissue,thefollowingessentialrequisitesmustbepresent:(1)theremustbea
rightinesseortheexistenceofarighttobeprotected;and(2)theactagainstwhichtheinjunctionis
directedtoconstituteaviolationofsuchright.46
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TheARMCfiledacomplaintforinjunctionagainsttheLBPonthegroundthatthelattersthenimpending
foreclosureofitsmortgagedpropertieswasinviolationofitscontractualandpropertyrights,particularly
therightoftheARMCtohaveitsoutstandingloanrestructuredbytheLBP.TheARMCallegedthatthe
LBPactedinbadfaithandinwantondisregardofitscommitmenttorestructuretheformersloanswhenit
hastilyfiledforextrajudicialforeclosurewhilenegotiationsfortheloanrestructuringwerestillongoing.
TheexistenceoftheARMCsclaimedrighttotheloanrestructuring,however,wasnotclearlyestablished
bytheARMC.Apartyseekingtoavailofaninjunctivereliefmustprovethatheorshepossessesarightin
esseoronethatisactualorexisting.47 Suchrightmustbeclearandunmistakable,48 andnotcontingent,
abstractorfuturerights,oronethatmayneverarise.49
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Inthepresentcase,boththeRTCandtheCAfoundthatnoagreementwasforgedbetweentheARMCand
theLBPontherestructuringoftheARMCsloans,theproposedloanrestructuringwasnotapprovedbythe
LBPbecausetheARMCfailedtoofferanadditionalcollateralsufficientenoughtocoveritsoutstanding
loanwiththebank.Thus,theARMC,then,hadnoactualrighttoprotectortoenforceagainsttheLBP.It
failedtosatisfythefirstrequisite,i.e.,theexistenceofaclearandunmistakablerightfortheissuanceofan
injunction.
Ontheotherhand,theLBPhadeveryrighttoforecloseontheRealandChattelMortgagesincetheARMC
haddefaultedinthepaymentofitsoverdueloanobligationwiththebank.Theforeclosureissupportedby
theexpressmandateofP.D.385.
Undertheseterms,theARMCcannotsecureaninjunctionagainsttheLBP,agovernmentfinancial
institution.
InjunctionBecameMootandAcademic
ThepresentpetitionmustalsobedeniedbecausetheactsoughttobeenjoinedbytheARMCisalreadya
consummatedact.TherecordsshowthattheforeclosuresaleontheARMC'sJTIOligagedpropertieswas
heldsometimeinJune2005andtheLBPemergedasthewinningbidder.Aninjunctionsuitbecomesmoot
andacademicaftertheactsoughttobeenjoinedhadalreadybeenconsummated.50
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WHEREFORE,weDENYthepresentpetitionforreviewoncertiorariforlackofmeritandforbeing
mootandacademic.CostsagainstpetitionerAgooRiceMillCorporation.
SOORDERED.