G.R. No. 129227 - BANCO FILIPINO SAVINGS AND MORTGAGE BANK, VS. THE HON. COURT OF APPEALS, AND CALVIN & ELSA ARCILLA.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, it is respectfully prayed a) Pending hearing on the prayer for the issuance of the Writ of Preliminary Injunction, a restraining order be immediately issued against the defendants or anyone acting in their behalf from enforcing the writ of possession issued against the plaintiffs; b) After notice and hearing, a writ of preliminary injunction be issued against the defendants, particularly defendants FGU Insurance Corporation and the City Sheriff of Pasay City, MM, or any of his deputies or anyone acting in their behalf from enforcing the writ of possession; c) After trial 1) To make the injunction permanent; 2) Declare the loan contracts null and void; 3) Declare the extrajudicial foreclosure null and void; 4) Ordering the defendants to pay the plaintiffs the sums of P100,000.00 as moral damages; P50,000.00 as attorney fees; and, costs of suit. PLAINTIFFS further pray for such other reliefs and remedies just and equitable in the premises." ( pages 88-89, Records ) In its Answer to the Complaint, the Appellant averred that the interests charged by it on Appellees loan accounts and that the said loan contracts and mortgages were lawful. The Appellant further averred that the Appellees action had already prescribed. In the interim, the Supreme Court promulgated its Decision in the precedent - setting case of " Banco Filipino Savings and Mortgage Bank vs. Hon. Miguel Navarro, et al., 152 SCRA 346 " where it declared that Central Bank Circular No. 494 was not the "law" envisaged in the mortgage deeds of borrowers of the Bank; that the escalation clause incorporated in said deeds giving authority to the Appellant to increase the rate of interests without the corresponding deescalation clause should not be given effect because of its one-sidedness in favor of the Appellant; that the aforesaid Central Bank Circular did not apply to loans secured by real estate mortgages, and that, therefore, the Appellant cannot rely said Circular as authority for it to unilaterally increase the rate of interests on loans secured by Real Estate Mortgages. In the meantime, the FGU Insurance Corp., Inc., filed a "Motion for Substitution" with the Regional Trial Court, in LRC Case No. Pq-7757-P praying that it be substituted as the Petitioner in said case ( pages 354-356, Records ). The Appellees were served with a copy of said motion and filed their Opposition thereto. However, on November 10, 1987, the Regional Trial Court rendered a Decision granting the motion of FGU Insurance Company ( page 369, Records ) On December 3, 1987, the Appellees filed a Motion, with the Court a quo , for leave to file an "Amended Complaint" to implead FGU Insurance Corporation as party defendant ( pages 83-129, Records ). The Court granted said motion and admitted Appellees Amended Complaint. After the requisite pre-trial, the Court a quo issued a Pre-Trial Order which defined, inter alia , Appellees action against the Appellant, and the latters defenses, to wit: "x x x On