Republic of the Philippines) Province of Leyte ) SS City of Tacloban )

AFFIDAVIT IN SUPPORT OF APPLICATION FOR EX-PARTE TRO, 20 DAYS TRO AND WRIT OF PRELIMINARY INJUNCTION
I, ISIDORO B. MILLANES, JR., Filipino, of legal age, married and a resident of Tacloban City, after being first sworn according to law, depose and state: THAT--1. Sometime in 2 October 1997, Plaintiffs Isidoro B. Millanes Jr. and Azucena P. Millanes secured a one (1) year revolving credit line of ONE MILLION NINE HUNDRED THOUSAND PESOS (P1,900,000.00) from Defendant PNB in its branch in Tacloban City by way of a Real Estate Mortgage (Annex B of Petition for Foreclosure, EJF No. 1973), with two (2) lots covered by TCT No. T-18411 and T-28452 as collaterals. 2. Then on June 19, 2002, plaintiffs Isidoro B. Millanes Jr. and Azucena P. Millanes executed another Real Estate Mortgage with defendant PNB in its branch in Tacloban City (Annex B of Petition for Foreclosure, EJF No. 1973), without any specific amount of consideration, using as additional security TCT No. T-28452, TCT No. T31748, TCT No. T-31893, TCT No. T-52189 and TCT No. T-53786. 3. The aforementioned line was to be availed of by drawings. According to the bank, plaintiffs availed of the aforesaid credit line by drawing a total outstanding principal amount of P2,500,000.00 as evidenced by Promissory Notes (Annexes A to A-7 of Petition for Foreclosure). When the said PNs were signed by plaintiffs, with entries not agreed upon or which are not accurate. 4. Lately, on September 27, 2004, plaintiffs received a Notice of Extrajudicial Sale signed by Sheriff IV Luis Copuaco in Extrajudicial Foreclosure File No. 1973 scheduling public auction sale of the entire properties under TCT No. T-18411, TCT No. T-28452 of REM dated 2 October 1997 and TCT No. T-28452, TCT No. T-31748, TCT No. T-31893, TCT No. T-52189 and TCT No. T-53786 of REM dated 19 June 2002, to be conducted on November 9, 2004 at 9:00 oclock in the morning in the Office of the Clerk of Court, RTC of Tacloban City, Bulwagan ng Katarungan, Magsaysay Blvd., Tacloban City. The notice is a result of a petition for sale filed on 13 August 2004 by defendant PNB 5. The petition for sale of defendant PNB is fatally defective. Among other defects, it does not specify the correct amount of the claims. It suppresses and fail to specify the amount of interests, penalties and other charges that defendant PNB seeks to recover. As a result the correct filing fees have not been paid. 6. The petition for sale also includes amounts not covered by the REMs. Among these amounts which should not have been included are the unquantified penalties which are not mentioned in the REMs (Philippne Bank of Communications vs. CA, 253 SCRA 241), non-existent or bloated principal and escalated and illegal interests. 7. The Notice of Extrajudicial Foreclosure is totally defective. There are errors therein. The specified time of the scheduled sale violates Act 3135. The notices also

2 include amounts not covered by the REMs. Finally, the notice has not been properly posted and published in newspapers of general circulation as required by Act 3135. 8. The validity and existence of consideration of the Promissory Notes (PNs) used as basis for the extra-judicial foreclosure are still in question. Pending determination of their validity and the existence of consideration, the PNs should not be allowed in the meantime to be used as basis for enforcement of payment through extrajudicial foreclosure. 9. The REM on TCT Nos. T-18411 and T-28452 secure a credit line of P1.9 Million. The REM on TCT Nos. No. T-28452, TCT No. T-31748, TCT No. T-31893, TCT No. T-52189 and TCT No. T-53786 does not specify any amount. 10. The PNs (Annex A to A-7 of Petition) which are the bases for the petition for sale and notice of sale are non-existent, null and void and lacking in consideration. At the very least, they are wrongfully bloated. 11. The two REMs which, according to the defendant bank, are supported by the principal obligation under eight (8) PNs are without valid, legal and actual consideration because these PNs are null and void and without any valid, legal and actual consideration. An examination of bank figures, computations, statement of accounts and other documents indicates that the defendant bank has been changing and escalating interest rates on alleged obligations of plaintiffs unilaterally and without plaintiffs consent. The latters act of unilaterally fixing, changing and escalating interest rates is illegal, null and void. Any stipulation authorizing defendant PNB to unilaterally fix, change and escalate interest rates is also null and void. (PNB vs CA, 196 SCRA 536). 12. The properties mentioned in the REMs were appraised and assigned respective loan values of up to 40% of the appraisal. The assigned loan values are supposed to be the only amounts to be secured by the properties. However, defendant bank made it appear on the titles that each of the mortgaged properties is liable up to the maximum limits of the line. This should be corrected. The fair market value of all the properties whose REMs defendant bank seeks to foreclose is at about four times the bloated claims of the said bank. 13. Considering the foregoing facts and the additional reality, that it is defendant bank which undermined plaintiffs capacity to pay by imposing unilaterally escalated interest rates, bloating the alleged obligation and by other illegal acts, defendant bank must not be allowed to extrajudicially foreclose on the REMs. 14. The allegations, antecedents, factual circumstances and issues established herein shows that there is a need to maintain the status quo between the parties which necessitates the issuance of a temporary restraining order and writ of preliminary injunction against the extra-judicial foreclosure proceedings and the use of the questioned documents as basis for defendant bank in asking for extrajudicial foreclosure otherwise grave and irreparable damage and injury will be caused to the plaintiffs. Accordingly, the following acts must be prohibited pendent elite, to wit: a) Posting and publication of the Notice of Sale; b) Conduct of foreclosure sale on November 9, 2004 or at any time during the pendency of the case; c) Execution of Certificates of Sale; d) Registration of Certificates of Sale with the Register of Deeds; e) Execution of the Deed of Final Sale and other consolidation documents; f) Payment of capital gains tax, documentary stamps tax and other transfer taxes;

3 g) Disturbing the status quo ante litem. 15. Plaintiffs have valid and genuine causes of action and are entitled to the relief they are asking. Part of the relief that plaintiffs are entitled to is a restraining order and a writ of preliminary injunction enjoining the commission or continuance of the acts complained of. 16. Defendant is doing, suffering to be done, attempting to do, threatening to continue the questioned and assailed acts despite the fact that there are no valid principal obligations to speak of and there is no valid and legal basis for extrajudicial foreclosure proceedings in clear, wanton and gross violation of the rights of the plaintiffs respecting the subject of the pending action and tending to render the judgment ineffectual. 17. The commission, continuance or performance of the acts complained of during the litigation would work injustice to plaintiff. 18. Plaintiffs sustain or will sustain grave and irreparable damage and injury if the acts complained of are not immediately restrained and enjoined. Among other injuries, plaintiffs sustain or will sustain the following: a) The plaintiffs will be deprived of their properties without due process of law; b) Plaintiffs will be ousted from their properties and their family home and business operations based thereon will be interrupted or halted; c) If the foreclosure is given full effect at this time, plaintiffs would be compelled to redeem the properties at a shocking price, for bloated amounts, despite the fact that there is no valid basis for extrajudicial foreclosure; d) In effect, plaintiffs will be made to pay for incorrect amount of indebtedness and for exorbitant and usurious interests which are illegal, unconscionable and confiscatory penalties. e) Plaintiffs rehabilitation efforts will be jeopardized and their impending moves for re-financing with other banks and banking intermediaries will be aborted resulting to collapse of their businesses and the consequent deprivation of their source of income. f) If the plaintiffs properties are sold in foreclosure and if they are ousted therefrom, plaintiffs will be blacklisted by banks and financing institutions causing grave, irreparable and permanent damage and injury and, more importantly, thereby depriving plaintiffs of sources of much needed capital and cash which will be fatal to their businesses and their efforts at recovery. 19. Grave and irreparable damage and injury would be inflicted on plaintiffs before the matter of the application for a writ of preliminary injunction is heard and resolved unless a temporary restraining order is issued against defendant bank, its agents, representatives, assigns or any persons or entities acting on its behalf restraining them from proceeding with the foreclosure and further prohibiting them to perform any and all acts tending to disturb or destroy the status ante. 20. The matter is of extreme urgency and the applicants-plaintiffs will suffer grave injustice and irreparable injury before the matter of the 20-days temporary restraining order of writ of preliminary injunction is heard on notice, thus requiring an EX-PARTE TEMPORARY RESTRAINING ORDER effective only for 72 hours from issuance thereof, subject to the provisions of Section 5, Rule 58 of the 1997 Rules of Civil Procedure. Defendant has continued to illegally post and publish the notice of sale and has shown determination to proceed with the illegal and baseless public auction sale on November 9, 2004.

21. I am executing this affidavit in support for the application of the ex-parte temporary restraining order and writ of preliminary injunction and temporary restraining order. IN WITNESS WHEREOF, I have hereunto set my hand this 3 November 2004 at Tacloban City, Philippines. ISIDORO B. MILLANES, JR. Affiant SUBSCRIBED AND SWORN to before me this 3 November 2004 at Tacloban City, Philippines, affiant exhibiting to me his CTC No. ___________ issued on _____________ at Tacloban City, Philippines. Doc. No. ___ Page No. ___ Book No. ___ SERIES OF 2004