G.R. No. 215111 - Abosta Shipmanagement Corp. vs. Delos Reyes

The private respondents obtained a loan amounting to ₱3,000,000 from the petitioner (Anchor Savings Bank, now Equicom Savings Bank) in December 1997.
The loan was secured by a real estate mortgage over parcels of land located in Cubao, Quezon City, registered in the name of private respondent Marylin MaAalac.
MaAalac executed a Promissory Note and Disclosure Statement reflecting a total obligation of ₱3,308,447.74, which already included payment for three months’ interest.
The documents stipulated three installments:

The proceeds of the loan were released to MaAalac on December 3, 1997, who then issued three checks:

A check for ₱144,000 for the first installment (which cleared).
A check for ₱144,000 for the second installment (which did not clear).
A check for ₱3,300,000 corresponding to the third installment (which did not clear).

As a result, an outstanding balance of ₱3,012,252.32 remained unpaid.
MaAalac continued to correspond with the petitioner regarding an update on the account.
A Second Notice of Extrajudicial Sale was subsequently issued for the satisfaction of an obligation that reached ₱4,577,269.42 as of October 15, 1998 (excluding penalties, charges, attorney’s fees, and foreclosure costs).

On June 1, 1999, an extrajudicial foreclosure sale was conducted where the petitioner emerged as the highest bidder.
A Certificate of Sale was issued in favor of the petitioner, and ownership of the foreclosed properties was consolidated in the petitioner’s name upon failure of redemption by MaAalac.
The petitioner later acquired certificates of title over the disputed properties.
On September 6, 2000, private respondents filed a Complaint for the Annulment of Extrajudicial Foreclosure Sale, asserting:

The foreclosure sale was based on an exorbitant and excessive demand amount.
They contended that, instead of the ₱4,577,269.42 demanded in the Notice, the proper computed balance should have been ₱3,825,907.16 using an interest rate of 3% from the date of last payment.

It held that there was compliance with the procedural requirements for extrajudicial foreclosure.
The RTC observed that the respondents had not taken any measures to enjoin the foreclosure upon becoming aware of alleged usurious interest charges.

It annulled the foreclosure sale based on the finding that the petitioner unilaterally imposed an excessive, iniquitous, and unconscionable interest rate of 30.33% per annum.
The CA ruled that due to the absence of any written stipulation of the interest rate, under Article 1956 of the Civil Code, the imposition was unlawful.
It affirmed the principal amount due, subjecting any interest to the legal ceiling of 12% per annum.
The CA maintained the lender’s right to institute a new foreclosure proceeding upon default of the mortgagor.

The petitioner challenged both the CA’s findings and the annulment of the foreclosure sale.
The issues raised included:

Whether Article 1956 of the Civil Code requires that the interest rate be expressly stipulated in writing.
Whether the foreclosure of the mortgage was valid given the imposition of usurious interest rates.

Does Article 1956 require that an interest rate be expressly stipulated in writing in order for interest to be enforceable?
Is the absence of a written stipulation equivalent to a failure to provide for the payment of interest in the contractual agreement?

Can a foreclosure sale be valid if it is predicated on a loan obligation with usurious interest rates?
Does the imposition of an excessive, unconscionable, and iniquitous interest rate invalidate the foreclosure sale?
Are discrepancies in the calculation of the loan obligation (inflated amounts due to excessive charges) sufficient grounds for annulling the foreclosure sale?
How is the petitioner’s argument regarding the defect in the extrajudicial notice and the subsequent barred action by private respondents (laches) to be reconciled with established jurisprudence?