Facts:

The case involves Samuel Ang and Fontaine Bleau Finance and Realty Corporation as petitioners and Cristeta Abaldonado as the respondent. On August 27, 1998, Abaldonado acquired a loan amounting to PHP 700,000 from Ang, subjected to an exorbitant compounded interest rate of four percent per month, along with an additional compounded penalty of four percent for late payments. To secure the loan, Abaldonado created a Real Estate Mortgage (REM) over Lot 334-C, which she owned. However, Abaldonado defaulted on several installments and subsequently received a Demand Letter from Ang on July 18, 2001, summoning her to settle her total indebtedness of PHP 2,543,807.64, failing which Ang indicated he would commence foreclosure proceedings.

Despite the demand, Abaldonado did not pay, prompting Ang to initiate a Petition for Extrajudicial Foreclosure of the REM on August 16, 2002, which was delayed due to a lawsuit filed by Abaldonado’s children against her and Ang. This suit aimed to void

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Facts:

Loan Transaction and Mortgage

• On August 27, 1998, respondent Cristeta Abaldonado obtained a loan of P700,000.00 from petitioner Samuel Ang.
• The loan was made subject to a compounded interest rate of 4% per month, with an additional 4% compounded penalty interest in case of payment delay.
• The obligation was secured by a Real Estate Mortgage (REM) over Lot 334-C, registered in Abaldonado’s name under TCT No. T-125491.

Default, Demand, and Extrajudicial Foreclosure Proceedings

• Abaldonado failed to pay several installments, which led Ang to send a Demand Letter on July 18, 2001, requiring payment of the total indebtedness (P2,543,807.64) to avoid foreclosure.
• Owing to Abaldonado’s non-response, Ang filed a Petition for Extrajudicial Foreclosure on August 16, 2002.
• The foreclosure steps were disrupted by a case filed by Abaldonado’s children challenging the validity of an alleged Extrajudicial Adjudication with Waiver of Rights and the REM, alleging issues of forgery and impropriety.
• The case by the children was eventually dismissed without prejudice for lack of interest.

Assignment, Subsequent Foreclosure, and Title Consolidation

• On December 1, 2005, Ang assigned his mortgage rights to Fontaine Bleau Finance and Realty Corporation, making Fontaine Bleau the assignee of the REM.
• Fontaine Bleau initiated its own Petition for Extrajudicial Foreclosure, leading to a public bidding on March 28, 2006, in which Fontaine Bleau emerged as the winning bidder.
• A Final Deed of Sale was executed on June 18, 2007, and subsequently, a new Title (TCT No. T-161718) was issued in the name of Fontaine Bleau on October 2, 2007.

Challenge to the Foreclosure Proceedings

• On June 18, 2010, Abaldonado filed a Complaint for Declaration of Nullity of Foreclosure Proceedings, Annulment of Interest Rate, Accounting, and Damages.
• She contended that the interest rate stipulated in the REM was unconscionable and iniquitous, seeking to nullify the mortgage and foreclosure proceedings ab initio.

Trial Court (RTC) Decision

• In its September 26, 2013 Decision, the RTC dismissed Abaldonado’s complaint.
• The court ruled that while the stipulated interest and penalty were excessive and thus subject to equitable reduction, the validity of the REM and the foreclosure proceedings was not affected.
• The RTC found Abaldonado guilty of laches for waiting an unreasonable time (12 years from the loan execution, almost 11 years from the demand, and about 6 years from the foreclosure instigation) before challenging the terms of the REM.

Court of Appeals (CA) Decision and Subsequent Developments

• In its July 28, 2016 Decision, the CA reversed the RTC ruling, agreeing with Abaldonado that the interest and penalty provisions were iniquitous and unconscionable.
• The CA held that the entire foreclosure proceeding was null and void because the iniquitous stipulations prevented correct settlement of the debt, and thus, the title transferred to Fontaine Bleau (TCT No. T-161718) was annulled.
• The CA ordered that the original title (TCT No. T-125491) be reinstated in Abaldonado’s name, and that the interest rate be replaced by the legal rate of 6% per annum from July 18, 2001 until full satisfaction of the obligation.
• The CA remanded the case to the RTC for proper accounting and computation, and set a 60-day period for Abaldonado to pay the recomputed obligation.
• After the CA issued an April 20, 2017 resolution denying petitioners’ motion for reconsideration, petitioners filed the current petition for review on certiorari.

Issues Raised in the Petition for Review

• Petitioners questioned whether the CA erred in finding that Abaldonado’s alleged efforts to settle her obligations negated the application of laches.
• They also contended that Abaldonado had foreclosed her right to redeem the mortgaged property by failing to tender the redemption price within the prescribed period, or by not filing a legal action to fix that price.
• Lastly, petitioners objected to the CA’s imposition of a six percent interest rate from July 28, 2001, arguing that the loan was initially contracted at a legal rate of 12% and that penalty charges in the form of liquidated damages should have been imposed due to her payment delays.

Testimonies and Evidence Regarding Laches

• Witnesses from petitioners testified that Abaldonado did not actively participate in negotiations to settle her obligation and that her contact was made indirectly through her children.
• Abaldonado’s own testimony revealed her prolonged inactivity regarding raising objections to the mortgage contract or the stipulated interest.
• The evidence established that Abaldonado waited until after the Final Deed of Sale was executed and the title had been transferred before questioning the foreclosure proceedings, thereby reinforcing the finding of laches.

Issue:

• Whether the CA erred in concluding that Abaldonado’s alleged efforts to settle her unpaid obligations – as evidenced by her indirect negotiations through her children – negated the doctrine of laches.
• Whether Abaldonado foreclosed her right to redeem or re-acquire Lot No. 334-C by failing to tender the redemption price or file an action to fix such price within the designated period.
• Whether the CA erred in imposing a six percent per annum interest rate from July 18, 2001, without imputing penalty charges as liquidated damages, particularly given that the original loan transaction was executed at a legal rate of 12% per annum and in light of her admitted payment delays.

Ruling:

• (Subscriber-Only)

Ratio:

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Doctrine:

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