A.M. No. RTJ-00-1593 - Morta Sr. vs. Sanez

On June 3, 2008, respondent Zenaida C. Estonactoc executed a Deed of Mortgage of Real Property over a 42,727-sqm parcel in Sto. Tomas, La Union as security for a ₱200,000 loan from petitioner Atty. Leonard Florent O. Bulatao.
The mortgage provided for payment of the ₱200,000 principal plus 5% monthly interest within 12 months (i.e., by June 4, 2009), otherwise the mortgage remained enforceable.

Upon Zenaida’s default, Atty. Bulatao foreclosed extrajudicially; notice of sale issued July 15, 2011, and certificate of sale dated October 10, 2011.
Zenaida filed a complaint for injunction, annulment of the mortgage deed, nullity of foreclosure sale, and damages, alleging unconscionable 5% monthly interest, receipt of only ₱80,000, co-ownership issues, lack of annotation on title, and improper notarization.

Atty. Bulatao’s answer denied usury and misrepresentation, claiming Zenaida offered up to 30% monthly interest, received the full ₱200,000 check, and he was an innocent mortgagee. He counterclaimed for damages and attorney’s fees.
On May 4, 2015, the RTC dismissed Zenaida’s complaint for lack of merit, upheld the 5% monthly interest as not exorbitant, declared Atty. Bulatao an innocent mortgagee, validated foreclosure, and awarded moral, exemplary, nominal damages and attorney’s fees in favor of defendants.

Declared the mortgage valid only as to Zenaida’s share (3/4 undivided) and void as to her late husband’s share.
Ruled the 5% monthly interest unconscionable and void; reduced it to 1% per month (12% per annum) from June 3, 2008.
Held prior demand and foreclosure invalid and nullified the foreclosure sale and certificate.
Set aside damages awarded against Zenaida.

Atty. Bulatao filed a Rule 45 petition, challenging the reduction of interest and invalidation of foreclosure; Zenaida opposed, seeking dismissal or affirmation of the CA ruling.