Case Digest (G.R. No. 176344)
Facts:
- Yolanda G. David operated a poultry business named David Poultry Farm in Arayat, Pampanga.
- On April 21, 1993, she secured a loan of P1,100,000 from the Land Bank of the Philippines, with interest rates aligned to prevailing lender's rates and a 12% per annum penalty for defaults.
- David mortgaged a parcel of land (Transfer Certificate of Title No. 334702-R) to secure the loan.
- Due to business setbacks, a Restructuring Agreement was made on April 18, 1996, establishing a new principal balance of P1,171,467.18 and an interest rate of 17% per annum.
- After failing to make two consecutive quarterly payments, Land Bank initiated foreclosure proceedings.
- On July 28, 1997, David filed a complaint in the Regional Trial Court (RTC) to stop the foreclosure, claiming the interest rates were usurious.
- The RTC granted a Temporary Restraining Order but later denied her request for a preliminary injunction.
- The mortgaged property was sold at public auction for P1,298,460.88.
- David filed a supplemental complaint to annul the sale, arguing the amount was due to usurious interest.
- The RTC dismissed her complaint, but the Court of Appeals found the interest and penalty charges excessive, reducing them and nullifying the foreclosure sale.
Issue:
- (Unlock)
Ruling:
- The Supreme Court ruled in favor of Yolanda G. David, affirming the Court of Appeals' decision.
- The Court found both the interest rate and penalty charges to be excessive, reducing them to 12% per annum and 5% per annum...(Unlock)
Ratio:
- The ruling was based on the principle that courts can equitably reduce interest rates and penalty charges deemed iniquitous or unconscionable, as per Article 1229 of the Civil Code.
- The Court emphasized that determining what constitutes an iniquitous or unconscionable rate is at the discretion of the courts, considering the specific circumstances of each case.
- The loan was part of a social assistance program aimed at improving ...continue reading
Case Digest (G.R. No. 176344)
Facts:
In the case of Land Bank of the Philippines vs. Yolanda G. David, G.R. No. 176344, decided on August 22, 2008, the respondent, Yolanda G. David, operated a poultry business under the name David Poultry Farm in Arayat, Pampanga. On April 21, 1993, she obtained a loan of P1,100,000 from the petitioner, Land Bank of the Philippines, which was subject to interest rates aligned with prevailing lender's rates and included a penalty charge of 12% per annum for any defaults. To secure this loan, David mortgaged a parcel of land identified by Transfer Certificate of Title No. 334702-R. However, due to significant setbacks in her business operations, David and Land Bank entered into a Restructuring Agreement on April 18, 1996. This agreement established a new principal balance of P1,171,467.18 and set the interest rate at 17% per annum on the remaining balance, to be paid in quarterly installments. Following David's failure to make two consecutive quarterly payments, Land Bank initiated foreclosure proceedings against her property. In response, on July 28, 1997, David filed a complaint with the Regional Trial Court (RTC) of San Fernando, Pampanga, seeking a preliminary injunction to halt the foreclosure, contending that the interest rates imposed were usurious. The RTC initially granted a Temporary Restraining Order but later denied her request for a writ of preliminary injunction. Subsequently, the mortgaged property was sold at public auction for P1,298,460.88. David then...