Case Digest (G.R. No. 258526)
Facts:
Manila Credit Corporation v. Ramon S. Viroomal and Anita S. Viroomal, G.R. No. 258526, January 11, 2023, the Supreme Court Second Division, Lopez, J., writing for the Court. The petition is a Rule 45 petition for review on certiorari seeking to set aside the Court of Appeals’ July 6, 2021 Decision and its December 22, 2021 Resolution in CA-G.R. CV No. 115157, which affirmed the Regional Trial Court of Parañaque City’s March 3, 2020 judgment voiding certain interest charges and penalties imposed by petitioner.In September 2009 respondents Ramon S. Viroomal and Anita S. Viroomal obtained PN No. 7155 from Manila Credit Corporation (MCC) for PHP 467,600.00 payable in 60 months at a stated 23.36% per annum interest, secured by a real estate mortgage over Ramon’s Paranaque property (TCT No. 72248). When respondents fell behind, they executed a restructuring PN No. 8351 for PHP 495,840.00 payable in 84 months at 24.99% per annum; that restructured amount allegedly represented the unpaid balance, accrued interest, and penalty charges.
Respondents asserted that MCC in fact charged an unlisted effective interest rate (EIR) of 3% per month (36% p.a.) plus daily interest (1/10 of 1% per day), a 1.5% per month penalty, and P100 collection fee, all compounded monthly, resulting in an allegedly usurious, unconscionable bloating of their debt. They paid PHP 1,175,638.12 in total but MCC still demanded full payment and proceeded with extra-judicial foreclosure; after the redemption period MCC was declared highest bidder and title consolidated in MCC’s name (TCT No. 010-2019001298).
Respondents filed Civil Case No. 2017-79 in RTC Branch 258 for nullity of the real estate mortgage, injunction and specific performance with prayer for injunctive relief, claiming full payment if unconscionable charges were struck down. The RTC rendered judgment on March 3, 2020 declaring the compounded interests and penalties void, reducing interest to the legal 12% p.a., finding PN No. 7155 fully paid, declaring PN No. 8351 void for lack of consideration, ordering refund of overpayment, and directing cancellation/reinstatement of titles. MCC’s motion for reconsideration in the RTC was denied on June 16, 2020.
MCC appealed to the Court of Appeals (CA-G.R. CV No. 115157). The CA, in its July 6, 2021 Decision, affirmed the RTC: it found MCC imposed an additional 3% monthly EIR not shown in PN No. 7155, that compounded interests and penalties produced an aggregate rate the C...(Pro-only)
Issues:
- Procedural: Did MCC properly question the CA’s finding that the 3% monthly EIR and other compounded charges were invalid and unconscionable?
- Substantive: Whether the compounded interest, penalty charges, and other fees imposed on PN No. 7155 are void as unconscionable and whether the Court may equitably reduce the stipulated interest to the legal rate.
- Substantive: Whether PN No. 7155 was fully paid (thus extinguishing the mortgage) and whether PN No. 8351 is void for lack of consideration; and whether the foreclosure a...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)