Case Digest (G.R. No. 168940)
Facts:
Spouses Isagani Castro and Diosdada Castro v. Angelina de Leon Tan, et al., G.R. No. 168940, November 24, 2009, Supreme Court Second Division, Del Castillo, J., writing for the Court. Petitioners are the Castros (lenders); respondent Angelina de Leon Tan (with co-respondents the Clementes, Carpios, Solimans and Julius Amiel Tan) are the mortgagors/borrowers and occupants of the property in dispute.On February 17, 1994, the Tans (Ruben and Angelina) executed a Kasulatan ng Sanglaan ng Lupa at Bahay to secure a P30,000 loan from petitioners; the instrument stipulated interest at 5% per month, compounded monthly, with repayment due within six months (or by August 17, 1994). Ruben Tan died on September 2, 1994; Angelina thereafter failed to pay the maturity amount. She offered to pay the principal and part of the interest, but petitioners demanded the total accumulated sum of P359,000.00.
Petitioners initiated extrajudicial foreclosure (auction held March 3, 1999), became the sole bidder and later consolidated title following expiration of the redemption period; a writ of possession was executed and respondents were ejected (possession delivery referenced June 21, 2000). On September 26, 2000, Angelina and the co-respondents filed a Complaint for Nullification of Mortgage and Foreclosure and/or Partial Rescission of Documents and Damages in the Regional Trial Court (RTC) of Malolos, Bulacan, alleging the stipulated interest was unconscionable.
On June 11, 2002 the RTC (Branch 79) partially rescinded the Kasulatan by reducing the interest to 12% per annum and awarded an additional 1% per month as liquidated damages from February 17, 1994 to June 21, 2000; it otherwise denied moral damages and attorneys’ fees and dismissed defendants’ counterclaim. Petitioners appealed; the Court of Appeals (CA) in a Decision dated October 29, 2004 affirmed the RTC’s finding that the 5% monthly compounded interest was unconscionable and equitably reduced it to the legal rate of 12% per annum, and further held respondents may redeem the mortgaged property notwithstanding the elapsed redemption period; the CA expressly ordered payment of P30,000 with interest at 12% p.a. from February 17, 1994 plus penalty charges for the relevant period. The CA denied petitioners’ motion for reconsideration in a July 18, 2005 Resolution.
Petitioners filed a Petition for Review on Certiora...(Pro-only)
Issues:
- Did the Court of Appeals err in nullifying the interest rate voluntarily agreed upon by the parties in the Kasulatan?
- Did the Court of Appeals improperly alter the terms of the mortgage contract by reducing the stipulated interest rate?
- Did the Court of Appeals err in extending the period of redemption in favor of respondents notwithstanding Act No. 3135...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)