Case Summary (G.R. No. 192304)
Background of the Loan Agreement
In December 1997, the respondents obtained a loan of P3,000,000 from the petitioner, which was documented through a Promissory Note and a Disclosure Statement detailing the terms of the loan. The loan stipulated various installment payments that included exorbitant charges: a late payment fee of 5% per month, attorney's fees amounting to 25%, and liquidated damages of 25% for any unpaid installments.
Payment Defaults and Foreclosure
After disbursing the loan proceeds to MaAalac, the respondents issued three checks corresponding to the installments; however, only the first check cleared, leaving an outstanding balance of P3,012,252.32. Subsequent notices of extrajudicial sale were issued, culminating in a foreclosure sale where the bank emerged as the highest bidder for the disputed properties. The Statement of Account issued by the petitioner reflected a sizable increase in the amounts due, totaling P12,525,673.44 as of October 29, 1999.
Legal Proceedings Initiated by Respondents
Respondents filed a complaint against the petitioner in September 2000 seeking annulment of the extrajudicial foreclosure proceedings claiming that the amounts demanded were excessively inflated. They alleged that the actual amount owed should have been significantly lower based on a lawful interest rate.
Ruling of the Regional Trial Court
The Regional Trial Court, in a Decision dated March 16, 2007, dismissed the complaint, noting the private respondents did not contest the procedural legality of the foreclosure and had not taken steps to enjoin the foreclosure sale despite knowing of the alleged usurious interest charges.
Reversal by the Court of Appeals
On appeal, the Court of Appeals reversed the RTC's ruling, emphasizing that the loan agreement failed to specify an interest rate and thus deemed the unilateral imposition of a 30.33% interest rate as excessive and against public policy. The appellate court annulled the foreclosure sale but allowed the bank to pursue a recomputed foreclosure proceeding based on the valid principal amount.
Legal Issues Before the Supreme Court
The petitioner contended that the absence of a stipulated interest rate did not equate to the absence of an agreement on interest payment. They claimed the inconsistencies in the Notice of Sale did not invalidate the foreclosure. Conversely, the respondents argued against the imposition of high interest rates, claiming the corresponding foreclosure was disparaged by usury.
Supreme Court's Resolution and Rationale
The Supreme Court reinforced the legal principle that foreclosure sales resulting from usurious loans lack legal effect. Quoting precedents, the Court undersc
...continue readingCase Syllabus (G.R. No. 192304)
Case Background
- This case involves a petition for review on certiorari filed by Anchor Savings Bank against Pinzman Realty and Development Corporation, Marylin MaAalac, and Renato Gonzales.
- The petition challenges the Court of Appeals (CA) Decision dated September 11, 2009, and Resolution dated May 17, 2010, which reversed the Regional Trial Court (RTC) Decision dated March 16, 2007, in Civil Case No. 00-1094.
- The context of the case revolves around a loan of P3,000,000 obtained by the private respondents secured by a real estate mortgage.
Loan Agreement and Payment Details
- The loan was secured by a mortgage over parcels of land in Cubao, Quezon City, registered under Marylin MaAalac.
- Private respondent MaAalac executed a Promissory Note and Disclosure Statement for a total of P3,308,447.74, including three months of interest.
- The payment structure included:
- First installment: P148,640 due on December 26, 1997.
- Second installment: P148,640 due on January 26, 1998.
- Third installment: P3,011,167.74 due on February 26, 1998.
- The loan documents stipulated a 5% monthly late payment charge, 25% attorney's fees, and 25% liquidated damages for unpaid installments.
Default and Foreclosure Proceedings
- Loan proceeds were released on December 3, 1997, and initial checks were issued for the installments.
- Only the first check cleared, leading to an outstanding balance of P3,012,252.32.
- The private resp