G.R. No. 231913 - Ang vs. Abaldonado

Case Summary (G.R. No. 231913)

Factual Background

On August 27, 1998, Cristeta Abaldonado obtained a loan of P700,000.00 from Samuel Ang at a stipulated compounded interest of four percent per month and a four percent compounded penalty for delay. The loan was secured by a Real Estate Mortgage over Lot 334-C registered under TCT No. T-125491. After defaults, Ang sent a demand letter dated July 18, 2001 claiming a total indebtedness of P2,543,807.64 and filed an extrajudicial foreclosure petition on August 16, 2002. Foreclosure did not immediately proceed because of litigation filed by Abaldonado’s children challenging an Extrajudicial Adjudication with Waiver of Rights and the REM. The assignment of mortgage rights to Fontaine Bleau Finance and Realty Corporation occurred on December 1, 2005. Fontaine Bleau pursued extrajudicial foreclosure, won the public bidding held March 28, 2006, executed a Final Deed of Sale on June 18, 2007, and obtained TCT No. T-161718 on October 2, 2007. On June 18, 2010, Abaldonado sued to declare the foreclosure proceedings null, to annul the interest stipulation, and for accounting and damages, alleging the interest was unconscionable and seeking that the REM be void ab initio.

RTC Proceedings and Ruling

The Regional Trial Court, Branch 35, Iloilo City, rendered its decision on September 26, 2013. The RTC found the stipulated interest and penalty excessive and equitably reduced them but held that reduction did not void the REM or invalidate the foreclosure sale. The trial court further found Cristeta Abaldonado guilty of laches for failing to challenge the interest clause or the mortgage at the earliest opportunity, noting that she waited twelve years from execution of the loan, almost eleven years after the demand, and several years after the initiation of foreclosure proceedings before filing suit. The RTC dismissed Abaldonado’s complaint and her counterclaim.

Court of Appeals Proceedings and Ruling

The Court of Appeals, in a July 28, 2016 Decision, reversed and set aside the RTC decision. The CA agreed that the four percent monthly interest and four percent penalty were iniquitous and unconscionable but reiterated that a usurious stipulation does not void the principal obligation. The CA held that the usurious interest rendered the foreclosure proceedings void because the usury prevented the mortgagor from redeeming at the correct amount; accordingly, the auction, certificate of sale, Final Deed of Sale, and TCT No. T-161718 were annulled and TCT No. T-125491 in Abaldonado’s name was ordered reinstated. The CA directed that the secured obligation be subject to legal interest of six percent per annum from July 18, 2001 until full satisfaction, remanded the case to the RTC for accounting, and ordered Abaldonado to pay the recomputed obligation within sixty days after finality of the decision. The CA denied the petitioners’ motion for reconsideration in its April 20, 2017 Resolution.

Issues Presented to the Supreme Court

Petitioners framed the principal issues as: whether the CA erred in finding that Abaldonado’s alleged efforts to settle negated laches and in declaring the March 28, 2006 auction void despite evidentiary contradiction; whether Abaldonado foreclosed her right to redeem by failing to validly tender the redemption price or seek judicial fixation of the redemption price; and whether the CA erred in imposing a six percent per annum interest from July 18, 2001 without imposing penalty charges given the loan’s August 27, 1998 origin and the debtor’s admitted delay.

Petitioners’ Contentions

Petitioners argued that the CA misappreciated the testimony of Samuel Ang, which showed that negotiations were conducted with Abaldonado’s children and not with Abaldonado herself, and that Abaldonado did not personally participate in any attempt to settle. They contended that Abaldonado thereby foreclosed her right to redeem by failing to tender the redemption price, by failing to oppose the auction, or by not consigning the redemption price while simultaneously filing an action to fix the same. Petitioners further argued that the prevailing legal interest at the time of contracting was twelve percent and that penalty charges by way of liquidated damages should be imposed for delay.

Respondent’s Contentions

Cristeta Abaldonado opposed the petition and maintained that the CA’s findings were supported by evidence and that the case raised primarily questions of fact. She asserted that laches did not apply because she exerted efforts to redeem and negotiate, that she was deprived of opportunity to redeem at the correct amount due to the usurious interest, and that the CA correctly reduced the usurious stipulation to legal interest of six percent per annum from July 18, 2001.

Supreme Court Ruling and Disposition

The Supreme Court granted the petition. It held that the petition raised reviewable exceptions to the Rule 45 general bar on questions of fact because the CA and RTC had divergent findings and the CA had misapprehended the facts. Applying the doctrine of laches, the Court reversed the CA and reinstated the RTC decision dated September 26, 2013. The Court ordered that the July 28, 2016 Decision and April 20, 2017 Resolution of the Court of Appeals be set aside and that the RTC decision be reinstated.

Legal Basis and Reasoning

The Court observed that petitions under Rule 45, Rules of Court ordinarily present questions of law but that well-recognized exceptions permit review of factual findings, citing the Court’s articulation in Far Eastern Surety and Insurance Co., Inc. v. People and Heirs of Juan M. Dinglasan v. Ayala Corporation. The Court recited the elements of laches as set out in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan: (1) conduct by the defendant giving rise to the complaint; (2) delay by the complainant in asserting rights despite knowledge or notice and opportunity to sue; (3) lack of notice to the defendant that the complainant would assert the right; and (4) injury or prejudice to the defendant if relief is granted. Examining the record, the Court found that the evidence supported the RTC’s findi

Case Syllabus (G.R. No. 231913)

Parties and Procedural Posture

Samuel Ang and Fontaine Bleau Finance and Realty Corporation filed a petition for review on certiorari under Rule 45 seeking reversal of the Court of Appeals decision in CA-G.R. CV No. 05150.
Cristeta Abaldonado was the respondent and original mortgagor who filed the complaint for nullity of foreclosure proceedings and annulment of interest.
The case proceeded from the Regional Trial Court, Branch 35, Iloilo City to the Court of Appeals and thereafter to the Supreme Court on certiorari.
The Supreme Court granted the petition, set aside the Court of Appeals decision, and reinstated the September 26, 2013 Decision of the RTC.

Key Factual Allegations

Cristeta Abaldonado obtained a loan of P700,000.00 from Samuel Ang on August 27, 1998 secured by a Real Estate Mortgage over Lot 334-C under TCT No. T-125491.
The mortgage stipulated a compounded interest of four percent per month and a penalty interest of four percent compounded for delays.
Abaldonado defaulted and received a demand letter dated July 18, 2001 advising a total indebtedness of P2,543,807.64.
Samuel Ang filed an extrajudicial foreclosure petition on August 16, 2002 that did not push through initially because of litigation filed by Abaldonado’s children.
Samuel Ang assigned the mortgage to Fontaine Bleau on December 1, 2005, and Fontaine Bleau won at public bidding on March 28, 2006, executed a Final Deed of Sale on June 18, 2007, and obtained TCT No. T-161718 on October 2, 2007.
Cristeta Abaldonado filed a complaint on June 18, 2010 for declaration of nullity of foreclosure proceedings, annulment of interest rate, accounting, and damages.

Procedural History

The RTC rendered its decision on September 26, 2013 and dismissed Abaldonado’s complaint while equitably reducing the interest but leaving the REM and foreclosure intact and finding laches on Abaldonado’s part.
The Court of Appeals rendered judgment on July 28, 2016 reversing the RTC, voiding the extrajudicial foreclosure and sale, annulling the resultant titles and instruments, declaring the stipulated interest and penalty void, and substituting legal interest of six percent per annum from July 18, 2001.
The Court of Appeals denied reconsideration on April 20, 2017.
Petitioners filed the present petition for review on certiorari under Rule 45, which the Supreme Court resolved on January 15, 2020.

Issues Presented

Whether the Court of Appeals erred in finding that Cristeta Abaldonado’s alleged efforts to amicably settle negated the existence of laches and in declaring the March 28, 2006 auction void.
Whether Cristeta Abaldonado had foreclosed her right to redeem Lot 334-C by failing to validly tender the redemption price before the expiration of the redemption period.
Whether the Court of Appeals erred in imposing an interest rate of six percent per annum from July 18, 2001 without imputing penalty charges or applying the legal interest prevailing at the time of the loan.

Contentions of the Parties

Petitioners contended that the Court of Appeals misappreciated the testimony and record, that Abaldonado did not personally participate in settlement efforts, that she failed to redeem or consign the redemption price, and that the proper interest to apply was twelve percent or that penalty liquidated damages should be imposed.
Cristeta Abaldonado contended that her actions did not constitute laches, that she was denied opportunity to redeem at the correct amount because of the usurious interest, and that the Court of Appeals correctly reduced the stipulated interest to six percent per annum from July 18, 2001.

Trial Court Ruling

The RTC dismissed Abaldonad