G.R. Nos. 150773 & 153599, September 30, 2005
Spouses David B. Carpo and Rechilda S. Carpo, Petitioners, vs. Eleanor Chua and Elma Dy Ng, Respondents.

FACTS

1. On July 18, 1995, petitioners-spouses Carpo borrowed ₱175,000.00 from respondents Eleanor Chua and Elma Dy Ng, payable within six months with an interest rate of 6% per month. To secure the loan, petitioners mortgaged their residential house and lot.
2. Petitioners failed to pay the loan upon demand. Consequently, the real estate mortgage was extrajudicially foreclosed, and the property was sold at public auction on July 8, 1996, with respondents as the winning bidders for ₱367,457.80.
3. After petitioners failed to redeem the property, a certificate of sale was issued on September 5, 1997, and the title was transferred to respondents.
4. Petitioners continued to occupy the property, prompting respondents to file a petition for a writ of possession (Special Proceedings No. 98-1665). The RTC issued an order for the writ on March 23, 1999.
5. On July 23, 1999, petitioners filed a complaint (Civil Case No. 99-4376) for annulment of the real estate mortgage and the foreclosure proceedings, consigning ₱257,197.26 with the RTC. The RTC (Branch 26, Naga City) later issued orders temporarily restraining and then suspending the enforcement of the writ of possession pending the outcome of the annulment case.
6. On October 26, 2001, the RTC dismissed petitioners’ complaint for annulment, ruling it was filed out of time and barred by laches, treating it as an action to annul a voidable contract subject to a four-year prescriptive period.
7. Respondents challenged the suspension orders in SP No. 98-1665 via a petition for certiorari and mandamus before the Court of Appeals (CA-G.R. SP No. 57297). On April 30, 2002, the CA annulled the RTC’s suspension orders, holding that the issuance of a writ of possession is a ministerial duty once title is consolidated in the mortgagee.
8. Petitioners filed two separate petitions for review before the Supreme Court: G.R. No. 150773 assailing the dismissal of their annulment complaint, and G.R. No. 153599 assailing the CA decision setting aside the suspension of the writ of possession. The Supreme Court consolidated the cases.

ISSUE

1. In G.R. No. 150773 : Whether the stipulated interest rate of 6% per month (72% per annum) is excessive, iniquitous, unconscionable, and exorbitant, rendering it void, and whether such invalidity affects the entire loan and accessory mortgage contract.
2. In G.R. No. 153599: Whether the Court of Appeals correctly annulled the RTC orders suspending the enforcement of the writ of possession and ruled that the writ must be issued as a ministerial duty.

RULING

1. On G.R. No. 150773 (Validity of Interest Rate and Mortgage):
– The Supreme Court ruled that the stipulated interest rate of 6% per month (72% per annum) is excessive, iniquitous, unconscionable, and exorbitant, and therefore void. This aligns with precedents such as Medel v. Court of Appeals (5.5% per month void), Solangon v. Salazar (6% per month void), and others where similarly high rates were invalidated.
– However, the invalidity of the interest stipulation does not render the entire loan contract or the accessory real estate mortgage null and void. Citing Briones v. Cammayo, the Court held that a usurious loan transaction is defective only with respect to the excessive interest, not the principal obligation. The mortgage, as an accessory contract, remains valid as it secures the principal loan.
– The Court modified the obligation. Petitioners are liable to pay the principal loan of ₱175,000.00, but the interest is reduced to a legal rate of 12% per annum from the date of judicial demand (filing of the complaint on July 23, 1999). The consigned amount of ₱257,197.26 shall be applied to this adjusted obligation.
– The RTC’s dismissal of the complaint on grounds of prescription and laches was reversed. The action, being one to annul a voidable stipulation (the interest rate) within the loan, was not time-barred under the circumstances presented.
2. On G.R. No. 153599 (Writ of Possession):
– The Supreme Court affirmed the Court of Appeals’ decision. Once the foreclosure sale has been made and title has been consolidated in the name of the mortgagee-purchaser (respondents), the issuance of a writ of possession is a ministerial duty of the court. The pendency of a separate action for annulment of the mortgage does not justify suspending the writ.
– The RTC orders suspending the writ of possession constituted grave abuse of discretion. Certiorari was a proper remedy because the orders were patently erroneous, and appeal would not provide adequate relief.
– Respondents, as the registered owners after consolidation of title, are entitled to possession of the property.
DISPOSITIVE:
– In G.R. No. 150773 , the RTC Decision dated October 26, 2001, is REVERSED and SET ASIDE. The stipulated interest rate is declared void. Petitioners are ordered to pay respondents the principal loan of ₱175,000.00 with interest at 12% per annum from July 23, 1999, until fully paid. The consigned amount shall be applied accordingly.
– In G.R. No. 153599, the Court of Appeals Decision dated April 30, 2002, is AFFIRMED. The RTC orders suspending the writ of possession are declared null and void. The writ of possession in favor of respondents shall be enforced.