GR 231913; (January, 2020) (Digest)
G.R. No. 231913 , January 15, 2020
Samuel Ang and Fontaine Bleau Finance and Realty Corporation, Petitioner, v. Cristeta Abaldonado, Respondent.
FACTS
On August 27, 1998, respondent Cristeta Abaldonado obtained a P700,000.00 loan from petitioner Samuel Ang, secured by a Real Estate Mortgage (REM) over her property. The loan stipulated a compounded interest rate of 4% per month, with an additional 4% compounded interest as a penalty for delay. Abaldonado failed to pay several installments. On July 18, 2001, Ang demanded payment of the total indebtedness, which had ballooned to P2,543,807.64, threatening foreclosure. As Abaldonado did not pay, Ang filed a Petition for Extrajudicial Foreclosure on August 16, 2002. These proceedings were initially halted by a case filed by Abaldonado’s children against her and Ang, which was later dismissed. On December 1, 2005, Ang assigned his mortgage rights to petitioner Fontaine Bleau Finance and Realty Corporation. Fontaine Bleau filed a new Petition for Extrajudicial Foreclosure. A public auction was held on March 28, 2006, with Fontaine Bleau as the winning bidder. A Final Deed of Sale was executed on June 18, 2007, and title was consolidated in Fontaine Bleau’s name on October 2, 2007. On June 18, 2010, Abaldonado filed a Complaint for Declaration of Nullity of Foreclosure Proceedings, Annulment of Interest Rate, Accounting and Damages, arguing the interest rate was unconscionable and the subsequent foreclosure void. The Regional Trial Court (RTC) dismissed the complaint, ruling the interest was excessive and should be equitably reduced, but that the REM and foreclosure were valid, and Abaldonado was guilty of laches. The Court of Appeals (CA) reversed the RTC, declaring the foreclosure void due to the iniquitous interest, annulling the related sale and title, ordering the reinstatement of Abaldonado’s title, reducing the interest to 6% per annum from July 18, 2001, and remanding the case for accounting. Petitioners appealed to the Supreme Court.
ISSUE
1. Whether the Court of Appeals erred in finding that Abaldonado’s alleged efforts to settle negated laches and in declaring the auction sale void.
2. Whether Abaldonado foreclosed her right to redeem the property by failing to validly tender the redemption price.
3. Whether the Court of Appeals erred in imposing an interest rate of 6% per annum from July 18, 2001, without penalty charges.
RULING
The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the CA Decision and Resolution, and REINSTATED the RTC Decision dismissing Abaldonado’s complaint.
1. On Laches: The Court found Abaldonado guilty of laches. Laches is the failure or neglect to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has abandoned or declined to assert it. Abaldonado slept on her rights by questioning the loan and REM only after twelve years from its execution, nearly eleven years from the demand letter, and almost six years from the initiation of foreclosure. She could have assailed the interest or the REM when she received the demand, when foreclosure commenced, or in the case filed by her children. Her inaction prejudiced petitioners, who relied on her acquiescence and proceeded with the foreclosure. The CA’s finding that her settlement efforts negated laches was erroneous, as the evidence showed negotiations were conducted by her children, not by Abaldonado herself, and there was no proof they were authorized to act on her behalf.
2. On Right to Redeem: The Court held that Abaldonado’s failure to validly tender the redemption price or file a legal action to fix the price during the redemption period foreclosed her right to redeem. She did not oppose the public auction or consign the redemption price to establish good faith while simultaneously filing a case to fix the price.
3. On Interest Rate: While the Supreme Court agreed with the lower courts that the stipulated 4% monthly interest compounded with a 4% penalty was iniquitous and unconscionable, the resolution of this issue became moot due to the finding of laches. The RTC’s decision to equitably reduce the interest was reinstated along with its dismissal of the complaint. The Court did not reach the merits of petitioners’ argument regarding the specific interest rate or penalty charges.