G.R. No. 233974 - CATALINA F. ISLA, ELIZABETH ISLA, AND GILBERT F. ISLA, V. GENEVIRA[*] P. ESTORGA.

Ruling

accordingly, ordered petitioners to pay respondent the following sums: ( a ) P100,000.00 representing the principal of the loan obligation; ( b ) an amount equivalent to twelve percent (12%) of P100,000.00 computed per year from November 16, 2006 until full payment, representing interest on the loan; ( c ) an amount equivalent to six percent (6%) of the sums due in ( a ) and ( b ) per annum computed from the finality of the CA Decision until full payment, representing legal interest; and ( d ) P20,000.00 as attorney's fees. [20] The CA held that in light of the registry return receipt bearing the signature of Catalina, it was established that petitioners indeed received the demand letter dated November 16, 2006. [21] Meanwhile, it did not agree with the RTC's order providing petitioners alternative remedies, which remedies are, by law, mutually exclusive. Thus, since respondent's Petition for Judicial Foreclosure was essentially an action to collect a sum of money, she is then barred from causing the foreclosure of the subject mortgage. [22] Moreover, the CA ruled that the RTC erred in imposing the interest rate of twelve percent (12%) per annum from December 2007 until full payment. It likewise held that the stipulated interest of ten percent (10%) per month on the real estate mortgage is exorbitant. And finally, it declared that respondent is entitled to the award of attorney's fees based on equity and in the exercise of its discretion. [23] Undaunted, petitioners sought partial reconsideration, [24] claiming that the award of attorney's fees was without factual, legal, and equitable justification and should therefore be deleted. [25] The same, however, was denied in a Resolution [26] dated August 24, 2017; hence, the instant petition, claiming that the CA gravely erred not only in awarding attorney's fees despite the absence of factual justification in the body of its Decision but also in imposing interest of twelve percent (12%) per annum interest until full payment. [27] In her Comment, [28] respondent retorted that the CA's award of attorney's fees was proper and within the discretion of the court. Likewise, the CA correctly imposed interest at the rate of twelve percent (12%) per annum to the principal loan obligation of petitioners. [29] The Issues Before the Court The issue for the Court's resolution is whether or not the CA erred in awarding: (a) twelve percent (12%) interest on the principal obligation until full payment; and (b) attorney's fees. The Court's Ruling The petition is partly meritorious. I. In their petition, petitioners contest the interest imposed on the principal amount of the loan at the rate of twelve percent (12%) per annum from the date of extrajudicial demand until full payment, as stated in paragraph 2 of the CA ruling. In this regard, they argue that pursuant to ECE Realty and Development, Inc. v. Hernandez (ECE Realty) , [30] the applicable interest rate should only be six percent (6%). [31] The argument is unte