G.R. No. 243891 - MEGALOPOLIS PROPERTIES, INC. (NOW, KAIZEN BUILDERS, INC.), GERALDINE FAJARDO AND SPOUSES HILARIO AND CECILLE APOSTOL, VS. D'NHEW LENDING CORPORATION, JONATHAN DEL PRADO AND PRADEEP "PAUL" LALWANI.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, petitioners delivered 24 checks to respondents to cover the monthly payments according to the restructured loan agreement. The first seven checks issued by petitioners (six checks worth P96,750.00 covering October 16, 2008 to March 16, 2009 and the April 16, 2009 check worth P275,403.33) were either cleared by the drawee bank or paid in cash. However, the checks dated May 16, June 16, and July 16, 2009 were all dishonored upon presentment for having been drawn against insufficient funds. [14] Del Prado informed petitioners that the said checks had been dishonored, but the latter failed to make good on the payments thereon. [15] On July 23, 2009, petitioners filed a Complaint [16] with the RTC for nullification of the interest rate, seeking, inter alia , the following reliefs: To declare as void the 3% monthly interest for being excessive and to fix a legal interest of 12% per annum, computed on the basis of the P4,000,000.00 principal from June to September 2008 and on the basis of the P3,000,000.00 principal balance from October 2008 to September 2010; To declare Megalopolis' balance to be in the amount of P2,568,597.71; To declare null and void the eighteen (18) checks issued by Megalopolis to D'Nhew [Lending]; To declare the loan contract executed on May 15, 2008 extinguished by novation; to declare the Agreement executed on February 25, 2009, the real estate mortgage null and void, and the annotation of the said real estate mortgage on TCT No. T-7972 null and void; To order [respondents] to return to Fajardo her owner's duplicate copy of TCT No. T-7972; and To order [respondents] to pay Megalopolis actual damages, attorney's fees, litigation expenses, exemplary damages, and costs of suit. [17] During the pendency of the case, the mortgaged property was extra­judicially foreclosed for the amount of P5,345,202.00, with D'Nhew Lending as the highest bidder. [18] Ruling of the RTC In a Decision dated May 18, 2015, the RTC declared that the foreclosure of the mortgaged property had rendered all other reliefs prayed for by petitioners moot, and upheld the validity of the interest rate at 3% per month. In so ruling, the RTC stated that the interest should be computed based on the principle of diminishing principal and proceeded to compute petitioners' remaining obligation using the diminishing balance interest rate method as follows: As of the time the property was foreclosed on July 21, 2010, plaintiffs' indebtedness to the defendant was P2,814,862.60 on the principal and P1,266,688.14 representing the unpaid interest from May 16, 2009 to July 16, 2010 or a total of P4,081,550.74. The mortgaged property was sold for P5,345,202.00 thus, it would seem that there was an excess payment of P1,263,651.26. This amount should be returned by defendant D'Nhew Lending Corporation, to the plaintiffs after deducting the reasonable expenses it incurred in the foreclosure proceedings. [19] Accordingly, the RTC dismissed the complaint, but ordered D'N