State Investment House v. Court · G.R. 112590

Petitioner: State Investment House
Respondent: Court of Appeals
Citation: G.R. No. 112590
Court: Supreme Court
Division: First Division
Ponente: Kapunan, J.
Decided: July 12, 2001

Summary

State Investment House, Inc. (SIHI) purchased receivables consisting of checks worth P2,558,073.75 from Lomuyon Timber Industries in 1978. When the checks were dishonored, SIHI imposed 3% monthly penalty charges and foreclosed on real estate mortgage securing the debt. After the foreclosure sale yielded P4,233,874.00, SIHI claimed a deficiency of P2,601,147.62. The Supreme Court affirmed lower courts' decisions denying the deficiency claim, finding the 3% monthly penalty charges unconscionable under Articles 1229 and 2227 of the Civil Code. The Court noted that SIHI's original P2.5M investment had already earned over P2M in interest and charges, and allowing recovery of the claimed amount would result in profits nearly three times the original investment, which would be inequitable and unconscionable.

Statutes applied

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By Intellegal Editorial Board · July 12, 2001

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