- Petitioner
- Spouses Florentino T. Mallari
- Respondent
- Mallari
- Citation
- G.R. No. 197861
- Court
- Supreme Court
- Division
- Third Division
- Ponente
- Peralta, J.
- Decided
- June 5, 2013
Summary
Spouses Mallari obtained two loans from Prudential Bank: P300,000 in 1984 (21% p.a. interest) and P1.7 million in 1989 (23% p.a. interest, 12% p.a. penalty). After default, the bank foreclosed the mortgaged property. Petitioners challenged the interest rates as unconscionable and claimed improper computation of obligations. The Supreme Court affirmed lower courts' dismissal, ruling that 23% p.a. interest rate was not excessive compared to precedents involving 66-84% annual rates. The Court emphasized freedom of contract principles and found the penalty charges valid as liquidated damages. The case establishes that interest rates below 24% p.a. are generally reasonable in banking transactions, and contracting parties are bound by validly stipulated terms absent unconscionability.