Rogelio Lim, Jr. v. Geraldine S. Oville

Summary

This Supreme Court case involved a loan dispute where Spouses Lim borrowed P5,000,000.00 from Oville with 5% monthly interest. After multiple extensions and interest payments totaling P1,750,000.00, the security checks were dishonored, prompting Oville to file a collection case. The RTC initially upheld the 5% monthly interest rate, but the CA found it unconscionable and applied legal interest rates instead. The Supreme Court affirmed that the 5% monthly interest was unconscionable and void under Article 1306 of the Civil Code, but corrected the CA's computation of the outstanding principal amount from P3,685,026.30 to P3,490,970.15. The Court applied graduated interest rates based on BSP circulars: 12% per annum until June 30, 2013, then 6% per annum thereafter, emphasizing that while parties may stipulate interest rates, courts retain authority to temper unconscionable rates that violate morals and public policy.