Bustamante vs.

Spouses Rosel
GR 126800, November 29, 1999
FACTS
On March 9, 1987, Norma Rosel entered into a loan agreement with petitioner Natalia
Bustamante wherein Norma Rosel borrowed the sum of P100, 000 from the lender for a period of 2
years with 18% interest per annum. As a guaranty to the payment thereof, Rosel put as collateral 70
square meters of her lot situated along Congressional Avenue. The agreement states that in the event
the borrower fails to pay, the lender has the option to buy or purchase the collateral for P200, 000
inclusive of the amount borrowed and the interest therein.
On March 1, 1989, petitioner tendered payment of the loan which the respondents refused to
accept. Respondents insisted on petitioners signing a prepared deed of absolute sale of the collateral.
Respondents also filed with the RTC a complaint for specific performance with consignation against the
petitioner pursuant to the option to buy embodied in the agreement. On the other hand, petitioner
also filed with the RTC a petition for consignation and deposited the amount of P153, 000 with the City
Treasurer. RTC ruled in favor of petitioner. Court of Appeals reversed. Supreme Court affirmed the
decision of the CA so petitioner filed a motion for reconsideration contending that the real intention of
the parties to the loan was to put up the collateral as guaranty similar to an equitable mortgage.
ISSUE
1. W/N petitioner failed to pay the load on maturity
2. W/N the stipulation in the loan contract was valid and enforceable
HELD
1. No
2. No
RATIONALE
1. The loan was due for payment on March 1, 1989. Petitioner tendered payment to settle the loan
which the respondents refused to accept. After the refusal, petitioner consigned the amount with the
trial court.
2. Upon scrutiny of the stipulation of the parties, it can be seen that it is a subtle intention of the
creditor to acquire the property given as security for loan. This is in the nature of PACTUM
COMMISORIUM and is therefore VOID.
Elements of pactum commissorium
a. there should be a property mortgaged as security for a loan
b. there is a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of
non-payment of the principal obligation within the stipulated period.

Nika Llamzon