ONG v ROBAN LENDING CORP.
Pactum Commissorium is prohibited under Art 2088 of the CC which
DOCTRINE: Pactum Commissorium is the Automatic appropriation by the
creditor of the thing pledged or mortgaged upon the failure of the debtor
to pay the principal obligation. Article 2088 prohibits this The creditor cannot
appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is null and void.
FACTS:
Spouses Ong obtained several loans from respondent Roban Lending
Corp that was secured by real estate mortgage on petitioner parcels
of land located in Tarlac City.
On Feb 2001, Spouses on executed an Amendment to Amend Real
Estate Mortgage consolidating their loans inclusive of charges which
totals to 5. 9 mil. To extinguish this, the parties executed a Dacion in
Payment Agreement where petitioner assigned properties covered by
the mortgage property to respondent in settlement of their total
obligation, and a Memorandum of Agreement which provides that
Spouses Ong promise to pay the amount due within one year or else
the Dacion will be enforced.
In April 2002, Spouses Ong filed a complaint before the RTC of
Tarlac to declare the mortgage contract as abandoned, annul the
deeds, illegal exaction, unjust enrichment, accounting and damages,
alleging that the Memorandum of Agreement and Dacion in Payment
executed are void for being PACTUM COMMISSORIUM.
o Petitioner allege that the loans were added interest
denominated as EVAT/AR. Petitioner decried these additional
charges as illegal, iniquitous, unconscionable, and revolting
to the conscience as they hardly allow any borrower any
chance of survival in case of default.
Respondent Roban maintained the legality of the transacrtion.
RTC found no pactum commisorium and dismissed the complaint
CA upheld the RTC decision
ISSUE: Whether or not Pactum Commisorium exists
HELD: Yes, Pactum Commissorium exists.
JTT
provides: the creditor cannot appropriate the things given by way of
pledge or mortgage, or dispose of them, Any stipulation is null and
void.
Elements of Pactum Commissorium
o There should be a property mortgaged by way of security for
the payment of the principal obligation
o There should be a stipulation for automatic appropriation by
the creditor of the thing mortgaged in case of non-payments
of the principal obligation within the stipulated period.
In the case at bar, the Memorandum and Dacion contains no
provision for foreclosure nor redemption.
Respondent argues that dacion is a special form of payment.
However, in the case at bar, the alienation of the properties was by
way of security and not by way of satisfying the debt. The Dacion did
not extinguish the petitioner obligations. The petitioner had to
execute a promissory note for 5 mill first which they were to pay
within one year. The respondents would automatically acquire the
properties upon petitioners failure to pay debts within stipulated
period.
With regard to the interest imposed, the contract provides that the
petitioner must pay. 3.5% per month (42% per annum) and 5% per
month penalty (60% pa) unconscionable. The court reduced it to
12%.
Spouses Ong wins