Case Digest (G.R. No. 212734)
Facts:
In Spouses Wilfredo N. Ong and Edna Sheila Paguio-Ong v. Roban Lending Corporation (G.R. No. 172592, July 9, 2008), petitioners obtained several loans from respondent from July 14, 1999 to March 20, 2000 totaling ₱4,000,000.00, secured by a real estate mortgage on their parcels in Binauganan, Tarlac City (TCT No. 297840). On February 12, 2001, the parties executed an Amendment to Amended Real Estate Mortgage consolidating obligations to ₱5,916,117.50, a Dacion in Payment Agreement assigning the mortgaged property in settlement of that amount, and a Memorandum of Agreement restructuring the debt by a new promissory note due in one year, “otherwise” granting respondent the right to enforce the Dacion. In April 2002, petitioners sued in RTC Tarlac City (Civil Case No. 9322) for declaration of the mortgage abandoned, annulment of deeds, illegal exaction, unjust enrichment, accounting, damages, and for nullity of the Memorandum and Dacion as pactum commissorium. They challenged the 3Case Digest (G.R. No. 212734)
Facts:
- Loan Transactions
- From July 14, 1999 to March 20, 2000, Spouses Wilfredo N. Ong and Edna Sheila Paguio-Ong obtained several loans from Roban Lending Corporation totaling ₱4,000,000, secured by a real estate mortgage on their Tarlac City property (TCT No. 297840).
- On February 12, 2001, the parties executed an Amendment to Amended Real Estate Mortgage consolidating all obligations to ₱5,916,117.50.
- Concurrent Agreements
- On the same date, they signed a Dacion in Payment Agreement assigning the mortgaged property to respondent to settle the consolidated debt.
- They also executed a Memorandum of Agreement (MOA) restructuring the loans, creating a new promissory note for ₱5,916,117.50 payable within one year, and stipulating that failure to pay would automatically enforce the Dacion in Payment.
- Trial Court Proceedings
- In April 2002, petitioners filed Civil Case No. 9322 in the RTC of Tarlac City seeking:
- Declaration of the mortgage, its amendments, the MOA, and the Dacion in Payment as null and void for pactum commissorium;
- Striking out of alleged illegal interest, penalties, EVAT/AR charges, and attorney’s fees;
- Accounting, damages, and attorneys’ fees.
- After several resets for settlement efforts, only respondent filed a memorandum.
- On April 21, 2004, Branch 64, RTC issued a decision (styled as judgment on the pleadings but functionally a summary judgment) dismissing the complaint for lack of pactum commissorium.
- Court of Appeals Proceedings
- Petitioners appealed; the CA held that despite misnaming, the trial disposition was a proper summary judgment since no material fact was disputed on pactum commissorium.
- The CA affirmed the RTC decision; petitioners’ motion for reconsideration was denied.
- Petition to the Supreme Court
- Petitioners filed a petition for review on certiorari, arguing that:
- The CA erred in denying due process by disposing of disputed factual issues via summary judgment;
- The MOA and Dacion in Payment are pactum commissorium and void;
- The interest, penalties, EVAT/AR, and attorney’s fees are unconscionable;
- An accounting is necessary to determine actual loan balances.
Issues:
- Validity of Agreements
- Do the MOA and Dacion in Payment constitute pactum commissorium and thus violate Art. 2088 of the Civil Code?
- Alternatively, are they valid as dacion in pago under Art. 1245?
- Legality and Quantum of Charges
- Are the interest rate (3.5% per month), penalty (5% per month), EVAT/AR charges, and 25% attorney’s fees unconscionable?
- Should these charges be reduced?
- Procedural Due Process
- Was summary judgment appropriate given the existence of genuine issues, particularly on petitioners’ payments and accounting?
- Did the dismissal without trial violate petitioners’ right to due process?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)