- Petitioner
- Spouses Wilfredo N. Ong
- Respondent
- Roban Lending Corporation
- Citation
- G.R. No. 172592
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Carpio-Morales, J.
- Decided
- July 9, 2008
Summary
The Supreme Court reversed lower courts' decisions in this civil case involving loan agreements between spouses and a lending corporation. The petitioner-spouses obtained P4 million in loans secured by real estate mortgage, later consolidated to P5.9 million through agreements executed February 12, 2001. The Court found the Memorandum of Agreement and Dation in Payment constituted prohibited pactum commissorium under Article 2088 of the Civil Code, as they provided for automatic appropriation of mortgaged property without foreclosure proceedings upon non-payment. The Court distinguished this from true dacion en pago which extinguishes debt, noting here the spouses remained obligated under a promissory note. Finding loan terms unconscionable, the Court reduced monthly interest from 3.5% to 12% per annum, penalty charges from 5% monthly to 12% annually from demand, and attorney's fees to 25% of principal only. The case was remanded for accounting proceedings on partial payments claimed by petitioners.