- Petitioner
- Anita Dimas-San Juan
- Respondent
- Adoracion Z. Belo
- Citation
- G.R. No. 243165
- Court
- Supreme Court
- Division
- First Division
- Decided
- January 25, 2023
Summary
This case involves the validity of a dacion en pago sale executed after default on a P1,600,000.00 loan secured by real estate mortgage. The Supreme Court affirmed the Court of Appeals' finding that the dacion en pago constituted pactum commissorium under Article 2088 of the Civil Code, as it allowed automatic appropriation of mortgaged property without foreclosure proceedings. The Court declared the sale void and ordered reinstatement of petitioners' title, while requiring payment of the loan amount. The Court modified the interest rate from the excessive 4.75% monthly (57% annually) to 12% per annum until June 2013, then 6% per annum thereafter pursuant to BSP-MB Circular No. 799. The Court denied petitioners' claim for civil fruits, ruling that the issue was raised for the first time on appeal and that the creditor was a possessor in good faith. This decision reinforces the prohibition against pactum commissorium while balancing creditor and debtor rights through proper foreclosure procedures and reasonable interest rates.