Bustamante vs. Rosel

April 17, 2018 | Author: Ruth Lumibao | Category: Collateral (Finance), Loans, Mortgage Loan, Consideration, Debt
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Bustmante vs. Rosel

 November 29, 1999 1999 | Pardo, J. | Obligatory force between parties; What may not be stiplated PETITIONER: Natalia Bustamante RESPONDENT: Sps. Rodito F. Rosel and Norma Rosel Natalia !stamante !stamante and her hsband hsband "already "already deceased# deceased# entered entered into a loan agreement agreement with the $ps% &osel% &osel% 'ccording 'ccording to their  their  SUMMAR: Natalia agreement, shold Natalia fail to pay the loan, the sposes will have the option to by the land owned by Natalia, which was designated as collateral% collateral% When the loan was abot to matre, the sposes told Natalia that they wold li(e to by the lot instead% Natalia refsed, and the sposes refsed to accept her payment for the loan% &)* rled in favor of Natalia% *' rled in favor of the sposes% $* initially rled in favor of the sposes, citing that contracts have the force of law between contracting parties% +n Natalias -&, however, the $* fond that the stiplation  providing for an option to b y is void for being a pactm commissorim, which is proscribed by law nder 'rticle 2.//, in relation to 'rticle 10.% DO!TRINE:  )he general rle is contracts have the force of law between contracting parties, and that parties are free to establish stiplations, clases, terms, and conditions as they may deem convenient% One of the eceptions is when the stiplation is contrary to law, which in this case, was a  pactum commissorium. 'ccording 'ccording to 'rticle 'rticle 2.//, 3)he creditor cannot appropriate appropriate the things things given by way of pledge pledge or motgage, motgage, or  dispose of them% 'ny stiplation to the contrary is nll and void%4

FA!TS: 1% Norm Normaa &ose &osell ente entere red d into into a loan loan agreem agreemen entt with with Natal Natalia ia !stamante and her late hsband, +smael *% !stamante% )he foll follow owin ing g are are the the term termss and and cond condit itio ions ns of the the loan loan agreement5 a% Nata Natali liaa will will borrow borrow the the sm of P1.., P1..,.. ... . from the the $ps% &osel% )his will be given in a period of 2 years, conted from Mar"# $% $&'(, with an interest of 1/6  per annm%  b% Natalia, as registered owner of a parcel of land, will se 7. s8are meters as collateral for payment of the debt% c% +n the event event that that Natal Natalia ia fails fails to pay pay, the spos sposes es &osel will have the option to by or prchase the collat collatera erall for a total total consid considera eratio tion n of P2..,. P2..,..., .., inclsive of the borrowed amont and interest therein% 2% When When the the loa loan n was was abo abott to mat matr ree on Mar"# $% $&'&% the spo spose sess &ose &osell prop propos osed ed to by by at the the pre prese sett pric pricee of  P2..,..., the 7. s8% m% parcel of land sed as collateral% 0% Natalia Natalia refse refsed d to sell sell and re8es re8ested ted for for an etens etension ion of time to pay the loan% loan% $he also offer offered ed to sell sell to respon responden dents ts another residential lot located at &oad 2., Pro:ect /, e% On Mar"# Mar"# $% $&'&% Natalia tendered payment of the loan to the sposes, bt the latter refsed to accept it, and insisted that Natalia sign a prepared deed of absolte sale of the collateral% % On ?ebr ?ebra ary ry 2/, 199. 199.,, the spos sposes es file filed d with with the &)* &)* of  e0 P1>0,. ,... .. with with the the *ity *ity )reas )reasre rer% r% )he )he spose sposess also also consig consigned ned the amon amontt of  P=7,>..% "!ecase they really, really wanted to by the land designated as collateralA# /% &)* &)* rle rled d in in favo favorr of of Nata Natalia lia%% 9% *' reversed reversed and set set aside aside the &)* &)* rling rling,, re8iring re8iring Natali Nataliaa to eecte a deed of sale in favor of the sposes and to

accept the amont consigned by the sposes% 1.% )he $* already already had a decision, denying denying Natalias Natalias petition petition on the grond that there was no reversible error on the part of  the *' in ordering the eection of the necessary deed of  sale in conformity with the stiplated agreement% +t arged that the "ontra"t is t#e la) *et)een t#e parties. 11% 11% Natalia Natalia filed filed a motion for reconsid reconsiderati eration% on% ISSUE+S: 1% WBN Natal Natalia ia failed failed to to loan loan at its its matri matrity ty date date  NO NO 2% WBN WBN the the stip stipl lat atio ion n in the the loan loan cont contra ract ct was was vali valid d and and enforceable  NO RU,IN-: ?ormer rling set aside, -& C&'N)DE% RATIO: 1% )he sale sale of the colla collateral teral was an an obligati obligation on with with a sspens sspensive ive condition% +t was dependent pon the happening of an event  F Natalias Natalias failre to pay the loan% $ince Natalia had the capacity to pay, tendered and even consigned the amont, the sposes did not have the right to demand flfillment of the  petitioners obligation to deliver the collateral% )he *ort also too( note of the fact that the consideration of P2..,... was was inad inade8 e8a ate te for for a 7. s8%m s8%m%% prop proper erty ty loca locate ted d at *ongressional 've%, *% 2% While While it is tre tre that that a contrac contractt has the forc forcee of law betw between een the contracting parties and mst be complied with in good faith, faith, there there are certain eceptions eceptions as provided provided in 'rticl 'rticlee 10.5 those that are contrary to law, morals, good cstoms,  pblic order, order, or pblic policy% 0% )he )he cor cortt fon fond d that that the stip stipla lati tion on in the the cont contra ract ct "$DD "$DD GNED GNED&H &H+N +NDE DE P'&) I1 O? ?'*)$# *)$# was was a pa"tum "ommissorium, whic which h is prosc proscri ribe bed d by law ARTI!,E /0''1. )he )he foll follow owin ing g are are the the elem elemen ents ts of a pact pactm m commissorim5 a# )her )heree sho shold ld be a prop proper erty ty mortg mortgag aged ed by way way of  secrity for the payment of the principal obligation%  b# )here shold be a stiplation for atomatic appropriation by the creditor of the thing mortgaged in case of nonpayment of the principal obligation within the stiplated period% =% )he stiplation was declared void, and Natalia is nder no obligation to give the land designated as collateral becase she was able to pay the debt%

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