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    Ong v. Roban Lending - Digest

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    Perry Lao
    The Ong spouses obtained loans from Roban Lending Corporation totaling 4 million pesos secured by a real estate mortgage. An amendment to the mortgage agreement included a "dacion in payment" clause where the property would automatically be appropriated by the creditor if the debt was not paid within one year. The court found this constituted a pactum commissorium since the property was being used merely as security for the debt rather than satisfying the debt. As such, the amendment was annulled and the interest rates in the agreement were reduced from 42% annually to 12% as they were found to be unconscionable.

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    Ong v. Roban Lending - Digest

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    Perry Lao
    332 views1 page
    The Ong spouses obtained loans from Roban Lending Corporation totaling 4 million pesos secured by a real estate mortgage. An amendment to the mortgage agreement included a "dacion in payment" clause where the property would automatically be appropriated by the creditor if the debt was not paid within one year. The court found this constituted a pactum commissorium since the property was being used merely as security for the debt rather than satisfying the debt. As such, the amendment was annulled and the interest rates in the agreement were reduced from 42% annually to 12% as they were found to be unconscionable.

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    Admin Law Ong v. Roban Lending Case Digest

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    The Ong spouses obtained loans from Roban Lending Corporation totaling 4 million pesos secured by a real estate mortgage. An amendment to the mortgage agreement included a "dacion in payment" clause where the property would automatically be appropriated by the creditor if the debt was not paid within one year. The court found this constituted a pactum commissorium since the property was being used merely as security for the debt rather than satisfying the debt. As such, the amendment was annulled and the interest rates in the agreement were reduced from 42% annually to 12% as they were found to be unconscionable.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    332 views1 page

    Ong v. Roban Lending - Digest

    Uploaded by

    Perry Lao
    The Ong spouses obtained loans from Roban Lending Corporation totaling 4 million pesos secured by a real estate mortgage. An amendment to the mortgage agreement included a "dacion in payment" clause where the property would automatically be appropriated by the creditor if the debt was not paid within one year. The court found this constituted a pactum commissorium since the property was being used merely as security for the debt rather than satisfying the debt. As such, the amendment was annulled and the interest rates in the agreement were reduced from 42% annually to 12% as they were found to be unconscionable.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Ong vs.

    Roban Lending Corporation


    July 9, 2008
    Carpio Morales, J.:
    Topic: Security Devices
    Facts:
    On different dates from Jul 14, 1999 to March 20, 2000, petitioner-spouses Ong
    obtained several loans from Roban Lending Corporation amounting to P4,000,000.
    These were secured by a real estate mortgage over a parcel of land in Tarlac.
    On February 21, 2001, both parties executed an Amendment to the Amended Real
    Estate Mortgage, a pertinent provision of which states, the Second Party hereby
    sign a promissory note in the amount of P5,916,117.50 with a promise to pay the
    First Party, otherwise the Second Part agree to have their DACION IN PAYMENT
    agreement, which they have executed and signed today in favor of the First Party.
    In April 2002, petitioners filed a complaint praying that the Amendment to the
    Amended Real Estate Mortgage be annulled for being pactum commissorium, and to
    have the interest rates reduced for being unconscionable.
    RTC of Tarlac found that there was no pactum commissorium. The CA affirmed the
    RTC ruling.
    Issue / Held:
    WON the Amendment to the Amended Real Estate Mortgage constitutes pactum
    commissorium. YES. The Ong spouses won!
    Ratio:
    2 elements of pactum commissorium (1) there should be a property mortgaged by
    way of security for the payment of the principal obligation, and (2) there should be
    a stipulation for automatic appropriation by the creditor of the thing mortgaged in
    case of non-payment of the principal obligation within the stipulated period.
    In a true dacion en pago, the assignment of the property extinguishes the monetary
    debt. In the case at bar, the alienation of the property was by way of security and
    not by way of satisfying the debt. The Dacion in payment did not extinguish Ongs
    obligation to Roban Lending Corporation. On the contrary, Ong had to execute a
    promissory not which they were to pay within one year.
    As to the interest rates, the court finds the monthly interest rate of 3.5% or 42% per
    annum unconscionable and thus reduces it to 12% p.a. while the penalty fee at the
    monthly interest rate of 5% (60% p.a.) is also unconscionable and reduced it to 12%
    yearly. Moreover, the court finds that the penalty fee of 25% imposed on the
    principal, interests and interests thereon unconscionable and thus reduced it to 25%
    of the principal amount only.
    WHEREFORE, the CA decisions is REVERSED.

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