Luzon Dev't Bank V Enriquez
Luzon Dev't Bank V Enriquez
Luzon Dev't Bank V Enriquez
FACTS:
Petitioner DELTA is a domestic corporation engaged in the business of developing and selling
real estate properties, particularly Delta Homes I in Cavite. DELTA is owned by Ricardo De Leon.
De Leon and his spouse obtained a ₱4M loan from the BANK for the development of Delta
Homes I. To secure the loan, the spouses executed a real estate mortgage, including Lot 4
property. Sometime in 1997, DELTA executed a Contract to Sell with respondent Angeles
Catherine Enriquez over the house and lot in Lot 4. DELTA defaulted on its loan obligation, the
BANK, instead of foreclosing the real estate mortgage, agreed to a dation in payment. Unknown
to Enriquez, among the properties assigned to the BANK was the house and lot of Lot 4, which
is the subject of her Contract to Sell with DELTA.
Enriquez then filed a complaint against DELTA and the BANK alleging that DELTA violated the
terms of its License to Sell.
ISSUE:
W/N the dacion en pago extinguished the loan obligation, such that DELTA has no more
obligations to the BANK – YES.
HELD:
DACION EN PAGO EXTINGUISHED THE LOAN OBLIGATION.
Like in all contracts, the intention of the parties to the dation in payment is paramount and
controlling. The contractual intention determines whether the property subject of the dation
will be considered as the full equivalent of the debt and will therefore serve as full satisfaction
for the debt. “The dation in payment extinguishes the obligation to the extent of the value of
the thing delivered, either as agreed upon by the parties or as may be proved, unless the
parties by agreement, express or implied, or by their silence, consider the thing as equivalent to
the obligation, in which case the obligation is totally extinguished.”
In the case at bar, the Dacion en Pago executed by DELTA and the BANK indicates a clear
intention by the parties that the assigned properties would serve as full payment for DELTA’s
entire obligation.
Thus,
1. Delta Development and Management Services, Inc. is NOT LIABLE TO PAY Luzon
Development Bank the value of the subject lot; and
2. Respondent Angeles Catherine Enriquez is ordered to PAY the balance of the purchase
price and the interests accruing thereon, to the Luzon Development Bank.
3. The Luzon Development Bank is ordered to DELIVER a CLEAN TITLE to Angeles Catherine
Enriquez upon the latter’s full payment of the balance of the purchase price and the
accrued interests.
JUDGMENT:
WHEREFORE, Decision of the CA, as well as its June 22, 2005 Resolution in CA-G.R. SP No. 81280
are hereby AFFIRMED with the MODIFICATIONS that Delta Development and Management
Services, Inc. is NOT LIABLE TO PAY Luzon Development Bank the value of the subject lot; and
respondent Angeles Catherine Enriquez is ordered to PAY the balance of the purchase price
and the interests accruing thereon, as decreed by CA, to the Luzon Development Bank, instead
of Delta Development and Management Services, Inc., within thirty (30) days from finality of
this Decision. The Luzon Development Bank is ordered to DELIVER a CLEAN TITLE to Angeles
Catherine Enriquez upon the latters full payment of the balance of the purchase price and the
accrued interests.