G.R. No. 173856 – DAO HENG BANK, INC., now BANCO DE ORO UNIVERSAL BANK, petitioner, vs. SPS. LILIA and REYNALDO LAIGO, respondent.
CARPIO MORALES, J.
Rule Synopsis
Dacion en pago as a mode of extinguishing an obligation is governed by the rules on sale. Hence, essential requisites as consent, object, and cause of consideration must likewise be present. A contract cannot be said to have been partially performed, failing to show even its perfection by the concurrence of said elements.
Facts
Spouses Lilia and Reynaldo Laigo obtained a loan from Dao Heng Bank, Inc. (Dao Heng)secured by real estate mortgage on their two lots. The former defaulted, for which they verbally offered to cede to Dao Heng one of the two mortgaged lots by way of dacion en pago. Dao Heng commissioned an appraiser for such purpose, fees to be borne by Sps Laigo. Nonetheless, Dao Heng proceeded to foreclose the mortgage for failure of Sps Lago to pay despite demands; they also failed to redeem.
Instead, Sps Laigo filed a complaint before the RTC, praying for, among others, the annulment of the foreclosure of the properties subject of the real estate mortgages and for them to be allowed “to deliver by way of ‘dacion en pago’ one of the mortgaged properties as full payment of [their] mortgaged obligation.”
As defense, Dao Heng argued that the alleged daction en pago contract was unenforceable under the Statute of Frauds. Sps Laigo claimed that there was partial performance of the same given the commissioning of the appraiser, delivery of title to the property, among others, taking the contract out of the coverage of the Statute of Frauds.
The RTC dismissed the complaint. The CA reinstated. The SC reversed; the complaint was finally dismissed.
Issue
Was there a partial performance of the dacion en pago agreement that will take that same out of the coverage of the Statute of Frauds?
Ruling and Discussion
No. There was no partial performance of the dacion en pago agreement that will take that same out of the coverage of the Statute of Frauds. The contract was not even been shown to have been perfected as the creditor’s consent to the same was not duly established.
Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation that requires the consent of both the debtor and the creditor.
In this case, there is no concrete showing, that after the appraisal of the properties, Dao Heng approved Sps Laigo’s proposal to settle their obligation via dacion en pago. The delivery to Do Heng of the titles to the properties is a usual condition sine qua non to the execution of the mortgage, both for security and registration purposes. For if the title to a property is not delivered to the mortgagee, what will prevent the mortgagor from again encumbering it also by a mortgage or even by sale to a third party.
Dispositive
Decision reversed and set aside.