SSS vs. Moonwalk Devt. and Housing Corp.

G.R. No. 73345 | April 7, 1993 | CAMPOS, JR., J

FACTS: Respondent Moonwalk loaned a sum of money from complainant SSS. The
loan was eventually paid resulting to SSS releasing the mortgages of respondent.
When SSS realized that it
committed an error in failing to compute the 12% interest due on delayed payment
s, it filed a complaint against respondent Moonwalk demanding an unpaid balance on
their principal loan agreement and said penalties for delayed payment. SSS contends
that the waiver of a right must be express, made in a clear and unequivocal manner
and that as a trust fund, it cannot condone penalties.

ISSUE: W/N the obligation is extinguished and respondent is not liable for the unpaid
penalties?

RULING: Yes, the obligation is extinguished and respondent is not liable for the
unpaid penalties.

The Court held that the penalties sought to be enforced by SSS is a penal clause
which is an accessory obligation which the parties attach to a principal obligation for
the purpose of insuring the performance in case the obligation is not fulfilled or is
irregularly or inadequately fulfilled. An accessory obligation is dependent for its
existence on the existence of a principal obligation. A principal obligation may exist
without an accessory obligation but an accessory obligation cannot exist without a
principal obligation. If therefore the principal obligation does not exist the penalty
being accessory cannot exist.

Moreover, it is noteworthy that in the present case during all the period when the
principal obligation was still subsisting, although there were late amortizations there
was no demand made by the creditor, plaintiff-appellant for the payment of the
penalty. There is no mora or delay unless there is a demand. Therefore up to the
time of the letter of plaintiff-appellant there was no demand for the payment of the
penalty, hence the debtor was no in mora in the payment of the penalty.

For all purposes therefore the principal obligation of defendant-appellee was deemed
extinguished as well as the accessory obligation of real estate mortgage. The penal
clause which is also an accessory obligation must also be deemed extinguished
considering that the principal obligation was considered extinguished, and the penal
clause being an accessory obligation. The demands for payment of the penal clause
made by plaintiff-appellant are therefore ineffective as there was nothing to demand.
Payment of the penalty does not mean gain or loss of plaintiff-appellant since it is
merely for the purpose of enforcing the performance of the main obligation has been
fully complied with and extinguished, the penal clause has lost its raison d' entre