Introduction
The Supreme Court of Justice of the Republic of Peru has ruled through Cassation 1304-2002, Ica, on behalf of the mortgagor, in the case of Oscar Martínez Chuquín vs. the Banco Internacional del Perú. This ruling addresses the reduction of a mortgage after a partial payment and establishes significant precedents on the rights of mortgagors.
Background
On November 15, 1991, the Banco Internacional del Perú granted a $50,000 loan to Martínez, securing the mortgage with two real estate. On February 1, 2001, the bank reported that the balance owed was $24,762.09. Thus, Chuquín requested the reduction of the mortgage, arguing that the property of the “El Rodedal” housing project was sufficient to guarantee the remaining debt, and asked to exclude the property of the Julio Arboleda housing estate.
Contradictory Principles
- Autonomy of contracts: Frequently, contracts must be performed as the parties agree. This principle is called pacta sunt servanda (agreements must be kept) and finds its conformity in Article 1361 of our Civil Code.
- Equity and good faith: These principles ensure fairness and honesty in contractual relations. Equity intends to balance the interests of the parties involved, avoiding situations where one may misuse its position to impose unfair terms on the other. Good faith implies that contracts must be honestly and fairly executed, with a common intention to fulfill the obligations.
Judicial Resolution
The Supreme Court, through Cassation 1304- 2003, Ica, resolved the conflict by prioritizing the principles of equity and good faith, determining that the mortgage should be reduced to reflect the amount of the current debt. This decision is based on fair reporting. Reducing mortgages ensures that the debtor is not disproportionately affected and the creditor is still secured for the amount owed.
Conclusion
The Supreme Court declared the cassation appeal filed by Martínez Chuquín well-founded, annulled the Superior Chamber’s annulled, and upheld the claim for mortgage reduction. This decision underscores the importance of fairness and protection against abuse of rights in mortgage contractual relationships.
Source: IP Derecho