Introduction
The Supreme Court of Justice of the Republic of Peru has ruled through Cassation 1304-2003, Ica, in favor of the mortgagor in the case of Oscar Honorio Martínez Chuquín v. Banco Internacional del Perú. This ruling addresses the reduction of a mortgage after a partial payment and establishes important precedents on the rights of mortgagors.
Context
On November 15, 1991, Banco Internacional del Perú granted a $50,000 loan to Martínez Chuquín, securing the mortgage with two real estate properties. On February 1, 2001, according to, the bank reported that the balance owed was $24,762.09. Being so Chuquín requested the reduction of the mortgage, arguing that the property of Conjunto Habitacional “El Rosedal” was sufficient to guarantee the remaining debt, and asked to exclude the property of Urbanización Julio Arboleda.
Contradictory Principles
- Autonomy of contracts: Normally, contracts must be performed as agreed between the parties, this principle is called pacta sunt servanda and finds its conformity in article 1361 of our Civil Code.
- Equity and good faith: Equity and good faith, the principles of equity and good faith are essential to ensure fairness and honesty in contractual relations. Equity seeks to balance the interests of the parties, avoiding situations where one party may abuse its position to impose unfair terms on the other. Good faith implies that contracts must be executed honestly and fairly, with a common intention to fulfill the obligations assumed.
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 the idea that contracts, although they must be respected, cannot be executed in a way that results in an injustice or abuse of rights. The reduction of the mortgage ensures that the debtor is not disproportionately affected and that the creditor still has sufficient security for the amount owed.
Conclusion
The Supreme Court declared the cassation appeal filed by Martínez Chuquín well founded, annulled the decision of the Superior Chamber and upheld the claim for mortgage reduction. This ruling underscores the importance of fairness and protection against abuse of rights in mortgage contractual relationships.
Source: IP Derecho