The deficiency period (where no capital is repaid) is fixed for the first two years, with payment of agreed interest in six monthly periods. Once this period is up the successive six month periods of the prolongation constitute the repayment period, with gradual payment of the capital, with due payment of part of the capital as well as interests, in six monthly payments

At the end of each period, if the loan is not prolonged, total expiry is produced. And as such the bank can demand all capital due for repayment

If the borrower does not execute the prolongation faculty he will be liable for repayment of the outstanding capital, notifying the bank with a month's notice, the date of payment

Approximately one year after signing for the loan, the hotel is sold to a company, which is substituted in the mortgage. From the price agreed for the sale of the hotel, the buyer retains a certain amount of money, destined to paying off the mortgage payments on the hotel. The buyer binds himself to settle accounts with the seller once the bank has effected the opportune payment

The bank effects payment, including the compensation charge for payment outside the dates agreed in the loan documents

The object of litigation centres on whether the bank is entitled to penalise the borrower, in terms of compensation, for repayment outside the dates agreed in the contract. After passing through two courts, the case reaches the Supreme Court

The Supreme Court states that in the loan contract that there is no mention in any part of the penalty clause that the bank has exercised. Furthermore, the court affirms that in the documents of the purchase option presented to the purchaser of the hotel, there was a figure for payment of the loan, logically set out by the bank. In the purchase option document, also, it was stated that the bank would be present in execution of the public deeds of the definitive sale and that here would certify and receive the capital and interests corresponding to the existing loans

The court affirms that if the bank thought for one moment, with respect to one of the loans, that the agreed notification for cancellation of the loan had not been fulfilled, it could perfectly well deny the applied for cancellation, but in no case was the bank entitled to convert this presumed non-fulfilment into a compensation in the bank's favour, which nobody had envisaged or agreed to

The court finds that in application of the General Law for Consumer and User Protection, which regulates in its article 10c), the fair balance and good faith, that between the two parties, must be present in all contracts with clauses not negotiated by the consumer, avoiding conditions or abusive interpretation of the contract or penalisations that do not correspond with additional obligations

Thus said, the court rejects the banks argument and accepts the reasoning of Citizen X