Facts:

• On August 26, 1898, Luisa Asis y Diangco entered into a loan agreement with Jorge Pardo y Acevedo.
• Luisa borrowed 2,300 pesos from Jorge without interest, secured by a mortgage on seven parcels of real estate.
• The agreement required Luisa to repay the loan within five years, using rents and profits from the mortgaged properties.
• Jorge was granted management rights over the mortgaged properties, and Luisa could not regain enjoyment of them until the loan was repaid.
• The mortgage included necessary equipment for distilling nipa alcohol.
• On February 22, 1902, Luisa filed a complaint seeking an accounting of the management of the mortgaged properties and application of profits towards her debt.
• The lower court found that Luisa had borrowed an additional $470 from Jorge, which was added to the original loan.
• The court noted changes in management of the distillery and the delivery of tuba by Luisa's tenants.
• The main question was whether Jorge had usufruct of the distillery or if its revenue should reduce Luisa's debt.
• The court recognized modifications to the contract and two settlements made on June 12, 1900, and January 1, 1902, which did not address the distillery's use or profits.

Issue:

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Ruling:

• The court affirmed the lower court's judgment, stating that Luisa Asis was not entitled to credit for the distillery's rent for the years before 1902.
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Ratio:

• The court noted that the contract between Luisa and Jorge evolved through modifications and practical applications.
• The settlements on June 12, 1900, and January 1, 1902, indicated Luisa did not claim rights to the distillery's profits during those times.
• This suggested Luisa understood and accepted the management arrangement.
• The court emphasized ...continue reading