Case Digest (A.M. No. P-17-3754)
Facts:
On February 22, 1962, Aurelio G. Briones (plaintiff-appellee) filed a complaint in the Municipal Court of Manila against Primitivo P. Cammayo, Nicasio Cammayo, Pedro Cammayo, Hilario Cammayo and Artemio Cammayo (defendants-appellants) to recover ₱1,500.00 plus damages, attorney’s fees and costs. The defendants mortgaged real property as security for a supposed ₱1,500.00 loan but alleged they actually received only ₱1,200.00, the withheld ₱300.00 being advance interest under an illegal usurious agreement. In their answer, they pleaded usury under Act 2655 (the Usury Law) as a special defense and counterclaimed for recovery of unlawful interest, damages and attorney’s fees. The Municipal Court granted plaintiff’s motion for summary judgment and ordered defendants to pay ₱1,500.00 with legal interest from February 22, 1962 and attorney’s fees of ₱150.00. On appeal to the Court of First Instance of Manila, both parties agreed to summary disposition. The trial court reduced the debtCase Digest (A.M. No. P-17-3754)
Facts:
- Parties and Complaint
- On February 22, 1962, Aurelio G. Briones sued Primitivo P. Cammayo, Nicasio Cammayo, Pedro Cammayo, Hilario Cammayo and Artemio Cammayo in the Municipal Court of Manila for P1,500.00 plus damages, attorney’s fees and costs, based on a real estate mortgage securing a one-year, interest-free loan.
- Defendants denied liability and pleaded that they received only P1,200.00 of the loan, with P300.00 withheld as advance interest (usurious). They claimed they paid P330.00 as interest and asserted a compulsory counterclaim for recovery of illegal interest, moral damages and attorney’s fees.
- Procedural History
- Briones filed an unverified reply denying the counterclaim. Defendants moved for summary judgment. The Municipal Court granted summary judgment in favor of Briones, ordering defendants to pay P1,500.00 with legal interest from February 22, 1962 and P150.00 attorney’s fees.
- Defendants appealed to the Court of First Instance of Manila. The CFI granted summary judgment by agreement of parties, reduced principal to P1,180.00 (deducting P320.00 usurious interest and fees), awarded legal interest from October 16, 1962, P200.00 attorney’s fees and imposed costs on Briones.
- Defendants appealed to the Supreme Court, challenging the award of principal and interest despite finding usury, and seeking dismissal of the action.
Issues:
- Whether a lender whose contract is tainted with usury may recover the principal loaned.
- If recovery of principal is allowed, whether the lender may also recover interest thereon, and at what rate and from what date.
- Whether the contract’s nullity under the New Civil Code extends to the principal obligation or only to the usurious stipulation.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)