G.R. No. L-23559, October 4, 1971
AURELIO G. BRIONES, plaintiff-appellee, vs. PRIMITIVO P. CAMMAYO, ET AL., defendants-appellants.

FACTS

This digest focuses on the dissenting opinion of Justice Castro in the case. The main case involved a contract of loan tainted with usury. The central legal debate concerned the consequences of a usurious loan under the New Civil Code, specifically the interpretation of Article 1957. The prevailing jurisprudence, as established in El Hogar Filipino, held that a usurious loan was valid as to the principal sum and void only as to the usurious interest, allowing the lender to recover the principal. The dissenting opinion argues that this interpretation is no longer tenable under the new legal framework.

ISSUE

The core issue addressed in the dissent is whether, under Article 1957 of the New Civil Code, a usurious contract of loan is entirely void, thereby barring the usurious lender from recovering the principal amount lent.

RULING

Justice Castro, in his dissent, argues that Article 1957 of the New Civil Code fundamentally altered the law on usurious contracts. He posits that in a usurious loan, the stipulation to pay usurious interest is an integral and controlling part of the cause of the contract. Since this cause is illegal, the entire contract is rendered void. The provision declaring such contracts “void” under any cloak or device is a new and deliberate departure from the old rule. The dissent reasons that if the contract itself is void, the general rule under Article 1411 on in pari delicto applies: when both parties are in equal fault, neither can recover from the other. However, an explicit exception is carved out for the borrower by the second sentence of Article 1957 and by Article 1413, allowing the recovery of usurious interest paid. No similar exception is made for the lender to recover the principal; therefore, the lender falls under the general rule of Article 1411 and is barred from recovery. The dissent concludes that the Code Commission, aware of the El Hogar ruling, intended to overrule it by omitting any affirmative right for the lender to recover the principal and instead emphasizing only the borrower’s right of recovery. This interpretation gives full effect to the punitive and deterrent purpose of the anti-usury law under the new Code.