G.R. No. 39425; February 10, 1934
SILVERIO F. GARCIA, plaintiff-appellee, vs. JOSE A. DE ARAMBURO, defendants-appellants.
FACTS
On December 3, 1929, defendants-appellants Jose A. de Aramburo and Elvira Veguillas de Aramburo obtained a loan of P16,000 from plaintiff-appellee Silverio F. Garcia, secured by a mortgage. The agreement stipulated payment of 12% annual interest in advance for a one-year term, renewable annually for up to five years upon advance interest payment. From the loan amount, P1,920 (representing one year’s interest at 12%) and P25 for inspection and incidental expenses were to be deducted, leaving a net amount of P14,055. However, when Garcia issued a check on December 4, 1929, he mistakenly wrote P15,055 instead of P14,055. The defendants claimed the loan was usurious, alleging they paid P1,920 in cash as advance interest and that an additional P945 (representing a further 6% interest) was deducted from the check, reducing it to P15,055, plus an extra P15 payment.
ISSUE
Whether the loan transaction was usurious and therefore null and void.
RULING
No, the loan was not usurious. The Court found neither party’s claim fully credible. The defendants’ claim of paying cash interest in addition to a deduction was illogical, as a borrower typically lacks funds to pay advance interest separately. The plaintiff’s claim of a simple error in the check amount was deemed incredible. However, even assuming the plaintiff’s failure to deny under oath the defendants’ cross-complaint allegation of usury constituted an admission, such admission would only result in the reduction of any interest exceeding the legal rate and a refund of the excess. In this case, no usurious interest was sufficiently proven. The trial court’s judgment ordering the defendants to pay the loan with interest at 12% per annum for the years 1930-1932 was affirmed.
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