Delgado vs Alonso Case Digest

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G.R. No. L-19826, March 31, 1923

Justice Street

FACTS: In November of the year 1917 Alonso purchased twelve parcels of land in the municipality of Goa from one Stickney. On February 1, 1918, Alonso conveyed the same property to Luciano Delgado; and in order to secure the payment of the purchase money Delgado contemporaneously executed a mortgage in favor of the defendant upon the same land and also upon two other large parcels already owned by the plaintiff situated in the municipality of Tinambac, of the Province of Camarines Sur.

A simple calculation shows that the interest agreed to be paid upon the purchase price of the land which had thus been bought by Delgado was at a rate well above fifteen per centum per annum. This mortgage therefore offends against the provisions of the Usury Law, which limits the rate that can ordinarily be secured by mortgage upon real property to twelve per centum per annum (Act No. 2655-2).

Delgado filed a complaint against Alonso to recover the sum of P2,625 paid upon February 1, 1919, by way of interest. To this complaint the defendant answered with a general denial; and by way of special defense he alleged that the contract in question had been entered into by him innocently and in total ignorance on his part of the existence of the Usury Law and, further, that he had been maliciously inveigled into said contract by the plaintiff, with full knowledge on the part of the latter of the illegality of the stipulation for usurious interest, and with the design of taking advantages of the Usury Law to the prejudice of the defendant.

ISSUE: whether the defendant is justified in raising ignorance of the usury law as defense to escape its legal consequences.

HELD: No. Both parties were, in our opinion, victims, at once of their own ignorance and of economic practices inherited from the past; and ignorance of the provisions of the Usuary Law does not relieve either from the legal consequences of the contract into which they voluntarily entered.

We are quite prepared to believe the defendant when he says that the entered into the contract in total ignorance of the law against usury and it is not improbable that the plaintiff, stimulated by the desire to purchase the property, had suggested the terms upon which he was willing to take it; but it is not proved that he had the Usury Law in mind at the time or maliciously intended to entrap the defendant into the making of this contract and then to take advantage of the law.