1-29-19 ObliCon Atty Bathan Case Digests
1. CUATON VS SALUD: USURIOUS TRANSACTION
This is a assailing CA’s decision in affirming LC imposition of 8-10% interest rate/month on
the 1M loan of P.
Spouses Salud instituted a suit for foreclosure of real estate mortgage w/ damages against
P- Cuaton and his mother. The Trial Court ruled that the mortgage was void, on the ground
that it was executed by P in favor of R w/o expressly stating that he was merely a
representative of his mother. The LC ordered P to pay R 1M for the loan secured by the
mortgage and an additional 6M for the 10% and 8% interest/month from Feb to Aug.
Unsatisfied with the decision, hence this petition for review in certiorari.
ISSUE: WON the 10% and 8% interest is unconscionable.
RULING: the court ruled that the Usury Law was already suspended by Central Bank Circular
No. 905, thus, parties in an agreement have been allowed to agree on any interest rates
provided that it is not unconscionable (enslaving the borrower or hemorrhaging of their
assets). Furthermore, the 10% and 8% interest rates per month imposed on the loan are
even higher than those they previously invalidated, hence, a reduction to 12% per annum is
fair and reasonable.
2. LAW VS OLYMPIC SAWMILL: USURIOUS TRANSACTION
Plaintiff-Law loaned w/o interest to Defendant Partnership and Chi. When the loan became
due, Defendant was not able to pay and asked for an extension of 3 months. Subsequently,
the parties executed another loan document and allowed the extension asked by the
debtors/ D but the obligation was increased by 6K. Defendant again failed to pay their
obligation, thus, P instituted this collection case.
D admitted to the principal obligation but claimed that the additional 6K constituted
usurious interest.
ISSUE: WON the additional 6K constituted usurious interest
RULING: the court ruled that under Article 1354 of the Civil Code, in regards to the
agreement of the parties relative to the P6K obligation, "it is presumed that it exists and is
lawful, unless the debtor proves the contrary" which the D failed to do. Confirming the Trial
Court's finding, we view the P6K obligation as liquidated damages suffered by plaintiff.
Furthermore, if the entity sued shall not file its answer under oath denying the allegation of
usury, the defendant shall be deemed to have admitted the usury. The provision does not
apply to a case, as in the present, where it is the defendant, not the plaintiff, who is alleging
usury. Moreover, usury has been legally non-existent. Interest can now be charged as
lender and borrower may agree upon.
3. MANILA TRADING VS MEDINA: PRESUMPTIONS
Mariano Medina had an account prior to May 7, 1956 with Manila Trading and Supply Co.
with an amount of 60, 000 php for which Medina executed a promissory note. The note
provided that upon failure to pay the installments, the remaining amount will immediately
become due and payable at the option of the holder of the note.
On January 8, 1957, Manila Trading & Co. filed a complaint against Medina for failure
to pay installments from September 1956 to January 7, 1957. Medina filed an answer
admitting the allegations but said that the 12% for attorney’s fees were exorbitant and
unconscionable. He pleaded that on January 24, 1957, an additional 4,000 php was paid so
that he will not be sued and allowed to pay the balance. Upon petition of plaintiff, a writ of
attachment was issued and levied upon eleven of the defendant’s buses.
Defendant then filed a counterclaim for damages for the loss of his earnings. Plaintiff
denied the defense and counterclaim by providing evidence of 21 payments made by
defendant from June 6, 1956 to January 21, 1957. The defendant testified that he has 10
other payments with receipts but the dates and serial numbers are unclear for it was eaten
by “anay”.
Defendant claims that his payment on Jan. 1957 gives rise to the presumption that prior
installments have been paid.
ISSUE: WON D payment on Jan gives rise to the presumption that prior installments have
been paid
RULING: the court ruled that the ten additional receipts produced by the defendant were
not for payments made on the dates claimed by defendant, nor are they chargeable to the
balance of the promissory note. it is highly suspicious that these receipts should be
mutilated precisely at the places where the serial numbers and the year of issue must
appear. Moreover, these contested receipts appear identical in shape, size, and color to
those issued by plaintiff company prior to July 1956 but differ radically in color, size, and
particulars from those issued after the same date.
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1-29-19 ObliCon Atty Bathan Case Digests

Furthermore, D avers that the genuine receipts dated January, 1957 raise the presumption As the the Barengs failed to pay their loan, they enter into a compromise agreement with
that prior installments were paid. This might be true if such receipts recited that they were the Ps wherein the former acknowledge their indebtedness, however, it remained unpaid.
issued for the installments corresponding to the month of January, 1957; but nowhere does Upon knowledge of the land sold to Ramos, Ps filed for the annulment of sale on the ground
that fact appear. And even if such recital had been made, the resulting presumption would that it was fraudulently prepared and executed. The further claim, that their interest over
only be prima facie, and the evidence before us is clear that the payments made do not the property as creditors of Francisco Bareng are prejudiced.
correspond to the installment falling due on the dates of the genuine receipts
ISSUE: WON the Ps have the right to rescind the contract of sale made by their debtor
4. LEDESMA VS REALUBIN: PRESUMPTIONS
RULING: the court ruled that the petition for review has no merit on the ground that Ps do
Petitioner- Ledesma purchased on credit and different dates, through her drivers from not have material interest as to allow them to sue for rescission of the contract of sale. At
Respondent- Realubin. All credit were invoiced in the same printed form by the R following the outset, petitioners' right against private respondents is only a personal right to receive
his business practice. During the trial, R was in possession of the original invoice signed by payment for the loan; it is not a real right over the lot subject of the deed of sale. While
P’s truck drivers. petitioners have an interest in securing payment of the loan they extended, their right to
seek payment does not in any manner attach to a particular portion of the patrimony of
-Due to repeated verbal demands upon to pay, the petitioner sent to Alberto Realubin a
their debtor, Francisco Bareng.
handwritten letter which expressed her sincere apology for the delay of payment for her
obligations. The letter was affixed with “Mrs. Ledesma”. Subsequently, P-Ledesma denied Nor can we sustain petitioners' claim that the sale was made in fraud of creditors. Art. 1177
the purchases and averred that her truck drivers did not have the authority to sign and that of the Civil Code provides that The creditors, after having pursued the property in
the letter is a forgery. However, contradictory to her contentions, P, during the trial, possession of the debtor to satisfy their claims, may exercise all the rights and bring all the
admitted paying the R the amount the latter was collecting from her and invokes Article actions of the latter for the same purpose, save those which are inherent in his person; they
1176 of the Civil Code (New), petitioner claims that inasmuch as she admittedly paid her may also impugn the actions which the debtor may have done to defraud them.
latest purchase, it is to be presumed that her prior purchases were likewise paid, because
Indeed, an action for rescission is a subsidiary remedy; it cannot be instituted except when
her account with the respondent was a running account.
the party suffering damage has no other legal means to obtain reparation for the same.
ISSUE: WON P can invoke 1176 Petitioners have not shown that they have no other means of enforcing their credit
Art. 1176. Presumption of payment. (par. 2) The receipt of a later installment of a debt
without reservation as to prior installment, shall likewise raise the presumption that such
installments have been paid.
RULING: the court ruled that P cannot invoke art 1176 because R proved as a fact that the
prior purchases were not paid, and that the latest purchases were for cash, as found by the
CA. Therefore the presumption of payment of prior obligations cannot prevail.
5. ADORABLE VS CA: REMEDIES OF CREDITOR
Respondent Saturnino owned 2 parcel of lands wherein Petitioners were lessees. On April
1985, Respondents obtained a loan from Ps w/c they promised to transfer the possession
and enjoyment of the fruits of a lot. Subsequently, R- Saturnino sold to his son R-Francisco a
lot and in turn the latter sold it to R-Ramos. The portion of lot being rented by Ps was
included in the portion of lot sold to R-Ramos.
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