EN BANC
G.R. No. L-23559 October 4, 1971
AURELIO G. BRIONES, plaintiff-appellee,
vs.
PRIMITIVO P. CAMMAYO, ET AL., defendants-appellants.
Carlos J. Antiporda for plaintiff-appellee.
Manuel A. Cammayo for defendants-appellants.
Separate Opinions
CASTRO, J., dissenting:
Beyond the area of debate is the principle that in a contract of loan of a sum of money, the cause, with respect to the lender, is generally the borrower's prestation to return the same amount. It is my view, however, that in a contract which is tainted with usury, that is, with a stipulation (whether written or unwritten) to pay usurious interest, the prestation to pay such interest is an integral part of the cause of the contract.1 It is also the controlling cause, for a usurer lends his money not just to have it returned but indeed, to acquire in coordinate gain. Article l957, which is a new provision in the Civil Code, provides as follows: "Contracts and stipulations, under any cloak or device whatever, intended to circumvent the laws against usury shall be void. The borrower may recover in accordance with the laws on usury." This article which declares the contract itself — next merely the stipulation interest — void, necessarily regards the prestation to pay usurious interest as an integral part of the cause, making it illegal.
Undoubtedly, the motive of the usurer is his desire to acquire inordinate gain; this motive becomes an integral and controlling part of the cause because its realization can be achieved only by compliance by the borrower with the stipulated prestation to pay usurious interest.
The law never proscribes a contract merely because of the immoral motive of a contracting party, for the reason that it does not concern itself with motive but only with cause.2 An exception is where such motive becomes an integral part of the cause, like the stipulated usurious interest in a contract of loan.
While the old law, according to El Hogar,3 considered the usurious loan valid as to the loan and void as to the usurious interest, the new law, in article 1957 of the new Civil Code, declares the usurious loan void as to the loan and void as to the usurious interest. What is the reason for the new law? In my view, it is none other than its intention to regard the usurious interest as an integral part of the cause, thus, making it illegal; otherwise, the new law would be devoid of reason. Any interpretation that divests the new law of reason, that declares the usurious contract void and in the same breath permits recovery of the principal of the loan — which was the same result under the old law, as well as under El Hogar that considered the usurious contract valid as to the loan — renders article 1957 of the new Civil Code meaningless, and pointless.
The prestation to pay usurious interest being an integral and controlling part and the cause, making it illegal and the contract of loan void, article 1411 of the new Civil Code should be applied.(awÞhi( This article provides:
When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari-delicto, they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to the disposal of effects or instrument of a crime shall be applicable to the things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given, and shall not be bound to comply with his promise.ℒαwρhi৷
An exception is, however, provided in the second sentence of article 1957 which states: "The borrower may recover in accordance with the laws on usury." "As an exception to the general rule in article 1411, the debtor is allowed in accordance with the Usury Law to recover the amount he has paid, as usurious interest. Thus, article 1413 explicitly authorizes that "Interest paid in excess of the interest allowed by the usury laws may be recovered by the debtor, with interest thereon from the date of payment." But the lender is not allowed to recover the principal, because no such exception is made; hence, he falls within the general rule stated in article 1411.
In Mulet vs. People,4 the Supreme Court, in effect, reconsidered its opinion in El Hogar. In Mulet, the plaintiff extended a usurious loan to Rebillos. When the debtor failed to pay the whole usurious arrest, the creditor, in consideration of the said unpaid interests made the debtor execute a pacto de retro sale of certain properties to him. He then sought to be exempt from returning the value of the produce of the lands so transferred. Mr. Justice Moran, speaking for the Supreme Court, said:
... We are of the opinion that the petitioner should be ordered to return ... the amount ... of P480.00. This last amount is not usurious interest on the capital of the loan but the value of the produce of the land sold to petitioner under pacto de retro, with the unpaid balance of the usurious interest as the consideration, because contrary to law, is illicit, and the contract which results therefrom, null and void.
If the unpaid usurious interests as the consideration of the pacto de retro sale render such sale null and void, a fortiori, the usurious interest as consideration of the contract of loan, also renders such loan null and void.ℒαwρhi৷
In Asturias, et al. vs. Court of Appeals,5 the Supreme Court, speaking through Mr. Justice Jesus Barrera, stressed that "A contract designed to hide a usurious agreement not only violates the law but contravenes public policy. Such a contract can not be countenanced and is therefore illegal and void from its inception."
The ruling in El Hogar that a usurious loan was valid as to the principal but void as to the usurious interest was based upon the laws then in force, namely, the old Civil Code and the Usury Law, both of which did not contain any specific explicit provision proscribing the contract itself. I am fully persuaded that in drafting Chapter 2, Title XI of Book IV of the new Civil Code, the Code Commission knew of the majority opinion in El Hogar, took note of it, and, to offset any doubt concerning the intention of the Commission to overrule El Hogar, formulated articles 1957 and 1961. And it is of great significance to me that when the Commission formulated article 1957, knowing that under El Hogar the usurer may recover the principal of the loan, it omitted affirmance of the right of the lender to recover the principal, and instead emphasized that "the borrower may recover in accordance with the laws on usury."
Concepcion, C.J., and Fernando, J., concur..
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