Robinson v. Sackermann de Macleod
REITERATIONFacts
The Antecedents: L. B. Robinson instituted mortgage foreclosure proceedings against Carmen Sackermann de Macleod. The Postal Savings Bank of the Philippine Islands held a first mortgage on the property, and L. B. Robinson held a second mortgage. Procedural History: The Court of First Instance of Manila rendered judgment in favor of the Postal Savings Bank for P22,459.25 (principal, accrued interest, and premiums) with interest at seven percent per annum from the date of judgment. L. B. Robinson also obtained judgment for P16,000 with interest at twelve percent per annum from October 28, 1922. The Petition: The defendant appealed, seeking modification of the judgment regarding interest on the first mortgage and a complete reversal of the judgment on the second mortgage due to usury.
Issue(s)
Whether the judgment on the first mortgage, specifically the computation of interest, should be modified. Whether the judgment on the second mortgage should be reversed on the ground of usury.
Ruling
The judgment as to the Postal Savings Bank mortgage was modified, and the judgment as to the Robinson mortgage was affirmed. The defendant Carmen Sackermann de Macleod was ordered to pay the Postal Savings Bank P20,000 with seven percent annual interest from May 16, 1923, and P882.56 with six percent annual interest from May 16, 1923. The judgment in favor of Robinson was affirmed.
Ratio Decidendi
On the modification of the first mortgage judgment: The Court held that compound interest is allowed only from the date when interest is judicially demanded, as per Article 1109 of the Civil Code and Section 5 of the Usury Law. The original mortgage contract did not provide for compound interest. Therefore, the judgment should have been for the principal amount with seven percent annual interest from the date the cross-complaint was filed, and for the accrued interest and premiums, with six percent annual interest from the same date. The Court found it impracticable to sanction interest on interest computed at semiannual periods beyond what was judicially claimed. On the reversal of the second mortgage judgment due to usury: The Court ruled that the defense of usury must be raised in the answer to be considered. Since the defendant did not raise this defense in the trial court, it could not be considered on appeal. Furthermore, the Court noted that the Usury Law specifies the permissible rate for mortgage loans but does not prohibit interest from being computed at intervals other than yearly. The judgment of the trial court regarding the second mortgage was therefore affirmed.
Main Doctrine
Compound interest is allowed from the date when interest, although not expressly reserved, is judicially demanded. However, statutory provisions limit the rate of interest on accrued interests when judicially claimed.