People v. Hodges
REITERATIONFacts
The Antecedents: Maximo Positos and Paulina Sombilla owned two parcels of land (lots 2114 and 2837) mortgaged with right of repurchase. To secure a loan to redeem the properties, they executed a general power of attorney in favor of their son, Demetrio Positos. Demetrio, with the help of a broker, applied for a P2,500 loan from the accused, offering the lots as security. The accused agreed to grant the loan on the condition that the owners first sell the lots to him, and he would then resell them along with another small lot (960-C-17) for P3,500. Demetrio acceded to this proposal. Deeds of sale were executed: Demetrio, as attorney-in-fact, sold lots 2114 and 2837 to the accused for P2,500. The accused then sold these two lots and lot 960-C-17 to Demetrio for P3,500. From the P2,500 loan, the accused deducted P420 as advance annual interest and P280 for land tax, delivering P1,800 to Demetrio. Subsequently, the accused collected additional sums for unpaid interest: P184.44 on February 9, 1931, P220 on March 31, 1931, and P300 on August 10, 1932. Procedural History: The provincial fiscal of Iloilo filed an information charging the appellant with violation of the Usury Law for collecting illegal interest. After preliminary investigation, the case was forwarded to the Court of First Instance, where a similar information was filed. The accused was convicted. The Petition: The accused appealed the decision. The case was set for rehearing after a second motion for reconsideration. The Supreme Court reviewed the facts and the issue of prescription.
Issue(s)
Whether the accused collected usurious interest. Whether the violations of the Usury Law have prescribed.
Ruling
The appealed judgment is reversed, and the accused-appellant is acquitted.
Ratio Decidendi
On Whether the accused collected usurious interest: The Court found that the accused collected interest exceeding the legal rate. Specifically, upon signing the instruments, P420 was collected as advance interest on P3,500 at 12% per annum, and P280 was deducted for land tax, resulting in an overcollection of P66.36. This amounted to an annual interest rate of 19.45% on P2,500 and 13.6% on P3,500. Further collections of P184.44, P220, and P300 were made for interest in subsequent years, representing annual interest rates of 16.17% on P2,500 and 11.55% on P3,500, and 12% on P2,500 and 8.57% on P3,500, respectively. The Court noted that the transaction, disguised as a sale and resale, was designed to violate the Usury Law. On Whether the violations of the Usury Law have prescribed: The Court applied Section 1 of Act No. 3326, as amended by Act No. 3763, which provides that violations penalized by imprisonment of more than one month but less than two years prescribe after four years. The Usury Law (Act No. 2655, as amended) provides for imprisonment of not less than ten days nor more than six months. The usurious interest was collected on February 12, 1930, February 9, 1931, and March 31, 1931. The criminal case was commenced on May 4, 1935. The Court found that four years, one month, and three days had elapsed from the last collection of usurious interest until the filing of the information. Therefore, the violations had prescribed. The prosecution admitted that the violations had prescribed, citing the case of People vs. Edesan and Edesan.
Main Doctrine
Violations of the Usury Law, punishable by imprisonment of not more than six months, prescribe after four years from their commission, in accordance with clause (b) of Section 1 of Act No. 3326, as amended.