People v. Mulet
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns a series of transactions initiated by Anastacio Cuizon's loan of P200 from petitioner Miguel Mulet in November 1928, with an initial interest rate of 30% per annum. This loan was repeatedly restructured through deeds of sale with pacto de retro (right to repurchase), with the stated consideration escalating due to the capitalization of usurious interest. The properties involved were Cuizon's house and lot, assessed at P1,500 and P130 respectively. The final transaction involved a consideration of P550, representing the original loan plus accumulated interest. Upon Cuizon's failure to pay, Mulet consolidated ownership and subsequently sold the properties to Ricardo D. Omega for P580. 2. Procedural History: Miguel Mulet was convicted in the trial court for violating the Usury Law. The decision of the trial court was affirmed by the Court of Appeals. A motion for reconsideration of the appellate court's judgment was denied, leading to the instant appeal by Mulet to the Supreme Court. 3. The Petition: The appellant's brief primarily contested the amount of P589 representing usurious interest ordered to be returned. The petition sought to uphold the validity of the last deed of sale. The Supreme Court, however, found that the consideration for the last deed of sale was derived from accumulated usurious interests, rendering the contract void. The Court modified the judgment, ordering Mulet to return the house and lot to Cuizon within thirty days or pay its assessed value of P1,630, with interest, and affirmed the Court of Appeals' decision in all other respects.
Issue(s)
Whether the deeds of sale with pacto de retro, executed to secure a loan with usurious interest, are valid. Whether the offended party can recover the properties or their value from the accused.
Ruling
The Court affirmed the judgment of the Court of Appeals with modification. The appellant, Miguel Mulet, was ordered to return to Anastacio Cuizon the house and lot described in Exhibits H and I within thirty (30) days from notice of the judgment, or, in default thereof, to pay the sum of P1,630, which is the assessed value of the house and lot. The judgment of the Court of Appeals was affirmed in all other respects.
Ratio Decidendi
On Whether the deeds of sale with pacto de retro, executed to secure a loan with usurious interest, are valid: The Court ruled that the deeds of sale with pacto de retro were null and void. The consideration sustaining the last deed of sale was the accumulated usurious interests, which are illicit. Article 1275 of the Civil Code provides that a contract with an illicit consideration is null and void. The Court found that Cuizon had already paid P405 on the original loan of P200, and the subsequent renewals with capitalized usurious interests rendered the entire transaction tainted with illegality. Therefore, the contracts could not be sustained as valid. On Whether the offended party can recover the properties or their value from the accused: The Court held that the offended party, Anastacio Cuizon, could recover from the appellant, Miguel Mulet, whatever he had given, including the fruits of the usurious interests. As the contracts were declared null and void due to illicit consideration, the principle of restitutio in integrum applies. The Court found it unnecessary to reserve Cuizon's right to institute a separate civil action for the recovery of the properties from Ricardo D. Omega, to whom Mulet had conveyed them. Instead, the Court ordered Mulet to return the house and lot or its assessed value of P1,630 to Cuizon, thereby directly rectifying the wrong committed.
Main Doctrine
The Court affirmed the conviction of Miguel Mulet for violating the Usury Law. It held that the deeds of sale with pacto de retro, executed to secure a loan with usurious interest, were null and void because their consideration was based on accumulated illicit interests. Consequently, the offended party, Anastacio Cuizon, was entitled to recover the properties or their assessed value, and the reserved right to file a separate civil action was deemed unnecessary.