ii Chelda Enterprises alleged however that they obtained 4 loans from Angel

Ii chelda enterprises alleged however that they

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ii. Chelda Enterprises alleged however that they obtained 4 loans from Angel Jose for P26,500, where P5,260 was already paid, leaving only a balance of P20,880. iii. That Angel Jose charged and deducted from the loan usurious interest at the rate of 2% and 2.5%, thus Angel Jose shouldn’t even permitted to recover under the law. iv. CFI found that: 1. There is an unpaid principal of P20,287.50 2. AJ charged usurious interest where P1,048 has already been deducted from the loan. And that this should be deducted from the principal. 3. That 19,247.35 is the remaining balance 4. However, notwithstanding the usurious interest, AJ is not barred from collecting ISSUE: i. WON AJ can recover the principal of a loan with despite the usurious interest YES ii. WON the attorney’s fees should be awarded to AJ NO Contract of loan with usurious interest is valid as to loan but void as to the usurious interest. In simple loan with stipulation of usurious interest, the prestation of the debtor to pay the principal debt, which is the cause of the contract is not illegal; illegality is only with regard to the interest and, since it is separable, what should be deemed void is only that which is illegal 1. The credit can still recover the principal a. A contract of loan with usurious interest consists of a principal and accessory stipulation. The principal is the payment of debt while the accessory is the payment of interest. b. In case the contract is divisible, in case there is any illegality, the terms can be separated, the illegal from the lega. c. Thus, in a contract of loan with a usurious interest, what is considered illegal/invalid is the usurious interest and NOT the principal obligation. The illegality lies only as to the prestation to pay the interest. Therefore, the creditor can still collect the principal. 2. As to the conflict between the NCC and the Usury Law a. Usury law: the person who pays a higher rate or greater sum than what is allowed by law, can recover the whole interest paid b. NCC: interest paid in excess allowed by the usury law may be recovered from the interest from the date of payment c. SC held that NCC pertained to the whole usurious interest, not just the excess, and this is the case where the division is not allowed since the whole stipulation to the interest is void. d. To suggest otherwise would be unjust enrichment on the part of the creditor. 3. AJ cannot recover attorney’s fees a. As a result of defendant’s refusal to pay even after repeated demands, Angel Jose was obliged to retain the services of counsel. The rule as to attorney’s fees is that the same are not recoverable, in the absence of stipulation. b. Unless shown to fall under an exception, the act of Angel Jose in engaging counsel’s services due to refusal of defendants to pay his demand, does not justify award of attorney’s fees.
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