Pua v.

Spouses Bautista
CA-G.R. CV NO. 77418, August 11, 2006

Facts: Spouses Bautista contracted a loan with Anita Pua, petitioner, amounting to 1.02M
with a stipulation on interest pegged at 20% per annum. After payment of some 450K plus,
the respondents stopped making payments. Despite frequent demands from the petitioner,
the spouses failed to send payment. The petitioner re-computed the loan amount at 2M to
include thereof the accrued interests, and filed a complaint for collection of sum of money
with the MTC—which the lower court ruled in favor of the petitioner. The spouses then
questioned before the Court the re-computed amount alleging that it is excessive and
unconscionable.

Issue: Could the interest rate being agreed upon by parties be considered as excessive?

Held: No. Elementary is the rule that when the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Here, the Bautistas agreed to a 20%
interest rate per annum to be applied on top of their loan principal.

The stipulated interest rate of 20% per annum was not excessive, iniquitous,
unconscionable, or in any way exorbitant. There are already cases where the Supreme
Court validated even a higher rate of stipulated interest. It is important to note that the
Bautistas freely agreed on the rate of interest that would govern their contract of loan.
Parties to a contract of loan like in any other contracts are essentially free to stipulate on
the terms of their undertaking. If their debt increased considerably, it is because they had
been in default for a long time.

Applying the stipulated interest rate on the loan, the Court believes that re-computed
amount of P1,889,829 is fairly reasonable considering that more than six years have passed
since the last payment of the Bautistas was recorded. It is to be considered that the
computation was made right in front of the Bautistas who could have easily protested if
there was any mistake or irregularity in the procedure. Instead, the Bautistas again
acknowledged the amount.
Chee Kiong Yam v. Malik
GR No-50550-52 October 31, 1979

Facts: Petitioners filed a petition for certiorari, prohibition and mandamus with
preliminary injunction against the respondent Judge Malik who ruled that several cases of
estafa filed against the petitioners should be admitted for trial in his sala. It must be noted
that all complainants admitted that the money which the petitioners did not return were
obtained from them by the latter in a form of loans.

Issue: Can there be a crime of estafa for non-payment of a loan?

Held: No. In order that a person be convicted of Swindling (Estafa) under Art. 315 of the
Revised Penal Code, it must be proven that he has the obligation to deliver or return the
same money, goods or personal property that he received. Petitioners had no such
obligation to return the same money, i.e., the bills or coins, which they received from
private respondents. This is so because as clearly stated in criminal complaints, the related
civil complaints and the supporting sworn statements, the sums of money that petitioners
received were loans. In U.S. vs. Ibañez, 19 Phil. 559, 560 (1911), the Supreme Court held
that it is not estafa for a person to refuse to pay his debt or to deny its existence.

It is the opinion of the Court that when the relation is purely that of debtor and creditor,
the debtor can not be held liable for the crime of estafa, under said article, by merely
refusing to pay or by denying the indebtedness.

It appeared that respondent judge failed to appreciate the distinction between the two
types of loan, mutuum and commodatum, when he performed the questioned acts. He
mistook the transaction between petitioners and private respondents to be commodatum
wherein the borrower does not acquire ownership over the thing borrowed and has the
duty to return the same thing to the lender.