Mansueto Cuaton v. Rebecca Salud

Summary

This case involved a petition challenging excessive interest rates on a one-million-peso loan. Mansueto Cuaton borrowed money from Rebecca Salud, securing it with a mortgage over his mother's property. When Salud sued for foreclosure, the trial court found the mortgage void but ordered payment of the loan with 8-10% monthly interest (totaling P610,000.00). The Court of Appeals affirmed this decision. The Supreme Court granted Cuaton's petition, ruling that the 96-120% annual interest rates were unconscionable and void under Article 1409 of the Civil Code. The Court reduced the interest to 12% per annum, emphasizing that while the Usury Law was suspended, lenders cannot impose enslaving interest rates. This decision reinforced judicial authority to invalidate excessive interest stipulations as contrary to morals and public policy, providing important precedent for loan agreement disputes.