Villaruel v. Alvayda

Summary

This 1924 Supreme Court case involved collection of a P46,000 mortgage debt between private parties. Plaintiff Villaruel sued defendants Alvayda and Vicencio for mortgage debt collection, while defendants raised usury defense claiming 24% interest rates. The trial court and Supreme Court both found no usury violation, determining that the 12% annual interest rate was properly applied and that capitalizing unpaid interest into new principal debt was legally permissible under existing precedent. The SC affirmed the judgment ordering defendants to pay P44,642.93 plus attorney's fees and costs, with mortgage foreclosure if unpaid. The case established that accrued interest becomes new principal by agreement without constituting illegal compound interest.