The Government of the Philippine Islands v. Mariano Conde

Summary

The Government sued Mariano Conde for collection of a promissory note worth P8,300 with 8% annual interest payable semi-annually, and mortgage foreclosure. The key legal issue was whether charging compound interest (interest on unpaid interest) violated the Usury Law. The Supreme Court En Banc affirmed the lower court's judgment of P10,678.75, ruling that compound interest is legally permissible when expressly agreed upon by the parties. The Court distinguished between compound interest arrangements and usurious interest rates, holding that interest charged on stipulated interest should not be counted in determining whether interest exceeds legal limits. This decision established important precedent on contractual freedom in interest calculations and the validity of compound interest clauses in loan agreements under Philippine law.