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PASCUAL VS.

RAMOS
G.R. No. 144712 July 4, 2002
Facts: Rodrigo Ramos, herein respondent alleged that on June 3, 1987 the spouses Silvestre and Celia Pascual,
herein petitioners executed in his favour a Deed of Absolute Sale with Right to repurchase over two parcels of land
and improvements thereon, located in Bulacan for Php 150,000.00. The Pascuals did not exercise their right to
repurchase within the stipulated one year period, thus, the respondent prayed that the ownership or title over the
subject lands and improvements thereon be consolidated in his favor. The Pascuals admitted the signing of the deed
but claimed that what the parties have agreed upon was a real estate mortgage and that there was no limiting period
as when to repurchase and that they have even overpaid Ramos. The Pascuals then prayed that Ramos be ordered to
execute a Deed of Cancellation, Release of the Deed of Absolute Sale with Right to Repurchase or a Deed of Real
Estate Mortgage and to pay damages.
The parties having presented their own evidences, the trial court found out that the transaction between the parties
was actually a loan in the amount of Php 150,000.00, the payment of which is secured by a mortgage of the
property. It was also found out that the Pascuals had made payment in the total sum of Php 344,000.00 and that
with interest at 7% per annum, overpaying the loan by Php 141,500.00. The trial court then rendered decision in
favour of the defendants. Ramos moved for the reconsideration of the decision averring that what was stipulated in
the Sinumpaang Salaysay was 7% per month as interest. Making the necessary computations, there was Php
793,000.00 still due from the Pascuals. With this, the trial court then issued an Order modifying its earlier decision;
however, the trial court declared the interest too onerous, reducing the interest rate to 5%. The Pascuals then were
rendered to pay Php 511,000.00 to Ramos. The Pascuals filed a motion for reconsideration but was later on denied,
thus, they reasonably appealed to the Court of Appeals. In its decision, the CA affirmed in toto the trial court s
Order. With the denial of their motion for reconsideration, the Pascuals filed a petition to the Supreme Court.
Issue: Whether or not the Pascuals are liable for 5% interest per month?
Ruling: The Supreme Court held that the Pascuals are liable for the interest. It must be stressed that the Pascuals
never raised as a defense or basis for their counterclaim the nullity of the stipulated interest. The Pascuals should
accept not only the favorable aspect of the trial courts declaration that the document is actually an equitable
mortgage but also the necessary consequence of such declaration, that is, that interest on the loan as stipulated by
the parties in that same document should be paid.
It is a basic principle in civil law that parties are bound by the stipulations in the contracts voluntarily entered into
by them. The interest rate of 7% per month was voluntarily agreed upon by Ramos and the Pascuals. With the
suspension of the Usury Law and the removal of interest ceiling, the parties are free to stipulate the interest to be
imposed on loans. Absent any evidence of fraud, undue influence, or any vice of consent exercised by Ramos on
the Pascuals, the interest agreed upon is binding upon them. The Court held that it is not in a position to impose
upon parties contractual stipulations different from what they have agreed upon.
The assailed decision of the Court of Appeals in CA-G.R. CV No. 52848 is AFFIRMED in toto. Accordingly, the
Deed of Sale with Right to Repurchase is to be cancelled by the Register of Deeds, the Spouses Pascual to pay the
total amount due of Php 511, 000.00 and granting the defendants attorneys fee. The costs against petitioners.

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