52 Phil. 346 [1928]
MAIN TOPIC – Obligations with a Penal Clause
FACTS
Bachrach Motor Co., filed two cases – Nos. 28497 and 28498 which were tried together, against defendants. The cases involve an action for the recovery of total amount of P11,940.37 representing the unpaid balance of White truck purchases within the periods agreed upon. To secure the payment, defendant executed mortgage deeds and promissory note. In both sales it was agreed that 12% interest would be paid upon the unpaid portion of the price at the execution of the contracts, and in case of non-payment of the total debt upon its maturity, 25% thereon, as penalty. The trial courts rendered judgments in favor of the plaintiff. However, the defendants contended that the 25 % penalty upon the debt, in addition to the interest of 12% per annum makes the contract usurious.