AQUILES M. SAJO, PLAINTIFF AND APPELLANT, VS. MERCEDES GUSTILO ET AL., DEFENDANTS AND APPELLANTS.

“The
plaintiff in this case called Aquiles M. Sajo is suing the defendants
Mercedes Gustilo, Leopoldo Jereza and Antonia Gustilo for the payment
of a promissory note dated January 4, 1922, for the sum of twenty-eight
thousand pesos, and quoted in the complaint filed herein, asking at the
same time for the foreclosure of a mortgage in connection with said
promissory note for the reason that the said note was not paid by any
of the said defendants.

“The defendants in this case filed an answer which reads as follows:

“ANSWER

“Come now the defendants and answering the complaint presented in this case allege:

“1.
That they admit the first paragraph of the complaint and also admit
having executed in Manapla on the 4th day of January, 1922, the receipt
copied in the second paragraph of the complaint.

“2. That
to guarantee the registry and inscription of the mortgage executed by
Mercedes Gustilo for the hacienda Mercedes in favor of the fictitious
person who appears as mortgage creditor in that document executed in
Manapla on the 4th of January, 1922, Antonia Gustilo signed the receipt
inserted in the second paragraph of the complaint.

“3.
That said document of mortgage is recorded in the registry of deeds of
Occidental Negros, and according to what Herminio Maravilla induced
Antonia Gustilo to believe, before she signed the receipt inserted in
the second paragraph of the complaint, said Antonia Gustilo would be
exempt from the effects thereof after the inscription of the mortgage
in the registry of property.

“4. That the delivery of the
receipt inserted in the second paragraph of the complaint by Herminio
Maravilla to Jose Maravilla and by the latter to the herein plaintiff
is without consideration and fictitious and null and void.

“5.
That the real party in interest in this case, who is the real party
plaintiff, is Herminio Maravilla, and therefore there is a defect, of
parties litigant, and the said Jose Maravilla and Herminio Maravilla
should be included as parties plaintiffs.

“6. That
Herminio Maravilla had assumed liability for the amount of the receipt
inserted in the second paragraph of the complaint, and for a
consideration had considered it as paid, cancelled and null and void.

“7.
That the true and correct amount of the receipt inserted in the second
paragraph of the complaint is P23,000, the balance being usurious
interests.

“Wherefore, we pray that it be declared
that there is a defect of parties litigant in this case; that the
contract of loan evidenced by the receipt inserted in the second
paragraph of the complaint be declared usurious and null; that Antonia
Gustilo be declared relieved from all responsibility on account of the
receipt aforesaid; that the defendants be absolved from the complaint
with the costs of the proceedings in their favor; and that they be
granted any other remedy in accordance to which they may be entitled
although not prayed for in the complaint.

“Bacolod, Occidental Negros, March 23, 1923.

(Sgd.)		“ENRIQUE C. LOCSIN
		“Attorney for defendants

“SWORN STATEMENT

“I,
Leopoldo Jereza, after having been legally sworn, depose: That I have
read and understood the facts alleged in the answer and that they are
true according to my direct and personal knowledge of said facts.

(Sgd.) “LEOPOLDO JEREZA

“Signed
and sworn to before me this 28th day of March, 1923, A, D. The affiant
exhibited his cedula No. F-1126117, issued in Manapla on January 24,
1923.

(Sgd.)			“PRIMITIVO BACHOCO
		“Justice of the Peace, Manapla

“Reg. No. 57
“Page No. 56
“Book No. 2

	“Received copy today:
		____________________________
		“Attorney for the plaintiff

“I,
Simplicio Tiberio, after having been legally sworn, depose: That Mr. A.
P. Seva is absent from Bacolod and has his office closed and that I
sent copy of this answer by registered mail to said Mr. A. P. Seva, as
appears on post- office receipt No. 827002 hereto attached.

__________________________________

‘Signed and sworn to before me this 4th day of April, 1923, A. D. The
affiant exhibited to me his cedula No. F-1082290, issued in Bacolod on
March 23, 1923.

__________________________________

“The
defendants further filed a supplementary pleading asking that the
plaintiff be further adjudged to pay the attorney’s fees in this case.

“This
case was originally heard before the then Honorable Judge Eduardo
Gutierrez David and was finally tried before the undersigned. The
plaintiff was represented by attorney A. P. Seva, Esq., and the
defendants by attorney Enrique C. Locsin, Esq. After the final hearing
of the case, the attorney for the defendants was allowed 15 days time
to file his written brief and the plaintiff was also allowed the same
period of time to answer the brief of the defendants. It appearing that
up to this date, the attorney for the plaintiff has not filed any brief
in support of his contention although a considerable length of time had
already elapsed, the court will have to conclude that the said
plaintiff has impliedly renounced the filing of any brief in this case.

“After
the court has carefully studied the evidence taken before the then
Honorable Judge Gutierrez David in connection with the evidence
subsequently presented in this case, finds that the following facts
have been established: That the Exhibit A which is a promissory note
was signed by Mercedes Gustilo and her husband Leopoldo Jereza on the
4th of January, 1922, in the municipality of Manapla, Province of
Occidental Negros, and was subsequently signed by Antonia Gustilo; that
said Exhibit A was executed in favor of Jose Maravilla and was
supported by a deed of mortgage marked as Exhibit B signed by Leopoldo
Jereza and his wife Mercedes Gustilo only; that Jose Maravilla by means
of Exhibit C transferred and assigned said promissory note (Exhibit A)
and mortgage (Exhibit B) in favor of Aquiles M. Sajo, plaintiff herein,
on the 16th of August, 1922; and that the defendants herein failed to
comply with the terms of the said promissory note and so the plaintiff
herein instituted the present action.

“With regard to the
evidence presented by the defendants in this case, the court found also
that the following facts have been conclusively established. That the
original sum of P23,000 received by the defendants in this case was
obtained by them from one Herminio Maravilla as is supported by Exhibit
1 presented by the defendants in this case and executed by the said
defendants on November 24, 1920, and ratified before a notary public ex-officio,
Anastacio Villanueva, on the same date; that the said document recites
that the defendants received the sum of twenty-five thousand pesos when
in fact the amount of money received by said defendants is only
twenty-three thousand pesos, because the sum of two thousand pesos was
retained by said Herminio Maravilia as a payment of an usurious
interest which could not be very well inserted in the said document;
that the defendants having failed to pay the said sum of twenty-five
thousand pesos, a promissory note (Exhibit A) was executed by the said
defendants in favor of Jose Maravilla, a nephew of said Herminio
Maravilla, for the sum of twenty-eight thousand pesos, which promissory
note is quoted in plaintiff’s complaint and was supported by a deed of
mortgage as already stated above; that said Herminio Maravilla, being
indebted to Julio Javellana for P400,000, and fearing what might
subsequently take place, had the said promissory note and deed of
mortgage (Exhibits A and B) placed in the name of Jose Maravilla and
subsequently transferred by said Jose Maravilla to the plaintiff herein.

“It
was further established in this case that Antonia Gustilo signed the
said Exhibit A, because Leopoldo Jereza and Mercedes Gustilo were
required to furnish more security for the loan. The court cannot
believe the contention of Antonia Gustilo that she did not understand
Exhibit A, or that she believed it to be the original contract which
she signed sometime ago.

“Several witnesses have testified
in this case that the original sum received by Leopoldo Jereza and his
wife Mercedes Gustilo was twenty-five thousand pesos and that the two
thousand pesos which is claimed by Herminio Maravilla and his employee
to have been delivered to Leopoldo Jereza and his wife Mercedes Gustilo
to make the original amount P25,000, cannot be believed by the court.
The preponderance of evidence in this regard is so overwhelming against
the claim of the plaintiff that the court will have to give due credit
in favor of the defendants, that the original sum was only P23,000 and
that the rest of the amount is for the usurious interest thereon and
cannot be recovered by the plaintiff. Furthermore the two checks which
were issued by Herminio Maravilla amount only to twenty-three thousand
pesos and the testimonies of said Herminio Maravilla and his aforesaid
employee do not appear to be reasonable to the court.

“The
contention of the defendants that Herminio Maravilla simulated the
transfer in favor of Jose Maravilla and subsequently transferred by the
latter to the plaintiff herein Aquiles M. Sajo appears supported by
documentary and circumstantial evidence in this case. The deed marked
Exhibit 1 is in favor of Herminio Maravilla. Jose Maravilla and Aquiles
M. Sajo were proven in this case to be quite young and without much
money or capital. In fact Aquiles M. Sajo was a newly returned student
from Manila and has only been borrowing money from his relatives. From
the whole evidence in this case, it really appears that Herminio
Maravilla is behind the affair, and that his nephew Maravilla and
Aquiles M. Sajo are nothing but his tools in the said transactions.
Herminio Maravilla while testifying in this court stated as follows:

”
‘Q. Is it true that by means of fraud you caused Antonia Gustilo to
sign Exhibit A?—A. No, sir. That and this transaction were made at
their own request and in accordance with their wishes, because they
wanted that the time of the mortgage be extended one more year; but in
those days the price of sugar had dropped, as also the prices of land
whereas the amount of the loan had increased to P28,000. So I told Don
Leopoldo that that could not be done with the same security, but if the
security was increased I would have no objection in waiting.

” ‘Q. Did they give additional security?—A. Yes.

”
‘Q. What did it consist of?—A. He told me if you want real property we
have no more, but if you want I will look for a signature and then he
brought me the signature of Dona Antonia Gustilo.

” ‘Q.
Who did?—A. He himself. He came to my house telling me that he had
secured the signature of Doña Antonia Gustilo, and it was about two or
three days after that he returned to my house.

” ‘Q. Did
you not induce Antonia Gustilo to sign this document making her believe
that it was the same as the previous document signed by her, telling
her that after signing it her mortgage would become liberated?—A. I
would not deceive anybody; that was a promissory note; she did not sign
in the mortgage document.’

“It clearly
appears from the aforesaid testimony, Herminio Maravilla’s connection
in this case. Moreover, the deputy sheriff, Mr. Pareñas, was clearly
informed that Aquiles M. Sajo is not the real plaintiff in this case,
and so the required fees were not paid by Sajo. This contention of the
defendants is further corroborated by the fact that neither Jose
Maravilla nor Aquiles M. Sajo had required the defendants herein for
the payment of the said promissory note, Exhibit A, and that the only
one who made the demand for payment was Herminio Maravilla in his own
behalf. It is, therefore, clear that Herminio Maravilla may have also
been made plaintiff herein.

“At the hearing of this case,
the defendants offered in open court to the plaintiff Aquiles M. Sajo
and to Herminio Maravilla the payment of the original sum of P23,000 as
a final settlement of the case, but the said offer was rejected by the
attorney for the plaintiff herein.

“Although it appears
that Herminio Maravilla may have been made also one of the plaintiffs
herein, it further appears impliedly from the circumstances herein that
said Herminio Maravilla recognizes the right of the plaintiff in this
case to sue as an assignee of the action in his favor and it appearing
from Exhibit C that the plaintiff herein has acquired the right to sue
without any objection from said Herminio Maravilla, who appeared as one
of the witnesses in favor of the plaintiff in this case, the, court is
of the opinion that a judgment in this case for the legitimate debt of
the defendants herein may be adjudged in favor of the said plaintiff
for the purpose of avoiding a multiplicity of suits. Furthermore, the
action of the defendants herein in offering to the said plaintiff in
open court, the payment of the sum of P23,000, impliedly recognized the
right of the said plaintiff to recover the said amount. And it has
already been held by the Supreme Court that a debtor should not enrich
himself by not paying the capital of the loan and that the creditor has
the right to sue for its recovery. (See Official Gazette—Feb. 5, 1924.)

“With
regard to the contention of the defendants that the plaintiff should be
charged with the attorney’s fees in this case, the court believes that
the defendants are not entitled to recover same, because strictly
speaking up to the present time they have not actually paid the
usurious interest which they have agreed to pay, and they did not even
pay the real amount of money obtained by them from Herminio Maravilla
nor a portion of same, and for that reason the present suit for the
recovery of the same has been filed.

“In view of all the foregoing considerations, the court hereby adjudges
Mercedes Gustilo, Leopoldo Jereza and Antonia Gustilo to jointly and
severally pay to plaintiff herein the amount of P23,000, with legal
interest thereon from the filing of the complaint which is March 2,
1923, until fully paid, and also to pay the costs of this action.

“In
default of payment of this judgment for the period of three months
hereof, the property subject of the mortgage marked Exhibit B shall be
sold to realize the mortgage debt and costs and disposed of in
accordance with law.

“It is so ordered.

“Bacolod, Occidental Negros, February 24, 1925.

(Sgd.)			“DELFIN JARANILLA
	“Judge, Twenty-second Judicial District”

An
examination of the evidence of record shows the findings of the trial
judge to conform to the proven facts. The subtle arguments of skilled
counsel have failed to disclose any prejudicial error in the judgment.
These statements should be sufficient to dispose of the appeals.
However, for the satisfaction of the parties and their attorneys, we
will resolve all the assignments of error.

PLAINTIFF’S APPEAL

Assignment of error No. I.—Whether defense of usury properly interposed and alleged by the defendants.—After
the complaint was filed by the attorney for the plaintiff, the three
defendants consisting of Mercedes Gustilo and her husband, Leopoldo
Jereza, and Antonia Gustilo, presented an answer signed by a lawyer as
“Attorney for the Defendants.” The oath following was subscribed by
Leopoldo Jereza—only. It is now argued by the plaintiff-appellant that
this was in contravention of section 9 of the Usury Law, Act No, 2655
as amended, providing “The person or corporation sued shall file its
answer in writing under oath to any complaint brought or filed against
said person or corporation before a competent court to recover the
money or other personal or real property, seeds or agricultural
products, charged or received in violation of the provisions of this
Act. The lack of taking an oath to an answer to a complaint will mean
the admission of the facts contained in the latter.”

It will
be noted that while the law provides both affirmatively and negatively
for the taking of an oath to an answer to a complaint, the law says
nothing as to whether all of the defendants must subscribe to the oath
or whether the verification of one is sufficient. In this instance, the
oath was accomplished by the husband without joining the wife. The
better practice would be for the answer to be sworn to by the wife as
well as by the husband. It would likewise be the better practice for
the plaintiff, after the answer setting up usury as a defense is filed,
in his replication or otherwise to raise the point of irregularity in
defendants’ answer. Where this is done, it is easy for the defendants
to so amend as to meet the situation. Here since the answer is verified
by the husband, and since the plaintiff did not by any means contest
the sufficiency of the verification in the lower court, it would be
highly technical at this stage of the proceedings to throw the case out
of court on such a specious excuse. (Collard vs. Smith [1860], 13 N. J. Eq., 43; Vanderveer vs. Holcomb [1866], 17 N. J. Eq., 547; Hartley vs. James, 18 Abb. Pr. [N. Y.], 229.)

Assignment
of error No. II.—Whether the spouses Leopoldo Jereza and Mercedes
Gustilo received of Herminio Maravilla P23,000 with P2,000 usurious
interest added to make up P25,000, or whether the said husband and wife
received P25,000.—The documents on their faces call for
twenty-five thousand pesos (P25,000). These documents have in their
favor all the sanctity with which the law surrounds them. The
plaintiff’s contention is thus supported by the instruments, and, in
addition, by the oral testimony of Herminio Maravilla, the real party
in interest, and his cashier, Miguel Aldea.

It is the rule
that he who alleges usury as a defense to an obligation must establish
it by clear and satisfactory evidence. The later cases reflecting the
more liberal views now prevailing with regard to the taking of
interest, consider that usury, like other facts in civil cases, needs
only a preponderance of the evidence to be established. With these
principles concerning the proof of usury in mind, we find the
allegation here supported by the testimony of the three defendants
Antonia Gustilo, Leopoldo Jereza, and Mercedes Gustilo. This evidence
made such an impression on the trial judge that he termed the
preponderance of the evidence in this regard as “overwhelmingly against
the claim of the plaintiff.” Two details speak eloquently on behalf of
this finding. The first is the simulated transfers from Herminio Mara
villa to Jose Maravilla, his nephew, to Aquiles M. Sajo, a young man,
to defeat the rights of the creditors in other actions, thus permitting
of no sympathy for the nominal plaintiff and the real plaintiff. And
the second and more important detail is that two checks—one for eleven
thousand pesos (P11,000) and the other for twelve thousand pesos
(P12,000)—were drawn on November 25, 1920, thus evidencing a
consideration to the amount of twenty-three thousand pesos (P23,000).
Excepting the assertions of the plaintiff and his witness, no other
evidence exists that two thousand pesos (P2,000) in cash was turned
over to the defendants. Certainly no receipt for the money was taken.
Under such conditions, we feel that the defendants have carried the
burden of their defense by a clear preponderance of the evidence.
(Houghton vs. Burden [1912], 228 U. S., 161; Pusser, vs. Thompson [1909], 132 Ga., 280; Abbott vs. Stone [1898], 172 Ill., 634; France vs. Munro [1908], 132 Iowa, 1; Poppleton vs. Nelson [1885], 12 Ore., 349.)

Assignment
of error No. III.—Whether interest on P23,000 should be allowed at the
rate of 12 per cent per annum, or at the rate of 6 per cent per annum,
and whether the plaintiff should be allowed 10 per cent on P23,000 by
way of damages.—The Usury Law, as construed by this court, permits
the creditor to recover the principal but not the stipulated usurious
interest. This could well be taken to mean a forfeiture of the right to
any interest so as not to arrive at a contradiction in terms.
Nevertheless the court has fallen into the habit in cases of this
character of allowing the creditor the legal rate of interest on the
judgment from the date of the filing of the complaint. The right to
damages falls with the denial of the plaintiff’s right to usurious
interest. (Go Chioco vs. Martinez [1923], 45 Phil., 256; Gui Jong & Co. vs. Rivera and Avellar [1924], 45 Phil., 778.)

DEFENDANTS’ APPEAL

Assignment
of error No. I.—Whether Antonia Gustilo should be condemned jointly and
severally with Leopoldo Jereza and Mercedes Gustilo to pay the judgment.—Antonia Gustilo signed Exhibit A, the promissory note sued on, as a maker. She is bound by her action.

Assignment of error No. II.—Whether legal interest should be allowed on the judgment, and if so, for what period of time.—As
has previously been pointed out, it is the practice of the court in
usury cases to permit the creditor to secure legal interest on his
judgment. Counsel for the defense insists nevertheless that even if
this be so, legal interest should not be granted subsequent to his
offer to pay the plaintiff the sum of twenty-three thousand pesos
(P23,000). As we read the record, however, the action of counsel in
court was merely in the nature of a gesture and was at most an offer to
compromise which was not accepted by counsel for the plaintiff. There
is nothing, therefore, taking the facts out of the general rule.

Assignment of error No. III.—Whether certain questions of the plaintiff should have been permitted.—Whatever the ruling of the trial judge, it does not constitute reversible error.

Assignment
of error No. IV.—Whether the defendants should be adjudged to pay the
costs and whether the defendants should recover attorney’s fees from
the plaintiff.—The determination of costs was discretionary with
the trial judge. As the defendants had not really paid any usurious
interest and as the honors of the battle were about even, no mistake
was made in the ruling of the trial judge concerning attorney’s fees.

Assignment
of error No. V.—Whether the ruling of the trial judge permitting verbal
evidence to be presented by the plaintiff relating to the usurious
character of the loan was proper, notwithstanding no answer to the
defense was presented under oath.—Like some of the arguments for
the plaintiff, this is an argument technical in character. The
defendants having set up the defense of usury and having offered oral
testimony to vary the terms of a written instrument, could not very
well complain if the plaintiff was given the right of rebuttal.

For all the foregoing, the judgment appealed from is affirmed without special pronouncement as to costs in this instance.

Avanceña, C. J., Street, Ostrand, Johns, Romualdez, and Villa-Real, JJ., concur.