LO BUN CHAY, PLAINTIFF AND APPELLEE, VS. ALBINO PAULINO ET AL., DEFENDANTS. HILARION SORIANO, INTERVENOR AND APPELLANT.

The plaintiff alleges that he is a part owner, of a lot described in
his complaint, together with the defendants, and he prays for the
partition thereof among them.

It appears that the land in question formerly belonged to the
defendants and, Hilarion Soriano in joint ownership. Hilarion Soriano
conveyed his share to the plaintiff. Thus the plaintiff became coowner
with the defendants, as he alleges, in place of Hilarion Soriano.

Besides the defendants, some third-party claimants put in an appearance, among them, Hilarion Soriano.

The trial court, reserving to the defendants and the rest of the
intervenors the right to their day in court, decided the case solely
with respect to the contention between the plaintiff and intervenor
Hilarion Soriano.

In his complaint in intervention, Hilarion Soriano alleges that if
he subscribed a deed of sale of his share in the land in favor of the
plaintiff, that contract was not in reality a sale, but a loan with
usurious interest, and he prays that said sale be annulled, and that
the plaintiff be ordered to reimburse him the usurious interest
received. It is to be noted that after the sale of Soriano’s share to
the plaintiff, the latter obtained the proper transfer title.

The trial court rendered judgment in favor of the plaintiff and against Hilarion Soriano’s third-party claim.

One of the grounds for the judgment appealed from is that although
Hilarion Soriano pleaded the defense of usury in his complaint in
intervention, he failed to make it under oath, and for the lack of
verification, he was deemed to have admitted the facts alleged in the
complaint. The trial court cites section 9 of Act No. 2655, as amended
by Act No. 2992, which reads:

“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.”

Interpreting the above legal provision, when as the instant case,
action for the recovery of usurious interest is instituted, the
defendant must file a sworn” answer, and the absence of this oath
implies an admission of the facts alleged in the complaint. From this
provision it may be inferred that the oath must be taken by the person
against whom the action is filed for the recovery of usurious interest,
and not by the person who brings the action, which seems to be the
opinion of the trial court. The law was enacted to do away with usury.
It was passed against the usurer and not in his favor. And finding, no
doubt, that the evil to be eradicated was so widespread, the legislator
felt justified in presuming that it existed whenever its existence was
alleged, unless denied under oath, thus demanding the guaranty of this
oath, not in the allegation, but in the denial of this fact. The law
cannot be construed otherwise when it provides that the person or
corporation sued shall file its answer in writing under oath to the
complaint claiming the recovery of usurious interest received.

It is no bar to this construction of the law that the allegation of
usury is here made by an intervenor and not by the plaintiff, since in
third-party claims, the intervenor may interpose his allegations
against the plaintiff, as in this case, and then he is, with respect to
the third-party claim, the plaintiff, and the original plaintiff is the
defendant. Moreover, within the spirit of the law, it is immaterial
whether the allegation of usury is made in the complaint or in a plea
of intervention for the purpose of the oath, which must be taken, not
by the person affirming that he paid usurious interest, but by him who
denies that he received it. The point of the law is that whenever a
person or a corporation is alleged to have charged usurious interest,
said person or corporation must v deny such an imputation under oath or
be deemed to admit the charge.

It therefore follows that in the case at bar, it was the plaintiff
who, under the law, should have sworn to his answer to the third-party
claim. According to the record, he has failed to do so.

In view of the circumstances of the case at bar, this conclusion
renders it necessary that we declare the extent of this implied
admission according to law.

It may, of course, be held in general that only th^t for which the
law requires an oath is deemed admitted, should no oath be taken. If it
is alleged in the complaint that the defendant, whether an individual
or a corporation, has entered into a contract of loan with the
plaintiff, there is no need for a sworn answer. But if it be added that
on this loan $he defendant has collected usurious interest, that is,
interest in excess of the rate fixed by the law, then there is need of
an oath. In that case, if no oath is taken to the answer, the only
thing admitted is the allegation that the interest charged is usurious,
not that the contract entered into is a loan, which is something that
must be proved independently of the admission, especially when, as in
the one in question, this allegation is disputed.

The intervenor Hilarion Soriano not only alleges that the plaintiff
charged, and that he paid him, usurious interest, but also that the
contract they made, under the guise of a sale subject to repurchase,
according to its terms, was in reality a contract of loan wherein
usurious interest was stipulated and collected. He should therefore
have shown by competent evidence that that contract was really a loan.
But, not only is there hot a scintilla of evidence to this effect, but,
on the contrary, the evidence of record, which is the contract itself,
shows conclusively that it was a sale subject to repurchase. Wherefore,
as the plaintiff and the intervenor did not enter into a contract of
loan by virtue of which, usurious interest could be collected, and as
the contract entered into between them was a sale upon which usurious
interest could not be collected, the admission established by the law
that sugIi interest was in fact collected, does not exist. The law
cannot presume an absurdity. In order that this admission of the
collection of usurious interest may be invoked, it is necessary first
to establish the contract by virtue of which such interest could be
collected.

Upon these grounds the judgment appealed from is affirmed, with costs against the appellant. So ordered.

Street, Malcolm, Johns, and Romualdez, JJ., concur.

Ostrand, J., concurs in the result.

Villa-Real, J., with whom concur

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DISSENTING

JOHNSON and VILLAMOR, JJ.:

I am constrained to dissent from the majority opinion in so far as
it holds that the plaintiff’s failure to verify his answer to the
complaint in intervention, wherein it is alleged that the contract
entered into by and between plaintiff and intervenor is loan with
usurious interest, only admits the existence of said usurious interest
but not the contract of loan, so that the intervenor is relieved from
proving the former, but not the latter. J am at a loss to see how the
existence of usurious interest can be admitted without admitting the
contract of loan whereof they are the cause or consideration. If the
existence of usurious interest is admitted, then the contract whereof
they are the cause or consideration must of necessity be admitted.

Furthermore, the pertinent portion of section 9, Act No. 2655, as
amended by Act No. 2992, plainly provides that “the lack of taking an
oath to an answer to a complaint will mean the admission of the facts
contained in the latter.” If this is so, then the lack of taking an
oath to the answer to the complaint in intervention alleging that the
contract is a loan contract with usurious interest admits both points,
because both are facts contained in said complaint. In my opinion,
then, the judgment appealed from should be reversed.