Republic of the Philippines

COURT OF APPEALS
Manila, Philippines

LIBERTY Civil Case No. R-2345

COMMERCIAL (Civil Case No. 1870)
CORPORATION,
Plaintiff-Appellee

-versus-

JULMA RODRIGUEZ,
XAVIER RODRIGUEZ,
Defendants-Appellant

x x

APPELLANT’S BRIEF

DEFENDANTS-APPELANTS, by counsel, Unto this

Honorable Court respectfully submit their Brief, in support
of their appeal from the Decision dated 20 July 2022 and the
Order dated 18 September 2022 of the Regional Trial Court
of Legazpi City, Albay, Branch 10, in Civil Case No. 890-M-
2006, and state:

I. THE PARTIES

Plaintiff-Appellee LIBERTY COMMERCIAL CORPORATION is a

corporation duly organized and existing Under Philippines laws, with
principal office at Legazpi City, Albay.
Defendants-Appellants XAVIER RODRIGUEZ and JULMA
RODRIGUEZ are spouses, of legal age, Filipino, and with address at
No. 64 Legazpi City, Albay.

II. STATEMENT OF MATERIAL DATES

1. Orders dated 29 September 2021 1 and 15 April 2022,2 by

the lower court favored the plaintiff-appellee to sold at public
auction the properties of defendant- appellant given as
security for the loan.

2. On o8 August 2022 defendants-appellants filed a Motion

for Reconsideration3 but was denied in the court a quo dated
18 September 2022.4

III. STATEMENT OF THE CASE

This is an ordinary appeal under rule 41 of the 1997 Rules

of Civil Procedure filed by the herein Defendants-Appellants
(brevity) Spouses Harvey and JULMA RODRIGUEZ against
Plaintiff-Appellee LIBERTY COMMERCIAL CORPORATION
seeking to SET ASIDE and REVERSE the Decision dated 20
July 2022 and the Order dated 18 September 2022 of the
Regional Trial Court of Legazpi City, Albay, Branch 10, in the
case entitled, “Properties Corporation vs. Spouses XAVIER
RODRIGUEZ and JULMA RODRIGUEZ”, docketed as Civil
Case No. 890-M-2006.

In the appealed Decision dated 20 July 2022, the court a

quo rendered judgment in favor of the plaintiff-appellee as
follows
1
Order date 29 September 2021, Rollo, p. 218
2
Order dated 15 April 2o22, Rollo, p. 303.
3
Motion for Reconsideration dated o8 August 2oo9, Rollo, pp. 348-354.
4
Order dated 18 September 2o22, Rollo, pp. 3#4-3#5
 “WHEREFORE, it appearing that the material
allegations of the complaints
had been established by clear and convincing and
comment evidence, judgment is hereby rendered in favor
of the plaintiff and against the defendants-spouses,
ordering the latter to pay the former within a period of
one hundred twenty (12o) days from the entry of
judgment, the following:

(1) The principal amount of Five Million Pesos

Php5,ooo,ooo.oo) plus twelve percent (12%) interest per
annum computed from June 26, 2015, less the payment
effected on February 23, 2oo9 in the amount of Php
500,000.00 to be initially to be initially applied to be
accrued interest;

(2) The amount equivalent to five percent (5%) of the

total amount due as attorney's fees; and

(3) Cost of suit.

If defendants-spouses fail to pay the aforementioned

amount within the period as afore-stated, the properties
covered by Transfer Certificate of Title (TCT) Nos. T-
389849 (M), TCT-389850 (M) shall be sold at public
auction to satisfy the judgment in the manner and Under
the provisions of Rules of Court and other regulations
governing sales of sales of real estate Under execution.

Defendants-spouses' counterclaims are dismissed for lack

of merit.

SO ORDERED.”

A Complaint for Judicial Foreclosure of Mortgage filed by

Plaintiff-appellee against herein Defendant-Appellants, where
it prayed for judgment in its favor, asking the court to order
the defendants to pay plaintiff the amount of NINE MILLION
NINE HUNDRED THOUSAND PESOS (P9,900,000.00); a
sum equivalent to fifteen percent of total indebtedness,
inclusive of principal and interest as and by way of attorney's
fees, expenses, and costs; and to issue a decree of foreclosure
for the
sale at public auction of the properties located at Legazpi City,
Albay, and covered by Transfer Certificate of Title (TCT) Nos.
T-389849 (M), TCT -389850 (M) issued by the Registry of
Deeds for Legazpi City, Albay, and for the disposition of
the proceeds thereof in accordance with law, Upon failure of
the defendants to fully pay the sums set forth in the complaint,
within the period set by law.5

Indeed, it was further alleged by plaintiff-appellee in its

Complaint that: (a) out of the total amount of Ten Million Four
Hundred Thousand Pesos (P1o,4oo,ooo.oo), the defendants
were only able to pay the amount of Five Hundred Thousand
Pesos (P5oo,ooo.oo) by a check dated 23 February 2oo3,
leaving a balance of NINE MILLION NINE HUNDRED
THOUSAND PESOS (P9,9oo,ooo.oo); (b) despite
numerous and repeated demands, defendants failed to pay the
afore-stated amount and that on 26 April 2oo5, final demand
was made Upon them to pay the total amount of Twelve
Million Six Hundred Ten Thousand Pesos (r2,aro,ooo.oo),
inclusive of the principal amount of the loan, interest due
thereon as of 2a December 2oo4 and fifteen percent (r5%) of
the sum thereof, as and by way of attorney's fee and liquidated
damages.6

Defendants-appellants sought the dismissal of the Complaint,

and by way of compulsory counterclaims, sought payment by
plaintiff of the following amounts: Five Hundred Thousand
Pesos (P500,000.00) as and by way of moral and exemplary
damages; One Hundred Thousand Pesos (P100,000.00), as
and by way of

attorney's fees; and Fifty Thousand Pesos (P50,000.00) as and

by way of litigation expenses.7

Pre-trial8 and trial of the case ensued, with the parties

presenting their respective testimonial and documentary
evidence. Plaintiff-appellee presented witnesses in the persons
of Ayne and Alfred Ramos, while Harvey and JULMA
RODRIGUEZ testified for the defendants. The parties were
also ordered to file their respective Formal Offer of

5
Complaint dated 8 November 2oo#, pp. #-7( Rollo, pp.#5-72
6
7
Defendants´ Answer (with Compulsory Counterclaims) dated 25 October 2015, pp. 3-4; Rollo, pp.57-61.
8
Pre-trial Order was issued on 22 February 2021, After attempts at setting the case proved futile, the case
was set for initial trial on 16 May 2021.
Exhibits as well as the Comments/Objections thereto, and the
court accordingly ruled Upon the same in its Orders dated 29
September 20219 and 15 April 2022.10
Defendants-appellant sought a reconsideration of the assailed
Decision by filing a Motion for Reconsideration dated 08
August 202211 where they averred, among others that: (a) the
evidence presented by plaintiff was insufficient to justify the
decision; (b) the monetary award was excessive; and (c) they
should be granted damages and attorney's fees.

Plaintiff-appellee filed its Comment/Opposition dated 04

September 202212 to the Motion for Reconsideration filed by
defendants.

On 18 September 2022, the court rendered the Assailed Order

denying the Motion for Reconsideration filed by the
defendants-appellant.13

IV. STATEMENT OF FACTS

On 18 December 2015, the defendants-appellant obtained

a loan from the plaintiff in the amount of FIVE MILLION
PESOS (P5,ooo,ooo.oo), as evidenced by the Promissory Note
dated r8 December 2o015 14, wherein they promised to pay
plaintiff the aforementioned amount with interest at the rate
of three percent (3%) per month on or before 26 December
2018.

To secure the payment of the loan, the defendants-appellants

executed a real estate mortgage dated 9 December 2015 15 over

real properties located in Legazpi City, Albay and covered by

9
Order dated 29 September 2o21, Rollo, p. 218
10
Order dated 15 April 2022, Rollo, p. 303.
11
Motion for Reconsideration dated o8 August 2o22, Rollo, pp. 348-354.
12
Comment/Opposition dated 04 September 2022, Rollo, pp.358-363.
13
Order dated 18 September 2022, Rollo, pp.364-365
14
Promissory Note dated 18 December 2015, Plaintiff´s Exhibits "B" to "B-2", Inclusive, Rollo, p. 194.
15
Real Estate Mortgage dated 19 December 2015, Plaintiff´s Exhibits "C" to "C-14", inclusive, Rollo, pp. 195-
198.
Transfer Certificate of Title (TCT) Nos. T-389849 (M) 16
, TCT-
389850 (M)17.

The REM was duly annotated at the back of both TCT Nos. T-
389849 (M)18 and 389850 (M)19 Under Entry No. 525rr75
(M).

Pursuant to the Promissory Note dated 18 December 2015, the

appellants- defendants agreed and committed themselves to
pay plaintiff-appellee in accordance with the terms and
conditions state.

The defendants-appellant failed to pay the amount due on

26 June 2002 in accordance with the terms and condition of
the afore-mentioned Promissory Note, and out of the total
amount of Ten Million Four Hundred Thousand Pesos
(Php1o,4oo,ooo.oo) due plaintiff, the defendants were only
able to pay the amount of Five Hundred Thousand Pesos
(Php5,ooo,ooo.oo) by a check dated 23 February 2003. Said
amount was applied to the payment of the interest outstanding
and overdue as of 26 June 2002, thereby leaving a balance of
Nine Million Nine Hundred
Thousand Pesos (Php9,900,000.00) as of 26 December 2004.

Since the defendants20-appellant failed to make good their

obligation despite numerous and repeated demands made
Upon them. In a letter dated 26 April 2016 2o, final demand
was made Upon the defendants to pay the total amount of
Twelve Million Six Hundred Ten Thousand Pesos
(Phpr2,aro,ooo.oo), inclusive of the principal amount of the
loan, interest due thereon as of 2a December 2oo4 and fifteen
percent (r5%) of the sum thereof, as and by way of attorney's
fees and liquidated damages.

Despite having received the aforementioned letter, the

defendants-appellant failed and or refused to settle their
obligation to the plaintiff. This prompted the plaintiff-
appellee to institute the action for Judicial Foreclosure of
Mortgage before the Trial Court.

V. ASSIGNMENT OF ERROR
16
Transfer Certificate of Title No. T-389849 (M), Plaintiff´s Exhibits "D" to "D-1", inclusive, Rollo, p. 199
17
Transfer Certificate of Title No. T-38985o (M), Plaintiff´s Exhibits "E" to "E-1", inclusive, Rollo, p. 2oo-
2o1.
18
Entry No. 525117 (M)- Plaintiff´s Exhibit "D-1", inclusive, Rollo, p. 199.
19
Entry No. 525117 (M)- Plaintiff´s Exhibit "E-1", inclusive, Rollo, pp. 2oo-2o1.
20
Demand letter dated 26 April 2o18, Plaintiff´s Exhibit "F", Rollo, pp. 2o2-2o4.
A. The Honorable Trial Court committed reversible error in
declaring/granting that Appellee’s prayer to exercise its
right to foreclose Appellants’ real properties despite the
finding that Appellee charged exorbitant rate of interest of
3% per month (36% interest per annum).

B. The Honorable Trial Court erred in granting Appellee’s

prayer to exercise its right to foreclose Appellants’ real
properties despite the breach of contract made by the
Appellee.

VI. ARGUMENTS l DISCUSSION

A. The Honorable Trial Court committed reversible

error in declaring/granting that Appellee’s prayer to
exercise its right to foreclose Appellants’ real
properties despite the finding that Appellee charged
exorbitant rate of interest of 3% per month (3a%
interest per annum).

Though it is a settled rule that the contract is the law

between the parties, there are exceptions to such which must
be given due course. In this present case, it is very clear that
the interest of 3% per month for the loan obtained by the
defendant- appellant was excessive, iniquitous,
Unconscionable and exorbitant, contrary to morals, and the
law which should render the contact void ab initio.

In a case of ASIAN CATHAY FINANCE AND LEASING

CORPORATION VS. SPOUSES CESARIO GRAVADOR, et. Al,
G.R. NO. r86550, July 05, 2010 , the
Supreme Court ruled as follows:

"Thus, we similarly hold the 3% monthly interest to

be excessive, iniquitous, Unconscionable and exorbitant,
contrary to morals, and the law. It is therefore void ab
initio for being violative of Article r306.

Stipulations authorizing the imposition of iniquitous

or unconscionable interest are contrary to morals, if not
against the law.

Under Article r409 of the Civil Code, these contracts

are inexistent and void from the beginning."

Though the defendants-appellants, admitted that they

obtained a loan from the plaintiff and agreed to the terms and
conditions of the Real Estate Mortgage and Promissory Note,
such contract must be void for being violative of Article r306.

B. The Honorable Trial Court erred in granting

Appellee’s prayer to exercise its right to foreclose
Appellants’ real properties despite the breach of
contract made by the Appellee.

The Appellant should have received the loaned amount of

5,000,000.00 in full. It was necessary for the business of
piggery intended by the Appellants.

On cross-examination, JULMA RODRIGUEZ mentioned

that they received the loan on installment basis and not in full.

Q: But the amount of P5M was eventually given?

A: Yes sir, it was given to Us, the full amount but
not immediately and on installment basis.

Breach of contract is defined as the failure without legal

reason to comply with the terms of a contract. It is also defined
as the failure, without legal excuse, to perform any promise
which forms the whole or part of the contract.2r

The Plaintiff-Appellees committed a breach of contract by

releasing the loan on installment basis instead of being in full.
As a result of the breach of contract, the Appellants may elect
to rescind the contract as the case of MANUEL RIOS v.
JACINTO PALMA provides:

“At first blush it might appear that the case

would perhaps be affected by the reservation
contained in the demand of plaintiffs' attorney for
the surrender of the premises, in which he stated that
the demand was without prejudice to Ulterior
responsibility for damages. But a moment's reflection
ought to show that the right of action here reserved
must be Understood as having reference to such
damages as might be recoverable in law, consistently
with the election of the plaintiffs to rescind the
contract.”22

The Appellants should not anymore pay the interest of the

loan to compensate the damages brought about by the non-
performance of the contractual obligation of the Appellee. The
Appellees are liable further of actual and moral damages due
to their breach of contract.

In cases such as this, Art. 2219 of the Code provides that

moral damages may be recovered in acts referred to in its Art.
21.23
ART. 2219.Moral damages may be recovered in the following
and "analogous cases":

acts;

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 3o9;
(10) Acts and actions referred to in articles 21, 26, 27,
28, 29, 30, 32, 34 and 35;

PRAYER
 WHEREFORE, in view of the foregoing premises,
defendants-appellant Spouses Harvey and JULMA
RODRIGUEZ respectfully prays for this Honorable Court that
the Decision dated 20 July 2022 and Order dated 18
September 2022 of the Honorable Regional Trial Court of
Legazpi City, Albay, Branch 10 appealed from be REVERSED
and SET ASIDE, and lieu thereof, judgment be rendered and a
new one be issued dismissing the Complaint for lack of merit.

Other relief and remedies just and equitable Under the

premises are likewise prayed for.

MOST RESPECTFULLY SUBMITTED.

City of Legazpi for City of Manila, 15 February 2022

ALLAN V. ASUNCION JR.

ASUNCION LAW OFFICE
2/F Aquende Bldg.,
Old Roces Street, Legazpi City, Albay
Email:[email protected]
Mobile No. 63945123567
Attorney’s Roll No. 1029832
IBP No. 726392
PTR No. 6253921
MCLE Compliance No. 0 0 1 2 9 3
 NOTICE

To The Hon. Branch Clerk of Court

Regional Trial Court,

Madam:

Kindly bring the foregoing MEMORANDUM to the immediate

attention of the Honorable Court.

ALLAN V. ASUNCION JR.

Copy furnished:

Atty. Alessandra B. Apuya

Counsel for Defendants
2F Arista Building
Karangahan
Boulevard Tabaco City