La Urbana v. Villa Abrille
REITERATIONFacts
The Antecedents: La Urbana, Sociedad Mutua de Construccion y Prestamos (appellee) commenced an action in the Court of First Instance of Davao against Maria F. Villa Abrille (appellant) for the foreclosure of a real estate mortgage. The mortgage secured a loan of P40,000 obtained by the appellant from the appellee. Procedural History: The trial court rendered judgment in favor of the plaintiff-appellee, ordering the defendant-appellant to pay P42,492.18 with interest at twelve percent per annum from December 23, 1933, and P6,000 as attorney's fees. The Petition: The defendant-appellant appealed the decision, assigning four errors.
Issue(s)
Whether the court below erred in overruling the demurrer to the complaint on the ground of ambiguity, unintelligibility, and uncertainty. Whether the principal amount claimed by the plaintiff-appellee falls within the sanction of the Usury Law, and if the defense of usury can be invoked. Whether the depositions and exhibits admitted by the court were taken in compliance with legal requirements. Whether the amount awarded as attorney's fees is reasonable.
Ruling
The judgment of the lower court is affirmed with a modification reducing the attorney's fees from P6,000 to P3,000. Costs are taxed against the appellant.
Ratio Decidendi
On the demurrer to the complaint: The Court found no merit in the contention that the complaint was ambiguous, unintelligible, and uncertain. The complaint provided an itemized statement of the indebtedness covered by the mortgage and clearly stated the circumstances constituting the plaintiff's cause of action, thus complying with Section 90 of the Code of Civil Procedure. On the issue of usury: The Court clarified that Section 9 of the Usury Law, which requires an answer to be under oath to avoid admission of facts, applies only to actions brought by the victim of usury to recover money or property charged or received in violation of the Usury Law. In this case, the appellant was not filing such an action, thus the defense of usury was properly raised by her answer. However, the Court found that the stipulated interest rates of 10% and 12% were within the legal limits, and other charges were those usually made by building and loan associations and had received the sanction of law, citing Lopez and Javelona vs. El Hogar Filipino. On the admission of depositions and exhibits: The Court found that there was substantial compliance with the requirements of Section 361 of the Code of Civil Procedure regarding the taking of depositions. The depositions were taken before a notary public in Manila, and notice was served on the appellant eight days prior to the taking, at a time when the plaintiff had no knowledge of her attorney's appointment. On the award of attorney's fees: While the P6,000 attorney's fees were in accordance with the mortgage contract, the Court held that stipulated attorney's fees may be reduced to a reasonable amount. Citing Bachrach vs. Golingco and Manila Trading & Supply Co. vs. Tamaraw Plantation Co., the Court determined that P3,000 was a reasonable allowance for attorney's fees under the circumstances.
Main Doctrine
The defense of usury cannot be invoked if the answer is not under oath, as per Section 9 of the Usury Law. However, this provision applies only when the victim of usury files an action to recover what has been exacted. In cases where the principal amount is challenged for usurious character, the stipulated interest rates must be examined against legal limits, and charges by building and loan associations are permissible if sanctioned by law. Furthermore, attorney's fees stipulated in a mortgage contract may be reduced to a reasonable amount by the court.