1. USURY; DEFENSE; VERIFICATION OF ANSWER. — The Usury Law, Act No. 2656 as amended, provides both affirmatively and negatively for the taking of an oath to an answer to a complaint if the defense of usury is relied upon. The better practice then is for the answer to be sworn to by all of the defendants. Where husband and wife are the defendants, the answer should be sworn to by the wife as well as by the husband.

2. ID.; ID.; PROOF. — He who alleges usury as a defense to an obligation must establish it by clear and satisfactory evidence. Usury, like other facts in civil cases, needs only a preponderance of the evidence to be established.

3. ID.; ID.; RECOVERY BY CREDITOR. — Where the taking of usurious interest is proven, the creditor is permitted to recover the principal but not the stipulated usurious interest. The creditor is also allowed the legal rate of interest on his judgment from the date of the filing of the complaint.

4. ID.; ID.; ID. — In the case at bar, plaintiff was permitted to recover the amount of twenty-three thousand pesos (P23,000) with legal interest thereon from the filing of the complaint until fully paid, but was not permitted to recover two thousand pesos (P2,000) additional as usurious interest, or interest at a higher rate than that provided by law on twenty-three thousand pesos (P23,000), or 10 per cent of twenty-three thousand pesos (P23,000) by way of damages.

Both parties appeal from the following decision and judgment:jgc:chanrobles.com.ph

"The plaintiff in this case called Aquiles M. Saio 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:jgc:chanrobles.com.ph

"ANSWER

"Come now the defendants and answering the complaint presented in this case allege:jgc:chanrobles.com.ph

"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:

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"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 postoffice receipt No. 827002 hereto attached.

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"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.

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"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 Maravilla 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:jgc:chanrobles.com.ph

"‘Q. Is it true that by means of fraud you caused Antonia Gustilo to sign Exhibit A?

"‘A. No, sir. That and this transacti