[G.R. No. 143932. August 14, 2000]

CARIDAD I. DANDOY vs. RTC OF BAGUIO CITY, et al.

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated AUG 14 2000.

G.R. No. 143932 (Caridad I. Dandoy vs. Regional Trial Court of Baguio City, Branch 6, and Heraclides Morales, et al.).

The motion of petitioner for extension of thirty (30) days within which to file petition for review on certiorari is GRANTED PROVIDED THAT THIS BE THE LAST EXTENSION, counted from the expiration of the reglementary period and conditioned upon the timeliness of the motion and movant's compliance with the requisites for its filing.

Heraclides Morales, now represented by his heirs, brought an action for judicial foreclosure of mortgage and for damages against herein petitioner, Caridad I. Dandoy. Petitioner admitted having obtained several loans totaling P4 million pesos from Morales and his wife but she alleged thru the loan agreement is voidable because it was executed through undue influence. She claimed that because she could not pay her indebtedness, the bank to which she had mortgaged her land threatened to foreclose the mortgage; that at that time, she had "special relations" with Morales who convinced her to ask his (Morales's) wife for a loan so that she could pay the bank and give Morales part of the money for gambling; and that Morales assured her that in case she failed to pay the loan when it fell due, the mortgage would not be foreclosed.

The Regional Trial Court, Branch 6, Baguio City, gave judgment for Morales, ordering petitioner to pay within 90 days, at 2% interest per month, her indebtedness amounting to P4,329,000.00 otherwise her mortgaged properties shall be foreclosed. On appeal, the decision of the trial court was affirmed by the Court of Appeals. Hence, this petition for review on certiorari. Petitioner contends that the mortgage contract is voidable and that the trial court had no authority to order her to pay interest at the rate of 2% per month.

First. Art. 1337 of the Civil Code provides that there is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. In the case at bar, petitioner may have been forced to borrow money from Morales and mortgage her properties to secure the loan because the bank threatened foreclosure but not because of any undue influence exerted on her by Morales. That she had illicit relations with Morales does not necessarily mean she was unduly influenced in obtaining a loan from the Morales spouses. Nor is there anything in the record from which it may be deduced that Morales took advantage of his illicit relationship with petitioner to persuade her to borrow money from him and his wife, not even if some of the proceeds of the loan obtained were given by her to Morales to finance the latter's gambling. It is hard to see how this circumstance could have vitiated petitioner's consent to mortgage her properties to secure the loans.

Moreover, as correctly observed by the trial court, the following facts militate against petitioner's claim that she was unduly influenced by Morales to enter into the mortgage contract. First, petitioner is a college graduate and an experienced businesswoman engaged in buying and selling jewelry, dry goods, and clothes. Second, the loan she obtained from Morales was indeed used to secure the release of her properties from a previous mortgage to the bank. Third, the fact that the property of a third person, a certain Teresita Romero, was used as additional collateral indicates that the creditor was serious in securing his interest in the contract. Fourth, it was improbable that petitioner would borrow money from her paramour's wife to finance Morales' gambling when the latter is a person of greater means than petitioner.

Indeed, findings of facts of lower courts are entitled to great respect, and, in the absence of anything in the record to show that the lower court erred in the appreciation of evidence, this Court will not revise the same and substitute its own findings.

Second. Petitioner also questions the imposition of 2 percent interest per month on her obligation notwithstanding that the trial court found the original stipulation of 7 percent per month void under Art. 1306 of the Civil Code. She argues that since the interest rate originally stipulated was declared void, it was as if no interest was stipulated by the parties. She cites Art. 1956 of the Civil Code which provides that no interest shall be due unless it has been expressly stipulated in writing.

This is error. Art. 1956 applies only where there is no stipulation regarding interest, because then the presumption is that no interest was agreed upon by the parties. But, in the case at bar, the parties agreed in writing upon the payment of interest collectible upon default of the obligor. Hence, the trial court correctly ordered the payment of interest. This is similar to the rule on obligations with a penal clause where, under Art. 1229 of the Civil Code, the judge is allowed to reduce the penalty if it is iniquitous or unconscionable.

WHEREFORE, the Court RESOLVED to DENY the petition for lack of showing that the Court of Appeals committed a reversible error.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS

Clerk of Court�


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