GR 28335; (March, 1970) (Digest)
G.R. No. L-28335 March 30, 1970
EQUITABLE BANKING CORPORATION, plaintiff-appellee, vs. FELIPE LIWANAG AND MICHAEL PARSONS, defendants.
FACTS
On November 4, 1963, defendants Felipe Liwanag and Michael Parsons obtained a loan of P80,000.00 from Equitable Banking Corporation, evidenced by a promissory note. They agreed to pay jointly and severally with 9% annual interest within 120 days. The note stipulated that in case of non-payment at maturity, an additional interest of 5% per annum on the total amount due would be payable, compounded monthly, and the total amount would bear interest at 12% per annum until paid. It also included a provision for attorney’s fees equivalent to 10% of the amount due if referred for collection. The defendants failed to pay the outstanding balance of P27,346.66. The bank filed a complaint on April 26, 1967. Defendant Liwanag filed an answer admitting the loan but denying the rest of the complaint’s averments “for lack of knowledge sufficient to form a belief as to the truth thereof.” He also raised special defenses that the plaintiff had no cause of action and that the claim for interest and attorney’s fees was exorbitant, and included a cross-claim against co-defendant Parsons. The plaintiff moved for judgment on the pleadings, arguing the answer failed to tender any issue. The lower court granted the motion and rendered judgment against Liwanag.
ISSUE
Whether the lower court correctly rendered a judgment on the pleadings based on the defendant’s answer.
RULING
Yes, the lower court correctly rendered a judgment on the pleadings. The Supreme Court affirmed the decision. The defendant’s denial “for lack of knowledge” was not availed of in good faith, as the facts denied were plainly within his knowledge, particularly since a copy of the promissory note and a detailed account statement were attached to the complaint, and he admitted contracting the obligation. His special defenses were bare assertions without any supporting allegations to tender a genuine issue. The stipulated interest (9% plus a 5% penalty upon default) was not usurious but a valid penalty clause under the Civil Code, which the defendant did not show to be iniquitous. The appeal was deemed interposed solely for delay, resulting in the affirmance of the judgment with treble costs against appellant Liwanag and his counsel.