Republic of the Philippines

REGIONAL TRIAL COURT

9th Judicial Region
BRANCH 16
Zamboanga City
-oOOo-

ZAMBOANGA RNR LENDING CIVIL CASE NO. 5899

INVESTORS, INC., represented by
ROSEVILLA RECAIDO in her capacity
as President,
Plaintiffs,

- versus - - for -

JOAN F. TAMAO, SUM OF MONEY and

Defendant. DAMAGES

x- - - - - - - - - - - - - - - - - - - - - - - -x

ORDER
Under consideration is a petition for Sum of Money and
Damages filed by ZAMBOANGA RNR LENDING INVESTORS, INC.,
represented by ROSEVILLA RECAIDO in her capacity as
President against defendant JOAN F. TAMAO.

FACTS OF THE CASE

Plaintiff Zamboanga RNR Lending Investors, Inc. (ZRNRLII, for

brevity) represented by its President Rosevilla R. Recaido (Recaido,
for brevity), is a corporation duly organized and established under the
laws of the Republic of the Philippines and is engaged in lending
money to people, including the herein defendant Joan Tamao.
Plaintiff and defendant have known each other since 2000 as
defendant is a customer/frequent borrower of money to the plaintiff
corporation thru its President Recaido. as culled from the plaintiffs
records, as of March 8, 2007 defendant had already owed plaintiff
corporation an accumulated sum of THREE HUNDRED EIGHTY
THOUSAND PESOS (Php 380,000.00) Philippine Currency,
representing the total unpaid obligation arising from a series of
loans/transactions that plaintiff corporation granted to defendant
within a period beginning from September 26, 2006 to October 31,
2006. On the same date, March 8, 2007, defendant issued a

Page 1 of 6
Promissory Note in favor of the plaintiff wherein she acknowledged
her indebtedness to plaintiff and promised to pay the amount she
owed daily until fully paid. The said promissory note contains as
condition in case of default in any of the daily payment, the whole
obligation or the balance thereof becomes immediately due and
demandable without need of notice of demand. Defendant was only
able to pay a total of SEVENTEEN THOUSAND FOUR HUNDRED
PESOS (Php 17,400.00) Philippine Currency. On March 3, 2007
defendant stopped payment of her obligation.

Plaintiff Corporation thru Recaido executed a Notice of Demand

to plaintiff, in an effort to amicably settle the matter or the balance of
the entire loan in the amount of THREE HUNDRED SIXTY TWO
THOUSAND SIX HUNDRED PESOS (Php 362,600.00) Philippine
Currency. Defendant failed and refused to pay the obligation
notwithstanding repeated demands, both verbal and written, from the
plaintiff.

RULING

Plaintiff presented and offered the testimonies of plaintiffs

President Recaido, Hon. Vera Vergara, Elvira Sabulahan, Hon.
Vergaras former secretary at the Southern Command, and Isaac
Lacaste, Recaidos former client.

All the witnesses made common allegations that: ZRNRLII is a

corporation engaged in lending money as early as the grant of its
Articles of Incorporation by the SEC with office address at 361 B
Compound, Upper Calarian; that defendant Joan is a client of plaintiff
corporation and the kumare of Recaido.

Former Judge Advocate of the Southern Command Hon. Vera

Vergara went on elaborating her knowledge involving the due
execution of the promissory note and the real estate mortgage by
Joan in favor of ZRNRLII and Recaido. She is the Ninang of
defendant Joan and was responsible for the notarizations of the
public documents (promissory note and real estate mortgage)
through the intervention of Joan.

Recaido, for her part, testified in her capacity as the President

of ZRNRLII. She testified that she knew the herein defendant
because they are kumares and their husband were co-workers
before. She also testified that her association with defendant involves
her lending defendant borrow money from the said corporation. That
the money borrowed from her by the defendant increased and
defendant Joan failed to pay her obligation. She denies having hired
Joan to be one of neither the corporations collector nor agent.

Page 2 of 6
 Defendant on the other hand, vehemently and vigorously
denies and asserts that plaintiff has no cause of action against her
warranting the dismissal of the Complaint.

Plaintiff in the case at bar is the Corporation, ZRNRLII and not

its President and Board Chairman Recaido; thus. Even without the
hereunder additional arguments, it is but patent that indeed, the
plaintiff has no cause of action against the defendant even granting
without admitting, that defendant had really incurred indebtedness to
Recaido during the period indicated (September 26 to October 31,
2006), inasmuch as, the corporate life of ZRNRLII only begun on
January 16, 2007 the day when it had been granted the Certificate
of Incorporation by the Securities and Exchange Commission (SEC),
for as the ;aw declared: It is from the date of issuance of the
certificate that corporate life begins, to last for the duration
provided for in the articles, unless sooner legally dissolved.

Recaido did engage in lending business without the necessary

permits and licenses from the concerned agencies. Neither did she
report her income from such undertaking, for she did not issue the
Bureau of Internal Revenue (BIR) approved and/or registered
receipts to its borrowers/customers. Thus, Recaido deserves no
sympathy from this Court, for not only did she take advantage on the
separate entity of ZRNRLII; she likewise earned untaxed income from
our marginalized brethren by imposing unconscionable and shocking
interests.

For want of consideration received by the defendant, and its

failure to express and be reflective of the true intents and wishes of
the parties, the Promissory Note dated March 8, 2007 is in fact not
legally binding and enforceable. The same is true with the Real
Estate Mortgage constituted on the family home of the defendant, as
it has been executed in blatant violation of the provision of the Family
Code of the Philippines.

Defendant is the borrower and she could not escape her

obligation to pay by making it appear that she was a mere agent of
plaintiff ZRNRLII, a collector as she describes herself. Defendant
alleges that she was hired by the plaintiff as a collector; however, she
failed to present any proof that she was indeed hired as collector by
the plaintiff. It appears that she used the money she borrowed to loan
them to others. However, whatever she did with the money is of no
moment for the simple truth is the promissory note itself, the one that
she alone assumed and executed in favor of the plaintiff. The note is
the undeniable proof of her indebtedness to plaintiff.

As to the claim of shocking and unconscionable interest on the

loan, there was none because there are no other charges on the
principal loan stipulated in the promissory note. If there was any such

Page 3 of 6
exorbitant rate, it would be most likely on the loan granted by
defendant to the constituents of Cabatangan using the money that
she borrowed from the plaintiff. The promissory note executed by the
defendant on March 8, 2007 is clear and unambiguous. The money
that she received is the consideration itself and she promised to pay
the same on a daily basis until its full satisfaction. That is the simple
intent and agreement between the parties.

A contract of adhesion is one in which one of the parties

imposes a ready-made form of contract, which the other party may
accept or reject, but which the latter cannot modify. In other words, in
such contract, the terms therein are fixed by one party, and the other
party has merely "to take it, or leave it."1 Thus, it can be struck down
as void and unenforceable for being subversive of public policy,
especially when the will of the dominant party is imposed upon the
weaker party and the latter is denied the opportunity to bargain on
equal footing.2

Defendant was not compelled to sign the promissory note. She

could have rejected any stipulation in the said note, but she did not.
In fact, she even affirmed the same when she executed the real
estate mortgage in favor of the plaintiff. Defendant was not force or
intimidated to sign the promissory note and to have the real estate
mortgage in favor of the plaintiff without the prior consent of her
spouse.

Plaintiff denies that defendant signed the promissory note by

mistake and undue influence without fully understanding its contents
and implications. As a matter of fact, it was the defendant who inputs
the contents of the promissory note thru her Ninang Atty. Vera
Vergara.

As stressed in Tan Sua Sia v. Yu Baio Sontua, 56 Phil. 711,

cited in Mata v. Court of Appeals3

x x x The rule that one who signs a contract is presumed

to know its contents has been applied even to contracts of
illiterate persons on the ground that if such persons are unable
to read, they are negligent if they fail to have the contract read
to them. If a person cannot read the instrument, it is as much
his duty to procure some reliable persons to read and explain it
to him, before he signs it, as it would be to read it before he
signed it if he were able to do and his failure to obtain a reading

1 Sweet Lines, Inc. vs. Teves, G.R. No. L-37750, May 19, 1978, 83 SCRA 361; Tolentino,
COMMENTS AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES, VOL. IV,
1997 reprint at 503.
2 Saludo vs. Court of Appeals, G.R. No. 95536, March 23, 1992, 207 SCRA 498.
3 G.R. No. 87880, 207 SCRA 753, 760 (1992)

Page 4 of 6
 and explanation of it is such gross negligence as will estop from
avoiding it on the ground that he was ignorant of its contents.

The plaintiff through its President personally tendered the

demand letter dated May 8, 2007 upon defendant after she refused to
receive the same. It was left in her possession, and she was apprised
of its contents.

Finally, on the issue of damages, Plaintiff Zamboanga RNR

Lending Investors, Inc. is not entitled to any damages. The award of
moral damages cannot be granted to a corporation, it being an
artificial person that exists only in legal contemplation and cannot,
therefore, experience physical suffering and mental anguish, which
can be experienced only by one having a nervous system.4 There is
also no sufficient basis for the award of exemplary damages. There
being no moral damages, exemplary damages could not be awarded
also. As to attorneys fees, aside from lack of adequate support and
proof on the matter, these fees are not recoverable as a matter of
right but depend on the sound discretion of the courts.5

The case at bar calls to mind the principle of unjust enrichment

Nemo cum alterius detrimento locupletari potest. No person shall
be allowed to enrich himself unjustly at the expense of others. This
principle of equity has been enshrined in our Civil Code, Article 22 of
which provides:

"Art. 22. Every person who through an act or performance

by another or by any other means, acquires or comes into
possession of something at the expense of the latter without
just or legal ground, shall return the same to him."

Justice and equity thus oblige that defendant Joan Tamao be

held liable for her outstanding obligation with the plaintiffs
corporation. It would be unjust enrichment on the part of defendant to
be relieved of that obligation.

4 ABS-CBN Broadcasting Corporation v. Court of Appeals, G.R. No. 128690, 21 January 1999,
301 SCRA 572, 602-603.
5 Article 2233, Civil Code of the Philippines.

Page 5 of 6
 WHEREFORE, premises considered, this Court finds

SO ORDERED.

GIVEN this ________________, in the City of Zamboanga,

Philippines.

CATHERINE C. FABIAN
Presiding Judge

Copy furnished:

ATTY. MARIA JOY P. ARCADIO _______________

Counsel for the Plaintiffs
Jose Co Bldg., Veterans Ave.,
Zamboanga City

ZAMBOANGA RNR LENDING INVESTORS, INC. _______________

Represented by ROSEVILLA RECAIDO,
in her capacity as President
Plaintiffs
361 B Compound, Upper Calarian,
Zamboanga City

ATTY. LUCIO R. MABALOD, JR. _______________

Counsel for the Defendant
G/F Blanco Bldg., N.S. Valderosa St.,
Zamboanga City

JOAN F. TAMAO _______________

Defendant
PopCom, Lower Cabatangan,
Zamboanga City

OFFICE OF THE CLERK OF COURT _______________

Hall of Justice
Zamboanga City

Page 6 of 6