Republic of the Philippines

MUNICIPAL TRIAL COURT IN CITIES

7th Judicial Region
Branch 2
City of Tagbilaran

CEBU CFI COMMUNITY SMALL CLAIMS CASE NO.

COOPERATIVE, -TAGB
Plaintiff
For: Collection of sum of money
- versus

Defendants.

X--------------------------------x

DECISION

Plaintiff filed this case on ______________ against the

defendants. Summons under the Rule of Procedure for Small
Claims Cases as Amended, Response Form, Order and
Notice of Hearing for ___________ were issued but the
Sheriffs Return on Summons1 shows that these were not
served upon defendant __________as he can no longer be
found at the address given by the plaintiff. Court Sheriff
George A. Baluma undertook to serve these court processes
upon the defendant ___________________ at
________________but his report indicates that according to
a______________. These court processes were, however,
served upon ______________.

Plaintiff asked that the initial hearing be reset since it did not
hold office on Mondays. Plaintiff was also asked to ascertain
the whereabouts of ______________so that court processes can
be served upon him.

At the next scheduled hearing on _________________, notice of

which was received by defendant ___________; defendants
failed to appear. Section 12 of the Rule of Procedure for
Small Claims Cases as Amended provides that (s)hould the
defendant fail to file his Response within the required period,
and likewise fail to appear at the date set for hearing, the
court shall render judgment on the same day, as may be
warranted by the facts, hence this decision.

1 Dated November 17, 2014, p24 of the rollo.

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Plaintiff is a cooperative represented by Jorros A. Nagal and
eventually by Guadalupe R. Rollan. The records show board
resolutions authorizing these persons to represent the
cooperative.

The promissory note attached to the Statement of Claims

show that defendant Borja obligated himself to pay the
amount of Php60,000.00 on a monthly basis, with the term
of the loan running from 2-9-07 to 2-28-09. The promissory
note indicates an interest rate of 24% per annum. It also
contains the following provision:

In case of default in the payments of the above stated

installments as it falls due, all other installments shall
immediately become due and payable, a fine of 1.5%
per month shall be charged on the defaulted amount.

In a demand letter dated April 30, 2008 which is also

attached to the complaint, plaintiff is demanding the amount
of Php28,116.89. A statement of indebtedness also
attached to the statement of claim shows that as of
September 2014, the total outstanding obligation of the
defendants to plaintiff was in the amount of Php56,011.35,
broken down as follows:

Salary loan

Interest
Fines
Coop Health Loan
Total Amount

The interest rate imposed by the plaintiff at 24% per annum

is reasonable as per Supreme Court ruling in Sps. Villanueva
v. CA, et. al2. Consequently, the interest rate as computed is
allowed.

However, the court deems it equitable to reduce the penalty

of 1.5% per month or 18% per annum to 12% per
annum, in light of Articles 1229 and 12273 of the Civil Code
of the Philippines, as applied in BPI v. Spouses Yu, et. al 4 and
in RGM Industries Inc. v. United Pacific Capital Corporation. 5
It can be deduced from the 2008 demand letter that
defendant has made partial payments on his loan.

2 G.R. No. 163433, August 22, 2011.

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The Court furthermore, finds it just to cause the
reimbursement of plaintiff's filing fee expenses as it is
undeniable that it paid P3,815.00 as legal fees.

Only defendant _______was served court processes, and

records show that he signed the promissory note as co-
maker, making him liable as an accommodation party. In Ang
v. Associated Bank6, the Supreme Court explained an
accommodation party thus:

A]n accommodation party is one who meets all the

three requisites, viz: (1) he must be a party to the
instrument, signing as maker, drawer, acceptor, or
indorser; (2) he must not receive value therefor; and (3)
he must sign for the purpose of lending his name or
credit to some other person. An accommodation party
lends his name to enable the accommodated party to
obtain credit or to raise money; he receives no part of
the consideration for the instrument but assumes
liability to the other party/ies thereto. The
accommodation party is liable on the instrument to a
holder for value even though the holder, at the time of
taking the instrument, knew him or her to be merely an
accommodation party, as if the contract was not for
accommodation.

As petitioner acknowledged it to be, the relation

between an accommodation party and the
accommodated party is one of principal and suretythe
accommodation party being the surety. As such, he is
deemed an original promisor and debtor from the
beginning; he is considered in law as the same party as
the debtor in relation to whatever is adjudged touching

3Article 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly complied with by the
debtor. Even if there has been no performance, the penalty may also
be reduced by the courts if it is iniquitous or unconscionable; Article
2227: Liquidated damages, whether intended as an indemnity or
penalty, shall be equitably reduced if they are iniquitous and
unconscionable.

4 G.R. No. 184122, January 20, 2010.

5 G.R. No. 194781, June 27, 2012.

6 G.R. No. 146511, September 5, 2007, 532 SCRA 244 as cited in

Gonzales v. PCIB, et. al., G.R. No. 180257, February 23, 2011.

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 the obligation of the latter since their liabilities are
interwoven as to be inseparable. Although a contract of
suretyship is in essence accessory or collateral to a
valid principal obligation, the suretys liability to the
creditor is immediate, primary and absolute; he
is directly and equally bound with the principal. As an
equivalent of a regular party to the undertaking, a
surety becomes liable to the debt and duty of the
principal obligor even without possessing a direct or
personal interest in the obligations nor does he receive
any benefit therefrom.

WHEREFORE, Decision is hereby rendered in favor of

_______________________against defendant _________________,
as follows:

1. Ordering the defendant to pay the plaintiff in the amount

of Php__________ plus 24% interest per annum as well as
an additional 12% on the said principal amount as penalty
per annum from the time of the filing of the complaint
until such time that it is duly paid;

2. Ordering defendant to pay plaintiff the amount of

__________________________________________ (P2,915.00) as
filing fee expenses.

SO ORDERED.

Given in Chambers this _______ day of _______, 2015 in

Tagbilaran City, Philippines.

JOY ANGELICA SANTOS DOCTOR

Judge Designate