Republic of the Philippines

National Capital Judicial Region

REGIONAL TRIAL COURT
Branch 57
Makati City

LEAGUE ONE FINANCE & LEASING

CORPORATION (LEAGUE ONE),
Plaintiff,

versus R-MKT-19-02417-CV
For: Replevin, Sum of Money
& Damages

SPS. MARICAR D. PANGANIBAN,

JUVINAL PANGANIBAN &
JOHN DOES
Defendants.
X-------------------------------------------X

“ANSWER WITH
SPECIAL/AFFIRMATIVE
DEFENSES AND
COUNTERCLAIMS”
Defendants MARICAR D. PANGANIBAN & JUVINAL P.
PANGANIBAN, to this Honourable Court, respectfully submit
their Answer with Special/Affirmative Defenses and
Counterclaims, and aver as follows:

ADMISSIONS

1. Defendants admit their identities, personal

circumstances and common address in Par. 1.2 of the
Complaint;

2. They admit of the existence of the Certificates of

Registration and Official Receipts of the subject twenty-eight
(28) units of mortgaged motor vehicles registered in the Land
Transportation Office under the name of the defendant
MARICAR D. PANGANIBAN, as descibed in Par. 2.2, 2.4, 2.6,
2.8, 2.10, 2.12. 2.14, 2.16, 2.18 and 2.20 of the Complaint;

NEGATIVE DEFENSES

3. They specifically deny Par. 2.1, 2.3, 2.5, 2.7, 2.9,

2.11, 2.13, 2.15, 2.17 and 2.19 of the Complaint, in so far as
1
herein defendants were alleged to have received the purported
full amount or value of the loan proceeds which plaintiff
obligated itself to deliver to the the defendant MARICAR D.
PANGANIBAN, and which it disclosed in the subject
Promissory Notes with Chattel Mortgage;

4. Defendants specifically deny Par. 2.24 of the

Complaint, insofar as the following allegations are concerned:

a. That defendants allegedly received the demand

letters and their contents (statements of accounts),
Annexes “MM”-Series thru “VV”-Series);

b. That defendants “refused to surrender” the

subject twenty-eight (28) units of mortgaged vehicles;

c. That the demand letters (with statements of

accounts) were tendered to a certain “Mr. Delfin S.
Ronquillo”, the alleged Finance Manager of SPS.
PANGANIBAN;

d. That substituted service was resorted to.

5. Defendants specifically deny Par. 2.25 of the

Complaint, concerning the allegation that defendants
outstanding loan obligations to plaintiff as of 6 March 2019
amounted to ₱43,556,551.69. Plaintiff’s Statement of Account
(Annex “XX”) is without basis, even as plaintiff deliberately
ommitted the loan payments already made by herein plaintiff
totalling in the amount of ₱13,772,336.44, as well as
plaintiffs “undelivered” loan proceeds in the amount of ₱8
million, more or less, as discussed in the Special and
Affirmative Defenses below;

6. Defendants specifically deny Par. 2.26 of the

Complaint, inasmuch as the filing of the instant suit for
replevin, sum of money and damages, is predicated on
plaintiff’s malicious acts done in utter bad faith, and lack of
prior valid demand, at least, for the voluntary turn-over the
subject twenty-eight (28) units of mortgaged vehicles;

7. Defendants specifically deny Par. 2.21, 2.22, 3.1

and 4.1 of the Complaint, insofar as the “acceleration /waiver
of demand” (Par.2.21 & 2.22), “Attorney’s Fees & Liquidated
Damages” (Par. 3.1) and “venue” (Par. 4.1) are one-sided and
iniquitous provisions of the Promissory Notes with Chattel
Mortgage (Annexes “A”, “G”, “K”, “N”, “R”, “W”, “BB”, “DD”,
“FF”, “JJ”) which must be strictly construed against plaintiff;

2
 8. Defendants specifically deny Par. 5.1 and 6.1 of the
Complaint, insofar as the alleged “actual market value” of the
mortgaged properties, which is also made the basis for the
bond as posted by plaintiff in support of its application for the
issuance of the Writ of Replevin, is at most “speculative” and
must be subjected to strict proof.

9. The truth of the matter, concerning the foregoing

denied allegations in the complaint, are set forth below:

SPECIAL/AFFIRMATIVE DEFENSES

I. The complaint states

no cause of action, for
failure of the plaintiff to
deliver the entirety of the
loan proceeds to
defendant Panganiban.
x------------------------------------x

10. Defendant MARICAR D. PANGANIBAN is the

owner/proprietess of MADES MANPOWER AND ENTERPRISES
(hereafter, “MME JJ TRANSPORT”). The subject twenty-eight
(28) units of mortgaged motor vehicles (shuttle buses) are used
in her said private company.

11. On the other hand, defendant JUVINAL P.

PANGANIBAN is her spouse. He has no other participation in
this case, aside from the fact that he was required by plaintiff
to sign the subject Promissory Notes with Chattel Mortgage;

12. On the face of the subject Promissory Notes with

Chattel Mortgage (Annexes “A”, “G”, “K”, “N”, “R”, “W”,
“BB”, “DD”, “FF” & “JJ”) the obligation of the defendants to
pay plaintiff the purported consideration/ loan principal in
total sum of ₱54,037,516.28, is predicated upon the premise:
“for value received”.;

13. Necessarily, the phrase: “for value received” must

go in consonance with the fact that defendants have “actually”
and “in fact” received the full value or consideration of the
subject 10 loan transactions. Otherwise, there would be no
basis to demand payment from the defendants, nor to ascribe
to them delay in their obligation, since in the first instance,
plaintiff itself has not yet faithfully and fully complied with its
corresponding obligation (i.e., to release the full value of the
loan proceeds).

3
 14. This finds basis and support in the principle that a
contract of loan is a “reciprocal obligation” betwen the parties,
wherein pursuant Article 1169, par. (3) of our Civil Code: “[In
reciprocal obligations,] neither party incurs in delay if the
other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From
the moment one of the parties fulfills his obligation, delay by the
other begins.”

15. The Supreme Court, in DBP v. Guarina

Agricultural And Realty Development Corporation (G.R.
No. 160758, January 15, 2014) ruled as follows:

“xxx [b]y its failure to release the proceeds of the loan

in their entirety, DBP had no right yet to exact on Guariña
Corporation the latter's compliance with its own
obligation under the loan. Indeed, if a party in a reciprocal
contract like a loan does not perform its obligation, the
other party cannot be obliged to perform what is expected
of it while the other's obligation remains unfulfilled. In
other words, the latter party does not incur delay.

Still, DBP called upon Guariña Corporation to make good

on the construction works pursuant to the acceleration clause
written in the mortgage contract (i.e., Stipulation No. 26), or
else it would foreclose the mortgages.

DBP's actuations were legally unfounded. It is true that

loans are often secured by a mortgage constituted on real or
personal property to protect the creditor's interest in case of
the default of the debtor. By its nature, however, a mortgage
remains an accessory contract dependent on the principal
obligation, such that enforcement of the mortgage contract
will depend on whether or not there has been a violation of the
principal obligation. While a creditor and a debtor could
regulate the order in which they should comply with their
reciprocal obligations, it is presupposed that in a loan the
lender should perform its obligation - the release of the
full loan amount - before it could demand that the
borrower repay the loaned amount. In other words,
Guariña Corporation would not incur in delay before DBP
fully performed its reciprocal obligation.”

Considering that it had yet to release the entire

proceeds of the loan, DBP could not yet make an effective
demand for payment upon Guariña Corporation to perform
its obligation under the loan. According to Development
Bank of the Philippines v. Licuanan, it would only be when a
demand to pay had been made and was subsequently refused
that a borrower could be considered in default, and the lender
could obtain the right to collect the debt or to foreclose the
mortgage. Hence, Guariña Corporation would not be in default
without the demand.”

4
 16. Here, out of the contracted loan sum of
₱54,037,516.28, plaintiff was only able to release loan
proceeds to the defendant MARICAR D. PANGANIBAN
amounting to ₱43,352,263.00 (or a difference in the
staggering amount of ₱8 million, more or less).

17. To prove so, she has attached herewith as Annex

“___”-series her PBCOM Account No. 0267201005899
passbook (on the highlighted entries made therein from 2
February 2017 up to 22 March 2018), reflecting the entire sum
of loan proceeds remitted by plaintiff in said total amount of
only ₱43,352,263.00.

18. For the convenience of the Honourable Court,

attached is Annex “___”, which illustrates in tabular form the
summary of plaintiff’s remitted loan proceeds as of 18 August
2019. Evidently, there is a difference of ₱8 million, more or
less between the sum total of ₱54,037,516.28 contracted value
of the loan proceeds, and the sum of ₱43,352,263.00 actually
delivered by plaintiff;

19. To date, said difference of ₱8 million, more or

less remains undelivered/undeposited/unaccounted for in
the PBCOM Account No. 0267201005899 belonging to
MARICAR D. PANGANIBAN/MME JJ TRANSPORT. Notably,
said amount, pursuant to the subject 10 loan transactions,
was supposed to form part of the loan proceeds which plaintiff
committed to deliver to said defendant;

20. Similar to the case of DBP v. Guarina Agricultural

And Realty Development Corporation as above-quoted,
since it had yet to release the “entire” proceeds of the
loan, herein plaintiff could not yet make an effective demand
for payment upon the defendants to perform their obligation
under the loan.

21. While plaintiff may have released a substantial

amount of loan proceeds in the amount of ₱43,352,263.00,
mere “partial performance” in a reciprocal obligation is
not enough. “The nature of this reciprocal obligation requires
both parties’ simultaneous fulfillment of the totality of their
reciprocal obligations and not only partial performance on the
part of the allegedly injured party.” (The Wellex Group, Inc. v.
U-land Airlines, Co., Ltd., G.R. No. 167519, 14 January
2015).

22. Stated otherwise, plaintiff’s delivery of the full

amount of the loan proceeds operates as a “suspensive
condition” (Art. 1181, Civil Code), the fulfillment of which is
5
necessary before defendants may be bound by its obligations
under the subject Notes.

23. Under the premises, defendants cannot be aptly

said to have “defaulted” or to have incurred in delay in the
payment of their loan obligations to plaintiff. Plaintiff may only
invoke the applicable “default” provisions in the subject Notes,
if and only if it has itself fully complied with its reciprocal
obligation under Article 1169, par. (3) of our Civil Code.

24. Consequently, for lack of cause of action, the

complaint for replevin, sum of money and damages, must
accordingly be dismissed.

II. There is lack of proof

of valid demand made
upon the defendants,
which warrants the
dismissal of the
complaint.
x------------------------------------x

25. Plaintiff alleges in par. 2.24 of the Complaint:

a. That defendants allegedly received the demand

letters and their contents (statements of accounts),
Annexes “MM”-Series thru “VV”-Series);

b. That defendants “refused to surrender” the

subject twenty-eight (28) units of mortgaged vehicles;

c. That the demand letters (with statements of

accounts) were tendered to a certain “Mr. Delfin S.
Ronquillo”, the alleged Finance Manager of SPS.
PANGANIBAN;

d. That substituted service was resorted to.

26. The hard truth and fact, however, is that no such

valid demand was ever made by the plaintiff from the herein
defendants.

27. Further, herein defendants are not associated to

any “Mr. Delfin S. Ronquillo”, and the latter has no authority to
act for and in behalf of the herein defendants;

28. Notably, plaintiff’s allegation in Par. 2.24

contradicts the allegations in the “Affidavit of Service”
6
(Annex “WW”) also adverted to in Par. 2.24 of the
Complaint. Notably, Par. 2.24 of the complaint alleges that
“the demand letters and Statements of Account were
tendered to Mr. Delfin S. Ronquillo, Finance Manager of
SPS. PANGANIBAN, but the latter refused to receive the
copies of said Demand Letters. Thus, substituted service
was resorted to.” However, the “Affidavit of Service” (Annex
“WW”) states that “the demand letter was tendered to Ms.
Maricar Panganiban [However] she refused to sign the
receiving copy of the demand letter, as per instruction of
their lawyer, thus, substituted service was resorted to.”

29. Here, it is obvious that plaintiff merely contrived the

allegation that a demand was validly served upon the
defendants, prior to its recourse before this Honourable Court.
It did so in bad faith, purportedly for no other reason than to
support the instant action for replevin.

30. It must be stressed that, were it not for the

contention that “defendants xxx [refusal] to surrender the
mortgaged vehicle[s]” (Par. 3.1, complaint) which
presupposes the valid service of a demand letter, plaintiff
can have no good foundation or basis in saying that the
subject property was “wrongfully detained” by the defendants.

31. Without the requirement that “the property is

wrongfully detained by the adverse party, alleging the cause
of detention thereof according to the best of his knowledge,
information, and belief”, as provided for under Sec. 2, Rule 60
of the Rules of Court, the complaint for replevin cannot
prosper.

32. Accordingly, for lack of proof of valid demand, to

establish, among others: (1) a demand for payment has been
made, prior to the filing of their malicious charges in court; (2)
that defendants refused to surrender the subject mortgaged
vehicles; (2) they wrongfully detain the same, and are thus
entitled to the issuance of a writ of replevin; the complaint has
been prematurely filed, has no valid basis, and must
perforce, be dismissed.

7
III. The Utter Bad Faith of
Plaintiff bars it from
recovering its claims,
pursuant to the “In Pari
Delicto” doctrine.
x----------------------------------x

33. To the contrary, it was plaintiff who acted in bad

faith by resorting to the filing this case for replevin, without
any prior demand for the voluntary surrender of the subject
mortgaged vehicles.

34. All along, defendant MARICAR D. PANGANIBAN

was in good faith to make good her obligations to plaintiff.
From the time that she experienced delay in her payments
owing to uncontrolled factors (i.e., sudden domestic inflation in
fuel & other financial difficulties) in her business, she was
never remiss in updating the plaintiff of her account, as well
as to send plaintiff her proposals for practical and effective
payment solutions;

35. To prove so, attached herewith are her letter-

requests sent to plaintiff via e-mail thru its account manager,
MS. JANE S. HERNANDEZ (email:
jshernandez@leagueone.com.ph), as follows:

a. Letter dated 21 June 2018 (Annex “___”-Series)

for rescheduling of payment of accounts due as
of 22 July 2018 (in the amount of ₱304,059.49)
and as of 29 July 2018 (in the amount of
₱1,501,041.45), respectively, with attached
proposed payment scheme for the month of July
2018;
b. Letter dated 22 June 2018 (Annex “___”-Series)
with request for partial payment and attached
proposed rescheduling of payment for the
month of July;
c. Letter dated 28 June 2018 (Annex “___”-Series)
for extension of payment of accounts due as of
29 June 2018, with attached proposed payment
scheme until 30 July 2018 – to August 2018;
d. Letter dated 23 August 2018 (Annex “___”) for
loan restructuring, with a proposed 2-year term
of payment, starting September 2018;
e. Letter dated 28 August 2018 (Annex “___”-
Series) for loan restructuring of the
₱7,450,571.44 amount due as of 30 September
2018, with attached proposed 2-year term of
payment, starting October 2018;
8
 f. Letter dated 15 November 2018 (Annex “___”-
Series) requesting recomputation, loan
restructuring, and adjustment of penalties and
charges, in respect of the ₱9,356,713.83 amount
due as of October 2018;
g. E-mail dated 24 January 2019 (Annex “___”) for
follow up on the last letter-request for loan
restructuring with attached ₱500,000.00 payment
(PBCOM deposit slip) to plaintiff;
h. Letters dated 15 March 2019 (Annex “___”) and 15
July 2019 (Annex “___”) for loan restructuring with
a proposed 5-year term of payment, and request for
adjustment of penalties and charges;

36. Defendant MARICAR D. PANGANIBAN, with high

hopes and in all good faith, sincerely trusted that plaintiff
would grant her requests as above-stated, considering that
other financing institutions would have accommodated similar
requests, as what Radiowealth Finance Corporation in fact did
to her, despite her extraordinary situations and unforeseen
financial difficulties at the time, as shown by the attached
Certification dated 26 April 2019 (Annex “___”) issued by the
latter;

37. However, the stubborn plaintiff was never open to

communication, or to any response, in relation to her repeated
pleas and requests which the defendant MARICAR D.
PANGANIBAN all made in good faith;

38. Worst, just when Maybank Philippines Incorporated

(“Maybank”) was about to approve defendant MARICAR D.
PANGANIBAN’s loan application in the amount of
₱30,000,000.00, which she was supposed to use in payment
of her loan obligations to plaintiff, the latter, in utter bad faith,
deliberately prevented the release of the said loan proceeds, by
unjustifiably and without prior notice, causing her to be
placed on “credit alert” with the Credit Management
Association of the Philippines, Inc. (CMAP) database. Attached
as proof is the Letter dated 1 July 2019 (Annex “___”), issued
by Maybank.

39. Instead, plaintiff, in utter bad faith, resorted to the

filing of the instant case for replevin and sum of money, sans
any prior demand or, at the very least, for a request for the
“voluntary surrender” of the subject 28 Units of mortgaged
vehicles, so that it may, at the same time, re-possess the
subject mortgaged vehicles, and at the same time, recover
enormous sums of money from herein defendants, based on
its malicious allegations;

9
 40. In the case of North Negros Sugar Co. V. Serafin
Hidalgo (G.R. NO. L-42334, October 31, 1936), the Highest
Tribunal ruled:

“The well-known principle of equity that ‘he who comes to

equity must come with clean hands’ bars the granting of the
remedy applied for by plaintiff.

It has been already stated that the plaintiff, to obtain a

preliminary injunction in this case, alleged under oath in its
original complaint facts which it knew to be false, or, at least,
unprobable xxx

xxx From all this it follows that the plaintiff in order to

obtain a preliminary injunction, trifled with the good faith of
the lower court by knowingly making untrue allegations on
matters important and essential to its cause of action.
Consequently, it did not come to court with clean hands.

Coming into Equity with Clean Hands. – The maxim that

he who comes into equity must come with clean hands is, of
course, applicable in suits to obtain relief by injunction.
Injunction will be denied even though complainant shows that
he has a right and would otherwise be entitled to the remedy
in case it appears that he himself actied dishonestly,
fraudulently or illegal in respect to the matter in which
redress is sought, or where he has encouraged, invited or
contributed to the injury sought to be enjoined. xxx"

41. The same principle has been re-stated in the case of

Frenzel v. Catito (G.R. No. 143958, July 11, 2003), thus:

“Equity as a rule will follow the law and will not permit
that to be done indirectly which, because of public policy,
cannot be done directly. Where the wrong of one party
equals that of the other, the defendant is in the stronger
position... it signifies that in such a situation, neither a
court of equity nor a court of law will administer a
remedy. The rule is expressed in the maxims: EX DOLO
ORITUR ACTIO nad IN PARI DELICTO POTIOR EST
CONDITIO DEFENDENTIS.”

42. In light of the in pari delicto doctrine, the evident

bad faith on part of plaintiff, bars it from recovering more than
what, in equity and justice, it is entitled to recover. Plaintiff
cannot be allowed to seek refuge behind the lopsided “default”
provisions of the subject Notes, which provide for penalty
charges, attorney’s fees and such other iniquitous claims,
since it has itself, “come to this court with unclean hands.”

10
IV. The plaintiff is guilty
of fraud in the
performance of its duties.
x------------------------------------x

43. Fraud has been defined in the case of People v.

Baladjay (G.R. No. 220458, July 26, 2017), as follows:

“Fraud, in its general sense, is deemed to comprise

anything calculated to deceive, including all acts, omissions,
and concealment involving a breach of legal or equitable duty,
trust, or confidence justly reposed, resulting in damage to
another, or by which an undue and unconscientious
advantage is taken of another. It is a generic term embracing
all multifarious means which human ingenuity can device,
and which are resorted to by one individual to secure an
advantage over another by false suggestions or by suppression
of truth and includes all surprise, trick, cunning, dissembling
and any unfair way by which another is cheated. On the other
hand, deceit is the false representation of a matter of fact
whether by words or conduct, by false or misleading
allegations, or by concealment of that which should have been
disclosed which deceives or is intended to deceive another so
that he shall act upon it to his legal injury.”

44. Here, the following acts and ommissions by the

plaintiff, committed deliberately and in wanton bad faith, are
constitutive of “fraud”:

a. Failure to disclose to defendants, the true

amount of the loan proceeds which it committed to
deliver;

b. Failure to make full disclosure of credit,

including its itemized charges and deductions, if any,
of the credit transaction/total value of the loan
principal, when it is plaintiff’s mandatory obligation
to do so, pursuant to law (Sec. 4, “Truth in Lending
Act of 1968” / R.A. 3765) under pain of committing a
criminal offense (Sec. 6, “Truth in Lending Act of
1968” / R.A. 3765);

c. Making false allegations in the Complaint

(par. 2.24 thereof), that:

(i.) defendants allegedly received the demand

letters and their contents (statements of
accounts), Annexes “MM”-Series thru “VV”-
Series);

11
 (ii.) Defendants “refused to surrender” the
subject twenty-eight (28) units of mortgaged
vehicles;

(iii) Allegedly, the demand letters (with

statements of accounts) were tendered to a
certain “Mr. Delfin S. Ronquillo”, the alleged
Finance Manager of SPS. PANGANIBAN;

(iv.) Plaintiff resorted to substituted service

despite being uncertain whether the same was
served to: (a) a certain “Mr. Delfin S. Ronquillo”
(Par. 2.24 of the Complaint), or; (b) the defendant
MARICAR D. PANGANIBAN (Affidavit of Service,
Annex “WW”);

d. Furtively and in bad faith, refusing to

respond to defendant MARICAR D. PANGANIBAN’s
written communications (Annex “___”-Series thru
Annex “___”-Series), while taking steps to
deliberately prevent her from acquiring other
modes or avenues of payment (when, after her loan
was approved, and was about to be released by
Maybank, plainitff unilaterally and without notice,
caused her name to be placed on “credit alert” with
the C.M.A.P. database);

45. Plaintiff’s commission of several fraud manifested by

the foregoing acts magnifies the application of the in pari
delicto doctrine, being itself “at fault”, when it came to seek
redress before the Honorable Court.

46. For this very reason, plaintiff’s claims must be

denied.

47. Further, the commission of fraud by plaintiff in the

performance of its obligation, entitles the defendants to
damages, pursuant to Art. 1170 of the Civil Code, as set forth
in the Counterclaim below.

V. The one-sided and

iniquitous stipulations of
the Notes, must be strictly
construed against the
plaintiff.

48. More often than not, loan contracts contain one-

sided provisions that leaves the borrower at the mercy of his
creditor. The Supreme Court, in the case of Sps. Silos v.
12
P.N.B. (G.R. No. 181045, July 2, 2014), had the occassion to
describe the lopsided nature of such contracts, to wit:

“Loan and credit arrangements may be made enticing by,

or "sweetened" with, offers of low initial interest rates, but
actually accompanied by provisions written in fine print
that allow lenders to later on increase or decrease interest
rates unilaterally, without the consent of the borrower,
and depending on complex and subjective factors. Because
they have been lured into these contracts by initially low
interest rates, borrowers get caught and stuck in the web of
subsequent steep rates and penalties, surcharges and the
like. Being ordinary individuals or entities, they naturally
dread legal complications and cannot afford court
litigation; they succumb to whatever charges the lenders
impose. At the very least, borrowers should be charged
rightly; but then again this is not possible in a one-sided
credit system where the temptation to abuse is strong and
the willingness to rectify is made weak by the eternal
desire for profit.

xxx

The Court sustains petitioners’ view that the penalty

may not be included as part of the secured amount.
Having found the credit agreements and promissory notes
to be tainted, we must accord the same treatment to the
mortgages. After all, "[a] mortgage and a note secured by it
are deemed parts of one transaction and are construed
together."101 Being so tainted and having the attributes of
a contract of adhesion as the principal credit documents,
we must construe the mortgage contracts strictly, and
against the party who drafted it. An examination of the
mortgage agreements reveals that nowhere is it stated
that penalties are to be included in the secured amount.
Construing this silence strictly against the respondent,
the Court can only conclude that the parties did not
intend to include the penalty allowed under PN 9707237
as part of the secured amount. Given its resources,
respondent could have – if it truly wanted to – conveniently
prepared and executed an amended mortgage agreement with
the petitioners, thereby including penalties in the amount to
be secured by the encumbered properties. Yet it did not.

With regard to attorney’s fees, it was plain error for the

CA to have passed upon the issue since it was not raised by
the petitioners in their appeal; it was the respondent that
improperly brought it up in its appellee’s brief, when it should
have interposed an appeal, since the trial court’s Decision on
this issue is adverse to it. It is an elementary principle in the
subject of appeals that an appellee who does not himself
appeal cannot obtain from the appellate court any affirmative
relief other than those granted in the decision of the court
below. xxx"

13
 49. In said case, the Supreme Court ruled that the
interest rates unilaterally imposed by the plaintiff bank
violated the rule on “mutuality of contracts” (Article 1308, Civil
Code). Hence, it invalidated said stipulation in the credit
agreement. Finding such agreement to be “tainted”, being in
the nature of a contract of adhesion, the court went further to
rule that the note and mortgages securing said credit
agreement to be likewise “tainted”. Thus, it refused to include
the penalty, as stipulated in the note, as part of the amount
secured by the mortgage.

50. Similarly, the common stipulations in the subject

Promissory Notes with Chattel Mortgage (such as: the
“acceleration /waiver of demand”, “Attorney’s Fees &
Liquidated Damages” and “venue”), having been drafted
unilateraly by plaintiff, must be strictly construed against the
latter.

51. To reiterate, defendants could not have defaulted in

their obligations, considering that plaintiff failed to deliver to
them the entire loan proceeds. No valid demand was made, to
at least prove and show that defendants refused to voluntarily
surrender the subject vehicles. This could have prevented
unnecessary litigation. Hastily and in bad faith, plaintiff
proceeded to file this case, since anyway, the defendants are at
the mercy of the lopsided stipulations in the Notes, which
plaintiff unilaterally drafted. This must not be so. The rule of
in pari delicto and mutuality of contracts, must serve and
protect the interests of the aggrieved defendants. Equity and
justice must prevail.

ALTERNATIVE DEFENSES

Defendants, by way of alternative defenses, set forth as

their further special/affirmative defenses, as follows:

Plaintiff’s partial failure

of consideration, the
Partial Payments (of
defendants) and the
Foreclosure Sale Proceeds
(should plaintiff be
adjudged entitled to
foreclose the mortgaged
properties) must all be
taken into account in
determining the total

14
amount of indebtedness of
the defendants.
x------------------------------------x

52. It is stipulated in the subject contracts, that:

“ xxx The obligations specified in the condition above

mentioned, which obligations are just and valid, are to be
secured by mortgage of assets under my/our name. For
this purpose, I/we hereby convey by way of chattel
mortgage to LEAGUE ONE or its assigns all of the following
personal property/ies situated in the Municipality/City of
MAKATI, Philippines which properties is/are/ now in my/our
possession unpledged and unencumbered, to wit:

UNIT :
ENGINE NO. :
CHASSIS NO. :
YEAR MODEL :

together with the body built or that may be built thereon, and
all equipment and other accessories which may now or from
time to time be used in connection with or attached to the
property/ies above set fortg. This mortgage further secures
any total or partial extension, replacement or renewal of this
NOTE and any indebtedness incurred by me/us for supplies,
equipment or repairs made in connection with the mortgaged
property. xxx"

53. From the foregoing, plaintiff’s alleged possessory

rights over the subject vehicles, is founded on the “chattel
mortgage” constituted over the same, which is intended to
secure the principal loan obligation of the defendants.

54. Considering that the accessory contract of mortgage

is intended to cover the amount of unpaid loan obligation,
plaintiff cannot appropriate to itself the subject mortgaged
vehicles, but can only proceed to foreclose the same, and apply
the sale proceeds to its uncollected payments. This is in line
with the prohibition against “pactum commisorium”, in a
general contract of mortgage.

55. However, where there is partial failure of

consideration, the mortgage constituted over the property,
“becomes unenforceable to the extent of such failure”
(Central Bank of the Philippines v. Court of Appeals, G.R.
No. L-45710, October 3, 1985);

56. Otherwise stated, “the mortgage [must] be

enforceable only to the extent of the amount of the loan
that was released” (Komatsu Industries Inc. v. Court of
Appeals, G.R. No. 127682, April 24, 1998)
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 57. Here, plaintiff’s failure to deliver/remit to the
defendant MARICAR D. PANGANIBAN the undelivered sum of
₱8 million, more or less out of the ₱54,037,516.28
transacted loan value/consideration, gives rise to a partial
failure of consideration.

58. Being so, the Statement of Account (Annex “XX”)

attached in the complaint, is baseless. This is because this did
not fully take into account and consideration the ₱8 million,
more or less amount of loan proceeds which plaintiff failed to
deliver to the defendant MARICAR D. PANGANIBAN. Hence,
for utter lack of factual basis, plaintiffs’ claims in the
complaint, based on said Statement of Account, must be
denied.

59. Consequently, based on the the tabular illustration

Annex “___”, mentioned above, plaintiff may only enforce the
remedy of foreclosure against defendants’ “actual” unpaid
loan obligations. The sum of which, may be computed based
on the actual loan proceeds which defendants received, in the
total amount of ₱43,352,263.00, less the total payments in
the amount of ₱13,772,336.44 (the difference of
₱29,579,926.56) that defendant MARICAR D. PANGANIBAN
had already made to plaintiff.

60. As proof of the total payments given by defendant

MARICAR D. PANGANIBAN to plaintiff, attached as Annexes
“___”-series are the Official Receipts and her Bank Statement
of Account, which shows the debited check payments issued to
plaintiff, in payment of her loan obligations;

61. Nonetheless, should the Honourable Court adjudge

plaintiff as entitled to foreclose the subject mortgaged vehicles
(but not to waive our prayer for the dismissal of the complaint),
it would be proper under the circumstances, that the
foreclosure sale proceeds of such mortgaged vehicles be set off
against the defendants’ unpaid obligations, and the excess, if
any, be returned to them.

62. This is only in accordance with the principle of

“unjust enrichment” (Article 22, Civil Code of the Philippines)
which intends to prevent a situation wherein “a person
unjustly retains a benefit at the loss of another, or when a
person retains money or property of another against the
fundamental principles of justice, equity and good conscience”
(Gonzalo v. Ternate, Jr. G.R. No. 160600, 15 January 2014).

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 63. Also worth mentioning, in this regard, is the fact
that the alleged market value (page 21 of the complaint) of the
repossessed mortgaged vehicles (₱36,500,000.00) exceeds the
unpaid obligations of the defendants (₱29,579,926.56).
Defendants, nonetheless, reserve all the right to present
controverting evidence to rebut the said “market value”, based
on defendants’ allegations.

COUNTERCLAIMS

Defendants replead the foregoing allegations and aver

further that:

64. “Bad faith” has been defined under existing

jurisprudence (Air France v. Carrascoso. G.R. No. L-21438,
September 28, 1966) as follows:

“‘Bad faith’ contemplates a ‘state of mind

affirmatively operating with furtive design or with some
motive of self-interest or will or for ulterior purpose’. ”

Pursuant to the same case, a finding of bad faith entitles the

plaintiff to an award for moral and exemplary damages, and
attorney’s fees.

65. On the other hand, Article 1170 of the Civil Code

provides for liability that may be incurred because of
incidental fraud:

'Those who in the performance of their obligations

are guilty of fraud, negligence, or delay, and those
who in any manner contravene the tenor thereof are
liable for damages.'

66. As a result of plaintiff’s acts showing wanton bad

faith and fraud in the performance of its duties, defendants
incurred actual, incidental and consequential damages,
including loss of earnings following the loss of their possession
of the subject mortgaged vehicles, because of this replevin suit
maliciously and in bad faith, initiated by plaintiff. Defendants
must be compensated for such amount of damages, as may be
proved in the course of trial;

67. Also, defendants suffered sleepless nights, wounded

feelings and serious anxiety for which defendant must be
adjudged liable to pay plaintiff moral and exemplary damages
in the amount of PHP: 1,000,000.00 each;

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 68. Plaintiff should also be adjudged liable to pay the
costs of suit, as well as the services of defendants’ lawyer in
the amount of P400,000.00 as Acceptance Fee, P5,000.00 per
Appearance/Hearing Fee and minimum of P5,000.00 per
pleading, as pleading fees.

PRAYER
WHEREFORE, premises considered, it is respectfully
prayed of the Honorable Court that the complaint be
DISMISSED and that defendants’ counterclaims be
GRANTED.

Respectfully submitted. For Makati City, ___ September

2019.

ATTY. VINCENT PAUL R. TALAO

Counsel for the Defendants SPS. PANGANIBAN
Unit 11-C Future Point Plaza III
Panay Avenue, Brgy. South Triangle,
Quezon City 1103
IBP Lifetime Member No. 014897/ May 20, 2016
PTR No. 7324572/1-4-19/Quezon City
Roll No. 65893
MCLE Compliance No. No. VI-0022753, issued on 2 April 2019
vince_talao@live.com
Tel. No. 0977-007-3068

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NOTICE, COPY FURNISHED & EXPLANATION:

ATTY. CLARIBELLE A. YKUTANEN*

Counsel for the Plaintiff
22nd Floor Tower 6789, 6789 Ayala Avenue
Makati City, Metro Manila

THE BRANCH CLERK OF COURT

BR. 57, RTC MAKATI CITY

Greetings!

Kindly submit the foregoing Answer With Affirmative Defenses and

Counterclaims to the consideration and approval of the Honorable Court,
immediately upon receipt hereof.

*A copy of this pleading was served to the counsel for the plaintiff by
registered mail, due to distance and lack of messengerial services.

ATTY. VINCENT PAUL R. TALAO

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 VERIFICATION/CERTIFICATION

We, MARICAR D. PANGANIBAN AND JUVINAL P. PANGANIBAN, both

of legal age, Filipino Citizen and residing at 14B P5 Blk 94 Lot15,
Hayward Street, Bel-Air II, Santa Rosa City, Laguna after first having
duly sworn to in accordance with law depose and say:

1. We are the defendants in the above- entitled case.

2. We have caused the preparation of the foregoing answer.

3. The contents therein are true and correct to the best of our
personal knowledge and based on authentic documents.

4. We hereby certify that we have not commenced any action or

proceeding involving the same issue in any tribunal or agency, to
the best of our own knowledge, no such action or proceeding is
pending in any other tribunal or agency and should We thereafter
learn that a similar action or proceeding has been filed or is pending
in Court, we will undertake to report such fact within five (5) days
therefrom to the court wherein this Petition and this certification
have been filed.

IN WITNESS WHEREOF, We have hereunto affixed our signatures

this ______________________ in _________________________________________.

MARICAR D. PANGANIBAN JUVINAL P. PANGANIBAN

Affiant Affiant
(____ ID No. ___________) (____ ID No. ___________)

Republic of the Philippines )

City ) S.S.

SUBSCRIBED AND SWORN to before me by the foregoing affiants

who exhibited to me their competent evidence of identities on the date
and place first mentioned above.

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