CASE:

Spouses executed a REM as security of the loan of P30M over the property in Boracay covered by a title and
registered in the name of a husband.

SPA of wife and the REM were registered and annotated on the title.

FACTS:

Defendant Spouses Leo Neil (as represented by his wife and atty.-in-fact, Myla Sheila ) and Myla Sheila , as
mortgagor, executed a Real Estate Mortgage on May 11, 2021 with plaintiff Atty. Aquino F. Ambray as
mortgagee, over a property situated in Brgy. Yapac, Boracay Island, alay, Aklan covered by TCT No. ____
registered in the name of Leo Neil Tirol, over a lot which has an area of 27, 603 sq.m.

Plaintiffs were made to issue 12 Manager’s checks for one year with 12 monthly interest of P450,000.00 and one
check for the principal loan of 30M. First few checks were dishonored that prompted the plaintiff to demand
payment from defendant but still unpaid. Plaintiff sent a demand letter and was received as shown in the LBC
tracker. Despite receipt of the demand letter, defendant still failed to settle their obligation the 30M principal
plus 2.7M interest from Dec. 2021 to May 2022. Hence, the case.

Defendants failed to pay in full the loan extended to them by the plaintiff despite demand, thus, they are bound
by the terms and conditions embodied in the Real Estate Mortgage. No one claims interest over the described
property

RULING:

The dishonored checks were the following:

(enumerate)

The checks issued with the amount of 450,000 or equiv. to 1% of the principal represents interest per month as
stipulated by the parties in the REM.

ART. 1306 of the Civil Code provides that the contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy. The court finds the stipulation on interest rate to be in accord with the law, thus,
shall not be disturbed.

The utter disregard of the defendants in fulfilling their loan obligation to the plaintiff as clearly stipulated in the
REM despite repeated demand, warrants an award of moral damages.

DISPOSITIVE:

WHEREFORE, plaintiff having presented a preponderance of evidence that defendants have obtained a loan and
duly executed a real estate mortgage in his favor and that defendants failed to pay their indebtedness and fulfill
their obligation, judgment is hereby rendered ordering the defendants Spouses Tirol to jointly and severally pay
plaintiff within 90 days from the entry of judgment:

1. The sum of 30M together with the stipulated interest at 1.5% per month (P450,000.00) from
December 10, 2021 to May 10, 2022 plus 1% interest per month on the principal loan of
P30,000,000.00 from the date of demand, August 22, 2022, until fully paid;
2. The sum of P100,000.00 as moral damages and the legal fees in the amount of P673,860.00
3. In default of the defendant to pay within the given period, the two (2) hectares of the undivided
portion of the subject property as described in par. 2 of the REM is ordered sold in a public auction to
pay off the mortgage debt.

JURISPRUDENCE:
Rule 68, Sec. 1 of the Rules of Court on Foreclosure of REM
Section 1. Complaint in action for foreclosure._
Art. 2087, Civil Code on Foreclosure of Real Estate Mortgage
Defendant filed a Motion to Reconsideration of the Decision. Plaintiffs were given 5 days to comment.

RESOLUTION:

Def. filed a MR of the Order. Plaintiff filed a Comment thereto.

Def.-Movant assigned three errors in her Motion:

(enumerate)

The Court finds no ground to grant the motion for reconsideration.

Def.-movant has the same arguments in her Motion to Lift Order of Default and in her Motion for
Reconsideration. The arguments were already discussed by the court in its Order denying the Motion to Lift
Order of Default and there is no need for the court to discuss it again.

The plaintiff presented his evidence ex-parte as defendants were declared in default on the ground of not filing
their Answer within the period allowed by the rules. Thus the case was decided by the Court based on the
evidence presented by plaintiff alone.

A defendant declared in default loses his or her standing in Court. He or she is “deprived of the right to take part
in the trial and forfeits his or her rights as a party litigant,” has no right “to present evidence (supporting his or
her claim,” and has no right “to control the proceedings or cross-examine the witness.” Moreover, he or she has
no right to expect that the court would act upon his or her pleadings or that he or she “may oppose motions
filed against him or her.” (Lui Enterprise, Inc. vs. Zuellig Pharma, Corp. and PB Com., GR. No. 193494, March 7,
2014).

The negotiation between plaintiff and defendant has no significance in this case. The defendant has been
declared in default and the court cannot consider whatever allegations she presents.

In view of the foregoing, the MR filed by defendant is DENIED for lack of merit.
Art. 148 RPC Direct Assault Elements: