The Bachrach Motor Co v. Espiritu G.R. No. L-28497 November ! "928 Facts: 1. This is a consolidated case(Cases no.

28497 and 28948) involving two separate sale transactions. One ade in Fe!. 18" 192# (case 28498)" when the de$endant earlier !o%ght a tr%c& on instal ent $ro the petitioner and said tr%c& was ortgaged together with the two others (no. 77197 ' 92744 in the the s%!se(%ent sale transaction dated )%l* 28" 192#. The said two o$ the other tr%c&s were also p%rchased (!%t alread* paid previo%sl*) $ro the plainti$$. The de$endant $ailed to pa* the !alance. +n )%l* 192#" de$endant again p%rchased another tr%c& $ro ,achrach. The said tr%c&" together with the - other vehicles were ortgaged to the plainti$$ to sec%re the re aining !alance. The de$endant $ailed to pa* the !alance $or the latest tr%c& o!tained. 2. +t was agreed in !oth sales that 12. interest will !e paid on the %npaid price" and in case o$ the non/pa* ent o$ the total de!t at at%rit*" 2#. shall !e the penalt*. The de$endant also signed a pro issor* note solidaril* with his !rother 0osario (acting as intervenor)" the s% s sec%red !* the ortgages. 0osario is alleged to !e the owner o$ the two white tr%c&s no. 77197 ' 92744 ortgaged. -. 1hile these two cases were pending in the lower co%rt the ortgaged tr%c&s were sold !* virt%e o$ the ortgage" all o$ the together !ringing in" a$ter ded%cting the sheri$$2s $ees and transportation charges to 3anila" the net s% o$ 4-"259.#8. 4. The lower co%rt ordered the de$endants and the intervenor to pa* plainti$$ in case 28497 the s% o$ 47"7-2.69 with interest at the rate o$ 12 per cent per ann% $ro 3a* 1" 1925 %ntil $%ll* paid" and 2# per cent thereo$ in addition as penalt*. +n case 28498" the trial co%rt ordered the de$endant and the intervenor to pa* plainti$$ the s% o$ 44"268.28 with interest at 12 per cent per ann% $ro 7ece !er 1" 192# %ntil $%ll* paid" and 2# per cent thereon as penalt*. #. The appellants contend that tr%c&s 77197 and 92744 were not ortgaged" !eca%se" when the de$endant signed the ortgage deeds these tr%c&s were not incl%ded in those doc% ents" and were onl* p%t in later" witho%t de$endant2s &nowledge. 8ppellants also alleged that on Fe!r%ar* 4" 192#" the de$endant sold his rights in said tr%c&s 9os. 77197 and 92744 to the intervenor" and that as the latter did not sign the ortgage deeds" s%ch tr%c&s cannot !e considered as ortgaged. 5. ,%t there is positive proo$ that the* were incl%ded at the ti e the de$endant signed these doc% ents. ,esides" there were presented two o$ de$endant2s letters to :idalgo" an e plo*ee o$ the plainti$$2s written a $ew da*s !e$ore the transaction" ac(%iescing in the incl%sion o$ all his White tr%c&s alread* paid $or" in the ortgage (;<hi!it :/+). #ssue$ %&N the 2'( pe)a*t+ upo) the ,ebt i) a,,itio) to the 2'( p.a. is usurious 0%ling: 9o" 8rticle 11#2 o$ the Civil Code per its the agree ent %pon a penalt* apart $ro the interest. =ho%ld there !e s%ch an agree ent" the penalt*" as was held in the case o$ >ope? vs. :ernae? (-2 4hil." 5-1)" does not incl%de the interest" and which a* !e de anded separatel*. The penalt* is not to !e added to the interest $or the deter ination o$ whether the interest e<ceeds the rate $i<ed !* the law" since said rate was $i<ed onl* $or the interest. ,%t considering that the o!ligation was partl* per$or ed" and a&ing %se o$ the power given to the co%rt !* article 11#4 o$ the Civil Code" this penalt* is red%ced to 16 per cent o$ the %npaid de!t. The penalt* is however red%ced $ro 2# . %pon the s% owed" the de$endants need pa* onl* 16 . thereon as penalt*. ()%dg ent appealed $ro is a$$ir ed in all other respects).