559 Phil. 793
VELASCO JR., J.:
WHEREFORE, premises considered[,] finding defendant's Motion For Judgment On Demurrer To The Evidence to be meritorious[,] the same is hereby GRANTED. Consequently, considering that the obligation of the defendant to the plaintiff having been extinguish[ed] by a Dacion en Pago duly executed by said parties, the instant complaint is hereby DISMISSED, with prejudice. Without Cost.[14]
WHEREFORE, premises considered, the Order dated May 12, 1999 of the Regional Trial Court, National Capital Judicial Region, Branch 145, Makati City is hereby REVERSED and SET ASIDE.Petitioner filed a Motion for Reconsideration[18] which was denied by the CA in its November 7, 2001 Resolution.[19]
Judgment is hereby entered ORDERING [petitioner] Casent Realty [Development] Corporation to:SO ORDERED.[17]
- pay [respondent] Philbanking Corporation the amount of P300,000.00 with an interest of 36% per annum and a penalty of 12% for failure to pay the same on its maturity date, June 27, 1985 as stipulated in Promissory Note No. 84-04;
- pay [respondent] Philbanking Corporation the amount of P681,500.00 with an interest of 18% per annum and a penalty of 12% for failure to pay the same on its maturity date, June 25, 1985 as stipulated in Promissory Note No. 84-05; and
- pay [respondent] Philbanking Corporation, the amount representing 25% of total amount due as attorney's fee as stipulated in the promissory notes.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN EXCLUDING THE PETITIONER'S AFFIRMATIVE DEFENSES IN ITS ANSWER IN RESOLVING A DEMURRER TO EVIDENCE; ANDIn other words, the questions posed by this case are:
WHETHER OR NOT PETITIONER IS LIABLE TO PAY THE RESPONDENT
Petitioner asserts that its obligation to pay under the promissory notes was already extinguished as evidenced by the Dacion and Confirmation Statement. Petitioner submits that when it presented these documents in its Answer, respondent should have denied the same under oath. Since respondent failed to file a Reply, the genuineness and due execution of said documents were deemed admitted, thus also admitting that the loan was already paid. On the other hand, respondent states that while it failed to file a Reply, all the new matters were deemed controverted pursuant to Section 10, Rule 6 of the Rules of Court. Also, the loan which was covered by the Dacion refers to another loan of petitioner amounting to PhP 3,921,750 which was obtained directly from the respondent as of August 1986.[20] Furthermore, petitioner argued that assuming respondent admitted the genuineness and due execution of the Dacion and Confirmation Statement, said admission was not all-encompassing as to include the allegations and defenses pleaded in petitioner's Answer.
- Does respondent's failure to file a Reply and deny the Dacion and Confirmation Statement under oath constitute a judicial admission of the genuineness and due execution of these documents?
- Should judicial admissions be considered in resolving a demurrer to evidence? If yes, are the judicial admissions in this case sufficient to warrant the dismissal of the complaint?
Section 1. Demurrer to evidence.--After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.In Gutib v. Court of Appeals, we defined a demurrer to evidence as "an objection by one of the parties in an action, to the effect that the evidence which his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the issue."[21]
Section 8. How to contest such documents.--When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth, what he claims to be the facts; but the requirement of an oath does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused.Since respondent failed to file a Reply, in effect, respondent admitted the genuineness and due execution of said documents. This judicial admission should have been considered by the appellate court in resolving the demurrer to evidence. Rule 129, Section 4 of the Rules of Court provides:
Section 4. Judicial admissions.--An admission, verbal or written, made by a party in the course of the proceeding in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.On appeal to the CA, respondent claimed that even though it failed to file a Reply, all the new matters alleged in the Answer are deemed controverted anyway, pursuant to Rule 6, Section 10:
Section 10. Reply.--A reply is a pleading, the office or function of which is to deny, or allege facts in denial or avoidance of new matters alleged by way of defense in the answer and thereby join or make issue as to such new matters. If a party does not file such reply, all the new matters alleged in the answer are deemed controverted.We agree with petitioner. Rule 8, Section 8 specifically applies to actions or defenses founded upon a written instrument and provides the manner of denying it. It is more controlling than Rule 6, Section 10 which merely provides the effect of failure to file a Reply. Thus, where the defense in the Answer is based on an actionable document, a Reply specifically denying it under oath must be made; otherwise, the genuineness and due execution of the document will be deemed admitted.[23] Since respondent failed to deny the genuineness and due execution of the Dacion and Confirmation Statement under oath, then these are deemed admitted and must be considered by the court in resolving the demurrer to evidence. We held in Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc. that "[w]hen the due execution and genuineness of an instrument are deemed admitted because of the adverse party's failure to make a specific verified denial thereof, the instrument need not be presented formally in evidence for it may be considered an admitted fact."[24]
From the facts of the case, the genuineness and due execution of the Dacion en Pago were never put to issue. Genuineness merely refers to the fact that the signatures were not falsified and/or whether there was no substantial alteration to the document. While due execution refers to whether the document was signed by one with authority.[25]The more important issue now is whether the Dacion and Confirmation Statement sufficiently prove that petitioner's liability was extinguished. Respondent asserts that the admission of the genuineness and due execution of the documents in question is not all encompassing as to include admission of the allegations and defenses pleaded in petitioner's Answer. In executing the Dacion, the intention of the parties was to settle only the loans of petitioner with respondent, not the obligation of petitioner arising from the promissory notes that were assigned by Rare Realty to respondent.
Rare Realty Corporation, a corporation duly organized and existing in accordance with law, with office at 8th Floor Philbanking Building, Ayala Ave., Makati, Metro Manila (herein called Assignor) in consideration of the sum of THREE MILLION SEVEN HUNDRED NINETY THOUSAND & 00/100 pesos [PhP 3,790,000.00] and as security fee or in the payment of the sum, obtained or to be obtained as loan or credit accommodation of whatever form or nature from the [PHILBANKING] CORPORATION, with office at Ayala Ave., Makati, Metro Manila (herein called Assignee), including renewals or extensions of such loan or credit accommodation, now existing or hereinafter incurred, due or to become due, whether absolute or contingent, direct or indirect, and whether incurred by the Assignor as principal, guarantor, surety, co-maker, or in any other capacity, including interest, charges, penalties, fees, liquidated damage, collection expenses and attorney's fee, the Assignor hereby assigns, transfers and conveys to Assignee all its rights, title and interest in and to: (a) contracts under which monies are or will be due to Assignor, (b) moneys due or to be due thereunder, or (c) letters of credit and/or proceeds or moneys arising from negotiations under such credits, all which are herein called moneys or receivables assigned or assigned moneys or receivables, and are attached, or listed and described in the Attached Annex A (for contracts) or Annex B (for letters of credit).[26]It is clear from the foregoing deed that the promissory notes were given as security for the loan granted by respondent to Rare Realty. Through the Deed of Assignment, respondent stepped into the shoes of Rare Realty as petitioner's creditor.
NOW, THEREFORE, in consideration of the foregoing premises, the DEBTOR hereby transfers and conveys in favor of the BANK by way of Dacion en Pago, the above-described property in full satisfaction of its outstanding indebtedness in the amount of P3,921,750.00 to the BANK, subject to x x x terms and conditions.[27] (Emphasis supplied.)The language of the Dacion is unequivocal--the property serves in full satisfaction of petitioner's own indebtedness to respondent, referring to the loan of PhP 3,921,750. For this reason, the bank issued a Confirmation Statement saying that petitioner has no unpaid obligations with the bank as of December 31, 1988.