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GO TONG ELECTRICAL SUPPLY CO., INC.

and GEORGE By way of special and affirmative defenses, petitioners


C. GO, Petitioners, argued, among others, that: (a) the real party-in-interest
vs. should be DBS and not respondent; (b) no demand was
BPI FAMILY SAVINGS BANK, INC., substituted by made upon them; and (c) Go cannot be held liable under the
PHILIPPINE INVESTMENT ONE [SPV-AMC], CSA since there was supposedly no solidarity of debtors.
INC.,*Respondent.
Petitioners further interposed counterclaims for the payment
Doctrine: of moral and exemplary damages, as well as litigation and
attorney's fees in the total amount of ₱1,250,000.00.22During
"[t]he admission of the genuineness and due execution of a
trial, respondent presented Ricardo 0. Suñio 23 (Suñio ), the
document means that the party whose signature it bears
Account Officer handling petitioners' loan accounts, as its
admits that he voluntarily signed the document or it was
witness. Sunio attested to the existence of petitioners' loan
signed by another for him and with his authority; that at the
obligation in favor of respondent, 24 and identified a
time it was signed it was in words and figures exactly as set
Statement of Account25 which shows the amount due as of
out in the pleading of the party relying upon it; that the
June 16, 2004.
document was delivered; and that any formalities required by
law, such as a seal, an acknowledgment, or revenue stamp, On cross-examination, Suñio nonetheless admitted that he
which it lacks, are waived by him. Also, it effectively had no knowledge of how the PN was prepared, executed,
eliminated any defense relating to the authenticity and due and signed, nor did he witness its signing27
execution of the document, e.g., that the document was
spurious, counterfeit, or of different import on its face as the For their part, petitioners presented Go Tong Electrical's
one executed by the parties; or that the signatures appearing Finance Officer, Jocelyn Antonette Lim, who testified that Go
thereon were forgeries; or that the signatures were Tong Electrical was able to pay its loan, albeit partially.
unauthorized."50 However, she admitted that she does not know how much
payments were made, nor does she have a rough estimate
Facts: thereof, as these were allegedly paid for in dollars.

On October 4, 2002, respondent filed a complaint5against HELD:


petitioners Go Tong Electrical and its President, George C.
Go seeking that the latter be held jointly and severally liable The Court concurs with the CA Decision holding that the
to it for the payment of their loan obligation in the aggregate genuineness and due execution of the loan documents in this
amount of ₱87,086,398.71, inclusive of the principal sum, case were deemed admitted by petitioners under the
interests, and penalties as of May 28, 2002, as well as parameters of Section 8, Rule 8.
attorney’s fees, litigation expenses, and costs of suit. 6
A reading of the Answer shows that petitioners failed to
As alleged by respondent as early as 1996, Go Tong specifically deny the execution of the Credit Agreement,
Electrical had applied for and was granted financial PN, and CSA under the auspices of the above-quoted
assistance by the then Bank of South East Asia (BSA). rule. The mere statement in paragraph 4 of their Answer, i.e.,
Subsequently, DBS7 Bank of the Philippines, Inc. (DBS) that they "specifically deny" the pertinent allegations of the
became the successor in interest of BSA. The application for Complaint "for being self-serving and pure conclusions
financial assistance was renewed on January 6, 1999 intended to suit plaintiffs purposes," 44 does not constitute
through a Credit Agreement. On even date, Go Tong an effective specific denial as contemplated by
Electrical, represented by Go, among others, obtained a loan law.45Verily, a denial is not specific simply because it is
from DBS in the principal amount of ₱40,491,051.65, for so qualified by the defendant. Stated otherwise, a general
which Go Tong Electrical executed Promissory Note for the denial does not become specific by the use of the word
same amount in favor of DBS, maturing on February 5, 2000 "specifically."46 Neither does it become so by the simple
Under the PN’s terms, Go Tong Electrical bound itself to pay expedient of coupling the same with a broad conclusion
a default penalty interest at the rate of one percent (1%) per of law that the allegations contested are "self-serving"
month in addition to the current interest rate, as well as or are intended "to suit plaintiffs purposes."
attorney’s fees equivalent to twenty-five percent (25%) of the
amount sought to be recovered. As additional security, Go how to deny the genuineness and due execution of an
executed a Comprehensive Surety Agreement (CSA) actionable document?
covering any and all obligations undertaken by Go Tong
Electrical, including the aforesaid loan. Upon default of The defendant must declare under oath that he did not sign
petitioners, DBS – and later, its successor-in-interest, herein the document or that it is otherwise false or fabricated.
respondent– demanded payment from petitioners, but to no Neither does the statement of the answer to the effect that
avail, hence, the aforesaid complaint. the instrument was procured by fraudulent representation
raise any issue as to its genuineness or due execution. On
In their Answer with Counterclaim18 (Answer), petitioners the contrary such a plea is an- admission both of the
merely stated that they "specifically deny" 19 the allegations genuineness and due execution thereof, since it seeks to
under the complaint. Of particular note is their denial of the avoid the instrument upon a ground not affecting either.49
execution of the loan agreement, the PN, and the CSA "for
To add, Section 8, Rule 8 of the Rules further requires
being self-serving and pure conclusions intended to suit that the defendant "sets forth what he claims to be the facts,"
[respondent's] purposes." which requirement, likewise, remains absent from the
Answer in this case.
Thus, with said pleading failing to comply with the "specific of the debt, then mortgaged the title of the subject property
denial under oath" requirement under Section 8, Rule 8 of with respondent; and the signatures appearing in the
the Rules, the proper conclusion, as arrived at by the CA, documents were falsified.11
is that petitioners had impliedly admitted the due
execution and genuineness of the documents During the pre-trial, the parties agreed that petitioner is the
evidencing their loan obligation to respondent. registered owner of the subject property, and that she once
mortgaged the property with the Batangas Savings & Loan
Accordingly, with petitioners' admission of the genuineness Bank in order to secure a loan of P200,000.00 from the
and due execution of the loan documents as above- bank.12 They also submitted the following issues for
discussed, the competence of respondent's witness Suñio to resolution: whether the pacto de retro sale was executed by
testify in order to authenticate the same is therefore of no petitioner; whether the consideration of the sale has been
moment. paid to petitioner; and whether the contract of sale con pacto
de retro is genuine.
The Court clarifies that while the "[ f]ailure to deny the
genuineness and due execution of an actionable document On July 11, 2006, the heirs of respondent filed a
does not preclude a party from arguing against it by evidence Manifestation and Motion to Dismiss the Complaint on
of fraud, mistake, compromise, payment, statute of the ground that it was Rufina Villamin, respondent's
limitations, estoppel and want of consideration [nor] bar a common law wife, who was the source of the fund in
party from raising the defense in his answer or reply and purchasing Lot 4-A.17 They alleged that the consolidation
prove at the trial that there is a mistake or imperfection in the of ownership and title to respondent would be prejudicial to
writing, or that it does not express the true agreement of the Villamin and would unjustly enrich them.18 Consequently, the
parties, or that the agreement is invalid or that there is an RTC, through Judge Christino E. Judit, in an Order dated
intrinsic ambiguity in the writing,"53 none of these defenses July 12, 2006, dismissed the case with prejudice on the
were adequately argued or proven during the proceedings of ground that the case was not filed by an indispensable party,
this case. Villamin.19

JUANA VDA. DE ROJALES, SUBSTITUTED BY HER However, on August 2, 2006, Atty. Pedro N. Belmi, the
HEIRS, REPRESENTED BY CELERINA ROJALES- counsel of respondent, filed a Motion for Reconsideration
SEVILLA, Petitioner, v. MARCELINO DIME, praying to set aside the dismissal with prejudice on the
SUBSTITUTED BY HIS HEIRS, REPRESENTED BY ground that Villamin and the daughters of petitioner, Manilyn
BONIFACIA MANIBAY, Respondent. Rojales Sevilla and Olivia Rojales, tricked and manipulated
the respondent's widow and her children to affix their
signatures on the motion to dismiss.20 Atty. Belmi insisted
that the RTC erred in giving credence to the motion
Facts: without his verification that the motion was indeed freely
and voluntarily executed by the parties.21
Petitioner Juana Vda. de Rojales owned a parcel of land
Thereafter, the RTC ruled in favor of the petitioner.
In a petition dated May 30, 2000 filed before the RTC of
Nasugbu, Batangas, Branch 14, respondent Marcelino RTC considered the unverified motion for reconsideration
Dime alleged that on May 16, 1999, petitioner conveyed filed by Atty. Belmi as an unsigned pleading.26 It further held
under a pacto de retro contract Lot 4-A in favor of that the manifestation and motion to dismiss deserved the
respondent for and in consideration of the sum of presumption of validity since there was no sufficient proof
P2,502,932.10.5 Petitioner reserved the right to repurchase that the compulsory heirs who substituted respondent were
the property for the same price within a period of nine (9) made to sign such motion without knowing its content… the
months from March 24, 1999 to December 24, CA reversed and set aside the decision of the RTC.
1999.6 Despite repeated verbal and formal demands to
exercise her right, petitioner refused to exercise her right to The CA rejected the ruling of the court a quo that Villamin
repurchase the subject property.7 was an indispensable party. It ruled that the person who
provided the funds for the purchase of the property is not
In her answer, petitioner denied the execution of considered as an indispensable party in a case of
the pacto de retro sale in favor of respondent and consolidation of title filed by respondent, the vendee, in
alleged that she had not sold the subject property.8 She whose favor the petitioner sold the subject property under
claimed that the document presented by respondent was the contract of sale con pacto de retro.
falsified since the fingerprint appearing therein was not hers
and the signature of the Notary Public Modesto S. Alix was HELD:
not his.9 She also averred that she filed falsification and use
of falsified documents charges against respondent.10 This Court notes that the RTC relied on the bare assertions
of the heirs in dismissing the case with prejudice. The
In her sworn statement attached to her Answer, records are bereft of evidence to support the allegation
petitioner alleged that she mortgaged the subject that Villamin has indeed provided the consideration. Not
property with the Batangas Savings and Loan Bank for being a privy to the pacto de retro sale, Villamin cannot be
P100,000.00 when her daughter Violeta Rojales Rufo considered to have been prejudiced with the consolidation of
needed the money for application of overseas work; Antonio title in respondent's name. Assuming arguendo that she was
Barcelon redeemed the property and paid P260,000.00 for indeed the source of the consideration, she has a separate
the debt plus the unpaid interest with the bank; when cause of action against respondent. The legal obligation of
Barcelon entered the mayoralty race, he demanded payment respondent to her is separate and distinct from the contract
of sale cow pacto de retro, thus, the award of consolidation Settled is the rule that generally, a notarized document
of title in her name would be untenable. carries the evidentiary weight conferred upon it with respect
to its due execution, and documents acknowledged before a
Anent the issue on verification, Section 4, Rule 7 notary public have in their favor the presumption of
regularity.55 In other words, absent any clear and convincing
Sec. 4. Verification. - Except when otherwise specifically proof to the contrary, a notarized document enjoys the
required by law or rule, pleadings need not be under oath, presumption of regularity and is conclusive as to the
verified or accompanied by affidavit. truthfulness of its contents.56 Irregularities in the notarization
of the document may be established by oral evidence of
A pleading is verified by an affidavit that the affiant has persons present in said proceeding.57
read the pleading and that the allegations therein are
true and correct of his personal knowledge or based on We rule that petitioner failed to present clear and convincing
authentic records. evidence to overcome such presumption of regularity of a
public document. Petitioner submitted the specimen
We do not agree with petitioner's assertion that the signature of the notary public but the same was never
motion for reconsideration should not have been presented during the trial nor was authenticated. Records
allowed since the respondent failed to pose a reasonable disclose that after she admitted to being bound with
explanation on the absence of verification. conclusion of the NBI regarding the issue on the thumbmark,
petitioner did not present any evidence to rebut the due
Non-compliance with verification or a defect therein does not execution of the notarized contract of sale con pacto de retro.
necessarily render the pleading fatally Instead, she presented her testimony and the testimony of
defective. Verification, like in most cases required by the her daughter Josefma Rojales to prove that she never
rules of procedure, is a formal requirement, not intended to sell her property.
jurisdictional.47 It is mainly intended to secure an
assurance that matters which are alleged are done in
good faith or are true and correct and not of mere
speculation.48Thus, when circumstances so warrant, "the SPOUSES RAMON SY AND ANITA NG, RICHARD SY,
court may simply order the correction of unverified pleadings JOSIE ONG, WILLIAM SY AND JACKELINE DE
or act on it and waive strict compliance with the rules in order LUCIA, Petitioners, v. WESTMONT BANK (NOW UNITED
that the ends of justice may thereby be served." OVERSEAS BANK PHILIPPINES) AND PHILIPPINE
DEPOSIT INSURANCE CORPORATION, AS ASSIGNEE
The RTC waived the strict compliance for verification when it OF UNITED OVERSEAS BANK
acted on the motion for reconsideration in the interest of PHILIPPINES, Respondents.
justice and equity and allowed the further reception of
evidence. Therefore, it is erroneous to dismiss the case
based on the non-compliance of verification. As
discussed earlier, Villamin is not privy to the pacto de Facts:
retro sale between the petitioner and the respondent. Hence,
the case should not have been dismissed because Villamin The present case stemmed from a Complaint for Sum of
is not an indispensable party in an action for consolidation of Money, filed by respondent Westmont
ownership and title emanating from the contract of pacto de Bank (Westmont), now United Overseas Bank
retro sale. Philippines (UOBP), against petitioners Spouses Ramon Sy
and Anita Ng, Richard Sy, Josie Ong, William Sy, and
Petitioner's allegation that respondent should have executed Jackeline de Lucia (petitioners) before the RTC.
affidavits in denying what was written in the manifestation
and motion to dismiss based on Rule 8, Section 850 of the Westmont alleged that on October 21, 1997, petitioners,
Rules of Court is unfounded. Such rule is applicable in doing business under the trade name Moondrops obtained a
contesting an action or defense based on a written loan in the amount of P2,429,500.00, evidenced by
instrument or document copied or attached to the Promissory Note payable on November 20, 1997. Barely a
pleading. In the case at bar, it is the motion to dismiss that month after, or on November 25, 1997, petitioners obtained
is being contested and not a written instrument or document another loan from Westmont Bank in the amount of
which an action or defense is based on. P4,000,000.00, evidenced by Promissory Note payable on
December 26, 1997. Disclosure Statements on the
Petitioner avers that the CA erred in relying on the NBI Loan/Credit Transactions8 were signed by the parties.
Fingerprint Examination. She alleges that the opinion of one Earlier, a Continuing Suretyship Agreement,9 dated
claiming to be an expert is not binding upon the court. February 4, 1997, was executed between Westmont and
petitioners for the purpose of securing any future
There is nothing on record that would compel this Court to indebtedness of Moondrops.
believe that said witness, Fingerprint Examiner Gomez, has
improper motive to falsely testify against the petitioner nor Westmont averred that petitioners defaulted in the
was his testimony not very certain. His testimony is worthy of payment of their loan obligations. It sent a Demand
full faith and credit in the absence of evidence of an improper Letter,10 dated August 27, 1999, to petitioners, but it was
motive. His straightforward and consistent testimonies bear unheeded. Hence, Westmont filed the subject complaint.
the earmarks of credibility.
In their Answer, petitioners countered that in August 1997,
Ramon Sy and Richard Sy applied for a loan with Westmont
Bank, through its bank manager William Chu
Lao (Lao). According to them, Lao required them to sign
blank forms of promissory notes and disclosure statements In its Entry of Appearance with
and promised that he would notify them immediately Compliance/Manifestation,22 dated October 19, 2015,
regarding the status of their loan application. UOBP, formerly Westmont, informed the Court that all their
interests in the present litigated case were already
In September 1997, Lao informed Ramon Sy and Richard Sy transferred to the Philippine Deposit Insurance
that their application was disapproved. He, however, offered Corporation (PDIC).
to help them secure a loan through Amado
Chua (Chua), who would lend them the amounts of In its Comment,23 dated September 23, 2015, the PDIC
P2,500,000.00 and P4,000,000.00, both payable within three stated that the CA correctly ruled that petitioners failed to
(3) months. Ramon Sy and Richard Sy accepted Lao's offer specifically deny the actionable documents in their answer
and received the amounts of P2,429,500.00 and and were deemed to have admitted the genuieness and due
P3,994,000.00, respectively, as loans from Chua. Petitioners execution thereof Citing Permanent Savings and Loan Bank
claimed that they paid Chua the total amount of their loans. v. Velarde,24 the PDIC underscored that the specific denial
meant that the defendant must declare under oath that he
Petitioners insisted that their loan applications from did not sign the document or that it was otherwise false or
Westmont were denied and it was Chua who lent them fabricated.
the money. Thus, they contended that Westmont could
not demand the payment of the said loans. In their Reply,25 dated November 2, 2015, petitioners
insisted that they made a categorical specific denial in their
In the pre-trial conference, the parties agreed on one issue - answer and never admitted the genuineness and due
whether or not the defendants obtained loans from execution of the promissory notes, disclosure statements
Westmont in the total amount of P6,429,500.00.12 During and continuing surety agreements; the promissory notes
trial, Westmont presented, among others, its employee presented by Westmont were mere photocopies; and
Consolacion Esplana, who testified that the proceeds of the Westmont failed to establish that they received the proceeds
loan were credited to the account of Moondrops per its loan of any loan.
manifold.13 Westmont, however, never offered such loan
manifold in evidence.14 HELD:

On the other hand, petitioners presented a Cashier's petition meritorious.


Check,15 dated October 21, 1997, in the amount of
P2,429,500.00, purchased from Chua, to prove that the said Whenever an action or defense is based upon a written
loan was obtained from Chua, and not from Westmont. The instrument or document, the substance of such
cashier's check for the subsequent loan of P4,000,000.00 instrument or document shall be set forth in the
could not have been obtained from Westmont. pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be
The RTC ruled in favor of Westmont…the RTC opined deemed to be a part of the pleading, or said copy may
that petitioners admitted the genuineness and due with like effect be set forth in the pleading. The said
execution of the said actionable documents because instrument or document is called an actionable document
they failed to make a specific denial in the answer. It and Section 8 of Rule 8 provides the proper method for the
added that it should be presumed that the two (2) loan adverse party to deny its genuineness and due execution, to
transactions were fair and regular; that the ordinary course wit:
of business was followed; and that they were issued for a
sufficient consideration. Sec. 8. How to contest such documents. — When an action
or defense is founded upon a written instrument, copied in or
The CA affirmed the ruling of the RTC. attached to the corresponding pleading as provided in the
preceding Section, the genuineness and due execution of
CONTENTIONS: the instrument shall be deemed admitted unless the
adverse party, under oath, specifically denies them, and
Petitioners argue that: they specifically denied the sets forth what he claims to be the facts; but the
allegations of Westmont under oath in their answer filed requirement of an oath does not apply when the adverse
before the RTC; although they signed blank forms of party does not appear to be a party to the instrument or when
promissory notes, disclosure statements and continuing compliance with an order for an inspection of the original
suretyship agreements, they were informed that their loan instrument is refused. [Emphasis supplied]
application were denied; these should be considered as
sufficient compliance with Section 8 of Rule 8; Westmont
Bank failed to prove the existing loan obligations; and the Accordingly, to deny the genuineness and due execution
original copy of the promissory notes were never presented of an actionable document:
in court.
(1) there must be a specific denial in the responsive pleading
In a Resolution,20 dated July 4, 2012, the Court initially of the adverse party;
denied the petition for failure to show any reversible error in
the challenged decision and resolution of the CA. In a (2) the said pleading must be under oath; and
Resolution,21 dated June 15, 2015, however, the Court
granted petitioners' motion for reconsideration, reinstated the (3) the adverse party must set forth what he claims to be the
petition and required the respondents to file their comment. facts.
Failure to comply with the prescribed procedure results in of "Moondrops General Merchandising," applied for and
the admission of the genuineness and due execution of the were granted another loan by the plaintiff in the principal
actionable document. amount of Four Million Pesos (P4, 000, 000.00), Philippine
Currency, in evidence of which said defendants executed in
In Toribio v. Bidin,27 the Court expounded that the purpose plaintiffs favor Promissory Note No. GP- 5285, xxx.
of specifically denying an actionable document "appears
to have been to relieve a party of the trouble and expense of 6. The defendants Anita Ng, Josie Ong, William Sy and
proving in the first instance an alleged fact, the existence or Jackeline De Lucia, for purposes of securing the payment of
non-existence of which is necessarily within the knowledge said loans, collectively executed a Continuing Suretyship
of the adverse party, and of the necessity (to his opponent's Agreement, xxx, whereby they jointly and severally bound
case) of establishing which such adverse party is notified by themselves to plaintiff for the payment of the obligations of
his opponent's pleading."28 In other words, the reason for the defendants Richard Sy and Ramon Sy/Moondrops General
rule is to enable the adverse party to know beforehand Merchandising thereto.
whether he will have to meet the issue of genuineness
or due execution of the document during trial.29 7. The defendants defaulted in the payment of the
aforementioned loan obligations when the same fell due and,
in Titan Construction Corporation v. David, Sr.,30 the Court despite demands, continue to fail and/or refuse to pay the
relaxed the rules of procedure regarding Section 8 of Rule 8. same, to the prejudice of the plaintiff, xx.
In that case, the respondent failed to file a responsive
pleading under oath to specifically deny the special power of 8. As of November 9, 1999, the defendants' outstanding
attorney, the actionable document therein, which was obligation to the plaintiff on both loans amounted to Fifteen
attached to the answer of the petitioner therein. Million Six Hundred Thirty-Nine Thousand Five Hundred
Notwithstanding such deficiency, the Court ruled that there Eighty Nine and 25/100 Pesos, xxx.31
was substantial compliance because the respondent therein
consistently denied the genuineness and due execution of chanrobleslaw
the actionable document in his complaint and during trial. On the other hand, petitioners alleged in the answer, under
oath:
In fine, although Section 8 of Rule 8 provides for a
precise method in denying the genuineness and due 2. Paragraphs 3, 4, 5, 6, 7 and 8 are specifically denied, the
execution of an actionable document and the dire truth of the matter being those alleged in the Special and
consequences of its non-compliance, it must not be Affirmative Defenses hereunder.
applied with absolute rigidity. What should guide judicial
action is the principle that a party-litigant is to be given the 3. Paragraph 9 is specifically denied for want of knowledge
fullest opportunity to establish the merits of his complaint or or information sufficient to form a belief as to the truth or
defense rather than for him to lose life, liberty, honor, or falsity thereof. Besides, the plaintiff has no one to blame
property on technicalities. except itself and its personnel for maliciously filing the instant
complaint for collection knowing fully well that the alleged
In the present case, the actionable documents attached to loan obligations were not consummated; and by way of -
the complaint of Westmont were PN 5280 and PN 5285. The
CA opined that petitioners failed to specifically deny the SPECIAL AND AFFIRMATIVE DEFENSES
genuineness and due execution of the said instruments
because nowhere in their answer did they "specifically deny"
the genuineness and due execution of the said documents. 4. The complaint does not state a cause of action.

After a judicious study of the records, the Court finds that 5. While the limited partnership Moondrops General
petitioners sufficiently complied with Section 8 of Rule Merchandising Co., Ltd. (Moondrops for brevity) appears in
8 and grants the petition. the alleged loan documents to be the borrower and,
therefore, the real party in interest, it is not impleaded as a
Petitioners specifically party, xxx.
denied the genuineness
and due execution of the 6. The alleged loan obligations were never consummated for
promissory notes want of consideration.

The complaint of Westmont alleged, among others, that: 7. Sometime in August, 1997, Moondrops desperately
needed additional working capital, thus it applied for a loan
3. On or about October 21, 1997, defendants Richard Sy and of P6,500, 000.00 with the plaintiff Westmont Bank through
Ramon Sy, under the trade name and style of "Moondrops the Manager of Grace Park Branch William Chu Lao.
General Merchandising," obtained a loan from the plaintiff in
the principal amount of Two Million Four Hundred Twenty- 8. Manager William Chu Lao required herein defendants to
Nine Thousand Five Hundred Pesos (P2, 429, 500.00), sign blank forms of plaintiffs promissory notes, Disclosure
Philippine Currency, in evidence of which said defendants Statements and Continuing Suretyship Agreement.
executed in plaintiffs favor Promissory Note No. GP- 5280,
xxx. 9. Sometime in September, 1997, Manager William Chu Lao
informed herein defendants that the application of
4. Again, on or about November 25, 1997, defendants Moondrops for an additional working capital was
Richard Sy and Ramon Sy, under the trade name and style disapproved by Westmont Bank but that, however, he
offered to lend the defendants, through Mr. Amado Chua, the Facts:
initial amount of P2,500,000.00 payable in three (3) months,
and then another P4,000,000.00 likewise payable in three (3) A Complaint for Sum of Money was filed by petitioner BP Oil
months, against customers' checks. against respondent Total Distribution & Logistic Systems,
Inc. (TDLSI) on April 15, 2002, seeking to recover the sum of
10. Since Moondrops desperately needed the additional ₱36,440,351.79 representing the total value of the moneys,
working capital, defendants agreed to and accepted the offer stock and accounts receivables that TDLSI has allegedly
of Manager William Chu Lao, thus Mr. Amado Chua loaned refused to return to BP Oil.
to defendants the amounts of P2,500,000.00 and P4,000,
000.00. The allegations of the parties, as summarized by the RTC,
are as follows:
11. Pursuant to the agreement between Mr. Amado Chua
and the defendants, the latter delivered to the former According to the allegations in the complaint, the defendant
customers' checks in the total amount of P6,500,000.00. entered into an Agency Agreement (the Agreement) with BP
Singapore on September 30, 1997, whereby it was given the
12. Defendants have fully paid Mr. Amado Chua the loan right to act as the exclusive agent of the latter for the sales
obligations in the amounts of P2,500, 000.00 and and distribution of its industrial lubricants in the Philippines.
P4,000,000.00, including the interests thereon. The agency was for a period of five years from 1997 to 2002.
In return, the defendant was supposed to meet the target
sales volume set by BP Singapore for each year of the
The answer above readily shows that petitioners did not Agreement.
spell out the words "specifically deny the genuineness
and due execution of the promissory notes." When the defendant did not meet its target sales volume for
Nevertheless, when the answer is read as whole, it can be the first year of the Agreement, the plaintiff informed the
deduced that petitioners specifically denied the paragraphs defendant that it was going to appoint other distributors to
of the complaint regarding the promissory notes. More sell the BP's industrial lubricant products in the Philippines.
importantly, petitioners were able to set forth what they The defendant did not object to the plan of the plaintiff but
claim to be the facts, which is a crucial element under asked for ₱10,000,000.00 as compensation for the
Section 8 of Rule 8. In particular, they alleged that expenses. The plaintiff did not agree to the demand made by
although Ramon Sy and Richard Sy signed blank forms the defendant.
of promissory notes and disclosure statements, they
were later informed that their loans were not approved. the defendant through its lawyer, wrote the plaintiff a letter
Such disapproval led them to seek loans elsewhere, through where it demanded that it be paid damages in the amount of
Lao and Chua, but definitely not with the bank anymore. ₱40,000,000.00 and announced that it was withholding
remittance of the sales until it was paid by the plaintiff… The
Verily, petitioners asserted throughout the entire plaintiff also demanded that the defendant pay the plaintiff its
proceedings that the loans they applied from Westmont outstanding obligations and return the unsold stock in its
were disapproved, and that they never received the loan possession.
proceeds from the bank. Stated differently, they insisted
that the promissory notes and disclosure statement attached On April 15, 2002, the plaintiff filed the instant complaint for
to the complaint were false and different from the documents collection against the defendant. The defendant initially filed
they had signed. These significant and consistent denials by a Motion to Dismiss the complaint on the ground for [sic] lack
petitioners sufficiently informed Westmont beforehand that it of cause of action because of the existence of an arbitration
would have to meet the issue of genuineness or due agreement, as well as a previously filed arbitration
execution of the actionable documents during trial. proceeding between the parties. This Court denied the
defendant's Motion to Dismiss for lack of merit
Accordingly, petitioners substantially complied with Section
The Defendant went up to the Court of Appeals to question
8 of Rule 8. Although their answer did not indicate the exact
words contained in the said provision, the questionable loans the denial of its Motion to Dismiss via a Petition
for Certiorari and Prohibition.
and the non-delivery of its proceeds compel the Court to
relax the rules of procedure in the present case. Law and
On June 9, 2003, the Defendant filed its Answer Ad
jurisprudence grant to courts the prerogative to relax
Cautelam with Compulsory Counterclaim Ad Cautelam.
compliance with procedural rules of even the most
mandatory character, mindful of the duty to reconcile both In its answer, the defendant alleged that it was appointed as
the need to put an end to litigation speedily and the parties' the exclusive agent of the plaintiff to sell BP brand industrial
right to an opportunity to be heard. lubricants in the Philippines. The agency was to last for five
years from signing of the Agreement. The defendant further
alleged that it did not fail to meet the sales target for Year I.
BP OIL AND CHEMICALS INTERNATIONAL Delays on the part of the plaintiff in shipping the products
PHILIPPINES, INC., Petitioner moved the commencement of the Agreement from January
1997 to August 1997, making the stipulated sales target no
vs.
TOTAL DISTRIBUTION & LOGISTIC SYSTEMS, INC., longer applicable.
Respondents
the Court of Appeals came out with its Decision affirming this
Court's denial of the defendant's Motion to Dismiss after the
defendant filed it Answer Ad Cautelam. The Court of
Appeals also denied the defendant's Motion for A document, therefore, is actionable when an action or
Reconsideration on August 16, 2004. The Decision of the defense is grounded upon such written instrument or
Court of Appeals sustaining this Court attained finality with document. The complaint filed by petitioner is an action for
the denial by the Supreme Court on November 10, 2004 of collection of sum of money arising from the termination of the
the Petition for Review on Certiorari filed by the defendant as Agency Agreement with TDLSI. The CA, therefore, was
well as its Motion for Reconsideration from the said denial. correct when it stated that petitioner's cause of action is
primarily based on the alleged non-payment of outstanding
the RTC ruled in favor of the petitioner debts of respondent as well as the unremitted
collections/payments and unsold stocks, despite demand.
The CA ruled, among others, that the admission made by Thus, petitioner's cause of action is not based solely on the
respondent in Exhibit "J ," that it was withholding moneys, April 30, 2001 letter allegedly stating the "present value of
receivables and stocks respectively valued at stocks, collections and accounts receivables" of TDLSI.
₱27,261,305.75, ₱8,767,656.26 and ₱1,155,000.00 from Noteworthy is the denial of respondent TDLSI' s Demurrer to
petitioner, has no evidentiary weight, thus, petitioner was not Evidence by the RTC because it clearly discussed
able to preponderantly establish its claim. petitioner's cause of action and the sufficiency of the
evidence it presented
CONTENTIONS:

According to petitioner, Exhibit "J" qualifies as an actionable The record shows that the plaintiff presented sufficient
document whose authenticity and due execution were evidence that will preponderantly establish its claim against
deemed admitted by respondent or TDLSI following its failure the defendant. Among the evidence presented which might
to specifically deny the same under oath. Petitioner insists prove the claim or right to relief of the plaintiff against the
that it has met the quantum of proof required by law. defendant include (I) the purchase orders of TDLSI's third
party customers; (2) original approved copies of the requests
In its Comment dated March 24, 2015, respondent reiterates for approval sent by TDLSI to BP Oil from May 21, 1998 to
the ruling of the CA that Exhibit "J" is not an actionable August 14, 1999; (3)TDLSI invoices covering the products
document and cannot be considered a judicial admission on subject of the purchase orders and requests for approval;
its part. and (4) The sales invoices issued by BP Oil to TDLSI to its
customers.
HELD:
The aforesaid evidence presented was to the mind of the
On the issue of whether Exhibit "J" is an actionable Court contain pertinent facts and such evidence will
document, the CA ruled: prove that the plaintiff has a cause of action against the
defendant.
Here, plaintiff-appellee relies heavily on its Exhibit "J",
defendant-appellant's purported letter dated April 30, 2001,
which it alleged to be an "actionable document" which
defendant-appellant failed to deny under oath. It does
amounts to a judicial admission on the part of defendant-
appellant that it has possession of its stocks, moneys and
receivables belonging to plaintiff-appellee.

x x xx

Here, the purported April 30, 2001 letter is not an actionable


document per se. The present complaint is an action for
collection of sum of money arising from the termination of the
Agency Agreement between the parties. Plaintiff-appellee's
cause of action is primarily based on the alleged non-
payment of outstanding debts of defendant-appellant as well
as the unremitted collections/payments and unsold stocks,
despite demand. In other words, plaintiff-appellee's cause of
action is not based solely on the April 30, 2001 letter
allegedly stating the "present value of stocks, collections and
accounts receivables" of defendant-appellant. Clearly, said
document is not an actionable document contemplated in
Section 7, Rule 8 of the 1997 Rules of Court but is merely
evidentiary in nature. As such, there was no need for
defendant-appellant to deny its genuineness and due
execution under oath.

The above findings of the CA are partially correct.

To the mind of the Court, Exh. "J" is not an actionable


document but is an evidence that may be admissible and;
hence, need not be denied under.